Delaware
|
5411
|
47-4376911
|
||
(State or other jurisdiction of
incorporation or organization) |
(Primary Standard Industrial
Classification Code Number) |
(I.R.S. Employer
Identification No.) |
Stuart D. Freedman, Esq.
Antonio L. Diaz-Albertini, Esq.
Schulte Roth & Zabel LLP
919 Third Avenue
New York, NY 10022
Phone: (212)
756-2000
Fax: (212)
593-5955
|
William J. Miller, Esq.
Cahill Gordon & Reindel LLP
80 Pine Street
New York, NY 10005
Phone: (212) 701-3000
Fax: (212) 378-2500
|
Large accelerated filer
|
☐
|
Accelerated filer
|
☐
|
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Non-accelerated filer
|
☒
|
Smaller reporting company
|
☐
|
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Emerging growth company
|
☐
|
|
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|
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Title of Each Class of
Securities to be Registered
|
|
Proposed
Maximum
Aggregate
Offering Price(1)(2) |
|
Amount of
Registration
Fee(3)(4)
|
Common Stock, par value $0.01 per share
|
|
$100,000,000
|
|
$12,980
|
Series A mandatory convertible preferred stock, par value $0.01 per share (5)
|
|
$100,000,000
|
|
$12,980
|
Common Stock, par value $0.01 per share (6)
|
|
$
|
|
$
|
Total
|
|
$
|
|
$
|
|
||||
|
(1)
|
Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended (the “Securities Act”).
|
(2)
|
Includes the aggregate offering price of additional shares that the underwriters have the option to purchase from the registrant.
|
(3)
|
Calculated pursuant to Rule 457(o) based on an estimate of the proposed maximum aggregate offering price.
|
(4)
|
An aggregate registration fee of $11,620 in respect of shares of the registrant’s common stock was previously paid on July 8, 2015 in connection with the registration statement on Form
S-1
(No.
333-205546).
Additionally, an aggregate registration fee of $202,188 in respect of shares of the registrant’s common stock was previously paid on September 25, 2015 in connection with
Pre-Effective
Amendment No. 2 to the registration statement on Form
S-1
(No.
333-205546).
Additionally, an aggregate registration fee of $13,091 in respect of shares of the registrant’s common stock was previously paid on October 2, 2015 in connection with
Pre-Effective
Amendment No. 3 to the registration statement on Form
S-1
(No.
333-205546).
Thus, the aggregate filing fee associated with the registrant in connection with the registration statement on Form
S-1
(No.
333-205546)
was $226,899. The registrant withdrew the registration statement on Form
S-1
(No.
333-205546)
by filing a Form RW on April 6, 2018. The withdrawn registration statement on Form
S-1
(No.
333-205546)
was not declared effective, and no securities were sold thereunder. Pursuant to Rule 457(p), the registrant utilized $225,641 previously paid in connection with the withdrawn registration statement on Form
S-1
to offset the filing fee in respect of shares of the registrant’s common stock in connection with the registration statement on Form
S-4
(No.
333-224169)
filed with the Securities and Exchange Commission on April 6, 2018. The registrant terminated the offering and, on August 9, 2018, filed a Post-Effective Amendment No. 1 to Form
S-4
(No.
333-224169),
which Post-Effective Amendment No. 1 to Form
S-4
was declared effective on August 14, 2018, to deregister any and all securities registered but unsold or otherwise unissued under the registration statement on Form
S-4.
Pursuant to Rule 457(p), the registrant hereby offsets $226,899 of the filing fee previously paid in connection with the withdrawn registration statement on Form
S-1,
of which $225,641 was used to offset the filing fee paid in connection with the terminated offering pursuant to the registration statement on Form
S-4,
against the filing fee for this registration statement on Form
S-1.
|
(5) | In accordance with Rule 457(i) under the Securities Act, this registration statement also registers the shares of our common stock that are initially issuable upon conversion of the Series A preferred stock registered hereby. The number of shares of our common stock issuable upon such conversion is subject to adjustment upon the occurrence of certain events described herein and will vary based on the public offering price of the common stock registered hereby. Pursuant to Rule 416 under the Securities Act, the number of shares of our common stock to be registered includes an indeterminable number of shares of common stock that may become issuable upon conversion of the Series A preferred stock as a result of such adjustments. |
(6) | This registration statement also registers shares of common stock that may be issued as dividends on the Series A preferred stock in accordance with the terms thereof. |
• | front and back cover pages, which will replace the front and back cover pages of the Common Stock Prospectus; |
• | pages for the “Table of Contents” section, which will replace the “Table of Contents” section of the Common Stock Prospectus; |
• | pages for the “Prospectus Summary—The Offering” section, which will replace the “Prospectus Summary—The Offering” section of the Common Stock Prospectus; |
• | pages for the “Risk Factors—Risks Related to this Offering and Owning Our Series A Preferred Stock and Common Stock” section, which will replace the “Risk Factors—Risks Related to this Offering and Owning Our Common Stock” section of the Common Stock Prospectus; |
• | pages for the “Description of Series A Preferred Stock” section, which will replace the “Concurrent Offering of Series A Preferred Stock” section of the Common Stock Prospectus; |
• | pages for the “Material U.S. Federal Income Tax Consequences to Holders of Our Series A Mandatory Convertible Preferred Stock” section, which will replace the “Material U.S. Federal Income Tax Consequences to Non-U.S. Holders of Our Common Stock” section of the Common Stock Prospectus; and |
• | pages for the “Underwriting” section, which will replace the “Underwriting” section of the Common Stock Prospectus. |
• | references to “this offering” contained in “Explanatory Note,” “Prospectus Summary—Our Corporate Structure,” “Prospectus Summary—Our Sponsors,” “Use of Proceeds,” “Capitalization,” “Dilution,” “Management,” “Certain Relationships and Related Party Transactions,” “Principal and Selling Stockholders,” “Description of Capital Stock” and “Shares Eligible for Future Sale,” “Description of Indebtedness,” and “Where You Can Find Additional Information” of the Common Stock Prospectus will be replaced with references to “the concurrent initial public offering of our common stock” in the Series A Preferred Stock Prospectus; |
• | references to “common stock” or “our common stock” contained in the first paragraph under “Prospectus Summary,” “Prospectus Summary—Risks Related to Our Business and This Offering,” in the first paragraph under “Risk Factors,” “Legal Matters” and “Where You Can Find Additional Information” of the Common Stock Prospectus will be replaced with a reference to “Series A preferred stock” in the Series A Preferred Stock Prospectus; |
• | references to “on the cover page of this prospectus” contained in “Prospectus Summary—Our Corporate Structure,” “Prospectus Summary—Our Sponsors,” “Principal and Selling Stockholders,” and “Description of Capital Stock” of the Common Stock Prospectus will be replaced with references to “on the cover page of the prospectus relating to the concurrent initial public offering of our common stock” in the Series A Preferred Stock Prospectus; |
• | references to “the offering of Series A preferred stock” or “the Series A preferred stock offering” contained in “Prospectus Summary—Our Sponsors,” “Use of Proceeds,” “Capitalization,” |
“Dilution,” “Certain Relationships and Related Party Transactions,” “Description of Capital Stock,” and “Shares Eligible for Future Sale” of the Common Stock Prospectus will be replaced with references to “this offering” in the Series A Preferred Stock Prospectus; |
• | the reference to “—Risks Related to this Offering and Owning Our Common Stock—” contained in the last line of the section titled “Prospectus Summary—Our Sponsors” of the Common Stock Prospectus will be replaced with a reference to “—Risks Related to this Offering and Owning of Our Series A Preferred Stock and Common Stock—” in the Series A Preferred Stock Prospectus; |
• | the first paragraph under “Use of Proceeds” of the Common Stock Prospectus will be removed from the Series A Preferred Stock Prospectus; |
• | the reference to “—Risks Related to this Offering and Owning Our Common Stock—” contained in the second paragraph of “Dividend Policy” of the Common Stock Prospectus will be replaced with a reference to “—Risks Related to this Offering and Owning of Our Series A Preferred Stock and Common Stock—” in the Series A Preferred Stock Prospectus; |
• | the section titled “Principal and Selling Stockholders” of the Common Stock Prospectus will be renamed the “Principal Stockholders” in the Series A Preferred Stock Prospectus; and |
• | the reference to “Concurrent Offering of Series A Preferred Stock” contained in “Description of Capital Stock—Preferred Stock” of the Common Stock Prospectus will be replaced with a reference to “Description of Series A Preferred Stock” in the Series A Preferred Stock Prospectus. |
|
Per Share
|
Total
|
||||||
Initial public offering price
|
$ |
|
$ |
|
||||
Underwriting discounts and commissions(1)
|
$ |
|
$ |
|
||||
Proceeds to selling stockholders(1)
|
$ |
|
$ |
|
(1) | See “Underwriting” for additional information regarding underwriting compensation. |
BofA Securities
|
Goldman Sachs & Co. LLC
|
J.P. Morgan
|
|
Credit Suisse
|
Morgan Stanley
|
Wells Fargo Securities
|
Barclays
|
Deutsche Bank Securities
|
BMO Capital Markets
|
Evercore ISI
|
Guggenheim Securities
|
Oppenheimer & Co.
|
RBC Capital Markets
|
Telsey Advisory Group
|
MUFG
|
Academy Securities
|
Blaylock Van, LLC
|
vi
|
||||
1
|
||||
24
|
||||
47
|
||||
49
|
||||
50
|
||||
51
|
||||
52
|
||||
53
|
||||
54
|
||||
82
|
||||
101
|
||||
113
|
||||
139
|
||||
145
|
||||
148
|
||||
152
|
||||
157
|
||||
162
|
||||
171
|
||||
176
|
||||
182
|
||||
182
|
||||
182
|
||||
F-
1
|
• | “ACI” refers to Albertsons Companies, Inc., a Delaware corporation; |
• | “ACI Institutional Investors” refers to Klaff Realty, L.P., Schottenstein Stores Corp., Lubert-Adler Partners, L.P. and Kimco Realty Corporation, and each of their respective controlled affiliates and investment funds; |
• | “Albertsons” refers to Albertson’s LLC, a Delaware limited liability company and a wholly-owned subsidiary of ACI; |
• | “Cerberus” refers to Cerberus Capital Management, L.P., a Delaware limited partnership, and investment funds and accounts managed by it and its affiliates; |
• | “Code” refers to the Internal Revenue Code of 1986, as amended; |
• | “Exchange Act” refers to the U.S. Securities Exchange Act of 1934, as amended; |
• | “GAAP” refers to accounting principles generally accepted in the United States of America; |
• | “NALP” refers to New Albertsons L.P., a Delaware limited partnership and a wholly-owned subsidiary of ACI; |
• | “Safeway” refers to Safeway Inc., a Delaware corporation and a wholly-owned subsidiary of ACI; |
• | “SEC” refers to the Securities and Exchange Commission; |
• | “Securities Act” refers to the U.S. Securities Act of 1933, as amended; |
• | “Sponsors” refers to Cerberus, the ACI Institutional Investors and their respective controlled affiliates and investment funds; and |
• | “we,” “our” and “us” refers to ACI and its direct or indirect subsidiaries. |
• |
Non-GAAP
Measures do not reflect certain
one-time
or
non-recurring
cash costs to achieve anticipated synergies;
|
• |
Non-GAAP
Measures do not reflect changes in, or cash requirements for, our working capital needs;
|
• | EBITDA and Adjusted EBITDA do not reflect the significant interest expense or the cash requirements necessary to service interest or principal payments on our debt; |
• | EBITDA and Adjusted EBITDA do not reflect income taxes or the cash payments related to income tax obligations; |
• |
Although depreciation and amortization are
non-cash
charges, the assets being depreciated or amortized may have to be replaced in the future, and EBITDA and Adjusted EBITDA and, with respect to acquired intangible assets, Adjusted Net Income, do not reflect any cash requirements for such replacements;
|
• |
Non-GAAP
Measures are adjusted for certain
non-recurring
and
non-cash
income or expense items that are reflected in our statements of operations;
|
• |
Non-GAAP
Measures do not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments; and
|
• | Other companies in our industry may calculate these measures differently than we do, limiting their usefulness as comparative measures. |
• |
Easy
well-thought-out
initiatives underway that seek to make the Albertsons shopping experience easier and more convenient for our existing customers and appealing to new customers. We are leveraging our exceptional store footprint to provide a full suite of omni-channel offerings, including Drive Up & Go curbside pickup and home delivery. We are working to make the
in-store
shopping experience quicker and easier through initiatives such as faster checkout and improved
in-store
navigation. These capabilities are further enhanced through targeted technology investments and partnerships like the ones we have announced with Glympse for location sharing of store pickup and home delivery orders and Takeoff Technologies for automated micro-fulfillment to support our eCommerce efforts. We also seek to simplify the many food-related choices our customers face daily by offering efficient, comprehensive solutions such as meal planning, shopping list creation and prepared foods.
|
• |
Exciting
best-in-class
fresh offerings encompass value-added organic, local and seasonal products. Examples include daily
fresh-cut
fruit and vegetables, customized meat cuts and seafood varieties, made-from-scratch bakery items, convenient prepared meal solutions, deli offerings and beautiful floral designs. In many locations, we also provide attractive specialty offerings, including curated wine selections and artisan cheese shops. We feature a localized
|
assortment that is customized to individual markets, like our Santa Monica Seafood in Southern California and our Hatch Chile salsa in Arizona. We continue to innovate with our
Own Brands
Own Brands
O Organics
Own Brands
|
• |
Friendly
non-customer-facing
areas of our stores, freeing up our associates to do more of what they love: serving shoppers and providing a great customer experience.
|
|
|
Identical Sales
|
Net Income ($mm)
|
Adj. EBITDA ($mm)
|
||
|
|
|
|
|
|
• |
Well-Known Banners
|
• |
Prime Locations
First-and-Main
locations, providing our customers with exceptional convenience. Our owned and ground leased stores and distribution centers, which represent approximately 39% of our store and distribution base, have an aggregate appraised value of $11.2 billion.
|
• |
Strong Market Share and Local
Market Density
|
• |
Highly Attractive Markets
one-third
of the U.S. population and approximately 45% of U.S. GDP. In 65% of the 121 MSAs in which we operate, the projected population growth over the next five years, in aggregate, exceeds the national average by over 50%.
|
|
|
|
|
|
|
|
|
•
Currently available in approximately 550 locations, with plans to grow to approximately 600 by the end of fiscal 2019 and to 1,400 locations in the next two years
•
Easy-to-use
mobile app
•
Convenient, well-signed, curbside pickup
|
|
•
First launched home delivery services in 2001
•
Provide home delivery using our own “white glove” delivery service in approximately 60% of our stores
•
Operate over 1,000 multi-temperature delivery trucks to support home delivery growth
•
Successful roll out of new eCommerce website and mobile applications to all divisions
|
|
•
Launched rush delivery in 2017 with Instacart
•
Delivery within one to two hours in all divisions and covering over 2,000, or nearly 90%, of our stores offered in collaboration with third parties
•
Partnership with Grubhub and Uber Eats adds delivery offerings for our prepared and
ready-to-eat
options from our stores
|
• |
Achieve More Identical Sales Growth From Our Stores
|
o |
Merchandising Excellence
Exciting
re-merchandised
more than 700 stores and plan to expand this successful program.
|
o |
Pricing and Promotions
|
o |
Operating Excellence
in-store
efficiency by using technology to optimize labor and improve
in-stock
and display execution, resulting in enhanced store productivity and customer satisfaction. A number of these initiatives are already underway. In stores where we have introduced computer-assisted ordering and production systems, for example, we have seen a meaningful uplift in sales and improved levels of
in-stocks,
inventory and shrink.
|
o |
Culture of Exceptional Service
in-store
technology to achieve labor efficiencies through the automation of
non-customer-facing
tasks. We expect this effort to provide our associates more time to better serve customers, enhancing the shopping experience and driving purchase frequency, larger basket size, customer satisfaction and retention.
|
o |
Targeted Store Remodels
Easy
Exciting
Friendly
|
• |
Drive Incremental eCommerce Growth:
easy-to-use
and fully-integrated digital experience. We are improving our mobile applications to enable more personalized rewards and services like advanced basket-building tools and product, meal and recipe recommendations. We are
|
further integrating our digital and
in-store
models to better drive existing customer engagement and new customer trial for our own and third-party delivery.
|
• |
Accelerate Own Brand Penetration
Own Brands
Own Brands
Own Brands
|
• |
Increase Customer Engagement and Lifetime Value:
just for U
just for U
|
• |
Enhancing Store and DC Operations:
non-customer-facing
tasks and drive labor productivity. For example, we are working to roll out enhanced demand forecasting and replenishment systems to improve operating efficiency, reduce product waste and optimize labor and inventory levels. We expect to scale these opportunities across the business quickly and efficiently.
|
• |
Leveraging Scale to Buy Better:
|
• |
Increasing Promotional Effectiveness:
|
• |
Leveraging G&A:
.
|
• |
Customers:
check-out
processes and improve our
at-store
pickup experience. For example, we are partnering with Adobe to provide an artificial intelligence-powered solution to personalize the website and mobile application experience. This will enable the customer to see personalized products and information as they browse homepages, categories and product detail pages.
|
• |
Store Operations:
out-of-stocks,
inventory, and shrink.
|
|
|
• |
Merchandising
|
so they are able to make smarter decisions on pricing, promotions and assortment in each local market. |
• |
Supply Chain:
|
|
|
• | the competitive nature of the industry in which we conduct our business; |
• | general business and economic conditions, including the rate of inflation or deflation, consumer spending levels, population, employment and job growth and/or losses in our market; |
• |
our ability to increase identical sales, expand our
Own Brand
|
• | our ability to expand or grow our home delivery network and Drive Up & Go curbside pickup services; |
• | pricing pressures and competitive factors, which could include pricing strategies, store openings, remodels or acquisitions by our competitors; |
• | labor costs, including benefit plan costs and severance payments, or labor disputes that may arise from time to time and work stoppages that could occur in areas where certain collective bargaining agreements have expired or are on indefinite extensions or are scheduled to expire in the near future; |
• | disruptions in our manufacturing facilities’ or distribution centers’ operations, disruption of significant supplier relationships, or disruptions to our produce or product supply chains; |
• | results of any ongoing litigation in which we are involved or any litigation in which we may become involved; |
• | data privacy and security, the failure of our IT systems, or maintaining, expanding or upgrading existing systems or implementing new systems; |
• | the effects of government regulation and legislation, including healthcare reform; |
• | our ability to raise additional capital to finance the growth of our business, including to fund acquisitions; |
• | our ability to service our debt obligations, and restrictions in our debt agreements; |
• | the impact of private and public third-party payers’ continued reduction in prescription drug reimbursements and the ongoing efforts to limit participation in payor networks, including through mail order; |
• | plans for future growth and other business development activities; |
• | our ability to realize anticipated savings from our implementation of cost reduction and productivity initiatives; |
• | changes in tax laws or interpretations that could increase our consolidated tax liabilities; and |
• | competitive pressures in all markets in which we operate. |
Common stock outstanding | shares |
Common stock offered by the selling stockholders | shares |
Option to purchase additional shares of common stock |
The selling stockholders have granted to the underwriters a
30-day
option to purchase up to additional shares of our common stock at the initial public offering price less the underwriting discount and commissions.
|
Use of proceeds | We will not receive any net proceeds from the sale of common stock by the selling stockholders, including from any exercise by the underwriters of their option to purchase additional shares of our common stock from the selling stockholders. |
Dividend Policy | Effective fiscal 2020, we have established a dividend policy pursuant to which we intend to pay a dividend on our common stock in an amount of $ per share, starting with the first full quarter following completion of this offering. Our board of directors may change or eliminate the payment of future dividends to our common stockholders at its discretion, without notice to our stockholders. Any future determination relating to our dividend policy will be made at the sole discretion of our board of directors and will depend on a number of factors, including general and economic conditions, industry standards, our financial condition and operating results, our available cash and current and anticipated cash needs, |
Lock-Up Agreements | Prior to the closing of this offering, each Pre-IPO Stockholder will deliver a lock-up agreement to us. Pursuant to the lock-up agreements, for a period of six months after the closing of this offering each Pre-IPO Stockholder will agree, subject to certain exceptions, that it will not offer, sell, contract to sell, pledge, grant any option to purchase, make any short sale or otherwise dispose of any shares of common stock or any options or warrants to purchase common stock, or any securities convertible into, exchangeable for or that represent the right to receive common stock, owned by them (whether directly or by means of beneficial ownership) immediately prior to the closing of this offering. Thereafter, each Pre-IPO Stockholder will be permitted to sell shares of common stock subject to certain restrictions. See “Certain Relationships and Related Party Transactions—Lock-Up Agreements.” |
Concurrent Series A preferred stock offering | Concurrently with this offering of common stock, we are making a public offering of shares of our Series A preferred stock, and we have granted the underwriters of that offering a 30-day option to purchase up to additional shares of Series A preferred stock to cover over-allotments. Such shares of Series A preferred stock will be convertible into an aggregate of up to shares of our common stock (up to shares of our common stock if the underwriters in the Series A preferred stock offering exercise their over-allotment option in full), in each case subject to anti-dilution, make-whole and other adjustments. |
We cannot assure you that the offering of Series A preferred stock will be completed or, if completed, on what terms it will be completed. The closing of this offering is conditioned upon the closing of the Series A preferred stock offering and the closing of our offering of Series A preferred stock is conditioned upon the closing of this offering. See “Concurrent Offering of Series A Preferred Stock” for a summary of the |
Risk Factors | You should carefully read and consider the information set forth in the section entitled “Risk Factors” beginning on page 24, together with all of the other information set forth in this prospectus, before deciding whether to invest in our common stock. |
Proposed NYSE trading symbol | “ACI.” |
Directed Share Program | At our request, the underwriters have reserved for sale, at the initial public offering price, up to 5% of the shares offered by this prospectus for sale within the United States to some of our directors, officers, employees, business associates and related persons. If these persons purchase reserved shares, it will reduce the number of shares available for sale to the general public. Any reserved shares that are not so purchased will be offered by the underwriters to the general public on the same terms as the other shares offered by this prospectus. |
(dollars in millions, except per share data)
|
40 Weeks
Ended November 30, 2019 |
|
40 Weeks
Ended December 1, 2018 |
|
Fiscal 2018
|
|
Fiscal 2017
|
|
Fiscal 2016
|
|
Fiscal 2015
|
|
||||||||||||
Results of Operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net sales and other revenue
|
$ |
47,018
|
$ |
46,518
|
$ |
60,535
|
$ |
59,925
|
$ |
59,678
|
$ |
58,734
|
||||||||||||
Gross profit
|
$ |
13,176
|
$ |
12,836
|
$ |
16,895
|
$ |
16,361
|
$ |
16,641
|
$ |
16,062
|
||||||||||||
Selling and administrative expenses
|
12,548
|
12,501
|
16,272
|
16,209
|
16,072
|
15,600
|
||||||||||||||||||
(Gain) loss on property dispositions and impairment losses, net
|
(483
|
) |
(164
|
) |
(165
|
) |
67
|
(39
|
) |
103
|
||||||||||||||
Goodwill impairment
|
—
|
—
|
—
|
142
|
—
|
—
|
||||||||||||||||||
Operating income (loss)
|
1,111
|
499
|
788
|
(57
|
) |
608
|
359
|
|||||||||||||||||
Interest expense, net
|
558
|
663
|
831
|
875
|
1,004
|
951
|
||||||||||||||||||
Loss (gain) on debt extinguishment
|
66
|
9
|
9
|
(5
|
) |
112
|
—
|
|||||||||||||||||
Other income, net
|
(22
|
) |
(88
|
) |
(104
|
) |
(9
|
) |
(44
|
) |
(50
|
) | ||||||||||||
Income (loss) before income taxes
|
509
|
(85
|
) |
52
|
(918
|
) |
(464
|
) |
(542
|
) | ||||||||||||||
Income tax expense (benefit)
|
110
|
(80
|
) |
(79
|
) |
(964
|
) |
(90
|
) |
(40
|
) | |||||||||||||
Net income (loss)
|
$ |
399
|
$ |
(5
|
) | $ |
131
|
$ |
46
|
$ |
(374
|
) | $ |
(502
|
) | |||||||||
Other Financial Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Adjusted EBITDA(1)
|
$ |
2,079
|
$ |
2,014
|
$ |
2,741
|
$ |
2,398
|
$ |
2,817
|
$ |
2,681
|
||||||||||||
Adjusted Net Income(1)
|
418
|
218
|
435
|
74
|
378
|
365
|
||||||||||||||||||
Rent expense(2)(3)
|
757
|
663
|
864
|
844
|
806
|
781
|
||||||||||||||||||
Capital expenditures
|
1,084
|
917
|
1,362
|
1,547
|
1,415
|
960
|
||||||||||||||||||
Net cash provided by operating activities
|
1,387
|
1,069
|
1,688
|
1,019
|
1,814
|
902
|
||||||||||||||||||
Adjusted Free Cash Flow(1)
|
995
|
1,097
|
1,379
|
851
|
1,402
|
1,721
|
||||||||||||||||||
Net Debt(1)
|
8,343
|
10,515
|
9,660
|
11,206
|
11,119
|
11,646
|
||||||||||||||||||
Other Operating Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Identical sales
|
2.1
|
% |
0.9
|
% |
1.0
|
% |
(1.3
|
)% |
(0.4
|
)% |
4.4
|
% | ||||||||||||
Store count (at end of fiscal period)
|
2,260
|
2,277
|
2,269
|
2,318
|
2,324
|
2,271
|
||||||||||||||||||
Gross square footage (at end of fiscal period) (in millions).
|
113
|
113
|
113
|
115
|
115
|
113
|
||||||||||||||||||
Fuel sales
|
$ |
2,664
|
$ |
2,785
|
$ |
3,456
|
$ |
3,105
|
$ |
2,693
|
$ |
2,955
|
||||||||||||
Balance Sheet Data (at end of period):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Cash and equivalents
|
$ |
406
|
$ |
463
|
$ |
926
|
$ |
670
|
$ |
1,219
|
$ |
580
|
||||||||||||
Total assets(3)
|
24,992
|
20,982
|
20,777
|
21,812
|
23,755
|
23,770
|
||||||||||||||||||
Total stockholders’ / member equity(3)
|
2,411
|
1,390
|
1,451
|
1,398
|
1,371
|
1,613
|
||||||||||||||||||
Total debt, including finance leases
|
8,749
|
10,978
|
10,586
|
11,876
|
12,338
|
12,226
|
||||||||||||||||||
Per Share Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Basic net income (loss) per common share
|
$ |
1.43
|
$ |
(0.02
|
) | $ |
0.47
|
$ |
0.17
|
$ |
(1.33
|
) | $ |
(1.80
|
) | |||||||||
Diluted net income (loss) per common share
|
$ |
1.42
|
$ |
(0.02
|
) | $ |
0.47
|
$ |
0.17
|
$ |
(1.33
|
) | $ |
(1.80
|
) | |||||||||
Weighted-average common shares outstanding (in millions):
|
|
|
|
|
|
|
||||||||||||||||||
Basic
|
280
|
281
|
280
|
280
|
280
|
280
|
||||||||||||||||||
Diluted
|
280
|
281
|
280
|
280
|
280
|
280
|
|
Fiscal 2019
|
Fiscal 2018
|
Fiscal 2017
|
Fiscal 2016
|
Fiscal 2015
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Q3’19
|
|
Q2’19
|
|
Q1’19
|
|
Q4’18
|
|
Q3’18
|
|
Q2’18
|
|
Q1’18
|
|
Q4’17
|
|
Q3’17
|
|
Q2’17
|
|
Q1’17
|
|
Q4’16
|
|
Q3’16
|
|
Q2’16
|
|
Q1’16
|
|
Q4’15
|
|
Q3’15
|
|
Q2’15
|
|
Q1’15
|
|
||||||||||||||||||||||||||||||||||||||
Identical Sales
|
2.7
|
% |
2.4
|
% |
1.5
|
% |
1.1
|
% |
1.9
|
% |
1.0
|
% |
0.2
|
% |
0.6
|
% |
(1.8
|
)% |
(1.8
|
)% |
(2.1
|
)% |
(3.3
|
)% |
(2.1
|
)% |
0.1
|
% |
2.9
|
% |
4.7
|
% |
5.1
|
% |
4.5
|
% |
4.3
|
% |
(1) |
Adjusted EBITDA is a
Non-GAAP
Measure defined as earnings (net income (loss)) before interest, income taxes, depreciation and amortization, further adjusted to eliminate the effects of items management does not consider in assessing ongoing performance. Adjusted Net Income is a
Non-GAAP
Measure defined as net income (loss) adjusted to eliminate the effects of items management does not consider in assessing ongoing performance. We define Adjusted Free Cash Flow as Adjusted EBITDA less capital expenditures. Net Debt is defined as total debt (which includes finance lease obligations and is net of deferred financing costs and original issue discount) minus cash and cash equivalents.
|
Adjusted EBITDA, Adjusted Net Income, Adjusted Free Cash Flow and Net Debt are
Non-GAAP
Measures that provide supplemental information we believe is useful to analysts and investors to evaluate ongoing results of operations, when considered alongside other GAAP measures such as net income, operating income and gross profit. These
Non-GAAP
Measures exclude the financial impact of items management does not consider in assessing ongoing operating performance, and thereby facilitate review of our operating performance on a
period-to-period
basis. Other companies may have different capital structures or different lease terms, and comparability to our results of operations may be impacted by the effects of acquisition accounting on our depreciation and amortization. As a result of the effects of these factors and factors specific to other companies, we believe Adjusted EBITDA, Adjusted Net Income, Adjusted Free Cash Flow and Net Debt provide helpful information to analysts and investors to facilitate a comparison of our operating performance to that of other companies. Set forth below is a reconciliation of net income to Adjusted Net Income and Adjusted EBITDA and a reconciliation of cash flow from operating activities to Adjusted Free Cash Flow:
|
(dollars in millions)
|
40 Weeks
Ended November 30, 2019 |
|
40 Weeks
Ended December 1, 2018 |
|
Fiscal
2018 |
|
Fiscal
2017 |
|
Fiscal
2016 |
|
Fiscal
2015 |
|
||||||||||||
Net income (loss)
|
$ |
399
|
$ |
(5
|
) | $ |
131
|
$ |
46
|
$ |
(374
|
) | $ |
(502
|
) | |||||||||
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
(Gain) loss on interest rate and commodity hedges, net
|
—
|
(1
|
) |
(1
|
) |
(6
|
) |
(7
|
) |
16
|
||||||||||||||
Facility closures and related transition costs(a)
|
11
|
13
|
13
|
12
|
23
|
25
|
||||||||||||||||||
Integration costs(b)
|
36
|
164
|
186
|
156
|
144
|
125
|
||||||||||||||||||
Acquisition-related costs(c)
|
15
|
66
|
74
|
62
|
70
|
217
|
||||||||||||||||||
Equity-based compensation expense
|
25
|
36
|
48
|
46
|
53
|
98
|
||||||||||||||||||
Net (gain) loss on property dispositions, asset impairments and lease exit costs
|
(483
|
) |
(164
|
) |
(165
|
) |
67
|
(39
|
) |
103
|
||||||||||||||
Goodwill impairment
|
—
|
—
|
—
|
142
|
—
|
—
|
||||||||||||||||||
LIFO expense (benefit)
|
19
|
16
|
8
|
3
|
(8
|
) |
30
|
|||||||||||||||||
Amortization and
write-off
of original issue discount, deferred financing costs and loss on extinguishment of debt
|
135
|
66
|
72
|
67
|
253
|
82
|
||||||||||||||||||
Collington acquisition(d)
|
—
|
—
|
—
|
—
|
79
|
—
|
||||||||||||||||||
Amortization of intangible assets resulting from acquisitions
|
227
|
251
|
326
|
422
|
404
|
377
|
||||||||||||||||||
Other(e)
|
41
|
(44
|
) |
(53
|
) |
66
|
45
|
45
|
||||||||||||||||
Effect of ACI Reorganization Transactions, Tax Act and reversal of valuation allowance
|
—
|
(60
|
) |
(57
|
) |
(750
|
) |
—
|
—
|
|||||||||||||||
Tax impact of adjustments to Adjusted Net Income
|
(7
|
) |
(120
|
) |
(147
|
) |
(259
|
) |
(265
|
) |
(251
|
) | ||||||||||||
Adjusted Net Income
|
$
|
418
|
|
$
|
218
|
|
$
|
435
|
|
$
|
74
|
|
$
|
378
|
|
$
|
365
|
|
||||||
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Tax impact of adjustments to Adjusted Net Income
|
7
|
120
|
147
|
259
|
265
|
251
|
||||||||||||||||||
Effect of tax restructuring, tax reform, and reversal of valuation allowance
|
—
|
60
|
57
|
750
|
—
|
—
|
||||||||||||||||||
Income tax expense (benefit)
|
110
|
(80
|
) |
(79
|
) |
(964
|
) |
(90
|
) |
(40
|
) | |||||||||||||
Amortization and
write-off
of original issue discount, deferred financing costs and loss on extinguishment of debt
|
(135
|
) |
(66
|
) |
(72
|
) |
(67
|
) |
(253
|
) |
(82
|
) | ||||||||||||
Interest expense, net
|
558
|
663
|
831
|
875
|
1,004
|
951
|
||||||||||||||||||
Loss (gain) on debt extinguishment
|
66
|
9
|
9
|
(5
|
) |
112
|
—
|
|||||||||||||||||
Amortization of intangible assets resulting from acquisitions
|
(227
|
) |
(251
|
) |
(326
|
) |
(422
|
) |
(404
|
) |
(377
|
) | ||||||||||||
Depreciation and amortization
|
1,282
|
1,341
|
1,739
|
1,898
|
1,805
|
1,613
|
||||||||||||||||||
Adjusted EBITDA
|
$
|
2,079
|
|
$
|
2,014
|
|
$
|
2,741
|
|
$
|
2,398
|
|
$
|
2,817
|
|
$
|
2,681
|
|
||||||
(dollars in millions)
|
40 Weeks
Ended November 30, 2019 |
|
40 Weeks
Ended December 1, 2018 |
|
Fiscal
2018 |
|
Fiscal
2017 |
|
Fiscal
2016 |
|
Fiscal
2015 |
|
||||||||||||
Net cash provided by operating activities
|
$ |
1,387
|
$ |
1,069
|
$ |
1,688
|
$ |
1,019
|
$ |
1,814
|
$ |
902
|
||||||||||||
Income tax expense (benefit)
|
110
|
(80
|
) |
(79
|
) |
(964
|
) |
(90
|
) |
(40
|
) | |||||||||||||
Deferred income taxes
|
41
|
135
|
82
|
1,094
|
220
|
90
|
||||||||||||||||||
Interest expense, net
|
558
|
663
|
831
|
875
|
1,004
|
951
|
||||||||||||||||||
Operating lease
right-of-use
assets amortization
|
(418
|
) |
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||
Changes in operating assets and liabilities
|
326
|
(147
|
) |
(176
|
) |
222
|
(252
|
) |
467
|
|||||||||||||||
Amortization and
write-off
of deferred financing costs
|
(35
|
) |
(38
|
) |
(43
|
) |
(56
|
) |
(84
|
) |
(69
|
) | ||||||||||||
Contributions to pension and post-retirement benfit plans, net of expense
|
16
|
178
|
175
|
23
|
(84
|
) |
(7
|
) | ||||||||||||||||
Integration costs
|
36
|
164
|
186
|
156
|
144
|
125
|
||||||||||||||||||
Acquisition-related costs
|
15
|
66
|
74
|
62
|
70
|
217
|
||||||||||||||||||
Collington acquisition
|
—
|
—
|
—
|
—
|
79
|
—
|
||||||||||||||||||
Other adjustments
|
43
|
4
|
3
|
(33
|
) |
(4
|
) |
45
|
||||||||||||||||
Adjusted EBITDA
|
|
2,079
|
|
|
2,014
|
|
|
2,741
|
|
|
2,398
|
|
|
2,817
|
|
|
2,681
|
|
||||||
Less: capital expenditures
|
1,084
|
917
|
1,362
|
1,547
|
1,415
|
960
|
||||||||||||||||||
Adjusted Free Cash Flow
|
$
|
995
|
|
$
|
1,097
|
|
$
|
1,379
|
|
$
|
851
|
|
$
|
1,402
|
|
$
|
1,721
|
|
||||||
(a) | Includes costs related to facility closures and the transition to our decentralized operating model. The 40 weeks ended November 30, 2019 includes closure costs related to the discontinuation of our meal kit subscription delivery operations in the third quarter of fiscal 2019. |
(b) | Related to conversion activities and related costs associated with integrating acquired businesses, primarily the Safeway acquisition. |
(c) | Includes expenses related to acquisition and financing activities, including management fees of $13.8 million in each year through fiscal 2018. Fiscal 2018 includes acquisition costs related to the mutually terminated merger with Rite Aid Corporation. Fiscal 2016 and fiscal 2015 include adjustments to tax indemnification assets of $12.3 million and $30.8 million, respectively. Fiscal 2015 also includes losses of $44.2 million related to acquired contingencies in connection with the Safeway acquisition. |
(d) |
Fiscal 2016 includes a charge to pension expense, net related to the settlement of a
pre-existing
contractual relationship and assumption of the pension plan related to the acquisition of Collington Services, LLC (“Collington”) from C&S Wholesale Grocers, Inc. during the first quarter of fiscal 2016.
|
(e) |
Primarily includes
non-cash
lease-related adjustments and lease-related costs for surplus and closed stores. Also includes net realized and unrealized (gains) losses on non-operating investments, certain legal and regulatory accruals and settlements, net, changes in the fair value of the contingent value rights, changes in our equity investment in Casa Ley, S.A. de C.V. (“Casa Ley”) (disposed of in the fourth quarter of fiscal 2017), foreign currency translation gains, adjustments to contingent consideration, costs related to our planned initial public offering and pension expense (exclusive of the charge related to the Collington acquisition) in excess of cash contributions.
|
(2) | Represents rent expense on operating leases, including contingent rent expense. |
(3) |
We adopted ASU
2016-02,
Leases (Topic 842), and related amendments as of February 24, 2019 under the modified retrospective approach and, therefore, have not revised comparative periods. Under Topic 842, leases historically classified as capital leases are now referred to as finance leases.
|
• | transaction litigation; |
• | a failure of our due diligence process to identify significant risks or issues; |
• | the loss of customers of the acquired company or our Company; |
• | negative impact on the brands or banners of the acquired company or our Company; |
• | a failure to maintain or improve the quality of customer service; |
• | difficulties assimilating the operations and personnel of the acquired company; |
• | our inability to retain key personnel of the acquired company; |
• | the incurrence of unexpected expenses and working capital requirements; |
• | our inability to achieve the financial and strategic goals, including synergies, for the combined businesses; and |
• | difficulty in maintaining internal controls, procedures and policies. |
• | increase our vulnerability to general adverse economic and industry conditions; |
• | require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures and other general corporate purposes, including acquisitions; |
• | limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; |
• | place us at a competitive disadvantage compared to our competitors that have less debt; and |
• | limit our ability to borrow additional funds. |
• | sales of assets; |
• | sales of equity; or |
• | negotiations with our lenders to restructure the applicable debt. |
• | incur additional indebtedness or provide guarantees in respect of obligations of other persons; |
• | pay dividends on, repurchase or make distributions to our owners or make other restricted payments or make certain investments; |
• | prepay, redeem or repurchase debt; |
• | make loans, investments and capital expenditures; |
• | sell or otherwise dispose of certain assets; |
• | incur liens; |
• | engage in sale and leaseback transactions; |
• | restrict dividends, loans or asset transfers from our subsidiaries; |
• | consolidate, merge, sell or otherwise dispose of all or substantially all of our assets; |
• | enter into a new or different line of business; and |
• | enter into certain transactions with our affiliates. |
• | the failure of securities analysts to cover our common stock after this offering, or changes in financial estimates by analysts; |
• | changes in, or investors’ perception of, the food and drug retail industry; |
• | the activities of competitors; |
• | future issuances and sales of our common stock, including in connection with acquisitions; |
• | our quarterly or annual earnings or those of other companies in our industry; |
• | the public’s reaction to our press releases, our other public announcements and our filings with the SEC; |
• | regulatory or legal developments in the United States; |
• | litigation involving us, our industry, or both; |
• | general economic conditions; and |
• | other factors described elsewhere in these “Risk Factors.” |
• | the requirement that a majority of the board of directors consist of independent directors; |
• | the requirement that we have a nominating and corporate governance committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities; |
• | the requirement that we have a compensation committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities; and |
• | the requirement for an annual performance evaluation of the nominating and corporate governance and compensation committees. |
• |
from and after such date that our Sponsors and their respective Affiliates (as defined in Rule
12b-2
of the Exchange Act), or any person who is an express assignee or designee of their respective rights under our certificate of incorporation (and such assignee’s or designee’s Affiliates) ceases to own, in the aggregate, at least 50% of the then-outstanding shares of our common stock (the “50% Trigger Date”), the authorized number of our directors may be increased or decreased only by the affirmative vote of
two-thirds
of the then-outstanding shares of our common stock or by resolution of our board of directors;
|
• |
prior to the 50% Trigger Date, only our board of directors and the Sponsors are expressly authorized to make, alter or repeal our bylaws and, from and after the 50% Trigger Date, our stockholders may only amend our bylaws with the approval of at least
two-thirds
of all of the outstanding shares of our capital stock entitled to vote;
|
• | from and after the 50% Trigger Date, the manner in which stockholders can remove directors from the board will be limited; |
• | from and after the 50% Trigger Date, stockholder actions must be effected at a duly called stockholder meeting and actions by our stockholders by written consent will be prohibited; |
• | from and after such date that our Sponsors and their respective Affiliates (or any person who is an express assignee or designee of our Sponsors’ respective rights under our certificate of incorporation (and such assignee’s or designee’s Affiliates)) ceases to own, in the aggregate, at least 35% of the then-outstanding shares of our common stock (the “35% Trigger Date”), advance notice requirements for stockholder proposals that can be acted on at stockholder meetings and nominations to our board of directors will be established; |
• | limits on who may call stockholder meetings; |
• | requirements on any stockholder (or group of stockholders acting in concert), other than, prior to the 35% Trigger Date, the Sponsors, who seeks to transact business at a meeting or nominate directors for election to submit a list of derivative interests in any of our company’s securities, including any short interests and synthetic equity interests held by such proposing stockholder; |
• |
requirements on any stockholder (or group of stockholders acting in concert) who seeks to nominate directors for election to submit a list of “related party transactions” with the proposed nominee(s) (as if such nominating person were a registrant pursuant to Item 404 of Regulation
S-K,
and the proposed nominee was an executive officer or director of the “registrant”); and
|
• | our board of directors is authorized to issue preferred stock without stockholder approval, which could be used to institute a “poison pill” that would work to dilute the stock ownership of a potential hostile acquiror, effectively preventing acquisitions that have not been approved by our board of directors. |
• | investors’ anticipation of the potential resale in the market of a substantial number of additional shares of our common stock received upon conversion of the Series A preferred stock; |
• | possible sales of our common stock by investors who view the Series A preferred stock as a more attractive means of equity participation in us than owning shares of our common stock; and |
• | hedging or arbitrage trading activity that may develop involving the Series A preferred stock and our common stock. |
• | the competitive nature of the industry in which we conduct our business; |
• | general business and economic conditions, including the rate of inflation or deflation, consumer spending levels, population, employment and job growth and/or losses in our market; |
• |
our ability to increase identical sales, expand our
Own Brand
|
• | our ability to expand or grow our home delivery network and Drive Up & Go curbside pickup services; |
• | pricing pressures and competitive factors, which could include pricing strategies, store openings, remodels or acquisitions by our competitors; |
• | labor costs, including benefit plan costs and severance payments, or labor disputes that may arise from time to time and work stoppages that could occur in areas where certain collective bargaining agreements have expired or are on indefinite extensions or are scheduled to expire in the near future; |
• | disruptions in our manufacturing facilities’ or distribution centers’ operations, disruption of significant supplier relationships, or disruptions to our produce or product supply chains; |
• | results of any ongoing litigation in which we are involved or any litigation in which we may become involved; |
• | data privacy and security, the failure of our IT systems, or maintaining, expanding or upgrading existing systems or implementing new systems; |
• | the effects of government regulation and legislation, including healthcare reform; |
• | our ability to raise additional capital to finance the growth of our business, including to fund acquisitions; |
• | our ability to service our debt obligations, and restrictions in our debt agreements; |
• | the impact of private and public third-party payers’ continued reduction in prescription drug reimbursements and the ongoing efforts to limit participation in payor networks, including through mail order; |
• | plans for future growth and other business development activities; |
• | our ability to realize anticipated savings from our implementation of new productivity initiatives, the failure of which could adversely affect our financial performance and competitive position; |
• | changes in tax laws or interpretations that could increase our consolidated tax liabilities; and |
• | competitive pressures in all markets in which we operate. |
|
As of November 30, 2019
|
|||||||
(dollars in millions)
|
Actual
|
|
As
Adjusted |
|
||||
Cash and cash equivalents
|
$ |
406
|
$ |
|
||||
Debt, including current maturities, net of debt discounts and deferred financing costs(1)
|
|
|
||||||
ABL Facility(2)
|
$ |
18
|
$ |
|
||||
Term loan facilities
|
2,312
|
|
||||||
ACI Notes
|
4,554
|
|
||||||
Safeway Notes(3)
|
642
|
|
||||||
NALP Notes(4)
|
466
|
|
||||||
Finance leases
|
702
|
|
||||||
Other financing liabilities(5)
|
37
|
|
||||||
Mortgage notes payable, secured
|
18
|
|
||||||
Total Debt
|
$ |
8,749
|
$ |
|
||||
Stockholders’ equity
|
|
|
||||||
Total preferred stock, $0.01 par value; 30,000,000 shares authorized, no shares issued and outstanding, actual; 100,000,000 shares authorized, shares issued and outstanding, as adjusted
|
$ |
—
|
$ |
|
||||
Series A mandatory convertible preferred stock, $0.01 par value; no shares authorized, issued and outstanding, actual; shares authorized, shares issued and outstanding, as adjusted
|
—
|
|
||||||
Undesignated preferred stock, $0.01 par value; 30,000,000 shares authorized, no shares issued and outstanding, actual; shares authorized, no shares issued and outstanding, as adjusted
|
—
|
|
||||||
Common stock, $0.01 par value; 1,000,000,000 shares authorized, 279,597,312 shares issued and outstanding, actual; 1,000,000,000 shares authorized, shares issued and outstanding, as adjusted
|
2.8
|
|
||||||
Total stockholders’ equity
|
$ |
2,411
|
$ |
|
||||
Total capitalization
|
$ |
11,160
|
$ |
|
||||
(1) | Debt discounts and deferred financing costs totaled $78.3 million and $62.8 million, respectively, as of November 30, 2019, on an actual basis. |
(2) | The ABL Facility provides for a $4,000.0 million revolving credit facility. As of November 30, 2019, the aggregate borrowing base on the ABL Facility would be approximately $4.0 billion, which was reduced by $459.8 million of outstanding standby letters of credit, resulting in a net borrowing base availability of approximately $3.5 billion. See “Description of Indebtedness—ABL Facility.” |
(3) | Consists of the 2020 Safeway Notes, 2021 Safeway Notes, 2027 Safeway Notes (as defined herein) and 2031 Safeway Notes (as defined herein). |
(4) | Consists of the NALP Medium-Term Notes, 2026 NALP Notes, 2029 NALP Notes, 2030 NALP Notes and 2031 NALP Notes (each as defined herein). |
(5) | Consists of other financing obligations and the ASC Notes (as defined herein). |
Initial public offering price per share of common stock (the midpoint of the estimated offering price range shown on the cover page of this prospectus)
|
$ |
|
||
Net tangible book value (deficit) per share as of , 2020
|
$ |
|
||
Increase in tangible book (deficit) value per share attributable to investors in the this offering
|
$ |
|
||
As adjusted net tangible book value (deficit) per share after this offering
|
$ |
|
||
Dilution per share to investors in this offering
|
$ |
|
|
40 Weeks Ended
|
|
||||||||||||||||||||||||||
(dollars in millions, except per share data)
|
November 30,
2019 |
|
December 1,
2018 |
|
Fiscal
2018 |
|
Fiscal
2017
|
|
Fiscal
2016
|
|
Fiscal
2015
|
|
Fiscal
2014(1) |
|
||||||||||||||
Results of Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Net sales and other revenue
|
$ |
47,018
|
$ |
46,518
|
$ |
60,535
|
$ |
59,925
|
$ |
59,678
|
$ |
58,734
|
$ |
27,199
|
||||||||||||||
Gross Profit
|
13,176
|
12,836
|
16,895
|
16,361
|
16,641
|
16,062
|
7,503
|
|||||||||||||||||||||
Selling and administrative expenses
|
12,548
|
12,501
|
16,272
|
16,209
|
16,072
|
15,600
|
7,929
|
|||||||||||||||||||||
(Gain) loss on property dispositions and impairment losses, net
|
(483
|
) |
(164
|
) |
(165
|
) |
67
|
(39
|
) |
103
|
228
|
|||||||||||||||||
Goodwill impairment
|
—
|
—
|
—
|
142
|
—
|
—
|
—
|
|||||||||||||||||||||
Operating income (loss)
|
1,111
|
499
|
788
|
(57
|
) |
608
|
359
|
(654
|
) | |||||||||||||||||||
Interest expense, net
|
558
|
663
|
831
|
875
|
1,004
|
951
|
633
|
|||||||||||||||||||||
Loss (gain) on debt extinguishment
|
66
|
9
|
9
|
(5
|
) |
112
|
—
|
—
|
||||||||||||||||||||
Other (income) expense, net
|
(22
|
) |
(88
|
) |
(104
|
) |
(9
|
) |
(44
|
) |
(50
|
) |
91
|
|||||||||||||||
Income (loss) before income taxes
|
509
|
(85
|
) |
52
|
(918
|
) |
(464
|
) |
(542
|
) |
(1,378
|
) | ||||||||||||||||
Income tax expense (benefit)
|
111
|
(80
|
) |
(79
|
) |
(964
|
) |
(90
|
) |
(40
|
) |
(153
|
) | |||||||||||||||
Net income (loss)
|
$ |
399
|
$ |
(5
|
) | $ |
131
|
$ |
46
|
$ |
(374
|
) | $ |
(502
|
) | $ |
(1,225
|
) | ||||||||||
Balance Sheet (at end of period)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Cash and cash equivalents
|
$ |
406
|
$ |
463
|
$ |
926
|
$ |
670
|
$ |
1,219
|
$ |
580
|
$ |
1,126
|
||||||||||||||
Total assets(2)
|
24,992
|
20,982
|
20,777
|
21,812
|
23,755
|
23,770
|
25,678
|
|||||||||||||||||||||
Total stockholders’ / member equity(2)
|
2,411
|
1,390
|
1,451
|
1,398
|
1,371
|
1,613
|
2,169
|
|||||||||||||||||||||
Total debt, including finance leases
|
8,749
|
10,978
|
10,586
|
11,876
|
12,338
|
12,226
|
12,569
|
|||||||||||||||||||||
Net cash provided by (used in) operating activities
|
1,387
|
1,069
|
1,688
|
1,019
|
1,814
|
902
|
(165
|
) | ||||||||||||||||||||
Per Share Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Basic net income (loss) per common share
|
$ |
1.43
|
$ |
(0.02)
|
$ |
0.47
|
$ |
0.17
|
$ |
(1.33
|
) | $ |
(1.80
|
) | $ |
(4.38
|
) | |||||||||||
Diluted net income (loss) per common share
|
$ |
1.42
|
$ |
(0.02)
|
$ |
0.47
|
$ |
0.17
|
$ |
(1.33
|
) | $ |
(1.80
|
) | $ |
(4.38
|
) | |||||||||||
Weighted-average common shares outstanding (in millions):
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Basic
|
280
|
281
|
280
|
280
|
280
|
280
|
280
|
|||||||||||||||||||||
Diluted
|
280
|
281
|
280
|
280
|
280
|
280
|
280
|
(1) | Includes results from four weeks for the stores purchased in the Safeway merger on January 30, 2015. |
(2) |
We adopted ASU
2016-02,
Leases (Topic 842), and related amendments as of February 24, 2019 under the modified retrospective approach and, therefore, have not revised comparative periods. Under Topic 842, leases historically classified as capital leases are now referred to as finance leases.
|
|
40 weeks ended
|
52 weeks ended
|
||||||||||||||||||
|
November 30,
2019 |
|
December 1,
2018 |
|
February 23,
2019 |
|
February 24,
2018 |
|
February 25,
2017 |
|
||||||||||
Stores, beginning of period
|
2,269
|
2,318
|
2,318
|
2,324
|
2,271
|
|||||||||||||||
Acquired
|
—
|
—
|
—
|
5
|
78
|
|||||||||||||||
Opened
|
12
|
3
|
6
|
15
|
15
|
|||||||||||||||
Closed
|
(21
|
) |
(44
|
) |
(55
|
) |
(26
|
) |
(40
|
) | ||||||||||
Stores, end of period
|
2,260
|
2,277
|
2,269
|
2,318
|
2,324
|
|||||||||||||||
|
Number of stores
|
Percent of Total
|
Retail Square Feet(1)
|
|||||||||||||||||||||
Square Footage
|
November 30,
2019 |
|
December 1,
2018 |
|
November 30,
2019 |
|
December 1,
2018 |
|
November 30,
2019 |
|
December 1,
2018 |
|
||||||||||||
Less than 30,000
|
204
|
208
|
9.0
|
% |
9.1
|
% |
4.7
|
4.8
|
||||||||||||||||
30,000 to 50,000
|
787
|
795
|
34.8
|
% |
34.9
|
% |
33.0
|
33.4
|
||||||||||||||||
More than 50,000
|
1,269
|
1,274
|
56.2
|
% |
56.0
|
% |
75.0
|
75.2
|
||||||||||||||||
Total Stores
|
2,260
|
2,277
|
100.0
|
% |
100.0
|
% |
112.7
|
113.4
|
||||||||||||||||
(1) | In millions, reflects total square footage of retail stores operating at the end of the quarter. |
|
Number of Stores
|
Percent of Total
|
Retail Square Feet(1)
|
|||||||||||||||||||||
Square Footage
|
February 23,
2019 |
|
February 24,
2018 |
|
February 23,
2019 |
|
February 24,
2018 |
|
February 23,
2019 |
|
February 24,
2018 |
|
||||||||||||
Less than 30,000
|
208
|
211
|
9.2
|
% |
9.1
|
% |
4.9
|
4.9
|
||||||||||||||||
30,000 to 50,000
|
792
|
810
|
34.9
|
% |
34.9
|
% |
33.2
|
34.0
|
||||||||||||||||
More than 50,000
|
1,269
|
1,297
|
55.9
|
% |
56.0
|
% |
74.9
|
76.5
|
||||||||||||||||
Total Stores
|
2,269
|
2,318
|
100.0
|
% |
100.0
|
% |
113.0
|
115.4
|
||||||||||||||||
(1) | In millions, reflects total square footage of retail stores operating at the end of the period. |
|
40 weeks ended
|
|||||||||||||||
|
November 30,
2019 |
|
% of
Sales |
|
December 1,
2018 |
|
% of
Sales |
|
||||||||
Net sales and other revenue
|
$ |
47,018.3
|
100.0
|
% | $ |
46,517.9
|
100.0
|
% | ||||||||
Cost of sales
|
33,842.1
|
72.0
|
33,682.0
|
72.4
|
||||||||||||
Gross profit
|
13,176.2
|
28.0
|
12,835.9
|
27.6
|
||||||||||||
Selling and administrative expenses
|
12,548.4
|
26.7
|
12,500.7
|
26.9
|
||||||||||||
Gain on property dispositions and impairment losses, net
|
(482.7
|
) |
(1.0
|
) |
(163.7
|
) |
(0.4
|
) | ||||||||
Operating income
|
1,110.5
|
2.3
|
498.9
|
1.1
|
||||||||||||
Interest expense, net
|
557.5
|
1.2
|
662.5
|
1.5
|
||||||||||||
Loss on debt extinguishment
|
65.8
|
0.1
|
9.5
|
—
|
||||||||||||
Other income, net
|
(21.9
|
) |
—
|
(88.3
|
) |
(0.2
|
) | |||||||||
Income (loss) before income taxes
|
509.1
|
1.0
|
(84.8
|
) |
(0.2
|
) | ||||||||||
Income tax expense (benefit)
|
110.5
|
0.2
|
(80.3
|
) |
(0.2
|
) | ||||||||||
Net income (loss)
|
$ |
398.6
|
0.8
|
% | $ |
(4.5
|
) |
—
|
% | |||||||
|
40 weeks ended
|
|||||||
|
November 30,
2019 |
|
December 1,
2018 |
|
||||
Identical sales, excluding fuel
|
2.1%
|
0.9%
|
First 40 weeks of fiscal 2019 vs. First 40 weeks of fiscal 2018
|
Basis point increase
(decrease)
|
|
||
Lower shrink expense
|
22
|
|||
Product mix, including increased penetration in
Own Brands
|
13
|
|||
Lower depreciation expense
|
9
|
|||
Pharmacy reimbursement rate pressure
|
(14
|
) | ||
Higher rent expense
|
(10
|
) | ||
Other
|
10
|
|||
Total
|
30
|
|||
First 40 weeks of fiscal 2019 vs. First 40 weeks of fiscal 2018
|
Basis point increase
(decrease)
|
|
||
Lower integration and acquisition-related costs
|
(37
|
) | ||
Depreciation and amortization
|
(9
|
) | ||
Rent expense and occupancy costs
|
13
|
|||
Investments in strategic initiatives
|
9
|
|||
Employee wage and benefit cost
|
7
|
|||
Other
|
(13
|
) | ||
Total
|
(30
|
) | ||
|
Fiscal
2018 |
Fiscal
2017 |
Fiscal
2016 |
|||||||||||||||||||||
Net sales and other revenue
|
$ |
60,534.5
|
100.0
|
% | $ |
59,924.6
|
100.0
|
% | $ |
59,678.2
|
100.0
|
% | ||||||||||||
Cost of sales
|
43,639.9
|
72.1
|
43,563.5
|
72.7
|
43,037.7
|
72.1
|
||||||||||||||||||
Gross profit
|
16,894.6
|
27.9
|
16,361.1
|
27.3
|
16,640.5
|
27.9
|
||||||||||||||||||
Selling and administrative expenses
|
16,272.3
|
26.9
|
16,208.7
|
27.0
|
16,072.1
|
26.9
|
||||||||||||||||||
(Gain) loss on property dispositions and impairment losses, net
|
(165.0
|
) |
(0.3
|
) |
66.7
|
0.1
|
(39.2
|
) |
—
|
|||||||||||||||
Goodwill impairment
|
—
|
—
|
142.3
|
0.2
|
—
|
—
|
||||||||||||||||||
Operating income (loss)
|
787.3
|
1.3
|
(56.6
|
) |
—
|
607.6
|
1.0
|
|||||||||||||||||
Interest expense, net
|
830.8
|
1.4
|
874.8
|
1.5
|
1,003.8
|
1.7
|
||||||||||||||||||
Loss (gain) on debt extinguishment
|
8.7
|
—
|
(4.7
|
) |
—
|
111.7
|
0.2
|
|||||||||||||||||
Other income
|
(104.4
|
) |
(0.2
|
) |
(9.2
|
) |
—
|
(44.3
|
) |
(0.1
|
) | |||||||||||||
Income (loss) before income taxes
|
52.2
|
0.1
|
(917.5
|
) |
(1.5
|
) |
(463.6
|
) |
(0.8
|
) | ||||||||||||||
Income tax benefit
|
(78.9
|
) |
(0.1
|
) |
(963.8
|
) |
(1.6
|
) |
(90.3
|
) |
(0.2
|
) | ||||||||||||
Net income (loss)
|
$ |
131.1
|
0.2
|
% | $ |
46.3
|
0.1
|
% | $ |
(373.3
|
) |
(0.6
|
)% | |||||||||||
|
Fiscal
2018 |
|
Fiscal
2017 |
|
Fiscal
2016 |
|
||||||
Identical sales, excluding fuel
|
1.0
|
% |
(1.3
|
)% |
(0.4
|
)% |
|
Fiscal
2018 |
|
||
Net sales and other revenue for fiscal 2017
|
$ |
59,924.6
|
||
Identical sales increase of 1.0%
|
539.6
|
|||
Increase in fuel sales
|
351.3
|
|||
Decrease in sales due to store closures, net of new store openings
|
(413.6
|
) | ||
Other(1)
|
132.6
|
|||
Net sales and other revenue for fiscal 2018
|
$ |
60,534.5
|
||
(1) |
Includes changes in
non-identical
sales and other miscellaneous revenue.
|
|
Fiscal
2017 |
|
||
Net sales and other revenue for fiscal 2016
|
$ |
59,678.2
|
||
Additional sales due to new stores and acquisitions, net of store closings
|
589.4
|
|||
Increase in fuel sales
|
411.2
|
|||
Identical sales decline of 1.3%
|
(740.4
|
) | ||
Other(1)
|
(13.8
|
) | ||
Net sales and other revenue for fiscal 2017
|
$ |
59,924.6
|
||
(1) |
Includes changes in
non-identical
sales and other miscellaneous revenue.
