UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): March 20, 2013

 

SUPERVALU INC.

(Exact name of registrant as specified in its charter)

 

Delaware

 

1–5418

 

41–0617000

(State or other jurisdiction
of incorporation)

 

(Commission
File Number)

 

(IRS Employer
Identification No.)

 

7075 Flying Cloud Drive
Eden Prairie, Minnesota

 

55344

(Address of principal executive offices)

 

(Zip Code)

 

Registrant’s telephone number, including area code: (952) 828-4000

 

N/A

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

o             Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o             Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o             Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o             Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 



 

Item 1.01    Entry into a Material Definitive Agreement.

 

On March 21, 2013, SUPERVALU INC. (“ SUPERVALU ” or the “ Company ”) entered into (i) an amended and restated five-year $1.0 billion asset-based revolving credit facility, secured by the Company’s inventory, credit card receivables and certain other assets, which will bear interest at the rate of LIBOR plus 1.75% to LIBOR plus 2.25%, depending on utilization and (ii) a new six-year $1.5 billion term loan, secured by the Company’s real estate, equipment and certain other assets, which will bear interest at the rate of LIBOR plus 5.00% and include a floor on LIBOR set at 1.25%.  The material terms of these agreements are described in more detail below.

 

ABL Credit Agreement

 

On March 21, 2013, the Company entered into an Amended and Restated Credit Agreement (the “ ABL Credit Agreement ”), among the Company, as Lead Borrower, the subsidiaries of the Company named as borrowers therein, the subsidiaries of the Company named as guarantors therein, Wells Fargo Bank, National Association, as Administrative Agent, Swing Line Lender and LC Issuer, certain other lenders party thereto, as LC Issuers, and the lenders party thereto (collectively, the “ ABL Lenders ”), U.S. Bank, National Association and Rabobank Nederland, New York Branch, as Co-Syndication Agents, Wells Fargo Bank, National Association, as collateral agent, Goldman Sachs Bank USA, Credit Suisse AG, Morgan Stanley Senior Funding, Inc., Barclays Bank PLC and Bank of America, N.A., as Co-Documentation Agents, BMO Harris Bank N.A., RBS Citizens Business Capital, a division of RBS Asset Finance, Inc., Regions Bank and Union Bank, N.A., as Senior Managing Agents, and Wells Fargo Bank, National Association, U.S. Bank, National Association, Goldman Sachs Bank USA, Credit Suisse Securities (USA) LLC, Morgan Stanley Senior Funding, Inc., Barclays Bank PLC, Rabobank Nederland, New York Branch and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as Joint Lead Arrangers and Joint Bookrunners.

 

The ABL Credit Agreement provides the Company and certain of its direct and indirect operating subsidiaries (the “ ABL Borrowers ”) with the ability to borrow up to an aggregate principal amount of $1.0 billion under a senior secured revolving credit and letter of credit facility, which matures on March 21, 2018 (the “ ABL Credit Facility ”).  Borrowings under the ABL Credit Facility will bear interest at rates of LIBOR plus 1.75% to LIBOR plus 2.25%, depending on utilization, and are subject to unused line fees of 0.25% or 0.375% per year, depending on utilization.

 

The ABL Credit Facility is guaranteed by certain of the Company’s existing and subsequently acquired or organized direct or indirect wholly owned domestic subsidiaries (the “ ABL Guarantors ”, and together with the ABL Borrowers, the “ ABL Loan Parties ”).  To secure their obligations under the ABL Credit Facility, each of the ABL Loan Parties has granted to the Administrative Agent a perfected first-priority security interest for the benefit of the ABL Lenders in its present and future inventory, credit card, wholesale trade, pharmacy and certain other receivables, prescription files and related assets.  In addition, the obligations of the ABL Loan Parties under the ABL Credit Agreement will be secured by second-priority liens on and security interests in the collateral securing the Term Loan Credit Agreement (as described below under “ Term Loan Credit Agreement ”), subject to certain limitations to ensure compliance with the Company’s outstanding debt instruments and leases.

 

2



 

The revolving loans under the ABL Credit Agreement are subject to a borrowing base, the calculation of which is set forth in the ABL Credit Agreement.  The letters of credit outstanding under the ABL Credit Facility are subject to a sublimit of $400 million and the swingline loans outstanding under the ABL Credit Facility are subject to a sublimit equal to the lesser of $100 million and the Aggregate Commitments (defined below).  The ABL Borrowers have the right to increase the Aggregate Commitment in an aggregate principal amount of no less than $10 million and not more than $250 million, subject to identifying ABL Lenders or other institutional lenders willing to provide the increased commitments and the terms of such facility increase that may be agreed to by the parties.

 

The revolving loans under the ABL Credit Facility may be voluntarily prepaid in certain minimum principal amounts, in whole or in part, without premium or penalty, subject to breakage or similar costs.  The ABL Borrowers are required to repay the revolving loans in cash and provide cash collateral under the ABL Credit Facility to the extent that the revolving loans and letters of credit exceed the lesser of the borrowing base then in effect or the aggregate amount of the ABL Lenders’ commitments under the ABL Credit Facility (the “ Aggregate Commitment ”).

 

However, in such an event, the ABL Borrowers will not be required to cash collateralize the letter of credit obligations unless after the prepayment in full of the loans, the aggregate amount outstanding of letter of credit obligations exceeds the lesser of the borrowing base then in effect or the Aggregate Commitments.  In the event that the Company’s Excess Availability (as defined in the ABL Credit Agreement) under the ABL Credit Agreement falls below certain thresholds, the Company will be obligated to apply all proceeds from collateral for the ABL Credit Facility plus other cash receipts not required to be applied to repay other debt to the repayment of the ABL Credit Facility, subject to the ability to reborrow on the terms described in the ABL Credit Agreement.

 

The ABL Credit Agreement contains customary representations and warranties.  The ABL Credit Agreement also contains certain operating covenants, which restrict the ability of the ABL Loan Parties to take certain actions without the permission of the ABL Lenders or as otherwise permitted under the ABL Credit Agreement.  If Excess Availability is less than 10% of the Aggregate Commitments under the ABL Credit Facility, the ABL Credit Agreement also contains a financial covenant that requires that the consolidated fixed charge coverage ratio of the Company and its Restricted Subsidiaries (as defined in the ABL Credit Agreement) will not be less than 1.00 to 1.00 for the Measurement Period (as defined in the ABL Credit Agreement) ending as of the end of the most recent fiscal period for which the administrative agent has received financial statements.

 

The ABL Credit Agreement contains customary default provisions.  Among other things, an event of default will be deemed to have occurred upon (subject, in some cases, to certain grace periods as specifically set forth in the ABL Credit Agreement):  (i) the failure to pay any amounts due under the ABL Credit Agreement, (ii) the breach of covenants, (iii) representations and warranties that are incorrect or misleading in any material respect, (iv) liquidation of all or a material portion of the Company’s or its Restricted Subsidiaries’ assets, insolvency or inability to pay debts as they come due, (v) certain judgments and orders, (vi) a suit by the federal or any state government alleging racketeering, (vii) certain ERISA Events (as defined in the ABL Credit

 

3



 

Agreement), (viii) an uninsured loss to a portion of the collateral having a value in excess of $50 million, (ix) the suspension of payments or similar events by the credit card issuers or processors of the ABL Borrowers and (x) the occurrence of a Material Adverse Effect (as defined in the ABL Credit Agreement).  In addition, default by an ABL Loan Party under any Material Indebtedness (as defined in the ABL Credit Agreement), the termination or ineffectiveness of the provisions of the Term Loan Intercreditor Agreement and the maturity of the Term Loan Facility prior to its original maturity date would each be an event of default under the ABL Credit Agreement.

 

Term Loan Credit Agreement

 

On March 21, 2013, the Company entered into a Term Loan Credit Agreement (the “ Term Loan Credit Agreement ”), among the Company, as Borrower, the subsidiaries of the Company named as guarantors therein, the lenders parties thereto (collectively, the “ Term Loan Lenders ”), Goldman Sachs Bank USA, as Administrative Agent and Collateral Agent, Goldman Sachs Bank USA, Credit Suisse Securities (USA) LLC, Morgan Stanley Senior Funding, Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated and Barclays Bank PLC, as Joint Lead Bookrunners and Joint Lead Arrangers, Credit Suisse Securities (USA) LLC and Morgan Stanley Senior Funding, Inc., as Syndication Agents, and Merrill Lynch, Pierce, Fenner & Smith Incorporated and Barclays Bank PLC, as Documentation Agents.

 

The Term Loan Credit Agreement provides the Company with the ability to borrow an aggregate principal amount of $1.5 billion in a single draw (the “ Term Loan Facility ”), which the Company did on March 21, 2013.  The Company may incur additional term loans under the Term Loan Facility in an aggregate principal amount of up to $250 million, subject to identifying Term Loan Lenders or other institutional lenders willing to provide the additional loans and the satisfaction of certain terms and conditions.  Borrowings under the Term Loan Facility will bear interest at a rate of LIBOR plus 5.00% and with a floor on LIBOR set at 1.25%.  The Term Loan Facility will mature on March 21, 2019.  However, if by the date that is 91 days prior to the maturity date of the Company’s 8.0% Notes due 2016, the Company has not reduced the principal amount of such notes to not more than $250 million as permitted in the Term Loan Credit Agreement, the Term Loan Facility will mature on the date that is 91 days prior to the maturity date of such notes.  The Term Loan Facility will also mature early upon the occurrence of a Change of Control (as defined in the Term Loan Credit Agreement).

 

The Term Loan Facility is guaranteed by certain of the Company’s existing and subsequently acquired or organized direct or indirect wholly owned domestic subsidiaries (the “ Term Loan Guarantors ”, and together with the Company, the “ Term Loan Parties ”).  To secure their obligations under the Term Loan Facility, each of the Term Loan Parties will grant a perfected first-priority mortgage lien and security interest for the benefit of the Term Loan Lenders in the Term Loan Parties’ equity investment in Moran Foods, LLC, the parent entity of the Company’s Save-A-Lot business, substantially all of the Term Loan Parties’ intellectual property, certain of the Term Loan Parties’ owned or ground leased real estate within 90 days after the closing of the Term Loan Facility and certain additional equipment of the Term Loan Parties within 120 days after the closing of the Term Loan Facility, subject to any extensions that may be granted by the Administrative Agent.  In addition, the obligations of the Term Loan Parties under the Term Loan Credit Agreement are secured by second-priority security interests in the collateral securing the

 

4



 

ABL Credit Agreement (as described above under “ ABL Credit Agreement ”), subject to certain limitations to ensure compliance with the Company’s outstanding debt instruments.

 

The loans under the Term Loan Facility may be voluntarily prepaid in certain minimum principal amounts, subject to the payment of breakage or similar costs and, in certain circumstances as specifically set forth in the Term Loan Credit Agreement, a prepayment fee.  Pursuant to the Term Loan Credit Agreement, the Company must, subject to certain customary reinvestment rights, apply 100% of Net Cash Proceeds (as defined in the Term Loan Credit Agreement) from certain types of asset sales (excluding proceeds of the collateral security of the ABL Credit Agreement and other secured indebtedness) to prepay the loans outstanding under the Term Loan Facility.  Also, beginning with the Company’s fiscal year ending February 28, 2014, the Company must prepay loans outstanding under the Term Loan Facility no later than 90 days after the fiscal year end in an aggregate principal amount equal to a percentage (which percentage ranges from 0% to 50% depending on the Company’s Total Secured Leverage Ratio (as defined in the Term Loan Credit Agreement) as of the last day of such fiscal year) of Excess Cash Flow (as defined in the Term Loan Credit Agreement) for the fiscal year then ended minus any voluntary prepayments made during such fiscal year with Internally Generated Cash (as defined in the Term Loan Agreement).  The Term Loan Credit Agreement also requires the Company to apply 100% of Net Cash Proceeds from the issuance or incurrence of certain indebtedness for borrowed money to prepay the loans outstanding under the Term Loan Facility and not later than the tenth day following the receipt of Net Cash Proceeds in respect of a Moran Sale (as defined in the Term Loan Credit Agreement) apply an amount equal to (x) 100% of the first $750,000,000 of Net Cash Proceeds received with respect thereto and (y) thereafter, 50% of the Net Cash Proceeds in excess of such amount up to an amount that would cause the Total Secured Leverage Ratio (as defined in the Term Loan Credit Agreement) on a pro forma basis after giving effect to such prepayment to be 1.50:1.00, in each case, to prepay loans outstanding under the Term Loan Facility.

 

The Term Loan Credit Agreement contains customary representations and warranties.  The Term Loan Credit Agreement also contains certain operating covenants, which restrict the ability of the Term Loan Parties to take certain actions without the permission of the Term Loan Lenders or as permitted under the Term Loan Credit Agreement.

 

The Term Loan Credit Agreement contains customary default provisions.  Among other things, an event of default will be deemed to have occurred upon (subject, in some cases, to certain grace periods as specifically set forth in the ABL Credit Agreement):  (i) the failure to pay any amounts due under the Term Loan Credit Agreement, (ii) the breach of covenants, (iii) representations and warranties that are incorrect or misleading in any material respect, (iv) liquidation of all or a material portion of the Company’s or its Restricted Subsidiaries’ assets, insolvency or inability to pay debts as they come due, (v) certain judgments and orders, (vi) a suit by the federal or any state government alleging racketeering, (vii) certain ERISA Events (as defined in the Term Loan Credit Agreement), (viii) an uninsured loss to a portion of the collateral having a value in excess of $50 million and (ix) the termination or attempted termination of any Facility Guaranty (as defined in the Term Loan Credit Agreement).  In addition, default by a Term Loan Party under any Material Indebtedness (as defined in the Term Loan Credit Agreement), the termination or ineffectiveness of the provisions of the Intercreditor Agreement, the maturity of the ABL Credit Facility prior to its original maturity date and certain payments in respect of the ASC Guarantee (as defined in the

 

5



 

Term Loan Credit Agreement) made with Internally General Cash or proceeds of indebtedness or in respect of interest, fees, expenses, indemnities and other amounts (other than principal) in respect of the ASC Guarantee from the proceeds of the Escrow Fund (as defined in the Term Loan Credit Agreement) would each be an event of default under the Term Loan Credit Agreement.

 

The proceeds of the ABL Credit Facility and the Term Loan Credit Agreement were used to replace the Company’s existing five-year $1.65 billion asset-based revolving credit facility, an existing $8.35 million term loan and a $200 million receivables financing facility, and refinanced $490 million of 7.5% senior notes due 2014.

 

Certain of the ABL Lenders and the Term Loan Lenders and their affiliates were lenders under the Company’s existing five-year $1.65 billion asset-based revolving credit facility, $8.35 million term loan and $200 million receivables financing facility which were replaced by the ABL Credit Facility and the Term Loan Credit Agreement and have provided from time to time, and may provide in the future, commercial and investment banking and financial advisory services to the Company and its affiliates in the ordinary course of business, for which they have received and may in the future receive customary fees and commissions. An affiliate of Goldman Sachs Bank USA acted as financial advisor to the Company in connection with the NAI Banner Sale described in Item 2.01 of this Current Report on Form 8-K and the Offer described in Item 3.02 of this Current Report on Form 8-K. Pursuant to the Stock Purchase Agreement described in Item 2.01 of this Current Report on Form 8-K, SUPERVALU and Albertson’s LLC entered into a Transition Services Agreement upon the consummation of the Stock Purchase Agreement, pursuant to which SUPERVALU will provide to Albertson’s LLC, and Albertson’s LLC will provide to SUPERVALU, certain administrative and other services for an initial term of two and a half years following the closing of the NAI Banner Sale.  In addition, SUPERVALU and NAI entered into a Transition Services Agreement upon the consummation of the Stock Purchase Agreement, pursuant to which SUPERVALU will provide to NAI, and NAI will provide to SUPERVALU, certain administrative and other services for an initial term of two and a half years following the closing of the NAI Banner Sale.  A copy of each of the Albertson’s Transition Services Agreement, New Albertson’s Transition Services Agreement, ABL Credit Agreement and the Term Loan Credit Agreement have been filed as Exhibits 10.1, 10.2, 10.3 and 10.4, respectively, to this Current Report on Form 8-K and incorporated herein by reference.  The foregoing descriptions of the Albertson’s Transition Services Agreement, New Albertson’s Transition Services Agreement, ABL Credit Agreement and the Term Loan Credit Agreement are qualified in their entirety by reference to the full text of those agreements.

 

Item 1.02 Termination of a Material Definitive Agreement.

 

On March 21, 2013, the Company repaid its existing $850 million term loan agreement, the Term Loan Credit Agreement, dated August 30, 2012, among SUPERVALU, as Borrower, the subsidiaries of the Company named as guarantors therein, the Lenders parties thereto, Credit Suisse AG, as Administrative Agent and Collateral Agent, Credit Suisse Securities (USA) LLC and Barclays Bank PLC, as Joint Bookrunners and Joint Lead Arrangers, Barclays Bank PLC, as Syndication Agent, and Wells Fargo Bank, National Association, as Documentation Agent.  Upon the payment of this indebtedness and a prepayment fee of $16,671,737, the Company’s obligations under such term loan agreement immediately terminated.  The material terms of such

 

6



 

term loan agreement were previously disclosed in the Company’s Current Report on Form 8-K, which was filed with the Securities and Exchange Commission on September 6, 2012 and are incorporated herein by reference.

 

On March 20, 2013, the Company terminated the Second Amended and Restated Receivables Purchase Agreement, dated as of November 30, 2011, among SUPERVALU Receivables Funding Corporation, SUPERVALU, Nieuw Amsterdam Receivables Corporation, Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A. Rabobank Nederland New York Branch, and the other conduit purchasers, alternate purchasers and facility agents party thereto, and repaid all indebtedness then outstanding under such agreement.  The material terms of such agreement were previously disclosed in the Company’s Quarterly Report on Form 10-Q for the period ended December 3, 2011, which was filed with the Securities and Exchange Commission on January 12, 2012 and are incorporated herein by reference.

 

The information in Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 1.02.

 

Item 2.01    Completion of Acquisition or Disposition of Assets.

 

As previously disclosed, on January 10, 2013, SUPERVALU, New Albertson’s, Inc., an Ohio corporation and a direct wholly owned subsidiary of SUPERVALU (“ NAI ”), and AB Acquisition LLC, a Delaware limited liability corporation (“ AB Acquisition ” or the “ Buyer ”), an affiliate of a Cerberus Capital Management, L.P. (“ Cerberus ”)-led consortium which also includes Kimco Realty, Klaff Realty LP, Lubert-Adler Partners and Schottenstein Real Estate Group, entered into a Stock Purchase Agreement (as it may be amended or supplemented from time to time, the “ Stock Purchase Agreement ”), which provides for, among other things, the sale of NAI to AB Acquisition.

 

On March 21, 2013, the Company completed the sale of NAI in accordance with the Stock Purchase Agreement, which resulted in the sale of the NAI banners, including Albertson’s, Acme, Jewel-Osco, Shaw’s and Star Market banners and related Osco and Sav-on in-store pharmacies (collectively, the “ NAI Banners ”), to AB Acquisition, in a stock sale valued at approximately $3,300 million.  The sale consisted of the acquisition by AB Acquisition of the stock of NAI, which owns the NAI Banners, for $100 million in cash subject to potential working capital adjustments, and the assumption of approximately $3,200 million in debt and capital lease obligations, which were retained by NAI (the “ NAI Banner Sale ”).

 

The Unaudited Pro Forma Condensed Consolidated Financial Statements of SUPERVALU giving effect to the NAI Banner Sale and the related notes thereto are attached hereto as Exhibit 99.1.

 

Item 2.03  Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

 

The information in Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 2.03.

 

7



 

Item 2.05    Costs Associated with Exit or Disposal Activities.

 

On March 26, 2013, SUPERVALU INC. issued a press release announcing that its plans to reduce its national workforce by an estimated 1,100 positions.  The workforce reduction reflects the Company’s strategy to be more focused and efficient in its operations following the NAI Banner Sale described in Item 2.01 of this Current Report on Form 8-K, as the remaining organization will require significantly fewer corporate and store support roles and functions.  The Company expects to incur total pre-tax cash charges for severance and employee-related costs of approximately $65 million to $70 million and a non-cash charge for accelerated vesting of certain stock based compensation arrangements of approximately $10 million.  Of these amounts, the Company expects that $55 million to $60 million will be paid in its fiscal 2014 first quarter ending June 15, 2013, and the majority of the remainder will be paid in its fiscal 2014 second quarter.

 

Item 3.02   Unregistered Sales of Equity Securities.

 

As previously disclosed, concurrently with the execution of the Stock Purchase Agreement, the Company entered into a Tender Offer Agreement, dated January 10, 2013 (as it may be amended or supplemented from time to time, the “ Tender Offer Agreement ”), with Symphony Investors LLC, a Delaware limited liability company (“ Symphony ” or “ Offeror ”), an affiliate of a Cerberus-led consortium, and Cerberus.  In accordance with the terms of the Tender Offer Agreement, Symphony commenced a tender offer to purchase up to 30% of the Company’s outstanding common stock (the “ Common Stock ”), par value $0.01 per share, at $4.00 net per share in cash, without interest, subject to any applicable withholding tax, upon the terms and conditions set forth in the Offer to Purchase to the Schedule TO (as amended or supplemented from time to time), and in the related Letter of Transmittal, filed by Offeror with the Securities and Exchange Commission on January 25, 2013 (which collectively and together with any amendments or supplements, constitute the “ Offer ”).

 

The Offer expired at 5:00 p.m., New York City time, on Wednesday, March 20, 2013.  According to Symphony, as of such time, (i) approximately 11,686,406 shares of Common Stock were validly tendered and not withdrawn pursuant to the Offer, which represented approximately 5.5% of the then issued and outstanding shares.  Offeror accepted for payment and paid for all of the Shares that were validly tendered and not withdrawn pursuant to the terms of the Offer (the “ Acceptance ”).  Pursuant to the Tender Offer Agreement, on March 21, 2013, substantially simultaneously with the Acceptance, the Company issued an additional 42,477,692 shares of Common Stock, at $4.00 per share in cash, to Symphony which combined with the tendered shares resulted in an equity ownership interest by Symphony in the Company of 21.2% after taking into account the additional issued shares.  The issuance was exempt from registration under the Securities Act of 1933, as amended (the “ Securities Act ”) pursuant to Section 4(2) of the Securities Act and Regulation D promulgated under the Securities Act.

 

8



 

Item 5.02   Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

 

(b)(c) On March 20, 2013, pursuant to the Tender Offer Agreement, each of Ronald Daly, Susan Engel, Edwin “Skip” Gage, Steven Rogers and Kathi Seifert resigned from SUPERVALU’s Board of Directors, effective as of the consummation of the Offer.  Also in accordance with the Tender Offer Agreement, on March 21, 2013, Symphony designated two directors who were appointed to SUPERVALU’s Board of Directors—Robert G. Miller as non-executive chairman of SUPERVALU’s Board of Directors and Lenard Tessler.

 

Mr. Miller is the president and chief executive officer of Albertson’s LLC, and Mr. Tessler is co-head of global private equity and senior managing director of Cerberus.  The Company has entered into several agreements with Albertson’s LLC, Buyer and/or Offeror, including the Stock Purchase Agreement, the Tender Offer Agreement, Transition Services Agreement by and between SUPERVALU and Albertson’s LLC and Transition Services Agreement by and between SUPERVALU and New Albertson’s, Inc.  The Stock Purchase Agreement and Tender Offer Agreement are further described in Item 11 to the Offer to Purchase filed with the Schedule TO (as amended or supplemented from time to time) filed by Offeror with the Securities and Exchange Commission on January 25, 2013, which description is incorporated herein by reference, but which is qualified in its entirety by reference to the text of such agreements, which are filed as Exhibits 2.1 and 2.2 hereto.  The Transition Services Agreement by and between SUPERVALU and Albertson’s LLC and the Transition Services Agreement by and between SUPERVALU and New Albertson’s, Inc. are further described in Item 1.01 of this Current Report on Form 8-K, which description is incorporated herein by reference, but which is qualified in its entirety by reference to the text of such agreements which are filed as Exhibits 10.1 and 10.2, respectively, hereto.

 

(e)  On March 20, 2013, the Board of Directors determined that the acquisition by Symphony of 20% or more of the Company’s outstanding Common Stock in connection with the transactions contemplated by the Tender Offer Agreement through a combination of the acquisition of tendered Company Common Stock in the Offer and the direct issuance of Company Common Stock to Symphony from the Company pursuant to the terms of the Tender Offer Agreement, the transactions contemplated by the Tender Offer Agreement and the Stock Purchase Agreement would constitute a “Change of Control” with respect to equity awards outstanding under the Company’s 2007 Stock Plan and for purposes of the Change in Control Severance Agreements with each of Sherry M. Smith, Janel S. Haugarth and J. Andrew Herring.  The determination with respect to the Company’s 2007 Stock Plan resulted in the vesting of the following number of equity awards on March 21, 2013 held by certain named executive officers of the Company solely as a result of the transactions contemplated by the Tender Offer Agreement and the Stock Purchase Agreement:  Ms. Smith, stock options with respect to 6,000 shares of Company Common Stock; Ms. Haugarth, stock options with respect to 6,000 shares of Company Common Stock and cash-settled stock appreciation rights with respect to 6,000 shares of Company Common Stock; and Mr. Herring, stock options with respect to 5,000 shares of Company Common Stock.  With respect to the Company’s outstanding Fiscal Year 2012-2014 Multi-Year Performance Awards or the Fiscal Year 2013-2015 Multi-Year Performance Awards, in each case granted to the executives under the Company’s 2007 Stock Plan, the determination of a “Change of Control” by

 

9



 

the Board of Directors resulted in the awards vesting with no value based on the Company’s performance during the applicable performance period.  Consistent with the “Change of Control” determination with respect to the Company’s 2007 Stock Plan, the Board of Directors determined that each stock option granted pursuant to the Company’s 2012 Stock Plan would vest upon the termination of the holder’s employment by the Company without “cause” or by the holder for “good reason” (as each term is defined in the applicable equity award agreement).

 

In connection with the NAI Banner Sale, the Company has confirmed that Ms. Haugarth, Executive Vice President and President of Independent Business and Supply Chain Services, will continue to have the protections under her Change of Control Agreement with the Company for the term of the Agreement which includes a guaranteed base salary and bonus for the term of two years from the date of the change of control (March 20, 2013) conditioned upon her continued employment with the Company during this two year period.

 

Item 5.03   Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

 

On March 20, 2013, Section 3.02(a) of the Restated Bylaws of SUPERVALU was amended to decrease the minimum number of directors who may serve on the Board from ten to the minimum number of directors permitted by the Delaware General Corporation Law.  Such action was taken to facilitate the elections described in Item 5.02 of this Current Report on Form 8-K.  SUPERVALU’s Bylaws, as amended and restated, are filed as Exhibit 3.1 to this Current Report on Form 8-K and are incorporated by reference herein.

 

Item 9.01    Financial Statements and Exhibits.

 

(b) Pro Forma Financial Information

 

The Unaudited Pro Forma Condensed Consolidated Financial Statements of the Company for the fiscal years ended February 25, 2012, February 26, 2011 and February 27, 2010, the year-to-date third quarter (40 weeks) ended December 1, 2012 and December 3, 2011, and as of December 1, 2012 are filed as Exhibit 99.1 to this Current Report on Form 8-K.

 

(d)  Exhibits

 

Item No.

 

Description

 

 

 

2.1

 

Stock Purchase Agreement, dated January 10, 2013, by and among SUPERVALU INC., Albertson’s LLC and New Albertson’s, Inc. (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 14, 2013)

 

 

 

2.2

 

Tender Offer Agreement, dated January 10, 2013, by and between SUPERVALU INC. and Symphony Investors LLC (incorporated by reference to Exhibit 2.2 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 14, 2013)

 

10



 

 

 

 

3.1

 

Restated Bylaws of SUPERVALU INC., as amended March 20, 2013

 

 

 

10.1**

 

Transition Services Agreement, dated as of March 21, 2013, by and between SUPERVALU INC. and Albertson’s LLC

 

 

 

10.2**

 

Transition Services Agreement, dated as of March 21, 2013, by and between SUPERVALU INC. and New Albertson’s, Inc.

 

 

 

10.3**

 

Amended and Restated Credit Agreement, dated March 21, 2013, among SUPERVALU INC., as Lead Borrower, the subsidiaries of the Company named as borrowers therein, the subsidiaries of the Company named as guarantors therein, Wells Fargo Bank, National Association, as Administrative Agent, Swing Line Lender and LC Issuer, certain other lenders party thereto, as LC Issuers, and the lenders party thereto, U.S. Bank, National Association and Rabobank Nederland, New York Branch, as Co-Syndication Agents, Wells Fargo Bank, National Association, as collateral agent, Goldman Sachs Bank USA, Credit Suisse AG, Morgan Stanley Senior Funding, Inc., Barclays Bank PLC and Bank of America, N.A., as Co-Documentation Agents, BMO Harris Bank N.A., RBS Citizens Business Capital, a division of RBS Asset Finance, Inc., Regions Bank and Union Bank, N.A., as Senior Managing Agents, and Wells Fargo Bank, National Association, U.S. Bank, National Association, Goldman Sachs Bank USA, Credit Suisse Securities (USA) LLC, Morgan Stanley Senior Funding, Inc., Barclays Bank PLC, Rabobank Nederland, New York Branch and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as Joint Lead Arrangers and Joint Bookrunners

 

 

 

10.4**

 

Term Loan Credit Agreement, dated March 21, 2013, among SUPERVALU INC., as Borrower, the subsidiaries of the Company named as guarantors therein, the lenders parties thereto, Goldman Sachs Bank USA, as Administrative Agent and Collateral Agent, Goldman Sachs Bank USA, Credit Suisse Securities (USA) LLC, Morgan Stanley Senior Funding, Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated and Barclays Bank PLC, as Joint Lead Bookrunners and Joint Lead Arrangers, Credit Suisse Securities (USA) LLC and Morgan Stanley Senior Funding, Inc., as Syndication Agents, and Merrill Lynch, Pierce, Fenner & Smith Incorporated and Barclays Bank PLC, as Documentation Agents

 

 

 

99.1

 

Unaudited Pro Forma Condensed Consolidated Financial Statements of SUPERVALU INC.

 


** Pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, confidential portions of this exhibit have been deleted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

 

11



 

CAUTIONARY STATEMENTS FOR PURPOSES OF THE SAFE HARBOR PROVISIONS OF THE SECURITIES LITIGATION REFORM ACT

 

Any statements contained in this Current Report on Form 8-K, including Exhibit 99.1, regarding the outlook for the Company’s businesses and their respective markets, such as projections of future performance, guidance, statements of the Company’s plans and objectives, forecasts of market trends and other matters, are forward-looking statements based on the Company’s assumptions and beliefs.  Such statements may be identified by such words or phrases as “will likely result,” “are expected to,” “will continue,” “outlook,” “will benefit,” “is anticipated,” “estimate,” “project,” “management believes” or similar expressions.  These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those discussed in such statements and no assurance can be given that the results in any forward-looking statement will be achieved.  For these statements, SUPERVALU INC. claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.  Any forward-looking statement speaks only as of the date on which it is made, and we disclaim any obligation to subsequently revise any forward-looking statement to reflect events or circumstances after such date or to reflect the occurrence of anticipated or unanticipated events.

 

Certain factors could cause the Company’s future results to differ materially from those expressed or implied in any forward-looking statements contained in this Current Report on Form 8-K, including Exhibit 99.1.  These factors include the factors discussed in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the fiscal year ended February 25, 2012, under the heading “Risk Factors,” Part II, Item 1A of the Company’s Quarterly Report on Form 10-Q for the third quarter (40 weeks) ended December 1, 2012 under the heading “Risk Factors,” the factors discussed below and any other cautionary statements, written or oral, which may be made or referred to in connection with any such forward-looking statements.  Since it is not possible to foresee all such factors, these factors should not be considered as complete or exhaustive.

 

Competitive Practices

·                   The Company’s ability to attract and retain customers

·                   Competition from other food or drug retail chains, supercenters, non-traditional competitors and alternative formats in the Company’s markets

·                   Competition for employees, store sites and products

·                   The ability of the Company’s Independent Business to maintain or increase sales due to wholesaler competition or increased customer self-distribution

·                   The ability of the Company’s affiliated independent retailers to attract and retain customers due to competition

·                   Changes in demographics or consumer preferences that affect consumer spending or buying habits

·                   The success of the Company’s promotional and sales programs and the Company’s ability to respond to the promotional and pricing practices of competitors

 

Execution of Initiatives

·                   The effectiveness of cost reduction strategies

·                   The adequacy of the Company’s capital resources to fund new store growth and remodeling

 

12



 

activities that achieve appropriate returns on capital investment

·                   The ability to retain and affiliate independent retailers in the Company’s Independent Business

·                   The ability to retain and license additional stores within the Company’s Save-A-Lot business

·                   The ability to turn around the sales trajectory through improved operational execution and investment in price across the Company’s retail banners

 

Substantial Indebtedness

·                   The impact of the Company’s substantial indebtedness on its business and financial flexibility

·                   The Company’s ability to comply with debt covenants or to refinance the Company’s debt obligations

·                   A downgrade in the Company’s debt ratings, which may increase the cost of borrowing or adversely affect the Company’s ability to access one or more financial markets

·                   The availability of favorable credit and trade terms

 

Economic Conditions

·                   Continued volatility in the economy and financial markets, the decline in the housing market, the low level of consumer confidence and high unemployment rates that affect consumer spending or buying habits

·                   Increases in unemployment, healthcare costs, energy costs and commodity prices, which could impact consumer spending or buying habits and the cost of doing business

·                   Changes in interest rates

·                   Food and drug inflation or deflation

 

Labor Relations

·                   The Company’s ability to renegotiate labor agreements with its unions

·                   Resolution of issues associated with rising pension, healthcare and employee benefits costs

·                   Potential for work disruption from labor disputes

 

Employee Benefit Costs

·                   Increased operating costs resulting from rising employee benefit costs and pension funding obligations

·                   Required funding of multiemployer pension plans

 

Governmental Regulations

·                   The ability to timely obtain permits, comply with government regulations or make capital expenditures required to maintain compliance with government regulations

·                   Changes in applicable laws and regulations that impose additional requirements or restrictions on the operation of the Company’s businesses

 

Food Safety

·                   Events that give rise to actual or potential food contamination, drug contamination or foodborne illness or any adverse publicity relating to these types of concerns, whether or not valid

 

13



 

Self-Insurance

·                   Variability in actuarial projections regarding workers’ compensation, automobile and general liability

·                   Potential increase in the number or severity of claims for which the Company is self-insured

 

Legal and Administrative Proceedings

·                   Unfavorable outcomes in litigation, governmental or administrative proceedings or other disputes

·                   Adverse publicity related to such unfavorable outcomes

 

Information Technology

·                   Dependence of the Company’s businesses on computer hardware and software systems which are vulnerable to security breach by computer hackers and cyber terrorists

·                   Difficulties in developing, maintaining or upgrading information technology systems

·                   Business disruptions or losses resulting from data theft, information espionage, or other criminal activity directed at the Company’s computer or communications systems

 

Severe Weather, Natural Disasters and Adverse Climate Changes

·                   Property damage or business disruption resulting from severe weather conditions and natural disasters that affect the Company and the Company’s customers or suppliers

·                   Unseasonably adverse climate conditions that impact the availability or cost of certain products in the grocery supply chain

 

Tax Matters

·                   Changes in tax laws could affect the Company’s effective income tax rate and results of operations

·                   The future results of operations could impact the Company’s ability to realize deferred tax assets

 

Goodwill and Intangible Asset Impairment Charges

·                   Unfavorable changes in the Company’s industry, the broader economy, market conditions, business operations, competition or the Company’s stock price and market capitalization

 

Accounting Matters

·                   Changes in accounting standards that impact the Company’s financial statements

 

Effect to SUPERVALU of the NAI Banner Sale

·                   Disruptions in current plans, operations and business relationships

·                   Difficulties in attracting or retaining management and employees and transitioning to a new management team

·                   Ability to effectively manage the Company’s cost structure to realize benefits from the Transition Services Agreement with NAI

 

14



 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

Dated: March 26, 2013

 

 

SUPERVALU INC.

 

 

 

By:

/s/ Sherry M. Smith

 

Sherry M. Smith

 

Executive Vice President and Chief

 

Financial Officer

 

(Authorized Officer of Registrant)

 

15



 

EXHIBIT INDEX

 

Exhibit

 

Item No.

 

Description

 

 

 

2.1

 

Stock Purchase Agreement, dated January 10, 2013, by and among SUPERVALU INC., Albertson’s LLC and New Albertson’s, Inc. (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 14, 2013)

 

 

 

2.2

 

Tender Offer Agreement, dated January 10, 2013, by and between SUPERVALU INC. and Symphony Investors LLC (incorporated by reference to Exhibit 2.2 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 14, 2013)

 

 

 

3.1

 

Restated Bylaws of SUPERVALU INC., as amended March 20, 2013

 

 

 

10.1**

 

Transition Services Agreement, dated as of March 21, 2013, by and between SUPERVALU INC. and Albertson’s LLC

 

 

 

10.2**

 

Transition Services Agreement, dated as of March 21, 2013, by and between SUPERVALU INC. and New Albertson’s, Inc.

 

 

 

10.3**

 

Amended and Restated Credit Agreement, dated March 21, 2013, among SUPERVALU INC., as Lead Borrower, the subsidiaries of the Company named as borrowers therein, the subsidiaries of the Company named as guarantors therein, Wells Fargo Bank, National Association, as Administrative Agent, Swing Line Lender and LC Issuer, certain other lenders party thereto, as LC Issuers, and the lenders party thereto, U.S. Bank, National Association and Rabobank Nederland, New York Branch, as Co-Syndication Agents, Wells Fargo Bank, National Association, as collateral agent, Goldman Sachs Bank USA, Credit Suisse AG, Morgan Stanley Senior Funding, Inc., Barclays Bank PLC and Bank of America, N.A., as Co-Documentation Agents, BMO Harris Bank N.A., RBS Citizens Business Capital, a division of RBS Asset Finance, Inc., Regions Bank and Union Bank, N.A., as Senior Managing Agents, and Wells Fargo Bank, National Association, U.S. Bank, National Association, Goldman Sachs Bank USA, Credit Suisse Securities (USA) LLC, Morgan Stanley Senior Funding, Inc., Barclays Bank PLC, Rabobank Nederland, New York Branch and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as Joint Lead Arrangers and Joint Bookrunners

 

 

 

10.4**

 

Term Loan Credit Agreement, dated March 21, 2013, among SUPERVALU INC., as Borrower, the subsidiaries of the Company named as guarantors therein, the lenders parties thereto, Goldman Sachs Bank USA, as Administrative Agent and Collateral Agent, Goldman Sachs Bank USA, Credit Suisse Securities (USA) LLC, Morgan Stanley Senior Funding, Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated and Barclays Bank PLC, as Joint Lead Bookrunners and Joint Lead Arrangers, Credit Suisse Securities (USA) LLC and Morgan Stanley Senior Funding, Inc., as Syndication Agents, and Merrill Lynch, Pierce, Fenner & Smith Incorporated and Barclays Bank PLC, as Documentation Agents

 

16



 

99.1

 

Unaudited Pro Forma Condensed Consolidated Financial Statements of SUPERVALU INC.

 


** Pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, confidential portions of this exhibit have been deleted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

 

17


Exhibit 3.1

 

 

Adopted:

 

October 23, 1980

 

Amended:

 

June 27, 1983

 

Amended:

 

December 16, 1986

 

Amended:

 

April 13, 1988

 

Amended:

 

June 30, 1988

 

Amended:

 

February 14, 1990

 

Amended:

 

December 12, 1990

 

Amended:

 

February 16, 1991

 

Amended:

 

June 30, 1992

 

Amended:

 

October 9, 1998

 

Amended:

 

August 14, 2002

 

Amended:

 

February 8, 2006

 

Amended:

 

April 12, 2006

 

Amended:

 

December 6, 2007

 

Amended:

 

October 2, 2008

 

Amended:

 

December 3, 2008

 

Amended:

 

May 6, 2009

 

Amended:

 

July 7, 2009

 

Amended:

 

October 7, 2009

 

Amended:

 

April 15, 2010

 

Amended:

 

June 24, 2010

 

Amended:

 

June 2, 2011

 

Amended:

 

July 29, 2012

 

Amended:

 

March 20, 2013

 

RESTATED BYLAWS

OF

SUPERVALU INC.

 

Table of Contents

 

 

 

Page

 

 

 

ARTICLE I.

Offices, Corporate Seal

1

Section 1.01.

Registered Office

1

Section 1.02.

Corporate Seal

1

 

 

 

ARTICLE II.

Meetings of Stockholders

1

Section 2.01.

Place and Time of Meetings

1

Section 2.02.

Annual Meetings

1

Section 2.03.

Special Meetings

1

Section 2.04.

Quorum, Adjourned Meetings

1

Section 2.05.

Organization

2

Section 2.06.

Order of Business

2

Section 2.07.

Voting

2

Section 2.08.

Inspectors of Election

3

 

i



 

Section 2.09.

Notices of Meetings and Consents

3

Section 2.10.

Proxies

3

Section 2.11.

Waiver of Notice

3

Section 2.12.

Stockholder List

4

Section 2.13.

Fixing Date for Determination of Stockholders of Record

4

Section 2.14.

Stockholder Action by Written Consent

4

Section 2.15.

Notice of Stockholder Business and Nominations

5

 

 

 

ARTICLE III.

Board of Directors

8

Section 3.01.

General Powers

8

Section 3.02.

Number, Election and Term of Office

8

Section 3.03.

Annual Meeting

10

Section 3.04.

Regular Meetings

10

Section 3.05.

Special Meetings

10

Section 3.06.

Notice of Meetings

10

Section 3.07.

Waiver of Notice

10

Section 3.08.

Quorum

10

Section 3.09.

Removal

10

Section 3.10.

Committees of Directors

11

Section 3.11.

Written Action

11

Section 3.12.

Compensation

11

Section 3.13.

Conference Communications

11

Section 3.14.

Chairman of the Board

12

 

 

 

ARTICLE IV.

Standing Committees

12

Section 4.01.

Standing Committees

12

Section 4.02.

Executive Committee

12

Section 4.03.

Leadership Development and Compensation Committee

13

Section 4.04.

Finance Committee

13

Section 4.05.

Audit Committee

13

Section 4.06.

Corporate Governance and Nominating Committee

13

 

 

 

ARTICLE V.

Officers

13

Section 5.01.

Number

13

Section 5.02.

Election, Term of Office and Qualifications

14

Section 5.03.

Removal and Vacancies

14

Section 5.04.

President

14

Section 5.05.

Chief Executive Officer

14

Section 5.06.

Chief Operating Officer

14

Section 5.07.

Vice Presidents

14

Section 5.08.

President Pro Tem

14

Section 5.09.

Secretary

14

Section 5.10.

Treasurer

15

Section 5.11.

Controller

15

Section 5.12.

Counsel

15

Section 5.13.

Duties of Other Officers

15

 

ii



 

Section 5.14.

Authority to Execute Agreements

15

Section 5.15.

Duties of Officers May be Delegated

16

Section 5.16

Compensation

16

 

 

 

ARTICLE VI.

Shares and Their Transfer

16

Section 6.01.

Certificates for Stock

16

Section 6.02.

Issuance of Stock

16

Section 6.03.

Partly Paid Stock

16

Section 6.04.

Transfer of Stock

17

Section 6.05.

Facsimile Signatures

17

Section 6.06

Lost, Stolen, Destroyed or Mutilated Certificates

17

 

 

 

ARTICLE VII.

Dividends, Surplus, Etc.

18

Section 7.01.

Dividends

18

Section 7.02.

Use of Surplus, Reserve

18

 

 

 

ARTICLE VIII.

Books and Records, Audit, Fiscal Year

18

Section 8.01.

Books and Records

18

Section 8.02.

Audit

18

Section 8.03.

Fiscal Year

18

 

 

 

ARTICLE IX.

Indemnification

18

Section 9.01.

Statutory Indemnification

18

Section 9.02.

Additional Indemnification

18

Section 9.03.

Procedure for Indemnification

19

Section 9.04.

Non-Exclusive

20

Section 9.05.

Subsidiary Corporations

21

 

 

 

ARTICLE X.

Miscellaneous

21

Section 10.01.

Periods of Time

21

Section 10.02.

Voting Securities Held by the Corporation

21

Section 10.03.

Purchase and Sale of Securities

21

 

 

 

ARTICLE XI.

Amendments

21

Section 11.01.

 

21

 

iii



 

RESTATED BYLAWS

OF

SUPERVALU INC.

 

ARTICLE I.

Offices, Corporate Seal

 

Section 1.01. Registered Office .  The registered office of the Corporation in Delaware shall be at 100 West Tenth Street, Wilmington, Delaware, and the resident agent in charge thereof shall be The Corporation Trust Company.

 

Section 1.02. Corporate Seal .  The corporate seal shall be circular in form and have inscribed thereon, the name of the Corporation, the year of its incorporation (1925), and the word “Delaware.”

 

ARTICLE II.

Meetings of Stockholders

 

Section 2.01. Place and Time of Meetings .  Meetings of the stockholders may be held at such place and at such time as may be designated by the Board of Directors. In the absence of a designation of place, meetings shall be held at the principal executive office of the Corporation. In the absence of a designation of time, the meetings shall be held at 10:00 a.m. local time at the place where the meeting is to be held. Any previously scheduled annual or special meeting of the stockholders may be postponed by resolution of the Board of Directors upon public notice given prior to the date previously scheduled for such meeting.

 

Section 2.02. Annual Meetings .  The annual meeting of the stockholders of the Corporation for the election of directors and for the transaction of any other proper business shall be held at such date, time and place as may be fixed by resolution of the Board of Directors.

 

Section 2.03. Special Meetings .  Special meetings of the stockholders for any purpose or purposes shall be called only by the Secretary (but only at the written request of a majority of the total number of directors), the Chairman of the Board or the President. Stockholders shall have no power or right to call special meetings. The call of any special meeting shall state the purpose or purposes of the meeting. Business transacted at any special meeting shall be limited to the purposes stated in the call of such meeting.

 

Section 2.04. Quorum, Adjourned Meetings .  The holders of a majority of the shares outstanding and entitled to vote shall constitute a quorum for the transaction of business at any annual or special meeting. If a quorum is not present at a meeting, those present shall adjourn to such day as they shall agree upon by majority vote; provided , however , that any annual or special meeting of stockholders, whether or not a quorum is present, may be adjourned from time to time by the Chairman of the meeting.

 

1



 

Notice of any adjourned meeting need not be given if the time and place thereof are announced at the meeting at which the adjournment is taken. At adjourned meetings, any business may be transacted which might have been transacted at the meeting as originally noticed. If a quorum is present, the stockholders may continue to transact business until adjournment notwithstanding the withdrawal of enough stockholders to leave less than a quorum.

 

Section 2.05. Organization .  At each meeting of the stockholders, the Chairman of the Board or in such person’s absence the Lead Director, if then in existence, or in such person’s absence, a person designated by the Board shall act as Chairman; and the Secretary of the Corporation or in such person’s absence an Assistant Secretary or in such person’s absence any person whom the Chairman of the meeting shall appoint shall act as Secretary of the meeting.

 

Section 2.06. Order of Business .  The order of business at all meetings of the stockholders shall be determined by the Chairman of the meeting. The Chairman of the meeting shall convene and adjourn the meeting and determine and announce the times at which the polls shall be opened and closed at the meeting.

 

Section 2.07. Voting .  Except as may be provided in a resolution or resolutions of the Board of Directors establishing a series of Preferred Stock, and except as may be otherwise provided in the Certificate of Incorporation of the Corporation, each stockholder of the Corporation entitled to vote at a meeting of stockholders shall have one vote in person or by written proxy for each share of stock having voting rights held by him and registered in such person’s name on the books of the Corporation. Upon the request of any stockholder, the vote upon any question before a meeting shall be by written ballot, and all elections of directors shall be by written ballot. All questions at a meeting shall be decided by a majority vote of the number of shares entitled to vote represented at the meeting at the time of the vote except where otherwise required by statute, the Certificate of Incorporation or these Bylaws.

 

Persons holding stock in fiduciary capacity shall be entitled to vote the shares so held. Unless the Secretary of the Corporation has been furnished with a copy of governing instruments or orders which would cause other rules to be applicable, the following rules shall govern the voting of shares standing of record in the names of two or more persons (whether joint tenants, tenants in common, tenants by the entirety, fiduciaries, members of a partnership, or otherwise)  or shares held in a fiduciary capacity in which two or more persons have the same fiduciary relationship respecting such shares:

 

(i)                                      if only one person shall vote, such person’s act shall bind all;

 

(ii)                                   if more than one person shall vote, the act of the majority voting shall bind all;

 

2



 

(iii)                                if more than one person shall vote, but the votes shall be evenly split on any particular matter, then, except as otherwise provided by statute, each fraction may vote the shares in question proportionately.

 

Section 2.08. Inspectors of Election .  For each meeting of the stockholders, the Chairman of such meeting shall appoint one or more inspectors of election to act. Each inspector of election so appointed shall first subscribe an oath or affirmation to execute the duties of an inspector of election at such meeting with strict impartiality and according to the best of such person’s ability. Such inspectors of election, if any, shall take charge of the ballots at such meeting and after the balloting on any question shall count the ballots and shall make a report in writing to the Secretary of such meeting of the results thereof. An inspector of election need not be a stockholder of the Corporation, and any officer or employee of the Corporation may be an inspector of election on any question other than a vote for or against such person’s election to any position with the Corporation or on any other question in which such person may be directly interested.

 

Section 2.09. Notices of Meetings and Consents .  Every stockholder may furnish the Secretary of the Corporation with an address at which notices of meetings and all other corporate communications may be served on or mailed to him. In the absence of such address, the address on the corporate share registry maintained by the transfer agent shall be sufficient for purposes of the hereinafter described notice. Except as otherwise provided by the Certificate of Incorporation or by statute, a written notice of each annual or special meeting of stockholders shall be given not less than 10 nor more than 60 days before the date of such meeting to each stockholder of record of the Corporation entitled to vote at such meeting by delivering such notice of meeting to him personally or depositing the same in the United States mail, postage prepaid, directed to him at the post office address as provided above. Service of notice is complete upon mailing. Personal delivery to any officer of a corporation or association or to any member of a partnership is delivery to such corporation, association or partnership. Every notice of a meeting of stockholders shall state the place, date and hour of the meeting and the purpose or purposes for which the meeting is called.

 

Section 2.10. Proxies .  Each stockholder entitled to vote at a meeting of stockholders or consent to corporate action without a meeting may authorize another person or persons to act for him by proxy by an instrument executed in writing. If any such instrument designates two or more persons to act as proxies, a majority of such persons present at the meeting, or, if only one shall be present, then that one shall have and may exercise all of the powers conferred by such written instrument upon all of the persons so designated unless the instrument shall otherwise provide.

 

Section 2.11. Waiver of Notice .  Notice of any annual or special meeting may be waived either before, at or after such meeting in writing signed by the person or persons entitled to the notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express

 

3



 

purpose of objecting at the beginning of the meeting to the transacting of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of any regular or special meeting of the stockholders need be specified in any written waiver of notice.

 

Section 2.12. Stockholder List .  The officer who has charge of the stock ledger of the Corporation shall prepare and make, at least ten days before each meeting of stockholders, a complete list of the stockholders entitled to vote at such meeting, arranged in alphabetical order and showing the address of each stockholder and the number of shares registered in the name of each stockholder.

 

Section 2.13. Fixing Date for Determination of Stockholders of Record .

 

(a)                                  In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action (other than the expression of consent to corporate action in writing without a meeting of stockholders) , the Board of Directors shall fix, in advance, a record date, which may not be more than 60 or not less than 10 days before the date of such meeting, nor more than 60 days prior to any other action.

 

(b)                                  A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.

 

Section 2.14. Stockholder Action by Written Consent .  In order that the Corporation may determine the stockholders entitled to consent to corporate action in writing without a meeting, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which date shall not be more than 10 days after the date upon which the resolution fixing the record date is adopted by the Board of Directors. Any stockholder of record seeking to have the stockholders authorize or take corporate action by written consent shall, by written notice to the Secretary, request the Board of Directors to fix a record date. The Board of Directors shall promptly, but in all events within 10 days after the date on which such a request is received, adopt a resolution fixing the record date. If no record date has been fixed by the Board of Directors within 10 days of the date on which such a request is received, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the Board of Directors is required by applicable law, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Corporation by delivery to its registered office in the State of Delaware, its principal place of business, or any officer or agent of the Corporation having custody of the book in which proceedings of

 

4



 

meetings of stockholders are recorded. Delivery made to the Corporation’s registered office shall be by hand or certified or registered mail, return receipt requested. If no record date has been fixed by the Board of Directors and prior action by the Board of Directors is required by applicable law, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting shall be at the close of business on the date on which the Board of Directors adopts the resolution taking such prior action.

 

Section 2.15. Notice of Stockholder Business and Nominations.

 

(a)                                  Annual Meetings of Stockholders .  (1)  Nominations of persons for election to the Board of Directors of the Corporation and the proposal of business to be considered by the stockholders may be made at an annual meeting of stockholders (A)  pursuant to the Corporation’s notice of meeting, (B)  by or at the direction of the Board of Directors or (C)  by any stockholder of the Corporation who was a stockholder of record at the time of giving of notice provided for in this Section 2.15, who is entitled to vote at the meeting and who complied with the notice procedures set forth in this Section 2.15.

 

(2)   For nominations or other business to be properly brought before an annual meeting by a stockholder pursuant to clause (C)  of paragraph (a) (1)  of this Section 2.15, the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation and such other business must be a proper matter for stockholder action.  To be timely, a stockholder’s notice shall be delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the 120th day nor earlier than the close of business on the 150th day prior to the first anniversary of the preceding year’s annual meeting; provided, however, that in the event that the date of the annual meeting is more than 30 days before or more than 60 days after such anniversary date, notice by the stockholder to be timely must be so delivered not earlier than the close of business on the 150th day prior to such annual meeting and not later than the close of business on the later of the 120th day prior to such annual meeting or the 10th day following the day on which public announcement of the date of such meeting is first made. In no event shall the public announcement of an adjournment of an annual meeting commence a new time period for the giving of a stockholder’s notice as described above.

 

A stockholder’s notice to be proper must include (A)  as to each person whom the stockholder proposes to nominate for election or reelection as a director (i)  the name, age, business address and residence address of such person, (ii)  the class, series and number of any shares of stock of the Corporation that are beneficially owned or owned of record by such person, (iii)  the date or dates such shares were acquired and the investment intent of such acquisition, (iv)  a completed and signed questionnaire, representation and agreement required by paragraph (a) (5)  of this Section 2.15, and (v)  all other information relating to such person that is required to be disclosed in solicitations of proxies for election of directors in an election contest (even if an election contest is not involved), or is otherwise required, in each case pursuant to Regulation

 

5



 

14A (or any successor provision) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)  and the rules thereunder (including such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected); (B)  as to any other business that the stockholder proposes to bring before the meeting, a description of such business, the reasons for conducting such business at the meeting and any material interest in such business of such stockholder and any Stockholder Associated Person (as defined below) , individually or in the aggregate, including any anticipated benefit to the stockholder or the Stockholder Associated Person therefrom; (C)  as to the stockholder giving the notice and any Stockholder Associated Person, (i)  the class, series and number of all shares of stock of the Corporation which are owned by such stockholder and by such Stockholder Associated Person, if any, (ii)  the nominee holder for, and number of, shares owned beneficially but not of record by such stockholder and by any such Stockholder Associated Person, and (iii)  whether and the extent to which any hedging or other transaction or series of transactions has been entered into by or on behalf of, or any other agreement, arrangement or understanding (including any short position or any borrowing or lending of shares)  has been made, the effect or intent of which is to mitigate loss to or manage risk or benefit of share price changes for, or to increase or decrease the voting power of, such stockholder or any such Stockholder Associated Person with respect to any share of stock of the Corporation; (D)  as to the stockholder giving the notice and any Stockholder Associated Person covered by clauses (B)  or (C)  of this paragraph (a)  (2)  of this Section 2.15, the name and address of such stockholder, as they appear on the Corporation’s stock ledger, and current name and address, if different, and of such Stockholder Associated Person; and (E)  to the extent known by the stockholder giving the notice, the name and address of any other stockholder supporting the nominee for election or reelection as a director or the proposal of other business on the date of such stockholder’s notice.

 

(3)   Notwithstanding anything in the second sentence of paragraph (a) (2)  of this Section 2.15 to the contrary, in the event that the number of directors to be elected to the Board of Directors of the Corporation is increased and there is no public announcement naming all of the nominees for director or specifying the size of the increase Board of Directors made by the Corporation at least 100 days prior to the first anniversary of the preceding year’s annual meeting, a stockholder’s notice required by this Section 2.15 shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the 10th day following the day on which such public announcement is first made by the Corporation.

 

(4)   For purposes of this Section 2.15, “Stockholder Associated Person” of any stockholder shall mean (i) any person controlling, directly or indirectly, or acting in concert with, such stockholder, (ii) any beneficial owner of shares of stock of the Corporation owned of record or beneficially by such stockholder and (iii) any person controlling, controlled by or under common control with such Stockholder Associated Person.

 

6



 

(5)   To be eligible to be a nominee for election or reelection as a director of the Corporation, a person must deliver (in accordance with the time periods prescribed for delivery of notice under this Section 2.15) to the Secretary at the principal executive offices of the Corporation a written questionnaire with respect to the background and qualification of such person and the background of any other person or entity on whose behalf the nomination is being made (which questionnaire shall be provided by the Secretary upon written request)  and a written representation and agreement (in the form provided by the Secretary upon written request)  that such person (A)  is not and will not become a party to (i)  any agreement, arrangement or understanding with, and has not given any commitment or assurance to, any person or entity as to how such person, if elected as a director of the Corporation, will act or vote on any issue or question (a “Voting Commitment”)  that has not been disclosed to the Corporation or (ii)  any Voting Commitment that could limit or interfere with such person’s ability to comply, if elected as a director of the Corporation, with such person’s fiduciary duties under applicable law; (B)  is not and will not become a party to any agreement, arrangement or understanding with any person or entity other than the Corporation with respect to any direct or indirect compensation, reimbursement or indemnification in connection with service or action as a director that has not been disclosed therein; and (C)  in such person’s individual capacity and on behalf of any person or entity on whose behalf the nomination is being made, would be in compliance, if elected as a director of the Corporation, and will comply with all applicable publicly disclosed corporate governance, conflict of interest, confidentiality and stock ownership and trading policies and guidelines of the Corporation.

 

(b)           Special Meetings of Stockholders .  Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to the Corporation’s notice of meeting.  Nominations of persons for election to the Board of Directors may be made at a special meeting of stockholders at which directors are to be elected pursuant to the Corporation’s notice of meeting (A)  by or at the direction of the Board of Directors or (B)  by any stockholder of the Corporation who is a stockholder of record at the time of giving of notice provided for in this Section 2.15, who shall be entitled to vote at the meeting and who complies with the notice procedures set forth in this Section 2.15.  In the event the Corporation calls a special meeting of stockholders for the purpose of electing one or more directors to the Board of Directors, any such stockholder may nominate a person or persons (as the case may be) , for election to such position(s)  as specified in the Corporation’s notice of meeting, if the stockholder’s notice required by paragraph (a) (2)  of this Section 2.15 shall be delivered to the Secretary at the principal executive offices of the Corporation not earlier than the close of business on the 120th day prior to such special meeting and not later than the close of business on the later of the 90th day prior to such special meeting or the 10th day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting.  In no event shall the public announcement of an adjournment of a special meeting commence a new time period for the giving of a stockholder’s notice as described above.

 

7



 

(c)           General .  (1)   Only such persons who are nominated in accordance with the procedures set forth in this Section 2.15 shall be eligible to serve as directors and only such business shall be conducted at a meeting of stockholders as shall have been brought before the meeting in accordance with the procedures set forth in this Section 2.15.  Except as otherwise provided by law, the Chairman of the meeting shall have the power and duty to determine whether a nomination or any business proposed to be brought before the meeting was made, or proposed, as the case may be, in accordance with the procedures set forth in this Section 2.15 and, if any proposed nomination or business is not in compliance with this Section 2.15, to declare that such defective proposal or nomination shall be disregarded.

 

(2)   For purposes of this Section 2.15, “public announcement” shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act.

 

(3)   Notwithstanding the foregoing provisions of this Section 2.15, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Section 2.15.  Nothing in this Section 2.15 shall be deemed to affect any rights of (i)   stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act or (ii)   the holders of any series of Preferred Stock to elect directors under specified circumstances.

 

ARTICLE III.

Board of Directors

 

Section 3.01. General Powers .  The business of the Corporation shall be managed by or under the direction of the Board of Directors. The Board of Directors may delegate its authority, subject to its reasonable supervision, to any committee, officer or agent and grant the power to sub-delegate.

 

Section 3.02. Number, Election and Term of Office .

 

(a)           Number:   The exact number of directors shall be determined from time to time by resolution adopted by a majority of the whole Board of Directors or of the holders of at least 75% of the stock of the Corporation entitled to vote, considered for the purpose as one class, to a number not exceeding 15 and not less than the minimum number of directors permitted by the Delaware General Corporation Law.

 

(b)           Election:  Except as otherwise provided by law or by these Bylaws, the directors of the Corporation shall be elected at the Annual Meeting of stockholders in each year. Except as provided in paragraph (d)  of this Section 3.02,  each director shall  be elected by the vote of the  majority  of  the votes cast with respect to the director at

 

8



 

any meeting  for  the election of directors at which a quorum is present, provided that if  the number of nominees exceeds the number of directors to  be elected,  the  directors  shall be  elected  by  the  vote  of  a plurality of the shares represented in person or by proxy at  any such  meeting and entitled to vote on the election of  directors. For purposes of this paragraph, a majority of the votes cast means that the number of shares voted “for” a director must exceed the number of votes cast “against” that director.  If a director is not elected, the director shall offer to tender his or her resignation to the Board of Directors.   The Corporate Governance and Nominating Committee will make a recommendation to the Board of Directors on whether to accept or reject the resignation, or whether other action should be taken.  The Board of Directors will act on the  Committee’s recommendation and publicly disclose  its  decision  and   the rationale  behind  it  within  90  days  from  the  date  of  the certification of the election results.  The director who tenders his or her resignation will not participate in the Board of Directors’ decision.

 

(c)           Annual Election:  Commencing with the 2009 Annual Meeting of Stockholders, directors shall be elected annually for terms expiring at the next annual meeting of stockholders and until their successors shall be duly elected and qualified, except that any director at the 2009 Annual Meeting of Stockholders whose term expires at the 2010 Annual Meeting of Stockholders or the 2011 Annual Meeting of Stockholders shall continue to hold office until the end of the term for which such director was elected and until such director’s successor shall be duly elected and qualified (subject to their earlier death, resignation, retirement, disqualification or removal). From and after the 2011 Annual Meeting of Stockholders, all directors will stand for election annually. If, for any cause, the Board of Directors shall not have been elected at an annual meeting of stockholders, they may be elected as soon thereafter convenient at a special meeting of stockholders called for that purpose in the manner provided in these Bylaws.

 

(d)           Vacancies:  Newly Created Directorships - If the office of any director becomes vacant at any time by reason of death, resignation, retirement, disqualification, removal from office or otherwise, or if any new directorship is created by any increase in the authorized number of directors, a majority of the directors then in office, although less than a quorum, or the sole remaining director, may choose a successor to fill the newly created directorship, and the director so chosen shall hold office subject to the provisions of these Bylaws, until the next Annual Meeting of Stockholders or until his or her successor shall have been elected and qualified.  At such next Annual Meeting the stockholders shall elect a director to fill the balance of the unexpired term of the director whose place was originally vacated or the term established by the Board pursuant to subsection (a) above.

 

(e)           Amendment:  Notwithstanding Article XI of these Bylaws, no provision of this Section 3.02 may be amended or rescinded except by the affirmative vote of the holders of at least 75% of the stock of the Corporation entitled to vote, considered for the purpose as one class, or by a majority of the whole Board of Directors.

 

9



 

Section 3.03. Annual Meeting .  As soon as practicable after each annual election of directors, the Board of Directors shall meet at the same place as the annual meeting of shareholders or at the principal executive office of the Corporation, or at such other place previously designated by the Board of Directors, for the purpose of electing the officers of the Corporation and for the transaction of such other business as may come before the meeting.

 

Section 3.04. Regular Meetings .  Regular meetings of the Board of Directors shall be held from time to time at such time and place as may be fixed by resolution adopted by a majority of the total number of directors.

 

Section 3.05. Special Meetings . Special meetings of the Board of Directors may be called by the Chairman of the Board, the President, or by any two of the directors and shall be held from time to time at such time and place as may be designated in the notice of such meeting.

 

Section 3.06. Notice of Meetings .  No notice need be given of any annual or regular meeting of the Board of Directors. Notice of each special meeting of the Board of Directors shall be given by the Secretary who shall give at least three (3) days’ notice thereof by mail or at least twenty-four (24) hours’ notice thereof to each director by telephone, telegram or in person. Notice shall be effective upon dispatch of a letter or telegram (properly addressed to the director) or upon delivery of written or telephoned notice to a person at the regular business or residence address of the director even if such notice is not personally received by the director.

 

Section 3.07. Waiver of Notice .  Notice of any meeting of the Board of Directors may be waived either before, at or after such meeting in writing signed by each director so waiving notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purposes of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the directors need be specified in any written waiver of notice.

 

Section 3.08. Quorum .  A majority of the total number of directors shall constitute a quorum for the transaction of business. The vote of a majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors unless these Bylaws require a greater number.

 

Section 3.09. Removal .  Any director may be removed from office at any meeting of the stockholders, with or without cause; provided, however, that any director in a class of directors may be removed from office at any meeting of the stockholders, but only for cause.  If one or more directors be so removed, new director(s) may be elected at the same meeting.

 

10



 

Section 3.10. Committees of Directors .

 

(a)           The Board of Directors may, by resolution adopted by a majority of the total number of directors, designate one or more committees in addition to the committees established pursuant to Article IV of these Bylaws, each to consist of one or more of the directors of the Corporation, which, to the extent provided in the resolution, may exercise the powers of the Board of Directors in management of the business and affairs of the Corporation and may authorize the corporate seal to be affixed to all papers that may require it. The Board of Directors shall elect the directors to serve on each Committee and may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. Such committee or committees shall have such name or names as may be determined by the resolution adopted by the directors. The chairman of each committee shall act as secretary of the meeting and prepare minutes of proceedings where formal action is taken by the committee, and each committee shall report their actions and recommendations to the Board of Directors when required.

 

(b)           The provisions of Section 3.06 through 3.08 of these Bylaws with respect to notices of meetings and quorums shall also be applicable to meetings of committees, except as otherwise provided in the Bylaws or resolutions establishing a particular committee. Special meetings of any committee shall be called at the request of any member or by the President or Chairman of the Board.

 

Section 3.11. Written Action .  Any action required or permitted to be taken at a meeting of the Board of Directors or any committee thereof may be taken without a meeting if all directors or committee members consent thereto in writing and the writing or writings are filed with the minutes of proceedings of the Board of Directors or committee. Such action shall be deemed to have been taken upon the effective date appearing in said writing, notwithstanding the fact that some or all of the directors may have signed on a date other than the effective date.

 

Section 3.12. Compensation .  Directors who are not salaried officers of this Corporation may receive such fixed sum per Board or Committee meeting attended or fixed annual sum and such other forms of compensation as may be determined by resolution of the Board of Directors. All directors shall receive their expenses, if any, of attendance at meetings of the Board of Directors or any committee thereof. Any director may serve the Corporation in any other capacity and receive proper compensation therefor.

 

Section 3.13. Conference Communications .  Directors may participate in any meeting of the Board of Directors, or of any duly constituted committee thereof, by means of a conference telephone conversation or other comparable communication technique whereby all persons participating in the meeting can hear and communicate to each other. For the purposes of establishing a quorum and taking any action at the meeting, such directors participating pursuant to this Section 3.13 shall be deemed present in person at the meeting; and the place of the meeting shall be the place of

 

11



 

origination of the conference telephone conversation or other comparable communication technique.

 

Section 3.14. Chairman of the Board .  The non-employee directors of the Board of Directors shall elect from their number, at each annual meeting of the Board of Directors, a Chairman of the Board.  The Chairman shall preside at all meetings of the directors and shall have such other duties as may be prescribed, from time to time, by the Board of Directors.  The Chairman shall serve for a term ending (a) at the time determined by the Board of Directors at the time of election  or (b) upon his or her earlier death, resignation, removal or disqualification as an independent director. The Chairman may be removed as Chairman at any time with or without cause by a majority of the non-employee directors. The Chairman of the Board shall not be deemed to be an officer of the Corporation as a result of such title.

 

ARTICLE IV.

Standing Committees

 

Section 4.01. Standing Committees .  The Corporation shall have such standing committees of the Board of Directors as are provided in Article IV of these Bylaws. The Chairman of each standing committee shall be appointed by vote of a majority of the whole Board of Directors. The provisions of Section 3.10 of the Bylaws shall govern all standing committees, except as may be otherwise provided in the Bylaw establishing the committee. Each standing committee shall perform the duties specified in these Bylaws and shall have such other responsibilities and authority as may from time to time be assigned by the Board of Directors.

 

Section 4.02. Executive Committee .

 

(a)           Between sessions of the Board of Directors, the Executive Committee shall have, and may exercise, all of the powers of the Board of Directors in the management and affairs of the Corporation, including the power to authorize the seal of the Corporation to be affixed to all papers which may require it, except the Executive Committee shall have no power or authority to (i)  adopt an agreement of merger or consolidation, (ii)  recommend to the stockholders the sale, lease or exchange of all or substantially all of the Corporation’s property and assets, (iii)  recommend to the stockholders a dissolution of the Corporation or revocation of a dissolution, or (iv) amend the Certificate of Incorporation or the Bylaws of the Corporation. The Executive Committee shall have the power and authority to declare a dividend and to authorize the issuance of stock.

 

(b)           At least one member of the Executive Committee shall be a director of the Corporation who is not an employee and no meeting of the Committee shall be deemed to have a quorum unless at least one such member is present. Action by the Executive Committee may be taken only by the unanimous vote of the members present at a meeting in which a quorum is present. The chief executive officer shall be a member of

 

12



 

the Executive Committee and shall preside at its meetings in the absence of its Chairman.

 

Section 4.03. Leadership Development and Compensation Committee .  The Leadership Development and Compensation Committee shall provide a general review of the Corporation’s compensation and benefit plans to insure they meet corporate objectives. It shall perform such duties and responsibilities as may from time to time be assigned to it by the Board of Directors. All members of the Committee shall be directors who are not employees of the Corporation.

 

Section 4.04. Finance Committee .  The Finance Committee shall act in an advisory capacity and make its recommendations to the management of the Corporation and to the Board of Directors on corporate fiscal matters. It shall perform such duties and responsibilities as may from time to time be assigned to it by the Board of Directors.

 

Section 4.05. Audit Committee .

 

(a)           The Audit Committee shall recommend to the whole Board of Directors the selection of independent certified public accountants to audit annually the books and records of this Corporation and shall review the activities and the reports of the independent certified public accountants and shall report the results of such review to the whole Board of Directors. The Audit Committee shall also monitor the internal audit controls of the Corporation.

 

(b)           The Audit Committee shall be comprised solely of directors independent of management and free from any relationship that, in the opinion of the Board of Directors, would interfere with the exercise of independent judgment as a Committee member.

 

Section 4.06. Corporate Governance and Nominating Committee .  The Corporate Governance and Nominating Committee shall review and make its recommendations to the whole Board of Directors regarding nominations of persons to serve on the Board of Directors, and shall have such other duties and responsibilities as may from time to time be assigned to it by the Board of Directors.

 

ARTICLE V.

Officers

 

Section 5.01. Number .  The officers of the Corporation shall consist of a President, a Treasurer and a Secretary, and, if elected, such additional officers as described in this Article V.  The directors may designate one or more regional or divisional Presidents and Vice Presidents who shall not be officers of this Corporation. Any person may hold two or more offices except President and Vice President.

 

13



 

Section 5.02. Election, Term of Office and Qualifications .  At each annual meeting of the Board of Directors, all officers, from within or without their number, shall be elected; however, the Board may elect additional officers at any Board meeting. Such officers shall hold office until the next annual meeting of the directors or until their successors are elected and qualified or until such office is eliminated by a vote of the majority of all directors.

 

Section 5.03. Removal and Vacancies .  Any officer may be removed from office by a majority vote of the total number of directors with or without cause. A vacancy among the officers by death, resignation, removal, or otherwise may be filled for the unexpired term by the Board of Directors.

 

Section 5.04. President .  The President shall have such duties as may, from time to time be prescribed by the Board of Directors and may be designated by the Board of Directors as the Chief Executive Officer.

 

Section 5.05. Chief Executive Officer .  The Chief Executive Officer shall be the principal executive officer of the Corporation and shall be responsible for the general management, direction and control of all of the business and affairs of the Corporation. The Chief Executive Officer shall have such other authority and duties as the Board of Directors may prescribe. The Chief Executive Officer shall report to the Board of Directors and be responsible to them.

 

Section 5.06. Chief Operating Officer .  The Chief Operating Officer shall be responsible for the daily operations of the Corporation’s business and shall have such other authority and duties as the Board of Directors or the Chief Executive Officer may prescribe. The Chief Operating Officer shall report to the Chief Executive Officer if the Chief Executive Officer is not also serving as the Chief Operating Officer.

 

Section 5.07. Vice Presidents .  Each Vice President shall have such powers and shall perform such duties as may be prescribed by the Board of Directors or by the Chief Executive Officer. The following categories of Vice Presidents may be elected by the Board of Directors:

 

(i)            Executive Vice Presidents,

(ii)           Senior Vice Presidents, or

(iii)          Vice Presidents including Group Vice Presidents.

 

Section 5.08. President Pro Tem .  In the absence or disability of the President, the Board of Directors may appoint a President Pro Tem who shall have all the powers and duties of the President and shall serve during the aforesaid absence or disability.

 

Section 5.09. Secretary .  The Secretary shall be secretary of and shall attend all meetings of the stockholders and the Board of Directors and shall record the proceedings of such meetings in the minute book of the Corporation. The Secretary shall give proper notice of meetings of stockholders and Board of Directors. The

 

14



 

Secretary shall keep the seal of the Corporation. The Secretary shall perform such other duties as may from time to time be prescribed by the Board of Directors or by the President or the Chairman.

 

Section 5.10. Treasurer .  The Treasurer or such person’s delegate shall keep accurate accounts of all moneys of the Corporation received or disbursed. The Treasurer shall have power to endorse for deposit all notes, checks and drafts received by the Corporation. The Treasurer shall disburse the funds of the Corporation as ordered by the directors, making proper vouchers therefor. The Treasurer shall render to the President and the Board of Directors whenever required an account of all his or her transactions as Treasurer and of the financial condition of the Corporation and shall perform such other duties as may from time to time be prescribed by the Board of Directors or by the President or the Chairman.

 

Section 5.11. Controller .  The duties of the Controller shall be to maintain adequate records and books of account and control of all assets, liabilities and transactions of this Corporation; to see that adequate audits thereof are currently and regularly made; and, in conjunction with other officers and department heads, to initiate and enforce adequate accounting measures and procedures. The Controller shall perform such other duties as the Board of Directors may from time to time prescribe or require.  The Controller’s duties and powers shall extend to all subsidiary corporations.

 

Section 5.12. Counsel .  The Counsel shall be the legal adviser of the Corporation and shall receive such salary for his or her services as the Board of Directors may fix.

 

Section 5.13. Duties of Other Officers .  Assistant Vice Presidents, Assistant Secretaries, and Assistant Treasurers elected by the Board of Directors shall have the power and authority and may perform all the duties of a Vice President, the Secretary, or the Treasurer, respectively. The duties of such other officers and agents as the Board of Directors may designate shall be set forth in the resolution creating such office or by subsequent resolution.

 

Section 5.14. Authority to Execute Agreements .  The Chairman of the Board, President, Executive Vice Presidents, Senior Vice Presidents, Vice Presidents and Group Vice Presidents are hereby authorized to execute or cause to be executed in the name and on behalf of this Corporation, all contracts, agreements, deeds, mortgages, bonds, options, leases, lease and other guarantees of the obligations of others, including subsidiary corporations and customers, stock transfer documents, and such other instruments as may be necessary or desirable in the conduct of the business of the Corporation; and said officers are further authorized to sign and affix, or cause to be signed and affixed, the seal of the Corporation on any instrument requiring the same, which seal shall be attested by the signature of the Secretary, the Treasurer, any Assistant Secretary or any Assistant Treasurer.  Except as may be limited in a resolution or resolutions of the Board of Directors, in causing any of said documents to be executed in the name and on behalf of this Corporation, any of said officers shall have the authority to designate employees of the Corporation or any of its subsidiaries

 

15



 

to have the power and authority to sign such documents in the name and on behalf of this Corporation as determined by the officer making such designation.  The persons upon whom such power and authority is conferred shall not be deemed officers of the Corporation unless elected by the Board of Directors.

 

Section 5.15. Duties of Officers May be Delegated .  In the case of the absence or disability of any officer of the Corporation or for any other reason deemed sufficient by the Board of Directors, it may delegate such officer’s powers or duties to any other officer or to any director during such absence or disability.

 

Section 5.16. Compensation .  The officers of the Corporation shall receive such compensation for their services as may be determined from time to time by resolution of the Board of Directors or by one or more committees to the extent so authorized from time to time by the Board of Directors.

 

ARTICLE VI.

Shares and Their Transfer

 

Section 6.01. Certificates for Stock .  The Corporation’s shares of stock shall be represented by certificates, provided that the Board of Directors may, subject to the limits imposed by law, provide by resolution or resolutions that some or all of any or all classes or series shall be uncertificated shares. Certificates for shares of stock of the Corporation shall be in such form as shall be prescribed by the Board of Directors. Certificates for such shares shall be numbered in the order in which they shall be issued and shall be signed in the name of the Corporation by the Chairperson of the Board, the President or a Vice President, and by the Secretary or an Assistant Secretary and the seal of the Corporation shall be affixed thereto. Uncertificated shares of the Corporation’s stock that are issued by the Corporation shall be evidenced by entries on the books and records of the Corporation established and maintained for such purpose. Every certificate surrendered to the Corporation for exchange or transfer shall be cancelled, and no new certificate or certificates shall be issued in exchange for any existing certificate, or if uncertificated shares are to be issued pursuant to such exchange or transfer, no entry shall be made on the books and records of the Corporation relating to such exchange or transfer, until such certificate shall have been so cancelled, except in cases provided for in Section 6.06 below.

 

Section 6.02. Issuance of Stock .  The Board of Directors is authorized to cause to be issued shares of the Corporation up to the full amount authorized by the Certificate of Incorporation in such amounts and for such consideration as may be determined by the Board of Directors.

 

Section 6.03. Partly Paid Stock .  The Corporation may issue the whole or any part of its stock as partly paid and subject to call for the remainder of the consideration to be paid therefor. Upon the face or back of each certificate issued to represent any such partly paid stock, the total amount of the consideration to be paid therefor and the amount paid thereon shall be stated. Upon the declaration of any dividend on fully paid

 

16



 

stock, the Corporation shall declare a dividend upon partly paid stock of the same class, but only upon the basis of the percentage of the consideration actually paid thereon. The Board of Directors may, from time to time, demand payment, in respect of each share of stock not fully paid, of such sum of money as the necessities of the business may, in the judgment of the Board of Directors, require, not exceeding in the whole the balance remaining unpaid on such stock, and such sum so demanded shall be paid to the Corporation at such times and by such installments as the directors shall direct. The directors shall give written notice of the time and place of such payments, which notice shall be mailed at least 30 days before the time for such payment, to each holder of or subscriber for stock which is not fully paid at such person’s last known post office address or such person’s last known address on the stock registry.

 

Section 6.04. Transfer of Stock .  Transfer of stock on the books of the Corporation may be authorized only by the registered holder, the stockholder’s legal representative or the stockholder’s duly authorized attorney-in-fact and upon surrender of the certificate or the certificates for such stock. The Corporation may treat as the absolute owner of stock of the Corporation the person or persons in whose name stock is registered on the books and records of the Corporation. The Board of Directors may appoint one or more transfer agents, who shall keep the stock ledger and transfer book for the transfer of stock of the Corporation, and one or more registrars, and may require all certificates of stock to bear the signature of such transfer agents and of such registrars.

 

Section 6.05. Facsimile Signatures .  Whenever any certificate is countersigned by a transfer agent or by a registrar other than the Corporation or its employee, then the signatures of the officers or agents of the Corporation may be a facsimile. Where a certificate is to bear the signature of a transfer agent and a registrar, the signature of one, but not both, may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed on any such certificate shall cease to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation as though the person who signed such certificate or whose facsimile signature or signatures had been placed thereon were such officer, transfer agent or registrar at the date of issue.

 

Section 6.06. Lost, Stolen, Destroyed or Mutilated Certificates.   The Corporation may issue a new stock certificate of stock in the place of any certificate theretofore issued by it alleged to have been lost, stolen, destroyed or mutilated, or if the Board of Directors has designated that such stock no longer be certificated, by recording the ownership of such shares on the books and records of the Corporation maintained for such purpose.  The Board of Directors may require the owner of the allegedly lost, stolen or destroyed certificate, or the owner’s legal representatives, to give the Corporation such bond or such surety or sureties as the board of directors, in its sole discretion, deems sufficient to indemnify the Corporation against any claim that may be made against it on account of the alleged loss, theft or destruction or the issuance of such new certificate and, in the case of a certificate alleged to have been mutilated, to surrender the mutilated certificate.

 

17



 

ARTICLE VII.

Dividends, Surplus, Etc.

 

Section 7.01. Dividends .  The Board of Directors may declare dividends on its capital stock from the Corporation’s surplus, or if there be none, out of its net profits for the current fiscal year, and/or the preceding fiscal year in such amounts as in its opinion the condition of the affairs of the Corporation shall render it advisable unless otherwise restricted by law.

 

Section 7.02. Use of Surplus, Reserve .  The Board of Directors may use any of the Corporation’s property or funds, unless such would cause an impairment of capital, in purchasing any of the stock, bonds, debentures, notes, scrip or other securities or evidences of indebtedness of the Corporation. The Board of Directors may from time to time set aside from corporate surplus or net profits such sums as it deems proper as a reserve fund for any purpose.

 

ARTICLE VIII.

Books and Records, Audit, Fiscal Year

 

Section 8.01. Books and Records .  The Board of Directors of the Corporation shall cause to be kept: (a)  a share ledger which shall be in charge of the Secretary; (b)  records of the proceedings of stockholders and directors: and (c)  such other records and books of account as shall be necessary and appropriate to the conduct of the corporate business.

 

Section 8.02. Audit .  The Board of Directors shall cause the records and books of account of the Corporation to be audited at least once for each fiscal year and at such other times as it may deem necessary or appropriate.

 

Section 8.03. Fiscal Year .  The fiscal year of the Corporation shall end on the last Saturday in February of each year.

 

ARTICLE IX.

Indemnification

 

Section 9.01. Statutory Indemnification .  The Corporation shall indemnify any director or officer of the Corporation and may indemnify any employee or agent of the Corporation in the discretion of the Board of Directors for such liabilities in such manner under such circumstances and to such extent as permitted by Section 145 of the Delaware General Corporation Law or its successor, as now enacted or hereafter amended.

 

Section 9.02. Additional Indemnification .  In addition to that authorized in Section 9.01 herein, the Corporation shall indemnify as follows:

 

18



 

(a)           The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation)  by reason of the fact that such person is or was a director or officer of the Corporation, or is or was serving at the request of the Corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees) , judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding (even if such wrongful act arose out of neglect or breach of duty not involving willful misconduct) , so long as such person did not act out of personal profit or advantage which was undisclosed to the Corporation and such person acted in a manner he or she reasonably believed to be in or not opposed to the best interest of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he or she reasonably believed to be or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his or her conduct was unlawful.

 

(b)           The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that such person is or was a director or officer of the Corporation, or is or was serving at the request of the Corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees)  actually and reasonably incurred by him in connection with the defense or settlement of such action or suit, including amounts paid in settlement, (even if such wrongful act arose out of neglect or breach of duty not involving willful misconduct) , so long as such person did not act out of personal profit or advantage which was undisclosed to the Corporation and such person acted in a manner he or she reasonably believed to be in or not opposed to the best interests of the Corporation.

 

Section 9.03. Procedure for Indemnification .

 

(a)           The Corporation shall be required to make a determination that indemnification under this Article is proper in the circumstances because the person being indemnified has met the applicable standards of conduct set forth in this Article. Such determination shall be made (1) by a majority vote of the directors who are not parties to the action, suit or proceeding, even though less than a quorum, (2) by a committee of such directors designated by a majority vote of such directors, even though less than a quorum, (3) if there are no such directors, or if such directors so direct, by independent legal counsel in a written opinion, or (4) by the stockholders of the Corporation. If a court orders indemnification of the officer or director, no such outside determination is necessary.

 

19



 

(b)           Expenses incurred by any person who shall have a right of indemnification under this Article in defending a civil or criminal action, suit or proceeding shall be paid by the Corporation in advance of the final disposition of such action provided that a determination has not been made by independent legal counsel (who may be the regular counsel for the Corporation)  in a written opinion that it is reasonably likely that the person has not met the applicable standards of conduct for indemnification and provided that the Corporation has received an undertaking by or on behalf of the person to repay such expenses unless it shall ultimately be determined that such person is entitled to be indemnified by the Corporation pursuant to this Article.

 

Section 9.04. Vested, Non-Exclusive Contract Right; Survival .

 

(a)           The indemnification provided by this Article is in addition to and independent of and shall not be deemed exclusive of any other rights to which any person may be entitled under any agreement, vote of stockholders or disinterested directors, or otherwise, both as to action in such person’s official capacity and as to action in another capacity while holding such office, and shall continue to a person who has ceased to be a director or officer and shall inure to the benefit of the heirs, executors and administrators of such a person; provided that any indemnification realized other than under this Article shall apply as a credit against any indemnification provided by this Article.

 

(b)           The Corporation may provide indemnification under this Article to any employee or agent of the Corporation or of any other corporation of which the Corporation owns or controls or at the time owned or controlled directly or indirectly a majority of the shares of stock entitled to vote for election of directors or to any director, officer, employee or agent of any other corporation, partnership, joint venture, trust or other enterprise in which the Corporation has or at the time had an interest as an owner, creditor or otherwise, if and whenever the Board of Directors of the Corporation deems it in the best interest of the Corporation to do so.

 

(c)           The Corporation may, to the fullest extent permitted by applicable law from time to time in effect, indemnify any and all persons whom the Corporation shall have power to indemnify under said law from and against any and all of the expenses, liabilities or other matters referred to in or covered by said law, if and whenever the Board of Directors of the Corporation deems it to be in the best interest of the Corporation to do so.

 

(d)           The provisions of this Article IX shall be deemed to be a contract between the Corporation and each director and officer who serves in such capacity at any time while this Article IX is in effect, and any repeal or amendment of this Article IX shall not adversely affect any right or protection of any person granted pursuant hereto then existing with respect to any state of facts then or theretofore existing or any action, suit or proceeding theretofore or thereafter brought or threatened based in whole or in part upon any such state of facts.  Neither the repeal nor amendment of this Article IX, nor

 

20



 

the adoption of any provision of the Certificate of Incorporation inconsistent with this Article IX, shall eliminate or reduce the effect of this Article IX in respect of any matter occurring, or any cause of action, suit or claim that would accrue or arise, prior to such repeal, amendment or adoption of an inconsistent provision.

 

Section 9.05. Subsidiary Corporations .  For purposes of this Article and indemnification hereunder, any person who is or was a director or officer of any other corporation of which the Corporation owns or controls or at the time owned or controlled directly or indirectly a majority of the shares of stock entitled to vote for election of directors of such other corporation shall be conclusively presumed to be serving or to have served as such director or officer at the request of the Corporation.

 

ARTICLE X.

Miscellaneous

 

Section 10.01. Periods of Time .  During any period of time prescribed by these Bylaws, the date from which the designated period of time begins to run shall not be included, and the last day of the period so computed shall be included.

 

Section 10.02. Voting Securities Held by the Corporation .  Unless otherwise ordered by the Board of Directors, the Chief Executive Officer shall have full power and authority on behalf of the Corporation (a) to attend and to vote at any meeting of security holders of other corporations in which the Corporation may hold securities; (b) to execute any proxy for such meeting on behalf of the Corporation; or (c) to execute a written action in lieu of a meeting of such other corporation on behalf of the Corporation. At such meeting, by such proxy or by such writing in lieu of meeting, the Chief Executive Officer shall possess and may exercise any and all rights and powers incident to the ownership of such securities that the Corporation might have possessed and exercised if it had been present. The Board of Directors may, from time to time, confer like powers upon any other person or persons.

 

Section 10.03. Purchase and Sale of Securities .  Unless otherwise ordered by the Board of Directors, the Chief Executive Officer shall have full power and authority on behalf of the Corporation to purchase, sell, transfer or encumber any and all securities of any other corporation owned by the Corporation and may execute and deliver such documents as may be necessary to effectuate such purchase, sale, transfer or encumbrance. The Board of Directors may, from time to time, confer like powers upon any other person or persons.

 

21



 

ARTICLE XI.

Amendments

 

Section 11.01. These Bylaws may be amended, altered or repealed at any meeting of the directors by a vote of the majority of the whole Board of Directors or at any meeting of the shareholders at which a quorum, as defined in Article II, Section 2.04 of these Bylaws, is present by the vote of a majority of the shares voting at the meeting.

 

22


Exhibit 10.1

 

EXECUTION VERSION

 

TRANSITION SERVICES AGREEMENT

 

by and between

 

SUPERVALU INC.

 

and

 

ALBERTSON’S LLC

 

Dated as of March 21, 2013

 



 

Table of Contents

 

 

 

Page

 

 

 

ARTICLE I AGREEMENT TO PROVIDE AND ACCEPT SERVICES

1

Section 1.1

Services

2

Section 1.2

Books and Records; Availability of Information

2

Section 1.3

Cost of Providing the Services

2

Section 1.4

Required Consents

2

Section 1.5

Intellectual Property Licenses

3

Section 1.6

Heritage Albertson’s System Code

3

Section 1.7

IT Systems

3

 

 

 

ARTICLE II SERVICES; PAYMENT; INDEPENDENT CONTRACTORS SERVICES

4

Section 2.1

Services To Be Provided

4

Section 2.2

Cooperation

6

Section 2.3

Steering Committee

6

Section 2.4

Additional Services

7

Section 2.5

Pricing; Payments

7

Section 2.6

Disclaimer of Warranty

8

Section 2.7

Taxes

8

Section 2.8

Use of Services; Third Party Transferees

8

Section 2.9

Confidential Information; Third Party Transferees

9

Section 2.10

Work-around

9

Section 2.11

Prior Resolution of Certain Disputes

9

Section 2.12

Agency; Power of Attorney

9

Section 2.13

Accounting Adjustment Procedure

10

 

 

ARTICLE III TERM OF SERVICES

10

Section 3.1

Term

10

Section 3.2

Option(s) to Extend Term

10

Section 3.3

Additional Service Extensions

12

Section 3.4

Transition of TSA Services

12

 

 

ARTICLE IV FORCE MAJEURE

13

Section 4.1

Force Majeure

13

 

 

ARTICLE V LIABILITIES

14

Section 5.1

Consequential and Other Damages

14

Section 5.2

Limitation of Liability

14

Section 5.3

Obligation To Re-perform

14

Section 5.4

Indemnity

14

 

 

ARTICLE VI TERMINATION

15

Section 6.1

Termination

15

Section 6.2

Breach of Services Agreement; Dispute Resolution

15

Section 6.3

Sums Due

16

 

i



 

Section 6.4

Service Provider Termination Right

16

Section 6.5

Services Following Expiration or Termination

17

Section 6.6

Effect of Termination

17

 

 

ARTICLE VII MISCELLANEOUS

17

Section 7.1

Notice

17

Section 7.2

Incorporation of Purchase Agreement Provisions

18

Section 7.3

No Third Party Beneficiaries

19

Section 7.4

Assignment

19

Section 7.5

Termination of Existing TSA

19

 

Schedule 1

Procurement of Goods

Schedule 2

Other Services

 

 

Exhibit A

Fees

Exhibit B

System Code Purchase Option

Exhibit C

IT Systems - Redlight Schedule

Exhibit D

Dispute Resolution Process

Exhibit E

Resolution of Certain Disputes

Exhibit F

PCI Compliance

Exhibit G

Services Elimination and Fee Credit

 

ii



 

This TRANSITION SERVICES AGREEMENT, dated as of March 21, 2013 (this “ Services Agreement ” or “ TSA ”), is entered into by and between SUPERVALU INC., a Delaware corporation (“ SVU ”) and Albertson’s LLC, a Delaware limited liability company (“ ABS LLC ” and together with its Subsidiaries other than New Albertson’s Inc. (“ NAI ”) and its Subsidiaries, “ Albertson’s ”).  In this Services Agreement, SVU, on the one hand, and Albertson’s, on the other hand, are sometimes referred to individually as a “ party ” and collectively as the “ parties .”  In its capacity as a recipient of Services hereunder (as designated on Schedules 1 and 2 hereof with respect to particular services), each party is referred to herein as “ Receiving Party ,” and, in its capacity as a provider of Services hereunder (as designated on Schedules 1 and 2 hereof with respect to particular services), each party is referred to herein as “ Service Provider .”  All terms used herein and not defined herein shall have the meanings assigned to them in the SPA (as defined below).

 

WHEREAS, the Transition Services Agreement, dated as of June 2, 2006, by and between NAI and ABS LLC (as amended, modified or supplemented, the “ Existing TSA ”) was amended by the following agreements, each between NAI and ABS LLC, (i) that certain First Amendment to Transition Services Agreement dated February 22, 2007, (ii) that certain Second Amendment to Transition Services Agreement dated May 31, 2007, (iii) that certain Third Amendment to Transition Services Agreement dated July 12, 2007, (iv) that certain Settlement Agreement and Release of Claims dated December 15, 2007, (v) that certain Fourth Amendment to Transition Services Agreement dated April 21, 2008, (vi) that certain Fifth Amendment to Transition Services Agreement dated February 18, 2009, (vii) that certain Settlement Agreement and Release of Claims dated February 18, 2009, (viii) that certain letter agreement dated December 16, 2009, (ix) that certain letter agreement dated January 27, 2010 and (x) that certain Sixth Amendment to Transition Services Agreement dated September 10, 2010;

 

WHEREAS, the parties have entered into a Stock Purchase Agreement (the “ SPA ”), dated January 10, 2013, pursuant to which, among other things, SVU agreed to sell all of the outstanding capital stock of NAI to AB Acquisition LLC, parent company of ABS LLC (the “ Stock Purchase ”);

 

WHEREAS, in connection with the Stock Purchase, the Existing TSA will be terminated and will be replaced by this TSA and a separate Transition Services Agreement to be entered into by SVU and NAI;

 

WHEREAS, each Receiving Party desires to procure certain services from the Service Provider, and the Service Provider is willing to provide such services to the Receiving Party during a transition period commencing on March 21, 2013 (the “ Effective Date ”), on the terms and conditions set forth in this Services Agreement.

 

NOW THEREFORE, in consideration of the foregoing and the mutual covenants and agreements herein contained, and intending to be legally bound hereby, the parties hereto hereby agree as follows:

 

ARTICLE I

 

AGREEMENT TO PROVIDE AND ACCEPT SERVICES

 

1



 

Section 1.1                                     Services .

 

(a)                                  On the terms and subject to the conditions contained herein, the Service Provider shall provide, or shall cause its Subsidiaries and Affiliates and their respective employees designated by the Service Provider to provide, to the Receiving Party or its designated Subsidiaries and Affiliates the services referred to in this Services Agreement or listed on the attached Schedules (the “ Schedules ” and such services, the “ Services ”).  Subject to Section 2.1 , any decisions as to which of the Service Provider, its Subsidiaries and Affiliates, or any third parties shall provide the Services shall be made by the Service Provider in its sole discretion, except to the extent specified in the applicable Schedule; provided , however , that the Receiving Party’s consent shall be required if and to the extent that the Service Provider delegates Services after the date of the SPA to a third party provider and such Services are to be provided for the benefit of the Receiving Party and not for the benefit of the Service Provider or any of its Affiliates.  Any delegation of Services shall not release the Service Provider from its obligations hereunder.  The Services shall be provided in exchange for the consideration set forth in Section 2.5 or as the parties may otherwise agree in writing.  Each Service shall be provided and accepted in accordance with the terms, limitations and conditions set forth herein and on the applicable Schedule.

 

Section 1.2                                     Books and Records; Availability of Information .  Each party shall create and maintain accurate books and records in connection with the provision of the Services performed hereunder and, upon reasonable notice from the other party, shall make available for inspection and copy by such other party’s agents such books and records during reasonable business hours.  The Receiving Party shall make available on a timely basis to the Service Provider all information and materials reasonably requested by the Service Provider to enable it to provide the Services.  The Receiving Party shall provide to the Service Provider reasonable access to the Receiving Party’s premises to the extent reasonably necessary for the purpose of providing the Services.

 

Section 1.3                                     Cost of Providing the Services .  Unless otherwise expressly set forth in this Services Agreement, the Service Provider shall bear all costs necessary to provide the Services (including all out-of-pocket and third-party expenses incurred by the Service Provider and its designees in order to provide the Services).  The Service Provider shall be solely responsible for the payment of all direct and indirect compensation (including all fringe benefits of any sort) for the personnel assigned to perform the Services under this Services Agreement, and will be responsible for workers’ compensation insurance, unemployment insurance, employment taxes, and all other employer liabilities relating to such personnel.

 

Section 1.4                                     Required Consents .  The Service Provider shall obtain and pay for, or cause to be obtained and paid for, any and all consents necessary or advisable to allow the Service Provider to provide the Services and to allow the Receiving Party to access and use the Services (the “ Required Consents ”).  The Receiving Party agrees to cooperate with the Service Provider’s reasonable requests and to execute such documents (subject to the Receiving Party’s reasonable approval of such documents) in connection with such consents.  If a Required Consent is not obtained, then, unless and until such Required Consent is obtained, the Service Provider shall determine and adopt, subject to the Receiving Party’s prior written approval, such alternative commercially reasonable approaches as are necessary and sufficient to provide the Services in accordance with the terms hereof without such Required Consents and in a manner

 

2



 

which does not increase the fees or costs payable by the Receiving Party hereunder.  For purposes of clarity, the parties acknowledge and agree that the foregoing provision shall in no way affect the allocation of costs or expenses related to transfer of assets (including costs incurred in connection with obtaining third party consents) in connection with the transactions contemplated by the SPA, which matters shall be controlled solely by the SPA.  For the avoidance of doubt, except as otherwise provided in Section 5.5(a) of the SPA, ABS LLC shall obtain and pay for any and all consents required in connection with the consummation of the APA (as such term is defined in the SPA).

 

Section 1.5                                     Intellectual Property Licenses .  Notwithstanding anything to the contrary contained in the TSA, and except as otherwise provided in Section 5.13 of the SPA, it shall be the responsibility of the Receiving Party (at the Receiving Party’s sole cost and expense) to obtain all licenses associated with the use of third party intellectual property, including but not limited to copyrights (e.g., software), trademarks and patents (and/or consents and extensions relating to such licenses), if any, necessary for the provision of Services to the Receiving Party during the Term.  The Service Provider agrees to use commercially reasonable efforts to assist the Receiving Party in its negotiations with any licensors from whom the Receiving Party may require such a license (or consent or extension) during the Term.  In the event the Receiving Party is unable to obtain a necessary license, consent or extension, the Services related to such license shall be removed from the scope of the TSA, without a reduction in fees or payments owed by the Receiving Party under the TSA.  In all events, and in addition to (and not in limitation of) any similar rights that the Service Provider may have under the TSA, the Receiving Party shall indemnify, defend and hold the Service Provider harmless from and against any actions, liabilities and/or claims relating to the licenses and the license matters discussed in this provision.  The Receiving Party’s obligation to pay any fees under this Section 1.5 shall apply whether or not such claims for fees arise from the Receiving Party’s continued or past access to or benefit from third party intellectual property.  The Receiving Party also acknowledges the Service Provider’s right to initiate discussion with third party licensors that may involve the Receiving Party’s use of intellectual property.  All negotiated agreements with third party licensors for the future use of or rights to intellectual property and associated services shall be at the cost of the Service Provider, provided that the Receiving Party shall bear the cost of incremental third party use fees which are specifically identified in the agreements with the third party licensors and which relate solely to the Receiving Party’s use (“ Incremental License Fees ”).  Such Incremental License Fees shall be approved in advance in writing by the Receiving Party, which approval shall not be unreasonably withheld or delayed.

 

Section 1.6                                     Heritage Albertson’s System Code .  Prior to the termination or expiration of the TSA, and so long as Albertson’s is not in default of the TSA, Albertson’s shall have the option to purchase from SVU the heritage Albertson’s source code (the “ System Code Purchase Option ”).  The terms and conditions applicable to the System Code Purchase Option are set forth on Exhibit B hereto.

 

Section 1.7                                     IT Systems .  SVU and Albertson’s agree to cooperate in maintaining current, common and compatible IT systems where practical and feasible and as to only those IT systems for which SVU is providing Albertson’s support.  In furtherance of this intent, SVU and Albertson’s shall work together to eliminate those IT systems that are not current, common or compatible.  The stated goal of this paragraph is for SVU and Albertson’s to work together in

 

3



 

good faith to ensure that IT systems trend toward converging rather than diverging.  Toward that end, the parties agree to the terms and conditions set forth in Exhibit C hereto.

 

ARTICLE II

 

SERVICES; PAYMENT; INDEPENDENT CONTRACTORS SERVICES

 

Section 2.1                                     Services To Be Provided .

 

(a)                                  Notwithstanding anything to the contrary contained herein, other than as set forth on the applicable Schedule and subject to Sections 2.4 and 2.10 hereof, (i) the Services to be provided by SVU as Service Provider hereunder shall be limited to (A) the Services with respect to which it is listed as the Service Provider on Schedule 2 hereto, (B) as to the NAI business which Albertson’s is acquiring, the Services which SVU and its Affiliates have historically provided to the NAI-acquired business, and (C) the Services performed by SVU and its Affiliates for Albertson’s as of immediately prior to the date of the SPA; provided that any change in Services after the date of the SPA but prior to the Effective Date shall be approved by the Steering Committee, (ii) the Services to be provided by Albertson’s as Service Provider hereunder shall be limited to the Services with respect to which it is listed as the Service Provider on Schedule 2 hereto, and (iii) in no event shall the Service Provider be required to provide any other services to the Receiving Party.  The parties acknowledge and agree that they have sought to identify all Services to be provided by the Service Provider under this Services Agreement on the Schedules hereto, but that if the Schedules do not include the Services performed immediately prior to the date of the SPA by the Service Provider, the parties shall cooperate after the Closing Date to amend and/or supplement the Schedules hereto from time to time to more accurately reflect such past practice; provided , however , that (i) in no event will the Service Provider be obligated to provide any Service which (A) is listed on Schedule 2 as “deleted” or indicated in any way as no longer required or (B) is indicated to be provided only on a temporary basis and such time period has lapsed, subject to the possible extension of such Service in accordance with Section 3.3 , and (ii)  Schedule 1 hereto sets forth the agreement of the parties with respect to procurement of goods for the Receiving Party and shall control that Service notwithstanding the past practices of the parties with respect to procurement of goods.

 

(b)                                  The Service Provider or its designees shall perform the Services only in a manner, scope, nature and quality (such manner, scope, nature and quality, the “ Applicable Service Level ”) that is, in the case of SVU as the Service Provider, the same in all material respects as the manner in which such Services were performed or to be performed by SVU and its Affiliates for Albertson’s as of immediately prior to the Date of the SPA, or, where a specific service level has been provided, as set forth in the Schedules hereto and, in the case of Albertson’s as Service Provider, in the manner described on Schedule 2 .  For the avoidance of doubt, any change in service levels provided by the Service Provider to itself and its Affiliates after the Date of the SPA shall not affect the Applicable Service Level to be provided to the Receiving Party pursuant to this Services Agreement.  Unless otherwise set forth herein or on the applicable Schedule, the Services provided hereunder shall be used by the Receiving Party for substantially the same purposes and in substantially the same manner (including as to volume, amount, level or frequency, as applicable) as such Services were used by the Receiving Party as of immediately prior to the Date of the SPA.  Notwithstanding the foregoing, the parties

 

4



 

acknowledge and agree that (1) Albertson’s acquisition of the NAI business shall not be deemed an increase of volume, amount, level or frequency, that SVU shall provide the Services contemplated herein to the NAI business, and that SVU’s provision of services to the NAI business shall include the services historically provided by SVU or its Affiliates to NAI (or which NAI provided to itself), as well as the Services identified on Schedule 2 , and (2) Albertson’s request for Services for New Stores as defined in Exhibit A shall not constitute an increase in volume, amount, level of frequency of Services.  The Service Provider shall act under this Services Agreement solely as an independent contractor and not as an agent or employee of any other party or any of such party’s Affiliates.  For the purposes of clarity, the parties acknowledge and agree that if and to the extent the Service Provider changes systems and processes used in the course of its business for its own account the Service Provider shall not permit such changes to degrade the Applicable Service Level.

 

(c)                                   The provision of Services by the Service Provider shall be subject to Article V hereof.

 

(d)                                  The parties have agreed to separate the Legal function of SVU and transition certain legal associates to Albertson’s over a period of up to ninety (90) days after the Effective Date (the “ Legal Transition Period ”).  At the Effective Date, certain attorneys responsible for the provision of certain Services to Albertson’s (the “ Transitioned Attorneys ”) will transition to and become employed by Albertson’s at Albertson’s option.  At some point during the Legal Transition Period, Albertson’s will have the option to make Qualifying Offers (as defined in the SPA) to some or all of an additional group of identified members of the SVU Legal function.  During the Legal Transition Period, the parties will cooperate with respect to the transition of legal matters between them, and each of Albertson’s (but only with respect to the services provided by the Transitioned Attorneys and only to the extent historically provided to SVU) and SVU will provide legal services pursuant to Schedule 2 hereto, if needed, provided that (i) SVU may, in its discretion and at its expense, provide outside counsel (reasonably selected from a list of outside counsel used by Albertson’s prior to the Effective Date) in lieu of providing such legal services directly (it being understood that such outside counsel providing Services to Albertson’s hereunder will be acting on behalf of and as counsel for Albertson’s, and that (as between Albertson’s and SVU) Albertson’s will control the attorney-client relationship); (ii) neither party will in any case provide services with respect to commercial or other litigation that the other party has agreed to assume responsibility for, or to indemnify the other party or its Affiliates for, pursuant to the SPA ( provided , however , that SVU will continue to cooperate in providing in-house litigation support (other than litigation management) to the extent historically provided by SVU to Albertson’s and Albertson’s acknowledges that during the Legal Transition Period in-house litigation support will continue to be provided to SVU by the remaining SVU legal function not hired by Albertson’s as of the Effective Date); (iii) SVU will not be responsible for providing legal services to Albertson’s in quantities that exceed the historical levels provided by SVU to Albertson’s; and (iv) each party will provide any reasonable and customary waiver of conflicts of interest or similar waiver reasonably requested by the other party or any substituted outside counsel in connection with the legal services provided pursuant to this Services Agreement, provided that no such waiver shall materially disadvantage the other party with respect to any matter handled by such counsel.  Upon the elimination of legal services as Services under this Services Agreement, there will be a dollar-for-dollar reduction in the fees payable during the Initial Term equal to the salary and benefits of each employee that transfers

 

5



 

employment to Albertson’s pursuant to a Qualifying Offer (as defined in the SPA) made in Albertson’s sole discretion, and, if necessary, the parties will execute a letter agreement confirming the reduction as soon as reasonably possible thereafter.

 

(e)                                   Similar to the legal transition referenced in Section 2.1(d) , the parties have agreed to the elimination of additional Services originally contemplated to be provided by SVU pursuant to this Services Agreement by the employees of SVU and its Subsidiaries identified on Exhibit G .  Upon the elimination of such Services from this Services Agreement, Albertson’s will receive credits against the fees payable pursuant to this Services Agreement as such credits are set forth on Exhibit G , and, if necessary, the parties will execute a letter agreement confirming the reduction as soon as reasonably practicable thereafter.

 

(f)                                    The parties agree to meet on or before September 20, 2013, to review the Services being provided and determine if there are any Services no longer required and which may be deleted from the Service schedules.

 

Section 2.2                                     Cooperation .  The parties will use good-faith efforts to reasonably cooperate with each other in all matters relating to the provision and receipt of Services.  Such cooperation shall include obtaining all consents, licenses or approvals necessary to permit each party to perform its obligations hereunder, subject to Section 1.3 , Section 1.4 and Section 1.5 .  Furthermore, if and to the extent that the Receiving Party owns or controls any assets that are required to be used in the provision of Services by the Service Provider or its designees, as applicable, the Receiving Party shall furnish or otherwise make available such asset to the Service Provider or its designees, as applicable, for the provision of Services including by way of a grant of royalty-free license for such purpose.

 

Section 2.3                                     Steering Committee .

 

(a)                                  Size and Composition .  SVU, in its sole discretion as determined by the SVU Board of Directors (excluding Offeror Related Directors, as such term is defined in the Tender Offer Agreement between Symphony Investors LLC, Supervalu Inc., and Cerberus Capital Management, L.P., dated January 10, 2013), will appoint three (3) members of its management staff and Albertson’s will appoint three (3) members of its management staff to serve on a steering committee (the “ Steering Committee ”).  Either party may change its Steering Committee members from time to time upon written notice to the other party.  In addition, the parties may mutually agree to increase or decrease the size, purpose or composition of the Steering Committee.

 

(b)                                  Responsibilities .  The Steering Committee shall be responsible for the general on-going oversight of each party’s performance under this Services Agreement.  The representatives of the party serving on the Steering Committee shall have the power and authority to bind such party with respect to the matters contemplated by this Services Agreement.

 

(c)                                   Meetings .  The Steering Committee will meet (in person or telephonically) once every 90 days or at such other frequency as mutually agreed by the parties.  Each Steering Committee meeting will be at a mutually acceptable location.

 

6



 

(d)                                  Annual Business Plan .  The Steering Committee will develop an annual business plan (the “ Business Plan ”) to project Service usage and costs (after the third anniversary of the Effective Date) and other matters with respect to the Services, and will review and update the Business Plan not less than quarterly.  If the parties mutually agree to modify or discontinue any Service, both parties will be entitled to rely on the Business Plan for the purpose of determining what Services will be provided during the time period covered by the Business Plan, and may discontinue any Service not projected to be required by the Business Plan.  For the avoidance of doubt, if the parties do not mutually agree to modify or discontinue any Service, that Service shall continue without any change to its service level.

 

(e)                                   Contingency Plans .  The Steering Committee shall formulate mutually acceptable back-up and contingency plans to address unplanned errors and disruptions in the Services.  In furtherance of the foregoing, in the event of a disaster, the Service Provider agrees to use the same degree of care to restore the Services as the Service Provider would use to restore similar services for itself.  In the event of scheduled downtime, the Service Provider shall provide the Receiving Party with reasonable advance notice.

 

Section 2.4                                     Additional Services .

 

(a)                                  From time to time during the term, the Receiving Party may request that the Service Provider (i) provide additional services (including as to volume, amount, level or frequency, as applicable) or different services which the Service Provider is not obligated to provide under this Services Agreement if such services are of the type and scope provided to the Receiving Party immediately prior to the Effective Date or (ii) to expand the scope of any Service (such additional or expanded services, the “ Additional Services ”).  The Service Provider shall consider such request in good faith and shall use commercially reasonable efforts to provide such Additional Service; provided , that the Service Provider shall not be obligated to provide any Additional Services if it does not, in its reasonable judgment, have adequate resources to provide such Additional Services or if the provision of such Additional Services would interfere with the operation of its business or the business of its Affiliates.  If the Service Provider receives a request for Additional Services it shall notify the Receiving Party within fifteen (15) days of its receipt of the request as to whether it will or will not provide the Additional Services.

 

(b)                                  If the Service Provider agrees to provide Additional Services pursuant to Section 2.4(a) , then a representative of each party shall in good faith negotiate the terms of a supplemental Schedule to this Services Agreement which will describe in detail the service, project scope, term, price and payment terms to be charged for the Additional Service.  Once definitively agreed to in writing, the supplemental Schedule shall be deemed part of this Services Agreement as of such date and the Additional Services shall be deemed “Services” provided hereunder, in each case subject to the terms and conditions of this Services Agreement.

 

Section 2.5                                     Pricing; Payments .

 

(a)                                  Fees .  The fees for the Services are set forth in Exhibit A attached hereto.  Notwithstanding anything herein to the contrary, except as provided in Exhibit A , any costs paid or borne by the Receiving Party related to any provision herein shall not impact or reduce the payments under this Section 2.5(a) .  The parties understand that certain Services will terminate pursuant to specified periods set forth in Schedule 2 and acknowledge that, except as set forth in

 

7



 

Section 2.1(d) , there shall be no reduction in fees for the scheduled termination of such Services pursuant to Schedule 2 .

 

(b)                                  Invoices .  Unless otherwise provided in Exhibit A , payments due hereunder shall be invoiced on a weekly basis.  Other than with respect to any Non-Performance Holdbacks (as defined in Section 2.5(c) ), payments that are not timely paid shall be subject to late charges, calculated at an interest rate per annum equal to the Prime Rate (or the maximum legal rate, whichever is lower), and calculated for the actual number of days elapsed, accrued from the date on which such payment was due up to the date of the actual receipt of payment.  Payments shall be made by wire transfer to an account designated in writing from time to time by Service Provider.

 

(c)                                   Performance Disputes; Fees .  Subject to Section 4.1 and Section 6.2 hereof, in the event any Dispute (as defined below) arises between the parties regarding the Service Provider’s or its designees’ failure to provide one or more material Services at or above the Applicable Service Level, and the Service Provider has not cured such failure within fifteen (15) days of written notice (or a reasonably shorter period of time, in light of the nature of the Dispute), the Receiving Party shall be entitled to withhold from payment an amount of money equal to lesser of (i) the cost of commercially reasonable alternative arrangements to procure such Services from an alternative source, if applicable and (ii) in the case of Albertson’s as the Receiving Party, $15,000,000, and in the case of SVU as the Receiving Party, $300,000, in each case aggregating all Non-Performance Holdback amounts then subject to Dispute) (such amount, the “ Non-Performance Holdback ”), until such Service Disruption or Dispute has been resolved.  Upon resolution of any such Dispute the Non-Performance Holdback (or any greater or lesser amount agreed to by the parties in lieu thereof) shall be paid promptly to the Service Provider or the Receiving Party, as applicable, as shall be determined in accordance with the resolution of such Dispute.

 

Section 2.6                                     Disclaimer of Warranty .  EXCEPT AS EXPRESSLY SET FORTH IN THIS SERVICES AGREEMENT, THE SERVICES TO BE PURCHASED UNDER THIS SERVICES AGREEMENT ARE FURNISHED AS IS, WHERE IS, WITH ALL FAULTS AND WITHOUT WARRANTY OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE.

 

Section 2.7                                     Taxes .  In the event that any Tax is properly chargeable on the provision of the Services (other than any Tax on the income of Service Provider received in its capacity as a third party service provider to the Receiving Party) as indicated on the applicable Schedule, the Receiving Party shall be responsible for and shall pay the amount of any such Tax in addition to and at the same time as the Service fees.  All Service fees and other consideration will be paid free and clear of and without withholding or deduction for or on account of any Tax, except as may be required by law.

 

Section 2.8                                     Use of Services; Third Party Transferees .  The Receiving Party shall not, and shall cause its Affiliates not to, resell any Services to any person whatsoever or permit the use of the Services by any person other than in connection with the conduct of the Receiving Party’s operations as conducted immediately prior to the Effective Date.  Notwithstanding anything to the contrary contained herein, if either party transfers or otherwise disposes of assets

 

8



 

(including one or more stores or distribution centers) (each a “ Transferring Party ”) to one or more third parties (each, a “ Third Party Transferee ”), the Transferring Party shall have the right to transfer or assign its rights hereunder to each such Third Party Transferee for a period (the “ Transfer Period ”) not to exceed the lesser of (i) 180 days from the date of transfer and (ii) the remaining term of this Services Agreement; provided , however , the Transferring Party shall remain obligated under the terms hereof (including for payments pursuant to Section 2.4 ); provided , further , however , in the event that the Third Party Transferee competes on a national level with SVU and/or its Affiliates the Transfer Period shall be no longer than ninety (90) days from the date of such transfer.  No such transfer shall limit the collective amount of Services to be provided to the Transferring Party and the Third Party Transferee.

 

Section 2.9                                     Confidential Information; Third Party Transferees .  As a result of a sale or transfer of some or all of Albertson’s assets during the term of this Services Agreement, a Third Party Transferee may have access to SVU’s Confidential Product Cost Information (as defined below) as a result of Services relating to the provision of products for resale (both nationally branded and private label products).  In such event and if such Third Party Transferee is a competitor of SVU, then SVU may require that the Third Party Transferee execute (or that Albertson’s use commercially reasonable efforts to require the Third Party Transferee execute if Albertson’s has previously completed negotiations of a pending transaction with such Third Party Transferee as of the Effective Date) a three-party confidentiality agreement, in a form reasonably acceptable to SVU and Albertson’s, setting forth the Third Party Transferee’s agreement: (i) to keep strictly confidential such Confidential Product Cost Information; (ii) to restrict access to such Confidential Product Cost Information to personnel not responsible for product development or product procurement on behalf of such Third Party Transferee; and (iii) to ensure that, under no circumstances, shall such Third Party Transferee use (directly or indirectly) such Confidential Product Cost Information for its pecuniary gain, for the solicitation of business or to the financial detriment of SVU.  For purposes of this provision, “ Confidential Product Cost Information ” shall mean SVU’s confidential information dealing with or relating to SVU’s acquisition cost of products purchased for resale, including any invoice price, rebates, allowances, incentive payments, and marketing and other funds related to such products.

 

Section 2.10                              Work-around .  Subject to Section 1.5 , if any of the Services cannot be provided by the Service Provider for any reason including because such Services infringe on the rights of others or violate Law, and the Service Provider shall develop an alternative to the Service that it uses for itself or one of its Affiliates, then the Service Provider shall provide such alternative service to the Receiving Party at no additional cost.

 

Section 2.11                              Prior Resolution of Certain Disputes .  The parties previously agreed to settle and resolve certain issues that arose under the Existing TSA as set forth in Exhibit E .

 

Section 2.12                              Agency; Power of Attorney .  Albertson’s hereby appoints SVU as attorney-in-fact and agent with full and exclusive power and authority to act for and on behalf of Albertson’s for the purposes of entering into, on behalf of Albertson’s, Corporate Contracts (as defined on Schedule 1 ) that have been approved in advance by Albertson’s.  In addition, Albertson’s agrees to execute and deliver any particular forms of powers of attorney as may be reasonably (as determined by Albertson’s in its sole discretion) requested by SVU in connection with the provision of the Services.  Notwithstanding anything to the contrary in this Services Agreement, if Albertson’s does not provide to SVU any power of attorney reasonably necessary

 

9



 

to provide any Service or otherwise perform SVU’s obligations under this Services Agreement, SVU shall not be deemed to be in breach of this Services Agreement for any such failure to perform to the extent attributable to the lack of such power of attorney.  The power and authority granted to SVU hereunder shall terminate upon the termination of this Services Agreement.

 

Section 2.13                              Accounting Adjustment Procedure .  Upon an adjustment to the fees pursuant to the terms of this Services Agreement, the Receiving Party shall deliver to the Service Provider a complete list (certified as accurate by the Receiving Party for that week) of the supermarkets, distribution centers, fuel centers and/or pharmacies being serviced by the Service Provider under the terms of this Services Agreement.

 

ARTICLE III

 

TERM OF SERVICES

 

Section 3.1                                     Term .  Subject to Section 3.2 and Section 6.1 , the provision of Services shall commence on the Effective Date and shall terminate no later than the 30-month anniversary of the Effective Date (the “ Initial Term ”).

 

Section 3.2                                     Option(s) to Extend Term .

 

(a)                                  Albertson’s as the Receiving Party shall have ten (10), and SVU as the Receiving Party shall have ten (10), consecutive options to extend the TSA for a period of one (1) year each on the terms and conditions (including, without limitation, payment timing and fee arrangements) contained in the TSA.  Such extension terms shall be exercised, if at all, by the Receiving Party giving written notice to the Service Provider twelve months preceding the extension term being exercised.  For such exercise to be valid, the Receiving Party must (i) not be in default under the TSA as of the date of the notice of exercise or as of January 1 of the extension term being exercised, and (ii) be in compliance with the Dispute Resolution Process set forth in Exhibit D hereto.

 

(b)                                  Upon the proper exercise of an extension term by the Receiving Party, the term of the TSA shall be extended for the applicable twelve-month period without the execution of any further instrument.  As used in this Services Agreement, the term “Term” shall include all Annual Extension Terms (as defined below).

 

(c)                                   For clarification purposes, the following chart defines and sets forth the key dates for each annual extension term:

 

Option Exercise

 

 

 

Defined Term (for

Deadline

 

Extension Period

 

reference purposes in this TSA)

18-month Anniversary of Effective Date

 

30-month Anniversary of Effective Date through 42-month Anniversary of Effective Date

 

First Annual Extension Term

 

 

 

 

 

 

 

42-month Anniversary of

 

Second Annual Extension Term

 

10



 

Option Exercise

 

 

 

Defined Term (for

Deadline

 

Extension Period

 

reference purposes in this TSA)

30-month Anniversary of Effective Date

 

Effective Date through 54-month Anniversary of Effective Date

 

 

 

 

 

 

 

42-month Anniversary of Effective Date

 

54-month Anniversary of Effective Date through 66-month Anniversary of Effective Date

 

Third Annual Extension Term

 

 

 

 

 

54-month Anniversary of Effective Date

 

66-month Anniversary of Effective Date through 78-month Anniversary of Effective Date

 

Fourth Annual Extension Term

 

 

 

 

 

66-month Anniversary of Effective Date

 

78-month Anniversary of Effective Date through 90-month Anniversary of Effective Date

 

Fifth Annual Extension Term

 

 

 

 

 

78-month Anniversary of Effective Date

 

90-month Anniversary of Effective Date through 102-month Anniversary of Effective Date

 

Sixth Annual Extension Term

 

 

 

 

 

90-month Anniversary of Effective Date

 

102-month Anniversary of Effective Date through 114-month Anniversary of Effective Date

 

Seventh Annual Extension Term

 

 

 

 

 

102-month Anniversary of Effective Date

 

114-month Anniversary of Effective Date through 126-month Anniversary of Effective Date

 

Eighth Annual Extension Term

 

 

 

 

 

114-month Anniversary of Effective Date

 

126-month Anniversary of Effective Date through 138-month Anniversary of Effective Date

 

Ninth Annual Extension Term

 

 

 

 

 

126-month Anniversary of Effective Date

 

138-month Anniversary of Effective Date through 150-month Anniversary of Effective Date

 

Tenth Annual Extension Term

 

11



 

Albertson’s (numbered) Annual Extension Terms, together with SVU’s corresponding Annual Extension Terms may be collectively referred to herein as the “ Annual Extension Terms .”  Upon occurrence of the Effective Date the parties will execute a letter agreement confirming the Initial Term and Annual Extension Term dates.

 

(d)                                  A Receiving Party’s failure to timely or properly exercise any of the Annual Extension Terms shall constitute a forfeiture of its right to exercise any future Annual Extension Term and the TSA shall terminate with respect to Services provided to such Receiving Party (subject to the applicable Wind Down Period and Transaction Services Period) at the end of such Receiving Party’s then current Annual Extension Term.

 

Section 3.3                                     Additional Service Extensions .  In addition to the Receiving Party’s rights under Sections 3.2, 3.4 and 6.5 , in the event the Receiving Party requests an extension of the term of provision of Services, such request shall be considered in good faith by the Service Provider.  Any terms, conditions or costs or fees to be paid by the Receiving Party for Services provided during an extended term will be on mutually acceptable terms.  For the avoidance of doubt, under no circumstances shall the Service Provider be required to extend the term of provision of any Service if (i) the Service Provider does not, in its reasonable judgment, have adequate resources to continue providing such Services, (ii) the extension of the term would interfere with the operation of the Service Provider’s business or (iii) the extension would require capital expenditure on the part of the Service Provider or otherwise require the Service Provider to renew or extend any contract, agreement, arrangement or similar understanding with any third party.

 

Section 3.4                                     Transition of TSA Services .

 

(a)                                  If, at any time during the term of the TSA, the Receiving Party desires to transition any Service(s) to a third party, it shall so notify the Service Provider one hundred and twenty (120) days prior to the commencement of such transition (and upon delivery of such notice, the Receiving Party may commence planning discussions with the Service Provider). The Service Provider agrees that it will assist with such transitions to third party providers (the “ Transition Services ”), and any out of pocket and internal costs incurred by the Service Provider for the Transition Services shall be reimbursed by the Receiving Party as soon as reasonably practicable. In the case of SVU as the Service Provider of Transition Services, all costs incurred (out of pocket and internal) shall be subject to and included in a cap amount of $1,000,000, and in the case of Albertson's as the Service Provider of Transition Services, all costs incurred (out of pocket and internal) shall be subject to and included in a cap amount of $500,000 (each, a “ Cap Amount ”). In the event the combined Transition Services costs (out of pocket and internal) and separation services costs exceed the applicable Cap Amount, the Service Provider shall continue to provide the Transition Services to the Receiving Party with the Service Provider bearing the costs in excess of the applicable Cap Amount. As the case may be or as the case may arise, the Service Provider shall notify the Receiving Party in writing of any utilization of the applicable Cap Amount and a running total of the remaining balance.

 

(b)                                  In order to clarify the potential provision of Transition Services by the Service Provider, and except as set forth below, the parties expressly acknowledge that the timing must be such that the Service Provider is able to complete all Transition Services during the term of the TSA (and the Party shall work in good faith to complete such transitions prior to

 

12



 

the expiration or termination of the TSA) and that, in addition to the reimbursement of costs by the Receiving Party (up to the Cap Amount) as provided in this Section 3.4 , all other fees and payments under the TSA shall remain payable by the Receiving Party without modification or abatement.  The parties acknowledge and reaffirm that, except as set forth below, upon the expiration or termination of the TSA, the Service Provider’s obligation to provide Services shall be limited to the terms set forth in Section 6.4 and Section 6.5 of this TSA.

 

(c)                                   Notwithstanding the foregoing, in the event Transition Services will not be completed prior to the expiration or termination of the TSA, and upon written request by the Receiving Party to the Service Provider prior to expiration or termination of the TSA, the Service Provider shall continue the Transition Services for a period not to exceed seven (7) months after expiration or termination of the TSA (“ Transition Services Period ”).  During the Transition Services Period, Albertson’s as the Receiving Party will pay SVU as the Service Provider during the Transition Services Period fees equal to the greater of (i) $1,000,000 each calendar month, payable in advance, or (ii) the applicable weekly fee per operating supermarket and distribution center set out in Exhibit A and SVU as the Receiving Party will pay Albertson’s as the Service Provider during the Transition Services Period fees equal to the greater of (A) $150,000 each calendar month, payable in advance, or (B) the applicable weekly fee set forth on Exhibit A .  The parties shall mutually determine prior to the commencement of each calendar month during the Transition Services Period whether the fees for such month shall be as set out in (i) or (ii) above, and the Receiving Party shall then pay such fees accordingly.  The foregoing Transition Services fees would be in addition to fees paid for any wind down services consistent with the terms set forth in Section 6.5 of this TSA.

 

ARTICLE IV

 

FORCE MAJEURE

 

Section 4.1                                     Force Majeure The Service Provider shall not be liable for any expense, loss or damage whatsoever arising out of any interruption of Service or delay or failure to perform under this Services Agreement that is due to acts of God, acts of a public enemy, acts of terrorism, acts of a nation or any state, territory, province or other political division thereof, changes in applicable law, fires, floods, epidemics, riots, theft, quarantine restrictions, freight embargoes, strikes, work stoppages or other similar causes beyond the reasonable control of the Service Provider and its applicable designees.  In any such event, the Service Provider’s obligations hereunder shall be postponed for such time as its performance is suspended or delayed on account thereof.  The Service Provider will promptly notify the recipient of the Service, either orally or in writing, upon learning of the occurrence of such event of force majeure.  Upon the cessation of the force majeure event, the Service Provider will use commercially reasonable efforts to resume its performance with the least practicable delay ( provided that, at the election of the Receiving Party, the applicable term for such suspended Services shall be extended by the length of the force majeure event).  During such force majeure event, the Receiving Party shall be free to acquire affected Services from an alternative source, at the Receiving Party’s sole cost and expense, and without liability to the Service Provider, for the period and to the extent reasonably necessitated by such non-performance.  The parties shall negotiate in good faith to determine the costs of procurement of such Services from such

 

13



 

alternative source and such amounts shall be deducted from the payments otherwise required under Section 2.5 hereof.

 

ARTICLE V

 

LIABILITIES

 

Section 5.1                                     Consequential and Other Damages .  Neither party shall be liable to the other with respect to this Services Agreement, whether in contract, tort (including negligence and strict liability) or otherwise, for any special, indirect, incidental or consequential damages whatsoever which in any way arise out of, relate to or are a consequence of, the performance or nonperformance by such party hereunder, including with respect to loss of profits, business interruptions or claims of customers.

 

Section 5.2                                     Limitation of Liability .  Subject to Section 5.3 hereof and other than with respect to the Receiving Party’s obligation to make payment under Section 1.5 or Section 2.5 hereof, the liability of each party with respect to this Services Agreement or any act or failure to act in connection herewith (including, but not limited to, the performance or breach hereof), or from the sale, delivery, provision or use of any Service provided under or covered by this Services Agreement, whether in contract, tort (including negligence and strict liability) or otherwise, (i) shall not exceed $180,000,000 for actions or omissions resulting from gross negligence and (ii) shall be unlimited for actions or omissions resulting from willful breach.

 

Section 5.3                                     Obligation To Re-perform .  In the event of any breach of this Services Agreement by the Service Provider resulting from any error or defect in the performance of any Service (which breach the Service Provider can reasonably be expected to cure by re-performance in a commercially reasonable manner), the Service Provider shall use its reasonable commercial efforts to correct in all material respects such error, defect or breach or reperform in all material respects such Service at the request of the Receiving Party.

 

Section 5.4                                     Indemnity .  Except as otherwise provided in this Services Agreement, (including the limitation of liability provisions in this Article V ), the Service Provider shall not be liable for any Loss (as defined below) arising out of or relating to the Services, whether arising out of breach of warranty, strict liability, tort, contract or otherwise, other than Losses which result directly from Service Provider’s gross negligence with respect to the provision of Services or the breach of this Services Agreement.  The Service Provider shall defend, indemnify, and hold harmless the Receiving Party and its Subsidiaries and Affiliates from and against any third party claims, damages, losses or expenses (including, but not limited to, reasonable attorneys’ fees and costs) (a “ Loss ”) incurred by the Receiving Party or its Subsidiaries resulting from the Service Provider’s gross negligence with respect to the provision of Services or the breach of this Services Agreement.  The Receiving Party shall defend, indemnify and hold harmless the Service Provider and its Subsidiaries and Affiliates (and to the extent certain roles and responsibilities of individual employees of Service Provider acting as fiduciaries for Receiving Party could expose said employees to a Loss in their individual capacities, then said employees shall likewise be defended, indemnified and held harmless) from and against any and all Losses arising out of or connected with the Services or in any way related to this Services Agreement, regardless of the legal theory asserted (other than in matters for which the Service Provider would have liability under this Section 5.4 or expenses reasonably

 

14



 

contemplated to be borne by Service Provider in performing its obligations hereunder). The Receiving Party shall at all times maintain reasonable and customary fiduciary liability insurance coverage (with a tail coverage of no less than 5 years) for any such employees of the Service Provider who are acting in a fiduciary capacity for the Receiving Party.

 

ARTICLE VI

 

TERMINATION

 

Section 6.1            Termination Notwithstanding anything herein to the contrary, this Services Agreement shall terminate, and the obligation of the Service Provider to provide or cause to be provided any Service shall cease, on the earliest to occur of (i) the date on which the provision of all Services has been terminated or canceled pursuant to Article IV hereof, or (ii) the date on which all Services under this Services Agreement are terminated by the Service Provider or the Receiving Party, as the case may be, in accordance with the terms of Section 6.2 hereof; provided that, in each case, no such termination shall relieve any party of any liability for any breach of any provision of this Services Agreement prior to the date of such termination and subject to the Wind Down Period and the Transition Services Period as respectively defined in Section 6.5 and Section 3.4(c) .

 

Section 6.2            Breach of Services Agreement; Dispute Resolution .

 

(a)           Breach .  Subject to Article V hereof, the dispute resolution process set forth in this Section 6.2 and the last sentence of this Section 6.2(a) , if a party shall cause or suffer to exist any material breach of any of its obligations under this Services Agreement, including any failure to make a payment within thirty (30) days after such payment becomes due pursuant to Section 2.5 (taking into account the exception for any Non-Performance Holdback provided in Section 2.5(c) ) with respect to more than one Service provided hereunder, and that party does not cure such default in all material respects within 30 days after receiving written notice thereof from the non-breaching party, the non-breaching party shall have the right to terminate this Services Agreement immediately thereafter.  Notwithstanding anything to the contrary in this Services Agreement, a breach by either party in the provision of Services as Service Provider shall not give the other party as Receiving Party the right to stop performing its obligations hereunder and in such instance the Receiving Party’s sole and exclusive remedy with respect to a material breach by the Service Provider with respect to the performance of such Services shall be for the Service Provider to correct in all material respects any error or defect in such Services or to re-perform in all material respects the Services with respect to which the Service Provider shall have breached its performance obligations.

 

(b)           Dispute Resolution .  Either party may commence the dispute resolution process of this Section 6.2 by giving the other party written notice with detailed description and underlying facts (a “ Dispute Notice ”) of any controversy, claim or dispute of whatever nature arising out of or relating to this Services Agreement or the breach, termination, enforceability or validity hereof (a “ Dispute ”) which has not been resolved in the normal course of business.  The parties shall attempt in good faith to resolve any Dispute by negotiation between executives (excluding Offeror Related Directors as such term is defined in the Tender Offer Agreement between Symphony Investors LLC, Supervalu Inc., and Cerberus Capital Management, L.P., dated January 10, 2013) of each party hereto (“ Senior Party Representatives ”) who have

 

15



 

authority to settle the Dispute and who are at a higher level of management than the persons who have direct responsibility for the administration of this Services Agreement.  Within 15 days after delivery of the Dispute Notice, the receiving party shall submit to the other a written response (the “ Response ”).  The Dispute Notice and the Response shall include (i) a statement setting forth the position of the party giving such notice and a summary of arguments supporting such position and (ii) the name and title of such party’s Senior Party Representative and any other persons who will accompany the Senior Party Representative at the meeting at which the parties will attempt to settle the Dispute.  Within 30 days after the delivery of the Dispute Notice, the Senior Party Representatives of both parties shall meet at a mutually acceptable time and place, and thereafter as often as they reasonably deem necessary, to attempt to resolve the Dispute.  The parties shall cooperate in good faith with respect to any reasonable requests for exchanges of information regarding the Dispute or a Response thereto.

 

(i)            If the Dispute has not been resolved within sixty (60) days after delivery of the Dispute Notice, or if the parties fail to meet within 30 days after delivery of the Dispute Notice as hereinabove provided, the parties shall submit the matter to arbitration contemplated by Section 6.2(c)  or any other dispute resolution procedure that may be agreed by the parties.

 

(ii)           All negotiations, conferences and discussions pursuant to this Section 6.2 shall be confidential and shall be treated as compromise and settlement negotiations.  Nothing said or disclosed, nor any document produced, in the course of such negotiations, conferences and discussions that is not otherwise independently discoverable shall be offered or received as evidence or used for impeachment or for any other purpose in any current or future arbitration.

 

(c)           Arbitration .  If the Dispute has not been resolved by the dispute resolution process described in Section 6.2(b) , the parties agree that any such Dispute shall be settled by binding arbitration before the American Arbitration Association (“ AAA ”) in Chicago, Illinois pursuant to the Commercial Rules of the AAA.  Any arbitrator(s) selected to resolve the Dispute shall be bound exclusively by the laws of the State of New York without regard to its choice of law rules. Any decisions of award of the arbitrator(s) will be final and binding upon the parties and may be entered as a judgment by the parties hereto.  Any rights to appeal or review such award by any court or tribunal are hereby waived to the extent permitted by law.

 

(d)           Costs .  The costs of any arbitration pursuant to this Section 6.2 shall be shared equally between the parties.

 

Section 6.3            Sums Due .  In addition to any other payments required pursuant to this Service Agreement, in the event of a termination of this Services Agreement, the Service Provider shall be entitled to the immediate payment of, and the Receiving Party shall within three Business Days pay to the Service Provider, all accrued amounts for Services, Taxes and other amounts due under this Services Agreement as of the date of termination.

 

Section 6.4            Service Provider Termination Right .  Notwithstanding the grant of the options for the Annual Extension Terms, the Service Provider shall have the right to deliver to the Receiving Party a written notice to terminate the TSA with respect to Services being provided to the Receiving Party (the “ Service Provider Termination Notice ”).  In the event the

 

16



 

Service Provider delivers the Service Provider Termination Notice to the Receiving Party, the TSA with respect to Services being provided to the Receiving Party shall terminate on the last day of that calendar month which is thirty six (36) months after the date of delivery of the Service Provider Termination Notice (subject to the applicable Wind Down Period and Transition Services Period).  The Receiving Party may reduce the 36 month period by electing to not exercise the next Annual Extension Term, in which case the TSA shall terminate with respect to the Services provided to the Receiving Party (subject to the applicable Wind Down Period and Transition Services Period) as of the last day of the then current Term.  If the Service Provider has delivered the Service Provider Termination Notice, then any exercise by the Receiving Party of a Annual Extension Term within which the 36 th  month falls must recognize in said exercise notice that the TSA will terminate with respect to the Services provided to the Receiving Party as of the last day of the 36 th  month (subject to the applicable Wind Down Period and Transition Services Period).  The Service Provider may not deliver a Service Provider Termination Notice hereunder prior to December 31, 2013.

 

Section 6.5            Services Following Expiration or Termination .  Upon the written request of Albertson’s, SVU shall, notwithstanding any provision in the TSA to the contrary, provide to Albertson’s one or more Services provided by SVU to Albertson’s immediately prior to any termination or expiration of the TSA on a wind-down basis, including without limitation in the areas of finance, tax, accounting and property management following any termination or expiration of the TSA.  Such wind-down services shall be provided for a period not to exceed twelve (12) months from the applicable termination or expiration date (“ Wind Down Period ”).  The fee for such services shall be mutually agreed upon, but in no event shall the fees be less than the reasonably documented out-of-pocket costs for such services, and shall be payable at the commencement of each month for which such services are provided.  In the event the parties are not able to agree to the fee, this Section 6.5 shall become null and void.  For the avoidance of doubt, SVU and Albertson’s acknowledge that the wind-down services discussed in this paragraph (and the fee associated with such services) cover a period of time after the expiration of the TSA, and that, during the term of the TSA the service schedule relating to “Separation Services” remains unmodified by this Section 6.5 .

 

Section 6.6            Effect of Termination Sections 1.2 , 2.5 , 2.6 , 2.7 hereof and Articles IV , V , VI and VII hereof shall survive any termination of this Services Agreement.

 

ARTICLE VII

 

MISCELLANEOUS

 

Section 7.1            Notice .  All notices, requests and demands to or upon the respective parties hereto, and all statements and accountings given or required to be given hereunder, shall be made by personal service, or sent by certified mail, return receipt requested, postage prepaid, or by facsimile addressed as follows, or to such other address as may hereafter be designated in writing by the respective parties hereto, and shall be deemed received when delivered to the designated address (and only if confirmed if delivered by facsimile):

 

To Albertson’s:

Albertson’s LLC
250 East Parkcenter Boulevard
Boise, ID 83706

 

17



 

 

Attn: Paul Rowan, Esq.

 

Facsimile: (208) 395 - 4625

 

 

 

with a copy to:

 

 

 

Schulte Roth & Zabel LLP
919 Third Avenue
New York, NY 10022
Attn: Stuart D. Freedman, Esq.
         Robert R. Kiesel, Esq.
Facsimile: (212) 593-5955

 

 

To SVU:

SUPERVALU INC.

Attn: Legal Department
Mailing Address:

PO Box 990

Minneapolis, MN 55440-0990

Street Address:

7075 Flying Cloud Drive

Eden Prairie, MN 55344-3691

 

 

 

with a copy to:

 

 

 

SUPERVALU INC.

7075 Flying Cloud Drive

Eden Prairie, MN 55344-3691

Attn: J. Andrew Herring

 

 

 

and:

 

 

 

Wachtell, Lipton, Rosen & Katz

51 West 52nd Street

New York, NY 10019

Attn: David Silk, Esq.

Igor Kirman, Esq.

DongJu Song, Esq.

Facsimile: (212) 403-2393

 

Section 7.2            Incorporation of Purchase Agreement Provisions .  The following provisions of the SPA are hereby incorporated herein by reference, and unless otherwise expressly specified herein, such provisions shall apply as if fully set forth herein (references in this Section 7.2 to an “Article” or “Section” shall mean Articles or Sections of the SPA, and references in the material incorporated herein by reference shall be references to the SPA:  Section 8.11 (“Amendments; Waivers; Enforcement”), Section 8.4 (“Governing Law”), Section 8.13 (“Interpretation”), Section 8.3 (“Counterparts”), Section 8.5 (“Specific Performance”), Section 8.9 (“Severability”), and Section 8.6 (“Waiver of Jury Trial”).

 

18



 

Section 7.3            No Third Party Beneficiaries .  This Services Agreement is for the sole benefit of the parties to this Services Agreement and their permitted successors and assigns and nothing in this Services Agreement, express or implied, is intended to or shall confer upon any other person any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Services Agreement.

 

Section 7.4            Assignment .  Except as set forth in Section 2.8 , neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by either party (whether by operation of law or otherwise) without the prior written consent of the other party, except that either party may, solely in connection with the sale of all or substantially all of its assets (or in the case of SVU, all or substantially all of the assets of its wholesale independent business), assign, in its sole discretion and without the other party’s consent, any or all of its rights, interest and obligations under this Agreement to any third party transferee; provided that the transferee (i) agrees to be bound by the terms of this TSA; (ii) has the assets, systems, personnel and financial wherewithal to perform the transferring party’s obligations hereunder; (iii) is not engaged in litigation with the non-transferring party; (iv) has not been declared insolvent, or is not the subject of any proceedings or application related to its winding up, liquidation, administration, receivership, administrative receivership, bankruptcy or other similar proceedings; and (v) possesses creditworthiness and business reputation at least on par with SVU.

 

Section 7.5            Termination of Existing TSA .  The Existing TSA is hereby terminated and of no further force and effect, except that any obligations under the Existing TSA arising or relating to the period prior to the Effective Date shall survive until fully performed.  To the extent that any such obligations are owed or to be performed by NAI, they are hereby assigned to, and assumed by, SVU.

 

19



 

IN WITNESS WHEREOF, the parties have caused this Services Agreement to be executed by their duly authorized representatives.

 

 

SUPERVALU INC.

 

 

 

 

 

By:

/s/ Todd N. Sheldon

 

 

Name:

 

 

Title:

 

 

 

 

 

ALBERTSON’S LLC

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

[ Signature Page to LLC Transition Services Agreement ]

 

20



 

IN WITNESS WHEREOF, the parties have caused this Services Agreement to be executed by their duly authorized representatives.

 

 

ALBERTSON’S LLC

 

 

 

 

 

By:

/s/ Susan McMillan

 

 

Name: Susan McMillan

 

 

Title:

 

[Signature Page to SVU/ABS TSA]

 

21



 

Schedule 1 — Procurement of Goods

 

1.               SVU agrees to use its commercially reasonable efforts to permit Albertson’s to obtain the benefits (including as to price, shipping, payment terms, warranties, indemnification, restocking fees and penalties, cancellation return and refund policies) of vendor and supply contracts for products, goods and inventory with nationally-based vendors and suppliers utilized by SVU and its Affiliates (each such contract, individually, a “ Corporate Contract ” and, collectively, the “ Corporate Contracts ”).  For the avoidance of doubt, contracts related to regionally specific items are not included in the definition of Corporate Contract.  In addition, any contracts bifurcated as contemplated by Section 5.13 of the SPA shall not be included in the definition of Corporate Contract.

 

2.               SVU agrees to use its commercially reasonable efforts to obtain favorable prices under Corporate Contracts by combining or consolidating orders made under such Corporate Contracts.  Subject to the provisions of Paragraph 3 below, Albertson’s will continue to support the programs described in the Corporate Contracts, and will continue to purchase all its needs for the products covered by those Corporate Contracts, in the same manner as the applicable operations owned by Albertson’s and SVU and its affiliates performed prior to the Effective Date, and, subject to good faith collaboration, make purchases for a pro rata portion of any minimum volume commitments under those Corporate Contracts.

 

3.               Subject to the provisions of Paragraph 7 below, SVU shall negotiate, manage and administer the Corporate Contracts.  SVU shall use commercially reasonable efforts to provide to Albertson’s a summary of the material terms of each Corporate Contract; provided that SVU shall, within ten business days following the date of the SPA, provide to Albertson’s a summary of the material terms of each Corporate Contract that is a “material contract” (as such term is defined in Item 601(b)(10) of Regulation S-K of the Securities Act (as such definition is applied to SVU).  On a regular basis, as the parties may determine (which, for the first six (6) months of the term of this Services Agreement, will be weekly), a representative of SVU’s merchandising group will meet with a representative of Albertson’s to preview anticipated upcoming national vendor negotiations with respect to proposed Corporate Contracts or the amendment or renewal thereof, and will provide Albertson’s with a summary of the material terms of such proposed Corporate Contracts (or such amendment or renewal thereof).  Albertson’s may elect to participate in one or more of the upcoming contracts, amendments or renewals by notifying SVU of its election at these preview meetings.  If Albertson’s provides notice to SVU at such a meeting that it elects to participate in such contract, amendment or renewal, SVU will advise the national vendor that Albertson’s is participating in such Corporate Contract (or the amendment or renewal thereof), SVU will debrief Albertson’s as to the material aspects of its meetings with the national vendor, and Albertson’s will be obligated to participate in such Corporate Contract (or the amendment or renewal thereof) on the terms finally negotiated by SVU, unless the terms of such contract, amendment or renewal are materially different from the terms previewed to Albertson’s by SVU.  With respect to any Corporate Contract which Albertson’s elects to obtain or continue to obtain (after the amendment or renewal thereof) the benefit of, SVU shall provide Albertson’s with reasonable access to its books and records for purposes of being able to audit such Corporate Contracts and to ascertain that it is receiving advance payments, inducements, incentives, rebates, fees or promotional funds

 

Schedule 1-1



 

associated with such Corporate Contracts on a basis proportionate to its purchases and satisfaction of other performance criteria under such Corporate Contracts.  Additionally, the parties will consult and collaborate to the extent commercially feasible with respect to Albertson’s regional vendor relationships.

 

4.               Payments and amounts owing under each Corporate Contract shall be in addition to any payments required under this Services Agreement, and shall be made on the terms and subject to the conditions of each Corporate Contract.

 

5.               The parties shall cooperate to establish procurement and merchandising systems that allow Albertson’s to order inventory in substantially the same manner as stores managed by SVU.

 

6.               To the extent requested by Albertson’s, SVU shall assist Albertson’s in reconciling disputes with vendors.

 

7.               Provided that Albertson’s is not in breach of its obligations hereunder, all purchase orders for the benefit of Albertson’s under the Corporate Contracts will be issued bearing the name of both SVU and Albertson’s, and will provide that the “ship to” destination will determine title and which party will be responsible for the vendor payable.  Albertson’s will be financially responsible for paying all invoices for all purchase orders for products shipped to it directly from its own funds and will directly manage credit aspects of the vendor relationships relating to these purchase orders.  SVU will provide Albertson’s with commercially reasonable assistance in managing vendor relationships as requested, but Albertson’s will establish its own credit lines with the vendors without assistance from SVU.  In order to facilitate a smooth transition of vendor relationships, the parties have approved the notice to vendors that has previously been sent to vendors, and the parties have agreed that, after the date of such notice, SVU will direct all inquiries from vendors concerning Albertson’s, credit and payment terms applicable to Albertson’s to the Treasurer of Albertson’s, and shall not initiate any contacts with vendors concerning credit and payment terms applicable to Albertson’s for a period of sixty (60) days following the SPA Closing Date (as such term is defined in the SPA).

 

8.               The parties acknowledge and agree that, notwithstanding anything to the contrary contained in this Services Agreement, in no event shall SVU be required to pay or otherwise advance funds in respect of accounts payable of Albertson’s.

 

9.               Albertson’s and SVU will jointly purchase fuel under SVU’s purchase orders.

 

Schedule 1-2



 

Schedule 2 — Other Service

 

[**]

 


** Denotes confidential information that has been omitted from the exhibit and filed separately, accompanied by a confidential treatment request, with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934.

 


 


 

Exhibit A — Fees

 

I.                                         Fees for Services to be provided by SVU

 

A.                                     Services Fees During First 12 Months of Initial Term .  Subject to Section 2.1(d) , the Services fee for the first 12 months of the Initial Term is $114,000,000, payable in equal installments as follows:  10% of the Year One Fee in each of the first 4 months of the Initial Term, 9% of the Year One Fee in the 5th and 6th month of the Initial Term and 7% of the Year One fee in the 7th through 12th month of the Initial Term.

 

B.                                     One-time Transition Fee .  In addition, Albertson’s shall pay SVU a one-time transition fee of $60,000,000, such fee to be paid in installments of $20,000,000 each on June 1, 2013, October 1, 2013 and February 1, 2014.

 

C.                                     Services Fees During Months 13 through 30 of the Initial Term .  After the first 12 months of the Initial Term, and during the remainder of the Initial Term, Albertson’s will pay fixed and variable fees for Services calculated as follows:

 

1.                           Operating Distribution Centers — Albertson’s will pay (a) a weekly fixed fee of $9,615 per distribution center operated by Albertson’s on SVU’s systems at the start of month 13 of the Initial Term, which fee shall not be subject to reduction for the closure of distribution centers during the Initial Term, and (b) a weekly variable fee of $9,615 per distribution center operated by Albertson’s on SVU’s systems each week, which fee shall be subject to reduction for the closure of distribution centers as provided in Section I.F below.

 

2.                                       Operating Supermarkets — Albertson’s will pay a weekly fixed store fee and a weekly variable store fee based on an Annual Per Store Fee (defined below) for operating grocery stores receiving Services under this Services Agreement.  Immediately following the first 90 days after the Effective Date, the Annual Per Store Fee will be calculated as follows:

 

(a)                                  $114,000,000 minus the cost of Services transferred from SVU within the first 90 days of the Initial Term (as described in I.A above), minus the sum of $1,000,000 multiplied by the number of operating distribution centers.  The result shall then be divided by the number of operating supermarkets receiving Services on day 91(“ Annual Per Store Fee ”).  The parties will execute a letter agreement as soon as possible after the first 90 days of the Initial Term to confirm the Annual Per Store Fee.  Once established, the Annual Per Store Fee will be the base fee used to calculate fixed and variable fees during months 13 through 30 of the Initial Term and during any exercised Extension Terms.

 

(b)                                  During months 13 through 30 of the Initial Term, the weekly fixed store fee will be equal to one-half of the Annual Per Store Fee divided by 52. This weekly fixed store fee will not be subject to reduction for the closure of a supermarket during the Initial Term.

 

Exhibit A-1



 

(c)                                   During months 13 through 30 of the Initial Term, the weekly variable store fee (which is based on the number of operating supermarkets at the beginning of a given week) will be calculated by dividing one-half of the Annual Per Store Fee by 52.   The weekly variable store fee will be subject to reduction for the closure of supermarkets as provided in Section I.F below

 

3.                                       As an example only, during months 13 through 30 of the Initial Term, if the reduction for transferred Services after the first 90 days equals $10,000,000, if the number of grocery stores on day 91 is 600, and if Albertson’s LLC has 7 operating distribution centers, the Annual Per Store Fee shall be calculated as follows:   $114,000,000 - $10,000,000 = $104,000,000 — (7 x $1,000,000) = $97,000,000 / 600 =  $161,666 per year or $3,109 per supermarket per week. The weekly variable per store fee would be $1,554.50 per supermarket. The weekly fixed per store fee would be $1,554.50 per supermarket. Assuming 600 supermarkets, the weekly variable store fee for all supermarkets would be $932,700 ($1,554.50 x 600). Assuming 600 stores, the weekly fixed store fee for all stores would be $932,700 ($1,554.50 x 600) for a weekly payment total (fixed and variable) of $1,865,400. The weekly variable store fee could be reduced as a result of supermarket closures.  For example, if five (5) stores closed in a given week, the weekly variable store fee would be $924,927.50 ($1,554.50 x 595) for the next week, but the weekly fixed store fee would continue at $932,700 ($1,554.50 x 600) for a weekly total (fixed and variable) of $1,849,855.

 

D.                                     Services Fees After the Initial Term.   After the Initial Term, and provided that Albertson’s has exercised an Annual Extension Term(s), Albertson’s will pay fixed and variable fees for Services calculated as follows:

 

1.                                       Operating Distribution Centers — During each exercised Annual Extension Term, Albertson’s will pay (a) a weekly fixed fee of $9,615 per distribution center operated by Albertson’s on SVU’s systems at the start of the Annual Extension Term which amount shall not be decreased during such Annual Extension Term due to the closure of distribution centers, and (b) a weekly variable fee $9,615 per week per distribution center operated by Albertson’s on SVU’s systems at the start of the Annual Extension Term, which fee shall be subject to reduction each week for the closure of Distribution Centers as provided in Section I.F below.

 

2.                                       Operating Supermarkets — During each exercised Annual Extension Term, Albertson’s will pay a weekly fixed store fee and a weekly variable store fee as follows:

 

(a)                                  The weekly fixed store fee will be equal to one-half of the Annual Per Store Fee multiplied by the number of operating supermarkets at the beginning of the Annual Extension Term divided by 52.  The weekly fixed store fee will not be subject to reduction for the closure of a supermarket during the applicable Annual Extension Term.

 

Exhibit A-2



 

(b)                                  The weekly variable store fee (which is based on the number of operating supermarkets at the beginning of a given week) will be calculated by dividing one-half of the Annual Per Store Fee by the number of operating supermarkets at the beginning of a given week, and further dividing that sum by 52.  The weekly variable store fee will be subject to reduction for the closure of supermarkets as provided in Section I.F below.

 

(c)                                   As an example only, during the first Annual Extension Term, if the Annual Per Store Fee has been established after the first 90 days at $3,109 per week per store, and if on the first day of the Annual Extension Term the number of operating supermarkets is 575, the weekly fixed store fee would be $893,838 ($1,554.50 x 575).  Assuming 575 supermarkets, the weekly fixed store fee for all supermarkets would be $893,838 ($1,554.50 x 575) for a weekly payment total (fixed and variable) of $1,787,675.  The weekly variable store fee could be reduced as a result of supermarket closures.  For example, if five (5) stores closed in a given week, the weekly variable store fee would be $886,065 ($1,554.50 x 570) for the next week, but the weekly fixed store fee would continue at $893,838 ($1,554.50 x 570) for a weekly total (fixed and variable) of $1,779,903.

 

E.                                      Fees for New or Acquired Supermarkets

 

From and after the Effective Date, in the event Albertson’s opens supermarkets or acquires operating supermarkets (collectively, “ New Stores ”), such New Stores shall be added to the TSA if, and only if, such New Stores utilize IT systems and platforms that are compatible in all material respects with Albertson’s then current IT systems and platforms.  As an example and for sake of clarity, it is agreed that SVU would have no obligation to provide Services to a supermarket (or a supermarket chain) acquired by Albertson’s which is supported by IT systems and platforms not compatible in all material respects with the then current IT systems and platforms of Albertson’s, including, but not limited to, all material applicable hardware and software and their respective versions.  If New Stores are added to the TSA (as allowed above), the fees for such New Stores shall be as provided above. Albertson’s shall pay no fee (fixed or variable) for New Stores receiving Services under this Services Agreement during the first twelve (12) month period of the Initial Term, unless Albertson’s adds more than five (5) stores during the first twelve (12) month period of the Initial Term, at which point the parties will agree to an appropriate increase in the Service Fees.

 

F.                                       Store and Distribution Center Counts .

 

In the event Albertson chooses to not receive Services at a supermarket or distribution center, the variable weekly fee for such supermarket or distribution center set out in Section I.C and Section 1.D above, as applicable, shall be eliminated only after Albertson’s provides SVU with written notice of the separation and fee reduction, and, as set out in Section I.G below, the fee reduction shall become effective ten (10) weeks after SVU’s receipt of the notice.

 

Exhibit A-3



 

G.                                     No Proration of Weekly Payments .

 

There shall be no proration of a variable fee weekly payment due to the timing of a supermarket or distribution center closure or separation during a particular week (i.e., if a supermarket or distribution center is operating during any portion of the week for which it is receiving Services, for payment purposes hereunder, it shall be deemed to have operated and received Services for the entire week).  A week shall run from Friday to Thursday.

 

H.                                    Annual Prepayment Portion Amount .  Albertson’s expressly acknowledges and agrees that it shall prepay to SVU a portion of the total fees due for each Annual Extension Term exercised by Albertson’s.  Such portion to be prepaid shall be an amount that equals Ten Million and 00/100 Dollars ($10,000,000) (the “ Albertson’s Annual Prepayment Portion Amount ”).  The Albertson’s Annual Prepayment Portion Amount is due on or before the final business day in each 12 month period during the Initial Term, and, thereafter, prior to the expiration of each Annual Extension Term provided Albertson’s has exercised its next Annual Extension Term option.  Receipt of such payment by SVU is an express condition precedent to the effectiveness of the Annual Extension Term then being exercised.  The payment of the Albertson’s Annual Prepayment Portion Amount is a material part of the consideration that induced SVU to enter into this Services Agreement, and the payment shall be deemed fully earned by SVU upon receipt except as otherwise provided herein.  No part of the Albertson’s Annual Prepayment Portion Amount shall be subject (under any circumstances) to rebate or refund, other than (i) a refund to Albertson’s of any unearned portion of the Albertson’s Annual Prepayment Portion Amount in the event Albertson’s terminates its receipt of Services under the TSA as a result of an uncured default by SVU; or (ii) a refund to Albertson’s of any unearned portion of the Albertson’s Annual Prepayment Portion Amount in the event Albertson’s does not exercise the first available Annual Extension Term.  Further, and notwithstanding anything to the contrary herein, in the event an Annual Extension Term is exercised but the Services provided to Albertson’s under the TSA will terminate prior to the completion of that Annual Extension Term (“ Albertson’s Partial Annual Extension Term ”) due to a Service Provider Termination Notice, Albertson’s shall pay a prorated amount of the Albertson’s Annual Prepayment Portion Amount for such Albertson’s Partial Annual Extension Term (such pro rata calculation to be based on an agreed-upon store count, current per week rates, and the timing of the termination of the relevant TSA Services and shall not exceed $10,000,000) on or before the usual due date, and will continue to pay the per-supermarket and per-distribution center fees set out above.

 

I.                                         Annual Prepayment Made Pursuant to Existing TSA :  SVU acknowledges that in December, 2012 Albertson’s made the required $20,000,000 annual prepayment pursuant to the Existing TSA (“ 2012 Prepayment ”).  Albertson’s shall be entitled to a credit against the fees to be paid by Albertson’s pursuant to I.A above of the unapplied portion of the 2012 Prepayment through the date of termination of the Existing TSA.

 

Exhibit A-4



 

J.                                         Tacoma, WA Office Space.   Albertson’s will reimburse SVU monthly the monthly fee being paid by the Washington division to SVU for the Tacoma office space immediately prior to the date of the SPA.

 

II.                                    Fees for Services to be provided by Albertson’s

 

A.                                     General Office Services.

 

With respect to general office services at shared locations, the party that holds either fee simple title or a leasehold interest in the property (the “ Owning Party ”) shall be entitled to reimbursement from the other party that maintains employees at such location (the “ Non-Owning Party ”) to the extent that the Non-Owning Party maintains (i) at least ten (10) employees and contractors at the shared location or (ii) at least twenty percent (20%) of the total number of employees and contractors (“ Shared Location ”). The parties will work together to identify all office facilities that are shared within 90 days from the Effective Date including the headcount in each facility.

 

The Non-Owning Party will promptly reimburse the Owning Party’s monthly expenses incurred in connection with providing office space to the Non-Owning Party at the Shared Location including without limitation:

 

1.               Utilities — including without limitation power, gas, water, sewer, telephone and trash;

 

2.               Taxes — including without limitation property, ad valorem and personal property taxes; and

 

3.               Insurance — including without limitation building insurance and general liability.

 

The Non-Owning Party will promptly reimburse the Owning Party’s third party reasonable documented out-of-pocket monthly expenses incurred in connection with providing office space to the Non-Owning Party at the Shared Location including without limitation:

 

1.                                       Cafeteria, Catering and/or Vending Services;

 

2.                                       Mailroom Services;

 

3.                                       Security;

 

4.                                       Common Area Maintenance; and

 

5.                                       Maintenance Repair and Cleaning of Interior and Exterior of Shared Location (including landscape, parking and driving areas).

 

6.                                       For those Shared Locations where Owning Party controls the interest as a tenant under a lease, rent and other customary charges payable to the third party landlord.

 

Exhibit A-5



 

Each party shall be responsible for its pro rata percentage of payments based on such party’s pro rata percentage of the total number of employees and independent contractors at the Shared Location as of the Effective Date.  The parties will review on a semi-annual basis each party’s Shared Location usage to increase or decrease fees as a result of increase or decrease in employees and contractors.

 

For the avoidance of doubt, salary and benefit costs of personnel providing services at a Shared Location will shall not be included in the shared costs addressed in this section.

 

The Non-Owning Party may make cosmetic improvements to the Shared Locations so long as the Non-Owning Party pays for the full amount of such improvements or as otherwise agreed in writing by the parties.  The Non-Owning Party must acquire the prior written consent of the Owning Party to make any improvements.

 

The parties will work with one another on a reasonable basis to facilitate any reconfigurations, expansions, or contractions as required to accommodate the business needs of either party subject to the review and approval of the Owning Party.  Any out of pocket costs and expenses incurred as a result will be borne solely by the party that will be completing such reconfiguration.

 

B.                                     Records Center Services .

 

As fees for the provision of records management and retention services, SVU will reimburse Albertson’s monthly for fifteen percent (15%) of the total budget for the Records Center department.  The percentage is based on the pro rata percentage of physical space occupied by SVU’s files in the various records depository centers managed by the Records Center.  The parties will review yearly the physical space occupied by SVU’s files to increase or decrease fees as a result of increase or decrease in space occupied.

 

C.                                     Environmental Services.

 

As fees for the provision of environmental services, SVU will reimburse Albertson’s monthly for salary and employee benefit costs of the Albertson’s environmental group.  Notwithstanding the foregoing, SVU shall be solely responsible for the payment of all third party costs associated with SVU environmental projects, including but not limited to retention of consultants for SVU projects, remediation expenses, and regulatory fees and penalties.

 

Exhibit A-6



 

Exhibit B — System Code Purchase Option

 

A.                                     A.                                     Albertson’s may exercise the System Code Purchase Option by providing written notice to SVU immediately upon the establishment of a date certain for the future termination or expiration of the TSA as provided under the terms of the TSA and at any time thereafter until such termination or expiration date.  By way of example, Albertson’s may exercise its System Code Purchase Option immediately upon the date of any of the following to occur: (1) SVU notifies Albertson’s that SVU has exercised its right to terminate the Services provided to Albertson’s under the TSA in thirty six (36) months under Section 6.4 of the TSA; or (2) Albertson’s notifies SVU that it will not exercise its option to extend the TSA beyond the then current Annual Extension Term; or (3) Albertson’s notifies SVU that it has exercised its option to extend for the last available Annual Extension Term under Section 3.2 of the TSA (the Twelfth Annual Extension Term).

 

B.                                     Said purchase shall be in consideration of the parties’ rights and obligations contained in the TSA (without the requirement of additional payment); provided , however , (1) any third party consents necessary for the transfer of the System Code and/or all costs associated with the licensing or transfer of the System Code or related data, and (2) any hardware or software purchases, upgrades or modifications necessary for the transfer and continued operation of the System Code and all associated costs, shall be the sole responsibility of Albertson’s.  The transfer shall be expressly conditioned on Albertson’s obtaining all necessary third party consents, if any.

 

C.                                     Within a reasonable time following SVU’s receipt of Albertson’s notice that it has exercised the System Code Purchase Option, the parties shall work in good faith to mutually define with reasonable specificity the source code that comprises any Albertson’s legacy system, which shall be limited to (i) only that code developed by SVU then in place and used to solely support the operations of Albertson’s under the TSA, and (ii) the ARX pharmacy system code and supporting back office health care system applications, such as third party accounting and DEA reporting (collectively, the “ System Code ”).  Prior to the date that Albertson’s exercises its System Code Purchase Option, at a time mutually agreed to by the parties, SVU shall cooperate with and give Albertson’s access to the System Code in order to allow Albertson’s to evaluate the performance of the System Code and to determine any hardware or software upgrades or modifications Albertson’s may desire to make following the System Code Purchase Date (defined below).

 

D.                                     Completion of the purchase and transfer of title to the System Code shall take place on the date the parties complete the identification and definition of the System Code as described above (said date to be referred to herein as the “ System Code Purchase Date ”).  The System Code shall be conveyed by bill of sale in a form reasonably acceptable to Albertson’s.  With respect to the sale of the System Code, the following shall apply:

 

i.                                           The System Code shall be sold to Albertson’s on a completely AS IS, WHERE IS basis, with absolutely no representation or warranty by SVU.  SVU GIVES NO EXPRESS OR IMPLIED WARRANTIES OF ANY KIND (INCLUDING, WITHOUT LIMITATION, ANY IMPLIED WARRANTIES, STATUTORY OR OTHERWISE, OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR

 

Exhibit B-1



 

PURPOSE OR OF NON-INFRINGEMENT) FOR THE SYSTEM CODE OR RELATED SERVICES.  This disclaimer of warranties is a fundamental element of the basis of the agreement for sale of the System Code between Albertson’s and SVU.  SVU would not be able to provide the System Code on the present terms without such limitations.

 

ii.                                        Notwithstanding the preceding Section D(i) , but subject to Albertson’s responsibility for third party licenses and fees as provided under Section 1.5 of the TSA, SVU agrees to defend and indemnify Albertson’s from and against any and all infringement of patents, copyrights, or trade secrets owned or claimed to be owned by third parties caused by use of the System Code before the System Code Purchase Date.  SVU’s indemnification obligation to Albertson’s is dependent upon the following conditions being fulfilled: (a) that Albertson’s gives SVU prompt written notice of any claim for which Albertson’s seeks indemnification; (b) that Albertson’s cooperates with SVU in the defense of such claims; and (c) that SVU has the sole right to defend any such claim in the manner it deems prudent, including retaining counsel of its choice, although Albertson’s shall have the right to be represented by counsel of its own choosing at its own expense, if desired.

 

iii.                                     Upon consummation of the sale, SVU will immediately deliver to Albertson’s a copy of the System Code in a mutually agreed upon form.  Following the System Code Purchase Date, SVU may retain one or more copies of the System Code and shall be granted, on an AS IS, WHERE IS basis, a perpetual, non-exclusive, royalty-free license to access, modify and use, for any business purpose SVU deems reasonable, so long as such activities do not relate in any manner to the primary purpose of the System Code purchased by Albertson’s; provided, however, that SVU may use the ARX pharmacy system code for its primary purpose.  Notwithstanding anything to the contrary provided in this Exhibit B , SVU shall have no obligation to keep or maintain a copy of the System Code for any purpose.

 

iv.                                    Any and all future enhancements, upgrades, changes, improvements and/or modifications to the System Code desired by Albertson’s or necessitated for any reason shall be the sole responsibility of Albertson’s (at Albertson’s sole cost and expense) and shall be outside the scope of the TSA.  Albertson’s specifically acknowledges and agrees that: (a) Albertson’s will be responsible for all liabilities and risks associated with the operation and maintenance of the System Code arising out of Albertson’s or its successors’ use after the System Code Purchase Date; and (b) Albertson’s will defend and indemnify SVU from and against any liability, expense, damage or causes of action of any kind arising out of Albertson’s use of the System Code after the System Code Purchase Date.

 

v.                                       After the System Code Purchase Date, and except as otherwise provided in this Exhibit B , SVU shall have no obligation to help, aid or consult with Albertson’s as to the System Code.  Any consulting services that Albertson’s may request will be considered as a request for an Additional Service and shall be treated as such pursuant to the terms of Section 2.4 of the TSA.  As to any changes to the System Code requested by Albertson’s, Albertson’s must comply with the change

 

Exhibit B-2



 

management process then used by SVU (the change management process includes, without limitation, the requirement to document a change to the System Code and written analysis and collaboration with support teams prior to change and before deployment and authorization by SVU’s deployment manager of such change), and the implementation of the approved change must be communicated to the appropriate IT personnel of SVU, so the required testing can be completed so as not to impact any downstream systems.

 

vi.                                    From time to time during the term of the TSA, upon Albertson’s request, SVU shall provide Albertson’s with a then-current copy of the System Code (in a mutually agreed format), and (subject to paragraph B above) SVU hereby grants Albertson’s a non-exclusive license to use (and to make modifications and improvements to) such System Code in connection with the operation of its business.

 

Exhibit B-3



 

Exhibit C — IT Systems - Redlight Schedule

 

A.                                     Unless the parties agree otherwise, 5 months prior to the end of either (a) each calendar year of the Initial Term or (b) the then current Annual Extension Term, SVU will provide Albertson’s with a list of redlighted IT systems that SVU has identified for removal from its IT environment and/or for which SVU intends to terminate support during the next Annual Extension Term and the timing for such terminations (the “ Redlight Schedule ”).  The first Redlight Schedule which SVU can present pursuant to this provision shall relate to the Third Annual Extension Term.  The Redlight Schedule will identify the following items:

 

i.                                           A list of the IT systems, applications and services, which SVU plans to terminate in the following Annual Extension Term and the timing of such terminations (the “ Redlighted Apps ”);

 

ii.                                        Applications or services of reasonably comparable functionality to the Redlighted Apps., which SVU has selected to replace the Redlighted Apps (the “ Replacement Apps ”) and the timing of implementation of such Replacement Apps.  Such Replacement Apps may include third party software applications or services, as well as such applications and services internally developed by SVU; and

 

iii.                                     The estimated cost of each Replacement Apps, including applicable third party license, incremental development, installation and maintenance and support fees, as well as SVU’s incremental labor costs associated with the conversions to the Replacement Apps at Albertson’s locations.  Albertson’s shall be responsible for such actual costs of such Replacement Apps only to the extent such costs relate to Albertson’s use.

 

B.                                     Within thirty (30) days of its receipt of the Redlight Schedule, Albertson’s shall provide SVU with a written response to the Redlight Schedule.  Albertson’s response may include: (i) acceptance of any or all of the Redlighted Apps, (ii) acceptance of any or all of the Replacement Apps, or (iii) notice that it has chosen not to replace any or all of the respective Redlighted Apps.

 

Within fifteen (15) days of SVU’s receipt of the Albertson’s response, the parties shall commence good faith negotiations of the Redlight Schedule and Albertson’s response with the intent to achieve mutual acceptance of a final Redlight Schedule, which shall be completed prior to the commencement of the next Annual Extension Term.

 

The following scenario is illustrative of the intended process described herein:

 

On July 25, 2011, SVU provided Albertson’s with the Redlight Schedule for the 2012 Annual Extension Term.  The Redlight Schedule lists Travel and Expense Reporting (“ TERS ”) as a Redlighted App, which SVU planned to terminate use and de-install on August 1, 2012.  The Redlight Schedule also identified Oracle’s iExpense software as a Replacement App, which includes an estimated license fee of $XX and an annual maintenance and support fee of $X.

 

Exhibit C-1



 

On August 20, 2011, Albertson’s provided SVU with its written comments to the Redlight Schedule.  On September 5th, the Parties met to discuss the Redlight Schedule and Albertson’s comments thereto and continued negotiations until a final Redlight Schedule was completed

 

C.                                     In the event that the parties fail to agree on all items of the Redlight Schedule prior to the commencement of the next Annual Extension Term, the final Redlight Schedule shall contain only those items on which the Parties have mutually agreed.  Notwithstanding the preceding, SVU shall have no further obligation to host and/or support any Redlighted App which it has identified in the Redlight Schedule, but with respect to which the Parties have not agreed on a Replacement App; provided , however , systems, applications and services which serve only Albertson’s shall not be redlighted without Albertson’s written approval, not to be unreasonably withheld.

 

However, in the event that SVU chooses, in its sole and absolute discretion, to continue to host and/or support a Redlighted App beyond its planned termination, subject to Albertson’s agreement that SVU shall continue to host and/or support a Redlighted App beyond its planned termination, Albertson’s shall pay all documented internal and out-of-pocket costs (at both corporate level and store level) actually incurred by SVU that are incremental and in addition to any costs SVU incurs in supporting its own business.  SVU will make good faith efforts to minimize such costs and expenses.  In addition, Albertson’s shall acknowledge and agree that SVU shall not be responsible for maintaining services levels that may have applied to such Redlighted App prior to its planned termination.

 

D.                                     To assist Albertson’s with its capital expenditure planning, SVU agrees to share with Albertson’s, upon Albertson’s request and during the term of the TSA, SVU’s plans as to IT systems, applications and services which SVU provides support under this TSA and which SVU may be considering for termination in future Annual Extension Terms beyond the next immediate Annual Extension Term, replacement systems, applications and services which SVU is considering in the future, and roll-out schedules for such terminations and replacement applications (“ Future IT Plans ”).  Except as otherwise provided in this Exhibit C , neither SVU nor Albertson’s shall have any obligation to the other as to such Future IT Plans, including any obligation to implement or pay for any such Future IT Plans.

 

Exhibit C-2



 

Exhibit D — Dispute Resolution Process

 

The “ Dispute Resolution Process ” shall mean that any then current, known disputes or potential disputes individually having a monetary value that reasonably could be expected to exceed $1,000,000 shall be listed by the Receiving Party and delivered to the Service Provider concurrent with an extension term exercise notice.  The Service Provider shall notify the Receiving Party in writing within ten (10) business days after receipt of the extension term notice of any additional disputes or potential disputes individually having a monetary value that reasonably could be expected to exceed $1,000,000.  The parties will then have twelve (12) months from the date of delivery of such list to fully resolve or submit to binding arbitration (consistent with Section 5.11 of the Settlement Agreement) the listed matters.  If said matters are not fully resolved or submitted to arbitration within such twelve (12) month period, the next scheduled extension term exercise shall no longer be available to the Receiving Party and shall be deemed to have failed.  The listed matters shall be deemed submitted to arbitration if either party notifies the other in writing that it wishes to engage in arbitration as to outstanding listed matters.

 

The parties agree that the existing sales/use tax services dispute between the parties will be resolved by the parties outside the scope of this Services Agreement.  Resolution of such dispute is not a condition to the extension of the Term of this Services Agreement.

 

Exhibit D-1



 

Exhibit E - Resolution of Certain Disputes

 

A.                                     Albertson’s and SVU previously agreed to a settlement regarding antitrust litigation settlement proceeds attributable to the stand along drug business and in-store pharmacies.  As of the Effective Date, all proceeds from drug antitrust litigation settlements attributable to the stand alone drug business or in-store ALB LLC pharmacies shall belong to Albertson’s.

 

B.                                     Albertson’s and SVU previously entered into a letter agreement dated May 26, 2010 relating to US Satellite.  Albertson’s and SVU acknowledge and agree that Albertson’s will be acquiring US Satellite as a result of the Stock Purchase under the SPA; therefore, any and all proceeds in regard to the sale of US Satellite shall belong to Albertson’s, not SVU, notwithstanding any agreements between the parties previously.

 

Exhibit E-1



 

Exhibit F — PCI Compliance

 

A.                                     Service Provider agrees that that if it or its subcontractors access, store, process, handle, or transmit Cardholder Data, as defined below, as part of performing Services under this Agreement, it and its Subcontractors shall fully comply with the Payment Card Industry Data Security Standard, as promulgated by the PCI Security Standards Council or its successors (the “ PCI DSS ” ) and all other applicable industry standards having to do with the protection or security of Cardholder Data, as such standards may be modified from time to time (the “ PCI Requirements ”) and with all applicable Laws having to do with the protection or security of Cardholder Data (the “ Cardholder Data Protection Laws ”), as such PCI Requirements and Cardholder Data Protection Laws apply to Supplier in its performance of Services.  Service Provider further agrees that it and its subcontractors, through their acts or omissions, shall not cause Receiving Party or its Affiliates to be in violation of the PCI Requirements or the Cardholder Data Protection Laws.  For purposes of this Section, “ Cardholder Data ” shall be defined as in the PCI DSS, and includes, as to any payment card, the full magnetic stripe (and all data encoded in it), the primary account number (PAN), the cardholder’s name, the expiration date, and the service code.

 

B.                                     Service Provider agrees that it and its subcontractors shall use the Cardholder Data that they access, store, process, handle, or transmit under this Agreement only as necessary to perform Service Provider’s obligations under this Agreement (including any Order) and comply with applicable Law.

 

C.                                     If Service Provider discovers that unauthorized access has been, or is reasonably likely to have been, gained to Cardholder Data to which it or its subcontractors have had access or have stored, processed, handled, or transmitted, Service Provider shall immediately notify Receiving Party and provide the applicable card companies and acquiring financial institutions, and their respective designees, access to Service Provider and its subcontractors’ facilities and all pertinent records to conduct a review of the compliance by Service Provider and its subcontractors with the PCI Requirements.  Service Provider agrees that it and its subcontractors shall fully cooperate with any reviews of their facilities and records provided for in this subsection.

 

D.                                     Service Provider agrees that if it or its subcontractors have access to, store, process, handle, or transmit Cardholder Data as part of performing Services under an order, it and its subcontractors shall maintain appropriate business continuity procedures and systems to ensure security of Cardholder Data in their possession or control in the event of a disruption, disaster, or failure of the primary data systems of SVU, ABS LLC, or ABS LLC’s subcontractors.

 

E.                                      If Service Provider or its subcontractors have access to, store, process, handle, or transmit Cardholder Data as part of performing Services under an order, Service Provider shall provide Receiving Party and its Affiliates with all certifications and other information reasonably requested by Receiving Party or its Affiliates to enable Receiving Party and its Affiliates to be certified as being in compliance with the PCI Requirements.

 



 

F.                                       Service Provider’s obligations under this Exhibit shall continue in effect after the termination of this Agreement.

 



 

Exhibit G — Services Elimination and Fee Credit

 

[**]

 


** Denotes confidential information that has been omitted from the exhibit and filed separately, accompanied by a confidential treatment request, with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934.

 


Exhibit 10.2

 

EXECUTION VERSION

 

TRANSITION SERVICES AGREEMENT

 

by and between

 

SUPERVALU INC.

 

and

 

NEW ALBERTSON’S, INC.

 

Dated as of March 21, 2013

 



 

Table of Contents

 

 

Page

 

 

ARTICLE I AGREEMENT TO PROVIDE AND ACCEPT SERVICES

1

Section 1.1

Services

2

Section 1.2

Books and Records; Availability of Information

2

Section 1.3

Cost of Providing the Services

2

Section 1.4

Required Consents

2

Section 1.5

Intellectual Property Licenses

3

Section 1.7

IT Systems

3

 

 

 

ARTICLE II SERVICES; PAYMENT; INDEPENDENT CONTRACTORS SERVICES 4

 

Section 2.1

Services To Be Provided

4

Section 2.2

Cooperation

6

Section 2.3

Steering Committee

6

Section 2.4

Additional Services

7

Section 2.5

Pricing; Payments

7

Section 2.6

Disclaimer of Warranty

8

Section 2.7

Taxes

8

Section 2.8

Use of Services; Third Party Transferees

8

Section 2.9

Confidential Information; Third Party Transferees

9

Section 2.10

Work-around

9

Section 2.11

Prior Resolution of Certain Disputes

9

Section 2.12

Agency; Power of Attorney

9

Section 2.13

Accounting Adjustment Procedure

10

 

 

ARTICLE III TERM OF SERVICES

10

Section 3.1

Term

10

Section 3.2

Option(s) to Extend Term

10

Section 3.3

Additional Service Extensions

12

Section 3.4

Transition of TSA Services

12

 

 

ARTICLE IV FORCE MAJEURE

13

Section 4.1

Force Majeure

13

 

 

ARTICLE V LIABILITIES

14

Section 5.1

Consequential and Other Damages

14

Section 5.2

Limitation of Liability

14

Section 5.3

Obligation To Re-perform

14

Section 5.4

Indemnity

14

 

 

ARTICLE VI TERMINATION

15

Section 6.1

Termination

15

Section 6.2

Breach of Services Agreement; Dispute Resolution

15

Section 6.3

Sums Due

16

Section 6.4

Service Provider Termination Right

17

 

i



 

Section 6.5

Services Following Expiration or Termination

17

Section 6.6

Effect of Termination

17

 

 

ARTICLE VII MISCELLANEOUS

17

Section 7.1

Notice

17

Section 7.2

Incorporation of Purchase Agreement Provisions

18

Section 7.3

No Third Party Beneficiaries

19

Section 7.4

Assignment

19

Section 7.5

Termination of Existing TSA

19

 

 

Schedule 1

Procurement of Goods

 

Schedule 2

Other Services

 

 

 

 

Exhibit A

Fees

 

Exhibit B

IT Systems - Redlight Schedule

 

Exhibit C

Dispute Resolution Process

 

Exhibit D

Resolution of Certain Disputes

 

Exhibit E

PCI Compliance

 

Exhibit F

Services Elimination and Fee Credit

 

 

ii



 

This TRANSITION SERVICES AGREEMENT, dated as of March 21, 2013 (this “ Services Agreement ” or “ TSA ”), is entered into by and between SUPERVALU INC., a Delaware corporation (“ SVU ”) and New Albertson’s, Inc., an Ohio corporation (“ NAI ” and together with its Subsidiaries, “ New Albertson’s ”).  In this Services Agreement, SVU, on the one hand, and NAI, on the other hand, are sometimes referred to individually as a “ party ” and collectively as the “ parties .”  In its capacity as a recipient of Services hereunder (as designated on Schedules 1 and 2 hereof with respect to particular services), each party is referred to herein as “ Receiving Party ,” and, in its capacity as a provider of Services hereunder (as designated on Schedules 1 and 2 hereof with respect to particular services), each party is referred to herein as “ Service Provider .”  All terms used herein and not defined herein shall have the meanings assigned to them in the SPA (as defined below).

 

WHEREAS, the Transition Services Agreement, dated as of June 2, 2006, by and between NAI and Albertson’s LLC (as amended, modified or supplemented, the “ Existing TSA ”) was amended by the following agreements, each between NAI and Albertson’s LLC, (i) that certain First Amendment to Transition Services Agreement dated February 22, 2007, (ii) that certain Second Amendment to Transition Services Agreement dated May 31, 2007, (iii) that certain Third Amendment to Transition Services Agreement dated July 12, 2007, (iv) that certain Settlement Agreement and Release of Claims dated December 15, 2007, (v) that certain Fourth Amendment to Transition Services Agreement dated April 21, 2008, (vi) that certain Fifth Amendment to Transition Services Agreement dated February 18, 2009, (vii) that certain Settlement Agreement and Release of Claims dated February 18, 2009, (viii) that certain letter agreement dated December 16, 2009, (ix) that certain letter agreement dated January 27, 2010 and (x) that certain Sixth Amendment to Transition Services Agreement dated September 10, 2010;

 

WHEREAS, the parties have entered into a Stock Purchase Agreement (the “ SPA ”), dated January 10, 2013, pursuant to which, among other things, SVU agreed to sell all of the outstanding capital stock of NAI to AB Acquisition LLC, parent company of NAI (the “ Stock Purchase ”);

 

WHEREAS, in connection with the Stock Purchase, the Existing TSA will be terminated and will be replaced by this TSA and a separate Transition Services Agreement to be entered into by SVU and Albertson’s LLC;

 

WHEREAS, each Receiving Party desires to procure certain services from the Service Provider, and the Service Provider is willing to provide such services to the Receiving Party during a transition period commencing on March 21, 2013 (the “ Effective Date ”), on the terms and conditions set forth in this Services Agreement.

 

NOW THEREFORE, in consideration of the foregoing and the mutual covenants and agreements herein contained, and intending to be legally bound hereby, the parties hereto hereby agree as follows:

 

ARTICLE I

AGREEMENT TO PROVIDE AND ACCEPT SERVICES

 



 

Section 1.1                                     Services .

 

(a)                                  On the terms and subject to the conditions contained herein, the Service Provider shall provide, or shall cause its Subsidiaries and Affiliates and their respective employees designated by the Service Provider to provide, to the Receiving Party or its designated Subsidiaries and Affiliates the services referred to in this Services Agreement or listed on the attached Schedules (the “ Schedules ” and such services, the “ Services ”).  Subject to Section 2.1 , any decisions as to which of the Service Provider, its Subsidiaries and Affiliates, or any third parties shall provide the Services shall be made by the Service Provider in its sole discretion, except to the extent specified in the applicable Schedule; provided , however , that the Receiving Party’s consent shall be required if and to the extent that the Service Provider delegates Services after the date of the SPA to a third party provider and such Services are to be provided for the benefit of the Receiving Party and not for the benefit of the Service Provider or any of its Affiliates.  Any delegation of Services shall not release the Service Provider from its obligations hereunder.  The Services shall be provided in exchange for the consideration set forth in Section 2.5 or as the parties may otherwise agree in writing.  Each Service shall be provided and accepted in accordance with the terms, limitations and conditions set forth herein and on the applicable Schedule.

 

Section 1.2                                     Books and Records; Availability of Information .  Each party shall create and maintain accurate books and records in connection with the provision of the Services performed hereunder and, upon reasonable notice from the other party, shall make available for inspection and copy by such other party’s agents such books and records during reasonable business hours.  The Receiving Party shall make available on a timely basis to the Service Provider all information and materials reasonably requested by the Service Provider to enable it to provide the Services.  The Receiving Party shall provide to the Service Provider reasonable access to the Receiving Party’s premises to the extent reasonably necessary for the purpose of providing the Services.

 

Section 1.3                                     Cost of Providing the Services .  Unless otherwise expressly set forth in this Services Agreement, the Service Provider shall bear all costs necessary to provide the Services (including all out-of-pocket and third-party expenses incurred by the Service Provider and its designees in order to provide the Services).  The Service Provider shall be solely responsible for the payment of all direct and indirect compensation (including all fringe benefits of any sort) for the personnel assigned to perform the Services under this Services Agreement, and will be responsible for workers’ compensation insurance, unemployment insurance, employment taxes, and all other employer liabilities relating to such personnel.

 

Section 1.4                                     Required Consents .  The Service Provider shall obtain and pay for, or cause to be obtained and paid for, any and all consents necessary or advisable to allow the Service Provider to provide the Services and to allow the Receiving Party to access and use the Services (the “ Required Consents ”).  The Receiving Party agrees to cooperate with the Service Provider’s reasonable requests and to execute such documents (subject to the Receiving Party’s reasonable approval of such documents) in connection with such consents.  If a Required Consent is not obtained, then, unless and until such Required Consent is obtained, the Service Provider shall determine and adopt, subject to the Receiving Party’s prior written approval, such alternative commercially reasonable approaches as are necessary and sufficient to provide the Services in accordance with the terms hereof without such Required Consents and in a manner

 

2



 

which does not increase the fees or costs payable by the Receiving Party hereunder.  For purposes of clarity, the parties acknowledge and agree that the foregoing provision shall in no way affect the allocation of costs or expenses related to transfer of assets (including costs incurred in connection with obtaining third party consents) in connection with the transactions contemplated by the SPA, which matters shall be controlled solely by the SPA.  For the avoidance of doubt, except as otherwise provided in Section 5.5(a) of the SPA, NAI shall obtain and pay for any and all consents required in connection with the consummation of the APA (as such term is defined in the SPA).

 

Section 1.5                                     Intellectual Property Licenses .  Notwithstanding anything to the contrary contained in the TSA, and except as otherwise provided in Section 5.13 of the SPA, it shall be the responsibility of the Receiving Party (at the Receiving Party’s sole cost and expense) to obtain all licenses associated with the use of third party intellectual property, including but not limited to copyrights (e.g., software), trademarks and patents (and/or consents and extensions relating to such licenses), if any, necessary for the provision of Services to the Receiving Party during the Term.  The Service Provider agrees to use commercially reasonable efforts to assist the Receiving Party in its negotiations with any licensors from whom the Receiving Party may require such a license (or consent or extension) during the Term.  In the event the Receiving Party is unable to obtain a necessary license, consent or extension, the Services related to such license shall be removed from the scope of the TSA, without a reduction in fees or payments owed by the Receiving Party under the TSA.  In all events, and in addition to (and not in limitation of) any similar rights that the Service Provider may have under the TSA, the Receiving Party shall indemnify, defend and hold the Service Provider harmless from and against any actions, liabilities and/or claims relating to the licenses and the license matters discussed in this provision.  The Receiving Party’s obligation to pay any fees under this Section 1.5 shall apply whether or not such claims for fees arise from the Receiving Party’s continued or past access to or benefit from third party intellectual property.  The Receiving Party also acknowledges the Service Provider’s right to initiate discussion with third party licensors that may involve the Receiving Party’s use of intellectual property.  All negotiated agreements with third party licensors for the future use of or rights to intellectual property and associated services shall be at the cost of the Service Provider, provided that the Receiving Party shall bear the cost of incremental third party use fees which are specifically identified in the agreements with the third party licensors and which relate solely to the Receiving Party’s use (“ Incremental License Fees ”).  Such Incremental License Fees shall be approved in advance in writing by the Receiving Party, which approval shall not be unreasonably withheld or delayed.

 

Section 1.6                                     IT Systems .  SVU and New Albertson’s agree to cooperate in maintaining current, common and compatible IT systems where practical and feasible and as to only those IT systems for which SVU is providing New Albertson’s support.  In furtherance of this intent, SVU and New Albertson’s shall work together to eliminate those IT systems that are not current, common or compatible.  The stated goal of this paragraph is for SVU and New Albertson’s to work together in good faith to ensure that IT systems trend toward converging rather than diverging.  Toward that end, the parties agree to the terms and conditions set forth in Exhibit B hereto.

 

3



 

ARTICLE II

SERVICES; PAYMENT; INDEPENDENT CONTRACTORS SERVICES

 

Section 2.1                                     Services To Be Provided .

 

(a)                                  Notwithstanding anything to the contrary contained herein, other than as set forth on the applicable Schedule and subject to Sections 2.4 and 2.10 hereof, (i) the Services to be provided by SVU as Service Provider hereunder shall be limited to (A) the Services with respect to which it is listed as the Service Provider on Schedule 2 hereto, (B) as to the NAI business which Albertson’s LLC is acquiring, the Services which SVU and its Affiliates have historically provided to the NAI-acquired business, and (C) the Services performed by SVU and its Affiliates for New Albertson’s as of immediately prior to the date of the SPA; provided that any change in Services after the date of the SPA but prior to the Effective Date shall be approved by the Steering Committee (ii) the Services to be provided by New Albertson’s as Service Provider hereunder shall be limited to the Services with respect to which it is listed as the Service Provider on Schedule 2 hereto,  and (iii) in no event shall the Service Provider be required to provide any other services to the Receiving Party.  The parties acknowledge and agree that they have sought to identify all Services to be provided by the Service Provider under this Services Agreement on the Schedules hereto, but that if the Schedules do not include the Services performed immediately prior to the date of the SPA by the Service Provider, the parties shall cooperate after the Closing Date to amend and/or supplement the Schedules hereto from time to time to more accurately reflect such past practice; provided , however , that (i) in no event will the Service Provider be obligated to provide any Service which (A) is listed on Schedule 2 as “deleted” or indicated in any way as no longer required or (B) is indicated to be provided only on a temporary basis and such time period has lapsed, subject to the possible extension of such Service in accordance with Section 3.3 , and (ii)  Schedule 1 hereto sets forth the agreement of the parties with respect to procurement of goods for the Receiving Party and shall control that Service notwithstanding the past practices of the parties with respect to procurement of goods.

 

(b)                                  The Service Provider or its designees shall perform the Services only in a manner, scope, nature and quality (such manner, scope, nature and quality, the “ Applicable Service Level ”) that is, in the case of SVU as the Service Provider, the same in all material respects as the manner in which such Services were performed or to be performed by SVU and its Affiliates for New Albertson’s as of immediately prior to the Date of the SPA, or, where a specific service level has been provided, as set forth in the Schedules hereto and, in the case of New Albertson’s as Service Provider, in the manner described on Schedule 2 .  For the avoidance of doubt, any change in service levels provided by the Service Provider to itself and its Affiliates after the Date of the SPA shall not affect the Applicable Service Level to be provided to the Receiving Party pursuant to this Services Agreement.  Unless otherwise set forth herein or on the applicable Schedule, the Services provided hereunder shall be used by the Receiving Party for substantially the same purposes and in substantially the same manner (including as to volume, amount, level or frequency, as applicable) as such Services were used by the Receiving Party as of immediately prior to the Date of the SPA.  Notwithstanding the foregoing, the parties acknowledge and agree that (1) the acquisition of the NAI business by Albertson’s LLC shall not be deemed an increase of volume, amount, level or frequency, that SVU shall provide the Services contemplated herein to the NAI business, and that SVU’s provision of services to the

 

4



 

NAI business shall include the services historically provided by SVU or its Affiliates to NAI (or which NAI provided to itself), as well as the Services identified on Schedule 2 , and (2) New Albertson’s request for Services for New Stores as defined in Exhibit A shall not constitute an increase in volume, amount, level of frequency of Services.  The Service Provider shall act under this Services Agreement solely as an independent contractor and not as an agent or employee of any other party or any of such party’s Affiliates.  For the purposes of clarity, the parties acknowledge and agree that if and to the extent the Service Provider changes systems and processes used in the course of its business for its own account the Service Provider shall not permit such changes to degrade the Applicable Service Level.

 

(c)                                   The provision of Services by the Service Provider shall be subject to Article V hereof.

 

(d)                                  The parties have agreed to separate the Legal function of SVU and transition certain legal associates to New Albertson’s over a period of up to ninety (90) days after the Effective Date (the “ Legal Transition Period ”).  At the Effective Date,  certain attorneys responsible for the provision of certain Services to New Albertson’s (the “ Transitioned Attorneys ”) will transition to and become employed by New Albertson’s at New Albertson’s option.  At some point during the Legal Transition Period, New Albertson’s will have the option to make Qualifying Offers (as defined in the SPA) to some or all of an additional group of identified members of the SVU Legal function.  During the Legal Transition Period, the parties will cooperate with respect to the transition of legal matters between them, and each of New Albertson’s (but only with respect to the services provided by the Transitioned Attorneys and only to the extent historically provided to SVU) and SVU will provide legal services pursuant to Schedule 2 hereto, if needed, provided that (i) SVU may, in its discretion and at its expense, provide outside counsel (reasonably selected from a list of outside counsel used by New Albertson’s prior to the Effective Date) in lieu of providing such legal services directly (it being understood that such outside counsel providing Services to New Albertson’s hereunder will be acting on behalf of and as counsel for New Albertson’s, and that (as between New Albertson’s and SVU) New Albertson’s will control the attorney-client relationship); (ii) neither party will in any case provide services with respect to commercial or other litigation that the other party has agreed to assume responsibility for, or to indemnify the other party or its Affiliates for, pursuant to the SPA ( provided , however , that SVU will continue to cooperate in providing in-house litigation support (other than litigation management) to the extent historically provided by SVU to New Albertson’s and New Albertson’s acknowledges that during the Legal Transition Period in-house litigation support will continue to be provided to SVU by the remaining SVU legal function not hired by New Albertson’s as of the Effective Date); (iii) SVU will not be responsible for providing legal services to New Albertson’s in quantities that exceed the historical levels provided by SVU to New Albertson’s; and (iv) each party will provide any reasonable and customary waiver of conflicts of interest or similar waiver reasonably requested by the other party or any substituted outside counsel in connection with the legal services provided pursuant to this Services Agreement, provided that no such waiver shall materially disadvantage the other party with respect to any matter handled by such counsel.  Upon the elimination of legal services as Services under this Services Agreement, there will be a dollar-for-dollar reduction in the fees payable during the Initial Term equal to the salary and benefits of each employee that transfers employment to New Albertson’s pursuant to a Qualifying Offer (as defined in the SPA) made in

 

5



 

New Albertson’s sole discretion, and, if necessary, the parties will execute a letter agreement confirming the reduction as soon as reasonably possible thereafter.

 

(e)           Similar to the legal transition referenced in Section 2.1(d) , the parties have agreed to the elimination of additional Services originally contemplated to be provided by SVU pursuant to this Services Agreement by the employees of SVU and its Subsidiaries identified on Exhibit G .  Upon the elimination of such Services from this Services Agreement, New Albertson’s will receive credits against the fees payable pursuant to this Services Agreement as such credits are set forth on Exhibit G , and, if necessary, the parties will execute a letter agreement confirming the reduction as soon as reasonably practicable thereafter.

 

(f)            The parties agree to meet on or before September 20, 2013, to review the Services being provided and determine if there are any Services no longer required and which may be deleted from the Service schedules.

 

Section 2.2            Cooperation .  The parties will use good-faith efforts to reasonably cooperate with each other in all matters relating to the provision and receipt of Services.  Such cooperation shall include obtaining all consents, licenses or approvals necessary to permit each party to perform its obligations hereunder, subject to Section 1.3 , Section 1.4 and Section 1.5 .  Furthermore, if and to the extent that the Receiving Party owns or controls any assets that are required to be used in the provision of Services by the Service Provider or its designees, as applicable, the Receiving Party shall furnish or otherwise make available such asset to the Service Provider or its designees, as applicable, for the provision of Services including by way of a grant of royalty-free license for such purpose.

 

Section 2.3            Steering Committee .

 

(a)           Size and Composition .  SVU, in its sole discretion as determined by the SVU Board of Directors (excluding Offeror Related Directors, as such term is defined in the Tender Offer Agreement between Symphony Investors LLC, Supervalu Inc., and Cerberus Capital Management, L.P., dated January 10, 2013), will appoint three (3) members of its management staff and New Albertson’s will appoint three (3) members of its management staff to serve on a steering committee (the “ Steering Committee ”).  Either party may change its Steering Committee members from time to time upon written notice to the other party.  In addition, the parties may mutually agree to increase or decrease the size, purpose or composition of the Steering Committee.

 

(b)           Responsibilities .  The Steering Committee shall be responsible for the general on-going oversight of each party’s performance under this Services Agreement.  The representatives of the party serving on the Steering Committee shall have the power and authority to bind such party with respect to the matters contemplated by this Services Agreement.

 

(c)           Meetings .  The Steering Committee will meet (in person or telephonically) once every 90 days or at such other frequency as mutually agreed by the parties.  Each Steering Committee meeting will be at a mutually acceptable location.

 

6



 

(d)           Annual Business Plan .  The Steering Committee will develop an annual business plan (the “ Business Plan ”) to project Service usage and costs (after the third anniversary of the Effective Date) and other matters with respect to the Services, and will review and update the Business Plan not less than quarterly.  If the parties mutually agree to modify or discontinue any Service, both parties will be entitled to rely on the Business Plan for the purpose of determining what Services will be provided during the time period covered by the Business Plan, and may discontinue any Service not projected to be required by the Business Plan.  For the avoidance of doubt, if the parties do not mutually agree to modify or discontinue any Service, that Service shall continue without any change to its service level.

 

(e)           Contingency Plans .  The Steering Committee shall formulate mutually acceptable back-up and contingency plans to address unplanned errors and disruptions in the Services.  In furtherance of the foregoing, in the event of a disaster, the Service Provider agrees to use the same degree of care to restore the Services as the Service Provider would use to restore similar services for itself.  In the event of scheduled downtime, the Service Provider shall provide the Receiving Party with reasonable advance notice.

 

Section 2.4            Additional Services .

 

(a)           From time to time during the term, the Receiving Party may request that the Service Provider (i) provide additional services (including as to volume, amount, level or frequency, as applicable) or different services which the Service Provider is not obligated to provide under this Services Agreement if such services are of the type and scope provided to the Receiving Party immediately prior to the Effective Date or (ii) to expand the scope of any Service (such additional or expanded services, the “ Additional Services ”).  The Service Provider shall consider such request in good faith and shall use commercially reasonable efforts to provide such Additional Service; provided , that the Service Provider shall not be obligated to provide any Additional Services if it does not, in its reasonable judgment, have adequate resources to provide such Additional Services or if the provision of such Additional Services would interfere with the operation of its business or the business of its Affiliates.  If the Service Provider receives a request for Additional Services it shall notify the Receiving Party within fifteen (15) days of its receipt of the request as to whether it will or will not provide the Additional Services.

 

(b)           If the Service Provider agrees to provide Additional Services pursuant to Section 2.4(a) , then a representative of each party shall in good faith negotiate the terms of a supplemental Schedule to this Services Agreement which will describe in detail the service, project scope, term, price and payment terms to be charged for the Additional Service.  Once definitively agreed to in writing, the supplemental Schedule shall be deemed part of this Services Agreement as of such date and the Additional Services shall be deemed “Services” provided hereunder, in each case subject to the terms and conditions of this Services Agreement.

 

Section 2.5            Pricing; Payments .

 

(a)           Fees .  The fees for the Services are set forth in Exhibit A attached hereto.  Notwithstanding anything herein to the contrary, except as provided in Exhibit A , any costs paid or borne by the Receiving Party related to any provision herein shall not impact or reduce the payments under this Section 2.5(a) .  The parties understand that that certain Services will

 

7



 

terminate pursuant to specified periods set forth in Schedule 2 and acknowledge that there shall be no reduction in fees for the scheduled termination of certain Services pursuant to Schedule 2 .

 

(b)           Invoices .  Unless otherwise provided in Exhibit A , payments due hereunder shall be invoiced on a weekly basis.  Other than with respect to any Non-Performance Holdbacks (as defined in Section 2.5(c) ), payments that are not timely paid shall be subject to late charges, calculated at an interest rate per annum equal to the Prime Rate (or the maximum legal rate, whichever is lower), and calculated for the actual number of days elapsed, accrued from the date on which such payment was due up to the date of the actual receipt of payment.  Payments shall be made by wire transfer to an account designated in writing from time to time by Service Provider.

 

(c)           Performance Disputes; Fees .  Subject to Section 4.1 and Section 6.2 hereof, in the event any Dispute (as defined below) arises between the parties regarding the Service Provider’s or its designees’ failure to provide one or more material Services at or above the Applicable Service Level, and the Service Provider has not cured such failure within fifteen (15) days of written notice (or a reasonably shorter period of time, in light of the nature of the Dispute), the Receiving Party shall be entitled to withhold from payment an amount of money equal to lesser of (i) the cost of commercially reasonable alternative arrangements to procure such Services from an alternative source, if applicable and (ii) in the case of New Albertson’s as the Receiving Party, $15,000,000, and in the case of SVU as the Receiving Party, $300,000, in each case aggregating all Non-Performance Holdback amounts then subject to Dispute) (such amount, the “ Non-Performance Holdback ”), until such Service Disruption or Dispute has been resolved.  Upon resolution of any such Dispute the Non-Performance Holdback (or any greater or lesser amount agreed to by the parties in lieu thereof) shall be paid promptly to the Service Provider or the Receiving Party, as applicable, as shall be determined in accordance with the resolution of such Dispute.

 

Section 2.6            Disclaimer of Warranty .  EXCEPT AS EXPRESSLY SET FORTH IN THIS SERVICES AGREEMENT, THE SERVICES TO BE PURCHASED UNDER THIS SERVICES AGREEMENT ARE FURNISHED AS IS, WHERE IS, WITH ALL FAULTS AND WITHOUT WARRANTY OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE.

 

Section 2.7            Taxes .  In the event that any Tax is properly chargeable on the provision of the Services (other than any Tax on the income of Service Provider received in its capacity as a third party service provider to the Receiving Party) as indicated on the applicable Schedule, the Receiving Party shall be responsible for and shall pay the amount of any such Tax in addition to and at the same time as the Service fees.  All Service fees and other consideration will be paid free and clear of and without withholding or deduction for or on account of any Tax, except as may be required by law.

 

Section 2.8            Use of Services; Third Party Transferees .  The Receiving Party shall not, and shall cause its Affiliates not to, resell any Services to any person whatsoever or permit the use of the Services by any person other than in connection with the conduct of the Receiving Party’s operations as conducted immediately prior to the Effective Date.  Notwithstanding anything to the contrary contained herein, if either party transfers or otherwise disposes of assets

 

8



 

(including one or more stores or distribution centers) (each a “ Transferring Party ”) to one or more third parties (each, a “ Third Party Transferee ”), the Transferring Party shall have the right to transfer or assign its rights hereunder to each such Third Party Transferee for a period (the “ Transfer Period ”) not to exceed the lesser of (i) 180 days from the date of transfer and (ii) the remaining term of this Services Agreement; provided , however , the Transferring Party shall remain obligated under the terms hereof (including for payments pursuant to Section 2.4 ); provided , further , however , in the event that the Third Party Transferee competes on a national level with SVU and/or its Affiliates the Transfer Period shall be no longer than ninety (90) days from the date of such transfer.  No such transfer shall limit the collective amount of Services to be provided to the Transferring Party and the Third Party Transferee.

 

Section 2.9            Confidential Information; Third Party Transferees .  As a result of a sale or transfer of some or all of New Albertson’s assets during the term of this Services Agreement, a Third Party Transferee may have access to  SVU’s Confidential Product Cost Information (as defined below) as a result of Services relating to the provision of products for resale (both nationally branded and private label products).  In such event and if such Third Party Transferee is a competitor of  SVU, then  SVU may require that the Third Party Transferee execute (or that New Albertson’s use commercially reasonable efforts to require the Third Party Transferee execute if New Albertson’s has previously completed negotiations of a pending transaction with such Third Party Transferee as of the Effective Date) a three-party confidentiality agreement, in a form reasonably acceptable to  SVU and New Albertson’s, setting forth the Third Party Transferee’s agreement: (i) to keep strictly confidential such Confidential Product Cost Information; (ii) to restrict access to such Confidential Product Cost Information to personnel not responsible for product development or product procurement on behalf of such Third Party Transferee; and (iii) to ensure that, under no circumstances, shall such Third Party Transferee use (directly or indirectly) such Confidential Product Cost Information for its pecuniary gain, for the solicitation of business or to the financial detriment of  SVU.  For purposes of this provision, “ Confidential Product Cost Information ” shall mean SVU’s confidential information dealing with or relating to SVU’s acquisition cost of products purchased for resale, including any invoice price, rebates, allowances, incentive payments, and marketing and other funds related to such products.

 

Section 2.10          Work-around .  Subject to Section 1.5 , if any of the Services cannot be provided by the Service Provider for any reason including because such Services infringe on the rights of others or violate Law, and the Service Provider shall develop an alternative to the Service that it uses for itself or one of its Affiliates, then the Service Provider shall provide such alternative service to the Receiving Party at no additional cost.

 

Section 2.11          Prior Resolution of Certain Disputes .  The parties previously agreed to settle and resolve certain issues that arose under the Existing TSA as set forth in Exhibit E .

 

Section 2.12          Agency; Power of Attorney .  New Albertson’s hereby appoints SVU as attorney-in-fact and agent with full and exclusive power and authority to act for and on behalf of New Albertson’s for the purposes of entering into, on behalf of New Albertson’s, Corporate Contracts (as defined on Schedule 1 ) that have been approved in advance by New Albertson’s.  In addition, New Albertson’s agrees to execute and deliver any particular forms of powers of attorney as may be reasonably (as determined by New Albertson’s in its sole discretion) requested by SVU in connection with the provision of the Services.  Notwithstanding anything to

 

9



 

the contrary in this Services Agreement, if New Albertson’s does not provide to SVU any power of attorney reasonably necessary to provide any Service or otherwise perform SVU’s obligations under this Services Agreement, SVU shall not be deemed to be in breach of this Services Agreement for any such failure to perform to the extent attributable to the lack of such power of attorney.  The power and authority granted to SVU hereunder shall terminate upon the termination of this Services Agreement.

 

Section 2.13          Accounting Adjustment Procedure .  Upon an adjustment to the fees pursuant to the terms of this Services Agreement, the Receiving Party shall deliver to the Service Provider a complete list (certified as accurate by the Receiving Party for that week) of the supermarkets, distribution centers, fuel centers and/or pharmacies being serviced by the Service Provider under the terms of this Services Agreement.

 

ARTICLE III

TERM OF SERVICES

 

Section 3.1            Term .  Subject to Section 3.2 and Section 6.1 , the provision of Services shall commence on the Effective Date and shall terminate no later than the 30-month anniversary of the Effective Date (the “ Initial Term ”).

 

Section 3.2            Option(s) to Extend Term .

 

(a)           New Albertson’s as the Receiving Party shall have ten (10), and SVU as the Receiving Party shall have ten (10), consecutive options to extend the TSA for a period of one (1) year each on the terms and conditions (including, without limitation, payment timing and fee arrangements) contained in the TSA.  Such extension terms shall be exercised, if at all, by the Receiving Party giving written notice to the Service Provider twelve months preceding the extension term being exercised.  For such exercise to be valid, the Receiving Party must (i) not be in default under the TSA as of the date of the notice of exercise or as of January 1 of the extension term being exercised, and (ii) be in compliance with the Dispute Resolution Process set forth in Exhibit C hereto.

 

(b)           Upon the proper exercise of an extension term by the Receiving Party, the term of the TSA shall be extended for the applicable twelve-month period without the execution of any further instrument.  As used in this Services Agreement, the term “Term” shall include all Annual Extension Terms (as defined below).

 

(c)           For clarification purposes, the following chart defines and sets forth the key dates for each annual extension term:

 

Option Exercise
Deadline

 

Extension Period

 

Defined Term (for
reference purposes in this TSA)

18-month Anniversary of Effective Date

 

30-month Anniversary of Effective Date through 42-month Anniversary of Effective Date

 

First Annual Extension Term

 

10



 

Option Exercise
Deadline

 

Extension Period

 

Defined Term (for
reference purposes in this TSA)

 

 

 

 

 

30-month Anniversary of Effective Date

 

42-month Anniversary of Effective Date through 54-month Anniversary of Effective Date

 

Second Annual Extension Term

 

 

 

 

 

42-month Anniversary of Effective Date

 

54-month Anniversary of Effective Date through 66-month Anniversary of Effective Date

 

Third Annual Extension Term

 

 

 

 

 

54-month Anniversary of Effective Date

 

66-month Anniversary of Effective Date through 78-month Anniversary of Effective Date

 

Fourth Annual Extension Term

 

 

 

 

 

66-month Anniversary of Effective Date

 

78-month Anniversary of Effective Date through 90-month Anniversary of Effective Date

 

Fifth Annual Extension Term

 

 

 

 

 

78-month Anniversary of Effective Date

 

90-month Anniversary of Effective Date through 102-month Anniversary of Effective Date

 

Sixth Annual Extension Term

 

 

 

 

 

90-month Anniversary of Effective Date

 

102-month Anniversary of Effective Date through 114-month Anniversary of Effective Date

 

Seventh Annual Extension Term

 

 

 

 

 

102-month Anniversary of Effective Date

 

114-month Anniversary of Effective Date through 126-month Anniversary of Effective Date

 

Eighth Annual Extension Term

 

 

 

 

 

114-month Anniversary of Effective Date

 

126-month Anniversary of Effective Date through 138-month Anniversary of Effective Date

 

Ninth Annual Extension Term

 

 

 

 

 

126-month Anniversary of Effective Date

 

138-month Anniversary of Effective Date through 150-month Anniversary of Effective Date

 

Tenth Annual Extension Term

 

11



 

Option Exercise
Deadline

 

Extension Period

 

Defined Term (for
reference purposes in this TSA)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

New Albertson’s (numbered) Annual Extension Terms, together with SVU’s corresponding Annual Extension Terms may be collectively referred to herein as the “ Annual Extension Terms .”  Upon occurrence of the Effective Date the parties will execute a letter agreement confirming the Initial Term and Annual Extension Term dates.

 

(d)           A Receiving Party’s failure to timely or properly exercise any of the Annual Extension Terms shall constitute a forfeiture of its right to exercise any future Annual Extension Term and the TSA shall terminate with respect to Services provided to such Receiving Party (subject to the applicable Wind Down Period and Transaction Services Period) at the end of such Receiving Party’s then current Annual Extension Term.

 

Section 3.3            Additional Service Extensions .  In addition to the Receiving Party’s rights under Sections 3.2, 3.4 and 6.5 , in the event the Receiving Party requests an extension of the term of provision of Services, such request shall be considered in good faith by the Service Provider.  Any terms, conditions or costs or fees to be paid by the Receiving Party for Services provided during an extended term will be on mutually acceptable terms.  For the avoidance of doubt, under no circumstances shall the Service Provider be required to extend the term of provision of any Service if (i) the Service Provider does not, in its reasonable judgment, have adequate resources to continue providing such Services, (ii) the extension of the term would interfere with the operation of the Service Provider’s business or (iii) the extension would require capital expenditure on the part of the Service Provider or otherwise require the Service Provider to renew or extend any contract, agreement, arrangement or similar understanding with any third party.

 

Section 3.4            Transition of TSA Services .

 

(a)           If, at any time during the term of the TSA, the Receiving Party desires to transition any Service(s) to a third party, it shall so notify the Service Provider one hundred and twenty (120) days prior to the commencement of such transition (and upon delivery of such notice, the Receiving Party may commence planning discussions with the Service Provider). The Service Provider agrees that it will assist with such transitions to third party providers (the “ Transition Services ”), and any out of pocket and internal costs incurred by the Service Provider for the Transition Services shall be reimbursed by the Receiving Party as soon as reasonably practicable. In the case of SVU as the Service Provider of Transition Services, all costs incurred (out of pocket and internal) shall be subject to and included in a cap amount of $1,000,000, and in the case of New Albertson's as the Service Provider of Transition Services, all costs incurred (out of pocket and internal) shall be subject to and included in a cap amount of $500,000 (each, a “ Cap Amount ”). In the event the combined Transition Services costs (out of pocket and internal) and separation services costs exceed the applicable Cap Amount, the Service Provider shall continue to provide the Transition Services to the Receiving Party with the Service Provider bearing the costs in excess of the applicable Cap Amount. As the case may be or as the case may arise, the Service Provider shall notify the Receiving Party in writing of any utilization of the applicable Cap Amount and a running total of the remaining balance.

 

12



 

(b)           In order to clarify the potential provision of Transition Services by the Service Provider, and except as set forth below, the parties expressly acknowledge that the timing must be such that the Service Provider is able to complete all Transition Services during the term of the TSA (and the Party shall work in good faith to complete such transitions prior to the expiration or termination of the TSA) and that, in addition to the reimbursement of costs by the Receiving Party (up to the Cap Amount) as provided in this Section 3.4 , all other fees and payments under the TSA shall remain payable by the Receiving Party without modification or abatement.  The parties acknowledge and reaffirm that, except as set forth below, upon the expiration or termination of the TSA, the Service Provider’s obligation to provide Services shall be limited to the terms set forth in Section 6.4 and Section 6.5 of this TSA.

 

(c)           Notwithstanding the foregoing, in the event Transition Services will not be completed prior to the expiration or termination of the TSA, and upon written request by the Receiving Party to the Service Provider prior to expiration or termination of the TSA, the Service Provider shall continue the Transition Services for a period not to exceed seven (7) months after expiration or termination of the TSA (“ Transition Services Period ”).  During the Transition Services Period, New Albertson’s as the Receiving Party will pay SVU as the Service Provider during the Transition Services Period fees equal to the greater of (i) $1,000,000 each calendar month, payable in advance, or (ii) the applicable weekly fee per operating supermarket and distribution center set out in Exhibit A and SVU as the Receiving Party will pay New Albertson’s as the Service Provider during the Transition Services Period fees equal to the greater of (A) $150,000 each calendar month, payable in advance, or (B) the applicable weekly fee set forth on Exhibit A .  The parties shall mutually determine prior to the commencement of each calendar month during the Transition Services Period whether the fees for such month shall be as set out in (i) or (ii) above, and the Receiving Party shall then pay such fees accordingly.  The foregoing Transition Services fees would be in addition to fees paid for any wind down services consistent with the terms set forth in Section 6.5 of this TSA.

 

ARTICLE IV

FORCE MAJEURE

 

Section 4.1            Force Majeure The Service Provider shall not be liable for any expense, loss or damage whatsoever arising out of any interruption of Service or delay or failure to perform under this Services Agreement that is due to acts of God, acts of a public enemy, acts of terrorism, acts of a nation or any state, territory, province or other political division thereof, changes in applicable law, fires, floods, epidemics, riots, theft, quarantine restrictions, freight embargoes, strikes, work stoppages or other similar causes beyond the reasonable control of the Service Provider and its applicable designees.  In any such event, the Service Provider’s obligations hereunder shall be postponed for such time as its performance is suspended or delayed on account thereof.  The Service Provider will promptly notify the recipient of the Service, either orally or in writing, upon learning of the occurrence of such event of force majeure.  Upon the cessation of the force majeure event, the Service Provider will use commercially reasonable efforts to resume its performance with the least practicable delay ( provided that, at the election of the Receiving Party, the applicable term for such suspended Services shall be extended by the length of the force majeure event).  During such force majeure event, the Receiving Party shall be free to acquire affected Services from an alternative source, at

 

13



 

the Receiving Party’s sole cost and expense, and without liability to the Service Provider, for the period and to the extent reasonably necessitated by such non-performance.  The parties shall negotiate in good faith to determine the costs of procurement of such Services from such alternative source and such amounts shall be deducted from the payments otherwise required under Section 2.5 hereof.

 

ARTICLE V

LIABILITIES

 

Section 5.1            Consequential and Other Damages .  Neither party shall be liable to the other with respect to this Services Agreement, whether in contract, tort (including negligence and strict liability) or otherwise, for any special, indirect, incidental or consequential damages whatsoever which in any way arise out of, relate to or are a consequence of, the performance or nonperformance by such party hereunder, including with respect to loss of profits, business interruptions or claims of customers.

 

Section 5.2            Limitation of Liability .  Subject to Section 5.3 hereof and other than with respect to the Receiving Party’s obligation to make payment under Section 1.5 or Section 2.5 hereof, the liability of each party with respect to this Services Agreement or any act or failure to act in connection herewith (including, but not limited to, the performance or breach hereof), or from the sale, delivery, provision or use of any Service provided under or covered by this Services Agreement, whether in contract, tort (including negligence and strict liability) or otherwise, (i) shall not exceed $180,000,000 for actions or omissions resulting from gross negligence and (ii) shall be unlimited for actions or omissions resulting from willful breach.

 

Section 5.3            Obligation To Re-perform .  In the event of any breach of this Services Agreement by the Service Provider resulting from any error or defect in the performance of any Service (which breach the Service Provider can reasonably be expected to cure by re-performance in a commercially reasonable manner), the Service Provider shall use its reasonable commercial efforts to correct in all material respects such error, defect or breach or reperform in all material respects such Service at the request of the Receiving Party.

 

Section 5.4            Indemnity .  Except as otherwise provided in this Services Agreement, (including the limitation of liability provisions in this Article V ), the Service Provider shall not be liable for any Loss (as defined below) arising out of or relating to the Services, whether arising out of breach of warranty, strict liability, tort, contract or otherwise, other than Losses which result directly from Service Provider’s gross negligence with respect to the provision of Services or the breach of this Services Agreement.  The Service Provider shall defend, indemnify, and hold harmless the Receiving Party and its Subsidiaries and Affiliates from and against any third party claims, damages, losses or expenses (including, but not limited to, reasonable attorneys’ fees and costs) (a “ Loss ”) incurred by the Receiving Party or its Subsidiaries resulting from the Service Provider’s gross negligence with respect to the provision of Services or the breach of this Services Agreement.  The Receiving Party shall defend, indemnify and hold harmless the Service Provider and its Subsidiaries and Affiliates (and to the extent certain roles and responsibilities of individual employees of Service Provider acting as fiduciaries for Receiving Party could expose said employees to a Loss in their individual capacities, then said employees shall likewise be defended, indemnified and held harmless) from

 

14



 

and against any and all Losses arising out of or connected with the Services or in any way related to this Services Agreement, regardless of the legal theory asserted (other than in matters for which the Service Provider would have liability under this Section 5.4 or expenses reasonably contemplated to be borne by Service Provider in performing its obligations hereunder). The Receiving Party shall at all times maintain reasonable and customary fiduciary liability insurance coverage (with a tail coverage of no less than 5 years) for any such employees of the Service Provider who are acting in a fiduciary capacity for the Receiving Party.

 

ARTICLE VI

 

TERMINATION

 

Section 6.1            Termination Notwithstanding anything herein to the contrary, this Services Agreement shall terminate, and the obligation of the Service Provider to provide or cause to be provided any Service shall cease, on the earliest to occur of (i) the date on which the provision of all Services has been terminated or canceled pursuant to Article IV hereof, or (ii) the date on which all Services under this Services Agreement are terminated by the Service Provider or the Receiving Party, as the case may be, in accordance with the terms of Section 6.2 hereof; provided that, in each case, no such termination shall relieve any party of any liability for any breach of any provision of this Services Agreement prior to the date of such termination and subject to the Wind Down Period and the Transition Services Period as respectively defined in Section 6.5 and Section 3.4(c) .

 

Section 6.2            Breach of Services Agreement; Dispute Resolution .

 

(a)           Breach .  Subject to Article V hereof, the dispute resolution process set forth in this Section 6.2 and the last sentence of this Section 6.2(a) , if a party shall cause or suffer to exist any material breach of any of its obligations under this Services Agreement, including any failure to make a payment within thirty (30) days after such payment becomes due pursuant to Section 2.5 (taking into account the exception for any Non-Performance Holdback provided in Section 2.5(c) ) with respect to more than one Service provided hereunder, and that party does not cure such default in all material respects within 30 days after receiving written notice thereof from the non-breaching party, the non-breaching party shall have the right to terminate this Services Agreement immediately thereafter.  Notwithstanding anything to the contrary in this Services Agreement, a breach by either party in the provision of Services as Service Provider shall not give the other party as Receiving Party the right to stop performing its obligations hereunder and in such instance the Receiving Party’s sole and exclusive remedy with respect to a material breach by the Service Provider with respect to the performance of such Services shall be for the Service Provider to correct in all material respects any error or defect in such Services or to re-perform in all material respects the Services with respect to which the Service Provider shall have breached its performance obligations.

 

(b)           Dispute Resolution .  Either party may commence the dispute resolution process of this Section 6.2 by giving the other party written notice with detailed description and underlying facts (a “ Dispute Notice ”) of any controversy, claim or dispute of whatever nature arising out of or relating to this Services Agreement or the breach, termination, enforceability or validity hereof (a “ Dispute ”) which has not been resolved in the normal course of business.  The parties shall attempt in good faith to resolve any Dispute by negotiation between executives

 

15



 

(excluding Offeror Related Directors as such term is defined in the Tender Offer Agreement between Symphony Investors LLC, Supervalu Inc., and Cerberus Capital Management, L.P.) of each party hereto (“ Senior Party Representatives ”) who have authority to settle the Dispute and who are at a higher level of management than the persons who have direct responsibility for the administration of this Services Agreement.  Within 15 days after delivery of the Dispute Notice, the receiving party shall submit to the other a written response (the “ Response ”).  The Dispute Notice and the Response shall include (i) a statement setting forth the position of the party giving such notice and a summary of arguments supporting such position and (ii) the name and title of such party’s Senior Party Representative and any other persons who will accompany the Senior Party Representative at the meeting at which the parties will attempt to settle the Dispute.  Within 30 days after the delivery of the Dispute Notice, the Senior Party Representatives of both parties shall meet at a mutually acceptable time and place, and thereafter as often as they reasonably deem necessary, to attempt to resolve the Dispute.  The parties shall cooperate in good faith with respect to any reasonable requests for exchanges of information regarding the Dispute or a Response thereto.

 

(i)            If the Dispute has not been resolved within sixty (60) days after delivery of the Dispute Notice, or if the parties fail to meet within 30 days after delivery of the Dispute Notice as hereinabove provided, the parties shall submit the matter to arbitration contemplated by Section 6.2(c) or any other dispute resolution procedure that may be agreed by the parties.

 

(ii)           All negotiations, conferences and discussions pursuant to this Section 6.2 shall be confidential and shall be treated as compromise and settlement negotiations.  Nothing said or disclosed, nor any document produced, in the course of such negotiations, conferences and discussions that is not otherwise independently discoverable shall be offered or received as evidence or used for impeachment or for any other purpose in any current or future arbitration.

 

(c)           Arbitration .  If the Dispute has not been resolved by the dispute resolution process described in Section 6.2(b) , the parties agree that any such Dispute shall be settled by binding arbitration before the American Arbitration Association (“ AAA ”) in Chicago, Illinois pursuant to the Commercial Rules of the AAA.  Any arbitrator(s) selected to resolve the Dispute shall be bound exclusively by the laws of the State of New York without regard to its choice of law rules. Any decisions of award of the arbitrator(s) will be final and binding upon the parties and may be entered as a judgment by the parties hereto.  Any rights to appeal or review such award by any court or tribunal are hereby waived to the extent permitted by law.

 

(d)           Costs .  The costs of any arbitration pursuant to this Section 6.2 shall be shared equally between the parties.

 

Section 6.3            Sums Due .  In addition to any other payments required pursuant to this Service Agreement, in the event of a termination of this Services Agreement, the Service Provider shall be entitled to the immediate payment of, and the Receiving Party shall within three Business Days pay to the Service Provider, all accrued amounts for Services, Taxes and other amounts due under this Services Agreement as of the date of termination.

 

16



 

Section 6.4            Service Provider Termination Right .  Notwithstanding the grant of the options for the Annual Extension Terms, the Service Provider shall have the right to deliver to the Receiving Party a written notice to terminate the TSA with respect to Services being provided to the Receiving Party (the “ Service Provider Termination Notice ”).  In the event the Service Provider delivers the Service Provider Termination Notice to the Receiving Party, the TSA with respect to Services being provided to the Receiving Party shall terminate on the last day of that calendar month which is thirty six (36) months after the date of delivery of the Service Provider Termination Notice (subject to the applicable Wind Down Period and Transition Services Period).  The Receiving Party may reduce the 36 month period by electing to not exercise the next Annual Extension Term, in which case the TSA shall terminate with respect to the Services provided to the Receiving Party (subject to the applicable Wind Down Period and Transition Services Period) as of the last day of the then current Term.  If the Service Provider has delivered the Service Provider Termination Notice, then any exercise by the Receiving Party of a Annual Extension Term within which the 36 th  month falls must recognize in said exercise notice that the TSA will terminate with respect to the Services provided to the Receiving Party as of the last day of the 36 th  month (subject to the applicable Wind Down Period and Transition Services Period).  The Service Provider may not deliver a Service Provider Termination Notice hereunder prior to December 31, 2013.

 

Section 6.5            Services Following Expiration or Termination .  Upon the written request of New Albertson’s, SVU shall, notwithstanding any provision in the TSA to the contrary, provide to New Albertson’s one or more Services provided by SVU to New Albertson’s immediately prior to any termination or expiration of the TSA on a wind-down basis, including without limitation in the areas of finance, tax, accounting and property management following any termination or expiration of the TSA.  Such wind-down services shall be provided for a period not to exceed twelve (12) months from the applicable termination or expiration date (“ Wind Down Period ”).  The fee for such services shall be mutually agreed upon, but in no event shall the fees be less than the reasonably documented out-of-pocket costs for such services,  and shall be payable at the commencement of each month for which such services are provided.  In the event the parties are not able to agree to the fee, this Section 6.5 shall become null and void.  For the avoidance of doubt, SVU and New Albertson’s acknowledge that the wind-down services discussed in this paragraph (and the fee associated with such services) cover a period of time after the expiration of the TSA, and that, during the term of the TSA the service schedule relating to “Separation Services” remains unmodified by this Section 6.5 .

 

Section 6.6            Effect of Termination Sections 1.2 , 2.5 , 2.6 , 2.7 hereof and Articles IV , V , VI and VII hereof shall survive any termination of this Services Agreement.

 

ARTICLE VII

MISCELLANEOUS

Section 7.1            Notice .  All notices, requests and demands to or upon the respective parties hereto, and all statements and accountings given or required to be given hereunder, shall be made by personal service, or sent by certified mail, return receipt requested, postage prepaid, or by facsimile addressed as follows, or to such other address as may hereafter be designated in

 

17



 

writing by the respective parties hereto, and shall be deemed received when delivered to the designated address (and only if confirmed if delivered by facsimile):

 

To New Albertson’s:

New Albertson’s, Inc.

250 East Parkcenter Boulevard

Boise, ID 83706

Attn: Paul Rowan, Esq.

Facsimile: (208) 395 - 4625

 

 

 

with a copy to:

 

 

 

Schulte Roth & Zabel LLP

919 Third Avenue

New York, NY 10022

 

Attn:

Stuart D. Freedman, Esq.

 

 

Robert R. Kiesel, Esq.

 

Facsimile: (212) 593-5955

 

 

To SVU:

SUPERVALU INC.

Attn:  Legal Department

Mailing Address:

PO Box 990

Minneapolis, MN 55440-0990

Street Address:

7075 Flying Cloud Drive

Eden Prairie, MN 55344-3691

 

 

 

with a copy to:

 

 

 

SUPERVALU INC.

7075 Flying Cloud Drive

Eden Prairie, MN 55344-3691

Attn: J. Andrew Herring

 

 

 

and:

 

 

 

Wachtell, Lipton, Rosen & Katz

51 West 52nd Street

New York, NY 10019

 

Attn:

David Silk, Esq.

 

 

Igor Kirman, Esq.

 

 

DongJu Song, Esq.

 

Facsimile: (212) 403-2393

 

Section 7.2            Incorporation of Purchase Agreement Provisions .  The following provisions of the SPA are hereby incorporated herein by reference, and unless otherwise

 

18



 

expressly specified herein, such provisions shall apply as if fully set forth herein (references in this Section 7.2 to an “Article” or “Section” shall mean Articles or Sections of the SPA, and references in the material incorporated herein by reference shall be references to the SPA:  Section 8.11 (“Amendments; Waivers; Enforcement”), Section 8.4 (“Governing Law”), Section 8.13 (“Interpretation”), Section 8.3 (“Counterparts”), Section 8.5 (“Specific Performance”), Section 8.9 (“Severability”), and Section 8.6 (“Waiver of Jury Trial”).

 

Section 7.3            No Third Party Beneficiaries .  This Services Agreement is for the sole benefit of the parties to this Services Agreement and their permitted successors and assigns and nothing in this Services Agreement, express or implied, is intended to or shall confer upon any other person any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Services Agreement.

 

Section 7.4            Assignment .  Except as set forth in Section 2.8 , neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by either party (whether by operation of law or otherwise) without the prior written consent of the other party, except that either party may, solely in connection with the sale of all or substantially all of its assets (or in the case of SVU, all or substantially all of the assets of its wholesale independent business), assign, in its sole discretion and without the other party’s consent, any or all of its rights, interest and obligations under this Agreement to any third party transferee; provided that the transferee (i) agrees to be bound by the terms of this TSA; (ii) has the assets, systems, personnel and financial wherewithal to perform the transferring party’s obligations hereunder; (iii) is not engaged in litigation with the non-transferring party; (iv) has not been declared insolvent, or is not the subject of any proceedings or application related to its winding up, liquidation, administration, receivership, administrative receivership, bankruptcy or other similar proceedings; and (v) possesses creditworthiness and business reputation at least on par with SVU.

 

Section 7.5            Termination of Existing TSA .  The Existing TSA is hereby terminated and of no further force and effect, except that any obligations under the Existing TSA arising or relating to the period prior to the Effective Date shall survive until fully performed.  To the extent that any such obligations are owed or to be performed by NAI, they are hereby assigned to, and assumed by, SVU.

 

19



 

IN WITNESS WHEREOF, the parties have caused this Services Agreement to be executed by their duly authorized representatives.

 

 

SUPERVALU INC.

 

 

 

 

 

 

 

By:

/s/ Todd N. Sheldon

 

 

Name:

 

 

Title:

 

[Signature Page to NAI Transition Services Agreement]

 



 

IN WITNESS WHEREOF, the parties have caused this Services Agreement to be executed by their duly authorized representatives.

 

 

NEW ALBERTSON’S, INC.

 

 

 

 

 

 

 

By:

/s/ M Bessent

 

 

Name: M Bessent

 

 

Title: Treasurer

 

[Signature Page to SVU/NAI TSA]

 



 

Schedule 1 — Procurement of Goods

 

1.               SVU agrees to use its commercially reasonable efforts to permit New Albertson’s to obtain the benefits (including as to price, shipping, payment terms, warranties, indemnification, restocking fees and penalties, cancellation return and refund policies) of vendor and supply contracts for products, goods and inventory with nationally-based vendors and suppliers utilized by SVU and its Affiliates (each such contract, individually, a “ Corporate Contract ” and, collectively, the “ Corporate Contracts ”).  For the avoidance of doubt, contracts related to regionally specific items are not included in the definition of Corporate Contract.  In addition, any contracts bifurcated as contemplated by Section 5.13 of the SPA shall not be included in the definition of Corporate Contract.

 

2.               SVU agrees to use its commercially reasonable efforts to obtain favorable prices under Corporate Contracts by combining or consolidating orders made under such Corporate Contracts.  Subject to the provisions of Paragraph 3 below, New Albertson’s will continue to support the programs described in the Corporate Contracts, and will continue to purchase all its needs for the products covered by those Corporate Contracts, in the same manner as the applicable operations owned by New Albertson’s and SVU and its affiliates performed prior to the Effective Date, and, subject to good faith collaboration, make purchases for a pro rata portion of any minimum volume commitments under those Corporate Contracts.

 

3.               Subject to the provisions of Paragraph 7 below, SVU shall negotiate, manage and administer the Corporate Contracts.  SVU shall use commercially reasonable efforts to provide to New Albertson’s a summary of the material terms of each Corporate Contract; provided that SVU shall, within ten business days following the date of the SPA, provide to New Albertson’s a summary of the material terms of each Corporate Contract that is a “material contract” (as such term is defined in Item 601(b)(10) of Regulation S-K of the Securities Act (as such definition is applied to SVU).  On a regular basis, as the parties may determine (which, for the first six (6) months of the term of this Services Agreement, will be weekly), a representative of SVU’s merchandising group will meet with a representative of New Albertson’s to preview anticipated upcoming national vendor negotiations with respect to proposed Corporate Contracts or the amendment or renewal thereof, and will provide New Albertson’s with a summary of the material terms of such proposed Corporate Contracts (or such amendment or renewal thereof).  New Albertson’s may elect to participate in one or more of the upcoming contracts, amendments or renewals by notifying SVU of its election at these preview meetings.  If New Albertson’s provides notice to SVU at such a meeting that it elects to participate in such contract, amendment or renewal, SVU will advise the national vendor that New Albertson’s is participating in such Corporate Contract (or the amendment or renewal thereof), SVU will debrief New Albertson’s as to the material aspects of its meetings with the national vendor, and New Albertson’s will be obligated to participate in such Corporate Contract (or the amendment or renewal thereof) on the terms finally negotiated by SVU, unless the terms of such contract, amendment or renewal are materially different from the terms previewed to New Albertson’s by SVU.  With respect to any Corporate Contract which New Albertson’s elects to obtain or continue to obtain (after the amendment or renewal thereof) the benefit of, SVU shall provide New Albertson’s with reasonable access to its books and records for purposes of being able to audit such Corporate Contracts and to ascertain that it is receiving advance payments, inducements, incentives,

 

Schedule 1-1



 

rebates, fees or promotional funds associated with such Corporate Contracts on a basis proportionate to its purchases and satisfaction of other performance criteria under such Corporate Contracts.  Additionally, the parties will consult and collaborate to the extent commercially feasible with respect to New Albertson’s regional vendor relationships.

 

4.               Payments and amounts owing under each Corporate Contract shall be in addition to any payments required under this Services Agreement, and shall be made on the terms and subject to the conditions of each Corporate Contract.

 

5.               The parties shall cooperate to establish procurement and merchandising systems that allow New Albertson’s to order inventory in substantially the same manner as stores managed by SVU.

 

6.               To the extent requested by New Albertson’s, SVU shall assist New Albertson’s in reconciling disputes with vendors.

 

7.               Provided that New Albertson’s is not in breach of its obligations hereunder, all purchase orders for the benefit of New Albertson’s under the Corporate Contracts will be issued bearing the name of both SVU and New Albertson’s, and will provide that the “ship to” destination will determine title and which party will be responsible for the vendor payable.  New Albertson’s will be financially responsible for paying all invoices for all purchase orders for products shipped to it directly from its own funds and will directly manage credit aspects of the vendor relationships relating to these purchase orders.  SVU will provide New Albertson’s with commercially reasonable assistance in managing vendor relationships as requested, but New Albertson’s will establish its own credit lines with the vendors without assistance from SVU.  In order to facilitate a smooth transition of vendor relationships, the parties have approved the notice to vendors that has previously been sent to vendors, and the parties have agreed that, after the date of such notice, SVU will direct all inquiries from vendors concerning New Albertson’s, credit and payment terms applicable to New Albertson’s to the Treasurer of New Albertson’s, and shall not initiate any contacts with vendors concerning credit and payment terms applicable to New Albertson’s for a period of sixty (60) days following the SPA Closing Date (as such term is defined in the SPA).

 

8.               The parties acknowledge and agree that, notwithstanding anything to the contrary contained in this Services Agreement, in no event shall SVU be required to pay or otherwise advance funds in respect of accounts payable of New Albertson’s.

 

9.               New Albertson’s and SVU will jointly purchase fuel under SVU’s purchase orders.

 

Schedule 1-2



 

Schedule 2 — Other Services

 

[**]

 


** Denotes confidential information that has been omitted from the exhibit and filed separately, accompanied by a confidential treatment request, with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934.

 


 


 

Exhibit A — Fees

 

I.                                         Fees for Services to be provided by SVU

 

A.                                     Services Fees During First 12 Months of Initial Term .  Subject to Section 2.1(d), the Services fee for the first 12 months of the Initial Term is $86,000,000, payable in equal installments as follows:  10% of the Year One Fee in each of the first 4 months of the Initial Term, 9% of the Year One Fee in the 5th and 6th month of the Initial Term and 7% of the Year One fee in the 7th through 12th month of the Initial Term.

 

B.                                     Services Fees During Months 13 through 30 of the Initial Term .  After the first 12 months of the Initial Term, and during the remainder of the Initial Term, New Albertson’s will pay fixed and variable fees for Services calculated as follows:

 

1.                                       Operating Distribution Centers — New Albertson’s will pay (a) a weekly fixed fee of $9,615 per distribution center operated by New Albertson’s on SVU’s systems at the start of month 13 of the Initial Term, which fee shall not be subject to reduction for the closure of distribution centers during the Initial Term, and (b) a weekly variable fee of $9,615 per distribution center operated by New Albertson’s on SVU’s systems each week, which fee shall be subject to reduction for the closure of distribution centers as provided in Section I.E below.

 

2.                                       Operating Supermarkets — New Albertson’s will pay a weekly fixed store fee and a weekly variable store fee based on an Annual Per Store Fee (defined below) for operating grocery stores receiving Services under this Services Agreement.  Immediately following the first 90 days after the Effective Date, the Annual Per Store Fee will be calculated as follows:

 

(a)                                  $86,000,000 minus the cost of Services transferred from SVU within the first 90 days of the Initial Term (as described in I.A above), minus the sum of $1,000,000 multiplied by the number of operating distribution centers.  The result shall then be divided by the number of operating supermarkets receiving Services on day 91(“ Annual Per Store Fee ”).  The parties will execute a letter agreement as soon as possible after the first 90 days of the Initial Term to confirm the Annual Per Store Fee.  Once established, the Annual Per Store Fee will be the base fee used to calculate fixed and variable fees during months 13 through 30 of the Initial Term and during any exercised Extension Terms.

 

(b)                                  During months 13 through 30 of the Initial Term, the weekly fixed store fee will be equal to one-half of the Annual Per Store Fee divided by 52. This weekly fixed store fee will not be subject to reduction for the closure of a supermarket during the Initial Term.

 

(c)                                   During months 13 through 30 of the Initial Term, the weekly variable store fee (which is based on the number of operating supermarkets at the beginning of a given week) will be calculated by dividing one-half of the Annual

 

Exhibit A-1



 

Per Store Fee by 52.   The weekly variable store fee will be subject to reduction for the closure of supermarkets as provided in Section I.E below

 

3.                                       As an example only, during months 13 through 30 of the Initial Term, if the reduction for transferred Services after the first 90 days equals $0, if the number of grocery stores on day 91 is 450, and if New Albertson’s has 5 operating distribution centers, the Annual Per Store Fee shall be calculated as follows:   $86,000,000 - $0 = $86,000,000 — (5 x $1,000,000) = $81,000,000 / 450 =  $180,000 per year or $3,562 per supermarket per week. The weekly variable per store fee would be $1,781 per supermarket. The weekly fixed per store fee would be $1,781 per supermarket. Assuming 450 supermarkets, the weekly variable store fee for all supermarkets would be $801,450 ($1,781 x 450). Assuming 450 supermarkets, the weekly fixed store fee for all supermarkets would be $801,450 ($1,781 x 450) for a weekly payment total (fixed and variable) of $1,602,900. The weekly variable store fee could be reduced as a result of supermarket closures.  For example, if five (5) stores closed in a given week, the weekly variable store fee would be $792,545 ($1,781 x 445) for the next week, but the weekly fixed store fee would continue at $801,450 ($1,781 x 450) for a weekly total (fixed and variable) of $1,593,995.

 

C.                                     Services Fees After the Initial Term.   After the Initial Term, and provided that New Albertson’s has exercised an Annual Extension Term(s), New Albertson’s will pay fixed and variable fees for Services calculated as follows:

 

1.                                       Operating Distribution Centers — During each exercised Annual Extension Term, New Albertson’s will pay (a) a weekly fixed fee of $9,615 per distribution center operated by New Albertson’s on SVU’s systems at the start of the Annual Extension Term which amount shall not be decreased during such Annual Extension Term due to the closure of distribution centers, and (b) a weekly variable fee $9,615 per week per distribution center operated by New Albertson’s on SVU’s systems at the start of the Annual Extension Term, which fee shall be subject to reduction each week for the closure of Distribution Centers as provided in Section I.E below.

 

2.                                       Operating Supermarkets — During each exercised Annual Extension Term, New Albertson’s will pay a weekly fixed store fee and a weekly variable store fee as follows:

 

(a)                                  The weekly fixed store fee will be equal to one-half of the Annual Per Store Fee multiplied by the number of operating supermarkets at the beginning of the Annual Extension Term divided by 52.  The weekly fixed store fee will not be subject to reduction for the closure of a supermarket during the applicable Annual Extension Term.

 

(b)                                  The weekly variable store fee (which is based on the number of operating supermarkets at the beginning of a given week) will be calculated by dividing one-half of the Annual Per Store Fee by the number of operating

 

Exhibit A-2



 

supermarkets at the beginning of a given week, and further dividing that sum by 52.  The weekly variable store fee will be subject to reduction for the closure of supermarkets as provided in Section I.E below.

 

(c)                                   As an example only, during the first Annual Extension Term, if the Annual Per Store Fee has been established after the first 90 days at $3,562 per week per store, and if on the first day of the Annual Extension Term the number of operating supermarkets is 425, the weekly fixed store fee would be $756,925 ($1,781 x 425).  Assuming 425 supermarkets, the weekly fixed store fee for all supermarkets would be $756,925 ($1,781 x 25) for a weekly payment total (fixed and variable) of $1,513,850.  The weekly variable store fee could be reduced as a result of supermarket closures.  For example, if five (5) stores closed in a given week, the weekly variable store fee would be $748,020 ($1,81 x 420) for the next week, but the weekly fixed store fee would continue at $756,925 ($1,781 x 425) for a weekly total (fixed and variable) of $1,504,945.

 

D.                                     Fees for New or Acquired Supermarkets

 

From and after the Effective Date, in the event New Albertson’s opens supermarkets or acquires operating supermarkets (collectively, “ New Stores ”), such New Stores shall be added to the TSA if, and only if, such New Stores utilize IT systems and platforms that are compatible in all material respects with New Albertson’s then current IT systems and platforms.  As an example and for sake of clarity, it is agreed that SVU would have no obligation to provide Services to a supermarket (or a supermarket chain) acquired by New Albertson’s which is supported by IT systems and platforms not compatible in all material respects with the then current IT systems and platforms of New Albertson’s, including, but not limited to, all material applicable hardware and software and their respective versions.  If New Stores are added to the TSA (as allowed above), the fees for such New Stores shall be as provided above. New Albertson’s shall pay no fee (fixed or variable) for New Stores receiving Services under this Services Agreement during the first 12 month period of the Initial Term, unless New Albertson’s adds more than five (5) stores during the first twelve (12) month period of the Initial Term, at which point the parties will agree to an appropriate increase in the Service Fees.

 

E.                                      Store and Distribution Center Counts .

 

In the event Albertson chooses to not receive Services at a supermarket or distribution center, the variable weekly fee for such supermarket or distribution center set out in Section I.C and Section 1.D above, as applicable, shall be eliminated only after New Albertson’s provides SVU with written notice of the separation and fee reduction, and, as set out in Section I.G below, the fee reduction shall become effective ten (10) weeks after SVU’s receipt of the notice.

 

Exhibit A-3



 

F.                                       No Proration of Weekly Payments .

 

There shall be no proration of a variable fee weekly payment due to the timing of a supermarket or distribution center closure or separation during a particular week (i.e., if a supermarket or distribution center is operating during any portion of the week for which it is receiving Services, for payment purposes hereunder, it shall be deemed to have operated and received Services for the entire week).  A week shall run from Friday to Thursday.

 

G.                                     Annual Prepayment Portion Amount .  New Albertson’s expressly acknowledges and agrees that it shall prepay to SVU a portion of the total fees due for each Annual Extension Term exercised by New Albertson’s.  Such portion to be prepaid shall be an amount that equals Ten Million and 00/100 Dollars ($10,000,000) (the “ New Albertson’s Annual Prepayment Portion Amount ”).  The New Albertson’s Annual Prepayment Portion Amount is due on or before the final business day in each 12 month period during the Initial Term, and, thereafter, prior to the expiration of each Annual Extension Term provided New Albertson’s has exercised its next Annual Extension Term option.  Receipt of such payment by SVU is an express condition precedent to the effectiveness of the Annual Extension Term then being exercised.  The payment of the New Albertson’s Annual Prepayment Portion Amount is a material part of the consideration that induced SVU to enter into this Services Agreement, and the payment shall be deemed fully earned by SVU upon receipt except as otherwise provided herein.  No part of the New Albertson’s Annual Prepayment Portion Amount shall be subject (under any circumstances) to rebate or refund, other than (i) a refund to New Albertson’s of any unearned portion of the New Albertson’s Annual Prepayment Portion Amount in the event New Albertson’s terminates its receipt of Services under the TSA as a result of an uncured default by SVU; or (ii) a refund to New Albertson’s of any unearned portion of the New Albertson’s Annual Prepayment Portion Amount in the event New Albertson’s does not exercise the first available Annual Extension Term.  Further, and notwithstanding anything to the contrary herein, in the event an Annual Extension Term is exercised but the Services provided to New Albertson’s under the TSA will terminate prior to the completion of that Annual Extension Term (“ New Albertson’s Partial Annual Extension Term ”) due to a Service Provider Termination Notice, New Albertson’s shall pay a prorated amount of the New Albertson’s Annual Prepayment Portion Amount for such New Albertson’s Partial Annual Extension Term (such pro rata calculation to be based on an agreed-upon store count, current per week rates, and the timing of the termination of the relevant TSA Services and shall not exceed $10,000,000) on or before the usual due date, and will continue to pay the per-supermarket and per-distribution center fees set out above.

 

II.                                    Fees for Services to be provided by New Albertson’s

 

A.                                     Pharmacy Services .  SVU will pay New Albertson’s fees based on a per operating pharmacy allocation as is currently the process as reflected on SVU P&Ls (paid weekly).

 

Exhibit A-4



 

B.                                     General Office Services .

 

With respect to general office services at shared locations, the party that holds either fee simple title or a leasehold interest in the property (the “ Owning Party ”) shall be entitled to reimbursement from the other party that maintains employees at such location (the “ Non-Owning Party ”) to the extent that the Non-Owning Party maintains (i) at least ten (10) employees and contractors at the shared location or (ii) at least twenty percent (20%) of the total number of employees and contractors (“ Shared Location ”). The parties will work together to identify all office facilities that are shared within 90 days from the Effective Date including the headcount in each facility.

 

The Non-Owning Party will promptly reimburse the Owning Party’s monthly expenses incurred in connection with providing office space to the Non-Owning Party at the Shared Location including without limitation:

 

1.               Utilities — including without limitation power, gas, water, sewer, telephone and trash;

 

2.               Taxes — including without limitation property, ad valorem and personal property taxes; and

 

3.               Insurance — including without limitation building insurance and general liability.

 

The Non-Owning Party will promptly reimburse the Owning Party’s third party reasonable documented out-of-pocket monthly expenses incurred in connection with providing office space to the Non-Owning Party at the Shared Location including without limitation:

 

1.                                       Cafeteria, Catering and/or Vending Services;

 

2.                                       Mailroom Services;

 

3.                                       Security;

 

4.                                       Common Area Maintenance; and

 

5.                                       Maintenance Repair and Cleaning of Interior and Exterior of Shared Location (including landscape, parking and driving areas).

 

6.                                       For those Shared Locations where Owning Party controls the interest as a tenant under a lease, rent and other customary charges payable to the third party landlord.

 

Each party shall be responsible for its pro rata percentage of payments based on such party’s pro rata percentage of the total number of employees and independent contractors at the Shared Location as of the Effective Date.  The parties will review on a semi-annual

 

Exhibit A-5



 

basis each party’s Shared Location usage to increase or decrease fees as a result of increase or decrease in employees and contractors.

 

For the avoidance of doubt, salary and benefit costs of personnel providing services at a Shared Location will shall not be included in the shared costs addressed in this section.

 

The Non-Owning Party may make cosmetic improvements to the Shared Locations so long as the Non-Owning Party pays for the full amount of such improvements or as otherwise agreed in writing by the parties.  The Non-Owning Party must acquire the prior written consent of the Owning Party to make any improvements.

 

The parties will work with one another on a reasonable basis to facilitate any reconfigurations, expansions, or contractions as required to accommodate the business needs of either party subject to the review and approval of the Owning Party.  Any out of pocket costs and expenses incurred as a result will be borne solely by the party that will be completing such reconfiguration.

 

Exhibit A-6



 

Exhibit B — IT Systems - Redlight Schedule

 

A.                                     Unless the parties agree otherwise 5 months prior to the end of either (a) each calendar year of the Initial Term or (b) the then current Annual Extension Term, SVU will provide New Albertson’s with a list of redlighted IT systems that SVU has identified for removal from its IT environment and/or for which SVU intends to terminate support during the next Annual Extension Term and the timing for such terminations (the “ Redlight Schedule ”).  The first Redlight Schedule which SVU can present pursuant to this provision shall relate to the Third Annual Extension Term.  The Redlight Schedule will identify the following items:

 

i.                                           A list of the IT systems, applications and services, which SVU plans to terminate in the following Annual Extension Term and the timing of such terminations (the “ Redlighted Apps ”);

 

ii.                                        Applications or services of reasonably comparable functionality to the Redlighted Apps., which SVU has selected to replace the Redlighted Apps (the “ Replacement Apps ”) and the timing of implementation of such Replacement Apps.  Such Replacement Apps may include third party software applications or services, as well as such applications and services internally developed by SVU; and

 

iii.                                     The estimated cost of each Replacement Apps, including applicable third party license, incremental development, installation and maintenance and support fees, as well as SVU’s incremental labor costs associated with the conversions to the Replacement Apps at New Albertson’s locations.  New Albertson’s shall be responsible for such actual costs of such Replacement Apps only to the extent such costs relate to New Albertson’s use.

 

B.                                     Within thirty (30) days of its receipt of the Redlight Schedule, New Albertson’s shall provide SVU with a written response to the Redlight Schedule.  New Albertson’s response may include: (i) acceptance of any or all of the Redlighted Apps, (ii) acceptance of any or all of the Replacement Apps, or (iii) notice that it has chosen not to replace any or all of the respective Redlighted Apps.

 

Within fifteen (15) days of SVU’s receipt of the New Albertson’s response, the parties shall commence good faith negotiations of the Redlight Schedule and New Albertson’s response with the intent to achieve mutual acceptance of a final Redlight Schedule, which shall be completed prior to the commencement of the next Annual Extension Term.

 

The following scenario is illustrative of the intended process described herein:

 

On July 25, 2011, SVU provided Albertson’s LLC (“ Albertson’s ”) with the Redlight Schedule for the 2012 Annual Extension Term.  The Redlight Schedule lists Travel and Expense Reporting (“ TERS ”) as a Redlighted App, which SVU planned to terminate use and de-install on August 1, 2012.  The Redlight Schedule also identified Oracle’s iExpense software as a Replacement App, which includes an estimated license fee of $XX and an annual maintenance and support fee of $X.

 

Exhibit B-1



 

On August 20, 2011, Albertson’s provided SVU with its written comments to the Redlight Schedule.  On September 5th, the Parties met to discuss the Redlight Schedule and Albertson’s comments thereto and continued negotiations until a final Redlight Schedule was completed

 

C.                                     In the event that the parties fail to agree on all items of the Redlight Schedule prior to the commencement of the next Annual Extension Term, the final Redlight Schedule shall contain only those items on which the Parties have mutually agreed.  Notwithstanding the preceding, SVU shall have no further obligation to host and/or support any Redlighted App which it has identified in the Redlight Schedule, but with respect to which the Parties have not agreed on a Replacement App; provided , however , systems, applications and services which serve only New Albertson’s shall not be redlighted without New Albertson’s written approval, not to be unreasonably withheld.

 

However, in the event that SVU chooses, in its sole and absolute discretion, to continue to host and/or support a Redlighted App beyond its planned termination, subject to New Albertson’s agreement that SVU shall continue to host and/or support a Redlighted App beyond its planned termination, New Albertson’s shall pay all documented internal and out-of-pocket costs (at both corporate level and store level) actually incurred by SVU that are incremental and in addition to any costs SVU incurs in supporting its own business.  SVU will make good faith efforts to minimize such costs and expenses.  In addition, New Albertson’s shall acknowledge and agree that SVU shall not be responsible for maintaining services levels that may have applied to such Redlighted App prior to its planned termination.

 

D.                                     To assist New Albertson’s with its capital expenditure planning, SVU agrees to share with New Albertson’s, upon New Albertson’s request and during the term of the TSA, SVU’s plans as to IT systems, applications and services which SVU provides support under this TSA and which SVU may be considering for termination in future Annual Extension Terms beyond the next immediate Annual Extension Term, replacement systems, applications and services which SVU is considering in the future, and roll-out schedules for such terminations and replacement applications (“ Future IT Plans ”).  Except as otherwise provided in this Exhibit B , neither SVU nor New Albertson’s shall have any obligation to the other as to such Future IT Plans, including any obligation to implement or pay for any such Future IT Plans.

 

Exhibit B-2



 

Exhibit C — Dispute Resolution Process

 

The “ Dispute Resolution Process ” shall mean that any then current, known disputes or potential disputes individually having a monetary value that reasonably could be expected to exceed $1,000,000 shall be listed by the Receiving Party and delivered to the Service Provider concurrent with an extension term exercise notice.  The Service Provider shall notify the Receiving Party in writing within ten (10) business days after receipt of the extension term notice of any additional disputes or potential disputes individually having a monetary value that reasonably could be expected to exceed $1,000,000.  The parties will then have twelve (12) months from the date of delivery of such list to fully resolve or submit to binding arbitration (consistent with Section 5.11 of the Settlement Agreement) the listed matters.  If said matters are not fully resolved or submitted to arbitration within such twelve (12) month period, the next scheduled extension term exercise shall no longer be available to the Receiving Party and shall be deemed to have failed.  The listed matters shall be deemed submitted to arbitration if either party notifies the other in writing that it wishes to engage in arbitration as to outstanding listed matters.