|
Fiscal 2018 vs. Fiscal 2017
|
Basis point increase
(decrease)
|
|
||
Lower shrink expense
|
31
|
|||
Product mix, including increased
Own Brands
|
16
|
|||
Advertising
|
14
|
|||
Acquisition synergies
|
6
|
|||
Other
|
3
|
|||
Total
|
70
|
|||
Fiscal 2017 vs. Fiscal 2016
|
Basis point increase
(decrease)
|
|
||
Investment in price and changes in product mix
|
(36
|
) | ||
Increase in shrink expense
|
(23
|
) | ||
LIFO expense
|
(1
|
) | ||
Acquisition synergies
|
10
|
|||
Total
|
(50
|
) | ||
Fiscal 2018 vs. Fiscal 2017
|
Basis point increase
(decrease)
|
|
||
Depreciation and amortization
|
(27
|
) | ||
Cost reduction initiatives
|
(18
|
) | ||
Employee wage and benefit costs (primarily incentive pay)
|
28
|
|||
Other (includes an increase in acquisition and integration costs)
|
7
|
|||
Total
|
(10
|
) | ||
Fiscal 2017 vs. Fiscal 2016
|
Basis point increase
(decrease)
|
|
||
Employee wage and benefit costs
|
20
|
|||
Depreciation and amortization
|
14
|
|||
Store-related costs
|
12
|
|||
Pension expense, net
|
(17
|
) | ||
Safeway merger synergies
|
(7
|
) | ||
Other
|
(2
|
) | ||
Total
|
20
|
|||
|
Fiscal
2018 |
|
Fiscal
2017 |
|
Fiscal
2016 |
|
||||||
ABL Facility, senior secured and unsecured notes, term loans and debentures
|
$ |
698.3
|
$ |
701.5
|
$ |
764.3
|
||||||
Capital lease obligations
|
81.8
|
96.3
|
106.8
|
|||||||||
Amortization and
write-off
of deferred financing costs
|
42.7
|
56.1
|
84.4
|
|||||||||
Amortization and
write-off
of debt discounts
|
20.3
|
16.0
|
22.3
|
|||||||||
Other interest (income) expense
|
(12.3
|
) |
4.9
|
26.0
|
||||||||
Interest expense, net
|
$ |
830.8
|
$ |
874.8
|
$ |
1,003.8
|
||||||
|
Fiscal
2018 |
|
Fiscal
2017 |
|
Fiscal
2016 |
|
||||||
Income tax expense (benefit) at federal statutory rate
|
$ |
11.0
|
$ |
(301.5
|
) | $ |
(162.3
|
) | ||||
State income taxes, net of federal benefit
|
0.7
|
(39.8
|
) |
(20.2
|
) | |||||||
Change in valuation allowance
|
(3.3
|
) |
(218.0
|
) |
107.1
|
|||||||
Unrecognized tax benefits
|
(16.2
|
) |
(36.5
|
) |
(18.7
|
) | ||||||
Member loss
|
—
|
83.1
|
16.6
|
|||||||||
Charitable donations
|
(4.4
|
) |
—
|
(11.1
|
) | |||||||
Tax credits
|
(10.8
|
) |
(9.1
|
) |
(17.3
|
) | ||||||
Indemnification asset
|
—
|
—
|
5.1
|
|||||||||
Effect of Tax Cuts and Jobs Act
|
(56.9
|
) |
(430.4
|
) |
—
|
|||||||
CVR liability adjustment
|
—
|
(20.3
|
) |
7.5
|
||||||||
Reorganization of limited liability companies
|
—
|
46.7
|
—
|
|||||||||
Nondeductible equity-based compensation expense
|
3.8
|
1.6
|
4.2
|
|||||||||
Other
|
(2.8
|
) |
(39.6
|
) |
(1.2
|
) | ||||||
Income tax benefit
|
$ |
(78.9
|
) | $ |
(963.8
|
) | $ |
(90.3
|
) | |||
|
40 weeks ended
|
|||||||
|
November 30,
2019 |
|
December 1,
2018 |
|
||||
Net income (loss)
|
$ |
398.6
|
$ |
(4.5
|
) | |||
Depreciation and amortization
|
1,281.9
|
1,340.8
|
||||||
Interest expense, net
|
557.5
|
662.5
|
||||||
Income tax expense (benefit)
|
110.5
|
(80.3
|
) | |||||
EBITDA
|
2,348.5
|
1,918.5
|
||||||
Integration costs(1)
|
36.4
|
164.4
|
||||||
Acquisition-related costs(2)
|
14.6
|
65.8
|
||||||
Equity-based compensation expense
|
24.8
|
35.5
|
||||||
Loss on debt extinguishment
|
65.8
|
9.5
|
||||||
Gain on property dispositions and impairment losses, net
|
(482.7
|
) |
(163.7
|
) | ||||
LIFO expense
|
18.9
|
15.7
|
||||||
Miscellaneous adjustments(3)
|
52.5
|
(31.6
|
) | |||||
Adjusted EBITDA
|
$ |
2,078.8
|
$ |
2,014.1
|
||||
(1) | Related to conversion activities and related costs associated with integrating acquired businesses, primarily the Safeway acquisition. |
(2) | Includes expenses related to acquisitions (including the mutually terminated merger with Rite Aid Corporation in fiscal 2018) and expenses related to management fees paid in connection with acquisition and financing activities. |
(3) | Miscellaneous adjustments include the following (see table below): |
|
40 weeks ended
|
|||||||
|
November 30,
2019 |
|
December 1,
2018 |
|
||||
Non-cash
lease-related adjustments
|
$ |
13.3
|
$ |
(6.9
|
) | |||
Lease and lease-related costs for surplus and closed stores
|
16.5
|
16.9
|
||||||
Facility closure costs(a)
|
11.0
|
13.4
|
||||||
Net realized and unrealized gain on
non-operating
investments
|
(2.5
|
) |
(26.0
|
) | ||||
Adjustments to contingent consideration
|
—
|
(39.4
|
) | |||||
Certain legal and regulatory accruals and settlements, net
|
(1.8
|
) |
—
|
|||||
Other(b)
|
16.0
|
10.4
|
||||||
Total other adjustments
|
$ |
52.5
|
$ |
(31.6
|
) | |||
(a) | Includes costs related to facility closures. Includes closure costs related to the discontinuation of our meal kit subscription delivery operations in the third quarter of fiscal 2019. |
(b) | Primarily includes adjustments for unconsolidated equity investments. |
|
40 weeks ended
|
|||||||
|
November 30,
2019 |
|
December 1,
2018 |
|
||||
Net cash provided by operating activities
|
$ |
1,387.0
|
$ |
1,069.1
|
||||
Income tax expense (benefit)
|
110.5
|
(80.3
|
) | |||||
Deferred income taxes
|
40.6
|
135.2
|
||||||
Interest expense, net
|
557.5
|
662.5
|
||||||
Operating lease
right-of-use
assets amortization
|
(418.3
|
) |
—
|
|||||
Changes in operating assets and liabilities
|
326.1
|
(146.8
|
) | |||||
Amortization and
write-off
of deferred financing costs
|
(35.4
|
) |
(38.3
|
) | ||||
Contributions to pension and post-retirement benefit plans, net of expense
|
16.2
|
178.2
|
||||||
Integration costs
|
36.4
|
164.4
|
||||||
Acquisition-related costs
|
14.6
|
65.8
|
||||||
Other adjustments
|
43.6
|
4.3
|
||||||
Adjusted EBITDA
|
2,078.8
|
2,014.1
|
||||||
Less: capital expenditures
|
(1,083.7
|
) |
(916.9
|
) | ||||
Adjusted Free Cash Flow
|
$ |
995.1
|
$ |
1,097.2
|
||||
|
Fiscal
2018 |
|
Fiscal
2017 |
|
Fiscal
2016 |
|
||||||
Net income (loss)
|
$ |
131.1
|
$ |
46.3
|
$ |
(373.3
|
) | |||||
Depreciation and amortization
|
1,738.8
|
1,898.1
|
1,804.8
|
|||||||||
Interest expense, net
|
830.8
|
874.8
|
1,003.8
|
|||||||||
Income tax benefit
|
(78.9
|
) |
(963.8
|
) |
(90.3
|
) | ||||||
EBITDA
|
2,621.8
|
1,855.4
|
2,345.0
|
|||||||||
Integration costs(1)
|
186.3
|
156.2
|
144.1
|
|||||||||
Acquisition-related costs(2)
|
73.4
|
61.5
|
69.5
|
|||||||||
Loss (gain) on debt extinguishment
|
8.7
|
(4.7
|
) |
111.7
|
||||||||
Equity-based compensation expense
|
47.7
|
45.9
|
53.3
|
|||||||||
Net (gain) loss on property dispositions, asset impairment and lease exit costs(3)
|
(165.0
|
) |
66.7
|
(39.2
|
) | |||||||
Goodwill impairment
|
—
|
142.3
|
—
|
|||||||||
LIFO expense (benefit)
|
8.0
|
3.0
|
(7.9
|
) | ||||||||
Collington acquisition(4)
|
—
|
—
|
78.9
|
|||||||||
Miscellaneous adjustments(5)
|
(39.6
|
) |
71.6
|
61.1
|
||||||||
Adjusted EBITDA
|
$ |
2,741.3
|
$ |
2,397.9
|
$ |
2,816.5
|
||||||
(1) | Related to activities to integrate acquired businesses, primarily the Safeway merger. |
(2) | Includes expenses related to acquisition and financing activities, including management fees of $13.8 million in each year. Fiscal 2018 includes expenses related to the mutually terminated merger with Rite Aid. Fiscal 2016 includes adjustments to tax indemnification assets of $12.3 million. |
(3) | Fiscal 2018 includes gains related to various property dispositions and increased amortization of deferred gains related to sale-leaseback transactions. Fiscal 2017 includes asset impairment losses of $100.9 million primarily related to underperforming stores. Fiscal 2016 includes a net gain of $42.9 million related to the disposition of a portfolio of surplus properties. |
(4) |
Fiscal 2016 charge to pension expense, net related to the settlement of a
pre-existing
contractual relationship and assumption of the pension plan related to the acquisition of Collington.
|
(5) | Miscellaneous adjustments include the following: |
|
Fiscal
2018 |
|
Fiscal
2017 |
|
Fiscal
2016 |
|
||||||
Lease-related adjustments(a)
|
$ |
5.8
|
$ |
17.4
|
$ |
27.0
|
||||||
Net realized and unrealized gain on
non-operating
investments
|
(17.2
|
) |
(5.1
|
) |
(9.7
|
) | ||||||
Adjustments to contingent consideration
|
(59.3
|
) |
—
|
—
|
||||||||
Facility closures and related transition costs(b)
|
13.4
|
12.4
|
23.0
|
|||||||||
Costs related to initial public offering and reorganization transactions
|
1.6
|
8.7
|
23.9
|
|||||||||
Changes in our equity method investment in Casa Ley and related CVR adjustments
|
—
|
53.8
|
1.5
|
|||||||||
Certain legal and regulatory accruals and settlements, net
|
4.0
|
(13.7
|
) |
(0.1
|
) | |||||||
Other(c)
|
12.1
|
(1.9
|
) |
(4.5
|
) | |||||||
Total miscellaneous adjustments
|
$ |
(39.6
|
) | $ |
71.6
|
$ |
61.1
|
|||||
(a) | Primarily includes lease adjustments related to deferred rents, deferred gains on leases and costs incurred on leased surplus properties. |
(b) | Includes costs related to facility closures and the transition to our decentralized operating model. |
(c) | Primarily includes gains and losses from interest rate and commodity hedges and adjustments for unconsolidated equity investments |
|
Fiscal
2018 |
|
Fiscal
2017 |
|
Fiscal
2016 |
|
||||||
Net cash provided by operating activities
|
$ |
1,687.9
|
$ |
1,018.8
|
$ |
1,813.5
|
||||||
Income tax benefit
|
(78.9
|
) |
(963.8
|
) |
(90.3
|
) | ||||||
Deferred income tax
|
81.5
|
1,094.1
|
219.5
|
|||||||||
Interest expense, net
|
830.8
|
874.8
|
1,003.8
|
|||||||||
Changes in operating assets and liabilities
|
(176.2
|
) |
222.1
|
(251.9
|
) | |||||||
Amortization and
write-off
of deferred financing costs
|
(42.7
|
) |
(56.1
|
) |
(84.4
|
) | ||||||
Acquisition and integration costs
|
259.7
|
217.7
|
213.6
|
|||||||||
Pension and post-retirement expense, net of contributions
|
174.8
|
22.8
|
(84.0
|
) | ||||||||
Collington acquisition
|
—
|
—
|
78.9
|
|||||||||
Other adjustments
|
4.4
|
(32.5
|
) |
(2.2
|
) | |||||||
Adjusted EBITDA
|
2,741.3
|
2,397.9
|
2,816.5
|
|||||||||
Less: capital expenditures
|
(1,362.6
|
) |
(1,547.0
|
) |
(1,414.9
|
) | ||||||
Adjusted Free Cash Flow
|
$ |
1,378.7
|
$ |
850.9
|
$ |
1,401.6
|
||||||
|
40 weeks ended
|
|
|
|
|
|
|
|||||||||||||
|
November 30,
2019 |
|
December 1,
2018 |
|
Fiscal
2018 |
|
Fiscal
2017 |
|
Fiscal
2016 |
|
||||||||||
Cash and cash equivalents and restricted cash at end of period
|
$ |
416.6
|
$ |
486.1
|
$ |
967.7
|
$ |
680.8
|
$ |
1,229.1
|
||||||||||
Cash flows provided by operating activities
|
1,387.0
|
1,069.1
|
1,687.9
|
1,018.8
|
1,813.5
|
|||||||||||||||
Cash flows used in investing activities
|
(25.4
|
) |
(360.6
|
) |
(86.8
|
) |
(469.0
|
) |
(1,079.6
|
) | ||||||||||
Cash flows used in financing activities
|
(1,912.7
|
) |
(903.2
|
) |
(1,314.2
|
) |
(1,098.1
|
) |
(97.8
|
) |
Projected Fiscal 2019 Capital Expenditures
|
|
|
||
New stores and remodels
|
$ |
625.0
|
||
Maintenance
|
200.0
|
|||
Supply chain
|
100.0
|
|||
IT
|
375.0
|
|||
Real estate and expansion capital
|
200.0
|
|||
Total
|
$ |
1,500.0
|
||
|
November 30, 2019
|
|
||
ABL Facility
|
$ |
18.0
|
||
Term loans
|
2,311.5
|
|||
Notes and debentures
|
5,661.7
|
|||
Finance leases
|
702.3
|
|||
Other notes payable and mortgages
|
55.7
|
|||
Total debt, including finance leases
|
$ |
8,749.2
|
||
|
Payments Due Per Year
|
|||||||||||||||||||
|
Total
|
|
2019
|
|
2020-2021
|
|
2022-2023
|
|
Thereafter
|
|
||||||||||
Long-term debt(2)
|
$ |
10,086.3
|
$ |
51.5
|
$ |
370.4
|
$ |
2,661.9
|
$ |
7,002.5
|
||||||||||
Estimated interest on long-term debt(3)
|
4,248.5
|
633.1
|
1,231.3
|
1,075.8
|
1,308.3
|
|||||||||||||||
Operating leases(4)
|
8,216.6
|
879.7
|
1,623.7
|
1,374.6
|
4,338.6
|
|||||||||||||||
Capital leases(4)
|
1,203.0
|
170.5
|
286.2
|
237.2
|
509.1
|
|||||||||||||||
Other long-term liabilities(5)
|
1,183.8
|
319.3
|
394.2
|
156.9
|
313.4
|
|||||||||||||||
Purchase obligations(6)
|
402.3
|
179.4
|
83.7
|
55.4
|
83.8
|
|||||||||||||||
Total contractual obligations
|
$ |
25,340.5
|
$ |
2,233.5
|
$ |
3,989.5
|
$ |
5,561.8
|
$ |
13,555.7
|
||||||||||
(1) | The contractual obligations table excludes funding of pension and other postretirement benefit obligations, which totaled $199.3 million in fiscal 2018 and is expected to total $12.4 million in fiscal 2019. This table excludes contributions under various multiemployer pension plans, which totaled $451.1 million in fiscal 2018 and is expected to total approximately $475 million in fiscal 2019. |
(2) | Long-term debt amounts exclude any debt discounts and deferred financing costs. See Note 8 – Long-term debt in our consolidated financial statements, included elsewhere in this prospectus, for additional information. |
(3) | Amounts include contractual interest payments using the interest rate as of February 23, 2019 applicable to our variable interest term debt instruments and stated fixed rates for all other debt instruments, excluding interest rate swaps. See Note 8 – Long-term debt in our consolidated financial statements, included elsewhere in this prospectus, for additional information. |
(4) | Represents the minimum rents payable under operating and capital leases, excluding common area maintenance, insurance or tax payments, for which we are obligated. |
(5) | Consists of self-insurance liabilities, which have not been reduced by insurance-related receivables, and deferred cash consideration related to Plated. Excludes the $142.1 million of assumed withdrawal liabilities related to Safeway’s previous closure of its Dominick’s division, and excludes the unfunded pension and postretirement benefit obligation of $502.6 million. The amount of unrecognized tax benefits of $376.2 million as of February 23, 2019 has been excluded from the contractual obligations table because a reasonably reliable estimate of the timing of future tax settlements cannot be determined. Excludes contingent consideration because the timing and settlement is uncertain. Also excludes deferred tax liabilities and certain other deferred liabilities that will not be settled in cash and other lease-related liabilities already reflected as operating lease commitments. |
(6) | Purchase obligations include various obligations that have specified purchase commitments. As of February 23, 2019, future purchase obligations primarily relate to fixed asset, marketing and information technology commitments, including fixed price contracts. In addition, not included in the contractual obligations table are supply contracts to purchase product for resale to consumers which are typically of a short-term nature with limited or no purchase commitments. We also enter into supply contracts which typically include either volume commitments or fixed expiration dates, termination provisions and other customary contractual considerations. The supply contracts that are cancelable have not been included above. |
|
Percentage
Point Change
|
|
Projected Benefit Obligation
Decrease / (Increase)
|
|
Expense
Decrease / (Increase)
|
|
||||||
Discount rate
|
+
/-1.00
|
% |
$194.8 / $(234.0)
|
$26.8 / $(5.2
|
) | |||||||
Expected return on assets
|
+
/-1.00
|
% |
- / -
|
$17.6 / $(17.6
|
) |
|
Fiscal
2019 |
|
Fiscal
2020 |
|
Fiscal
2021 |
|
Fiscal
2022 |
|
Fiscal
2023 |
|
Thereafter
|
|
Total
|
|
Fair
Value
|
|
||||||||||||||||
Long-Term Debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Fixed Rate - Principal payments
|
$ |
4.2
|
$ |
141.1
|
$ |
134.5
|
$ |
4.7
|
$ |
5.0
|
$ |
5,102.5
|
$ |
5,392.0
|
$ |
5,139.2
|
||||||||||||||||
Weighted average interest rate
|
7.15
|
% |
4.04
|
% |
4.83
|
% |
6.97
|
% |
6.98
|
% |
6.86
|
% |
6.74
|
% |
|
|||||||||||||||||
Variable Rate - Principal payments
|
$ |
47.3
|
$ |
47.4
|
$ |
47.4
|
$ |
1,124.0
|
$ |
1,528.2
|
$ |
1,900.0
|
$ |
4,694.3
|
$ |
4,662.0
|
||||||||||||||||
Weighted average interest rate(1)
|
5.54
|
% |
5.54
|
% |
5.54
|
% |
5.39
|
% |
5.69
|
% |
5.52
|
% |
5.54
|
% |
|
(1) | Excludes effect of interest rate swaps. Also excludes debt discounts and deferred financing costs. |
|
Pay Fixed / Receive Variable
|
|||||||||||||||||||||||
|
Fiscal
2019 |
|
Fiscal
2020 |
|
Fiscal
2021 |
|
Fiscal
2022 |
|
Fiscal
2023 |
|
Thereafter
|
|
||||||||||||
Cash Flow Hedges
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Average Notional amount outstanding
|
$ |
2,514.0
|
$ |
1,957.0
|
$ |
1,653.0
|
$ |
593.0
|
$ |
—
|
$ |
—
|
||||||||||||
Average pay rate
|
5.8
|
% |
5.8
|
% |
5.8
|
% |
5.9
|
% |
0.0
|
% |
0.0
|
% | ||||||||||||
Average receive rate
|
5.5
|
% |
5.3
|
% |
5.3
|
% |
5.3
|
% |
0.0
|
% |
0.0
|
% |
|
|
Identical Sales
|
Net Income ($mm)
|
Adj. EBITDA ($mm)
|
||
|
|
|
|
|
|
• |
Well-Known Banners
|
• |
Prime Locations
First-and-Main
locations, providing our customers with exceptional convenience. Our owned and ground leased stores and distribution centers, which represent approximately 39% of our store and distribution base, have an aggregate appraised value of $11.2 billion.
|
• |
Strong Market Share and Local
Market Density
|
• |
Highly Attractive Markets
one-third
of the U.S. population and approximately 45% of U.S. GDP. In 65% of the 121 MSAs in which we operate, the projected population growth over the next five years, in aggregate, exceeds the national average by over 50%.
|
|
|
|
|
|
|
|
|
|
|
|
•
Currently available in approximately 550 locations, with plans to grow to approximately 600 by the end of fiscal 2019 and to 1,400 locations in the next two years
•
Easy-to-use
mobile app
•
Convenient, well-signed, curbside pickup
|
|
|
|
|
•
First launched home delivery services in 2001
•
Provide home delivery using our own “white glove” delivery service in approximately 60% of our stores
•
Operate over 1,000 multi-temperature delivery trucks to support home delivery growth
•
Successful roll out of new eCommerce website and mobile applications to all divisions
|
|
|
|
|
•
Launched rush delivery in 2017 with Instacart
•
Delivery within one to two hours in all divisions and covering over 2,000, or nearly 90%, of our stores offered in collaboration with third parties
•
Partnership with Grubhub and Uber Eats adds delivery offerings for our prepared and
ready-to-eat
options from our stores
|
• |
Achieve More Identical Sales Growth From Our Stores
|
o |
Merchandising Excellence
Exciting
re-merchandised
more than 700 stores and plan to expand this successful program.
|
o |
Pricing and Promotions
|
o |
Operating Excellence
in-store
efficiency by using technology to optimize labor and improve
in-stock
and display execution, resulting in enhanced store productivity and customer satisfaction. A number of these initiatives are already underway. In stores where we have introduced computer-assisted ordering and production systems, for example, we have seen a meaningful uplift in sales and improved levels of
in-stocks,
inventory and shrink.
|
o |
Culture of Exceptional Service
in-store
technology to achieve labor efficiencies through the automation of
non-customer-facing
tasks. We expect this effort to provide our associates more time to better serve customers, enhancing the shopping experience and driving purchase frequency, larger basket size, customer satisfaction and retention.
|
o |
Targeted Store Remodels
Easy
Exciting
Friendly
|
• |
Drive Incremental eCommerce Growth:
easy-to-use
and fully-integrated digital experience. We are improving our mobile applications to enable more personalized rewards and services like advanced basket-building tools and product, meal and recipe recommendations. We are further integrating our digital and
in-store
models to better drive existing customer engagement and new customer trial for our own and third-party delivery.
|
• |
Accelerate Own Brand Penetration
Own Brands
Own Brands
Own Brands
|
• |
Increase Customer Engagement and Lifetime Value:
just for U
just for U
|
• |
Enhancing Store and DC Operations:
non-customer-facing
tasks and drive labor productivity. For example, we are working to roll out enhanced demand forecasting and replenishment systems to improve operating
|
efficiency, reduce product waste and optimize labor and inventory levels. We expect to scale these opportunities across the business quickly and efficiently. |
• |
Leveraging Scale to Buy Better:
|
• |
Increasing Promotional Effectiveness:
|
• |
Leveraging G&A:
.
|
• |
Customers:
check-out
processes and improve our
at-store
pickup experience. For example, we are partnering with Adobe to provide an artificial intelligence-powered solution to personalize the website and mobile application experience. This will enable the customer to see personalized products and information as they browse homepages, categories and product detail pages.
|
• |
Store Operations:
out-of-stocks,
inventory, and shrink.
|
|
• |
Merchandising
|
• |
Supply Chain:
|
|
|
• |
Customer Focus on Fresh, Natural and Organic Offerings.
|
• |
Omni-Channel Convenience as a Differentiator
in-store
experience as well as online, home delivery, pickup and digital shopping solutions in order to differentiate themselves from competitors.
In-store
amenities and services, including store-within-store sites such as restaurants, coffee bars, fuel centers, banks and ATMs, meal kits and prepared meals have become increasingly commonplace.
|
• |
Expansion of Private Label Offerings.
|
• |
Loyalty Programs and Personalization.
in-store.
|
Location
|
Number of
stores
|
Location
|
Number of
stores
|
Location
|
Number of
stores
|
|
||||||
Alaska
|
26
|
Iowa
|
1
|
North Dakota
|
1
|
|||||||
Arizona
|
134
|
Louisiana
|
16
|
Oregon
|
122
|
|||||||
Arkansas
|
1
|
Maine
|
21
|
Pennsylvania
|
50
|
|||||||
California
|
596
|
Maryland
|
65
|
Rhode Island
|
8
|
|||||||
Colorado
|
105
|
Massachusetts
|
76
|
South Dakota
|
3
|
|||||||
Connecticut
|
4
|
Montana
|
38
|
Texas
|
213
|
|||||||
Delaware
|
18
|
Nebraska
|
5
|
Utah
|
6
|
|||||||
District of Columbia
|
11
|
Nevada
|
50
|
Vermont
|
19
|
|||||||
Hawaii
|
22
|
New Hampshire
|
26
|
Virginia
|
38
|
|||||||
Idaho
|
42
|
New Jersey
|
73
|
Washington
|
219
|
|||||||
Illinois
|
183
|
New Mexico
|
34
|
Wyoming
|
14
|
|||||||
Indiana
|
4
|
New York
|
16
|
|
|
Square Footage
|
Number of
stores |
|
Percent
of total |
|
||||
Less than 30,000
|
204
|
9.0
|
% | |||||
30,000 to 50,000
|
787
|
34.8
|
% | |||||
More than 50,000
|
1,269
|
56.2
|
% | |||||
Total stores
|
2,260
|
100.0
|
% | |||||
|
40 weeks ended
November 30, 2019 |
Fiscal
2018 |
Fiscal
2017 |
Fiscal
2016 |
||||||||||||||||||||||||||||
|
Amount
(1) |
|
% of
Total |
|
Amount
(1)
|
|
% of
Total |
|
Amount
(1) |
|
% of
Total |
|
Amount
(1) |
|
% of
Total |
|
||||||||||||||||
Non-perishables
(2)
|
$ |
20,362.4
|
43.3
|
% | $ |
26,371.8
|
43.6
|
% | $ |
26,522.0
|
44.3
|
% | $ |
26,699.2
|
44.7
|
% | ||||||||||||||||
Perishables(3)
|
19,347.7
|
41.1
|
24,920.9
|
41.2
|
24,583.7
|
41.0
|
24,398.5
|
40.9
|
||||||||||||||||||||||||
Pharmacy
|
3,958.2
|
8.4
|
4,986.6
|
8.2
|
5,002.6
|
8.3
|
5,119.2
|
8.6
|
||||||||||||||||||||||||
Fuel
|
2,664.0
|
5.7
|
3,455.9
|
5.7
|
3,104.6
|
5.2
|
2,693.4
|
4.5
|
||||||||||||||||||||||||
Other(4)
|
686.0
|
1.5
|
799.3
|
1.3
|
711.7
|
1.2
|
767.9
|
1.3
|
||||||||||||||||||||||||
Total
|
$ |
47,018.3
|
100.0
|
% | $ |
60,534.5
|
100.0
|
% | $ |
59,924.6
|
100.0
|
% | $ |
59,678.2
|
100.0
|
% | ||||||||||||||||
(1) | eCommerce-related sales are included in the categories to which the revenue pertains. |
(2) | Consists primarily of general merchandise, grocery and frozen foods. |
(3) | Consists primarily of produce, dairy, meat, deli, floral and seafood. |
(4) | Consists primarily of wholesale revenue to third parties, commissions and other miscellaneous revenue. |
Name
|
Age
†
|
|
Position
|
|
||||
Vivek Sankaran
|
56
|
President, Chief Executive Officer and Director
|
||||||
James L. Donald
|
65
|
Co-Chairman
|
||||||
Leonard Laufer(c)
|
54
|
Co-Chairman
|
||||||
Susan Morris
|
51
|
Executive Vice President and Chief Operations Officer
|
||||||
Anuj Dhanda
|
57
|
Executive Vice President and Chief Information Officer
|
||||||
Robert B. Dimond
|
58
|
Executive Vice President and Chief Financial Officer
|
||||||
Michael Theilmann
|
55
|
Executive Vice President and Chief Human Resources Officer
|
||||||
Geoff White
|
54
|
Executive Vice President and Chief Merchandising Officer
|
||||||
Christine Rupp
|
51
|
Executive Vice President and Chief Customer and Digital Officer
|
||||||
Justin Ewing
|
51
|
Executive Vice President, Corporate Development and Real Estate
|
||||||
Robert A. Gordon
|
68
|
Executive Vice President, General Counsel and Secretary
|
||||||
Sharon L. Allen*(a)(b)
|
68
|
Director
|
||||||
Steven A. Davis*(d)(e)
|
61
|
Director
|
||||||
Kim Fennebresque*(b)(d)
|
69
|
Director
|
||||||
Allen M. Gibson*(a)
|
54
|
Director
|
||||||
Hersch Klaff(e)
|
66
|
Director
|
||||||
Jay L. Schottenstein
|
65
|
Director
|
||||||
Alan H. Schumacher*(d)
|
73
|
Director
|
||||||
Lenard B. Tessler(a)(b)
|
67
|
Director
|
||||||
B. Kevin Turner(c)
|
54
|
Vice Chairman
|
†
|
As of November 30, 2019 |
* | Independent Director |
(a) | Member, Nominating and Corporate Governance Committee |
(b) | Member, Compensation Committee |
(c) | Member, Technology Committee |
(d) | Member, Audit and Risk Committee |
(e) | Member, Compliance Committee |
• | the requirement that a majority of the board of directors consist of independent directors; |
• | the requirement that we have a nominating and corporate governance committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities; |
• | the requirement that we have a compensation committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities; and |
• | the requirement for an annual performance evaluation of the nominating and corporate governance committee and the compensation committee. |
Name
|
Committee Position
|
Additional
Annual Fee |
|
|||
Sharon L. Allen
|
Chair of Nominating and Governance Committee
|
$ |
10,000
|
|||
Member of Nominating and Governance Committee
|
$ |
10,000
|
||||
Member of Compensation Committee
|
$ |
20,000
|
||||
Steven A. Davis
|
Member of Audit and Risk Committee
|
$ |
25,000
|
|||
Member of Compliance Committee
|
$ |
20,000
|
||||
Kim Fennebresque
|
Chair of Compensation Committee
|
$ |
20,000
|
|||
Member of Compensation Committee
|
$ |
20,000
|
||||
Member of Audit and Risk Committee
|
$ |
25,000
|
||||
Alan H. Schumacher
|
Chair of Audit and Risk Committee
|
$ |
25,000
|
|||
Member of Audit and Risk Committee
|
$ |
25,000
|
(in dollars)
Name |
Fees
Earned or Paid in Cash($) |
|
Unit
Awards ($)(1) |
|
Option
Awards |
|
Non-Equity
Incentive Plan Compensation |
|
Change in
Pension Value and Nonqualified Deferred Compensation Earnings |
|
All Other
Compensation |
|
Total($)
|
|
||||||||||||||
Sharon L. Allen
|
165,000
|
125,004
|
—
|
—
|
—
|
—
|
290,004
|
|||||||||||||||||||||
Steven A. Davis
|
170,000
|
125,004
|
—
|
—
|
—
|
—
|
295,004
|
|||||||||||||||||||||
Kim Fennebresque
|
190,000
|
125,004
|
—
|
—
|
—
|
—
|
315,004
|
|||||||||||||||||||||
Allen M. Gibson
|
125,000
|
125,004
|
—
|
—
|
—
|
—
|
250,004
|
|||||||||||||||||||||
Robert G. Miller
|
1,039,286
|
—
|
—
|
—
|
—
|
—
|
1,039,286
|
|||||||||||||||||||||
Alan H. Schumacher
|
175,000
|
125,004
|
—
|
—
|
—
|
—
|
300,004
|
(1) | Reflects the grant date fair value calculated in accordance with Financial Accounting Standards Board, Accounting Standards Codification Topic 718 Compensation—Stock Compensation (“ASC 718”). |
Name
|
Number of
Vested Phantom Units |
|
Number of
Unvested Phantom Units |
|
||||
Sharon L. Allen
|
3,788
|
—
|
||||||
Steven A. Davis
|
3,788
|
—
|
||||||
Kim Fennebresque
|
3,788
|
—
|
||||||
Allen M. Gibson
|
3,788
|
—
|
||||||
Alan H. Schumacher
|
3,788
|
—
|
• | Vivek Sankaran, our President and Chief Executive Officer; |
• |
James L. Donald, our former President and Chief Executive Officer and current
Co-Chairman
;
|
• | Robert B. Dimond, our Executive Vice President and Chief Financial Officer; |
• | Susan Morris, our Executive Vice President and Chief Operations Officer; |
• | Christine Rupp, our Executive Vice President and Chief Customer and Digital Officer; |
• | Michael Theilmann, our Executive Vice President and Chief Human Resources Officer; and |
• | Shane Sampson, our former Chief Marketing and Merchandising Officer. |
• | base salary that reflects compensation for the NEO’s role and responsibilities, experience, expertise and individual performance; |
• | quarterly bonus based on division performance; |
• | annual bonus based on our financial performance for the fiscal year; |
• | incentive compensation based on the value of our equity; |
• | severance protection; and |
• | other benefits that are provided to all employees, including healthcare benefits, life insurance, retirement savings plans and disability plans. |
Name
|
Fiscal 2018
Base Salary Rate ($) |
|
Fiscal 2019
Base Salary Rate ($) |
|
||||
Vivek Sankaran*
|
—
|
1,500,000
|
||||||
James L. Donald
|
1,500,000
|
1,500,000
|
||||||
Robert B. Dimond
|
775,000
|
850,000
|
||||||
Susan Morris
|
850,000
|
900,000
|
||||||
Christine Rupp*
|
—
|
750,000
|
||||||
Shane Sampson
|
900,000
|
900,000
|
||||||
Michael Theilmann*
|
—
|
600,000
|
* | Mr. Sankaran joined ACI on April 25, 2019, followed by Mr. Theilmann and Ms. Rupp on August 19, 2019 and December 1, 2019, respectively. |
• | a quarterly bonus component based on the performance achieved by each of our divisions for each fiscal quarter in fiscal 2019 (each, a “Quarterly Division Bonus”), other than our United Supermarkets Division and Haggen stores; and |
• | an annual bonus component based on performance for the full fiscal 2019 year (the “Annual Corporate Bonus”). |
Quarterly Sales Goal Percentage Achieved
|
Maximum
Percentage of Quarterly Division Bonus Target Earned |
|
||
Below 99%
|
100
|
% | ||
99%-99.99%
|
150
|
% | ||
100% or greater
|
200
|
% |
Name
|
Aggregate Quarterly
Division Bonus for Fiscal 2019 Earned
Q1-Q3(1)
($) |
|
Annual Corporate
Bonus for Fiscal 2019 Earned ($)(1) |
|
Aggregate Bonus
for Fiscal 2019 Earned ($)(1) |
|
||||||
Vivek Sankaran
|
$ |
776,934
|
|
|
||||||||
James L. Donald
|
$ |
653,083
|
|
|
||||||||
Robert B. Dimond
|
$ |
370,080
|
|
|
||||||||
Susan Morris
|
$ |
391,850
|
|
|
||||||||
Christine Rupp
|
—
|
|
|
|||||||||
Michael Theilmann
|
$ |
104,464
|
|
|
||||||||
Shane Sampson
|
$ |
259,487
|
|
|
(1) |
Amounts exclude fiscal 2019 annual bonuses and fiscal quarterly bonuses for the fourth quarter of fiscal 2019 which are not calculable as of the date hereof and will remain undetermined until the completion of the audited Consolidated Financial Statements for fiscal 2019, expected in April 2020. We will file a Current Report on Form
8-K
with this information when those amounts are determined.
|
• | conviction of a felony; |
• | acts of intentional dishonesty resulting or intending to result in personal gain or enrichment at our expense, or our subsidiaries or affiliates; |
• | a material breach of the executive’s obligations under the applicable Executive Employment Agreement, including, but not limited to, breach of the restrictive covenants or fraudulent, unlawful or grossly negligent conduct by the executive in connection with his or her duties under the applicable Executive Employment Agreement; |
• | personal conduct by the executive which seriously discredits or damages us, our subsidiaries or our affiliates; or |
• | contravention of specific lawful direction from the board of directors. |
• | a reduction in the base salary or target bonus; or |
• | without prior written consent, relocation of the executive’s principal location of work to any location that is in excess of 50 miles from such location on the date of the applicable Executive Employment Agreement. |
Name and Principal
Position |
Year(1)
|
|
Salary
($) |
|
Bonus
($)(2) |
|
Unit
Awards
($)(3)
|
|
Option
Awards ($) |
|
Non-Equity
Incentive Plan Compensation ($)(4) |
|
Change in
Pension Value and Nonqualified Deferred Compensation Earnings ($) |
|
All Other
Compensation ($)(5) |
|
Total
($) |
|
||||||||||||||||||
(a)
|
(b)
|
|
(c)
|
|
(d)
|
|
(e)
|
|
(f)
|
|
(g)
|
|
(h)
|
|
(i)
|
|
(j)
|
|
||||||||||||||||||
Vivek Sankaran
President and Chief
Executive Officer(6) |
2019
|
1,280,769
|
5,000,000
|
19,505,086
|
—
|
776,934
|
—
|
420,823
|
26,983,613
|
|||||||||||||||||||||||||||
James L. Donald
Co-Chairman, Former President and Chief
Executive Officer(7) |
2019
|
1,528,846
|
|
9,454,536
|
—
|
653,083
|
—
|
94,921
|
11,731,386
|
|||||||||||||||||||||||||||
2018
|
1,219,231
|
141,385
|
14,814,306
|
—
|
1,099,814
|
—
|
71,232
|
17,345,968
|
||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||
Robert B. Dimond
Executive Vice
President and Chief Financial Officer |
2019
|
866,346
|
—
|
—
|
—
|
370,080
|
—
|
34,979
|
1,271,405
|
|||||||||||||||||||||||||||
2018
|
800,962
|
76,495
|
2,515,008
|
—
|
508,674
|
—
|
52,200
|
3,953,338
|
||||||||||||||||||||||||||||
2017
|
764,904
|
448,734
|
—
|
—
|
39,330
|
—
|
63,768
|
1,316,736
|
||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||
Susan Morris
Executive Vice
President and Chief Operations Officer |
2019
|
917,308
|
|
—
|
—
|
391,850
|
—
|
45,831
|
1,354,988
|
|||||||||||||||||||||||||||
2018
|
867,308
|
131,151
|
2,515,008
|
—
|
550,256
|
—
|
41,276
|
4,104,999
|
||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||
Christine Rupp
Executive Vice
President and Chief Customer and Digital Officer |
2019
|
184,615
|
1,500,000
|
2,819,320
|
—
|
—
|
—
|
62,743
|
4,566,679
|
|||||||||||||||||||||||||||
Michael Theilmann
Executive Vice President and Chief Human Resources Officer
|
2019
|
323,077
|
950,000
|
1,634,373
|
—
|
104,464
|
—
|
28,917
|
3,040,831
|
|||||||||||||||||||||||||||
Shane Sampson
Former Chief
Marketing and Merchandising Officer(8) |
2019
|
484,615
|
14,280
|
—
|
—
|
259,487
|
—
|
4,230,333
|
4,988,715
|
|||||||||||||||||||||||||||
2018
|
900,000
|
146,457
|
2,515,008
|
—
|
570,078
|
—
|
56,229
|
4,187,772
|
||||||||||||||||||||||||||||
2017
|
886,538
|
436,403
|
4,968,425
|
—
|
45,578
|
—
|
72,574
|
6,409,518
|
||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
(1) |
Reflects the
53-week
fiscal year ended February 29, 2020, and
52-week
fiscal years ended February 23, 2019 and February 24, 2018.
|
(2) |
Reflects retention bonuses,
sign-on
and tax bonuses paid to the NEOs, as set forth in the table below. The retention bonuses for fiscal 2019, fiscal 2018 and fiscal 2017 are further described in “—Compensation Discussion and Analysis.” Tax bonuses for fiscal 2019, fiscal 2018 and fiscal 2017 were paid to the NEOs in connection with the vesting of Phantom Units as described in “—Compensation Discussion and Analysis.”
|
Name
|
Fiscal Year(1)
|
|
Retention Bonus ($)
|
|
Sign On Bonus ($)
|
|
Tax Bonus ($)
|
|
||||||||
Vivek Sankaran
|
2019
|
|
5,000,000
|
—
|
||||||||||||
James L. Donald
|
2019
|
—
|
—
|
|
||||||||||||
2018
|
—
|
—
|
141,385
|
|||||||||||||
Robert B. Dimond
|
2019
|
—
|
—
|
—
|
||||||||||||
2018
|
—
|
—
|
76,495
|
|||||||||||||
2017
|
375,000
|
—
|
73,734
|
|||||||||||||
Susan Morris
|
2019
|
|
—
|
|
||||||||||||
2018
|
21,875
|
—
|
109,276
|
|||||||||||||
Christine Rupp
|
2019
|
—
|
1,500,000
|
—
|
||||||||||||
Michael Theilmann
|
2019
|
—
|
950,000
|
—
|
||||||||||||
Shane Sampson
|
2019
|
—
|
—
|
14,280
|
||||||||||||
2018
|
—
|
—
|
146,457
|
|||||||||||||
2017
|
310,000
|
—
|
126,403
|
(3) |
Reflects the grant date fair value calculated in accordance with ASC 718 of the (a) Class
B-1
Units in Albertsons Investor and KIM ACI and Class
B-2
Units in Albertsons Investor and KIM ACI granted to Mr. Sankaran in fiscal 2019, and (b) the Phantom Units granted to Mr. Donald in fiscal 2019 and fiscal 2018, to Mr. Dimond in fiscal 2018, to Mr. Sampson in fiscal 2018 and fiscal 2017, to Ms. Morris in fiscal 2018, to Ms. Rupp in fiscal 2019 and to Mr. Theilmann in fiscal 2019. The respective fair value of the Class
B-1
Units and Class
B-2
Units in Albertsons Investor, Class
B-1
Units and Class
B-2
Units in KIM ACI and
|
(4) |
Reflects amounts paid to the NEOs under our bonus plan for the applicable fiscal year, as set forth in the table below. The amount excludes fiscal 2019 annual bonuses and fiscal quarterly bonuses for the fourth quarter of fiscal 2019 which were not calculable as of the date hereof and will remain undetermined until the completion of the audited Consolidated Financial Statements for fiscal 2019, expected in April 2020. We will file a Current Report on Form
8-K
with this information when those amounts are determined.
|
Name
|
Fiscal Year(1)
|
|
Fiscal Quarterly Bonus (For Fiscal
2019, only through Q3) ($)(a) |
|
Fiscal Year
Annual Bonus ($)(b) |
|
||||||
Vivek Sankaran
|
2019
|
776,934
|
|
|||||||||
James L. Donald
|
2019
|
653,083
|
|
|||||||||
2018
|
485,760
|
614,054
|
||||||||||
Robert B. Dimond
|
2019
|
370,080
|
|
|||||||||
2018
|
218,045
|
290,629
|
||||||||||
2017
|
39,330
|
0
|
||||||||||
Susan Morris
|
2019
|
391,850
|
|
|||||||||
2018
|
235,553
|
314,703
|
||||||||||
Christine Rupp
|
2019
|
—
|
|
|||||||||
Michael Theilmann
|
2019
|
104,464
|
|
|||||||||
Shane Sampson
|
2019
|
259,487
|
|
|||||||||
2018
|
243,513
|
326,565
|
||||||||||
2017
|
45,578
|
0
|
(a) |
Reflects amounts paid to the NEOs under our Quarterly Bonus Plan. For fiscal 2019, reflects amounts paid for the first three quarters of fiscal 2019 but excludes fiscal quarterly bonuses for the fourth quarter of fiscal 2019 which are not calculable as of the date hereof and will remain undetermined until the completion of the audited Consolidated Financial Statements for fiscal 2019, expected in April 2020. We will file a Current Report on Form
8-K
with this information when those amounts are determined.
|
(b) |
Annual Bonus Plan payments for fiscal 2019 are not calculable as of the date hereof and will remain undetermined until the completion of the audited Consolidated Financial Statements for fiscal 2019, expected in April 2020. We will file a Current Report on Form
8-K
with this information when those amounts are determined.
|
(5) | A detailed breakdown of “All Other Compensation” is provided in the table below: |
Name
|
Fiscal
Year(1) |
|
Aircraft
($)(a) |
|
Relocation
($) |
|
COBRA/
Life Insurance ($) |
|
Other
Payments ($) |
|
Financial/
Tax Planning ($) |
|
Deferred
Comp. Plan Company Contribution ($)(b) |
|
401(k) Plan
Company Contribution ($) |
|
Total
($) |
|
||||||||||||||||||
Vivek Sankaran
|
2019
|
332,725
|
79,161
|
8,937
|
70,154
|
—
|
—
|
—
|
420,823
|
|||||||||||||||||||||||||||
James L. Donald
|
2019
|
24,767
|
—
|
—
|
—
|
|
—
|
—
|
94,921
|
|||||||||||||||||||||||||||
2018
|
71,232
|
—
|
—
|
—
|
—
|
—
|
—
|
71,232
|
||||||||||||||||||||||||||||
Robert B. Dimond
|
2019
|
—
|
—
|
—
|
—
|
3,150
|
26,785
|
5,043
|
34,979
|
|||||||||||||||||||||||||||
2018
|
—
|
—
|
—
|
—
|
3,880
|
39,070
|
9,250
|
52,200
|
||||||||||||||||||||||||||||
2017
|
—
|
—
|
—
|
—
|
6,715
|
48,053
|
9,000
|
63,768
|
||||||||||||||||||||||||||||
Susan Morris
|
2019
|
9,351
|
—
|
—
|
—
|
2,150
|
29,661
|
4,669
|
45,831
|
|||||||||||||||||||||||||||
|
2018
|
—
|
—
|
—
|
|
4,400
|
27,626
|
9,250
|
41,276
|
|||||||||||||||||||||||||||
Christine Rupp
|
2019
|
—
|
62,743
|
—
|
—
|
—
|
—
|
—
|
62,743
|
|||||||||||||||||||||||||||
Michael Theilmann
|
2019
|
0
|
27,139
|
—
|
—
|
1,778
|
—
|
—
|
28,917
|
|||||||||||||||||||||||||||
Shane Sampson
|
2019
|
—
|
—
|
—
|
4,187,756
|
(c) |
5,650
|
31,982
|
4,945
|
4,230,333
|
||||||||||||||||||||||||||
2018
|
1,203
|
—
|
—
|
—
|
4,300
|
41,476
|
9,250
|
56,229
|
||||||||||||||||||||||||||||
2017
|
5,698
|
—
|
—
|
—
|
6,065
|
51,811
|
9,000
|
72,574
|
(a) | Represents the aggregate incremental cost to us for personal use of our aircraft. |
(b) | Reflects our contributions to the NEO’s Deferred Compensation Plan account in an amount equal to the excess of the amount we would contribute to the ACI 401(k) Plan as a Company contribution on the NEO’s behalf for the plan year without regard to any limitations imposed by the Code based on the NEO’s compensation over the amount of our actual contributions to the ACI 401(k) Plan for the plan year. |
(c) | Represents the total severance benefits paid to Mr. Sampson in connection with his resignation during fiscal 2019 consisting of (i) a lump sum payment equal to 200% of the sum of Mr. Sampson’s then-current base salary plus target bonus, (ii) a lump sum payment equal to 50% of the annual bonus Mr. Sampson would have received in respect of fiscal 2019 had Mr. Sampson remained employed for the entirety of such fiscal year, payable no later than May 15, 2020, and (iii) reimbursement of the cost of continuation coverage of group health coverage for a period of up to 18 months. |
(6) | Mr. Sankaran commenced serving as President and Chief Executive Officer effective April 25, 2019. |
(7) |
Mr. Donald served as President and Chief Executive Officer through April 25, 2019 and then as
Co-Chairman.
|
(8) | Mr. Sampson served as Chief Marketing and Chief Merchandising Officer through September 7, 2019. |
|
|
|
Estimated Future Payouts
Under
Non-Equity
Incentive
Plan Awards(1) |
Estimated Future
Payouts Under Equity
Incentive Plan Awards(2) |
All
Other Unit Awards: Number of Units (#) |
|
All Other
Option Awards: Number of Securities Underlying Options (#) |
|
Exercise
or Base Price of Option Awards ($/Unit) |
|
Grant
Date Fair Value of Unit and Option Awards ($) |
|
||||||||||||||||||||||||||||||||
Name
|
Grant
Date |
|
Threshold
($) |
|
Target ($)
|
|
Maximum
($) |
|
Threshold
($) |
|
Target
($) |
|
Maximum
($) |
|
||||||||||||||||||||||||||||||
Vivek Sankaran
|
|
—
|
2,250,000
|
4,500,000
|
—
|
—
|
—
|
—
|
—
|
—
|
|
|||||||||||||||||||||||||||||||||
4/25/2019
|
|
|
|
|
|
|
1,168,578
|
(3) |
|
|
17,575,413
|
(6) | ||||||||||||||||||||||||||||||||
4/25/2019
|
|
|
|
|
|
|
1,176,630
|
(4) |
|
|
1,929,673
|
(7) | ||||||||||||||||||||||||||||||||
James L. Donald
|
|
—
|
1,500,000
|
3,000,000
|
—
|
—
|
—
|
—
|
—
|
—
|
|
|||||||||||||||||||||||||||||||||
9/11/2019
|
—
|
—
|
—
|
|
4,727,268
|
5,672,722
|
|
|
|
|
||||||||||||||||||||||||||||||||||
9/11/2019
|
—
|
—
|
—
|
—
|
—
|
—
|
121,212
|
(5) |
—
|
|
4,727,268
|
(8) | ||||||||||||||||||||||||||||||||
Robert B. Dimond
|
|
—
|
850,000
|
1,700,000
|
—
|
—
|
—
|
—
|
—
|
—
|
|
|||||||||||||||||||||||||||||||||
Susan Morris
|
|
—
|
900,000
|
1,800,000
|
—
|
—
|
—
|
—
|
—
|
—
|
|
|||||||||||||||||||||||||||||||||
Christine Rupp
|
|
—
|
750,000
|
1,500,000
|
—
|
—
|
—
|
—
|
—
|
—
|
|
|||||||||||||||||||||||||||||||||
2/7/2020
|
—
|
|
|
—
|
768,040
|
921,648
|
—
|
—
|
—
|
|
||||||||||||||||||||||||||||||||||
2/7/2020
|
—
|
|
|
—
|
—
|
—
|
51,282
|
(5) |
—
|
|
2,051,280
|
(8) | ||||||||||||||||||||||||||||||||
Michael Theilmann
|
|
—
|
600,000
|
1,200,000
|
—
|
—
|
—
|
—
|
—
|
—
|
|
|||||||||||||||||||||||||||||||||
10/29/2019
|
—
|
|
|
|
747,981
|
897,577
|
|
—
|
—
|
|
||||||||||||||||||||||||||||||||||
10/29/2019
|
—
|
|
|
|
—
|
—
|
22,728
|
(5) |
—
|
|
886,392
|
(8) | ||||||||||||||||||||||||||||||||
Shane Sampson
|
|
—
|
900,000
|
1,800,000
|
—
|
—
|
—
|
—
|
—
|
—
|
|
(1) |
Amounts represent the range of annual cash incentive awards the NEO was potentially entitled to receive based on the achievement of performance goals for fiscal 2019 under our 2019 Bonus Plan as more fully described in “—Compensation Discussion and Analysis.” The amounts actually paid are reported in the
Non-Equity
Incentive Plan column of the Summary Compensation table. Pursuant to the 2019 Bonus Plan, performance below a specific threshold will result in no payment with respect to that performance goal. Performance at or above the threshold will result in a payment from $0 up to the maximum bonus amounts reflected in the table. Whether, and at what level, performance has been achieved in fiscal 2019 has not been determined as of the date of this prospectus and will remain undetermined until the completion of the audited Consolidated Financial Statements for fiscal 2019, expected in April 2020. We will file a Current Report on Form
8-K
with this information when those amounts are determined.
|
(2) | Amounts represent the value of Phantom Units subject to performance-based vesting granted to the NEOs as described in “—Compensation Discussion and Analysis-Incentive Plans.” |
(3) |
Represents Class
B-1
Units and Class
B-2
Units in Albertsons Investor.
|
(4) |
Represents Class
B-1
Units and Class
B-2
Units in KIM ACI.
|
(5) | Amounts represent the value of Phantom Units granted to the NEOs as described in “—Compensation Discussion and Analysis-Incentive Plans.” |
(6) |
Reflects the grant date fair value of $15.04 per unit with respect to the Class
B-1
Units and Class
B-2
Units in Albertsons Investor granted to Mr. Sankaran. One Class
B-1
or Class
B-2
Unit in Albertsons Investor is not equivalent to one share of Company common stock. The fair value of the Class
B-1
Units and Class
B-2
Units in Albertsons Investor is calculated in accordance with ASC 718. The fair value of the Phantom Units is determined using an option pricing model, adjusted for lack of marketability and using an expected term or time to liquidity based on judgments made by management.
|
(7) |
Reflects the grant date fair value of $1.64 per unit with respect to the Class
B-1
Units and Class
B-2
Units in KIM ACI granted to Mr. Sankaran. One Class
B-1
or Class
B-2
Unit in KIM ACI is not equivalent to one share of Company common stock. The fair value of the Class
B-1
Units and Class
B-2
Units in KIM ACI is calculated in accordance with ASC 718. The fair value of the Phantom Units is determined using an option pricing model, adjusted for lack of marketability and using an expected term or time to liquidity based on judgments made by management.
|
(8) | Reflects the grant date fair value of $39.00 per unit with respect to the Phantom Units granted to Mr. Theilmann on October 29, 2019 and Mr. Donald on September 11, 2019 and $40.00 per unit with respect to the Phantom Units granted to Ms. Rupp on February 7, 2020, as calculated in accordance with ASC 718. One Phantom Unit is not equivalent to one share of Company common stock. The fair value of the Phantom Units is determined using an option pricing model, adjusted for lack of marketability and using an expected term or time to liquidity based on judgments made by management. |
|
Option Awards
|
Unit Awards
|
||||||||||||||||||||||||||||||||||
Name
|
Number of
Securities Underlying Unexercised Options (#) Exercisable |
|
Number of
Securities Underlying Unexercised Options (#) Unexercisable |
|
Equity
Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) |
|
Option
Exercise Price ($) |
|
Option
Expiration Date |
|
Number
of Units That Have Not Vested (#) |
|
Fair
Value of Units That Have Not Vested ($) |
|
Equity
Incentive Plan Awards: Number of Unearned Units or Other Rights That Have Not Vested (#) |
|
Equity
Incentive Plan Awards: Fair or Payout Value of Unearned Units or Other Rights That Have Not Vested ($) |
|
||||||||||||||||||
Vivek Sankaran
|
—
|
—
|
—
|
—
|
—
|
1,168,578
|
(1) |
(3
|
) |
—
|
—
|
|||||||||||||||||||||||||
|
|
|
|
|
1,176,630
|
(2) |
(4
|
) |
|
|
||||||||||||||||||||||||||
James L. Donald
|
—
|
—
|
—
|
—
|
—
|
204,545
|
(5) |
|
(6) |
246,212
|
(7) |
(6
|
) | |||||||||||||||||||||||
Robert B. Dimond
|
—
|
—
|
—
|
—
|
—
|
26,198
|
(5) |
|
(6) |
39,297
|
(7) |
(6
|
) | |||||||||||||||||||||||
Susan Morris
|
—
|
—
|
—
|
—
|
—
|
125,541
|
(5) |
|
(6) |
39,297
|
(7) |
(6
|
) | |||||||||||||||||||||||
Christine Rupp
|
—
|
—
|
—
|
—
|
—
|
51,282
|
(5) |
|
(6) |
19,201
|
(7) |
(6
|
) | |||||||||||||||||||||||
Michael Theilmann
|
|
|
|
|
|
22,728
|
(5) |
|
(6) |
19,179
|
(7) |
(6
|
) | |||||||||||||||||||||||
Shane Sampson
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(1) |
Reflects
584,289 unvested Class
B-1
Units and 584,289 Class
B-2
Units in Albertsons Investor that will vest based on Mr. Sankaran’s continued service or a combination of service and the achievement of performance targets, as follows:
|
Vesting Date
|
Number of Class
B-1
Units Vesting
Based on
Continued Service
|
|
Number of Class
B-2
Units Vesting
Based on Continued Service and Performance |
|
||||
4/25/2020
|
64,921
|
|
||||||
4/25/2021
|
129,842
|
|
||||||
2/26/2022
|
|
194,763
|
||||||
4/25/2022
|
194,763
|
|
||||||
2/25/2023
|
|
194,763
|
||||||
4/25/2023
|
129,842
|
|
||||||
2/24/2024
|
|
194,763
|
||||||
4/25/2024
|
64,921
|
|
(2) |
Reflects 588,315 unvested Class
B-1
Units and 588,315 unvested Class
B-2
Units in KIM ACI held by Mr. Sankaran that will vest based on Mr. Sankaran’s continued service or a combination of service and the achievement of performance targets, as follows:
|
Vesting Date
|
Number of Class
B-1
Units Vesting
Based on
Continued Service
|
|
Number of Class
B-2
Units Vesting
Based on Continued Service and Performance |
|
||||
4/25/2020
|
65,369
|
|
||||||
4/25/2021
|
130,737
|
|
||||||
2/26/2022
|
|
196,105
|
||||||
4/25/2022
|
196,105
|
|
||||||
2/25/2023
|
|
196,105
|
||||||
4/25/2023
|
130,736
|
|
||||||
2/24/2024
|
|
196,105
|
||||||
4/25/2024
|
65,368
|
|
(3) |
Based on a fair value of per Class
B-1
Unit and Class
B-2
Unit in Albertsons Investor as of February 29, 2020.
|
(4) |
Based on a fair value of per Class
B-1
Unit and Class
B-2
Unit in KIM ACI as of February 29, 2020
|
(5) | Reflects the number of unvested Phantom Units held by the NEO that will vest based on either continued service of the individual, or a combination of service of the individual and the achievement of performance targets, as follows: |
Name
|
Vesting Date
|
|
Number of
Phantom Units Vesting Based on Continued Service |
|
Number of
Phantom Units Vesting Based on Continued Service and Performance |
|
||||||
James L. Donald
|
9/11/2020
|
82,071
|
|
|||||||||
9/11/2021
|
82,070
|
|
||||||||||
9/11/2022
|
40,404
|
|
||||||||||
Robert B. Dimond
|
11/9/2020
|
13,099
|
|
|||||||||
11/9/2021
|
13,099
|
|
||||||||||
Susan Morris
|
2/29/2020
|
|
33,115
|
|||||||||
11/9/2020
|
13,099
|
|
||||||||||
2/27/2021
|
16,557
|
16,557
|
||||||||||
11/9/2021
|
13,099
|
|
||||||||||
2/26/2022
|
16,557
|
16,557
|
||||||||||
Michael Theilmann
|
8/19/2020
|
7,576
|
|
|||||||||
8/19/2021
|
7,576
|
|
||||||||||
8/19/2022
|
7,576
|
|
||||||||||
Christine Rupp
|
12/1/2021
|
25,641
|
|
|||||||||
12/1/2022
|
12,820
|
|
||||||||||
12/1/2023
|
12,821
|
|
(6) | Based on a per unit price of $ , the aggregate value of one management incentive unit in each of Albertsons Investor and KIM ACI as of February 29, 2020. |
(7) |
Reflects the target number of unvested Phantom Units held by the NEO that could vest on February 26, 2022, subject to the NEO’s continued employment through such date, with the actual number of Phantom Units that could vest (up to a maximum of 120% of the target) based on our achievement of performance targets for fiscal 2019, fiscal 2020 and fiscal 2021, respectively. In the case of Mr. Donald, this also reflects a target number of 121,212 unvested Phantom Units held by Mr. Donald that could vest on February 26, 2023, subject to Mr. Donald’s continued employment through such date, with the actual number of Phantom Units that could vest (up to a maximum of 120% of the target) based on our achievement of performance targets for fiscal 2020, fiscal 2021 and fiscal 2022, respectively. Depending on the attainment of the performance targets for a particular fiscal year, an NEO’s Phantom Units, if any, in respect of that fiscal year will become vested based only on the NEO’s continued service and would be included in this table in the column entitled “Number of Units that have not vested.” The totals include performance-based units for fiscal 2019, which are not calculable as of the date hereof and will remain undetermined until the completion of the audited Consolidated Financial Statements for fiscal 2019, expected in April 2020. We will file a Current Report on Form
8-K
with this information when those amounts are determined.