 

Exhibit C-1



 

Exhibit D - Resolution of Certain Disputes

 

A.                                     Albertson’s LLC and SVU previously agreed to a settlement regarding antitrust litigation settlement proceeds attributable to the stand along drug business and in-store pharmacies.  As of the Effective Date, all proceeds from drug antitrust litigation settlements attributable to in-store NAI pharmacies shall belong to New Albertson’s.

 

Exhibit D-1



 

Exhibit F — PCI Compliance

 

A.                                     Service Provider agrees that that if it or its subcontractors access, store, process, handle, or transmit Cardholder Data, as defined below, as part of performing Services under this Agreement, it and its Subcontractors shall fully comply with the Payment Card Industry Data Security Standard, as promulgated by the PCI Security Standards Council or its successors (the “ PCI DSS ” ) and all other applicable industry standards having to do with the protection or security of Cardholder Data, as such standards may be modified from time to time (the “ PCI Requirements ”) and with all applicable Laws having to do with the protection or security of Cardholder Data (the “ Cardholder Data Protection Laws ”), as such PCI Requirements and Cardholder Data Protection Laws apply to Supplier in its performance of Services.  Service Provider further agrees that it and its subcontractors, through their acts or omissions, shall not cause Receiving Party or its Affiliates to be in violation of the PCI Requirements or the Cardholder Data Protection Laws.  For purposes of this Section, “ Cardholder Data ” shall be defined as in the PCI DSS, and includes, as to any payment card, the full magnetic stripe (and all data encoded in it), the primary account number (PAN), the cardholder’s name, the expiration date, and the service code.

 

B.                                     Service Provider agrees that it and its subcontractors shall use the Cardholder Data that they access, store, process, handle, or transmit under this Agreement only as necessary to perform Service Provider’s obligations under this Agreement (including any Order) and comply with applicable Law.

 

C.                                     If Service Provider discovers that unauthorized access has been, or is reasonably likely to have been, gained to Cardholder Data to which it or its subcontractors have had access or have stored, processed, handled, or transmitted, Service Provider shall immediately notify Receiving Party and provide the applicable card companies and acquiring financial institutions, and their respective designees, access to Service Provider and its subcontractors’ facilities and all pertinent records to conduct a review of the compliance by Service Provider’s and its subcontractors with the PCI Requirements.  Service Provider agrees that it and its subcontractors shall fully cooperate with any reviews of their facilities and records provided for in this subsection.

 

D.                                     Service Provider agrees that if it or its subcontractors have access to, store, process, handle, or transmit Cardholder Data as part of performing Services under an order, it and its subcontractors shall maintain appropriate business continuity procedures and systems to ensure security of Cardholder Data in their possession or control in the event of a disruption, disaster, or failure of the primary data systems of SVU, New Albertson’s, or New Albertson’s subcontractors.

 

E.                                     If Service Provider or its subcontractors have access to, store, process, handle, or transmit Cardholder Data as part of performing Services under an order, Service Provider shall provide Receiving Party and its Affiliates with all certifications and other information reasonably requested by Receiving Party or its Affiliates to enable Receiving Party and its Affiliates to be certified as being in compliance with the PCI Requirements.

 



 

F.                                       Service Provider’s obligations under this Exhibit shall continue in effect after the termination of this Agreement.

 



 

Exhibit F — Services Elimination and Fee Credit

 

[**]

 


** Denotes confidential information that has been omitted from the exhibit and filed separately, accompanied by a confidential treatment request, with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934.

 


EXHIBIT 10.3

 

Confidential treatment has been requested for portions of this exhibit pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [**]. A complete version of this exhibit has been filed separately with the Securities and Exchange Commission.

 

AMENDED AND RESTATED CREDIT AGREEMENT

 

Dated as of March 21, 2013

 

Among

 

SUPERVALU INC.,
as the Lead Borrower

 

The Other Borrowers Named Herein

 

The Guarantors Named Herein

 

WELLS FARGO BANK, NATIONAL ASSOCIATION
as Administrative Agent, Swing Line Lender and LC Issuer

 

and

 

The Other Lenders Party Hereto

 

U.S. BANK, NATIONAL ASSOCIATION
RABOBANK NEDERLAND, NEW YORK BRANCH
as Co-Syndication Agents

 

GOLDMAN SACHS BANK USA
CREDIT SUISSE AG
MORGAN STANLEY SENIOR FUNDING, INC.
BARCLAYS BANK PLC
BANK OF AMERICA, N.A.
as Co-Documentation Agents

 

BMO HARRIS BANK N.A.
RBS CITIZENS BUSINESS CAPITAL, a division of RBS Asset Finance, Inc.
REGIONS BANK
UNION BANK, N.A.
as Senior Managing Agents

 

WELLS FARGO BANK, NATIONAL ASSOCIATION
U.S. BANK, NATIONAL ASSOCIATION
GOLDMAN SACHS BANK USA
CREDIT SUISSE SECURITIES (USA) LLC
MORGAN STANLEY SENIOR FUNDING, INC.
BARCLAYS BANK PLC



 

RABOBANK NEDERLAND, NEW YORK BRANCH
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
as Joint Lead Arrangers and Joint Bookrunners

 

2



 

TABLE OF CONTENTS

 

Section

 

Page

 

 

ARTICLE I           DEFINITIONS AND ACCOUNTING TERMS

2

 

 

1.01. Defined Terms

2

1.02. Other Interpretive Provisions

74

1.03. Accounting Terms

75

1.04. Rounding

75

1.05. Times of Day

76

1.06. Letter of Credit Amounts

76

1.07. Currency Equivalents Generally

76

 

 

ARTICLE II         THE COMMITMENTS AND CREDIT EXTENSIONS

76

 

 

2.01. Committed Loans

76

2.02. Borrowings, Conversions and Continuations of Committed Loans

77

2.03. Letters of Credit

79

2.04. Swing Line Loans

87

2.05. Prepayments

89

2.06. Termination or Reduction of Commitments

90

2.07. Repayment of Loans

91

2.08. Interest

92

2.09. Fees

92

2.10. Computation of Interest and Fees

92

2.11. Evidence of Debt

92

2.12. Payments Generally; Administrative Agent’s Clawback

93

2.13. Sharing of Payments by Lenders

95

2.14. Settlement Amongst Lenders

95

2.15. Increase in Commitments

96

 

 

ARTICLE III       TAXES, YIELD PROTECTION AND ILLEGALITY; APPOINTMENT OF LEAD BORROWER

97

 

 

3.01. Taxes

97

3.02. Illegality

99

3.03. Inability to Determine Rates

99

3.04. Increased Costs; Reserves on LIBO Rate Loans

100

3.05. Compensation for Losses, Costs or Expenses

101

3.06. Mitigation Obligations; Replacement of Lenders

102

3.07. Survival

102

3.08. Designation of Lead Borrower as Borrowers’ Agent

102

 

 

ARTICLE IV        CONDITIONS PRECEDENT TO CREDIT EXTENSIONS

103

 

 

4.01. Conditions of Initial Credit Extension

103

4.02. Conditions to all Credit Extensions

106

 

i



 

ARTICLE V         REPRESENTATIONS AND WARRANTIES

107

 

 

5.01. Existence, Qualification and Power

108

5.02. Authorization; No Contravention

108

5.03. Governmental Authorization; Other Consents

108

5.04. Binding Effect

108

5.05. Financial Statements; No Material Adverse Effect

109

5.06. Litigation

110

5.07. No Default

110

5.08. Ownership of Property; Liens

110

5.09. Environmental Compliance

111

5.10. Insurance

112

5.11. Taxes

112

5.12. ERISA Compliance

112

5.13. Subsidiaries; Equity Interests

113

5.14. Margin Regulations; Investment Company Act

114

5.15. Disclosure

114

5.16. Compliance with Laws

114

5.17. Intellectual Property; Licenses, Etc.

114

5.18. Labor Matters

114

5.19. Security Documents

115

5.20. Solvency

116

5.21. Deposit Accounts; Credit Card Arrangements

116

5.22. Brokers

116

5.23. Trade Relations

116

5.24. Material Contracts

116

5.25. Casualty

117

5.26. Payable Practices

117

5.27. Notices from Farm Products Sellers, etc.

117

5.28. HIPAA Compliance

117

5.29. Compliance with Health Care Laws

118

5.30. OFAC

118

5.31. Patriot Act

118

5.32. Transaction Documents

119

 

 

ARTICLE VI        AFFIRMATIVE COVENANTS

119

 

 

6.01. Financial Statements

119

6.02. Certificates; Other Information

120

6.03. Notices

123

6.04. Payment of Obligations

124

6.05. Preservation of Existence, Etc.

125

6.06. Maintenance of Properties

125

6.07. Maintenance of Insurance

125

6.08. Compliance with Laws

127

6.09. Books and Records; Accountants

128

6.10. Inspection Rights; Field Examinations; Appraisals

128

6.11. Use of Proceeds

129

6.12. Additional Loan Parties

129

6.13. Cash Management

130

6.14. Information Regarding the Collateral

131

 

ii



 

6.15. Physical Inventories

132

6.16. Environmental Laws

132

6.17. Further Assurances

132

6.18. Lender Meetings

133

6.19. ERISA

133

6.20. Agricultural Products

134

6.21. Post-Closing Matters

135

6.22. Escrow Agreement, 2014 Notes and Indemnity

135

6.23. Preparation of Environmental Reports

135

 

 

ARTICLE VII      NEGATIVE COVENANTS

135

 

 

7.01. Liens

135

7.02. Investments

136

7.03. Indebtedness; Disqualified Stock

136

7.04. Fundamental Changes

136

7.05. Dispositions

136

7.06. Restricted Payments

136

7.07. Prepayments of Indebtedness

137

7.08. Change in Nature of Business

137

7.09. Transactions with Affiliates

137

7.10. Burdensome Agreements

138

7.11. Use of Proceeds

138

7.12. Amendment of Material Documents

138

7.13. Fiscal Year

138

7.14. Deposit Accounts

138

7.15. Minimum Fixed Charge Coverage Ratio

139

 

 

ARTICLE VIII    EVENTS OF DEFAULT AND REMEDIES

139

 

 

8.01. Events of Default

139

8.02. Remedies Upon Event of Default

143

8.03. Application of Funds

143

 

 

ARTICLE IX        ADMINISTRATIVE AGENT

145

 

 

9.01. Appointment and Authority

145

9.02. Rights as a Lender

146

9.03. Exculpatory Provisions

146

9.04. Reliance by Administrative Agent

147

9.05. Delegation of Duties

147

9.06. Resignation of Administrative Agent

147

9.07. Non-Reliance on Administrative Agent and Other Lenders

148

9.08. No Other Duties, Etc.

149

9.09. Administrative Agent May File Proofs of Claim

149

9.10. Collateral and Guaranty Matters

149

9.11. Notice of Transfer

150

9.12. Reports and Financial Statements

150

9.13. Agency for Perfection

151

9.14. Indemnification

151

9.15. Relation among Lenders

151

 

iii



 

9.16. Defaulting Lender

152

9.17. Secured Bank Product Obligations; Commercial LC Facility Obligations

154

9.18. Co-Syndication Agents; Co-Documentation Agents and Joint Lead Arrangers

155

 

 

ARTICLE X         MISCELLANEOUS

155

 

 

10.01. Amendments, Etc.

155

10.02. Notices; Effectiveness; Electronic Communications

157

10.03. No Waiver; Cumulative Remedies

158

10.04. Expenses; Indemnity; Damage Waiver

159

10.05. Payments Set Aside

160

10.06. Successors and Assigns

160

10.07. Treatment of Certain Information; Confidentiality

164

10.08. Right of Setoff

165

10.09. Interest Rate Limitation

165

10.10. Counterparts; Integration; Effectiveness

165

10.11. Survival

166

10.12. Severability

166

10.13. Replacement of Lenders

166

10.14. Governing Law; Jurisdiction; Etc.

167

10.15. Waiver of Jury Trial

168

10.16. No Advisory or Fiduciary Responsibility

168

10.17. USA PATRIOT Act Notice

169

10.18. Foreign Asset Control Regulations

169

10.19. Time of the Essence

169

10.20. Press Releases

169

10.21. Additional Waivers

170

10.22. No Strict Construction

171

10.23. Attachments

171

 

 

ARTICLE XI ACKNOWLEDGMENT AND RESTATEMENT

171

 

 

11.01. Existing Obligations

171

11.02. Acknowledgment of Security Interests

172

11.03. Existing Financing Agreements

172

11.04. Restatement

172

 

 

SIGNATURES

S-2

 

iv



 

SCHEDULES

 

1.01(a)

Subsidiary Borrowers

1.01(b)

Existing Letters of Credit

1.01(c)

Transition Agreement Parties

1.01(d)

Unrestricted Subsidiaries

2.01

Commitments and Applicable Percentages

5.01

Loan Parties Organizational Information

5.06

Litigation

5.08(b)

Owned Real Estate

5.08(c)

Leased Real Estate

5.09

Environmental Matters

5.10

Insurance

5.13

Subsidiaries; Other Equity Investments

5.17

Intellectual Property Matters

5.21(a)

Demand Deposit Accounts

5.21(b)

Credit Card Arrangements

6.02

Financial and Collateral Reporting

6.17

Substitution, Release and Addition of Fixed Asset Collateral

6.21

Post-Closing Matters

7.01

Existing Liens

7.02

Existing Investments

7.03

Existing Indebtedness

7.09

Transactions with Affiliates

10.02

Administrative Agent’s Office; Certain Addresses for Notices

 

 

EXHIBITS

 

A

Form of Committed Loan Notice

B

Form of Swing Line Loan Notice

C-1

Form of Note

C-2

Form of Swing Line Note

D

Form of Compliance Certificate

E

Form of Assignment and Assumption

F

Form of Borrowing Base Certificate

G

Form of DDA Notification

H

Form of Credit Card Notification

I

Closing Date Collateral List

J

Form of Mortgage

K

Form of Personal Property Security Agreement

L

Form of Solvency Certificate

M

Credit and Collection Policy

 

v



 

AMENDED AND RESTATED CREDIT AGREEMENT

 

This AMENDED AND RESTATED CREDIT AGREEMENT (“ Agreement ”) is entered into as of March 21, 2013, among SUPERVALU INC., a Delaware corporation (the “ Lead Borrower ”), the subsidiaries of the Lead Borrower listed on Schedule 1.01(a) hereto (together with the Lead Borrower, each a “ Borrower ” and collectively, the “ Borrowers ”, as hereinafter further defined), the Guarantors (as hereinafter defined), each lender from time to time party hereto (collectively, the “ Lenders ” and individually, a “ Lender ”), Wells Fargo Bank, National Association (“ Wells Fargo ”), as Administrative Agent, Swing Line Lender and LC Issuer, U.S. Bank, National Association and Rabobank Nederland, New York Branch, as Co-Syndication Agents, Goldman Sachs Bank USA, Credit Suisse AG, Morgan Stanley Senior Funding, Inc., Barclays Bank PLC and Bank of America, N.A., as Co-Documentation Agents, BMO Harris Bank N.A., RBS Citizens Business Capital, a division of RBS Asset Finance, Inc., Regions Bank and Union Bank, N.A., as Senior Managing Agents, and Wells Fargo, U.S. Bank, National Association, Goldman Sachs Bank USA, Credit Suisse Securities (USA) LLC, Morgan Stanley Senior Funding, Inc., Barclays Bank PLC, Rabobank Nederland, New York Branch, and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as Joint Lead Arrangers and Joint Bookrunners.

 

WHEREAS, Administrative Agent, Lenders and Borrowers have entered into financing arrangements pursuant to which Lenders (or Administrative Agent on behalf of Lenders) have made loans and advances and have provided other financial accommodations to Borrowers, New Albertson’s, Inc., an Ohio corporation (“ NAI ”) and certain Subsidiaries of NAI that are “Loan Parties” under the Existing Credit Agreement (collectively, with NAI, the “ NAI Parties ”) as set forth in the Credit Agreement, dated August 30, 2012, by and among Administrative Agent, Lenders, Borrowers and the NAI Parties (the “ Existing Credit Agreement ”, and together with all agreements, documents and instruments at any time executed and/or delivered in connection therewith, or related thereto, as from time to time amended, modified, supplemented, extended, renewed, restated or replaced, collectively, the “ Existing Loan Documents ”);

 

WHEREAS, pursuant to and in accordance with the Acquisition Agreement, AB Acquisition LLC, a Delaware limited liability company (the “ Buyer ”) is purchasing all of the issued and outstanding Equity Interests of NAI from Lead Borrower (the “ NAI Stock Purchase ”).

 

WHEREAS, Borrowers have requested that, contemporaneously with the consummation of the NAI Stock Purchase, Administrative Agent and Lenders (a) amend and restate the Existing Credit Agreement and continue the existing financing arrangements with Borrowers pursuant to which Lenders may make loans and advances and provide other financial accommodations to Borrowers, and (b) release the NAI Parties as borrowers and guarantors under the Existing Credit Agreement; and

 

WHEREAS, Administrative Agent and Lenders have agreed to amend and restate the Existing Credit Agreement and each Lender (severally and not jointly) has agreed to continue to make such loans and advances and provide such other financial accommodations to Borrowers on a pro rata basis according to its Commitment (as defined below) on the terms and conditions set forth herein and Administrative Agent has agreed to continue to act as agent for Lenders on the terms and conditions set forth herein and the other Loan Documents;

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, the parties hereto covenant and agree as follows:

 



 

ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS

 

1.01.  Defined Terms.   As used in this Agreement, the following terms shall have the meanings set forth below:

 

“ABL Priority Collateral” has the meaning specified therefor in the Term Loan Intercreditor Agreement.

 

“Accelerated Borrowing Base Delivery Event” means either (i) the occurrence and continuance of any Event of Default, or (ii) Excess Availability shall at any time be less than or equal to twenty percent (20%) of the Aggregate Commitments.  For purposes of this Agreement, the occurrence of an Accelerated Borrowing Base Delivery Event shall be deemed continuing (A) in the case of such an event pursuant to clause (i)  above, so long as such Event of Default has not been waived or cured, and/or (B) in the case of such an event pursuant to clause (ii)  above, until Excess Availability has exceeded twenty percent (20%) of the Aggregate Commitments for forty-five (45) consecutive days, in which case under clause (A)  or (B)  hereof, as applicable, an Accelerated Borrowing Base Delivery Event shall no longer be deemed to be continuing for purposes of this Agreement.

 

“ACH” means automated clearing house transfers.

 

“Accommodation Payment” as defined in Section 10.21(d) .

 

“Account” means “account” as defined in the UCC as in effect on the date hereof.

 

“Account Debtor” means an “account debtor” as such term is defined in the UCC, including, without limitation, a Credit Card Issuer, a Credit Card Processor, a Fiscal Intermediary or another Third Party Payor.

 

“Acquisition” means, with respect to any Person (a) an Investment in, or a purchase of a Controlling interest in, the Equity Interests of any other Person, (b) a purchase or other acquisition of all or substantially all of the assets or properties of, another Person or of any business unit of another Person, (c) any merger or consolidation of such Person with any other Person or other transaction or series of transactions resulting in the acquisition of all or substantially all of the assets, or a Controlling interest in the Equity Interests, of any Person, or (d) any acquisition of any Store locations of any Person, in each case in any transaction or group of transactions which are part of a common plan.

 

“Acquisition Agreement” means the Stock Purchase Agreement, dated as of January 10, 2013, by and among Buyer, Lead Borrower and NAI.

 

“Additional Commitment Lender” shall have the meaning provided in Section 2.15 .

 

“Adjusted LIBO Rate” means for any Interest Period with respect to any LIBO Borrowing, an interest rate per annum (rounded upwards, if necessary, to the next 1/100 of one percent) equal to (a) the LIBO Rate for such Interest Period multiplied by (b) the Statutory Reserve Rate.  The Adjusted LIBO Rate will be adjusted automatically as of the effective date of any change in the Statutory Reserve Rate.

 

“Adjustment Date” means the first day of each Fiscal Quarter, commencing December 1, 2013.

 

“Administrative Agent” means Wells Fargo in its capacity as administrative and collateral agent under any of the Loan Documents, or any successor administrative and collateral agent.

 

2



 

“Administrative Agent’s Office” means the Administrative Agent’s address and, as appropriate, account as set forth on Schedule 10.02 , or such other address or account as the Administrative Agent may from time to time notify the Lead Borrower and the Lenders.

 

“Administrative Questionnaire” means an Administrative Questionnaire in a form supplied by the Administrative Agent.

 

“Affiliate” means, with respect to any Person, (a) another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified, (b) any director, officer, managing member, partner, trustee, or beneficiary of that Person, but excluding such Persons as to any Lender (or in the case of a Lender that is an Approved Fund, the entity that administers or manages such Approved Fund), (c) any other Person directly or indirectly holding ten percent (10%) or more of any class of the Equity Interests of that Person, except in the case of a Lender (or in the case of a Lender that is an Approved Fund, the entity that administers or manages such Approved Fund), any other Person directly or indirectly holding thirty-five percent (35%) or more of any class of the Equity Interests of such Person, and (d) any other Person ten percent (10%) or more of any class of whose Equity Interests is held directly or indirectly by that Person, except in the case of a Lender (or in the case of a Lender that is an Approved Fund, the entity that administers or manages such Approved Fund), any other Person thirty-five percent (35%) or more of any class of whose Equity Interests is held directly or indirectly by such Person.  Any reference herein to an “Affiliate” of any Loan Party shall be construed to exclude the Investors, except, where any such Person would otherwise constitute an Affiliate of a Loan Party in accordance with this definition, in Section 7.09 .

 

“Agent Parties” shall have the meaning set forth in Section 10.02(c) .

 

“Agent Payment Account” shall mean account no. 37235547964501078 of Administrative Agent at Wells Fargo, or such other account of Administrative Agent as Administrative Agent may from time to time designate to Lead Borrower as the Agent Payment Account for purposes of this Agreement and the other Loan Documents.

 

“Aggregate Commitments” means the Commitments of all the Lenders.  As of the Closing Date, the Aggregate Commitments are $1,000,000,000.

 

“Agreement” means this Amended and Restated Credit Agreement.

 

“Allocable Amount” has the meaning set forth in Section 10.21(d) .

 

“Applicable Collateral List” shall mean the Closing Date Collateral List or, if any Restated Collateral List has been delivered to the Administrative Agent pursuant to Schedule 6.17 , the most recent Restated Collateral List so delivered.

 

“Applicable Commitment Fee Percentage” means three-eighths of one percent (0.375%) per annum; provided , that , on and after the first Commitment Fee Adjustment Date, and on each Commitment Fee Adjustment Date thereafter, the Applicable Commitment Fee Percentage shall be determined from the following pricing grid based upon the sum of the average daily balances of the Committed Borrowings and LC Credit Extensions for the most recent Fiscal Quarter ended immediately preceding such Commitment Fee Adjustment Date:

 

3



 

Average Daily Balance of Committed
Borrowings and LC
Credit Extensions in any Fiscal Quarter

 

Applicable Commitment Fee Percentage

 

Less than 50% of the Aggregate Commitments

 

0.375

%

 

 

 

 

Greater than or equal to 50% of the Aggregate Commitments

 

0.250

%

 

“Applicable Lenders” means the Required Lenders, the Supermajority Lenders, all affected Lenders, or all Lenders, as the context may require.

 

“Applicable LC Fee Rate” means the percentage set forth in Level II of the pricing grid below; provided , that , on and after the first Adjustment Date, and on each Adjustment Date thereafter, the Applicable LC Fee Rate shall be determined from the following pricing grid based upon the Quarterly Average Excess Availability for the most recent Fiscal Quarter ended immediately preceding such Adjustment Date; except that (i) notwithstanding anything to the contrary set forth herein, upon the occurrence of an Event of Default, the Administrative Agent may, and at the direction of the Required Lenders shall, immediately increase the Applicable LC Fee Rate to the rate set forth in Level III (even if the Quarterly Average Excess Availability requirements for a different Level have been met) and interest shall accrue at the Default Rate and (ii) if any Borrowing Base Certificate is at any time restated or otherwise revised (including as a result of a field examination) or if the information set forth in any Borrowing Base Certificate otherwise proves to be false or incorrect such that the Applicable LC Fee Rate would have been higher than was otherwise in effect during any period, without constituting a waiver of any Default or Event of Default arising as a result thereof, Letter of Credit Fees due under this Agreement shall be immediately recalculated at such higher rate for any applicable periods and shall be due and payable on demand.  In the event that the credit rating of the Lead Borrower is upgraded by both S&P and Moody’s in each case for the Lead Borrower’s Corporate Family Ratings to Ba1 (stable outlook) and BB+ (stable outlook) or better, respectively, commencing on the first day of the calendar month after the receipt by Administrative Agent of a written request from the Lead Borrower with confirmation of such upgrade, the Applicable LC Fee Rates in each of the Levels set forth below will be reduced by twenty-five (25) basis points.

 

Level

 

Quarterly Average Excess Availability

 

Letter of Credit Fee

 

I

 

Equal to or greater than 66.67% of the Aggregate Commitments

 

1.75

%

 

 

 

 

 

 

II

 

Greater than or equal to 33.33% of the Aggregate Commitments but less than 66.67% of the Aggregate Commitments

 

2.00

%

 

 

 

 

 

 

III

 

Less than 33.33% of the Aggregate Commitments

 

2.25

%

 

“Applicable Margin” means the percentage set forth in Level II of the pricing grid below; provided , that , on and after the first Adjustment Date, and on each Adjustment Date thereafter, the Applicable Margin shall be determined from the following pricing grid based upon the Quarterly Average Excess Availability for the most recent Fiscal Quarter ended immediately preceding such Adjustment Date; except , that , (i) notwithstanding anything to the contrary set forth herein, upon the occurrence of an

 

4



 

Event of Default, the Administrative Agent may, and at the direction of the Required Lenders shall, immediately increase the Applicable Margin to that set forth in Level III (even if the Quarterly Average Excess Availability requirements for a different Level have been met) and interest shall accrue at the Default Rate and (ii) if any Borrowing Base Certificate is at any time restated or otherwise revised (including as a result of a field examination) or if the information set forth in any Borrowing Base Certificates otherwise proves to be false or incorrect such that the Applicable Margin would have been higher than was otherwise in effect during any period, without constituting a waiver of any Default or Event of Default arising as a result thereof, interest due under this Agreement shall be immediately recalculated at such higher rate for any applicable periods and shall be due and payable on demand.  In the event that the credit rating of the Lead Borrower is upgraded by both S&P and Moody’s in each case for the Lead Borrower’s Corporate Family Ratings to Ba1 (stable outlook) and BB+ (stable outlook) or better, respectively, commencing on the first day of the calendar month after the receipt by Administrative Agent of a written request from the Lead Borrower with confirmation of such upgrade, the Applicable Margins in each of the Levels set forth below will be reduced by twenty-five (25) basis points.

 

Level

 

Quarterly Average Excess Availability

 

LIBO Rate Margin

 

Base Rate Margin

 

I

 

Equal to or greater than 66.67% of the Aggregate Commitments

 

1.75

%

0.75

%

 

 

 

 

 

 

 

 

II

 

Greater than or equal to 33.33% of the Aggregate Commitments but less than 66.67% of the Aggregate Commitments

 

2.00

%

1.00

%

 

 

 

 

 

 

 

 

III

 

Less than 33.33% of the Aggregate Commitments

 

2.25

%

1.25

%

 

“Applicable Percentage” means with respect to any Lender (a) at any time during the Availability Period, the fraction, expressed as a percentage (carried out to the ninth decimal place), the numerator of which is such Lender’s Commitment and the denominator of which is the Aggregate Commitments at such time and (b) after the Availability Period, the Applicable Percentage of such Lender most recently in effect, giving effect to any subsequent assignments.  The initial Applicable Percentage of each Lender is set forth opposite the name of such Lender on Schedule 2.01 (as amended from time to time) or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable.

 

“Approved Fund” means any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender, (c) an entity or an Affiliate of an entity that administers or manages a Lender that is an Approved Fund or (d) an advisor under common control with such Lender, Affiliate or advisor, as applicable.

 

“ASC” means American Stores Company, LLC, a Delaware limited liability company.

 

“ASC Guarantee” means the ASC Notes Guarantee, dated as of July 6, 2005, by Lead Borrower with respect to the obligations of ASC under the ASC Indenture and the ASC Notes.

 

“ASC Indenture” means the Senior Indenture, dated as of May 1, 1995, between ASC and Wells Fargo Bank, National Association (as successor to The First National Bank of Chicago), as amended, supplemented or otherwise modified as of the Closing Date.

 

“ASC Notes” means the notes issued by ASC pursuant to the ASC Indenture.

 

5



 

“Assignee Group” means two or more Eligible Assignees that are Affiliates of one another or two or more Approved Funds managed by the same investment advisor.

 

“Assignment and Assumption” means an assignment and assumption entered into by a Lender and an Eligible Assignee (with the consent of any party whose consent is required by Section 10.06(b) ), and accepted by the Administrative Agent, in substantially the form of Exhibit E or any other form approved by the Administrative Agent.

 

“Attributable Indebtedness” means, on any date, (a) in respect of any Capital Lease Obligation of any Person, the capitalized amount thereof that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP, and (b) in respect of any Synthetic Lease Obligation, the capitalized amount of the remaining lease or similar payments under the relevant lease or other applicable agreement or instrument that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP if such lease, agreement or instrument were accounted for as a capital lease.

 

“Audited Financial Statements” means the audited Consolidated balance sheet of the Lead Borrower and its Subsidiaries (prior to giving effect to the Transactions) for the Fiscal Year ended February 25, 2012, and the related Consolidated statements of income or operations, Shareholders’ Equity and cash flows (in each case, prior to giving effect to the Transactions) for such Fiscal Year of the Lead Borrower and its Subsidiaries, including the notes thereto.

 

“Auto-Extension Letter of Credit” shall have the meaning set forth in Section 2.03(b)(iii) .

 

“Availability Period” means the period from and including the Closing Date to the earliest of (a) the Maturity Date, (b) the date of termination of the Aggregate Commitments pursuant to Section 2.06 , and (c) the date of termination of the commitment of each Lender to make Loans and of the obligation of the LC Issuers to make LC Credit Extensions pursuant to Section 8.02 .

 

“Availability Reserves” means, without duplication of any other Reserves or items to the extent such items are otherwise addressed or excluded through eligibility criteria, such reserves as the Administrative Agent from time to time determines in its Permitted Discretion as being appropriate (a) to reflect the impediments to the Administrative Agent’s ability to realize upon the Collateral, (b) to reflect claims and liabilities that the Administrative Agent determines in its Permitted Discretion will need to be satisfied in connection with the realization upon the Collateral, (c) to reflect criteria, events, conditions, contingencies or risks which adversely affect any component of the Borrowing Base, or the validity or enforceability of this Agreement or the other Loan Documents or any material remedies of the Credit Parties hereunder or thereunder, or (d) to reflect that a Default or an Event of Default then exists.  Without limiting the generality of the foregoing, Availability Reserves may include, in the Administrative Agent’s Permitted Discretion (but are not limited to) reserves based on: (i) any rental payments, service charges or other amounts due or to become due to lessors of real property to the extent Inventory or Records are located in or on such property or such Records are needed to monitor or otherwise deal with the Collateral (other than for locations where Administrative Agent has received a Collateral Access Agreement executed and delivered by the owner and lessor of such real property that Administrative Agent has acknowledged in writing is in form and substance reasonably satisfactory to Administrative Agent); provided , that , the Availability Reserves established pursuant to this clause (i)  as to retail store locations that are leased shall not exceed at any time the aggregate of amounts payable for the next one (1) month to the lessors of such retail store locations, and only with respect to retail store locations in those States where any right of the lessor to ABL Priority Collateral may be pari passu or have priority over the Lien of Administrative Agent therein; provided , that , such limitation on the amount of the Availability Reserves pursuant to this clause (i)  shall only apply so long as: (A) no Event of Default shall exist, (B) neither any Loan Party nor Administrative Agent shall have received notice of any event of

 

6



 

default under the lease with respect to such location and (C) no Borrower has granted to the lessor a Lien upon any assets of such Borrower; (ii) customs duties, and other costs to release Inventory which is being imported into the United States; (iii) outstanding taxes and other governmental charges, including, without limitation, ad valorem, real estate, personal property, sales, excise, stamp, cigarette, claims of the PBGC and other taxes which have or are anticipated to have priority over the interests of the Administrative Agent in the Collateral; (iv) salaries, wages and benefits due to employees of any Borrower that would reasonably be expected to be incurred in connection with a Liquidation, (v) Customer Credit Liabilities, (vi) Customer Deposits, (vii) deposits or other amounts received in trust for the benefit of any Governmental Authority, utilities or other third parties, (viii) warehousemen’s or bailee’s charges and other Permitted Encumbrances which may be pari passu or have priority over the interests of the Administrative Agent in the Collateral (other than for locations where Administrative Agent has received a Collateral Access Agreement executed and delivered by such warehouseman or bailee that Administrative Agent has acknowledged in writing is in form and substance reasonably satisfactory to Administrative Agent), (ix) amounts due to vendors on account of consigned goods, (x) payables to vendors entitled to the benefit of the trust under PACA or the PSA, or any similar statute or regulation, including the Food Security Act, (xi) Cash Management Reserves, (xii) Bank Products Reserves, (xiii) royalties payable in respect of licensed merchandise, (xiv) SVU 2016 Notes Reserve, and (xv) reserves in respect of Commercial LC Facility Obligations, and (xvi) dilution with respect to Pharmacy Receivables and Wholesale Trade Receivables (based on the ratio of the aggregate amount of non-cash reductions in Accounts for any period to the aggregate dollar amount of the sales of such Borrower for such period) as calculated by Administrative Agent for any period that is or is reasonably anticipated to be greater than five (5%) percent.  To the extent that such Reserve is in respect of amounts that may be payable to third parties the Administrative Agent may, at its option, deduct such Reserve from the amount equal to the Aggregate Commitments, at any time that the Aggregate Commitments are less than the amount of the Borrowing Base.  The amount of any Availability Reserve established by the Administrative Agent shall have a reasonable relationship to the event, condition or other matter which is the basis for such reserve as determined by the Administrative Agent in its Permitted Discretion.  To the extent that an event, condition or matter is directly addressed pursuant to the calculation of the Net Recovery Percentage as to Inventory or the calculation of the Pharmacy Scripts Availability, the Administrative Agent shall not also establish an Availability Reserve to address the same event, condition or matter.

 

“Average Daily Stated Amount” means, for any Letter of Credit during any period, an amount equal to (a) the Stated Amount of such Letter of Credit each day during such period, divided by (b) the number of days occurring in such period.

 

“Bank Product Obligations” means any obligation on account of (a) any Cash Management Services furnished by a Person that is a Lender or an Affiliate of a Lender on the Closing Date or, if such Cash Management Services are established later, on the date such Cash Management Services are established, to any of the Loan Parties or any of their Subsidiaries and/or (b) any transaction with a Person that is a Lender or any of its Affiliates on the Closing Date or, if a Bank Product is established later, on the date the Bank Product is established, which arises out of such Bank Product entered into with any Loan Party and any such Person, as each may be amended from time to time; provided , that , (i) by the later of (A) the Closing Date or (B) on or about the date that such Cash Management Services or Bank Products are established or the party providing them becomes a Lender (or is an Affiliate), but in any event in the case of either clause (A)  or clause (B) , within ten (10) Business Days thereafter, Administrative Agent shall have received a written notice, in form and substance reasonably satisfactory to Administrative Agent, from the Lead Borrower and the Lender that is providing (or whose Affiliate is providing) such Cash Management Services or Bank Product that such obligations thereunder constitute “Bank Product Obligations” for purposes of this Agreement and the other Loan Documents, and in the case of any Affiliate of a Lender, such Affiliate shall have entered into an agreement to be bound by the

 

7



 

provisions of Article IX hereof as though such Affiliate were a party to this Agreement in form and substance reasonably satisfactory to the Administrative Agent, (ii) such Lender (or such Affiliate, as the case may be) may at any time thereafter notify Administrative Agent in writing that such obligations have ceased to constitute Bank Product Obligations, in which case, such obligations shall no longer be deemed to be “Bank Product Obligations” for purposes of this Agreement and the other Loan Documents, (iii) if at any time a Lender ceases to be a Lender under this Agreement (or an Affiliate of a Lender ceases to be an Affiliate), then, from and after the date on which it ceases to be a Lender hereunder, any Cash Management Services or any Bank Product provided by it or its Affiliates shall continue to give rise to Bank Product Obligations, so long as (A) such Person is, and at all times remains, in compliance with the provisions of Section 9.17(b)  and (B) agrees in writing (1) that the Administrative Agent and the other Credit Parties shall have no duty to such Person (other than the payment of any amounts to which such Person may be entitled under Section 8.03 ) and acknowledges that the Administrative Agent and the other Credit Parties may deal with the Loan Parties and the Collateral as they deem appropriate (including the release of any Loan Party or all or any portion of the Collateral) without notice or consent from such Person, whether or not such action impairs the ability of such Person to be repaid Bank Product Obligations owing to it) and (2) to be bound by Section 9.17(b)  and (iv) in no event shall the aggregate amount of all Bank Product Obligations arising under or in connection with all equipment leasing facilities at any time outstanding exceed $25,000,000.

 

“Bank Products” means any services or facilities provided to any Loan Party by any Person that is a Lender or its Affiliates on the Closing Date or, if such services or facilities are established later, on the date such services or facilities are established (but excluding Cash Management Services and equipment leasing facilities existing on or prior to the Closing Date), in each case approved by Lead Borrower, including, without limitation, on account of (a) Swap Contracts, (b) equipment leasing facilities and (c) supply chain finance services including, without limitation, trade payable services and supplier accounts receivable purchases, but excluding any factoring services.

 

“Bank Products Reserves” means such reserves as the Administrative Agent from time to time determines in its discretion as being appropriate to reflect the liabilities and obligations of the Loan Parties with respect to Bank Products then provided or outstanding.

 

“Banner Account” means a deposit account into which all amounts on deposit within the individual store accounts of a particular store brand are remitted.

 

“Base Rate” means, for any day, a fluctuating rate per annum equal to the highest of (a) the Federal Funds Rate, as in effect from time to time, plus one-half of one percent (0.50%), (b) the LIBO Rate (using the three month rate), which rate shall be determined on a daily basis, plus one percent (1.00%), or (c) the rate of interest in effect for such day as publicly announced from time to time by Wells Fargo as its “prime rate.”  The “prime rate” is a rate set by Wells Fargo based upon various factors including Wells Fargo’s costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate.  Any change in such rate announced by Wells Fargo shall take effect at the opening of business on the day specified in the public announcement of such change.

 

“Base Rate Loan” means a Loan that bears interest based on the Base Rate.

 

“Blocked Account” means a DDA which is either subject to a Blocked Account Agreement or is identified as a Blocked Account or a Master Concentration Account on Schedule 5.21(a)  and is to be subject to a Blocked Account Agreement within the time period provided in Section 6.13(c) .

 

8



 

“Blocked Account Agreement” means with respect to a deposit account established by a Loan Party, an agreement, in form and substance reasonably satisfactory to the Administrative Agent, establishing control (as defined in the UCC) of such account by the Administrative Agent and whereby the bank maintaining such account agrees to comply with instructions originated by the Administrative Agent without the further consent of any Loan Party.

 

“Blocked Account Bank” means each bank with whom a Blocked Account or a Master Concentration Account is maintained.

 

“Book Value” means, with respect to Inventory, book value determined in accordance with GAAP as consistently applied by the Lead Borrower pursuant to its then current practices; provided , that , in any event such book value of the Inventory for purposes of the calculation of the Borrowing Base shall at all times be consistent with the practices used in the most recent field examination and appraisals that have been received by Administrative Agent prior to the Closing Date.

 

“Borrower Materials” has the meaning set forth in Section 6.02 .

 

“Borrowers” has the meaning set forth in the introductory paragraph hereto.

 

“Borrowing” means a Committed Borrowing or a Swing Line Borrowing, as the context may require.

 

“Borrowing Base” means, at any time of calculation, an amount equal to:

 

(a)                    ninety percent (90%) multiplied by the net amount of Eligible Credit Card Receivables; plus

 

(b)                    the lesser of: (i) eighty-five percent (85%) of the net amount of Eligible Pharmacy Receivables or (ii) ten percent (10%) of the Borrowing Base (determined without regard to the limitation in this clause (ii) ); plus

 

(c)                     the lesser of: (i) eighty-five percent (85%) of the net amount of Eligible Trade Receivables or (ii) twenty-five percent (25%) of the Borrowing Base (determined without regard to the limitation in this clause (ii) ); plus

 

(d)                    eighty-five percent (85%) of the Net Recovery Percentage of Eligible Wholesale Inventory (other than Perishable Inventory) multiplied by the Book Value (without giving effect to a LIFO Reserve) of such Eligible Wholesale Inventory, net of applicable Inventory Reserves; plus

 

(e)                     ninety percent (90%) of the Net Recovery  Percentage of Eligible Retail Inventory (other than Perishable Inventory) multiplied by the Book Value (without giving effect to a LIFO Reserve) of such Eligible Retail Inventory, net of applicable Inventory Reserves; plus

 

(f)                      the lesser of (i) the sum of (A) eighty-five percent (85%) of the Net Recovery Percentage of Eligible Wholesale Inventory consisting of Perishable Inventory multiplied by the Book Value (without giving effect to a LIFO Reserve) of such Eligible Wholesale Inventory, plus (B) ninety percent (90%) of the Net Recovery Percentage of Eligible Retail Inventory consisting of Perishable Inventory multiplied by the Book Value (without giving effect to a LIFO Reserve) of such Eligible Retail Inventory, or (ii) twenty-five percent (25%) of the Borrowing Base (determined without regard to this limitation in clause (ii) or the limitation in clause (b) of the definition of “Pharmacy Scripts Availability”), in case of clauses (i) and (ii), net of applicable Inventory Reserves; plus

 

9



 

(g)                     the Pharmacy Scripts Availability; minus

 

(h)                    Availability Reserves.

 

“Borrowing Base Certificate” means a certificate substantially in the form of Exhibit F hereto (with such changes therein as may be required by the Administrative Agent in its Permitted Discretion to reflect the components of and reserves against the Borrowing Base as provided for hereunder from time to time), executed and certified as accurate and complete by a Responsible Officer of the Lead Borrower which shall include appropriate exhibits, schedules, supporting documentation, and additional reports as reasonably requested by Administrative Agent.

 

“Business” means retail food operations through traditional and hard-discount retail food stores, providing wholesale distribution of products to independent retailers, and other businesses reasonably related thereto.

 

“Business Day” means any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the Laws of, or are in fact closed in, the state of New York and, if such day relates to any LIBO Rate Loan, means any such day on which dealings in Dollar deposits are conducted by and between banks in the London interbank market.

 

“Buyer” has the meaning set forth in the Recitals.

 

“Capital Expenditures” means, with respect to any Person for any period, (a) all expenditures made (whether made in the form of cash or other property) or costs incurred for the acquisition or improvement of fixed or capital assets of such Person (excluding normal replacements and maintenance which are properly charged to current operations), in each case that are (or should be) set forth as capital expenditures in a Consolidated statement of cash flows of such Person for such period, in each case prepared in accordance with GAAP, and (b) without duplication, Capital Lease Obligations incurred by a Person during such period.

 

“Capital Lease Obligations” means, with respect to any Person for any period, the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as liabilities on a balance sheet of such Person under GAAP and the amount of which obligations shall be the capitalized amount thereof determined in accordance with GAAP.

 

“Capital Leases” shall mean, with respect to any Person, any lease of (or any agreement conveying the right to use) any property (whether real, personal or mixed) by such Person as lessee which in accordance with GAAP, is required to be classified and accounted for as liabilities on the balance sheet of such Person.

 

“Cash Collateralize” has the meaning set forth in Section 2.03(g) .  Derivatives of such term have corresponding meanings.

 

“Cash Dominion Event” means either (a) the occurrence and continuance of any Event of Default, or (b) Excess Availability shall (i) be less than fifteen percent (15.0%) of the Aggregate Commitments for three (3) consecutive days, or (ii) at any time be less than twelve and one-half percent (12.5%) of the Aggregate Commitments.  A Cash Dominion Event shall be deemed continuing (A) in the case of a Cash Dominion Event pursuant to clause (a)  above, until such Event of Default has ceased to exist for thirty (30) consecutive days or has been waived, and (B) in the case of a Cash Dominion Event pursuant to clause (b)  above, until Excess Availability equals or exceeds fifteen percent (15.0%) of the Aggregate

 

10



 

Commitments for thirty (30) consecutive days, in which case a Cash Dominion Event shall no longer be deemed to be continuing for purposes of this Agreement; provided , that , in no event may a Cash Dominion Event cease to exist as contemplated in clauses (A)  or (B)  above more than two (2) times in any twelve (12) month period (even if an Event of Default is no longer continuing and/or Excess Availability equals or exceeds the required amount for thirty (30) consecutive days). The termination of a Cash Dominion Event as provided herein shall in no way limit, waive or delay the occurrence of a subsequent Cash Dominion Event in the event that the conditions set forth in this definition arise thereafter.

 

“Cash Equivalents” has the meaning set forth in the definition of the term “Permitted Investments.”

 

“Cash Management Reserves” means such reserves as the Administrative Agent, from time to time, determines in its reasonable discretion as being appropriate to reflect the reasonably anticipated liabilities and obligations of the Loan Parties with respect to Cash Management Services then provided or outstanding.

 

“Cash Management Services” means any one or more of the following types or services or facilities provided to any Loan Party by any Person that is a Lender or its Affiliates on the Closing Date or, if such services or facilities are established later, on the date such services or facilities are established, in each case as selected by Lead Borrower, after notice to Administrative Agent (and with the approval of Administrative Agent in its Permitted Discretion): (a) ACH transactions, (b) cash management services, including, without limitation, controlled disbursement services, treasury, depository, overdraft, and electronic funds transfer services, (c) foreign exchange facilities, (d) credit or debit cards, (e) credit card processing services, and (f) purchase cards.

 

Cerberus” means Cerberus Capital Management, L.P.

 

“CERCLA” means the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. Section 9601 et seq.

 

“CERCLIS” means the Comprehensive Environmental Response, Compensation, and Liability Information System maintained by the United States Environmental Protection Agency.

 

“Certified Medicare Provider” means a provider or supplier, including without limitation a pharmacy, that has in effect an agreement with the Centers for Medicare and Medicaid Services to participate in Medicare.

 

“Certified Medicaid Provider” means any provider or supplier, including without limitation a pharmacy, that has in effect an agreement with a Governmental Authority of a State to participate in Medicaid.

 

“Change in Law” means the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation or application thereof by any Governmental Authority or (c) the making or issuance of any request, guideline or directive (whether or not having the force of law) by any Governmental Authority.  For purposes of this definition, the Dodd-Frank Wall Street Reform and Consumer Protection Act and all rules, regulations, orders, requests, guidelines or directives thereunder or in connection therewith and all requests, rules, guidelines or directives concerning capital adequacy known as “Basel III” and promulgated either by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or by

 

11



 

the United States or foreign regulatory authorities pursuant thereto are deemed to have been adopted and gone into effect after the date of this Agreement.

 

“Change of Control” means an event or series of events by which:

 

(a)                    in the case of a Person or Persons other than the Investors or any of them, any such Person, or two or more of such Persons acting in concert, shall have acquired beneficial ownership (within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934), directly or indirectly, of Equity Interests of the Lead Borrower (or other securities convertible into such Equity Interests) representing thirty-five percent (35%) or more of the combined voting power of all Equity Interests of the Lead Borrower on a fully-diluted basis (and taking into account all such Equity Interests that such “person” or “group” has the right to acquire pursuant to any option right); or

 

(b)                    in the case of the Investors or any of them, any such Person, or two or more of such Persons acting in concert, shall have acquired beneficial ownership (within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934), directly or indirectly, of Equity Interests of the Lead Borrower (or other securities convertible into such Equity Interests) representing fifty percent (50%) or more of the combined voting power of all Equity Interests of the Lead Borrower on a fully-diluted basis (and taking into account all such Equity Interests that such “person” or “group” has the right to acquire pursuant to any option right); or

 

(c)                     during any period of up to twenty-four (24) consecutive months, commencing before or after the date of this Agreement, individuals who at the beginning of such twenty-four (24) month period were directors of the Lead Borrower shall cease for any reason (other than due to death or disability) to constitute a majority of the board of directors of the Lead Borrower (except to the extent that individuals who at the beginning of such twenty-four (24) month period were replaced by individuals (i) elected by at least a majority of the remaining members of the board of directors of the Lead Borrower or (ii) nominated for election by a majority of the remaining members of the board of directors of the Lead Borrower and thereafter elected as directors by the shareholders of the Lead Borrower).

 

“Closing Date” means the first date all the conditions precedent in Section 4.01 are satisfied or waived in accordance with Section 10.01 .

 

“Closing Date Collateral List” means the list of Real Estate sites of the Loan Parties attached hereto as Exhibit I.

 

“Code” means the Internal Revenue Code of 1986, and the regulations promulgated thereunder, as amended and in effect.

 

“Collateral” means any and all “Collateral” or “Property” as defined in any applicable Security Document and all other property that is or is intended under the terms of the Security Documents to be subject to Liens in favor of the Administrative Agent.

 

“Collateral Access Agreement” means an agreement reasonably satisfactory in form and substance to the Administrative Agent executed by (a) a bailee or other Person in possession of Collateral, and (b) any landlord with respect to a Lease where there is ABL Priority Collateral or other assets that Administrative Agent may require access to, and use of, to realize on ABL Priority Collateral.

 

“Commercial Letter of Credit” means any letter of credit (as defined in the UCC) issued for the purpose of providing the primary payment mechanism in connection with the purchase of any materials, goods or services by a Loan Party in the ordinary course of business of such Loan Party.

 

12



 

“Commercial Letter of Credit Agreement” means the Commercial Letter of Credit Agreement relating to the issuance of a Commercial Letter of Credit in the form from time to time in use by an LC Issuer.

 

“Commercial LC Facility” means a letter of credit facility provided to any Loan Party by any Person that is a Lender or its Affiliates on the Closing Date or, if such services or facilities are established later, on the date such services or facilities are established, in each case approved by Lead Borrower and used for the issuance of letters of credit (as defined in the UCC) for the purpose of providing the primary payment mechanism in connection with the purchase of any materials, goods or services by a Loan Party in the ordinary course of business of such Loan Party, provided , that , all obligations thereunder shall be unsecured except to the extent of the Lien of Administrative Agent under the Loan Documents as provided for herein.  In no event shall any letter of credit issued under or pursuant to such letter of credit facility be deemed to be a Letter of Credit or give rise to any obligations of any Lender or other Credit Party to make any payment to the Lender (or its Affiliate) that is providing such facility.

 

“Commercial LC Facility Obligations” means any obligation on account of any Commercial LC Facility owing by any of the Loan Parties; provided , that , (i) by the later of (A) the Closing Date or (B) on or about the date that such Commercial LC Facility is established or the party providing them becomes a Lender (or is an Affiliate), but in any event in the case of either clause (A)  or clause (B) , within ten (10) Business Days thereafter, Administrative Agent shall have received (x) a written notice, in form and substance satisfactory to Administrative Agent, from the Lead Borrower and the Lender that is providing (or whose Affiliate is providing) such Commercial LC Facility that such obligations thereunder constitute “Commercial LC Facility Obligations” for purposes of this Agreement and the other Loan Documents, and in the case of any Affiliate of a Lender, such Affiliate shall have entered into an agreement to be bound by the provisions of Article IX hereof as though such Affiliate were a party to this Agreement in form and substance reasonably satisfactory to the Administrative Agent, and (y) Administrative Agent shall have entered into an agreement, in form and substance satisfactory to Administrative Agent, with the Lender (or its Affiliate) that is providing such Commercial LC Facility, as acknowledged and agreed to by the Loan Parties, providing for the delivery to Administrative Agent by such Lender (or Affiliate) of information with respect to the amount of such obligations and providing for the other rights of the Administrative Agent and such Lender (or Affiliate) in connection with such arrangements, (ii) such Lender (or such Affiliate, as the case may be) may at any time thereafter notify Administrative Agent in writing that such obligations have ceased to constitute Commercial LC Facility Obligations, in which case, such obligations shall no longer be deemed to be “Commercial LC Facility Obligations” for purposes of this Agreement and the other Loan Documents, (iii) if at any time a Lender ceases to be a Lender under this Agreement (or an Affiliate of a Lender ceases to be an Affiliate), then, from and after the date on which it ceases to be a Lender hereunder, any Commercial LC Facility provided by it or its Affiliates shall continue to give rise to Commercial LC Facility Obligations, so long as (A) such Person is, and at all times remains, in compliance with the provisions of Section 9.17(b)  and (B) agrees in writing (1) that the Administrative Agent and the other Credit Parties shall have no duty to such Person (other than the payment of any amounts to which such Person may be entitled under Section 8.03 ) and acknowledges that the Administrative Agent and the other Credit Parties may deal with the Loan Parties and the Collateral as they deem appropriate (including the release of any Loan Party or all or any portion of the Collateral) without notice or consent from such Person, whether or not such action impairs the ability of such Person to be repaid Commercial LC Facility Obligations owing to it) and (2) to be bound by Section 9.17(b) , and (iv) in no event shall the aggregate amount of all Commercial LC Facility Obligations arising under or in connection with all Commercial LC Facilities at any time outstanding exceed $15,000,000.

 

“Commitment” means, as to each Lender, its obligation to (a) make Committed Loans to the Borrowers pursuant to Section 2.01 , (b) purchase participations in LC Obligations, and (c) purchase participations in Swing Line Loans, in an aggregate principal amount at any one time outstanding not to

 

13



 

exceed the amount set forth opposite such Lender’s name on Schedule 2.01 (as amended from time to time) or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable, as such amount may be adjusted from time to time in accordance with this Agreement.

 

“Commitment Fee Adjustment Date” means the first day of each Fiscal Quarter, commencing September 8, 2013.

 

“Committed Borrowing” means a borrowing consisting of simultaneous Committed Loans of the same Type and, in the case of LIBO Rate Loans, having the same Interest Period made by each of the Lenders pursuant to Section 2.01 .

 

“Committed Loan” has the meaning set forth in Section 2.01 .

 

“Committed Loan Notice” means a notice of (a) a Committed Borrowing, (b) a conversion of Committed Loans from one Type to the other, or (c) a continuation of LIBO Rate Loans, pursuant to 2.01(a), which, if in writing, shall be substantially in the form of Exhibit A .

 

“Company Material Adverse Effect” means an event or effect that is materially adverse to the business, financial condition or results of operations of the Lead Borrower and its Subsidiaries, taken as a whole, but shall not include events or effects relating to or resulting from (a) changes in general economic or political conditions or the securities, credit or financial markets in general, except to the extent such change has a disproportionate effect on the Lead Borrower and its Subsidiaries, taken as a whole, when compared to other companies operating in the same industries and markets in which the Lead Borrower and its Subsidiaries operate, (b) any decline in the market price or trading volume of the Lead Borrower’s securities (it being understood that the underlying cause of such decline may be taken into account in determining whether a Company Material Adverse Effect has occurred to the extent it is not excluded by another clause of this definition), (c) general changes or developments in the industries or markets in which the Lead Borrower and its Subsidiaries operate, including general changes in law or regulation across such industries and markets, except to the extent such change has a disproportionate effect on the Lead Borrower and its Subsidiaries, taken as a whole, when compared to other companies operating in the same industries and markets in which the Lead Borrower and its Subsidiaries operate, (d) the execution and delivery of agreements with respect to or the public announcement or pendency of the Transactions and tender offer pursuant to the Tender Offer Agreement, including the impact thereof on the relationships, contractual or otherwise, of the Lead Borrower or any of its Subsidiaries with employees, customers, suppliers or partners, (e) the identity of the Investors or any of their Affiliates as the parties involved in the tender offer pursuant to the Tender Offer Agreement, (f) compliance with the terms of, or the taking of any action required by, the Tender Offer Agreement, (g) any acts of terrorism or war, except to the extent such act has a disproportionate effect on the Lead Borrower and its Subsidiaries, taken as a whole, when compared to other companies operating in the same industries and markets in which the Lead Borrower and its Subsidiaries operate, (h) any hurricane, tornado, flood, earthquake, natural disasters, acts of God or other comparable events, except to the extent such event has a disproportionate effect on the Lead Borrower and its Subsidiaries, taken as a whole, when compared to other companies operating in the same industries and markets in which the Lead Borrower and its Subsidiaries operate, (i) changes in applicable law, regulation or generally accepted accounting principles or the interpretation thereof after January 10, 2013, (j) any failure to meet internal or published projections, forecasts or revenue or earning predictions for any period (it being understood that the underlying cause of such failure may be taken into account in determining whether a Company Material Adverse Effect has occurred to the extent it is not excluded by another clause of this definition); or (k) any matter disclosed in Section 3.15 of the disclosure letter delivered by the Lead Borrower to Wells Fargo immediately prior to the execution of the Tender Offer Agreement, a correct and complete copy of which has been provided to Lead Arrangers on or prior to January 10, 2013.

 

14



 

“Competitor” means a Person, other than a Loan Party, who directly provides products or services that are the same or substantially similar to the products or services provided by, and that constitute a material part of the business of, the Loan Parties taken as a whole and who has been identified as a competitor by Lead Borrower to the Administrative Agent in writing from time to time.

 

“Compliance Certificate” means a certificate substantially in the form of Exhibit D .

 

“Consolidated” means, when used to modify a financial term, test, statement, or report of a Person, the application or preparation of such term, test, statement or report (as applicable) based upon the consolidation, in accordance with GAAP of the financial condition or operating results of such Person and its Subsidiaries.

 

“Consolidated EBITDA” means, at any date of determination, an amount equal to Consolidated Net Income of the Lead Borrower and its Restricted Subsidiaries on a Consolidated basis for the most recently completed Measurement Period, plus (a) depreciation and amortization and other non-cash charges including imputed interest, deferred compensation and non-cash costs associated with the closing of retail store locations or other facilities, in each case for such period (to the extent deducted in the computation of Consolidated Net Income of such Person), all in accordance with GAAP, plus (b) Consolidated Interest Expense for such period (to the extent deducted in the computation of Consolidated Net Income of such Person), plus (c) the Provision for Taxes for such period (to the extent deducted in the computation of Consolidated Net Income of such Person), plus (d) LIFO Adjustments (to the extent deducted in the computation of Consolidated Net Income of such Person), plus (e) one-time non-cash charges for restructurings and non-cash “other unusual items” as reported in a Form 10-K or a Form 10-Q of Lead Borrower filed with the Securities and Exchange Commission for such period, plus (f) non-cash charges related to goodwill impairment and impairment of non-cash intangibles, plus (g) non-cash charges, losses or expenses resulting from the application of Statement of Financial Accounting Standards No. 123(R), minus (viii) non-cash extraordinary gains, minus (ix) the income (or loss) of such Person during such Measurement Period in which any other Person has a joint interest to the extent of the amount of cash dividends or other distributions were not actually paid in cash to such Person during such period and to the extent of any Investments not actually paid in cash to such Person during such period (but in each case to the extent added to the computation of Consolidated Net Income of such Person), minus (x) the income of any direct or indirect Subsidiary of such Person to the extent that the declaration or payment of dividends or similar distributions by that Subsidiary of that income is not at the time permitted by operation of the terms of its Organization Documents or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Subsidiary (but in each case to the extent added to the computation of Consolidated Net Income of such Person).  “LIFO Adjustments” means, for any period, the net adjustment to costs of goods sold for such period required by the LIFO inventory method used by Lead Borrower determined in accordance with GAAP.

 

“Consolidated Fixed Charge Coverage Ratio” means, for any period of determination, the ratio of:

 

(a)                    Consolidated EBITDA for such period, minus Unfinanced Capital Expenditures made during such period, minus the aggregate amount of the Provision for Taxes paid in cash during such period, and if the amount by which the Cash Pension Contribution for such period exceeds the Pension Expense for such period, then minus such excess amount, or if the Pension Expense for such period exceeds the Cash Pension Contribution for such period, then plus such excess amount, to

 

(b)                    the Consolidated Fixed Charges of Lead Borrower and its Restricted Subsidiaries for such period.

 

15



 

The “ Cash Pension Contribution ” means the actual cash pension funding payments made by Lead Borrower and its Restricted Subsidiaries with respect to pension funding obligations for the applicable period.  The “ Pension Expense ” means the actual pension expense for the applicable period of the Lead Borrower and its Restricted Subsidiaries pursuant to the profit and loss statement charge (or benefit) with respect to such pension funding obligations for such period.

 

“Consolidated Fixed Charges” means, as to any Person, with respect to any period, the sum of, without duplication,

 

(a)                    all Consolidated Interest Expense paid or received in cash during such period, plus

 

(b)                    all principal payments in respect of Indebtedness that are required to be paid during such period (and including (i) any principal payments required to be made under the Term Loan Agreement based on excess cash flow, (ii) any scheduled payments in respect of Indebtedness with respect to Capital Leases and (iii) in the case of Loan Parties, any payments made by a Loan Party after the Closing Date in respect of the NAI Workers’ Compensation Liabilities or in respect of the ASC Notes or the Guarantee thereof), but excluding (A) any portion of payments in respect of Capital Leases included in item (a) of this definition, (B) payments in respect of Loans which do not result in a reduction of the Aggregate Commitments during such period, (C) payments in respect of Indebtedness for borrowed money during such period to the extent paid with the proceeds of Refinancing Indebtedness, (D) payments in respect of Indebtedness made on or before the Closing Date, and (E) payments in respect of NAI Workers’ Compensation Liabilities not made by a Loan Party or payments in respect of the ASC Notes (including the Guarantee thereof) made from funds held in escrow for such purpose under the Escrow Agreement or otherwise not made by a Loan Party, plus

 

(c)                     all Restricted Payments paid in cash during such period, plus

 

(d)                    any mandatory permanent reduction of any Permitted Securitization Facility during such period;

 

provided , that , (i) payments in respect of NAI Workers’ Compensation Liabilities or in respect of the ASC Notes in each case made by a Loan Party shall not be included as Consolidated Fixed Charges

 

(A) so long as no Cash Dominion Event exists, for the period from the date such payment is made until the date ninety (90) days after the date such payment is made, provided , that , in the event that a Cash Dominion Event occurs at any time during such ninety (90) day period, such payments shall not be included as Consolidated Fixed Charges for the period ending on the earlier of (1) the date ninety (90) days after the date such payment is made or (2) thirty (30) days after the date of the Cash Dominion Event, or

 

(B) at any time a Cash Dominion Event exists (except as otherwise provided in clause (A)), for the period ending thirty (30) days after the date such payment is made, or

 

(C) to the extent such Loan Party is reimbursed for such payment in cash by a Person that is not a Loan Party or a Subsidiary of a Loan Party, or in the case of the payments in respect of the ASC Notes, from the Escrow Fund, and

 

(ii) to the extent that such Loan Party is not so reimbursed within the applicable period provided for in clauses (i)(A) and (i)(B) above, the payments in respect of NAI Workers’ Compensation Liabilities or ASC Notes, as the case may be, shall be deemed to be Consolidated Fixed Charges made as of the last day of the Fiscal Period most recently ended for which Administrative Agent has received financial

 

16



 

statements, but in the event that a Loan Party is thereafter reimbursed in cash, such payments by a Loan Party in respect of NAI Workers’ Compensation Liabilities or ASC Notes, as the case may be, shall no longer be deemed to be Consolidated Fixed Charges (provided, that, the foregoing shall not be construed to have such payments cease to be Consolidated Fixed Charges for any prior period for which the Loan Parties were not in compliance with Section 7.15 )

 

“Consolidated Interest Expense” means, for any Measurement Period (a) interest expense (including imputed interest in respect of Capital Lease Obligations and any amounts comparable to or in the nature of interest under any Permitted Securitization Facility) minus (b) the interest income, in each case, of Lead Borrower and its Restricted Subsidiaries for such Measurement Period, determined on a Consolidated basis in accordance with GAAP.

 

“Consolidated Net Income” means, as of any date of determination, the net income of the Lead Borrower and its Restricted Subsidiaries for the most recently completed Measurement Period, all as determined on a Consolidated basis in accordance with GAAP, provided , that , there shall be excluded the income (or loss) of such Person during such Measurement Period and accrued prior to the date it becomes a Subsidiary of a Person or any of such Person’s Subsidiaries or is merged into or consolidated with a Person or any of its Subsidiaries or that Person’s assets are acquired by such Person or any of its Subsidiaries.

 

“Consolidated Total Debt” means, as of any date of determination, the Indebtedness of the Lead Borrower and the Restricted Subsidiaries outstanding on such date (excluding Indebtedness of the type described in clauses (b) , (c)  and (g)  of the definition of such term, except, in the case of such clause (b) , to the extent of any unreimbursed drawings thereunder, and also excluding all Synthetic Lease Obligations).

 

“Contractual Obligation” means, as to any Person, any provision of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound.

 

“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise.  “Controlling” and “Controlled” have meanings correlative thereto.

 

“Covenant Compliance Event” shall mean, at any time, Excess Availability is less than ten percent (10%) of the Aggregate Commitments.

 

“Credit and Collection Policy” shall mean, with respect to any Borrower, such Borrower’s credit, collection, enforcement and other policies and practices relating to Pharmacy Receivables and Wholesale Trade Receivables existing on the date hereof and as set forth on Exhibit M hereto, together with any other normal and customary credit practices, procedures and policies employed by such Person.

 

“Credit Card Agreements” shall mean all agreements now or hereafter entered into by any Borrower or for the benefit of any Borrower, in each case with any Credit Card Issuer or any Credit Card Processor with respect to sales transactions involving credit card or debit card purchases, including, but not limited to, the agreements set forth on Schedule 5.21(b)  hereto.

 

“Credit Card Issuer” shall mean any person (other than a Loan Party) who issues or whose members issue credit cards, including, without limitation, MasterCard or VISA bank credit or debit cards or other bank credit or debit cards issued through World Financial Network National Bank, MasterCard International, Inc., Visa, U.S.A., Inc. or Visa International and American Express, Discover, Diners Club, Carte Blanche and other non-bank credit or debit cards, including, without limitation, credit or debit cards

 

17



 

issued by or through American Express Travel Related Services Company, Inc., Novus Services, Inc., PayPal and other issuers approved by the Administrative Agent.

 

“Credit Card Notifications” has the meaning set forth in Section 6.13(a) .

 

“Credit Card Processor” shall mean any servicing or processing agent or any factor or financial intermediary who facilitates, services, processes or manages the credit authorization, billing transfer and/or payment procedures with respect to any Borrower’s sales transactions involving credit card or debit card purchases by customers using credit cards or debit cards issued by any Credit Card Issuer.

 

“Credit Card Receivables” means amounts, together with all income, payments and proceeds thereof, owed by a Credit Card Issuer or Credit Card Processor to a Loan Party resulting from charges by a customer of a Loan Party on credit or debit cards issued by such Credit Card Issuer or processed by such Credit Card Processor (including, without limitation, electronic benefits transfers) in connection with the sale of goods by a Loan Party, or services performed by a Loan Party, in each case in the ordinary course of its business.

 

“Credit Extensions” mean each of the following: (a) a Borrowing (and including a Permitted Overadvance) and (b) an LC Credit Extension.

 

“Credit Party” or “Credit Parties” means (a) individually, (i) each Lender and its Affiliates, (ii) Administrative Agent, (iii) each LC Issuer, (iv) the Lead Arrangers, (v) each beneficiary of each indemnification obligation undertaken by any Loan Party under any Loan Document, (vi) any other Person to whom Obligations under this Agreement and other Loan Documents are owing, and (vii) the successors and assigns of each of the foregoing, and (b) collectively, all of the foregoing.

 

“Credit Party Expenses” means, without limitation, (a) all reasonable out-of-pocket costs and expenses incurred by the Administrative Agent and its Affiliates, in connection with this Agreement and the other Loan Documents, including, without limitation, (i) the reasonable fees, charges and disbursements (A) of counsel for the Administrative Agent, (B) of outside consultants for the Administrative Agent, (C) of appraisers (subject to the limitations provided for in Section 6.10 ), (D) incurred during any field examinations (subject to the limitations provided for in Section 6.10 ), (E) filing and search charges and recording taxes, and (F) all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of the Obligations, (ii) in connection with (A) the syndication of the credit facilities provided for herein, (B) the preparation, negotiation, administration, management, execution and delivery of this Agreement and the other Loan Documents or any amendments, modifications or waivers of the provisions thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), (C) the enforcement or protection of their rights in connection with this Agreement or the Loan Documents or efforts to preserve, protect, collect, or enforce the Collateral, or (D) any workout, restructuring or negotiations in respect of any Obligations, (b) with respect to the LC Issuers, all reasonable out-of-pocket expenses incurred in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder; and (c) all reasonable out-of-pocket expenses incurred by the Credit Parties who are not the Administrative Agent, the LC Issuers or any Affiliate of any of them, after the occurrence and during the continuance of an Event of Default, provided , that , such legal fees and expenses shall be limited to the reasonable and documented fees and disbursements of one external counsel for the Credit Parties, and in addition, one local or special counsel in each applicable jurisdiction, and in the case of an actual or perceived conflict of interest as determined by the affected Person, one counsel for such affected Person).

 

“Customer Credit Liabilities” means at any time, the aggregate remaining value at such time of (a) outstanding gift certificates and gift cards of any Borrower entitling the holder thereof to use all or a

 

18



 

portion of the certificate or gift card to pay all or a portion of the purchase price for any Inventory, (b) outstanding merchandise credits of any Borrower, and (c) liabilities in connection with frequent shopping programs of any Borrower.

 

“Customer Deposits” means deposits made by customers with respect to the purchase or lease of goods or the performance of services.

 

“Customer Support Transaction” shall mean any one of the following transactions in the ordinary course of the business of the Borrowers consistent with the current practices as of the date hereof: (a) any sublease by a Loan Party to a customer of any Loan Party of leased real property of such Loan Party that constitutes a Capital Lease, (b) any lease by a Loan Party to a customer of any Loan Party of owned real property of such Loan Party that constitutes a Capital Lease, (c) any assignment of a lease of real property by a Loan Party that constitutes a Capital Lease to a customer of any Loan Party in connection with which the assigning Loan Party is not released from liability under such lease, (d) any Guarantee by a Loan Party for the benefit of a third party of Indebtedness of a customer of any Loan Party and (e) any loan of money or property (other than ABL Priority Collateral) by a Loan Party to a customer; provided , that , the foregoing shall not be construed to apply to the sale of inventory on credit by a Loan Party to a customer in the ordinary course of business.

 

“DDA” means each checking, savings or other demand deposit account maintained by any of the Loan Parties.  All funds in each DDA (other than the Excluded DDAs) shall be presumed to be Collateral and proceeds of Collateral and the Administrative Agent and the Lenders shall have no duty to inquire as to the source of the amounts on deposit in any DDA.

 

“DDA Notification” has the meaning set forth in Section 6.17(d) .

 

“Deal-based Breakout Financial Information” has the meaning set forth in Section 4.01(f) .

 

“Debtor Relief Laws” means the Bankruptcy Code of the United States, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally.

 

“Default” means any event or condition that constitutes an Event of Default or that, with the giving of any notice, the passage of time, or both, would be an Event of Default.

 

“Default Rate” means (a) when used with respect to Obligations other than Letter of Credit Fees, an interest rate equal to (i) the Base Rate plus (ii) the Applicable Margin, if any, applicable to Base Rate Loans, plus (iii) two percent (2%) per annum; provided , that , with respect to a LIBO Rate Loan, the Default Rate shall be an interest rate equal to the interest rate (including any Applicable Margin) otherwise applicable to such Loan plus two percent (2%) per annum, and (b) when used with respect to Letter of Credit Fees, a rate equal to the Applicable LC Fee Rate for Letters of Credit, plus two percent (2%) per annum.

 

“Defaulting Lender” means any Lender that (a) has failed to (i) fund all or any portion of its Loans within two (2) Business Days of the date such Loans were required to be funded hereunder unless such Lender notifies the Administrative Agent and the Lead Borrower in writing that such failure is the result of such Lender’s reasonable determination that one or more conditions precedent to funding (each of which conditions precedent, together with any applicable default, shall be specifically identified in such writing) has not been satisfied, or (ii) pay to the Administrative Agent, any LC Issuer, any Swing Line Lender, any other Lender or the Borrowers, any other amount required to be paid by it hereunder

 

19



 

(including in respect of its participation in Letters of Credit or Swing Line Loans) within two (2) Business Days of the date when due, (b) has notified the Lead Borrower, the Administrative Agent or any LC Issuer or Swing Line Lender in writing that it does not intend to comply with its funding obligations hereunder, or has made a public statement to that effect (unless such writing or public statement relates to such Lender’s obligation to fund a Loan hereunder and states that such position is based on such Lender’s determination that a condition precedent to funding (which condition precedent, together with any applicable default, shall be specifically identified in such writing or public statement) cannot be satisfied), (c) has failed, within three (3) Business Days after written request by the Administrative Agent or the Lead Borrower, to confirm in writing to the Administrative Agent and the Lead Borrower that it will comply with its prospective funding obligations hereunder (provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c)  upon receipt of such written confirmation by the Administrative Agent and the Lead Borrower), or (d) has, or has a direct or indirect parent company that has after the Closing Date, (i) become the subject of a proceeding under any Debtor Relief Law, or (ii) had appointed for it a receiver, custodian, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or assets, including the Federal Deposit Insurance Corporation or any other state or federal regulatory authority acting in such a capacity; provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any equity interest in that Lender or any direct or indirect parent company thereof by a Governmental Authority so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender. Any determination by the Administrative Agent that a Lender is a Defaulting Lender under any one or more of clauses (a)  through (d)  above shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender upon delivery of written notice of such determination to the Lead Borrower, each LC Issuer, each Swing Line Lender and each Lender.

 

“Disposition” or “Dispose” means the sale, transfer, license, lease or other disposition (including any sale and leaseback transaction and any sale, transfer, license or other disposition of (whether in one transaction or in a series of transactions) of any property (including, without limitation, the issuance and/or sale of any Equity Interests) by any Person (or the granting of any option or other right to do any of the foregoing), including any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith.

 

“Disqualified Stock” means any Equity Interest that, by its terms (or by the terms of any security into which it is convertible, or for which it is exchangeable, in each case at the option of the holder thereof), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder thereof, in whole or in part, on or prior to the date that is ninety-one (91) days after the date on which the Loans mature; provided , that , (i) only the portion of such Equity Interests which so matures or is mandatorily redeemable, is so convertible or exchangeable or is so redeemable at the option of the holder thereof prior to such date shall be deemed to be Disqualified Stock and (ii) with respect to any Equity Interests issued to any employee or to any plan for the benefit of employees of the Lead Borrower or its Subsidiaries or by any such plan to such employees, such Equity Interest shall not constitute Disqualified Stock solely because it may be required to be repurchased by the Lead Borrower or one of its Subsidiaries in order to satisfy obligations or as a result of such employee’s termination, resignation, death or disability and if any class of Equity Interest of such Person that by its terms authorizes such Person to satisfy its obligations thereunder by delivery of an Equity Interest that is not Disqualified Stock, such Equity Interests shall not be deemed to be Disqualified Stock. Notwithstanding the preceding sentence, any Equity Interest that would constitute Disqualified Stock solely because the holders thereof have the right to require a Loan Party to repurchase such Equity Interest upon the occurrence of a change of control or an asset sale shall not constitute Disqualified Stock.

 

20



 

The amount of Disqualified Stock deemed to be outstanding at any time for purposes of this Agreement will be the maximum amount that the Lead Borrower and its Subsidiaries may become obligated to pay upon maturity of, or pursuant to any mandatory redemption provisions of, such Disqualified Stock or portion thereof, plus accrued dividends.

 

“Dollars” and “$” mean lawful money of the United States.

 

“Domestic Subsidiary” means any direct or indirect Subsidiary of a Loan Party other than a Foreign Subsidiary.

 

“Eligible Assignee” means (a) a commercial bank organized under the laws of the United States, or any State thereof, and having total assets in excess of $1,000,000,000, (b) a savings and loan association, savings bank or farm credit bank and association organized under the laws of the United States, or any State thereof, and having total assets in excess of $1,000,000,000, (c) a commercial bank organized under the laws of any other country which is a member of the Organization for Economic Cooperation and Development (the “ OECD ”) or has concluded special lending arrangements with the International Monetary Fund associated with its General Arrangements to Borrow, or a political subdivision of any such country, and having total assets in excess of $1,000,000,000, provided that such bank is acting through such bank’s branch, or agency, located in the United States, (d) the central bank of any country which is a member of the OECD, (e) a company engaged in the business of making commercial loans on a revolving basis (including a commercial finance company), in each case organized under the laws of the United States, or any State thereof, which Person, together with its Affiliates, has total assets in excess of $1,000,000,000, (f) any Approved Fund, (g) any Lender, (h) any Affiliate of any Lender and (i) any other Person (other than a natural person) approved by (i) the Administrative Agent, each LC Issuer and the Swing Line Lender (in each case such approval not to be unreasonably withheld or delayed), and (ii) unless an Event of Default has occurred and is continuing, the Lead Borrower (such approval not to be unreasonably withheld or delayed); provided , that , notwithstanding the foregoing, “Eligible Assignee” shall not include (A) a Loan Party or any of the Loan Parties’ Affiliates or Subsidiaries, (B) the Investors or any of the Investors’ Affiliates or Subsidiaries, (C) any Person organized under the laws of a jurisdiction outside the United States if at the time of an assignment pursuant to Section 10.06(b ), such Person would be subject to United States interest withholding tax at a rate greater than zero, except if such Person agrees not to seek additional payments from Borrowers as a result of its obligations for such withholding tax, (D) so long as no Specified Event of Default exists or has occurred and is continuing, any Competitor, or (E) any Defaulting Lender.

 

“Eligible Credit Card Receivables” means at the time of any determination thereof, each Credit Card Receivable that at all times satisfies the criteria set forth below and which has been earned by performance and represents the bona fide amounts due to a Borrower from a Credit Card Processor and/or Credit Card Issuer, and in each case originated in the ordinary course of business of such Borrower.  Without limiting the foregoing, in order to be an Eligible Credit Card Receivable, an Account shall indicate no Person other than a Borrower as payee or remittance party.  In determining the amount to be so included, the face amount of an Account shall be reduced by, without duplication, to the extent not reflected in such face amount, (i) the amount of all accrued and actual fees, discounts, claims or credits pending, promotional program allowances, price adjustments, finance charges or other allowances (including any amount that a Borrower may be obligated to rebate to a customer, a Credit Card Processor, or Credit Card Issuer pursuant to the terms of any agreement or understanding (written or oral)) and (ii) the aggregate amount of all cash received in respect of such Account but not yet applied by the Loan Parties to reduce the amount of such Credit Card Receivable.  Except as otherwise determined by the Administrative Agent in its Permitted Discretion, Eligible Credit Card Receivables shall not include any Credit Card Receivable:

 

21



 

(a)                    which is unpaid more than five (5) Business Days after the date of determination of eligibility thereof;

 

(b)                    where such Credit Card Receivable or the underlying contract contravenes any laws, rules or regulations applicable thereto, including, rules and regulations relating to truth-in-lending, fair credit billing, fair credit reporting, equal credit opportunity, fair debt collection practices and privacy or any party to the underlying contract is in violation of any such laws, rules or regulations;

 

(c)                     which is not a valid, legally enforceable obligation of the applicable Credit Card Issuer or Credit Card Processor with respect thereto;

 

(d)                    which is disputed, is with recourse due to the creditworthiness of the cardholder, or with respect to which a claim, chargeback, offset, deduction or counterclaim, dispute or other defense has been asserted (to the extent of such claim, chargeback, offset, deduction or counterclaim, dispute or other defense);

 

(e)                     that is not subject to a perfected first priority security interest in favor of the Administrative Agent, or with respect to which a Borrower does not have good, valid and marketable title thereto, free and clear of any Lien, other than Liens granted to the Administrative Agent pursuant to the Security Documents and Liens permitted under clauses (a) , (e)  or (o)  of the definition of Permitted Encumbrances  and any other Liens with respect thereto permitted under this Agreement that are subject to an intercreditor agreement, in form and substance reasonably satisfactory to the Administrative Agent, between the holder of such Lien and the Administrative Agent;

 

(f)                      which does not conform to all representations, warranties or other provisions in the Loan Documents relating to Credit Card Receivables;

 

(g)                     which does not constitute an “Account” or “Payment Intangible” (as each such term is defined in the UCC);

 

(h)                    as to which the Credit Card Issuer or Credit Card Processor has asserted the right to require a Loan Party to repurchase such Credit Card Receivable from such Credit Card Issuer or Credit Card Processor;

 

(i)                        is due from a Credit Card Issuer or Credit Card Processor which is the subject of proceedings under a Debtor  Relief Law;

 

(j)                       which is evidenced by “chattel paper” or an “instrument” of any kind unless such “chattel paper” or “instrument” is in the possession of the Administrative Agent, and to the extent necessary or appropriate, endorsed to the Administrative Agent;

 

(k)                    which are Pharmacy Receivables or Wholesale Trade Receivables;

 

(l)                        which arise from the “Purchase Advantage” private label credit card of Borrowers or any other proprietary credit card of a Borrower where such Borrower has liability for the failure of the card holder to make payment thereunder as a result of the financial condition of such card holder;

 

(m)                which is payable in any currency other than Dollars; or

 

(n)                    which the Administrative Agent determines in its Permitted Discretion to be uncertain of collection.

 

22



 

The criteria for Eligible Credit Card Receivables set forth above may be changed and any new criteria for Eligible Credit Card Receivables may be established by the Administrative Agent in the exercise of its Permitted Discretion solely based on either: (i) an event, condition or other circumstance arising after the Closing Date, or (ii) an event, condition or other circumstance existing on the Closing Date to the extent that such event, condition or circumstance has not been identified by a Borrower to the field examiners of the Administrative Agent prior to the Closing Date (except to the extent that it may have been identified but the Administrative Agent has elected not to establish eligibility criteria with respect thereto as of the Closing Date), in either case under clause (i)  or (ii)  which adversely affects or would reasonably be expected to adversely affect the Credit Card Receivables or the Administrative Agent’s ability to realize upon the Credit Card Receivables in any material respect, as determined by the Administrative Agent in its Permitted Discretion.  Any Credit Card Receivables that are not Eligible Credit Card Receivables shall nevertheless be part of the Collateral.

 

“Eligible Inventory” means, as of the date of determination thereof, items of Inventory of a Borrower that are finished goods, merchantable and readily saleable to the public in the ordinary course of a Borrower’s business.  Except as otherwise determined by the Administrative Agent in its Permitted Discretion, Eligible Inventory shall not include any Inventory:

 

(a)                    that is not solely owned by a Borrower or a Borrower does not have good and valid title thereto;

 

(b)                    that is leased by or is on consignment to a Borrower or which is consigned by a Borrower to a Person which is not a Loan Party;

 

(c)                     that is not located in the United States (excluding territories or possessions of the United States) at a location that is owned or leased by a Borrower, except Inventory in transit between locations owned or leased by a Borrower in the United States;

 

(d)                    that is located in a distribution center leased by a Loan Party unless (i) the applicable lessor has delivered to the Administrative Agent a Collateral Access Agreement or (ii) a Reserve based on rent with respect to such location has been established by the Administrative Agent in its Permitted Discretion subject to the terms in the definition of Availability Reserves;

 

(e)                     that is comprised of goods which (i) are damaged, defective, “seconds,” or otherwise unmerchantable, (ii) are to be returned to the vendor, (iii) are obsolete or slow moving, or custom items, work in process, raw materials, or that constitute spare parts, promotional, marketing, packaging and shipping materials or supplies used or consumed in a Borrower’s business, (iv) are seasonal in nature and which have been packed away for sale in the subsequent season, (v) are not in material compliance with all standards imposed by any Governmental Authority having regulatory authority over such Inventory, its use or sale, (vi) are bill and hold goods or (vii) are coffee shop inventory or fuel inventory;

 

(f)                      which does not conform to all representations, warranties or other provisions in the Loan Documents relating to Inventory;

 

(g)                     that is not subject to a perfected first priority security interest in favor of the Administrative Agent or that is subject to any other Lien, other than Liens permitted under clauses (a) , (b) , (e) , (p)  and (r)  of the definition of Permitted Encumbrances and any other Liens with respect thereto permitted under this Agreement that are subject to an intercreditor agreement in form and substance reasonably satisfactory to Administrative Agent between the holder of such Lien and Administrative Agent;

 

23



 

(h)                    that consists of samples, labels, bags, packaging, and other similar non-merchandise categories;

 

(i)                        that is not insured in compliance with the provisions of Section 5.10 hereof;

 

(j)                       that has been sold but not yet delivered or as to which a Borrower has accepted a deposit;

 

(k)                    that is subject to any licensing, patent, royalty, trademark, trade name or copyright agreement with any third party from which any Borrower or any of its Subsidiaries has received notice of a material dispute in respect of any such agreement; or

 

(l)                        acquired in a Permitted Acquisition or which is not of the type usually sold in the ordinary course of a Borrower’s business, unless and until the Administrative Agent has completed or received (A) an appraisal of such Inventory from appraisers reasonably satisfactory to the Administrative Agent and establishes an Inventory advance rate and Inventory Reserves (if applicable) therefor, and otherwise agrees that such Inventory shall be deemed Eligible Inventory, and (B) such other due diligence as the Administrative Agent may reasonably require (including a field examination with respect thereto, which will not be considered for purposes of any of the limitations in Section 6.10 ), all of the results of the foregoing to be reasonably satisfactory to the Administrative Agent.

 

The criteria for Eligible Inventory set forth above may only be changed and any new criteria for Eligible Inventory may only be established by the Administrative Agent in the exercise of its Permitted Discretion and solely based on either: (i) an event, condition or other circumstance arising after the Closing Date, or (ii) an event, condition or other circumstance existing on the Closing Date to the extent that such event, condition or circumstance has not been identified by a Borrower to the field examiners of the Administrative Agent prior to the Closing Date (except to the extent that it may have been identified but the Administrative Agent has elected not to establish eligibility criteria with respect thereto as of the Closing Date), in either case under clause (i)  or (ii)  which adversely affects or would reasonably be expected to adversely affect the Inventory or the Administrative Agent’s ability to realize upon the Inventory in any material respect, in each case, as determined by Administrative Agent in its Permitted Discretion.  Any Inventory that is not Eligible Inventory shall nevertheless be part of the Collateral.

 

“Eligible Pharmacy Receivables” means, at the time of any determination thereof, each Pharmacy Receivable that at all times satisfies the criteria set forth below and which has been earned by performance, and in each case originated in the ordinary course of business of such Borrower. In determining the amount to be so included, the face amount of a Pharmacy Receivable shall be reduced by, without duplication, to the extent not reflected in such face amount, (1) any and all returns, accrued rebates, discounts (which may, at the Administrative Agent’s option, be calculated on shortest terms), credits, allowances or sales or excise taxes of any nature at any time issued, owing, claimed by Account Debtors, granted, outstanding or payable in connection with such Pharmacy Receivables at such time, and (2) the aggregate amount of all customer deposits, unapplied cash, bonding subrogation rights to the extent not cash collateralized.  Except as otherwise determined by the Administrative Agent in its Permitted Discretion, Eligible Pharmacy Receivables shall not include any Pharmacy Receivable:

 

(a)                    which is unpaid within the earlier of thirty (30) days following its original due date or sixty (60) days following its original invoice date;

 

(b)                    that is the obligation of an Account Debtor (or its Affiliates) if fifty percent (50%) or more of the dollar amount of all Pharmacy Receivables owing by that Account Debtor (or its Affiliates) are ineligible under the other criteria listed in clause (a)  above;

 

24



 

(c)                     where such Pharmacy Receivable or the underlying contract contravenes any laws, rules or regulations applicable thereto, including, rules and regulations relating to truth-in-lending, fair credit billing, fair credit reporting, equal credit opportunity, fair debt collection practices and privacy or any party to the underlying contract is in violation of any such laws, rules or regulations;

 

(d)                    which is not a valid, legally enforceable obligation of the applicable Account Debtor with respect thereto;

 

(e)                     which is disputed, or with respect to which a claim, chargeback, offset, deduction or counterclaim, dispute or other defense has been asserted (to the extent of such claim, chargeback, offset, deduction or counterclaim, dispute or other defense);

 

(f)                      that is not subject to a perfected first priority security interest in favor of the Administrative Agent, or with respect to which a Borrower does not have good, valid and marketable title thereto, free and clear of any Lien, other than Liens granted to the Administrative Agent pursuant to the Security Documents and Liens permitted under clauses (a) , (e)  or (o)  of the definition of Permitted Encumbrances and any other Liens with respect thereto permitted under this Agreement that are subject to an intercreditor agreement, in form and substance reasonably satisfactory to the Administrative Agent, between the holder of such Lien and the Administrative Agent;

 

(g)                     which does not conform to all representations, warranties or other provisions in the Loan Documents relating to Pharmacy Receivables;

 

(h)                    which does not constitute an “Account” or “Payment Intangible” (as each such term is defined in the UCC);

 

(i)                        is due from an Account Debtor which is the subject of proceedings under a Debtor Relief Law;

 

(j)                       where the Account Debtor obligated upon such Pharmacy Receivable suspends business, makes a general assignment for the benefit of creditors or fails to pay its debts generally as they come due;

 

(k)                    which is evidenced by “chattel paper” or an “instrument” of any kind unless such “chattel paper” or “instrument” is in the possession of the Administrative Agent, and to the extent necessary or appropriate, endorsed to the Administrative Agent;

 

(l)                        which are Credit Card Receivables or Wholesale Trade Receivables;

 

(m)                which do not direct payment thereof to be sent to a Blocked Account;

 

(n)                    which is payable in any currency other than Dollars;

 

(o)                    for which the Account Debtor is (i) any Governmental Authority (including, without limitation, Medicare, Medicaid and food assistance programs), or (ii) a Credit Card Issuer or Credit Card Processor;

 

(p)                    for which the Account Debtor is not a (i) retail customer or (ii) Third Party Payor;

 

(q)                    that do not arise from the sale of medication, medical equipment or other medical items by such Borrower in the ordinary course of its business;

 

25



 

(r)                       with respect to an Account Debtor, other than an Investment Grade Account Debtor, whose total obligations owing to Borrowers exceed fifteen percent (15%) (such percentage, as applied to a particular Account Debtor, being subject to reduction by Administrative Agent in its Permitted Discretion if the creditworthiness of such Account Debtor deteriorates or otherwise, in any event, as applied to a particular Account Debtor being subject to increase as to such Account Debtor by Administrative Agent in its Permitted Discretion) of all Eligible Pharmacy Accounts, to the extent of the obligations owing by such Account Debtor in excess of such percentage; provided , that , in each case, the amount of Eligible Pharmacy Accounts that are excluded because they exceed the foregoing percentage shall be determined by Administrative Agent based on all of the otherwise Eligible Pharmacy Accounts prior to giving effect to any eliminations based upon the foregoing concentration limit;

 

(s)                      (i) upon which such Borrower’s right to receive payment is not absolute or is contingent upon the fulfillment of any condition whatsoever, or (ii) as to which Pharmacy Receivable the Account Debtor is located in a state requiring the filing of a Notice of Business Activities Report or similar report in order to permit such Borrower to use the courts of such state or to otherwise seek judicial enforcement of payment of such Pharmacy Receivable, in each case unless such Borrower has qualified to do business in such state or has filed a Notice of Business Activities Report (or equivalent report, as applicable) for the most recent year for which such qualification or report is required (in each case to the extent that the Administrative Agent has determined to render such Pharmacy Receivable ineligible), or (iii) if the Pharmacy Receivable represents a progress billing consisting of an invoice for goods sold or used or services rendered pursuant to a contract under which the Account Debtor’s obligation to pay that invoice is subject to such Borrower’s completion of further performance under such contract or is subject to the equitable lien of a surety bond issuer;

 

(t)                       to the extent any Borrower or any Subsidiary thereof is (i) liable for goods sold or services rendered by the applicable Account Debtor to any Borrower or any Subsidiary thereof, or (ii) liable for accrued and actual discounts, claims, unpaid fees, credit or credits pending, promotional program allowances, price adjustment, finance charges or other allowances (including any amount that any Borrower or any Subsidiary thereof, as applicable, may be obligated to rebate to a customer pursuant to the terms of any agreement or understanding (whether written or oral), but in each case only to the extent of the potential offset resulting therefrom;

 

(u)                    that is the obligation of an Account Debtor located in a foreign country unless payment thereof is supported by an irrevocable letter of credit reasonably satisfactory to the Administrative Agent as to form, substance and issuer or domestic confirming bank (provided, that, at any time an Accelerated Borrowing Base Delivery Event exists, in addition, any such letter of credit shall have been delivered to Administrative Agent and shall be directly drawable by Administrative Agent) or is covered by credit insurance in form, substance and amount, and by an insurer, reasonably satisfactory to Administrative Agent;

 

(v)                    with respect to which an invoice, reasonably acceptable to the Administrative Agent in form, has not been sent to the applicable Account Debtor or such invoice does not include a true and correct statement of the bona fide payment obligation incurred in the amount of the Pharmacy Receivable for medication, medical equipment or other medical items sold to and accepted by the applicable Account Debtor;

 

(w)                  in a transaction wherein goods are placed on consignment or are sold pursuant to a guaranteed sale, a sale or return, a sale on approval, a bill and hold, or any other terms by reason of which the payment by an Account Debtor may be conditional;

 

26



 

(x)                    as to which any check, draft or other items of payment has previously been received which has been returned unpaid or otherwise dishonored;

 

(y)                    to the extent such Pharmacy Receivable consists of finance charges as compared to obligations to such Borrower for goods sold;

 

(z)                     to the extent such Pharmacy Receivable exceeds any credit limit established by the Administrative Agent in its Permitted Discretion, but only after a determination made by the Administrative Agent in its Permitted Discretion that the creditworthiness of such applicable Account Debtor has declined in such a manner that the prospects for payment on such Pharmacy Receivable have or may become materially impaired;

 

(aa)             which have not been underwritten in accordance with the applicable Borrower’s Credit and Collection Policy, and has terms which have not been modified, impaired, waived, altered, extended or renegotiated since its origination in any way; or

 

(bb)             which the Administrative Agent determines in its Permitted Discretion to be uncertain of collection.

 

The criteria for Eligible Pharmacy Receivables set forth above may only be changed and any new criteria for Eligible Pharmacy Receivables may only be established by the Administrative Agent in the exercise of its Permitted Discretion and solely based on either: (i) an event, condition or other circumstance arising after the Closing Date, or (ii) an event, condition or other circumstance existing on the Closing Date to the extent that such event, condition or circumstance has not been identified by a Borrower to the field examiners of the Administrative Agent prior to the Closing Date (except to the extent that it may have been identified but the Administrative Agent has elected not to establish eligibility criteria with respect thereto as of the Closing Date), in either case under clause (i)  or (ii)  which adversely affects or would reasonably be expected to adversely affect the Pharmacy Receivables or the Administrative Agent’s ability to realize upon the Pharmacy Receivables in any material respect, as determined by the Administrative Agent in its Permitted Discretion.  Any Pharmacy Receivables that are not Eligible Pharmacy Receivables shall nevertheless be part of the Collateral.

 

“Eligible Prescription Files” means, at the time of any determination thereof, each Prescription File that at all times satisfies the criteria set forth below and which arises and is maintained in the ordinary course of the business of such Borrower and which is of a type included in an appraisal of Prescription Files received by Administrative Agent in accordance with the requirements of Administrative Agent (including Prescription Files acquired by such Borrower after the date of such appraisal).  Except as otherwise determined by the Administrative Agent in its Permitted Discretion, Eligible Prescription Files shall not include any Prescription Files: (a) at premises other than those owned, leased or licensed and in each case controlled by a Borrower; (b) subject to a Lien in favor of any Person other than Administrative Agent except those permitted in this Agreement that are subject to an intercreditor agreement in form and substance reasonably satisfactory to Administrative Agent between the holder of such Lien and Administrative Agent; (c) that are not in a form that may be sold or otherwise transferred or are subject to regulatory restrictions on the transfer thereof that are not acceptable to the Administrative Agent in its Permitted Discretion.  The criteria for Eligible Prescription Files set forth above may only be changed and any new criteria for Eligible Prescription Files may be established by the Administrative Agent in the exercise of its Permitted Discretion based solely on either: (i) an event, condition or other circumstance arising after the Closing Date, or (ii) an event, condition or other circumstance existing on the Closing Date to the extent that such event, condition or circumstance has not been identified by a Borrower to the field examiners of Administrative Agent prior to the Closing Date (except to the extent that it may have been identified but the Administrative Agent has elected not to

 

27



 

establish eligibility criteria with respect thereto as of the Closing Date), in either case under clause (i)  or (ii)  which adversely affects or would reasonably be expected to adversely affect the Prescription Files or the Administrative Agent’s ability to realize upon the Prescription Files in any material respect, in each case, as determined by Administrative Agent in its Permitted Discretion.  Any Prescription Files that are not Eligible Prescription Files shall nevertheless be part of the Collateral.

 

“Eligible Retail Inventory” means Eligible Inventory that is Retail Inventory.

 

“Eligible Trade Receivables” means Accounts deemed by the Administrative Agent in its Permitted Discretion to be eligible for inclusion in the calculation of the Borrowing Base arising from the sale of the Borrowers’ Wholesale Inventory that satisfies the following criteria at the time of creation and continues to meet the same at the time of such determination: such Account (1) has been earned by performance and represents the bona fide amounts due to a Borrower from an Account Debtor, and in each case originated in the ordinary course of business of such Borrower, and (2) in each case is acceptable to the Administrative Agent in its discretion, and is not ineligible for inclusion in the calculation of the Borrowing Base pursuant to any of clauses (a)  through (ff) below.  Without limiting the foregoing, to qualify as an Eligible Trade Receivable, an Account shall indicate no Person other than a Borrower as payee or remittance party.  In determining the amount to be so included, the face amount of an Account shall be reduced by, without duplication, to the extent not reflected in such face amount, (1) the amount of all accrued and actual discounts, claims, credits or credits pending, promotional program allowances, price adjustments, finance charges or other allowances (including any amount that a Borrower may be obligated to rebate to a customer pursuant to the terms of any agreement or understanding (written or oral)) and (2) the aggregate amount of all cash received in respect of such Account but not yet applied by the Borrowers to reduce the amount of such Eligible Trade Receivable.  Except as otherwise determined by the Administrative Agent in its Permitted Discretion, Eligible Trade Receivables shall not include any Wholesale Trade Receivable:

 

(a)                    which is unpaid within the earlier of twenty-one (21) days following its original due date or forty-nine (49) days following the initial statement date with respect to such Wholesale Trade Receivable;

 

(b)                    due from any Account Debtor (or its Affiliates),  where fifty percent (50%) or more of all Accounts owed by that Account Debtor (or its Affiliates) are deemed ineligible pursuant to clause (a) , above;

 

(c)                     with respect to which an invoice, reasonably acceptable to the Administrative Agent in form, has not been sent to the applicable Account Debtor;

 

(d)                    with respect to which (i) the goods giving rise to such Wholesale Trade Receivable have not been shipped and billed to the Account Debtor, or (ii) the services giving rise to such Wholesale Trade Receivable have not been performed and billed to the Account Debtor,

 

(e)                     where such Wholesale Trade Receivables or the underlying contract contravenes any laws, rules or regulations applicable thereto, including, rules and regulations relating to truth-in-lending, fair credit billing, fair credit reporting, equal credit opportunity, fair debt collection practices and privacy or any party to the underlying contract is in violation of any such laws, rules or regulations;

 

(f)                      which is not a valid, legally enforceable obligation of the applicable Account Debtor with respect thereto;

 

28



 

(g)                     which are disputed or with respect to which claim, chargeback, offset, deduction or counterclaim, dispute or other defense has been asserted (to the extent of such claim, chargeback, offset, deduction or counterclaim, dispute or other defense);

 

(h)                    that are not subject to a perfected first priority security interest in favor of the Administrative Agent, or with respect to which a Borrower does not have good, valid and marketable title thereto, free and clear of any Lien, other than Liens granted to the Administrative Agent pursuant to the Security Documents and Liens permitted under clauses (a) , (e)  or (o)  of the definition of Permitted Encumbrances  and any other Liens with respect thereto permitted under this Agreement that are subject to an intercreditor agreement, in form and substance reasonably satisfactory to the Administrative Agent, between the holder of such Lien and the Administrative Agent;

 

(i)                        which do not conform to all representations, warranties or other provisions in the Loan Documents relating to Wholesale Trade Receivables;

 

(j)                       for which all consents, approvals or authorizations of, or registrations or declarations with any Governmental Authority required to be obtained, effected or given in connection with the performance of such Account by the account debtor or in connection with the enforcement of such Account by the Administrative Agent have been duly obtained, effected or given and are in full force and effect;

 

(k)                    which do not constitute an “Account” or “Payment Intangible” (as each such term is defined in the UCC);

 

(l)                        which are due from an Account Debtor which is the subject of proceedings under a Debtor Relief Law;

 

(m)                where the Account Debtor obligated upon such Wholesale Trade Receivables suspends business, makes a general assignment for the benefit of creditors or fails to pay its debts generally as they come due;

 

(n)                    which are evidenced by “chattel paper” or an “instrument” of any kind unless such “chattel paper” or “instrument” is in the possession of the Administrative Agent, and to the extent necessary or appropriate, endorsed to the Administrative Agent;

 

(o)                    which are Pharmacy Receivables or Credit Card Receivables;

 

(p)                    for which the Account Debtor is a (i) retail customer, (ii) Credit Card Issuer or Credit Card Processor, (iii) Governmental Authority (including, without limitation, Medicare, Medicaid and food assistance programs), (iv) military customers, (v) a Sanctioned Person or Sanctioned Entity, or (vi) an Affiliate of any Borrower or an employee or agent of any Borrower;

 

(q)                    (i) owing from any Person (other than the Transition Agreement Parties) that is also a supplier to or creditor of a Loan Party or any of its Subsidiaries, or (ii) representing any manufacturer’s or supplier’s credits, discounts, incentive plans or similar arrangements entitling a Loan Party or any of its Subsidiaries to discounts on future purchase therefrom;

 

(r)                       which consist of amounts due from vendors as rebates or allowances or from franchisees;

 

(s)                      which are payable in any currency other than Dollars;

 

29



 

(t)                       which do not direct payment thereof to be sent to a Blocked Account;

 

(u)                    arising in a transaction wherein goods are placed on consignment or are sold pursuant to a guaranteed sale, a sale or return, a sale on approval, a bill and hold, or any other terms by reason of which the payment by the Account Debtor may be conditional;

 

(v)                    that is the obligation of an Account Debtor located in a foreign country unless payment thereof is supported by an irrevocable letter of credit reasonably satisfactory to the Administrative Agent as to form, substance and issuer or domestic confirming bank (provided, that, at any time an Accelerated Borrowing Base Delivery Event exists, in addition, any such letter of credit shall have been delivered to Administrative Agent and shall be directly drawable by Administrative Agent) or is covered by credit insurance in form, substance and amount, and by an insurer, reasonably satisfactory to Administrative Agent;

 

(w)                  (i) upon which such Borrower’s right to receive payment is not absolute or is contingent upon the fulfillment of any condition whatsoever, or (ii) as to which Wholesale Trade Receivable the Account Debtor is located in a state requiring the filing of a Notice of Business Activities Report or similar report in order to permit such Borrower to use the courts of such state or to otherwise seek judicial enforcement of payment of such Wholesale Trade Receivable, in each case unless such Borrower has qualified to do business in such state or has filed a Notice of Business Activities Report or equivalent report for the most recent year for which such qualification or report is required (to the extent that the Administrative Agent in its Permitted Discretion has determined to render such Wholesale Trade Receivable ineligible), or (iii) if the Wholesale Trade Receivable represents a progress billing consisting of an invoice for goods sold or used or services rendered pursuant to a contract under which the Account Debtor’s obligation to pay that invoice is subject to such Borrower’s completion of further performance under such contract or is subject to the equitable lien of a surety bond issuer;

 

(x)                    to the extent any Borrower or any Subsidiary thereof is (i) liable for goods sold or services rendered by the applicable Account Debtor to any Borrower or any Subsidiary thereof, or (ii) liable for accrued and actual discounts, claims, unpaid fees, credit or credits pending, promotional program allowances, price adjustment, finance charges or other allowances (including any amount that any Borrower or any Subsidiary thereof, as applicable, may be obligated to rebate to a customer pursuant to the terms of any agreement or understanding (whether written or oral), but, in each case only to the extent of the potential offset resulting therefrom (provided, that, the amount of the offset for this purpose in respect of amounts owing by a Borrower or any Subsidiary thereof to any of the Transition Agreement Parties shall be limited to the extent that such Transition Agreement Party has agreed in writing to offset first against amounts owing to such Borrower or Subsidiary other than any of the Wholesale Trade Receivables, so long as such agreement is in form and substance reasonably satisfactory to Administrative Agent and is either (i) in favor of Administrative Agent or (ii) provides that (A) Administrative Agent is a third party beneficiary with respect thereto, (B) Administrative Agent is entitled to directly enforce such agreement, (C) the agreement of the applicable Transition Agreement Party is not subject to any defenses against Administrative Agent based on any act or omission of a Loan Party, and (D) such agreement may not be amended, modified or any rights of any Loan Party thereunder waived without the written consent of Administrative Agent);

 

(y)                    which arise in whole or in part from the sale of products purchased by the applicable Borrower from a Person which is entitled to the benefits of the PSA, with respect to such products;

 

(z)                     to the extent such Wholesale Trade Receivable exceeds any credit limit established by the Administrative Agent in its Permitted Discretion, but only after a determination made by the Administrative Agent in its Permitted Discretion that the creditworthiness of such applicable Account

 

30



 

Debtor has declined in such a manner that the prospects for payment on such Wholesale Trade Receivable have or may become materially impaired;

 

(aa)             with respect to an Account Debtor whose total obligations owing to Borrowers exceed ten percent (10%) (such percentage, as applied to a particular Account Debtor, being subject to reduction by Administrative Agent in its Permitted Discretion if the creditworthiness of such Account Debtor deteriorates or otherwise, in any event, as applied to a particular Account Debtor being subject to increase as to such Account Debtor by Administrative Agent in its Permitted Discretion) of all Eligible Trade Receivables, to the extent of the obligations owing by such Account Debtor in excess of such percentage; provided , that , in each case, the amount of Eligible Trade Receivables that are excluded because they exceed the foregoing percentage shall be determined by Administrative Agent based on all of the otherwise Eligible Trade Receivables prior to giving effect to any eliminations based upon the foregoing concentration limit;

 

(bb)             where the Account Debtor obligated upon such Wholesale Trade Receivables is in default, in any manner material to the Wholesale Trade Receivable in question;

 

(cc)               which have not been underwritten in accordance with the applicable Borrower’s Credit and Collection Policy, and has terms which have not been modified, impaired, waived, altered, extended or renegotiated since its origination in any way;

 

(dd)             as to which any check, draft or other items of payment has previously been received which has been returned unpaid or otherwise dishonored; or

 

(ee)               which the Administrative Agent determines in its Permitted Discretion to be uncertain of collection.

 

“Eligible Wholesale Inventory” means Eligible Inventory that is Wholesale Inventory.

 

“Environmental Laws” means any and all Federal, state, local, and foreign statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, grants, franchises, licenses, agreements or governmental restrictions relating to pollution and the protection of the environment or the Release of any Hazardous Materials into the environment, including those related to hazardous substances or wastes, air emissions and discharges to waste or public systems.

 

“Environmental Liability” means any liability, obligation, damage, loss, claim, action, suit, judgment, order, fine, penalty, fee, expense, or cost, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of the Lead Borrower or any other Loan Party resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, labeling, storage, treatment or disposal or recycling of, or presence of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the Release or threatened Release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.

 

“Equipment” has the meaning set forth in the UCC.

 

“Equity Interests” means, with respect to any Person, the shares of capital stock of (or other ownership or profit interests in) such Person, the warrants, options or other rights for the purchase or acquisition from such Person of shares of capital stock of (or other ownership or profit interests in) such Person, the securities convertible into or exchangeable for shares of capital stock of (or other ownership

 

31



 

or profit interests in) such Person or warrants, rights or options for the purchase or acquisition from such Person of such shares (or such other interests), and any of the other ownership or profit interests in such Person (including partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such shares, warrants, options, rights or other interests are outstanding on any date of determination.

 

“ERISA” means the Employee Retirement Income Security Act of 1974.

 

“ERISA Affiliate” means any trade or business (whether or not incorporated) under common control with Lead Borrower within the meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code).

 

“ERISA Event” means (a) a Reportable Event with respect to a Pension Plan; (b) a withdrawal by the Lead Borrower or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by the Lead Borrower or any ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to terminate, the treatment of a Plan amendment as a termination under Sections 4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (e) an event or condition which constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan or Multiemployer Plan; (f) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon the Lead Borrower or any ERISA Affiliate, or (g) the breach of any terms of the PBGC Agreement.

 

“Escrow Agreement” means the Escrow Agreement dated the Closing Date, by and among Lead Borrower, ASC, and JPMorgan Chase Bank, N.A., as Escrow Agent.

 

“Escrow Fund” has the meaning set forth in the Escrow Agreement.

 

“Event of Default” has the meaning set forth in Section 8.01 .  An Event of Default shall be deemed to be continuing unless and until that Event of Default has been duly waived as provided in Section 10.01 hereof or is cured if such Event of Default is capable of being cured.

 

“Excess Availability” means, as of any date of determination thereof, the result of: (a) the Loan Cap, minus , (b) the aggregate unpaid balance of Credit Extensions; provided , that , for purposes of the calculation of Excess Availability prior to April 30, 2013, any NAI LCs outstanding as of the Closing Date (or any portion of any such NAI LC, as the case may be) shall not be considered in such calculation to the extent that Administrative Agent has received evidence satisfactory to it that a new letter of credit replacing such NAI LC has been issued for the account of the beneficiary thereof, that such new letter of credit is being sent to such beneficiary and such NAI LC will be released promptly after the Closing Date.  Any portion of an NAI LC that is not covered by a new letter of credit as provided for in the previous sentence shall be included in the calculation of Excess Availability prior to April 30, 2013.  On and after April 30, 2013, all NAI LCs then outstanding shall be Letters of Credit for purposes of the calculation of Excess Availability.

 

“Excluded DDAs” means each checking, savings or other demand deposit account maintained by any Loan Party and exclusively used (a) for payroll, payroll taxes and other employee wage and benefit payments to or for the benefit of any Loan Party’s employees, (b) for the receipt of Medicare and Medicaid receivables of a Loan Party, (c) to hold proceeds of Term Loan Priority Collateral, subject to

 

32



 

the Term Loan Intercreditor Agreement, unless and until the release of the Lien therein of the Term Loan Agent, or (d) for the receipt and deposit of funds of a specific Person other than a Loan Party, or which a Loan Party is holding in trust or as a fiduciary for such Person, in each case in  a manner permitted under this Agreement or the other Loan Documents.

 

“Excluded Subsidiaries” means each (a) Immaterial Subsidiary, (b) Foreign Subsidiary, (c) Unrestricted Subsidiary, (d) Insurance Captive and (e) a Subsidiary of Lead Borrower that is not, directly or indirectly, wholly owned by Lead Borrower; provided , that , (i) Moran Foods, LLC shall not be deemed to be an Excluded Subsidiary, and (ii) in no event shall any Subsidiary of Lead Borrower that is a guarantor of the Term Loan Debt be an Excluded Subsidiary.

 

“Excluded Taxes” means, with respect to the Administrative Agent, any Lender, any LC Issuer or any other recipient of any payment to be made by or on account of any obligation of the Loan Parties hereunder, (a) any tax imposed on or measured by, in whole or in part, the revenue, net income, net profits, net assets, capital or net worth of, and franchise taxes imposed on, any Lender or any Participant (including any branch profits taxes), in each case imposed by the jurisdiction (or by any political subdivision or taxing authority thereof) (i) in which such Lender or such Participant is organized (ii) in which such Lender’s or such Participant’s principal office is located, (iii) in which such Lender or such Participant is doing business, including, branch profits taxes and branch interest taxes (other than solely as a result of entering into any Loan Document or taking any action contemplated thereunder), (iv) in which it has a present or former connection other than as a result of the Loan Documents or taking any action contemplated thereunder or (v) in the case of any Foreign Lender, in which its applicable Lending Office is located, in each case as a result of a present or former connection between such Lender or such Participant and the jurisdiction or taxing authority imposing the tax (other than any such connection arising solely from such Lender or such Participant having executed, delivered or performed its obligations or received payment under, or enforced its rights or remedies under the Agreement or any other Loan Document); (b) taxes resulting from a Lender’s or a Participant’s failure to comply with the requirements of Section 3.01(e) , (c) any branch profits taxes imposed by the United States or any similar tax imposed by any other jurisdiction in which any Borrower is located, (d) in the case of a Foreign Lender, any United States federal withholding taxes imposed on amounts payable to such Foreign Lender as a result of such Foreign Lender’s failure to comply with FATCA to establish a complete exemption from withholding thereunder, and (e) any United States federal withholding taxes that would be imposed on amounts payable to a Foreign Lender based upon the applicable withholding rate in effect at the time such Foreign Lender becomes a party to the Agreement (or designates a new lending office), except that Taxes shall include (1) any amount that such Foreign Lender (or its assignor, if any) was previously entitled to receive pursuant to Section 3.01(e) , if any, with respect to such withholding tax at the time such Foreign Lender becomes a party to the Agreement (or designates a new lending office), and (2) additional United States federal withholding taxes that may be imposed after the time such Foreign Lender becomes a party to the Agreement (or designates a new lending office), as a result of a Change in Law.

 

“Executive Order” has the meaning set forth in Section 10.18 .

 

“Existing Credit Agreement” has the meaning set forth in the Recitals.

 

“Existing Debt Documents” means, collectively, the SVU 2016 Notes, the SVU Indenture (but solely in respect of the SVU 2016 Notes) and any other notes, indentures, instruments or other agreements evidencing, governing or related to any other Material Indebtedness or securitization arrangements of the Lead Borrower or any of its Subsidiaries incurred after the Closing Date with a maturity on or prior to the date that is five (5) years from the Closing Date.

 

33



 

“Existing Letters of Credit” means, collectively, the letters of credit issued for the account of a Loan Party or for which such Loan Party is otherwise liable listed on Schedule 1.01(b)  hereto, as the same now exist or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.

 

“Existing Loan Documents” has the meaning set forth in the Recitals.

 

“Existing Receivables Transfer Agreements” means (a) the Second Amended and Restated Receivables Purchase Agreement, dated as of November 30, 2011, by and among SUPERVALU Receivables Funding Corporation, a Delaware corporation, as seller, the Lead Borrower, as servicer, the banks and other financial institutions party thereto, as purchasers and Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A., “Rabobank Nederland”, New York Branch, as agent, and (b) each Purchase Agreement as defined in such Second Amended and Restated Receivables Purchase Agreement.

 

“Existing Term Loan Agent” means Credit Suisse AG, Cayman Islands Branch, in its capacity as agent for the Existing Term Loan Lenders.

 

“Existing Term Loan Agreement” means the Credit Agreement, dated August 30, 2012, among Existing Term Loan Agent, Existing Term Loan Lenders, and the Lead Borrower.

 

“Existing Term Loan Facility” means the term loan facility provided to Lead Borrower pursuant to the terms of the Existing Term Loan Agreement.

 

“Existing Term Loan Lenders” means the financial institutions party to the Existing Term Loan Agreement as lenders.

 

“Extraordinary Receipt” means any cash received by or paid to or for the account of any Person not in the ordinary course of business, including tax refunds, pension plan reversions, proceeds of insurance (other than proceeds of business interruption insurance to the extent such proceeds constitute compensation for lost earnings), condemnation awards (and payments in lieu thereof), indemnity payments and any purchase price adjustments.

 

“Facility Guaranty” means the Amended and Restated Guaranty made by the Guarantors in favor of the Administrative Agent and the other Credit Parties, in form and substance reasonably satisfactory to the Administrative Agent.

 

“Farm Products” has the meaning set forth in the Food Security Act and the UCC.

 

“Farm Products Sellers” means, collectively, sellers or suppliers to any Loan Party of any Farm Products and including any milk or dairy products, perishable agricultural commodity (as defined in PACA) or livestock (as defined in the PSA), meat, meat food products or livestock products derived therefrom or any poultry or products derived therefrom; sometimes referred to herein individually as a “Farm Products Seller”.

 

“FATCA” means current Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is that is substantively comparable and not materially more burdensome to comply with), any current or future regulations or official interpretations thereof and any agreements entered into pursuant to Section 1471(b)(1) of the Code.

 

“Federal Funds Rate” means, for any day, the rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the

 

34



 

Business Day next succeeding such day; provided , that , (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate (rounded upward, if necessary, to a whole multiple of 1/100 of 1%) charged to Wells Fargo on such day on such transactions as determined by the Administrative Agent.

 

“Fee Letter” means the letter agreement, dated January 10, 2013, by and among the Lead Arrangers and the Lead Borrower.

 

“Fiscal Intermediary” means any qualified insurance company or other Person that has entered into an ongoing relationship with any Governmental Authority to make payments to payees under Medicare, Medicaid or any other Federal, state or local public health care or medical assistance program pursuant to any of the Health Care Laws.

 

“Fiscal Period” means any four-week or five-week fiscal period of any Fiscal Year, in accordance with the fiscal accounting calendar of the Loan Parties as in effect on the date hereof.

 

“Fiscal Quarter” means the period consisting of the first four Fiscal Periods of each Fiscal Year and the next three periods of three Fiscal Periods each in such Fiscal Year.

 

“Fiscal Year” means any period of thirteen (13) consecutive Fiscal Periods ending on the last Saturday of February of any calendar year.

 

“Flood Program” shall mean the National Flood Insurance Program created by the U.S. Congress pursuant to the National Flood Insurance Act of 1968, the Flood Disaster Protection Act of 1973, the National Flood Insurance Reform Act of 1994 and the Flood Insurance Reform Act of 2004, in each case as amended from time to time, and any successor statutes.

 

“Flood Zone” shall mean areas having special flood hazards as described in the National Flood Insurance Act of 1968, as amended from time to time, and any successor statute.

 

“Food Security Act” means the Food Security Act of 1984, 7 U.S.C. Section 1631 et. seq., as the same now exists or may hereafter from time to time be amended, modified, recodified or supplemented, together with all rules and regulations thereunder.

 

“Food Security Act Notices” is defined in Section 5.27(a)  hereof.

 

“Foreign Asset Control Regulations” has the meaning set forth in Section 10.18 .

 

“Foreign Lender” means any Lender that is organized under the laws of a jurisdiction other than that in which the Lead Borrower is resident for tax purposes.  For purposes of this definition, the United States, the States thereof and the District of Columbia shall be deemed to constitute a single jurisdiction.

 

“Foreign Subsidiary” means a direct or indirect Subsidiary of a Loan Party organized or incorporated under the laws of a jurisdiction other than a State of the United States, the United States, or the District of Columbia.

 

“FRB” means the Board of Governors of the Federal Reserve System of the United States.

 

35



 

“Fund” means any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its business.

 

“GAAP” means generally accepted accounting principles in the United States set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or such other principles as may be approved by a significant segment of the accounting profession in the United States, that are applicable to the circumstances as of the date of determination, consistently applied.

 

“Governmental Authority” means the government of the United States or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).

 

“Ground Lease” means, individually and collectively, as the context may require, each ground lease described on the Applicable Collateral List.

 

“Guarantee” means, as to any Person, (a) any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation payable or performable by another Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation, (ii) to purchase or lease property, securities or services for the purpose of assuring the obligee in respect of such Indebtedness or other obligation of the payment or performance of such Indebtedness or other obligation, (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity or level of income or cash flow of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation, or (iv) entered into for the purpose of assuring in any other manner the obligee in respect of such Indebtedness or other obligation of the payment or performance thereof or to protect such obligee against loss in respect thereof (in whole or in part), or (b) any Lien on any assets of such Person securing any Indebtedness or other obligation of any other Person (or any right, contingent or otherwise, of any holder of such Indebtedness to obtain any such Lien).  The amount of any Guarantee shall be deemed to be an amount equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by the guaranteeing Person in good faith.  The term “Guarantee” as a verb has a corresponding meaning.

 

“Guarantor” means each Subsidiary that is neither a Borrower nor an Excluded Subsidiary, together with its successors and assigns.

 

“Hazardous Materials” means all chemicals, materials, substances or wastes of any nature that are listed, classified, regulated, characterized or otherwise defined as “hazardous,” “toxic,” “radioactive,” a “pollutant,” a “contaminant,” or terms of similar intent or meaning, by any Governmental Authority or that are otherwise prohibited, limited or regulated pursuant to any Environmental Law, including petroleum or petroleum distillates, friable asbestos or friable asbestos-containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes.

 

“Health Care Laws” means all Federal, state and local laws, rules, regulations, interpretations, guidelines, ordinances and decrees primarily relating to patient healthcare, any health care provider, medical assistance and cost reimbursement programs, as now or at any time hereafter in effect, applicable

 

36



 

to any Loan Party, including, but not limited to, the Social Security Act, the Social Security Amendments of 1972, the Medicare-Medicaid Anti-Fraud and Abuse Amendments of 1977, the Medicare and Medicaid Patient and Program Protection Act of 1987, HIPAA and the Patient Protection and Affordable Care Act of 2010.

 

“HIPAA” means the Health Insurance Portability and Accountability Act of 1996, as the same now exists or may hereafter from time to time be amended, modified, recodified or supplemented, together with all rules and regulations thereunder.

 

“HIPAA Compliance Date” has the meaning set forth in Section 5.28 .

 

“HIPAA Compliance Plan” has the meaning set forth in Section 5.28 .

 

“Immaterial Subsidiary” means (a) each Subsidiary identified as an Immaterial Subsidiary on the Closing Date on Schedule 5.13 , and (b) thereafter, each Subsidiary of the Lead Borrower identified as an “Immaterial Subsidiary” pursuant to a certificate executed and delivered by a Responsible Officer of the Lead Borrower to the Administrative Agent within sixty (60) days of the delivery of annual financial statements pursuant to Section 6.01(a)  (certifying as to each of the items set forth in the following proviso); provided , that , (i) a Subsidiary shall not be an Immaterial Subsidiary if the book value of its assets (net of assets arising from intercompany transactions that would be eliminated on a Consolidated balance sheet of the Lead Borrower) exceed one percent (1%) of the Total Assets of the Lead Borrower and its Restricted Subsidiaries on a Consolidated basis and (ii) the aggregate book value of the assets of all Immaterial Subsidiaries (net of assets arising from intercompany transactions that would be eliminated on a Consolidated balance sheet of the Lead Borrower) shall not exceed five percent (5%) of the Total Assets of the Lead Borrower and its Restricted Subsidiaries on a Consolidated basis, in each case as determined for the most recently completed Fiscal Quarter for which the Lead Borrower has provided financial statements pursuant to Section 6.01 ; provided , that , that Moran Foods, LLC shall not constitute an Immaterial Subsidiary.

 

“Increase Effective Date” has the meaning set forth in Section 2.15(e) .

 

“Indebtedness” means, as to any Person at a particular time, without duplication, all of the following, whether or not included as indebtedness or liabilities in accordance with GAAP:

 

(a)                    all obligations of such Person for borrowed money and all obligations of such Person evidenced by bonds, debentures, notes, loan agreements or other similar instruments;

 

(b)                    the maximum amount of all direct or contingent obligations of such Person arising under letters of credit (including standby and commercial), bankers’ acceptances, bank guaranties, and similar instruments (and including reimbursement obligations in connection with surety bonds);

 

(c)                     the Swap Termination Value under any Swap Contract;

 

(d)                    all obligations of such Person to pay the deferred purchase price of property or services which are due six (6) months or more from the date after such property is acquired or such services are completed, and including, without limitation, customary indemnification, adjustment of purchase price or similar obligations, earn-outs or other similar obligations (but excluding trade accounts payable incurred in the ordinary course of business on normal trade terms and not overdue by more than ninety (90) days unless such trade payables or other obligations are being contested or disputed by a Borrower in good faith);

 

37



 

(e)                     Indebtedness (excluding prepaid interest thereon) secured by a Lien on property owned or being purchased by such Person (including indebtedness arising under conditional sales or other title retention agreements), whether or not such indebtedness shall have been assumed by such Person or is limited in recourse;

 

(f)                      all Attributable Indebtedness of such Person;

 

(g)                     all obligations of such Person to purchase, redeem, retire, defease or otherwise make any payment in respect of any Equity Interest in such Person or any other Person (including, without limitation, Disqualified Stock), or any warrant, right or option to acquire such Equity Interest, valued, in the case of a redeemable preferred interest, at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends;

 

(h)                    all obligations under, or the net investments outstanding pursuant to, any receivables financing (including any Permitted Securitization Facility); and

 

(i)                        all Guarantees of such Person in respect of any of the foregoing.

 

For all purposes hereof, the Indebtedness of any Person shall include the Indebtedness of any partnership or joint venture (other than a joint venture that is itself a corporation or limited liability company) in which such Person is a general partner or a joint venturer, unless such Indebtedness is expressly made non-recourse to such Person.  The amount of any net obligation under any Swap Contract on any date shall be deemed to be the Swap Termination Value thereof as of such date; provided , that , (i) as to Swap Contracts relating to fuel entered into by the Lead Borrower in the ordinary course of business consistent with its current practices, the Swap Termination Value may be determined at the end of the most recently ended Fiscal Period for purposes of this Agreement and (ii) as to Swap Contracts other than such Swap Contracts with respect to fuel, the Swap Termination Value may be determined at the end of the most recently ended Fiscal Period for purposes of this Agreement until Administrative Agent may notify the Lead Borrower otherwise.

 

“Indemnified Taxes” means Taxes other than Excluded Taxes.

 

“Indemnitees” has the meaning set forth in Section 10.04(b) .

 

“Information” has the meaning set forth in Section 10.07 .

 

“Initial Lead Arrangers” means Wells Fargo, U.S. Bank, National Association, Goldman Sachs Bank USA, Credit Suisse Securities (USA) LLC, Morgan Stanley Senior Funding, Inc., Barclays Bank PLC, and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as joint lead arrangers and joint bookrunners.

 

“Insurance Captive” means each of (a) Wetterau Insurance Co. Ltd, a Bermuda corporation, (b) Market Company, Ltd., a Bermuda corporation and (c) such other Subsidiaries of the Lead Borrower formed or acquired after the date hereof that perform similar insurance functions, in each case to the extent organized and maintained as a captive insurance Subsidiary of the Lead Borrower, provided , that , as to such other Subsidiaries, the Lead Borrower shall notify Administrative Agent of the formation or acquisition of such Subsidiary, certify to Administrative Agent, in form and substance satisfactory to Administrative Agent, that its function is to provide insurance and Administrative Agent shall have received such information with respect thereto as it requests.

 

38



 

“Intellectual Property” means all present and future: (a) trade secrets, know-how and other proprietary information; (b) trademarks, trademark applications, internet domain names, service marks, trade dress, trade names, business names, designs, logos, slogans (and all translations, adaptations, derivations and combinations of the foregoing) indicia and other source and/or business identifiers, and all registrations or applications for registrations which have heretofore been or may hereafter be issued thereon throughout the world; (c) copyrights and copyright applications (including copyrights for computer programs) and all tangible and intangible property embodying the copyrights, unpatented inventions (whether or not patentable); (d) patents and patent applications; (e) industrial design applications and registered industrial designs; (f) license agreements related to any of the foregoing and income therefrom; (g) books, records, writings, computer tapes or disks, flow diagrams, specification sheets, computer software, source codes, object codes, executable code, data, databases and other physical manifestations, embodiments or incorporations of any of the foregoing; (h) all other intellectual property; and all common law and other rights throughout the world in and to all of the foregoing.

 

“Intellectual Property Security Agreements” mean, collectively, each (a) Grant of Security Interest in Trademarks, (b) Grant of Security Interest in Patents, and (c) Grant of Security Interest in Copyrights, each dated as of the Closing Date, between a Loan Party and the Administrative Agent, granting a Lien in Intellectual Property and certain other assets of the Loan Parties.

 

“Interest Payment Date” means (a) as to any Loan other than a Base Rate Loan, the last day of each Interest Period applicable to such Loan and the Maturity Date; provided , that , if any Interest Period for a LIBO Rate Loan exceeds three months, the respective dates that fall every three (3) months after the beginning of such Interest Period shall also be Interest Payment dates, and (b) as to any Base Rate Loan (including a Swing Line Loan), the first calendar day after the end of each calendar quarter and the Maturity Date.

 

“Interest Period” means, as to each LIBO Rate Loan, the period commencing on the date such LIBO Rate Loan is disbursed or converted to or continued as a LIBO Rate Loan and ending on the date one, two, three, or six months thereafter, as selected by the Lead Borrower in its Committed Loan Notice (or the date nine or twelve months thereafter if requested by the Lead Borrower and consented to by all of the Lenders); provided , that :

 

(a)                    any Interest Period that would otherwise end on a day that is not a Business Day shall be extended to the next succeeding Business Day unless such Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Business Day;

 

(b)                    any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period;

 

(c)                     no Interest Period shall extend beyond the Maturity Date; and

 

(d)                    notwithstanding the provisions of clause (c) , no Interest Period shall have a duration of less than one (1) month, and if any Interest Period applicable to a LIBO Borrowing would be for a shorter period, such Interest Period shall not be available hereunder.

 

For purposes hereof, the date of a Borrowing initially shall be the date on which such Borrowing is made and thereafter shall be the effective date of the most recent conversion or continuation of such Borrowing.

 

39



 

“Internal Control Event” means a material weakness in, or fraud that involves management or other employees who have a significant role in, the Lead Borrower’s and/or its Subsidiaries’ internal controls over financial reporting, in each case as described in the Securities Laws.

 

“Inventory” has the meaning set forth in the UCC as in effect on the date hereof.

 

“Inventory Reserves” means such reserves as may be established from time to time by the Administrative Agent in the Administrative Agent’s Permitted Discretion with respect to the determination of the saleability, at retail, of the Eligible Inventory or which reflect such other factors as affect the market value of the Eligible Inventory to the extent not addressed in the calculation of the Net Recovery Percentage of such Inventory.  Without limiting the generality of the foregoing, Inventory Reserves may, in the Administrative Agent’s Permitted Discretion, include (but are not limited to) reserves based on: (a) obsolescence; (b) seasonality; (c) Shrink; (d) imbalance; (e) change in Inventory character; (f) change in Inventory composition; (g) change in Inventory mix; (h) markdowns (both permanent and point of sale); (i) out-of-date and/or expired Inventory and (j) intercompany profit.

 

“Investment” means, as to any Person, any direct or indirect acquisition or investment by such Person, whether by means of (a) the purchase or other acquisition of Equity Interests of another Person, (b) a loan, advance or capital contribution to, Guarantee or assumption of debt of, or purchase or other acquisition of any other debt or interest in, another Person, (c) any Acquisition, or (d) any other investment of money or capital in order to obtain a profitable return.  For purposes of covenant compliance, the amount of any Investment shall be the amount actually invested, without adjustment for subsequent increases or decreases in the value of such Investment.

 

“Investment Grade Account Debtor” means an Account Debtor that, at the time of determination, has a corporate credit rating and/or family rating, as applicable, of BBB- or higher by S&P or Baa3 or higher by Moody’s.

 

“Investors” means each of (a) Cerberus, (b) Cerberus Institutional Partners V, L.P., (c) Kimco Realty Services, Inc., (d) Jubilee Limited Partnership, (e) Sei, Inc., (f) Jubilee Symphony ABS LLC, (g)  Lubert-Adler Real Estate Fund VI, L.P., (h) Lubert-Adler Real Estate Fund VI-A, L.P., (i) Lubert-Adler Real Estate Fund VI-B, L.P., (j) ALBA VI, LLC, (k) A2B2 VI-A, LLC, (l) ALB-2VI-B, LLC, (m) Klaff Realty, LP. and (n) A-S Klaff Equity, LLC, and any of their Affiliates.

 

“IRS” means the United States Internal Revenue Service.

 

“ISP” means, with respect to any Letter of Credit, the “International Standby Practices 1998” published by the Institute of International Banking Law & Practice (or such later version thereof as may be in effect at the time of issuance).

 

“Issuer Documents” means with respect to any Letter of Credit, the Letter Credit Application, the Letter of Credit Agreement, and any other document, agreement and instrument entered into by a Borrower with or in favor of the applicable LC Issuer and relating to any such Letter of Credit.

 

“Joinder Agreement” means an agreement, in form reasonably satisfactory to the Administrative Agent pursuant to which, among other things, a Person becomes a party to, and bound by the terms of, this Agreement and/or the other Loan Documents in the same capacity and to the same extent as either a Borrower or a Guarantor, as the Administrative Agent may determine.

 

“Laws” means each international, foreign, Federal, state and local statute, treaty, rule, guideline, regulation, ordinance, code and administrative or judicial precedent or authority, including the

 

40



 

interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and each applicable administrative order, directed duty, request, license, authorization and permit of, and agreement with, any Governmental Authority.

 

“LC Credit Extension” means, with respect to any Letter of Credit, the issuance thereof or extension of the expiry date thereof, or the increase of the amount thereof.

 

“LC Disbursement” means a payment made by an LC Issuer pursuant to a drawing on a Letter of Credit.

 

“LC Issuer” means (a) Wells Fargo, U.S. Bank, National Association, and PNC Bank, National Association each in its capacity as issuer of Letters of Credit hereunder, or any successor issuer of Letters of Credit hereunder (which successor may only be a Lender selected by Administrative Agent in its discretion and shall be subject to the approval of the Lead Borrower (not to be unreasonably withheld or delayed) so long as no Default or Event of Default exists or has occurred and is continuing), and (b) any other Lender acceptable to Lead Borrower and approved by the Administrative Agent.  An LC Issuer may, in its discretion, arrange for one or more Letters of Credit to be issued by Affiliates of the LC Issuer and/or for such Affiliate to act as an advising, transferring, confirming and/or nominated bank in connection with the issuance or administration of any such Letter of Credit, in which case the term “LC Issuer” shall include any such Affiliate with respect to Letters of Credit issued by such Affiliate.  The agreement of a Lender to be an LC Issuer shall be required.

 

“LC Obligations” means, as at any date of determination, the aggregate undrawn amount available to be drawn under all outstanding Letters of Credit.  For purposes of computing the amounts available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with Section 1.06 .  For all purposes of this Agreement, if on any date of determination a Letter of Credit has expired by its terms but any amount may still be drawn thereunder by reason of the operation of any rule under the ISP or any article of UCP 600, such Letter of Credit shall be deemed to be “outstanding” in the amount so remaining available to be drawn.

 

“Lead Arrangers” means, collectively, Wells Fargo, U.S. Bank, National Association, Goldman Sachs Bank USA, Credit Suisse Securities (USA) LLC, Morgan Stanley Senior Funding, Inc., Barclays Bank PLC, Rabobank Nederland, New York Branch, and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as Joint Lead Arrangers and Joint Bookrunners.

 

“Lead Borrower” has the meaning set forth in the introductory paragraph hereto.

 

“Lease” means any agreement, whether written or oral, no matter how styled or structured, pursuant to which a Loan Party is entitled to the use or occupancy of any space in a structure, land, improvements or premises for any period of time.

 

“Lender” has the meaning set forth in the introductory paragraph hereto and, as the context requires, includes the Swing Line Lender.

 

“Lending Office” means, as to any Lender, the office or offices of such Lender described as such in such Lender’s Administrative Questionnaire, or such other office or offices as a Lender may from time to time notify the Lead Borrower and the Administrative Agent.

 

“Letter of Credit” means (a) each Standby Letter of Credit, and (b) each Commercial Letter of Credit issued hereunder.  The Existing Letters of Credit shall constitute Letters of Credit.

 

41



 

“Letter of Credit Agreement” means a Standby Letter of Credit Agreement or a Commercial Letter of Credit Agreement, as applicable.

 

“Letter of Credit Application” means an application for the issuance or amendment of a Letter of Credit in the form from time to time in use by the applicable LC Issuer.

 

“Letter of Credit Expiration Date” means the day that is five (5) days prior to the Maturity Date then in effect (or, if such day is not a Business Day, the next preceding Business Day).

 

“Letter of Credit Exposure” means, with respect to any Lender, at any time, the sum of (a) the principal amount of any Unpaid Drawings in respect of which such Lender has made (or is required to have made) payments to the LC Issuers pursuant to Section 2.03(c)  at such time and (b) such Lender’s Applicable Percentage of the outstanding Letters of Credit at such time (excluding the portion thereof consisting of Unpaid Drawings in respect of which the Lenders have made (or are required to have made) payments to the LC Issuers pursuant to Section 2.03(c) .

 

“Letter of Credit Fee” has the meaning set forth in Section 2.03(i) .

 

“Letter of Credit Sublimit” means an amount equal to $400,000,000.  The Letter of Credit Sublimit is part of, and not in addition to, the Aggregate Commitments.  Subject to Section 2.06(b) , a permanent reduction of the Aggregate Commitments shall not require a corresponding reduction in the Letter of Credit Sublimit.

 

“LIBO Borrowing” means a Borrowing comprised of LIBO Rate Loans.

 

“LIBO Rate” means for any Interest Period with respect to a LIBO Rate Loan, the rate per annum equal to the British Bankers Association LIBOR Rate (“BBA LIBOR”), as published by Reuters (or other commercially available source providing quotations of BBA LIBOR as designated by the Administrative Agent from time to time) at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period, for Dollar deposits (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period.  If such rate is not available at such time for any reason, then the “LIBO Rate” for such Interest Period shall be the rate per annum determined by the Administrative Agent to be the rate at which deposits in Dollars for delivery on the first day of such Interest Period in same day funds in the approximate amount of the LIBO Rate Loan being made, continued or converted by Wells Fargo and with a term equivalent to such Interest Period would be offered to Wells Fargo by major banks in the London interbank eurodollar market in which Wells Fargo participates at their request at approximately 11:00 a.m. (London time) two Business Days prior to the commencement of such Interest Period.

 

“LIBO Rate Loan” means a Committed Loan that bears interest at a rate based on the Adjusted LIBO Rate.

 

“Lien” means (a) any mortgage, deed of trust, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge, or preference, priority or other security interest or preferential arrangement in the nature of a security interest of any kind or nature whatsoever (including any conditional sale, any lease or other agreement constituting or giving rise to a Capital Lease Obligation, Synthetic Lease Obligation, or other title retention agreement, any easement, right of way or other encumbrance on title to real property, and any financing lease having substantially the same economic effect as any of the foregoing) and (b) in the case of securities, any purchase option, call or similar right of a third party with respect to such securities.

 

42



 

“Liquidation” means the exercise by the Administrative Agent of those rights and remedies accorded to Administrative Agent under the Loan Documents and applicable Law as a creditor of the Loan Parties with respect to the realization on the Collateral, including (after the occurrence and during the continuation of an Event of Default) the conduct by the Loan Parties acting with the consent of the Administrative Agent, of any public, private or “going out of business”, “store closing”, or other similarly themed sale or other disposition of the Collateral for the purpose of liquidating the Collateral.  Derivations of the word “Liquidation” (such as “Liquidate”) are used with like meaning in this Agreement.

 

“Loan” means an extension of credit by or on behalf of a Lender to a Borrower under Article II in the form of a Committed Loan or a Swing Line Loan.

 

“Loan Account” has the meaning set forth in Section 2.11(a) .

 

“Loan Cap” means, at any time of determination, the lesser of (a) the Aggregate Commitments or (b) the Borrowing Base.

 

“Loan Documents” means this Agreement, each Note, each Issuer Document, the Fee Letter, all Borrowing Base Certificates, the Credit Card Notifications, the Security Documents, the Facility Guaranty, the Term Loan Intercreditor Agreement, and any other instrument or agreement now or hereafter executed and delivered in connection herewith, or in connection with any transaction arising out of any Cash Management Services, Bank Products or Commercial LC Facility; provided , that , for purposes of the definition of “Material Adverse Effect” and Article VII , “Loan Documents” shall not include agreements relating to Cash Management Services, Bank Products or a Commercial LC Facility.

 

“Loan Parties” means, collectively, the Borrowers and the Guarantors.

 

“Master Concentration Account” means the deposit account of Lead Borrower in which funds of any Loan Party from one or more Blocked Accounts are from time to time deposited. As of the date hereof, the Master Concentration Accounts are the deposit accounts identified as Master Concentration Accounts on Schedule 5.21(a) .

 

“Material Adverse Effect” means (a) a material adverse change in, or a material adverse effect upon, the operations, business, properties, or condition (financial or otherwise) of the Loan Parties taken as a whole; (b) a material impairment of the ability of the Loan Parties to perform their obligations under the Loan Documents; or (c) a material impairment of the rights and remedies of the Administrative Agent or the Lenders under the Loan Documents or a material adverse effect upon the legality, validity, binding effect or enforceability against the Loan Parties of the Loan Documents.  In determining whether any individual event would result in a Material Adverse Effect, notwithstanding that such event in and of itself does not have such effect, a Material Adverse Effect shall be deemed to have occurred if the cumulative effect of such event and all other then existing events described in the applicable provision since the applicable date would result in a Material Adverse Effect.

 

“Material Contract” means, with respect to any Loan Party, each contract or agreement to which such Loan Party is a party or which is binding upon it or its property that is deemed to be a material contract or material definitive agreement under any Securities Law applicable to such Loan Party or its Subsidiaries, including, without limitation, the types of contracts specified in item 601(b)(10)(ii) of Regulation S-K, and in the event that at any time hereafter the Lead Borrower shall cease to be required to comply with the Securities Laws, then the same definitions shall continue to apply for purposes of this Agreement and the other Loan Documents.

 

43



 

“Material Indebtedness” means the Indebtedness evidenced by or arising under the Existing Debt Documents, and any other Indebtedness (other than the Obligations) of the Loan Parties in an aggregate principal amount exceeding $50,000,000.  For purposes of determining the amount of Material Indebtedness at any time, (a) the amount of the obligations in respect of any Swap Contract at such time shall be calculated at the Swap Termination Value thereof, (b) undrawn committed or available amounts shall be included, and (c) all amounts owing to all creditors under any combined or syndicated credit arrangement shall be included.

 

“Material Real Estate Asset” means Real Estate owned by or ground leased to a Loan Party if the property, plant and equipment located at such Real Estate has a book value on Lead Borrower’s financial statements in excess of $1,000,000 as of the Closing Date.

 

“Material Related Collateral Location” means any owned or leased Real Estate other than a Material Real Estate Asset if the book value of the property, plant and equipment located at such Real Estate on the Borrower’s financial statements exceeds $150,000 as of the Closing Date.

 

“Maturity Date” means March 21, 2018, or such earlier date as provided in Section 2.07 .

 

“Maturity Projection Period” has the meaning set forth in Section 2.07(c) .

 

“Maximum Rate” has the meaning set forth in Section 10.09 .

 

“Measurement Period” means, at any date of determination, the most recently completed thirteen (13) consecutive Fiscal Periods of Lead Borrower and its Subsidiaries.

 

“Medicaid” means the health care financial assistance program jointly financed and administered by the Federal and State governments under Title XIX of the Social Security Act.

 

“Medicare” means the health care financial assistance program under Title XVIII of the Social Security Act.

 

“MMMF” has the meaning set forth in the Escrow Agreement as in effect on the date hereof.

 

“Moody’s” means Moody’s Investors Service, Inc. and any successor thereto.

 

“Mortgages” means any mortgage, deed of trust or leasehold mortgage encumbering any Real Estate, given by the Loan Party owning or leasing such Real Estate in favor of the Administrative Agent, substantially in the form of Exhibit J hereto or such other form reasonably satisfactory to the Administrative Agent, together with such schedules and including such provisions as shall be necessary to conform such document to applicable Laws or as shall be customary under applicable Laws.

 

“Multiemployer Plan” means any employee benefit plan of the type described in Section 4001(a)(3) of ERISA, to which the Lead Borrower or any ERISA Affiliate makes or is obligated to make contributions, or during the preceding five plan years, has made or been obligated to make contributions.

 

“NAI” has the meaning set forth in the Recitals.

 

“NAI Indenture” means the Indenture, dated as of May 1, 1992, between NAI and U.S. Bank National Association, as amended, supplemented or otherwise modified as of the Closing Date.

 

44



 

“NAI LCs” means the Letters of Credit listed on Schedule 1.01(b)  hereto as supporting obligations of NAI or any of its Subsidiaries.

 

“NAI Notes” means the notes (including NAI’s 7.25% Notes due 2013, 7.45% Debentures due 2029, 7.75% Debentures due 2026, 8.70% Debentures due 2030, 8.00% Debentures due 2031 and 6.34-7.15% Medium Term Notes due 2013-2028) issued by NAI pursuant to the NAI Indenture.

 

“NAI Parties” has the meaning set forth in the Recitals.

 

“NAI Sale” means the purchase by Buyer of all of the issued and outstanding Equity Interests of NAI from Lead Borrower (together with the subsequent transfer pursuant to Section 1.5 of the Acquisition Agreement by the Borrower to NAI of (x) the equity interests in US Satellite Corporation, Inc., and (y) the FCC-issued licenses and permits set forth in Section 5.23 of the Seller Disclosure Letter to the Acquisition Agreement as in effect on the date hereof, in each case as to such equity interests and licenses and permits retained by the Lead Borrower solely for the purpose of obtaining necessary regulatory consents), in consideration of, among other things, not less than $100,000,000 in cash, as adjusted in accordance with the Acquisition Agreement, and in connection with which (a) Buyer will acquire NAI subject to certain existing direct and indirect liabilities, including those arising under (i) the NAI Notes, (ii) the ASC Notes, (iii) certain Capital Leases, and (iv) all workers’ compensation claims relating to the store brands operated by NAI and its subsidiaries, including the NAI Workers’ Compensation Liabilities, (b) the Lead Borrower and its Subsidiaries shall have their liability eliminated, limited or indemnified in connection with (i) such worker’s compensation claims (and such obligations to provide any form of security) and (ii) the ASC Notes, in each case as to matters under clause (i)  and (ii)  in a manner reasonably satisfactory to the Lead Arrangers, and (c) Buyer and the Lead Borrower will enter into transition services agreements and a cross-license agreement as contemplated by the Acquisition Agreement.

 

“NAI Sale Documents” means the Acquisition Agreement and all other documents related thereto and executed in connection therewith.

 

“NAI Stock Purchase” has the meaning set forth in the Recitals.

 

“NAI Workers’ Compensation Liabilities” means all workers’ compensation claims (and including any obligations to provide any form of security for the benefit of the California Office of Self Insured Funds, the California Department of Industrial Relations or the California Self-Insured Security Fund or similar entities) relating to banners operated by NAI and its Subsidiaries.

 

“Net Proceeds” means

 

(a)                    with respect to any Disposition by any Loan Party, or any Extraordinary Receipt received or paid to the account of any Loan Party, the excess, if any, of (i) the sum of cash and Cash Equivalents received in connection with such transaction (including any cash or Cash Equivalents received by way of deferred payment pursuant to, or by monetization of, a note receivable or otherwise, but only as and when so received) over (ii) the sum of (A) the principal amount of any Indebtedness that is secured by the applicable asset by a Lien permitted hereunder which is senior to the Administrative Agent’s Lien on such asset and that is required to be repaid (or to establish an escrow for the future repayment thereof) in connection with such transaction, (B) the reasonable and customary out-of-pocket expenses incurred by such Loan Party in connection with such transaction (including, without limitation, appraisals, and brokerage, legal, title and recording or transfer tax expenses and commissions) paid by any Loan Party to third parties (other than Affiliates)), (C) taxes paid (directly or indirectly) to any taxing authorities by such Loan Party, as the case may be, in connection with, or directly attributable to, such

 

45



 

Disposition at the time thereof or not later than the end of the tax year immediately following the year during which the Disposition occurs; provided , that , (1) as to any amounts that are deducted from the proceeds of any Disposition based on taxes that are not required to be paid at the time of such Disposition, if such amount is greater than $50,000, Administrative Agent shall have received a certificate from a  Responsible Officer of Lead Borrower as to the calculation of the amount of the deduction based on such taxes and the basis for the calculation, in reasonable detail and otherwise in form and substance reasonably satisfactory to Administrative Agent and (2) in the event that the amount of the taxes paid by such Loan Party or such Subsidiary in the immediately following tax year after such sale are less, or are less in respect of taxes as a result of such sale, than the amount that was deducted from such proceeds, then Borrowers shall pay to Administrative Agent on the date that the applicable taxes are or would have been due under applicable tax law, the amount by which the reduction in the proceeds from the Disposition for such taxes as set forth in the certificate from a Responsible Officer referred to above exceeds the amount of such taxes paid as so determined and (D) a reasonable reserve for indemnification payments or purchase price adjustments payable by such Loan Party or such Subsidiary, as the case may be, to the purchaser thereof under the terms of the sale arrangements up to an amount equal to twenty percent (20%) of the gross cash purchase price receivable by such Loan Party or such Subsidiary, as the case may be, at the time of the transfer of ownership of the assets subject to such Disposition; provided , that , upon the release or termination of such reserve, other than to the extent of the payment of such indemnification payments or purchase price adjustments, the amount of such reserve shall be deemed to constitute Net Proceeds; and

 

(b)                    with respect to the sale or issuance of any Equity Interest by any Loan Party, or the incurrence or issuance of any Indebtedness by any Loan Party, the excess of (i) the sum of the cash and Cash Equivalents received in connection with such transaction over (ii) the sum of (A) underwriting discounts and commissions, and other reasonable and customary out-of-pocket expenses, incurred by such Loan Party in connection therewith and (B) any portion thereof used to pay any Indebtedness of a Loan Party being refinanced therewith to the extent permitted hereunder.

 

“Net Recovery Percentage” means the fraction, expressed as a percentage (a) the numerator of which is the amount equal to the recovery on the aggregate amount of the applicable category of Eligible Inventory at such time on a “going out of business sale” basis for such Inventory, as set forth in the most recent acceptable inventory appraisal received by the Administrative Agent in accordance with the requirements of this Agreement, net of operating expenses, liquidation expenses and commissions reasonably anticipated in the disposition of such assets and (b) the denominator of which is the Book Value of the aggregate amount of the Eligible Inventory subject to such appraisal.

 

“Non-Consenting Lender” has the meaning set forth in Section 10.01 .

 

“Non-Defaulting Lender” means and includes each Lender other than a Defaulting Lender.

 

“Non-Extension Notice Date” has the meaning set forth in Section 2.03(b)(iii) .

 

“Note” means (a) a promissory note made by the Borrowers in favor of a Lender evidencing Loans made by such Lender, substantially in the form of Exhibit C-1 , and (b) the Swing Line Note.

 

“NPL” means the National Priorities List under CERCLA.

 

“Obligations” means (a) all advances to, and debts (including principal, interest, fees, costs, and expenses), liabilities, obligations, covenants, indemnities, and duties of, any Loan Party arising under any Loan Document or otherwise with respect to any Loan or Letter of Credit (including payments in respect of reimbursement of disbursements, interest thereon and obligations to provide cash collateral therefor),

 

46



 

whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest, fees, costs, expenses and indemnities that accrue after the commencement by or against any Loan Party or any Affiliate thereof of any proceeding under any Debtor Relief Laws naming such Person as the debtor in such proceeding, regardless of whether such interest, fees, costs, expenses and indemnities are allowed or allowable claims in such proceeding, (b) any Bank Product Obligations and (c) any Commercial LC Facility Obligations.

 

“Occurrence Update Schedule” means each of Schedule 5.01 (Loan Parties Organizational Information), 5.06 (Litigation), 5.09 (Environmental Matters),  5.10 (for primary casualty insurance policies that cover Collateral),  5.13 (Subsidiaries; Other Equity Investments), 5.17 (Intellectual Property Matters), 5.21(b) (Credit Card Agreements), 7.02 (for Investments greater than $50,000,000) (Existing Investments), 7.03 (for Indebtedness greater than $50,000,000) (Existing Indebtedness).

 

“OFAC” means The Office of Foreign Assets Control of the U.S. Department of the Treasury.

 

“Organization Documents” means, (a) with respect to any corporation, the certificate or articles of incorporation and the bylaws (or equivalent or comparable constitutive documents with respect to any non-U.S. jurisdiction); (b) with respect to any limited liability company, the certificate or articles of formation or organization and operating agreement; (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation or organization and any agreement, instrument, filing or notice with respect thereto filed in connection with its formation or organization with the applicable Governmental Authority in the jurisdiction of its formation or organization and, if applicable, any certificate or articles of formation or organization of such entity, and (d) in each case, all shareholder or other equity holder agreements, voting trusts and similar arrangements to which such Person is a party.

 

“Other Taxes” means all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made hereunder or under any other Loan Document or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement or any other Loan Document.

 

“Outstanding Amount” means (i) with respect to Committed Loans and Swing Line Loans on any date, the aggregate outstanding principal amount thereof after giving effect to any borrowings and prepayments or repayments of Committed Loans and Swing Line Loans, as the case may be, occurring on such date; and (ii) with respect to any LC Obligations on any date, the amount of such LC Obligations on such date after giving effect to any LC Credit Extension occurring on such date and any other changes in the aggregate amount of the LC Obligations as of such date.

 

“Overadvance” means a Credit Extension to the extent that, immediately after its having been made, Excess Availability is less than zero.

 

“PACA” means the Perishable Agricultural Commodities Act, 1930, as amended, 7 U.S.C. Section 499a et. seq., as the same now exists or may hereafter from time to time be amended, modified, recodified or supplemented, together with all rules and regulations thereunder.

 

“Participant” has the meaning set forth in Section 10.06(d) .

 

“Participant Register” has the meaning set forth in Section 10.06(d) .

 

“Patriot Act” has the meaning set forth in Section 5.31 .

 

47



 

“Payment Conditions” means, at the time of determination with respect to any specified transaction or payment, that (a) as of the date of any transaction or payment and after giving effect thereto, no Default or Event of Default shall exist or have occurred and be continuing, (b) as of the date of any such transaction or payment, and after giving effect thereto, on a pro forma basis using the Borrowing Base as of the date of the most recent calculation thereof immediately prior to any such transaction or payment, Excess Availability shall be not less than twenty-two and one-half percent (22.5%) of the Aggregate Commitments, (c) Administrative Agent shall have received from Lead Borrower projections reasonably satisfactory to the Administrative Agent demonstrating that Excess Availability at all times during the six (6) consecutive Fiscal Periods immediately after any such transaction or payment shall be not less than twenty-two and one-half percent (22.5%) of the Aggregate Commitments, and (d) as of the date of any such transaction or payment, and after giving effect thereto, on a pro forma basis, the Consolidated Fixed Charge Coverage Ratio for the immediately preceding thirteen (13) consecutive Fiscal Periods ending on the last day of the Fiscal Period prior to the date of such transaction or payment for which Administrative Agent has received financial statements shall be at least 1.00 to 1.00; provided , that , in the event that Excess Availability as determined in accordance with clause (b)  and Excess Availability as set forth in the projections for clause (c)  above is greater than thirty-five percent (35%) of the Aggregate Commitments, then the condition in this clause (d)  shall not be applicable.

 

“PBGC” means the Pension Benefit Guaranty Corporation.

 

“PBGC Agreement” means the term sheet by and among Buyer, the Lead Borrower and the PBGC, dated January 9, 2013, as received by the Administrative Agent on or about January 10, 2013and any subsequent agreement entered into pursuant thereto that is consistent with the terms thereof.

 

“PCAOB” means the Public Company Accounting Oversight Board.

 

“Pension Plan” means any “employee pension benefit plan” (as such term is defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is subject to Title IV of ERISA and is sponsored or maintained by the Lead Borrower or any ERISA Affiliate or to which Lead Borrower or any ERISA Affiliate contributes or has an obligation to contribute, or in the case of a multiple employer or other plan described in Section 4064(a) of ERISA, has made contributions at any time during the immediately preceding six plan years.

 

“Periodic Update Schedules” shall mean each of Schedules 5.13 (Immaterial Subsidiaries), 1.01(d)  (Unrestricted Subsidiaries), 5.08(b)(1) (Owned Real Estate), 5.08(b)(2) (Leased Real Estate), 5.10 (for policies other than primary casualty policies that cover Collateral),  5.21(a) (Demand Deposit Accounts), 7.01 (Existing Liens), 7.02 (for Investments greater than  $25,000,000 and less than $50,000,000), (Existing Investments), 7.03 (for Indebtedness greater than  $25,000,000 and less than $50,000,000) (Existing Indebtedness) and 7.09 (Transactions with Affiliates).

 

“Perishable Inventory” means inventory consisting of meat (including prepackaged meat), dairy, cheese, seafood, produce, prepared meals, delicatessen, non-artificial floral products and bakery goods and other similar categories of Inventory which have a short shelf life as set forth in the most recent acceptable appraisal of Inventory received by Administrative Agent.

 

“Permitted Acquisition” means an Acquisition in which all of the following conditions are satisfied:

 

(a)                    such Acquisition shall have been approved by the board of directors of the Person (or similar governing body if such Person is not a corporation) which is the subject of such Acquisition and

 

48



 

such Person shall not have announced that it will oppose such Acquisition or shall not have commenced any action which alleges that such Acquisition shall violate applicable Law;

 

(b)                    in the case of any Acquisition involving consideration in an amount greater than $30,000,000, the Lead Borrower shall have furnished the Administrative Agent with thirty (30) days’ prior written notice of such intended Acquisition (and in the case of any Acquisition involving consideration less than such amount, notice shall be delivered at the same time as the next Borrowing Base Certificate) and shall have furnished the Administrative Agent with such other information as the Administrative Agent may reasonably require, all of which shall be reasonably satisfactory to the Administrative Agent;

 

(c)                     the Acquisition shall be with respect to an operating company or division or line of business that engages in a line of business substantially similar, reasonably related or incidental to the business that Borrowers are engaged in; and

 

(d)                    as of the date of such Acquisition, each of the Payment Conditions shall be satisfied.

 

“Permitted Discretion” shall mean as used in this Agreement with reference to Administrative Agent a determination made in good faith in the exercise of its reasonable business judgment based on how an asset-based lender with similar rights providing a credit facility of the type set forth herein would act in similar circumstances at the time with the information then available to it.

 

“Permitted Disposition” means any of the following:

 

(a)                    Dispositions of Inventory in the ordinary course of business (which for this purpose does not include any Disposition in connection with a Store closing or sale of a Store location);

 

(b)                    bulk sales of the Inventory of a Loan Party not in the ordinary course of business in connection with Store closings or the conversion of a Store to a licensee or joint venture operated store, at arm’s length, provided , that , (i) the number of such Store closings or conversions and related sales of Inventory, minus the number of new Store locations opened during the same period, shall not exceed in any Fiscal Year of the Lead Borrower and its Subsidiaries, seven and one-half percent (7.5%) of the number of the Loan Parties’ Stores as of the beginning of such Fiscal Year and shall not exceed, in the aggregate from and after the Closing Date, fifteen percent (15%) of the number of the Loan Parties’ Stores in existence as of the Closing Date), (ii) in connection with each of such sales and Store closings, Administrative Agent shall have received an updated Borrowing Base Certificate that gives effect to such Store closings and sales of Inventory, and (iii) all Net Proceeds received in connection therewith are applied to the Obligations if then required in accordance with Section 2.05 hereof,

 

(c)                     non-exclusive licenses or sublicenses of Intellectual Property of a Loan Party or any of its Restricted Subsidiaries in the ordinary course of business or in connection with a Permitted Disposition;

 

(d)                    licenses for the conduct of licensed departments within the Loan Parties’ Stores in the ordinary course of business;

 

(e)                     Dispositions of Equipment in the ordinary course of business that is substantially worn, damaged, obsolete or, in the reasonable, good faith judgment of a Loan Party, no longer useful or necessary in its business or that of any Subsidiary;

 

(f)                      Dispositions among the Loan Parties or by any Restricted Subsidiary to a Loan Party;

 

49



 

(g)                     Dispositions by any Excluded Subsidiary;

 

(h)                    sales of Real Estate of any Loan Party pursuant to any arrangement, directly or indirectly, with any person whereby it shall sell or transfer such property and thereafter lease back such property that it intends to use for substantially the same purpose or purposes as the property being sold or transferred (a “ Sale-Leaseback Transaction ”); provided , that , (i) the consideration paid to such Loan Party in connection therewith shall be paid contemporaneously with consummation of the transaction,  and shall be in an amount not less than the fair market value of the property disposed of, (ii) at any time a Cash Dominion Event exists, subject to the terms of the Term Loan Intercreditor Agreement, the proceeds of such sale are applied to the Obligations in accordance with Section 2.05(e) , (iii) as of the date of any such sale, and in each case after giving effect thereto, no Default or Event of Default shall exist or have occurred and be continuing; and (iv) other than in connection with any Store location, the Administrative Agent shall have received from each such purchaser or transferee a Collateral Access Agreement on terms and conditions reasonably satisfactory to the Administrative Agent;

 

(i)                        Dispositions by any Loan Party of Intellectual Property; provided , that , except in connection with a Permitted Disposition permitted under clause (m)  below, (i) such Intellectual Property is no longer used or useful in the business of any Loan Party or any of their Affiliates or Subsidiaries, and (ii) such Intellectual Property is not otherwise material to the business of any Loan Party or any of their Affiliates or Subsidiaries in any respect;

 

(j)                       sales of Prescription Files in the ordinary course of business other than in connection with the sale of a Store location where such Prescription Files are maintained or in connection with the sale of other assets (and in any such case, clause (m)  below shall be applicable); provided , that , as to any such sale each of the following conditions is satisfied: (i) the aggregate amount of all Prescription Files disposed of pursuant to this clause (j)  in any one Fiscal Year multiplied by the appraised value thereof  (determined per Prescription File based on the most recent acceptable appraisal received by Administrative Agent) shall not exceed $12,500,000, (ii) as of the date of any such sale and after giving effect thereto, no Default or Event of Default shall exist or have occurred and be continuing, (iii) without limiting any rights of Administrative Agent, in the case of any such sale involving Prescription Files with an aggregate appraised value of greater than $2,500,000, or after such sales in any Fiscal Year which in the aggregate involve Prescription Files with an aggregate appraised value of greater than $5,000,000, Administrative Agent shall have received an updated Borrowing Base Certificate that gives effect to such sale of Prescription Files, (iv) all Net Proceeds received in connection therewith are applied to the Obligations if then required in accordance with Section 2.05 hereof, which Net Proceeds as to any Eligible Prescription Files shall be not less than the amount of the Pharmacy Scripts Availability provided with respect to any such Eligible Prescription Files so disposed of (without giving effect to the advance rate with respect thereto), and (v) Administrative Agent shall have received true, correct and complete copies of all agreements, documents and instruments related to any such sale;

 

(k)                    the NAI Sale;

 

(l)                        the issuance and sale by any Loan Party or Restricted Subsidiary of Equity Interests of such Loan Party or Restricted Subsidiary after the date hereof; provided , that , (i) such Loan Party or Restricted Subsidiary shall not be required to pay any cash dividends or repurchase or redeem such Equity Interests or make any other payments in respect thereof, except as otherwise permitted in Section 7.06 , (B) at any time during a Cash Dominion Period, all of the Net Proceeds of the sale and issuance of such Equity Interests shall be applied to the Obligations if then required in accordance with Section 2.05 hereof and (C) as of the date of such issuance and sale and after giving effect thereto, no Default or Event of Default shall exist or have occurred and be continuing (including as a result of any Change of Control);

 

50



 

(m)                Dispositions of assets of Loan Parties not otherwise permitted pursuant to the provisions set forth in this definition, provided , that , as to any such Disposition, each of the following conditions is satisfied:

 

(i)                        the aggregate net book value of all of the assets subject to all Dispositions by the Lead Borrower and its Restricted Subsidiaries on and after the Closing Date pursuant to this clause (m)  do not exceed ten percent (10%) of Total Assets (measured as of the Closing Date after giving effect to the Transactions), as of the date of such Disposition, and after giving effect thereto,

 

(ii)                     the aggregate net book value of all of the assets of Moran Foods, LLC and its Subsidiaries subject to all Dispositions on and after the Closing Date pursuant to this clause (m) do not exceed thirty percent (30%) of the total assets of Moran Foods, LLC and its Subsidiaries (measured as of the Closing Date after giving effect to the Transactions), as of the date of such Disposition, and after giving effect thereto; provided , that , (A) an additional twenty percent (20%) of the aggregate net book value of all of the assets of Moran Foods, LLC and its Subsidiaries (measured as of the Closing Date after giving effect to the Transactions) may be sold pursuant to this clause (m) to the extent such additional Dispositions are in connection with the conversion of Stores to licensee operated stores and (B) promptly after such Dispositions exceed thirty percent (30%) of the total assets as provided above Administrative Agent shall have received an updated appraisal of the Inventory at the expense of Borrowers (which will not be considered for purposes of the limitations set forth in Section 6.10(b) ),

 

(iii)                  not less than seventy-five percent (75%) of the total consideration received by the Loan Parties contemporaneously with the consummation of the transaction shall be paid in cash or Cash Equivalents,

 

(iv)                 the consideration paid in connection therewith shall be paid contemporaneously with consummation of the transaction and shall be in an amount not less than the fair market value of the property disposed of,

 

(v)                    such transaction does not involve the Disposition of (A) a minority Equity Interest in any Restricted Subsidiary, (B) any Equity Interests of Moran Foods, LLC, or (C) Accounts of a Borrower,

 

(vi)                 as of the date of such Disposition, and after giving effect thereto, (A) using the most recent calculation of the Borrowing Base prior to the date of any such payment, on a pro forma basis, Excess Availability shall be not less than twenty-two and one-half percent (22.5%) of the Aggregate Commitments and (B) Administrative Agent shall have received an updated Borrowing Base Certificate that gives effect to such Disposition,

 

(vii)              Administrative Agent shall have received from Lead Borrower projections reasonably satisfactory to Administrative Agent demonstrating that, after giving effect to such Disposition, on a pro forma basis, Excess Availability at the end of each of the thirteen (13) consecutive Fiscal Periods (commencing with the Fiscal Period that begins immediately after such Disposition) shall be not less than twenty-two and one-half percent (22.5%) of the Aggregate Commitments and the Consolidated Fixed Charge Coverage Ratio at the end of each such Fiscal Period (commencing with the Fiscal Period that begins immediately after such Disposition) shall be at least 1.00 to 1.00,

 

(viii)           to the extent that the total consideration paid or payable to the Loan Parties in respect of any such Disposition is less than $10,000,000, then none of the conditions set forth in clauses (vi)  and (vii)  shall be required to be satisfied (but in any event the assets subject to any such Dispositions

 

51



 

shall be considered for purposes of measuring the percentage of Total Assets that have been subject to Dispositions for purposes of clauses (i)  and (ii)  above),

 

(ix)                 to the extent that clauses (vi)  and (vii)  above are not applicable, at any time a Cash Dominion Event exists, subject to the terms of the Term Loan Intercreditor Agreement, the Net Proceeds from any such sale or other Disposition, shall be applied to the Obligations (without permanent reduction thereof,

 

(x)                    as of the date of any such sale or other Disposition, and in each case after giving effect thereto, no Default or Event of Default shall exist or have occurred and be continuing;

 

(n)                    Dispositions by any Loan Party constituting a Customer Support Transaction, provided , that , as of the date of any such Disposition and after giving effect thereto, (i) the aggregate amount of the exposure of the Loan Parties under or pursuant to all Customer Support Transactions (including, without duplication, Customer Support Transactions constituting Permitted Indebtedness, Permitted Investments and Permitted Dispositions) shall not exceed $250,000,000, (ii) the aggregate amount of the exposure under any one of the types of transactions described in clauses (a) , (b) , (c)  or (e)  of the definition of the term Customer Support Transactions shall not exceed $150,000,000, and (ii) no Default or Event of Default shall exist or have occurred and be continuing;

 

(o)                    Dispositions pursuant to a Permitted Store Swap Transaction;

 

(p)                    (i) the lease, sublease, license or sublicense of Real Estate owned or leased out by a Loan Party to another Person (other than in connection with a Customer Support Transaction) in the ordinary course of business and (ii) the lease, sublease, license or sublicense of Real Estate owned or leased out by a Loan Party to another Person (other than in connection with a Customer Support Transaction) in the ordinary course of business so long as such Real Estate is (A) no longer used or useful in the business of any Loan Party or any of their Affiliates or Subsidiaries, and (B) is not otherwise material to the business of any Loan Party or any of their Affiliates or Subsidiaries in any respect;

 

(q)                    the Disposition of all or substantially all of the Equity Interests of Moran Foods, LLC or its Subsidiaries or of more than the percentage of the total assets of Moran Foods, LLC and its Subsidiaries (measured as of the Closing Date and after giving effect to the Transactions) permitted to be disposed of pursuant to clause (m) of this definition, or to the extent that after giving effect to any Disposition of the assets of Moran Foods, LLC or its Subsidiaries, the aggregate net book value of all of the assets of Moran Foods, LLC and its Subsidiaries subject to Dispositions on and after the Closing Date exceed or would exceed such percentage of the total assets of Moran Foods, LC and its Subsidiaries (measured as of the Closing Date and after giving effect to the Transactions), provided , that , in the case of any of the foregoing, each of the following conditions is satisfied:

 

(i)                        as of the date of such Disposition and after giving effect thereto, no Default or Event of Default shall exist or have occurred and be continuing,

 

(ii)                     after giving effect to such Disposition, using the most recent calculation of the Borrowing Base prior to the date of such Disposition, on a pro forma basis, Excess Availability shall be not less than twenty-five percent (25%) of the Aggregate Commitments,

 

(iii)                  on a pro forma basis after giving effect to such Disposition, the Consolidated Fixed Charge Coverage Ratio for the immediately preceding thirteen (13) consecutive Fiscal Periods ending on the last day of the Fiscal Period prior to the date of such Disposition shall be at least 1.00 to 1.00,

 

52



 

(iv)                 on a pro forma basis after giving effect to such Disposition, the Total Leverage Ratio of the Lead Borrower and its Restricted Subsidiaries for the immediately preceding thirteen (13) consecutive Fiscal Periods ending on the last day of the Fiscal Period prior to the date of such Disposition shall be not more than 4.25 to 1.00,

 

(v)                    Administrative Agent shall have received from Lead Borrower projections reasonably satisfactory to Administrative Agent demonstrating that, after giving effect to such Disposition, on a pro forma basis, Excess Availability at the end of each of the thirteen (13) consecutive Fiscal Periods (commencing with the Fiscal Period that begins immediately after such Disposition) shall be not less than twenty-five percent (25%) of the Aggregate Commitments and the Consolidated Fixed Charge Coverage Ratio at the end of each of the thirteen (13) consecutive Fiscal Periods (commencing with the Fiscal Period that begins immediately after such Disposition) shall be at least 1.00 to 1.00,

 

(vi)                 Administrative Agent shall have received (A) an updated Borrowing Base Certificate that gives effect to such Disposition, and (B) a certificate in form and substance reasonably satisfactory to Administrative Agent setting forth the calculation of the Consolidated Fixed Charge Coverage Ratio and the Total Leverage Ratio in accordance with the requirements of the provisions above from a Responsible Officer of Lead Borrower setting forth in reasonable detail the basis for such calculations,

 

(vii)              Administrative Agent shall have received an updated appraisal of the Inventory at the expense of Borrowers (conducted without regard to the assets to be subject to such Disposition and which will not be considered for purposes of the limitations set forth in Section 6.10(b) ),

 

(viii)           not less than seventy-five percent (75%) of the total consideration received by the Loan Parties contemporaneously with the consummation of the Disposition shall be paid in cash or Cash Equivalents, and

 

(ix)                 the consideration paid in connection therewith shall be paid contemporaneously with the consummation of such Disposition and shall be in an amount not less than the fair market value of the property disposed of; and

 

(r)                       Dispositions of Securitization Assets pursuant to a Permitted Securitization Facility.

 

“Permitted Encumbrances” means:

 

(a)                    Liens imposed by law for taxes that are not yet delinquent (and remain payable without penalty) or are being contested in compliance with Section 6.04 , provided , that , adequate reserves with respect thereto are maintained on the books of the applicable Loan Party, to the extent required by GAAP;

 

(b)                    carriers’, warehousemen’s, mechanics’, materialmen’s, landlords’, repairmen’s and other like Liens imposed by applicable Law, arising in the ordinary course of business and securing obligations that are not delinquent (and remain payable without penalty) or are being contested in compliance with Section 6.04 ;

 

(c)                     pledges and deposits of cash made in the ordinary course of business in compliance with workers’ compensation, unemployment insurance and other social security laws or regulations, other than any Lien imposed by ERISA;

 

(d)                    deposits of cash to secure the performance of bids, trade and government contracts and leases (other than Indebtedness), statutory obligations, surety and appeal bonds, performance bonds and

 

53



 

other obligations of a like nature incurred in the ordinary course of business (including to secure liability to insurance carriers);

 

(e)                     Liens in respect of judgments that would not constitute an Event of Default hereunder;

 

(f)                      (i) easements, covenants, conditions, restrictions, building code laws, zoning restrictions, rights-of-way and similar encumbrances on real property imposed by law or arising in the ordinary course of business and such other minor title defects or survey matters that are disclosed by current surveys (or would have been disclosed by current surveys if the same were obtained), provided , that , in each case, the same does not (A) secure any monetary obligations, (B) to the extent that the affected property is a Real Estate Collateral Property, materially detract from the value of the affected property, (C) materially detract from the value of the affected property as a going concern in connection with a Loan Party’s business, or (D) materially interfere with the ordinary conduct of business of a Loan Party and (ii) Liens and encumbrances against or upon any property as shown on (A) Schedule B of the title insurance policies insuring the Mortgages, as are reasonably acceptable to the Administrative Agent, or (B) surveys of the Real Estate subject to the Mortgages, as are reasonably acceptable to the Administrative Agent;

 

(g)                     interests or title of lessors, sublessors, licensors or sublicensors under any lease or license otherwise permitted pursuant to this Agreement (other than in respect of any ABL Priority Collateral);

 

(h)                    Liens existing on the date hereof and listed on Schedule 7.01 and any renewals or extensions thereof, provided , that , (i) the property covered thereby is not changed, (ii) the amount secured or benefited thereby is not increased, (iii) the direct or any contingent obligor with respect thereto is not changed, and (iv) any renewal or extension of the obligations secured or benefited thereby is otherwise permitted hereunder);

 

(i)                        Liens on fixed or capital assets acquired or constructed by any Loan Party which secure Indebtedness permitted under clause (c)  or (f)  of the definition of Permitted Indebtedness so long as (i) such Liens and the Indebtedness secured thereby are incurred prior to or within one hundred eighty (180) days after such acquisition or construction, (ii) the principal amount of the Indebtedness secured thereby does not exceed the cost of acquisition and construction of such fixed or capital assets (including any shipping and installation costs, if applicable) and (iii) such Liens shall not extend to any other property or assets of the Loan Parties other than Proceeds of such secured property or assets;

 

(j)                       Liens in favor of the Administrative Agent;

 

(k)                    possessory Liens in favor of brokers and dealers arising in connection with the acquisition or disposition of Investments owned as of the date hereof and Permitted Investments, provided , that , such Liens (i) attach only to such Investments and (ii) secure only obligations incurred in the ordinary course and arising in connection with the acquisition or disposition of such Investments and not any obligation in connection with margin financing;

 

(l)                        Liens relating to banker’s liens, liens in favor of securities intermediaries, rights of setoff or similar rights and remedies as to deposit accounts or securities accounts or other funds maintained with depository institutions or securities intermediaries in the ordinary course of business only to secure customary fees and charges related to the maintenance and operation of accounts maintained with such depository institution or securities intermediaries;

 

54



 

(m)                Liens arising from precautionary UCC filings regarding “true” operating leases or, to the extent permitted under the Loan Documents, the consignment of goods to a Loan Party;

 

(n)                    Liens on property (other than ABL Priority Collateral) in existence at the time such property is acquired pursuant to a Permitted Acquisition or on such property of a Subsidiary of a Loan Party in existence at the time such Subsidiary is acquired pursuant to a Permitted Acquisition; provided , that , such Liens are not incurred in connection with or in anticipation of such Permitted Acquisition and do not attach to any other assets of any Loan Party or any Subsidiary;

 

(o)                    Liens or rights of setoff against credit balances of Borrowers with Credit Card Issuers or Credit Card Processors or amounts owing by such Credit Card Issuers or Credit Card Processors to Borrowers in the ordinary course of business, but not Liens on or rights of setoff against any other property or assets of Borrowers, pursuant to the Credit Card Agreements to secure the obligations of Borrowers to the Credit Card Issuers or Credit Card Processors as a result of fees and chargebacks;

 

(p)                    Liens on inventory in favor of customs and revenues authorities imposed by applicable Law arising in the ordinary course of business in connection with the importation of goods and securing obligations not secured by deposits permitted pursuant to paragraph (d) above, (i) that are being contested in good faith by appropriate proceedings, (ii) as to which the applicable Loan Party or Subsidiary has set aside on its books adequate reserves with respect thereto in accordance with GAAP and (iii) which contest effectively suspends collection of the contested obligation and enforcement of any Lien securing such obligation;

 

(q)                    security interests in Securitization Assets to secure Indebtedness arising under a Permitted Securitization Facility (including any related filings of financing statements) but only to the extent that any such security interest relates to the applicable Securitization Assets actually sold or otherwise financed pursuant to such transaction and provided that such security interests shall be released and terminated as to any Securitization Assets upon the repurchase or reconveyance of such assets to a Loan Party;

 

(r)                       Liens in favor of the Term Loan Agent in and on the assets and properties of the Loan Parties constituting Collateral to secure the Indebtedness permitted under clause (i)  of the definition of Permitted Indebtedness; provided , that , such Liens are at all times subject to the terms of the Term Loan Intercreditor Agreement;

 

(s)                      Leases and licenses constituting Permitted Dispositions;

 

(t)                       Liens to secure Refinancing Indebtedness to the extent such Liens are permitted under the definition of the term “Refinancing Indebtedness”; and

 

(u)                    other Liens on assets (other than ABL Priority Collateral and Term Loan Priority Collateral) to secure obligations permitted hereunder that do not exceed $30,000,000 at any time outstanding.

 

“Permitted Indebtedness” means each of the following so long as no Default or Event of Default exists or would arise from the incurrence thereof:

 

(a)                    Indebtedness outstanding on the date hereof and listed on Schedule 7.03 ;

 

(b)                    (i) Indebtedness of any Loan Party or a Restricted Subsidiary to any other Loan Party or (ii) Indebtedness or other obligations of any Loan Party to any Restricted Subsidiary that is not a Loan

 

55



 

Party arising in the ordinary course of their respective businesses pursuant to the cash concentration and disbursement practices of the Lead Borrower and its Subsidiaries as conducted on the date hereof, provided , that , as to such Indebtedness or other obligations of a Loan Party to a Restricted Subsidiary that it not a Loan Party, (A) such Indebtedness is unsecured and will be subordinated in right of payment to the payment in full of the Obligations on terms and conditions reasonably satisfactory to Administrative Agent pursuant to a subordination agreement to be delivered to Administrative Agent in accordance with Schedule 6.21 , (B) repayments of such Indebtedness or other obligations shall be permitted in the ordinary course of their businesses consistent with and pursuant to the cash concentration and disbursement practices of the Lead Borrower and its Subsidiaries as conducted on the date hereof, so long as no Specified Event of Default exists or has occurred and so long as no Event of Default under Section 8.01(b)  as a result of the failure to comply with Section 7.15 exists or has occurred and is continuing, and (C) Lead Borrower shall cause the Restricted Subsidiary that is not a Loan Party not to exercise any legal remedies to enforce any of the Indebtedness or other obligations owed to it;

 

(c)                     without duplication of Indebtedness described in clause (f)  of this definition, purchase money Indebtedness of any Loan Party incurred after the Closing Date to finance the acquisition of any fixed or capital assets, including Capital Lease Obligations and Synthetic Lease Obligations, and any Indebtedness assumed in connection with the acquisition of any such assets or secured by a Lien on any such assets prior to the acquisition thereof, and any Refinancing Indebtedness with respect thereto; provided , that , (i) the aggregate principal amount of Indebtedness permitted by this clause (c) , when combined with the aggregate principal amount of all Indebtedness incurred pursuant to clause (f)  of this definition, shall not exceed $300,000,000 at any time outstanding, and in any event the incurrence of such Indebtedness permitted by this clause (c) , when combined with the aggregate principal amount of all Indebtedness incurred pursuant to clause (f)  of this definition, in any Fiscal Year (commencing with the current Fiscal Year) shall not exceed $100,000,000, and (ii) other than in case of a Store location, if requested by the Administrative Agent with respect to any Indebtedness secured by a Lien on Real Estate at which ABL Priority Collateral is located or a Lien on other assets where Administrative Agent may require access and use to realize on ABL Priority Collateral, the Loan Parties shall cause the holders of such Indebtedness to enter into a Collateral Access Agreement on terms reasonably satisfactory to the Administrative Agent;

 

(d)                    obligations (contingent or otherwise) of any Loan Party or any Subsidiary thereof existing or arising under any Swap Contract, provided , that , (i) such obligations are (or were) entered into by such Person in the ordinary course of business for the purpose of directly mitigating risks associated with fluctuations in interest rates or foreign exchange rates or commodity prices, and not for purposes of speculation or taking a “market view;” and (ii) the aggregate Swap Termination Value of all such Swap Contracts, excluding Swap Contracts entered into to mitigate risks associated with fluctuations in the interest rate payable under the Term Loan Facility, shall not exceed $25,000,000 at any time outstanding;

 

(e)                     contingent liabilities under surety bonds or similar instruments incurred in the ordinary course of business;

 

(f)                      Indebtedness incurred after the Closing Date for the construction or acquisition or improvement of, or to finance or to refinance the construction, acquisition or improvement of, any Real Estate owned by any Loan Party (including therein any Indebtedness incurred in connection with sale-leaseback transactions permitted hereunder), provided , that , (i) all Net Proceeds received in connection with any such Indebtedness incurred in connection with a sale-leaseback transaction shall be applied to the Obligations to the extent required under Section 2.05(e) , (ii) other than in the case of a Store location, if there is ABL Priority Collateral at such Real Estate or other assets that Administrative Agent may require the access and use of to realize on ABL Priority Collateral, the Loan Parties shall cause the holders of such Indebtedness (or in the case of a sale-leaseback transaction, the lessors under any sale-

 

56



 

leaseback transaction) to enter into a Collateral Access Agreement on terms reasonably satisfactory to the Administrative Agent and (iii) the aggregate principal amount of Indebtedness permitted by this clause (f) , when combined with the aggregate principal amount of all Indebtedness incurred pursuant to clause (c)  of this definition, shall not exceed $300,000,000 at any time outstanding, and in any event the incurrence of such Indebtedness permitted by this clause (f) , when combined with the aggregate principal amount of all Indebtedness incurred pursuant to clause (c)  of this definition, in any Fiscal Year (commencing with the current Fiscal Year) shall not exceed $100,000,000;

 

(g)                     Indebtedness of any Person that becomes a Subsidiary of a Loan Party in a Permitted Acquisition, which Indebtedness is existing at the time such Person becomes a Subsidiary of a Loan Party (other than Indebtedness incurred solely in contemplation of such Person’s becoming a Subsidiary of a Loan Party);

 

(h)                    the Obligations;

 

(i)                        Indebtedness under the Term Loan Documents in an aggregate outstanding principal amount not to exceed $1,500,000,000 (plus up to an aggregate additional amount of $250,000,000 to the extent that Lead Borrower exercises its right to obtain additional term loans from lenders under the Term Loan Documents in accordance with the terms thereof);

 

(j)                       Indebtedness of any Loan Party pursuant to Customer Support Transactions; provided , that , as of the date of Incurring such Indebtedness and after giving effect thereto, (i) the aggregate amount of the exposure of the Loan Parties under or pursuant to all Customer Support Transactions (including, without duplication, Customer Support Transactions constituting Permitted Indebtedness, Permitted Investments and Permitted Dispositions) shall not exceed $250,000,000, (ii) the aggregate amount of the exposure under any one of the types of transactions described in clauses (a) , (b) , (c)  or (e)  of the definition of the term Customer Support Transactions shall not exceed $150,000,000 at any time outstanding, and (iii) no Default or Event of Default shall exist or have occurred and be continuing;

 

(k)                    Indebtedness incurred after the Closing Date and not otherwise specifically described in this definition so long as each of the following conditions is satisfied: (i) as of the date of such Indebtedness and after giving effect thereto, each of the Payment Conditions is satisfied, (ii) such Indebtedness shall have a maturity date that is at least ninety-one (91) days after the Maturity Date, and shall not include covenants, defaults and remedy provisions that are more restrictive in any material respect to the Lead Borrower and its Restricted Subsidiaries than the Term Loan Facility taken as a whole, (iii) such Indebtedness shall not have scheduled amortization payments in excess of one percent (1%) of the principal amount thereof in any Fiscal Year, (iv) if such Indebtedness is subordinated to any other Indebtedness of any Loan Party or its Restricted Subsidiaries it will be subordinated in right of payment to the Obligations on terms and conditions no less favorable to the Administrative Agent and Lenders than the most favorable terms and conditions in favor of any other holder of Indebtedness (and if such Indebtedness is owed to a seller of assets to the Lead Borrower or any other Loan Party, then it shall be required to be subordinated in right of payment and shall be subordinated on terms and conditions reasonably satisfactory to the Administrative Agent), (v) any such Indebtedness shall only be secured by Liens permitted hereunder, and in any event, any such Indebtedness (or any portion thereof) shall not be secured by a Lien on the ABL Priority Collateral, and (vi) Administrative Agent shall have received ten (10) Business Days’ prior written notice of such Indebtedness and, (vii) Administrative Agent shall have received such other information related to such Indebtedness as the Administrative Agent may reasonably require;

 

(l)                        Indebtedness of any Receivables Financing Subsidiary under a Permitted Securitization Facility that is non-recourse to any Loan Party or Restricted Subsidiary or their respective assets other

 

57



 

than pursuant to the Standard Securitization Undertakings and does not otherwise subject any assets of any Loan Party or Restricted Subsidiary  (other than the Securitization Assets), directly or indirectly, contingently or otherwise, to any Lien to secure the satisfaction thereof, provided , that , the aggregate amount of such Indebtedness shall not exceed $200,000,000 at any time outstanding;

 

(m)                Indebtedness of the Lead Borrower and the Restricted Subsidiaries for customary indemnification, purchase price adjustments, earn-outs or similar obligations in each case in respect of the purchase price or other similar adjustments incurred in connection with a Permitted Acquisition or Permitted Disposition;

 

(n)                    Indebtedness constituting Refinancing Indebtedness;

 

(o)                    Indebtedness of a Loan Party as an account party in respect of letters of credit issued pursuant to a Commercial LC Facility, provided , that , in no event shall the aggregate amount of all such Indebtedness in respect of all Commercial LC Facilities exceed $15,000,000 at any time outstanding; and

 

(p)                    other Indebtedness of the Lead Borrower and the Restricted Subsidiaries in an aggregate principal amount for all such Persons not to exceed $30,000,000 at any time outstanding.

 

“Permitted Investments” means each of the following so long as no Default or Event of Default exists or would arise from the making of such Investment:

 

(a)                    readily marketable obligations issued or directly and fully guaranteed or insured by the United States of America or any agency or instrumentality thereof having maturities of not more than three hundred sixty (360) days from the date of acquisition thereof; provided , that , the full faith and credit of the United States of America is pledged in support thereof;

 

(b)                    commercial paper issued by any Person organized under the laws of any state of the United States of America and rated at least “Prime-1” (or the then equivalent grade) by Moody’s or at least “A-1” (or the then equivalent grade) by S&P, in each case with maturities of not more than one hundred eighty (180) days from the date of acquisition thereof;

 

(c)                     time deposits with, or insured certificates of deposit or bankers’ acceptances of, any commercial bank that (i) (A) is a Lender or (B) is organized under the laws of the United States of America, any state thereof or the District of Columbia or is the principal banking subsidiary of a bank holding company organized under the laws of the United States of America, any state thereof or the District of Columbia, and is a member of the Federal Reserve System, (ii) issues (or the parent of which issues) commercial paper rated as described in clause (b)  of this definition and (iii) has combined capital and surplus of at least $1,000,000,000, in each case with maturities of not more than one hundred eighty (180) days from the date of acquisition thereof;

 

(d)                    fully collateralized repurchase agreements with a term of not more than thirty (30) days for securities described in clause (a)  above (without regard to the limitation on maturity contained in such clause) and entered into with a financial institution satisfying the criteria described in clause (c)  above or with any primary dealer and having a market value at the time that such repurchase agreement is entered into of not less than one hundred percent (100%) of the repurchase obligation of such counterparty entity with whom such repurchase agreement has been entered into;

 

(e)                     Investments, classified in accordance with GAAP as current assets of the Loan Parties, in any money market fund, mutual fund, or other investment companies that are registered under the Investment Company Act of 1940, as amended, which are administered by financial institutions that have

 

58



 

the highest rating obtainable from either Moody’s or S&P, and which invest solely in one or more of the types of securities described in clauses (a)  through (d)  above;

 

(f)                      Investments described on Schedule 7.02 (and in the case of Investments covered by the investment policy of Lead Borrower included in Schedule 7.02 , Investments of such type), but not any additional payments to increase the amount thereof or other modification of the terms thereof that increases the obligations or liabilities of any Loan Party, except to increase the scheduled Investments or for other modifications of the terms thereof that increase the obligations or liabilities of any Loan Party if (i) such increase in any case would be permitted pursuant to clause (n)  of this definition or (ii) otherwise, such increases in the aggregate do not exceed $10,000,000 in any Fiscal Year;

 

(g)                     (i) Investments by any Loan Party and its Subsidiaries in their respective Restricted Subsidiaries outstanding on the date hereof, (ii) additional Investments by any Loan Party and its Restricted Subsidiaries in Loan Parties (other than the Lead Borrower), (iii) additional Investments by Restricted Subsidiaries of the Loan Parties that are not Loan Parties in other Subsidiaries that are not Loan Parties, (iv) additional Investments by the Loan Parties in Subsidiaries that are not Loan Parties, provided , that , in the case of clause (iv)  above as of the date of such Investment and after giving effect thereto, either (A) such Investments give rise to Indebtedness of such Subsidiary to the Loan Parties of the type described in clause (b)(ii)  of the definition of Permitted Indebtedness, or (B) each of the Payment Conditions shall be satisfied;

 

(h)                    Investments consisting of extensions of credit in the nature of accounts receivable or notes receivable arising from the grant of trade credit in the ordinary course of business, and Investments received in satisfaction or partial satisfaction thereof from financially troubled account debtors to the extent reasonably necessary in order to prevent or limit loss;

 

(i)                        Investments by any Loan Party in Swap Contracts entered into in the ordinary course of business and for bona fide business (and not speculative purposes) to protect against fluctuations in interest rates in respect of the Obligations or other Permitted Indebtedness or fluctuations in commodity prices;

 

(j)                       Investments received in connection with the bankruptcy or reorganization of, or settlement of delinquent accounts and disputes with, customers and suppliers, in each case in the ordinary course of business;

 

(k)                    advances to officers, directors and employees of the Loan Parties and their Subsidiaries in the ordinary course of business in an amount not to exceed $1,000,000 to any individual at any time or in an aggregate amount not to exceed $2,000,000 at any time outstanding, for travel, entertainment, relocation and analogous ordinary business purposes;

 

(l)                        Investments constituting Permitted Acquisitions or a Permitted Store Swap Transaction;

 

(m)                Investments under or pursuant to Customer Support Transactions; provided , that , (i) as of the date of any such Investment and after giving effect thereto, the aggregate amount of the exposure of the Loan Parties under or pursuant to all Customer Support Transactions (including, without duplication, Customer Support Transactions constituting Permitted Indebtedness, Permitted Investments and Permitted Dispositions) shall not exceed $250,000,000, (ii) the aggregate amount of the exposure of the Loan Parties under any one of the types of transactions described in clauses (a) , (b) , (c)  or (e)  of the definition of the term Customer Support Transactions shall not exceed $150,000,000, (iii) as of the date of such transaction and after giving effect thereto, no Default or Event of Default shall exist or have occurred and be continuing, (iv) Administrative Agent shall have received (A) with respect to any such

 

59



 

loan in an amount equal to or greater than $5,000,000, not less than two (2) Business Days’ prior written notice thereof setting forth in reasonable detail the nature and terms thereof, (B) true, correct and complete copies of all agreements, documents and instruments relating thereto and (C) such other information with respect thereto as Administrative Agent may request, including a report once each month on the outstanding balance of all such Permitted Investments and including the then outstanding amount of the existing loans and advances by Loan Parties and Restricted Subsidiaries to third parties pursuant to this clause (m) ;

 

(n)                    Guarantees constituting Permitted Indebtedness; and

 

(o)                    other Investments not otherwise provided for in this definition, provided , that , (i) as of the date of any such Investment and after giving effect thereto, each of the Payment Conditions is satisfied, and (ii) upon its request, Administrative Agent shall have received (A) with respect to any such Investment in an amount equal to or greater than $10,000,000, not less than two (2) Business Days’ prior written notice thereof setting forth in reasonable detail the nature and terms thereof, (B) true, correct and complete copies of all agreements, documents and instruments relating thereto and (C) such other information with respect thereto as Administrative Agent may request;

 

provided , that , notwithstanding the foregoing, (i) after the occurrence and during the continuance of a Cash Dominion Event, no Investments in cash or Investments permitted pursuant to clauses (a)  through (e) , or the equivalents thereof described in the investment policy referred to in clause (f)  of this definition (such Investments, collectively, “ Cash Equivalents ”) or additional Investments in the form of cash or Cash Equivalents pursuant to clause (o) , in each case shall be permitted, unless no Loans are then outstanding, except that notwithstanding that any Loans are outstanding at any time a Cash Dominion Event exists, the Lead Borrower and its Restricted Subsidiaries may from time to time in the ordinary course of business consistent with their current practices as of the date hereof make deposits of cash or other immediately available funds with proceeds of Loans in operating demand deposit accounts used for disbursements to the extent required to provide funds for amounts drawn or anticipated to be drawn shortly on such accounts and such funds may be held in Cash Equivalents consisting of overnight investments until so drawn (so long as (A) such funds and Cash Equivalents are not held more than two (2) Business Days from the date of the initial deposit thereof and (B) such Investments are pledged to the Administrative Agent as additional collateral for the Obligations pursuant to such agreements as may be reasonably required by the Administrative Agent and (ii) at any time that a Cash Dominion Event does not exist, no Investments in cash or Cash Equivalents in excess of $125,000,000 at any one time shall be permitted, unless no Loans are then outstanding; provided , that , so long as no Default or Event of Default exists or has occurred and is continuing, cash or Cash Equivalents may exceed such amount for a period of up to three (3) Business Days by an amount up to (but not to exceed) one hundred ten percent (110%) of the aggregate amount of payments in respect of Permitted Indebtedness permitted to be made hereunder due within such three (3) Business Day period.

 

“Permitted Overadvance” means an Overadvance made by the Administrative Agent, in its discretion, which:

 

(a)                    is made to maintain, protect or preserve the Collateral and/or the Credit Parties’ rights under the Loan Documents or which is otherwise for the benefit of the Credit Parties; or

 

(b)                    is made to enhance the likelihood of, or to maximize the amount of, repayment of any Obligation; or

 

(c)                     is made to pay any other amount chargeable to any Loan Party hereunder; and

 

60



 

(d)                    together with all other Permitted Overadvances then outstanding, shall not (i) exceed at any time the lesser of (A) $100,000,000 and (B) ten percent (10%) of the Aggregate Commitments, or (ii) unless a Liquidation is occurring, remain outstanding for more than forty-five (45) consecutive Business Days, unless in each case, the Required Lenders otherwise agree;

 

provided , that , (i) the foregoing shall not (A) modify or abrogate any of the provisions of Section 2.03 regarding the Lender’s obligations with respect to Letters of Credit, or (B) result in any claim or liability against the Administrative Agent (regardless of the amount of any Overadvance) for Unintentional Overadvances and such Unintentional Overadvances shall not reduce the amount of Permitted Overadvances allowed hereunder, (ii) in no event shall the Administrative Agent make an Overadvance, if after giving effect thereto, the principal amount of the Credit Extensions would exceed the Aggregate Commitments (as in effect immediately prior to any termination of the Commitments pursuant to Section 2.06 hereof) and (iii) the right of the Administrative Agent to make Permitted Overadvances under clauses (a)  and (b)  above may be revoked upon the receipt by Administrative Agent of written notice from the Supermajority Lenders.

 

“Permitted Securitization Facility” means a receivables financing pursuant to agreements and documents in form and substance reasonably satisfactory to the Administrative Agent in which (a) a Loan Party sells Securitization Assets to a Receivables Financing Subsidiary in a manner that legally isolates the Securitization Assets from such Loan Party (such that the transferred assets would not be included in the estate of such Loan Party in a bankruptcy, receivership or other insolvency proceeding of such Loan Party) and (b) the Receivables Financing Subsidiary finances its acquisition of such transferred assets by selling an interest in such transferred assets to a person that is not a Subsidiary or Affiliate of a Loan Party or borrows from such person and secures such borrowings by a pledge of such receivables, provided , that ,

 

(i)                        no portion of any Indebtedness or other obligations (contingent or otherwise) of the Receivables Financing Subsidiary is guaranteed by a Loan Party, other than to the extent of the Standard Securitization Undertakings made by such Loan Party,

 

(ii)                     any such Indebtedness or other obligations (contingent or otherwise) of the Receivables Financing Subsidiary is non-recourse to any Loan Party and does not otherwise give rise to any obligations of any Loan Party other than pursuant to Standard Securitization Undertakings and does not subject any assets of the Loan Parties other than Securitization Assets to any Lien to secure the satisfaction of the obligations arising under the financing,

 

(iii)                  the Loan Parties do not have any ongoing obligation to maintain or preserve the financial condition of the Receivables Financing Subsidiary or cause the Receivables Financing Subsidiary to achieve certain levels of operation results,

 

(iv)                 such sales of the Securitization Assets will cease upon a written notice by Administrative Agent to the agent under a Permitted Securitization Facility and Lead Borrower of an Event of Default,

 

(v)                    Loan Parties shall receive fair value in the form of cash and other consideration for such Securitization Assets, and

 

(vi)                 Administrative Agent shall have received an intercreditor or similar agreement with the purchasers of the interest in the Securitization Assets from the Receivables Financing Subsidiary or the lenders to the Receivables Financing Subsidiary, or their agent, in form and substance reasonably satisfactory to the Administrative Agent, duly authorized, executed and delivered by such parties.

 

61



 

“Permitted Store Swap Transaction” means the transfer by a Loan Party of ownership of a Store or Stores to an unaffiliated third party in an arm’s length transaction in the ordinary course of business in exchange for the transfer to such Loan Party of a retail store or stores (and the related assets, including real property, fixtures, equipment, inventory and other property related thereto) owned and operated by such third party; provided , that , as to any such exchange, (a) the value of the Store or Stores transferred by such Loan Party shall be reasonably equivalent to the value of the store or stores (and related assets) transferred to it, (b) the transfer of such assets by the Loan Party to such third party and by such third party to such Loan Party shall be substantially contemporaneous, (c) the aggregate number of such Stores transferred to unaffiliated third parties by the Loan Parties in any Fiscal Year pursuant to such exchanges shall not exceed twenty (20), except as Administrative Agent may otherwise agree in the exercise of its Permitted Discretion, and (d) as of the date of any such transaction, and after giving effect thereto, no Default or Event of Default shall exist or have occurred and be continuing.

 

“Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, limited partnership, Governmental Authority or other entity.

 

“Pharmacy Receivables” means as to each Borrower, all present and future rights of such Borrower to payment from a Third Party Payor arising from the sale of prescription drugs by such Borrower (it being understood that the portion of the purchase price for such prescription drugs payable by the purchaser of such prescription drugs or any Person other than a Third Party Payor shall not be deemed to be a Pharmacy Receivable).

 

“Pharmacy Scripts Availability” means the lesser of: (a) eighty-five percent (85%) of the product of (i) the average per Prescription File “net orderly liquidation value” of Eligible Prescription Files based on the most recent acceptable appraisal thereof received by Administrative Agent in accordance with the requirements of this Agreement, net of operating expenses, liquidation expenses and commissions reasonably anticipated in the disposition of such assets, multiplied by (ii) the number of Eligible Prescription Files, or (b) the amount equal to twenty-five percent (25%) of the Borrowing Base (determined without regard to this limitation in clause (b)  or the limitation in clause (f)(ii)  of the definition of “Borrowing Base”).

 

“Plan” means any “employee benefit plan” (as such term is defined in Section 3(3) of ERISA) established by the Lead Borrower or, with respect to any such plan that is subject to Section 412 of the Code or Title IV of ERISA, any ERISA Affiliate.

 

“Platform” has the meaning set forth in Section 6.02 .

 

“Post-Maturity Period” has the meaning set forth in Section 2.07(c) .

 

“Pre-Maturity Period” has the meaning set forth in Section 2.07(c) .

 

“Prepayment Event” means any of the following occurring after a Cash Dominion Event and for so long as the same is continuing:

 

(a)                    any Disposition (including pursuant to a sale and leaseback transaction) of any property or asset of a Loan Party;

 

(b)                    the issuance by a Loan Party of any Equity Interests, other than any such issuance of Equity Interests (i) to a Loan Party, (ii) as consideration for a Permitted Acquisition or (iii) as a compensatory issuance to any employee, director, or consultant (including under any option plan);

 

62



 

(c)                     the incurrence by a Loan Party of any Indebtedness for borrowed money other than Permitted Indebtedness;

 

(d)                    the receipt by any Loan Party of any other cash receipts as provided in Section 6.13 .

 

“Prescription Files” means, as to each Borrower, all of such Borrower’s now owned or hereafter existing or acquired retail customer files with respect to prescriptions for retail customers and other medical information related thereto, maintained by the retail pharmacies of Borrowers, wherever located.

 

“Provision for Taxes” means an amount equal to all taxes imposed on or measured by net income, whether federal, state, provincial, county or local, and whether foreign or domestic, that are paid or payable by any Person in respect of any period in accordance with GAAP.

 

“PSA” means the Packers and Stockyard Act of 1921, 7 U.S.C. Section 181 et. seq., as the same now exists or may from time to time hereafter be amended, modified, recodified or supplemented, together with all rules, regulations and interpretations thereunder or related thereto.

 

“Public Lender” has the meaning set forth in Section 6.02 .

 

“Quarterly Average Excess Availability” shall mean, at any time, the average of the daily Excess Availability during the immediately preceding Fiscal Quarter as calculated by the Administrative Agent in accordance with the terms hereof.

 

“Real Estate” means all right, title, and interest (including any leasehold, fee, mineral or other estate) in and to any and all parcels of or interests in real property owned, leased or operated by any Loan Party, whether by lease, license or other means, and the buildings, structures, parking areas and other improvements thereon, now or hereafter owned by any Loan Party, including all fixtures, easements, hereditaments, appurtenances, rights-of-way and similar rights relating thereto and all leases, tenancies and occupancies thereof now or hereafter owned by any Loan Party.

 

“Real Estate Collateral Properties” means the Real Estate of the Loan Parties at the sites on the Applicable Collateral List.

 

“Receivables Financing Subsidiary” means a corporation that (a) is a direct or indirect bankruptcy remote, special purpose entity, (b) satisfies, as of the date of its formation, the special purpose entity criteria published by Standard & Poor’s Rating Services, a division of The McGraw-Hill Companies, Inc. and in effect as of such date, and (c) was created for the sole purpose of acquiring, and whose only assets consist at all times of, Securitization Assets.

 

“Refinancing Indebtedness” means Indebtedness of any Loan Party arising after the Closing Date issued in exchange for, or the proceeds of which are used to extend, refinance, replace or substitute for other Indebtedness (such extended, refinanced, replaced or substituted Indebtedness, the “ Refinanced Obligations ”) to the extent permitted hereunder; provided , that :

 

(a)                    the Administrative Agent shall have received not less than ten (10) Business Days’ prior written notice of the intention to incur such Indebtedness, which notice shall set forth in reasonable detail reasonably satisfactory to the Administrative Agent the amount of such Indebtedness, the schedule of repayments and maturity date with respect thereto and such other information with respect thereto as the Administrative Agent may reasonably request;

 

63



 

(b)                    promptly upon the Administrative Agent’s request, the Administrative Agent shall have received true, correct and complete copies of all agreements, documents and instruments evidencing or otherwise related to such Indebtedness, as executed and delivered by the parties thereto;

 

(c)                     the principal amount of such Refinancing Indebtedness shall not exceed the principal amount of the Refinanced Obligations (plus the amount of reasonable refinancing fees and expenses incurred in connection therewith);

 

(d)                    such Indebtedness shall have a final maturity that is no earlier than (i) in the case of Refinanced Obligations that constitute Material Indebtedness, ninety-one (91) days after the Maturity Date, and (ii) in the case of all other Refinanced Obligations, three hundred sixty-four (364) days after the final maturity date of such Refinanced Obligations or, if earlier, ninety (91) days after the Maturity Date;

 

(e)                     such Indebtedness shall have a Weighted Average Life to Maturity not less than the Weighted Average Life to Maturity of the Refinanced Obligations;

 

(f)                      such Indebtedness shall rank in right of payment no more senior than, and be subordinated (if subordinated) to the Obligations on terms no less favorable to the Credit Parties than the Refinanced Obligations;

 

(g)                     as of the date of incurring such Indebtedness and after giving effect thereto, no Default or Event of Default shall exist or have occurred and be continuing;

 

(h)                    if the Refinanced Obligations or any Guarantees thereof are unsecured, such Indebtedness and any Guarantees thereof shall be unsecured, except, that, in the case of Refinancing Indebtedness in respect of the SVU 2016 Notes, such Refinancing Indebtedness may be secured by a Lien on the Term Loan Priority Collateral senior to the Lien securing the Obligations; provided , that , such Liens and Refinancing Indebtedness shall be subject to an intercreditor agreement to which Administrative Agent is a party with terms and conditions no less favorable to the Administrative Agent and Lenders than the Term Loan Intercreditor Agreement (except to the extent necessary to address the Lien on the Term Loan Priority Collateral to secure such Refinancing Indebtedness as permitted above);

 

(i)                        if the Refinanced Obligations or any Guarantees thereof are secured, such Indebtedness and any Guarantees thereof shall be secured in all material respects by substantially the same or less collateral as secured such Refinanced Obligations or any Guarantees thereof, on terms no less favorable to the Administrative Agent or the Lenders;

 

(j)                       if the Refinanced Obligations or any Guarantees thereof are secured, the Liens to secure such Indebtedness shall not have a priority more senior than the Liens securing the Refinanced Obligations and if subordinated to any other Liens on such property, shall be subordinated to the Administrative Agent’s Liens on terms and conditions no less favorable;

 

(k)                    if the Refinanced Obligations or any Guarantees thereof are subordinated to any Indebtedness of the Borrower other than the Obligations, such Refinancing Indebtedness and any Guarantees thereof shall be subordinated to the Obligations on terms (including intercreditor terms) no less favorable to the Administrative Agent or the Lenders;

 

(l)                        the obligors in respect of the Refinanced Obligations immediately prior to such refinancing, refunding, extending, renewing or replacing thereof shall be the only obligors on such Indebtedness; and

 

64



 

(m)                the terms and conditions (excluding as to pricing, premiums and optional prepayment or redemption provisions) of any such Indebtedness, taken as a whole, are not more restrictive with respect to the Lead Borrower and the Restricted Subsidiaries, as reasonably determined by the Lead Borrower in good faith, than the terms and conditions of the Refinanced Obligations.

 

“Register” has the meaning set forth in Section 10.06(c) .

 

“Registered Public Accounting Firm” has the meaning specified by the Securities Laws and shall be independent of the Lead Borrower and its Subsidiaries as prescribed by the Securities Laws.

 

“Related Parties” means, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents and advisors of such Person and of such Person’s Affiliates.

 

“Related Real Estate Collateral” means all Equipment now or hereafter owned by Lead Borrower or any of its Subsidiaries located on any Material Real Estate Asset or any Material Related Collateral Location.

 

“Related Real Estate Collateral Security Agreement” means a Personal Property Security Agreement executed by a Loan Party in favor of Administrative Agent with respect to Related Real Estate Collateral.

 

“Release” shall have the meaning assigned to such term in Section 101(22) of CERCLA.

 

“Reportable Event” means any of the events set forth in Section 4043(c) of ERISA as in effect as of the Closing Date, other than events for which the thirty (30) day notice period has been waived.

 

“Reports” has the meaning set forth in Section 9.12(b) .

 

“Request for Credit Extension” means (a) with respect to a Borrowing, conversion or continuation of Committed Loans, a Committed Loan Notice, (b) with respect to an LC Credit Extension, a Letter of Credit Application and, if required by the applicable LC Issuer, a Letter of Credit Agreement, and (c) with respect to a Swing Line Loan, a Swing Line Loan Notice.

 

“Required Lenders” means, as of any date of determination, Lender or Lenders holding more than fifty percent (50%) of the Aggregate Commitments or, if the commitments of the Lenders to make Loans and the obligation of the LC Issuers to make LC Credit Extensions have been terminated pursuant to Section 8.02 , at least two Lenders holding in the aggregate more than fifty percent (50%) of the Total Outstandings (with the aggregate amount of each Lender’s risk participation and funded participation in LC Obligations and Swing Line Loans being deemed “held” by such Lender for purposes of this definition); provided , that , (a) the Commitment of, and the portion of the Total Outstandings held or deemed held by, any Defaulting Lender shall be excluded for purposes of making a determination of Required Lenders and (b) at any time that there are two (2) or more unaffiliated Lenders, “Required Lenders” must include at least two (2) unaffiliated Lenders.

 

“Reserves” means Inventory Reserves and Availability Reserves.

 

“Responsible Officer” means the chief executive officer, chief financial officer, treasurer, assistant treasurer, vice president of tax or controller of a Loan Party or any of the other individuals designated in writing to the Administrative Agent by an existing Responsible Officer of a Loan Party as an authorized signatory of any certificate or other document to be delivered hereunder.  Any document delivered hereunder that is signed by a Responsible Officer of a Loan Party shall be conclusively

 

65



 

presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of such Loan Party and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Loan Party.

 

“Restated Collateral List” means the Closing Date Collateral List as modified to reflect all Fixed Asset Collateral List Substitutions, Fixed Asset Collateral Substitutions, Fixed Asset Collateral Releases and Fixed Asset Collateral Additions, as each of such terms is defined in Schedule 6.17 , to and including the date of such Restated Collateral List.

 

“Restricted Payment” means any dividend or other distribution (whether in cash, securities or other property) with respect to any capital stock or other Equity Interest of any Person or any of its Subsidiaries, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, defeasance, acquisition, cancellation or termination of any such capital stock or other Equity Interest, or on account of any return of capital to such Person’s stockholders, partners or members (or the equivalent of any thereof), or any holder of an option, warrant or other right to acquire any such dividend or other distribution or payment and any payment of management fees (or other fees of a similar nature) by any Person to any holder of an Equity Interest of any Person or any of its Subsidiaries.  Without limiting the foregoing, “Restricted Payments” with respect to any Person shall also include all payments made by such Person to holders of Equity Interests with any proceeds of a dissolution or liquidation of such Person.

 

“Restricted Subsidiary” means each Subsidiary of Lead Borrower that is not an Unrestricted Subsidiary.

 

“Retail Inventory” means Inventory located at, or in transit to, any Store.

 

“S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc. and any successor thereto.

 

“Sale-Leaseback Transaction” has the meaning set forth in clause (h)  of the definition of the term “Permitted Disposition”.

 

“Sanctioned Entity” means (a) a country or a government of a country, (b) an agency of the government of a country, (c) an organization directly or indirectly controlled by a country or its government, (d) a Person resident in or determined to be resident in a country, in each case, that is subject to a country sanctions program administered and enforced by OFAC.

 

“Sanctioned Person” means a person named on the list of Specially Designated Nationals maintained by OFAC.

 

“Sarbanes-Oxley” means the Sarbanes-Oxley Act of 2002.

 

“SEC” means the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions.

 

“Securities Laws” means the Securities Act of 1933, the Securities Exchange Act of 1934, Sarbanes-Oxley, and the applicable accounting and auditing principles, rules, standards and practices promulgated, approved or incorporated by the SEC or the PCAOB.

 

“Securitization Assets” means, collectively, all Accounts which are transferred by a Borrower to a Receivables Financing Subsidiary pursuant to any Permitted Securitization Facility to the extent, and in

 

66



 

accordance with, the terms and conditions of such facility; provided , that , (a) the Securitization Assets shall only include Accounts owing by clearly identifiable Account Debtors that are not obligated on Accounts included in the Borrowing Base or Accounts arising from licensing transactions in the ordinary course of business in each case, and whether relating to the Account Debtors or the nature of the transaction, that are capable of being reported separately from Accounts in the Borrowing Base in a manner reasonably satisfactory to Administrative Agent and (b) the proceeds of any such transferred Accounts shall be clearly identifiable and paid to separate DDAs established and exclusively used for the receipt of such proceeds.

 

“Security Agreement” means the Amended and Restated Security Agreement dated as of the Closing Date among the Loan Parties and the Administrative Agent.

 

“Security Documents” means, collectively, the following: (a) the Security Agreement, (b) the Intellectual Property Security Agreement, (c) the Blocked Account Agreements, (d) the Mortgages, (e) the Related Real Estate Collateral Security Agreements, (f) the DDA Notifications, (g) the Credit Card Notifications, and (h) each other security agreement or other instrument or document executed and/or delivered to the Administrative Agent pursuant to this Agreement or any other Loan Document granting a Lien to secure any of the Obligations.

 

“Settlement Date” has the meaning set forth in Section 2.14(a) .

 

“Shareholders’ Equity” means, as of any date of determination, consolidated shareholders’ equity of Lead Borrower and its Subsidiaries as of that date determined in accordance with GAAP.

 

“Shrink” means Inventory which has been lost, misplaced, stolen, spoiled or is otherwise unsaleable or unaccounted for.

 

“Solvent” and “Solvency” mean, with respect to any Person on a particular date, that on such date (a) at fair valuation, all of the properties and assets of such Person (and including as assets for this purpose at a fair valuation all rights of subrogation, contribution or indemnification in favor of such Person) are greater than the sum of the liabilities, including contingent liabilities (and including as liabilities for this purpose, at a fair valuation, all obligations of subrogation, contribution or indemnification against such Person, of such Person, (b) the present fair saleable value of the properties and assets of such Person is not less than the amount that would be required to pay the probable liability of such Person on its debts as they become absolute and matured, (c) such Person is able to realize upon its properties and assets and pay its debts and other liabilities, contingent obligations and other commitments as they mature in the normal course of business, (d) such Person does not intend to, and does not believe that it will, incur debts beyond such Person’s ability to pay as such debts mature, and (e) such Person is not engaged in a business or a transaction, and is not about to engage in a business or transaction, for which such Person’s properties and assets would constitute unreasonably small capital after giving due consideration to the prevailing practices in the industry in which such Person is engaged.  The amount of all guarantees and other contingent liabilities at any time shall be computed as the amount that, in light of all the facts and circumstances existing at the time, can reasonably be expected to become an actual or matured liability.

 

“Specified Event of Default” means the occurrence of (a) any Event of Default of the type described in Section 8.01(a)  or Section 8.01(f)  or (b) the exercise by Administrative Agent or any Lender of any of its or their rights or remedies upon an Event of Default.

 

67



 

“Specified Representations” means those representations and warranties set forth in Sections 5.01(a) , 5.01(b)(ii)  (solely with respect to power and authority), 5.02(a) , 5.02(b)(i) , 5.02(b)(iv) , 5.04 , 5.05(a) , 5.05(b) , 5.05(f) , 5.14 , 5.19(a) , 5.19(b) , 5.19(c) , 5.20(a) , 5.30 and 5.31 of the Agreement.

 

“Spot Rate” has the meaning set forth in Section 1.07 hereof.

 

“Standard Securitization Undertakings” means representations, warranties, covenants, repurchase obligations and indemnities entered into by any Loan Party or any of their Subsidiaries concerning Securitization Assets which are customarily included in securitizations of accounts receivable.

 

“Standby Letter of Credit” means any letter of credit (as such term is defined in the UCC) that is not a Commercial Letter of Credit and that (a) is used in lieu or in support of performance guaranties or performance, surety or similar bonds (excluding appeal bonds) arising in the ordinary course of business, (b) is used in lieu or in support of stay or appeal bonds, (c) supports the payment of insurance premiums for reasonably necessary casualty insurance carried by any of the Loan Parties, or (d) supports payment or performance for identified purchases or exchanges of products or services in the ordinary course of business.  A “direct pay” Letter of Credit shall be a Standby Letter of Credit.

 

“Standby Letter of Credit Agreement” means the Standby Letter of Credit Agreement relating to the issuance of a Standby Letter of Credit in the form from time to time in use by the applicable LC Issuer.

 

“Stated Amount” means at any time the maximum amount for which a Letter of Credit may be honored.

 

“Statutory Reserve Rate” means a fraction (expressed as a decimal), the numerator of which is the number one and the denominator of which is the number one minus the aggregate of the maximum reserve percentages (including any marginal, special, emergency or supplemental reserves) expressed as a decimal established by the FRB to which the Administrative Agent is subject with respect to the Adjusted LIBO Rate, for eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in Regulation D of the FRB). Such reserve percentages shall include those imposed pursuant to such Regulation D.  LIBO Rate Loans shall be deemed to constitute eurocurrency funding and to be subject to such reserve requirements without benefit of or credit for proration, exemptions or offsets that may be available from time to time to any Lender under such Regulation D or any comparable regulation. The Statutory Reserve Rate shall be adjusted automatically on and as of the effective date of any change in any reserve percentage.

 

“Store” means any retail store (which may include any real property, fixtures, equipment, inventory and other property related thereto) operated, or to be operated, by any Loan Party.

 

“Subordinated Indebtedness” means any Indebtedness which is expressly subordinated in right of payment to the prior payment in full of the Obligations and which is in form and on terms approved in writing by the Administrative Agent.

 

“Subsidiary” of a Person means a corporation, partnership, joint venture, limited liability company or other business entity of which a majority of the shares Equity Interests having ordinary voting power for the election of directors or other governing body are at the time beneficially owned, or the management of which is otherwise controlled, directly, or indirectly through one or more intermediaries, or both, by such Person.  Unless otherwise specified, all references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries of a Loan Party, and shall exclude NAI and its Subsidiaries.

 

68



 

“Substitute Property” has the meaning set forth in Section 6.17(b) .

 

“Supermajority Lenders” means, as of any date of determination, Lender or Lenders holding more than sixty-six and two thirds percent (66-2/3%) of the Aggregate Commitments or, if the commitments of the Lenders to make Loans and the obligation of the LC Issuers to make LC Credit Extensions have been terminated pursuant to Section 8.02 , at least two (2) Lenders holding in the aggregate more than sixty-six and two thirds percent (66-2/3%) of the Total Outstandings (with the aggregate amount of each Lender’s risk participation and funded participation in LC Obligations and Swing Line Loans being deemed “held” by such Lender for purposes of this definition); provided , that , (a) the Commitment of, and the portion of the Total Outstandings held or deemed held by, any Defaulting Lender shall be excluded for purposes of making a determination of Required Lenders and (b) at any time that there are two (2) or more unaffiliated Lenders, “Supermajority Lenders” must include at least two (2) unaffiliated Lenders.

 

“SVU Indenture” means the Indenture, dated as of July 1, 1987, between Lead Borrower and the SVU 2014 Notes Trustee, as supplemented by the First Supplemental Indenture dated as of August 1, 1990, the Second Supplemental indenture dated as of October 1, 1992, the Third Supplemental Indenture dated as of September 1, 1995, the Fourth Supplemental Indenture dated as of August 4, 1999, and the Fifth Supplemental Indenture dated as of September 17, 1999.

 

“SVU 2014 Notes” means the 7.50% Senior Notes due November 15, 2014 issued by the Lead Borrower pursuant to the SVU Indenture in the original principal amount of $500,000,000.

 

“SVU 2014 Note Repayment” means (a) to the extent Lead Borrower has made a tender offer for the SVU 2014 Notes and any of the SVU 2014 Notes have been tendered, the purchase and cancellation of such SVU 2014 Notes on the Closing Date, (b) the provision of a notice of redemption by the Lead Borrower on the Closing Date to the SVU 2014 Notes Trustee and the holders of all untendered SVU 2014 Notes, if any (or, to the extent the Lead Borrower has not made a tender offer therefor, all of the SVU 2014 Notes), and (c) the deposit of cash with the SVU 2014 Notes Trustee in trust on the Closing Date in an amount equal to the full amount required to redeem all untendered SVU 2014 Notes, if any (or, to the extent the Lead Borrower has not made a tender offer therefor, all SVU 2014 Notes), in accordance with such notice and to otherwise repay and satisfy all obligations in connection therewith.

 

“SVU 2014 Notes Trustee” means Deutsche Bank Trust Company (formerly Bankers Trust Company), as trustee.

 

“SVU 2016 Notes” means the 8.00% Senior Notes due May 1, 2016 issued by the Lead Borrower pursuant to the SVU Indenture in the original principal amount of $1,000,000,000.

 

“SVU 2016 Notes Reserve” has the meaning set forth in Section 2.07(c) .

 

“Swap Contract” means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and

 

69



 

Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a “Master Agreement”), including any such obligations or liabilities under any Master Agreement.

 

“Swap Termination Value” means, in respect of any one or more Swap Contracts, after taking into account the effect of any legally enforceable netting agreement relating to such Swap Contracts, (a) for any date on or after the date such Swap Contracts have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in clause (a) , the amount(s) determined as the mark-to-market value(s) for such Swap Contracts, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Swap Contracts (which may include a Lender or any Affiliate of a Lender).

 

“Swing Line” means the revolving credit facility made available by the Swing Line Lender pursuant to Section 2.04 .

 

“Swing Line Borrowing” means a borrowing of a Swing Line Loan pursuant to Section 2.04 .

 

“Swing Line Lender” means Wells Fargo, in its capacity as provider of Swing Line Loans, or any successor swing line lender hereunder.

 

“Swing Line Loan” has the meaning set forth in Section 2.04(a) .

 

“Swing Line Loan Notice” means a notice of a Swing Line Borrowing pursuant to Section 2.04(b) , which, if in writing, shall be substantially in the form of Exhibit B .

 

“Swing Line Note” means the amended and restated promissory note of the Borrowers substantially in the form of Exhibit C-2 , payable to the order of the Swing Line Lender, evidencing the Swing Line Loans made by the Swing Line Lender.

 

“Swing Line Sublimit” means an amount equal to the lesser of (a) the lesser of $100,000,000 and (b) the Aggregate Commitments.  The Swing Line Sublimit is part of, and not in addition to, the Aggregate Commitments.

 

“Synthetic Lease Obligation” means the monetary obligation of a Person under (a) a so-called synthetic, off-balance sheet or tax retention lease, or (b) an agreement for the use or possession of property (including sale and leaseback transactions), in each case, creating obligations that do not appear on the balance sheet of such Person but which, upon the application of any Debtor Relief Laws to such Person, would be characterized as the indebtedness of such Person (without regard to accounting treatment).

 

“Tax Returns” has the meaning set forth in Section 5.11 .

 

“Taxes” means all present or future taxes, levies, imposts, duties, deductions, withholdings, assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto; provided , that , Taxes shall exclude Excluded Taxes.

 

“Tender Offer Agreement” means the Tender Offer Agreement, dated as of January 10, 2013, among Symphony Investors LLC, Cerberus and the Lead Borrower.

 

70



 

“Term Loan Agent” means Goldman Sachs Bank USA, in its capacity as agent for the Term Loan Lenders, and its successors and assigns including any replacement or successor agent.

 

“Term Loan Agreement” means the Credit Agreement, dated of even date with the Agreement, among Term Loan Agent, Term Loan Lenders, and the Lead Borrower.

 

“Term Loan Debt” means the Indebtedness evidenced by or arising under the Term Loan Documents.

 

“Term Loan Documents” means, collectively: (a) the Term Loan Agreement and (b) all other agreements, instruments, documents and certificates executed and delivered to, or in favor of, the Term Loan Agent or the Term Loan Lenders in connection therewith.

 

“Term Loan Facility” means the term loan facility provided to Lead Borrower pursuant to the terms of the Term Loan Agreement as it may be amended or refinanced in accordance with the terms of the Term Loan Intercreditor Agreement.

 

“Term Loan Intercreditor Agreement” means the Intercreditor Agreement, dated of even date herewith, by and among Administrative Agent, Lenders, Term Loan Agent and Term Loan Lenders, as acknowledged and agreed to by Borrowers and Guarantors, providing for such parties’ relative rights and priorities with respect to the assets and properties of the Loan Parties and related matters.

 

“Term Loan Lenders” means the financial institutions from time to time party to the Term Loan Agreement as lenders, together with their respective successors and assigns.

 

“Term Loan Priority Collateral” has the meaning specified therefor in the Term Loan Intercreditor Agreement.

 

“Termination Date” means the earliest to occur of (a) the Maturity Date, (b) the date on which the maturity of the Obligations is accelerated (or deemed accelerated) and the Commitments are irrevocably terminated (or deemed terminated) in accordance with Article VIII , or (c) the termination of the Commitments in accordance with the provisions of Section 2.06(a)  hereof.

 

“Third Party Payor” shall mean any Person, such as a Fiscal Intermediary, Blue Cross/Blue Shield, or private health insurance company, which is obligated to reimburse or otherwise make payments to health care providers who provide medical care or medical assistance or other goods or services for eligible patients under any private insurance contract.

 

“Total Assets” means, at any date, the amount that would, in conformity with GAAP, be set forth opposite the caption “total assets” (or any like caption) on a consolidated balance sheet of the Lead Borrower and its Restricted Subsidiaries.

 

“Total Leverage Ratio” means, on any date of determination, on a pro forma basis, the ratio of (a) Consolidated Total Debt on such date to (b) Consolidated EBITDA for the Measurement Period most recently ended on or prior to such date for which financial statements have most recently been delivered pursuant to Section 6.01; provided , that , with respect to any date of determination occurring during the Fiscal Period ending closest to October 31, November 30 and December 31 of any Fiscal Year, an amount equal to $150,000,000 shall be deducted from the calculation of Consolidated Total Debt for the purposes of this calculation.

 

71



 

“Total Outstandings” means the aggregate Outstanding Amount of all Loans and all LC Obligations.

 

“Trading with the Enemy Act” has the meaning set forth in Section 10.18 .

 

“Transactions” means, collectively, (a) the NAI  Sale (including the funding of the Escrow Account (as defined in the Escrow Agreement) substantially contemporaneously with the consummation of the Albertson’s Asset Purchase (as defined in the Acquisition Agreement) as contemplated by the Acquisition Agreement and the Escrow Agreement), (b) the entering into by the Loan Parties and their applicable Subsidiaries of the Term Loan Documents, (c) the entering into by the Loan Parties and their applicable Subsidiaries of the Loan Documents to which they are or are intended to be a party, (d) the amendment and restatement of the Existing Credit Facility, (e) payment in full of all obligations under the Existing Term Loan Facility, and the termination of all Liens securing obligations thereunder, and Lead Borrower and its Subsidiaries shall have no further obligations or liabilities with respect thereto, (f) the SVU 2014 Note Repayment, (g) the payment in full of all obligations of Lead Borrower and its Subsidiaries under the Existing Receivables Transfer Agreements and the termination thereof, the repurchase by Lead Borrower and its Subsidiaries of all receivables sold thereunder, and the termination of all Liens securing obligations under or in connection with the Existing Receivables Transfer Agreements, and the Lead Borrower and its Subsidiaries shall have no further obligations or liabilities with respect thereto, (h) the payment of the fees and expenses incurred in connection with the consummation of the foregoing, and (i) the transactions reasonably related to the foregoing.

 

“Transition Agreement Parties” means the parties to the Transition Agreements as set forth on Schedule 1.01(c) , together with such other Persons as become parties to the Transition Agreements after the Closing Date provided, that, Administrative Agent has received written notice thereof from Administrative Borrower.

 

“Transition Agreements” means, collectively, (a) the Amended and Restated Transition Services Agreement, dated on or about the date hereof, between Albertson’s LLC and Lead Borrower, (b) the Transition Services Agreement, dated on or about the date hereof,  between NAI and Lead Borrower, (c) the Cross-License Agreement, dated on or about the date hereof, between AB Acquisition LLC and the Lead Borrower, and (d) the supply agreements or arrangements entered into from time to time by the Lead Borrower and its Subsidiaries and NAI and its Subsidiaries pursuant to Sections 5.5(g) and 5.5(h) of the Acquisition Agreement.

 

“Type” means, with respect to a Committed Loan, its character as a Base Rate Loan, or a LIBO Rate Loan.

 

“UCC” or “Uniform Commercial Code” means the Uniform Commercial Code as in effect from time to time in the State of New York; provided , that , (a) if a term is defined in Article 9 of the Uniform Commercial Code differently than in another Article thereof, the term shall have the meaning set forth in Article 9 and (b) if by reason of mandatory provisions of law, perfection, or the effect of perfection or non-perfection, of a security interest in any Collateral or the availability of any remedy hereunder is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York, “Uniform Commercial Code” means the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions hereof relating to such perfection or effect of perfection or non-perfection or availability of such remedy, as the case may be.

 

“UCP 600” means the rules of the Uniform Customs and Practice for Documentary Credits, as most recently published by the International Chamber of Commerce and in effect as of July 1, 2007, or as

 

72



 

an LC Issuer may agree, such later version thereof as may be in effect at the time of issuance of a Letter of Credit.

 

“UFCA” has the meaning set forth in Section 10.21(d) .

 

“UFTA” has the meaning set forth in Section 10.21(d) .

 

“Unfinanced Capital Expenditures” means all Capital Expenditures other than those made utilizing financing provided by the applicable seller or third party lenders (including, without limitation, Capital Expenditures that may give rise to Capital Lease Obligations); provided , that , Capital Expenditures made or incurred utilizing Loans shall be deemed Unfinanced Capital Expenditures.

 

“Unfunded Pension Liability” means the excess of a Pension Plan’s benefit liabilities under Section 4001(a)(16) of ERISA, over the current value of that Pension Plan’s assets, determined in accordance with the assumptions used for funding the Pension Plan pursuant to Section 412 of the Code for the applicable plan year.

 

“Unintentional Overadvance” means an Overadvance which, to the Administrative Agent’s knowledge, did not constitute an Overadvance when made but which has become an Overadvance resulting from changed circumstances, including, without limitation, a reduction in the Net Recovery Percentage of property or assets included in the Borrowing Base or misrepresentation by the Loan Parties.

 

“United States” and “U.S.” mean the United States of America.

 

“Unpaid Drawings” has the meaning set forth in Section 2.03(c) .

 

“Unrestricted Subsidiary” means (a) any Subsidiary of Lead Borrower designated by Lead Borrower as an Unrestricted Subsidiary as listed on Schedule 1.01(d)  and (b) any Subsidiary of Lead Borrower designated by Lead Borrower as an Unrestricted Subsidiary hereunder by written notice to Administrative Agent; provided , that , in each case, as to clause (a)  and (b) , Lead Borrower shall only be permitted to so designate a Subsidiary as an Unrestricted Subsidiary so long as each of the following conditions is satisfied: (i) as of the date of the designation thereof and after giving effect thereto, no Default or Event of Default exists or has occurred and is continuing, (ii) immediately after giving effect to such designation, Borrowers shall be in compliance, on a pro forma basis, with the financial covenants set forth in Section 7.15 (to the same extent as if a Covenant Compliance Event had occurred), (iii) such Subsidiary shall not be a Borrower hereunder, (iv) such Unrestricted Subsidiary shall be capitalized (to the extent capitalized by the Lead Borrower or any of its Restricted Subsidiaries) through Investments as permitted by, and in compliance with, Section 6.10 , such that the Equity Interests in such Subsidiary as of the date of, and after giving effect to, it becoming an Unrestricted Subsidiary shall be a Permitted Investment deemed made on such date to a Person that is not a Subsidiary of the Lead Borrower, and any Indebtedness of such Subsidiary owing to any Loan Party or Restricted Subsidiary as of the date of, and after giving effect to, it becoming an Unrestricted Subsidiary shall be a Permitted Investment deemed made on such date to a Person that is not a Subsidiary of the Lead Borrower, (v) without duplication of clause (iii) , the value of and investments in such Subsidiary will constitute Permitted Investments, (vi) such Subsidiary shall have been or will promptly be designated an “Unrestricted Subsidiary” (or otherwise not be subject to the covenants) under the Term Loan Facility, and the Existing Debt Documents, if applicable, and shall not be designated a Restricted Subsidiary for purposes of any other Indebtedness, (vii) such Subsidiary shall not have as of the date of the designation thereof or at any time thereafter, create, incur, issue, assume, guarantee or otherwise become directly liable with respect to any Indebtedness pursuant to which the lender, or other party to whom such Indebtedness is owing, has recourse to any Loan Party or any Restricted Subsidiary or their assets, and (viii) Administrative Agent

 

73



 

shall have received an officer’s certificate executed by a Responsible Officer of the Lead Borrower, certifying compliance with the requirements of preceding clauses (i)  through (vii) , and containing the calculations and information required by the preceding clause (ii) , and (b) any Subsidiary of an Unrestricted Subsidiary.  The Lead Borrower may designate any Unrestricted Subsidiary to be a Restricted Subsidiary for purposes of the Agreement (each, a “ Subsidiary Redesignation ”); provided , that , (1) as of the date thereof, and after giving effect thereto, no Default or Event of Default exists or has occurred and is continuing, (2) immediately after giving effect to such Subsidiary Redesignation, Borrowers shall be in compliance, on a pro forma basis, with the financial covenants set forth in Section 7.15 (to the same extent as if a Covenant Compliance Event had occurred), (3) designation of any Unrestricted Subsidiary as a Restricted Subsidiary shall constitute the incurrence at the time of designation of any Indebtedness or Liens of such Subsidiary existing at such time, and (4) Administrative Agent shall have received an officer’s certificate executed by a Responsible Officer of the Lead Borrower, certifying compliance with the requirements of preceding clauses (1)  and (2) , and containing the calculations and information required by the preceding clause (2) .  In no event will Moran Foods, LLC constitute an Unrestricted Subsidiary.

 

“Wells Fargo” means Wells Fargo Bank, National Association and its successors and assigns.

 

“Weighted Average Life to Maturity” shall mean, when applied to any Indebtedness at any date, the number of years obtained by dividing (a) the then outstanding principal amount of such Indebtedness into (b) the total of the product obtained by multiplying (i) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect thereof, by (ii) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment.

 

“Wholesale Inventory” means Inventory located at, or in transit to, any distribution center owned or leased by any Loan Party.

 

“Wholesale Trade Receivables” shall mean, all Accounts owing to a Borrower, whether now existing or hereafter arising and wherever located, arising from the sale of Wholesale Inventory, and including the right to payment of any other obligations with respect thereto.

 

1.02.  Other Interpretive Provisions.   With reference to this Agreement and each other Loan Document, unless otherwise specified herein or in such other Loan Document:

 

(a)                    The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined.  Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms.  The words “ include ,” “ includes ” and “ including ” shall be deemed to be followed by the phrase “without limitation.”  The word “ will ” shall be construed to have the same meaning and effect as the word “ shall .”  Unless the context requires otherwise, (i) any definition of or reference to any agreement, instrument or other document (including any Organization Document) shall be construed as referring to such agreement, instrument or other document as from time to time amended, modified, supplemented, extended, renewed, restated or replaced (subject to any restrictions on such amendments, supplements or modifications set forth herein or in any other Loan Document), (ii) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (iii) the words “ herein ,” “ hereof ” and “ hereunder ,” and words of similar import when used in any Loan Document, shall be construed to refer to such Loan Document in its entirety and not to any particular provision thereof, (iv) all references in a Loan Document to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, the Loan Document in which such references appear, (v) any reference to any law shall include all statutory and regulatory provisions consolidating, amending, replacing or interpreting such law and any reference to any law or

 

74



 

regulation shall, unless otherwise specified, refer to such law or regulation as amended, modified or supplemented from time to time, and (vi) the words “ asset ” and “ property ” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.

 

(b)                    In the computation of periods of time from a specified date to a later specified date, the word “ from ” means “ from and including ;” the words “ to ” and “ until ” each mean “ to but excluding ;” and the word “ through ” means “ to and including .”

 

(c)                     Section headings herein and in the other Loan Documents are included for convenience of reference only and shall not affect the interpretation of this Agreement or any other Loan Document.

 

(d)                    Any reference herein or in any other Loan Document to the satisfaction, repayment, or payment in full of the Obligations shall mean the repayment in Dollars in full in cash or immediately available funds (or, in the case of contingent reimbursement obligations with respect to Letters of Credit and Bank Products (other than Swap Contracts), providing Cash Collateralization) of all of the Obligations (including the payment of any termination amount then applicable (or which would become applicable as a result of the repayment of the other Obligations) under Swap Contracts with a Lender or Affiliate of a Lender) other than (i) unasserted contingent indemnification Obligations, (ii) any Obligations relating to Bank Products (other than Swap Contracts) that, at such time, are allowed by the applicable Bank Product provider to remain outstanding without being required to be repaid or Cash Collateralized, and (iii) any Obligations relating to Swap Contracts with a Lender or Affiliate of a Lender that, at such time, are allowed by the applicable provider of such Swap Contracts to remain outstanding without being required to be repaid.

 

1.03.  Accounting Terms

 

(a)                    Generally .  All accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations) required to be submitted pursuant to this Agreement shall be prepared in conformity with, GAAP applied on a consistent basis, as in effect from time to time, applied in a manner consistent with that used in preparing the Audited Financial Statements, except as otherwise specifically prescribed herein.  Whenever the term “Lead Borrower” or “Borrowers” is used in respect of a financial covenant or a related definition, it shall be understood to mean Lead Borrower or Borrowers and their Restricted Subsidiaries on a Consolidated basis, unless the context clearly requires otherwise.

 

(b)                    Changes in GAAP .  If at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in any Loan Document, and either the Lead Borrower or the Required Lenders shall so request, the Administrative Agent, the Lenders and the Lead Borrower shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the approval of the Required Lenders); provided , that , until so amended, (i) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (ii) the Lead Borrower shall provide to the Administrative Agent and the Lenders financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP.

 

1.04.  Rounding.   Any financial ratios required to be maintained by the Borrowers pursuant to this Agreement shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which such ratio is expressed herein

 

75



 

and rounding the result up or down to the nearest number (with a rounding-up if there is no nearest number).

 

1.05.  Times of Day.   Unless otherwise specified, all references herein to times of day shall be references to Eastern time (daylight or standard, as applicable).

 

1.06.  Letter of Credit Amounts.  Unless otherwise specified, all references herein to the amount of a Letter of Credit at any time shall be deemed to be the Stated Amount of such Letter of Credit in effect at such time; provided , that , with respect to any Letter of Credit that, by its terms, provides for one or more automatic increases in the Stated Amount thereof, the amount of such Letter of Credit shall be deemed to be the maximum Stated Amount of such Letter of Credit after giving effect to all such increases, whether or not such maximum Stated Amount is in effect at such time.

 

1.07.  Currency Equivalents Generally.   Any amount specified in this Agreement (other than in Articles II IX and X ) or any of the other Loan Documents to be in Dollars shall also include the equivalent of such amount in any currency other than Dollars, such equivalent amount thereof in the applicable currency to be determined by the Administrative Agent at such time on the basis of the Spot Rate (as defined below) for the purchase of such currency with Dollars.  The Outstanding Amount of Letters of Credit stated in any currency other than Dollars, shall be, at the time of any such determination the equivalent amount in Dollars of such currency or currencies as determined by the Administrative Agent on the basis of the Spot Rate for the purchase of Dollars with such currency or currencies at such time.  For purposes of this Section 1.07 , the “ Spot Rate ” for a currency means the rate determined by the Administrative Agent to be the rate quoted by the Person acting in such capacity as the spot rate for the purchase by such Person of such currency with another currency through its principal foreign exchange trading office at approximately 11:00 a.m. on the date two Business Days prior to the date of such determination; provided , that , the Administrative Agent may obtain such spot rate from another financial institution designated by the Administrative Agent if the Person acting in such capacity does not have as of the date of determination a spot buying rate for any such currency.

 

ARTICLE II
THE COMMITMENTS AND CREDIT EXTENSIONS

 

2.01.  Committed Loans.

 

(a)                    Subject to the terms and conditions set forth herein, each Lender severally agrees to make loans in Dollars (each such loan, a “ Committed Loan ”) to the Borrowers from time to time, on any Business Day during the Availability Period, in an aggregate amount not to exceed at any time outstanding the lesser of (x) the amount of such Lender’s Commitment, or (y) such Lender’s Applicable Percentage of the Borrowing Base; subject in each case to the following limitations:

 

(i)                        after giving effect to any Committed Borrowing, the Total Outstandings shall not exceed the Loan Cap,

 

(ii)                     after giving effect to any Committed Borrowing, the aggregate Outstanding Amount of the Committed Loans of any Lender, plus such Lender’s Applicable Percentage of the Outstanding Amount of all LC Obligations, plus such Lender’s Applicable Percentage of the Outstanding Amount of all Swing Line Loans shall not exceed such Lender’s Commitment,

 

(iii)                  the Outstanding Amount of all LC Obligations shall not at any time exceed the Letter of Credit Sublimit.

 

76



 

Within the limits of each Lender’s Commitment, and subject to the other terms and conditions hereof, the Borrowers may borrow under this Section 2.01 , prepay under Section 2.05 , and reborrow under this Section 2.01 .  Committed Loans may be Base Rate Loans, or LIBO Rate Loans, as further provided herein.

 

(b)                    The Administrative Agent shall have the right, at any time and from time to time after the Closing Date in their Permitted Discretion to establish, modify or eliminate Reserves.  The Administrative Agent will provide the Lead Borrower one (1) Business Day’s prior notice of the establishment of any new categories of Reserves or for changes in the methodology of the calculation of an existing category of Reserves, provided , that , no such notice shall be required (i) at any time that a Default or Event of Default shall exist or have occurred and be continuing, (ii) for changes to any Reserves resulting solely by virtue of mathematical calculations of the amount of the Reserve in accordance with the methodology of calculation previously utilized (such as, but not limited to, rent and Customer Credit Liabilities), or (iii) for changes to categories of Reserves or methodology of calculation if a Material Adverse Effect has occurred or it would be reasonably likely to occur were such categories of Reserves or methodology not changed prior to the expiration of such one (1) Business Day period.

 

2.02.  Borrowings, Conversions and Continuations of Committed Loans.

 

(a)                    Committed Loans shall be (i) Base Rate Loans, or (ii) LIBO Rate Loans as the Lead Borrower may request subject to and in accordance with this Section 2.02 .  All Swing Line Loans shall be only Base Rate Loans.  Subject to the other provisions of this Section 2.02 , Committed Borrowings of more than one Type may be incurred at the same time.

 

(b)                    Each Committed Borrowing, each conversion of Committed Loans from one Type to the other, and each continuation of LIBO Rate Loans shall be made upon the Lead Borrower’s irrevocable notice to the Administrative Agent, which may be given by telephone.  Each such notice must be received by the Administrative Agent not later than (i) 4:00 p.m. three Business Days prior to the requested date of any Borrowing of, conversion to or continuation of LIBO Rate Loans, and (ii) 1:00 p.m. on the Business Day that is the requested date of any Borrowing of Base Rate Loans or of any conversion of LIBO Rate Loans to Base Rate Loans; provided , that , if the Lead Borrower wishes to request LIBO Rate Loans having an Interest Period other than one, two, three or six months in duration as provided in the definition of “Interest Period”, the applicable notice must be received by the Administrative Agent not later than 11:00 a.m. four Business Days prior to the requested date of such Borrowing, conversion or continuation, whereupon the Administrative Agent shall give prompt notice to the Lenders of such request and determine whether the requested Interest Period is acceptable to all of them.  Not later than 11:00 a.m., two Business Days before the requested date of such Borrowing, conversion or continuation, the Administrative Agent shall notify the Lead Borrower (which notice may be by telephone) whether or not the requested Interest Period has been consented to by all the Lenders. Each telephonic notice by the Lead Borrower pursuant to this Section 2.02(b)  must be confirmed promptly by delivery to the Administrative Agent of a written Committed Loan Notice, appropriately completed and signed by a Responsible Officer of the Lead Borrower.  Each Borrowing of, conversion to or continuation of LIBO Rate Loans shall be in a principal amount of $1,000,000 or a whole multiple of $500,000 in excess thereof.  Each Borrowing of, conversion to or continuation of Base Rate Loans shall be in a principal amount of $500,000 or a whole multiple of $100,000 in excess thereof.  Each Committed Loan Notice (whether telephonic or written) shall specify (i) whether the Lead Borrower is requesting a Committed Borrowing, a conversion of Committed Loans from one Type to the other, or a continuation of LIBO Rate Loans, (ii) the requested date of the Borrowing, conversion or continuation, as the case may be (which shall be a Business Day), (iii) the principal amount of Committed Loans to be borrowed, converted or continued, (iv) the Type of Committed Loans to be borrowed or to which existing Committed Loans are to be converted, and (v) if applicable, the duration of the Interest Period with respect thereto.  If the Lead Borrower fails to specify a

 

77



 

Type of Committed Loan in a Committed Loan Notice or if the Lead Borrower fails to give a timely notice requesting a conversion or continuation, then the applicable Committed Loans shall be made as, or converted to, Base Rate Loans.  Any such automatic conversion to Base Rate Loans shall be effective as of the last day of the Interest Period then in effect with respect to the applicable LIBO Rate Loans.  If the Lead Borrower requests a Borrowing of, conversion to, or continuation of LIBO Rate Loans in any such Committed Loan Notice, but fails to specify an Interest Period, it will be deemed to have specified an Interest Period of one month.  Notwithstanding anything to the contrary herein, a Swing Line Loan may not be converted to a LIBO Rate Loan.

 

(c)                     Following receipt of a Committed Loan Notice, the Administrative Agent shall promptly notify each Lender of the amount of its Applicable Percentage of the applicable Committed Loans, the Type of such Committed Loans and, if such Committed Loans are LIBO Rate loans, the Interest Period applicable thereto and if no timely notice of a conversion or continuation is provided by the Lead Borrower, the Administrative Agent shall notify each Lender of the details of any automatic conversion to Base Rate Loans described in Section 2.02(b) .  In the case of a Committed Borrowing, each Lender shall make the amount of its Committed Loan available to the Administrative Agent in immediately available funds at the Administrative Agent’s Office not later than 3:00 p.m. on the Business Day specified in the applicable Committed Loan Notice.  Upon satisfaction of the applicable conditions set forth in Section 4.02 (and, if such Borrowing is the initial Credit Extension, Section 4.01 ), to the extent that Administrative Agent has received such funds from Lenders in a timely manner, the Administrative Agent shall use reasonable efforts to make all funds so received available to the Borrowers in like funds by no later than 4:00 p.m. on the Business Day requested in the applicable Committed Loan Notice either by (i) crediting the account of the Lead Borrower on the books of Wells Fargo with the amount of such funds or (ii) wire transfer of such funds, in each case in accordance with instructions provided to (and reasonably acceptable to) the Administrative Agent by the Lead Borrower.

 

(d)                    The Administrative Agent, without the request of the Lead Borrower, may advance any interest, fee, service charge (including direct wire fees), Credit Party Expenses, or other payment to which any Credit Party is entitled from the Loan Parties pursuant hereto or any other Loan Document and may charge the same to the Loan Account notwithstanding that an Overadvance may result thereby, provided , that , in the event that Administrative Agent has received payment by wire transfer to the Agent Payment Account prior to 3:00 p.m. on the date such amount is due and payable, Administrative Agent will not make such advance or charge the Loan Account  The Administrative Agent shall advise the Lead Borrower of any such advance or charge promptly after the making thereof.  Such action on the part of the Administrative Agent shall not constitute a waiver of the Administrative Agent’s rights and the Borrowers’ obligations under Section 2.05(c) .  Any amount which is added to the principal balance of the Loan Account as provided in this Section 2.02(d)  shall bear interest at the interest rate then and thereafter applicable to Base Rate Loans.

 

(e)                     Except as otherwise provided herein, a LIBO Rate Loan may be continued or converted only on the last day of an Interest Period for such LIBO Rate Loan.  During the existence of a Default, no Loans may be requested as, converted to or continued as LIBO Rate Loans without the consent of the Required Lenders.

 

(f)                      The Administrative Agent shall promptly notify the Lead Borrower and the Lenders of the interest rate applicable to any Interest Period for LIBO Rate Loans upon determination of such interest rate.  At any time that Base Rate Loans are outstanding, the Administrative Agent shall promptly notify the Lead Borrower of any change in the Base Rate.

 

78



 

(g)                     After giving effect to all Committed Borrowings, all conversions of Committed Loans from one Type to the other, and all continuations of Committed Loans as the same Type, there shall not be more than twelve (12) Interest Periods in effect with respect to LIBO Rate Loans.

 

(h)                    The Administrative Agent, the Lenders, the Swing Line Lender and the LC Issuers shall have no obligation to make any Loan or to provide any Letter of Credit if an Overadvance would result.  The Administrative Agent may, in its discretion, make Permitted Overadvances without the consent of the Borrowers, the Lenders, the Swing Line Lender and the LC Issuers and the Borrowers and each Lender shall be bound thereby.  Any Permitted Overadvance may constitute a Swing Line Loan. A Permitted Overadvance is for the account of the Borrowers and shall constitute a Base Rate Loan and an Obligation and shall be repaid by the Borrowers in accordance with the provisions of Section 2.05(c) .  The making of any such Permitted Overadvance on any one occasion shall not obligate the Administrative Agent or any Lender to make or permit any Permitted Overadvance on any other occasion or to permit such Permitted Overadvances to remain outstanding. The making by the Administrative Agent of a Permitted Overadvance shall not modify or abrogate any of the provisions of Section 2.03 regarding the Lenders’ obligations to purchase participations with respect to Letter of Credits or of Section 2.04 regarding the Lenders’ obligations to purchase participations with respect to Swing Line Loans.  The Administrative Agent shall have no liability for, and no Loan Party or Credit Party shall have the right to, or shall, bring any claim of any kind whatsoever against the Administrative Agent with respect to Unintentional Overadvances regardless of the amount of any such Overadvance(s).

 

2.03.  Letters of Credit.

 

(a)                    The Letter of Credit Commitment .

 

(i)                        Subject to the terms and conditions set forth herein, (A) each LC Issuer agrees, in reliance upon the agreements of the Lenders set forth in this Section 2.03 , (1) from time to time on any Business Day during the period from the Closing Date until the Letter of Credit Expiration Date, to issue Letters of Credit for the account of the Loan Parties, and to amend or extend Letters of Credit previously issued by it, in accordance with Section 2.03(b)  below, and (2) to honor drawings under the Letters of Credit that comply with the terms thereof; and (B) the Lenders severally agree to participate in Letters of Credit issued for the account of the Loan Parties and any drawings thereunder; provided , that , after giving effect to any LC Credit Extension with respect to any Letter of Credit, (1) the Total Outstandings shall not exceed the Loan Cap, (2) the aggregate Outstanding Amount of the Committed Loans of any Lender, plus such Lender’s Applicable Percentage of the Outstanding Amount of all LC Obligations, plus such Lender’s Applicable Percentage of the Outstanding Amount of all Swing Line Loans shall not exceed such Lender’s Commitment, and (3) the Outstanding Amount of the LC Obligations shall not exceed the Letter of Credit Sublimit.  Each request by the Lead Borrower for the issuance or amendment of a Letter of Credit shall be deemed to be a representation by the Borrowers that the LC Credit Extension so requested complies with the conditions set forth in the proviso to the preceding sentence.  Within the foregoing limits, and subject to the terms and conditions hereof, the Borrowers’ ability to obtain Letters of Credit shall be fully revolving, and accordingly the Borrowers may, during the foregoing period, obtain Letters of Credit to replace Letters of Credit that have expired or that have been drawn upon and reimbursed.

 

(ii)                     Each LC Issuer (other than Wells Fargo or any of its Affiliates) shall notify the Administrative Agent in writing on each Business Day of each LC Credit Extension issued on the prior Business Day by such LC Issuer; provided , that , (A) until the Administrative Agent advises any such LC Issuer that the provisions of Section 4.02 are not satisfied, or (B) the aggregate amount of the Letters of Credit issued in any such week exceeds such amount as shall be agreed by the Administrative Agent and the LC Issuers, each LC Issuer shall be required to so notify the Administrative Agent in writing only

 

79



 

once each week of the Letters of Credit issued by such LC Issuer during the immediately preceding week as well as the daily amounts outstanding for the prior week, such notice to be furnished on such day of the week as the Administrative Agent and such LC Issuer may agree.

 

(iii)                  All Existing Letters of Credit, whether or not issued for the account of a Loan Party, shall be deemed to have been issued pursuant hereto, and from and after the Closing Date shall be subject to and governed by the terms and conditions hereof, including all obligations of Borrowers hereunder

 

(iv)                 No Letter of Credit shall be issued if:

 

(A)        subject to Section 2.03(b)(iii) , the expiry date of such requested Standby Letter of Credit would occur more than twelve months after the date of issuance or last extension, unless the Required Lenders have approved such expiry date; or

 

(B)        subject to Section 2.03(b)(iii) , the expiry date of such requested Commercial Letter of Credit would occur more than one hundred twenty (120) days after the date of issuance or last extension, unless the Required Lenders have approved such expiry date; or

 

(C)        the expiry date of such requested Letter of Credit would occur after the Letter of Credit Expiration Date, unless either (1) such Letter of Credit is Cash Collateralized on or prior to the date of issuance of such Letter of Credit (or such later date as to which the Administrative Agent may agree) or (2) all the Lenders have approved such expiry date.

 

(v)                    No Letter of Credit shall be issued without the prior consent of the Administrative Agent if:

 

(A)        any order, judgment or decree of any Governmental Authority or arbitrator shall by its terms purport to enjoin or restrain the applicable LC Issuer from issuing such Letter of Credit, or any Law applicable to such LC Issuer or any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over such LC Issuer shall prohibit, or request that such LC Issuer refrain from, the issuance of letters of credit generally or such Letter of Credit in particular or shall impose upon such LC Issuer with respect to such Letter of Credit any restriction, reserve or capital requirement (for which such LC Issuer is not otherwise compensated hereunder) not in effect on the Closing Date, or shall impose upon the LC Issuer any unreimbursed loss, cost or expense which was not applicable on the Closing Date and which the LC Issuer in good faith deems material to it;

 

(B)        the issuance of such Letter of Credit would violate one or more policies of the applicable LC Issuer applicable to letters of credit generally;

 

(C)        such Letter of Credit contains any provisions for automatic reinstatement of the Stated Amount after any drawing thereunder; or

 

(D)        a default of any Lender’s obligations to fund under Section 2.03(c)  exists or any Lender is at such time a Defaulting Lender hereunder, unless the Administrative Agent or LC Issuer has entered into reasonably satisfactory arrangements with the Borrowers, the other Lenders or such Lender to eliminate the LC Issuer’s risk with respect to such Lender.

 

(vi)                 If a Letter of Credit is to be denominated in a currency other than Dollars, all reimbursements by the Borrowers of the honoring of any drawing under such Letter of Credit shall be paid in Dollars based on the Spot Rate.

 

80



 

(vii)              No LC Issuer shall amend any Letter of Credit if (A) the LC Issuer would not be permitted at such time to issue such Letter of Credit in its amended form under the terms hereof or (B) the beneficiary of such Letter of Credit does not accept the proposed amendment to such Letter of Credit.

 

(viii)           If, at any time, it becomes unlawful for the LC Issuer to comply with its obligations under any Letter of Credit (including, but not limited to, as a result of any sanctions imposed by the United Nations, the European Union, the Netherlands, the United Kingdom and/or the United States), such obligations shall be suspended (and all corresponding rights shall cease to accrue) until such time as it may again become lawful for the LC Issuer to comply with them, and the LC Issuer shall not be liable for any losses which Loan Parties may incur as a result.

 

(ix)                 Each LC Issuer shall act on behalf of the Lenders with respect to any Letters of Credit issued by it and the documents associated therewith, and to the extent that an LC Issuer is acting on behalf of the Lenders in such circumstances, as to such Lenders, the LC Issuer shall be entitled to the benefits and immunities provided to the Administrative Agent in Article IX with respect to any acts taken or omissions suffered by such LC Issuer in connection with Letters of Credit issued by it or proposed to be issued by it and Issuer Documents pertaining to such Letters of Credit; provided , that , nothing in this clause (ix)  shall be construed to affect the rights of the Borrowers with respect to Letters of Credit.

 

(b)                    Procedures for Issuance and Amendment of Letters of Credit and Auto-Extension Letters of Credit .

 

(i)                        Each Letter of Credit shall be issued or amended, as the case may be, upon the request of the Lead Borrower delivered to the applicable LC Issuer (with a copy to the Administrative Agent) in the form of a Letter of Credit Application, appropriately completed and signed by a Responsible Officer of the Lead Borrower.  Such Letter of Credit Application must be received by the applicable LC Issuer and the Administrative Agent not later than 2:00 p.m. at least two Business Days (or such other date and time as the Administrative Agent and the applicable LC Issuer may agree in a particular instance in their sole discretion) prior to the proposed issuance date or date of amendment, as the case may be.  In the case of a request for an initial issuance of a Letter of Credit, such Letter of Credit Application shall specify in form and detail reasonably satisfactory to the Administrative Agent and the applicable LC Issuer: (A) the proposed issuance date of the requested Letter of Credit (which shall be a Business Day); (B) the amount thereof; (C) the expiry date thereof; (D) the name and address of the beneficiary thereof; (E) the documents to be presented by such beneficiary in case of any drawing thereunder; (F) the full text of any certificate to be presented by such beneficiary in case of any drawing thereunder; and (G) such other matters as the Administrative Agent or the applicable LC Issuer may reasonably require.  In the case of a request for an amendment of any outstanding Letter of Credit, such Letter of Credit Application shall specify in form and detail reasonably satisfactory to the Administrative Agent and such LC Issuer (1) the Letter of Credit to be amended; (2) the proposed date of amendment thereof (which shall be a Business Day); (3) the nature of the proposed amendment; and (4) such other matters as the Administrative Agent or such LC Issuer may reasonably require.  In addition, the Lead Borrower shall furnish to the applicable LC Issuer and the Administrative Agent such other documents and information pertaining to such requested Letter of Credit issuance or amendment, and any Issuer Documents as such LC Issuer or the Administrative Agent may reasonably require and the terms of such Letter of Credit shall be in form and substance reasonably satisfactory to such LC Issuer and may include partial drawings and, subject to the other terms and conditions herein and therein, provide for the automatic reinstatement of the Stated Amount thereunder.  To the extent that a Borrower may request a direct pay Letter of Credit, additional agreements and documents may be required in connection with the issuance and administration thereof, together with related additional fees and charges to Borrowers.

 

81



 

(ii)       Promptly after the receipt by an LC Issuer of any Letter of Credit Application, such LC Issuer will confirm with the Administrative Agent (by telephone or in writing) that the Administrative Agent has received a copy of such Letter of Credit Application from the Lead Borrower and, if not, such  LC Issuer will provide the Administrative Agent with a copy thereof.  Unless such LC Issuer has received written notice from any Lender, the Administrative Agent or any Loan Party, at least one Business Day prior to the requested date of issuance or amendment of the applicable Letter of Credit, that one or more applicable conditions contained in Article IV shall not then be satisfied, then, subject to the terms and conditions hereof, such LC Issuer shall, on the requested date, issue a Letter of Credit for the account of the applicable Loan Party or enter into the applicable amendment, as the case may be, in each case in accordance with such LC Issuer’s usual and customary business practices.  Immediately upon the issuance or amendment of each Letter of Credit, each Lender shall be deemed to (without any further action), and hereby irrevocably and unconditionally agrees to, purchase from such LC Issuer, without recourse or warranty, a risk participation in such Letter of Credit in an amount equal to the product of such Lender’s Applicable Percentage multiplied by the Stated Amount of such Letter of Credit.  Upon any change in the Commitments under this Agreement, with respect to all LC Obligations, there shall be an automatic adjustment to the participations hereby created to reflect the new Applicable Percentages of the assigning and assignee Lenders.

 

(iii)      If the Lead Borrower so requests in any applicable Letter of Credit Application, the applicable LC Issuer may, in its sole and absolute discretion, agree to issue a Standby Letter of Credit that has automatic extension provisions (each, an “ Auto-Extension Letter of Credit ”); provided , that , any such Auto-Extension Letter of Credit must permit such LC Issuer to prevent any such extension at least once in each twelve-month period (commencing with the date of issuance of such Standby Letter of Credit) by giving prior notice to the beneficiary thereof not later than a day (the “ Non-Extension Notice Date ”) in each such twelve-month period to be agreed upon at the time such Standby Letter of Credit is issued.  Unless otherwise directed by the Administrative Agent or the applicable LC Issuer, the Lead Borrower shall not be required to make a specific request to the Administrative Agent or such LC Issuer for any such extension.  Once an Auto-Extension Letter of Credit has been issued, the Lenders shall be deemed to have authorized (but may not require) such LC Issuer to permit the extension of such Standby Letter of Credit at any time to an expiry date not later than the Letter of Credit Expiration Date; provided , that , the Administrative Agent shall instruct the LC Issuer not to permit any such extension if (A) such LC Issuer has determined that it would not be permitted, or would have no obligation, at such time to issue such Standby Letter of Credit in its revised form (as extended) under the terms hereof (by reason of the provisions of clause (ii)  or (iii)  of Section 2.03(a)  or otherwise), or (B) such LC Issuer has received notice (which may be by telephone or in writing) on or before the day that is five Business Days before the Non-Extension Notice Date (1) from the Administrative Agent that the Required Lenders have elected not to permit such extension or (2) from the Administrative Agent, any Lender or the Lead Borrower that one or more of the applicable conditions specified in Section 4.02 is not then satisfied, and in each such case directing such LC Issuer not to permit such extension.

 

(iv)     Promptly after its delivery of any Letter of Credit or any amendment to a Letter of Credit to an advising bank with respect thereto or to the beneficiary thereof, the applicable LC Issuer will also deliver to the Lead Borrower and the Administrative Agent a true and complete copy of such Letter of Credit or amendment.

 

(c)       Drawings and Reimbursements; Funding of Participations .

 

(i)        Upon receipt from the beneficiary of any Letter of Credit of any notice of a drawing under such Letter of Credit, the applicable LC Issuer shall notify the Lead Borrower and the Administrative Agent of such demand for payment and whether such LC Issuer has made or will make an LC Disbursement thereunder; provided , that , any failure to give or delay in giving such notice shall not

 

82



 

relieve the Borrowers of their obligation to reimburse such LC Issuer and the Lenders with respect to any such LC Disbursement.  If an LC Issuer shall make an LC Disbursement, the Borrowers shall reimburse such LC Disbursement by paying to the Administrative Agent an amount equal to such LC Disbursement (each such amount so paid until reimbursed, an “ Unpaid Drawing ”) not later than 12:00 noon on the Business Day immediately following the date the Lead Borrower receives the notice from such LC Issuer as provided above.  In the event that Administrative Agent does not receive such payment by such time, except as Administrative Agent may otherwise agree, the Borrowers shall be deemed to have requested a Committed Borrowing of Base Rate Loans to be immediately disbursed in an amount equal to the applicable LC Disbursement, without regard to the minimum and multiples specified in Section 2.02(c)  for the principal amount of Base Rate Loans and without regard to whether the conditions set forth in Section 4.02 have been met.  Any notice given by an LC Issuer or the Administrative Agent pursuant to this Section 2.03(c)(i)  may be given by telephone if confirmed in writing, provided , that , the lack of such immediate confirmation shall not affect the conclusiveness or binding effect of such notice.  If LC Issuer shall make any LC Disbursement, unless the Borrowers shall reimburse such LC Disbursement in full on the date such LC Disbursement is made, the unpaid amount thereof shall bear interest at the interest rate applicable to Base Rate Loans, for each day from and including the date such LC Disbursement is made to but excluding the date that the Committed Loan is deemed made as provided above.  Such interest accrued shall be for the account of the applicable LC Issuer.

 

(ii)       Each Lender’s obligation to make Committed Loans or to reimburse the LC Issuers for amounts drawn under Letters of Credit, as contemplated by this Section 2.03(c) , shall be absolute and unconditional and shall not be affected by any circumstance, including (A) any setoff, counterclaim, recoupment, defense or other right which such Lender may have against any LC Issuer, any Borrower or any other Person for any reason whatsoever; (B) the occurrence or continuance of a Default, or (C) any other occurrence, event or condition, whether or not similar to any of the foregoing,  and without regard to whether the conditions set forth in Section 4.02 have been met.

 

(d)      Repayment of Participations .  If any payment received by an LC Issuer pursuant to Section 2.03(c)(i)  is required to be returned under any of the circumstances described in Section 10.05 (including pursuant to any settlement entered into by such LC Issuer in its discretion), each Lender shall pay to the Administrative Agent for the account of such LC Issuer its Applicable Percentage thereof on demand of the Administrative Agent, plus interest thereon from the date of such demand to the date such amount is returned by such Lender, at a rate per annum equal to the Federal Funds Rate from time to time in effect.  The obligations of the Lenders under this clause shall survive the payment in full of the Obligations and the termination of this Agreement.

 

(e)       Obligations Absolute .  The obligation of the Borrowers to reimburse the applicable LC Issuer for each drawing under each Letter of Credit shall be absolute, unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement under all circumstances, including the following:

 

(i)        any lack of validity or enforceability of such Letter of Credit, this Agreement, or any other Loan Document (other than such lack of validity or enforceability that arises from the expiration of such Letter of Credit by its terms);

 

(ii)       the existence of any claim, counterclaim, setoff, defense or other right that the Borrowers or any Subsidiary may have at any time against any beneficiary or any transferee of such Letter of Credit (or any Person for whom any such beneficiary or any such transferee may be acting), such LC Issuer or any other Person, whether in connection with this Agreement, the transactions contemplated hereby or by such Letter of Credit or any agreement or instrument relating thereto, or any unrelated transaction;

 

83



 

(iii)      any draft, demand, certificate or other document presented under such Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; or any loss or delay in the transmission or otherwise of any document required in order to make a drawing under such Letter of Credit;

 

(iv)     any payment by such LC Issuer under such Letter of Credit against presentation of a draft or certificate that does not strictly comply with the terms of such Letter of Credit; or any payment made by such LC Issuer under such Letter of Credit to any Person purporting to be a trustee in bankruptcy, debtor-in-possession, assignee for the benefit of creditors, liquidator, receiver or other representative of or successor to any beneficiary or any transferee of such Letter of Credit, including any arising in connection with any proceeding under any Debtor Relief Law;

 

(v)      any other circumstance or happening whatsoever, whether or not similar to any of the foregoing, including any other circumstance that might otherwise constitute a defense available to, or a discharge of, the Borrowers or any of their Subsidiaries; or

 

(vi)     the fact that any Default or Event of Default shall have occurred and be continuing.

 

The Lead Borrower shall promptly examine a copy of each Letter of Credit and each amendment thereto that is delivered to it and, in the event of any claim of noncompliance with the Lead Borrower’s instructions or other irregularity, the Lead Borrower will immediately notify the Administrative Agent and the LC Issuer.  The Borrowers shall be conclusively deemed to have waived any such claim against the LC Issuer and its correspondents unless such notice is given as aforesaid, provided , that , nothing in this Section 2.03(e)  shall be construed to limit or otherwise affect the rights of the Borrowers with respect to claims of the Borrowers against an LC Issuer.

 

(f)       Role of LC Issuer .  Each Lender and the Borrowers agree that, in paying any drawing under a Letter of Credit, the applicable LC Issuer shall not have any responsibility to obtain any document (other than any sight draft, certificates and documents expressly required by the Letter of Credit) or to ascertain or inquire as to the validity or accuracy of any such document or the authority of the Person executing or delivering any such document.  None of the LC Issuers, the Administrative Agent, any of their respective Related Parties nor any correspondent, participant or assignee of the LC Issuer shall be liable to any Lender for (i) any action taken or omitted in connection herewith at the request or with the approval of the Lenders or the Required Lenders, as applicable; (ii) any action taken or omitted in the absence of gross negligence or willful misconduct; (iii) any error, omission, interruption, loss or delay in transmission or delivery of any draft, notice or other communication under or relating to any Letter of Credit or any error in interpretation of technical terms; or (iv) the due execution, effectiveness, validity or enforceability of any document or instrument related to any Letter of Credit or Issuer Document.  The Borrowers hereby assume all risks of the acts or omissions of any beneficiary or transferee with respect to its use of any Letter of Credit; provided , that , this assumption is not intended to, and shall not, preclude the Borrowers’ pursuing such rights and remedies as it may have against the beneficiary or transferee at law or under any other agreement.  None of the LC Issuers, the Administrative Agent, any of their respective Related Parties nor any correspondent, participant or assignee of any LC Issuer shall be liable or responsible for any of the matters described in clauses (i)  through (vi)  of Section 2.03(e)  or for any action, neglect or omission under or in connection with any Letter of Credit or Issuer Documents, including, without limitation, the issuance or any amendment of any Letter of Credit, the failure to issue or amend any Letter of Credit, or the honoring or dishonoring of any demand under any Letter of Credit, and such action or neglect or omission will bind the Borrowers; provided , that , anything in such clauses to the contrary notwithstanding, the Borrowers may have a claim against an LC Issuer, and an LC Issuer may be liable to the Borrowers, to the extent, but only to the extent, of any direct, as opposed to consequential, exemplary or punitive damages suffered by the Borrowers caused by (A) such LC Issuer’s

 

84



 

willful misconduct or gross negligence (as determined by a final, non-appealable order of a court of competent jurisdiction) in determining whether documents presented under any Letter of Credit comply with the terms thereof or (B) such LC Issuer’s willful failure to pay under any Letter of Credit after the presentation to such LC Issuer by any beneficiary (or a successor beneficiary to whom such Letter of Credit has been transferred in accordance with its terms) of documents strictly complying with the terms and conditions of such Letter of Credit; provided , that , any claim against such LC Issuer by the Borrowers for any loss suffered or incurred by the Borrowers shall be reduced by an amount equal to the sum of (A) the amount (if any) saved by the Borrowers as a result of the breach or other wrongful conduct that allegedly caused such loss, and (B) the amount (if any) of the loss that would have been avoided had the Borrowers taken all reasonable steps to mitigate such loss, including, without limitation, by enforcing their rights against any beneficiary and, in case of a claim of wrongful dishonor, by specifically and timely authorizing such LC Issuer to cure such dishonor.  In furtherance and not in limitation of the foregoing, the LC Issuers may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary (or the LC Issuers may refuse to accept and make payment upon such documents if such documents are not in strict compliance with the terms of such Letter of Credit), and the LC Issuers shall not be responsible for the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign a Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason.  The LC Issuers shall not be responsible for the wording of any Letter of Credit (including, without limitation, any drawing conditions or any terms or conditions that are ineffective, ambiguous, inconsistent, unduly complicated or reasonably impossible to satisfy), notwithstanding any assistance an LC Issuer may provide to the Borrowers with drafting or recommending text for any Letter of Credit Application or with the structuring of any transaction related to any Letter or Credit, and the Borrowers hereby acknowledge and agree that any such assistance will not constitute legal or other advice by an LC Issuer or any representation or warranty by an LC  Issuer that any such wording or such Letter of Credit will be effective.  Without limiting the foregoing, an LC Issuer may, as it deems appropriate, to the extent necessary to conform with its customary practices and procedures, after notice to and consent by Lead Borrower, modify or alter and use in any Letter of Credit the terminology contained on the Letter of Credit Application for such Letter of Credit.

 

(g)       Cash Collateral .

 

(i)        Upon the request of the Administrative Agent, (A) if an LC Issuer has honored any full or partial drawing request under any Letter of Credit and such drawing has resulted in an LC Obligation that remains outstanding, or (B) if, as of the Letter of Credit Expiration Date, any LC Obligation for any reason remains outstanding, the Borrowers shall, in each case, immediately Cash Collateralize the then Outstanding Amount of all LC Obligations.  Sections 2.03(a)(iv)(C) , 2.05 and 8.02(c)  set forth certain additional requirements to deliver Cash Collateral hereunder.  For purposes of this Section 2.03 , Section 1.02 , Section 2.05 and Section 8.02(c) , “ Cash Collateralize ” means to pledge and deposit with or deliver to the Administrative Agent, for the benefit of such LC Issuer and the Lenders, as collateral for the LC Obligations, cash or deposit account balances in an amount equal to one hundred three percent (103%) of the Outstanding Amount of all LC Obligations (other than LC Obligations with respect to Letters of Credit denominated in a currency other than Dollars, which LC Obligations shall be Cash Collateralized in an amount equal to one hundred fifteen percent (115%) of the Outstanding Amount of such LC Obligations), pursuant to documentation in form and substance reasonably satisfactory to the Administrative Agent and the LC Issuers (which documents are hereby consented to by the Lenders).  The Borrowers hereby grant to the Administrative Agent a security interest in all such cash, deposit accounts and all balances therein and all proceeds of the foregoing.  Cash Collateral shall be maintained in blocked, non-interest bearing deposit accounts at Wells Fargo.

 

85



 

(ii)       If at any time the Administrative Agent determines that any funds held as Cash Collateral are subject to any right or claim of any Person other than the Administrative Agent or that the total amount of such funds is less than the aggregate Outstanding Amount of all LC Obligations, the Borrowers will, forthwith upon demand by the Administrative Agent, pay to the Administrative Agent, as additional funds to be deposited as Cash Collateral, an amount equal to the excess of (A) such aggregate Outstanding Amount over (B) the total amount of funds, if any, then held as Cash Collateral that the Administrative Agent determines to be free and clear of any such right and claim.  Upon the drawing of any Letter of Credit for which funds are on deposit as Cash Collateral, such funds shall be applied, to the extent permitted under applicable Laws, to reimburse the applicable LC Issuer and, to the extent not so applied, shall thereafter be applied to satisfy other Obligations then due and payable.  After all Obligations have been paid in full, any remaining Cash Collateral will be released to the Lead Borrower or as otherwise required by applicable Law.

 

(h)      Applicability of ISP and UCP 600 .  Unless otherwise expressly agreed by the applicable LC Issuer and the Lead Borrower when a Letter of Credit is issued (including any such agreement applicable to an Existing Letter of Credit), (i) the rules of either the ISP or UCP 600 shall apply to each Standby Letter of Credit, and (ii) the rules of UCP 600 shall apply to each Commercial Letter of Credit.

 

(i)        Letter of Credit Fees .  The Borrowers shall pay to the Administrative Agent for the account of each Lender in accordance with its Applicable Percentage a Letter of Credit fee (the “ Letter of Credit Fee ”) for each Letter of Credit, for each period referred to below, equal to the Applicable LC Fee Rate on a per annum basis multiplied by the Average Daily Stated Amount under each such Letter of Credit.  For purposes of computing the daily amount available to be drawn under any Letter of Credit, the amount of the Letter of Credit shall be determined in accordance with Section 1.06 .  Letter of Credit Fees shall be (i) due and payable on the first day of the month after the end of each calendar quarter commencing with the first such date to occur after the issuance of such Letter of Credit, on the Letter of Credit Expiration Date and thereafter on demand, and (ii) computed on a quarterly basis for each calendar quarter in arrears.  If there is any change in the Applicable LC Fee Rate during any calendar quarter, the daily amount available to be drawn under of each Letter of Credit shall be computed and multiplied by the Applicable LC Fee Rate separately for each period during such calendar quarter that such Applicable LC Fee Rate was in effect.  Notwithstanding anything to the contrary contained herein, while any Event of Default exists, all Letter of Credit Fees shall accrue at the Default Rate as provided in Section 2.08(b)  hereof.

 

(j)       Fronting Fee and Documentary and Processing Charges Payable to LC Issuer .  The Borrowers shall pay directly to each LC Issuer, for its own account, a fronting fee (the “ Fronting Fee ”) with respect to each Letter of Credit issued by such LC Issuer, at a rate equal to 0.125% per annum, computed on the Average Daily Stated Amount of such Letter of Credit and on a quarterly basis in arrears.  Such Fronting Fees shall be due and payable on the first day of the month after the end of each calendar quarter, commencing with the first such date to occur after the issuance of such Letter of Credit, on the Letter of Credit Expiration Date and thereafter on demand, in each case upon receipt of an invoice from the applicable LC Issuer.  For purposes of computing the daily amount available to be drawn under any Letter of Credit, the amount of the Letter of Credit shall be determined in accordance with Section 1.06 .  Except, at Borrowers’ option, as paid directly by a beneficiary of a Commercial Letter of Credit to an LC Issuer, the Borrowers shall pay directly to each LC Issuer, for its own account, the customary issuance, presentation, amendment and other processing fees, and other standard costs and charges, of such LC Issuer relating to letters of credit as from time to time in effect.  Such customary fees and standard costs and charges are due and payable on demand and are nonrefundable.

 

(k)      Conflict with Issuer Documents .  In the event of any conflict between the terms hereof and the terms of any Issuer Document, the terms hereof shall control.

 

86



 

2.04.  Swing Line Loans.

 

(a)      The Swing Line .  Subject to the terms and conditions set forth herein, the Swing Line Lender may, in reliance upon the agreements of the other Lenders set forth in this Section 2.04 , make loans (each such loan, a “ Swing Line Loan ”) to the Borrowers from time to time on any Business Day during the Availability Period in an aggregate amount not to exceed at any time outstanding the amount of the Swing Line Sublimit, notwithstanding the fact that such Swing Line Loans, when aggregated with the Applicable Percentage of the Outstanding Amount of Committed Loans and LC Obligations of the Lender acting as Swing Line Lender, may exceed the amount of such Lender’s Commitment (in its capacity as a Lender and not Swing Line Lender); provided , that , after giving effect to any Swing Line Loan, (i) the Total Outstandings shall not exceed the Loan Cap, and (ii) the aggregate Outstanding Amount of the Committed Loans of any Lender at such time, plus such Lender’s Applicable Percentage of the Outstanding Amount of all LC Obligations at such time, plus such Lender’s Applicable Percentage of the Outstanding Amount of all Swing Line Loans at such time shall not exceed such Lender’s Commitment, and provided , that , the Borrowers shall not use the proceeds of any Swing Line Loan to refinance any outstanding Swing Line Loan.  Within the foregoing limits, and subject to the other terms and conditions hereof, the Borrowers may borrow under this Section 2.04 , prepay under Section 2.05 , and reborrow under this Section 2.04 .  Each Swing Line Loan shall bear interest only at a rate based on the Base Rate.  Immediately upon the making of a Swing Line Loan, each Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from the Swing Line Lender a risk participation in such Swing Line Loan in an amount equal to the product of such Lender’s Applicable Percentage multiplied by the amount of such Swing Line Loan.  The Swing Line Lender shall be entitled to the benefits and immunities provided to the Administrative Agent in Article IX with respect to any acts taken or omissions suffered by the Swing Line Lender in connection with Swing Line Loans; provided , that , nothing in this sentence shall be construed to affect the rights of the Borrowers with respect to Swing Line Loans.

 

(b)      Borrowing Procedures .  Each Swing Line Borrowing shall be made upon the Lead Borrower’s irrevocable notice to the Swing Line Lender and the Administrative Agent, which may be given by telephone. Each such notice must be received by the Swing Line Lender and the Administrative Agent not later than 2:00 p.m. on the requested borrowing date, and shall specify (i) the amount to be borrowed, which shall be a minimum of $100,000, and (ii) the requested borrowing date, which shall be a Business Day.  Each such telephonic notice must be confirmed promptly by delivery to the Swing Line Lender and the Administrative Agent of a written Swing Line Loan Notice, appropriately completed and signed by a Responsible Officer of the Lead Borrower.  Promptly after receipt by the Swing Line Lender of any telephonic Swing Line Loan Notice, the Swing Line Lender will confirm with the Administrative Agent (by telephone or in writing) that the Administrative Agent has also received such Swing Line Loan Notice and, if not, the Swing Line Lender will notify the Administrative Agent (by telephone or in writing) of the contents thereof.  Unless the Swing Line Lender has received notice (by telephone or in writing) from the Administrative Agent at the request of the Required Lenders prior to 2:00 p.m. on the date of the proposed Swing Line Borrowing (A) directing the Swing Line Lender not to make such Swing Line Loan as a result of the limitations set forth in the proviso to the first sentence of Section 2.04(a) , or (B) that one or more of the applicable conditions specified in Article IV is not then satisfied, then, subject to the terms and conditions hereof, the Swing Line Lender may, not later than 5:00 p.m. on the borrowing date specified in such Swing Line Loan Notice, make the amount of its Swing Line Loan available to the Borrowers either by (i) crediting the account of the Lead Borrower on the books of Wells Fargo with the amount of such funds or (ii) wire transfer of such funds, in each case in accordance with instructions provided to (and reasonably acceptable to) the Swing Line Lender and Administrative Agent by the Lead Borrower.

 

87



 

(c)       Refinancing of Swing Line Loans .

 

(i)        The Swing Line Lender at any time in its sole and absolute discretion may request, on behalf of the Borrowers (which hereby irrevocably authorize the Swing Line Lender to so request on their behalf), that each Lender make a Base Rate Loan in an amount equal to such Lender’s Applicable Percentage of the amount of Swing Line Loans then outstanding.  Such request shall be made in writing (which written request shall be deemed to be a Committed Loan Notice for purposes hereof) and in accordance with the requirements of Section 2.02 , without regard to the minimum and multiples specified therein for the principal amount of Base Rate Loans, but subject to the unutilized portion of the Aggregate Commitments and the conditions set forth in Section 4.02 .  The Swing Line Lender shall furnish the Lead Borrower with a copy of the applicable Committed Loan Notice promptly after delivering such notice to the Administrative Agent.  Each Lender shall make an amount equal to its Applicable Percentage of the amount specified in such Committed Loan Notice available to the Administrative Agent in immediately available funds for the account of the Swing Line Lender at the Administrative Agent’s Office not later than 1:00 p.m. on the day specified in such Committed Loan Notice, whereupon, subject to Section 2.04(c)(ii) , each Lender that so makes funds available shall be deemed to have made a Base Rate Loan to the Borrowers in such amount.  The Administrative Agent shall remit the funds so received to the Swing Line Lender.

 

(ii)       If for any reason any Swing Line Loan cannot be refinanced by such a Committed Borrowing in accordance with Section 2.04(c)(i) , the request for Base Rate Loans submitted by the Swing Line Lender as set forth herein shall be deemed to be a request by the Swing Line Lender that each of the Lenders fund its risk participation in the relevant Swing Line Loan and each Lender’s payment to the Administrative Agent for the account of the Swing Line Lender pursuant to Section 2.04(c)(i)  shall be deemed payment in respect of such participation.

 

(iii)      If any Lender fails to make available to the Administrative Agent for the account of the Swing Line Lender any amount required to be paid by such Lender pursuant to the foregoing provisions of this Section 2.04(c)  by the time specified in Section 2.04(c)(i) , the Swing Line Lender shall be entitled to recover from such Lender (acting through the Administrative Agent), on demand, such amount with interest thereon for the period from the date such payment is required to the date on which such payment is immediately available to the Swing Line Lender at a rate per annum equal to the greater of the Federal Funds Rate and a rate determined by the Swing Line Lender in accordance with banking industry rules on interbank compensation plus any administrative, processing or similar fees customarily charged by the Swing Line Lender in connection with the foregoing.  If such Lender pays such amount (with interest and fees as aforesaid), the amount so paid shall constitute such Lender’s Committed Loan included in the relevant Committed Borrowing or funded participation in the relevant Swing Line Loan, as the case may be.   A certificate of the Swing Line Lender submitted to any Lender (through the Administrative Agent) with respect to any amounts owing under this clause (iii) ) shall be conclusive absent manifest error.

 

(iv)     Each Lender’s obligation to make Committed Loans or to purchase and fund risk participations in Swing Line Loans pursuant to this Section 2.04(c)  shall be absolute and unconditional and shall not be affected by any circumstance, including (A) any setoff, counterclaim, recoupment, defense or other right which such Lender may have against the Swing Line Lender, the Borrowers or any other Person for any reason whatsoever, (B) the occurrence or continuance of a Default, or (C) any other occurrence, event or condition, whether or not similar to any of the foregoing; provided , that , each Lender’s obligation to make Committed Loans pursuant to this Section 2.04(c)  is subject to the conditions set forth in Section 4.02 .  No such funding of risk participations shall relieve or otherwise impair the obligation of the Borrowers to repay Swing Line Loans, together with interest as provided herein.

 

88



 

(d)      Repayment of Participations .

 

(i)        At any time after any Lender has purchased and funded a risk participation in a Swing Line Loan, if the Swing Line Lender receives any payment on account of such Swing Line Loan, the Swing Line Lender will distribute to such Lender its Applicable Percentage of such payment (appropriately adjusted, in the case of interest payments, to reflect the period of time during which such Lender’s risk participation was funded) in the same funds as those received by the Swing Line Lender.

 

(ii)       If any payment received by the Swing Line Lender in respect of principal or interest on any Swing Line Loan is required to be returned by the Swing Line Lender under any of the circumstances described in Section 10.05 (including pursuant to any settlement entered into by the Swing Line Lender in its discretion), each Lender shall pay to the Swing Line Lender its Applicable Percentage thereof on demand of the Administrative Agent, plus interest thereon from the date of such demand to the date such amount is returned, at a rate per annum equal to the Federal Funds Rate.  The Administrative Agent will make such demand upon the request of the Swing Line Lender.  The obligations of the Lenders under this clause shall survive the payment in full of the Obligations and the termination of this Agreement.

 

(e)       Interest for Account of Swing Line Lender .  The Swing Line Lender shall be responsible for invoicing the Borrowers for interest on the Swing Line Loans.  Until each Lender funds its Base Rate Loan or risk participation pursuant to this Section 2.04 to refinance such Lender’s Applicable Percentage of any Swing Line Loan, interest in respect of such Applicable Percentage shall be solely for the account of the Swing Line Lender.

 

(f)       Payments Directly to Swing Line Lender .  The Borrowers shall make all payments of principal and interest in respect of the Swing Line Loans directly to the Swing Line Lender.

 

2.05.  Prepayments.

 

(a)      The Borrowers may, upon irrevocable notice from the Lead Borrower to the Administrative Agent, at any time or from time to time voluntarily prepay Committed Loans in whole or in part without premium or penalty; provided , that , (i) such notice must be received by the Administrative Agent not later than (A) 4:00 p.m. three (3) Business Days prior to any date of prepayment of LIBO Rate Loans and (B) 1 p.m. on the date of prepayment of Base Rate Loans; (ii) any prepayment of LIBO Rate Loans shall be in a principal amount of $5,000,000 or a whole multiple of $1,000,000 in excess thereof; and (iii) any prepayment of Base Rate Loans shall be in a principal amount of $500,000 or a whole multiple of $100,000 in excess thereof or, in each case, if less, the entire principal amount thereof then outstanding.  Each such notice shall specify the date and amount of such prepayment and the Type(s) of Loans to be prepaid and, if LIBO Rate Loans, the Interest Period(s) of such Loans.  The Administrative Agent will promptly notify each Lender of its receipt of each such notice, and of the amount of such Lender’s Applicable Percentage of such prepayment.  If such notice is given by the Lead Borrower, the Borrowers shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein.  Any prepayment of a LIBO Rate Loan shall be accompanied by all accrued interest on the amount prepaid, together with any additional amounts required pursuant to Section 3.05 .  Each such prepayment shall be applied to the Committed Loans of the Lenders in accordance with their respective Applicable Percentages.

 

(b)      The Borrowers may, upon irrevocable notice from the Lead Borrower to the Swing Line Lender (with a copy to the Administrative Agent), at any time or from time to time, voluntarily prepay Swing Line Loans in whole or in part without premium or penalty; provided , that , (i) such notice must be received by the Swing Line Lender and the Administrative Agent not later than 2:00 p.m. on the date of the prepayment, and (ii) any such prepayment shall be in a minimum principal amount of $100,000.  Each such notice shall specify the date and amount of such prepayment.  If such notice is given by the Lead

 

89



 

Borrower, the Borrowers shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein.

 

(c)       If for any reason the Total Outstandings at any time exceed the Loan Cap as then in effect, the Borrowers shall immediately prepay Committed Loans, Swing Line Loans and/or Cash Collateralize the LC Obligations in an aggregate amount equal to such excess, in each case in cash without any prepayment premium or penalty (but including all breakage or similar costs); provided , that , the Borrowers shall not be required to Cash Collateralize the LC Obligations pursuant to this Section 2.05(c)  unless after the prepayment in full of the Loans the Total Outstandings exceed the Loan Cap as then in effect.

 

(d)      The Borrowers shall prepay the Loans and, to the extent otherwise required in this Agreement (including as provided in clause (g)  below), Cash Collateralize the LC Obligations in accordance with the provisions of Section 6.13 hereof.

 

(e)       The Borrowers shall prepay the Loans and, to the extent otherwise required in this Agreement (including as provided in clause (g)  below), Cash Collateralize the LC Obligations in an amount equal to the Net Proceeds received by a Loan Party on account of a Prepayment Event (subject to the rights of Term Loan Lenders to receive prepayments from the proceeds of certain asset dispositions as set forth in the Term Loan Agreement as in effect on the date hereof or as amended in accordance with the Term Loan Intercreditor Agreement, provided , that , in no event shall any such prepayment be with any ABL Priority Collateral or proceeds thereof).

 

(f)       The Borrowers shall prepay the Loans and Cash Collateralize the LC Obligations, to the extent otherwise required in this Agreement (including as provided in clause (g)  below).

 

(g)       Prepayments made pursuant to Section 2.05(c) , (d) , (e)  and (f)  above, shall be applied first, to the Swing Line Loans, second, ratably to the outstanding Committed Loans, third, to the extent required pursuant to Section 2.03(g) , 2.05(c)  or 8.02 , to Cash Collateralize the remaining LC Obligations; and, fourth, to the remaining Obligations.  Upon the drawing of any Letter of Credit that has been Cash Collateralized, the funds held as Cash Collateral shall be applied (without any further action by or notice to or from the Borrowers or any other Loan Party) to reimburse the applicable LC Issuer or the Lenders, as applicable.

 

2.06.  Termination or Reduction of Commitments.

 

(a)      The Borrowers may, upon irrevocable notice from the Lead Borrower to the Administrative Agent, terminate the Aggregate Commitments (and the Commitment of each Lender shall be reduced on a pro rata basis), the Letter of Credit Sublimit or the Swing Line Sublimit or from time to time permanently reduce the Aggregate Commitments, the Letter of Credit Sublimit or the Swing Line Sublimit; provided , that , (i) any such notice shall be received by the Administrative Agent not later than 2:00 p.m. five Business Days prior to the date of termination or reduction, (ii) any such partial reduction of the Aggregate Commitments, the Letter of Credit Sublimit or the Swing Line Sublimit shall be in an aggregate amount of $10,000,000 or any whole multiple of $1,000,000 in excess thereof, (iii) the Borrowers shall not (A) terminate or reduce the Aggregate Commitments if, after giving effect thereto and to any concurrent prepayments hereunder, the Total Outstandings would exceed the Aggregate Commitments, (B) terminate or reduce the Letter of Credit Sublimit if, after giving effect thereto, the Outstanding Amount of LC Obligations not fully Cash Collateralized hereunder would exceed the Letter of Credit Sublimit, and (C) terminate or reduce the Swing Line Sublimit if, after giving effect thereto, and to any concurrent payments hereunder, the Outstanding Amount of Swing Line Loans hereunder would exceed the Swing Line Sublimit.

 

90



 

(b)      If, after giving effect to any reduction of the Aggregate Commitments, the Letter of Credit Sublimit or the Swing Line Sublimit exceeds the amount of the Aggregate Commitments, such Letter of Credit Sublimit or Swing Line Sublimit shall be automatically reduced by the amount of such excess.

 

(c)       The Administrative Agent will promptly notify the Lenders of any termination or reduction of the Letter of Credit Sublimit, Swing Line Sublimit or the Aggregate Commitments under this Section 2.06 .  All fees (including, without limitation, commitment fees, and Letter of Credit Fees) and interest in respect of the Aggregate Commitments accrued until the effective date of any termination of the Aggregate Commitments shall be paid on the effective date of such termination.

 

2.07.  Repayment of Loans.

 

(a)      The Borrowers shall repay to the Lenders on the Termination Date the aggregate principal amount of Committed Loans outstanding on such date.

 

(b)      To the extent not previously paid, the Borrowers shall repay the outstanding balance of the Swing Line Loans on the Termination Date.

 

(c)       Notwithstanding the foregoing, in the event that there are any obligations outstanding under the SVU 2016 Notes on the date ninety (90) days prior to the scheduled maturity date of the SVU 2016 Notes, then the Obligations shall become immediately due and payable in full and the Maturity Date for purposes of this Agreement shall be such date unless each of the following conditions shall have been satisfied on such date: (i) the obligations under the SVU 2016 Notes are $250,000,000 or less, (ii) Administrative Agent shall have received, reasonably satisfactory financial projections of the Lead Borrower and its Subsidiaries (on a consolidated basis) for such ninety (90) day period (the “ Pre-Maturity Period ”) and for the six (6) consecutive Fiscal Periods after the scheduled maturity date of the SVU 2016 Notes (the “ Post-Maturity Period ” and together with the Pre-Maturity Period, the “ Maturity Projection Period ”) showing minimum Excess Availability at all times during the Maturity Projection Period, on a pro forma basis after giving effect to the SVU 2016 Notes Reserve for the Pre-Maturity Period, of not less than twenty-two and one half percent (22.5%) of the Aggregate Commitments, and (iii) Administrative Agent shall have established Availability Reserves in an amount equal to the outstanding obligations evidenced by or arising under the SVU 2016 Notes that are due at the end of such ninety (90) day period (the “ SVU 2016 Notes Reserve ”).  The projections to be provided under clause (ii)  above shall show the Excess Availability as of the end of each Fiscal Period during the Maturity Projection Period.  In the event that, after giving effect to the SVU 2016 Notes Reserve Excess Availability during the Pre-Maturity Period is less than the amount equal to twenty-two and one-half percent (22.5%) of the Aggregate Commitments for any three (3) consecutive Business Days then the Obligations shall become immediately due and payable in full and the Maturity Date for purposes of this Agreement shall be the date immediately following the third consecutive Business Day during which Excess Availability has been less than such amount.  In the event that the SVU 2016 Notes Reserve is established with respect to Indebtedness under the SVU 2016 Notes, such SVU 2016 Notes Reserve shall be reduced or terminated substantially contemporaneously with the payment of such Indebtedness by the amount of such payment upon the Administrative Agent’s receipt of evidence thereof.

 

(d)      In the event of a Change of Control, the Obligations shall become immediately due and payable in full and the date of such Change of Control shall be the Maturity Date for purposes of this Agreement.

 

91



 

2.08.  Interest.

 

(a)      Subject to the provisions of Section 2.08(b)  below, (i) each LIBO Rate Loan shall bear interest on the outstanding principal amount thereof for each Interest Period at a rate per annum equal to the Adjusted LIBO Rate for such Interest Period plus the Applicable Margin; (ii) each Base Rate Loan shall bear interest on the outstanding principal amount thereof from the applicable borrowing date at a rate per annum equal to the Base Rate plus the Applicable Margin; and (iii) each Swing Line Loan shall bear interest on the outstanding principal amount thereof from the applicable borrowing date at a rate per annum equal to the Base Rate plus the Applicable Margin.

 

(b)      If any amount payable under any Loan Document is not paid when due, whether at stated maturity, by acceleration or otherwise, such amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws.  If any other Event of Default exists, then the Administrative Agent may, and upon the request of the Required Lenders shall, notify the Lead Borrower that all outstanding Obligations shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate and thereafter such Obligations shall bear interest at the Default Rate to the fullest extent permitted by applicable Laws.  Accrued and unpaid interest on past due amounts (including interest on past due interest) shall be due and payable upon demand.

 

(c)       Interest on each Loan shall be due and payable in arrears on each Interest Payment Date applicable thereto and at such other times as may be specified herein.  Interest hereunder shall be due and payable in accordance with the terms hereof before and after judgment, and before and after the commencement of any proceeding under any Debtor Relief Law.

 

2.09.  Fees.   In addition to certain fees described in clauses (i)  and (j)  of Section 2.03 :

 

(a)      Commitment Fee .  The Borrowers shall pay to the Administrative Agent for the account of each Lender in accordance with its Applicable Percentage, a commitment fee equal to the Applicable Commitment Fee Percentage multiplied by the actual daily amount by which the Aggregate Commitments exceed the Total Outstandings.  The commitment fee shall accrue at all times during the Availability Period, including at any time during which one or more of the conditions in Article IV is not met, and shall be due and payable quarterly in arrears on the first day after the end of each calendar quarter, commencing with the first such date to occur after the Closing Date, and on the last day of the Availability Period.  The commitment fee shall be calculated quarterly in arrears.  Swing Line Loans and Permitted Overadvances will not be considered in the calculation of the commitment fee.

 

(b)      Other Fees .  The Borrowers shall pay to the Administrative Agent for its own account fees in the amounts and at the times specified in the Fee Letter.  Such fees shall be fully earned when paid and shall not be refundable for any reason whatsoever.

 

2.10.  Computation of Interest and Fees.   All computations of fees and interest shall be made on the basis of a three hundred sixty (360) day year and actual days elapsed.  Interest shall accrue on each Loan for the day on which the Loan is made, and shall not accrue on a Loan, or any portion thereof, for the day on which the Loan or such portion is paid, provided , that , any Loan that is repaid on the same day on which it is made shall, subject to Section 2.12(a) , bear interest for one day.  Each determination by the Administrative Agent of an interest rate or fee hereunder shall be conclusive and binding for all purposes, absent manifest error.

 

2.11.  Evidence of Debt.

 

(a)      The Credit Extensions made by each Lender shall be evidenced by one or more accounts or records maintained by the Administrative Agent (the “ Loan Account ”) in the ordinary course

 

92



 

of business.  In addition, each Lender may record in such Lender’s internal records, an appropriate notation evidencing the date and amount of each Loan from such Lender, each payment and prepayment of principal of any such Loan, and each payment of interest, fees and other amounts due in connection with the Obligations due to such Lender.  The accounts or records maintained by the Administrative Agent and each Lender shall be conclusive absent manifest error of the amount of the Credit Extensions made by the Lenders to the Borrowers and the interest and payments thereon.  Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation of the Borrowers hereunder to pay any amount owing with respect to the Obligations.  In the event of any conflict between the accounts and records maintained by any Lender and the accounts and records of the Administrative Agent in respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of manifest error.  Upon the request of any Lender made through the Administrative Agent, the Borrowers shall execute and deliver to such Lender (through the Administrative Agent) a Note, which shall evidence such Lender’s Loans in addition to such accounts or records.  Each Lender may attach schedules to its Note and endorse thereon the date, Type (if applicable), amount and maturity of its Loans and payments with respect thereto.  Upon receipt of an affidavit of a Lender as to the loss, theft, destruction or mutilation of such Lender’s Note and upon cancellation of such Note, the Borrowers will issue, in lieu thereof, a replacement Note in favor of such Lender, in the same principal amount thereof and otherwise of like tenor.

 

(b)      In addition to the accounts and records referred to in Section 2.11(a) , each Lender and the Administrative Agent shall maintain in accordance with its usual practice accounts or records evidencing the purchases and sales by such Lender of participations in Letters of Credit and Swing Line Loans.  In the event of any conflict between the accounts and records maintained by the Administrative Agent and the accounts and records of any Lender in respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of manifest error.

 

2.12.  Payments Generally; Administrative Agent’s Clawback.

 

(a)      General .  All payments to be made by the Borrowers shall be made without condition or deduction for any counterclaim, defense, recoupment or setoff.  Except as otherwise expressly provided herein, all payments by the Borrowers hereunder shall be made to the Administrative Agent, for the account of the respective Lenders to which such payment is owed, at the Administrative Agent’s Office in Dollars and in immediately available funds not later than 2:00 p.m. on the date specified herein.  The Administrative Agent will promptly distribute to each Lender its Applicable Percentage (or other applicable share as provided herein) of such payment in like funds as received by wire transfer to such Lender’s Lending Office.  All payments received by the Administrative Agent after 2:00 p.m., at the option of the Administrative Agent, shall be deemed received on the next succeeding Business Day and any applicable interest or fee shall continue to accrue.  If any payment to be made by the Borrowers shall come due on a day other than a Business Day, payment shall be made on the next following Business Day, and such extension of time shall be reflected in computing interest or fees, as the case may be.

 

(b)      Funding by Lenders; Presumption by Administrative Agent .  Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any Borrowing of LIBO Rate Loans (or in the case of any Borrowing of Base Rate Loans, prior to 1:00 p.m. on the date of such Borrowing) that such Lender will not make available to the Administrative Agent such Lender’s share of such Borrowing, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with Section 2.02 (or in the case of a Borrowing of Base Rate Loans, that such Lender has made such share available in accordance with and at the time required by Section 2.02 ) and may, in reliance upon such assumption, make available to the Borrowers a corresponding amount.  In such event, if a Lender has not in fact made its share of the applicable Committed Borrowing available to the Administrative Agent, then the applicable Lender and the Borrowers severally agree to pay to the

 

93



 

Administrative Agent forthwith on demand such corresponding amount in immediately available funds with interest thereon, for each day from and including the date such amount is made available to the Borrowers to but excluding the date of payment to the Administrative Agent, at (i) in the case of a payment to be made by such Lender, the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation plus any administrative processing or similar fees customarily charged by the Administrative Agent in connection with the foregoing, and (ii) in the case of a payment to be made by the Borrowers, the interest rate applicable to Base Rate Loans.  If the Borrowers and such Lender shall pay such interest to the Administrative Agent for the same or an overlapping period, the Administrative Agent shall promptly remit to the Borrowers the amount of such interest paid by the Borrowers for such period.  If such Lender pays its share of the applicable Committed Borrowing to the Administrative Agent, then the amount so paid shall constitute such Lender’s Committed Loan included in such Committed Borrowing.  Any payment by the Borrowers shall be without prejudice to any claim the Borrowers may have against a Lender that shall have failed to make such payment to the Administrative Agent.

 

(c)       Payments by Borrowers; Presumptions by Administrative Agent .  Unless the Administrative Agent shall have received notice from the Lead Borrower prior to the time at which any payment is due to the Administrative Agent for the account of the Lenders or the LC Issuers hereunder that the Borrowers will not make such payment, the Administrative Agent may assume that the Borrowers have made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders or the LC Issuers, as the case may be, the amount due.  In such event, if the Borrowers have not in fact made such payment, then each of the Lenders or the LC Issuers, as the case may be, severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender or LC Issuer, in immediately available funds with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation.  A notice of the Administrative Agent to any Lender or the Lead Borrower with respect to any amount owing under this clause (c)  shall be conclusive, absent manifest error.

 

(d)      Failure to Satisfy Conditions Precedent .  If any Lender makes available to the Administrative Agent funds for any Loan to be made by such Lender as provided in the foregoing provisions of this Article II , and such funds are not made available to the Borrowers by the Administrative Agent because the conditions to the applicable Credit Extension set forth in Article IV are not satisfied or waived in accordance with the terms hereof (subject to the provisions of the last paragraph of Section 4.02 hereof), the Administrative Agent shall promptly return such funds (in like funds as received from such Lender) to such Lender, without interest.

 

(e)       Obligations of Lenders Several .  The obligations of the Lenders hereunder to make Committed Loans, to fund participations in Letters of Credit and Swing Line Loans and to make payments hereunder are several and not joint.  The failure of any Lender to make any Committed Loan, to fund any such participation or to make any payment hereunder on any date required hereunder shall not relieve any other Lender of its corresponding obligation to do so on such date, and no Lender shall be responsible for the failure of any other Lender to so make its Committed Loan, to purchase its participation or to make its payment hereunder.

 

(f)       Funding Source .  Nothing herein shall be deemed to obligate any Lender to obtain the funds for any Loan in any particular place or manner or to constitute a representation by any Lender that it has obtained or will obtain the funds for any Loan in any particular place or manner.

 

94



 

2.13.  Sharing of Payments by Lenders.   If any Credit Party shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of any principal of, interest on, or other amounts with respect to, any of the Obligations resulting in such Lender’s receiving payment of a proportion of the aggregate amount of such Obligations greater than its share thereof as provided herein (including as in contravention of the priorities of payment set forth in Section 8.03 ), then the Credit Party receiving such greater proportion shall (a) notify the Administrative Agent of such fact, and (b) purchase (for cash at face value) participations in the Obligations of the other Credit Parties, or make such other adjustments as shall be equitable, so that the benefit of all such payments shall be shared by the Credit Parties ratably and in the priorities set forth in Section 8.03 , provided , that :

 

(i)        if any such participations or subparticipations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations or subparticipations shall be rescinded and the purchase price restored to the extent of such recovery, without interest; and

 

(ii)       the provisions of this Section shall not be construed to apply to (A) any payment made by the Loan Parties pursuant to and in accordance with the express terms of this Agreement or (B) any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Committed Loans or subparticipations in LC Obligations or Swing Line Loans to any assignee or participant, other than to the Borrowers or any Subsidiary thereof (as to which the provisions of this Section shall apply).

 

Each Loan Party consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against such Loan Party rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of such Loan Party in the amount of such participation.

 

2.14.  Settlement Amongst Lenders

 

(a)      The amount of each Lender’s Applicable Percentage of outstanding Loans (including outstanding Swing Line Loans) shall be computed weekly (or more frequently in the Administrative Agent’s discretion) and shall be adjusted upward or downward based on all Loans (including Swing Line Loans) and repayments of Loans (including Swing Line Loans) received by the Administrative Agent as of 3:00 p.m. on the first Business Day (such date, the “ Settlement Date ”) following the end of the period specified by the Administrative Agent.

 

(b)      The Administrative Agent shall deliver to each of the Lenders promptly after a Settlement Date a summary statement of the amount of outstanding Committed Loans and Swing Line Loans for the period and the amount of repayments received for the period.  As reflected on the summary statement, (i) the Administrative Agent shall transfer to each Lender its Applicable Percentage of repayments, and (ii) each Lender shall transfer to the Administrative Agent (as provided below) or the Administrative Agent shall transfer to each Lender, such amounts as are necessary to insure that, after giving effect to all such transfers, the amount of Committed Loans made by each Lender shall be equal to such Lender’s Applicable Percentage of all Committed Loans outstanding as of such Settlement Date.  If the summary statement requires transfers to be made to the Administrative Agent by the Lenders and is received prior to 1:00 p.m. on a Business Day, such transfers shall be made in immediately available funds no later than 3:00 p.m. that day; and, if received after 1:00 p.m., then no later than 3:00 p.m. on the next Business Day. The obligation of each Lender to transfer such funds is irrevocable, unconditional and without recourse to or warranty by the Administrative Agent.  If and to the extent any Lender shall not have so made its transfer to the Administrative Agent, such Lender agrees to pay to the Administrative Agent, forthwith on demand such amount, together with interest thereon, for each day from such date until the date such amount is paid to the Administrative Agent, equal to the greater of the Federal Funds

 

95



 

Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation plus any administrative, processing, or similar fees customarily charged by the Administrative Agent in connection with the foregoing.

 

2.15.  Increase in Commitments.

 

(a)      Request for Increase .  Lead Borrower may from time to time request an increase in the Aggregate Commitments by an amount (for all such requests) not exceeding $250,000,000; provided , that , (i) any such request for an increase shall be in a minimum amount of $10,000,000, (ii) the Lead Borrower may make a maximum of five (5) such requests, and (iii) as of the date of such request no Default or Event of Default shall exist or have occurred and be continuing.  At the time of sending such notice, the Lead Borrower (in consultation with the Administrative Agent) shall specify the time period within which each Lender is requested to respond (which shall in no event be less than ten (10) Business Days from the date of delivery of such notice to the Lenders).

 

(b)      Lender Elections to Increase .  Each Lender shall notify the Administrative Agent within such time period whether or not it agrees to increase its Commitment and, if so, whether by an amount equal to, greater than, or less than its Applicable Percentage of such requested increase.  Any Lender not responding within such time period shall be deemed to have declined to increase its Commitment.

 

(c)       Notification by Administrative Agent; Additional Lenders .  The Administrative Agent shall notify the Lead Borrower and each Lender of the Lenders’ responses to each request made hereunder.  To achieve the full amount of a requested increase and subject to the approval of the Administrative Agent, the LC Issuers and the Swing Line Lender (which approvals shall not be unreasonably withheld), to the extent that the existing Lenders decline to increase their Commitments, or decline to increase their Commitments to the amount requested by the Lead Borrower, the Administrative Agent, in consultation with the Lead Borrower, will use its reasonable efforts to arrange for other Eligible Assignees to become a Lender hereunder and to issue commitments in an amount equal to the amount of the increase in the Aggregate Commitments requested by the Lead Borrower and not accepted by the existing Lenders (and the Lead Borrower may also invite additional Eligible Assignees to become Lenders), provided , that , except for the initial fee payable in respect of the new or additional Commitment of a Lender, in no event shall the fees, interest rate and other compensation offered or paid in respect of additional Commitments or increase in Commitments have higher rates than the amounts paid and payable to the then existing Lenders in respect of their Commitments, unless the fees, interest rate and other compensation payable to the then existing Lenders are increased to the same as those paid in connection with the additional Commitments or increase in Commitments.  Each new or existing Lender that provides a new or increased Commitment as provided in this Section 2.15 is an “ Additional Commitment Lender ”.

 

(d)      Conditions to Effectiveness of Increase .  Such increase shall be subject to the satisfaction of each of the following conditions precedent: (i) the Lead Borrower shall deliver to the Administrative Agent a certificate of each Loan Party dated as of the Increase Effective Date (in sufficient copies for each Lender) signed by a Responsible Officer of such Loan Party (A) certifying and attaching the resolutions adopted by such Loan Party approving or consenting to such increase, and (B) in the case of the Borrowers, certifying that, before and after giving effect to such increase, the representations and warranties contained in Article V and the other Loan Documents are true and correct in all material respects on and as of the Increase Effective Date, except (1) to the extent that such representations and warranties specifically refer to an earlier date, in which case they are true and correct as of such earlier date, (2) in the case of any representation and warranty qualified by materiality or Material Adverse Effect (or words of similar import), they shall be true and correct in all respects in accordance with the terms thereof, and (3) that for purposes of this Section 2.15 , the representations and warranties contained

 

96



 

in subsections (a)  and (b)  of Section 5.05 shall be deemed to refer to the most recent statements furnished pursuant to clauses (a)  and (b) , respectively, of Section 6.01 ; (ii) the Borrowers, the Administrative Agent, and any Additional Commitment Lender shall have executed and delivered a joinder to the Loan Documents in such form as the Administrative Agent shall reasonably require; (iii) the Borrowers shall have paid such fees and other compensation to the Additional Commitment Lenders as the Lead Borrower and such Additional Commitment Lenders shall agree; (iv) the Borrowers shall have paid such arrangement fees to the Administrative Agent as the Lead Borrower and the Administrative Agent may agree; (v) upon the request of Administrative Agent, the Borrowers shall deliver to the Administrative Agent and the Lenders an opinion or opinions, in form and substance reasonably satisfactory to the Administrative Agent, from counsel to the Borrowers reasonably satisfactory to the Administrative Agent and dated such date; (vi) the Borrowers and the Additional Commitment Lender shall have delivered such other instruments, documents and agreements as the Administrative Agent may reasonably have requested; and (vii) no Default or Event of Default shall exist or have occurred and be continuing.

 

(e)       Effective Date and Allocations .  If the Aggregate Commitments are increased in accordance with this Section, the Administrative Agent, in consultation with the Lead Borrower, shall determine the effective date (the “ Increase Effective Date ”) and the final allocation of such increase.  The Administrative Agent shall promptly notify the Lead Borrower and the Lenders of the final allocation of such increase and the Increase Effective Date and on the Increase Effective Date (i) the Aggregate Commitments under, and for all purposes of, this Agreement shall be increased by the aggregate amount of such Commitment Increases, and (ii)  Schedule 2.01 shall be deemed modified, without further action, to reflect the revised Commitments and Applicable Percentages of the Lenders.  On the Increase Effective Date and notwithstanding any other provisions of this Agreement to the contrary (A) each Lender shall make such payments as shall be directed by the Administrative Agent in order that the outstanding Loans shall be held ratably by the Lenders based on their respective Commitments; provided , that , if the Increase Effective Date occurs on a date which is not the last day of the Interest Period with respect to any LIBO Rate Borrowing, then such payments shall be deemed to be the purchase and sale of participations in each LIBO Rate Loan until the end of such Interest Period, and the Administrative Agent shall determine the amount of each participation in such LIBO Rate Loans such that the Borrowers shall not be required to pay additional costs pursuant to Section 3.05 and (B) participations in outstanding Letters of Credit and risk participations in Swing Line Loans shall be deemed to be reallocated according to the respective Commitments of the Lenders.  Payments of interest, fees and commissions with respect to the Loans, Swingline Loans and Letters of Credit shall be made to give effect to any adjustments in the Loans and participations in the Letters of Credit made pursuant to this Section 2.15 .

 

(f)       Conflicting Provisions .  This Section shall supersede any provisions in Sections 2.13 or 10.01 to the contrary.

 

ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY;
APPOINTMENT OF LEAD BORROWER

 

3.01.  Taxes.

 

(a)      Payments Free of Taxes .  Any and all payments by or on account of any obligation of the Borrowers hereunder or under any other Loan Document shall be made free and clear of and without reduction or withholding for any Indemnified Taxes or Other Taxes, provided , that , if the Borrowers shall be required by applicable law to deduct any Indemnified Taxes (including any Other Taxes) from such payments, then (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section) the Administrative Agent, Lender or LC Issuer, as the case may be, receives an amount equal to the sum it

 

97



 

would have received had no such deductions been made, (ii) the Borrowers shall make such deductions and (iii) the Borrowers shall timely pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law.

 

(b)      Payment of Other Taxes by the Borrowers .  Without limiting the provisions of clause (a)  above, the Borrowers shall timely pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law.

 

(c)       Indemnification by the Loan Parties .  The Loan Parties shall indemnify the Administrative Agent, each Lender and each LC Issuer, within thirty (30) days after demand therefor, for the full amount of any Indemnified Taxes or Other Taxes (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section) paid by the Administrative Agent, such Lender or such LC Issuer, as the case may be, and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority.  A certificate as to the amount of such payment or liability delivered to the Lead Borrower by a Lender or an LC Issuer (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Lender or an LC Issuer, shall be conclusive absent manifest error.

 

(d)      Evidence of Payments .  Not later than thirty (30) days after any payment of Indemnified Taxes or Other Taxes by the Borrowers to a Governmental Authority pursuant to this Section, the Lead Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.

 

(e)       Status of Lenders .  Any Foreign Lender that is entitled to an exemption from or reduction of withholding tax under the law of the jurisdiction in which any Borrower is resident for tax purposes, or any treaty to which such jurisdiction is a party, with respect to payments hereunder or under any other Loan Document shall deliver to the Lead Borrower (with a copy to the Administrative Agent), at the time or times prescribed by applicable law or reasonably requested by the Lead Borrower or the Administrative Agent, such properly completed and executed documentation prescribed by applicable law as will permit such payments to be made without withholding or at a reduced rate of withholding. Such delivery shall be provided on the Closing Date and on or before such documentation expires or becomes obsolete or after the occurrence of an event requiring a change in the documentation most recently delivered.  In addition, any Lender, if requested by the Lead Borrower or the Administrative Agent, shall deliver such other documentation prescribed by applicable law or reasonably requested by the Lead Borrower or the Administrative Agent as will enable the Lead Borrower or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements.

 

Without limiting the generality of the foregoing, any Foreign Lender shall deliver to the Lead Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the request of the Lead Borrower or the Administrative Agent, but only if such Foreign Lender is legally entitled to do so), whichever of the following is applicable:

 

(i)        duly completed copies of Internal Revenue Service Form W-8BEN claiming eligibility for benefits of an income tax treaty to which the United States is a party,

 

(ii)       duly completed copies of Internal Revenue Service Form W-8ECI,

 

98



 

(iii)      in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a certificate to the effect that such Foreign Lender is not (A) a “bank” within the meaning of Section 881(c)(3)(A) of the Code, (B) a “10 percent shareholder” of the Borrowers within the meaning of Section 881(c)(3)(B) of the Code, or (C) a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code and (y) duly completed copies of  Internal Revenue Service Form W-8BEN, or

 

(iv)     any other form prescribed by applicable law as a basis for claiming exemption from or a reduction in United States Federal withholding tax duly completed together with such supplementary documentation as may be prescribed by applicable law to permit the Lead Borrower to determine the withholding or deduction required to be made, including under FATCA.

 

(f)       Treatment of Certain Refunds .  If the Administrative Agent, any Lender or any LC Issuer determines, in its sole reasonable discretion (or in the case of Administrative Agent, its Permitted Discretion), that it has received a refund of any Taxes or Other Taxes as to which it has been indemnified by the Borrowers or with respect to which the Borrowers have paid additional amounts pursuant to this Section, it shall pay to the Borrowers an amount equal to such refund (but only to the extent of indemnity payments made, or additional amounts paid, by the Borrowers under this Section with respect to the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses of the Administrative Agent, such Lender or the LC Issuer, as the case may be, and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund), provided , that , the Borrowers, upon the request of the Administrative Agent, such Lender or the LC Issuer, agree to repay the amount paid over to the Borrowers (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to the Administrative Agent, such Lender or such LC Issuer in the event the Administrative Agent, such Lender or such LC Issuer is required to repay such refund to such Governmental Authority.  This clause shall not be construed to require the Administrative Agent, any Lender or such LC Issuer to make available its tax returns (or any other information relating to its taxes that it deems confidential) to the Borrowers or any other Person.

 

3.02.  Illegality.   If any Lender determines that any Law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for any Lender or its applicable Lending Office to make, maintain or fund LIBO Rate Loans, or to determine or charge interest rates based upon the LIBO Rate, or any Governmental Authority has imposed material restrictions on the authority of such Lender to purchase or sell, or to take deposits of, Dollars in the London interbank market, then, on notice thereof by such Lender to the Lead Borrower through the Administrative Agent, any obligation of such Lender to make or continue LIBO Rate Loans or to convert Base Rate Loans to LIBO Rate Loans shall be suspended until such Lender notifies the Administrative Agent and the Lead Borrower that the circumstances giving rise to such determination no longer exist.  Upon receipt of such notice, the Borrowers shall, upon demand from such Lender (with a copy to the Administrative Agent), prepay or, if applicable, convert all LIBO Rate Loans of such Lender to Base Rate Loans, either on the last day of the Interest Period therefor, if such Lender may lawfully continue to maintain such LIBO Rate Loans to such day, or immediately, if such Lender may not lawfully continue to maintain such LIBO Rate Loans.  Upon any such prepayment or conversion, the Borrowers shall also pay accrued interest on the amount so prepaid or converted.

 

3.03.  Inability to Determine Rates.   If the Administrative Agent determines that for any reason in connection with any request for a LIBO Rate Loan or a conversion to or continuation thereof that (a) Dollar deposits are not being offered to banks in the London interbank market for the applicable amount and Interest Period of such LIBO Rate Loan, (b) adequate and reasonable means do not exist for determining the LIBO Rate for any requested Interest Period with respect to a proposed LIBO Rate Loan, or (c) the LIBO Rate for any requested Interest Period with respect to a proposed LIBO Rate Loan does

 

99



 

not adequately and fairly reflect the cost to such Lenders of funding such Loan, the Administrative Agent will promptly so notify the Lead Borrower and each Lender.  Thereafter, the obligation of the Lenders to make or maintain LIBO Rate Loans shall be suspended until the Administrative Agent (upon the instruction of the Required Lenders) revokes such notice.  Upon receipt of such notice, the Lead Borrower may revoke any pending request for a Borrowing of, conversion to or continuation of LIBO Rate Loans or, failing that, will be deemed to have converted such request into a request for a Committed Borrowing of Base Rate Loans in the amount specified therein.

 

3.04.  Increased Costs; Reserves on LIBO Rate Loans.

 

(a)      Increased Costs Generally .  If any Change in Law shall:

 

(i)        impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, any Lender (except any reserve requirement reflected in the LIBO Rate) or the LC Issuer;

 

(ii)       subject any Lender or LC Issuer to any tax of any kind whatsoever with respect to this Agreement, any Letter of Credit, any participation in a Letter of Credit or any LIBO Rate Loan made by it, or change the basis of taxation of payments to such Lender or LC Issuer in respect thereof (except for Indemnified Taxes or Other Taxes covered by Section 3.01 and the imposition of, or any change in the rate of, any Excluded Tax payable by such Lender or LC Issuer); or

 

(iii)      impose on any Lender or any LC Issuer or the London interbank market any other condition, cost or expense affecting this Agreement or LIBO Rate Loans made by such Lender or any Letter of Credit or participation therein;

 

and the result of any of the foregoing shall be to increase the cost to such Lender of making or maintaining any LIBO Rate Loan (or of maintaining its obligation to make any such Loan), or to increase the cost to such Lender or such LC Issuer of participating in, issuing or maintaining any Letter of Credit (or of maintaining its obligation to participate in or to issue any Letter of Credit), or to reduce the amount of any sum received or receivable by such Lender or such LC Issuer hereunder (whether of principal, interest or any other amount) then, upon request of such Lender or such LC Issuer, the Borrowers will pay to such Lender or such LC Issuer, as the case may be, such additional amount or amounts as will compensate such Lender or such LC Issuer, as the case may be, for such additional costs incurred or reduction suffered.

 

(b)      Capital Requirements .  If any Lender or LC Issuer determines that any Change in Law affecting such Lender or LC Issuer or any Lending Office of such Lender or such Lender’s or LC Issuer’s holding company, if any, regarding capital or liquidity requirements has or would have the effect of reducing the rate of return on such Lender’s or LC Issuer’s capital or on the capital of such Lender’s or LC Issuer’s holding company, if any, as a consequence of this Agreement, the Commitments of such Lender or the Loans made by, or participations in Letters of Credit held by, such Lender, or the Letters of Credit issued by such LC Issuer, to a level below that which such Lender or LC Issuer or such Lender’s or LC Issuer’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s or LC Issuer’s policies and the policies of such Lender’s or LC Issuer’s holding company with respect to capital adequacy), then from time to time the Borrowers will pay to such Lender or LC Issuer, as the case may be, such additional amount or amounts as will compensate such Lender or LC Issuer or such Lender’s or LC Issuer’s holding company for any such reduction suffered.

 

100



 

(c)       Certificates for Reimbursement .  A certificate of a Lender or an LC Issuer setting forth in reasonable detail the amount or amounts necessary to compensate such Lender or such LC Issuer or its holding company, as the case may be, as specified in clauses (a)  or (b)  of this Section and delivered to the Lead Borrower shall be conclusive absent manifest error.  The Borrowers shall pay such Lender or such LC Issuer, as the case may be, the amount shown as due on any such certificate within ten (10) days after receipt thereof.

 

(d)      Delay in Requests .  Failure or delay on the part of any Lender or LC Issuer to demand compensation pursuant to the foregoing provisions of this Section shall not constitute a waiver of such Lender’s or LC Issuer’s right to demand such compensation, provided , that , the Borrowers shall not be required to compensate a Lender or LC Issuer pursuant to the foregoing provisions of this Section for any increased costs incurred or reductions suffered more than one hundred eighty (180) days prior to the date that such Lender or the LC Issuer, as the case may be, notifies the Lead Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’s or LC Issuer’s intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the one hundred eighty (180) day period referred to above shall be extended to include the period of retroactive effect thereof).

 

(e)       Reserves on LIBO Rate Loans .  The Borrowers shall pay to each Lender, so long as such Lender shall be required to maintain reserves with respect to liabilities or assets consisting of or including Eurocurrency funds or deposits (currently known as “Eurocurrency liabilities”), additional interest on the unpaid principal amount of each LIBO Rate Loan equal to the actual costs of such reserves allocated to such Loan by such Lender (as determined by such Lender in good faith, which determination shall be conclusive), which shall be due and payable on each date on which interest is payable on such Loan; provided , that , (i) the Lead Borrower shall have received at least ten (10) days’ prior notice (with a copy to the Administrative Agent) of such additional interest from such Lender and (ii) any such payments by Borrowers to a Lender shall be reduced by the amount that such Lender has received as a result of the Statutory Reserve Rate applied to such Loan by such Lender in connection with such reserves, if any.  If a Lender fails to give notice ten (10) days prior to the relevant Interest Payment Date, such additional interest shall be due and payable ten (10) days from receipt of such notice.

 

3.05.  Compensation for Losses, Costs or Expenses.   Upon written demand of any Lender (with a copy to the Administrative Agent) from time to time, the Borrowers shall promptly compensate such Lender for and hold such Lender harmless from any loss, cost or expense incurred by it as a result of:

 

(a)      any continuation, conversion, payment or prepayment of any Loan other than a Base Rate Loan on a day other than the last day of the Interest Period for such Loan (whether voluntary, mandatory, automatic, by reason of acceleration, or otherwise);

 

(b)      any failure by the Borrowers (for a reason other than the failure of such Lender to make a Loan) to prepay, borrow, continue or convert any Loan other than a Base Rate Loan on the date or in the amount notified by the Lead Borrower; or

 

(c)       any assignment of a LIBO Rate Loan on a day other than the last day of the Interest Period therefor as a result of a request by the Lead Borrower pursuant to Section 10.13 ;

 

including any loss of anticipated profits and any loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain such Loan or from fees payable to terminate the deposits from which such funds were obtained.  The Borrowers shall also pay any customary administrative fees charged by such Lender in connection with the foregoing.  Each Lender shall provide a certificate setting forth any amount or amounts which such Lender is entitled to receive pursuant to this

 

101



 

Section 3.05 to the Borrower within one hundred eighty (180) days after the event which is the basis for such demand and such certificate shall be conclusive absent manifest error.

 

For purposes of calculating amounts payable by the Borrowers to the Lenders under this Section 3.05 , each Lender shall be deemed to have funded each LIBO Rate Loan made by it at the LIBO Rate for such Loan by a matching deposit or other borrowing in the London interbank market for a comparable amount and for a comparable period, whether or not such LIBO Rate Loan was in fact so funded.

 

3.06.  Mitigation Obligations; Replacement of Lenders.

 

(a)      Designation of a Different Lending Office .  If any Lender requests compensation under Section 3.04 , or the Borrowers are required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 3.01 , or if any Lender gives a notice pursuant to Section 3.02 , then such Lender shall use reasonable efforts to designate a different Lending Office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 3.01 or 3.04 , as the case may be, in the future, or eliminate the need for the notice pursuant to Section 3.02 , as applicable, and (ii) in each case, would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender.  The Borrowers hereby agree to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.

 

(b)      Replacement of Lenders .  If any Lender requests compensation under Section 3.04 , or if the Borrowers are required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 3.01 , the Borrowers may replace such Lender in accordance with Section 10.13 .

 

3.07.  Survival.   All of the Borrowers’ obligations under this Article III shall survive termination of the Aggregate Commitments and repayment of all other Obligations hereunder.

 

3.08.  Designation of Lead Borrower as Borrowers’ Agent.

 

(a)      Each Borrower hereby irrevocably designates and appoints the Lead Borrower as such Borrower’s agent to obtain Credit Extensions, the proceeds of which shall be available to each Borrower for such uses as are permitted under this Agreement.  As the disclosed principal for its agent, each Borrower shall be obligated to each Credit Party on account of Credit Extensions so made as if made directly by the applicable Credit Party to such Borrower, notwithstanding the manner by which such Credit Extensions are recorded on the books and records of the Lead Borrower and of any other Borrower.  In addition, each Loan Party other than the Borrowers hereby irrevocably designates and appoints the Lead  Borrower as such Loan Party’s agent to represent such Loan Party in all respects under this Agreement and the other Loan Documents.

 

(b)      Each Borrower recognizes that credit available to it hereunder is in excess of and on better terms than it otherwise could obtain on and for its own account and that one of the reasons therefor is its joining in the credit facility contemplated herein with all other Borrowers.  Consequently, each Borrower hereby assumes and agrees to discharge all Obligations of each of the other Borrowers.

 

(c)       The Lead Borrower shall act as a conduit for each Borrower (including itself, as a “Borrower”) on whose behalf the Lead Borrower has requested a Credit Extension.  Neither the

 

102



 

Administrative Agent nor any other Credit Party shall have any obligation to see to the application of such proceeds therefrom.

 

ARTICLE IV
CONDITIONS PRECEDENT TO CREDIT EXTENSIONS

 

4.01.  Conditions of Initial Credit Extension.   The obligation of the LC Issuer and each Lender to make its initial Credit Extension hereunder is subject to satisfaction of the following conditions precedent:

 

(a)      the Administrative Agent shall have received evidence, in form and substance reasonably satisfactory to Administrative Agent, that Administrative Agent has (or will have concurrently with the effectiveness of the Agreement) a valid perfected first priority security interest in the ABL Priority Collateral;

 

(b)      the Administrative Agent’s receipt of the following, each of which shall be originals, telecopies or other electronic image scan transmission (e.g., “pdf” or “tif “ via e-mail) (followed promptly by originals) unless otherwise specified, each properly executed by a Responsible Officer of the signing Loan Party or the Lenders, as applicable, each dated the Closing Date (or, in the case of certificates of governmental officials, a recent date before the Closing Date) and each in form and substance reasonably satisfactory to the Administrative Agent:

 

(i)        executed counterparts of this Agreement sufficient in number for distribution to the Administrative Agent, each Lender and the Lead Borrower;

 

(ii)       a Note executed by the Borrowers in favor of each Lender requesting a Note;

 

(iii)      such certificates of resolutions or other action, incumbency certificates and/or other certificates of Responsible Officers of each Loan Party as the Administrative Agent may require evidencing (A) the authority of each Loan Party to enter into this Agreement and the other Loan Documents to which such Loan Party is a party or is to become a party and (B) the identity, authority and capacity of each Responsible Officer thereof authorized to act as a Responsible Officer in connection with this Agreement and the other Loan Documents to which such Loan Party is a party or is to become a party;

 

(iv)     copies of each Loan Party’s Organization Documents and such other documents and certifications as the Administrative Agent may reasonably require to evidence that each Loan Party is duly organized or formed, and that each Loan Party is validly existing, in good standing and qualified to engage in business in each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification, except to the extent that failure to so qualify in such jurisdiction would not reasonably be expected to have a Material Adverse Effect;

 

(v)      a favorable written opinion of Dorsey & Whitney LLP, counsel for the Loan Parties, and such other counsel for the Loan Parties as may be reasonably requested by Administrative Agent, (A)  dated the Closing Date, (B) addressed to the Administrative Agent and the Lenders and (C) in form and substance reasonably satisfactory to the Administrative Agent, as to such matters concerning the Loan Parties and the Loan Documents as the Administrative Agent may reasonably request;

 

(vi)     a certificate signed by a Responsible Officer of Lead Borrower certifying that the conditions specified in Section 4.01(e)  and Sections 4.02(a)  and (b)  have been satisfied;

 

103



 

(vii)    a certificate signed by a Responsible Officer of Lead Borrower certifying that the obligations of the Loan Parties hereunder and the Term Loan Facility do not give rise to any obligation of the Lead Borrower or its Subsidiaries to grant any Liens in respect of any existing indebtedness of the Lead Borrower or its Subsidiaries or violate any of the terms of the agreements with respect thereto, together with such supporting detail as Administrative Agent may request, including with respect to the calculation of Consolidated tangible net assets or any other amounts that are the basis for such certification;

 

(viii)   a duly completed Compliance Certificate as of the last day of the most recent Fiscal Quarter of the Lead Borrower and its Subsidiaries ended at least forty-five (45) days prior to the Closing Date, signed by a Responsible Officer of the Lead Borrower;

 

(ix)     certificates of insurance for the insurance policies required by Section 6.07 and the applicable provisions of the other Loan Documents (including customary lender’s loss payable endorsements and naming the Administrative Agent as an additional insured, in each case in form and substance reasonably satisfactory to the Administrative Agent);

 

(x)      a payoff letter from the Existing Term Loan Agent reasonably satisfactory in form and substance to the Administrative Agent evidencing that the Existing Term Loan Agreement has been or concurrently with the Closing Date is being terminated, all obligations thereunder are being paid in full, and all Liens securing obligations under the Existing Term Loan Agreement have been or concurrently with the Closing Date are being released;

 

(xi)     the Security Documents (other than the Mortgages and the Related Real Estate Collateral Security Agreements), each duly executed by the applicable Loan Parties;

 

(xii)    all other Loan Documents (other than the Mortgages and the Related Real Estate Collateral Security Agreements), each duly executed by the applicable Loan Parties;

 

(xiii)   results of Lien searches with respect to each Loan Party (in each case dated as of a date reasonably satisfactory to the Administrative Agent) indicating the absence of Liens on the Collateral, except for Permitted Encumbrances and Liens for which termination statements and releases, satisfactions and discharges of any Mortgages, and releases  or subordination agreements reasonably satisfactory to the Administrative Agent are being tendered concurrently with such extension of credit or other arrangements reasonably satisfactory to the Administrative Agent for the delivery of such termination statements and releases, satisfactions and discharges have been made; and

 

(xiv)   (A) all documents and instruments, including Uniform Commercial Code financing statements, required by law or reasonably requested by the Administrative Agent to be filed, registered or recorded to create, perfect or continue the perfection of the first priority Liens in the ABL Priority Collateral and all such documents and instruments will be filed, registered or recorded to the satisfaction of the Administrative Agent, (B) the DDA Notifications, Credit Card Notifications, and Blocked Account Agreements required pursuant to Section 6.13 hereof, and (C) other than for Store locations, Collateral Access Agreements for locations where there is ABL Priority Collateral or other assets Administrative Agent may require access and use of to realize on ABL Priority Collateral as such Collateral Access Agreements may be required by the Administrative Agent;

 

(c)       after giving effect to (i) the first funding under the Loans, (ii) any charges to the Loan Account made in connection with the establishment of the credit facility contemplated hereby, (iii) provision for payment of all other fees and expenses of the Transactions, and (iv) all Letters of Credit to

 

104



 

be issued at, or immediately subsequent to, such establishment, Excess Availability shall be not less than $400,000,000;

 

(d)      the Administrative Agent shall have received a Borrowing Base Certificate dated the Closing Date, relating to the Fiscal Period ended on February 23, 2013, and executed by a Responsible Officer of the Lead Borrower;

 

(e)       no Company Material Adverse Effect  shall have occurred since February 25, 2012;

 

(f)       the Lead Arrangers shall have received (i) projected balance sheets, income statements, statements of cash flows and availability of the Loan Parties for the period from and including the 2014 Fiscal Year through the 2018 Fiscal Year (on a Fiscal Period basis for the 2014 Fiscal Year, on a quarterly basis for the 2015 Fiscal Year and an annual basis thereafter), and a deal-basis carve-out balance sheet for the Loan Parties as of February 21, 2013, in each case in form and substance reasonably satisfactory to Administrative Agent, (ii) a quality of earnings review of the Lead Borrower and its Subsidiaries for the 2012 Fiscal Year and for the year-to-date 28-week period ending September 6, 2012 by Deloitte & Touche and (iii)(A) deal basis carve-out income statements for the Lead Borrower and its Subsidiaries for the 2011 and 2012 Fiscal Year and 52-week period ending December 1, 2012 (or the last day of the most recent Fiscal Quarter of the Lead Borrower ended at least forty-five (45) days prior to the Closing Date (or ninety (90) days prior to the Closing Date if such Fiscal Quarter is the final Fiscal Quarter of the relevant Fiscal Year)) and (B) deal basis carve-out balance sheets for the Lead Borrower and its Subsidiaries as of February 25, 2012 and December 1, 2012 (or the last day of the most recent Fiscal Quarter of the Lead Borrower ended at least forty-five (45) days prior to the Closing Date (or ninety (90) days prior to the Closing Date if such Fiscal Quarter is the final Fiscal Quarter of the relevant Fiscal Year)) (the foregoing financial information, the “ Deal-based Breakout Financial Information ”);

 

(g)       the Lead Arrangers shall have received a solvency certificate substantially in the form attached hereto as Exhibit L, which shall have been executed by the chief financial officer of the Lead Borrower or other officer with equivalent duties of the Lead Borrower;

 

(h)      there shall not exist any action, suit, investigation, litigation or proceeding pending in any court or before any arbitrator or governmental authority that challenges the legality of, or otherwise seeks to enjoin, the revolving credit facilities to be made available under this Agreement which Administrative Agent in its sole discretion believes is material;

 

(i)        all costs, fees and expenses contemplated by the Loan Documents or otherwise due and payable to the Administrative Agent, the Lead Arrangers or the Lenders on or before the Closing Date in respect of the Transactions for which the Lead Borrower has received notice at least two (2) Business Days’ prior to the Closing Date have been paid in full;

 

(j)       the Lead Arrangers shall have received all documentation and information at least five (5) Business Days prior to the Closing Date as is reasonably requested in writing by the Lead Arrangers about the Lead Borrower and its Subsidiaries required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including without limitation the Patriot Act, in each case to the extent requested in writing at least ten (10) Business Days prior to the Closing Date;

 

(k)      the accuracy of each of the representations made by Buyer in the Acquisition Agreement as are material to the interests of the Lenders, but only to the extent that the Lead Borrower has (or its applicable Affiliate has) the right to terminate its obligations under the Acquisition Agreement

 

105



 

or to decline to consummate the NAI Sale as a result of a breach of such representations and warranties in the Acquisition Agreement;

 

(l)        the Administrative Agent shall have received evidence that the Lead Borrower has received gross proceeds of not less than $1,500,000,000 from borrowings under the Term Loan Facility and the Lead Arrangers shall have received all documents in connection therewith (other than the fee letter), which shall be on terms and conditions reasonably satisfactory to the Lead Arrangers (it being agreed that the terms and conditions of the Term Loan Facility as set forth in commitment letter dated as of January 10, 2013 (as amended February 19, 2012) are reasonably acceptable to the Lead Arrangers);

 

(m)     the Administrative Agent shall have received the Term Loan Intercreditor Agreement, duly executed by the applicable parties;

 

(n)      the NAI Sale shall have occurred on terms and conditions reasonably satisfactory to the Lead Arrangers and the Lead Arrangers shall have received copies of all documents in connection therewith, duly executed by the parties thereto (it being agreed that the terms and conditions of the NAI Sale as set forth in the Acquisition Agreement (including all schedules, exhibits and annexes thereto) are reasonably acceptable to the Lead Arrangers);

 

(o)      the SVU 2014 Note Repayment shall have occurred on terms and conditions reasonably satisfactory to the Lead Arrangers and the Lead Arrangers shall have received all documents in connection therewith; and

 

(p)      the Lead Arrangers shall have received evidence, in form and substance reasonably satisfactory to the Lead Arrangers, of the payment in full of all obligations of Lead Borrower and its Subsidiaries under the Existing Receivables Transfer Agreements, the repurchase by Lead Borrower of all receivables sold thereunder, and the termination of all Liens securing obligations under the Existing Receivables Transfer Agreements.

 

Without limiting the generality of the provisions of Section 9.04 , for purposes of determining compliance with the conditions specified in this Section 4.01 , each Lender that has signed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to a Lender unless the Administrative Agent shall have received notice from such Lender prior to the proposed Closing Date specifying its objection thereto.

 

4.02.  Conditions to all Credit Extensions.   The obligation of each Lender to honor any Request for Credit Extension (other than a Committed Loan Notice requesting only a conversion of Committed Loans to the other Type, or a continuation of LIBO Rate Loans) and each LC Issuer to issue each Letter of Credit is subject to the following conditions precedent:

 

(a)      the representations and warranties of each other Loan Party contained in Article V or any other Loan Document, or which are contained in any document furnished at any time under or in connection herewith or therewith, shall be true and correct in all material respects on and as of the date of such Credit Extension, except (i) to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct as of such earlier date, (ii) in the case of any representation and warranty qualified by materiality or Material Adverse Effect (or words of similar import), they shall be true and correct in all respects in accordance with the terms thereof, and (iii) for purposes of this Section 4.02 , the representations and warranties contained in clauses (a)  and (b)  of Section 5.05 shall be deemed to refer to the most recent statements furnished pursuant to clauses (a)  and (b) , respectively, of Section 6.01 ; provided , that , as of the Closing Date, only the Specified

 

106



 

Representations shall be true and correct in all material respects except (A) to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct as of such earlier date, (B) in the case of any representation and warranty qualified by materiality or Material Adverse Effect (or words of similar import), they shall be true and correct in all respects in accordance with the terms thereof;

 

(b)      as of the date of such Request for Credit Extension, and after giving effect to such proposed Credit Extension and to the application of the proceeds thereof, no Default shall exist (other than, as of the Closing Date, any default arising from the inaccuracy of representations and warranties which are not Specified Representations);

 

(c)       the Administrative Agent and, if applicable, the applicable LC Issuer or the Swing Line Lender shall have received a Request for Credit Extension in accordance with the requirements hereof; and

 

(d)      no Overadvance shall result from such Credit Extension.

 

Each Request for Credit Extension (other than a Committed Loan Notice requesting only a conversion of Committed Loans to the other Type or a continuation of LIBO Rate Loans) submitted by the Borrowers shall be deemed to be a representation and warranty by the Borrowers that the conditions specified in Sections 4.02(a), (b) , (c)  and (d)  have been satisfied on and as of the date of the applicable Credit Extension.  The conditions set forth in this Section 4.02 are for the sole benefit of the Credit Parties but until the Required Lenders otherwise direct the Administrative Agent to cease making Committed Loans, the Lenders will fund their Applicable Percentage of all Loans and participate in all Swing Line Loans and Letters of Credit whenever made or issued, which are requested by the Lead Borrower and which, notwithstanding the failure of the Loan Parties  to comply with the provisions of this Article IV , agreed to by the Administrative Agent, provided , that , the making of any such Loans or the issuance of any Letters of Credit shall not be deemed a modification or waiver by any Credit Party of the provisions of this Article IV on any future occasion or a waiver of any rights of the Credit Parties as a result of any such failure to comply.

 

ARTICLE V
REPRESENTATIONS AND WARRANTIES

 

To induce the Credit Parties to enter into this Agreement and to make Loans and to issue Letters of Credit hereunder, (i) each Loan Party makes as of the Closing Date, the Specified Representations, each of which shall be true and correct, in all material respects except (A) to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct as of such earlier date, and (B) in the case of any representation and warranty qualified by materiality or Material Adverse Effect (or words of similar import), they shall be true and correct in all respects in accordance with the terms thereof; and (ii) each Loan Party makes at and as of the date of the making of each Credit Extension (or the issuance, amendment, renewal or extension of any Letter of Credit) after the Closing Date each of the following representations and warranties to the Credit Parties, each of which shall be true and correct, in all material respects except (A) to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct as of such earlier date, and (B) in the case of any representation and warranty qualified by materiality or Material Adverse Effect (or words of similar import), they shall be true and correct in all respects in accordance with the terms thereof, as of the date of the making of such Credit Extension (or the issuance, amendment, renewal or extension of such Letter of Credit), as though made on and as of the date of such Credit Extension (or the issuance, amendment, renewal or extension of such Letter of Credit):

 

107



 

5.01.  Existence, Qualification and Power.   Each Loan Party and each Restricted Subsidiary thereof (a) is a corporation, limited liability company, trust, partnership or limited partnership, duly incorporated, organized or formed, validly existing and, where applicable, in good standing under the Laws of the jurisdiction of its incorporation, organization, or formation; (b) has all requisite power and authority and all requisite governmental licenses, permits, authorizations, consents and approvals to (i) own or lease its assets and carry on its business and (ii) execute, deliver and perform its obligations under the Loan Documents to which it is a party; and (c) is duly qualified and is licensed and, where applicable, in good standing under the Laws of each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification or license; except in each case referred to in clause (c) , to the extent that failure to do so would not reasonably be expected to have a Material Adverse Effect.  Schedule 5.01 annexed hereto sets forth, as of the Closing Date, each Loan Party’s name as it appears in official filings in its state of incorporation or organization, organization type, organization number, if any, issued by its state of incorporation or organization, and its federal employer identification number.

 

5.02.  Authorization; No Contravention.   The execution, delivery and performance by each Loan Party of each Loan Document to which such Person is a party, (a) has been duly authorized by all necessary corporate or other organizational action, and (b) does not and will not (i) contravene the terms of any of such Person’s Organization Documents; (ii) conflict with or result in any breach, termination, or contravention of, or constitute a default under, or require any payment to be made under (A) any Material Contract or any Material Indebtedness to which such Person is a party or affecting such Person or the properties of such Person or any of its Subsidiaries or (B) any order, injunction, writ or decree of any Governmental Authority or any arbitral award to which such Person or its property is subject in each case which has or would reasonably be expected to have a Material Adverse Effect; (iii) result in or require the creation of any Lien upon any asset of any Loan Party (other than Liens in favor of the Administrative Agent under the Security Documents); or (iv) violate any applicable Law where such violation has or would reasonably be expected to have a Material Adverse Effect.

 

5.03.  Governmental Authorization; Other Consents.   No approval, consent (including, the consent of equity holders or creditors of any Loan Party or Restricted Subsidiary), exemption, authorization, license or other action by, or notice to, or filing with, any Governmental Authority or regulatory body or any other Person is necessary or required for the grant of the security interest by such Loan Party or Restricted Subsidiary of the Collateral pledged by it pursuant to the Security Documents or for the execution, delivery or performance by, or enforcement against, any Loan Party or Restricted Subsidiary of this Agreement or any other Loan Document, except for (a) the perfection or maintenance of the Liens created under the Security Documents or the priority thereof, (b) such consents which have been obtained or made prior to the date hereof and are in full force and effect and (c) consents required for the exercise of remedies with respect to the Term Loan Priority Collateral, if any, required under the terms of the Term Loan Intercreditor Agreement or any other Loan Document.

 

5.04.  Binding Effect.   This Agreement has been, and each other Loan Document, when delivered, will have been, duly executed and delivered by each Loan Party that is party thereto.  This Agreement constitutes, and each other Loan Document when so delivered will constitute, a legal, valid and binding obligation of such Loan Party, enforceable against each Loan Party that is party thereto in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.

 

108



 

5.05.  Financial Statements; No Material Adverse Effect.

 

(a)      The Audited Financial Statements (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; and (ii) fairly present the financial condition of the Lead Borrower and its Subsidiaries (prior to giving effect to the Transactions) as of the date thereof and their results of operations for the period covered thereby in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein.

 

(b)      The unaudited Consolidated balance sheet of the Lead Borrower and its Subsidiaries (prior to giving effect to the Transactions) dated December 1, 2012, and the related Consolidated statements of income or operations, and cash flows for the Fiscal Quarter ended on that date (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein, and (ii) fairly present the financial condition of the Lead Borrower and its Subsidiaries (prior to giving effect to the Transactions) as of the date thereof and their results of operations for the period covered thereby, subject, in the case of clauses (i)  and (ii) , to the absence of footnotes and to normal year-end audit adjustments.

 

(c)       Since the date of the Audited Financial Statements, there has been no event or circumstance, either individually or in the aggregate, that has had or would reasonably be expected to have a Material Adverse Effect, provided , that , the matters disclosed in earnings guidance and forecasted revenue trends of the Lead Borrower and its Subsidiaries to the Initial Lead Arrangers prior to January 10, 2013 (but not the underlying circumstances giving rise to such earnings guidance and forecasted revenue trends, but solely to the extent such underlying circumstances impact the Lead Borrower and its Subsidiaries in a manner that is adverse compared with the impact shown on the face of such earnings guidance or forecasted revenue trends) shall not be deemed to constitute a Material Adverse Effect.

 

(d)      To the best knowledge of the Lead Borrower, no Internal Control Event exists or has occurred since the date of the Audited Financial Statements that has resulted in or would reasonably be expected to result in a misstatement in any material respect, in any financial information delivered or to be delivered to the Administrative Agent or the Lenders, of (i) covenant compliance calculations provided hereunder or (ii) the assets, liabilities, financial condition or results of operations of the Lead Borrower and its Subsidiaries on a Consolidated basis.

 

(e)       The Consolidated forecasted balance sheet and statements of income and cash flows of the Lead Borrower and its Subsidiaries delivered pursuant to Section 6.01(d)  were prepared in good faith on the basis of the assumptions stated therein, which assumptions were believed by Lead Borrower to be reasonable at the time made and at the time of delivery of such forecasts (it being understood that projections by their nature are inherently uncertain and that, even though the Projections are prepared in good faith on the basis of assumptions believed to be reasonable at the time such Projections were prepared, the results reflected in the Projections may not be achieved and actual results may differ and such differences may be material).

 

(f)       The Deal-based Breakout Financial Information has been prepared to reflect in all material respects the historical financial information of the remaining operations of Lead Borrower and its Subsidiaries following the Transactions.  The Deal-based Breakout Financial Information excludes the financial information of NAI’s business operations expected to be sold to the Buyer, other than the assets and liabilities of NAI and its Subsidiaries that are expected to be retained by Lead Borrower pursuant to the Acquisition Agreement.   The Deal-based Breakout Financial Information reflects periods during which Lead Borrower and its Subsidiaries operated as a consolidated entity inclusive of the operations of NAI, and its Subsidiaries and accordingly, the presentation to exclude such operations has relied on assumptions and allocations to separate the operations of NAI and its Subsidiaries, and are not necessarily indicative of the future operations or financial position of Lead Borrower and its Subsidiaries following

 

109



 

the Transactions.  Lead Borrower believes the assumptions and allocations underlying the Deal-based Breakout Financial Information are reasonable and appropriate, but such assumptions and allocations are preliminary and based on estimates and are subject to change.  The Deal-based Breakout Financial Information was not prepared to comply with the requirements of GAAP, and does not purport to comply with pro forma disclosures in accordance with SEC Regulation S X.  Therefore, the assumptions and allocations underlying the financial information included in the Deal-based Breakout Financial Information differ from those that would be included in pro forma financial information for the Lead Borrower giving effect to the Transactions, and such differences may be material.  The Deal-based Breakout Financial Information shall not constitute material non-public information with respect to the Lead Borrower, its Subsidiaries or their respective securities for purposes of United States federal and state securities laws.

 

5.06.  Litigation.   There are no actions, suits, proceedings, claims or disputes pending or, to the knowledge of the Loan Parties after due and diligent investigation, threatened or contemplated, at law, in equity, in arbitration or before any Governmental Authority, by or against any Loan Party or any of its Subsidiaries or against any of its properties, rights or revenues that (a) purport to materially and adversely affect or pertain to this Agreement or any other Loan Document, or any of the transactions contemplated hereby, or (b) except as specifically disclosed in Schedule 5.06 , either individually or in the aggregate, if determined adversely, would reasonably be expected to have a Material Adverse Effect.  Since the Closing Date, there has been no material adverse change in the status, or financial effect on any Loan Party or any Restricted Subsidiary thereof, of the matters described on Schedule 5.06 .

 

5.07.  No Default.   No Loan Party or any Restricted Subsidiary is in default under or with respect to any Material Indebtedness.  No Event of Default has occurred and is continuing or would result from the consummation of the transactions contemplated by this Agreement or any other Loan Document.  Neither the Lead Borrower nor any of its Subsidiaries is a party to any agreement or instrument or subject to any corporate restriction that has resulted or would reasonably be expected to result in a Material Adverse Effect.

 

5.08.  Ownership of Property; Liens.

 

(a)      Each Loan Party and each Restricted Subsidiary has good and marketable title in fee simple to or valid leasehold interests in, all Real Estate necessary or used in the ordinary conduct of its business and each Loan Party and each Restricted Subsidiary has good title to, valid leasehold interests in, or valid licenses or service agreements for all personal property material to the ordinary conduct of its business, except in each case as does not have and would not reasonably be expected to have a Material Adverse Effect.  The property of each Loan Party and each Restricted Subsidiary is subject to no Liens other than Permitted Encumbrances.

 

(b)      Schedule 5.08(b)  sets forth the street address, county and state of each site of land that is fee owned by any Loan Party or any Restricted Subsidiary as of the Closing Date.  As of the Closing Date, except as set forth in Schedule 5.08(b) , no Responsible Officer of a Loan Party or Restricted Subsidiary has received any written notice of, or has any knowledge of, any pending or contemplated condemnation proceeding affecting any Real Estate Collateral Property or any sale or disposition thereof in lieu of condemnation.  As of the Closing Date, to the best of the knowledge of any Responsible Officer, except as set forth on Schedule 5.08(b) ,no Loan Party or Restricted Subsidiary is obligated under any unrecorded right of first refusal, option or other contractual right to sell, assign or otherwise dispose of any such Real Estate Collateral Property or any interest therein that would not constitute a Permitted Encumbrance.

 

110



 

(c)       Schedule 5.08(c)  sets forth, as of the Closing Date, each Lease that constitutes a Material Contract, a Ground Lease (pursuant to the Closing Date Collateral List), or a Lease of any location where ABL Priority Collateral is located to which any Loan Party or any Restricted Subsidiary is a party as tenant or subtenant, together with the street address, county and state of the property subject thereto, and the name and contact information of the lessor thereunder.  Each of such Leases is in full force and effect, the Loan Parties and the Restricted Subsidiaries are not in default (beyond applicable cure periods) of the terms of any such Leases and each of the Loan Parties and the Restricted Subsidiaries enjoys peaceful and undisturbed possession under all such Leases, except, in each case, as would not reasonably be expected to have a Material Adverse Effect.

 

(d)      Schedule 7.01 sets forth a complete and accurate list of all Liens on the property or assets of each Loan Party and each of its Restricted Subsidiaries, other than Immaterial Subsidiaries or for those other Subsidiaries that are not Loan Parties as referred to in Schedule 6.21 (other than Liens that constitute Permitted Encumbrances described in clauses (a)  through (g)  or clauses (j)  through (l)  or clauses (n)  through (s)  of the definition thereof) as of the Closing Date showing the lienholder thereof and the property or assets of such Loan Party or such Subsidiary subject thereto.

 

(e)       Schedule 7.02 sets forth a true and accurate copy of the investment policy of the Lead Borrower and its Restricted Subsidiaries and a complete and accurate list of all Investments held by any Loan Party or any Restricted Subsidiary of a Loan Party on the Closing Date, other than Investments in Subsidiaries and Cash Equivalents, in each case in excess of $10,000,000.

 

(f)       Schedule 7.03 sets forth a complete and accurate list of all Indebtedness of each Loan Party (other than Indebtedness among the Loan Parties and Indebtedness permitted pursuant to clause (b)(ii)  of the definition of the term Permitted Indebtedness) or any Restricted Subsidiary of a Loan Party on the Closing Date, in each case in excess of $10,000,000, showing as of the date hereof the amount, obligor or issuer and maturity thereof, provided , that , for Capital Leases, Schedule 7.03 sets forth only the aggregate amount of each type of Capital Lease.

 

5.09.  Environmental Compliance.

 

(a)      Except as specifically disclosed in Schedule 5.09 , no Loan Party or any Restricted Subsidiary thereof (i)  has failed to comply in all material respects with applicable Environmental Law or to obtain, maintain or comply with any permit, license or other approval required under applicable Environmental Law, (ii) has become subject to any material Environmental Liability, (iii) has received notice of any claim with respect to any material Environmental Liability or (iv) has a Responsible Officer with knowledge of any basis for any material Environmental Liability, except, in each case, as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

(b)      Except as specifically disclosed in Schedule 5.09 , (i) none of the properties currently or formerly owned or operated by any Loan Party or Restricted Subsidiary is or was listed or proposed for listing on the NPL or on the CERCLIS or any analogous state or local list at any time while such property was owned by such Loan Party or, to the knowledge of any Responsible Officer, at any time prior to or after such property was owned by such Loan Party, and, to the knowledge of any Responsible Officer, no property currently owned or operated by any Loan Party or Restricted Subsidiary is adjacent to any such property, in each case in connection with any matter for which any Loan Party or Restricted Subsidiary would have any material Environmental Liability; (ii) there are no and never have been any underground or above-ground storage tanks or any surface impoundments, septic tanks, pits, sumps or lagoons in which Hazardous Materials are being or have been treated, stored or disposed on any property currently owned or operated by any Loan Party or Restricted Subsidiary in violation of any Environmental Laws or, to the best of the knowledge of any Responsible Officer, on any property formerly owned or operated by

 

111



 

any Loan Party or Restricted Subsidiary; (iii) there is no friable asbestos or friable asbestos-containing material on any property currently owned or operated by any Loan Party or Restricted Subsidiary; (iv) Hazardous Materials have not been Released, discharged or disposed of on any property currently or formerly owned or operated by any Loan Party or Restricted Subsidiary in violation of any Environmental Laws; and (v) to the knowledge of any Responsible Officer, there are no pending or threatened Liens under or pursuant to any applicable Environmental Laws on any real property or other assets owned or leased by any Loan Party or Restricted Subsidiary, and to the best of the knowledge of any Responsible Officer, no actions by any Governmental Authority have been taken or are in process which would subject any of such properties or assets to such Liens, except, in the case of clauses (i)  through (v)  above, as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

(c)       Except as specifically disclosed in Schedule 5.09 , no Loan Party or Restricted Subsidiary is undertaking, and no Loan Party or Restricted Subsidiary has completed, either individually or together with other potentially responsible parties, any investigation or assessment or remedial or response action relating to any actual or threatened Release, discharge or disposal of Hazardous Materials at any site, location or operation, either voluntarily or pursuant to the order of any Governmental Authority or the requirements of any Environmental Law that has or would reasonably be expected to have a Material Adverse Effect; and all Hazardous Materials generated, used, treated, handled or stored at, or transported to or from, any property currently or formerly owned or operated by the Loan Parties and their Restricted Subsidiaries have been disposed of in a manner not reasonably expected to, individually or in the aggregate, result in a Material Adverse Effect.

 

5.10.  Insurance.

 

The properties of the Loan Parties and the Restricted Subsidiaries are insured with financially sound and reputable insurance companies (including any Insurance Captive) in such amounts (after giving effect to any self-insurance), with such deductibles and covering such risks (including, without limitation, workers’ compensation, public liability, business interruption and property damage insurance) as are customarily carried by companies engaged in similar businesses and owning similar properties in localities where the applicable Loan Party or Restricted Subsidiary operates.  Schedule 5.10 sets forth a description of all such insurance currently maintained (excluding title, group health and disability, and similar types of insurance) by or on behalf of the Loan Parties and the Restricted Subsidiaries as of the Closing Date.  Each insurance policy listed on Schedule 5.10 is in full force and effect and all premiums in respect thereof that are due and payable have been paid.

 

5.11.  Taxes.   The Loan Parties and their Restricted Subsidiaries have filed all Federal, state and other material tax returns (collectively, the “ Tax Returns ”) and reports required to be filed and all such Tax Returns are true, correct and complete in all material respects, and have paid when due and payable (subject to any grace periods) all Taxes levied or imposed upon them or their properties, income or assets otherwise due and payable, except those which are being contested in good faith by appropriate proceedings being diligently conducted, for which adequate reserves have been provided in accordance with GAAP, as to which Taxes no Lien has been filed and which contest effectively suspends the collection of the contested obligation and the enforcement of any Lien securing such obligation.  There is no proposed tax assessment against any Loan Party or any Restricted Subsidiary that would, if made, have a Material Adverse Effect.  No Loan Party or any Restricted Subsidiary thereof is a party to any tax sharing agreement.

 

5.12.  ERISA Compliance.

 

(a)      Each Plan is in compliance in all material respects with the applicable provisions of ERISA, the Code and other Federal or state Laws.  Each Plan that is intended to qualify under Section 401(a) of the Code has received a favorable determination letter from the IRS or an application for such a letter is currently being processed by the IRS with respect thereto and, to the best knowledge of the Lead

 

112



 

Borrower, nothing has occurred which would prevent, or cause the loss of, such qualification.  The Loan Parties and each ERISA Affiliate have made all required contributions, including any such contributions required pursuant to the PBGC Agreement, to each Plan subject to Sections 302 or 303 of ERISA or Sections 412 or 430 of the Code, and no application for a funding waiver or an extension of any amortization period pursuant to Section 302 of ERISA or Section 412 of the Code has been made with respect to any Plan.  No Lien imposed under the Code or ERISA exists or is likely to arise on account of any Plan.

 

(b)      There are no pending or, to the best knowledge of the Lead Borrower, threatened claims, actions or lawsuits, or action by any Governmental Authority, with respect to any Plan that would reasonably be expected to have a Material Adverse Effect.  There has been no prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan that has resulted or would reasonably be expected to result in a Material Adverse Effect.

 

(c)       (i)  No ERISA Event has occurred or is reasonably expected to occur that, together with all other ERISA Events that have occurred or are reasonably expected to occur, has or would reasonably be expected to have a Material Adverse Effect; (ii) no Pension Plan has any Unfunded Pension Liability; except , that , based on the latest valuation of the SUPERVALU INC. Retirement Plan and on the actuarial methods and assumptions employed for such valuation (determined in accordance with the assumptions used for funding such Pension Plan pursuant to Section 412 or 430 of the Code or Sections 302 or 303 of ERISA), as of the date hereof the aggregate current value of accumulated “benefit liabilities” of such Pension Plan under Section 4001(a)(16) of ERISA is in excess of the aggregate current value of the assets of such Pension Plan, but the scheduled payments with respect to such underfunding does not have, and would not reasonably be expected to have, a Material Adverse Effect and the Loan Parties have and shall continue to comply with the requirements of ERISA and the PBGC Agreement with respect to the funding of each of their Pension Plans; (iii) neither any Loan Party nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability under Title IV of ERISA with respect to any Pension Plan that, individually or in the aggregate, has, or would reasonably be expected to have, a Material Adverse Effect; provided, that, solely for purposes of the representation in this clause (iii) the foregoing shall not be deemed to apply to premiums due and not delinquent under Section 4007 of ERISA and amounts payable under the PBGC Agreement; (iv)  neither any Loan Party nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability (and no event has occurred which, with the giving of notice under Section 4219 of ERISA, would result in such liability) under Sections 4201 or 4243 of ERISA with respect to a Multiemployer Plan that has or would reasonably be expected to have a Material Adverse Effect; and (v)  neither any Loan Party nor any ERISA Affiliate has engaged in a transaction that would be subject to Sections 4069 or 4212(c) of ERISA.

 

5.13.  Subsidiaries; Equity Interests.   The Loan Parties have no Subsidiaries other than those specifically disclosed in Part (a) of Schedule 5.13 , which Schedule sets forth the legal name, jurisdiction of incorporation or formation and the percentage interest of such Loan Party therein.  The outstanding Equity Interests in such Subsidiaries described on Part (a) of Schedule 5.13 as owned by a Loan Party or a Subsidiary of a Loan Party have been validly issued, are fully paid and non-assessable and are owned by a Loan Party (or a Subsidiary of a Loan Party) free and clear of all Liens.  Except as set forth in Schedule 5.13 , there are no outstanding rights to purchase any Equity Interests in any Restricted Subsidiary.  All of the outstanding Equity Interests in the Loan Parties have been validly issued, and are fully paid and non-assessable and with respect to the Loan Parties and their Subsidiaries (other than the Lead Borrower and Excluded Subsidiaries) are owned in the amounts specified on Part (c) of Schedule 5.13 free and clear of all Liens.  The copies of the Organization Documents of each Loan Party and each amendment thereto provided pursuant to Section 4.01 are true and correct copies of each such document, each of which is valid and in full force and effect.

 

113



 

5.14.  Margin Regulations; Investment Company Act.

 

(a)      No Loan Party or Restricted Subsidiary is engaged or will be engaged, principally or as one of its important activities, in the business of purchasing or carrying margin stock (within the meaning of Regulation U issued by the FRB), or extending credit for the purpose of purchasing or carrying margin stock.  None of the proceeds of the Credit Extensions shall be used directly or indirectly for the purpose of purchasing or carrying any margin stock, for the purpose of reducing or retiring any Indebtedness that was originally incurred to purchase or carry any margin stock or for any other purpose that might cause any of the Credit Extensions to be considered a “purpose credit” within the meaning of Regulations T, U, or X issued by the FRB.

 

(b)      None of the Loan Parties or any Restricted Subsidiary is or is required to be registered as an “investment company” under the Investment Company Act of 1940.

 

5.15.  Disclosure.   Each Loan Party has disclosed to the Administrative Agent and the Lenders all agreements, instruments and corporate or other restrictions to which it or any of its Subsidiaries is subject, and all other matters known to it, that, individually or in the aggregate, would reasonably be expected to result in a Material Adverse Effect.  No report, financial statement, certificate or other information furnished (whether in writing or orally) by or on behalf of any Loan Party to the Administrative Agent or any Lender in connection with the transactions contemplated hereby and the negotiation of this Agreement or any other Loan Document or delivered hereunder or under any other Loan Document (in each case, as modified or supplemented by other information so furnished) contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided , that , with respect to projected financial information, the Loan Parties represent only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time (based upon accounting principles consistent with the historical audited financial statements of the Lead Borrower) and using due care in the preparation of such information, report, financial statement or certificate.

 

5.16.  Compliance with Laws.   Each of the Loan Parties and each Restricted Subsidiary is in compliance in all material respects with the requirements of all Laws and all orders, writs, injunctions and decrees applicable to it or to its properties, except in such instances in which the failure to comply therewith, either individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect.

 

5.17.  Intellectual Property; Licenses, Etc.   The Loan Parties and their Restricted Subsidiaries own, or possess the right to use, all of the Intellectual Property, licenses, permits and other authorizations that are reasonably necessary for the operation of their respective businesses, without conflict with the rights of any other Person.  To the best of the knowledge of the Loan Parties, no slogan or other advertising device, product, process, method, substance, part or other material now employed, or now contemplated to be employed, by any Loan Party or any Restricted Subsidiary infringes upon any rights held by any other Person.  Except as specifically disclosed in Schedule 5.17 , no claim or litigation regarding any of the foregoing is pending or, to the best of the knowledge of the Loan Parties, threatened, which, either individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect.

 

5.18.  Labor Matters.   There are no strikes, lockouts, slowdowns or other material labor disputes against any Loan Party or any Restricted Subsidiary thereof pending or, to the knowledge of any Loan Party, threatened. The hours worked by and payments made to employees of the Loan Parties and their Restricted Subsidiaries have not been in violation of the Fair Labor Standards Act and any other applicable federal, state, local or foreign Law dealing with such matters in any material respect.  All

 

114



 

payments due from any Loan Party and its Restricted Subsidiaries, or for which any claim may be made against any Loan Party or any of its Restricted Subsidiaries, on account of wages and employee health and welfare insurance and other benefits, have been paid or properly accrued in accordance with GAAP as a liability on the books of such Loan Party or Restricted Subsidiary.  The Loan Parties and their Restricted Subsidiaries have disclosed, in accordance with all applicable Securities Laws, any collective bargaining agreement, management agreement, employment agreement, bonus, restricted stock, stock option, or stock appreciation plan or agreement, or any similar plan, agreement or arrangement required to be disclosed. There are no complaints, unfair labor practice charges, grievances, arbitrations, unfair employment practices charges or any other claims or complaints against any Loan Party or Restricted Subsidiary pending or, to the knowledge of any Loan Party, threatened to be filed with any Governmental Authority or arbitrator based on, arising out of, in connection with, or otherwise relating to the employment or termination of employment of any employee of any Loan Party or Restricted Subsidiary which has had or would reasonably be expected to have a Material Adverse Effect.  The consummation of the transactions contemplated by the Loan Documents will not give rise to any right of termination or right of renegotiation on the part of any union under any collective bargaining agreement to which any Loan Party or any of its Restricted Subsidiaries is bound.

 

5.19.  Security Documents.

 

(a)      The Security Agreement creates in favor of the Administrative Agent, for the benefit of the Credit Parties referred to therein, a legal, valid, continuing and enforceable security interest in the Collateral (as defined in the Security Agreement), the enforceability of which is subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.

 

(b)      The financing statements, releases and other filings are in appropriate form and have been or will be filed in the offices specified in Schedule II of the Security Agreement.  Upon such filings and/or the obtaining of “control” (as defined in the UCC), the Administrative Agent will have a perfected Lien on, and security interest in, to and under all right, title and interest of the Loan Parties in all Collateral that may be perfected by filing, recording or registering a financing statement or analogous document (including, without limitation, the proceeds of such Collateral subject to the limitations relating to such proceeds in the UCC) or by obtaining control, under the UCC (in effect on the date this representation is made) in each case, prior and superior in right to any other Person, except for those Permitted Encumbrances that have priority in such Collateral by operation of law and except as to the Term Loan Priority Collateral, for the Liens of the Term Loan Agent to the extent provided in the Term Loan Intercreditor Agreement.

 

(c)       When the Security Agreement (or a short form thereof) is filed in the United States Patent and Trademark Office and the United States Copyright Office and when financing statements, releases and other filings in appropriate form are filed in the offices specified in Schedule II of the Security Agreement, the Administrative Agent shall have a fully perfected Lien on, and security interest in, all right, title and interest of the applicable Loan Parties in the Intellectual Property (as defined in the Security Agreement) in which a security interest may be perfected by filing, recording or registering a security agreement, financing statement or analogous document in the United States Patent and Trademark Office or the United States Copyright Office, as applicable, in each case prior and superior in right to any other Person (it being understood that subsequent recordings in the United States Patent and Trademark Office and the United States Copyright Office may be necessary to perfect a Lien on registered trademarks, trademark applications and copyrights acquired by the Loan Parties after the date hereof), except for those Permitted Encumbrances that have priority in such Collateral by operation of law and except as to the Term Loan Priority Collateral, as provided in the Term Loan Intercreditor Agreement.

 

115



 

(d)      Upon the execution and delivery thereof, the Mortgages shall create in favor of the Administrative Agent, for the benefit of the Credit Parties referred to therein, a legal, valid, continuing and enforceable Lien on, and security interests in, the Real Estate Collateral Property described therein, subject to Permitted Encumbrances, the enforceability of which is subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.  Upon the filing or recording of the Mortgages with the appropriate Governmental Authorities, the Administrative Agent will have a perfected Lien on, and security interest in, to and under all right, title and interest of the grantors thereunder in all Real Estate Collateral Property that may be perfected by such filing (including, without limitation, the proceeds of such Real Estate Collateral Property), in each case prior and superior in right to any other Person, except for those Permitted Encumbrances that have priority in such Collateral by operation of law and except as to the Term Loan Priority Collateral, for the Liens of the Term Loan Agent to the extent provided in the Term Loan Intercreditor Agreement.

 

5.20.  Solvency.

 

(a)      After giving effect to the transactions contemplated by this Agreement, and before and after giving effect to each Credit Extension, the Loan Parties, on a consolidated basis, are Solvent.

 

(b)      No transfer of property has been or will be made by any Loan Party and no obligation has been or will be incurred by any Loan Party in connection with the transactions contemplated by this Agreement or the other Loan Documents with the intent to hinder, delay, or defraud either present or future creditors of any Loan Party.

 

5.21.  Deposit Accounts; Credit Card Arrangements.

 

(a)      Annexed hereto as Schedule 5.21(a)  is a list of all DDAs (and including Blocked Accounts and the Master Concentration Accounts) maintained by the Loan Parties as of the Closing Date, which Schedule includes, with respect to each DDA (i) the name and address of the depository; (ii) the purpose of the DDA and (iii) the identification of the Blocked Account Bank to which funds from such DDA are sent.

 

(b)      Annexed hereto as Schedule 5.21(b)  is a list describing all arrangements as of the Closing Date to which any Loan Party is a party with respect to the processing and/or payment to such Loan Party of the proceeds of any credit card charges and debit card charges for sales made by such Loan Party.

 

5.22.  Brokers.   No broker or finder brought about the obtaining, making or closing of the Loans or transactions contemplated by the Loan Documents, and no Loan  Party, Restricted Subsidiary or Affiliate thereof has any obligation to any Person in respect of any finder’s or brokerage fees in connection therewith.

 

5.23.  Trade Relations.   There exists no actual or, to the knowledge of any Loan Party, threatened, termination or cancellation of, or any material adverse modification or change in the business relationship of any Loan Party with any supplier material to its operations.

 

5.24.  Material Contracts.   The Loan Parties and the Restricted Subsidiaries have disclosed, in accordance with all applicable Securities Laws, all Material Contracts.  The Loan Parties are not in breach or in default in any material respect of or under any Material Contract and have not received any notice of the intention of any other party thereto to terminate any Material Contract, in each case that has resulted in, or would  reasonably be expected to result in, a Material Adverse Effect.

 

116



 

5.25.  Casualty.   Neither the businesses nor the properties of any Loan Party or any of its Restricted Subsidiaries are affected by any fire, explosion, accident, strike, lockout or other labor dispute, drought, storm, hail, earthquake, embargo, act of God or of the public enemy or other casualty (whether or not covered by insurance) that has had or would reasonably be expected to have a Material Adverse Effect.

 

5.26.  Payable Practices.   No Loan Party has made any material change in the historical accounts payable practices from those in effect immediately prior to the Closing Date that has or would reasonably be expected to have a Material Adverse Effect.

 

5.27.  Notices from Farm Products Sellers, etc.

 

(a)      Each Loan Party has not, within the one (1) year period prior to the Closing Date, received any written notice pursuant to the applicable provisions of the PSA, PACA, the Food Security Act, the UCC or any other applicable local laws from (i) any Farm Products Seller or (ii) any lender to any Farm Products Seller or any other Person with a security interest in the assets of any Farm Products Seller or (iii) the Secretary of State (or equivalent official) or other Governmental Authority of any State, Commonwealth or political subdivision thereof in which any Farm Products purchased by such Loan Party are produced, in any case advising or notifying such Loan Party of the intention of such Farm Products Seller or other Person to preserve the benefits of any trust applicable to any assets of any Borrower established in favor of such Farm Products Seller or other Person under the provisions of any law or claiming a Lien upon or other claim or encumbrance with respect to any perishable agricultural commodity or any other Farm Products which may be or have been purchased by a Loan Party or any related or other assets of such Loan Party (all of the foregoing, together with any such notices as any Loan Party may at any time hereafter receive, collectively, the “ Food Security Act Notices ”).

 

(b)      No Loan Party is a “live poultry dealer” (as such term is defined in the PSA) or otherwise purchases or deals in live poultry of any type whatsoever.  The Loan Parties do not purchase livestock pursuant to cash sales as such term is defined in the PSA. Each Loan Party is not engaged in, and shall not engage in, raising, cultivating, propagating, fattening, grazing or any other farming, livestock or aquacultural operations.

 

5.28.  HIPAA Compliance.

 

(a)      To the extent that and for so long as any Loan Party is a “covered entity” within the meaning of HIPAA, such Loan Party (i) has undertaken or will promptly undertake all appropriate surveys, audits, inventories, reviews, analyses and/or assessments (including any necessary risk assessments) of all areas of its business and operations required by HIPAA; (ii)  has developed or will promptly develop an appropriate plan and time line for becoming HIPAA Compliant (a “ HIPAA Compliance Plan ”); and (iii) has implemented or will implement those provisions of such HIPAA Compliance Plan in all material respects necessary to ensure that such Loan Party is or becomes HIPAA Compliant.

 

(b)      For purposes hereof, “ HIPAA Compliant ” shall mean that a Loan Party or Restricted Subsidiary (i) is or will be in compliance in all material respects with each of the applicable requirements of the so-called “Administrative Simplification” provisions of HIPAA on and as of each date that any part thereof, or any final rule or regulation thereunder, becomes effective in accordance with its or their terms, as the case may be (each such date, a “ HIPAA Compliance Date ”) and (ii) is not and would not reasonably be expected to become, as of any date following any such HIPAA Compliance Date, the subject of any civil or criminal penalty, process, claim, action or proceeding, or any administrative or other regulatory review, survey, process or proceeding (other than routine or mandated surveys or reviews

 

117



 

conducted by any Governmental Authority, government health plan or other accreditation entity) that has had or would reasonably be expected to have a Material Adverse Effect.

 

(c)       Each Loan Party has entered into a business associate agreement with any third party acting on behalf of the Loan Party as a business associate as defined in 45 C.F.R. §160.103, where the failure to enter into such a business associate agreement has had or would reasonably be expected to have a Material Adverse Effect.

 

5.29.  Compliance with Health Care Laws.   Without limiting the generality of Sections 5.16 or 5.28 , or any other representation or warranty made herein or in any of the other Loan Documents:

 

(a)      Each Loan Party is in compliance in all material respects with all applicable Health Care Laws, including all Medicare and Medicaid program rules and regulations applicable to them.  Without limiting the generality of the foregoing, no Loan Party has received notice by a Governmental Authority of any violation of any provisions of the Medicare and Medicaid Anti-Fraud and Abuse or Anti-Kickback Amendments of the Social Security Act (presently codified in Section 1128(B)(b) of the Social Security Act) or the Medicare and Medicaid Patient and Program Protection Act of 1987.

 

(b)      Each Loan Party has maintained in all material respects all records required to be maintained by the Food and Drug Administration, Drug Enforcement Agency and State Boards of Pharmacy, the Federal and State Medicare and Medicaid programs and as otherwise required by applicable Health Care Laws and each Loan Party has all necessary permits, licenses, franchises, certificates and other approvals or authorizations of Governmental Authority as are required under applicable Health Care Laws.

 

(c)       Each Loan Party and each Restricted Subsidiary who is a Certified Medicare Provider or Certified Medicaid Provider has in a timely manner filed all requisite cost reports, claims and other reports required to be filed in connection with all Medicare and Medicaid programs due on or before the date hereof, all of which are complete and correct in all material respects.  There are no known claims, actions or appeals pending before any Third Party Payor or Governmental Authority, including any Fiscal Intermediary, the Provider Reimbursement Review Board or the Administrator of the Centers for Medicare and Medicaid Services, with respect to any Medicare or Medicaid cost reports or claims filed by any Loan Party or Restricted Subsidiary on or before the date hereof.  There currently exist no restrictions, deficiencies, required plans of correction actions or other such remedial measures with respect to Federal and State Medicare and Medicaid certifications or licensure.

 

5.30.  OFAC .   No Loan Party or Restricted Subsidiary, nor to the knowledge of Lead Borrower, any director, officer, agent, employee or Affiliate of any Loan Party or Restricted Subsidiary is currently subject to any U.S. sanctions administered by OFAC; and Borrowers will not directly or indirectly use the proceeds of the Loans or otherwise make available such proceeds to any Person for the purpose of financing the activities of any Person currently subject to any U.S. sanctions administered by OFAC.

 

5.31.  Patriot Act .   To the extent applicable, each Loan Party and each Restricted Subsidiary is in compliance, in all material respects, with the (a) Trading With the Enemy Act, and the Foreign Assets Control Regulations, and (b) Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA Patriot Act of 2001) (the “ Patriot Act ”).  No part of the proceeds of the loans made hereunder will be used by any Loan Party or any of their Affiliates, directly or indirectly, for any payments to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as amended.

 

118



 

5.32.  Transaction Documents .   The Lead Borrower has delivered to the Administrative Agent a complete and correct copy of the Acquisition Agreement and the Tender Offer Agreement (in each case, including all schedules, exhibits, amendments, supplements and modifications thereto).

 

ARTICLE VI
AFFIRMATIVE COVENANTS

 

So long as any Lender shall have any Commitment hereunder and until the payment in full of the Obligations, the Loan Parties shall, and shall, to the extent provided below, cause each Restricted Subsidiary to:

 

6.01.  Financial Statements.   Deliver to the Administrative Agent, in form and detail reasonably satisfactory to the Administrative Agent:

 

(a)      as soon as available, but in any event within ninety (90) days after the end of each Fiscal Year of the Lead Borrower, a Consolidated balance sheet of the Lead Borrower as at the end of such Fiscal Year, and the related Consolidated statements of income or operations, Shareholders’ Equity and cash flows for such Fiscal Year, setting forth in each case in comparative form the figures for the previous Fiscal Year, all in reasonable detail and prepared in accordance with GAAP, such Consolidated statements to be audited and accompanied by (i) a report and opinion of a Registered Public Accounting Firm of nationally recognized standing reasonably acceptable to the Administrative Agent, which report and opinion shall be prepared in accordance with generally accepted auditing standards and shall not be subject to any “going concern” or like qualification or exception or any qualification or exception as to the scope of such audit to the effect that such Consolidated financial statements fairly present the financial condition and results of operations of the Lead Borrower and its Subsidiaries on a Consolidated and consolidating basis in accordance with GAAP consistently applied, together with a customary “management discussion and analysis” provision, and (ii) an opinion of such Registered Public Accounting Firm independently assessing the Loan Parties’ internal controls over financial reporting in accordance with Item 308 of SEC Regulation S-K, PCAOB Auditing Standard No. 2, and Section 404 of Sarbanes-Oxley expressing a conclusion that contains no statement that there is a material weakness in such internal controls, except for such material weaknesses as to which the Required Lenders do not object;

 

(b)      as soon as available, but in any event within forty-five (45) days after the end of each of the first three (3) Fiscal Quarters of each Fiscal Year of the Lead Borrower, a Consolidated balance sheet of the Lead Borrower as at the end of such Fiscal Quarter, and the related Consolidated statements of income or operations and cash flows for such Fiscal Quarter and for the portion of the Lead Borrower’s Fiscal Year then ended, setting forth in each case in comparative form the figures for (i) the corresponding Fiscal Quarter of the previous Fiscal Year and (ii) the corresponding year-to-date portion of the previous Fiscal Year, all in reasonable detail, such Consolidated statements to be certified by a Responsible Officer of the Lead Borrower as fairly presenting the financial condition, results of operations and cash flows of the Lead Borrower as of the end of such Fiscal Quarter in accordance with GAAP consistently applied, subject to normal year-end audit adjustments, together with a customary “management discussion and analysis” provision, subject only to normal year-end audit adjustments and the absence of footnotes;

 

(c)       in the event that Excess Availability is less than twenty percent (20%) of the Aggregate Commitments at any time, as soon as available, but in any event within thirty (30) days after (x) the end of each Fiscal Period that is not the final Fiscal Period of a Fiscal Quarter (commencing with the Fiscal Period ended after the date on which Excess Availability is less than such amount), and (y) in addition, after the end of each Fiscal Period that is the end of a Fiscal Year, a Consolidated balance sheet of the

 

119



 

Lead Borrower and its Subsidiaries as at the end of such Fiscal Period, and the related Consolidated statements of income or operations and cash flows for such Fiscal Period, and for the portion of the Lead Borrower’s Fiscal Year then ended, setting forth in each case in comparative form the figures for (i) the corresponding Fiscal Period of the previous Fiscal Year and (ii) the corresponding year-to-date portion of the previous Fiscal Year, all in reasonable detail, such Consolidated statements to be certified by a Responsible Officer of the Lead Borrower as fairly presenting the financial condition, results of operations and cash flows of the Lead Borrower as of the end of such Fiscal Period in accordance with the Lead Borrower’s practices, which shall be reasonably satisfactory to Administrative Agent; provided , that , if after the Loan Parties have been delivering financial statements for each Fiscal Period as provided above, thereafter Excess Availability shall be equal to or greater than twenty percent (20%) of the Aggregate Commitments for forty-five (45) days, then the Loan Parties shall not be required to deliver the financial statements under this clause (c) , until such time as Excess Availability may again be less than twenty percent (20%) of the Aggregate Commitments; and

 

(d)      as soon as available, but in any event no more than forty-five (45) days after the end of each Fiscal Year of the Lead Borrower, forecasts prepared by management of the Lead Borrower, in form reasonably satisfactory to the Administrative Agent, of Consolidated balance sheets and statements of income or operations, cash flows and availability of the Lead Borrower and its Subsidiaries on a basis using Fiscal Periods for the immediately following Fiscal Year (including the Fiscal Year in which the Maturity Date occurs), and as soon as available, any significant revisions to such forecasts with respect to such Fiscal Year.

 

6.02.  Certificates; Other Information .

 

(a)      Deliver to the Administrative Agent and upon Administrative Agent’s request, each Lender, in form and detail reasonably satisfactory to the Administrative Agent:

 

(i)        concurrently with the delivery of the financial statements referred to in Sections 6.01(a) , (b)  and (c) , (A) a duly completed Compliance Certificate signed by a Responsible Officer of the Lead Borrower, but only with the financial statements referred to in Section 6.01(c)  after Excess Availability is less than twenty percent (20%) of the Aggregate Commitments, and (B) in the event of any change in generally accepted accounting principles used in the preparation of such financial statements, the Lead Borrower shall also provide a statement of reconciliation conforming such financial statements to GAAP and a copy of management’s discussion and analysis with respect to such financial statements;

 

(ii)       ten (10) days after the end of each Fiscal Period (or, if such day is not a Business Day, on the next succeeding Business Day), a certificate in the form of Exhibit F (a “ Borrowing Base Certificate ”) showing the Borrowing Base as of the close of business as of the last day of such Fiscal Period, each Borrowing Base Certificate to be certified as complete and correct by a Responsible Officer of the Lead Borrower; provided , that , at any time that an Accelerated Borrowing Base Delivery Event has occurred and is continuing, such Borrowing Base Certificate shall be delivered on the fourth Business Day following the last day of each week showing the Borrowing Base as of the close of business as of the last day of such week (which Borrowing Base Certificate may include certain information as of the end of the prior Fiscal Period in each case as is reasonably satisfactory to Administrative Agent to account for the greater frequency and shorter periods for the delivery of such certificate);

 

(iii)      promptly after the same are available, copies of each annual report, proxy or financial statement or other report or communication sent to the stockholders of the Loan Parties, and copies of all annual, regular, periodic and special reports and registration statements which any Loan Party may file or be required to file with the SEC under Sections 13 or 15(d) of the Securities Exchange

 

120



 

Act of 1934 or with any national securities exchange, and in any case not otherwise required to be delivered to the Administrative Agent pursuant hereto;

 

(iv)     the financial and collateral reports described on Schedule 6.02 hereto, at the times set forth in such Schedule;

 

(v)      as soon as available, but in any event within thirty (30) days after the end of each Fiscal Year, and as more frequently as may be reasonably requested by the Administrative Agent, (A) a report summarizing the insurance coverage (specifying type, amount and carrier) in effect for each Loan Party and its Subsidiaries and containing such additional information as the Administrative Agent, or any Lender through the Administrative Agent, may reasonably specify and (B) a report summarizing collective bargaining agreements then in effect (specifying parties, expiration dates, number of employees covered and locations) and containing such additional information as the Administrative Agent, or any Lender through the Administrative Agent may reasonably specify;

 

(vi)     promptly after the Administrative Agent’s request therefor, copies of all Material Contracts (but only to the extent not then publicly available from the SEC) and documents evidencing Material Indebtedness;

 

(vii)    promptly after the Administrative Agent’s request therefor, a list of any “business associate agreements” (as such term is defined in HIPAA) that any Loan Party is a party to or bound by that is accurate in all material respects as of the date set forth therein and a copy of any standard form of such agreement used by any Loan Party;

 

(viii)   promptly, and in any event within five (5) Business Days after receipt thereof by any Loan Party or any Subsidiary thereof, copies of each notice or other correspondence received from any Governmental Authority (including, without limitation, the SEC (or comparable agency in any applicable non-U.S. jurisdiction)) concerning any proceeding with, or investigation or possible investigation or other inquiry by such Governmental Authority regarding financial or other operational results of any Loan Party or any Subsidiary thereof or any other matter which, if adversely determined, would reasonably be expected to have a Material Adverse Effect;

 

(ix)     if requested by Administrative Agent, promptly and in any event within five (5) Business Days after such request, provide to Administrative Agent, the name(s) used on each tax return filed by the Lead Borrower or by any of its Subsidiaries, together with a copy of the portion of the tax return that shows such name(s);

 

(x)      promptly after Administrative Agent’s request therefor, any collective bargaining agreement or other labor contract to which a Loan Party becomes a party, or the application for the certification of a collective bargaining agent, and/or at Administrative Agent’s option, a description of the material terms thereof;

 

(xi)     promptly after the receipt thereof by the Lead Borrower or any of its Subsidiaries, a copy of any “management letter” received by any such Person from its certified public accountants and the management’s response thereto;

 

(xii)    promptly after the request by any Lender, all documentation and other information that such Lender reasonably requests in order to comply with its ongoing obligations under applicable “know your customer” and anti-money laundering rules and regulations, including the Patriot Act; and

 

121



 

(xiii)           promptly, such additional information regarding the business affairs, financial condition or operations of any Loan Party or any Subsidiary, or compliance with the terms of the Loan Documents, as the Administrative Agent or any Lender may from time to time reasonably request.

 

(b)                    Documents required to be delivered pursuant to Section 6.01 or Section 6.02 may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date (i)  specified in Section 10.02(b)(i)  with respect to e-mail communications, (ii) on which the Lead Borrower posts such documents, or provides a link thereto on the Lead Borrower’s website on the Internet at the website address listed on Schedule 10.02 ; or (iii) on which such documents are posted on the Lead Borrower’s behalf on an Internet or intranet website, if any, to which each Lender and the Administrative Agent have access (whether a commercial, third-party website or whether sponsored by the Administrative Agent); provided , that : (A) promptly upon the request of Administrative Agent or any Lender at any time or from time to time as to any of such documents, the Lead Borrower shall deliver paper copies of such documents to the Administrative Agent or any Lender making such request and (B) the Lead Borrower shall notify the Administrative Agent and each Lender (by telecopier or electronic mail) of the posting of any such documents as provided in clauses (ii)  and (iii)  above and if for any reason Administrative Agent is unable to obtain electronic versions of the documents posted, promptly upon Administrative Agent’s request provide to the Administrative Agent by electronic mail electronic versions ( i.e. , soft copies) of such documents.  Notwithstanding anything contained herein, except as Administrative Agent may specify otherwise at any time and from time to time, in every instance the Lead Borrower shall be required to provide paper copies of the Compliance Certificates required by Section 6.02(a)(i)  to the Administrative Agent.  The Administrative Agent shall have no obligation to request the delivery or to maintain copies of the documents referred to above, and in any event shall have no responsibility to monitor compliance by the Loan Parties with any such request for delivery, and each Lender shall be solely responsible for requesting delivery to it or maintaining its copies of such documents

 

(c)                     The Loan Parties hereby acknowledge that (i) the Administrative Agent and/or the Initial Lead Arrangers will make available to the Lenders and the LC Issuers materials and/or information provided by or on behalf of the Loan Parties hereunder (collectively, “ Borrower Materials ”) by posting the Borrower Materials on IntraLinks or another similar electronic system (the “ Platform ”) and (ii) certain of the Lenders may be “public-side” Lenders (i.e., Lenders that do not wish to receive material non-public information with respect to the Loan Parties or their securities) (each, a “ Public Lender ”).  The Loan Parties hereby agree that (A) all Borrower Materials that are to be made available to Public Lenders shall be clearly and conspicuously marked “PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently on the first page thereof; (B) by marking Borrower Materials “PUBLIC,” the Loan Parties shall be deemed to have authorized the Administrative Agent and the Lenders to treat such Borrower Materials as not containing any material non-public information with respect to the Loan Parties, theirs Subsidiaries or their respective securities for purposes of United States Federal and state securities laws (provided, that, to the extent such Borrower Materials constitute Information, they shall be treated as set forth in Section 10.07 ); (C) all Borrower Materials marked “PUBLIC” are permitted to be made available through a portion of the Platform designated as “Public Investor;” and (D) the Administrative Agent shall be entitled to treat any Borrower Materials that are not marked “PUBLIC” as being suitable only for posting on a portion of the Platform not marked as “Public Investor.”  Notwithstanding the foregoing, the following Borrower Materials shall be marked “PUBLIC” and the Loan Parties agree that the following documents may be distributed to all Lenders (including Public Lenders) unless, solely with respect to the documents described in clauses (B) and (C) below, the Lead Borrower advises the Administrative Agent in writing (including by e-mail) within a reasonable time prior to their intended distribution that such material should only be distributed to Lenders other than Public Lenders (it being agreed that the Lead Borrower and its counsel shall have been given a reasonable opportunity to review such documents and comply with applicable securities law disclosure obligations):

 

122



 

(A) the Loan Documents; (B) administrative materials prepared by the Administrative Agent for prospective Lenders; (C) term sheets and notification of changes in the terms of the financing hereunder; and (D) the Audited Financial Statements, the Deal-based Breakout Financial Information and the financial statements and certificates furnished pursuant to Sections 6.01(a)  and 6.01(b) .

 

(d)                    Lead Borrower hereby acknowledges and agrees that all financial statements and certificates furnished pursuant to Sections 6.01(a)  and (b)  are hereby deemed to be Borrower Materials suitable for distribution, and to be made available, to Public Lenders as contemplated by Section 10.02(b)  and may be treated by the Administrative Agent and the Lenders as if the same had been marked “PUBLIC” in accordance with such Section.

 

(e)                     Administrative Agent shall notify the Lead Borrower (which notice may be by telephone) if any Lender becomes a Public Lender, within thirty (30) days after Administrative Agent receives written notification thereof from such Lender.

 

6.03.  Notices.  Promptly notify the Administrative Agent of:

 

(a)                    the occurrence of any Default or Event of Default, specifying the nature and extent thereof and the corrective action (if any) taken or proposed to be taken with respect thereto;

 

(b)                    any matter that has resulted or would reasonably be expected to result in a Material Adverse Effect, such as arising from (i) breach or non-performance of, or any default under, a Material Contract or with respect to Material Indebtedness of any Loan Party or any Restricted Subsidiary thereof; (ii) any dispute, litigation, investigation, proceeding or suspension between any Loan Party or any Restricted Subsidiary thereof and any Governmental Authority; or (iii) the commencement of, or any material development in, any litigation or proceeding affecting any Loan Party or any Restricted Subsidiary thereof, including pursuant to any applicable Environmental Laws;

 

(c)                     the occurrence of any event, including any violation of Environmental Law, Release of Hazardous Materials, acquisition of any stock, assets or property, or the receipt of notice, claim, demand, action or suit pertaining to any of the foregoing, that, in each case, would reasonably be expected to result in Environmental Liabilities in excess of $20,000,000;

 

(d)                    the occurrence of any ERISA Event that itself, or together with any other ERISA Events that have occurred, has had or would reasonably be expected to have a Material Adverse Effect;

 

(e)                     any material change in accounting policies or financial reporting practices by any Loan Party or any Subsidiary thereof;

 

(f)                      any change in any Loan Party’s chief executive officer, chief financial officer, chief operating officer or treasurer;

 

(g)                     the discharge by any Loan Party of its present Registered Public Accounting Firm or any withdrawal or resignation by such Registered Public Accounting Firm;

 

(h)                    the filing of any Lien for unpaid taxes exceeding $20,000,000 in the aggregate against the Loan Parties;

 

(i)                        any casualty or other insured damage to any material portion of the Collateral or the commencement of any action or proceeding for the taking of any interest in a material portion of the

 

123



 

Collateral under power of eminent domain or by condemnation or similar proceeding or if any material portion of the Collateral is damaged or destroyed;

 

(j)                       the receipt of any notice from a supplier, seller, or agent pursuant to the Food Security Act, PACA or the PSA;

 

(k)                    any transaction of the nature contained in Article VII hereof, occurring after the Closing Date, consisting of: (i) the entry by a Loan Party into a Material Contract, (ii) the incurrence by a Loan Party of Material Indebtedness (or in the case of Indebtedness of less than $50,000,000 but greater than $25,000,000, notify Administrative Agent at the same time as the next Borrowing Base Certificate to be delivered to Administrative Agent), (iii) the voluntary or involuntary grant of any Lien other than a Permitted Encumbrance upon any property of a Loan Party; or (iv) the making of any Permitted Investments by a Loan Party in excess of $50,000,000 (or in the case of any Permitted Investment less than $50,000,000 but greater than $25,000,000, notify Administrative Agent at the same time as the next Borrowing Base Certificate to be delivered to Administrative Agent); and (v) mergers or acquisitions permitted under Section 7.04 ;

 

(l)                        any failure by the Loan Parties to pay rent at (i) five percent (5%) or more of the Loan Parties’ locations in the aggregate or (ii) any of such Loan Party’s locations if such failure continues for more than ten (10) days following the day on which such rent first came due and such failure has had or would reasonably be expected to have a Material Adverse Effect;

 

(m)                (i) any claim being asserted for payment under the ASC Guarantee, (ii) any payment being made from the Initial Escrow Amount Subaccount (as defined in the Escrow Agreement) other than to retire principal obligations on the ASC Notes, or from the Additional Escrow Amount Subaccount (as defined in the Escrow Agreement) to pay amounts other than interest on the ASC Notes, (iii) any claim for payment being made from either subaccount of the Escrow Account (as defined in the Escrow Agreement) and such claim not being honored by the Escrow Agent (as defined in the Escrow Agreement) or (iv) any claim being asserted for payment under the Lead Borrower’s guarantee of NAI Workers’ Compensation Liabilities.

 

Each notice pursuant to this Section shall be accompanied by a statement of a Responsible Officer of the Lead Borrower setting forth details of the occurrence referred to therein and stating what action the Lead Borrower has taken and proposes to take with respect thereto.  Each notice pursuant to Section 6.03(a)  shall describe with particularity any and all provisions of this Agreement and any other Loan Document that have been breached.

 

6.04.  Payment of Obligations.   Pay and discharge as the same shall become due and payable, all its obligations and liabilities, including (a) all tax liabilities, assessments and governmental charges or levies upon it or its properties, assets, income or profits, (b) all lawful claims (including claims of landlords, warehousemen, freight forwarders, and carriers, and all claims for labor materials and supplies or otherwise) which, if unpaid, would by law become a Lien upon its property; and (c) all Indebtedness, as and when due and payable, but subject to any subordination provisions contained in any instrument or agreement evidencing such Indebtedness, except, in each case under clause (a) , (b)  or (c) , where (i) the validity or amount thereof is being contested in good faith by appropriate proceedings, (ii) such Loan Party has set aside on its books adequate reserves with respect thereto in accordance with GAAP, (iii) such contest effectively suspends collection of the contested obligation and enforcement of any Lien securing such obligation, (iv) no notice of a Lien with respect thereto has been filed in any applicable filing office, (v) in the case of any Real Estate Collateral Property subject to a Mortgage, there is no present risk of forfeiture of such Real Estate Collateral Property, and (vi) the failure to make payment pending such contest would not reasonably be expected to result in a Material Adverse Effect. Nothing

 

124



 

contained in this Section 6.04 shall be deemed to limit the rights of the Administrative Agent with respect to determining Reserves pursuant to this Agreement.

 

6.05.  Preservation of Existence, Etc.   (a) Preserve, renew and maintain in full force and effect its legal existence and good standing under the Laws of the jurisdiction of its organization or formation except in a transaction permitted by Section 7.04 or 7.05 ; (b) take all necessary action to maintain and keep in full force and effect all rights, privileges, permits, licenses and franchises material to the normal conduct of its business; and (c) preserve or renew all of its Intellectual Property, except to the extent such Intellectual Property (i) is no longer used or useful in the business of any Loan Party or any of its Restricted Subsidiaries, and (ii) is not otherwise material to the business of any Loan Party or any of its Restricted Subsidiaries in any respect.

 

6.06.  Maintenance of Properties.   (a) Maintain, preserve and protect all of its material properties and equipment material to the operation of its business in good working order and condition, ordinary wear and tear excepted; and (b) make all repairs thereto and renewals, improvements, additions and replacements thereof necessary in order that the business carried on in connection therewith may be properly conducted at all times and (c) perform and observe all the terms and provisions of each Ground Lease to be performed or observed by it, maintain each such Ground Lease in full force and effect, enforce each such Ground Lease in accordance with its material terms, take all such action to such end as may be from time to time reasonably requested by the Term Loan Agent (or, if the Term Loan Facility has been repaid in full and no Refinancing Indebtedness in respect thereof  with the same or similar rights as to such Ground Leases as under the Term Loan Facility is outstanding, the Administrative Agent) and, upon reasonable request of the Term Loan Agent (or, if the Term Loan Facility has been repaid in full and no Refinancing Indebtedness in respect thereof  with the same or similar rights as to such Ground Leases as under the Term Loan Facility is outstanding, the Administrative Agent), make to each other party to each such Ground Lease such demands and requests for information and reports or for action as any Loan Party or any of its Subsidiaries is entitled to make under such Ground Lease, and cause each of its Subsidiaries that are party to Ground Leases to do so.

 

6.07.  Maintenance of Insurance.

 

(a)                    Maintain with financially sound and reputable insurance companies reasonably acceptable to the Administrative Agent and not Affiliates of the Loan Parties (except to the extent that the Insurance Captives are Affiliates of the Loan Parties), insurance with respect to its properties and business against loss or damage of the kinds customarily insured against by Persons engaged in the same or similar business and operating in the same or similar locations and as is otherwise required by applicable Law, of such types and in such amounts (after giving effect to any self-insurance compatible with the following standards) as are customarily carried under similar circumstances by such other Persons and as are reasonably acceptable to the Administrative Agent, including coverage for business interruption and public liability insurance against claims for personal injury or death or property damage occurring upon, in, about or in connection with the use of any properties owned, occupied or controlled by it.

 

(b)                    Cause fire and extended coverage policies maintained with respect to any Collateral and business interruption coverage to provide (by endorsement or otherwise):

 

(i)                        a non-contributing mortgage clause (regarding improvements to real property);

 

(ii)                     that none of the Loan Parties, Credit Parties or any other Person (other than an Insurance Captive) shall be a co-insurer;

 

125



 

(iii)                  a customary lender’s loss payable clause, in form and substance reasonably satisfactory to the Administrative Agent, which shall provide that the insurance carrier shall pay all proceeds otherwise payable to the Loan Parties under the policies to the Administrative Agent as its interests may appear (it being understood that there will be a separate lender’s loss payable clause for the benefit of the Term Loan Agent as its interests may appear, and that the rights of Administrative Agent and Term Loan Agent will be subject to the Term Loan Intercreditor Agreement);

 

(iv)                 that neither the Loan Parties, the Administrative Agent nor any other Person (other than an Insurance Captive) shall be a co-insurer thereunder;

 

(v)                    a “Replacement Cost Endorsement”, without any deduction for depreciation; and

 

(vi)                 such other provisions as the Administrative Agent may reasonably require from time to time to protect its and the Lenders’ interests.

 

(c)                     Cause commercial general liability policies to provide coverage to the Administrative Agent as an additional insured.

 

(d)                    (i) Cause each policy of insurance required by this Section 6.07 to also provide that it shall not be canceled by reason of nonpayment of premium except upon not less than ten (10) days’ prior written notice thereof by the insurer to the Administrative Agent or for any other reason except upon not less than thirty (30) days’ prior written notice thereof by the insurer to the Administrative Agent, except, in each case, in the case of force majeure, (ii) notify the Administrative Agent promptly (and in any event within five (5) Business Days) whenever it receives a notice from the insurance carrier that any policy required by this Section 6.07 will be canceled for any reason and (iii) use reasonable efforts to include in such clause that the insurance carrier will provide prior written notice to the loss payee of any modification to the policy so as to reduce the scope or amount of coverage in any material respect and otherwise notify the Administrative Agent on or about the date that any policy required by this Section 6.07 is modified so as to reduce the scope or amount of coverage in any material respect.

 

(e)                     Deliver to the Administrative Agent, on or about the date of the cancellation or non-renewal of any policy of insurance required by this Section 6.07 , a certificate of insurance for the replacement policy; and deliver to the Administrative Agent, on or about the date of the renewal of any policy of insurance required by this Section 6.07 , a certificate evidencing renewal of each such policy.

 

(f)                      Maintain for themselves and their Subsidiaries, a Directors and Officers insurance policy, and a “Blanket Crime” policy, the “Blanket Crime” policy including employee dishonesty, forgery or alteration, theft, disappearance and destruction, robbery and safe burglary, and computer fraud coverage, placed with responsible companies and otherwise as customarily insured against by Persons engaged in the same or similar business and operating in the same or similar locations and as is otherwise required by applicable Law, of such types and in such amounts (after giving effect to any self-insurance compatible with the following standards) as are customarily carried under similar circumstances by such other Persons, and will upon request by the Administrative Agent furnish the Administrative Agent certificates evidencing renewal of each such policy.

 

(g)                     Permit, upon the reasonable request of the Administrative Agent, any representatives that are designated by the Administrative Agent to inspect the insurance policies maintained by or on behalf of the Loan Parties and to inspect books and records related thereto and any properties covered thereby at any reasonable time during business hours.

 

126



 

(h)                    Deliver to the Administrative Agent, upon the Administrative Agent’s reasonable request therefor, (i) copies and updated certificates of insurance for the insurance policies required by this Section 6.07 and the applicable provisions of the Security Documents, and (ii) duplicate originals or certified copies of all such policies covering any Collateral.

 

(i)                        If at any time the area in which any Real Estate Collateral Property subject to a Mortgage is located is designated (i) a “special flood hazard area” in any Flood Insurance Rate Map published by the Federal Emergency Management Agency (or any successor agency), obtain flood insurance in such total amount (after giving effect to any self-insurance compatible with the following standards) as is customarily carried under similar circumstances by Persons engaged in the same or similar business and operating in the same or similar locations, and as is otherwise required by applicable Law, and as is reasonably acceptable to the Administrative Agent, and otherwise comply with the Flood Program, or (ii)  in “seismic zone” 3 or 4 (as defined in the Uniform Building Code 1997 map published by the International Conference of Building Officials), obtain earthquake insurance in such total amount as is customarily carried under similar circumstances by Persons engaged in the same or similar business and operating in the same or similar locations, and as is otherwise required by applicable Law, and as is reasonably acceptable to the Administrative Agent.

 

(j)                       With respect to any Real Estate Collateral Property, carry and maintain commercial general liability insurance on an occurrence basis covering bodily injury including death, and property damage liability in such amounts (after giving effect to any self-insurance compatible with the following standards) as is customarily carried under similar circumstances by Persons engaged in the same or similar business and operating in the same or similar locations and as is otherwise required by applicable Law, and as is reasonably acceptable to the Administrative Agent, naming the Administrative Agent as an additional insured.

 

(k)                    (i) Notify the Administrative Agent promptly whenever any separate insurance concurrent in form or contributing in the event of loss with that required to be maintained under this Section 6.07 is taken out by any Loan Party, and (ii) deliver to the Administrative Agent a certificate of insurance for such policy or policies within thirty (30) days of such policy or policies (or, at the reasonable request of the Administrative Agent, duplicate originals thereof) being taken out by any Loan Party.

 

(l)                        The insurance companies providing the insurance required to be maintained under this Section 6.07 shall have no rights of subrogation against any Credit Party or its agents or employees.  If, however, the insurance policies do not provide waiver of subrogation rights against such parties, as required above, then the Loan Parties hereby agree, to the extent permitted by law, to waive their right of recovery, if any, against the Credit Parties and their agents and employees to the extent payment for such loss or damage is actually made by the insurance companies issuing the insurance policies required to be maintained under this Section 6.07 .  The designation of any form, type or amount of insurance coverage by any Credit Party under this Section 6.07 shall in no event be deemed a representation, warranty or advice by such Credit Party that such insurance is adequate for the purposes of the business of the Loan Parties or the protection of their properties.

 

6.08.  Compliance with Laws.  Comply in all material respects with the requirements of all Laws and all orders, writs, injunctions and decrees applicable to it or to its business or property, except in such instances in which the failure to comply therewith would not reasonably be expected to have a Material Adverse Effect.

 

127



 

6.09.  Books and Records; Accountants.

 

(a)                    Maintain proper books of record and account, in which full, true and correct entries in conformity with GAAP consistently applied  shall be made of all financial transactions and matters involving the assets and business of the Lead Borrower and its Subsidiaries, as the case may be; and (ii) maintain such books of record and account in material conformity with all applicable requirements of any Governmental Authority having regulatory jurisdiction over the Lead Borrower and its Subsidiaries, as the case may be.

 

(b)                    At all times retain a Registered Public Accounting Firm which is reasonably satisfactory to the Administrative Agent and shall instruct such Registered Public Accounting Firm to cooperate with, and be available to, the Administrative Agent or its representatives to discuss the Loan Parties’ financial performance, financial condition, operating results, controls, and such other matters, within the scope of the retention of such Registered Public Accounting Firm, as may be raised by the Administrative Agent.  A representative of the Lead Borrower shall attend any meeting between the Administrative Agent or its representatives and such Registered Public Accounting Firm, provided , that , so long as the Administrative Agent shall provide not less than five (5) Business Days prior notice if no Default or Event of Default has occurred and is continuing, or prior notice if a Default or Event of Default exists, to the Lead Borrower of any proposed meeting with such Registered Public Accounting Firm, if no representative of the Lead Borrower attends such meeting, such Registered Public Accounting Firm may meet to discuss such matters with the Administrative Agent or its representatives without the representative of the Lead Borrower present.

 

6.10.  Inspection Rights; Field Examinations; Appraisals.

 

(a)                    Permit representatives and independent contractors of the Administrative Agent to visit and inspect any of its properties, to examine its corporate, financial and operating records, and make copies thereof or abstracts therefrom, and to discuss its affairs, finances and accounts with its directors, officers, and Registered Public Accounting Firm, all at the expense of the Loan Parties and at such reasonable times during normal business hours and as often as may be reasonably desired, upon reasonable advance notice to the Lead Borrower; provided , that , (i) when an Event of Default exists the Administrative Agent (or any of its representatives or independent contractors) may do any of the foregoing at the expense of the Loan Parties at any time during normal business hours and without advance notice and (ii) the foregoing shall not apply to field examinations and appraisals, which shall be subject to the limitations set forth in Sections 6.10(b)  and 6.10(c)  below.

 

(b)                    Upon the request of the Administrative Agent after reasonable prior notice, permit the Administrative Agent or professionals (including investment bankers, consultants, accountants and lawyers) retained by the Administrative Agent to conduct field examinations and other evaluations, including, without limitation, of (i) the Lead Borrower’s practices in the computation of the Borrowing Base, (ii) the assets included in the Borrowing Base and related financial information such as, but not limited to, sales, gross margins, payables, accruals and reserves, and (iii) the Loan Parties’ business plan and cash flows.  The Administrative Agent will make such request, and make arrangements, for at least one such field examination in any thirteen (13) consecutive Fiscal Periods.  The Loan Parties shall pay the fees and expenses of the Administrative Agent and one set of such professionals with respect to such examinations and evaluations (the “ Field Examination Expenses ”), with respect to one (1) field examination in each period of thirteen (13) consecutive Fiscal Periods; provided , that , if Excess Availability is less than the amount equal to thirty-five percent (35%) of the Borrowing Base at any time during such thirteen (13) consecutive Fiscal Periods, the Administrative Agent may, in its Permitted Discretion, require the Loan Parties to pay the Field Examination Expenses with respect to one (1) additional field examination done during such thirteen (13) consecutive Fiscal Periods.  Notwithstanding the foregoing, in addition to the field examinations described above, the Administrative Agent may have additional field examinations done (A) as it in its Permitted Discretion deems necessary or appropriate at

 

128



 

the expense of Agent and Lenders, or (B) if an Event of Default shall have occurred and be continuing, at the Loan Parties’ expense.

 

(c)                     Upon the request of the Administrative Agent after reasonable prior notice, permit the Administrative Agent or professionals (including appraisers) retained by the Administrative Agent to conduct appraisals of the ABL Priority Collateral, including, without limitation, the assets included in the Borrowing Base.  The Administrative Agent will make such request, and make arrangements, for at least one such appraisal of the Inventory and Prescription Files in any thirteen (13) consecutive Fiscal Periods.  The Loan Parties shall pay the fees and expenses of the Administrative Agent and one set of such professionals with respect to such appraisals of the ABL Priority Collateral (the “ Appraisal Expenses ”) with respect to up to one (1) Inventory and Prescription File appraisal in each period of thirteen (13) consecutive Fiscal Periods; provided , that , if Excess Availability is less than the amount equal to thirty-five percent (35%) of the Borrowing Base at any time during any such period of thirteen (13) consecutive Fiscal Periods, the Administrative Agent may, in its Permitted Discretion, require the Loan Parties to pay the Appraisal Expenses with respect to one (1) additional Inventory and Prescription File appraisal during such thirteen (13) consecutive Fiscal Periods.  Notwithstanding the foregoing, the Administrative Agent may cause additional appraisals to be undertaken (i) as it in its Permitted Discretion deems necessary or appropriate, at it’s the expense of Agent and Lenders or (ii) if an Event of Default shall have occurred and be continuing, at the Loan Parties’ expense.

 

(d)                    Upon the request of the Administrative Agent after reasonable prior notice, permit the Administrative Agent or professionals (including appraisers) retained by the Administrative Agent to conduct or obtain valuations of the Term Loan Priority Collateral in connection with substitutions and additions as provided in Schedule 6.17 .

 

6.11.  Use of Proceeds.   Use the proceeds of the Credit Extensions (a) to finance the acquisition of working capital assets of the Borrowers, including the purchase of inventory and equipment, in each case in the ordinary course of business, (b) to finance Capital Expenditures of the Borrowers, (c) on the Closing Date to (i) restate the Indebtedness outstanding under the Existing Credit Agreement, (ii) satisfy the Indebtedness outstanding under the Existing Term Loan Agreement, the SVU 2014 Notes and the Existing Receivables Transfer Agreements, and (iii) finance the repurchase by Lead Borrower of all receivables sold under the Existing Receivables Transfer Agreements, (d) to pay costs, expenses and fees in connection with the credit facility provided for hereunder, under the Term Loan Facility and under the other Transactions, and (e) for general corporate purposes of the Borrowers (including Capital Expenditures and Permitted Acquisitions), in each case to the extent expressly permitted under applicable Law and the Loan Documents.

 

6.12.  Additional Loan Parties.   Notify the Administrative Agent at the time that any Person becomes a Subsidiary, whether such Person shall be a Restricted Subsidiary or an Unrestricted Subsidiary, and promptly thereafter (and in any event within thirty (30) days), cause any such Person (a) which is not an Excluded Subsidiary, to (i) become a Loan Party by executing and delivering to the Administrative Agent a Joinder to this Agreement and if such Person is not a Borrower, a counterpart of the Facility Guaranty or such other document as the Administrative Agent shall deem appropriate for such purpose, (ii) grant a Lien to the Administrative Agent on such Person’s assets of the types constituting Collateral to secure the Obligations, and (iii) deliver to the Administrative Agent documents of the types referred to in clauses (iii)  and (iv)  of Section 4.01(b)  and upon Administrative Agent’s request, favorable opinions of counsel to such Person (which shall cover, among other things, the legality, validity, binding effect and enforceability of the documentation referred to in clause (a) ), and (b) if any Indebtedness of such Person is owned by or on behalf of any Loan Party, to pledge such Indebtedness and promissory notes evidencing such Indebtedness to the extent any such Indebtedness is in an amount in excess of $10,000,000, in each case in form, content and scope reasonably satisfactory to the Administrative Agent.

 

129



 

In no event shall compliance with this Section 6.12 waive or be deemed a waiver or consent to any transaction giving rise to the need to comply with this Section 6.12 if such transaction was not otherwise expressly permitted by this Agreement or constitute or be deemed to constitute, with respect to any Subsidiary, an approval of such Person as a Borrower or permit the inclusion of any acquired assets in the computation of the Borrowing Base.

 

6.13.  Cash Management.

 

(a)                    On or prior to the Closing Date, deliver to the Administrative Agent copies of notifications (each, a “ Credit Card Notification ”) substantially in the form attached hereto as Exhibit H which have been executed on behalf of such Loan Party and delivered to such Loan Party’s Credit Card Processors listed on Schedule 5.21(b) .

 

(b)                    The Loan Parties shall ACH or wire transfer no less frequently than daily (and whether or not there are then any outstanding Obligations), (i) other than as to certain Store locations consistent with current practices, for which such ACH or wire transfer will be no less frequently than weekly (so long as the aggregate amount of the funds in all such accounts at any time does not exceed $1,000,000), to a Blocked Account (including Banner Accounts) or a Master Concentration Account all available amounts on deposit in each DDA used by any Store or other retail location or otherwise for the receipt of proceeds of Accounts or other Collateral from customers and other obligors (which shall not include any Excluded DDA, so that funds in an Excluded DDA are not sent to a Blocked Account), (ii) all payments due from Credit Card Issuers and Credit Card Processors or otherwise in respect of ABL Priority Collateral to a Blocked Account or a Master Concentration Account and (iii) all amounts on deposit in a Blocked Account to a Master Concentration Account; provided , that , (A) with respect to a DDA relating to a Store location for which such ACH or wire transfer is no less frequently than weekly, up to $25,000 may remain in any such DDA, not to exceed $1,000,000 in the aggregate for all such DDAs and (B) with respect to a DDA for which such ACH or wire transfer is no less frequently than daily, the available amounts from such DDA shall only be required to be transferred if the available amount on deposit in such DDA on such day is greater than $250,000, so long as the aggregate amount of available funds in all such DDAs at any time, immediately after giving effect to the transfers for such day, does not exceed $3,500,000 (except that so long as no Cash Dominion Event exists, Borrowers may maintain, in addition and to the extent that no Base Rate Loans are outstanding, available amounts for all such Blocked Accounts of up to an aggregate amount of $100,000,000 for a period of seven (7) days).

 

(c)                     Within sixty (60) days after the Closing Date (or such longer period as the Administrative Agent may approve in writing in its sole discretion but in no event more than one hundred eighty (180) days from the Closing Date), deliver to Administrative Agent (i) Blocked Account Agreements reasonably satisfactory in form and substance to the Administrative Agent as duly authorized, executed and delivered by such Loan Party and the applicable Blocked Account Bank with which such Loan Party maintains each Blocked Account and each Master Concentration Account covering each such Blocked Account and Master Concentration Account and (ii) control agreements reasonably satisfactory in form and substance to the Administrative Agent as duly authorized executed and delivered by such Loan Party and any securities intermediary with which such Loan Party maintains any securities or investment accounts, covering each such securities or investment account maintained with such securities intermediary that at any time holds or constitutes any Related Collateral (as defined in the Security Agreement) or other Collateral.

 

(d)                    Each Blocked Account Agreement as to a Blocked Account shall require that the applicable Blocked Account Bank transfer no less frequently than daily (subject to the limitations set forth in Section 6.13(b)  above) to a Master Concentration Account all available amounts on deposit in the Blocked Account subject to such agreement, including, without limitation, the following: (i) all available

 

130



 

cash receipts from the sale of Inventory and other assets (whether or not constituting Collateral); (ii) all proceeds of collections of Accounts; (iii) all Net Proceeds, and all other cash payments received by a Loan Party from any Person or from any source or on account of any sale or other transaction or event, including, without limitation, any Prepayment Event.  Each Blocked Account Agreement as to a Master Concentration Account shall require that the applicable Blocked Account Bank, after notice by Administrative Agent to the applicable Blocked Account Bank transfer no less frequently than daily to the Agent Payment Account, all funds on deposit therein, provided , that , Administrative Agent shall only send such notice to a Blocked Account Bank with respect to a Master Concentration Account at any time a Cash Dominion Event shall exist.

 

(e)                     All funds received in the Agent Payment Account shall be applied to the Obligations as provided in accordance with Section 8.03 of this Agreement to the extent then due and payable.  In the event that, notwithstanding the provisions of this Section 6.13 , any Loan Party receives or otherwise has dominion and control of any such proceeds or collections, such proceeds and collections shall be held in trust by such Loan Party for the Administrative Agent, shall not be commingled with any of such Loan Party’s other funds or deposited in any account of such Loan Party and shall, not later than the Business Day after receipt thereof, be deposited into a Blocked Account or a Master Concentration Account, or if there then exists a Cash Dominion Event, dealt with in such other fashion as such Loan Party may be instructed by the Administrative Agent.

 

(f)                      Upon the request of the Administrative Agent, the Loan Parties shall cause bank statements and/or other reports to be delivered to the Administrative Agent not less often than monthly, accurately setting forth all amounts deposited in each Blocked Account to ensure the proper transfer of funds as set forth above.

 

6.14.  Information Regarding the Collateral.

 

(a)                    Furnish to the Administrative Agent (i) at least ten (10) Business Days prior written notice of any change in (A) any Loan Party’s name, organizational structure, jurisdiction of incorporation or formation or other change in location as determined in accordance with Article 9 of the UCC and (B) the location of any Loan Party’s primary recordkeeping functions currently conducted in its offices in Eden Prairie, Minnesota, St. Louis, Missouri or Boise, Idaho, and (ii) at least thirty (30) days written notice after any change in any Loan Party’s Federal taxpayer identification number or organizational identification number assigned to it by its state of organization.

 

(b)                    Should any of the information on any (i) Periodic Update Schedule hereto become inaccurate or misleading in any material respect as a result of changes after the Closing Date, the Lead Borrower shall provide updated versions of such Periodic Update Schedule together with the next delivery of financial statements required to be delivered to the Administrative Agent pursuant to Section 6.01(a) , (b)  or (c)  and (ii) Occurrence Update Schedule become inaccurate or misleading in any material respect as a result of changes after the Closing Date, the Lead Borrower shall advise the Administrative Agent in writing of such revisions or updates as may be necessary or appropriate to update or correct the same promptly, but in any event within ten (10) Business Days.  From time to time as may be reasonably requested by the Administrative Agent, the Lead Borrower shall supplement each Schedule hereto, or any representation herein or in any other Loan Document, with respect to any matter arising after the Closing Date that, if existing or occurring on the Closing Date, would have been required to be set forth or described in such Schedule or as an exception to such representation or that is necessary to correct any information in such Schedule or representation which has been rendered inaccurate thereby (and, in the case of any supplements to any Schedule, such Schedule shall be appropriately marked to show the changes made therein).  Notwithstanding the foregoing, no supplement or revision to any Schedule or representation shall be deemed the Credit Parties’ consent to the matters reflected in such updated

 

131



 

Schedules or revised representations nor permit the Loan Parties to undertake any actions otherwise prohibited hereunder or fail to undertake any action required hereunder from the restrictions and requirements in existence prior to the delivery of such updated Schedules or such revision of a representation; nor shall any such supplement or revision to any Schedule or representation be deemed the Credit Parties’ waiver of any Default resulting from the matters disclosed therein.

 

6.15.  Physical Inventories.

 

(a)                    Cause a physical inventory to be undertaken with respect to all Inventory locations, at the expense of the Loan Parties, pursuant to periodic cycle counts consistent with the current practices and procedures of Loan Parties as in effect on the date hereof, but in no event will Inventory at all locations be counted less than two times in any period of thirteen (13) Fiscal Periods, using the methodology used as of the date hereof or as otherwise may be reasonably satisfactory to the Administrative Agent. The Administrative Agent, at the expense of the Loan Parties, may participate in and/or observe scheduled physical counts of Inventory undertaken on behalf of any Loan Party.  The Lead Borrower, (i) within twenty (20) days following the completion of such physical inventory pursuant to the cycle count (with respect to any location, as and when completed at such location), shall post such results to the Loan Parties’ stock ledgers and general ledgers, as applicable and (ii) on a quarterly basis, concurrently with the delivery of the financial statements referred to in Section 6.01(b) , shall provide the Administrative Agent with a reconciliation of the results of such inventory (as well as of any other physical inventory or cycle counts undertaken by a Loan Party).

 

(b)                    The Administrative Agent, in its Permitted Discretion, if any Default or Event of Default exists, may cause additional such inventories to be taken as the Administrative Agent determines (each, at the expense of the Loan Parties).

 

6.16.  Environmental Laws (a) Conduct its operations and keep and maintain its Real Estate and require all lessees and sublessees of such Real Estate to operate and maintain such Real Estate, in material compliance with all Environmental Laws; (b) obtain and renew all environmental permits necessary for its operations and properties; and (c) implement any and all investigation, remediation, removal and response actions that are appropriate or necessary to comply with Environmental Laws pertaining to the presence, generation, treatment, storage, use, disposal, transportation or Release of any Hazardous Materials on, at, in, under, above, to, from or about any of its Real Estate, provided , that , neither a Loan Party nor any of its Subsidiaries shall be required to undertake any such cleanup, removal, remedial or other action to the extent that its obligation to do so is being contested in good faith and by proper proceedings and adequate reserves have been set aside and are being maintained by the Loan Parties and Restricted Subsidiaries with respect to such circumstances in accordance with GAAP.

 

6.17.  Further Assurances.

 

(a)                    Execute any and all further documents, financing statements, agreements and instruments, and take all such further actions (including the filing and recording of financing statements and other documents), that may be required under any applicable Law, or which the Administrative Agent may reasonably request, to carry out the terms and conditions of this Agreement and the other Loan Documents and to establish, maintain, renew, preserve or protect the rights and remedies of Administrative Agent and other Credit Parties hereunder and under the other Loan Documents, or to grant, preserve, protect or perfect the Liens created or intended to be created by the Security Documents or the validity or priority of any such Lien, all at the expense of the Loan Parties. The Loan Parties also agree to provide to the Administrative Agent, from time to time upon request, evidence reasonably satisfactory to the Administrative Agent as to the perfection and priority of the Liens created or intended to be created by the Security Documents.

 

132



 

(b)                    If any assets of a type that constitute ABL Priority Collateral are acquired by any Loan Party after the Closing Date (and the Security Documents do not create and perfect a first priority security interest in such assets without any further action upon acquisition thereof), notify the Administrative Agent thereof, and the Loan Parties will cause such assets to be subjected to a Lien securing the Obligations and will take such actions as shall be necessary or shall be requested by the Administrative Agent to grant and perfect such Liens, including actions described in paragraph (a)  of this Section 6.17 , all at the expense of the Loan Parties. In no event shall compliance with this Section 6.17(b)  waive or be deemed a waiver or consent to any transaction giving rise to the need to comply with this Section 6.17(b)  if such transaction was not otherwise expressly permitted by this Agreement or constitute or be deemed to constitute consent to the inclusion of any acquired assets in the computation of the Borrowing Base.  If the Loan Parties add one or more fee-owned or ground leased Real Estate sites (and the Equipment located thereon owned by any Loan Party) as Term Loan Priority Collateral in lieu of any one or more Real Estate Collateral Properties and the Related Real Estate Collateral (as defined on Schedule 6.17 )  located thereon, or add the Related Real Estate Collateral located at one or more Material Related Collateral Locations as Term Loan Priority Collateral in lieu of the Related Real Estate Collateral located at one or more other Material Related Collateral Locations (in either case, a “ Substitute Property ”), the Loan Parties shall, contemporaneously with the granting and perfection of the security interest of the Term Loan Agent or any of the Term Loan Lenders in such Substitute Property, deliver to the Administrative Agent evidence of the granting and perfection of a valid second priority security interest in the Substitute Property (subordinate only as provided in the Term Loan Intercreditor Agreement and to other Permitted Encumbrances to the extent such Permitted Encumbrances have priority by operation of law) for the benefit of the Administrative Agent.

 

(c)                     Upon the request of the Administrative Agent, cause any of its landlords (other than with respect to Stores and locations where no ABL Priority Collateral or other assets which Administrative Agent may require access and use of to realize on ABL Priority Collateral are located) to deliver a Collateral Access Agreement to the Administrative Agent in such form as the Administrative Agent may reasonably require.

 

(d)                    Upon the request of the Administrative Agent, deliver to the Administrative Agent copies of notifications (each, a “ DDA Notification ”) substantially in the form attached hereto as Exhibit G which have been executed on behalf of such Loan Party and delivered to each depository institution at which a DDA (other than an Excluded DDA) is maintained.

 

6.18.  Lender Meetings.  Within sixty (60) days after the receipt by Administrative Agent of the audited financial statements pursuant to Section 6.01(a)(i)  for the then most recently ended Fiscal Year of Lead Borrower commencing with the 2014 Fiscal Year or on such other date as Administrative Agent and Lead Borrower may agree, at the request of Administrative Agent or of the Required Lenders and upon reasonable prior notice, hold a meeting (at a mutually agreeable location and time or, at the option of Administrative Agent, by conference call) with all Lenders who choose to attend such meeting at which meeting shall be reviewed the financial results of the previous Fiscal Year and the financial condition of the Lead Borrower and its Subsidiaries and the projections presented for the current Fiscal Year of Lead Borrower.

 

6.19.  ERISA .

 

(a)                    Each Loan Party shall, and shall cause each of its ERISA Affiliates to: (i) maintain each Plan in compliance in all material respects with the applicable provisions of ERISA, the Code and other Federal and State law; (ii) cause each Plan which is qualified under Section 401(a) of the Code to maintain such qualification; (iii) not terminate any Pension Plan so as to incur any material liability to the Pension Benefit Guaranty Corporation; (iv) not allow or suffer to exist any prohibited transaction

 

133



 

involving any Plan or any trust created thereunder which would subject such Borrower, Guarantor or such ERISA Affiliate to a material tax or other liability on prohibited transactions imposed under Section 4975 of the Code or ERISA; (v) make all required contributions to any Plan which it is obligated to pay under Sections 302 or 303 of ERISA, Sections 412 or 430 of the Code, the PBGC Agreement or the terms of such Plan; (vi) not allow or suffer to exist any violation of the “minimum funding standards” (within the meaning of Section 302 of ERISA and Section 412 of the Code), whether or not waived, with respect to any such Pension Plan; (vii) not engage in a transaction that could be subject to Section 4069 or 4212(c) of ERISA; or (viii) not allow or suffer to exist any occurrence of a Reportable Event or any other event or condition which presents a material risk of termination by the PBGC of any Plan that is a single employer plan, which termination could result in any material liability to the PBGC.

 

(b)                    Promptly upon each determination of the amount of the contributions or other payments required to be made for any calendar year by any Loan Party in respect of any underfunded Pension Plan in order to eliminate or reduce the funding deficiency and prior to any Loan Party making any contribution of other payment in respect of such calendar year, Lead Borrower shall notify Administrative Agent of such determination and provide such information with respect thereto as Administrative Agent may reasonably request.

 

6.20.  Agricultural Products .

 

(a)                    Each Borrower shall at all times comply in all material respects with all existing and future Food Security Act Notices during their periods of effectiveness under the Food Security Act, including, without limitation, directions to make payments to the Farm Products Seller by issuing payment instruments directly to the secured party with respect to any assets of the Farm Products Seller or jointly payable to the Farm Products Seller and any secured party with respect to the assets of such Farm Products Seller, as specified in the Food Security Act Notice, so as to terminate or release the security interest in any Farm Products maintained by such Farm Products Seller or any secured party with respect to the assets of such Farm Products Seller under the Food Security Act.

 

(b)                    Each Borrower shall take all other actions as may be reasonably required, if any, to ensure that any perishable agricultural commodity (in whatever form) or other Farm Products are purchased free and clear of any Lien or other claims in favor of any Farm Products Seller or any secured party with respect to the assets of any Farm Products Seller.

 

(c)                     Each Borrower shall promptly notify Administrative Agent in writing after receipt by or on behalf of such Borrower of any Food Security Act Notice or amendment to a previous Food Security Act Notice, and including any notice from any Farm Products Seller of the intention of such Farm Products Seller to preserve the benefits of any trust applicable to any assets of any Loan Party under the provisions of the PSA, PACA or any other statute and upon the request of the Administrative Agent, such Borrower shall promptly provide Administrative Agent with a true, correct and complete copy of such Food Security Act Notice or amendment, as the case may be, and other information delivered to or on behalf of such Borrower pursuant to the Food Security Act.

 

(d)                    To the extent that a Borrower purchases any Farm Products from a Person who produces such Farm Products in a state with a central filing system certified by the United States Secretary of Agriculture, such Borrower shall immediately register, as a buyer, with the Secretary of State of such state (or the designated system operator).  Each Borrower shall forward promptly to Administrative Agent a copy of such registration as well as a copy of all relevant portions of the master list periodically distributed by any such Secretary of State (or the designated system operator).  Each Borrower shall comply with any payment of obligations in connection with the purchase of any Farm Products imposed by a secured party as a condition of the waiver or release of a security interest effective

 

134



 

under the Food Security Act or other applicable law whether or not as a result of direct notice or the filing under any applicable central filing system.  Each Borrower shall also provide to Administrative Agent from time to time upon its request true and correct copies of all state filings recorded in any such central filing system in respect of a Person from whom a Borrower has purchased Farm Products within the preceding twelve (12) months.

 

6.21.  Post-Closing Matters.  Execute and deliver the documents and complete the tasks set forth on Schedule 6.21 , in each case within the time limits specified on such schedule (unless Administrative Agent, in its Permitted Discretion, shall have agreed to any particular longer period).

 

6.22.  Escrow Agreement, 2014 Notes and Indemnity .

 

(a)                    To the extent that any demand for payment has been made on the Lead Borrower in respect of its obligations under the ASC Guarantee, the Lead Borrower shall diligently exercise its rights pursuant to the Escrow Agreement and Section 5.11(c) of the Acquisition Agreement to obtain payment (directly or indirectly to the indenture trustee under the ASC Indenture in satisfaction in full of the amount demanded) in respect of any amount demanded under the ASC Guarantee prior to the Lead Borrower making any payment in respect thereof and, to the extent the Lead Borrower makes any payment in respect thereof, the Lead Borrower will appropriately exercise its rights pursuant to the Escrow Agreement and Section 5.11(c) of the Acquisition Agreement to obtain reimbursement for such payment.

 

(b)                    The Escrow Fund and all other assets and property subject to the Escrow Agreement shall at all times be and remain invested in a MMMF or one or more other investments reasonably satisfactory to the Administrative Agent, except for cash or Cash Equivalents received in connection with liquidations distributing proceeds thereof and except for other liquid non-cash investments off the type described in clauses (a)  through (e)  of the term “Permitted Investments”.

 

(c)                     Each Loan Party shall in a timely manner take any actions required to be taken by it in connection with the redemption of all outstanding SVU 2014 Notes and to otherwise repay and satisfy all obligations in connection therewith.

 

6.23.  Preparation of Environmental Reports If any Loan Party is at any time obligated to provide to the Term Loan Agent or any Term Loan Lender environmental assessment reports pursuant to Section 5.24 of the Term Loan Agreement as in effect on the date hereof, the Loan Parties shall promptly, and in any event no later than five (5) Business Days after delivery of any such reports to Term Loan Agent or any Term Loan Lender, provide copies of such reports to the Administrative Agent.

 

ARTICLE VII               
NEGATIVE COVENANTS

 

So long as any Lender shall have any Commitment hereunder and until the payment in full of the Obligations, no Loan Party shall, nor shall it permit any Restricted Subsidiary to, directly or indirectly:

 

7.01.  Liens Create, incur, assume or suffer to exist any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired or sign or file or suffer to exist under the UCC or any similar Law or statute of any jurisdiction a financing statement that names any Loan Party or any Subsidiary thereof as debtor; or sign or suffer to exist any security agreement authorizing any Person thereunder to file such financing statement; sell any of its property or assets subject to an understanding or agreement (contingent or otherwise) to repurchase such property or assets with recourse to it or any of its Subsidiaries; or assign or otherwise transfer any accounts or other rights to receive income, except as

 

135



 

to all of the above, Permitted Encumbrances and in the case of the assignment or transfer of accounts or other rights to receive payment except for Permitted Dispositions.

 

7.02.  Investments.   Make any Investments, except Permitted Investments.

 

7.03.  Indebtedness; Disqualified Stock.

 

(a)                    Create, incur, assume, guarantee, suffer to exist or otherwise become or remain liable with respect to, any Indebtedness, except Permitted Indebtedness;

 

(b)                    issue Disqualified Stock.

 

7.04.  Fundamental Changes.  Merge, dissolve, liquidate, or consolidate with or into another Person, (or agree to do any of the foregoing), except that, so long as no Default or Event of Default shall have occurred and be continuing prior to or immediately after giving effect to any action described below or would result therefrom:

 

(a)                    a Loan Party may merge with any Excluded Subsidiary, provided , that , the Loan Party shall be the continuing or surviving Person;

 

(b)                    any Loan Party may merge into any Loan Party, provided , that , in any merger involving one or more Borrowers, a Borrower shall be the continuing or surviving Person;

 

(c)                     in connection with a Permitted Acquisition, any Restricted Subsidiary (other than a Loan Party) may merge with or into or consolidate with any other Person or permit any other Person to merge with or into or consolidate with it, provided , that , (i) the Person surviving such merger shall be a Subsidiary of a Loan Party and (ii) in the case of any such merger to which any Loan Party is a party, such Loan Party is the surviving Person;

 

(d)                    any Restricted Subsidiary may be wound up and dissolved, provided , that , promptly upon the commencement of the winding up or any action to dissolve such Restricted Subsidiary, (i) any assets of such Restricted Subsidiary which constitute Collateral are either (A) transferred to a Loan Party and are subject to the valid perfected first priority security interest of the Administrative Agent as to any ABL Priority Collateral and valid perfected second priority security interest of Administrative Agent as to any Term Loan Priority Collateral or (B) are subject to a Permitted Disposition and (ii) any such Restricted Subsidiary that is a Borrower shall cease to be a Borrower.

 

7.05.  Dispositions.   Make any Disposition or enter into any agreement to make any Disposition, except Permitted Dispositions.

 

7.06.  Restricted Payments.   Declare or make, directly or indirectly, any Restricted Payment, or incur any obligation (contingent or otherwise) to do so; except that as of the date of any such Restricted Payment and after giving effect thereto:

 

(a)                    a Loan Party or a Restricted Subsidiary that is not a Loan Party may make Restricted Payments to any Loan Party and a Restricted Subsidiary that is not a Loan Party may make a Restricted Payment to another Restricted Subsidiary that is not a Loan Party;

 

(b)                    a Restricted Subsidiary that is not wholly-owned, directly or indirectly, by a Loan Party may make Restricted Payments in a pro rata amount to its minority owners at the time of any Restricted Payment made to a Loan Party or Restricted Subsidiary pursuant to clause (a)  above;

 

136



 

(c)                     the Lead Borrower may declare and make regularly scheduled dividend payments in respect of Equity Interests consisting of common stock of the Lead Borrower, or redeem such Equity Interests, provided , that , as of the date of the payment of any such dividend or redemption and after giving effect thereto, (i) the aggregate amount of such dividends and redemptions in any Fiscal Year shall not exceed $50,000,000, and (ii) no Cash Dominion Event shall exist;

 

(d)                    the Lead Borrower may make Restricted Payments, provided , that , as of the date of any such payment and after giving effect thereto, (i) each of the Payment Conditions is satisfied, (ii) Administrative Agent shall have received ten (10) Business Days’ prior written notice of such transaction and (iii) Administrative Agent shall have received such other information related to such transaction as the Administrative Agent may reasonably require; and

 

(e)                     a Loan Party may issue securities or make payments to the extent permitted under Section 7.09(b)(iii)  hereof.

 

7.07.  Prepayments of Indebtedness .   Prepay, redeem, purchase, defease or otherwise satisfy prior to the scheduled maturity thereof in any manner any Indebtedness, or make any payment in respect of any of the Term Loan Debt, any of the Subordinated Indebtedness or any other Material Indebtedness, except: (a) regularly scheduled or mandatory repayments (including repayments required as a result of a Permitted Disposition), repurchases, redemptions or defeasances of Permitted Indebtedness (other than Subordinated Indebtedness), provided , that , in the case of mandatory payments under the Term Loan Facility in respect of, or based on, excess cash flow of the Lead Borrower or any of its Subsidiaries, no proceeds of Loans or Letters of Credit may be used to make any such mandatory payment unless, after giving effect to any such payment, on a pro forma basis using the most recent calculation of the Borrowing Base immediately prior to any such payment, the Excess Availability shall be not less than twenty-two and one-half percent (22.5%) of the Aggregate Commitments, (b) repayments and prepayments of Subordinated Indebtedness in accordance with the subordination terms thereof, so long as, on the date of any such payment and after giving effect thereto, no Default or Event of Default shall exist or have occurred and be continuing, (c) voluntary prepayments, repurchases, redemptions or defeasances of Permitted Indebtedness (but excluding on account of any Subordinated Indebtedness except to the extent permitted under the subordination provisions applicable thereto) so long as (i) each of the Payment Conditions is satisfied, (ii) Administrative Agent shall have received ten (10) Business Days’ prior written notice of such transaction and, (iii) Administrative Agent shall have received such other information related to such transaction as the Administrative Agent may reasonably require; and (d) refinancings and refundings of such Indebtedness to the extent permitted hereunder.

 

7.08.  Change in Nature of Business.   In the case of each of the Loan Parties, engage in any line of business substantially different from the Business conducted by the Loan Parties and their Subsidiaries on the date hereof or any business substantially related or incidental thereto.

 

7.09.  Transactions with Affiliates .

 

(a)                    Enter into, renew, extend or be a party to any transaction of any kind with any Affiliate of any Loan Party,  whether or not in the ordinary course of business, other than (i) as set forth on Schedule 7.09 , (ii) Restricted Payments permitted under Section 7.06 , (iii) the payment of compensation and benefits and the providing of indemnification to officers and directors in the ordinary course of business and consistent with past practices, (iv) sales of Securitization Assets to a Receivables Financing Subsidiary in a Permitted Securitization Facility, or (v) on fair and reasonable terms substantially as favorable to the Loan Parties or such Subsidiary as would be obtainable by the Loan Parties or such Subsidiary at the time in a comparable arm’s length transaction with a Person other than an Affiliate,

 

137



 

provided , that , the foregoing restriction shall not apply to a transaction between or among the Loan Parties.

 

(b)                    The foregoing restriction shall not restrict (i) a transaction between or among the Loan Parties, (ii) advances for commissions, travel and other similar purposes in the ordinary course of business to directors, officers and employees, (iii) any employment or compensation arrangement or agreement, employee benefit plan or arrangement, severance or retention agreement, plan or arrangement, officer or director indemnification agreement or any similar arrangement or other compensation arrangement entered into by the Lead Borrower or any of its Subsidiaries in the ordinary course of business and payments, issuance of securities or awards pursuant thereto, and including the grant of stock options, restricted stock, stock appreciation rights, phantom stock awards or similar rights to employees and directors in each case approved by the Board of Directors of the Lead Borrower or such Subsidiary, and (iv) the payment of reasonable fees and out-of-pocket costs to directors of the Lead Borrower or any of its Subsidiaries.

 

7.10.  Burdensome Agreements.   Enter into or permit to exist any Contractual Obligation (other than this Agreement or any other Loan Document or any Term Loan Documents) that (a) limits the ability (i) of any Subsidiary to make Restricted Payments or other distributions to any Loan Party or to otherwise transfer property to or invest in a Loan Party, (ii) of any Subsidiary (other than an Excluded Subsidiary) to Guarantee the Obligations, (iii) of any Subsidiary (other than an Excluded Subsidiary) to make or repay loans to a Loan Party, or (iv) of the Loan Parties or any Subsidiary (other than an Excluded Subsidiary) to create, incur, assume or suffer to exist Liens on property of such Person in favor of the Administrative Agent; provided , that , this clause (iv)  shall not prohibit any negative pledge incurred or provided in favor of any holder of Indebtedness permitted under clauses (c)  or (f)  of the definition of Permitted Indebtedness solely to the extent any such negative pledge relates to the property financed by or securing such Indebtedness; or (b) requires the grant of a Lien to secure an obligation of such Person if a Lien is granted to secure another obligation of such Person.

 

7.11.  Use of Proceeds.   Use the proceeds of any Credit Extension, whether directly or indirectly, and whether immediately, incidentally or ultimately, (a) to purchase or carry margin stock (within the meaning of Regulation U of the FRB) or to extend credit to others for the purpose of purchasing or carrying margin stock or to refund Indebtedness originally incurred for such purpose; or (b) for purposes other than those permitted under this Agreement.

 

7.12.  Amendment of Material Documents.   Amend, modify, consent to or waive any of a Loan Party’s rights under or any provision of (a) its Organization Documents, the Acquisition Agreement or any document related to the Acquisition Agreement (including the Escrow Agreement and the transition services agreements referred to in the Acquisition Agreement), in each case in a manner materially adverse to the Credit Parties or (b) the SVU Indenture, the SVU 2016 Notes, the ASC Guarantee or any other Material Indebtedness, in each case in a manner that would be materially adverse to the Credit Parties (including, in the case of the SVU Indenture, the SVU 2016 Notes and the ASC Guarantee, changing the obligors with respect to such Material Indebtedness except as required by the terms thereof as in effect on the Closing Date) or to the extent that such amendment, modification or waiver has or would reasonably be expected to have a Material Adverse Effect.

 

7.13.  Fiscal Year.   Change the Fiscal Year of any Loan Party, or the accounting policies or reporting practices of the Loan Parties, except as required by GAAP.

 

7.14.  Deposit Accounts.   Open new DDAs (other than an Excluded DDA), Blocked Accounts or Master Concentration Accounts unless, upon the request of Administrative Agent, the Loan Parties shall have delivered to the Administrative Agent appropriate DDA Notifications or Blocked Account

 

138



 

Agreements consistent with the provisions of Section 6.13 and otherwise reasonably satisfactory to the Administrative Agent.

 

7.15.  Minimum Fixed Charge Coverage Ratio.   At any time that a Covenant Compliance Event exists, permit the Consolidated Fixed Charge Coverage Ratio of Lead Borrower and its Restricted Subsidiaries determined for the applicable Measurement Period as of the end of the most recently ended Fiscal Period for which Administrative Agent has received financial statements to be less than 1.00 to 1.00.

 

ARTICLE VIII

EVENTS OF DEFAULT AND REMEDIES

 

8.01.  Events of Default.   Any of the following shall constitute an Event of Default:

 

(a)                    Non-Payment .  Any Loan Party or any Restricted Subsidiary fails to pay when and as required to be paid herein, whether at the due date thereof or at a date fixed for prepayment thereof or by acceleration thereof or otherwise, (i) any amount of principal of any Loan or any LC Obligation, or deposit any funds as Cash Collateral in respect of LC Obligations, or (ii) any interest on any Loan or on any LC Obligation, or any fee due hereunder, within three (3) Business Days of the due date, or (iii) any other amount payable hereunder or under any other Loan Document, within three (3) Business Days of the due date; or

 

(b)                    Specific Covenants .  Any Loan Party or any Restricted Subsidiary fails to perform or observe any term, covenant or agreement contained in any of Section 6.01 , 6.02(a)(i), (ii), (iv), and (viii) , 6.03 , 6.05 , 6.07 , 6.10 , 6.11 , 6.12 , 6.13 or 6.14 or Article VII (excluding Section 7.10 ) of this Agreement or Sections 4.9 of the Security Agreement or Sections 5(a) , 5(c)  (as to the first sentence thereof), 6 and 7 of the Mortgages; or

 

(c)                     Other Defaults .  Any Loan Party or any Restricted Subsidiary fails to perform or observe any term, covenant or agreement (not specified in Sections 8.01(a)  or 8.01(b)  above) contained in this Agreement or any other Loan Document on its part to be performed or observed and such failure continues for thirty (30) days after the date written notice thereof shall have been given to the Lead Borrower by the Administrative Agent or any Lender; provided , that , in the event the Lead Borrower fails to notify the Administrative Agent in accordance with the terms of Section 6.03(a)  within three (3) Business Days after the occurrence of its failure to perform or observe such term, covenant or agreement as provided therein, an Event of Default will occur as a result of the failure to perform or observe such term, covenant or agreement on the date thirty (30) days after the earlier of (i) the date of the event or occurrence which is the basis for such Event of Default or (ii) the date written notice thereof shall have been given to the Lead Borrower by the Administrative Agent or any Lender; or

 

(d)                    Representations and Warranties .  Any representation, warranty, certification or statement of fact made or deemed made by or on behalf of any Loan Party or any other Restricted Subsidiary herein, in any other Loan Document, or in any document, report, certificate, financial statement or other instrument delivered in connection herewith or therewith (including, without limitation, any Borrowing Base Certificate) shall be incorrect or misleading in any material respect when made or deemed made, except that such materiality qualifier shall not be applicable to any representation or warranty that is already qualified by materiality or “Material Adverse Effect” (or words of similar import); or

 

(e)                     Cross-Default .  (i) Any Loan Party or any Restricted Subsidiary thereof (A) fails to make any payment when due (regardless of amount and whether by scheduled maturity, required

 

139



 

prepayment, acceleration, demand, or otherwise) in respect of any Material Indebtedness (including undrawn committed or available amounts and including amounts owing to all creditors under any combined or syndicated credit arrangement), or (B) fails to observe or perform any other agreement or condition relating to any such Material Indebtedness or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event occurs, the effect of which default or other event is to cause, or to permit the holder or holders of such Material Indebtedness or the beneficiary or beneficiaries of any Guarantee thereof (or a trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause, with or without the giving of notice, lapse of time or both, such Indebtedness to be demanded, accelerated or to become due or to be repurchased, prepaid, defeased or redeemed (automatically or otherwise), or an offer to repurchase, prepay, defease or redeem such Indebtedness to be made, prior to its stated maturity, or such Guarantee to become payable or cash collateral in respect thereof to be demanded or in the case of any Permitted Securitization Facility that is greater than $50,000,000, to terminate such facility, or cease purchasing any Accounts or cause any Loan Party to cease being a servicer or acting in any similar capacity thereunder; (ii)  there occurs under any Swap Contract an Early Termination Date (as defined in such Swap Contract) resulting from (A) any event of default under such Swap Contract as to which a Loan Party or any Subsidiary thereof is the Defaulting Party (as defined in such Swap Contract) or (B) any Termination Event (as defined in such Swap Contract) under such Swap Contract as to which a Loan Party or any Subsidiary thereof is an Affected Party (as defined in such Swap Contract) and, in either event, the Swap Termination Value owed by the Loan Party or such Subsidiary as a result thereof is greater than $50,000,000; (iii) (A) any party to the Escrow Agreement fails to pay any amount due to the Lead Borrower thereunder, to deposit any amount required to be deposited thereunder, or follow the terms of the Escrow Agreement with respect to any dispute by Lead Borrower thereunder, (B) the Escrow Agent (as defined in the Escrow Agreement) fails to comply with its obligations not to enter into any control agreement or any other agreement with any other Person relating to the securities accounts established pursuant to the Escrow Agreement, (C) ASC fails to comply with its obligations not to grant any Lien on its rights under the Escrow Agreement or on any funds deposited pursuant thereto except as contemplated by the Escrow Agreement or (D) the Escrow Agent (as defined in the Escrow Agreement) disburses funds deposited pursuant to the Escrow Agreement other than in accordance with the terms thereof, and in each case with respect to this clause (iii) such failure continues for forty-five (45) days (after the Lead Borrower obtains knowledge thereof other than in the case of any such failure on the part of the Lead Borrower); (iv) the Lead Borrower fails to observe or perform any agreement or condition contained in the ASC Guarantee, or any other event occurs, the effect of which default or other event is to cause the ASC Guarantee to be in default, and such failure continues for forty-five (45) days;  (v) the Lead Borrower fails to observe or perform its obligations under any Guarantee of NAI Workers’ Compensation Liabilities, and such failure continues for forty-five (45) days; or

 

(f)                      Insolvency Proceedings, Etc .  Any Loan Party or any Subsidiary (other than an Excluded Subsidiary) (i) institutes or consents to the institution of any voluntary or involuntary proceeding under any Debtor Relief Law, or makes a general assignment for the benefit of creditors; or (ii) applies for or consents to the appointment of any receiver, trustee, custodian, sequestrator, conservator, liquidator, rehabilitator or similar officer for it or for all or any material part of its property; or (iii) a proceeding shall be commenced or a petition filed, without the application or consent of such Person, seeking or requesting the appointment of any receiver, trustee, custodian, sequestrator, conservator, liquidator, rehabilitator or similar officer is appointed and the appointment continues undischarged, undismissed or unstayed for sixty (60) calendar days or an order or decree approving or ordering any of the foregoing shall be entered; or (iv) files an answer admitting the material allegations of a petition filed against it in any proceeding described in the foregoing clauses (i) , (ii)  or (iii) ; or (v) any proceeding under any Debtor Relief Law relating to any such Person or to all or any material part of its property is instituted without the consent of such Person and continues undismissed or unstayed for sixty (60) calendar days, or an order for relief is entered in any such proceeding; or

 

140



 

(g)                     Inability to Pay Debts; Attachment .  (i) Any Loan Party or any Subsidiary (other than any Excluded Subsidiary) becomes unable or admits in writing its inability or fails generally to pay its debts as they become due in the ordinary course of business, or (ii) any writ or warrant of attachment or execution or similar process is issued or levied against all or any material part of the property of any such Person and is not released, vacated or fully bonded within sixty (60) days after its issuance or levy (except in the case of an attachment of  the Blocked Accounts or Master Concentration Accounts, within five (5) days), or (iii) takes any action for the purpose of effecting the events described in the foregoing paragraph (f) or this paragraph (g); or

 

(h)                    Judgments .  There is entered against any Loan Party or any Subsidiary (other than an Excluded Subsidiary) (i) one or more judgments or orders or any combination thereof for the payment of money in an aggregate amount (as to all such judgments and orders) exceeding $50,000,000 (to the extent not covered by independent third-party insurance as to which the insurer is rated at least “A” by A.M. Best Company, has been notified of the potential claim and does not dispute coverage), or (ii) any one or more non-monetary judgments that have, or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect and, in either case, (A) enforcement proceedings are commenced by any creditor upon such judgment or order, or (B) there is a period of forty-five (45) consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, is not in effect; or

 

(i)                        Racketeering .  There is filed against any Loan Party or any of its Subsidiaries by any federal or state Governmental Authority any action, suit or proceeding under any federal or state racketeering statute (including the Racketeer Influenced and Corrupt Organization Act of 1970), which action, suit or proceeding: (i) is not dismissed within one hundred twenty (120) days and (ii) would reasonably be expected to result in the confiscation or forfeiture of any material portion of the Collateral; or

 

(j)                       ERISA .  (i) An ERISA Event occurs with respect to a Pension Plan, Multiemployer Plan or the PBGC Agreement which, in the case of a Pension Plan or Multiemployer Plan, has resulted or would reasonably be expected to result in the liability of any Borrower or any Restricted Subsidiary under Title IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC and that has or would reasonably be expected to have a Material Adverse Effect when taken together with all other such ERISA Events or (ii) a Loan Party or any ERISA Affiliate fails to pay when due, after the expiration of any applicable grace period, any installment payment with respect to its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan or any installment in connection with an underfunded Pension Plan as provided in Section 6.19 , in either case as to any such installment that is in excess of $50,000,000; or

 

(k)                    Invalidity of Loan Documents .  (i)  Any provision of any Loan Document, at any time after its execution and delivery and for any reason other than as expressly permitted hereunder or thereunder or satisfaction in full of all the Obligations, ceases to be in full force and effect (other than in accordance with its terms) and as a result thereof, a Material Adverse Effect occurs or would reasonably be expected to occur; or any Loan Party or any other Person contests in any manner the validity or enforceability of any provision of any Loan Document; or any Loan Party denies that it has any or further liability or obligation under any provision of any Loan Document (other than as a result of the discharge of such Loan Party in accordance with the terms of the applicable Loan Document), or purports to revoke, terminate or rescind any provision of any Loan Document or seeks to avoid, limit or otherwise adversely affect any Lien purported to be created under any Security Document; or (ii) any Lien purported to be created under any Security Document shall cease to be, or shall be asserted by any Loan Party or any other Person not to be, a valid and perfected Lien on any Collateral, with the priority required by the applicable Security Document; or

 

141



 

(l)                        Cessation of Business .  Except as otherwise expressly permitted hereunder, any Loan Party or any Restricted Subsidiary shall take any action to suspend the operation of its business in the ordinary course, liquidate all or a material portion of its assets or Store locations, or employ an agent or other third party to conduct a program of closings, liquidations or “going-out-of-business” sales of any material portion of its business; or

 

(m)                Loss of Collateral .  There occurs any uninsured loss to any portion of the Collateral having a value in excess of $50,000,000; or

 

(n)                    Indictment .  The indictment or institution of any legal process or proceeding against, any Loan Party or any Restricted Subsidiary thereof, under any federal or state criminal statute, rule, regulation, order, or other requirement having the force of law for a felony; or

 

(o)                    Guaranty .  The termination or attempted termination of any Facility Guaranty except as expressly permitted hereunder or under any other Loan Document; or

 

(p)                    Credit Card Agreements .  (i) any Credit Card Issuer or Credit Card Processor shall send notice to any Borrower that it is ceasing to make or suspending payments to such Borrower of amounts due or to become due to such Borrower or shall cease or suspend such payments, or shall send notice to such Borrower that it is terminating its arrangements with Borrower or such arrangements shall terminate as a result of any event of default under such arrangements, which continues for more than the applicable cure period, if any, with respect thereto, unless such Borrower shall have entered into arrangements with another Credit Card Issuer or Credit Card Processor, as the case may be, within sixty (60) days after the date of any such notice or (ii) any Credit Card Issuer or Credit Card Processor withholds payment of amounts otherwise payable to a Borrower to fund a reserve account or otherwise hold as collateral, or shall require a Borrower to pay funds into a reserve account or for such Credit Card Issuer or Credit Card Processor to otherwise hold as collateral, or any Borrower shall provide a letter of credit, guarantee, indemnity or similar instrument to or in favor of such Credit Card Issuer or Credit Card Processors such that in the aggregate all of such funds in the reserve account, other than amounts held as collateral and the amount of such letters of credit, guarantees, indemnities or similar instruments shall exceed an amount equal to or exceeding ten percent (10%) of the Credit Card Receivables processed by such Credit Card Issuer or Credit Card Processor in the immediately preceding Fiscal Year; or

 

(q)                    Material Adverse Effect .  There occurs any Material Adverse Effect; or

 

(r)                       Subordination; Intercreditor Agreement .  (i)  The subordination provisions of the documents evidencing or governing any Subordinated Indebtedness, or provisions of the Term Loan Intercreditor Agreement (or any other intercreditor agreement entered into by Administrative Agent after the date hereof), any such provisions being referred to as the “ Intercreditor Provisions ”, shall, in whole or in part, terminate, cease to be effective or cease to be legally valid, binding and enforceable against any holder of the applicable Indebtedness as a result of any act or omission of any Loan Party or any Restricted Subsidiary; or (ii) any Loan Party or any Restricted Subsidiary shall, directly or indirectly, disavow or contest in any manner (A) the effectiveness, validity or enforceability of any of the Intercreditor Provisions, (B) that the Intercreditor Provisions exist for the benefit of the Credit Parties, or (C) in the case of Subordinated Indebtedness, that all payments of principal of or premium and interest on the applicable Subordinated Indebtedness, or realized from the liquidation of any property of any Loan Party or any Restricted Subsidiary, shall be subject to any of the Intercreditor Provisions; or

 

(s)                      Maturity of Term Loan Facility .  The maturity of the Term Loan Facility prior to its originally scheduled maturity date (as a result of the failure of any Borrower or any Restricted Subsidiary

 

142



 

to obtain refinancing or otherwise as a result of any act or omission of any Borrower or any Restricted Subsidiary after the Closing Date).

 

8.02.  Remedies Upon Event of Default.   If any Event of Default occurs and is continuing, the Administrative Agent may, or, at the request of the Required Lenders shall, take any or all of the following actions:

 

(a)                    declare the Commitments of each Lender to make Loans and any obligation of each LC Issuer to make LC Credit Extensions to be terminated, whereupon such Commitments and obligation shall be terminated;

 

(b)                    declare the unpaid principal amount of all outstanding Loans, all interest accrued and unpaid thereon, and all other amounts owing or payable hereunder or under any other Loan Document to be immediately due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by the Loan Parties;

 

(c)                     require that the Loan Parties Cash Collateralize the LC Obligations; and

 

(d)                    whether or not the maturity of the Obligations shall have been accelerated pursuant hereto, proceed to protect, enforce and exercise all rights and remedies of the Credit Parties under this Agreement, any of the other Loan Documents or applicable Law, including, but not limited to, by suit in equity, action at law or other appropriate proceeding, whether for the specific performance of any covenant or agreement contained in this Agreement and the other Loan Documents or any instrument pursuant to which the Obligations are evidenced, and, if such amount shall have become due, by declaration or otherwise, proceed to enforce the payment thereof or any other legal or equitable right of the Credit Parties;

 

provided , that , upon the entry of an order for relief (or similar order) with respect to any Loan Party under any Debtor Relief Laws, the obligation of each Lender to make Loans and any obligation of each LC Issuer to make LC Credit Extensions shall automatically terminate, the unpaid principal amount of all outstanding Loans and all interest and other amounts as aforesaid shall automatically become due and payable, and the obligation of the Loan Parties to Cash Collateralize the LC Obligations as aforesaid shall automatically become effective, in each case without further act of the Administrative Agent or any Lender.

 

No remedy herein is intended to be exclusive of any other remedy and each and every remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute or any other provision of Law.

 

8.03.  Application of Funds.   After the exercise of remedies provided for in Section 8.02 (or after the Loans have automatically become immediately due and payable and the LC Obligations have automatically been required to be Cash Collateralized as set forth in the proviso to Section 8.02 ), any amounts received on account of the Obligations shall, subject to the Term Loan Intercreditor Agreement, be applied by the Administrative Agent in the following order:

 

first , to payment of that portion of the Obligations (excluding the Bank Product Obligations and Commercial LC Facility Obligations) constituting fees, indemnities, Credit Party Expenses and other amounts (including fees, charges and disbursements of counsel to the Administrative Agent) payable to the Administrative Agent, in its capacity as such;

 

143



 

second , to payment of that portion of the Obligations (excluding the Bank Product Obligations and Commercial LC Facility Obligations) constituting indemnities, Credit Party Expenses, and other amounts (other than principal, interest and fees) payable to the Lenders and the LC Issuers (including fees, charges and disbursements of counsel to the respective Lenders and LC Issuers), ratably among them in proportion to the amounts described in this clause Second payable to them;

 

third , to the extent not previously reimbursed by the Lenders, to payment to the Administrative Agent of that portion of the Obligations constituting principal and accrued and unpaid interest on any Permitted Overadvances;

 

fourth , to the extent that Swing Line Loans have not been refinanced by a Committed Loan, payment to the Swing Line Lender of that portion of the Obligations constituting accrued and unpaid interest on the Swing Line Loans;

 

fifth , to payment of that portion of the Obligations constituting accrued and unpaid interest on the Committed Loans and other Obligations, and fees (including Letter of Credit Fees), ratably among the Lenders and the LC Issuers in proportion to the respective amounts described in this clause Fifth payable to them;

 

sixth , to the extent that Swing Line Loans have not been refinanced by a Committed Loan, to payment to the Swing Line Lender of that portion of the Obligations constituting unpaid principal of the Swing Line Loans;

 

seventh , to payment of that portion of the Obligations constituting unpaid principal of the Committed Loans and Unpaid Drawings, ratably among the Lenders and the LC Issuers in proportion to the respective amounts described in this clause Seventh held by them;

 

eighth , to (i) the Administrative Agent for the account of the LC Issuers, to Cash Collateralize that portion of LC Obligations comprised of the aggregate undrawn amount of Letters of Credit and (ii) the applicable Lender (or its Affiliate, as the case may be) to cash collateralize the aggregate undrawn amount of letters of credit under a Commercial LC Facility, ratably among the Credit Parties and the Lender (or its Affiliate) providing the Commercial LC Facility in proportion to the respective amounts described in this clause Eighth held by them;

 

ninth , to payment of all other Obligations (including, without limitation, the cash collateralization of asserted but unliquidated indemnification obligations as provided in Section 10.04(b) , but excluding any Bank Product Obligations), ratably among the Credit Parties in proportion to the respective amounts described in this clause Ninth held by them

 

tenth , to payment of that portion of the Bank Product Obligations arising from Cash Management Services to the extent secured under the Security Documents, ratably among the Credit Parties in proportion to the respective amounts described in this clause Tenth held by them;

 

eleventh , to payment of all other Bank Product Obligations to the extent secured under the Security Documents, ratably among the Credit Parties in proportion to the respective amounts described in this clause Eleventh held by them;

 

last , the balance, if any, after all of the Obligations have been indefeasibly paid in full, to the Loan Parties or as otherwise required by Law.

 

144



 

Subject to Section 2.03(c) , amounts used to Cash Collateralize the aggregate undrawn amount of Letters of Credit pursuant to clause Eighth above shall be applied to satisfy drawings under such Letters of Credit as they occur.  If any amount remains on deposit as Cash Collateral after all Letters of Credit have either been fully drawn or expired, such remaining amount shall be applied to the other Obligations, if any, in the order set forth above.

 

ARTICLE IX

ADMINISTRATIVE AGENT

 

9.01.  Appointment and Authority.

 

(a)                    Each of the Lenders and the LC Issuers hereby irrevocably appoints Wells Fargo to act on its behalf as the Administrative Agent hereunder and under the other Loan Documents, and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto.  The provisions of this Article are solely for the benefit of the Administrative Agent, the Lenders and the LC Issuers, and no Loan Party or any Subsidiary thereof shall have rights as a third party beneficiary of any of such provisions.

 

(b)                    Each of the Lenders (in its capacities as a Lender) and the LC Issuers hereby irrevocably appoints Wells Fargo as Administrative Agent and authorizes the Administrative Agent to act as the agent of such Lender for purposes of acquiring, holding and enforcing any and all Liens on Collateral granted by any of the Loan Parties to secure any of the Obligations, together with such powers and discretion as are reasonably incidental thereto.  In this connection, the Administrative Agent, as “administrative agent” and any co-agents, sub-agents and attorneys-in-fact appointed by the Administrative Agent pursuant to Section 9.05 for purposes of holding or enforcing any Lien on the Collateral (or any portion thereof) granted under the Collateral Documents, or for exercising any rights and remedies thereunder at the direction of the Administrative Agent), shall be entitled to the benefits of all provisions of this Article IX and Article X (including Section 10.04(c) ), as though such co-agents, sub-agents and attorneys-in-fact were the “collateral agent” under the Loan Documents, as if set forth in full herein with respect thereto.

 

(c)                     Each Lender and LC Issuer authorizes and directs the Administrative Agent to enter into this Agreement and the other Loan Documents to which it is a party, including the Term Loan Intercreditor Agreement.  Each Lender agrees that any action taken by the Administrative Agent, Required Lenders or Supermajority Lenders in accordance with the terms of this Agreement or the other Loan Documents and the exercise by the Administrative Agent, Required Lenders or Supermajority Lenders of their respective powers set forth herein or therein, together with such other powers that are reasonably incidental thereto, shall be binding upon all of the Lenders.

 

(d)                    The Lenders, LC Issuers and any other holder of any Obligations acknowledge that the Term Loan Debt is secured by Liens on the Collateral and that the exercise of certain of the rights and remedies of Administrative Agent under the Loan Documents may be subject to the provisions of the Term Loan Intercreditor Agreement.  Each Lender and LC Issuer irrevocably (i) consents to the subordination of Liens provided for under the Term Loan Intercreditor Agreement and the other terms and conditions therein, (ii) authorizes and directs the Administrative Agent to execute and deliver the Term Loan Intercreditor Agreement and any documents relating thereto, in each case, on behalf of such Lender or such LC Issuer and to take all actions (and execute all documents) required (or deemed advisable) by it in accordance with the terms of the Term Loan Intercreditor Agreement, in each case, and without any further consent, authorization or other action by such Lender or LC Issuer, (iii) agrees that, upon the execution and delivery thereof, such Lender and LC Issuer will be bound by the provisions of

 

145



 

the Term Loan Intercreditor Agreement as if it were a signatory thereto and will take no actions contrary to the provisions of the Term Loan Intercreditor Agreement, (iv) agrees that no Lender or LC Issuer shall have any right of action whatsoever against the Administrative Agent as a result of any action taken by Administrative Agent pursuant to this Section or in accordance with the terms of the Term Loan Intercreditor Agreement and (v) acknowledges (or is deemed to acknowledge) that a copy of the Term Loan Intercreditor Agreement has been delivered, or made available, to such Lender and LC Issuer.  Each Lender and LC Issuer hereby further irrevocably authorizes and directs the Administrative Agent to enter into such amendments, supplements or other modifications to the Term Loan Intercreditor Agreement as are approved by Administrative Agent and the Required Lenders, provided , that , Administrative Agent may execute and deliver such amendments, supplements and modifications thereto as are contemplated by  the Term Loan Intercreditor Agreement in connection with any extension, renewal, refinancing or replacement of this Agreement or any refinancing of the Obligations, in each case, on behalf of such Lender and LC Issuer and without any further consent, authorization or other action by any Lender or LC Issuer.  The Administrative Agent shall have the benefit of the provisions of Section 9 with respect to all actions taken by it pursuant to this Section or in accordance with the terms of the Term Loan Intercreditor Agreement to the full extent thereof.

 

9.02.  Rights as a Lender.   The Person serving as the Administrative Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though they were not the Administrative Agent, and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated or unless the context otherwise requires, include the Person serving as the Administrative Agent hereunder, in each case in its individual capacity.  Each such Person and its Affiliates may accept deposits from, lend money to, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of business with the Loan Parties or any Subsidiary or other Affiliate thereof as if such Person were not the Administrative Agent hereunder and without any duty to account therefor to the Lenders.

 

9.03.  Exculpatory Provisions.   The Administrative Agent shall not have any duties or obligations except those expressly set forth herein and in the other Loan Documents.  Without limiting the generality of the foregoing, the Administrative Agent:

 

(a)                    shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing;

 

(b)                    shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that the Administrative Agent is required to exercise as directed in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in the other Loan Documents), provided , that , the Administrative Agent shall not be required to take any action that, in its respective opinion or the opinion of its counsel, may expose the Administrative Agent to liability or that is contrary to any Loan Document or applicable law; and

 

(c)                     shall not, except as expressly set forth herein and in the other Loan Documents, have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to any Loan Parties or any of its Affiliates that is communicated to or obtained by the Person serving as the Administrative Agent, or any of its Affiliates in any capacity.

 

The Administrative Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as the Administrative Agent shall believe in good faith shall be necessary, under the circumstances as provided in Sections 10.01 and 8.02 ) or (ii) in the absence of its own gross negligence or

 

146



 

willful misconduct as determined by a final and non-appealable judgment of a court of competent jurisdiction.

 

The Administrative Agent shall not be deemed to have knowledge of any Default unless and until notice describing such Default is given to the Administrative Agent by the Loan Parties, a Lender or LC Issuer.  Upon the occurrence of an Event of Default, the Administrative Agent shall take such action with respect to such Default or Event of Default as shall be reasonably directed by the Applicable Lenders.  Unless and until the Administrative Agent shall have received such direction, the Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to any such Default or Event of Default as it shall deem advisable in the best interest of the Credit Parties.  In no event shall the Administrative Agent be required to comply with any such directions to the extent that the Administrative Agent believes that its compliance with such directions would be unlawful.

 

The Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or document or the creation, perfection or priority of any Lien purported to be created by the Security Documents, (v) the value or the sufficiency of any Collateral, or (vi) the satisfaction of any condition set forth in Article IV or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent.

 

9.04.  Reliance by Administrative Agent.  Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including, but not limited to, any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person.  Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon.  In determining compliance with any condition hereunder to the making of a Loan, or the issuance of a Letter of Credit, that by its terms must be fulfilled to the satisfaction of a Lender or LC Issuer, the Administrative Agent may presume that such condition is satisfactory to such Lender or LC Issuer unless the Administrative Agent shall have received written notice to the contrary from such Lender or LC Issuer prior to the making of such Loan or the issuance of such Letter of Credit.  Administrative Agent may consult with legal counsel (who may be counsel for any Loan Party), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.

 

9.05.  Delegation of Duties.   The Administrative Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Loan Document by or through any one or more sub agents appointed by the Administrative Agent.  The Administrative Agent, and any such sub agent may perform any and all of its duties and exercise its rights and powers by or through their respective Related Parties.  The exculpatory provisions of this Article shall apply to any such sub agent and to the Related Parties of the Administrative Agent, and any such sub agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as the Administrative Agent.

 

9.06.  Resignation of Administrative Agent.   Administrative Agent may at any time give written notice of its resignation to the Lenders and the Lead Borrower.  Upon receipt of any such notice of resignation, the Required Lenders shall appoint a successor from among the Lenders, with the approval of

 

147



 

the Lead Borrower, which approval shall not be unreasonably withheld or delayed, provided , that , no such approval shall be required at any time a Default or Event of Default exists or has occurred and is continuing.  If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within thirty (30) days after the retiring Administrative Agent gives notice of its resignation, then the retiring Administrative Agent may on behalf of the Lenders and the LC Issuers, appoint a successor Administrative Agent that is an Eligible Assignee or an Affiliate of an Eligible Assignee, after consultation with the Lead Borrower; provided , that , if the Administrative Agent shall notify the Lead Borrower and the Lenders that no qualifying Person has accepted such appointment, then such resignation shall nonetheless become effective in accordance with such notice and (a) the retiring Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents (except that in the case of any Collateral held by the Administrative Agent on behalf of the Lenders or the LC Issuers under any of the Loan Documents, the retiring Administrative Agent shall continue to hold such collateral security until such time as a successor Administrative Agent is appointed) and (b) all payments, communications and determinations provided to be made by, to or through the Administrative Agent shall instead be made by or to each Lender and LC Issuer directly, until such time as the Required Lenders appoint a successor Administrative Agent as provided for above in this Section.  Upon the acceptance of a successor’s appointment as Administrative Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring (or retired) Administrative Agent, and the retiring Administrative Agent shall be discharged from all of its duties and obligations hereunder or under the other Loan Documents (if not already discharged therefrom as provided above in this Section).  The fees payable by the Borrowers to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Lead Borrower and such successor.  After the retiring Administrative Agent’s resignation hereunder and under the other Loan Documents, the provisions of this Article and Section 10.04 shall continue in effect for the benefit of such retiring Administrative Agent, its sub agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring Administrative Agent was acting as Administrative Agent hereunder.

 

Any resignation by Wells Fargo as Administrative Agent pursuant to this Section shall also constitute its resignation as Swing Line Lender and the resignation of Wells Fargo as LC Issuer.  Upon the acceptance of a successor’s appointment as Administrative Agent hereunder, (a) such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring LC Issuer and Swing Line Lender, (b) the retiring LC Issuer and Swing Line Lender shall be discharged from all of their respective duties and obligations hereunder or under the other Loan Documents, and (c) the successor LC Issuer shall issue letters of credit in substitution for the Letters of Credit issued by the retiring LC Issuer, if any, outstanding at the time of such succession or make other arrangements satisfactory to the retiring LC Issuer to effectively assume the obligations of the retiring LC Issuer with respect to such Letters of Credit.

 

9.07.  Non-Reliance on Administrative Agent and Other Lenders.   Each Lender and LC Issuer acknowledges that it has, independently and without reliance upon the Administrative Agent, or any other Lender or any of their Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement.  Each Lender and LC Issuer also acknowledges that it will, independently and without reliance upon the Administrative Agent, or any other Lender or any of their Related Parties and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder.  Except as provided in Section 9.12 , the Administrative Agent shall not have any duty or responsibility to provide any Credit Party with any other credit or other information concerning the affairs, financial condition or business of any Loan Party that may come into the possession of the Administrative Agent.

 

148



 

9.08.  No Other Duties, Etc.   Anything herein to the contrary notwithstanding, none of the Bookrunners, Initial Lead Arrangers, Lead Arrangers, Co-Syndication Agents or Co-Documentation Agents listed on the cover page hereof shall have any powers, duties or responsibilities under this Agreement or any of the other Loan Documents, except in its capacity, as applicable, as the Administrative Agent, a Lender, an LC Issuer or the Swing Line Lender hereunder.

 

9.09.  Administrative Agent May File Proofs of Claim.   In case of the pendency of any proceeding under any Debtor Relief Law or any other judicial proceeding relative to any Loan Party, the Administrative Agent (irrespective of whether the principal of any Loan or LC Obligation shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on the Loan Parties) shall be entitled and empowered, by intervention in such proceeding or otherwise

 

(a)                    to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans, LC Obligations and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders, the LC Issuers, the Administrative Agent and the other Credit Parties (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders, the LC Issuers, the Administrative Agent, such Credit Parties and their respective agents and counsel and all other amounts due the Lenders, the LC Issuers, the Administrative Agent and such Credit Parties under Sections 2.03(i)  and 2.03(j)  as applicable, 2.09 and 10.04 ) allowed in such judicial proceeding; and

 

(b)                    to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;

 

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender and LC Issuer to make such payments to the Administrative Agent and, if the Administrative Agent shall consent to the making of such payments directly to the Lenders and the LC Issuers, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its agents and counsel, and any other amounts due the Administrative Agent under Sections 2.09 and 10.04 .

 

Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lender or LC Issuer any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any Lender or LC Issuer or to authorize the Administrative Agent to vote in respect of the claim of any Lender or LC Issuer in any such proceeding.

 

9.10.  Collateral and Guaranty Matters.

 

(a)                    The Credit Parties irrevocably authorize the Administrative Agent, at its option and in its discretion,

 

(i)                        to release any Lien on any property granted to or held by the Administrative Agent under any Loan Document (A) upon termination of the Aggregate Commitments and payment in full of the Obligations, (B) constituting property being sold or otherwise Disposed of if the Lead Borrower certifies to Administrative Agent that the sale or other Disposition is a Permitted Disposition (and Administrative Agent may rely conclusively on any such certificate, without further inquiry), (C) constituting property in which any Loan Party did not own an interest at the time the security interest, mortgage or lien was granted or at any time thereafter, or (D) having a value in the aggregate in any twelve (12) month period of less than $50,000,000, and to the extent Administrative Agent may release its

 

149



 

Lien upon any such Collateral pursuant to the sale or other Disposition thereof, such sale or other Disposition shall be deemed consented to by Lenders, (E) if required or permitted under the terms of any of the other Loan Documents, including the Term Loan Intercreditor Agreement or any other intercreditor agreement, or (F) subject to Section 10.01(h) , if the release is approved, authorized or ratified in writing by the Required Lenders.

 

(ii)                     to release or subordinate any Lien on any property granted to or held by the Administrative Agent under any Loan Document to the holder of any Lien on such property that is permitted by clause (i)  of the definition of Permitted Encumbrances; and

 

(iii)                  to release any Guarantor from its obligations under the Facility Guaranty if such Person ceases to be a Subsidiary as a result of a transaction permitted hereunder.

 

(b)                    In addition to the foregoing, in the event that Term Loan Agent shall release its Lien on any of the Term Loan Priority Collateral at any time in exchange for other Term Loan Priority Collateral in accordance with the terms of the Term Loan Agreement (other than as result of payment in full of all obligations under the Term Loan Agreement), the Credit Parties irrevocably authorize and direct the Administrative Agent to release its Lien on such Term Loan Priority Collateral subject to the receipt by Administrative Agent of a certificate duly executed and delivered by the Lead Borrower that the release of the Lien of Term Loan Agent on such Term Loan Priority Collateral in such circumstances is in accordance with the terms of the Term Loan Agreement and Administrative Agent may rely conclusively on any such certificate, without further inquiry.  In addition, the Credit Parties irrevocably authorize and direct the Administrative Agent to release its Lien on Term Loan Priority Collateral in accordance with the terms and conditions of Schedule 6.17 hereof.

 

(c)                     Upon request by the Administrative Agent at any time, the Applicable Lenders will confirm in writing the Administrative Agent’s authority to release or subordinate its interest in particular types or items of property, or to release any Guarantor from its obligations under the Facility Guaranty pursuant to this Section 9.10 .  In each case as specified in this Section 9.10 , the Administrative Agent will, at the Loan Parties’ expense, execute and deliver to the applicable Loan Party such documents as such Loan Party may reasonably request to evidence the release of such item of Collateral from the assignment and security interest granted under the Security Documents or to subordinate its interest in such item, or to release such Guarantor from its obligations under the Facility Guaranty, in each case in accordance with the terms of the Loan Documents and this Section 9.10 .

 

9.11.  Notice of Transfer.   The Administrative Agent may deem and treat a Lender party to this Agreement as the owner of such Lender’s portion of the Obligations for all purposes, unless and until, and except to the extent, an Assignment and Acceptance shall have become effective as set forth in Section 10.06 .

 

9.12.  Reports and Financial Statements.   By signing this Agreement, each Lender:

 

(a)                    agrees to furnish the Administrative Agent (at such frequency as the Administrative Agent may reasonably request) with a summary of all Bank Product Obligations due or to become due to such Lender. In connection with any distributions to be made hereunder, the Administrative Agent shall be entitled to assume that no amounts are due to any Lender on account of Bank Product Obligations unless the Administrative Agent has received written notice thereof from such Lender;

 

(b)                    is deemed to have requested that the Administrative Agent furnish such Lender, promptly after they become available, copies of all financial statements required to be delivered by the

 

150



 

Lead Borrower hereunder and all field examinations and appraisals of the Collateral received by the Administrative Agent (collectively, the “ Reports ”);

 

(c)                     expressly agrees and acknowledges that the Administrative Agent makes no representation or warranty as to the accuracy of the Reports, and shall not be liable for any information contained in any Report;

 

(d)                    expressly agrees and acknowledges that the Reports are not comprehensive audits or examinations, that the Administrative Agent or any other party performing any audit or examination will inspect only specific information regarding the Loan Parties and will rely significantly upon the Loan Parties’ books and records, as well as on representations of the Loan Parties’ personnel;

 

(e)                     agrees to keep all Reports confidential in accordance with the provisions of Section 10.07 hereof; and

 

(f)                      without limiting the generality of any other indemnification provision contained in this Agreement, agrees: (i) to hold the Administrative Agent and any such other Lender preparing a Report harmless from any action the indemnifying Lender may take or conclusion the indemnifying Lender may reach or draw from any Report in connection with any Credit Extensions that the indemnifying Lender has made or may make to the Borrowers, or the indemnifying Lender’s participation in, or the indemnifying Lender’s purchase of, a Loan or Loans; and (ii) to pay and protect, and indemnify, defend, and hold the Administrative Agent and any such other Lender preparing a Report harmless from and against, the claims, actions, proceedings, damages, costs, expenses, and other amounts (including attorney costs) incurred by the Administrative Agent and any such other Lender preparing a Report as the direct or indirect result of any third parties who might obtain all or part of any Report through the indemnifying Lender.

 

9.13.  Agency for Perfection.   Each Lender hereby appoints each other Lender as agent for the purpose of perfecting Liens for the benefit of the Administrative Agent and the Lenders, in assets which, in accordance with Article 9 of the UCC or any other applicable Law of the United States can be perfected only by possession.  Should any Lender (other than the Administrative Agent) obtain possession of any such Collateral, such Lender shall notify the Administrative Agent thereof, and, promptly upon the Administrative Agent’s request therefor shall deliver such Collateral to the Administrative Agent or otherwise deal with such Collateral in accordance with the Administrative Agent’s instructions.

 

9.14.  Indemnification.   The Lenders hereby agree to indemnify the Administrative Agent, the LC Issuers and any Related Party, as the case may be (to the extent not reimbursed by the Loan Parties and without limiting the obligations of Loan Parties hereunder), ratably according to their Applicable Percentages, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever that may be imposed on, incurred by, or asserted against the Administrative Agent, any LC Issuer or any Related Party in any way relating to or arising out of this Agreement or any other Loan Document or any action taken or omitted to be taken by the Administrative Agent, the LC Issuer or any Related Party in connection therewith; provided , that , no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the Administrative Agent’s, any LC Issuer’s or any Related Party’s, as applicable, gross negligence or willful misconduct as determined by a final and nonappealable judgment of a court of competent jurisdiction.

 

9.15.  Relation among Lenders.   The Lenders are not partners or co-venturers, and no Lender shall be liable for the acts or omissions of, or (except as otherwise set forth herein in case of the Administrative Agent) authorized to act for, any other Lender.

 

151



 

9.16.  Defaulting Lender.

 

(a)                    If for any reason any Lender shall become a Defaulting Lender or shall fail or refuse to abide by its obligations under this Agreement, including, without limitation, its obligation to make available to Administrative Agent its Applicable Percentage of any Loans, expenses or setoff or purchase its Applicable Percentage of a participation interest in the Swing Line Loans or Letter of Credit Exposure and such failure is not cured within one (1) Business Day after receipt from the Administrative Agent of written notice thereof, then, in addition to the rights and remedies that may be available to the other Credit Parties, the Loan Parties or any other party at law or in equity, and not at limitation thereof, (i) such Defaulting Lender’s right to participate in the administration of, or decision-making rights related to, the Obligations, this Agreement or the other Loan Documents shall be suspended during the pendency of such failure or refusal, provided , that , (A) the Commitment of a Defaulting Lender may not be increased, (B) the Loans of a Defaulting Lender may not be reduced or forgiven and (C) the interest applicable to Obligations owing to a Defaulting Lender may not be reduced in such a manner that by its terms affects such Defaulting Lender more adversely than Non-Defaulting Lenders, in each case of clauses (A) , (B)  and (C)  without the consent of such Defaulting Lender and (ii) the Administrative Agent shall be authorized, and shall have the right to, use any and all payments due to a Defaulting Lender from the Loan Parties, whether on account of outstanding Loans, interest, fees or otherwise, to the remaining Non-Defaulting Lenders for application to, and reduction of, their proportionate shares of all outstanding Obligations until, as a result of application of such payments the Lenders’ respective Applicable Percentages of all outstanding Obligations shall have returned to those in effect immediately prior to such delinquency and without giving effect to the nonpayment causing such delinquency, and (iii) at the option of the Administrative Agent, any amount payable to such Defaulting Lender hereunder (whether on account of principal, interest, fees or otherwise) may, in lieu of being distributed to such Defaulting Lender, be retained by the Administrative Agent as cash collateral for future funding obligations of the Defaulting Lender in respect of any Committed Loan or existing or future participating interest in any Swing Line Loan or Letter of Credit.

 

(b)                    The Non-Defaulting Lenders shall also have the right, but not the obligation, in their respective, sole and absolute discretion, to cause the termination and assignment, without any further action by the Defaulting Lender for no cash consideration ( pro rata , based on the respective Commitments of those Lenders electing to exercise such right), of the Defaulting Lender’s Commitment to fund future Loans.  Upon any such purchase of the Applicable Percentage of any Defaulting Lender, the Defaulting Lender’s share in future Credit Extensions and its rights under the Loan Documents with respect thereto shall terminate on the date of purchase, and the Defaulting Lender shall promptly execute all documents reasonably requested to surrender and transfer such interest, including, if so requested, an Assignment and Acceptance.  If the Defaulting Lender fails for any reason to promptly execute and deliver any Assignment and Acceptance or other agreement in connection with the purchase or termination of its interests, Administrative Agent is irrevocably authorized, at its option, but shall not be required to, execute and deliver such Assignment and Acceptance or other agreement in the name or and on behalf of the Defaulting Lender and regardless of whether Administrative Agent executes and delivers such Assignment and Acceptance or other agreement, the Defaulting Lender shall be deemed to have executed and delivered such Assignment and Acceptance or other agreement.

 

(c)                     Each Defaulting Lender shall indemnify the Administrative Agent and each Non-Defaulting Lender from and against any and all loss, damage or expenses, including but not limited to reasonable attorneys’ fees and funds advanced by the Administrative Agent or by any Non-Defaulting Lender, on account of a Defaulting Lender’s failure to timely fund its Applicable Percentage of a Loan or to otherwise perform its obligations under the Loan Documents.

 

152



 

(d)                    If any Swing Line Loans or Letters of Credit are outstanding at the time a Lender becomes a Defaulting Lender then:

 

(i)                        all or any part of the interests of such Defaulting Lender in Swing Line Loans and Letter of Credit Exposure of such Defaulting Lender shall be reallocated among the Non-Defaulting Lenders in accordance with their respective Applicable Percentages but only to the extent (A) the sum of the aggregate Outstanding Amount of the Committed Loans and Letter of Credit Exposure of all Non-Defaulting Lenders, plus such Defaulting Lender’s interest in such Lender’s Applicable Percentage of the Outstanding Amount of all Swing Line Loans and Letter of Credit Exposure does not exceed the total of all Non-Defaulting Lenders’ Commitments and (B) the conditions set forth in Section 4.02 hereof are satisfied at the time of any such reallocation (and, unless Borrowers shall have otherwise notified Administrative Agent at such time, Borrowers shall be deemed to have represented and warranted that such conditions are satisfied at such time);

 

(ii)                     if the reallocation described in clause (i)  above cannot, or can only partially, be effected, the Borrowers shall within three (3) Business Days following notice by the Administrative Agent (A) first, prepay such Outstanding Amount of Swing Line Loans in an amount equal to the amount by which the sum of the aggregate Outstanding Amount of the Committed Loans and Letter of Credit Exposure of all Non-Defaulting Lenders exceed the total of all Non-Defaulting Lenders’ Commitments and (B) second, Cash Collateralize, for the benefit of each applicable LC Issuer, the Borrowers’ obligations corresponding to such Defaulting Lender’s Letter of Credit Exposure (after giving effect to any partial reallocation pursuant to clause (i)  above) in accordance with the procedures set forth in Section 2.03(g)  for so long as such Letter of Credit Exposure is outstanding;

 

(iii)                  if the Borrowers Cash Collateralize any portion of such Defaulting Lender’s Letter of Credit Exposure pursuant to clause (ii)  above, the Borrowers shall not be required to pay any fees to such Defaulting Lender pursuant to Section 2.03(i)  with respect to such Defaulting Lender’s Letter of Credit Exposure during the period such Defaulting Lender’s Letter of Credit Exposure is Cash Collateralized;

 

(iv)                 if the Letter of Credit Exposure of the Non-Defaulting Lenders is reallocated pursuant to clause (i)  above, then the fees payable to the Lenders pursuant to Section 2.09(a)  and Section 2.03(i)  shall be adjusted in accordance with such Non-Defaulting Lenders’ Applicable Percentages; and

 

(v)                    if all or any portion of such Defaulting Lender’s Letter of Credit Exposure is neither reallocated nor Cash Collateralized pursuant to clause (i)  or (ii)  above, then, without prejudice to any rights or remedies of any LC Issuer or any Lender hereunder, all Letter of Credit Fees payable under Section 2.03(i)  with respect to such Defaulting Lender’s Letter of Credit Exposure shall be payable to the LC Issuer until such Letter of Credit Exposure is reallocated and/or Cash Collateralized;

 

(vi)                 so long as such Lender is a Defaulting Lender, an LC Issuer shall not be required to issue, amend or increase any Letter of Credit, unless it is satisfied that the related exposure will be one hundred percent (100%) covered by the Commitments of the Non-Defaulting Lenders and/or cash collateral has been provided by the Borrowers in accordance with Section 9.16(d)  or Section 2.03(g) , and participating interests in any such newly issued or increased Letter of Credit shall be allocated among Non-Defaulting Lenders in a manner consistent with Section 9.16(d)(i)  (and such Defaulting Lender shall not participate therein); and

 

(vii)              so long as such Lender is a Defaulting Lender, the Swing Line Lender shall not be required to make any Swing Line Loan, unless it is satisfied that the related exposure will be one hundred percent (100%) covered by the Commitments of the Non-Defaulting Lenders, and participating interests

 

153



 

in any new Swing Line Loans shall be allocated among Non-Defaulting Lenders in a manner consistent with Section 9.16(d)(i)  (and such Defaulting Lender shall not participate therein);

 

(e)                     In the event that each of the Administrative Agent, the Lead Borrower, each LC Issuer and each Swing Line Lender agrees that a Defaulting Lender has adequately remedied all matters that caused such Lender to be a Defaulting Lender, then the interests of the Lenders in the Swing Line Loans and the Letter of Credit Exposure of the Lenders shall be readjusted to reflect the inclusion of such Lender’s Commitment and on the date of such readjustment such Lender shall purchase at par such of the Loans of the other Lenders (other than Swing Line Loans) as the Administrative Agent shall determine may be necessary in order for such Lender to hold such Loans in accordance with its Applicable Percentage, whereupon such Lender will cease to be a Defaulting Lender; provided , that , (i) no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Borrowers while such Lender was a Defaulting Lender, (ii) except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender and (iii) to the extent that the Letter of Credit Exposure was Cash Collateralized pursuant to clause (d)(ii)  above while such Lender was a Defaulting Lender, and after giving effect to such Lender ceasing to be a Defaulting Lender, the Letter of Credit Exposure is covered by the Commitments, such Cash Collateral shall be released to the Lead Borrower.

 

9.17.  Secured Bank Product Obligations; Commercial LC Facility Obligations .

 

(a)                    Except as otherwise expressly set forth herein or in any other Loan Documents, no Lender or any Affiliate of a Lender that is owed any Bank Product Obligations, obligations under any Cash Management Services or Commercial LC Facility Obligations shall have any right to notice of any action or to consent to, direct or object to any action hereunder or under any other Loan Document or otherwise in respect of the Collateral (including the release or impairment of any Collateral) other than in its capacity as a Lender or an LC Issuer and, in such case, only to the extent expressly provided in the Loan Documents.  Notwithstanding any other provision of this Article IX to the contrary, the Administrative Agent shall not be required to verify the payment of, or that other satisfactory arrangements have been made with respect to, Bank Product Obligations, obligations under Cash Management Services or Commercial LC Facility Obligations.  Each Lender or Affiliate of Lender providing Bank Products, Cash Management Services or a Commercial LC Facility will provide written notice of the Bank Product Obligations, the obligations under such Cash Management Services or Commercial LC Facility, as the case may be, to Administrative Agent, together with such supporting documentation with respect thereto as the Administrative Agent may request, including the amounts owing in respect thereof.  Each Lender that is owed any Bank Product Obligations, obligations under Cash Management Services or Commercial LC Facility Obligations (or whose Affiliate is owed any thereof) will from time to time, promptly upon the request of Administrative Agent, provide a summary of all Bank Product Obligations, obligations under Cash Management Services or Commercial LC Facility Obligations, as the case may be, owing to it or its Affiliates.   Borrowers and each Lender or Affiliate of Lender at any time providing Bank Products, Cash Management Services or a Commercial LC Facility authorizes and consents to the disclosure of any information concerning such Bank Products, Cash Management Services or Commercial LC Facility to any other Lender at any time and from time to time, provided , that , in no event shall such disclosure be deemed a representation or warranty by Administrative Agent of the accuracy or completeness of such information.

 

(b)                    Each Lender hereby agrees that the benefit of the provisions of the Loan Documents directly relating to the Collateral or any Lien granted thereunder shall extend to and be available to any Person that is a Lender at the time that it establishes a Bank Product, Cash Management Service or Commercial LC Facility and thereafter ceases to be a Lender so long as, by accepting such benefits, such

 

154



 

Person agrees, as among Administrative Agent and all other Credit Parties, that such Person is bound by (and, if requested by Administrative Agent, shall confirm such agreement in a writing in form and substance reasonably acceptable to Administrative Agent) this Article IX and Sections 3.01 , 10.04 , 10.07 , 10.08 , 10.16 and the Term Loan Intercreditor Agreement, and the decisions and actions of Administrative Agent, or the Required Lenders (or, where expressly required by the terms of this Agreement, a greater proportion of the Lenders or other parties hereto as required herein) to the same extent a Lender is bound; provided , that , notwithstanding the foregoing in this clause (b) , (i) such Person shall be bound by Section 10.04 only to the extent of liabilities, reimbursement obligations, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses, or disbursements with respect to or otherwise relating to the Liens and Collateral held for the benefit of such Person, in which case the obligations of such Person thereunder shall not be limited by any concept of pro rata share or similar concept, (ii) each of Administrative Agent, the Lenders and the LC Issuers party hereto shall be entitled to act in its sole discretion, without regard to the interest of such Person, regardless of whether any Obligation to such Person thereafter remains outstanding, is deprived of the benefit of the Collateral, becomes unsecured or is otherwise affected or put in jeopardy thereby, and without any duty or liability to such Person or any such Obligation and (iii) such Person shall not have any right to be notified of, consent to, direct, require or be heard with respect to, any action taken or omitted in respect of the Collateral or under any Loan Document.

 

9.18.  Co-Syndication Agents; Co-Documentation Agents and Joint Lead Arrangers .   Notwithstanding the provisions of this Agreement or any of the other Loan Documents, no Person who is or becomes a Co-Syndication Agent or a Co-Documentation Agent nor a Primary Lead Arranger, or a Lead Arranger shall have any powers, rights, duties, responsibilities or liabilities with respect to this Agreement and the other Loan Documents.

 

ARTICLE X

MISCELLANEOUS

 

10.01.  Amendments, Etc.   No amendment or waiver of any provision of this Agreement or any other Loan Document, and no consent to any departure by any Loan Party therefrom, shall be effective unless in writing signed by the Administrative Agent, with the consent of the Required Lenders, and the Lead Borrower or the applicable Loan Party, as the case may be, and each such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided , that , no such amendment, waiver or consent shall:

 

(a)                    extend or, increase the Commitment of any Lender (or reinstate any Commitment terminated pursuant to Section 8.02 ) without the written consent of each Lender directly affect thereby;

 

(b)                    postpone any date fixed by this Agreement or any other Loan Document for any scheduled payment (including the Maturity Date) or mandatory prepayment of principal, interest, fees or other amounts due hereunder or under any of the other Loan Documents without the written consent of such Lender entitled to such payment hereunder or under such other Loan Document;

 

(c)                     reduce the principal of, or the rate of interest specified herein on, any Loan, or (subject to clause (v)  of the second proviso to this Section 10.01 ) any fees or other amounts payable hereunder or under any other Loan Document, without the written consent of each Lender directly affected thereby; provided , that , only the consent of the Required Lenders shall be necessary to amend the definition of “Default Rate” or to waive any obligation of the Borrowers to pay interest or Letter of Credit Fees at the Default Rate;

 

155



 

(d)                    change the order of application of funds provided in Section 8.03 hereof or Section 8.7 of the Security Agreement without the consent of each Lender directly affected thereby;

 

(e)                     change Section 2.13 or Section 8.03 in a manner that would alter the pro rata sharing of payments required thereby without the written consent of each Lender;

 

(f)                      change any provision of this Section or the definition of “Required Lenders”, “Supermajority Lenders”, or any other provision hereof specifying the number or percentage of Lenders required to amend, waive or otherwise modify any rights hereunder or make any determination or grant any consent hereunder, without the written consent of each Lender;

 

(g)                     permit any Loan Party to assign its rights under the Loan Documents, without the written consent of each Lender;

 

(h)                    except as expressly permitted hereunder or under any other Loan Document, release, or limit the liability of, any Loan Party, without the written consent of each Lender;

 

(i)                        release all or substantially all of the Collateral from the Liens of the Security Documents, without the written consent of each Lender;

 

(j)                       increase the percentages applied to eligible assets in the definition of the Borrowing Base, without the consent of each Lender;

 

(k)                    subject to clause (j)  above, change the definition of the term “Borrowing Base” or any component definition thereof if as a result thereof the amounts available to be borrowed by the Borrowers would be increased, without the written consent of Supermajority Lenders, provided , that , the foregoing shall not limit the discretion of the Administrative Agent to change, establish or eliminate any Reserves; and

 

(l)                        except as expressly permitted herein or in any other Loan Document, subordinate the Obligations hereunder or the Liens granted hereunder or under the other Loan Documents, to any other Indebtedness or Lien, as the case may be without the written consent of each Lender;

 

and, provided , that , (i) no amendment, waiver or consent shall, unless in writing and signed by the applicable LC Issuer in addition to the Lenders required above, affect the rights or duties of such LC Issuer under this Agreement or any Issuer Document relating to any Letter of Credit issued or to be issued by it; (ii) no amendment, waiver or consent shall, unless in writing and signed by the Swing Line Lender in addition to the Lenders required above, affect the rights or duties of the Swing Line Lender under this Agreement; (iii) no amendment, waiver or consent shall, unless in writing and signed by the Administrative Agent in addition to the Lenders required above, affect the rights or duties of the Administrative Agent under this Agreement or any other Loan Document; and (iv) the Fee Letter may be amended, or rights or privileges thereunder waived, in a writing executed only by the parties thereto.  Notwithstanding anything to the contrary herein, no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent hereunder, except that the Commitment of such Lender may not be increased or extended without the consent of such Lender.

 

Notwithstanding anything to the contrary in this Agreement or any other Loan Document, no provider or holder of any Bank Products or Cash Management Services shall have any voting or approval rights hereunder (or be deemed a Lender) solely by virtue of its status as the provider or holder of such agreements or products or the Obligations owing thereunder, nor shall the consent of any such provider or holder be required (other than in their capacities as Lenders, to the extent applicable) for any matter

 

156



 

hereunder or under any of the other Loan Documents, including as to any matter relating to the Collateral or the release of Collateral or any Loan Party.

 

If any Lender does not consent (a “ Non-Consenting Lender ”) to a proposed amendment, waiver, consent or release with respect to any Loan Document that requires the consent of each Lender or of all Lenders directly affected thereby, and that has been approved by the Required Lenders, the Lead Borrower may replace such Non-Consenting Lender in accordance with Section 10.13 ; provided , that , such amendment, waiver, consent or release can be effected as a result of the assignment contemplated by such Section (together with all other such assignments required by the Lead Borrower to be made pursuant to this paragraph).

 

10.02.  Notices; Effectiveness; Electronic Communications.

 

(a)                    Notices Generally .  Except in the case of notices and other communications expressly permitted to be given by telephone (and except as provided in clause (b)  below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopier as follows, and all notices and other communications expressly permitted hereunder to be given by telephone shall be made to the applicable telephone number, as follows:

 

(i)                        if to the Loan Parties, the Administrative Agent, the LC Issuers or the Swing Line Lender, to the address, telecopier number, electronic mail address or telephone number specified for such Person on Schedule 10.02 ; and

 

(ii)                     if to any other Lender, to the address, telecopier number, electronic mail address or telephone number specified in its Administrative Questionnaire.

 

Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices sent by telecopier shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next Business Day for the recipient).  Notices delivered through electronic communications to the extent provided in clause (b)  below, shall be effective as provided in such clause (b) .

 

(b)                    Electronic Communications .  Notices and other communications to the Lenders and the LC Issuers hereunder may be delivered or furnished by electronic communication (including e mail and Internet or intranet websites) pursuant to procedures approved by the Administrative Agent, provided , that , the foregoing shall not apply to notices to any Lender or LC Issuer pursuant to Article II if such Lender or LC Issuer, as applicable, has notified the Administrative Agent that it is incapable of receiving notices under such Article by electronic communication.  The Administrative Agent or the Lead Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it, provided , that , approval of such procedures may be limited to particular notices or communications.

 

Unless the Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement), provided , that , if such notice or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next Business Day for the recipient, and provided further that if the sender receives an “out-of-office” reply e-mail, that notice or other communication shall be deemed

 

157



 

received upon the sender’s compliance with the instructions in such “out-of-office” reply e-mail regarding notification to any other person in the intended recipient’s absence, and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (i)  of notification that such notice or communication is available and identifying the website address therefor.

 

(c)                     The Platform .  THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE.”  THE AGENT PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE BORROWER MATERIALS OR THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS IN OR OMISSIONS FROM THE BORROWER MATERIALS.  NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY ANY AGENT PARTY IN CONNECTION WITH THE BORROWER MATERIALS OR THE PLATFORM.  In no event shall the Administrative Agent or any of their Related Parties (collectively, the “ Agent Parties ”) have any liability to any Loan Party, any Lender, any LC Issuer or any other Person for losses, claims, damages, liabilities or expenses of any kind (whether in tort, contract or otherwise) arising out of the Loan Parties’ or the Administrative Agent’s transmission of Borrower Materials through the Internet, except to the extent that such losses, claims, damages, liabilities or expenses are determined by a court of competent jurisdiction by a final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Agent Party; provided , that , in no event shall any Agent Party have any liability to any Loan Party, any Lender, any LC Issuer or any other Person for indirect, special, incidental, consequential or punitive damages (as opposed to direct or actual damages).

 

(d)                    Change of Address, Etc .  Each of the Loan Parties, the Administrative Agent, the LC Issuers and the Swing Line Lender may change its address, telecopier or telephone number for notices and other communications hereunder by notice to the other parties hereto.  Each other Lender may change its address, telecopier or telephone number for notices and other communications hereunder by notice to the Lead Borrower, the Administrative Agent, each LC Issuer and the Swing Line Lender.  In addition, each Lender agrees to notify the Administrative Agent from time to time to ensure that the Administrative Agent has on record (i) an effective address, contact name, telephone number, telecopier number and electronic mail address to which notices and other communications may be sent and (ii) accurate wire instructions for such Lender.

 

(e)                     Reliance by Administrative Agent, LC Issuers and Lenders .  The Administrative Agent, the LC Issuers and the Lenders shall be entitled to rely and act upon any notices (including telephonic Committed Loan Notices and Swing Line Loan Notices) purportedly given by or on behalf of the Loan Parties even if (i) such notices were not made in a manner specified herein, were incomplete or were not preceded or followed by any other form of notice specified herein, or (ii) the terms thereof, as understood by the recipient, varied from any confirmation thereof.  The Loan Parties shall indemnify the Administrative Agent, each LC Issuer, each Lender and the Related Parties of each of them from all losses, costs, expenses and liabilities resulting from the reliance by such Person on each notice purportedly given by or on behalf of the Loan Parties.  All telephonic notices to and other telephonic communications with the Administrative Agent may be recorded by the Administrative Agent, and each of the parties hereto hereby consents to such recording.

 

10.03.  No Waiver; Cumulative Remedies.   No failure by any Credit Party to exercise, and no delay by any such Person in exercising, any right, remedy, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder or under any other Loan Document preclude any other or further exercise thereof or the exercise of any

 

158



 

other right, remedy, power or privilege.  The rights, remedies, powers and privileges provided herein and in the other Loan Documents are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.  Without limiting the generality of the foregoing, the making of a Loan or issuance of a Letter of Credit shall not be construed as a waiver of any Default, regardless of whether any Credit Party may have had notice or knowledge of such Default at the time.

 

10.04.  Expenses; Indemnity; Damage Waiver.

 

(a)                    Costs and Expenses .  The Borrowers shall, upon Administrative Agent’s demand (which may be upon the request of the Person or Persons entitled thereto), pay all Credit Party Expenses.

 

(b)                    Indemnification by the Loan Parties .  The Loan Parties shall indemnify the Administrative Agent (and any sub-agent thereof), each other Credit Party, and each Related Party of any of the foregoing Persons (each such Person being called an “ Indemnitee ”) against, and hold each Indemnitee harmless from, any and all losses, claims, causes of action, damages, liabilities, settlement payments, costs, and related expenses (including the fees, charges and disbursements of any counsel for any Indemnitee), incurred by any Indemnitee or asserted against any Indemnitee by any third party or by any Borrower or any other Loan Party arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement, any other Loan Document or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their respective obligations hereunder or thereunder or the consummation of the transactions contemplated hereby or thereby, or, in the case of the Administrative Agent (and any sub-agents thereof) and their Related Parties only, the administration of this Agreement and the other Loan Documents, (ii) any Loan or Letter of Credit or the use or proposed use of the proceeds therefrom (including any refusal by an LC Issuer to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), any bank advising or confirming a Letter of Credit or any other nominated person with respect to a Letter of Credit seeking to be reimbursed or indemnified or compensated, and any third party seeking to enforce the rights of a Borrower, beneficiary, nominated person, transferee, assignee of Letter of Credit proceeds, or holder of an instrument or document related to any Letter of Credit), (iii) any actual or alleged presence or release of Hazardous Materials on or from any property owned or operated by any Loan Party or any of its Subsidiaries, or any Environmental Liability related in any way to any Loan Party or any of its Subsidiaries, (iv) any claims of, or amounts paid by any Credit Party to, a Blocked Account Bank or other Person which has entered into a control agreement with any Credit Party hereunder, or (v) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by any Borrower or any other Loan Party or any of the Loan Parties’ directors, shareholders or creditors, and regardless of whether any Indemnitee is a party thereto, in all cases, whether or not caused by or arising, in whole or in part, out of the comparative, contributory or sole negligence of the Indemnitee; provided , that , (A) such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses (1) are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee or (2) result from a claim brought by a Borrower or any other Loan Party against an Indemnitee for breach in bad faith of such Indemnitee’s obligations hereunder or under any other Loan Document, if the Borrowers or such Loan Party has obtained a final and non-appealable judgment in its favor on such claim as determined by a court of competent jurisdiction, and (B) the obligation to reimburse any Indemnitee for legal fees and expenses shall be limited to legal fees and expenses of one firm of counsel for all such Indemnitees and one local counsel in each appropriate jurisdiction (and, to the extent required by the subject matter, one specialist counsel for each such specialized area of law in each appropriate jurisdiction), and in the case of an actual or perceived conflict of interest as determined by the affected Indemnitee, one counsel for such affected Indemnitee).

 

159



 

(c)                     Reimbursement by Lenders .  Without limiting their obligations under Section 9.14 hereof, to the extent that the Loan Parties for any reason fail to indefeasibly pay any amount required under clause (a)  or (b)  of this Section to be paid by it, each Lender severally agrees to pay to the Administrative Agent (or any such sub-agent), the LC Issuers or such Related Party, as the case may be, such Lender’s Applicable Percentage (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount; provided , that , the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent (or any such sub-agent) or the LC Issuer in its capacity as such, or against any Related Party of any of the foregoing acting for the Administrative Agent (or any such sub-agent) such LC Issuer in connection with such capacity.  The obligations of the Lenders under this clause (c)  are subject to the provisions of Section 2.12(d) .

 

(d)                    Waiver of Consequential Damages, Etc .  To the fullest extent permitted by applicable Law, the parties hereto shall not assert, and hereby waive, any claim against any other party hereto or any Related Party thereof, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any Loan or Letter of Credit or the use of the proceeds thereof.  No Indemnitee shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed to such unintended recipients by such Indemnitee through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby other than for direct or actual damages resulting from the gross negligence or willful misconduct of such Indemnitee as determined by a final and nonappealable judgment of a court of competent jurisdiction.

 

(e)                     Payments .  All amounts due under this Section shall be payable on demand therefor.

 

(f)                      Survival .  The agreements in this Section shall survive the resignation of the Administrative Agent and any LC Issuer, the assignment of any Commitment or Loan by any Lender, the replacement of any Lender, the termination of the Aggregate Commitments and the repayment, satisfaction or discharge of all the other Obligations.

 

10.05.  Payments Set Aside.   To the extent that any payment by or on behalf of the Loan Parties is made to any Credit Party, or any Credit Party exercises its right of setoff, and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by such Credit Party in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Law, then (a) to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such setoff had not occurred, and (b) each Lender and LC Issuer severally agrees to pay to the Administrative Agent upon demand its Applicable Percentage (without duplication) of any amount so recovered from or repaid by the Administrative Agent, plus interest thereon from the date of such demand to the date such payment is made at a rate per annum equal to the Federal Funds Rate from time to time in effect.  The obligations of the Lenders and the LC Issuers under clause (b)  of the preceding sentence shall survive the payment in full of the Obligations and the termination of this Agreement.

 

10.06.  Successors and Assigns.

 

(a)                    Successors and Assigns Generally .  The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted

 

160



 

hereby, except that no Loan Party may assign or otherwise transfer any of its rights or obligations hereunder or under any other Loan Document without the prior written consent of the Administrative Agent and each Lender and no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an Eligible Assignee in accordance with the provisions of Section 10.06(b) , (ii) by way of participation in accordance with the provisions of Section 10.06(d) , or (iii) by way of pledge or assignment of a security interest subject to the restrictions of Section 10.06(f)  (and any other attempted assignment or transfer by any party hereto shall be null and void).  Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in Section 10.06(d)  and, to the extent expressly contemplated hereby, the Related Parties of each of the Credit Parties) any legal or equitable right, remedy or claim under or by reason of this Agreement.

 

(b)                    Assignments by Lenders .  Any Lender may at any time assign to one or more Eligible Assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment(s) and the Loans (including for purposes of this Section 10.06(b) , participations in LC Obligations and in Swing Line Loans) at the time owing to it); provided , that , any such assignment shall be subject to the following conditions:

 

(i)                        Minimum Amounts.

 

(A)        in the case of an assignment of the entire remaining amount of the assigning Lender’s Commitment and the Loans at the time owing to it or in the case of an assignment to a Lender or an Affiliate of a Lender or an Approved Fund with respect to a Lender, no minimum amount need be assigned; and

 

(B)        in any case not described in clause (b)(i)(A)  of this Section, the aggregate amount of the Commitment (which for this purpose includes Loans outstanding thereunder) or, if the Commitment is not then in effect, the principal outstanding balance of the Loans of the assigning Lender subject to each such assignment, determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent or, if a “Trade Date” is specified in the Assignment and Assumption, as of the Trade Date, shall be not less than $10,000,000 (or not less than $5,000,000 in the case of an assignment to another Lender, an Affiliate of a Lender or an Approved Fund), unless each of the Administrative Agent and, so long as no Default has occurred and is continuing, except as otherwise agreed, the Lead Borrower consents (each such consent not to be unreasonably withheld or delayed) to an assignment of a lesser amount; provided , that , concurrent assignments to members of an Assignee Group and concurrent assignments from members of an Assignee Group to a single Eligible Assignee (or to an Eligible Assignee and members of its Assignee Group) will be treated as a single assignment for purposes of determining whether such minimum amount has been met;

 

(ii)                     Proportionate Amounts .  Each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement with respect to the Loans or the Commitment assigned, except that this clause (ii)  shall not apply to the Swing Line Lender’s rights and obligations in respect of Swing Line Loans;

 

(iii)                  Required Consents .  No consent shall be required for any assignment except to the extent required by clause (b)(i)(B)  of this Section and, in addition:

 

(A)        the consent of the Lead Borrower (such consent not to be unreasonably withheld or delayed) shall be required unless (1) an Event of Default has occurred and is continuing at the time of such assignment, (2) such assignment is to a Lender, an Affiliate of a Lender or an Approved Fund, or (3) otherwise agreed by Lead Borrower, provided , that , the Lead Borrower shall be deemed to have

 

161



 

consented to any such assignment unless it shall object thereto by written notice to the Administrative Agent within ten (10) Business Days after having received notice thereof;

 

(B)        the consent of the Administrative Agent (such consent not to be unreasonably withheld or delayed) shall be required for assignments in respect of any Commitment if such assignment is to a Person that is not a Lender, an Affiliate of such Lender or an Approved Fund with respect to such Lender; and

 

(C)        the consent of each LC Issuer (such consent not to be unreasonably withheld or delayed) shall be required for any assignment in respect of any Commitment if such assignment is to a Person that is not a Lender, an Affiliate of such Lender or an Approved Fund with respect to such Lender that increases the obligation of the assignee to participate in exposure under one or more Letters of Credit (whether or not then outstanding); and

 

(D)        the consent of the Swing Line Lender (such consent not to be unreasonably withheld or delayed) shall be required for any assignment in respect of any Commitment if such assignment is to a Person that is not a Lender, an Affiliate of such Lender or an Approved Fund with respect to such Lender.