|
Name
|
Number of
Shares Acquired on Exercise (#) |
|
Value
Realized on Exercise ($) |
|
Number of
Units Acquired on Vesting (#)(1) |
|
Value
Realized on Vesting ($)(2) |
|
||||||||
(a)
|
(b)
|
|
(c)
|
|
(d)
|
|
(e)
|
|
||||||||
Vivek Sankaran
|
—
|
—
|
—
|
—
|
||||||||||||
James L. Donald
|
—
|
—
|
148,776
|
|
||||||||||||
Robert B. Dimond
|
—
|
—
|
13,099
|
510,861
|
||||||||||||
Susan Morris
|
—
|
—
|
46,212
|
|
||||||||||||
Christine Rupp
|
—
|
—
|
—
|
—
|
||||||||||||
Michael Theilmann
|
—
|
—
|
—
|
—
|
||||||||||||
Shane Sampson
|
—
|
—
|
10,818
|
356,994
|
(1) | Reflects the vesting of Phantom Units and settlement in management incentive units as described in “—Compensation Discussion and Analysis.” The totals exclude performance-based Phantom Units for fiscal 2019, which are not calculable as of the date hereof and will remain |
undetermined until the completion of the audited Consolidated Financial Statements for fiscal 2019, expected in April 2020. We will file a Current Report on Form
8-K
with this information when those amounts are determined.
|
(2) | The value realized upon vesting of the Phantom Units is based on the fair value of a management incentive unit on the vesting date. |
Name
|
Executive
Contributions in Last FY ($)(1) |
|
Registrant
Contributions in Last FY ($)(2) |
|
Aggregate
Earnings in Last FY ($)(3) |
|
Aggregate
Withdrawals/ Distributions ($) |
|
Aggregate
Balance at Last FYE ($) |
|
||||||||||
(a)
|
(b)
|
|
(c)
|
|
(d)
|
|
(e)
|
|
(f)
|
|
||||||||||
Vivek Sankaran
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||
James L. Donald
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||
Robert B. Dimond
|
25,062
|
26,785
|
86,512
|
—
|
776,221
|
|||||||||||||||
Susan Morris
|
27,025
|
29,661
|
54,165
|
—
|
541,415
|
|||||||||||||||
Christine Rupp
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||
Michael Theilmann
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||
Shane Sampson
|
27,855
|
31,982
|
17,963
|
518,741
|
—
|
(1) |
All executive contributions represent amounts deferred by each NEO under a Deferred Compensation Plan and are included as compensation in the Summary Compensation Table under “Salary,” “Bonus” and
“Non-Equity
Incentive Plan Compensation.”
|
(2) | All registrant contributions are reported under “All Other Compensation” in the Summary Compensation Table. |
(3) | These amounts are not reported in the Summary Compensation Table as none of the earnings are based on interest above the market rate. |
Payments and Benefits
|
Death or
Disability ($) |
|
For Cause
or Without Good Reason |
|
Without
Cause or for Good Reason ($) |
|
Change in
Control – Without Cause or for Good Reason ($) |
|
||||||||
Cash Payments
|
5,375,000
|
(1) |
—
|
7,500,000
|
(2) |
7,500,000
|
(2) | |||||||||
Health Benefits (3)
|
14,087
|
—
|
14,087
|
14,087
|
||||||||||||
Total
|
5,389,087
|
—
|
7,514,087
|
7,514,087
|
(1) |
Reflects a lump sum cash payment in an amount equal to the sum of (i) any earned but unpaid bonus with respect to any completed performance period prior to the date of termination, (ii) a lump sum payment in an amount equal to 25% of Mr. Sankaran’s base salary, (iii) a bonus for the fiscal year of termination based on actual performance metrics for the fiscal year in which termination occurs, but prorated based on the number of days of service during the applicable fiscal year through the termination date and (iv) payment of the unvested or unpaid portions of the
sign-on
retention award.
|
(2) |
Reflects a lump sum cash payment equal to the sum of (i) any earned but unpaid bonus with respect to any completed performance period prior to the date of termination, (ii) a lump sum payment in an amount equal to 200% of the sum of Mr. Sankaran’s base salary plus target bonus, (iii) a bonus for the fiscal year of termination based on actual performance metrics for the fiscal year in which termination occurs, but prorated based on the number of days of service during the applicable fiscal year through the termination date and (iv) payment of the unvested or unpaid portions of the
sign-on
retention award.
|
(3) | Reflects the cost of reimbursement for up to 18 months of continuation of health coverage. |
Payments and Benefits
|
Death or
Disability ($) |
|
For Cause
or Without Good Reason |
|
Without
Cause or for Good Reason ($) |
|
Change in
Control – Without Cause or for Good Reason ($) |
|
||||||||
Cash Payments
|
375,000
|
(1) |
—
|
6,000,000
|
(2) |
6,000,000
|
(2) | |||||||||
Health Benefits
|
—
|
—
|
20,825
|
(3) |
20,825
|
(3) | ||||||||||
Total
|
375,000
|
—
|
6,020,825
|
6,020,825
|
(1) | Reflects a lump sum cash payment in an amount equal to 25% of Mr. Donald’s base salary. |
(2) | Reflects a lump sum cash payment equal to the sum of Mr. Donald’s base salary and target bonus for 24 months. |
(3) | Reflects the cost of reimbursement for up to 18 months continuation of health coverage. |
Payments and Benefits
|
Death or
Disability ($) |
|
For Cause
or Without Good Reason |
|
Without
Cause or for Good Reason ($) |
|
Change in
Control – Without Cause or for Good Reason ($) |
|
||||||||
Cash Payments
|
212,500
|
(1) |
—
|
3,400,000
|
(2) |
3,400,000
|
(2) | |||||||||
Health Benefits
|
—
|
—
|
13,822
|
(3) |
13,822
|
(3) | ||||||||||
Total
|
212,500
|
—
|
3,413,822
|
3,413,822
|
(1) | Reflects a lump sum cash payment in an amount equal to 25% of Mr. Dimond’s base salary. |
(2) | Reflects a lump sum cash payment equal to the sum of Mr. Dimond’s base salary and target bonus for 24 months. |
(3) | Reflects the cost of reimbursement for up to 12 months continuation of health coverage. |
Payments and Benefits
|
Death or
Disability ($) |
|
For Cause
or Without Good Reason |
|
Without
Cause or for Good Reason ($) |
|
Change in
Control – Without Cause or for Good Reason ($) |
|
||||||||
Cash Payments
|
225,000
|
(1) |
—
|
3,600,000
|
(2) |
3,600,000
|
(2) | |||||||||
Health Benefits
|
—
|
—
|
7,889
|
(3) |
7,889
|
(3) | ||||||||||
Total
|
225,000
|
—
|
3,607,889
|
3,607,889
|
(1) | Reflects a lump sum cash payment in an amount equal to 25% of Ms. Morris’s base salary. |
(2) | Reflects a lump sum cash payment equal to the sum of Ms. Morris’ base salary and target bonus for 24 months. |
(3) | Reflects the cost of reimbursement for up to 12 months continuation of health coverage. |
Payments and Benefits
|
Death or
Disability ($) |
|
For Cause
or Without Good Reason |
|
Without
Cause or for Good Reason ($) |
|
Change in
Control – Without Cause or for Good Reason ($) |
|
||||||||
Cash Payments
|
187,500
|
(1) |
—
|
3,000,000
|
(2) |
3,000,000
|
(2) | |||||||||
Health Benefits
|
—
|
—
|
7,738
|
(3) |
7,738
|
(3) | ||||||||||
Total
|
187,500
|
—
|
3,007,738
|
3,007,738
|
(1) | Reflects a lump sum cash payment in an amount equal to 25% of Ms. Rupp’s base salary. |
(2) | Reflects a lump sum cash payment equal to the sum of Ms. Rupp’s base salary and target bonus for 24 months. |
(3) | Reflects the cost of reimbursement for up to 12 months continuation of health coverage. |
Payments and Benefits
|
Death or
Disability ($) |
|
For Cause
or Without Good Reason |
|
Without
Cause or for Good Reason ($) |
|
Change in
Control – Without Cause
or for Good
Reason ($)
|
|
||||||||
Cash Payments
|
150,000
|
(1) |
—
|
2,400,000
|
(2) |
2,400,000
|
(2) | |||||||||
Health Benefits
|
—
|
—
|
10,862
|
(3) |
10,862
|
(3) | ||||||||||
Total
|
150,000
|
—
|
2,410,862
|
2,410,862
|
(1) | Reflects a lump sum cash payment in an amount equal to 25% of Mr. Theilmann’s base salary. |
(2) | Reflects a lump sum cash payment equal to 200% of Mr. Theilmann’s base salary plus target annual bonus. |
(3) | Reflects the cost of reimbursement for up to 12 months continuation of health coverage. |
NEO
|
Value of
Vesting Class B Units ($) |
|
Value of
Vesting
Phantom
Units ($)
(1)
|
|
Tax
Bonus ($) |
|
||||||
Vivek Sankaran
|
|
—
|
—
|
|||||||||
James L. Donald
|
—
|
|
—
|
|||||||||
Robert B. Dimond
|
—
|
|
—
|
|||||||||
Susan Morris
|
—
|
(2
|
) |
|
||||||||
Christine Rupp
|
—
|
|
—
|
|||||||||
Michael Theilmann
|
—
|
|
—
|
|||||||||
Shane Sampson
|
—
|
—
|
—
|
(1) |
With respect to 2019 Performance-Based Phantom Unit Awards, assumes that 100% of the target number of Phantom Units was awarded in respect of
fiscal 2019. The actual number of 2019 Performance-Based Phantom Unit Awards awarded in respect of fiscal 2019 is based on the achievement of the Adjusted EBITDA target for fiscal 2019, which has not been determined as of the date of this prospectus and will remain undetermined until the completion of the audited Consolidated Financial Statements for fiscal 2019, expected in April 2020.
|
(2) | Excludes the value of the 2016-2017 Performance-Based Phantom Units held by Ms. Morris that may vest on February 29, 2020, but which is not calculable as of the date hereof and will remain undetermined until the completion of the audited Consolidated Financial Statements for fiscal 2019, expected in April 2020. |
• | in the case of an offering pursuant to a demand under the registration rights agreement, (1) the stockholders that are parties to the registration rights agreement will have first priority to include their registrable securities, (2) we will have second priority to the extent that we elect to sell any shares for our own account and (3) any other holders with registration rights will have third priority; and |
• | in the case of any offering not pursuant to a demand under the registration rights agreement, (1) we will have first priority to the extent that we elect to sell any shares for our own account, (2) the stockholders that are parties to the registration rights agreement will have second priority to include their registrable securities and (3) any other holders with registration rights will have third priority. |
• | the selling stockholders; |
• | each person who is known by us to beneficially own 5% or more of our outstanding shares of capital stock; |
• | each member of our board of directors; |
• | each of our named executive officers; and |
• | all of our directors and executive officers as a group. |
|
Common
Stock Beneficially Owned Immediately Prior to the Completion of this Offering(1) |
Number of
Shares of Common Stock Being Offered |
|
Number of
Shares of Common Stock Being Offered Pursuant to Underwriters’ Option |
|
Shares of Common Stock
Beneficially Owned After This Offering |
Shares of Common Stock
Beneficially Owned After The Repurchase |
|||||||||||||||||||||||||||||||||||||||||
|
|
|
No Exercise of
Underwriters’ Option to Purchase Additional Shares |
Full Exercise of
Underwriters’ Option to Purchase Additional Shares |
No Exercise of
Underwriters’
Option
to Purchase
Additional
Shares
|
Full Exercise of
Underwriters’
Option
to Purchase
Additional
Shares
|
||||||||||||||||||||||||||||||||||||||||||
Name of
Beneficial Owner |
Number
of Shares |
|
Percen-
tage |
|
Number
of Shares |
|
Percen-
tage |
|
Number
of Shares |
|
Percen-
tage |
|
Number
of Shares |
|
Percen-
tage |
|
Number
of Shares |
|
Percen-
tage |
|
||||||||||||||||||||||||||||
Selling Stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||
Cerberus Capital Management, L.P.(2)
|
|
%
|
|
|
|
%
|
|
%
|
|
%
|
|
%
|
||||||||||||||||||||||||||||||||||||
Klaff Realty, L.P.(3)
|
|
%
|
|
|
|
%
|
|
%
|
|
%
|
|
%
|
||||||||||||||||||||||||||||||||||||
Schottenstein Stores Corp.(4)
|
|
%
|
|
|
|
%
|
|
%
|
|
%
|
|
%
|
||||||||||||||||||||||||||||||||||||
Lubert-Adler Partners, L.P.(5)
|
|
%
|
|
|
|
%
|
|
%
|
|
%
|
|
%
|
||||||||||||||||||||||||||||||||||||
Kimco Realty Corporation(6)
|
|
%
|
|
|
|
%
|
|
%
|
|
%
|
|
%
|
||||||||||||||||||||||||||||||||||||
Colfin Safe Holdings, LLC(7)
|
|
%
|
|
|
|
%
|
|
%
|
|
%
|
|
%
|
||||||||||||||||||||||||||||||||||||
Mexico Foods Holdings LLC(8)
|
|
%
|
|
|
|
%
|
|
%
|
|
%
|
|
%
|
||||||||||||||||||||||||||||||||||||
SK Retail Investment LLC(9)
|
|
%
|
|
|
|
%
|
|
%
|
|
%
|
|
%
|
||||||||||||||||||||||||||||||||||||
Robert G. Miller
|
|
%
|
|
|
|
%
|
|
%
|
|
%
|
|
%
|
||||||||||||||||||||||||||||||||||||
Justin Dye … …
|
|
%
|
|
|
|
%
|
|
%
|
|
%
|
|
%
|
|
Common
Stock Beneficially Owned Immediately Prior to the Completion of this Offering(1) |
Number of
Shares of Common Stock Being Offered |
|
Number of
Shares of Common Stock Being Offered Pursuant to Underwriters’ Option |
|
Shares of Common Stock
Beneficially Owned After This Offering |
Shares of Common Stock
Beneficially Owned After The Repurchase |
|||||||||||||||||||||||||||||||||||||||||
|
|
|
No Exercise of
Underwriters’ Option to Purchase Additional Shares |
Full Exercise of
Underwriters’ Option to Purchase Additional Shares |
No Exercise of
Underwriters’
Option
to Purchase
Additional
Shares
|
Full Exercise of
Underwriters’
Option
to Purchase
Additional
Shares
|
||||||||||||||||||||||||||||||||||||||||||
Name of Beneficial Owner
|
Number
of Shares |
|
Percen-
tage |
|
Number
of Shares |
|
Percen-
tage |
|
Number
of Shares |
|
Percen-
tage |
|
Number
of Shares |
|
Percen-
tage |
|
Number
of Shares |
|
Percen-
tage |
|
||||||||||||||||||||||||||||
Howard Cohen
|
|
%
|
|
|
|
%
|
|
%
|
|
%
|
|
%
|
||||||||||||||||||||||||||||||||||||
Richard Navarro
|
|
%
|
|
|
|
%
|
|
%
|
|
%
|
|
%
|
||||||||||||||||||||||||||||||||||||
Robert Butler
|
|
%
|
|
|
|
%
|
|
%
|
|
%
|
|
%
|
||||||||||||||||||||||||||||||||||||
Andrew Scoggin
|
|
%
|
|
|
|
%
|
|
%
|
|
%
|
|
%
|
||||||||||||||||||||||||||||||||||||
Robert Edwards
|
|
%
|
|
|
|
%
|
|
%
|
|
%
|
|
%
|
||||||||||||||||||||||||||||||||||||
Paul Rowan
|
|
%
|
|
|
|
%
|
|
%
|
|
%
|
|
%
|
||||||||||||||||||||||||||||||||||||
Shane Sampson
|
|
%
|
|
|
|
%
|
|
%
|
|
%
|
|
%
|
||||||||||||||||||||||||||||||||||||
Mark Bates
|
|
%
|
|
|
|
%
|
|
%
|
|
%
|
|
%
|
||||||||||||||||||||||||||||||||||||
Wayne Denningham
|
|
%
|
|
|
|
%
|
|
%
|
|
%
|
|
%
|
||||||||||||||||||||||||||||||||||||
Justin Ewing
|
|
%
|
|
|
|
%
|
|
%
|
|
%
|
|
%
|
||||||||||||||||||||||||||||||||||||
Shane Dorcheus
|
|
%
|
|
|
|
%
|
|
%
|
|
%
|
|
%
|
||||||||||||||||||||||||||||||||||||
Susan Morris
|
|
%
|
|
|
|
%
|
|
%
|
|
%
|
|
%
|
||||||||||||||||||||||||||||||||||||
Other Pre-IPO Stockholders(10)
|
|
%
|
|
|
|
%
|
|
%
|
|
%
|
|
%
|
||||||||||||||||||||||||||||||||||||
5% Stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||
Albertsons Investor Holdings LLC(11)
|
|
%
|
|
|
|
%
|
|
%
|
|
%
|
|
%
|
||||||||||||||||||||||||||||||||||||
KIM ACI, LLC(12)
|
|
%
|
|
|
|
%
|
|
%
|
|
%
|
|
%
|
||||||||||||||||||||||||||||||||||||
Directors:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||
Vivek Sankaran
|
|
%
|
|
|
|
%
|
|
%
|
|
%
|
|
%
|
||||||||||||||||||||||||||||||||||||
James L. Donald
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||
Leonard Laufer
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||
Sharon L. Allen
|
|
%
|
|
|
|
%
|
|
%
|
|
%
|
|
%
|
||||||||||||||||||||||||||||||||||||
Steven A. Davis
|
|
%
|
|
|
|
%
|
|
%
|
|
%
|
|
%
|
||||||||||||||||||||||||||||||||||||
Kim Fennebresque
|
|
%
|
|
|
|
%
|
|
%
|
|
%
|
|
%
|
||||||||||||||||||||||||||||||||||||
Allen M. Gibson
|
|
%
|
|
|
|
%
|
|
%
|
|
%
|
|
%
|
||||||||||||||||||||||||||||||||||||
Hersch Klaff(3)
|
|
%
|
|
|
|
%
|
|
%
|
|
%
|
|
%
|
||||||||||||||||||||||||||||||||||||
Jay L. Schottenstein(4)
|
|
%
|
|
|
|
%
|
|
%
|
|
%
|
|
%
|
||||||||||||||||||||||||||||||||||||
Alan H. Schumacher
|
|
%
|
|
|
|
%
|
|
%
|
|
%
|
|
%
|
||||||||||||||||||||||||||||||||||||
Lenard B. Tessler
|
|
%
|
|
|
|
%
|
|
%
|
|
%
|
|
%
|
||||||||||||||||||||||||||||||||||||
B. Kevin Turner
|
|
%
|
|
|
|
%
|
|
%
|
|
%
|
|
%
|
||||||||||||||||||||||||||||||||||||
Named Executive Officers:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||
Vivek Sankaran
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||
James L. Donald
|
|
%
|
|
|
|
%
|
|
%
|
|
%
|
|
%
|
||||||||||||||||||||||||||||||||||||
Robert B. Dimond
|
|
%
|
|
|
|
%
|
|
%
|
|
%
|
|
%
|
||||||||||||||||||||||||||||||||||||
Susan Morris
|
|
%
|
|
|
|
%
|
|
%
|
|
%
|
|
%
|
||||||||||||||||||||||||||||||||||||
Christine Rupp
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||
Michael Theilmann
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||
Shane Sampson
|
|
%
|
|
|
|
%
|
|
%
|
|
%
|
|
%
|
||||||||||||||||||||||||||||||||||||
All directors and executive officers as a group(3) (20 Persons)
|
|
%
|
|
|
|
%
|
|
%
|
|
%
|
|
%
|
* | Represents less than 1%. |
(1) | Percentage of shares beneficially owned prior to this offering is based on shares of our common stock outstanding as of our listing date on the NYSE. |
(2) | Stephen Feinberg exercises voting and investment authority and may be deemed to have beneficial ownership of shares, or % of our outstanding common stock prior to this offering and % upon the completion of this offering. Messrs. Laufer and Tessler are affiliated with Cerberus. The address for Cerberus is 875 Third Avenue, New York, New York 10022. |
(3) | Mr. Klaff is affiliated with Klaff Realty, whose affiliated entities have beneficial ownership of shares, or % of our outstanding common stock prior to this offering and % upon the completion of this offering. The address for Klaff Realty is 35 E. Wacker Drive, Suite 2900, Chicago, Illinois 60601. |
(4) | Mr. Schottenstein is affiliated with Schottenstein Stores, whose affiliated entities have beneficial ownership of shares, or % of our outstanding common stock prior to this offering and % upon the completion of this offering. The address for Schottenstein Stores is 4300 E. Fifth Avenue, Columbus, Ohio 43219. |
(5) | The address for Lubert-Adler is The FMC Tower, 2929 Walnut Street, Suite 1530, Philadelphia, Pennsylvania 19104, Attention: Dean Adler and R. Eric Emrich. |
(6) | The address for Kimco is 3333 New Hyde Park Road, Suite 100, New Hyde Park, New York 11042. |
(7) | The address for Colfin Safe Holdings, LLC is c/o Colony NorthStar, Inc., 712 Fifth Avenue, 35th Floor, New York, New York 10019. |
(8) | The address for Mexico Foods Holdings LLC is 2600 McCree Road, Suite 100, Garland, Texas 75041. |
(9) | The address for SK Retail Investment LLC is c/o Kimco Realty Corporation, Attention: Ray Edwards and Bruce Rubenstein, 3333 New Hyde Park Road, Suite 100, New Hyde Park, New York 10042. |
(10) | All of such persons beneficially own, in the aggregate, less than 1% of the common stock outstanding prior to this offering. |
(11) | Albertsons Investor is held by a private investor group, including affiliates of our Sponsors and certain members of management. The address for Albertsons Investor is 250 Parkcenter Blvd., Boise, ID 83706. |
(12) | KIM ACI is controlled indirectly by Kimco. The address for KIM ACI is c/o Kimco Realty Corporation, Attention: Ray Edwards and Bruce Rubenstein, 3333 New Hyde Park Road, Suite 100, New Hyde Park, New York 11042. |
• | if the Applicable Market Value (as defined herein) of our common stock is greater than $ (the “Threshold Appreciation Price”), then the Conversion Rate will be shares of our common stock per share of the Series A preferred stock (the “Minimum Conversion Rate”), which is approximately equal to $ divided by the Threshold Appreciation Price; |
• |
if the Applicable Market Value of our common stock is less than or equal to the Threshold Appreciation Price but equal to or greater than $ (the “Initial Price”), then the Conversion Rate will be equal to $ divided by the Applicable Market Value of our common stock, rounded to the nearest
ten-thousandth
of a share; or
|
• | if the Applicable Market Value of our common stock is less than the Initial Price, then the Conversion Rate will be shares of our common stock per share of the Series A preferred stock (the “Maximum Conversion Rate”). |
• | greater than the $ liquidation preference of the share of Series A preferred stock, if the Applicable Market Value is greater than the Threshold Appreciation Price; |
• | equal to the $ liquidation preference of the share of Series A preferred stock, if the Applicable Market Value is less than or equal to the Threshold Appreciation Price and greater than or equal to the Initial Price; and |
• | less than the $ liquidation preference of the share of Series A preferred stock, if the Applicable Market Value is less than the Initial Price. |
• | prior to the date of the transaction, the board of directors of the corporation approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder; |
• | upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the number of shares outstanding those shares owned by persons who are directors and also officers and by employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or |
• |
on or subsequent to the date of the transaction, the business combination is approved by our board of directors and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least
two-thirds
of the outstanding voting stock which is not owned by the interested stockholder.
|
• | beginning on the date of this prospectus, all shares of our common stock sold in this offering will be immediately available for sale in the public market; and |
• | beginning 181 days after the date of this prospectus, the remaining shares of our common stock will be eligible for sale in the public market from time to time thereafter, subject in some cases to the volume and other restrictions of Rule 144, as described below. |
• | 1% of the number of shares of our capital stock then outstanding, which will equal shares immediately after this offering; or |
• | the average weekly trading volume of our common stock during the four calendar weeks preceding the filing of a notice on Form 144 with respect to that sale. |
• | in the case of an offering pursuant to a demand under the registration rights agreement, (1) the stockholders that are parties to the registration rights agreement will have first priority to include their registrable securities, (2) we will have second priority to the extent that we elect to sell any shares for our own account and (3) any other holders with registration rights will have third priority; and |
• | in the case of any offering not pursuant to a demand under the registration rights agreement, (1) we will have first priority to the extent that we elect to sell any shares for our own account, (2) the stockholders that are parties to the registration rights agreement will have second priority to include their registrable securities and (3) any other holders with registration rights will have third priority. |
• | U.S. expatriates and former citizens or long-term residents of the United States; |
• | persons holding our common stock as part of a hedge, straddle or other risk reduction strategy or as part of a conversion transaction or other integrated investment; |
• | banks, insurance companies, and other financial institutions; |
• | brokers, dealers or traders in securities, currencies or commodities; |
• | “controlled foreign corporations,” “passive foreign investment companies,” and corporations that accumulate earnings to avoid U.S. federal income tax; |
• | partnerships or other entities or arrangements treated as partnerships for U.S. federal income tax purposes (and investors therein); |
• |
tax-exempt
entities or governmental entities;
|
• | persons deemed to sell our common stock under the constructive sale provisions of the Code; |
• | persons who hold or receive our common stock pursuant to the exercise of any employee stock option or otherwise as compensation; |
• |
tax-qualified
retirement plans;
|
• | “qualified foreign pension funds” as defined in Section 897(l)(2) of the Code and entities all of the interests of which are held by qualified foreign pension funds; |
• | persons subject to special tax accounting rules as a result of any item of gross income with respect to the stock being taken into account in an “applicable financial statement” (as defined in the Code); |
• | regulated investment companies; and |
• | real estate investment trusts. |
• | an individual who is a citizen or resident of the United States; |
• | a corporation created or organized under the laws of the United States, any state thereof, or the District of Columbia; |
• | an estate, the income of which is subject to U.S. federal income tax regardless of its source; or |
• | a trust that (1) is subject to the primary supervision of a U.S. court and the control of one or more “United States persons” (within the meaning of Section 7701(a)(30) of the Code), or (2) has a valid election in effect to be treated as a United States person for U.S. federal income tax purposes. |
• |
the gain is effectively connected with the
Non-U.S.
Holder’s conduct of a trade or business within the United States;
|
• |
the
Non-U.S.
Holder is a nonresident alien individual present in the United States for 183 days or more during the taxable year of the disposition and certain other requirements are met; or
|
• | subject to certain exceptions, our common stock constitutes a U.S. real property interest, or USRPI, by reason of our status as a U.S. real property holding corporation, or USRPHC, for U.S. federal income tax purposes. |
Underwriters
|
Number
of Shares |
|
||
BofA Securities, Inc.
|
|
|||
Goldman Sachs & Co. LLC
|
|
|||
J.P. Morgan Securities LLC
|
|
|||
Citigroup Global Markets Inc.
|
|
|||
Credit Suisse Securities (USA) LLC
|
|
|||
Morgan Stanley & Co. LLC
|
|
|||
Wells Fargo Securities, LLC
|
|
|||
Barclays Capital Inc.
|
|
|||
Deutsche Bank Securities Inc.
|
|
|||
BMO Capital Markets Corp.
|
|
|||
Evercore Group L.L.C.
|
|
|||
Guggenheim Securities, LLC
|
|
|||
Oppenheimer & Co. Inc.
|
|
|||
RBC Capital Markets, LLC
|
|
|||
Telsey Advisory Group LLC
|
|
|||
MUFG Securities Americas Inc.
|
|
|||
Academy Securities, Inc.
|
|
|||
Blaylock Van, LLC
|
|
|||
Total
|
|
|
|
|
Total
|
|||||||||
|
Per Share
|
|
No Exercise
|
|
Full Exercise
|
|
||||||
Public offering price and proceeds to the selling stockholders
|
$ |
|
$ |
|
$ |
|
||||||
Underwriting discounts and commissions
|
$ |
|
$ |
|
$ |
|
|
Page
|
|
||
Unaudited Interim Condensed Consolidated Financial Statements
|
|
|
|
|
F-2
|
||||
F-3
|
||||
F-4
|
||||
F-6
|
||||
F-7
|
||||
Audited Consolidated Financial Statements
|
|
|
|
|
F-26
|
||||
F-27
|
||||
F-28
|
||||
F-29
|
||||
F-31
|
||||
F-32
|
|
November 30,
2019 |
|
February 23,
2019 |
|
||||
ASSETS
|
|
|
|
|
|
|
||
Current assets
|
|
|
|
|
|
|
||
Cash and cash equivalents
|
$ |
406.4
|
$ |
926.1
|
||||
Receivables, net
|
501.2
|
586.2
|
||||||
Inventories, net
|
4,624.2
|
4,332.8
|
||||||
Other current assets
|
447.8
|
404.9
|
||||||
Total current assets
|
5,979.6
|
6,250.0
|
||||||
Property and equipment, net
|
9,222.0
|
9,861.3
|
||||||
Operating lease
right-of-use
assets
|
5,836.1
|
—
|
||||||
Intangible assets, net
|
2,123.9
|
2,834.5
|
||||||
Goodwill
|
1,183.3
|
1,183.3
|
||||||
Other assets
|
646.7
|
647.5
|
||||||
TOTAL ASSETS
|
$ |
24,991.6
|
$ |
20,776.6
|
||||
LIABILITIES
|
|
|
|
|
|
|
||
Current liabilities
|
|
|
|
|
|
|
||
Accounts payable
|
$ |
3,183.2
|
$ |
2,918.7
|
||||
Accrued salaries and wages
|
1,099.9
|
1,054.7
|
||||||
Current maturities of long-term debt and finance lease obligations
|
133.3
|
148.8
|
||||||
Current maturities of operating lease obligations
|
549.7
|
—
|
||||||
Other current liabilities
|
1,006.1
|
1,030.5
|
||||||
Total current liabilities
|
5,972.2
|
5,152.7
|
||||||
Long-term debt and finance lease obligations
|
8,615.9
|
10,437.6
|
||||||
Long-term operating lease obligations
|
5,430.5
|
—
|
||||||
Deferred income taxes
|
711.3
|
561.4
|
||||||
Other long-term liabilities
|
1,851.1
|
3,174.2
|
||||||
Commitments and contingencies
|
|
|
||||||
STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
||
Preferred stock, $0.01 par value; 30,000,000 shares authorized, no shares issued and outstanding as of November 30, 2019 and February 23, 2019, respectively
|
—
|
—
|
||||||
Common stock, $0.01 par value; 1,000,000,000 shares authorized and 279,597,312 shares issued and outstanding as of November 30, 2019, and 1,000,000,000 shares authorized and 277,882,010 shares issued and outstanding as of February 23, 2019
|
2.8
|
2.8
|
||||||
Additional
paid-in
capital
|
1,823.5
|
1,814.2
|
||||||
Treasury stock, at cost, 1,772,018 shares held as of November 30, 2019 and February 23, 2019, respectively
|
(25.8
|
) |
(25.8
|
) | ||||
Accumulated other comprehensive income
|
85.6
|
91.3
|
||||||
Retained earnings (accumulated deficit)
|
524.5
|
(431.8
|
) | |||||
Total stockholders’ equity
|
2,410.6
|
1,450.7
|
||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
|
$ |
24,991.6
|
$ |
20,776.6
|
||||
|
40 weeks ended
|
|||||||
|
November 30, 2019
|
|
December 1, 2018
|
|
||||
Net sales and other revenue
|
$ |
47,018.3
|
$ |
46,517.9
|
||||
Cost of sales
|
33,842.1
|
33,682.0
|
||||||
Gross profit
|
13,176.2
|
12,835.9
|
||||||
Selling and administrative expenses
|
12,548.4
|
12,500.7
|
||||||
Gain on property dispositions and impairment losses, net
|
(482.7
|
) |
(163.7
|
) | ||||
Operating income
|
1,110.5
|
498.9
|
||||||
Interest expense, net
|
557.5
|
662.5
|
||||||
Loss on debt extinguishment
|
65.8
|
9.5
|
||||||
Other income, net
|
(21.9
|
) |
(88.3
|
) | ||||
Income (loss) before income taxes
|
509.1
|
(84.8
|
) | |||||
Income tax expense (benefit)
|
110.5
|
(80.3
|
) | |||||
Net income (loss)
|
$ |
398.6
|
$ |
(4.5
|
) | |||
Other comprehensive income (loss), net of tax
|
|
|
|
|
|
|
||
(Loss) gain on interest rate swaps
|
(33.3
|
) |
4.3
|
|||||
Recognition of pension gain (loss)
|
24.8
|
(1.6
|
) | |||||
Other
|
2.8
|
(1.7
|
) | |||||
Other comprehensive (loss) income
|
$ |
(5.7
|
) | $ |
1.0
|
|||
Comprehensive income (loss)
|
$ |
392.9
|
$ |
(3.5
|
) | |||
Net income (loss) per common share
|
|
|
||||||
Basic net income (loss) per common share
|
$ |
1.43
|
$ |
(0.02
|
) | |||
Diluted net income (loss) per common share
|
1.42
|
(0.02
|
) | |||||
Weighted average common shares outstanding
|
|
|
||||||
Basic
|
280
|
281
|
||||||
Diluted
|
280
|
281
|
|
40 weeks ended
|
|||||||
|
November 30, 2019
|
|
December 1, 2018
|
|
||||
Cash flows from operating activities:
|
|
|
|
|
|
|
||
Net income (loss)
|
$ |
398.6
|
$ |
(4.5
|
) | |||
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
||||||
Gain on property dispositions and impairment losses, net
|
(482.7
|
) |
(163.7
|
) | ||||
Depreciation and amortization
|
1,281.9
|
1,340.8
|
||||||
Operating lease
right-of-use
assets amortization
|
418.3
|
—
|
||||||
LIFO expense
|
18.9
|
15.7
|
||||||
Deferred income tax
|
(40.6
|
) |
(135.2
|
) | ||||
Contributions to pension and post-retirement benefit plans, net of (income) expense
|
(16.2
|
) |
(178.2
|
) | ||||
Amortization and
write-off
of deferred financing costs
|
35.4
|
38.3
|
||||||
Loss on debt extinguishment
|
65.8
|
9.5
|
||||||
Equity-based compensation expense
|
24.8
|
35.5
|
||||||
Other
|
8.9
|
(35.9
|
) | |||||
Changes in operating assets and liabilities:
|
|
|
||||||
Receivables, net
|
84.9
|
47.1
|
||||||
Inventories, net
|
(310.4
|
) |
(234.0
|
) | ||||
Accounts payable, accrued salaries and wages and other accrued liabilities
|
322.4
|
347.4
|
||||||
Operating lease liabilities
|
(385.5
|
) |
—
|
|||||
Other operating assets and liabilities
|
(37.5
|
) |
(13.7
|
) | ||||
Net cash provided by operating activities
|
1,387.0
|
1,069.1
|
||||||
Cash flows from investing activities:
|
|
|
|
|
|
|
||
Payments for property, equipment and intangibles, including payments for lease buyouts
|
(1,083.7
|
) |
(916.9
|
) | ||||
Proceeds from sale of assets
|
1,061.0
|
529.3
|
||||||
Other
|
(2.7
|
) |
27.0
|
|||||
Net cash used in investing activities
|
(25.4
|
) |
(360.6
|
) | ||||
|
40 weeks ended
|
|||||||
|
November 30, 2019
|
|
December 1, 2018
|
|
||||
Cash flows from financing activities:
|
|
|
|
|
|
|
||
Proceeds from issuance of long-term debt
|
$ |
1,518.0
|
$ |
1,365.8
|
||||
Payments on long-term borrowings
|
(3,300.8
|
) |
(2,113.8
|
) | ||||
Payments of obligations under finance leases
|
(78.3
|
) |
(74.5
|
) | ||||
Payments for debt financing costs
|
(25.5
|
) |
(18.6
|
) | ||||
Purchase of treasury stock, at cost
|
—
|
(25.8
|
) | |||||
Other
|
(26.1
|
) |
(36.3
|
) | ||||
Net cash used in financing activities
|
(1,912.7
|
) |
(903.2
|
) | ||||
Net decrease in cash and cash equivalents and restricted cash
|
(551.1
|
) |
(194.7
|
) | ||||
Cash and cash equivalents and restricted cash at beginning of period
|
967.7
|
680.8
|
||||||
Cash and cash equivalents and restricted cash at end of period
|
$ |
416.6
|
$ |
486.1
|
||||
|
Common Stock
|
Additional
paid in capital |
|
Treasury
stock |
|
Accumulated
other comprehensive income |
|
Retained
earnings (accumulated deficit) |
|
Total
stockholders’ equity |
|
|||||||||||||||||
|
Shares
|
|
Amount
|
|
||||||||||||||||||||||||
Balance as of February 23, 2019
|
277,882,010
|
$ |
2.8
|
$ |
1,814.2
|
$ |
(25.8
|
) | $ |
91.3
|
$ |
(431.8
|
) | $ |
1,450.7
|
|||||||||||||
Issuance of common stock to Company’s parents
|
1,715,302
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||||||
Equity-based compensation
|
—
|
—
|
24.8
|
—
|
—
|
—
|
24.8
|
|||||||||||||||||||||
Employee tax withholding on vesting of phantom units
|
—
|
—
|
(14.7
|
) |
—
|
—
|
—
|
(14.7
|
) | |||||||||||||||||||
Adoption of new accounting standards, net of tax
|
—
|
—
|
—
|
—
|
16.6
|
558.0
|
574.6
|
|||||||||||||||||||||
Net income
|
—
|
—
|
—
|
—
|
—
|
398.6
|
398.6
|
|||||||||||||||||||||
Other comprehensive loss, net of tax
|
—
|
—
|
—
|
—
|
(22.3
|
) |
—
|
(22.3
|
) | |||||||||||||||||||
Other activity
|
—
|
—
|
(0.8
|
) |
—
|
—
|
(0.3
|
) |
(1.1
|
) | ||||||||||||||||||
Balance as of November 30, 2019
|
279,597,312
|
$ |
2.8
|
$ |
1,823.5
|
$ |
(25.8
|
) | $ |
85.6
|
$ |
524.5
|
$ |
2,410.6
|
||||||||||||||
Balance as of February 24, 2018
|
279,654,028
|
$ |
2.8
|
$ |
1,773.3
|
$ |
—
|
$ |
191.1
|
$ |
(569.0
|
) | $ |
1,398.2
|
||||||||||||||
Equity-based compensation
|
—
|
—
|
35.5
|
—
|
—
|
—
|
35.5
|
|||||||||||||||||||||
Employee tax withholding on vesting of phantom units
|
—
|
—
|
(15.3
|
) |
—
|
—
|
—
|
(15.3
|
) | |||||||||||||||||||
Treasury stock purchases, at cost
|
(1,772,018
|
) |
—
|
—
|
(25.8
|
) |
—
|
—
|
(25.8
|
) | ||||||||||||||||||
Net loss
|
—
|
—
|
—
|
—
|
—
|
(4.5
|
) |
(4.5
|
) | |||||||||||||||||||
Other comprehensive income, net of tax
|
—
|
—
|
—
|
—
|
1.0
|
—
|
1.0
|
|||||||||||||||||||||
Other activity
|
—
|
—
|
(4.8
|
) |
—
|
—
|
5.8
|
1.0
|
||||||||||||||||||||
Balance as of December 1, 2018
|
277,882,010
|
$ |
2.8
|
$ |
1,788.7
|
$ |
(25.8
|
) | $ |
192.1
|
$ |
(567.7
|
) | $ |
1,390.1
|
|||||||||||||
|
40 weeks ended
|
|||||||||||||||
|
November 30,
2019 |
December 1,
2018 |
||||||||||||||
|
Amount
(1)
|
|
% of
Total |
|
Amount
(1)
|
|
% of
Total |
|
||||||||
Non-perishables(2)
|
$ |
20,362.4
|
43.3
|
% | $ |
20,186.0
|
43.4
|
% | ||||||||
Perishables(3)
|
19,347.7
|
41.1
|
19,099.1
|
41.0
|
||||||||||||
Pharmacy
|
3,958.2
|
8.4
|
3,847.0
|
8.3
|
||||||||||||
Fuel
|
2,664.0
|
5.7
|
2,785.4
|
6.0
|
||||||||||||
Other(4)
|
686.0
|
1.5
|
600.4
|
1.3
|
||||||||||||
Net sales and other revenue
|
$ |
47,018.3
|
100.0
|
% | $ |
46,517.9
|
100.0
|
% | ||||||||
(1) | eCommerce related sales are included in the categories to which the revenue pertains. |
(2) | Consists primarily of general merchandise, grocery and frozen foods. |
(3) | Consists primarily of produce, dairy, meat, deli, floral and seafood. |
(4) | Consists primarily of wholesale revenue to third parties, commissions and other miscellaneous revenue. |
Level 1
|
—
|
Quoted prices in active markets for identical assets or liabilities;
|
||
Level 2
|
—
|
Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable; and
|
||
Level 3
|
—
|
Unobservable inputs in which little or no market activity exists, requiring an entity to develop its own assumptions that market participants would use to value the asset or liability.
|
|
Fair Value Measurements
|
|||||||||||||||
|
Total
|
|
Quoted prices
in active markets
for identical
assets
(Level 1)
|
|
Significant
observable
inputs
(Level 2)
|
|
Significant
unobservable
inputs
(Level 3)
|
|
||||||||
Assets:
|
|
|
|
|
||||||||||||
Short-term investments(1)
|
$ |
11.7
|
$ |
9.2
|
$ |
2.5
|
$ |
—
|
||||||||
Non-current
investments(2)
|
86.9
|
31.3
|
55.6
|
—
|
||||||||||||
Total
|
$ |
98.6
|
$ |
40.5
|
$ |
58.1
|
$ |
—
|
||||||||
Liabilities:
|
|
|
|
|
||||||||||||
Derivative contracts(3)
|
$ |
56.7
|
$ |
—
|
$ |
56.7
|
$ |
—
|
||||||||
Total
|
$ |
56.7
|
$ |
—
|
$ |
56.7
|
$ |
—
|
||||||||
(1) | Primarily relates to Mutual Funds. Included in Other current assets. |
(2) | Primarily relates to investments in publicly traded stock classified as available for sale (Level 1) and U.S. Treasury Notes and Corporate Bonds (Level 2). Included in Other assets. |
(3) | Primarily relates to interest rate swaps. Included in Other current liabilities. |
|
Fair Value Measurements
|
|||||||||||||||
|
Total
|
|
Quoted prices
in active markets
for identical
assets
(Level 1)
|
|
Significant
observable
inputs
(Level 2)
|
|
Significant
unobservable
inputs
(Level 3)
|
|
||||||||
Assets:
|
|
|
|
|
||||||||||||
Cash equivalents:
|
|
|
|
|
||||||||||||
Money market
|
$ |
489.0
|
$ |
489.0
|
$ |
—
|
$ |
—
|
||||||||
Short-term investments(1)
|
23.1
|
21.0
|
2.1
|
—
|
||||||||||||
Non-current
investments(2)
|
84.2
|
30.5
|
53.7
|
—
|
||||||||||||
Total
|
$ |
596.3
|
$ |
540.5
|
$ |
55.8
|
$ |
—
|
||||||||
Liabilities:
|
||||||||||||||||
Derivative contracts(3)
|
$ |
21.1
|
$ |
—
|
$ |
21.1
|
$ |
—
|
||||||||
Total
|
$ |
21.1
|
$ |
—
|
$ |
21.1
|
$ |
—
|
||||||||
(1) | Primarily relates to Mutual Funds. Included in Other current assets. |
(2) | Primarily relates to investments in publicly traded stock classified as available for sale (Level 1) and U.S. Treasury Notes and Corporate Bonds (Level 2). Included in Other assets. |
(3) | Primarily relates to interest rate swaps. Included in Other current liabilities. |
|
Amount of (loss) income recognized
from derivatives |
|
|
|||||||||
Derivatives designated as hedging instruments
|
40 weeks ended
November 30, 2019 |
|
40 weeks ended
December 1, 2018 |
|
Location of (loss)
income recognized from derivatives |
|
||||||
Designated interest rate swaps
|
$ |
(33.3
|
) | $ |
4.3
|
Other comprehensive income (loss), net of tax
|
|
November 30,
2019 |
|
February 23,
2019 |
|
||||
Albertsons Term Loans due 2025 to 2026, interest rate range of 4.45% to 5.69%
|
$ |
2,311.5
|
$ |
4,610.7
|
||||
Senior Unsecured Notes due 2024, 2025, 2026, 2027 and 2028, interest rate of 6.625%, 5.750%, 7.5%, 4.625% and 5.875%, respectively
|
4,554.3
|
3,071.6
|
||||||
New Albertsons L.P. Notes due 2026 to 2031, interest rate range of 6.52% to 8.70%
|
465.5
|
1,322.3
|
||||||
Safeway Inc. Notes due 2020 to 2031, interest rate range of 3.95% to 7.45%
|
641.9
|
675.3
|
||||||
ABL Facility, average interest rate of 5.0%
|
18.0
|
—
|
||||||
Other Notes Payable, unsecured
|
37.3
|
125.4
|
||||||
Mortgage Notes Payable, secured
|
18.4
|
18.8
|
||||||
Finance lease obligations (see Note 5)
|
702.3
|
762.3
|
||||||
Total debt
|
8,749.2
|
10,586.4
|
||||||
Less current maturities
|
(133.3
|
) |
(148.8
|
) | ||||
Long-term portion
|
$ |
8,615.9
|
$ |
10,437.6
|
||||
|
Classification
|
40 weeks ended
November 30, 2019 |
|
|||
Operating lease cost(1)
|
Cost of sales and Selling and administrative expenses(3)
|
$ |
748.1
|
|||
Finance lease cost
|
|
|
||||
Amortization of lease assets
|
Cost of sales and Selling and administrative expenses(3)
|
70.1
|
||||
Interest on lease liabilities
|
Interest expense, net
|
62.2
|
||||
Variable lease cost(2)
|
Cost of sales and Selling and administrative expenses(3)
|
299.3
|
||||
Sublease income
|
Net sales and other revenue
|
(83.6
|
) | |||
Total lease cost, net
|
|
$ |
1,096.1
|
|||
(1) | Includes short-term lease cost, which is immaterial. |
(2) |
Represents variable lease costs for both operating and finance leases. Includes contingent rent expense and other
non-fixed
lease related costs, including property taxes, common area maintenance and property insurance.
|
(3) | Supply chain-related amounts are included in Cost of sales. |
|
Classification
|
November 30,
2019 |
|
|||
Assets
|
|
|
|
|
||
Operating
|
Operating lease
right-of-use
assets
|
$ |
5,836.1
|
|||
Finance
|
Property and equipment, net
|
458.8
|
||||
Total lease assets
|
|
$ |
6,294.9
|
|||
Liabilities
|
|
|
|
|
||
Current
|
|
|
||||
Operating
|
Current maturities of operating lease obligations
|
$ |
549.7
|
|||
Finance
|
Current maturities of long-term debt and finance lease obligations
|
101.1
|
||||
Long-term
|
|
|
||||
Operating
|
Long-term operating lease obligations
|
5,430.5
|
||||
Finance
|
Long-term debt and finance lease obligations
|
601.2
|
||||
Total lease liabilities
|
|
$ |
6,682.5
|
|||
|
40 weeks ended
November 30, 2019 |
|
||
Cash paid for amounts included in the measurement of lease liabilities
|
|
|||
Operating cash flows from operating leases
|
700.2
|
|||
Operating cash flows from finance leases
|
62.2
|
|||
Financing cash flows from finance leases
|
78.3
|
|||
ROU assets obtained in exchange for operating lease obligations
|
999.8
|
|||
ROU assets obtained in exchange for finance lease obligations
|
—
|
|||
Weighted average remaining lease term—operating leases (in years)
|
12.2
|
|||
Weighted average remaining lease term—finance leases (in years)
|
9.1
|
|||
Weighted average discount rate—operating leases
|
7.1
|
% | ||
Weighted average discount rate—finance leases
|
13.7
|
% |
|
Lease Obligations
|
|||||||
Fiscal year
|
Operating Leases
|
|
Finance Leases
|
|
||||
Remainder of 2019
|
$ |
224.0
|
$ |
39.8
|
||||
2020
|
947.0
|
147.6
|
||||||
2021
|
897.5
|
137.1
|
||||||
2022
|
838.4
|
125.8
|
||||||
2023
|
767.1
|
116.2
|
||||||
Thereafter
|
5,537.1
|
519.7
|
||||||
Total future minimum obligations
|
9,211.1
|
1,086.2
|
||||||
Less interest
|
(3,230.9
|
) |
(383.9
|
) | ||||
Present value of net future minimum lease obligations
|
5,980.2
|
702.3
|
||||||
Less current portion
|
(549.7
|
) |
(101.1
|
) | ||||
Long-term obligations
|
$ |
5,430.5
|
$ |
601.2
|
||||
|
Lease Obligations
|
|||||||
Fiscal year
|
Operating Leases
|
|
Capital Leases
|
|
||||
2019
|
$ |
879.7
|
$ |
170.5
|
||||
2020
|
840.5
|
151.3
|
||||||
2021
|
783.2
|
134.9
|
||||||
2022
|
723.6
|
123.1
|
||||||
2023
|
651.0
|
114.1
|
||||||
Thereafter
|
4,338.6
|
509.1
|
||||||
Total future minimum obligations
|
$ |
8,216.6
|
1,203.0
|
|||||
Less interest
|
|
(440.7
|
) | |||||
Present value of net future minimum lease obligations
|
|
762.3
|
||||||
Less current portion
|
|
(97.3
|
) | |||||
Long-term obligations
|
|
$ |
665.0
|
|||||
|
40 weeks ended
|
|||||||||||||||
|
Pension
|
Other post-retirement
benefits |
||||||||||||||
|
November 30,
2019 |
|
December 1,
2018 |
|
November 30,
2019 |
|
December 1,
2018 |
|
||||||||
Estimated return on plan assets
|
$ |
(84.6
|
) | $ |
(86.6
|
) | $ |
—
|
$ |
—
|
||||||
Service cost
|
11.3
|
40.3
|
0.4
|
0.8
|
||||||||||||
Interest cost
|
62.0
|
66.0
|
0.5
|
0.4
|
||||||||||||
Amortization of prior service cost
|
0.3
|
—
|
2.8
|
2.8
|
||||||||||||
Amortization of net actuarial loss (gain)
|
0.4
|
(4.8
|
) |
(0.3
|
) |
(0.2
|
) | |||||||||
(Income) expense, net
|
$ |
(10.6
|
) | $ |
14.9
|
$ |
3.4
|
$ |
3.8
|
|||||||
|
40 weeks ended November 30, 2019
|
|||||||||||||||
|
Total
|
|
Interest
rate
swaps |
|
Pension and
Post-retirement
benefit plans |
|
Other
|
|
||||||||
Beginning balance
|
$ |
91.3
|
$ |
3.4
|
$ |
88.8
|
$ |
(0.9
|
) | |||||||
Cumulative effect of accounting change(1)
|
16.6
|
1.2
|
14.9
|
0.5
|
||||||||||||
Other comprehensive (loss) income before reclassifications
|
(31.8
|
) |
(44.9
|
) |
10.1
|
3.0
|
||||||||||
Amounts reclassified from accumulated other comprehensive income
|
1.5
|
(1.7
|
) |
3.2
|
—
|
|||||||||||
Tax benefit (expense)
|
8.0
|
12.1
|
(3.4
|
) |
(0.7
|
) | ||||||||||
Current-period other comprehensive (loss) income, net of tax
|
(5.7
|
) |
(33.3
|
) |
24.8
|
2.8
|
||||||||||
Ending balance
|
$ |
85.6
|
$ |
(29.9
|
) | $ |
113.6
|
$ |
1.9
|
|||||||
|
40 weeks ended December 1, 2018
|
|||||||||||||||
|
Total
|
|
Interest
rate
swaps |
|
Pension and
Post-retirement
benefit plans |
|
Other
|
|
||||||||
Beginning balance
|
$ |
191.1
|
$ |
18.9
|
$ |
171.9
|
$ |
0.3
|
||||||||
Other comprehensive income (loss) before reclassifications
|
3.8
|
5.5
|
—
|
(1.7
|
) | |||||||||||
Amounts reclassified from accumulated other comprehensive income
|
(2.5
|
) |
0.4
|
(2.2
|
) |
(0.7
|
) | |||||||||
Tax (expense) benefit
|
(0.3
|
) |
(1.6
|
) |
0.6
|
0.7
|
||||||||||
Current-period other comprehensive income (loss), net of tax
|
1.0
|
4.3
|
(1.6
|
) |
(1.7
|
) | ||||||||||
Ending balance
|
$ |
192.1
|
$ |
23.2
|
$ |
170.3
|
$ |
(1.4
|
) | |||||||
|
40 weeks ended
November 30, 2019 |
|
40 weeks ended
December 1, 2018 |
|
||||
Net Income (loss)
|
$ |
398.6
|
$ |
(4.5
|
) | |||
Weighted average common shares outstanding (1)
|
279.6
|
280.6
|
||||||
Dilutive effect of potential common shares (2)
|
0.2
|
—
|
||||||
Weighted average common shares and potential dilutive common shares outstanding
|
279.8
|
280.6
|
||||||
Basic net income (loss) per common share
|
$ |
1.43
|
$ |
(0.02
|
) | |||
Diluted net income (loss) per common share
|
1.42
|
(0.02
|
) |
(1) | The 40 weeks ended November 30, 2019 and December 1, 2018, includes 0.1 million and 0.9 million common shares remaining to be issued, respectively. |
(2) | There were no potential common shares outstanding that were antidilutive for the 40 weeks ended November 30, 2019. For the 40 weeks ended December 1, 2018, there were 0.7 million potential common shares excluded from the diluted net income (loss) per share calculations because they would have been antidilutive. |
|
February 23,
2019 |
|
February 24,
2018 |
|
||||
ASSETS
|
|
|
|
|
|
|
||
Current assets
|
|
|
|
|
|
|
||
Cash and cash equivalents
|
$ |
926.1
|
$ |
670.3
|
||||
Receivables, net
|
586.2
|
615.3
|
||||||
Inventories, net
|
4,332.8
|
4,421.1
|
||||||
Prepaid assets
|
316.2
|
368.6
|
||||||
Other current assets
|
88.7
|
73.3
|
||||||
Total current assets
|
6,250.0
|
6,148.6
|
||||||
Property and equipment, net
|
9,861.3
|
10,770.3
|
||||||
Intangible assets, net
|
2,834.5
|
3,142.5
|
||||||
Goodwill
|
1,183.3
|
1,183.3
|
||||||
Other assets
|
647.5
|
567.6
|
||||||
TOTAL ASSETS
|
$ |
20,776.6
|
$ |
21,812.3
|
||||
LIABILITIES
|
|
|
|
|
|
|
||
Current liabilities
|
|
|
|
|
|
|
||
Accounts payable
|
$ |
2,918.7
|
$ |
2,833.0
|
||||
Accrued salaries and wages
|
1,054.7
|
984.1
|
||||||
Current maturities of long-term debt and capitalized lease obligations
|
148.8
|
168.2
|
||||||
Current portion of self-insurance liability
|
306.8
|
296.0
|
||||||
Taxes other than income taxes
|
309.0
|
323.5
|
||||||
Other current liabilities
|
414.7
|
424.8
|
||||||
|
|
|||||||
Total current liabilities
|
5,152.7
|
5,029.6
|
||||||
Long-term debt and capitalized lease obligations
|
10,437.6
|
11,707.6
|
||||||
Deferred income taxes
|
561.4
|
579.9
|
||||||
Long-term self-insurance liability
|
839.5
|
921.7
|
||||||
Other long-term liabilities
|
2,334.7
|
2,175.3
|
||||||
Commitments and contingencies
|
|
|
||||||
STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
||
Preferred stock, $0.01 par value; 30,000,000 shares authorized, no shares issued and outstanding as of February 23, 2019 and February 24, 2018, respectively
|
—
|
—
|
||||||
Common stock, $0.01 par value; 1,000,000,000 shares authorized, 277,882,010 and 279,654,028 shares issued and outstanding as of February 23, 2019 and February 24, 2018, respectively
|
2.8
|
2.8
|
||||||
Additional
paid-in
capital
|
1,814.2
|
1,773.3
|
||||||
Treasury stock, at cost, 1,772,018 and no shares held as of February 23, 2019 and February 24, 2018, respectively
|
(25.8
|
) |
—
|
|||||
Accumulated other comprehensive income
|
91.3
|
191.1
|
||||||
Accumulated deficit
|
(431.8
|
) |
(569.0
|
) | ||||
Total stockholders’ equity
|
1,450.7
|
1,398.2
|
||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
|
$ |
20,776.6
|
$ |
21,812.3
|
||||
|
52 weeks ended
February 23, 2019 |
|
52 weeks ended
February 24, 2018 |
|
52 weeks ended
February 25, 2017 |
|
||||||
Net sales and other revenue
|
$ |
60,534.5
|
$ |
59,924.6
|
$ |
59,678.2
|
||||||
Cost of sales
|
43,639.9
|
43,563.5
|
43,037.7
|
|||||||||
Gross profit
|
16,894.6
|
16,361.1
|
16,640.5
|
|||||||||
Selling and administrative expenses
|
16,272.3
|
16,208.7
|
16,072.1
|
|||||||||
(Gain) loss on property dispositions and impairment losses, net
|
(165.0
|
) |
66.7
|
(39.2
|
) | |||||||
Goodwill impairment
|
—
|
142.3
|
—
|
|||||||||
Operating income (loss)
|
787.3
|
(56.6
|
) |
607.6
|
||||||||
Interest expense, net
|
830.8
|
874.8
|
1,003.8
|
|||||||||
Loss (gain) on debt extinguishment
|
8.7
|
(4.7
|
) |
111.7
|
||||||||
Other income
|
(104.4
|
) |
(9.2
|
) |
(44.3
|
) | ||||||
Income (loss) before income taxes
|
52.2
|
(917.5
|
) |
(463.6
|
) | |||||||
Income tax benefit
|
(78.9
|
) |
(963.8
|
) |
(90.3
|
) | ||||||
Net income (loss)
|
$ |
131.1
|
$ |
46.3
|
$ |
(373.3
|
) | |||||
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|||
(Loss) gain on interest rate swaps, net of tax
|
(15.5
|
) |
47.0
|
39.4
|
||||||||
Recognition of pension (loss) gain, net of tax
|
(83.1
|
) |
92.2
|
82.0
|
||||||||
Foreign currency translation adjustment, net of tax
|
(0.3
|
) |
65.0
|
(20.5
|
) | |||||||
Other
|
(0.9
|
) |
(0.3
|
) |
(1.0
|
) | ||||||
Other comprehensive (loss) income
|
$ |
(99.8
|
) | $ |
203.9
|
$ |
99.9
|
|||||
Comprehensive income (loss)
|
$ |
31.3
|
$ |
250.2
|
$ |
(273.4
|
) | |||||
Net income (loss) per common share
|
|
|
|
|||||||||
Basic net income (loss) per common share
|
$ |
0.47
|
$ |
0.17
|
$ |
(1.33
|
) | |||||
Diluted net income (loss) per common share
|
0.47
|
0.17
|
(1.33
|
) | ||||||||
Weighted average common shares outstanding
|
|
|
|
|||||||||
Basic
|
280.1
|
279.7
|
279.7
|
|||||||||
Diluted
|
280.2
|
279.7
|
279.7
|
|
52 weeks ended
February 23, 2019 |
|
52 weeks ended
February 24, 2018 |
|
52 weeks ended
February 25, 2017 |
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|||
Net income (loss)
|
$ |
131.1
|
$ |
46.3
|
$ |
(373.3
|
) | |||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
|||||||||
Net (gain) loss on property dispositions, asset impairment and lease exit costs
|
(165.0
|
) |
66.7
|
(39.2
|
) | |||||||
Goodwill impairment
|
—
|
142.3
|
—
|
|||||||||
Depreciation and amortization
|
1,738.8
|
1,898.1
|
1,804.8
|
|||||||||
LIFO expense (benefit)
|
8.0
|
3.0
|
(7.9
|
) | ||||||||
Deferred income tax
|
(81.5
|
) |
(1,094.1
|
) |
(219.5
|
) | ||||||
Pension and post-retirement benefits expense
|
24.5
|
(0.9
|
) |
95.5
|
||||||||
Contributions to pension and post-retirement
benefit plans |
(199.3
|
) |
(21.9
|
) |
(11.5
|
) | ||||||
Amortization and
write-off
of deferred financing costs
|
42.7
|
56.1
|
84.4
|
|||||||||
Loss (gain) on debt extinguishment
|
8.7
|
(4.7
|
) |
111.7
|
||||||||
Equity-based compensation expense
|
47.7
|
45.9
|
53.3
|
|||||||||
Other
|
(44.0
|
) |
104.1
|
63.3
|
||||||||
Changes in operating assets and liabilities, net of effects of acquisition of businesses:
|
|
|
|
|||||||||
Receivables, net
|
28.8
|
21.7
|
(9.2
|
) | ||||||||
Inventories, net
|
80.3
|
45.6
|
2.7
|
|||||||||
Accounts payable, accrued salaries and
wages and other accrued liabilities |
98.4
|
(158.2
|
) |
233.6
|
||||||||
Self-insurance assets and liabilities
|
(48.7
|
) |
(55.3
|
) |
(42.5
|
) | ||||||
Other operating assets and liabilities
|
17.4
|
(75.9
|
) |
67.3
|
||||||||
Net cash provided by operating activities
|
1,687.9
|
1,018.8
|
1,813.5
|
|||||||||
|
|
|
||||||||||
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|||
Business acquisitions, net of cash acquired
|
—
|
(148.8
|
) |
(220.6
|
) | |||||||
Payments for property, equipment, intangibles, including payments for lease buyouts
|
(1,362.6
|
) |
(1,547.0
|
) |
(1,414.9
|
) | ||||||
Proceeds from sale of assets
|
1,252.0
|
939.2
|
477.0
|
|||||||||
Proceeds from sale of Casa Ley
|
—
|
344.2
|
—
|
|||||||||
Other
|
23.8
|
(56.6
|
) |
78.9
|
||||||||
|
|
|
||||||||||
Net cash used in investing activities
|
(86.8
|
) |
(469.0
|
) |
(1,079.6
|
) | ||||||
|
52 weeks ended
February 23, 2019 |
|
52 weeks ended
February 24, 2018 |
|
52 weeks ended
February 25, 2017 |
|
||||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|||
Proceeds from issuance of long-term debt
|
$ |
1,969.8
|
$ |
290.0
|
$ |
3,053.1
|
||||||
Payments on long-term borrowings
|
(3,082.3
|
) |
(870.6
|
) |
(2,832.7
|
) | ||||||
Payment of make-whole premium on debt extinguishment
|
(3.1
|
) |
—
|
(87.7
|
) | |||||||
Payments of obligations under capital leases
|
(97.5
|
) |
(107.2
|
) |
(123.2
|
) | ||||||
Payments for debt financing costs
|
(27.0
|
) |
(1.5
|
) |
(31.8
|
) | ||||||
Payment of Casa Ley contingent value right
|
—
|
(222.0
|
) |
—
|
||||||||
Employee tax withholding on vesting of phantom units
|
(15.3
|
) |
(17.5
|
) |
(17.4
|
) | ||||||
Member distributions
|
—
|
(250.0
|
) |
—
|
||||||||
Purchase of treasury stock, at cost
|
(25.8
|
) |
—
|
—
|
||||||||
Proceeds from financing leases
|
—
|
137.6
|
—
|
|||||||||
Other
|
(33.0
|
) |
(56.9
|
) |
(58.1
|
) | ||||||
Net cash used in financing activities
|
(1,314.2
|
) |
(1,098.1
|
) |
(97.8
|
) | ||||||
Net increase (decrease) in cash and cash equivalents and restricted cash
|
286.9
|
(548.3
|
) |
636.1
|
||||||||
Cash and cash equivalents and restricted cash at beginning of period
|
680.8
|
1,229.1
|
593.0
|
|||||||||
|
|
|
||||||||||
Cash and cash equivalents and restricted cash at end of period
|
$ |
967.7
|
$ |
680.8
|
$ |
1,229.1
|
||||||
|
|
|
||||||||||
Reconciliation of capital investments:
|
|
|
|
|
|
|
|
|
|
|||
Payments for property and equipment, including payments for lease buyouts
|
$ |
(1,362.6
|
) | $ |
(1,547.0
|
) | $ |
(1,414.9
|
) | |||
Payments for lease buyouts
|
18.9
|
26.5
|
39.4
|
|||||||||
|
|
|
||||||||||
Total payments for capital investments, excluding lease buyouts
|
$ |
(1,343.7
|
) | $ |
(1,520.5
|
) | $ |
(1,375.5
|
) | |||
|
|
|
||||||||||
Supplemental cash flow information:
|
|
|
|
|
|
|
|
|
|
|||
Non-cash
investing and financing activities were as follows:
|
|
|
|
|||||||||
Additions of capital lease obligations, excluding business acquisitions
|
$ |
6.0
|
$ |
31.0
|
$ |
11.5
|
||||||
Purchases of property and equipment included in accounts payable
|
243.1
|
179.7
|
220.2
|
|||||||||
Interest and income taxes paid:
|
|
|
|
|||||||||
Interest paid, net of amount capitalized
|
805.9
|
813.5
|
924.2
|
|||||||||
Income taxes paid
|
18.2
|
15.8
|
129.2
|
|
February 23,
2019 |
|
February 24,
2018 |
|
||||
Beginning balance
|
$ |
1,217.7
|
$ |
1,264.9
|
||||
Expense
|
323.5
|
314.4
|
||||||
Claim payments
|
(279.3
|
) |
(287.6
|
) | ||||
Other reductions(1)
|
(115.6
|
) |
(74.0
|
) | ||||
Ending balance
|
1,146.3
|
1,217.7
|
||||||
Less current portion
|
(306.8
|
) |
(296.0
|
) | ||||
Long-term portion
|
$ |
839.5
|
$ |
921.7
|
||||
(1) | Primarily reflects the systematic adjustments to the fair value of assumed self-insurance liabilities from acquisitions and actuarial adjustments for claims experience. |
|
Fiscal
2018 |
Fiscal
2017 |
Fiscal
2016 |
|||||||||||||||||||||
|
Amount
(1)
|
|
% of
Total |
|
Amount
(1) |
|
% of
Total |
|
Amount
(1) |
|
% of
Total |
|
||||||||||||
Non-perishables
(2)
|
$ |
26,371.8
|
43.6
|
% | $ |
26,522.0
|
44.3
|
% | $ |
26,699.2
|
44.7
|
% | ||||||||||||
Perishables(3)
|
24,920.9
|
41.2
|
% |
24,583.7
|
41.0
|
% |
24,398.5
|
40.9
|
% | |||||||||||||||
Pharmacy
|
4,986.6
|
8.2
|
% |
5,002.6
|
8.3
|
% |
5,119.2
|
8.6
|
% | |||||||||||||||
Fuel
|
3,455.9
|
5.7
|
% |
3,104.6
|
5.2
|
% |
2,693.4
|
4.5
|
% | |||||||||||||||
Other(4)
|
799.3
|
1.3
|
% |
711.7
|
1.2
|
% |
767.9
|
1.3
|
% | |||||||||||||||
Total
|
$ |
60,534.5
|
100.0
|
% | $ |
59,924.6
|
100.0
|
% | $ |
59,678.2
|
100.0
|
% | ||||||||||||
(1) | eCommerce related sales are included in the categories to which the revenue pertains. |
(2) | Consists primarily of general merchandise, grocery and frozen foods. |
(3) | Consists primarily of produce, dairy, meat, deli, floral and seafood. |
(4) | Consists primarily of lottery and various other commissions, rental income and other miscellaneous income. |
|
February 23,
2019 |
|
February 24,
2018 |
|
February 25,
2017 |
|
||||||
Cash and cash equivalents
|
$ |
926.1
|
$ |
670.3
|
$ |
1,219.2
|
||||||
Restricted cash
|
41.6
|
10.5
|
9.9
|
|||||||||
Cash and cash equivalents and restricted cash
|
$ |
967.7
|
$ |
680.8
|
$ |
1,229.1
|
||||||
|
June 2,
2016
|
|
||
Inventory
|
$ |
31.8
|
||
Other current assets
|
2.5
|
|||
Property and equipment
|
89.9
|
|||
Intangible assets, primarily pharmacy scripts and trade names
|
31.4
|
|||
Total assets acquired
|
155.6
|
|||
Capital lease obligations
|
35.2
|
|||
Other long-term liabilities
|
22.7
|
|||
Total liabilities assumed
|
57.9
|
|||
Net assets purchased
|
97.7
|
|||
Goodwill
|
16.1
|
|||
Total purchase consideration
|
$ |
113.8
|
||
|
February 23,
2019 |
|
February 24,
2018 |
|
||||
Beginning balance
|
$ |
58.2
|
$ |
44.4
|
||||
Additions
|
26.6
|
32.7
|
||||||
Payments
|
(16.6
|
) |
(17.9
|
) | ||||
Disposals
|
(1.7
|
) |
(1.0
|
) | ||||
Ending balance
|
$ |
66.5
|
$ |
58.2
|
||||
|
February 23,
2019 |
|
February 24,
2018 |
|
||||
Assets held for sale:
|
|
|
||||||
Beginning balance
|
$ |
29.9
|
$ |
3.1
|
||||
Transfers in
|
18.6
|
295.5
|
||||||
Disposals
|
(46.7
|
) |
(268.7
|
) | ||||
Ending balance
|
$ |
1.8
|
$ |
29.9
|
||||
Liabilities held for sale:
|
|
|
||||||
Beginning balance
|
$ |
10.5
|
$ |
15.4
|
||||
Transfers in
|
5.7
|
—
|
||||||
Disposals
|
(7.9
|
) |
(4.9
|
) | ||||
Ending balance
|
$ |
8.3
|
$ |
10.5
|
||||
|
February 23,
2019 |
|
February 24,
2018 |
|
||||
Land
|
$ |
2,382.7
|
$ |
2,624.7
|
||||
Buildings
|
4,968.4
|
5,407.9
|
||||||
Property under construction
|
652.2
|
579.3
|
||||||
Leasehold improvements
|
1,468.3
|
1,367.5
|
||||||
Fixtures and equipment
|
5,132.1
|
4,488.9
|
||||||
Property under capital leases
|
970.8
|
1,037.1
|
||||||
Total property and equipment
|
15,574.5
|
15,505.4
|
||||||
Accumulated depreciation and amortization
|
(5,713.2
|
) |
(4,735.1
|
) | ||||
Total property and equipment, net
|
$ |
9,861.3
|
$ |
10,770.3
|
||||
|
February 23,
2019 |
|
February 24,
2018 |
|
||||
Balance at beginning of year
|
$ |
1,183.3
|
$ |
1,167.8
|
||||
Acquisitions and related adjustments
|
—
|
157.8
|
||||||
Impairment
|
—
|
(142.3
|
) | |||||
Balance at end of year
|
$ |
1,183.3
|
$ |
1,183.3
|
||||
|
|
|
February 23,
2019 |
February 24,
2018 |
||||||||||||||||||||||||
|
Estimated
useful lives (Years) |
|
Gross
carrying amount |
|
Accumulated
amortization |
|
Net
|
|
Gross
carrying amount |
|
Accumulated
amortization |
|
Net
|
|
||||||||||||||
Trade names
|
40
|
$ |
1,959.1
|
$ |
(231.7
|
) | $ |
1,727.4
|
$ |
1,960.4
|
$ |
(174.1
|
) | $ |
1,786.3
|
|||||||||||||
Beneficial lease rights
|
12
|
892.0
|
(410.6
|
) |
481.4
|
918.3
|
(355.7
|
) |
562.6
|
|||||||||||||||||||
Customer prescription files
|
5
|
1,483.4
|
(1,276.1
|
) |
207.3
|
1,486.4
|
(1,078.1
|
) |
408.3
|
|||||||||||||||||||
Internally developed software
|
5
|
672.4
|
(348.1
|
) |
324.3
|
537.1
|
(246.3
|
) |
290.8
|
|||||||||||||||||||
Other intangible assets(1)
|
6
|
22.4
|
(14.4
|
) |
8.0
|
27.1
|
(7.9
|
) |
19.2
|
|||||||||||||||||||
Total finite-lived intangible assets
|
|
5,029.3
|
(2,280.9
|
) |
2,748.4
|
4,929.3
|
(1,862.1
|
) |
3,067.2
|
|||||||||||||||||||
Liquor licenses and restricted covenants
|
Indefinite
|
86.1
|
—
|
86.1
|
75.3
|
—
|
75.3
|
|||||||||||||||||||||
Total intangible assets, net
|
|
$ |
5,115.4
|
$ |
(2,280.9
|
) | $ |
2,834.5
|
$ |
5,004.6
|
$ |
(1,862.1
|
) | $ |
3,142.5
|
|||||||||||||
(1) | Other intangible assets consists of covenants not to compete, specialty accreditation and licenses and patents. |
Fiscal Year
|
Amortization
Expected |
|
||
2019
|
$ |
457.9
|
||
2020
|
217.8
|
|||
2021
|
191.8
|
|||
2022
|
163.8
|
|||
2023
|
119.0
|
|||
Thereafter
|
1,598.1
|
|||
Total
|
$ |
2,748.4
|
||
Level 1
|
—
|
Quoted prices in active markets for identical assets or liabilities;
|
||
Level 2
|
—
|
Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable;
|
||
Level 3
|
—
|
Unobservable inputs in which little or no market activity exists, requiring an entity to develop its own assumptions that market participants would use to value the asset or liability.