 

(iv)                 Assignment and Assumption .  The parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee of $3,500; provided , that , the Administrative Agent may, in its sole discretion, elect to waive such processing and recordation fee in the case of any assignment. The assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire.

 

Subject to acceptance and recording thereof by the Administrative Agent pursuant to clause (c)  of this Section, from and after the effective date specified in each Assignment and Assumption, the Eligible Assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto) but shall continue to be entitled to the benefits of Sections 3.01 , 3.04 , 3.05 , and 10.04 with respect to facts and circumstances occurring prior to the effective date of such assignment.  Upon request, the Borrowers (at their expense) shall execute and deliver a Note to the assignee Lender.  Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this clause (b)  shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with Section 10.06(d) .

 

(c)                     Register .  The Administrative Agent, acting solely for this purpose as an agent of the Borrowers, shall maintain at the Administrative Agent’s Office a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amounts of the Loans and LC Obligations owing to, each Lender pursuant to the terms hereof from time to time (the “ Register ”).  The entries in the Register shall be conclusive, absent manifest error, and the Loan Parties, the Administrative Agent and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary.  The Register shall be available for inspection by the Lead Borrower and any Lender at any reasonable time and from time to time upon reasonable prior notice.

 

162



 

(d)                    Participations .  Any Lender may at any time, without the consent of, or notice to, the Loan Parties or the Administrative Agent, sell participations to any Person (other than a natural person, the Investors or any of the Investors’ Affiliates or Subsidiaries, or the Loan Parties or any of the Loan Parties’ Affiliates or Subsidiaries) (each, a “ Participant ”) in all or a portion of such Lender’s rights and/or obligations under this Agreement (including all or a portion of its Commitment and/or the Loans (including such Lender’s participations in LC Obligations and/or Swing Line Loans) owing to it); provided , that , (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, (iii) the Loan Parties, the Administrative Agent, the Lenders and the LC Issuers shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement and (iv) so long as no Specified Event of Default shall exist or have occurred and be continuing, such Lender shall not sell participations to any Person that is a Competitor of the Loan Parties.  Any Participant shall agree in writing to comply with all confidentiality obligations set forth in Section 10.07 as if such Participant was a Lender hereunder.

 

Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided , that , such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, waiver or other modification that would reduce the principal of or the interest rate on the Loans, extend the term or increase the amount of the Commitment, as it relates to such Participant, or reduce the amount of any unused line fee payable pursuant to Section 2.09(a)  to which such Participant is entitled.  Subject to clause (e)  of this Section, the Loan Parties agree that each Participant shall be entitled to the benefits of Sections 3.01 , 3.04 and 3.05 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to Section 10.06(b) .  To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 10.08 as though it were a Lender, provided such Participant agrees to be subject to Section 2.13 as though it were a Lender.  Each Lender that sells a participation, acting solely for this purpose as a non-fiduciary agent of the Borrowers, shall maintain a register on which it records the name and address of each participant and the principal amounts of each participant’s interest (and stated interest with respect thereto) in the Loans and Commitments (each a “Participant Register”).  A Lender shall not be obligated to disclose the Participant Register to any Person except to the extent such disclosure is necessary to establish that any Loan or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury regulations.  The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary.

 

(e)                     Limitations upon Participant Rights .  A Participant shall not be entitled to receive any greater payment under Section 3.01 or 3.04 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Lead Borrower’s prior written consent.  A Participant that would be a Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 3.01 unless the Lead Borrower is notified of the participation sold to such Participant and such Participant agrees, for the benefit of the Loan Parties, to comply with Section 3.01(e)  as though it were a Lender.

 

(f)                      Certain Pledges .  Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement (including under its Note, if any) to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank; provided , that , no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

 

163



 

(g)                     Electronic Execution of Assignments .  The words “execution,” “signed,” “signature,” and words of like import in any Assignment and Assumption shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.

 

(h)                    Resignation as LC Issuer or Swing Line Lender after Assignment .  Notwithstanding anything to the contrary contained herein, if at any time Wells Fargo assigns all of its Commitment and Loans pursuant to clause (b)  above, Wells Fargo may, (i) upon thirty (30) days’ notice to the Lead Borrower and the Lenders, resign as an LC Issuer and/or (ii) upon thirty (30) days’ notice to the Lead Borrower, Wells Fargo may resign as Swing Line Lender.  In the event of any such resignation as an LC Issuer or Swing Line Lender, the Lead Borrower shall be entitled to appoint from among the Lenders a successor LC Issuer or Swing Line Lender hereunder; provided , that , no failure by the Lead Borrower to appoint any such successor shall affect the resignation of Wells Fargo as an LC Issuer or Swing Line Lender, as the case may be.  If Wells Fargo resigns as an LC Issuer, it shall retain all the rights, powers, privileges and duties of an LC Issuer hereunder with respect to all Letters of Credit outstanding and issued by it as of the effective date of its resignation as LC Issuer and all LC Obligations with respect thereto (including the right to require the Lenders to make Base Rate Loans pursuant to Section 2.03(c) ).  If Wells Fargo resigns as Swing Line Lender, it shall retain all the rights of the Swing Line Lender provided for hereunder with respect to Swing Line Loans made by it and outstanding as of the effective date of such resignation, including the right to require the Lenders to make Base Rate Loans or fund risk participations in outstanding Swing Line Loans pursuant to Section 2.04(c) .  Upon the appointment of a successor LC Issuer and/or Swing Line Lender, (a) such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring LC Issuer or Swing Line Lender, as the case may be, and (b) the successor LC Issuer shall issue letters of credit in substitution for the Letters of Credit, if any, outstanding at the time of such succession or make other arrangements satisfactory to Wells Fargo to effectively assume the obligations of Wells Fargo with respect to such Letters of Credit.

 

10.07.  Treatment of Certain Information; Confidentiality.   Each of the Credit Parties agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its Affiliates and to its and its Affiliates’ respective partners, directors, officers, employees, agents, funding sources, attorneys, advisors and representatives (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any regulatory authority purporting to have jurisdiction over it (including any self-regulatory authority, such as the National Association of Insurance Commissioners), (c) to the extent required by applicable Laws or regulations or by any subpoena or similar legal process, (d) to any other party hereto, (e) in connection with the exercise of any remedies hereunder or under any other Loan Document or any action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement or (ii) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to any Loan Party and its obligations, (g) with the consent of the Lead Borrower or (h) to the extent such Information (i) becomes publicly available other than as a result of a breach of this Section or (ii) becomes available to any Credit Party or any of their respective Affiliates on a non-confidential basis from a source other than the Loan Parties.

 

For purposes of this Section, “ Information ” means all information received from the Loan Parties or any Subsidiary thereof relating to the Loan Parties or any Subsidiary thereof or their respective

 

164



 

businesses, other than any such information that is available to any Credit Party on a non-confidential basis prior to disclosure by the Loan Parties or any Subsidiary thereof, provided , that , in the case of information received from any Loan Party or any Subsidiary after the date hereof, such information is clearly identified at the time of delivery as confidential.  Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.

 

Each of the Credit Parties acknowledges that (a) the Information may include material non-public information concerning the Loan Parties or a Subsidiary, as the case may be, (b) it has developed compliance procedures regarding the use of material non-public information and (c) it will handle such material non-public information in accordance with applicable Law, including Federal and state securities Laws.

 

10.08.  Right of Setoff.   If an Event of Default shall have occurred and be continuing, or if any Lender shall have been served with an attachment or similar process relating to property of a Loan Party, each Lender, each LC Issuer and each of their respective Affiliates is hereby authorized at any time and from time to time, after obtaining the prior written consent of the Administrative Agent or the Required Lenders, to the fullest extent permitted by applicable law, to set off and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held and other obligations (in whatever currency) at any time owing by such Lender, such LC Issuer or any such Affiliate to or for the credit or the account of the Borrowers or any other Loan Party against any and all of the Obligations now or hereafter existing under this Agreement or any other Loan Document to such Lender or LC Issuer, regardless of the adequacy of the Collateral, and irrespective of whether or not such Lender or LC Issuer shall have made any demand under this Agreement or any other Loan Document and although such obligations of the Borrowers or such Loan Party may be contingent or unmatured or are owed to a branch or office of such Lender or LC Issuer different from the branch or office holding such deposit or obligated on such indebtedness.  The rights of each Lender, LC Issuer and their respective Affiliates under this Section are in addition to other rights and remedies (including other rights of setoff) that such Lender, LC Issuer or their respective Affiliates may have.  Each Lender and the LC Issuer agrees to notify the Lead Borrower and the Administrative Agent promptly after any such setoff and application, provided , that , the failure to give such notice shall not affect the validity of such setoff and application.

 

10.09.  Interest Rate Limitation.   Notwithstanding anything to the contrary contained in any Loan Document, the interest paid or agreed to be paid under the Loan Documents shall not exceed the maximum rate of non-usurious interest permitted by applicable Law (the “ Maximum Rate ”).  If the Administrative Agent or any Lender shall receive interest in an amount that exceeds the Maximum Rate, the excess interest shall be applied to the principal of the Loans or, if it exceeds such unpaid principal, refunded to the Borrowers.  In determining whether the interest contracted for, charged, or received by the Administrative Agent or a Lender exceeds the Maximum Rate, such Person may, to the extent permitted by applicable Law, (a) characterize any payment that is not principal as an expense, fee, or premium rather than interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the Obligations hereunder.

 

10.10.  Counterparts; Integration; Effectiveness.   This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract.  This Agreement and the other Loan Documents constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the

 

165



 

subject matter hereof.  Except as provided in Section 4.01 , this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto.  Delivery of an executed counterpart of a signature page of this Agreement by telecopy or other electronic method shall be as effective as delivery of a manually executed counterpart of this Agreement.

 

10.11.  Survival.   All representations and warranties made hereunder and in any other Loan Document or other document delivered pursuant hereto or thereto or in connection herewith or therewith shall survive the execution and delivery hereof and thereof.  Such representations and warranties have been or will be relied upon by the Credit Parties, regardless of any investigation made by any Credit Party or on their behalf and notwithstanding that any Credit Party may have had notice or knowledge of any Default at the time of any Credit Extension, and shall continue in full force and effect so long as any Loan or any other Obligation hereunder shall remain unpaid or unsatisfied or any Letter of Credit shall remain outstanding that is not Cash Collateralized.  Further, the provisions of Sections 3.01 , 3.04 , 3.05 and 10.04 and Article IX shall survive and remain in full force and effect regardless of the repayment of the Obligations, the expiration or termination of the Letters of Credit and the Commitments or the termination of this Agreement or any provision hereof.  In connection with the termination of this Agreement and the release and termination of the security interests in the Collateral, the Administrative Agent may require such indemnities and collateral security as it shall reasonably deem necessary or appropriate to protect the Credit Parties against (a) loss on account of credits previously applied to the Obligations that may subsequently be reversed or revoked, (b) any obligations that may thereafter arise with respect to the Bank Product Obligations and (c) any Obligations (other than contingent indemnification obligations for which no claim has been asserted) that may thereafter arise under Section 10.04 .

 

10.12.  Severability.   If any provision of this Agreement or the other Loan Documents is held to be illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the remaining provisions of this Agreement and the other Loan Documents shall not be affected or impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions.  The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

 

10.13.  Replacement of Lenders.   If any Lender requests compensation under Section 3.04 , or if the Borrowers are required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 3.01 , or if any Lender is a Defaulting Lender or a Non-Consenting Lender, then the Borrowers may, at their sole expense and effort, or the Administrative Agent may, at its option, in either case upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in, and consents required by, Section 10.06 ), all of its interests, rights and obligations under this Agreement and the related Loan Documents to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment), provided , that ,:

 

(a)                    the Borrowers shall have paid to the Administrative Agent the assignment fee specified in Section 10.06(b) ;

 

(b)                    such Lender shall have received payment of an amount equal to the outstanding principal of its Loans, together with accrued interest thereon, accrued fees and all other amounts payable to it hereunder and under the other Loan Documents (including any amounts under Section 3.05 ) from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrowers (in the case of all other amounts);

 

166



 

(c)                     in the case of any such assignment resulting from a claim for compensation under Section 3.04 or payments required to be made pursuant to Section 3.01 , such assignment will result in a reduction in such compensation or payments thereafter; and

 

(d)                    such assignment does not conflict with applicable Laws.

 

A Lender shall not be required to make any such assignment or delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrowers to require such assignment and delegation cease to apply.  If the Defaulting Lender, Non-Consenting Lender or Lender seeking additional compensation or amounts, as applicable, fails for any reason to promptly execute and deliver any Assignment and Acceptance or other agreement in connection with the purchase or termination of its interests, Administrative Agent is irrevocably authorized, at its option, but shall not be required to, execute and deliver such Assignment and Acceptance or other agreement in the name or and on behalf of the Defaulting Lender, Non-Consenting Lender or other Lender, as applicable, and regardless of whether Administrative Agent executes and delivers such Assignment and Acceptance or other agreement, the Defaulting Lender, Non-Consenting Lender or other Lender, as applicable, shall be deemed to have executed and delivered such Assignment and Acceptance or other agreement.

 

10.14.  Governing Law; Jurisdiction; Etc.

 

(a)                    GOVERNING LAW .  THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT EXCLUDING ANY PRINCIPLES OF CONFLICTS OF LAW OR OTHER RULE OF LAW THAT WOULD CAUSE THE APPLICATION OF THE LAW OF ANY JURISDICTION OTHER THAN THE LAWS OF THE STATE OF NEW YORK.

 

(b)                    SUBMISSION TO JURISDICTION .  EACH LOAN PARTY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE LOAN PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT.  EACH OF THE LOAN PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.  NOTHING IN THIS AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT ANY CREDIT PARTY MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST ANY LOAN PARTY OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION IF REQUIRED TO REALIZE UPON COLLATERAL OR ENFORCE ANY JUDGMENT.

 

(c)                     WAIVER OF VENUE .  EACH LOAN PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS

 

167



 

AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN PARAGRAPH (B) OF THIS SECTION.  EACH OF THE LOAN PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

 

(d)                    SERVICE OF PROCESS .  EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 10.02 EXCLUDING SERVICE OF PROCESS BY EMAIL.  NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW BUT IN NO EVENT SHALL SERVICE OF PROCESS BY EMAIL BE EFFECTIVE.

 

(e)                     ACTIONS .  EACH LOAN PARTY AND, EXCEPT AS PROVIDED IN THE LAST SENTENCE OF SECTION 10.14(b), EACH CREDIT PARTY AGREES THAT ANY ACTION COMMENCED BY ANY PARTY ASSERTING ANY CLAIM OR COUNTERCLAIM ARISING UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT SHALL BE BROUGHT SOLELY IN A COURT OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY OR THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, AS THE ADMINISTRATIVE AGENT MAY ELECT IN ITS SOLE DISCRETION AND CONSENTS TO THE EXCLUSIVE JURISDICTION OF SUCH COURTS WITH RESPECT TO ANY SUCH ACTION.

 

10.15.  Waiver of Jury Trial.   EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).  EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

10.16.  No Advisory or Fiduciary Responsibility.   In connection with all aspects of each transaction contemplated hereby, the Loan Parties each acknowledge and agree that: (a) the credit facility provided for hereunder and any related arranging or other services in connection therewith (including in connection with any amendment, waiver or other modification hereof or of any other Loan Document) are an arm’s-length commercial transaction between the Loan Parties, on the one hand, and the Credit Parties, on the other hand, and each of the Loan Parties is capable of evaluating and understanding and understands and accepts the terms, risks and conditions of the transactions contemplated hereby and by the other Loan Documents (including any amendment, waiver or other modification hereof or thereof); (b) in connection with the process leading to such transaction, each Credit Party is and has been acting solely as a principal and is not the financial advisor, agent or fiduciary, for the Loan Parties or any of their respective Affiliates, stockholders, creditors or employees or any other Person; (c) none of the Credit Parties has assumed or will assume an advisory, agency or fiduciary responsibility in favor of the Loan Parties with respect to any of the transactions contemplated hereby or the process leading thereto, including with respect to any amendment, waiver or other modification hereof or of any other Loan Document (irrespective of whether any of the Credit Parties has advised or is currently advising any Loan

 

168



 

Party or any of its Affiliates on other matters) and none of the Credit Parties has any obligation to any Loan Party or any of its Affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in the other Loan Documents; (d) the Credit Parties and their respective Affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Loan Parties and their respective Affiliates, and none of the Credit Parties has any obligation to disclose any of such interests by virtue of any advisory, agency or fiduciary relationship; and (e) the Credit Parties have not provided and will not provide any legal, accounting, regulatory or tax advice with respect to any of the transactions contemplated hereby (including any amendment, waiver or other modification hereof or of any other Loan Document) and each of the Loan Parties has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate.  Each of the Loan Parties hereby waives and releases, to the fullest extent permitted by law, any claims that it may have against each of the Credit Parties with respect to any breach or alleged breach of agency or fiduciary duty.

 

10.17.  USA PATRIOT Act Notice.   Each Lender that is subject to the Patriot Act and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies the Loan Parties that pursuant to the requirements of the Patriot Act, it is required to obtain, verify and record information that identifies each Loan Party, which information includes the name and address of each Loan Party and other information that will allow such Lender or the Administrative Agent, as applicable, to identify each Loan Party in accordance with the Patriot Act.

 

10.18.  Foreign Asset Control Regulations.   Neither of the advance of the Loans nor the use of the proceeds of any thereof will violate the Trading With the Enemy Act (50 U.S.C. § 1 et seq., as amended) (the “ Trading With the Enemy Act ”) or any of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) (the “ Foreign Assets Control Regulations ”) or any enabling legislation or executive order relating thereto (which for the avoidance of doubt shall include, but shall not be limited to (a) Executive Order 13224 of September 21, 2001 Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)) (the “ Executive Order ”) and (b) the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Public Law 107-56)).  Furthermore, none of the Borrowers or their Affiliates (a) is or will become a “blocked person” as described in the Executive Order, the Trading With the Enemy Act or the Foreign Assets Control Regulations or (b) engages or will engage in any dealings or transactions, or be otherwise associated, with any such “blocked person” or in any manner violative of any such order.

 

10.19.  Time of the Essence.   Time is of the essence of the Loan Documents.

 

10.20.  Press Releases.

 

(a)                    Each Credit Party executing this Agreement agrees that neither it nor its Affiliates will in the future issue any press releases or other public disclosure using the name of Administrative Agent or its Affiliates without at least two (2) Business Days’ prior notice to Administrative Agent and without the prior written consent of Administrative Agent unless (and only to the extent that) such Credit Party or Affiliate is required to do so under applicable Law and then, in any event, such Credit Party or Affiliate will consult with Administrative Agent before issuing such press release or other public disclosure.

 

(b)                    Each Loan Party consents to the publication by Administrative Agent or any Lender of advertising material relating to the financing transactions contemplated by this Agreement using any Loan Party’s name, logo or trademark.  Administrative Agent or such Lender shall provide a draft reasonably in advance of any advertising material to the Lead Borrower for review and comment prior to the

 

169



 

publication thereof.  Administrative Agent and Lead Arrangers reserve the right to provide to industry trade organizations information necessary and customary for inclusion in league table measurements.

 

10.21.  Additional Waivers.

 

(a)                    The Obligations are the joint and several obligation of each Loan Party. To the fullest extent permitted by Applicable Law, the obligations of each Loan Party shall not be affected by (i) the failure of any Credit Party to assert any claim or demand or to enforce or exercise any right or remedy against any other Loan Party under the provisions of this Agreement, any other Loan Document or otherwise, (ii) any rescission, waiver, amendment or modification of, or any release from any of the terms or provisions of, this Agreement or any other Loan Document, or (iii) the failure to perfect any security interest in, or the release of, any of the Collateral or other security held by or on behalf of the Administrative Agent or any other Credit Party.

 

(b)                    The obligations of each Loan Party shall not be subject to any reduction, limitation, impairment or termination for any reason (other than the indefeasible payment in full in cash of the Obligations after the termination of the Commitments), including any claim of waiver, release, surrender, alteration or compromise of any of the Obligations, and shall not be subject to any defense or setoff, counterclaim, recoupment or termination whatsoever by reason of the invalidity, illegality or unenforceability of any of the Obligations or otherwise. Without limiting the generality of the foregoing, the obligations of each Loan Party hereunder shall not be discharged or impaired or otherwise affected by the failure of the Administrative Agent or any other Credit Party to assert any claim or demand or to enforce any remedy under this Agreement, any other Loan Document or any other agreement, by any waiver or modification of any provision of any thereof, any default, failure or delay, willful or otherwise, in the performance of any of the Obligations, or by any other act or omission that may or might in any manner or to any extent vary the risk of any Loan Party or that would otherwise operate as a discharge of any Loan Party as a matter of law or equity (other than the indefeasible payment in full of all the Obligations after the termination of the Commitments).

 

(c)                     To the fullest extent permitted by applicable Law, each Loan Party waives any defense based on or arising out of any defense of any other Loan Party or the unenforceability of the Obligations or any part thereof from any cause, or the cessation from any cause of the liability of any other Loan Party, other than the indefeasible payment in full of all the Obligations and the termination of the Commitments. The Administrative Agent and the other Credit Parties may, at their election, foreclose on any security held by one or more of them by one or more judicial or non-judicial sales, accept an assignment of any such security in lieu of foreclosure, compromise or adjust any part of the Obligations, make any other accommodation with any other Loan Party, or exercise any other right or remedy available to them against any other Loan Party, without affecting or impairing in any way the liability of any Loan Party hereunder except to the extent that all the Obligations have been indefeasibly paid in full in cash and the Commitments have been terminated.  Each Loan Party waives any defense arising out of any such election even though such election operates, pursuant to applicable Law, to impair or to extinguish any right of reimbursement or subrogation or other right or remedy of such Loan Party against any other Loan Party, as the case may be, or any security.

 

(d)                    Each Borrower is obligated to repay the Obligations as joint and several obligors under this Agreement.  Upon payment by any Loan Party of any Obligations, all rights of such Loan Party against any other Loan Party arising as a result thereof by way of right of subrogation, contribution, reimbursement, indemnity or otherwise shall in all respects be subordinate and junior in right of payment to the prior indefeasible payment in full in cash of all the Obligations and the termination of the Commitments. In addition, any indebtedness of any Loan Party now or hereafter held by any other Loan Party is hereby subordinated in right of payment to the prior indefeasible payment in full of the

 

170



 

Obligations and no Loan Party will demand, sue for or otherwise attempt to collect any such indebtedness.  If any amount shall erroneously be paid to any Loan Party on account of (i) such subrogation, contribution, reimbursement, indemnity or similar right or (ii) any such indebtedness of any Loan Party, such amount shall be held in trust for the benefit of the Credit Parties and shall forthwith be paid to the Administrative Agent to be credited against the payment of the Obligations, whether matured or unmatured, in accordance with the terms of this Agreement and the other Loan Documents.  Subject to the foregoing, to the extent that any Borrower shall, under this Agreement as a joint and several obligor, repay any of the Obligations constituting Revolving Loans made to another Borrower hereunder or other Obligations incurred directly and primarily by any other Borrower (an “ Accommodation Payment ”), then the Borrower making such Accommodation Payment shall be entitled to contribution and indemnification from, and be reimbursed by, each of the other Borrowers in an amount, for each of such other Borrowers, equal to a fraction of such Accommodation Payment, the numerator of which fraction is such other Borrower’s Allocable Amount and the denominator of which is the sum of the Allocable Amounts of all of the Borrowers.  As of any date of determination, the “ Allocable Amount ” of each Borrower shall be equal to the maximum amount of liability for Accommodation Payments which could be asserted against such Borrower hereunder without (a) rendering such Borrower “insolvent” within the meaning of Section 101(31) of the Bankruptcy Code, Section 2 of the Uniform Fraudulent Transfer Act (“ UFTA ”) or Section 2 of the Uniform Fraudulent Conveyance Act (“ UFCA ”), (b) leaving such Borrower with unreasonably small capital or assets, within the meaning of Section 548 of the Bankruptcy Code, Section 4 of the UFTA, or Section 5 of the UFCA, or (c) leaving such Borrower unable to pay its debts as they become due within the meaning of Section 548 of the Bankruptcy Code or Section 4 of the UFTA, or Section 5 of the UFCA.

 

(e)                     Without limiting the generality of the foregoing, or of any other waiver or other provision set forth in this Agreement, each Loan Party hereby absolutely, knowingly, unconditionally, and expressly waives any and all claim, defense or benefit arising directly or indirectly under any one or more of Sections 2787 to 2855 inclusive of the California Civil Code or any similar law of California.

 

10.22.  No Strict Construction.   The parties hereto have participated jointly in the negotiation and drafting of this Agreement.  In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions of this Agreement.

 

10.23.  Attachments.   The exhibits, schedules and annexes attached to this Agreement are incorporated herein and shall be considered a part of this Agreement for the purposes stated herein, except that in the event of any conflict between any of the provisions of such exhibits and the provisions of this Agreement, the provisions of this Agreement shall prevail.

 

ARTICLE XI

ACKNOWLEDGMENT AND RESTATEMENT

 

11.01.  Existing Obligations The Loan Parties hereby acknowledge, confirm and agree that, as of the close of business on March 20, 2013, Borrowers are indebted to Administrative Agent and Lenders in respect of Loans under the Existing Credit Agreement in the aggregate principal amount of $210,000,000.00, and with respect to the Existing Letters of Credit, in each case together with all interest accrued and accruing thereon (to the extent applicable), and all fees, costs, expenses and other charges relating thereto, all of which are unconditionally owing by Borrowers to Administrative Agent and Lenders, without offset, defense or counterclaim of any kind, nature or description whatsoever.

 

171



 

11.02.  Acknowledgment of Security Interests . The Loan Parties hereby acknowledge, confirm and agree that Administrative Agent on behalf of Credit Parties shall continue to have a security interest in and lien upon the assets of the Loan Parties constituting Collateral heretofore granted to Administrative Agent pursuant to the Existing Loan Documents to secure the Obligations, as well as any Collateral granted under this Agreement or under any of the other Loan Documents or otherwise granted to or held by Administrative Agent or any Lender.  The Liens of Administrative Agent in the Collateral shall be deemed to be continuously granted and perfected from the earliest date of the granting and perfection of such Liens interests to Administrative Agent and Lenders, whether under the Existing Loan Documents, this Agreement or any of the other Loan Documents.

 

11.03.  Existing Financing Agreements . The Loan Parties hereby acknowledge, confirm and agree that: (a) the Existing Loan Documents have been duly executed and delivered by the Loan Parties and are in full force and effect as of the date hereof and (b) the agreements and obligations of the Loan Parties contained in the Existing Loan Documents constitute the legal, valid and binding obligations of the Loan Parties enforceable against the Loan Parties in accordance with their respective terms, and the Loan Parties have no valid defense to the enforcement of such obligations and (c) Administrative Agent on behalf of the Credit Parties is entitled to all of the rights and remedies provided for in favor of Administrative Agent and the other Credit Parties in the Existing Loan Documents, as amended and restated by this Agreement.

 

11.04.  Restatement . Except as otherwise stated in Section 11.02 and this Section 11.04 , as of the date hereof, the terms, conditions, agreements, covenants, representations and warranties set forth in the Existing Loan Documents are hereby amended and restated in their entirety, and as so amended and restated, replaced and superseded, by the terms, conditions, agreements, covenants, representations and warranties set forth in this Agreement and the other Loan Documents.  Except as provided below, the amendment and restatement contained herein shall not, in any manner, be construed to constitute payment of, or impair, limit, cancel or extinguish, or constitute a novation in respect of, the Indebtedness and other obligations and liabilities of any Loan Party evidenced by or arising under the Existing Loan Documents, and the Liens in the Collateral (as such term is defined herein) of Administrative Agent securing such Indebtedness and other obligations and liabilities, which shall not in any manner be impaired, limited, terminated, waived or released, but shall continue in full force and effect in favor of Administrative Agent for the benefit of the Credit Parties.  The principal amount of the Loans and the amount of the Letters of Credit outstanding as of the date hereof under the Existing Loan Documents shall be allocated to the Loans and Letters of Credit hereunder in accordance with the Applicable Percentages hereunder pursuant to the Commitment allocations made in such manner and in such amounts as Administrative Agent shall determine.

 

[Remainder of this page intentionally left blank]

 

172



 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the date first above written.

 

 

BORROWERS

 

 

 

SUPERVALU INC.

 

 

 

 

By:

/s/ Sherry Smith

 

Name:

Sherry M. Smith

 

Title:

Executive Vice President and Chief Financial Officer

 

 

 

 

ADVANTAGE LOGISTICS - SOUTHEAST, INC.

 

EASTERN REGION MANAGEMENT CORPORATION

 

FF ACQUISITION, L.L.C.

 

FOODARAMA LLC

 

RICHFOOD, INC.

 

RICHFOOD HOLDINGS, INC.

 

SHOP ‘N SAVE ST. LOUIS, INC.

 

SHOP ‘N SAVE WAREHOUSE FOODS, INC.

 

SHOPPERS FOOD WAREHOUSE CORP.

 

SUPER RITE FOODS, INC.

 

SUPERVALU HOLDINGS, INC.

 

SUPERVALU HOLDINGS - PA LLC

 

 

By: SUPERVALU Holdings, Inc., its sole member

 

SUPERVALU PHARMACIES, INC.

 

SUPERVALU TRANSPORTATION, INC.

 

SUPERVALU TTSJ, INC.

 

W. NEWELL & CO., LLC

 

 

 

 

By:

/s/ Sherry Smith

 

Name:

Sherry M. Smith

 

Title:

Vice President

 

 

 

CHAMPLIN 2005 L.L.C.

 

 

By: SUPERVALU INC., its sole member

 

 

 

 

By:

/s/ Sherry Smith

 

Name:

Sherry M. Smith

 

Title:

Executive Vice President and Chief Financial Officer

 

 

 

MORAN FOODS, LLC

 

 

 

 

By:

/s/ Santiago Roces

 

Name:

Santiago Roces

 

Title:

Chief Executive Officer

 



 

 

SAVE-A-LOT TYLER GROUP, LLC

 

 

 

 

By:

/s/ Sherry Smith

 

Name: 

Sherry M. Smith

 

Title: 

Senior Vice President, Finance, Treasurer

 

 

 

GUARANTORS

 

 

 

BUTSON’S ENTERPRISES, INC.

 

RICHFOOD PROCUREMENT, L.L.C.

 

SCOTT’S FOOD STORES, INC.

 

SFW HOLDING CORP.

 

SFW LICENSING CORP.

 

SUPERMARKET OPERATORS OF AMERICA INC.

 

SVH REALTY, INC.

 

 

 

 

By: 

/s/ Sherry Smith

 

Name: 

Sherry M. Smith

 

Title:

Vice President

 



 

 

WELLS FARGO BANK, NATIONAL ASSOCIATION, as Administrative Agent, as Collateral Agent, as LC Issuer, and as a Lender

 

 

 

 

By:

/s/ Joseph Burt

 

Name:

Joseph Burt

 

Title:

Director

 



 

 

GENERAL ELECTRIC CAPITAL CORPORATION, as a Lender

 

 

 

 

By:

/s/ Kristina M. Miller

 

Name:

Kristina M. Miller

 

Title:

Duly Authorized Signatory

 

A&R Credit Agreement - Supervalu

 



 

 

U.S. BANK NATIONAL ASSOCIATION, as LC Issuer and as a Lender

 

 

 

 

By:

/s/ Lisa Freeman

 

Name:

Lisa Freeman

 

Title:

Senior Vice President

 

A&R Credit Agreement - Supervalu

 



 

 

COÖPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A., “RABOBANK NEDERLAND”, NEW YORK BRANCH, as LC Issuer and as a Lender

 

 

 

 

By:

/s/ William Binder

 

Name:

William Binder

 

Title:

Executive Director

 

 

 

 

 

 

By:

/s/ James Purky

 

Name:

James Purky

 

Title:

Vice President

 

A&R Credit Agreement - Supervalu

 



 

 

BARCLAYS BANK PLC, as a Lender

 

 

 

 

By:

/s/ Noam Azachi

 

Name:

NOAM AZACHI

 

Title:

VICE PRESIDENT

 

A&R Credit Agreement - Supervalu

 



 

 

BMO HARRIS BANK N.A., as a Lender

 

 

 

 

By:

/s/ Michael W. Scolaro

 

Name:

Michael W. Scolaro

 

Title:

Managing Director

 

A&R Credit Agreement - Supervalu

 



 

 

RBS CITIZENS BUSINESS CAPITAL, A DIVISION OF RBS ASSET FINANCE, INC., as a Lender

 

 

 

 

By:

/s/ Francis Garvin

 

Name:

Francis Garvin

 

Title:

Senior Vice President

 

A&R Credit Agreement - Supervalu

 



 

 

CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH, as a Lender

 

 

 

 

By:

/s/ Bill O’Daly

 

Name:

Bill O’Daly

 

Title:

Director

 

 

 

 

 

 

 

By:

/s/ Sanja Gazahi

 

Name:

Sanja Gazahi

 

Title:

Associate

 

A&R Credit Agreement - Supervalu

 



 

 

REGIONS BANK, as a Lender

 

 

 

 

By:

/s/ Louis Alexander

 

Name:

Louis Alexander

 

Title:

Attorney in Fact

 

A&R Credit Agreement - Supervalu

 



 

 

GOLDMAN SACHS BANK USA, as a Lender

 

 

 

 

By:

/s/ Robert Ehudin

 

Name:

Robert Ehudin

 

Title:

Authorized Signatory

 

A&R Credit Agreement - Supervalu

 



 

 

UNION BANK, N.A., as a Lender

 

 

 

 

By:

/s/ Greg Stewart

 

Name:

Greg Stewart

 

Title:

Vice President

 

A&R Credit Agreement - Supervalu

 



 

 

PNC BANK, NATIONAL ASSOCIATION, as LC Issuer and as a Lender

 

 

 

 

By:

/s/ Adam Moss

 

Name:

Adam Moss

 

Title:

Vice President

 

A&R Credit Agreement - Supervalu

 



 

 

CAPITAL ONE LEVERAGE FINANCE CORP., as a Lender

 

 

 

 

By:

/s/ Julianne Low

 

Name:

Julianne Low

 

Title:

Vice President

 

A&R Credit Agreement - Supervalu

 



 

 

CITY NATIONAL BANK, A NATIONAL BANKING ASSOCIATION, as a Lender

 

 

 

 

By:

/s/ Brent Phillips

 

Name:

Brent Phillips

 

Title:

Vice President

 

A&R Credit Agreement - Supervalu

 



 

 

SIEMENS FINANCIAL SERVICES, INC., as a Lender

 

 

 

 

By:

/s/ Jeffrey B. Iervese

 

Name:

Jeffrey B. Iervese

 

Title:

Vice President

 

 

 

 

 

 

 

By:

/s/ Andrew Beneduce

 

Name:

Andrew Beneduce

 

Title:

 

 

A&R Credit Agreement - Supervalu

 



 

 

CIT FINANCE LLC, as a Lender

 

 

 

 

By:

/s/ Robert L. Klein

 

Name:

Robert L. Klein

 

Title:

Director

 

A&R Credit Agreement - Supervalu

 



 

 

BANK OF AMERICA, N.A., as a Lender

 

 

 

 

By:

/s/ Matthew Potter

 

Name:

Matthew Potter

 

Title:

Vice President

 

A&R Credit Agreement - Supervalu

 



 

 

MORGAN STANLEY BANK, N.A., as a Lender

 

 

 

 

By:

/s/ Lisa Hanson

 

Name:

Lisa Hanson

 

Title:

Authorized Signatory

 

A&R Credit Agreement - Supervalu

 



 

SCHEDULES TO CREDIT AGREEMENT

 

This document constitutes the Schedules referred to in the AMENDED AND RESTATED CREDIT AGREEMENT (“Agreement”) entered into as of March 21, 2013, among SUPERVALU INC., a Delaware corporation (the “Lead Borrower”), the subsidiaries of the Lead Borrower listed on Schedule 1.01(a) hereto (together with the Lead Borrower, each a “Borrower” and collectively, the “Borrowers”), the Guarantors (as defined therein), each lender from time to time party thereto (collectively, the “Lenders” and individually, a “Lender”), Wells Fargo Bank, National Association (“Wells Fargo”), as Administrative Agent, Swing Line Lender and LC Issuer, U.S. Bank, National Association and Rabobank Nederland, New York Branch, as Co-Syndication Agents, Goldman Sachs Bank USA, Credit Suisse AG, Morgan Stanley Senior Funding, Inc., Barclays Bank PLC and Bank of America, N.A., as Co-Documentation Agents, BMO Harris Bank N.A., RBS Citizens Business Capital, a division of RBS Asset Finance, Inc., Regions Bank and Union Bank, N.A., as Senior Managing Agents, and Wells Fargo, U.S. Bank, National Association, Goldman Sachs Bank USA, Credit Suisse Securities (USA) LLC, Morgan Stanley Senior Funding, Inc., Barclays Bank PLC, Rabobank Nederland, New York Branch, and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as Joint Lead Arrangers and Joint Bookrunners, and contains information referenced in the Agreement, including certain disclosures and exceptions to the representations and warranties of the Borrowers and Guarantors made in the Agreement.  Capitalized terms used in these Schedules but not otherwise defined herein shall have the same meanings ascribed to such terms in the Agreement.

 

The numbered sections and subsections referenced in these Schedules correspond to the numbered sections and subsections of the Agreement.  The headings in these Schedules are for reference purposes only.  Any matter disclosed in any section or subsection of these Schedules shall be deemed to respond to the related section or subsection of the Agreement and any other sections or subsections of the Agreement or these Schedules where the applicability of such disclosure is reasonably discernible, even if there is no cross-reference in such section or sub-section to such other sections or subsections.  To the extent a disclosure in these Schedules makes reference to or describes a provision of any agreement or other document, such reference or description is qualified in its entirety by the actual terms and provisions of such agreement or other document.  Agreements and documents referenced within an agreement or document disclosed herein shall not be deemed to be disclosed pursuant to these Schedules unless specifically referred to in these Schedules.

 

The fact that any item of information is disclosed in these Schedules shall not be construed as an admission of liability with respect to the matters covered by such information.  No implication should be drawn that any information provided in these Schedules is necessarily material or otherwise required to be disclosed, or that the inclusion of such information establishes or implies a standard of materiality, a standard for what is or is not a Material Adverse Effect or any other standard contrary to that set forth in the Agreement.  No disclosure in these Schedules relating to any possible breach, violation of, or noncompliance with, any Law or contract or other topic to which such disclosure is applicable shall be construed as an admission or indication that any such breach, violation or noncompliance exists or has actually occurred.  These Schedules are qualified in their entirety by reference to the specific provisions of the Agreement and the representations, warranties, covenants and agreements to which the disclosures herein pertain and to the extent these Schedules modify such representations, warranties, covenants or agreements of the Borrowers and the Guarantors, it shall become a part of and be read together with the representations, warranties, covenants or agreements of the Borrowers and the Guarantors contained in the Agreement.

 

The information contained herein is in all events subject to Section 10.07 of the Agreement.

 



 

Schedule 1.01(a)

 

Subsidiary Borrowers

 

1.               Advantage Logistics - Southeast, Inc.

2.               Champlin 2005 L.L.C.

3.               Eastern Region Management Corporation

4.               FF Acquisition, L.L.C.

5.               Foodarama LLC

6.               Moran Foods, LLC

7.               Richfood Holdings, Inc.

8.               Richfood, Inc.

9.               Save-A-Lot Tyler Group, LLC

10.        Shop ‘N Save St. Louis, Inc.

11.        Shop ‘N Save Warehouse Foods, Inc.

12.        Shoppers Food Warehouse Corp.

13.        Super Rite Foods, Inc.

14.        SUPERVALU Holdings, Inc.

15.        SUPERVALU Holdings - PA LLC

16.        SUPERVALU Pharmacies, Inc.

17.        SUPERVALU Transportation Inc.

18.        SUPERVALU TTSJ, Inc.

19.        W. Newell & Co., LLC

 

Sch. 1.01(a) - 2



 

Schedule 1.01(b)

 

Existing Letters of Credit

 

[**]

 


** Denotes confidential information that has been omitted from the exhibit and filed separately, accompanied by a confidential treatment request, with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934.

 

Sch. 1.01(b) - 1



 

Schedule 1.01(c)

 

Transition Agreement Parties

 

Amended and Restated Transition Services Agreement:

 

Albertson’s LLC

SUPERVALU INC.

 

Transition Services Agreement:

 

New Albertson’s, Inc.

SUPERVALU INC.

 

Cross-License Agreement:

 

New Albertson’s, Inc.

SUPERVALU INC.

 

Sch. 1.01(c) - 1



 

Schedule 1.01(d)

 

Unrestricted Subsidiaries

 

None.

 

Sch. 1.01(d) - 1



 

Schedule 2.01

 

Commitments and Applicable Percentages of Commitments

 

COMMITMENT SCHEDULE

 

Lender

 

Commitment

 

Applicable Percentage

 

Wells Fargo Bank, National Association

 

$

300,000,000

 

30.00

%

Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A., “Rabobank Nederland”, New York Branch

 

$

125,000,000

 

12.50

%

U.S. Bank National Association

 

$

100,000,000

 

10.00

%

BMO Harris Bank N.A.

 

$

68,000,000

 

6.80

%

RBS Citizens Business Capital, a division of RBS Asset Finance, Inc.

 

$

50,000,000

 

5.00

%

Regions Bank

 

$

50,000,000

 

5.00

%

Union Bank, N.A.

 

$

37,000,000

 

3.70

%

CIT Finance LLC

 

$

35,000,000

 

3.50

%

Goldman Sachs Bank USA

 

$

35,000,000

 

3.50

%

PNC Bank, National Association

 

$

30,000,000

 

3.00

%

Bank of America, N.A.

 

$

25,000,000

 

2.50

%

Barclays Bank PLC

 

$

25,000,000

 

2.50

%

Credit Suisse AG, Cayman Islands Branch

 

$

25,000,000

 

2.50

%

Morgan Stanley Bank

 

$

25,000,000

 

2.50

%

Capital One Leverage Finance Corp.

 

$

20,000,000

 

2.00

%

City National Bank, a National Banking Association

 

$

20,000,000

 

2.00

%

Siemens Financial Services, Inc.

 

$

20,000,000

 

2.00

%

General Electric Capital Corporation

 

$

10,000,000

 

1.00

%

Total

 

$

1,000,000,000

 

100

%

 

Sch. 2.01 -1



 

Schedule 5.01

 

Loan Parties Organizational Information

 

Name

 

Borrower/
Guarantor

 

Type

 

State

 

Org #

 

FEIN

 

1.               Advantage Logistics - Southeast, Inc.

 

Borrower

 

Corporation

 

Alabama

 

168-431

 

[**]

 

 

 

 

 

 

 

 

 

 

 

 

 

2.               Butson’s Enterprises, Inc.

 

Guarantor

 

Corporation

 

New Hampshire

 

005800

 

[**]

 

 

 

 

 

 

 

 

 

 

 

 

 

3.               Champlin 2005 L.L.C.

 

Borrower

 

LLC

 

Delaware

 

3928464

 

[**]

 

 

 

 

 

 

 

 

 

 

 

 

 

4.               Eastern Region Management Corporation

 

Borrower

 

Corporation

 

Virginia

 

0392564-1

 

[**]

 

 

 

 

 

 

 

 

 

 

 

 

 

5.               FF Acquisition, L.L.C.

 

Borrower

 

LLC

 

Virginia

 

S023920-4

 

[**]

 

 

 

 

 

 

 

 

 

 

 

 

 

6.               Foodarama LLC

 

Borrower

 

LLC

 

Delaware

 

2053114

 

[**]

 

 

 

 

 

 

 

 

 

 

 

 

 

7.               Moran Foods, LLC

 

Borrower

 

LLC

 

Missouri

 

LC1235424

 

[**]

 

 

 

 

 

 

 

 

 

 

 

 

 

8.               Richfood Holdings, Inc.

 

Borrower

 

Corporation

 

Delaware

 

3051876

 

[**]

 

 

 

 

 

 

 

 

 

 

 

 

 

9.               Richfood, Inc.

 

Borrower

 

Corporation

 

Virginia

 

0043962-0

 

[**]

 

 

 

 

 

 

 

 

 

 

 

 

 

10.        Richfood Procurement, L.L.C.

 

Guarantor

 

LLC

 

Virginia

 

S031919-6

 

[**]

 

 

 

 

 

 

 

 

 

 

 

 

 

11.        Save-A-Lot Tyler Group, LLC

 

Borrower

 

LLC

 

Missouri

 

LC0035762

 

[**]

 

 

 

 

 

 

 

 

 

 

 

 

 

12.        Scott’s Food Stores, Inc.

 

Guarantor

 

Corporation

 

Indiana

 

1991110292

 

[**]

 

 

 

 

 

 

 

 

 

 

 

 

 

13.        SFW Holding Corp.

 

Guarantor

 

Corporation

 

Delaware

 

2704081

 

[**]

 

 

 

 

 

 

 

 

 

 

 

 

 

14.        SFW Licensing Corp.

 

Guarantor

 

Corporation

 

Delaware

 

2403136

 

[**]

 

 

 

 

 

 

 

 

 

 

 

 

 

15.        Shop ‘N Save St. Louis, Inc.

 

Borrower

 

Corporation

 

Missouri

 

00473225

 

[**]

 

 

 

 

 

 

 

 

 

 

 

 

 

16.        Shop ‘N Save Warehouse Foods, Inc.

 

Borrower

 

Corporation

 

Missouri

 

00243351

 

[**]

 

 

 

 

 

 

 

 

 

 

 

 

 

17.        Shoppers Food Warehouse Corp.

 

Borrower

 

Corporation

 

Ohio

 

1825906

 

[**]

 

 

 

 

 

 

 

 

 

 

 

 

 

18.        Super Rite Foods, Inc.

 

Borrower

 

Corporation

 

Delaware

 

2019543

 

[**]

 

 

 

 

 

 

 

 

 

 

 

 

 

19.        Supermarket Operators of America Inc.

 

Guarantor

 

Corporation

 

Delaware

 

0849965

 

[**]

 

 

 

 

 

 

 

 

 

 

 

 

 

20.        SUPERVALU Holdings, Inc.

 

Borrower

 

Corporation

 

Missouri

 

00101405

 

[**]

 

 

 

 

 

 

 

 

 

 

 

 

 

21.        SUPERVALU Holdings - PA LLC

 

Borrower

 

LLC

 

Pennsylvania

 

2893444

 

[**]

 

 

 

 

 

 

 

 

 

 

 

 

 

22.        SUPERVALU INC.

 

Borrower

 

Corporation

 

Delaware

 

194304

 

41-0617000

 

 

 

 

 

 

 

 

 

 

 

 

 

23.        SUPERVALU Pharmacies, Inc.

 

Borrower

 

Corporation

 

Minnesota

 

4X-214

 

[**]

 

 

 

 

 

 

 

 

 

 

 

 

 

24.        SUPERVALU Transportation Inc.

 

Borrower

 

Corporation

 

Minnesota

 

7C-793

 

[**]

 

 

 

 

 

 

 

 

 

 

 

 

 

25.        SUPERVALU TTSJ, Inc.

 

Borrower

 

Corporation

 

Delaware

 

5292861

 

[**]

 

 

 

 

 

 

 

 

 

 

 

 

 

26.        SVH Realty, Inc.

 

Guarantor

 

Corporation

 

Delaware

 

2694033

 

[**]

 

 

 

 

 

 

 

 

 

 

 

 

 

27.        W. Newell & Co., LLC

 

Borrower

 

LLC

 

Delaware

 

3932547

 

[**]

 

 


** Denotes confidential information that has been omitted from the exhibit and filed separately, accompanied by a confidential treatment request, with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934.

 

Sch. 5.01 - 1



 

Schedule 5.06

 

Litigation

 

·                  In September 2008, a class action complaint was filed against the Company, as well as International Outsourcing Services, LLC (“IOS”), Inmar, Inc., Carolina Manufacturer’s Services, Inc., Carolina Coupon Clearing, Inc. and Carolina Services, in the United States District Court in the Eastern District of Wisconsin. The plaintiffs in the case are a consumer goods manufacturer, a grocery co-operative and a retailer marketing services company who allege on behalf of a purported class that the Company and the other defendants (i) conspired to restrict the markets for coupon processing services under the Sherman Act and (ii) were part of an illegal enterprise to defraud the plaintiffs under the Federal Racketeer Influenced and Corrupt Organizations Act. The plaintiffs seek monetary damages, attorneys’ fees and injunctive relief. The Company intends to vigorously defend this lawsuit, however all proceedings have been stayed in the case pending the result of the criminal prosecution of certain former officers of IOS.

 

·                   In December 2008, a class action complaint was filed in the United States District Court for the Western District of Wisconsin against the Company alleging that a 2003 transaction between the Company and C&S Wholesale Grocers, Inc. (“C&S”) was a conspiracy to restrain trade and allocate markets. In the 2003 transaction, the Company purchased certain assets of the Fleming Corporation as part of Fleming Corporation’s bankruptcy proceedings and sold certain assets of the Company to C&S which were located in New England. Since December 2008, three other retailers have filed similar complaints in other jurisdictions. The cases have been consolidated and are proceeding in the United States District Court for the District of Minnesota. The complaints allege that the conspiracy was concealed and continued through the use of non-compete and non-solicitation agreements and the closing down of the distribution facilities that the Company and C&S purchased from each other. Plaintiffs are seeking monetary damages, injunctive relief and attorneys’ fees. The Company is vigorously defending these lawsuits. Separately from these civil lawsuits, on September 14, 2009, the United States Federal Trade Commission (“FTC”) issued a subpoena to the Company requesting documents related to the C&S transaction as part of the FTC’s investigation into whether the Company and C&S engaged in unfair methods of competition. The Company cooperated with the FTC. On March 18, 2011, the FTC notified the Company that it had determined that no additional action was warranted by the FTC and that it had closed its investigation.

 

Sch. 5.06 - 1



 

Schedule 5.08(b)

 

I.              Condemnation Proceedings

 

None.

 

II.             Owned Real Estate

 

[**]

 


** Denotes confidential information that has been omitted from the exhibit and filed separately, accompanied by a confidential treatment request, with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934.

 

Sch. 5.08(b) - 1



 

Schedule 5.08(c)

 

Leases

 

[**]

 


** Denotes confidential information that has been omitted from the exhibit and filed separately, accompanied by a confidential treatment request, with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934.

 

Sch. 5.08(c) - 1



 

Schedule 5.09

 

Environmental Matters

 

None.

 

Sch. 5.09 - 1



 

Schedule 5.10

 

Insurance

 

[**]

 


** Denotes confidential information that has been omitted from the exhibit and filed separately, accompanied by a confidential treatment request, with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934.

 

Sch. 5.10 - 1



 

Schedule 5.13

 

Subsidiaries; Other Equity Investments

 

[**]

 


** Denotes confidential information that has been omitted from the exhibit and filed separately, accompanied by a confidential treatment request, with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934.

 

Sch. 5.13 - 1



 

Schedule 5.17

 

Intellectual Property Matters

 

None.

 

Sch. 5.17 - 1



 

Schedule 5.21(a)

 

Demand Deposit Accounts

 

(See attached)

 

[**]

 


** Denotes confidential information that has been omitted from the exhibit and filed separately, accompanied by a confidential treatment request, with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934.

 

Sch. 5.21(a) - 1



 

Schedule 5.21(b)

 

Credit Card Arrangements

 

EFT Services and License Agreement dated March 27, 1997, between BUYPASS Corporation and SUPERVALU INC., as amended.

 

Agreement for American Express Card Acceptance/Supermarket dated October 29, 1999, between American Express Travel Related Services Company, Inc., and SUPERVALU Holdings, Inc., as amended.

 

Merchant Services Agreement effective as of October 1, 2006, between Discover Financial Services LLC and SUPERVALU INC., as amended.

 

Cash Over Amendment to Merchant Services Agreement dated July 15, 2011, between DFS Services LLC and SUPERVALU INC.

 

Promotional Merchant Fee Letter Agreement dated December 22, 2008, between DFS Services LLC and SUPERVALU INC., as amended by letter agreement dated August 1, 2011, between the parties.

 

Visa Promotional Agreement dated as of October 1, 2011, between Visa U.S.A. Inc. and SUPERVALU INC.

 

Sch. 5.21(b) - 1



 

Schedule 6.02

 

Financial and Collateral Reporting

 

In addition to the other materials and information required to be provided pursuant to the terms of the Credit Agreement, the Loan Parties shall provide Administrative Agent, on the applicable day specified below, the following documents (each in such form and detail as the Administrative Agent from time to time may specify):

 

1.             On (i) the tenth (10th) day of each Fiscal Period (or, if such day is not a Business Day, on the next succeeding Business Day) or (ii) on the fourth Business day of each week as of the closing of business on the immediately preceding week, upon the occurrence and during the continuation of an Accelerated Borrowing Base Delivery Event, supporting source documents for the Borrowing Base Certificate delivered in accordance with Section 6.02(a)(ii) of the Credit Agreement.

 

2.             Within fifteen (15) days of the end of each Fiscal Period for the immediately preceding Fiscal Period:

 

(a)           Statement of store activity for the Lead Borrower and its Restricted Subsidiaries on a Consolidated basis in form reasonably acceptable the Administrative Agent;

 

(b)           Reconciliation of the stock ledger to the general ledger and the calculation of Excess Availability;

 

(c)           Agings of Wholesale Trade Receivables, together with a reconciliation to the general ledger; and

 

(d)           Agings of Pharmacy Receivables, together with a reconciliation to the general ledger.

 

Capitalized terms used herein and not defined herein shall have the meanings specified in the Credit Agreement.

 

Sch. 6.02 - 1



 

Schedule 6.17

 

Substitution, Release and Addition of Fixed Asset Collateral

 

Subject to the terms and conditions of this Schedule 6.17, Borrowers may, after the Closing Date, (i) substitute one or more fee-owned or ground leased Real Estate sites (and the Equipment located thereon owned by Borrowers or any of their Subsidiaries) as Term Loan Priority Collateral (each, a “Substitute Property”), in lieu of any one or more Real Estate Collateral Properties (each, a “Replaced Property”) and the Related Real Estate Collateral located thereon (each such substitution, once the requirements of this Schedule 6.17 have been satisfied with respect to such Replaced Property, a “Term Loan Priority Collateral Substitution”); provided , that , no such substitution shall affect the amount of time permitted for taking any action in accordance with Section 1 of Schedule 6.21, (ii) request that the Administrative Agent release its Lien on any Real Estate Collateral Property and the Related Real Estate Collateral located thereon, or on the Related Real Estate Collateral located on any Material Related Collateral Location (each, a “Release Property”) and, with respect to such Release Property, to the extent the relevant requirements of this Schedule 6.17 are satisfied, the Administrative Agent shall release such Lien in accordance with Section 9.10 (each, a “Term Loan Priority Collateral Release”) and (iii) add one or more fee-owned or ground leased Real Estate sites (and the Equipment located thereon owned by Borrowers or any of their Subsidiaries) or Related Real Estate Collateral on additional Material Related Collateral Locations (in each case including pursuant to the requirements of Section 6.12 or Section 6.17) (each, an “Additional Property”) as Term Loan Priority Collateral (each, a “Term Loan Priority Collateral Addition”); provided, that, the following conditions have been satisfied:

 

(a)           As long as the Term Loan Facility or any Refinancing Indebtedness therefor is outstanding,

 

(i)            a Term Loan Priority Collateral Substitution, Term Loan Priority Collateral Release or Term Loan Priority Collateral Addition involving the same Real Estate and Related Real Estate Collateral has occurred under the Term Loan Facility or such Refinancing Indebtedness;

 

(ii)           granting Liens on any related Real Estate and Related Real Estate Collateral to secure the Obligations would not violate or trigger the equal and ratable security provisions under the SVU Indenture;

 

(iii)          the applicable requirements of Schedule 6.21 (subject to any limitations set forth therein) shall have been satisfied as of the date of such Term Loan Priority Collateral Substitution or Term Loan Priority Collateral Addition with respect to any Real Estate and Related Real Estate Collateral on which a Lien is granted; and

 

(iv)          no Default or Event of Default shall have occurred and be continuing.

 

Except in the circumstances contemplated by clause (a):

 



 

(b)           In the case of a Term Loan Priority Collateral Substitution, (i) the Administrative Agent shall have received at least 15 Business Days’ prior written notice thereof (or such shorter notice as may be approved by the Administrative Agent) identifying the proposed Substitute Property and Replaced Property, (ii) both before and after giving effect thereto, no Default or Event of Default shall have occurred and be continuing, (iii) the Administrative Agent shall have received a Restated Collateral List after giving effect thereto, (iv)(a) the aggregate Value of the Term Loan Priority Collateral set forth on such Restated Collateral List shall not be less than the Value of the Term Loan Priority Collateral on the Applicable Collateral List (prior to giving effect to such restatement), (b) the Related Real Estate Collateral on a pro forma basis after giving effect to such Term Loan Priority Collateral Substitution shall not constitute more than 45% of the aggregate Value of the Real Estate Collateral Properties and the Related Real Estate Collateral and (c) the owned Real Estate Collateral Properties on a pro forma basis after giving effect to such Term Loan Priority Collateral Substitution shall constitute at least 50% of the aggregate Value of the Real Estate Collateral Properties and the Related Real Estate Collateral, (v) no fee-owned Real Estate Collateral Property shall have been replaced by a ground leased Real Estate site, (vi)  the requirements of Schedule 6.21 shall have been satisfied with respect to the applicable Substitute Property and (vii) at the request of the Administrative Agent, the Administrative Agent shall have received (A) a certificate of a Responsible Officer of Lead Borrower (1) certifying that the requirements set forth in the foregoing clauses (i) through (vii) have been satisfied and (2) setting forth in reasonable detail the calculations described in clause (iv), if applicable, all in form and substance reasonably satisfactory to the Administrative Agent, (B) a certificate of a Responsible Officer of Lead Borrower of the type described in Section 4.01(b)(iii), and (C) (1) a certificate of a Responsible Officer of Borrowers as to factual matters supporting the legal opinions delivered pursuant to this clause (C) and (2) a customary no conflicts opinion from Borrowers’ counsel, in each case in form and substance satisfactory to the Administrative Agent, opining that the grants of security interests in the Term Loan Priority Collateral on the Restated Collateral List (after giving effect to such Term Loan Priority Collateral Substitution) will not violate the SVU Indenture or any other Material Indebtedness or trigger any of the equal and ratable sharing provisions thereof.

 

(c)           In the case of a Term Loan Priority Collateral Release, (i) the Administrative Agent shall have received at least 15 Business Days’ prior written notice thereof (or such shorter notice as may be approved by the Administrative Agent) identifying the proposed Release Property, (ii) both before and after giving effect thereto, no Default or Event of Default shall have occurred and be continuing, (iii) unless the Term Loan Priority Collateral Release is in connection with a Permitted Disposition, (a) the aggregate Value of the Term Loan Priority Collateral set forth on such Restated Collateral List shall not be less than the Value of the Term Loan Priority Collateral on the Applicable Collateral List (prior to giving effect to such restatement), (b) the Related Real Estate Collateral on a pro forma basis after giving effect to such Term Loan

 



 

Priority Collateral Release shall not constitute more than 45% of the aggregate Value of the Real Estate Collateral Properties and the Related Real Estate Collateral and (c) the owned Real Estate Collateral Properties on a pro forma basis after giving effect to such Term Loan Priority Collateral Release shall constitute at least 50% of the aggregate Value of the Real Estate Collateral Properties and the Related Real Estate Collateral, (iv) the Administrative Agent shall have received a Restated Collateral List after giving effect thereto, (v) to the extent applicable, Borrowers shall have made any payments required by Section 7.05 and (vi) the Administrative Agent shall have received an officer’s certificate of a Responsible Officer of Lead Borrower (A) certifying that the requirements set forth in the foregoing clauses (i) through (vi) have been satisfied and (B) setting forth in reasonable detail the calculations described in clause (iii), if applicable, all in form and substance reasonably satisfactory to the Administrative Agent.

 

(d)           In the case of a Term Loan Priority Collateral Addition, (i) the Administrative Agent shall have received at least 15 Business Days’ prior written notice thereof (or such shorter notice as may be approved by the Administrative Agent) identifying the proposed Additional Property, (ii) the Administrative Agent shall have received a Restated Collateral List after giving effect thereto, (iii) the requirements of Schedule 6.21 shall have been satisfied with respect to the applicable Additional Property, except to the extent additional time to satisfy the requirements of Schedule 6.21 is provided elsewhere in this Agreement, (iv) the Administrative Agent shall have received (A) an officer’s certificate of a Responsible Officer of Lead Borrower certifying that the requirements set forth in the foregoing clauses (i) through (iii) have been satisfied, all in form and substance reasonably satisfactory to the Administrative Agent, (B) a certificate of a Responsible Officer of Lead Borrower in substantially the form of the certificate required to be delivered pursuant to Section 4.01(b)(iii) and (C) (1) a certificate of a Responsible Officer of Lead Borrower as to factual matters supporting the legal opinions delivered pursuant to this clause (C) and (2)  a customary no conflicts opinion from Borrowers’ counsel, in each case in form and substance satisfactory to the Administrative Agent, opining that the grants of security interests in the Term Loan Priority Collateral on the Restated Collateral List (after giving effect to such Term Loan Priority Collateral Addition) will not violate the SVU Indenture or any other Material Indebtedness or trigger any of the equal and ratable sharing provisions thereof.

 

For the purposes of this Schedule 6.17, the following terms shall have the meanings specified below:

 

“Value” shall mean (a) the value of the Real Estate sites (and the Equipment located thereon that is owned by Borrowers or their Subsidiaries) as set forth in the Closing Date Collateral List, and (b) with respect to any Substitute Property or Additional Property (and the Equipment located thereon that is owned by Borrowers or their Subsidiaries), the book value thereof (and, in the case of any Replaced Property or Released Property, the value thereof as set forth in the Applicable Collateral List).

 



 

Schedule 6.21

 

Post-Closing Matters

 

Loan Parties shall deliver or cause to be delivered to the Administrative Agent, or shall have taken or caused to have been taken, in form and substance reasonably satisfactory to the Administrative Agent, as promptly as possible following the Closing Date, but in any event no later than the dates referred to below with respect to each such item (unless, in the case of Section 1 below, the Term Loan Agent, pursuant to the Term Loan Agreement, and in the case of Sections 2, 3, 4, 5 and 6 below, the Administrative Agent, in its Permitted Discretion, shall have agreed to any particular longer period), the items or actions set forth below:

 

1.             on or before June 20, 2013 (or such later date as may be agreed to by the Term Loan Agent pursuant to the Term Loan Agreement), the Administrative Agent shall have received with respect to each Real Estate Collateral Property (excluding any Real Estate Collateral Property with respect to which the grant of Liens to secure the Obligations would violate or trigger the equal and ratable security provisions of the SVU Indenture or any lease or other agreement with a third party with respect to any such Real Estate Collateral Property):

 

(a)           a Mortgage in the form of Exhibit J to the Credit Agreement or otherwise in form and substance reasonably satisfactory to the Administrative Agent, a Related Real Estate Collateral Security Agreement in the form of Exhibit K to the Credit Agreement, a UCC fixture filing (if determined by Administrative Agent to be necessary under the Laws of the jurisdiction where such Real Estate Collateral Property is located to perfect in fixtures properly), and a UCC-1 financing statement with respect to the Related Real Estate Collateral (as defined in Schedule 6.17) located thereon, which Security Documents shall be in form and substance satisfactory to the Administrative Agent, shall have been duly executed by the parties thereto and delivered to the Administrative Agent and in full force and effect, together with, in the case of Real Estate Collateral Property, an acknowledgment by a title insurance company of receipt of such Mortgage, Personal Property Security Agreement, and UCC fixture filings and an agreement to record or file, as applicable, such Mortgage and UCC fixture filing in the real estate records for the county in which the Real Estate Collateral Property is located (if determined by the Administrative Agent to be necessary under the Laws of the jurisdiction where such Real Estate Collateral Property is located to perfect in fixtures properly), so as to effectively create upon such recording and filing (together with the filing of a UCC-1 financing statement in the applicable state filing office) valid and enforceable perfected second-priority Liens (subject in priority only to the Lien granted in favor of the Term Loan Agent pursuant to and in accordance with the Term Loan Intercreditor Agreement) upon such Real Estate Collateral Property and Related Real Estate Collateral, in favor of the Administrative Agent (or such other trustee as may be desired under local law), subject only to the Permitted Encumbrances.  Unless otherwise (i) required to avoid triggering any of the equal and ratable security provisions of the SVU Indenture or (ii) agreed by the Administrative Agent, and subject to limitations of local law, each such Mortgage shall secure the total amount of the Obligations; provided , that , if the jurisdiction in which any applicable Real Estate Collateral Property is located imposes a mortgage recording, intangibles or similar tax and does not permit the

 

Sch. 6.21 - 1



 

allocation of undivided aggregate indebtedness for the purpose of determining the amount of such tax payable, or if there are other local state impediments to the Mortgage securing the full amount of the Obligations, the principal amount secured by such Mortgage shall be limited to secure a maximum amount acceptable to the Administrative Agent, not to exceed 125% of the Value of such Real Estate Collateral Property;

 

(b)           (i) a title insurance policy (or a marked, signed and redated commitment to issue such title insurance policy) insuring or committing to insure (upon payment of the premium therefor) the Lien of the Mortgage encumbering each Real Estate Collateral Property, (A) with respect to each Real Estate Collateral Property having a Value greater than $3,000,000, with the standard exception for survey matters deleted, and a “same as survey” endorsement, (B) otherwise with the standard exception for survey matters deleted and a “same as survey” endorsement but only to the extent available (without requirement for such Loan Party to procure a new survey), and (C) in all cases with other lenders’ endorsements and otherwise as reasonably required by the Administrative Agent but only to the extent available without requirement for such Loan Party to procure a new survey with respect to any Real Estate Collateral Property having a Value of less than or equal to $3,000,000 (in the case of a Fixed Asset Collateral List Substitution, issued by the title company that issued the title insurance policies insuring the Liens of the existing Mortgages and dates as of the date of the recording of the Mortgage for the Substitute Property); a. to the extent available, a “tie-in” and a “first loss” endorsement, or similar endorsements, to the title insurance policy, in form and substance reasonably satisfactory to the Administrative Agent; and b. a copy of any survey, plat, or site plan of the Real Estate Collateral Property that any Loan Party provides to the title company issuing the title insurance policy, with any such surveys recertified to the Administrative Agent to the extent reasonably available and as reasonably required by the Term Loan Agent pursuant to the Term Loan Agreement.  Such title insurance policies shall be deemed adequate so long as they (i) they are in the aggregate insured amount equal to the amount of insurance to be provided to the Term Loan Agent in those jurisdictions where pro tanto coverage is available and (ii) in an amount (not to exceed $100,000,000) reasonably acceptable to the Administrative Agent, in its Permitted Discretion in those jurisdictions where pro tanto coverage is not available.  The Administrative Agent also shall have received copies of paid receipts or other evidence showing that all premiums in respect of such title insurance policies and endorsements have been paid;

 

(c)           (i) a completed flood certificate with respect to the Real Estate Collateral Property, which flood certificate shall i. be addressed to the Administrative Agent, ii. be completed by a company that has guaranteed the accuracy of the information contained therein and iii. otherwise comply with the Flood Program; c. evidence describing whether the community in which the Real Estate Collateral Property is located participates in the Flood Program; d. if any flood certificate states that a Real Estate Collateral Property is located in a Flood Zone, the applicable Loan Party’s written acknowledgement of receipt of written notification from the Administrative Agent i. as to the existence of each such Real Estate Collateral Property and ii. as to whether the community in which each such Real Estate Collateral Property is located is participating in the Flood Program; and e. if any Real Estate Collateral Property is located in a Flood

 

Sch. 6.21 - 2



 

Zone and is located in a community that participates in the Flood Program, evidence that the applicable Loan Party has obtained flood insurance that is in compliance with all applicable regulations of the Flood Program;

 

(d)           if required by the Term Loan Agent pursuant to the Term Loan Agreement, documentation regarding environmental matters acceptable to the Administrative Agent with respect to each Real Estate Collateral Property, and, if warranted by the findings of such documentation, a Phase I environmental report acceptable to the Administrative Agent, and, if warranted by the findings of such Phase I environmental report or other documentation, a Phase II environmental report acceptable to the Administrative Agent, which concludes that such Real Estate Collateral Property (i) does not contain any Hazardous Materials in contravention of Environmental Law in any material respect and (ii) is not subject to any significant risk of contamination from any off site Hazardous Materials in contravention of Environmental Law in any material respect;

 

(e)           (i) an opinion or opinions of counsel admitted to practice under the laws of the State in which each Real Estate Collateral Property is located, regarding the enforceability of the Liens of the Mortgages in that State, and a due execution, delivery and authority opinion, in each case substantially identical to the opinion or opinions delivered to the Term Loan Agent with respect to such Real Estate Collateral Property, and (ii) an opinion or opinions of counsel regarding each Related Real Estate Collateral Security Agreement, in each case in form and substance reasonably acceptable to the Administrative Agent; provided , that , if the Term Loan Agent shall not have required delivery of an opinion or opinions of counsel with respect to any Real Estate Collateral Property and Related Real Estate Collateral, Borrowers and Guarantors shall not be obligated to deliver an opinion or opinions of counsel to Administrative Agent with respect to such Real Estate Collateral Property and Related Real Estate Collateral;

 

(f)            true and correct copies of all Material Contracts relating to the leasing or operation of each Real Estate Collateral Property and each other property on which Related Real Estate Collateral is located, each of which shall be in form and substance reasonably satisfactory to the Term Loan Agent pursuant to the Term Loan Agreement;

 

(g)           satisfactory (i.e., showing no Liens other than Permitted Encumbrances) UCC, tax lien, judgment and litigation searches with respect to each Real Estate Collateral Property and each other property on which Related Real Estate Collateral is located and the Loan Party that is the owner or lessee thereof, in the State in which such Real Estate Collateral Property or such other property is located and the jurisdictions where each such Loan Party has its principal place of business; and

 

(h)         in the case of any Ground Lease, f. a true and correct copy of the applicable Ground Lease, together with (to the extent required by the Term Loan Agent pursuant to the Term Loan Agreement) all amendments and modifications thereto and a recorded memorandum thereof, in form and substance reasonably satisfactory in all respects to the Term Loan Agent pursuant to the Term Loan Agreement and subject to

 

Sch. 6.21 - 3



 

customary leasehold mortgagee provisions and protections in form and substance reasonably satisfactory in all respects to the Term Loan Agent pursuant to the Term Loan Agreement and which shall provide, among other things, cure rights reasonably acceptable to the Term Loan Agent pursuant to the Term Loan Agreement for Loan Party defaults thereunder, and g. if required by the Term Loan Agent pursuant to the Term Loan Agreement, a Ground Lease estoppel executed by the fee owner and ground lessor of such Real Estate Collateral Property, reasonably acceptable to the Term Loan Agent pursuant to the Term Loan Agreement;

 

provided , that , in connection with the foregoing Section 1, the following requirements shall also be satisfied:

 

(1)           Loan Parties shall have paid or reimbursed the Administrative Agent for all reasonable out-of-pocket costs and expenses incurred by the Administrative Agent (including, without limitation, reasonable attorneys’ fees and disbursements) in connection with the preparation and negotiation of the Mortgage of each Real Estate Collateral Property and the Personal Property Security Agreement for the Related Real Estate Collateral located thereon, and Loan Parties shall have paid all recording charges, filing fees, taxes or other out-of-pocket expenses (including, without limitation, title insurance premiums, mortgage and intangibles taxes and documentary stamp taxes) payable in connection therewith;

 

(2)           on the date of the applicable Mortgage and Personal Property Security Agreement, the grants of Liens in the Fixed Asset Collateral (as defined in Schedule 6.17) on the Applicable Collateral List (after giving effect to all Fixed Asset Collateral List Substitutions) will not violate the SVU Indenture or any other Material Indebtedness, or trigger any of the equal and ratable sharing provisions thereof, as evidenced by (A) a certificate of a Responsible Officer of the Lead Borrower and (B) a customary no conflicts opinion from Loan Parties’ counsel, in each case, in form and substance satisfactory to the Administrative Agent, certifying and opining, respectively, that the grants of Liens in the Fixed Asset Collateral on the Applicable Collateral List will not violate the SVU Indenture or any other Material Indebtedness or trigger any of the equal and ratable sharing provisions thereof;

 

(3)           the Administrative Agent shall have received with respect to the initial satisfaction of the requirements set forth in this Section 1, a confirmation of the certificates described in Section 4.01(b)(iii), and thereafter a certificate of the type described in Section 4.01(b)(iii), in each case, from the relevant Loan Parties; and

 

(4)           each Real Estate Collateral Property shall be fee owned or ground leased by a Loan Party or a Subsidiary which shall have become a Loan Party hereunder pursuant to and in accordance with the requirements of Section 6.12 prior to the execution and delivery of the applicable Mortgage;

 

In addition to the foregoing, Loan Parties shall, promptly upon the request of Administrative Agent, take such actions, and execute and deliver to the Administrative Agent such Security Documents as the Administrative Agent may in its reasonable

 

Sch. 6.21 - 4



 

judgment deem necessary or appropriate (including, without limitation, the Security Documents set forth in Section 1 of this Schedule 6.21), in order to grant to the Administrative Agent, for the benefit of the Credit Parties, a Lien upon any SVU Operating Property (as such term is defined in the Term Loan Intercreditor Agreement), subject to Security Documents in favor of the Term Loan Agent at any time that either (i) the grant of such Lien on any such SVU Operating Property to secure all or any portion of the Obligations (after giving effect to the Lien thereon to secure the Term Loan Debt) would no longer violate the terms of the SVU Indenture (as then in effect), or give rise to any obligation of any Loan Party under the SVU Indenture to grant a Lien on any of its assets to secure any Indebtedness governed by or subject to the SVU Indenture, or (ii) no Indebtedness is outstanding under the SVU Indenture.  The Lead Borrower shall promptly notify Administrative Agent in writing at any time that either clauses (i) or (ii) above are applicable.

 

In addition to the foregoing, Loan Parties shall deliver or cause to be delivered to the Administrative Agent on or before May 21, 2013 (unless the Administrative Agent, in its sole discretion, shall have agreed to any longer period), a lender’s loss payable endorsement for each of the property insurance policies (including marine insurance policies insuring Inventory) required to be maintained pursuant to Section 6.07, each in form and substance reasonably satisfactory to the Administrative Agent and naming the Administrative Agent as a loss payee and additional insured.  Such endorsements shall, or the insurer shall otherwise agree in writing, to make the Administrative Agent a payee on any payment of a claim under such policies and provide for delivery of such payment directly to the Administrative Agent (subject to the rights of the Term Loan Agent with respect to Term Loan Priority Collateral).

 

Sch. 6.21 - 5



 

Schedule 7.01

 

Existing Liens

 

 

 

State

 

Debtor

 

Secured Party

 

Filing Information

 

Collateral

1.

 

VA

 

FF Acquisition, L.L.C.

 

American Bank Note Company, as Agent for the United States Postal Service

 

File No. 02092373445

Filed: 9/23/2002

Lapse Date: 9/23/2012

 

Continuation

File No. 07070670920

Filed: 7/6/2007

 

The Consigned Goods are all USPS postage delivered to Consignee for sale to the public from all establishments maintained by Consignee, including, but not limited to, First Class postage, etc.

 

 

 

 

 

 

 

 

 

 

 

2.

 

VA

 

FF Acquisition, L.L.C.

 

American Greetings Corporation

 

File No. 10031072883

Filed: 3/10/2010

Lapse Date: 3/10/2015

 

Inventory sold or delivered by Secured Party or its affiliates to Debtor, etc.

 

 

 

 

 

 

 

 

 

 

 

3.

 

MO

 

Shop ‘n Save Warehouse Foods Inc

 

American Bank Note Company, as Agent for the United States Postal Service

 

File No. 4176312

Filed: 6/15/2001

Lapse Date: 6/15/2016

 

Continuation

File No. 20060066189K

Filed: 6/14/2006

 

Continuation

File No. 20110062748B

Filed: 6/7/2011

 

The Consigned Goods are all USPS postage delivered to Consignee for sale to the public from all establishments maintained by Consignee, including, but not limited to, First Class postage, etc.

 

 

 

 

 

 

 

 

 

 

 

4.

 

MO

 

Shop ‘N Save Warehouse Foods, Inc.

 

American Greetings Corporation

 

File No. 20100025327C

Filed: 3/10/2010

Lapse Date: 3/10/2015

 

Inventory sold or delivered by Secured Party or its affiliates to Debtor, etc.

 

 

 

 

 

 

 

 

 

 

 

5.

 

OH

 

Shoppers Food Warehouse Corp.

 

American Greetings Corporation

 

File No. OH00140730723

Filed: 3/10/2010

Lapse Date: 3/10/2015

 

Inventory sold or delivered by Secured Party or its affiliates to Debtor, etc.

 

 

 

 

 

 

 

 

 

 

 

6.

 

DE

 

SUPERVALU Inc.

 

Banc of America Leasing & Capital, LLC

 

File No. 20073461901

Filed: 9/12/2007

Lapse Date: 9/12/2012

 

[Specific equipment]

 

 

 

 

 

 

 

 

 

 

 

7.

 

DE

 

SUPERVALU Inc.

 

Banc of America Leasing & Capital, LLC

 

File No. 20074524020

Filed: 11/29/2007

Lapse Date: 11/29/2012

 

[Specific equipment]

 

Sch. 7.01 - 1



 

8.

 

DE

 

SUPERVALU Inc.

 

Banc of America Leasing & Capital, LLC

 

File No. 20074868013

Filed: 12/26/2007

Lapse Date: 12/26/2012

 

[Specific equipment]

 

 

 

 

 

 

 

 

 

 

 

9.

 

DE

 

SUPERVALU Inc.

 

Banc of America Leasing & Capital, LLC

 

File No. 20080895555

Filed: 3/13/2008

Lapse Date: 3/13/2013

 

Collateral Amendment

File No. 20080999456

Filed: 3/21/2008

 

[Specific equipment]

 

 

 

 

 

 

 

 

 

 

 

10.

 

DE

 

SUPERVALU Inc.

 

Banc of America Leasing & Capital, LLC

 

File No. 20081416633

Filed: 4/23/2008

Lapse Date: 4/23/2013

 

[Specific equipment]

 

 

 

 

 

 

 

 

 

 

 

11.

 

DE

 

SUPERVALU Inc.

 

Banc of America Leasing & Capital, LLC

 

File No. 20081974151

Filed: 6/10/2008

Lapse Date: 6/10/2013

 

[Specific equipment]

 

 

 

 

 

 

 

 

 

 

 

12.

 

DE

 

SUPERVALU Inc.

 

Banc of America Leasing & Capital, LLC

 

File No. 20081974219

Filed: 6/10/2008

Lapse Date: 6/10/2013

 

[Specific equipment]

 

 

 

 

 

 

 

 

 

 

 

13.

 

DE

 

SUPERVALU Inc.

 

Banc of America Leasing & Capital, LLC

 

File No. 20081996477

Filed: 6/11/2008

Lapse Date: 6/11/2013

 

[Specific equipment]

 

 

 

 

 

 

 

 

 

 

 

14.

 

DE

 

SUPERVALU, Inc.

 

American Color Graphics, Inc.

 

File No. 20082237202

Filed: 6/30/2008

Lapse Date: 6/30/2013

 

[Specific equipment]

 

 

 

 

 

 

 

 

 

 

 

15.

 

DE

 

SUPERVALU Inc.

 

Banc of America Leasing & Capital, LLC

 

File No. 20082839361

Filed: 8/20/2008

Lapse Date: 8/20/2013

 

[Specific equipment]

 

Sch. 7.01 - 2



 

16.

 

DE

 

SUPERVALU Inc.

 

MassMutual Asset Finance LLC

 

File No. 20082840617

Filed: 8/20/2008

Lapse Date: 8/20/2013

 

Secured Party Amendment

File No. 20083388772

Filed: 10/7/2008

 

Secured Party Amendment

File No. 20083394192

Filed: 10/7/2008

 

Partial Assignment

File No. 20083395132

Filed: 10/7/2008

 

Full Assignment

File No. 20083436589

Filed: 10/10/2008

 

[Specific equipment]

 

 

 

 

 

 

 

 

 

 

 

17.

 

DE

 

SUPERVALU Inc

 

Teradata Operations, Inc.

 

File No. 20090427317

Filed: 2/9/2009

Lapse Date: 2/9/2014

 

All products, equipment, etc. acquired from Secured Party and all proceeds, etc.

 

 

 

 

 

 

 

 

 

 

 

18.

 

DE

 

SUPERVALU Inc.

 

National City Commercial Capital Company, LLC

 

File No. 20091208096

Filed: 4/7/2009

Lapse Date: 4/7/2014

 

[Specific equipment]

 

 

 

 

 

 

 

 

 

 

 

19.

 

DE

 

SUPERVALU Inc.

 

National City Commercial Capital Company, LLC

 

File No. 20091208195

Filed: 4/7/2009

Lapse Date: 4/7/2014

 

[Specific equipment]

 

 

 

 

 

 

 

 

 

 

 

20.

 

DE

 

SUPERVALU Inc

 

NCR Corporation

 

File No. 20092513429

Filed: 8/5/2009

Lapse Date: 8/5/2014

 

All products, including without limitations, equipment, components, software, deliverables and supplies, whether now or hereafter acquired, which are acquired (directly or indirectly) from NCR Corporation and/or the acquisition of which is financed by NCR Corporation, and all proceeds.

 

 

 

 

 

 

 

 

 

 

 

21.

 

DE

 

SUPERVALU Inc.

 

Banc of America Leasing & Capital, LLC

 

File No. 20100447478

Filed: 2/9/2010

Lapse Date: 2/9/2015

 

[Specific equipment]

 

Sch. 7.01 - 3



 

22.

 

DE

 

SUPERVALU Inc.

 

American Greetings Corporation

 

File No. 20100806459

Filed: 3/10/2010

Lapse Date: 3/10/2015

 

Inventory sold or delivered by Secured Party or its affiliates to Debtor, etc.

 

 

 

 

 

 

 

 

 

 

 

23.

 

DE

 

SUPERVALU Inc.

 

The Bank of Holland

 

File No. 20102851487

Filed: 8/16/2010

Lapse Date: 8/16/2015

 

Full Assignment

File No. 20102977639

Filed: 8/25/2010

 

[Specific equipment]

 

 

 

 

 

 

 

 

 

 

 

24.

 

DE

 

SUPERVALU Inc.

 

Banc of America Leasing & Capital, LLC

 

File No. 20114575224

Filed: 11/30/2011

Lapse Date: 11/30/2016

 

[Specific equipment]

 

 

 

 

 

 

 

 

 

 

 

25.

 

DE

 

SUPERVALU Inc.

 

Banc of America Leasing & Capital, LLC

 

File No. 20114575240

Filed: 11/30/2011

Lapse Date: 11/30/2016

 

[Specific equipment]

 

 

 

 

 

 

 

 

 

 

 

26.

 

DE

 

SUPERVALU Inc.

 

Nestle Dreyer’s Ice Cream Company

 

File No. 20115000438

Filed: 12/20/2011

Lapse Date: 12/20/2016

 

[Specific consigned products]

 

 

 

 

 

 

 

 

 

 

 

27.

 

DE

 

SUPERVALU Inc.

 

Papyrus-Recycled Greetings, Inc.

 

File No. 20122461111

Filed: 6/26/2012

Lapse Date: 6/26/2017

 

Inventory sold or delivered by Secured Party to Debtor on a scan based trading and consignment basis, etc.

 

 

 

 

 

 

 

 

 

 

 

28.

 

MO

 

SUPERVALU Holdings, Inc.

 

American Bank Note Company, as Agent for the United States Postal Service

 

File No. 20050068215M

Filed: 6/29/2005

Lapse Date: 6/29/2015

 

Continuation

File No. 20100060676K

Filed: 6/9/2010

 

The Consigned Goods are all USPS postage delivered to Consignee for sale to the public from all establishments maintained by Consignee, including, but not limited to, First Class postage, etc.

 

 

 

 

 

 

 

 

 

 

 

29.

 

MO

 

SUPERVALU Holdings, Inc.

 

American Greetings Corporation

 

File No. 20100025328E

Filed: 3/10/2010

Lapse Date: 3/10/2015

 

Inventory sold or delivered by Secured Party or its affiliates to Debtor, etc.

 

Sch. 7.01 - 4



 

Capital Lease Obligations as of March 21, 2013

 

[**]

 

One or more of the Loan Parties is contingently liable for leases that have been assigned to various third parties in connection with facility closings and dispositions.  The Loan Parties could be required to satisfy the obligations under the leases if any of the assignees are unable to fulfill their lease obligations.  Due to the wide distribution of the Loan Parties’ assignments among third parties, and various other remedies available, the Loan Parties believe the likelihood that the Loan Parties will be required to assume a material amount of these obligations is remote.

 

PURCHASE AND SALE AGREEMENTS

 

[**]

 

ADDITIONAL ENCUMBRANCES

 

[**]

 


** Denotes confidential information that has been omitted from the exhibit and filed separately, accompanied by a confidential treatment request, with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934.

 

Sch. 7.01 - 5



 

Schedule 7.02

 

Investments

 

I.             Non-Wholly Owned Entities:

 

[**]

 

II.            Investment Policy

 

SUPERVALU INC.

INVESTMENT GUIDELINES

August 22, 2012

 

PURPOSE:

 

To state clearly the responsibility for the investment of surplus cash, the approved types of investments and their maturities.

 

POLICY STATEMENT:

 

Cash temporarily not needed for Company operations or to reduce debt will be invested by the Cash Management Team (in Treasury Services), following approval from either the Treasurer, Controller, Vice President—Tax, or Chief Financial Officer.  The investments will be of appropriate maturities to meet projected cash requirements of the Company, and will be made according to the following written guidelines.  The objectives of such investments will be, in order of importance: safety of principal, liquidity of funds, diversification and investment yield.

 

GUIDELINES:

 

All surplus Company cash will be forwarded to the parent.  Subsidiaries are not authorized to invest cash with outside parties without prior approval from either the Treasurer, Controller or Chief Financial Officer.

 

APPROVED INVESTMENTS:

 

1.                                       U.S. Treasury Securities and general obligations fully guaranteed with respect to principal and interest by the U. S. Government.

 

2.                                       Obligations of U.S. Government Agencies (i.e. GNMA’s and FNMA’s).

 


** Denotes confidential information that has been omitted from the exhibit and filed separately, accompanied by a confidential treatment request, with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934.

 

Sch. 7.02 - 1



 

3.                                       Commercial paper of prime quality (rated A-1 by Standard and Poor’s and P-1 by Moody’s), purchased through recognized money market dealers (see list of “Authorized Dealers”).

 

4.                                       Certificates of Deposit and Time Deposits of Banks and their overseas branches are limited to:

 

a.                                       Top 50 worldwide banks as measured by assets, and

 

b.                                       Banks rated A—1/AA and/or P—1/Aa or better

 

5.                                       Repurchase Agreements, with authorized money market dealers (see list of “Authorized Dealers”) or major banks as defined in item #4, executed against those securities approved for direct purchase (1-4 above). The current market value of the collateral must cover the principal amount of the investment and collateral must be held in our name.

 

6.                                       Diversified money market investment funds (see list of “Authorized Money Market Funds”) meeting the following conditions:

 

a.                                       AAAm rating from Standard and Poor’s or AAA rating from Moody’s

 

b.                                       Total assets of at least $5 billion

 

c.                                        Rule 2a-7 compliant

 

d.                                       At least three years of history

 

e.                                        Previously approved by either the Treasurer, Controller, or Chief Financial Officer

 

7.                                       Other investments, including commercial paper rated A-2/P-2, may be allowed from time to time with specific written authorization from the Chief Financial Officer or the Treasurer.

 

8.                                       During a period of time where demand deposit accounts (DDA’s) are federally guaranteed by the Temporary Liquitidy Guarantee Program or any other similar FDIC guarantee programs, surplus funds may be held in the company’s DDA accounts at authorized participating depository banks.

 

9.                                       Surplus funds may be held at authorized depository banks not participating in guarantee programs described in #8 above to earn the earnings credit rate that meet one of the following requirements:

 

a.                                       A Long Term issuer rating no lower than

 

i.                                           A3 from Moody’s or

 

ii.                                        A- from Standard and Poor’s

 

Sch. 7.02 - 2



 

b.                                       Market Credit Default Swap (CDS) rate of no greater than 250 basis points

 

INVESTMENT LIMITATIONS:

 

1.                                       All short-term investments shall be denominated in U.S. dollars.

 

2.                                       A maximum principal investment of up to:

 

a.                                       $50 million per money market fund (determined by CUSIP number)

 

b.                                       $25 million per DDA Account

 

3.                                       For direct securities purchases, the commitment to any one name will be limited to $10 million with the exception of U.S. Government and U.S. Government Agencies (no limit).

 

4.                                      All securities that are purchased will be held in “safekeeping” by the seller or by a Safekeeping Agent (see list of “Authorized Dealers”) named by SUPERVALU INC. who will issue trade confirmation for all transactions.

 

5.                                       Maturities for investments are not to exceed 90 days.

 

AUTHORIZED INSTITUTIONS/ FUNDS:

 

The following lists include the Authorized Dealers, Authorized Money Market Funds and Authorized Depository Banks that have been approved as part of the investment policy.

 

Authorized Dealers:

 

1.             Bank of America

2.             US Bank

3.             Wells Fargo

 

Authorized Money Market Funds:

 

1.             JP Morgan Government Fund

2.             Federated Government Obligations Fund

3.             Fidelity Institutional Government Fund

4.             Dreyfus Government Cash Management Fund (BNY Mellon)

5.             Columbia Government Reserves Fund (Bank of America)

6.             First American Government Obligations

7.             Goldman Sachs Financial Square Government Fund

8.             BlackRock Liquidity FedFund Institutional Fund

9.             Western Asset Institutional Government Fund

10.          Funds For Institutions Government Fund (Merrill Lynch)

 

Sch. 7.02 - 3



 

Authorized Depository Banks Participating in Government Sponsored Guarantee Programs

 

1.                                       Bank of America

2.                                       US Bank

3.                                       PNC Bank

4.                                       JP Morgan

5.                                       Wells Fargo

6.                                       Northern Trust

7.                                       Banco Santander (Sovereign)

8.                                       TCF Bank

9.                                       Union Bank

10.                                Key Bank

 

Nothing in this Schedule 7.02 modifies any Loan Party’s obligations contained in (i) the proviso at the end of the definition of Permitted Investments or (ii) Section 6.13 of the Credit Agreement.

 

Sch. 7.02 - 4



 

Schedule 7.03

 

Existing Indebtedness

 

Part (a):

 

 

 

MATURITY

 

FACE VALUE BALANCE March 21, 2013

 

Secured/Unsecured

SUPERVALU DEBT

 

 

 

 

 

 

 

 

 

 

 

 

 

SVU NOTES PAYABLE:

 

 

 

 

 

 

 

 

 

 

 

 

 

DUE 11/15/14

 

11/15/2014

 

489,890,000.00

 

Unsecured

DUE 5/1/16

 

5/1/2016

 

1,000,000,000.00

 

Unsecured

 

 

 

 

 

 

 

TOTAL SVU NOTES PAYABLE:

 

 

 

1,489,890,000.00

 

 

 

 

 

 

 

 

 

SVU MORTGAGES AND OTHER DEBT:

 

 

 

 

 

 

 

 

 

 

 

 

 

[**]

 

 

 

 

 

 

 

 

 

 

 

 

 

SVU MORTGAGES AND OTHER DEBT:

 

 

 

29,081,683.61

 

 

 

 

 

 

 

 

 

TOTAL COMPANY DEBT

 

 

 

1,518,971,683.61

 

 

 

Part (b):

 

Existing Letters of Credit

 

[**]

 

Commercial Letters of Credit

 

No commercial letters of credit outstanding on the Closing Date.

 

Surety Bonds

 

[**]

 


** Denotes confidential information that has been omitted from the exhibit and filed separately, accompanied by a confidential treatment request, with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934.

 

Sch. 7.03 - 1



 

Part (c):

 

Swap Termination Value

 

[**]

 

Part (f):

 

Capital Lease Obligations as of March 21, 2013

 

[**]

 

One or more of the Loan Parties is contingently liable for leases that have been assigned to various third parties in connection with facility closings and dispositions.  The Loan Parties could be required to satisfy the obligations under the leases if any of the assignees are unable to fulfill their lease obligations.  Due to the wide distribution of the Loan Parties’ assignments among third parties, and various other remedies available, the Loan Parties believe the likelihood that the Loan Parties will be required to assume a material amount of these obligations is remote.

 

Part (g):

 

None.

 

Part (i):

 

Financial Guaranties

 

[**]

 

Retailer Lease Guaranties

 

[**]

 


** Denotes confidential information that has been omitted from the exhibit and filed separately, accompanied by a confidential treatment request, with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934.

 

Sch. 7.03 - 2



 

Other Lease Guaranties

 

[**]

 

CALIFORNIA WORKERS’ COMPENSATION GUARANTIES

 

(Unsecured)

 

July 27, 2006

 

Agreement of Assumption and Guarantee of Workers’ Compensation Liabilities executed by SUPERVALU for the benefit of Albertson’s, Inc. in consideration for the Department of Industrial Relations permission for Albertson’s, Inc. to operate as certified self-insured employers in the State of California.  SUPERVALU agrees to assume and guarantee to pay all liabilities and obligations which Albertson’s, Inc. may incur as a self-insurer of its California workers’ compensation liabilities on or after 7/27/2006.

 

August 8, 2007

 

Agreement of Assumption and Guarantee of Workers’ Compensation Liabilities executed by SUPERVALU for the benefit of American Drug Stores LLC in consideration for the Department of Industrial Relations permission for American Drug Store LLC to operate as certified self-insured employers in the State of California.  SUPERVALU agrees to assume and guarantee to pay all liabilities and obligations which American Drug Store LLC may incur as a self-insurer of its California workers’ compensation liabilities arising on or after 8/3/2007.

 

September 8, 2010

 

Agreement of Assumption and Guarantee of Worker’s Compensation Liabilities executed by SUPERVALU for the benefit of New Albertson’s, Inc. in consideration for the Department of Industrial Relations permission for New Albertson’s, Inc. to operate as certified self-insured employers in the State of California.  SUPERVALU agrees to assume and guarantee to pay all liabilities and obligations which New Albertson’s, Inc. may incur as a self-insurer of its California workers’ compensation liabilities on or after 9/8/2010.

 


** Denotes confidential information that has been omitted from the exhibit and filed separately, accompanied by a confidential treatment request, with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934.

 

Sch. 7.03 - 3



 

ASC NOTES GUARANTEE

 

(Unsecured)

 

On July 6, 2005, the Lead Borrower executed that certain ASC Notes Guarantee, dated as of July 6, 2005, guaranteeing the obligations of ASC under the ASC Indenture and the ASC Notes.

 

Sch. 7.03 - 4



 

Schedule 7.09

 

Transactions with Affiliates

 

Investments in Non-Wholly Owned Entities:

 

[**]

 


** Denotes confidential information that has been omitted from the exhibit and filed separately, accompanied by a confidential treatment request, with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934.

 

Sch. 7.09 - 1



 

Schedule 10.02

 

Administrative Agent’s Office; Certain Addresses for Notices

 

Notices and Account Information for Administrative and Collateral Agent

 

Wells Fargo Bank, National Association

One Boston Place, 18th Floor

Boston, Massachusetts 02108

Attention: Joseph Burt, Portfolio Manager - Supervalu

Telephone: 617-854-7279

Telecopier: 866-617-3988

Email: joseph.burt@wellsfargo.com

 

Administrative Agent’s Office Account Information for Lenders

 

Bank Address:      Wells Fargo Bank, N.A.

420 Montgomery Street

San Francisco, CA

ABA No.:               [**]

A/C Name:            Wells Fargo Bank, N.A.

A/C No.:                 [**]

Reference:             SUPERVALU INC.

 

Agent Payment Account Information for Borrowers and Guarantors

 

Bank Address:      Wells Fargo Bank, N.A.

420 Montgomery Street

San Francisco, CA

ABA No.:               [**]

A/C Name:            Wells Fargo Bank, N.A.

A/C No.:                 [**]

Reference:             SUPERVALU INC.

 

Notices for LC Issuers

 

Wells Fargo Bank, National Association

One Boston Place, 18th Floor

Boston, Massachusetts 02108

Attention: Joseph Burt, Portfolio Manager - Supervalu

Telephone: 617-854-7279

 


** Denotes confidential information that has been omitted from the exhibit and filed separately, accompanied by a confidential treatment request, with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934.

 

Sch. 10.02 - 1



 

Telecopier: 866-617-3988

Email: joseph.burt@wellsfargo.com

 

U.S. Bank National Association

Attention: Lynn Gosselin

VP, Portfolio Manager

209 S. LaSalle Street

MK-IL-RY3B

Chicago, Illinois 60604

Telephone: 312-325-8747

Telecopier: 312-325-8905

Email: lynn.gosselin@usbank.com

 

PNC Bank, National Association

Attention: Gurdatt Jagnanan

VP-Operations Supervisor

Two Tower Center Boulevard, 21st Floor

East Brunswick, New Jersey 08816

Telephone: 732-220-4302

Telecopier: 732-220-3268

Email: gurdatt.jagnanan@pnc.com

 

Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A., “Rabobank Nederland”, New York Branch

Attention: Denise DeMarco

Assistant Vice President

123 North Wacker Drive, Suite 2100

Chicago, Illinois 60606

Telephone: 312-408-8223

Telecopier: 312-408-8240

Email: denise.demarco@rabobank.com

 

Notices for Swing Line Lender

 

Wells Fargo Bank, National Association

One Boston Place, 18th Floor

Boston, Massachusetts 02108

Attention: Joseph Burt, Portfolio Manager - Supervalu

Telephone: 617-854-7279

Telecopier: 866-617-3988

Email: joseph.burt@wellsfargo.com

 

Notices for Loan Parties:

 

SUPERVALU INC.

250 Park Center Boulevard

 

Sch. 10.02 - 2



 

P.O. Box 20

Boise, ID 83706

Attn: Treasurer

Fax: 208-395-6631

 

With a copy to:

 

SUPERVALU INC.

7075 Flying Cloud Drive

Eden Prairie, MN 55344

Attention: Vice President, Business Law

Fax: 952-828-4403

 

Web Address:  http://www.supervaluinvestors.com

 

Sch. 10.02 - 3



 

EXHIBIT A

 

FORM OF COMMITTED LOAN NOTICE

 

Date:                        ,          

 

To:           Wells Fargo Bank, National Association, as Administrative Agent

 

Ladies and Gentlemen:

 

Reference is made to the Amended and Restated Credit Agreement dated as of March 21, 2013 (as amended, modified, supplemented or restated hereafter, the “ Credit Agreement ”) by and among (i)  SUPERVALU INC. , a Delaware corporation, for itself and as Lead Borrower (in such capacity, the “ Lead Borrower ”) for the other Borrowers party thereto from time to time (individually, a “ Borrower ” and, collectively, the “ Borrowers ”), (ii) the Borrowers party thereto from time to time, (iii) Wells Fargo Bank, National Association, as administrative and collateral agent (in such capacity, the “ Administrative Agent ”) for its own benefit and the benefit of the other Credit Parties referred to therein, (iv) Wells Fargo Bank, National Association, [U.S. Bank National Association, PNC Bank, National Association and “Rabobank Nederland”, New York Branch], as LC Issuers, and (v) the lenders from time to time party thereto (individually, a “ Lender ” and, collectively, the “ Lenders ”).  All capitalized terms used herein and not otherwise defined shall have the same meaning herein as in the Credit Agreement.

 

1.             The Lead Borrower hereby requests [a Borrowing][a conversion of Committed Loans from one Type to the other][a continuation of LIBO Rate Loans] (1) :

 

(a)            On                                 (a Business Day) (2)

 

(b)            In the amount of $                                          (3)

 

(c)            Comprised of [Base Rate][LIBO Rate] Loans (Type of Committed Loan) (4)

 


(1)  A Borrowing must be a borrowing consisting of simultaneous Loans of the same Type and, in the case of LIBO Rate Loans, must have the same Interest Period.

 

(2)  Each notice of a Borrowing must be received by the Administrative Agent not later than (i) 4:00 p.m. three (3) Business Days prior to the requested date of any Borrowing of conversion to or continuation of LIBO Rate Loans; provided , that , if the Lead Borrower wishes to request LIBO Rate Loans having an Interest Period other than one, two, three or six months in duration as provided in the definition of “Interest Period” in the Credit Agreement, the applicable notice must be received by the Administrative Agent not later than 11:00 a.m. four (4) Business Days prior to the requested date of such Borrowing, conversion or continuation, whereupon the Administrative Agent shall give prompt notice to the Lenders of such request and determine whether the requested Interest Period is acceptable to all of them, and (ii) 1:00 p.m on the Business Day that is the requested date of any Borrowing of Base Rate Loans or of any conversion of LIBO Rate Loans to Base Rate Loans.

 

(3)  Each Borrowing, conversion to, or continuation of LIBO Rate Loans must be in a principal amount of $1,000,000 or a whole multiple of $500,000 in excess thereof.  Each Borrowing, conversion to, or continuation of Base Rate Loans must be in a principal amount of $500,000 or a whole multiple of $100,000 in excess thereof.

 

(4)  Committed Loans may be either Base Rate Loans or LIBO Rate Loans.  If the Type of Committed Loan is not specified, then the applicable Committed Loans will be made as Base Rate Loans.

 



 

(d)            For LIBO Rate Loans:  with an Interest Period of          months (5)

 

The Lead Borrower hereby represents and warrants (for itself and on behalf of the other Borrowers) that (a) the Borrowing requested herein complies with Section 2.02 and the other provisions of the Credit Agreement and (b) the conditions specified in Sections 4.01 and 4.02 of the Credit Agreement have been satisfied on and as of the date specified in Item 1(a) above.

 

[signature page follows]

 


(5)  The Lead Borrower may request a Borrowing of LIBO Rate Loans with an Interest Period of one, two, three or six months (or such period of nine or twelve months as requested by the Lead Borrower and Consented to by all of the Lenders).  If no election of Interest Period is specified, then the Lead Borrower will be deemed to have specified an Interest Period of one month.

 

2



 

Dated as of the date above first written.

 

 

SUPERVALU INC. , as Lead Borrower

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

Committed Loan Notice

 



 

EXHIBIT B

 

FORM OF SWING LINE LOAN NOTICE

 

Date:                        ,                

 

To:           Wells Fargo Bank, National Association, as Swing Line Lender
Wells Fargo Bank, National Association, as Administrative Agent

 

Ladies and Gentlemen:

 

Reference is made to the Amended and Restated Credit Agreement dated as of March 21, 2013 (as amended, modified, supplemented or restated hereafter, the “ Credit Agreement ”) by and among (i)  SUPERVALU INC. , a Delaware corporation, for itself and as Lead Borrower (in such capacity, the “ Lead Borrower ”) for the other Borrowers party thereto from time to time (individually, a “ Borrower ” and, collectively, the “ Borrowers ”), (ii) the Borrowers party thereto from time to time, (iii) Wells Fargo Bank, National Association, as administrative and collateral agent (in such capacity, the “ Administrative Agent ”) for its own benefit and the benefit of the other Credit Parties referred to therein, (iv) Wells Fargo Bank, National Association, [U.S. Bank National Association, PNC Bank, National Association and “Rabobank Nederland”, New York Branch], as LC Issuers and (v) the lenders from time to time party thereto (individually, a “ Lender ” and, collectively, the “ Lenders ”).  All capitalized terms used herein and not otherwise defined shall have the same meaning herein as in the Credit Agreement.

 

The Lead Borrower hereby requests a Swing Line Borrowing:

 

1.              On                                                                            (a Business Day) (1)

 

2.              In the amount of $                                             (2)

 

The Swing Line Borrowing requested herein complies with the provisions of Section 2.04 of the Credit Agreement.

 

 

SUPERVALU INC. , as Lead Borrower

 

 

 

By:

 

 

Name:

 

 

Title:

 

 


(1)            Each notice of a Swing Line Borrowing must be received by the Swing Line Lender and the Administrative Agent not later than 2:00 p.m. on the requested date of any Swing Line Borrowing.

 

(2)            Each Swing Line Borrowing must be in a minimum amount of $100,000.

 



 

EXHIBIT C-1

 

FORM OF NOTE

 

NOTE

 

$

                              ,          

 

FOR VALUE RECEIVED , the undersigned (individually, a “ Borrower ” and, collectively, the “ Borrowers ”), jointly and severally promise to pay to the order of                                            (hereinafter, with any subsequent holders, the “ Lender ”), c/o Wells Fargo Bank, National Association, [                                                      ], the principal sum of                                        DOLLARS ($                            ), or, if less, the aggregate unpaid principal balance of Committed Loans made by the Lender to or for the account of any Borrower pursuant to the Amended and Restated Credit Agreement dated as of March 21, 2013 (as amended, modified, supplemented or restated and in effect from time to time, the “ Credit Agreement ”) by and among (i) the Borrowers, (ii) Wells Fargo Bank, National Association, as administrative and collateral agent (in such capacity, the “ Administrative Agent ”) for its own benefit and the benefit of the other Credit Parties referred to therein, (iii) Wells Fargo Bank, National Association, [U.S. Bank National Association, PNC Bank, National Association and Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A., “Rabobank Nederland”, New York Branch], as LC Issuers, and (iv) the lenders from time to time party thereto (individually, a “ Lender ” and, collectively, the “ Lenders ”), with interest at the rate and payable in the manner stated therein.

 

This is a “ Note ” to which reference is made in the Credit Agreement and is subject to all terms and provisions thereof.  The principal of, and interest on, this Note shall be payable at the times, in the manner, and in the amounts as provided in the Credit Agreement and shall be subject to prepayment and acceleration as provided therein.  Capitalized terms used herein and not defined herein shall have the meanings assigned to such terms in the Credit Agreement.

 

The Administrative Agent’s books and records concerning the Committed Loans, the accrual of interest thereon, and the repayment of such Committed Loans, shall be prima facie evidence of the indebtedness to the Lender hereunder.

 

No delay or omission by Administrative Agent or the Lender in exercising or enforcing any of Administrative Agent’s or the Lender’s powers, rights, privileges, remedies, or discretions hereunder shall operate as a waiver thereof on that occasion nor on any other occasion.  No waiver of any Event of Default shall operate as a waiver of any other Event of Default, nor as a continuing waiver of any such Event of Default.

 

Each Borrower, and each endorser and guarantor of this Note, waives presentment, demand, notice, and protest, and also waives any delay on the part of the holder hereof.  Each Borrower assents to any extension or other indulgence (including, without limitation, the release or substitution of Collateral) permitted by the Administrative Agent and/or the Lender with respect to this Note and/or any Collateral or any extension or other indulgence with respect to any other liability or any collateral given to secure any other liability of any Borrower or any other Person obligated on account of this Note.

 

1



 

This Note shall be binding upon each Borrower, and each endorser and guarantor hereof, and upon their respective successors, assigns, and representatives, and shall inure to the benefit of the Lender and its successors, endorsees, and assigns.

 

The liabilities of each Borrower, and of any endorser or guarantor of this Note, are joint and several, provided , that , the release by the Administrative Agent or the Lender of any one or more such Persons shall not release any other Person obligated on account of this Note.  Each reference in this Note to any Borrower, any endorser, and any guarantor, is to such Person individually and also to all such Persons jointly.  No Person obligated on account of this Note may seek contribution from any other Person also obligated unless and until all of the Obligations have been paid in full in cash.

 

THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT EXCLUDING ANY PRINCIPLES OF CONFLICTS OF LAW OR OTHER RULE OF LAW THAT WOULD CAUSE THE APPLICATION OF THE LAW OF ANY JURISDICTION OTHER THAN THE LAWS OF THE STATE OF NEW YORK.

 

EACH OF THE BORROWERS IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE BORROWERS IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT.  EACH OF THE BORROWERS HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.  NOTHING IN THIS NOTE OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT THE ADMINISTRATIVE AGENT OR ANY LENDER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS NOTE OR ANY OTHER LOAN DOCUMENT AGAINST ANY OF THE BORROWERS OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.

 

EACH OF THE BORROWERS IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS NOTE OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO HEREIN.  EACH OF THE BORROWERS HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

 

EACH OF THE BORROWERS IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 10.02 OF THE CREDIT AGREEMENT.  EXCLUDING SERVICE OF PROCESS BY EMAIL, NOTHING IN THIS NOTE WILL AFFECT THE RIGHT OF THE ADMINISTRATIVE AGENT OR ANY LENDER TO SERVE PROCESS IN ANY

 

2



 

OTHER MANNER PERMITTED BY APPLICABLE LAW BUT IN NO EVENT SHALL SERVICE OF PROCESS BY EMAIL BE EFFECTIVE.

 

EACH OF THE BORROWERS AGREES THAT ANY ACTION COMMENCED BY ANY OF THE BORROWERS ASSERTING ANY CLAIM OR COUNTERCLAIM ARISING UNDER OR IN CONNECTION WITH THIS NOTE OR ANY OTHER LOAN DOCUMENT SHALL BE BROUGHT SOLELY IN A COURT OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY OR THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, AS THE ADMINISTRATIVE AGENT MAY ELECT IN ITS SOLE DISCRETION, AND CONSENTS TO THE EXCLUSIVE JURISDICTION OF SUCH COURTS WITH RESPECT TO ANY SUCH ACTION.

 

Each Borrower makes the following waiver knowingly, voluntarily, and intentionally, and understands that the Administrative Agent and the Lender, in the establishment and maintenance of their respective relationship with the Borrowers contemplated by this Note, are each relying thereon.  EACH BORROWER, EACH GUARANTOR, ENDORSER AND SURETY, LENDER AND THE ADMINISTRATIVE AGENT, BY ITS ACCEPTANCE HEREOF, HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN  ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS NOTE OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).  EACH BORROWER (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT THE ADMINISTRATIVE AGENT AND LENDERS HAVE BEEN INDUCED TO ENTER INTO THE CREDIT AGREEMENT AND THIS NOTE BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS HEREIN.

 

[ SIGNATURE PAGES FOLLOW ]

 

3



 

IN WITNESS WHEREOF, the Borrowers have caused this Note to be duly executed as of the date set forth above.

 

 

BORROWERS :

 

 

 

SUPERVALU INC.

 

 

 

By:

 

 

Name:

Sherry M. Smith

 

Title:

Executive Vice President and Chief Financial Officer

 

 

 

 

ADVANTAGE LOGISTICS - SOUTHEAST, INC.

 

FF ACQUISITION, L.L.C.

 

FOODARAMA LLC

 

RICHFOOD, INC.

 

SHOP ‘N SAVE ST. LOUIS, INC.

 

SHOP ‘N SAVE WAREHOUSE FOODS, INC.

 

SHOPPERS FOOD WAREHOUSE CORP.

 

SUPERVALU HOLDINGS, INC.

 

SUPERVALU HOLDINGS - PA LLC

 

By:

SUPERVALU Holdings, Inc., its sole member

 

SUPERVALU PHARMACIES, INC.

 

W. NEWELL & CO., LLC

 

RICHFOOD HOLDINGS, INC.

 

SUPER RITE FOODS, INC.

 

SUPERVALU TTSJ, INC.

 

 

 

By:

 

 

Name:

Sherry M. Smith

 

Title:

Vice President

 

 

 

 

CHAMPLIN 2005 L.L.C.

 

 

 

 

By:

SUPERVALU INC., its sole member

 

 

 

 

 

By:

 

 

 

Name:

Sherry M. Smith

 

 

Title:

Executive Vice President and

 

 

 

Chief Financial Officer

 

 

 

 

 

MORAN FOODS, LLC

 

 

 

By:

 

 

Name:

Santiago Roces

 

Title:

Chief Executive Officer

 

Note - [Lender]

 



 

 

SAVE-A-LOT TYLER GROUP, LLC

 

 

 

 

By:

 

 

Name:

Sherry M. Smith

 

Title:

Senior Vice President, Finance, Treasurer

 

Note - [Lender]

 



 

EXHIBIT C-2

 

FORM OF AMENDED AND RESTATED SWING LINE NOTE

 

SWING LINE NOTE

 

$

 

                         ,           

 

FOR VALUE RECEIVED , the undersigned (individually, a “ Borrower ” and, collectively, the “ Borrowers ”), jointly and severally promise to pay to the order of WELLS FARGO BANK, NATIONAL ASSOCIATION (hereinafter, with any subsequent holders, the “ Swing Line Lender ”), [                                                                  ], the principal sum of                                      DOLLARS ($                        ), or, if less, the aggregate unpaid principal balance of Swing Line Loans made by the Swing Line Lender to or for the account of any Borrower pursuant to the Amended and Restated Credit Agreement dated as of March 21, 2013 (as amended, modified, supplemented or restated and in effect from time to time, the “ Credit Agreement ”) by and among (i) the Borrowers, (ii) Wells Fargo Bank, National Association, as administrative and collateral agent (in such capacity, the “ Administrative Agent ”) for its own benefit and the benefit of the other Credit Parties referred to therein, (iii) Wells Fargo Bank, National Association, [U.S. Bank National Association, PNC Bank, National Association and Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A., “Rabobank Nederland”, New York Branch], as LC Issuers, and (iv) the lenders from time to time party thereto (individually, a “ Lender ” and, collectively, the “ Lenders ”), with interest at the rate and payable in the manner stated therein.

 

This is a “ Swing Line Note ” to which reference is made in the Credit Agreement and is subject to all terms and provisions thereof.  The principal of, and interest on, this Swing Line Note shall be payable at the times, in the manner, and in the amounts as provided in the Credit Agreement and shall be subject to prepayment and acceleration as provided therein.  Capitalized terms used herein and not defined herein shall have the meanings assigned to such terms in the Credit Agreement.

 

The Administrative Agent’s books and records concerning the Swing Line Loans, the accrual of interest thereon, and the repayment of such Swing Line Loans, shall be prima facie evidence of the indebtedness to the Lender hereunder.

 

No delay or omission by the Administrative Agent or the Swing Line Lender in exercising or enforcing any of the Administrative Agent’s or the Swing Line Lender’s powers, rights, privileges, remedies, or discretions hereunder shall operate as a waiver thereof on that occasion nor on any other occasion.  No waiver of any Event of Default shall operate as a waiver of any other Event of Default, nor as a continuing waiver of any such Event of Default.

 

Each Borrower, and each endorser and guarantor of this Swing Line Note, waives presentment, demand, notice, and protest, and also waives any delay on the part of the holder hereof.  Each Borrower assents to any extension or other indulgence (including, without limitation, the release or substitution of Collateral) permitted by the Administrative Agent and/or the Lender with respect to this Swing Line Note and/or any Collateral or any extension or other indulgence with respect to any other liability or any

 

1



 

collateral given to secure any other liability of any Borrower or any other Person obligated on account of this Swing Line Note.

 

This Swing Line Note shall be binding upon each Borrower, and each endorser and guarantor hereof, and upon their respective successors, assigns, and representatives, and shall inure to the benefit of the Lender and its successors, endorsees, and assigns.

 

The liabilities of each Borrower, and of any endorser or guarantor of this Swing Line Note, are joint and several, provided , that , the release by the Administrative Agent or the Lender of any one or more such Persons shall not release any other Person obligated on account of this Swing Line Note.  Each reference in this Swing Line Note to any Borrower, any endorser, and any guarantor, is to such Person individually and also to all such Persons jointly.  No Person obligated on account of this Swing Line Note may seek contribution from any other Person also obligated unless and until all of the Obligations have been paid in full in cash.

 

THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT EXCLUDING ANY PRINCIPLES OF CONFLICTS OF LAW OR OTHER RULE OF LAW THAT WOULD CAUSE THE APPLICATION OF THE LAW OF ANY JURISDICTION OTHER THAN THE LAWS OF THE STATE OF NEW YORK.

 

EACH OF THE BORROWERS IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE BORROWERS IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT.  EACH OF THE BORROWERS HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.  NOTHING IN THIS SWING LINE NOTE OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT THE SWING LINE LENDER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS SWING LINE NOTE OR ANY OTHER LOAN DOCUMENT AGAINST ANY OF THE BORROWERS OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.

 

EACH OF THE BORROWERS IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS SWING LINE NOTE OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO HEREIN.  EACH OF THE BORROWERS HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

 

2



 

EACH OF THE BORROWERS IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 10.02 OF THE CREDIT AGREEMENT EXCLUDING SERVICE OF PROCESS BY EMAIL.  NOTHING IN THIS SWING LINE NOTE WILL AFFECT THE RIGHT OF THE SWING LINE LENDER TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW BUT IN NO EVENT SHALL SERVICE OF PROCESS BY EMAIL BE EFFECTIVE.

 

EACH OF THE BORROWERS AGREES THAT ANY ACTION COMMENCED BY ANY OF THE BORROWERS ASSERTING ANY CLAIM OR COUNTERCLAIM ARISING UNDER OR IN CONNECTION WITH THIS SWING LINE NOTE OR ANY OTHER LOAN DOCUMENT SHALL BE BROUGHT SOLELY IN A COURT OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY OR THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, AS THE ADMINISTRATIVE AGENT MAY ELECT IN ITS SOLE DISCRETION, AND CONSENTS TO THE EXCLUSIVE JURISDICTION OF SUCH COURTS WITH RESPECT TO ANY SUCH ACTION.

 

Each Borrower makes the following waiver knowingly, voluntarily, and intentionally, and understands that the Agents and the Lender, in the establishment and maintenance of their respective relationship with the Borrowers contemplated by this Swing Line Note, are each relying thereon.  EACH BORROWER, EACH GUARANTOR, ENDORSER AND SURETY, AND THE SWING LINE LENDER, BY ITS ACCEPTANCE HEREOF, HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS SWING LINE NOTE OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).  EACH BORROWER (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT THE AGENTS AND THE SWING LINE LENDER HAVE BEEN INDUCED TO ENTER INTO THE CREDIT AGREEMENT AND THIS NOTE BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS HEREIN.

 

This Swing Line Note supersedes and replaces the Swing Line Note, dated August 30, 2012, by certain of the Borrowers payable to the order of the Swing Line Lender in the original principal amount of $150,000,000 (the “Existing Swing Line Note”), but does not extinguish or constitute payment of the obligations, liabilities and indebtedness evidenced through or arising thereunder or in respect thereof.  Borrowers hereby acknowledge that Borrowers are jointly and severally indebted to Swing Line Lender for interest through the date hereof under the Existing Swing Line Note and for interest accruing hereunder from and after the date hereof.  Neither the amendment and restatement contained herein nor Swing Line Lender’s acceptance of this Swing Line Note or other actions contemplated by the Credit Agreement or any of the other Loan Documents shall, in any manner, be construed to constitute payment of, or impair, limit or extinguish the indebtedness arising under or evidenced by the Existing Swing Line Note or constitute a novation with respect thereto and the liens and security interests securing such indebtedness shall not in any manner be impaired, limited, terminated, waived or release hereby.

 

[ SIGNATURE PAGES FOLLOW ]

 

3



 

IN WITNESS WHEREOF, the Borrowers have caused this Swing Line Note to be duly executed as of the date set forth above.

 

 

BORROWERS :

 

 

 

SUPERVALU INC.

 

 

 

By:

 

 

Name:

Sherry M. Smith

 

Title:

Executive Vice President and Chief Financial Officer

 

 

 

 

ADVANTAGE LOGISTICS - SOUTHEAST, INC.

 

FF ACQUISITION, L.L.C.

 

FOODARAMA LLC

 

RICHFOOD, INC.

 

SHOP ‘N SAVE ST. LOUIS, INC.

 

SHOP ‘N SAVE WAREHOUSE FOODS, INC.

 

SHOPPERS FOOD WAREHOUSE CORP.

 

SUPERVALU HOLDINGS, INC.

 

SUPERVALU HOLDINGS - PA LLC

 

By:

SUPERVALU Holdings, Inc., its sole member

 

SUPERVALU PHARMACIES, INC.

 

W. NEWELL & CO., LLC

 

RICHFOOD HOLDINGS, INC.

 

SUPER RITE FOODS, INC.

 

SUPERVALU TTSJ, INC.

 

 

 

By:

 

 

Name:

Sherry M. Smith

 

Title:

Vice President

 

 

 

 

CHAMPLIN 2005 L.L.C.

 

 

 

 

By:

SUPERVALU INC., its sole member

 

 

 

 

 

By:

 

 

 

Name:

Sherry M. Smith

 

 

Title:

Executive Vice President and

 

 

 

Chief Financial Officer

 

 

 

 

 

MORAN FOODS, LLC

 

 

 

By:

 

 

Name:

Santiago Roces

 

Title:

Chief Executive Officer

 

Amended and Restated Swing Line Note

 



 

 

SAVE-A-LOT TYLER GROUP, LLC

 

 

 

By:

 

 

Name:

Sherry M. Smith

 

Title:

Senior Vice President, Finance, Treasurer

 

Amended and Restated Swing Line Note

 



 

EXHIBIT D
TO
AMENDED AND RESTATED CREDIT AGREEMENT

 

FORM OF COMPLIANCE CERTIFICATE

 

To:

Wells Fargo Bank, National Association

Date:

 

One Boston Place, 18th Floor

 

 

Boston, Massachusetts 02108-4407

 

 

Attention: Portfolio Manager - SUPERVALU

 

 

Re:           Amended and Restated Credit Agreement dated as of March 21, 2013 (as amended, modified, supplemented or restated hereafter, the “ Credit Agreement ”) by and among (i) SUPERVALU INC. a Delaware corporation, for itself and as Lead Borrower (in such capacity, the “ Lead Borrower ”) for the other Borrowers party thereto from time to time (individually, a “ Borrower ” and, collectively, the “ Borrowers ”), (ii) the Borrowers party thereto from time to time, (iii) Wells Fargo Bank, National Association, as administrative and collateral agent (in such capacity, the “ Administrative Agent ”) for its own benefit and the benefit of the other Credit Parties referred to therein, (iv) Wells Fargo Bank, National Association, PNC Bank, National Association, RaboBank Nederland, New York Branch and U.S. Bank, National Association, as LC Issuers, and (vi) the lenders from time to time party thereto (individually, a “ Lender ” and, collectively, the “ Lenders ”).  All capitalized terms used herein and not otherwise defined shall have the same meaning herein as in the Credit Agreement.

 

The undersigned, a duly authorized and acting Responsible Officer of the Lead Borrower, hereby certifies to you as follows(1):

 

1.              No Default .

 

(a) [To the knowledge of the undersigned Responsible Officer, no Default or Event of Default has occurred and is continuing (except with respect to any Default arising from the inaccuracy of representations and warranties which are not Specified Representations).(2)]

 

or

 

(a) [To the knowledge of the undersigned Responsible Officer, except as set forth in Appendix I , no Default or Event of Default has occurred and is continuing.

 

(b) If a Default or Event of Default has occurred and is continuing, the Borrowers propose to take action as set forth in Appendix I with respect to such Default or Event of Default. (3)]

 


(1)  After the Closing Date, Compliance Certificate is only required to be delivered with financial statements referred to in Section 6.01(c) of the Credit Agreement after Excess Availability is less than twenty percent (20%) of the Aggregate Commitments.

(2)  This certification is to be included in the Compliance Certificate delivered on the Closing Date.

(3)  This certification is to be included in each Compliance Certificate delivered after the Closing Date.

 



 

2.              Financial Calculations .  [Attached hereto as Appendix I are reasonably detailed calculations necessary to determine the Consolidated Fixed Charge Coverage Ratio of Lead Borrower and its Restricted Subsidiaries as of [                           , 201  ] . (4)]

 

or

 

[Attached hereto as Appendix II are reasonably detailed calculations necessary to determine the Consolidated Fixed Charge Coverage Ratio of Lead Borrower and its Restricted Subsidiaries as of [                           , 201  ] (whether or not compliance therewith is then required under Section 7.15 of the Credit Agreement). (5)]

 

3.              No Material Accounting Changes, Etc .  The financial statements furnished to the Administrative Agent for the Fiscal Period/Fiscal Quarter/Fiscal Year ending [               , 201  ] were prepared in accordance with GAAP consistently applied for the period covered thereby, and present fairly in all material respects the financial condition of the Lead Borrower and its Subsidiaries on a consolidated basis at the close of, and the results of their operations and cash flows for, the period(s) covered, subject to, with respect to the quarterly financial statements, normal year end audit adjustments and the absence of footnotes.  To the extent there has been any change in generally accepted accounting principles used in the preparation of such financial statements, (a) attached as Appendix [II or III] hereto is a statement of reconciliation conforming such financial statements to GAAP, and (b) attached as Appendix [III or IV] hereto is a copy of management’s discussion and analysis with respect to such financial statements.

 


(4)  This certification is to be included in the Compliance Certificate delivered on the Closing Date.

(5)  This certification is to be included in each Compliance Certificate delivered after the Closing Date.

 



 

IN WITNESS WHEREOF, I have executed this certificate as of the date first written above.

 

 

By:

 

 

Name:

 

 

Title:

 

 



 

APPENDIX  I

 

Events of Default, if any and Proposed Actions

 



 

APPENDIX II

 

Calculation of Consolidated Fixed Charge Coverage Ratio

 



 

APPENDIX III

 

Statement of Reconciliation Conforming Financial Statements to GAAP

 



 

APPENDIX IV

 

Management’s Discussion and Analysis

 



 

EXHIBIT E

 

FORM OF ASSIGNMENT AND ASSUMPTION

 

Reference is made to the Amended and Restated Credit Agreement dated as of March 21, 2013 (as amended, modified, supplemented or restated hereafter, the “ Credit Agreement ”) by and among (i) SUPERVALU INC. , a Delaware corporation, for itself and as Lead Borrower (in such capacity, the “ Lead Borrower ”) for the other Borrowers party thereto from time to time (individually, a “ Borrower ” and, collectively, the “ Borrowers ”), (ii) the Borrowers party thereto from time to time, (iii) Wells Fargo Bank, National Association, as administrative and collateral agent (in such capacity, the “ Administrative Agent ”) for its own benefit and the benefit of the other Credit Parties referred to therein, (iv) Wells Fargo Bank, National Association, [PNC Bank, National Association, “Rabobank Nederland”, New York Branch and U.S. Bank National Association], as LC Issuers, and (v) the lenders from time to time party thereto (individually, a “ Lender ” and, collectively, the “ Lenders ”).  All capitalized terms used herein and not otherwise defined shall have the same meaning herein as in the Credit Agreement.

 

                                                             (the “ Assignor ”) and                                        (the “ Assignee ”) agree as follows:

 

1.              The Assignor hereby sells and assigns to the Assignee, and the Assignee hereby purchases and assumes from the Assignor, that interest in and to the Assignor’s rights and obligations as a Lender under the Credit Agreement as of the date hereof (including, without limitation, such interest in each of the Assignor’s outstanding Commitments, if any, and the Loans (and related Obligations) owing to it) specified in Section 1 of Schedule I hereto.  After giving effect to such sale and assignment, the Assignor’s and the Assignee’s Commitments and the amount of the Loans owing to the Assignor and the Assignee and the amount of Letters of Credit participated in by the Assignor and the Assignee will be as set forth in Section 2 of Schedule I hereto.

 

2.              The Assignor: (a) represents and warrants that it is the legal and beneficial owner of the interest being assigned by it hereunder and that such interest is free and clear of any Liens and that it is legally authorized to enter into this Assignment and Assumption; (b) makes no representation or warranty and assumes no responsibility with respect to (i) any statements, warranties or representations made in, or in connection with, the Credit Agreement or any other Loan Document or any other instrument or document furnished pursuant thereto, or (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Credit Agreement or any other Loan Document or any other instrument or document furnished pursuant thereto; (c) makes no representation or warranty and assumes no responsibility with respect to the financial condition of any Loan Party or the performance or observance by any Loan Party of any of their respective obligations under the Credit Agreement or any other Loan Document or any other instrument or document furnished pursuant thereto; and (d) confirms, in the case of an Assignee who is not a Lender, an Affiliate of a Lender, or an Approved Fund, the amount of the Commitment (which for this purpose includes Loans outstanding thereunder) or, if the Commitment is not then in effect, the principal outstanding balance of the Loans of the Assignor being assigned pursuant to this Assignment and Assumption, is not less than $10,000,000(1), or, if less, the entire remaining amount of the Assignor’s Commitment and the Loans at any time owing to it, unless each of the Administrative Agent, the LC Issuer and the Swing Line Lender and, so

 


(1)  In the case of an assignment to another Lender, an Affiliate of a Lender or an Approved Fund, $5,000,000.

 

1



 

long as no Default or Event of Default has occurred and is continuing, the Lead Borrower otherwise consent (each such consent not to be unreasonably withheld or delayed).

 

3.              The Assignee: (a) confirms that it has received a copy of the Credit Agreement, together with copies of the financial statements referred to in Section 6.01 thereof and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption; (b) agrees that it will, independently and without reliance upon the Administrative Agent, the Assignor or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement; (c) appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such powers under the Credit Agreement as are delegated to the Administrative Agent by the terms thereof, together with such powers as are reasonably incidental thereto; (d) agrees that it will perform in accordance with their terms all of the obligations which, by the terms of the Credit Agreement, are required to be performed by it as a Lender; (e) specifies as its lending office (and address for notices) the office set forth beneath its name on the signature pages hereof; (f) agrees that, if the Assignee is a Foreign Lender entitled to an exemption from, or reduction of, withholding tax under the law of the jurisdiction in which the applicable Loan Party is resident for tax purposes, it shall deliver to the Loan Parties and the Administrative Agent (in such number of copies as shall be requested by the recipient) whichever of the following is applicable: (i) duly completed copies of Internal Revenue Service Form W-8BEN claiming eligibility for benefits of an income tax treaty to which the United States is a party, (ii) duly completed copies of Internal Revenue Service Form W-8ECI, (iii) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under section 881(c) of the Code, (A) a certificate to the effect that such Foreign Lender is not (1) a “bank” within the meaning of section 881(c)(3)(A) of the Code, (2) a “10 percent shareholder” of the Loan Parties within the meaning of section 881(c)(3)(B) of the Code, or (3) a “controlled foreign corporation” described in section 881(c)(3)(C) of the Code and (B) duly completed copies of  Internal Revenue Service Form W-8BEN, or (iv) any other form prescribed by applicable law as a basis for claiming exemption from, or a reduction in, United States Federal withholding tax, duly completed, together with such supplementary documentation as may be prescribed by applicable law to permit the Borrowers to determine the withholding or deduction required to be made; and (g) represents and warrants that it is an Eligible Assignee.

 

4.              Following the execution of this Assignment and Assumption by the Assignor and the Assignee, it will be delivered, together with a processing and recordation fee in the amount required as set forth in Section 10.06 to the Credit Agreement, to the Administrative Agent for acceptance and recording by the Administrative Agent.  The effective date of this Assignment and Assumption shall be the date of acceptance thereof by the Administrative Agent, unless otherwise specified on Schedule I hereto (the “ Effective Date ”).

 

5.              Upon such acceptance and recording by the Administrative Agent and, to the extent required by Section 10.06(b)(iii) of the Credit Agreement, consent by the Administrative Agent, the LC Issuer, the Swing Line Lender and the Lead Borrower, as applicable (such consent not to be unreasonably withheld or delayed), from and after the Effective Date, (a) the Assignee shall be a party to the Credit Agreement and, to the extent of the interest assigned by this Assignment and Assumption, shall have the rights and obligations of a Lender under the Credit Agreement, and

 

2



 

(b) the Assignor shall, to the extent of the interest assigned by this Assignment and Assumption, be released from its obligations under the Credit Agreement.

 

6.              Upon such acceptance and recording by the Administrative Agent, from and after the Effective Date, the Administrative Agent shall make all payments under the Credit Agreement in respect of the interest assigned hereby (including, without limitation, all payments of principal, interest and fees with respect thereto) to the Assignee.  The Assignor and Assignee shall make all appropriate adjustments in payments under the Credit Agreement for periods prior to the Effective Date directly between themselves.

 

7.              This Assignment and Assumption shall be governed by, and be construed in accordance with, the laws of the State of New York.

 

[SIGNATURE PAGE FOLLOWS]

 

3



 

IN WITNESS WHEREOF, the parties hereto have caused this Assignment and Assumption to be executed by their respective officers thereunto duly authorized, as of the date first above written.

 

 

[ASSIGNOR]

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

 

 

[ASSIGNEE]

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

 

 

Lending Office (and address for notices):

 

 

 

[Address]

 

 

Accepted this            day

 

of                       ,           :

 

 

 

WELL FARGO BANK, NATIONAL ASSOCIATION

 

as Administrative Agent

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

Schedule I to Assignment and Assumption

 



 

Acknowledged and, to the extent required by Section 10.06(b)(iii) of the Credit Agreement, consented to, this            day of                           ,               :

 

ADMINISTRATIVE AGENT :

 

WELL FARGO BANK, NATIONAL ASSOCIATION

 

By:

 

 

Name:

 

 

Title:

 

 

 

2



 

Acknowledged and, to the extent required by Section 10.06(b)(iii) of the Credit Agreement, consented to, this            day of                           ,               :

 

LC ISSUERS :

 

WELLS FARGO BANK, NATIONAL ASSOCIATION

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

[OTHERS]

 

By:

 

 

Name:

 

 

Title:

 

 

 

3



 

Acknowledged and, to the extent required by Section 10.06(b)(iii) of the Credit Agreement, consented to, this            day of                           ,               :

 

SWING LINE LENDER :

 

WELLS FARGO BANK, NATIONAL ASSOCIATION

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

4



 

Acknowledged and, to the extent required by Section 10.06(b)(iii) of the Credit Agreement, consented to, this            day of                           ,               :

 

LEAD BORROWER :

 

SUPERVALU INC.

 

By:

 

 

Name:

 

 

Title:

 

 

 

5



 

Schedule I

 

Section 1 .              Percentage/Amount of Commitments/Loans/Letters of Credit Assigned by Assignor to Assignee .

 

Applicable Percentage assigned by Assignor:

 

%

 

 

 

Commitment assigned by Assignor:

 

$

 

 

 

Commitment assigned by Assignor:

 

$

 

 

 

Aggregate Outstanding Principal Amount of

 

 

Loans assigned by Assignor:

 

$

 

 

 

Aggregate Participations assigned by Assignor in LC Obligations:

 

$

 

Section 2.              Percentage/Amount of Commitments/Loans/Letters of Credit Held by Assignor and Assignee after giving effect to Assignment and Assumption .

 

Assignor’s Applicable Percentage

 

%

 

 

 

Assignee’s Applicable Percentage:

 

%

 

 

 

Assignor’s Commitment:

 

$

 

 

 

Assignee’s Commitment:

 

$

 

 

 

Aggregate Outstanding Principal Amount of

 

 

Loans Owing to Assignor:

 

$

 

 

 

Aggregate Outstanding Principal Amount of

 

 

Loans Owing to Assignee:

 

$

 

 

 

Aggregate Participations by Assignor in LC Obligations:

 

$

 

 

 

Aggregate Participations by Assignee in LC Obligations:

 

$

 

Section 3 Effective Date

 

Effective Date:

                              ,       

 

6



 

EXHIBIT F

to

AMENDED AND RESTATED CREDIT AGREEMENT

FORM OF BORROWING BASE CERTIFICATE

 

See attached.

 



 

Borrowing Base Certificate

SUPERVALU, Inc.

REVOLVING LINE OF CREDIT AVAILABILITY CALCULATION

 

 

 

 

 

 

Date:

 

 

 

 

 

 

Number:

 

 

 

 

 

 

 

 

CREDIT CARD RECEIVABLES

 

as of:

 

 

 

 

Credit Card Receivables

 

 

 

 

 

 

Less: Ineligibles

 

 

 

 

 

 

Eligible Credit Card Receivables

 

 

 

 

 

$

0

Credit Card Accounts Receivable Advance Rate

 

 

 

 

 

[**]

Credit Card Receivable Availability

 

 

 

 

 

$

0

 

 

 

 

 

 

 

PHARMACY ACCOUNTS RECEIVABLE

 

as of:

 

 

 

 

Pharmacy Accounts Receivable

 

 

 

 

 

 

Less: Ineligibles

 

 

 

 

 

 

Eligible Pharmacy Accounts Receivable

 

 

 

 

 

$

0

Pharmacy Accounts Receivables Advance Rate

 

 

 

 

 

[**]

Available Pharmacy Accounts Receivable

 

 

 

 

 

$

0

Less: In excess of 10% of the BBC

 

 

 

 

 

 

Capped Pharmacy Accounts Receivable

 

 

 

 

 

 

Total Pharmacy AR as a % of the Borrowing Base

 

 

 

 

 

 

 

 

 

 

 

 

 

TRADE ACCOUNTS RECEIVABLE

 

as of:

 

 

 

 

Trade Accounts Receivable

 

 

 

 

 

 

Less: Ineligibles

 

 

 

 

 

 

Eligible Trade Accounts Receivable

 

 

 

 

 

$

0

Trade Accounts Receivables Advance Rate

 

 

 

 

 

[**]

Available Trade Accounts Receivable

 

 

 

 

 

$

0

Less: In excess of 25% of the BBC

 

 

 

 

 

 

Capped Trade Accounts Receivable

 

 

 

 

 

 

Trade AR as a % of the Borrowing Base

 

 

 

 

 

 

 

 

 

 

 

 

 

PERISHABLE INVENTORY

 

 

 

 

 

 

Supply Chain Perishable

 

 

 

 

 

 

Less: Supply Chain Perishable Ineligibles

 

 

 

 

 

 

Eligible Supply Chain Perishable

 

 

 

 

 

$

0

Advance Rate  (85% of NOLV)

NOLV:

[**]

 

 

 

[**]

Available Supply Chain Perishable

 

 

 

 

 

$

0

 

 

 

 

 

 

 

Retail Perishable

 

 

 

 

 

 

Less: Retail Perishable Ineligibles

 

 

 

 

 

 

Eligible Retail Perishable

 

 

 

 

 

$

0

Advance Rate  (90% of NOLV)

NOLV:

[**]

 

 

 

[**]

Available Retail Perishable

 

 

 

 

 

 

 

 

 

 

 

 

Total Available Perishable

 

 

 

 

 

Less: In excess of 25% of the BBC

 

 

 

 

 

 

Capped Perishable Inventory

 

 

 

 

 

 

Total Perishable Inventory as a % of the Borrowing Base

 

 

 

 

 

 

 

 

 

 

 

 

 

NON-PERISHABLE INVENTORY

 

as of:

 

 

 

 

Supply Chain Non-Perishable

 

 

 

 

 

 

Less: Supply Chain Non-Perishable Ineligibles

 

 

 

 

 

 

Eligible Supply Chain Non-Perishable

 

 

 

 

 

$

0

Advance Rate  (85% of NOLV)

NOLV:

[**]

 

 

 

[**]

Available Supply Chain Non-Perishable

 

 

 

 

 

$

0

 

 

 

 

 

 

 

Retail Non-Perishable

 

 

 

 

 

 

Less: Retail Non-Perishable Ineligibles

 

 

 

 

 

 

Eligible Retail Non-Perishable

 

 

 

 

 

$

0

Advance Rate  (90% of NOLV)

NOLV:

[**]

 

 

 

[**]

Available Retail Perishable

 

 

 

 

 

Available Non-Perishable Inventory

 

 

 

 

 

 

 

 

 

 

 

 

Total Inventory Availability

 

 

 

 

 

 

 

 

 

 

 

 

 

PHARMACY SCRIPTS

 

as of:

 

 

 

 

# of Scripts (trailing 13 periods)

 

 

 

 

 

 

Value per Script

 

 

 

 

 

 

Appraised Script Value

 

 

 

 

 

 

Pharmacy Script Advance Rate

 

 

 

 

 

[**]

Available Pharmacy Scripts

 

 

 

 

 

$

0

Less: Amount In Excess of 25% of the Borrowing Base

 

 

 

 

 

 

Capped Pharmacy Scripts

 

 

 

 

 

Scripts as a % of the Borrowing Base

 

 

 

 

 

 

 


**Denotes confidential information that has been omitted from the exhibit and filed separately, accompanied by a confidential treatment request, with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934.

 



 

AVAILABILITY RESERVES

 

as of:

 

 

 

 

 

 

 

 

 

 

 

BORROWING BASE

 

 

 

 

 

 

 

 

 

 

 

 

 

(A) Calculated Borrowing Base

 

as of:

 

 

 

 

(B) Revolving Commitment $1,000MM

 

 

 

 

 

 

Lesser of A or B

 

 

 

 

 

$

0

 

 

 

 

 

 

 

Availability Calculation

 

as of:

 

 

 

 

 

 

 

 

 

 

 

Beginning Principal Balance

Prior Days Advance

 

 

 

$

 

Fees Charged Today

 

 

 

$

 

Adjustments

 

 

 

$

 

 

 

 

 

 

 

 

Prior Day’s Pay Down

 

 

 

$

 

 

 

 

 

 

 

 

Ending Principal Balance

 

 

 

 

 

$

 

Est. Accrued Interest MTD

 

 

 

$

 

Standby Letters of Credit

 

 

 

 

 

Documentary Letters of Credit

 

 

 

 

 

 

 

 

 

 

 

Total Loan Balance Prior to Request

 

 

 

 

 

$

 

 

 

 

 

 

 

Net Availability Prior to Today’s Request

 

 

 

 

 

$

 

 

 

 

 

 

 

TODAY’S ADVANCE REQEUST

 

 

 

 

 

$

 

 

 

 

 

 

 

Net Availability After Today’s Request

 

 

 

 

 

$

 

The undersigned, a Responsible Officer (as defined in the ABL Credit Agreement referenced below) of SUPERVALU Inc., in its capacity as “Lead Borrower” under, and as defined in, that that certain Amended and Restated Credit Agreement, dated as of March     , 2013 (as amended, restated, modified, supplemented, refinanced, renewed, or extended from time to time, the “ABL Credit Agreement”; capitalized terms used herein shall have the meanings set forth in the ABL Credit Agreement), by and among (1) Lead Borrower, for itself and as agent for the other Borrowers party thereto from time to time, (2) the Borrowers party thereto from time to time, (3) the Guarantors party thereto from time to time, (4) the Lenders party thereto from time to time, and (5) Wells Fargo Bank, National Association, in its capacity as administrative and collateral agent for the Lenders (in such capacity, together with its successors and assigns, if any, in such capacity, “Agent”) and as a Lender, hereby certifies to Agent that: (A) the information set forth above and the supporting documentation and information delivered herewith (i) is true and correct in all material respects and (ii) has been prepared in accordance with the requirements of the ABL Credit Agreement, (B) the Loan Parties are in compliance with and, after giving effect to any currently requested Credit Extension will be in compliance with, the terms, conditions and provisions of the ABL Credit Agreement, and (C) no Default or Event of Default has occurred and is continuing.

 

SUPERVALU INC.

 

By:

 

 

 

John Boyd

 

Group Vice President & Treasurer

 

 



 

EXHIBIT G

 

FORM OF DDA NOTIFICATION

 

PREPARE ON BORROWER LETTERHEAD - ONE FOR EACH DEPOSITORY

 

[DATE]

 

To:                              [Name and Address of Bank]

 

Re:           [                                            ]

The Account Numbers referenced on Exhibit A annexed hereto

 

Dear Sir/Madam:

 

This letter relates to the Account Numbers referenced on Exhibit A annexed hereto and any other depository account(s) (collectively the “ Account ”) which [                            ], a [                                ] with an address at [                                        ] (the “ Borrower ”), now or hereafter maintains with you.  The term “Account” shall also mean any certificates of deposit, investments, or other evidence of indebtedness heretofore or hereafter issued by you to or for the account of the Borrower.

 

The Borrower and certain of its affiliates have entered into separate financing agreements with each of (a) Wells Fargo Bank, National Association, with an office at One Boston Place, 18th Floor, Boston, Massachusetts 02108-4407, as administrative and collateral agent (in such capacity, together with its successors, assigns and any replacement agent pursuant to a replacement asset-based revolving credit financing, “ Revolving Loan Agent ”) for its own benefit and the benefit of a syndicate of revolving lenders and certain other credit parties (together with their successors and assigns, and any replacement lenders pursuant to a replacement asset-based revolving credit financing, the “ Revolving Credit Parties ”), which are making loans or furnishing other financials accommodations to [                      ]; and (b) Goldman Sachs Bank USA, with an office at                                                                   , as administrative and collateral agent (in such capacity, together with its successors and assigns, and any replacement agent pursuant to a replacement term loan credit financing, “ Term Loan Agent ”) for its own benefit and the benefit of a syndicate of  term lenders (together with their successors and assigns, and any replacement lenders pursuant to a replacement term loan credit financing, the “ Term Credit Parties ”), which are making term loans to the Borrower and certain of its affiliates.

 

For purposes of this letter, the term “ Lender Representative ” as used herein shall mean Revolving Loan Agent until such time as Revolving Loan Agent notifies you in writing (at your address above) that the Lender Representative shall be Term Loan Agent, and on and after delivery of such notice from Revolving Loan Agent to you, the term “Lender Representative” shall mean Term Loan Agent.

 

The Borrower has granted to the Revolving Loan Agent (for its own benefit and the benefit of the Revolving Credit Parties) and to the Term Loan Agent (for its own benefit and the benefit of the Term Credit Parties) security interests in and to, among other things, the Borrower’s accounts, accounts receivable, inventory, and proceeds therefrom, including, without limitation, the proceeds now or

 



 

hereafter deposited in the Account or evidenced thereby.  Consequently, the present and all future contents of the Account constitute the collateral of Revolving Loan Agent and Term Loan Agent.

 

Until you receive written notification from the Lender Representative that the interest of the Revolving Loan Agent, the other Revolving Credit Parties, the Term Loan Agent and the Term Credit Parties in the Accounts has been terminated, all funds from time to time on deposit in each of the Accounts, net of such minimum balance, not to exceed $[                    ], shall be transferred [on each business day] [lesser frequency for remote accounts to be determined] as follows:

 

(a)           By ACH, Depository Transfer Check, or Electronic Depository Transfer to:

 

[Blocked Account Details]

ABA #

Account No.

Re:

 

or

 

(b)           As you may be otherwise instructed from time to time in writing by an officer of the Lender Representative.

 

Upon request of the Lender Representative, a copy of each statement issued with respect to the Account should be provided to the Revolving Loan Agent and Term Loan Agent at the following addresses (which address may be changed upon seven (7) days’ written notice given to you by the Revolving Loan Agent or Term Loan Agent, as applicable):

 

If to Revolving Loan Agent:

 

Wells Fargo Bank, National Association

One Boston Place, 18th Floor

Boston, Massachusetts 02108-4407
Attn: Portfolio Manager - Supervalu

Fax No.: (866) 617-3988

 

If to Term Loan Agent:

 

Goldman Sachs Bank USA

 

 

You shall be fully protected in acting on any order or direction by the Lender Representative given in accordance with terms of this DDA Notification respecting the Accounts without making any inquiry whatsoever as to the Lender Representative’s right or authority to give such order or direction or as to the application of any payment made pursuant thereto.  Nothing contained herein is intended to, nor

 

2



 

shall it be deemed to, modify the rights and obligations of the Borrower and the Revolving Loan Agent or Term Loan Agent under the terms of the respective loan arrangement and the loan documents executed in connection therewith between, among others, the Borrower and Revolving Loan Agent, and the Borrower and Term Loan Agent.

 

This letter may be amended only by notice in writing signed by the Borrower and an officer of the Revolving Loan Agent and Term Loan Agent.  The letter may be terminated solely by written notice signed by an officer of the Revolving Loan Agent and Term Loan Agent.

 

[signature page follows]

 

3



 

 

Very truly yours,

 

 

 

 

 

[                                        ], as Borrower

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

cc:                                 Wells Fargo Bank, National Association, as Revolving Loan Agent
Goldman Sachs Bank USA, as Term Loan Agent

 



 

Exhibit A

 

Accounts

 

[see attached]

 



 

EXHIBIT H

 

FORM OF CREDIT CARD NOTIFICATION

 

PREPARE ON BORROWER LETTERHEAD - ONE FOR EACH PROCESSOR

 

                     ,          

 

BY CERTIFIED MAIL -- RETURN RECEIPT REQUESTED

 

To:                              [                      ]

[                      ]

[                      ]

(the “ Processor ”)

 

Re:                              [                      ] (1)

Merchant Account Number:

 

Dear Sir/Madam:

 

[                      ] (2) , a                                         with its principal executive offices at 7075 Flying Cloud Drive, Eden Prairie, Minnesota (the “ Company ”), among others, has entered into separate financing agreements with each of (a) WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association, with offices at One Boston Place, 18 th  Floor, Boston, Massachusetts 02108, as administrative agent and co-collateral agent (in such capacity herein, together with its successors and assigns, and any replacement agent pursuant to a replacement asset-based revolving credit financing, the “ Revolving Loan Agent ”) for its own benefit and the benefit of a syndicate of revolving lenders and certain other credit parties (together with their successors and assigns, and any replacement lenders pursuant to a replacement asset-based revolving credit financing, the “ Revolving Loan Credit Parties ”) which are making loans or furnishing other financial accommodations to the Company and certain of its affiliates, and (b) GOLDMAN SACHS BANK USA, having an office at                                                                 , as administrative and collateral agent (in such capacity herein, together with its successors and assigns, and any replacement agent pursuant to a replacement term loan credit financing, the “ Term Loan Agent ”) for its own benefit and the benefit of a syndicate of term lenders and certain other credit parties (together with their successors and assigns, and any replacement lenders pursuant to a replacement term loan credit financing, the “ Term Loan Credit Parties ”) which are making loans to SUPERVALU INC. (the “ Lead Borrower ”), pursuant to which agreements the Company, among others, has granted to the Revolving Loan Agent, for its own benefit and the benefit of the other Revolving Loan Credit Parties, and to the Term Loan Agent, for its own benefit and the benefit of the other Term Loan

 


(1) Insert applicable Supervalu company

(2) Insert applicable Supervalu company

 

1



 

Credit Parties, a security interest in and to, among other things, certain of the assets of the Company (the “ Collateral ”), including, without limitation, all credit and debit card charges submitted by the Company to the Processor for processing and all amounts which the Processor owes to the Company on account thereof (the “ Credit Card Proceeds ”).

 

The Processor has entered into arrangements pursuant to which Processor acts as credit card processing service provider to the Company and certain of its subsidiaries and affiliates in connection with sales by the Company and such subsidiaries and affiliates to their customers using credit cards and debit cards as set forth in the                                                   , by and between Processor and the Company (together with any replacement agreement thereto, the “ Card Processing Agreement ”).

 

For purposes of this Credit Card Notification, the term “Lender Representative” as used herein shall mean Revolving Loan Agent until such time as Revolving Loan Agent notifies the Processor in writing (at the Processor’s address above) that the Lender Representative shall be Term Loan Agent, and on and after delivery of such notice from Revolving Loan Agent to the undersigned, the term “Lender Representative” shall mean Term Loan Agent.

 

Notwithstanding anything to the contrary contained in the Card Processing Agreement or any prior instructions which may have been given to the Processor, unless and until Processor receives written instructions from the Lender Representative to the contrary, effective as of the date hereof, all amounts as may become due from time to time from the Processor to the Company pursuant to the Card Processing Agreement or otherwise shall be transferred only as follows:

 

(a)                                  By [Wire Transfer][ACH (for American Express only)] to one of the deposit accounts described on Schedule I hereto, as such Schedule may be supplemented from time to time in writing by an officer of the Company and confirmed in writing by an officer of the Lender Representative:

 

or

 

(b)                                  As the Processor may be otherwise instructed from time to time in writing by an officer of the Revolving Loan Agent.

 

Upon the request of the Revolving Loan Agent or the Term Loan Agent, a copy of each periodic statement provided or made available by the Processor to the Company shall be provided to the Lender Representative at the following address (which address may be changed upon seven (7) days written notice given to the Processor by the Revolving Loan Agent or the Term Loan Agent, as applicable):

 

2



 

If to Revolving Loan Agent :

 

Wells Fargo Bank, National Association
One Boston Place, 18
th  Floor
Boston, MA 02108
Attention:   Portfolio Manager - Supervalu
Facsimile: 866.617.3988
Re:  Supervalu

 

If to Term Loan Agent :

 

Goldman Sachs Bank USA

 

Attention:                                   
Facsimile:                                   
Re:

 

The Processor shall be fully protected in acting on any order or direction by the Lender Representative given in accordance with the terms of this Credit Card Notification respecting the Credit Card Proceeds without making any inquiry whatsoever as to the Revolving Loan Agent’s or the Term Loan Agent’s right or authority to give such order or direction or as to the application of any payment made pursuant thereto.

 

This Credit Card Notification may be amended only by a written notice executed by the Company and the Lender Representative, and may be terminated solely by written notice signed by an officer of the Lender Representative.  The Company shall not have any right to terminate this Credit Card Notification or, except as provided in this Credit Card Notification, amend it.

 

This Credit Card Notification may be executed and delivered by telecopier or other method of electronic transmission with the same force and effect as if it were a manually executed and delivered counterpart.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

3



 

THIS CREDIT CARD NOTIFICATION AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.

 

 

Very truly yours,

 

 

 

[                      ](3)

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

cc:                                 Wells Fargo Bank, National Association, as Revolving Loan Agent

Goldman Sachs Bank USA, as Term Loan Agent

 


(3) Insert applicable Supervalu company

 

[Supervalu Credit Card Notification]

 



 

Schedule I

to

Credit Card Notification

 

Deposit Account

 

Wells Fargo Bank, National Association

ABA #

Account Name:

Account No.

 



 

EXHIBIT I

to

AMENDED AND RESTATED CREDIT AGREEMENT

CLOSING DATE COLLATERAL LIST

 

See attached.

 

[**]

 


** Denotes confidential information that has been omitted from the exhibit and filed separately, accompanied by a confidential treatment request, with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934.

 



 

EXHIBIT J

to

AMENDED AND RESTATED CREDIT AGREEMENT

FORM OF MORTGAGE

 

See attached.

 



 

[AMENDED AND RESTATED] MORTGAGE, ASSIGNMENT OF LEASES AND RENTS,
SECURITY AGREEMENT AND FIXTURE FILING(1)

 

from

 

[NAME OF MORTGAGOR], Mortgagor

 

to

 

WELLS FARGO BANK, NATIONAL ASSOCIATION,

 

as administrative agent, Mortgagee

 

DATED AS OF                            , 2013

 

EFFECTIVE AS OF                          , 2013

 

After recording, please return to:

 

Otterbourg, Steindler, Houston & Rosen, P.C.
230 Park Avenue.
New York, NY 10169

 

ATTN:  Daniel P. Greenstein, Esq.

 


(1) This form’s riders contain provisions to be included in the mortgage if the mortgage is with respect to a leasehold.

 

 

 

Property No.                               County,               

 



 

THIS(2) [AMENDED AND RESTATED] MORTGAGE, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT AND FIXTURE FILING, dated as of                            , 20      , and effective as of                          , 2013, is made by [NAME OF MORTGAGOR], a [INSERT STATE OF ORGANIZATION AND TYPE OF ENTITY OF MORTGAGOR] (“ Mortgagor ”), whose address is c/o SUPERVALU INC., 7075 Flying Cloud Drive, Eden Prairie, Minnesota 55344, Attention:  Vice President, Business Law, to WELLS FARGO BANK, NATIONAL ASSOCIATION, as administrative agent (in such capacity and together with its successors in such capacity, “ Mortgagee ”), whose address is One Boston Place, 19 th  Floor, Boston, Massachusetts 02108.  References to this “ Mortgage ” shall mean this instrument and any and all renewals, modifications, amendments, supplements, extensions, consolidations, substitutions, spreaders, and replacements of this instrument.

 

Background

 

A.                                     [Mortgagor has requested Mortgagee and the Lenders to amend and restate the Existing Credit Agreement (as defined in the Credit Agreement as hereinafter defined) and continue the financing arrangements with Borrowers (as hereinafter defined) pursuant to which the Lenders may make loans and provide other financial accommodations to Borrowers.

 

B.                                     In order to secure the Secured Obligations (as such term is defined in the Original Mortgage as hereinafter defined), Mortgagor executed and delivered to Mortgagee a certain Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing, dated as of [October 30, 2012 and effective November 29, 2012] (the “Original Mortgage”) with respect to the Mortgaged Property (as such term is defined in the Original Mortgage) which Original Mortgage was recorded on                                      , 2012 as Instrument No.                              in                            , Page            in the Office of the                                              of                      County,                       .]

 

[C] [A]

 

[SUPERVALU INC., a Delaware corporation (the “ Lead Borrower ”), certain of the Lead Borrower’s Subsidiaries (together with the Lead Borrower, each a “ Borrower ”) and collectively, the “ Borrowers ”, as further defined in the Credit Agreement), and certain of Lead Borrower’s other Affiliates (including Mortgagor), as Guarantors (as further defined in the Credit Agreement) have entered into the Amended and Restated Credit Agreement dated as of March 22, 2013 (as the same may be amended, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), with several banks and other financial institutions from time to time parties thereto (the “ Lenders ”) and Mortgagee.  Capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Credit Agreement.]

 

[SUPERVALU INC., a Delaware corporation (the “ Lead Borrower ”), certain of the Lead Borrower’s Subsidiaries (including Mortgagor) (together with the Lead Borrower, each a “ Borrower ”) and collectively, the “ Borrowers ”, as further defined in the Credit Agreement), and

 


(2) For a leasehold mortgage, insert Rider A here.

 



 

certain of Lead Borrower’s other Affiliates, as Guarantors (as further defined in the Credit Agreement) have entered into the Amended and Restated Credit Agreement dated as of March 22, 2013 (as the same may be amended, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), with several banks and other financial institutions from time to time parties thereto (the “ Lenders ”) and Mortgagee.  Capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Credit Agreement.]

 

[D] [B]  [Mortgagor has, pursuant to that certain Facility Guaranty (as the same may be amended, supplemented or otherwise modified from time to time, the “ Guaranty ”), among other things, unconditionally guaranteed the Guaranteed Obligations (as defined in the Guaranty).](3)

 

[E] [C]             Pursuant and subject to the Credit Agreement, the Lenders have made, severally and not jointly, certain Loans to Borrower, and Borrower has agreed to cause Mortgagor to execute and deliver this Mortgage in connection therewith.(4)

 

[[F]  This Mortgage is executed for the purpose of amending and restating the Original Mortgage and is not intended to extinguish, release or otherwise discharge the Mortgagor’s obligations under the Original Mortgage and is not intended to be a novation of the Mortgagor’s obligation under the Original Mortgage.]

 

Granting Clauses

 

For ten dollars ($10) and other good and valuable consideration, the receipt and legal sufficiency of which are hereby acknowledged, Mortgagor agrees that to secure the payment and performance of the following obligations,  excluding in each case all Excluded Swap Obligations (collectively, the “ Secured Obligations ”):

 

(a)                                  the Obligations (as defined in the Credit Agreement), including, without limitation, (i) the aggregate principal amount of $1,250,000,000 or so much thereof as may be advanced by the Lenders as Loans pursuant to the Credit Agreement and as is outstanding from time to time, together with interest thereon as provided by the Credit Agreement (including, without limitation, if and to the extent provided by the Credit Agreement, interest accruing after the maturity of the Loans made by each Lender and interest accruing after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to Mortgagor, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding), as evidenced by the Credit Agreement and, if requested by any Lender as provided by the Credit Agreement, certain promissory notes (as the same may be amended, supplemented or otherwise modified from time to time, the “ Notes ”), (ii) [the Guaranteed Obligations, and (iii)] all Protective Advances (as defined below); and

 

(b)                                  the performance and observance of each obligation, term, covenant and condition to be performed or observed by Mortgagor under, in connection with or pursuant to the provisions of this Mortgage;

 


(3) For a leasehold mortgage, insert Rider B here as recital “B,” and move the current recital “B” to a new recital “C.”

(4) For a leasehold mortgage, insert Rider B here as recital “B,” and move the current recital “B” to a new recital “C.”

 

2



 

MORTGAGOR HEREBY GRANTS TO MORTGAGEE A LIEN UPON AND A SECURITY INTEREST IN, AND HEREBY MORTGAGES, GRANTS, ASSIGNS, TRANSFERS, HYPOTHECATES, PLEDGES, CONVEYS AND SETS OVER TO MORTGAGEE WITH MORTGAGE COVENANTS (TOGETHER WITH POWER OF SALE THEREOF), all of the following property and rights and interests now owned or held or subsequently acquired by Mortgagor (collectively, the “ Mortgaged Property ”):

 

(A)                                (5)the parcel(s) of real property described on Exhibit A attached hereto and made a part hereof (the “ Land ”), together with all of the buildings, improvements, and structures now located thereon (the “ Improvements ”);

 

(B)                                all the estate, right, title, interest, claim or demand whatsoever of Mortgagor, in possession or expectancy, in and to the Land or Improvements or any part thereof;

 

(C)                                all right, title, estate and interest of Mortgagor in, to and under all easements, rights of way, strips and gores of land, streets, ways, alleys, passages, sewer rights, waters, water courses, water and riparian rights, development rights, air rights, mineral rights and all estates, rights, titles, interests, privileges, licenses, tenements, hereditaments and appurtenances belonging, relating or appertaining to the Premises (as defined below), and any reversions, remainders, rents, issues, profits and revenue thereof and all land lying in the bed of any street, road or avenue, in front of or adjoining the Premises to the center line thereof;

 

(D)                                all right, title, estate and interest of Mortgagor in and to all buildings, improvements, structures, additions, and concessions to, the Land or Improvements, and substitutes and replacements thereof, subsequently acquired by or released to Mortgagor or constructed, assembled or placed by Mortgagor on the Land or Improvements, immediately upon such acquisition, release, construction, assembling or placement, including, without limitation, any and all building materials whether stored at the Land or offsite, and, in each such case, without any further mortgage, conveyance, assignment or other act by Mortgagor (collectively, the property and rights and interests described in the foregoing clauses (A) through (D)(6), the “ Premises ”);

 

(E)                                 all right, title, estate and interest of Mortgagor in and to all of the “fixtures” (as defined in the Code, as defined below) from time to time attached to or contained in the Premises (but only while attached to or contained in the Premises), including without limitation, screens, awnings, shades, blinds, curtains, draperies, carpets, rugs, and other floor coverings, storm doors and windows, heating, electrical, and mechanical equipment, lighting, switchboards, plumbing, ventilating, air conditioning and air-cooling apparatus, refrigeration systems, and incinerating equipment, shelving, escalators, elevators, docks, loading and unloading equipment and systems, stoves, ranges, laundry equipment, cleaning systems (including window cleaning apparatus),

 


(5) For a leasehold mortgage, insert Rider C here, and move the current subclause “A” to “B,” and shift all subsequent paragraph lettering down accordingly.

(6) For a leasehold mortgage, replace “(D)” with “(E).”

 

3



 

telephones, communication systems (including satellite dishes and antennae), computers, sprinkler systems and other fire prevention and extinguishing apparatus and materials, security systems, motors, engines, machinery, pipes, pumps, tanks, conduits, appliances, and fittings (together with, in each case, attachments, components, parts and accessories);

 

(F)                                  all right, title, estate and interest of Mortgagor in and to all substitutes and replacements of, and all additions, improvements and concessions to, the aforementioned fixtures, subsequently acquired by Mortgagor or constructed, assembled or placed by Mortgagor on the Premises or subsequently attached thereto, immediately upon such acquisition, construction, attachment, assembling or placement at the Premises (but only while attached to or contained in the Premises), without any further mortgage, conveyance, assignment or other act by Mortgagor (all of the foregoing property described in clauses (E) and (F)(7), while attached to or contained in the Premises, being referred to as the “ Fixtures ”);

 

(G)                                all right, title, estate and interest of Mortgagor in, to and under all leases, subleases, underlettings, occupancy agreements, concession agreements, management agreements, licenses and other agreements entitling third parties to use or occupy the Premises or any part thereof, now existing or subsequently entered into by Mortgagor and whether written or oral and any guaranties of any of the foregoing (collectively, as any of the foregoing may be amended, restated, extended, renewed or modified from time to time, the “ Leases ”), and all rights of Mortgagor in respect of security deposits thereunder and the right to receive and collect the revenues, income, rents, issues and profits thereof, together with all other rents, royalties, issues, profits, revenue, income and other benefits arising from the use and enjoyment of the Mortgaged Property (collectively, the “ Rents ”);

 

(H)                               all right, title, estate and interest of Mortgagor in and to (i) all contracts from time to time executed by Mortgagor or any manager or agent on its behalf relating to the ownership, construction, maintenance, repair, operation, management, occupancy, sale, leasing or financing of the Premises or Fixtures or any part thereof, all agreements relating to Mortgagor’s sale or lease of any portion of the Premises, and all agreements relating to Mortgagor’s purchase or lease, or option to purchase or lease, of any property which is adjacent or peripheral to the Premises together with the right to exercise  any such option and all leases of Fixtures (collectively, the “ Contracts ”); (ii) all consents, licenses, permits, variances, building permits, certificates of occupancy and other governmental approvals relating to construction, completion, occupancy, use or operation of the Premises or any part thereof (collectively, the “ Permits ”); and (iii) all drawings, plans, specifications and similar or related items relating to the Premises (collectively, the “ Plans ”);

 

(I)                                    all right, title, estate and interest of Mortgagor in and to all books and records and documents relating to the ownership, construction, maintenance, repair, operation, management, occupancy, sale, or leasing of the Premises or Fixtures or any

 


(7) For a leasehold mortgage, replace “(E)” with “(F)” and “(F)” with “(G)”.

 

4



 

part thereof, whether tangible or electronic, which contain any information relating to any of the foregoing, to the extent necessary or desirable to sell, transfer or otherwise realize on any of the other Mortgaged Property (collectively, the “ Books and Records ”); and

 

(J)                                    all right, title, estate and interest of Mortgagor in and to all proceeds (as defined in the Code) of the foregoing, including without limitation, all proceeds, products, offspring, rents, profits or receipts, in whatever form, arising from the other Mortgaged Property, and including, without limitation, (i) cash, instruments and other property received, receivable or otherwise distributed in respect of or in exchange for any or all of the Mortgaged Property, (ii) any and all proceeds of the collection, sale, lease, sublease, concession, exchange, assignment, licensing or other disposition of, or realization upon, any item or portion of the Mortgaged Property (including, without limitation, all claims of Mortgagor against third parties for loss of, damage to, or destruction of, any of the Mortgaged Property now existing or hereafter arising), (iii) any and all proceeds of any insurance, indemnity, warranty or guaranty payable to Mortgagor from time to time with respect to any of the Mortgaged Property, including all right, title, estate and interest of Mortgagor in and to all unearned premiums under insurance policies now or subsequently obtained by Mortgagor relating to the Premises or Fixtures and Mortgagor’s interest in and to all proceeds of any such insurance policies (including title insurance policies) including the right to collect and receive such proceeds, subject to the provisions relating to insurance generally set forth below, (iv) any and all payments (in any form whatsoever) made or due and payable to Mortgagor from time to time in connection with the requisition, confiscation, condemnation, seizure or forfeiture of all or any part of the Mortgaged Property by any Governmental Authority (or any Person acting under color of Governmental Authority), including all awards and other compensation, including the interest payable thereon and the right to collect and receive the same, made for the taking by eminent domain, condemnation or otherwise, of all or any part of the Premises or any easement or other right therein, and (v) any and all other amounts from time to time paid or payable under or from any of the Mortgaged Property, both cash and noncash, of the foregoing;

 

PROVIDED, HOWEVER, that, notwithstanding anything to the contrary contained in clauses (A) through (J)(8) above, for the avoidance of doubt (and without implication that such property would otherwise be included), the Lien, security interest, mortgage, grant, assignment, transfer, hypothecation, pledge, conveyance and set over created by this Mortgage is not intended to extend to, shall not extend to, and the term “Mortgaged Property” shall not include, any Excluded Assets (as defined below), and Mortgagor shall from time to time at the request of Mortgagee give written notice to Mortgagee identifying in reasonable detail the Excluded Assets and shall provide to Mortgagee such other information regarding the Excluded Assets as Mortgagee may reasonably request.

 

For purposes hereof, “ Excluded Assets ” shall mean the following:

 

(i)                                      any rights or interests in any contract, agreement, lease, permit, license, charter or license agreement, as such, if under the terms of such contract, agreement,

 


(8) For a leasehold mortgage, replace “(J)” with “(K).”

 

5



 

lease, permit, license, charter or license agreement, or applicable Law with respect thereto, the valid grant of a Lien therein to Mortgagee would constitute or result in a breach, termination or default under such contract, agreement, lease, permit, license, charter or license agreement and such breach, termination or default has not been or is not waived or the consent of the other party to such contract, agreement, lease, permit, license, charter or license agreement has not been or is not otherwise obtained or under applicable Law such prohibition cannot be waived; provided, the foregoing exclusion shall in no way be construed (i) to apply if any such prohibition is unenforceable under Sections 9-406, 9-407 or 9-408 of the Code or other applicable Law or (ii) so as to limit, impair or otherwise affect Mortgagee’s unconditional continuing liens in any rights or interests of Mortgagor in or to monies due or to become due under any such contract, lease, permit, license, charter or license agreement;

 

(ii)                                   all ABL Priority Collateral; and

 

(iii)                                any checking, savings or other demand deposit account maintained by any Loan Party and exclusively used (a) for payroll, payroll taxes and other employee wage and benefit payments to or for the benefit of any Loan Party’s employees, (b) for the receipt of Medicare and Medicaid receivables of a Loan Party, (c) to hold proceeds of ABL Priority Collateral, or (d) for the receipt and deposit of funds of a specific Person other than a Loan Party, or which a Loan Party is holding in trust or as a fiduciary for such Person, in each case in a manner permitted under the Credit Agreement or the other Loan Documents.

 

Notwithstanding the foregoing definition of Excluded Assets, nothing contained in this Mortgage shall affect the rights of Mortgagee or any other Lender with respect to any or all of the Excluded Assets as provided for in any other Loan Document.

 

TO HAVE AND TO HOLD the Mortgaged Property and the rights and privileges hereby mortgaged unto Mortgagee, its permitted successors and assigns for the uses and purposes set forth herein, until (i) the Commitments shall have expired or been terminated, and (ii) the principal of and interest on each Loan and all fees and other Secured Obligations (other than unasserted contingent indemnification Obligations) shall have been indefeasibly performed and paid in full in cash.

 

Terms and Conditions

 

Mortgagor further represents, warrants, covenants, and agrees with Mortgagee as follows:

 

1.                                       Warranty of Title.  Mortgagor warrants the good and marketable title to the Premises, subject only to the matters that are set forth in Schedule B of any title insurance policy or policies being issued to Mortgagee to insure the Lien of this Mortgage and Permitted Encumbrances under the Credit Agreement (collectively, the “ Permitted Exceptions ”) and that Mortgagor has the full power, authority and right to execute, deliver and perform its obligations under this Mortgage and to encumber, mortgage, transfer, give, grant, bargain, sell, alienate, enfeoff, convey, confirm, warrant, pledge, assign and hypothecate the same and that this Mortgage is and will remain a valid and enforceable Lien on and security interest in the

 

6



 

Mortgaged Property, subject only to the Permitted Exceptions.  Mortgagor shall forever warrant, defend and preserve such title and the validity and priority of the Lien of this Mortgage and shall forever warrant and defend the same to Mortgagee against the claims of all Persons whomsoever.

 

2.                                       (9) Payment of Secured Obligations .  Mortgagor shall pay and perform the Secured Obligations owing by it as and when due.

 

3.                                       Requirements .  Mortgagor shall comply with all provisions of the Credit Agreement regarding compliance with the requirements of Laws, orders, writs, injunctions, and decrees applicable to it or the Mortgaged Property.

 

4.                                       Payment of Taxes and Other Impositions .  Mortgagor shall comply with all provisions of the Credit Agreement regarding payment and discharge of Taxes, assessments, and governmental charges or levies upon the Mortgaged Property, subject to Mortgagor’s right to contest the same as set forth therein.

 

5.                                       Insurance .  (a)  Mortgagor shall (i) maintain or shall cause to be maintained such insurance with respect to it or the Mortgaged Property as is required pursuant to the Credit Agreement; (ii) maintain such other insurance with respect to it or the Mortgaged Property as may be required by applicable Law; and (iii) furnish to Mortgagee, upon written request, information as to the insurance carried as provided in the Credit Agreement.

 

(a)                                  Mortgagor promptly shall comply with and conform to (i) all provisions of each such insurance policy, and (ii) all requirements of the insurers applicable to Mortgagor or to any of the Mortgaged Property or to the use, manner of use, occupancy, possession, operation, maintenance, alteration, or repair of any of the Mortgaged Property.  Mortgagor shall not use or permit the use of the Mortgaged Property in any manner which would permit any insurer to cancel any insurance policy or void coverage required to be maintained by this Mortgage.

 

(b)                                  If the Mortgaged Property, or any part thereof, shall be destroyed or damaged, Mortgagor (or any other Borrower) shall give immediate notice thereof to Mortgagee in accordance with, and to the extent required by, Section 6.03 of the Credit Agreement.  All insurance proceeds from the Mortgaged Property shall be paid to Mortgagee as and to the extent required by the Credit Agreement.  Notwithstanding the preceding sentence, provided that no Event of Default shall have occurred and be continuing, Mortgagor shall have the right to adjust such loss, and the insurance proceeds relating to such loss shall be paid over to Mortgagor as and to the extent required by the Credit Agreement; provided that, Mortgagor shall, promptly after any such damage, repair all such damage regardless of whether any insurance proceeds have been received or whether such proceeds, if received, are sufficient to pay for the costs of repair.  If an Event of Default shall have occurred and be continuing, Mortgagee shall have the right to adjust such loss and receive and apply the insurance proceeds to pay the Secured Obligations as and to the extent required by the Credit Agreement or repair the Mortgaged Property in its sole and absolute discretion.

 


(9) For leasehold mortgages, make this existing Section 3, insert Rider D here as Section 2, and shift all subsequent section numbers down accordingly.

 

7



 

6.                                       Restrictions on Liens and Encumbrances .  Except for the Lien of this Mortgage and the Permitted Exceptions, and except as expressly permitted by the Credit Agreement, Mortgagor shall not further mortgage, nor otherwise encumber the Mortgaged Property nor create or suffer to exist any Lien, charge or encumbrance on the Mortgaged Property, or any part thereof, whether superior or subordinate to the Lien of this Mortgage and whether recourse or non-recourse.

 

7.                                       Transfer Restrictions .  Mortgagor shall not sell, transfer, convey, or assign all or any portion of, or any interest in, the Mortgaged Property except as permitted under the Credit Agreement.

 

8.                                       Maintenance .  Mortgagor shall maintain or cause to be maintained all the Improvements in good condition and repair, ordinary wear and tear excepted, and shall not commit or suffer any waste of the Improvements.  Mortgagor shall repair, restore, replace, or rebuild promptly any part of the Premises which may be damaged or destroyed by any casualty whatsoever.

 

9.                                       Condemnation/Eminent Domain .  Mortgagor (or any other Borrower) shall notify Mortgagee of the pendency of the commencement of any action or proceeding for the taking of any interest in the Mortgaged Property in accordance with, and to the extent required by, Section 6.03 of the Credit Agreement.  If an Event of Default shall have occurred and be continuing, Mortgagee is hereby authorized and empowered by Mortgagor to settle or compromise any claim in connection with such condemnation and to receive all awards and proceeds thereof as provided by the Credit Agreement.  Notwithstanding the preceding sentence, provided no Event of Default shall have occurred and be continuing, but subject to the terms and provisions of the Credit Agreement, Mortgagor shall, at its expense, diligently prosecute any proceeding relating to such condemnation, settle or compromise any claims in connection therewith and receive any awards or proceeds thereof.

 

10.                                Leases .  Except as expressly permitted under the Credit Agreement, Mortgagor shall not lease, sublease, license, or sublicense all or any portion of, or any interest in, the Mortgaged Property.  Mortgagor may revise, modify, or amend any Lease without the consent of Mortgagee, provided that the Lease, as modified, is or would be expressly permitted under the Credit Agreement.

 

11.                                Further Assurances .  Mortgagor agrees to execute any and all further documents, financing statements, agreements and instruments, and take all such further actions (including the filing and recording of financing statements and other documents), that may be required under any applicable Law, or which Mortgagee may reasonably request, to grant, preserve, protect or perfect the Lien created or intended to be created by this Mortgage or the validity or priority of such Lien, all at the expense of Mortgagor.

 

12.                                Mortgagee’s Right to Perform .  If Mortgagor fails to perform any of the covenants or agreements of Mortgagor hereunder (other than with respect to the failure to maintain insurance as required hereunder, in which case Mortgagee can immediately perform), and such failure constitutes an Event of Default, without waiving or releasing Mortgagor from any obligation or default under this Mortgage, Mortgagee may, at any time (but shall be under no

 

8



 

obligation to) pay or perform the same, and the amount or cost thereof, with interest at the rate provided for in the Credit Agreement, shall constitute Protective Advances secured by this Mortgage and shall be a Lien on the Mortgaged Property prior to any right, title to, interest in or claim upon the Mortgaged Property attaching subsequent to the Lien of this Mortgage.  No payment or advance of money or performance rendered by Mortgagee under this Section 12 (10) shall be deemed or construed to cure any default or Event of Default or waive any right or remedy of Mortgagee.

 

13.                                Hazardous Material .  Mortgagor shall comply with all provisions of the Credit Agreement regarding Hazardous Materials and Environmental Laws with respect to itself and the Mortgaged Property.

 

14.                                Protective Advances .(11)  All Protective Advances shall:  (a) become part of the Secured Obligations and be secured by this Mortgage; (b) bear interest at the rate provided for in the Credit Agreement (commencing from the date that the funds are advanced by or on behalf of Mortgagee and continuing until Mortgagor has actually repaid such advances in full), the payment of which interest this Mortgage shall secure; and (c) be repaid by Mortgagor immediately or upon demand, which obligation shall survive repayment of all other Obligations or any foreclosure in connection with this Mortgage.  As used herein, the term “ Protective Advance ” means any amount that Mortgagee advances or expends in its sole and absolute discretion to cure or seek to cure any default or in exercising any remedy of Mortgagee hereunder.

 

15.                                Events of Default .  The occurrence of an Event of Default under the Credit Agreement shall constitute an Event of Default hereunder.

 

16.                                Remedies .  (a)  To the extent permitted by applicable Law, upon the occurrence and during the continuance of any Event of Default, Mortgagee may, and at the direction of the Required Lenders, shall, in addition to the other rights and remedies provided for herein, under applicable Law, under the Credit Agreement and the other Loan Documents, or otherwise available to it (including, to the extent permitted under the Credit Agreement, declaring amounts secured by this Mortgage to be due and payable, in whole or in part, whereupon the same shall immediately become due and payable), immediately take such action, without notice or demand, as it deems advisable to protect and enforce its rights against Mortgagor and in and to the Mortgaged Property, including, but not limited to, the following actions, each of which may be pursued concurrently or otherwise, at such time and in such manner as Mortgagee may determine, in its sole discretion, without impairing or otherwise affecting the other rights and remedies of Mortgagee:

 

(i)                                      Mortgagee may, to the extent permitted by applicable Law, (A) take immediate possession of all of the Mortgaged Property and take such action as Mortgagee, in its sole judgment, deems necessary to protect and preserve the Mortgaged Property, (B) institute, maintain and complete an action of mortgage foreclosure against all or any part of the Mortgaged Property and cause the Mortgaged Property to be sold in

 


(10) For leasehold mortgages, change to “Section 12” to “Section 13.”

(11) Deleted text matter included in Section 12.

 

9



 

total or in parts, (C) purchase the Mortgaged Property at foreclosure sale, (D) enforce any judgment received in connection with the exercise of remedies under the Credit Agreement or other Loan Documents, (E) sell all or part of the Mortgaged Property (Mortgagor expressly granting to Mortgagee the power of sale), or (F) take any other action at law or in equity for the enforcement of this Mortgage.  Mortgagee may proceed in any such action to final judgment and execution thereon.

 

(ii)                                   Mortgagee may personally, or by its agents, attorneys and employees and without regard to the adequacy or inadequacy of the Mortgaged Property or any other Collateral as security for the Secured Obligations, to the extent permitted by applicable Law, enter into and upon the Mortgaged Property and each and every part thereof and exclude Mortgagor and its agents and employees therefrom without liability for trespass, damage or otherwise (Mortgagor hereby agreeing to surrender possession of the Mortgaged Property to Mortgagee upon demand at any such time) and use, operate, manage, maintain and control the Mortgaged Property and every part thereof.  Following such entry and taking of possession, Mortgagee shall be entitled, without limitation, to the extent permitted by applicable Law, (x) to lease all or any part or parts of the Mortgaged Property for such periods of time and upon such conditions as Mortgagee may, in its discretion, deem proper, (y) to enforce, cancel or modify any Lease, and (z) generally to execute, do and perform any other act, deed, matter or thing concerning the Mortgaged Property as Mortgagee shall deem appropriate as fully as Mortgagor might do.

 

(iii)                                Mortgagee may, with respect to personal property included in the Mortgaged Property, exercise all of the applicable rights and remedies of a secured party under the Code in effect in the state in which the Premises are located (the “ State ”).

 

(b)                                  In case of a foreclosure sale, the Premises may be sold, at Mortgagee’s election, in one parcel or in more than one parcel and Mortgagee is specifically empowered, (without being required to do so, and in its sole and absolute discretion) to cause successive sales of portions of the Mortgaged Property to be held.

 

(c)                                   Except as expressly provided above in this Section 16 (12) or elsewhere in this Mortgage, presentment, demand, and protest and all other notices of any kind are hereby expressly waived.

 

17.                                Sale of the Properties; Application of Proceeds .  Subject to the requirements of applicable Law, the proceeds or avails of a foreclosure sale and all moneys received by Mortgagee pursuant to any right given or action taken under the provisions of this Mortgage shall be applied in accordance with, and subject to, Section 8.03 of the Credit Agreement.

 

18.                                Right of Mortgagee to Credit Sale .  Upon the occurrence of any sale made under this Mortgage, whether made under the power of sale or by virtue of judicial proceedings or of a judgment or decree of foreclosure and sale, Mortgagee may bid for and acquire the

 


(12) For leasehold mortgages, change to “Section 16” to “Section 17.”

 

10



 

Mortgaged Property or any part thereof.  In lieu of paying cash therefor, Mortgagee may make settlement for the purchase price by crediting upon the Secured Obligations or other sums secured by this Mortgage the net sales price after deducting therefrom the expenses of sale and the cost of the action and any other sums which Mortgagee is authorized to deduct under this Mortgage.  In such event, this Mortgage, the Credit Agreement, any Note[, the Facility Guaranty] and documents evidencing expenditures secured hereby may be presented to the Person conducting the sale in order that the amount so used or applied may be credited upon the Secured Obligations as having been paid.

 

19.                                Appointment of Receiver .  Upon the occurrence and during the continuance of any Event of Default, Mortgagee may, and at the direction of the Required Lenders, shall, in addition to the other rights and remedies provided for herein, under applicable Law or otherwise available to it as a matter of right and without notice to Mortgagor, unless otherwise required by applicable Law, and without regard to the adequacy or inadequacy of the Mortgaged Property or any other collateral as security for the Secured Obligations or the interest of Mortgagor therein, apply to any court having jurisdiction to appoint a receiver or receivers or other manager of the Mortgaged Property, and Mortgagor hereby irrevocably consents to such appointment and waives notice of any application therefor (except as may be required by applicable Law).  Any such receiver or receivers shall have all the usual powers and duties of receivers in like or similar cases and all the powers and duties of Mortgagee in case of entry as provided in this Mortgage, including, without limitation and to the extent permitted by applicable Law, the right to enter into leases of all or any part of the Mortgaged Property, and shall continue as such and exercise all such powers until the date of confirmation of sale of the Mortgaged Property unless such receivership is sooner terminated.

 

20.                                Extension, Release, etc.   (a)  Without affecting the Lien or charge of this Mortgage upon any portion of the Mortgaged Property not then or theretofore released as security for the full amount of the Secured Obligations, Mortgagee may, from time to time and without notice, release or reconvey, or cause to be released or reconveyed any parcel, portion or all of the Mortgaged Property in accordance with, and subject to, Section 9.10 of the Credit Agreement.  [If at any time this Mortgage shall secure less than all of the principal amount of the Secured Obligations, it is expressly agreed that any repayments of the principal amount of the Secured Obligations shall not reduce the amount of the Lien of this Mortgage until the Lien amount shall equal the principal amount of the Secured Obligations outstanding](13).

 

(b)                                  No recovery of any judgment by Mortgagee and no levy of an execution under any judgment upon the Mortgaged Property or upon any other property of Mortgagor shall affect the Lien of this Mortgage or any Liens, rights, powers or remedies of Mortgagee hereunder, and such Liens, rights, powers and remedies shall continue unimpaired until this Mortgage is terminated or released in accordance with Section 39.

 

(c)                                   If Mortgagee shall have the right to foreclose this Mortgage, Mortgagor authorizes Mortgagee at its option to foreclose the Lien of this Mortgage subject to the rights of any tenants of the Mortgaged Property.  The failure to make any such tenants parties defendant

 


(13) To be deleted in States where no mortgage recording tax is imposed

 

11



 

to any such foreclosure proceeding and to foreclose their rights will not be asserted by Mortgagor as a defense to any proceeding instituted by Mortgagee to collect the Secured Obligations or to foreclose the Lien of this Mortgage.

 

(d)                                  Unless expressly provided otherwise, in the event that ownership of this Mortgage and title to the Mortgaged Property or any estate therein shall become vested in the same Person, this Mortgage shall not merge in such title but shall continue as a valid Lien on the Mortgaged Property for the amount secured hereby.

 

21.                                Security Agreement under Uniform Commercial Code .  (a)  It is the intention of the parties hereto that this Mortgage shall constitute a Security Agreement within the meaning of the Uniform Commercial Code of the State (the “ Code ”).  Upon the occurrence and during the continuance of any Event of Default, Mortgagee may, and at the direction of the Required Lenders, shall, in addition to the other rights and remedies provided for herein, under applicable Law or otherwise available to it under the Credit Agreement and other Loan Documents at Mortgagee’s option either (i) proceed under the Code and exercise such rights and remedies as may be provided to a secured party by the Code with respect to all or any portion of the Mortgaged Property which is personal property (including, without limitation, taking possession of and selling such property) or (ii) treat such property as real property and proceed with respect to both the real and personal property constituting the Mortgaged Property in accordance with Mortgagee’s rights, powers and remedies with respect to the real property (in which event the default provisions of the Code shall not apply).  If Mortgagee shall elect to proceed under the Code, then ten days’ notice of sale of the personal property shall be deemed reasonable notice and the reasonable expenses of retaking, holding, preparing for sale, selling and the like incurred by Mortgagee shall include, but not be limited to, attorneys’ fees and legal expenses.  At Mortgagee’s request, Mortgagor shall assemble the personal property and make it available to Mortgagee at a place designated by Mortgagee which is reasonably convenient to both parties.

 

(a)                                  Mortgagor and Mortgagee agree, to the extent permitted by applicable Law, that: (i) this Mortgage upon recording or registration in the real estate records of the proper office shall constitute a financing statement filed as a “fixture filing” within the meaning of the Code; (ii) [                      ] is the record owner of the Premises; (iii) the addresses of Mortgagor and Mortgagee are as set forth in the initial paragraph of this Mortgage; and (iv) the organization identification number of Mortgagor is [                                  ].

 

(b)                                  Mortgagor, upon request by Mortgagee from time to time, shall execute, acknowledge and deliver to Mortgagee one or more separate security agreements, in form reasonably satisfactory to Mortgagee, covering all or any part of the Mortgaged Property and will further execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, any financing statement, affidavit, continuation statement or certificate or other document as Mortgagee may reasonably request in order to perfect, preserve, maintain, continue or extend the security interest under and the priority of this Mortgage and any such security agreements.  Mortgagor further agrees to pay to Mortgagee on demand all costs and expenses incurred by Mortgagee in connection with the preparation, execution, recording, filing and re-filing of any such document and all reasonable costs and expenses of any record searches for

 

12



 

financing statements Mortgagee shall reasonably require.  Pursuant to the provisions of the Code, Mortgagor hereby authorizes Mortgagee to file any such financing and continuation statements as required by the Credit Agreement.  The filing of any financing or continuation statements in the records relating to personal property or chattels shall not be construed as in any way impairing the right of Mortgagee to proceed against any personal property encumbered by this Mortgage as real property, as set forth above.

 

22.                                Assignment of Rents .  Mortgagor hereby assigns to Mortgagee the Rents as further security for the payment and performance of the Secured Obligations, and, to the extent permitted by applicable Law, Mortgagor grants to Mortgagee the right to enter the Mortgaged Property for the purpose of collecting the same and to let the Mortgaged Property or any part thereof, and to apply the Rents on account of the Secured Obligations.  The foregoing assignment and grant is present and absolute and shall continue in effect until the Secured Obligations (other than unasserted contingent indemnification Obligations) are paid in full, but Mortgagee hereby waives the right to enter the Mortgaged Property for the purpose of collecting the Rents and Mortgagor shall be entitled to collect, receive, use and retain the Rents until the occurrence of an Event of Default under this Mortgage; such right of Mortgagor to collect, receive, use and retain the Rents may be revoked by Mortgagee upon the occurrence of any Event of Default under this Mortgage by giving not less than five days’ written notice of such revocation to Mortgagor.  In the event such notice is given, Mortgagor shall pay over to Mortgagee, or to any receiver appointed to collect the Rents, any Lease security deposits.  Mortgagor shall not accept prepayments of installments of Rent to become due for a period of more than one month in advance (except for security deposits and estimated payments of percentage rent, if any).

 

23.                                Notices .  All notices, requests, demands and other communications hereunder shall be given in accordance with the provisions of Section 10.02 of the Credit Agreement to Mortgagor in care of the Lead Borrower and to Mortgagee at the address of the Administrative Agent as specified therein.

 

24.                                No Oral Modification .  This Mortgage may not be amended, supplemented, or otherwise modified except in accordance with the provisions of Section 10.01 of the Credit Agreement.  To the extent permitted by applicable Law, any agreement made by Mortgagor and Mortgagee after the effective date of this Mortgage relating to this Mortgage shall be superior to the rights of the holder of any intervening or subordinate Lien or encumbrance.

 

25.                                Partial Invalidity .  In the event any one or more of the provisions contained in this Mortgage should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and therein shall not in any way be affected or impaired thereby (it being understood that the invalidity of a particular provision in a particular jurisdiction shall not in and of itself affect the validity of such provision in any other jurisdiction).  The parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.  Notwithstanding anything to the contrary contained in this Mortgage or in any provisions of the Loan Documents, the obligations of Mortgagor and of any other obligor under the Loan

 

13



 

Documents to repay the Secured Obligations shall be subject to the limitation that Mortgagee shall not charge, take or receive, nor shall Mortgagor or any other obligor be obligated to pay to Mortgagee, any amounts constituting interest in excess of the maximum rate permitted by Law to be charged by Mortgagee, as provided by Section 10.09 of the Credit Agreement.

 

26.                                Mortgagor’s Waiver of Rights .  To the fullest extent permitted by applicable Law, Mortgagor waives the benefit of all Laws now existing or that may subsequently be enacted providing for (i) any appraisement before sale of any portion of the Mortgaged Property, (ii) any extension of the time for the enforcement of the collection of the Secured Obligations or the creation or extension of a period of redemption from any sale, and (iii) exemption of the Mortgaged Property from attachment, levy or sale under execution or exemption from civil process.  To the fullest extent Mortgagor may do so, Mortgagor agrees that Mortgagor will not at any time insist upon, plead, claim or take the benefit or advantage of any Law now or hereafter in force providing for any appraisement, valuation, stay, exemption, extension or redemption, or requiring foreclosure of this Mortgage before exercising any other remedy granted hereunder and Mortgagor, for Mortgagor and its successors and assigns, and for any and all Persons ever claiming any interest in the Mortgaged Property, to the extent permitted by applicable Law, hereby waives and releases all rights of redemption, valuation, appraisement, stay of execution, notice of election to mature or declare due the whole of the secured indebtedness and marshalling in the event of foreclosure of the Liens hereby created.

 

27.                                Remedies Not Exclusive .  In addition to any rights and remedies that Mortgagee may have under the Credit Agreement and the other Loan Documents, Mortgagee shall be entitled to exercise all rights and powers under this Mortgage or under any applicable Laws now or hereafter in force with respect hereto, notwithstanding that some or all of the Secured Obligations may now or hereafter be otherwise secured, whether by mortgage, security agreement, pledge, Lien, assignment or otherwise.  Neither the acceptance of this Mortgage nor its enforcement, shall prejudice or in any manner affect Mortgagee’s right to realize upon or enforce any other security now or hereafter held by Mortgagee, it being agreed that Mortgagee shall not be required to look first to, enforce or exhaust any other security, collateral or guaranties and that Mortgagee shall be entitled to enforce this Mortgage and any other security now or hereafter held by Mortgagee in such order and manner as Mortgagee may determine in its absolute discretion.  No remedy herein conferred upon or reserved to Mortgagee is intended to be exclusive of any other remedy herein or by Law provided or permitted, but each shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute.  Every power or remedy given by any of the Loan Documents to Mortgagee or to which Mortgagee is otherwise entitled may be exercised concurrently or independently from time to time and as often as may be deemed expedient by Mortgagee in accordance therewith.  In no event shall Mortgagee, in the exercise of the remedies provided in this Mortgage (including, without limitation, in connection with the assignment of Rents to Mortgagee, or the appointment of a receiver and the entry of such receiver on to all or any part of the Mortgaged Property), be deemed a “mortgagee in possession,” and Mortgagee shall not in any way be made liable for any act, either of commission or omission, in connection with the exercise of such remedies.

 

14



 

28.                                Multiple Security .  If (a) the Premises shall consist of one or more parcels, whether or not contiguous and whether or not located in the same county, or (b) in addition to this Mortgage, Mortgagee shall now or hereafter hold one or more additional mortgages, Liens, deeds of trust or other security (directly or indirectly) for the Secured Obligations upon other property in the State (whether or not such property is owned by Mortgagor or by others) or (c) both the circumstances described in clauses (a) and (b) shall be true, then to the fullest extent permitted by applicable Law, Mortgagee may, at its election, commence or consolidate in a single foreclosure action all foreclosure proceedings against all such collateral securing the Secured Obligations (including the Mortgaged Property), which action may be brought or consolidated in the courts of any county in the State in which any of such collateral is located.  Mortgagor acknowledges that the right to maintain a consolidated foreclosure action in the State is a specific inducement to Mortgagee to extend the Secured Obligations, and Mortgagor expressly and irrevocably waives any objections to the commencement or consolidation of the foreclosure proceedings in a single action and any objections to the laying of venue or based on the grounds of forum non conveniens which it may now or hereafter have.  Mortgagor further agrees that if Mortgagee shall be prosecuting one or more foreclosure or other proceedings against a portion of the Mortgaged Property or against any collateral other than the Mortgaged Property, which collateral directly or indirectly secures the Secured Obligations, or if Mortgagee shall have obtained a judgment of foreclosure and sale or similar judgment against such collateral, then, whether or not such proceedings are being maintained or judgments were obtained in or outside the State, Mortgagee may commence or continue foreclosure proceedings and exercise its other remedies granted in this Mortgage against all or any part of the Mortgaged Property and Mortgagor waives any objections to the commencement or continuation of a foreclosure of this Mortgage or exercise of any other remedies hereunder based on such other proceedings or judgments, and waives any right to seek to dismiss, stay, remove, transfer or consolidate either any action under this Mortgage or such other proceedings on such basis.  Neither the commencement nor continuation of proceedings to foreclose this Mortgage nor the exercise of any other rights hereunder nor the recovery of any judgment by Mortgagee in any such proceedings shall prejudice, limit or preclude Mortgagee’s right to commence or continue one or more foreclosure or other proceedings or obtain a judgment against any other collateral (either in or outside the State) which directly or indirectly secures the Secured Obligations, and Mortgagor expressly waives any objections to the commencement of, continuation of, or entry of a judgment in such other proceedings or exercise of any remedies in such proceedings based upon any action or judgment connected to this Mortgage, and Mortgagor also waives any right to seek to dismiss, stay, remove, transfer or consolidate either such other proceedings or any action under this Mortgage on such basis.  It is expressly understood and agreed that to the fullest extent permitted by applicable Law, Mortgagee may, at its election, cause the sale of all collateral which is the subject of a single foreclosure action in the State at either a single sale or at multiple sales conducted simultaneously and take such other measures as are appropriate in order to effect the agreement of the parties to dispose of and administer all collateral securing the Secured Obligations (directly or indirectly) in the most economical and least time-consuming manner.

 

29.                                Successors and Assigns .  Whenever in this Mortgage any of the parties hereto is referred to, such reference shall be deemed to include the successors and assigns of such party as permitted by the Credit Agreement; and all covenants, promises and agreements by

 

15



 

or on behalf of Mortgagor or Mortgagee that are contained in this Mortgage shall run with the Premises and bind and inure to the benefit of their respective successors and assigns.

 

30.          No Waivers, etc.   Mortgagee may release, regardless of consideration and without the necessity for any notice to or consent by the holder of any subordinate Lien on the Mortgaged Property, any part of the security held for the obligations secured by this Mortgage without, as to the remainder of the security, in anywise impairing or affecting the Lien of this Mortgage or the priority of such Lien over any subordinate Lien.  No failure or delay of Mortgagee in exercising any power or right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power.  No waiver of any provision of this Mortgage or consent to any departure by Mortgagor therefrom shall in any event be effective unless the same shall be permitted as provided in Section 24,(14) and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given.  No notice or demand on Mortgagor in any case shall entitle Mortgagor to any other or further notice or demand in similar or other circumstances.

 

31.          Governing Law, etc.   The provisions of this Mortgage regarding the creation, perfection, priority, and enforcement of the Liens and security interests granted herein shall be governed by and construed under the Laws of the State.  All other provisions of this Mortgage and the rights and obligations of Mortgagor and Mortgagee, including the provisions of the Credit Agreement and any other Loan Document incorporated or referenced herein shall be governed by, and construed and enforced in accordance with, the Laws of the State of New York, without regard to the conflict of laws principles thereof that would result in the application of any Law other than the Law of the State of New York.

 

32.          Certain Definitions .  The word “Mortgagor” shall be construed as if it reads “Mortgagors” whenever the sense of this Mortgage so requires and if there shall be more than one Mortgagor, the obligations of Mortgagors shall be joint and several.  Unless the context clearly indicates a contrary intent or unless otherwise specifically provided herein, words used in this Mortgage shall be used interchangeably in singular or plural form and the word “ Mortgagor ” shall mean “each Mortgagor or any subsequent owner or owners of the Mortgaged Property or any part thereof or interest therein,” the word “ Mortgagee ” shall mean “Mortgagee or any successor Administrative Agent or other permitted agent for the Lenders permitted by the Credit Agreement,” and the words “ Mortgaged Property ” shall include any portion of the Mortgaged Property or interest therein.  Whenever the context may require, any pronouns used herein shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns and pronouns shall include the plural and vice versa.  The captions in this Mortgage are for convenience or reference only and in no way limit or amplify the provisions hereof.

 

33.          Consent to Jurisdiction and Service of Process; Waiver of Jury Trial .  (a)  MORTGAGOR HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR

 


(14) For leasehold mortgages, change to “Section 24” to “Section 25.”

 

16



 

ITSELF AND THE MORTGAGED PROPERTY, TO THE EXTENT PERMITTED BY APPLICABLE LAW, TO THE NON-EXCLUSIVE JURISDICTION OF ANY COURT OF THE STATE OR OF ANY NEW YORK STATE COURT OR FEDERAL COURT OF THE UNITED STATES OF AMERICA SITTING IN NEW YORK COUNTY, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS MORTGAGE, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND MORTGAGOR HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN THE AFORESAID COURTS.  MORTGAGOR AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.  NOTHING IN THIS MORTGAGE SHALL AFFECT ANY RIGHT THAT MORTGAGEE MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS MORTGAGE AGAINST MORTGAGOR OR THE MORTGAGED PROPERTY IN THE COURTS OF ANY JURISDICTION IF REQUIRED TO REALIZE UPON THE MORTGAGED PROPERTY OR ENFORCE ANY JUDGMENT.

 

(b)           MORTGAGOR FURTHER IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION, OR PROCEEDING ARISING OUT OF OR RELATING TO THIS MORTGAGE IN ANY OF THE AFORESAID COURTS IN CLAUSE (a) ABOVE MORTGAGOR HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH SUIT, ACTION OR PROCEEDING IN ANY SUCH COURT.

 

(c)           TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, MORTGAGOR IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 23,(15) EXCLUDING SERVICE OF PROCESS BY MAIL.  NOTHING IN THIS MORTGAGE WILL AFFECT THE RIGHT OF MORTGAGOR OR MORTGAGEE TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.

 

(d)           MORTGAGOR, AND MORTGAGEE, BY ACCEPTANCE HEREOF, EACH HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS MORTGAGE.  MORTGAGOR (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS

 


(15) For leasehold mortgages, change to “SECTION 23” to “SECTION 24.”

 

17



 

MORTGAGE BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN SECTION 10.15 OF THE CREDIT AGREEMENT.

 

34.          Future Advances .  This Mortgage is given to secure the Secured Obligations and shall secure not only obligations with respect to presently existing indebtedness but also any and all other obligations that may hereafter be owing to the Administrative Agent and the Lenders under the Loan Documents, however incurred, whether interest, discount or otherwise, and whether the same shall be deferred, accrued or capitalized, including future advances, re-advances, and Protective Advances (collectively, “ Future Advances ”), in each case pursuant to the Credit Agreement or the other Loan Documents, whether such Future Advances are obligatory or to be made at the option of the Administrative Agent, the Lenders, or otherwise, to the same extent as if such Future Advances were made on the date of the execution of this Mortgage.  The Lien of this Mortgage shall be valid as to all Secured Obligations secured hereby, including Future Advances, from the time of delivery hereof by Mortgagor to Mortgagee.  This Mortgage is intended to and shall be valid and have priority over all subsequent Liens and encumbrances, including statutory Liens, excepting solely taxes and assessments levied on the Premises and Permitted Exceptions.  Although this Mortgage is given to secure all Future Advances made by Mortgagee or the other Lenders to or for the benefit of any Borrower, Mortgagor, or the Mortgaged Property, pursuant to this Mortgage or in connection with the Mortgaged Property, the Credit Agreement or other Loan Documents, whether obligatory or optional, Mortgagor and Mortgagee acknowledge and agree that Mortgagee and the Lenders are obligated by the terms of the Loan Documents to make certain Future Advances, subject to the fulfillment of the relevant conditions set forth in the Loan Documents.

 

35.          Mortgagee as Agent; Successor Agents .  (a)  Mortgagee has been appointed to act as agent hereunder by the other Lenders pursuant to the Credit Agreement.  Mortgagee shall have the right hereunder to make demands, to give notices, to exercise or refrain from exercising any rights, and to take or refrain from taking any action (including, without limitation, the release or substitution of the Mortgaged Property) in accordance with the Credit Agreement, any related agency agreement among the Loan Parties, Mortgagee and the other Lenders (collectively, as amended, amended and restated, supplemented or otherwise modified or replaced from time to time, the “ Agency Documents ”) and this Mortgage.  Mortgagor and all other Persons shall be entitled to rely on releases, waivers, consents, approvals, notifications and other acts of Mortgagee, without inquiry into the existence of required consents or approvals of the Lenders therefor.

 

(b)           Mortgagee shall at all times be the same Person that is the Administrative Agent or other permitted agency role under the Agency Documents.  Mortgagee may resign and a successor agent may be appointed in the manner provided in the Credit Agreement, and written notice of resignation by the Administrative Agent or other permitted agent pursuant to the Agency Documents shall also constitute notice of resignation as Mortgagee under this Mortgage.  Removal of the Administrative Agent or other permitted agent pursuant to any provision of the Agency Documents shall also constitute removal as Mortgagee under this Mortgage.  Appointment of a successor Administrative Agent or other permitted agent pursuant to the Agency Documents shall also constitute appointment of a successor Mortgagee under this Mortgage.  Upon the acceptance of any appointment as Administrative Agent or other permitted

 

18



 

agent by a successor Administrative Agent or other permitted agent under the Agency Documents, that successor Administrative Agent or other permitted agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring or removed Administrative Agent or other permitted agent as Mortgagee under this Mortgage, and the retiring or removed Mortgagee shall promptly (i) assign and transfer to such successor Mortgagee all of its right, title and interest in and to this Mortgage and the Mortgaged Property, and (ii) execute and deliver to such successor Mortgagee such assignments and amendments and take such other actions, as may be necessary or appropriate in connection with the assignment to such successor Mortgagee of the Liens and security interests created hereunder, whereupon such retiring or removed Mortgagee shall be discharged from its duties and obligations under this Mortgage.  After any retiring or removed Mortgagee’s resignation or removal hereunder as Mortgagee, the provisions of this Mortgage and the Agency Documents shall inure to such Mortgagee’s benefit as to any actions taken or omitted to be taken by it under this Mortgage while it was Mortgagee hereunder.

 

36.          Intercreditor Agreement .  This Mortgage and the Liens granted to the Mortgagee pursuant to this Mortgage or any other Loan Documents in any Mortgaged Property and the exercise of any right or remedy with respect to any Mortgaged Property hereunder or any other Loan Document are subject to the provisions of the Intercreditor Agreement by and between Mortgagee as ABL Agent and Goldman Sachs Bank USA as Term Loan Agent (as the same may be amended, supplemented or otherwise modified from time to time, the “ Intercreditor Agreement ”).  In the event of any inconsistency between the terms of this Mortgage and the terms of the Intercreditor Agreement, the terms of the Intercreditor Agreement shall control.

 

37.          Addendum .  The terms and conditions set forth in the Addendum attached hereto are made an integral part hereof and are incorporated in this Mortgage as though fully set forth in the body of this Mortgage.  If any conflict exists between the terms and provisions contained in the body of this Mortgage and the terms and provisions set forth in the Addendum, the terms and provisions set forth in the Addendum shall control.

 

38.          Incorporation of Credit Agreement; No Conflicts .  The terms of the Credit Agreement are incorporated by reference herein as though set forth in full detail.  In the event of any conflict between the terms and provisions of this Mortgage relating to the creation, perfection, priority, and enforcement of the real property Liens and the terms and provisions of the Credit Agreement, the terms and provisions of this Mortgage shall control; in the event of a conflict between any other term or provision of this Mortgage (other than Section 31(16)) and the Credit Agreement, the terms and provisions of the Credit Agreement shall control.

 

39.          Termination; Release .  (a)  This Mortgage, the Liens in favor of Mortgagee and all other security interests granted hereby shall terminate with respect to all Secured Obligations when (i) the Commitments shall have expired or been terminated and (ii) the principal of and interest on each Loan and all fees and other Secured Obligations (other than unasserted contingent indemnification Obligations) shall have been indefeasibly performed and

 


(16) For leasehold mortgages, change to “Section 31” to “Section 32.”

 

19



 

paid in full in cash.  In addition, the Mortgaged Property or any portion thereof shall be released from the Liens of this Mortgage in accordance with the provisions of the Credit Agreement.  Upon any such termination or release of this Mortgage, the Liens in favor of Mortgagee or other security interests granted hereby, at Mortgagor’s cost and expense, Mortgagee shall file a satisfaction and release of this Mortgage, in full or in part as the case may be, in the proper real estate records.

 

40.          (17)[ Maximum Secured Amount .  Notwithstanding anything contained herein to the contrary, with respect to this Mortgage on properties located in [              ], the maximum amount secured hereby (including Mortgagor’s obligation to reimburse Protective Advances) is $                      .  Notwithstanding any provision herein to the contrary, the amount secured by this Mortgage shall be limited as follows:                 .]

 

41.          Second Lien Status .  Anything contained in this Mortgage to the contrary notwithstanding, Mortgagor and Mortgagee acknowledge and agree that so long as the Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing (together with all amendments, modifications, and supplements thereto, the “First Lien Mortgage” ) in favor of the Term Loan Agent (as defined in the Intercreditor Agreement), securing the obligations under the Term Loan Agreement (as defined in the Intercreditor Agreement) and encumbering the Mortgaged Property and intended to be recorded before the recordation of this Mortgage, has not been terminated or released of record, this Mortgage shall be subject and subordinate to the lien and the terms and provisions of the First Lien Mortgage.  Notwithstanding anything to the contrary contained in this Mortgage, all of the terms, covenants and provisions of this Mortgage shall be subject and subordinate to the terms and provisions of the First Lien Mortgage and the rights of the holder thereunder.  So long as the First Lien Mortgage has not been terminated or released of record (but subject always to the terms of the Intercreditor Agreement), (i) in the event of any inconsistency between the terms of this Mortgage (or the Mortgagor’s obligations hereunder) and the terms of the First Lien Mortgage (or the Mortgagor’s obligations thereunder) the terms of the First Lien Mortgage shall control and (ii) to the extent the consent of Mortgagee is required for matters set forth herein, the consent of Mortgagee will be deemed given when, as, if, and to the same extent that, the holder of the First Lien Mortgage consents.

 

[ADDENDUM IMMEDIATELY FOLLOWS]

 


(17) Local counsel to advise if required.

 

20



 

ADDENDUM TO MORTGAGE

 

A.            [insert State-specific provisions]

 

[SIGNATURE PAGE IMMEDIATELY FOLLOWS]

 



 

This Mortgage has been duly executed and delivered to Mortgagee by Mortgagor and is effective as of the effective date first above written.

 

 

 

MORTGAGOR:

 

 

 

[                                                ],

 

a [                            ] [                          ]

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

[Signature block subject to review and comment by local counsel]

 

[APPROPRIATE NOTARY BLOCK]

 



 

Exhibit A

 

Description of the Land

 

[Attach Legal Description of all parcels]

 



 

RIDER FOR LEASEHOLD MORTGAGE FORM

 

Rider A :

 

LEASEHOLD

 

Rider B :

 

WHEREAS, Mortgagor is the holder of leasehold title in and to all of the Land (as defined below), pursuant to the [Lease Agreement] dated as of                          ,              by and between [LANDLORD], a [                      ], as lessor (“ Lessor ”) and Mortgagor, as lessee, (“ Lessee ”), a memorandum of which is recorded in Book                 , Page                    with the Clerk of                                County,                               , [as amended by that certain                                           , dated as of                          ,               ], which Premises (as defined below) forms a portion of the Mortgaged Property described below;

 

Rider C :

 

that certain lease described in Recital C above, as the same has been and may be in the future amended, restated, renewed or extended in compliance with this Mortgage, including any options to purchase, extend or renew provided for in such lease (collectively, the “ Subject Lease ”) and any nondisturbance, attornment and recognition agreement benefiting Mortgagor with respect to the Subject Lease, together with all credits, deposits, privileges, rights, estates, title and interest of Mortgagor as tenant under the Subject Lease (including all rights of Mortgagor to treat the Subject Lease as terminated under Section 365(h) (a “ 365(h) Election ”) of the Bankruptcy Code, or any other Debtor Relief Laws, or any comparable right provided under any other Debtor Relief Law, together with all rights, remedies and privileges related thereto), and all books and records that contain records of payments of rent or security made under the Subject Lease and all of Mortgagor’s claims and rights to the payment of damages that may arise from Lessor’s failure to perform under the Subject Lease, or rejection of the Subject Lease under any Debtor Relief Law (a “ Lease Damage Claim ”), Mortgagee having the right, at any time and from time to time, to notify Lessor of the rights of Mortgagee hereunder;

 

Rider D :

 

Subject Lease .  (a)  Mortgagor represents, warrants and agrees as follows:

 

(i)            Mortgagor has delivered to Mortgagee a true, correct and complete copy of the Subject Lease, including all amendments and modifications, existing as of the date hereof.

 

(ii)           Mortgagor has not executed or entered into any modifications or amendments of the Subject Lease, either orally or in writing, other than written amendments that have been disclosed to Mortgagee in writing.  Except as expressly permitted under the Credit Agreement, Mortgagor shall not enter into any new leases of

 



 

all or any portion of the Mortgaged Property or any modifications or amendments of the Subject Lease except with Mortgagee’s prior written consent which consent shall not be unreasonably withheld or delayed.

 

(iii)          The Subject Lease is in full force and effect, and Mortgagor is in no default of its obligations under the Subject Lease that, with the giving of notice or the passage of time or both, would entitle Lessor to terminate the Subject Lease or avoid its obligations thereunder.   To Mortgagor’s knowledge, no other event has occurred that, with the giving of notice or the passage of time or both, would entitle Lessor to terminate the Subject Lease or avoid its obligations thereunder.  Mortgagor has no knowledge of any material default of Lessor’s obligations under the Subject Lease or the occurrence of any event that, with the giving of notice or the passage of time or both, would constitute such a default or entitle Mortgagor to terminate the Subject Lease or avoid its obligations thereunder.

 

(iv)          Except for Permitted Exceptions, Mortgagor has not executed any assignment or pledge of the Subject Lease or of Mortgagor’s right, title or interest in the same.

 

(v)           This Mortgage has been granted in conformity with the Subject Lease, does not constitute a violation or default under the Subject Lease, and shall at all times constitute a valid Lien (subject only to matters permitted by this Mortgage) on Mortgagor’s interests in the Subject Lease.

 

(vi)          Mortgagor shall pay, when due and payable, the rentals, additional rentals, and other charges required to be paid by Mortgagor under the terms of the Subject Lease.

 

(vii)         Mortgagor shall perform and observe all terms, covenants, and conditions that Mortgagor is required to perform and observe as lessee under the Subject Lease (including maintenance of insurance as required thereby and under the Credit Agreement), and will not do or suffer to be done anything the doing of which, or refrain from doing anything the omission of which, will impair the security of this Mortgage.  Mortgagor will enforce the obligations of the Lessor under the Subject Lease, to the end that Mortgagor may enjoy all of the rights granted to it as lessee under the Subject Lease.  Mortgagor shall furnish to Mortgagee any and all documentary evidence received by it or in its possession showing compliance by Mortgagor with the provisions of the Subject Lease that Mortgagee may reasonably request from time to time.

 

(viii)        Mortgagor shall promptly deliver to Mortgagee a copy of any written notice of default or termination under the Subject Lease that it receives from the Lessor.  Mortgagor shall promptly notify Mortgagee of any request that either party to the Subject Lease makes for arbitration pursuant to the Subject Lease and the guidelines of the institution of any such arbitration.  Mortgagor shall promptly deliver to Mortgagee a copy of the arbitrators’ determination in each such arbitration.  Mortgagee may participate in any such arbitration in such manner as Mortgagee shall determine appropriate, including,

 

Rider 2



 

during the continuance of an Event of Default, to the exclusion of Mortgagor if so determined by Mortgagee in its reasonable discretion.

 

(ix)          Mortgagor shall not, without Mortgagee’s consent, consent or refuse to consent to any action that the Lessor or any third party takes or desires to take pursuant to the terms and provisions of such Subject Lease if such action has a material adverse effect on the Subject Lease or Mortgagor’s rights thereunder.

 

(x)           Mortgagor’s obligations under this Mortgage are independent of and in addition to Mortgagor’s obligations under the Subject Lease.  Nothing in this Mortgage shall be construed to require Mortgagor or Mortgagee to take or omit to take any action that would cause a default under the Subject Lease.

 

(b)           Treatment of Subject Lease in Bankruptcy .  (i)  If the Lessor rejects or disaffirms, or seeks or purports to reject or disaffirm, the Subject Lease pursuant to any Debtor Relief Law, then Mortgagor shall not suffer or permit the termination of any Lease by exercise of the 365(h) Election or otherwise without Mortgagee’s consent.  Mortgagor acknowledges that because the Subject Lease is a primary element of Mortgagee’s security for the Secured Obligations, it is not anticipated that Mortgagee would consent to termination of the Subject Lease.  If Mortgagor makes any 365(h) Election in violation of this Mortgage, then such 365(h) Election shall be void and of no force or effect.

 

(ii)           Mortgagor hereby assigns to Mortgagee the 365(h) Election with respect to the Subject Lease until the earlier of (i) satisfaction in full of the Secured Obligations (other than unasserted contingent indemnification Obligations), and (ii) release of Mortgagee’s security interest in the Subject Lease.  Mortgagor acknowledges and agrees that the foregoing assignment of the 365(h) Election and related rights is one of the rights that Mortgagee may use at any time to protect and preserve Mortgagee’s other rights and interests under this Mortgage.  Mortgagor further acknowledges that exercise of the 365(h) Election in favor of terminating the Subject Lease would constitute waste prohibited by this Mortgage.  Mortgagor acknowledges and agrees that the 365(h) Election is in the nature of a remedy available to Mortgagor under the Subject Lease, and is not a property interest that Mortgagor can separate from the Subject Lease as to which it arises.  Therefore, Mortgagor agrees and acknowledges that exercise of the 365(h) Election in favor of preserving the right to possession under the Subject Lease shall not be deemed to constitute Mortgagee’s taking or sale of the Land (or any element thereof) and shall not entitle Mortgagor to any credit against the Secured Obligations secured hereunder or otherwise impair Mortgagee’s remedies.

 

(iii)          Mortgagor acknowledges that if the 365(h) Election is exercised in favor of Mortgagor’s remaining in possession under the Subject Lease, then Mortgagor’s resulting occupancy rights, as adjusted by the effect of Section 365 of the Bankruptcy Code, shall then be part of the Mortgaged Property and shall be subject to the Lien of this Mortgage.

 

Rider 3



 

(iv)          If the Lessor rejects or disaffirms the Subject Lease or purports or seeks to disaffirm such Subject Lease pursuant to any Debtor Relief Law, and the 365(h) Election is exercised in favor of Mortgagor’s remaining in possession under the Subject Lease, then:

 

(1)           Mortgagor shall remain in possession of the Land demised under the Subject Lease and shall perform all acts necessary for Mortgagor to remain in such possession for the unexpired term of such Subject Lease (including all renewals), whether the then existing terms and provisions of such Subject Lease require such acts or otherwise; and

 

(2)           All the terms and provisions of this Mortgage and the Lien created by this Mortgage shall remain in full force and effect and shall extend automatically to all of Mortgagor’s rights and remedies arising at any time under, or pursuant to, Section 365(h) of the Bankruptcy Code, including all of Mortgagor’s rights to remain in possession of the Land.

 

(c)           Assignment of Claims to Mortgagee .  Mortgagor, immediately upon learning that the Lessor has failed to perform any material term or provision under the Subject Lease (including by reason of a rejection or disaffirmance or purported rejection or disaffirmance of such Subject Lease pursuant to any Debtor Relief Law), shall notify Mortgagee of any such material failure to perform.  Mortgagor unconditionally assigns, transfers, and sets over to Mortgagee any and all Lease Damage Claims.  This assignment constitutes a present, irrevocable, and unconditional assignment of the Lease Damage Claims, and shall continue in effect until the earlier of (i) satisfaction in full of the Secured Obligations (other than unasserted contingent indemnification Obligations), and (ii) release of Mortgagee’s security interest in the Subject Lease.  So long as no Event of Default exists, Mortgagee grants Mortgagor a revocable license to exercise, collect and receive any sums arising in connection with any Lease Damage Claims (the “ Lease Damages ”).  While any Event of Default exists, Mortgagee may (x) revoke such license, with or without notice (“ Revocation of License ”), or (y) collect all Lease Damages directly under the foregoing absolute assignment of all Lease Damage Claims to Mortgagee.  Upon any Revocation of License, Mortgagor promptly shall pay to Mortgagee all Lease Damages paid to Mortgagor to the extent that the same are allocable to any period from and after such Revocation of License, and Mortgagor shall hold in trust all Lease Damages (to be applied as required pursuant to the terms and provisions of the Credit Agreement).

 

(d)           Offset by Mortgagor .  If pursuant to Section 365(h)(2) of the Bankruptcy Code or any other similar Debtor Relief Law, Mortgagor seeks to offset against any rent under the Subject Lease the amount of any Lease Damage Claim, then Mortgagor shall notify Mortgagee of its intent to do so at least 20 days before effecting such offset.  Such notice shall set forth the amounts proposed to be so offset and the basis for such offset.  If Mortgagee reasonably objects to all or any part of such offset, then Mortgagor shall not effect any offset of the amounts to which Mortgagee reasonably

 

Rider 4



 

objects.  If Mortgagee approves such offset, then Mortgagor may effect such offset as set forth in Mortgagor’s notice.  Neither Mortgagee’s failure to object, nor any objection or other communication between Mortgagee and Mortgagor that relates to such offset, shall constitute Mortgagee’s approval of any such offset.  Mortgagor shall indemnify Mortgagee against any offset by Mortgagor against the rent reserved in the Subject Lease.

 

(e)           Mortgagor’s Acquisition of Interest in Leased Parcel .  If Mortgagor acquires the fee or any other interest in any Land or Improvements originally subject to the Subject Lease, then, such acquired interest shall immediately become subject to the Lien of this Mortgage as fully and completely, and with the same effect, as if Mortgagor now owned it and as if this Mortgage specifically described it, without need for the delivery and/or recording of a supplement to this Mortgage or any other instrument.  In the event of any such acquisition, the fee and leasehold interests in such Land or Improvements, unless Mortgagee elects otherwise in writing, remain separate and distinct and shall not merge, notwithstanding any principle of law to the contrary.

 

(f)            New Lease Issued to Mortgagee .  If the Subject Lease is for any reason whatsoever terminated before the expiration of its term, Mortgagor acknowledges that Mortgagee or its designee may enter into with Lessor a new lease of the relevant leased premises, and Mortgagor shall have no right, title or interest in or to such new lease or the estate created thereby.

 

Rider 5



 

EXHIBIT K

 

FORM OF PERSONAL PROPERTY SECURITY AGREEMENT

 

 

RELATED REAL ESTATE COLLATERAL SECURITY AGREEMENT

 

dated as of

 

[                    ], 20[    ]

 

by

 

THE LOAN PARTIES LISTED ON THE SIGNATURE PAGES HERETO

 

in favor of

 

WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Administrative Agent

 

 



 

Table of Contents

 

ARTICLE I DEFINITIONS AND INTERPRETATION

2

 

 

SECTION 1.1 Definitions

2

SECTION 1.2 Interpretation

3

SECTION 1.3 Perfection Certificate

4

 

 

ARTICLE II GRANT OF SECURITY AND SECURED OBLIGATIONS

4

 

 

SECTION 2.1 Pledge; Grant of Security Interest

4

SECTION 2.2 Secured Obligations

4

SECTION 2.3 Security Interest

4

 

 

ARTICLE III PERFECTION; SUPPLEMENTS; FURTHER ASSURANCES; USE OF COLLATERAL

5

 

 

SECTION 3.1 Financing Statements and Other Filings; Maintenance of Perfected Security Interest

5

SECTION 3.2 Supplements; Further Assurances

5

SECTION 3.3 Grant of License

6

 

 

ARTICLE IV REPRESENTATIONS, WARRANTIES AND COVENANTS

6

 

 

SECTION 4.1 Title

6

SECTION 4.2 Limitation on Liens; Defense of Claims; Transferability of Collateral

6

SECTION 4.3 Chief Executive Office; Change of Name; Jurisdiction of Organization

7

SECTION 4.4 No Conflicts, Consents, etc.

7

SECTION 4.5 Collateral

7

SECTION 4.6 Insurance

7

SECTION 4.7 Payment of Taxes; Compliance with Laws; Contested Liens; Claims

8

 

 

ARTICLE V REMEDIES

8

 

 

SECTION 5.1 Remedies

8

SECTION 5.2 Notice of Sale

10

SECTION 5.3 Waiver of Notice and Claims

10

SECTION 5.4 Certain Sales of Collateral

10

SECTION 5.5 No Waiver; Cumulative Remedies

10

SECTION 5.6 Application of Proceeds

11

SECTION 5.7 Third Party Agreements

11

 

 

ARTICLE VI MISCELLANEOUS

11

 

 

SECTION 6.1 Concerning the Administrative Agent

11

SECTION 6.2 Administrative Agent May Perform; Administrative Agent Appointed Attorney-in-Fact

12

SECTION 6.3 Expenses

12

SECTION 6.4 Continuing Security Interest; Assignment

12

SECTION 6.5 Termination; Release

13

SECTION 6.6 Modification in Writing

14

SECTION 6.7 Notices

14

SECTION 6.8 GOVERNING LAW

14

 

i



 

SECTION 6.9 CONSENT TO JURISDICTION; SERVICE OF PROCESS; WAIVER OF JURY TRIAL

14

SECTION 6.10 Severability of Provisions

15

SECTION 6.11 Execution in Counterparts; Effectiveness

15

SECTION 6.12 No Release

16

SECTION 6.13 Obligations Absolute

16

SECTION 6.14 Term Loan Intercreditor Agreement

16

 

ii



 

EXHIBIT 1

 

Mortgaged Property

 

 

 

SCHEDULE 3.1

 

Filings, Registrations and Recordings

SCHEDULE 4.3(a)

 

Other Legal and Fictitious Names, Mergers, Consolidations, Acquisitions

 

iii



 

RELATED REAL ESTATE COLLATERAL SECURITY AGREEMENT

 

RELATED REAL ESTATE COLLATERAL SECURITY AGREEMENT, dated as of [                      ] , 20 [      ] (as amended, amended and restated, supplemented or otherwise modified from time to time in accordance with the provisions hereof, this “ Related Real Estate Collateral Security Agreement ”) made by [                        ] (“ Grantor ”) in favor of WELLS FARGO BANK, NATIONAL ASSOCIATION, having an office at One Boston Place, 18th Floor, Boston, MA 02108, in its capacity as administrative agent for the Credit Parties (as defined in the Credit Agreement defined below) pursuant to the Credit Agreement, as pledgee, assignee and secured party (in such capacities and together with any successors in such capacities, the “ Administrative Agent ”)

 

R E C I T A L S :

 

A.            SUPERVALU INC., a Delaware corporation, for itself and as Lead Borrower (in such capacity, the “ Lead Borrower ”) for the other Borrowers party to the Credit Agreement (as hereinafter defined) from time to time (individually, a “ Borrower ” and, collectively, the “ Borrowers ”),the Borrowers party to the Credit Agreement from time to time, the Guarantors party to the Credit Agreement, the Administrative Agent, and the Lenders party to the Credit Agreement have, in connection with the execution and delivery of this Related Real Estate Collateral Security Agreement, entered into that certain Amended and Restated Credit Agreement, dated as of March 21, 2013 as amended, amended and restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”).

 

B.            Pursuant to the terms of the Credit Agreement, Grantor which is [a Borrower] [Guarantor] under the Credit Agreement, agreed to execute and deliver a Mortgage granting a Lien on the Mortgaged Property and this Related Real Estate Collateral Security Agreement.

 

C.            The Grantor received substantial benefits from the execution, delivery and performance of the Credit Agreement and is, therefore, willing to enter into this Related Real Estate Collateral Security Agreement.

 

D.            This Related Real Estate Collateral Security Agreement is given by Grantor in favor of the Administrative Agent for the benefit of the Credit Parties to secure the payment and performance of all of the Secured Obligations (as hereinafter defined).

 

A G R E E M E N T :

 

NOW THEREFORE, in consideration of the foregoing premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Grantor and the Administrative Agent hereby agree as follows:

 

1



 

ARTICLE I

 

DEFINITIONS AND INTERPRETATION

 

SECTION 1.1  Definitions .

 

(a)   Unless otherwise defined herein or in the Credit Agreement, capitalized terms used herein that are defined in the UCC shall have the meanings assigned to them in the UCC.

 

(b)   Capitalized terms used but not otherwise defined herein that are defined in the Credit Agreement shall have the meanings assigned to them in the Credit Agreement.

 

(c)   The following terms shall have the following meanings:

 

ABL Priority Collateral ” shall have the meaning assigned to such term in the Term Loan Intercreditor Agreement.

 

Administrative Agent ” shall have the meaning assigned to such term in the Preamble hereof.

 

Claims ” shall mean any and all property taxes and other taxes, assessments and special assessments, levies, fees and all governmental charges imposed upon or assessed against, and all claims (including, without limitation, landlords’, carriers’, mechanics’, workmen’s, repairmen’s, laborers’, materialmen’s, suppliers’ and warehousemen’s Liens and other claims arising by operation of law) against, all or any portion of the Collateral.

 

Collateral ” shall have the meaning assigned to such term in Section 2.1 hereof.

 

Credit Agreement ” shall have the meaning assigned to such term in Recital A hereof.

 

Excluded Assets ” shall mean the following:

 

(a)   any rights or interests in any contract, agreement, lease, permit, license, charter or license agreement, as such, if under the terms of such contract, agreement, lease, permit, license, charter or license agreement, or applicable law with respect thereto, the valid grant of a Lien therein to the Administrative Agent would constitute or result in a breach, termination or default under such contract, agreement, lease, permit, license, charter or license agreement and such breach, termination or default has not been or is not waived or the consent of the other party to such contract, agreement, lease, permit, license, charter or license agreement has not been or is not otherwise obtained or under applicable law such prohibition cannot be waived; provided , that , the foregoing exclusion shall in no way be construed (i) to apply if any such prohibition is unenforceable under Sections 9-406, 9-407 or 9-408 of the UCC or other applicable law or (ii) so as to limit, impair or otherwise affect the Administrative Agent’s unconditional continuing Liens in any rights or interests of Grantor in or to monies due or to become due under any such contract, lease, permit, license, charter or license agreement;

 

(b)   ABL Priority Collateral.

 

“Excluded Swap Obligations” shall mean, with respect to Grantor, any obligation (a “ Swap Obligation ”) to pay or perform under any agreement, contract or transaction that constitutes a “swap” within the meaning of section 1a(47) of the Commodity Exchange Act, if, and to the extent that, all or a portion of the guarantee of Grantor of, or the grant by Grantor of a security interest to secure, such Swap

 

2



 

Obligation (or any guarantee thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) as a result of the failure for any reason of such Grantor to constitute an “eligible contract participant” as defined in the Commodity Exchange Act.

 

Grantor ” shall have the meaning assigned to such term in the Preamble hereof.

 

Intellectual Property ” shall mean “Patents,” “Trademarks,” “Copyrights,” “Licenses” and “Goodwill” (each as defined in the Security Agreement) of Grantor.

 

Material Related Collateral Location ” means the Material Releated Collateral Location of the Grantor described in Exhibit I hereto.

 

Mortgage ” shall mean the [mortgage or deed of trust] of even date herewith made by Grantor in favor of the Administrative Agent and covering the Mortgaged Property, as the same may be amended, supplemented, restated or otherwise modified and in effect from time to time.

 

Mortgaged Property ” means the real property described in Exhibit 1 hereto.

 

Perfection Certificate ” shall mean that certain Perfection Certificate, dated as of the Closing Date, executed and delivered by Grantor in favor of the Administrative Agent for the benefit of the Credit Parties, as the same may be amended, supplemented, restated or otherwise modified and in effect from time to time in accordance with the Credit Agreement.

 

Secured Obligations ” shall mean the Obligations and the Guaranteed Obligations (as defined in the Facility Guaranty).

 

Related Real Estate Collateral Security Agreement ” shall have the meaning assigned to such term in the Preamble hereof.

 

Fixed Asset Collateral ” shall mean all Equipment owned by Grantor from time to time located on the [Mortgaged Property (but only while located on the Mortgaged Property)] [Material Related Collateral Location (but only while located on the Material Related Collateral Location)], other than (a) rolling stock and (b) air or automobile equipment, information technology equipment and leasehold improvements located on operating lease sites (but including all other fixtures).

 

UCC ” means the Uniform Commercial Code as in effect from time to time in the State of New York; provided , that , (a) if a term is defined in Article 9 of the Uniform Commercial Code differently than in another Article thereof, the term shall have the meaning set forth in Article 9 of the Uniform Commercial Code and (b) if by reason of mandatory provisions of law, perfection, or the effect of perfection or non-perfection, of a security interest in any Collateral or the availability of any remedy hereunder is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York, “UCC” means the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions hereof relating to such perfection or effect of perfection or non-perfection or availability of such remedy, as the case may be.

 

SECTION 1.2  Interpretation .  The rules of interpretation specified in Section 1.02 of the Credit Agreement shall be applicable to this Related Real Estate Collateral Security Agreement.

 

3



 

SECTION 1.3  Perfection Certificate .  The Administrative Agent and Grantor agree that the Perfection Certificate and all schedules, amendments and supplements thereto are, and shall at all times remain, a part of this Related Real Estate Collateral Security Agreement.

 

ARTICLE II

 

GRANT OF SECURITY AND SECURED OBLIGATIONS

 

SECTION 2.1  Pledge; Grant of Security Interest .  As collateral security for the payment and performance in full of all the Secured Obligations, Grantor hereby pledges and grants to the Administrative Agent for its benefit and for the benefit of the other Credit Parties, a lien on and security interest in and to all of the right, title and interest of Grantor in, to and under the following personal property and interests in such personal property, wherever located, and whether now existing or hereafter arising or acquired from time to time (collectively, the “ Collateral ”):

 

(a)   all Specified Fixed Asset Collateral;

 

(b)   all books and records and documents relating to the Collateral (whether tangible or electronic, which contain any information relating to any of the foregoing), but only to the extent necessary or desirable to sell, transfer or otherwise realize on any of the other Collateral; and

 

(c)   all Proceeds of the foregoing and all accessions to, substitutions and replacements for, and rents, profits and products of, each of the foregoing, any and all proceeds of any insurance (including proceeds of business interruption and other insurance claims against third parties), indemnity, warranty or guaranty payable to Grantor from time to time with respect to any of the foregoing.

 

Notwithstanding anything to the contrary contained in clauses (a)  through (d)  above, the security interest created by this Related Real Estate Collateral Security Agreement shall not extend to, and the term “Collateral” shall not include, any Excluded Assets and Grantor shall from time to time at the request of the Administrative Agent give written notice to the Administrative Agent identifying in reasonable detail the Excluded Assets described in clause (a) of the definition thereof and shall provide to the Administrative Agent such other information regarding such Excluded Assets as the Administrative Agent may reasonably request.

 

SECTION 2.2  Secured Obligations .  This Related Real Estate Collateral Security Agreement secures, and the Collateral is collateral security for, the payment and performance in full when due of the Secured Obligations, but excluding all Excluded Swap Obligations.

 

SECTION 2.3  Security Interest .

 

(a)   Grantor hereby irrevocably authorizes the Administrative Agent at any time and from time to time to authenticate and file in any relevant jurisdiction any financing statements (including fixture filings) and amendments thereto that contain the information required by Article 9 of the UCC of each applicable jurisdiction for the filing of any financing statement or amendment relating to the Collateral, including, without limitation, (i) the type of organization and any organizational identification number issued to Grantor and (ii) a description of the Collateral.  Grantor agrees to provide all information described in the immediately preceding sentence to the Administrative Agent promptly upon request.

 

4



 

(b)   Grantor hereby ratifies its prior authorization for the Administrative Agent to file in any relevant jurisdiction any financing statements or amendments thereto relating to the Collateral if filed prior to the date hereof.

 

ARTICLE III

 

PERFECTION; SUPPLEMENTS; FURTHER ASSURANCES; USE OF COLLATERAL

 

SECTION 3.1  Financing Statements and Other Filings; Maintenance of Perfected Security Interest (a).  Grantor represents and warrants that the only filings, registrations and recordings necessary and appropriate to create, preserve, protect, publish notice of and perfect the security interest granted by Grantor to the Administrative Agent (for the benefit of the Credit Parties) pursuant to this Related Real Estate Collateral Security Agreement in respect of the Collateral are listed in Schedule 3.1 hereto.  Grantor represents and warrants that all such filings, registrations and recordings have been delivered to the Administrative Agent in completed and, to the extent necessary or appropriate, duly executed form for filing in each governmental, municipal or other office specified in Schedule 3.1 hereto.  Grantor agrees that at the sole cost and expense of Grantor, (a)  Grantor will maintain the security interest created by this Related Real Estate Collateral Security Agreement in the Collateral as a perfected first priority security interest (subject to Permitted Encumbrances having priority by operation of law) and shall defend such security interest against the claims and demands of all Persons (other than with respect to Permitted Encumbrances), (b)  Grantor shall furnish to the Administrative Agent from time to time statements and schedules further identifying and describing the Collateral and such other reports in connection with the Collateral as the Administrative Agent may reasonably request, all in reasonable detail and (c) at any time and from time to time, upon the written request of the Administrative Agent, Grantor shall promptly and duly execute and deliver, and file and have recorded, such further instruments and documents and take such further action as the Administrative Agent may reasonably request, including the filing of any financing statements, continuation statements and other documents (including this Related Real Estate Collateral Security Agreement) under the UCC (or other applicable Law) in effect in any jurisdiction with respect to the security interest created hereby wherever required by applicable Law in each case to perfect, continue and maintain a valid, enforceable, first priority security interest (subject to Permitted Encumbrances having priority by operation of law) as provided herein and to preserve the other rights and interests granted to the Administrative Agent hereunder, as against Grantor and third parties (other than with respect to Permitted Encumbrances), with respect to the Collateral.

 

SECTION 3.2  Supplements; Further Assurances .  Grantor shall take such further actions, and execute and deliver to the Administrative Agent such additional assignments, agreements, supplements, powers and instruments, as the Administrative Agent may in its reasonable judgment deem necessary or appropriate, wherever required by Law, in order to perfect, preserve and protect the security interest in the Collateral as provided herein and the rights and interests granted to the Administrative Agent hereunder, or better to assure and confirm unto the Administrative Agent or permit the Administrative Agent to exercise and enforce its rights, powers and remedies hereunder with respect to any Collateral.  Without limiting the generality of the foregoing, Grantor shall make, execute, endorse, acknowledge, file or refile and/or deliver to the Administrative Agent from time to time upon reasonable request such lists, descriptions and designations of the Collateral, copies of warehouse receipts, receipts in the nature of warehouse receipts, bills of lading, documents of title, vouchers, invoices, schedules, confirmatory assignments, supplements, additional security agreements, conveyances, financing statements, transfer endorsements, powers of attorney, certificates, reports and other assurances or instruments.  If an Event of Default has occurred and is continuing, the Administrative Agent may institute and maintain, in its own name or in the name of Grantor, such suits and proceedings as the Administrative Agent may be advised

 

5



 

by counsel shall be necessary or expedient to prevent any impairment of the security interest in or the perfection thereof in the Collateral.  All of the foregoing shall be at the sole cost and expense of Grantor.  Grantor and the Administrative Agent acknowledge that this Related Real Estate Collateral Security Agreement is intended to grant to the Administrative Agent for the benefit of the Credit Parties a security interest in and Lien upon the Collateral and shall not constitute or create a present assignment of any of the Collateral.

 

SECTION 3.3  Grant of License .  For the purpose of enabling the Administrative Agent, during the continuance of an Event of Default, to exercise rights and remedies under Article V hereof at such time as the Administrative Agent shall be lawfully entitled to exercise such rights and remedies, and for no other purpose, Grantor hereby grants to the Administrative Agent, to the extent assignable, an irrevocable, non-exclusive license (exercisable without payment of royalty or other compensation to Grantor) to use, assign, license or sublicense any of the Intellectual Property now owned or hereafter acquired by Grantor, wherever the same may be located, including in such license access to all media in which any of the licensed items may be recorded or stored and to all computer programs used for the compilation or printout hereof.

 

ARTICLE IV

 

REPRESENTATIONS, WARRANTIES AND COVENANTS

 

In addition to, and without limitation of, each of the representations, warranties and covenants set forth in the Credit Agreement and the other Loan Documents, Grantor represents, warrants and covenants as follows:

 

SECTION 4.1  Title (a).  No financing statement, mortgage, or other public notice with respect to all or any part of the Collateral is on file or of record in any public office, except such as have been filed in favor of the Administrative Agent pursuant to this Related Real Estate Collateral Security Agreement or as are permitted by the Credit Agreement.  The security interests granted pursuant to this Related Real Estate Collateral Security Agreement constitute a legal and valid security interest in favor of the Administrative Agent, for the benefit of the Credit Parties, securing the payment and performance of Grantor’s Obligations and upon completion of the filings and other actions specified on Schedule 3.1 hereto (all of which, in the case of all filings and other documents referred to on such Schedule, have been delivered to the Administrative Agent in duly completed and duly executed form, as applicable, and may be filed by the Administrative Agent at any time) and payment of all filing fees, will constitute fully perfected security interests in all of the Collateral, prior to all other Liens on the Collateral except for Permitted Encumbrances arising by operation of law that have priority under such law.

 

SECTION 4.2  Limitation on Liens; Defense of Claims; Transferability of Collateral .  Grantor, as to Collateral now owned by it or acquired by it from time to time after the date hereof, is or will be the sole direct and beneficial owner of such Collateral free from any Lien or other right, title or interest of any Person other than the Liens and security interest created by this Related Real Estate Collateral Security Agreement and Permitted Encumbrances.  Grantor shall, at its own cost and expense, defend title to the Collateral pledged by it hereunder and the security interest therein and Lien thereon granted to the Administrative Agent and the priority thereof against all claims and demands of all Persons, at its own cost and expense, at any time claiming any interest therein adverse to the Administrative Agent or any other Credit Party other than Permitted Encumbrances.  There is no agreement, and Grantor shall not enter into any agreement or take any other action, that would restrict the transferability of any of the Collateral or otherwise impair or conflict with Grantor’s obligations or the rights of the Administrative Agent hereunder.

 

6



 

SECTION 4.3  Chief Executive Office; Change of Name; Jurisdiction of Organization .

 

(a)   The exact legal name, type of organization, jurisdiction of organization, federal taxpayer identification number, organizational identification number and the mailing address for purposes of completing a UCC-1 financing statement of Grantor is indicated next to its name in Schedules I(A) and I(B) of the Perfection Certificate.  Grantor has not, during the four months prior to the date of this Related Real Estate Collateral Security Agreement, been known by or used any other legal or fictitious name or been a party to any merger or consolidation, or acquired all or substantially all of the assets of any Person, or acquired any of its property or assets out of the ordinary course of business, except as set forth in Schedule 4.3(a)  hereto.

 

(b)   The Administrative Agent may rely on advice of counsel as to whether any or all UCC financing statements of Grantor need to be amended as a result of any of the changes described in Section 4.3(a), Section 6.14 of the Credit Agreement [ or in any Periodic Update Schedule or Occurrence Update Schedule ] .  If Grantor fails to provide information to the Administrative Agent about such changes on a timely basis, the Administrative Agent shall not be liable or responsible to any party for any failure to maintain a perfected security interest in Grantor’s property constituting Collateral, for which the Administrative Agent needed to have information relating to such changes.  The Administrative Agent shall have no duty to inquire about such changes if Grantor does not inform the Administrative Agent of such changes, the parties acknowledging and agreeing that it would not be feasible or practical for the Administrative Agent to search for information on such changes if such information is not provided by Grantor.

 

SECTION 4.4  No Conflicts, Consents, etc .  No consent of any party (including, without limitation, equityholders or creditors of Grantor) and no consent, authorization, approval, license or other action by, and no notice to or filing with, any Governmental Authority or regulatory body or other Person is required for the grant of the security interest by Grantor of the Collateral pledged by it pursuant to this Related Real Estate Collateral Security Agreement or for the execution, delivery or performance hereof by Grantor, except for the perfection or maintenance of the Liens created under this Related Real Estate Collateral Security Agreement (including the first priority nature thereof, subject to Permitted Encumbrances having priority by operation of law) and such consents which have been obtained or made prior to the date hereof and are in full force and effect.  Following the occurrence and during the continuation of an Event of Default, if the Administrative Agent desires to exercise any remedies, voting or consensual rights or attorney-in-fact powers set forth in this Related Real Estate Collateral Security Agreement and determines it necessary to obtain any approvals or consents of any Governmental Authority or any other Person therefor, then, upon the reasonable request of the Administrative Agent, Grantor agrees to use commercially reasonable efforts to assist and aid the Administrative Agent to obtain as soon as commercially practicable any necessary approvals or consents for the exercise of any such remedies, rights and powers.

 

SECTION 4.5  Collateral .  All information set forth herein, including the schedules annexed hereto, and all information contained in any documents, schedules and lists heretofore delivered to any Credit Party in connection with this Related Real Estate Collateral Security Agreement, in each case, relating to the Collateral, is accurate and complete in all material respects.  The Collateral described on the schedules annexed hereto constitutes all of the property of such type of Collateral owned or held by Grantor.

 

SECTION 4.6  Insurance (a).  Grantor shall (a) maintain or shall cause to be maintained such insurance as is required pursuant to Section 6.07 of the Credit Agreement; (b) maintain such other insurance as may be required by applicable Law; and (c) furnish to the Administrative Agent, upon

 

7



 

written request, full information as to the insurance carried.  Grantor hereby irrevocably makes, constitutes and appoints the Administrative Agent (and all officers, employees or agents designated by the Administrative Agent) as Grantor’s true and lawful agent (and attorney-in-fact), exercisable only after the occurrence and during the continuance of an Event of Default, for the purpose of making, settling and adjusting claims in respect of the Collateral under policies of insurance, endorsing the name of Grantor on any check, draft, instrument or other item of payment for the proceeds of such policies of insurance and for making all determinations and decisions with respect thereto.  In the event that Grantor at any time or times shall fail to obtain or maintain any of the policies of insurance required hereby or to pay any premium in whole or in part relating thereto, the Administrative Agent may, without waiving or releasing any obligation or liability of Grantor hereunder or any Default or Event of Default, in its sole discretion, obtain and maintain such policies of insurance and pay such premium and take any other actions with respect thereto as the Administrative Agent deems advisable.  All sums disbursed by the Administrative Agent in connection with this Section 4.6 , including reasonable attorneys’ fees, court costs, expenses and other charges relating thereto, shall be payable, upon demand, by Grantor to the Administrative Agent and shall be additional Secured Obligations secured hereby.

 

SECTION 4.7  Payment of Taxes; Compliance with Laws; Contested Liens; Claims (a)     .  Grantor represents and warrants that all Claims imposed upon or assessed against the Collateral have been paid and discharged except to the extent such Claims constitute a Lien not yet due and payable or a Permitted Encumbrance.  Grantor shall comply with all applicable Law relating to the Collateral the failure to comply with which, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.  Grantor may at its own expense contest the validity, amount or applicability of any Claims so long as the contest thereof shall be conducted in accordance with, and permitted pursuant to the provisions of, the Credit Agreement.  Notwithstanding the foregoing provisions of this Section 4.7 , no contest of any such obligation may be pursued by Grantor if such contest would expose the Administrative Agent or any other Credit Party to (a) any possible criminal liability or (b) any additional civil liability for failure to comply with such obligations unless Grantor shall have furnished a bond or other security therefor satisfactory to the Administrative Agent or such other Credit Party, as the case may be.

 

ARTICLE V

 

REMEDIES

 

SECTION 5.1  Remedies .  Upon the occurrence and during the continuance of any Event of Default the Administrative Agent may, and at the direction of the Required Lenders, shall, from time to time in respect of the Collateral, in addition to the other rights and remedies provided for herein, under applicable Law or otherwise available to it, subject to the Term Loan Intercreditor Agreement:

 

(a)   Personally, or by agents or attorneys, immediately take possession of the Collateral or any part thereof, from Grantor or any other Person who then has possession of any part thereof with or without notice or process of law, and for that purpose may enter upon Grantor’s premises where any of the Collateral is located, remove such Collateral, remain present at such premises to receive copies of all communications and remittances relating to the Collateral and use in connection with such removal and possession any and all services, supplies, aids and other facilities of Grantor;

 

(b)   Demand, sue for, collect or receive any money or property at any time payable or receivable in respect of the Collateral including, without limitation, instructing the obligor or obligors on any agreement, instrument or other obligation constituting part of the Collateral to make any payment required by the terms of such agreement, instrument or other obligation directly to the Administrative

 

8



 

Agent, and in connection with any of the foregoing, compromise, settle, extend the time for payment and make other modifications with respect thereto; provided , that , in the event that any such payments are made directly to Grantor, prior to receipt by any such obligor of such instruction, Grantor shall segregate all amounts received pursuant thereto in trust for the benefit of the Administrative Agent and shall promptly pay such amounts to the Administrative Agent;

 

(c)   Sell, assign, grant a license to use or otherwise liquidate, or direct Grantor to sell, assign, grant a license to use or otherwise liquidate, any and all investments made in whole or in part with the Collateral or any part thereof, and take possession of the proceeds of any such sale, assignment, license or liquidation;

 

(d)   Take possession of the Collateral or any part thereof, by directing Grantor in writing to deliver the same to the Administrative Agent at any place or places so designated by the Administrative Agent, in which event Grantor shall at its own expense:  (i) forthwith cause the same to be moved to the place or places designated by the Administrative Agent and therewith delivered to the Administrative Agent, (ii) store and keep any Collateral so delivered to the Administrative Agent at such place or places pending further action by the Administrative Agent and (iii) while the Collateral shall be so stored and kept, provide such security and maintenance services as shall be necessary to protect the same and to preserve and maintain them in good condition.  Grantor’s obligation to deliver the Collateral as contemplated in this Section 5.1 is of the essence hereof.  Upon application to a court of equity having jurisdiction, the Administrative Agent shall be entitled to a decree requiring specific performance by Grantor of such obligation;

 

(e)   Withdraw all moneys, instruments, securities and other property in any bank, financial securities, deposit or other account of Grantor constituting Collateral for application to the Secured Obligations as provided in Section 7.02 of the Credit Agreement;

 

(f)    Exercise any and all rights as beneficial and legal owner of the Collateral, including, without limitation, perfecting assignment of and exercising any and all voting, consensual and other rights and powers with respect to any Collateral; and

 

(g)   Exercise all the rights and remedies of a secured party under the UCC, and the Administrative Agent may also in its sole discretion, without notice except as specified in Section 5.2 hereof, sell, assign or grant a license to use the Collateral or any part thereof in one or more parcels at public or private sale, at any exchange, broker’s board or at any of the Administrative Agent’s offices or elsewhere, for cash, on credit or for future delivery, and at such price or prices and upon such other terms as the Administrative Agent may deem commercially reasonable.  The Administrative Agent or any other Credit Party or any of their respective Affiliates may be the purchaser, licensee, assignee or recipient of any or all of the Collateral at any such sale and shall be entitled, for the purpose of bidding and making settlement or payment of the purchase price for all or any portion of the Collateral sold, assigned or licensed at such sale, to use and apply any of the Secured Obligations owed to such Person as a credit on account of the purchase price of any Collateral payable by such Person at such sale.  Each purchaser, assignee, licensee or recipient at any such sale shall acquire the property sold, assigned or licensed absolutely free from any claim or right on the part of Grantor, and Grantor hereby waives, to the fullest extent permitted by Law, all rights of redemption, stay and/or appraisal which it now has or may at any time in the future have under any rule of law or statute now existing or hereafter enacted.  The Administrative Agent shall not be obligated to make any sale of Collateral regardless of notice of sale having been given.  The Administrative Agent may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned.  To the fullest extent permitted by Law, Grantor

 

9



 

hereby waives any claims against the Administrative Agent arising by reason of the fact that the price at which any Collateral may have been sold, assigned or licensed at such a private sale was less than the price which might have been obtained at a public sale, even if the Administrative Agent accepts the first offer received and does not offer such Collateral to more than one offeree.

 

SECTION 5.2  Notice of Sale .  Grantor acknowledges and agrees that, to the extent notice of sale or other disposition of Collateral shall be required by applicable Law and unless the Collateral is perishable or threatens to decline speedily in value, or is of a type customarily sold on a recognized market (in which event the Administrative Agent shall provide Grantor such advance notice as may be practicable under the circumstances), 10 days’ prior notice to Grantor of the time and place of any public sale or of the time after which any private sale or other intended disposition is to take place shall be commercially reasonable notification of such matters.  No notification need be given to Grantor if it has signed, after the occurrence of an Event of Default, a statement renouncing or modifying (as permitted under Law) any right to notification of sale or other intended disposition.

 

SECTION 5.3  Waiver of Notice and Claims (a)  .  Grantor hereby waives, to the fullest extent permitted by applicable Law, notice or judicial hearing in connection with the Administrative Agent’s taking possession or the Administrative Agent’s disposition of any of the Collateral, including, without limitation, any and all prior notice and hearing for any prejudgment remedy or remedies and any such right which Grantor would otherwise have under law, and Grantor hereby further waives, to the fullest extent permitted by applicable Law:  (a) all damages occasioned by such taking of possession, (b) all other requirements as to the time, place and terms of sale or other requirements with respect to the enforcement of the Administrative Agent’s rights hereunder and (c) all rights of redemption, appraisal, valuation, stay, extension or moratorium now or hereafter in force under any applicable Law.  The Administrative Agent shall not be liable for any incorrect or improper payment made pursuant to this Article V in the absence of gross negligence or willful misconduct as determined in a final, nonappealable judgment of a court of competent jurisdiction.  Any sale of, or the grant of options to purchase, or any other realization upon, any Collateral shall operate to divest all right, title, interest, claim and demand, either at law or in equity, of the applicable Grantor therein and thereto, and shall be a perpetual bar both at law and in equity against Grantor and against any and all Persons claiming or attempting to claim the Collateral so sold, optioned or realized upon, or any part thereof, from, through or under Grantor.

 

SECTION 5.4  Certain Sales of Collateral .

 

(a)   Grantor recognizes that, by reason of certain prohibitions contained in law, rules, regulations or orders of any Governmental Authority, the Administrative Agent may be compelled, with respect to any sale of all or any part of the Collateral, to limit purchasers to those who meet the requirements of such Governmental Authority.  Grantor acknowledges that any such sales may be at prices and on terms less favorable to the Administrative Agent than those obtainable through a public sale without such restrictions, and, notwithstanding such circumstances, agrees that any such restricted sale shall be deemed to have been made in a commercially reasonable manner and that, except as may be required by applicable Law, the Administrative Agent shall have no obligation to engage in public sales.

 

SECTION 5.5  No Waiver; Cumulative Remedies .

 

(a)   No failure on the part of the Administrative Agent to exercise, no course of dealing with respect to, and no delay on the part of the Administrative Agent in exercising, any right, power or remedy hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any such right, power or remedy hereunder preclude any other or further exercise thereof or the exercise of any other right, power or remedy; nor shall the Administrative Agent be required to look first to, enforce or

 

10



 

exhaust any other security, collateral or guaranties.  The remedies herein provided are cumulative and are not exclusive of any remedies provided by Law.

 

(b)   In the event that the Administrative Agent shall have instituted any proceeding to enforce any right, power or remedy under this Related Real Estate Collateral Security Agreement by foreclosure, sale, entry or otherwise, and such proceeding shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Administrative Agent, then and in every such case, Grantor, the Administrative Agent and each other Credit Party shall be restored to their respective former positions and rights hereunder with respect to the Collateral, and all rights, remedies and powers of the Administrative Agent and the other Credit Parties shall continue as if no such proceeding had been instituted.

 

SECTION 5.6  Application of Proceeds .  The proceeds received by the Administrative Agent in respect of any sale of, collection from or other realization upon all or any part of the Collateral pursuant to the exercise by the Administrative Agent of its remedies shall be applied, together with any other sums then held by the Administrative Agent pursuant to this Related Real Estate Collateral Security Agreement, in accordance with and as set forth in Section 7.02 of the Credit Agreement.

 

SECTION 5.7  Third Party Agreements .  Pursuant to the Collateral Access Agreements (as defined in the Credit Agreement), the Administrative Agent has the right to give notice to certain Persons who are parties thereto or recipients thereof.  With respect to each Collateral Access Agreement (as defined in the Credit Agreement), the Administrative Agent hereby acknowledges and agrees that it will not deliver any notice to such Persons in connection with the exercise of its rights and remedies under the Credit Agreement, this Related Real Estate Collateral Security Agreement and the other Loan Documents until after the occurrence and during the continuance of an Event of Default.

 

ARTICLE VI

 

MISCELLANEOUS

 

SECTION 6.1  Concerning the Administrative Agent .

 

(a)   The Administrative Agent has been appointed as agent pursuant to the Credit Agreement.  The actions of the Administrative Agent hereunder are subject to the provisions of the Credit Agreement.  The Administrative Agent shall have the right hereunder to make demands, to give notices, to exercise or refrain from exercising any rights, and to take or refrain from taking action (including, without limitation, the release or substitution of the Collateral), in accordance with this Related Real Estate Collateral Security Agreement and the Credit Agreement.  The Administrative Agent may employ agents and attorneys-in-fact in connection herewith and shall not be liable for the negligence or misconduct of any such agents or attorneys-in-fact.  The Administrative Agent may resign and a successor Administrative Agent may be appointed in the manner provided in the Credit Agreement.  Upon the acceptance of any appointment as the Administrative Agent by a successor Administrative Agent, that successor Administrative Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Administrative Agent under this Related Real Estate Collateral Security Agreement, and the retiring Administrative Agent shall thereupon be discharged from its duties and obligations under this Related Real Estate Collateral Security Agreement.  After any retiring Administrative Agent’s resignation, the provisions hereof shall inure to its benefit as to any actions taken or omitted to be taken by it under this Related Real Estate Collateral Security Agreement while it was the Administrative Agent.

 

11



 

(b)   The Administrative Agent shall be deemed to have exercised reasonable care in the custody and preservation of the Collateral in its possession if such Collateral is accorded treatment substantially equivalent to that which the Administrative Agent, in its individual capacity, accords its own property consisting of similar instruments or interests, it being understood that neither the Administrative Agent nor any of the other Credit Parties shall have responsibility for, without limitation taking any necessary steps to preserve rights against any Person with respect to any Collateral.

 

(c)   The Administrative Agent shall be entitled to rely upon any written notice, statement, certificate, order or other document or any telephone message believed by it to be genuine and correct and to have been signed, sent or made by the proper Person, and, with respect to all matters pertaining to this Related Real Estate Collateral Security Agreement and its duties hereunder, upon advice of counsel selected by it.

 

(d)   If any item of Collateral also constitutes collateral granted to the Administrative Agent under any other deed of trust, mortgage, security agreement, pledge or instrument of any type, in the event of any conflict between the provisions hereof and the provisions of such other deed of trust, mortgage, security agreement, pledge or instrument of any type in respect of such collateral, the Administrative Agent, in its sole discretion, shall select which provision or provisions shall control.

 

SECTION 6.2  Administrative Agent May Perform; Administrative Agent Appointed Attorney-in-Fact (a)     .  If Grantor shall fail to perform any covenants contained in this Related Real Estate Collateral Security Agreement or in the Credit Agreement (including, without limitation, Grantor’s covenants to (a) pay the premiums in respect of all required insurance policies hereunder, (b) pay Claims, (c) make repairs, (d) discharge Liens or (e) pay or perform any other obligations of Grantor with respect to any Collateral) or if any warranty on the part of Grantor contained herein shall be breached, the Administrative Agent may (but shall not be obligated to) do the same or cause it to be done or remedy any such breach, and may expend funds for such purpose; provided , that , the Administrative Agent shall in no event be bound to inquire into the validity of any tax, lien, imposition or other obligation which Grantor fails to pay or perform as and when required hereby.  Any and all amounts so expended by the Administrative Agent shall be paid by Grantor in accordance with the provisions of Section 6.3 hereof.  Neither the provisions of this Section 6.2 nor any action taken by the Administrative Agent pursuant to the provisions of this Section 6.2 shall prevent any such failure to observe any covenant contained in this Related Real Estate Collateral Security Agreement nor any breach of warranty from constituting an Event of Default.  Grantor hereby appoints the Administrative Agent its attorney-in-fact, with full authority in the place and stead of Grantor and in the name of Grantor, or otherwise, from time to time after the occurrence and during the continuation of an Event of Default in the Administrative Agent’s discretion to take any action and to execute any instrument consistent with the terms of the Credit Agreement and the other Security Documents which the Administrative Agent may deem necessary to accomplish the purposes hereof.  The foregoing grant of authority is a power of attorney coupled with an interest and such appointment shall be irrevocable for the term hereof.  Grantor hereby ratifies all that such attorney shall lawfully do or cause to be done by virtue hereof.

 

SECTION 6.3  Expenses .  Grantor will upon demand pay to the Administrative Agent the amount of any and all amounts required to be paid pursuant to Section 9.05 of the Credit Agreement.

 

SECTION 6.4  Continuing Security Interest; Assignment (a)      .  This Related Real Estate Collateral Security Agreement shall create a continuing security interest in the Collateral and shall (a) be binding upon Grantor, their respective successors and assigns, and (b) inure, together with the rights and remedies of the Administrative Agent hereunder, to the benefit of the Administrative Agent and the other Credit Parties and each of their respective successors, transferees and assigns.  No other Persons

 

12



 

(including, without limitation, any other creditor of Grantor) shall have any interest herein or any right or benefit with respect hereto.  Without limiting the generality of the foregoing clause (b) , any Credit Party may assign or otherwise transfer any indebtedness held by it secured by this Related Real Estate Collateral Security Agreement to any other Person, and such other Person shall thereupon become vested with all the benefits in respect thereof granted to such Credit Party, herein or otherwise, subject, however, to the provisions of the Credit Agreement.

 

SECTION 6.5  Termination; Release .

 

(a)   This Related Real Estate Collateral Security Agreement, the Lien in favor of the Administrative Agent (for the benefit of itself and the other Credit Parties) and all other security interests granted hereby shall terminate with respect to all Secured Obligations, and all rights to the Collateral shall revert to Grantor or any other Person entitled thereto, either (i) as provided in Section 9.20 of the Credit Agreement, or (ii) when the Commitments shall have expired or been terminated and the principal of and interest on each Loan and all fees and other Secured Obligations shall have been indefeasibly paid in full in cash; provided , that , in connection with the termination of this Related Real Estate Collateral Security Agreement, the Administrative Agent may require such indemnities and collateral security as it shall reasonably deem necessary or appropriate to protect the Credit Parties against (A) loss on account of credits previously applied to the Secured Obligations that may subsequently be reversed or revoked, (B) any Secured Obligations (other than contingent indemnification obligations for which no claim has been asserted) that may thereafter arise under Section 9.05 of the Credit Agreement.

 

(b)   (i) Upon the consummation of a transaction expressly permitted under the Credit Agreement, which results in Grantor ceasing to be a Subsidiary of the Lead Borrower, Grantor shall be automatically released from its obligations under this Related Real Estate Collateral Security Agreement, the security interest granted hereby shall terminate with respect to Grantor and all rights to the Collateral of Grantor shall revert to Grantor or any other Person entitled thereto.

 

(ii)   Upon any sale or other transfer by Grantor of any Collateral that is expressly permitted under the Credit Agreement (other than a sale or other transfer to a Loan Party), or upon the effectiveness of any written consent to the release of the security interest granted hereby in any Collateral pursuant to Section 9.20 of the Credit Agreement, the security interest granted hereby shall terminate with respect to such Collateral and all rights to the Collateral shall revert to Grantor or any other Person entitled thereto.

 

(iii)  At such time as any of the foregoing contained Sections 6.5(a) , 6.5(b)(i)  and 6.5(b)(ii)  hereof, upon the Lead Borrower’s written request and at the sole cost and expense of Grantor, the Administrative Agent will (A) assign, transfer and deliver to Grantor, against receipt and without recourse to or warranty by the Administrative Agent, such of the Collateral to be released (in the case of a release) or all of the Collateral (in the case of the satisfaction of Sections 6.5(a) , 6.5(b)(i)  and 6.5(b)(ii)  hereof) as may be in possession of the Administrative Agent and as shall not have been sold or otherwise applied pursuant to the terms hereof, and (B) with respect to any other Collateral, authorize the filing of appropriate termination statements and other documents (including UCC termination statements or releases) to terminate such security interests.

 

(c)   At any time that the respective Grantor desires that the Administrative Agent take any action described in Section 6.5(b)  hereof, Grantor shall, upon request of the Administrative Agent, deliver to the Administrative Agent an officer’s certificate certifying that the release of the respective Collateral is permitted pursuant to Sections 6.5(a)  or 6.5(b)  hereof.  The Administrative Agent shall have

 

13



 

no liability whatsoever to any other Credit Party as the result of any release of Collateral by it as permitted (or which the Administrative Agent in good faith believes to be permitted) by this Section 6.5 .

 

SECTION 6.6  Modification in Writing .  No amendment, modification, supplement, termination or waiver of or to any provision hereof, nor consent to any departure by Grantor therefrom, shall be effective unless the same shall be made in accordance with the terms of the Credit Agreement and unless in writing and signed by the Administrative Agent and Grantor.  Any amendment, modification or supplement of or to any provision hereof, any waiver of any provision hereof and any consent to any departure by Grantor from the terms of any provision hereof shall be effective only in the specific instance and for the specific purpose for which made or given.  Except where notice is specifically required by this Related Real Estate Collateral Security Agreement or any other document evidencing the Secured Obligations, no notice to or demand on Grantor in any case shall entitle Grantor to any other or further notice or demand in similar or other circumstances.

 

SECTION 6.7   Notices .  Unless otherwise provided herein or in the Credit Agreement, any notice or other communication herein required or permitted to be given shall be given in the manner and become effective as set forth in the Credit Agreement, as to Grantor, addressed to it at the address of the Borrower set forth in the Credit Agreement and as to the Administrative Agent, addressed to it at the address set forth in the Credit Agreement, or in each case at such other address as shall be designated by such party in a written notice to the other parties hereto complying as to delivery with the terms of this Section 6.7 .

 

SECTION 6.8  GOVERNING LAW .  THIS RELATED REAL ESTATE COLLATERAL SECURITY AGREEMENT AND ANY CLAIM, CONTROVERSY, DISPUTE OR CAUSE OF ACTION (WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE) BASED UPON, ARISING OUT OF OR RELATING TO THIS RELATED REAL ESTATE COLLATERAL SECURITY AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES (OTHER THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW).

 

SECTION 6.9  CONSENT TO JURISDICTION; SERVICE OF PROCESS; WAIVER OF JURY TRIAL .

 

(a)   GRANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE EXCLUSIVE JURISDICTION OF ANY NEW YORK STATE COURT OR FEDERAL COURT OF THE UNITED STATES OF AMERICA SITTING IN NEW YORK COUNTY, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS RELATED REAL ESTATE COLLATERAL SECURITY AGREEMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND GRANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT.  GRANTOR AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.  NOTHING IN THIS RELATED REAL ESTATE COLLATERAL SECURITY AGREEMENT SHALL AFFECT ANY RIGHT THAT THE ADMINISTRATIVE AGENT OR ANY CREDIT PARTY MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS RELATED REAL ESTATE COLLATERAL SECURITY AGREEMENT AGAINST GRANTOR OR ITS PROPERTIES IN THE COURTS OF ANY

 

14



 

JURISDICTION IF REQUIRED TO REALIZE UPON THE COLLATERAL OR ENFORCE ANY JUDGMENT.

 

(b)   GRANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS RELATED REAL ESTATE COLLATERAL SECURITY AGREEMENT IN ANY COURT REFERRED TO IN SECTION 6.9(a)  HEREOF.  GRANTOR HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH SUIT, ACTION OR PROCEEDING IN ANY SUCH COURT.

 

(c)   GRANTOR AND, EXCEPT AS PROVIDED IN THE LAST SENTENCE OF SECTION 6.9(a)  HEREOF, EACH CREDIT PARTY, AGREES THAT ANY ACTION COMMENCED BY GRANTOR ASSERTING ANY CLAIM OR COUNTERCLAIM ARISING UNDER OR IN CONNECTION WITH THIS RELATED REAL ESTATE COLLATERAL SECURITY AGREEMENT OR ANY OTHER LOAN DOCUMENT SHALL BE BROUGHT SOLELY IN A COURT OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY OR ANY FEDERAL COURT SITTING THEREIN AS THE ADMINISTRATIVE AGENT MAY ELECT IN ITS SOLE DISCRETION AND CONSENTS TO THE EXCLUSIVE JURISDICTION OF SUCH COURTS WITH RESPECT TO ANY SUCH ACTION.

 

(d)   EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 6.7 HEREOF EXCLUDING SERVICE OF PROCESS BY MAIL.  NOTHING IN THIS RELATED REAL ESTATE COLLATERAL SECURITY AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.

 

(e)   EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS RELATED REAL ESTATE COLLATERAL SECURITY AGREEMENT.  EACH PARTY HERETO (i) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (ii) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS RELATED REAL ESTATE COLLATERAL SECURITY AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 6.9 .

 

SECTION 6.10  Severability of Provisions .  Any provision hereof which 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 hereof or affecting the validity or enforceability of such provision in any other jurisdiction.

 

SECTION 6.11  Execution in Counterparts; Effectiveness .  This Related Real Estate Collateral Security Agreement may be executed in any number of counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract.  Delivery of an executed counterpart of a signature page of this Related Real Estate Collateral Security Agreement by facsimile or other electronic transmission (including “.pdf”

 

15



 

or “.tif”) shall be as effective as delivery of a manually executed counterpart of this Related Real Estate Collateral Security Agreement.

 

SECTION 6.12  No Release .  Nothing set forth in this Related Real Estate Collateral Security Agreement shall relieve Grantor from the performance of any term, covenant, condition or agreement on Grantor’s part to be performed or observed under or in respect of any of the Collateral or from any liability to any Person under or in respect of any of the Collateral or shall impose any obligation on the Administrative Agent or any other Credit Party to perform or observe any such term, covenant, condition or agreement on Grantor’s part to be so performed or observed or shall impose any liability on the Administrative Agent or any other Credit Party for any act or omission on the part of Grantor relating thereto or for any breach of any representation or warranty on the part of Grantor contained in this Related Real Estate Collateral Security Agreement, the Credit Agreement or the other Loan Documents, or under or in respect of the Collateral or made in connection herewith or therewith.  The obligations of Grantor contained in this Section 6.12 shall survive the termination hereof and the discharge of Grantor’s other obligations under this Related Real Estate Collateral Security Agreement, the Credit Agreement and the other Loan Documents.

 

SECTION 6.13  Obligations Absolute .  All obligations of Grantor hereunder shall be absolute and unconditional irrespective of:

 

(a)   any bankruptcy, insolvency, reorganization, arrangement, readjustment, composition, liquidation or the like of Grantor;

 

(b)   any lack of validity or enforceability of the Credit Agreement or any other Loan Document, or any other agreement or instrument relating thereto;

 

(c)   any change in the time, manner or place of payment of, or in any other term of, all or any of the Secured Obligations, or any other amendment or waiver of or any consent to any departure from the Credit Agreement or any other Loan Document or any other agreement or instrument relating thereto;

 

(d)   any pledge, exchange, release or non-perfection of any other collateral, or any release or amendment or waiver of or consent to any departure from any guarantee, for all or any of the Secured Obligations;

 

(e)   any exercise, non-exercise or waiver of any right, remedy, power or privilege under or in respect hereof, the Credit Agreement or any other Loan Document except as specifically set forth in a waiver granted pursuant to the provisions of Section 6.6 hereof; or

 

(f)    any other circumstances which might otherwise constitute a defense available to, or a discharge of, Grantor (other than the termination of this Related Real Estate Collateral Security Agreement in accordance with Section 6.5(a)  hereof).

 

SECTION 6.14  Term Loan Intercreditor Agreement .

 

(a)   This Related Real Estate Collateral Security Agreement and the Liens granted to the Administrative Agent pursuant to this Related Real Estate Collateral Security Agreement or any other Loan Documents in any Collateral and the exercise of any right or remedy with respect to any Collateral hereunder or any other Loan Document are subject to the provisions of the Term Loan Intercreditor Agreement.  In the event of any inconsistency between the terms of this Related Real Estate Collateral

 

16



 

Security Agreement and the terms of the Term Loan Intercreditor Agreement, the terms of the Term Loan Intercreditor Agreement shall control.

 

(b)   Notwithstanding anything herein to the contrary, prior to the Discharge of Term Loan Debt (as defined in the Term Loan Intercreditor Agreement), (i) the requirements of this Related Real Estate Collateral Security Agreement to deliver Collateral, or control thereof, to the Administrative Agent shall be deemed satisfied by delivery of such Collateral, or control thereof, to the Term Loan Agent and (ii) the Administrative Agent may exercise all remedies of the Administrative Agent hereunder in accordance with Section 3.1 of the Intercreditor Agreement.

 

[ Signature Pages Follow ]

 

17



 

IN WITNESS WHEREOF, Grantor and the Administrative Agent have caused this Related Real Estate Collateral Security Agreement to be duly executed and delivered by their duly authorized officers as of the date first above written.

 

 

GRANTOR

 

 

 

[                                        ]

 

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

Related Real Estate Collateral Security Agreement

 



 

 

WELLS FARGO BANK, NATIONAL ASSOCIATION, as Administrative Agent

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

Related Real Estate Collateral Security Agreement

 



 

EXHIBIT 1

 

Mortgaged Property

 



 

SCHEDULE 3.1

Filings, Registrations and Recordings

 

Grantor

 

UCC-1 Financing Statement Filing Office

 

 

 

 

[LIST APPLICABLE MORTGAGES AND ANY REQUIRED FIXTURE FILINGS]

 



 

SCHEDULE 4.3(a)

Other Legal and Fictitious Names, Mergers, Consolidations, Acquisitions

 

I. Legal and Fictitious Names .  During the past three years, Grantor has used the following trade name(s) and/or trade style(s):

 

Grantor

 

Trade Name/Divisions

 

 

 

 

 

 

 

 

 

 

II. Changes in Names, Jurisdiction of Organization or Corporate Structure E xcept as set forth below, Grantor has not changed its name, jurisdiction of organization or its corporate structure in any way ( e.g. , by merger, consolidation, change in corporate form, change in jurisdiction of organization or otherwise) within the past three years:

 

Date of Change

 

Description of Change

 

 

 

 

III. Acquisitions of Equity Interests or Assets Except as set forth below, Grantor has not acquired the controlling equity interests of another entity or substantially all the assets of another entity within the past three years:

 

Date of Acquisition

 

Description of Acquisition

 

 

 

 



 

EXHIBIT L
to
AMENDED AND RESTATED CREDIT AGREEMENT

 

FORM SOLVENCY CERTIFICATE

 

This Certificate is furnished pursuant to Section 4.01(g) of the Amended and Restated Credit Agreement, dated of even date herewith (the “ Credit Agreement ”), by and among the parties thereto as lenders (collectively, “ Lenders ”), Wells Fargo Bank, National Association in its capacity as administrative and collateral agent acting for and on behalf of Lenders (in such capacity, “ Administrative Agent ”), SUPERVALU Inc., a Delaware corporation (the “ Lead Borrower ”), certain subsidiaries of Lead Borrower as co-borrowers (together with Lead Borrower, each a “ Borrower ” and collectively, the “ Borrowers ”), certain subsidiaries of Borrower as guarantors (each a “ Guarantor ” and collectively, the “ Guarantors ” and together with Borrowers, each individually a “ Loan Party ” and collectively, the “ Loan Parties ”).  Capitalized terms used but not defined herein have the meanings given such terms in the Credit Agreement.

 

I, the undersigned, as chief financial officer of Lead Borrower, do hereby certify, solely in my capacity as chief financial officer of Lead Borrower and not in my individual capacity, to Administrative Agent and Lenders that:

 

1.     I am the chief financial officer of Lead Borrower, with the primary responsibility for the management of the financial affairs and accounting practices of Lead Borrower and have acted on behalf of Lead Borrower in connection with the financing arrangements provided for under the Credit Agreement, including meeting and conferring with the Loan Parties’ independent auditors as well as counsel to the Loan Parties.

 

2.     I have carefully reviewed the contents of this Certificate and have conferred with legal counsel for the Loan Parties for the purpose of discussing the meaning of its contents.

 

3.     In connection with preparing for the transactions contemplated by the Credit Agreement and the other Loan Documents, I have assisted in the preparation of and have reviewed the balance sheets and the financial projections delivered pursuant to Section 4.01(f) of the Credit Agreement.

 

4.     I have no reason to believe that the balance sheets and the financial projections are not a fair and reasonable presentation as of the date thereof of the financial condition of the Loan Parties.  The assumptions stated in the balance sheets and financial projections are fair and reasonable in all material respects.

 

5.     Based upon the foregoing, I hereby certify on behalf of Lead Borrower, in my capacity as chief financial officer of Lead Borrower and not in my individual capacity, that as of the Closing Date after giving effect to the transactions contemplated by the Credit Agreement:

 

(i)    at fair valuation, all of the properties and assets of the Lead Borrower and its Subsidiaries, on a Consolidated basis (and including as assets for this purpose, at a fair valuation, all rights of subrogation, contribution or indemnification in their favor) are greater than the sum of their liabilities, including contingent liabilities (and including as liabilities for this purpose, at a fair valuation, all obligations of subrogation, contribution or indemnification against them);

 

(ii)   the present fair saleable value of the properties and assets of the Lead Borrower and its Subsidiaries, on a Consolidated basis, is not less than the amount that would be required to pay the

 



 

probable liability of their debts as they become absolute and matured;

 

(iii)  the Lead Borrower and its Subsidiaries, on a Consolidated basis, are able to realize upon their properties and assets and pay their debts and other liabilities, contingent obligations and other commitments as they mature in the normal course of business;

 

(iv)  the Lead Borrower and its Subsidiaries, on a Consolidated basis, do not intend to, and do not believe that they will, incur debts beyond their ability to pay as such debts mature; and

 

(v)   the Lead Borrower and its Subsidiaries, on a Consolidated basis are not engaged in a business or a transaction, and are not about to engage in a business or transaction, for which their properties and assets would constitute unreasonably small capital after giving due consideration to the prevailing practices in the industry in which they are engaged.

 

For the purposes of this Certificate, the amount of all guarantees and other contingent liabilities at any time shall be computed as the amount that, in light of all the facts and circumstances existing at the time, can reasonably be expected to become an actual or matured liability.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 



 

IN WITNESS WHEREOF, Lead Borrower has caused its chief financial officer to execute and deliver this Certificate as of the date first set forth above, solely in her capacity as chief financial officer of Lead Borrower.

 

 

SUPERVALU INC.

 

 

 

 

 

 

 

By:

 

 

Name:

Sherry M. Smith

 

Title:

Chief Financial Officer

 



 

EXHIBIT M

to

AMENDED AND RESTATED CREDIT AGREEMENT

CREDIT AND COLLECTION POLICY

 

See attached.

 

[**]

 


** Denotes confidential information that has been omitted from the exhibit and filed separately, accompanied by a confidential treatment request, with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934.

 


EXHIBIT 10.4

 

Confidential treatment has been requested for portions of this exhibit pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [**]. A complete version of this exhibit has been filed separately with the Securities and Exchange Commission.

 

 

TERM LOAN CREDIT AGREEMENT

 

dated as of

 

March 21, 2013

 

among

 

SUPERVALU INC.,
as Borrower,

 

THE GUARANTORS PARTY HERETO,

 

THE LENDERS PARTY HERETO

 

and

 

GOLDMAN SACHS BANK USA,
as Administrative Agent and Collateral Agent

 

GOLDMAN SACHS BANK USA, CREDIT SUISSE SECURITIES (USA) LLC, MORGAN STANLEY SENIOR FUNDING, INC., MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED and BARCLAYS BANK PLC,
as Joint Lead Bookrunners and Joint Lead Arrangers

 

CREDIT SUISSE SECURITIES (USA) LLC

 

and

 

MORGAN STANLEY SENIOR FUNDING, INC.,
as Syndication Agents

 

MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED

 

and

 

BARCLAYS BANK PLC,
as Documentation Agents

 

 



 

Table of Contents

 

 

 

Page

ARTICLE I Definitions

 

1

 

 

 

SECTION 1.01. Defined Terms

 

1

SECTION 1.02. Terms Generally

 

59

SECTION 1.03. Pro Forma Calculations

 

60

SECTION 1.04. Classification of Loans and Borrowings

 

60

 

 

 

ARTICLE II The Credits

 

60

 

 

 

SECTION 2.01. Commitments

 

60

SECTION 2.02. Loans

 

60

SECTION 2.03. Borrowing Procedure

 

61

SECTION 2.04. Evidence of Debt; Repayment of Loans

 

62

SECTION 2.05. Fees

 

63

SECTION 2.06. Interest on Loans

 

63

SECTION 2.07. Default Interest

 

63

SECTION 2.08. Alternate Rate of Interest

 

64

SECTION 2.09. Termination of Commitments

 

64

SECTION 2.10. Conversion and Continuation of Borrowings

 

64

SECTION 2.11. Repayment of Borrowings

 

66

SECTION 2.12. Voluntary Prepayments

 

67

SECTION 2.13. Mandatory Prepayments

 

68

SECTION 2.14. Reserve Requirements; Change in Circumstances

 

70

SECTION 2.15. Change in Legality

 

71

SECTION 2.16. Breakage

 

72

SECTION 2.17. Pro Rata Treatment

 

72

SECTION 2.18. Sharing of Setoffs

 

73

SECTION 2.19. Payments

 

73

SECTION 2.20. Taxes

 

74

SECTION 2.21. Assignment of Commitments Under Certain Circumstances; Duty to Mitigate

 

75

SECTION 2.22. Incremental Loans

 

77

SECTION 2.23. Extension Amendments

 

79

 

 

 

ARTICLE III Representations and Warranties

 

81

 

 

 

SECTION 3.01. Existence, Qualification and Power

 

81

SECTION 3.02. Authorization; No Contravention

 

82

SECTION 3.03. Governmental Authorization; Other Consents

 

83

SECTION 3.04. Binding Effect

 

83

SECTION 3.05. Financial Statements; No Material Adverse Effect

 

83

SECTION 3.06. Litigation

 

85

SECTION 3.07. No Default

 

85

SECTION 3.08. Ownership of Properties; Liens

 

85

 

i



 

SECTION 3.09. Environmental Compliance

 

86

SECTION 3.10. Insurance

 

87

SECTION 3.11. Taxes

 

88

SECTION 3.12. ERISA Compliance

 

88

SECTION 3.13. Subsidiaries; Equity Interests

 

89

SECTION 3.14. Margin Regulations; Investment Company Act

 

89

SECTION 3.15. Disclosure

 

89

SECTION 3.16. Compliance with Laws

 

90

SECTION 3.17. Intellectual Property; Licenses, Etc.

 

90

SECTION 3.18. Labor Matters

 

90

SECTION 3.19. Security Documents

 

91

SECTION 3.20. Solvency

 

92

SECTION 3.21. Deposit Accounts; Credit Card Arrangements

 

92

SECTION 3.22. Brokers

 

92

SECTION 3.23. Trade Relations

 

93

SECTION 3.24. Material Contracts

 

93

SECTION 3.25. Casualty

 

93

SECTION 3.26. Payable Practices

 

93

SECTION 3.27. Notices from Farm Products Sellers, Etc.

 

93

SECTION 3.28. HIPAA Compliance

 

93

SECTION 3.29. Compliance with Health Care Laws

 

94

SECTION 3.30. Transaction Documents

 

95

SECTION 3.31. Sanctioned Persons

 

95

SECTION 3.32. Anti-Terrorism; Foreign Corrupt Practices Act

 

95

 

 

 

ARTICLE IV Conditions of Lending

 

95

 

 

 

SECTION 4.01. Conditions to Borrowing

 

95

 

 

 

ARTICLE V Affirmative Covenants

 

99

 

 

 

SECTION 5.01. Financial Statements

 

99

SECTION 5.02. Certificates; Other Information

 

100

SECTION 5.03. Notices

 

102

SECTION 5.04. Payment of Obligations

 

104

SECTION 5.05. Preservation of Existence, Etc.

 

105

SECTION 5.06. Maintenance of Properties

 

105

SECTION 5.07. Maintenance of Insurance

 

105

SECTION 5.08. Compliance with Laws

 

107

SECTION 5.09. Books and Records; Accountants; Maintenance of Ratings

 

108

SECTION 5.10. Inspection Rights

 

108

SECTION 5.11. Use of Proceeds

 

108

SECTION 5.12. Additional Loan Parties

 

108

SECTION 5.13. Cash Management

 

109

SECTION 5.14. Information Regarding the Collateral

 

109

SECTION 5.15. [Reserved]

 

110

SECTION 5.16. Environmental Laws

 

110

 

ii



 

SECTION 5.17. Further Assurances

 

111

SECTION 5.18. Ground Leases

 

112

SECTION 5.19. [Reserved]

 

113

SECTION 5.20. ERISA

 

113

SECTION 5.21. Agricultural Products

 

113

SECTION 5.22. Term Loan Priority Account

 

114

SECTION 5.23. Designation of Subsidiaries

 

114

SECTION 5.24. Preparation of Environmental Reports

 

115

SECTION 5.25. Post-Closing Collateral

 

116

SECTION 5.26. Escrow Agreement and Indemnity

 

116

 

 

 

ARTICLE VI Negative Covenants

 

117

 

 

 

SECTION 6.01. Liens

 

117

SECTION 6.02. Investments, Loans and Advances

 

117

SECTION 6.03. Indebtedness

 

118

SECTION 6.04. Fundamental Changes

 

118

SECTION 6.05. Dispositions

 

118

SECTION 6.06. Restricted Payments

 

118

SECTION 6.07. Prepayments of Other Indebtedness

 

119

SECTION 6.08. Business of Borrower and Restricted Subsidiaries

 

120

SECTION 6.09. Transactions with Affiliates

 

120

SECTION 6.10. Burdensome Agreements

 

120

SECTION 6.11. Use of Proceeds

 

121

SECTION 6.12. Amendment of Material Documents

 

121

SECTION 6.13. Fiscal Year

 

121

SECTION 6.14. Disqualified Stock

 

121

 

 

 

ARTICLE VII Events of Default

 

121

 

 

 

SECTION 7.01. Events of Default

 

121

SECTION 7.02. Application of Funds

 

126

 

 

 

ARTICLE VIII The Administrative Agent and the Collateral Agent; Etc.

 

127

 

 

 

ARTICLE IX Miscellaneous

 

131

 

 

 

SECTION 9.01. Notices; Electronic Communications

 

131

SECTION 9.02. Survival of Agreement

 

134

SECTION 9.03. Binding Effect

 

134

SECTION 9.04. Successors and Assigns

 

135

SECTION 9.05. Expenses; Indemnity

 

140

SECTION 9.06. Right of Setoff

 

142

SECTION 9.07. Applicable Law

 

142

SECTION 9.08. Waivers; Amendment

 

143

SECTION 9.09. Interest Rate Limitation

 

144

SECTION 9.10. Entire Agreement

 

144

 

iii



 

SECTION 9.11. WAIVER OF JURY TRIAL

 

144

SECTION 9.12. Severability

 

145

SECTION 9.13. Counterparts

 

145

SECTION 9.14. Headings

 

145

SECTION 9.15. Jurisdiction; Consent to Service of Process

 

145

SECTION 9.16. Confidentiality

 

146

SECTION 9.17. Lender Action; Intercreditor Agreement

 

146

SECTION 9.18. USA PATRIOT Act Notice

 

147

SECTION 9.19. No Fiduciary Duty

 

147

SECTION 9.20. Collateral and Guarantee Matters

 

148

SECTION 9.21. Substitution, Release and Addition of Term Loan Priority Collateral

 

149

 

iv



 

SCHEDULES

 

 

 

 

 

Schedule 2.01

-

Lenders and Commitments

Schedule 3.01

-

Organizational Information of Loan Parties

Schedule 3.06

-

Litigation

Schedule 3.08(b)

-

Owned Real Estate

Schedule 3.08(c)

-

Leases Constituting Material Contracts

Schedule 3.09

-

Environmental Matters

Schedule 3.10

-

Insurance

Schedule 3.13

-

Subsidiaries and Equity Interests

Schedule 3.17

-

Intellectual Property Matters

Schedule 3.21(a)

-

Demand Deposit Accounts

Schedule 3.21(b)

-

Credit Card Arrangements

Schedule 5.02

-

Financial and Collateral Reports

Schedule 6.01

-

Existing Liens

Schedule 6.02

-

Existing Investments

Schedule 6.03

-

Existing Indebtedness

Schedule 6.09

-

Transactions with Affiliates

Schedule 9.01(a)

-

Borrower’s Website Address

Schedule 9.01(b)

-

Administrative Agent’s Notice and Account Information

 

 

 

EXHIBITS

 

 

 

 

 

Exhibit A

-

Form of Administrative Questionnaire

Exhibit B

-

Form of Assignment and Acceptance

Exhibit C

-

Form of Borrowing Request

Exhibit D

-

Form of Compliance Certificate

Exhibit E

-

Form of Perfection Certificate

Exhibit F

-

Form of Security Agreement

Exhibit G

-

Form of Facility Guaranty

Exhibit H

-

Form of Mortgage

Exhibit I

-

Form of Intercreditor Agreement

Exhibit J

-

Form of Promissory Note

Exhibit K

-

Form of Opinion of Dorsey & Whitney LLP

Exhibit L

-

Form of DDA Notification

Exhibit M

-

Form of Credit Card Notification

Exhibit N

-

Closing Date Collateral List

Exhibit O

-

Form of United States Tax Compliance Certificate

Exhibit P

-

Form of Related Real Estate Collateral Security Agreement

Exhibit Q

-

Modified Dutch Auction Procedures

Exhibit R

-

Form of Borrower Assignment and Acceptance

 

v



 

TERM LOAN CREDIT AGREEMENT, dated as of March 21, 2013 (as amended, amended and restated, supplemented or otherwise modified from time to time, this “ Agreement ”), among SUPERVALU INC., a Delaware corporation (the “ Borrower ”), the Guarantors (such term and each other capitalized term used but not defined in this introductory statement having the meaning given it in Article I) party hereto, the Lenders party hereto and GOLDMAN SACHS BANK USA (“ Goldman Sachs ”), as administrative agent (in such capacity, including any successor thereto, the “ Administrative Agent ”) and as collateral agent (in such capacity, including any successor thereto, the “ Collateral Agent ”) for the Lenders.

 

WHEREAS, the Borrower has requested the Lenders to extend credit in the form of Loans on the Closing Date, in an aggregate principal amount not in excess of $1,500,000,000; and

 

WHEREAS, the Lenders are willing to extend such credit to the Borrower on the terms and subject to the conditions set forth herein.

 

NOW THEREFORE, in consideration of the mutual agreements, provisions and covenants contained herein, the parties hereto agree as follows:

 

ARTICLE I

 

Definitions

 

SECTION 1.01.  Defined Terms .  As used in this Agreement, the following terms shall have the meanings specified below:

 

ABL Collateral Agent ” shall mean Wells Fargo Bank, National Association, as collateral agent under the ABL Facility for the benefit of the lenders thereunder, and its successors and assigns including any replacement or successor agent.

 

ABL Credit Agreement ” shall mean the amended and restated asset-based revolving credit agreement, dated of even date herewith, by and among the Borrower, each Subsidiary party thereto, the ABL Facility Agent and the various financial institutions from time to time party thereto, as amended, restated, amended and restated, supplemented or otherwise modified in accordance with the terms thereof, hereof and the Intercreditor Agreement.

 

ABL Debt ” shall have the meaning assigned to such term in the Intercreditor Agreement as of the date hereof.

 

ABL Facility ” shall mean the senior secured asset-based revolving credit facility pursuant to the terms of the ABL Credit Agreement as it may be amended or refinanced in accordance with the terms thereof, hereof and the Intercreditor Agreement.

 

ABL Facility Agent ” shall mean Wells Fargo Bank, National Association, as administrative agent under the ABL Facility for the benefit of the lenders thereunder, including its successors and assigns including any replacement or successor agent successors thereto.

 

1



 

ABL Facility Documents ” shall mean the ABL Credit Agreement and each other document specified as a “Loan Document” in the ABL Credit Agreement, in each case, as amended, restated, amended and restated, supplemented or otherwise modified in accordance with the terms thereof, hereof and the Intercreditor Agreement.

 

ABL Priority Collateral ” shall have the meaning assigned to such term in the Intercreditor Agreement.

 

ABL Refinancing ” shall mean the amendment and restatement of the Existing ABL Facility with the ABL Facility.

 

ABR ”, when used in reference to any Loan or Borrowing, shall refer to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Alternate Base Rate.

 

Acquired Entity ” shall have the meaning assigned to such term in Section 6.02(b).

 

Acquisition ” shall mean, with respect to any Person (a) an Investment in, or a purchase of a Controlling interest in, the Equity Interests of any other Person, (b) a purchase or other acquisition of all or substantially all of the assets or properties of another Person or of any business unit of another Person, (c) any merger or consolidation of such Person with any other Person or other transaction or series of transactions resulting in the acquisition of all or substantially all of the assets, or a Controlling interest in the Equity Interests, of any Person, or (d) any acquisition of any Store locations of any Person, in each case in any transaction or group of transactions which are part of a common plan.

 

Acquisition Agreement ” shall mean that certain Stock Purchase Agreement dated as of January 10, 2013 among Buyer, the Borrower and NAI.

 

Acquisition Agreement Representations ” shall mean such of the representations made by Buyer in the Acquisition Agreement as are material to the interests of the Joint Lead Arrangers and the Initial Lenders, but only to the extent that the Borrower has (or its applicable affiliate has) the right to terminate its obligations under the Acquisition Agreement or to decline to consummate the NAI Sale as a result of a breach of such representations and warranties in the Acquisition Agreement.

 

Additional Property ” shall have the meaning assigned to such term in Section 9.21.

 

Adjusted LIBO Rate ” shall mean, with respect to any Eurodollar Borrowing for any Interest Period, an interest rate per annum equal to the greater of (a) 1.25% per annum and (b) the product of (i) the LIBO Rate in effect for such Interest Period and (ii) Statutory Reserves.

 

Administrative Agent ” shall have the meaning assigned to such term in the introductory statement to this Agreement.

 

Administrative Agent Fees ” shall have the meaning assigned to such term in Section 2.05.

 

2



 

Administrative Questionnaire ” shall mean an Administrative Questionnaire in the form of Exhibit A, or such other form as may be supplied from time to time by the Administrative Agent.

 

Affiliate ” shall mean, with respect to any Person, (a) another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified, (b) any director, officer, managing member, partner, trustee or beneficiary of that Person, but excluding such Persons as to any Lender (or in the case of a Lender that is a Related Fund, the entity that administers or manages such Related Fund), (c) any other Person directly or indirectly holding 10% or more of any class of the Equity Interests of that Person, except in the case of a Lender (or in the case of a Lender that is a Related Fund, the entity that administers or manages such Related Fund), 35% or more of any class of the Equity Interests of such Person and (d) any other Person 10% or more of any class of whose Equity Interests is held directly or indirectly by that Person, except in the case of a Lender (or in the case of a Lender that is a Related Fund, the entity that administers or manages such Related Fund), 35% or more of any class of whose Equity Interests is held directly or indirectly by such Person.

 

Agent Payment Account ” shall mean the account of the Administrative Agent set forth on Schedule 9.01(b) or such other account of the Administrative Agent as the Administrative Agent may from time to time designate to the Borrower as the Agent Payment Account for purposes of this Agreement and the other Loan Documents.

 

Agents ” shall have the meaning assigned to such term in Article VIII.

 

ALTA ” shall mean American Land Title Association, or any successor thereto.

 

Alternate Base Rate ” shall mean, for any day, a rate per annum equal to the greatest of (a) the Prime Rate in effect on such day, (b) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1.00%, (c) the Adjusted LIBO Rate for a one-month Interest Period on such day (or if such day is not a Business Day, the immediately preceding Business Day) plus 1.00% and (d) 2.25%; provided that, for the avoidance of doubt, the Adjusted LIBO Rate for any day shall be based on the rate determined on such day at approximately 11:00 a.m. (London time) by reference to the British Bankers’ Association Interest Settlement Rates for deposits in dollars (as set forth by any service selected by the Administrative Agent that has been nominated by the British Bankers’ Association as an authorized vendor for the purpose of displaying such rates).  If the Administrative Agent shall have determined (which determination shall be conclusive absent manifest error) that it is unable to ascertain the Federal Funds Effective Rate for any reason, including the inability or failure of the Administrative Agent to obtain sufficient quotations in accordance with the terms of the definition thereof, the Alternate Base Rate shall be determined without regard to clause (b) of the preceding sentence until the circumstances giving rise to such inability no longer exist.  Any change in the Alternate Base Rate due to a change in the Prime Rate, the Federal Funds Effective Rate or the Adjusted LIBO Rate shall be effective on the effective date of such change in the Prime Rate, the Federal Funds Effective Rate or the Adjusted LIBO Rate, as the case may be.

 

3



 

Applicable Collateral List ” shall mean the Closing Date Collateral List or, if any Restated Collateral List has been delivered to the Administrative Agent pursuant to Section 9.21 (and subject to the satisfaction of the conditions therein), the most recent Restated Collateral List so delivered.

 

Applicable Margin ” shall mean, for any day (a) with respect to any Eurodollar Loan, 5.00% per annum and (b) with respect to any ABR Loan, 4.00% per annum .

 

ASC ” shall mean American Stores Company, LLC, a Delaware limited liability company (formerly American Stores Company, a Delaware corporation).

 

ASC Guarantee ” shall mean that certain Guarantee by the Borrower of the ASC Notes, originally made by Albertson’s Inc., a Delaware corporation, pursuant to that Supplemental Indenture No. 2 dated as of July 6, 2005 between American Stores Company, LLC, a Delaware limited liability company and J.P. Morgan Trust Company, National Association, as successor trustee, to the ASC Indenture, as assigned by Albertson’s LLC, a Delaware limited liability company (formerly Albertson’s, Inc., a Delaware corporation) to the Borrower pursuant to that Assignment and Assumption Agreement dated on or about July 21, 2008 between Albertson’s LLC and the Borrower and that Supplemental Indenture No. 3 to the ASC Indenture dated as of July 21, 2008 between American Stores Company, LLC and Wells Fargo Bank, National Association, as successor trustee.

 

ASC Indenture ” shall mean the Indenture, dated as of May 1, 1995, between ASC and Wells Fargo Bank, National Association (as successor to The First National Bank of Chicago), as amended, supplemented or otherwise modified (including any such modification contained in any notes, officer’s certificates or other operative documents) as of the Closing Date or in accordance with the terms hereof.

 

ASC Notes ” shall have the meaning assigned to such term in the definition of NAI Sale.

 

Assignment and Acceptance shall mean an assignment and acceptance entered into by a Lender and an Eligible Assignee, and accepted by the Administrative Agent, in the form of Exhibit B or such other form as shall be approved by the Administrative Agent.

 

Attributable Indebtedness ” shall mean, on any date, (a) in respect of any Capital Lease Obligation of any Person, the capitalized amount thereof that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP and (b) in respect of any Synthetic Lease Obligation, the capitalized amount of the remaining lease or similar payments under the relevant lease or other applicable agreement or instrument that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP if such lease, agreement or instrument were accounted for as a capital lease.

 

Auction ” shall have the meaning assigned to such term in Section 9.04(k)(i).

 

Auction Manager ” means (a) the Administrative Agent or any of its Affiliates or (b) any other financial institution or advisor agreed by Borrower and Administrative Agent (whether or not an affiliate of the Administrative Agent) to act as an arranger in connection with any repurchases pursuant to Section 9.04(k).

 

4



 

Audited Financial Statements ” shall mean the audited Consolidated balance sheet of the Borrower and its Subsidiaries (prior to giving effect to the Transactions) for the Fiscal Year ended February 25, 2012, and the related Consolidated statements of income or operations, Shareholders’ Equity and cash flows (in each case, prior to giving effect to the Transactions) for such Fiscal Year of the Borrower and its Subsidiaries, including the notes thereto.

 

Bank of America ” shall mean Bank of America, N.A. and its successors and assigns.

 

Barclays ” shall mean Barclays Bank PLC and its successors and assigns.

 

Blocked Account ” shall mean a deposit account of a Loan Party to which funds from one or more DDAs are from time to time transferred.

 

Blocked Account Agreement ” shall mean, with respect to a deposit account established by a Loan Party, an agreement, in form and substance satisfactory to the Administrative Agent, establishing control (as defined in the UCC) of such account by the Administrative Agent and whereby the bank maintaining such account agrees to comply with instructions originated by the Administrative Agent without the further consent of any Loan Party.

 

Blocked Account Bank ” shall mean each bank at which a Blocked Account is located.

 

Board ” shall mean the Board of Governors of the Federal Reserve System of the United States of America.

 

Borrower ” shall have the meaning assigned to such term in the introductory statement to this Agreement.

 

Borrower Assignment and Acceptance ” shall mean an assignment and acceptance entered into by a Lender and the Borrower, and accepted by the Administrative Agent, in the form of Exhibit R or such other form as may be approved by the Administrative Agent.

 

Borrower Materials ” shall have the meaning assigned to such term in Section 9.01.

 

Borrowing ” shall mean Loans of the same Class and Type made, converted or continued on the same date and, in the case of Eurodollar Loans, as to which a single Interest Period is in effect.

 

Borrowing Request ” shall mean a request by the Borrower in accordance with the terms of Section 2.03 and substantially in the form of Exhibit C, or such other form as shall be approved by the Administrative Agent.

 

Breakage Event ” shall have the meaning assigned to such term in Section 2.16.

 

Business ” shall mean retail food operations through traditional and hard-discount retail food stores, wholesale distribution of products to independent retailers and other businesses reasonably related thereto.

 

5



 

Business Day ” shall mean any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the Laws of, or are in fact closed in, the state of New York and, if such day relates to any Eurodollar Loan, shall mean any such day on which dealings in Dollar deposits are conducted by and between banks in the London interbank market.

 

Buyer ” shall mean AB Acquisition LLC, a Delaware limited liability company.

 

Capital Expenditures ” shall mean, with respect to any Person for any period, (a) all expenditures made (whether made in the form of cash or other property) or costs incurred for the acquisition or improvement of fixed or capital assets of such Person (excluding normal replacements and maintenance which are properly charged to current operations), in each case that are (or should be) set forth as capital expenditures in a Consolidated statement of cash flows of such Person for such period, in each case prepared in accordance with GAAP, and (b) without duplication, Capital Lease Obligations or Synthetic Lease Obligations incurred by a Person during such period.

 

Capital Leases ” shall mean, with respect to any Person, any lease of (or any agreement conveying the right to use) any property (whether real, personal or mixed) by such Person as lessee which, in accordance with GAAP, is required to be classified and accounted for as liabilities on the balance sheet of such Person; provided , that, subject to any amendment entered into pursuant to Section 1.02, the adoption or issuance of any accounting standards after the Closing Date will not cause any lease that would not have been treated as a Capital Lease prior to such adoption or issuance to be deemed a Capital Lease regardless of whether such lease was entered into before or after such adoption or issuance.

 

Capital Lease Obligations ” of any Person shall mean the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP, and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP; provided , that, subject to any amendment entered into pursuant to Section 1.02, the adoption or issuance of any accounting standards after the Closing Date will not cause any lease that would not have been treated as a Capital Lease prior to such adoption or issuance to be deemed a Capital Lease regardless of whether such lease was entered into before or after such adoption or issuance.

 

“Cash Equivalents” shall mean Investments defined in clauses (a) through (e) of the definition of Permitted Investments, or the equivalents thereof described in the investment policy referred to in clause (f) of such definition.

 

Casualty Event shall mean any event that gives rise to the receipt by the Borrower or any Restricted Subsidiary of any insurance proceeds or condemnation awards in respect of any equipment, fixed assets or real property (including any improvements thereon) to replace or repair such equipment, fixed assets or real property.

 

6



 

Cash Pension Contribution ” shall mean the actual cash pension funding payments made by the Borrower and the Restricted Subsidiaries with respect to pension funding obligations for the applicable period.

 

Cerberus ” shall mean Cerberus Capital Management, L.P.

 

CERCLA ” shall mean the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. § 9601 et seq .

 

CERCLIS ” shall mean the Comprehensive Environmental Response, Compensation, and Liability Information System maintained by the United States Environmental Protection Agency.

 

Certified Medicaid Provider ” shall mean any provider or supplier, including without limitation a pharmacy, that has in effect an agreement with a Governmental Authority of a State to participate in Medicaid.

 

Certified Medicare Provider ” shall mean a provider or supplier, including without limitation a pharmacy, that has in effect an agreement with the Centers for Medicare and Medicaid Services to participate in Medicare.

 

Change in Law ” shall mean the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation or application thereof by any Governmental Authority or (c) the making or issuance of any request, guideline or directive (whether or not having the force of law) by any Governmental Authority.  For purposes of this definition, the Dodd-Frank Wall Street Reform and Consumer Protection Act and all rules, regulations, orders, requests, guidelines or directives thereunder or in connection therewith and all requests, rules, guidelines or directives concerning capital adequacy known as “Basel III” and promulgated either by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or by the United States or foreign regulatory authorities pursuant thereto, are deemed to have been adopted and gone into effect after the date of this Agreement.

 

Change of Control ” shall mean an event or series of events by which:

 

(a)  (i) any Person or two or more Persons (other than Cerberus) acting in concert shall have acquired beneficial ownership (within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934), directly or indirectly, of Equity Interests of the Borrower (or other securities convertible into such Equity Interests) representing 35% or more of the combined voting power of all Equity Interests of the Borrower on a fully-diluted basis (and taking into account all such Equity Interests that such “person” or “group” has the right to acquire pursuant to any option right) or (ii) any Person or two or more Persons (including Cerberus) acting in concert shall have acquired beneficial ownership (within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934), directly or indirectly, of Equity Interests of the Borrower (or other securities convertible into such Equity Interests) representing 50% or more of the combined voting power of all Equity Interests of the Borrower on a fully-diluted basis (and taking into account all such

 

7



 

Equity Interests that such “person” or “group” has the right to acquire pursuant to any option right); or

 

(b)  during any period of up to 24 consecutive months, commencing before or after the date of this Agreement, individuals who at the beginning of such 24-month period were directors of the Borrower shall cease for any reason (other than due to death or disability) to constitute a majority of the board of directors of the Borrower (except to the extent that individuals who at the beginning of such 24-month period were replaced by individuals (i) elected by at least a majority of the remaining members of the board of directors of the Borrower or (ii) nominated for election by a majority of the remaining members of the board of directors of the Borrower and thereafter elected as directors by the shareholders of the Borrower).

 

Charges ” shall have the meaning assigned to such term in Section 9.09.

 

Class ”, when used in reference to any Loan or Borrowing, shall refer to whether such Loan, or the Loans comprising such Borrowing, are Loans, Other Loans or Extended Loans and, when used in reference to any Commitment, refers to whether such Commitment is a commitment to make Loans on the Closing Date or an Incremental Loan Commitment.

 

Closing Date ” shall mean March 21, 2013.

 

Closing Date Collateral List ” shall mean the list of Real Estate sites of the Loan Parties attached hereto as Exhibit N.

 

Closing Date Material Adverse Effect ”  shall mean an event or effect that is materially adverse to the business, financial condition or results of operations of the Borrower and its Subsidiaries, taken as a whole, but shall not include events or effects relating to or resulting from (i) changes in general economic or political conditions or the securities, credit or financial markets in general, except to the extent such change has a disproportionate effect on the Borrower and its Subsidiaries, taken as a whole, when compared to other companies operating in the same industries and markets in which the Borrower and its Subsidiaries operate, (ii) any decline in the market price or trading volume of the Borrower’s securities (it being understood that the underlying cause of such decline may be taken into account in determining whether a Closing Date Material Adverse Effect has occurred to the extent it is not excluded by another clause of this definition), (iii) general changes or developments in the industries or markets in which the Borrower and its Subsidiaries operate, including general changes in Law or regulation across such industries and markets, except to the extent such change has a disproportionate effect on the Borrower and its Subsidiaries, taken as a whole, when compared to other companies operating in the same industries and markets in which the Borrower and its Subsidiaries operate, (iv) the execution and delivery of agreements with respect to, or the public announcement or pendency of, the Transactions and the tender offer pursuant to the Tender Offer Agreement, including the impact thereof on the relationships, contractual or otherwise, of the Borrower or any of its Subsidiaries with employees, customers, suppliers or partners, (v) the identity of Cerberus or any of its affiliates or co-investors and the parties involved in the tender offer pursuant to the Tender Offer Agreement, (vi) the taking of any action required by the Tender Offer Agreement, (vii) any acts of terrorism or war, except to the extent such act has a

 

8



 

disproportionate effect on the Borrower and its Subsidiaries, taken as a whole, when compared to other companies operating in the same industries and markets in which the Borrower and its Subsidiaries operate, (viii) any hurricane, tornado, flood, earthquake, natural disasters, acts of God or other comparable events, except to the extent such event has a disproportionate effect on the Borrower and its Subsidiaries, taken as a whole, when compared to other companies operating in the same industries and markets in which the Borrower and its Subsidiaries operate, (ix) changes in applicable law, regulation or generally accepted accounting principles or the interpretation thereof after January 10, 2013, (x) any failure to meet internal or published projections, forecasts or revenue or earning predictions for any period (it being understood that the underlying cause of such failure may be taken into account in determining whether a Closing Date Material Adverse Effect has occurred to the extent it is not excluded by another clause of this definition); or (xi) any matter disclosed in Section 3.15 of the disclosure letter delivered by the Borrower to Symphony immediately prior to the execution of the Tender Offer Agreement, a correct and complete copy of which disclosure letter was provided to the Arrangers on or prior to the date of the Tender Offer Agreement.

 

Code ” shall mean the Internal Revenue Code of 1986, as amended from time to time, and the regulations promulgated and rulings issued thereunder (unless otherwise provided herein).

 

Collateral ” shall mean any and all “Collateral” as defined in any applicable Security Document and all other property that is or is intended under the terms of the Security Documents to be subject to Liens in favor of the Administrative Agent or the Collateral Agent and shall also include the Real Estate Collateral Properties and the Related Real Estate Collateral.

 

Collateral Access Agreement and Lien Waiver ” means an agreement reasonably satisfactory in form and substance to the Administrative Agent executed by (a) a bailee or other Person in possession of Collateral, or (b) any landlord with respect to a lease of property on which is located Collateral or other assets that Administrative Agent may require access to, and use of, to realize on such Collateral, and pursuant to which such bailee, other Person, or landlord waives any lien that it may have in such Collateral.

 

Collateral Agent ” shall have the meaning assigned to such term in the introductory statement to this Agreement.

 

Collateral Assignment Agreement ” shall mean that certain Collateral Assignment of Purchase Agreement and Escrow Agreement, dated of even date herewith, by and among the Borrower, the Administrative Agent and the Collateral Agent.

 

Commitment ” shall mean, with respect to any Lender, the commitment of such Lender to make Loans hereunder as set forth on Schedule 2.01, or in the Assignment and Acceptance pursuant to which such Lender assumed its Commitment, as applicable, as the same may be reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 9.04.  The aggregate commitments on the Closing Date shall be $1,500,000,000.  Unless the context shall otherwise require, the “Commitments” shall include the Incremental Loan Commitments.

 

9



 

Commitment Letter ” shall mean the Commitment Letter, dated as of January 10, 2013, among the Borrower, Goldman Sachs, CS Securities, Credit Suisse, MSSF, MLPFS, Bank of America and Barclays, as amended by the amendment thereto, dated on or about February 13, 2013, among such parties.

 

Communications ” shall have the meaning assigned to such term in Section 9.01.

 

Competitor ” shall mean a Person, other than a Loan Party, who directly provides products or services that are the same or substantially similar to the products or services provided by, and that constitute a material part of the business of, the Loan Parties taken as a whole, and any Controlled Affiliate of any such Person, in each case who has been identified to the Administrative Agent in writing from time to time and posted to both the “Public Lender” and “Non-Public Lender” portions of the Platform subject to the confidentiality provisions thereof in accordance with Section 9.01 or otherwise made available to all Lenders and, in the case of Persons and Controlled Affiliates of any Person identified to the Administrative Agent on or after the Closing Date, to the extent reasonably acceptable to the Administrative Agent.  In no event shall the designation of a Person as a Competitor apply retroactively to disqualify any Lender as of the date of such designation.

 

Compliance Certificate ” shall mean a certificate substantially in the form of Exhibit D.

 

Consolidated ” shall mean, when used to modify a financial term, test, statement or report of a Person, the application or preparation of such term, test, statement or report (as applicable) based upon the consolidation, in accordance with GAAP, of the financial condition or operating results of such Person and its Subsidiaries.

 

Consolidated EBITDA ” shall mean, for any period, Consolidated Net Income for such period plus (a) without duplication and to the extent deducted in determining such Consolidated Net Income, the sum of (i) Consolidated Interest Expense for such period, (ii) Consolidated income tax expense for such period, (iii) all amounts attributable to depreciation and amortization for such period, (iv) any extraordinary, non-recurring or unusual charges for such period (including such charges reflected in the financial statements provided to the Lenders prior to the Closing Date), (v) the amount of any non-cash charges, losses or expenses (and minus the amount of such cash gains) resulting from the application of Statement of Financial Accounting Standards No. 123(R) and (vi) Transaction Expenses incurred within one year after the Closing Date, minus (b) without duplication (i) all cash payments made during such period on account of reserves, restructuring charges and other non-cash charges added to Consolidated Net Income pursuant to clauses (a)(iv) and (a)(v) above in a previous period and (ii) to the extent included in determining such Consolidated Net Income, any extraordinary, non-recurring or unusual gains for such period, all determined on a Consolidated basis in accordance with GAAP; provided , that for purposes of calculating the Total Leverage Ratio or the Total Secured Leverage Ratio for any period, (A) the Consolidated EBITDA of any Acquired Entity acquired or investment made by the Borrower or any Restricted Subsidiary pursuant to a Permitted Acquisition during such period shall be included on a pro forma basis for such period (assuming the consummation of such acquisition and the incurrence or assumption of any Indebtedness in connection therewith occurred as of the first day of such period) and (B) the Consolidated EBITDA of any Person or line of business sold or otherwise disposed of by the Borrower or any Restricted Subsidiary

 

10



 

during such period for shall be excluded for such period (assuming the consummation of such sale or other disposition and the repayment of any Indebtedness in connection therewith occurred as of the first day of such period); provided, further , that Consolidated EBITDA for the Fiscal Quarter ended September 8, 2012 shall be deemed to be $155,000,000 and for the Fiscal Quarter ended December 1, 2012 shall be deemed to be $172,000,000; provided , further , that for the Fiscal Quarter ending February 23, 2013 and the Fiscal Quarter ending June 15, 2013, Consolidated EBITDA shall be calculated on the basis used in preparing the Deal Basis Financial Statements (as more particularly described in Section 3.05(f) and the Lender Presentation).

 

Consolidated Interest Expense ” shall mean, for any period (a) the interest expense (including imputed interest expense in respect of Capital Lease Obligations and Synthetic Lease Obligations) minus (b) the interest income, in each case, of the Borrower and the Restricted Subsidiaries for such period, determined on a Consolidated basis in accordance with GAAP.

 

Consolidated Net Income ” shall mean, for any period, the net income or loss of the Borrower and the Restricted Subsidiaries for such period determined on a Consolidated basis in accordance with GAAP; provided that there shall be excluded (a) the income of any Restricted Subsidiary to the extent that the declaration or payment of dividends or similar distributions by such Restricted Subsidiary of such income is not at the time permitted by operation of the terms of its charter or any agreement, instrument, judgment, decree, statute, rule or governmental regulation applicable to such Restricted Subsidiary, (b) the income of any Person (other than the Borrower and the Restricted Subsidiaries) in which any other Person (other than the Borrower and the Restricted Subsidiaries or any director holding qualifying shares in compliance with applicable law) owns an Equity Interest, except to the extent of the amount of dividends or other distributions actually paid to the Borrower and the Restricted Subsidiaries during such period, (c) the income or loss of any Person accrued prior to the date it becomes a Subsidiary of the Borrower or is merged into or consolidated with the Borrower or any Restricted Subsidiary or the date that such Person’s assets are acquired by the Borrower or any Restricted Subsidiary and (d) any gains attributable to Dispositions.

 

Contractual Obligation ” shall mean, as to any Person, any provision of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound.

 

Control ” shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise, and the terms “ Controlling ” and “ Controlled ” shall have meanings correlative thereto.

 

Credit Card Agreements ” shall mean all agreements now or hereafter entered into by the Borrower or for the benefit of the Borrower, in each case with any Credit Card Issuer or any Credit Card Processor with respect to sales transactions involving credit card or debit card purchases, including, but not limited to, the agreements set forth on Schedule 3.21(b) hereto.

 

Credit Card Notification ” shall have the meaning assigned to such term in Section 5.13(a).

 

11



 

Credit Card Issuer ” shall mean any person (other than a Loan Party) who issues or whose members issue credit cards, including, without limitation, MasterCard or VISA bank credit or debit cards or other bank credit or debit cards issued through World Financial Network National Bank, MasterCard International, Inc., Visa, U.S.A., Inc. or Visa International and American Express, Discover, Diners Club, Carte Blanche and other non-bank credit or debit cards, including, without limitation, credit or debit cards issued by or through American Express Travel Related Services Company, Inc., Novus Services, Inc., PayPal and other issuers approved by the Administrative Agent.

 

Credit Card Processor ” shall mean any servicing or processing agent or any factor or financial intermediary who facilitates, services, processes or manages the credit authorization, billing transfer and/or payment procedures with respect to the Borrower’s sales transactions involving credit card or debit card purchases by customers using credit cards or debit cards issued by any Credit Card Issuer.

 

Credit Card Receivables ” shall mean each “Account” (as defined in the UCC) together with all income, payments and proceeds thereof, owed by a Credit Card Issuer or Credit Card Processor to a Loan Party resulting from charges by a customer of a Loan Party on credit or debit cards issued by such Credit Card Issuer or processed by such Credit Card Processor (including, without limitation, electronic benefits transfers) in connection with the sale of goods by a Loan Party, or services performed by a Loan Party, in each case in the ordinary course of its business.

 

Credit Suisse ” shall mean Credit Suisse AG and its successors and assigns.

 

CS Securities ” shall mean Credit Suisse Securities (USA) LLC and its successors and assigns.

 

Cumulative Credit Amount ” shall mean, as of any date, an amount (which shall not be less than zero), determined on a cumulative basis, equal to, without duplication:  (a) the Retained Excess Cash Flow Amount, plus (b) the cumulative amount of Net Cash Proceeds received by the Borrower after the Closing Date from issuances of the Borrower’s Qualified Capital Stock (but excluding any such sale or issuance by the Borrower of its Equity Interests upon exercise of any warrant or option by directors, officers or employees of any Loan Party or any Subsidiary), minus (c) the cumulative amount of Permitted Investments made in reliance on clause (o) of the definition thereof, minus (d) the cumulative amount of Restricted Payments made in reliance on Section 6.06(iv), minus (e) the cumulative amount of any payments of Indebtedness made in reliance on Section 6.07(a)(vii).

 

Current Assets ” shall mean, at any time, the consolidated current assets (other than cash and Permitted Investments) of the Borrower and the Subsidiaries.

 

Current Liabilities ” shall mean, at any time, the consolidated current liabilities of the Borrower and the Subsidiaries at such time, but excluding, without duplication, (a) the current portion of any long-term Indebtedness and (b) outstanding revolving loans and swingline loans under the ABL Credit Agreement.

 

Customer Support Transaction ” shall mean any one of the following transactions in the ordinary course of the business of the Loan Parties consistent with the current practices as of the

 

12



 

date hereof: (a) any sublease by a Loan Party to a customer of any Loan Party of leased real property of such Loan Party that constitutes a Capital Lease, (b) any lease by a Loan Party to a customer of any Loan Party of owned real property of such Loan Party that constitutes a Capital Lease, (c) any assignment of a lease of real property by a Loan Party that constitutes a Capital Lease to a customer of any Loan Party in connection with which the assigning Loan Party is not released from liability under such lease, (d) any Guarantee by a Loan Party for the benefit of a third party of Indebtedness of a customer of any Loan Party and (e) any loan of money or property (other than ABL Priority Collateral or Term Loan Priority Collateral) by a Loan Party to a customer; provided , that the foregoing shall not be construed to apply to the sale of inventory on credit by a Loan Party to a customer in the ordinary course of business.

 

Customer Support Transaction Report ” shall a report demonstrating in reasonable detail the aggregate exposure of all Loan Parties under Customer Support Transactions.

 

DDA ” shall mean each checking, savings or other demand deposit account maintained by any of the Loan Parties, other than (i) such accounts used for trust, payroll, payroll taxes and other employee wage and benefit payments to or for the benefit of any Loan Party’s employees or exclusively used for the receipt of Medicare and Medicaid receivables or exclusively used to hold funds for the benefit of a particular person in a manner permitted pursuant to the Loan Documents and (ii) such accounts pledged to secure Indebtedness and subject to, or containing proceeds of property subject to, a Permitted Encumbrance.  All funds in each DDA shall be presumed to be Collateral and proceeds of Collateral and the Administrative Agent and the Lenders shall have no duty to inquire as to the source of the amounts on deposit in any DDA.

 

DDA Notification ” shall have the meaning assigned to such term in Section 5.17(d).

 

Deal Basis Financial Statements ” shall have the meaning assigned to such term in Section 3.05(f).

 

Debtor Relief Laws ” shall mean the Bankruptcy Code of the United States, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally.

 

Default ” shall mean any event or condition that constitutes an Event of Default or that, with the giving of any notice, the passage of time, or both, would constitute an Event of Default.

 

Defaulting Lender ” shall mean, subject to the second proviso of this definition, any Lender for which the Administrative Agent has received notification that such Lender is, or has a direct or indirect parent company that is (i) insolvent, or is generally unable to pay its debts as they become due, or admits in writing its inability to pay its debts as they become due, or makes a general assignment for the benefit of its creditors or (ii) the subject of a bankruptcy, insolvency, reorganization, liquidation or similar proceeding, or a receiver, trustee, conservator, intervenor or sequestrator or the like has been appointed for such Lender or its direct or indirect parent company, or such Lender or its direct or indirect parent company has taken any action in furtherance of or indicating its consent to or acquiescence in any such proceeding or

 

13



 

appointment; provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any Equity Interest in that Lender or any direct or indirect parent company thereof by a Governmental Authority so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority or instrumentality) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender; provided that a Defaulting Lender that has adequately remedied all matters that caused such Lender to be a Defaulting Lender shall cease to be a Defaulting Lender.

 

Discharge of ABL Debt ” shall have the meaning assigned to such term in the Intercreditor Agreement.

 

Discharge of Obligations ” shall have the meaning assigned to such term in Section 9.20(a).

 

Disposition ” or “ Dispose ” shall mean the sale, transfer, license, lease or other disposition (including any sale and leaseback transaction and any sale, transfer, license or other disposition (whether in one transaction or in a series of transactions) of any property (including, without limitation, any Equity Interests) by any Person (or the granting of any option or other right to do any of the foregoing), including any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith.

 

Disqualified Stock ” shall mean any Equity Interest that, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable, in each case, at the option of the holder thereof) or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder thereof, in whole or in part, on or prior to the date that is 91 days after the Latest Maturity Date; provided , that (i) only the portion of such Equity Interests which so matures or is mandatorily redeemable, is so convertible or exchangeable or is so redeemable at the option of the holder thereof prior to such date shall be deemed to be Disqualified Stock and (ii) with respect to any Equity Interest issued to any employee or to any plan for the benefit of employees of the Borrower or its Subsidiaries or by any such plan to such employees, (x) such Equity Interest shall not constitute Disqualified Stock solely because it may be required to be repurchased by the Borrower or one of its Subsidiaries in order to satisfy obligations or as a result of such employee’s termination, resignation, death or disability, (y) if any class of such Equity Interest of such Person that by its terms authorizes such Person to satisfy its obligations thereunder by delivery of an Equity Interest that is not Disqualified Stock, such Equity Interests shall not be deemed to be Disqualified Stock solely by reason thereof and (z) any such Equity Interest that would constitute Disqualified Stock solely because the holders thereof have the right to require a Loan Party to repurchase such Equity Interest upon the occurrence of a change of control or an asset sale shall not constitute Disqualified Stock.  The amount of Disqualified Stock deemed to be outstanding at any time for purposes of this Agreement will be the maximum amount that the Borrower and its Subsidiaries may become obligated to pay upon maturity of, or pursuant to any mandatory redemption provisions of, such Disqualified Stock or portion thereof, plus accrued dividends.

 

14


 


 

Documentation Agents ” shall mean MLPFS and Barclays, in their capacities as documentation agents.

 

Dollars ” or “ $ ” shall mean lawful money of the United States of America.

 

Domestic Subsidiary ” shall mean any direct or indirect Subsidiary of a Loan Party other than a Foreign Subsidiary.

 

E&Y ” shall mean Ernst & Young LLP.

 

Eligible Assignee ” shall mean any Person other than a natural Person that is (i) a Lender, an Affiliate of any Lender or a Related Fund (any two or more Related Funds being treated as a single Eligible Assignee for all purposes hereof) or (ii) a commercial bank, insurance company, investment or mutual fund or other entity that is an “accredited investor” (as defined in Regulation D) and which extends credit or buys loans in the ordinary course; provided that notwithstanding anything herein to the contrary, “Eligible Assignee” shall not include any Person that is a Loan Party (other than the Borrower to the extent provided in Section 9.04(k)), any of the Loan Parties’ Affiliates, any Subsidiaries, Cerberus and any of its Affiliates, any Competitor or any Lender that at the time of the proposed assignment is a Defaulting Lender.

 

Environmental Laws ” shall mean any and all Federal, state, and local statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, grants, franchises, licenses, agreements or governmental restrictions relating to pollution and the protection of the environment or the Release of any Hazardous Materials into the environment, including those related to hazardous substances or wastes, air emissions and discharges to waste or public systems.

 

Environmental Liability ” shall mean any liability, obligation, damage, loss, claim, action, suit, judgment, order, fine, penalty, fee, expense, or cost, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of the Borrower, or any other Loan Party resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, labeling, storage, treatment, disposal or recycling of, or presence of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the Release or threatened Release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.

 

Equipment ” shall have the meaning assigned to such term in the UCC.

 

Equity Interest s ” shall mean, with respect to any Person, the shares of capital stock of (or other ownership or profit interests in) such Person, the warrants, options or other rights for the purchase or acquisition from such Person of shares of capital stock of (or other ownership or profit interests in) such Person, the securities convertible into or exchangeable for shares of capital stock of (or other ownership or profit interests in) such Person or warrants, rights or options for the purchase or acquisition from such Person of such shares (or such other interests), and any of the other ownership or profit interests in such Person (including partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such shares, warrants, options, rights or other interests are outstanding on any date of determination.

 

15



 

ERISA ” shall mean the Employee Retirement Income Security Act of 1974 and the regulations promulgated thereunder, as amended and in effect.

 

ERISA Affiliate ” shall mean any trade or business (whether or not incorporated) under common control with the Borrower within the meaning of Sections 414(b) or (c) of the Code (and Sections 4.14(m) and (o) of the Code for purposes of provisions relating to Sections 412 or 430 of the Code).

 

ERISA Event ” shall mean (a) a Reportable Event with respect to a Pension Plan; (b) a withdrawal by the Borrower or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by the Borrower or any ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to terminate, the treatment of a Plan amendment as a termination under Sections 4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (e) an event or condition which constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan or Multiemployer Plan; (f) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon the Borrower or any ERISA Affiliate; or (g) the breach of any terms of the PBGC Agreement.

 

Escrow Agreement ” shall mean that certain escrow agreement, dated of even date herewith, by and among the Borrower, ASC and JPMorgan Chase Bank, N.A., as escrow agent.

 

Eurodollar ”, when used in reference to any Loan or Borrowing, shall refer to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Adjusted LIBO Rate.

 

Events of Default ” shall have the meaning assigned to such term in Section 7.01.

 

Excess Cash Flow ” shall mean, for (A) the period from the Closing Date until February 22, 2014, and (B) any subsequent Fiscal Year of the Borrower (commencing with the Fiscal Year ending closest to February 28, 2015) (a) the sum, without duplication, of (i) Consolidated EBITDA for such period, (ii) reductions to noncash working capital of the Borrower and the Restricted Subsidiaries for such period ( i.e. , the decrease, if any, in Current Assets minus Current Liabilities from the beginning to the end of such period), (iii) the amount by which the Pension Expense for such period exceeds the Cash Pension Contribution for such period, if any, and (iv) the Net Cash Proceeds of any Other Asset Sale (whether a single transaction or a series of related transactions) received by the Borrower and the Restricted Subsidiaries during such period in which such Net Cash Proceeds are greater than $50,000 but less than $5,000,000, minus (b) the sum, without duplication, of (i) the amount of any Taxes payable in cash by the Borrower and the Restricted Subsidiaries with respect to such period, (ii) Consolidated Interest Expense for such period paid in cash, (iii) Capital Expenditures made in cash during such period, except to the extent financed with the proceeds of Indebtedness, equity issuances, casualty proceeds, condemnation proceeds or other proceeds that would not be

 

16



 

included in Consolidated EBITDA, (iv) scheduled repayments of Indebtedness (other than Indebtedness in respect of the ABL Facility) made in cash by the Borrower and the Restricted Subsidiaries during such period, but only to the extent that the Indebtedness so repaid by its terms cannot be reborrowed or redrawn and such repayments do not occur in connection with a refinancing of all or any portion of such Indebtedness, (v) additions to noncash working capital for such period ( i.e. , the increase, if any, in Current Assets minus Current Liabilities from the beginning to the end of such period), (vi) the amount by which the Cash Pension Contribution for such period exceeds the Pension Expense for such period, if any, and (vii) the amount of Restricted Payments made in cash during such period to the extent permitted under Section 6.06.

 

Excluded DDAs ” shall mean each checking, savings or other demand deposit account maintained by any Loan Party and exclusively used (a) for payroll, payroll taxes and other employee wage and benefit payments to or for the benefit of any Loan Party’s employees, (b) for the receipt of Medicare and Medicaid receivables of a Loan Party, (c) to hold proceeds of Term Loan Priority Collateral, subject to the Intercreditor Agreement, unless and until the release of the Lien thereon of the Agents, or (d) for the receipt and deposit of funds of a specific Person other than a Loan Party, or which a Loan Party is holding in trust or as a fiduciary for such Person, in each case in a manner permitted under this Agreement or the other Loan Documents.

 

Excluded Information ” shall have the meaning assigned to such term in Section 9.04(l).

 

Excluded Subsidiaries ” shall mean, at any date of determination, each (a) Immaterial Subsidiary, (b) Foreign Subsidiary, (c) Unrestricted Subsidiary, (d) Subsidiary that is not wholly owned, directly or indirectly, by the Borrower or (e) Insurance Captive; provided that, notwithstanding the foregoing, Moran Foods shall not be deemed to be an Excluded Subsidiary.

 

Excluded Taxes ” shall mean, with respect to the Administrative Agent or any Lender or any other recipient of any payment to be made by or on account of any obligation of the Borrower hereunder, (a) income or franchise taxes imposed on (or measured by) its net income by the United States of America, or by the jurisdiction under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable lending office is located, (b) any branch profits taxes imposed by the United States of America or any similar tax imposed by any other jurisdiction described in clause (a) above, (c) in the case of a Foreign Lender (other than an assignee pursuant to a request by the Borrower under Section 2.21(a)), any U.S. federal withholding tax that is imposed on amounts payable to such Foreign Lender at the time such Foreign Lender becomes a party to this Agreement (or designates a new lending office) or is attributable to such Foreign Lender’s failure to comply with Section 2.20(e), in each case except to the extent that such Foreign Lender (or its assignor, if any) was entitled, at the time of designation of a new lending office (or assignment), to receive additional amounts from the Borrower with respect to such withholding tax pursuant to Section 2.20(a) and (d) any U.S. federal withholding taxes imposed as a result of a Foreign Lender’s failure to comply with FATCA.

 

Existing ABL Credit Agreement ” shall mean that certain asset-based revolving credit agreement, dated as of August 30, 2012, by and among the Borrower, each Subsidiary party thereto, the ABL Facility Agent and the various financial institutions from time to time party thereto.

 

17



 

Existing ABL Facility ” shall mean the Borrower’s existing senior secured asset-based revolving credit facility, documented pursuant to the Existing ABL Credit Agreement.

 

Existing Debt Documents ” shall mean, collectively, the SVU 2016 Notes, the SVU Indenture (but solely in respect of the SVU 2016 Notes) and any other notes, indentures, instruments or other agreements evidencing, governing or related to any other Material Indebtedness or securitization arrangements of the Borrower or any of its Subsidiaries incurred after the Closing Date with a maturity prior to the date that is five years from the Closing Date.

 

Existing Term Loan Credit Agreement ” shall mean the Term Loan Credit Agreement, dated as of August 30, 2012, among the Borrower, Credit Suisse, as administrative agent, and the various lenders and agents party thereto from time to time.

 

Existing Term Loan Facility ” shall mean the Borrower’s existing senior secured term loan credit facility, documented pursuant to the Existing Term Loan Credit Agreement.

 

Extended Loan Yield Differential ” shall have the meaning assigned to such term in Section 2.23.

 

Extended Loans ” shall have the meaning assigned to such term in Section 2.23.

 

Extending Lender ” shall have the meaning assigned to such term in Section 2.23.

 

Extension Amendment ” shall have the meaning assigned to such term in Section 2.23.

 

Extension Election ” shall have the meaning assigned to such term in Section 2.23.

 

Extension Fee ” shall have the meaning assigned to such term in Section 2.23.

 

Extension Request ” shall have the meaning assigned to such term in Section 2.23.

 

Facility Guaranty ” shall mean the Facility Guaranty, dated of even date herewith, made by the Guarantors in favor of the Administrative Agent and the other Secured Parties, substantially in the form of Exhibit G hereto.

 

Farm Products ” shall have the meaning defined in the Food Security Act and the UCC.

 

Farm Products Sellers ” shall mean, collectively, sellers or suppliers to any Loan Party of any Farm Products and including any milk or dairy products, perishable agricultural commodity (as defined in the PACA) or livestock (as defined in the PSA), meat, meat food products or livestock products derived therefrom or any poultry or products derived therefrom; sometimes referred to herein individually as a “Farm Products Seller”.

 

FATCA ” shall mean current Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof and any agreements entered into pursuant to Section 1471(b)(1) of the Code.

 

18



 

FCPA ” shall have the meaning assigned to such term in Section 3.32.

 

Federal Funds Effective Rate ” shall mean, for any day, the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average of the quotations for the day for such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it.

 

Fee Letter ” shall mean the Fee Letter, dated as of January 10, 2013, among the Borrower, Goldman Sachs, CS Securities, Credit Suisse, MSSF, MLPFS, Bank of America and Barclays.

 

Fees ” shall mean the Administrative Agent Fees and the Participation Fees.

 

Fiscal Intermediary ” shall mean any qualified insurance company or other Person that has entered into an ongoing relationship with any Governmental Authority to make payments to payees under Medicare, Medicaid or any other Federal, state or local public health care or medical assistance program pursuant to any of the Health Care Laws.

 

Fiscal Period ” shall mean any four-week or five-week fiscal period of any Fiscal Year, in accordance with the fiscal accounting calendar of the Loan Parties as in effect on the date hereof.

 

Fiscal Quarter ” shall mean the period consisting of the first four Fiscal Periods of each Fiscal Year and the next three periods of three Fiscal Periods each in such Fiscal Year.

 

Fiscal Year ” shall mean any period of 13 consecutive Fiscal Periods ending on the last Saturday of February of any calendar year.

 

Fixed Maturity Date ” shall mean March 21, 2019.

 

Flood Certificate ” shall mean a “Standard Flood Hazard Determination Form” of the Federal Emergency Management Agency and any successor Governmental Authority performing a similar function.

 

Flood Program ” shall mean the National Flood Insurance Program created by the U.S. Congress pursuant to the National Flood Insurance Act of 1968, the Flood Disaster Protection Act of 1973, the National Flood Insurance Reform Act of 1994 and the Flood Insurance Reform Act of 2004, in each case as amended from time to time, and any successor statutes.

 

Flood Zone ” shall mean areas having special flood hazards as described in the National Flood Insurance Act of 1968, as amended from time to time, and any successor statute.

 

Food Security Act ” shall mean the Food Security Act of 1984, 7 U.S.C. § 1631 et. seq. , as the same now exists or may hereafter from time to time be amended, modified, recodified or supplemented, together with all rules and regulations thereunder.

 

19



 

Food Security Act Notices ” shall have the meaning assigned to such term in Section 3.27(a).

 

Foreign Lender ” shall mean any Lender that is not a “United States person” within the meaning of Section 7701(a)(30) of the Code.

 

Foreign Subsidiary ” shall mean a direct or indirect Subsidiary of a Loan Party organized or incorporated under the laws of a jurisdiction other than a State of the United States, the United States or the District of Columbia.

 

GAAP ” shall mean United States generally accepted accounting principles in effect from time to time.

 

Goldman Sachs ” shall have the meaning assigned to such term in the introductory statement to this Agreement.

 

Governmental Authority ” shall mean the government of the United States or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).

 

Granting Lender ” shall have the meaning assigned to such term in Section 9.04(i).

 

Ground Lease ” shall mean, individually and collectively, as the context may require, each ground lease described on the Applicable Collateral List.

 

Guarantee ” shall mean, as to any Person, (a) any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation payable or performable by another Person (the “ primary obligor ”) in any manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation, (ii) to purchase or lease property, securities or services for the purpose of assuring the obligee in respect of such Indebtedness or other obligation of the payment or performance of such Indebtedness or other obligation, (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity or level of income or cash flow of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation or (iv) entered into for the purpose of assuring in any other manner the obligee in respect of such Indebtedness or other obligation of the payment or performance thereof or to protect such obligee against loss in respect thereof (in whole or in part), or (b) any Lien on any assets of such Person securing any Indebtedness or other obligation of any other Person (or any right, contingent or otherwise, of any holder of such Indebtedness to obtain any such Lien).  The term “ Guarantee ” as a verb shall have a meaning correlative thereto.

 

Guarantor ” shall mean (a) each Subsidiary of the Borrower that is not an Excluded Subsidiary, together with its successors and assigns, and (b) each other Subsidiary of the Borrower from time to time party to the Facility Guaranty.

 

20



 

Hazardous Materials ” shall mean all chemicals, materials, substances or wastes of any nature that are listed, classified, regulated, characterized or otherwise defined as “hazardous,” “toxic,” “radioactive,” a “pollutant,” a “contaminant,” or terms of similar intent or meaning, by any Governmental Authority or that are otherwise prohibited, limited or regulated pursuant to any Environmental Law, including petroleum or petroleum distillates, friable asbestos or friable asbestos-containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes.

 

Health Care Laws ” shall mean all Federal, state and local laws, rules, regulations, interpretations, guidelines, ordinances and decrees primarily relating to patient healthcare, any health care provider, medical assistance and cost reimbursement program, as now or at any time hereafter in effect, applicable any Loan Party, including, but not limited to, the Social Security Act, the Social Security Amendments of 1972, the Medicare-Medicaid Anti-Fraud and Abuse Amendments of 1977, the Medicare and Medicaid Patient and Program Protection Act of 1987, HIPAA and the Patient Protection and Affordable Care Act of 2010.

 

HIPAA ” shall mean the Health Insurance Portability and Accountability Act of 1996, as the same now exists or may hereafter from time to time be amended, modified, recodified or supplemented, together with all rules and regulations thereunder.

 

HIPAA Compliance Date ” shall have the meaning assigned to such term in Section 3.28(b).

 

HIPAA Compliance Plan ” shall have the meaning assigned to such term in Section 3.28(a).

 

HIPAA Compliant ” shall have the meaning assigned to such term in Section 3.28(b).

 

Immaterial Subsidiary ” shall mean (a) until the Borrower has first provided financial statements pursuant to Section 5.01(a), each Subsidiary identified as an Immaterial Subsidiary on the Closing Date on Schedule 3.13, and (b) thereafter, each Subsidiary of the Borrower identified as an “Immaterial Subsidiary” pursuant to a certificate executed and delivered by a Responsible Officer of the Borrower to the Administrative Agent within 60 days of the delivery of annual financial statements pursuant to Section 5.01(a) (certifying as to each of the items set forth in the following proviso); provided (i) no Subsidiary shall be an Immaterial Subsidiary if the book value of its assets (net of assets arising from intercompany transactions that would be eliminated on a Consolidated balance sheet of the Borrower) exceed 1.00% of the Total Assets of the Borrower and its Subsidiaries on a Consolidated basis and (ii) the aggregate book value of the assets of all Immaterial Subsidiaries (net of assets arising from intercompany transactions that would be eliminated on a Consolidated balance sheet of the Borrower) shall not exceed 5.00% of the Total Assets of the Borrower and its Subsidiaries on a Consolidated basis, in each case as determined for the most recently completed Fiscal Quarter for which the Borrower has provided financial statements pursuant to Section 5.01(b); provided, further, that Moran Foods shall not constitute an Immaterial Subsidiary.

 

Incremental Lender ” shall mean a Lender with an Incremental Loan Commitment or an outstanding Incremental Loan.

 

21



 

Incremental Loan Amount ” shall mean, at any time, the excess, if any, of (a) $250,000,000 over (b) the aggregate amount of all Incremental Loan Commitments established prior to such time pursuant to Section 2.22.

 

Incremental Loan Assumption Agreement ” shall mean an Incremental Loan Assumption Agreement among, and in form and substance reasonably satisfactory to, the Borrower, the Administrative Agent and one or more Incremental Lenders.

 

Incremental Loan Commitment ” shall mean the commitment of any Lender, established pursuant to Section 2.22, to make Incremental Loans to the Borrower.

 

Incremental Loan Maturity Date ” shall mean the final maturity date of any Incremental Loan, as set forth in the applicable Incremental Loan Assumption Agreement.

 

Incremental Loan Repayment Dates ” shall mean the dates scheduled for the repayment of principal of any Incremental Loan, as set forth in the applicable Incremental Loan Assumption Agreement.

 

Incremental Loans ” shall mean Loans made by one or more Lenders to the Borrower pursuant to Section 2.01(b).  Incremental Loans may be made in the form of additional Loans or, to the extent permitted by Section 2.22 and provided for in the relevant Incremental Loan Assumption Agreement, Other Loans.

 

Indebtedness ” shall mean, as to any Person at a particular time, without duplication, all of the following, whether or not included as indebtedness or liabilities in accordance with GAAP:

 

(a)  all obligations of such Person for borrowed money and all obligations of such Person evidenced by bonds, debentures, notes, loan agreements or other similar instruments;

 

(b)  the maximum amount of all direct or contingent obligations of such Person arising under letters of credit (including standby and commercial), bankers’ acceptances, bank guaranties, and similar instruments (and including reimbursement obligations in connection with surety bonds);

 

(c)  the Swap Termination Value under any Swap Contract;

 

(d)  all obligations of such Person to pay the deferred purchase price of property or services which are due six months or more from the date after such property is acquired or such services are completed, and including, without limitation, customary indemnification, adjustment of purchase price or similar obligations, earn-outs or other similar obligations (but excluding trade accounts payable incurred in the ordinary course of business on normal trade terms and not overdue by more than 90 days unless such trade payables or other obligations are being contested or disputed by such Person in good faith), in each case to the extent required to be recorded as liabilities in accordance with GAAP;

 

22



 

(e)  Indebtedness (excluding prepaid interest thereon) secured by a Lien on property owned or being purchased by such Person (including indebtedness arising under conditional sales or other title retention agreements), whether or not such indebtedness shall have been assumed by such Person or is limited in recourse;

 

(f)  all Attributable Indebtedness of such Person;

 

(g)  all obligations of such Person to purchase, redeem, retire, defease or otherwise make any payment in respect of any Equity Interests of such Person or any other Person (including, without limitation, Disqualified Stock), or any warrant, right or option to acquire such Equity Interests, valued, in the case of a redeemable preferred interest, at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends;

 

(h)  all obligations under, or the net investments outstanding pursuant to, any receivables financing; and

 

(i)  all Guarantees of such Person in respect of any of the foregoing.

 

For all purposes hereof, the Indebtedness of any Person shall include the Indebtedness of any partnership or joint venture (other than a joint venture that is itself a corporation or limited liability company) in which such Person is a general partner or a joint venturer, unless such Indebtedness is expressly made non-recourse to such Person.  The amount of any net obligation under any Swap Contract on any date shall be deemed to be the Swap Termination Value thereof as of such date; provided , (i) as to Swap Contracts relating to fuel entered into by the Borrower in the ordinary course of business consistent with its current practices, the Swap Termination Value may be determined at the end of the most recently ended Fiscal Period for purposes of this Agreement and (ii) as to Swap Contracts other than such Swap Contracts with respect to fuel, the Swap Termination Value may be determined at the end of the most recently ended Fiscal Period for purposes of this Agreement until the Administrative Agent may notify the Borrower otherwise.

 

Indemnified Taxes ” shall mean Taxes other than Excluded Taxes.

 

Indemnitee ” shall have the meaning assigned to such term in Section 9.05(b).

 

Information ” shall have the meaning assigned to such term in Section 9.16.

 

Initial Lenders ” shall mean Goldman Sachs, Credit Suisse, MSSF, Bank of America and Barclays in their capacities as such under the Commitment Letter.

 

Insurance Captive ” shall mean each of (a) Wetterau Insurance Co. Ltd., a Bermuda corporation, (b) Market Company, Ltd., a Bermuda corporation and (c) such other Subsidiaries of the Borrower that perform similar insurance functions, in each case to the extent organized and maintained as a captive insurance Subsidiary of the Borrower.

 

Intercreditor Agreement ” shall mean the Intercreditor Agreement, dated of even date herewith, by and among the Administrative Agent, the Collateral Agent and the ABL Facility

 

23



 

Agent, as acknowledged and agreed to by the Borrower and the Guarantors, providing for such parties’ relative rights and priorities with respect to the assets and properties of the Loan Parties and related matters, substantially in the form of Exhibit I hereto.

 

Intercreditor Provisions ” shall have the meaning assigned to such term in Section 7.01(p).

 

Interest Payment Date ” shall mean (a) with respect to any ABR Loan, the last Business Day of each March, June, September and December, and (b) with respect to any Eurodollar Loan, the last day of the Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a Eurodollar Borrowing with an Interest Period of more than three months’ duration, each day that would have been an Interest Payment Date had successive Interest Periods of three months’ duration been applicable to such Borrowing.

 

Interest Period ” shall mean, with respect to any Eurodollar Borrowing, the period commencing on the date of such Borrowing and ending on the numerically corresponding day (or, if there is no numerically corresponding day, on the last day) in the calendar month that is one, two, three or six months (or nine or 12 months if agreed to by all Lenders and, with respect to a Eurodollar Borrowing on the Closing Date, the period commencing on the Closing Date and ending on March 31, 2013) thereafter, as the Borrower may elect; provided , however , that (a) if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day, (b) any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period and (c) no Interest Period for any Loan shall extend beyond the maturity date of such Loan.  Interest shall accrue from and including the first day of an Interest Period to but excluding the last day of such Interest Period.  For purposes hereof, the date of a Borrowing initially shall be the date on which such Borrowing is made and thereafter shall be the effective date of the most recent conversion or continuation of such Borrowing.

 

Internal Control Event ” shall mean a material weakness in, or fraud that involves senior management or other employees who have a significant role in, the Borrower’s and/or its Subsidiaries’ internal controls over financial reporting, in each case as described in the Securities Laws.

 

Internally Generated Cash ” shall mean, with respect to any Person, funds of such Person and its Restricted Subsidiaries not constituting (x) proceeds of the issuance of (or contributions in respect of) Equity Interests of such Person, (y) proceeds of the incurrence of Indebtedness (other than the incurrence of loans under the ABL Facility or extensions of credit under any other revolving credit or similar facility or other short-term Indebtedness) by such Person or any of its Restricted Subsidiaries or (z) proceeds of Dispositions and Casualty Events.

 

Investment ” shall mean, as to any Person, any direct or indirect acquisition or investment by such Person, whether by means of (a) the purchase or other acquisition of Equity Interests of another Person, (b) a loan, advance or capital contribution to, Guarantee or

 

24



 

assumption of Indebtedness of, or purchase or other acquisition of any other debt or interest in, another Person, (c) any Acquisition or (d) any other investment of money or capital in order to obtain a profitable return.  For purposes of covenant compliance, the amount of any Investment shall be the amount actually invested, without adjustment for subsequent increases or decreases in the value of such Investment.

 

IRS ” shall mean the United States Internal Revenue Service.

 

Joinder Agreement ” shall mean an agreement, in form satisfactory to the Administrative Agent, pursuant to which a Subsidiary becomes a party to, and bound by the terms of, this Agreement, the Facility Guaranty or the Security Agreement, as applicable.

 

Joint Lead Arrangers ” shall mean Goldman Sachs, CS Securities, MSSF, MLPFS and Barclays, in their capacities as joint bookrunners and joint lead arrangers.

 

Latest Maturity Date ” shall mean, at any date of determination, the latest maturity date applicable to any Class of Loans or Commitments with respect to such Loans or Commitments at such date of determination, including, for the avoidance of doubt, the latest maturity date of any Incremental Loans, Incremental Loan Commitments, Other Loans or Extended Loans, in each case, as extended from time to time in accordance with this Agreement.

 

Laws ” shall mean each international, foreign, Federal, state and local statute, treaty, rule, guideline, regulation, ordinance, code and administrative or judicial precedent or authority, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and each applicable administrative order, directed duty, request, license, authorization and permit of, and agreement with, any Governmental Authority, in each case whether or not having the force of law.

 

Lender Presentation ” shall mean the Lender Presentation, dated January 2013, included in the Borrower’s current report on form 8-K filed January 28, 2013.

 

Lenders ” shall mean (a) the Persons listed on Schedule 2.01 (other than any such Person that has ceased to be a party hereto pursuant to an Assignment and Acceptance) and (b) any Person that has become a party hereto pursuant to an Assignment and Acceptance.

 

LIBO Rate ” shall mean, with respect to any Eurodollar Borrowing for any Interest Period, the rate per annum determined by the Administrative Agent at approximately 11:00 a.m. (London time) on the date that is two Business Days prior to the commencement of such Interest Period by reference to the British Bankers’ Association Interest Settlement Rates for deposits in Dollars (as set forth by any service selected by the Administrative Agent that has been nominated by the British Bankers’ Association as an authorized information vendor for the purpose of displaying such rates) for a period equal to such Interest Period; provided that, to the extent that an interest rate is not ascertainable pursuant to the foregoing provisions of this definition, the “LIBO Rate” shall be the interest rate per annum determined by the Administrative Agent to be the average of the rates per annum at which deposits in Dollars are offered for such relevant Interest Period to major banks in the London interbank market in London, England by the Administrative Agent at approximately 11:00 a.m. (London time) on the date that is two Business Days prior to the beginning of such Interest Period.

 

25



 

Lien ” shall mean (a) any mortgage, deed of trust, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge, or preference, priority or other security interest or preferential arrangement in the nature of a security interest of any kind or nature whatsoever (including any conditional sale, any lease or other agreement giving rise to a Capital Lease Obligation, Synthetic Lease Obligation, or other title retention agreement, any easement, right of way or other encumbrance on title to real property, and any financing lease having substantially the same economic effect as any of the foregoing) and (b) in the case of securities, any purchase option, call or similar right of a third party with respect to such securities.

 

Loan Documents ” shall mean this Agreement, the Intercreditor Agreement, the Security Documents, each Incremental Loan Assumption Agreement, the promissory notes, if any, executed and delivered pursuant to Section 2.04(e) and any other document executed in connection with any of the foregoing and together with all schedules, exhibits, annexes and other attachments thereto.

 

Loan Parties ” shall mean, collectively, the Borrower and the Guarantors.

 

Loans ” shall mean term loans made by the Lenders to the Borrower pursuant to Section 2.01.  Unless the context shall otherwise require, the term “Loans” shall include any Incremental Loans and any Extended Loans.

 

Master Agreement ” shall have the meaning assigned to such term in the definition of “Swap Contract.”

 

Material Adverse Effect ” shall mean (a) a material adverse change in, or a material adverse effect upon, the operations, business, properties or condition (financial or otherwise) of the Borrower and its Subsidiaries taken as a whole; (b) a material impairment of the ability of the Loan Parties to perform their obligations under the Loan Documents; or (c) a material impairment of the rights and remedies of the Administrative Agent or the Lenders under the Loan Documents or a material adverse effect upon the legality, validity, binding effect or enforceability against the Loan Parties of the Loan Documents.  In determining whether any individual event would result in a Material Adverse Effect, notwithstanding that such event in and of itself does not have such effect, a Material Adverse Effect shall be deemed to have occurred if the cumulative effect of such event and all other then existing events described in the applicable provision since the applicable date would result in a Material Adverse Effect.

 

Material Contract ” shall mean with respect to any Loan Party, each contract or agreement to which such Loan Party is a party that is deemed to be a material contract or material definitive agreement under any Securities Laws applicable to such Loan Party, including, without limitation, the types of contracts specified in item 601(b)(10)(ii) of Regulation S-K, and in the event that at any time hereafter the Borrower ceases to be required to comply with the Securities Laws, then the same definitions shall continue to apply for purposes of this Agreement and the other Loan Documents.

 

Material Indebtedness ” shall mean the Indebtedness evidenced by or arising under the Existing Debt Documents and any other Indebtedness (other than the Obligations) of the Loan

 

26



 

Parties in an aggregate principal amount exceeding $50,000,000.  For purposes of determining the amount of Material Indebtedness at any time, (a) the amount of the obligations in respect of any Swap Contract at such time shall be calculated at the Swap Termination Value thereof, (b) undrawn committed or available amounts shall be included and (c) all amounts owing to all creditors under any combined or syndicated credit arrangement shall be included.

 

Material Real Estate Asset ” means Real Estate (other than an operating leasehold interest) having a Value in excess of $1,000,000, as determined in good faith by the Borrower, the acquiring Loan Party, E&Y or another independent, third-party expert reasonably satisfactory to the Administrative Agent, as of the date of the acquisition thereof.

 

Material Related Collateral Location ” means any Real Estate, other than a Real Estate Collateral Property, owned, leased or operated by the Borrower or any of its Subsidiaries if the Value of the property, plant and equipment located at such Real Estate on the Borrower’s or such Subsidiary’s financial statements exceeds $150,000 as of the Closing Date or as of the acquisition thereof.

 

Maturity Date ” shall mean the earlier of (a) the Fixed Maturity Date and (b) the Springing Maturity Date.

 

Maximum Rate ” shall have the meaning assigned to such term in Section 9.09.

 

Medicaid ” shall mean the health care financial assistance program jointly financed and administered by the Federal and State governments under Title XIX of the Social Security Act.

 

Medicare ” shall mean the health care financial assistance program under Title XVIII of the Social Security Act.

 

MLPFS ” shall mean Merrill Lynch, Pierce, Fenner & Smith Incorporated and its successors and assigns.

 

MMMF ” shall having the meaning assigned to such term in the Escrow Agreement.

 

Moody’s ” shall mean Moody’s Investors Service, Inc., or any successor thereto.

 

Moran Foods ” shall mean Moran Foods, LLC, a Missouri limited liability company.

 

Moran Sale ” shall mean a sale, transfer or other disposition (including by way of merger, casualty, condemnation or otherwise) of all or substantially all of the assets or property of Moran Foods and its Subsidiaries (whether in one transaction or a series of related transactions) or of all of the outstanding Equity Interests of Moran Foods; provided that (a) no Default or Event of Default shall have occurred or be continuing or shall occur as a result of any such transaction, (b) the Borrower shall have delivered to the Administrative Agent opinions of counsel, in each case in form and substance reasonably satisfactory to the Administrative Agent, opining that the occurrence of any such transaction (i) will not conflict with the SVU Indenture, the SVU 2016 Notes or any other Material Indebtedness, (ii) will not result in any “change of control” offer or similar offer being required to be made under the SVU Indenture, the SVU 2016 Notes or any other any Material Indebtedness and (iii) will not result in the application of

 

27



 

any of the consolidation, merger, conveyance, transfer or lease of assets (however so denominated) provisions of the SVU Indenture, the SVU 2016 Notes or any other Material Indebtedness, (c) to the extent applicable, the Borrower shall apply the Net Cash Proceeds thereof in accordance with Section 2.13, (d) the consideration paid in connection therewith shall be paid contemporaneously with consummation thereof (other than consideration received in connection with customary earn-out arrangements (calculated as of the date of such Moran Sale as the present value of expected future payments in respect thereof) in an amount not to exceed 25% of the aggregate consideration therefor) and shall be in an amount not less than the fair market value of the property disposed of and (e) the consideration paid in connection therewith shall be at least 75% in cash or Cash Equivalents.

 

Mortgage ” shall mean any mortgage, deed of trust or leasehold mortgage delivered pursuant to clause (a) of the definition of “Term Loan Priority Collateral Requirements” encumbering any Real Estate Collateral Property, given by the Loan Party owning or leasing such Real Estate Collateral Property in favor of the Collateral Agent, substantially in the form of Exhibit H hereto or such other form reasonably satisfactory to the Administrative Agent, together with such schedules and including such provisions as shall be necessary to conform such document to applicable Laws or as shall be customary under applicable Laws.

 

MSSF ” shall mean Morgan Stanley Senior Funding, Inc. and its successors and assigns.

 

Multiemployer Plan ” shall mean any employee benefit plan of the type described in Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA Affiliate makes or is obligated to make contributions, or during the preceding six plan years, has made or been obligated to make contributions.

 

NAI ” shall mean New Albertson’s, Inc., an Ohio corporation.

 

NAI Indenture ” shall mean the Indenture, dated as of May 1, 1992, between NAI and U.S. Bank National Association, as trustee, as successor trustee to Morgan Guaranty Trust Company of New York, as supplemented by Supplemental Indenture No. 1 dated as of May 7, 2004, Supplemental Indenture No. 2 dated as of June 1, 2006, and Supplemental Indenture No. 3 dated as of December 29, 2008, and as further amended, supplemented or otherwise modified (including any such modification contained in any notes, officer’s certificates or other operative documents) as of the Closing Date.

 

NAI Notes ” shall have the meaning assigned to such term in the definition of “NAI Sale”.

 

NAI Sale ” shall mean the purchase by Buyer of all of the issued and outstanding shares of NAI from the Borrower (together with the subsequent transfer pursuant to Section 1.5 of the Acquisition Agreement by the Borrower to NAI of (x) the equity interests in US Satellite Corporation, Inc. and (y) the FCC-issued licenses and permits set forth in Section 5.23 of the Seller Disclosure Letter to the Acquisition Agreement as in effect on the date hereof, in each case as to such equity interests and licenses and permits retained by the Borrower solely for the purpose of obtaining necessary regulatory consents) in consideration of, among other things, not less than $100,000,000 in cash and Cash Equivalents, as adjusted in accordance with the

 

28



 

Acquisition Agreement, Buyer shall acquire NAI subject to certain direct and indirect liabilities, including those arising under the notes (including, without limitation, NAI’s 7.25% Notes due 2013, 7.45% Debentures due 2029, 7.75% Debentures due 2026, 8.70% Debentures due 2030, 8.00% Debentures due 2031 and 6.34-7.15% Medium Term Notes due 2013-2028) issued by NAI pursuant to the NAI Indenture (the “ NAI Notes ”), and the notes (including, without limitation, ASC’s 7.90% Debentures due 2017, 8.00% Debentures due 2026, 7.50% Debentures due 2037 and 7.10% Medium Term Notes due 2028) issued by ASC under the ASC Indenture (the “ ASC Notes ”), certain capital leases and all workers’ compensation claims (and including any obligations to provide any form of security for the benefit of the California Office of Self Insured Funds, the California Department of Industrial Relations or the California Self-Insured Security Fund or similar entities) relating to banners operated by NAI and its Subsidiaries (the “ NAI Workers’ Compensation Liabilities ”), and the Borrower and its Subsidiaries after giving effect to the NAI Sale shall have their liability eliminated, limited or indemnified in a manner reasonably satisfactory to the Joint Lead Arrangers in connection with the NAI Workers’ Compensation Liabilities (and such obligations to provide any form of security) and the ASC Notes. In connection with the NAI Sale, the Buyer and the Borrower will enter into transition services agreements and a cross-license agreement as contemplated by the Acquisition Agreement.

 

NAI Workers’ Compensation Liabilities ” shall have the meaning assigned to such term in the definition of “NAI Sale”.

 

Net Cash Proceeds ” shall mean (a) with respect to any Term Loan Priority Collateral Sale, Other Asset Sale or Moran Sale, the cash proceeds (including cash proceeds subsequently received (as and when received) in respect of noncash consideration initially received), net of (i) selling expenses (including reasonable broker’s fees or commissions, legal fees, transfer and similar taxes and the Borrower’s good faith estimate of income taxes paid or payable in connection with such sale), (ii) amounts provided as a reserve, in accordance with GAAP, against any liabilities under any indemnification obligations or purchase price adjustment associated with such Term Loan Priority Collateral Sale or Other Asset Sale ( provided that, to the extent and at the time any such amounts are released from such reserve, such amounts shall constitute Net Cash Proceeds) and (iii) the principal amount, premium or penalty, if any, interest and other amounts on any Indebtedness which is secured by the asset sold in such Term Loan Priority Collateral Sale or Other Asset Sale by a Lien permitted hereunder which, to the extent the Administrative Agent has a Lien on such asset, is senior to the Administrative Agent’s Lien on such asset and which is required to be repaid with such proceeds (excluding any such Indebtedness assumed by the purchaser of such asset); and (b) with respect to any issuance or incurrence of Indebtedness (other than Permitted Indebtedness) or Equity Interests (other than Equity Interests issued to directors, officers or employees of the Borrower or its Subsidiaries), the cash proceeds thereof, net of all taxes and customary fees, commissions, costs and other expenses incurred in connection therewith.

 

New Valuation ” shall mean any valuation of a Substitute Property, a Replaced Property, a Released Property or an Additional Property conducted by E&Y or another independent, third-party expert reasonably satisfactory to the Administrative Agent provided in connection with the applicable Term Loan Priority Collateral Substitution, Term Loan Priority Collateral Release or Term Loan Priority Collateral Addition for which the New Valuation Conditions have been met.

 

29



 

New Valuation Conditions ” shall mean with respect to a Substitute Property, a Replaced Property, a Released Property (other than in connection with a Permitted Disposition) or an Additional Property consisting of Real Estate, such property (i) has not been Valued during the year preceding the date of the Restated Collateral List provided in connection with the applicable Term Loan Priority Collateral Substitution, Term Loan Priority Collateral Release or Term Loan Priority Addition and is Valued at more than $4,000,000 pursuant to the most recent Valuation thereof or (ii) has not been Valued; provided that, notwithstanding the foregoing, the New Valuation Conditions shall be deemed to be satisfied at any time after the aggregate Value of all Substitute Properties and Additional Properties that have been added to the Term Loan Priority Collateral during the current Fiscal Year without being Valued at any time in such Fiscal Year exceeds $10,000,000.

 

Non-Extended Loans ” shall have the meaning assigned to such term in Section 2.23.

 

NPL ” shall mean the National Priorities List under CERCLA.

 

Obligations ” shall mean all obligations, liabilities and indebtedness of every kind, nature and description owing by any Loan Party to any Secured Party, including principal, interest, charges, fees, premiums, indemnities and expenses, however evidenced, whether as principal, surety, endorser, guarantor or otherwise, arising under any of the Loan Documents, whether now existing or hereafter arising, whether arising before, during or after the initial or any renewal term of the Loan Documents or after the commencement of any case with respect to any Loan Party under the Bankruptcy Code or any other Debtor Relief Law or any other insolvency proceeding (and including, without limitation, any principal, interest, fees, costs, expenses and other amounts which would accrue and become due but for the commencement of such case, whether or not such amounts are allowed or allowable in whole or in part in such case or similar proceeding), whether direct or indirect, absolute or contingent, joint or several, due or not due, primary or secondary, liquidated or unliquidated, secured or unsecured.

 

“Occurrence Update Schedule” shall mean each of Schedule 3.01 (Loan Parties Organizational Information), 3.06 (Litigation), 3.09 (Environmental Matters), 3.10 (for primary casualty insurance policies that cover Collateral), 3.13 (Subsidiaries; Other Equity Investments), 3.17 (Intellectual Property Matters) and 3.21(b) (Credit Card Agreements).

 

OFAC ” shall have the meaning assigned to such term in Section 3.31.

 

Offer ” shall have the meaning assigned to such term in the Tender Offer Agreement.

 

OID ” shall have the meaning assigned to such term in Section 2.22(b).

 

Organization Documents ” shall mean, (a) with respect to any corporation, the certificate or articles of incorporation and the bylaws (or equivalent or comparable constitutive documents with respect to any non-U.S. jurisdiction); (b) with respect to any limited liability company, the certificate or articles of formation or organization and operating agreement; (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation or organization and any agreement, instrument, filing or notice with respect thereto filed in connection with its formation or organization with the applicable Governmental Authority in the jurisdiction of its formation or

 

30



 

organization and, if applicable, any certificate or articles of formation or organization of such entity; and (d) in each case, all shareholder or other equity holder agreements, voting trusts and similar arrangements to which such Person is a party.

 

Original Loans ” shall have the meaning assigned to such term in Section 2.23.

 

Other Asset Sale ” shall mean a sale, transfer or other disposition (including by way of merger, casualty, condemnation or otherwise) that is not a Permitted Disposition pursuant to clauses (a) through (n) of the definition thereof or clause (p) of the definition thereof, of any assets or property of the Borrower and the Restricted Subsidiaries other than a Disposition consisting solely of Term Loan Priority Collateral or Equity Interests of any Subsidiary to the extent the assets of such Subsidiary consist solely of Term Loan Priority Collateral.

 

Other Loans ” shall have the meaning assigned to such term in Section 2.22(a).

 

Other Taxes ” shall mean any and all present or future stamp or documentary Taxes or any other excise or property Taxes, charges or similar levies arising from any payment made under any Loan Document or from the execution, delivery or enforcement of, or otherwise with respect to, any Loan Document.

 

PACA ” shall mean the Perishable Agricultural Commodities Act, 1930, as amended, 7 U.S.C. § 499a et. seq. , as the same now exists or may hereafter from time to time be amended, modified, recodified or supplemented, together with all rules and regulations thereunder.

 

Participation Fees ” shall have the meaning assigned to such term in Section 2.05.

 

PBGC ” shall mean the Pension Benefit Guaranty Corporation or any entity succeeding to any or all of its functions under ERISA.

 

PBGC Agreement ” shall mean that certain term sheet by and among AB Acquisition LLC, the Borrower and the PBGC, dated January 9, 2013, and any subsequent agreement entered into pursuant thereto.

 

PCAOB ” shall mean the Public Company Accounting Oversight Board.

 

Pension Expense ” shall mean the actual pension expense for the applicable period of the Borrower and the Restricted Subsidiaries pursuant to the profit and loss statement charge (or benefit) with respect to such pension funding obligations for such period.

 

Pension Plan ” shall mean any “employee pension benefit plan” (as such term is defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is subject to Title IV of ERISA and is sponsored or maintained by the Borrower or any ERISA Affiliate or to which Borrower or any ERISA Affiliate contributes or has an obligation to contribute, or in the case of a multiple employer or other plan described in Section 4064(a) of ERISA, has made contributions at any time during the immediately preceding six plan years.

 

Perfection Certificate ” shall mean the Perfection Certificate substantially in the form of Exhibit E hereto.

 

31



 

“Periodic Update Schedule” shall mean each of Schedule 3.13 (as to Immaterial Subsidiaries and Unrestricted Subsidiaries), 3.08(b) (Owned Real Estate), 3.08(c) (Leased Real Estate), 3.10 (for policies other than primary casualty policies that cover Collateral) and 3.21(a) (Demand Deposit Accounts).

 

Permitted Acquisition ” shall mean an Acquisition permitted pursuant to Section 6.02(b).

 

Permitted Disposition ” shall mean any of the following:

 

(a)  Dispositions of Inventory in the ordinary course of business (which for this purpose does not include any Disposition in connection with a Store closing or sale of a Store location);

 

(b)  bulk sales of the Inventory of a Loan Party not in the ordinary course of business in connection with Store closings or the conversions of a Store to a licensee operated store or a joint venture, at arm’s length, provided that the number of such Store closings and conversions and related sales of Inventory, minus the number of new Store locations opened during the same period, shall not exceed in any Fiscal Year of the Borrower and its Subsidiaries, seven and one-half percent (7.5%) of the number of the Loan Parties’ Stores as of the beginning of such Fiscal Year and shall not exceed, in the aggregate from and after the Closing Date, fifteen percent (15.0%) of the number of the Loan Parties’ Stores in existence as of the Closing Date);

 

(c)  non-exclusive licenses or sublicenses of Intellectual Property of a Loan Party or any of its Subsidiaries in the ordinary course of business;

 

(d)  licenses for the conduct of licensed departments within the Loan Parties’ Stores in the ordinary course of business;

 

(e)  Dispositions in the ordinary course of business of Equipment that (i) is substantially worn, damaged or obsolete and the Disposition of which does not detract from the value of the Related Real Estate Collateral in any material respect or (ii) is replaced with similar property having at least equivalent value;

 

(f)  Dispositions among the Loan Parties or by any Restricted Subsidiary to a Loan Party; provided , that with respect to any such Disposition of Real Estate Collateral Property (a) the Borrower provides at least 15 Business Days prior written notice thereof (or such shorter notice as the Administrative Agent may approve) identifying such Real Estate Collateral Property, (b) such Real Estate Collateral Property is Disposed of subject in all respects to the Mortgage thereon and such Mortgage remains a valid first priority lien on such Real Estate Collateral Property so Disposed of and (c) the Borrower shall have delivered to the Administrative Agent such documents and other information evidencing that such Real Estate Collateral Property was so Disposed of subject to the Mortgage thereon as the Administrative Agent may reasonably request;

 

(g)  Dispositions by an Excluded Subsidiary to an Excluded Subsidiary or to a Loan Party;

 

(h)  (i) Dispositions of interests in Real Estate that constitute or create Permitted Encumbrances pursuant to clauses (f), (g) and (h) of the definition thereof (but only to the extent

 

32



 

thereof); (ii) Dispositions in the ordinary course of business of fixtures that (A) are substantially worn, damaged or obsolete and the Disposition of which does not detract from the value of the Real Estate Collateral Properties in any material respect or (B) are replaced with similar property having at least equivalent value; (iii) with respect to Real Estate that does not constitute Term Loan Priority Collateral, sale and leaseback transactions pursuant to leases on market terms, so long as, as of the date of such sale and after giving effect thereto, (x) no Default or Event of Default shall exist or have occurred and be continuing and (y) the consideration paid to such Loan Party in connection therewith shall be paid contemporaneously with the transaction (other than consideration received in connection with customary earn-out arrangements in an amount (calculated as of the date of such Disposition as the present value of expected future payments in respect thereof) not to exceed 25% of the aggregate consideration therefor) and shall be in an amount not less than the fair market value of the property disposed of and shall be at least 75% in cash or Cash Equivalents; and (iv) assignments of leases, subleases, licenses, and sublicenses, that do not constitute Term Loan Priority Collateral and that, in the reasonable, good faith judgment of a Loan Party, are no longer useful or necessary in its business or that of any Subsidiary;

 

(i)  Dispositions by any Loan Party constituting a Customer Support Transaction; provided , that the aggregate exposure of the Loan Parties under or pursuant to all of such Customer Support Transactions, when combined with the aggregate exposure of the Loan Parties under or pursuant to Investments made pursuant to clause (n) of the definition of “Permitted Investments” and Indebtedness incurred pursuant to clause (j) of the definition of “Permitted Indebtedness”, shall not exceed $250,000,000 at any time outstanding; provided , further , that, as to any such Disposition, each of the following conditions is satisfied:

 

(i) as of the date of any such Disposition, and in each case after giving effect thereto, no Default or Event of Default shall have occurred and be continuing;

 

(ii) the Person receiving the property subject to such Disposition shall be engaged in a business related, ancillary or complementary to the business of the Borrower permitted by this Agreement; and

 

(iii) the Administrative Agent shall have received a Customer Support Transaction Report once each month;

 

(j)  Dispositions by any Loan Party of Intellectual Property; provided that, (i) such Intellectual Property is no longer used or useful in the business of any Loan Party or Restricted Subsidiary, (ii) such Intellectual Property is not otherwise material to the business of any Loan Party or any of its Affiliates or Subsidiaries, (iii) such Intellectual Property does not have material value and (iv) no Default or Event of Default shall have occurred and be continuing as of the date of such Disposition;

 

(k)  sales of Prescription Files in the ordinary course of business, other than in connection with the sale of a Store location where such Prescription Files are maintained or in connection with the sale of other assets (and in such case, clause (o) of this definition shall be applicable), (i) in connection with the sale of one or more Stores or (ii) in the ordinary course of business; provided , that as to any such sale pursuant to this clause (ii), each of the following conditions is

 

33



 

satisfied: (A) the appraised value (as determined pursuant to the ABL Credit Agreement) of all Prescription Files disposed of pursuant to this clause (ii) in any one Fiscal Year shall not exceed $12,500,000 and (B) as of the date of any such sale and after giving effect thereto, no Default or Event of Default shall have occurred and be continuing;

 

(l)  the NAI Sale;

 

(m)  the issuance and sale by any Loan Party or Restricted Subsidiary of Equity Interests of such Loan Party or Restricted Subsidiary after the date hereof; provided that (i) such Loan Party or Restricted Subsidiary shall not be required to pay any cash dividends or repurchase or redeem such Equity Interests or make any other payments in respect thereof, except as otherwise permitted in Section 6.06, (ii) as of the date of such issuance and sale and after giving effect thereto, no Default or Event of Default shall have occurred and be continuing and (iii) no wholly-owned Restricted Subsidiary that is a Loan Party shall issue and sell Equity Interests to any Person other than another Loan Party;

 

(n)  Dispositions pursuant to a Permitted Store Swap Transaction or consisting of transfers described in clause (s) of the definition of Permitted Encumbrances;

 

(o)  sales or other Dispositions (including, for the avoidance of doubt, Dispositions of Intellectual Property, but excluding any Moran Sale) of assets of Loan Parties not otherwise subject to the provisions set forth in this definition, provided that, as to any such sale or other Disposition, each of the following conditions is satisfied:

 

(i) the consideration paid in connection therewith shall be paid contemporaneously with consummation of the transaction (other than consideration received in connection with customary earn-out arrangements in an amount (calculated as of the date of such Disposition as the present value of expected future payments in respect thereof) not to exceed 25% of the aggregate consideration therefor), shall be in an amount not less than the fair market value of the property disposed of and shall be at least 75% in cash or Cash Equivalents;

 

(ii) if such sale or Disposition is a sale and leaseback transaction, such transaction is permitted under clause (h)(iii) above;

 

(iii) such sale or Disposition does not involve the sale or other disposition of a minority Equity Interest in any Restricted Subsidiary or Accounts of any Loan Party;

 

(iv) in the case of any (A) Term Loan Priority Collateral Sale or (B) Other Asset Sale (whether a single transaction or a series of related transactions) including Term Loan Priority Collateral for which the Net Cash Proceeds (before deducting the Value of any Term Loan Priority Collateral included therein) exceed $5,000,000, (x) the ratio of the aggregate Value of the Term Loan Priority Collateral (giving pro forma effect to any permitted reinvestment of proceeds) to the amount of outstanding Obligations on a pro forma basis after giving effect to such Term Loan Priority Collateral Sale or Other Asset Sale and any related prepayments of the Loans (using such Net Cash Proceeds that the Borrower has elected not to exercise its right of reinvestment pursuant to Section 2.13(a) or (b) with respect thereto) shall not be less than the ratio of the aggregate Value of the

 

34



 

Term Loan Priority Collateral to the amount of outstanding Obligations prior to giving effect to such Term Loan Priority Collateral Sale or Other Asset Sale and (y) in the case of a Term Loan Priority Collateral Sale or Other Asset Sale with respect to which the Borrower has elected to exercise its right of reinvestment pursuant to Section 2.13(a) or (b), (i) the Related Real Estate Collateral on a pro forma basis after giving effect to such Term Loan Priority Collateral Sale or Other Asset Sale and such reinvestment shall not constitute more than 45% of the aggregate Value of the Real Estate Collateral Properties and the Related Real Estate Collateral and (ii) the owned Real Estate Collateral Properties on a pro forma basis after giving effect to such Term Loan Priority Collateral Sale or Other Asset Sale and such reinvestment shall constitute at least 50% of the aggregate Value of the Real Estate Collateral Properties and the Related Real Estate Collateral; and

 

(v) as of the date of any such sale or Disposition, and in each case after giving effect thereto, no Default or Event of Default shall have occurred and be continuing; and

 

(p)  any Moran Sale.

 

Permitted Encumbrances ” shall mean:

 

(a)  Liens imposed by law for Taxes that are not yet delinquent (or remain payable without penalty) or are being contested in compliance with Section 5.04; provided that adequate reserves with respect thereto are maintained on the books of the relevant Loan Party, to the extent required by GAAP;

 

(b)  carriers’, warehousemen’s, mechanics’, materialmen’s, landlords’, repairmen’s and other like Liens imposed by applicable Law, arising in the ordinary course of business and securing obligations that are not delinquent (or remain payable without penalty) or are being contested in compliance with Section 5.04 (other than clause (iv) thereof);

 

(c)  pledges and deposits of cash made in the ordinary course of business in compliance with workers’ compensation, unemployment insurance and other social security laws or regulations, other than any Lien imposed by ERISA;

 

(d)  deposits of cash to secure the performance of bids, trade contracts, government contracts, leases (other than Indebtedness), statutory obligations, surety and appeal bonds, performance bonds and to secure liability to insurance carriers, and other obligations of a like nature incurred in the ordinary course of business;

 

(e)  Liens in respect of judgments that would not constitute an Event of Default hereunder;

 

(f)  (i) easements, covenants, conditions, restrictions, building code laws, zoning restrictions, rights-of-way and similar encumbrances on real property imposed by law or arising in the ordinary course of business and such other minor title defects or survey matters that are disclosed by current surveys (or would have been disclosed by current surveys if the same were not obtained); provided , that in each case, the same does not (A) secure any monetary obligation that is not Permitted Indebtedness, (B) materially detract from the value of the affected Real

 

35



 

Estate Collateral Property, (C) materially detract from the value of the affected property as a going concern in connection with such Loan Party’s business or (D) materially interfere with the ordinary conduct of business of any Loan Party; and (ii) Liens and encumbrances against or upon any property as shown on or pursuant to the express terms of a document shown on (A) Schedule B-I or B-II of the Title Insurance Policies insuring the Mortgages, or (B) surveys of the Real Estate Collateral Properties to the extent such surveys were provided to the Collateral Agent pursuant to the Term Loan Priority Collateral Requirements;

 

(g)  interests or title of lessors, sublessors, licensors or sublicensors under any lease or license otherwise permitted pursuant to this Agreement;

 

(h)  Leases, subleases, licenses, sublicenses and similar encumbrances on Real Estate, Intellectual Property and other property, or interests therein, arising in the ordinary course of business (or in connection with a Store closure permitted under this Agreement) for fair market value; provided that, in each case, if such Real Estate, Intellectual Property or other property is owned by a Loan Party, such lease, sublease, license, sublicense, or similar encumbrance does not secure any monetary obligation that is not Permitted Indebtedness, and does not materially detract from the value of the affected property operated by a Loan Party as a going concern in connection with such Loan Party’s business or materially interfere with the ordinary conduct of business of any Loan Party or any Store closures otherwise permitted under this Agreement; provided , further , that to the extent affected Real Estate constitutes Real Estate Collateral Property, such leases, subleases, licenses, sublicenses, and similar encumbrances do not also materially detract from the value of such Real Estate Collateral Property;

 

(i)  Liens existing on the date hereof and listed on Schedule 6.01 and any renewals or extensions thereof; provided that (i) the property covered thereby is not changed, (ii) the amount secured or benefited thereby is not increased, (iii) the direct or any contingent obligor with respect thereto is not changed and (iv) any renewal or extension of the obligations secured or benefited thereby is otherwise permitted hereunder;

 

(j)  Liens on fixed or capital assets acquired or constructed by any Loan Party which secure Indebtedness permitted under clauses (c) or (f) of the definition of “Permitted Indebtedness” so long as (i) such Liens and the Indebtedness secured thereby are incurred prior to or within 180 days after such acquisition, improvement or construction, (ii) the principal amount of the Indebtedness secured thereby does not exceed the cost of acquisition and construction of such fixed or capital assets (including any shipping and installation costs) and (iii) such Liens shall not extend to any other property or assets of the Loan Parties other than proceeds of such secured property or assets;

 

(k)  Liens in favor of the Administrative Agent;

 

(l)  Liens of landlords if the leases are not in default in respect of rent, except where a Collateral Access Agreement and Landlord Waiver is required by Section 5.17;

 

(m)  possessory Liens in favor of brokers and dealers arising in connection with the acquisition or disposition of Permitted Investments; provided that such Liens (i) attach only to such Permitted Investments and (ii) secure only obligations incurred in the ordinary course and

 

36



 

arising in connection with the acquisition or disposition of such Permitted Investments and not any obligation in connection with margin financing;

 

(n)  banker’s Liens, Liens in favor of securities intermediaries, rights of setoff or similar rights and remedies as to deposit accounts or securities accounts or other funds maintained with depository institutions or securities intermediaries in the ordinary course of business of the maintenance and operation of such accounts;

 

(o)  Liens arising from precautionary UCC filings regarding “true” operating leases or, to the extent permitted under the Loan Documents, the consignment of goods to a Loan Party;

 

(p)  Liens on property (other than ABL Priority Collateral) in existence at the time such property is acquired pursuant to a Permitted Acquisition or on such property of a Subsidiary of a Loan Party in existence at the time such Subsidiary is acquired pursuant to a Permitted Acquisition; provided that such Liens are not incurred in connection with or in anticipation of such Permitted Acquisition and do not attach to any other assets of any Loan Party or any Subsidiary;

 

(q)  Liens or rights of setoff against credit balances of the Borrower with Credit Card Issuers or Credit Card Processors or amounts owing by such Credit Card Issuers or Credit Card Processors to the Borrower in the ordinary course of business, but not Liens on or rights of setoff against any other property or assets of the Borrower pursuant to the Credit Card Agreements to secure the obligations of the Borrower to such Credit Card Issuers or Credit Card Processors as a result of fees and chargebacks;

 

(r)  Liens on inventory in favor of customs and revenues authorities imposed by applicable Law arising in the ordinary course of business in connection with the importation of goods and securing obligations not secured by deposits permitted pursuant to clause (d) of this definition, (i) that are being contested in good faith by appropriate proceedings, (ii) as to which the applicable Loan Party or Subsidiary has set aside on its books adequate reserves with respect thereto in accordance with GAAP and (iii) which contest effectively suspends collection of the contested obligation and enforcement of any Lien securing such obligation;

 

(s)  transfers of any receivables not included in the Borrowing Base (as defined in the ABL Credit Agreement) to secure any receivables financing that constitutes Permitted Indebtedness under clause (k) of the definition thereof;

 

(t)  Liens in favor of the ABL Facility Agent in and on the ABL Priority Collateral to secure the ABL Facility and in and on the Term Loan Priority Collateral to secure the ABL Debt; provided that such Liens are at all times subject to the terms of the Intercreditor Agreement;

 

(u)  Leases and licenses constituting Permitted Dispositions; and

 

(v)  other Liens on assets (other than Term Loan Priority Collateral) to secure obligations permitted hereunder that do not exceed $30,000,000 at any time outstanding.

 

37



 

Permitted Indebtedness ” shall mean each of the following, so long as no Default or Event of Default exists or would arise from the incurrence thereof:

 

(a)  Indebtedness outstanding on the date hereof and listed on Schedule 6.03 hereto and any Permitted Refinancing Indebtedness with respect thereto;

 

(b)  (i) unsecured Indebtedness of any Loan Party to any other Loan Party or (ii) unsecured Indebtedness of any Loan Party or a Restricted Subsidiary to any Restricted Subsidiary that is not a Loan Party arising in the ordinary course of their respective businesses or conducted on the date hereof pursuant to the cash concentration and disbursement practices of the Lead Borrower and its Subsidiaries, provided, that, as to such Indebtedness or other obligations of a Loan Party to a Restricted Subsidiary that it not a Loan Party, (A) will be subordinated in right of payment to the payment in full of the Obligations on terms and conditions reasonably satisfactory to Administrative Agent pursuant to a subordination agreement to be delivered to Administrative Agent within 30 days after the Closing Date (or such longer period of time as the Administrative Agent may agree), (B) repayments of such Indebtedness or other obligations shall be permitted in the ordinary course of their businesses consistent with and pursuant to the cash concentration and disbursement practices of the Borrower and its Subsidiaries as conducted on the date hereof, so long as no Specified Event of Default exists or has occurred and (C) Borrower shall cause any Restricted Subsidiary that is not a Loan Party not to exercise any legal remedies to enforce any of the Indebtedness or other obligations owed to it;

 

(c)  without duplication of Indebtedness described in clause (f) of this definition, purchase money Indebtedness of any Loan Party incurred after the Closing Date to finance the acquisition of any fixed or capital assets, including Capital Lease Obligations and Synthetic Lease Obligations, and any Indebtedness assumed in connection with the acquisition of any such assets or secured by a Lien on any such assets prior to the acquisition thereof, any earn-out obligations that constitute Indebtedness incurred in a transaction permitted hereunder and any Permitted Refinancing Indebtedness with respect thereto; provided , that the aggregate principal amount of Indebtedness permitted by this clause (c), when combined with the aggregate principal amount of all Indebtedness incurred pursuant to clause (f) of this definition, shall not exceed $300,000,000 at any time outstanding and in any event the incurrence of such Indebtedness permitted by this clause (c), when combined with the aggregate principal amount of all Indebtedness incurred pursuant to clause (f) of this definition, in any Fiscal Year (commencing with the Fiscal Year in which the Closing Date occurs) shall not exceed $100,000,000;

 

(d)  obligations (contingent or otherwise) of any Loan Party or any Subsidiary thereof existing or arising under any Swap Contract, provided that (i) such obligations are (or were) entered into by such Person in the ordinary course of business for the purpose of directly mitigating risks associated with fluctuations in interest rates or foreign exchange rates or commodity prices, and not for purposes of speculation or taking a “market view” and (ii) the aggregate Swap Termination Value of all such Swap Contracts, excluding Swap Contracts entered into to mitigate risks associated with interest on the Loans, shall not exceed $25,000,000 at any time outstanding;

 

38



 

(e)  contingent liabilities under surety bonds or similar instruments incurred in the ordinary course of business;

 

(f)  Indebtedness incurred after the Closing Date for the construction or acquisition or improvement of, or to finance or to refinance the construction, acquisition or improvement of, any Real Estate owned by any Loan Party (including therein any Indebtedness incurred in connection with sale and leaseback transactions permitted hereunder), provided , that the aggregate principal amount of Indebtedness permitted by this clause (f), when combined with the aggregate principal amount of all Indebtedness incurred pursuant to clause (c) of this definition, shall not exceed $300,000,000 at any time outstanding and in any event the incurrence of such Indebtedness permitted by this clause (f), when combined with the aggregate principal amount of all Indebtedness incurred pursuant to clause (c) of this definition, in any Fiscal Year (commencing with the Fiscal Year in which the Closing Date occurs) shall not exceed $100,000,000;

 

(g)  Indebtedness of any Person that becomes a Subsidiary of a Loan Party in a Permitted Acquisition, which Indebtedness is existing at the time such Person becomes a Subsidiary of a Loan Party (other than Indebtedness incurred in contemplation of such Permitted Acquisition);

 

(h)  the Obligations;

 

(i)  Indebtedness under the ABL Facility in an aggregate outstanding principal amount not to exceed $1,250,000,000 and any Permitted Refinancing Indebtedness with respect thereto;

 

(j)  Indebtedness of any Loan Party pursuant to Customer Support Transactions; provided , that as of the date of incurring such Indebtedness and after giving effect thereto, (i) the aggregate amount of the exposure of the Loan Parties under or pursuant to all Customer Support Transactions (including, without duplication, Customer Support Transactions constituting Permitted Indebtedness, Permitted Investments and Permitted Dispositions) shall not exceed $250,000,000, (ii) the aggregate amount of the exposure under any one of the types of transactions described in clauses (a), (b), (c) or (e) of the definition of “Customer Support Transactions” shall not exceed $150,000,000 at any time outstanding and (iii) no Default or Event of Default shall exist or have occurred and be continuing;

 

(k)  Obligations under, or the net investments outstanding pursuant to, a receivables financing involving transfers described in clause (s) of the definition of Permitted Encumbrances, in an amount not to exceed $200,000,000;

 

(l)  Indebtedness of the Borrower and the Restricted Subsidiaries for customary indemnification, purchase price adjustments or similar obligations (other than earn-outs and similar obligations) in each case in respect of the purchase price or other similar adjustments incurred in connection with a Permitted Acquisition or Permitted Disposition;

 

(m)  Indebtedness of a Loan Party as an account party in respect of letters of credit issued pursuant to a Commercial LC Facility (as defined in the ABL Credit Agreement), provided, in no event shall the aggregate amount of all such Indebtedness in respect of all Commercial LC Facilities exceed $15,000,000 at any time outstanding;

 

39



 

(n)  other Indebtedness of the Borrower or the Restricted Subsidiaries (in the case of Indebtedness of the Restricted Subsidiaries, in an aggregate principal amount not to exceed $150,000,000 at any time outstanding) and Permitted Refinancing Indebtedness in respect thereof, provided , that with respect to such Indebtedness or Permitted Refinancing Indebtedness, (i) as of the incurrence of such Indebtedness (A) both before and after giving effect thereto, no Default or Event of Default shall have occurred and be continuing and (B) the Total Leverage Ratio of the Borrower shall not exceed 4.00:1.00 on a pro forma basis after giving effect to such incurrence of Indebtedness and the use of proceeds thereof, (ii) such Indebtedness shall have a maturity date that is at least 91 days after the Latest Maturity Date, (iii) the terms and provisions of such Indebtedness (including any guarantees thereof) shall be, taken as a whole, not materially more favorable to the lenders than those contained in the Loan Documents, (iv) such Indebtedness does not provide for any early maturity (excluding any maturity as the result of an optional redemption by the issuer thereof or an event of default), is not mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, is not redeemable at the option of the holder thereof (other than pursuant to customary asset sale and change of control provisions that permit payment of the Obligations prior to the payment of such Indebtedness), in whole or in part, and does not require the payment of any cash dividend or any other scheduled amortization payments in excess of 1.00% of the principal amount thereof in any Fiscal Year constituting a return of capital, (v) if such Indebtedness is subordinated to any other Indebtedness of any Loan Party or its Subsidiaries it will be subordinated in right of payment to the Obligations on terms and conditions no less favorable to the Administrative Agent and the Lenders than any other holder of senior debt (and if such Indebtedness is owed to a seller of assets to the Borrower or any other Loan Party, then it shall be required to be subordinated in right of payment and shall be subordinated on terms and conditions reasonably satisfactory to the Administrative Agent) and (vi) the Administrative Agent shall have received 10 Business Days prior written notice of the incurrence of such Indebtedness and the transactions contemplated thereby and prior to the incurrence thereof shall have received such information with respect thereto and with respect to such related transactions as the Administrative Agent shall have reasonably requested; and

 

(o)  other Indebtedness of the Borrower and the Restricted Subsidiaries in an aggregate principal amount for all such Persons not to exceed $30,000,000 at any time outstanding.

 

Permitted Investments ” shall mean each of the following, so long as no Default or Event of Default exists or would arise from the making of such Investment:

 

(a)  readily marketable obligations issued or directly and fully guaranteed or insured by the United States of America or any agency or instrumentality thereof having maturities of not more than 360 days from the date of acquisition thereof; provided that the full faith and credit of the United States is pledged in support thereof;

 

(b)  commercial paper issued by any Person organized under the laws of any state of the United States and rated at least “Prime-1” (or the then equivalent grade) by Moody’s or at least “A-1” (or the then equivalent grade) by S&P, in each case with maturities of not more than 180 days from the date of acquisition thereof;

 

(c)  time deposits with, or insured certificates of deposit or bankers’ acceptances of, any commercial bank that (i) is a Lender or is organized under the laws of the United States, any

 

40



 

state thereof or the District of Columbia or is the principal banking subsidiary of a bank holding company organized under the laws of the United States, any state thereof or the District of Columbia, and is a member of the Federal Reserve System, (ii) issues (or the parent of which issues) commercial paper rated as described in clause (b) of this definition and (iii) has combined capital and surplus of at least $1,000,000,000, in each case with maturities of not more than 180 days from the date of acquisition thereof;

 

(d)  fully collateralized repurchase agreements with a term of not more than 30 days for securities described in clause (a) of this definition (without regard to the limitation on maturity contained in such clause) and entered into with a financial institution satisfying the criteria described in clause (c) of this definition or with any primary dealer and having a market value at the time that such repurchase agreement is entered into of not less than 100% of the repurchase obligation of such counterparty entity with whom such repurchase agreement has been entered into;

 

(e)  Investments, classified in accordance with GAAP as current assets of the Loan Parties, in any money market fund, mutual fund or other investment companies that are registered under the Investment Company Act of 1940, as amended, which are administered by financial institutions that have the highest rating obtainable from either Moody’s or S&P, and which invest solely in one or more of the types of securities described in clauses (a) through (d) of this definition;

 

(f)  Investments described on Schedule 6.02 (and in the case of Investments covered by the investment policy of Borrower included in Schedule 6.02 , Investments of such type), but not any additional payments to increase the amount thereof or other modification of the terms thereof that increases the obligations or liabilities of any Loan Party, except to increase the scheduled Investments or for other modifications of the terms thereof that increase the obligations or liabilities of any Loan Party if such increases in the aggregate do not exceed $10,000,000 in any Fiscal Year; provided , that with respect to other similar short-term investments entered into at the good faith discretion of the Borrower’s Chief Financial Officer or Treasurer as a means of managing the Borrower’s cash in the ordinary course of business and in accordance with the investment policy attached hereto as Schedule 6.02, in each case, such investments have been specifically identified in writing to the Administrative Agent and approved by it in its reasonable discretion;

 

(g)  (i) Investments by any Loan Party and its Restricted Subsidiaries in their respective Restricted Subsidiaries outstanding on the date hereof, (ii) additional Investments by any Loan Party or Restricted Subsidiary in Loan Parties (other than the Borrower), (iii) additional Investments by any Restricted Subsidiary that is not a Loan Party in other Subsidiaries that are not Loan Parties, (iv) additional investments consisting of loans or advances made by an Insurance Captive to the Borrower or any Subsidiary, or the purchase of any real or personal property from the Borrower or any Subsidiary and (v) additional Investments by any Loan Party in Subsidiaries that are not Loan Parties (determined without regard to any write-downs or write-offs of such Instruments) provided that, in the case of clause (v) as of the date of such Investment and after giving effect thereto, either (A) such Investment gave rise to Indebtedness of such Subsidiary to the Loan Parties of the type described in clause(b)(ii) of the definition of Permitted Indebtedness, or (B) such Investments, excluding those described in subclause (A), in the

 

41



 

aggregate do not to exceed $25,000,000 at any time outstanding; and provided further that in the case of clauses (i) and (ii), to the extent any Investment consists of Real Estate Collateral Property, (a) the Borrower provides at least 15 Business Days prior written notice thereof to the Administrative Agent (or such shorter notice as the Administrative Agent may approve) identifying such Real Estate Collateral Property, (b) such Real Estate Collateral Property is invested subject in all respects to the Mortgage thereon and such Mortgage remains a valid first priority lien on such Real Estate Collateral Property so invested and (c) the Borrower shall have delivered to the Administrative Agent such documents and other information evidencing that such Real Estate Collateral Property was invested subject to the Mortgage thereon as the Administrative Agent may reasonably request;

 

(h)  Investments consisting of extensions of credit in the nature of accounts receivable or notes receivable arising from the grant of trade credit in the ordinary course of business and Investments received in satisfaction or partial satisfaction thereof from financially troubled account debtors to the extent reasonably necessary in order to prevent or limit loss;

 

(i)  Guarantees constituting Permitted Indebtedness;

 

(j)  Investments by any Loan Party in Swap Contracts entered into in the ordinary course of business and for bona fide business (and not speculative) purposes to protect against fluctuations in interest rates in respect of the Obligations or other Permitted Indebtedness or fluctuations in commodity prices;

 

(k)  Investments received in connection with the bankruptcy or reorganization of, or settlement of delinquent accounts and disputes with, customers and suppliers, in each case in the ordinary course of business;

 

(l)  advances to officers, directors and employees of the Loan Parties and their Subsidiaries in the ordinary course of business in an amount not to exceed $1,000,000 to any individual at any time or in an aggregate amount not to exceed $2,000,000 at any time outstanding, for travel, entertainment, relocation and analogous ordinary business purposes;

 

(m)  Investments constituting a Permitted Store Swap Transaction;

 

(n)  Investments under or pursuant to Customer Support Transactions; provided , that (i) as of the date of any such Investment and after giving effect thereto, the aggregate amount of the exposure of the Loan Parties under or pursuant to all Customer Support Transactions (including, without duplication, Customer Support Transactions constituting Permitted Indebtedness, Permitted Investments and Permitted Dispositions) shall not exceed $250,000,000, (ii) the aggregate amount of the exposure of the Loan Parties under any one of the types of transactions described in clauses (a), (b), (c) or (e) of the definition of “Customer Support Transactions” shall not exceed $150,000,000, (iii) as of the date of such transaction and after giving effect thereto, no Default or Event of Default shall exist or have occurred and be continuing, (iv) the Administrative Agent shall have received (A) with respect to any such loan in an amount equal to or greater than $5,000,000, not less than two Business Days’ prior written notice thereof setting forth in reasonable detail the nature and terms thereof, (B) true, correct and complete copies of all agreements, documents and instruments relating thereto and (C) such

 

42



 

other information with respect thereto as the Administrative Agent may request, including a report once each month on the outstanding balance of all such Permitted Investments and including the then outstanding amount of the existing loans and advances by Loan Parties and Restricted Subsidiaries to third parties pursuant to this clause (n);

 

(o)  additional investments, loans and advances by the Borrower and the Restricted Subsidiaries so long as the aggregate amount invested, loaned or advanced pursuant to this clause (o) (determined without regard to any write-downs or write-offs of such investments, loans and advances) does not exceed an amount equal to the sum of (x) $60,000,000 plus (y) the Cumulative Credit Amount; provided that, at the time of such investment, loan or advance (i) both before and after giving effect thereto, no Default or Event of Default shall have occurred and be continuing, (ii) in the case of the foregoing clause (y), the Total Leverage Ratio of the Borrower shall not exceed 3.75:1:00 on a pro forma basis after giving effect to such payment and (iii) the Borrower shall have delivered a certificate of a Responsible Officer, certifying as to the satisfaction of the foregoing clauses (i) and (ii), in form and substance satisfactory to the Administrative Agent; and

 

(p)  additional investments made with the Net Cash Proceeds of a Moran Sale that are not required to be applied to prepay Loans hereunder pursuant to Section 2.13 or to prepay loans or cash collateralize letters of credit under the ABL Facility and reinvestments of the Net Cash Proceeds of a Term Loan Priority Collateral Sale or Other Asset Sale permitted pursuant to, and in compliance with, Section 2.13.

 

Permitted Refinancing Indebtedness ” shall mean Indebtedness of any Loan Party arising after the Closing Date issued in exchange for, or the proceeds of which are used to extend, refinance, replace or substitute for other Indebtedness (such extended, refinanced, replaced or substituted Indebtedness, the “ Refinanced Obligations ”) to the extent permitted hereunder; provided that:

 

(a)  the Administrative Agent shall have received not less than 10 Business Days’ prior written notice of the intention to incur such Indebtedness, which notice shall set forth in reasonable detail satisfactory to the Administrative Agent the amount of such Indebtedness, the schedule of repayments and maturity date with respect thereto and such other information with respect thereto as the Administrative Agent may reasonably request;

 

(b)  promptly upon the Administrative Agent’s request, the Administrative Agent shall have received true, correct and complete copies of all agreements, documents and instruments evidencing or otherwise related to such Indebtedness, as executed and delivered by the parties thereto;

 

(c)  the principal amount of such Permitted Refinancing Indebtedness shall not exceed the principal amount of the Refinanced Obligations (plus the amount of reasonable refinancing fees and expenses incurred in connection therewith);

 

(d)  such Indebtedness shall have a final maturity that is no earlier than (i) in the case of Refinanced Obligations that constitute Material Indebtedness, 91 days after the Latest Maturity

 

43



 

Date, and (ii) in the case of all other Refinanced Obligations, 364 days after the final maturity date of such Refinanced Obligations or, if earlier, 91 days after the Latest Maturity Date;

 

(e)  such Indebtedness shall have a Weighted Average Life to Maturity not less than the shorter of the Weighted Average Life to Maturity of (i) the Refinanced Obligations or (ii) the outstanding Loans;

 

(f)  such Indebtedness shall rank in right of payment no more senior than, and be subordinated (if subordinated) to the Obligations on terms no less favorable to the Secured Parties than, the Refinanced Obligations;

 

(g)  as of the date of incurring such Indebtedness and after giving effect thereto, no Default or Event of Default shall have occurred and be continuing;

 

(h)  if the Refinanced Obligations or any Guarantees thereof are unsecured, such Indebtedness and any Guarantees thereof shall be unsecured;

 

(i)  if the Refinanced Obligations or any Guarantees thereof are secured, such Indebtedness and any Guarantees thereof shall be secured in all material respects by substantially the same or less collateral as secured such Refinanced Obligations or any Guarantees thereof, on terms no less favorable to the Administrative Agent or the Lenders;

 

(j)  if the Refinanced Obligations or any Guarantees thereof are secured, the Liens to secure such Indebtedness shall not have a priority more senior than the Liens securing such Refinanced Obligations and, if subordinated to any other Liens on such property, shall be subordinated to the Administrative Agent’s Liens on terms and conditions no less favorable;

 

(k)  if the Refinanced Obligations or any Guarantees thereof are subordinated to any Indebtedness of the Borrower, such Refinancing Indebtedness and any Guarantees thereof shall be subordinated to the Obligations on terms (including intercreditor terms) no less favorable to the Administrative Agent or the Lenders;

 

(l)  the obligors in respect of the Refinanced Obligations immediately prior to such refinancing, refunding, extending, renewing or replacing thereof shall be the only obligors on such Permitted Refinancing Indebtedness; and

 

(m)  the terms and conditions (excluding as to pricing, premiums and optional prepayment or redemption provisions) of any such Indebtedness, taken as a whole, are not more restrictive with respect to the Borrower and the Restricted Subsidiaries, as reasonably determined by the Borrower in good faith, than the terms and conditions of the Refinanced Obligations.

 

Permitted Specified Note Prepayment ” shall mean the prepayment of the SVU 2016 Notes permitted pursuant to Section 6.07.

 

Permitted Store Swap Transaction ” means the transfer by a Loan Party of ownership of a Store or Stores to an unaffiliated third party in an arm’s length transaction in the ordinary course of business in exchange for the transfer to such Loan Party of a retail store or stores (and the related assets, including real property, fixtures, equipment, inventory and other property

 

44



 

related thereto) owned and operated by such third party; provided, that, as to any such exchange, (a) the value of the Store or Stores transferred by such Loan Party shall be reasonably equivalent to the value of the store or stores (and related assets) transferred to it, (b) the transfer of such assets by the Loan Party to such third party and by such third party to such Loan Party shall be substantially contemporaneous, (c) the aggregate number of such Stores transferred to unaffiliated third parties by the Loan Parties in any Fiscal Year pursuant to such exchanges shall not exceed 10, except as Administrative Agent may otherwise agree in the exercise of its discretion, (d) as of the date of any such transaction, and after giving effect thereto, no Default or Event of Default shall exist or have occurred and be continuing and (e) any Material Real Estate Assets and Related Real Estate Collateral) received in connection with such an exchange shall be pledged as Collateral to the extent required by Section 5.12 or Section 5.17.

 

Person ” shall mean any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, limited partnership, Governmental Authority or other entity.

 

Plan ” shall mean any “employee benefit plan” (as such term is defined in Section 3(3) of ERISA) established by the Borrower or, with respect to any such plan that is subject to Sections 412 or 430 of the Code or Sections 302 or 303 or Title IV of ERISA, any ERISA Affiliate.

 

Platform ” shall have the meaning assigned to such term in Section 9.01.

 

Prescription Files ” shall mean, as to a Loan Party, all of such Loan Party’s now owned or hereafter existing or acquired retail customer files with respect to prescriptions for retail customers and other medical information related thereto, maintained by the retail pharmacies of Loan Parties, wherever located.

 

Prime Rate shall mean the rate of interest per annum quoted in the print edition of The Wall Street Journal , Money Rates Section as the Prime Rate (currently defined as the base rate on corporate loans posted by at least 75% of the nation’s thirty largest banks), as in effect from time to time.  The Prime Rate is a reference rate and does not necessarily represent the lowest or best rate actually charged to any customer.  The Administrative Agent or any other Lender may make commercial loans or other loans at rates of interest at, above or below the Prime Rate.

 

PSA ” shall mean the Packers and Stockyard Act of 1921, 7 U.S.C. § 181 et. seq. , as the same now exists or may from time to time hereafter be amended, modified, recodified or supplemented, together with all rules, regulations and interpretations thereunder or related thereto.

 

Public Lender ” shall have the meaning assigned to such term in Section 9.01.

 

Qualified Capital Stock ” of any Person shall mean any Equity Interest of such Person that is not Disqualified Stock.

 

Real Estate ” shall mean all right, title, and interest (including any leasehold, fee, mineral or other estate) in and to any and all parcels of or interests in real property owned, leased or operated by the Borrower or any of its Subsidiaries, whether by lease, license or other means,

 

45



 

and the buildings, structures, parking areas and other improvements thereon, now or hereafter owned by the Borrower or any of its Subsidiaries, including all fixtures, easements, hereditaments, appurtenances, rights-of-way and similar rights relating thereto and all leases, tenancies and occupancies thereof now or hereafter owned by the Borrower or any of its Subsidiaries.

 

Real Estate Collateral Properties ” shall mean the Real Estate of the Loan Parties at the sites designated as Material Real Estate Assets on the Applicable Collateral List.

 

Receivables Purchase Agreement ” shall mean (a) each Purchase Agreement as defined in the receivables purchase agreement referred to in clause (a) of the definition of “Receivables Transfer Agreement” and (b) any agreement amending, supplementing, extending, refinancing or replacing such Receivables Purchase Agreement, in whole or in part.

 

Receivables Transfer Agreement ” shall mean (a) the Second Amended and Restated Receivables Purchase Agreement, dated as of November 30, 2011, by and among Supervalu Receivables Funding Corporation, as seller, the Borrower, as servicer, the banks and other financial institutions party thereto, as purchasers, and Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A., “Rabobank Nederland”, New York Branch, as agent, and (b) any agreement amending, supplementing, extending, refinancing or replacing, in whole or in part, such Receivables Transfer Agreement.

 

Refinanced Obligations ” shall have the meaning assigned to such term in the definition of “Permitted Refinancing Indebtedness”.

 

Register ” shall have the meaning assigned to such term in Section 9.04(d).

 

Registered Public Accounting Firm ” shall have the meaning specified by the Securities Laws and shall be independent of the Borrower and its Subsidiaries as prescribed by the Securities Laws.

 

Regulation D ” shall mean Regulation D of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.

 

Regulation T ” shall mean Regulation T of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.

 

Regulation U ” shall mean Regulation U of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.

 

Regulation X ” shall mean Regulation X of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.

 

Related Fund shall mean, with respect to any Lender that is a fund or commingled investment vehicle that invests in bank loans, any other fund that invests in bank loans and is managed or advised by the same investment advisor as such Lender or by an Affiliate of such investment advisor.

 

46



 

Related Parties ” shall mean, with respect to any Person, such Person’s Affiliates and the partners, members, controlling persons, directors, officers, employees, agents, advisors, representatives and successors and assigns of such Person and of such Person’s Affiliates.

 

Related Real Estate Collateral ” shall mean all Equipment now or hereafter owned by the Borrower or any of its Subsidiaries located on any Real Estate Collateral Property or any Material Related Collateral Location.

 

Related Real Estate Collateral Security Agreement ” shall mean any security agreement delivered pursuant to clause (a) of the definition of “Term Loan Priority Collateral Requirements,” substantially in the form of Exhibit P hereto, or such other form reasonably satisfactory to the Administrative Agent.

 

Release ” shall have the meaning assigned to such term in Section 101(22) of CERCLA.

 

Release Property ” shall have the meaning assigned to such term in Section 9.21.

 

Repayment Date ” shall have the meaning given such term in Section 2.11(a).

 

Replaced Property ” shall have the meaning assigned to such term in Section 9.21.

 

Reportable Event ” shall mean any of the events set forth in Section 4043(c) of ERISA as in effect as of the Closing Date, other than events for which the 30-day notice period has been waived.

 

Repricing Transaction ” shall mean the voluntary prepayment, refinancing, substitution or replacement of all or a portion of the Loans, except following a Change of Control, with the incurrence by the Borrower of any debt financing having an effective interest cost or weighted average yield (with the comparative determinations to be made by the Administrative Agent consistent with generally accepted financial practices, after giving effect to, among other factors, margin, interest rate floors, upfront or similar fees or original issue discount shared with all providers of such financing, but excluding the effect of any arrangement, structuring, syndication or other fees payable in connection therewith that are not shared with all providers of such financing, and without taking into account any fluctuations in the Adjusted LIBO Rate) that is less than the effective interest cost or weighted average yield (as determined by the Administrative Agent on the same basis) of such Loans so repaid, refinanced, substituted or replaced, including without limitation, as may be effected through any amendment to this Agreement relating to the interest rate for, or weighted average yield of, such Loans.

 

Required Lenders ” shall mean, at any time, Lenders having Loans and Commitments representing more than 50% of the sum of all Loans outstanding and Commitments at such time.

 

Responsible Officer ” shall mean the chief executive officer, chief financial officer, vice president of tax, controller, treasurer or assistant treasurer of a Loan Party or, with the consent of the Administrative Agent, any of the other individuals designated in writing to the Administrative Agent by an existing Responsible Officer of a Loan Party as an authorized signatory of any certificate or other document to be delivered hereunder.

 

47



 

Restated Collateral List ” shall mean, at any date of determination, the Closing Date Collateral List as modified to reflect all Term Loan Priority Collateral Releases, Term Loan Priority Collateral Substitutions and Term Loan Priority Collateral Additions to and including the date of such Restated Collateral List.

 

Restricted Indebtedness ” shall mean Indebtedness of the Borrower or any Restricted Subsidiary, the payment, prepayment, repurchase or defeasance of which is restricted under Section 6.07.

 

Restricted Payment ” shall mean any dividend or other distribution (whether in cash, securities or other property) with respect to any capital stock or other Equity Interest of any Person or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, defeasance, acquisition, cancellation or termination of any such capital stock or other Equity Interest, or on account of any return of capital to such Person’s stockholders, partners or members (or the equivalent of any thereof), or any holder of an option, warrant or other right to acquire any such dividend or other distribution or payment and any payment of management fees (or other fees of a similar nature) by any Person to any holder of an Equity Interest of any Person or any of its Subsidiaries.  Without limiting the foregoing, “Restricted Payments” with respect to any Person shall also include all payments made by such Person to holders of Equity Interests with any proceeds of a dissolution or liquidation of such Person.

 

Restricted Subsidiary ” shall mean any Subsidiary that is not an Unrestricted Subsidiary.

 

Retained Excess Cash Flow Amount ” shall mean, at any date of determination, an amount equal to (a) the sum of the amounts of Excess Cash Flow for each Fiscal Year (or portion thereof) ending on or prior to the date of determination for which the amount of Excess Cash Flow shall have been calculated as provided in Section 2.13(c) and with respect to which the payments required under Section 2.13(c) have been made (commencing with the period from the Closing Date until February 22, 2014), minus (b) the sum at the time of determination of the aggregate amount of prepayments required to be made pursuant to Section 2.13(c) through the date of determination calculated without regard to any reduction in such sum that resulted from voluntary prepayments of the Loans referred to in Section 2.13(c)(y).

 

S&P ” shall mean Standard& Poor’s Ratings Service, or any successor thereto.

 

Sarbanes-Oxley ” shall mean the Sarbanes-Oxley Act of 2002.

 

SEC ” shall mean the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions.

 

Section 2.23 Additional Agreement ” shall have the meaning assigned to such term in Section 2.23.

 

Secured Parties ” shall mean the collective reference to (a) the Administrative Agent, (b) the Collateral Agent, (c) the Lenders, (d) the beneficiaries of each indemnification or reimbursement obligation undertaken by any Loan Party under any Loan Document and (e) the successors and assigns of each of the foregoing.

 

48



 

Securities Laws ” shall mean the Securities Act of 1933, the Securities Exchange Act of 1934, Sarbanes-Oxley, and the applicable accounting and auditing principles, rules, standards and practices promulgated, approved or incorporated by the SEC or the PCAOB.

 

Securitization Termination ” shall mean the repayment in full of all of the obligations of the Borrower and its Subsidiaries under the Receivables Transfer Agreement and each Receivables Purchase Agreement and the termination thereof, the repurchase by the Borrower and its Subsidiaries of all of the receivables sold thereunder, the termination or release, as applicable, of all guarantees, and all security interests and liens, in each case arising thereunder or in connection therewith, and the Borrower and its Subsidiaries having no further obligations or liabilities with respect thereto.

 

Security Agreement ” shall mean the Security Agreement, dated of even date herewith, by and among the Loan Parties and the Collateral Agent, substantially in the form of Exhibit F hereto.

 

Security Documents ” shall mean the Mortgages, the Facility Guaranty, the Security Agreement, each Related Real Estate Collateral Security Agreement, the Collateral Assignment Agreement and each of the security agreements, mortgages and other instruments and documents executed and delivered to the Administrative Agent pursuant to this Agreement or any other Loan Document granting a Lien to secure any of the Obligations.

 

Shareholders’ Equity ” shall mean, as of any date of determination, consolidated shareholders’ equity of the Borrower and its Subsidiaries as of that date determined in accordance with GAAP.

 

Solvent ” and “ Solvency ” shall mean, with respect to any Person on a particular date, that on such date (a) at fair valuation, all of the properties and assets of such Person (and including as assets for this purpose, at a fair valuation, all rights of subrogation, contribution or indemnification in favor of such Person) are greater than the sum of the liabilities, including contingent liabilities (and including as liabilities for this purpose, at a fair valuation, all obligations of subrogation, contribution or indemnification against such Person), of such Person, (b) the present fair saleable value of the properties and assets of such Person is not less than the amount that would be required to pay the probable liability of such Person on its debts as they become absolute and matured, (c) such Person is able to realize upon its properties and assets and pay its debts and other liabilities, contingent obligations and other commitments as they mature in the normal course of business, (d) such Person does not intend to, and does not believe that it will, incur debts beyond such Person’s ability to pay as such debts mature and (e) such Person is not engaged in a business or a transaction, and is not about to engage in a business or transaction, for which such Person’s properties and assets would constitute unreasonably small capital after giving due consideration to the prevailing practices in the industry in which such Person is engaged.  The amount of all guarantees and other contingent liabilities at any time shall be computed as the amount that, in light of all the facts and circumstances existing at the time, can reasonably be expected to become an actual or matured liability.

 

49



 

Specified Event of Default ” shall mean the occurrence of (a) any Event of Default described in Sections 7.01(a), 7.01(f) or 7.01(g) or (b) the Lender’s exercise of any of its remedies pursuant to the last paragraph of Section 7.01 following any other Event of Default.

 

Specified Representations ” means those representations and warranties made by the Borrower and the Guarantors in Sections 3.01(a) and (b)(ii) (solely with respect to power and authority), 3.02(a), 3.04, 3.05(a), (b) and (f), 3.06, 3.08 (a), (b) and (c), 3.09, 3.12, 3.13, 3.14, 3.15(b), 3.16, 3.19(a), (b) and (c), 3.20(a), 3.31 and 3.32.

 

Springing Maturity Date ” shall mean the earliest of (a) date that is 91 days before the maturity of the SVU 2016 Notes ( provided , that if on or prior to the date that is 91 days before the maturity date of the SVU 2016 Notes the Borrower has refinanced and/or prepaid all but an aggregate principal amount of not more than $250,000,000 of the SVU 2016 Notes pursuant to (x) Permitted Refinancing Indebtedness having a maturity date that is at least six months after the Fixed Maturity Date or (y) Permitted Specified Note Prepayments, then the Springing Maturity Date will not occur) and (b) the date of the occurrence of a Change of Control.

 

SPV ” shall have the meaning assigned to such term in Section 9.04(i).

 

Statutory Reserves ” shall mean a fraction (expressed as a decimal), the numerator of which is the number one and the denominator of which is the number one minus the aggregate of the maximum reserve percentages (including any marginal, special, emergency or supplemental reserves) expressed as a decimal established by the Board and any other banking authority, domestic or foreign, to which the Administrative Agent or any Lender (including any branch, Affiliate or other fronting office making or holding a Loan) is subject for Eurocurrency Liabilities (as defined in Regulation D).  Eurodollar Loans shall be deemed to constitute Eurocurrency Liabilities (as defined in Regulation D) and to be subject to such reserve requirements without benefit of or credit for proration, exemptions or offsets that may be available from time to time to any Lender under Regulation D.  Statutory Reserves shall be adjusted automatically on and as of the effective date of any change in any reserve percentage.

 

Store ” shall mean any retail store (which may include any Real Estate, Equipment, inventory and other property related thereto) operated, or to be operated, by any Loan Party.

 

Subordinated Indebtedness ” shall mean any Indebtedness which is expressly subordinated in right of payment to the prior payment in full of the Obligations and which is in form and on terms approved in writing by the Administrative Agent.

 

Subsidiary ” of a Person shall mean a corporation, partnership, joint venture, limited liability company or other business entity of which a majority of the shares of Equity Interests having ordinary voting power for the election of directors or other governing body are at the time beneficially owned, or the management of which is otherwise controlled, directly or indirectly, through one or more intermediaries, or both, by such Person.  Unless otherwise specified, all references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries of a Loan Party, and shall exclude NAI and its subsidiaries.

 

Substitute Property ” shall have the meaning assigned to such term in Section 9.21.

 

50



 

SVU 2014 Note Repayment ” shall mean (a) to the extent the Borrower has made a tender offer for any SVU 2014 Notes and any of the SVU 2014 Notes have been tendered pursuant thereto, the purchase and cancellation of such SVU 2014 Notes on the Closing Date and (b) the providing of an irrevocable notice of redemption to the holders of all untendered SVU 2014 Notes, if any (or, to the extent the Borrower has not made a tender offer therefor, all SVU 2014 Notes) and the depositing with the trustee under the SVU Indenture in trust on the Closing Date the full amount (including, without limitation, all interest, fees and prepayment penalties due and payable on the redemption date) required to redeem, and the providing of evidence of the delivery to such trustee of all materials required to redeem, all untendered SVU 2014 Notes, if any (or, to the extent the Borrower has not made a tender offer therefor, all SVU 2014 Notes), in accordance with the terms of the SVU Indenture and the SVU 2014 Notes.

 

SVU 2014 Notes ” shall mean the 7.50% Senior Notes due November 15, 2014 issued by the Borrower pursuant to the SVU Indenture in the original principal amount of $500,000,000.

 

SVU 2016 Notes ” shall mean the 8.00% Senior Notes due May 1, 2016 issued by the Borrower pursuant to the SVU Indenture in the original principal amount of $1,000,000,000.

 

SVU Indenture ” shall mean the Indenture, dated as of July 1, 1987, between the Borrower and Deutsche Bank Trust Company (formerly Bankers Trust Company), as trustee, as supplemented by the First Supplemental Indenture dated as of August 1, 1990, the Second Supplemental indenture dated as of October 1, 1992, the Third Supplemental Indenture dated as of September 1, 1995, the Fourth Supplemental Indenture dated as of August 4, 1999, and the Fifth Supplemental Indenture dated as of September 17, 1999, and as further amended, amended and restated, supplemented or otherwise modified (including any such modifications contained in any notes, officer’s certificates or other operative documents) as of the Closing Date in accordance with the terms hereof.

 

Swap Contract ” shall mean (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a “ Master Agreement ”), including any such obligations or liabilities under any Master Agreement.

 

Swap Termination Value ” shall mean, in respect of any one or more Swap Contracts, after taking into account the effect of any legally enforceable netting agreement relating to such Swap Contracts, (a) for any date on or after the date such Swap Contracts have been closed out

 

51



 

and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in clause (a), the amount(s) determined as the mark-to-market value(s) for such Swap Contracts, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Swap Contracts (which may include a Lender or any Affiliate of a Lender).

 

Symphony ” shall mean Symphony Investors LLC, a Delaware limited liability company.

 

Syndication Agents ” shall mean CS Securities and MSSF, in their capacities as syndication agents.

 

Synthetic Lease Obligations ” shall mean the monetary obligation of a Person under (a) a so-called synthetic, off-balance sheet or tax retention lease or (b) an agreement for the use or possession of property (including sale and leaseback transactions), in each case, creating obligations that do not appear on the balance sheet of such Person but which, upon the application of any Debtor Relief Laws to such Person, would be characterized as the indebtedness of such Person (without regard to accounting treatment).

 

Synthetic Purchase Agreement ” shall mean any swap, derivative or other agreement or combination of agreements pursuant to which the Borrower or any Restricted Subsidiary is or may become obligated to make (a) any payment in connection with a purchase by any third party from a Person other than the Borrower or any Restricted Subsidiary of any Equity Interest or Restricted Indebtedness or (b) any payment (other than on account of a permitted purchase by it of any Equity Interest or Restricted Indebtedness) the amount of which is determined by reference to the price or value at any time of any Equity Interest or Restricted Indebtedness; provided that no phantom stock or similar plan providing for payments only to current or former directors, officers or employees of the Borrower or the Restricted Subsidiaries (or to their heirs or estates) shall be deemed to be a Synthetic Purchase Agreement.

 

Taxes ” shall mean any and all present or future taxes, levies, imposts, duties, deductions, charges or withholdings imposed by any Governmental Authority, including any interest, penalties and additions to tax related thereto.

 

Tender Offer Agreement ” that certain Tender Offer Agreement dated as of January 10, 2013 among Symphony, Cerberus and the Borrower.

 

Term Facility ” shall mean the term loan facility provided for by this Agreement.

 

Term Loan Priority Collateral ” shall have the meaning assigned to such term in the Intercreditor Agreement.

 

Term Loan Priority Collateral Addition ” shall have the meaning assigned to such term in Section 9.21.

 

Term Loan Priority Collateral Release ” shall have the meaning assigned to such term in Section 9.21.

 

52



 

Term Loan Priority Collateral Requirements ” shall mean the collective requirements that:

 

(a)  the Collateral Agent shall have received:

 

(i) a Mortgage, a Related Real Estate Collateral Security Agreement and a UCC financing statement with respect to each Real Estate Collateral Property and the Related Real Estate Collateral thereon, and a Related Real Estate Collateral Security Agreement and a UCC financing statement with respect to all other Related Real Estate Collateral, which Security Documents shall be in form and substance satisfactory to the Administrative Agent, shall have been duly executed by the parties thereto and delivered to the Collateral Agent and shall be in full force and effect, together with, in the case of Real Estate Collateral Property, an acknowledgment by a title insurance company of receipt of such Mortgage and UCC financing statement and an agreement to record or file, as applicable, such Mortgage and UCC financing statement in the real estate records for the county in which the Real Estate Collateral Property is located (if determined by the Administrative Agent to be necessary under the Laws of the jurisdiction where such Real Estate Collateral Property is located to perfect in fixtures), so as to effectively create upon such recording and filing (together with the filing of a UCC-1 financing statement in the applicable state filing office) valid and enforceable perfected first-priority Liens upon such Real Estate Collateral Property and Related Real Estate Collateral, in favor of the Collateral Agent (or such other trustee as may be desired under local law), subject only to the Permitted Encumbrances.  Unless otherwise (i) required to avoid triggering any of the equal and ratable security provisions of the SVU Indenture or (ii) agreed by the Administrative Agent, and subject to limitations of local law, each such Mortgage shall secure the total amount of the Obligations, provided that if the jurisdiction in which any applicable Real Estate Collateral Property is located imposes a mortgage recording, intangibles or similar tax and does not permit the allocation of undivided aggregate indebtedness for the purpose of determining the amount of such tax payable, or if there are other local state impediments to the Mortgage securing the full amount of the Obligations, the principal amount secured by such Mortgage shall be limited to secure a maximum amount acceptable to the Administrative Agent, not to exceed 125% of the fair market value of such Real Estate Collateral Property;

 

(ii)  (A) a Title Insurance Policy (or a marked, signed and dated commitment to issue a Title Insurance Policy) insuring or committing to insure (upon payment of the premium therefor) the Lien of the Mortgage encumbering each Real Estate Collateral Property, (1) with respect to each Real Estate Collateral Property having a Value greater than $3,000,000, with the standard exception for survey matters deleted and a “same as survey” endorsement, (2) otherwise with the standard exception for survey matters deleted and a “same as survey” endorsement but only to the extent available without requirement for the Borrower to procure a new survey, and (3) in all cases with other lenders’ endorsements and otherwise as reasonably required by the Administrative Agent but only to the extent available without requirement for the Borrower to procure a new survey with respect to any Real Estate Collateral Property having a Value of less than or equal to $3,000,000 (in the case of a Term Loan Priority Collateral Substitution, issued by the title company that issued the Title Insurance Policies insuring the Liens of the

 

53



 

existing Mortgages and dated as of the date of the recording of the Mortgage for the Substitute Property); (B) to the extent available, a “tie-in” and a “first loss” endorsement, or similar endorsements, to the Title Insurance Policy, in form and substance reasonably satisfactory to the Administrative Agent; and (C) a copy of any survey, plat, or site plan of the Real Estate Collateral Property that the Borrower provides to the title company issuing the Title Insurance Policy, with any such surveys recertified to the Collateral Agent to the extent reasonably available and as reasonably required by the Administrative Agent; provided , that the Administrative Agent will not require any such recertification with respect to any such survey that was created or last updated more than five years before the later of (1) the date of the Loan Parties’ satisfaction of the requirements set forth in Section 5.25 and (2) any Term Loan Priority Collateral Substitution, as the case may be.  The Collateral Agent also shall have received copies of paid receipts or other evidence showing that all premiums in respect of such Title Insurance Policies and endorsements have been paid;

 

(iii) (A) a completed Flood Certificate with respect to each Real Estate Collateral Property, which Flood Certificate shall (x) be addressed to the Collateral Agent, (y) be completed by a company that has guaranteed the accuracy of the information contained therein and (z) otherwise comply with the Flood Program; (B) evidence describing whether the community in which each Real Estate Collateral Property is located participates in the Flood Program; (C) if any Flood Certificate states that a Real Estate Collateral Property is located in a Flood Zone, the applicable Loan Party’s written acknowledgement of receipt of written notification from the Collateral Agent (x) as to the existence of each such Real Estate Collateral Property and (y) as to whether the community in which each such Real Estate Collateral Property is located is participating in the Flood Program; and (D) if any Real Estate Collateral Property is located in a Flood Zone and is located in a community that participates in the Flood Program, evidence that the applicable Loan Party has obtained flood insurance that is in compliance with all applicable regulations of the Flood Program;

 

(iv) if required by the Administrative Agent, documentation regarding environmental matters acceptable to the Administrative Agent with respect to each Real Estate Collateral Property, and, if warranted by the findings of such documentation, a Phase I environmental report acceptable to the Administrative Agent, and, if warranted by the findings of such Phase I environmental report or other documentation, a Phase II environmental report acceptable to the Administrative Agent, which concludes that such Real Estate Collateral Property (A) does not contain any Hazardous Materials in contravention of Environmental Law in any material respect and (B) is not subject to any significant risk of contamination from any off site Hazardous Materials in contravention of Environmental Law in any material respect;

 

(v) (x) an opinion or opinions of counsel admitted to practice under the laws of the State in which each Real Estate Collateral Property is located, regarding the enforceability of the Liens of the Mortgages in that State, (y) a due execution, delivery, and authority opinion (consistent with the requirements of Section 4.01f) and (z) an opinion or opinions of counsel regarding each Related Real Estate Collateral Security

 

54



 

Agreement, in each case in form and substance reasonably acceptable to the Administrative Agent;

 

(vi) true and correct copies of all Material Contracts relating to the leasing or operation of each Real Estate Collateral Property and each other property on which Related Real Estate Collateral is located, each of which shall be in form and substance reasonably satisfactory to the Administrative Agent;

 

(vii) satisfactory ( i.e. , showing no Liens other than Permitted Encumbrances) UCC, tax lien, judgment and litigation searches with respect to each Real Estate Collateral Property and each other property on which Related Real Estate Collateral is located and the Loan Party that is the owner or lessee thereof, in the State in which such Real Estate Collateral Property or such other property is located and the jurisdictions where each such Loan Party has its principal place of business; and

 

(viii) in the case of any Ground Lease, (A) a true and correct copy of the applicable Ground Lease, together with (to the extent required by the Administrative Agent) all amendments and modifications thereto and a recorded memorandum thereof, in form and substance reasonably satisfactory in all respects to the Administrative Agent and subject to leasehold mortgagee provisions and protections in form and substance reasonably satisfactory in all respects to the Administrative Agent and which shall provide, among other things, cure rights reasonably acceptable to the Administrative Agent for Loan Party defaults thereunder, and (B) if required by the Administrative Agent, a Ground Lease estoppel executed by the fee owner and ground lessor of such Real Estate Collateral Property, reasonably acceptable to the Administrative Agent;

 

(b)  the Borrower shall have paid or reimbursed the Administrative Agent for all reasonable out-of-pocket costs and expenses incurred by the Administrative Agent (including, without limitation, reasonable attorneys’ fees and disbursements) in connection with the preparation and negotiation of the Mortgage of each Real Estate Collateral Property and the Borrower shall have paid all recording charges, filing fees, taxes or other out-of-pocket expenses (including, without limitation, title insurance premiums, mortgage and intangibles taxes and documentary stamp taxes) payable in connection therewith;

 

(c)  on the date of the applicable Mortgage, the grants of security interests in the Term Loan Priority Collateral on the Applicable Collateral List (after giving effect to all Term Loan Priority Collateral List Substitutions) will not violate the SVU Indenture or any other Material Indebtedness or trigger any of the equal and ratable sharing provisions thereof, as evidenced by (i) a certificate of a Responsible Officer of the Borrower in substantially the form of the certificate required to be delivered pursuant to Section 4.01(h) (covering factual matters supporting the legal opinions delivered pursuant this clause (c)) and (ii) a customary no conflicts opinion from the Borrower’s counsel, in each case in form and substance satisfactory to the Administrative Agent, certifying and opining, respectively, that the grants of security interests in the Term Loan Priority Collateral on the Applicable Collateral List will not violate the SVU Indenture or any other Material Indebtedness or trigger any of the equal and ratable sharing provisions thereof;

 

55



 

(d)  the Administrative Agent shall have received with respect to the initial satisfaction of the Term Loan Priority Collateral Requirements pursuant to Section 5.25, a confirmation of the certificates described in Section 4.01(g)(ii), and thereafter a certificate of the type described in Section 4.01(g)(ii), in each case from the relevant Loan Parties; and

 

(e)  each Real Estate Collateral Property shall be fee owned or ground leased by a Loan Party or a Subsidiary which shall have become a Loan Party hereunder pursuant to and in accordance with the requirements of Section 5.12 prior to the execution and delivery of the applicable Mortgage.

 

Term Loan Priority Collateral Sale ” shall mean any sale, transfer or other disposition (including by way of merger, casualty, condemnation or otherwise) of Term Loan Priority Collateral or Equity Interests of any Subsidiary to the extent the assets of such Subsidiary consist solely of Term Loan Priority Collateral that produces $50,000 or more of Net Cash Proceeds and that is not part of an Other Asset Sale and that is not a Permitted Disposition pursuant to clauses (a) through (n) (other than clause (j)) of the definition thereof or clause (p) of the definition thereof.

 

Term Loan Priority Collateral Substitution ” shall have the meaning assigned to such term in Section 9.21.

 

Term Loan Refinancing ” shall mean the repayment in full of all of the obligations of the Borrower and its Subsidiaries under the Existing Term Loan Facility, the termination or release, as applicable of all guarantees and all security interests and liens, in each case arising under or in connection therewith, and the Borrower and its Subsidiaries having no further obligations or liabilities with respect thereto.

 

Third Party Payor ” shall mean any Person, such as a Fiscal Intermediary, Blue Cross/Blue Shield or private health insurance company, which is obligated to reimburse or otherwise make payments to health care providers who provide medical care or medical assistance or other goods or services for eligible patients under Medicare, Medicaid or any private insurance contract.

 

Title Insurance Policy ” shall mean, with respect to each Real Estate Collateral Property, an ALTA mortgagee title insurance policy in a form reasonably acceptable to the Administrative Agent (or, if a Real Estate Collateral Property is located in a State which does not permit the issuance of such ALTA policy, such form as shall be permitted in such State and reasonably acceptable to the Administrative Agent) issued with respect to such Real Estate Collateral Property and insuring the Lien of the Mortgage encumbering such Real Estate Collateral Property, which Title Insurance Policy shall (i) provide coverage in an amount satisfactory to the Administrative Agent ( provided that the aggregate insured amount of all Title Insurance Policies will not exceed the aggregate amount of the Loans, except as is reasonably necessary to insure Real Estate Collateral Properties under Title Insurance Policies that cannot be “tied in” with other Title Insurance Policies), (ii) insure the Collateral Agent that the relevant Mortgage creates a valid first lien on the Real Estate Collateral Property encumbered thereby, free and clear of all exceptions from coverage other than Permitted Encumbrances, (iii) contain such endorsements and affirmative coverages as have been reasonably requested by the Administrative Agent to the

 

56



 

extent available in the applicable jurisdiction where such Real Estate Collateral Property is located (and subject to the availability thereof for Real Estate Collateral Properties with respect to which additional surveys are not required pursuant to the definition of Term Loan Priority Collateral Requirements) and (iv) name the Collateral Agent as the insured.

 

Total Assets ” shall mean, at any date, the amount that would, in conformity with GAAP, be set forth opposite the caption “total assets” (or any like caption) on a Consolidated balance sheet of the Borrower and the Restricted Subsidiaries.

 

Total Debt ” shall mean, at any time, the total Indebtedness of the Borrower and the Restricted Subsidiaries at such time (excluding Indebtedness of the type described in clauses (b), (c) and (g) of the definition of such term, except, in the case of such clause (b), to the extent of any unreimbursed drawings thereunder, and also excluding the ASC Guarantee and all Synthetic Lease Obligations).

 

Total Leverage Ratio ” shall mean, on any date, the ratio of (a) Total Debt on such date (net of the amount of Unrestricted Cash as of such date up to a maximum amount of $150,000,000 or, when the amount of Total Debt is reduced pursuant to the proviso set forth in this definition, up to a maximum amount of $50,000,000) to (b) Consolidated EBITDA for the period of four consecutive Fiscal Quarters then most recently ended on or prior to such date; provided that, with respect to any date of determination occurring during the Fiscal Periods ending closest to October 31, November 30 and December 31 of any Fiscal Year, an amount equal to $150,000,000 shall be deducted from the calculation of Total Debt for the purposes of this calculation.

 

Total Secured Leverage Ratio ” shall mean, on any date, the ratio of (a) Total Debt that is secured by Liens on such date (net of the amount of Unrestricted Cash as of such date up to a maximum amount of $150,000,000 or, when the amount of Total Debt is reduced pursuant to the proviso set forth in this definition, up to a maximum amount of $50,000,000) to (b) Consolidated EBITDA for the period of four consecutive Fiscal Quarters then most recently ended on or prior to such date; provided that, with respect to any date of determination occurring during the Fiscal Periods ending closest to October 31, November 30 and December 31 of any Fiscal Year, an amount equal to $150,000,000 shall be deducted from the calculation of Total Debt for the purposes of this calculation.

 

Transaction Expenses ”  shall mean all of the one-time fees, costs, losses, charges and expenses incurred by the Borrower and its Restricted Subsidiaries in connection with the Transactions, including employee severance expenses associated with the Transactions, prepayment premiums payable in connection with the Term Loan Refinancing, legal, advisory and other professionals fees and expenses incurred in connection with the Transactions, financing fees incurred in connection with the Transactions, recruitment expenses associated with the Transactions, stock transfer taxes payable in connection with the transactions contemplated by the Tender Offer Agreement, information technology investments related to the Transactions, corporate expenses incurred in connection with the Transactions other than personnel expenses, employee retention plan expenses associated with the Transactions, litigation contingency and legal reserves related to the Transactions and environmental expenses incurred in connection with the Transactions.

 

57



 

Transactions ” shall mean (i) the NAI Sale (including the funding of the Escrow Account (as defined in the Escrow Agreement) substantially contemporaneously with the consummation of the Albertson’s Asset Purchase (as defined in the Acquisition Agreement) as contemplated by the Acquisition Agreement and the Escrow Agreement), (ii) the SVU 2014 Note Repayment, (iii) the Term Loan Refinancing, (iv) the ABL Refinancing, (v) the Securitization Termination, (vi) the execution, delivery and performance by the Loan Parties of the Loan Documents to which they are a party and the making of the Borrowings hereunder, (vii) the payment of fees and expenses in connection with the foregoing and (viii) the transactions reasonably related to the foregoing.

 

Type ”, when used in respect of any Loan or Borrowing, shall refer to the Rate by reference to which interest on such Loan or on the Loans comprising such Borrowing is determined. For purposes hereof, the term “ Rate ” shall mean the Adjusted LIBO Rate and the Alternate Base Rate.

 

UCC or “ Uniform Commercial Code ” shall mean the Uniform Commercial Code as in effect from time to time in the State of New York; provided that (a) if a term is defined in Article 9 of the Uniform Commercial Code differently than in another Article thereof, such term shall have the meaning set forth in Article 9 and (b) if by reason of mandatory provisions of law, perfection or the effect of perfection or non-perfection of a security interest in any Collateral or the availability of any remedy hereunder is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York, “Uniform Commercial Code” shall mean the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions hereof relating to such perfection or effect of perfection or non-perfection or availability of such remedy, as the case may be.

 

Unfunded Pension Liability ” shall mean the excess of a Pension Plan’s benefit liabilities under Section 4001(a)(16) of ERISA, over the current value of that Pension Plan’s assets, determined in accordance with the assumptions used for funding the Pension Plan pursuant to Sections 412 or 430 of the Code and Sections 302 or 303 of ERISA for the applicable plan year.

 

Unrestricted Cash ” shall mean, at any date of determination, the aggregate amount of cash of the Borrower and the Restricted Subsidiaries at such date to the extent that the use of such cash for application to payment of the Obligations or other Indebtedness is not prohibited by law or any contract or other agreement and such cash is free and clear of all Liens (other than Liens in favor of the Collateral Agent and the ABL Facility Agent or as would not cause such cash to be classified as “restricted” on a consolidated balance sheet of the Borrower prepared in accordance with GAAP).

 

Unrestricted Subsidiary ” shall mean any Subsidiary of the Borrower that is designated by the Borrower as an “Unrestricted Subsidiary” as provided in Section 5.23; provided that an Unrestricted Subsidiary shall cease to be an Unrestricted Subsidiary if converted to a Restricted Subsidiary in accordance with Section 5.23; provided further, that in no event will Moran Foods constitute an Unrestricted Subsidiary.  As of the Closing Date, no Subsidiary of the Borrower is an Unrestricted Subsidiary.

 

58



 

USA PATRIOT Act ” shall mean The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Title III of Pub. L. No. 107-56 (signed into law October 26, 2001)).

 

Value ” shall mean (a) the value of the Real Estate sites (and the Equipment located thereon that is owned by the Borrower or its Subsidiaries) as set forth in the Closing Date Collateral List, and (b) with respect to any Substitute Property or Additional Property (and the Equipment located thereon that is owned by the Borrower or its Subsidiaries), the book value thereof (and, in the case of any Replaced Property or Released Property, the value thereof as set forth in the Applicable Collateral List) or, with respect to any Real Estate site valued pursuant to a New Valuation, the value of such Real Estate site (and the Equipment located thereon that is owned by the Borrower or its Subsidiaries) set forth in such New Valuation.

 

Weighted Average Life to Maturity ” shall mean, when applied to any Indebtedness at any date, the number of years obtained by dividing (a) the then outstanding principal amount of such Indebtedness by (b) the total of the product of (i) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect thereof multiplied by (ii) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment.

 

Yield Differential ” shall have the meaning assigned to such term in Section 2.22(b).

 

SECTION 1.02.  Terms Generally .  The definitions in Section 1.01 shall apply equally to both the singular and plural forms of the terms defined.  Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms.  The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”.  The word “will” shall be construed to have the same meaning and effect as the word “shall”; and the words “asset” and “property” shall be construed as having the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.  Any reference to any law, code, statute, treaty, rule, guideline, regulation or ordinance of a Governmental Authority shall, unless otherwise specified, refer to such law, code, statute, treaty, rule, guideline, regulation or ordinance as amended, supplemented or otherwise modified from time to time.  Any reference to any IRS form shall be construed to include any successor form.  All references herein to Articles, Sections, Exhibits and Schedules shall be deemed references to Articles and Sections of, and Exhibits and Schedules to, this Agreement unless the context shall otherwise require.  Except as otherwise expressly provided herein, (a) any reference in this Agreement to any Loan Document or other agreement, document or instrument shall mean such document as amended, restated, supplemented or otherwise modified from time to time, in each case, in accordance with the express terms of this Agreement, and (b) all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect from time to time; provided , however , that if the Borrower notifies the Administrative Agent that the Borrower wishes to amend any calculation or any related definition to eliminate the effect of any change in GAAP occurring after the date of this Agreement on the operation of such covenant (or if the Administrative Agent notifies the Borrower that the Required Lenders wish to amend any calculation or any related definition), then the Borrower’s compliance with such covenant shall be determined on the basis of GAAP in effect immediately before the relevant change in GAAP became effective,

 

59



 

until either such notice is withdrawn or such covenant or definition is amended in a manner satisfactory to the Borrower and the Required Lenders.  Neither this Agreement or any other Loan Document nor any other agreement, document or instrument referred to herein or executed and delivered in connection herewith shall be construed against any Person as the principal draftsperson hereof or thereof.

 

SECTION 1.03.  Pro Forma Calculations .   All pro forma calculations permitted or required to be made by the Borrower or any Subsidiary pursuant to this Agreement shall include only those adjustments that would be (a) permitted or required by Regulation S-X under the Securities Act of 1933, as amended, together with those adjustments that (i) have been certified by a Responsible Officer of the Borrower as having been prepared in good faith based upon reasonable assumptions and (ii) are based on reasonably detailed written assumptions reasonably acceptable to the Administrative Agent and (b) required by the definition Consolidated EBITDA. 

 

SECTION 1.04.  Classification of Loans and Borrowings .   For purposes of this Agreement, Loans may be classified and referred to by Class ( e.g. , an “Other Loan”) or by Class and Type ( e.g. , a “Eurodollar Other Loan”) . Borrowings also may be classified and referred to by Class ( e.g. , an “Other Borrowing”) or by Class and Type ( e.g. , an “Other Eurodollar Borrowing”).

 

ARTICLE II

 

The Credits

 

SECTION 2.01.  Commitments .  (a)   Subject to the terms and conditions and relying upon the representations and warranties herein set forth, each Lender agrees, severally and not jointly, to make a Loan to the Borrower on the Closing Date in a principal amount not to exceed its Commitment.  Amounts paid or prepaid in respect of the Loans may not be reborrowed.

 

(b)   Each Lender having an Incremental Loan Commitment, severally and not jointly, hereby agrees, subject to the terms and conditions and relying upon the representations and warranties set forth herein and in the applicable Incremental Loan Assumption Agreement, to make Incremental Loans to the Borrower, in an aggregate principal amount not to exceed its Incremental Loan Commitment.  Amounts paid or prepaid in respect of Incremental Loans may not be reborrowed.

 

SECTION 2.02.  Loans .  (a)  Each Loan shall be made as part of a Borrowing consisting of Loans made by the Lenders ratably in accordance with their applicable Commitments; provided , however , that the failure of any Lender to make any Loan shall not in itself relieve any other Lender of its obligation to lend hereunder (it being understood, however, that no Lender shall be responsible for the failure of any other Lender to make any Loan required to be made by such other Lender).  The Loans comprising any Borrowing shall be in an aggregate principal amount that is (i) an integral multiple of $1,000,000 and not less than $5,000,000 (except, with respect to any Incremental Borrowing, to the extent otherwise provided in the related Incremental Loan Assumption Agreement) or (ii) equal to the remaining available balance of the applicable Commitments.

 

(b)  Subject to Sections 2.08 and 2.15, each Borrowing shall be comprised entirely of ABR Loans or Eurodollar Loans as the Borrower may request pursuant to Section 2.03. Each Lender may at its option make any Eurodollar Loan by causing any domestic or foreign branch

 

60



 

or Affiliate of such Lender to make such Loan; provided that any exercise of such option shall not affect the obligation of the Borrower to repay such Loan in accordance with the terms of this Agreement. Borrowings of more than one Type may be outstanding at the same time; provided , however , that the Borrower shall not be entitled to request any Borrowing that, if made, would result in more than eight Eurodollar Borrowings outstanding hereunder at any time. For purposes of the foregoing, Borrowings having different Interest Periods, regardless of whether they commence on the same date, shall be considered separate Borrowings.

 

(c)  Each Lender shall make each Loan or Incremental Loan to be made by it hereunder on the Closing Date or the proposed date of Borrowing thereof, as applicable, by wire transfer of immediately available funds to such account in New York City as the Administrative Agent may designate not later than 9:00 a.m., New York City time, and the Administrative Agent shall promptly wire transfer the amounts so received in accordance with instructions received from the Borrower in the applicable Borrowing Request or, if a Borrowing shall not occur on such date because any condition precedent herein specified shall not have been met, return the amounts so received to the respective Lenders.

 

(d)  Unless the Administrative Agent shall have received notice from a Lender prior to the date of any Borrowing that such Lender will not make available to the Administrative Agent such Lender’s portion of such Borrowing, the Administrative Agent may assume that such Lender has made such portion available to the Administrative Agent on the date of such Borrowing in accordance with Section 2.02(c) and the Administrative Agent may, in reliance upon such assumption, make available to the Borrower on such date a corresponding amount. If the Administrative Agent shall have so made funds available then, to the extent that such Lender shall not have made such portion available to the Administrative Agent, such Lender and the Borrower severally agree to repay to the Administrative Agent forthwith on demand such corresponding amount together with interest thereon, for each day from the date such amount is made available to the Borrower to but excluding the date such amount is repaid to the Administrative Agent at (i) in the case of the Borrower, a rate per annum equal to the interest rate applicable at the time to the Loans comprising such Borrowing and (ii) in the case of such Lender, a rate determined by the Administrative Agent to represent its cost of overnight or short-term funds (which determination shall be conclusive absent manifest error). If such Lender shall repay to the Administrative Agent such corresponding amount, such amount shall constitute such Lender’s Loan as part of such Borrowing for purposes of this Agreement.

 

SECTION 2.03.  Borrowing Procedure .  In order to request a Borrowing, the Borrower shall notify the Administrative Agent of such request by telephone (a) in the case of a Eurodollar Borrowing, not later than 2:00 p.m., New York City time, three Business Days before a proposed Borrowing, and (b) in the case of an ABR Borrowing, not later than 2:00 p.m., New York City time, one Business Day before a proposed Borrowing.  Each such telephonic Borrowing Request shall be irrevocable, and shall be confirmed promptly by hand delivery, e-mail or fax to the Administrative Agent of a written Borrowing Request and shall specify the following information: (i) whether the Borrowing then being requested is to be a Borrowing of Loans or a Borrowing of Incremental Loans and whether such Borrowing is to be a Eurodollar Borrowing or an ABR Borrowing ( provided that, until the Administrative Agent shall have notified the Borrower that the primary syndication of the Commitments has been completed (which notice shall be given as promptly as practicable and, in any event, within 30 days after the Closing

 

61



 

Date), the Borrower shall not be permitted to request a Eurodollar Borrowing with an Interest Period in excess of one month); provided , however , that the initial Interest Period of any Eurodollar Borrowing made on the Closing Date shall commence on the Closing Date and end on March 31, 2013; (ii) the date of such Borrowing (which shall be a Business Day); (iii) the number and location of the account to which funds are to be disbursed; (iv) the amount of such Borrowing; and (v) if such Borrowing is to be a Eurodollar Borrowing, the Interest Period with respect thereto; provided , however , that, notwithstanding any contrary specification in any Borrowing Request, each requested Borrowing shall comply with the requirements set forth in Section 2.02.  If no election as to the Type of Borrowing is specified in any such notice, then the requested Borrowing shall be an ABR Borrowing.  If no Interest Period with respect to any Eurodollar Borrowing is specified in any such notice, then the Borrower shall be deemed to have selected an Interest Period of one month’s duration.  The Administrative Agent shall promptly advise the applicable Lenders of any notice given pursuant to this Section 2.03 (and the contents thereof), and of each Lender’s portion of the requested Borrowing.

 

SECTION 2.04.  Evidence of Debt; Repayment of Loans .  (a)  The Borrower hereby unconditionally promises to pay to the Administrative Agent for the account of each Lender the principal amount of each Loan of such Lender as provided in Section 2.11.

 

(b)  Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to such Lender resulting from each Loan made by such Lender from time to time, including the amounts of principal and interest payable and paid to such Lender from time to time under this Agreement.

 

(c)  The Administrative Agent shall maintain the Register in which it will record (i) the amount of each Loan made hereunder, the Class and Type thereof and, if applicable, the Interest Period applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder and (iii) the amount of any sum received by the Administrative Agent hereunder from the Borrower or any Guarantor and each Lender’s share thereof.

 

(d)  The entries made in the Register maintained pursuant to Section 2.04(c) shall be prima facie evidence of the existence and amounts of the obligations therein recorded; provided , however , that the failure of any Lender or the Administrative Agent to maintain such accounts or any error therein shall not in any manner affect the obligations of the Borrower to repay the Loans in accordance with their terms.

 

(e)  Any Lender may request that Loans made by it hereunder be evidenced by a promissory note.  In such event, the Borrower shall execute and deliver to such Lender a promissory note payable to such Lender and its registered assigns and in the form attached hereto as Exhibit J.  Notwithstanding any other provision of this Agreement, in the event any Lender shall request and receive such a promissory note, the interests represented by such note shall at all times thereafter (including after any assignment of all or part of such interests pursuant to Section 9.04) be represented by one or more promissory notes payable to the payee named therein or its registered assigns.

 

62



 

SECTION 2.05.  Fees .  The Borrower agrees to pay to the Administrative Agent, for its own account, the administrative fees set forth in the Fee Letter at the times and in the amounts specified therein (the “ Administrative Agent Fees ”).  In addition, the Borrower agrees to pay on the Closing Date to each Lender that is party to this Agreement as a Lender on the Closing Date, as fee compensation for the funding of such Lender’s Loan, a closing fee (collectively, the “ Participation Fees ”) in an amount equal to 1.00% of the stated principal amount of such Lender’s Loan, payable to such Lender from the proceeds of its Loan as and when funded on the Closing Date.  Such Participation Fees will be in all respects fully earned, due and payable on the Closing Date.

 

All Fees shall be paid on the dates due, in immediately available funds, to the Administrative Agent for distribution, if and as appropriate, among the Lenders.  Once paid, none of the Fees shall be refundable under any circumstances.

 

SECTION 2.06.  Interest on Loans .  (a)  Subject to the provisions of Section 2.07, the Loans comprising each ABR Borrowing shall bear interest (computed on the basis of the actual number of days elapsed over a year of 365 or 366 days, as the case may be, when the Alternate Base Rate is determined by reference to the Prime Rate and over a year of 360 days at all other times and calculated from and including the date of such Borrowing to but excluding the date of repayment thereof) at a rate per annum equal to the Alternate Base Rate plus the Applicable Margin.

 

(b)  Subject to the provisions of Section 2.07, the Loans comprising each Eurodollar Borrowing shall bear interest (computed on the basis of the actual number of days elapsed over a year of 360 days) at a rate per annum equal to the Adjusted LIBO Rate for the Interest Period in effect for such Borrowing plus the Applicable Margin.

 

(c)  Interest on each Loan shall be payable on the Interest Payment Dates applicable to such Loan except as otherwise provided in this Agreement. The applicable Alternate Base Rate or Adjusted LIBO Rate for each Interest Period or day within an Interest Period, as the case may be, shall be determined by the Administrative Agent, and such determination shall be conclusive absent manifest error.

 

SECTION 2.07.  Default Interest .  If any Event of Default under Sections 7.01(a), 7.01(f) or 7.01(g) has occurred and is continuing then, until such defaulted amount shall have been paid in full, to the extent permitted by law, such defaulted amounts shall bear interest (after as well as before judgment), payable on demand, (a) in the case of principal, at the rate otherwise applicable to such Loan pursuant to Section 2.06 plus 2.00% per annum and (b) in all other cases, at a rate per annum (computed on the basis of the actual number of days elapsed over a year of 365 or 366 days, as the case may be, when determined by reference to the Prime Rate and over a year of 360 days at all other times) equal to the rate that would be applicable to an ABR Loan plus 2.00% per annum .

 

SECTION 2.08.  Alternate Rate of Interest .  In the event, and on each occasion, that on the day two Business Days prior to the commencement of any Interest Period for a Eurodollar Borrowing the Administrative Agent shall have determined (a) that Dollar deposits in the principal amounts of the Loans comprising such Borrowing are not generally available in the

 

63



 

London interbank market, (b) that the rates at which such Dollar deposits are being offered will not adequately and fairly reflect the cost to the Required Lenders of making or maintaining Eurodollar Loans during such Interest Period or (c) that reasonable means do not exist for ascertaining the Adjusted LIBO Rate, the Administrative Agent shall, as soon as practicable thereafter, give written or fax notice of such determination to the Borrower and the Lenders. In the event of any such determination, until the Administrative Agent shall have advised the Borrower and the Lenders that the circumstances giving rise to such notice no longer exist, any request by the Borrower for a Eurodollar Borrowing pursuant to Sections 2.03 or 2.10 shall be deemed to be a request for an ABR Borrowing.  Each determination by the Administrative Agent under this Section 2.08 shall be conclusive absent manifest error.

 

SECTION 2.09.  Termination of Commitments .  (a)  The Commitments (other than any Incremental Loan Commitments, which shall terminate as provided in the related Incremental Loan Assumption Agreement) shall automatically terminate upon the making of the Loans on the Closing Date.

 

(b)  Upon at least three Business Days’ prior irrevocable written or fax notice to the Administrative Agent, the Borrower may at any time in whole permanently terminate, or from time to time in part permanently reduce, the Commitments; provided , however , that each partial reduction of the Commitments shall be in an integral multiple of $1,000,000 and in a minimum amount of $5,000,000.

 

(c)  Each reduction in the Commitments hereunder shall be made ratably among the Lenders in accordance with their respective applicable Commitments.

 

SECTION 2.10.  Conversion and Continuation of Borrowings .  The Borrower shall have the right at any time upon prior irrevocable notice (including by telephone or e-mail, which in the case of telephonic notice, shall be promptly followed by written notice) to the Administrative Agent (a) not later than 2:00 p.m., New York City time, one Business Day prior to conversion, to convert any Eurodollar Borrowing into an ABR Borrowing, (b) not later than 2:00 p.m., New York City time, three Business Days prior to conversion or continuation, to convert any ABR Borrowing into a Eurodollar Borrowing or to continue any Eurodollar Borrowing as a Eurodollar Borrowing for an additional Interest Period, and (c) not later than 2:00 p.m., New York City time, three Business Days prior to conversion, to convert the Interest Period with respect to any Eurodollar Borrowing to another permissible Interest Period, subject in each case to the following:

 

(i)  until the Administrative Agent shall have notified the Borrower that the primary syndication of the Commitments has been completed (which notice shall be given as promptly as practicable and, in any event, within 30 days after the Closing Date), no ABR Borrowing may be converted into a Eurodollar Borrowing with an Interest Period in excess of one month;

 

(ii)  each conversion or continuation shall be made pro rata among the Lenders in accordance with the respective principal amounts of the Loans comprising the converted or continued Borrowing;

 

(iii)  if less than all the outstanding principal amount of any Borrowing shall be converted or continued, then each resulting Borrowing shall satisfy the limitations

 

64



 

specified in Sections 2.02(a) and 2.02(b) regarding the principal amount and maximum number of Borrowings of the relevant Type;

 

(iv)  each conversion shall be effected by each Lender and the Administrative Agent by recording for the account of such Lender the new Loan of such Lender resulting from such conversion and reducing the Loan (or portion thereof) of such Lender being converted by an equivalent principal amount; accrued interest on any Eurodollar Loan (or portion thereof) being converted shall be paid by the Borrower at the time of conversion;

 

(v)  if any Eurodollar Borrowing is converted at a time other than the end of the Interest Period applicable thereto, the Borrower shall pay, upon demand, any amounts due to the Lenders pursuant to Section 2.16;

 

(vi)  any portion of a Borrowing maturing or required to be repaid in less than one month may not be converted into or continued as a Eurodollar Borrowing;

 

(vii)  any portion of a Eurodollar Borrowing that cannot be converted into or continued as a Eurodollar Borrowing by reason of the immediately preceding clause shall be automatically converted at the end of the Interest Period in effect for such Borrowing into an ABR Borrowing;

 

(viii)  no Interest Period may be selected for any Eurodollar Borrowing that would end later than a Repayment Date occurring on or after the first day of such Interest Period if, after giving effect to such selection, the aggregate outstanding amount of (A) the Eurodollar Borrowings comprised of Loans or Other Loans, as applicable, with Interest Periods ending on or prior to such Repayment Date and (B) the ABR Borrowings comprised of Loans or Other Loans, as applicable, would not be at least equal to the principal amount of Borrowings to be paid on such Repayment Date; and

 

(ix)  upon notice to the Borrower from the Administrative Agent given at the request of the Required Lenders, after the occurrence and during the continuance of a Default or Event of Default, no outstanding Loan may be converted into, or continued as, a Eurodollar Loan.

 

Each notice pursuant to this Section 2.10 shall be irrevocable and shall refer to this Agreement and specify (i) the identity and amount of the Borrowing that the Borrower requests be converted or continued, (ii) whether such Borrowing is to be converted to or continued as a Eurodollar Borrowing or an ABR Borrowing, (iii) if such notice requests a conversion, the date of such conversion (which shall be a Business Day) and (iv) if such Borrowing is to be converted to or continued as a Eurodollar Borrowing, the Interest Period with respect thereto.  If no Interest Period is specified in any such notice with respect to any conversion to or continuation as a Eurodollar Borrowing, the Borrower shall be deemed to have selected an Interest Period of one month’s duration. The Administrative Agent shall advise the Lenders of any notice given pursuant to this Section 2.10 and of each Lender’s portion of any converted or continued Borrowing. If the Borrower shall not have given notice in accordance with this Section 2.10 to continue any Borrowing into a subsequent Interest Period (and shall not otherwise have given notice in accordance with this Section 2.10 to convert such Borrowing), such Borrowing shall, at

 

65



 

the end of the Interest Period applicable thereto (unless repaid pursuant to the terms hereof), automatically be converted to an ABR Borrowing.

 

SECTION 2.11.  Repayment of Borrowings .  (a)  (i)  The Borrower shall pay to the Administrative Agent, for the account of the Lenders, on the dates set forth below, or if any such date is not a Business Day, on the next preceding Business Day (each such date being called a “ Repayment Date ”), a principal amount of the Loans other than Other Loans (as adjusted from time to time pursuant to Sections 2.11(b), 2.12, 2.13(f) and 2.22(d)) equal to the amount set forth below for such date, together in each case with accrued and unpaid interest on the principal amount to be paid to but excluding the date of such payment:

 

Repayment Date

 

Amount

 

June 30, 2013

 

$

3,750,000

 

September 30, 2013

 

$

3,750,000

 

December 31, 2013

 

$

3,750,000

 

March 31, 2014

 

$

3,750,000

 

June 30, 2014

 

$

3,750,000

 

September 30, 2014

 

$

3,750,000

 

December 31, 2014

 

$

3,750,000

 

March 31, 2015

 

$

3,750,000

 

June 30, 2015

 

$

3,750,000

 

September 30, 2015

 

$

3,750,000

 

December 31, 2015

 

$

3,750,000

 

March 31, 2016

 

$

3,750,000

 

June 30, 2016

 

$

3,750,000

 

September 30, 2016

 

$

3,750,000

 

December 31, 2016

 

$

3,750,000

 

March 31, 2017

 

$

3,750,000

 

June 30, 2017

 

$

3,750,000

 

September 30, 2017

 

$

3,750,000

 

December 31, 2017

 

$

3,750,000

 

March 31, 2018

 

$

3,750,000

 

June 30, 2018

 

$

3,750,000

 

September 30, 2018

 

$

3,750,000

 

December 31, 2018

 

$

3,750,000

 

Maturity Date

 

Remaining unpaid principal amount of the Loans

 

 

(ii)   The Borrower shall pay to the Administrative Agent, for the account of the Incremental Lenders, on each Incremental Loan Repayment Date, a principal amount of the Other Loans (as adjusted from time to time pursuant to Sections 2.11(b), 2.12 and 2.13(f)) equal to the amount set forth for such date in the applicable Incremental Loan Assumption Agreement, together in each case with accrued and unpaid interest on the principal amount to be paid to but excluding the date of such payment.

 

66



 

(b)  In the event and on each occasion that the Incremental Loan Commitments shall be reduced or shall expire or terminate other than as a result of the making of an Incremental Loan, the installments payable on each Incremental Repayment Date shall be reduced pro rata by an aggregate amount equal to the amount of such reduction, expiration or termination.

 

(c)  To the extent not previously paid, all Loans, Other Loans and Extended Loans shall be due and payable on the Maturity Date, the Incremental Loan Maturity Date and the maturity date of such Extended Loans, respectively, together with accrued and unpaid interest on the principal amount to be paid to but excluding the date of payment.

 

(d)  All repayments pursuant to this Section 2.11 shall be subject to Section 2.16, but shall otherwise be without premium or penalty.

 

SECTION 2.12.  Voluntary Prepayments .  (a)  The Borrower shall have the right at any time and from time to time to prepay any Borrowing, in whole or in part, upon at least three Business Days’ prior written or fax notice (or telephone notice promptly confirmed by written or fax notice) in the case of Eurodollar Loans, or written or fax notice (or telephone notice promptly confirmed by written or fax notice) at least one Business Day prior to the date of prepayment in the case of ABR Loans, to the Administrative Agent before 12:00 noon, New York City time; provided , however , that each partial prepayment shall be in an amount that is an integral multiple of $1,000,000 and not less than $5,000,000.

 

(b)  Voluntary prepayments of outstanding Loans shall be applied against the remaining scheduled installments of principal due in respect of the Loans under Section 2.11 as directed by the Borrower.

 

(c)  Each notice of prepayment shall specify the prepayment date and the principal amount of each Borrowing (or portion thereof) to be prepaid, shall be irrevocable and shall commit the Borrower to prepay such Borrowing by the amount stated therein on the date stated therein; provided , however , that if such prepayment is for all of the then outstanding Loans, then the Borrower may revoke such notice and/or extend the prepayment date by not more than five Business Days; provided , further , however , that the provisions of Section 2.16 shall apply with respect to any such revocation or extension. All prepayments under this Section 2.12 shall be subject to Section 2.16 but otherwise without premium or penalty (subject to the last sentence of this Section 2.12(c)).  All prepayments under this Section 2.12 shall be accompanied by accrued and unpaid interest on the principal amount to be prepaid to but excluding the date of payment.  In the event that prior to the first anniversary of the Closing Date, the Borrower (i) voluntarily prepays or otherwise refinances, substitutes or replaces any Loans pursuant to any Repricing Transaction or (ii) effects any amendment of this Agreement resulting in a Repricing Transaction, then the Borrower shall pay to the Lenders (x) in the case of clause (i), a fee of 1.00% of the aggregate principal amount of Loans so voluntarily prepaid, refinanced, substituted or replaced and (y) in the case of clause (ii), a fee equal to 1.00% of the aggregate principal amount of the applicable Loans outstanding immediately prior to such amendment.

 

67



 

SECTION 2.13.  Mandatory Prepayments .

 

(a)  Not later than the tenth day following the receipt of Net Cash Proceeds in respect of any Term Loan Priority Collateral Sale, the Borrower shall apply 100% of the Net Cash Proceeds received with respect thereto to prepay outstanding Loans in accordance with Section 2.13(f); provided that, if (i) the Borrower shall deliver a certificate of a Responsible Officer to the Administrative Agent at the time of receipt thereof setting forth the Borrower’s intent to reinvest such proceeds in productive assets of a kind then used or usable in the business of the Borrower and its Restricted Subsidiaries within 365 days of receipt of such proceeds, (ii) such proceeds are at all times following the receipt thereof and prior to such reinvestment, held in a depositary account maintained in accordance with Section 5.22 hereof and subject to a Blocked Account Agreement in favor of the Collateral Agent and the ABL Collateral Agent and (iii) no Default or Event of Default shall have occurred and shall be continuing at the time of such certificate or at the proposed time of the application of such proceeds, such proceeds shall not be required to prepay outstanding Loans except to the extent not so used at the end of such 365-day period or committed to be so used at the end of and so used within 180 days after the end of such 365-day period, at which time any such proceeds not so used shall be applied to prepay outstanding Loans in accordance with Section 2.13(f); provided , further , that the Net Cash Proceeds received with respect thereto shall be reinvested (v) such that after giving effect to such reinvestment, the Related Real Estate Collateral shall not constitute more than 45% of the aggregate Value of the Real Estate Collateral Properties and the Related Real Estate Collateral, (w) such that after giving effect to such reinvestment, the owned Real Estate Collateral Properties shall constitute at least 50% of the aggregate Value of the Real Estate Collateral Properties and the Related Real Estate Collateral, (x) to the extent attributable to a Loan Party, in assets of a Loan Party, (y) to the extent attributable to Related Real Estate Collateral or Real Estate Collateral Properties, in Related Real Estate Collateral or Real Estate Collateral Properties and (z) in Term Loan Priority Collateral.

 

(b)  In the event that the Borrower or any Restricted Subsidiary conducts any Other Asset Sale for which the Net Cash Proceeds exceed $5,000,000, then the Borrower shall apply 100% of the Net Cash Proceeds received with respect thereto to prepay outstanding Loans in accordance with Section 2.13(f) not later than the tenth day following the receipt of such Net Cash Proceeds; provided that if (x) the Borrower shall deliver a certificate of a Responsible Officer to the Administrative Agent at the time of receipt thereof setting forth the Borrower’s intent to reinvest such proceeds in productive assets of a kind then used or usable in the business of the Borrower and its Restricted Subsidiaries within 365 days of receipt of such proceeds, (y) such proceeds attributable to Term Loan Priority Collateral are at all times following the receipt thereof and prior to such reinvestment, held in a depositary account maintained in accordance with Section 5.22 hereof and subject to a Blocked Account Agreement in favor of the Collateral Agent and the ABL Collateral Agent and (z) no Default or Event of Default shall have occurred and shall be continuing at the time of such certificate or at the proposed time of the application of such proceeds, such proceeds shall not be required to prepay outstanding Loans except to the extent not so used at the end of such 365-day period or committed to be so used at the end of and so used within 180 days after the end of such 365-day period, at which time any such proceeds not so used shall be applied to prepay outstanding Loans in accordance with Section 2.13(f); provided, further, that the Net Cash Proceeds received with respect thereto shall be reinvested (v) to the extent attributable to Term Loan Priority Collateral, such that after giving effect to such reinvestment, the Related Real Estate Collateral shall not constitute more than 45% of the aggregate Value of the Real Estate Collateral Properties and the Related Real Estate Collateral,

 

68



 

(w) to the extent attributable to Term Loan Priority Collateral, such that after giving effect to such reinvestment, the owned Real Estate Collateral Properties shall constitute at least 50% of the aggregate Value of the Real Estate Collateral Properties and the Related Real Estate Collateral, (x) to the extent attributable to a Loan Party, in assets of a Loan Party, (y) to the extent attributable to Term Loan Priority Collateral that is Related Real Estate Collateral or Real Estate Collateral Properties, in Related Real Estate Collateral or Real Estate Collateral Properties and (z) to the extent attributable to Term Loan Priority Collateral, in other Term Loan Priority Collateral.

 

(c)  No later than 90 days after the end of each Fiscal Year of the Borrower, commencing with the Fiscal Year ending closest to February 28, 2014, the Borrower shall prepay outstanding Loans in accordance with Section 2.13(f) in an aggregate principal amount equal to (x) 50% of Excess Cash Flow for the Fiscal Year then ended minus (y) voluntary prepayments of Loans under Section 2.12 made during such Fiscal Year with Internally Generated Cash; provided that such prepayments do not occur in connection with a refinancing of all or any portion of such Indebtedness; provided , further , that the Excess Cash Flow percentage for any Fiscal Year with respect to which Excess Cash Flow is measured shall be reduced to (A) 25% if the Total Secured Leverage Ratio as of the last day of such Fiscal Year is less than or equal to 2.00:1.00 but greater than 1.50:1.00 and (B) zero if the Total Secured Leverage Ratio as of the last day of such Fiscal Year is less than or equal to 1.50:1.00.

 

(d)  In the event that the Borrower or any Restricted Subsidiary shall receive Net Cash Proceeds from the issuance or incurrence of Indebtedness for money borrowed (other than Permitted Indebtedness), the Borrower shall, substantially simultaneously with (and in any event not later than the first Business Day next following) the receipt of such Net Cash Proceeds by the Borrower or such Restricted Subsidiary, apply an amount equal to 100% of such Net Cash Proceeds to prepay outstanding Loans in accordance with Section 2.13(f).

 

(e)  Not later than the tenth day following the receipt of Net Cash Proceeds in respect of any Moran Sale, the Borrower shall apply an amount equal to (x) 100% of the first $750,000,000 of Net Cash Proceeds received with respect thereto and (y) thereafter, 50% of the Net Cash Proceeds in excess of such amount up to an amount that would cause the Total Secured Leverage Ratio on a pro forma basis after giving effect to such prepayment to be 1.50:1.00, in each case to prepay outstanding Loans in accordance with Section 2.13(f).

 

(f)  Mandatory prepayments of outstanding Loans under this Agreement shall be allocated pro rata between the Loans, the Other Loans and the Extended Loans (unless Other Loans or Extended Loans agreed to receive less than their pro rata share) and applied first , to the next four succeeding scheduled installments of principal due in respect of the Loans, Other Loans and Extended Loans under Sections 2.11(a)(i) and (ii), respectively, second , pro rata against the remaining scheduled installments of principal due in respect of the Loans, Other Loans and the Extended Loans under Sections 2.11(a)(i) and (ii), respectively (excluding the final payments on the Maturity Date of the Loans (or the maturity date in respect of such Other Loans or Extended Loans) under Sections 2.11(a)(i) and (ii), respectively and third , to the final payment on the Maturity Date of the Loans (or the final payment on the maturity date of such Other Loans or Extended Loans).

 

69



 

(g)  The Borrower shall deliver to the Administrative Agent, at the time of each prepayment required under this Section 2.13, (i) a certificate signed by a Responsible Officer of the Borrower setting forth in reasonable detail the calculation of the amount of such prepayment and (ii) to the extent practicable (except in respect of prepayments required under Section 2.13(d)), at least three Business Days prior written notice of such prepayment.  Each notice of prepayment shall specify the prepayment date, the Type of each Loan being prepaid and the principal amount of each Loan (or portion thereof) to be prepaid.  All prepayments of Borrowings under this Section 2.13 shall be subject to Section 2.16, but shall otherwise be without premium or penalty, and shall be accompanied by accrued and unpaid interest on the principal amount to be prepaid to but excluding the date of payment.

 

SECTION 2.14.  Reserve Requirements; Change in Circumstances .  (a)  Notwithstanding any other provision of this Agreement, if any Change in Law shall impose, modify or deem applicable any reserve, special deposit, liquidity requirement, Tax (other than Indemnified Taxes indemnified pursuant to Section 2.20 and Excluded Taxes) or similar requirement against assets of, deposits with or for the account of or credit extended by any Lender (except any such reserve requirement which is reflected in the Adjusted LIBO Rate) or shall impose on such Lender or the London interbank market any other condition affecting this Agreement or Eurodollar Loans made by such Lender, and the result of any of the foregoing shall be to increase the cost to such Lender of making or maintaining any Eurodollar Loan or increase the cost to any Lender or to reduce the amount of any sum received or receivable by such Lender hereunder (whether of principal, interest or otherwise) by an amount deemed by such Lender to be material, then the Borrower will pay to such Lender upon demand such additional amount or amounts as will compensate such Lender for such additional costs incurred or reduction suffered.

 

(b)  If any Lender shall have determined that any Change in Law regarding capital adequacy or liquidity has had or would have the effect of reducing the rate of return on such Lender’s capital or on the capital of such Lender’s holding company, if any, as a consequence of this Agreement or the Loans made by such Lender pursuant hereto to a level below that which such Lender or such Lender’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s policies and the policies of such Lender’s holding company with respect to capital adequacy and liquidity) by an amount deemed by such Lender to be material, then from time to time the Borrower shall pay to such Lender upon demand such additional amount or amounts as will compensate such Lender or such Lender’s holding company for any such reduction suffered.

 

(c)  A certificate of a Lender setting forth (i) the amount or amounts necessary to compensate such Lender or its holding company, as applicable, and (ii) the calculations supporting such amount or amounts, as specified in Sections 2.14(a) or 2.14(b) shall be delivered to the Borrower and shall be conclusive absent manifest error.  The Borrower shall pay such Lender the amount shown as due on any such certificate delivered by it within 10 days after its receipt of the same.

 

(d)  Failure or delay on the part of any Lender to demand compensation for any increased costs or reduction in amounts received or receivable or reduction in return on capital shall not constitute a waiver of such Lender’s right to demand such compensation; provided that the

 

70



 

Borrower shall not be under any obligation to compensate any Lender under Sections 2.14(a) or 2.14(b) with respect to increased costs or reductions with respect to any period prior to the date that is 180 days prior to such request if such Lender knew or would reasonably have been expected to know of the circumstances giving rise to such increased costs or reductions and of the fact that such circumstances would result in a claim for increased compensation by reason of such increased costs or reductions; provided , further , that the foregoing limitation shall not apply to any increased costs or reductions arising out of the retroactive application of any Change in Law within such 180-day period. The protection of this Section 2.14 shall be available to each Lender regardless of any possible contention of the invalidity or inapplicability of the Change in Law that shall have occurred or been imposed.

 

SECTION 2.15.  Change in Legality .  (a)  Notwithstanding any other provision of this Agreement, if any Change in Law shall make it unlawful for any Lender to make or maintain any Eurodollar Loan or to give effect to its obligations as contemplated hereby with respect to any Eurodollar Loan, then, by written notice to the Borrower and to the Administrative Agent:

 

(i) such Lender may declare that Eurodollar Loans will not thereafter (for the duration of such unlawfulness) be made by such Lender hereunder (or be continued for additional Interest Periods) and ABR Loans will not thereafter (for such duration) be converted into Eurodollar Loans, whereupon any request for a Eurodollar Borrowing (or to convert an ABR Borrowing to a Eurodollar Borrowing or to continue a Eurodollar Borrowing for an additional Interest Period) shall, as to such Lender only, be deemed a request for an ABR Loan (or a request to continue an ABR Loan as such for an additional Interest Period or to convert a Eurodollar Loan into an ABR Loan, as the case may be), unless such declaration shall be subsequently withdrawn; and

 

(ii) such Lender may require that all outstanding Eurodollar Loans made by it be converted to ABR Loans, in which event all such Eurodollar Loans shall be automatically converted to ABR Loans as of the effective date of such notice as provided in Section 2.15(b).

 

In the event any Lender shall exercise its rights under clauses (i) or (ii) above, all payments and prepayments of principal that would otherwise have been applied to repay the Eurodollar Loans that would have been made by such Lender or the converted Eurodollar Loans of such Lender shall instead be applied to repay the ABR Loans made by such Lender in lieu of, or resulting from the conversion of, such Eurodollar Loans.

 

(b)  For purposes of this Section 2.15, a notice to the Borrower by any Lender shall be effective as to each Eurodollar Loan made by such Lender, if lawful, on the last day of the Interest Period then applicable to such Eurodollar Loan; in all other cases such notice shall be effective on the date of receipt by the Borrower.

 

SECTION 2.16.  Breakage .  The Borrower shall indemnify each Lender against any loss or expense that such Lender may sustain or incur as a consequence of (a) any event, other than a default by such Lender in the performance of its obligations hereunder, which results in (i) such Lender receiving or being deemed to receive any amount on account of the principal of any Eurodollar Loan prior to the end of the Interest Period in effect therefor, (ii) the conversion of

 

71



 

any Eurodollar Loan to an ABR Loan, or the conversion of the Interest Period with respect to any Eurodollar Loan, in each case other than on the last day of the Interest Period in effect therefor, or (iii) any Eurodollar Loan to be made by such Lender (including any Eurodollar Loan to be made pursuant to a conversion or continuation under Section 2.10) not being made after notice of such Loan shall have been given by the Borrower hereunder (any of the events referred to in this clause (a) being called a “ Breakage Event ”) or (b) any default in the making of any payment or prepayment of any Eurodollar Loan required to be made hereunder.  In the case of any Breakage Event, such loss shall include an amount equal to the excess, as reasonably determined by such Lender, of (i) its cost of obtaining funds for the Eurodollar Loan that is the subject of such Breakage Event for the period from the date of such Breakage Event to the last day of the Interest Period in effect (or that would have been in effect) for such Loan over (ii) the amount of interest likely to be realized by such Lender in redeploying the funds released or not utilized by reason of such Breakage Event for such period.  Each Lender shall provide a certificate setting forth any amount or amounts which such Lender is entitled to receive pursuant to this Section 2.16 to the Borrower within 180 days after the Breakage Event and such certificate shall be conclusive absent manifest error.

 

SECTION 2.17.  Pro Rata Treatment .  Except as required under Section 2.15 or otherwise stated herein, each Borrowing, each payment or prepayment of principal of any Borrowing, each payment of interest on the Loans and each conversion of any Borrowing to or continuation of any Borrowing as a Borrowing of any Type shall be allocated pro rata among the Lenders in accordance with their respective applicable Commitments (or, if such Commitments shall have expired or been terminated, in accordance with the respective principal amounts of their outstanding Loans).  Each Lender agrees that in computing such Lender’s portion of any Borrowing to be made hereunder, the Administrative Agent may, in its discretion, round each Lender’s percentage of such Borrowing to the next higher or lower whole Dollar amount.

 

SECTION 2.18.  Sharing of Setoffs .  Each Lender agrees that if it shall, through the exercise of a right of banker’s lien, setoff or counterclaim against the Borrower or any other Loan Party, or pursuant to a secured claim under Section 506 of Title 11 of the United States Code or other security or interest arising from, or in lieu of, such secured claim, received by such Lender under any applicable bankruptcy, insolvency or other similar law or otherwise, or by any other means, obtain payment (voluntary or involuntary) in respect of any Loan or Loans as a result of which the unpaid principal portion of its Loans shall be proportionately less than the unpaid principal portion of the Loans of any other Lender, it shall be deemed simultaneously to have purchased from such other Lender at face value, and shall promptly pay to such other Lender the purchase price for, a participation in the Loans of such other Lender, so that the aggregate unpaid principal amount of the Loans held by each Lender shall be in the same proportion to the aggregate unpaid principal amount of all Loans then outstanding as the principal amount of its Loans prior to such exercise of banker’s lien, setoff or counterclaim or other event was to the principal amount of all Loans outstanding prior to such exercise of banker’s lien, setoff or counterclaim or other event; provided , however , that (i) if any such purchase or purchases or adjustments shall be made pursuant to this Section 2.18 and the payment giving rise thereto shall thereafter be recovered, such purchase or purchases or adjustments shall be rescinded to the extent of such recovery and the purchase price or prices or adjustment restored without interest, and (ii) the provisions of this Section 2.18 shall not be construed to apply to any payment made by the Borrower pursuant to and in accordance with the

 

72



 

express terms of this Agreement or any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans to any assignee or participant, other than to any Affiliates of the Borrower (as to which the provisions of this Section 2.18 shall apply).  The Borrower expressly consents to the foregoing arrangements and agrees that any Lender holding a participation in a Loan deemed to have been so purchased may exercise any and all rights of banker’s lien, setoff or counterclaim with respect to any and all moneys owing by the Borrower to such Lender by reason thereof as fully as if such Lender had made a Loan directly to the Borrower in the amount of such participation.

 

SECTION 2.19.  Payments .  (a)  The Borrower shall make each payment (including principal of or interest on any Borrowing or any Fees or other amounts) hereunder and under any other Loan Document not later than 2:00 p.m., New York City time, on the date when due in immediately available Dollars, without setoff, defense or counterclaim. Each such payment shall be made to the Administrative Agent at its offices described on Schedule 9.01(b) (or as otherwise notified by the Administrative Agent in writing to the Borrower from time to time).  Any payments received by the Administrative Agent after 2:00 p.m., New York City time, may, in the Administrative Agent’s sole discretion, be deemed received on the next succeeding Business Day.  Subject to Article VIII, the Administrative Agent shall promptly distribute to each Lender any payments received by the Administrative Agent on behalf of such Lender.

 

(b)  Except as otherwise expressly provided herein, whenever any payment (including principal of or interest on any Borrowing or any Fees or other amounts) hereunder or under any other Loan Document shall become due, or otherwise would occur, on a day that is not a Business Day, such payment may be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of interest or Fees, if applicable.

 

SECTION 2.20.  Taxes .  (a)  Any and all payments by or on account of any obligation of the Borrower or any other Loan Party hereunder or under any other Loan Document shall be made free and clear of and without deduction for any Indemnified Taxes or Other Taxes; provided that, if any Indemnified Taxes or Other Taxes are required to be deducted from such payments, then (i) the sum payable by the Borrower or other Loan Party shall be increased as necessary so that after making all required deductions, (including deductions applicable to additional sums payable under this Section 2.20) the Administrative Agent and each Lender (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower or such Loan Party shall make such deductions as required by law and (iii) the Borrower or such Loan Party shall pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law.

 

(b)  In addition, the Borrower and any other Loan Party, as the case may be, shall pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law.

 

(c)  The Borrower shall indemnify the Administrative Agent and each Lender, within 30 days after written demand therefor, for the full amount of any Indemnified Taxes or Other Taxes paid by the Administrative Agent or such Lender, as the case may be, on or with respect to any payment by or on account of any obligation of the Borrower or any other Loan Party hereunder or otherwise with respect to any Loan Document (including Indemnified Taxes or Other Taxes

 

73



 

imposed or asserted on or attributable to amounts payable under this Section 2.20) and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to the Borrower by a Lender or by the Administrative Agent on behalf of itself or a Lender shall be conclusive absent manifest error.

 

(d)  Not later than 30 days after any payment of Indemnified Taxes or Other Taxes by the Borrower or any other Loan Party to a Governmental Authority, the Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.

 

(e)  Any Lender that is entitled to an exemption from or reduction of withholding tax with respect to payments under this Agreement shall deliver to the Borrower and the Administrative Agent, at the time or times prescribed by applicable law, such properly completed and executed documentation prescribed by applicable law and reasonably requested by the Borrower or the Administrative Agent as will permit such payments to be made without withholding or at a reduced rate.  Without limiting the generality of the foregoing, each Foreign Lender shall deliver to the Borrower and the Administrative Agent, on or prior to the date it becomes a Lender hereunder and thereafter upon the expiration, obsolescence or invalidity of any previously delivered documentation or upon the reasonable request of the Borrower or the Administrative Agent, two original, properly completed IRS Forms W-8BEN (claiming the benefits of an applicable tax treaty), W-8ECI, W-8EXP or W-8IMY (together with any required attachments) or, if the Foreign Lender is relying on the so-called “portfolio interest exemption,” two properly completed IRS Forms W-8BEN and two executed certificates substantially in the form of Exhibit O hereto stating that the Foreign Lender is not (i) a “bank” within the meaning of Section 881(c)(3)(A) of the Code, (ii) a “10-percent shareholder” within the meaning of Section 871(h)(3)(B) of the Code or (iii) a “controlled foreign corporation” related to any Loan Party within the meaning of Section 864(d)(4) of the Code, in the case of any of the foregoing certifying that the Foreign Lender is entitled to an exemption or reduced rate of U.S. federal withholding tax on payments hereunder.  Each Lender that is not a Foreign Lender shall deliver to the Borrower and the Administrative Agent, on or prior to the date it becomes a Lender hereunder and thereafter upon the expiration, obsolescence or invalidity of any previously delivered documentation or upon the reasonable request of the Borrower or the Administrative Agent, two original, properly completed IRS Forms W-9 or shall otherwise establish an exemption from U.S. backup withholding.  Notwithstanding the foregoing, this Section 2.20(e) shall not require any Lender to provide any forms or documentation that it is not legally entitled to provide.

 

(f)  If a payment made to a Lender hereunder may be subject to U.S. federal withholding tax under FATCA if such Lender fails to comply with the applicable reporting requirements of FATCA, such Lender shall deliver to the Borrower and the Administrative Agent, at the time or times prescribed by law and at such time or times reasonably requested by the Borrower or the Administrative Agent, such documentation prescribed by applicable law and such additional documentation reasonably requested by the Borrower or the Administrative Agent to comply with its withholding obligations, to determine that such Lender has complied with such Lender’s

 

74



 

obligations under FATCA or to determine the amount to deduct and withhold from such payment.  Solely for purposes of this Section 2.20(f), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.

 

SECTION 2.21.  Assignment of Commitments Under Certain Circumstances; Duty to Mitigate .  (a)  In the event (i) any Lender delivers a certificate requesting compensation pursuant to Section 2.14, (ii) any Lender delivers a notice described in Section 2.15, (iii) the Borrower is required to pay any additional amount to any Lender or any Governmental Authority on account of any Lender pursuant to Section 2.20 or (iv) any Lender refuses to consent to any amendment, waiver or other modification of any Loan Document requested by the Borrower that requires the consent of a greater percentage of the Lenders than the Required Lenders and such amendment, waiver or other modification is consented to by the Required Lenders, then, in each case, the Borrower may, at its sole expense and effort (including with respect to the processing and recordation fee referred to in Section 9.04(b)), upon notice to such Lender and the Administrative Agent, require such Lender to transfer and assign, without recourse (in accordance with and subject to the restrictions contained in Section 9.04), all of its interests, rights and obligations under this Agreement (or, in the case of clause (iv) above, all of its interests, rights and obligations with respect to the Class of Loans or Commitments that is the subject of the related consent, amendment, waiver or other modification) to an Eligible Assignee that shall assume such assigned obligations and, with respect to clause (iv) above, shall consent to such requested amendment, waiver or other modification of any Loan Documents (which assignee may be another Lender, if a Lender accepts such assignment); provided that (x) such assignment shall not conflict with any law, rule or regulation or order of any court or other Governmental Authority having jurisdiction, (y) the Borrower shall have received the prior written consent of the Administrative Agent, which consent shall not unreasonably be withheld or delayed, and (z) the Borrower or such assignee shall have paid to the affected Lender in immediately available funds an amount equal to the sum of the principal of and interest accrued to the date of such payment on the outstanding Loans of such Lender plus all Fees and other amounts accrued for the account of such Lender hereunder with respect thereto (including any amounts under Sections 2.14 and 2.16 and, in the case of any such assignment occurring in connection with a Repricing Event occurring prior to the first anniversary of the Closing Date, the prepayment fee pursuant to Section 2.12(c) (with such assignment being deemed to be a voluntary prepayment for purposes of determining the applicability of Section 2.12(c), such amount to be payable by the Borrower)); provided , further , that if prior to any such transfer and assignment the circumstances or event that resulted in such Lender’s claim for compensation under Section 2.14, notice under Section 2.15 or the amounts paid pursuant to Section 2.20, as the case may be, cease to cause such Lender to suffer increased costs or reductions in amounts received or receivable or reduction in return on capital, or cease to have the consequences specified in Section 2.15, or cease to result in amounts being payable under Section 2.20, as the case may be (including as a result of any action taken by such Lender pursuant to Section 2.21(b)), or if such Lender shall waive its right to claim further compensation under Section 2.14 in respect of such circumstances or event or shall withdraw its notice under Section 2.15 or shall waive its right to further payments under Section 2.20 in respect of such circumstances or event or shall consent to the proposed amendment, waiver, consent or other modification, as the case may be, then such Lender shall not thereafter be required to make any such transfer and assignment hereunder.  Each Lender hereby grants to the Administrative Agent an irrevocable power of attorney (which power is coupled with an interest) to execute and deliver, on behalf of

 

75



 

such Lender, as assignor, any Assignment and Acceptance necessary to effectuate any assignment of such Lender’s interests hereunder in the circumstances contemplated by this Section 2.21(a).

 

(b)  If (i) any Lender shall request compensation under Section 2.14, (ii) any Lender delivers a notice described in Section 2.15 or (iii) the Borrower is required to pay any additional amount to any Lender or any Governmental Authority on account of any Lender pursuant to Section 2.20, then such Lender shall use reasonable efforts (which shall not require such Lender to incur an unreimbursed loss or unreimbursed cost or expense or otherwise take any action inconsistent with its internal policies or legal or regulatory restrictions or suffer any disadvantage or burden deemed by it to be significant) (x) to file any certificate or document reasonably requested in writing by the Borrower or (y) to assign its rights and delegate and transfer its obligations hereunder to another of its offices, branches or affiliates, if such filing or assignment would reduce its claims for compensation under Section 2.14 or enable it to withdraw its notice pursuant to Section 2.15 or would reduce amounts payable pursuant to Section 2.20, as the case may be, in the future.  The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such filing or assignment, delegation and transfer.

 

SECTION 2.22.  Incremental Loans .  (a)  The Borrower may, by written notice to the Administrative Agent from time to time, request Incremental Loan Commitments in an amount not to exceed the Incremental Loan Amount from one or more Incremental Lenders, all of which must be Eligible Assignees. Such notice shall set forth (i) the amount of the Incremental Loan Commitments being requested (which shall be in minimum increments of $1,000,000 and a minimum amount of $5,000,000 or such lesser amount equal to the remaining Incremental Loan Amount), (ii) the date on which such Incremental Loan Commitments are requested to become effective (which shall not be less than 10 Business Days nor more than 60 days after the date of such notice), and (iii) whether such Incremental Loan Commitments are commitments to make additional Loans or commitments to make term loans with terms different from the Loans (“ Other Loans ”).

 

(b)  The Borrower may seek Incremental Loan Commitments from existing Lenders (each of which shall be entitled to agree or decline to participate in its sole discretion) and additional banks, financial institutions and other institutional lenders who will become Incremental Lenders in connection therewith; provided that the Borrower and the Administrative Agent shall have consented to such additional banks, financial institutions and other institutional lenders to the extent the consent of the Borrower or the Administrative Agent, as applicable, would be required if such institution were receiving an assignment of Loans pursuant to Section 9.04 (provided, further, that the consent of the Administrative Agent shall not be required with respect to an additional bank, financial institution, or other institutional lender that is an Affiliate of a Lender or a Related Fund).  The Borrower and each Incremental Lender shall execute and deliver to the Administrative Agent an Incremental Loan Assumption Agreement and such other documentation as the Administrative Agent shall reasonably specify to evidence the Incremental Loan Commitment of each Incremental Lender.  The terms and provisions of the Incremental Loans shall be identical to those of the Loans except as otherwise set forth herein or in the Incremental Loan Assumption Agreement.  Without the prior written consent of the Administrative Agent, (i) the final maturity date of any Other Loans shall be no earlier than the Maturity Date, (ii) the average life to maturity of the Other Loans shall be no shorter than the

 

76



 

remaining average life to maturity of the Loans, (iii) if the initial yield on such Other Loans (as reasonably determined by the Administrative Agent to be equal to the sum of (x) the margin above the Adjusted LIBO Rate on such Other Loans (taking into account any interest rate floors with respect to such Other Loans) and (y) if such Other Loans are initially made at a discount or the Lenders making the same receive a fee directly or indirectly from the Borrower or any Subsidiary for doing so (the amount of such discount or fee, expressed as a percentage of the Other Loans, being referred to herein as “ OID ”), the amount of such OID divided by the lesser of (A) the average life to maturity of such Other Loans and (B) four) exceeds the Applicable Margin then in effect for Eurodollar Loans by more than 50 basis points (the amount of such excess above 50 basis points being referred to herein as the “ Yield Differential ”), then the Applicable Margin then in effect for Loans shall automatically be increased by the Yield Differential, effective upon the making of the Other Loans and (iv) the other terms and documentation in respect of such Other Loans, to the extent not consistent with the Term Facility, shall be reasonably satisfactory to the Administrative Agent.  The Administrative Agent shall promptly notify each Lender as to the effectiveness of each Incremental Loan Assumption Agreement.  Notwithstanding anything in Section 9.08 to the contrary, each of the parties hereto hereby agrees that, upon the effectiveness of any Incremental Loan Assumption Agreement, this Agreement shall be deemed amended to the extent (but only to the extent) necessary to reflect the existence and terms of the Incremental Loan Commitment and the Incremental Loans evidenced thereby, and the Administrative Agent and the Borrower may revise this Agreement to evidence such amendments.  Incremental Loans and Other Loans shall have the same guarantees as, and be secured on a pari passu basis with, the Loans.

 

(c)  Notwithstanding the foregoing, no Incremental Loan Commitment shall become effective under this Section 2.22 unless (i) on the date of such effectiveness, (x) the representations and warranties set forth in Article III and in each other Loan Document shall be true and correct in all material respects (or in all respects to the extent qualified by materiality or Material Adverse Effect) on and as of such date with the same effect as though made on and as of such date, except to the extent such representations and warranties expressly relate to an earlier date, in which case such representations and warranties shall be true and correct in all material respects (or in all respects to the extent qualified by materiality or Material Adverse Effect) on and as of such earlier date and (y) at the time of and immediately after the giving effect to the Borrowing of Incremental Loans, no Default or Event of Default shall have occurred and be continuing, and the Administrative Agent shall have received a certificate to that effect dated such date and executed by a Responsible Officer of the Borrower, (ii) the Borrower’s Total Secured Leverage Ratio shall not exceed 2.50:1.00 on a pro forma basis after giving effect to such Incremental Loan Commitment, the incurrence of the Incremental Loans thereunder the use of proceeds thereof and the Administrative Agent shall have received a certificate to that effect showing such calculations in reasonable detail dated such date and executed by a Responsible Officer of the Borrower, (iii) all fees and expenses owing to the Administrative Agent and the Lenders in respect of such increase shall have been paid, (iv) except as otherwise specified in the applicable Incremental Loan Assumption Agreement, the Administrative Agent shall have received (with sufficient copies for each of the Incremental Lenders) legal opinions, board resolutions and other closing certificates reasonably requested by the Administrative Agent and consistent with those delivered on the Closing Date under Section 4.01 and (v) to the extent reasonably necessary to maintain the continuing priority of the Lien of the Mortgages on the Real Estate Collateral Properties as security for the Obligations, as determined by the

 

77



 

Administrative Agent in its reasonable discretion, (x) the applicable Loan Party to any Mortgages shall have entered into, and delivered to the Administrative Agent, at the direction and in the sole discretion of the Administrative Agent a mortgage modification or new Mortgage in proper form for recording in the relevant jurisdiction and in a form reasonably satisfactory to the Administrative Agent, (y) the Borrower shall have caused to be delivered to the Administrative Agent for the benefit of the Lenders an endorsement to the title insurance policy, date down(s) or other evidence reasonably satisfactory to the Administrative Agent insuring that the priority of the Lien of such Mortgages as security for the Obligations has not changed and confirming and/or insuring that since the issuance of the title insurance policy there has been no change in the condition of title and there are no intervening liens or encumbrances that may then or thereafter take priority over the Lien of such Mortgages (other than Permitted Encumbrances) and (z) the Borrower shall have delivered, at the request of the Administrative Agent, to the Administrative Agent and/or all other relevant third parties all other items reasonably necessary to maintain the continuing priority of the Lien of such Mortgages as security for the Obligations.

 

(d)  Each of the parties hereto hereby agrees that the Administrative Agent may, in consultation with the Borrower, take any and all action as may be reasonably necessary to ensure that all Incremental Loans (other than Other Loans), when originally made, are included in each Borrowing of outstanding Loans on a pro rata basis.  This may be accomplished by requiring each outstanding Eurodollar Borrowing to be converted into an ABR Borrowing on the date of each Incremental Loan, or by allocating a portion of each Incremental Loan to each outstanding Eurodollar Borrowing on a pro rata basis.  Any conversion of Eurodollar Loans to ABR Loans required by the preceding sentence shall be subject to Section 2.16.  If any Incremental Loan is to be allocated to an existing Interest Period for a Eurodollar Borrowing, then the interest rate thereon for such Interest Period and the other economic consequences thereof shall be as set forth in the applicable Incremental Loan Assumption Agreement.  In addition, to the extent any Incremental Loans are not Other Loans, the scheduled amortization payments under Section 2.11(a)(i) required to be made after the making of such Incremental Loans shall be ratably increased by the aggregate principal amount of such Incremental Loans and shall be further increased for all Lenders on a pro rata basis to the extent necessary to avoid any reduction in the amortization payments to which the Lenders were entitled before such recalculation.

 

SECTION 2.23.  Extension Amendments .  (a)  So long as no Event of Default or Default has occurred and is continuing (after giving effect to any amendments and/or waivers that are or become effective on the date of the relevant conversion), the Borrower may at any time and from time to time request that all or a portion of any Class of Loans then outstanding selected by the Borrower (such series, the “ Original Loans ”) be converted to extend the maturity date thereof and to provide for other terms permitted by this Section 2.23 (any portion thereof that have been so extended, the “ Extended Loans ” and the remainder not so extended, the “ Non-Extended Loans ”).  Prior to entering into any Extension Amendment with respect to any Original Loans, the Borrower shall provide a notice to the Administrative Agent (who shall provide a copy of such notice to each Lender who has Original Loans) in such form as approved from time to time by the Borrower and the Administrative Agent (each, an “ Extension Request ”) setting forth the terms of the proposed Extended Loans, as applicable, which terms shall be identical to those applicable to the Original Loans, except for Section 2.23 Additional Agreements or as otherwise permitted by this Section 2.23 and except (w) the maturity date of

 

78



 

Extended Loans may be delayed to a date after the Fixed Maturity Date, (x) Extended Loans may have different amortization payments than the Original Loans; provided that the Weighted Average Life to Maturity of such Extended Loans shall be no shorter than the Weighted Average Life to Maturity of the Original Loans from which they were converted and (y) the initial yield (including, without limitation, margins, fees and premiums) of the Extended Loans may be higher or lower than the initial yield (including, without limitation, margins, fees and premiums) of the Original Loans; provided , however , that if the initial yield on such Extended Loans (as reasonably determined by the Administrative Agent to be equal to the sum of (x) the margin above the Adjusted LIBO Rate on such Extended Loans (taking into account any interest rate floors with respect to such Extended Loans) and (y) if the Extending Lenders agreeing to extend their Loans receive a fee directly or indirectly from the Borrower or any Subsidiary for doing so (the amount of such fee, expressed as a percentage of the Extended Loans, being referred to herein as the “ Extension Fee ”), the amount of such Extension Fee divided by the lesser of (A) the average life to maturity of such Extended Loans and (B) four) exceeds the Applicable Margin for the Original Loans by more than 50 basis points (the amount of such excess above 50 basis points being referred to herein as the “ Extended Loan Yield Differential ”), then the Applicable Margin then for such Loans shall automatically be increased by the Extended Loan Yield Differential, effective upon the extension of the Extended Loans.  In addition to any other terms and changes required or permitted by this Section 2.23, each Extension Amendment establishing a Class of Extended Loans shall amend the scheduled amortization payments provided under Section 2.11 with respect to the related Non-Extended Loans to reduce each scheduled installment for such Non-Extended Loans to an aggregate amount equal to the product of (1) the original aggregate amount of such installment with respect to the Original Loans, multiplied by (2) a fraction, the numerator of which is the aggregate principal amount of such related Non-Extended Loans and (y) the denominator of which is the aggregate principal amount of such Original Loans prior to the effectiveness of such Extension Amendment (it being understood that the amount of any installment payable with respect to any individual Non-Extended Loan shall not be reduced as a result thereof without the consent of the holder of such individual Non-Extended Loan).  No Lender shall have any obligation to agree to have any of its Original Loans converted into Extended Loans pursuant to any Extension Request.

 

(b)  The Borrower shall provide the applicable Extension Request at least seven Business Days prior to the date on which the applicable Lenders are requested to respond (or such later date as the Administrative Agent may agree).  Any Lender (an “ Extending Lender ”) wishing to have all or a portion of its Original Loans converted into Extended Loans shall notify the Administrative Agent (such notice to be in such form as approved from time to time by the Borrower and the Administrative Agent) (each, an “ Extension Election ”) on or prior to the date specified in such Extension Request (which shall in any event be no less than three Business Days prior to the effectiveness of the applicable Extension Amendment) of the amount of its Original Loans that it has elected to convert into Extended Loans.  In the event that the aggregate amount of the applicable Original Loans subject to Extension Elections exceeds the amount of the applicable Extended Loans requested pursuant to the Extension Request, the applicable Original Loans subject to such Extension Elections shall be converted to Extended Loans on a pro rata basis based on the amount of the applicable Original Loans included in each such Extension Election.

 

79



 

(c)  Subject to the requirements of this Section 2.23, so long as no Event of Default or Default has occurred and is continuing (after giving effect to any amendments and/or waivers that are or become effective on the date that such Extended Loans are established), Extended Loans may be established pursuant to a supplement (which shall set forth the effective date of such extension) to this Agreement (which, except to the extent otherwise expressly contemplated by this Section 2.23(c), shall require the consent only of the Lenders who elect to make the Extended Loans established thereby) in such form as approved from time to time by the Borrower and the Administrative Agent in the reasonable exercise of its discretion (each, an “ Extension Amendment ”) executed by the Loan Parties, the Administrative Agent and the Extending Lenders.  Any Extension Amendment may provide for additional terms (other than those referred to or contemplated in this Section 2.23 or in the form of the Extension Request or Extension Amendment (each, a “ Section 2.23 Additional Agreement ”)) to this Agreement and the other Loan Documents; provided that no such Section 2.23 Additional Agreement shall become effective prior to the time that such Section 2.23 Additional Agreement has been consented to by such of the Lenders, Loan Parties and other parties (if any) as would be required (including, without limitation, under the requirements of Section 9.08) if such Section 2.23 Additional Agreement were a separate and independent amendment of this Agreement.  In connection with any Extension Amendment, (i) if requested by the Administrative Agent, the Borrower shall deliver an opinion of counsel reasonably acceptable to the Administrative Agent as to any matters reasonably requested by the Administrative Agent and (ii) to the extent reasonably necessary to maintain the continuing priority of the Lien of the Mortgages on the Real Estate Collateral Properties as security for the Obligations, as determined by the Administrative Agent in its reasonable discretion, (x) the applicable Loan Party to any Mortgages shall have entered into, and delivered to the Administrative Agent, at the direction and in the sole discretion of the Administrative Agent a mortgage modification or new Mortgage in proper form for recording in the relevant jurisdiction and in a form reasonably satisfactory to the Administrative Agent, (y) the Borrower shall have caused to be delivered to the Administrative Agent for the benefit of the Lenders an endorsement to the title insurance policy, date down(s) or other evidence reasonably satisfactory to the Administrative Agent insuring that the priority of the Lien of such Mortgages as security for the Obligations has not changed and confirming and/or insuring that since the issuance of the title insurance policy there has been no change in the condition of title and there are no intervening liens or encumbrances that may then or thereafter take priority over the Lien of such Mortgages (other than Permitted Encumbrances) and (z) the Borrower shall have delivered, at the request of the Administrative Agent, to the Administrative Agent and/or all other relevant third parties all other items reasonably necessary to maintain the continuing priority of the Lien of such Mortgages as security for the Obligations.

 

(d)  The Lenders hereby irrevocably authorize the Administrative Agent to enter into technical amendments to this Agreement and the other Loan Documents with the applicable Loan Parties as may be necessary or advisable in order to effectuate the transactions contemplated by this Section 2.23.

 

80



 

ARTICLE III

 

Representations and Warranties

 

To induce the Secured Parties to enter into this Agreement and to make Loans hereunder, each Loan Party represents and warrants to the Administrative Agent and the other Secured Parties that:

 

SECTION 3.01.  Existence, Qualification and Power .  Each Loan Party and each Restricted Subsidiary (a) is a corporation, limited liability company, trust, partnership or limited partnership, duly incorporated, organized or formed, validly existing and, where applicable, in good standing under the Laws of the jurisdiction of its incorporation, organization, or formation; (b) has all requisite power and authority and all requisite governmental licenses, permits, authorizations, consents and approvals to (i) own or lease its assets and carry on its business and (ii) execute, deliver and perform its obligations under the Loan Documents to which it is a party; and (c) is duly qualified and is licensed and, where applicable, in good standing under the Laws of each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification or license; except in each case referred to in clause (c), to the extent that failure to do so would not reasonably be expected to have a Material Adverse Effect.  Schedule 3.01 annexed hereto sets forth, as of the Closing Date, each Loan Party’s name as it appears in official filings, state of incorporation or organization, organization type, organization number, if any, issued by its state of incorporation or organization, and its federal employer identification number.

 

SECTION 3.02.  Authorization; No Contravention .

 

(a)  The execution, delivery and performance by each Loan Party of each Loan Document to which such Person is a party, have been duly authorized by all necessary corporate or other organizational action, and do not and will not (i) contravene the terms of any of such Person’s Organization Documents; (ii) conflict with or result in any breach, termination, or contravention of, or constitute a default under or require any payment to be made under (x) any Material Contract or any Material Indebtedness to which such Person is a party or affecting such Person or the properties of such Person or any of its Subsidiaries or (y) any order, injunction, writ or decree of any Governmental Authority or any arbitral award to which such Person or its property is subject, in each case under this clause (ii), which has had or would reasonably be expected to have a Material Adverse Effect; (iii) result in or require the creation of any Lien upon any asset of any Loan Party or any guarantee by any Loan Party (other than Liens in favor of the Administrative Agent under the Security Documents and guarantees in favor of the Administrative Agent); (iv) violate any applicable Law where such violation has had or would reasonably be expected to have a Material Adverse Effect; (v) result in any “change of control” offer or similar offer being required to be made under any Material Indebtedness to which such Person is a party or affecting such Person or the properties of such Person or any of its Subsidiaries; or (vi) result in the application of any of the consolidation, merger, conveyance, transfer or lease of assets (however so denominated) provisions of any Material Indebtedness to which such Person is a party or affecting such Person or the properties of such Person or any of its Subsidiaries.  For purposes of the representations set forth in this Section 3.02(a) that are made on the Closing Date, (i) the terms “Material Contract” and “Material Indebtedness” shall

 

81



 

be deemed to include Material Contracts and Material Indebtedness (including the NAI Notes, the NAI Indenture, the ASC Notes and the ASC Indenture) of NAI and its subsidiaries as if NAI and its subsidiaries were Subsidiaries of the Borrower, and (ii) the dollar amount set forth in the definition of the term “Material Indebtedness” shall be deemed to be $75,000,000.

 

(b)  The consummation of the Transactions does not and will not (i) contravene the terms of the Organization Documents of the Borrower, NAI or any of their respective Subsidiaries; (ii) conflict with or result in any breach, termination, or contravention of, or constitute a default under or require any payment to be made under (x) any Material Contract or any Material Indebtedness to which such Person is a party or affecting such Person or the properties of such Person or any of its Subsidiaries or (y) any order, injunction, writ or decree of any Governmental Authority or any arbitral award to which such Person or its property is subject, in each case under this clause (ii), which has had or would reasonably be expected to have a Material Adverse Effect; (iii) result in or require the creation of any Lien upon any asset of the Borrower, NAI or any of their respective Subsidiaries or any guarantee by any such Person (other than Liens in favor of the Administrative Agent under the Security Documents and guarantees in favor of the Administrative Agent); (iv) violate any applicable Law where such violation has had or would reasonably be expected to have a Material Adverse Effect on the Borrower and its Subsidiaries; (v) result in any “change of control” offer or similar offer being required to be made under any Material Indebtedness to which the Borrower, NAI or any of their respective Subsidiaries is a party or affecting any such Person or the properties of any such Person or any of its Subsidiaries; or (vi) result in the application of any of the consolidation, merger, conveyance, transfer or lease of assets (however so denominated) provisions of any Material Indebtedness to which the Borrower, NAI or any of their respective Subsidiaries is a party or affecting any such Person or the properties of any such Person or any of its Subsidiaries.  For purposes of the representations set forth in this Section 3.02(b) that are made on the Closing Date, (i) the terms “Material Contract” and “Material Indebtedness” shall be deemed to include Material Contracts and Material Indebtedness (including the NAI Notes, the NAI Indenture, the ASC Notes and the ASC Indenture) of NAI and its subsidiaries as if NAI and its subsidiaries were Subsidiaries of the Borrower, and (ii) the dollar amount set forth in the definition of the term “Material Indebtedness” shall be deemed to be $75,000,000.

 

SECTION 3.03.  Governmental Authorization; Other Consents .  No approval, consent (including, the consent of equity holders or creditors of any Loan Party or Restricted Subsidiary), exemption, authorization, license or other action by, or notice to, or filing with, any Governmental Authority or regulatory body or any other Person is necessary or required for the grant of the security interest by such Loan Party or Restricted Subsidiary of the Collateral pledged by it pursuant to the Security Documents or for the execution, delivery or performance by, or enforcement against, any Loan Party or Restricted Subsidiary of this Agreement or any other Loan Document, except for (a) the perfection or maintenance of the Liens created under the Security Documents (including the first priority (subject to the Intercreditor Agreement) nature thereof), (b) such consents which have been obtained or made prior to the date hereof and are in full force and effect and (c) such consents which are required for the exercise of remedies with respect to the ABL Priority Collateral, if any, under the terms of the Intercreditor Agreement or any other Loan Document.

 

82



 

SECTION 3.04.  Binding Effect .  This Agreement has been, and each other Loan Document, when delivered, will have been, duly executed and delivered by each Loan Party that is party thereto.  This Agreement constitutes, and each other Loan Document when so delivered will constitute, a legal, valid and binding obligation of such Loan Party, enforceable against each Loan Party that is party thereto in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.

 

SECTION 3.05.  Financial Statements; No Material Adverse Effect .

 

(a)  The Audited Financial Statements (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein, and (ii) fairly present the financial condition of the Borrower and its Subsidiaries (prior to giving effect to the Transactions) as of the date thereof and their results of operations for the period covered thereby in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein.

 

(b)  The unaudited Consolidated balance sheet of the Borrower and its Subsidiaries (prior to giving effect to the Transactions) dated December 1, 2012, and the related Consolidated statements of income or operations and cash flows for the Fiscal Quarter ended on such date (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein, and (ii) fairly present the financial condition of the Borrower and its Subsidiaries (prior to giving effect to the Transactions) as of the date thereof and their results of operations for the period covered thereby, subject, in the case of clauses (i) and (ii), to the absence of footnotes and to normal year-end audit adjustments.

 

(c)  Since February 25, 2012, as of the Closing Date, there has not occurred any Closing Date Material Adverse Effect or any event, condition, change or effect that would reasonably be expected to have, individually or in the aggregate, a Closing Date Material Adverse Effect.  Since the end of the most recent period for which financial statements were required to be delivered pursuant to Sections 5.01(a) or 5.01(b), as applicable, as of each date of the making of representations and warranties under this Article III (other than the Closing Date), there has been no event or circumstance, either individually or in the aggregate, that has had or would reasonably be expected to have a Material Adverse Effect.

 

(d)  To the best knowledge of the Borrower, no Internal Control Event exists or has occurred since the date of the Audited Financial Statements that has resulted in or would reasonably be expected to result in a misstatement in any material respect, in any financial information delivered or to be delivered to the Administrative Agent or the Lenders, of (i) the covenant compliance calculations provided hereunder or (ii) the assets, liabilities, financial condition or results of operations of the Borrower and its Subsidiaries on a Consolidated basis.

 

(e)  The Consolidated forecasted balance sheet and statements of income and cash flows of the Borrower and its Subsidiaries delivered pursuant to Section 5.01(c) were prepared in good faith on the basis of the assumptions stated therein, which assumptions were fair in light of the conditions existing at the time of delivery of such forecasts (it being understood that projections

 

83



 

by their nature are inherently uncertain and that, even though such forecasts are prepared in good faith on the basis of assumptions believed to be reasonable at the time such forecasts were prepared, the results reflected in such forecasts may not be achieved and actual results may differ and such differences may be material).

 

(f)  The deal basis financial statements described in Section 4.01(n) (the “ Deal Basis Financial Statements ”) have been prepared to reflect the historical financial information of the remaining operations of the Borrower and its Subsidiaries following the Transactions and exclude the financial information of NAI’s business operations expected to be sold to the Buyer, other than the assets and liabilities of NAI and its subsidiaries that are expected to be retained by the Borrower pursuant to the Acquisition Agreement.  The Deal Basis Financial Statements reflect periods during which the Borrower and its Subsidiaries operated as a consolidated entity inclusive of the operations of NAI and its subsidiaries, and accordingly, the presentation to exclude such operations has relied on assumptions and allocations to separate the operations of NAI and its subsidiaries, and are not necessarily indicative of the future operations or financial position of the Borrower and its Subsidiaries following the Transactions.  The Borrower believes the assumptions and allocations underlying the Deal Basis Financial Statements are reasonable and appropriate, but such assumptions and allocations are preliminary and based on estimates and are subject to change.