|
|
Fair Value Measurements
|
|||||||||||||||
|
Total
|
|
Quoted prices
in active markets
for identical
assets
(Level 1)
|
|
Significant
observable
inputs
(Level 2)
|
|
Significant
unobservable
inputs
(Level 3)
|
|
||||||||
Assets:
|
|
|
|
|
||||||||||||
Cash equivalents:
|
|
|
|
|
||||||||||||
Money Market
|
$ |
489.0
|
$ |
489.0
|
$ |
—
|
$ |
—
|
||||||||
Short-term investments(1)
|
23.1
|
21.0
|
2.1
|
—
|
||||||||||||
Non-current
investments(2)
|
84.2
|
30.5
|
53.7
|
—
|
||||||||||||
Total
|
$ |
596.3
|
$ |
540.5
|
$ |
55.8
|
$ |
—
|
||||||||
Liabilities:
|
||||||||||||||||
Derivative contracts(3)
|
$ |
21.1
|
$ |
—
|
$ |
21.1
|
$ |
—
|
||||||||
|
|
|||||||||||||||
Total
|
$ |
21.1
|
$ |
—
|
$ |
21.1
|
$ |
—
|
||||||||
(1) | Primarily relates to Mutual Funds. Included in Other current assets. |
(2) | Primarily relates to investments in publicly traded stock (Level 1) and U.S. Treasury Notes and Corporate Bonds (Level 2). Included in Other assets. |
(3) | Primarily relates to interest rate swaps. Included in Other current liabilities. |
|
Fair Value Measurements
|
|||||||||||||||
|
Total
|
|
Quoted prices
in active markets
for identical
assets
(Level 1)
|
|
Significant
observable
inputs
(Level 2)
|
|
Significant
unobservable
inputs
(Level 3)
|
|
||||||||
Assets:
|
|
|
|
|
||||||||||||
Cash equivalents:
|
|
|
|
|
||||||||||||
Money Market
|
$ |
198.0
|
$ |
198.0
|
$ |
—
|
$ |
—
|
||||||||
Short-term investments(1)
|
24.5
|
22.1
|
2.4
|
—
|
||||||||||||
Non-current
investments(2)
|
91.2
|
40.2
|
51.0
|
—
|
||||||||||||
Total
|
$ |
313.7
|
$ |
260.3
|
$ |
53.4
|
$ |
—
|
||||||||
Liabilities:
|
|
|
|
|
||||||||||||
Derivative contracts(3)
|
$ |
11.8
|
$ |
—
|
$ |
11.8
|
$ |
—
|
||||||||
Contingent consideration(4)
|
60.0
|
—
|
—
|
60.0
|
||||||||||||
Total
|
$ |
71.8
|
$ |
—
|
$ |
11.8
|
$ |
60.0
|
||||||||
(1) | Primarily relates to Mutual Funds. Included in Other current assets. |
(2) | Primarily relates to investments in publicly traded stock (Level 1) and U.S. Treasury Notes and Corporate Bonds (Level 2). Included in Other assets. |
(3) | Primarily relates to interest rate swaps. Included in Other current liabilities. |
(4) | Included in Other current liabilities and Other long-term liabilities. |
|
Contingent Consideration
|
|||||||
|
February 23,
2019 |
|
February 24,
2018 |
|
||||
Beginning balance
|
$ |
60.0
|
$ |
281.0
|
||||
Plated acquisition
|
—
|
60.1
|
||||||
Change in fair value
|
(59.3
|
) |
(50.9
|
) | ||||
Payments
|
(0.7
|
) |
(230.2
|
) | ||||
Ending balance
|
$ |
—
|
$ |
60.0
|
||||
|
Amount of (loss) income recognized
from derivatives |
|
|
|||||||||||||
Derivatives designated as hedging instruments
|
Fiscal
2018
|
|
Fiscal
2017
|
|
Fiscal
2016
|
|
Location of (loss)
income recognized from derivatives |
|
||||||||
Designated interest rate swaps
|
$ |
(15.5
|
) | $ |
47.0
|
$ |
39.4
|
Other comprehensive (loss) income
|
|
February 23,
2019 |
|
February 24,
2018 |
|
||||
Albertsons Term Loans, due 2022 to 2025, interest range of 4.32% to 5.69%
|
$ |
4,610.7
|
$ |
5,610.7
|
||||
Senior Unsecured Notes due 2024, 2025 and 2026, interest rate of 6.625%, 5.750% and 7.5%, respectively
|
3,071.6
|
2,476.1
|
||||||
Safeway Inc. 5.00% Senior Notes due 2019
|
—
|
269.5
|
||||||
Safeway Inc. 3.95% Senior Notes due 2020
|
137.2
|
137.5
|
||||||
Safeway Inc. 4.75% Senior Notes due 2021
|
130.6
|
130.8
|
||||||
New Albertson’s L.P. 6.52% to 7.15% Medium Term Notes due 2027 – 2028
|
154.0
|
190.9
|
||||||
Safeway Inc. 7.45% Senior Debentures due 2027
|
129.2
|
152.5
|
||||||
Safeway Inc. 7.25% Debentures due 2031
|
278.3
|
576.6
|
||||||
New Albertson’s L.P. 7.75% Debentures due 2026
|
143.0
|
140.1
|
||||||
New Albertson’s L.P. 7.45% Debentures due 2029
|
484.2
|
525.5
|
||||||
New Albertson’s L.P. 8.70% Debentures due 2030
|
186.8
|
186.6
|
||||||
New Albertson’s L.P. 8.00% Debentures due 2031
|
354.3
|
350.8
|
||||||
Other financing liabilities, unsecured
|
125.4
|
242.7
|
||||||
Mortgage notes payable, secured
|
18.8
|
20.9
|
||||||
Total debt
|
9,824.1
|
11,011.2
|
||||||
Less current maturities
|
(51.5
|
) |
(66.1
|
) | ||||
Long-term portion
|
$ |
9,772.6
|
$ |
10,945.1
|
||||
2019
|
$ |
51.5
|
||
2020
|
188.5
|
|||
2021
|
181.9
|
|||
2022
|
1,128.7
|
|||
2023
|
1,533.2
|
|||
Thereafter
|
7,002.5
|
|||
Total
|
$ |
10,086.3
|
||
|
Fiscal
2018 |
|
Fiscal
2017 |
|
Fiscal
2016 |
|
||||||
ABL Facility, senior secured and unsecured notes, term loans and debentures
|
$ |
698.3
|
$ |
701.5
|
$ |
764.3
|
||||||
Capital lease obligations
|
81.8
|
96.3
|
106.8
|
|||||||||
Amortization and write off of deferred financing costs
|
42.7
|
56.1
|
84.4
|
|||||||||
Amortization and write off of debt discounts
|
20.3
|
16.0
|
22.3
|
|||||||||
Other interest (income) expense
|
(12.3
|
) |
4.9
|
26.0
|
||||||||
Interest expense, net
|
$ |
830.8
|
$ |
874.8
|
$ |
1,003.8
|
||||||
|
Lease Obligations
|
|||||||
Fiscal year
|
Operating Leases
|
|
Capital Leases
|
|
||||
2019
|
$ |
879.7
|
$ |
170.5
|
||||
2020
|
840.5
|
151.3
|
||||||
2021
|
783.2
|
134.9
|
||||||
2022
|
723.6
|
123.1
|
||||||
2023
|
651.0
|
114.1
|
||||||
Thereafter
|
4,338.6
|
509.1
|
||||||
Total future minimum obligations
|
$8,216.6
|
1,203.0
|
||||||
Less interest
|
|
(440.7
|
) | |||||
Present value of net future minimum lease obligations
|
|
762.3
|
||||||
Less current portion
|
|
(97.3
|
) | |||||
Long-term obligations
|
|
$ |
665.0
|
|||||
|
Fiscal
2018 |
|
Fiscal
2017 |
|
Fiscal
2016 |
|
||||||
Minimum rent
|
$ |
853.5
|
$ |
831.6
|
$ |
792.2
|
||||||
Contingent rent
|
10.3
|
12.0
|
13.4
|
|||||||||
Total rent expense
|
863.8
|
843.6
|
805.6
|
|||||||||
Tenant rental income
|
(107.2
|
) |
(98.8
|
) |
(89.3
|
) | ||||||
Total rent expense, net of tenant rental income
|
$ |
756.6
|
$ |
744.8
|
$ |
716.3
|
||||||
|
Fiscal
2018 |
|
Fiscal
2017 |
|
Fiscal
2016 |
|
||||||
Current
|
|
|
|
|||||||||
Federal(1)
|
$ |
9.0
|
$ |
54.0
|
$ |
108.6
|
||||||
State(2)
|
(6.7
|
) |
26.5
|
20.6
|
||||||||
Foreign
|
0.3
|
49.8
|
—
|
|||||||||
Total Current
|
2.6
|
130.3
|
129.2
|
|||||||||
Deferred
|
|
|
|
|||||||||
Federal
|
(77.9
|
) |
(807.7
|
) |
(177.9
|
) | ||||||
State
|
(3.6
|
) |
(216.6
|
) |
(41.6
|
) | ||||||
Foreign
|
—
|
(69.8
|
) |
—
|
||||||||
Total Deferred
|
(81.5
|
) |
(1,094.1
|
) |
(219.5
|
) | ||||||
Income tax benefit
|
$ |
(78.9
|
) | $ |
(963.8
|
) | $ |
(90.3
|
) | |||
(1) | Federal current tax expense net of $12.8 million, $22.4 million and $31.2 million tax benefit of NOLs in fiscal 2018, fiscal 2017 and fiscal 2016, respectively. |
(2) | State current tax expense net of $9.5 million, $9.6 million and $3.8 million tax benefit of NOLs in fiscal 2018, fiscal 2017 and fiscal 2016, respectively. |
|
Fiscal
2018 |
|
Fiscal
2017 |
|
Fiscal
2016 |
|
||||||
Income tax expense (benefit) at federal statutory rate
|
$ |
11.0
|
$ |
(301.5
|
) | $ |
(162.3
|
) | ||||
State income taxes, net of federal benefit
|
0.7
|
(39.8
|
) |
(20.2
|
) | |||||||
Change in valuation allowance
|
(3.3
|
) |
(218.0
|
) |
107.1
|
|||||||
Tax Cuts and Jobs Act
|
(56.9
|
) |
(430.4
|
) |
—
|
|||||||
Unrecognized tax benefits
|
(16.2
|
) |
(36.5
|
) |
(18.7
|
) | ||||||
Member loss
|
—
|
83.1
|
16.6
|
|||||||||
Charitable donations
|
(4.4
|
) |
—
|
(11.1
|
) | |||||||
Tax Credits
|
(10.8
|
) |
(9.1
|
) |
(17.3
|
) | ||||||
Indemnification asset
|
—
|
—
|
5.1
|
|||||||||
CVR liability adjustment
|
—
|
(20.3
|
) |
7.5
|
||||||||
Reorganization of limited liability companies
|
—
|
46.7
|
—
|
|||||||||
Nondeductible equity-based compensation expense
|
3.8
|
1.6
|
4.2
|
|||||||||
Other
|
(2.8
|
) |
(39.6
|
) |
(1.2
|
) | ||||||
Income tax benefit
|
$ |
(78.9
|
) | $ |
(963.8
|
) | $ |
(90.3
|
) | |||
|
February 23,
2019 |
|
February 24,
2018 |
|
February 25,
2017 |
|
||||||
Beginning balance
|
$ |
134.9
|
$ |
387.6
|
$ |
286.8
|
||||||
Additions charged to income tax expense
|
3.5
|
141.0
|
107.1
|
|||||||||
Reductions credited to income tax expense
|
(6.8
|
) |
(359.0
|
) |
—
|
|||||||
Changes to other comprehensive income or loss and other
|
7.9
|
(34.7
|
) |
(6.3
|
) | |||||||
Ending balance
|
$ |
139.5
|
$ |
134.9
|
$ |
387.6
|
||||||
|
February 23,
2019 |
|
February 24,
2018 |
|
||||
Deferred tax assets:
|
||||||||
Compensation and benefits
|
$ |
132.0
|
$ |
122.3
|
||||
Net operating loss
|
165.9
|
160.5
|
||||||
Pension & postretirement benefits
|
195.6
|
194.7
|
||||||
Reserves
|
1.5
|
6.3
|
||||||
Self-Insurance
|
259.7
|
265.1
|
||||||
Tax credits
|
64.2
|
57.4
|
||||||
Other
|
58.7
|
59.3
|
||||||
Gross deferred tax assets
|
877.6
|
865.6
|
||||||
Less: valuation allowance
|
(139.5
|
) |
(134.9
|
) | ||||
Total deferred tax assets
|
738.1
|
730.7
|
||||||
Deferred tax liabilities:
|
||||||||
Debt discounts
|
62.8
|
73.7
|
||||||
Depreciation and amortization
|
876.1
|
903.5
|
||||||
Inventories
|
346.5
|
322.9
|
||||||
Other
|
14.1
|
10.5
|
||||||
Total deferred tax liabilities
|
1,299.5
|
1,310.6
|
||||||
Net deferred tax liability
|
$ |
(561.4
|
) | $ |
(579.9
|
) | ||
Noncurrent deferred tax asset
|
$ |
—
|
$ |
—
|
||||
Noncurrent deferred tax liability
|
(561.4
|
) |
(579.9
|
) | ||||
Total
|
$ |
(561.4
|
) | $ |
(579.9
|
) | ||
|
Fiscal
2018 |
|
Fiscal
2017 |
|
Fiscal
2016 |
|
||||||
Beginning balance
|
$ |
356.0
|
$ |
418.0
|
$ |
435.3
|
||||||
Increase related to tax positions taken in the current year
|
1.6
|
65.4
|
63.8
|
|||||||||
Increase related to tax positions taken in prior years
|
35.1
|
4.6
|
6.4
|
|||||||||
Decrease related to tax position taken in prior years
|
(0.4
|
) |
(70.0
|
) |
(71.0
|
) | ||||||
Decrease related to settlements with taxing authorities
|
(8.3
|
) |
(17.5
|
) |
(9.8
|
) | ||||||
Decrease related to lapse of statute of limitations
|
(7.8
|
) |
(44.5
|
) |
(6.7
|
) | ||||||
Ending balance
|
$ |
376.2
|
$ |
356.0
|
$ |
418.0
|
||||||
|
Pension
|
Other Post-Retirement
Benefits |
||||||||||||||
|
February 23,
2019 |
|
February 24,
2018 |
|
February 23,
2019 |
|
February 24,
2018 |
|
||||||||
Change in projected benefit obligation:
|
|
|
|
|
||||||||||||
Beginning balance
|
$ |
2,351.8
|
$ |
2,613.0
|
$ |
26.9
|
$ |
31.2
|
||||||||
Service cost
|
52.4
|
49.8
|
1.0
|
1.0
|
||||||||||||
Interest cost
|
85.8
|
88.3
|
0.5
|
0.9
|
||||||||||||
Actuarial loss (gain)
|
0.5
|
(56.6
|
) |
(2.4
|
) |
(4.5
|
) | |||||||||
Plan participant contributions
|
—
|
—
|
0.4
|
0.5
|
||||||||||||
Benefit payments
|
(167.8
|
) |
(78.7
|
) |
(2.6
|
) |
(2.2
|
) | ||||||||
Plan amendments
|
3.1
|
—
|
—
|
—
|
||||||||||||
Settlements
|
—
|
(264.0
|
) |
—
|
—
|
|||||||||||
Ending balance
|
$ |
2,325.8
|
$ |
2,351.8
|
$ |
23.8
|
$ |
26.9
|
||||||||
Change in fair value of plan assets:
|
|
|
|
|
||||||||||||
Beginning balance
|
$ |
1,814.0
|
$ |
1,934.8
|
$ |
—
|
$ |
—
|
||||||||
Actual return on plan assets
|
3.6
|
201.6
|
—
|
—
|
||||||||||||
Employer contributions
|
197.2
|
20.2
|
2.1
|
1.7
|
||||||||||||
Plan participant contributions
|
—
|
—
|
0.4
|
0.5
|
||||||||||||
Benefit payments (including settlements)
|
(167.8
|
) |
(342.6
|
) |
(2.5
|
) |
(2.2
|
) | ||||||||
Ending balance
|
$ |
1,847.0
|
$ |
1,814.0
|
$ |
—
|
$ |
—
|
||||||||
Components of net amount recognized in financial position:
|
|
|
|
|
||||||||||||
Other current liabilities
|
$ |
(6.7
|
) | $ |
(6.8
|
) | $ |
(2.1
|
) | $ |
(2.2
|
) | ||||
Other long-term liabilities
|
(472.1
|
) |
(531.0
|
) |
(21.7
|
) |
(24.7
|
) | ||||||||
Funded status
|
$ |
(478.8
|
) | $ |
(537.8
|
) | $ |
(23.8
|
) | $ |
(26.9
|
) | ||||
|
Pension
|
Other Post-Retirement
Benefits
|
||||||||||||||
|
February 23,
2019 |
|
February 24,
2018 |
|
February 23,
2019 |
|
February 24,
2018 |
|
||||||||
Net actuarial gain
|
$ |
(140.6
|
) | $ |
(256.4
|
) | $ |
(8.2
|
) | $ |
(6.0
|
) | ||||
Prior service cost
|
3.1
|
0.3
|
5.6
|
9.3
|
||||||||||||
|
$ |
(137.5
|
) | $ |
(256.1
|
) | $ |
(2.6
|
) | $ |
3.3
|
|||||
|
February 23,
2019 |
|
February 24,
2018 |
|
||||
Projected benefit obligation
|
$ |
2,325.8
|
$ |
2,351.8
|
||||
Accumulated benefit obligation
|
2,323.9
|
2,349.6
|
||||||
Fair value of plan assets
|
1,847.0
|
1,814.0
|
|
Pension
|
Other Post-
Retirement
Benefits
|
||||||||||||||
|
Fiscal
2018 |
|
Fiscal
2017 |
|
Fiscal
2018 |
|
Fiscal
2017 |
|
||||||||
Components of net expense:
|
|
|
|
|
||||||||||||
Estimated return on plan assets
|
$ |
(112.6
|
) | $ |
(119.6
|
) | $ |
—
|
$ |
—
|
||||||
Service cost
|
52.4
|
49.8
|
1.0
|
1.0
|
||||||||||||
Interest cost
|
85.8
|
88.3
|
0.5
|
0.9
|
||||||||||||
Amortization of prior service cost
|
0.1
|
0.1
|
3.7
|
3.7
|
||||||||||||
Amortization of net actuarial (gain) loss
|
(6.3
|
) |
0.4
|
(0.2
|
) |
(0.1
|
) | |||||||||
Collington acquisition
|
—
|
—
|
—
|
—
|
||||||||||||
Gain due to settlement accounting
|
—
|
(25.4
|
) |
—
|
—
|
|||||||||||
Loss due to curtailment accounting
|
0.1
|
—
|
—
|
—
|
||||||||||||
Net expense (benefit)
|
19.5
|
(6.4
|
) |
5.0
|
5.5
|
|||||||||||
Changes in plan assets and benefit obligations recognized in Other comprehensive (loss) income:
|
|
|
|
|
||||||||||||
Net actuarial loss (gain)
|
109.4
|
(138.6
|
) |
(2.4
|
) |
(4.5
|
) | |||||||||
Gain due to settlement accounting
|
—
|
25.4
|
—
|
—
|
||||||||||||
Loss due to curtailment accounting
|
(0.1
|
) |
—
|
—
|
—
|
|||||||||||
Amortization of net actuarial gain (loss)
|
6.3
|
(0.4
|
) |
0.2
|
0.1
|
|||||||||||
Prior service cost
|
3.1
|
—
|
—
|
—
|
||||||||||||
Amortization of prior service cost
|
(0.1
|
) |
(0.1
|
) |
(3.7
|
) |
(3.7
|
) | ||||||||
Total recognized in Other comprehensive (loss) income
|
118.6
|
(113.7
|
) |
(5.9
|
) |
(8.1
|
) | |||||||||
Total net expense and changes in plan assets and benefit obligations recognized in Other comprehensive (loss) income
|
$ |
138.1
|
$ |
(120.1
|
) | $ |
(0.9
|
) | $ |
(2.6
|
) | |||||
|
February 23,
2019 |
|
February 24,
2018 |
|
||||
Discount rate
|
4.17
|
% |
4.12
|
% | ||||
Rate of compensation increase
|
2.87
|
% |
2.87
|
% |
|
February 23,
2019 |
|
February 24,
2018 |
|
||||
Discount rate
|
4.12
|
% |
4.21
|
% | ||||
Expected return on plan assets:
|
6.38
|
% |
6.40
|
% |
|
|
|
Plan Assets
|
|||||||||
Asset category
|
Target
|
|
February 23,
2019 |
|
February 24,
2018 |
|
||||||
Equity
|
65
|
% |
62.5
|
% |
65.0
|
% | ||||||
Fixed income
|
35
|
% |
35.6
|
% |
35.5
|
% | ||||||
Cash and other
|
—
|
% |
1.9
|
% |
(0.5
|
)% | ||||||
Total
|
100
|
% |
100.0
|
% |
100.0
|
% | ||||||
|
|
|
Plan Assets
|
|||||||||
Asset category
|
Target
|
|
February 23,
2019 |
|
February 24,
2018 |
|
||||||
Equity
|
65
|
% |
60.5
|
% |
65.4
|
% | ||||||
Fixed income
|
35
|
% |
35.9
|
% |
32.2
|
% | ||||||
Cash and other
|
—
|
% |
3.6
|
% |
2.4
|
% | ||||||
Total
|
100
|
% |
100.0
|
% |
100.0
|
% | ||||||
|
|
|
Plan Assets
|
|||||||||||||
Asset category
|
Target(1)
|
|
February 23,
2019 |
|
February 24,
2018 |
|
||||||||||
Equity
|
50
|
% |
50.3
|
% |
50.1
|
% | ||||||||||
Fixed income
|
50
|
% |
50.0
|
% |
47.9
|
% | ||||||||||
Cash and other
|
—
|
% |
(0.3
|
)% |
2.0
|
% | ||||||||||
Total
|
100
|
% |
100.0
|
% |
100.0
|
% | ||||||||||
(1) | The target market value of equity securities for the United Plan is 50% of plan assets. If the equity percentage exceeds 60% or drops below 40%, the asset allocation is adjusted to target. |
|
Fair Value Measurements
|
|||||||||||||||||||
Asset category
|
Total
|
|
Quoted Prices in
Active Markets for Identical Assets (Level 1) |
|
Significant
Observable Inputs (Level 2) |
|
Significant
Unobservable Inputs
(Level 3)
|
|
Assets
Measured at NAV |
|
||||||||||
Cash and cash equivalents(1)
|
$ |
10.8
|
$ |
1.6
|
$ |
9.2
|
$ |
—
|
$ |
—
|
||||||||||
Short-term investment collective trust(2)
|
73.3
|
—
|
73.3
|
—
|
—
|
|||||||||||||||
Common and preferred stock:(3)
|
|
|
|
|
|
|||||||||||||||
Domestic common and preferred stock
|
254.5
|
254.5
|
—
|
—
|
—
|
|||||||||||||||
International common stock
|
64.0
|
64.0
|
—
|
—
|
—
|
|||||||||||||||
Collective trust funds(2)
|
649.9
|
—
|
—
|
—
|
649.9
|
|||||||||||||||
Corporate bonds(4)
|
126.0
|
—
|
126.0
|
—
|
—
|
|||||||||||||||
Mortgage- and other asset-backed securities(5)
|
42.8
|
—
|
42.8
|
—
|
—
|
|||||||||||||||
Mutual funds(6)
|
257.2
|
139.9
|
29.2
|
—
|
88.1
|
|||||||||||||||
U.S. government securities(7)
|
362.5
|
—
|
362.5
|
—
|
—
|
|||||||||||||||
Other securities(8)
|
85.5
|
—
|
51.6
|
—
|
33.9
|
|||||||||||||||
Total
|
$ |
1,926.5
|
$ |
460.0
|
$ |
694.6
|
$ |
—
|
$ |
771.9
|
||||||||||
(1) | The carrying value of these items approximates fair value. |
(2) | These investments are valued based on the Net Asset Value (“NAV”) of the underlying investments and are provided by the fund issuers. There are no unfunded commitments or redemption restrictions for these funds. Funds meeting the practical expedient are included in the Assets Measured at NAV column. |
(3) | The fair value of common stock is based on the exchange quoted market prices. When quoted prices are not available for identical stock, an industry valuation model is used which maximizes observable inputs. |
(4) | The fair value of corporate bonds is generally based on yields currently available on comparable securities of the same or similar issuers with similar credit ratings and maturities. When quoted prices are not available for identical or similar bonds, the fair value is based upon an industry valuation model, which maximizes observable inputs. |
(5) | The fair value of mortgage- and other asset-backed securities is generally based on yields currently available on comparable securities of the same or similar issuers with similar credit ratings and maturities. When quoted prices are not available for comparable securities, the fair value is based upon an industry valuation model which maximizes observable inputs. |
(6) |
These investments are open-ended mutual funds that are registered with the SEC which are valued using the NAV. The NAV of the mutual funds is a published price in an active market. The NAV is determined once a day after the closing of the exchange based upon the underlying assets in the fund, less the fund’s liabilities, expressed on a
per-share
basis. There are no unfunded commitments, or redemption restrictions for these funds, and the funds are required to transact at the published price.
|
(7) | The fair value of U.S. government securities is based on quoted market prices when available. When quoted prices are not available, the fair value of U.S. government securities is based on yields currently available on comparable securities or on an industry valuation model which maximizes observable inputs. |
(8) |
Level 2 Other securities, which consist primarily of U.S. municipal bonds, foreign government bonds and foreign agency securities are valued based on yields currently available on comparable securities of issuers with similar credit ratings. Also included in Other securities is a commingled fund valued based on the NAV of the underlying investments and is provided by the issuer and exchange-traded derivatives that are valued based on quoted prices in an active market for identical derivatives, assets and liabilities. Funds meeting the practical expedient are included in the Assets Measured at NAV column. Exchange-traded derivatives are valued based on quoted prices in an active market for identical derivatives assets and liabilities.
Non-exchange-traded
derivatives are valued using industry valuation models, which maximize observable inputs, such as interest-rate yield curve data, foreign exchange rates and applicable spot and forward rates.
|
|
Fair Value Measurements
|
|||||||||||||||||||
Asset category
|
Total
|
|
Quoted Prices in
Active Markets for Identical Assets
(Level 1)
|
|
Significant
Observable Inputs
(Level 2)
|
|
Significant
Unobservable Inputs
(Level 3)
|
|
Assets
Measured at NAV |
|
||||||||||
Cash and cash equivalents(1)
|
$ |
6.5
|
$ |
1.5
|
$ |
5.0
|
$ |
—
|
$ |
—
|
||||||||||
Short-term investment collective trust(2)
|
67.0
|
—
|
67.0
|
—
|
—
|
|||||||||||||||
Common and preferred stock:(3)
|
|
|
|
|
|
|||||||||||||||
Domestic common and preferred stock
|
244.7
|
244.7
|
—
|
—
|
—
|
|||||||||||||||
International common stock
|
59.0
|
59.0
|
—
|
—
|
—
|
|||||||||||||||
Collective trust funds(2)
|
686.0
|
—
|
1.3
|
—
|
684.7
|
|||||||||||||||
Corporate bonds(4)
|
118.7
|
—
|
118.7
|
—
|
—
|
|||||||||||||||
Mortgage- and other asset-backed securities(5)
|
45.2
|
—
|
45.2
|
—
|
—
|
|||||||||||||||
Mutual funds(6)
|
254.3
|
146.0
|
21.3
|
—
|
87.0
|
|||||||||||||||
U.S. government securities(7)
|
354.5
|
—
|
354.5
|
—
|
—
|
|||||||||||||||
Other securities(8)
|
65.5
|
0.1
|
26.6
|
—
|
38.8
|
|||||||||||||||
|
|
|
|
|||||||||||||||||
Total
|
$ |
1,901.4
|
$ |
451.3
|
$ |
639.6
|
$ |
—
|
$ |
810.5
|
||||||||||
(1) | The carrying value of these items approximates fair value. |
(2) | These investments are valued based on the NAV of the underlying investments and are provided by the fund issuers. There are no unfunded commitments or redemption restrictions for these funds. Funds meeting the practical expedient are included in the Assets Measured at NAV column. |
(3) | The fair value of common stock is based on the exchange quoted market prices. When quoted prices are not available for identical stock, an industry valuation model is used which maximizes observable inputs. |
(4) | The fair value of corporate bonds is generally based on yields currently available on comparable securities of the same or similar issuers with similar credit ratings and maturities. When quoted prices are not available for identical or similar bonds, the fair value is based upon an industry valuation model, which maximizes observable inputs. |
(5) | The fair value of mortgage- and other asset-backed securities is generally based on yields currently available on comparable securities of the same or similar issuers with similar credit ratings and maturities. When quoted prices are not available for comparable securities, the fair value is based upon an industry valuation model which maximizes observable inputs. |
(6) |
These investments are open-ended mutual funds that are registered with the SEC which are valued using the NAV. The NAV of the mutual funds is a published price in an active market. The NAV is determined once a day after the closing of the exchange based upon the underlying assets in the fund, less the fund’s liabilities, expressed on a
per-share
basis. There are no unfunded commitments, or redemption restrictions for these funds, and the funds are required to transact at the published price.
|
(7) | The fair value of U.S. government securities is based on quoted market prices when available. When quoted prices are not available, the fair value of U.S. government securities is based on yields currently available on comparable securities or on an industry valuation model which maximizes observable inputs. |
(8) |
Level 2 Other securities, which consist primarily of U.S. municipal bonds, foreign government bonds and foreign agency securities are valued based on yields currently available on comparable securities of issuers with similar credit ratings. Also included in Other securities is a commingled fund valued based on the NAV of the underlying investments and is provided by the issuer and exchange-traded derivatives that are valued based on quoted prices in an active market for identical derivatives, assets and liabilities. Funds meeting the practical expedient are included in the Assets Measured at NAV column. Exchange-traded derivatives are valued based on quoted prices in an active market for identical derivatives assets and liabilities.
Non-exchange-traded
derivatives are valued using industry valuation models, which maximize observable inputs, such as interest-rate yield curve data, foreign exchange rates and applicable spot and forward rates.
|
|
Pension Benefits
|
|
Other Benefits
|
|
||||
2019
|
$ |
275.7
|
$ |
2.3
|
||||
2020
|
185.1
|
2.1
|
||||||
2021
|
179.6
|
2.1
|
||||||
2022
|
174.6
|
2.0
|
||||||
2023
|
171.3
|
1.9
|
||||||
2024 – 2028
|
734.5
|
8.6
|
• | Assets contributed to the multiemployer plan by one employer may be used to provide benefits to employees of other participating employers. |
• | If a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers. |
• | If the Company chooses to stop participating in some multiemployer plans, or makes market exits or store closures or otherwise has participation in the plan fall below certain levels, the Company may be required to pay those plans an amount based on the underfunded status of the plan, referred to as withdrawal liability. The Company records the actuarially determined liability at an undiscounted amount. |
|
EIN - PN
|
|
Pension Protection Act zone
status(1) |
Company’s 5% of total
plan contributions |
FIP/RP status
pending/implemented |
|
||||||||||||||||||
Pension fund
|
2018
|
|
2017
|
|
2017
|
|
2016
|
|
||||||||||||||||
UFCW-Northern California Employers Joint Pension Trust Fund
|
946313554 - 001
|
Red
|
Red
|
Yes
|
Yes
|
Implemented
|
||||||||||||||||||
Western Conference of Teamsters Pension Plan
|
916145047 - 001
|
Green
|
Green
|
No
|
No
|
No
|
||||||||||||||||||
Southern California United Food & Commercial Workers Unions and Food Employers Joint Pension Plan(4)
|
951939092 - 001
|
Red
|
Red
|
Yes
|
Yes
|
Implemented
|
||||||||||||||||||
Food Employers Labor Relations Association and United Food and Commercial Workers Pension Fund
|
526128473 - 001
|
Red
|
Red
|
Yes
|
Yes
|
Implemented
|
||||||||||||||||||
Sound Retirement Trust(6)
|
916069306 - 001
|
Green
|
Red
|
Yes
|
Yes
|
Implemented
|
||||||||||||||||||
Bakery and Confectionery Union and Industry International Pension Fund
|
526118572 - 001
|
Red
|
Red
|
Yes
|
Yes
|
Implemented
|
||||||||||||||||||
UFCW Union and Participating Food Industry Employers
Tri-State
Pension Fund
|
236396097 - 001
|
Red
|
Red
|
Yes
|
Yes
|
Implemented
|
||||||||||||||||||
Rocky Mountain UFCW Unions & Employers Pension Plan
|
846045986 - 001
|
Green
|
Green
|
Yes
|
Yes
|
No
|
||||||||||||||||||
UFCW Local 152 Retail Meat Pension Fund(5)
|
236209656 - 001
|
Red
|
Red
|
Yes
|
Yes
|
Implemented
|
||||||||||||||||||
Desert States Employers & UFCW Unions Pension Plan
|
846277982 - 001
|
Green
|
Green
|
Yes
|
Yes
|
No
|
||||||||||||||||||
UFCW International Union—Industry Pension Fund(5)
|
516055922 - 001
|
Green
|
Green
|
Yes
|
No
|
No
|
||||||||||||||||||
Mid Atlantic Pension Fund
|
461000515 - 001
|
Green
|
Green
|
Yes
|
Yes
|
No
|
||||||||||||||||||
Retail Food Employers and UFCW Local 711 Pension Trust Fund
|
516031512 - 001
|
Yellow
|
Red
|
Yes
|
Yes
|
Implemented
|
||||||||||||||||||
Oregon Retail Employees Pension Trust
|
936074377 - 001
|
Green
|
Green
|
Yes
|
Yes
|
No
|
|
Contributions of Company
(in millions) |
Surcharge
imposed(2) |
|
Expiration date of
collective bargaining agreements |
|
Total collective
bargaining agreements |
|
Most significant collective
bargaining agreement(s)(3) |
||||||||||||||||||||||||
Pension fund
|
2018
|
|
2017
|
|
2016
|
|
Count
|
|
Expiration
|
|
||||||||||||||||||||||
UFCW-Northern California Employers Joint Pension Trust Fund
|
$ |
104.4
|
$ |
110.2
|
$ |
98.9
|
No
|
10/13/2018 to 7/27/2020
|
63
|
56
|
10/13/2018
|
|||||||||||||||||||||
Western Conference of Teamsters Pension Plan
|
63.7
|
61.2
|
59.1
|
No
|
3/16/2019 to 10/1/2022
|
51
|
15
|
9/20/2020
|
||||||||||||||||||||||||
Southern California United Food & Commercial Workers Unions and Food Employers Joint Pension Plan(4)
|
108.4
|
92.4
|
63.9
|
No
|
3/11/2018 to 3/6/2021
|
47
|
43
|
3/3/2019
|
||||||||||||||||||||||||
Food Employers Labor Relations Association and United Food and Commercial Workers Pension Fund
|
20.4
|
20.4
|
33.8
|
No
|
10/26/2019 to 2/22/2020
|
21
|
16
|
10/26/2019
|
||||||||||||||||||||||||
Sound Retirement Trust(6)
|
39.1
|
32.1
|
33.1
|
Yes
|
10/13/2018 to 10/16/2021
|
118
|
22
|
5/4/2019
|
||||||||||||||||||||||||
Bakery and Confectionery Union and Industry International Pension Fund
|
17.4
|
16.6
|
17.1
|
Yes
|
9/3/2011 to 1/22/2022
|
92
|
28
|
9/6/2020
|
||||||||||||||||||||||||
UFCW Union and Participating Food Industry Employers
Tri-State
Pension Fund
|
14.0
|
15.8
|
16.7
|
No
|
1/31/2018 to 1/25/2022
|
5
|
2
|
3/20/2020
|
||||||||||||||||||||||||
Rocky Mountain UFCW Unions & Employers Pension Plan
|
10.8
|
10.8
|
11.0
|
Yes
|
1/12/2019 to 6/11/2022
|
81
|
30
|
2/23/2019
|
||||||||||||||||||||||||
UFCW Local 152 Retail Meat Pension Fund(5)
|
10.8
|
11.0
|
10.8
|
No
|
5/2/2020
|
4
|
4
|
5/2/2020
|
||||||||||||||||||||||||
Desert States Employers & UFCW Unions Pension Plan
|
9.1
|
9.3
|
9.1
|
Yes
|
5/9/2019 to 11/5/2022
|
16
|
13
|
10/24/2020
|
||||||||||||||||||||||||
UFCW International Union—Industry Pension Fund(5)
|
13.1
|
12.4
|
8.6
|
No
|
8/25/2018 to 11/5/2022
|
27
|
8
|
6/11/2022
|
||||||||||||||||||||||||
Mid Atlantic Pension Fund
|
6.6
|
6.8
|
6.9
|
No
|
10/26/2019 to 2/22/2020
|
19
|
16
|
10/26/2019
|
||||||||||||||||||||||||
Retail Food Employers and UFCW Local 711 Pension Trust Fund
|
7.1
|
6.6
|
5.4
|
No
|
5/19/2018 to 12/13/2020
|
7
|
2
|
3/3/2019
|
||||||||||||||||||||||||
Oregon Retail Employees Pension Trust
|
7.6
|
6.6
|
2.3
|
No
|
9/1/2016 to 12/6/2019
|
111
|
25
|
8/4/2018
|
||||||||||||||||||||||||
Other funds
|
18.6
|
19.0
|
22.4
|
|
|
|
|
|
||||||||||||||||||||||||
Total Company contributions to U.S. multiemployer pension plans
|
$ |
451.1
|
$ |
431.2
|
$ |
399.1
|
|
|
|
|
|
|||||||||||||||||||||
(1) | PPA established three categories (or “zones”) of plans: (1) “Green Zone” for healthy; (2) “Yellow Zone” for endangered; and (3) “Red Zone” for critical. These categories are based upon the funding ratio of the plan assets to plan liabilities. In general, Green Zone plans have a funding ratio greater than 80%, Yellow Zone plans have a funding ratio between 65% - 79%, and Red Zone plans have a funding ratio less than 65%. |
(2) | Under the PPA, a surcharge may be imposed when employers make contributions under a collective bargaining agreement that is not in compliance with a rehabilitation plan. As of February 23, 2019, the collective bargaining agreements under which the Company was making contributions were in compliance with rehabilitation plans adopted by the applicable pension fund. |
(3) | These columns represent the number of most significant collective bargaining agreements aggregated by common expiration dates for each of the Company’s pension funds listed above. |
(4) |
The information for this fund was obtained from the Form 5500 filed for the plan’s
year-end
at March 31, 2018 and March 31, 2017.
|
(5) |
The information for this fund was obtained from the Form 5500 filed for the plan’s
year-end
at June 30, 2017 and June 30, 2016.
|
(6) |
The information for this fund was obtained from the Form 5500 filed for the plan’s
year-end
at September 30, 2017 and September 30, 2016.
|
|
Fiscal
2018 |
|
Fiscal
2017 |
|
Fiscal
2016 |
|
||||||
Supply agreements included in Cost of sales
|
$ |
1,064.8
|
$ |
1,674.7
|
$ |
1,749.1
|
||||||
Selling and administrative expenses
|
40.7
|
119.4
|
157.1
|
|||||||||
Total
|
$ |
1,105.5
|
$ |
1,794.1
|
$ |
1,906.2
|
||||||
|
Fiscal 2018
|
|||||||||||||||||||
|
Total
|
|
Interest
rate swaps |
|
Pension
and Post- retirement benefit plan items |
|
Foreign
currency translation adjustments |
|
Other
|
|
||||||||||
Beginning AOCI balance
|
$ |
191.1
|
$ |
18.9
|
$ |
171.9
|
$ |
(1.1
|
) | $ |
1.4
|
|||||||||
Other comprehensive loss before reclassifications
|
(129.8
|
) |
(18.6
|
) |
(110.0
|
) |
(0.3
|
) |
(0.9
|
) | ||||||||||
Amounts reclassified from Accumulated other comprehensive income
|
(5.6
|
) |
(2.3
|
) |
(2.7
|
) |
—
|
(0.6
|
) | |||||||||||
Tax benefit
|
35.6
|
5.4
|
29.6
|
—
|
0.6
|
|||||||||||||||
Current-period other comprehensive loss, net
|
(99.8
|
) |
(15.5
|
) |
(83.1
|
) |
(0.3
|
) |
(0.9
|
) | ||||||||||
Ending AOCI balance
|
$ |
91.3
|
$ |
3.4
|
$ |
88.8
|
$ |
(1.4
|
) | $ |
0.5
|
|||||||||
|
Fiscal 2017
|
|||||||||||||||||||
|
Total
|
|
Interest
rate swaps |
|
Pension
and Post- retirement benefit plan items |
|
Foreign
currency translation adjustments |
|
Other
|
|
||||||||||
Beginning AOCI balance
|
$ |
(12.8
|
) | $ |
(28.1
|
) | $ |
79.7
|
$ |
(66.1
|
) | $ |
1.7
|
|||||||
Other comprehensive income before reclassifications
|
207.0
|
33.7
|
143.1
|
23.7
|
6.5
|
|||||||||||||||
Amounts reclassified from Accumulated other comprehensive income
|
90.9
|
32.4
|
(21.3
|
) |
84.9
|
(5.1
|
) | |||||||||||||
Tax (expense) benefit
|
(94.0
|
) |
(19.1
|
) |
(29.6
|
) |
(43.6
|
) |
(1.7
|
) | ||||||||||
Current-period other comprehensive income (loss), net
|
203.9
|
47.0
|
92.2
|
65.0
|
(0.3
|
) | ||||||||||||||
Ending AOCI balance
|
$ |
191.1
|
$ |
18.9
|
$ |
171.9
|
$ |
(1.1
|
) | $ |
1.4
|
|||||||||
|
Fiscal 2018
|
|
Fiscal 2017
|
|
Fiscal 2016
|
|
||||||
Net Income (loss)
|
$ |
131.1
|
$ |
46.3
|
$ |
(373.3
|
) | |||||
Weighted average common shares outstanding (1)
|
280.1
|
279.7
|
279.7
|
|||||||||
Dilutive effect of potential common shares (2)
|
0.1
|
—
|
—
|
|||||||||
Weighted average common shares and potential dilutive common shares outstanding
|
280.2
|
279.7
|
279.7
|
|||||||||
Basic net income (loss) per common share
|
$ |
0.47
|
$ |
0.17
|
$ |
(1.33
|
) | |||||
Diluted net income (loss) per common share
|
0.47
|
0.17
|
(1.33
|
) |
(1) | Fiscal 2018 includes 0.9 million common shares remaining to be issued. For fiscal 2017 and fiscal 2016, there were no common shares remaining to be issued, respectively. |
(2) | There were no potential common shares outstanding that were antidilutive for fiscal 2018. For fiscal 2017 and fiscal 2016, there were 1.3 million and 1.6 million potential common shares excluded, respectively, from the diluted net income (loss) per share calculations because they would have been antidilutive. |
|
Fiscal 2018
|
|||||||||||||||||||
|
52
Weeks |
|
Last 12
Weeks |
|
Third 12
Weeks |
|
Second 12
Weeks |
|
First 16
Weeks |
|
||||||||||
Net sales and other revenue
|
$ |
60,534.5
|
$ |
14,016.6
|
$ |
13,840.4
|
$ |
14,024.1
|
$ |
18,653.4
|
||||||||||
Gross profit
|
16,894.6
|
4,058.7
|
3,852.4
|
3,812.8
|
5,170.7
|
|||||||||||||||
Operating income
|
787.3
|
288.4
|
174.4
|
131.4
|
193.1
|
|||||||||||||||
Income (loss) before income taxes
|
52.2
|
137.0
|
(19.8
|
) |
(44.3
|
) |
(20.7
|
) | ||||||||||||
Income tax (benefit) expense
|
(78.9
|
) |
1.4
|
(65.4
|
) |
(11.9
|
) |
(3.0
|
) | |||||||||||
Net income (loss)
|
$ |
131.1
|
$ |
135.6
|
$ |
45.6
|
$ |
(32.4
|
) | $ |
(17.7
|
) | ||||||||
Basic and diluted net income (loss) per common share
|
$ |
0.47
|
$ |
0.49
|
$ |
0.16
|
$ |
(0.12
|
) | $ |
(0.06
|
) |
|
Fiscal 2017
|
|||||||||||||||||||
|
52
Weeks |
|
Last 12
Weeks |
|
Third 12
Weeks |
|
Second 12
Weeks |
|
First 16
Weeks |
|
||||||||||
Net sales and other revenue
|
$ |
59,924.6
|
$ |
14,033.7
|
$ |
13,599.2
|
$ |
13,831.7
|
$ |
18,460.0
|
||||||||||
Gross profit
|
16,361.1
|
3,948.3
|
3,624.6
|
3,729.7
|
5,058.5
|
|||||||||||||||
Operating (loss) income(1)
|
(56.6
|
) |
181.8
|
(101.0
|
) |
(219.8
|
) |
82.4
|
||||||||||||
(Loss) income before income taxes
|
(917.5
|
) |
15.3
|
(305.4
|
) |
(422.9
|
) |
(204.5
|
) | |||||||||||
Income tax (benefit) expense
|
(963.8
|
) |
(373.0
|
) |
(523.5
|
) |
(67.7
|
) |
0.4
|
|||||||||||
Net income (loss)
|
$ |
46.3
|
$ |
388.3
|
$ |
218.1
|
$ |
(355.2
|
) | $ |
(204.9
|
) | ||||||||
Basic and diluted net income (loss) per common share
|
$ |
0.17
|
$ |
1.39
|
$ |
0.78
|
$ |
(1.27
|
) | $ |
(0.73
|
) |
(1) |
Fiscal 2017 has been adjusted for the retrospective adoption of Accounting Standards Update (“ASU”)
2017-07,
“
Compensation—Retirement Benefits (Topic 715)—Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost” in
non-service
pension and post-retirement cost components to Other income from Selling and administrative expenses. See Note 1 - Description of business, basis of presentation and summary of significant accounting policies.
|
BofA Securities
|
Goldman Sachs & Co. LLC
|
J.P. Morgan
|
Citigroup
|
Credit Suisse
|
Morgan Stanley
|
Wells Fargo Securities
|
Barclays
|
Deutsche Bank Securities
|
BMO Capital Markets
|
Evercore ISI
|
Guggenheim Securities
|
Oppenheimer & Co.
|
RBC Capital Markets
|
Telsey Advisory Group
|
MUFG
|
Academy Securities
|
Blaylock Van, LLC
|
|
Per Share
|
Total
|
||||||
Public offering price
|
$ |
|
$ |
|
||||
Underwriting discounts and commissions(1)
|
$ |
|
$ |
|
||||
Proceeds, before expenses, to us(1)
|
$ |
|
$ |
|
(1) | See “Underwriting” for additional information regarding underwriting compensation. |
BofA Securities
|
Goldman Sachs & Co. LLC
|
J.P. Morgan
|
Citigroup
|
Credit Suisse
|
Morgan Stanley
|
Wells Fargo Securities
|
Barclays
|
Deutsche Bank Securities
|
BMO Capital Markets
|
RBC Capital Markets
|
MUFG
|
Securities we are offering | shares of % Series A mandatory convertible preferred stock, $0.01 par value (the “Series A preferred stock”). |
Public offering price | $ per share of Series A preferred stock. |
Option to purchase additional shares of Series A preferred stock |
We have granted the underwriters a
30-day
option to purchase up to additional shares of our Series A preferred stock to cover over-allotments at the public offering price, less the underwriting discount.
|
Dividends | % of the liquidation preference of $ per share of our Series A preferred stock per year. Dividends will accumulate from the first original issue date and, to the extent that we are legally permitted to pay dividends and our board of directors, or an authorized committee of our board of directors, declares a dividend payable with respect to our Series A preferred stock, we will pay such dividends in cash or, subject to certain limitations, in common stock or any combination of cash and common stock, as determined by us in our sole discretion, on each dividend payment date; provided that any unpaid dividends will continue to accumulate. Dividends that are declared will be payable on the dividend payment dates (as described below) to holders of record on the immediately preceding , , and (each a “record date”), whether or not such holders convert their shares, or such shares are automatically converted, after a record date and on or prior to the immediately succeeding dividend payment date. The expected dividend payable on the first dividend payment date is $ per share. Each subsequent dividend is expected to be $ per share. See “Description of Series A Preferred Stock—Dividends.” |
If we elect to make any such payment of a declared dividend, or any portion thereof, in shares of our common stock, such shares shall be valued for such purpose at 97% of the average VWAP per share (as defined under “Description of Series A Preferred Stock—Certain Definitions”), of our common stock
|
The initial price is $ , which equals the price at which our common stock was initially offered to the public in the concurrent offering of our common stock. |
Dividend payment dates | , , and of each year, commencing on , 202 and to, and including, the mandatory conversion date. |
Redemption | Our Series A preferred stock is not redeemable. |
Mandatory conversion date | , 202 . |
Mandatory conversion | On the mandatory conversion date, each share of our Series A preferred stock, unless previously converted, will automatically convert into shares of our common stock based on the conversion rate as described below. |
If we declare a dividend for the dividend period ending on the mandatory conversion date, we will pay such dividend to the holders of record on the immediately preceding record date, as described above. If, prior to the mandatory conversion date, we have not declared all or any portion of the accumulated and unpaid dividends on the Series A preferred stock, the conversion rate will be adjusted so that holders receive an additional number of shares of common stock equal to the amount of accumulated and unpaid dividends that have not been declared (the “additional conversion amount”) divided by the greater of (x) the floor price and (y) 97% of the Average Price (as defined under “Description of Series A Preferred Stock--Method of Payment of Dividends”. To the extent that the additional conversion amount exceeds the product of the number of additional shares and the applicable market value, we will, if we are legally able to do so and to the extent
|
Conversion rate | The conversion rate for each share of our Series A preferred stock will be not more than shares of common stock and not less than shares of common stock, depending on the applicable market value of our common stock, as described below and subject to certain anti-dilution adjustments. |
The “applicable market value” of our common stock is the average of the closing prices of our common stock over the 20 consecutive trading day period beginning on, and including, the 21st scheduled trading day immediately preceding the mandatory conversion date. The conversion rate will be calculated as described under “Description of Series A Preferred Stock—Mandatory Conversion,” and the following table illustrates the conversion rate per share of our Series A preferred stock, subject to certain anti-dilution adjustments. |
Applicable market value of our common stock
|
Conversion rate (number of shares of common stock to be received upon conversion of each share of Series A preferred stock)
|
|
Greater than $.........