 

SECTION 3.06.  Litigation .  There are no actions, suits, proceedings, claims or disputes pending or, to the knowledge of the Loan Parties after due and diligent investigation, threatened or contemplated, at law, in equity, in arbitration or before any Governmental Authority, by or against any Loan Party or any of its Subsidiaries or against any of its properties, rights or revenues that (a) purport to materially and adversely affect or pertain to this Agreement or any other Loan Document, or any of the transactions contemplated hereby, or (b) except as specifically disclosed in Schedule 3.06, either individually or in the aggregate, if determined adversely, would reasonably be expected to have a Material Adverse Effect.  Since the Closing Date, there has been no material adverse change in the status, or financial effect on any Loan Party or Restricted Subsidiary, of the matters described on Schedule 3.06.

 

SECTION 3.07.  No Default .  No Loan Party or Restricted Subsidiary is in default under or with respect to any Material Indebtedness.  No Event of Default (other than an Event of Default arising from the inaccuracy of the representation set forth in the second sentence of Section 3.15(a)) has occurred and is continuing or would result from the consummation of the transactions contemplated by this Agreement or any other Loan Document.  Neither the Borrower nor any of its Subsidiaries is a party to any agreement or instrument or subject to any corporate restriction that has had or would reasonably be expected to have a Material Adverse Effect.

 

SECTION 3.08.  Ownership of Properties; Liens .

 

(a)  Each Loan Party and each Restricted Subsidiary has good and marketable title in fee simple to or valid leasehold interests in, all Real Estate necessary or used in the ordinary conduct of its business and each Loan Party and each Restricted Subsidiary has good title to, valid leasehold interests in, or valid licenses or service agreements for all personal property material to the ordinary conduct of its business, except, in each case, as does not have and would not reasonably be expected to have a Material Adverse Effect.  The property of each Loan Party and each Restricted Subsidiary is subject to no Liens other than Permitted Encumbrances.

 

84



 

(b)  Schedule 3.08(b) sets forth the street address, county and state of each site of land that is fee-owned by any Loan Party or Restricted Subsidiary as of the Closing Date.  As of the Closing Date, except as set forth on Schedule 3.08(b), no Responsible Officer for a Loan Party or Restricted Subsidiary has received any written notice of, or has any knowledge of, any pending or contemplated condemnation proceeding affecting any Real Estate Collateral Property or any sale or disposition thereof in lieu of condemnation.  To the best of the knowledge of any Responsible Officer, except as set forth on Schedule 3.08(b), no Loan Party or Restricted Subsidiary is obligated under any unrecorded right of first refusal, option or other contractual right to sell, assign or otherwise dispose of any such Real Estate Collateral Property or any interest therein that would not constitute a Permitted Encumbrance.

 

(c)  Schedule 3.08(c) sets forth each lease that constitutes a Material Contract or a Ground Lease (pursuant to the Closing Date Collateral List) or a lease of any location where ABL Priority Collateral is located, in each case, to which any Loan Party or any Restricted Subsidiary is a party as tenant or subtenant, together with the street address, county and state of the property subject thereto, and the name and contact information of the lessor thereunder.  Each of such leases is in full force and effect, the Loan Parties and the Restricted Subsidiaries are not in default (beyond applicable cure periods) of the terms of any such leases, and each of the Loan Parties and the Restricted Subsidiaries enjoys peaceful and undisturbed possession under all such leases, except, in each case, as would not reasonably be expected to have a Material Adverse Effect.

 

(d)  Schedule 6.01 sets forth a complete and accurate list of all Liens on the property or assets of each Loan Party and each Restricted Subsidiary, other than Liens that would constitute Permitted Encumbrances under clauses (a) through (h) or clauses (j) through (u) of the definition thereof, showing as of the Closing Date the lienholder thereof and the property or assets of such Loan Party or Restricted Subsidiary subject thereto.

 

(e)  Schedule 6.02 sets forth a true and accurate copy of the investment policy of the Borrower and the Restricted Subsidiaries and a complete and accurate list of all Investments held by any Loan Party or any Restricted Subsidiary on the Closing Date, other than Investments in Subsidiaries and Cash Equivalents, in each case in excess of $10,000,000.

 

(f)  Schedule 6.03 sets forth a complete and accurate list of all Indebtedness of each Loan Party (other than Indebtedness among the Loan Parties) or any Restricted Subsidiary on the Closing Date, in each case in excess of $10,000,000, showing as of the date hereof the amount, obligor or issuer and maturity thereof and whether such Indebtedness is secured by a Lien; provided , that for Capital Leases, Schedule 6.03 sets forth only the aggregate amount of each type of Capital Lease.

 

SECTION 3.09.  Environmental Compliance .

 

(a)  Except as specifically disclosed in Schedule 3.09, no Loan Party or Restricted Subsidiary (i) has failed to comply in all material respects with applicable Environmental Law or to obtain, maintain or comply with any permit, license or other approval required under applicable Environmental Law, (ii) has become subject to any Environmental Liability, (iii) has received notice of any claim with respect to any material Environmental Liability or (iv) has a

 

85



 

Responsible Officer with knowledge of any basis for any material Environmental Liability, except, in each case, as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

(b)  Except as specifically disclosed in Schedule 3.09, (i) none of the properties currently or formerly owned or operated by any Loan Party or Restricted Subsidiary is or was listed or proposed for listing on the NPL or on the CERCLIS or any analogous state or local list at any time while such property was owned by such Loan Party or, to the knowledge of any Responsible Officer, at any time prior to or after such property was owned by such Loan Party, and, to the knowledge of any Responsible Officer, no property currently owned or operated by any Loan Party or Restricted Subsidiary is adjacent to any such property, in each case in connection with any matter for which any Loan Party or Restricted Subsidiary would have any material Environmental Liability; (ii) there are no and never have been any underground or above-ground storage tanks or any surface impoundments, septic tanks, pits, sumps or lagoons in which Hazardous Materials are being or have been treated, stored or disposed on any property currently owned or operated by any Loan Party or Restricted Subsidiary in violation of any Environmental Laws or, to the best of the knowledge of any Responsible Officer, on any property formerly owned or operated by any Loan Party or Restricted Subsidiary; (iii) there is no friable asbestos or friable asbestos-containing material on any property currently owned or operated by any Loan Party or Restricted Subsidiary; (iv) Hazardous Materials have not been Released, discharged or disposed of on any property currently or formerly owned or operated by any Loan Party or Restricted Subsidiary in violation of any Environmental Laws; and (v) to the knowledge of any Responsible Officer, there are no pending or threatened Liens under or pursuant to any applicable Environmental Laws on any real property or other assets owned or leased by any Loan Party or Restricted Subsidiary, and to the best of the knowledge of any Responsible Officer, no actions by any Governmental Authority have been taken or are in process which would subject any of such properties or assets to such Liens, except, in the case of clauses (i) through (v) above, as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

(c)  Except as specifically disclosed in Schedule 3.09, no Loan Party or Restricted Subsidiary is undertaking, and no Loan Party or Restricted Subsidiary has completed, either individually or together with other potentially responsible parties, any investigation or assessment or remedial or response action relating to any actual or threatened Release, discharge or disposal of Hazardous Materials at any site, location or operation, either voluntarily or pursuant to the order of any Governmental Authority or the requirements of any Environmental Law that has or would reasonably be expected to have a Material Adverse Effect; and all Hazardous Materials generated, used, treated, handled or stored at, or transported to or from, any property currently or formerly owned or operated by any Loan Party or Restricted Subsidiary have been disposed of in a manner not reasonably expected, individually or in the aggregate, to have a Material Adverse Effect.

 

SECTION 3.10.  Insurance .  The properties of the Loan Parties and the Restricted Subsidiaries are insured with financially sound and reputable insurance companies (including any Insurance Captive) in such amounts (after giving effect to any self-insurance), with such deductibles and covering such risks (including, without limitation, workers’ compensation, public liability, business interruption and property damage insurance) as are customarily carried

 

86



 

by companies engaged in similar businesses and owning similar properties in localities where the applicable Loan Party or Restricted Subsidiary operates.  Schedule 3.10 sets forth a description of all such insurance currently maintained (excluding title, group health and disability, and similar types of insurance) by or on behalf of the Loan Parties and the Restricted Subsidiaries as of the Closing Date.  Each insurance policy listed on Schedule 3.10 is in full force and effect and all premiums in respect thereof that are due and payable have been paid.

 

SECTION 3.11.  Taxes .  The Loan Parties and the Restricted Subsidiaries have filed all Federal, state and other material tax returns and reports (collectively, the “ Tax Returns ”) required to be filed, and all such Tax Returns are true, correct and complete in all material respects, and have paid when due and payable (subject to any grace periods) all Federal, state and other material Taxes, assessments, fees and other governmental charges levied or imposed upon them or their properties, income or assets otherwise due and payable, except those which are being contested in good faith by appropriate proceedings being diligently conducted, for which adequate reserves have been provided in accordance with GAAP, as to which Taxes no Lien has been filed and which contest effectively suspends the collection of the contested obligation and the enforcement of any Lien securing such obligation.  There is no proposed tax assessment against any Loan Party or any Restricted Subsidiary that would, if made, have a Material Adverse Effect.  No Loan Party or Restricted Subsidiary is a party to any tax sharing agreement.

 

SECTION 3.12.  ERISA Compliance .

 

(a)  Each Plan is in compliance in all material respects with the applicable provisions of ERISA, the Code and other Federal or state Laws.  Each Plan that is intended to qualify under Section 401(a) of the Code has received a favorable determination letter from the IRS or an application for such a letter is currently being processed by the IRS with respect thereto and, to the best knowledge of the Borrower, nothing has occurred which would prevent, or cause the loss of, such qualification.  Each Loan Party and each ERISA Affiliate has made all required contributions, including without limitation any such contributions required pursuant to the PBGC Agreement, to each Plan subject to Sections 302 or 303 of ERISA or Sections 412 or 430 of the Code, and no application for a funding waiver or an extension of any amortization period pursuant to Section 302 of ERISA or Section 412 of the Code has been made with respect to any Plan.  No Lien imposed under the Code or ERISA exists or is likely to arise on account of any Plan.

 

(b)  There are no pending or, to the best knowledge of the Borrower, threatened claims, actions or lawsuits, or action by any Governmental Authority, with respect to any Plan that would reasonably be expected to have a Material Adverse Effect.  There has been no prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan that has had or would reasonably be expected to have a Material Adverse Effect.

 

(c)  (i) No ERISA Event has occurred or is reasonably expected to occur that, together with all other ERISA Events that have occurred or are reasonably expected to occur, has had or would reasonably be expected to have a Material Adverse Effect; (ii) no Pension Plan has any Unfunded Pension Liability; except, that, based on the latest valuation of the SUPERVALU Inc. Retirement Plan and Shaw’s Supermarkets, Inc. Pension Plan for Union Employees and on the

 

87



 

actuarial methods and assumptions employed for such valuation (determined in accordance with the assumptions used for funding such Pension Plan pursuant to Sections 412 or 430 of the Code or Sections 302 or 303 of ERISA), as of the date hereof the aggregate current value of accumulated “benefit liabilities” of such Pension Plan under Section 4001(a)(16) of ERISA is in excess of the aggregate current value of the assets of such Pension Plan, but the scheduled payments with respect to such underfunding do not have, and would not reasonably be expected to have, a Material Adverse Effect and the Loan Parties have complied, and shall continue to comply, with the requirements of ERISA and the PBGC Agreement with respect to the funding of each of their Pension Plans; (iii) neither any Loan Party nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability under Title IV of ERISA with respect to any Pension Plan (other than premiums due and not delinquent under Section 4007 of ERISA and amounts payable under the PBGC Agreement) that, individually or in the aggregate, has or would reasonably be expected to have a Material Adverse Effect; (iv) neither any Loan Party nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability (and no event has occurred which, with the giving of notice under Section 4219 of ERISA, would result in such liability) under Sections 4201 or 4243 of ERISA with respect to a Multiemployer Plan, that has had or would reasonably be expected to have a Material Adverse Effect; and (v) neither any Loan Party nor any ERISA Affiliate has engaged in a transaction that would be subject to Sections 4069 or 4212(c) of ERISA.

 

SECTION 3.13.  Subsidiaries; Equity Interests .  The Loan Parties have no Subsidiaries other than those specifically disclosed in Part (a) of Schedule 3.13, which Schedule sets forth the legal name, jurisdiction of incorporation or formation and the percentage interest of such Loan Party therein.  The outstanding Equity Interests in such Subsidiaries described on Part (a) of Schedule 3.13 as owned by a Loan Party (or a Subsidiary of a Loan Party) have been validly issued, are fully paid and non-assessable and are owned by a Loan Party (or a Subsidiary of a Loan Party) free and clear of all Liens.  Except as set forth in Schedule 3.13, there are no outstanding rights to purchase any Equity Interests in any Restricted Subsidiary.  All of the outstanding Equity Interests in the Loan Parties have been validly issued, and are fully paid and non-assessable and, with respect to the Loan Parties and their Subsidiaries (other than the Borrower and Excluded Subsidiaries), are owned in the amounts specified on Part (c) of Schedule 3.13 free and clear of all Liens.  The copies of the Organization Documents of each Loan Party and each amendment thereto provided pursuant to Section 4.01 are true and correct copies of each such document, each of which is valid and in full force and effect.

 

SECTION 3.14.  Margin Regulations; Investment Company Act .

 

(a)  No Loan Party or Restricted Subsidiary is engaged or will be engaged, principally or as one of its important activities, in the business of purchasing or carrying margin stock (within the meaning of Regulation U), or extending credit for the purpose of purchasing or carrying margin stock.  None of the proceeds of the Loans shall be used directly or indirectly for the purpose of purchasing or carrying any margin stock, for the purpose of reducing or retiring any Indebtedness that was originally incurred to purchase or carry any margin stock or for any other purpose that might cause any of the Loans to be considered a “purpose credit” within the meaning of Regulations T, U or X.

 

88



 

(b)  None of the Loan Parties or any Restricted Subsidiary is or is required to be registered as an “investment company” under the Investment Company Act of 1940.

 

SECTION 3.15.  Disclosure .  (a)  Each Loan Party has disclosed to the Administrative Agent and the Lenders all agreements, instruments and corporate or other restrictions to which it or any of its Subsidiaries is subject, and all other matters known to it, that, individually or in the aggregate, would reasonably be expected to result in a Material Adverse Effect.  No report, financial statement, certificate or other information furnished (whether in writing or orally) by or on behalf of any Loan Party to the Administrative Agent or any Lender in connection with the transactions contemplated hereby and the negotiation of this Agreement or any other Loan Document or delivered hereunder or under any other Loan Document (in each case, as modified or supplemented by other information so furnished) contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that, with respect to projected financial information, the Loan Parties represent only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time (based upon accounting principles consistent with the historical audited financial statements of the Borrower) and using due care in the preparation of such information, report, financial statement or certificate.

 

(b)  No material written report, financial statement, certificate or other information (other than projections and other than information that is accurately disclosed by the Borrower and is covered by one of the other representations set forth in this Article III or in the other Loan Documents) furnished by or on behalf of any Loan Party to the Administrative Agent or any Lender in connection with the transactions contemplated hereby and the negotiation of this Agreement or any other Loan Document or delivered hereunder or under any other Loan Document (in each case, as modified or supplemented by other information so furnished) that is customarily used by financing sources in making credit or underwriting decisions in transactions of this type and that is relevant to the Term Facility contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.

 

SECTION 3.16.  Compliance with Laws .  Each of the Loan Parties and the Restricted Subsidiaries is in compliance in all material respects with the requirements of all Laws and all orders, writs, injunctions and decrees applicable to it or to its properties, except in such instances in which the failure to comply therewith, either individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect.

 

SECTION 3.17.  Intellectual Property; Licenses, Etc .  The Loan Parties and the Restricted Subsidiaries own, or possess the right to use, all of the Intellectual Property, licenses, permits and other authorizations that are reasonably necessary for the operation of their respective businesses, without conflict with the rights of any other Person.  To the best of the knowledge of the Loan Parties, no slogan or other advertising device, product, process, method, substance, part or other material now employed, or now contemplated to be employed, by any Loan Party or Restricted Subsidiary infringes upon any rights held by any other Person.  Except as specifically disclosed in Schedule 3.17, no claim or litigation regarding any of the foregoing is pending or, to the best of the knowledge of the Loan Parties, threatened, which, either individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect.

 

89



 

SECTION 3.18.  Labor Matters .  There are no strikes, lockouts, slowdowns or other material labor disputes against any Loan Party or any Restricted Subsidiary pending or, to the knowledge of any Loan Party, threatened.  The hours worked by and payments made to employees of the Loan Parties and the Restricted Subsidiaries have not been in violation of the Fair Labor Standards Act and any other applicable federal, state, local or foreign Law dealing with such matters in any material respect.  All payments due from any Loan Party or Restricted Subsidiary, or for which any claim may be made against any Loan Party or Restricted Subsidiary, on account of wages and employee health and welfare insurance and other benefits, have been paid or properly accrued in accordance with GAAP as a liability on the books of such Loan Party or Restricted Subsidiary. The Loan Parties and the Restricted Subsidiaries have disclosed, in accordance with all applicable Securities Laws, any collective bargaining agreement, management agreement, employment agreement, bonus, restricted stock, stock option, or stock appreciation plan or agreement, or any similar plan, agreement or arrangement required to be disclosed.  There are no complaints, unfair labor practice charges, grievances, arbitrations, unfair employment practices charges or any other claims or complaints against any Loan Party or Restricted Subsidiary pending or, to the knowledge of any Loan Party, threatened to be filed with any Governmental Authority or arbitrator based on, arising out of, in connection with, or otherwise relating to the employment or termination of employment of any employee of any Loan Party or Restricted Subsidiary which has had or would reasonably be expected to have a Material Adverse Effect.  The consummation of the transactions contemplated by the Loan Documents will not give rise to any right of termination or right of renegotiation on the part of any union under any collective bargaining agreement to which any Loan Party or Restricted Subsidiary is bound.

 

SECTION 3.19.  Security Documents .

 

(a)  The Security Agreement creates in favor of the Administrative Agent, for the benefit of the Secured Parties referred to therein, a legal, valid, continuing and enforceable security interest in the Collateral (as defined in the Security Agreement), the enforceability of which is subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.

 

(b)  The financing statements, releases and other filings are in appropriate form and have been or will be filed in the offices specified in Schedule II of the Security Agreement.  Upon such filings and/or the obtaining of “control” (as defined in the UCC) or possession, the Administrative Agent will have a perfected Lien on, and security interest in, to and under all right, title and interest of the Loan Parties in all Collateral that may be perfected by filing, recording or registering a financing statement or analogous document (including, without limitation, the proceeds of such Collateral subject to the limitations relating to such proceeds in the UCC) or by obtaining control or possession, under the UCC (in effect on the date this representation is made), prior and superior in right to any other Person, except for those Permitted Encumbrances that have priority in such Collateral by operation of law and except, as to the ABL Priority Collateral, for the Liens of the ABL Facility Agent to the extent provided in the Intercreditor Agreement.

 

90



 

(c)  When the Security Agreement (or a short form thereof) is filed in the United States Patent and Trademark Office and the United States Copyright Office and when financing statements, releases and other filings in appropriate form are filed in the offices specified in Schedule II of the Security Agreement, the Administrative Agent shall have a fully perfected Lien on, and security interest in, all right, title and interest of the applicable Loan Parties in the Intellectual Property (as defined in the Security Agreement) in which a security interest may be perfected by filing, recording or registering a security agreement, financing statement or analogous document in the United States Patent and Trademark Office or the United States Copyright Office, as applicable, in each case prior and superior in right to any other Person (it being understood that subsequent recordings in the United States Patent and Trademark Office and the United States Copyright Office may be necessary to perfect a Lien on registered trademarks, trademark applications and copyrights acquired by the Loan Parties after the date hereof), except for those Permitted Encumbrances that have priority in such Collateral by operation of law.

 

(d)  Upon the execution and delivery thereof, the Mortgages shall create in favor of the Administrative Agent, for the benefit of the Secured Parties referred to therein, a legal, valid, continuing and enforceable first-priority Lien on, and security interests in, the Real Estate Collateral Property described therein, subject to Permitted Encumbrances, the enforceability of which is subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.  Upon the filing or recording of the Mortgages with the appropriate Governmental Authorities, the Administrative Agent will have a perfected Lien on, and security interest in, to and under all right, title and interest of the grantors thereunder in all Real Estate Collateral Property that may be perfected by such filing (including, without limitation, the proceeds of such Real Estate Collateral Property), in each case prior and superior in right to any other Person, except for those Permitted Encumbrances that have priority in such Collateral by operation of law and except, as to the ABL Priority Collateral, for the Liens of the ABL Facility Agent to the extent provided in the Intercreditor Agreement.

 

SECTION 3.20.  Solvency .

 

(a)  After giving effect to the Transactions, the Loan Parties, on a consolidated basis, are Solvent.

 

(b)  No transfer of property has been or will be made by any Loan Party and no obligation has been or will be incurred by any Loan Party in connection with the transactions contemplated by this Agreement or the other Loan Documents with the intent to hinder, delay, or defraud either present or future creditors of any Loan Party.

 

SECTION 3.21.  Deposit Accounts; Credit Card Arrangements .

 

(a)  Annexed hereto as Schedule 3.21(a) is a list of all DDAs (and including Blocked Accounts) maintained by the Loan Parties as of the Closing Date, which Schedule includes, with respect to each DDA (i) the name and address of the depository; (ii) the purpose of such DDA and (iii) the identification of the Blocked Account Bank to which funds from such DDA are sent.

 

91



 

(b)  Annexed hereto as Schedule 3.21(b) is a list describing all arrangements as of the Closing Date to which any Loan Party is a party with respect to the processing and/or payment to such Loan Party of the proceeds of any credit card charges and debit card charges for sales made by such Loan Party.

 

SECTION 3.22.  Brokers .  No broker or finder brought about the obtaining, making or closing of the Loans or transactions contemplated by the Loan Documents, and no Loan Party, Restricted Subsidiary or Affiliate thereof has any obligation to any Person in respect of any finder’s or brokerage fees in connection therewith.

 

SECTION 3.23.  Trade Relations .  There exists no actual or, to the knowledge of any Loan Party, threatened, termination or cancellation of, or any material adverse modification or change in the business relationship of any Loan Party with any supplier material to its operations.

 

SECTION 3.24.  Material Contracts .  The Loan Parties and the Restricted Subsidiaries have disclosed, in accordance with all applicable Securities Laws, all Material Contracts.  No Loan Party is in breach or in default in any material respect of or under any Material Contract and has not received any notice of the intention of any other party thereto to terminate any Material Contract, in each case, that has had or would reasonably be expected to have a Material Adverse Effect.

 

SECTION 3.25.  Casualty .  Neither the businesses nor the properties of any Loan Party or Restricted Subsidiary are affected by any fire, explosion, accident, strike, lockout or other labor dispute, drought, storm, hail, earthquake, embargo, act of God or of the public enemy or other casualty (whether or not covered by insurance) that has had or would reasonably be expected to have a Material Adverse Effect.

 

SECTION 3.26.  Payable Practices .  No Loan Party has made any material change in the historical accounts payable practices from those in effect immediately prior to the Closing Date that has had or would reasonably be expected to have a Material Adverse Effect.

 

SECTION 3.27.  Notices from Farm Products Sellers, Etc .

 

(a)  No Loan Party has, within the one-year period prior to the Closing Date, received any written notice pursuant to the applicable provisions of the PSA, the PACA, the Food Security Act, the UCC or any other applicable local laws from (i) any Farm Products Seller or (ii) any lender to any Farm Products Seller or any other Person with a security interest in the assets of any Farm Products Seller or (iii) the Secretary of State (or equivalent official) or other Governmental Authority of any State, Commonwealth or political subdivision thereof in which any Farm Products purchased by such Loan Party are produced, in any case advising or notifying such Loan Party of the intention of such Farm Products Seller or other Person to preserve the benefits of any trust applicable to any assets of the Borrower established in favor of such Farm Products Seller or other Person under the provisions of any law or claiming a Lien upon or other claim or encumbrance with respect to any perishable agricultural commodity or any other Farm Products which may be or have been purchased by a Loan Party or any related or other assets of such Loan Party (all of the foregoing, together with any such notices as any Loan Party may at any time hereafter receive, collectively, the “ Food Security Act Notices ”).

 

92



 

(b)  No Loan Party is a “live poultry dealer” (as such term is defined in the PSA) or otherwise purchases or deals in live poultry of any type whatsoever.  The Loan Parties do not purchase livestock pursuant to cash sales as such term is defined in the PSA.  Each Loan Party is not engaged in, and shall not engage in, raising, cultivating, propagating, fattening, grazing or any other farming, livestock or aquacultural operations.

 

SECTION 3.28.  HIPAA Compliance .

 

(a)  To the extent that and for so long as any Loan Party is a “covered entity” within the meaning of HIPAA, such Loan Party (i) has undertaken or will promptly undertake all appropriate surveys, audits, inventories, reviews, analyses and/or assessments (including any necessary risk assessments) of all areas of its business and operations required by HIPAA; (ii) has developed or will promptly develop an appropriate plan and time line for becoming HIPAA Compliant (a “ HIPAA Compliance Plan ”); and (iii) has implemented or will implement those provisions of such HIPAA Compliance Plan in all material respects necessary to ensure that such Loan Party is or becomes HIPAA Compliant.

 

(b)  For purposes hereof, “ HIPAA Compliant ” shall mean that a Loan Party or Restricted Subsidiary (i) is or will be in compliance in all material respects with each of the applicable requirements of the so-called “Administrative Simplification” provisions of HIPAA on and as of each date that any part thereof, or any final rule or regulation thereunder, becomes effective in accordance with its or their terms, as the case may be (each such date, a “ HIPAA Compliance Date ”) and (ii) is not and would not reasonably be expected to become, as of any date following any such HIPAA Compliance Date, the subject of any civil or criminal penalty, process, claim, action or proceeding, or any administrative or other regulatory review, survey, process or proceeding (other than routine or mandated surveys or reviews conducted by any Governmental Authority, government health plan or other accreditation entity) that has had or would reasonably be expected to have a Material Adverse Effect.

 

(c)  Each Loan Party has entered into a business associate agreement with any third party acting on behalf of the Loan Party as a business associate as defined in 45 C.F.R. §160.103, where the failure to enter into such a business associate agreement has had or would reasonably be expected to have a Material Adverse Effect.

 

SECTION 3.29.  Compliance with Health Care Laws .  Without limiting the generality of Sections 3.16 or 3.28 or any other representation or warranty made herein or in any of the other Loan Documents:

 

(a)  Each Loan Party is in compliance in all material respects with all applicable Health Care Laws, including all Medicare and Medicaid program rules and regulations applicable to them.  Without limiting the generality of the foregoing, no Loan Party has received notice by a Governmental Authority of any violation of any provisions of the Medicare and Medicaid Anti-Fraud and Abuse or Anti-Kickback Amendments of the Social Security Act (presently codified in Section 1128(B)(b) of the Social Security Act) or the Medicare and Medicaid Patient and Program Protection Act of 1987.

 

(b)  Each Loan Party has maintained in all material respects all records required to be maintained by the Food and Drug Administration, Drug Enforcement Agency and State Boards of Pharmacy and the Federal and State Medicare and Medicaid programs and as otherwise

 

93



 

required by applicable Health Care Laws, and each Loan Party has all necessary permits, licenses, franchises, certificates and other approvals or authorizations of Governmental Authority as are required under applicable Health Care Laws.

 

(c)  Each Loan Party and each Restricted Subsidiary who is a Certified Medicare Provider or Certified Medicaid Provider has in a timely manner filed all requisite cost reports, claims and other reports required to be filed in connection with all Medicare and Medicaid programs due on or before the date hereof, all of which are complete and correct in all material respects.  There are no known claims, actions or appeals pending before any Third Party Payor or Governmental Authority, including any Fiscal Intermediary, the Provider Reimbursement Review Board or the Administrator of the Centers for Medicare and Medicaid Services, with respect to any Medicare or Medicaid cost reports or claims filed by any Loan Party or Restricted Subsidiary on or before the date hereof.  There currently exist no restrictions, deficiencies, required plans of correction actions or other such remedial measures with respect to Federal and State Medicare and Medicaid certifications or licensure.

 

SECTION 3.30.  Transaction Documents .  The Borrower has delivered to the Administrative Agent a complete and correct copy of the Acquisition Agreement and the Tender Offer Agreement (in each case, including all schedules, exhibits, amendments, supplements and modifications thereto).

 

SECTION 3.31.  Sanctioned Persons .  No Loan Party or Restricted Subsidiary, nor to the knowledge of the Borrower, any director, officer, agent, employee or Affiliate of any Loan Party or Restricted Subsidiary is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“ OFAC ”); and the Borrower will not directly or indirectly use the proceeds of the Loans or otherwise make available such proceeds to any Person for the purpose of financing the activities of any Person currently subject to any U.S. sanctions administered by OFAC.

 

SECTION 3.32.  Anti-Terrorism; Foreign Corrupt Practices Act .  To the extent applicable, each of the Loan Parties and the Restricted Subsidiaries is in compliance in all material respects with (i) the Trading with the Enemy Act, as amended, and each of the foreign assets control regulations of the United States Treasury Department (31 C.F.R., Subtitle B, Chapter V, as amended) and any other enabling legislation or executive order relating thereto, and (ii) the USA PATRIOT Act.  No part of the proceeds of the Loans will be used, directly or indirectly, for any payments to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977 (the “ FCPA ”).

 

ARTICLE IV

 

Conditions of Lending

 

The obligations of the Lenders to make the Loans hereunder are subject to the satisfaction of the following conditions:

 

94



 

SECTION 4.01.  Conditions to Borrowing .  On the Closing Date:

 

(a)  The Administrative Agent shall have received a notice of such Borrowing as required by Section 2.03 (or such notice shall have been deemed given in accordance with Section 2.02).

 

(b)  The representations and warranties set forth in Article III and in each other Loan Document (other than the Specified Representations and the representation contained in the second sentence of Section 3.15(a)) shall be true and correct without giving effect to any materiality or Material Adverse Effect qualifications therein (except for such failures to be so true and correct as have not had and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect), on and as of the date of the Borrowing with the same effect as though made on and as of such date, except to the extent such representations and warranties expressly relate to an earlier date, in which case such representations and warranties shall be true and correct without giving effect to any materiality or Material Adverse Effect qualifications therein (except for such failures to be so true and correct as have not had and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect), on and as of such earlier date.  The Specified Representations shall be true and correct in all material respects on and as of the date of the Borrowing with the same effect as though made on and as of such date, except to the extent such Specified Representations expressly relate to an earlier date, in which case such Specified Representations shall be true and correct in all material respects on and as of such earlier date.  The Acquisition Agreement Representations shall be true and correct on and as of the date of the Borrowing with the same effect as though made on and as of such date, except to the extent such Acquisition Agreement Representations expressly relate to an earlier date, in which case such Acquisition Agreement Representations shall be true and correct on and as of such earlier date.

 

(c)  The NAI Sale (including the receipt by the Borrower of proceeds in respect thereof of at least $100,000,000, as adjusted in accordance with the Acquisition Agreement) shall have been or, substantially concurrently with the borrowing under the Term Facility, shall be consummated, in accordance with the terms of the Acquisition Agreement and all related documents, in each case as amended and in effect from time to time, but without giving effect to any modifications, amendments, waivers or consents that are materially adverse to the Initial Lenders or the Joint Lead Arrangers (each in their respective capacity as such) without the consent of the Joint Lead Arrangers (provided that it is understood and agreed that any modifications, amendments, waivers or consents with respect to Cerberus’ proposed direct or indirect equity ownership stake in the Borrower after giving effect to the Transactions shall not be deemed materially adverse to the Initial Lenders or the Joint Lead Arrangers), and the other Transactions shall have been, or shall substantially concurrently with the borrowing under the Term Facility, be consummated.  In the event that the Offer is commenced, Cerberus shall have directly or indirectly purchased, or will purchase substantially contemporaneously with the Closing Date, at least $165,000,000 of the Borrower’s outstanding common equity interests pursuant to the terms and conditions of the Tender Offer Agreement.

 

95



 

(d)  The Borrower shall have received not less than $1,000,000,000 in aggregate commitments pursuant to and under the ABL Facility.  The terms and conditions of the ABL Facility (including, but not limited to, terms and conditions relating to the interest rate, fees, amortization, maturity, lien subordination, representations and warranties, covenants, events of default and remedies) shall be reasonably satisfactory to the Joint Lead Arrangers (it being acknowledged that the terms and conditions expressly set forth in the ABL Facility Documents and provided to the Joint Lead Arrangers are satisfactory to the Joint Lead Arrangers).

 

(e)  Since February 25, 2012, there shall not have occurred any Closing Date Material Adverse Effect or any event, condition, change or effect that would reasonably be expected to have, individually or in the aggregate, a Closing Date Material Adverse Effect.

 

(f)  The Administrative Agent shall have received, on behalf of itself and the Lenders, (i) a favorable written opinion of Dorsey & Whitney LLP, counsel for the Borrower, substantially to the effect set forth in Exhibit K and (ii) a favorable written opinion of local counsel in those jurisdictions of organization of Loan Parties reasonably requested by the Administrative Agent (or, to the extent agreed by the Administrative Agent with respect to particular jurisdictions, a favorable written opinion of the Vice President — Business Law of the Borrower), in each case (A) dated the Closing Date, (B) addressed to the Administrative Agent, the Collateral Agent and the Lenders and (C) covering such other matters relating to the Loan Documents and the Transactions as the Administrative Agent shall reasonably request, and the Borrower hereby requests such counsel to deliver such opinions.

 

(g)  The Administrative Agent shall have received (i) a copy of the certificate or articles of incorporation, including all amendments thereto, of each Loan Party, certified as of a recent date by the Secretary of State of the state of its organization, and a certificate as to the good standing (to the extent applicable) of each Loan Party as of a recent date, from such Secretary of State; (ii) a certificate of the Secretary or the Assistant Secretary (or other Responsible Officer acceptable to the Administrative Agent) of each Loan Party dated the Closing Date and certifying (A) that attached thereto is a true and complete copy of the by-laws or operating agreement of such Loan Party as in effect on the Closing Date and at all times since a date prior to the date of the resolutions described in clause (B) below, (B) that attached thereto is a true and complete copy of resolutions duly adopted by the Board of Directors of such Loan Party authorizing the execution, delivery and performance of the Loan Documents to which such Person is a party and, in the case of the Borrower, the borrowings hereunder, and that such resolutions have not been modified, rescinded or amended and are in full force and effect, (C) that the certificate or articles of incorporation of such Loan Party have not been amended since the date of the last amendment thereto shown on the certificate of good standing furnished pursuant to clause (i) above, and (D) as to the incumbency and specimen signature of each officer executing any Loan Document or any other document delivered in connection herewith on behalf of such Loan Party and (iii) a certificate of another officer as to the incumbency and specimen signature of the Secretary or Assistant Secretary (or other Responsible Officer

 

96



 

acceptable to the Administrative Agent) executing the certificate pursuant to clause (ii) above.

 

(h)  The Administrative Agent shall have received a certificate, dated the Closing Date and signed by a Responsible Officer of the Borrower, confirming compliance with the conditions precedent set forth in Sections 4.01(b) and 4.01(e).

 

(i)  All fees required to be paid on the Closing Date pursuant to the Fee Letter and the Commitment Letter and reasonable and documented out-of-pocket expenses required to be paid on the Closing Date pursuant to the Commitment Letter (in the case of out-of-pocket expenses, to the extent invoiced at least two business days prior to the Closing Date), shall have been paid (which amounts may be offset against the proceeds of the Loans).

 

(j)  This Agreement and the Security Documents (other than with respect to the Term Loan Priority Collateral that is not part of the Collateral under the Security Agreement) shall have been duly executed by each Loan Party that is to be a party thereto and shall be in full force and effect on the Closing Date.  The Collateral Agent on behalf of the Secured Parties shall have a security interest in the Collateral of the type and priority described in each Security Document (other than with respect to the Term Loan Priority Collateral that is not part of the Collateral under the Security Agreement) and in the Intercreditor Agreement.  The Intercreditor Agreement shall have been duly executed by the ABL Collateral Agent and shall be in full force and effect on the Closing Date.

 

(k)  The Collateral Agent shall have received the results of judgment searches and a search of the UCC filings (or equivalent filings) made with respect to the Loan Parties in the states (or other jurisdictions) of formation of such Persons, in which the chief executive office of each such Person is located and in the other jurisdictions in which such Persons maintain property, together with copies of the financing statements (or similar documents) disclosed by such search, and accompanied by evidence satisfactory to the Collateral Agent that the Liens indicated in any such financing statement (or similar document) would be permitted under Section 6.01 or have been or will be contemporaneously released or terminated.

 

(l)  The Administrative Agent shall have received certificates or other evidence of insurance for the insurance policies required by Section 5.07 and the applicable provisions of the other Loan Documents, in each case in form and substance reasonably satisfactory to the Administrative Agent.

 

(m)  All Indebtedness for borrowed money owed to the third parties of the Loan Parties and their Restricted Subsidiaries shall have been or, substantially concurrently with the borrowing under the Term Facility, shall be repaid and all commitments (if any) in respect thereof shall have been terminated and all guarantees (if any) thereof and security (if any) therefor discharged and released (and the Administrative Agent shall have received reasonably satisfactory evidence of the foregoing), other than (i) the Term Facility, (ii) the ABL Facility, (iii) up to $1,000,000,000 of the SVU 2016 Notes and (iv) up to $400,000,000 of Capital Leases and other Indebtedness.

 

97



 

(n)  The Administrative Agent and the Lenders shall have received (A) deal basis carve-out consolidated statements of income of the Borrower and its Subsidiaries as of and for the 2011 fiscal year and the 2012 fiscal year and the 52-week period ending December 1, 2012, in each case, in the form included in the Lender Presentation (or the last day of the most recent fiscal quarter of the Borrower ended at least 45 days prior to the Closing Date (or 90 days prior to the Closing Date if such fiscal quarter is the final fiscal quarter of the relevant fiscal year), in such case in the format included in the Lender Presentation) and (B) deal basis carve-out balance sheets of the Borrower and its Subsidiaries as of February 25, 2012 and December 1, 2012, in each case, in the form included in the Lender Presentation (or the last day of the most recent fiscal quarter of the Borrower ended at least 45 days prior to the Closing Date (or 90 days prior to the Closing Date if such fiscal quarter is the final fiscal quarter of the relevant fiscal year), in such case in the format included in the Lender Presentation), and, in each case, which shall have been made public via an 8-K filing or otherwise prior to the date of the “lender meeting” for the Term Facility (or in the case of such financial statements as of and for the last day of the most recent fiscal quarter of the Borrower ended at least 45 days prior to the Closing Date (or 90 days prior to the Closing Date if such fiscal quarter is the final fiscal quarter of the relevant fiscal year), prior to the Closing Date) such that such financial statements shall not constitute material non-public information.

 

(o)  The Administrative Agent shall have received a certificate from the chief financial officer of the Borrower substantially in the form attached to the Commitment Letter certifying that the Borrower and its Subsidiaries, on a Consolidated basis after giving effect to the Transactions are Solvent.

 

(p)  The Administrative Agent shall have received, at least three Business Days prior to the Closing Date, all documentation and other information required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including the USA PATRIOT Act, that has been reasonably requested by the Initial Lenders at least ten days prior to the Closing Date.

 

ARTICLE V

 

Affirmative Covenants

 

The Loan Parties covenant and agree with each Lender that so long as this Agreement shall remain in effect and until the Commitments have been terminated and the principal of and interest on each Loan, all Fees and all other expenses or amounts payable under any Loan Document shall have been paid in full (other than contingent indemnification obligations not then due and payable), unless the Required Lenders shall otherwise consent in writing, the Loan Parties will, and will, to the extent provided below, cause each of the Restricted Subsidiaries to:

 

SECTION 5.01.  Financial Statements .  Deliver to the Administrative Agent, in form and detail satisfactory to the Administrative Agent (for distribution to each Lender):

 

(a)  as soon as available, but in any event within 90 days after the end of each Fiscal Year, a Consolidated balance sheet of the Borrower as at the end of such Fiscal

 

98



 

Year, and the related Consolidated statements of income or operations, Shareholders’ Equity and cash flows for such Fiscal Year, setting forth in each case in comparative form the figures for the previous Fiscal Year, all in reasonable detail and prepared in accordance with GAAP, such Consolidated statements to be audited and accompanied by (i) a report and opinion of a Registered Public Accounting Firm of nationally recognized standing reasonably acceptable to the Administrative Agent, which report and opinion shall be prepared in accordance with generally accepted auditing standards and shall not be subject to any “going concern” or like qualification or exception or any qualification or exception as to the scope of such audit to the effect that such Consolidated financial statements fairly present the financial condition and results of operations of the Borrower and its Subsidiaries on a Consolidated and consolidating basis in accordance with GAAP consistently applied, together with a customary “management discussion and analysis” provision and (ii) an opinion of such Registered Public Accounting Firm independently assessing the Loan Parties’ internal controls over financial reporting in accordance with Item 308 of SEC Regulation S-K, PCAOB Auditing Standard No. 2 and Section 404 of Sarbanes-Oxley expressing a conclusion that contains no statement that there is a material weakness in such internal controls, except for such material weaknesses as to which the Required Lenders do not object;

 

(b)  as soon as available, but in any event within 45 days after the end of each of the first three Fiscal Quarters of each Fiscal Year, a Consolidated balance sheet of the Borrower as at the end of such Fiscal Quarter, and the related Consolidated statements of income or operations and cash flows for such Fiscal Quarter and for the portion of the Fiscal Year then ended, setting forth in each case in comparative form the figures for (i) the corresponding Fiscal Quarter of the previous Fiscal Year and (ii) the corresponding portion of the previous Fiscal Year, all in reasonable detail, such Consolidated statements to be certified by a Responsible Officer of the Borrower as fairly presenting the financial condition, results of operations and cash flows of the Borrower as of the end of such Fiscal Quarter in accordance with GAAP consistently applied, subject to normal year-end audit adjustments, together with a customary “management discussion and analysis” provision, subject only to normal year-end audit adjustments and the absence of footnotes;

 

(c)  as soon as available, but in any event no more than 45 days after the end of each Fiscal Year, forecasts prepared by management of the Borrower, in form satisfactory to the Administrative Agent, of Consolidated balance sheets and statements of income or operations, cash flows and availability of the Borrower and its Subsidiaries on a Consolidated basis using Fiscal Periods for the immediately following Fiscal Year (including the Fiscal Year in which the Maturity Date occurs), and as soon as available, any significant revisions to such forecasts with respect to such Fiscal Year; and

 

(d)  the Borrower hereby acknowledges and agrees that all financial statements and certificates furnished pursuant to Sections 5.01(a) and 5.01(b) are hereby deemed to be Borrower Materials suitable for distribution, and to be made available, to Public Lenders as contemplated by Section 9.01(d) and may be treated by the Administrative Agent and the Lenders as if the same had been marked “PUBLIC” in accordance with such paragraph.

 

99



 

SECTION 5.02.  Certificates; Other Information .

 

(a)  Deliver to the Administrative Agent and, upon the Administrative Agent’s request, each Lender, in form and detail satisfactory to the Administrative Agent:

 

(i) concurrently with the delivery of the financial statements referred to in Sections 5.01(a) and (b), a duly completed Compliance Certificate signed by a Responsible Officer of the Borrower, and in the event of any change in GAAP used in the preparation of such financial statements, the Borrower shall also provide a statement of reconciliation conforming such financial statements to GAAP and a copy of management’s discussion and analysis with respect to such financial statements;

 

(ii) [reserved];

 

(iii) promptly after the same are available, copies of each annual report, proxy or financial statement or other report or communication sent to the stockholders of the Loan Parties, and copies of all annual, regular, periodic and special reports and registration statements which any Loan Party may file or be required to file with the SEC under Sections 13 or 15(d) of the Securities Exchange Act of 1934 or with any national securities exchange, and in any case not otherwise required to be delivered to the Administrative Agent pursuant hereto;

 

(iv) the financial and collateral reports described on Schedule 5.02 hereto, at the times set forth in such Schedule;

 

(v) as soon as available, but in any event within 30 days after the end of each Fiscal Year, and as more frequently as may be reasonably requested by the Administrative Agent, (A) a report summarizing the insurance coverage (specifying type, amount and carrier) in effect for each Loan Party and its Subsidiaries and containing such additional information as the Administrative Agent may reasonably specify and (B) a report summarizing collective bargaining agreements then in effect (specifying parties, expiration dates, number of employees covered and locations) and containing such additional information as the Administrative Agent, or any Lender through the Administrative Agent, may reasonably specify;

 

(vi) promptly after the Administrative Agent’s request therefor, copies of all Material Contracts (but only to the extent not then publicly available from the SEC) and documents evidencing Material Indebtedness;

 

(vii) promptly after the Administrative Agent’s request therefor, a list of any “business associate agreements” (as such term is defined in HIPAA) that any Loan Party is a party to or bound by that is accurate in all material respects as of the date set forth therein and a copy of any standard form of such agreement used by any Loan Party;

 

(viii) promptly, and in any event within five Business Days after receipt thereof by any Loan Party or any Subsidiary thereof, copies of each notice or other correspondence received from any Governmental Authority (including, without limitation, the SEC (or comparable agency in any applicable non-U.S. jurisdiction))

 

100



 

concerning any proceeding with, or investigation or possible investigation or other inquiry by such Governmental Authority regarding financial or other operational results of any Loan Party or any Subsidiary thereof or any other matter which, if adversely determined, would reasonably be expected to have a Material Adverse Effect;

 

(ix) if requested by the Administrative Agent, promptly, and in any event within five Business Days after such request, provide to the Administrative Agent the name(s) used on each tax return filed by the Borrower or any of its Subsidiaries, together with a copy of the portion of the tax return that shows such name(s);

 

(x) promptly after the receipt thereof by the Borrower or any of its Subsidiaries, a copy of any “management letter” received by any such Person from its certified public accountants and the management’s response thereto;

 

(xi) promptly after the request by any Lender, all documentation and other information that such Lender reasonably requests in order to comply with its ongoing obligations under applicable “know your customer” and anti-money laundering rules and regulations, including the USA PATRIOT Act; and

 

(xii) promptly, such additional information regarding the business affairs, financial condition or operations of any Loan Party or any Subsidiary, or compliance with the terms of the Loan Documents, as the Administrative Agent or any Lender may from time to time reasonably request.

 

(b)  Documents required to be delivered pursuant to Sections 5.01(a), 5.01(b) or 5.02(a)(iv) (to the extent any such documents are included in materials otherwise filed with the SEC) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date (1) specified in Section 9.01 with respect to e-mail communications, (2) on which the Borrower posts such documents, or provides a link thereto on the Borrower’s website on the Internet at the website address listed on Schedule 9.01(a); or (3) on which such documents are posted on the Borrower’s behalf on an Internet or intranet website, if any, to which each Lender and the Administrative Agent have access (whether a commercial, third-party website or whether sponsored by the Administrative Agent); provided , that (x) the Borrower shall notify the Administrative Agent and each Lender (by telecopier or e-mail) of the posting of any such documents and (y) if for any reason the Administrative Agent is unable to obtain electronic versions of the documents posted, promptly upon the Administrative Agent’s request provide to the Administrative Agent by electronic mail electronic versions ( i.e. , soft copies) of such documents.  Notwithstanding anything contained herein, except as the Administrative Agent may specify otherwise at any time and from time to time, in every instance the Borrower shall be required to provide paper copies of the Compliance Certificate required by Section 5.02(a)(i) to the Administrative Agent.  The Administrative Agent shall have no obligation to request the delivery or to maintain copies of the documents referred to above, and in any event shall have no responsibility to monitor compliance by the Loan Parties with any such request for delivery, and each Lender shall be solely responsible for requesting delivery to it or maintaining its copies of such documents.

 

101



 

SECTION 5.03.  Notices .  Promptly notify the Administrative Agent of:

 

(a)  the occurrence of any Default or Event of Default, specifying the nature and extent thereof and the corrective action (if any) taken or proposed to be taken with respect thereto;

 

(b)  any matter that has resulted or would reasonably be expected to result in a Material Adverse Effect, such as (i) any breach or non-performance of, or any default under, a Material Contract or with respect to Material Indebtedness of any Loan Party or any Restricted Subsidiary; (ii) any dispute, litigation, investigation, proceeding or suspension between any Loan Party or any Restricted Subsidiary and any Governmental Authority; or (iii) the commencement of, or any material development in, any litigation or proceeding affecting any Loan Party or any Restricted Subsidiary, including pursuant to any applicable Environmental Laws;

 

(c)  the occurrence of any event, including any violation of Environmental Law, Release of Hazardous Materials, acquisition of any stock, assets or property, or the receipt of notice, claim, demand, action or suit pertaining to any of the foregoing, that, in each case, would reasonably be expected to result in Environmental Liabilities in excess of $25,000,000;

 

(d)  the occurrence of any ERISA Event that itself, or together with any other ERISA Events that have occurred, has had or would reasonably be expected to have a Material Adverse Effect;

 

(e)  any material change in accounting policies or financial reporting practices by any Loan Party or any Subsidiary thereof;

 

(f)  any change in any Loan Party’s chief executive officer, chief financial officer, chief operating officer or treasurer;

 

(g)  the discharge by any Loan Party of its present Registered Public Accounting Firm or any withdrawal or resignation by such Registered Public Accounting Firm;

 

(h)  the filing of any Lien for unpaid taxes exceeding $15,000,000 in the aggregate against the Loan Parties;

 

(i)  any casualty or other insured damage to any material portion of the Collateral or the commencement of any action or proceeding for the taking of any interest in a material portion of the Collateral under power of eminent domain or by condemnation or similar proceeding or if any material portion of the Collateral is damaged or destroyed;

 

(j)  the receipt of any notice from a supplier, seller or agent pursuant to either the PACA or the PSA;

 

(k)  any transaction of the nature contained in Article VI hereof, occurring after the Closing Date, consisting of: (i) the entry by a Loan Party into a Material Contract, (ii) the incurrence by a Loan Party of Material Indebtedness (or in the case of Indebtedness of less

 

102



 

than $50,000,000 but greater than $25,000,000, notify the Administrative Agent at the same time as the next Compliance Certificate to be delivered to the Administrative Agent), (iii) the voluntary or involuntary grant of any Lien other than a Permitted Encumbrance upon any property of a Loan Party; or (iv) the making of any Permitted Investments by a Loan Party in excess of $50,000,000 (or in the case of any Permitted Investment less than $50,000,000 but greater than $25,000,000, notify the Administrative Agent at the same time as the next Compliance Certificate to be delivered to the Administrative Agent); and (v) mergers or acquisitions permitted under Section 6.04;

 

(l)  any failure by the Loan Parties to pay rent at (i) 5.00% or more of the Loan Parties’ locations in the aggregate or (ii) any of such Loan Party’s locations if such failure continues for more than 10 days following the day on which such rent first came due and such failure has had or would reasonably be expected to have a Material Adverse Effect;

 

(m)  any change in the Borrower’s corporate rating by S&P, in the Borrower’s corporate family rating by Moody’s or in the ratings of the Term Facility by S&P or Moody’s, or any notice from either such agency indicating its intent to effect such a change or to place the Borrower or the Term Facility on a “CreditWatch” or “WatchList” or any similar list, in each case with negative implications, or its cessation of, or its intent to cease, rating the Borrower or the Term Facility; and

 

(n)  (i) any claim being asserted for payment under the ASC Guarantee, (ii) any payment being made from the Initial Escrow Amount Subaccount (as defined in the Escrow Agreement) other than to retire principal obligations on the ASC Notes, or from the Additional Escrow Amount Subaccount (as defined in the Escrow Agreement) to pay amounts other than interest on the ASC Notes, (iii) any claim for payment being made from either subaccount of the Escrow Account (as defined in the Escrow Agreement) and such claim not being honored by the Escrow Agent (as defined in the Escrow Agreement) or (iv) any claim being asserted for payment under the Borrower’s guarantee of NAI Workers’ Compensation Liabilities.

 

Each notice pursuant to this Section 5.03 shall be accompanied by a statement of a Responsible Officer of the Borrower setting forth details of the occurrence referred to therein and stating what action the Borrower has taken and proposes to take with respect thereto.  Each notice pursuant to Section 5.03(a) shall describe with particularity any and all provisions of this Agreement and any other Loan Document that have been breached.

 

SECTION 5.04.  Payment of Obligations .  Pay and discharge as the same shall become due and payable, all its obligations and liabilities, including (a) all Taxes, assessments and governmental charges or levies upon it or its properties, assets, income or profits before the same shall have become delinquent or in default, (b) all lawful claims (including claims of landlords, warehousemen, freight forwarders and carriers, and all claims for labor materials and supplies or otherwise) which, if unpaid, would by law become a Lien upon its property; and (c) all Indebtedness, as and when due and payable, but subject to any subordination provisions contained in any instrument or agreement evidencing such Indebtedness, except, in each case under clauses (a), (b) or (c), where (i) and to the extent, the validity or amount thereof is being contested in good faith by appropriate proceedings, (ii) such Loan Party has set aside on its

 

103



 

books adequate reserves with respect thereto in accordance with GAAP, (iii) such contest effectively suspends collection of the contested obligation and enforcement of any Lien securing such obligation, (iv) in the case of any Real Estate Collateral Property subject to a Mortgage, there is no present risk of forfeiture or such Real Estate Collateral Property and (v) the failure to make payment pending such contest would not reasonably be expected to result in a Material Adverse Effect.

 

SECTION 5.05.  Preservation of Existence, Etc .  (a) Preserve, renew and maintain in full force and effect its legal existence and good standing under the Laws of the jurisdiction of its organization or formation except in a transaction permitted by Section 6.05; (b) take all necessary action to maintain and keep in full force and effect all rights, privileges, permits, licenses and franchises material to the normal conduct of its business; and (c) preserve or renew all of its Intellectual Property, except to the extent such Intellectual Property (i) is no longer used or useful in the business of any Loan Party or Restricted Subsidiary and (ii) is not otherwise material to the business of any Loan Party or Restricted Subsidiary in any respect.

 

SECTION 5.06.  Maintenance of Properties .  (a) Maintain, preserve and protect all of its material properties and Equipment material to the operation of its business in good working order and condition, ordinary wear and tear excepted; and (b) make all repairs thereto and renewals, improvements, additions and replacements thereof necessary in order that the business carried on in connection therewith may be properly conducted at all times.

 

SECTION 5.07.  Maintenance of Insurance .

 

(a)  Maintain with financially sound and reputable insurance companies reasonably acceptable to the Administrative Agent and not Affiliates of the Loan Parties (except to the extent that the Insurance Captives are Affiliates of the Loan Parties), insurance with respect to its properties and business against loss or damage of the kinds customarily insured against by Persons engaged in the same or similar business and operating in the same or similar locations and as is otherwise required by applicable Law, of such types and in such amounts (after giving effect to any self-insurance compatible with the following standards) as are customarily carried under similar circumstances by such other Persons and as are reasonably acceptable to the Administrative Agent, including coverage for business interruption and public liability insurance against claims for personal injury or death or property damage occurring upon, in, about or in connection with the use of any properties owned, occupied or controlled by it.

 

(b)  Cause fire and extended coverage policies maintained with respect to any Collateral and business interruption coverage to provide (by endorsement or otherwise):

 

(i)                                      a non-contributing mortgage clause (regarding improvements to real property);

 

(ii)                                   that none of the Loan Parties, Secured Parties or any other Person (other than an Insurance Captive) shall be a co-insurer;

 

(iii)                                a customary lender’s loss payable clause, in form and substance reasonably satisfactory to the Administrative Agent, which shall provide that the insurance carrier shall pay all proceeds otherwise payable to the Loan Parties under the policies to the Administrative Agent as its interests may appear (it being understood that there will be

 

104



 

a separate lender’s loss payable clause for the benefit of the ABL Facility Agent as its interests may appear, and that the rights of Administrative Agent and ABL Facility Agent will be subject to the Intercreditor Agreement);

 

(iv)                               that neither the Loan Parties, the Administrative Agent nor any other Person (other than an Insurance Captive) shall be a co-insurer thereunder;

 

(v)                                  a “Replacement Cost Endorsement”, without any deduction for depreciation; and

 

(vi)                               such other provisions as the Administrative Agent may reasonably require from time to time to protect its and the Lenders’ interests.

 

(c)  Cause commercial general liability policies to provide coverage to the Administrative Agent as an additional insured.

 

(d)  (i) Cause each policy of insurance required by this Section 5.07 to also provide that it shall not be canceled by reason of nonpayment of premium except upon not less than ten (10) days’ prior written notice thereof by the insurer to the Administrative Agent or for any other reason except upon not less than thirty (30) days’ prior written notice thereof by the insurer to the Administrative Agent, except, in each case, in the case of force majeure, (ii) notify the Administrative Agent promptly (and in any event within five (5) Business Days) whenever it receives a notice from the insurance carrier that any policy required by this Section 5.07 will be canceled for any reason and (iii) use reasonable efforts to include in such clause that the insurance carrier will provide prior written notice to the loss payee of any modification to the policy so as to reduce the scope or amount of coverage in any material respect and otherwise notify the Administrative Agent on or about the date that any policy required by this Section 5.07 is modified so as to reduce the scope or amount of coverage in any material respect.

 

(e)  Deliver to the Administrative Agent, on or about the date of cancellation or non-renewal of any policy of insurance required by this Section 5.07, a certificate of insurance for the replacement policy; and deliver to the Administrative Agent, on or about the date of the renewal of any policy of insurance required by this Section 5.07, a certificate evidencing renewal of each such policy.

 

(f)  Maintain for themselves and their Subsidiaries, a Directors and Officers insurance policy, and a “Blanket Crime” policy, the “Blanket Crime” policy including employee dishonesty, forgery or alteration, theft, disappearance and destruction, robbery and safe burglary, and computer fraud coverage, placed with responsible companies and otherwise as customarily insured against by Persons engaged in the same or similar business and operating in the same or similar locations and as is otherwise required by applicable Law, of such types and in such amounts (after giving effect to any self-insurance compatible with the following standards) as are customarily carried under similar circumstances by such other Persons, and will upon request by the Administrative Agent furnish the Administrative Agent certificates evidencing renewal of each such policy.

 

(g)  Permit, upon the reasonable request of the Administrative Agent, any representatives that are designated by the Administrative Agent to inspect the insurance policies maintained by

 

105



 

or on behalf of the Loan Parties and to inspect books and records related thereto and any properties covered thereby at any reasonable time during business hours.

 

(h)  Deliver to the Administrative Agent, upon the Administrative Agent’s reasonable request therefor, (A) copies and updated certificates of insurance for the insurance policies required by this Section 5.07 and the applicable provisions of the Security Documents, and (B) duplicate originals or certified copies of all such policies covering any Collateral.

 

(i)  If at any time the area in which any Real Estate Collateral Property subject to a Mortgage is located is designated (i) in a federally designated “special flood hazard area,” flood hazard insurance in an amount equal to the maximum amount of such insurance available under the National Flood Insurance Act of 1968, the Flood Disaster Protection Act of 1973 or the National Flood Insurance Reform Act of 1994, as each may be amended to comply with current regulations required or (ii)  in “seismic zone” 3 or 4 (as defined in the Uniform Building Code 1997 map published by the International Conference of Building Officials), obtain earthquake insurance in such total amount as is customarily carried under similar circumstances by Persons engaged in the same or similar business and operating in the same or similar locations, and as is otherwise required by applicable Law, and as is reasonably acceptable to the Administrative Agent.

 

(j)  With respect to any Real Estate Collateral Property, carry and maintain commercial general liability insurance on an occurrence basis covering bodily injury including death, and property damage liability in such amounts (after giving effect to any self-insurance compatible with the following standards) as is customarily carried under similar circumstances by Persons engaged in the same or similar business and operating in the same or similar locations or as required by applicable Law, and as is reasonably acceptable to the Administrative Agent, naming the Administrative Agent as an additional insured.

 

(k)  (i) Notify the Administrative Agent promptly whenever any separate insurance concurrent in form or contributing in the event of loss with that required to be maintained under this Section 5.07 is taken out by any Loan Party, and (ii) deliver to the Administrative Agent a certificate of insurance for such policy or policies within thirty (30) days of such policy or policies (or, at the reasonable request of the Administrative Agent, duplicate originals thereof) being taken out by any Loan Party.

 

(l)  The insurance companies providing the insurance required to be maintained under this Section 5.07 shall have no rights of subrogation against any Secured Party or its agents or employees.  If, however, the insurance policies do not provide waiver of subrogation rights against such parties, as required above, then the Loan Parties hereby agree, to the extent permitted by law, to waive their right of recovery, if any, against the Secured Parties and their agents and employees to the extent payment for such loss or damage is actually made by the insurance companies issuing the insurance policies required to be maintained under this Section 5.07.  The designation of any form, type or amount of insurance coverage by any Secured Party under this Section 5.07 shall in no event be deemed a representation, warranty or advice by such Secured Party that such insurance is adequate for the purposes of the business of the Loan Parties or the protection of their properties.

 

106



 

SECTION 5.08.  Compliance with Laws .  Comply in all material respects with the requirements of all Laws and all orders, writs, injunctions and decrees applicable to it or to its business or property, except in such instances in which the failure to comply therewith would not reasonably be expected to have a Material Adverse Effect.

 

SECTION 5.09.  Books and Records; Accountants; Maintenance of Ratings .

 

(a)  Maintain proper books of record and account, in which full, true and correct entries in conformity with GAAP consistently applied shall be made of all financial transactions and matters involving the assets and business of the Loan Parties or such Subsidiary, as the case may be; and maintain such books of record and account in material conformity with all applicable requirements of any Governmental Authority having regulatory jurisdiction over the Loan Parties or such Subsidiary, as the case may be.

 

(b)  At all times retain a Registered Public Accounting Firm which is reasonably satisfactory to the Administrative Agent and shall instruct such Registered Public Accounting Firm to cooperate with, and be available to, the Administrative Agent or its representatives to discuss, with a representative of the Borrower present, the Loan Parties’ financial performance, financial condition, operating results, controls, and such other matters, within the scope of the retention of such Registered Public Accounting Firm, as may be raised by the Administrative Agent.

 

(c)  Use commercially reasonable efforts to cause the Term Facility to be continuously rated by S&P and Moody’s, and use commercially reasonable efforts to maintain a corporate rating from S&P and a corporate family rating from Moody’s, in each case in respect of the Borrower.

 

SECTION 5.10.  Inspection Rights .  Permit representatives and independent contractors of the Administrative Agent to visit and inspect any of its properties, to examine its corporate, financial and operating records, and make copies thereof or abstracts therefrom, and to discuss its affairs, finances and accounts with its directors, officers, and Registered Public Accounting Firm, all at the expense of the Loan Parties and at such reasonable times during normal business hours and as often as may be reasonably desired, upon reasonable advance notice to the Borrower; provided , that when an Event of Default exists, the Administrative Agent (or any of its representatives or independent contractors) may do any of the foregoing at the expense of the Loan Parties at any time during normal business hours.

 

SECTION 5.11.  Use of Proceeds .  Use the proceeds of the Loans (other than Incremental Loans) to consummate the Transactions and to pay fees and expenses in connection therewith, and for no other purpose.

 

SECTION 5.12.  Additional Loan Parties .  Notify the Administrative Agent at the time that any Person becomes a Subsidiary, whether such Person shall be an Excluded Subsidiary (and if so, pursuant to which clause or clauses of the definition thereof), and promptly thereafter (and in any event within 30 days), cause any such Person which is not an Excluded Subsidiary, (i) to become a Loan Party and grant a Lien to the Collateral Agent on such Person’s assets of the types constituting Collateral to secure the Obligations by executing and delivering to the Administrative Agent a joinder to each of the Security Agreement and the Facility Guaranty and such other documents (including, to the extent applicable, Mortgages and Related Real Estate Collateral Security Agreements) as the Administrative Agent shall deem appropriate for such purpose and by

 

107



 

complying with the Term Loan Priority Collateral Requirements with respect to any Material Real Estate Assets and Material Related Collateral Locations, (ii) deliver to the Administrative Agent documents of the types referred to in Sections 4.01(g) and 4.01(k) and, upon the Administrative Agent’s reasonable request, favorable opinions of counsel to such Person (which shall cover, among other things, the legality, validity, binding effect and enforceability of the documentation referred to in this sentence) and (iii) if any Indebtedness of such Person is owned by or on behalf of any Loan Party in an amount greater than or equal to $10,000,000 individually or in the aggregate, to pledge such Indebtedness and promissory notes evidencing such Indebtedness, in each case in form, content and scope reasonably satisfactory to the Administrative Agent.  In no event shall compliance with this Section 5.12 waive or be deemed a waiver or consent to any transaction giving rise to the need to comply with this Section 5.12 if such transaction was not otherwise expressly permitted by this Agreement.

 

SECTION 5.13.  Cash Management .

 

(a)  On or prior to the Closing Date, deliver to the Administrative Agent copies of notifications (each, a “ Credit Card Notification ”) substantially in the form attached hereto as Exhibit M (with such changes as may be approved by the ABL Facility Agent) which have been executed on behalf of such Loan Party and delivered to such Loan Party’s Credit Card Processors listed on Schedule 3.21(b).

 

(b)  Within 60 days after the Closing Date (or such longer period as the ABL Facility Agent may approve in writing in its sole discretion), deliver to the Administrative Agent (i) Blocked Account Agreements reasonably satisfactory in form and substance to the ABL Facility Agent duly authorized, executed and delivered by such Loan Party and the applicable Blocked Account Bank with which such Loan Party maintains each Blocked Account covering each such Blocked Account and (ii) control agreements reasonably satisfactory in form and substance to the ABL Facility Agent duly authorized executed and delivered by such Loan Party and any securities intermediary with which such Loan Party maintains any securities or investment accounts, covering each such securities or investment account maintained with such securities intermediary that at any time holds or constitutes any Related Collateral (as defined in the Security Agreement).

 

(c)  All funds received in the Agent Payment Account shall be applied to the Obligations as provided in accordance with Section 7.02 of this Agreement to the extent that the Obligations are then due and payable.

 

SECTION 5.14.  Information Regarding the Collateral .

 

(a)  Furnish to the Administrative Agent (i) at least 10 Business Days prior written notice of any change in any Loan Party’s name, organizational structure, jurisdiction of incorporation or formation or other change in Article 9 location; or (ii) notice not less than 30 days after any Loan Party makes a change in any trade name used to identify it in the conduct of its business or in the ownership of its properties, the location of any office in which it maintains books or records relating to Collateral owned by it, any office or facility at which Collateral owned by it is located (including the establishment of any such new office or facility) or its Federal Taxpayer Identification Number or the organizational identification number assigned to it by its state of organization.  The Loan Parties agree not to effect or permit any change referred to in clause (i) of the preceding sentence unless all filings have been

 

108



 

made under the UCC or otherwise that are required in order for the Administrative Agent to continue at all times following such change to have a valid, legal and perfected first priority security interest in all of the Term Loan Priority Collateral and a valid, legal and perfected second priority security interest in all of the ABL Priority Collateral, in each case, for its own benefit and the benefit of the other Secured Parties.

 

(b)  Should any of the information on any (i) Periodic Update Schedule hereto become inaccurate or misleading in any material respect as a result of changes after the Closing Date, the Borrower shall provide updated versions of such Periodic Update Schedule together with the next delivery of financial statements required to be delivered to the Administrative Agent pursuant to Section 5.01(a) or (b) and (ii) Occurrence Update Schedule become inaccurate or misleading in any material respect as a result of changes after the Closing Date, the Borrower shall advise the Administrative Agent in writing of such revisions or updates as may be necessary or appropriate to update or correct the same promptly, but in any event within 10 Business Days.  From time to time as may be reasonably requested by the Administrative Agent, the Borrower shall supplement each Schedule hereto, or any representation herein or in any other Loan Document, with respect to any matter arising after the Closing Date that, if existing or occurring on the Closing Date, would have been required to be set forth or described in such Schedule or as an exception to such representation or that is necessary to correct any information in such Schedule or representation which has been rendered inaccurate thereby (and, in the case of any supplements to any Schedule, such Schedule shall be appropriately marked to show the changes made therein).  Notwithstanding the foregoing, no supplement or revision to any Schedule or representation shall be deemed the Secured Parties’ consent to the matters reflected in such updated Schedules or revised representations nor permit the Loan Parties to undertake any actions otherwise prohibited hereunder or fail to undertake any action required hereunder from the restrictions and requirements in existence prior to the delivery of such updated Schedules or such revision of a representation; nor shall any such supplement or revision to any Schedule or representation be deemed the Secured Parties’ waiver of any Default resulting from the matters disclosed therein.

 

SECTION 5.15.  [Reserved] .

 

SECTION 5.16.  Environmental Laws .  (a) Conduct its operations and keep and maintain its Real Estate, and require all lessees and sublessees of such Real Estate to operate and maintain such Real Estate, in material compliance with all Environmental Laws; (b) obtain and renew all environmental permits necessary for its operations and properties; and (c) implement any and all investigation, remediation, removal and response actions that are appropriate or necessary to comply with Environmental Laws pertaining to the presence, generation, treatment, storage, use, disposal, transportation or Release of any Hazardous Materials on, at, in, under, above, to, from or about any of its Real Estate, provided , that neither a Loan Party nor any Restricted Subsidiary shall be required to undertake any such cleanup, removal, remedial or other action to the extent that its obligation to do so is being contested in good faith and by proper proceedings and adequate reserves have been set aside and are being maintained by the Loan Parties and Restricted Subsidiaries with respect to such circumstances in accordance with GAAP.

 

SECTION 5.17.  Further Assurances .

 

(a)  Execute any and all further documents, financing statements, agreements and instruments, and take all such further actions

 

109



 

(including the filing and recording of financing statements and other documents), that may be required under any applicable Law, or which the Administrative Agent may reasonably request, to carry out the terms and conditions of this Agreement and the other Loan Documents and to establish, maintain, renew, preserve or protect the rights and remedies of Administrative Agent and other Secured Parties hereunder and under the other Loan Documents, or to grant, preserve, protect or perfect the Liens created or intended to be created by the Security Documents or the validity or priority of any such Lien, all at the expense of the Loan Parties.  The Loan Parties also agree to provide to the Administrative Agent, from time to time upon request, evidence satisfactory to the Administrative Agent as to the perfection and priority of the Liens created or intended to be created by the Security Documents.

 

(b)  If any Collateral is acquired by any Loan Party after the Closing Date that does not become subject to the Lien of the Security Documents upon acquisition thereof, notify the Administrative Agent thereof, and the Loan Parties will cause such assets to be subjected to a Lien securing the Obligations and will take such actions as shall be necessary or shall be requested by the Administrative Agent to grant and perfect such Liens, including actions described in Section 5.17(a), all at the expense of the Loan Parties. In no event shall compliance with this Section 5.17(b) waive or be deemed a waiver or Consent to any transaction giving rise to the need to comply with this Section 5.17(b) if such transaction was not otherwise expressly permitted by this Agreement.

 

(c)  Other than for Store Locations, if the Borrower or any Loan Party leases any Material Related Collateral Location, then the Borrower shall use commercially reasonable efforts, or shall cause such Loan Party to use commercially reasonable efforts, on or before the date that is 90 days after the Closing Date or the initial leasing of such property (or such later date as the Administrative Agent may approve in its sole discretion), to obtain Collateral Access Agreements and Lien Waivers for each such Material Related Collateral Location.

 

(d)  Upon the request of the Administrative Agent, deliver to the Administrative Agent copies of notifications (each, a “DDA Notification”) substantially in the form attached hereto as Exhibit L, with such changes reasonably acceptable to the ABL Facility Agent, which have been executed on behalf of such Loan Party and delivered to each depository institution at which a DDA (other than an Excluded DDA) is maintained.

 

(e)  If the Borrower or any Loan Party acquires a Material Real Estate Asset (including, without limitation, pursuant to a Permitted Acquisition or a Permitted Store Swap Transaction), and the Term Loan Priority Collateral Requirements and the requirements of Section 9.21 applicable to Additional Properties have not otherwise been satisfied with respect to such Material Real Estate Asset, then the Borrower shall satisfy, or shall cause such Loan Party to satisfy, on or before the date that is 45 days after the acquisition of such Material Real Estate Asset (or such later date as the Administrative Agent may approve in its sole discretion) the Term Loan Priority Collateral Requirements and the other requirements of Section 9.21 with respect to such Material Real Estate Asset; provided that the satisfaction of such requirements will not violate the SVU

 

110



 

Indenture or any other Material Indebtedness or trigger any of the equal and ratable sharing provisions thereof.  If the Borrower or any Loan Party acquires a Material Related Collateral Location (including, without limitation, pursuant to a Permitted Acquisition or a Permitted Store Swap Transaction), and such requirements have not otherwise been satisfied with respect to such Material Related Collateral Location, then the Borrower shall, or shall cause such Loan Party to, on or before the date that is 45 days after the acquisition of such Material Related Collateral Location (or such later date as the Administrative Agent may approve in its sole discretion) deliver to the Collateral Agent a Related Real Estate Collateral Security Agreement and a UCC financing statement with respect to such Material Related Collateral Location, which Security Documents shall have been duly executed by the parties thereto and delivered to the Collateral Agent and shall be in full force and effect, together with a certificate of the type described in Section 4.01(g)(ii); provided that the satisfaction of such requirements will not violate the SVU Indenture or any other Material Indebtedness or trigger any of the equal and ratable sharing provisions thereof.

 

(f)  As of the date hereof, if Borrower or any Loan Party has entered into a lease or other agreement with a third party with respect to any such Material Real Estate Asset and such lease or other agreement expressly prohibits the granting of a Lien encumbering the Material Real Estate Asset as Collateral in accordance with the terms of this Agreement, then Borrower shall use commercially reasonable efforts, or shall cause the applicable Loan Party to use commercially reasonable efforts, for a period of 90 days after the Closing Date, to obtain such third party’s written consent expressly permitting Borrower’s or such Loan Party’s grant of a Lien on such Material Real Estate Asset. If such consent is obtained within such 90 day period, then Borrower shall satisfy or cause such Loan Party to satisfy the requirements set forth in Section 9.21(c) with respect to such Material Real Estate Asset within forty-five (45) days after the date of receipt of such consent by Borrower.  If such consent is not obtained within such 90 day period, then Borrower shall have no further obligation to pursue such consent. In addition, if Borrower is unable to obtain such consent and such lease or other agreement is subsequently terminated or amended or modified after the Closing Date to permit the applicable Material Real Estate Asset to become subject to a Lien, then Borrower shall satisfy all such requirements set forth in Section 9.21(c) with respect to such Material Real Estate Asset within forty-five (45) days after the date of such termination, amendment or modification.

 

SECTION 5.18.  Ground Leases .  Perform and observe all the terms and provisions of each Ground Lease to be performed or observed by it, maintain each such Ground Lease in full force and effect, enforce each such Ground Lease in accordance with its material terms, take all such action to such end as may be from time to time reasonably requested by the Administrative Agent and, upon reasonable request of the Administrative Agent, make to each other party to each such Ground Lease such demands and requests for information and reports or for action as any Loan Party or any of its Subsidiaries is entitled to make under such Ground Lease, and cause each of its Subsidiaries that are party to Ground Leases to do so.

 

SECTION 5.19.  [Reserved] .

 

SECTION 5.20.  ERISA .

 

(a)  Each Loan Party shall, and shall cause each of its ERISA Affiliates to: (i) maintain each Plan in compliance in all material respects with the applicable provisions of ERISA, the Code and other Federal and

 

111



 

State law; (ii) cause each Plan which is qualified under Section 401(a) of the Code to maintain such qualification; (iii) not terminate any Pension Plan so as to incur any material liability to the PBGC; (iv) not allow or suffer to exist any prohibited transaction involving any Plan or any trust created thereunder which would subject such Loan Party or ERISA Affiliate to a material tax or other liability on prohibited transactions imposed under Section 4975 of the Code or ERISA; (v) make all required contributions to any Plan which it is obligated to pay under Sections 302 or 303 of ERISA, Sections 412 or 430 of the Code, the PBGC Agreement or the terms of such Plan; (vi) not allow or suffer to exist any violation of the “minimum funding standards” (within the meaning of Section 302 of ERISA and Section 412 of the Code), whether or not waived, with respect to any such Pension Plan; (vii) not engage in a transaction that could be subject to Sections 4069 or 4212(c) of ERISA; and (viii) not allow or suffer to exist any occurrence of a Reportable Event or any other event or condition, to the extent such Reportable Event or other event or condition presents a material risk of termination by the PBGC of any Plan that is a single employer plan, if such termination could result in any material liability to the PBGC.

 

(b)  Promptly upon each determination of the amount of the contributions or other payments required to be made for any calendar year by any Loan Party in respect of any underfunded Pension Plan in order to eliminate or reduce the funding deficiency and prior to any Loan Party making any contribution of other payment in respect of such calendar year, the Borrower shall notify the Administrative Agent of such determination and provide such information with respect thereto as the Administrative Agent may reasonably request.

 

SECTION 5.21.  Agricultural Products .

 

(a)  The Borrower shall at all times comply in all material respects with all existing and future Food Security Act Notices during their periods of effectiveness under the Food Security Act, including, without limitation, directions to make payments to the Farm Products Seller by issuing payment instruments directly to the secured party with respect to any assets of the Farm Products Seller or jointly payable to the Farm Products Seller and any secured party with respect to the assets of such Farm Products Seller, as specified in the Food Security Act Notice, so as to terminate or release the security interest in any Farm Products maintained by such Farm Products Seller or any secured party with respect to the assets of such Farm Products Seller under the Food Security Act.

 

(b)  The Borrower shall take all other actions as may be reasonably required, if any, to ensure that any perishable agricultural commodity (in whatever form) or other Farm Products are purchased free and clear of any Lien or other claims in favor of any Farm Products Seller or any secured party with respect to the assets of any Farm Products Seller.

 

(c)  The Borrower shall promptly notify the Administrative Agent in writing after receipt by or on behalf of the Borrower of any Food Security Act Notice or amendment to a previous Food Security Act Notice, and including any notice from any Farm Products Seller of the intention of such Farm Products Seller to preserve the benefits of any trust

 

112



 

applicable to any assets of any Loan Party under the provisions of the PSA, the PACA or any other statute and, upon the request of the ABL Facility Agent (or, after the Discharge of ABL Debt (as defined in the Intercreditor Agreement), upon the request of the Administrative Agent), the Borrower shall promptly provide the Administrative Agent with a true, correct and complete copy of such Food Security Act Notice or amendment, as the case may be, and other information delivered to or on behalf of the Borrower pursuant to the Food Security Act.

 

(d)  To the extent that the Borrower purchases any Farm Products from a Person who produces such Farm Products in a state with a central filing system certified by the United States Secretary of Agriculture, the Borrower shall immediately register, as a buyer, with the Secretary of State of such state (or the designated system operator).  The Borrower shall forward promptly to the Administrative Agent a copy of such registration as well as a copy of all relevant portions of the master list periodically distributed by any such Secretary of State (or the designated system operator).  The Borrower shall comply with any payment of obligations in connection with the purchase of any Farm Products imposed by a secured party as a condition of the waiver or release of a security interest effective under the Food Security Act or other applicable law whether or not as a result of direct notice or the filing under any applicable central filing system.  The Borrower shall also provide to the Administrative Agent from time to time upon its request true and correct copies of all state filings recorded in any such central filing system in respect of a Person from whom the Borrower has purchased Farm Products within the preceding 12 months.

 

SECTION 5.22.  Term Loan Priority Account .  The Borrower shall maintain a depositary account subject to a Blocked Account Agreement in favor of the Collateral Agent and the ABL Facility Agent in which solely the proceeds of the Term Loan Priority Collateral (as defined in the Intercreditor Agreement) are deposited.  The Borrower will deposit, or will cause to be deposited, all Net Cash Proceeds of the Term Loan Priority Collateral (as defined in the Intercreditor Agreement) into such account.

 

SECTION 5.23.  Designation of Subsidiaries .  The Borrower may from time to time after the Closing Date, pursuant to a determination by its board of directors, designate any of its Subsidiaries as an Unrestricted Subsidiary or any Unrestricted Subsidiary as a Restricted Subsidiary; provided that (i) immediately before and after such designation, no Default or Event of Default shall have occurred and be continuing or would result therefrom, (ii) each Subsidiary to be designated as an Unrestricted Subsidiary and its Subsidiaries has not at the time of such designation and does not thereafter create incur, issue, assume, guarantee or otherwise become directly or indirectly liable with respect to any Indebtedness pursuant to which the lender thereof has recourse to any of the assets of the Borrower, any Guarantor or any Restricted Subsidiary, (iii) the fair market value of any such Subsidiary to be designated as an Unrestricted Subsidiary and its Subsidiaries would be permitted as an Investment under Section 6.04, (iv) the designation of any Unrestricted Subsidiary as a Restricted Subsidiary will constitute the incurrence at the time of designation of all Indebtedness and Liens of such Subsidiary existing at the time of such designation, (v) no Restricted Subsidiary may be designated as an Unrestricted Subsidiary if it is a “restricted subsidiary” (or a term having a similar effect) for purposes of any other Material Indebtedness of the Borrower and its Subsidiaries; and (vi) any Unrestricted Subsidiary that has been designated as a Restricted Subsidiary may not subsequently be re-designated as an Unrestricted Subsidiary

 

113



 

without the prior consent of the Administrative Agent.  Any such designation by the Board of Directors shall be evidenced to the Administrative Agent by promptly delivering to the Administrative Agent a copy of the resolution of the Borrower’s board of directors giving effect to such designation and a certificate signed by a Responsible Officer of the Borrower certifying that such designation complied with the foregoing provisions.

 

SECTION 5.24.  Preparation of Environmental Reports .

 

(a)  If a Default caused by reason of a breach of Section 3.09 or Section 5.16 shall have occurred and be continuing for more than 20 days without any Loan Party commencing activities reasonably likely to cure such Default, at the written request of the Lenders through the Administrative Agent, provide to the Lenders within 90 days after such request, at the expense of the Borrower, an environmental site assessment report regarding the matters which are the subject of such Default prepared by an environmental consulting firm reasonably acceptable to the Administrative Agent and indicating the presence or absence of Hazardous Materials and the estimated cost of any compliance or remedial action in connection with such Default.

 

(b)  If any Event of Default shall have occurred, at the written request of the Lenders through the Administrative Agent, provide to the Lenders within 45 days after such request, at the expense of the Borrower, an environmental site assessment report for any Real Estate Collateral Property (whether owned or leased) prepared by an environmental consulting firm reasonably acceptable to the Administrative Agent regarding the presence or absence of Hazardous Materials at such property, the extent of any Environmental Liabilities associated with such Loan Party’s operations thereon, and the estimated cost of any compliance or remedial action in connection therewith.

 

(c)  If any Loan Party has not promptly commenced preparation for completion of an environmental report duly requested by the Lenders pursuant to this Section 5.24, the Administrative Agent may, after prior notice to the Borrower and at the Borrower’s expense, engage a qualified environmental consultant to prepare such reports.  The Loan Parties shall provide the Administrative Agent, its consultant or other designated representative, with reasonable access to its Real Estate, records and personnel for the purpose of completing all necessary investigations related to preparation of the requested environmental reports (the scope of which shall be consistent with the then current ASTM Phase I standard practice, but which shall not include the taking of soil, groundwater, surface water, air or building samples or other invasive testing unless the Borrower has provided its prior written consent, which consent shall not be unreasonably withheld; provided, that such testing is reasonably related to information set forth in the Phase I report or reasonably related to the specific Event of Default that has occurred and is continuing).

 

SECTION 5.25.  Post-Closing Collateral .  The Borrower shall have satisfied, and shall have caused each Loan Party to have satisfied, the Term Loan Priority Collateral Requirements on or prior to (x) the date that is 90 days after the Closing Date (or such later date as may be agreed by the Administrative Agent in its sole discretion) with respect to Term Loan Priority Collateral consisting of Real Estate Collateral Properties and Related Real Estate Collateral located thereon, and (y) within 120 days after the Closing (or such later date as may be agreed by the Administrative Agent in its sole discretion) with respect to Term Loan Priority Collateral consisting of Related Real Estate Collateral located at Material Related Collateral Locations.

 

114



 

After the Closing Date, the Borrower may substitute one or more fee-owned or ground leasehold interests in Real Estate (and the Equipment located thereon) for any Term Loan Priority Collateral on the Applicable Collateral List subject to the satisfaction of the terms and conditions set forth in Section 9.21, but provided that any such substitution prior to the completion of the requirements of the previous sentence shall not affect the amount of time permitted for taking any action required under this Section 5.25.  In addition to the foregoing, Loan Parties shall deliver or cause to be delivered to the Administrative Agent on or before May 21, 2013 (unless the Administrative Agent, in its sole discretion, shall have agreed to any longer period), a lender’s loss payable endorsement for each of the property insurance policies (including Marine insurance policies insuring inventory) required to be maintained pursuant to Section 5.07, each in form and substance reasonably satisfactory to the Administrative Agent and naming the Administrative Agent as a loss payee and additional insured. Such endorsements shall, or the insurer shall otherwise agree in writing, to make the Administrative Agent a payee on any payment of a claim under such policies and provide for delivery of such payment directly to the ABL Facility Agent (subject to the rights of the Administrative Agent with respect to Term Loan Priority Collateral).

 

SECTION 5.26.  Escrow Agreement and Indemnity .

 

(a)  To the extent that any demand for payment has been made on the Borrower in respect of its obligations under the ASC Guarantee, the Borrower shall diligently exercise its rights pursuant to the Escrow Agreement and Section 5.11(c) of the Acquisition Agreement to obtain payment (directly or indirectly to the indenture trustee under the ASC Indenture in satisfaction in full of the amount demanded) in respect of any amount demanded under the ASC Guarantee prior to the Borrower making any payment in respect thereof and, to the extent the Borrower makes any payment in respect thereof, the Borrower will appropriately exercise its rights pursuant to the Escrow Agreement and Section 5.11(c) of the Acquisition Agreement to obtain reimbursement for such payment.

 

(b)  The Escrow Fund (as defined in the Escrow Agreement) and all other assets and property subject to the Escrow Agreement shall at all times be and remain invested in a MMMF or one or more other investments reasonably satisfactory to the Administrative Agent, except for cash or Cash Equivalents received in connection with liquidations distributing proceeds thereof and except for other liquid non-cash investments of the type described in clauses (a) through (e) of the term “Permitted Investments”.

 

ARTICLE VI

 

Negative Covenants

 

The Loan Parties covenant and agree with each Lender that so long as this Agreement shall remain in effect and until the Commitments have been terminated and the principal of and interest on each Loan, all Fees and all other expenses or amounts payable under any Loan Document shall have been paid in full (other than contingent indemnification obligations not then due and payable), unless the Required Lenders shall otherwise consent in writing, the Loan Parties will not, and will not, to the extent provided below, cause or permit any Restricted Subsidiary to:

 

SECTION 6.01.  Liens .  Create, incur, assume or suffer to exist any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired or sign or file or suffer to

 

115



 

exist under the UCC or any similar Law or statute of any jurisdiction a financing statement that names any Loan Party or any Subsidiary thereof as debtor; sign or suffer to exist any security agreement authorizing any Person thereunder to file such financing statement; sell any of its property or assets subject to an understanding or agreement (contingent or otherwise) to repurchase such property or assets with recourse to it or any of its Subsidiaries; or assign or otherwise transfer any accounts or other rights to receive income, except as to all of the above, Permitted Encumbrances.

 

SECTION 6.02.  Investments, Loans and Advances .  Make any Investments except:

 

(a)  Permitted Investments; and

 

(b)  the Borrower or any Subsidiary may acquire all or substantially all the assets of a Person or line of business of such Person, or not less than 100% of the Equity Interests (other than directors’ qualifying shares) of a Person (referred to herein as the “ Acquired Entity ”); provided that (i) such acquisition was not preceded by an unsolicited tender offer for such Equity Interests by, or proxy contest initiated by, the Borrower or any Subsidiary and the board of directors (or other comparable governing body) of the Person to be acquired shall not have announced that it will oppose such acquisition or shall not have commenced any action or proceeding which alleges that such acquisition will violate any applicable law; (ii) the Acquired Entity shall be in a substantially similar, reasonably related or incidental to line of business as that of the Borrower and its Subsidiaries as conducted during the current and most recent calendar year; (iii) the Administrative shall have received 10 Business Days prior written notice of such acquisition and prior to the consummation thereof shall have received such information with respect thereto as the Administrative Agent shall have reasonably requested and (iv) at the time of such transaction (A) both before and after giving effect thereto, no Default or Event of Default shall have occurred and be continuing; (B) the Total Leverage Ratio of the Borrower shall not exceed 3.50:1:00 on a pro forma basis after giving effect to such acquisition, any incurrence or assumption of Indebtedness in connection therewith and the use of proceeds thereof; (C) the Borrower shall have delivered a certificate of a Responsible Officer, certifying as to the satisfaction of the foregoing clauses (A) and (B) and containing reasonably detailed calculations in support thereof, in form and substance satisfactory to the Administrative Agent; (D) the Acquired Entity, if a Person, shall become a Loan Party prior to or substantially simultaneously with such acquisition or, if all or substantially all of the assets or a line of business of a Person shall be acquired, the same shall be acquired by a Person who is a Loan Party or becomes a Loan Party substantially simultaneously with such acquisition; and (E) the Borrower shall comply, and shall cause the Acquired Entity to comply, with the applicable provisions of Section 5.12, Section 5.17 and the Security Documents (any acquisition of an Acquired Entity meeting all the criteria of this Section 6.02(b) being referred to herein as a “ Permitted Acquisition ”).

 

SECTION 6.03.  Indebtedness .  Incur, create, assume or permit to exist any Indebtedness, except Permitted Indebtedness.

 

SECTION 6.04.  Fundamental Changes .  Merge, dissolve, liquidate or consolidate with or into another Person (or agree to do any of the foregoing), except that, so long as no Default or Event of Default shall have occurred and be

 

116



 

continuing prior to or immediately after giving effect to any action described below or would result therefrom:

 

(a)  any Loan Party may merge with any Excluded Subsidiary; provided that the Loan Party shall be the continuing or surviving Person;

 

(b)  any Loan Party may merge into any Loan Party, provided that, (i) in any merger involving the Borrower, the Borrower shall be the continuing or surviving Person and (ii) in any merger involving Moran Foods or any of its Subsidiaries and a Loan Party that is not Moran Foods or any of its Subsidiaries, Moran Foods or such Subsidiary shall be the continuing or surviving person;

 

(c)  in connection with a Permitted Acquisition, any Subsidiary of a Loan Party may merge with or into or consolidate with any other Person or permit any other Person to merge with or into or consolidate with it; provided that (i) the Person surviving such merger shall be a Subsidiary of a Loan Party and (ii) in the case of any such merger to which any Loan Party is a party, such Loan Party is the surviving Person; and

 

(d)  any Restricted Subsidiary may be wound up and dissolved, provided, promptly upon the commencement of the winding up or any action to dissolve such Restricted Subsidiary, (i) any assets of such Restricted Subsidiary which constitute Collateral are either (A) transferred to a Loan Party and are subject to the valid perfected second priority security interest of the Administrative Agent as to any ABL Priority Collateral and valid perfected first priority security interest of the Administrative Agent as to any Term Loan Priority Collateral or (B) are subject to a Permitted Disposition and (ii) any such Restricted Subsidiary that is a Loan Party shall cease to be a Loan Party; provided that notwithstanding the foregoing, Moran Foods and its Subsidiaries may not be wound up or dissolved.

 

SECTION 6.05.  Dispositions .  Make any Disposition, or enter into any agreement to make any Disposition, except Permitted Dispositions.

 

SECTION 6.06.  Restricted Payments .  Declare or make, or agree to declare or make, directly or indirectly, any Restricted Payment (including pursuant to any Synthetic Purchase Agreement), or incur any obligation (contingent or otherwise) to do so; provided , however , that as of the date of any such Restricted Payment and after giving effect thereto, (i) any Restricted Subsidiary may declare and pay dividends or make other distributions ratably to its equity holders, (ii) so long as no Event of Default or Default shall have occurred and be continuing or would result therefrom, the Borrower may repurchase its Equity Interests owned by employees of the Borrower or the Subsidiaries or make payments to employees of the Borrower or the Subsidiaries upon termination of employment in connection with the exercise of stock options, stock appreciation rights or similar equity incentives or equity based incentives pursuant to management incentive plans or in connection with the death or disability of such employees, (iii) the Borrower may make other Restricted Payments in an aggregate amount when combined with all payments made pursuant to Section 6.07(a)(vi) not to exceed $175,000,000 and (iv) the Borrower may make other Restricted Payments in an aggregate amount not to exceed the Cumulative Credit Amount; provided , that (x) in the case of clause (i), to the extent any such

 

117



 

dividends or distributions consist of Real Estate Collateral Property, (1) the Borrower provides at least 15 Business Days prior written notice thereof (or such shorter notice as the Administrative Agent may approve) identifying such Real Estate Collateral Property, (2) such Real Estate Collateral Property is distributed subject in all respects to the Mortgage thereon and such Mortgage remains a valid first priority lien on such Real Estate Collateral Property so distributed and (3) the Borrower shall have delivered to the Administrative Agent such documents and other information evidencing that such Real Estate Collateral Property was distributed subject to the Mortgage thereon as the Administrative Agent may reasonably request; (y) in the case of clause (iv), the Total Leverage Ratio of the Borrower shall not exceed 3.50:1.00 on a pro forma basis after giving effect to such payment; and (z) in the case of clauses (iii) and (iv), at the time of the declaration and making of such Restricted Payment, (A) both before and after giving effect thereto, no Default or Event of Default shall have occurred and be continuing and (B) the Borrower shall have delivered a certificate of a Responsible Officer, certifying as to compliance with the remaining availability pursuant to clause (iii) and the usage of the Cumulative Credit Amount, as applicable, and the satisfaction of the foregoing clauses (y) and (z)(A), as applicable, and containing reasonably detailed calculations in support thereof, in form and substance satisfactory to the Administrative Agent.

 

SECTION 6.07.  Prepayments of Other Indebtedness .  (a) Make any distribution, whether in cash, property, securities or a combination thereof, other than regular scheduled payments of principal and interest as and when due (to the extent not prohibited by applicable subordination provisions), in respect of, or pay, or commit to pay, or directly or indirectly (including pursuant to any Synthetic Purchase Agreement) redeem, repurchase, retire or otherwise acquire for consideration, or set apart any sum for the aforesaid purposes, any Indebtedness (other than Indebtedness in respect of the ASC Guarantee) except (i) the payment of the Indebtedness created hereunder or under the ABL Facility, (ii) refinancings of Permitted Indebtedness with Permitted Refinancing Indebtedness, (iii) payments of the SVU 2016 Notes (A) with proceeds of borrowings under the ABL Facility (including any Permitted Refinancing Indebtedness with respect thereto) ( provided , that the ABL Facility or such Permitted Refinancing Indebtedness with respect thereto has a final maturity date at least six months after the Latest Maturity Date), (B) so long as no Default or Event of Default shall have occurred and be continuing, with the Net Cash Proceeds of a Moran Sale that are not required to be applied to prepay Loans hereunder pursuant to Section 2.13 or prepay loans or cash collateralize letters of credit under the ABL Facility and (C) so long as no Default or Event of Default shall have occurred and be continuing, with other sources of cash that are not required to be applied to prepay Loans hereunder or prepay loans or cash collateralize letters of credit under the ABL Facility, (iv) the payment of secured Indebtedness that becomes due as a result of the voluntary sale or transfer of the property or assets securing such Indebtedness, (v) [Reserved], (vi) payments in an aggregate amount when combined with all Restricted Payments made pursuant to Section 6.06(iii) not to exceed $175,000,000 and (vii) other payments of Indebtedness in an aggregate amount not to exceed the Cumulative Credit Amount; provided that, in the case of clauses (vi) and (vii), (A) at the time of such payment, both before and after giving effect thereto, no Default or Event of Default shall have occurred and be continuing and (B) the Borrower shall have delivered a certificate of a Responsible Officer, certifying as to the satisfaction of the foregoing clause (A), and containing reasonably detailed calculations certifying as to compliance with the remaining availability pursuant to clause (vi) or the usage of the Cumulative Credit Amount, as applicable, in form and substance satisfactory to the

 

118



 

Administrative Agent or (b) pay in cash any amount in respect of any Indebtedness or preferred Equity Interests that may at the obligor’s option be paid in kind or in other securities.  Payments originally made in reliance on clause (vi) above may subsequently be reallocated to clauses (v) or (vii) to the extent permitted at the time of reallocation under such clauses.

 

SECTION 6.08.  Business of Borrower and Restricted Subsidiaries .  Engage in any line of business substantially different from the Business conducted by the Loan Parties and their Subsidiaries on the date hereof or any business substantially related or incidental thereto.

 

SECTION 6.09.  Transactions with Affiliates .  Enter into, renew, extend or be a party to any transaction of any kind with any Affiliate of any Loan Party, whether or not in the ordinary course of business, other than (a) those set forth on Schedule 6.09 hereto, (b) Restricted Payments permitted under Section 6.06, (c) the payment of compensation and benefits and the providing of indemnification to officers and directors in the ordinary course of business and consistent with past practices or (d) on fair and reasonable terms substantially as favorable to the Loan Parties as would be obtainable by the Loan Parties at the time in a comparable arm’s-length transaction with a Person other than an Affiliate.  The foregoing restriction shall not restrict (i) a transaction between or among the Loan Parties, (ii) advances for commissions, travel and other similar purposes in the ordinary course of business to directors, officers and employees, (iii) the issuance of Equity Interests of the Borrower to any officer, director or employee of the Borrower or any of its Subsidiaries in the ordinary course of business, (iv) the payment of reasonable fees and out-of-pocket costs to directors, and compensation and employee benefit arrangements paid to, and indemnities provided for the benefit of, directors, officers or employees of the Borrower or any of its Subsidiaries, and (v) any issuances of Qualified Equity Interests of the Borrower (other than Disqualified Stock and other Equity Interests not permitted hereunder) or other payments, awards or grants in cash, securities or otherwise pursuant to, or the funding of, severance agreements, retention plans, employment agreements, deferred compensation agreements, stock options, restricted stock agreements and stock ownership plans (in each case in respect of Qualified Equity Interests of the Borrower) of the Borrower or any of its Subsidiaries.

 

SECTION 6.10.  Burdensome Agreements .  Enter into or permit to exist any Contractual Obligation (other than this Agreement or any other Loan Document or any ABL Facility Documents) that (a) limits the ability (i) of any Subsidiary to make Restricted Payments or other distributions to any Loan Party or to otherwise transfer property to or invest in a Loan Party, (ii) of any Subsidiary (other than an Excluded Subsidiary) to Guarantee the Obligations, (iii) of any Subsidiary (other than an Excluded Subsidiary) to make or repay loans to a Loan Party or (iv) of the Loan Parties or any Subsidiary (other than an Excluded Subsidiary) to create, incur, assume or suffer to exist Liens on property of such Person in favor of the Administrative Agent; provided , that this clause (iv) shall not prohibit any negative pledge incurred or provided in favor of any holder of Indebtedness permitted under clauses (c) or (f) of the definition of “Permitted Indebtedness” solely to the extent any such negative pledge relates to the property financed by or securing such Indebtedness; or (b) other than the SVU Indenture and any Permitted Refinancing Indebtedness in respect thereof, requires the grant of a Lien to secure an obligation of such Person if a Lien is granted to secure another obligation of such Person.

 

SECTION 6.11.  Use of Proceeds .  Use the proceeds of any Loan, whether directly or indirectly, and whether immediately, incidentally or ultimately, (a) to purchase or carry margin stock (within the meaning of Regulation U) or to extend credit to others for the purpose of

 

119



 

purchasing or carrying margin stock or to refund Indebtedness originally incurred for such purpose; or (b) for purposes other than those permitted under this Agreement.

 

SECTION 6.12.  Amendment of Material Documents .  Amend, modify, consent to or waive any of a Loan Party’s rights under or any provision of (a) its Organization Documents, the Acquisition Agreement or any document related to the Acquisition Agreement (including the Escrow Agreement and the transition services agreements referred to in the Acquisition Agreement), in each case in a manner materially adverse to the Secured Parties or (b) the SVU Indenture, the SVU 2016 Notes, the ASC Guarantee or any other Material Indebtedness, in each case in a manner that would be materially adverse to the Secured Parties (including, in the case of the SVU Indenture, the SVU 2016 Notes and the ASC Guarantee, changing the obligors with respect to such Material Indebtedness) or to the extent that such amendment, modification or waiver would reasonably be expected to have a Material Adverse Effect.

 

SECTION 6.13.  Fiscal Year .  Change the Fiscal Year of any Loan Party, or the accounting policies or reporting practices of the Loan Parties, except as required by GAAP.

 

SECTION 6.14.  Disqualified Stock .  Issue any Disqualified Stock.

 

ARTICLE VII

 

Events of Default

 

SECTION 7.01.  Events of Default .  In case of the happening of any of the following events (“ Events of Default ”).

 

(a)  Non-Payment .  The Borrower or any Restricted Subsidiary fails to pay when and as required to be paid herein, whether at the due date thereof or at a date fixed for prepayment thereof or by acceleration thereof or otherwise, (i) any amount of principal of any Loan or (ii) any interest on any Loan, or any fee due hereunder, within five Business Days of the due date or (iii) any other amount payable hereunder or under any other Loan Document, within five Business Days of the due date; or

 

(b)  Specific Covenants .  The Borrower or any Restricted Subsidiary fails to perform or observe any term, covenant or agreement contained in any of Sections 5.01 , 5.02(a)(i) , 5.02(a)(iv) , 5.03 , 5.05 , 5.07 , 5.11 , 5.12 or 5.13 or Article VI ; or

 

(c)  Other Defaults .  The Borrower or any Restricted Subsidiary fails to perform or observe (i) any term, covenant or agreement contained in Section 4.9 of the Security Agreement, (ii) any term, covenant or agreement contained in Sections 5(a), the first sentence of Section 5(c), Section 6 or Section 7 of any of the Mortgages, or (iii) any other term, covenant or agreement (not specified in Sections 7.01(a) or 7.01(b) above) contained in any Loan Document on its part to be performed or observed and such failure continues for 30 days after the date written notice thereof shall have been given to the Borrower by the Administrative Agent or any Lender; provided , that in the case of clause (iii), in the event the Borrower fails to notify the Administrative Agent pursuant to Section 5.03(a) within three Business Days after the occurrence of its failure to perform or observe such term, covenant or agreement as provided therein, an Event of Default will occur as a result of the failure to perform or observe such term, covenant or agreement 30 days after the

 

120



 

earlier of (x) the date of the event or occurrence which is the basis for such Event of Default and (b) the date written notice thereof shall have been given to the Borrower by the Administrative Agent or any Lender; or

 

(d)  Representations and Warranties .  Any representation, warranty, certification or statement of fact made or deemed made by or on behalf of the Borrower or any Restricted Subsidiary herein, in any other Loan Document, or in any document, report, certificate, financial statement or other instrument delivered in connection herewith or therewith shall be incorrect or misleading in any material respect when made or deemed made, except that such materiality qualifier shall not be applicable to any representation or warranty that is already qualified by materiality or “material adverse effect”; or

 

(e)  Cross-Default .  (i) Any Loan Party or Restricted Subsidiary (a) fails to make any payment when due (regardless of amount and whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise) in respect of any Material Indebtedness (including undrawn committed or available amounts and including amounts owing to all creditors under any combined or syndicated credit arrangement), or (b) fails to observe or perform any other agreement or condition relating to any such Material Indebtedness or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event occurs, the effect of which default or other event is to cause, or to permit the holder or holders of such Material Indebtedness or the beneficiary or beneficiaries of any Guarantee thereof (or a trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause, with or without the giving of notice, lapse of time or both, such Indebtedness to be demanded, accelerated or to become due or to be repurchased, prepaid, defeased or redeemed (automatically or otherwise), or an offer to repurchase, prepay, defease or redeem such Indebtedness to be made, prior to its stated maturity, or such Guarantee to become payable or cash collateral in respect thereof to be demanded; (ii) there occurs under any Swap Contract an Early Termination Date (as defined in such Swap Contract) resulting from (a) any event of default under such Swap Contract as to which a Loan Party or any Subsidiary thereof is the Defaulting Party (as defined in such Swap Contract) or (b) any Termination Event (as defined in such Swap Contract) under such Swap Contract as to which a Loan Party or any Subsidiary thereof is an Affected Party (as defined in such Swap Contract) and, in either event, the Swap Termination Value owed by the Loan Party or such Subsidiary as a result thereof is greater than $50,000,000; (iii) (a) any party to the Escrow Agreement fails to pay any amount due to the Borrower thereunder, to deposit any amount required to be deposited thereunder, or follow the terms of the Escrow Agreement with respect to any dispute by Borrower thereunder, (b) the Escrow Agent (as defined in the Escrow Agreement) fails to comply with its obligations not to enter into any control agreement or any other agreement with any other Person relating to the securities accounts established pursuant to the Escrow Agreement, (c) ASC fails to comply with its obligations not to grant any Lien on its rights under the Escrow Agreement or on any funds deposited pursuant thereto except as contemplated by the Escrow Agreement or (d) the Escrow Agent (as defined in the Escrow Agreement) disburses funds deposited pursuant to the Escrow Agreement other than in accordance with the terms thereof, and in each case with respect to this clause (iii) such failure continues for 45 days (after the Borrower obtains knowledge thereof other than in the case of any such failure on the part of the Borrower); (iv) the Borrower fails to observe or

 

121



 

perform any agreement or condition contained in the ASC Guarantee, or any other event occurs, the effect of which default or other event is to cause the ASC Guarantee to be in default, and such failure continues for 45 days; or (v) the Borrower fails to observe or perform its obligations under any guarantee of NAI Workers’ Compensation Liabilities, and such failure continues for 45 days; or

 

(f)  Insolvency Proceedings, Etc .  Any Loan Party or Subsidiary (other than an Excluded Subsidiary) (i) institutes or consents to the institution of any voluntary or involuntary proceeding under any Debtor Relief Law, or makes a general assignment for the benefit of creditors; or (ii) applies for or consents to the appointment of any receiver, trustee, custodian, sequestrator, conservator, liquidator, rehabilitator or similar officer for it or for all or any material part of its property; or (iii) a proceeding shall be commenced or a petition filed, without the application or consent of such Person, seeking or requesting the appointment of any receiver, trustee, custodian, sequestrator, conservator, liquidator, rehabilitator or similar officer is appointed and the appointment continues undischarged, undismissed or unstayed for 60 calendar days or an order or decree approving or ordering any of the foregoing shall be entered; (iv) files an answer admitting the material allegations of a petition filed against it in any proceeding described in the foregoing clauses (i), (ii) or (iii), or (v) any proceeding under any Debtor Relief Law relating to any such Person or to all or any material part of its property is instituted without the consent of such Person and continues undismissed or unstayed for 60 calendar days, or an order for relief is entered in any such proceeding; or

 

(g)  Inability to Pay Debts; Attachment .  (i) Any Loan Party or Subsidiary (other than an Excluded Subsidiary) becomes unable or admits in writing its inability or fails generally to pay its debts as they become due in the ordinary course of business, or (ii) any writ or warrant of attachment or execution or similar process is issued or levied against all or any material part of the property of any such Person and is not released, vacated or fully bonded within 30 days after its issuance or levy, or (iii) takes any action for the purpose of effecting the events described in the foregoing paragraph (f) or this paragraph (g); or

 

(h)  Judgments .  There is entered against any Loan Party or Subsidiary (other than an Excluded Subsidiary) (i) one or more judgments or orders or any combination thereof for the payment of money in an aggregate amount (as to all such judgments and orders) exceeding $50,000,000 (to the extent not covered by independent third-party insurance as to which the insurer is rated at least “A” by A.M. Best Company, has been notified of the potential claim and does not dispute coverage), or (ii) any one or more non-monetary judgments that have, or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect and, in either case, (a) enforcement proceedings are commenced by any creditor upon such judgment or order, or (b) there is a period of 45 consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, is not in effect; or

 

(i)  Racketeering .  There is filed against any Loan Party or Subsidiary by any federal or state Governmental Authority any action, suit or proceeding under any federal or state racketeering statute (including the Racketeer Influenced and Corrupt Organization Act of 1970), which action, suit or proceeding: (i) is not dismissed within 120 days and

 

122



 

(ii) would reasonably be expected to result in the confiscation or forfeiture of any material portion of the Collateral; or

 

(j)  ERISA .  (i) An ERISA Event occurs with respect to a Pension Plan, Multiemployer Plan or the PBGC Agreement which, in the case of a Pension Plan or Multiemployer Plan, has resulted or would reasonably be expected to result in the liability of any Borrower or any Restricted Subsidiary under Title IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC and that has or would reasonably be expected to have a Material Adverse Effect when taken together with all other such ERISA Events or (ii) a Loan Party or any ERISA Affiliate fails to pay when due, after the expiration of any applicable grace period, any installment payment with respect to its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan or any installment in connection with an underfunded Pension Plan as provided in Section 5.20 , in either case as to any such installment that is in excess of $50,000,000; or

 

(k)  Invalidity of Loan Documents .  (i) Any provision of any Loan Document, at any time after its execution and delivery and for any reason other than as expressly permitted hereunder or thereunder or satisfaction in full of all the Obligations, ceases to be in full force and effect (other than in accordance with its terms) and as a result thereof, a Material Adverse Effect would occur or would reasonably be expected to occur; or any Loan Party or any other Person contests in any manner the validity or enforceability of any provision of any Loan Document; or any Loan Party denies that it has any or further liability or obligation under any provision of any Loan Document (other than as a result of the discharge of such Loan Party in accordance with the terms of the applicable Loan Document), or purports to revoke, terminate or rescind any provision of any Loan Document or seeks to avoid, limit or otherwise adversely affect any Lien purported to be created under any Security Document; or (ii) any Lien purported to be created under any Security Document shall cease to be, or shall be asserted by any Loan Party or any other Person not to be, a valid and perfected Lien on any Collateral, with the priority required by the applicable Security Document; or

 

(l)  Cessation of Business .  Except as otherwise expressly permitted hereunder, the Borrower or any Restricted Subsidiary shall take any action to suspend the operation of its business in the ordinary course, liquidate all or a material portion of its assets or Store locations, or employ an agent or other third party to conduct a program of closings, liquidations or “going-out-of-business” sales of any material portion of its business; or

 

(m)  Loss of Collateral .  There occurs any uninsured loss to any material portion of the Term Loan Priority Collateral having a value in excess of $50,000,000; or

 

(n)  Indictment .  The indictment or institution of any legal process or proceeding against, any Loan Party or any Restricted Subsidiary, under any federal or state criminal statute, rule, regulation, order, or other requirement having the force of law for a felony; or

 

(o)  Guaranty .  The termination or attempted termination of any Facility Guaranty except as expressly permitted hereunder or under any other Loan Document; or

 

123



 

(p)  Subordination; Intercreditor Agreement .  (i) The subordination provisions of the documents evidencing or governing any Subordinated Indebtedness, or provisions of the Intercreditor Agreement (or any other intercreditor agreement entered into by the Administrative Agent after the date hereof), any such provisions being referred to as the “ Intercreditor Provisions ,” shall, in whole or in part, terminate, cease to be effective or cease to be legally valid, binding and enforceable against any holder of the applicable Indebtedness as a result of any act or omission of any Loan Party or any Restricted Subsidiary; or (ii) any Loan Party or any Restricted Subsidiary shall, directly or indirectly, disavow or contest in any manner (a) the effectiveness, validity or enforceability of any of the Intercreditor Provisions, (b) that the Intercreditor Provisions exist for the benefit of the Secured Parties or (c) in the case of Subordinated Indebtedness, that all payments of principal of or premium and interest on the applicable Subordinated Indebtedness, or realized from the liquidation of any property of any Loan Party or Restricted Subsidiary, shall be subject to any of the Intercreditor Provisions;

 

(q)  Maturity of ABL Facility .  The maturity of the ABL Facility prior to its originally scheduled maturity date (as a result of the failure of the Borrower or any Restricted Subsidiary to obtain refinancing or otherwise as a result of any act or omission of the Borrower or any Restricted Subsidiary after the Closing Date); or

 

(r)  Payments Under ASC Guarantee .  Make any payment, whether in cash, property, securities or a combination thereof, in respect of the ASC Guarantee using Internally Generated Cash or proceeds of Indebtedness in an aggregate amount in excess of $40,000,000 (other than amounts subsequently reimbursed to the Borrower from the Escrow Fund (as defined in the Escrow Agreement) or other assets or property subject to the Escrow Agreement or pursuant to Section 5.11(c) of the Acquisition Agreement), or (b) make any payment, whether in cash, property, securities or a combination thereof, in respect of the ASC Guarantee in an aggregate amount in excess of $40,000,000 in respect of interest, fees, expenses, indemnities and other amounts (other than principal) from the proceeds of the Escrow Fund (as defined in the Escrow Agreement) or other assets or property subject to the Escrow Agreement, other than payments made or reimbursed from the Additional Escrow Amount Subaccount (as defined in the Escrow Agreement);

 

then, and in every such event (other than an event with respect to the Borrower described in Sections 7.01(f) or 7.01(g)), and at any time thereafter during the continuance of such event, the Administrative Agent may, and at the request of the Required Lenders shall, by notice to the Borrower, take either or both of the following actions, at the same or different times:  (i) terminate forthwith the Commitments and (ii) declare the Loans then outstanding to be forthwith due and payable in whole or in part, whereupon the principal of the Loans so declared to be due and payable, together with accrued interest thereon and any unpaid accrued Fees and all other liabilities of the Borrower accrued hereunder and under any other Loan Document, shall become forthwith due and payable, without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived by the Borrower, anything contained herein or in any other Loan Document to the contrary notwithstanding; and in any event with respect to the Borrower described in Sections 7.01(f) or 7.01(g), the Commitments shall automatically terminate and the principal of the Loans then outstanding, together with accrued interest thereon and any unpaid accrued Fees and all other liabilities of the Borrower accrued hereunder and

 

124



 

under any other Loan Document, shall automatically become due and payable, without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived by the Borrower, anything contained herein or in any other Loan Document to the contrary notwithstanding and the Administrative Agent and the Collateral Agent shall have the right to take all or any actions and exercise any remedies available under the Loan Documents or applicable law or in equity.

 

SECTION 7.02.  Application of Funds .  After the exercise of remedies provided for in this Article VII (or after the Loans have automatically become immediately due and payable as set forth in this Article VII), any amounts received on account of the Obligations shall (subject to the Intercreditor Agreement) be applied by the Administrative Agent in the following order:

 

first , to payment of that portion of the Obligations constituting fees, indemnities, expenses and other amounts (including fees, charges and disbursements of counsel to the Administrative Agent and the Collateral Agent and amounts payable under Section 2.20) payable to the Administrative Agent and the Collateral Agent, in their capacities as such;

 

second , to payment of that portion of the Obligations constituting indemnities, expenses, and other amounts (other than principal, interest and fees) payable to the Lenders (including fees, charges and disbursements of counsel to the respective Lenders and amounts payable under Section 2.20), ratably among them in proportion to the amounts described in this clause  second payable to them;

 

third , to payment of that portion of the Obligations constituting accrued and unpaid interest on the Loans and other Obligations, and fees, ratably among the Lenders in proportion to the respective amounts described in this clause  third payable to them;

 

fourth , to payment of that portion of the Obligations constituting unpaid principal of the Loans, ratably among the Lenders in proportion to the respective amounts described in this clause  fourth held by them;

 

fifth , to payment of all other Obligations ratably among the Secured Parties in proportion to the respective amounts described in this clause  fifth held by them; and

 

last , the balance, if any, after all of the Obligations have been indefeasibly paid in full, to the Loan Parties or as otherwise required by Law.

 

ARTICLE VIII

 

The Administrative Agent and the Collateral Agent; Etc.

 

(a)  Each Lender hereby irrevocably appoints the Administrative Agent and the Collateral Agent (for purposes of this Article VIII, the Administrative Agent and the Collateral Agent are referred to collectively as the “ Agents ”) its agent hereunder and under the other Loan Documents and authorizes the Agents to take such actions on its behalf and to exercise such powers as are delegated to such Agent by the terms hereof and thereof, together with such actions and powers as are reasonably incidental thereto.  The provisions of this Article VIII are solely for the benefit of the Agents and the Lenders, and

 

125



 

neither the Borrower nor any other Loan Party shall have rights as a third-party beneficiary of any of such provisions.  It is understood and agreed that the use of the term “agent” herein or in any other Loan Documents (or any other similar term) with reference to the Administrative Agent or Collateral Agent, as applicable, is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable law.  Instead such term is used as a matter of market custom, and is intended to create or reflect only an administrative relationship between contracting parties.  Without limiting the generality of the foregoing, the Agents are hereby expressly authorized to (i) execute any and all documents (including releases and the Security Documents) with respect to the Collateral and the rights of the Secured Parties with respect thereto, as contemplated by and in accordance with the provisions of this Agreement and the Security Documents and (ii) negotiate, enforce or the settle any claim, action or proceeding affecting the Lenders in their capacity as such, at the direction of the Required Lenders, which negotiation, enforcement or settlement will be binding upon each Lender.

 

(b)  The Person serving as the Administrative Agent and/or the Collateral Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not an Agent, and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated or unless the context otherwise requires, include the Person serving as an Agent hereunder in its individual capacity.  Such Person and its Affiliates may accept deposits from, lend money to, own securities of, act as the financial advisor or in any other advisory capacity for, and generally engage in any kind of business with the Borrower or any Subsidiary or other Affiliate thereof (subject to securities law and other requirements of applicable law) as if it were not an Agent hereunder and without any duty to account therefor to the Lenders.

 

(c)  Neither Agent shall have any duties or obligations except those expressly set forth herein and in the Loan Documents, and its duties hereunder shall be administrative in nature.  Without limiting the generality of the foregoing, (a) neither Agent shall be subject to any fiduciary or other implied duties, regardless of whether a Default or Event of Default has occurred and is continuing, (b) neither Agent shall have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby that such Agent is instructed in writing to exercise by the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided for herein or in the other Loan Documents); provided that neither Agent shall be required to take any action that, in its opinion or the opinion of its counsel, may expose such Agent to liability or that is contrary to any Loan Document or applicable law and (c) except as expressly set forth herein and in the other Loan Documents, neither Agent shall have any duty to disclose, nor shall it be liable for the failure to disclose, any information relating to the Borrower or any of the Subsidiaries that is communicated to or obtained by the Person serving as the Administrative Agent and/or the Collateral Agent or any of its Affiliates in any capacity.  Neither Agent shall be liable for any action taken or not taken by it with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as such Agent shall believe in good faith shall be necessary, under the circumstances as provided in Article VII or Section 9.08) or in the absence of its own

 

126



 

gross negligence or willful misconduct as determined by a court of competent jurisdiction by a final non-appealable judgment.  Neither Agent shall be deemed to have knowledge of any Default or Event of Default unless and until written notice thereof is given to such Agent by the Borrower or a Lender.  Neither Agent shall be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered thereunder or in connection therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth in any Loan Document or the occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness of any Loan Document or any other agreement, instrument or document, or (v) the satisfaction of any condition set forth in Article IV or elsewhere in any Loan Document, other than to confirm receipt of items expressly required to be delivered to such Agent.

 

(d)  Each Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person.  Each Agent may also rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon.  In determining compliance with any condition hereunder to the making of a Loan that by its terms must be fulfilled to the satisfaction of a Lender, each Agent may presume that such condition is satisfactory to such Lender unless such Administrative Agent shall have received notice to the contrary from such Lender prior to the making of such Loan.  Each Agent may consult with legal counsel (who may be counsel for the Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.

 

(e)  Each Agent may perform any and all its duties and exercise its rights and powers hereunder or under any other Loan Document by or through any one or more sub-agents appointed by it.  Each Agent and any such sub-agent may perform any and all its duties and exercise its rights and powers by or through their respective Related Parties.  The exculpatory provisions of the preceding paragraphs shall apply to any such sub-agent and to the Related Parties of each Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the Term Facility as well as activities as Agent.  Neither Agent shall be responsible for the negligence or misconduct of any sub-agents except to the extent that a court of competent jurisdiction determines in a final and non-appealable judgment that such Agent acted with gross negligence or willful misconduct in the selection of such sub-agents.

 

(f)  Either Agent may resign at any time by notifying the Lenders and the Borrower. Upon any such resignation, the Required Lenders shall have the right, with the consent of the Borrower (prior to the occurrence of a Specified Event of Default), to appoint a successor. If no successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 60 days after the retiring Agent gives notice of its resignation, then the retiring Agent may, on behalf of the Lenders, appoint a

 

127



 

successor Agent which shall be a financial institution with an office in New York, New York, or an Affiliate of any such financial institution. If no successor Agent has been appointed pursuant to the immediately preceding sentence by the 60 th  day after the date such notice of resignation was given by such Agent, such Agent’s resignation shall become effective (and such Agent shall be discharged from its duties and obligations hereunder) and the Required Lenders shall thereafter perform all the duties of such Agent hereunder and/or under any other Loan Document until such time, if any, as the Required Lenders appoint a successor Administrative Agent and/or Collateral Agent, as the case may be, with the consent of the Borrower (prior to the occurrence of a Specified Event of Default).  Upon the acceptance of its appointment as Agent hereunder by a successor, such successor shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations hereunder (if not already discharged therefrom as provided above).  The fees payable by the Borrower to a successor Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor.  After an Agent’s resignation hereunder, the provisions of this Article VIII and Section 9.05 shall continue in effect for the benefit of such retiring Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while acting as Agent.

 

(g)  Each Lender acknowledges that it has, independently and without reliance upon the Agents or any other Lender or any of their Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement.  Each Lender also acknowledges that it will, independently and without reliance upon the Agents or any other Lender or any of their Related Parties and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document, any related agreement or any document furnished hereunder or thereunder.

 

(h)  Notwithstanding any other provision of this Agreement or any provision of any other Loan Document, each of the Joint Lead Arrangers, the Syndication Agents and the Documentation Agents are named as such for recognition purposes only, and in their respective capacities as such shall have no duties, responsibilities or liabilities with respect to this Agreement or any other Loan Document; it being understood and agreed that each of the Joint Lead Arrangers, the Syndication Agents and the Documentation Agents shall be entitled to all indemnification and reimbursement rights in favor of the Agents provided herein and in the other Loan Documents.  Without limitation of the foregoing, neither the Joint Lead Arrangers, the Syndication Agents nor the Documentation Agents in their respective capacities as such shall, by reason of this Agreement or any other Loan Document, have any fiduciary relationship in respect of any Lender, Loan Party or any other Person.

 

(i)  In case of the pendency of any proceeding under any Debtor Relief Law or any other judicial proceeding relative to any Loan Party, each Agent (irrespective of whether the principal of any Loan shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether such Agent shall have made any

 

128



 

demand on the Borrower) shall be entitled and empowered (but not obligated) by intervention in such proceeding or otherwise (a) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders and the Agents (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders and the Agents and their respective agents and counsel and all other amounts due the Lenders and Agents under Section 9.05) allowed in such judicial proceeding and (b) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same and, in either case, any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender and each other Secured Party to make such payments to such Agent and, in the event that such Agent shall consent to the making of such payments directly to the Lenders, to pay to such Agent any amount due for the reasonable compensation, expenses, disbursements and advances of such Agent and its agents and counsel, and any other amounts due such Agent under Section 9.05.

 

(j)  To the extent required by any applicable law, the Administrative Agent may withhold from any payment to any Lender an amount equivalent to any applicable withholding Tax.  If any payment has been made to any Lender by the Administrative Agent without the applicable withholding Tax being withheld from such payment and the Administrative Agent has paid over the applicable withholding Tax to the IRS or any other Governmental Authority, or the IRS or any other Governmental Authority asserts a claim that the Administrative Agent did not properly withhold Tax from amounts paid to or for the account of any Lender because the appropriate form was not delivered or was not properly executed or because such Lender failed to notify the Administrative Agent of a change in circumstance which rendered the exemption from, or reduction of, withholding Tax ineffective or for any other reason, such Lender shall indemnify the Administrative Agent fully for all amounts paid, directly or indirectly, by the Administrative Agent as Tax or otherwise, including any penalties or interest and together with all expenses (including legal expenses, allocated internal costs and out-of-pocket expenses) incurred.

 

ARTICLE IX

 

Miscellaneous

 

SECTION 9.01.  Notices; Electronic Communications .

 

(a)  Notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by fax, as follows:

 

(i) if to the Borrower, to it at SUPERVALU Inc., 250 Park Center Boulevard, P.O. Box 20, Boise, Idaho 83706, Attention: Treasurer, Fax: (208) 395-6631, with a copy to SUPERVALU Inc., 7075 Flying Cloud Drive, Eden Prairie, Minnesota 55344, Attention: Vice President, Business Law, Fax: (952) 828-4403;

 

129



 

(ii) if to the Administrative Agent, to Goldman Sachs Bank USA, to the address, facsimile number, electronic mail address or telephone number specified for such Person on Schedule 9.01(b);

 

(iii) if to the Collateral Agent, to Goldman Sachs Bank USA, to the address, facsimile number, electronic mail address or telephone number specified for such Person on Schedule 9.01(b); and

 

(iv) if to a Lender, to such Lender at its address (or fax number) set forth on Schedule 2.01 or in the Assignment and Acceptance pursuant to which such Lender shall have become a party hereto.

 

(b)  All notices and other communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given on the date of receipt if delivered by hand or overnight courier service or sent by fax or on the date five Business Days after dispatch by certified or registered mail if mailed, in each case delivered, sent or mailed (properly addressed) to such party as provided in this Section 9.01 or in accordance with the latest unrevoked direction from such party given in accordance with this Section 9.01.

 

(c)  As agreed to among the Borrower, the Administrative Agent and the applicable Lenders from time to time, notices and other communications may also be delivered by e-mail to the e-mail address of a representative of the applicable Person provided from time to time by such Person.  Notices and other communications to the Lenders hereunder may be delivered or furnished by electronic communication (including e-mail and Internet or intranet websites) pursuant to procedures approved by the Administrative Agent; provided that the foregoing shall not apply to notices to any Lender pursuant to Article II if such Lender has notified the Administrative Agent that it is incapable of receiving notices under Article II by electronic communication.  The Administrative Agent or the Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it; provided that approval of such procedures may be limited to particular notices or communications.

 

(d)  Unless the Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the intended recipient’s receipt of the notice or communication, which shall be evidenced by an acknowledgment from the intended recipient (such as by the “delivery receipt” function, as available, return e-mail or other written acknowledgement); provided that, if such notice or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next Business Day for the recipient; provided , further , that if the sender receives an “out-of-office” reply e-mail containing instructions regarding notification to another person in the intended recipient’s absence, such notice or other communication shall be deemed received upon the sender’s compliance with such instructions, and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as

 

130



 

described in the foregoing clause (i) of notification that such notice or communication is available and identifying the website address therefor.

 

(e)  The Borrower hereby agrees, unless directed otherwise by the Administrative Agent or unless the e-mail address referred to below has not been provided by the Administrative Agent to the Borrower, that it will, or will cause its Subsidiaries to, provide to the Administrative Agent all information, documents and other materials that it is obligated to furnish to the Administrative Agent pursuant to the Loan Documents or to the Lenders under Article V, including all notices, requests, financial statements, financial and other reports, certificates and other information materials, but excluding any such communication that (i) is or relates to a Borrowing Request, a notice pursuant to Section 2.10, (ii) relates to the payment of any principal or other amount due under this Agreement prior to the scheduled date therefor, (iii) provides notice of any Default or Event of Default under this Agreement or any other Loan Document or (iv) is required to be delivered to satisfy any condition precedent to the effectiveness of this Agreement and/or any Borrowing or other extension of credit hereunder (all such non-excluded communications being referred to herein collectively as “ Communications ”), by transmitting the Communications in an electronic/soft medium that is properly identified in a format acceptable to the Administrative Agent to an e-mail address as directed by the Administrative Agent.  In addition, the Borrower agrees, and agrees to cause its Subsidiaries, to continue to provide the Communications to the Administrative Agent or the Lenders, as the case may be, in the manner specified in the Loan Documents but only to the extent requested by the Administrative Agent.

 

(f)  The Borrower hereby acknowledges that (i) the Administrative Agent will make available to the Lenders materials and/or information provided by or on behalf of the Borrower hereunder (collectively, the “ Borrower Materials ”) by posting the Borrower Materials on IntraLinks or another similar electronic system (the “ Platform ”) and (ii) certain of the Lenders may be “public-side” Lenders ( i.e. , Lenders that do not wish to receive material non-public information with respect to the Borrower, its Subsidiaries or their respective securities for purposes of United States federal and state securities laws) (each, a “ Public Lender ”).  The Borrower hereby agrees that (w) all Borrower Materials that are to be made available to Public Lenders shall be clearly and conspicuously marked “PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently on the first page thereof; (x) by marking Borrower Materials “PUBLIC,” the Borrower shall be deemed to have authorized the Administrative Agent and the Lenders to treat such Borrower Materials as not containing any material non-public information with respect to the Borrower, its Subsidiaries or their respective securities for purposes of United States federal and state securities laws ( provided , however , that to the extent such Borrower Materials constitute Information, they shall be treated as set forth in Section 9.16); (y) all Borrower Materials marked “PUBLIC” are permitted to be made available through a portion of the Platform designated as “Public Investor;” and (z) the Administrative Agent shall be entitled to treat any Borrower Materials that are not marked “PUBLIC” as being suitable only for posting on a portion of the Platform not marked as “Public Investor.” Notwithstanding the foregoing, the following Borrower Materials shall be marked “PUBLIC” and the Borrower agrees that the following documents may be distributed to all Lenders (including Public Lenders) unless, solely with respect to the

 

131



 

documents described in clauses (B) and (C) below, the Borrower advises the Administrative Agent in writing (including by e-mail) within a reasonable time prior to their intended distribution that such material should only be distributed to Lenders other than Public Lenders (it being agreed that the Borrower and its counsel shall have been given a reasonable opportunity to review such documents and comply with applicable securities law disclosure obligations): (A) the Loan Documents; (B) administrative materials prepared by the Administrative Agent for prospective Lenders; (C) term sheets and notification of changes in the terms of the Term Facility; and (D) the Audited Financial Statements, the Deal Basis Financial Statements and the financial statements and certificates furnished pursuant to Sections 5.01(a) and 5.01(b).

 

(g)  Each Public Lender agrees to cause at least one individual at or on behalf of such Public Lender to at all times have selected the “Private Side Information” or similar designation on the content declaration screen of the Platform in order to enable such Public Lender or its delegate, in accordance with such Public Lender’s compliance procedures and applicable law, including United States Federal and state securities laws, to make reference to Communications that are not made available through the “Public Side Information” portion of the Platform and that may contain material non-public information with respect to the Borrower or its securities for purposes of United States Federal or state securities laws.

 

(h)  THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE”.  NEITHER THE ADMINISTRATIVE AGENT NOR ANY OF ITS RELATED PARTIES WARRANTS THE ACCURACY OR COMPLETENESS OF THE COMMUNICATIONS OR THE ADEQUACY OF THE PLATFORM AND EACH EXPRESSLY DISCLAIMS LIABILITY FOR ERRORS OR OMISSIONS IN THE COMMUNICATIONS.  NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS IS MADE BY THE ADMINISTRATIVE AGENT OR ANY OF ITS RELATED PARTIES IN CONNECTION WITH THE COMMUNICATIONS OR THE PLATFORM.  IN NO EVENT SHALL THE ADMINISTRATIVE AGENT OR ANY OF ITS RELATED PARTIES HAVE ANY LIABILITY TO ANY LOAN PARTY, ANY LENDER OR ANY OTHER PERSON FOR DAMAGES OF ANY KIND, WHETHER OR NOT BASED ON STRICT LIABILITY AND INCLUDING DIRECT OR INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, LOSSES OR EXPENSES (WHETHER IN TORT, CONTRACT OR OTHERWISE) ARISING OUT OF ANY LOAN PARTY’S OR THE ADMINISTRATIVE AGENT’S TRANSMISSION OF COMMUNICATIONS THROUGH THE INTERNET, EXCEPT TO THE EXTENT THE LIABILITY OF ANY SUCH PERSON IS FOUND IN A FINAL RULING BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED PRIMARILY FROM SUCH PERSON’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.

 

(i)  The Administrative Agent agrees that the receipt of the Communications by the Administrative Agent at its e-mail address set forth above shall constitute effective delivery of the Communications to the Administrative Agent for purposes of the Loan

 

132



 

Documents.  Each Lender agrees that receipt of notice to it (as provided in the next sentence) specifying that the Communications have been posted to the Platform shall constitute effective delivery of the Communications to such Lender for purposes of the Loan Documents.  Each Lender agrees to notify the Administrative Agent in writing (including by electronic communication) from time to time of such Lender’s e-mail address to which the foregoing notice may be sent by electronic transmission and that the foregoing notice may be sent to such e-mail address.

 

SECTION 9.02.  Survival of Agreement Nothing herein shall prejudice the right of the Administrative Agent or any Lender to give any notice or other communication pursuant to any Loan Document in any other manner specified in such Loan Document.  All covenants, agreements, representations and warranties made by the Borrower herein and in the certificates or other instruments prepared or delivered in connection with or pursuant to this Agreement or any other Loan Document shall be considered to have been relied upon by the Lenders and shall survive the making by the Lenders of the Loans, regardless of any investigation made by the Lenders or on their behalf, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any Fee or any other amount payable under this Agreement or any other Loan Document is outstanding and unpaid and so long as the Commitments have not been terminated.  The provisions of Sections 2.14, 2.16, 2.20 and 9.05 shall remain operative and in full force and effect regardless of the expiration of the term of this Agreement, the consummation of the transactions contemplated hereby, the repayment of any of the Loans, the expiration of the Commitments, the invalidity or unenforceability of any term or provision of this Agreement or any other Loan Document, or any investigation made by or on behalf of the Administrative Agent, the Collateral Agent or any Lender.

 

SECTION 9.03.  Binding Effect .  This Agreement shall become effective when the Administrative Agent shall have received executed counterparts hereof from each of the Borrower, the other Loan Parties, the Administrative Agent, the Collateral Agent and each Person who is a Lender on the Closing Date.

 

SECTION 9.04.  Successors and Assigns .  (a)  Whenever in this Agreement any of the parties hereto is referred to, such reference shall be deemed to include the permitted successors and assigns of such party; and all covenants, promises and agreements by or on behalf of the Borrower, the other Loan Parties, the Administrative Agent, the Collateral Agent or the Lenders that are contained in this Agreement shall bind and inure to the benefit of their respective successors and assigns.

 

(b)  Each Lender may assign to one or more Eligible Assignees all or a portion of its interests, rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it), with the prior written consent of the Administrative Agent (not to be unreasonably withheld or delayed) and the Borrower (not to be unreasonably withheld or delayed); provided , however , that (i) the consent of the Borrower shall not be required to any assignment made (x) to a Lender, an Affiliate of a Lender or a Related Fund, (y) in connection with the initial syndication of the Term Facility to Persons identified by the Joint Lead Arrangers to the Borrower prior to the Closing Date or (z) after the occurrence and during the continuance of any Specified Event of Default ( provided , further , that the Borrower shall be deemed to have consented to any such assignment unless it shall object thereto by written notice to the Administrative Agent within five Business Days after having received notice thereof), (ii) the consent of the Administrative Agent shall not be required to any assignment (x) made by an

 

133



 

assigning Lender to a Related Fund of such Lender or (y) of an amount less than $1,000,000 by an assigning Lender to a Related Fund of such Lender, (iii) the amount of the Commitment or Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Acceptance with respect to such assignment is delivered to the Administrative Agent) shall be in an integral multiple of, and not less than, $1,000,000 (or, if less, the entire remaining amount of such Lender’s Commitment or Loans of the relevant Class); provided that simultaneous assignments by two or more Related Funds shall be combined for purposes of determining whether the minimum assignment requirement is met, (iv) the parties to each assignment shall (A) execute and deliver to the Administrative Agent an Assignment and Acceptance via an electronic settlement system acceptable to the Administrative Agent or (B) if previously agreed with the Administrative Agent, manually execute and deliver to the Administrative Agent an Assignment and Acceptance, and, in each case, shall pay to the Administrative Agent a processing and recordation fee of $3,500 (which fee may be waived or reduced in the sole discretion of the Administrative Agent); provided that only one such fee shall be payable in the event of simultaneous assignments to or from two or more Related Funds by a single Lender and (v) the assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire (in which the assignee shall designate one or more credit contacts to whom all syndicate-level information (which may contain material non-public information about the Loan Parties and their Related Parties or their respective securities) will be made available and who may receive such information in accordance with the assignee’s compliance procedures and applicable laws, including Federal and state securities laws) and all applicable tax forms.  Upon acceptance and recording pursuant to Section 9.04(e), from and after the effective date specified in each Assignment and Acceptance, (A) the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Acceptance, have the rights and obligations of a Lender under this Agreement and (B) the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Acceptance, be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 2.14, 2.16, 2.20 and 9.05, as well as to any Fees accrued for its account and not yet paid).

 

(c)  By executing and delivering an Assignment and Acceptance, the assigning Lender thereunder and the assignee thereunder shall be deemed to confirm to and agree with each other and the other parties hereto as follows:  (i) such assigning Lender warrants that it is the legal and beneficial owner of the interest being assigned thereby free and clear of any adverse claim and that its Commitment and the outstanding balances of its Loans, in each case without giving effect to assignments thereof which have not become effective, are as set forth in such Assignment and Acceptance, (ii) except as set forth in clause (i) above, such assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement, or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement, any other Loan Document or any other instrument or document furnished pursuant hereto, or the financial condition of the Borrower or any Subsidiary or the performance or observance by the Borrower or any

 

134



 

Subsidiary of any of its obligations under this Agreement, any other Loan Document or any other instrument or document furnished pursuant hereto; (iii) such assignee represents and warrants that it is an Eligible Assignee legally authorized to enter into such Assignment and Acceptance; (iv) such assignee confirms that it has received a copy of this Agreement, together with copies of the most recent financial statements referred to in Section 3.05(a) or delivered pursuant to Section 5.01 and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance; (v) such assignee will independently and without reliance upon the Administrative Agent, the Collateral Agent, such assigning Lender or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement; (vi) such assignee appoints and authorizes the Administrative Agent and the Collateral Agent to take such action as agent on its behalf and to exercise such powers under this Agreement as are delegated to the Administrative Agent and the Collateral Agent, respectively, by the terms hereof, together with such powers as are reasonably incidental thereto; and (vii) such assignee agrees that it will perform in accordance with their terms all the obligations which by the terms of this Agreement are required to be performed by it as a Lender.

 

(d)  The Administrative Agent, acting solely for this purpose as a non-fiduciary agent of the Borrower, shall maintain at one of its offices in New York City a copy of each Assignment and Acceptance delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amount of the Loans owing to, each Lender pursuant to the terms hereof from time to time (the “ Register ”).  The entries in the Register shall be conclusive absent manifest error and the Borrower, the Administrative Agent, the Collateral Agent and the Lenders shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary.  The Register shall be available for inspection by the Borrower, the Collateral Agent and any Lender (solely with respect to any entry relating to such Lender’s Loans and Commitments), at any reasonable time and from time to time upon reasonable prior notice.

 

(e)  Upon its receipt of, and consent to, a duly completed Assignment and Acceptance executed by an assigning Lender and an assignee, an Administrative Questionnaire completed in respect of the assignee (unless the assignee shall already be a Lender hereunder), the processing and recordation fee referred to in Section 9.04(b), if applicable, and the written consent of the Administrative Agent and, if required, the Borrower to such assignment and any applicable tax forms, the Administrative Agent shall (i) accept such Assignment and Acceptance and (ii) record the information contained therein in the Register.  No assignment shall be effective unless it has been recorded in the Register as provided in this Section 9.04(e).

 

(f)  Each Lender may, without the consent of, or notice to, the Borrower or the Administrative Agent, sell participations to one or more banks or other Persons in all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans owing to it); provided , however , that (i) no Lender shall, without the written consent of the Borrower, sell participations in Loans or Commitments

 

135



 

to any Competitor of the Borrower, (ii) such Lender’s obligations under this Agreement shall remain unchanged, (iii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, (iv) the participating banks or other Persons shall be entitled to the benefit of the cost protection provisions contained in Sections 2.14, 2.16 and 2.20 to the same extent as if they were Lenders (but, with respect to any particular participant, to no greater extent than the Lender that sold the participation to such participant unless a greater payment results from a Change in Law occurring after such particular participant acquired the applicable participation or the sale of such participation was approved in writing by the Borrower), (v) the Borrower, the Administrative Agent and the Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement, and such Lender shall retain the sole right to enforce the obligations of the Borrower relating to the Loans and to approve any amendment, modification or waiver of any provision of this Agreement (other than amendments, modifications or waivers decreasing any fees payable to such participating bank or Person hereunder or the amount of principal of or the rate at which interest is payable on the Loans in which such participating bank or Person has an interest, extending any scheduled principal payment date or date fixed for the payment of interest on the Loans in which such participating bank or Person has an interest, increasing or extending the Commitments in which such participating bank or Person has an interest or releasing all or substantially all of the value of the Facility Guaranty or all or substantially all of the Collateral) and (v) such Lender shall maintain a register on which it records the name and address of each participant and the principal amounts of each participant’s participating interest with respect to the Loans, Commitments or other interests hereunder, which entries shall be conclusive absent manifest error; provided , further , that no Lender shall have any obligation to disclose any portion of such register to any Person except to the extent disclosure is necessary to establish that the Loans, Commitments or other interests hereunder are in registered form for United States federal income tax purposes.  To the extent permitted by law, each participating bank or other Person also shall be entitled to the benefits of Section 9.06 as though it were a Lender, provided such participating bank or other Person agrees to be subject to Section 2.18 as though it were a Lender.

 

(g)  Any Lender or participant may, in connection with any assignment or participation or proposed assignment or participation pursuant to this Section 9.04, disclose to the assignee or participant or proposed assignee or participant any information relating to the Borrower furnished to such Lender by or on behalf of the Borrower; provided that, prior to any such disclosure of information designated by the Borrower as confidential, each such assignee or participant or proposed assignee or participant shall execute an agreement whereby such assignee or participant shall agree (subject to customary exceptions) to preserve the confidentiality of such confidential information on terms no less restrictive than those applicable to the Lenders pursuant to Section 9.16.

 

(h)  Any Lender may at any time assign all or any portion of its rights under this Agreement to secure extensions of credit to such Lender or in support of obligations owed by such Lender; provided that no such assignment shall release a Lender from any of its obligations hereunder or substitute any such assignee for such Lender as a party hereto.

 

136



 

(i)  Notwithstanding anything to the contrary contained herein, any Lender (a “ Granting Lender ”) may grant to a special purpose funding vehicle (an “ SPV ”), identified as such in writing from time to time by the Granting Lender to the Administrative Agent and the Borrower, the option to provide to the Borrower all or any part of any Loan that such Granting Lender would otherwise be obligated to make to the Borrower pursuant to this Agreement; provided that (i) nothing herein shall constitute a commitment by any SPV to make any Loan and (ii) if an SPV elects not to exercise such option or otherwise fails to provide all or any part of such Loan, the Granting Lender shall be obligated to make such Loan pursuant to the terms hereof.  The making of a Loan by an SPV hereunder shall utilize the Commitment of the Granting Lender to the same extent, and as if, such Loan were made by such Granting Lender.  Each party hereto hereby agrees that no SPV shall be liable for any indemnity or similar payment obligation under this Agreement (all liability for which shall remain with the Granting Lender).  In furtherance of the foregoing, each party hereto hereby agrees (which agreement shall survive the termination of this Agreement) that, prior to the date that is one year and one day after the payment in full of all outstanding commercial paper or other senior indebtedness of any SPV, it will not institute against, or join any other Person in instituting against, such SPV any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings under the laws of the United States or any State thereof.  In addition, notwithstanding anything to the contrary contained in this Section 9.04, any SPV may (i) with notice to, but without the prior written consent of, the Borrower and the Administrative Agent and without paying any processing fee therefor, assign all or a portion of its interests in any Loans to the Granting Lender or to any financial institutions (consented to by the Borrower and Administrative Agent) providing liquidity and/or credit support to or for the account of such SPV to support the funding or maintenance of Loans and (ii) disclose on a confidential basis any non-public information relating to its Loans to any rating agency, commercial paper dealer or provider of any surety, guarantee or credit or liquidity enhancement to such SPV.

 

(j)  Neither the Borrower nor any Guarantor shall assign or delegate any of its rights or duties hereunder or any other Loan Document without the prior written consent of the Administrative Agent and each Lender, and any attempted assignment without such consent shall be null and void.

 

(k)  Notwithstanding anything to the contrary contained in this Section 9.04 or any other provision of this Agreement, so long as no Default or Event of Default has occurred and is continuing or would result therefrom, each Lender shall have the right at any time to sell, assign or transfer all or a portion of its Loans owing to it to the Borrower on a non-pro rata basis ( provided , however , that each assignment shall be of a uniform, and not varying, percentage of all rights and obligations under and in respect of any applicable Loan), subject to the following limitations:

 

(i) The Borrower shall conduct one or more modified Dutch auctions (each, an “ Auction ”) to repurchase all or any portion of the Loans, provided that, (A) notice of the Auction shall be made to all Lenders and (B) the Auction shall be conducted pursuant to such procedures as the Auction Manager may establish which are consistent with this

 

137



 

Section 9.04(k) and the Auction Procedures set forth on Exhibit Q and are otherwise reasonably acceptable to Borrower, the Auction Manager and Administrative Agent;

 

(ii) With respect to all repurchases made by the Borrower pursuant to this Section 9.04(k), (A) the Borrower shall deliver to the Auction Manager and the Administrative Agent a certificate of a Responsible Officer stating that no Default or Event of Default has occurred and is continuing or would result from such repurchase, (B) the Borrower shall not use the proceeds of any loans under the ABL Facility to acquire such Loans, (C) Loans so purchased shall not constitute a prepayment of Loans hereunder for the purposes of calculating Excess Cash Flow, (D) the assigning Lender and the Borrower shall execute and deliver to the Auction Manager and the Administrative Agent a Borrower Assignment and Acceptance and (E) no representation or warranty regarding the possession of any information that has not been disclosed to the Administrative Agent or non-Public Lenders and that may be material to a Lender’s decision to participate in such repurchase shall be required;

 

(iii) Following repurchase by the Borrower pursuant to this Section 9.04(k), the Loans so repurchased shall, without further action by any Person, be deemed cancelled for all purposes and no longer outstanding (and may not be resold by the Borrower), for all purposes of this Agreement and all other Loan Documents, including, but not limited to (A) the making of, or the application of, any payments to the Lenders under this Agreement or any other Loan Document, (B) the making of any request, demand, authorization, direction, notice, consent or waiver under this Agreement or any other Loan Document or (C) the determination of Required Lenders, or for any similar or related purpose, under this Agreement or any other Loan Document.  In connection with any Loans repurchased and cancelled pursuant to this Section 9.04(k), the Administrative Agent is authorized to make appropriate entries in the Register to reflect any such cancellation; and

 

(l)  Each Lender acknowledges that (i) the Borrower currently may have information regarding the Loan Parties, their ability to perform their Obligations or any other matter that may be material to a decision by any Lender to participate in any repurchase contemplated by Section 9.04(k) and that has not previously been disclosed to the Administrative Agent and the Lenders (“ Excluded Information ”), (ii) the Excluded Information may not be available to it, the Administrative Agent or the other Lenders and (iii) it has independently and without reliance on any other party made its own analysis and determined to participate in any repurchase contemplated by Section 9.04(k) thereby notwithstanding its lack of knowledge of the Excluded Information.

 

SECTION 9.05.  Expenses; Indemnity .  (a)  The Borrower agrees to pay all reasonable out-of-pocket expenses incurred by the Joint Lead Arrangers, the Administrative Agent, the Collateral Agent, the Syndication Agents and the Documentation Agents in connection with the syndication of the Term Facility and, all reasonable out-of-pocket expenses incurred by the Administrative Agent and the Collateral Agent in connection with the preparation, execution and delivery and administration of this Agreement and the other Loan Documents or in connection with any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions hereby or thereby contemplated shall be consummated) or incurred by the

 

138



 

Joint Lead Arrangers, the Administrative Agent, the Collateral Agent, Syndication Agents, the Documentation Agents or any Lender in connection with the enforcement or protection of its rights in connection with this Agreement and the other Loan Documents or in connection with the Loans made hereunder, including the fees, charges and disbursements of one primary counsel for such Persons taken as a whole (and, to the extent deemed reasonably necessary by the Administrative Agent in its good faith discretion, one local counsel in each relevant jurisdiction to the Joint Lead Arrangers, the Administrative Agent, the Collateral Agent, the Syndication Agent, the Documentation Agent and the Lenders, taken as a whole, and one special or regulatory counsel in each relevant specialty), and, solely in the case of a conflict of interest or a potential conflict of interest, one additional primary counsel (and, to the extent deemed reasonably necessary or advisable by the affected persons in their good faith discretion, one local counsel in each relevant jurisdiction and one special or regulatory counsel in each relevant specialty) to the affected persons, taken as a whole.

 

(b)  The Borrower agrees to indemnify the Joint Lead Arrangers, the Administrative Agent, the Collateral Agent, the Syndication Agent, the Documentation Agent, each Lender and each Related Party of any of the foregoing Persons (each such Person being called an “ Indemnitee ”) against, and to hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses, including reasonable counsel fees, charges and disbursements, incurred by or asserted against any Indemnitee arising out of, in any way connected with, or as a result of (i) the execution or delivery of this Agreement or any other Loan Document or any agreement or instrument contemplated thereby, the performance by the parties thereto of their respective obligations thereunder or the consummation of the Transactions and the other transactions contemplated thereby (including the Term Facility and the syndication thereof), (ii) the use of the proceeds of the Loans, (iii) any claim, litigation, investigation or proceeding relating to any of the foregoing, whether or not any Indemnitee is a party thereto (and regardless of whether such matter is initiated by a third party or by the Borrower, any other Loan Party or any of their respective Affiliates or equity holders) or (iv) any actual or alleged presence or Release of Hazardous Materials on any property currently or formerly owned or operated by the Borrower or any of the Subsidiaries, or any Environmental Liability related in any way to the Borrower or the Subsidiaries; provided that such indemnity shall not, as to any Indemnitee, be available (A) to the extent that such losses, claims, damages, liabilities or related expenses are determined by a court of competent jurisdiction by final and non-appealable judgment to have resulted primarily from (1) the bad faith, gross negligence or willful misconduct of such Indemnitee, (2) disputes solely among Indemnitees (or their Related Persons) (other than claims against any Indemnitee (x) in its capacity or in fulfilling its role as agent or arranger or any similar role under the Term Facility or (y) arising out of any act or omission on the part of the Borrower or any of its Subsidiaries or Affiliates) or (B) in respect of legal fees or expenses of the Indemnitees, other than the reasonable invoiced fees, expenses and charges of one primary counsel for all Indemnitees taken as a whole (and, to the extent deemed reasonably necessary by the Administrative Agent in its good faith discretion, one local counsel in each relevant jurisdiction and one special or regulatory counsel in each relevant specialty), and solely in the case of a conflict of interest or a potential conflict of interest, one additional primary counsel (and, to the extent deemed reasonably necessary by the Administrative Agent in its good faith discretion, one local counsel in each relevant

 

139



 

jurisdiction and one special or regulatory counsel in each relevant specialty) to the affected Indemnitees, taken as a whole.

 

(c)  To the extent that the Borrower fails to pay any amount required to be paid by it to the Administrative Agent or the Collateral Agent under Sections 9.05(a) or 9.05(b), each Lender severally agrees to pay to the Administrative Agent or the Collateral Agent, as the case may be, such Lender’s pro rata share (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount; provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent or the Collateral Agent in its capacity as such.  For purposes hereof, a Lender’s “ pro rata share” shall be determined based upon its share of the sum of the outstanding Loans and unused Commitments at the time.

 

(d)  To the extent permitted by applicable law, no Loan Party shall assert, and hereby waives, any claim against any Indemnitee, and no Indemnitee shall assert, and hereby waives, any claim against any Loan Party, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement or any agreement or instrument contemplated hereby, the Transactions, any Loan or the use of the proceeds thereof; provided  that nothing contained in this sentence will limit the indemnity obligations of any Loan Party to the extent indirect, special, punitive or consequential damages are included in any third party claim in connection with which such Indemnitee is entitled to indemnification hereunder.

 

(e)  No Indemnitee seeking indemnification or reimbursement under this Agreement will, without the Borrower’s prior written consent (not to be unreasonably withheld, delayed or conditioned), settle, compromise, consent to the entry of any judgment in or otherwise seek to terminate any claim, litigation, action, investigation or proceeding referred to herein; provided that the foregoing indemnity will apply to any such settlement in the event that (i) the Borrower was offered the ability to assume the defense of the action that was the subject matter of such settlement and elected not to so assume or (ii) such settlement is entered into more than seventy-five (75) days after receipt by the Borrower of a request by the applicable Indemnitee for reimbursement of its legal or other expenses incurred in connection with such claim, litigation, action, investigation or proceeding and the Borrower not having reimbursed such Indemnitee in accordance with such request prior to the date of such settlement (provided that the foregoing indemnity will not apply to any settlement made in accordance with this clause (ii) if the Borrower is disputing such expenses in good faith in accordance with paragraph (b) of this Section 9.05), and the foregoing indemnity will also apply to any settlement with the Borrower’s written consent or if there is a final judgment for the plaintiff against an Indemnitee in any such proceeding.

 

(f)  Notwithstanding the foregoing, each Indemnitee (and its Related Persons) shall be obligated to refund and return promptly any and all amounts paid by the Loan Parties under Section 9.05(b) to such Indemnitee (or such Related Person) for any such fees, expenses or damages to the extent such Indemnitee (or such Related Person) is not entitled

 

140



 

to payment of such amounts in accordance with the terms hereof, as determined by a final non-appealable judgment of a court of competent jurisdiction.

 

(g)  The provisions of this Section 9.05 shall remain operative and in full force and effect regardless of the expiration of the term of this Agreement, the consummation of the transactions contemplated hereby, the repayment of any of the Loans, the expiration of the Commitments, the invalidity or unenforceability of any term or provision of this Agreement or any other Loan Document, or any investigation made by or on behalf of the Administrative Agent, the Collateral Agent or any Lender.  All amounts due under this Section 9.05 shall be payable on written demand therefor.

 

SECTION 9.06.  Right of Setoff .  If an Event of Default shall have occurred and be continuing, each Lender is hereby authorized at any time and from time to time, except to the extent prohibited by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by such Lender to or for the credit or the account of the Borrower against any of and all the obligations of the Borrower now or hereafter existing under this Agreement and other Loan Documents held by such Lender, irrespective of whether or not such Lender shall have made any demand under this Agreement or such other Loan Document and although such obligations may be unmatured.  The rights of each Lender under this Section 9.06 are in addition to other rights and remedies (including other rights of setoff) which such Lender may have.

 

SECTION 9.07.  Applicable Law .  THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND ANY CLAIMS, CONTROVERSY, DISPUTE OR CAUSE OF ACTION (WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE) BASED UPON, ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT (EXCEPT, AS TO ANY OTHER LOAN DOCUMENT, AS EXPRESSLY SET FORTH THEREIN) AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES (OTHER THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW).

 

SECTION 9.08.  Waivers; Amendment .  (a)  No failure or delay of the Administrative Agent, the Collateral Agent or any Lender in exercising any power or right hereunder or under any other Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power.  The rights and remedies of the Administrative Agent, the Collateral Agent and the Lenders hereunder and under the other Loan Documents are cumulative and are not exclusive of any rights or remedies that they would otherwise have.  No waiver of any provision of this Agreement or any other Loan Document or consent to any departure by the Borrower or any other Loan Party therefrom shall in any event be effective unless the same shall be permitted by Section 9.08(b), and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given.  No notice or demand on the Borrower in any case shall entitle the Borrower to any other or further notice or demand in similar or other circumstances.

 

(b)  Neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the

 

141



 

Borrower and the Required Lenders; provided , however , that no such agreement shall (i) decrease the principal amount of, or extend the maturity of or any scheduled principal payment date or date for the payment of any interest on any Loan, or waive or excuse any such payment or any part thereof, or decrease the rate of interest on any Loan, without the prior written consent of each Lender directly adversely affected thereby, (ii) increase or extend the Commitment or decrease or extend the date for payment of any Fees of any Lender without the prior written consent of such Lender, (iii) amend or modify the pro rata requirements of Section 2.17, the provisions of Section 9.04(k) or the provisions of this Section 9.08 or release all or substantially all of the value of the Facility Guaranty or all or substantially all of the Collateral, without the prior written consent of each Lender, (iv) change the provisions of any Loan Document in a manner that by its terms adversely affects the rights in respect of payments due to Lenders holding Loans of one Class differently from the rights of Lenders holding Loans of any other Class without the prior written consent of Lenders holding a majority in interest of the outstanding Loans and unused Commitments of each adversely affected Class, (v) modify the protections afforded to an SPV pursuant to the provisions of Section 9.04(i) without the written consent of such SPV, (vi) reduce the percentage contained in the definition of “Required Lenders” without the prior written consent of each Lender (it being understood that with the consent of the Required Lenders, additional extensions of credit pursuant to this Agreement may be included in the determination of the Required Lenders on substantially the same basis as the Commitments on the date hereof) or (vii) modify any other provision, if any, of this Agreement that expressly requires the consent of each Lender or each directly affected Lender without the prior written consent of each Lender; provided , further , that no such agreement shall amend, modify or otherwise affect the rights or duties of the Administrative Agent or the Collateral Agent hereunder or under any other Loan Document without the prior written consent of the Administrative Agent or the Collateral Agent.

 

(c)  The Administrative Agent and the Borrower may amend any Loan Document to correct administrative errors or omissions, or to effect administrative changes that are not adverse to any Lender.  Notwithstanding anything to the contrary contained herein, such amendment shall become effective without any further consent of any other party to such Loan Document.

 

SECTION 9.09.  Interest Rate Limitation .  Notwithstanding anything herein to the contrary, if at any time the interest rate applicable to any Loan, together with all fees, charges and other amounts which are treated as interest on such Loan under applicable law (collectively the “ Charges ”), shall exceed the maximum lawful rate (the “ Maximum Rate ”) which may be contracted for, charged, taken, received or reserved by the Lender holding such Loan in accordance with applicable law, the rate of interest payable in respect of such Loan hereunder, together with all Charges payable in respect thereof, shall be limited to the Maximum Rate and, to the extent lawful, the interest and Charges that would have been payable in respect of such Loan but were not payable as a result of the operation of this Section 9.09 shall be cumulated and the interest and Charges payable to such Lender in respect of other Loans or participations or periods shall be increased (but not above the Maximum Rate therefor) until such cumulated amount, together with interest thereon at the Federal Funds Effective Rate to the date of repayment, shall have been received by such Lender.

 

142



 

SECTION 9.10.  Entire Agreement .  This Agreement, the Fee Letter and the other Loan Documents constitute the entire contract between the parties relative to the subject matter hereof.  Any other previous agreement among the parties with respect to the subject matter hereof is superseded by this Agreement and the other Loan Documents.  Nothing in this Agreement or in the other Loan Documents, expressed or implied, is intended to confer upon any Person (other than the parties hereto and thereto, their respective successors and assigns permitted hereunder and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent, the Collateral Agent and the Lenders) any rights, remedies, obligations or liabilities under or by reason of this Agreement or the other Loan Documents.

 

SECTION 9.11.  WAIVER OF JURY TRIAL .  EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS.  EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.11.

 

SECTION 9.12.  Severability .  In the event any one or more of the provisions contained in this Agreement or in any other Loan Document should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and therein shall not in any way be affected or impaired thereby (it being understood that the invalidity of a particular provision in a particular jurisdiction shall not in and of itself affect the validity of such provision in any other jurisdiction).  The parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

 

SECTION 9.13.  Counterparts .  This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original but all of which when taken together shall constitute a single contract, and shall become effective as provided in Section 9.03.  Delivery of an executed signature page to this Agreement by facsimile transmission or by other electronic transmission (including “.pdf” or “.tif”) shall be as effective as delivery of a manually signed counterpart of this Agreement.

 

SECTION 9.14.  Headings .  Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and are not to affect the construction of, or to be taken into consideration in interpreting, this Agreement.

 

SECTION 9.15.  Jurisdiction; Consent to Service of Process .  (a)  The Borrower and each other Loan Party hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of any New York State court or Federal court of the United States of America sitting in New York County, and any appellate court from any thereof, in any action or

 

143



 

proceeding arising out of or relating to this Agreement or the other Loan Documents, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such Federal court.  Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.  Nothing in this Agreement shall affect any right that the Administrative Agent, the Collateral Agent or any Lender may otherwise have to bring any action or proceeding relating to this Agreement or the other Loan Documents against the Borrower or its properties in the courts of any jurisdiction if required to realize upon the Collateral as determined in good faith by the Person bringing such action or proceeding.

 

(b)  The Borrower and each other Loan Party hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or the other Loan Documents in any New York State or Federal court.  Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

 

(c)  Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 9.01 excluding service of process by mail.  Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by law.

 

SECTION 9.16.  Confidentiality .  Each of the Administrative Agent, the Collateral Agent and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its and its Affiliates’ officers, directors, employees and agents, including accountants, legal counsel, numbering, administration and settlement service providers and other advisors (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested or required by any regulatory authority or quasi-regulatory authority (such as the National Association of Insurance Commissioners), (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) in connection with the exercise of any remedies hereunder or under the other Loan Documents or any suit, action or proceeding relating to the enforcement of its rights hereunder or thereunder, (e) subject to an agreement containing provisions substantially the same as or no less restrictive than those of this Section 9.16, to any actual or prospective assignee of or participant in any of its rights or obligations under this Agreement and the other Loan Documents, (f) with the consent of the Borrower, (g) to the extent such Information becomes publicly available other than as a result of a breach of this Section 9.16, (h) subject to an agreement containing provisions substantially the same as or no less restrictive than those of this Section 9.16, to actual or proposed direct or indirect counterparties in connection with any Swap Contract relating to the Loan Parties or their obligations or (i) disclosure to any rating agency when required by it, provided that, prior to any disclosure, such rating agency shall undertake in writing to preserve the confidentiality of any confidential information relating to Loan Parties received by it from any Agent or any Lender.  In addition, each Agent and each

 

144



 

Lender may disclose the existence of this Agreement and the information about this Agreement to market data collectors, similar services providers to the lending industry, and service providers to the Agents and the Lenders in connection with the administration and management of this Agreement and the other Loan Documents.  For the purposes of this Section 9.16, “ Information ” shall mean all information received from the Borrower and related to the Borrower or its business, other than any such information that was available to the Administrative Agent, the Collateral Agent or any Lender on a nonconfidential basis prior to its disclosure by the Borrower.  Any Person required to maintain the confidentiality of Information as provided in this Section 9.16 shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord its own confidential information.

 

SECTION 9.17.  Lender Action; Intercreditor Agreement .  (a)  Each Lender agrees that it shall not take or institute any actions or proceedings, judicial or otherwise, for any right or remedy against any Loan Party or any other obligor under any of the Loan Documents (including the exercise of any right of setoff, rights on account of any banker’s lien or similar claim or other rights of self-help), or institute any actions or proceedings, or otherwise commence any remedial procedures, with respect to any Collateral or any other property of any such Loan Party, unless expressly provided for herein or in any other Loan Document, without the prior written consent of the Administrative Agent.  The provisions of this Section 9.17 are for the sole benefit of the Lenders and shall not afford any right to, or constitute a defense available to, any Loan Party.

 

(b)  Each Lender that has signed this Agreement shall be deemed to have consented to and hereby irrevocably authorizes the Collateral Agent to enter into the Intercreditor Agreement (and including any and all amendments, amendments and restatements, modifications, supplements and acknowledgments thereto) from time to time, and agree to be bound by the provisions thereof.

 

(c)  Notwithstanding anything herein to the contrary, each Lender and the Agents acknowledge that the Lien and security interest granted to the Collateral Agent pursuant to the Security Documents and the exercise of any right or remedy by the Collateral Agent thereunder, are subject to the provisions of the Intercreditor Agreement.  In the event of a conflict or any inconsistency between the terms of the Intercreditor Agreement and the Security Documents, the terms of the Intercreditor Agreement shall prevail.

 

SECTION 9.18.  USA PATRIOT Act Notice .  Each Lender and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies the Borrower and the Guarantors that pursuant to the requirements of the USA PATRIOT Act, it is required to obtain, verify and record information that identifies the Borrower and the Guarantors, which information includes the name and address of the Borrower and the Guarantors and other information that will allow such Lender or the Administrative Agent, as applicable, to identify the Borrower and the Guarantors in accordance with the USA PATRIOT Act.

 

SECTION 9.19.  No Fiduciary Duty .  The parties hereto hereby acknowledge that each Agent, each Joint Lead Arranger, each Syndication Agent, each Documentation Agent, each Lender and their respective Affiliates (collectively, solely for purposes of this paragraph, the “Lenders”), may have economic interests that conflict with those of any Loan Party, its stockholders and/or their respective Affiliates.  The Borrower agrees, on behalf of itself and each

 

145



 

other Loan Party, that nothing in the Loan Documents or otherwise will be deemed to create an advisory, fiduciary or agency relationship or fiduciary or other implied duty between any Lender, on the one hand, and any Loan Party, its stockholders or their respective Affiliates on the other hand.  The Borrower acknowledges and agrees, on behalf of itself and each other Loan Party, that (a) the transactions contemplated by the Loan Documents (including the exercise of rights and remedies hereunder and thereunder) are arm’s-length commercial transactions between the Lenders, on the one hand, and the Loan Parties, on the other hand, and (b) in connection therewith and with the process leading thereto, (i) no Lender has assumed an advisory or fiduciary responsibility in favor of any Loan Party, with respect to the transactions contemplated hereby (or the exercise of rights or remedies with respect thereto) or the process leading thereto (irrespective of whether any Lender has advised, is currently advising or will advise any Loan Party, on other matters) or any other obligation to any Loan Party except the obligations expressly set forth in the Loan Documents and (ii) each Lender is acting solely as principal and not as the agent or fiduciary of any Loan Party.

 

The Borrower acknowledges and agrees, on behalf of itself and each other Loan Party, that it has consulted its own legal and financial advisors to the extent it deemed appropriate and that it is responsible for making its own independent judgment with respect to such transactions and the process leading thereto.  The Borrower agrees, on behalf of itself and each other Loan Party, that it will not claim that any Lender has rendered advisory services of any nature or respect, or owes a fiduciary or similar duty to any Loan Party, in connection with such transaction or the process leading thereto.

 

Goldman Sachs & Co. has been retained by the Borrower as financial advisor and Barclays Capital Inc. has been retained by Cerberus as financial advisor (each in such capacity, a “Financial Advisor”), in each case in connection with the potential sale of all or a portion of the businesses of the Borrower and its Subsidiaries, including the NAI Sale.  Each party hereto agrees to such retention, and further agrees not to assert any claim it might allege based on any actual or potential conflicts of interest that might be asserted to arise or result from (x) on the one hand, the engagement of Goldman Sachs & Co, in its capacity as a Financial Advisor and, on the other hand, Goldman Sachs’ and its affiliates’ relationships with such party as described and referred to herein or (y) on the one hand, the engagement of Barclays Capital Inc., in its capacity as a Financial Advisor and, on the other hand, Barclays’ and its affiliates’ relationships with such party as described and referred to herein.  Nothing in this Agreement shall affect the agreements and obligations between the Borrower and Goldman Sachs & Co. as a Financial Advisor.

 

SECTION 9.20.  Collateral and Guarantee Matters .  Each of the Lenders irrevocably authorizes the Collateral Agent, at its option and in its discretion:

 

(a)  to release any Lien on any property granted to or held by the Collateral under any Loan Document (i) upon termination of the Commitments and payment in full of all Obligations (other than contingent, unasserted indemnification obligations) (the occurrence of the events described in this clause (i), the “ Discharge of Obligations ”), (ii) that is sold or otherwise disposed of or to be sold or otherwise disposed of as part of or in connection with any sale or other disposition permitted hereunder (including, without limitation, in connection with a receivables facility described in clause (k) of the definition of Permitted Indebtedness) or under any other Loan Document and, in the case of any

 

146



 

Lien on any Real Estate Collateral Property, which sale or other disposition is made in accordance with the requirements of Section 9.21, (iii) in connection with a release permitted by and in accordance with Section 9.21 or (iv) subject to Section 9.08, if approved, authorized or ratified in writing by the Required Lenders; and

 

(b)  to release any Guarantor from its obligations under each of the Security Agreement and the Facility Guaranty if such Person ceases to be a Subsidiary as a result of a transaction permitted under the Loan Documents.

 

Upon request by the Administrative Agent at any time, the Required Lenders will confirm in writing the Collateral Agent’s authority to release its interest in particular types or items of property, or to release any Guarantor from its obligations under the Facility Guaranty pursuant to this Section 9.20. In each case as specified in this Section 9.20, the Administrative Agent will, at the Borrower’s expense, execute and deliver to the applicable Loan Party such documents as such Loan Party may reasonably request to evidence the release of such item of Collateral from the assignment and security interest granted under the Security Documents, or to release such Guarantor from its obligations under the Facility Guaranty, in each case in accordance with the terms of the Loan Documents and this Section 9.20.

 

The Collateral Agent shall not be responsible for or have a duty to ascertain or inquire into any representation or warranty regarding the existence, value or collectability of the Collateral, the existence, priority or perfection of the Collateral Agent’s Lien thereon, or any certificate prepared by any Loan Party in connection therewith, nor shall the Administrative Agent be responsible or liable to the Lenders for any failure to monitor or maintain any portion of the Collateral.

 

SECTION 9.21.  Substitution, Release and Addition of Term Loan Priority Collateral .  Subject to the terms and conditions of this Section 9.21 and the requirements of Section 5.25, the Borrower may, after the Closing Date, (i) substitute one or more fee-owned or ground leased Real Estate sites (and the Equipment located thereon owned by the Borrower or any of its Subsidiaries) as Term Loan Priority Collateral (each, a “ Substitute Property ”), in lieu of any one or more Real Estate Collateral Properties (each, a “ Replaced Property ”) and the Related Real Estate Collateral located thereon (each such substitution, once the requirements of Section 5.25 and this Section 9.21 have been satisfied with respect to such Replaced Property, a “ Term Loan Priority Collateral Substitution ”), provided that no such substitution shall affect the amount of time permitted for taking any action in accordance with Section 5.25, (ii) request that the Collateral Agent release its Lien on any Real Estate Collateral Property and the Related Real Estate Collateral located thereon, or on the Related Real Estate Collateral located on any Material Related Collateral Location (each, a “ Release Property ”) and, with respect to such Release Property, to the extent the relevant requirements of this Section 9.21 are satisfied, the Collateral Agent shall release such Lien in accordance with Section 9.20 (each, a “ Term Loan Priority Collateral Release ”) and (iii) add one or more fee-owned or ground leased Real Estate sites (and the Equipment located thereon owned by the Borrower or any of its Subsidiaries) or Related Real Estate Collateral on additional Material Related Collateral Locations (in each case including pursuant to the requirements of Section 5.12 or Section 5.17) (each, an “ Additional Property ”) as Term Loan Priority Collateral (each, a “ Term Loan Priority Collateral Addition ”); provided that the following conditions have been satisfied:

 

147



 

(a)  In the case of a Term Loan Priority Collateral Substitution, (i) the Administrative Agent shall have received at least 15 Business Days’ prior written notice thereof (or such shorter notice as may be approved by the Administrative Agent) identifying the proposed Substitute Property and Replaced Property, (ii) if the New Valuation Conditions are satisfied with respect to such Substitute Property and/or Replaced Property, the Administrative Agent shall have received a New Valuation of such Substitute Property and/or Replaced Property to the extent requested by the Administrative Agent within 10 Business Days of receiving the notice described in clause (i) above, (iii) both before and after giving effect thereto, no Default or Event of Default shall have occurred and be continuing, (iv) the Administrative Agent shall have received a Restated Collateral List after giving effect thereto, (v)(a) the aggregate Value of the Term Loan Priority Collateral set forth on such Restated Collateral List shall not be less than the Value of the Term Loan Priority Collateral on the Applicable Collateral List (prior to giving effect to such restatement), (b) the Related Real Estate Collateral on a pro forma basis after giving effect to such Term Loan Priority Collateral Substitution shall not constitute more than 45% of the aggregate Value of the Real Estate Collateral Properties and the Related Real Estate Collateral and (c) the owned Real Estate Collateral Properties on a pro forma basis after giving effect to such Term Loan Priority Collateral Substitution shall constitute at least 50% of the aggregate Value of the Real Estate Collateral Properties and the Related Real Estate Collateral, (vi) no fee-owned Real Estate Collateral Property shall have been replaced by a ground leased Real Estate site, (vii)  the Term Loan Priority Collateral Requirements shall have been satisfied with respect to the applicable Substitute Property and (viii) at the request of the Administrative Agent, the Administrative Agent shall have received (A) a certificate of a Responsible Officer of the Borrower (1) certifying that the requirements set forth in the foregoing clauses (i) through (vii) have been satisfied and (2) setting forth in reasonable detail the calculations described in clause (v), if applicable, all in form and substance reasonably satisfactory to the Administrative Agent, (B) a certificate of a Responsible Officer of the Borrower of the type described in Section 4.01(g)(ii), and (C) (1) a certificate of a Responsible Officer of the Borrower as to factual matters supporting the legal opinions delivered pursuant to this clause (C) and (2) a customary no conflicts opinion from Borrower’s counsel, in each case in form and substance satisfactory to the Administrative Agent, opining that the grants of security interests in the Term Loan Priority Collateral on the Restated Collateral List (after giving effect to such Term Loan Priority Collateral Substitution) will not violate the SVU Indenture or any other Material Indebtedness or trigger any of the equal and ratable sharing provisions thereof.

 

(b)  In the case of a Term Loan Priority Collateral Release, (i) the Administrative Agent shall have received at least 15 Business Days’ prior written notice thereof (or such shorter notice as may be approved by the Administrative Agent) identifying the proposed Release Property, (ii) both before and after giving effect thereto, no Default or Event of Default shall have occurred and be continuing, (iii) unless the Term Loan Priority Collateral Release is in connection with a Permitted Disposition, if the New Valuation Conditions are satisfied with respect to such Release Property, the Administrative Agent shall have received a New Valuation of such Release Property to the extent requested by the Administrative Agent within 10 Business Days of receiving the notice described in clause (i) above, (iv) unless the Term Loan Priority Collateral Release is in connection with a Permitted Disposition, (a) the aggregate Value of the Term Loan Priority Collateral set forth on such Restated Collateral List shall not be less than the Value of the Term Loan Priority Collateral on the Applicable Collateral List (prior to giving effect to such restatement), (b) the Related Real Estate Collateral on a pro forma basis after giving effect to

 

148



 

such Term Loan Priority Collateral Release shall not constitute more than 45% of the aggregate Value of the Real Estate Collateral Properties and the Related Real Estate Collateral and (c) the owned Real Estate Collateral Properties on a pro forma basis after giving effect to such Term Loan Priority Collateral Release shall constitute at least 50% of the aggregate Value of the Real Estate Collateral Properties and the Related Real Estate Collateral, (v) the Administrative Agent shall have received a Restated Collateral List after giving effect thereto, (vi) to the extent applicable, the Borrower shall have made any payments required by Section 2.13 and (vii) the Administrative Agent shall have received an officer’s certificate of a Responsible Officer of the Borrower (A) certifying that the requirements set forth in the foregoing clauses (i) through (vi) have been satisfied and (B) setting forth in reasonable detail the calculations described in clause (iv), if applicable, all in form and substance reasonably satisfactory to the Administrative Agent.

 

(c)  In the case of a Term Loan Priority Collateral Addition, (i) the Administrative Agent shall have received at least 15 Business Days’ prior written notice thereof (or such shorter notice as may be approved by the Administrative Agent) identifying the proposed Additional Property, (ii) if the New Valuation Conditions are satisfied with respect to such Additional Property, (at the request of the Administrative Agent) the Administrative Agent shall have received a New Valuation of such Additional Property to the extent requested by the Administrative Agent within 10 Business Days of receiving the notice described in clause (i) above, (iii) the Administrative Agent shall have received a Restated Collateral List after giving effect thereto, (iv) the Term Loan Priority Collateral Requirements shall have been satisfied with respect to the applicable Additional Property, except to the extent additional time to satisfy the Term Loan Priority Collateral Requirements is provided elsewhere in this Agreement, (v) the Administrative Agent shall have received (A) an officer’s certificate of a Responsible Officer of the Borrower certifying that the requirements set forth in the foregoing clauses (i) through (iv) have been satisfied, all in form and substance reasonably satisfactory to the Administrative Agent, (B) a certificate of a Responsible Officer of the Borrower in substantially the form of the certificate required to be delivered pursuant to Section 4.01(g)(ii) and (C) (1) a certificate of a Responsible Officer of the Borrower as to factual matters supporting the legal opinions delivered pursuant to this clause (C) and (2)  a customary no conflicts opinion from Borrower’s counsel, in each case in form and substance satisfactory to the Administrative Agent, opining that the grants of security interests in the Term Loan Priority Collateral on the Restated Collateral List (after giving effect to such Term Loan Priority Collateral Addition) will not violate the SVU Indenture or any other Material Indebtedness or trigger any of the equal and ratable sharing provisions thereof.

 

[ Signature Pages Follow ]

 

149



 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.

 

 

SUPERVALU INC.,

 

as Borrower

 

 

 

 

 

By:

/s/ Sherry Smith

 

 

Name:

Sherry M. Smith

 

 

Title:

Executive Vice President and Chief

 

 

 

Financial Officer

 

 

 

 

 

ADVANTAGE LOGISTICS — SOUTHEAST, INC.

 

EASTERN REGION MANAGEMENT CORPORATION

 

BUTSON’S ENTERPRISES, INC.

 

FF ACQUISITION, L.L.C.

 

FOODARAMA LLC

 

RICHFOOD, INC.

 

RICHFOOD HOLDINGS, INC.

 

RICHFOOD PROCUREMENT, L.L.C.

 

SCOTT’S FOOD STORES, INC.

 

SFW HOLDING CORP.

 

SFW LICENSING CORP.

 

SHOP ‘N SAVE ST. LOUIS, INC.

 

SHOP ‘N SAVE WAREHOUSE FOODS, INC.

 

SHOPPERS FOOD WAREHOUSE CORP.

 

SUPER RITE FOODS, INC.

 

SUPERMARKET OPERATORS OF AMERICA INC.

 

SUPERVALU HOLDINGS, INC.

 

SUPERVALU HOLDINGS-PA LLC

 

By: SUPERVALU Holdings, Inc., its sole member

 

SUPERVALU PHARMACIES, INC.

 

SUPERVALU TRANSPORTATION, INC.

 

SUPERVALU TTSJ, INC.

 

SVH REALTY, INC.

 

W. NEWELL & CO., LLC

 

 

 

 

 

By:

/s/ Sherry Smith

 

 

Name:

Sherry M. Smith

 

 

Title:

Vice President

 

SUPERVALU INC.

TERM LOAN CREDIT AGREEMENT

 



 

 

CHAMPLIN 2005 L.L.C.

 

 

By: SUPERVALU INC., its sole member

 

 

 

 

 

By:

/s/ Sherry Smith

 

 

Name:

Sherry M. Smith

 

 

Title:

Executive Vice President and Chief

 

 

 

Financial Officer

 

 

 

 

 

MORAN FOODS, LLC

 

 

 

 

 

By:

/s/ Santiago Roces

 

 

Name:

Santiago Roces

 

 

Title:

Chief Executive Officer

 

 

 

 

 

SAVE-A-LOT TYLER GROUP, LLC

 

 

 

 

 

By:

/s/ Sherry Smith

 

 

Name:

Sherry M. Smith

 

 

Title:

Senior Vice President, Finance, Treasurer

 

SUPERVALU INC.

TERM LOAN CREDIT AGREEMENT

 



 

 

GOLDMAN SACHS BANK USA,

 

as Administrative Agent and Collateral Agent and

 

as a Lender

 

 

 

 

 

By:

/s/ Robert Ehudin

 

 

Robert Ehudin

 

 

Authorized Signatory

 

SUPERVALU INC.

TERM LOAN CREDIT AGREEMENT

 



 

SCHEDULES TO TERM LOAN CREDIT AGREEMENT

 

This document constitutes the Schedules referred to in the TERM LOAN CREDIT AGREEMENT (“ Agreement ”) entered into as of March 21, 2013, among SUPERVALU INC., a Delaware corporation (the “ Borrower ”), the Guarantors (such term and each other capitalized term used but not defined in this introductory statement having the meaning given it in Article I of the Agreement) party hereto, the Lenders party hereto and GOLDMAN SACHS BANK USA (“ Goldman Sachs ”), as administrative agent (in such capacity, including any successor thereto, the “ Administrative Agent ”) and as collateral agent (in such capacity, including any successor thereto, the “ Collateral Agent ”) for the Lenders, and contains information referenced in the Agreement, including certain disclosures and exceptions to the representations and warranties of the Borrower and Guarantors made in the Agreement.  Capitalized terms used in these Schedules but not otherwise defined herein shall have the same meanings ascribed to such terms in the Agreement.

 

The numbered sections and subsections referenced in these Schedules correspond to the numbered sections and subsections of the Agreement.  The headings in these Schedules are for reference purposes only.  Any matter disclosed in any section or subsection of these Schedules shall be deemed to respond to the related section or subsection of the Agreement and any other sections or subsections of the Agreement or these Schedules where the applicability of such disclosure is reasonably discernible, even if there is no cross-reference in such section or sub-section to such other sections or subsections.  To the extent a disclosure in these Schedules makes reference to or describes a provision of any agreement or other document, such reference or description is qualified in its entirety by the actual terms and provisions of such agreement or other document.  Agreements and documents referenced within an agreement or document disclosed herein shall not be deemed to be disclosed pursuant to these Schedules unless specifically referred to in these Schedules.

 

The fact that any item of information is disclosed in these Schedules shall not be construed as an admission of liability with respect to the matters covered by such information.  No implication should be drawn that any information provided in these Schedules is necessarily material or otherwise required to be disclosed, or that the inclusion of such information establishes or implies a standard of materiality, a standard for what is or is not a Material Adverse Effect or any other standard contrary to that set forth in the Agreement.  No disclosure in these Schedules relating to any possible breach, violation of, or noncompliance with, any Law or contract or other topic to which such disclosure is applicable shall be construed as an admission or indication that any such breach, violation or noncompliance exists or has actually occurred.  These Schedules are qualified in their entirety by reference to the specific provisions of the Agreement and the representations, warranties, covenants and agreements to which the disclosures herein pertain and to the extent these Schedules modify such representations, warranties, covenants or agreements of the Borrowers and the Guarantors, it shall become a part of and be read together with the representations, warranties, covenants or agreements of the Borrowers and the Guarantors contained in the Agreement.

 

The information contained herein is in all events subject to Section 9.16 of the Agreement.

 



 

Schedule 2.01

 

Lenders and Commitments

 

Lender

 

Commitment

 

Goldman Sachs Bank USA

 

$

1,500,000,000

 

Total:

 

$

1,500,000,000

 

 

Sch. 2.01 - 1



 

Schedule 3.01

 

Loan Parties Organizational Information

 

Name

 

Type

 

State

 

Org #

 

FEIN

1.

Advantage Logistics - Southeast, Inc.

 

Corporation

 

Alabama

 

168-431

 

[**]

2.

Butson’s Enterprises, Inc.

 

Corporation

 

New
Hampshire

 

005800

 

[**]

3.

Champlin 2005 L.L.C.

 

LLC

 

Delaware

 

3928464

 

[**]

4.

Eastern Region Management Corporation

 

Corporation

 

Virginia

 

0392564-1

 

[**]

5.

FF Acquisition, L.L.C.

 

LLC

 

Virginia

 

S023920-4

 

[**]

6.

Foodarama LLC

 

LLC

 

Delaware

 

2053114

 

[**]

7.

Moran Foods, LLC

 

LLC

 

Missouri

 

LC1235424

 

[**]

8.

Richfood Holdings, Inc.

 

Corporation

 

Delaware

 

3051876

 

[**]

9.

Richfood, Inc.

 

Corporation

 

Virginia

 

0043962-0

 

[**]

10.

Richfood Procurement, L.L.C.

 

LLC

 

Virginia

 

S031919-6

 

[**]

11.

Save-A-Lot Tyler Group, LLC

 

LLC

 

Missouri

 

LC0035762

 

[**]

12.

Scott’s Food Stores, Inc.

 

Corporation

 

Indiana

 

1991110292

 

[**]

13.

SFW Holding Corp.

 

Corporation

 

Delaware

 

2704081

 

[**]

14.

SFW Licensing Corp.

 

Corporation

 

Delaware

 

2403136

 

[**]

15.

Shop ‘N Save St. Louis, Inc.

 

Corporation

 

Missouri

 

00473225

 

[**]

16.

Shop ‘N Save Warehouse Foods, Inc.

 

Corporation

 

Missouri

 

00243351

 

[**]

17.

Shoppers Food Warehouse Corp.

 

Corporation

 

Ohio

 

1825906

 

[**]

18.

Super Rite Foods, Inc.

 

Corporation

 

Delaware

 

2019543

 

[**]

19.

Supermarket Operators of America Inc.

 

Corporation

 

Delaware

 

0849965

 

[**]

20.

SUPERVALU Holdings, Inc.

 

Corporation

 

Missouri

 

00101405

 

[**]

21.

SUPERVALU Holdings - PA LLC

 

LLC

 

Pennsylvania

 

2893444

 

[**]

22.

SUPERVALU INC.

 

Corporation

 

Delaware

 

194304

 

41-0617000

23.

SUPERVALU Pharmacies, Inc.

 

Corporation

 

Minnesota

 

4X-214

 

[**]

24.

SUPERVALU Transportation Inc.

 

Corporation

 

Minnesota

 

7C-793

 

[**]

25.

SUPERVALU TTSJ, Inc.

 

Corporation

 

Delaware

 

5292861

 

[**]

26.

SVH Realty, Inc.

 

Corporation

 

Delaware

 

2694033

 

[**]

27.

W. Newell & Co., LLC

 

LLC

 

Delaware

 

3932547

 

[**]

 


** Denotes confidential information that has been omitted from the exhibit and filed separately, accompanied by a confidential treatment request, with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934.

 

Sch. 3.01 - 1



 

Schedule 3.06

 

Litigation

 

·                   In September 2008, a class action complaint was filed against the Company, as well as International Outsourcing Services, LLC (“IOS”), Inmar, Inc., Carolina Manufacturer’s Services, Inc., Carolina Coupon Clearing, Inc. and Carolina Services, in the United States District Court in the Eastern District of Wisconsin. The plaintiffs in the case are a consumer goods manufacturer, a grocery co-operative and a retailer marketing services company who allege on behalf of a purported class that the Company and the other defendants (i) conspired to restrict the markets for coupon processing services under the Sherman Act and (ii) were part of an illegal enterprise to defraud the plaintiffs under the Federal Racketeer Influenced and Corrupt Organizations Act. The plaintiffs seek monetary damages, attorneys’ fees and injunctive relief. The Company intends to vigorously defend this lawsuit, however all proceedings have been stayed in the case pending the result of the criminal prosecution of certain former officers of IOS.

 

·                   In December 2008, a class action complaint was filed in the United States District Court for the Western District of Wisconsin against the Company alleging that a 2003 transaction between the Company and C&S Wholesale Grocers, Inc. (“C&S”) was a conspiracy to restrain trade and allocate markets. In the 2003 transaction, the Company purchased certain assets of the Fleming Corporation as part of Fleming Corporation’s bankruptcy proceedings and sold certain assets of the Company to C&S which were located in New England. Since December 2008, three other retailers have filed similar complaints in other jurisdictions. The cases have been consolidated and are proceeding in the United States District Court for the District of Minnesota. The complaints allege that the conspiracy was concealed and continued through the use of non-compete and non-solicitation agreements and the closing down of the distribution facilities that the Company and C&S purchased from each other. Plaintiffs are seeking monetary damages, injunctive relief and attorneys’ fees. The Company is vigorously defending these lawsuits. Separately from these civil lawsuits, on September 14, 2009, the United States Federal Trade Commission (“FTC”) issued a subpoena to the Company requesting documents related to the C&S transaction as part of the FTC’s investigation into whether the Company and C&S engaged in unfair methods of competition. The Company cooperated with the FTC. On March 18, 2011, the FTC notified the Company that it had determined that no additional action was warranted by the FTC and that it had closed its investigation.

 

Sch. 3.06 - 1



 

Schedule 3.08(b)

 

I.                                         Condemnation Proceedings

 

None.

 

II.                                    Owned Real Estate

 

[**]

 


** Denotes confidential information that has been omitted from the exhibit and filed separately, accompanied by a confidential treatment request, with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934.

 

Sch. 3.08(b) - 1



 

Schedule 3.08(c)

 

Leases

 

[**]

 


** Denotes confidential information that has been omitted from the exhibit and filed separately, accompanied by a confidential treatment request, with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934.

 

Sch. 3.08(c) - 1



 

Schedule 3.09

 

Environmental Matters

 

None.

 

Sch. 3.09 - 1



 

Schedule 3.10

 

Insurance

 

[**]

 


** Denotes confidential information that has been omitted from the exhibit and filed separately, accompanied by a confidential treatment request, with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934.

 

Sch. 3.10 - 1



 

Schedule 3.13

 

Subsidiaries; Other Equity Investments

 

[**]

 


** Denotes confidential information that has been omitted from the exhibit and filed separately, accompanied by a confidential treatment request, with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934.

 

Sch. 3.13 - 1



 

Schedule 3.17

 

Intellectual Property Matters

 

None.

 

Sch. 3.17 - 1



 

Schedule 3.21(a)

 

Demand Deposit Accounts

 

(See attached)

 

[**]

 


** Denotes confidential information that has been omitted from the exhibit and filed separately, accompanied by a confidential treatment request, with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934.

 

Sch. 3.21(a) - 1



 

Schedule 3.21(b)

 

Credit Card Arrangements

 

EFT Services and License Agreement dated March 27, 1997, between BUYPASS Corporation and SUPERVALU INC., as amended.

 

Agreement for American Express Card Acceptance/Supermarket dated October 29, 1999, between American Express Travel Related Services Company, Inc., and SUPERVALU Holdings, Inc., as amended.

 

Merchant Services Agreement effective as of October 1, 2006, between Discover Financial Services LLC and SUPERVALU INC., as amended.

 

Cash Over Amendment to Merchant Services Agreement dated July 15, 2011, between DFS Services LLC and SUPERVALU INC.

 

Promotional Merchant Fee Letter Agreement dated December 22, 2008, between DFS Services LLC and SUPERVALU INC., as amended by letter agreement dated August 1, 2011, between the parties.

 

Visa Promotional Agreement dated as of October 1, 2011, between Visa U.S.A. Inc. and SUPERVALU INC.

 

Sch. 3.21(b) - 1



 

Schedule 5.02

 

Financial and Collateral Reporting

 

In addition to the other materials and information required to be provided pursuant to the terms of the Agreement, the Loan Parties shall provide Administrative Agent, on the applicable day specified below, the following documents (each in such form and detail as the Administrative Agent from time to time may specify):

 

1.                                       On (i) the tenth (10 th ) day of each Fiscal Period (or, if such day is not a Business Day, on the next succeeding Business Day) or (ii) on the fourth Business day of each week as of the closing of business on the immediately preceding week, upon the occurrence and during the continuation of an Accelerated Borrowing Base Delivery Event (as defined in the ABL Credit Agreement), supporting source documents for the Borrowing Base Certificate (as defined in the ABL Credit Agreement) delivered in accordance with Section 6.02(a)(ii) of the ABL Credit Agreement.

 

2.                                       Within fifteen (15) days of the end of each Fiscal Period for the immediately preceding Fiscal Period:

 

(a)                                  Statement of store activity for the Borrower and its Restricted Subsidiaries on a Consolidated basis in form reasonably acceptable the Administrative Agent;

 

(b)                                  Reconciliation of the stock ledger to the general ledger and the calculation of Excess Availability (as defined in the ABL Credit Agreement);

 

(c)                                   Agings of Wholesale Trade Receivables (as defined in the ABL Credit Agreement), together with a reconciliation to the general ledger; and

 

(d)                                  Agings of Pharmacy Receivables (as defined in the ABL Credit Agreement), together with a reconciliation to the general ledger.

 

Capitalized terms used herein and not defined herein shall have the meanings specified in the Agreement.

 

Sch. 5.02 - 1



 

Schedule 6.01

 

Existing Liens

 

 

 

State

 

Debtor

 

Secured Party

 

Filing Information

 

Collateral

1.

 

VA

 

FF Acquisition, L.L.C.

 

American Bank Note Company, as Agent for the United States Postal Service

 

File No. 02092373445
Filed: 9/23/2002
Lapse Date: 9/23/2012

Continuation
File No. 07070670920
Filed: 7/6/2007

 

The Consigned Goods are all USPS postage delivered to Consignee for sale to the public from all establishments maintained by Consignee, including, but not limited to, First Class postage, etc.

2.

 

VA

 

FF Acquisition, L.L.C.

 

American Greetings Corporation

 

File No. 10031072883
Filed: 3/10/2010
Lapse Date: 3/10/2015

 

Inventory sold or delivered by Secured Party or its affiliates to Debtor, etc.

3.

 

MO

 

Shop ‘n Save Warehouse Foods Inc

 

American Bank Note Company, as Agent for the United States Postal Service

 

File No. 4176312
Filed: 6/15/2001
Lapse Date: 6/15/2016

Continuation
File No. 20060066189K
Filed: 6/14/2006

Continuation
File No. 20110062748B
Filed: 6/7/2011

 

The Consigned Goods are all USPS postage delivered to Consignee for sale to the public from all establishments maintained by Consignee, including, but not limited to, First Class postage, etc.

4.

 

MO

 

Shop ‘N Save Warehouse Foods, Inc.

 

American Greetings Corporation

 

File No. 20100025327C
Filed: 3/10/2010
Lapse Date: 3/10/2015

 

Inventory sold or delivered by Secured Party or its affiliates to Debtor, etc.

5.

 

OH

 

Shoppers Food Warehouse Corp.

 

American Greetings Corporation

 

File No. OH00140730723
Filed: 3/10/2010
Lapse Date: 3/10/2015

 

Inventory sold or delivered by Secured Party or its affiliates to Debtor, etc.

6.

 

DE

 

SUPERVALU Inc.

 

Banc of America Leasing & Capital, LLC

 

File No. 20073461901
Filed: 9/12/2007
Lapse Date: 9/12/2012

 

[Specific equipment]

7.

 

DE

 

SUPERVALU Inc.

 

Banc of America Leasing & Capital, LLC

 

File No. 20074524020
Filed: 11/29/2007
Lapse Date: 11/29/2012

 

[Specific equipment]

 

Sch. 6.01 - 1



 

8.

 

DE

 

SUPERVALU Inc.

 

Banc of America Leasing & Capital, LLC

 

File No. 20074868013
Filed: 12/26/2007
Lapse Date: 12/26/2012

 

[Specific equipment]

9.

 

DE

 

SUPERVALU Inc.

 

Banc of America Leasing & Capital, LLC

 

File No. 20080895555
Filed: 3/13/2008
Lapse Date: 3/13/2013

Collateral Amendment
File No. 20080999456
Filed: 3/21/2008

 

[Specific equipment]

10.

 

DE

 

SUPERVALU Inc.

 

Banc of America Leasing & Capital, LLC

 

File No. 20081416633
Filed: 4/23/2008
Lapse Date: 4/23/2013

 

[Specific equipment]

11.

 

DE

 

SUPERVALU Inc.

 

Banc of America Leasing & Capital, LLC

 

File No. 20081974151
Filed: 6/10/2008
Lapse Date: 6/10/2013

 

[Specific equipment]

12.

 

DE

 

SUPERVALU Inc.

 

Banc of America Leasing & Capital, LLC

 

File No. 20081974219
Filed: 6/10/2008

Lapse Date: 6/10/2013

 

[Specific equipment]

13.

 

DE

 

SUPERVALU Inc.

 

Banc of America Leasing & Capital, LLC

 

File No. 20081996477
Filed: 6/11/2008
Lapse Date: 6/11/2013

 

[Specific equipment]

14.

 

DE

 

SUPERVALU, Inc.

 

American Color Graphics, Inc.

 

File No. 20082237202
Filed: 6/30/2008
Lapse Date: 6/30/2013

 

[Specific equipment]

15.

 

DE

 

SUPERVALU Inc.

 

Banc of America Leasing & Capital, LLC

 

File No. 20082839361

Filed: 8/20/2008
Lapse Date: 8/20/2013

 

[Specific equipment]

 

Sch. 6.01 - 2



 

16.

 

DE

 

SUPERVALU Inc.

 

MassMutual Asset Finance LLC

 

File No. 20082840617
Filed: 8/20/2008
Lapse Date: 8/20/2013

Secured Party Amendment
File No. 20083388772
Filed: 10/7/2008

Secured Party Amendment
File No. 20083394192
Filed: 10/7/2008

Partial Assignment
File No. 20083395132
Filed: 10/7/2008

Full Assignment
File No. 20083436589
Filed: 10/10/2008

 

[Specific equipment]

17.

 

DE

 

SUPERVALU Inc

 

Teradata Operations, Inc.

 

File No. 20090427317
Filed: 2/9/2009
Lapse Date: 2/9/2014

 

All products, equipment, etc. acquired from Secured Party and all proceeds, etc.

18.

 

DE

 

SUPERVALU Inc.

 

National City Commercial Capital Company, LLC

 

File No. 20091208096
Filed: 4/7/2009
Lapse Date: 4/7/2014

 

[Specific equipment]

19.

 

DE

 

SUPERVALU Inc.

 

National City Commercial Capital Company, LLC

 

File No. 20091208195
Filed: 4/7/2009
Lapse Date: 4/7/2014

 

[Specific equipment]

20.

 

DE

 

SUPERVALU Inc

 

NCR Corporation

 

File No. 20092513429
Filed: 8/5/2009
Lapse Date: 8/5/2014

 

All products, including without limitations, equipment, components, software, deliverables and supplies, whether now or hereafter acquired, which are acquired (directly or indirectly) from NCR Corporation and/or the acquisition of which is financed by NCR Corporation, and all proceeds.

21.

 

DE

 

SUPERVALU Inc.

 

Banc of America Leasing & Capital, LLC

 

File No. 20100447478
Filed: 2/9/2010
Lapse Date: 2/9/2015

 

[Specific equipment]

 

Sch. 6.01 - 3



 

22.

 

DE

 

SUPERVALU Inc.

 

American Greetings Corporation

 

File No. 20100806459
Filed: 3/10/2010
Lapse Date: 3/10/2015

 

Inventory sold or delivered by Secured Party or its affiliates to Debtor, etc.

23.

 

DE

 

SUPERVALU Inc.

 

The Bank of Holland

 

File No. 20102851487
Filed: 8/16/2010
Lapse Date: 8/16/2015

Full Assignment
File No. 20102977639
Filed: 8/25/2010

 

[Specific equipment]

24.

 

DE

 

SUPERVALU Inc.

 

Banc of America Leasing & Capital, LLC

 

File No. 20114575224
Filed: 11/30/2011
Lapse Date: 11/30/2016

 

[Specific equipment]

25.

 

DE

 

SUPERVALU Inc.

 

Banc of America Leasing & Capital, LLC

 

File No. 20114575240
Filed: 11/30/2011
Lapse Date: 11/30/2016

 

[Specific equipment]

26.

 

DE

 

SUPERVALU Inc.

 

Nestle Dreyer’s Ice Cream Company

 

File No. 20115000438
Filed: 12/20/2011
Lapse Date: 12/20/2016

 

[Specific consigned products]

27.

 

DE

 

SUPERVALU Inc.

 

Papyrus-Recycled Greetings, Inc.

 

File No. 20122461111
Filed: 6/26/2012
Lapse Date: 6/26/2017

 

Inventory sold or delivered by Secured Party to Debtor on a scan based trading and consignment basis, etc.

28.

 

MO

 

SUPERVALU Holdings, Inc.

 

American Bank Note Company, as Agent for the United States Postal Service

 

File No. 20050068215M
Filed: 6/29/2005
Lapse Date: 6/29/2015

Continuation
File No. 20100060676K
Filed: 6/9/2010

 

The Consigned Goods are all USPS postage delivered to Consignee for sale to the public from all establishments maintained by Consignee, including, but not limited to, First Class postage, etc.

29.

 

MO

 

SUPERVALU Holdings, Inc.

 

American Greetings Corporation

 

File No. 20100025328E
Filed: 3/10/2010
Lapse Date: 3/10/2015

 

Inventory sold or delivered by Secured Party or its affiliates to Debtor, etc.

 

Sch. 6.01 - 4



 

Capital Lease Obligations as of March 21, 2013

 

[**]

 

One or more of the Loan Parties is contingently liable for leases that have been assigned to various third parties in connection with facility closings and dispositions.  The Loan Parties could be required to satisfy the obligations under the leases if any of the assignees are unable to fulfill their lease obligations.  Due to the wide distribution of the Loan Parties’ assignments among third parties, and various other remedies available, the Loan Parties believe the likelihood that the Loan Parties will be required to assume a material amount of these obligations is remote.

 

PURCHASE AND SALE AGREEMENTS

 

[**]

 

ADDITIONAL ENCUMBRANCES

 

[**]

 


** Denotes confidential information that has been omitted from the exhibit and filed separately, accompanied by a confidential treatment request, with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934.

 

Sch. 6.01 - 5



 

Schedule 6.02

 

Investments

 

I.             Non-Wholly Owned Entities:

 

[**]

 

II.            Investment Policy

 

SUPERVALU INC.

INVESTMENT GUIDELINES

August 22, 2012

 

PURPOSE:

 

To state clearly the responsibility for the investment of surplus cash, the approved types of investments and their maturities.

 

POLICY STATEMENT:

 

Cash temporarily not needed for Company operations or to reduce debt will be invested by the Cash Management Team (in Treasury Services), following approval from either the Treasurer, Controller, Vice President—Tax, or Chief Financial Officer.  The investments will be of appropriate maturities to meet projected cash requirements of the Company, and will be made according to the following written guidelines.  The objectives of such investments will be, in order of importance: safety of principal, liquidity of funds, diversification and investment yield.

 

GUIDELINES:

 

All surplus Company cash will be forwarded to the parent.  Subsidiaries are not authorized to invest cash with outside parties without prior approval from either the Treasurer, Controller or Chief Financial Officer.

 

APPROVED INVESTMENTS:

 

1.                                       U.S. Treasury Securities and general obligations fully guaranteed with respect to principal and interest by the U. S. Government.

 

2.                                       Obligations of U.S. Government Agencies (i.e. GNMA’s and FNMA’s).

 


** Denotes confidential information that has been omitted from the exhibit and filed separately, accompanied by a confidential treatment request, with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934.

 

Sch. 6.02 - 1



 

3.                                       Commercial paper of prime quality (rated A-1 by Standard and Poor’s and P-1 by Moody’s), purchased through recognized money market dealers (see list of “Authorized Dealers”).

 

4.                                       Certificates of Deposit and Time Deposits of Banks and their overseas branches are limited to:

 

a.                                       Top 50 worldwide banks as measured by assets, and

 

b.                                       Banks rated A—1/AA and/or P—1/Aa or better

 

5.                                       Repurchase Agreements, with authorized money market dealers (see list of “Authorized Dealers”) or major banks as defined in item #4, executed against those securities approved for direct purchase (1-4 above). The current market value of the collateral must cover the principal amount of the investment and collateral must be held in our name.

 

6.                                       Diversified money market investment funds (see list of “Authorized Money Market Funds”) meeting the following conditions:

 

a.                                       AAAm rating from Standard and Poor’s or AAA rating from Moody’s

 

b.                                       Total assets of at least $5 billion

 

c.                                        Rule 2a-7 compliant

 

d.                                       At least three years of history

 

e.                                        Previously approved by either the Treasurer, Controller, or Chief Financial Officer

 

7.                                       Other investments, including commercial paper rated A-2/P-2, may be allowed from time to time with specific written authorization from the Chief Financial Officer or the Treasurer.

 

8.                                       During a period of time where demand deposit accounts (DDA’s) are federally guaranteed by the Temporary Liquitidy Guarantee Program or any other similar FDIC guarantee programs, surplus funds may be held in the company’s DDA accounts at authorized participating depository banks.

 

9.                                       Surplus funds may be held at authorized depository banks not participating in guarantee programs described in #8 above to earn the earnings credit rate that meet one of the following requirements:

 

a.                                       A Long Term issuer rating no lower than

 

i.                                           A3 from Moody’s or

 

ii.                                        A- from Standard and Poor’s

 

Sch. 6.02 - 2



 

b.                                       Market Credit Default Swap (CDS) rate of no greater than 250 basis points

 

INVESTMENT LIMITATIONS:

 

1.                                       All short-term investments shall be denominated in U.S. dollars.

 

2.                                       A maximum principal investment of up to:

 

a.                                       $50 million per money market fund (determined by CUSIP number)

 

b.                                       $25 million per DDA Account

 

3.                                       For direct securities purchases, the commitment to any one name will be limited to $10 million with the exception of U.S. Government and U.S. Government Agencies (no limit).

 

4.                                       All securities that are purchased will be held in “safekeeping” by the seller or by a Safekeeping Agent (see list of “Authorized Dealers”) named by SUPERVALU INC. who will issue trade confirmation for all transactions.

 

5.                                       Maturities for investments are not to exceed 90 days.

 

AUTHORIZED INSTITUTIONS/ FUNDS:

 

The following lists include the Authorized Dealers, Authorized Money Market Funds and Authorized Depository Banks that have been approved as part of the investment policy.

 

Authorized Dealers:

 

1.

Bank of America

2.

US Bank

3.

Wells Fargo

 

Authorized Money Market Funds:

 

1.

JP Morgan Government Fund

2.

Federated Government Obligations Fund

3.

Fidelity Institutional Government Fund

4.

Dreyfus Government Cash Management Fund (BNY Mellon)

5.

Columbia Government Reserves Fund (Bank of America)

6.

First American Government Obligations

7.

Goldman Sachs Financial Square Government Fund

8.

BlackRock Liquidity FedFund Institutional Fund

9.

Western Asset Institutional Government Fund

10.

Funds For Institutions Government Fund (Merrill Lynch)

 

Sch. 6.02 - 3



 

Authorized Depository Banks Participating in Government Sponsored Guarantee Programs

 

1.

Bank of America

2.

US Bank

3.

PNC Bank

4.

JP Morgan

5.

Wells Fargo

6.

Northern Trust

7.

Banco Santander (Sovereign)

8.

TCF Bank

9.

Union Bank

10.

Key Bank

 

Nothing in this Schedule 6.02 modifies any Loan Party’s obligations contained in (i) the proviso at the end of the definition of Permitted Investments or (ii) Section 6.13 of the ABL Credit Agreement.

 

Sch. 6.02 - 4



 

Schedule 6.03

 

Existing Indebtedness

 

Part (a):

 

 

 

MATURITY

 

FACE VALUE BALANCE March 21, 2013

 

Secured/Unsecured

 

SUPERVALU DEBT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SVU NOTES PAYABLE:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DUE 11/15/14

 

11/15/2014

 

489,890,000.00

 

Unsecured

 

DUE 5/1/16

 

5/1/2016

 

1,000,000,000.00

 

Unsecured

 

 

 

 

 

 

 

 

 

TOTAL SVU NOTES PAYABLE:

 

 

 

1,489,890,000.00

 

 

 

 

 

 

 

 

 

 

 

SVU MORTGAGES AND OTHER DEBT:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[**]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SVU MORTGAGES AND OTHER DEBT:

 

 

 

29,081,683.61

 

 

 

 

 

 

 

 

 

 

 

TOTAL COMPANY DEBT

 

 

 

1,518,971,683.61

 

 

 

 

Part (b):

 

Existing Letters of Credit

 

[**]

 


** Denotes confidential information that has been omitted from the exhibit and filed separately, accompanied by a confidential treatment request, with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934.

 

Sch. 6.03 - 1



 

Commercial Letters of Credit

No commercial letters of credit outstanding on the Closing Date.

 

Surety Bonds

 

[**]

 

Part (c):

 

Swap Termination Value

 

[**]

 

Part (f):

 

Capital Lease Obligations as of March 21, 2013

 

[**]

 

One or more of the Loan Parties is contingently liable for leases that have been assigned to various third parties in connection with facility closings and dispositions.  The Loan Parties could be required to satisfy the obligations under the leases if any of the assignees are unable to fulfill their lease obligations.  Due to the wide distribution of the Loan Parties’ assignments among third parties, and various other remedies available, the Loan Parties believe the likelihood that the Loan Parties will be required to assume a material amount of these obligations is remote.

 

Part (g):

 

None.

 

Part (i):

 

Financial Guaranties

 

[**]

 


** Denotes confidential information that has been omitted from the exhibit and filed separately, accompanied by a confidential treatment request, with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934.

 

Sch. 6.03 - 2



 

Retailer Lease Guaranties

 

[**]

 

Other Lease Guaranties

 

[**]

 

CALIFORNIA WORKERS’ COMPENSATION GUARANTIES

 

(Unsecured)

 

July 27, 2006

 

Agreement of Assumption and Guarantee of Workers’ Compensation Liabilities executed by SUPERVALU for the benefit of Albertson’s, Inc. in consideration for the Department of Industrial Relations permission for Albertson’s, Inc. to operate as certified self-insured employers in the State of California.  SUPERVALU agrees to assume and guarantee to pay all liabilities and obligations which Albertson’s, Inc. may incur as a self-insurer of its California workers’ compensation liabilities on or after 7/27/2006.

 

August 8, 2007

 

Agreement of Assumption and Guarantee of Workers’ Compensation Liabilities executed by SUPERVALU for the benefit of American Drug Stores LLC in consideration for the Department of Industrial Relations permission for American Drug Store LLC to operate as certified self-insured employers in the State of California.  SUPERVALU agrees to assume and guarantee to pay all liabilities and obligations which American Drug Store LLC may incur as a self-insurer of its California workers’ compensation liabilities arising on or after 8/3/2007.

 

September 8, 2010

 

Agreement of Assumption and Guarantee of Worker’s Compensation Liabilities executed by SUPERVALU for the benefit of New Albertson’s, Inc. in consideration for the Department of Industrial Relations permission for New Albertson’s, Inc. to operate as certified self-insured employers in the State of California.  SUPERVALU agrees to assume and guarantee to pay all liabilities and obligations which New Albertson’s, Inc. may incur as a self-insurer of its California workers’ compensation liabilities on or after 9/8/2010.

 

Sch. 6.03 - 3



 

ASC NOTES GUARANTEE

 

(Unsecured)

 

On July 6, 2005, the Borrower executed that certain ASC Notes Guarantee, dated as of July 6, 2005, guaranteeing the obligations of ASC under the ASC Indenture and the ASC Notes.

 

Sch. 6.03 - 4



 

Schedule 6.09

 

Transactions with Affiliates

 

Investments in Non-Wholly Owned Entities:

 

[**]

 


** Denotes confidential information that has been omitted from the exhibit and filed separately, accompanied by a confidential treatment request, with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934.

 

Sch. 6.09 - 1



 

Schedule 9.01(a)

 

Web Address:

 

http://www.supervaluinvestors.com

 

Sch. 9.01(a) - 1



 

Schedule 9.01(b)

 

Administrative Agent’s Notice and Account Information

 

Notices:

 

Goldman Sachs Bank USA

c/o Goldman Sachs Group, Inc.

6031 Connection Drive

Irving, Texas 75039

Attention: Ken Moua

Telephone: 972-368-2746

Email: gs-sbdagency-borrowernotices@ny.email.gs.com

 

Account Information:

Entity Name: Goldman Sachs Bank USA

Bank Name: Citibank N.A.

ABA: [**]

A/C #: [**]

City: New York

 


** Denotes confidential information that has been omitted from the exhibit and filed separately, accompanied by a confidential treatment request, with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934.

 

Sch. 9.01(b) - 1



 

Exhibit A
to the Credit Agreement

 

ADMINISTRATIVE QUESTIONNAIRE

 

Legal Name of Institution/Fund :

 

 

 

 

 

 

 

 

Address:

 

 

 

 

 

 

 

 

Parent Company :

 

 

 

 

 

Signature Block:

 

 

 

 

By:

 

 

 

 

 

 

 

 

 

 

Attention:

 

Phone:

 

 

 

Address:

 

Fax:

 

 

 

 

 

 

 

 

 

Loan Activity To :

 

 

 

 

 

Attention:

 

Phone:

 

 

 

Address:

 

Fax:

 

 

 

 

 

 

USD Payment Instructions :

 

 

 

 

 

Bank Name:

 

 

 

 

 

ABA #:

 

 

 

 

 

Account Name:

 

 

 

 

 

Account Number:

 

 

 

 

 

Further credit to:

 

 

 

 

 

Account number:

 

 

 

A-1



 

Financials, Amendments, Credit Documentation, Voting :

 

Attention:

 

Phone:

 

 

 

Address:

 

Fax:

 

 

 

 

 

 

Tax ID Information :

 

 

 

 

 

Tax ID number:

 

Please attach appropriate tax form

 

 

 

Indicate “Offshore” if applicable

 

 

 

 

 

 

Fund Type (Check One) :

 

o             Hedge Fund

 

o             Private Investment Vehicle

 

o             Mutual Fund

 

o             CLO/CDO

 

A-2



 

Exhibit B
to the Credit Agreement

 

FORM OF ASSIGNMENT AND ACCEPTANCE

 

This Assignment and Acceptance Agreement (the “ Assignment ”) is dated as of the Effective Date set forth below and is entered into by and between [ Insert name of Assignor ] (the “ Assignor ”) and [ Insert name of Assignee ] (the “ Assignee ”).  Capitalized terms used but not defined herein shall have the meanings given to them in the Credit Agreement identified below (as amended, the “ Credit Agreement ”), receipt of a copy of which is hereby acknowledged by the Assignee.  The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment as if set forth herein in full.

 

For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the Assignee, and the Assignee hereby irrevocably purchases and assumes from the Assignor, subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by the Administrative Agent as contemplated below, the interest in and to all of the Assignor’s rights and obligations under the Credit Agreement and any other documents or instruments delivered pursuant thereto that represents the amount and percentage interest identified below of all of the Assignor’s outstanding rights and obligations under the facility identified below (the “ Assigned Interest ”).  Such sale and assignment is without recourse to the Assignor and, except as expressly provided in this Assignment, without representation or warranty by the Assignor.

 

1.

 

Assignor:

 

                                                    

 

 

 

 

 

2.

 

Assignee:

 

                                                    is an Eligible Assignee [and a[n] [Lender/Affiliate of a Lender/Related Fund]] 1

 

 

 

 

 

3.

 

Borrower:

 

SUPERVALU Inc.

 

 

 

 

 

4.

 

Administrative Agent:

 

Goldman Sachs Bank USA, as Administrative Agent under the Credit Agreement

 

 

 

 

 

5.

 

Credit Agreement:

 

Term Loan Credit Agreement dated as of March 21, 2013 among SUPERVALU Inc., a Delaware corporation, the Guarantors party thereto, the Lenders parties thereto and Goldman Sachs Bank USA, as Administrative Agent and Collateral Agent

 


1                                            Select as applicable.

 

B-1



 

6.

 

Assigned Interest:

 

 

 

Aggregate
Amount of Loans for all
Lenders

 

Amount of Loans
Assigned

 

Percentage
Assigned of Loans
2

 

$

 

 

$

 

 

 

%

 

[Remainder of page intentionally left blank]

 


2                                            Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans of all Lenders thereunder.

 

B-2



 

Effective Date:                                  , 20       [TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]

 

The terms set forth in this Assignment are hereby agreed to:

 

 

 

ASSIGNOR :

 

 

 

 

 

[NAME OF ASSIGNOR]

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

ASSIGNEE :

 

 

 

 

 

[NAME OF ASSIGNEE]

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

 

Consented to and Accepted:

 

 

 

 

 

GOLDMAN SACHS BANK USA,

 

 

as Administrative Agent

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

[Consented to:

 

 

 

 

 

SUPERVALU INC.

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:] 3

 

 

 


3                                            If required pursuant to Section 9.04(b)  of the Credit Agreement.

 

B-3



 

Annex 1
to Assignment and Acceptance

 

SUPERVALU INC.
TERM LOAN CREDIT AGREEMENT

 

STANDARD TERMS AND CONDITIONS FOR ASSIGNMENT
AND ACCEPTANCE AGREEMENT

 

1.             Representations and Warranties .

 

1.1          Assignor .  The Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of any lien, encumbrance or other adverse claim, (iii) its Commitment and the outstanding balances of its Loans, without giving effect to assignments thereof that have not become effective, are as set forth in this Assignment and (iv) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and to consummate the transactions contemplated hereby; and (b) except as set forth in clause (a) above, makes no representation or warranty and assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Credit Agreement, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Credit Agreement, any other Loan Document or any other instrument or document delivered pursuant thereto, other than this Assignment (herein, collectively, the “ Loan Documents ”), (iii) the financial condition of Borrower or any of its Subsidiaries or (iv) the performance or observance by the Borrower or any of its Subsidiaries of any of their respective obligations under any Loan Document or any other instrument or document furnished pursuant thereto.

 

1.2          Assignee .  The Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement, (ii) it meets all requirements of an Eligible Assignee under the Credit Agreement, (iii) it has received a copy of the Credit Agreement, together with copies of the most recent financial statements referred to in Section 3.05(a)  thereof or delivered pursuant to Section 5.01 thereof, as applicable, and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and (iv) attached to this Assignment is any documentation required to be delivered by it pursuant to the terms of the Credit Agreement, duly completed and executed by the Assignee, including to the extent required pursuant to Section 2.20(e)  of the Credit Agreement, two properly completed originals of IRS Forms W-8BEN, W-8ECI, W-8EXP, W-8IMY or W-9 and, if applicable, a portfolio interest exemption certificate substantially in the form of Exhibit O to the Credit Agreement; (b) agrees that (i) it will, independently and without reliance upon the Administrative Agent, the Collateral Agent, the Assignor or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Credit Agreement are required to be performed by it as a Lender; and (c) appoints and authorizes the Administrative Agent and the Collateral Agent to take such action as agent on its behalf and to

 

B-4



 

exercise such powers under the Credit Agreement as are delegated to the Administrative Agent and the Collateral Agent, respectively, by the terms thereof, together with such powers as are reasonably incidental thereto.

 

2.             Payments .  From and after the Effective Date, Administrative Agent shall make all payments in respect of the Assigned Interest (including payments of principal, interest, fees and other amounts) to the Assignor for amounts which have accrued to but excluding the Effective Date and to the Assignee for amounts which have accrued from and after the Effective Date.

 

3.             General Provisions .  This Assignment shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns.  This Assignment may be executed in any number of counterparts, which together shall constitute one instrument.  Delivery of an executed counterpart of a signature page of this Assignment by telecopy or other electronic transmission shall be effective as delivery of a manually executed counterpart of this Assignment.  THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.

 

[Remainder of page intentionally left blank]

 

B-5



 

Exhibit C
to the Credit Agreement

 

FORM OF BORROWING REQUEST

 

Goldman Sachs Bank USA, as Administrative Agent

for the Lenders referred to below

c/o Goldman Sachs Group, Inc.

6031 Connection Drive

Irving, Texas 75039

Attention: Ken Moua

Telephone: 972-368-2746

Email: gs-sbdagency-borrowernotices@ny.email.gs.com

 

[Date]

 

Ladies and Gentlemen:

 

The undersigned, SUPERVALU INC., a Delaware corporation (the “ Borrower ”), refers to that certain Term Loan Credit Agreement, dated as of March 21, 2013 (as may be amended, restated, replaced, refinanced, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), among the Borrower, the Guarantors party thereto, the Lenders party thereto (the “ Lenders ”) and GOLDMAN SACHS BANK USA, as Administrative Agent for the Lenders (in such capacity, including any successor thereto, the “ Administrative Agent ”) and Collateral Agent for the Secured Parties.  Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Credit Agreement.  The Borrower hereby gives you notice pursuant to Section 2.03 of the Credit Agreement that it requests a Borrowing under the Credit Agreement, and in connection therewith sets forth below the terms on which such Borrowing is requested to be made:

 

(A)                                Date of Borrowing
(which is a Business Day):

 

(B)                                Principal Amount of Borrowing:

 

(C)                                Class of Borrowing: 4

 

(D)                                Type of Borrowing: 5

 

(E)                                 Interest Period and the last day thereof: 6

 


4                      Specify Borrowing of Loans or Borrowing of Incremental Loans

 

5                      Specify Eurodollar Borrowing or ABR Borrowing.

 

6                      Applicable only for Eurodollar Borrowings and shall be subject to the definition of “Interest Period” and Section 2.02 of the Credit Agreement and end not later than the Maturity Date.

 

C-1



 

(F)                                  Funds are requested to be disbursed to the Borrower’s account with:
                                                    (Account No.                                   ).

 

The Borrower hereby represents and warrants to the Administrative Agent and the Lenders that, on the date of this Borrowing Request and on the date of the related Borrowing, the conditions to lending specified in Section 4.01(b)  of the Credit Agreement have been satisfied.

 

[Remainder of page intentionally left blank]

 

C-2



 

IN WITNESS WHEREOF, the undersigned has caused this Borrowing Request to be duly executed and delivered by its officer as of the date first above written.

 

 

SUPERVALU INC.

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

C-3



 

Exhibit D
to the Credit Agreement

 

FORM OF COMPLIANCE CERTIFICATE

 

The undersigned hereby certifies that he or she is the [                      ] of SUPERVALU Inc. (the “ Borrower ”), and certifies on behalf of the Borrower, and not in his or her individual capacity, as follows:

 

I have reviewed the terms of the Term Loan Credit Agreement, dated as of March 21, 2013 (as amended, restated, replaced, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), among the Borrower, the Guarantors party thereto, the Lenders party thereto from time to time and Goldman Sachs Bank USA, as Administrative Agent for the Lenders (in such capacity, including any successor thereto, the “ Administrative Agent ”) and Collateral Agent for the Secured Parties, and I have made, or have caused to be made under my supervision, a review in reasonable detail of the transactions and condition of the Borrower and its Subsidiaries during the accounting period covered by the attached financial statements.

 

Terms defined in the Credit Agreement and not otherwise defined in this Compliance Certificate (this “ Compliance Certificate ”) shall have the meanings assigned to such terms in the Credit Agreement.  Section references herein relate to the Credit Agreement unless stated otherwise.  In the event of any conflict between the calculations set forth in this Compliance Certificate and the manner of calculation required by the Credit Agreement, the terms of the Credit Agreement shall govern and control.

 

The examinations described in the second paragraph above did not disclose the existence of any condition or event which constitutes an Event of Default or Default as of the date of this Compliance Certificate, except as set forth in a separate attachment, if any, to this Compliance Certificate, specifying the nature and extent thereof and the corrective action taken or proposed to be taken with respect thereto by the Borrower.

 

This Compliance Certificate is delivered in accordance with Section 5.02(a)(i)  of the Credit Agreement.  This Compliance Certificate is delivered for the fiscal [ quarter ][ year ] (the “ Test Period ”) ended [            ] , 20 [      ] (the “ Test Date ”).  A computation of the Cumulative Credit Amount and a description of the uses thereof, in each case during the Test Period, are set forth on Annex A hereto.  [ A statement of reconciliation conforming the financial statements delivered herewith to any changes in GAAP used in the preparation thereof and copy of management’s discussion and analysis with respect to such financial statements are attached as Annex B hereto ] 8.

 

[Remainder of page intentionally left blank]

 


7                      Insert title of applicable Responsible Officer.

 

8                      Delivery of Annex A required only in the event of a change in GAAP used in the preparation of the financial statements delivered pursuant to Sections 5.01(a)  and 5.01(b)  of the Credit Agreement.

 

D-1



 

The foregoing certifications, together with the computations set forth in Annex A hereto [ ,   the statement of reconciliation and management’s discussion and analysis attached as Annex B hereto ] and the financial statements delivered with this Compliance Certificate in support hereof, are made and delivered as of [            ] , 20 [      ] pursuant to Section 5.02(a)(i)  of the Credit Agreement.

 

 

SUPERVALU INC.

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title: [                    ]9

 


9                      Insert title of applicable Responsible Officer.

 

D-2



 

Annex A
to Compliance Certificate

 

FOR THE FISCAL [QUARTER][YEAR] ENDING [                ] , 20 [  ]

 

A.             Computation of Cumulative Credit Amount :

 

[1.           CONSOLIDATED NET INCOME

 

 

 

 

 

 

 

(i)              the net income or loss of the Borrower and the Restricted Subsidiaries for such period determined on a Consolidated basis in accordance with GAAP

 

$

[      ,      ,      ]

 

 

 

 

 

 

 

minus

 

 

 

 

 

(ii)           (a)          income of any Restricted Subsidiary to the extent that the declaration or payment of dividends or similar distributions by such Restricted Subsidiary of such income is not at the time permitted by operation of the terms of its charter or any agreement, instrument, judgment, decree, statute, rule or governmental regulation applicable to such Restricted Subsidiary

 

$

[      ,      ,      ]

 

 

 

 

 

(b)          the income of any Person (other than the Borrower and the Restricted Subsidiaries) in which any other Person (other than the Borrower and the Restricted Subsidiaries or any director holding qualifying shares in compliance with applicable law) owns an Equity Interest, except to the extent of the amount of dividends or other distributions actually paid to the Borrower and the Restricted Subsidiaries during such period

 

$

[      ,      ,      ]

 

 

 

 

 

(c)           the income or loss of any Person accrued prior to the date it becomes a Subsidiary of the Borrower or is merged into or consolidated with the Borrower or any Restricted Subsidiary or the date that such Person’s assets are acquired by the Borrower or any Restricted Subsidiary

 

$

[      ,      ,      ]

 

 

 

 

 

(d)          any gains attributable to Dispositions

 

$

[      ,      ,      ]

 

 

 

 

 

 

 

equals

 

 

 

 

 

Consolidated Net Income

 

$

[      ,      ,      ]

 

 

D-3



 

2.               CONSOLIDATED EBITDA

 

 

 

 

 

 

 

(i)              Consolidated Net Income for such period

 

$

[      ,      ,      ]

 

 

 

 

 

 

 

plus

 

 

 

 

 

(ii)           (a)          Consolidated Interest Expense for such period

 

$

[      ,      ,      ]

 

 

 

 

 

(b)          Consolidated income tax expense for such period

 

$

[      ,      ,      ]

 

 

 

 

 

(c)           depreciation and amortization expense for such period

 

$

[      ,      ,      ]

 

 

 

 

 

(d)          extraordinary, non-recurring or unusual charges for such period (including such charges reflected in the financial statements provided to the Lenders prior to the Closing Date)

 

$

[      ,      ,      ]

 

 

 

 

 

(e)           non-cash charges, losses or expenses (and minus the amount of such cash gains) resulting from the application of FAS No. 123(R)

 

$

[      ,      ,        ]

 

 

 

 

 

(f)            Transaction Expenses incurred within one year after the Closing Date

 

$

[      ,      ,      ]

 

 

 

 

 

 

 

minus

 

 

 

 

 

(iii)        (a)          cash payments made during such period on account of reserves and restructuring charges

 

$

[      ,      ,      ]

 

 

 

 

 

(b)          cash payments made during such period on account of non-cash extraordinary, non-recurring or unusual charges added to Consolidated Net Income pursuant to Section (ii)(d) in a previous period

 

$

[      ,      ,      ]

 

 

 

 

 

(c)           cash payments made during such period on account of non-cash charges, losses or expenses resulting from the application of FAS No. 123(R) added to Consolidated Net Income pursuant to Section (ii)(e) in a previous period

 

$

[      ,      ,      ]

 

 

 

 

 

(d)          extraordinary, non-recurring or unusual gains for such period to the extent included in determining Consolidated Net Income

 

$

[      ,      ,      ]

 

 

 

 

 

 

 

equals

 

 

 

 

 

Consolidated EBITDA

 

$

[      ,      ,      ]

 

 

D-4



 

3.               EXCESS CASH FLOW

 

 

 

 

 

 

 

(i)              (a)          Consolidated EBITDA for such period

 

$

[      ,      ,      ]

 

 

 

 

 

(b)          reductions to non-cash working capital of the Borrower and the Restricted Subsidiaries for such period ( i.e. , the decrease, if any, in Current Assets minus Current Liabilities from the beginning to the end of such period)

 

$

[      ,      ,      ]

 

 

 

 

 

(c)           the amount by which the Pension Expense for such period exceeds the Cash Pension Contribution for such period, if any

 

$

[      ,      ,      ]

 

 

 

 

 

(d)          the Net Cash Proceeds of any Other Asset Sale (whether a single transaction or a series of related transactions) received by the Borrower and the Restricted Subsidiaries during such period in which such Net Cash Proceeds are greater than $50,000 but less than $5,000,000

 

$

[      ,      ,      ]

 

 

 

 

 

 

 

minus

 

 

 

 

 

(ii)           (a)          the amount of Taxes payable in cash by the Borrower and the Restricted Subsidiaries with respect to such period

 

$

[      ,      ,      ]

 

 

 

 

 

(b)          Consolidated Interest Expense for such period paid in cash

 

$

[      ,      ,      ]

 

 

 

 

 

(c)           Capital Expenditures made in cash during such period, except to the extent financed with the proceeds of Indebtedness, equity issuances, casualty proceeds, condemnation proceeds or other proceeds that would not be included in Consolidated EBITDA

 

$

[      ,      ,      ]

 

 

 

 

 

(d)          scheduled repayments of Indebtedness (other than Indebtedness in respect of the ABL Facility) made in cash by the Borrower and the Restricted Subsidiaries during such period, but only to the extent that the Indebtedness so repaid by its terms cannot be reborrowed or redrawn and such repayments do not occur in connection with a refinancing of all or any portion of such Indebtedness

 

$

[      ,      ,      ]

 

 

 

 

 

(e)           additions to non-cash working capital for such period ( i.e. , the increase, if any, in Current Assets minus Current Liabilities from the beginning to the end of such period)

 

$

[      ,      ,      ]

 

 

 

 

 

(f)            the amount by which the Cash Pension Contribution for such period exceeds the Pension Expense for such period, if any

 

$

[      ,      ,      ]

 

 

 

 

 

(g)           the amount of Restricted Payments paid in cash during such period to the extent permitted under Section 6.06 of the Credit Agreement

 

$

[      ,      ,      ]

 

 

 

 

 

 

 

equals

 

 

 

 

 

Excess Cash Flow

 

$

[      ,      ,      ]]

10

 


10                                       Include calculation of Excess Cash Flow (including calculations of its constituent parts) for any certificate delivered in connection with the Borrower’s Fiscal Year end.

 

D-5



 

4.               RETAINED EXCESS CASH FLOW AMOUNT

 

 

 

 

 

 

 

(i)              sum of the amounts of Excess Cash Flow for each Fiscal Year (or portion thereof) ending on or prior to the date of determination for which the amount of Excess Cash Flow shall have been calculated as provided in Section 2.13(c) of the Credit Agreement and with respect to which the payments required under Section 2.13(c) of the Credit Agreement have been made, consisting of:

 

 

 

 

 

 

 

(a)          the period from the Closing Date until February 22, 2014

 

$

[      ,      ,      ]

 

 

 

 

 

 

 

plus

 

 

 

 

 

[ (b)      Fiscal Year ending February [    ], 20[    ] ] 11

 

$

[      ,      ,      ]

 

 

 

 

 

 

 

equals

 

 

 

 

 

 

 

$

[      ,      ,      ]

 

 

 

 

 

 

 

minus

 

 

 

 

 

(ii)           the sum at the time of determination of the aggregate amount of prepayments required to be made pursuant to Section 2.13(c) of the Credit Agreement through the date of determination calculated without regard to any reduction in such sum that resulted from voluntary prepayments of the Loans referred to in Section 2.13(c)(y) of the Credit Agreement, consisting of:

 

 

 

 

 

 

 

(a)          the period from the Closing Date until February 22, 2014

 

$

[      ,      ,      ]

 

 

 

 

 

 

 

plus

 

 

 

 

 

[ (b)      Fiscal Year ending February [    ], 20[    ] ] 12

 

$

[      ,      ,      ]

 

 

 

 

 

 

 

equals

 

 

 

 

 

 

 

$

[      ,      ,      ]

 

 

 

 

 

 

 

equals

 

 

 

 

 

Retained Excess Cash Flow Amount :

 

$

[      ,      ,      ]

 

 


11                                       Insert additional years, as applicable.

 

12                                       Insert additional years, as applicable.

 

D-6



 

5.               CUMULATIVE CREDIT AMOUNT

 

 

 

 

 

 

 

(a)          Retained Excess Cash Flow Amount

 

$

[      ,      ,      ]

 

 

 

 

 

 

 

plus

 

 

 

 

 

(b)          Cumulative amount of Net Cash Proceeds received by the Borrower after the Closing Date from issuances of the Borrower’s Qualified Capital Stock (but excluding any such sale or issuance by the Borrower of its Equity Interests upon the exercise of any warrant or option by directors, officers or employees of any Loan Party or any Subsidiary)

 

$

[      ,      ,      ]

 

 

 

 

 

 

 

minus

 

 

 

 

 

(c)           Cumulative amount of Permitted Investments made in reliance on clause (o) of the definition of “Permitted Investments”

 

$

[      ,      ,      ]

 

 

 

 

 

 

 

minus

 

 

 

 

 

(d)          Cumulative amount of Restricted Payments made in reliance on Section 6.06(iv) of the Credit Agreement

 

$

[      ,      ,      ]

 

 

 

 

 

 

 

minus

 

 

 

 

 

(e)           Cumulative amount of payments of Indebtedness made in reliance on Section 6.07(a)(vii) of the Credit Agreement

 

$

[      ,      ,      ]

 

 

 

 

 

 

 

equals

 

 

 

 

 

Cumulative Credit Amount

 

$

[      ,      ,      ]

 

 

D-7



 

B.             Description of Cumulative Credit Amount Uses :

 

Type of Use

 

Description of Use

 

 

 

Permitted Investments made pursuant to clause (o) of the definition thereof

 

 

 

 

 

Restricted Payments made pursuant to Section 6.06(iv)  of the Credit Agreement

 

 

 

 

 

Payments of Indebtedness made pursuant to Section 6.07(a)(vii)  of the Credit Agreement

 

 

 

D-8



 

Annex B
to Compliance Certificate

 

STATEMENT OF RECONCILIATION
AND
MANAGEMENT’S DISCUSSION AND ANALYSIS

 

(See attached)

 

D-9



 

Exhibit E
to the Credit Agreement

 

FORM OF PERFECTION CERTIFICATE

 

(See attached)

 



 

PERFECTION CERTIFICATE

 

SUPERVALU INC., et al.

 

[          ], 20[    ]

 

In connection with (i) that certain Amended and Restated Credit Agreement (the “ ABL Credit Agreement ”) to be entered into by and among SUPERVALU INC., a Delaware corporation having an office at 7075 Flying Cloud Drive, Eden Prairie, Minnesota (“ SUPERVALU ”), the other Borrowers and Guarantors party thereto (together with SUPERVALU, individually, a “ Company ”, and collectively, the “ Companies ”), the Lenders party thereto from time to time, and Wells Fargo Bank, National Association, as administrative agent (in such capacity, the “ ABL Administrative Agent ”) and as collateral agent, and (ii) that certain Term Loan Credit Agreement (the “ Term Loan Credit Agreement ” together with the ABL Credit Agreement, collectively, the “ Credit Agreements ” and terms used but not defined herein shall have the meaning given in the Credit Agreements) to be entered into by and among SUPERVALU, the lenders from time to time party thereto and Goldman Sachs Bank USA, as administrative agent (in such capacity, “ Term Loan Administrative Agent ” together with the ABL Administrative Agent, collectively, the “ Administrative Agents ”), SUPERVALU hereby certifies on behalf of itself and the Companies under the Credit Agreements as follows:

 

I.                                         Current Information

 

A.                                     Legal Name, Organizations, Corporate Functions, Jurisdiction of Organization and Organizational Identification Number . The full and exact legal name (as it appears in its certificate or articles of organization, limited liability membership agreement, or similar organizational documents, in each case as amended to date), the type of organization, the jurisdiction of organization and the state organizational identification number and federal taxpayer identification number) of each Company are as follows:

 

·                   Attached hereto as Schedule I.A.

 

B.                                     Chief Executive Offices, Mailing Addresses and other Locations .  The mailing address of each Loan Party for purposes of completing a UCC-1 financing statement is:

 

c/o SUPERVALU INC.

7075 Flying Cloud Drive

Attention: Treasurer

Eden Prairie, MN 55344

 

Schedules V.A. and V.B. contain the mailing addresses of distribution centers at which each Company maintains any collateral or any books and records relating thereto.

 

C.                                     Warehousemen, Bailees, etc .   Except as set forth below, no warehouseman or bailee has possession of any inventory of any Company:

 

·                   Attached hereto as Schedule I.C.

 

D.                                     Changes in Names, Jurisdiction of Organization or Corporate Structure Except as set forth below, n o Company has changed its name, jurisdiction of organization or its corporate structure in any way (e.g. by merger, consolidation, change in corporate form, change in jurisdiction of organization or otherwise) within the past four (4) months.

 



 

E.                                     Acquisitions of Equity Interests or Assets No Company has acquired the controlling equity interests of another entity or substantially all the assets of another entity within the past four (4) months.

 

F.                                      Corporate Ownership and Organizational Structure Attached as Exhibit A hereto is a true and correct organizational chart showing the ownership of the Companies.

 

G.                                    Federal Tax Return Attached hereto as Schedule I.G. are true and correct copies of the cover pages of the federal tax returns most recently filed by SUPERVALU with the Internal Revenue Service.

 

II.                                    Investment Related Property

 

A.                                     Securities Schedule II.A. sets forth a true and accurate copy of the investment policy of the SUPERVALU.

 

B.                                     Securities Accounts Set forth below is a list of all securities accounts of each Company:

 

Name of Company

 

Type of Account

 

Name & Address of Financial
Institutions/Financial Intermediary

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

C.                                     Deposit Accounts .   Set forth below is a list of all bank accounts (checking, savings, money market or the like) of the Companies:

 

·                   Attached hereto as Schedule II.C.

 

D.                                     Instruments Set forth below is a list of all third party instruments held by or payable to the Companies:

 

·                   Attached hereto as Schedule II.D.

 

III.                               Intellectual Property

 

A.                                     Set forth below is a list of United States registered copyrights, patents, trademarks and other intellectual property owned by any Company:

 

·                   Attached hereto as Schedule III.

 

B.                                     Set forth below is a list of United States registered trademarks owned by Save-A-Lot Food Stores, Ltd.:

 

·                   Attached hereto as Schedule III.B.

 

IV.                                Commercial Tort Claims The Companies currently have the following commercial tort claims against other parties, none of which constitute Related Collateral (as defined in the Security Agreement).

 

·                   Attached hereto as Schedule IV.

 



 

V.                                     Real Estate Related UCC Collateral .

 

·                   Schedule V.A. sets forth, as of the date hereof, the street address, county and state of each site of land that is fee owned by any Company or any Restricted Subsidiary.

 

·                   Schedule V.B. sets forth, as of the date hereof, each lease that constitutes a Material Contract or a Ground Lease (pursuant to the Closing Date Collateral List) or a lease of any location where ABL Priority Collateral is located, in each case to which any Loan Party or any Restricted Subsidiary is a party as tenant or subtenant, together with the street address, county and state of the property subject thereto, and the name and contact information of the lessor thereunder.

 

VI.                                AUTHORITY TO FILE FINANCING STATEMENTS

 

The undersigned, on behalf of the Companies, hereby authorizes the Administrative Agents to file financing or continuation statements, and amendments thereto, in all jurisdictions and with all filing offices as each Administrative Agent may determine, in its sole discretion, are necessary or advisable to perfect the security interest granted or to be granted to the Administrative Agents.  Such financing statements may describe the collateral in the same manner as described in the Security Documents (to be defined in the Credit Agreements) or may contain an indication or description of collateral that describes such property in any other manner as the Administrative Agents may determine, in its sole discretion, is necessary, advisable or prudent to ensure the perfection of the security interest in the collateral granted to the Administrative Agents, including, without limitation, describing such property as “all assets” or “all personal property.”

 



 

IN WITNESS WHEREOF, the undersigned hereto have caused this Perfection Certificate to be executed as of the date above first written by its officer thereunto duly authorized.

 

 

 

SUPERVALU INC., on behalf of the Companies

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 



 

Exhibit A

 



 

Schedule I.A

 

Entity Information

 



 

Schedule I.C

 

Description of Warehousemen

 



 

Schedule I.G

 

Tax Return

 



 

Schedule II.A

 

Investment Policy

 



 

Schedule II.C

 

Deposit Accounts

 



 

Schedule II.D

 

Instruments

 



 

Schedule III

 

Pledged Intellectual Property

 



 

Schedule III.A

 

Save-A-Lot Food Stores, Ltd. Intellectual Property

 



 

Schedule IV

 

Commercial Tort Claims

 



 

Schedule V.A.i

 

Owned Real Estate

 



 

Schedule V.A.ii

 

Leases

 

E-1



 

Exhibit F
to the Credit Agreement

 

FORM OF SECURITY AGREEMENT

 

(See attached)

 

1



 

EXECUTION COPY

 

 

TERM LOAN SECURITY AGREEMENT

 

dated as of

 

March 21, 2013

 

by

 

SUPERVALU INC.
as Borrower,

 

and

 

THE GUARANTORS PARTY HERETO FROM TIME TO TIME

 

in favor of

 

GOLDMAN SACHS BANK USA,
as Collateral Agent

 

 

2



 

Table of Contents

 

 

 

ARTICLE I DEFINITIONS AND INTERPRETATION

1

 

 

SECTION 1.1 Definitions

1

SECTION 1.2 Interpretation

6

SECTION 1.3 Perfection Certificate

6

 

 

ARTICLE II GRANT OF SECURITY AND SECURED OBLIGATIONS

6

 

 

SECTION 2.1 Pledge; Grant of Security Interest

6

SECTION 2.2 Secured Obligations

7

SECTION 2.3 Security Interest

7

 

 

ARTICLE III PERFECTION; SUPPLEMENTS; FURTHER ASSURANCES; USE OF COLLATERAL

8

 

 

SECTION 3.1 Delivery of Securities Collateral

8

SECTION 3.2 Perfection of Security Interest in Pledged Interests

9

SECTION 3.3 Financing Statements and Other Filings; Maintenance of Perfected Security Interest

9

SECTION 3.4 Other Actions

10

SECTION 3.5 Supplements; Further Assurances

12

 

 

ARTICLE IV REPRESENTATIONS, WARRANTIES AND COVENANTS

12

 

 

SECTION 4.1 Title

12

SECTION 4.2 Limitation on Liens; Defense of Claims; Transferability of Collateral

13

SECTION 4.3 Chief Executive Office; Change of Name; Jurisdiction of Organization

13

SECTION 4.4 Location of Inventory

14

SECTION 4.5 [Reserved]

14

SECTION 4.6 Fair Labor Standards Act

14

SECTION 4.7 No Conflicts, Consents, etc.

14

SECTION 4.8 Collateral

14

SECTION 4.9 Insurance

14

SECTION 4.10 Payment of Taxes; Compliance with Laws; Contested Liens; Claims

15

SECTION 4.11 [Reserved]

15

SECTION 4.12 New Subsidiaries

15

 

 

ARTICLE V CERTAIN PROVISIONS CONCERNING SECURITIES COLLATERAL

15

 

 

SECTION 5.1 Pledge of Additional Securities Collateral

15

SECTION 5.2 Voting; Distributions; etc.

15

SECTION 5.3 Turnover

16

SECTION 5.4 Defaults, Etc.

17

SECTION 5.5 Certain Agreements of Grantors as Issuers and Holders of Equity Interests

17

 

 

ARTICLE VI CERTAIN PROVISIONS CONCERNING INTELLECTUAL PROPERTY

17

 

3



 

SECTION 6.1 Grant of License

17

SECTION 6.2 Registrations

17

SECTION 6.3 No Violations or Proceedings

18

SECTION 6.4 Protection of Collateral Agent’s Security

18

SECTION 6.5 After-Acquired Property

19

SECTION 6.6 Modifications

19

SECTION 6.7 Litigation

19

SECTION 6.8 Third Party Consents

19

 

 

ARTICLE VII CERTAIN PROVISIONS CONCERNING ACCOUNTS

20

 

 

SECTION 7.1 Special Representations and Warranties

20

SECTION 7.2 Maintenance of Records

20

SECTION 7.3 Legend

20

SECTION 7.4 Modification of Terms, Etc.

20

SECTION 7.5 Collection

20

 

 

ARTICLE VIII REMEDIES

21

 

 

SECTION 8.1 Remedies

21

SECTION 8.2 Notice of Sale

22

SECTION 8.3 Waiver of Notice and Claims

22

SECTION 8.4 Certain Sales of Collateral

23

SECTION 8.5 No Waiver; Cumulative Remedies

24

SECTION 8.6 Certain Additional Actions Regarding Intellectual Property

24

SECTION 8.7 Application of Proceeds

24

SECTION 8.8 Third Party Agreements

24

 

 

ARTICLE IX MISCELLANEOUS

25

 

 

SECTION 9.1 Concerning the Collateral Agent

25

SECTION 9.2 Collateral Agent May Perform; Collateral Agent Appointed Attorney-in-Fact

25

SECTION 9.3 Expenses

26

SECTION 9.4 Continuing Security Interest; Assignment

26

SECTION 9.5 Termination; Release

26

SECTION 9.6 Modification in Writing

27

SECTION 9.7 Notices

27

SECTION 9.8 GOVERNING LAW

27

SECTION 9.9 CONSENT TO JURISDICTION; SERVICE OF PROCESS; WAIVER OF JURY TRIAL

28

SECTION 9.10 Severability of Provisions

29

SECTION 9.11 Execution in Counterparts; Effectiveness

29

SECTION 9.12 No Release

29

SECTION 9.13 Obligations Absolute

29

SECTION 9.14 Intercreditor Agreement

30

 

4



 

EXHIBIT 1

Form of Securities Pledge Amendment

 

 

SCHEDULE I

Intercompany Notes

SCHEDULE 3.3

Filings, Registrations and Recordings

SCHEDULE 3.4(a)

Instruments

SCHEDULE 4.3(a)

Other Legal and Fictitious Names, Mergers, Consolidations, Acquisitions

 

Annex I

Form of Joinder

 

5



 

TERM LOAN SECURITY AGREEMENT

 

TERM LOAN SECURITY AGREEMENT dated as of March 21, 2013 (as amended, amended and restated, supplemented or otherwise modified from time to time in accordance with the provisions hereof, this “ Security Agreement ”) made by SUPERVALU INC., a Delaware corporation having an office at 7075 Flying Cloud Drive, Eden Prairie, MN, as borrower (the “ Borrower ”) and the Guarantors listed on the signature pages hereto (the “ Original Guarantors ”) and the other guarantors from time to time party hereto by execution of a Joinder Agreement (the “ Additional Guarantors ” and, together with the Original Guarantor, the “ Guarantors ”), as pledgors, assignors and debtors (the Borrower, together with the Guarantors, in such capacities and together with any successors in such capacities, collectively, the “ Grantors ” and, each, a “ Grantor ”), in favor of GOLDMAN SACHS BANK USA, having an office at 30 Hudson St, 5th Floor, Jersey City, NJ 07302, in its capacity as collateral agent for the Secured Parties, as pledgee, assignee and secured party (in such capacities and together with any successors in such capacities, the “ Collateral Agent ”).

 

RECITALS :

 

A.            The Borrower, the Collateral Agent, the Guarantors party thereto and the Lenders party thereto have, in connection with the execution and delivery of this Security Agreement, entered into that certain Term Loan Credit Agreement, dated as of the date hereof (as amended, amended and restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”).

 

B.            The Original Guarantors have, pursuant to that certain Term Loan Guaranty dated as of the date hereof (as amended, amended and restated, supplemented or otherwise modified from time to time, the “ Guaranty ”), among other things, unconditionally guaranteed the Guaranteed Obligations (as defined in the Guaranty).

 

C.            The Borrower and the Guarantors will receive substantial benefits from the execution, delivery and performance of the Obligations and the Guaranteed Obligations and each is, therefore, willing to enter into this Security Agreement.

 

D.            This Security Agreement is given by each Grantor in favor of the Collateral Agent for the benefit of the Secured Parties to secure the payment and performance of all of the Secured Obligations (as hereinafter defined).

 

E.            It is a condition to the obligations of the Lenders to make the Loans under the Credit Agreement that each Grantor execute and deliver the applicable Loan Documents, including this Security Agreement.

 

AGREEMENT :

 

NOW THEREFORE, in consideration of the foregoing premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each Grantor and the Collateral Agent hereby agree as follows:

 



 

ARTICLE I

 

DEFINITIONS AND INTERPRETATION

 

SECTION 1.1  Definitions.

 

(a)   Unless otherwise defined herein or in the Credit Agreement, capitalized terms used herein that are defined in the UCC shall have the meanings assigned to them in the UCC.

 

(b)   Capitalized terms used but not otherwise defined herein that are defined in the Credit Agreement shall have the meanings assigned to them in the Credit Agreement.

 

(c)   The following terms shall have the following meanings:

 

Additional Guarantors ” shall have the meaning assigned to such term in the Preamble hereof.

 

Borrower ” shall have the meaning assigned to such term in the Preamble hereof.

 

Claims ” shall mean any and all property taxes and other taxes, assessments and special assessments, levies, fees and all governmental charges imposed upon or assessed against, and all claims (including, without limitation, landlords’, carriers’, mechanics’, workmen’s, repairmen’s, laborers’, materialmen’s, suppliers’ and warehousemen’s Liens and other claims arising by operation of law) against, all or any portion of the Collateral.

 

Collateral ” shall have the meaning assigned to such term in Section 2.1 hereof.

 

Collateral Agent ” shall have the meaning assigned to such term in the Preamble hereof.

 

Contracts ” shall mean, collectively, with respect to each Grantor, all sale, service, performance, equipment or property lease contracts, agreements and grants and all other contracts, agreements or grants (in each case, whether written or oral, or third party or intercompany), between such Grantor and any other party, and all assignments, amendments, restatements, supplements, extensions, renewals, replacements or modifications thereof.

 

Control ” shall mean (a) in the case of each DDA, “control,” as such term is defined in Section 9-104 of the UCC, and (b) in the case of any security entitlement, “control,” as such term is defined in Section 8-106 of the UCC.

 

Control Agreements ” shall mean, collectively, the Blocked Account Agreements and the Securities Account Control Agreements.

 

Copyrights ” shall mean, collectively, with respect to each Grantor, all copyrights (whether statutory or common Law, whether established or registered in the United States or any other country or group of countries or any political subdivision thereof whether registered or unregistered and whether published or unpublished) and all copyright registrations and applications made by such Grantor, in each case, whether now owned or hereafter created or acquired by or assigned to such Grantor, including, without limitation, the registrations and

 

2



 

applications listed in Schedule III of the Perfection Certificate, together with any and all (a) rights and privileges arising under applicable Law with respect to such Grantor’s use of such copyrights, (b) reissues, renewals, continuations and extensions thereof, (c) income, fees, royalties, damages, claims and payments now or hereafter due and/or payable with respect thereto, including, without limitation, damages and payments for past, present or future infringements thereof, (d) rights corresponding thereto throughout the world and (e) rights to sue for past, present or future infringements thereof.

 

Credit Agreement ” shall have the meaning assigned to such term in Recital A hereof.

 

Distributions ” shall mean, collectively, with respect to each Grantor, all amounts from time to time received, receivable or otherwise distributed to such Grantor in respect of or in exchange for any or all of the Pledged Interests and Successor Interests or Intercompany Notes.

 

Excluded Assets ” shall mean the following:

 

(a)   Equity Interests issued by any Subsidiary of any Grantor, other than the Pledged Interests and Successor Interests;

 

(b)   Excluded DDAs;

 

(c)   all accounts receivables financed by a Grantor pursuant to a Permitted Securitization Facility (as defined in the ABL Credit Agreement);

 

(d)   any rights or interests in any contract, agreement, lease, permit, license, charter or license agreement, as such, if under the terms of such contract, agreement, lease, permit, license, charter or license agreement, or applicable law with respect thereto, the valid grant of a Lien therein to the Collateral Agent would constitute or result in a breach, termination or default under such contract, agreement, lease, permit, license, charter or license agreement and such breach, termination or default has not been or is not waived or the consent of the other party to such contract, agreement, lease, permit, license, charter or license agreement has not been or is not otherwise obtained or under applicable law such prohibition cannot be waived; provided , that , the foregoing exclusion shall in no way be construed (i) to apply if any such prohibition is unenforceable under Sections 9-406, 9-407 or 9-408 of the UCC or other applicable law or (ii) so as to limit, impair or otherwise affect the Collateral Agent’s unconditional continuing Liens in any rights or interests of a Grantor in or to monies due or to become due under any such contract, lease, permit, license, charter or license agreement;

 

(e)   assets of any Excluded Subsidiary;

 

(f)    all Real Estate and all Equipment; and

 

(g)   any trademark or servicemark applications that have been filed with the U.S. Patent and Trademark Office on the basis of an “intent-to-use” with respect to such trademarks or servicemarks, unless and until a statement of use or amendment to allege use is filed or any other filing is made or circumstances otherwise change so that the interests of a Grantor in such marks in no longer on an “intent-to-use” basis, at which time such trademarks and servicemarks

 

3



 

shall automatically and without further action by the parties be subject to the security interests and liens granted by such Grantor to Collateral Agent.

 

Notwithstanding anything to the contrary, the Excluded Assets shall not include any “proceeds” (as defined in the UCC), substitutions or replacements of Excluded Assets (unless such proceeds, substitutions or replacements would otherwise constitute Excluded Assets).  The security interest granted pursuant to Section 2.1 hereof shall attach to property and assets immediately and automatically (without the need for any further grant or act) at such time as the applicable condition described in clause (d) ceases to exist.

 

Goodwill ” shall mean, collectively, with respect to each Grantor, the goodwill connected with such Grantor’s business including, without limitation, (a) all goodwill connected with the use of and symbolized by any of the Trademarks in which such Grantor has any interest, (b) all know-how, trade secrets, customer and supplier lists, proprietary information, inventions, methods, procedures, formulae, descriptions, compositions, technical data, drawings, specifications, name plates, catalogs, confidential information and the right to limit the use or disclosure thereof by any Person, pricing and cost information, business and marketing plans and proposals, consulting agreements, engineering contracts and such other assets which relate to such goodwill and (c) all product lines of such Grantor’s business.

 

Grantor ” shall have the meaning assigned to such term in the Preamble hereof.

 

Guarantors ” shall have the meaning assigned to such term in the Preamble hereof.

 

Guaranty ” shall have the meaning assigned to such term in Recital B hereof.

 

Intellectual Property ” shall mean, collectively, Patents, Trademarks, Copyrights, Licenses and Goodwill.

 

Intercompany Notes ” shall mean, with respect to each Grantor, all intercompany notes described in Schedule I hereto and each promissory note hereafter acquired by such Grantor and made by the Borrower or one of its Subsidiaries, and all certificates, instruments or agreements evidencing such intercompany notes, and all assignments, amendments, restatements, supplements, extensions, renewals, replacements or modifications thereof to the extent permitted pursuant to the terms hereof.

 

Joinder Agreement ” shall mean each Joinder to this Security Agreement executed and delivered by the Collateral Agent and each Additional Guarantor listed on the signature pages thereto, in substantially the form of Annex 1 hereto.

 

Licenses ” shall mean, collectively, with respect to each Grantor, all license and distribution agreements with any other Person with respect to any Patent, Trademark or Copyright or any other patent, trademark or copyright, whether such Grantor is a licensor or licensee, distributor or distributee under any such license or distribution agreement, together with any and all (a) renewals, extensions, supplements and continuations thereof, (b) income, fees, royalties, damages, claims and payments now and hereafter due and/or payable thereunder and with respect thereto including, without limitation, damages and payments for past, present or future infringements or violations thereof, (c) rights to sue for past, present and future

 

4



 

infringements or violations thereof and (d) other rights to use, exploit or practice any or all of the Patents, Trademarks or Copyrights or any other patent, trademark or copyright.

 

Patents ” shall mean, collectively, with respect to each Grantor, all patents issued or assigned to and all patent applications made by such Grantor (whether established or registered or recorded in the United States or any other country or group of countries or any political subdivision thereof), including, without limitation, those patents, patent applications listed in Schedule III of the Perfection Certificate, together with any and all (a) rights and privileges arising under applicable Law with respect to such Grantor’s use of any patents, (b) inventions and improvements described and claimed therein, (c) reissues, divisions, continuations, renewals, extensions and continuations-in-part thereof, (d) income, fees, royalties, damages, claims and payments now or hereafter due and/or payable thereunder and with respect thereto including, without limitation, damages and payments for past, present or future infringements thereof, (e) rights corresponding thereto throughout the world and (f) rights to sue for past, present or future infringements thereof.

 

Perfection Certificate ” shall mean that certain Perfection Certificate dated as of the date hereof, executed and delivered by each Grantor in favor of the Collateral Agent for the benefit of the Secured Parties, and each other Perfection Certificate (which shall be in form and substance reasonably acceptable to the Collateral Agent) executed and delivered by the applicable Grantor in favor of the Collateral Agent for the benefit of the Secured Parties contemporaneously with the execution and delivery of a Joinder Agreement executed in accordance with Section 4.12 hereof, in each case, as the same may be amended, amended and restated, restated, supplemented or otherwise modified from time to time in accordance with the Credit Agreement.

 

Pledged Interests ” shall mean, collectively, with respect to each Grantor, all Equity Interest in Moran Foods now existing or hereafter acquired or formed, including, without limitation, all Equity Interests of Moran Foods described in Schedule P-1, together with all rights, privileges, authority and powers of such Grantor relating to such Equity Interests issued by Moran Foods under the Organization Documents of Moran Foods, the certificates, instruments and agreements representing such Equity Interests and any and all interest of such Grantor in the entries on the books of Moran Foods or of any financial intermediary pertaining to such Equity Interests, from time to time acquired by such Grantor in any manner.

 

Registered Intellectual Property ” shall mean, collectively, all Intellectual Property owned by the Grantors that is the subject of:  (a) a pending patent application or an issued patent; (b) a pending trademark application (except to the extent any such application is an Excluded Asset) or trademark registration; or (c) a copyright registration.

 

Related Collateral ” shall mean all Documents, Instruments, Securities Collateral, Investment Property, Letters of Credit and Letter-of-Credit Rights, Commercial Tort Claims (including, without limitation, those described in Schedule IV of the Perfection Certificate), General Intangibles and Supporting Obligations, in each case to the extent evidencing, governing, securing or otherwise reasonably related to any of the Collateral described in Sections 2.1(a)  through 2.1(g)  hereof or any Specified Fixed Asset Collateral (as defined in the Related Real Estate Collateral Security Agreements).

 

5



 

Secured Obligations ” shall mean the Obligations (as defined in the Credit Agreement) and the Guaranteed Obligations.

 

Securities Account Control Agreement ” shall mean an agreement in form and substance satisfactory to the Collateral Agent with respect to any Securities Account of a Grantor.

 

Securities Act ” means the Securities Exchange Act of 1934 and the applicable regulations promulgated by the Securities and Exchange Commission pursuant to such Act.

 

Securities Collateral ” shall mean, collectively, the Pledged Interests and Successor Interests, the Intercompany Notes and the Distributions.

 

Security Agreement ” shall have the meaning assigned to such term in the Preamble hereof.

 

Successor Interests ” shall mean, collectively, with respect to each Grantor, all shares of each class of the capital stock of the successor corporation or interests or certificates of the successor limited liability company, partnership or other entity owned by such Grantor (unless such successor is such Grantor itself) formed by or resulting from any consolidation or merger in which Moran Foods is not the surviving entity.

 

Trademarks ” shall mean, collectively, with respect to each Grantor, all trademarks (including service marks), slogans, logos, certification marks, trade dress, uniform resource locations (URLs), domain names, corporate names and trade names, whether registered or unregistered, owned by or assigned to such Grantor and all registrations and applications for the foregoing (whether statutory or common Law and whether established or registered in the United States or any other country or group of countries or any political subdivision thereof), including, without limitation, the registrations and applications listed in Schedule III of the Perfection Certificate, together with any and all (a) rights and privileges arising under applicable Law with respect to such Grantor’s use of any trademarks, (b) reissues, continuations, extensions and renewals thereof, (c) income, fees, royalties, damages and payments now and hereafter due and/or payable thereunder and with respect thereto, including, without limitation, damages, claims and payments for past, present or future infringements thereof, (d) all of the Goodwill associated with any of the foregoing, (e) rights corresponding thereto throughout the world and (f) rights to sue for past, present and future infringements thereof.

 

UCC ” means the Uniform Commercial Code as in effect from time to time in the State of New York; provided , that , (a) if a term is defined in Article 9 of the Uniform Commercial Code differently than in another Article thereof, the term shall have the meaning set forth in Article 9 of the Uniform Commercial Code and (b) if by reason of mandatory provisions of law, perfection, or the effect of perfection or non-perfection, of a security interest in any Collateral or the availability of any remedy hereunder is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York, “UCC” means the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions hereof relating to such perfection or effect of perfection or non-perfection or availability of such remedy, as the case may be.

 

6



 

UETA ” shall have the meaning assigned to such term in Section 4.1 .

 

SECTION 1.2  Interpretation .  The rules of interpretation specified in Section 1.02 of the Credit Agreement shall be applicable to this Security Agreement.

 

SECTION 1.3  Perfection Certificate .  The Collateral Agent and each Grantor agree that the Perfection Certificate and all schedules, amendments and supplements thereto are, and shall at all times remain, a part of this Security Agreement.

 

ARTICLE II

 

GRANT OF SECURITY AND SECURED OBLIGATIONS

 

SECTION 2.1  Pledge; Grant of Security Interest .  As collateral security for the payment and performance in full of all the Secured Obligations, each Grantor hereby pledges and grants to the Collateral Agent for its benefit and for the benefit of the other Secured Parties, a lien on and security interest in and to all of the right, title and interest of such Grantor in, to and under the following personal property and interests in such personal property, wherever located, and whether now existing or hereafter arising or acquired from time to time (collectively, the “ Collateral ”), consisting of the following:

 

(a)          all Accounts;

 

(b)          all Inventory;

 

(c)           all Chattel Paper;

 

(d)          all Intellectual Property;

 

(e)           all Deposit Accounts (and all cash, checks and other negotiable instruments, funds and other evidences of payment held therein);

 

(f)            all Money;

 

(g)           all Prescription Files;

 

(h)          all Securities Collateral;

 

(i)              all rights under the Acquisition Agreement and the Escrow Agreement;

 

(j)             all Related Collateral;

 

(k)          all books and records and documents relating to the Collateral (including databases, customer lists and other records, whether tangible or electronic, which contain any information relating to any of the foregoing); and

 

(l)              all Proceeds and products of each of the foregoing and all accessions to, substitutions and replacements for, and rents, profits and products of, each of the foregoing, any and all proceeds of any insurance (including proceeds of business interruption and other

 

7



 

insurance claims against third parties), indemnity, warranty or guaranty payable to such Grantor from time to time with respect to any of the foregoing.

 

Notwithstanding anything to the contrary contained in clauses (a) through (l) above, the security interest created by this Security Agreement shall not extend to, and the term “Collateral” shall not include, any Excluded Assets and the Grantors shall from time to time at the request of the Collateral Agent give written notice to the Collateral Agent identifying in reasonable detail the Excluded Assets and shall provide to the Collateral Agent such other information regarding the Excluded Assets as the Collateral Agent may reasonably request.

 

SECTION 2.2  Secured Obligations .  This Security Agreement secures, and the Collateral is collateral security for, the payment and performance in full when due of the Secured Obligations.

 

SECTION 2.3  Security Interest.

 

(a)          Each Grantor hereby irrevocably authorizes the Collateral Agent at any time and from time to time to authenticate and file in any relevant jurisdiction any financing statements (including fixture filings) and amendments thereto that contain the information required by Article 9 of the UCC of each applicable jurisdiction for the filing of any financing statement or amendment relating to the Collateral, including, without limitation, (i) the type of organization and any organizational identification number issued to such Grantor and (ii) a description of the Collateral.  Each Grantor agrees to provide all information described in the immediately preceding sentence to the Collateral Agent promptly upon request.

 

(b)          Each Grantor hereby ratifies its prior authorization for the Collateral Agent to file in any relevant jurisdiction any financing statements or amendments thereto relating to the Collateral if filed prior to the date hereof.

 

(c)           Each Grantor hereby further authorizes the Collateral Agent to file filings with the United States Patent and Trademark Office and, other than with respect to agreements under 17 U.S.C. § 201(d)(2), United States Copyright Office, (or any successor office or any similar office in any other country) or other necessary documents for the purpose of perfecting, confirming, continuing, enforcing or protecting the security interest granted by such Grantor hereunder in any Collateral consisting of Intellectual Property (excluding any authority or requirement to register Intellectual Property in the United States Patent and Trademark Office or United States Copyright Office except as required under Section 6.4 of this Security Agreement), without the signature of such Grantor, and naming such Grantor, as debtor, and the Agent, as secured party.

 

ARTICLE III

 

PERFECTION; SUPPLEMENTS; FURTHER ASSURANCES; USE OF COLLATERAL

 

SECTION 3.1  Delivery of Securities Collateral.

 

(a)          Each Grantor represents and warrants that all agreements or instruments representing or evidencing Related Collateral constituting Investment Property and Securities

 

8



 

Collateral (other than Pledged Interests) having a value in excess of $10,000,000 in existence on the date hereof have been delivered to the Collateral Agent in suitable form for transfer by delivery or accompanied by duly executed instruments of transfer or assignment in blank and that the Collateral Agent has a perfected first priority (subject to Permitted Encumbrances having priority by operation of law and Permitted Encumbrances permitted by clause (t) of the definition of “Permitted Encumbrances” in the Credit Agreement) security interest therein.  Each Grantor hereby agrees that all agreements or instruments representing or evidencing Related Collateral constituting Investment Property and Securities Collateral (other than Pledged Interests) having a value in excess of $10,000,000 acquired by such Grantor after the date hereof, shall promptly (and in any event within three Business Days) upon receipt thereof by such Grantor be delivered to and held by or on behalf of the Collateral Agent pursuant hereto.  The Collateral Agent shall have the right, at any time upon the occurrence and during the continuance of any Event of Default, to endorse, assign or otherwise transfer to or to register in the name of the Collateral Agent or any of its nominees or endorse for negotiation any or all of the Securities Collateral, without any indication that such Securities Collateral is subject to the security interest hereunder.

 

(b)          Each Grantor represents and warrants that all certificates representing or evidencing the Pledged Interests in existence on the date hereof have been delivered to the Collateral Agent in suitable form for transfer by delivery or accompanied by duly executed instruments of transfer or assignment in blank and that the Collateral Agent has a perfected first priority (subject to Permitted Encumbrances having priority by operation of law and Permitted Encumbrances permitted by clause (t) of the definition of “Permitted Encumbrances” in the Credit Agreement) security interest therein.  Each Grantor hereby agrees that (subject to Permitted Encumbrances having priority by operation of law and Permitted Encumbrances permitted by clause (t) of the definition of “Permitted Encumbrances” in the Credit Agreement) all certificates representing or evidencing the Pledged Interests and Successor Interests acquired by such Grantor after the date hereof, shall promptly (and in any event within three Business Days) upon receipt thereof by such Grantor be delivered to and held by or on behalf of the Collateral Agent pursuant hereto.  The Collateral Agent shall have the right, at any time upon the occurrence and during the continuance of any Event of Default, to endorse, assign or otherwise transfer to or to register in the name of the Collateral Agent or any of its nominees or endorse for negotiation any or all of the Pledged Interests and Successor Interests, without any indication that such Pledged Interests or Successor Interests are subject to the security interest hereunder.

 

(c)           Schedule P-1 hereto sets forth all of the Pledged Interests owned by any Grantor and such Pledged Interests constitute the percentage of issued and outstanding shares of stock, percentage of membership interests or percentage of partnership interests of the respective issuers thereof indicated on such Schedule.  The Pledged Interests and Successor Interests pledged by such Grantor hereunder constitute all of the issued and outstanding shares of all classes of the Equity Interests of each issuer owned by such Grantor.  All the shares of the Pledged Interests and Successor Interests have been duly and validly issued and are fully paid and nonassessable.  No Grantor is in default of its obligations under any Organization Document of any issuer of Pledged Interests and Successor Interests.

 

(d)          None of the Pledged Interests and Successor Interests are, or represent interests in entities that (i) are registered as investment companies, (ii) are dealt in or traded on

 

9



 

securities exchanges or markets or (iii) have opted to be treated as securities under the UCC of any jurisdiction.

 

(e)           Such Grantor is the record and beneficial owner of, and has good and marketable title to, the Pledged Interests and Successor Interests pledged by it hereunder, free of any and all Liens or options in favor of, or claims of, any other Person, except for Permitted Liens arising pursuant to a requirement of Law, and there are no outstanding warrants, options or other rights to purchase, or members’, voting trust or similar agreements outstanding with respect to, or property that is convertible into, or that requires the issuance or sale of, any Pledged Interests and Successor Interests.

 

SECTION 3.2  Perfection of Security Interest in Pledged Interests .  Each Grantor represents and warrants that the Collateral Agent has a perfected first priority (subject to Permitted Encumbrances having priority by operation of law and Permitted Encumbrances permitted by clause (t) of the definition of “Permitted Encumbrances” in the Credit Agreement) security interest in all Pledged Interests and Successor Interests pledged by it hereunder and that the applicable Organization Documents do not require the consent of the other members, or other Person to permit the Collateral Agent or its designee to be substituted for the applicable Grantor as a member thereto.  Each Grantor hereby agrees that if any of the Pledged Interests and Successor Interests are at any time not evidenced by certificates of ownership, then each applicable Grantor shall, to the extent permitted by applicable Law and upon the request of the Collateral Agent, cause such pledge to be recorded on the equityholder register or the books of the issuer, execute customary pledge forms or other documents, in each case as necessary or reasonably requested to complete the pledge and give the Collateral Agent the right to transfer such Pledged Interests and Successor Interests under the terms hereof.

 

SECTION 3.3  Financing Statements and Other Filings; Maintenance of Perfected Security Interest .  Each Grantor represents and warrants that the only filings, registrations and recordings necessary and appropriate to create, preserve, protect, publish notice of and perfect the security interest granted by each Grantor to the Collateral Agent (for the benefit of the Secured Parties) pursuant to this Security Agreement in respect of the Collateral are listed in Schedule 3.3 hereto (other than agreements under 17 U.S.C. § 201(d)(2) and any registrations with respect to Intellectual Property other than Registered Intellectual Property required in the United States Patent and Trademark Office or the United States Copyright Office, except to the extent such registration is required under Section 6.4 of this Security Agreement).  Each Grantor represents and warrants that all such filings, registrations and recordings have been delivered to the Collateral Agent in completed and, to the extent necessary or appropriate, duly executed form for filing in each governmental, municipal or other office specified in Schedule 3.3 hereto .  Each Grantor agrees that at the sole cost and expense of the Grantors, (a) such Grantor will maintain the security interest created by this Security Agreement in the Collateral as a perfected first priority security interest (subject to, with respect to priority, the Intercreditor Agreement and Permitted Encumbrances having priority by operation of law and Permitted Encumbrances permitted by clause (t) of the definition of “Permitted Encumbrances” in the Credit Agreement) and shall defend such security interest against the claims and demands of all Persons (other than with respect to Permitted Encumbrances), (b) such Grantor shall furnish to the Collateral Agent from time to time statements and schedules further identifying and describing the Collateral (other than agreements under 17 U.S.C. § 201(d)(2)) and such other reports in connection with

 

10



 

the Collateral as the Collateral Agent may reasonably request, all in reasonable detail and (c) at any time and from time to time, upon the written request of the Collateral Agent, such Grantor shall promptly and duly execute and deliver, and file and have recorded, such further instruments and documents and take such further action as the Collateral Agent may reasonably request, including the filing of any financing statements, continuation statements and other documents (including this Security Agreement) under the UCC (or other applicable Laws) in effect in any jurisdiction with respect to the security interest created hereby and the execution and delivery of Control Agreements, all in form reasonably satisfactory to the Collateral Agent and in such offices (including, without limitation, the United States Patent and Trademark Office and United States Copyright Office) wherever required by applicable Law in each case to perfect, continue and maintain a valid, enforceable, first priority security interest (subject to Permitted Encumbrances having priority by operation of law and Permitted Encumbrances permitted by clause (t) of the definition of “Permitted Encumbrances” in the Credit Agreement) in the Collateral (other than agreements under 17 U.S.C. § 201(d)(2) and any registrations with respect to Intellectual Property other than Registered Intellectual Property required in the United States Patent and Trademark Office or the United States Copyright Office, except to the extent such registration is required under Section 6.4 of this Security Agreement) as provided herein and to preserve the other rights and interests granted to the Collateral Agent hereunder, as against the Grantors and third parties (other than with respect to Permitted Encumbrances), with respect to the Collateral.

 

SECTION 3.4  Other Actions .  In order to further evidence the attachment, perfection and priority of, and the ability of the Collateral Agent to enforce, the Collateral Agent’s security interest in the Collateral, each Grantor represents, warrants and agrees, in each case at such Grantor’s own expense, with respect to the following Collateral that:

 

(a)          Instruments and Tangible Chattel Paper .  As of the date hereof (i) no amount payable under or in connection with any of the Collateral in excess of $10,000,000 is evidenced by any Instrument or Tangible Chattel Paper other than such Instruments and Tangible Chattel Paper listed in Schedule 3.4(a)  hereto and (ii) each Instrument and each item of Tangible Chattel Paper listed in Schedule 3.4(a)  hereto, to the extent requested by the Collateral Agent, has been properly endorsed, assigned and delivered to the Collateral Agent, accompanied by instruments of transfer or assignment and letters of direction duly executed in blank.  If any amount payable under or in connection with any of the Collateral shall be evidenced by any Instrument or Tangible Chattel Paper, the Grantor acquiring such Instrument or Tangible Chattel Paper in excess of $10,000,000 individually or $20,000,000 in the aggregate shall forthwith endorse, assign and deliver the same to the Collateral Agent, accompanied by such instruments of transfer or assignment duly executed in blank as the Collateral Agent may reasonably request from time to time.

 

(b)          Deposit Accounts .  Such Grantor does not have any Deposit Accounts as of the date hereof, except as set forth in Schedule 3.21(a) of Credit Agreement.

 

(c)           Investment Property .

 

(i)              As of the date hereof (A) it has no Securities Accounts containing any Collateral or proceeds of Collateral, and (B) it does not hold, own or have any interest in any certificated securities or uncertificated securities evidencing any Collateral or proceeds of

 

11



 

Collateral other than those constituting Pledged Interests with respect to which the Collateral Agent has a perfected first priority security interest.

 

(ii)           If any Grantor shall at any time hold or acquire any certificated securities evidencing any Collateral or proceeds of Collateral having a value in excess of $10,000,000, such Grantor shall promptly (A) notify the Collateral Agent thereof and endorse, assign and deliver the same to the Collateral Agent, accompanied by such instruments of transfer or assignment duly executed in blank, all in form and substance reasonably satisfactory to the Collateral Agent or (B) deliver such securities into a Securities Account with respect to which a Securities Account Control Agreement is in effect in favor of the Collateral Agent.  If any securities now or hereafter acquired by any Grantor evidencing any Collateral or proceeds of Collateral having a value in excess of $10,000,000 are uncertificated, such Grantor shall promptly notify the Collateral Agent thereof and pursuant to an agreement in form and substance reasonably satisfactory to the Collateral Agent, either (1) grant Control to the Collateral Agent and cause the issuer to agree to comply with instructions from the Collateral Agent as to such securities, without further consent of any Grantor or such nominee, (2) cause a security entitlement with respect to such uncertificated security to be held in a Securities Account with respect to which the Collateral Agent has Control or (3) arrange for the Collateral Agent to become the registered owner of the securities.  The Collateral Agent agrees with each Grantor that the Collateral Agent shall not give any entitlement orders or instructions or directions to any issuer of uncertificated securities or Securities Intermediary, and shall not withhold its consent to the exercise of any withdrawal or dealing rights by such Grantor, unless an Event of Default has occurred and is continuing.

 

(iii)        As between the Collateral Agent and the Grantors, the Grantors shall bear the investment risk with respect to the Investment Property, and the risk of loss of, damage to, or the destruction of the Investment Property, whether in the possession of, or maintained as a security entitlement or deposit by, or subject to the control of, the Collateral Agent, a Securities Intermediary, any Grantor or any other Person; provided , that , nothing contained in this Section 3.4(c ) shall release or relieve any Securities Intermediary of its duties and obligations to the Grantors or any other Person under any Securities Account Control Agreement or under applicable Law and nothing contained herein shall excuse the Collateral Agent from its duty to exercise reasonable care in the custody and preservation of the Collateral in its possession; provided , further , that , the Collateral Agent shall be deemed to have exercised reasonable care in the custody and preservation of any Collateral in its actual possession if such Collateral is accorded treatment substantially equal to that which the Collateral Agent accords its own property. Each Grantor shall promptly pay all Claims and fees of whatever kind or nature with respect to the Pledged Interests and Successor Interests pledged by it under this Security Agreement.  In the event any Grantor shall fail to make such payment contemplated in the immediately preceding sentence, the Collateral Agent may do so for the account of such Grantor and the Grantors shall promptly reimburse and indemnify the Collateral Agent for all costs and expenses incurred by the Collateral Agent under this Section 3.4(c)  and under Section 9.3 .

 

(d)          Electronic Chattel Paper and Transferable Records .  As of the date hereof no amount payable under or in connection with any of the Collateral is evidenced by any Electronic Chattel Paper or any “transferable record” (as defined in Section 201 of the Federal Electronic Signatures in Global and National Commerce Act or in Section 16 of the UETA).  If any amount

 

12



 

payable under or in connection with any of the Collateral shall be evidenced by any Electronic Chattel Paper or any transferable record, the Grantor acquiring such Electronic Chattel Paper or transferable record shall promptly notify the Collateral Agent thereof and shall take such action as the Collateral Agent may reasonably request to vest in the Collateral Agent “control” (within the meaning of Section 9-105 of the UCC) of such Electronic Chattel Paper or “control” (within the meaning of Section 201 of the Federal Electronic Signatures in Global and National Commerce Act or Section 16 of the UETA) of such transferable record.  The Collateral Agent agrees with such Grantor that the Collateral Agent will arrange, pursuant to procedures reasonably satisfactory to the Collateral Agent and so long as such procedures will not result in the Collateral Agent’s loss of control, for the Grantor to make alterations to the Electronic Chattel Paper or transferable record permitted under Section 9-105 of the UCC or, as the case may be, Section 201 of the Federal Electronic Signatures in Global and National Commerce Act or Section 16 of the UETA for a party in control to allow without loss of control, unless an Event of Default has occurred and is continuing or would occur after taking into account any action by such Grantor with respect to such Electronic Chattel Paper or transferable record.

 

(e)           Letter-of-Credit Rights .  If such Grantor is at any time a beneficiary under a Letter of Credit now or hereafter issued in favor of such Grantor that constitutes Related Collateral, such Grantor shall promptly notify the Collateral Agent thereof and such Grantor shall, at the request of the Collateral Agent, pursuant to an agreement in form and substance reasonably satisfactory to the Collateral Agent, either (i) arrange for the issuer and any confirmer of such Letter of Credit to consent to an assignment to the Collateral Agent of, and to pay to the Collateral Agent, the proceeds of, any drawing under the Letter of Credit or (ii) arrange for the Collateral Agent to become the beneficiary of such Letter of Credit, with the Collateral Agent agreeing, in each case, that the proceeds of any drawing under the Letter of Credit are to be applied as provided in the Credit Agreement.

 

(f)            Commercial Tort Claims .  As of the date hereof it holds no Commercial Tort Claims that constitute Related Collateral.  If any Grantor shall at any time hold or acquire a Commercial Tort Claim that constitutes Related Collateral, such Grantor shall immediately notify the Collateral Agent in writing signed by such Grantor of the brief details thereof and grant to the Collateral Agent in such writing a security interest therein and in the Proceeds thereof, all upon the terms of this Security Agreement, with such writing to be in form and substance reasonably satisfactory to the Collateral Agent.

 

SECTION 3.5  Supplements; Further Assurances .  Each Grantor shall take such further actions, and execute and deliver to the Collateral Agent such additional assignments, agreements, supplements, powers and instruments, as the Collateral Agent may in its reasonable judgment deem necessary or appropriate, wherever required by Law, in order to perfect, preserve and protect the security interest in the Collateral (other than agreements under 17 U.S.C. § 201(d)(2) and to the extent such further actions require registrations with respect to Intellectual Property in the United States Patent and Trademark Office or the United States Copyright Office, excluding Registered Intellectual Property, except as required under Section 6.4 of this Security Agreement) as provided herein and the rights and interests granted to the Collateral Agent hereunder, or better to assure and confirm unto the Collateral Agent or permit the Collateral Agent to exercise and enforce its rights, powers and remedies hereunder with respect to any Collateral.  Without limiting the generality of the foregoing, each Grantor shall make, execute,

 

13



 

endorse, acknowledge, file or refile and/or deliver to the Collateral Agent from time to time upon reasonable request such lists, descriptions and designations of the Collateral, copies of warehouse receipts, receipts in the nature of warehouse receipts, bills of lading, documents of title, vouchers, invoices, schedules, confirmatory assignments, supplements, additional security agreements, conveyances, financing statements, transfer endorsements, powers of attorney, certificates, reports and other assurances or instruments.  If an Event of Default has occurred and is continuing, the Collateral Agent may institute and maintain, in its own name or in the name of any Grantor, such suits and proceedings as the Collateral Agent may be advised by counsel shall be necessary or expedient to prevent any impairment of the security interest in or the perfection thereof in the Collateral.  All of the foregoing shall be at the sole cost and expense of the Grantors.  The Grantors and the Collateral Agent acknowledge that this Security Agreement is intended to grant to the Collateral Agent for the benefit of the Secured Parties a security interest in and Lien upon the Collateral and shall not constitute or create a present assignment of any of the Collateral.

 

ARTICLE IV

 

REPRESENTATIONS, WARRANTIES AND COVENANTS

 

In addition to, and without limitation of, each of the representations, warranties and covenants set forth in the Credit Agreement and the other Loan Documents, each Grantor represents, warrants and covenants as follows:

 

SECTION 4.1  Title .  No financing statement, mortgage, or other public notice with respect to all or any part of the Collateral is on file or of record in any public office, except such as have been filed in favor of the Collateral Agent pursuant to this Security Agreement or as are permitted by the Credit Agreement.  The security interests granted pursuant to this Security Agreement constitute a legal and valid security interest in favor of the Collateral Agent, for the benefit of the Secured Parties, securing the payment and performance of each Grantor’s Obligations and upon completion of the filings and other actions specified on Schedule 3.3 hereto (all of which, in the case of all filings and other documents referred to on such Schedule, have been delivered to the Collateral Agent in duly completed and duly executed form, as applicable, and may be filed by the Collateral Agent at any time) and payment of all filing fees, will constitute fully perfected security interests in all of the Collateral (other than agreements under 17 U.S.C. § 201(d)(2) and Intellectual Property, other than Registered Intellectual Property to the extent such perfection requires registration with the United States Patent and Trademark Office or United States Copyright Office, except to the extent such registration is required under Section 6.4 of this Security Agreement) prior to all other Liens on the Collateral except for Permitted Encumbrances arising by operation of law that have priority under such law and Permitted Encumbrances permitted by clause (t) of the definition of “Permitted Encumbrances” in the Credit Agreement.  Without limiting the foregoing, each Grantor has taken all actions necessary or desirable, including without limitation those specified in Section 3.4(c)  hereof to: (a) establish the Collateral Agent’s “control” (within the meanings of Sections 8-106 and 9-106 of the UCC) over any portion of the Related Collateral constituting Certificated Securities, Uncertificated Securities, Securities Accounts, Securities Entitlements or Commodity Accounts (other than as provided for in Sections 3.1 and 3.4(c)  hereof), (b) establish the Collateral Agent’s “control” (within the meaning of Section 9-104 of the UCC) over all Deposit Accounts (other

 

14



 

than Excluded DDAs), (c) establish the Collateral Agent’s “control” (within the meaning of Section 9-107 of the UCC) over all Related Collateral constituting Letter-of-Credit Rights, (d) establish the Collateral Agent’s control (within the meaning of Section 9-105 of the UCC) over all Related Collateral constituting Electronic Chattel Paper and (e) establish the Collateral Agent’s “control” (within the meaning of Section 16 of the UETA) over all Related Collateral constituting “transferable records” (as defined in the UETA).

 

SECTION 4.2  Limitation on Liens; Defense of Claims; Transferability of Collateral .  Each Grantor, as to Collateral now owned by it or acquired by it from time to time after the date hereof, is or will be the sole direct and beneficial owner of such Collateral free from any Lien or other right, title or interest of any Person other than the Liens and security interest created by this Security Agreement and Permitted Encumbrances.  Each Grantor shall, at its own cost and expense, defend title to the Collateral pledged by it hereunder and the security interest therein and Lien thereon granted to the Collateral Agent and the priority thereof against all claims and demands of all Persons, at its own cost and expense, at any time claiming any interest therein adverse to the Collateral Agent or any other Secured Party other than Permitted Encumbrances.  There is no agreement, and no Grantor shall enter into any agreement or take any other action, that would restrict the transferability of any of the Collateral or otherwise impair or conflict with such Grantors’ obligations or the rights of the Collateral Agent hereunder.

 

SECTION 4.3  Chief Executive Office; Change of Name; Jurisdiction of Organization.

 

(a)          The exact legal name, type of organization, jurisdiction of organization, federal taxpayer identification number, organizational identification number and the mailing address for purposes of completing a UCC-1 financing statement of such Grantor is indicated next to its name in Schedules I(A) and I(B) of the Perfection Certificate.  No Grantor has, during the four months prior to the date of this Security Agreement, been known by or used any other legal or fictitious name or been a party to any merger or consolidation, or acquired all or substantially all of the assets of any Person, or acquired any of its property or assets out of the ordinary course of business, except as set forth in Schedule 4.3(a)  hereto.

 

(b)          The Collateral Agent may rely on advice of counsel as to whether any or all UCC financing statements of the Grantors need to be amended as a result of any of the changes described in any Periodic Update Schedule or Occurrence Update Schedule.  If any Grantor fails to provide information to the Collateral Agent about such changes on a timely basis, the Collateral Agent shall not be liable or responsible to any party for any failure to maintain a perfected security interest in such Grantor’s property constituting Collateral, for which the Collateral Agent needed to have information relating to such changes.  The Collateral Agent shall have no duty to inquire about such changes if any Grantor does not inform the Collateral Agent of such changes, the parties acknowledging and agreeing that it would not be feasible or practical for the Collateral Agent to search for information on such changes if such information is not provided by any Grantor.

 

SECTION 4.4  Location of Inventory .  As of the Closing Date, all Inventory of such Grantor is located at one of the locations listed in Schedule 3.08(b) and Schedule 3.08(c) to the Credit Agreement.

 

SECTION 4.5  [Reserved]

 

15



 

SECTION 4.6  Fair Labor Standards Act .  Any Inventory now or hereafter produced by any Grantor included in the Collateral has been and will be produced in compliance with the requirements of the Fair Labor Standards Act, as amended, and any other applicable federal, state, local or foreign Law dealing with such matters.

 

SECTION 4.7  No Conflicts, Consents, etc .   No consent of any party (including, without limitation, equityholders or creditors of such Grantor) and no consent, authorization, approval, license or other action by, and no notice to or filing with, any Governmental Authority or regulatory body or other Person is required for the grant of the security interest by such Grantor of the Collateral pledged by it pursuant to this Security Agreement or for the execution, delivery or performance hereof by such Grantor, except for the perfection or maintenance of the Liens created under this Security Agreement (including the first priority nature thereof, subject to Permitted Encumbrances having priority by operation of law and, with respect to the ABL Priority Collateral, to Permitted Encumbrances permitted by clause (t) of the definition of “Permitted Encumbrances” in the Credit Agreement) and such consents which have been obtained or made prior to the date hereof and are in full force and effect.  Following the occurrence and during the continuation of an Event of Default, if the Collateral Agent desires to exercise any remedies, voting or consensual rights or attorney-in-fact powers set forth in this Security Agreement and determines it necessary to obtain any approvals or consents of any Governmental Authority or any other Person therefor, then, upon the reasonable request of the Collateral Agent, such Grantor agrees to use commercially reasonable efforts to assist and aid the Collateral Agent to obtain as soon as commercially practicable any necessary approvals or consents for the exercise of any such remedies, rights and powers.

 

SECTION 4.8  Collateral .  All information set forth herein, including the schedules annexed hereto, and all information contained in any documents, schedules and lists heretofore delivered to any Secured Party in connection with this Security Agreement, in each case, relating to the Collateral, is accurate and complete in all material respects.  The Collateral described on the schedules annexed hereto constitutes all of the property of such type of Collateral owned or held by the Grantors.

 

SECTION 4.9  Insurance .  Such Grantor shall (a) maintain or shall cause to be maintained such insurance as is required pursuant to Section 5.07 of the Credit Agreement; (b) maintain such other insurance as may be required by applicable Law; and (c) furnish to the Collateral Agent, upon written request, full information as to the insurance carried.  Each Grantor hereby irrevocably makes, constitutes and appoints the Collateral Agent (and all officers, employees or agents designated by the Collateral Agent) as such Grantor’s true and lawful agent (and attorney-in-fact), exercisable only after the occurrence and during the continuance of an Event of Default, for the purpose of making, settling and adjusting claims in respect of the Collateral under policies of insurance, endorsing the name of such Grantor on any check, draft, instrument or other item of payment for the proceeds of such policies of insurance and for making all determinations and decisions with respect thereto.  In the event that any Grantor at any time or times shall fail to obtain or maintain any of the policies of insurance required hereby or to pay any premium in whole or in part relating thereto, the Collateral Agent may, without waiving or releasing any obligation or liability of the Grantors hereunder or any Default or Event of Default, in its sole discretion, obtain and maintain such policies of insurance and pay such premium and take any other actions with respect thereto as the Collateral Agent deems advisable.  All sums disbursed by the Collateral Agent in connection with this Section 4.9 , including

 

16



 

reasonable attorneys’ fees, court costs, expenses and other charges relating thereto, shall be payable, upon demand, by the Grantors to the Collateral Agent and shall be additional Secured Obligations secured hereby.

 

SECTION 4.10  Payment of Taxes; Compliance with Laws; Contested Liens; Claims .  Each Grantor represents and warrants that all Claims imposed upon or assessed against the Collateral have been paid and discharged except to the extent such Claims constitute a Lien not yet due and payable or a Permitted Encumbrance.  Each Grantor shall comply with all applicable Law relating to the Collateral the failure to comply with which, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.  Each Grantor may at its own expense contest the validity, amount or applicability of any Claims so long as the contest thereof shall be conducted in accordance with, and permitted pursuant to the provisions of, the Credit Agreement.  Notwithstanding the foregoing provisions of this Section 4.10 , no contest of any such obligation may be pursued by such Grantor if such contest would expose the Collateral Agent or any other Secured Party to (a) any possible criminal liability or (b) any additional civil liability for failure to comply with such obligations unless such Grantor shall have furnished a bond or other security therefor satisfactory to the Collateral Agent or such other Secured Party, as the case may be.

 

SECTION 4.11  [Reserved] .

 

SECTION 4.12  New Subsidiaries .  Pursuant to Section 5.12 of the Credit Agreement, certain Subsidiaries (whether by acquisition or creation) of any Grantor are required to enter into this Security Agreement by executing and delivering in favor of the Collateral Agent a Joinder Agreement.  Upon the execution and delivery of a Joinder Agreement by any such new Subsidiary, such Subsidiary shall become a Grantor hereunder with the same force and effect as if originally named as a Grantor herein.  The execution and delivery of any instrument adding an additional Grantor as a party to this Security Agreement shall not require the consent of any other Grantor hereunder.  The rights and obligations of each Grantor hereunder shall remain in full force and effect notwithstanding the addition of any new Grantor hereunder.

 

ARTICLE V

 

CERTAIN PROVISIONS CONCERNING SECURITIES COLLATERAL

 

SECTION 5.1  Pledge of Additional Securities Collateral .  Each Grantor shall, upon obtaining any Pledged Interests, Successor Interests or Intercompany Notes required to be pledged hereunder, accept the same in trust for the benefit of the Collateral Agent and forthwith deliver to the Collateral Agent a pledge amendment, duly executed by such Grantor, in substantially the form of Exhibit 1 annexed hereto (each, a “ Pledge Amendment ”), and the certificates and other documents required under Sections 3.1 and 3.2 hereof in respect of the additional Pledged Interests, Successor Interests or Intercompany Notes which are to be pledged pursuant to this Security Agreement, and confirming the attachment of the Lien hereby created on and in respect of such additional Pledged Interests, Successor Interests or Intercompany Notes.  Each Grantor hereby authorizes the Collateral Agent to attach each Pledge Amendment to this Security Agreement and agrees that all Pledged Interests, Successor Interests or Intercompany Notes listed on any Pledge Amendment delivered to the Collateral Agent shall for all purposes hereunder be considered Collateral.

 

17



 

SECTION 5.2  Voting; Distributions; etc.

 

(a)          So long as no Event of Default shall have occurred and be continuing, each Grantor shall be entitled to exercise any and all voting and other consensual rights pertaining to the Securities Collateral or any part thereof for any purpose not inconsistent with the terms or purposes hereof, the Credit Agreement or any other Loan Document evidencing the Secured Obligations; provided , that , no vote shall be cast or corporate or other ownership right exercised or other action taken that could reasonably be expected to impair the Collateral or to be inconsistent with or result in any violation of any provision of the Credit Agreement, this Security Agreement or any other Loan Document.  The Collateral Agent shall be deemed without further action or formality to have granted to each Grantor all necessary consents relating to voting rights and shall, if necessary, upon written request of any Grantor and at the sole cost and expense of the Grantors, from time to time execute and deliver (or cause to be executed and delivered) to such Grantor all such instruments as such Grantor may reasonably request in order to permit such Grantor to exercise the voting and other rights which it is entitled to exercise pursuant to this Section 5.2(a) .

 

(b)          Upon the occurrence and during the continuance of any Event of Default, all rights of each Grantor to exercise the voting and other consensual rights it would otherwise be entitled to exercise pursuant to Section 5.2(a)  hereof without any action, other than, in the case of any Securities Collateral, or the giving of any notice, shall immediately cease, and all such rights shall thereupon become vested in the Collateral Agent, which shall thereupon have the sole right (but shall be under no obligation) to exercise such voting and other consensual rights; provided , that , the Collateral Agent shall have the right, in its sole discretion, from time to time following the occurrence and continuance of an Event of Default to permit such Grantor to exercise such rights under Section 5.2(a)  hereof.  After such Event of Default is no longer continuing, each Grantor shall have the right to exercise the voting, managerial and other consensual rights and powers that it would otherwise be entitled to pursuant to Section 5.2(a)  hereof.

 

(c)           So long as no Event of Default shall have occurred and be continuing, each Grantor shall be entitled to receive and retain, and to utilize free and clear of the Lien hereof, any and all Distributions, but only if and to the extent made without violating, and to the extent permitted by, the provisions of the Credit Agreement; provided , that , any and all such Distributions consisting of rights or interests in the form of securities shall be forthwith delivered to the Collateral Agent to hold as Collateral and shall, if received by any Grantor, be received in trust for the benefit of the Collateral Agent, be segregated from the other property or funds of such Grantor and be forthwith delivered to the Collateral Agent as Collateral in the same form as so received (with any necessary endorsement).  The Collateral Agent shall, if necessary, upon written request of any Grantor and at the sole cost and expense of the Grantors, from time to time execute and deliver (or cause to be executed and delivered) to such Grantor all such instruments as such Grantor may reasonably request in order to permit such Grantor to receive the Distributions which it is authorized to receive and retain pursuant to this Section 5.2(c) .

 

(d)          Upon the occurrence and during the continuance of any Event of Default, all rights of each Grantor to receive Distributions which it would otherwise be authorized to receive and retain pursuant to Section 5.2(c)  hereof shall cease and all such rights shall thereupon become vested in the Collateral Agent, which shall thereupon have the sole right to receive and

 

18



 

hold as Collateral such Distributions.  After such Event of Default is no longer continuing, each Grantor shall have the right to receive the Distributions which it would be authorized to receive and retain pursuant to Section 5.2(c)  hereof.

 

(e)           Each Grantor shall, at its sole cost and expense, from time to time execute and deliver to the Collateral Agent appropriate proxies, dividend payment orders and other instruments as the Collateral Agent may reasonably request in order to permit the Agent to exercise the voting and other rights which it may be entitled to exercise pursuant to Section 5.2(b)  and to receive all Distributions which it may be entitled to receive under Section 5.2(c) .

 

SECTION 5.3  Turnover .  All Distributions which are received by any Grantor contrary to the provisions of Section 5.2(c)  hereof shall be received in trust for the benefit of the Collateral Agent, shall be segregated from other funds of such Grantor and shall immediately be paid over to the Collateral Agent as Collateral in the same form as so received (with any necessary endorsement).

 

SECTION 5.4  Defaults, Etc .   Such Grantor is not in default in the payment of any portion of any mandatory capital contribution, if any, required to be made under any agreement to which such Grantor is a party relating to the Pledged Interests and Successor Interests pledged by it, and such Grantor is not in violation of any other provisions of any such agreement to which such Grantor is a party, or otherwise in default or violation thereunder.  No Securities Collateral pledged by such Grantor is subject to any defense, offset or counterclaim, nor have any of the foregoing been asserted or alleged against such Grantor by any Person with respect thereto, and as of the date hereof, there are no certificates, instruments, documents or other writings (other than the Organization Documents and certificates, if any, delivered to the Collateral Agent) which evidence any Pledged Interests and Successor Interests of such Grantor.

 

SECTION 5.5  Certain Agreements of Grantors as Issuers and Holders of Equity Interests.

 

(a)          In the case of each Grantor which is an issuer of Securities Collateral, such Grantor agrees to be bound by the terms of this Security Agreement relating to the Securities Collateral issued by it and will comply with such terms insofar as such terms are applicable to it.

 

(b)          In the case of each Grantor which is a partner in a partnership, limited liability company or other entity, such Grantor hereby consents to the extent required by the applicable Organization Documents to the pledge by each other Grantor, pursuant to the terms hereof, of the Pledged Interests in such partnership, limited liability company or other entity and, upon the occurrence and during the continuance of an Event of Default, to the transfer of such Pledged Interests to the Collateral Agent or its nominee and to the substitution of the Collateral Agent or its nominee as a substituted partner or member in such partnership, limited liability company or other entity with all the rights, powers and duties of a general partner or a limited partner or member, as the case may be.

 

(c)           Without the prior written consent of the Collateral Agent, such Grantor will not (i) vote to enable, or take any other action to permit, any issuer of Pledged Interests and Successor Interests to amend its Organization Documents in any manner that adversely affects the validity, perfection or priority of the Collateral Agent’s Lien therein or (ii) enter into any

 

19



 

agreement or undertaking restricting the right or ability of such Grantor or the Collateral Agent to sell, assign or transfer any of the Pledged Interests and Successor Interests or Proceeds thereof or any interest therein.

 

ARTICLE VI

 

CERTAIN PROVISIONS CONCERNING INTELLECTUAL
PROPERTY

 

SECTION 6.1  Grant of License .  For the purpose of enabling the Collateral Agent, during the continuance of an Event of Default, to exercise rights and remedies under Article VIII hereof with respect to the Collateral at such time as the Collateral Agent shall be lawfully entitled to exercise such rights and remedies, and for no other purpose, each Grantor hereby grants to the Collateral Agent, to the extent assignable, an irrevocable, non-exclusive license (exercisable without payment of royalty or other compensation to such Grantor) to use, assign, license or sublicense any of the Intellectual Property now owned or hereafter acquired by such Grantor, wherever the same may be located, including in such license access to all media in which any of the licensed items may be recorded or stored and to all computer programs used for the compilation or printout hereof.

 

SECTION 6.2  Registrations .  Except pursuant to licenses and other user agreements entered into by any Grantor in the ordinary course of business that are listed in Schedule III of the Perfection Certificate, on and as of the date hereof (a) each Grantor is the sole and exclusive owner of the entire right, title and interest in, free and clear of all Liens except Permitted Encumbrances, and possesses the right to use, and has done nothing to authorize or enable any other Person to use, any material Copyright, Patent or Trademark listed in Schedule III of the Perfection Certificate, (b) all registrations and issuances listed in Schedule III of the Perfection Certificate are subsisting, valid and in full force and effect, and each Grantor has performed all acts and has paid all renewal, maintenance and other fees required to maintain each and every registration and application in the material Copyrights, Patents and Trademarks listed in Schedule III of the Perfection Certificate, (c) no holding, decision, ruling or judgment has been rendered in any action or proceeding before any court or administrative authority challenging the validity, enforceability, or scope of , or such Grantor’s right to register, own or use any material Copyrights, Patents and Trademarks listed in Schedule III of the Perfection Certificate and no such action or proceeding is pending or, to the best of such Grantor’s knowledge, threatened, (d) all registrations, issuances and applications for material Copyrights, Patents and Trademarks listed in Schedule III of the Perfection Certificate are standing in the name of such Grantor, and (e) each Grantor controls the nature and quality in accordance with industry standards of all products sold and all services rendered under or in connection with all Trademarks of such Grantor and has taken all action necessary to insure that all licensees of the Trademarks owned by such Grantor comply with such Grantor’s standards of quality and each Grantor has taken commercially reasonable steps to protect the confidentiality of its trade secrets in accordance with industry standards.

 

SECTION 6.3  No Violations or Proceedings .  To each Grantor’s knowledge, on and as of the date hereof, there is no violation by others of any right of such Grantor with respect to any

 

20



 

Copyright, Patent or Trademark listed in Schedule III of the Perfection Certificate, respectively, pledged by it under the name of such Grantor.

 

SECTION 6.4  Protection of Collateral Agent’s Security .  On a continuing basis, each Grantor shall, at its sole cost and expense, (a) promptly following its becoming aware thereof, notify the Collateral Agent of (i) any adverse determination in any proceeding in the United States Patent and Trademark Office or United States Copyright Office with respect to any Copyright, Patent or Trademark necessary for the conduct of business of such Grantor or (ii) the institution of any proceeding or any adverse determination in any federal, state or local court or administrative body regarding such Grantor’s claim of ownership in or right to use any of the Intellectual Property material to the use and operation of the Collateral, its right to register such Intellectual Property or its right to keep and maintain such registration in full force and effect, (b) maintain and protect the Intellectual Property necessary for the conduct of business of such Grantor, (c) not permit to lapse or become abandoned any Intellectual Property necessary for the conduct of business of such Grantor, and not settle or compromise any pending or future litigation or administrative proceeding with respect to such Intellectual Property, in each case except as shall be consistent with commercially reasonable business judgment and, if any Event of Default has occurred and is continuing, with the prior approval of the Collateral Agent (such approval not to be unreasonably withheld), (d) upon such Grantor’s obtaining knowledge thereof, promptly notify the Collateral Agent in writing of any event which may be reasonably expected to materially and adversely affect the value or utility of the Intellectual Property or any portion thereof material to the use and operation of the Collateral, the ability of such Grantor or the Collateral Agent to dispose of the Intellectual Property or any portion thereof or the rights and remedies of the Collateral Agent in relation thereto including, without limitation, a levy or threat of levy or any legal process against the Intellectual Property or any portion thereof, (e) not license the Intellectual Property other than licenses entered into by such Grantor in, or incidental to, the ordinary course of business, or amend or permit the amendment of any of the material licenses in a manner that materially and adversely affects the right to receive payments thereunder, or in any manner that would materially impair the value of the Intellectual Property or the Lien on and security interest in the Intellectual Property intended to be granted to the Collateral Agent for the benefit of the Secured Parties, without the consent of the Collateral Agent, (f) until the Collateral Agent exercises its rights to make collection, diligently keep adequate records respecting the Intellectual Property and (g) furnish to the Collateral Agent from time to time upon the Collateral Agent’s reasonable request therefor detailed statements and amended schedules further identifying and describing the material Intellectual Property and such other materials evidencing or reports pertaining to the material Intellectual Property as the Collateral Agent may from time to time request.  Notwithstanding the foregoing, nothing herein shall prevent any Grantor from selling, disposing of or otherwise using any material Intellectual Property as permitted under the Credit Agreement.

 

SECTION 6.5  After-Acquired Property .  If at any time before this Security Agreement shall have been terminated in accordance with Section 9.5(a)  hereof, any Grantor shall (a) obtain any rights to any additional Intellectual Property or (b) become entitled to the benefit of any additional Intellectual Property or any renewal or extension thereof, including any reissue, division, continuation, or continuation-in-part of any Intellectual Property, or any improvement on any Intellectual Property, the provisions hereof shall automatically apply thereto and any such item enumerated in clauses (a) or (b) of this Section 6.5 with respect to such Grantor shall automatically constitute Intellectual Property if such would have constituted Intellectual Property

 

21



 

at the time of execution hereof and be subject to the Lien and security interest created by this Security Agreement without further action by any party.  With respect to any federally registered Intellectual Property, each Grantor shall promptly (i) provide to the Collateral Agent written notice of any of the foregoing and (ii) confirm the attachment of the Lien and security interest created by this Security Agreement to any rights described in clauses (a) and (b) of the immediately preceding sentence of this Section 6.5 by execution of an instrument in form reasonably acceptable to the Collateral Agent.

 

SECTION 6.6  Modifications .  Each Grantor authorizes the Collateral Agent to modify this Security Agreement by amending Schedule III of the Perfection Certificate to include any Intellectual Property acquired or arising after the date hereof of such Grantor including, without limitation, any of the items listed in Section 6.5 hereof.

 

SECTION 6.7  Litigation .  Unless there shall occur and be continuing any Event of Default, each Grantor shall have the right to commence and prosecute in its own name, as the party in interest, for its own benefit and at the sole cost and expense of the Grantors, such applications for protection of the Intellectual Property and suits, proceedings or other actions to prevent the infringement, counterfeiting, unfair competition, dilution, diminution in value or other damage as are necessary to protect the Intellectual Property.  Upon the occurrence and during the continuance of any Event of Default, the Collateral Agent shall have the right but shall in no way be obligated to file applications for protection of the Intellectual Property and/or bring suit in the name of any Grantor, the Collateral Agent or the other Secured Parties to enforce the Intellectual Property and any license thereunder.  In the event of such suit, each Grantor shall, at the reasonable request of the Collateral Agent, do any and all lawful acts and execute any and all documents requested by the Collateral Agent in aid of such enforcement and the Grantors shall promptly reimburse and indemnify the Collateral Agent, as the case may be, for all costs and expenses incurred by the Collateral Agent in the exercise of its rights under this Section 6.7 in accordance with Section 9.3 hereof.  In the event that the Collateral Agent shall elect not to bring suit to enforce the Intellectual Property, each Grantor agrees, at the request of the Collateral Agent, to take all commercially reasonable actions necessary, whether by suit, proceeding or other action, to prevent the infringement, counterfeiting, unfair competition, dilution, diminution in value of or other damage to any of the Intellectual Property by others and for that purpose agrees to diligently maintain any suit, proceeding or other action against any Person so infringing necessary to prevent such infringement.

 

SECTION 6.8  Third Party Consents .  Each Grantor shall use reasonable commercial efforts to obtain the consent of third parties to the extent such consent is necessary or desirable to create a valid, perfected security interest in favor of the Collateral Agent in any Intellectual Property.

 

ARTICLE VII

 

CERTAIN PROVISIONS CONCERNING ACCOUNTS

 

SECTION 7.1  Special Representations and Warranties .  As of the time when each of its Accounts is included in the Borrowing Base (as defined in the ABL Credit Agreement) as an Eligible Credit Card Receivable (as defined in the ABL Credit Agreement) each Grantor shall be deemed to have represented and warranted that such Account constituting a Credit Card Receivable and all records, papers and documents relating thereto (a) are genuine and correct and

 

22



 

in all material respects what they purport to be, (b) represent the legal, valid and binding obligation of the account debtor, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar Laws relating to or limiting creditors’ rights generally or by equitable principles relating to enforceability (including limitations on the enforceability of credit card charges), evidencing indebtedness unpaid and owed by such account debtor, arising out of the performance of labor or services or the sale, lease, license, assignment or other disposition and delivery of the goods or other property listed therein or out of an advance or a loan and (c) are in all material respects in compliance and conform with all applicable material federal, state and local Laws and applicable Laws of any relevant foreign jurisdiction.

 

SECTION 7.2  Maintenance of Records .  Each Grantor shall keep and maintain at its own cost and expense materially complete records of each Account, in a manner consistent with prudent business practice, including, without limitation, records of all payments received, all credits granted thereon, all merchandise returned and all other documentation relating thereto.  Each Grantor shall, at such Grantor’s sole cost and expense, upon the Collateral Agent’s demand made at any time after the occurrence and during the continuance of any Event of Default, deliver all tangible evidence of Accounts, including, without limitation, all documents evidencing Accounts and any books and records relating thereto to the Collateral Agent or to its representatives (copies of which evidence and books and records may be retained by such Grantor).  Upon the occurrence and during the continuance of any Event of Default, the Collateral Agent may transfer a full and complete copy of any Grantor’s books, records, credit information, reports, memoranda and all other writings relating to the Accounts to and for the use by any Person that has acquired or is contemplating acquisition of an interest in the Accounts or the Collateral Agent’s security interest therein in accordance with applicable Law without the consent of any Grantor.

 

SECTION 7.3  Legend .  To the extent reasonably practical, each Grantor shall legend, at the request of the Collateral Agent made at any time after the occurrence and during the continuance of any Event of Default and in form and manner reasonably satisfactory to the Collateral Agent, the books, records and documents of such Grantor evidencing or pertaining to the Credit Card Receivables with an appropriate reference to the fact that the Credit Card Receivables have been collaterally assigned to the Collateral Agent for the benefit of the Secured Parties and that the Collateral Agent has a security interest therein.

 

SECTION 7.4  Modification of Terms, Etc .   No Grantor shall rescind or cancel any indebtedness evidenced by any Account or modify any term thereof or make any adjustment with respect thereto except in the ordinary course of business consistent with prudent business practice, or extend or renew any such indebtedness except in the ordinary course of business consistent with prudent business practice or compromise or settle any dispute, claim, suit or legal proceeding relating thereto or sell any Account or interest therein except in the ordinary course of business consistent with prudent business practice or in accordance with the Credit Agreement without the prior written consent of the Collateral Agent; provided , that , the foregoing shall not apply to any Account that is an Excluded Asset because it has been sold pursuant to a Permitted Securitization Facility (as defined in the ABL Credit Agreement).

 

SECTION 7.5  Collection .  Each Grantor shall cause to be collected from the account debtor of each of the Accounts constituting Credit Card Receivables, as and when due in the ordinary course of business consistent with prudent business practice, any and all amounts owing

 

23



 

under or on account of such Accounts constituting Credit Card Receivables, and apply forthwith upon receipt thereof all such amounts as are so collected to the outstanding balance of such Accounts constituting Credit Card Receivables.  The costs and expenses (including, without limitation, attorneys’ fees) of collection, in any case, whether incurred by any Grantor, the Collateral Agent or any other Secured Party, shall be paid by the Grantors.

 

ARTICLE VIII

 

REMEDIES

 

SECTION 8.1  Remedies .  Upon the occurrence and during the continuance of any Event of Default the Collateral Agent may, and at the direction of the Required Lenders, shall, from time to time in respect of the Collateral, in addition to the other rights and remedies provided for herein, under applicable Law or otherwise available to it, subject to the Intercreditor Agreement:

 

(a)          Personally, or by agents or attorneys, immediately take possession of the Collateral or any part thereof, from any Grantor or any other Person who then has possession of any part thereof with or without notice or process of law, and for that purpose may enter upon any Grantor’s premises where any of the Collateral is located, remove such Collateral, remain present at such premises to receive copies of all communications and remittances relating to the Collateral and use in connection with such removal and possession any and all services, supplies, aids and other facilities of any Grantor;

 

(b)          Demand, sue for, collect or receive any money or property at any time payable or receivable in respect of the Collateral including, without limitation, instructing the obligor or obligors on any agreement, instrument or other obligation constituting part of the Collateral to make any payment required by the terms of such agreement, instrument or other obligation directly to the Collateral Agent, and in connection with any of the foregoing, compromise, settle, extend the time for payment and make other modifications with respect thereto; provided , that , in the event that any such payments are made directly to any Grantor, prior to receipt by any such obligor of such instruction, such Grantor shall segregate all amounts received pursuant thereto in trust for the benefit of the Collateral Agent and shall promptly pay such amounts to the Collateral Agent;

 

(c)           Sell, assign, grant a license to use or otherwise liquidate, or direct any Grantor to sell, assign, grant a license to use or otherwise liquidate, any and all investments made in whole or in part with the Collateral or any part thereof, and take possession of the proceeds of any such sale, assignment, license or liquidation;

 

(d)          Take possession of the Collateral or any part thereof, by directing any Grantor in writing to deliver the same to the Collateral Agent at any place or places so designated by the Collateral Agent, in which event such Grantor shall at its own expense:  (i) forthwith cause the same to be moved to the place or places designated by the Collateral Agent and therewith delivered to the Collateral Agent, (ii) store and keep any Collateral so delivered to the Collateral Agent at such place or places pending further action by the Collateral Agent and (iii) while the Collateral shall be so stored and kept, provide such security and maintenance services as shall be necessary to protect the same and to preserve and maintain them in good condition.  Each

 

24



 

Grantor’s obligation to deliver the Collateral as contemplated in this Section 8.1 is of the essence hereof.  Upon application to a court of equity having jurisdiction, the Collateral Agent shall be entitled to a decree requiring specific performance by any Grantor of such obligation;

 

(e)           Withdraw all moneys, instruments, securities and other property in any bank, financial securities, deposit or other account of any Grantor constituting Collateral for application to the Secured Obligations as provided in Section 7.02 of the Credit Agreement;

 

(f)            Retain and apply the Distributions to the Secured Obligations as provided in Section 7.02 of the Credit Agreement;

 

(g)           Exercise any and all rights as beneficial and legal owner of the Collateral, including, without limitation, perfecting assignment of and exercising any and all voting, consensual and other rights and powers with respect to any Collateral; and

 

(h)          Exercise all the rights and remedies of a secured party under the UCC, and the Collateral Agent may also in its sole discretion, without notice except as specified in Section 8.2 hereof, sell, assign or grant a license to use the Collateral or any part thereof in one or more parcels at public or private sale, at any exchange, broker’s board or at any of the Collateral Agent’s offices or elsewhere, for cash, on credit or for future delivery, and at such price or prices and upon such other terms as the Collateral Agent may deem commercially reasonable.  The Collateral Agent or any other Secured Party or any of their respective Affiliates may be the purchaser, licensee, assignee or recipient of any or all of the Collateral at any such sale and shall be entitled, for the purpose of bidding and making settlement or payment of the purchase price for all or any portion of the Collateral sold, assigned or licensed at such sale, to use and apply any of the Secured Obligations owed to such Person as a credit on account of the purchase price of any Collateral payable by such Person at such sale.  Each purchaser, assignee, licensee or recipient at any such sale shall acquire the property sold, assigned or licensed absolutely free from any claim or right on the part of any Grantor, and each Grantor hereby waives, to the fullest extent permitted by Law, all rights of redemption, stay and/or appraisal which it now has or may at any time in the future have under any rule of law or statute now existing or hereafter enacted.  The Collateral Agent shall not be obligated to make any sale of Collateral regardless of notice of sale having been given.  The Collateral Agent may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned.  To the fullest extent permitted by Law, each Grantor hereby waives any claims against the Collateral Agent arising by reason of the fact that the price at which any Collateral may have been sold, assigned or licensed at such a private sale was less than the price which might have been obtained at a public sale, even if the Collateral Agent accepts the first offer received and does not offer such Collateral to more than one offeree.

 

SECTION 8.2  Notice of Sale .  Each Grantor acknowledges and agrees that, to the extent notice of sale or other disposition of Collateral shall be required by applicable Law and unless the Collateral is perishable or threatens to decline speedily in value, or is of a type customarily sold on a recognized market (in which event the Collateral Agent shall provide such Grantor such advance notice as may be practicable under the circumstances), 10 days’ prior notice to such Grantor of the time and place of any public sale or of the time after which any private sale

 

25



 

or other intended disposition is to take place shall be commercially reasonable notification of such matters.  No notification need be given to any Grantor if it has signed, after the occurrence of an Event of Default, a statement renouncing or modifying (as permitted under Law) any right to notification of sale or other intended disposition.

 

SECTION 8.3  Waiver of Notice and Claims .  Each Grantor hereby waives, to the fullest extent permitted by applicable Law, notice or judicial hearing in connection with the Collateral Agent’s taking possession or the Collateral Agent’s disposition of any of the Collateral, including, without limitation, any and all prior notice and hearing for any prejudgment remedy or remedies and any such right which such Grantor would otherwise have under law, and each Grantor hereby further waives, to the fullest extent permitted by applicable Law:  (a) all damages occasioned by such taking of possession, (b) all other requirements as to the time, place and terms of sale or other requirements with respect to the enforcement of the Collateral Agent’s rights hereunder and (c) all rights of redemption, appraisal, valuation, stay, extension or moratorium now or hereafter in force under any applicable Law.  The Collateral Agent shall not be liable for any incorrect or improper payment made pursuant to this Article VIII in the absence of gross negligence or willful misconduct as determined in a final, nonappealable judgment of a court of competent jurisdiction.  Any sale of, or the grant of options to purchase, or any other realization upon, any Collateral shall operate to divest all right, title, interest, claim and demand, either at law or in equity, of the applicable Grantor therein and thereto, and shall be a perpetual bar both at law and in equity against such Grantor and against any and all Persons claiming or attempting to claim the Collateral so sold, optioned or realized upon, or any part thereof, from, through or under such Grantor.

 

SECTION 8.4  Certain Sales of Collateral.

 

(a)          Each Grantor recognizes that, by reason of certain prohibitions contained in law, rules, regulations or orders of any Governmental Authority, the Collateral Agent may be compelled, with respect to any sale of all or any part of the Collateral, to limit purchasers to those who meet the requirements of such Governmental Authority.  Each Grantor acknowledges that any such sales may be at prices and on terms less favorable to the Collateral Agent than those obtainable through a public sale without such restrictions, and, notwithstanding such circumstances, agrees that any such restricted sale shall be deemed to have been made in a commercially reasonable manner and that, except as may be required by applicable Law, the Collateral Agent shall have no obligation to engage in public sales.

 

(b)          Each Grantor recognizes that, by reason of certain prohibitions contained in the Securities Act, and applicable state securities Laws, the Collateral Agent may be compelled, with respect to any sale of all or any part of the Securities Collateral and Investment Property, to limit purchasers to Persons who will agree, among other things, to acquire such Securities Collateral or Investment Property for their own account, for investment and not with a view to the distribution or resale thereof.  Each Grantor acknowledges that any such private sales may be at prices and on terms less favorable to the Collateral Agent than those obtainable through a public sale without such restrictions (including, without limitation, a public offering made pursuant to a registration statement under the Securities Act), and, notwithstanding such circumstances, agrees that any such private sale shall be deemed to have been made in a commercially reasonable manner and that the Collateral Agent shall have no obligation to engage in public sales and no obligation to delay the sale of any Securities Collateral or

 

26



 

Investment Property for the period of time necessary to permit the issuer thereof to register it for a form of public sale requiring registration under the Securities Act or under applicable state securities Laws, even if such issuer would agree to do so.

 

(c)           If the Collateral Agent determines to exercise its right to sell any or all of the Securities Collateral or Investment Property, upon written request, the applicable Grantor shall from time to time furnish to the Collateral Agent all such information as the Collateral Agent may reasonably request in order to determine the number of securities included in the Securities Collateral or Investment Property which may be sold by the Collateral Agent as exempt transactions under the Securities Act and the rules of the Securities and Exchange Commission thereunder, as the same are from time to time in effect.

 

(d)          Each Grantor further agrees that a breach of any of the covenants contained in this Section 8.4 will cause irreparable injury to the Collateral Agent and the other Secured Parties, that the Collateral Agent and the other Secured Parties have no adequate remedy at law in respect of such breach and, as a consequence, that each and every covenant contained in this Section 8.4 shall be specifically enforceable against such Grantor, and such Grantor hereby waives and agrees not to assert any defenses against an action for specific performance of such covenants except for a defense that no Event of Default has occurred and is continuing.

 

SECTION 8.5  No Waiver; Cumulative Remedies.

 

(a)          No failure on the part of the Collateral Agent to exercise, no course of dealing with respect to, and no delay on the part of the Collateral Agent in exercising, any right, power or remedy hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any such right, power or remedy hereunder preclude any other or further exercise thereof or the exercise of any other right, power or remedy; nor shall the Collateral Agent be required to look first to, enforce or exhaust any other security, collateral or guaranties.  The remedies herein provided are cumulative and are not exclusive of any remedies provided by Law.

 

(b)          In the event that the Collateral Agent shall have instituted any proceeding to enforce any right, power or remedy under this Security Agreement by foreclosure, sale, entry or otherwise, and such proceeding shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Collateral Agent, then and in every such case, the Grantors, the Collateral Agent and each other Secured Party shall be restored to their respective former positions and rights hereunder with respect to the Collateral, and all rights, remedies and powers of the Collateral Agent and the other Secured Parties shall continue as if no such proceeding had been instituted.

 

SECTION 8.6  Certain Additional Actions Regarding Intellectual Property .  If any Event of Default shall have occurred and be continuing, upon the written demand of the Collateral Agent, each Grantor shall execute and deliver to the Collateral Agent an assignment or assignments of the registered Patents, Trademarks and/or Copyrights and such other documents as are necessary or appropriate to carry out the intent and purposes hereof to the extent such assignment does not result in any loss of rights therein under applicable Law.  Within five Business Days of written notice thereafter from the Collateral Agent, each Grantor shall make available to the Collateral Agent, to the extent within such Grantor’s power and authority, such

 

27



 

personnel in such Grantor’s employ on the date of the Event of Default as the Collateral Agent may reasonably designate to permit such Grantor to continue, directly or indirectly, to produce, advertise and sell the products and services sold by such Grantor under the registered Patents, Trademarks and/or Copyrights, and such Persons shall be available to perform their prior functions on the Collateral Agent’s behalf.

 

SECTION 8.7  Application of Proceeds .  The proceeds received by the Collateral Agent in respect of any sale of, collection from or other realization upon all or any part of the Collateral pursuant to the exercise by the Collateral Agent of its remedies shall be applied, together with any other sums then held by the Collateral Agent pursuant to this Security Agreement, in accordance with and as set forth in Section 7.02 of the Credit Agreement.

 

SECTION 8.8  Third Party Agreements .  Pursuant to the Collateral Access Agreements (as defined in the ABL Credit Agreement), DDA Notifications and Credit Card Notifications, the Collateral Agent has the right to give notice to certain Persons who are parties thereto or recipients thereof.  With respect to each DDA Notification and Credit Card Notification, the Administrative Agent hereby acknowledges and agrees that it will not deliver any notice instructing the recipient thereof to transfer funds to any account other than the account identified in such notice until after the occurrence and during the continuance of an Event of Default.  Additionally, with respect to each Credit Card Notification, the Administrative Agent hereby acknowledges and agrees that it will not deliver any request for statements or other information until after the occurrence and during the continuance of an Event of Default.  With respect to each Collateral Access Agreement (as defined in the ABL Credit Agreement), the Collateral Agent hereby acknowledges and agrees that it will not deliver any notice to such Persons in connection with the exercise of its rights and remedies under the Credit Agreement, this Security Agreement and the other Loan Documents until after the occurrence and during the continuance of an Event of Default.

 

ARTICLE IX
MISCELLANEOUS

 

SECTION 9.1  Concerning the Collateral Agent.

 

(a)          The Collateral Agent has been appointed as agent pursuant to the Credit Agreement.  The actions of the Collateral Agent hereunder are subject to the provisions of the Credit Agreement.  The Collateral Agent shall have the right hereunder to make demands, to give notices, to exercise or refrain from exercising any rights, and to take or refrain from taking action (including, without limitation, the release or substitution of the Collateral), in accordance with this Security Agreement and the Credit Agreement.  The Collateral Agent may employ agents and attorneys-in-fact in connection herewith and shall not be liable for the negligence or misconduct of any such agents or attorneys-in-fact.  The Collateral Agent may resign and a successor Collateral Agent may be appointed in the manner provided in the Credit Agreement.  Upon the acceptance of any appointment as the Collateral Agent by a successor Collateral Agent, that successor Collateral Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Collateral Agent under this Security Agreement, and the retiring Collateral Agent shall thereupon be discharged from its duties and obligations under this Security Agreement.  After any retiring Collateral Agent’s resignation, the provisions hereof

 

28



 

shall inure to its benefit as to any actions taken or omitted to be taken by it under this Security Agreement while it was the Collateral Agent.

 

(b)          The Collateral Agent shall be deemed to have exercised reasonable care in the custody and preservation of the Collateral in its possession if such Collateral is accorded treatment substantially equivalent to that which the Collateral Agent, in its individual capacity, accords its own property consisting of similar instruments or interests, it being understood that neither the Collateral Agent nor any of the other Secured Parties shall have responsibility for, without limitation (i) ascertaining or taking action with respect to calls, conversions, exchanges, maturities, tenders or other matters relating to any Securities Collateral, whether or not the Collateral Agent or any other Secured Party has or is deemed to have knowledge of such matters or (ii) taking any necessary steps to preserve rights against any Person with respect to any Collateral.

 

(c)           The Collateral Agent shall be entitled to rely upon any written notice, statement, certificate, order or other document or any telephone message believed by it to be genuine and correct and to have been signed, sent or made by the proper Person, and, with respect to all matters pertaining to this Security Agreement and its duties hereunder, upon advice of counsel selected by it.

 

(d)          If any item of Collateral also constitutes collateral granted to the Collateral Agent under any other deed of trust, mortgage, security agreement, pledge or instrument of any type, in the event of any conflict between the provisions hereof and the provisions of such other deed of trust, mortgage, security agreement, pledge or instrument of any type in respect of such collateral, the Collateral Agent, in its sole discretion, shall select which provision or provisions shall control.

 

SECTION 9.2  Collateral Agent May Perform; Collateral Agent Appointed Attorney-in-Fact .  If any Grantor shall fail to perform any covenants contained in this Security Agreement or in the Credit Agreement (including, without limitation, such Grantor’s covenants to (a) pay the premiums in respect of all required insurance policies hereunder, (b) pay Claims, (c) make repairs, (d) discharge Liens or (e) pay or perform any other obligations of such Grantor with respect to any Collateral) or if any warranty on the part of any Grantor contained herein shall be breached, the Collateral Agent may (but shall not be obligated to) do the same or cause it to be done or remedy any such breach, and may expend funds for such purpose; provided , that , the Collateral Agent shall in no event be bound to inquire into the validity of any tax, lien, imposition or other obligation which such Grantor fails to pay or perform as and when required hereby.  Any and all amounts so expended by the Collateral Agent shall be paid by the Grantors in accordance with the provisions of Section 9.3 hereof.  Neither the provisions of this Section 9.2 nor any action taken by the Collateral Agent pursuant to the provisions of this Section 9.2 shall prevent any such failure to observe any covenant contained in this Security Agreement nor any breach of warranty from constituting an Event of Default.  Each Grantor hereby appoints the Collateral Agent its attorney-in-fact, with full authority in the place and stead of such Grantor and in the name of such Grantor, or otherwise, from time to time after the occurrence and during the continuation of an Event of Default in the Collateral Agent’s discretion to take any action and to execute any instrument consistent with the terms of the Credit Agreement and the other Security Documents which the Collateral Agent may deem necessary to accomplish the purposes

 

29



 

hereof.  The foregoing grant of authority is a power of attorney coupled with an interest and such appointment shall be irrevocable for the term hereof.  Each Grantor hereby ratifies all that such attorney shall lawfully do or cause to be done by virtue hereof.

 

SECTION 9.3  Expenses .  Each Grantor will upon demand pay to the Collateral Agent the amount of any and all amounts required to be paid pursuant to Section 9.05 of the Credit Agreement.

 

SECTION 9.4  Continuing Security Interest; Assignment .  This Security Agreement shall create a continuing security interest in the Collateral and shall (a) be binding upon the Grantors, their respective successors and assigns, and (b) inure, together with the rights and remedies of the Collateral Agent hereunder, to the benefit of the Collateral Agent and the other Secured Parties and each of their respective successors, transferees and assigns.  No other Persons (including, without limitation, any other creditor of any Grantor) shall have any interest herein or any right or benefit with respect hereto.  Without limiting the generality of the foregoing clause (b) , any Secured Party may assign or otherwise transfer any indebtedness held by it secured by this Security Agreement to any other Person, and such other Person shall thereupon become vested with all the benefits in respect thereof granted to such Secured Party, herein or otherwise, subject, however, to the provisions of the Credit Agreement.

 

SECTION 9.5  Termination; Release.

 

(a)          This Security Agreement, the Lien in favor of the Collateral Agent (for the benefit of itself and the other Secured Parties) and all other security interests granted hereby shall terminate with respect to all Secured Obligations, and all rights to the Collateral shall revert to Grantors or any other Person entitled thereto, when (i) the Commitments shall have expired or been terminated and (ii) the principal of and interest on each Loan and all fees and other Secured Obligations shall have been indefeasibly paid in full in cash; provided , that , in connection with the termination of this Security Agreement, the Collateral Agent may require such indemnities and collateral security as it shall reasonably deem necessary or appropriate to protect the Secured Parties against (A) loss on account of credits previously applied to the Secured Obligations that may subsequently be reversed or revoked, (B) any obligations that may thereafter arise with respect to the Bank Product Obligations and (C) any Secured Obligations (other than contingent indemnification obligations for which no claim has been asserted) that may thereafter arise under Section 9.05 of the Credit Agreement.

 

(b)          (i) Upon the consummation of a transaction expressly permitted under the Credit Agreement, which results in a Grantor ceasing to be a Subsidiary of the Borrower, such Grantor shall be automatically released from its obligations under this Security Agreement, the security interest granted hereby shall terminate with respect to such Grantor and all rights to the Collateral of such Grantor shall revert to such Grantor or any other Person entitled thereto.

 

(ii)           Upon any sale or other transfer by any Grantor of any Collateral that is expressly permitted under the Credit Agreement (other than a sale or other transfer to a Loan Party), or upon the effectiveness of any written consent to the release of the security interest granted hereby in any Collateral pursuant to Section 9.20 of the Credit Agreement, the security interest granted hereby shall terminate with respect to such Collateral and all rights to the Collateral shall revert to Grantors or any other Person entitled thereto.

 

30



 

(iii)        At such time as any of the foregoing contained Sections 9.5(a) , 9.5(b)(i)  and 9.5(b)(ii)  hereof, upon the Borrower’s written request and at the sole cost and expense of the Grantors, the Collateral Agent will (A) assign, transfer and deliver to the Grantors, against receipt and without recourse to or warranty by the Collateral Agent, such of the Collateral to be released (in the case of a release) or all of the Collateral (in the case of the satisfaction of Sections 9.5(a) , 9.5(b)(i)  and 9.5(b)(ii)  hereof) as may be in possession of the Collateral Agent and as shall not have been sold or otherwise applied pursuant to the terms hereof, and (B) with respect to any other Collateral, authorize the filing of appropriate termination statements and other documents (including UCC termination statements or releases) to terminate such security interests.

 

(c)           At any time that the respective Grantor desires that the Collateral Agent take any action described in Section 9.5(b)  hereof, such Grantor shall, upon request of the Collateral Agent, deliver to the Collateral Agent an officer’s certificate certifying that the release of the respective Collateral is permitted pursuant to Sections 9.5(a)  or 9.5(b)  hereof.  The Collateral Agent shall have no liability whatsoever to any other Secured Party as the result of any release of Collateral by it as permitted (or which the Collateral Agent in good faith believes to be permitted) by this Section 9.5 .

 

SECTION 9.6  Modification in Writing .  No amendment, modification, supplement, termination or waiver of or to any provision hereof, nor consent to any departure by any Grantor therefrom, shall be effective unless the same shall be made in accordance with the terms of the Credit Agreement and unless in writing and signed by the Collateral Agent and the Grantors.  Any amendment, modification or supplement of or to any provision hereof, any waiver of any provision hereof and any consent to any departure by any Grantor from the terms of any provision hereof shall be effective only in the specific instance and for the specific purpose for which made or given.  Except where notice is specifically required by this Security Agreement or any other document evidencing the Secured Obligations, no notice to or demand on any Grantor in any case shall entitle any Grantor to any other or further notice or demand in similar or other circumstances.

 

SECTION 9.7  Notices .  Unless otherwise provided herein or in the Credit Agreement, any notice or other communication herein required or permitted to be given shall be given in the manner and become effective as set forth in the Credit Agreement, as to any Grantor, addressed to it at the address of the Borrower set forth in the Credit Agreement and as to the Collateral Agent, addressed to it at the address set forth in the Credit Agreement, or in each case at such other address as shall be designated by such party in a written notice to the other parties hereto complying as to delivery with the terms of this Section 9.7 .

 

SECTION 9.8  GOVERNING LAW .  THIS SECURITY AGREEMENT AND ANY CLAIM, CONTROVERSY, DISPUTE OR CAUSE OF ACTION (WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE) BASED UPON, ARISING OUT OF OR RELATING TO THIS SECURITY AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES (OTHER THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW).

 

31



 

SECTION 9.9  CONSENT TO JURISDICTION; SERVICE OF PROCESS; WAIVER OF JURY TRIAL.

 

(a)          EACH GRANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE EXCLUSIVE JURISDICTION OF ANY NEW YORK STATE COURT OR FEDERAL COURT OF THE UNITED STATES OF AMERICA SITTING IN NEW YORK COUNTY, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS SECURITY AGREEMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH GRANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT.  EACH GRANTOR AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.  NOTHING IN THIS SECURITY AGREEMENT SHALL AFFECT ANY RIGHT THAT THE COLLATERAL AGENT OR ANY SECURED PARTY MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS SECURITY AGREEMENT AGAINST ANY GRANTOR OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION IF REQUIRED TO REALIZE UPON THE COLLATERAL OR ENFORCE ANY JUDGMENT.

 

(b)          EACH GRANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS SECURITY AGREEMENT IN ANY COURT REFERRED TO IN SECTION 9.9(a)  HEREOF.  EACH GRANTOR HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH SUIT, ACTION OR PROCEEDING IN ANY SUCH COURT.

 

(c)           EACH GRANTOR AND, EXCEPT AS PROVIDED IN THE LAST SENTENCE OF SECTION 9.9(a)  HEREOF, EACH SECURED PARTY, AGREES THAT ANY ACTION COMMENCED BY ANY GRANTOR ASSERTING ANY CLAIM OR COUNTERCLAIM ARISING UNDER OR IN CONNECTION WITH THIS SECURITY AGREEMENT OR ANY OTHER LOAN DOCUMENT SHALL BE BROUGHT SOLELY IN A COURT OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY OR ANY FEDERAL COURT SITTING THEREIN AS THE COLLATERAL AGENT MAY ELECT IN ITS SOLE DISCRETION AND CONSENTS TO THE EXCLUSIVE JURISDICTION OF SUCH COURTS WITH RESPECT TO ANY SUCH ACTION.

 

(d)          EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 9.7 HEREOF EXCLUDING SERVICE OF PROCESS BY MAIL.  NOTHING IN THIS SECURITY

 

32



 

AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.

 

(e)           EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS SECURITY AGREEMENT.  EACH PARTY HERETO (i) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (ii) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS SECURITY AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.9 .

 

SECTION 9.10  Severability of Provisions .  Any provision hereof which 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 hereof or affecting the validity or enforceability of such provision in any other jurisdiction.

 

SECTION 9.11   Execution in Counterparts; Effectiveness .  This Security Agreement may be executed in any number of counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract.  Delivery of an executed counterpart of a signature page of this Security Agreement by facsimile or other electronic transmission (including “.pdf” or “.tif”) shall be as effective as delivery of a manually executed counterpart of this Security Agreement.

 

SECTION 9.12  No Release .  Nothing set forth in this Security Agreement shall relieve any Grantor from the performance of any term, covenant, condition or agreement on such Grantor’s part to be performed or observed under or in respect of any of the Collateral or from any liability to any Person under or in respect of any of the Collateral or shall impose any obligation on the Collateral Agent or any other Secured Party to perform or observe any such term, covenant, condition or agreement on such Grantor’s part to be so performed or observed or shall impose any liability on the Collateral Agent or any other Secured Party for any act or omission on the part of such Grantor relating thereto or for any breach of any representation or warranty on the part of such Grantor contained in this Security Agreement, the Credit Agreement or the other Loan Documents, or under or in respect of the Collateral or made in connection herewith or therewith.  The obligations of each Grantor contained in this Section 9.12 shall survive the termination hereof and the discharge of such Grantor’s other obligations under this Security Agreement, the Credit Agreement and the other Loan Documents.

 

SECTION 9.13  Obligations Absolute .  All obligations of each Grantor hereunder shall be absolute and unconditional irrespective of:

 

(a)          any bankruptcy, insolvency, reorganization, arrangement, readjustment, composition, liquidation or the like of any Grantor;

 

(b)          any lack of validity or enforceability of the Credit Agreement or any other Loan Document, or any other agreement or instrument relating thereto;

 

33



 

(c)           any change in the time, manner or place of payment of, or in any other term of, all or any of the Secured Obligations, or any other amendment or waiver of or any consent to any departure from the Credit Agreement or any other Loan Document or any other agreement or instrument relating thereto;

 

(d)          any pledge, exchange, release or non-perfection of any other collateral, or any release or amendment or waiver of or consent to any departure from any guarantee, for all or any of the Secured Obligations;

 

(e)           any exercise, non-exercise or waiver of any right, remedy, power or privilege under or in respect hereof, the Credit Agreement or any other Loan Document except as specifically set forth in a waiver granted pursuant to the provisions of Section 9.6 hereof; or

 

(f)            any other circumstances which might otherwise constitute a defense available to, or a discharge of, any Grantor (other than the termination of this Security Agreement in accordance with Section 9.5(a)  hereof).

 

SECTION 9.14  Intercreditor Agreement .

 

(a)          This Security Agreement and the Liens granted to the Collateral Agent pursuant to this Security Agreement or any other Loan Documents in any Collateral and the exercise of any right or remedy with respect to any Collateral hereunder or any other Loan Document are subject to the provisions of the Intercreditor Agreement.  In the event of any inconsistency between the terms of this Security Agreement and the terms of the Intercreditor Agreement, the terms of the Intercreditor Agreement shall control.

 

(b)          Notwithstanding anything herein to the contrary, prior to the Discharge of ABL Debt (as defined in the Intercreditor Agreement), (i) the requirements of this Security Agreement to deliver Collateral, or control thereof, to the Collateral Agent or register the Collateral Agent as the registered owner of any Collateral shall be deemed satisfied by delivery of such Collateral, or control thereof, to, or the registration of such Collateral in the name of, the ABL Collateral Agent and (ii) the Collateral Agent may exercise all remedies of the Collateral Agent hereunder in accordance with Section 3.1 of the Intercreditor Agreement.

 

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

 

34



 

IN WITNESS WHEREOF, the Grantors and the Collateral Agent have caused this Security Agreement to be duly executed and delivered by their duly authorized officers as of the date first above written.

 

 

BORROWER

 

 

 

SUPERVALU INC.

 

 

 

 

By:

 

 

Name:

 Sherry M. Smith

 

Title:

Executive Vice President and Chief Financial Officer

 

 

 

ADVANTAGE LOGISTICS - SOUTHEAST, INC.

 

EASTERN REGION MANAGEMENT CORPORATION

 

FF ACQUISITION, L.L.C.

 

FOODARAMA LLC

 

RICHFOOD, INC.

 

RICHFOOD HOLDINGS, INC.

 

SHOP ‘N SAVE ST. LOUIS, INC.

 

SHOP ‘N SAVE WAREHOUSE FOODS, INC.

 

SHOPPERS FOOD WAREHOUSE CORP.

 

SUPER RITE FOODS, INC.

 

SUPERVALU HOLDINGS, INC.

 

SUPERVALU HOLDINGS - PA LLC

 

 

By: SUPERVALU Holdings, Inc., its sole member

 

SUPERVALU PHARMACIES, INC.

 

SUPERVALU TRANSPORTATION, INC.

 

SUPERVALU TTSJ, INC.

 

W. NEWELL & CO., LLC

 

 

 

 

By:

 

 

Name:

Sherry M. Smith

 

Title:

Vice President

 

 

 

CHAMPLIN 2005 L.L.C.

 

 

By: SUPERVALU INC., its sole member

 

 

 

 

By:

 

 

Name: 

Sherry M. Smith

 

Title:

Executive Vice President and Chief Financial Officer

 

Signature Page of Term Loan Security Agreement

 



 

 

MORAN FOODS, LLC

 

 

 

By:

 

 

Name:

Santiago Roces

 

Title:

Chief Executive Officer

 

Signature Page of Term Loan Security Agreement

 



 

 

SAVE-A-LOT TYLER GROUP, LLC

 

 

 

 

By:

 

 

Name: 

Sherry M. Smith

 

Title:

Senior Vice President, Finance, Treasurer

 

 

 

GUARANTORS:

 

 

 

BUTSON’S ENTERPRISES, INC.

 

RICHFOOD PROCUREMENT, L.L.C.

 

SCOTT’S FOOD STORES, INC.

 

SFW HOLDING CORP.

 

SFW LICENSING CORP.

 

SUPERMARKET OPERATORS OF AMERICA INC.

 

SVH REALTY, INC.

 

 

 

 

By:

 

 

Name: 

Sherry M. Smith

 

Title:

Vice President

 

Signature Page of Term Loan Security Agreement

 



 

 

GOLDMAN SACHS BANK USA, as Collateral Agent

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

Signature Page of Term Loan Security Agreement

 



 

EXHIBIT 1

 

[Form of]

 

SECURITIES PLEDGE AMENDMENT

 

This Securities Pledge Amendment, dated as of                        , 201  , is delivered pursuant to Section 5.1 of that certain Security Agreement (as amended, amended and restated, restated, supplemented or otherwise modified from time to time, the “ Security Agreement ;” capitalized terms used but not otherwise defined herein shall have the meanings assigned to such terms in the Security Agreement), dated as of March 21, 2013, made by SUPERVALU INC., a Delaware corporation, as borrower (the “ Borrower ”), and the Guarantors party thereto from time to time (the “ Guarantors ”), as pledgors, assignors and debtors (the Borrower, together with the Guarantors, in such capacities and together with any successors in such capacities, the “ Grantors ” and, each, a “ Grantor ”), in favor of GOLDMAN SACHS BANK USA, having an office at 6031 Connection Drive, Irving, Texas 75039, in its capacity as collateral agent for the Secured Parties, as pledgee, assignee and secured party (in such capacities, and together with any successors in such capacities, the “ Collateral Agent ”).  The undersigned hereby agrees that this Securities Pledge Amendment may be attached to the Security Agreement and that the Intercompany Notes listed on this Securities Pledge Amendment shall be deemed to be and shall become part of the Collateral and shall secure all Secured Obligations.

 



 

INTERCOMPANY NOTES

 

ISSUES

 

PRINCIPAL 
AMOUNT

 

DATE OF 
ISSUANCE

 

INTEREST 
RATE

 

MATURITY 
DATE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[                                                                    ],

 

 

as Grantor

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

AGREED TO AND ACCEPTED:

 

 

 

 

 

GOLDMAN SACHS BANK USA, as Collateral Agent

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 



 

SCHEDULE I

 

Intercompany Notes

 

ISSUER

 

PRINCIPAL 
AMOUNT

 

DATE OF 
ISSUANCE

 

INTEREST 
RATE

 

MATURITY 
DATE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

SCHEDULE 3.3

 

Filings, Registrations and Recordings

 

Name of Company

 

UCC-1 Financing 
Statement Filing 
Office

 

Intellectual Property 
Security Interests
Filing Office

SUPERVALU INC.

 

Delaware

 

TBD

Advantage Logistics - Southeast, Inc.

 

Alabama

 

TBD

Butson’s Enterprises, Inc.

 

New Hampshire

 

TBD

Champlin 2005 L.L.C.

 

Delaware

 

TBD

Eastern Region Management Corporation

 

Virginia

 

TBD

FF Acquisition, L.L.C.

 

Virginia

 

TBD

Foodarama LLC

 

Delaware

 

TBD

Moran Foods, LLC

 

Missouri

 

TBD

Richfood Holdings, Inc.

 

Delaware

 

TBD

Richfood, Inc.

 

Virginia

 

TBD

Richfood Procurement, L.L.C.

 

Virginia

 

TBD

Save-A-Lot Tyler Group, LLC

 

Missouri

 

TBD

Scott’s Food Stores, Inc.

 

Indiana

 

TBD

SFW Holding Corp.

 

Delaware

 

TBD

SFW Licensing Corp.

 

Delaware

 

TBD

Shop ‘N Save St. Louis, Inc.

 

Missouri

 

TBD

Shop ‘N Save Warehouse Foods, Inc.

 

Missouri

 

TBD

Shoppers Food Warehouse Corp.

 

Ohio

 

TBD

Super Rite Foods, Inc.

 

Delaware

 

TBD

Supermarket Operators of America Inc.

 

Delaware

 

TBD

 



 

Name of Company

 

UCC-1 Financing 
Statement Filing 
Office

 

Intellectual Property 
Security Interests
Filing Office

SUPERVALU Holdings, Inc.

 

Missouri

 

TBD

SUPERVALU Holdings-PA LLC

 

Pennsylvania

 

TBD

SUPERVALU Pharmacies, Inc.

 

Minnesota

 

TBD

Supervalu Transportation, Inc.

 

Minnesota

 

TBD

Supervalu TTSJ, Inc.

 

Delaware

 

TBD

SVH Realty, Inc.

 

Delaware

 

TBD

W. Newell & Co., LLC

 

Delaware

 

TBD

 



 

SCHEDULE 3.4(a)

 

Instruments

 

Name of Company

 

Issuer of Instrument

 

Principal Amount 
of Instrument

 

Maturity Date

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

SCHEDULE 4.3(a)

 

Other Legal and Fictitious Names, Mergers, Consolidations, Acquisitions

 

I. Legal and Fictitious Names .  During the past three years, each Company has used the following trade name(s) and/or trade style(s):

 

Company

 

Trade Name/Divisions

 

 

 

 

 

 

 

 

 

 

II. Changes in Names, Jurisdiction of Organization or Corporate Structure E xcept as set forth below, no Company has changed its name, jurisdiction of organization or its corporate structure in any way (e.g. by merger, consolidation, change in corporate form, change in jurisdiction of organization or otherwise) within the past three years:

 

Date of Change

 

Description of Change

 

 

 

 

 

 

 

 

 

 

III. Acquisitions of Equity Interests or Assets Except as set forth below, no Company has acquired the controlling equity interests of another entity or substantially all the assets of another entity within the past three years:

 

Date of Acquisition

 

Description of Acquisition

 

 

 

 

 

 

 

 

 

 



 

ANNEX 1 TO SECURITY AGREEMENT

FORM OF JOINDER

 

JOINDER NO.         , dated as of                                (this “ Joinder ”), to that certain Security Agreement, dated as of March 21, 2013 (as amended, amended and restated, supplemented, or otherwise modified from time to time, the “ Security Agreement ”), by SUPERVALU INC., a Delaware corporation having an office at 7075 Flying Cloud Drive, Eden Prairie, MN, as borrower (the “ Borrower ”), and the guarantors listed on the signature pages thereto (the “ Original Guarantors ”) and the other guarantors thereafter party thereto by execution of a joinder agreement (the “ Additional Guarantors ” and, together with the Original Guarantors, the “ Guarantors ”), as pledgors, assignors and debtors (the Borrower, together with the Guarantors, in such capacities and together with any successors in such capacities, collectively, the “ Grantors ” and, each, a “ Grantor ”), in favor of GOLDMAN SACHS BANK USA, in its capacity as collateral agent for the Secured Parties, as pledgee, assignee and secured party (in such capacities, and together with any successors in such capacities, the “ Collateral Agent ”).

 

W I T N E S S E T H :

 

WHEREAS, pursuant to that certain Term Loan Credit Agreement, dated as of March 21, 2013 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), among the Borrower, the Guarantors party thereto, the Lenders party thereto and the Collateral Agent, the Lenders have agreed to make certain financial accommodations available to the Borrower from time to time pursuant to the terms and conditions thereof; and

 

WHEREAS, initially capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Security Agreement or, if not defined therein, in the Credit Agreement; and

 

WHEREAS, Grantors have entered into the Security Agreement in order to induce the Lenders to make certain financial accommodations to the Borrower; and

 

WHEREAS, pursuant to Section 5.12 of the Credit Agreement and Section 4.12 of the Security Agreement, certain Subsidiaries of the Grantors, must execute and deliver certain Loan Documents, including the Security Agreement, and the joinder to the Security Agreement by the undersigned new Grantor or Grantors (collectively, the “ New Grantors ”) may be accomplished by the execution of this Joinder in favor of the Collateral Agent, for the benefit of the Collateral Agent and the Secured Parties; and

 

WHEREAS, each New Grantor (a) is a direct or indirect Subsidiary of [Name of Loan Party] and, as such, will benefit by virtue of the financial accommodations extended to the Borrower by the Secured Parties and (b) by becoming a Loan Party will benefit from certain rights granted to the Loan Parties pursuant to the terms of the Loan Documents.

 



 

NOW, THEREFORE, for and in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each New Grantor hereby agrees as follows:

 

SECTION 1.         In accordance with Section 4.12 of the Security Agreement, each New Grantor, by its signature below, becomes a “Grantor” under the Security Agreement with the same force and effect as if originally named therein as a “Grantor” and each New Grantor hereby (a) agrees to all of the terms and provisions of the Security Agreement applicable to it as a “Grantor” thereunder and (b) represents and warrants that the representations and warranties made by it as a “Grantor” thereunder are true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that are already qualified or modified by materiality in the text thereof) on and as of the date hereof.  In furtherance of the foregoing, each New Grantor does hereby unconditionally grant, assign, and pledge to the Collateral Agent, for the benefit of the Secured Parties, to secure the Secured Obligations, a continuing security interest in and to all of such New Grantor’s right, title and interest in and to the Collateral.  The Schedules attached hereto supplement the Schedules previously delivered by the Existing Grantors and shall be deemed a part thereof for all purposes of the Security Agreement.  Each reference to a “Grantor” in the Security Agreement shall be deemed to include each New Grantor.  The Security Agreement is incorporated herein by reference.  Each New Grantor authorizes the Collateral Agent at any time and from time to time to file, transmit, or communicate, as applicable, financing statements and amendments thereto (a) describing the Collateral that contain any information required by part 5 of Article 9 of the UCC for the sufficiency or filing office acceptance.  Each New Grantor also hereby ratifies any and all financing statements or amendments previously filed by the Collateral Agent in any jurisdiction in connection with the Loan Documents.

 

SECTION 2.         Each New Grantor represents and warrants to the Collateral Agent, the Secured Parties that this Joinder has been duly executed and delivered by such New Grantor and constitutes its legal, valid, and binding obligation, enforceable against it in accordance with its terms, except as enforceability thereof may be limited by bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium, or other similar laws affecting creditors’ rights generally and general principles of equity (regardless of whether such enforceability is considered in a proceeding at law or in equity).

 

SECTION 3.         This Joinder is a Loan Document.  This Joinder may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, shall be deemed to be an original, and all of which, when taken together, shall constitute but one and the same Joinder.  Delivery of an executed counterpart of this Joinder by telefacsimile or other electronic method of transmission shall be equally as effective as delivery of an original executed counterpart of this Joinder.  Any party delivering an executed counterpart of this Joinder by telefacsimile or other electronic method of transmission also shall deliver an original executed counterpart of this Joinder but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and binding effect of this Joinder.

 



 

SECTION 4.         The Security Agreement, as supplemented hereby, shall remain in full force and effect.

 

SECTION 5.         THE VALIDITY OF THIS JOINDER, THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF, AND THE RIGHTS OF THE PARTIES HERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR RELATED HERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

 

SECTION 6.         EACH NEW GRANTOR IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS SECURITY AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN SECTION 7.  EACH NEW GRANTOR HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT

 

SECTION 7.         EACH NEW GRANTOR AGREES THAT ANY ACTION COMMENCED BY ANY NEW GRANTOR ASSERTING ANY CLAIM OR COUNTERCLAIM ARISING UNDER OR IN CONNECTION WITH THIS SECURITY AGREEMENT OR ANY OTHER LOAN DOCUMENT SHALL BE BROUGHT SOLELY IN A COURT OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY OR ANY FEDERAL COURT SITTING THEREIN AS THE COLLATERAL AGENT MAY ELECT IN ITS SOLE DISCRETION AND CONSENTS TO THE EXCLUSIVE JURISDICTION OF SUCH COURTS WITH RESPECT TO ANY SUCH ACTION.

 

SECTION 8.         TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, THE COLLATERAL AGENT AND EACH NEW GRANTOR HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS JOINDER OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS.  THE COLLATERAL AGENT AND EACH NEW GRANTOR REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.  IN THE EVENT OF LITIGATION, A COPY OF THIS JOINDER MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

 

[ Signature Pages Follow ]

 



 

IN WITNESS WHEREOF, the parties hereto have caused this Joinder to the Security Agreement to be executed and delivered as of the day and year first above written.

 

NEW GRANTORS:

[NAME OF NEW GRANTOR]

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

 

[NAME OF NEW GRANTOR]

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

 

 

COLLATERAL AGENT:

GOLDMAN SACHS BANK USA

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

F-1



 

Exhibit G
to the Credit Agreement

 

FORM OF FACILITY GUARANTY

 

(See attached)

 



 

EXECUTION COPY

 

TERM LOAN GUARANTY

 

TERM LOAN GUARANTY (this “ Guaranty ”), dated as of March 21, 2013, by each of the Subsidiaries of the Borrower listed on the signature pages hereto (each such Person, individually, a “Guarantor” and, collectively, the “Guarantors”) in favor of (a) Goldman Sachs Bank USA, as administrative (in such capacity, together with its successors and assigns, the “ Administrative Agent ”) for its own benefit and the benefit of the other Secured Parties and (b) the Secured Parties.

 

W I T N E S S E T H

 

WHEREAS, reference is made to that certain Term Loan Credit Agreement, dated as of March 21, 2013 (as amended, modified, supplemented or restated hereafter, the “ Credit Agreement ”), among SUPERVALU Inc., a Delaware corporation (the “ Borrower ”), the Guarantors, the Lenders party thereto (the “ Lenders ”) and the Administrative Agent.  Capitalized terms used herein and not defined herein shall have the meanings assigned to such terms in the Credit Agreement.

 

WHEREAS, the Lenders have agreed to make Loans to the Borrower pursuant to, and upon the terms and subject to the conditions specified in, the Credit Agreement.

 

WHEREAS, each Guarantor acknowledges that it is an integral part of a consolidated enterprise and that it will receive direct and indirect benefits from the availability of the credit facility provided for in the Credit Agreement and from the making of the Loans by the Lenders.

 

WHEREAS, the obligations of the Lenders to make Loans are conditioned upon, among other things, the execution and delivery by the Guarantors of a guaranty in the form hereof.  As consideration therefor, and in order to induce the Lenders to make Loans, the Guarantors are willing to execute this Guaranty.

 

Accordingly, each Guarantor hereby agrees as follows:

 

SECTION 1.                             Guaranty .  Each Guarantor irrevocably and unconditionally guaranties, jointly with the other Guarantors and severally, as a primary obligor and not merely as a surety, the due and punctual payment when due (whether at the stated maturity, by required prepayment, by acceleration or otherwise) and performance by the Borrower of all Obligations (collectively, the “ Guaranteed Obligations ”), including all such Guaranteed Obligations which shall become due but for the operation of the Bankruptcy Code.  Each Guarantor further agrees that the Guaranteed Obligations may be extended or renewed, in whole or in part, without notice to or further assent from it, and that it will remain bound upon this Guaranty notwithstanding any extension or renewal of any Guaranteed Obligation.

 

SECTION 2.                             Guaranteed Obligations Not Affected .  To the fullest extent permitted by applicable Law, each Guarantor waives presentment to, demand of payment from, and protest to, any Loan Party of any of the Guaranteed Obligations, and also waives notice of acceptance of this Guaranty, notice of protest for nonpayment and all other notices of any kind.  To the fullest extent permitted by applicable Law, the obligations of each Guarantor hereunder shall not be affected by (a) the failure of Administrative Agent or any other Secured Party to assert any claim or demand or to enforce or exercise any right or remedy against any Loan Party under the provisions of the Credit Agreement, any other Loan Document or otherwise or against any other party with respect to any of the Guaranteed Obligations, (b) any rescission, waiver, amendment or modification of, or any release from, any of the terms or provisions of this Guaranty, any other Loan Document or any other agreement, with respect to any Loan

 



 

Party or with respect to the Guaranteed Obligations, (c) the failure to perfect any security interest in, or the release of, any of the Collateral held by or on behalf of the Administrative Agent or any other Secured Party or (d) the lack of legal existence of any Loan Party or legal obligation to discharge any of the Guaranteed Obligations by any Loan Party for any reason whatsoever, including, without limitation, in any insolvency, bankruptcy or reorganization of any Loan Party.

 

SECTION 3.                             Security .  Each of the Guarantors hereby acknowledges and agrees that the Administrative Agent and each of the other Secured Parties may (a) take and hold security for the payment of this Guaranty and the Guaranteed Obligations and exchange, enforce, waive and release any such security, (b) apply such security and direct the order or manner of sale thereof as they in their sole discretion may determine and (c) release or substitute any one or more endorsees, the Borrower, other Guarantors or other obligors, in each case without affecting or impairing in any way the liability of any Guarantor hereunder.

 

SECTION 4.                             Guaranty of Payment .  Each of the Guarantors further agrees that this Guaranty constitutes a guaranty of payment and performance when due of all Guaranteed Obligations and not of collection and, to the fullest extent permitted by applicable Law, waives any right to require that any resort be had by the Administrative Agent or any other Secured Party to any of the Collateral or other security held for payment of the Guaranteed Obligations or to any balance of any deposit account or credit on the books of the Administrative Agent or any other Secured Party in favor of any Loan Party or any other Person or to any other guarantor of all or part of the Guaranteed Obligations.  Any payment required to be made by the Guarantors hereunder may be required by the Administrative Agent or any other Secured Party on any number of occasions and shall be payable to the Administrative Agent, for the benefit of the Administrative Agent and the other Secured Parties, in the manner provided in the Credit Agreement.

 

SECTION 5.                             No Discharge or Diminishment of Guaranty .  The obligations of each Guarantor hereunder shall not be subject to any reduction, limitation, impairment or termination for any reason (other than the indefeasible payment in full in cash of the Guaranteed Obligations), including any claim of waiver, release, surrender, alteration or compromise of any of the Guaranteed Obligations, and shall not be subject to any defense or set-off, counterclaim, recoupment or termination whatsoever by reason of the invalidity, illegality or unenforceability of the Guaranteed Obligations or otherwise.  Without limiting the generality of the foregoing, the Guaranteed Obligations of each Guarantor hereunder shall not be discharged or impaired or otherwise affected by the failure of the Administrative Agent or any other Secured Party to assert any claim or demand or to enforce any remedy under this Guaranty, the Credit Agreement, any other Loan Document or any other agreement, by any waiver or modification of any provision of any thereof, by any default, failure or delay, willful or otherwise, in the performance of the Guaranteed Obligations, or by any other act or omission that may or might in any manner or to any extent vary the risk of any Guarantor or that would otherwise operate as a discharge of any Guarantor as a matter of law or equity (other than the indefeasible payment in full in cash of the Guaranteed Obligations).

 

SECTION 6.                             Defenses of Loan Parties Waived .  To the fullest extent permitted by applicable Law, each of the Guarantors waives any defense based on or arising out of any defense of any Loan Party or the unenforceability of the Guaranteed Obligations or any part thereof from any cause, or the cessation from any cause of the liability of any Loan Party, other than the indefeasible payment in full in cash of the Guaranteed Obligations.  Each Guarantor hereby acknowledges that the Administrative Agent and the other Secured Parties may, at their election, foreclose on any security held by one or more of them by one or more judicial or nonjudicial sales, accept an assignment of any such security in lieu of foreclosure, compromise or adjust any part of the Guaranteed Obligations, make any other accommodation with any Loan Party, or exercise any other right or remedy available to them against any Loan Party, without affecting or impairing in any way the liability of any Guarantor hereunder except to the extent that the

 



 

Guaranteed Obligations have been indefeasibly paid in full in cash. Pursuant to, and to the extent permitted by, applicable Law, each of the Guarantors waives any defense arising out of any such election and waives any benefit of and right to participate in any such foreclosure action, even though such election operates, pursuant to applicable Law, to impair or to extinguish any right of reimbursement or subrogation or other right or remedy of such Guarantor against any Loan Party, as the case may be, or any security.  Each Guarantor agrees that it shall not assert any claim in competition with the Administrative Agent or any other Secured Party in respect of any payment made hereunder in any bankruptcy, insolvency, reorganization or any other proceeding.

 

SECTION 7.                             Agreement to Pay; Subordination.   In furtherance of the foregoing and not in limitation of any other right that the Administrative Agent or any other Secured Party has at law or in equity against any Guarantor by virtue hereof, upon the failure of any Loan Party to pay any Guaranteed Obligation when and as the same shall become due, whether at maturity, by acceleration, after notice of prepayment or otherwise, each of the Guarantors hereby promises to and will forthwith pay, or cause to be paid, to the Administrative Agent or such other Secured Party as designated thereby in cash the amount of such unpaid Guaranteed Obligations.  Upon payment by any Guarantor of any sums to the Administrative Agent or any other Secured Party as provided above, all rights of such Guarantor against any Loan Party arising as a result thereof by way of right of subrogation, contribution, reimbursement, indemnity or otherwise shall in all respects be subordinate and junior in right of payment to the prior indefeasible payment in full in cash of all the Guaranteed Obligations.  In addition, any indebtedness of the Borrower or any other Loan Party now or hereafter held by any Guarantor is hereby subordinated in right of payment to the prior indefeasible payment in full in cash of all of the Guaranteed Obligations.  Notwithstanding the foregoing, prior to the occurrence of an Event of Default, the Borrower or any other Loan Party may make payments to any Guarantor on account of any such indebtedness. After the occurrence and during the continuance of an Event of Default, none of the Guarantors will demand, sue for, or otherwise attempt to collect any such indebtedness until the indefeasible payment in full in cash of the Guaranteed Obligations and termination or expiration of the Commitments.  If any amount shall erroneously be paid to any Guarantor on account of (a) such subrogation, contribution, reimbursement, indemnity or similar right or (b) any such indebtedness of any Loan Party, such amount shall be held in trust for the benefit of the Secured Parties and shall forthwith be paid to the Administrative Agent to be credited against the payment of the Guaranteed Obligations, whether matured or unmatured, in accordance with the terms of the Credit Agreement.

 

SECTION 8.                             Limitation on Guaranty of Guaranteed Obligations .

 

(a)          In any action or proceeding with respect to any Guarantor involving any state corporate law, the Bankruptcy Code or any other state or federal bankruptcy, insolvency, reorganization or other law affecting the rights of creditors generally, including, without limitation, the Uniform Fraudulent Conveyance Act, Uniform Fraudulent Transfer Act or any similar foreign, federal or state law to the extent applicable to the guaranty set forth herein and the obligations of each Guarantor hereunder, if the obligations of such Guarantor under Section 1 hereof would otherwise be determined to be void, invalid or unenforceable, or subordinated to the claims of any other creditors, in such action or proceeding on account of the amount of its liability under Section 1, then, notwithstanding any other provision hereof to the contrary, the amount of such liability shall, without any further action by such Guarantor, any Lender, Administrative Agent or any other Person, be automatically limited and reduced to the highest amount which is valid and enforceable and not subordinated to the claims of other creditors as determined in such action or proceeding.

 

(b)          In such circumstances, to effectuate the foregoing, the amount of the liability of each Guarantor hereunder shall be determined, unless such Guarantor is a borrower under the ABL Facility, after taking into account such Guarantor’s liability under the ABL Facility based on the fraction, the

 



 

numerator of which is the then outstanding total liability under the ABL Facility and the denominator of which is the sum of the then outstanding total liability under the ABL Facility and the then outstanding total liability under the Term Facility as of the applicable date of determination.  To the fullest extent permitted by applicable Law, this Section 8(b) hereof shall be for the benefit solely of creditors and representatives of creditors of each Guarantor and not for the benefit of such Guarantor or the holders of any Equity Interest in such Guarantor.  Each Guarantor agrees that Obligations may at any time and from time to time be incurred or permitted in an amount exceeding the maximum liability of such Guarantor under this Section 8 without impairing the guaranty contained in Section 1 hereof or affecting the rights and remedies of any Secured Party hereunder.

 

SECTION 9.                             Information.   Each of the Guarantors assumes all responsibility for being and keeping itself informed of each Loan Party’s financial condition and assets, and of all other circumstances bearing upon the risk of nonpayment of the Guaranteed Obligations and the nature, scope and extent of the risks that such Guarantor assumes and incurs hereunder, and agrees that none of the Administrative Agent or the other Secured Parties will have any duty to advise any of the Guarantors of information known to it or any of them regarding such circumstances or risks.

 

SECTION 10.                      Termination; Release .

 

(a)          This Guaranty (i) shall terminate upon termination of the Commitments and payment in full of the Guaranteed Obligations (other than contingent, unasserted indemnification obligations) and (ii) shall continue to be effective or be reinstated, as the case may be, if at any time payment, or any part thereof, of any Guaranteed Obligation is rescinded or must otherwise be restored by any Secured Party or any Guarantor upon the bankruptcy or reorganization of any Loan Party or otherwise.

 

(b)          A Guarantor shall be released from its obligations under this Guaranty if such Person ceases to be a Subsidiary as a result of a transaction permitted under the Loan Documents.

 

SECTION 11.                      Binding Effect; Several Agreement; Assignments.   Whenever in this Guaranty any of the parties hereto is referred to, such reference shall be deemed to include the successors and assigns of such party, and all covenants, promises and agreements by or on behalf of the Guarantors that are contained in this Guaranty shall bind and inure to the benefit of each of the Guarantors and its respective successors and assigns.  This Guaranty shall be binding upon each of the Guarantors and their respective successors and assigns, and shall inure to the benefit of the Administrative Agent and the other Secured Parties, and their respective successors and assigns, except that no Guarantor shall have the right to assign or transfer its rights or obligations hereunder or any interest herein (and any such attempted assignment or transfer shall be void), except as expressly permitted by this Guaranty or the Credit Agreement.  This Guaranty shall be construed as a separate agreement with respect to each Guarantor and may be amended, modified, supplemented, waived or released with respect to any Guarantor without the approval of any other Guarantor and without affecting the obligations of any other Guarantor hereunder.

 

SECTION 12.                      Waivers; Amendment.

 

(a)          The rights, remedies, powers, privileges, and discretions of the Administrative Agent hereunder and under applicable Law (herein, the “ Administrative Agent’s Rights and Remedies ”) shall be cumulative and not exclusive of any rights or remedies which they would otherwise have.  No delay or omission by the Administrative Agent in exercising or enforcing any of the Administrative Agent’s Rights and Remedies shall operate as, or constitute, a waiver thereof.  No waiver by the Administrative Agent of any Event of Default or of any default under any other agreement shall operate as a waiver of any other default hereunder or under any other agreement.  No single or partial exercise of any of the Administrative Agent’s Rights or Remedies, and no express or implied agreement or transaction of

 



 

whatever nature entered into between the Administrative Agent and any Person, at any time, shall preclude the other or further exercise of the Administrative Agent’s Rights and Remedies.  No waiver by the Administrative Agent of any of the Administrative Agent’s Rights and Remedies on any one occasion shall be deemed a waiver on any subsequent occasion, nor shall it be deemed a continuing waiver.  The Administrative Agent’s Rights and Remedies may be exercised at such time or times and in such order of preference as the Administrative Agent may determine. The Administrative Agent’s Rights and Remedies may be exercised without resort or regard to any other source of satisfaction of the Guaranteed Obligations.  No waiver of any provisions of this Guaranty or any other Loan Document or consent to any departure by any Guarantor therefrom shall in any event be effective unless the same shall be permitted by Section 12(b) hereof, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given.  No notice to or demand on any Guarantor in any case shall entitle such Guarantor or any other Guarantor to any other or further notice or demand in the same, similar or other circumstances.

 

(b)          Neither this Guaranty nor any provision hereof may be waived, amended or modified except pursuant to a written agreement entered into between the Administrative Agent and a Guarantor or the Guarantors with respect to whom such waiver, amendment or modification is to apply, subject to any consent required in accordance with Section 9.08 of the Credit Agreement.

 

SECTION 13.                      Copies and Facsimiles .  This instrument and all documents which have been or may be hereinafter furnished by the Guarantors to the Administrative Agent may be reproduced by the Administrative Agent by any photographic, microfilm, xerographic, digital imaging, or other process. Any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding (whether or not the original is in existence and whether or not such reproduction was made in the regular course of business). Any facsimile or other electronic transmission which bears proof of transmission shall be binding on the party which or on whose behalf such transmission was initiated and likewise so admissible in evidence as if the original of such facsimile or other electronic transmission had been delivered to the party which or on whose behalf such transmission was received.

 

SECTION 14.                      Governing Law.   THIS GUARANTY AND ANY CLAIM, CONTROVERSY, DISPUTE OR OTHER CAUSE OF ACTION (WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE) BASED UPON, ARISING OUT OF OR RELATING TO THIS GUARANTY AND THE TRANSACTIONS CONTEMPLATED HEREBY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES (OTHER THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW).

 

SECTION 15.                      Notices.   All communications and notices hereunder shall (except as otherwise expressly permitted herein) be in writing and given as provided in Section 9.01 of the Credit Agreement; provided , that communications and notices to the Guarantors may be delivered to the Borrower on behalf of each of the Guarantors.

 

SECTION 16.                      Survival of Agreement; Severability.

 

(a)          All covenants, agreements, indemnities, representations and warranties made by the Guarantors herein and in the certificates or other instruments delivered in connection with or pursuant to this Guaranty, the Credit Agreement or any other Loan Document shall be considered to have been relied upon by the Administrative Agent and the other Secured Parties and shall survive the execution and delivery of this Guaranty, the Credit Agreement and the other Loan Documents and the making of any Loans by the Lenders, regardless of any investigation made by the Administrative Agent or any other

 



 

Secured Party or on their behalf and notwithstanding that the Administrative Agent or other Secured Party may have had notice or knowledge of any Default or Event of Default or incorrect representation or warranty at the time any credit is extended, and shall continue in full force and effect until terminated as provided in Section 10 hereof.

 

(b)          Any provision of this Guaranty held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof, and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.

 

SECTION 17.                      Counterparts.   This Guaranty may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original but all of which when taken together shall constitute a single contract.  Delivery of an executed signature page to this Guaranty by facsimile transmission or by other electronic transmission (including “.pdf” or “.tif”) shall be as effective as delivery of a manually signed counterpart of this Guaranty.

 

SECTION 18.                      Rules of Interpretation.   The rules of interpretation specified in Section 1.02 of the Credit Agreement shall be applicable to this Guaranty.

 

SECTION 19.                      Jurisdiction; Consent to Service of Process.

 

(a)          Each of the Guarantors hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of any New York State court or Federal court of the United States of America sitting in New York County, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Guaranty or the other Loan Documents, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such Federal court.  Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.  Nothing in this Guaranty shall affect any right that the Administrative Agent, the Collateral Agent or any other Secured Party may otherwise have to bring any action or proceeding relating to this Guaranty or the other Loan Documents against a Guarantor or its properties in the courts of any jurisdiction if required to realize upon the Collateral as determined in good faith by the Person bringing such action or proceeding.

 

(b)          Each of the Guarantors hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Guaranty or the other Loan Documents in any New York State or Federal court.  Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

 

(c)           Each party to this Guaranty irrevocably consents to service of process in the manner provided for notices in Section 17 hereof.  Nothing in this Guaranty will affect the right of any party to this Guaranty to serve process in any other manner permitted by law.

 

SECTION 20.                      Waiver of Jury Trial.   EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS GUARANTY.  EACH PARTY HERETO

 



 

(A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT THE IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS GUARANTY BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 20 .

 

 [ Signature Pages Follow ]

 



 

IN WITNESS WHEREOF, the Guarantors have duly executed this Guaranty as of the day and year first above written.

 

GUARANTORS :

 

[                                ]

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

 

 

 

 

[                                ]

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

 

 

 

 

[                                ]

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

Signature Page to Term Loan Guaranty

 



 

ACKNOWLEDGED AND AGREED

 

as of the date first above written:

 

 

 

 

 

GOLDMAN SACHS BANK USA,

 

as Administrative Agent

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

G-1



 

Exhibit H
to the Credit Agreement

 

FORM OF MORTGAGE

 

(See attached)

 

1



 

MORTGAGE, ASSIGNMENT OF LEASES AND RENTS,
SECURITY AGREEMENT AND FIXTURE FILING
13

 

from

 

[NAME OF MORTGAGOR], Mortgagor

 

to

 

GOLDMAN SACHS BANK USA,

 

as collateral agent, Mortgagee

 

DATED AS OF                            , 2013

 

EFFECTIVE AS OF                            , 2013

 

After recording, please return to:

 

Latham & Watkins LLP
885 Third Ave.
New York, NY 10022

 

ATTN:  Mark Leskiw (049646-0118)

 


13   This form’s riders contain provisions to be included in the mortgage if the mortgage is with respect to a leasehold.

 

2



 

[INSERT STATE]

 

THIS 14  MORTGAGE, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT AND FIXTURE FILING, dated as of                          , 2013, and effective as of                          , 2013, is made by [NAME OF MORTGAGOR], a [INSERT STATE OF ORGANIZATION AND TYPE OF ENTITY OF MORTGAGOR] (“ Mortgagor ”), whose address is c/o SUPERVALU INC., 7075 Flying Cloud Drive, Eden Prairie, Minnesota 55344, Attention:  Vice President, Business Law, to GOLDMAN SACHS BANK USA, as collateral agent (in such capacity and together with its successors in such capacity, “ Mortgagee ”), whose address is [c/o Goldman Sachs Group, Inc., 6031 Connection Drive, Irving, Texas 75039].  References to this “ Mortgage ” shall mean this instrument and any and all renewals, modifications, amendments, supplements, extensions, consolidations, substitutions, spreaders, and replacements of this instrument.

 

Background

 

A.                                     SUPERVALU INC., a Delaware corporation (“ Borrower ”), and certain of its Affiliates (including Mortgagor) have entered into the Term Loan Credit Agreement dated as of March 21, 2013 (as the same may be amended, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), with several banks and other financial institutions from time to time parties thereto (the “ Lenders ”) and Mortgagee.  Capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Credit Agreement.

 

B.                                     Mortgagor has, pursuant to that certain Term Loan Guaranty (defined as the Facility Guaranty in the Credit Agreement) dated as of March 21, 2013 (as the same may be amended, supplemented or otherwise modified from time to time, the “ Guaranty ”), among other things, unconditionally guaranteed the Guaranteed Obligations (as defined in the Guaranty). 15

 

 

C.                                     Pursuant and subject to the Credit Agreement, the Lenders have made, severally and not jointly, certain Loans to Borrower, and Borrower has agreed to cause Mortgagor to execute and deliver this Mortgage in connection therewith.

 

Granting Clauses

 

For ten dollars ($10) and other good and valuable consideration, the receipt and legal sufficiency of which are hereby acknowledged, Mortgagor agrees that to secure the payment and performance of the following obligations (collectively, the “ Secured Obligations ”):

 

(a)                                  the Obligations (as defined in the Credit Agreement), including, without limitation, (i) the aggregate principal amount of $1,500,000,000 plus any Incremental Loans made pursuant to Section 2.01(b) of the Credit Agreement for a total aggregate principal amount including such Incremental Loans of $1,750,000,000, or so much thereof as may be advanced by the Lenders as Loans pursuant to the Credit Agreement and as is outstanding from time to time, together with interest thereon as provided by the Credit Agreement (including, without limitation, if and to the extent provided by the

 


14   For a leasehold mortgage, insert Rider A here.

15   For a leasehold mortgage, insert Rider B here as recital “C,” and move the current recital “C” to a new recital “D.”

 

Property #[      ], [      ] County, [      ]

 



 

Credit Agreement, interest accruing after the maturity of the Loans made by each Lender and interest accruing after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to Mortgagor, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding), as evidenced by the Credit Agreement and, if requested by any Lender as provided by the Credit Agreement, certain promissory notes (as the same may be amended, supplemented or otherwise modified from time to time, the “ Notes ”), (ii) the Guaranteed Obligations, and (iii) all Protective Advances (as defined below); and

 

(b)                                  the performance and observance of each obligation, term, covenant and condition to be performed or observed by Mortgagor under, in connection with or pursuant to the provisions of this Mortgage;

 

MORTGAGOR HEREBY GRANTS TO MORTGAGEE A LIEN UPON AND A SECURITY INTEREST IN, AND HEREBY MORTGAGES, GRANTS, ASSIGNS, TRANSFERS, HYPOTHECATES, PLEDGES, CONVEYS AND SETS OVER TO MORTGAGEE WITH MORTGAGE COVENANTS (TOGETHER WITH POWER OF SALE THEREOF), all of the following property and rights and interests now owned or held or subsequently acquired by Mortgagor (collectively, the “ Mortgaged Property ”):

 

(A)                                16 the parcel(s) of real property described on Exhibit A attached hereto and made a part hereof (the “ Land ”), together with all of the buildings, improvements, and structures now located thereon (the “ Improvements ”);

 

(B)                                all the estate, right, title, interest, claim or demand whatsoever of Mortgagor, in possession or expectancy, in and to the Land or Improvements or any part thereof;

 

(C)                                all right, title, estate and interest of Mortgagor in, to and under all easements, rights of way, strips and gores of land, streets, ways, alleys, passages, sewer rights, waters, water courses, water and riparian rights, development rights, air rights, mineral rights and all estates, rights, titles, interests, privileges, licenses, tenements, hereditaments and appurtenances belonging, relating or appertaining to the Premises (as defined below), and any reversions, remainders, rents, issues, profits and revenue thereof and all land lying in the bed of any street, road or avenue, in front of or adjoining the Premises to the center line thereof;

 

(D)                                all right, title, estate and interest of Mortgagor in and to all buildings, improvements, structures, additions, and concessions to, the Land or Improvements, and substitutes and replacements thereof, subsequently acquired by or released to Mortgagor or constructed, assembled or placed by Mortgagor on the Land or Improvements, immediately upon such acquisition, release, construction, assembling or placement, including, without limitation, any and all building materials whether stored at the Land or offsite, and, in each such case, without any further mortgage, conveyance, assignment or

 


16   For a leasehold mortgage, insert Rider C here, and move the current subclause “A” to “B,” and shift all subsequent paragraph lettering down accordingly.

 

2



 

other act by Mortgagor (collectively, the property and rights and interests described in the foregoing clauses (A) through (D) 17 , the “ Premises ”);

 

(E)                                 all right, title, estate and interest of Mortgagor in and to all of the “fixtures” (as defined in the Code, as defined below) from time to time attached to or contained in the Premises (but only while attached to or contained in the Premises), including without limitation, screens, awnings, shades, blinds, curtains, draperies, carpets, rugs, and other floor coverings, storm doors and windows, heating, electrical, and mechanical equipment, lighting, switchboards, plumbing, ventilating, air conditioning and air-cooling apparatus, refrigeration systems, and incinerating equipment, shelving, escalators, elevators, docks, loading and unloading equipment and systems, stoves, ranges, laundry equipment, cleaning systems (including window cleaning apparatus), telephones, communication systems (including satellite dishes and antennae), computers, sprinkler systems and other fire prevention and extinguishing apparatus and materials, security systems, motors, engines, machinery, pipes, pumps, tanks, conduits, appliances, and fittings (together with, in each case, attachments, components, parts and accessories);

 

(F)                                  all right, title, estate and interest of Mortgagor in and to all substitutes and replacements of, and all additions, improvements and concessions to, the aforementioned fixtures, subsequently acquired by Mortgagor or constructed, assembled or placed by Mortgagor on the Premises or subsequently attached thereto, immediately upon such acquisition, construction, attachment, assembling or placement at the Premises (but only while attached to or contained in the Premises), without any further mortgage, conveyance, assignment or other act by Mortgagor (all of the foregoing property described in clauses (E) and (F), 18  while attached to or contained in the Premises, being referred to as the “ Fixtures ”);

 

(G)                                all right, title, estate and interest of Mortgagor in, to and under all leases, subleases, underlettings, occupancy agreements, concession agreements, management agreements, licenses and other agreements entitling third parties to use or occupy the Premises or any part thereof, now existing or subsequently entered into by Mortgagor and whether written or oral and any guaranties of any of the foregoing (collectively, as any of the foregoing may be amended, restated, extended, renewed or modified from time to time, the “ Leases ”), and all rights of Mortgagor in respect of security deposits thereunder and the right to receive and collect the revenues, income, rents, issues and profits thereof, together with all other rents, royalties, issues, profits, revenue, income and other benefits arising from the use and enjoyment of the Mortgaged Property (collectively, the “ Rents ”);

 

(H)                               all right, title, estate and interest of Mortgagor in and to (i) all contracts from time to time executed by Mortgagor or any manager or agent on its behalf relating to the ownership, construction, maintenance, repair, operation, management, occupancy, sale, leasing or financing of the Premises or Fixtures or any part thereof, all agreements relating to Mortgagor’s sale or lease of any portion of the Premises, and all agreements

 


17   For a leasehold mortgage, replace “(D)” with “(E).”

18   For a leasehold mortgage, replace “(E) and (F)” with “(F) and (G).”

 

3



 

relating to Mortgagor’s purchase or lease, or option to purchase or lease, of any property which is adjacent or peripheral to the Premises together with the right to exercise any such option, and all leases of Fixtures (collectively, the “ Contracts ”); (ii) all consents, licenses, permits, variances, building permits, certificates of occupancy and other governmental approvals relating to construction, completion, occupancy, use or operation of the Premises or any part thereof (collectively, the “ Permits ”); and (iii) all drawings, plans, specifications and similar or related items relating to the Premises (collectively, the “ Plans ”);

 

(I)                                    all right, title, estate and interest of Mortgagor in and to all books and records and documents relating to the ownership, construction, maintenance, repair, operation, management, occupancy, sale, or leasing of the Premises or Fixtures or any part thereof, whether tangible or electronic, which contain any information relating to any of the foregoing, to the extent necessary or desirable to sell, transfer or otherwise realize on any of the other Mortgaged Property (collectively, the “ Books and Records ”); and

 

(J)                                    all right, title, estate and interest of Mortgagor in and to all proceeds (as defined in the Code) of the foregoing, including without limitation, all proceeds, products, offspring, rents, profits or receipts, in whatever form, arising from the other Mortgaged Property, and including, without limitation, (i) cash, instruments and other property received, receivable or otherwise distributed in respect of or in exchange for any or all of the Mortgaged Property, (ii) any and all proceeds of the collection, sale, lease, sublease, concession, exchange, assignment, licensing or other disposition of, or realization upon, any item or portion of the Mortgaged Property (including, without limitation, all claims of Mortgagor against third parties for loss of, damage to, or destruction of, any of the Mortgaged Property now existing or hereafter arising), (iii) any and all proceeds of any insurance, indemnity, warranty or guaranty payable to Mortgagor from time to time with respect to any of the Mortgaged Property, including all right, title, estate and interest of Mortgagor in and to all unearned premiums under insurance policies now or subsequently obtained by Mortgagor relating to the Premises or Fixtures and Mortgagor’s interest in and to all proceeds of any such insurance policies (including title insurance policies) including the right to collect and receive such proceeds, subject to the provisions relating to insurance generally set forth below, (iv) any and all payments (in any form whatsoever) made or due and payable to Mortgagor from time to time in connection with the requisition, confiscation, condemnation, seizure or forfeiture of all or any part of the Mortgaged Property by any Governmental Authority (or any Person acting under color of Governmental Authority), including all awards and other compensation, including the interest payable thereon and the right to collect and receive the same, made for the taking by eminent domain, condemnation or otherwise, of all or any part of the Premises or any easement or other right therein, and (v) any and all other amounts from time to time paid or payable under or from any of the Mortgaged Property, both cash and noncash, of the foregoing;

 

4



 

PROVIDED, HOWEVER, that, notwithstanding anything to the contrary contained in clauses (A) through (J) 19  above, for the avoidance of doubt (and without implication that such property would otherwise be included), the Lien, security interest, mortgage, grant, assignment, transfer, hypothecation, pledge, conveyance and set over created by this Mortgage is not intended to extend to, shall not extend to, and the term “Mortgaged Property” shall not include, any Excluded Assets (as defined below), and Mortgagor shall from time to time at the request of Mortgagee give written notice to Mortgagee identifying in reasonable detail the Excluded Assets and shall provide to Mortgagee such other information regarding the Excluded Assets as Mortgagee may reasonably request.

 

For purposes hereof, “ Excluded Assets ” shall mean the following:

 

(i)                                      any rights or interests in any contract, agreement, lease, permit, license, charter or license agreement, as such, if under the terms of such contract, agreement, lease, permit, license, charter or license agreement, or applicable Law with respect thereto, the valid grant of a Lien therein to Mortgagee would constitute or result in a breach, termination or default under such contract, agreement, lease, permit, license, charter or license agreement and such breach, termination or default has not been or is not waived or the consent of the other party to such contract, agreement, lease, permit, license, charter or license agreement has not been or is not otherwise obtained or under applicable Law such prohibition cannot be waived; provided, the foregoing exclusion shall in no way be construed (i) to apply if any such prohibition is unenforceable under Sections 9-406, 9-407 or 9-408 of the Code or other applicable Law or (ii) so as to limit, impair or otherwise affect Mortgagee’s unconditional continuing liens in any rights or interests of Mortgagor in or to monies due or to become due under any such contract, lease, permit, license, charter or license agreement;

 

(ii)                                   all ABL Priority Collateral; and

 

(iii)                                any checking, savings or other demand deposit account maintained by any Loan Party and exclusively used (a) for payroll, payroll taxes and other employee wage and benefit payments to or for the benefit of any Loan Party’s employees, (b) for the receipt of Medicare and Medicaid receivables of a Loan Party, (c) to hold proceeds of ABL Priority Collateral, or (d) for the receipt and deposit of funds of a specific Person other than a Loan Party, or which a Loan Party is holding in trust or as a fiduciary for such Person, in each case in a manner permitted under the Credit Agreement or the other Loan Documents.

 

Notwithstanding the foregoing definition of Excluded Assets, nothing contained in this Mortgage shall affect the rights of Mortgagee or any other Lender with respect to any or all of the Excluded Assets as provided for in any other Loan Document.

 

TO HAVE AND TO HOLD the Mortgaged Property and the rights and privileges hereby mortgaged unto Mortgagee, its permitted successors and assigns for the uses and purposes set forth herein, until (i) the Commitments shall have expired or been terminated, and (ii) the principal of and interest on each Loan and all fees and other Secured Obligations (other than

 


19   For a leasehold mortgage, replace “(J)” with “(K).”

 

5



 

unasserted contingent indemnification Obligations) shall have been indefeasibly performed and paid in full in cash.

 

Terms and Conditions

 

Mortgagor further represents, warrants, covenants, and agrees with Mortgagee as follows:

 

1.                                       Warranty of Title .  Mortgagor warrants the good and marketable title to the Premises, subject only to the matters that are set forth in Schedule B of any title insurance policy or policies being issued to Mortgagee to insure the Lien of this Mortgage and Permitted Encumbrances under the Credit Agreement (collectively, the “ Permitted Exceptions ”) and that Mortgagor has the full power, authority and right to execute, deliver and perform its obligations under this Mortgage and to encumber, mortgage, transfer, give, grant, bargain, sell, alienate, enfeoff, convey, confirm, warrant, pledge, assign and hypothecate the same and that this Mortgage is and will remain a valid and enforceable first Lien on and security interest in the Mortgaged Property, subject only to the Permitted Exceptions.  Mortgagor shall forever warrant, defend and preserve such title and the validity and priority of the Lien of this Mortgage and shall forever warrant and defend the same to Mortgagee against the claims of all Persons whomsoever.

 

2.                                       20 Payment of Secured Obligations .  Mortgagor shall pay and perform the Secured Obligations owing by it as and when due.

 

3.                                       Requirements .  Mortgagor shall comply with all provisions of the Credit Agreement regarding compliance with the requirements of Laws, orders, writs, injunctions, and decrees applicable to it or the Mortgaged Property.

 

4.                                       Payment of Taxes and Other Impositions .  Mortgagor shall comply with all provisions of the Credit Agreement regarding payment and discharge of Taxes, assessments, and governmental charges or levies upon the Mortgaged Property, subject to Mortgagor’s right to contest the same as set forth therein.

 

5.                                       Insurance .  (a)  Mortgagor shall (i) maintain or shall cause to be maintained such insurance with respect to it or the Mortgaged Property as is required pursuant to the Credit Agreement; (ii) maintain such other insurance with respect to it or the Mortgaged Property as may be required by applicable Law; and (iii) furnish to Mortgagee, upon written request, information as to the insurance carried as provided in the Credit Agreement.

 

(a)                                  Mortgagor promptly shall comply with and conform to (i) all provisions of each such insurance policy, and (ii) all requirements of the insurers applicable to Mortgagor or to any of the Mortgaged Property or to the use, manner of use, occupancy, possession, operation, maintenance, alteration, or repair of any of the Mortgaged Property.  Mortgagor shall not use or permit the use of the Mortgaged Property in any manner which would permit any insurer to cancel any insurance policy or void coverage required to be maintained by this Mortgage.

 


20   For leasehold mortgages, make this existing Section 3, insert Rider D here as Section 2, and shift all subsequent section numbers down accordingly.

 

6



 

(b)                                  If the Mortgaged Property, or any part thereof, shall be destroyed or damaged, Mortgagor (or Borrower) shall give immediate notice thereof to Mortgagee in accordance with, and to the extent required by, Section 5.03(i) of the Credit Agreement.  All insurance proceeds from the Mortgaged Property shall be paid to Mortgagee as and to the extent required by the Credit Agreement.  Notwithstanding the preceding sentence, provided that no Event of Default shall have occurred and be continuing, Mortgagor shall have the right to adjust such loss, and the insurance proceeds relating to such loss shall be paid over to Mortgagor as and to the extent required by the Credit Agreement; provided that, Mortgagor shall, promptly after any such damage, repair all such damage regardless of whether any insurance proceeds have been received or whether such proceeds, if received, are sufficient to pay for the costs of repair.  If an Event of Default shall have occurred and be continuing, Mortgagee shall have the right to adjust such loss and receive and apply the insurance proceeds to pay the Secured Obligations as and to the extent required by the Credit Agreement or repair the Mortgaged Property in its sole and absolute discretion.

 

6.                                       Restrictions on Liens and Encumbrances .  Except for the Lien of this Mortgage and the Permitted Exceptions, and except as expressly permitted by the Credit Agreement, Mortgagor shall not further mortgage, nor otherwise encumber the Mortgaged Property nor create or suffer to exist any Lien, charge or encumbrance on the Mortgaged Property, or any part thereof, whether superior or subordinate to the Lien of this Mortgage and whether recourse or non-recourse.

 

7.                                       Transfer Restrictions .  Mortgagor shall not sell, transfer, convey, or assign all or any portion of, or any interest in, the Mortgaged Property except as permitted under the Credit Agreement.

 

8.                                       Maintenance .  Mortgagor shall maintain or cause to be maintained all the Improvements in good condition and repair, ordinary wear and tear excepted, and shall not commit or suffer any waste of the Improvements.  Mortgagor shall repair, restore, replace, or rebuild promptly any part of the Premises which may be damaged or destroyed by any casualty whatsoever.

 

9.                                       Condemnation/Eminent Domain .  Mortgagor (or Borrower) shall notify Mortgagee of the pendency of the commencement of any action or proceeding for the taking of any interest in the Mortgaged Property in accordance with, and to the extent required by, Section 5.03(i) of the Credit Agreement.  If an Event of Default shall have occurred and be continuing, Mortgagee is hereby authorized and empowered by Mortgagor to settle or compromise any claim in connection with such condemnation and to receive all awards and proceeds thereof as provided by the Credit Agreement.  Notwithstanding the preceding sentence, provided no Event of Default shall have occurred and be continuing, but subject to the terms and provisions of the Credit Agreement, Mortgagor shall, at its expense, diligently prosecute any proceeding relating to such condemnation, settle or compromise any claims in connection therewith and receive any awards or proceeds thereof.

 

10.                                Leases .  Except as expressly permitted under the Credit Agreement, Mortgagor shall not lease, sublease, license, or sublicense all or any portion of, or any interest in, the Mortgaged Property.  Mortgagor may revise, modify, or amend any Lease without the

 

7



 

consent of Mortgagee, provided that the Lease, as modified, is or would be expressly permitted under the Credit Agreement.

 

11.                                Further Assurances .  Mortgagor agrees to execute any and all further documents, financing statements, agreements and instruments, and take all such further actions (including the filing and recording of financing statements and other documents), that may be required under any applicable Law, or which Mortgagee may reasonably request, to grant, preserve, protect or perfect the Lien created or intended to be created by this Mortgage or the validity or priority of such Lien, all at the expense of Mortgagor.

 

12.                                Mortgagee’s Right to Perform .  If Mortgagor fails to perform any of the covenants or agreements of Mortgagor hereunder (other than with respect to the failure to maintain insurance as required hereunder, in which case Mortgagee can immediately perform), and such failure constitutes an Event of Default, without waiving or releasing Mortgagor from any obligation or default under this Mortgage, Mortgagee may, at any time (but shall be under no obligation to) pay or perform the same, and the amount or cost thereof, with interest at the rate provided for in the Credit Agreement, shall constitute Protective Advances secured by this Mortgage and shall be a Lien on the Mortgaged Property prior to any right, title to, interest in or claim upon the Mortgaged Property attaching subsequent to the Lien of this Mortgage.  No payment or advance of money or performance rendered by Mortgagee under this Section 12 21  shall be deemed or construed to cure any default or Event of Default or waive any right or remedy of Mortgagee.

 

13.                                Hazardous Material .  Mortgagor shall comply with all provisions of the Credit Agreement regarding Hazardous Materials and Environmental Laws with respect to itself and the Mortgaged Property.

 

14.                                Protective Advances .  All Protective Advances shall:  (a) become part of the Secured Obligations and be secured by this Mortgage; (b) bear interest at the rate provided for in the Credit Agreement (commencing from the date that the funds are advanced by or on behalf of Mortgagee and continuing until Mortgagor has actually repaid such advances in full), the payment of which interest this Mortgage shall secure; and (c) be repaid by Mortgagor immediately or upon demand, which obligation shall survive repayment of all other Obligations or any foreclosure in connection with this Mortgage.  As used herein, the term “ Protective Advance ” means any amount that Mortgagee advances or expends in its sole and absolute discretion to cure or seek to cure any default or in exercising any remedy of Mortgagee hereunder.

 

15.                                Events of Default .  The occurrence of an Event of Default under the Credit Agreement shall constitute an Event of Default hereunder.

 

16.                                Remedies .  (a)  To the extent permitted by applicable Law, upon the occurrence and during the continuance of any Event of Default, Mortgagee may, and at the direction of the Required Lenders, shall, in addition to the other rights and remedies provided for herein, under applicable Law, under the Credit Agreement and the other Loan Documents, or

 


21  For leasehold mortgages, change to “Section 12” to “Section 13.”

 

8



 

otherwise available to it (including, to the extent permitted under the Credit Agreement, declaring amounts secured by this Mortgage to be due and payable, in whole or in part, whereupon the same shall immediately become due and payable), immediately take such action, without notice or demand, as it deems advisable to protect and enforce its rights against Mortgagor and in and to the Mortgaged Property, including, but not limited to, the following actions, each of which may be pursued concurrently or otherwise, at such time and in such manner as Mortgagee may determine, in its sole discretion, without impairing or otherwise affecting the other rights and remedies of Mortgagee:

 

(i)                                      Mortgagee may, to the extent permitted by applicable Law, (A) take immediate possession of all of the Mortgaged Property and take such action as Mortgagee, in its sole judgment, deems necessary to protect and preserve the Mortgaged Property, (B) institute, maintain and complete an action of mortgage foreclosure against all or any part of the Mortgaged Property and cause the Mortgaged Property to be sold in total or in parts, (C) purchase the Mortgaged Property at foreclosure sale, (D) enforce any judgment received in connection with the exercise of remedies under the Credit Agreement or other Loan Documents, (E) sell all or part of the Mortgaged Property (Mortgagor expressly granting to Mortgagee the power of sale), or (F) take any other action at law or in equity for the enforcement of this Mortgage.  Mortgagee may proceed in any such action to final judgment and execution thereon.

 

(ii)                                   Mortgagee may personally, or by its agents, attorneys and employees and without regard to the adequacy or inadequacy of the Mortgaged Property or any other Collateral as security for the Secured Obligations, to the extent permitted by applicable Law, enter into and upon the Mortgaged Property and each and every part thereof and exclude Mortgagor and its agents and employees therefrom without liability for trespass, damage or otherwise (Mortgagor hereby agreeing to surrender possession of the Mortgaged Property to Mortgagee upon demand at any such time) and use, operate, manage, maintain and control the Mortgaged Property and every part thereof.  Following such entry and taking of possession, Mortgagee shall be entitled, without limitation, to the extent permitted by applicable Law, (x) to lease all or any part or parts of the Mortgaged Property for such periods of time and upon such conditions as Mortgagee may, in its discretion, deem proper, (y) to enforce, cancel or modify any Lease, and (z) generally to execute, do and perform any other act, deed, matter or thing concerning the Mortgaged Property as Mortgagee shall deem appropriate as fully as Mortgagor might do.

 

(iii)                                Mortgagee may, with respect to personal property included in the Mortgaged Property, exercise all of the applicable rights and remedies of a secured party under the Code in effect in the state in which the Premises are located (the “ State ”).

 

(b)                                  In case of a foreclosure sale, the Premises may be sold, at Mortgagee’s election, in one parcel or in more than one parcel and Mortgagee is specifically empowered, (without being required to do so, and in its sole and absolute discretion) to cause successive sales of portions of the Mortgaged Property to be held.

 

9



 

(c)                                   Except as expressly provided above in this Section 16 22  or elsewhere in this Mortgage, presentment, demand, and protest and all other notices of any kind are hereby expressly waived.

 

17.                                Sale of the Properties; Application of Proceeds .  Subject to the requirements of applicable Law, the proceeds or avails of a foreclosure sale and all moneys received by Mortgagee pursuant to any right given or action taken under the provisions of this Mortgage shall be applied in accordance with, and subject to, Section 7.02 of the Credit Agreement.

 

18.                                Right of Mortgagee to Credit Sale .  Upon the occurrence of any sale made under this Mortgage, whether made under the power of sale or by virtue of judicial proceedings or of a judgment or decree of foreclosure and sale, Mortgagee may bid for and acquire the Mortgaged Property or any part thereof.  In lieu of paying cash therefor, Mortgagee may make settlement for the purchase price by crediting upon the Secured Obligations or other sums secured by this Mortgage the net sales price after deducting therefrom the expenses of sale and the cost of the action and any other sums which Mortgagee is authorized to deduct under this Mortgage.  In such event, this Mortgage, the Credit Agreement, any Note, the Facility Guaranty and documents evidencing expenditures secured hereby may be presented to the Person conducting the sale in order that the amount so used or applied may be credited upon the Secured Obligations as having been paid.

 

19.                                Appointment of Receiver .  Upon the occurrence and during the continuance of any Event of Default, Mortgagee may, and at the direction of the Required Lenders, shall, in addition to the other rights and remedies provided for herein, under applicable Law or otherwise available to it as a matter of right and without notice to Mortgagor, unless otherwise required by applicable Law, and without regard to the adequacy or inadequacy of the Mortgaged Property or any other collateral as security for the Secured Obligations or the interest of Mortgagor therein, apply to any court having jurisdiction to appoint a receiver or receivers or other manager of the Mortgaged Property, and Mortgagor hereby irrevocably consents to such appointment and waives notice of any application therefor (except as may be required by applicable Law).  Any such receiver or receivers shall have all the usual powers and duties of receivers in like or similar cases and all the powers and duties of Mortgagee in case of entry as provided in this Mortgage, including, without limitation and to the extent permitted by applicable Law, the right to enter into leases of all or any part of the Mortgaged Property, and shall continue as such and exercise all such powers until the date of confirmation of sale of the Mortgaged Property unless such receivership is sooner terminated.

 

20.                                Extension, Release, etc.   (a)  Without affecting the Lien or charge of this Mortgage upon any portion of the Mortgaged Property not then or theretofore released as security for the full amount of the Secured Obligations, Mortgagee may, from time to time and without notice, release or reconvey, or cause to be released or reconveyed any parcel, portion or all of the Mortgaged Property in accordance with, and subject to, Section 9.20 of the Credit Agreement.  [If at any time this Mortgage shall secure less than all of the principal amount of the Secured Obligations, it is expressly agreed that any repayments of the principal amount of the

 


22   For leasehold mortgages, change to “Section 16” to “Section 17.”

 

10



 

Secured Obligations shall not reduce the amount of the Lien of this Mortgage until the Lien amount shall equal the principal amount of the Secured Obligations outstanding.] 23

 

(b)                                  No recovery of any judgment by Mortgagee and no levy of an execution under any judgment upon the Mortgaged Property or upon any other property of Mortgagor shall affect the Lien of this Mortgage or any Liens, rights, powers or remedies of Mortgagee hereunder, and such Liens, rights, powers and remedies shall continue unimpaired until this Mortgage is terminated or released in accordance with Section 39 .

 

(c)                                   If Mortgagee shall have the right to foreclose this Mortgage, Mortgagor authorizes Mortgagee at its option to foreclose the Lien of this Mortgage subject to the rights of any tenants of the Mortgaged Property.  The failure to make any such tenants parties defendant to any such foreclosure proceeding and to foreclose their rights will not be asserted by Mortgagor as a defense to any proceeding instituted by Mortgagee to collect the Secured Obligations or to foreclose the Lien of this Mortgage.

 

(d)                                  Unless expressly provided otherwise, in the event that ownership of this Mortgage and title to the Mortgaged Property or any estate therein shall become vested in the same Person, this Mortgage shall not merge in such title but shall continue as a valid Lien on the Mortgaged Property for the amount secured hereby.

 

21.                                Security Agreement under Uniform Commercial Code .  (a)  It is the intention of the parties hereto that this Mortgage shall constitute a Security Agreement within the meaning of the Uniform Commercial Code of the State (the “ Code ”).  Upon the occurrence and during the continuance of any Event of Default, Mortgagee may, and at the direction of the Required Lenders, shall, in addition to the other rights and remedies provided for herein, under applicable Law or otherwise available to it under the Credit Agreement and other Loan Documents at Mortgagee’s option either (i) proceed under the Code and exercise such rights and remedies as may be provided to a secured party by the Code with respect to all or any portion of the Mortgaged Property which is personal property (including, without limitation, taking possession of and selling such property) or (ii) treat such property as real property and proceed with respect to both the real and personal property constituting the Mortgaged Property in accordance with Mortgagee’s rights, powers and remedies with respect to the real property (in which event the default provisions of the Code shall not apply).  If Mortgagee shall elect to proceed under the Code, then ten days’ notice of sale of the personal property shall be deemed reasonable notice and the reasonable expenses of retaking, holding, preparing for sale, selling and the like incurred by Mortgagee shall include, but not be limited to, attorneys’ fees and legal expenses.  At Mortgagee’s request, Mortgagor shall assemble the personal property and make it available to Mortgagee at a place designated by Mortgagee which is reasonably convenient to both parties.

 

(a)                                  Mortgagor and Mortgagee agree, to the extent permitted by applicable Law, that: (i) this Mortgage upon recording or registration in the real estate records of the proper office shall constitute a financing statement filed as a “fixture filing” within the meaning of the Code; (ii) [                      ] is the record owner of the Premises; (iii) the addresses of Mortgagor

 


23   To be deleted in States where no mortgage recording tax is imposed.

 

11



 

and Mortgagee are as set forth in the initial paragraph of this Mortgage; and (iv) the organization identification number of Mortgagor is [                                  ].

 

(b)                                  Mortgagor, upon request by Mortgagee from time to time, shall execute, acknowledge and deliver to Mortgagee one or more separate security agreements, in form reasonably satisfactory to Mortgagee, covering all or any part of the Mortgaged Property and will further execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, any financing statement, affidavit, continuation statement or certificate or other document as Mortgagee may reasonably request in order to perfect, preserve, maintain, continue or extend the security interest under and the priority of this Mortgage and any such security agreements.  Mortgagor further agrees to pay to Mortgagee on demand all costs and expenses incurred by Mortgagee in connection with the preparation, execution, recording, filing and re-filing of any such document and all reasonable costs and expenses of any record searches for financing statements Mortgagee shall reasonably require.  Pursuant to the provisions of the Code, Mortgagor hereby authorizes Mortgagee to file any such financing and continuation statements as required by the Credit Agreement.  The filing of any financing or continuation statements in the records relating to personal property or chattels shall not be construed as in any way impairing the right of Mortgagee to proceed against any personal property encumbered by this Mortgage as real property, as set forth above.

 

22.                                Assignment of Rents .  Mortgagor hereby assigns to Mortgagee the Rents as further security for the payment and performance of the Secured Obligations, and, to the extent permitted by applicable Law, Mortgagor grants to Mortgagee the right to enter the Mortgaged Property for the purpose of collecting the same and to let the Mortgaged Property or any part thereof, and to apply the Rents on account of the Secured Obligations.  The foregoing assignment and grant is present and absolute and shall continue in effect until the Secured Obligations (other than unasserted contingent indemnification Obligations) are paid in full, but Mortgagee hereby waives the right to enter the Mortgaged Property for the purpose of collecting the Rents and Mortgagor shall be entitled to collect, receive, use and retain the Rents until the occurrence of an Event of Default under this Mortgage; such right of Mortgagor to collect, receive, use and retain the Rents may be revoked by Mortgagee upon the occurrence of any Event of Default under this Mortgage by giving not less than five days’ written notice of such revocation to Mortgagor.  In the event such notice is given, Mortgagor shall pay over to Mortgagee, or to any receiver appointed to collect the Rents, any Lease security deposits.  Mortgagor shall not accept prepayments of installments of Rent to become due for a period of more than one month in advance (except for security deposits and estimated payments of percentage rent, if any).

 

23.                                Notices .  All notices, requests, demands and other communications hereunder shall be given in accordance with the provisions of Section 9.01 of the Credit Agreement to Mortgagor in care of Borrower and to Mortgagee at the address of the Collateral Agent as specified therein.

 

24.                                No Oral Modification .  This Mortgage may not be amended, supplemented, or otherwise modified except in accordance with the provisions of Section 9.08 of the Credit Agreement.  To the extent permitted by applicable Law, any agreement made by

 

12



 

Mortgagor and Mortgagee after the effective date of this Mortgage relating to this Mortgage shall be superior to the rights of the holder of any intervening or subordinate Lien or encumbrance.

 

25.                                Partial Invalidity .  In the event any one or more of the provisions contained in this Mortgage should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and therein shall not in any way be affected or impaired thereby (it being understood that the invalidity of a particular provision in a particular jurisdiction shall not in and of itself affect the validity of such provision in any other jurisdiction).  The parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.  Notwithstanding anything to the contrary contained in this Mortgage or in any provisions of the Loan Documents, the obligations of Mortgagor and of any other obligor under the Loan Documents to repay the Secured Obligations shall be subject to the limitation that Mortgagee shall not charge, take or receive, nor shall Mortgagor or any other obligor be obligated to pay to Mortgagee, any amounts constituting interest in excess of the maximum rate permitted by Law to be charged by Mortgagee, as provided by Section 9.09 of the Credit Agreement.

 

26.                                Mortgagor’s Waiver of Rights .  To the fullest extent permitted by applicable Law, Mortgagor waives the benefit of all Laws now existing or that may subsequently be enacted providing for (i) any appraisement before sale of any portion of the Mortgaged Property, (ii) any extension of the time for the enforcement of the collection of the Secured Obligations or the creation or extension of a period of redemption from any sale, and (iii) exemption of the Mortgaged Property from attachment, levy or sale under execution or exemption from civil process.  To the fullest extent Mortgagor may do so, Mortgagor agrees that Mortgagor will not at any time insist upon, plead, claim or take the benefit or advantage of any Law now or hereafter in force providing for any appraisement, valuation, stay, exemption, extension or redemption, or requiring foreclosure of this Mortgage before exercising any other remedy granted hereunder and Mortgagor, for Mortgagor and its successors and assigns, and for any and all Persons ever claiming any interest in the Mortgaged Property, to the extent permitted by applicable Law, hereby waives and releases all rights of redemption, valuation, appraisement, stay of execution, notice of election to mature or declare due the whole of the secured indebtedness and marshalling in the event of foreclosure of the Liens hereby created.

 

27.                                Remedies Not Exclusive .  In addition to any rights and remedies that Mortgagee may have under the Credit Agreement and the other Loan Documents, Mortgagee shall be entitled to exercise all rights and powers under this Mortgage or under any applicable Laws now or hereafter in force with respect hereto, notwithstanding that some or all of the Secured Obligations may now or hereafter be otherwise secured, whether by mortgage, security agreement, pledge, Lien, assignment or otherwise.  Neither the acceptance of this Mortgage nor its enforcement, shall prejudice or in any manner affect Mortgagee’s right to realize upon or enforce any other security now or hereafter held by Mortgagee, it being agreed that Mortgagee shall not be required to look first to, enforce or exhaust any other security, collateral or guaranties and that Mortgagee shall be entitled to enforce this Mortgage and any other security now or hereafter held by Mortgagee in such order and manner as Mortgagee may determine in its absolute discretion.  No remedy herein conferred upon or reserved to Mortgagee is intended to be

 

13



 

exclusive of any other remedy herein or by Law provided or permitted, but each shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute.  Every power or remedy given by any of the Loan Documents to Mortgagee or to which Mortgagee is otherwise entitled may be exercised concurrently or independently from time to time and as often as may be deemed expedient by Mortgagee in accordance therewith.  In no event shall Mortgagee, in the exercise of the remedies provided in this Mortgage (including, without limitation, in connection with the assignment of Rents to Mortgagee, or the appointment of a receiver and the entry of such receiver on to all or any part of the Mortgaged Property), be deemed a “mortgagee in possession,” and Mortgagee shall not in any way be made liable for any act, either of commission or omission, in connection with the exercise of such remedies.

 

28.                                Multiple Security .  If (a) the Premises shall consist of one or more parcels, whether or not contiguous and whether or not located in the same county, or (b) in addition to this Mortgage, Mortgagee shall now or hereafter hold one or more additional mortgages, Liens, deeds of trust or other security (directly or indirectly) for the Secured Obligations upon other property in the State (whether or not such property is owned by Mortgagor or by others) or (c) both the circumstances described in clauses (a) and (b) shall be true, then to the fullest extent permitted by applicable Law, Mortgagee may, at its election, commence or consolidate in a single foreclosure action all foreclosure proceedings against all such collateral securing the Secured Obligations (including the Mortgaged Property), which action may be brought or consolidated in the courts of any county in the State in which any of such collateral is located.  Mortgagor acknowledges that the right to maintain a consolidated foreclosure action in the State is a specific inducement to Mortgagee to extend the Secured Obligations, and Mortgagor expressly and irrevocably waives any objections to the commencement or consolidation of the foreclosure proceedings in a single action and any objections to the laying of venue or based on the grounds of forum non conveniens which it may now or hereafter have.  Mortgagor further agrees that if Mortgagee shall be prosecuting one or more foreclosure or other proceedings against a portion of the Mortgaged Property or against any collateral other than the Mortgaged Property, which collateral directly or indirectly secures the Secured Obligations, or if Mortgagee shall have obtained a judgment of foreclosure and sale or similar judgment against such collateral, then, whether or not such proceedings are being maintained or judgments were obtained in or outside the State, Mortgagee may commence or continue foreclosure proceedings and exercise its other remedies granted in this Mortgage against all or any part of the Mortgaged Property and Mortgagor waives any objections to the commencement or continuation of a foreclosure of this Mortgage or exercise of any other remedies hereunder based on such other proceedings or judgments, and waives any right to seek to dismiss, stay, remove, transfer or consolidate either any action under this Mortgage or such other proceedings on such basis.  Neither the commencement nor continuation of proceedings to foreclose this Mortgage nor the exercise of any other rights hereunder nor the recovery of any judgment by Mortgagee in any such proceedings shall prejudice, limit or preclude Mortgagee’s right to commence or continue one or more foreclosure or other proceedings or obtain a judgment against any other collateral (either in or outside the State) which directly or indirectly secures the Secured Obligations, and Mortgagor expressly waives any objections to the commencement of, continuation of, or entry of a judgment in such other proceedings or exercise of any remedies in such proceedings based upon any action or judgment connected to this Mortgage, and Mortgagor also waives any right to

 

14



 

seek to dismiss, stay, remove, transfer or consolidate either such other proceedings or any action under this Mortgage on such basis.  It is expressly understood and agreed that to the fullest extent permitted by applicable Law, Mortgagee may, at its election, cause the sale of all collateral which is the subject of a single foreclosure action in the State at either a single sale or at multiple sales conducted simultaneously and take such other measures as are appropriate in order to effect the agreement of the parties to dispose of and administer all collateral securing the Secured Obligations (directly or indirectly) in the most economical and least time-consuming manner.

 

29.                                Successors and Assigns .  Whenever in this Mortgage any of the parties hereto is referred to, such reference shall be deemed to include the successors and assigns of such party as permitted by the Credit Agreement; and all covenants, promises and agreements by or on behalf of Mortgagor or Mortgagee that are contained in this Mortgage shall run with the Premises and bind and inure to the benefit of their respective successors and assigns.

 

30.                                No Waivers, etc.   Mortgagee may release, regardless of consideration and without the necessity for any notice to or consent by the holder of any subordinate Lien on the Mortgaged Property, any part of the security held for the obligations secured by this Mortgage without, as to the remainder of the security, in anywise impairing or affecting the Lien of this Mortgage or the priority of such Lien over any subordinate Lien.  No failure or delay of Mortgagee in exercising any power or right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power.  No waiver of any provision of this Mortgage or consent to any departure by Mortgagor therefrom shall in any event be effective unless the same shall be permitted as provided in Section  24, 24  and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given.  No notice or demand on Mortgagor in any case shall entitle Mortgagor to any other or further notice or demand in similar or other circumstances.

 

31.                                Governing Law, etc.   The provisions of this Mortgage regarding the creation, perfection, priority, and enforcement of the Liens and security interests granted herein shall be governed by and construed under the Laws of the State.  All other provisions of this Mortgage and the rights and obligations of Mortgagor and Mortgagee, including the provisions of the Credit Agreement and any other Loan Document incorporated or referenced herein shall be governed by, and construed and enforced in accordance with, the Laws of the State of New York, without regard to the conflict of laws principles thereof that would result in the application of any Law other than the Law of the State of New York.

 

32.                                Certain Definitions .  The word “Mortgagor” shall be construed as if it reads “Mortgagors” whenever the sense of this Mortgage so requires and if there shall be more than one Mortgagor, the obligations of Mortgagors shall be joint and several.  Unless the context clearly indicates a contrary intent or unless otherwise specifically provided herein, words used in this Mortgage shall be used interchangeably in singular or plural form and the word “ Mortgagor ” shall mean “each Mortgagor or any subsequent owner or owners of the Mortgaged Property or any part thereof or interest therein,” the word “ Mortgagee ” shall mean “Mortgagee

 


24   For leasehold mortgages, change to “Section 24” to “Section 25.”

 

15



 

or any successor Collateral Agent or other permitted agent for the Lenders permitted by the Credit Agreement,” and the words “ Mortgaged Property ” shall include any portion of the Mortgaged Property or interest therein.  Whenever the context may require, any pronouns used herein shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns and pronouns shall include the plural and vice versa.  The captions in this Mortgage are for convenience or reference only and in no way limit or amplify the provisions hereof.

 

33.                                Consent to Jurisdiction and Service of Process; Waiver of Jury Trial .  (a)  MORTGAGOR HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND THE MORTGAGED PROPERTY, TO THE EXTENT PERMITTED BY APPLICABLE LAW, TO THE NON-EXCLUSIVE JURISDICTION OF ANY COURT OF THE STATE OR OF ANY NEW YORK STATE COURT OR FEDERAL COURT OF THE UNITED STATES OF AMERICA SITTING IN NEW YORK COUNTY, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS MORTGAGE, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND MORTGAGOR HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN THE AFORESAID COURTS.  MORTGAGOR AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.  NOTHING IN THIS MORTGAGE SHALL AFFECT ANY RIGHT THAT MORTGAGEE MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS MORTGAGE AGAINST MORTGAGOR OR THE MORTGAGED PROPERTY IN THE COURTS OF ANY JURISDICTION IF REQUIRED TO REALIZE UPON THE MORTGAGED PROPERTY OR ENFORCE ANY JUDGMENT.

 

(b)                                  MORTGAGOR FURTHER IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION, OR PROCEEDING ARISING OUT OF OR RELATING TO THIS MORTGAGE IN ANY OF THE AFORESAID COURTS IN CLAUSE (a) ABOVE MORTGAGOR HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH SUIT, ACTION OR PROCEEDING IN ANY SUCH COURT.

 

(c)                                   TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, MORTGAGOR IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION  23, 25  EXCLUDING SERVICE OF PROCESS BY MAIL.  NOTHING IN THIS MORTGAGE WILL AFFECT THE RIGHT OF MORTGAGOR OR MORTGAGEE TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.

 


25   For leasehold mortgages, change to “SECTION 23” to “SECTION 24.”

 

16



 

(d)                                  MORTGAGOR, AND MORTGAGEE, BY ACCEPTANCE HEREOF, EACH HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS MORTGAGE.  MORTGAGOR (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS MORTGAGE BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN SECTION 9.11 OF THE CREDIT AGREEMENT.

 

34.                                Future Advances .  This Mortgage is given to secure the Secured Obligations and shall secure not only obligations with respect to presently existing indebtedness but also any and all other obligations that may hereafter be owing to the Collateral Agent and the Lenders under the Loan Documents, however incurred, whether interest, discount or otherwise, and whether the same shall be deferred, accrued or capitalized, including future advances, re-advances, and Protective Advances (collectively, “ Future Advances ”), in each case pursuant to the Credit Agreement or the other Loan Documents, including with respect to any Incremental Loans made pursuant to Section 2.01(b) of the Credit Agreement, whether such Future Advances are obligatory or to be made at the option of the Collateral Agent, the Administrative Agent, the Lenders, or otherwise, to the same extent as if such Future Advances were made on the date of the execution of this Mortgage.  The Lien of this Mortgage shall be valid as to all Secured Obligations secured hereby, including Future Advances, from the time of delivery hereof by Mortgagor to Mortgagee.  This Mortgage is intended to and shall be valid and have priority over all subsequent Liens and encumbrances, including statutory Liens, excepting solely taxes and assessments levied on the Premises and Permitted Exceptions.  Although this Mortgage is given to secure all Future Advances made by Mortgagee or the other Lenders to or for the benefit of Borrower, Mortgagor, or the Mortgaged Property, pursuant to this Mortgage or in connection with the Mortgaged Property, the Credit Agreement or other Loan Documents, whether obligatory or optional, Mortgagor and Mortgagee acknowledge and agree that Mortgagee and the Lenders are obligated by the terms of the Loan Documents to make certain Future Advances, subject to the fulfillment of the relevant conditions set forth in the Loan Documents.

 

17



 

35.                                Mortgagee as Agent; Successor Agents .  (a)  Mortgagee has been appointed to act as agent hereunder by the other Secured Parties pursuant to the Credit Agreement.  Mortgagee shall have the right hereunder to make demands, to give notices, to exercise or refrain from exercising any rights, and to take or refrain from taking any action (including, without limitation, the release or substitution of the Mortgaged Property) in accordance with the Credit Agreement, any related agency agreement among the Loan Parties, Mortgagee and the other Secured Parties (collectively, as amended, amended and restated, supplemented or otherwise modified or replaced from time to time, the “ Agency Documents ”) and this Mortgage.  Mortgagor and all other Persons shall be entitled to rely on releases, waivers, consents, approvals, notifications and other acts of Mortgagee, without inquiry into the existence of required consents or approvals of the Secured Parties therefor.

 

(b)                                  Mortgagee shall at all times be the same Person that is the Collateral Agent or other permitted agency role under the Agency Documents.  Mortgagee may resign and a successor agent may be appointed in the manner provided in the Credit Agreement, and written notice of resignation by the Collateral Agent or other permitted agent pursuant to the Agency Documents shall also constitute notice of resignation as Mortgagee under this Mortgage.  Removal of the Collateral Agent or other permitted agent pursuant to any provision of the Agency Documents shall also constitute removal as Mortgagee under this Mortgage.  Appointment of a successor Collateral Agent or other permitted agent pursuant to the Agency Documents shall also constitute appointment of a successor Mortgagee under this Mortgage.  Upon the acceptance of any appointment as Collateral Agent or other permitted agent by a successor Collateral Agent or other permitted agent under the Agency Documents, that successor Collateral Agent or other permitted agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring or removed Collateral Agent or other permitted agent as Mortgagee under this Mortgage, and the retiring or removed Mortgagee shall promptly (i) assign and transfer to such successor Mortgagee all of its right, title and interest in and to this Mortgage and the Mortgaged Property, and (ii) execute and deliver to such successor Mortgagee such assignments and amendments and take such other actions, as may be necessary or appropriate in connection with the assignment to such successor Mortgagee of the Liens and security interests created hereunder, whereupon such retiring or removed Mortgagee shall be discharged from its duties and obligations under this Mortgage.  After any retiring or removed Mortgagee’s resignation or removal hereunder as Mortgagee, the provisions of this Mortgage and the Agency Documents shall inure to such Mortgagee’s benefit as to any actions taken or omitted to be taken by it under this Mortgage while it was Mortgagee hereunder.

 

36.                                Intercreditor Agreement .  This Mortgage and the Liens granted to the Mortgagee pursuant to this Mortgage or any other Loan Documents in any Mortgaged Property and the exercise of any right or remedy with respect to any Mortgaged Property hereunder or any other Loan Document are subject to the provisions of the Intercreditor Agreement by and between Mortgagee and Wells Fargo Bank, National Association, as Administrative Agent (as the same may be amended, supplemented or otherwise modified from time to time, the “ Intercreditor Agreement ”).  In the event of any inconsistency between the terms of this Mortgage and the terms of the Intercreditor Agreement, the terms of the Intercreditor Agreement shall control.

 

18



 

37.                                Addendum .  The terms and conditions set forth in the Addendum attached hereto are made an integral part hereof and are incorporated in this Mortgage as though fully set forth in the body of this Mortgage.  If any conflict exists between the terms and provisions contained in the body of this Mortgage and the terms and provisions set forth in the Addendum, the terms and provisions set forth in the Addendum shall control.

 

38.                                Incorporation of Credit Agreement; No Conflicts .  The terms of the Credit Agreement are incorporated by reference herein as though set forth in full detail.  In the event of any conflict between the terms and provisions of this Mortgage relating to the creation, perfection, priority, and enforcement of the real property Liens and the terms and provisions of the Credit Agreement, the terms and provisions of this Mortgage shall control; in the event of a conflict between any other term or provision of this Mortgage (other than Section  31 26 ) and the Credit Agreement, the terms and provisions of the Credit Agreement shall control.

 

 

39.                                Termination; Release .  This Mortgage, the Liens in favor of Mortgagee and all other security interests granted hereby shall terminate with respect to all Secured Obligations when (i) the Commitments shall have expired or been terminated, and (ii) the principal of and interest on each Loan and all fees and other Secured Obligations (other than unasserted contingent indemnification Obligations) shall have been indefeasibly performed and paid in full in cash.  In addition, the Mortgaged Property or any portion thereof shall be released from the Liens of this Mortgage in accordance with the provisions of the Credit Agreement.  Upon any such termination or release of this Mortgage, the Liens in favor of Mortgagee or other security interests granted hereby, at Mortgagor’s cost and expense, Mortgagee shall file a satisfaction and release of this Mortgage, in full or in part as the case may be, in the proper real estate records.

 

40.                                27 [ Maximum Secured Amount .  Notwithstanding anything contained herein to the contrary, with respect to this Mortgage on properties located in [              ], the maximum amount secured hereby (including Mortgagor’s obligation to reimburse Protective Advances) is $                      .  Notwithstanding any provision herein to the contrary, the amount secured by this Mortgage shall be limited as follows:                 .] 28

 

 [ADDENDUM IMMEDIATELY FOLLOWS]

 


26   For leasehold mortgages, change to “Section 31” to “Section 32.”

27   Local counsel to advise if required.

28  If the Mortgaged Property includes any “Operating Property” under the SVU Indenture as then in effect, then mutually agreeable [] language will be added in such Mortgage limiting the amount of the Secured Obligations secured thereby so that such Mortgage does not trigger any equal and ratable security provisions thereunder.

 

19



 

ADDENDUM TO MORTGAGE

 

A.                                     [insert State-specific provisions]

 

[SIGNATURE PAGE IMMEDIATELY FOLLOWS]

 



 

This Mortgage has been duly executed and delivered to Mortgagee by Mortgagor and is effective as of the effective date first above written.

 

 

 

MORTGAGOR:

 

 

 

[                                                ],

 

a [                            ] [                          ]

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

[Signature block subject to review and comment by local counsel]

 

[APPROPRIATE NOTARY BLOCK]

 



 

Exhibit A

 

Description of the Land

 

[Attach Legal Description of all parcels]

 



 

RIDER FOR LEASEHOLD MORTGAGE FORM

 

Rider A :

 

LEASEHOLD

 

Rider B :

 

WHEREAS, Mortgagor is the holder of leasehold title in and to all of the Land (as defined below), pursuant to the [Lease Agreement] dated as of                          ,              by and between [LANDLORD], a [                      ], as lessor (“ Lessor ”) and Mortgagor, as lessee, (“ Lessee ”), a memorandum of which is recorded in Book                 , Page                    with the Clerk of                                County,                               , [as amended by that certain                                           , dated as of                          ,               ], which Premises (as defined below) forms a portion of the Mortgaged Property described below;

 

Rider C :

 

that certain lease described in Recital C above, as the same has been and may be in the future amended, restated, renewed or extended in compliance with this Mortgage, including any options to purchase, extend or renew provided for in such lease (collectively, the “ Subject Lease ”) and any nondisturbance, attornment and recognition agreement benefiting Mortgagor with respect to the Subject Lease, together with all credits, deposits, privileges, rights, estates, title and interest of Mortgagor as tenant under the Subject Lease (including all rights of Mortgagor to treat the Subject Lease as terminated under Section 365(h) (a “ 365(h) Election ”) of the Bankruptcy Code, or any other Debtor Relief Laws, or any comparable right provided under any other Debtor Relief Law, together with all rights, remedies and privileges related thereto), and all books and records that contain records of payments of rent or security made under the Subject Lease and all of Mortgagor’s claims and rights to the payment of damages that may arise from Lessor’s failure to perform under the Subject Lease, or rejection of the Subject Lease under any Debtor Relief Law (a “ Lease Damage Claim ”), Mortgagee having the right, at any time and from time to time, to notify Lessor of the rights of Mortgagee hereunder;

 

Rider D :

 

Subject Lease .  (a)  Mortgagor represents, warrants and agrees as follows:

 

(i)              Mortgagor has delivered to Mortgagee a true, correct and complete copy of the Subject Lease, including all amendments and modifications, existing as of the date hereof.

 

(ii)           Mortgagor has not executed or entered into any modifications or amendments of the Subject Lease, either orally or in writing, other than written amendments that have been disclosed to Mortgagee in writing.  Except as expressly permitted under the Credit Agreement, Mortgagor shall not enter into any new leases of all or any portion of the Mortgaged Property or any modifications or amendments of the

 

H-1



 

Subject Lease except with Mortgagee’s prior written consent which consent shall not be unreasonably withheld or delayed.

 

(iii)                                The Subject Lease is in full force and effect, and Mortgagor is in no default of its obligations under the Subject Lease that, with the giving of notice or the passage of time or both, would entitle Lessor to terminate the Subject Lease or avoid its obligations thereunder.  To Mortgagor’s knowledge, no other event has occurred that, with the giving of notice or the passage of time or both, would entitle Lessor to terminate the Subject Lease or avoid its obligations thereunder.  Mortgagor has no knowledge of any material default of Lessor’s obligations under the Subject Lease or the occurrence of any event that, with the giving of notice or the passage of time or both, would constitute such a default or entitle Mortgagor to terminate the Subject Lease or avoid its obligations thereunder.

 

(iv)                               Except for Permitted Exceptions, Mortgagor has not executed any assignment or pledge of the Subject Lease or of Mortgagor’s right, title or interest in the same.

 

(v)                                  This Mortgage has been granted in conformity with the Subject Lease, does not constitute a violation or default under the Subject Lease, and shall at all times constitute a valid Lien (subject only to matters permitted by this Mortgage) on Mortgagor’s interests in the Subject Lease.

 

(vi)                               Mortgagor shall pay, when due and payable, the rentals, additional rentals, and other charges required to be paid by Mortgagor under the terms of the Subject Lease.

 

(vii)                            Mortgagor shall perform and observe all terms, covenants, and conditions that Mortgagor is required to perform and observe as lessee under the Subject Lease (including maintenance of insurance as required thereby and under the Credit Agreement), and will not do or suffer to be done anything the doing of which, or refrain from doing anything the omission of which, will impair the security of this Mortgage Mortgagor will enforce the obligations of the Lessor under the Subject Lease, to the end that Mortgagor may enjoy all of the rights granted to it as lessee under the Subject Lease .  Mortgagor shall furnish to Mortgagee any and all documentary evidence received by it or in its possession showing compliance by Mortgagor with the provisions of the Subject Lease that Mortgagee may reasonably request from time to time.

 

(viii)                         Mortgagor shall promptly deliver to Mortgagee a copy of any written notice of default or termination under the Subject Lease that it receives from the Lessor.  Mortgagor shall promptly notify Mortgagee of any request that either party to the Subject Lease makes for arbitration pursuant to the Subject Lease and the guidelines of the institution of any such arbitration.  Mortgagor shall promptly deliver to Mortgagee a copy of the arbitrators’ determination in each such arbitration.  Mortgagee may participate in any such arbitration in such manner as Mortgagee shall determine appropriate, including, during the continuance of an Event of Default, to the exclusion of Mortgagor if so determined by Mortgagee in its reasonable discretion.

 

H-2



 

(ix)                               Mortgagor shall not, without Mortgagee’s consent, consent or refuse to consent to any action that the Lessor or any third party takes or desires to take pursuant to the terms and provisions of such Subject Lease if such action has a material adverse effect on the Subject Lease or Mortgagor’s rights thereunder.

 

(x)                                  Mortgagor’s obligations under this Mortgage are independent of and in addition to Mortgagor’s obligations under the Subject Lease.  Nothing in this Mortgage shall be construed to require Mortgagor or Mortgagee to take or omit to take any action that would cause a default under the Subject Lease.

 

(b)                                  Treatment of Subject Lease in Bankruptcy .  (i)  If the Lessor rejects or disaffirms, or seeks or purports to reject or disaffirm, the Subject Lease pursuant to any Debtor Relief Law, then Mortgagor shall not suffer or permit the termination of any Lease by exercise of the 365(h) Election or otherwise without Mortgagee’s consent.  Mortgagor acknowledges that because the Subject Lease is a primary element of Mortgagee’s security for the Secured Obligations, it is not anticipated that Mortgagee would consent to termination of the Subject Lease.  If Mortgagor makes any 365(h) Election in violation of this Mortgage, then such 365(h) Election shall be void and of no force or effect.

 

(ii)                                   Mortgagor hereby assigns to Mortgagee the 365(h) Election with respect to the Subject Lease until the earlier of (i) satisfaction in full of the Secured Obligations (other than unasserted contingent indemnification Obligations), and (ii) release of Mortgagee’s security interest in the Subject Lease.  Mortgagor acknowledges and agrees that the foregoing assignment of the 365(h) Election and related rights is one of the rights that Mortgagee may use at any time to protect and preserve Mortgagee’s other rights and interests under this Mortgage.  Mortgagor further acknowledges that exercise of the 365(h) Election in favor of terminating the Subject Lease would constitute waste prohibited by this Mortgage.  Mortgagor acknowledges and agrees that the 365(h) Election is in the nature of a remedy available to Mortgagor under the Subject Lease, and is not a property interest that Mortgagor can separate from the Subject Lease as to which it arises.  Therefore, Mortgagor agrees and acknowledges that exercise of the 365(h) Election in favor of preserving the right to possession under the Subject Lease shall not be deemed to constitute Mortgagee’s taking or sale of the Land (or any element thereof) and shall not entitle Mortgagor to any credit against the Secured Obligations secured hereunder or otherwise impair Mortgagee’s remedies.

 

(iii)                                Mortgagor acknowledges that if the 365(h) Election is exercised in favor of Mortgagor’s remaining in possession under the Subject Lease, then Mortgagor’s resulting occupancy rights, as adjusted by the effect of Section 365 of the Bankruptcy Code, shall then be part of the Mortgaged Property and shall be subject to the Lien of this Mortgage.

 

(iv)                               If the Lessor rejects or disaffirms the Subject Lease or purports or seeks to disaffirm such Subject Lease pursuant to any Debtor Relief Law, and the

 

H-3



 

365(h) Election is exercised in favor of Mortgagor’s remaining in possession under the Subject Lease, then:

 

(1)                                  Mortgagor shall remain in possession of the Land demised under the Subject Lease and shall perform all acts necessary for Mortgagor to remain in such possession for the unexpired term of such Subject Lease (including all renewals), whether the then existing terms and provisions of such Subject Lease require such acts or otherwise; and

 

(2)                                  All the terms and provisions of this Mortgage and the Lien created by this Mortgage shall remain in full force and effect and shall extend automatically to all of Mortgagor’s rights and remedies arising at any time under, or pursuant to, Section 365(h) of the Bankruptcy Code, including all of Mortgagor’s rights to remain in possession of the Land.

 

(c)                                   Assignment of Claims to Mortgagee .  Mortgagor, immediately upon learning that the Lessor has failed to perform any material term or provision under the Subject Lease (including by reason of a rejection or disaffirmance or purported rejection or disaffirmance of such Subject Lease pursuant to any Debtor Relief Law), shall notify Mortgagee of any such material failure to perform.  Mortgagor unconditionally assigns, transfers, and sets over to Mortgagee any and all Lease Damage Claims.  This assignment constitutes a present, irrevocable, and unconditional assignment of the Lease Damage Claims, and shall continue in effect until the earlier of (i) satisfaction in full of the Secured Obligations (other than unasserted contingent indemnification Obligations), and (ii) release of Mortgagee’s security interest in the Subject Lease.  So long as no Event of Default exists, Mortgagee grants Mortgagor a revocable license to exercise, collect and receive any sums arising in connection with any Lease Damage Claims (the “ Lease Damages ”).  While any Event of Default exists, Mortgagee may (x) revoke such license, with or without notice (“ Revocation of License ”), or (y) collect all Lease Damages directly under the foregoing absolute assignment of all Lease Damage Claims to Mortgagee.  Upon any Revocation of License, Mortgagor promptly shall pay to Mortgagee all Lease Damages paid to Mortgagor to the extent that the same are allocable to any period from and after such Revocation of License, and Mortgagor shall hold in trust all Lease Damages (to be applied as required pursuant to the terms and provisions of the Credit Agreement).

 

(d)                                  Offset by Mortgagor .  If pursuant to Section 365(h)(2) of the Bankruptcy Code or any other similar Debtor Relief Law, Mortgagor seeks to offset against any rent under the Subject Lease the amount of any Lease Damage Claim, then Mortgagor shall notify Mortgagee of its intent to do so at least 20 days before effecting such offset.  Such notice shall set forth the amounts proposed to be so offset and the basis for such offset.  If Mortgagee reasonably objects to all or any part of such offset, then Mortgagor shall not effect any offset of the amounts to which Mortgagee reasonably objects.  If Mortgagee approves such offset, then Mortgagor may effect such offset as set forth in Mortgagor’s notice.  Neither Mortgagee’s failure to object, nor any objection or other communication between Mortgagee and Mortgagor that relates to such offset, shall

 

H-4



 

constitute Mortgagee’s approval of any such offset.  Mortgagor shall indemnify Mortgagee against any offset by Mortgagor against the rent reserved in the Subject Lease.

 

(e)                                   Mortgagor’s Acquisition of Interest in Leased Parcel .  If Mortgagor acquires the fee or any other interest in any Land or Improvements originally subject to the Subject Lease, then, such acquired interest shall immediately become subject to the Lien of this Mortgage as fully and completely, and with the same effect, as if Mortgagor now owned it and as if this Mortgage specifically described it, without need for the delivery and/or recording of a supplement to this Mortgage or any other instrument.  In the event of any such acquisition, the fee and leasehold interests in such Land or Improvements, unless Mortgagee elects otherwise in writing, remain separate and distinct and shall not merge, notwithstanding any principle of law to the contrary.

 

(f)                                    New Lease Issued to Mortgagee .  If the Subject Lease is for any reason whatsoever terminated before the expiration of its term, Mortgagor acknowledges that Mortgagee or its designee may enter into with Lessor a new lease of the relevant leased premises, and Mortgagor shall have no right, title or interest in or to such new lease or the estate created thereby.

 

H-5



 

Exhibit I
to the Credit Agreement

 

FORM OF INTERCREDITOR AGREEMENT

 

(See attached)

 

1



 

EXECUTION

 

 

 

INTERCREDITOR AGREEMENT

 

dated as of

 

March 21, 2013

 

among

 

WELLS FARGO BANK, NATIONAL ASSOCIATION,
as ABL Agent

 

and

 

GOLDMAN SACHS BANK USA,
as Term Loan Agent

 

 

2



 

TABLE OF CONTENTS

 

 

 

Page

 

 

 

Section 1.

Definitions; Interpretation

1

 

 

 

1.1

Definitions

1

1.2

Terms Generally

12

 

 

 

Section 2.

Lien Priorities

13

 

 

 

2.1

Acknowledgment of Liens

13

2.2

Relative Priorities

13

2.3

Prohibition on Contesting Liens

15

2.4

New Liens

15

 

 

 

Section 3.

Enforcement

15

 

 

 

3.1

Exercise of Rights and Remedies

15

3.2

Release of Second Priority Liens

19

3.3

Insurance and Condemnation Awards

21

 

 

 

Section 4.

Payments

22

 

 

 

4.1

Application of Proceeds

22

4.2

Payments Over

23

 

 

 

Section 5.

Bailee for Perfection

23

 

 

 

5.1

Each Agent as Bailee

23

5.2

Transfer of Pledged Collateral

24

 

 

 

Section 6.

Insolvency Proceedings

26

 

 

 

6.1

General Applicability

26

6.2

Use of Cash Collateral; Bankruptcy Financing

26

6.3

Relief from the Automatic Stay

29

6.4

Adequate Protection

29

6.5

Reorganization Securities

32

6.6

Separate Grants of Security and Separate Classes

32

6.7

Asset Dispositions

32

6.8

Certain Waivers as to Section 1111(b)(2) of Bankruptcy Code

33

6.9

Avoidance Issues

33

6.10

Other Bankruptcy Laws

33

6.11

Post-Petition Claims

34

 

 

 

Section 7.

Term Loan Lenders’ Purchase Option

34

 

 

 

7.1

Exercise of Option

34

7.2

Pro Rata Offer

34

7.3

Purchase and Sale

34

7.4

Payment of Purchase Price

35

7.5

Representations Upon Purchase and Sale

36

7.6

Notice from ABL Agent Prior to Enforcement Action

36

 

i



 

Section 8.

ABL Lenders’ Purchase Option

36

 

 

 

8.1

Exercise of Option

36

8.2

Pro Rata Offer

36

8.3

Purchase and Sale

37

8.4

Payment of Purchase Price

37

8.5

Representations Upon Purchase and Sale

38

8.6

Notice from ABL Agent Prior to Enforcement Action

38

 

 

 

Section 9.

Access and Use of Term Loan Priority Collateral

38

 

 

 

9.1

Access and Use Rights of ABL Agent

38

9.2

Responsibilities of ABL Secured Parties

39

9.3

Grantor Consent

40

 

 

 

Section 10.

Reliance; Waivers; Etc .

40

 

 

 

10.1

Reliance

40

10.2

No Warranties or Liability

40

10.3

No Waiver of Lien Priorities

41

10.4

Obligations Unconditional

42

10.5

Amendments to ABL Documents

42

10.6

Amendments to Term Loan Documents

43

 

 

 

Section 11.

Miscellaneous

44

 

 

 

11.1

Conflicts

44

11.2

Continuing Nature of this Agreement; Severabili ty

44

11.3

Refinancing

45

11.4

Amendments; Waivers

46

11.5

Subrogation

46

11.6

Notices

46

11.7

Further Assurances

47

11.8

Consent to Jurisdiction; Waiver of Jury Trial

47

11.9

Governing Law

47

11.10

Binding on Successors and Assigns

48

11.11

Specific Performance

48

11.12

Section Titles; Time Periods

48

11.13

Counterparts

48

11.14

Authorization

48

11.15

No Third Party Beneficiaries

48

11.16

Additional Grantors

48

 

ii



 

INTERCREDITOR AGREEMENT

 

THIS INTERCREDITOR AGREEMENT (“ Agreement ”), dated as of March 21, 2013, is by and among Wells Fargo Bank, National Association in its capacity as ABL Agent (as hereinafter defined) pursuant to the ABL Agreement (as hereinafter defined) acting for and on behalf of the ABL Secured Parties (as hereinafter defined), and Goldman Sachs Bank USA in its capacity as Term Loan Agent (as hereinafter defined) pursuant to the Term Loan Agreement (as hereinafter defined) acting for and on behalf of the Term Loan Secured Parties (as hereinafter defined).

 

W I T N E S S E T H :

 

WHEREAS, SUPERVALU Inc., a Delaware corporation (the “ Company ”), and certain wholly-owned subsidiaries of the Company as set forth on Exhibit A hereto, as borrowers, have entered into a secured revolving credit facility with ABL Agent and the lenders and other parties for whom it is acting as agent as set forth in the ABL Agreement (as hereinafter defined) pursuant to which such lenders have made and from time to time may make loans and provide other financial accommodations to such borrowers which are guaranteed by certain other subsidiaries of the Company  and secured by certain of the assets of such borrowers and other subsidiaries (collectively, “ Grantors ” as hereinafter further defined);

 

WHEREAS, the Company, as borrower, and the other Grantors, as guarantors, have entered into a secured term loan facility with Term Loan Agent and the lenders and other parties for whom it is acting as agent as set forth in the Term Loan Agreement (as hereinafter defined) pursuant to which such lenders have made term loans to the Company which are guaranteed by the other Grantors and secured by certain of the assets of Grantors; and

 

WHEREAS, ABL Agent, for itself and on behalf of the other ABL Secured Parties, and Term Loan Agent, for itself and on behalf of the other Term Loan Secured Parties, desire to enter into this Intercreditor Agreement to (i) confirm the relative priority of the security interests of ABL Agent and Term Loan Agent in the assets and properties of Grantors, (ii) provide for the orderly sharing among the ABL Secured Parties and the Term Loan Secured Parties, in accordance with such priorities, of proceeds of such assets and properties upon any foreclosure thereon or other disposition thereof and (iii) address related matters.

 

NOW, THEREFORE, in consideration of the foregoing, the mutual covenants and obligations herein set forth and for other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:

 

Section 1.              Definitions; Interpretation

 

1.1      Definitions .   As used in this Agreement, the following terms have the meanings specified below:

 



 

ABL Agent ” shall mean Wells Fargo Bank, National Association, and its successors and assigns in its capacity as administrative agent pursuant to the ABL Documents acting for and on behalf of the other ABL Secured Parties and any successor or replacement agent.

 

ABL Agreement ” shall mean the Amended and Restated Credit Agreement, dated of even date herewith, by and among Grantors, ABL Agent and ABL Lenders, as the same now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated, refinanced or otherwise replaced in accordance with the terms of this Agreement.

 

ABL Cap ” shall mean $1,100,000,000, plus the amount of the increase in the commitments of the ABL Lenders under the ABL Agreement from time to time, not to exceed $250,000,000 in the aggregate.

 

ABL Cash Collateral ” shall have the meaning set forth in Section 6.2 hereof.

 

ABL Debt ” shall mean all “Obligations” as such term is defined in the ABL Agreement, including, without limitation, obligations, liabilities and indebtedness of every kind, nature and description owing by any Grantor to any ABL Secured Party, including principal, interest, charges, fees, premiums, indemnities and expenses, however evidenced, whether as principal, surety, endorser, guarantor or otherwise, arising under any of the ABL Documents, Bank Product Obligations owing to an ABL Secured Party and Commercial LC Facility Obligations owing to an ABL Secured Party, in each case whether now existing or hereafter arising, whether arising before, during or after the initial or any renewal or replacement term of the ABL Documents or after the commencement of any case with respect to any Grantor under the Bankruptcy Code or any other Bankruptcy Law or any other Insolvency Proceeding (and including, without limitation, any principal, interest, fees, costs, expenses and other amounts which would accrue and become due but for the commencement of such case, whether or not such amounts are allowed or allowable in whole or in part in such case or similar proceeding), whether direct or indirect, absolute or contingent, joint or several, due or not due, primary or secondary, liquidated or unliquidated, secured or unsecured; provided , that , Excess ABL Debt shall not constitute ABL Debt.

 

ABL DIP Financing ” shall have the meaning set forth in Section 6.2 hereof.

 

ABL Documents ” shall mean, collectively, the ABL Agreement and all agreements, documents and instruments at any time executed and/or delivered by any Grantor or any other person to, with or in favor of any ABL Secured Party in connection therewith or related thereto, as all of the foregoing now exist or may hereafter be amended, modified, supplemented, extended, renewed, restated, refinanced, replaced or restructured (in whole or in part and including any agreements with, to or in favor of any other lender or group of lenders, or agent of any such other lender or group of lenders, that at any time refinances, replaces or succeeds to all or any portion of the ABL Debt) in accordance with the terms of this Agreement.

 

ABL Event of Default ” shall mean any “Event of Default” as defined in the ABL Agreement.

 

ABL Lenders ” shall mean, collectively, any person party to the ABL Documents as lender (and including any other lender or group of lenders that at any time refinances, replaces or

 

2



 

succeeds to all or any portion of the ABL Debt or is otherwise party to the ABL Documents as a lender); sometimes being referred to herein individually as a “ABL Lender”.

 

ABL Priority Collateral ” shall mean the Collateral described on Annex A hereto.

 

ABL Purchase Event ” shall have the meaning set forth in Section 8.1 hereof.

 

ABL Secured Parties ” shall mean, collectively, (a) ABL Agent, (b) the ABL Lenders, (c) the issuing bank or banks of letters of credit or similar or related instruments under the ABL Agreement, (d) each other person to whom any of the ABL Debt (including ABL Debt constituting Bank Product Obligations or Commercial LC Facility Obligations) is owed and (e) the successors, replacements and assigns of each of the foregoing; sometimes being referred to herein individually as a “ABL Secured Party”.

 

Affiliate ” shall mean, with respect to any Person, (a) another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled (as each such term is defined in the ABL Agreement) by or is under common Control with the Person specified, (b) any director, officer, managing member, partner, trustee, or beneficiary of that Person, but excluding such Persons as to any ABL Lender (or in the case of an ABL Lender that is an Approved Fund (as defined in the ABL Agreement), the entity that administers or manages such Approved Fund), (c) any other Person directly or indirectly holding ten percent (10%) or more of any class of the Equity Interests (as defined in the ABL Agreement) of that Person, except in the case of an ABL Lender (or in the case of an ABL Lender that is an Approved Fund, the entity that administers or manages such Approved Fund),any other Person directly or indirectly holding thirty-five percent (35%) or more of any class of the Equity Interests of such Person, and (d) any other Person ten percent (10%) or more of any class of whose Equity Interests is held directly or indirectly by that Person, except in the case of an ABL Lender (or in the case of an ABL Lender that is an Approved Fund, the entity that administers or manages such Approved Fund), any other Person thirty-five percent (35%) or more of any class of whose Equity Interests is held directly or indirectly by such Person.

 

Agents ” shall mean, collectively, ABL Agent and Term Loan Agent, sometimes being referred to herein individually as an “Agent”.

 

Agreement ” shall mean this Intercreditor Agreement, as the same now exists or may hereafter be amended, amended and restated, modified, supplemented, extended, renewed, restated or replaced from time to time in accordance with the terms hereof.

 

Bank Product Obligations ” shall mean any obligation on account of (a) any Cash Management Services furnished to any of the Grantors or any of their Subsidiaries and/or (b) any transaction with any Person that is an ABL Lender or any of its Affiliates on the date hereof or, if such transaction is established later, on the date such transaction is established, which arises out of any Bank Product entered into with any Grantor and any such Person, as each may be amended from time to time; provided , that , (i) by the later of (A) the date hereof or (B) on or about the date that such Cash Management Services or Bank Products are established or the party providing them becomes an ABL Lender (or is an Affiliate), but in any event in the case of either clause (A) or clause (B) within ten (10) Business Days thereafter, ABL Agent shall have

 

3



 

received a written notice, in form and substance satisfactory to ABL Agent, from Company and the ABL Lender that is providing (or whose Affiliate is providing) such Cash Management Services or Bank Product that such obligations thereunder constitute “Bank Product Obligations” for purposes of the ABL Agreement and the other ABL Documents, and in the case of any Affiliate of an ABL Lender, such Affiliate shall have entered into an agreement to be bound by the provisions of Article IX of the ABL Agreement as though such Affiliate were a party to the ABL Agreement in form and substance reasonably satisfactory to ABL Agent, (ii) such ABL Lender (or such Affiliate, as the case may be) may at any time thereafter notify ABL Agent in writing that such obligations have ceased to constitute Bank Product Obligations, in which case, such obligations shall no longer be deemed to be “Bank Product Obligations” for purposes of the ABL Agreement and the other ABL Documents, and (iii) if at any time an ABL Lender ceases to be a lender under the ABL Agreement (or an Affiliate of an ABL Lender ceases to be an Affiliate), then, from and after the date on which it ceases to be a lender under the ABL Agreement, any Cash Management Services or any Bank Product provided by it or its Affiliates shall continue to give rise to Bank Product Obligations, so long as (A) such Person is, and at all times remains, in compliance with the provisions of Section 9.17(b) of the ABL Agreement and (B) agrees in writing (1) that the ABL Agent and the other ABL Secured Parties shall have no duty to such Person (other than the payment of any amounts to which such Person may be entitled under Section 8.03 of the ABL Agreement) and acknowledges that the ABL Agent and the other ABL Secured Parties may deal with the Grantors and the Collateral as they deem appropriate (including the release of any Grantor or all or any portion of the Collateral) without notice or consent from such Person, whether or not such action impairs the ability of such Person to be repaid Bank Product  Obligations owing to it) and (2) to be bound by Section 9.17(b) of the ABL Agreement.

 

Bank Products ” shall mean any services or facilities provided to any Grantor by any person that is an ABL Lender or its Affiliates on the date hereof or, if such services or facilities are established later, on the date such services or facilities are established (but excluding Cash Management Services), in each case approved by Company, including, without limitation, on account of (a) Swap Contracts, and (b) supply chain finance services including, without limitation, trade payable services and supplier accounts receivable purchases, but excluding any factoring services.

 

Bankruptcy Code ” shall mean the United States Bankruptcy Code, being Title 11 of the United States Code, as the same now exists or may from time to time hereafter be amended, modified, recodified or supplemented.

 

Bankruptcy Law ” shall mean the Bankruptcy Code and any similar Federal, state or foreign law for the relief of debtors.

 

Borrowers ” shall mean, collectively, (a) the Company, and (b) for purposes of the ABL Agreement, the subsidiaries of the Company set forth on Exhibit A hereto, (c) any other person that at any time after the date hereof becomes a party to the ABL Agreement or the Term Loan Agreement as a Borrower, and (d) their respective successors and assigns; sometimes being referred to herein individually as a “Borrower”.

 

4



 

Business Day ” shall mean any day other than a Saturday, a Sunday or a day that is a legal holiday under the laws of the State of New York or on which banking institutions in the State of New York are required or authorized by law or other governmental action to close.

 

Cash Management Services ” shall mean any one or more of the following types or services or facilities provided to any Grantor by any Person that is an ABL Lender or its Affiliates on the date hereof or, if such services or facilities are established later, on the date such services or facilities are established, in each case as selected by Company, after notice to ABL Agent (and with the approval of ABL Agent in its Permitted Discretion (as defined in the ABL Agreement): (a) ACH transactions, (b) cash management services, including, without limitation, controlled disbursement services, treasury, depository, overdraft, and electronic funds transfer services, (c) foreign exchange facilities, (d) credit or debit cards, (e) credit card processing services, and (f) purchase cards.

 

Collateral ” shall mean all of the property and interests in property, real or personal, tangible or intangible, now owned or hereafter acquired by any Grantor in or upon which a Lien has been granted (or has been purported to be granted) to secure any ABL Debt or Term Loan Debt.

 

Commercial LC Facility ” means a letter of credit facility provided to any Grantor by any Person that is an ABL Lender or its Affiliates on the date hereof or, if such letter of credit facility is established later, on the date such letter of credit facility is established, in each case approved by the Company and used for the issuance of letters of credit (as defined in the UCC) for the purpose of providing the primary payment mechanism in connection with the purchase of any materials, goods or services by a Grantor in the ordinary course of business of such Grantor, provided, that, all obligations thereunder shall be unsecured except to the extent of the Lien of the ABL Agent under the ABL Loan Documents as provided for therein. In no event shall any letter of credit issued under or pursuant to such letter of credit facility be deemed to be a Letter of Credit (as defined in the ABL Agreement) or give rise to any obligations of any ABL Lender or other ABL Secured Party to make any payment to the ABL Lender (or its Affiliate) that is providing such facility.

 

Commercial LC Facility Obligations ” means any obligation on account of any Commercial LC Facility owing by any of the Grantors; provided , that , (a) by the later of (i) the date hereof or (ii) on or about the date that such Commercial LC Facility is established or the party providing them becomes an ABL Lender (or is an Affiliate), but in any event in the case of either clause (i) or clause (ii), within ten (10) Business Days thereafter, the ABL Agent shall have received (A) a written notice, in form and substance satisfactory to the ABL Agent, from the Company and the ABL Lender that is providing (or whose Affiliate is providing) such Commercial LC Facility that such obligations thereunder constitute “Commercial LC Facility Obligations” for purposes of the ABL Agreement and the other ABL Loan Documents, and in the case of any Affiliate of an ABL Lender, such Affiliate shall have entered into an agreement to be bound by the provisions of Article IX of the ABL Agreement as though such Affiliate were a party to the ABL Agreement in form and substance reasonably satisfactory to the ABL Agent, and (B) the ABL Agent shall have entered into an agreement, in form and substance satisfactory to the ABL Agent, with the ABL Lender (or its Affiliate) that is providing such Commercial LC Facility, as acknowledged and agreed to by the Grantors, providing for the delivery to ABL

 

5



 

Agent by such ABL Lender (or Affiliate) of information with respect to the amount of such obligations and providing for the other rights of the ABL Agent and such ABL Lender (or Affiliate) in connection with such arrangements, (b) such ABL Lender (or such Affiliate, as the case may be) may at any time thereafter notify ABL Agent in writing that such obligations have ceased to constitute Commercial LC Facility Obligations, in which case, such obligations shall no longer be deemed to be “Commercial LC Facility Obligations” for purposes of the ABL Agreement and the other ABL Loan Documents, (c) if at any time an ABL Lender ceases to be an ABL Lender under the ABL Agreement (or an Affiliate of a Lender ceases to be an Affiliate), then, from and after the date on which it ceases to be an ABL Lender hereunder, any Commercial LC Facility provided by it or its Affiliates shall continue to give rise to Commercial LC Facility Obligations, so long as (i) such Person is, and at all times remains, in compliance with the provisions of Section 9.17(b) of the ABL Agreement and (ii) agrees in writing (A) that the ABL Agent and the other ABL Secured Parties shall have no duty to such Person (other than the payment of any amounts to which such Person may be entitled under Section 8.03 of the ABL Agreement) and acknowledges that the ABL Agent and the other ABL Secured Parties may deal with the Grantors and the Collateral as they deem appropriate (including the release of any Grantor or all or any portion of the Collateral) without notice or consent from such Person, whether or not such action impairs the ability of such Person to be repaid Commercial LC Facility Obligations owing to it) and (B) to be bound by Section 9.17(b) of the ABL Agreement.

 

Company ” shall mean SUPERVALU Inc., a Delaware corporation, and its successors and assigns.

 

Discharge of ABL Debt ” shall mean, subject to Sections 6.9 and 11.3 hereof:

 

(a)  the payment in full in cash of the principal and interest (including any interest which would accrue and become due but for the commencement of an Insolvency Proceeding, whether or not such amounts are allowed or allowable in whole or in part in such case) constituting ABL Debt;

 

(b)  the payment in full in cash of all other ABL Debt that is due and payable or otherwise accrued and owing at or prior to the time such principal and interest are paid (including any such amounts which would accrue and become due but for the commencement of an Insolvency Proceeding, whether or not such amounts are allowed or allowable in whole or in part in such case), other than obligations described in clause (c) below;

 

(c) (i) the delivery to ABL Agent, or at ABL Agent’s option, each LC Issuer (as defined in the ABL Agreement) of cash collateral, or at ABL Agent’s option, the delivery to ABL Agent (or at its option, each LC Issuer) of a letter of credit payable to ABL Agent (or at ABL Agent’s option, such LC Issuer) issued by a bank reasonably acceptable to ABL Agent (or if issued to such LC Issuer, a bank reasonably acceptable to such LC Issuer) in form and substance reasonably satisfactory to ABL Agent (or if issued to such LC Issuer, in form and substance reasonably acceptable to such LC Issuer), in either case in respect of letters of credit, banker’s acceptances or similar or related instruments issued under the ABL Documents (in such amount as required by the ABL Documents but not to exceed one hundred three percent (103%) of the amount of such letters of credit, banker’s acceptances or similar or related instruments, other than obligations with respect to the foregoing denominated in a currency other than US

 

6



 

Dollars, in which case one hundred fifteen percent (115%) of the amount thereof), (ii) the delivery of cash collateral in respect of Bank Product Obligations owing to any ABL Secured Party (or, at the option of the ABL Secured Party with respect to such Bank Product Obligations, the termination of the applicable Swap Contracts or cash management or other arrangements and the payment in full in cash of the ABL Debt due and payable in connection with such termination), (iii) the delivery of cash collateral in respect of Commercial LC Facility Obligations owing to any ABL Secured Party (or, at the option of the ABL Secured Party with respect to such Commercial LC Facility Obligations, the termination of the applicable Commercial LC Facility and the payment in full in cash of the ABL Debt due and payable in connection with such termination), and (iv) the delivery of cash collateral to the ABL Agent, or at ABL Agent’s option, the delivery to ABL Agent of a letter of credit payable to ABL Agent issued by a bank reasonably acceptable to ABL Agent in form and substance reasonably satisfactory to ABL Agent, in respect of continuing obligations of ABL Agent and ABL Lenders under control agreements and other contingent ABL Debt for which a claim or demand for payment has been made at such time or in respect of matters or circumstances known to an ABL Secured Party at the time, of which such ABL Secured Party has informed the ABL Agent and which are reasonably expected to result in any loss, cost, damage or expense (including attorneys’ fees and legal expenses) to any ABL Secured Party for which such ABL Secured Party is entitled to indemnification by any Grantor; and

 

(d)  the termination of the commitments of the ABL Lenders and the financing arrangements provided by ABL Agent and the ABL Lenders to Grantors under the ABL Documents.

 

Discharge of Term Loan Debt ” shall mean, subject to Sections 6.9 and 11.3 hereof:

 

(a)  the payment in full in cash of the principal and interest (including any interest which would accrue and become due but for the commencement of an Insolvency Proceeding, whether or not such amounts are allowed or allowable in whole or in part in such case) constituting Term Loan Debt;

 

(b)  the payment in full in cash of all other Term Loan Debt that is due and payable or otherwise accrued and owing at or prior to the time such principal and interest are paid (including any such amounts which would accrue and become due but for the commencement of an Insolvency Proceeding, whether or not such amounts are allowed or allowable in whole or in part in such case), other than obligations described in clause (c) below;

 

(c)  the delivery to Term Loan Agent of cash collateral, or at Term Loan Agent’s option, the delivery to Term Loan Agent of a letter of credit payable to Term Loan Agent issued by a bank reasonably acceptable to Term Loan Agent and in form and substance reasonably satisfactory to Term Loan Agent, in either case in respect of contingent Term Loan Debt for which a claim or demand for payment has been made at such time or in respect of matters or circumstances known to a Term Loan Secured Party at the time, of which such Term Loan Secured Party has informed the Term Loan Agent and which are reasonably expected to result in any loss, cost, damage or expense (including attorneys’ fees and legal expenses) to any Term Loan Secured Party for which such Term Loan Secured Party is entitled to indemnification by any Grantor; and

 

7



 

(d)  the termination of the commitments of the Term Loan Lenders and the financing arrangements provided by Term Loan Agent and the Term Loan Lenders to Grantors under the Term Loan Documents.

 

Disposition ” shall mean any sale, transfer, license, lease or other disposition (including any sale and leaseback transaction) of any property by any Person, including any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith.

 

Enforcement Expenses ” shall mean all costs, expenses or fees (including fees incurred by any Agent or any attorneys or other agents or consultants retained by such Agent) that any Agent or any other Secured Party (in the case of any other Secured Party, to the extent such costs, expenses or fees are reimburseable under the terms of the ABL Agreement or the Term Loan Agreement, as applicable) may suffer or incur after the occurrence of an Event of Default on account or in connection with (a) the repossession, storage, repair, appraisal, insuring, completion of the manufacture of, preparing for sale, advertising for sale, selling, collecting or otherwise preserving or realizing upon any Collateral, (b) the settlement or satisfaction of any prior Lien or other encumbrance upon any Collateral or (c) the enforcement of any of the ABL Documents or the Term Loan Documents, as the case may be.

 

Event of Default ” shall mean, an ABL Event of Default or a Term Loan Event of Default, as the case may be.

 

Excess ABL Debt ” shall mean the amount equal to: (a) the sum of: (i) the portion of the principal amount of the loans outstanding under the ABL Agreement, plus (ii) the undrawn amount of all outstanding letters of credit issued pursuant to the ABL Agreement, plus (iii) the unreimbursed amount of all draws under such letters of credit that, in the aggregate for amounts described in clauses (i), (ii) and (iii), is in excess of the ABL Cap, plus (b) without duplication, the portion of accrued and unpaid interest and fees on account of such portion of the loans and letters of credit described in clause (a); provided , that , any Enforcement Expenses shall not constitute Excess ABL Debt regardless of whether such amounts are added to the principal balance of the loans pursuant to the ABL Documents and in no event shall the term Excess ABL Debt be construed to include Commercial LC Facility Obligations or Bank Product Obligations.

 

Excess Term Loan Debt ” shall mean the amount equal to (a) the portion of the principal amount of the loans outstanding under the Term Loan Agreement that is in excess of the Term Loan Cap, plus (b) without duplication, the portion of accrued and unpaid interest on account of such portion of the loans described in clause (a); provided , that , any Enforcement Expenses shall not constitute Excess Term Loan Debt regardless of whether such amounts are added to the principal balance of the loans pursuant to the Term Loan Documents.

 

Exigent Circumstance ” shall mean an event or circumstance that materially and imminently threatens the ability of ABL Agent or the Term Loan Agent, as the case may be, to realize upon all or a material portion of the ABL Priority Collateral or the Term Loan Priority Collateral, as the case may be, such as, without limitation, fraudulent removal, concealment, destruction (other than to the extent covered by insurance), material waste or abscondment thereof.

 

8



 

Grantors ” shall mean, collectively, the Company and each Subsidiary of the Company that shall have granted a Lien on any of its assets to secure any ABL Debt or Term Loan Debt, together with their respective successors and assigns; sometimes being referred to herein individually as a “Grantor”.

 

Guarantors ” shall mean, collectively, (a) the subsidiaries of the Company set forth on Exhibit B hereto, (b) any other person that at any time after the date hereof becomes a party to a guarantee in favor of ABL Agent or the other ABL Secured Parties in respect of any of the ABL Debt or in favor of Term Loan Agent or the other Term Loan Secured Parties in respect of any of the Term Loan Debt, and (c) their respective successors and assigns; sometimes being referred to herein individually as a “Guarantor”.

 

Insolvency Proceeding ” shall mean (a) any voluntary or involuntary case or proceeding under any Bankruptcy Law with respect to any Grantor, (b) any other voluntary or involuntary insolvency, reorganization or bankruptcy case or proceeding, or any receivership, liquidation, reorganization or other similar case or proceeding with respect to any Grantor or with respect to any of their respective assets, (c) any proceeding seeking the appointment of any trustee, receiver, liquidator, custodian or other insolvency official with similar powers with respect to any Grantor or any or all of its assets or properties, (d) any liquidation, dissolution, reorganization or winding up of any Grantor whether voluntary or involuntary and whether or not involving insolvency or bankruptcy or (e) any assignment for the benefit of creditors or any other marshalling of assets and liabilities of any Grantor.

 

Lien ” shall mean any mortgage, deed of trust, pledge, hypothecation, assignment, deposit arrangement, security interest, encumbrance (including, but not limited to, easements, rights of way and the like), lien (statutory or other), security agreement or transfer intended as security, including without limitation, any conditional sale or other title retention agreement, the interest of a lessor under a capital lease or any financing lease having substantially the same economic effect as any of the foregoing.

 

Person ” or “ person ” shall mean any individual, sole proprietorship, partnership, corporation (including, without limitation, any corporation which elects subchapter S status under the Internal Revenue Code of 1986, as amended), limited liability company, limited liability partnership, business trust, unincorporated association, joint stock company, trust, joint venture, or other entity or any government or any agency or instrumentality or political subdivision thereof.

 

Pledged Collatera l” shall have the meaning set forth in Section 5.1 hereof.

 

Proceeds ” or “ proceeds ” shall mean all “proceeds” as defined in Article 9 of the UCC, and in any event, shall include, without limitation, (a) whatever is receivable or received when Collateral or proceeds are sold, exchanged, collected or otherwise disposed of, whether such disposition is voluntary or involuntary and (b) any payment or distribution made in respect of Collateral in an Insolvency Proceeding.

 

Purchasing ABL Secured Parties ” shall have the meaning set forth in Section 8.1 hereof.

 

9



 

Purchasing Term Loan Secured Parties ” shall have the meaning set forth in Section 7.1 hereof.

 

Recovery ” shall have the meaning set forth in Section 6.9 hereof.

 

Refinance ” or “ refinance ” shall mean, in respect of any of indebtedness, to refinance, replace, refund or repay, or to issue other indebtedness or enter into alternative financing arrangements, in exchange or replacement for, such indebtedness in whole or in part, including by adding or replacing lenders, creditors, agents, borrowers and/or guarantors, and including in each case, but not limited to, after the original instrument giving rise to such indebtedness has been terminated.  “Refinanced” or “refinanced” and “Refinancing” or “refinancing” shall have correlative meanings.

 

Secured Parties ” shall mean, collectively, the ABL Secured Parties and the Term Loan Secured Parties; sometimes being referred to herein individually as a “Secured Party”.

 

Subsidiary ” of a Person means a corporation, partnership, joint venture, limited liability company or other business entity of which a majority of the shares of securities or other interests having ordinary voting power for the election of directors or other governing body (other than securities or interests having such power only by reason of the happening of a contingency) are at the time beneficially owned, or the management of which is otherwise controlled, directly, or indirectly through one or more intermediaries, or both, by such Person.  Unless otherwise specified, all references herein to a “ Subsidiary ” or to “ Subsidiaries ” shall refer to a Subsidiary or Subsidiaries of the Company.

 

SVU Indenture ” the Indenture, dated as of July 1, 1987, between the Company and Deutsche Bank Trust Company (formerly Bankers Trust Company), as trustee, as supplemented by the First Supplemental Indenture dated as of August 1, 1990, the Second Supplemental indenture dated as of October 1, 1992, the Third Supplemental Indenture dated as of September 1, 1995, the Fourth Supplemental Indenture dated as of August 4, 1999, and the Fifth Supplemental Indenture dated as of September 17, 1999, as further amended, supplemented or otherwise modified in accordance with the terms of the ABL Agreement and the Term Loan Agreement.

 

SVU Operating Property ” shall mean “Operating Property” as such term is defined in the SVU Indenture as in effect on the date hereof.

 

Swap Contracts ” shall mean (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and ii) any and all transactions of any kind, and the related confirmations, which are subject to the terms

 

10



 

and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a “Master Agreement”), including any such obligations or liabilities under any Master Agreement.

 

Term Loan Agent ” shall mean Goldman Sachs Bank USA and its successors and assigns in its capacity as administrative and collateral agent pursuant to the Term Loan Documents acting for and on behalf of the other Term Loan Secured Parties and any successor or replacement agent.

 

Term Loan Agreement ” shall mean the Term Loan Credit Agreement, dated of even date herewith, by and among the Company, the administrative agent party thereto, Term Loan Agent and Term Loan Lenders, as the same now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated, refinanced or otherwise replaced in accordance with the terms of this Agreement.

 

Term Loan Cap ” shall mean $1,650,000,000, plus the amount of the additional term loans under the Term Loan Agreement from time to time, not to exceed $250,000,000 in the aggregate.

 

Term Loan Cash Collateral ” shall have the meaning set forth in Section 6.2 hereof.

 

Term Loan Debt ” shall mean all “Obligations” as such term is defined in the Term Loan Agreement, including, without limitation, obligations, liabilities and indebtedness of every kind, nature and description owing by any Grantor to any Term Loan Secured Party, including principal, interest, charges, fees, premiums, indemnities and expenses, however evidenced, whether as principal, surety, endorser, guarantor or otherwise, arising under any of the Term Loan Documents, whether now existing or hereafter arising, whether arising before, during or after the initial or any renewal or replacement term of the Term Loan Documents or after the commencement of any case with respect to any Grantor under the Bankruptcy Code or any other Bankruptcy Law or any other Insolvency Proceeding (and including, without limitation, any principal, interest, fees, costs, expenses and other amounts which would accrue and become due but for the commencement of such case, whether or not such amounts are allowed or allowable in whole or in part in such case or similar proceeding), whether direct or indirect, absolute or contingent, joint or several, due or not due, primary or secondary, liquidated or unliquidated, secured or unsecured; provided , that , Excess Term Loan Debt shall not constitute Term Loan Debt.

 

Term Loan DIP Financing ” shall have the meaning set forth in Section 6.2 hereof.

 

Term Loan Documents ” shall mean, collectively, the Term Loan Agreement and all agreements, documents and instruments at any time executed and/or delivered by any Grantor or any other person to, with or in favor of any Term Loan Secured Party in connection therewith or related thereto, as all of the foregoing now exist or may hereafter be amended, modified, supplemented, extended, renewed, restated, refinanced, replaced or restructured (in whole or in part and including any agreements with, to or in favor of any other lender or group of lenders, or

 

11



 

agent of any such other lender or group of lenders, that at any time refinances, replaces or succeeds to all or any portion of the Term Loan Debt) in accordance with the terms of this Agreement.

 

Term Loan Event of Default ” shall mean any “Event of Default” as defined in the Term Loan Agreement.

 

Term Loan Lenders ” shall mean, collectively, any person party to the Term Loan Documents as lender (and including any other lender or group of lenders that at any time refinances, replaces or succeeds to all or any portion of the Term Loan Debt or is otherwise party to the Term Loan Documents as a lender); sometimes being referred to herein individually as a “Term Loan Lender”.

 

Term Loan Priority Collateral ” shall mean the Collateral described on Annex B hereto.

 

Term Loan Purchase Event ” shall have the meaning set forth in Section 7.1 hereof.

 

Term Loan Secured Parties ” shall mean, collectively, (a) Term Loan Agent, (b) the Term Loan Lenders, (c) each other person to whom any of the Term Loan Debt is owed, (d) the administrative agent under the Term Loan Documents and (e) the successors, replacements and assigns of each of the foregoing; sometimes being referred to herein individually as a “Term Loan Secured Party”.

 

Third Party Purchaser ” shall have the meaning set forth in Section 9.1 hereof.

 

Uniform Commercial Code ” or “ UCC ” shall mean the Uniform Commercial Code as from time to time in effect in the State of New York; provided, that, if by reason of mandatory provisions of law, perfection, or the effect of perfection or non-perfection, of a security interest in any Collateral or the availability of any remedy hereunder is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York, “Uniform Commercial Code” or “UCC” means the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions hereof relating to such perfection or effect of perfection or non-perfection or availability of such remedy, as the case may be.

 

1.2      Terms Generally .   The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined.  Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms.  The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”.  The word “will” shall be construed to have the same meaning and effect as the word “shall”.  Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified, subject to any limitations thereon set forth herein, (b) any reference herein to any Person shall be construed to include such Person’s successors and assigns, and as to any Borrower, any Guarantor or any other Grantor shall be deemed to include a receiver, trustee or debtor-in-possession on behalf of any of such person or on behalf of any such successor or assign, (c) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d)

 

12



 

all references herein to Sections shall be construed to refer to Sections of this Agreement and (e) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.

 

Section 2.              Lien Priorities

 

2.1      Acknowledgment of Liens .

 

(a)   ABL Agent, on behalf of itself and each other ABL Secured Party, hereby acknowledges that Term Loan Agent, acting for and on behalf of itself and the other Term Loan Secured Parties, has been granted Liens upon all of the Collateral pursuant to the Term Loan Documents to secure the Term Loan Debt and the Excess Term Loan Debt.

 

(b)   Term Loan Agent, on behalf of itself and each other Term Loan Secured Party, hereby acknowledges that ABL Agent, acting for and on behalf of itself and the ABL Secured Parties, has been granted Liens upon all of the Collateral pursuant to the ABL Documents to secure the ABL Debt and the Excess ABL Debt; provided , that , prior to the Discharge of Term Loan Debt, Term Loan Agent, on behalf of itself and each other Term Loan Secured Party, hereby acknowledges, and the ABL Agent, on behalf of itself and each other ABL Secured Party, hereby agrees, that, as of the date hereof, the ABL Agent does not have a Lien on the SVU Operating Property and the SVU Operating Property does not and will not secure ABL Debt or Excess ABL Debt or constitute ABL Priority Collateral (except as otherwise expressly provided for in the ABL Agreement as in effect on the date hereof or as amended in accordance with this Agreement).

 

2.2      Relative Priorities .

 

(a)   Notwithstanding the date, manner or order of grant, attachment or perfection of any Liens granted to ABL Agent or the other ABL Secured Parties or Term Loan Agent or the other Term Loan Secured Parties and notwithstanding any provision of the UCC, or any applicable law or any provisions of the ABL Documents or the Term Loan Documents or any defect or deficiencies in, or failure to grant or perfect, any Liens or the failure of such Liens to attach or any other circumstance whatsoever, the Term Loan Agent, on behalf of itself and the other Term Secured Parties, and the ABL Agent, on behalf of itself and the other ABL Secured Parties, hereby agree that:

 

(i)        any Lien on the ABL Priority Collateral securing the ABL Debt now or hereafter held by or for the benefit or on behalf of any ABL Secured Party or any agent or trustee therefor shall be senior in right, priority, operation, effect and in all other respects to any Lien on the ABL Priority Collateral securing the Term Loan Debt now or hereafter held by or for the benefit or on behalf of any Term Loan Secured Party or any agent or trustee therefor and any Lien on the ABL Priority Collateral securing any of the Term Loan Debt now or hereafter held by or for the benefit or on behalf of any Term Loan Secured Party or any agent or trustee therefor regardless of how acquired, whether by grant, statute, operation of law, subrogation or otherwise, shall be junior and subordinate in all respects to all Liens on the ABL Priority Collateral securing any ABL Debt;

 

13



 

(ii)       any Lien on the Term Loan Priority Collateral securing the Term Loan Debt now or hereafter held by or for the benefit or on behalf of any Term Loan Secured Party or any agent or trustee therefor shall be senior in right, priority, operation, effect and in all other respects to any Lien on the Term Loan Priority Collateral securing the ABL Debt now or hereafter held by or for the benefit or on behalf of any ABL Secured Party or any agent or trustee therefor and any Lien on the Term Loan Priority Collateral securing any of the ABL Debt now or hereafter held by or for the benefit or on behalf of any ABL Secured Party or any agent or trustee therefor regardless of how acquired, whether by grant, statute, operation of law, subrogation or otherwise, shall be junior and subordinate in all respects to all Liens on the Term Loan Priority Collateral securing any Term Loan Debt;

 

(iii)      any Lien on the ABL Priority Collateral securing Excess ABL Debt now or hereafter held by or for the benefit or on behalf of any ABL Secured Party or any agent or trustee therefor shall be junior and subordinate in right, priority, operation, effect and in all other respects to any Lien on the ABL Priority Collateral securing Term Loan Debt now or hereafter held by or for the benefit or on behalf of any Term Loan Secured Party or any agent or trustee therefor and any Lien on the ABL Priority Collateral securing any of the Term Loan Debt now or hereafter held by or for the benefit or on behalf of any Term Loan Secured Party or any agent or trustee therefor regardless of how acquired, whether by grant, statute, operation of law, subrogation or otherwise, shall be senior in all respects to all Liens on the ABL Priority Collateral securing any Excess ABL Debt;

 

(iv)     any Lien on the Term Loan Priority Collateral securing Excess Term Loan Debt now or hereafter held by or for the benefit or on behalf of any Term Loan Secured Party or any agent or trustee therefor shall be junior and subordinate in right, priority, operation, effect and in all other respects to any Lien on the Term Loan Priority Collateral securing ABL Debt now or hereafter held by or for the benefit or on behalf of any ABL Secured Party or any agent or trustee therefor and any Lien on the Term Loan Priority Collateral securing any of the ABL Debt now or hereafter held by or for the benefit or on behalf of any ABL Secured Party or any agent or trustee therefor regardless of how acquired, whether by grant, statute, operation of law, subrogation or otherwise, shall be senior in all respects to all Liens on the Term Loan Priority Collateral securing any Excess Term Loan Debt;

 

(v)      any Lien on the ABL Priority Collateral securing Excess ABL Debt now or hereafter held by or for the benefit or on behalf of any ABL Secured Party or any agent or trustee therefor shall be senior in right, priority, operation, effect and in all other respects to any Lien on the ABL Priority Collateral securing Excess Term Loan Debt now or hereafter held by or for the benefit or on behalf of any Term Loan Secured Party or any agent or trustee therefor and any Lien on the ABL Priority Collateral securing any of the Excess Term Loan Debt now or hereafter held by or for the benefit or on behalf of any Term Loan Secured Party or any agent or trustee therefor regardless of how acquired, whether by grant, statute, operation of law, subrogation or otherwise, shall be junior and subordinate in all respects to all Liens on the ABL Priority Collateral securing any Excess ABL Debt; and

 

(vi)     any Lien on the Term Loan Priority Collateral securing Excess Term Loan Debt now or hereafter held by or for the benefit or on behalf of any Term Loan Secured Party or any agent or trustee therefor shall be senior in right, priority, operation, effect and in all other

 

14



 

respects to any Lien on the Term Loan Priority Collateral securing Excess ABL Debt now or hereafter held by or for the benefit or on behalf of any ABL Secured Party or any agent or trustee therefore and any Lien on the Term Loan Priority Collateral securing any of the Excess ABL Debt now or hereafter held by or for the benefit or on behalf of any ABL Secured Party or any agent or trustee therefor regardless of how acquired, whether by grant, statute, operation of law, subrogation or otherwise, shall be junior and subordinate in all respects to all Liens on the Term Loan Priority Collateral securing any Excess Term Loan Debt.

 

(b)   As between ABL Secured Parties and Term Loan Secured Parties, the terms of this Agreement, including the priorities set forth above, shall govern even if part or all of the ABL Debt or Term Loan Debt or the Liens securing payment and performance thereof are not perfected or are subordinated, avoided, disallowed, set aside or otherwise invalidated in any judicial proceeding or otherwise.

 

2.3      Prohibition on Contesting Liens .   Each of ABL Agent, for itself and on behalf of the other ABL Secured Parties, and Term Loan Agent, for itself and on behalf of the other Term Loan Secured Parties, agrees that it shall not (and hereby waives any right to) contest or support any other Person in contesting, in any proceeding (including any Insolvency Proceeding), the perfection, priority, validity or enforceability of a Lien held, or purported to be held, by or for the benefit or on behalf of any Term Loan Secured Party in any Collateral or by or on behalf of any ABL Secured Party in any Collateral, as the case may be; provided , that , nothing in this Agreement shall be construed to prevent or impair the rights of any ABL Secured Party or Term Loan Secured Party to enforce this Agreement.

 

2.4      New Liens .   The parties hereto agree that it is their intention that the Collateral securing the Term Loan Debt and the ABL Debt be identical, except for the SVU Operating Property, which shall, prior to the Discharge of Term Loan Debt, secure only the Term Loan Debt (except as otherwise expressly provided for in the ABL Agreement as in effect on the date hereof or as amended in accordance with this Agreement).  In furtherance of the foregoing, the parties hereto agree, subject to the other provisions of this Agreement, upon request by the ABL Agent or the Term Loan Agent, to cooperate in good faith (and to direct their counsel to cooperate in good faith) from time to time in order to determine the specific items included in the ABL Priority Collateral and the Term Loan Priority Collateral and the steps taken to perfect their respective Liens thereon and the identity of the respective parties obligated under the Term Loan Documents and the ABL Loan Documents.

 

Section 3.              Enforcement

 

3.1      Exercise of Rights and Remedies .

 

(a)   So long as the Discharge of ABL Debt has not occurred, whether or not any Insolvency Proceeding has been commenced by or against any Grantor, Term Loan Agent, for itself and on behalf of the other Term Loan Secured Parties:

 

(i)        will not enforce or exercise, or seek to enforce or exercise, any rights or remedies (including any right of setoff or notification of account debtors) with respect to any ABL Priority Collateral (including the enforcement of any right under any lockbox agreement,

 

15



 

account control agreement, landlord waiver or bailee’s letter or any similar agreement or arrangement, in each case relating to ABL Priority Collateral, to which the Term Loan Agent or any other Term Loan Secured Party is a party) or commence or join with any Person (other than ABL Agent with its consent) in commencing, or filing a petition for, any action or proceeding with respect to such rights or remedies (including any foreclosure action, provided, that, Term Loan Agent or any other Term Loan Secured Party may commence or join with any Person in commencing, or filing, a petition for any Insolvency Proceeding);

 

(ii)       will not contest, protest or object to any foreclosure action or proceeding brought by ABL Agent or any other ABL Secured Party, or any other enforcement or exercise by any ABL Secured Party of any rights or remedies relating solely to the ABL Priority Collateral, so long as the Liens of Term Loan Agent attach to the Proceeds thereof subject to the relative priorities set forth in Section 2.1 and such actions or proceedings are being pursued in good faith;

 

(iii)      will not object to the forbearance by ABL Agent or the other ABL Secured Parties from commencing or pursuing any foreclosure action or proceeding or any other enforcement or exercise of any rights or remedies with respect to any of the ABL Priority Collateral;

 

(iv)     will not, so long as the Discharge of ABL Debt has not occurred and except for actions permitted under Section 3.1(a)(i), take or receive any ABL Priority Collateral, or any Proceeds thereof or payment with respect thereto, in connection with the exercise of any right or remedy (including any right of setoff) with respect to any ABL Priority Collateral (it being understood and agreed that payments made by any Grantor in respect of the Term Loan Debt with proceeds of loans or advances under the ABL Documents shall not constitute a breach of this Section 3.1(a)(iv));

 

(v)      agrees that no covenant, agreement or restriction contained in any Term Loan Document shall be deemed to restrict in any way the rights and remedies of ABL Agent or the other ABL Secured Parties with respect to the ABL Priority Collateral as set forth in this Agreement and the ABL Documents;

 

(vi)     will not object to the manner in which ABL Agent or any other ABL Secured Party may seek to enforce or collect the ABL Debt or the Liens of such ABL Secured Party on any ABL Priority Collateral, regardless of whether any action or failure to act by or on behalf of ABL Agent or any other ABL Secured Party is, or could be, adverse to the interests of the Term Loan Secured Parties, and will not assert, and hereby waive, to the fullest extent permitted by law, any right to demand, request, plead or otherwise assert or claim the benefit of any marshalling, appraisal, valuation or other similar right that may be available under applicable law with respect to the ABL Priority Collateral or any other rights a junior secured creditor may have under applicable law with respect to the matters described in this clause (vi); and

 

(vii)    will not attempt, directly or indirectly, whether by judicial proceeding or otherwise, to challenge or question the validity or enforceability of any ABL Debt or any Lien of ABL Agent or this Agreement, or the validity or enforceability of the priorities, rights or obligations established by this Agreement.

 

16



 

(b)   So long as the Discharge of Term Loan Debt has not occurred, whether or not any Insolvency Proceeding has been commenced by or against any Grantor, ABL Agent, for itself and on behalf of the other ABL Secured Parties:

 

(i)        will not enforce or exercise, or seek to enforce or exercise, any rights or remedies (including any right of setoff with respect to any deposit accounts used exclusively for identifiable proceeds of Term Loan Priority Collateral) with respect to any Term Loan Priority Collateral (including the enforcement of any right under any lockbox agreement, account control agreement, landlord waiver or bailee’s letter or any similar agreement or arrangement, in each case relating to Term Loan Priority Collateral, to which the ABL Agent or any other ABL Secured Party is a party) or commence or join with any Person (other than Term Loan Agent with its consent) in commencing, or filing a petition for, any action or proceeding with respect to such rights or remedies (including any foreclosure action, provided, that, ABL Agent or any other ABL Secured Party may commence or join with any Person in commencing, or filing, a petition for any Insolvency Proceeding);

 

(ii)       will not contest, protest or object to any foreclosure action or proceeding brought by Term Loan Agent or any other Term Loan Secured Party, or any other enforcement or exercise by any Term Loan Secured Party of any rights or remedies relating solely to the Term Loan Priority Collateral, so long as the Liens of ABL Agent attach to the Proceeds thereof subject to the relative priorities set forth in Section 2.1 and such actions or proceedings are being pursued in good faith;

 

(iii)      will not object to the forbearance by Term Loan Agent or the other Term Loan Secured Parties from commencing or pursuing any foreclosure action or proceeding or any other enforcement or exercise of any rights or remedies with respect to any of the Term Loan Priority Collateral;

 

(iv)     will not, so long as the Discharge of Term Loan Debt has not occurred and except for actions permitted under Section 3.1(b)(i), take or receive any Term Loan Priority Collateral, or any Proceeds thereof or payment with respect thereto, in connection with the exercise of any right or remedy (including any right of setoff) with respect to any Term Loan Priority Collateral (it being understood and agreed that payments made by any Grantor in respect of the ABL Debt with proceeds of loans or advances under the Term Loan Documents shall not constitute a breach of this Section 3.1(b)(iv));

 

(v)      agrees that no covenant, agreement or restriction contained in any ABL Document shall be deemed to restrict in any way the rights and remedies of Term Loan Agent or the other Term Loan Secured Parties with respect to the Term Loan Priority Collateral as set forth in this Agreement and the Term Loan Documents;

 

(vi)     will not object to the manner in which Term Loan Agent or any other Term Loan Secured Party may seek to enforce or collect the Term Loan Debt or the Liens of such Term Loan Secured Party on any Term Loan Priority Collateral, regardless of whether any action or failure to act by or on behalf of Term Loan Agent or any other Term Loan Secured Party is, or could be, adverse to the interests of the ABL Secured Parties, and will not assert, and hereby waive, to the fullest extent permitted by law, any right to demand, request, plead or otherwise

 

17



 

assert or claim the benefit of any marshalling, appraisal, valuation or other similar right that may be available under applicable law with respect to the Term Loan Priority Collateral or any other rights a junior secured creditor may have under applicable law with respect to the matters described in this clause (vi); and

 

(vii)    will not attempt, directly or indirectly, whether by judicial proceeding or otherwise, to challenge or question the validity or enforceability of any Term Loan Debt or any Lien of Term Loan Agent or this Agreement, or the validity or enforceability of the priorities, rights or obligations established by this Agreement.

 

(c)   Until the Discharge of ABL Debt has occurred, whether or not any Insolvency Proceeding has been commenced by or against any Grantor, subject to Section 3.1(a)(i) hereof, the ABL Secured Parties shall have the exclusive right to commence, and maintain the exercise of their rights and remedies with respect to the ABL Priority Collateral, including, without limitation, the exclusive right, to the extent provided for in the ABL Documents or under applicable law, to appoint an administrator, receiver or trustee in respect of the ABL Priority Collateral, to take or retake control or possession of such Collateral and to hold, prepare for sale, process, and sell, lease, dispose of, or liquidate such ABL Priority Collateral, without any consultation with or the consent of any Term Loan Secured Party; provided , that , the Lien securing the Term Loan Debt shall continue as to the Proceeds of such Collateral released or disposed of subject to the relative priorities described in Section 2 hereof.  In exercising enforcement rights and remedies with respect to the ABL Priority Collateral, the ABL Secured Parties may enforce the provisions of the ABL Documents with respect to the ABL Priority Collateral and exercise remedies thereunder, all in such order and in such manner as they may determine in the exercise of their sole discretion.  Such exercise and enforcement shall include the rights of an agent appointed by them to sell or otherwise realize on or dispose of any ABL Priority Collateral upon foreclosure, to incur expenses in connection with such sale or other realization or disposition, and to exercise all of the rights and remedies of a secured creditor under the UCC and of a secured creditor under the Bankruptcy Laws of any applicable jurisdiction.  Term Loan Secured Parties shall not have any right to direct any ABL Secured Party to exercise any right, remedy or power with respect to the ABL Priority Collateral and each Term Loan Secured Party shall have no right to consent to any exercise of remedies under the ABL Documents or applicable law in respect of any of the ABL Priority Collateral.

 

(d)   Until the Discharge of Term Loan Debt has occurred, whether or not any Insolvency Proceeding has been commenced by or against any Grantor, subject to Section 3.1(b)(i) hereof, the Term Loan Secured Parties shall have the exclusive right to commence, and maintain the exercise of their rights and remedies with respect to the Term Loan Priority Collateral, including, without limitation, the exclusive right, to the extent provided for in the Term Loan Documents or under applicable law, to appoint an administrator, receiver or trustee in respect of the Term Loan Priority Collateral, to take or retake control or possession of such Collateral and to hold, prepare for sale, process, and sell, lease, dispose of, or liquidate such Term Loan Priority Collateral, without any consultation with or the consent of any ABL Secured Party; provided, that, the Lien securing the ABL Debt shall continue as to the Proceeds of such Collateral released or disposed of subject to the relative priorities described in Section 2 hereof.  In exercising enforcement rights and remedies with respect to the Term Loan Priority Collateral, the Term Loan Secured Parties may enforce the provisions of the Term Loan Documents with

 

18



 

respect to the Term Loan Priority Collateral and exercise remedies thereunder, all in such order and in such manner as they may determine in the exercise of their sole discretion.  Such exercise and enforcement shall include the rights of an agent appointed by them to sell or otherwise realize on or dispose of any Term Loan Priority Collateral upon foreclosure, to incur expenses in connection with such sale or other realization or disposition, and to exercise all of the rights and remedies of a secured creditor under the UCC and of a secured creditor under the Bankruptcy Laws of any applicable jurisdiction.  ABL Secured Parties shall not have any right to direct any Term Loan Secured Party to exercise any right, remedy or power with respect to the Term Loan Priority Collateral and each ABL Secured Party shall have no right to consent to any exercise of remedies under the Term Loan Documents or applicable law in respect of any of the Term Loan Priority Collateral.

 

(e)   Notwithstanding the foregoing, each of the Term Loan Agent and the ABL Agent may:

 

(i)        file a claim or statement of interest with respect to the ABL Debt, Excess ABL Debt, Term Loan Debt or Excess Term Loan Debt, as the case may be, in an Insolvency Proceeding that has been commenced by or against any Grantor;

 

(ii)       in the case of the Term Loan Agent, take any action in order to create, perfect, preserve or protect (but not, prior to the Discharge of ABL Debt, enforce) its Lien on any of the ABL Priority Collateral, and in the case of the ABL Agent, take any action in order to create, perfect, preserve or protect (but not, prior to the Discharge of Term Loan Debt, enforce) its Lien on any of the Term Loan Priority Collateral;

 

(iii)      file any necessary responsive or defensive pleadings in opposition to any motion, claim, adversary proceeding or other pleading made by any Person objecting to or otherwise seeking the disallowance of the claims of the ABL Secured Parties or Term Loan Secured Parties, including any claims secured by the Collateral, if any, or otherwise make any agreements or file any motions or objections pertaining to the claims of such Secured Parties, in each case in accordance with the terms of this Agreement;

 

(iv)     file any pleadings, objections, motions or agreements which assert rights or interests that are available to unsecured creditors of the Grantors, including, without limitation, the commencement of an Insolvency Proceeding against any Grantor, in each case, in accordance with applicable law and in a manner not inconsistent with the terms of this Agreement (including, but not limited to, any of the provisions of Section 6 hereof); and

 

(v)      vote on any plan of reorganization, file any proof of claim, make other filings and make any arguments and motions that are, in each case, not inconsistent with the terms of this Agreement.

 

3.2      Release of Second Priority Liens .

 

(a)   If the Agent with the senior Lien on any Collateral releases its Liens on any part of such Collateral in connection with either any Disposition of any Collateral permitted under the terms of the ABL Documents and the terms of the Term Loan Documents or the exercise by the Agent with the senior Lien on any Collateral of its enforcement remedies in respect of such

 

19



 

Collateral, and including any Disposition of such Collateral by or on behalf of any Grantor that is approved or consented to by the Agent with the senior Lien therein at any time after an ABL Event of Default, in the case of ABL Priority Collateral, or a Term Loan Event of Default, in the case of Term Loan Priority Collateral, has occurred and is continuing, then effective upon the consummation of any such Disposition or exercise of enforcement remedies, the Agent with the junior Lien on any such Collateral shall:

 

(i)        be deemed to have automatically and without further action released and terminated any Liens it may have on such Collateral; provided , that , (A) the Liens of the Agent with such senior Lien on the Collateral so sold or disposed of are released at the same time, and (B) such junior Lien shall remain in place with respect to any Proceeds of such sale, transfer or other disposition under this clause (a)(i) that are not applied to the repayment of ABL Debt (in the case of ABL Priority Collateral) or the repayment of Term Loan Debt (in the case of Term Loan Priority Collateral); and

 

(ii)       be deemed to have authorized the Agent with the senior Lien on such Collateral to file UCC amendments and terminations and mortgage releases (as applicable) covering the Collateral so sold or otherwise disposed of with respect to the UCC financing statements and mortgage releases (as applicable) between any Grantor and the Agent with the junior Lien thereon to evidence such release and termination; and

 

(iii)      promptly upon the request of the Agent with the senior Lien thereon, execute and deliver such other release documents and confirmations of the authorization to file UCC amendments and terminations and mortgage releases (as applicable) provided for herein, in each case as the Agent with the senior Lien thereon may require in connection with such sale or other Disposition by such Agent, such Agent’s agents or any Grantor with the consent of such Agent to evidence and effectuate such termination and release; provided , that , any such release or UCC amendment or termination by or on behalf of the Agent with the junior Lien thereon shall not extend to or otherwise affect any of the rights, if any, of such Agent with the junior Lien to the Proceeds from any such sale or other Disposition of Collateral upon the payment and satisfaction in full in cash of the ABL Debt or the Term Loan Debt, as the case may be, whichever is secured by the senior Lien on such Collateral.

 

(b)   Each Agent, for itself and on behalf of the other Secured Parties for whom such Agent is acting, hereby irrevocably constitutes and appoints the other Agent and any officer or agent of such Agent, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of such Agent with the junior Lien or such holder or in the Agent’s own name, from time to time in such Agent’s (holding the senior Lien) discretion, for the purpose of carrying out the terms of this Section 3.2, to take any and all appropriate action and to execute any and all documents and instruments which may be necessary or desirable to accomplish the purposes of this Section 3.2, including any termination statements, endorsements or other instruments of transfer or release.  Nothing contained in this Agreement shall be construed to modify the obligation of the Agent with the senior Lien to act in a commercially reasonable manner in the exercise of its rights to sell, lease, license, exchange, transfer or otherwise dispose of any Collateral.

 

20



 

3.3      Insurance and Condemnation Awards .

 

(a)   So long as the Discharge of ABL Debt has not occurred, ABL Agent and the other ABL Secured Parties shall have the sole and exclusive right, subject to the rights of Grantors under the ABL Documents, to settle and adjust claims in respect of the ABL Priority Collateral under policies of insurance and to approve any award granted in any condemnation or similar proceeding, or any deed in lieu of condemnation in respect of the ABL Priority Collateral.  So long as the Discharge of ABL Debt has not occurred, all Proceeds of any such policy and any such award, or any payments with respect to a deed in lieu of condemnation, shall (i)  first , up to an amount not to exceed the ABL Debt, be paid to ABL Agent for the benefit of the ABL Secured Parties to the extent required under the ABL Documents, (ii)  second , up to an amount not to exceed the Term Loan Debt, be paid to Term Loan Agent for the benefit of the Term Loan Secured Parties to the extent required under the applicable Term Loan Documents, (iii)  third , up to an amount not to exceed the Excess ABL Debt, be paid to ABL Agent for the benefit of the ABL Secured Parties to the extent required under the ABL Documents, (iv)  fourth , up to an amount not to exceed the Excess Term Loan Debt, be paid to Term Loan Agent for the benefit of the Term Loan Secured Parties to the extent required under the applicable Term Loan Documents and (v)  fifth , if no Excess Term Loan Debt is outstanding, be paid to the owner of the subject property or as a court of competent jurisdiction may otherwise direct or may otherwise be required by applicable law.  Until the Discharge of ABL Debt, if Term Loan Agent or any other Term Loan Secured Party shall, at any time, receive any Proceeds of any such insurance policy or any such award or payment, it shall pay such Proceeds over to ABL Agent in accordance with the terms of Section 4.2.

 

(b)   So long as the Discharge of Term Loan Debt has not occurred, Term Loan Agent and the other Term Loan Secured Parties shall have the sole and exclusive right, subject to the rights of Grantors under the Term Loan Documents, to settle and adjust claims in respect of the Term Loan Priority Collateral under policies of insurance and to approve any award granted in any condemnation or similar proceeding, or any deed in lieu of condemnation in respect of the Term Loan Priority Collateral.  So long as the Discharge of Term Loan Debt has not occurred, all Proceeds of any such policy and any such award, or any payments with respect to a deed in lieu of condemnation, shall (i)  first , up to an amount not to exceed the Term Loan Debt, be paid to Term Loan Agent for the benefit of the Term Loan Secured Parties to the extent required under the Term Loan Documents, (ii)  second , up to an amount not to exceed the ABL Debt, be paid to ABL Agent for the benefit of the ABL Secured Parties to the extent required under the applicable ABL Documents, (iii)  third , up to an amount not to exceed the Excess Term Loan Debt, be paid to Term Loan Agent for the benefit of the Term Loan Secured Parties to the extent required under the Term Loan Documents, (iv)  fourth , up to an amount not to exceed the Excess ABL Debt, be paid to ABL Agent for the benefit of the ABL Secured Parties to the extent required under the applicable ABL Documents and (v)  fifth ,  if no Excess ABL Debt is outstanding, be paid to the owner of the subject property or as a court of competent jurisdiction may otherwise direct or may otherwise be required by applicable law.  Until the Discharge of Term Loan Debt, if ABL Agent or any other ABL Secured Party shall, at any time, receive any Proceeds of any such insurance policy or any such award or payment, it shall pay such Proceeds over to Term Loan Agent in accordance with the terms of Section 4.2.

 

21



 

Section 4.              Payments

 

4.1      Application of Proceeds .

 

(a)   So long as the Discharge of ABL Debt or the repayment in full in cash of the Excess ABL Debt has not occurred, the ABL Priority Collateral or Proceeds thereof received in connection with any Disposition of, or collection on, such ABL Priority Collateral, shall be applied in the following order of priority:

 

(i)        first , to the ABL Debt until the Discharge of ABL Debt has occurred;

 

(ii)       second , to the Term Loan Debt until the Discharge of Term Loan Debt  has occurred;

 

(iii)      third , to the Excess ABL Debt until such obligations are paid in full in cash;

 

(iv)     fourth , to the Excess Term Loan Debt until such obligations are paid in full in cash;

 

(v)      fifth , to the applicable Grantor or as otherwise required by applicable law.

 

(b)   So long as the Discharge of Term Loan Debt or the repayment in full in cash of the Excess Term Loan Debt has not occurred, the Term Loan Priority Collateral or Proceeds thereof received in connection with the Disposition of, or collection on, such Term Loan Priority Collateral shall be applied in the following order of priority:

 

(i)        first , to the Term Loan Debt until the Discharge of Term Loan Debt has occurred;

 

(ii)       second , to the ABL Debt until the Discharge of ABL Debt  has occurred;

 

(iii)      third , to the Excess Term Loan Debt until such obligations are paid in full in cash;

 

(iv)     fourth , to the Excess ABL Debt until such obligations are paid in full in cash;

 

(v)      fifth , to the applicable Grantor or as otherwise required by applicable law.

 

(c)   The provisions of this Section 4.1 are intended solely to govern the respective Lien priorities as between Term Loan Agent and ABL Agent and shall not impose on any Agent or any other Secured Party any obligations in respect of the disposition of Proceeds of foreclosure on any Collateral which would conflict with prior perfected claims therein in favor of any other person or any order or decree of any court or other governmental authority or any applicable law.

 

22



 

4.2      Payments Over .

 

(a)   At all times (i) prior to the Discharge of ABL Debt or (ii) after both the Discharge of ABL Debt and the Discharge of Term Loan Debt, but prior to the payment in full in cash of the Excess ABL Debt, in any case, whether or not any Insolvency Proceeding has been commenced by or against any Grantor, Term Loan Agent agrees, for itself and on behalf of the other Term Loan Secured Parties, that any ABL Priority Collateral or Proceeds thereof (including any ABL Priority Collateral or Proceeds thereof subject to Liens that have been avoided or otherwise invalidated) or payment with respect thereto received by Term Loan Agent or any other Term Loan Secured Party (including any right of set-off), and including in connection with any insurance policy claim or any condemnation award (or deed in lieu of condemnation), shall be segregated and held in trust and promptly transferred or paid over to ABL Agent for the benefit of the ABL Secured Parties in the same form as received, with any necessary endorsements or assignments or as a court of competent jurisdiction may otherwise direct.  ABL Agent is hereby authorized to make any such endorsements or assignments as agent for Term Loan Agent.  This authorization is coupled with an interest and is irrevocable.  Any payments made by Grantors in respect of the Term Loan Debt with proceeds of loans or advances under the ABL Documents shall not be required to be transferred or paid over to ABL Agent for the benefit of the ABL Secured Parties.

 

(b)   At all times (i) prior to the Discharge of Term Loan Debt or (ii) after both the Discharge of ABL Debt and the Discharge of Term Loan Debt, but prior to the payment in full in cash of the Excess Term Loan Debt, in any case, whether or not any Insolvency Proceeding has been commenced by or against any Grantor, ABL Agent agrees, for itself and on behalf of the other ABL Secured Parties, that any Term Loan Priority Collateral or Proceeds thereof (including any Term Loan Priority Collateral or Proceeds thereof subject to Liens that have been avoided or otherwise invalidated) or payment with respect thereto received by ABL Agent or any other ABL Secured Party (including any right of set-off), and including in connection with any insurance policy claim or any condemnation award (or deed in lieu of condemnation), shall be segregated and held in trust and promptly transferred or paid over to Term Loan Agent for the benefit of the Term Loan Secured Parties in the same form as received, with any necessary endorsements or assignments or as a court of competent jurisdiction may otherwise direct. Term Loan Agent is hereby authorized to make any such endorsements or assignments as agent for ABL Agent.  This authorization is coupled with an interest and is irrevocable.

 

Section 5.              Bailee for Perfection

 

5.1      Each Agent as Bailee .

 

(a)   Each Agent agrees to hold any Collateral that is in the possession or control of such Agent (or its agents or bailees), to the extent that possession or control thereof is effective to perfect a Lien thereon under the Uniform Commercial Code (such Collateral being referred to herein as the “ Pledged Collateral ”), as bailee and agent for and on behalf of the other Agent solely for the purpose of perfecting the Lien granted to the other Agent in such Pledged Collateral (including as to any securities or any deposit accounts or securities accounts, if any, for purposes of satisfying the requirements of Sections 8-106(d)(3), 8-301(a)(2) and 9-313(c) of the UCC) pursuant to the ABL Documents or Term Loan Documents, as applicable, subject to the terms and conditions of this Section 5.

 

23



 

(b)   Until the Discharge of ABL Debt has occurred, ABL Agent shall be entitled to deal with the Pledged Collateral constituting ABL Priority Collateral in accordance with the terms of the ABL Documents. The rights of Term Loan Agent to such Pledged Collateral shall at all times be subject to the terms of this Agreement and to ABL Agent’s rights under the ABL Documents.  Until the Discharge of Term Loan Debt has occurred, Term Loan Agent shall be entitled to deal with the Pledged Collateral constituting Term Loan Priority Collateral in accordance with the terms of the Term Loan Documents.  The rights of ABL Agent to such Pledged Collateral shall at all times be subject to the terms of this Agreement and to Term Loan Agent’s rights under the Term Loan Documents.

 

(c)   Each Agent shall have no obligation whatsoever to the other Agent or any other Secured Party to assure that the Pledged Collateral is genuine or owned by any of the Grantors or to preserve rights or benefits of any Person except as expressly set forth in this Section 5. The duties or responsibilities of each Agent under this Section 5 shall be limited solely to holding the Pledged Collateral as bailee and agent for and on behalf of the other Agent for purposes of perfecting the Lien held by the other Agent.

 

(d)   Each Agent shall not have by reason of the ABL Documents, the Term Loan Documents or this Agreement or any other document or otherwise in connection with the transactions contemplated by this Agreement, the ABL Documents and the Term Loan Documents a fiduciary relationship in respect of the other Agent or any of the other Secured Parties and shall not have any liability to the other Agent or any other Secured Party in connection with its holding the Pledged Collateral.  Each Agent hereby waives any claims against the other Agent for any breach or alleged breach of fiduciary duty.

 

5.2      Transfer of Pledged Collateral .

 

(a)   Upon the Discharge of ABL Debt, to the extent permitted under applicable law, upon the request of Term Loan Agent:

 

(i)        ABL Agent shall, without recourse or warranty, transfer the possession and control of the Pledged Collateral, if any, then in its possession or control to Term Loan Agent, except in the event and to the extent (A) ABL Agent or any other ABL Secured Party has retained or otherwise acquired such Collateral in full or partial satisfaction of any of the ABL Debt, (B) such Collateral is sold or otherwise disposed of by ABL Agent or any other ABL Secured Party or by a Grantor as provided herein or (C) it is otherwise required by any order of any court or other governmental authority or applicable law or would result in the risk of liability of ABL Secured Party to any third party.

 

(ii)       In connection with any transfer described herein to Term Loan Agent, ABL Agent agrees to take reasonable actions in its power (with all costs and expenses in connection therewith to be for the account of Term Loan Agent and to be paid by Grantors) as shall be reasonably requested by Term Loan Agent to permit Term Loan Agent to obtain, for the benefit of the Term Loan Secured Parties, a first priority security interest in the Pledged Collateral, including in connection with the terms of any Collateral Access Agreement (as defined in the ABL Agreement), whether with a landlord, processor, warehouse or other third party or any Deposit Account Control Agreement (as defined in the ABL Agreement), with respect to any

 

24



 

such agreement delivered on or after the date hereof, ABL Agent shall notify the other parties thereto that it is no longer the “Secured Party Representative”, “Agent Representative”, “Lender Representative” or otherwise entitled to act under such agreement and shall confirm to such parties that Term Loan Agent is thereafter the “Secured Party Representative”, “Agent Representative”, “Lender Representative” as any of such terms are used in any such agreement and is otherwise entitled to the rights of the secured party under such agreement.

 

(iii)      The foregoing provision shall not impose on ABL Agent or any other ABL Secured Party any obligations which would conflict with prior perfected claims therein in favor of any other person or any order or decree of any court or other governmental authority or any applicable law.

 

(b)   Upon the Discharge of Term Loan Debt, to the extent permitted under applicable law, upon the request of ABL Agent, Term Loan Agent shall, without recourse or warranty, transfer the possession and control of the Pledged Collateral, if any, then in its possession or control to ABL Agent, except in the event and to the extent (i) Term Loan Agent or any other Term Loan Secured Party has retained or otherwise acquired such Collateral in full or partial satisfaction of any of the Term Loan Debt, (ii) such Collateral is sold or otherwise disposed of by Term Loan Agent or any other Term Loan Secured Party or by a Grantor as provided herein or (iii) it is otherwise required by any order of any court or other governmental authority or applicable law or would result in the risk of liability of Term Loan Secured Party to any third party.  In connection with any transfer described herein to ABL Agent, Term Loan Agent agrees to take reasonable actions in its power (with all costs and expenses in connection therewith to be for the account of ABL Agent and to be paid by Grantors) as shall be reasonably requested by ABL Agent to permit ABL Agent to obtain, for the benefit of the ABL Secured Parties, a first priority security interest in the Pledged Collateral. The foregoing provision shall not impose on Term Loan Agent or any other Term Loan Secured Party any obligations which would conflict with prior perfected claims therein in favor of any other person or any order or decree of any court or other governmental authority or any applicable law.

 

(c)   After both the Discharge of ABL Debt and the Discharge of Term Loan Debt, but prior to the payment in full in cash of the Excess ABL Debt, Term Loan Agent shall take the same actions set out in Section 5.2(a) above to be taken by the ABL Agent upon the Discharge of ABL Debt so as to transfer the possession and control and related rights to the Pledged Collateral back to ABL Agent.  After the payment in full in cash of the Excess ABL Debt, ABL Agent shall take the same actions set out in Section 5.2(a) above to be taken by the ABL Agent upon the Discharge of ABL Debt so as to transfer the possession and control and related rights to the Pledged Collateral back to Term Loan Agent.

 

(d)   After both the Discharge of Term Loan Debt and the Discharge of ABL Debt, but prior to the payment in full in cash of the Excess Term Loan Debt, ABL Agent shall take the same actions set out in Section 5.2(b) above to be taken by the Term Loan Agent upon the Discharge of Term Loan Debt so as to transfer the possession and control and related rights to the Pledged Collateral back to Term Loan Agent. After the payment in full in cash of the Excess Term Loan Debt, Term Loan Agent shall take the same actions set out in Section 5.2(b) above to be taken by the Term Loan Agent upon the Discharge of Term Loan Debt so as to transfer the possession and control and related rights to the Pledged Collateral back to ABL Agent.

 

25



 

(e)   Each Grantor acknowledges and agrees to the delivery or transfer of control by ABL Agent to Term Loan Agent, and by Term Loan Agent to ABL Agent, of any such Collateral and waives and releases ABL Agent and the other ABL Secured Parties, and Term Loan Agent and the other Term Loan Secured Parties, from any liability as a result of such action.  Each Grantor shall take such further actions as are reasonably required to effectuate the transfer contemplated in this Section 5.2 and shall indemnify the Agent having the first priority Lien prior to such transfer for loss or damage suffered by such Agent as a result of such transfer, except to the extent resulting from such Agent’s own gross negligence or willful misconduct as determined pursuant to a final, non-appealable order of a court of competent jurisdiction.

 

Section 6.              Insolvency Proceedings

 

6.1      General Applicability .   This Agreement shall be applicable both before and after the institution of any Insolvency Proceeding involving any Grantor, including, without limitation, the filing of any petition by or against any Grantor under the Bankruptcy Code or under any other Bankruptcy Law and all converted or subsequent cases in respect thereof, and all references herein to any Grantor shall be deemed to apply to the trustee for such Grantor and such Grantor as debtor-in-possession.  The relative rights of the ABL Secured Parties and the Term Loan Secured Parties in or to any distributions from or in respect of any Collateral or Proceeds shall continue after the commencement of any Insolvency Proceeding involving any Grantor, including, without limitation, the filing of any petition by or against any Grantor under the Bankruptcy Code or under any other Bankruptcy Law and all converted cases and subsequent cases, on the same basis as prior to the date of such commencement, subject to any court order approving the financing of, or use of ABL Cash Collateral or Term Loan Cash Collateral by, any Grantor as debtor-in-possession, or any other court order affecting the rights and interests of the parties hereto not in conflict with this Agreement.  This Agreement shall constitute a subordination agreement for the purposes of Section 510(a) of the Bankruptcy Code and shall be enforceable in any Insolvency Proceeding in accordance with its terms.