|
shares
|
|
Equal to or less than $ but greater than or equal to
$.........
|
Between $ and $ , determined by dividing $ by the applicable market value
|
|
Less than $.........
|
shares
|
Early conversion at the option of the holder | At any time prior to , 202 , you may elect to convert your shares of Series A preferred stock in whole or in part at the minimum conversion rate of shares of common stock per share of Series A preferred stock as described under “Description of Series A Preferred Stock—Early Conversion at the Option of the Holder.” This minimum conversion rate is subject to certain anti-dilution adjustments. |
If, as of the effective date of any early conversion (the “early conversion date”), we have not declared all or any portion of
|
Conversion at the option of the holder upon fundamental change; fundamental change dividend make-whole amount | If a fundamental change occurs on or prior to , 202 , holders of the Series A preferred stock will have the right during the fundamental change conversion period to convert their shares of Series A preferred stock, in whole or in part (but in no event less than one share of the Series A preferred stock), into shares of our common stock at the fundamental change conversion rate. The fundamental change conversion rate will be determined based on the effective date of the fundamental change and the price paid or deemed paid per share of our common stock in such fundamental change. |
Holders who convert their Series A preferred stock within the fundamental change conversion period will also receive a fundamental change dividend make-whole amount equal to the present value (calculated using a discount rate of % per annum) of all dividend payments on their shares of the Series A preferred stock (excluding any accumulated dividend amount) for (i) the partial dividend period, if any, from, and including, the fundamental change effective date to, but excluding, the next dividend payment date and (ii) all remaining full dividend periods from, and including, the dividend payment date following the fundamental change effective date to, but excluding, the mandatory conversion date. If we elect to pay the fundamental change dividend make-whole amount in shares of our common stock (or units of exchange property) in lieu of cash, the number of shares of our common stock (or units of exchange property) that we will deliver will equal (x) the fundamental change dividend make-whole amount,
divided by
|
In addition, to the extent that the accumulated dividend amount exists as of the fundamental change effective date, holders who convert their Series A preferred stock within the fundamental change conversion period will be entitled to receive such accumulated dividend amount in cash (to the extent we are legally permitted to make such payment in cash and to the extent permitted under the terms of the documents
|
To the extent that the sum of the fundamental change dividend make-whole amount and accumulated dividend amount or the dollar amount of any portion thereof paid in shares of our common stock (or units of exchange property) exceeds the product of (x) the number of additional shares we deliver in respect thereof and (y) 97% of the fundamental change stock price, we will, if we are legally able to do so, and to the extent permitted under the terms of the documents governing our indebtedness, pay such excess amount in cash (computed to the nearest cent). Any such payment in cash may not be permitted by our then existing debt instruments, including any restricted payments covenants. To the extent that we are not able to pay such excess amount in cash under applicable law and in compliance with our indebtedness, we will not have any obligation to pay such amount in cash or deliver additional shares of our common stock in respect of such amount. |
See “Description of Series A Preferred Stock—Conversion at the Option of the Holder upon Fundamental Change; Fundamental Change Dividend Make-Whole Amount.” |
Liquidation preference | $ per share of Series A preferred stock. |
Voting rights | The holders of the Series A preferred stock do not have voting rights, except with respect to certain fundamental changes in the terms of the Series A preferred stock, in the case of certain dividend arrearages and except as specifically required under Delaware law. See “Description of Series A Preferred Stock—Voting Rights.” |
Ranking |
The Series A preferred stock will rank with respect to dividend rights and rights upon our liquidation,
winding-up
or dissolution:
|
• | senior to all of our common stock and to each other class of capital stock or series of preferred stock issued in the future unless the terms of that stock expressly provide that it ranks senior to, or on a parity with, the Series A preferred stock; |
• |
on a parity with any class of capital stock or series of preferred stock issued in the future the terms of which expressly provide that it will rank on a parity with the Series A preferred stock;
|
• | junior to each class of capital stock or series of preferred stock issued in the future the terms of which expressly provide that such preferred stock will rank senior to the Series A preferred stock; and |
• | junior to all of our existing and future debt obligations. |
In addition, the Series A preferred stock, with respect to dividend rights or rights upon our liquidation,
winding-up
or dissolution, will be structurally subordinated to existing and future indebtedness of our subsidiaries as well as the capital stock of our subsidiaries held by third parties.
|
Use of proceeds | We will not receive any proceeds from the sale of our common stock by the selling stockholders in the concurrent offering. |
We estimate that the net proceeds to us from the offering of our Series A preferred stock, based upon an assumed public offering price per share of our Series A preferred stock of $ , will be approximately $ (or approximately $ if the underwriters in this offering exercise their over-allotment option in full), after deducting underwriting discounts and commissions and estimated offering expenses payable by us. We intend to use the anticipated net proceeds from this offering, together with cash on hand, to repurchase approximately shares of outstanding common stock from certain Pre-IPO Stockholders (or approximately shares of outstanding common stock if the underwriters in this offering exercise their over-allotment option in full) (the “Repurchase”). The Repurchase is conditioned upon the consummation of this offering and the receipt of funds therefrom. |
See “Use of Proceeds.” |
Lock-Up Agreements |
Prior to the closing of the concurrent initial public offering, each Pre-IPO Stockholder will deliver a lock-up agreement to us. Pursuant to the lock-up agreements, for a period of six months after the closing of this offering each Pre-IPO Stockholder will agree, subject to certain exceptions, that it will not offer, sell, contract to sell, pledge, grant any option to purchase, make any short sale or otherwise dispose of any shares of common stock or any options or warrants to purchase common stock, or any securities convertible into, exchangeable for or that represent the right to receive common stock, owned by them (whether directly or by means of beneficial ownership) immediately prior to the closing of this offering. Thereafter, each Pre-IPO Stockholder will be permitted to sell shares of common stock subject to certain restrictions. See “Certain Relationships and Related Party Transactions—Lock-Up Agreements.”
|
Concurrent common stock offering |
Concurrently with this offering of Series A preferred stock, selling stockholders are making an initial public offering of shares of our common stock. In that offering, the selling stockholders have granted the underwriters of that offering a
30-day
option to purchase up to an additional shares of common stock to cover over-allotments. The closing of this offering of Series A preferred stock is conditioned upon the closing of the offering of our common stock and the closing of the offering of common stock is conditioned upon the closing of this offering of Series A preferred stock.
|
Risk factors | You should carefully read and consider the information set forth in the section entitled “Risk Factors” beginning on page 24, together with all of the other information set forth in this prospectus, before deciding whether to invest in our Series A preferred stock. |
Proposed NYSE trading symbol | “ACI.PRA.” |
• | investors’ anticipation of the potential resale in the market of a substantial number of additional shares of our common stock received upon conversion of the Series A preferred stock; |
• | possible sales of our common stock by investors who view the Series A preferred stock as a more attractive means of equity participation in us than owning shares of our common stock; and |
• | hedging or arbitrage trading activity that may develop involving the Series A preferred stock and our common stock. |
• | the requirement that a majority of the board of directors consist of independent directors; |
• | the requirement that we have a nominating and corporate governance committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities; |
• | the requirement that we have a compensation committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities; and |
• | the requirement for an annual performance evaluation of the nominating and corporate governance and compensation committees. |
• |
from and after such date that our Sponsors and their respective Affiliates (as defined in Rule
12b-2
of the Exchange Act), or any person who is an express assignee or designee of their respective rights under our certificate of incorporation (and such assignee’s or designee’s Affiliates) ceases to own, in the aggregate, at least 50% of the then-outstanding shares of our common stock (the “50% Trigger Date”), the authorized number of our directors may be increased or decreased only by the affirmative vote of
two-thirds
of the then-outstanding shares of our common stock or by resolution of our board of directors;
|
• |
prior to the 50% Trigger Date, only our board of directors and the Sponsors are expressly authorized to make, alter or repeal our bylaws and, from and after the 50% Trigger Date, our stockholders may only amend our bylaws with the approval of at least
two-thirds
of all of the outstanding shares of our capital stock entitled to vote;
|
• | from and after the 50% Trigger Date, the manner in which stockholders can remove directors from the board will be limited; |
• | from and after the 50% Trigger Date, stockholder actions must be effected at a duly called stockholder meeting and actions by our stockholders by written consent will be prohibited; |
• | from and after such date that our Sponsors and their respective Affiliates (or any person who is an express assignee or designee of our Sponsors’ respective rights under our certificate of incorporation (and such assignee’s or designee’s Affiliates)) ceases to own, in the aggregate, at least 35% of the then-outstanding shares of our common stock (the “35% Trigger Date”), advance notice requirements for stockholder proposals that can be acted on at stockholder meetings and nominations to our board of directors will be established; |
• | limits on who may call stockholder meetings; |
• | requirements on any stockholder (or group of stockholders acting in concert), other than, prior to the 35% Trigger Date, the Sponsors, who seeks to transact business at a meeting or nominate directors for election to submit a list of derivative interests in any of our company’s securities, including any short interests and synthetic equity interests held by such proposing stockholder; |
• |
requirements on any stockholder (or group of stockholders acting in concert) who seeks to nominate directors for election to submit a list of “related party transactions” with the proposed nominee(s) (as if such nominating person were a registrant pursuant to Item 404 of Regulation
S-K,
and the proposed nominee was an executive officer or director of the “registrant”); and
|
• | our board of directors is authorized to issue preferred stock without stockholder approval, which could be used to institute a “poison pill” that would work to dilute the stock ownership of a potential hostile acquiror, effectively preventing acquisitions that have not been approved by our board of directors. |
• | senior to (i) our common stock and (ii) each other class or series of our capital stock established after the first original issue date of shares of the Series A preferred stock (which we refer to as the “Initial Issue Date”) the terms of which do not expressly provide that such class or series ranks (x) senior to the Series A preferred stock as to dividend rights or distribution |
rights upon our liquidation,
winding-up
or dissolution or (y) on parity with the Series A preferred stock as to dividend rights or distribution rights upon our liquidation,
winding-up
or dissolution (we refer to our common stock and all such other classes or series of capital stock, collectively as “Junior Stock”);
|
• |
on parity with any class or series of our capital stock established after the Initial Issue Date the terms of which expressly provide that such class or series will rank on parity with the Series A preferred stock as to dividend rights and distribution rights upon our liquidation,
winding-up
or dissolution (which we refer to collectively as “Parity Stock”);
|
• |
junior to each class or series of our capital stock established after the Initial Issue Date the terms of which expressly provide that such class or series will rank senior to the Series A preferred stock as to dividend rights or distribution rights upon our liquidation,
winding-up
or dissolution (which we refer to collectively as “Senior Stock”); and
|
• | junior to our existing and future indebtedness and other liabilities. |
• | in cash; |
• | by delivery of shares of our common stock; or |
• | through any combination of cash and shares of our common stock. |
• |
the declared dividend,
divided by
|
• | $ (the “Floor Price”), which amount represents 35% of the Initial Price (as defined herein), subject to adjustment in a manner inversely proportional to any anti-dilution adjustment to each Fixed Conversion Rate as set forth below in “—Anti-Dilution Adjustments.” |
• | amend or alter the provisions of our certificate of incorporation so as to authorize or create, or increase the authorized number of, any class or series of Senior Stock; |
• | amend, alter or repeal any provision of our certificate of incorporation or the certificate of designations for the Series A preferred stock so as to adversely affect the special rights, preferences or voting powers of the Series A preferred stock; or |
• | consummate a binding share exchange or reclassification involving the shares of the Series A preferred stock, or a merger or consolidation of us with another entity, unless in each case: (i) the shares of the Series A preferred stock remain outstanding following the consummation of such binding share exchange, reclassification, merger or consolidation or, in the case of any such merger or consolidation with respect to which we are not the surviving or resulting entity (or the Series A preferred stock is otherwise exchanged or reclassified), are converted or reclassified into or exchanged for preference securities of the surviving or resulting entity or its ultimate parent or the right to receive such securities; and (ii) the shares of the Series A preferred stock that remain outstanding or such shares of preference securities, as the case may be, have such rights, preferences and voting powers that, taken as a whole, are not materially less favorable to the holders thereof than the rights, preferences and voting powers, taken as a whole, of the Series A preferred stock immediately prior to the consummation of such transaction; |
• | to cure any ambiguity, omission or mistake, or to correct or supplement any provision contained in the certificate of designations establishing the terms of the Series A preferred stock that may be defective or inconsistent with any other provision contained in such certificate of designations; |
• | to make any provision with respect to matters or questions relating to the Series A preferred stock that is not inconsistent with the provisions of our certificate of incorporation or the certificate of designations establishing the terms of the Series A preferred stock; or |
• | to make any other change that does not adversely affect the rights of any holder of the Series A preferred stock (other than any holder that consents to such change). |
• | if the Applicable Market Value (as defined herein) of our common stock is greater than $ (the “Threshold Appreciation Price”), then the Conversion Rate will be shares of our common stock per share of the Series A preferred stock (the “Minimum Conversion Rate”), which is approximately equal to $ divided by the Threshold Appreciation Price; |
• |
if the Applicable Market Value of our common stock is less than or equal to the Threshold Appreciation Price but equal to or greater than $ (the “Initial Price”), then the Conversion Rate will be equal to $ divided by the Applicable Market Value of our common stock, rounded to the nearest
ten-thousandth
of a share; or
|
• | if the Applicable Market Value of our common stock is less than the Initial Price, then the Conversion Rate will be shares of our common stock per share of the Series A preferred stock (the “Maximum Conversion Rate”). |
• |
the amount of such undeclared, accumulated and unpaid dividends per share of Series A preferred stock (the “Additional Conversion Amount”),
divided by
|
• | the greater of (x) the Floor Price and (y) 97% of the Average Price (calculated using , 20 as the applicable Dividend Payment Date). |
Assumed Applicable Market Value of
our common stock
|
|
Number of shares of our common
stock to be received upon mandatory conversion |
Assumed conversion value
(calculated as Applicable Market Value multiplied by the number of shares of our common stock to be received upon mandatory conversion) |
|
||||
$
|
|
$ |
|
|||||
$
|
|
$ |
|
|||||
$
|
|
$ |
|
|||||
$
|
|
$ |
|
|||||
$
|
|
$ |
|
|||||
$
|
|
$ |
|
|||||
$
|
|
$ |
|
|||||
$
|
|
$ |
|
|||||
$
|
|
$ |
|
|||||
$
|
|
$ |
|
• | greater than the $ liquidation preference of the share of Series A preferred stock, if the Applicable Market Value is greater than the Threshold Appreciation Price; |
• | equal to the $ liquidation preference of the share of Series A preferred stock, if the Applicable Market Value is less than or equal to the Threshold Appreciation Price and greater than or equal to the Initial Price; and |
• | less than the $ liquidation preference of the share of Series A preferred stock, if the Applicable Market Value is less than the Initial Price. |
• | a failure by the Relevant Stock Exchange to open for trading during its regular trading session; or |
• | the occurrence or existence, prior to 1:00 p.m., New York City time, on any Scheduled Trading Day for our common stock, for more than a one half-hour period in the aggregate during regular trading hours, of any suspension or limitation imposed on trading (by reason of movements in price exceeding limits permitted by the Relevant Stock Exchange or otherwise) in our common stock. |
• | there is no Market Disruption Event; and |
• | trading in our common stock generally occurs on the Relevant Stock Exchange; |
• |
such amount of undeclared, accumulated and unpaid dividends per share of Series A preferred stock for such prior full dividend periods (the “Early Conversion Additional Amount”),
divided by
|
• |
the greater of (x) the Floor Price and (y) the Average VWAP per share of our common stock over the 20 consecutive Trading Day period (the “Early Conversion Settlement Period”) commencing on, and including, the 21
st
Scheduled Trading Day immediately preceding the Early Conversion Date (such Average VWAP, the “Early Conversion Average Price”).
|
(i) | convert their shares of Series A preferred stock, in whole or in part (but in no event less than one share of the Series A preferred stock), into a number of shares of our common |
stock (or Units of Exchange Property as described below) at the conversion rate specified in the table below (the “Fundamental Change Conversion Rate”); |
(ii) | with respect to such converted shares, receive a Fundamental Change Dividend Make-Whole Amount (as defined herein) payable in cash or shares of our common stock; and |
(iii) | with respect to such converted shares, receive the Accumulated Dividend Amount (as defined herein) payable in cash or shares of our common stock, |
Fundamental Change Stock Price
|
||||||||||||||||||||||||||||||||||||
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||||
Fundamental Change Effective Date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
, 202
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
, 202
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
, 202
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
, 202
|
|
|
|
|
|
|
|
|
|
• |
if the Fundamental Change Stock Price is between two Fundamental Change Stock Price amounts in the table or the Fundamental Change Effective Date is between two Fundamental Change Effective Dates in the table, the Fundamental Change Conversion Rate will be determined by a straight-line interpolation between the Fundamental Change Conversion Rates set forth for the higher and lower Fundamental Change Stock Price amounts and the earlier and later Fundamental Change Effective Dates, as applicable, based on a
365-
or
366-day
year, as applicable;
|
• | if the Fundamental Change Stock Price is in excess of $ per share (subject to adjustment in the same manner as the Fundamental Change Stock Prices set forth in the first row of the table above), then the Fundamental Change Conversion Rate will be the Minimum Conversion Rate; and |
• | if the Fundamental Change Stock Price is less than $ per share (subject to adjustment in the same manner as the Fundamental Change Stock Prices set forth in the first row of the table above), then the Fundamental Change Conversion Rate will be the Maximum Conversion Rate. |
(a) | pay in cash (computed to the nearest cent), to the extent we are legally permitted to do so and to the extent permitted under the terms of the documents governing our indebtedness, an amount equal to the present value, calculated using a discount rate of % per annum, of all dividend payments (excluding any Accumulated Dividend Amount, and subject to the second sentence under “—General” above) on the Series A preferred stock for (i) the partial dividend period, if any, from, and including, the Fundamental Change Effective Date to, but excluding, the next Dividend Payment Date and (ii) all remaining full dividend periods from, and including, the Dividend Payment Date following the Fundamental Change Effective Date to, but excluding, the Mandatory Conversion Date (the “Fundamental Change Dividend Make-Whole Amount”); |
(b) | increase the number of shares of our common stock (or Units of Exchange Property) to be issued upon conversion by a number equal to (i) the Fundamental Change Dividend Make-Whole Amount divided by (ii) the greater of (x) the Floor Price and (y) 97% of the Fundamental Change Stock Price; or |
(c) | pay the Fundamental Change Dividend Make-Whole Amount through any combination of cash and shares of our common stock (or Units of Exchange Property) in accordance with the provisions of clauses (a) and (b) above. |
• | in cash (computed to the nearest cent), to the extent we are legally permitted to do so and to the extent permitted under the terms of the documents governing our indebtedness; |
• | in an additional number of shares of our common stock (or Units of Exchange Property) equal to (i) the Accumulated Dividend Amount divided by (ii) the greater of (x) the Floor Price and (y) 97% of the Fundamental Change Stock Price; or |
• | through a combination of cash and shares of our common stock (or Units of Exchange Property) in accordance with the provisions of the preceding two bullets. |
• | the Fundamental Change Conversion Rate (if we provide notice to holders prior to the anticipated Fundamental Change Effective Date, specifying how the Fundamental Change Conversion Rate will be determined); |
• | the Fundamental Change Dividend Make-Whole Amount and whether we will pay such amount in cash, shares of our common stock (or to the extent applicable, Units of Exchange Property) or a combination thereof, specifying the combination, if applicable; and |
• | the Accumulated Dividend Amount as of the Fundamental Change Effective Date and whether we will pay such amount in cash, shares of our common stock (or to the extent applicable, Units of Exchange Property) or a combination thereof, specifying the combination, if applicable. |
• | If shares of the Series A preferred stock are in global form, to convert the Series A preferred stock you must deliver to DTC the appropriate instruction form for conversion pursuant to DTC’s conversion program. |
• | If shares of the Series A preferred stock are held in certificated form, you must comply with certain procedures set forth in the certificate of designations for the Series A preferred stock. |
(1) | If we exclusively issue shares of our common stock as a dividend or distribution on shares of our common stock, or if we effect a share split or share combination, each Fixed Conversion Rate will be adjusted based on the following formula: |
CR
1
|
=
|
CR
0
|
×
|
OS
1
|
||||
|
|
|
|
OS
0
|
CR
0
=
|
such Fixed Conversion Rate in effect immediately prior to the Close of Business on the record date (as defined herein) of such dividend or distribution, or immediately prior to the Open of Business on the effective date of such share split or share combination, as applicable;
|
|
CR
1
=
|
such Fixed Conversion Rate in effect immediately after the Close of Business on such record date or immediately after the Open of Business on such effective date, as applicable;
|
|
OS
0
=
|
the number of shares of our common stock outstanding immediately prior to the Close of Business on such record date or immediately prior to the Open of Business on such effective date, as applicable, before giving effect to such dividend, distribution, share split or share combination; and
|
|
OS
1
=
|
the number of shares of our common stock outstanding immediately after giving effect to such dividend, distribution, share split or share combination.
|
(2) | If we issue to all or substantially all holders of our common stock any rights, options or warrants entitling them, for a period of not more than 45 calendar days after the announcement date of such issuance, to subscribe for or purchase shares of our common stock at a price per share that is less than the Average VWAP per share of our common stock for the 10 consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the date of announcement of such issuance, each Fixed Conversion Rate will be increased based on the following formula: |
CR
1
|
=
|
CR
0
|
×
|
OS
0
+ X
|
||||
|
|
|
|
OS
0
+ Y
|
CR
0
=
|
such Fixed Conversion Rate in effect immediately prior to the Close of Business on the record date for such issuance;
|
|
CR
1
=
|
such Fixed Conversion Rate in effect immediately after the Close of Business on such record date;
|
|
OS
0
=
|
the number of shares of our common stock outstanding immediately prior to the Close of Business on such record date;
|
|
X=
|
the total number of shares of our common stock issuable pursuant to such rights, options or warrants; and
|
|
Y=
|
the number of shares of our common stock equal to (i) the aggregate price payable to exercise such rights, options or warrants,
divided by
|
(3) | If we distribute shares of our capital stock, evidences of our indebtedness, other assets or property of ours or rights, options or warrants to acquire our capital stock or other securities, to all or substantially all holders of our common stock, excluding: |
• | dividends, distributions or issuances as to which the provisions set forth in clause (1) or (2) shall apply; |
• | dividends or distributions paid exclusively in cash as to which the provisions set forth in clause (4) below shall apply; |
• | any dividends and distributions upon conversion of, or in exchange for, our common stock in connection with a recapitalization, reclassification, change, consolidation, merger or other combination, share exchange, or sale, lease or other transfer or disposition resulting in the change in the conversion consideration as described below under “—Recapitalizations, Reclassifications and Changes of Our Common Stock”; |
• | except as otherwise described below, rights issued pursuant to a shareholder rights plan adopted by us; and |
• | spin-offs as to which the provisions set forth below in this clause (3) shall apply; |
|
CR
1
|
=
|
CR
0
|
× |
|
SP
0
|
|
|||||||||||||||
|
|
|
|
|
SP
0
– FMV
|
|
CR
0
=
|
such Fixed Conversion Rate in effect immediately prior to the Close of Business on the record date for such distribution;
|
|
CR
1
=
|
such Fixed Conversion Rate in effect immediately after the Close of Business on such record date;
|
|
SP
0
=
|
the Average VWAP per share of our common stock over the 10 consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the
ex-date
(as defined herein) for such distribution; and
|
|
FMV =
|
the fair market value (as determined by our board of directors or a committee thereof in good faith) of the shares of capital stock, evidences of indebtedness, assets, property, rights, options or warrants so distributed, expressed as an amount per share of our common stock on the
ex-date
for such distribution.
|
• | we will not adjust the Fixed Conversion Rates pursuant to the foregoing in this clause (3) until the earliest of these triggering events occurs; and |
• |
we will readjust the Fixed Conversion Rates to the extent any of these rights, options or warrants are not exercised before they expire or are terminated without exercise by any holder thereof;
provided
|
|
CR
1
|
=
|
CR
0
|
×
|
FMV
0
+ MP
0
|
|
||||||||||||||||
|
|
|
|
|
MP
0
|
|
CR
0
=
|
such Fixed Conversion Rate in effect immediately prior to the Close of Business on the last Trading Day of the 10 consecutive Trading Day period commencing on, and including, the
ex-date
for the
spin-off
(the “valuation period”);
|
|
CR
1
=
|
such Fixed Conversion Rate in effect immediately after the Close of Business on the last Trading Day of the valuation period;
|
|
FMV
0
=
|
the Average VWAP per share of the capital stock or similar equity interest distributed to holders of our common stock applicable to one share of our common stock over the valuation period; and
|
|
MP
0
=
|
the Average VWAP per share of our common stock over the valuation period.
|
(4) | If any cash dividend or distribution is made to all or substantially all holders of our common stock, other than a regular, quarterly cash dividend that does not exceed $ per share (the “Initial Dividend Threshold”), each Fixed Conversion Rate will be adjusted based on the following formula: |
|
CR
1
|
=
|
CR
0
|
×
|
SP
0
– T
|
|
||||||||||||||||
|
|
|
|
|
SP
0
– C
|
|
CR
0
=
|
such Fixed Conversion Rate in effect immediately prior to the Close of Business on the record date for such dividend or distribution;
|
|
CR
1
=
|
such Fixed Conversion Rate in effect immediately after the Close of Business on the record date for such dividend or distribution;
|
|
SP
0
=
|
the Average VWAP per share of our common stock over the 10 consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the
ex-date
for such distribution;
|
|
T =
|
the Initial Dividend Threshold; provided that if the dividend or distribution is not a regular quarterly cash dividend, the Initial Dividend Threshold shall be deemed to be zero; and
|
|
C =
|
the amount in cash per share we distribute to all or substantially all holders of our common stock.
|
(5) | If we or any of our subsidiaries make a payment in respect of a tender or exchange offer for our common stock, to the extent that the cash and value of any other consideration included in the payment per share of common stock exceeds the Average VWAP per share of our common stock |
over the 10 consecutive Trading Day period commencing on, and including, the Trading Day next succeeding the last date on which tenders or exchanges may be made pursuant to such tender or exchange offer (the “expiration date”), each Fixed Conversion Rate will be increased based on the following formula: |
|
CR
1
|
=
|
CR
0
|
×
|
AC + (SP
1
× OS
1
)
|
|
||||||||||||||||
|
|
|
|
|
OS
0
× SP
1
|
|
CR
0
=
|
such Fixed Conversion Rate in effect immediately prior to the Close of Business on the 10
th
Trading Day immediately following, and including, the Trading day next succeeding the expiration date;
|
|
CR
1
=
|
such Fixed Conversion Rate in effect immediately after the Close of Business on the 10
th
Trading Day immediately following, and including, the Trading day next succeeding the expiration date;
|
|
AC =
|
the aggregate value of all cash and any other consideration (as determined by our board of directors or a committee thereof in good faith) paid or payable for shares purchased in such tender or exchange offer;
|
|
OS
0
=
|
the number of shares of our common stock outstanding immediately prior to the expiration date (prior to giving effect to the purchase of all shares accepted for purchase or exchange in such tender or exchange offer);
|
|
OS
1
=
|
the number of shares of our common stock outstanding immediately after the expiration date (after giving effect to the purchase of all shares accepted for purchase or exchange in such tender or exchange offer); and
|
|
SP
1
=
|
the Average VWAP of our common stock over the 10 consecutive Trading Day period commencing on, and including, the Trading Day next succeeding the expiration date (the “averaging period”).
|
• | upon the issuance of any shares of our common stock pursuant to any present or future plan providing for the reinvestment of dividends or interest payable on our securities and the investment of additional optional amounts in common stock under any plan; |
• | upon the issuance of any shares of our common stock or rights or warrants to purchase those shares pursuant to any present or future benefit or other incentive plan or program of or assumed by us or any of our subsidiaries; |
• | upon the issuance of any shares of our common stock pursuant to any option, warrant, right or exercisable, exchangeable or convertible security not described in the preceding bullet and outstanding as of the Initial Issue Date; |
• | for a change in the par value of our common stock; |
• | for stock repurchases that are not tender offers referred to in clause (5) of the adjustments above, including structured or derivative transactions or pursuant to a stock repurchase program approved by our board of directors; |
• | for accumulated dividends on the Series A preferred stock, except as described above under “—Mandatory Conversion,” “—Early Conversion at the Option of the Holder” and “—Conversion |
at the Option of the Holder upon Fundamental Change; Fundamental Change Dividend Make-Whole Amount”; or |
• | for any other issuance of shares of our common stock or any securities convertible into or exchangeable for shares of our common stock or the right to purchase shares of our common stock or such convertible or exchangeable securities, except as described above. |
• | the record date for a dividend or distribution on shares of our common stock occurs after the end of the 20 consecutive Trading Day period used for calculating the Applicable Market Value and before the Mandatory Conversion Date; and |
• |
that dividend or distribution would have resulted in an adjustment of the number of shares issuable to the holders of the Series A preferred stock had such record date occurred on or before the last Trading Day of such
20-Trading
Day period,
|
• | any consolidation or merger of us with or into another person (other than a merger or consolidation in which we are the surviving corporation and in which the shares of our common stock outstanding immediately prior to the merger or consolidation are not exchanged for cash, securities or other property of us or another person); |
• | any sale, transfer, lease or conveyance to another person of all or substantially all of our property and assets; |
• | any reclassification of our common stock into securities, including securities other than our common stock; or |
• | any statutory exchange of our securities with another person (other than in connection with a merger or acquisition), |
• | the weighted average of the types and amounts of consideration received by the holders of our common stock that affirmatively make such an election; and |
• | if no holders of our common stock affirmatively make such an election, the types and amounts of consideration actually received by the holders of our common stock. |
• | a limited purpose trust company organized under the laws of the State of New York; |
• | a “banking organization” within the meaning of New York Banking Law; |
• | a member of the Federal Reserve System; |
• | a “clearing corporation” within the meaning of the Uniform Commercial Code; and |
• | a “Clearing Agency” registered pursuant to the provisions of Section 17A of the Exchange Act. |
• | securities brokers and dealers; |
• | banks and trust companies; and |
• | clearing corporations and certain other organizations. |
• | U.S. expatriates and former citizens or long-term residents of the United States; |
• | persons holding our Mandatory Convertible Preferred Stock or common stock as part of a hedge, straddle or other risk reduction strategy or as part of a conversion transaction or other integrated investment; |
• | banks, insurance companies, and other financial institutions; |
• | brokers, dealers or traders in securities, currencies or commodities; |
• | “controlled foreign corporations,” “passive foreign investment companies,” and corporations that accumulate earnings to avoid U.S. federal income tax; |
• | partnerships or other entities or arrangements treated as partnerships for U.S. federal income tax purposes (and investors therein); |
• |
tax-exempt
entities or governmental entities;
|
• | persons deemed to sell our Mandatory Convertible Preferred Stock or common stock under the constructive sale provisions of the Code; |
• | persons who hold or receive our Mandatory Convertible Preferred Stock or common stock pursuant to the exercise of any employee stock option or otherwise as compensation; |
• |
tax-qualified
retirement plans;
|
• | “qualified foreign pension funds” as defined in Section 897(l)(2) of the Code and entities all of the interests of which are held by qualified foreign pension funds; |
• | persons subject to special tax accounting rules as a result of any item of gross income with respect to the stock being taken into account in an “applicable financial statement” (as defined in the Code); |
• |
U.S. Holders holding Mandatory Convertible Preferred Stock or common stock through
non-U.S.
brokers or other
non-U.S.
intermediaries;
|
• | regulated investment companies; and |
• | real estate investment trusts. |
• | an individual who is a citizen or resident of the United States; |
• | a corporation created or organized in or under the laws of the United States, any state thereof or the District of Columbia; |
• | an estate the income of which is subject to United States federal income taxation regardless of its source; or |
• | a trust if it (1) is subject to the primary supervision of a court within the United States and one or more United States persons have the authority to control all substantial decisions of the trust or (2) has a valid election in effect under applicable United States Treasury regulations to be treated as a United States person. |
• |
the gain is effectively connected with a trade or business of the
non-U.S.
holder in the United States;
|
• |
the
non-U.S.
holder is an individual who is present in the United States for 183 days or more in the taxable year of that disposition, and certain other conditions are met; or
|
• | we are or have been a “United States real property holding corporation” (“USRPHC”) for United States federal income tax purposes and certain other conditions are met. |
Underwriters
|
Number
of Shares |
|
||
BofA Securities, Inc.
|
|
|||
Goldman Sachs & Co. LLC
|
|
|||
J.P. Morgan Securities LLC
|
|
|||
Citigroup Global Markets Inc.
|
|
|||
Credit Suisse Securities (USA) LLC
|
|
|||
Morgan Stanley & Co. LLC
|
|
|||
Wells Fargo Securities, LLC
|
|
|||
Barclays Capital Inc.
|
|
|||
Deutsche Bank Securities Inc.
|
|
|||
BMO Capital Markets Corp.
|
|
|||
RBC Capital Markets, LLC
|
|
|||
MUFG Securities Americas Inc.
|
|
|||
Total
|
|
|
|
|
Total
|
|||||||||
|
Per Share
|
|
No Exercise
|
|
Full Exercise
|
|
||||||
Public offering price
|
$ |
|
$ |
|
$ |
|
||||||
Underwriting discounts and commissions
|
$ |
|
$ |
|
$ |
|
BofA Securities
|
Goldman Sachs & Co. LLC
|
J.P. Morgan
|
Citigroup
|
Credit Suisse
|
Morgan Stanley
|
Wells Fargo Securities
|
Barclays
|
Deutsche Bank Securities
|
BMO Capital Markets
|
RBC Capital Markets
|
MUFG
|
SEC registration fee
|
$ |
25,960
|
||
FINRA filing fee
|
*
|
|||
Exchange listing fee
|
*
|
|||
Printing and engraving expenses
|
*
|
|||
Legal fees and expenses
|
*
|
|||
Accounting fees and expenses
|
*
|
|||
Transfer agent and registrar fees
|
*
|
|||
Miscellaneous expenses
|
*
|
|||
Total
|
$ |
*
|
* | To be provided by amendment. |
• | ACI is required to indemnify its directors and executive officers to the fullest extent permitted by the DGCL, subject to very limited exceptions; |
• | ACI may indemnify its other employees and agents as set forth in the DGCL; |
• | ACI is required to advance expenses, as incurred, to its directors and executive officers in connection with a legal proceeding to the fullest extent permitted by the DGCL, subject to very limited exceptions; and |
• | the rights conferred in the bylaws are not exclusive. |
(1) | For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective. |
(2) | For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. |
Exhibit
No. |
|
Description
|
||
10.18
|
||||
10.19
|
||||
10.20*
|
||||
10.21*
|
||||
10.22*
|
||||
10.23**
|
Form of Albertsons Companies, Inc. 2020 Omnibus Incentive Plan
|
|||
10.24**
|
Form of Albertsons Companies, Inc. Restricted Stock Unit Plan
|
|||
21.1*
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23.2*
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24.1*
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101.INS.*
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XBRL Instance Document – the instance document does not appear in the Interactive Data File because iXBRL tags are embedded within the Inline XBRL document
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101.SCH.*
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XBRL Taxonomy Extension Schema Document
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101.CAL.*
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XBRL Taxonomy Extension Calculation Linkbase Document
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101.DEF.*
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XBRL Taxonomy Extension Definition Linkbase Document
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101.LAB.*
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XBRL Taxonomy Extension Label Linkbase Document
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101.PRE.*
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XBRL Taxonomy Extension Presentation Linkbase Document
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104
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The cover page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
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* | Filed herewith. |
** | To be filed by amendment. |
Albertsons Companies, Inc.
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By:
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/s/ Vivek Sankaran
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Vivek Sankaran
President, Chief Executive Officer and Director
(Principal Executive Officer)
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Signature
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Title
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Date
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/s/ Vivek Sankaran
Vivek Sankaran
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President, Chief Executive Officer and Director
(Principal Executive Officer)
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March 6, 2020
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/s/ Robert B. Dimond
Robert B. Dimond
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Executive Vice President and Chief
Financial Officer
(Principal Financial Officer)
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March 6, 2020
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/s/ Robert B. Larson
Robert B. Larson
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Senior Vice President and Chief Accounting Officer
(Principal Accounting Officer)
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March 6, 2020
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/s/ Robert G. Miller
Robert G. Miller
|
Chairman Emeritus
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March 6, 2020
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/s/ James L. Donald
James L. Donald
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Co-Chairman
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March 6, 2020
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/s/ Leonard Laufer
Leonard Laufer
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Co-Chairman
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March 6, 2020
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Signature
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Title
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Date
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||
/s/ Dean S. Adler
Dean S. Adler
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Director
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March 6, 2020
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/s/ Sharon L. Allen
Sharon L. Allen
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Director
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March 6, 2020
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/s/ Steven A. Davis
Steven A. Davis
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Director
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March 6, 2020
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/s/ Kim Fennebresque
Kim Fennebresque
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Director
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March 6, 2020
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/s/ Allen M. Gibson
Allen M. Gibson
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Director
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March 6, 2020
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/s/ Hersch Klaff
Hersch Klaff
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Director
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March 6, 2020
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/s/ Jay L. Schottenstein
Jay L. Schottenstein
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Director
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March 6, 2020
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/s/ Alan H. Schumacher
Alan H. Schumacher
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Director
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March 6, 2020
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/s/ Lenard B. Tessler
Lenard B. Tessler
|
Director
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March 6, 2020
|
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/s/ B. Kevin Turner
B. Kevin Turner
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Vice Chairman
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March 6, 2020
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/s/ Scott Wille
Scott Wille
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Director
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March 6, 2020
|
Exhibit 3.1
AMENDED & RESTATED
CERTIFICATE OF INCORPORATION
OF
ALBERTSONS COMPANIES, INC.
Albertsons Companies, Inc., a corporation organized and existing under the laws of the State of Delaware, hereby certifies as follows:
1. |
The name of the Corporation is Albertsons Companies, Inc. and the Corporation was originally incorporated under the same name. The original Certificate of Incorporation of Albertsons Companies, Inc. was filed June 23, 2015. |
2. |
This Amended & Restated Certificate of Incorporation amends and restates the provisions of the Certificate of Incorporation of the Corporation. |
3. |
This Amended & Restated Certificate of Incorporation has been duly adopted by the Board of Directors and stockholders of the Corporation in accordance with Section 242 and 245 of the General Corporation Law of the State of Delaware. |
4. |
The text of the Certificate of Incorporation of the Corporation is hereby amended and restated in its entirety to read as follows. |
ARTICLE I
The name of the Corporation is Albertsons Companies, Inc. (the Corporation).
ARTICLE II
The address of the registered office of the Corporation in the State of Delaware is Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware, 19801, New Castle County. The name of its registered agent at such address is The Corporation Trust Company.
ARTICLE III
The purpose of the Corporation is to engage in any lawful act or activity for which a corporation may now or hereafter be organized under the General Corporation Law of the State of Delaware (the DGCL).
ARTICLE IV
The total number of shares of all classes of stock which the Corporation shall have authority to issue is one billion one hundred million (1,100,000,000), consisting of (i) one billion (1,000,000,000) shares of common stock, par value one cent ($0.01) per share (the Common Stock), and (ii) one hundred million (100,000,000) shares of preferred stock, par value one cent ($0.01) per share (the Preferred Stock). The Board of Directors is hereby expressly authorized,
by resolution or resolutions, to provide, out of the unissued shares of Preferred Stock, for one or more series of Preferred Stock and, with respect to each such series, to fix, without further stockholder approval, the designation, powers, preferences and relative, participating, optional or other special rights, including voting powers and rights, and the qualifications, limitations or restrictions thereof, of each series of Preferred Stock pursuant to Section 151 of the DGCL.
ARTICLE V
Except as otherwise provided by the DGCL or this Certificate of Incorporation, the business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors. The total number of directors consisting the Board of Directors shall be not less than 7 directors nor more than 15 directors, the exact number of directors to be determined from time to time exclusively by resolution adopted by the Board of Directors or in the manner provided herein. Prior to the date upon which Cerberus Capital Management, L.P., Schottenstein Stores Corp., Klaff Realty, L.P., Lubert-Adler Partners, L.P., Kimco Realty Corporation and their respective Affiliates (as defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended) or any person who is an express assignee or designee of their respective rights under this Certificate of Incorporation (and such assignees or designees Affiliates) (the ACI Control Group) ceases to own, in the aggregate, at least 50% of the then-outstanding shares of Common Stock of the Corporation (the 50% Trigger Date), the authorized number of directors may be increased or decreased by an affirmative vote of the majority of the outstanding shares of Common Stock owned by the ACI Control Group (such vote, ACI Control Group Approval). On and after the 50% Trigger Date, the authorized number of directors may be increased or decreased by the affirmative vote of not less than two-thirds (2/3) of the then-outstanding shares of capital stock of the Corporation entitled to vote or by resolution of the Board of Directors. At each annual meeting of stockholders of the Corporation, all directors shall be elected for a one (1) year term and shall hold office until the next annual meeting of stockholders and until their successors shall be elected and shall qualify, subject, however, to prior death, resignation, retirement, disqualification or removal from office.
Vacancies on the Board of Directors by reason of death, resignation, retirement, disqualification, removal from office, or otherwise, and newly created directorships resulting from any increase in the authorized number of directors, shall be filled (i) prior to the 50% Trigger Date, by (x) ACI Control Group Approval or (y) a majority of the directors then in office, although less than a quorum, or by a sole remaining director and (ii) on and after the 50% Trigger Date, solely by a majority of the directors then in office, although less than a quorum, or by a sole remaining director, and shall not be filled by the stockholders. A director elected to fill a vacancy or a newly created directorship shall hold office until the next annual meeting of stockholders and until his or her successor shall be elected and shall qualify, subject, however, to prior death, resignation, retirement, disqualification or removal from office.
ARTICLE VI
On or after the 50% Trigger Date, subject to the special rights of one or more series of Preferred Stock to elect directors, any director or the entire Board of Directors may only be removed from office, either with or without cause, by the affirmative vote of at least two-thirds (2/3) of the total voting power of the outstanding shares of the capital stock of the Corporation then entitled to vote generally in an election of directors, voting together as a single class.
2
ARTICLE VII
Elections of directors at an annual or special meeting of stockholders need not be by written ballot unless the Bylaws of the Corporation shall otherwise provide.
ARTICLE VIII
A. Special meetings of the stockholders of the Corporation for any purpose or purposes (i) may be called at any time by the Board of Directors, and (ii) shall be called by the Secretary upon the written request of stockholders owning at least twenty-five percent (25%) in amount of the entire capital stock of the Corporation issued and outstanding, and entitled to vote at the special meeting.
B. At any time prior to the 50% Trigger Date, any action required or permitted by the DGCL to be taken at a stockholders meeting may be taken without a meeting and without prior notice if the action is taken by ACI Control Group Approval and by the delivery of consents representing the voting power of stockholders otherwise required under the DGCL to effect such action by written consent in lieu of a meeting. On and after the 50% Trigger Date, no action required or permitted by the DGCL to be taken at a stockholders meeting may be taken by the written consent of stockholders in lieu of a meeting.
ARTICLE IX
The officers of the Corporation shall be chosen in such a manner, shall hold their offices for such terms and shall carry out such duties as are determined by the Board of Directors, subject to the right of the Board of Directors to remove any officer or officers at any time with or without cause.
ARTICLE X
A. The Corporation shall indemnify to the full extent authorized or permitted by law (as now or hereafter in effect) any person made, or threatened to be made, a defendant or witness to any action, suit or proceeding (whether civil or criminal or otherwise) by reason of the fact that such person is or was a director or officer of the Corporation or by reason of the fact that such director or officer, at the request of the Corporation, is or was serving any other corporation, partnership, joint venture, employee benefit plan or other enterprise, in any capacity. Nothing contained herein shall affect any rights to indemnification to which employees other than directors or officers may be entitled by law. No amendment or repeal of this Section A of Article X shall apply to or have any effect on any right to indemnification provided hereunder with respect to any acts or omissions occurring prior to such amendment or repeal. The rights to indemnification provided under this Section A of Article X shall extent to the testator or intestate of the person to whom such rights are granted.
3
B. To the fullest extent permitted by law, no director of the Corporation shall be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director. No amendment to or repeal of this Section B of this Article X shall apply to or have any effect on the liability or alleged liability of any director of the Corporation for or with respect to any acts or omissions of such director occurring prior to such amendment or repeal.
C. In furtherance and not in limitation of the powers conferred by statute:
(i) the Corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such persons status as such, whether or not the Corporation would have the power to indemnify such person against such liability under the provisions of law; and
(ii) the Corporation may create a trust fund, grant a security interest and/or use other means (including, without limitation, letters of credit, surety bonds and/or other similar arrangements), as well as enter into contracts providing indemnification to the full extent authorized or permitted by law and including as part thereof provisions with respect to any or all of the foregoing to ensure the payment of such amounts as may become necessary to effect indemnification as provided therein, or elsewhere.
ARTICLE XI
In furtherance and not in limitation of the powers conferred by statute, the Board of Directors is expressly empowered to adopt, amend or repeal the Bylaws of the Corporation. Any adoption, amendment or repeal of the Bylaws by the Board of Directors shall require the approval of a majority of the entire Board of Directors. The stockholders shall also have power to adopt, amend or repeal the Bylaws; provided, however, that, in addition to any vote of the holders of any class or series of stock of the Corporation required by law or by this Certificate of Incorporation, (i) prior to the 50% Trigger Date, in addition to any vote required by law, the adoption, amendment or repeal of the Bylaws may only be effected by ACI Control Group Approval, and (ii) on and after the 50% Trigger Date, in addition to any vote required by law, this Certificate of Incorporation or the Bylaws, the affirmative vote of the holders of at least two-thirds (2/3) of the voting power of all of the then outstanding shares of the capital stock of the Corporation entitled to vote thereon, voting together as a single class, shall be required to adopt, amend or repeal any provision of the Bylaws. Notwithstanding anything in the preceding sentences, in no event shall (x) any amendment or repeal of any Bylaw provision requiring a supermajority vote of the stockholders to take action under such provision be made without the affirmative vote of the same supermajority of the stockholders, and (y) any rights to indemnification or advancement of expenses conferred on the ACI Control Group, directors or officers by the Bylaws be amended or repealed other than prospectively with respect to actions taken on or after the date of such amendment or repeal.
4
ARTICLE XII
The Corporation reserves the right to repeal, alter amend, or rescind any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred on stockholders herein are granted subject to this reservation.
ARTICLE XIII
Unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall, to the fullest extent permitted by law, be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Corporation, (ii) any action asserting a claim for breach of a fiduciary duty owed by any director, officer, employee or agent of the Corporation to the Corporation or the Corporations stockholders, (iii) any action asserting a claim arising pursuant to any provision of the DGCL, the Certificate of Incorporation or the Bylaws or (iv) any action asserting a claim governed by the internal affairs doctrine.
Notwithstanding the foregoing, this provision does not apply to actions arising under the Securities Exchange Act of 1934, as amended, or the Securities Act of 1933, as amended, or any other claim for which the federal courts have exclusive jurisdiction.
ARTICLE XIV
The Corporation elects not to be governed by Section 203 of the DGCL, Business Combinations With Interested Stockholders, as permitted under and pursuant to subsection (b)(1) of Section 203 of the DGCL.
[Remainder of page intentionally left blank]
5
IN WITNESS WHEREOF, this Amended & Restated Certificate of Incorporation has been executed by its authorized officer, this fifth day of March, 2020.
ALBERTSONS COMPANIES, INC. |
By: |
/s/ Robert A. Gordon |
|
Name: | Robert A. Gordon | |
Title: | Executive Vice President, General Counsel & Secretary |
6
Exhibit 3.2
FORM OF
AMENDED & RESTATED
BYLAWS
OF
ALBERTSONS COMPANIES, INC.
(Effective , 2020)
ARTICLE I
DEFINITIONS
As used in these Bylaws of the Corporation, the terms set forth below shall have the meanings indicated, as follows:
35% Trigger Date shall mean the date upon which the ACI Control Group ceases to own, in the aggregate, at least 35% of the then-outstanding shares of Common Stock.
50% Trigger Date shall mean the date upon which the ACI Control Group ceases to own, in the aggregate, at least 50% of the then-outstanding shares of Common Stock.
ACI Control Group shall mean Cerberus Capital Management, L.P., Schottenstein Stores Corp., Klaff Realty, L.P., Lubert-Adler Partners, L.P., Kimco Realty Corporation and their respective Affiliates (as defined in Rule 12b-2 of the Exchange Act), or any person who is an express assignee or designee of their respective rights under the Certificate of Incorporation (and such assignees or designees respective Affiliates).
Board of Directors or Board shall mean the board of directors of the Corporation.
Bylaws shall mean these Bylaws of the Corporation, as the same may be amended and/or restated from time to time.
Certificate of Incorporation shall mean the Certificate of Incorporation of the Corporation, as the same may be amended and/or restated from time to time.
Common Stock shall mean the common stock, par value $0.01 per share, of the Corporation.
Corporation shall mean Albertsons Companies, Inc., a Delaware corporation.
Delaware Court shall mean the Court of Chancery of the State of Delaware.
Designated Controlling Stockholder shall mean, of the entities in the ACI Control Group, the entity that is the beneficial owner of the largest number of shares of the Common Stock.
DGCL shall mean the General Corporation Law of the State of Delaware, as amended from time to time.
1
Electronic Transmission shall mean any form of communication, not directly involving the physical transmission of paper, that creates a record that may be retained, retrieved and reviewed by a recipient thereof, and that may be directly reproduced on paper form by such a recipient through an automatic process.
Exchange Act shall mean the Securities Exchange Act of 1934, as amended.
Proposing Stockholder shall mean any stockholder of record other than, prior to the 35% Trigger Date, the Designated Controlling Stockholder, provided that, on or after the 35% Trigger Date, the Designated Controlling Stockholder shall be included as a Proposing Stockholder.
Secretary of State shall mean the Secretary of State of the State of Delaware.
Stockholders Agreement shall mean that certain Stockholders Agreement, dated as of , 2020, by and among the Corporation and the holders of stock of the Corporation signatory thereto, as the same may be amended and/or restated from time to time.
ARTICLE II
OFFICES
Section 2.01 Offices. The address of the registered office of the Corporation in the State of Delaware shall be as set forth in the Certificate of Incorporation.
The Corporation may also have offices at such other places both within and without the State of Delaware as the Board of Directors may from time to time determine or the business of the Corporation may require.
ARTICLE III
MEETINGS OF STOCKHOLDERS
Section 3.01 Place of Meeting. Meetings of stockholders shall be held at any place within or outside the State of Delaware designated by the Board of Directors. The Board of Directors may, in its sole discretion, determine that the meeting shall not be held at any place, but may instead be held solely by means of remote communication as provided under the DGCL. In the absence of any such designation, stockholders meetings shall be held at the principal executive office of the Corporation.
Section 3.02 Annual Meeting.
(a) The annual meeting of stockholders for the election of directors and for the transaction of such other business as shall have been properly brought before the meeting shall be held on such date and at such time and place, if any, as may be fixed by the Board of Directors and stated in the notice of the meeting. The Board of Directors may postpone, reschedule or cancel any previously scheduled annual meeting of stockholders. At an annual meeting of the stockholders, only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before an annual meeting, business (other than the nomination of a person for election of a director, which is governed by Section 4.01 of
2
these Bylaws) must be (i) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors, including any committee thereof, (ii) otherwise properly brought before the meeting by or at the direction of the Board of Directors, including any committee thereof, or, prior to the 35% Trigger Date, the Designated Controlling Stockholder, or (iii) otherwise properly brought before the meeting by a Proposing Stockholder who (A) was a stockholder of record (and, with respect to any beneficial owner, if different, on whose behalf such business is proposed, only if such beneficial owner was the beneficial owner of shares of the Corporation) both at the time of giving the notice provided for in this Section 3.02 and at the time of the meeting, (B) is entitled to vote at the meeting and (C) complied with all of the notice procedures set forth in this Section 3.02 as to such business. Except for proposals made in accordance with Rule 14a-8 under the Exchange Act, and included in the notice of meeting given by or at the direction of the Board of Directors, the foregoing clause (iii) shall be the exclusive means for a Proposing Stockholder to propose business (other than the nomination of a person for election of a director, which is governed by Section 4.01 of these Bylaws) to be brought before an annual meeting of the stockholders. Proposing Stockholders seeking to nominate persons for election to the Board of Directors must comply with the notice procedures set forth in Section 4.01 of these Bylaws, and this Section 3.02 shall not be applicable to nominations except as expressly provided in Section 4.01 of these Bylaws.
(b) Without qualification, for business to be properly brought before an annual meeting by a Proposing Stockholder, such proposed business must constitute a proper matter for stockholder action and the Proposing Stockholder must (i) provide Timely Notice (as defined below) thereof in writing and in proper form to the Secretary of the Corporation and (ii) provide any updates or supplements to such notice at the times and in the forms required by this Section 3.02. To be timely, a Proposing Stockholders notice must be delivered to or mailed and received at the principal executive offices of the Corporation not less than 90 days nor more than 120 days prior to the first anniversary of the preceding years annual meeting (which date shall, for purposes of the Corporations first annual meeting of stockholders after its shares of Common Stock are first publicly traded, be deemed to have occurred 120 days after the end of the last fiscal year concluded prior to the date on which shares of Common Stock are first publicly traded); 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 Proposing Stockholder to be timely must be so delivered not earlier than the 120th day prior to such annual meeting and not later than the 90th day prior to such annual meeting or, if later, the 10th day following the day on which public disclosure of the date of such annual meeting was made (such notice within such time periods, Timely Notice). In no event shall any adjournment or postponement of an annual meeting or the announcement thereof commence a new time period (or extend any time period) for the giving of Timely Notice as described above.
(c) To be in proper form for purposes of this Section 3.02, a Proposing Stockholders notice to the Secretary pursuant to this Section 3.02 shall be required to set forth:
(i) As to the Proposing Stockholder providing the notice and each other Proposing Person (as defined below), (A) the name and address of the Proposing Stockholder providing the notice, as they appear on the Corporations books, and each other Proposing Person and (B) the class or series and number of shares of the Corporation that are, directly or indirectly, owned of record or beneficially owned (as defined in Rule 13d-3 under the
3
Exchange Act) by the Proposing Stockholder providing the notice and/or any other Proposing Persons, except that such Proposing Stockholder and/or such other Proposing Persons shall be deemed to beneficially own any shares of any class or series of the Corporation as to which such Proposing Stockholder and/or such other Proposing Person(s) has a right to acquire beneficial ownership at any time in the future;
(ii) As to the Proposing Stockholder providing the notice (or, if different, the beneficial owner on whose behalf such business is proposed) and each other Proposing Person, (A) any derivative, swap or other transaction or series of transactions engaged in, directly or indirectly, by such Proposing Stockholder or beneficial owner, as applicable, and/or any other Proposing Person, the purpose or effect of which is to give such Proposing Stockholder or beneficial owner, as applicable, and/or such other Proposing Person economic risk similar to ownership of shares of any class or series of the Corporation, including due to the fact that the value of such derivative, swap or other transaction is determined by reference to the price, value or volatility of any shares of any class or series of the Corporation, or which derivative, swap or other transaction provides, directly or indirectly, the opportunity to profit from any increase in the price or value of shares of any class or series of the Corporation (Synthetic Equity Interests), which such Synthetic Equity Interests shall be disclosed without regard to whether (x) such derivative, swap or other transaction conveys any voting rights in such shares to such Proposing Stockholder or beneficial owner, as applicable, and/or such other Proposing Person, (y) the derivative, swap or other transaction is required to be, or is capable of being, settled through delivery of such shares or (z) such Proposing Stockholder or beneficial owner, as applicable, and/or such other Proposing Person may have entered into other transactions that hedge or mitigate the economic effect of such derivative, swap or other transaction, (B) any proxy (other than a revocable proxy given in response to a public proxy solicitation made pursuant to, and in accordance with, the Exchange Act), agreement, arrangement, understanding or relationship pursuant to which such Proposing Stockholder or beneficial owner, as applicable, and/or any other Proposing Person has or shares a right to vote any shares of any class or series of the Corporation, (C) any agreement, arrangement, understanding or relationship, including any repurchase or similar so-called stock borrowing agreement or arrangement, engaged in, directly or indirectly, by such Proposing Stockholder or beneficial owner, as applicable, and/or any other Proposing Person, the purpose or effect of which is to mitigate loss to, reduce the economic risk (of ownership or otherwise) of shares of any class or series of the Corporation by, manage the risk of share price changes for, or increase or decrease the voting power of, such Proposing Stockholder or beneficial owner, as applicable, and/or such other Proposing Person with respect to the shares of any class or series of the Corporation, or which provides, directly or indirectly, the opportunity to profit from any decrease in the price or value of the shares of any class or series of the Corporation (Short Interests), (D)(x) if such Proposing Stockholder or beneficial owner, as applicable, and/or any other Proposing Person is not a natural person, the identity of the natural person or persons associated with such Proposing Stockholder or beneficial owner, as applicable, and/or such other Proposing Person responsible for the formulation of and decision to propose the business to be brought before the meeting (such person or persons, the Responsible Person), the manner in which such Responsible Person was selected, any fiduciary duties owed by such Responsible Person to the equity holders or other beneficiaries of such Proposing Stockholder and/or beneficial owner, as applicable, and/or such other Proposing Person, the qualifications and background of such Responsible Person and any material interests or relationships of such Responsible Person that
4
are not shared generally by the other stockholders of the Corporation and that reasonably could have influenced the decision of such Proposing Stockholder and/or beneficial owner, as applicable, and/or such other Proposing Person to propose such business to be brought before the meeting, and (y) if such Proposing Stockholder or beneficial owner, as applicable, and/or any other Proposing Person is a natural person, the qualifications and background of such natural person and any material interests or relationships of such natural person that are not shared generally by the other stockholders of the Corporation and that reasonably could have influenced the decision of such Proposing Stockholder and/or beneficial owner, as applicable, and/or such other Proposing Person to propose such business to be brought before the meeting, (E) any significant equity interests or any Synthetic Equity Interests or Short Interests in any principal competitor of the Corporation held by such Proposing Stockholder and/or beneficial owner, as applicable, and/or any other Proposing Persons, (F) any direct or indirect interest of such Proposing Stockholder and/or beneficial owner, as applicable, and/or any other Proposing Person in any contract with the Corporation, any affiliate of the Corporation (including any employment agreement, collective bargaining agreement or consulting agreement), or any principal competitor of the Corporation, (G) any pending or threatened litigation in which such Proposing Stockholder and/or beneficial owner, as applicable, and/or any other Proposing Person is a party or material participant involving the Corporation or any of its officers or directors, or any affiliate of the Corporation, (H) any material transaction occurring during the prior 12 months between such Proposing Stockholder and/or beneficial owner, as applicable, and/or any other Proposing Person, on the one hand, and the Corporation, any affiliate of the Corporation or any principal competitor of the Corporation, on the other hand, (I) any other information relating to such Proposing Stockholder and/or beneficial owner, as applicable, and/or any other Proposing Person that would be required to be disclosed in a proxy statement or other filing required to be made in connection with solicitations of proxies by such Proposing Stockholder or beneficial owner, as applicable, and/or such other Proposing Person in support of the business proposed to be brought before the meeting pursuant to Section 14 of the Exchange Act and the rules and regulations thereunder, (J) a representation that the Proposing Stockholder is a holder of record of stock of the Corporation entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to propose such business and (K) a representation whether the Proposing Stockholder and/or beneficial owner, if any, and/or any other Proposing Person intends or is part of a group that intends (a) to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the Corporations outstanding capital stock required to approve or adopt the proposal and/or (b) otherwise to solicit proxies from stockholders in support of such proposal (the disclosures to be made pursuant to the foregoing clauses (A) through (K) are referred to as Disclosable Interests); and
(iii) As to each matter the Proposing Stockholder proposes to bring before the annual meeting, (A) a brief description of the business desired to be brought before the annual meeting, the text of the proposal or business (including the text of any resolutions proposed for consideration and, in the event that such business includes a proposal to amend these Bylaws, the language of the proposed amendment), the reasons for conducting such business at the annual meeting and any material interest in such business of the Proposing Stockholder providing the notice and/or any other Proposing Person and (B) a reasonably detailed description of all agreements, arrangements and understandings between or among the Proposing Stockholder providing the notice, any other Proposing Person and/or any other persons or entities (including their names) in connection with the proposal of such business by such Proposing Stockholder.
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For purposes of this Section 3.02, the term Proposing Person shall mean (i) the Proposing Stockholder providing the notice of business proposed to be brought before an annual meeting, (ii) the beneficial owner or owners, if different, on whose behalf the business proposed to be brought before the annual meeting is made, (iii) any affiliate or associate (as such terms are defined in Rule 12b-2 under the Exchange Act) of such beneficial owner and (iv) any other person with whom such Proposing Stockholder or beneficial owner (or any of their respective affiliates or associates) is Acting in Concert (as defined below).
A person shall be deemed to be Acting in Concert with another person for purposes of these Bylaws if such person knowingly acts (whether or not pursuant to an express agreement, arrangement or understanding) in concert with, or towards a common goal relating to the management, governance or control of the Corporation in parallel with, such other person where (A) each person is conscious of the other persons conduct or intent and this awareness is an element in their decision-making processes and (B) at least one additional factor suggests that such persons intend to act in concert or in parallel, which such additional factors may include, without limitation, exchanging information (whether publicly or privately), attending meetings, conducting discussions or making or soliciting invitations to act in concert or in parallel; provided, that a person shall not be deemed to be Acting in Concert with any other person solely as a result of the solicitation or receipt of revocable proxies from such other person in connection with a public proxy solicitation pursuant to, and in accordance with, the Exchange Act. A person which is Acting in Concert with another person shall be deemed to be Acting in Concert with any third party who is also acting in concert with such other person.
(d) A Proposing Stockholder providing notice of business proposed to be brought before an annual meeting shall further update and supplement such notice, if necessary, so that the information provided or required to be provided in such notice pursuant to this Section 3.02 shall be true and correct as of the record date for notice of the meeting and as of the date that is ten business days prior to the meeting or any adjournment or postponement thereof, and such update and supplement shall be delivered to or mailed and received by the Secretary at the principal executive offices of the Corporation not later than five business days after the record date for notice of the meeting (in the case of the update and supplement required to be made as of the record date for notice of the meeting), and not later than eight business days prior to the date for the meeting or any adjournment or postponement thereof (in the case of the update and supplement required to be made as of ten business days prior to the meeting or any adjournment or postponement thereof).
(e) Notwithstanding anything in these Bylaws to the contrary, no business shall be conducted at an annual meeting except in accordance with the procedures set forth in this Section 3.02 (including the requirement in the case of business to be brought before the meeting by a Proposing Stockholder that such Proposing Stockholder update and supplement the notice of proposed business set forth in clause (d) above). The person presiding over the annual meeting shall, if the facts warrant, determine that the business was not properly brought before the meeting in accordance with the provisions of this Section 3.02, and if he or she should so determine, he or she shall so declare to the meeting, and any such business not properly brought
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before the meeting shall not be transacted. Notwithstanding the foregoing provisions of this Section 3.02, unless otherwise required by law, if the Proposing Stockholder (or a qualified representative of the Proposing Stockholder) does not appear at the annual meeting of stockholders of the Corporation to present the proposed business, such proposed business shall not be transacted, notwithstanding that proxies in respect of such vote may have been received by the Corporation. For purposes of this Section 3.02, to be considered a qualified representative of the Proposing Stockholder, a person must be a duly authorized officer, manager or partner of such Proposing Stockholder or must be authorized by a writing executed by such Proposing Stockholder or an Electronic Transmission delivered by such Proposing Stockholder to act for such Proposing Stockholder as proxy at the meeting of stockholders and such person must produce such writing or Electronic Transmission, or a reliable reproduction of the writing or Electronic Transmission, at the meeting of stockholders.
(f) In addition to the requirements of this Section 3.02 with respect to any business proposed to be brought before an annual meeting, each Proposing Person shall comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to any such business. This Section 3.02 shall not be deemed to affect the rights of stockholders to request inclusion of proposals in the Corporations proxy statement pursuant to Rule 14a-8 under the Exchange Act.
(g) For purposes of these Bylaws, public disclosure shall mean disclosure in a press release reported by a national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Sections 13, 14 or 15(d) of the Exchange Act and the rules and regulations thereunder.
Section 3.03 Quorum; Adjournments. A majority in voting power of the shares of capital stock of the Corporation issued and outstanding and entitled to vote at the meeting of stockholders, the holders of which are present in person, present by means of remote communication in a manner, if any, authorized by the Board of Directors in its sole discretion or represented by proxy, shall constitute a quorum for the transaction of business except as otherwise provided by law, by the Certificate of Incorporation or by these Bylaws. A quorum, once established, shall not be broken by the withdrawal of enough votes to leave less than a quorum. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the person presiding at the meeting or, if directed to be voted on by the person presiding at the meeting, the stockholders present or represented by proxy at the meeting and entitled to vote thereon, although less than a quorum, may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the original meeting. If the adjournment is for more than 30 days, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. If after the adjournment a new record date for determination of stockholders entitled to vote is required for the adjourned meeting, the Board of Directors shall fix the record date for determining stockholders entitled to notice of such adjourned meeting, and a notice of the adjourned meeting shall be given to each stockholder of record as of the record date so fixed for notice of such adjourned meeting.
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Section 3.04 Voting. Except as otherwise provided by the Certificate of Incorporation or applicable law, each stockholder shall have one vote for each share of stock having voting power, registered in such stockholders name on the books of the Corporation on the record date set by the Board of Directors for determining the stockholders entitled to vote at a meeting of stockholders as provided in Section 7.04 hereof. When a quorum is present at any meeting, a majority of the votes cast by the shares present or represented by proxy at the meeting and entitled to vote on the subject matter shall decide any questions brought before such meeting, unless the question is one upon which by express provisions of applicable law, regulation applicable to the Corporation or its securities, the rules or regulations of any stock exchange applicable to the Corporation or the Certificate of Incorporation or these Bylaws, a different vote is required, in which case such express provision shall govern and control the decision of such question. Except as otherwise provided by these Bylaws, at any meeting for the election of directors at which a quorum is present, each director of the Corporation shall be elected by the vote of a majority of the votes cast with respect to that directors election by the shares present or represented by proxy at the meeting and entitled to vote on the election of directors. Notwithstanding the foregoing sentence, if, as of the tenth (10th) day preceding the date the Corporation first mails its notice of meeting for such meeting of stockholders, the number of nominees exceeds the number of directors to be elected (a Contested Election), the directors shall be elected by the vote of a plurality of the votes cast. In a Contested Election, stockholders shall be given the choice to cast for or withhold votes for the election of directors, and shall not have the ability to cast any other vote with respect to such election of directors. For purposes of this Section, a majority of the votes cast means that the number of votes cast for a proposal or a candidate for director must exceed the number of votes cast against that proposal or candidate for director (with abstentions and broker non-votes (i.e., shares held by a bank, broker or other nominee which are present or represented by proxy at the meeting, but with respect to which such bank, broker or nominee is not empowered to vote) not counted as votes cast either for or against such proposal or candidate for director).
Section 3.05 Proxies. Each stockholder having the right to vote at a meeting of stockholders or to express consent or dissent to corporate action in writing without a meeting may authorize another person or persons to act for such stockholder by proxy in a manner permitted by applicable law. No such proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period.
Section 3.06 Special Meetings. Unless otherwise provided by the Certificate of Incorporation, special meetings of the stockholders, for any purpose or purposes, (i) may be called at any time by the Board of Directors, and (ii) shall be called by the Secretary upon the written request of stockholders owning at least 25% in amount of the entire capital stock of the Corporation issued and outstanding, and entitled to vote at the special meeting. Such request shall set forth (i) if the purpose of the meeting relates to business other than the election or appointment of directors, all information as is required to be included in a notice delivered to the Corporation pursuant to Section 3.02(c) hereof (and, in such circumstance, the requirements of Section 3.02(d) hereof shall also apply) and (ii) if the purpose of the meeting includes the appointment or election of one or more members of the Board of Directors, all information as would be required to be included in a notice delivered to the Corporation pursuant to Section 4.01(d) hereof (and, in such circumstance, the requirements of Section 4.01(e) hereof shall also apply). The Board of Directors or, prior to the 35% Trigger Date, the Designated Controlling
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Stockholder, may bring business before a special meeting of stockholders called by the Secretary upon the request of the Stockholders. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice. The Board of Directors may postpone, reschedule or cancel any previously scheduled special meeting of stockholders, whether called by them or otherwise.
Section 3.07 Notice to Stockholders.
(a) Whenever stockholders are required or permitted to take any action at a meeting, a written notice of the meeting shall be given which notice shall state the place, if any, date and hour of the meeting, the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such meeting, the record date for determining stockholders entitled to vote at the meeting (if such date is different from the record date for stockholders entitled to notice of the meeting) and, in the case of a special meeting, the purpose or purposes for which the meeting is called. Except as otherwise provided by law, such written notice of any meeting shall be given to each stockholder entitled to vote at such meeting as of the record date for determining the stockholders entitled to notice of the meeting, not less than ten nor more than 60 days before the date of the meeting. If mailed, notice is deemed given when deposited in the United States mail, postage prepaid, directed to the stockholder at such stockholders address as it appears on the records of the Corporation.
(b) Except as otherwise prohibited by the DGCL and without limiting the foregoing, any notice to stockholders given by the Corporation under any provision of the DGCL, the Certificate of Incorporation or these Bylaws shall be effective if given by a form of Electronic Transmission consented to by the stockholder to whom the notice is given. Any such consent shall be revocable by the stockholder by written notice to the Corporation. Any such consent shall be deemed revoked if (i) the Corporation is unable to deliver by Electronic Transmission two consecutive notices given by the Corporation in accordance with such consent and (ii) such inability becomes known to the Secretary or an Assistant Secretary of the Corporation or to the transfer agent of the Corporation, or other person responsible for the giving of notice; provided, however, the inadvertent failure to treat such inability as a revocation shall not invalidate any meeting or other action. Any such notice shall be deemed given (i) if by facsimile telecommunication, when directed to a number at which the stockholder has consented to receive notice; (ii) if by electronic mail, when directed to an electronic mail address at which the stockholder has consented to receive notice; (iii) if by a posting on an electronic network together with separate notice to the stockholder of such specific posting, upon the later of (A) such posting and (B) the giving of such separate notice; and (iv) if by any other form of Electronic Transmission, when directed to the stockholder.
(c) Except as otherwise prohibited under the DGCL and without limiting the manner by which notice otherwise may be given to stockholders, any notice to stockholders given by the Corporation under any provision of the DGCL, the Certificate of Incorporation or these Bylaws may be given by a single written notice to stockholders who share an address if consented to by the stockholders at that address to whom such notice is given. Such consent shall have been deemed to have been given if a stockholder fails to object in writing to the Corporation within 60 days of having been given written notice by the Corporation of its intention to send the single notice as set forth in this Section 3.07(c). Any such consent shall be revocable by the stockholders by written notice to the Corporation.
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Section 3.08 List of Stockholders. The officer who has charge of the stock ledger of the Corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting (provided, however, if the record date for determining the stockholders entitled to vote is less than ten days before the date of the meeting, the list shall reflect the stockholders entitled to vote as of the tenth day before the meeting date), arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, for a period of at least ten days prior to the meeting, (i) on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of the meeting, or (ii) during ordinary business hours, at the principal place of business of the Corporation. If the meeting is to be held at a place, then the list shall be produced and kept at the time and place of the meeting during the whole time thereof and may be inspected by any stockholder who is present. If the meeting is to be held solely by means of remote communication, then the list shall also be open to the examination of any stockholder during the whole time of the meeting on a reasonably accessible electronic network, and the information required to access such list shall be provided with the notice of the meeting. Except as otherwise provided by law, such list shall be the only evidence as to who are the stockholders entitled to examine the list of stockholders required by this Section 3.08 or to vote in person or by proxy at any meeting of the stockholders. The Corporation shall not be required to include electronic mail addresses or other electronic contact information on such list.
Section 3.09 Written Consent of Stockholders in Lieu of Meeting. Unless otherwise provided in the Certificate of Incorporation, at any time prior to the 50% Trigger Date, any action required or permitted by the DGCL to be taken at a stockholders meeting may be taken without a meeting and without prior notice in the manner provided in the Certificate of Incorporation and the DGCL. On and after the 50% Trigger Date, no action required or permitted by the DGCL to be taken at a stockholders meeting may be taken by the written consent of stockholders in lieu of a meeting
Section 3.10 Conduct of Meetings.
(a) Meetings of stockholders shall be presided over by the Chairperson of the Board of Directors (the Chairperson), if any, or in the Chairpersons absence by the Chief Executive Officer, or in the Chief Executive Officers absence, by the President, or in the Presidents absence by a Vice President, or in the absence of all of the foregoing persons by a person designated by the Board of Directors. The Secretary shall act as secretary of the meeting, but in the Secretarys absence the person presiding over the meeting may appoint any person to act as secretary of the meeting.
(b) The Board of Directors may adopt by resolution such rules, regulations and procedures for the conduct of any meeting of stockholders of the Corporation as it shall deem appropriate including, without limitation, such guidelines and procedures as it may deem appropriate regarding the presence and participation by means of remote communication of
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stockholders and proxy holders not physically present at a meeting. Except to the extent inconsistent with such rules, regulations and procedures as adopted by the Board of Directors, the person presiding over any meeting of stockholders shall have the right and authority to convene and (for any or no reason) to recess and/or adjourn the meeting, to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such person, are appropriate for the proper conduct of the meeting. Such rules, regulations or procedures, whether adopted by the Board of Directors or prescribed by the person presiding over the meeting, may include, without limitation, the following: (i) the establishment of an agenda or order of business for the meeting; (ii) rules and procedures for maintaining order at the meeting and the safety of those present; (iii) limitations on attendance at or participation in the meeting to stockholders of record of the Corporation, their duly authorized and constituted proxies or such other persons as shall be determined; (iv) restrictions on entry to the meeting after the time fixed for the commencement thereof; and (v) limitations on the time allotted to questions or comments by participants. Unless and to the extent determined by the Board of Directors or the person presiding over the meeting, meetings of stockholders shall not be required to be held in accordance with the rules of parliamentary procedure.
(c) The person presiding over the meeting shall announce at the meeting when the polls for each matter to be voted upon at the meeting will be opened and closed. After the polls close, no ballots, proxies or votes or any revocations or changes thereto may be accepted.
(d) In advance of any meeting of stockholders, the Board of Directors, the Chairperson, the Chief Executive Officer or the President shall appoint one or more inspectors of election to act at the meeting and make a written report thereof. One or more other persons may be designated as alternate inspectors to replace any inspector who fails to act. If no inspector or alternate is present, ready and willing to act at a meeting of stockholders, the person presiding over the meeting shall appoint one or more inspectors to act at the meeting. Unless otherwise required by law, inspectors may be officers, employees or agents of the Corporation. Each inspector, before entering upon the discharge of such inspectors duties, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of such inspectors ability. The inspector shall have the duties prescribed by law and, when the vote is completed, shall make a certificate of the result of the vote taken and of such other facts as may be required by law. Every vote taken by ballots shall be counted by a duly appointed inspector or duly appointed inspectors.
ARTICLE IV
DIRECTORS
Section 4.01 Election of Directors.
(a) The total number of directors constituting the Board of Directors shall be as fixed in, or be determined in the manner provided by, the Certificate of Incorporation. At each annual meeting of stockholders of the Corporation, all directors shall be elected for a one (1) year term and shall hold office until the next annual meeting of stockholders and until their successors shall be elected and shall qualify, subject, however, to prior death, resignation, retirement, disqualification or removal from office. Election of directors need not be by written ballot. The directors need not be stockholders.
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With respect to nominations by Proposing Stockholders, only persons who are nominated in accordance with the following procedures shall be eligible for election as directors. Nominations of persons for election to the Board of Directors at an annual meeting or at a special meeting (but only if the Board, or pursuant to Section 3.06 of these Bylaws, the stockholders, have first determined that directors are to be elected at such special meeting) may be made at such meeting (i) specified in the notice of meeting given by or at the direction of the Board of Directors, including any committee thereof, (ii) brought before the meeting by or at the direction of the Board of Directors, including any committee thereof or the Designated Controlling Stockholder, prior to the 35% Trigger Date, or (iii) by any Proposing Stockholder who (A) was a stockholder of record (and, with respect to any beneficial owner, if different, on whose behalf such nomination is proposed to be made, only if such beneficial owner was the beneficial owner of shares of the Corporation) both at the time of giving the notice provided for in this Section 4.01 and at the time of the meeting, (B) is entitled to vote at the meeting and (C) complied with the notice procedures set forth in this Section 4.01 as to such nomination. This Section 4.01 shall be the exclusive means for a Proposing Stockholder to propose any nomination of a person or persons for election to the Board to be considered by the stockholders at an annual meeting or special meeting.
Without qualification, for nominations to be made at an annual meeting by a Proposing Stockholder, the Proposing Stockholder must (i) provide Timely Notice (as defined in Section 3.02 of these Bylaws) thereof in writing and in proper form to the Secretary of the Corporation and (ii) provide any updates or supplements to such notice at the times and in the forms required by this Section 4.01. Without qualification, if the Board has first determined that directors are to be elected at such special meeting (or if a special meeting is called pursuant to Section 3.06 hereof and relates to the election or appointment of directors), then for nominations to be made at a special meeting by a Proposing Stockholder, the Proposing Stockholder must (i) provide timely notice thereof in writing and in proper form to the Secretary of the Corporation at the principal executive offices of the Corporation and (ii) provide any updates or supplements to such notice at the times and in the forms required by this Section 4.01. To be timely, a Proposing Stockholders notice for nominations to be made at a special meeting by a Proposing Stockholder must be delivered to or mailed and received at the principal executive offices of the Corporation not earlier than the 120th day prior to such special meeting and not later than the 90th day prior to such special meeting or, if later, the 10th day following the day on which public disclosure (as defined in Section 3.02 of these Bylaws) of the date of such special meeting was first made. In no event shall any adjournment or postponement of an annual meeting or special meeting or the announcement thereof commence a new time period (or extend any time period) for the giving of a stockholders notice as described above.
To be in proper form for purposes of this Section 4.01, a Proposing Stockholders notice to the Secretary pursuant to this Section 4.01 shall be required to set forth:
(i) As to the Proposing Stockholder providing the notice and each other Proposing Person (as defined below), (A) the name and address of the Proposing Stockholder providing the notice, as they appear on the Corporations books, and of the other Proposing Persons, (B) a representation that the Proposing Stockholder is a holder of record of stock of the Corporation entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to propose such nomination, (C) a representation whether the Proposing
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Stockholder or the beneficial owner, if any, and/or any other Proposing Person intends or is part of a group that intends (a) to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the Corporations outstanding capital stock required to elect the nominee and/or (b) otherwise to solicit proxies from stockholders in support of such nomination, and (D) any Disclosable Interests (as defined in Section 3.02 of these Bylaws) of the Proposing Stockholder providing the notice (or, if different, the beneficial owner on whose behalf such notice is given) and/or each other Proposing Person;
(ii) As to each person whom the Proposing Stockholder proposes to nominate for election as a director, (A) all information with respect to such proposed nominee that would be required to be set forth in a Proposing Stockholders notice pursuant to this Section 4.01 if such proposed nominee were a Proposing Person, (B) all information relating to such proposed nominee that is required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors in a contested election pursuant to Section 14 under the Exchange Act and the rules and regulations thereunder (including such proposed nominees written consent to being named in the proxy statement as a nominee and to serving as a director if elected) and (C) a description of all direct and indirect compensation and other material monetary agreements, arrangements and understandings during the past three years, and any other material relationships, between or among the Proposing Stockholder providing the notice (or, if different, the beneficial owner on whose behalf such notice is given) and/or any Proposing Person, on the one hand, and each proposed nominee, his or her respective affiliates and associates and any other persons with whom such proposed nominee (or any of his or her respective affiliates and associates) is Acting in Concert (as defined in Section 3.02 of these Bylaws), on the other hand, including, without limitation, all information that would be required to be disclosed pursuant to Item 404 under Regulation S-K if such Proposing Stockholder or beneficial owner, as applicable, and/or such Proposing Person were the registrant for purposes of such rule and the proposed nominee were a director or executive officer of such registrant; and
(iii) The Corporation may require any proposed nominee to furnish such other information as may reasonably be required by the Corporation to determine the eligibility of such proposed nominee to serve as an independent director of the Corporation or that could be material to a reasonable stockholders understanding of the independence or lack of independence of such proposed nominee.
For purposes of this Section 4.01, the term Proposing Person shall mean (i) the Proposing Stockholder providing the notice of the nomination proposed to be made at the annual or special meeting, (ii) the beneficial owner or owners, if different, on whose behalf the nomination proposed to be made at the annual or special meeting is made, (iii) any affiliate or associate of such beneficial owner (as such terms are defined in Rule 12b-2 under the Exchange Act) and (iv) any other person with whom such Proposing Stockholder or such beneficial owner (or any of their respective affiliates or associates) is Acting in Concert.
A Proposing Stockholder providing notice of any nomination proposed to be made at an annual or special meeting shall further update and supplement such notice, if necessary, so that the information provided or required to be provided in such notice pursuant to this Section 4.01 shall be true and correct as of the record date for the annual or special meeting and as of the date
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that is ten business days prior to the meeting or any adjournment or postponement thereof, and such update and supplement shall be delivered to or mailed and received by the Secretary at the principal executive offices of the Corporation not later than five business days after the record date for the meeting (in the case of the update and supplement required to be made as of the record date), and not later than eight business days prior to the date for the meeting or any adjournment or postponement thereof (in the case of the update and supplement required to be made as of ten business days prior to the meeting or any adjournment or postponement thereof).
Notwithstanding anything in these Bylaws to the contrary, no person nominated by a Proposing Stockholder shall be eligible for election as a director of the Corporation unless nominated in accordance with the procedures set forth in this Section 4.01. The person presiding over the annual or special meeting shall, if the facts warrant, determine that a nomination was not properly made in accordance with the provisions of this Section 4.01 (including the requirement to update and supplement a Proposing Stockholders notice of any nomination set forth in clause (e) above), and if he or she should so determine, he or she shall so declare such determination to the meeting, and the defective nomination shall be disregarded. Notwithstanding the foregoing provisions of this Section 4.01, unless otherwise required by law, if the Proposing Stockholder (or a qualified representative of the Proposing Stockholder) does not appear at the annual or special meeting of stockholders of the Corporation to present a nomination, such nomination shall be disregarded, notwithstanding that proxies in respect of such vote may have been received by the Corporation. For purposes of this Section 4.01, to be considered a qualified representative of the Proposing Stockholder, a person must be a duly authorized officer, manager or partner of such Proposing Stockholder or must be authorized by a writing executed by such Proposing Stockholder or an Electronic Transmission delivered by such Proposing Stockholder to act for such Proposing Stockholder as proxy at the meeting of stockholders and such person must produce such writing or Electronic Transmission, or a reliable reproduction of the writing or Electronic Transmission, at the meeting of stockholders.
This Section 4.01 is expressly intended to apply to any nomination by a Proposing Stockholder proposed to be brought before an annual or special meeting. In addition to the requirements of this Section 4.01 with respect to any nomination by a Proposing Stockholder proposed to be made at an annual or special meeting, each Proposing Person shall comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to any such nominations.
Section 4.02 Vacancies. Vacancies on the Board of Directors by reason of death, resignation, retirement, disqualification, removal from office, or otherwise, and newly created directorships resulting from any increase in the authorized number of directors, shall be filled as provided in the Certificate of Incorporation. A director elected to fill a vacancy or a newly created directorship shall hold office until the next annual meeting of stockholders and until his or her successor shall be elected and shall qualify, subject, however, to prior death, resignation, retirement, disqualification or removal from office.
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Section 4.03 Removal. Any director or the entire Board of Directors may be removed from office in the manner provided in the Certificate of Incorporation.
Section 4.04 General Powers. Except as otherwise provided by law or the Certificate of Incorporation, the business and affairs of the Corporation shall be managed by or under the direction of its Board of Directors.
Section 4.05 Place of Meeting. The Board may hold its meetings at such place or places within or without the State of Delaware as it may from time to time determine.
Section 4.06 Regular Meetings. Regular meetings of the Board of Directors may be held without notice at such time and place as shall from time to time be determined by the Board.
Section 4.07 Special Meetings. Special meetings of the Board of Directors may be called by the Chairperson. Special meetings also shall be called by the Secretary on the written request of any two directors unless the Board consists of only one director, in which case special meetings shall be called by the Secretary on the written request of the sole director. Notice of the time, date and place of such meeting shall be given, orally or in writing, by the person or persons calling or requesting the meeting to all directors at least four days before the meeting if the notice is mailed, or at least 24 hours before the meeting if such notice is given by telephone, hand delivery, overnight express courier, facsimile, electronic mail or other Electronic Transmission. Unless otherwise indicated in the notice, any and all business may be transacted at a special meeting, provided that notice of the special meeting shall state the purpose or purposes of the special meeting. The notice shall be deemed given:
(i) in the case of hand delivery or notice by telephone, when received by the director to whom notice is to be given or by any person accepting such notice on behalf of such director,
(ii) in the case of delivery by mail, upon deposit in the United States mail, postage prepaid, directed to the director to whom notice is being given at such directors address as it appears on the records of the Corporation,
(iii) in the case of delivery by overnight express courier, on the first business day after such notice is dispatched, and
(iv) in the case of delivery via facsimile, electronic mail or other Electronic Transmission, when sent to the director to whom notice is to be given at such directors facsimile number or electronic mail address, as the case may be, as shown on the Corporations records.
Section 4.08 Quorum; Adjournments. At all meetings of the Board of Directors a majority of the authorized number of directors shall be necessary and sufficient to constitute a quorum for the transaction of business, and the vote of a majority of the directors present at any meeting at which there is a quorum, shall be the act of the Board of Directors, except as may be otherwise specifically provided by statute, by the Certificate of Incorporation or by these Bylaws. If a quorum shall not be present at any meeting of the Board of Directors the directors
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present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. If only one director is authorized, such sole director shall constitute a quorum.
Section 4.09 Unanimous Action in Lieu of a Meeting. Unless otherwise restricted by the Certificate of Incorporation or these Bylaws, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting, if all members of the Board or committee, as the case may be, consent thereto in writing, or by Electronic Transmission, and the writing or writings or Electronic Transmission or transmissions are filed with the minutes of proceedings of the Board or committee, respectively. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form.
Section 4.10 Conference Call Meetings. Unless otherwise restricted by the Certificate of Incorporation or these Bylaws, members of the Board of Directors, or any committee designated by the Board of Directors, may participate in a meeting of the Board of Directors, or any committee, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at such meeting.
Section 4.11 Committees. The Board of Directors may designate one or more committees, each such committee to consist of one or more of the directors of the Corporation. The Board 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. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he, she or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the Board of Directors, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to approving or adopting, or recommending to the stockholders, any action or matter (other than the election or removal of directors) expressly required by the DGCL to be submitted to stockholders for approval or adopting, amending or repealing these Bylaws.
Each committee shall keep regular minutes of its meetings and report the same to the Board of Directors when required.
Section 4.12 Compensation. Unless otherwise restricted by the Certificate of Incorporation or these Bylaws, the Board of Directors shall have the authority to fix the compensation of directors, including the granting of equity interests (which may include profits interests and Synthetic Equity Interests) of the Corporation to the directors. The directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors and may be paid a fixed sum for attendance at each meeting of the Board of Directors or a stated salary as director. No such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may
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be allowed like compensation for attending committee meetings or a stated salary as a committee member. The terms of any compensation (including the granting of equity interests of the Corporation) paid to directors shall be as determined by the Board of Directors.
Nothing in this Article IV shall be deemed to affect any rights of the holders of any series of preferred stock to elect directors pursuant to any applicable provisions of the Certificate of Incorporation or the rights of the ACI Control Group as agreed with the Corporation (and this provision regarding the rights of the ACI Control Group may only be amended with the consent of each member of the ACI Control Group).
ARTICLE V
OFFICERS
Section 5.01 Generally. The Board of Directors shall from time to time elect or appoint such officers as it shall deem necessary or appropriate to the management and operation of the Corporation, including, without limitation, a President (which may be the Chief Executive Officer (CEO), a Secretary and a Treasurer (which may be the Chief Financial Officer). The Board of Directors or the CEO shall have the power and authority to appoint as officers one or more Executive Vice Presidents, Senior Vice Presidents, Vice Presidents, a Chief Operating Officer, a Chief Administrative Officer and a Chief Marketing Officer. The officers of the Corporation shall exercise such powers and perform such duties as are specified in these Bylaws, in a resolution of the Board of Directors or, in the case of an officer appointed by the CEO, as specified by the CEO. Any person may hold two or more offices simultaneously, and no officer need be a stockholder of the Corporation.
In addition to the authority of the CEO to appoint officers as set forth above, if so provided by resolution of the Board, any officer may be delegated the authority to appoint one or more officers or assistant officers, which appointed officers or assistant officers shall have the duties and powers specified in the resolution of the Board or as determined by such officer.
Section 5.02 Compensation. The officers of the Corporation shall be entitled to such salaries, compensation or reimbursement as shall be fixed or allowed from time to time by the Board of Directors or any duly authorized committee thereof. In fixing the salaries, compensation and reimbursement of the officers of the Company other than the CEO, the Board of Directors may, among other things, take into account the recommendation of the CEO.
Section 5.03 Term; Removal. Each officer shall hold office until such officers successor is elected or appointed and qualified or until such officers earlier resignation or removal. Any officer may be removed at any time, with or without cause, by the Board of Directors. Any officer appointed by the CEO may be removed at any time by the CEO. If the office of any officer or officers becomes vacant for any reason, the vacancy shall be filled by the Board of Directors or by the CEO.
Section 5.04 Duties.
(a) Chairperson of the Board of Directors. The Chairperson shall, if present, preside at all meetings of the stockholders and of the Board. The Chairperson shall also perform such other duties and may exercise such other powers as may be assigned by these Bylaws or prescribed by the Board from time to time. If there is no President, the Chairperson shall in addition be the CEO and shall have the powers and duties prescribed in paragraph (b) of this Section 5.04. The Board of Directors may designate two persons to serve as Co-Chairpersons of the Board of Directors (each, a Co-Chairperson). Any reference to the Chairperson in these Bylaws shall be deemed to mean, if there are Co-Chairpersons, either Co-Chairperson, each of whom may exercise the full powers and authorities of the office.
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(b) President, Chief Executive Officer. The President shall be the CEO of the Corporation. The CEO shall be the principal executive officer of the Corporation and shall have such other title or titles designated by the Board. Subject to the control of the Board, the CEO shall in general manage, supervise and control all of the business and affairs of the Corporation. He or she shall have authority to conduct all ordinary business on behalf of the Corporation and may execute and deliver on behalf of the Corporation any contract, conveyance or similar document; and in general shall perform all duties incident to the office of the CEO of a corporation and such other duties as may be prescribed by the Board or these Bylaws from time to time. The President shall perform such other duties and shall have such other powers as the Board or the CEO (if the President is not the CEO) may from time to time prescribe.
(c) Treasurer. The Treasurer (who shall have any other title or titles designated by the Board or the CEO, including without limitation, in the Boards or the CEOs discretion, Chief Financial Officer) shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation and shall deposit all moneys, and other valuable effects in the name and to the credit of the Corporation, in such depositories as may be designated by the Board. He or she shall disburse the funds of the corporation as may be ordered by the Board, taking proper vouchers for such disbursements, and shall render to the Board, at its regular meetings, or when the Board so requires, an account of all his or her transactions as Treasurer and of the financial condition of the Corporation. If required by the Board, he or she shall give the Corporation a bond, in such sum and with such surety or sureties as shall be satisfactory to the Board, for the faithful performance of the duties of his or her office and for the restoration to the Corporation, in case of his or her death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his or her possession or under his or her control belonging to the Corporation. The Treasurer in general shall perform all duties incident to the office of the Treasurer of a corporation and such other duties as may be prescribed by the Board, the CEO or these Bylaws from time to time.
(d) Secretary. The Secretary shall: (1) attend and keep the minutes of the stockholders meetings and of the Boards meetings in one or more books provided for that purpose, and perform like duties for the standing committees of the Board when required by the Board; (2) see that all notices are duly given in accordance with the provisions of these Bylaws or as otherwise required by law or the provisions of the Certificate of Incorporation; (3) be custodian of the corporate records and of the seal of the Corporation and see that the seal of the Corporation is affixed to all documents, the execution of which on behalf of the Corporation under its seal is duly authorized; (4) maintain, or cause an agent designated by the Board to maintain, a record of the Corporations stockholders in a form that permits the preparation of a list of the names and addresses of all stockholders in alphabetical order by class of shares, showing the number and class of shares held by each; (5) have general charge of the stock transfer books of the Corporation or responsibility for supervision, on behalf of the Corporation, of any agent to which stock transfer responsibility has been delegated by the Board; (6) have responsibility for the custody, maintenance and preservation of those corporate records which the Corporation is required by the DGCL or otherwise to create, maintain or preserve; and (7) in general perform all duties incident to the office of Secretary of a corporation and such other duties as may be assigned by the Board, the CEO or these Bylaws from time to time.
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(e) Deputy Officers. The Board may create one or more deputy officers whose duties shall be, among any other designated thereto by the Board, to perform the duties of the officer to which such office has been deputized in the event of the unavailability, death or inability or refusal of such officer to act. Deputy officers may hold such titles as designated therefor by the Board; however, any office designated with the prefix Vice or Deputy shall be, unless otherwise specified by resolution of the Board, automatically a deputy officer to the office with the title of which the prefix term is conjoined. Deputy officers shall have such other duties as prescribed by the Board or the CEO from time to time.
(f) Assistant Officers. The Board may appoint one or more officers who shall be assistants to principal officers of the Corporation, or their deputies, and who shall have such duties as shall be delegated to such assistant officers by the Board or such principal officers, including the authority to perform such functions of those principal officers in the place of and with full authority of such principal officers as shall be designated by the Board or (if so authorized) by such principal officers. The Board may by resolution authorize appointment of assistant officers by those principal officers to which such appointed officers will serve as assistants.
ARTICLE VI
INDEMNIFICATION
Section 6.01 Indemnification.
(a) The Corporation shall indemnify and hold harmless to the full extent permitted by law (as now or hereafter in effect) 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 he or she is or was a director, officer, employee or agent of the Corporation, or, while serving as a director, officer, employee or agent of the Corporation, is or was serving at the request of the Corporation, any other corporation, partnership, joint venture, trust or other enterprise in any capacity, against expenses (including attorneys fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him or her in connection with such action, suit or proceeding if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests 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 in 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. Notwithstanding this Section 6.01(a) or the provisions of Section 6.01(b) hereof, except as otherwise provided in Section 6.01(f) hereof, the Corporation shall be required to indemnify a covered person in connection with a proceeding (or part thereof) commenced by such covered person only if the commencement of such proceeding (or part thereof) by the covered person was authorized in the specific case by the Board of Directors of the Corporation.
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(b) The Corporation shall indemnify and hold harmless to the full extent permitted by law (as now or hereafter in effect) 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 he or she is or was a director, officer, employee or agent of the Corporation, or, while serving as a director, officer, employee or agent of the Corporation, is or was serving at the request of the Corporation another corporation, partnership, joint venture, trust or other enterprise in any capacity against expenses (including attorneys fees) actually and reasonably incurred by him or her in connection with the defense or settlement of such action or suit if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Corporation and except that no such indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the Delaware Court or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which such Delaware Court or such other court shall deem proper.
(c) To the extent that a present or former director, officer, employee or agent of the Corporation shall be successful on the merits or otherwise in defense of any action, suit or proceeding referred to in paragraphs (a) and (b), or in defense of any claim, issue or matter therein, he or she shall be indemnified against expenses (including attorneys fees) actually and reasonably incurred by him or her in connection therewith.
(d) Any indemnification under paragraphs (a) and (b) (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the present or former director, officer, employee or agent is proper in the circumstances because he or she has met the applicable standard of conduct set forth in paragraphs (a) and (b). Such determination shall be made, with respect to a person who is a director, officer, employee or agent at the time of such determination, (1) by a majority vote of the directors who are not parties to such action, suit or proceeding, even though less than a quorum, or (2) by a committee of such directors designated by majority vote of such directors, even though less than a quorum, or (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.
(e) Expenses incurred by an officer or director in defending a civil or criminal action, suit or proceeding shall be paid by the Corporation to the fullest extent permitted by law in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that he or she is not entitled to be indemnified by the Corporation as authorized in this Section 6.01. Such expenses incurred by former directors and officers or other employees and agents may be so paid upon such terms and conditions, if any, as the Corporation deems appropriate.
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(f) The indemnification and advancement of expenses provided by, or granted pursuant to, the other paragraphs of this Section 6.01 shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any Bylaw, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his or her official capacity and as to action in another capacity while holding such office. The provisions of this Section 6.01 shall not be deemed to preclude the indemnification of (or advancement of expenses to) any person who is not specified in Section 6.01(a) or Section 6.01(b) but whom the Corporation has the power or obligation to indemnity under the provisions of the DGCL, or otherwise.
(g) If a claim for indemnification (following the final disposition of a proceeding) or advancement of expenses under this Section 6.01 is not paid in full within 90 days after a written claim therefor has been received by the Corporation, the claimant may file suit to recover the unpaid amount of such claim and, if successful in whole or in part, shall be entitled to be paid the expense of prosecuting such claim to the fullest extent permitted by law. In any such action the Corporation shall have the burden of proving that the claimant was not entitled to the requested indemnification or advancement of expenses under applicable law.
(g) The Board of Directors may authorize, by a vote of a majority of a quorum of the Board of Directors, the Corporation to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation another corporation, partnership, joint venture, trust or other enterprise in any capacity against any liability asserted against him or her and incurred by him or her in any such capacity, or arising out of his or her status as such, whether or not the Corporation would have the power to indemnify him or her against such liability under the provisions of this Section 6.01.
(h) The Board of Directors may authorize the Corporation to enter into a contract with any person who is or was a director, officer, employee or agent of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise providing for indemnification rights equivalent to or, if the Board of Directors so determines, greater than those provided in Section 6.01.
(i) For the purposes of this Section 6.01, references to the Corporation shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under the provisions of this Section 6.01 with respect to the resulting or surviving corporation as he or she would have with respect to such constituent corporation if its separate existence had continued.
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(j) For purposes of this Section 6.01, references to other enterprises shall include employee benefit plans; references to fines shall include any excise taxes assessed on a person with respect to an employee benefit plan; and references to serving at the request of the Corporation shall include service as a director, officer, employee or agent of the Corporation which imposes duties on, or involves services by, such director, officer, employee or agent with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner he or she reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner not opposed to the best interest of the Corporation as referred to in this section.
(k) The indemnification and advancement of expenses provided by, or granted pursuant to, this Section 6.01 shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person.
(l) The Corporations obligation, if any, to indemnify or to advance expenses to any person who was or is serving at its request another corporation, partnership, joint venture, trust or other enterprise in any capacity shall be reduced by any amount such person may collect as indemnification or advancement of expenses from such other corporation, partnership, joint venture, trust or other enterprise.
(m) Any repeal or modification of the foregoing provisions of this Section 6.01 shall not adversely affect any right or protection hereunder of any person in respect of any proceeding (regardless of when such proceeding is first threatened, commenced or completed) arising out of, or related to, any act or omission occurring prior to the time of such repeal or modification.
ARTICLE VII
CERTIFICATES OF STOCK
Section 7.01 Certificates. The shares of the Corporation shall be represented by certificates, provided that the Board of Directors may provide by resolution or resolutions that some or all of any or all classes or series of the Corporations stock shall be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the Corporation. Every holder of stock represented by certificates shall be entitled to have a certificate signed by, or in the name of the Corporation by, the Chairperson, or the President or a Vice President, and by the Secretary or an Assistant Secretary, or the Treasurer or an Assistant Treasurer of the Corporation, representing the number of shares registered in certificate form. Any or all of the signatures on the certificate may be a facsimile. In case any officer, transfer agent, or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent, or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he or she were such officer, transfer agent, or registrar at the date of issue.
Section 7.02 Transfer. The issue, transfer, conversion and registration of stock certificates or uncertificated shares shall be governed by such other regulations as the Board of Directors may establish.
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Section 7.03 Lost, Stolen or Destroyed Certificates. The Corporation may issue a new certificate of stock or uncertificated shares in the place of any certificate previously issued by it, alleged to have been lost, stolen or destroyed, and the Corporation may require the owner of the lost, stolen or destroyed certificate, or such owners legal representative, to agree to indemnify the Corporation and/or to give the Corporation a bond sufficient to indemnify it, against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate or uncertificated shares.
Section 7.04 Fixing the Record Date.
(a) In order that the Corporation may determine the stockholders entitled to notice of any meeting of stockholders or any adjournment thereof, 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 record date shall, unless otherwise required by law, not be more than sixty (60) nor less than ten (10) days before the date of such meeting. If the Board of Directors so fixes a date, such date shall also be the record date for determining the stockholders entitled to vote at such meeting unless the Board of Directors determines, at the time it fixes such record date, that a later date on or before the date of the meeting shall be the date for making such determination. If no record date is fixed by the Board of Directors, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. 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 determination of stockholders entitled to vote at the adjourned meeting, and in such case shall also fix as the record date for stockholders entitled to notice of such adjourned meeting the same or an earlier date as that fixed for determination of stockholders entitled to vote in accordance herewith at the adjourned meeting.
(b) In order that the Corporation may determine the stockholders 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, 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, and which record date shall not be more than sixty (60) days prior to such action. If no such record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto.
(c) In order that the Corporation may determine the stockholders entitled to express consent to corporate action in writing without a meeting at any time prior to the 50% Trigger Date, 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 record date shall not be more than ten (10) days after the date upon which the resolution fixing the record date is adopted by the Board of Directors. If no record date for determining stockholders entitled to express consent to corporate action in writing without a meeting is fixed by the Board of Directors, (i) when no prior action of the Board of Directors is
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required by law, the record date for such purpose 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 in accordance with applicable law, and (ii) if prior action by the Board of Directors is required by law, the record date for such purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution taking such prior action.
Section 7.05 Registered Stockholders. The Corporation shall be entitled to treat the holder of record of any share or shares of stock as the holder in fact thereof and accordingly shall not be bound to recognize any equitable or other claim or interest in such share on the part of any other person, whether or not it shall have express or other notice thereof, save as expressly provided by the laws of the State of Delaware.
ARTICLE VIII
GENERAL PROVISIONS
Section 8.01 Dividends. Dividends upon the capital stock of the Corporation, subject to the provisions of the Certificate of Incorporation, if any, may be declared by the Board of Directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the Certificate of Incorporation.
Before payment of any dividend there may be set aside out of any funds of the Corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve fund to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the Corporation, or for such other purpose as the directors shall think conducive to the interests of the Corporation, and the directors may abolish any such reserve.
Section 8.02 Checks. All checks or demands for money and notes of the Corporation shall be signed by such officer or officers as the Board of Directors may from time to time designate.
Section 8.03 Fiscal Year. The fiscal year of the Corporation shall be fixed by resolution of the Board of Directors.
Section 8.04 Seal. The Board of Directors may provide for a corporate seal, which shall have the name of the Corporation inscribed thereon and shall otherwise be in such form as may be approved from time to time by the Board of Directors. Said seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise.
Section 8.05 Waiver of Notice. Whenever any notice is required to be given under applicable law or the Certificate of Incorporation or these Bylaws, a waiver thereof in writing, signed by the person or persons entitled to said notice, or a waiver by Electronic Transmission by the person entitled to notice, whether before or after the time stated therein, shall be deemed equivalent thereto. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders, directors or members of a committee of directors need be specified in any written waiver of notice or any waiver by Electronic
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Transmission, unless so required by the Certificate of Incorporation. 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 purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened.
ARTICLE IX
AMENDMENTS
Section 9.01 Amendments. These Bylaws may be amended or repealed, in whole or in part, or new Bylaws may be adopted by the Board or by the stockholders as expressly provided in the Certificate of Incorporation.
ARTICLE X
EXCLUSIVE FORUM
Section 10.01 Exclusive Forum. Unless the Corporation consents in writing to the selection of an alternative forum, the Delaware Court shall, to the fullest extent permitted by law, be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Corporation, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director or officer of the Corporation to the Corporation or the Corporations stockholders, (iii) any action asserting a claim arising pursuant to any provision of the DGCL or these Bylaws or the Certificate of Incorporation or (iv) any action governed by the internal affairs doctrine. Any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of the Corporation shall be deemed to have notice of and consented to the provisions of this Section 10.01.
Notwithstanding the foregoing, this provision does not apply to actions arising under the Securities Exchange Act of 1934, as amended, or the Securities Act of 1933, as amended, or any other claim for which the federal courts have exclusive jurisdiction.
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Exhibit 3.3
CERTIFICATE OF DESIGNATIONS
OF
% SERIES A MANDATORY CONVERTIBLE PREFERRED STOCK
OF
ALBERTSONS COMPANIES, INC.
Albertsons Companies, Inc., a Delaware corporation (the Corporation), hereby certifies that, pursuant to the provisions of Sections 103, 141 and 151 of the General Corporation Law of the State of Delaware, (a) on , 2020, the board of directors of the Corporation (the Board of Directors), pursuant to authority conferred upon the Board of Directors by the Amended and Restated Certificate of Incorporation of the Corporation (as such may be amended, modified or restated from time to time, in each case to the extent not prohibited by Section 7(c) of this Certificate of Designations, the Charter), delegated to the Pricing Committee of the Board of Directors (the Pricing Committee), the power to create, designate, authorize and provide for the issuance of shares of a new series of the Corporations undesignated preferred stock and to establish the number of shares to be included in such series, and to fix the powers, preferences and rights of the shares of such series and the qualifications, limitations and restrictions thereof; and (b) on , 2020, the Pricing Committee adopted the resolution set forth immediately below, which resolution is now, and at all times since its date of adoption has been, in full force and effect:
RESOLVED, that pursuant to the authority conferred upon the Board of Directors by the Charter, which authorizes the issuance of up to 100,000,000 shares of preferred stock, par value $0.01 per share, and delegated to the Pricing Committee, a series of preferred stock be, and hereby is, created and designated % Series A Mandatory Convertible Preferred Stock, and that the designation and number of shares of such series, and the voting powers, designations, preferences and rights, and qualifications, limitations or restrictions thereof, are as set forth in this certificate of designations, as it may be amended from time to time (the Certificate of Designations) as follows:
Section 1 Designation and Number of Shares. Pursuant to the Charter, there is hereby created out of the authorized and unissued shares of preferred stock of the Corporation, par value $0.01 per share (Preferred Stock), a series of Preferred Stock consisting of shares of Preferred Stock designated as the % Series A Mandatory Convertible Preferred Stock (the Mandatory Convertible Preferred Stock). Such number of shares may be increased or decreased by resolution of the Board of Directors or any duly authorized committee thereof, subject to the terms and conditions hereof and the requirements of applicable law; provided that (i) no increase shall cause the number of authorized shares of Mandatory Convertible Preferred Stock to exceed the total number of authorized shares of Preferred Stock and (ii) no decrease shall reduce the number of shares of Mandatory Convertible Preferred Stock to a number less than the number of such shares then outstanding.
Section 2 General Matters; Ranking. Each share of Mandatory Convertible Preferred Stock shall be identical in all respects to every other share of Mandatory Convertible Preferred Stock. The Mandatory Convertible Preferred Stock, with respect to dividend rights and/or distribution rights upon the liquidation, winding-up or dissolution, as applicable, of the Corporation, shall rank (i) senior to each class or series of Junior Stock, (ii) on
parity with each class or series of Parity Stock, (iii) junior to each class or series of Senior Stock and (iv) junior to the Corporations existing and future indebtedness and other liabilities. In addition, with respect to dividend rights and distribution rights upon the liquidation, winding-up or dissolution of the Corporation, the Mandatory Convertible Preferred Stock will be structurally subordinated to any existing and future indebtedness and other liabilities of each of its Subsidiaries.
Section 3 Standard Definitions. As used herein with respect to Mandatory Convertible Preferred Stock:
Accumulated Dividend Amount means, with respect to any Fundamental Change Conversion, the aggregate amount of undeclared, accumulated and unpaid dividends, if any, for Dividend Periods prior to the Fundamental Change Effective Date for the relevant Fundamental Change, including for the partial Dividend Period, if any, from, and including, the Dividend Payment Date immediately preceding such Fundamental Change Effective Date to, but excluding, such Fundamental Change Effective Date, subject to the proviso in Section 10(a).
ADRs shall have the meaning set forth in Section 15.
Agent Members shall have the meaning set forth in Section 21(a).
Applicable Market Value means the Average VWAP per share of Common Stock over the Settlement Period.
Average Price shall have the meaning set forth in Section 4(c)(iii).
Average VWAP per share over a certain period means the arithmetic average of the VWAP per share for each Trading Day in the relevant period.
Averaging Period shall have the meaning set forth in Section 14(a)(v).
Board of Directors shall have the meaning set forth in the recitals.
Business Day means any day other than a Saturday or Sunday or any other day on which commercial banks in New York City are authorized or required by law or executive order to close.
By-Laws means the Amended and Restated By-Laws of the Corporation, as they may be amended or restated from time to time.
Certificate of Designations shall have the meaning set forth in the recitals.
Charter shall have the meaning set forth in the recitals.
Clause A Distribution shall have the meaning set forth in Section 14(a)(iii).
Clause B Distribution shall have the meaning set forth in Section 14(a)(iii).
Clause C Distribution shall have the meaning set forth in Section 14(a)(iii).
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close of business means 5:00 p.m., New York City time.
Common Stock means the common stock, par value $0.01 per share, of the Corporation.
Conversion and Dividend Disbursing Agent means American Stock Transfer & Trust Company, LLC, the Corporations duly appointed conversion and dividend disbursing agent for the Mandatory Convertible Preferred Stock, and any successor appointed under Section 16.
Conversion Date shall mean the Mandatory Conversion Date, the Fundamental Change Conversion Date or the Early Conversion Date, as applicable.
Corporation shall have the meaning set forth in the recitals.
Depositary means DTC or its nominee or any successor appointed by the Corporation.
Dividend Payment Date means , , and of each year to, and including, , commencing on .
Dividend Period means the period from, and including, a Dividend Payment Date to, but excluding, the next Dividend Payment Date, except that the initial Dividend Period shall commence on, and include, the Initial Issue Date and shall end on, and exclude, the Dividend Payment Date.
Dividend Rate shall have the meaning set for in Section 4(a).
DTC means The Depository Trust Company.
Early Conversion shall have the meaning set forth in Section 9(a).
Early Conversion Additional Conversion Amount shall have the meaning set forth in Section 9(b)(i).
Early Conversion Average Price shall have the meaning set forth in Section 9(b)(ii).
Early Conversion Date shall have the meaning set forth in Section 11(b).
Early Conversion Settlement Period shall have the meaning set forth in Section 9(b)(ii).
Effective Date means the first date on which the shares of Common Stock trade on the Relevant Stock Exchange, regular way, reflecting the relevant share split or share combination, as applicable.
Ex-Date means the first date on which the shares of Common Stock trade on the applicable exchange or in the applicable market, regular way, without the right to receive the issuance, dividend or distribution in question, from the Corporation or, if applicable, from the seller of the Common Stock on such exchange or market (in the form of due bills or otherwise) as determined by such exchange or market.
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Exchange Act means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder. Exchange Property shall have the meaning set forth in Section 15.
Expiration Date shall have the meaning set forth in Section 14(a)(v).
Fixed Conversion Rates means the Maximum Conversion Rate and the Minimum Conversion Rate.
Floor Price shall have the meaning set forth in Section 4(e)(ii).
A Fundamental Change shall be deemed to have occurred, at any time after the Initial Issue Date of the Mandatory Convertible Preferred Stock, if any of the following occurs:
(i) the consummation of (A) any recapitalization, reclassification or change of the Common Stock (other than changes resulting from a subdivision or combination or change in par value) as a result of which the Common Stock would be converted into, or exchanged for, stock, other securities, other property or assets (including cash or a combination thereof); (B) any consolidation, merger or other combination of the Corporation or binding share exchange pursuant to which the Common Stock will be converted into, or exchanged for, stock, other securities or other property or assets (including cash or a combination thereof); or (C) any sale, lease or other transfer or disposition in one transaction or a series of transactions of all or substantially all of the consolidated assets of the Corporation and its Subsidiaries taken as a whole, to any person other than one or more of its Wholly-Owned Subsidiaries;
(ii) any person or group (as such terms are used for purposes of Sections 13(d) and 14(d) of the Exchange Act, whether or not applicable), other than the Corporation, any of its Wholly-Owned Subsidiaries, a Permitted Holder or any of the Corporations or its Wholly-Owned Subsidiaries employee benefit plans (or any person or entity acting solely in its capacity as trustee, agent or other fiduciary or administrator of any such plan), filing a Schedule TO or any schedule, form or report under the Exchange Act disclosing that such person or group has become the beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of more than 50% of the total voting power in the aggregate of all classes of capital stock then outstanding entitled to vote generally in elections of the Corporations directors; or
(iii) the Common Stock (or other Exchange Property) ceases to be listed or quoted for trading on any of NYSE, the NASDAQ Global Select Market or the NASDAQ Global Market (or another U.S. national securities exchange or any of their respective successors).
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However, a transaction or transactions described in clause (i) or clause (ii) above will not constitute a Fundamental Change if at least 90% of the consideration received or to be received by holders of the Common Stock, excluding cash payments for fractional shares or pursuant to statutory appraisal rights, in connection with such transaction or transactions consists of shares of common stock that are listed or quoted on any of NYSE, the NASDAQ Global Select Market or the NASDAQ Global Market (or any of their respective successors) or will be so listed or quoted when issued or exchanged in connection with such transaction or transactions and as a result of such transaction or transactions such consideration (excluding cash payments for fractional shares or pursuant to statutory appraisal rights) becomes the Exchange Property.
Fundamental Change Conversion shall have the meaning set forth in Section 10(a)(i).
Fundamental Change Conversion Date shall have the meaning set forth in Section 11(c).
Fundamental Change Conversion Period means the period beginning on, and including, the Fundamental Change Effective Date and ending at the close of business on, and including, the date that is 20 calendar days after the Fundamental Change Effective Date (but in no event later than ). If we notify Holders of a Fundamental Change later than the second Business Day following the Fundamental Change Effective Date, the Fundamental Change Conversion Period will be extended by a number of days equal to the number of days from, and including, such Fundamental Change Effective Date to, but excluding, the date of the notice; provided, however, that the Fundamental Change Conversion Period will not be extended beyond .
Fundamental Change Conversion Rate means, for any Fundamental Change Conversion, the conversion rate per share of the Mandatory Convertible Preferred Stock set forth in the table below for the Fundamental Change Effective Date and the Fundamental Change Stock Price applicable to such Fundamental Change:
Fundamental Change Stock Price | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Fundamental Change Effective |
||||||||||||||||||||||||||||||||||||||||||||||||||||
Date |
$ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
, 2020 |
||||||||||||||||||||||||||||||||||||||||||||||||||||
, 2021 |
||||||||||||||||||||||||||||||||||||||||||||||||||||
, 2022 |
||||||||||||||||||||||||||||||||||||||||||||||||||||
, 2023 |
The exact Fundamental Change Stock Price and Fundamental Change Effective Date may not be set forth in the table, in which case:
(i) if the Fundamental Change Stock Price is between two Fundamental Change Stock Price amounts in the table above or the Fundamental Change Effective Date is between two Fundamental Change Effective Dates in the table above, the Fundamental Change Conversion Rate shall be determined by a straight-line interpolation
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between the Fundamental Change Conversion Rates set forth for the higher and lower Fundamental Change Stock Price amounts and the earlier and later Fundamental Change Effective Dates, as applicable, based on a 365 or 366-day year, as applicable;
(ii) if the Fundamental Change Stock Price is in excess of $ per share (subject to adjustment in the same manner as adjustments are made to the Fundamental Change Stock Prices in the column headings of the table above), then the Fundamental Change Conversion Rate shall be the Minimum Conversion Rate; and
(iii) if the Fundamental Change Stock Price is less than $ per share (subject to adjustment in the same manner as adjustments are made to the Fundamental Change Stock Prices in the column headings of the table above), then the Fundamental Change Conversion Rate shall be the Maximum Conversion Rate.
The Fundamental Change Stock Prices in the column headings in the table above are each subject to adjustment as of any date on which the Fixed Conversion Rates are adjusted. The adjusted Fundamental Change Stock Prices shall equal (x) the Fundamental Change Stock Prices applicable immediately prior to such adjustment, multiplied by (y) a fraction, the numerator of which is the Minimum Conversion Rate immediately prior to the adjustment giving rise to the Fundamental Change Stock Price adjustment and the denominator of which is the Minimum Conversion Rate as so adjusted. The Fundamental Change Conversion Rates set forth in the table above will be each subject to adjustment in the same manner and at the same time as each Fixed Conversion Rate as set forth in Section 14.
Fundamental Change Conversion Right shall have the meaning set forth in Section 10(a).
Fundamental Change Dividend Make-Whole Amount shall have the meaning set forth in Section 10(a)(ii).
Fundamental Change Effective Date shall mean the effective date of the relevant Fundamental Change.
Fundamental Change Notice shall have the meaning set forth in Section 10(b).
Fundamental Change Stock Price means, for any Fundamental Change, the price paid (or deemed paid) per share of Common Stock in the Fundamental Change, which shall equal (i) if all holders of Common Stock receive only cash in exchange for their Common Stock in such Fundamental Change, the amount of cash paid per share of Common Stock in such Fundamental Change, and (ii) in all other cases, the Average VWAP per share of Common Stock over the 10 consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the relevant Fundamental Change Effective Date.
Global Preferred Certificate shall have the meaning set forth in Section 21(a).
Global Preferred Share shall have the meaning set forth in Section 21(a).
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Holder means each Person in whose name shares of Mandatory Convertible Preferred Stock are registered, who shall be treated by the Corporation and the Registrar as the absolute owner of those shares of Mandatory Convertible Preferred Stock for the purpose of making payment and settling conversions and for all other purposes.
Initial Dividend Threshold shall have the meaning set forth in Section 14(a)(iv).
Initial Issue Date means , 2020, the first original issue date of shares of the Mandatory Convertible Preferred Stock.
Initial Price means $ , divided by the Maximum Conversion Rate, which quotient is initially equal to $ .
Junior Stock means (i) the Common Stock and (ii) each other class or series of capital stock of the Corporation established after the Initial Issue Date, the terms of which do not expressly provide that such class or series ranks (x) senior to the Mandatory Convertible Preferred Stock as to dividend rights or distribution rights upon the Corporations liquidation, winding-up or dissolution or (y) on parity with the Mandatory Convertible Preferred Stock as to dividend rights or distribution rights upon the Corporations liquidation, winding-up or dissolution.
Liquidation Dividend Amount shall have the meaning set forth in Section 5(a).
Liquidation Preference means, as to Mandatory Convertible Preferred Stock, $ per share.
Mandatory Conversion shall have the meaning set forth in Section 8(a).
Mandatory Conversion Additional Conversion Amount shall have the meaning set forth in Section 8(c)(i).
Mandatory Conversion Date means the second Business Day immediately following the last Trading Day of the Settlement Period. The Mandatory Conversion Date is expected to be . If the Mandatory Conversion Date occurs after (whether because a Scheduled Trading Day during the Settlement Period is not a Trading Day due to the occurrence of a Market Disruption Event or otherwise), no interest or other amounts will accrue as a result of such postponement.
Mandatory Conversion Rate shall have the meaning set forth in Section 8(b).
Mandatory Convertible Preferred Stock shall have the meaning set forth in Section 1 of this Certificate of Designations.
Market Disruption Event means (i) a failure by the Relevant Stock Exchange to open for trading during its regular trading session; or (ii) the occurrence or existence, prior to 1:00 p.m., New York City time, on any Scheduled Trading Day for the Common Stock, for more than a one half-hour period in the aggregate during regular trading hours of any suspension or limitation imposed on trading (by reason of movements in price exceeding limits permitted by the Relevant Stock Exchange or otherwise) in the Common Stock.
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Maximum Conversion Rate shall have the meaning set forth in Section 8(b)(iii). Minimum Conversion Rate shall have the meaning set forth in Section 8(b)(i).
Nonpayment shall have the meaning set forth in Section 7(b)(i).
Nonpayment Remedy shall have the meaning set forth in Section 7(b)(iii).
NYSE means The New York Stock Exchange.
Officer means the Chief Executive Officer, the Chief Financial Officer, the President, any Executive Vice President, any Senior Vice President, any Vice President, any Assistant Vice President, the Treasurer, any Assistant Treasurer, the Secretary or any Assistant Secretary of the Corporation.
open of business means 9:00 a.m., New York City time.
Parity Stock means any class or series of capital stock of the Corporation established after the Initial Issue Date, the terms of which expressly provide that such class or series shall rank on parity with the Mandatory Convertible Preferred Stock as to dividend rights and distribution rights upon the Corporations liquidation, winding-up or dissolution.
Permitted Holder means .
Person means any individual, partnership, firm, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture, governmental authority or other entity of whatever nature.
Preferred Stock shall have the meaning set forth in Section 1 of this Certificate of Designations. Preferred Stock Directors shall have the meaning set forth in Section 7(b)(i).
Pricing Committee shall have the meaning set forth in the recitals.
Prospectus means the prospectus dated , 2020, relating to the offering and sale of the Mandatory Convertible Preferred Stock.
Record Date means, with respect to any dividend, distribution or other transaction or event in which the holders of the Common Stock (or other applicable security) have the right to receive any cash, securities or other property or in which the Common Stock (or such other security) is exchanged for or converted into any combination of cash, securities or other property, the date fixed for determination of holders of the Common Stock (or such other security) entitled to receive such cash, securities or other property (whether such date is fixed by the Board of Directors or a duly authorized committee thereof, statute, contract or otherwise).