 

6.2      Use of Cash Collateral; Bankruptcy Financing .

 

(a)   If any Grantor becomes subject to any Insolvency Proceeding, and if ABL Agent or the ABL Secured Parties shall seek to provide a Grantor with, or consent to a third party providing, any post-petition financing under Section 364 of the Bankruptcy Code, or any comparable provision of any other Bankruptcy Law (an “ ABL DIP Financing ”), or the ABL Agent or the ABL Secured Parties consent to the use of any ABL Priority Collateral constituting cash collateral under Section 363 of the Bankruptcy Code, or any comparable provision of any other Bankruptcy Law (“ ABL Cash Collateral ”), until the Discharge of ABL Debt has occurred, Term Loan Agent, for itself and on behalf of the other Term Loan Secured Parties, agrees that each Term Loan Secured Party (i) will raise no objection to, nor support any other Person objecting to, and will be deemed to have consented to, the use of any ABL Cash Collateral, or ABL DIP Financing, (ii) will not request or accept adequate protection or any other relief in connection with the use of such ABL Cash Collateral or such ABL DIP Financing except as set forth in Section 6.4 below, and (iii) will subordinate (and will be deemed hereunder to have subordinated) the Liens on ABL Priority Collateral granted to Term Loan Agent or any other Term Loan Secured Parties pursuant to such ABL DIP Financing on the same terms as such Liens are subordinated hereunder to the Liens granted with respect to such ABL DIP Financing

 

26



 

(and such subordination will not alter in any manner the terms of this Agreement), to any adequate protection provided to the ABL Secured Parties and to any “carve-out” or other similar administrative priority expense or claim consented to in writing by ABL Agent to be paid prior to the Discharge of ABL Debt, provided , that :

 

(A)      the aggregate principal amount of the ABL DIP Financing plus the aggregate outstanding principal amount of ABL Debt under the ABL Agreement plus the aggregate face amount of any letters of credit issued and not reimbursed under the ABL Agreement shall not exceed the ABL Cap,

 

(B)      the Term Loan Secured Parties retain a Lien on the Collateral (including Proceeds thereof arising after the commencement of such proceeding) with the same priority relative to the Liens on such Collateral of ABL Agent as existed prior to the commencement of the case under the Bankruptcy Code or other Bankruptcy Law (junior in priority to the Liens securing such ABL DIP Financing and the existing Liens in favor of the ABL Agent on the ABL Priority Collateral but senior to the Liens of the ABL Agent and the Liens securing such ABL DIP Financing on the Term Loan Priority Collateral to the same extent as provided under Section 2.2),

 

(C)      Term Loan Agent receives additional or replacement Liens on all post-petition assets of any Grantor which are subject to an additional or replacement Lien to secure the ABL DIP Financing with same priority relative to the Liens of ABL Agent as existed prior to such Insolvency Proceeding to the extent Term Loan Agent seeks such Liens and is entitled to such additional or replacement Liens under the Bankruptcy Code or other applicable Bankruptcy Law as determined by the Bankruptcy Court having jurisdiction over the case,

 

(D)      such ABL DIP Financing or use of ABL Cash Collateral is subject to the terms of this Agreement,

 

(E)      the Term Loan Agent retains the right to object to any agreements or arrangements regarding the use of ABL Cash Collateral or the ABL DIP Financing that require a specific treatment of a claim in respect of the Term Loan Debt for purposes of a plan of reorganization or contravene the terms of this Agreement in any material respect, and

 

(F)      as a condition of such ABL DIP Financing or use of ABL Cash Collateral, until the Discharge of Term Loan Debt, (1) all proceeds of the Term Loan Priority Collateral shall either (x) be remitted to the Term Loan Agent for application in accordance with Section 4.1 hereof or (y) only be used by Borrowers subject to terms and conditions reasonably acceptable to the Term Loan Agent, and (2) no portion of the Term Loan Priority Collateral shall be used to repay the ABL Loan Debt outstanding as of the date of the commencement of any Insolvency Proceeding or any ABL Loan Debt incurred thereafter pursuant to any such ABL DIP Financing or use of ABL Cash Collateral.

 

(b)   If any Grantor becomes subject to any Insolvency Proceeding, and if Term Loan Agent or the Term Loan Secured Parties shall seek to provide a Grantor with, or consent to a third party providing, any post-petition financing under Section 364 of the Bankruptcy Code, or any comparable provision of any other Bankruptcy Law (a “ Term Loan DIP Financing ”), or the

 

27



 

Term Loan Agent or the Term Loan Secured Parties consent to the use of any Term Loan Priority Collateral constituting cash collateral under Section 363 of the Bankruptcy Code, or any comparable provision of any other Bankruptcy Law (“ Term Loan Cash Collateral ”), until the Discharge of Term Loan Debt has occurred, ABL Agent, for itself and on behalf of the other ABL Secured Parties, agrees that each ABL Secured Party (i) will raise no objection to, nor support any other Person objecting to, and will be deemed to have consented to, the use of any Term Loan Cash Collateral, or Term Loan DIP Financing, (ii) will not request or accept adequate protection or any other relief in connection with the use of such Term Loan Cash Collateral or such Term Loan DIP Financing except as set forth in Section 6.4 below, and (iii) will subordinate (and will be deemed hereunder to have subordinated) the Liens on Term Loan Priority Collateral granted to ABL Agent or any other ABL Secured Parties pursuant to such Term Loan DIP Financing on the same terms as such Liens are subordinated hereunder to the Liens granted with respect to such Term Loan DIP Financing (and such subordination will not alter in any manner the terms of this Agreement), to any adequate protection provided to the Term Loan Secured Parties and to any “carve-out” or other similar administrative priority expense or claim consented to in writing by Term Loan Agent to be paid prior to the Discharge of Term Loan Debt, provided , that :

 

(A)      the aggregate principal amount of the Term Loan DIP Financing plus the aggregate outstanding principal amount of Term Loan Debt under the Term Loan Agreement shall not exceed the Term Loan Cap,

 

(B)      the ABL Secured Parties retain a Lien on the Collateral (including Proceeds thereof arising after the commencement of such proceeding) with the same priority relative to the Liens on such Collateral of Term Loan Agent as existed prior to the commencement of the case under the Bankruptcy Code or other Bankruptcy Law (junior in priority to the Liens securing such Term Loan DIP Financing and the existing Liens in favor of the Term Loan Agent on the Term Loan Priority Collateral but senior to the Liens of the Term Loan Agent on the ABL Priority Collateral to the same extent as provided under Section 2.2),

 

(C)      ABL Agent receives additional or replacement Liens on all post-petition assets of any Grantor which are subject to an additional or replacement Lien to secure the Term Loan DIP Financing with same priority relative to the Liens of Term Loan Agent as existed prior to such Insolvency Proceeding to the extent ABL Agent seeks such Liens and is entitled to such additional or replacement Liens under the Bankruptcy Code or other applicable Bankruptcy Law as determined by the Bankruptcy Court having jurisdiction over the case,

 

(D)      such Term Loan DIP Financing or use of Term Loan Cash Collateral is subject to the terms of this Agreement,

 

(E)      the ABL Agent retains the right to object to any agreements or arrangements regarding the use of Term Loan Cash Collateral or the Term Loan DIP Financing that require a specific treatment of a claim in respect of the ABL Debt for purposes of a plan of reorganization or contravene the terms of this Agreement in any material respect, and

 

(F)      as a condition of such Term Loan DIP Financing or use of Term Loan Cash Collateral, until the Discharge of ABL Debt, (1) all proceeds of the ABL Priority Collateral

 

28



 

shall either (x) be remitted to the ABL Agent for application in accordance with Section 4.1 hereof or (y) only be used by Borrowers subject to terms and conditions reasonably acceptable to the ABL Agent, and (2) no portion of the ABL Priority Collateral shall be used to repay the Term Loan Debt outstanding as of the date of the commencement of any Insolvency Proceeding or any Term Loan Debt incurred thereafter pursuant to any such Term Loan DIP Financing or use of Term Loan Cash Collateral.

 

(c)   No ABL Secured Party shall, directly or indirectly, provide, or seek to provide, or support any other Person providing or seeking to provide, the use of ABL Cash Collateral or ABL DIP Financing secured by Liens equal or senior in priority to the Liens on the Term Loan Priority Collateral (including any assets or property arising after the commencement of a case under the Bankruptcy Code) of Term Loan Agent, without the prior written consent of Term Loan Agent.  No Term Loan Secured Party shall, directly or indirectly, provide, or seek to provide, or support any other Person providing or seeking to provide, the use of Term Loan Cash Collateral or Term Loan DIP Financing secured by Liens equal or senior in priority to the Liens on the ABL Priority Collateral (including any assets or property arising after the commencement of a case under the Bankruptcy Code) of ABL Agent, without the prior written consent of ABL Agent.  For purposes hereof, all references to Collateral shall include any assets or property of Grantors arising after the commencement of any Insolvency Proceeding that are subject to the Liens of Agents.

 

6.3      Relief from the Automatic Stay .

 

(a)   The Term Loan Agent, for itself and on behalf of the other Term Loan Secured Parties, agrees that, so long as the Discharge of ABL Debt has not occurred, no Term Loan Secured Party shall, without the prior written consent of the ABL Agent, seek or request relief from or modification of the automatic stay or any other stay in any Insolvency or Liquidation Proceeding in respect of any part of the ABL Priority Collateral, any Proceeds thereof or any Lien thereon securing any of the Term Loan Debt.

 

(b)   The ABL Agent, for itself and on behalf of the other ABL Secured Parties, agrees that, so long as the Discharge of Term Loan Debt has not occurred, no ABL Secured Party shall, without the prior written consent of the Term Loan Agent, seek or request relief from or modification of the automatic stay or any other stay in any Insolvency or Liquidation Proceeding in respect of any part of the Term Loan Priority Collateral, any Proceeds thereof or any Lien thereon securing any of the ABL Debt.

 

6.4      Adequate Protection .

 

(a)   The Term Loan Agent, on behalf of itself and the other Term Loan Secured Parties, agrees that none of them shall contest (or support any other Person contesting):

 

(i)        any request by the ABL Agent or the other ABL Secured Parties for adequate protection with respect to Liens on the ABL Priority Collateral; or

 

(ii)       any objection by the ABL Agent or the other ABL Secured Parties to any motion, relief, action or proceeding based on the ABL Agent or the other ABL Secured Parties

 

29



 

claiming a lack of adequate protection with respect to Liens on the ABL Priority Collateral to the extent not inconsistent with the other terms of this Agreement.

 

(b)   The ABL Agent, on behalf of itself and the other ABL Secured Parties, agrees that none of them shall contest (or support any other Person contesting):

 

(i)        any request by the Term Loan Agent or the other Term Loan Secured Parties for adequate protection with respect to Liens on the Term Loan Priority Collateral; or

 

(ii)       any objection by the Term Loan Agent or the other Term Loan Secured Parties to any motion, relief, action or proceeding based on the Term Loan Agent or the other Term Loan Secured Parties claiming a lack of adequate protection with respect to Liens on the Term Loan Priority Collateral to the extent not inconsistent with the other terms of this Agreement.

 

(c)   Notwithstanding anything to the contrary in Sections 6.4(a) and 6.4(b), in any Insolvency Proceeding:

 

(i)        if any or all of the ABL Secured Parties are granted adequate protection in the form of additional collateral or a super-priority claim in connection with any use of ABL Cash Collateral or an ABL DIP Financing or in connection with any Liens on the ABL Priority Collateral and such additional collateral is the type of asset or property that would constitute ABL Priority Collateral, then (A) the Term Loan Agent, on behalf of itself or any of the Term Loan Secured Parties, may seek or request adequate protection in the form of a Lien or super-priority claim on such additional collateral, which Lien or claim will be subordinated to the Liens securing the ABL Debt and such use of ABL Cash Collateral or ABL DIP Financing (and all obligations relating thereto) on the same basis as the other Liens on ABL Priority Collateral securing the Term Loan Debt are so subordinated to the Liens on ABL Priority Collateral securing the ABL Debt under this Agreement and (B) subject to clause (ii) below, the ABL Agent, on behalf of itself and the other ABL Secured Parties, agrees that none of them shall contest (or support any other Person contesting) (1) any request by the Term Loan Agent or any other Term Loan Secured Party for adequate protection pursuant to the preceding clause (A) or (2) any objection to any motion, relief, action or proceeding in support of a request for adequate protection pursuant to the preceding clause (A);

 

(ii)       in the event the Term Loan Agent, on behalf of itself or any other Term Loan Secured Parties, seeks or requests adequate protection in respect of Term Loan Debt and such adequate protection is granted in the form of additional collateral or super-priority claims of a type of asset or property that would constitute ABL Priority Collateral, then the Term Loan Agent, on behalf of itself and the other Term Loan Secured Parties, agrees that it will support any request by the ABL Agent to also be granted a Lien or super-priority claim on such additional collateral as security for the ABL Debt and for any use of ABL Cash Collateral or ABL DIP Financing and that any Lien or claim on such additional collateral securing the applicable Term Loan Debt shall be subordinated to the Lien on such collateral securing the ABL Debt and any such use of ABL Cash Collateral or ABL DIP Financing (and all obligations relating thereto) and to any other Liens granted to the ABL Secured Parties as adequate protection on the same basis as the other Liens on ABL Priority Collateral securing the Term

 

30



 

Loan Debt are so subordinated to the Liens on ABL Priority Collateral securing the ABL Debt under this Agreement;

 

(iii)      if any or all of the Term Loan Secured Parties are granted adequate protection in the form of additional collateral or a super-priority claim in connection with any use of Term Loan Cash Collateral or a Term Loan DIP Financing or in connection with any Liens on the Term Loan Priority Collateral and such additional collateral is the type of asset or property that would constitute Term Loan Priority Collateral, then (A) the ABL Agent, on behalf of itself or any of the ABL Secured Parties, may seek or request adequate protection in the form of a Lien or super-priority claim on such additional collateral, which Lien or claim will be subordinated to the Liens securing the Term Loan Debt and such use of Term Loan Cash Collateral or Term Loan DIP Financing (and all obligations relating thereto) on the same basis as the other Liens on Term Loan Priority Collateral securing the ABL Debt are so subordinated to the Liens on Term Loan Priority Collateral securing the Term Loan Debt under this Agreement and (B) subject to clause (iv) below, the Term Loan Agent, on behalf of itself and the other Term Loan Secured Parties, agrees that none of them shall contest (or support any other Person contesting) (1) any request by the ABL Agent or any other ABL Secured Party for adequate protection pursuant to the preceding clause (A) or (2) any objection to any motion, relief, action or proceeding in support of a request for adequate protection pursuant to the preceding clause (A);

 

(iv)     in the event the ABL Agent, on behalf of itself or any other ABL Secured Parties, seeks or requests adequate protection in respect of ABL Debt and such adequate protection is granted in the form of additional collateral or super-priority claims of a type of asset or property that would constitute Term Loan Priority Collateral, then the ABL Agent, on behalf of itself and the other ABL Secured Parties, agrees that it will support any request by the Term Loan Agent to also be granted a Lien or super-priority claim on such additional collateral as security for the Term Loan Debt and for any use of Term Loan Cash Collateral or Term Loan DIP Financing and that any Lien or claim on such additional collateral securing the applicable ABL Debt shall be subordinated to the Lien on such collateral securing the Term Loan Debt and any such use of Term Loan Cash Collateral or Term Loan DIP Financing (and all obligations relating thereto) and to any other Liens granted to the Term Loan Secured Parties as adequate protection on the same basis as the other Liens on Term Loan Priority Collateral securing the ABL Debt are so subordinated to the Liens on Term Loan Priority Collateral securing the Term Loan Debt under this Agreement; and

 

(v)      except as otherwise expressly set forth in Section 6.2 or in connection with the exercise of remedies with respect to the ABL Priority Collateral, nothing herein shall limit the rights of the Term Loan Agent or the other Term Loan Secured Parties from seeking adequate protection with respect to their rights in the Term Loan Priority Collateral in any Insolvency Proceeding (including adequate protection in the form of a cash payment, periodic cash payments or otherwise).  Except as otherwise expressly set forth in Section 6.2 or in connection with the exercise of remedies with respect to the Term Loan Priority Collateral, nothing herein shall limit the rights of the ABL Agent or the other ABL Secured Parties from seeking adequate protection with respect to their rights in the ABL Priority Collateral in any Insolvency Proceeding (including adequate protection in the form of a cash payment, periodic cash payments or otherwise).

 

31



 

(d)   Except as otherwise provided in this Section 6.4, (i) no ABL Secured Party may seek or assert any right it may have for adequate protection of its interest in the Term Loan Priority Collateral without the prior written consent of the Term Loan Secured Parties, and (ii) no Term Loan Secured Party may seek or assert any right it may have for adequate protection of its interest in the ABL Priority Collateral without the written consent of the ABL Secured Parties.

 

6.5      Reorganization Securities .   If, in any Insolvency Proceeding, debt obligations of any reorganized Grantor secured by Liens upon any property of such reorganized Grantor are distributed, pursuant to a plan of reorganization, on account of both the ABL Debt and the Term Loan Debt, then, to the extent the debt obligations distributed on account of the ABL Debt and on account of the Term Loan Debt are secured by Liens upon the same assets or property, the provisions of this Agreement will survive the distribution of such debt obligations pursuant to such plan and will apply with like effect to the Liens securing such debt obligations.

 

6.6      Separate Grants of Security and Separate Classes .   Each of the parties hereto irrevocably acknowledges and agrees that (a) the claims and interests of the ABL Secured Parties and the Term Loan Secured Parties are not “substantially similar” within the meaning of Section 1122 of the Bankruptcy Code, or any comparable provision of any other Bankruptcy Law, (b) the grants of the Liens to secure the ABL Debt and the grants of the Liens to secure the Term Loan Debt constitute two separate and distinct grants of Liens, (c) the ABL Secured Parties’ rights in the Collateral are fundamentally different from the Term Loan Secured Parties’ rights in the Collateral and (d) as a result of the foregoing, among other things, the ABL Debt and the Term Loan Debt must be separately classified in any plan of reorganization proposed or adopted in any Insolvency Proceeding.

 

6.7      Asset Dispositions .

 

(a)   Until the Discharge of ABL Debt has occurred, the Term Loan Agent, for itself and on behalf of the other Term Loan Secured Parties, agrees that, in the event of any Insolvency Proceeding, the Term Loan Secured Parties will not object or oppose (or support any Person in objecting or opposing) a motion for any Disposition of any ABL Priority Collateral free and clear of the Liens of Term Loan Agent and the other Term Loan Secured Parties or other claims under Sections 363, 365 or 1129 of the Bankruptcy Code, or any comparable provision of any Bankruptcy Law (and including any motion for bid procedures or other procedures related to the Disposition that is the subject of such motion), and shall be deemed to have consented to any such Disposition of any ABL Priority Collateral under Section 363(f) of the Bankruptcy Code that has been consented to by the ABL Agent; provided , that , the Proceeds of such Disposition of any Collateral to be applied to the ABL Debt or the Term Loan Debt are applied in accordance with Sections 4.1 and 4.2.

 

(b)   Until the Discharge of Term Loan Debt has occurred, the ABL Agent, for itself and on behalf of the other ABL Secured Parties, agrees that, in the event of any Insolvency Proceeding, the ABL Secured Parties will not object or oppose (or support any Person in objecting or opposing) a motion to any Disposition of any Term Loan Priority Collateral free and clear of the Liens of ABL Agent and the other ABL Secured Parties or other claims under Sections 363, 365 or 1129 of the Bankruptcy Code, or any comparable provision of any Bankruptcy Law (and including any motion for bid procedures or other procedures related to the

 

32



 

Disposition that is the subject of such motion), and shall be deemed to have consented to any such Disposition of any Term Loan Priority Collateral under Section 363(f) of the Bankruptcy Code that has been consented to by the Term Loan Agent; provided , that , the Proceeds of such Disposition of any Collateral to be applied to the ABL Debt or the Term Loan Debt are applied in accordance with Sections 4.1 and 4.2.

 

(c)   The Term Loan Secured Parties agree that the ABL Secured Parties shall have the right to credit bid under Section 363(k) of the Bankruptcy Code with respect to any Disposition of, the ABL Priority Collateral and the ABL Secured Parties agree that the Term Loan Secured Parties shall have the right to credit bid under Section 363(k) of the Bankruptcy Code with respect to any Disposition of the Term Loan Priority Collateral; provided , that , the Secured Parties shall not be deemed to have agreed to any credit bid by other Secured Parties in connection with the Disposition of Collateral consisting of both Term Loan Priority Collateral and ABL Priority Collateral.  The Term Loan Agent, for itself and on behalf of the other Term Loan Secured Parties, agrees that, so long as the Discharge of ABL Debt has not occurred, no Term Loan Secured Party shall, without the prior written consent of the ABL Agent, credit bid under Section 363(k) of the Bankruptcy Code with respect to the ABL Priority Collateral.  The ABL Agent, for itself and on behalf of the other ABL Secured Parties, agrees that, so long as the Discharge of Term Loan Debt has not occurred, no ABL Secured Party shall, without the prior written consent of the Term Loan Agent, credit bid under Section 363(k) of the Bankruptcy Code with respect to the Term Loan Priority Collateral.

 

6.8      Certain Waivers as to Section 1111(b)(2) of Bankruptcy Code .   Term Loan Agent, for itself and on behalf of the other Term Loan Secured Parties, waives any claim any Term Loan Secured Party may hereafter have against any ABL Secured Party arising out of the election by any ABL Secured Party of the application of Section 1111(b)(2) of the Bankruptcy Code, or any comparable provision of any other Bankruptcy Law.  ABL Agent, for itself and on behalf of the other ABL Secured Parties, waives any claim any ABL Secured Party may hereafter have against any Term Loan Secured Party arising out of the election by any Term Loan Secured Party of the application of Section 1111(b)(2) of the Bankruptcy Code or any comparable provision of any other Bankruptcy Law.

 

6.9      Avoidance Issues .   If any ABL Secured Party is required in any Insolvency Proceeding or otherwise to turn over or otherwise pay to the estate of any Grantor or any other person any amount (a “ Recovery ”), then the ABL Debt shall be reinstated to the extent of such Recovery and the ABL Secured Parties shall be entitled to a Discharge of ABL Debt with respect to all such recovered amounts.  If any Term Loan Secured Party is required in any Insolvency Proceeding or otherwise to turn over or otherwise pay to the estate of any Grantor or any other person any Recovery, then the Term Loan Debt shall be reinstated to the extent of such Recovery and the Term Loan Secured Parties shall be entitled to a Discharge of Term Loan Debt with respect to all such recovered amounts.  If this Agreement shall have been terminated prior to any Recovery, this Agreement shall be reinstated in full force and effect, and such prior termination shall not diminish, release, discharge, impair or otherwise affect the obligations of the parties hereto from such date of reinstatement.

 

6.10   Other Bankruptcy Laws .   In the event that an Insolvency Proceeding is filed in a jurisdiction other than the United States or is governed by any Bankruptcy Law other than the

 

33



 

Bankruptcy Code, each reference in this Agreement to a section of the Bankruptcy Code shall be deemed to refer to the substantially similar or corresponding provision of the Bankruptcy Law applicable to such Insolvency Proceeding, or, in the absence of any specific similar or corresponding provision of Bankruptcy Law, such other general Bankruptcy Law as may be applied in order to achieve substantially the same result as would be achieved under each applicable section of the Bankruptcy Code.

 

6.11   Post-Petition Claims .   Neither the ABL Agent nor any other ABL Secured Party shall oppose or seek to challenge any claim by the Term Loan Agent or any other Term Loan Secured Party for allowance in any Insolvency Proceeding of Term Loan Debt consisting of post-petition interest, fees, costs, charges or expenses to the extent of the value of any Term Loan Secured Party’s Lien.  Neither the Term Loan Agent nor any other Term Loan Secured Party shall oppose or seek to challenge any claim by the ABL Agent or any other ABL Secured Party for allowance in any Insolvency Proceeding of ABL Debt consisting of post-petition interest, fees, costs, charges or expenses to the extent of the value of any ABL Secured Party’s Lien.

 

Section 7.              Term Loan Lenders’ Purchase Option

 

7.1      Exercise of Option   On or after the occurrence and during the continuance of an ABL Event of Default and the acceleration of all of the ABL Debt or the commencement of an Insolvency Proceeding as to Grantors (each a “ Term Loan Purchase Event ”), one or more of the Term Loan Secured Parties (the “ Purchasing Term Loan Secured Parties ”), shall have the option, subject to Section 7.2, for a period of ten (10) Business Days after a Term Loan Purchase Event to purchase all (but not less than all) of the ABL Debt from the ABL Secured Parties and to assume all of the commitments and duties of the ABL Secured Parties.  Notice of the exercise of such option shall be sent by Term Loan Agent to ABL Agent within such ten (10) Business Day period and shall be irrevocable.  The obligations of ABL Secured Parties hereunder to sell the ABL Debt owing to them are several and not joint and several.  Each Grantor irrevocably consents to such sale.

 

7.2      Pro Rata Offer .   The Term Loan Secured Parties agree, solely as among themselves, that upon the occurrence of any Term Loan Purchase Event, the Term Loan Agent shall send a notice to all Term Loan Secured Parties giving each Term Loan Secured Party the option to purchase at least its pro rata share (calculated based on the aggregate Term Loan Debt) of the ABL Debt.  No Term Loan Secured Party shall be required to participate in any purchase offer hereunder, and a purchase offer may be made by any or all of the Term Loan Secured Parties, subject to the requirements of the preceding sentence.  The provisions of this Section 7.2 are intended solely for the benefit of the Term Loan Secured Parties and may be modified, amended or waived by them without the approval of any Grantor, any ABL Secured Party, or otherwise.

 

7.3      Purchase and Sale .   On the date specified by Term Loan Agent in such notice (which shall not be less than five (5) Business Days, nor more than ten (10) Business Days, after the receipt by ABL Agent of the notice from Term Loan Agent of its election to exercise such option), ABL Secured Parties shall, subject to any required approval of any court or other regulatory or governmental authority then in effect, if any, sell to such of the Purchasing Term Loan Secured Parties as are specified in the notice from Term Loan Agent of its election to

 

34



 

exercise such option, and such Purchasing Term Loan Secured Parties shall purchase from ABL Secured Parties, all of the ABL Debt.  Notwithstanding anything to the contrary contained herein, in connection with any such purchase and sale, ABL Secured Parties shall retain all rights under the ABL Documents to be indemnified or held harmless by Grantors in accordance with the terms thereof.  In connection with any such purchase and sale, each ABL Secured Party and each Purchasing Term Loan Secured Party shall execute and deliver an assignment and acceptance agreement, in form reasonably acceptable to all parties thereto, pursuant to which, among other things, each ABL Lender shall assign to the Purchasing Term Loan Secured Parties such ABL Lender’s pro rata share of the commitments and ABL Debt.  Upon the consummation of such purchase and sale, ABL Agent shall resign as the “Agent” under the ABL Documents and upon the written request of Term Loan Agent, and at the expense of the Purchasing Term Loan Secured Parties, shall execute and deliver all such documents and instruments reasonably requested by Term Loan Agent and/or Purchasing Term Loan Secured Parties to assign and transfer any Collateral, together with any and all rights under deposit account control agreements and collateral access agreements related to Collateral, to the applicable successor Agent under the ABL Documents.

 

7.4      Payment of Purchase Price .

 

(a)   Upon the date of such purchase and sale, the Purchasing Term Loan Secured Parties shall (i) pay to ABL Agent for the account of the ABL Secured Parties as the purchase price therefor the full amount of all of the ABL Debt then outstanding and unpaid (including principal, interest, fees and expenses, and including reasonable attorneys’ fees and legal expenses), (ii) furnish cash collateral to ABL Agent in such amounts as are required by the ABL Documents in connection with any issued and outstanding letters of credit, banker’s acceptances or similar or related instruments issued under the ABL Documents (but not in any event in an amount greater than one hundred three percent (103%) percent of the aggregate undrawn face amount of such letters of credit, banker’s acceptances and similar or related instruments, other than obligations with respect to the foregoing denominated in a currency other than US Dollars, in which case one hundred fifteen percent (115%) of the applicable amount), Bank Product Obligations (or at the option of the ABL Secured Party to whom such Bank Product Obligations are owing, terminate the applicable Swap Contracts or cash management or other arrangements and make all payments pursuant thereto, as applicable), Commercial LC Facility Obligations and in respect of indemnification obligations of Grantors under the ABL Documents as to matters or circumstances known to ABL Secured Parties and disclosed in writing to Term Loan Agent (unless such disclosure is not permitted under applicable law) at the time of the purchase and sale which would reasonably be expected to result in any loss, cost, damage or expense (including reasonable attorneys’ fees and legal expenses) to ABL Secured Parties, and (iii) agree to indemnify and hold harmless the ABL Secured Parties from and against any loss, liability, claim, damage or expense (including reasonable fees and expenses of legal counsel) arising out of any claim asserted by a third party in respect of the ABL Debt as a direct result of any acts by Term Loan Agent or any other Term Loan Secured Party.

 

(b)   Such purchase price and cash collateral shall be remitted by wire transfer in federal funds to such bank account of ABL Agent as ABL Agent may designate in writing to Term Loan Agent for such purpose.  Interest shall be calculated to but excluding the Business Day on which such purchase and sale shall occur if the amounts so paid by the Purchasing Term

 

35



 

Loan Secured Parties to the bank account designated by ABL Agent are received in such bank account prior to 12:00 noon, New York City time and interest shall be calculated to and including such Business Day if the amounts so paid by the Purchasing Term Loan Secured Parties to the bank account designated by ABL Agent are received in such bank account later than 12:00 noon, New York City time.

 

7.5      Representations Upon Purchase and Sale .   Such purchase and sale shall be expressly made without representation or warranty of any kind by ABL Agent or any other ABL Secured Party as to the ABL Debt or otherwise and without recourse to the ABL Secured Parties; except , that , each ABL Secured Party that is transferring such ABL Debt shall represent and warrant, severally as to it: (a) the amount of the ABL Debt being purchased from it is as reflected in the books and records of such ABL Secured Party (but without representation or warranty as to the collectability, validity or enforceability thereof), (b) that such ABL Secured Party owns the ABL Debt being sold by it free and clear of any liens or encumbrances and (c) such ABL Secured Party has the right to assign the ABL Debt being sold by it and the assignment is duly authorized.

 

7.6      Notice from ABL Agent Prior to Enforcement Action .   In the absence of Exigent Circumstances, ABL Agent, for itself and on behalf of the ABL Secured Parties, agrees that it will give Term Loan Agent five (5) Business Days’ prior written notice of its intention to commence any foreclosure or other action to sell or otherwise realize upon the ABL Priority Collateral. In the event that during such five (5) Business Day period, Term Loan Agent shall send to ABL Agent the irrevocable notice of the Term Loan Secured Parties’ intention to exercise the purchase option given by the ABL Secured Parties to the Term Loan Secured Parties under this Section 7, the ABL Secured Parties shall not commence any foreclosure or other action to sell or otherwise realize upon the Collateral, provided , that , the purchase and sale with respect to the ABL Debt provided for herein shall have closed within five (5) Business Days after the receipt by ABL Agent of the irrevocable notice from Term Loan Agent.

 

Section 8.              ABL Lenders’ Purchase Option

 

8.1      Exercise of Option   On or after the occurrence and during the continuance of a Term Loan Event of Default and the acceleration of all of the Term Loan Debt or the commencement of an Insolvency Proceeding as to Grantors (each a “ ABL Purchase Event ”), one or more of the ABL Secured Parties (the “ Purchasing ABL Secured Parties ”) shall have the option, subject to Section 8.2, for a period of ten (10) Business Days after an ABL Purchase Event to purchase all (but not less than all) of the Term Loan Debt from the Term Loan Secured Parties and to assume all of the commitments and duties of the Term Loan Secured Parties.  Notice of the exercise of such option shall be sent by ABL Agent to Term Loan Agent within such ten (10) Business Day period and shall be irrevocable. The obligations of Term Loan Secured Parties hereunder to sell the Term Loan Debt owing to them are several and not joint and several.  Each Grantor irrevocably consents to such sale.

 

8.2      Pro Rata Offer .   The ABL Secured Parties agree, solely as among themselves, that upon the occurrence of any ABL Purchase Event, the ABL Agent shall send a notice to all ABL Secured Parties giving each ABL Secured Party the option to purchase at least its pro rata share (calculated based on the aggregate ABL Debt) of the Term Loan Debt.  No ABL Secured Party

 

36



 

shall be required to participate in any purchase offer hereunder, and a purchase offer may be made by any or all of the ABL Secured Parties, subject to the requirements of the preceding sentence.  The provisions of this Section 8.2 are intended solely for the benefit of the ABL Secured Parties and may be modified, amended or waived by them without the approval of any Grantor, any Term Loan Secured Party, or otherwise.

 

8.3      Purchase and Sale .   On the date specified by ABL Agent in such notice (which shall not be less than five (5) Business Days, nor more than ten (10) Business Days, after the receipt by Term Loan Agent of the notice from ABL Agent of its election to exercise such option), Term Loan Secured Parties shall, subject to any required approval of any court or other regulatory or governmental authority then in effect, if any, sell to such of the Purchasing ABL Secured Parties as are specified in the notice from ABL Agent of its election to exercise such option, and such Purchasing ABL Secured Parties shall purchase from Term Loan Secured Parties, all of the Term Loan Debt.  Notwithstanding anything to the contrary contained herein, in connection with any such purchase and sale, Term Loan Secured Parties shall retain all rights under the Term Loan Documents to be indemnified or held harmless by Grantors in accordance with the terms thereof.  In connection with any such purchase and sale, each Term Loan Secured Party and each Purchasing ABL Secured Party shall execute and deliver an assignment and acceptance agreement, in form reasonably acceptable to all parties thereto, pursuant to which, among other things, each Term Loan Lender shall assign to the Purchasing ABL Secured Parties such Term Loan Lender’s pro rata share of the commitments and Term Loan Debt.  Upon the consummation of such purchase and sale, Term Loan Agent shall resign as the “Collateral Agent” and Administrative Agent under the Term Loan Documents and upon the written request of ABL Agent, and at the expense of the Purchasing ABL Secured Parties, shall execute and deliver all such documents and instruments reasonably requested by ABL Agent and/or Purchasing ABL Secured Parties to assign and transfer any Collateral, together with any and all rights under deposit account control agreements and collateral access agreements related to Collateral, to the applicable successor Agent under the Term Loan Documents.

 

8.4      Payment of Purchase Price .

 

(a)   Upon the date of such purchase and sale, the Purchasing ABL Secured Parties shall (i) pay to Term Loan Agent for the account of the Term Loan Secured Parties as the purchase price therefor the full amount of all of the Term Loan Debt then outstanding and unpaid (including principal, interest, fees and expenses, and including reasonable attorneys’ fees and legal expenses), (ii) furnish cash collateral to Term Loan Agent in respect of indemnification obligations of Grantors under the Term Loan Documents as to matters or circumstances known to Term Loan Secured Parties and disclosed in writing to ABL Agent (unless such disclosure is not permitted under applicable law) at the time of the purchase and sale which would reasonably be expected to result in any loss, cost, damage or expense (including reasonable attorneys’ fees and legal expenses) to Term Loan Secured Parties and (iii) agree to indemnify and hold harmless the Term Loan Secured Parties from and against any loss, liability, claim, damage or expense (including reasonable fees and expenses of legal counsel) arising out of any claim asserted by a third party in respect of the Term Loan Debt as a direct result of any acts by ABL Agent or any other ABL Secured Party.

 

37



 

(b)   Such purchase price and cash collateral shall be remitted by wire transfer in federal funds to such bank account of Term Loan Agent as Term Loan Agent may designate in writing to ABL Agent for such purpose.  Interest shall be calculated to but excluding the Business Day on which such purchase and sale shall occur if the amounts so paid by the Purchasing ABL Secured Parties to the bank account designated by Term Loan Agent are received in such bank account prior to 12:00 noon, New York City time and interest shall be calculated to and including such Business Day if the amounts so paid by the Purchasing ABL Secured Parties to the bank account designated by Term Loan Agent are received in such bank account later than 12:00 noon, New York City time.

 

8.5      Representations Upon Purchase and Sale .   Such purchase and sale shall be expressly made without representation or warranty of any kind by Term Loan Agent or any Term Loan Secured Party as to the Term Loan Debt or otherwise and without recourse to the Term Loan Secured Parties; except , that , each Term Loan Secured Party that is transferring such Term Loan Debt shall represent and warrant, severally as to it: (a) the amount of the Term Loan Debt being purchased from it is as reflected in the books and records of such Term Loan Secured Party (but without representation or warranty as to the collectability, validity or enforceability thereof), (b) that such Term Loan Secured Party owns the Term Loan Debt being sold by it free and clear of any liens or encumbrances and (c) such Term Loan Secured Party has the right to assign the Term Loan Debt being sold by it and the assignment is duly authorized.

 

8.6      Notice from ABL Agent Prior to Enforcement Action .   In the absence of Exigent Circumstances, Term Loan Agent, for itself and on behalf of the Term Loan Secured Parties, agrees that it will give ABL Agent five (5) Business Days’ prior written notice of its intention to commence any foreclosure or other action to sell or otherwise realize upon the Term Loan Priority Collateral. In the event that during such five (5) Business Day period, ABL Agent shall send to Term Loan Agent the irrevocable notice of the ABL Secured Parties’ intention to exercise the purchase option given by the Term Loan Secured Parties to the ABL Secured Parties under this Section 8, the Term Loan Secured Parties shall not commence any foreclosure or other action to sell or otherwise realize upon the Collateral, provided , that , the purchase and sale with respect to the Term Loan Debt provided for herein shall have closed within five (5) Business Days after the receipt by Term Loan Agent of the irrevocable notice from ABL Agent.

 

Section 9.              Access and Use of Term Loan Priority Collateral

 

9.1      Access and Use Rights of ABL Agent .

 

(a)   In the event that Term Loan Agent shall acquire control or possession of any of the Term Loan Priority Collateral or shall, through the exercise of remedies under the Term Loan Documents or otherwise, sell any of the Term Loan Priority Collateral to any third party (a “ Third Party Purchaser ”), Term Loan Agent shall permit ABL Agent (or require as a condition of such sale to the Third Party Purchaser that the Third Party Purchaser agree to permit the ABL Agent), at ABL Agent’s option and in accordance with applicable law and subject to the rights of any landlords under any real property leases, and at the expense of the ABL Secured Parties: (i) to enter and use any or all of the Term Loan Priority Collateral under such control or possession (or sold to a Third Party Purchaser) consisting of real property and the improvements, structures, buildings thereon and all related rights during normal business hours in order to inspect, remove

 

38



 

or take any action with respect to the ABL Priority Collateral or to enforce ABL Agent’s rights with respect thereto, including, but not limited to, the examination and removal of ABL Priority Collateral and the examination and duplication of the books and records of any Grantor related to the ABL Priority Collateral, or to otherwise handle, deliver, ship, transport, deal with or dispose of any ABL Priority Collateral, such right to include, without limiting the generality of the foregoing, the right to conduct one or more public or private sales or auctions thereon and (ii) use any of the Term Loan Priority Collateral under such control or possession (or sold to a Third Party Purchaser) consisting of equipment (including computers or other data processing equipment related to the storage or processing of records, documents or files pertaining to the ABL Priority Collateral) to handle, deal with or dispose of any ABL Priority Collateral pursuant to the rights of ABL Agent and the other ABL Secured Parties as set forth in the ABL Documents, the UCC of any applicable jurisdiction and other applicable law.

 

(b)   The rights of ABL Agent set forth in clause (a) above as to the Term Loan Priority Collateral shall be irrevocable and without charge and shall continue at ABL Agent’s option for a period of one hundred eighty (180) days as to any such Term Loan Priority Collateral from the earlier of (i) the date on which Term Loan Agent has notified ABL Agent that Term Loan Agent has acquired possession or control of such Term Loan Priority Collateral and (ii) the date of commencement by the ABL Agent of enforcement actions against the ABL Priority Collateral using such Term Loan Priority Collateral.  The time periods set forth herein shall be tolled during the pendency of any proceeding of a Grantor under the Bankruptcy Code or any other Bankruptcy Law or other proceedings if and for so long as ABL Agent is effectively stayed from enforcing its rights against the ABL Priority Collateral.  In no event shall Term Loan Agent or any of the Term Loan Secured Parties take any action to interfere, limit or restrict the rights of ABL Agent set forth above or the exercise of such rights by ABL Agent pursuant to this Section 9.1 prior to the expiration of such periods.

 

(c)   Nothing contained in this Agreement shall restrict the Disposition by Term Loan Agent of any Term Loan Priority Collateral prior to the expiration of such one hundred eighty (180) day period, subject to the provisions above regarding a Third Party Purchaser.

 

9.2      Responsibilities of ABL Secured Parties .   The ABL Agent shall repair at its expense any physical damage to any Term Loan Priority Collateral used by ABL Agent as a direct result of the actions of the ABL Agent (or its representatives) in exercising its access and use rights as provided in Section 9.1 above (but shall not be responsible for any diminution in value of the Term Loan Priority Collateral resulting from the ABL Agent so dealing with any ABL Priority Collateral so long as the ABL Agent and the other ABL Secured Parties leave the Term Loan Priority Collateral in the same condition as it was prior to their actions with respect to the ABL Priority Collateral, except for ordinary wear and tear resulting from the actions of the ABL Agent and the other ABL Secured Parties contemplated by, and for the time periods specified under, Section 9.1).  The ABL Agent and the other ABL Secured Parties shall indemnify and hold harmless the Term Loan Agent and the other Term Loan Secured Parties from any claim, loss, damage, cost or liability arising from any claim by a third party against Term Loan Agent and the other Term Loan Secured Parties as a direct result of any action by ABL Agent (or its representatives).  The Term Loan Agent shall not have any responsibility or liability for the acts or omissions of ABL Agent or any of the other ABL Secured Parties, and ABL Agent and the other ABL Secured Parties shall not have any responsibility or liability for the acts or omissions

 

39



 

of Term Loan Agent, in each case arising in connection with such other Person’s use and/or occupancy of any of the Term Loan Priority Collateral.  If the ABL Agent conducts a public auction or private sale of the ABL Priority Collateral at any of the real property constituting Term Loan Priority Collateral, the ABL Agent shall provide the Term Loan Agent with reasonable advance notice and use reasonable efforts to hold such auction or sale in a manner that would not unduly disrupt the Term Loan Agent’s use of such real property.  Without limiting the rights granted herein, to the extent such rights have been exercised under this Agreement, the ABL Agent and the other ABL Secured Parties shall reasonably cooperate with the Term Loan Agent and the other Term Loan Secured Parties in connection with any Disposition efforts made by the Term Loan Secured Parties with respect to the Term Loan Priority Collateral.

 

9.3      Grantor Consent .   The Grantors consent to the performance by the Term Loan Agent of the obligations set forth in Section 9.1 and acknowledge and agree that neither the Term Loan Agent (nor any other Term Loan Secured Party) shall ever by accountable or liable for any action taken or omitted to be taken by the ABL Agent or any other ABL Secured Party or its or any of their officers, employees, agents, successors, assigns or representatives in connection therewith or incidental thereto or in consequence thereof.

 

Section 10.            Reliance; Waivers; Etc .

 

10.1   Reliance .

 

(a)   The consent by the ABL Secured Parties to the execution and delivery of the Term Loan Documents and the grant to Term Loan Agent on behalf of the Term Loan Secured Parties of a Lien on the Collateral and all loans and other extensions of credit made or deemed made on and after the date hereof by the ABL Secured Parties to any Grantor shall be deemed to have been given and made in reliance upon this Agreement.

 

(b)   The consent by the Term Loan Secured Parties to the execution and delivery of the ABL Documents and the grant to ABL Agent on behalf of the ABL Secured Parties of a Lien on the Collateral and all loans and other extensions of credit made or deemed made on and after the date hereof by the Term Loan Secured Parties to any Grantor shall be deemed to have been given and made in reliance upon this Agreement.

 

10.2   No Warranties or Liability .

 

(a)   Term Loan Agent, for itself and on behalf of the other Term Loan Secured Parties, acknowledges and agrees that each of ABL Agent and the other ABL Secured Parties have made no express or implied representation or warranty, including with respect to the execution, validity, legality, completeness, collectability or enforceability of any of the ABL Documents, the ownership of any Collateral or the perfection or priority of any Liens thereon. Term Loan Agent agrees, for itself and on behalf of the other Term Loan Secured Parties, that the ABL Secured Parties will be entitled to manage and supervise their respective loans and extensions of credit under the ABL Documents in accordance with law and as they may otherwise, in their sole discretion, deem appropriate, and the ABL Secured Parties may manage their loans and extensions of credit without regard to any rights or interests that Term Loan

 

40



 

Agent or any of the other Term Loan Secured Parties have in the Collateral or otherwise, except as otherwise provided in this Agreement. Neither ABL Agent nor any of the other ABL Secured Parties shall have any duty to Term Loan Agent or any of the other Term Loan Secured Parties to act or refrain from acting in a manner which allows, or results in, the occurrence or continuance of an event of default or default under any agreements with any Grantor (including the Term Loan Documents), regardless of any knowledge thereof which they may have or with which they may be charged.

 

(b)   ABL Agent, for itself and on behalf of the other ABL Secured Parties, acknowledges and agrees that each of Term Loan Agent and the other Term Loan Secured Parties have made no express or implied representation or warranty, including with respect to the execution, validity, legality, completeness, collectability or enforceability of any of the Term Loan Documents, the ownership of any Collateral or the perfection or priority of any Liens thereon. ABL Agent agrees, for itself and on behalf of the other ABL Secured Parties, that the Term Loan Secured Parties will be entitled to manage and supervise their respective loans and extensions of credit under the Term Loan Documents in accordance with law and as they may otherwise, in their sole discretion, deem appropriate, and the Term Loan Secured Parties may manage their loans and extensions of credit without regard to any rights or interests that ABL Agent or any of the other ABL Secured Parties have in the Collateral or otherwise, except as otherwise provided in this Agreement.  Neither Term Loan Agent nor any of the other Term Loan Secured Parties shall have any duty to ABL Agent or any of the other ABL Secured Parties to act or refrain from acting in a manner which allows, or results in, the occurrence or continuance of an event of default or default under any agreements with any Grantor (including the ABL Documents), regardless of any knowledge thereof which they may have or with which they may be charged.

 

10.3   No Waiver of Lien Priorities .

 

(a)   No right of ABL Agent or any of the other ABL Secured Parties to enforce any provision of this Agreement or any of the ABL Documents shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of any Grantor or by any act or failure to act by ABL Agent or any other ABL Secured Party, or by any noncompliance by any Person with the terms, provisions and covenants of this Agreement, any of the ABL Documents or any of the Term Loan Documents, regardless of any knowledge thereof which ABL Agent or any of the other ABL Secured Parties may have or be otherwise charged with.

 

(b)   No right of Term Loan Agent or any of the other Term Loan Secured Parties to enforce any provision of this Agreement or any of the Term Loan Documents shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of any Grantor or by any act or failure to act by Term Loan Agent or any other Term Loan Secured Party, or by any noncompliance by any Person with the terms, provisions and covenants of this Agreement, any of the Term Loan Documents or any of the ABL Documents, regardless of any knowledge thereof which Term Loan Agent or any of the other Term Loan Secured Parties may have or be otherwise charged with.

 

(c)   Term Loan Agent agrees not to assert and hereby waives, to the fullest extent permitted by law, any right to demand, request, plead or otherwise assert or otherwise claim the

 

41



 

benefit of, any marshalling, appraisal, valuation or other similar right that may otherwise be available under applicable law with respect to the Collateral or any other similar rights a junior secured creditor may have under applicable law.

 

(d)   ABL Agent agrees not to assert and hereby waives, to the fullest extent permitted by law, any right to demand, request, plead or otherwise assert or otherwise claim the benefit of, any marshalling, appraisal, valuation or other similar right that may otherwise be available under applicable law with respect to the Collateral or any other similar rights a junior secured creditor may have under applicable law.

 

10.4   Obligations Unconditional .   All rights, interests, agreements and obligations of the ABL Agent, the ABL Secured Parties, the Term Loan Agent and the Term Loan Secured Parties hereunder shall remain in full force and effect irrespective of:

 

(a)   any lack of validity or enforceability of any ABL Document or Term Loan Document;

 

(b)   any change in the time, manner or place of payment of, or in any other terms of, all or any of the ABL Debt or Term Loan Debt, or any amendment or waiver or other modification, whether by course of conduct or otherwise, of the terms of any ABL Document or Term Loan Document;

 

(c)   any exchange of any security interest in any Collateral or any other collateral or any amendment, waiver or other modification, whether in writing or by course of conduct or otherwise, of all or any of the ABL Debt or Term Loan Debt or any guarantee thereof;

 

(d)   the commencement of any Insolvency Proceeding in respect of any Grantor; or

 

(e)   any other circumstance that otherwise might constitute a defense available to (i) any Grantor (other than the Discharge of ABL Debt or Discharge of Term Loan Debt, as applicable, subject to Sections 6.9 and 11.3) or (ii) a junior lienholder.

 

10.5   Amendments to ABL Documents .   The ABL Documents may be amended, supplemented or otherwise modified in accordance with their terms and the ABL Agreement may be refinanced, in each case, without notice to, or the consent of the Term Loan Agent or the other Term Loan Secured Parties, all without affecting the lien subordination or other provisions set forth in this Agreement (even if any right of subrogation or other right or remedy of Term Loan Agent or any other Term Loan Secured Party is affected, impaired or extinguished thereby); provided , that :

 

(a)   the holders of the ABL Debt as so Refinanced bind themselves in a writing addressed to the Term Loan Agent to the terms of this Agreement, and

 

(b)   without the prior written consent of the Term Loan Agent, any such amendment, supplement, modification or refinancing shall not:

 

(i)        increase the maximum amount of the aggregate commitments under the ABL Agreement to an amount greater than the ABL Cap; or

 

42



 

(ii)       increase the “Applicable Margin” or similar component of the interest rate by more than three percent (3%) per annum (excluding increases resulting from the accrual of interest at the default rate or changes in the underlying rate) or increase the amount, or frequency of payment, of any recurring fees provided for in the ABL Agreement;

 

(iii)      shorten the scheduled maturity of the ABL Agreement (other than in connection with an ABL Event of Default or the payment in full in cash of the ABL Debt prior to the scheduled maturity thereof or by means of any other shortening of the scheduled maturity as provided for under the ABL Agreement as in effect on the date hereof) to a date prior to the scheduled maturity date of the ABL Agreement as in effect on the date hereof or pursuant to any refinancing thereof;

 

(iv)     modify (or have the effect of a modification of) the prepayment provisions of the ABL Agreement that require mandatory prepayments in a manner that increases the amount or frequency of such required prepayments, or requires additional mandatory prepayments, limits the rights of Grantors with respect thereto or changes the order and manner in which such prepayments are applied against the ABL Debt, or changes to earlier dates any scheduled dates for the payment of principal or interest with respect to the ABL Debt;

 

(v)      add or modify any restriction on payment or prepayment of the Term Loan Debt;

 

(vi)     add any restriction on amendments, waivers or other modifications to the Term Loan Documents;

 

(vii)    contravene the provisions of this Agreement; or

 

(viii)   with respect to the Credit Card Notifications (as defined in the ABL Agreement), amend or modify such Credit Card Notifications if such amendment and modification is or could be expected to be materially adverse to the interests of the Term Loan Agent.

 

10.6   Amendments to Term Loan Documents .   The Term Loan Documents may be amended, supplemented or otherwise modified in accordance with their terms and the Term Loan Agreement may be refinanced, in each case, without notice to, or the consent of the ABL Agent or the other ABL Secured Parties, all without affecting the lien subordination or other provisions set forth in the Intercreditor Agreement (even if any right of subrogation or other right or remedy of ABL Agent or any other ABL Secured Party is affected, impaired or extinguished thereby); provided , that ,

 

(a)   the holders of the Term Loan Debt as so Refinanced bind themselves in a writing addressed to the ABL Agent to the terms of this Agreement, and

 

(b)   without the prior written consent of the ABL Agent, any such amendment, supplement, modification or refinancing shall not:

 

(i)        increase the sum of the then outstanding aggregate principal amount of the loans under the Term Loan Agreement in excess of the Term Loan Cap;

 

43



 

(ii)       increase the “Applicable Margin” or similar component of the interest rate by more than three percent (3%) per annum (excluding increases resulting from the accrual of interest at the default rate or changes in the underlying rate) or increase the amount, or frequency of payment, of any recurring fees provided for in the Term Loan Agreement;

 

(iii)      shorten the scheduled maturity of the Term Loan Agreement (other than in connection with a Term Loan Event of Default or the payment in full in cash of the Term Loan Debt prior to the scheduled maturity thereof or by means of any other shortening of the scheduled maturity as provided for under the Term Loan Agreement as in effect on the date hereof) to a date prior to the scheduled maturity date of the Term Loan Agreement as in effect on the date hereof or pursuant to any refinancing thereof;

 

(iv)     modify (or have the effect of a modification of) the prepayment provisions of the Term Loan Agreement that require mandatory prepayments in a manner that increases the amount or frequency of such required prepayments, or requires additional mandatory prepayments, limits the rights of Grantors with respect thereto or changes the order and manner in which such prepayments are applied against the Term Loan Debt, or changes to earlier dates any scheduled dates for the payment of principal or interest with respect to the Term Loan Debt;

 

(v)      add or modify any restriction on payment or prepayment of the ABL Debt;

 

(vi)     add any restriction on amendments, waivers or other modifications to the ABL Documents; or

 

(vii)    contravene the provisions of this Agreement.

 

Section 11.            Miscellaneous

 

11.1   Conflicts .   In the event of any conflict between the provisions of this Agreement and the provisions of the ABL Documents or the Term Loan Documents, the provisions of this Agreement shall govern.

 

11.2   Continuing Nature of this Agreement; Severabili ty.   This Agreement shall continue to be effective until the first to occur of (a) the Discharge of ABL Debt and the payment in full in cash of the Excess ABL Debt or (b) the Discharge of Term Loan Debt and the payment in full in cash of the Excess Term Loan Debt.  This is a continuing agreement of lien subordination and the Secured Parties may continue, at any time and without notice to the other Secured Parties, to extend credit and other financial accommodations and lend monies to or for the benefit of any Grantor constituting ABL Debt and/or Term Loan Debt (as applicable) in reliance hereof.  Each of Term Loan Agent, for itself and on behalf of the Term Loan Secured Parties, and ABL Agent, for itself and on behalf of the ABL Secured Parties, hereby waives any right it may have under applicable law to revoke this Agreement or any of the provisions of this Agreement.  The terms of this Agreement shall survive, and shall continue in full force and effect, in any Insolvency Proceeding. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall not invalidate the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

 

44



 

11.3   Refinancing .

 

(a)   Refinancing Permitted .  As an agreement among the Secured Parties only and without prejudice to any rights of the Secured Parties under the ABL Documents and Term Loan Documents, as applicable, and subject to the provisions of Sections 10.5 and 10.6 of this Agreement, the ABL Debt and/or Term Loan Debt may be refinanced in their entirety if the holders of such indebtedness, or a duly authorized agent on their behalf, agree in writing to be bound by the terms of this Agreement.  ABL Agent, for itself and on behalf of the ABL Secured Parties, and Term Loan Agent, for itself and on behalf of the Term Loan Secured Parties, agree, in connection with any refinancing of the ABL Debt and/or the Term Loan Debt permitted by this Section 11.3(a), promptly to enter into such documents and agreements (including amendments or supplements to this Agreement) as Grantors may reasonably request to reflect such refinancing; provided , that , the rights and powers of the Secured Parties contemplated hereby shall not be affected thereby.

 

(b)   Effect of Refinancing .

 

(i)        If substantially contemporaneously with the Discharge of ABL Debt, Grantors refinance indebtedness outstanding under the ABL Documents in accordance with the provisions of Section 11.3(a), then after written notice to Term Loan Agent, (A) the indebtedness and other obligations arising pursuant to such refinancing of the then outstanding indebtedness under the ABL Documents shall automatically be treated as ABL Debt for all purposes of this Agreement, including for purposes of the Lien priorities and rights in respect of Collateral set forth herein, (B) the credit agreement and the other loan documents evidencing such new indebtedness shall automatically be treated as the ABL Agreement and the ABL Documents for all purposes of this Agreement and (C) the agent under the new ABL Agreement shall be deemed to be ABL Agent for all purposes of this Agreement.  Upon receipt of notice of such refinancing (including the identity of the new ABL Agent), Term Loan Agent shall promptly enter into such documents and agreements (including amendments or supplements to this Agreement) as Grantors or the new ABL Agent may reasonably request in order to provide to the new ABL Agent the rights of ABL Agent contemplated hereby.

 

(ii)       If substantially contemporaneously with the Discharge of Term Loan Debt, Grantors refinance indebtedness outstanding under the Term Loan Documents in accordance with the provisions of Section 11.3(a), then after written notice to ABL Agent, (A) the indebtedness and other obligations arising pursuant to such refinancing of the then outstanding indebtedness under the Term Loan Documents shall automatically be treated as Term Loan Debt for all purposes of this Agreement, including for purposes of the Lien priorities and rights in respect of Collateral set forth herein, (B) the credit agreement and the other loan documents evidencing such new indebtedness shall automatically be treated as the Term Loan Agreement and the Term Loan Documents for all purposes of this Agreement and (C) the agent under the new Term Loan Agreement shall be deemed to be Term Loan Agent for all purposes of this Agreement.  Upon receipt of notice of such refinancing (including the identity of the new Term Loan Agent), ABL Agent shall promptly enter into such documents and agreements (including amendments or supplements to this Agreement) as Grantors or the new Term Loan Agent may reasonably request in order to provide to the new Term Loan Agent the rights of Term Loan Agent contemplated hereby.

 

45



 

11.4   Amendments; Waivers .   No amendment or modification of any of the provisions of this Agreement by Term Loan Agent or ABL Agent shall be deemed to be made unless the same shall be in writing signed on behalf of both of the Term Loan Agent and the ABL Agent (as directed pursuant to the applicable Term Loan Documents or ABL Documents, as the case may be).  No waiver of any of the provisions of this Agreement shall be deemed to be made unless the same shall be in writing signed by the party making the same or its authorized agent and each waiver, if any, shall be a waiver only with respect to the specific instance involved and shall in no way impair the rights of the parties making such waiver or the obligations of the other parties to such party in any other respect or at any other time. The Grantors shall not have any right to consent to or approve any amendment, modification or waiver of any provision of this Agreement except to the extent their rights or obligations are directly adversely affected.

 

11.5   Subrogation .

 

(a)   Term Loan Agent, for itself and on behalf of the Term Loan Secured Parties, hereby waives any rights of subrogation it may acquire as a result of any payment hereunder until the Discharge of ABL Debt has occurred.

 

(b)   ABL Agent, for itself and on behalf of the ABL Secured Parties, hereby waives any rights of subrogation it may acquire as a result of any payment hereunder until the Discharge of Term Loan Debt has occurred.

 

11.6   Notices .   All notices to the Term Loan Secured Parties and the ABL Secured Parties permitted or required under this Agreement may be sent to Term Loan Agent and ABL Agent, respectively. Unless otherwise specifically provided herein, any notice or other communication herein required or permitted to be given shall be in writing and may be personally served, electronically mailed or sent by courier service, facsimile transmission or U.S. mail and shall be deemed to have been given when delivered in person or by courier service, upon receipt of a facsimile transmission or electronic mail or four (4) Business Days after deposit in the U.S. mail (registered or certified, with postage prepaid and properly addressed). For the purposes hereof, the addresses of the parties hereto shall be as set forth below, or, as to each party, at such other address as may be designated by such party in a written notice to all of the other parties.

 

ABL Agent:

 

Wells Fargo Bank, National Association

 

 

One Boston Place, 19th Floor

 

 

Boston, Massachusetts 02108

 

 

Attn: Portfolio Manager - SUPERVALU

 

 

Fax No.: (866) 617-3988

 

46



 

Term Loan Agent:

 

Goldman Sachs Bank USA

 

 

c/o Goldman Sachs Group, Inc.

 

 

6031 Connection Drive

 

 

Irving, Texas 75039

 

 

Attn: Ken Moua

 

 

Telephone: 972-368-2746

 

 

Email: gs-sbdagency-borrowernotices@ny.email.gs.com

 

11.7   Further Assurances .

 

(a)   Term Loan Agent agrees that it shall, for itself and on behalf of the Term Loan Secured Parties, take such further action and shall execute and deliver to ABL Agent such additional documents and instruments (in recordable form, if requested) as ABL Agent may reasonably request to effectuate the terms of and the lien priorities contemplated by this Agreement.

 

(b)   ABL Agent agrees that it shall, for itself and on behalf of the ABL Secured Parties, take such further action and shall execute and deliver to Term Loan Agent such additional documents and instruments (in recordable form, if requested) as Term Loan Agent may reasonably request to effectuate the terms of and the lien priorities contemplated by this Agreement.

 

11.8   Consent to Jurisdiction; Waiver of Jury Trial .   EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY CONSENTS TO THE EXCLUSIVE JURISDICTION OF THE SUPREME COURT OF THE STATE OF NEW YORK IN NEW YORK COUNTY AND THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND CONSENT THAT ALL SERVICE OF PROCESS MAY BE MADE BY REGISTERED MAIL DIRECTED TO SUCH PARTY AS PROVIDED IN SECTION 11.6 ABOVE FOR SUCH PARTY.  THE PARTIES HERETO WAIVE ANY OBJECTION TO ANY ACTION INSTITUTED HEREUNDER BASED ON FORUM NON CONVENIENS, AND ANY OBJECTION TO THE VENUE OF ANY ACTION INSTITUTED HEREUNDER.  EACH OF THE PARTIES HERETO WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING, VERBAL OR WRITTEN STATEMENT OR ACTION OF ANY PARTY HERETO.  EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.  NOTHING IN THIS AGREEMENT SHALL AFFECT ANY RIGHT THAT THE TERM LOAN AGENT, ANY OTHER TERM LOAN SECURED PARTY, THE ABL AGENT OR ANY OTHER ABL SECURED PARTY MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AGAINST ANY GRANTOR OR ANY OF ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.

 

11.9   Governing Law .   The validity, construction and effect of this Agreement shall be governed by the internal laws of the State of New York but excluding any principles of conflicts

 

47



 

of law or any other rule of law that would result in the application of the law of any jurisdiction other than the laws of the State of New York.

 

11.10 Binding on Successors and Assigns .   This Agreement shall be binding upon ABL Agent, the other ABL Secured Parties, Term Loan Agent, the other Term Loan Secured Parties, Grantors and their respective permitted successors and assigns.

 

11.11 Specific Performance .

 

(a)   ABL Agent may demand specific performance of this Agreement. Term Loan Agent, for itself and on behalf of the Term Loan Secured Parties, hereby irrevocably waives any defense based on the adequacy of a remedy at law and any other defense which might be asserted to bar the remedy of specific performance in any action which may be brought by ABL Agent.

 

(b)   Term Loan Agent may demand specific performance of this Agreement. ABL Agent, for itself and on behalf of the ABL Secured Parties, hereby irrevocably waives any defense based on the adequacy of a remedy at law and any other defense which might be asserted to bar the remedy of specific performance in any action which may be brought by Term Loan Agent.

 

11.12 Section Titles; Time Periods .   The section titles contained in this Agreement are and shall be without substantive meaning or content of any kind whatsoever and are not a part of this Agreement.

 

11.13 Counterparts .   This Agreement may be executed in one or more counterparts, each of which shall be an original and all of which shall together constitute one and the same document.  Delivery of an executed counterpart of a signature page of this Agreement or any document or instrument delivered in connection herewith by facsimile transmission or other electronic transmission (in pdf or tif format) shall be effective as delivery of a manually executed counterpart of this Agreement or such other document or instrument, as applicable.

 

11.14 Authorization .   By its signature, each Person executing this Agreement on behalf of a party hereto represents and warrants to the other parties hereto that it is duly authorized to execute this Agreement.

 

11.15 No Third Party Beneficiaries .   This Agreement and the rights and benefits hereof shall inure to the benefit of each of the parties hereto and their respective successors and assigns and shall inure to the benefit of each of the holders of ABL Debt and Term Loan Debt. No other Person shall have or be entitled to assert rights or benefits hereunder.

 

11.16 Additional Grantors .   Grantors shall cause each of their Subsidiaries that becomes a Grantor to acknowledge and consent to the terms of this Agreement by causing such Subsidiary to execute and deliver to the parties hereto a Grantor Joinder, substantially in the form of Annex C hereto, pursuant to which such Subsidiary shall agree to be bound by the terms of the attached Acknowledgment and Agreement to the same extent as if it had executed and delivered same as of the date hereof.

 

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

 

48



 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

 

 

ABL AGENT

TERM LOAN AGENT

 

 

WELLS FARGO BANK, NATIONAL
ASSOCIATION
, as ABL Agent

GOLDMAN SACHS BANK USA , as Term
Loan Agent

 

 

 

 

 

By:

 

 

By:

 

Name:

Joseph Burt

 

Name:

 

Title:

Director

Title:

Authorized Signatory

 

Signature Page to Intercreditor Agreement

 



 

ACKNOWLEDGMENT AND AGREEMENT

 

Each of the undersigned hereby acknowledges and agrees to the terms and provisions of the Intercreditor Agreement among Wells Fargo Bank, National Association, in its capacity as administrative and collateral agent for the ABL Secured Parties (in such capacity, the “ABL Agent”) and Goldman Sachs Bank USA, in its capacity as collateral agent for the Term Loan Secured Parties (in such capacity, “Term Loan Agent”), of which this Acknowledgment and Agreement is a part.  By its signature below, the undersigned agrees that it will, together with its successors and assigns, be bound by the provisions hereof to the extent they purport to bind any Grantor.

 

Each of the undersigned agrees that (a) if either the ABL Agent or the Term Loan Agent holds Collateral it does so as bailee (under the UCC) for the other and is hereby authorized to and may turn over to such other Secured Party upon request therefor any such Collateral, after all obligations and indebtedness of the undersigned to the bailee Secured Party have been fully paid and performed, or as otherwise provided in the Intercreditor Agreement, and (b) it will execute any and all further documents, agreements and instruments, and take all such further actions, that may be required under any applicable Law, or which any Secured Party may reasonably request, to carry out the terms and conditions of the foregoing Intercreditor Agreement.  Each of the undersigned agrees to provide to the Term Loan Agent and the ABL Agent a copy of each Grantor Joinder hereto executed and delivered pursuant to Section 11.16 of the Intercreditor Agreement.

 

Each of the undersigned acknowledges and agrees that, although it may sign this Agreement, it is not a party hereto and does not and will not receive any right, benefit, priority or interest under or because of the existence of the foregoing Agreement, a breach by the undersigned of any of its obligations under the Intercreditor Agreement or this Acknowledgment and Agreement will constitute an Event of Default under the terms of each of the ABL Agreement and the Term Loan Agreement.

 

[SIGNATURE PAGE FOLLOWS]

 

1



 

 

GRANTORS

 

 

 

SUPERVALU INC.

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

SUPERVALU PHARMACIES, INC.

 

W. NEWELL & CO., LLC

 

ADVANTAGE LOGISTICS - SOUTHEAST, INC.

 

SUPERVALU HOLDINGS, INC.

 

SUPERVALU HOLDINGS - PA, LLC

 

MORAN FOODS, LLC

 

SAVE-A-LOT TYLER GROUP, LLC

 

SHOP ‘N SAVE WAREHOUSE FOODS, INC.

 

SHOP ‘N SAVE ST. LOUIS, INC.

 

RICHFOOD, INC.

 

SHOPPERS FOOD WAREHOUSE CORP.

 

FF ACQUISITION, L.L.C.

 

FOODARAMA LLC

 

CHAMPLIN 2005 L.L.C.

 

RICHFOOD HOLDINGS, INC.

 

SUPER RITE FOODS, INC.

 

SUPERVALU TTSJ, INC.

 

SVH REALTY, INC.

 

SUPERMARKET OPERATORS OF AMERICA, INC.

 

SFW HOLDING CORP

 

SFW LICENSING CORP.

 

SCOTT’S FOOD STORES, INC.

 

BUTSON’S ENTERPRISES, INC.

 

RICHFOOD PROCUREMENT, LLC

 

EASTERN REGION MANAGEMENT CORPORATION

 

SUPERVALU TRANSPORTATION INC.

 

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

Annex A-1



 

Annex A
to
Intercreditor Agreement

 

ABL Priority Collateral

 

ABL Priority Collateral means (i)  accounts and other receivables (except to the extent constituting identifiable proceeds of Term Loan Priority Collateral), (ii) chattel paper (except to the extent constituting identifiable proceeds of Term Loan Priority Collateral), (iii) deposit accounts (and all cash, checks and other negotiable instruments, funds and other evidences of payment held therein, except to the extent constituting identifiable proceeds of Term Loan Priority Collateral), other than deposit accounts (and all cash, checks and other negotiable instruments, funds and other evidences of payment held therein) used exclusively for identifiable proceeds of Term Loan Priority Collateral, (iv) all inventory, (v) all prescription files and related materials, (vi) to the extent evidencing, governing, securing or otherwise reasonably related to any of the foregoing and any of the other assets constituting ABL Priority Collateral, all documents, general intangibles (including, but not limited to, trademarks, patents, copyrights and other intellectual property, but only to the extent necessary or desirable to sell, transfer or otherwise realize on any of the other ABL Priority Collateral, and excluding any other intellectual property), instruments, investment property, commercial tort claims, letters of credit, supporting obligations and letter of credit rights, provided , that , if any of the foregoing also evidence, govern, secure or otherwise reasonably relate to Term Loan Priority Collateral only the portion evidencing, governing, securing or primarily relating to ABL Priority Collateral shall constitute ABL Priority Collateral, (vii) all books, records and documents related to the foregoing (including databases, customer lists and other records, whether tangible or electronic, which contain any information relating to any of the foregoing); provided , that , if any of the foregoing also relate to Term Loan Priority Collateral only the portion primarily relating to ABL Priority Collateral shall constitute ABL Priority Collateral and (viii) all proceeds and products of any or all of the foregoing in whatever form received, including proceeds of business interruption and other insurance and claims against third parties.

 

Extraordinary receipts solely to the extent constituting proceeds of judgments relating to any of the property referred to in clauses (i) — (viii) above, insurance proceeds and condemnation awards in respect of any such property, indemnity payments in respect of any such property and purchase price adjustments in connection with any such property shall constitute ABL Priority Collateral; it being understood and agreed that to the extent such receipts constitute proceeds of both ABL Priority Collateral and Term Loan Priority Collateral, only that portion attributable to ABL Priority Collateral shall constitute ABL Priority Collateral.  Proceeds of Excluded Assets (as defined in the ABL Documents as in effect on the date hereof) that would otherwise constitute ABL Priority Collateral shall be deemed ABL Priority Collateral.

 

Annex A-2



 

Annex B
to
Intercreditor Agreement

 

Term Loan Priority Collateral

 

Term Loan Priority Collateral means all Collateral other than the ABL Priority Collateral, including, without limitation, (i) the Real Estate Collateral Properties (as defined in the Term Loan Agreement as in effect on the date hereof), (ii) all equipment and fixtures located on the Real Estate Collateral Properties and the Material Related Collateral Locations, (iii) all deposit accounts (and all cash, checks and other negotiable instruments, funds and other evidences of payment held therein) used exclusively for identifiable proceeds of Term Loan Priority Collateral, (iv) all existing and after-acquired Equity Interests (as defined in the Term Loan Agreement as in effect on the date hereof) in Moran Foods, LLC owned by the Grantors, (v) all intellectual property other than the intellectual property that is ABL Priority Collateral, (vi) the Grantors’ rights under the Acquisition Agreement (as defined in the Term Loan Agreement as in effect on the date hereof), to the extent permitted under the terms of the Acquisition Agreement, and the escrow agreement (the “Escrow Agreement”) contemplated thereby, (vii) to the extent evidencing, securing, governing, or otherwise reasonably related to the assets described in the foregoing and any of the other assets constituting Term Loan Priority Collateral, all existing and after-acquired general intangibles, investment property, documents, instruments, supporting obligations, and letters of credit and letter of credit rights of the Grantors (except that if any of the foregoing also evidence, secure, govern or otherwise reasonably relate to the ABL Priority Collateral, only the portion evidencing securing, governing or otherwise primarily relating to the Term Loan Priority Collateral shall constitute Term Loan Priority Collateral), (viii) all existing and after-acquired books, records and documents related to the foregoing (including databases, customer lists and other records, whether tangible or electronic, which contain any information relating to any of the foregoing) of the Grantors (except that if any of the foregoing also evidence, secure, govern or otherwise reasonably relate to the ABL Priority Collateral, only the portion evidencing securing, governing or otherwise primarily relating to the Term Loan Priority Collateral shall constitute Term Loan Priority Collateral), and (ix) all proceeds and products of any or all of the foregoing property in whatever form received, including proceeds of insurance and claims against third parties related to the foregoing.

 

Extraordinary receipts solely to the extent constituting proceeds of judgments relating to any of the property referred to in clauses (i) — (ix) above, insurance proceeds and condemnation awards in respect of any such property, indemnity payments in respect of any such property and purchase price adjustments in connection with any such property shall constitute Term Loan Priority Collateral; it being understood and agreed that to the extent such receipts constitute proceeds of both ABL Priority Collateral and Term Loan Priority Collateral, only that portion attributable to Term Loan Priority Collateral shall constitute Term Loan Priority Collateral.  Proceeds of Excluded Assets (as defined in the Term Loan Documents as in effect on the date hereof) that would otherwise constitute Term Loan Priority Collateral shall be deemed Term Loan Priority Collateral.

 

Annex B-1



 

Annex C
to
Intercreditor Agreement

 

Form of Grantor Joinder

 

Reference is made to that certain Intercreditor Agreement, dated as of March 21, 2013 (as amended, amended and restated, renewed, extended, supplemented or otherwise modified from time to time in accordance with the terms thereof, the “Intercreditor Agreement”), among Wells Fargo Bank, National Association, in its capacity as administrative and collateral agent for the ABL Secured Parties (in such capacity, the “ABL Agent”) and Goldman Sachs Bank USA, in its capacity as administrative and collateral agent for the Term Loan Secured Parties (in such capacity, “Term Loan Agent”).  Capitalized terms used herein without definition shall have the meaning assigned thereto in the Intercreditor Agreement.

 

This Grantor Joinder, dated as of                     , 20     (this “Grantor Joinder”), is being delivered pursuant to Section 10.17 of the Intercreditor Agreement.

 

The undersigned,                     , a                      (the “Additional Grantor”), hereby agrees to become a party to the Intercreditor Agreement as a Grantor thereunder, for all purposes thereof on the terms set forth therein, and to be bound by the terms of the Intercreditor Agreement as fully as if the Additional Grantor had executed and delivered the Intercreditor Agreement as of the date thereof.

 

This Grantor Joinder may be executed in two or more counterparts, each of which shall constitute an original but all of which when taken together shall constitute one contract.

 

THIS GRANTOR JOINDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

 

The provisions of Section 10 of the Intercreditor Agreement shall apply with like effect to this Grantor Joinder.

 

[Signature Pages Follow]

 

Annex C-1



 

IN WITNESS WHEREOF, the Additional Grantor has caused this Grantor Joinder to be duly executed by its authorized representative as of the day and year first above written.

 

 

[ADDITIONAL GRANTOR]

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

Annex C-2



 

Exhibit A
to
Intercreditor Agreement

 

Subsidiary Borrowers

 

SUPERVALU Pharmacies, Inc.
W. Newell & Co., LLC
Advantage Logistics - Southeast, Inc.
SUPERVALU Holdings, Inc.
SUPERVALU Holdings - PA LLC
Moran Foods, LLC
Save-A-Lot Tyler Group, LLC
Shop ‘N Save Warehouse Foods, Inc.
Shop ‘N Save St. Louis, Inc.
Richfood, Inc.
Shoppers Food Warehouse Corp.
FF Acquisition, L.L.C.
Foodarama LLC
Champlin 2005 L.L.C.
Richfood Holdings, Inc.
Super Rite Foods, Inc.
Supervalu TTSJ, Inc.
Eastern Region Management Corporation
SUPERVALU Transportation Inc.

 

Exhibit A-1



 

Exhibit B
to
Intercreditor Agreement

 

Subsidiary Guarantors

 

SVH Realty, Inc.
Supermarket Operators of America Inc.
SFW Holding Corp.
SFW Licensing Corp.
Scott’s Food Stores, Inc.
Butson’s Enterprises, Inc.
Richfood Procurement, L.L.C.

 

I-1



 

Exhibit J
to the Credit Agreement

 

FORM OF PROMISSORY NOTE

 

THIS NOTE AND THE OBLIGATIONS REPRESENTED HEREBY MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE TERMS AND PROVISIONS OF THE CREDIT AGREEMENT REFERRED TO BELOW.  TRANSFERS OF THIS NOTE AND THE OBLIGATIONS REPRESENTED HEREBY MUST BE RECORDED IN THE REGISTER MAINTAINED BY THE ADMINISTRATIVE AGENT PURSUANT TO THE TERMS OF SUCH CREDIT AGREEMENT.

 

[        ], 20[  ]

 

FOR VALUE RECEIVED, the undersigned (the “ Borrower ”), hereby promises to pay to [                                          ] or registered and permitted assigns (the “ Lender ”), in accordance with the provisions of the Credit Agreement (as hereinafter defined), the principal amount of the Loan from time to time made by the Lender to the Borrower under that certain Term Loan Credit Agreement, dated as of March 21, 2013 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the “ Credit Agreement ”; the terms defined therein being used herein as therein defined), among SUPERVALU Inc., the Borrower, the Guarantors party thereto, the Lenders from time to time party thereto and Goldman Sachs Bank USA, as Administrative Agent.

 

The Borrower promises to pay interest on the unpaid principal amount of the Loan made by the Lender from the date of such Loan until such principal amount is paid in full, at such interest rates and at such times as provided in the Credit Agreement.  All payments of principal and interest shall be made to the Administrative Agent for the account of the Lender in Dollars in immediately available funds to the Agent Payment Account of the Administrative Agent.  If any amount is not paid in full when due hereunder, such unpaid amount shall bear interest, to be paid upon demand, from the due date thereof until the date of actual payment (and before as well as after judgment) computed at the per annum rate set forth in the Credit Agreement.

 

This promissory note (this “ Note ”) is entitled to the benefits of the Credit Agreement and may be prepaid in whole or in part subject to the terms and conditions provided therein.  This Note is also entitled to the benefits of the Security Agreement and the Facility Guaranty and is secured by the Collateral.  Upon the occurrence and continuation of an Event of Default specified in the Credit Agreement, all amounts then remaining unpaid on this Note shall become, or may be declared to be, immediately due and payable all as provided in the Credit Agreement.  The Loan made by the Lender shall be evidenced by one or more loan accounts or records maintained by the Lender in the ordinary course of business.  The Lender may also attach schedules to this Note and endorse thereon the date, amount and maturity of its Loans and payments with respect thereto.  Notwithstanding the foregoing, the failure of the Lender to so evidence the Loan or to attach such schedules shall not in any manner affect the obligation of the Borrower to make payments of principal and interest in accordance with the terms of this Note and the Credit Agreement.

 

J-1



 

This Note is one of the promissory notes referred to in the Credit Agreement, which, among other things, contains provisions for the acceleration of the maturity hereof upon the happening of certain events, for optional and mandatory prepayment of the principal hereof prior to the maturity hereof and for the amendment or waiver of certain provisions of the Credit Agreement, all upon the terms and conditions therein specified.

 

The Borrower, for itself, its successors and assigns, hereby waives diligence, presentment, protest and demand and notice of protest, demand, dishonor and non-payment of this Note.

 

J-2



 

THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

 

NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN OR IN THE CREDIT AGREEMENT, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT PURSUANT TO AND IN ACCORDANCE WITH THE PROVISIONS OF SECTION 9.04 OF THE CREDIT AGREEMENT.

 

 

SUPERVALU INC.

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

J-3



 

LOANS AND PAYMENTS WITH RESPECT THERETO

 

Date

 

Type of Loan
Made

 

Amount of
Loan Made

 

End of
Interest
Period

 

Amount of
Principal or
Interest Paid
This Date

 

Outstanding
Principal
Balance This
Date

 

Notation
Made By

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

J-4



 

The Lenders and the Administrative Agent

March 21, 2013

 

Exhibit K
to the Credit Agreement

 

FORM OF OPINION OF DORSEY & WHITNEY LLP

 

(See attached)

 

1



 

March 21, 2013

 

The Lenders and Goldman Sachs Bank USA,
as Administrative Agent and Collateral Agent

c/o Goldman Sachs Bank USA

6031 Connection Drive

Irving, Texas 75039

Attention: Ken Moua

 

Re:  $1,500,000,000 Secured Credit Facility

 

Ladies and Gentlemen:

 

We have acted as special counsel to SUPERVALU INC., a Delaware corporation (the “ Company ”) and each of the subsidiaries of the Company listed on Schedule 1 attached hereto (together with the Company, the “ Loan Parties ”), in connection with the documents listed on Schedule 2 attached hereto (collectively the “ Transaction Documents ”).  This opinion is being delivered to you at the request of the Loan Parties.  Capitalized terms defined in this opinion and in the schedules and exhibits hereto are used herein and therein as so defined.  Capitalized terms used in this opinion and in the schedules and exhibits hereto that are not defined herein or therein shall have the meanings given such terms in the Credit Agreement (as defined on Schedule 2 ).

 

In connection with this opinion, we have examined the Transaction Documents, the documents listed on Schedule 3 attached hereto (collectively, the “ Constitutive Documents ”), the legal opinions listed on Schedule 4 attached hereto (collectively, the “ Other Opinions ”) and the documents and instruments listed on Schedule 5 hereto (collectively, the “ Reviewed Documents ”).

 

We have also examined such other documents, and have reviewed such questions of law, as we have considered necessary and appropriate for the purposes of this opinion.  In addition, as to questions of fact material to the opinions hereinafter expressed, we have, when relevant facts were not independently established by us, relied upon certificates of officers of each of the Loan Parties and of public officials, and we have assumed that all such facts are true and correct as of the date of this opinion.  We have not independently examined the records of any court or public office in any jurisdiction, and our opinion is subject to matters which examination of such records would reveal.  Without limiting the generality of the foregoing, we have relied, as to factual matters, upon certificates of officers of each Loan Party referenced in Schedule 3 hereto

 

2



 

and the representations contained therein, and we have assumed that all such representations are true and correct as of the date of this opinion.  We have also relied on the Other Opinions.

 

Our opinions expressed below as to certain factual matters are qualified as being limited “to our actual knowledge” or by other words to the same or similar effect.  Such words, as used herein, mean that prior to or during the course of this firm’s representation of the Companies in connection with the specific transactions contemplated by the Transaction Documents, no contrary information came to the attention of Gary Tygesson, Thomas Kelly, Cassandra Headrick, John Seymour, Laura Dietrich, Erik Detlefsen, John Norton, Jessica Birnbaum or William Hughes, the attorneys in our firm who have principally represented the Companies in connection with the transactions contemplated by the Transaction Documents and the preparation of this opinion.

 

In rendering the opinions expressed below, we have assumed, without verification, that:

 

(A)                                Each of the parties to the Transaction Documents, other than the Delaware Loan Parties and the Minnesota Loan Parties, is validly existing and in good standing in its respective state of incorporation or formation, as applicable.

 

(B)                                Each of the parties to the Transaction Documents, other than the Delaware Loan Parties and the Minnesota Loan Parties, has the requisite corporate or limited liability company, as applicable, power and authority to enter into and perform its respective obligations described in the Transaction Documents.

 

(C)                                The Transaction Documents have been executed and delivered by the appropriate parties thereto, other than the Delaware Loan Parties and the Minnesota Loan Parties, and all necessary steps have been taken to authorize the execution, delivery and performance by such parties, other than the Delaware Loan Parties and the Minnesota Loan Parties, of the Transaction Documents.

 

(D)                                The representations and warranties of each of the Loan Parties contained in the Transaction Documents with respect to factual matters are true and correct as of the date of this opinion and all other statements of fact contained in the Transaction Documents are true, but no statements as to law or conclusions of law in the Transaction Documents which are expressly addressed by this opinion are assumed to be true.

 

(E)                                 All signatures on the Transaction Documents are genuine, all documents submitted to us as originals, if any, are authentic and all copies submitted to us conform to original documents which are themselves authentic original documents.

 

3



 

(F)                                  Each Transaction Document constitutes the valid, binding and enforceable obligations of each of the parties thereto, other than the Loan Parties.

 

(G)                                All natural persons executing and delivering the Transaction Documents have the legal capacity for all purposes relevant hereto to do so.

 

(H)                               The execution and delivery of the Transaction Documents, the performance of its obligations described therein, and compliance with the terms and observance of the conditions thereof will not conflict with, result in a breach or violation of, constitute a default under, or violate any of the terms, provisions or conditions of (i) the articles of incorporation or other similar constitution document of any party thereto, other than the Delaware Loan Parties and the Minnesota Loan Parties, or (ii) any indenture, mortgage, deed of trust, lease, document, agreement or other instrument to which any party thereto, is a party, or by which any of them or their properties are bound, including, without limitation, the documents, agreements and other instruments relating to any financing transaction to which any party thereto is a party; provided, that, the foregoing shall not apply to any Reviewed Documents.

 

(I)                                    All conditions precedent to the effectiveness of the Transaction Documents have been satisfied or waived.

 

(J)                                    The Secured Parties have given value pursuant to the Transaction Documents and each of the Loan Parties has rights in its respective “Collateral” (as defined in the Security Agreement, the “ Collateral ”).

 

(K)                               Each Financing Statement contains (i) the current address of the Administrative Agent from which information concerning the Administrative Agent’s security interest in the Collateral can be obtained, and (ii) a current mailing address of such debtor.

 

(L)                                 The Loans were not sold on an agency basis by a broker-dealer or any of its affiliates.

 

Based upon the foregoing and upon such investigation as we have deemed necessary, and subject to the qualifications set forth below, we are of the opinion that:

 

1.                                       Based solely on the Good Standing Certificate of each of the Delaware Corporate Loan Parties, each of the Delaware Corporate Loan Parties is a corporation that is validly existing and in good standing under the laws of the State of Delaware.  Based solely on the Good Standing Certificate of each of the Delaware LLC Loan Parties, each Delaware LLC Loan Party is a limited liability company that is validly existing and in good standing under the laws of the State of Delaware.  Based solely on the Good Standing Certificate of each of the Minnesota Loan Parties, each of the Minnesota Loan Parties is a corporation that is validly existing and in good standing under the laws of the State of Minnesota.

 

4



 

2.                                       Each Delaware Loan Party and each Minnesota Loan Party has the requisite corporate or limited liability company, as applicable, power and authority to execute, deliver and perform its obligations under the Transaction Documents executed by it, and has taken all requisite corporate or limited liability company action to authorize the execution and delivery of the Transaction Documents executed by it.  Each Transaction Document to which it is a party has been executed and delivered by such Delaware Loan Party or Minnesota Loan Party.

 

3.                                       The execution and delivery by each Delaware Loan Party of the Transaction Documents to which each Delaware Loan Party is a party, the performance of its obligations described therein and the compliance with the terms and conditions thereof, including, but not limited to, the borrowing and repayment of debt, the use of proceeds thereof as required by the Credit Agreement, and providing of security for such borrowing pursuant to such Transaction Documents, will not violate or cause a breach of (i) the Delaware General Corporation Law or the Delaware Limited Liability Company Act, as applicable or (ii) any provision of such Delaware Loan Party’s Constitutive Documents.

 

4.                                       The execution and delivery by each Minnesota Loan Party of the Transaction Documents to which each Minnesota Loan Party is a party, the performance of its obligations described therein and the compliance with the terms and conditions thereof, including, but not limited to, the borrowing and repayment of debt, the use of proceeds thereof as required by the Credit Agreement, and providing of security for such borrowing pursuant to such Transaction Documents, will not violate or cause a breach of (i) the Minnesota Business Corporation Act or (ii) any provision of such Minnesota Loan Party’s Constitutive Documents.

 

5.                                       The execution and delivery of the Transaction Documents to which each Loan Party is a party by such Loan Party and the borrowing and repayment of debt, the use of proceeds thereof as required by the Credit Agreement, and providing of security for such borrowing pursuant to such Transaction Documents will not violate or cause a breach of any statute of the United States or the State of New York, or any rule or regulation of any governmental authority or regulatory body of the United States or the State of New York (including without limitation, Regulations T, U or X of the Board of Governors of the Federal Reserve System). The execution and delivery of the Transaction Documents to which each Loan Party is a party by such Loan Party and the borrowing and repayment of debt, the use of proceeds thereof as required by the Credit Agreement, and providing of security for such borrowing pursuant to such Transaction Documents will not violate or cause a breach of any of the judgments, orders or decrees identified on Schedule 6 attached hereto, which the Loan Parties have informed us are the only judgments, orders or decrees applicable to the Loan Parties of any court, governmental authority or arbitrator. The execution and delivery of the Transaction Documents to which each Loan Party is a party by such Loan Party, the borrowing and repayment of debt, the providing of security and guaranties for such borrowing, the use of proceeds thereof as required by the Credit Agreement, the performance of its obligations described therein, and the compliance with the terms and conditions thereof, will not (i) violate or cause a breach of the Reviewed Documents, (ii) require any Loan Party to provide a Lien to any holder of Indebtedness governed thereby, (iii) require any Loan Party to provide a guaranty

 

5



 

to any holder of Indebtedness governed thereby, (iv) trigger any “Change of Control” offer or similar offer under any of the Reviewed Documents, or (v) trigger any of the consolidation, merger, conveyance, transfer or lease of assets provisions of any of the Reviewed Documents.

 

6.                                       No consent, approval, authorization of, or registration or filing with or under the laws of the State of Delaware that are generally applicable to transactions of a similar type or nature with respect to the Delaware Loan Parties, or the laws of the State of Minnesota that are generally applicable to transactions of this type or nature or the Minnesota Business Corporation Act with respect to the Minnesota Loan Parties, is required to be obtained or made by any such Loan Party to make valid the execution, delivery and performance by such Loan Party of its agreements under the Transaction Documents to which such Loan Party is a party, except such as have been obtained or made, which includes the filing of the Delaware Loan Party Financing Statements and the Minnesota Loan Party Financing Statements filed in connection with the Security Agreement.

 

7.                                       No consent, approval, authorization of, or registration or filing with, any State of New York or federal governmental authority is required to be obtained or made by any Loan Party to make valid the execution, delivery and performance by such Loan Party of its agreements under the Transaction Documents to which such Loan Party is a party.

 

8.                                       The Transaction Documents executed by each of the Loan Parties constitute its valid and binding obligations, enforceable against it in accordance with their respective terms.

 

9.                                       The Security Agreement creates in favor of the Administrative Agent for the benefit of the Secured Parties a valid security interest in the Collateral (as defined in the Security Agreement) to the extent of the rights of Advantage Logistics in such Collateral.  Under Article 9 of the Uniform Commercial Code (“ UCC ”) as enacted in the State of New York (the “UCC-New York”) and Article 9 of the UCC as enacted in the State of Alabama (the “UCC-Alabama”), the State of Alabama is the proper jurisdiction in which to file a financing statement to perfect the Administrative Agent’s security interest in the rights of Advantage Logistics in the Collateral.

 

10.                                The Security Agreement creates in favor of the Administrative Agent for the benefit of the Secured Parties a valid security interest in the Collateral to the extent of the rights of each Delaware Loan Party in such Collateral.  Under Article 9 of the UCC-New York and Article 9 of the Uniform Commercial Code as enacted in the State of Delaware (the “ UCC-Delaware ”), the State of Delaware is the proper jurisdiction in which to file a financing statement to perfect the Administrative Agent’s security interest in the rights of each Delaware Loan Party in the Collateral.

 

11.                                The Security Agreement creates in favor of the Administrative Agent for the benefit of the Secured Parties a valid security interest in the Collateral to the extent of the rights of Scott’s in such Collateral.  Under Article 9 of the UCC-New York and Article 9 of the Uniform Commercial Code as enacted in the State of Indiana (the “ UCC-Indiana ”), the State of Indiana is the proper jurisdiction in which to file a financing statement to perfect the Administrative Agent’s security interest in the rights of Scott’s in the Collateral.

 

6



 

12.                                The Security Agreement creates in favor of the Administrative Agent for the benefit of the Secured Parties a valid security interest in the Collateral to the extent of the rights of each Minnesota Loan Party in such Collateral.  Under Article 9 of the UCC-New York and Article 9 of the Uniform Commercial Code as enacted in the State of Minnesota (the “ UCC-Minnesota ”), the State of Minnesota is the proper jurisdiction in which to file a financing statement to perfect the Administrative Agent’s security interest in the rights of each Minnesota Loan Party in the Collateral.

 

13.                                The Security Agreement creates in favor of the Administrative Agent for the benefit of the Secured Parties a valid security interest in the Collateral to the extent of the rights of each Missouri Loan Party in such Collateral.  Under Article 9 of the UCC-New York and Article 9 of the Uniform Commercial Code as enacted in the State of Missouri (the “ UCC-Missouri ”), the State of Missouri is the proper jurisdiction in which to file a financing statement to perfect the Administrative Agent’s security interest in the rights of each Missouri Loan Party in the Collateral.

 

14.                                The Security Agreement creates in favor of the Administrative Agent for the benefit of the Secured Parties a valid security interest in the Collateral to the extent of the rights of Butson’s in such Collateral.  Under Article 9 of the UCC-New York and Article 9 of the Uniform Commercial Code as enacted in the State of New Hampshire (the “ UCC-New Hampshire ”), the State of New Hampshire is the proper jurisdiction in which to file a financing statement to perfect the Administrative Agent’s security interest in the rights of Butson’s in the Collateral.

 

15.                                The Security Agreement creates in favor of the Administrative Agent for the benefit of the Secured Parties a valid security interest in the Collateral to the extent of the rights of SFW in such Collateral.  Under Article 9 of the UCC-New York and Article 9 of the Uniform Commercial Code as enacted in the State of Ohio (the “ UCC-Ohio ”), the State of Ohio is the proper jurisdiction in which to file a financing statement to perfect the Administrative Agent’s security interest in the rights of SFW in the Collateral.

 

16.                                The Security Agreement creates in favor of the Administrative Agent for the benefit of the Secured Parties a valid security interest in the Collateral to the extent of the rights of SVH-PA in such Collateral.  Under Article 9 of the UCC-New York and Article 9 of the Uniform Commercial Code as enacted in the State of Pennsylvania (the “ UCC-Pennsylvania ”), the State of Pennsylvania is the proper jurisdiction in which to file a financing statement to perfect the Administrative Agent’s security interest in the rights of SVH-PA in the Collateral.

 

17.                                The Security Agreement creates in favor of the Administrative Agent for the benefit of the Secured Parties a valid security interest in the Collateral to the extent of the rights of each Virginia Loan Party in such Collateral.  Under Article 9 of the UCC-New York and Article 9 of the Uniform Commercial Code as enacted in the State of Virginia (the “ UCC-Virginia ”), the State of Virginia is the proper jurisdiction in which to file a financing statement to perfect the Administrative Agent’s security interest in the rights of each Virginia Loan Party in the Collateral.

 

7



 

18.                                The Advantage Logistics Financing Statement is sufficient in form for filing with the Alabama Secretary of State and perfects the Administrative Agent’s security interest in the Collateral described therein to the extent a security interest in the Collateral may be perfected under the UCC-Alabama by filing financing statements with the Alabama Secretary of State.

 

19.                                Each Delaware Financing Statement is sufficient in form for filing with the Delaware Secretary of State and perfects the Administrative Agent’s security interest in the Collateral described therein to the extent a security interest in the Collateral may be perfected under the UCC-Delaware by filing financing statements with the Delaware Secretary of State.

 

20.                                The Scott’s Financing Statement is sufficient in form for filing with the Indiana Secretary of State and perfects the Administrative Agent’s security interest in the Collateral described therein to the extent a security interest in the Collateral may be perfected under the UCC-Indiana by filing financing statements with the Indiana Secretary of State.

 

21.                                Each Minnesota Financing Statement is sufficient in form for filing with the Minnesota Secretary of State and perfects the Administrative Agent’s security interest in the Collateral described therein to the extent a security interest in the Collateral may be perfected under the UCC-Minnesota by filing financing statements with the Minnesota Secretary of State.

 

22.                                Each Missouri Financing Statement is sufficient in form for filing with the Missouri Secretary of State and perfects the Administrative Agent’s security interest in the Collateral described therein to the extent a security interest in the Collateral may be perfected under the UCC- Missouri by filing financing statements with the Missouri Secretary of State.

 

23.                                The Butson’s Financing Statement is sufficient in form for filing with the New Hampshire Secretary of State and perfects the Administrative Agent’s security interest in the Collateral described therein to the extent a security interest in the Collateral may be perfected under the UCC-New Hampshire by filing financing statements with the New Hampshire Secretary of State.

 

24.                                The SFW Financing Statement is sufficient in form for filing with the Ohio Secretary of State and perfects the Administrative Agent’s security interest in the Collateral described therein to the extent a security interest in the Collateral may be perfected under the UCC-Ohio by filing financing statements with the Ohio Secretary of State.

 

25.                                The SVH-PA Financing Statement is sufficient in form for filing with the Pennsylvania Secretary of State and perfects the Administrative Agent’s security interest in the Collateral described therein to the extent a security interest in the Collateral may be perfected under the UCC-Pennsylvania by filing financing statements with the Pennsylvania Secretary of State.

 

26.                                Each Virginia Financing Statement is sufficient in form for filing with the Virginia Secretary of State and perfects the Administrative Agent’s security interest in the Collateral described therein to the extent a security interest in the

 

8



 

Collateral may be perfected under the UCC-Virginia by filing financing statements with the Virginia Secretary of State.

 

27.                                None of the Loan Parties (other than the Company) is an “investment company” or a company controlled by an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

 

28.                                The Company is not an “investment company” as such term is defined in the Investment Company Act of 1940, as amended, and to our knowledge, based solely on our review of the statements of beneficial ownership of the Company’s stock filed as of the date hereof with the Securities and Exchange Commission and in reliance upon certificates of officers of the Company, the Company is not “controlled” by an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

 

SCOPE OF OPINION

 

Our opinions set forth above are further subject to the following additional qualifications:

 

(a)                                  Our opinions expressed above are limited to the law of the States of Minnesota, New York and Delaware, the federal laws of the United States of America and, with respect to our opinions set forth (i) in Paragraphs 9 and 18 above, the UCC-Alabama, (ii) in Paragraphs 11 and 20 above, the UCC-Indiana, (iii) in Paragraphs 13 and 22 above, the UCC-Missouri, (iv) in Paragraphs 14 and 23 above, the UCC-New Hampshire, (v) in Paragraphs 15 and 24 above, the UCC-Ohio, (vi) in Paragraphs 16 and 25 above, the UCC-Pennsylvania, and (vii) in Paragraphs 17 and 26 above, the UCC-Virginia, in each case as compiled in the CCH Secured Transactions Guide as of the date hereof and as updated through February 12, 2013.  No opinion is given with respect to (A)(I) the constitution or the statutes of the State of Alabama other than the UCC-Alabama, (II) the cases decided under the UCC-Alabama or other laws of the State of Alabama or (III) with respect to any provision of the UCC-Alabama that has been amended subsequent to, or differs from, the compilations thereof in the CCH Secured Transactions Guide as of the date hereof and as updated through February 12, 2013; (B)(I) the constitution or the statutes of the State of Indiana other than the UCC-Indiana, (II) the cases decided under the UCC-Indiana or other laws of the State of Indiana or (III) with respect to any provision of the UCC-Indiana that has been amended subsequent to, or differs from, the compilations thereof in the CCH Secured Transactions Guide as of the date hereof and as updated through February 12, 2013; (C)(I) the constitution or the statutes of the State of Missouri other than the UCC-Missouri, (II) the cases decided under the UCC-Missouri or other laws of the State of Missouri or (III) with respect to any provision of the UCC-Missouri that has been amended subsequent to, or differs from, the compilations thereof in the CCH Secured Transactions Guide as of the date hereof and as updated through February 12, 2013; (D)(I) the constitution or the statutes of the State of New Hampshire other than the UCC-New Hampshire, (II) the cases decided under the UCC-New Hampshire or other laws of the State of New Hampshire or (III) with respect to any provision of the UCC-New Hampshire that has been amended subsequent to, or differs from, the compilations thereof in the CCH Secured Transactions Guide as of the date hereof and as updated through February 12, 2013; (E)(I) the constitution or the statutes of the State of Ohio other than the UCC-

 

9



 

Ohio, (II) the cases decided under the UCC-Ohio or other laws of the State of Ohio or (III) with respect to any provision of the UCC-Ohio that has been amended subsequent to, or differs from, the compilations thereof in the CCH Secured Transactions Guide as of the date hereof and as updated through February 12, 2013; (F)(I) the constitution or the statutes of the Commonwealth of Pennsylvania other than the UCC-Pennsylvania, (II) the cases decided under the UCC-Pennsylvania or other laws of the Commonwealth of Pennsylvania or (III) with respect to any provision of the UCC-Pennsylvania that has been amended subsequent to, or differs from, the compilations thereof in the CCH Secured Transactions Guide as of the date hereof and as updated through February 12, 2013; (G)(I) the constitution or the statutes of the Commonwealth of Virginia other than the UCC-Virginia, (II) the cases decided under the UCC-Virginia or other laws of the Commonwealth of Virginia or (III) with respect to any provision of the UCC-Virginia that has been amended subsequent to, or differs from, the compilations thereof in the CCH Secured Transactions Guide as of the date hereof and as updated through February 12, 2013.  We assume no responsibility as to the applicability to this transaction, or the effect thereon, of the laws of any other jurisdiction.

 

(b)                                  Our opinions are subject to the effect of bankruptcy, insolvency, reorganization, arrangement, moratorium, fraudulent transfer, statutes of limitation, or other similar laws and judicial decisions affecting or relating to the rights of creditors generally, and are further subject to the effect of general principles of equity, including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing, estoppel, election of remedies and other similar doctrines affecting the enforcement of agreements generally (regardless of whether enforcement is considered in a proceeding at law or in equity).  In addition, the availability of specific performance, injunctive relief, the appointment of a receiver, marshalling of assets, stay or other equitable remedies is subject to the discretion of the tribunal before which any proceeding therefor may be brought, unless such discretion is limited by an applicable statute.

 

(c)                                   Our opinions are further subject to other laws and judicial decisions affecting the rights of creditors and secured creditors generally, including, without limitation, that the enforceability of the remedies, covenants or other provisions of the Transaction Documents and the availability of equitable remedies may be limited where the enforcement of specific rights under a Transaction Document may require a judgment or decree of a court of competent jurisdiction after prior notice to any Loan Party and an opportunity for such entity to be heard by an appropriate tribunal.

 

(d)                                  We express no opinion as to the enforceability of provisions of the Transaction Documents to the extent they contain:

 

(i)                                      choice of law or forum selection provisions, or any provision which purports to confer jurisdiction upon any court or other tribunal, other than the choice of New York laws to govern the Transaction Documents, on which our opinion is rendered in reliance upon Section 5-1401 of the General Obligations Law of New York and is subject to the qualifications that such enforceability may be limited by public policy considerations of any jurisdiction other than the courts of the State of New York in which

 

10



 

enforcement of such provisions, or of a judgment upon an agreement containing such provisions, is sought;

 

(ii)                                   waivers by any Loan Party of any statutory or constitutional rights, defenses or remedies, or the right to recover certain types of damages, or the right to impose counterclaims, or of statutes of limitation or the tolling thereof;

 

(iii)                                cumulative remedies to the extent such cumulative remedies purport to compensate, or would have the effect of compensating, the party entitled to the benefits thereof in an amount in excess of the actual loss suffered by such party;

 

(iv)                               provisions requiring any Loan Party to pay any default interest rate, early termination fee or other form of liquidated damages, if the payment of such interest rate, fee or damages may be construed as unreasonable in relation to actual damages or disproportionate to actual damages suffered by the Secured Parties as a result of such prepayment, default or termination;

 

(v)                                  provisions requiring any Loan Party to pay a prepayment premium upon payment in full of the indebtedness after an acceleration thereof for default or in connection with the payment of any amount due in redemption;

 

(vi)                               provisions which purport to render prohibited transfers null and void;

 

(vii)                            provisions to the effect that the terms of any document may not be waived or modified orally or by course of conduct;

 

(viii)                         provisions which purport to establish evidentiary standards;

 

(ix)                               provisions which purport to grant powers of attorney to any Person (as such term is defined in the Credit Agreement);

 

(x)                                  provisions which excuse any Person or entity from liability for, or require any Person or entity to indemnify any other Person or entity against, the indemnified Person’s or entity’s breach of contract, negligence, or willful misconduct, or any other indemnification agreement which may be contrary to public policy; or

 

(xi)                               provisions permitting forcible entry or removal or the exercise of other self-help remedies by any Person.

 

(e)                                   The enforceability of the remedies, covenants or other provisions of the Transaction Documents and the availability of equitable remedies may be limited where:

 

(i)                                      the grant of a security interest in Collateral under the Transaction Documents or the transfer of rights in such security interest or Collateral may, in some instances, require or be conditioned upon receipt of consent of third parties, but such requirements or conditions may not be effective as to assignments or grants of security

 

11



 

interests in certain types of Collateral, including accounts, chattel paper, payment intangibles, promissory notes, leasehold or landlord’s residual interests, certain general intangibles and letter of credit rights, as provided in Sections 9-404 through 9-409 of the UCC-New York;

 

(ii)                                   restrictions in the Transaction Documents on the voluntary or involuntary transfer of a Person’s rights in such Person’s assets may be limited as provided in Section 9-401 of the UCC-New York;

 

(iii)                                the rights of debtors, guarantors and secured parties to receive notices under Section 9-602 of the UCC-New York may not be varied or waived subject to Section 9-624 of the UCC-New York; and

 

(iv)                               notwithstanding any language of the Transaction Documents to the contrary, the Secured Parties may be limited to recovery of only reasonable expenses, including, without limitation, reasonable attorneys’ fees and legal expenses, with respect to the retaking, holding, preparing for sale, selling, pledging, hypothecating or otherwise transferring of Collateral or any other property.

 

(f)                                    Each of our opinions in Paragraphs 9 through 30, above, as to the creation, validity and perfection of the security interest of the Administrative Agent, on behalf of the Secured Parties, in the Collateral is further subject to the following additional qualifications:

 

(i)                                      we express no opinion as to Collateral which consists of or will consist of consumer goods or accounts resulting from the sale thereof, beneficial interests in a trust or decedent’s estate, commercial tort claims, letters of credit or letter of credit rights, goods subject to certificates of title (including, without limitation, motor vehicles), fixtures, agricultural liens, timber to be cut, as-extracted collateral, or items which are subject to a statute or treaty of the United States which provides for a national or international certificate of title for the perfection of a security interest therein or which specifies a place of filing different from that specified in the UCC-Alabama with respect to Advantage Logistics, the UCC-Delaware with respect to the Delaware Loan Parties, the UCC-Indiana with respect to the Indiana Loan Parties, the UCC-Minnesota with respect to SUPERVALU Pharmacies, the UCC-Missouri with respect to the Missouri Loan Parties, the UCC-NH with respect to Butson’s, the UCC-Ohio with respect to the Ohio Loan Parties, the UCC-Pennsylvania with respect to SVH-PA and the UCC-Virginia with respect to the Virginia Loan Parties, for filing to perfect such security interest (e.g., aircraft);

 

(ii)                                   we express no opinion as to matters excluded from Article 9 of the Uniform Commercial Code by Section 9-109 of the Uniform Commercial Code as in effect in the applicable jurisdiction;

 

(iii)                                we express no opinion as to the effect of Sections 9-315 and 9-320 of the Uniform Commercial Code as in effect in the applicable jurisdiction;

 

12



 

(iv)                               the requirement that continuation statements with respect to each Financing Statement be filed within six months prior to the fifth, tenth, fifteenth, etc. anniversaries of the original filing of such Financing Statement;

 

(v)                                  the security interest of the Administrative Agent in the Collateral may become unperfected if any Loan Party changes its name, jurisdiction of formation or its status therein, or identity or entity structure;

 

(vi)                               we express no opinion as to the creation, validity or perfection of any security interest purported to be granted in that portion of the Collateral that constitutes an interest or claim in or under a policy of insurance (except as provided in Section 9-315 of the Uniform Commercial Code as in effect in the applicable jurisdiction with respect to proceeds), a right represented by a judgment, a right of setoff, a claim arising out of tort or an interest in any consumer deposit account (except as provided in Section 9-315 of the Uniform Commercial Code as in effect in the applicable jurisdiction with respect to proceeds);

 

(vii)                            we express no opinion with respect to the validity, perfection or priority of the Administrative Agent’s security interest in any portion of the property of any Loan Party to the extent the Security Agreement does not describe such property specifically, but references to types of collateral that are defined in Section 9-102 of the UCC-New York are sufficiently specific;

 

(viii)                         we express no opinion with respect to the perfection of the Administrative Agent’s security interest in any Collateral which may only be perfected by “control” or “possession” within the meaning given to such term in the UCC-New York; and

 

(ix)                               we note that the enforcement of, and certain other matters affecting, security interests are subject to applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally and to general principles of equity.  Our opinions are subject to the effect of 11 U.S.C. §§363, 364, 506(a), 506(c), 506(d), 510(c), 544, 547, 548, 552, 553, 725, 1129(b)(2)(A) and 1141(c), and to any order, process or judgment issued under 11 U.S.C. §105(a).

 

(g)                                   We express no opinion concerning any Loan Party’s rights in or title to, or the priority of any security interest, pledge, lien, or other similar interest in, any personal property, or the creation, perfection or priority of any lien, mortgage or other similar interest in any real property.

 

(h)                                  Our opinions in clause (i) of Paragraph 5 and in Paragraph 7 are limited to (x) to our actual knowledge, if any, of the specifically regulated business activities and properties of each respective Company based solely upon an officer’s certificate in respect of such matters and without any independent investigation or verification on our part and (y) laws and regulations normally applicable to transactions of the type contemplated in the Transaction Documents and do not extend to licenses, permits and approvals necessary for the conduct of the such

 

13



 

Company’s business.  In addition and without limiting the previous sentence, we express no opinion herein, in Paragraphs 5 or 7 or otherwise, with respect to the effect of any state or federal securities laws, land use, safety, hazardous material, environmental or similar law, or any local or regional law.  In rendering such opinions, we have not conducted any independent investigation of the Companies or consulted with other attorneys in our firm with respect to the matters covered thereby.  No inference as to our knowledge with respect to the factual matters upon which we have so qualified our opinions should be drawn from the fact of our representation of the Companies.

 

(i)                                      Except as set forth in clause (i) of each of Paragraphs 3, 4 and 5, and as set forth in Paragraphs 6 and 7, we express no opinion as to compliance or the effect of noncompliance by any Loan Party with any laws or regulations applicable to such entity in connection with the transactions described in the Transaction Documents.

 

(j)                                     We express no opinion as to compliance or the effect of noncompliance by the Secured Parties with any state or federal laws or regulations applicable to the Secured Parties in connection with the transactions described in the Transaction Documents.

 

(k)                                  Our opinion in Paragraph 8 as to the Guaranty is subject to the defenses available to a guarantor under applicable law, but the waivers of such defenses set forth in the Guaranty are enforceable, subject to the other exceptions set forth herein.

 

(l)                                      Section 290.371, subd. 4, of the Minnesota Statutes provides that any corporation required to file a Notice of Business Activities Report does not have a cause of action upon which it may bring suit under Minnesota law unless the corporation has filed a Notice of Business Activities Report and that the use of the courts of the State of Minnesota for all contracts executed and all causes of actions that arose before the end of any period for which a corporation failed to file a required report is precluded.  Insofar as the foregoing opinion may relate to the enforceability of any agreement under Minnesota law or in a Minnesota court, we have assumed that any party seeking to enforce the agreement has at all times been, and will continue at all times to be, exempt from the requirement of filing a Notice of Business Activities Report or, if not exempt, has duly filed, and will continue to duly file, all Notice of Business Activities Reports.

 

(m)                              In rendering our opinion in Paragraphs 6 and 7, we are only opining as to consents, approvals, authorizations, registrations, declarations and filings necessary for any Loan Party to execute, deliver and perform its obligations under the Transaction Documents, and we express no opinion with respect to any consent, approval, authorization from, or any registration, declaration or filing with, any governmental authority or agency required generally in connection with the day-to-day business or operations of such entity.

 

This opinion is solely for the benefit of the Administrative Agent, each other Secured Party, their respective successors and assigns, and any assignee pursuant to Section 9.04(b) of the Credit Agreement, in connection with the transaction described in this letter, may not be relied upon for any other purpose, and may not be relied upon or used by, nor may copies hereof

 

14



 

be delivered to, any other person or entity, except that copies may be delivered to any prospective assignee that has agreed to the confidentiality provisions of Section 9.16 of the Credit Agreement and to the confidentiality and non-reliance provisions of this paragraph, or as may be required by any court or other governmental or regulatory authority, without our prior written consent; provided , however , that no use of or reliance on this opinion by any party, including, without limitation, the Secured Parties, shall establish or imply an attorney-client relationship between such party and this firm with respect to the Transaction Documents or the transactions contemplated by the Transaction Documents, and such party by using or relying on our opinion disclaims any such attorney-client relationship with respect to the Transaction Documents or the transactions contemplated by the Transaction Documents for any purpose without our prior written approval.  We disclaim any obligation to update this opinion letter for events occurring or coming to our attention, or any changes in the law taking effect, after the date hereof.

 

 

Very truly yours,

 

TOK/SK

 

Attachments:                     Schedule 1 — Loan Parties

Schedule 2 — Transaction Documents

Schedule 3 — Corporate Documents

Schedule 4 — Uniform Commercial

Schedule 5 — Reviewed Documents

Schedule 6 — Judgments, Orders and Decrees

Exhibit A-1 — SUPERVALU Financing Statement

Exhibit A-2 — Advantage Logistics — Southeast, Inc. Financing Statement

Exhibit A-3 — Butson’s Enterprises, Inc. Financing Statement

Exhibit A-4 — Champlin 2005 L.L.C. Financing Statement

Exhibit A-5 — Eastern Region Management Corporation Financing Statement

Exhibit A-6 — FF Acquisition, L.L.C. Financing Statement

Exhibit A-7 — Foodarama LLC Financing Statement

Exhibit A-8 — Moran Foods, LLC Financing Statement

Exhibit A-9 — Richfood Holdings, Inc. Financing Statement

Exhibit A-10 — Richfood, Inc. Financing Statement

Exhibit A-11 — Richfood Procurement, L.L.C. Financing Statement

Exhibit A-12 — Save-A-Lot Tyler Group, LLC Financing Statement

Exhibit A-13 — Scott’s Food Stores, Inc. Financing Statement

Exhibit A-14 — SFW Holding Corp. Financing Statement

Exhibit A-15 — SFW Licensing Corp. Financing Statement

Exhibit A-16 — Shop ‘N Save St. Louis, Inc. Financing Statement

Exhibit A-17 — Shop ‘N Save Warehouse Foods, Inc. Financing Statement

Exhibit A-18 — Shoppers Food Warehouse Corp. Financing Statement

Exhibit A-19 — Super Rite Foods, Inc. Financing Statement

Exhibit A-20 — Supermarket Operators of America, Inc. Financing Statement

Exhibit A-21 — SUPERVALU Holdings, Inc. Financing Statement

Exhibit A-22 — SUPERVALU Holdings-PA LLC Financing Statement

 

15



 

Exhibit A-23 — SUPERVALU Pharmacies, Inc. Financing Statement

Exhibit A-24 — SUPERVALU Transportation, Inc. Financing Statement

Exhibit A-25 — SUPERVALU TTSJ, INC. Financing Statement

Exhibit A-26 — SVH Realty, Inc. Financing Statement

Exhibit A-27 — W. Newell & Co., LLC Financing Statement

 

16



 

Schedule 1
Opinion of Dorsey & Whitney LLP
March 21, 2013

 

Loan Parties (other than the Company)

 

1.                                       Advantage Logistics - Southeast, Inc., an Alabama corporation (“Advantage Logistics”).

 

2.                                       Butson’s Enterprises, Inc., a New Hampshire corporation (“Butson’s”).

 

3.                                       Champlin 2005 L.L.C., a Delaware limited liability company (“Champlin”).

 

4.                                       Eastern Region Management Corporation, a Virginia corporation (“Eastern”).

 

5.                                       FF Acquisition, L.L.C., a Virginia limited liability company (“FFA”).

 

6.                                       Foodarama LLC, a Delaware limited liability company (“Foodarama”).

 

7.                                       Moran Foods, LLC, a Missouri limited liability company (“Moran”).

 

8.                                       Richfood Holdings, Inc., a Delaware corporation (“RHI”).

 

9.                                       Richfood, Inc., a Virginia corporation (“Richfood”).

 

10.                                Richfood Procurement, L.L.C., a Virginia limited liability company (“Richfood LLC”; together with Eastern, FFA and Richfood, the “Virginia Loan Parties”).

 

11.                                Save-A-Lot Tyler Group, LLC, a Missouri limited liability company (“SAL-Tyler”).

 

12.                                Scott’s Food Stores, Inc., an Indiana corporation (“Scott’s”).

 

13.                                SFW Holding Corp., a Delaware corporation (“SFW Holding”).

 

14.                                SFW Licensing Corp., a Delaware corporation (“SFW Licensing”).

 

15.                                Shop ‘N Save St. Louis, Inc., a Missouri corporation (“SNS-STL”).

 

16.                                Shop ‘N Save Warehouse Foods, Inc., a Missouri corporation (“SNSW”).

 

17.                                Shoppers Food Warehouse Corp., an Ohio Corporation (“SFW”).

 

18.                                Super Rite Foods, Inc., a Delaware corporation (“Super Rite”).

 

19.                                Supermarket Operators of America Inc., a Delaware corporation (“SOA”).

 

20.                                SUPERVALU Holdings, Inc., a Missouri corporation (“SVH”; together with Moran, SAL-Tyler, SNS-STL and SNSW, the “Missouri Loan Parties”).

 



 

21.                                SUPERVALU Holdings-PA LLC, a Pennsylvania limited liability company (“SVH-PA”).

 

22.                                SUPERVALU Pharmacies, Inc., a Minnesota corporation (“Pharmacies”).

 

23.                                SUPERVALU Transportation, Inc., a Minnesota corporation (“Transportation”; together with Pharmacies, the “Minnesota Loan Parties”).

 

24.                                SUPERVALU TTSJ, INC., a Delaware corporation (“TTSJ”).

 

25.                                SVH Realty, Inc., a Delaware corporation (“SVHR”; together with the Company, RHI, SFW Holding, SFW Licensing, Super Rite, SOA, and TTSJ, the “Delaware Corporate Loan Parties”).

 

26.                                W. Newell & Co., LLC, a Delaware limited liability company (“Newell”; together with Champlin and Foodarama, the “Delaware LLC Loan Parties”; and together with the Delaware Corporate Loan Parties, the “Delaware Loan Parties”).

 

The Loan Parties listed on this Schedule 1 are herein referred to as the “Guarantors”.

 



 

Schedule 2
Opinion of Dorsey & Whitney LLP
March 21, 2013

 

Transaction Documents

 

1.                                       Credit Agreement, dated as of March 21, 2013, by and between the Company, the other Loan Parties, Goldman Sachs Bank USA, as Administrative Agent (in such capacity, the “Administrative Agent”), the lenders and other secured parties thereto (together with the Administrative Agent, the “ Secured Parties ”) (the “ Credit Agreement ”).

 

2.                                       Security Agreement, dated as of March 21, 2013, by the Loan Parties, in favor of the Administrative Agent (the “ Security Agreement ”).

 

3.                                       Guaranty, dated as of March 21, 2013, by the Guarantors in favor of the Administrative Agent.

 

4.                                       Fee Letter, dated as of January 10, 2013, by and between the Company and Goldman Sachs Bank USA, Credit Suisse Securities (USA) LLC, Credit Suisse AG, Cayman Islands Branch, Morgan Stanley Senior Funding, Inc., Barclays, Merrill Lynch, Pierce, Fenner & Smith Incorporated, and Bank of America, N.A.

 

5.                                       Intercreditor Agreement, dated as of March 21, 2013, by and between the Administrative Agent and Wells Fargo Bank, National Association, as ABL Agent, as acknowledged and agreed by the Loan Parties.

 

6.                                       Trademark security agreement for:

 

a.                             FF Acquisition, L.L.C.

b.                             Foodarama LLC

c.                              Moran Foods, LLC

d.                             Richfood, Inc.

e.                              SFW Licensing Corp.

f.                               Super Rite Foods, Inc.

g.                              SUPERVALU Holdings, Inc.

h.                             SUPERVALU INC.

i.                                 SUPERVALU Pharmacies, Inc.

j.                                W. Newell & Co., LLC

 

7.                                       Copyright security agreement for:

 

a.                                       Shop ‘N Save Warehouse Foods, Inc.

b.                                       SUPERVALU INC.

 

8.                                       Patent security agreements for:

 



 

a.                                       SUPERVALU INC.

 

9.                                       Intercompany Subordination Agreement, dated as of March 21, 2013, by and among Wells Fargo Bank, National Association, as ABL Creditor Agent, Goldman Sachs Bank USA, as Term Loan Creditor Agent, and certain subsidiaries of the Company thereto.

 

10.                                Collateral Assignment of Purchase Agreement and Escrow Agreement, dated as of March 21, 2013, by and among the Company and Goldman Sachs Bank USA, as administrative agent and collateral agent.

 



 

Schedule 3
Opinion of Dorsey & Whitney LLP
March 21, 2013

 

Corporate Documents

 

I. Constitutive Documents

 

1.                               A copy of the certificate of incorporation of the Company certified as of March 4, 2013, as a true copy by the Delaware Secretary of State, and a copy of the bylaws of Company certified as of March 21, 2013, as a true copy by the Secretary of Company (collectively, the “ Company Constitutive Documents ”);

 

2.                               A copy of the articles of incorporation of Advantage Logistics certified as of March 4, 2013, as a true copy by the Alabama Secretary of State, and a copy of the bylaws of Acme certified as of March 21, 2013, as a true copy by the Secretary of Advantage Logistics (collectively, the “ Advantage Logistics Constitutive Documents ”);

 

3.                               A copy of the certificate of incorporation of Butson’s certified as of March 5, 2013, as a true copy by the New Hampshire Secretary of State, and a copy of the bylaws of  Butson’s certified as of March 21, 2013, as a true copy by the Secretary of Butson’s (collectively, the “ Butson’s Constitutive Documents ”);

 

4.                               A copy of the certificate of formation of Champlin certified as of March 4, 2013, as a true copy by the Delaware Secretary of State, and a copy of the operating agreement of Champlin certified as of March 21, 2013, as a true copy by the Secretary of Champlin (collectively, the “ Champlin Constitutive Documents ”);

 

5.                               A copy of the certificate of incorporation of Eastern certified as of March 5, 2013, as a true copy by the Virginia Secretary of State, and a copy of the bylaws of Eastern certified as of March 21, 2013, as a true copy by the Secretary of Eastern (collectively, the “ Eastern Constitutive Documents ”);

 

6.                               A copy of the articles of organization of FFA certified as of March 5, 2013, as a true copy by the Virginia Secretary of State, and a copy of the operating agreement of FFA certified as of March 21, 2013, as a true copy by the Secretary of FFA (collectively, the “ FFA Constitutive Documents ”);

 

7.                               A copy of the certificate of formation of Foodarama certified as of March 4, 2013, as a true copy by the Delaware Secretary of State, and a copy of the operating agreement of Foodarama certified as of March 21, 2013, as a true copy by the Secretary of Foodarama (collectively, the “ Foodarama Constitutive Documents ”);

 

8.                               A copy of the articles of organization of Moran certified as of March 4, 2013, as a true copy by the Ohio Secretary of State, and a copy of the operating agreement of Moran certified as of March 21, 2013, as a true copy by the Secretary of Moran (collectively, the “ Moran Constitutive Documents ”);

 



 

9.                               A copy of the certificate of incorporation of RHI certified as of March 4, 2013, as a true copy by the Delaware Secretary of State, and a copy of the bylaws of RHI certified as of March 21, 2013, as a true copy by the Secretary of RHI (collectively, the “ RHI Constitutive Documents ”);

 

10.                        A copy of the articles of incorporation of Richfood certified as of March 5, 2013, as a true copy by the Virginia Secretary of State, and a copy of the bylaws of Richfood certified as of March 21, 2013, as a true copy by the Secretary of Richfood (collectively, the “ Richfood Constitutive Documents ”);

 

11.                        A copy of the articles of organization of Richfood LLC certified as of March 5, 2013, as a true copy by the Virginia Secretary of State, and a copy of the operating agreement of Richfood LLC certified as of March 21, 2013, as a true copy by the Secretary of Richfood LLC (collectively, the “ Richfood LLC Constitutive Documents ”);

 

12.                        A copy of the articles of organization of SAL-Tyler certified as of March 4, 2013, as a true copy by the Missouri Secretary of State, and a copy of the operating agreement of SAL-Tyler certified as of March 21, 2013, as a true copy by the Secretary of SAL-Tyler (collectively, the “ SAL-Tyler Constitutive Documents ”);

 

13.                        A copy of the certificate of incorporation of Scott’s certified as of March 4, 2013, as a true copy by the Indiana Secretary of State, and a copy of the bylaws of Scott’s certified as of March 21, 2013, as a true copy by the Secretary of Scott’s (collectively, the “ Scott’s Constitutive Documents ”);

 

14.                        A copy of the certificate of incorporation of SFW Holding certified as of March 4, 2013, as a true copy by the Delaware Secretary of State, and a copy of the bylaws of SFW Holding certified as of March 21, 2013, as a true copy by the Secretary of SFW Holding (collectively, the “ SFW Holding Constitutive Documents ”);

 

15.                        A copy of the certificate of incorporation of SFW Licensing certified as of March 4, 2013, as a true copy by the Delaware Secretary of State, and a copy of the bylaws of SFW Licensing certified as of March 21, 2013, as a true copy by the Secretary of SFW Licensing (collectively, the “ SFW Licensing Constitutive Documents ”);

 

16.                        A copy of the articles of incorporation of SNS-STL certified as of March 4, 2013, as a true copy by the Missouri Secretary of State, and a copy of the bylaws of SNS-STL certified as of March 21, 2013, as a true copy by the Secretary of SNS-STL (collectively, the “ SNS-STL Constitutive Documents ”);

 

17.                        A copy of the articles of incorporation of SNSW certified as of March 4, 2013, as a true copy by the Missouri Secretary of State, and a copy of the bylaws of SNSW certified as of March 21, 2013, as a true copy by the Secretary of SNSW (collectively, the “ SNSW Constitutive Documents ”);

 



 

18.                        A copy of the articles of incorporation of SFW certified as of March 6, 2013, as a true copy by the Ohio Secretary of State, and a copy of the bylaws of SFW certified as of March 21, 2013, as a true copy by the Secretary of SFW (collectively, the “ SFW Constitutive Documents ”);

 

19.                        A copy of the certificate of incorporation of Super Rite certified as of March 4, 2013, as a true copy by the Delaware Secretary of State, and a copy of the bylaws of Super Rite certified as of March 21, 2013, as a true copy by the Secretary of Super Rite (collectively, the “ Super Rite Constitutive Documents ”);

 

20.                        A copy of the certificate of incorporation of SOA certified as of March 4, 2013, as a true copy by the Delaware Secretary of State, and a copy of the bylaws of SOA certified as of March 21, 2013, as a true copy by the Secretary of SOA (collectively, the “ SOA Constitutive Documents ”);

 

21.                        A copy of the articles of incorporation of SVH certified as of March 4, 2013, as a true copy by the Missouri Secretary of State, and a copy of the bylaws of SVH certified as of March 21, 2013, as a true copy by the Secretary of SVH (collectively, the “ SVH Constitutive Documents ”);

 

22.                        A copy of the articles of organization of SVH-PA certified as of March 4, 2013, as a true copy by the Pennsylvania Secretary of State, and a copy of the operating agreement of SVH-PA certified as of March 21, 2013, as a true copy by the Secretary of SVH-PA (collectively, the “ SVH-PA Constitutive Documents ”);

 

23.                        A copy of the articles of incorporation of Pharmacies certified as of March 18, 2013 , as a true copy by the Minnesota Secretary of State, and a copy of the bylaws of Pharmacies certified as of March 21, 2013, as a true copy by the Secretary of Pharmacies (collectively, the “ Pharmacies Constitutive Documents ”);

 

24.                        A copy of the certificate of incorporation of Transportation certified as of March 18, 2013, as a true copy by the Minnesota Secretary of State, and a copy of the bylaws of Transportation, certified as of March 21, 2013, as a true copy by the Secretary of Transportation (collectively, the “ Transportation Constitutive Documents ”);

 

25.                        A copy of the certificate of incorporation of TTSJ certified as of February 25, 2013, as a true copy by the Delaware Secretary of State, and a copy of the bylaws of TTSJ certified as of March 21, 2013, as a true copy by the Secretary of TTSJ (collectively, the “ TTSJ Constitutive Documents ”);

 

26.                        A copy of the certificate of incorporation of SVHR certified as of March 4, 2013, as a true copy by the Delaware Secretary of State, and a copy of the bylaws of SVHR certified as of March 21, 2013, as a true copy by the Secretary of SVHR (collectively, the “ SVHR Constitutive Documents ”);

 

27.                        A copy of the certificate of formation of Newell certified as of March 8, 2013, as a true copy by the Delaware Secretary of State, and a copy of the operating agreement of

 



 

Newell certified as of March 21, 2013, as a true copy by the Secretary of Newell (collectively, the “ Newell Constitutive Documents ”);

 

II. Good Standing Certificates

 

1.                               A certificate of good standing concerning the Company from the Delaware Secretary of State issued March 4, 2013 (the “ Company Good Standing Certificate ”);

 

2.                               A certificate of good standing concerning Advantage Logistics from the Alabama Secretary of State issued March 4, 2013 (the “ Advantage Logistics Good Standing Certificate ”);

 

3.                               A certificate of good standing concerning Butson’s from the New Hampshire Secretary of State issued March 5, 2013 (the “ Butson’s Good Standing Certificate ”);

 

4.                               A certificate of good standing concerning Champlin from the Delaware Secretary of State issued March 4, 2013 (the “ Champlin Good Standing Certificate ”);

 

5.                               A certificate of good standing concerning Eastern from the Virginia Secretary of State issued March 5, 2013 (the “ Eastern Good Standing Certificate ”);

 

6.                               A certificate of good standing concerning FFA from the Virginia Secretary of State issued March 5, 2013 (the “ FFA Good Standing Certificate ”);

 

7.                               A certificate of good standing concerning Foodarama from the Delaware Secretary of State issued March 4, 2013 (the “ Foodarama Good Standing Certificate ”);

 

8.                               A certificate of good standing concerning Moran from the Missouri Secretary of State issued March 4, 2013 (the “ Moran Good Standing Certificate ”);

 

9.                               A certificate of good standing concerning RHI from the Delaware Secretary of State issued March 5, 2013 (the “ RHI Good Standing Certificate ”);

 

10.                        A certificate of good standing concerning Richfood from the Virginia Secretary of State issued March 5, 2013 (the “ Richfood Good Standing Certificate ”);

 

11.                        A certificate of good standing concerning Richfood LLC from the Virginia Secretary of State issued March 5, 2013 (the “ Richfood LLC Good Standing Certificate ”);

 

12.                        A certificate of good standing concerning SAL-Tyler from the Missouri Secretary of State issued March 4, 2013 (the “ SAL-Tyler Good Standing Certificate ”);

 

13.                        A certificate of good standing concerning Scott’s from the Indiana Secretary of State issued March 4, 2013 (the “ Scott’s Good Standing Certificate ”);

 

14.                        A certificate of good standing concerning SFW Holding from the Delaware Secretary of State issued March 4, 2013 (the “ SFW Holding Good Standing Certificate ”);

 



 

15.                        A certificate of good standing concerning SFW Licensing from the Delaware Secretary of State issued March 5, 2013 (the “ SFW Licensing Good Standing Certificate ”);

 

16.                        A certificate of good standing concerning SNS-STL from the Missouri Secretary of State issued March 4, 2013 (the “ SNS-STL Good Standing Certificate ”);

 

17.                        A certificate of good standing concerning SNSW from the Missouri Secretary of State issued March 4, 2013 (the “ SNSW Good Standing Certificate ”);

 

18.                        A certificate of good standing concerning SFW from the Ohio Secretary of State issued March 4, 2013 (the “ SFW Good Standing Certificate ”);

 

19.                        A certificate of good standing concerning Super Rite from the Delaware Secretary of State issued March 4, 2013 (the “ Super Rite Good Standing Certificate ”);

 

20.                        A certificate of good standing concerning SOA from the Delaware Secretary of State issued March 4, 2013 (the “ SOA Good Standing Certificate ”);

 

21.                        A certificate of good standing concerning SVH from the Missouri Secretary of State issued March 4, 2013 (the “ SVH Good Standing Certificate ”);

 

22.                        A certificate of good standing concerning SVH-PA from the Pennsylvania Secretary of State issued March 4, 2013 (the “ SVH-PA Good Standing Certificate ”);

 

23.                        A certificate of good standing concerning Pharmacies from the Minnesota Secretary of State issued March 4, 2013 (the “ Pharmacies Good Standing Certificate ”);

 

24.                        A certificate of good standing concerning Transportation from the Minnesota Secretary of State issued March 4, 2013 (the “ Transportation Good Standing Certificate ”);

 

25.                        A certificate of good standing concerning TTSJ from the Delaware Secretary of State issued March 8, 2013 (the “ TTSJ Good Standing Certificate ”);

 

26.                        A certificate of good standing concerning SVHR from the Delaware Secretary of State issued March 4, 2013 (the “ SVHR Good Standing Certificate ”);

 

27.                        A certificate of good standing concerning Newell from the Delaware Secretary of State issued March 8, 2013 (the “ Newell Good Standing Certificate ”);

 

III.  Certificates

 

1.                               A certificate of an officer of the Company, dated as of March 21, 2013, certifying as to a copy of resolutions of the Board of Directors of Company, incumbency with respect to officers of the Company and certain other matters;

 



 

2.                               A certificate of an officer of Advantage Logistics, dated as of March 21, 2013, certifying as to a copy of resolutions of the Board of Directors of Advantage Logistics, incumbency with respect to officers of Advantage Logistics and certain other matters;

 

3.                               A certificate of an officer of Butson’s, dated as of March 21, 2013, certifying as to a copy of resolutions of the Board of Directors of Butson’s, incumbency with respect to officers of Butson’s and certain other matters;

 

4.                               A certificate of an officer of Champlin, dated as of March 21, 2013, certifying as to a copy of resolutions of the Members of Champlin, incumbency with respect to officers of Champlin and certain other matters;

 

5.                               A certificate of an officer of Eastern, dated as of March 21, 2013, certifying as to a copy of resolutions of the Board of Directors of Eastern, incumbency with respect to officers of Eastern and certain other matters;

 

6.                               A certificate of an officer of FFA, dated as of March 21, 2013, certifying as to a copy of resolutions of the Board of Managers of FFA, incumbency with respect to officers of FFA and certain other matters;

 

7.                               A certificate of an officer of Foodarama, dated as of March 21, 2013, certifying as to a copy of resolutions of the Member of Foodarama, incumbency with respect to officers of Foodarama and certain other matters;

 

8.                               A certificate of an officer of Moran, dated as of March 21, 2013, certifying as to a copy of resolutions of the Board of Managers of Moran, incumbency with respect to officers of Moran and certain other matters;

 

9.                               A certificate of an officer of RHI, dated as of March 21, 2013, certifying as to a copy of resolutions of the Board of Directors of RHI, incumbency with respect to officers of RHI and certain other matters;

 

10.                        A certificate of an officer of Richfood, dated as of March 21, 2013, certifying as to a copy of resolutions of the Board of Directors of Richfood, incumbency with respect to officers of Richfood and certain other matters;

 

11.                        A certificate of an officer of Richfood LLC, dated as of March 21, 2013, certifying as to a copy of resolutions of the board of managers of Richfood LLC, incumbency with respect to officers of Richfood LLC and certain other matters;

 

12.                        A certificate of an officer of SAL-Tyler, dated as of March 21, 2013, certifying as to a copy of resolutions of the Board of Managers of SAL-Tyler, incumbency with respect to officers of SAL-Tyler and certain other matters;

 

13.                        A certificate of an officer of Scott’s, dated as of March 21, 2013, certifying as to a copy of resolutions of the Board of Directors of Scott’s, incumbency with respect to officers of Scott’s and certain other matters;

 



 

14.                        A certificate of an officer of SFW Holding, dated as of March 21, 2013, certifying as to a copy of resolutions of the Board of Directors of SFW Holding, incumbency with respect to officers of SFW Holding and certain other matters;

 

15.                        A certificate of an officer of SFW Licensing, dated as of March 21, 2013, certifying as to a copy of resolutions of the Board of Directors of SFW Licensing, incumbency with respect to officers of SFW Licensing and certain other matters;

 

16.                        A certificate of an officer of SNS-STL dated as of March 21, 2013, certifying as to a copy of resolutions of the Board of Directors of SNS-STL, incumbency with respect to officers of SNS-STL and certain other matters;

 

17.                        A certificate of an officer of SNSW, dated as of March 21, 2013, certifying as to a copy of resolutions of the Board of Directors of SNSW, incumbency with respect to officers of SNSW and certain other matters;

 

18.                        A certificate of an officer of SFW, dated as of March 21, 2013, certifying as to a copy of resolutions of the Board of Directors of SFW, incumbency with respect to officers of SFW and certain other matters;

 

19.                        A certificate of an officer of Super Rite, dated as of March 21, 2013, certifying as to a copy of resolutions of the Board of Directors of Super Rite, incumbency with respect to officers of Super Rite and certain other matters;

 

20.                        A certificate of an officer of SOA, dated as of March 21, 2013, certifying as to a copy of resolutions of the Board of Directors of SOA, incumbency with respect to officers of SOA and certain other matters;

 

21.                        A certificate of an officer of SVH, dated as of March 21, 2013, certifying as to a copy of resolutions of the Board of Directors of SVH, incumbency with respect to officers of SVH and certain other matters;

 

22.                        A certificate of an officer of SVH-PA, dated as of March 21, 2013, certifying as to a copy of resolutions of the Member of SVH-PA, incumbency with respect to officers of SVH-PA and certain other matters;

 

23.                        A certificate of an officer of Pharmacies, dated as of March 21, 2013, certifying as to a copy of resolutions of the Board of Directors of Pharmacies, incumbency with respect to officers of Pharmacies and certain other matters;

 

24.                        A certificate of an officer of Transportation, dated as of March 21, 2013, certifying as to a copy of resolutions of the Board of Directors of Transportation, incumbency with respect to officers of Transportation and certain other matters;

 

25.                        A certificate of an officer of TTSJ, dated as of March 21, 2013, certifying as to a copy of resolutions of the Board of Directors of TTSJ, incumbency with respect to officers of TTSJ and certain other matters;

 



 

26.                        A certificate of an officer of SVHR, dated as of March 21, 2013, certifying as to a copy of resolutions of the Board of Directors of SVHR, incumbency with respect to officers of SVHR and certain other matters;

 

27.                        A certificate of an officer of Newell, dated as of March 21, 2013, certifying as to a copy of resolutions of the Board of Managers of Newell, incumbency with respect to officers of Newell and certain other matters;

 

IV. Financing Statements

 

A copy of each of the Uniform Commercial Code Financing Statements attached as Exhibits A-1 through A-27 hereto (the “ Financing Statements ”).

 



 

Schedule 4
Opinion of Dorsey & Whitney LLP
March 21, 2013

 

Opinions

 

1.                               The opinion of Jeffrey J. Steinle, Esq., Vice President, Business Law of the Company, dated as of the date hereof.

 

2.                               The opinion of Shook, Hardy & Bacon L.L.P., special local counsel to the Missouri Loan Parties, dated as of the date hereof.

 

3.                               The opinion of Baker & Hostetler LLP, special local counsel to SFW, dated as of the date hereof.

 

4.                               The opinion of Kaufman & Canoles, P.C., special local counsel to the Virginia Loan Parties, dated as of the date hereof.

 



 

Schedule 5
Opinion of Dorsey & Whitney LLP
March 21, 2013

 

Reviewed Documents

 

1.                               Indenture, dated as of May 1, 1995, between ASC and Wells Fargo Bank, National Association (as successor to The First National Bank of Chicago), as amended, supplemented or otherwise modified as of the Closing Date or in accordance with the terms hereof (the “ ASC Indenture ”).

 

2.                               Indenture, dated as of May 1, 1992, between New Albertson’s, Inc., a Delaware corporation, and U.S. Bank National Association, as trustee, as supplemented by Supplemental Indenture No. 1 dated as of May 7, 2004, as supplemented by Supplemental Indenture No. 2 dated as of June 1, 2006, as supplemented by Supplemental Indenture No. 3, dated as of December 29, 2008 (the “ NAI Indenture ”).

 

3.                               Indenture, dated as of July 1, 1987, between the Company and Deutsche Bank Trust Company (formerly Bankers Trust Company), as trustee, as supplemented by the First Supplemental Indenture dated as of August 1, 1990, the Second Supplemental indenture dated as of October 1, 1992, the Third Supplemental Indenture dated as of September 1, 1995, the Fourth Supplemental Indenture dated as of August 4, 1999, and the Fifth Supplemental Indenture dated as of September 17, 1999 (the “ Company Indenture ”).

 

4.                               Second Amended and Restated Receivables Purchase Agreement, dated as of November 30, 2011, by and among Supervalu Receivables Funding Corporation, as seller, the Company, as servicer, the banks and other financial institutions party thereto, as purchasers and Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A., “Rabobank Nederland”, New York Branch, as agent.

 

5.                               The 7.50% Senior Notes due 2014, issued by the Company pursuant to the Company Indenture.

 

6.                               The 8.000% Senior Notes due 2016, issued by the Company pursuant to the Company Indenture.

 

7.                               The 7.90% Debenture due May 1, 2017, issued by ASC pursuant to the ASC Indenture.

 

8.                               The 8% Debentures due June 1, 2026, issued by ASC pursuant to the ASC Indenture.

 

9.                               The Medium-Term Notes, Series B, due March 30, 2018, issued by ASC pursuant to the ASC Indenture.

 

10.                        The 7.25% Senior Notes due May 1, 2013, issued by NAI pursuant to the NAI Indenture.

 



 

11.                        The 7.75% Debentures due June 15, 2026, issued by NAI pursuant to the NAI Indenture.

 

12.                        The 7.45% Senior Debentures due August 1, 2029, issued by NAI pursuant to the NAI Indenture.

 

13.                        The 8.70% Senior Debentures due May 1, 2030, issued by NAI pursuant to the NAI Indenture.

 

14.                        The 8.00% Senior Debentures due May 1, 2031, issued by NAI pursuant to the NAI Indenture.

 



 

Schedule 6
Opinion of Dorsey & Whitney LLP
March 21, 2013

 

Judgments, Orders and Decrees

 

1)                              Gazzerro-Langford v. Supervalu, Inc. d/b/a Acme Markets, Docket No. 11-13587, Court of Common Please, Chester County, PA

 

2)                              Scott Perry v. SuperValu Inc, Case Number RIC 10017756, Superior Court of California, County of Riverside

 

3)                              EEOC v. SUPERVALU INC., American Drug Stores LLL, Jewel Food Stores, Inc., Consent Decree, Case No. 1:09 CV 05637, United States District Court, Northern District of Illinois, Eastern Division

 



 

Exhibit A-1
Opinion of Dorsey & Whitney LLP
March 21, 2013

 

Company Financing Statement

 

See attached.

 



 

Exhibit A-2
Opinion of Dorsey & Whitney LLP
March 21, 2013

 

Advantage Logistics — Southeast, Inc. Financing Statement

 

See attached.

 



 

Exhibit A-3
Opinion of Dorsey & Whitney LLP
March 21, 2013

 

Butson’s Enterprises, Inc. Financing Statement

 

See attached.

 



 

Exhibit A-4
Opinion of Dorsey & Whitney LLP
March 21, 2013

 

Champlin 2005 L.L.C. Financing Statement

 

See attached.

 



 

Exhibit A-5
Opinion of Dorsey & Whitney LLP
March 21, 2013

 

Eastern Region Management Corporation Financing Statement

 

See attached.

 



 

Exhibit A-6
Opinion of Dorsey & Whitney LLP
March 21, 2013

 

FF Acquisition L.L.C. Financing Statement

 

See attached.

 



 

Exhibit A-7
Opinion of Dorsey & Whitney LLP
March 21, 2013

 

Foodarama LLC Financing Statement

 

See attached.

 



 

Exhibit A-8
Opinion of Dorsey & Whitney LLP
March 21, 2013

 

Moran Foods, LLC Financing Statement

 

See attached.

 



 

Exhibit A-9
Opinion of Dorsey & Whitney LLP
March 21, 2013

 

Richfood Holdings, Inc. Financing Statement

 

See attached.

 



 

Exhibit A-10
Opinion of Dorsey & Whitney LLP
March 21, 2013

 

Richfood, Inc. Financing Statement

 

See attached.

 



 

Exhibit A-11
Opinion of Dorsey & Whitney LLP
March 21, 2013

 

Richfood Procurement, L.L.C. Financing Statement

 

See attached.

 



 

Exhibit A-12
Opinion of Dorsey & Whitney LLP
March 21, 2013

 

Save-A-Lot Tyler Group, LLC Financing Statement

 

See attached.

 



 

Exhibit A-13
Opinion of Dorsey & Whitney LLP
March 21, 2013

 

Scott’s Food Stores, Inc. Financing Statement

 

See attached.

 



 

Exhibit A-14
Opinion of Dorsey & Whitney LLP
March 21, 2013

 

SFW Holding Corp. Financing Statement

 

See attached.

 



 

Exhibit A-15
Opinion of Dorsey & Whitney LLP
March 21, 2013

 

SFW Licensing Corp. Financing Statement

 

See attached.

 



 

Exhibit A-16
Opinion of Dorsey & Whitney LLP
March 21, 2013

 

Shop ‘N Save St. Louis, Inc. Financing Statement

 

See attached.

 



 

Exhibit A-17
Opinion of Dorsey & Whitney LLP
March 21, 2013

 

Shop ‘N Save Warehouse Foods, Inc. Financing Statement

 

See attached.

 



 

Exhibit A-18
Opinion of Dorsey & Whitney LLP
March 21, 2013

 

Shoppers Food Warehouse Corp. Financing Statement

 

See attached.

 



 

Exhibit A-19
Opinion of Dorsey & Whitney LLP
March 21, 2013

 

Super Rite Foods, Inc. Financing Statement

 

See attached.

 



 

Exhibit A-20
Opinion of Dorsey & Whitney LLP
March 21, 2013

 

Supermarket Operators of America Inc. Financing Statement

 

See attached.

 



 

Exhibit A-21
Opinion of Dorsey & Whitney LLP
March 21, 2013

 

SUPERVALU Holdings, Inc. Financing Statement

 

See attached.

 



 

Exhibit A-22
Opinion of Dorsey & Whitney LLP
March 21, 2013

 

SUPERVALU Holdings-PA LLC Financing Statement

 

See attached.

 



 

Exhibit A-23
Opinion of Dorsey & Whitney LLP
March 21, 2013

 

SUPERVALU Pharmacies, Inc. Financing Statement

 

See attached.

 



 

Exhibit A-24
Opinion of Dorsey & Whitney LLP
March 21, 2013

 

SUPERVALU Transportation, Inc. Financing Statement

 

See attached.

 



 

Exhibit A-25
Opinion of Dorsey & Whitney LLP
March 21, 2013

 

SUPERVALU TTSJ, INC. Financing Statement

 

See attached.

 



 

Exhibit A-26
Opinion of Dorsey & Whitney LLP
March 21, 2013

 

SVH Realty, Inc. Financing Statement

 

See attached.

 



 

Exhibit A-27
Opinion of Dorsey & Whitney LLP
March 21, 2013

 

W. Newell & Co., LLC Financing Statement

 

See attached.

 

K-1



 

Exhibit L
to the Credit Agreement

 

FORM OF DDA NOTIFICATION

 

PREPARE ON BORROWER LETTERHEAD - ONE FOR EACH DEPOSITORY

 

[DATE]

 

To:                              [Name and Address of Bank]

 

Re:                              [                                            ]

The Account Numbers referenced on Exhibit A annexed hereto

 

Dear Sir/Madam:

 

This letter relates to the Account Numbers referenced on Exhibit A annexed hereto and any other depository account(s) (collectively the “ Account ”) which [                            ], a [                                ] with an address at [                                   ] (the “ Borrower ”), now or hereafter maintains with you.  The term “Account” shall also mean any certificates of deposit, investments, or other evidence of indebtedness heretofore or hereafter issued by you to or for the account of the Borrower.

 

The Borrower and certain of its affiliates have entered into separate financing agreements with each of (a) Wells Fargo Bank, National Association, with an office at One Boston Place, 18th Floor, Boston, Massachusetts 02108-4407, as administrative and collateral agent (in such capacity, together with its successors and assigns, and any replacement agent pursuant to a replacement asset-based revolving credit financing, the “ Revolving Loan Agent ”) for its own benefit and the benefit of a syndicate of revolving lenders and certain other credit parties (together with their successors and assigns, and any replacement lenders pursuant to a replacement asset-based revolving credit financing, the “ Revolving Credit Parties ”), which are making loans or furnishing other financial accommodations to [                      ]; and (b) Goldman Sachs Bank USA, with an office at 6031 Connection Drive, Irving, Texas 75039, c/o Goldman Sachs Group, Inc., as administrative and collateral agent (in such capacity, together with its successors and assigns, and any replacement agent pursuant to a replacement term loan credit financing, the “ Term Loan Agent ”) for its own benefit and the benefit of a syndicate of term lenders (together with their successors and assigns, and any replacement lenders pursuant to a replacement term loan credit financing, the “ Term Credit Parties ”), which are making term loans to the Borrower and certain of its affiliates.

 

For purposes of this letter, the term “ Lender Representative ” as used herein shall mean Revolving Loan Agent until such time as Revolving Loan Agent notifies you in writing (at your address above) that the Lender Representative shall be Term Loan Agent, and on and after

 

L-1



 

delivery of such notice from Revolving Loan Agent to you, the term “Lender Representative” shall mean Term Loan Agent.

 

The Borrower has granted to the Revolving Loan Agent (for its own benefit and the benefit of the Revolving Credit Parties) and to the Term Loan Agent (for its own benefit and the benefit of the Term Credit Parties) security interests in and to, among other things, the Borrower’s accounts, accounts receivable, inventory, and proceeds therefrom, including, without limitation, the proceeds now or hereafter deposited in the Account or evidenced thereby.  Consequently, the present and all future contents of the Account constitute the collateral of Revolving Loan Agent and Term Loan Agent.

 

Until you receive written notification from the Lender Representative that the interest of the Revolving Loan Agent, the other Revolving Credit Parties, the Term Loan Agent and the Term Credit Parties in the Accounts has been terminated, all funds from time to time on deposit in each of the Accounts, net of such minimum balance, not to exceed $[                    ], shall be transferred [on each business day] [lesser frequency for remote accounts to be determined] as follows:

 

(a)                                  By ACH, Depository Transfer Check, or Electronic Depository Transfer to:

 

[Blocked Account Details]

ABA #                                          

Account No.                                 

Re:                                                

 

or

 

(b)                                  As you may be otherwise instructed from time to time in writing by an officer of the Lender Representative.

 

Upon request of the Lender Representative, a copy of each statement issued with respect to the Account should be provided to the Revolving Loan Agent and Term Loan Agent at the following addresses (which address may be changed upon seven (7) days’ written notice given to you by the Revolving Loan Agent or Term Loan Agent, as applicable):

 

If to Revolving Loan Agent:

 

Wells Fargo Bank, National Association

One Boston Place, 18th Floor

Boston, Massachusetts 02108-4407

Attn: Portfolio Manager - Supervalu

Fax No.: (866) 617-3988

 

If to Term Loan Agent:

 

Goldman Sachs Bank USA

c/o Goldman Sachs Group, Inc.

 

L-2



 

6031 Connection Drive

Irving, Texas 75039

Attention: Ken Moua

Telephone: 972-368-2746

Email: gs-sbdagency-borrowernotices@ny.email.gs.com

 

You shall be fully protected in acting on any order or direction by the Lender Representative given in accordance with terms of this DDA Notification respecting the Accounts without making any inquiry whatsoever as to the Lender Representative’s right or authority to give such order or direction or as to the application of any payment made pursuant thereto.  Nothing contained herein is intended to, nor shall it be deemed to, modify the rights and obligations of the Borrower and the Revolving Loan Agent or Term Loan Agent under the terms of the respective loan arrangement and the loan documents executed in connection therewith between, among others, the Borrower and Revolving Loan Agent, and the Borrower and Term Loan Agent.

 

This letter may be amended only by notice in writing signed by the Borrower and an officer of the Revolving Loan Agent and Term Loan Agent.  The letter may be terminated solely by written notice signed by an officer of the Revolving Loan Agent and Term Loan Agent.

 

[signature page follows]

 

L-3



 

 

Very truly yours,

 

 

 

 

 

[                                        ], as Borrower

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

cc:

 

Wells Fargo Bank, National Association, as Revolving Loan Agent
Goldman Sachs Bank USA, as Term Loan Agent

 

L-4



 

Exhibit A

 

Accounts

 

[see attached]

 

L-5



 

Exhibit M
to the Credit Agreement

 

FORM OF CREDIT CARD NOTIFICATION

 

[SUPERVALU INC. Letterhead]

 

                             , 2012

 

BY CERTIFIED MAIL — RETURN RECEIPT REQUESTED & UPS NEXT DAY AIR

 

To:                              [                      ]

                                                [                      ]

                                                [                      ]

(the “ Processor ”)

 

Re:                              [                      ] 29

Merchant Account Number:                               

 

Dear Sir/Madam:

 

[                      ] 30 , a                                        with its principal executive offices at 7075 Flying Cloud Drive, Eden Prairie, Minnesota (the “ Company ”), among others, has entered into separate financing agreements with each of (a) WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association, with offices at One Boston Place, 18 th  Floor, Boston, Massachusetts 02108, as administrative agent and collateral agent (in such capacity herein, together with its successors and assigns, and any replacement agent pursuant to a replacement asset-based revolving credit financing, the “ Revolving Loan Agent ”) for its own benefit and the benefit of a syndicate of revolving lenders and certain other credit parties (together with their successors and assigns, and any replacement lenders pursuant to a replacement asset-based revolving credit financing, the “ Revolving Loan Credit Parties ”) which are making loans or furnishing other financial accommodations to the Company and certain of its affiliates, and (b) GOLDMAN SACHS BANK USA, having an office at 6031 Connection Drive, Irving, Texas 75039, c/o Goldman Sachs Group, Inc., as administrative and collateral agent (in such capacity herein, together with its successors and assigns, and any replacement agent pursuant to a replacement term loan credit financing, the “ Term Loan Agent ”) for its own benefit and the benefit of a syndicate of term lenders and certain other credit parties (together with their successors and assigns, and any replacement credit parties pursuant to a replacement term loan credit financing, the “ Term Loan Credit Parties ”) which are making loans to SUPERVALU INC. (the “ Lead Borrower ”), pursuant to which agreements the Company, among others, has granted

 


29                                       Insert applicable Supervalu company

 

30                                       Insert applicable Supervalu company

 

M-6



 

to the Revolving Loan Agent, for its own benefit and the benefit of the other Revolving Loan Credit Parties, and to the Term Loan Agent, for its own benefit and the benefit of the other Term Loan Credit Parties, a security interest in and to, among other things, certain of the assets of the Company (the “ Collateral ”), including, without limitation, all credit and debit card charges submitted by the Company to the Processor for processing and all amounts which the Processor owes to the Company on account thereof (the “ Credit Card Proceeds ”).

 

The Processor has entered into arrangements pursuant to which Processor acts as credit card processing service provider to the Company and certain of its subsidiaries and affiliates in connection with sales by the Company and such subsidiaries and affiliates to their customers using credit cards and debit cards as set forth in the                                                   , by and between Processor and the Company (together with any replacement agreement thereto, the “ Card Processing Agreement ”).

 

For purposes of this Credit Card Notification, the term “Lender Representative” as used herein shall mean Revolving Loan Agent until such time as Revolving Loan Agent notifies the Processor in writing (at the Processor’s address above) that the Lender Representative shall be Term Loan Agent, and on and after delivery of such notice from Revolving Loan Agent to the undersigned, the term “Lender Representative” shall mean Term Loan Agent.

 

Notwithstanding anything to the contrary contained in the Card Processing Agreement or any prior instructions which may have been given to the Processor, unless and until Processor receives written instructions from the Lender Representative to the contrary, effective as of the date hereof, all amounts as may become due from time to time from the Processor to the Company pursuant to the Card Processing Agreement or otherwise shall be transferred only as follows:

 

a.                                       By [Wire Transfer] [ACH (for American Express only)] to one of the deposit accounts described on Schedule I hereto, as such Schedule may be supplemented from time to time in writing by an officer of the Company and confirmed in writing by an officer of the Lender Representative:

or

 

b.                                       As the Processor may be otherwise instructed from time to time in writing by an officer of the Revolving Loan Agent.

 

Upon the request of the Revolving Loan Agent or the Term Loan Agent, a copy of each periodic statement provided or made available by the Processor to the Company shall be provided to the Lender Representative at the following address (which address may be changed upon seven (7) days written notice given to the Processor by the Revolving Loan Agent or the Term Loan Agent, as applicable):

 

M-7



 

If to Revolving Loan Agent :

 

Wells Fargo Bank, National Association
One Boston Place, 18
th  Floor
Boston, MA 02108
Attention:  Portfolio Manager - Supervalu
Facsimile: 866.617.3988
Re:  Supervalu

 

If to Term Loan Agent :

 

Goldman Sachs Bank USA
c/o Goldman Sachs Group, Inc.
6031 Connection Drive
Irving, Texas 75039
Attention: Ken Moua
Telephone: 972-368-2746
Email: gs-sbdagency-borrowernotices@ny.email.gs.com

 

The Processor shall be fully protected in acting on any order or direction by the Lender Representative given in accordance with the terms of this Credit Card Notification respecting the Credit Card Proceeds without making any inquiry whatsoever as to the Revolving Loan Agent’s or the Term Loan Agent’s right or authority to give such order or direction or as to the application of any payment made pursuant thereto.

 

This Credit Card Notification may be amended only by a written notice executed by the Company and the Lender Representative, and may be terminated solely by written notice signed by an officer of the Lender Representative.  The Company shall not have any right to terminate this Credit Card Notification or, except as provided in this Credit Card Notification, amend it.

 

This Credit Card Notification may be executed and delivered by telecopier or other method of electronic transmission with the same force and effect as if it were a manually executed and delivered counterpart.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

M-8



 

THIS CREDIT CARD NOTIFICATION AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.

 

 

Very truly yours,

 

 

 

[                      ] 31

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

cc:                                 Wells Fargo Bank, National Association, as Revolving Loan Agent

Goldman Sachs Bank USA, as Term Loan Agent

 


31                                   Insert applicable Supervalu company

 

M-9



 

Schedule I

to

Credit Card Notification

 

Deposit Accounts

 

Bank

 

ABA #

 

Name on Account

 

Account #

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

M-10



 

Exhibit N
to the Credit Agreement

 

CLOSING DATE COLLATERAL LIST

 

(See attached)

 

[**]

 


** Denotes confidential information that has been omitted from the exhibit and filed separately, accompanied by a confidential treatment request, with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934.

 

N-1



 

Exhibit O
to the Credit Agreement

 

FORM OF UNITED STATES TAX COMPLIANCE CERTIFICATE 32

 

Reference is made to that certain Term Loan Credit Agreement, dated as of March 21, 2013 (as amended, restated, replaced, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), among SUPERVALU Inc., a Delaware corporation (the “ Borrower ”), the Guarantors party thereto, the Lenders parties thereto and Goldman Sachs Bank USA, as Administrative Agent (in such capacity, including any successor thereto, the “ Administrative Agent ”) and Collateral Agent for the Secured Parties.  [NAME OF FOREIGN LENDER] (the “ Foreign Lender ”) provides this certificate pursuant to Section 2.20(e)  of the Credit Agreement (together with any other documentation required to be provided by it pursuant to Section 2.20(e) ), in respect of Loans made to the Borrower.  Terms defined in the Credit Agreement and not otherwise defined herein shall have the meanings defined for them in the Credit Agreement.  The Foreign Lender hereby represents and warrants that:

 

1.               The Foreign Lender is the sole beneficial owner of the Loans in respect of which it is providing this certificate.

 

2.               The Foreign Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code.

 

3.               The Foreign Lender is not a “10-percent shareholder” of any Loan Party within the meaning of Section 871(h)(3)(B) of the Code.

 

4.               The Foreign Lender is not a “controlled foreign corporation” related to any Loan Party within the meaning of Section 864(d)(4) of the Code.

 


32                                       If the Foreign Lender is an intermediary, a foreign partnership or other flow-through entity, the following adjustments shall be made:

 

A.             The following representations shall be provided as applied to the partners or the members claiming the portfolio interest exemption:

 

·                   the status in Clause 1;

·                   the status in Clause 3; and

·                   the status in Clause 4.

 

B.             The following representation shall be provided as applied to the Foreign Lender as well as the members/ beneficial owners claiming the portfolio interest exemption.

 

·                   The status in Clause 2.

 

C.             The Foreign Lender shall provide an Internal Revenue Service Form W-8IMY (with W-8BENs/ W-9s from each of its partners/ members).

 

D.             Appropriate adjustments shall be made in the case of tiered intermediaries or tiered partnerships/ flow-through entities.

 

O-1



 

IN WITNESS WHEREOF, the undersigned has duly executed this certificate.

 

 

 

[NAME OF FOREIGN LENDER]

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

 

 

Date:

 

 

O-2



 

Exhibit P
to the Credit Agreement

 

Exhibit P
to the Credit Agreement

 

FORM OF RELATED COLLATERAL SECURITY AGREEMENT

 

(See attached)

 



 

 

 

RELATED REAL ESTATE COLLATERAL SECURITY AGREEMENT

 

dated as of

 

[                    ], 20[    ]

 

by

 

THE LOAN PARTY LISTED ON THE SIGNATURE PAGES HERETO

 

in favor of

 

GOLDMAN SACHS BANK USA,
as Collateral Agent

 

 

 

2



 

Table of Contents

 

ARTICLE I DEFINITIONS AND INTERPRETATION

1

 

 

 

SECTION 1.1 Definitions

1

 

SECTION 1.2 Interpretation

3

 

SECTION 1.3 Perfection Certificate

3

 

 

 

ARTICLE II GRANT OF SECURITY AND SECURED OBLIGATIONS

3

 

 

 

SECTION 2.1 Pledge; Grant of Security Interest

3

 

SECTION 2.2 Secured Obligations

4

 

SECTION 2.3 Security Interest

4

 

SECTION 2.4 [Limitation on Secured Obligations

4

 

 

 

ARTICLE III PERFECTION; SUPPLEMENTS; FURTHER ASSURANCES; USE OF COLLATERAL

4

 

 

 

SECTION 3.1 Financing Statements and Other Filings; Maintenance of Perfected Security Interest

4

 

SECTION 3.2 Supplements; Further Assurances

5

 

SECTION 3.3 Grant of License

5

 

 

 

ARTICLE IV REPRESENTATIONS, WARRANTIES AND COVENANTS

6

 

 

 

SECTION 4.1 Title

6

 

SECTION 4.2 Limitation on Liens; Defense of Claims; Transferability of Collateral

6

 

SECTION 4.3 Chief Executive Office; Change of Name; Jurisdiction of Organization

6

 

SECTION 4.4 No Conflicts, Consents, etc.

7

 

SECTION 4.5 Collateral

7

 

SECTION 4.6 Insurance

7

 

SECTION 4.7 Payment of Taxes; Compliance with Laws; Contested Liens; Claims

7

 

 

 

ARTICLE V REMEDIES

8

 

 

 

SECTION 5.1 Remedies

8

 

SECTION 5.2 Notice of Sale

9

 

SECTION 5.3 Waiver of Notice and Claims

9

 

SECTION 5.4 Certain Sales of Collateral

10

 

SECTION 5.5 No Waiver; Cumulative Remedies

10

 

SECTION 5.6 Application of Proceeds

10

 

SECTION 5.7 Third Party Agreements

10

 

 

 

ARTICLE VI MISCELLANEOUS

11

 

 

 

SECTION 6.1 Concerning the Collateral Agent

11

 

SECTION 6.2 Collateral Agent May Perform; Collateral Agent Appointed Attorney-in-Fact

11

 

SECTION 6.3 Expenses

12

 

SECTION 6.4 Continuing Security Interest; Assignment

12

 

SECTION 6.5 Termination; Release

12

 

SECTION 6.6 Modification in Writing

13

 

i



 

 

SECTION 6.7 Notices

13

 

SECTION 6.8 GOVERNING LAW

13

 

SECTION 6.9 CONSENT TO JURISDICTION; SERVICE OF PROCESS; WAIVER OF JURY TRIAL

14

 

SECTION 6.10 Severability of Provisions

15

 

SECTION 6.11 Execution in Counterparts; Effectiveness

15

 

SECTION 6.12 No Release

15

 

SECTION 6.13 Obligations Absolute

15

 

SECTION 6.14 Intercreditor Agreement

16

 

ii



 

EXHIBIT 1

 

[Mortgaged Property][Material Related Collateral Location]

 

 

 

SCHEDULE 3.2

 

Filings, Registrations and Recordings

SCHEDULE 4.3(a)

 

Other Legal and Fictitious Names, Mergers, Consolidations, Acquisitions

 

iii



 

RELATED REAL ESTATE COLLATERAL SECURITY AGREEMENT

 

RELATED REAL ESTATE COLLATERAL SECURITY AGREEMENT, dated as of [                      ] , 20 [      ] (as amended, amended and restated, supplemented or otherwise modified from time to time in accordance with the provisions hereof, this “ Related Real Estate Collateral Security Agreement ”) made by the Loan Party listed on the signature pages hereto, as pledgor, assignor and debtor (in such capacities and together with any successors in such capacities, the “ Grantor ”), in favor of GOLDMAN SACHS BANK USA, having an office at [                ], in its capacity as collateral agent for the Secured Parties, as pledgee, assignee and secured party (in such capacities and together with any successors in such capacities, the “ Collateral Agent ”).

 

R E C I T A L S :

 

A.            The Borrower, the Collateral Agent, the Guarantors party thereto and the Lenders party thereto have, in connection with the execution and delivery of this Related Real Estate Collateral Security Agreement, entered into that certain Term Loan Credit Agreement, dated as of March 21, 2013 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”).

 

B.            Pursuant to the terms of the Credit Agreement, the Grantor which is [the Borrower] [or] [a Guarantor] under the Credit Agreement, agreed to execute and deliver [a Mortgage granting a Lien on the Mortgaged Property and] this Related Real Estate Collateral Security Agreement.

 

C.            The Grantor received substantial benefits from the execution, delivery and performance of the Credit Agreement and is, therefore, willing to enter into this Related Real Estate Collateral Security Agreement.

 

D.            This Related Real Estate Collateral Security Agreement is given by the Grantor in favor of the Collateral Agent for the benefit of the Secured Parties to secure the payment and performance of all of the Secured Obligations (as hereinafter defined).

 

A G R E E M E N T :

 

NOW THEREFORE, in consideration of the foregoing premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Grantor and the Collateral Agent hereby agree as follows:

 

ARTICLE I

 

DEFINITIONS AND INTERPRETATION

 

SECTION 1.1  Definitions .

 

(a)           Unless otherwise defined herein or in the Credit Agreement, capitalized terms used herein that are defined in the UCC shall have the meanings assigned to them in the UCC.

 

1



 

(b)           Capitalized terms used but not otherwise defined herein that are defined in the Credit Agreement shall have the meanings assigned to them in the Credit Agreement.

 

(c)           The following terms shall have the following meanings:

 

ABL Priority Collateral ” shall have the meaning assigned to such term in the Intercreditor Agreement.

 

Claims ” shall mean any and all property taxes and other taxes, assessments and special assessments, levies, fees and all governmental charges imposed upon or assessed against, and all claims (including, without limitation, landlords’, carriers’, mechanics’, workmen’s, repairmen’s, laborers’, materialmen’s, suppliers’ and warehousemen’s Liens and other claims arising by operation of law) against, all or any portion of the Collateral.

 

Collateral ” shall have the meaning assigned to such term in Section 2.1 hereof.

 

Collateral Agent ” shall have the meaning assigned to such term in the Preamble hereof.

 

Credit Agreement ” shall have the meaning assigned to such term in Recital A hereof.

 

Excluded Assets ” shall mean the following:

 

(a)   any rights or interests in any contract, agreement, lease, permit, license, charter or license agreement, as such, if under the terms of such contract, agreement, lease, permit, license, charter or license agreement, or applicable law with respect thereto, the valid grant of a Lien therein to the Collateral Agent would constitute or result in a breach, termination or default under such contract, agreement, lease, permit, license, charter or license agreement and such breach, termination or default has not been or is not waived or the consent of the other party to such contract, agreement, lease, permit, license, charter or license agreement has not been or is not otherwise obtained or under applicable law such prohibition cannot be waived; provided , that , the foregoing exclusion shall in no way be construed (i) to apply if any such prohibition is unenforceable under Sections 9-406, 9-407 or 9-408 of the UCC or other applicable law or (ii) so as to limit, impair or otherwise affect the Collateral Agent’s unconditional continuing Liens in any rights or interests of the Grantor in or to monies due or to become due under any such contract, lease, permit, license, charter or license agreement;

 

(b)   ABL Priority Collateral.

 

Grantor ” shall have the meaning assigned to such term in the Preamble hereof.

 

Intellectual Property ” shall mean “Patents,” “Trademarks,” “Copyrights,” “Licenses” and “Goodwill” (each as defined in the Security Agreement) of the Grantor.

 

[“ Material Related Collateral Location ” means the Material Related Collateral Location of the Grantor described in Exhibit 1 hereto.]

 

2



 

[“ Mortgage ” shall mean the [mortgage or deed of trust] of even date herewith made by the Grantor in favor of the Collateral Agent and covering the Mortgaged Property, as the same may be amended, supplemented, restated or otherwise modified and in effect from time to time.]

 

[“ Mortgaged Property ” means the real property described in Exhibit 1 hereto.]

 

Perfection Certificate ” shall mean that certain Perfection Certificate, dated as of the Closing Date, executed and delivered by the Grantor in favor of the Collateral Agent for the benefit of the Secured Parties, as the same may be amended, supplemented, restated or otherwise modified and in effect from time to time in accordance with the Credit Agreement.

 

Secured Obligations ” shall mean the Obligations and the Guaranteed Obligations (as defined in the Facility Guaranty)[, subject to the limitations set forth in Section 2.4 ].

 

Related Real Estate Collateral Security Agreement ” shall have the meaning assigned to such term in the Preamble hereof.

 

Specified Fixed Asset Collateral ” shall mean all Equipment owned by any Grantor from time to time located on the [Mortgaged Property (but only while located on the Mortgaged Property)] [Material Related Collateral Location (but only while located on the Material Related Collateral Location)], other than (a) rolling stock and (b) air or automobile equipment, information technology equipment and leasehold improvements located on operating lease sites (but including all other fixtures).

 

UCC ” means the Uniform Commercial Code as in effect from time to time in the State of New York; provided , that , (a) if a term is defined in Article 9 of the Uniform Commercial Code differently than in another Article thereof, the term shall have the meaning set forth in Article 9 of the Uniform Commercial Code and (b) if by reason of mandatory provisions of law, perfection, or the effect of perfection or non-perfection, of a security interest in any Collateral or the availability of any remedy hereunder is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York, “UCC” means the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions hereof relating to such perfection or effect of perfection or non-perfection or availability of such remedy, as the case may be.

 

SECTION 1.2  Interpretation .  The rules of interpretation specified in Section 1.02 of the Credit Agreement shall be applicable to this Related Real Estate Collateral Security Agreement.

 

SECTION 1.3  Perfection Certificate .  The Collateral Agent and the Grantor agree that the Perfection Certificate and all schedules, amendments and supplements thereto are, and shall at all times remain, a part of this Related Real Estate Collateral Security Agreement.

 

ARTICLE II

 

GRANT OF SECURITY AND SECURED OBLIGATIONS

 

SECTION 2.1  Pledge; Grant of Security Interest .  As collateral security for the payment and performance in full of all the Secured Obligations, the Grantor hereby pledges and grants to the Collateral Agent for

 

3



 

its benefit and for the benefit of the other Secured Parties, a lien on and security interest in and to all of the right, title and interest of the Grantor in, to and under the following personal property and interests in such personal property, wherever located, and whether now existing or hereafter arising or acquired from time to time (collectively, the “ Collateral ”):

 

(a)   all Specified Fixed Asset Collateral;

 

(b)   all books and records and documents relating to the Collateral (whether tangible or electronic, which contain any information relating to any of the foregoing), but only to the extent necessary or desirable to sell, transfer or otherwise realize on any of the other Collateral; and

 

(c)   all Proceeds of the foregoing and all accessions to, substitutions and replacements for, and rents, profits and products of, each of the foregoing, any and all proceeds of any insurance (including proceeds of business interruption and other insurance claims against third parties), indemnity, warranty or guaranty payable to the Grantor from time to time with respect to any of the foregoing.

 

Notwithstanding anything to the contrary contained in clauses (a)  through (d)  above, the security interest created by this Related Real Estate Collateral Security Agreement shall not extend to, and the term “Collateral” shall not include, any Excluded Assets and the Grantor shall from time to time at the request of the Collateral Agent give written notice to the Collateral Agent identifying in reasonable detail the Excluded Assets described in clause (a) of the definition thereof and shall provide to the Collateral Agent such other information regarding such Excluded Assets as the Collateral Agent may reasonably request.

 

SECTION 2.2  Secured Obligations .  This Related Real Estate Collateral Security Agreement secures, and the Collateral is collateral security for, the payment and performance in full when due of the Secured Obligations.

 

SECTION 2.3  Security Interest .

 

(a)           The Grantor hereby irrevocably authorizes the Collateral Agent at any time and from time to time to authenticate and file in any relevant jurisdiction any financing statements (including fixture filings) and amendments thereto that contain the information required by Article 9 of the UCC of each applicable jurisdiction for the filing of any financing statement or amendment relating to the Collateral, including, without limitation, (i) the type of organization and any organizational identification number issued to the Grantor and (ii) a description of the Collateral.  The Grantor agrees to provide all information described in the immediately preceding sentence to the Collateral Agent promptly upon request.

 

(b)           Each Grantor hereby ratifies its prior authorization for the Collateral Agent to file in any relevant jurisdiction any financing statements or amendments thereto relating to the Collateral if filed prior to the date hereof.

 

SECTION 2.4  [Limitation on Secured Obligations .  Notwithstanding any provision herein to the contrary, the amount of the Secured Obligations secured by the [Mortgaged Property][Specified Fixed Asset Collateral located on the Material Related Collateral Location] and the related Collateral that is

 

4



 

“Operating Property” (as defined in the SVU Indenture as then in effect) shall be automatically limited to the maximum amount of the Secured Obligations permitted to be secured by such assets without violating the terms of the SVU Indenture and without giving rise, to any obligation on the part of any Loan Party to grant a Lien on any of its assets to secure Indebtedness governed by or subject to the terms of the SVU Indenture.] 1

 

ARTICLE III

 

PERFECTION; SUPPLEMENTS; FURTHER ASSURANCES; USE OF COLLATERAL

 

SECTION 3.1  Financing Statements and Other Filings; Maintenance of Perfected Security Interest (d)    .  The Grantor represents and warrants that the only filings, registrations and recordings necessary and appropriate to create, preserve, protect, publish notice of and perfect the security interest granted by the Grantor to the Collateral Agent (for the benefit of the Secured Parties) pursuant to this Related Real Estate Collateral Security Agreement in respect of the Collateral are listed in Schedule 3.2 hereto.  The Grantor represents and warrants that all such filings, registrations and recordings have been delivered to the Collateral Agent in completed and, to the extent necessary or appropriate, duly executed form for filing in each governmental, municipal or other office specified in Schedule 3.2 hereto.  The Grantor agrees that at the sole cost and expense of the Grantor, (a) the Grantor will maintain the security interest created by this Related Real Estate Collateral Security Agreement in the Collateral as a perfected first priority security interest (subject to Permitted Encumbrances having priority by operation of law) and shall defend such security interest against the claims and demands of all Persons (other than with respect to Permitted Encumbrances), (b) the Grantor shall furnish to the Collateral Agent from time to time statements and schedules further identifying and describing the Collateral and such other reports in connection with the Collateral as the Collateral Agent may reasonably request, all in reasonable detail and (c) at any time and from time to time, upon the written request of the Collateral Agent, the Grantor shall promptly and duly execute and deliver, and file and have recorded, such further instruments and documents and take such further action as the Collateral Agent may reasonably request, including the filing of any financing statements, continuation statements and other documents (including this Related Real Estate Collateral Security Agreement) under the UCC (or other applicable Law) in effect in any jurisdiction with respect to the security interest created hereby wherever required by applicable Law in each case to perfect, continue and maintain a valid, enforceable, first priority security interest (subject to Permitted Encumbrances having priority by operation of law) as provided herein and to preserve the other rights and interests granted to the Collateral Agent hereunder, as against the Grantor and third parties (other than with respect to Permitted Encumbrances), with respect to the Collateral.

 

SECTION 3.2  Supplements; Further Assurances .  The Grantor shall take such further actions, and execute and deliver to the Collateral Agent such additional assignments, agreements, supplements, powers and instruments, as the Collateral Agent may in its reasonable judgment deem necessary or appropriate, wherever required by Law, in order to perfect, preserve and protect the security interest in the Collateral as provided herein and the rights and interests granted to the Collateral

 


1  To be included only if this Related Real Estate Collateral Security Agreement is entered into in connection with the execution and delivery of a Mortgage or other grant of security interest on “Operating Property” (as defined in the SVU Indenture) as then in effect.

 

5



 

Agent hereunder, or better to assure and confirm unto the Collateral Agent or permit the Collateral Agent to exercise and enforce its rights, powers and remedies hereunder with respect to any Collateral.  Without limiting the generality of the foregoing, the Grantor shall make, execute, endorse, acknowledge, file or refile and/or deliver to the Collateral Agent from time to time upon reasonable request such lists, descriptions and designations of the Collateral, copies of warehouse receipts, receipts in the nature of warehouse receipts, bills of lading, documents of title, vouchers, invoices, schedules, confirmatory assignments, supplements, additional security agreements, conveyances, financing statements, transfer endorsements, powers of attorney, certificates, reports and other assurances or instruments.  If an Event of Default has occurred and is continuing, the Collateral Agent may institute and maintain, in its own name or in the name of the Grantor, such suits and proceedings as the Collateral Agent may be advised by counsel shall be necessary or expedient to prevent any impairment of the security interest in or the perfection thereof in the Collateral.  All of the foregoing shall be at the sole cost and expense of the Grantor.  The Grantor and the Collateral Agent acknowledge that this Related Real Estate Collateral Security Agreement is intended to grant to the Collateral Agent for the benefit of the Secured Parties a security interest in and Lien upon the Collateral and shall not constitute or create a present assignment of any of the Collateral.

 

SECTION 3.3  Grant of License .  For the purpose of enabling the Collateral Agent, during the continuance of an Event of Default, to exercise rights and remedies under Article V hereof at such time as the Collateral Agent shall be lawfully entitled to exercise such rights and remedies, and for no other purpose, the Grantor hereby grants to the Collateral Agent, to the extent assignable, an irrevocable, non-exclusive license (exercisable without payment of royalty or other compensation to the Grantor) to use, assign, license or sublicense any of the Intellectual Property now owned or hereafter acquired by the Grantor, wherever the same may be located, including in such license access to all media in which any of the licensed items may be recorded or stored and to all computer programs used for the compilation or printout hereof.

 

ARTICLE IV

 

REPRESENTATIONS, WARRANTIES AND COVENANTS

 

In addition to, and without limitation of, each of the representations, warranties and covenants set forth in the Credit Agreement and the other Loan Documents, the Grantor represents, warrants and covenants as follows:

 

SECTION 4.1  Title (a) .  No financing statement, mortgage, or other public notice with respect to all or any part of the Collateral is on file or of record in any public office, except such as have been filed in favor of the Collateral Agent pursuant to this Related Real Estate Collateral Security Agreement or as are permitted by the Credit Agreement.  The security interests granted pursuant to this Related Real Estate Collateral Security Agreement constitute a legal and valid security interest in favor of the Collateral Agent, for the benefit of the Secured Parties, securing the payment and performance of the Grantor’s Obligations and upon completion of the filings and other actions specified on Schedule 3.2 hereto (all of which, in the case of all filings and other documents referred to on such Schedule, have been delivered to the Collateral Agent in duly completed and duly executed form, as applicable, and may be filed by the Collateral Agent at any time) and payment of all filing fees, will constitute fully perfected

 

6



 

security interests in all of the Collateral, prior to all other Liens on the Collateral except for Permitted Encumbrances arising by operation of law that have priority under such law.

 

SECTION 4.2  Limitation on Liens; Defense of Claims; Transferability of Collateral .  The Grantor, as to Collateral now owned by it or acquired by it from time to time after the date hereof, is or will be the sole direct and beneficial owner of such Collateral free from any Lien or other right, title or interest of any Person other than the Liens and security interest created by this Related Real Estate Collateral Security Agreement and Permitted Encumbrances.  The Grantor shall, at its own cost and expense, defend title to the Collateral pledged by it hereunder and the security interest therein and Lien thereon granted to the Collateral Agent and the priority thereof against all claims and demands of all Persons, at its own cost and expense, at any time claiming any interest therein adverse to the Collateral Agent or any other Secured Party other than Permitted Encumbrances.  There is no agreement, and the Grantor shall not enter into any agreement or take any other action, that would restrict the transferability of any of the Collateral or otherwise impair or conflict with the Grantor’s obligations or the rights of the Collateral Agent hereunder.

 

SECTION 4.3  Chief Executive Office; Change of Name; Jurisdiction of Organization .

 

(a)           The exact legal name, type of organization, jurisdiction of organization, federal taxpayer identification number, organizational identification number and the mailing address for purposes of completing a UCC-1 financing statement of such Grantor is indicated next to its name in Schedules I(A) and I(B) of the Perfection Certificate.  No Grantor has, during the four months prior to the date of this Related Real Estate Collateral Security Agreement, been known by or used any other legal or fictitious name or been a party to any merger or consolidation, or acquired all or substantially all of the assets of any Person, or acquired any of its property or assets out of the ordinary course of business, except as set forth in Schedule 4.3(a)  hereto.

 

(b)   The Collateral Agent may rely on advice of counsel as to whether any or all UCC financing statements of the Grantors need to be amended as a result of any of the changes described in Section 5.14 of the Credit Agreement [ or in any Periodic Update Schedule or Occurrence Update Schedule ] .  If any Grantor fails to provide information to the Collateral Agent about such changes on a timely basis, the Collateral Agent shall not be liable or responsible to any party for any failure to maintain a perfected security interest in such Grantor’s property constituting Collateral, for which the Collateral Agent needed to have information relating to such changes.  The Collateral Agent shall have no duty to inquire about such changes if any Grantor does not inform the Collateral Agent of such changes, the parties acknowledging and agreeing that it would not be feasible or practical for the Collateral Agent to search for information on such changes if such information is not provided by any Grantor.

 

SECTION 4.4  No Conflicts, Consents, etc .  No consent of any party (including, without limitation, equityholders or creditors of the Grantor) and no consent, authorization, approval, license or other action by, and no notice to or filing with, any Governmental Authority or regulatory body or other Person is required for the grant of the security interest by the Grantor of the Collateral pledged by it pursuant to this Related Real Estate Collateral Security Agreement or for the execution, delivery or performance hereof by the Grantor, except for the perfection or maintenance of the Liens created under this Related Real Estate Collateral Security Agreement

 

7



 

(including the first priority nature thereof, subject to Permitted Encumbrances having priority by operation of law) and such consents which have been obtained or made prior to the date hereof and are in full force and effect.  Following the occurrence and during the continuation of an Event of Default, if the Collateral Agent desires to exercise any remedies, voting or consensual rights or attorney-in-fact powers set forth in this Related Real Estate Collateral Security Agreement and determines it necessary to obtain any approvals or consents of any Governmental Authority or any other Person therefor, then, upon the reasonable request of the Collateral Agent, the Grantor agrees to use commercially reasonable efforts to assist and aid the Collateral Agent to obtain as soon as commercially practicable any necessary approvals or consents for the exercise of any such remedies, rights and powers.

 

SECTION 4.5  Collateral .  All information set forth herein, including the schedules annexed hereto, and all information contained in any documents, schedules and lists heretofore delivered to any Secured Party in connection with this Related Real Estate Collateral Security Agreement, in each case, relating to the Collateral, is accurate and complete in all material respects.  The Collateral described on the schedules annexed hereto constitutes all of the property of such type of Collateral owned or held by the Grantor.

 

SECTION 4.6  Insurance (c)  .  The Grantor shall (a) maintain or shall cause to be maintained such insurance as is required pursuant to Section 5.07 of the Credit Agreement; (b) maintain such other insurance as may be required by applicable Law; and (c) furnish to the Collateral Agent, upon written request, full information as to the insurance carried.  The Grantor hereby irrevocably makes, constitutes and appoints the Collateral Agent (and all officers, employees or agents designated by the Collateral Agent) as the Grantor’s true and lawful agent (and attorney-in-fact), exercisable only after the occurrence and during the continuance of an Event of Default, for the purpose of making, settling and adjusting claims in respect of the Collateral under policies of insurance, endorsing the name of the Grantor on any check, draft, instrument or other item of payment for the proceeds of such policies of insurance and for making all determinations and decisions with respect thereto.  In the event that the Grantor at any time or times shall fail to obtain or maintain any of the policies of insurance required hereby or to pay any premium in whole or in part relating thereto, the Collateral Agent may, without waiving or releasing any obligation or liability of the Grantor hereunder or any Default or Event of Default, in its sole discretion, obtain and maintain such policies of insurance and pay such premium and take any other actions with respect thereto as the Collateral Agent deems advisable.  All sums disbursed by the Collateral Agent in connection with this Section 4.6 , including reasonable attorneys’ fees, court costs, expenses and other charges relating thereto, shall be payable, upon demand, by the Grantor to the Collateral Agent and shall be additional Secured Obligations secured hereby.

 

SECTION 4.7  Payment of Taxes; Compliance with Laws; Contested Liens; Claims (d)  .  The Grantor represents and warrants that all Claims imposed upon or assessed against the Collateral have been paid and discharged except to the extent such Claims constitute a Lien not yet due and payable or a Permitted Encumbrance.  The Grantor shall comply with all applicable Law relating to the Collateral the failure to comply with which, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.  The Grantor may at its own expense contest the validity, amount or applicability of any Claims so long as the contest thereof shall be conducted in accordance with, and permitted pursuant to

 

8



 

the provisions of, the Credit Agreement.  Notwithstanding the foregoing provisions of this Section 4.7 , no contest of any such obligation may be pursued by the Grantor if such contest would expose the Collateral Agent or any other Secured Party to (a) any possible criminal liability or (b) any additional civil liability for failure to comply with such obligations unless the Grantor shall have furnished a bond or other security therefor satisfactory to the Collateral Agent or such other Secured Party, as the case may be.

 

ARTICLE V

 

REMEDIES

 

SECTION 5.1  Remedies .  Upon the occurrence and during the continuance of any Event of Default the Collateral Agent may, and at the direction of the Required Lenders, shall, from time to time in respect of the Collateral, in addition to the other rights and remedies provided for herein, under applicable Law or otherwise available to it, subject to the Intercreditor Agreement:

 

(a)           Personally, or by agents or attorneys, immediately take possession of the Collateral or any part thereof, from the Grantor or any other Person who then has possession of any part thereof with or without notice or process of law, and for that purpose may enter upon the Grantor’s premises where any of the Collateral is located, remove such Collateral, remain present at such premises to receive copies of all communications and remittances relating to the Collateral and use in connection with such removal and possession any and all services, supplies, aids and other facilities of the Grantor;

 

(b)           Demand, sue for, collect or receive any money or property at any time payable or receivable in respect of the Collateral including, without limitation, instructing the obligor or obligors on any agreement, instrument or other obligation constituting part of the Collateral to make any payment required by the terms of such agreement, instrument or other obligation directly to the Collateral Agent, and in connection with any of the foregoing, compromise, settle, extend the time for payment and make other modifications with respect thereto; provided , that , in the event that any such payments are made directly to the Grantor, prior to receipt by any such obligor of such instruction, the Grantor shall segregate all amounts received pursuant thereto in trust for the benefit of the Collateral Agent and shall promptly pay such amounts to the Collateral Agent;

 

(c)           Sell, assign, grant a license to use or otherwise liquidate, or direct the Grantor to sell, assign, grant a license to use or otherwise liquidate, any and all investments made in whole or in part with the Collateral or any part thereof, and take possession of the proceeds of any such sale, assignment, license or liquidation;

 

(d)           Take possession of the Collateral or any part thereof, by directing the Grantor in writing to deliver the same to the Collateral Agent at any place or places so designated by the Collateral Agent, in which event the Grantor shall at its own expense:  (i) forthwith cause the same to be moved to the place or places designated by the Collateral Agent and therewith delivered to the Collateral Agent, (ii) store and keep any Collateral so delivered to the Collateral Agent at such place or places pending further action by the Collateral Agent and (iii) while the Collateral shall be so stored and kept, provide such security and

 

9



 

maintenance services as shall be necessary to protect the same and to preserve and maintain them in good condition.  The Grantor’s obligation to deliver the Collateral as contemplated in this Section 5.1 is of the essence hereof.  Upon application to a court of equity having jurisdiction, the Collateral Agent shall be entitled to a decree requiring specific performance by the Grantor of such obligation;

 

(e)           Withdraw all moneys, instruments, securities and other property in any bank, financial securities, deposit or other account of the Grantor constituting Collateral for application to the Secured Obligations as provided in Section 7.02 of the Credit Agreement;

 

(f)            Exercise any and all rights as beneficial and legal owner of the Collateral, including, without limitation, perfecting assignment of and exercising any and all voting, consensual and other rights and powers with respect to any Collateral; and

 

(g)           Exercise all the rights and remedies of a secured party under the UCC, and the Collateral Agent may also in its sole discretion, without notice except as specified in Section 5.2 hereof, sell, assign or grant a license to use the Collateral or any part thereof in one or more parcels at public or private sale, at any exchange, broker’s board or at any of the Collateral Agent’s offices or elsewhere, for cash, on credit or for future delivery, and at such price or prices and upon such other terms as the Collateral Agent may deem commercially reasonable.  The Collateral Agent or any other Secured Party or any of their respective Affiliates may be the purchaser, licensee, assignee or recipient of any or all of the Collateral at any such sale and shall be entitled, for the purpose of bidding and making settlement or payment of the purchase price for all or any portion of the Collateral sold, assigned or licensed at such sale, to use and apply any of the Secured Obligations owed to such Person as a credit on account of the purchase price of any Collateral payable by such Person at such sale.  Each purchaser, assignee, licensee or recipient at any such sale shall acquire the property sold, assigned or licensed absolutely free from any claim or right on the part of the Grantor, and the Grantor hereby waives, to the fullest extent permitted by Law, all rights of redemption, stay and/or appraisal which it now has or may at any time in the future have under any rule of law or statute now existing or hereafter enacted.  The Collateral Agent shall not be obligated to make any sale of Collateral regardless of notice of sale having been given.  The Collateral Agent may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned.  To the fullest extent permitted by Law, the Grantor hereby waives any claims against the Collateral Agent arising by reason of the fact that the price at which any Collateral may have been sold, assigned or licensed at such a private sale was less than the price which might have been obtained at a public sale, even if the Collateral Agent accepts the first offer received and does not offer such Collateral to more than one offeree.

 

SECTION 5.2  Notice of Sale .  The Grantor acknowledges and agrees that, to the extent notice of sale or other disposition of Collateral shall be required by applicable Law and unless the Collateral is perishable or threatens to decline speedily in value, or is of a type customarily sold on a recognized market (in which event the Collateral Agent shall provide the Grantor such advance notice as may be practicable under the circumstances), 10 days’ prior notice to the Grantor of the time and place of any public sale or of the time after which any private sale or other intended disposition is to take place shall be commercially reasonable notification of such matters.  No

 

10



 

notification need be given to the Grantor if it has signed, after the occurrence of an Event of Default, a statement renouncing or modifying (as permitted under Law) any right to notification of sale or other intended disposition.

 

SECTION 5.3  Waiver of Notice and Claims (e)   .  The Grantor hereby waives, to the fullest extent permitted by applicable Law, notice or judicial hearing in connection with the Collateral Agent’s taking possession or the Collateral Agent’s disposition of any of the Collateral, including, without limitation, any and all prior notice and hearing for any prejudgment remedy or remedies and any such right which the Grantor would otherwise have under law, and the Grantor hereby further waives, to the fullest extent permitted by applicable Law:  (a) all damages occasioned by such taking of possession, (b) all other requirements as to the time, place and terms of sale or other requirements with respect to the enforcement of the Collateral Agent’s rights hereunder and (c) all rights of redemption, appraisal, valuation, stay, extension or moratorium now or hereafter in force under any applicable Law.  The Collateral Agent shall not be liable for any incorrect or improper payment made pursuant to this Article V in the absence of gross negligence or willful misconduct as determined in a final, nonappealable judgment of a court of competent jurisdiction.  Any sale of, or the grant of options to purchase, or any other realization upon, any Collateral shall operate to divest all right, title, interest, claim and demand, either at law or in equity, of the Grantor therein and thereto, and shall be a perpetual bar both at law and in equity against the Grantor and against any and all Persons claiming or attempting to claim the Collateral so sold, optioned or realized upon, or any part thereof, from, through or under the Grantor.

 

SECTION 5.4  Certain Sales of Collateral .

 

(a)           The Grantor recognizes that, by reason of certain prohibitions contained in law, rules, regulations or orders of any Governmental Authority, the Collateral Agent may be compelled, with respect to any sale of all or any part of the Collateral, to limit purchasers to those who meet the requirements of such Governmental Authority.  The Grantor acknowledges that any such sales may be at prices and on terms less favorable to the Collateral Agent than those obtainable through a public sale without such restrictions, and, notwithstanding such circumstances, agrees that any such restricted sale shall be deemed to have been made in a commercially reasonable manner and that, except as may be required by applicable Law, the Collateral Agent shall have no obligation to engage in public sales.

 

SECTION 5.5  No Waiver; Cumulative Remedies .

 

(a)           No failure on the part of the Collateral Agent to exercise, no course of dealing with respect to, and no delay on the part of the Collateral Agent in exercising, any right, power or remedy hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any such right, power or remedy hereunder preclude any other or further exercise thereof or the exercise of any other right, power or remedy; nor shall the Collateral Agent be required to look first to, enforce or exhaust any other security, collateral or guaranties.  The remedies herein provided are cumulative and are not exclusive of any remedies provided by Law.

 

11



 

(b)           In the event that the Collateral Agent shall have instituted any proceeding to enforce any right, power or remedy under this Related Real Estate Collateral Security Agreement by foreclosure, sale, entry or otherwise, and such proceeding shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Collateral Agent, then and in every such case, the Grantor, the Collateral Agent and each other Secured Party shall be restored to their respective former positions and rights hereunder with respect to the Collateral, and all rights, remedies and powers of the Collateral Agent and the other Secured Parties shall continue as if no such proceeding had been instituted.

 

SECTION 5.6  Application of Proceeds .  The proceeds received by the Collateral Agent in respect of any sale of, collection from or other realization upon all or any part of the Collateral pursuant to the exercise by the Collateral Agent of its remedies shall be applied, together with any other sums then held by the Collateral Agent pursuant to this Related Real Estate Collateral Security Agreement, in accordance with and as set forth in Section 7.02 of the Credit Agreement.

 

SECTION 5.7  Third Party Agreements .  Pursuant to the Collateral Access Agreements (as defined in the ABL Credit Agreement), the Collateral Agent has the right to give notice to certain Persons who are parties thereto or recipients thereof.  With respect to each Collateral Access Agreement (as defined in the ABL Credit Agreement), the Collateral Agent hereby acknowledges and agrees that it will not deliver any notice to such Persons in connection with the exercise of its rights and remedies under the Credit Agreement, this Related Real Estate Collateral Security Agreement and the other Loan Documents until after the occurrence and during the continuance of an Event of Default.

 

ARTICLE VI

 

MISCELLANEOUS

 

SECTION 6.1  Concerning the Collateral Agent .

 

(a)           The Collateral Agent has been appointed as agent pursuant to the Credit Agreement.  The actions of the Collateral Agent hereunder are subject to the provisions of the Credit Agreement.  The Collateral Agent shall have the right hereunder to make demands, to give notices, to exercise or refrain from exercising any rights, and to take or refrain from taking action (including, without limitation, the release or substitution of the Collateral), in accordance with this Related Real Estate Collateral Security Agreement and the Credit Agreement.  The Collateral Agent may employ agents and attorneys-in-fact in connection herewith and shall not be liable for the negligence or misconduct of any such agents or attorneys-in-fact.  The Collateral Agent may resign and a successor Collateral Agent may be appointed in the manner provided in the Credit Agreement.  Upon the acceptance of any appointment as the Collateral Agent by a successor Collateral Agent, that successor Collateral Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Collateral Agent under this Related Real Estate Collateral Security Agreement, and the retiring Collateral Agent shall thereupon be discharged from its duties and obligations under this Related Real Estate Collateral Security Agreement.  After any retiring Collateral Agent’s resignation, the provisions hereof shall inure to its benefit as to any actions taken or omitted to be taken by it under this Related Real Estate Collateral Security Agreement while it was the Collateral Agent.

 

12



 

(b)           The Collateral Agent shall be deemed to have exercised reasonable care in the custody and preservation of the Collateral in its possession if such Collateral is accorded treatment substantially equivalent to that which the Collateral Agent, in its individual capacity, accords its own property consisting of similar instruments or interests, it being understood that neither the Collateral Agent nor any of the other Secured Parties shall have responsibility for, without limitation taking any necessary steps to preserve rights against any Person with respect to any Collateral.

 

(c)           The Collateral Agent shall be entitled to rely upon any written notice, statement, certificate, order or other document or any telephone message believed by it to be genuine and correct and to have been signed, sent or made by the proper Person, and, with respect to all matters pertaining to this Related Real Estate Collateral Security Agreement and its duties hereunder, upon advice of counsel selected by it.

 

(d)           If any item of Collateral also constitutes collateral granted to the Collateral Agent under any other deed of trust, mortgage, security agreement, pledge or instrument of any type, in the event of any conflict between the provisions hereof and the provisions of such other deed of trust, mortgage, security agreement, pledge or instrument of any type in respect of such collateral, the Collateral Agent, in its sole discretion, shall select which provision or provisions shall control.

 

SECTION 6.2  Collateral Agent May Perform; Collateral Agent Appointed Attorney-in-Fact (f)   .  If the Grantor shall fail to perform any covenants contained in this Related Real Estate Collateral Security Agreement or in the Credit Agreement (including, without limitation, the Grantor’s covenants to (a) pay the premiums in respect of all required insurance policies hereunder, (b) pay Claims, (c) make repairs, (d) discharge Liens or (e) pay or perform any other obligations of the Grantor with respect to any Collateral) or if any warranty on the part of the Grantor contained herein shall be breached, the Collateral Agent may (but shall not be obligated to) do the same or cause it to be done or remedy any such breach, and may expend funds for such purpose; provided , that , the Collateral Agent shall in no event be bound to inquire into the validity of any tax, lien, imposition or other obligation which the Grantor fails to pay or perform as and when required hereby.  Any and all amounts so expended by the Collateral Agent shall be paid by the Grantor in accordance with the provisions of Section 6.3 hereof.  Neither the provisions of this Section 6.2 nor any action taken by the Collateral Agent pursuant to the provisions of this Section 6.2 shall prevent any such failure to observe any covenant contained in this Related Real Estate Collateral Security Agreement nor any breach of warranty from constituting an Event of Default.  The Grantor hereby appoints the Collateral Agent its attorney-in-fact, with full authority in the place and stead of the Grantor and in the name of the Grantor, or otherwise, from time to time after the occurrence and during the continuation of an Event of Default in the Collateral Agent’s discretion to take any action and to execute any instrument consistent with the terms of the Credit Agreement and the other Security Documents which the Collateral Agent may deem necessary to accomplish the purposes hereof.  The foregoing grant of authority is a power of attorney coupled with an interest and such appointment shall be irrevocable for the term hereof.  The Grantor hereby ratifies all that such attorney shall lawfully do or cause to be done by virtue hereof.

 

13



 

SECTION 6.3  Expenses .  The Grantor will upon demand pay to the Collateral Agent the amount of any and all amounts required to be paid pursuant to Section 9.05 of the Credit Agreement.

 

SECTION 6.4  Continuing Security Interest; Assignment (g)   .  This Related Real Estate Collateral Security Agreement shall create a continuing security interest in the Collateral and shall (a) be binding upon the Grantor, their respective successors and assigns, and (b) inure, together with the rights and remedies of the Collateral Agent hereunder, to the benefit of the Collateral Agent and the other Secured Parties and each of their respective successors, transferees and assigns.  No other Persons (including, without limitation, any other creditor of the Grantor) shall have any interest herein or any right or benefit with respect hereto.  Without limiting the generality of the foregoing clause (b) , any Secured Party may assign or otherwise transfer any indebtedness held by it secured by this Related Real Estate Collateral Security Agreement to any other Person, and such other Person shall thereupon become vested with all the benefits in respect thereof granted to such Secured Party, herein or otherwise, subject, however, to the provisions of the Credit Agreement.

 

SECTION 6.5  Termination; Release .

 

(a)           This Related Real Estate Collateral Security Agreement, the Lien in favor of the Collateral Agent (for the benefit of itself and the other Secured Parties) and all other security interests granted hereby shall terminate with respect to all Secured Obligations, and all rights to the Collateral shall revert to the Grantor or any other Person entitled thereto, either (i) as provided in Section 9.20 of the Credit Agreement, or (ii) when the Commitments shall have expired or been terminated and the principal of and interest on each Loan and all fees and other Secured Obligations shall have been indefeasibly paid in full in cash; provided , that , in connection with the termination of this Related Real Estate Collateral Security Agreement, the Collateral Agent may require such indemnities and collateral security as it shall reasonably deem necessary or appropriate to protect the Secured Parties against (A) loss on account of credits previously applied to the Secured Obligations that may subsequently be reversed or revoked, (B) any Secured Obligations (other than contingent indemnification obligations for which no claim has been asserted) that may thereafter arise under Section 9.05 of the Credit Agreement.

 

(b)           (i) Upon the consummation of a transaction expressly permitted under the Credit Agreement, which results in the Grantor ceasing to be a Subsidiary of the Borrower, the Grantor shall be automatically released from its obligations under this Related Real Estate Collateral Security Agreement, the security interest granted hereby shall terminate with respect to the Grantor and all rights to the Collateral of the Grantor shall revert to the Grantor or any other Person entitled thereto.

 

(i)    Upon any sale or other transfer by the Grantor of any Collateral that is expressly permitted under the Credit Agreement (other than a sale or other transfer to a Loan Party), or upon the effectiveness of any written consent to the release of the security interest granted hereby in any Collateral pursuant to Section 9.20 of the Credit Agreement, the security interest granted hereby shall terminate with respect to such Collateral and all rights to the Collateral shall revert to Grantor or any other Person entitled thereto.

 

14



 

(ii)   At such time as any of the foregoing contained Sections 6.5(a) , 6.5(b)(i)  and 6.5(b)(ii)  hereof, upon the Borrower’s written request and at the sole cost and expense of the Grantor, the Collateral Agent will (A) assign, transfer and deliver to the Grantor, against receipt and without recourse to or warranty by the Collateral Agent, such of the Collateral to be released (in the case of a release) or all of the Collateral (in the case of the satisfaction of Sections 6.5(a) , 6.5(b)(i)  and 6.5(b)(ii)  hereof) as may be in possession of the Collateral Agent and as shall not have been sold or otherwise applied pursuant to the terms hereof, and (B) with respect to any other Collateral, authorize the filing of appropriate termination statements and other documents (including UCC termination statements or releases) to terminate such security interests.

 

(c)           At any time that the Grantor desires that the Collateral Agent take any action described in Section 6.5(b)  hereof, the Grantor shall, upon request of the Collateral Agent, deliver to the Collateral Agent an officer’s certificate certifying that the release of the respective Collateral is permitted pursuant to Sections 6.5(a)  or 6.5(b)  hereof.  The Collateral Agent shall have no liability whatsoever to any other Secured Party as the result of any release of Collateral by it as permitted (or which the Collateral Agent in good faith believes to be permitted) by this Section 6.5 .

 

SECTION 6.6  Modification in Writing .  No amendment, modification, supplement, termination or waiver of or to any provision hereof, nor consent to any departure by the Grantor therefrom, shall be effective unless the same shall be made in accordance with the terms of the Credit Agreement and unless in writing and signed by the Collateral Agent and the Grantor.  Any amendment, modification or supplement of or to any provision hereof, any waiver of any provision hereof and any consent to any departure by the Grantor from the terms of any provision hereof shall be effective only in the specific instance and for the specific purpose for which made or given.  Except where notice is specifically required by this Related Real Estate Collateral Security Agreement or any other document evidencing the Secured Obligations, no notice to or demand on the Grantor in any case shall entitle the Grantor to any other or further notice or demand in similar or other circumstances.

 

SECTION 6.7  Notices .  Unless otherwise provided herein or in the Credit Agreement, any notice or other communication herein required or permitted to be given shall be given in the manner and become effective as set forth in the Credit Agreement, as to the Grantor, addressed to it at the address of the Borrower set forth in the Credit Agreement and as to the Collateral Agent, addressed to it at the address set forth in the Credit Agreement, or in each case at such other address as shall be designated by such party in a written notice to the other parties hereto complying as to delivery with the terms of this Section 6.7 .

 

SECTION 6.8  GOVERNING LAW .  THIS RELATED REAL ESTATE COLLATERAL SECURITY AGREEMENT AND ANY CLAIM, CONTROVERSY, DISPUTE OR CAUSE OF ACTION (WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE) BASED UPON, ARISING OUT OF OR RELATING TO THIS RELATED REAL ESTATE COLLATERAL SECURITY AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES (OTHER THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW).

 

15



 

SECTION 6.9  CONSENT TO JURISDICTION; SERVICE OF PROCESS; WAIVER OF JURY TRIAL .

 

(a)           THE GRANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE EXCLUSIVE JURISDICTION OF ANY NEW YORK STATE COURT OR FEDERAL COURT OF THE UNITED STATES OF AMERICA SITTING IN NEW YORK COUNTY, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS RELATED REAL ESTATE COLLATERAL SECURITY AGREEMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND The GRANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT.  the GRANTOR AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.  NOTHING IN THIS RELATED REAL ESTATE COLLATERAL SECURITY AGREEMENT SHALL AFFECT ANY RIGHT THAT THE COLLATERAL AGENT OR ANY SECURED PARTY MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS RELATED REAL ESTATE COLLATERAL SECURITY AGREEMENT AGAINST the GRANTOR OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION if required to realize upon the collateral or enforce any judgment.

 

(b)           THE GRANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS RELATED REAL ESTATE COLLATERAL SECURITY AGREEMENT IN ANY COURT REFERRED TO IN SECTION 6.9(a)  HEREOF.  THE GRANTOR HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH SUIT, ACTION OR PROCEEDING IN ANY SUCH COURT.

 

(c)           THE GRANTOR AND, EXCEPT AS PROVIDED IN THE LAST SENTENCE OF SECTION 6.9(a)  HEREOF, EACH SECURED PARTY, AGREES THAT ANY ACTION COMMENCED BY THE GRANTOR ASSERTING ANY CLAIM OR COUNTERCLAIM ARISING UNDER OR IN CONNECTION WITH THIS RELATED REAL ESTATE COLLATERAL SECURITY AGREEMENT OR ANY OTHER LOAN DOCUMENT SHALL BE BROUGHT SOLELY IN A COURT OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY OR ANY FEDERAL COURT SITTING THEREIN AS THE COLLATERAL AGENT MAY ELECT IN ITS SOLE DISCRETION AND CONSENTS TO THE EXCLUSIVE JURISDICTION OF SUCH COURTS WITH RESPECT TO ANY SUCH ACTION.

 

16



 

(d)           EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 6.7 HEREOF EXCLUDING SERVICE OF PROCESS BY MAIL.  NOTHING IN THIS RELATED REAL ESTATE COLLATERAL SECURITY AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.

 

(e)           EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS RELATED REAL ESTATE COLLATERAL SECURITY AGREEMENT.  EACH PARTY HERETO (i) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (ii) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS RELATED REAL ESTATE COLLATERAL SECURITY AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 6.9 .

 

Severability of Provisions .  Any provision hereof which 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 hereof or affecting the validity or enforceability of such provision in any other jurisdiction.

 

Execution in Counterparts; Effectiveness .  This Related Real Estate Collateral Security Agreement may be executed in any number of counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract.  Delivery of an executed counterpart of a signature page of this Related Real Estate Collateral Security Agreement by facsimile or other electronic transmission (including “.pdf” or “.tif”) shall be as effective as delivery of a manually executed counterpart of this Related Real Estate Collateral Security Agreement.

 

No Release .  Nothing set forth in this Related Real Estate Collateral Security Agreement shall relieve the Grantor from the performance of any term, covenant, condition or agreement on the Grantor’s part to be performed or observed under or in respect of any of the Collateral or from any liability to any Person under or in respect of any of the Collateral or shall impose any obligation on the Collateral Agent or any other Secured Party to perform or observe any such term, covenant, condition or agreement on the Grantor’s part to be so performed or observed or shall impose any liability on the Collateral Agent or any other Secured Party for any act or omission on the part of the Grantor relating thereto or for any breach of any representation or warranty on the part of the Grantor contained in this Related Real Estate Collateral Security Agreement, the Credit Agreement or the other Loan Documents, or under or in respect of the Collateral or made in connection herewith or therewith.  The obligations of the Grantor contained in this Section 6.12 shall survive the termination hereof and the discharge of the Grantor’s other obligations under this Related Real Estate Collateral Security Agreement, the Credit Agreement and the other Loan Documents.

 

17



 

Obligations Absolute .  All obligations of the Grantor hereunder shall be absolute and unconditional irrespective of:

 

(a)           any bankruptcy, insolvency, reorganization, arrangement, readjustment, composition, liquidation or the like of the Grantor;

 

(b)           any lack of validity or enforceability of the Credit Agreement or any other Loan Document, or any other agreement or instrument relating thereto;

 

(c)           any change in the time, manner or place of payment of, or in any other term of, all or any of the Secured Obligations, or any other amendment or waiver of or any consent to any departure from the Credit Agreement or any other Loan Document or any other agreement or instrument relating thereto;

 

(d)           any pledge, exchange, release or non-perfection of any other collateral, or any release or amendment or waiver of or consent to any departure from any guarantee, for all or any of the Secured Obligations;

 

(e)           any exercise, non-exercise or waiver of any right, remedy, power or privilege under or in respect hereof, the Credit Agreement or any other Loan Document except as specifically set forth in a waiver granted pursuant to the provisions of Section 6.6 hereof; or

 

(f)            any other circumstances which might otherwise constitute a defense available to, or a discharge of, the Grantor (other than the termination of this Related Real Estate Collateral Security Agreement in accordance with Section 6.5(a)  hereof).

 

Intercreditor Agreement .  This Related Real Estate Collateral Security Agreement and the Liens granted to the Collateral Agent pursuant to this Related Real Estate Collateral Security Agreement or any other Loan Documents in any Collateral and the exercise of any right or remedy with respect to any Collateral hereunder or any other Loan Document are subject to the provisions of the Intercreditor Agreement.  In the event of any inconsistency between the terms of this Related Real Estate Collateral Security Agreement and the terms of the Intercreditor Agreement, the terms of the Intercreditor Agreement shall control.

 

[ Signature Pages Follow ]

 

18



 

IN WITNESS WHEREOF, the Grantor and the Collateral Agent have caused this Related Real Estate Collateral Security Agreement to be duly executed and delivered by their duly authorized officers as of the date first above written.

 

 

GRANTOR

 

 

 

[                                        ]

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 



 

 

GOLDMAN SACHS BANK USA,

 

as Collateral Agent

 

 

 

By:

 

 

Name:

 

 

Title:

 

 



 

EXHIBIT 1

 

[Mortgaged Property][Material Related Collateral Location ]

 



 

SCHEDULE 3.2

Filings, Registrations and Recordings

 

Name of Grantor

 

UCC-1 Financing
Statement Filing Office

 

 

 

 

 

 

 

 

 

 

[LIST APPLICABLE MORTGAGES AND ANY REQUIRED FIXTURE FILINGS]

 



 

SCHEDULE 4.3(a)

Other Legal and Fictitious Names, Mergers, Consolidations, Acquisitions

 

I. Legal and Fictitious Names .  During the past three years, the Grantor has used the following trade name(s) and/or trade style(s):

 

Company

 

Trade Name/Divisions

 

 

 

 

 

 

 

 

 

 

II. Changes in Names, Jurisdiction of Organization or Corporate Structure E xcept as set forth below, the Grantor has not changed its name, jurisdiction of organization or its corporate structure in any way ( e.g. , by merger, consolidation, change in corporate form, change in jurisdiction of organization or otherwise) within the past three years:

 

Date of Change

 

Description of Change

 

 

 

 

 

 

 

 

 

 

III. Acquisitions of Equity Interests or Assets Except as set forth below, the Grantor has not acquired the controlling equity interests of another entity or substantially all the assets of another entity within the past three years:

 

Date of Acquisition

 

Description of Acquisition

 

 

 

 

 

 

 

 

 

 

P-1



 

Exhibit Q
to the Credit Agreement

 

MODIFIED DUTCH AUCTION PROCEDURES

 

(See attached)

 

Q-1



 

Exhibit Q
to the Credit Agreement

 

MODIFIED DUTCH AUCTION PROCEDURES

 

This Outline is intended to summarize certain basic terms of the modified Dutch auction procedures pursuant to and in accordance with the terms and conditions of Sections 9.04(k) of the Credit Agreement, of which this Exhibit Q is a part (the “ Auction Procedures ”).  It is not intended to be a definitive statement of all of the terms and conditions of a modified Dutch auction, the definitive terms and conditions for which shall be set forth in the applicable auction procedures set for each Auction (the “ Auction Documents ”).  None of the Administrative Agent, the Auction Manager and any other Agent, or any of their respective Affiliates, makes any recommendation pursuant to the Auction Documents as to whether or not any Lender should sell its Loans to Borrower (the “ Purchaser ”) pursuant to the Auction Documents, nor shall the decision by the Administrative Agent, the Auction Manager or any other Agent (or any of their Affiliates) in its capacity as a Lender be deemed to constitute such a recommendation.  Each Lender should make its own decision on whether to sell any of its Loans and, if it decides to do so, the principal amount of and price to be sought for such Loans.  In addition, each Lender should consult its own attorney, business advisor or tax advisor as to legal, business, tax and related matters concerning this Auction and the Auction Documents.  Capitalized terms not otherwise defined in this Exhibit have the meanings assigned to them in the Credit Agreement.

 

Summary.   The Purchaser may conduct one or more modified Dutch auctions in order to purchase Loans (each, an “ Auction ”) pursuant to the procedures described herein.

 

Notice Procedures.   In connection with each Auction, the Purchaser will provide notification to the Auction Manager (for distribution to the Lenders) of the Loans substantially in the form of Annex A to this Exhibit Q that will be the subject of the Auction (an “ Auction Notice ”).  Each Auction Notice shall contain (i) the maximum principal amount of Loans that the Purchaser is willing to purchase in the Auction (the “ Auction Amount ”), which shall be no less than $ [                ] or an integral multiple of $ [                ] in excess thereof; (ii) the range of discounts to par (the “ Discount Range ”), expressed as a range of prices per $1,000 (in increments of $5), at which the Purchaser would be willing to purchase Loans in the Auction; and (iii) the date on which the Auction will conclude, on which date Return Bids (as defined below) will be due by [ 1:00 p.m. New York time ] , as such date and time may be extended (such time, the “ Expiration Time ”) for a period not exceeding three Business Days upon notice by the Purchaser to the Auction Manager received not less than 24 hours before the original Expiration Time; provided , however , that only one extension per auction shall be permitted.  An Auction shall be regarded as a “ Failed Auction ” in the event that either (x) Purchaser withdraws such Auction in accordance with the terms hereof or (y) the Expiration Time occurs with no Qualifying Bids having been received.  In the event of a Failed Auction, Purchaser shall not be permitted to deliver a new Auction Notice prior to the date occurring five (5) Business Days after such withdrawal or Expiration Time, as the case may be.

 

Reply Procedures.   In connection with any Auction, each Lender holding Loans wishing to participate in such Auction shall, prior to the Expiration Time, provide the Auction Manager

 

Q-2



 

with a notice of participation substantially in the form of Annex B to this Exhibit Q (the “ Return Bid ”) which shall specify (i) a discount to par expressed as a price per $1,000 (in increments of $5) of Loans (the “ Reply Price ”) within the Discount Range and (ii) the principal amount of Loans, in an amount not less than [ $1,000,000 ] or an integral multiple in excess thereof, that such Lender is willing to offer for sale at its Reply Price (the “ Reply Amount ”); provided , that Lender may submit a Reply Amount that is less than the minimum amount and/or incremental amount requirements described above only if the Reply Amount comprises the entire amount of Loans held by such Lender.  Lenders may only submit one Return Bid per Auction but each Return Bid may contain up to [ three ] component bids, each of which may result in a separate Qualifying Bid (as defined below) and each of which will not be contingent on any other component bid submitted by such Lender resulting in a Qualifying Bid.  In addition to the Return Bid, the participating Lender must execute and deliver, to be held by the Auction Manager, a Borrower Assignment and Acceptance.  The Purchaser will not purchase any Loans at a price that is outside of the applicable Discount Range, nor will any Return Bids (including any component bids specified therein) submitted at a price that is outside such applicable Discount Range be considered in any calculation of the Applicable Threshold Price (as defined below).

 

Acceptance Procedures.   Based on the Reply Prices and Reply Amounts received by the Auction Manager, the Auction Manager, in consultation with the Purchaser, will calculate the lowest purchase price (the “ Applicable Threshold Price ”) for the Auction within the Discount Range for the Auction that will allow the Purchaser to complete the Auction by purchasing the full Auction Amount (or such lesser amount of Loans for which the Purchaser has received Qualifying Bids (as defined below)).  The Purchaser shall purchase Loans from each Lender whose Return Bid is within the Discount Range and contains a Reply Price that is equal to or less than the Applicable Threshold Price (each, a “ Qualifying Bid ”).  All Loans included in Qualifying Bids (including multiple component Qualifying Bids contained in a single Return Bid) received at a Reply Price lower than the Applicable Threshold Price will be purchased at the applicable Reply Price and shall not be subject to proration unless the aggregate principal amount of all such Loans at a Reply Price lower than the Applicable Threshold Price would exceed the Auction Amount.

 

Proration Procedures.   All Loans offered in Return Bids (or, if applicable, any component bid thereof) constituting Qualifying Bids at the Applicable Threshold Price will be purchased at the Applicable Threshold Price; provided that if the aggregate principal amount of all Loans for which Qualifying Bids have been submitted in any given Auction at the Applicable Threshold Price would exceed the remaining portion of the Auction Amount (if any, after deducting all Loans to be purchased at a Reply Price lower than the Applicable Threshold Price), the Purchaser shall purchase the Loans for which the Qualifying Bids submitted were at the Applicable Threshold Price ratably based on the respective principal amounts offered and in an aggregate amount equal to the amount necessary to complete the purchase of the Auction Amount.  No Return Bids (or any component thereof) will be accepted above the Applicable Threshold Price.

 

Notification Procedures.   Auction Manager will calculate the Applicable Threshold Price and post the Applicable Threshold Price and proration factor(s) onto an internet site (including an IntraLinks, SyndTrak or other electronic workspace) in accordance with the Auction Manager’s standard dissemination practices by [ 4:00 p.m. New York time ] on the same

 

Q-3



 

Business Day as the date the Return Bids were due.  The Auction Manager will insert the principal amount of Loans to be assigned and the applicable settlement date into each applicable Borrower Assignment and Acceptance received in connection with a Qualifying Bid.  Upon request of the submitting Lender, the Auction Manager will promptly return any Borrower Assignment and Acceptance received in connection with a Return Bid that is not a Qualifying Bid (as defined below).

 

Additional Procedures.   Furthermore, in connection with any Auction, upon submission by a Lender of a Return Bid, such Lender will not have any withdrawal rights.  Any Return Bid (including any component bid thereof) delivered to the Auction Manager may not be modified, revoked, terminated or cancelled by a Lender.  However, an Auction may become void if the conditions to the purchase of Loans by the Purchaser required by the terms and conditions of Section 9.04(k) of the Credit Agreement are not met.  The purchase price for each purchase of Loans shall be paid by the Purchaser [directly to the respective assigning Lender] [to [the Auction Manager] [a paying agent selected by the Purchaser] on behalf of the respective assigning Lender] on a settlement date as determined by the Auction Manager in consultation with the Purchaser (which shall be no later than ten (10) Business Days after the date Return Bids are due). The Purchaser shall execute each applicable Borrower Assignment and Acceptance received in connection with a Qualifying Bid.

 

All questions as to the form of documents and validity and eligibility of Loans that are the subject of an Auction will be determined by the Auction Manager, in consultation with the Purchaser, which determination will be final and binding.  The Auction Manager’s interpretation of the terms and conditions of the Offer Document, in consultation with the Purchaser, will be final and binding.

 

None of the Administrative Agent, the Auction Manager, any other Agent or any of their respective Affiliates assumes any responsibility for the accuracy or completeness of the information concerning the Purchaser, the Credit Parties, or any of their Affiliates (whether contained in the Auction Documents or otherwise) or for any failure to disclose events that may have occurred and may affect the significance or accuracy of such information.

 

This Exhibit Q shall not require the Purchaser to initiate any Auction.

 

Q-4



 

Annex A to Exhibit Q

to the Credit Agreement

 

AUCTION NOTICE

 

[ Borrower Letterhead ]

 

[              ] , as Auction Manager

[              ]
[              ]

Attention: [              ]

Fax No.:  [              ]

Email:  [              ] @gs.com

 

Re: Loan Auction

 

Ladies and Gentlemen:

 

Reference is made to that certain Term Loan Credit Agreement, dated as of March 21, 2013 (as amended, restated, replaced, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), by and among SUPERVALU INC., a Delaware corporation (“ Borrower ”), the Guarantors party thereto, the Lenders party thereto from time to time (the “ Lenders ”), Goldman Sachs Bank USA, as Administrative Agent and Collateral Agent, and the other agents named therein.  Capitalized terms used but not defined herein have the meanings given to such terms in the Credit Agreement.

 

SUPERVALU INC.  (the “ Purchaser ”) hereby gives notice to the Lenders that it desires to conduct the following Auction:

 

·                                                   Auction Amount:  $ [                            ] in principal amount of Loans 34

 

·                                                   Discount Range:  Not less than $ [                  ] nor greater than $ [                  ] per $1,000 principal amount of Loans.

 

The Purchaser acknowledges that this Auction Notice may not be withdrawn other than in accordance with the Auction Procedures.  The Auction shall be consummated in accordance with the Auction Procedures with all Return Bids due no later than [ 1:00 ]  p.m. (New York time) on [                    ] .

 

The Purchaser hereby represents and warrants that no Default or Event of Default has occurred and is continuing or would result from such repurchase and Borrower will not use the proceeds of any loans under the ABL Facility to acquire such Loans.

 


34   Modify, as appropriate, to: “$ [                      ] maximum cash value to be paid for all tendered Loans”

 



 

Very truly yours,

 

 

 

SUPERVALU INC.

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 



 

Annex B to Exhibit Q
to the Credit Agreement

 

RETURN BID

 

[              ] , as Auction Manager

[              ]
[              ]

Attention: [              ]

Fax No.:  [              ]

Email:  [              ] @gs.com

 

Ladies and Gentlemen:

 

Reference is made to that certain Term Loan Credit Agreement, dated as of March 21, 2013 (as amended, restated, replaced, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), by and among SUPERVALU INC., a Delaware corporation (“ Borrower ”), the Guarantors party thereto, the Lenders party thereto from time to time (the “ Lenders ”), Goldman Sachs Bank USA, as Administrative Agent and Collateral Agent, and the other agents named therein.  Capitalized terms used but not defined herein have the meanings given to such terms in the Credit Agreement.

 

The undersigned Lender hereby gives notice of its participation in the Auction by submitting the following Return Bid 35 :

 

Reply Price
(price per $1,000)

 

Reply Amount
(principal amount of Loans)

 

US$ 

 

US$

 

US$ 

 

US$

 

US$ 

 

US$

 

 

The undersigned Lender acknowledges that the submission of this Return Bid along with an executed Borrower Assignment and Acceptance, to be held in escrow by the Auction Manager, obligates the Lender to sell the entirety or its pro rata portion of the Reply Amount in accordance with the Auction Procedures, as applicable.

 

 

Very truly yours,

 


35              Lender may submit up to [ three ] component bids but need not submit more than one.  The sum of Lender’s bid(s) may not exceed the aggregate principal face amount of Loans held by it as lender of record on the date of submission of its Return Bid.

 

Q-1



 

 

[ Name of Lender ]

 

 

 

By:

 

 

 

Name:

 

 

Title:

 



 

Exhibit R
to the Credit Agreement

 

FORM OF BORROWER ASSIGNMENT AND ACCEPTANCE

 

(See attached)

 

R-1



 

Exhibit R
to the Credit Agreement

 

FORM OF BORROWER ASSIGNMENT AND ACCEPTANCE

 

This Borrower Assignment and Acceptance Agreement (the “ Assignment ”) is dated as of the Borrower Assignment Effective Date set forth below and is entered into by and between [ Insert name of Assignor ] (the “ Assignor ”) and SUPERVALU INC., a Delaware corporation (the “ Assignee ”).  Capitalized terms used but not defined herein shall have the meanings given to them in the Credit Agreement identified below (as amended, the “ Credit Agreement ”) or the Modified Dutch Auction Procedures with respect to the Assignment, receipt of a copy of which is hereby acknowledged by the Assignee.  The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment as if set forth herein in full.

 

For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the Assignee, and the Assignee hereby irrevocably purchases and assumes from the Assignor, subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the Borrower Assignment Effective Date inserted by the Auction Manager as contemplated in the Auction Procedures, the interest in and to all of the Assignor’s rights and obligations under the Credit Agreement and any other documents or instruments delivered pursuant thereto that represents the amount and percentage interest identified below of all of the Assignor’s outstanding rights and obligations under the facility identified below (the “ Assigned Interest ”).  Such sale and assignment is without recourse to the Assignor and, except as expressly provided in this Assignment, without representation or warranty by the Assignor.

 

1.

 

Assignor:

 

 

 

 

 

 

 

 

 

2.

 

Assignee:

 

SUPERVALU INC.

 

 

 

 

 

 

 

3.

 

Borrower:

 

SUPERVALU INC.

 

 

 

 

 

 

 

4.

 

Administrative Agent:

 

Goldman Sachs Bank USA, as Administrative Agent under the Credit Agreement

 

 

 

 

 

 

 

5.

 

Credit Agreement:

 

Term Loan Credit Agreement dated as of March 21, 2013 among SUPERVALU INC., a Delaware corporation, the Guarantors party thereto, the Lenders parties thereto and Goldman Sachs Bank USA, as Administrative Agent and Collateral Agent

 

 



 

6.                                       Assigned Interest:

 

Term Facility

 

Aggregate Principal Face
Amount of Loans of Assignor

 

Percentage of Loans
of Assignor
36

 

Loans

 

$

 

 

 

%

 

7.                                       Assigned Interest:

 

List below the Loans to be assigned by Assignor to Assignee, which shall be subject to the terms and conditions of the Auction, including, without limitation, the pro rata reduction procedures set forth in the Auction Procedures.

 

Reply Price with
respect to Loans being
offered for
assignment to
Assignee (price per
$1,000 principal
amount)
37

 

Reply Amount
(principal face
amount of Loans to
be Assigned to
Assignee at
relevant Reply
Price) (subject to
pro rata
reduction)
38

 

Pro Rated Principal
Face Amount of
Loans Assigned
39

 

Percentage
Assigned of
Loans
40

 

$

 

 

$

 

 

$

 

 

 

%

$

 

 

$

 

 

$

 

 

 

%

$

 

 

$

 

 

$

 

 

 

%

 

8.                                       Borrower Assignment Effective Date:                             , 20     [ TO BE INSERTED BY AUCTION MANAGER AND WHICH SHALL BE THE BORROWER ASSIGNMENT

 


36                                       Set forth, to at least 9 decimals, as a percentage of the Loans of all Lenders thereunder.  To be completed by Assignor.

 

37                                       To be completed by Assignor.

 

38                                       To be completed by Assignor.  The sum of Lender’s Reply Amount(s) may not exceed the aggregate principal face amount of Loans held by it as lender of record on the date of submission of its Return Bid.

 

39                                       To be completed by the Auction Manager, if necessary, based on the proration procedures set forth in the Auction Procedures.

 

40              To be completed by the Auction Manager to at least 9 decimals as a percentage of the Loans of all Lenders thereunder.

 



 

EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR. ]

 

9.             Notice and Wire Instructions:

 

ASSIGNOR:

ASSIGNEE:

 

 

[NAME OF ASSIGNOR]

SUPERVALU INC.

 

 

Notices :

Notices :

 

 

 

 

Attention:

Attention:

Telecopier:

Telecopier:

 

 

with a copy to:

with a copy to:

 

 

 

 

Attention:

Attention:

Telecopier:

Telecopier:

 

 

Wire Instructions :

 

 

The Assignor acknowledges and agrees that (i) submission of a Return Bid in respect of the Loans will constitute a binding agreement between the Assignor and the Assignee in accordance with the terms and conditions of the Auction Procedures and the Credit Agreement; (ii) Loans will be deemed to have been accepted by the Assignee to the extent such Loans are validly offered by Assignor to Assignee in accordance with the terms and conditions of the Auction Procedures and the Credit Agreement upon notification by the Auction Manager to the Assignor that such Loans are part of a Qualifying Bid (subject to applicable proration in accordance with the terms and conditions of the Auction); and (iii) it does not have any withdrawal rights with respect to any offer to assign of its Loans.

 

Subject to and effective upon the acceptance by the Assignee for purchase of the principal amount of the Loans to be assigned by the Assignor to the Assignee, the Assignor hereby irrevocably constitutes and appoints the Auction Manager as the true and lawful agent and attorney-in-fact of the Assignor with respect to such Loans, with full powers of substitution and revocation (such power of attorney being deemed to be an irrevocable power coupled with an interest) to complete or fill-in the blanks in this Assignment and deliver the completed Assignment to the Assignee and the Assignor.

 



 

[Remainder of page intentionally left blank]

 



 

The Assignor acknowledges and agrees that its offer to assign Loans pursuant to the Auction Procedures constitute the Assignor’s acceptance of the terms and conditions (including the proration procedures) contained in the Auction Procedures, the Credit Agreement and this Assignment.

 

The terms set forth in this Assignment are hereby agreed to:

 

 

ASSIGNOR:

 

 

 

[NAME OF ASSIGNOR]

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

ASSIGNEE:

 

 

 

SUPERVALU INC.

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

Consented to and Accepted:

 

 

 

GOLDMAN SACHS BANK USA,

 

as Administrative Agent

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

[                ],

 

as Auction Manager

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 



 

Annex 1
to Borrower Assignment and Acceptance

 

SUPERVALU INC.
TERM LOAN CREDIT AGREEMENT

 

STANDARD TERMS AND CONDITIONS FOR BORROWER
ASSIGNMENT AND ACCEPTANCE AGREEMENT

 

1.             Representations and Warranties .

 

1.1          Assignor .  The Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of any lien, encumbrance or other adverse claim, (iii) its Commitment and the outstanding balances of its Loans, without giving effect to assignments thereof that have not become effective, are as set forth in this Assignment and (iv) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and to consummate the transactions contemplated hereby; (b) except as set forth in clause (a) above, makes no representation or warranty and assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Credit Agreement, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Credit Agreement, any other Loan Document or any other instrument or document delivered pursuant thereto, other than this Assignment (herein, collectively, the “ Loan Documents ”), (iii) the financial condition of Borrower or any of its Subsidiaries or (iv) the performance or observance by the Borrower or any of its Subsidiaries of any of their respective obligations under any Loan Document or any other instrument or document furnished pursuant thereto; and (c) has read and agrees to all the terms and conditions (including the proration procedures) of the Auction Procedures set forth in the Auction Documents. The Assignor acknowledges that (i) the Borrower currently may have information regarding the Loan Parties, their ability to perform their Obligations or any other matter that may be material to a decision by such Assignor to participate in this Assignment and that has not previously been disclosed to the Administrative Agent and such Assignor (“ Excluded Information ”), (ii) the Excluded Information may not be available to it, the Administrative Agent or the Assignor and (iii) it has independently and without reliance on any other party made its own analysis and determined to participate in this Assignment notwithstanding its lack of knowledge of the Excluded Information.

 

1.2          Assignee .  The Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement until such time as the Loans are automatically cancelled without action by any Person on the Borrower Assignment Effective Date, (ii) it meets all requirements of an Eligible Assignee under the Credit Agreement and (iii) it has received a copy of the Credit Agreement, together with copies of the most recent financial statements referred to in Section 3.05(a)  thereof or delivered pursuant to Section 5.01 thereof, as applicable, and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment; (b) agrees that (i) it will, independently and without reliance upon the Administrative Agent, the Auction Manager, the Collateral Agent, the Assignor or any other

 



 

Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Credit Agreement are required to be performed by it as a Lender; and (c) appoints and authorizes the Administrative Agent and the Collateral Agent to take such action as agent on its behalf and to exercise such powers under the Credit Agreement as are delegated to the Administrative Agent and the Collateral Agent, respectively, by the terms thereof, together with such powers as are reasonably incidental thereto.  Following repurchase by the Borrower pursuant to this Assignment, the Assigned Interest shall, without further action by any Person, be deemed cancelled for all purposes and no longer outstanding (and may not be resold by the Borrower), for all purposes of the Credit Agreement and all other Loan Documents, including, but not limited to (A) the making of, or the application of, any payments to the Lenders under the Credit Agreement or any other Loan Document, (B) the making of any request, demand, authorization, direction, notice, consent or waiver under the Credit Agreement or any other Loan Document or (C) the determination of Required Lenders, or for any similar or related purpose, under the Credit Agreement or any other Loan Document.  In connection with the Assigned Interest, the Administrative Agent is authorized to make appropriate entries in the Register to reflect any such cancellation.

 

2.             Payments .  Payment to the Assignor by the Assignee in respect of the settlement of the assignment of the Assigned Interest shall be paid by Assignee directly to the Assignor and shall include all unpaid interest that has accrued in respect of the Assigned Interest through the Borrower Assignment Effective Date.  No interest shall accrue with respect to the Assigned Interest from and after the Borrower Assignment Effective Date and such Assigned Interest shall, from and after the Borrower Assignment Effective Date, and without further action by any Person, be deemed cancelled for all purposes and no longer outstanding.

 

3.             General Provisions .  This Assignment shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns.  This Assignment may be executed in any number of counterparts, which together shall constitute one instrument.  Delivery of an executed counterpart of a signature page of this Assignment by telecopy or other electronic transmission shall be effective as delivery of a manually executed counterpart of this Assignment.  THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.

 

[Remainder of page intentionally left blank]

 


Exhibit 99.1

 

SUPERVALU INC. and Subsidiaries

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In millions, except per share data)

 

On March 21, 2013, SUPERVALU INC. (SUPERVALU or the “Company”) completed the sale of New Albertson’s, Inc., an Ohio corporation and a direct wholly owned subsidiary of SUPERVALU (“NAI”), through a Stock Purchase Agreement (the “Stock Purchase Agreement”), which resulted in the sale of the Company’s NAI banners, including Albertsons, Acme, Jewel-Osco, Shaw’s and Star Market banners and related Osco and Sav-on in-store pharmacies (collectively, the “NAI Banners”), to AB Acquisition, LLC, a Delaware limited liability company (“AB Acquisition,” or the “Buyer”), an affiliate of a Cerberus Capital Management, L.P. (“Cerberus”)-led consortium which also includes Kimco Realty, Klaff Realty LP, Lubert-Adler Partners and Schottenstein Real Estate Group, in a stock sale. The sale consisted of the acquisition by AB Acquisition of the stock of NAI, which owned the NAI Banners, for $100 in cash subject to working capital adjustments, and the assumption of certain debt and capital lease obligations of approximately $3,200, which will be retained by NAI (the “NAI Banner Sale”).

 

As required by the NAI Banner Sale, the Company entered into two new credit agreements: (i) a new six-year $1,500 senior secured term loan credit facility (the “Term Loan Facility”), secured by substantially all of the Company’s real estate and equipment, substantially all of the Company’s intellectual property, and the equity interests in Moran Foods, LLC, the parent company of SUPERVALU’s Save-A-Lot banner, which will bear interest at the rate of London Interbank Offered Rate (“LIBOR”) plus 5.00 percent with a LIBOR floor of 1.25% and will be issued at a $15 discount and (ii) a new five-year $1,000 senior secured asset-based revolving credit facility (the “ABL Facility”), secured by the Company’s inventory, credit card, pharmacy and wholesale trade receivables and certain other assets, which will bear interest at the rate of LIBOR plus 1.75 to 2.25 percent, (collectively the “Refinancing Transactions”). The proceeds of these financings will be used to replace and extinguish the existing $1,650 asset-based revolving credit facility, the existing $834 term loan and the existing $200 accounts receivable securitization revolving facility, and for the early redemption of the Company’s $490 of 7.5% bonds scheduled to mature in November 2014.

 

In connection with the Refinancing Transactions the Company will pay new debt financing costs of approximately $78, of which approximately $63 will be capitalized and $15 will be expensed. In addition, the Company will recognize a non-cash charge of approximately $36 for the write-off of existing unamortized financing costs and $22 for the accelerated amortization of original issue discount on the existing term loan. These amounts are reflected in the Unaudited Pro Forma Condensed Consolidated Financial Statements.

 

Concurrently with the execution of the Stock Purchase Agreement, the Company entered into a Tender Offer Agreement, dated as of January 10, 2013 (the “Tender Offer Agreement”) with Symphony Investors, LLC, owned by a Cerberus-led investor consortium (“Symphony Investors”), pursuant to which, upon the terms and subject to the conditions of the Tender Offer Agreement, and contingent upon the NAI Banner Sale, Symphony Investors tendered for up to 30 percent of the issued and outstanding common stock of the Company at a purchase price of $4.00 per share in cash, without interest, subject to any required withholding tax (the “Tender Offer”). Approximately 12 shares were validly tendered, representing approximately 5.5 percent of the issued and outstanding shares at the time of the Tender Offer expiration on March 20, 2013. All shares that were validly tendered and not properly withdrawn were accepted for payment in accordance with the terms of Tender Offer. In addition, pursuant to the terms of the Tender Offer Agreement, on March 21, 2013, SUPERVALU issued approximately 42 additional shares of common stock (approximately 19.9 percent of outstanding shares prior to the share issuance) to Symphony Investors at the Tender Offer price per share of $4.00, resulting in $170 in cash proceeds to the Company, which brought Symphony Investors ownership percent to 21.2 percent after the share issuance.

 

The following Unaudited Pro Forma Condensed Consolidated Financial Statements were derived from the Company’s historical Consolidated Financial Statements and reflect the Company’s historical Consolidated Statements of Operations (formerly referred to as the Consolidated Statements of Earnings) recast as if the NAI Banner Sale and related Refinancing Transactions and Tender Offer occurred on March 1, 2009 (the first day of fiscal 2010) and the Company’s historical Consolidated Balance Sheet recast as if the NAI Banner Sale and related Refinancing Transactions and Tender Offer occurred on December 1, 2012. These Unaudited Pro Forma Condensed Consolidated Financial Statements should be read together with the Company’s historical Consolidated Financial Statements and accompanying Notes to Consolidated Financial Statements contained in the Company’s Annual Report on Form 10-K for the year ended February 25, 2012 and in the Company’s Quarterly Reports on Form 10-Q for the year to date third quarter (40 weeks) ended December 1, 2012.

 

The assumptions underlying the pro forma adjustments are described in the accompanying notes, which should be read in conjunction with the Unaudited Pro Forma Condensed Consolidated Financial Statements. Management believes the assumptions used and pro forma adjustments derived from such assumptions are reasonable under the circumstances and are based upon currently available information.

 

1



 

The historical financial information has been adjusted to give the effect to pro forma events that are related and directly attributable to the NAI Banner Sale, and the Refinancing Transactions and the related Tender Offer, are factually supportable and, in the case of the Unaudited Pro Forma Condensed Consolidated Statements of Operations, are expected to have a continuing impact on the Company’s future results of operations. No adjustments have been made for material indirect non-recurring transition charges anticipated to arise subsequent to the NAI Banner Sale of approximately $25 to $30 primarily related to contract breakage, financial and legal advisors and other costs. The adjustments presented in the Unaudited Pro Forma Condensed Consolidated Financial Statements have been identified and presented to provide relevant information necessary for an understanding of SUPERVALU upon consummation of the NAI Banner Sale, and the Refinancing Transactions and the related Tender Offer.

 

The Unaudited Pro Forma Condensed Consolidated Statements of Operations do not reflect expenses the Company has incurred or will incur for severance and employee-related costs including accelerated vesting of certain stock-based compensation arrangements related to the March 26, 2013 announced workforce reductions, which are anticipated to be approximately $70 to $75. The Company anticipates related costs savings in salary, employee-related benefits and other administrative costs of approximately $160 on an annualized basis from these headcount reductions.

 

The Unaudited Pro Forma Condensed Consolidated Financial Statements are presented for informational purposes only and are subject to a number of uncertainties and assumptions and do not purport to represent what the Company’s actual results of operations or financial position would have been had the NAI Banner Sale and related Refinancing Transactions and Tender Offer occurred on the dates previously described. Additionally, these statements are not necessarily indicative of the future results of operations or financial condition of SUPERVALU as of any future date or for any future period.

 

2



 

SUPERVALU INC. and Subsidiaries

PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)

For the Year-to-Date Third Quarter (40 Weeks) Ended December 1, 2012

(In millions, except per share data)

 

 

 

 

 

Pro Forma Adjustments

 

 

 

 

 

Historical

 

Disposition of
New Albertson’s,
Inc. (a)

 

Other

 

Note

 

Pro Forma

 

Net sales

 

$

26,542

 

$

(13,329

)

$

 

 

 

$

13,213

 

Cost of sales

 

20,818

 

(9,346

)

 

 

 

11,472

 

Gross profit

 

5,724

 

(3,983

)

 

 

 

1,741

 

Selling and administrative expenses

 

5,325

 

(3,644

)

(110

)

(b)

 

1,571

 

Goodwill and intangible asset impairment charges

 

74

 

(74

)

 

 

 

 

Operating earnings

 

325

 

(265

)

110

 

 

 

170

 

Interest expense, net

 

422

 

(211

)

7

 

(c)

 

218

 

Loss from continuing operations before income taxes

 

(97

)

(54

)

103

 

 

 

(48

)

Income tax provision (benefit)

 

(43

)

(24

)

39

 

(d)

 

(28

)

Net loss from continuing operations

 

$

(54

)

$

(30

)

$

64

 

 

 

$

(20

)

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share from continuing operations—basic

 

$

(0.26

)

 

 

 

 

 

 

$

(0.08

)

Net loss per share from continuing operations—diluted

 

$

(0.26

)

 

 

 

 

 

 

$

(0.08

)

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

Basic

 

212

 

 

 

42

 

(e)

 

254

 

Diluted

 

212

 

 

 

42

 

(e)

 

254

 

 

See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.

 

3



 

SUPERVALU INC. and Subsidiaries

 

PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)

 

For the Year-to-Date Third Quarter (40 Weeks) Ended December 3, 2011

 

(In millions, except per share data)

 

 

 

 

 

Pro Forma Adjustments

 

 

 

 

 

Historical

 

Disposition of
New
Albertson’s,
Inc. (a)

 

Other

 

Note

 

Pro Forma

 

Net sales

 

$

27,869

 

$

(14,511

)

$

 

 

 

$

13,358

 

Cost of sales

 

21,728

 

(10,207

)

 

 

 

11,521

 

Gross profit

 

6,141

 

(4,304

)

 

 

 

1,837

 

Selling and administrative expenses

 

5,446

 

(3,767

)

(107

)

(b)

 

1,572

 

Goodwill and intangible asset impairment charges

 

907

 

(853

)

 

 

 

54

 

Operating earnings (loss)

 

(212

)

316

 

107

 

 

 

211

 

Interest expense, net

 

394

 

(204

)

21

 

(c)

 

211

 

Loss from continuing operations before income taxes

 

(606

)

520

 

86

 

 

 

 

Income tax provision (benefit)

 

10

 

(24

)

33

 

(d)

 

19

 

Net loss from continuing operations

 

$

(616

)

$

544

 

$

53

 

 

 

$

(19

)

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share from continuing operations—basic

 

$

(2.91

)

 

 

 

 

 

 

$

(0.08

)

Net loss per share from continuing operations—diluted

 

$

(2.91

)

 

 

 

 

 

 

$

(0.08

)

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

Basic

 

212

 

 

 

42

 

(e)

 

254

 

Diluted

 

212

 

 

 

42

 

(e)

 

254

 

 

See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.

 

4



 

SUPERVALU INC. and Subsidiaries

 

PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)

 

For the Year Ended February 25, 2012

 

(In millions, except per share data)

 

 

 

 

 

Pro Forma Adjustments

 

 

 

 

 

Historical

 

Disposition of
New
Albertson’s,
Inc. (a)

 

Other

 

Note

 

Pro Forma

 

Net sales

 

$

36,100

 

$

(18,759

)

$

 

 

 

$

17,341

 

Cost of sales

 

28,081

 

(13,150

)

 

 

 

14,931

 

Gross profit

 

8,019

 

(5,609

)

 

 

 

 

2,410

 

Selling and administrative expenses

 

7,106

 

(4,881

)

(143

)

(b)

 

2,082

 

Goodwill and intangible asset impairment charges

 

1,432

 

(1,340

)

 

 

 

92

 

Operating earnings (loss)

 

(519

)

612

 

143

 

 

 

236

 

Interest expense, net

 

509

 

(262

)

25

 

(c)

 

272

 

Loss from continuing operations before income taxes

 

(1,028

)

874

 

118

 

 

 

(36

)

Income tax provision (benefit)

 

12

 

(54

)

45

 

(d)

 

3

 

Net loss from continuing operations

 

$

(1,040

)

$

928

 

$

73

 

 

 

$

(39

)

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share from continuing operations—basic

 

$

(4.91

)

 

 

 

 

 

 

$

(0.15

)

Net loss per share from continuing operations—diluted

 

$

(4.91

)

 

 

 

 

 

 

$

(0.15

)

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

Basic

 

212

 

 

 

42

 

(e)

 

254

 

Diluted

 

212

 

 

 

42

 

(e)

 

254

 

 

See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.

 

5



 

SUPERVALU INC. and Subsidiaries

 

PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)

 

For the Year Ended February 26, 2011

 

(In millions, except per share data)

 

 

 

 

 

Pro Forma Adjustments

 

 

 

 

 

Historical

 

Disposition of
New
Albertson’s,
Inc. (a)

 

Other

 

Note

 

Pro Forma

 

Net sales

 

$

37,534

 

$

(20,037

)

$

 

 

 

$

17,497

 

Cost of sales

 

29,124

 

(14,023

)

 

 

 

15,101

 

Gross profit

 

8,410

 

(6,014

)

 

 

 

2,396

 

Selling and administrative expenses

 

7,516

 

(5,266

)

(140

)

(b)

 

2,110

 

Goodwill and intangible asset impairment charges

 

1,870

 

(1,760

)

 

 

 

110

 

Operating earnings (loss)

 

(976

)

1,012

 

140

 

 

 

176

 

Interest expense, net

 

547

 

(317

)

49

 

(c)

 

279

 

Loss from continuing operations before income taxes

 

(1,523

)

1,329

 

91

 

 

 

(103

)

Income tax provision (benefit)

 

(13

)

(55

)

35

 

(d)

 

(33

)

Net loss from continuing operations

 

$

(1,510

)

$

1,384

 

$

56

 

 

 

$

(70

)

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share from continuing operations—basic

 

$

(7.13

)

 

 

 

 

 

 

$

(0.28

)

Net loss per share from continuing operations—diluted

 

$

(7.13

)

 

 

 

 

 

 

$

(0.28

)

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

Basic

 

212

 

 

 

42

 

(e)

 

254

 

Diluted

 

212

 

 

 

42

 

(e)

 

254

 

 

See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.

 

6



 

SUPERVALU INC. and Subsidiaries

 

PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)

 

For the Year Ended February 27, 2010

 

(In millions, except per share data)

 

 

 

 

 

Pro Forma Adjustments

 

 

 

 

 

Historical

 

Disposition of
New
Albertson’s,
Inc. (a)

 

Other

 

Note

 

Pro Forma

 

Net sales

 

$

40,597

 

$

(22,125

)

$

 

 

 

 

$

18,472

 

Cost of sales

 

31,444

 

(15,557

)

 

 

 

 

15,887

 

Gross profit

 

9,153

 

(6,568

)

 

 

 

 

2,585

 

Selling and administrative expenses

 

7,952

 

(5,668

)

(124

)

(b)

 

2,160

 

Operating earnings

 

1,201

 

(900

)

124

 

 

 

425

 

Interest expense, net

 

569

 

(346

)

54

 

(c)

 

277

 

Earnings from continuing operations before income taxes

 

632

 

(554

)

70

 

 

 

148

 

Income tax provision (benefit)

 

239

 

(220

)

27

 

(d)

 

46

 

Net earnings from continuing operations

 

$

393

 

$

(334

)

$

43

 

 

 

$

102

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings per share from continuing operations—basic

 

$

1.86

 

 

 

 

 

 

 

$

0.40

 

Net earnings per share from continuing operations—diluted

 

$

1.85

 

 

 

 

 

 

 

$

0.40

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

Basic

 

212

 

 

 

42

 

(e)

 

254

 

Diluted

 

213

 

 

 

42

 

(e)

 

255

 

 

See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.

 

7



 

SUPERVALU INC. and Subsidiaries

 

PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)

 

As of December 1, 2012

 

(In millions)

 

 

 

 

 

Pro Forma Adjustments

 

 

 

 

 

Historical

 

Disposition of
New
Albertson’s,
Inc. (a)

 

Other

 

Note

 

Pro Forma

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

155

 

$

(35

)

$

(55

)

(f)

 

$

330

 

 

 

 

 

 

 

100

 

(g)

 

 

 

 

 

 

 

 

 

170

 

(h)

 

 

 

 

 

 

 

 

 

97

 

(i)

 

 

 

 

 

 

 

 

 

(78

)

(j)

 

 

 

 

 

 

 

 

 

(24

)

(l)

 

 

 

Receivables, net

 

713

 

(228

)

 

 

 

485

 

Inventories

 

2,402

 

(1,320

)

 

 

 

1,082

 

Other current assets

 

195

 

(75

)

38

 

(n)

 

158

 

Total current assets

 

3,465

 

(1,658

)

248

 

 

 

2,055

 

Property, plant and equipment, net

 

5,980

 

(4,049

)

 

 

 

1,931

 

Goodwill

 

847

 

 

 

 

 

847

 

Intangible assets, net

 

703

 

(644

)

 

 

 

59

 

Other assets

 

862

 

(383

)

63

 

(j)

 

506

 

 

 

 

 

 

 

(36

)

(k)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

 

$

11,857

 

$

(6,734

)

$

275

 

 

 

$

5,398

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

$

2,423

 

$

(911

)

$

 

 

 

 

$

1,512

 

Current maturities of long-term debt and capital lease obligations

 

259

 

(214

)

 

 

 

 

45

 

Other current liabilities

 

592

 

(463

)

(24

)

(l)

 

105

 

Total current liabilities

 

3,274

 

(1,588

)

(24

)

 

 

1,662

 

Long-term debt and capital lease obligations

 

6,180

 

(2,841

)

22

 

(m)

 

3,361

 

Pension and other postretirement benefit obligations

 

1,027

 

(100

)

 

 

 

 

927

 

Other long-term liabilities

 

1,369

 

(871

)

 

 

 

 

498

 

Total stockholders’ equity (deficit)

 

7

 

(1,334

)

(55

)

(f)

 

(1,050

)

 

 

 

 

 

 

100

 

(g)

 

 

 

 

 

 

 

 

 

170

 

(h)

 

 

 

 

 

 

 

 

 

97

 

(i)

 

 

 

 

 

 

 

 

 

(15

)

(j)

 

 

 

 

 

 

 

 

 

(36

)

(k)

 

 

 

 

 

 

 

 

 

(22

)

(m)

 

 

 

 

 

 

 

 

 

38

 

(n)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total liabilities and stockholders’ equity (deficit)

 

$

11,857

 

$

(6,734

)

$

275

 

 

 

$

5,398

 

 

See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements

 

8



 

SUPERVALU INC. and Subsidiaries

 

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

(In millions, except per share data)

 

Overall

 

(a)          The “Disposition of New Albertson’s, Inc.” column reflects the net sales, expenses, assets, liabilities and stockholders’ equity attributable to NAI, which were historically included in SUPERVALU’s historical consolidated financial statements. This column excludes certain amounts attributable to NAI which will remain with SUPERVALU pursuant to the terms of the Stock Purchase Agreement and related commercial agreements, such as certain pension and other post retirement benefit obligations, certain corporate assets, and certain other accounts payable and accrued liabilities.

 

Pro Forma Condensed Consolidated Statements of Operations (Unaudited)

 

(b)          Reflects incremental Transition Services Agreement (“TSA”) fees that will be earned under the revised TSA between SUPERVALU INC. and New Albertson’s, Inc. (the “Revised TSA”) in connection with the NAI Banner Sale, net of the TSA fees recognized under the existing agreement between SUPERVALU and Albertson’s, LLC (the former TSA). The Revised TSA provides NAI with certain administrative and other services following the closing of the NAI Banner Sale for an initial term of two and a half years following the sale and is subject to certain adjustments under the terms of the agreement, such as a lower number of stores and distribution centers operated by NAI.

 

(c)           Interest expense, net has been adjusted to reflect the impact of an adjustment in interest rates of the new credit facilities attributable to the Refinancing Transactions as well as the net impact of the amortization of new and remaining deferred financing costs related to the NAI Banner Sale and related Refinancing Transactions.

 

(d)          The adjustments to the Unaudited Pro Forma Condensed Consolidated Statements of Operations adjustments were tax effected using the marginal tax rate of the applicable jurisdiction during each period presented.

 

(e)           Reflects approximately 42 additional common shares issued to Symphony Investors pursuant to the Tender Offer Agreement.

 

Pro Forma Condensed Consolidated Balance Sheet (Unaudited)

 

(f)            Reflects the direct costs of the NAI Banner Sale as of December 1, 2012, which are non-recurring direct and incremental costs.

 

(g)           Reflects the cash proceeds from NAI Banner Sale.

 

(h)          Reflects the cash proceeds received from Symphony Investors for the issuance of approximately 42 additional common shares at the Tender Offer price of $4.00 per share, pursuant to the terms and conditions of the Tender Offer Agreement.

 

(i)              Reflects the cash proceeds from the working capital settlement related to the NAI Banner Sale. Due to seasonal operating needs, higher December 1, 2012 working capital balances resulted in an estimated working capital settlement adjustment of $97 pursuant to the Stock Purchase Agreement. The Company expects that based on lower estimated working capital balances at the March 21, 2013 closing date, no working capital adjustment to the initial purchase price will be required pursuant to the Stock Purchase Agreement.

 

(j)             Reflects the payment of $78, capitalization of $68 and expense of $15 related to the new deferred financing costs related to the Refinancing Transactions.

 

(k)          Reflects the write-off of unamortized deferred financing costs relating to historical debt in connection with the Refinancing Transactions and NAI Banner Sale.

 

(l)              Reflects payment of accrued interest related to the historical debt refinanced pursuant to the Refinancing Transactions.

 

(m)      Reflects an increase in long-term debt to reflect the accelerated amortization of the original issue discount on the existing term loan.

 

(n)          Reflects the tax effects of the Unaudited Pro Forma Condensed Consolidated Balance Sheet adjustments using the applicable marginal tax rate in the jurisdiction in which the adjustment related.

 

9