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Record Holder means, with respect to any Dividend Payment Date, a Holder of record of the Mandatory Convertible Preferred Stock as such Holder appears on the stock register of the Corporation at the close of business on the related Regular Record Date.
Registrar initially means American Stock Transfer & Trust Company, LLC, the Corporations duly appointed registrar for Mandatory Convertible Preferred Stock and any successor appointed under Section 16.
Regular Record Date means, with respect to any Dividend Payment Date, the , , and , as the case may be, immediately preceding the relevant Dividend Payment Date. These Regular Record Dates shall apply regardless of whether a particular Regular Record Date is a Business Day.
Relevant Stock Exchange means NYSE or, if the Common Stock is not then listed on NYSE, on the principal other U.S. national or regional securities exchange on which the Common Stock is then listed or, if the Common Stock is not then listed on a U.S. national or regional securities exchange, on the principal other market on which the Common Stock is then listed or admitted for trading.
Reorganization Event shall have the meaning set forth in Section 15.
Scheduled Trading Day means any day that is scheduled to be a Trading Day.
Securities Act means the Securities Act of 1933, as amended, and the rules and regulations thereunder.
Senior Stock means each class or series of capital stock of the Corporation established after the Initial Issue Date, the terms of which expressly provide that such class or series shall rank senior to the Mandatory Convertible Preferred Stock as to dividend rights or distribution rights upon the Corporations liquidation, winding-up or dissolution.
Settlement Period means the 20 consecutive Trading Day period beginning on, and including, the 21st Scheduled Trading Day immediately preceding .
Share Dilution Amount means the increase in the number of diluted shares of Common Stock outstanding (determined in accordance with accounting principles generally accepted in the United States of America, and as measured from the Initial Issue Date) resulting from the grant, vesting or exercise of equity-based compensation to directors, employees and agents and equitably adjusted for any stock split, stock dividend, reverse stock split, reclassification or similar transaction.
Shelf Registration Statement means a shelf registration statement filed with the Securities and Exchange Commission in connection with the issuance of, or for resales of, shares of Common Stock issued as payment of a dividend on shares of the Mandatory Convertible Preferred Stock, including dividends paid in connection with a conversion.
Spin-Off means a payment of a dividend or other distribution on the Common Stock of shares of capital stock of any class or series, or similar equity interest, of or relating to a Subsidiary or other business unit of the Corporation that are, or, when issued, will be, listed or admitted for trading on a U.S. national securities exchange.
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Subsidiary means, with respect to any Person, any corporation, association, partnership or other business entity of which more than 50% of the total voting power of shares of capital stock or other interests (including partnership interests) entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers, general partners or trustees thereof is at the time owned or controlled, directly or indirectly, by (i) such Person; (ii) such Person and one or more Subsidiaries of such Person; or (iii) one or more Subsidiaries of such Person.
Threshold Appreciation Price means $ , divided by the Minimum Conversion Rate, which quotient is initially equal to approximately $ .
Trading Day means a day on which (i) there is no Market Disruption Event and (ii) trading in Common Stock generally occurs on the Relevant Stock Exchange; provided that if the Common Stock is not listed or admitted for trading,
Trading Day means any Business Day.
Transfer Agent shall initially mean American Stock Transfer & Trust Company, LLC, the Corporations duly appointed transfer agent for Mandatory Convertible Preferred Stock and any successor appointed under Section 16.
Trigger Event shall have the meaning set forth in Section 14(a)(iii).
Unit of Exchange Property shall have the meaning set forth in Section 15.
Valuation Period shall have the meaning set forth in Section 14(a)(iii).
Voting Preferred Stock means any other class or series of Preferred Stock, other than the Mandatory Convertible Preferred Stock, ranking equally with the Mandatory Convertible Preferred Stock as to dividends and to the distribution of assets upon liquidation, dissolution or winding-up and upon which like voting powers for the election of directors have been conferred and are exercisable.
VWAP per share of Common Stock on any Trading Day means the per share volume-weighted average price as displayed on Bloomberg page ACI<EQUITY>AQR (or its equivalent successor if such page is not available) in respect of the period from the scheduled open of trading until the scheduled close of trading of the primary trading session on such Trading Day (or if such volume-weighted average price is not available, the market value per share of Common Stock on such Trading Day as determined, using a volume-weighted average method, by a nationally recognized independent investment banking firm retained by the Corporation for this purpose).
Wholly-Owned Subsidiary means, with respect to any Person, any Subsidiary of such Person, except that, solely for purposes of this definition, the reference to more than 50% in the definition of Subsidiary shall be deemed to be replaced by a reference to 100%.
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Section 4 Dividends.
(a) Rate. Subject to the rights of holders of any class or series of Senior Stock, Holders shall be entitled to receive, when, as and if declared by the Board of Directors, or an authorized committee thereof, out of funds of the Corporation legally available for payment, in the case of dividends paid in cash, and shares of Common Stock legally permitted to be issued, in the case of dividends paid in shares of Common Stock, cumulative dividends at the rate per annum of % of the Liquidation Preference per share of the Mandatory Convertible Preferred Stock (the Dividend Rate) (equivalent to $ per annum per share), payable in cash, by delivery of shares of Common Stock or through any combination of cash and shares of Common Stock pursuant to Section 4(c), as determined by the Corporation in its sole discretion (subject to the limitations set forth in Section 4(e)).
If declared, dividends on the Mandatory Convertible Preferred Stock shall be payable quarterly on each Dividend Payment Date at such annual rate, and dividends shall accumulate from the most recent date as to which dividends shall have been paid or, if no dividends have been paid, from the Initial Issue Date, whether or not in any Dividend Period or Dividend Periods there have been funds legally available or shares of Common Stock legally permitted for the payment of such dividends.
If declared, dividends shall be payable on the relevant Dividend Payment Date to Record Holders on the immediately preceding Regular Record Date, whether or not such Record Holders early convert their shares of Mandatory Convertible Preferred Stock, or such shares are automatically converted, after a Regular Record Date and on or prior to the immediately succeeding Dividend Payment Date; provided that the Regular Record Date for any such dividend shall not precede the date on which such dividend was so declared. If a Dividend Payment Date is not a Business Day, payment shall be made on the next succeeding Business Day, without any interest or other payment in lieu of interest accruing with respect to this delay.
The amount of dividends payable on each share of Mandatory Convertible Preferred Stock for each full Dividend Period (subsequent to the initial Dividend Period) shall be computed by dividing the Dividend Rate by four. Dividends payable on Mandatory Convertible Preferred Stock for the initial Dividend Period and any other partial Dividend Period shall be computed based upon the actual number of days elapsed during such period over a 360-day year (consisting of twelve 30-day months). Accumulated dividends on shares of the Mandatory Convertible Preferred Stock shall not bear interest, nor shall additional dividends be payable thereon, if they are paid subsequent to the applicable Dividend Payment Date.
No dividend shall be paid unless and until the Board of Directors, or an authorized committee of the Board of Directors, declares a dividend payable with respect to the Mandatory Convertible Preferred Stock. No dividend shall be declared or paid upon, or any sum of cash or number of shares of Common Stock set apart for the payment of dividends upon, any outstanding shares of Mandatory Convertible Preferred Stock with respect to any Dividend Period unless all dividends for all preceding Dividend Periods have been declared and paid upon, or a sufficient sum of cash or number of shares of Common Stock has been set apart for the payment of such dividends upon, all outstanding shares of Mandatory Convertible Preferred Stock.
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Holders shall not be entitled to any dividends on Mandatory Convertible Preferred Stock, whether payable in cash, property or shares of Common Stock, in excess of full cumulative dividends.
Except as described in this Section 4(a), dividends on shares of Mandatory Convertible Preferred Stock converted to Common Stock shall cease to accumulate, and all other rights of Holders will terminate, from and after the applicable Conversion Date.
(b) Priority of Dividends. So long as any share of Mandatory Convertible Preferred Stock remains outstanding, no dividend or distribution shall be declared or paid on the Common Stock or any other class or series of Junior Stock, and no Common Stock or any other class or series of Junior Stock shall be purchased, redeemed or otherwise acquired for consideration by the Corporation or any of its Subsidiaries unless, in each case, all accumulated and unpaid dividends for all preceding Dividend Periods have been declared and paid in full in cash, shares of the Common Stock or a combination thereof, or a sufficient sum of cash or number of shares of the Common Stock has been set apart for the payment of such dividends, on all outstanding shares of Mandatory Convertible Preferred Stock. The foregoing limitation shall not apply to:
(i) any dividend or distribution payable in shares of Common Stock or other Junior Stock, together with cash in lieu of any fractional share;
(ii) purchases, redemptions or other acquisitions of Common Stock or other Junior Stock in connection with the administration of any benefit or other incentive plan, including any employment contract, in the ordinary course of business, including, without limitation, (x) purchases to offset the Share Dilution Amount pursuant to a publicly announced repurchase plan, provided that any purchases to offset the Share Dilution Amount shall in no event exceed the Share Dilution Amount, (y) the forfeiture of unvested shares of restricted stock or share withholding or other acquisitions or surrender of shares to which the holder may otherwise be entitled upon exercise, delivery or vesting of equity awards (whether in payment of applicable taxes, the exercise price or otherwise), and (z) the payment of cash in lieu of fractional shares;
(iii) purchases or deemed purchases or acquisitions of fractional interests in shares of any of our Common Stock or other Junior Stock pursuant to the conversion or exchange provisions of such shares of Junior Stock or any securities exchangeable for or convertible into shares of Common Stock or other Junior Stock;
(iv) any dividends or distributions of rights or Common Stock or other Junior Stock in connection with a stockholders rights plan or any redemption or repurchase of rights pursuant to any stockholders rights plan;
(v) purchases of Common Stock or other Junior Stock pursuant to a contractually binding requirement to buy Common Stock or other Junior Stock, including under a contractually binding stock repurchase plan, in each case, existing prior to the date of the Prospectus;
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(vi) the acquisition by the Corporation or any of its Subsidiaries of record ownership in Common Stock or other Junior Stock or Parity Stock for the beneficial ownership of any other persons (other than the Corporation or any of its Subsidiaries), including as trustees or custodians, and the payment of cash in lieu of fractional shares; and
(vii) the exchange or conversion of Junior Stock for or into other Junior Stock or of Parity Stock for or into other Parity Stock (with the same or lesser aggregate liquidation preference) or Junior Stock and, in each case, the payment of cash in lieu of fractional shares.
When dividends on shares of the Mandatory Convertible Preferred Stock (i) have not been declared and paid in full on any Dividend Payment Date, or (ii) have been declared but a sum of cash or number of shares of Common Stock sufficient for payment thereof has not been set aside for the benefit of the Holders thereof on the applicable Regular Record Date, no dividends may be declared or paid on any shares of Parity Stock unless dividends are declared on the shares of Mandatory Convertible Preferred Stock such that the respective amounts of such dividends declared on the shares of Mandatory Convertible Preferred Stock and such shares of Parity Stock shall be allocated pro rata among the Holders of the shares of the Mandatory Convertible Preferred Stock and the holders of any shares of Parity Stock then outstanding. For purposes of calculating the pro rata allocation of partial dividend payments, the Corporation shall allocate those payments so that the respective amounts of those payments for the declared dividend bear the same ratio to each other as all accumulated dividends and all declared and unpaid dividends per share on the shares of Mandatory Convertible Preferred Stock and such shares of Parity Stock bear to each other (subject to their having been declared by the Board of Directors, or an authorized committee thereof, out of legally available funds); provided that any unpaid dividends on the Mandatory Convertible Preferred Stock will continue to accumulate, except as described in Section 4(e), 8(c), 9(b) and 10(d)(iii). For purposes of this calculation, with respect to non-cumulative Parity Stock, the Corporation shall use the full amount of dividends that would be payable for the most recent dividend period if dividends were declared in full on such non-cumulative Parity Stock.
Subject to the foregoing, and not otherwise, such dividends as may be determined by the Board of Directors, or an authorized committee thereof, may be declared and paid (payable in cash, securities or other property) on any securities, including Common Stock and other Junior Stock, from time to time out of any funds legally available for such payment, and Holders shall not be entitled to participate in any such dividends.
(c) Method of Payment of Dividends. (i) Subject to the limitations set forth in Section 4(e), the Corporation may pay any declared dividend (or any portion of any declared dividend) on the shares of Mandatory Convertible Preferred Stock (whether or not for a current Dividend Period or any prior Dividend Period, including in connection with the payment of declared and unpaid dividends pursuant to Section 8 or Section 10), as determined in the Corporations sole discretion:
(A) in cash;
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(B) by delivery of shares of Common Stock; or
(C) through any combination of cash and shares of Common Stock.
(ii) The Corporation shall make each payment of a declared dividend on the shares of Mandatory Convertible Preferred Stock in cash, except to the extent the Corporation elects to make all or any portion of such payment in shares of Common Stock. The Corporation shall give notice to Holders of any such election, and the portion of such payment that will be made in cash and the portion that will be made in shares of Common Stock, no later than 10 Scheduled Trading Days prior to the Dividend Payment Date for such dividend, provided that if the Corporation does not provide timely notice of this election, the Corporation will be deemed to have elected to pay the relevant dividend in cash.
(iii) All cash payments to which a Holder is entitled in connection with a declared dividend on the shares of Mandatory Convertible Preferred Stock will be computed to the nearest cent. If the Corporation elects to make any such payment of a declared dividend, or any portion thereof, in shares of Common Stock, such shares shall be valued for such purpose, in the case of any dividend payment or portion thereof, at 97% of the Average VWAP per share of Common Stock over the five consecutive Trading Day period beginning on, and including, the seventh Scheduled Trading Day prior to the applicable Dividend Payment Date (such average, the Average Price). If the five Trading Day period to determine the Average Price ends on or after the relevant Dividend Payment Date (whether because a Scheduled Trading Day is not a Trading Day due to the occurrence of a Market Disruption Event or otherwise), then the Dividend Payment Date will be postponed until the third Business Day after the final Trading Day of such five Trading Day period, provided that no interest or other amounts will accrue as a result of such postponement.
(d) No fractional shares of Common Stock shall be delivered to the Holders in payment or partial payment of a dividend. The Corporation shall instead, to the extent the Corporation is legally permitted to do so, pay a cash amount (computed to the nearest cent) to each Holder that would otherwise be entitled to receive a fraction of a share of Common Stock based on the Average Price with respect to such dividend.
(e) Notwithstanding the foregoing, in no event shall the number of shares of Common Stock delivered in connection with any declared dividend, including any declared dividend payable in connection with a conversion, exceed a number equal to:
(i) the declared dividend, divided by
(ii) $ , subject to adjustment in a manner inversely proportional to any anti-dilution adjustment to each Fixed Conversion Rate as provided in Section 14 (such dollar amount, as adjusted, the Floor Price).
To the extent that the amount of any declared dividend exceeds the product of (x) the number of shares of Common Stock delivered in connection with such declared dividend as limited by Section 4(e) and (y) 97% of the Average Price, the Corporation shall, if it is legally able to do so,
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and to the extent permitted under the terms of the documents governing the Corporations indebtedness, notwithstanding any notice by the Corporation to the contrary, pay such excess amount in cash (computed to the nearest cent). Any such payment in cash may not be permitted by the Corporations then existing debt instruments. To the extent that the Corporation is not able to pay such excess amount in cash under applicable law and in compliance with its indebtedness, the Corporation shall not have any obligation to pay such amount in cash or deliver additional shares of Common Stock in respect of such amount, and such amount will not form a part of the cumulative dividends that may be deemed to accumulate on the shares of Mandatory Convertible Preferred Stock.
(f) To the extent that a Shelf Registration Statement is required in the Corporations reasonable judgment in connection with the issuance of, or for resales of, Common Stock issued as payment of a dividend on the shares of Mandatory Convertible Preferred Stock, including dividends paid in connection with a conversion, the Corporation shall, to the extent a registration statement covering such shares is not currently filed and effective, use its commercially reasonable efforts to file and maintain the effectiveness of such a Shelf Registration Statement until the earlier of such time as all such shares of Common Stock have been resold thereunder and such time as all such shares would be freely tradable without registration by holders thereof that are not (and were not at any time during the preceding three months) affiliates of the Corporation for purposes of the Securities Act. To the extent applicable, the Corporation shall also use its commercially reasonable efforts to have such shares of the Common Stock approved for listing on NYSE (or if the Common Stock is not listed on NYSE, on the principal other U.S. national or regional securities exchange on which the Common Stock is then listed), and qualified or registered under applicable state securities laws, if required; provided that the Corporation will not be required to qualify as a foreign corporation or to take any action that would subject it to general service of process in any such jurisdiction where it is not presently qualified or where it is not presently subject to taxation as a foreign corporation and such qualification or action would subject it to such taxation.
Section 5 Liquidation, Dissolution or Winding Up. (a) In the event of any voluntary or involuntary liquidation, winding-up or dissolution of the Corporation, each Holder shall be entitled to receive, per share of Mandatory Convertible Preferred Stock, the Liquidation Preference of $ per share of the Mandatory Convertible Preferred Stock, plus an amount (the Liquidation Dividend Amount) equal to accumulated and unpaid dividends on such share, whether or not declared, to, but excluding, the date fixed for liquidation, winding-up or dissolution to be paid out of the assets of the Corporation legally available for distribution to its stockholders, after satisfaction of debt and other liabilities owed to the Corporations creditors and holders of shares of any Senior Stock and before any payment or distribution is made to holders of any Junior Stock, including, without limitation, Common Stock.
(b) If, upon the voluntary or involuntary liquidation, winding-up or dissolution of the Corporation, the amounts payable with respect to (1) the Liquidation Preference plus the Liquidation Dividend Amount on the shares of the Mandatory Convertible Preferred Stock and (2) the liquidation preference of, and the amount of accumulated and unpaid dividends to, but excluding, the date fixed for liquidation, dissolution or winding up, on all Parity Stock, if applicable, are not paid in full, the Holders and all holders of any such Parity Stock shall share equally and ratably in any distribution of the Corporations assets in proportion to their respective liquidation preferences and amounts equal to the accumulated and unpaid dividends to which they are entitled.
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(c) After the payment to any Holder of the full amount of the Liquidation Preference and the Liquidation Dividend Amount for such Holders shares of Mandatory Convertible Preferred Stock, such Holder shall have no right or claim to any of the remaining assets of the Corporation.
(d) Neither the sale, lease nor exchange of all or substantially all of Corporations assets or business (other than in connection with the liquidation, winding-up or dissolution of the Corporation), nor its merger or consolidation into or with any other Person, shall be deemed to be the voluntary or involuntary liquidation, winding-up or dissolution of the Corporation.
Section 6 No Redemption; No Sinking Fund.
The Mandatory Convertible Preferred Stock shall not be subject to any redemption, sinking fund or other similar provisions. However, at the Corporations option, it may purchase or exchange the Mandatory Convertible Preferred Stock from time to time in the open market, by tender or exchange offer or otherwise, without the consent of, or notice to, Holders.
Section 7 Voting Powers.
(a) General. Holders shall not have any voting rights or powers other than those set forth in this Section 7, except as specifically required by Delaware law or by the Charter from time to time.
(b) Right to Elect Two Directors Upon Nonpayment. (i) Whenever dividends on any shares of the Mandatory Convertible Preferred Stock have not been declared and paid for the equivalent of six or more Dividend Periods, whether or not for consecutive Dividend Periods (a Nonpayment), the authorized number of directors on the Board of Directors shall, at the Corporations next annual meeting of the stockholders or at a special meeting of stockholders as provided below, automatically be increased by two and Holders, voting together as a single class with holders of any and all other series of Voting Preferred Stock then outstanding, shall be entitled, at the Corporations next annual meeting of stockholders or at a special meeting of stockholders, if any, as provided below, to vote for the election of a total of two additional members of the Board of Directors (the Preferred Stock Directors); provided that the election of any such Preferred Stock Directors will not cause the Corporation to violate the corporate governance requirements of NYSE (or any other exchange or automated quotation system on which the Corporations securities may be listed or quoted) that requires listed or quoted companies to have a majority of independent directors; and provided further that the Board of Directors shall, at no time, include more than two Preferred Stock Directors.
(ii) In the event of a Nonpayment, the holders of record of at least 25% of the shares of the Mandatory Convertible Preferred Stock and any other series of Voting Preferred Stock may request that a special meeting of stockholders be called to elect such Preferred Stock Directors (provided, however, that if the next annual or a special meeting
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of stockholders is scheduled to be held within 90 days of the receipt of such request, the election of such Preferred Stock Directors, to the extent otherwise permitted by the By-Laws, shall, instead, be included in the agenda for, and shall be held at, such scheduled annual or special meeting of stockholders). The Preferred Stock Directors shall stand for reelection annually, at each subsequent annual meeting of the stockholders, so long as the Holders continue to have such voting powers. At any meeting at which the Holders are entitled to elect Preferred Stock Directors, the holders of record of a majority in voting power of the then outstanding shares of Mandatory Convertible Preferred Stock and all other series of Voting Preferred Stock, present in person or represented by proxy, shall constitute a quorum and the vote of the holders of a majority in voting power of such shares of Mandatory Convertible Preferred Stock and other Voting Preferred Stock so present or represented by proxy at any such meeting at which there shall be a quorum shall be sufficient to elect the Preferred Stock Directors. Whether a plurality, majority or other portion in voting power of Mandatory Convertible Preferred Stock and any other Voting Preferred Stock have been voted in favor of any matter shall be determined by reference to the respective liquidation preference amounts of the Mandatory Convertible Preferred Stock and such other Voting Preferred Stock voted.
(iii) If and when all accumulated and unpaid dividends on the Mandatory Convertible Preferred Stock have been paid in full, or declared and a sum or number of shares of the Common Stock sufficient for such payment shall have been set aside for the benefit of the Holders thereof on the applicable Regular Record Date (a Nonpayment Remedy), the Holders shall immediately and, without any further action by the Corporation, be divested of the voting powers described in this Section 7(b), subject to the revesting of such powers in the event of each subsequent Nonpayment. If such voting powers for the Holders and all other holders of Voting Preferred Stock shall have terminated, each Preferred Stock Director then in office shall automatically be disqualified as a director and shall no longer be a director and the term of office of each such Preferred Stock Director so elected shall terminate at such time and the authorized number of directors on the Board of Directors shall automatically decrease by two.
(iv) Any Preferred Stock Director may be removed at any time, with or without cause, by the holders of record of a majority in voting power of the outstanding shares of the Mandatory Convertible Preferred Stock and any other series of Voting Preferred Stock then outstanding (voting together as a single class), when they have the voting powers described in this Section 7(b). In the event that a Nonpayment shall have occurred and there shall not have been a Nonpayment Remedy, any vacancy in the office of a Preferred Stock Director (other than prior to the initial election of Preferred Stock Directors after a Nonpayment) may be filled by the written consent of the Preferred Stock Director remaining in office, except in the event that such vacancy is created as a result of such Preferred Stock Director being removed, or if no Preferred Stock Director remains in office, such vacancy may be filled by a vote of the holders of record of a majority in voting power of the outstanding shares of the Mandatory Convertible Preferred Stock and any other series of Voting Preferred Stock then outstanding (voting together as a single class) when they have the voting powers described in this Section 7(b); provided that the election of any such Preferred Stock Directors to fill such vacancy will not cause the Corporation to violate the corporate governance requirements of NYSE
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(or any other exchange or automated quotation system on which the Corporations securities may be listed or quoted) that requires listed or quoted companies to have a majority of independent directors. The Preferred Stock Directors shall each be entitled to one vote per director on any matter that shall come before the Board of Directors for a vote.
(c) Other Voting Powers. So long as any shares of the Mandatory Convertible Preferred Stock are outstanding, the Corporation shall not, without the affirmative vote or consent of the holders of record of at least two-thirds in voting power of the outstanding shares of the Mandatory Convertible Preferred Stock and all other series of Voting Preferred Stock at the time outstanding and entitled to vote thereon (subject to the last paragraph of this Section 7(c)), voting together as a single class, given in person or by proxy, either in writing without a meeting or by vote at an annual or special meeting of such stockholders:
(i) amend or alter the provisions of the Charter so as to authorize or create, or increase the authorized number of, any class or series of Senior Stock;
(ii) amend, alter or repeal the provisions of the Charter or the Certificate of Designations so as to adversely affect the special rights, preferences or voting powers of the Mandatory Convertible Preferred Stock; or
(iii) consummate a binding share exchange or reclassification involving the shares of the Mandatory Convertible Preferred Stock or a merger or consolidation of the Corporation with another entity, unless in each case: (i) the shares of the Mandatory Convertible Preferred Stock remain outstanding following the consummation of such binding share exchange, reclassification, merger or consolidation or, in the case of any such merger or consolidation with respect to which the Corporation is not the surviving or resulting entity (or the Mandatory Convertible Preferred Stock is otherwise exchanged or reclassified), are converted or reclassified into or exchanged for preference securities of the surviving or resulting entity or its ultimate parent or the right to receive such securities; and (ii) the shares of the Mandatory Convertible Preferred Stock that remain outstanding or such shares of preference securities, as the case may be, have such rights, preferences and voting powers that, taken as a whole, are not materially less favorable to the holders thereof than the rights, preferences and voting powers, taken as a whole, of the Mandatory Convertible Preferred Stock immediately prior to the consummation of such transaction;
provided, however, that in the event a transaction would trigger voting powers under clauses (ii) and (iii) above, clause (iii) shall govern; provided, further, however, that for all purposes of this Section 7(c):
(1) any increase in the number of the Corporations authorized but unissued shares of Preferred Stock,
(2) any increase in the number of the authorized or issued shares of Mandatory Convertible Preferred Stock, or
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(3) the creation and issuance, or increase in the authorized or issued number, of any class or series of Parity Stock or Junior Stock,
shall be deemed not to adversely affect (or to otherwise cause to be materially less favorable) the rights, preferences or voting powers of the Mandatory Convertible Preferred Stock and shall not require the affirmative vote or consent of Holders.
If any amendment, alteration, repeal, share exchange, reclassification, merger or consolidation specified in this Section 7(c) would adversely affect the rights, preferences or voting powers of one or more but not all series of Voting Preferred Stock (including the Mandatory Convertible Preferred Stock for this purpose), then only the series of Voting Preferred Stock the rights, preferences and voting powers of which are adversely affected and entitled to vote shall vote as a class in lieu of all other series of Voting Preferred Stock.
(d) Without the consent of the Holders, so long as such action does not adversely affect the special rights, preferences or voting powers of the Mandatory Convertible Preferred Stock, and limitations and restrictions thereof, the Corporation may amend, alter, supplement or repeal any terms of the Mandatory Convertible Preferred Stock for the following purposes:
(i) to cure any ambiguity, omission or mistake, or to correct or supplement any provision contained in the Certificate of Designations that may be defective or inconsistent with any other provision contained in the Certificate of Designations;
(ii) to make any provision with respect to matters or questions relating to the Mandatory Convertible Preferred Stock that is not inconsistent with the provisions of the Charter or the Certificate of Designations; or
(iii) to make any other change that does not adversely affect the rights of any Holder (other than any Holder that consents to such change).
In addition, without the consent of the Holders, the Corporation may amend, alter, supplement or repeal any terms of the Mandatory Convertible Preferred Stock in order to (x) conform the terms thereof to the description of the terms of the Mandatory Convertible Preferred Stock set forth in the Prospectus or (y) file a certificate of correction with respect to the Certificate of Designations to the extent permitted by Section 103(f) of the Delaware General Corporation Law.
(e) Prior to the close of business on the applicable Conversion Date, the shares of Common Stock issuable upon conversion of any shares of the Mandatory Convertible Preferred Stock shall not be deemed to be outstanding for any purpose and Holders shall have no rights, powers or preferences with respect to such shares of Common Stock, including voting powers (including the power to vote on any amendment to the Charter that would adversely affect the rights, powers or preferences of the Common Stock), rights to respond to tender offers for the Common Stock and rights to receive any dividends or other distributions on the Common Stock, by virtue of holding the Mandatory Convertible Preferred Stock.
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(f) The number of votes that each share of Mandatory Convertible Preferred Stock and any Voting Preferred Stock participating in the votes set forth in this Section 7 shall have and shall be in proportion to the liquidation preference of such share.
(g) The rules and procedures for calling and conducting any meeting of the Holders (including, without limitation, the fixing of a record date in connection therewith), the solicitation and use of proxies at such a meeting, the obtaining of written consents and any other procedural aspect or matter with regard to such a meeting or such consents shall be governed by any rules the Board of Directors, in its discretion, may adopt from time to time, which rules and procedures shall conform to the requirements of the Charter, the By-Laws, applicable law and the rules of any national securities exchange or other trading facility on which the Mandatory Convertible Preferred Stock is listed or traded at the time.
Section 8 Mandatory Conversion on the Mandatory Conversion Date. (a) Each outstanding share of the Mandatory Convertible Preferred Stock shall automatically convert (unless previously converted in accordance with Section 9 or Section 10) on the Mandatory Conversion Date (Mandatory Conversion), into a number of shares of Common Stock equal to the Mandatory Conversion Rate.
(b) The Mandatory Conversion Rate shall, subject to adjustment in accordance with Section 8(c), be as follows:
(i) if the Applicable Market Value is greater than the Threshold Appreciation Price, then the Mandatory Conversion Rate shall be equal to shares of Common Stock per share of the Mandatory Convertible Preferred Stock (the Minimum Conversion Rate);
(ii) if the Applicable Market Value is less than or equal to the Threshold Appreciation Price but equal to or greater than the Initial Price, then the Mandatory Conversion Rate per share of the Mandatory Convertible Preferred Stock shall be equal to $ divided by the Applicable Market Value, rounded to the nearest ten-thousandth of a share of Common Stock; or
(iii) if the Applicable Market Value is less than the Initial Price, then the Mandatory Conversion Rate shall be equal to shares of Common Stock per share of the Mandatory Convertible Preferred Stock (the Maximum Conversion Rate);
provided that the Fixed Conversion Rates are each subject to adjustment in accordance with the provisions of Section 14.
(c) If the Corporation declares a dividend on the Mandatory Convertible Preferred Stock for the Dividend Period ending on, but excluding, , the Corporation shall pay such dividend to the Record Holders as of the immediately preceding Regular Record Date, in accordance with Section 4 and subject to the limitations set forth therein. If on or prior to , the Corporation has not declared all or any portion of the accumulated and unpaid dividends on the Mandatory Convertible Preferred Stock, the Mandatory Conversion Rate shall be adjusted so that Holders receive an additional number of shares of Common Stock equal to:
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(i) the amount of such undeclared, accumulated and unpaid dividends per share of the Mandatory Convertible Preferred Stock (the Mandatory Conversion Additional Conversion Amount), divided by
(ii) the greater of (x) the Floor Price and (y) 97% of the Average Price (calculated using as the applicable Dividend Payment Date).
To the extent that the Mandatory Conversion Additional Conversion Amount exceeds the product of such number of additional shares and 97% of the Average Price, the Corporation shall, if it is legally able to do so, and to the extent permitted under the terms of the documents governing its indebtedness, declare and pay such excess amount in cash (computed to the nearest cent) pro rata per share to the Holders. Any such payment in cash may not be permitted by the Corporations then existing debt instruments. To the extent that the Corporation is not able to pay such excess amount in cash under applicable law and in compliance with its indebtedness, the Corporation shall not have any obligation to pay such amount in cash or deliver additional shares of Common Stock in respect of such amount, and such amount will not form a part of the cumulative dividends that may be deemed to accumulate on the shares of Mandatory Convertible Preferred Stock.
Section 9 Early Conversion at the Option of the Holder. (a) Other than during a Fundamental Change Conversion Period, subject to satisfaction of the conversion procedures set forth in Section 11, the Holders shall have the option to convert their Mandatory Convertible Preferred Stock, in whole or in part (but in no event less than one share of the Mandatory Convertible Preferred Stock), at any time prior to (an Early Conversion), into shares of Common Stock at the Minimum Conversion Rate, subject to adjustment in accordance with Section 9(b).
(b) If, as of any Early Conversion Date, the Corporation has not declared all or any portion of the accumulated and unpaid dividends for all full Dividend Periods ending on a Dividend Payment Date prior to such Early Conversion Date, the Minimum Conversion Rate shall be adjusted, with respect to the relevant Early Conversion, so that the Holders converting their Mandatory Convertible Preferred Stock at such time receive an additional number of shares of Common Stock equal to:
(i) such amount of undeclared, accumulated and unpaid dividends per share of Mandatory Convertible Preferred Stock for such prior full Dividend Periods (the Early Conversion Additional Conversion Amount), divided by
(ii) the greater of (x) the Floor Price and (y) the Average VWAP per share of the Common Stock over the 20 consecutive Trading Day period (the Early Conversion Settlement Period) commencing on, and including, the 21st Scheduled Trading Day immediately preceding the Early Conversion Date (such average being referred to as the Early Conversion Average Price).
To the extent that the Early Conversion Additional Conversion Amount exceeds the product of such number of additional shares and the Early Conversion Average Price, the Corporation shall not have any obligation to pay the shortfall in cash or deliver shares of Common Stock in respect of such shortfall.
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Except as set forth in the first sentence of this Section 9(b), upon any Early Conversion of any shares of Mandatory Convertible Preferred Stock, the Corporation shall make no payment or allowance for unpaid dividends on such shares of the Mandatory Convertible Preferred Stock, unless such Early Conversion Date occurs after the Regular Record Date for a declared dividend and on or prior to the immediately succeeding Dividend Payment Date, in which case the Corporation shall pay such dividend on such Dividend Payment Date to the Record Holder of the converted shares of the Mandatory Convertible Preferred Stock as of such Regular Record Date, in accordance with Section 4.
Section 10 Fundamental Change Conversion. (a) If a Fundamental Change occurs on or prior to , the Holders shall have the right (the Fundamental Change Conversion Right) during the Fundamental Change Conversion Period to:
(i) convert their shares of Mandatory Convertible Preferred Stock, in whole or in part (but in no event less than one share of the Mandatory Convertible Preferred Stock) (any such conversion pursuant to this Section 10(a) being a Fundamental Change Conversion) into a number of shares of Common Stock (or Units of Exchange Property in accordance with Section 15) equal to the Fundamental Change Conversion Rate per share of Mandatory Convertible Preferred Stock;
(ii) with respect to such converted shares of Mandatory Convertible Preferred Stock, receive an amount equal to the present value, calculated using a discount rate of % per annum, of all dividend payments on such shares (excluding any Accumulated Dividend Amount) for (a) the partial Dividend Period, if any, from, and including, the Fundamental Change Effective Date to, but excluding, the next Dividend Payment Date and (b) all the remaining full Dividend Periods from, and including, the Dividend Payment Date following the Fundamental Change Effective Date to, but excluding, (the Fundamental Change Dividend Make-Whole Amount), payable in cash or shares of Common Stock; and
(iii) with respect to such converted shares of Mandatory Convertible Preferred Stock, receive the Accumulated Dividend Amount payable in cash or shares of Common Stock,
subject in the case of clauses (ii) and (iii) to certain limitations with respect to the number of shares of Common Stock the Corporation will be required to deliver as set forth in Section 10(d); provided, that if the Regular Record Date for a Divided Period for which the Corporation, as of the Fundamental Change Effective Date, declared a dividend occurs before or during the related Fundamental Change Conversion Period, then the Corporation shall pay such dividend on the relevant Dividend Payment Date to the Record Holders as of such Regular Record Date, in accordance with Section 4, and the Accumulated Dividend Amount shall not include the amount of such dividend, and the Fundamental Change Dividend Make-Whole Amount shall not include the present value of the payment of such dividend.
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(b) To exercise the Fundamental Change Conversion Right, Holders must submit their shares of Mandatory Convertible Preferred Stock for conversion at any time during the Fundamental Change Conversion Period. Holders who do not submit their shares for conversion during the Fundamental Change Conversion Period shall not be entitled to convert their Mandatory Convertible Preferred Stock at the relevant Fundamental Change Conversion Rate or to receive the relevant Fundamental Change Dividend Make-Whole Amount or the relevant Accumulated Dividend Amount.
The Corporation shall provide written notice (the Fundamental Change Notice) to Holders of the Fundamental Change Effective Date no later than the second Business Day immediately following such Fundamental Change Effective Date.
The Fundamental Change Notice shall state:
(i) the event causing the Fundamental Change;
(ii) the anticipated Fundamental Change Effective Date or actual Fundamental Change Effective Date, as the case may be;
(iii) that Holders shall have the right to effect a Fundamental Change Conversion in connection with such Fundamental Change during the Fundamental Change Conversion Period;
(iv) the Fundamental Change Conversion Period; and
(v) the instructions a Holder must follow to effect a Fundamental Change Conversion in connection with such Fundamental Change.
(c) Not later than the second Business Day following the Fundamental Change Effective Date, the Corporation shall notify Holders of:
(i) the Fundamental Change Conversion Rate (if notice is provided to Holders prior to the anticipated Fundamental Change Effective Date, specifying how the Fundamental Change Conversion Rate will be determined);
(ii) the Fundamental Change Dividend Make-Whole Amount and whether the Corporation will pay such amount in cash, shares of Common Stock (or to the extent applicable, Units of Exchange Property) or a combination thereof, specifying the combination, if applicable; and
(iii) the Accumulated Dividend Amount as of the Fundamental Change Effective Date and whether the Corporation will pay such amount in cash, shares of Common Stock (or to the extent applicable, Units of Exchange Property) or a combination thereof, specifying the combination, if applicable.
(d) (i) For any shares of the Mandatory Convertible Preferred Stock that are converted during the Fundamental Change Conversion Period, in addition to the Common Stock
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issued upon conversion at the Fundamental Change Conversion Rate, the Corporation shall at its option (subject to satisfaction of the requirements of this Section):
(A) pay the Fundamental Change Dividend Make-Whole Amount in cash (computed to the nearest cent), to the extent the Corporation is legally permitted to do so and to the extent permitted under the terms of the documents governing its indebtedness;
(B) increase the number of shares of Common Stock (or Units of Exchange Property) to be issued upon conversion by a number equal to (x) the Fundamental Change Dividend Make-Whole Amount, divided by (y) the greater of (i) the Floor Price and (ii) 97% of the Fundamental Change Stock Price; or
(C) pay the Fundamental Change Dividend Make-Whole Amount through any combination of cash and shares of Common Stock (or Units of Exchange Property) in accordance with the provisions of clauses (A) and (B) above.
(ii) In addition, to the extent that the Accumulated Dividend Amount exists as of the Fundamental Change Effective Date, the converting Holder shall be entitled to receive such Accumulated Dividend Amount upon such Fundamental Change Conversion. The Corporation shall, at its option, pay the Accumulated Dividend Amount (subject to satisfaction of the requirements of this Section):
(A) in cash (computed to the nearest cent), to the extent the Corporation is legally permitted to do so and to the extent permitted under the terms of the documents governing its indebtedness;
(B) in an additional number of shares of Common Stock (or Units of Exchange Property) equal to (x) the Accumulated Dividend Amount, divided by (y) the greater of (i) the Floor Price and (ii) 97% of the Fundamental Change Stock Price; or
(C) through any combination of cash and shares of Common Stock (or Units of Exchange Property) in accordance with the provisions of clauses (A) and (B) above.
(iii) The Corporation shall pay the Fundamental Change Dividend Make-Whole Amount and the Accumulated Dividend Amount in cash, except to the extent the Corporation elects on or prior to the second Business Day following the relevant Fundamental Change Effective Date to make all or any portion of such payments in shares of Common Stock (or Units of Exchange Property). If the Corporation elects to deliver Common Stock (or Units of Exchange Property) in respect of all or any portion of the Fundamental Change Dividend Make-Whole Amount or the Accumulated Dividend Amount, to the extent that the Fundamental Change Dividend Make-Whole Amount or the Accumulated Dividend Amount or the dollar amount of any portion thereof paid in Common Stock (or Units of Exchange Property) exceeds the product of (x) the number of additional shares the Corporation delivers in respect thereof and (y) 97% of the
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Fundamental Change Stock Price, the Corporation shall, if it is legally able to do, and to the extent permitted under the terms of the documents governing its indebtedness, pay such excess amount in cash (computed to the nearest cent). Any such payment in cash may not be permitted by the Corporations then existing debt instruments, including any restricted payments covenants. To the extent that the Corporation is not able to pay such excess amount in cash under applicable law and in compliance with its indebtedness, the Corporation shall not have any obligation to pay such amount in cash or deliver additional shares of Common Stock in respect of such amount.
(iv) No fractional shares of Common Stock (or, to the extent applicable, Units of Exchange Property) shall be delivered by the Corporation to converting Holders in respect of the Fundamental Change Dividend Make-Whole Amount or the Accumulated Dividend Amount. The Corporation shall instead pay a cash amount (computed to the nearest cent) to each a converting Holder that would otherwise be entitled to receive a fraction of a share of Common Stock (or to the extent applicable, Units of Exchange Property) based on the Average VWAP per share of Common Stock (or to the extent applicable, Units of Exchange Property) over the five consecutive Trading Day period beginning on, and including, the seventh Scheduled Trading Day immediately preceding the relevant Fundamental Change Conversion Date.
(v) If the Corporation is prohibited from paying or delivering, as the case may be, the Fundamental Change Dividend Make-Whole Amount (whether in cash or in shares of Common Stock), in whole or in part, due to limitations of applicable Delaware law, the Fundamental Change Conversion Rate will instead be increased by a number of shares of Common Stock equal to:
(A) the cash amount of the aggregate unpaid and undelivered Fundamental Change Dividend Make-Whole Amount, divided by
(B) the greater of (i) the Floor Price and (ii) 97% of the Fundamental Change Stock Price.
To the extent that the cash amount of the aggregate unpaid and undelivered Fundamental Change Dividend Make-Whole Amount exceeds the product of such number of additional shares and 97% of the Fundamental Change Stock Price, the Corporation shall not have any obligation to pay the shortfall in cash or deliver additional shares of Common Stock in respect of such amount.
Section 11 Conversion Procedures. (a) Pursuant to Section 8, on the Mandatory Conversion Date, any outstanding shares of Mandatory Convertible Preferred Stock shall mandatorily and automatically convert into shares of Common Stock.
Subject to any applicable rules and procedures of the Depositary, if more than one share of the Mandatory Convertible Preferred Stock held by the same Holder is automatically converted on the Mandatory Conversion Date, the number of full shares of Common Stock issuable upon conversion thereof shall be computed on the basis of the aggregate number of shares of Mandatory Convertible Preferred Stock so converted.
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A Holder of shares of the Mandatory Convertible Preferred Stock that are mandatorily converted shall not be required to pay any transfer or similar taxes or duties relating to the issuance or delivery of the Common Stock, except that such Holder shall be required to pay any tax or duty that may be payable relating to any transfer involved in the issuance or delivery of the Common Stock in a name other than the name of such Holder.
A certificate representing the shares of Common Stock issuable upon conversion shall be issued and delivered to the converting Holder or, if the Mandatory Convertible Preferred Stock being converted are in book-entry form, the shares of Common Stock issuable upon conversion shall be delivered to the converting Holder through book-entry transfer through the facilities of the Depositary, in each case, together with delivery by the Corporation to the converting Holder of any cash to which the converting Holder is entitled, only after all applicable taxes and duties, if any, payable by such converting Holder have been paid in full, and such shares and cash will be delivered on the later of (i) the Mandatory Conversion Date and (ii) the Business Day after the Holder has paid in full all applicable taxes and duties, if any.
The Person or Persons entitled to receive the shares of Common Stock issuable upon Mandatory Conversion shall be treated for all purposes as the record holder(s) of such shares of Common Stock as of the close of business on the Mandatory Conversion Date. Except as provided under Section 14, prior to the close of business on the Mandatory Conversion Date, the Common Stock issuable upon conversion of Mandatory Convertible Preferred Stock shall not be deemed to be outstanding for any purpose and Holders shall have no rights, powers or preferences with respect to such Common Stock, including voting powers, rights to respond to tender offers and rights to receive any dividends or other distributions on the Common Stock, by virtue of holding the Mandatory Convertible Preferred Stock.
(b) To effect an Early Conversion pursuant to Section 9, a Holder must:
(i) complete and manually sign the conversion notice on the back of the Mandatory Convertible Preferred Stock certificate or a facsimile of such conversion notice;
(ii) deliver the completed conversion notice and the certificated shares of Mandatory Convertible Preferred Stock to be converted to the Conversion and Dividend Disbursing Agent;
(iii) if required, furnish appropriate endorsements and transfer documents; and
(iv) if required, pay all transfer or similar taxes or duties, if any.
Notwithstanding the foregoing, to effect an Early Conversion pursuant to Section 9 of shares of Mandatory Convertible Preferred Stock held in global form, the Holder must, in lieu of the foregoing, comply with the applicable procedures of DTC (or any other Depositary for the shares of Mandatory Convertible Preferred Stock held in global form appointed by the Corporation).
The Early Conversion shall be effective on the date on which a Holder has satisfied the foregoing requirements, to the extent applicable (Early Conversion Date).
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Subject to any applicable rules and procedures of the Depositary, if more than one share of the Mandatory Convertible Preferred Stock is surrendered for conversion at one time by or for the same Holder, the number of full shares of Common Stock issuable upon conversion thereof shall be computed on the basis of the aggregate number of shares of the Mandatory Convertible Preferred Stock so surrendered.
A Holder shall not be required to pay any transfer or similar taxes or duties relating to the issuance or delivery of Common Stock upon conversion, but such Holder shall be required to pay any tax or duty that may be payable relating to any transfer involved in the issuance or delivery of Common Stock in a name other than the name of such Holder.
A certificate representing the shares of Common Stock issuable upon conversion shall be issued and delivered to the converting Holder or, if the Mandatory Convertible Preferred Stock being converted are in book-entry form, the shares of Common Stock issuable upon conversion shall be delivered to the converting Holder through book-entry transfer through the facilities of the Depositary, in each case, together with delivery by the Corporation to the converting Holder of any cash to which the converting Holder is entitled, only after all applicable taxes and duties, if any, payable by such converting Holder have been paid in full, and such shares and cash will be delivered on the latest of (i) the second Business Day immediately succeeding the Early Conversion Date, (ii) if applicable, the second Business Day immediately succeeding the last day of the Early Conversion Settlement Period, and (iii) the Business Day after the Holder has paid in full all applicable taxes and duties, if any.
The Person or Persons entitled to receive the shares of Common Stock issuable upon Early Conversion shall be treated for all purposes as the record holder(s) of such shares of Common Stock as of the close of business on the applicable Early Conversion Date. Except as set forth in Section 14, prior to the close of business on such applicable Early Conversion Date, the shares of Common Stock issuable upon conversion of any shares of Mandatory Convertible Preferred Stock shall not be deemed to be outstanding for any purpose, and Holders shall have no rights, powers or preferences with respect to such shares of Common Stock, including voting powers, rights to respond to tender offers for the Common Stock and rights to receive any dividends or other distributions on the Common Stock, by virtue of holding shares of Mandatory Convertible Preferred Stock.
In the event that an Early Conversion is effected with respect to shares of Mandatory Convertible Preferred Stock representing less than all the shares of the Mandatory Convertible Preferred Stock held by a Holder, upon such Early Conversion the Corporation shall execute and instruct the Transfer Agent and Registrar to countersign and deliver to the Holder thereof, at the expense of the Corporation, a certificate evidencing the shares of Mandatory Convertible Preferred Stock as to which Early Conversion was not effected, or, if the Mandatory Convertible Preferred Stock is held in book-entry form, the Corporation shall cause the Transfer Agent and Registrar to reduce the number of shares of the Mandatory Convertible Preferred Stock represented by the global certificate by making a notation on Schedule I attached to the global certificate or otherwise notate such reduction in the register maintained by such Transfer Agent and Registrar.
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(c) To effect a Fundamental Change Conversion pursuant to Section 10, a Holder must:
(i) complete and manually sign the conversion notice on the back of the Mandatory Convertible Preferred Stock certificate or a facsimile of such conversion notice;
(ii) deliver the completed conversion notice and the certificated shares of Mandatory Convertible Preferred Stock to be converted to the Conversion and Dividend Disbursing Agent;
(iii) if required, furnish appropriate endorsements and transfer documents; and
(iv) if required, pay all transfer or similar taxes or duties, if any.
Notwithstanding the foregoing, to effect a Fundamental Change Conversion pursuant to Section 10 of shares of Mandatory Convertible Preferred Stock held in global form, the Holder must, in lieu of the foregoing, comply with the applicable procedures of DTC (or any other Depositary for the shares of Mandatory Convertible Preferred Stock held in global form appointed by the Corporation).
The Fundamental Change Conversion shall be effective on the date on which a Holder has satisfied the foregoing requirements, to the extent applicable (the Fundamental Change Conversion Date).
Subject to any applicable rules and procedures of the Depositary, if more than one share of the Mandatory Convertible Preferred Stock is surrendered for conversion at one time by or for the same holder, the number of full shares of Common Stock issuable upon conversion thereof shall be computed on the basis of the aggregate number of shares of the Mandatory Convertible Preferred Stock so surrendered.
A Holder shall not be required to pay any transfer or similar taxes or duties relating to the issuance or delivery of Common Stock upon conversion, but such Holder shall be required to pay any tax or duty that may be payable relating to any transfer involved in the issuance or delivery of Common Stock in a name other than the name of such Holder.
A certificate representing the shares of Common Stock issuable upon conversion shall be issued and delivered to the converting Holder or, if the Mandatory Convertible Preferred Stock being converted are in book-entry form, the shares of Common Stock issuable upon conversion shall be delivered to the converting Holder through book-entry transfer through the facilities of the Depositary, in each case, together with delivery by the Corporation to the converting Holder of any cash to which the converting Holder is entitled, only after all applicable taxes and duties, if any, payable by such converting Holder have been paid in full, on the later of (i) the second Business Day immediately succeeding the Fundamental Change Conversion Date and (ii) the Business Day after the Holder has paid in full all applicable taxes and duties, if any.
The Person or Persons entitled to receive the shares of Common Stock issuable upon such Fundamental Change Conversion shall be treated for all purposes as the record
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holder(s) of such shares of Common Stock as of the close of business on the applicable Fundamental Change Conversion Date. Except as set forth in Section 14, prior to the close of business on such applicable Fundamental Change Conversion Date, the shares of Common Stock issuable upon conversion of any shares of the Mandatory Convertible Preferred Stock shall not be outstanding for any purpose, and Holders shall have no rights, powers or preferences with respect to the Common Stock, including voting powers, rights to respond to tender offers for the Common Stock and rights to receive any dividends or other distributions on the Common Stock, by virtue of holding shares of Mandatory Convertible Preferred Stock.
In the event that a Fundamental Change Conversion is effected with respect to shares of Mandatory Convertible Preferred Stock representing less than all the shares of Mandatory Convertible Preferred Stock held by a Holder, upon such Fundamental Change Conversion the Corporation shall execute and instruct the Transfer Agent and Registrar to countersign and deliver to the Holder thereof, at the expense of the Corporation, a certificate evidencing the shares of Mandatory Convertible Preferred Stock as to which Fundamental Change Conversion was not effected, or, if Mandatory Convertible Preferred Stock is held in book-entry form, the Corporation shall cause the Transfer Agent and Registrar to reduce the number of shares of Mandatory Convertible Preferred Stock represented by the global certificate by making a notation on Schedule I attached to the global certificate or otherwise notate such reduction in the register maintained by such Transfer Agent and Registrar.
(d) In the event that a Holder shall not by written notice designate the name in which shares of Common Stock to be issued upon conversion of such Mandatory Convertible Preferred Stock should be registered or, if applicable, the address to which the certificate or certificates representing such shares of Common Stock should be sent, the Corporation shall be entitled to register such shares, and make such payment, in the name of the Holder as shown on the records of the Corporation and, if applicable, to send the certificate or certificates representing such shares of Common Stock to the address of such Holder shown on the records of the Corporation.
(e) Shares of Mandatory Convertible Preferred Stock shall cease to be outstanding on the applicable Conversion Date, subject to the right of Holders of such shares to receive shares of Common Stock issuable upon conversion of such shares of Mandatory Convertible Preferred Stock and other amounts and shares of Common Stock, if any, to which they are entitled pursuant to Sections 8, 9 or 10, as applicable and, if the applicable Conversion Date occurs after the Regular Record Date for a declared dividend and prior to the immediately succeeding Dividend Payment Date, subject to the right of the Record Holders of such shares of the Mandatory Convertible Preferred Stock on such Regular Record Date to receive payment of the full amount of such declared dividend on such Dividend Payment Date pursuant to Section 4.
Section 12 Reservation of Common Stock. (a) The Corporation shall at all times reserve and keep available out of its authorized and unissued Common Stock, solely for issuance upon the conversion of shares of Mandatory Convertible Preferred Stock as herein provided, and free from any preemptive or other similar rights, a number of shares of Common Stock equal to the maximum number of shares of Common Stock deliverable upon conversion of all shares of Mandatory Convertible Preferred Stock (which shall initially equal a number of shares of Common Stock equal to the sum of (x) the product of (i) shares of Mandatory
29
Convertible Preferred Stock, and (ii) the initial Maximum Conversion Rate and (y) the product of (i) shares of Mandatory Convertible Preferred Stock, and (ii) the maximum number of shares of Common Stock that would be added to the Mandatory Conversion Rate assuming (A) the Corporation paid no dividends on the shares of Mandatory Convertible Preferred Stock prior to the Mandatory Conversion Date and (B) the Floor Price is greater than 97% of the relevant Average Price). For purposes of this Section 12(a), the number of shares of Common Stock that shall be deliverable upon the conversion of all outstanding shares of Mandatory Convertible Preferred Stock shall be computed as if at the time of computation all such outstanding shares were held by a single Holder.
(b) Notwithstanding the foregoing, the Corporation shall be entitled to deliver upon conversion of shares of Mandatory Convertible Preferred Stock or as payment of any dividend on such shares of Mandatory Convertible Preferred Stock, as herein provided, shares of Common Stock reacquired and held in the treasury of the Corporation (in lieu of the issuance of authorized and unissued shares of Common Stock), so long as any such treasury shares are free and clear of all liens, charges, security interests or encumbrances (other than liens, charges, security interests and other encumbrances created by the Holders).
(c) All shares of Common Stock delivered upon conversion of, or as payment of a dividend on, the Mandatory Convertible Preferred Stock shall be duly authorized, validly issued, fully paid and non-assessable, free and clear of all liens, claims, security interests and other encumbrances (other than liens, charges, security interests and other encumbrances created by the Holders) and free of preemptive rights.
(d) Prior to the delivery of any securities that the Corporation shall be obligated to deliver upon conversion of Mandatory Convertible Preferred Stock, the Corporation shall use commercially reasonable efforts to comply with all federal and state laws and regulations thereunder requiring the registration of such securities with, or any approval of or consent to the delivery thereof by, any governmental authority.
(e) The Corporation hereby covenants and agrees that, if at any time the Common Stock shall be listed on NYSE or any other national securities exchange or automated quotation system, the Corporation shall, if permitted by the rules of such exchange or automated quotation system, list and use its commercially reasonable efforts to keep listed, so long as the Common Stock shall be so listed on such exchange or automated quotation system, all Common Stock issuable upon conversion (including, for the avoidance of doubt, with respect to the Mandatory Conversion Additional Conversion Amount or Early Conversion Additional Conversion Amount) of, or issuable in respect of the payment of dividends, the Accumulated Dividend Amount and the Fundamental Change Dividend Make-Whole Amount on, the Mandatory Convertible Preferred Stock; provided, however, that if the rules of such exchange or automated quotation system permit the Corporation to defer the listing of such Common Stock until the earlier of (x) the first conversion of Mandatory Convertible Preferred Stock into Common Stock in accordance with the provisions hereof and (y) the first payment of any dividends, any Accumulated Dividend Amount or any Fundamental Change Dividend Make-Whole Amount on the Mandatory Convertible Preferred Stock, the Corporation covenants to list such Common Stock issuable upon the earlier of (1) the first conversion of the Mandatory Convertible Preferred Stock and (2) the first payment of any dividends, any Accumulated
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Dividend Amount or any Fundamental Change Dividend Make-Whole Amount on the Mandatory Convertible Preferred Stock in accordance with the requirements of such exchange or automated quotation system at such time.
Section 13 Fractional Shares. (a) No fractional shares of Common Stock shall be issued to Holders as a result of any conversion of shares of Mandatory Convertible Preferred Stock.
(b) In lieu of any fractional shares of Common Stock otherwise issuable in respect of the aggregate number of shares of the Mandatory Convertible Preferred Stock of any Holder that are converted on the Mandatory Conversion Date pursuant to Section 8 or at the option of the Holder pursuant to Section 9 or Section 10, such Holder shall be entitled to receive an amount in cash (computed to the nearest cent) equal to the product of (i) that same fraction and (ii) the Average VWAP of the Common Stock over the five consecutive Trading Day period beginning on, and including, the seventh Scheduled Trading Day immediately preceding the Mandatory Conversion Date, Early Conversion Date or Fundamental Change Conversion Date, as applicable.
Section 14 Anti-Dilution Adjustments to the Fixed Conversion Rates. (a) Each Fixed Conversion Rate shall be adjusted as set forth in this Section 14, except that the Corporation shall not make any adjustments to the Fixed Conversion Rates if Holders participate (other than in the case of a share split or share combination), at the same time and upon the same terms as holders of Common Stock and solely as a result of holding the Mandatory Convertible Preferred Stock, in any of the transactions set forth in Sections 14(a)(i)-(vi) without having to convert their Mandatory Convertible Preferred Stock as if they held a number of shares of Common Stock equal to (i) the Maximum Conversion Rate as of the Record Date for such transaction, multiplied by (ii) the number of shares of Mandatory Convertible Preferred Stock held by such Holder.
(i) If the Corporation exclusively issues shares of Common Stock as a dividend or distribution on shares of Common Stock, or if the Corporation effects a share split or share combination, each Fixed Conversion Rate shall be adjusted based on the following formula:
CR1 = CR0 x |
OS1 |
|
OS0 |
where,
CR0 = | such Fixed Conversion Rate in effect immediately prior to the close of business on the Record Date of such dividend or distribution, or immediately prior to the open of business on the Effective Date of such share split or share combination, as applicable; | |
CR1 = | such Fixed Conversion Rate in effect immediately after the close of business on such Record Date or immediately after the open of business on such Effective Date, as applicable; |
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OS0 = | the number of shares of Common Stock outstanding immediately prior to the close of business on such Record Date or immediately prior to the open of business on such Effective Date, as applicable, before giving effect to such dividend, distribution, share split or share combination; and | |
OS1 = | the number of shares of Common Stock outstanding immediately after giving effect to such dividend, distribution, share split or share combination. |
Any adjustment made under this Section 14(a)(i) shall become effective immediately after the close of business on the Record Date for such dividend or distribution, or immediately after the open of business on the Effective Date for such share split or share combination, as applicable. If any dividend or distribution of the type set forth in this Section 14(a)(i) is declared but not so paid or made, each Fixed Conversion Rate shall be immediately readjusted, effective as of the date the Board of Directors or a committee thereof determines not to pay such dividend or distribution, to such Fixed Conversion Rate that would then be in effect if such dividend or distribution had not been declared. For the purposes of this Section 14(a)(i), the number of shares of Common Stock outstanding immediately prior to the close of business on the Record Date and the number of shares of Common Stock outstanding immediately after giving effect to such dividend, distribution, share split or share combination shall, in each case, not include shares that the Corporation holds in treasury. The Corporation shall not pay any dividend or make any distribution on shares of Common Stock that it holds in treasury.
(ii) If the Corporation issues to all or substantially all holders of Common Stock any rights, options or warrants entitling them, for a period of not more than 45 calendar days after the announcement date of such issuance, to subscribe for or purchase shares of Common Stock at a price per share that is less than the Average VWAP per share of Common Stock for the 10 consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the date of announcement of such issuance, each Fixed Conversion Rate shall be increased based on the following formula:
CR1 = CR0 x |
OS1 + X |
|
OS0 + Y |
where,
CR0 = | such Fixed Conversion Rate in effect immediately prior to the close of business on the Record Date for such issuance; | |
CR1 = | such Fixed Conversion Rate in effect immediately after the close of business on such Record Date; | |
OS0 = | the number of shares of Common Stock outstanding immediately prior to the close of business on such Record Date; | |
X = | the total number of shares of Common Stock issuable pursuant to such rights, options or warrants; and |
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Y = | the number of shares of Common Stock equal to (i) the aggregate price payable to exercise such rights, options or warrants, divided by (ii) the Average VWAP per share of Common Stock over the 10 consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the date of announcement of the issuance of such rights, options or warrants. |
Any increase made under this Section 14(a)(ii) shall be made successively whenever any such rights, options or warrants are issued and shall become effective immediately after the close of business on the Record Date for such issuance. To the extent that such rights, options or warrants are not exercised prior to their expiration or shares of Common Stock are not delivered after the exercise of such rights, options or warrants, each Fixed Conversion Rate shall be decreased to such Fixed Conversion Rate that would then be in effect had the increase with respect to the issuance of such rights, options or warrants been made on the basis of delivery of only the number of shares of Common Stock actually delivered, if any. If such rights, options or warrants are not so issued, each Fixed Conversion Rate shall be immediately readjusted, effective as of the date the Board of Directors or a committee thereof determines not to pay such dividend or distribution, to such Fixed Conversion Rate that would then be in effect if such Record Date for such issuance had not occurred.
For the purpose of this Section 14(a)(ii), in determining whether any rights, options or warrants entitle the holders of Common Stock to subscribe for or purchase shares of Common Stock at less than such Average VWAP per share for the 10 consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the date of announcement of such issuance, and in determining the aggregate offering price of such shares of Common Stock, there shall be taken into account any consideration received by the Corporation for such rights, options or warrants and any amount payable on exercise or conversion thereof, the value of such consideration, if other than cash, to be determined by the Board of Directors or a committee thereof.
(iii) If the Corporation distributes shares of its capital stock, evidences of the Corporations indebtedness, other assets or property of the Corporation or rights, options or warrants to acquire its capital stock or other securities, to all or substantially all holders of Common Stock, excluding:
(A) dividends, distributions or issuances as to which the provisions set forth in Section 14(a)(i) or Section 14(a)(ii) shall apply;
(B) dividends or distributions paid exclusively in cash as to which the provisions set forth in Section 14(a)(iv) shall apply;
(C) any dividends and distributions upon conversion of, or in exchange for, shares of Common Stock in connection with a recapitalization, reclassification, change, consolidation, merger or other combination, share exchange, or sale, lease or other transfer or disposition resulting in the change in the conversion consideration as set forth under Section 15;
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(D) except as otherwise set forth in Section 14(a)(vii), rights issued pursuant to a shareholder rights plan adopted by the Corporation; and
(E) Spin-Offs as to which the provisions set forth below in this Section 14(a)(iii) shall apply;
then each Fixed Conversion Rate shall be increased based on the following formula:
CR1 = CR0 x |
SP0 |
|
SP0 + FMV |
where,
CR0 = | such Fixed Conversion Rate in effect immediately prior to the close of business on the Record Date for such distribution; | |
CR1 = | such Fixed Conversion Rate in effect immediately after the close of business on such Record Date; | |
SP0 = | the Average VWAP per share of Common Stock over the 10 consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the Ex-Date for such distribution; and | |
FMV = | the fair market value (as determined by the Board of Directors or a committee thereof in good faith) of the shares of capital stock, evidences of indebtedness, assets, property, rights, options or warrants so distributed, expressed as an amount per share of Common Stock on the Ex-Date for such distribution. |
Any increase made under the portion of this Section 14(a)(iii) will become effective immediately after the close of business on the Record Date for such distribution. If such distribution is not so paid or made, each Fixed Conversion Rate shall be immediately readjusted, effective as of the date the Board of Directors or a committee thereof determines not to pay such dividend or distribution, to be such Fixed Conversion Rate that would then be in effect if such distribution had not been declared.
Notwithstanding the foregoing, if FMV (as defined above) is equal to or greater than SP0 (as defined above), or if the difference is less than $1.00, in lieu of the foregoing increase, each Holder shall receive, in respect of each share of Mandatory Convertible Preferred Stock, at the same time and upon the same terms as holders of Common Stock, the amount and kind of the Corporations capital stock, evidences of the Corporations indebtedness, other assets or property of the Corporation or rights, options or warrants to acquire its capital stock or other securities that such Holder would have received if such Holder owned a number of shares of Common Stock equal to the Maximum Conversion Rate in effect on the Record Date for the distribution.
With respect to an adjustment pursuant to this Section 14(a)(iii) where there has been a Spin-Off, each Fixed Conversion Rate shall be increased based on the following formula:
CR1 = CR0 x |
FMV0 + MP0 |
|
MP0 |
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where,
CR0 = | such Fixed Conversion Rate in effect immediately prior to the close of business on the last Trading Day of the 10 consecutive Trading Day period commencing on, and including, the Ex-Date for the Spin-Off (the Valuation Period); | |
CR1 = | such Fixed Conversion Rate in effect immediately after the close of business on the last Trading Day of the Valuation Period; | |
FMV0 = | the Average VWAP per share of the capital stock or similar equity interest distributed to holders of Common Stock applicable to one share of Common Stock over the Valuation Period; and | |
MP0 = | the Average VWAP per share of Common Stock over the Valuation Period. |
The increase to each Fixed Conversion Rate under the preceding paragraph will become effective at the close of business on the last Trading Day of the Valuation Period. Notwithstanding the foregoing, if any date for determining the number of shares of Common Stock issuable to a Holder occurs during the Valuation Period, the reference to 10 in the preceding paragraph shall be deemed replaced with such lesser number of Trading Days as have elapsed between the beginning of the Valuation Period and such determination date for purposes of determining such Fixed Conversion Rate. If such dividend or distribution is not so paid, each Fixed Conversion Rate shall be decreased, effective as of the date the Board of Directors or a committee thereof determines not to make or pay such dividend or distribution, to be such Fixed Conversion Rate that would then be in effect if such dividend or distribution had not been declared.
For purposes of this Section 14(a)(iii) (and subject in all respects to Section 14(a)(i) and Section 14(a)(ii)):
(A) rights, options or warrants distributed by the Corporation to all or substantially all holders of the Common Stock entitling them to subscribe for or purchase shares of the Corporations capital stock, including Common Stock (either initially or under certain conditions), which rights, options or warrants, until the occurrence of a specified event or events (Trigger Event):
(1) |
are deemed to be transferred with such shares of the Common Stock; |
(2) |
are not exercisable; and |
(3) |
are also issued in respect of future issuances of the Common Stock, |
shall be deemed not to have been distributed for purposes of this Section 14(a)(iii) (and no adjustment to the Fixed Conversion Rates under this Section 14(a)(iii) shall be required) until the occurrence of the earliest Trigger Event, whereupon
35
such rights, options or warrants shall be deemed to have been distributed and an appropriate adjustment (if any is required) to the Fixed Conversion Rates shall be made under this Section 14(a)(iii).
(B) If any such right, option or warrant, including any such existing rights, options or warrants distributed prior to the Initial Issue Date, are subject to events, upon the occurrence of which such rights, options or warrants become exercisable to purchase different securities, evidences of indebtedness or other assets, then the date of the occurrence of any and each such event shall be deemed to be the date of distribution and Record Date with respect to new rights, options or warrants with such rights (in which case the existing rights, options or warrants shall be deemed to terminate and expire on such date without exercise by any of the holders thereof).
(C) In addition, in the event of any distribution (or deemed distribution) of rights, options or warrants, or any Trigger Event or other event (of the type described in the immediately preceding clause (B)) with respect thereto that was counted for purposes of calculating a distribution amount for which an adjustment to the Fixed Conversion Rates under this clause (iii) was made:
(1) |
in the case of any such rights, options or warrants that shall all have been redeemed or repurchased without exercise by any holders thereof, upon such final redemption or repurchase (x) the Fixed Conversion Rates shall be readjusted as if such rights, options or warrants had not been issued and (y) the Fixed Conversion Rates shall then again be readjusted to give effect to such distribution, deemed distribution or Trigger Event, as the case may be, as though it were a cash distribution pursuant to Section 14(a)(iv), equal to the per share redemption or repurchase price received by a holder or holders of Common Stock with respect to such rights, options or warrants (assuming such holder had retained such rights, options or warrants), made to all holders of Common Stock as of the date of such redemption or repurchase; and |
(2) |
in the case of such rights, options or warrants that shall have expired or been terminated without exercise by any holders thereof, the Fixed Conversion Rates shall be readjusted as if such rights, options and warrants had not been issued; |
provided that, in each case, such rights, options or warrants are deemed to be transferred with such shares of the Common Stock and are also issued in respect of future issuances of the Common Stock.
For purposes of Section 14(a)(i), Section 14(a)(ii) and this Section 14(a)(iii), if any dividend or distribution to which this Section 14(a)(iii) is applicable includes one or both of:
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(A) a dividend or distribution of shares of Common Stock to which Section 14(a)(i) is applicable (the Clause A Distribution);
or
(B) an issuance of rights, options or warrants to which Section 14(a)(ii) is applicable (the Clause B Distribution), then:
(1) |
such dividend or distribution, other than the Clause A Distribution and the Clause B Distribution, shall be deemed to be a dividend or distribution to which this Section 14(a)(iii) is applicable (the Clause C Distribution) and any Fixed Conversion Rate adjustment required by this Section 14(a)(iii) with respect to such Clause C Distribution shall then be made; and |
(2) |
the Clause A Distribution and Clause B Distribution shall be deemed to immediately follow the Clause C Distribution and any Fixed Conversion Rate adjustment required by Section 14(a)(i) and Section 14(a)(ii) with respect thereto shall then be made, except that, if determined by the Corporation (I) the Record Date of the Clause A Distribution and the Clause B Distribution shall be deemed to be the Record Date of the Clause C Distribution and (II) any shares of Common Stock included in the Clause A Distribution or Clause B Distribution shall be deemed not to be outstanding immediately prior to the close of business on such Record Date or immediately prior to the open of business on such Effective Date within the meaning of Section 14(a)(i) or outstanding immediately prior to close of business on such Record Date within the meaning of Section 14(a)(ii). |
(iv) If any cash dividend or distribution is made to all or substantially all holders of Common Stock, other than a regular, quarterly cash dividend that does not exceed $ per share (the Initial Dividend Threshold), each Fixed Conversion Rate shall be adjusted based on the following formula:
CR1 = CR0 x |
SP0 T |
|
SP0 C |
where,
CR0 = | such Fixed Conversion Rate in effect immediately prior to the close of business on the Record Date for such dividend or distribution; | |
CR1 = | such Fixed Conversion Rate in effect immediately after the close of business on the Record Date for such dividend or distribution; |
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SP0 = | the Average VWAP per share of Common Stock over the 10 consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the Ex-Date for such distribution; | |
T = | the Initial Dividend Threshold; provided that if the dividend or distribution is not a regular quarterly cash dividend, the Initial Dividend Threshold shall be deemed to be zero; and | |
C = | the amount in cash per share the Corporation distributes to all or substantially all holders of Common Stock. |
The Initial Dividend Threshold shall be subject to adjustment in a manner inversely proportional to adjustments to the Fixed Conversion Rate; provided that no adjustment will be made to the Initial Dividend Threshold for any adjustment to the Fixed Conversion Rate under this Section 14(a)(iv).
Any increase made under this Section 14(a)(iv) shall become effective immediately after the close of business on the Record Date for such dividend or distribution. If such dividend or distribution is not so paid, each Fixed Conversion Rate shall be decreased, effective as of the date the Board of Directors or a committee thereof determines not to make or pay such dividend or distribution, to be such Fixed Conversion Rate that would then be in effect if such dividend or distribution had not been declared.
Notwithstanding the foregoing, if C (as defined above) is equal to or greater than SP0 (as defined above), or if the difference is less than $1.00, in lieu of the foregoing increase, each Holder shall receive, for each share of Mandatory Convertible Preferred Stock, at the same time and upon the same terms as holders of shares of Common Stock, the amount of cash that such Holder would have received if such Holder owned a number of shares of Common Stock equal to the Maximum Conversion Rate on the Record Date for such cash dividend or distribution.
(v) If the Corporation or any of its Subsidiaries make a payment in respect of a tender or exchange offer for Common Stock, to the extent that the cash and value of any other consideration included in the payment per share of Common Stock exceeds the Average VWAP per share of Common Stock over the 10 consecutive Trading Day period commencing on, and including, the Trading Day next succeeding the last date on which tenders or exchanges may be made pursuant to such tender or exchange offer (the Expiration Date), each Fixed Conversion Rate shall be increased based on the following formula:
CR1 = CR0 x |
AC + (SP1 x OS) |
|
OS0 x SP1 |
where,
CR0 = | such Fixed Conversion Rate in effect immediately prior to the close of business on the 10th Trading Day immediately following, and including, the Trading Day next succeeding the Expiration Date; |
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CR1 = | such Fixed Conversion Rate in effect immediately after the close of business on the 10th Trading Day immediately following, and including, the Trading Day next succeeding the Expiration Date; | |
AC = | the aggregate value of all cash and any other consideration (as determined by the Board of Directors or a committee thereof in good faith) paid or payable for shares purchased in such tender or exchange offer; | |
OS0 = | the number of shares of Common Stock outstanding immediately prior to the Expiration Date (prior to giving effect to the purchase of all shares accepted for purchase or exchange in such tender or exchange offer); | |
OS1 = | the number of shares of Common Stock outstanding immediately after the Expiration Date (after giving effect to the purchase of all shares accepted for purchase or exchange in such tender or exchange offer); and | |
SP1 = | the Average VWAP of Common Stock over the 10 consecutive Trading Day period commencing on, and including, the Trading Day next succeeding the Expiration Date (the Averaging Period). |
The increase to each Fixed Conversion Rate under the preceding paragraph will become effective at the close of business on the 10th Trading Day immediately following, and including, the Trading Day next succeeding the Expiration Date. Notwithstanding the foregoing, if any date for determining the number of shares of Common Stock issuable to a Holder occurs within the 10 Trading Days immediately following, and including, the Trading Day next succeeding the Expiration Date of any tender or exchange offer, the reference to 10 in the preceding paragraph shall be deemed replaced with such lesser number of Trading Days as have elapsed between the Expiration Date of such tender or exchange offer and such determination date for purposes of determining such Fixed Conversion Rate. For the avoidance of doubt, no adjustment under this Section 14(a)(v) will be made if such adjustment would result in a decrease in any Fixed Conversion Rate, except as set forth in the immediately succeeding sentence.
In the event that the Corporation or one of its Subsidiaries is obligated to purchase shares of Common Stock pursuant to any such tender offer or exchange offer, but the Corporation or such Subsidiary is permanently prevented by applicable law from effecting any such purchases, or all such purchases are rescinded, then each Fixed Conversion Rate shall again be adjusted to be such Fixed Conversion Rate that would then be in effect if such tender offer or exchange offer had not been made.
(vi) If:
(A) the record date for a dividend or distribution on shares of the Common Stock occurs after the end of the 20 consecutive Trading Day period used for calculating the Applicable Market Value and before the Mandatory Conversion Date; and
39
(B) such dividend or distribution would have resulted in an adjustment of the number of shares of Common Stock issuable to the Holders had such record date occurred on or before the last Trading Day of such 20-Trading Day period,
then the Corporation shall deem the Holders to be holders of record, for each share of their Mandatory Convertible Preferred Stock, of a number of shares of Common Stock equal to the Mandatory Conversion Rate for purposes of that dividend or distribution, and in such a case, the Holders would receive the dividend or distribution on Common Stock together with the number of shares of Common Stock issuable upon mandatory conversion of Mandatory Convertible Preferred Stock.
(vii) If the Corporation has a rights plan in effect upon conversion of the Mandatory Convertible Preferred Stock into Common Stock, the Holders shall receive, in addition to any shares of Common Stock received in connection with such conversion, the rights under the rights plan. However, if, prior to any conversion, the rights have separated from the shares of Common Stock in accordance with the provisions of the applicable rights plan, each Fixed Conversion Rate will be adjusted at the time of separation as if the Corporation distributed to all or substantially all holders of Common Stock, shares of its capital stock, evidences of indebtedness, assets, property, rights, options or warrants as set forth in Section 14(a)(iii), subject to readjustment in the event of the expiration, termination or redemption of such rights.
(viii) The Corporation may (but is not required to), to the extent permitted by law and the rules of NYSE or any other securities exchange on which the shares of Common Stock or the Mandatory Convertible Preferred Stock is then listed, increase each Fixed Conversion Rate by any amount for a period of at least 20 Business Days if such increase is irrevocable during such 20 Business Days and the Board of Directors, or a committee thereof, determines that such increase would be in the best interest of the Corporation. The Corporation may also (but is not required to) make such increases in each Fixed Conversion Rate as it deems advisable in order to avoid or diminish any income tax to holders of Common Stock resulting from any dividend or distribution of shares of Common Stock (or issuance of rights or warrants to acquire shares of Common Stock) or from any event treated as such for income tax purposes or for any other reason. However, in either case, the Corporation may only make such discretionary adjustments if it makes the same proportionate adjustment to each Fixed Conversion Rate.
(ix) The Corporation shall not adjust the Fixed Conversion Rates:
(A) upon the issuance of shares of Common Stock pursuant to any present or future plan providing for the reinvestment of dividends or interest payable on securities of the Corporation and the investment of additional optional amounts in Common Stock under any plan;
(B) upon the issuance of any shares of Common Stock or rights or warrants to purchase such shares of Common Stock pursuant to any present or future benefit or other incentive plan or program of or assumed by the Corporation or any of its Subsidiaries;
40
(C) upon the issuance of any shares of Common Stock pursuant to any option, warrant, right or exercisable, exchangeable or convertible security not described in (B) of this Section 14(a)(ix) and outstanding as of the Initial Issue Date;
(D) for a change in par value of the Common Stock;
(E) for stock repurchases that are not tender offers referred to in Section 14(a)(v), including structured or derivative transactions or pursuant to a stock repurchase program approved by the Board of Directors;
(F) for accumulated dividends on the Mandatory Convertible Preferred Stock, except as described in Sections 8, 9 and 10; or
(G) for any other issuance of shares of Common Stock or any securities convertible into or exchangeable for shares of Common Stock or the right to purchase shares of Common Stock or such convertible or exchangeable securities, except as otherwise stated herein.
(x) Adjustments to each Fixed Conversion Rate will be calculated to the nearest 1/10,000th of a share of Common Stock. No adjustment to any Fixed Conversion Rate will be required unless the adjustment would require an increase or decrease of at least 1% of the Fixed Conversion Rate; provided, however, that if an adjustment is not made because the adjustment does not change the Fixed Conversion Rates by at least 1%, then such adjustment will be carried forward and taken into account in any future adjustment. Notwithstanding the foregoing, on each date for determining the number of shares of Common Stock issuable to a Holder upon any conversion of the Mandatory Convertible Preferred Stock, the Corporation shall give effect to all adjustments that otherwise had been deferred pursuant to this clause (x), and those adjustments will no longer be carried forward and taken into account in any future adjustment. Except as otherwise provided above, the Corporation will be responsible for making all calculations called for under the Mandatory Convertible Preferred Stock. These calculations include, but are not limited to, determinations of the Fundamental Change Stock Price, the VWAPs, the Average VWAPs and the Fixed Conversion Rates of the Mandatory Convertible Preferred Stock and shall be made in good faith.
(xi) For the avoidance of doubt, if an adjustment is made to the Fixed Conversion Rates, no separate inversely proportional adjustment will be made to the Initial Price or the Threshold Appreciation Price because the Initial Price is equal to $ divided by the Maximum Conversion Rate (as adjusted in the manner described herein) and the Threshold Appreciation Price is equal to $ divided by the Minimum Conversion Rate (as adjusted in the manner described herein).
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(xii) Whenever any provision of the Certificate of Designations requires the Corporation to calculate the VWAP per share of Common Stock over a span of multiple days, the Board of Directors, or any authorized committee thereof, shall make appropriate adjustments in good faith (including, without limitation, to the Applicable Market Value, the Early Conversion Average Price, the Fundamental Change Stock Price and the Average Price, as the case may be) to account for any adjustments to the Fixed Conversion Rates (as the case may be) that become effective, or any event that would require such an adjustment if the Ex-Date, Effective Date, Record Date or Expiration Date, as the case may be, of such event occurs during the relevant period used to calculate such prices or values, as the case may be.
(b) Whenever the Fixed Conversion Rates are to be adjusted, the Corporation shall:
(i) compute such adjusted Fixed Conversion Rates;
(ii) within 10 Business Days after the Fixed Conversion Rates are to be adjusted, provide or cause to be provided, a written notice to the Holders of the occurrence of such event; and
(iii) within 10 Business Days after the Fixed Conversion Rates are to be adjusted, provide or cause to be provided, to the Holders, a statement setting forth in reasonable detail the method by which the adjustments to the Fixed Conversion Rates were determined and setting forth such adjusted Fixed Conversion Rates.
Section 15 Recapitalizations, Reclassifications and Changes of Common Stock. In the event of:
(i) any consolidation or merger of the Corporation with or into another Person (other than a merger or consolidation in which the Corporation is the surviving corporation and in which the Common Stock outstanding immediately prior to the merger or consolidation is not exchanged for cash, securities or other property of the Corporation or another Person);
(ii) any sale, transfer, lease or conveyance to another Person of all or substantially all of the property and assets of the Corporation;
(iii) any reclassification of Common Stock into securities including securities other than Common Stock; or
(iv) any statutory exchange of securities of the Corporation with another Person (other than in connection with a merger or acquisition),
in each case, as a result of which the Common Stock would be converted into, or exchanged for, stock, other securities or other property or assets (including cash or any combination thereof) (each, a Reorganization Event), each share of the Mandatory Convertible Preferred Stock outstanding immediately prior to such Reorganization Event shall, without the consent of the Holders, become convertible into the kind of stock, other securities or other property or assets (including cash or any combination thereof) that such Holder would have been entitled to receive if such Holder had converted its Mandatory Convertible Preferred Stock into Common Stock
42
immediately prior to such Reorganization Event (such stock, other securities or other property or assets (including cash or any combination thereof), the Exchange Property, with each Unit of Exchange Property meaning the kind and amount of such Exchange Property that a holder of one share of Common Stock is entitled to receive).
If the transaction causes the Common Stock to be converted into, or exchanged for, the right to receive more than a single type of consideration (determined based in part upon any form of stockholder election), the Exchange Property into which the Mandatory Convertible Preferred Stock shall be convertible shall be deemed to be:
(i) the weighted average of the types and amounts of consideration received by the holders of Common Stock that affirmatively make such an election; and
(ii) if no holders of Common Stock affirmatively make such an election, the types and amounts of consideration actually received by the holders of the Common Stock.
The Corporation shall notify Holders of the weighted average referred to in clause (i) in the preceding sentence as soon as practicable after such determination is made.
The number of Units of Exchange Property the Corporation shall deliver for each share of Mandatory Convertible Preferred Stock converted following the effective date of such Reorganization Event shall be determined as if references in Section 8, Section 9 and Section 10 to shares of Common Stock were to Units of Exchange Property (without interest thereon and without any right to dividends or distributions thereon which have a Record Date that is prior to the date such shares of Mandatory Convertible Preferred stock are actually converted). For the purpose of determining which of clauses (i), (ii) and (iii) of Section 8(b) shall apply upon Mandatory Conversion, and for the purpose of calculating the Mandatory Conversion Rate if clause (ii) of Section 8(b) is applicable, the value of a Unit of Exchange Property shall be determined in good faith by the Board of Directors or an authorized committee thereof (which determination will be final), except that if a Unit of Exchange Property includes common stock or American Depositary Receipts (ADRs) that are traded on a U.S. national securities exchange, the value of such common stock or ADRs shall be the average over the 20 consecutive Trading Day period used for calculating the Applicable Market Value of the volume weighted Average Prices for such common stock or ADRs, as displayed on the applicable Bloomberg screen (as determined in good faith by the Board of Directors or an authorized committee thereof (which determination will be final)); or, if such price is not available, the average market value per share of such common stock or ADRs over such period as determined, using a volume-weighted average method, by a nationally recognized independent investment banking firm retained by the Corporation for this purpose.
The above provisions of this Section 15 shall similarly apply to successive Reorganization Events, and the provisions of Section 14 shall apply to any shares of capital stock or ADRs of the Corporation (or any successor thereto) received by the holders of Common Stock in any such Reorganization Event.
43
The Corporation (or any successor thereto) shall, as soon as reasonably practicable (but in any event within 20 calendar days) after the occurrence of any Reorganization Event, provide written notice to the Holders of such occurrence and of the kind and amount of cash, securities or other property that constitute the Exchange Property. Failure to deliver such notice shall not affect the operation of this Section 15.
Section 16 Transfer Agent, Registrar, and Conversion and Dividend Disbursing Agent. The duly appointed Transfer Agent, Registrar and Conversion and Dividend Disbursing Agent for Mandatory Convertible Preferred Stock shall be American Stock Transfer & Trust Company, LLC. The Corporation may, in its sole discretion, remove the Transfer Agent, Registrar or Conversion and Dividend Disbursing Agent in accordance with the agreement between the Corporation and the Transfer Agent, Registrar or Conversion and Dividend Disbursing Agent, as the case may be; provided that if the Corporation removes American Stock Transfer & Trust Company, LLC, the Corporation shall appoint a successor transfer agent, registrar or conversion and dividend disbursing agent, as the case may be, who shall accept such appointment prior to the effectiveness of such removal. Upon any such removal or appointment, the Corporation shall give notice thereof to the Holders.
Section 17 Record Holders. To the fullest extent permitted by applicable law, the Corporation and the Transfer Agent may deem and treat the Holder of any shares of Mandatory Convertible Preferred Stock as the true and lawful owner thereof for all purposes.
Section 18 Notices. All notices or communications in respect of Mandatory Convertible Preferred Stock shall be sufficiently given if given in writing and delivered by first class mail, postage prepaid, or if given in such other manner as may be permitted in this Certificate of Designations, in the Charter or the By-Laws and by applicable law. Notwithstanding the foregoing, if the shares of Mandatory Convertible Preferred Stock are represented by a Global Preferred Certificate, such notices may also be given to the Holders in any manner permitted by DTC or any similar facility used for the settlement of transactions in Mandatory Convertible Preferred Stock.
Section 19 No Preemptive Rights. The Holders shall have no preemptive or preferential rights to purchase or subscribe for any stock, obligations, warrants or other securities of the Corporation of any class.
Section 20 Other Rights. The shares of Mandatory Convertible Preferred Stock shall not have any rights, preferences, privileges or voting powers or relative, participating, optional or other special rights, or qualifications, limitations or restrictions thereof, other than as set forth herein or in the Charter or as provided by applicable law.
Section 21 Book-Entry Form. (a) The Mandatory Convertible Preferred Stock shall be issued in the form of one or more permanent global shares of Mandatory Convertible Preferred Stock in definitive, fully registered form eligible for book-entry settlement with the global legend as set forth on the form of Mandatory Convertible Preferred Stock certificate attached hereto as Exhibit A (each, a Global Preferred Certificate and the shares of Mandatory Convertible Preferred Stock represented by such Global Preferred Certificate, the Global Preferred Shares), which is hereby incorporated in and expressly made part of this
44
Certificate of Designations. The Global Preferred Certificates may have notations, legends or endorsements required by law, stock exchange rules, agreements to which the Corporation is subject, if any, or usage (provided that any such notation, legend or endorsement is in a form acceptable to the Corporation). The Global Preferred Certificates shall be deposited on behalf of the Holders represented thereby with the Registrar, at its New York office as custodian for the Depositary, and registered in the name of the Depositary, duly executed by the Corporation and countersigned and registered by the Registrar as hereinafter provided. The aggregate number of shares represented by each Global Preferred Certificate may from time to time be increased or decreased by adjustments made on the records of the Registrar and the Depositary or its nominee as hereinafter provided.
This Section 21(a) shall apply only to a Global Preferred Certificate deposited with or on behalf of the Depositary. The Corporation shall execute and the Registrar shall, in accordance with this Section 21(a), countersign and deliver any Global Preferred Certificate that (i) shall be registered in the name of Cede & Co. or other nominee of the Depositary and (ii) shall be delivered by the Registrar to Cede & Co. or pursuant to instructions received from Cede & Co. or held by the Registrar as custodian for the Depositary pursuant to an agreement between the Depositary and the Registrar. Members of, or participants in, the Depositary (Agent Members) shall have no rights under this Certificate of Designations with respect to any Global Preferred Share held on their behalf by the Depositary or by the Registrar as the custodian of the Depositary, or under such Global Preferred Share, and the Depositary may be treated by the Corporation, the Registrar and any agent of the Corporation or the Registrar as the absolute owner of such Global Preferred Share for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Corporation, the Registrar or any agent of the Corporation or the Registrar from giving effect to any written certification, proxy or other authorization furnished by the Depositary or impair, as between the Depositary and its Agent Members, the operation of customary practices of the Depositary governing the exercise of the rights of a holder of a beneficial interest in any Global Preferred Share. The Holder of the Global Preferred Shares may grant proxies or otherwise authorize any Person to take any action that a Holder is entitled to take pursuant to the Global Preferred Shares, this Certificate of Designations or the Charter.
Owners of beneficial interests in Global Preferred Shares shall not be entitled to receive physical delivery of certificated shares of Mandatory Convertible Preferred Stock, unless (x) the Depositary notifies the Corporation that it is unwilling or unable to continue as Depositary for the Global Preferred Shares and the Corporation does not appoint a qualified replacement for the Depositary within 90 days or (y) the Depositary ceases to be a clearing agency registered under the Exchange Act and the Corporation does not appoint a qualified replacement for the Depositary within 90 days. In any such case, the Global Preferred Certificates shall be exchanged in whole for definitive stock certificates that are not issued in global form, with the same terms and of an equal aggregate Liquidation Preference, and such definitive stock certificates shall be registered in the name or names of the Person or Persons specified by the Depositary in a written instrument to the Registrar.
(b) Signature. Any two authorized Officers shall sign each Global Preferred Certificate for the Corporation, in accordance with the Corporations By-Laws and applicable Delaware law, by manual or facsimile signature. If an Officer whose signature is on a Global
45
Preferred Certificate no longer holds that office at the time the Registrar countersigned such Global Preferred Certificate, such Global Preferred Certificate shall be valid nevertheless. A Global Preferred Certificate shall not be valid until an authorized signatory of the Registrar manually countersigns such Global Preferred Certificate. Each Global Preferred Certificate shall be dated the date of its countersignature. The foregoing paragraph shall likewise apply to any certificate representing shares of Mandatory Convertible Preferred Stock.
Section 22 Listing. The Corporation hereby covenants and agrees that, if its listing application for the Mandatory Convertible Preferred Stock is approved by NYSE, upon such listing, the Corporation shall use its commercially reasonable efforts to keep the Mandatory Convertible Preferred Stock listed on NYSE.
If the Global Preferred Share or Global Preferred Shares, as the case may be, shall be listed on NYSE or any other stock exchange, the Depositary may, with the written approval of the Corporation, appoint a registrar (acceptable to the Corporation) for registration of such Global Preferred Share or Global Preferred Shares, as the case may be, in accordance with the requirements of such exchange. Such registrar (which may be the Registrar if so permitted by the requirements of such exchange) may be removed and a substitute registrar appointed by the Registrar upon the request or with the written approval of the Corporation. If the Global Preferred Share or Global Preferred Shares, as the case may be, are listed on one or more other stock exchanges, the Registrar will, at the request and expense of the Corporation, arrange such facilities for the delivery, transfer, surrender and exchange of such Global Preferred Share or Global Preferred Shares, as the case may be, and the Global Preferred Certificate or Global Preferred Certificates representing such shares as may be required by law or applicable stock exchange regulations.
Section 23 Stock Certificates. (a) Shares of Mandatory Convertible Preferred Stock may be represented by stock certificates substantially in the form set forth as Exhibit A hereto.
(b) Stock certificates representing shares of the Mandatory Convertible Preferred Stock shall be signed by any two authorized Officers of the Corporation, in accordance with the By-Laws and applicable Delaware law, by manual or facsimile signature.
(c) A stock certificate representing shares of the Mandatory Convertible Preferred Stock shall not be valid until manually countersigned by an authorized signatory of the Transfer Agent and Registrar. Each stock certificate representing shares of the Mandatory Convertible Preferred Stock shall be dated the date of its countersignature.
(d) If any Officer of the Corporation who has signed a stock certificate no longer holds that office at the time the Transfer Agent and Registrar countersigns the stock certificate, the stock certificate shall be valid nonetheless.
Section 24 Replacement Certificates. If any Mandatory Convertible Preferred Stock certificate shall be mutilated, lost, stolen or destroyed, the Corporation shall, at the expense of the Holder, issue, in exchange and in substitution for and upon cancellation of the mutilated Mandatory Convertible Preferred Stock certificate, or in lieu of and substitution for the
46
Mandatory Convertible Preferred Stock certificate lost, stolen or destroyed, a new Mandatory Convertible Preferred Stock certificate of like tenor and representing an equivalent Liquidation Preference of shares of Mandatory Convertible Preferred Stock, but only upon receipt of evidence of such loss, theft or destruction of such Mandatory Convertible Preferred Stock certificate and indemnity, if requested, reasonably satisfactory to the Corporation and the Transfer Agent.
[Signature page follows]
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IN WITNESS WHEREOF, the Corporation has caused this Certificate of Designations to be signed by , its , this th day of , 2020.
ALBERTSONS COMPANIES, INC. | ||
By: |
/s/ |
|
Name: | ||
Title: |
48
EXHIBIT A
[FORM OF FACE OF % SERIES A MANDATORY CONVERTIBLE PREFERRED STOCK CERTIFICATE]
[INCLUDE FOR GLOBAL PREFERRED SHARES]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (DTC), TO THE CORPORATION OR THE TRANSFER AGENT NAMED ON THE FACE OF THIS CERTIFICATE, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL IN AS MUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO. HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSORS NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE STATEMENT WITH RESPECT TO SHARES. IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE TRANSFER AGENT NAMED ON THE FACE OF THIS CERTIFICATE SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.
Certificate Number [Initial] Number of Shares of Mandatory
Convertible Preferred Stock
CUSIP
ISIN
ALBERTSONS COMPANIES, INC.
% Series A Mandatory Convertible Preferred Stock
(par value $0.01 per share)
(Liquidation Preference as specified below)
Albertsons Companies, Inc., a Delaware corporation (the Corporation), hereby certifies that (the Holder), is the registered owner of [the number shown on Schedule I hereto of] fully paid and non-assessable shares of the Corporations designated % Series A Mandatory Convertible Preferred Stock, with a par value of $0.01 per share and a Liquidation Preference of $ per share (the Mandatory Convertible Preferred Stock). The shares of Mandatory Convertible Preferred Stock are transferable on the books and records of the Registrar, in person or by a duly authorized attorney, upon surrender of this certificate duly endorsed and in proper form for transfer. The designations, rights, restrictions, preferences and other terms and provisions of Mandatory Convertible Preferred Stock represented hereby are and shall in all respects be subject to the provisions of the Certificate of Designations of % Series A Mandatory Convertible Preferred Stock of Albertsons Companies, Inc. dated , 2020 as the same may be amended from time to time (the Certificate of Designations). Capitalized terms used herein but not defined shall have the meaning given them in the Certificate of Designations. The Corporation will provide a copy of the Certificate of Designations to the Holder without charge upon written request to the Corporation at its principal place of business. In the case of any conflict between this Certificate and the Certificate of Designations, the provisions of the Certificate of Designations shall control and govern.
Reference is hereby made to the provisions of Mandatory Convertible Preferred Stock set forth on the reverse hereof and in the Certificate of Designations, which provisions shall for all purposes have the same effect as if set forth at this place.
Upon receipt of this executed certificate, the Holder is bound by the Certificate of Designations and is entitled to the benefits thereunder.
Unless the Transfer Agent and Registrar have properly countersigned, these shares of Mandatory Convertible Preferred Stock shall not be entitled to any benefit under the Certificate of Designations or be valid or obligatory for any purpose.
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IN WITNESS WHEREOF, this certificate has been executed on behalf of the Corporation by the below authorized Officers of the Corporation this of .
ALBERTSONS COMPANIES, INC. | ||
By: |
|
|
Name: | ||
Title: | ||
By: |
|
|
Name: | ||
Title: |
COUNTERSIGNATURE
These are shares of Mandatory Convertible Preferred Stock referred to in the within-mentioned Certificate of Designations. Dated: ,
American Stock Transfer & Trust Company, LLC as Registrar and Transfer Agent |
||
By: |
|
|
Name: | ||
Title: |
[FORM OF REVERSE OF CERTIFICATE FOR % SERIES A MANDATORY CONVERTIBLE PREFERRED STOCK]
Cumulative dividends on each share of Mandatory Convertible Preferred Stock shall be payable at the applicable rate provided in the Certificate of Designations when, as and if declared by the Board of Directors.
The shares of Mandatory Convertible Preferred Stock shall be convertible in the manner and accordance with the terms set forth in the Certificate of Designations.
The Corporation shall furnish without charge to each Holder who so requests the powers, designations, limitations, preferences and relative, participating, optional or other special rights of each class or series of stock of the Corporation and the qualifications, limitations or restrictions of such preferences and/or rights.
NOTICE OF CONVERSION
(To be Executed by the Holder
in Order to Convert % Series A Mandatory Convertible Preferred Stock)
The undersigned hereby irrevocably elects to convert (the Conversion) % Series A Mandatory Convertible Preferred Stock (the Mandatory Convertible Preferred Stock), of Albertsons Companies, Inc. (hereinafter called the Corporation), represented by stock certificate No(s). (the Mandatory Convertible Preferred Stock Certificates), into common stock, par value $0.01 per share, of the Corporation (the Common Stock) according to the conditions of the Certificate of Designations of Mandatory Convertible Preferred Stock (the Certificate of Designations), as of the date written below.
If Common Stock is to be issued in the name of a Person other than the undersigned, the undersigned shall pay all transfer taxes payable with respect thereto, if any. Each Mandatory Convertible Preferred Stock Certificate (or evidence of loss, theft or destruction thereof) is attached hereto.
Capitalized terms used but not defined herein shall have the meanings ascribed thereto in or pursuant to the Certificate of Designations.
Date of Conversion: |
|
Applicable Conversion Rate: |
|
Shares of Mandatory Convertible Preferred Stock |
to be Converted: |
|
Shares of Common Stock to be Issued:* |
|
Signature: |
|
|
Name: |
|
|
Address:** |
|
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Fax No.: |
|
* |
The Corporation is not required to issue Common Stock until the original Mandatory Convertible Preferred Stock Certificate(s) (or evidence of loss, theft or destruction thereof) to be converted are received by the Corporation or the Conversion and Dividend Disbursing Agent. |
** |
Address where Common Stock and any other payments or certificates shall be sent by the Corporation. |
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ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers the shares of % Series A Mandatory Convertible Preferred Stock evidenced hereby to:
(Insert assignees social security or taxpayer identification number, if any)
(Insert address and zip code of assignee)
and irrevocably appoints:
as agent to transfer the shares of % Series A Mandatory Convertible Preferred Stock evidenced hereby on the books of the Transfer Agent.
The agent may substitute another to act for him or her.
Date:
Signature: |
|
|
(Sign exactly as your name appears on the other side of this Certificate) |
Signature Guarantee: |
|
(Signature must be guaranteed by an eligible guarantor institution that is a bank, stockbroker, savings and loan association or credit union meeting the requirements of the Transfer Agent, which requirements include membership or participation in the Securities Transfer Agents Medallion Program (STAMP) or such other signature guarantee program as may be determined by the Transfer Agent in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.)
SCHEDULE I
Albertsons Companies, Inc.
Global Preferred Certificate
% Series A Mandatory Convertible Preferred Stock
Certificate Number:
The number of shares of Mandatory Convertible Preferred Stock initially represented by this Global Preferred Certificate shall be . Thereafter the Transfer Agent and Registrar shall note changes in the number of shares of Mandatory Convertible Preferred Stock evidenced by this Global Preferred Certificate in the table set forth below:
Amount of Decrease in Number of Shares Represented by this Global Preferred Certificate |
Amount of Increase in Number of Shares Represented by this Global Preferred Certificate |
Number of Shares Represented by this Global Preferred Certificate following Decrease or Increase |
Signature of Authorized Officer of Transfer Agent and Registrar |
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(I) |
Attach Schedule I only to Global Preferred Certificate. |
Exhibit 4.1
STOCKHOLDERS AGREEMENT
BY AND AMONG
ALBERTSONS COMPANIES, INC.
AND
HOLDERS OF STOCK OF ALBERTSONS COMPANIES, INC. SIGNATORY HERETO
Dated as of , 2020
TABLE OF CONTENTS
Page | ||||||
ARTICLE I DEFINITIONS | 1 | |||||
Section 1.01. |
Defined Terms | 1 | ||||
Section 1.02. |
Other Interpretive Provisions |
3 | ||||
ARTICLE II CORPORATE GOVERNANCE | 4 | |||||
Section 2.01. |
Board Representation | 4 | ||||
Section 2.02. |
Board Committees |
6 | ||||
Section 2.03. |
Voting |
7 | ||||
Section 2.04. |
Controlled Company |
7 | ||||
ARTICLE III GROUP MATTERS | 8 | |||||
Section 3.01. |
Group Agreement | 8 | ||||
ARTICLE IV MISCELLANEOUS | 9 | |||||
Section 4.01. |
Term | 9 | ||||
Section 4.02. |
Injunctive Relief |
9 | ||||
Section 4.03. |
Attorneys Fees |
9 | ||||
Section 4.04. |
Notices |
9 | ||||
Section 4.05. |
Publicity and Confidentiality |
12 | ||||
Section 4.06. |
Amendment |
12 | ||||
Section 4.07. |
Successors, Assigns and Transferees |
12 | ||||
Section 4.08. |
Binding Effect |
12 | ||||
Section 4.09. |
Third Party Beneficiaries |
12 | ||||
Section 4.10. |
Governing Law; Jurisdiction |
12 | ||||
Section 4.11. |
Waiver of Jury Trial |
13 | ||||
Section 4.12. |
Severability |
13 | ||||
Section 4.13. |
Counterparts |
13 | ||||
Section 4.14. |
Headings |
13 | ||||
Section 4.15. |
Joinder |
13 |
i
STOCKHOLDERS AGREEMENT
This Stockholders Agreement (the Agreement) is made, entered into and effective as of , 2020, by and between (together, Cerberus), (Schottenstein), (collectively, Klaff), (collectively, Lubert-Adler), (collectively, Kimco, and each of Cerberus, Schottenstein, Klaff, Lubert-Adler and Kimco, a Sponsor and, collectively, the ACI Control Group) and Albertsons Companies, Inc., a Delaware corporation (including any of its successors by merger, acquisition, reorganization, conversion or otherwise) (the Company).
WITNESSETH
WHEREAS, as of the date hereof, each of the members of the ACI Control Group owns securities of the Company; and
WHEREAS, the parties desire to set forth certain rights of members of the ACI Control Group with respect to the Company.
NOW, THEREFORE, in consideration of the foregoing and the mutual promises, covenants and agreements of the parties hereto, and for other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Defined Terms(a) . As used in this Agreement, the following terms shall have the following meanings:
ACI Control Group has the meaning set forth in the preamble.
ACI Control Group Approval shall mean the affirmative vote of a majority of the outstanding shares of Company Shares owned by the ACI Control Group.
Affiliate shall mean any Person or entity, directly or indirectly controlling, controlled by or under common control with such Person or entity, including (i) a general partner, limited partner, or retired partner affiliated with such Person or entity, (ii) a fund, partnership, limited liability company or other entity affiliated with such Person or entity, (iii) a director, officer, stockholder, partner or member (or retired partner or member) affiliated with such Person or entity, or (iv) or the estate of any such partner or member (or retired partner or member) affiliated with such Person or entity; provided that neither the Company nor any of its subsidiaries shall be deemed to be an Affiliate of the Holders.
Agreement has the meaning set forth in the preamble.
Audit Committee has the meaning set forth in Section 2.02(a).
Board of Directors means the board of directors of the Company.
Business Day means any day other than a Saturday, Sunday or a day on which commercial banks located in New York, New York are required or authorized by law or executive order to be closed.
Company has the meaning set forth in the preamble.
Company Share Equivalent means securities exercisable or exchangeable for, or convertible, into Company Shares.
Company Shares means the shares of common stock, par value $0.01 per share, of the Company, any Equity Securities of the Company into which such shares of common stock shall have been changed, or any Equity Securities of the Company resulting from any reclassification, recapitalization, reorganization, merger, consolidation, conversion, stock or other equity split or dividend or similar transactions with respect to such shares of common stock or such other Equity Securities.
Compensation Committee has the meaning set forth in Section 2.02(a).
Director Requirements means with respect to an individual, that such individual shall not be prohibited by law from service and complies with all applicable corporate governance policies and guidelines of the Company and the Board of Directors and subject to any employment agreement or other agreement with an employee of the Company or any of its subsidiaries or controlled Affiliates, and all applicable legal, regulatory and stock exchange requirements (other than any requirements under Section 303A of the New York Stock Exchange Listed Company Manual regarding director independence).
Equity Securities means, as applicable, (i) any capital stock, membership interests or other equity interest of any Person; (ii) any securities directly or indirectly convertible into or exchangeable for any capital stock, membership interests or other equity interest of any Person; or (iii) any rights or options directly or indirectly to subscribe for or to purchase any capital stock, membership interests or other equity interest of any Person or to subscribe for or to purchase any securities directly or indirectly convertible into or exchangeable for any capital stock, membership interests or other equity interest of any Person.
Exchange Act means the Securities Exchange Act of 1934, as amended, and any successor thereto, and any rules and regulations promulgated thereunder, all as the same shall be in effect from time to time.
Governmental Entity means any federal, state, local or foreign governmental, administrative, judicial or regulatory agency, commission, court, body, entity or authority.
Holder means any holder of Company Shares that is a party hereto and/or any Permitted Assignee that succeeds to rights hereunder pursuant to Section 4.08.
2
Law means foreign or domestic law, statute, code, ordinance, rule, regulation, order, judgment, writ, stipulation, award, injunction, decree or arbitration award or finding of any Governmental Entity.
Nominating Committee has the meaning set forth in Section 2.02(a).
Observer has the meaning set forth in Section 2.01(h).
Permitted Assignee has the meaning set forth in Section 4.08.
Person means any individual, partnership, corporation, limited liability company, unincorporated organization, trust or joint venture, or a governmental agency or political subdivision thereof or any other entity.
Representatives means, with respect to any Person, any of such Persons officers, directors, employees, agents, attorneys, accountants, actuaries, consultants, equity financing partners or financial advisors or other Person associated with, or acting on behalf of, such Person.
Rule 144 means Rule 144 (or any successor provisions) under the Securities Act.
SEC means the Securities and Exchange Commission.
Securities Act means the Securities Act of 1933, as amended, and any successor thereto, and any rules and regulations promulgated thereunder, all as the same shall be in effect from time to time.
Sponsor has the meaning set forth in the preamble.
Voting Stock of any Person as of any date means the capital stock of such Person that is at the time entitled to vote in the election of the board of directors of such Person.
Section 1.02. Other Interpretive Provisions.
(a) In this Agreement, except as otherwise provided:
(i) A reference to an Article, Section, Schedule or Exhibit is a reference to an Article or Section of, or Schedule or Exhibit to, this Agreement, and references to this Agreement include any recital in or Schedule or Exhibit to this Agreement.
(ii) The Schedules form an integral part of and are hereby incorporated by reference into this Agreement.
(iii) Headings and the Table of Contents are inserted for convenience only and shall not affect the construction or interpretation of this Agreement.
(iv) Unless the context otherwise requires, words importing the singular include the plural and vice versa, words importing the masculine include the feminine and vice
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versa, and words importing persons include corporations, associations, partnerships, joint ventures and limited liability companies and vice versa.
(v) Unless the context otherwise requires, the words hereof and herein, and words of similar meaning refer to this Agreement as a whole and not to any particular Article, Section or clause. The words include, includes and including shall be deemed to be followed by the words without limitation.
(vi) A reference to any legislation or to any provision of any legislation shall include any amendment, modification or re-enactment thereof and any legislative provision substituted therefor.
(vii) All determinations to be made by any Holder hereunder may be made by such Holder in its sole discretion, and such Holder may determine, in its sole discretion, whether or not to take actions that are permitted, but not required, by this Agreement to be taken by such Holder, including the giving of consents required hereunder.
(b) The parties hereto have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intention 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.
ARTICLE II
CORPORATE GOVERNANCE
Section 2.01. Board Representation.
(a) The Company and each member of the ACI Control Group shall take all reasonable measures, if any, within its respective control to cause the Board of Directors to consist of at least five (5) directors who qualify as independent under the applicable rules of the New York Stock Exchange (the NYSE) and as such term is defined in Rule 10A-3(b)(1) under the Exchange Act. Independent directors may include one or more nominees nominated pursuant to this Section 2.01. From and after such time as the Company ceases to a controlled company within the meaning of the corporate governance standards of the NYSE and after the expiration of any applicable transition periods under such standards, the majority of the Board of Directors shall be comprised of members who are independent under the applicable rules of the NYSE and as such term is defined in Rule 10A-3(b)(1) under the Exchange Act. At all times the Company shall take all action necessary to cause the number of directors constituting the Board of Directors (regardless of the number of independent or other directors otherwise required) to be at least such number as shall be necessary to provide for the designation of one or more directors by each Sponsor entitled pursuant to this Section 2.01 to designate to the Board of Directors one or more directors.
(b) The Company and each member of the ACI Control Group shall take all reasonable measures, if any, within its respective control, to cause the Chief Executive Officer of the Company to be nominated and supported by the Company for election as a director.
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(c) For so long as Cerberus has, in the aggregate, beneficial ownership of (i) at least 20% of the aggregate number of Company Shares then outstanding, Cerberus shall be entitled to designate to the Board of Directors four (4) directors; (ii) less than 20% but at least 10% of the aggregate number of Company Shares then outstanding, Cerberus shall be entitled to designate to the Board of Directors two (2) directors; and (iii) less than 10% but at least 5% of the aggregate number of Company Shares then outstanding, Cerberus shall be entitled to designate to the Board of Directors one (1) director.
(d) For so long as Schottenstein has, in the aggregate, beneficial ownership of at least 5% of the aggregate number of Company Shares then outstanding, Schottenstein shall be entitled to designate to the Board of Directors one (1) director.
(e) For so long as Klaff has, in the aggregate, beneficial ownership of at least 5% of the aggregate number of Company Shares then outstanding, Klaff shall be entitled to designate to the Board of Directors one (1) director.
(f) For so long as a Sponsor is entitled to designate one or more directors to the Board of Directors pursuant to this Section 2.01, the Company agrees it shall take all action reasonably available to it to cause such individual(s) who satisfy the Director Requirements (or any replacement designated by such Sponsor) to be included in the slate of nominees recommended by the Board of Directors to the Companys stockholders for election as directors at each annual meeting of the stockholders of the Company (and/or in connection with any special meeting of stockholders or election by written consent) and the Company shall use the same efforts to cause the election of such nominee(s) as it uses to cause other nominees recommended by the Board of Directors to be elected, including soliciting proxies in favor of the election of such nominee(s).
(g) If the number of directors that a Sponsor is entitled to designate to the Board of Directors is reduced pursuant to the terms of this Section 2.01, then such Sponsor shall promptly cause a number of directors equal to such reduction to resign from service on the Board of Directors, including all committees thereof. Each Sponsor shall cause any director designated to the Board of Directors by it to resign from service on any committee of the Board of Directors if, as a result of such directors service on such committee, such committee does not satisfy the requirements of applicable law or the NYSE rules for service on such committee.
(h) In the event that a vacancy is created at any time by the death, disability, retirement, resignation or removal (with or without cause) of a director designated by a Sponsor to the Board of Directors pursuant to this Section 2.01, or in the event of the failure of any such nominee of a Sponsor to be elected, the Sponsor who designated such director shall have the right to designate a replacement who satisfies the Director Requirements to fill such vacancy (but only if the Sponsor would be then entitled to designate such director pursuant to the foregoing provisions of this Section 2.01). The Company shall take all action reasonably available to it to cause such vacancy to be filled by the replacement so designated, and, to the extent permitted under the Certificate of Incorporation and Bylaws of the Company then in effect, to cause the Board of Directors to promptly elect such designee to the Board of Directors. Any other vacant director position(s) or newly created directorship(s) shall be filled by the Board of Directors, upon the recommendation of the Nominating Committee.
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(i) For so long as such Sponsor has, in the aggregate, beneficial ownership of at least 5% of the aggregate number of Company Shares then outstanding, each of Cerberus, Kimco and Lubert-Adler shall have the right to designate one (1) observer to the Board of Directors (each such observer, an Observer). A Sponsor shall have the right to designate a replacement for any Observer previously designated by such Sponsor at any time and from time to time for so long as such Sponsor has a right to designate an Observer. Robert G. Miller shall also have the right to be an Observer.
(j) An Observer may attend any meeting of the Board of Directors, provided, that no Observer shall have the right to vote or otherwise participate in the Board of Directors meeting in any way other than to observe any applicable meeting of the Board of Directors. Observers shall be provided advance notice of each meeting of the Board of Directors in the same manner and at the same time as the other members of the Board of Directors and shall be given copies of all documents, materials and other information as and when given to other members of the Board of Directors, provided that the Observer shall have executed a non-disclosure and confidentiality agreement and such other acknowledgments and agreements reasonably satisfactory to the Board of Directors. Notwithstanding the foregoing, the Observer shall be excluded from attending any meeting of the Board of Directors or receiving any materials to the extent necessary to preserve attorney-client privilege, to safeguard highly proprietary or classified information, in the case of any conflict of interest involving such Observer or as otherwise deemed necessary or advisable by the Board of Directors. The Board of Directors or any committee thereof shall have the right to exclude an Observer from any meeting or portion thereof in the sole discretion of a majority of the members in attendance at such meeting. Each Observer shall be a natural person. The Company shall reimburse each Observer for his or her reasonable out-of-pocket costs incurred to attend meetings of the Board of Directors. The Company agrees that each Observer shall be entitled to the benefit of the indemnification and advancement of expenses provided by, or granted pursuant to, the Bylaws of the Company as if such Observer was a director of the Company.
Section 2.02. Board Committees.
(a) The Company shall establish and maintain an audit committee of the Board of Directors (the Audit Committee), a compensation committee of the Board of Directors (the Compensation Committee), a nominating and corporate governance committee of the Board of Directors (the Nominating Committee), and such other Board of Directors committees as the Board of Directors deems appropriate from time to time or as may be required by applicable law or the NYSE rules. The committees shall have such duties and responsibilities as are customary for such committees, subject to the provisions of this Agreement and committee charters adopted by the Board of Directors or the committees.
(b) Notwithstanding the foregoing, the Board of Directors (upon the recommendation of the Nominating Committee) shall, only to the extent necessary to comply with applicable law or the NYSE rules, modify the composition of any such committee. If any vacant director position on any committee of the Board of Directors results from a Sponsor no longer being entitled to designate at least one (1) director to the Board of Directors or declining to have one (1) of its director designees serve on such committee, then such vacant position shall be filled by the Board of Directors.
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Section 2.03. Voting.
(a) Each member of the ACI Control Group and their respective Permitted Assignees agrees, with respect to all of such Persons Company Shares from time to time held by such member to vote such Persons Company Shares for the directors designated to the Board of Directors in Section 2.01. Each member of the ACI Control Group and each of their respective Permitted Assignees, shall take all other necessary or desirable actions within such Persons control (including, without limitation, attending meetings of stockholders in person or by proxy for purposes of obtaining a quorum and execution of written consents in lieu of meetings) to effect the voting of such Persons Company Shares in accordance with this provision.
(b) To secure each member of the ACI Control Groups obligations to vote their respective Company Shares in accordance with Section 2.03(a) of this Agreement, each such Person hereby appoints an officer of the Company as such Persons true and lawful proxy and attorney, with the power to act alone and with full power of substitution, to vote all of such Persons Company Shares as set forth in this Agreement and to execute all appropriate instruments consistent with this Agreement on behalf of such Person if, and only if, such Person fails to vote all of such Persons Company Shares or execute such other instruments in accordance with the provisions of this Agreement within five days of the Companys written request for such Persons written consent or signature. The proxy and power granted by each Person pursuant to this Section 2.03(b) are coupled with an interest and are given to secure the performance of such Persons duties under this Agreement. Each such member of the ACI Control Group agrees to execute an irrevocable proxy in favor of the designated individual as and when identified, if requested by the Company. Each such proxy and power will be irrevocable for the term hereof. The proxy and power, so long as any such Person is an individual, will survive the death, incompetency and disability of such party or any other individual holder of any Persons Company Shares, as the case may be, and, so long as such Person is an entity, will survive the merger or reorganization of such party or any other entity holding any of a Persons Company Shares.
Section 2.04. Controlled Company.
(a) The Company and the members of the ACI Control Group agree that, by virtue of the combined Company Shares owned by the members of the ACI Control Group as of the date of this Agreement, the Company qualifies as of the date of this Agreement as a controlled company within the meaning of the corporate governance standards of the NYSE.
(b) For so long as the Company qualifies as a controlled company for the purposes of the applicable NYSE rules, the Company shall elect to be a controlled company for purposes of the NYSE rules. If the Company ceases to qualify as a controlled company for purposes of the NYSE rules, the Company and members of the ACI Control Group shall take whatever action may be reasonably necessary in relation to such party, if any, to cause the Company to comply with the applicable NYSE rules as then in effect within the timeframe for compliance available under such rules, including any applicable transition periods. Notwithstanding the foregoing, upon the mutual election of the Board of Directors and the ACI Control Group, the Company shall elect not to be a controlled company for purposes of the NYSE rules and, if so elected, the Company and the ACI Control Group will take all actions
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reasonably necessary in relation to such party, if any, to cause the Company to comply with the NYSE rules as then in effect within the timeframe for compliance available under such rules, including any applicable transition periods.
ARTICLE III
GROUP MATTERS
Section 3.01. Group Agreement.
(a) Each of the members of the ACI Control Group agrees to form a group for the purpose of working together to enhance stockholder value at the Company.
(b) To the extent required by applicable law, in accordance with Rule 13d-1(k)(1)(iii) under the Exchange Act, each member of the ACI Control Group agrees to the joint filing on behalf of each of them of statements on Schedule 13D or Schedule 13G, and any amendments thereto, with respect to the Company Shares. Each member of the ACI Control Group shall be responsible for the accuracy and completeness of such members own disclosure therein, and is not responsible for the accuracy and completeness of the information concerning the other members, unless such member knows or has reason to know that such information is inaccurate.
(c) Each member of the ACI Control Group shall, no later than 24 hours after each such transaction, provide written notice to Cerberus and Schulte Roth & Zabel LLP of (i) any of their purchases or sales of securities of the Company, or (ii) any securities of the Company over which they acquire or dispose of beneficial ownership. Cerberus shall also use its reasonable best efforts to notify the other members of the ACI Control Group of any significant purchases or sales of securities on its behalf and will in any case provide periodic information on sales and purchases upon reasonable request by the other members of the ACI Control Group.
(d) Each member of the ACI Control Group agrees that, to the extent any SEC filing, press release or public communication proposed to be made or issued by such member of the ACI Control Group references another member of the ACI Control Group, it shall provide a copy of such material to such referenced member of the ACI Control Group in advance of such filing, disclosure or communication and consider in good faith any reasonable comments to such material prior to filing or making public. The parties hereto hereby agree to work in good faith to resolve any disagreement that may arise between or among any of the members of the ACI Control Group concerning decisions to be made, actions to be taken or statements to be made in connection with the ACI Control Groups activities.
(e) The ACI Control Group shall be limited to carrying on the business of the group in accordance with the terms of this Agreement. Such relationship shall be construed and deemed to be for the sole and limited purpose of carrying on such business as described herein. Nothing herein shall be construed to authorize any member of the ACI Control Group to act as an agent for any other member of the ACI Control Group, or to create a joint venture or partnership.
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ARTICLE IV
MISCELLANEOUS
Section 4.01. Term. This Agreement shall terminate with respect to a Sponsor (and, for purposes of this Agreement, such Sponsors status as a member of the ACI Control Group) when such Sponsor ceases to own 5% of the aggregate number of Company Shares then outstanding. This Agreement shall expire when no member of the ACI Control Group has a right to designate a director to the Board of Directors pursuant to Section 2.01.
Section 4.02. Injunctive Relief. It is hereby agreed and acknowledged that it will be impossible to measure in money the damage that would be suffered if the parties fail to comply with any of the obligations herein imposed on them and that in the event of any such failure, an aggrieved Person will be irreparably damaged and will not have an adequate remedy at law. Any such Person shall, therefore, be entitled (in addition to any other remedy to which it may be entitled in law or in equity) to injunctive relief, including specific performance, to enforce such obligations, and if any action should be brought in equity to enforce any of the provisions of this Agreement, none of the parties hereto shall raise the defense that there is an adequate remedy at law.
Section 4.03. Attorneys Fees. In any action or proceeding brought to enforce any provision of this Agreement or where any provision hereof is validly asserted as a defense, the successful party shall, to the extent permitted by applicable law, be entitled to recover reasonable attorneys fees in addition to any other available remedy.
Section 4.04. Notices. Unless otherwise specified herein, all notices, consents, approvals, reports, designations, requests, waivers, elections and other communications authorized or required to be given pursuant to this Agreement shall be in writing and shall be deemed to have been given (a) when personally delivered, (b) the day following the day (except if not a Business Day then the next Business Day) on which the same has been delivered prepaid to a reputable national overnight air courier service, (c) when transmitted via email (including via attached pdf document) to the applicable email address set forth below, if the sender on the same day sends a confirming copy of such notice by a recognized overnight delivery service (charges prepaid) or (d) the third Business Day following the day on which the same is sent by certified or registered mail, postage prepaid, in each case to the respective parties, as applicable, at the applicable address, facsimile number or email address set forth below (or such other address, facsimile number or email address as such Holder may specify by notice to the Company in accordance with this Section 4.04), and the Company, which notices shall be addressed:
If to the Company, to:
Albertsons Companies, Inc.
250 Parkcenter Blvd.
Boise, ID 83706
Attention: Robert A. Gordon, Esq.
Email: Robert.gordon@albertsons.com
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with copies (which shall not constitute notice) to:
Schulte Roth & Zabel LLP
919 Third Avenue
New York, New York 10022
Attention: Stuart D. Freedman, Esq.
Antonio L. Diaz-Albertini, Esq.
Email: Stuart.Freedman@srz.com
Antonio.Diaz-Albertini@srz.com
If to Cerberus, to:
c/o Cerberus Capital Management, L.P.
875 Third Avenue, 11th Floor
New York, NY 10022
Attention: Lenard Tessler
Alex Benjamin, Esq.
Email: LTessler@cerberus.com
Albenjamin@cerberus.com
with copies (which shall not constitute notice) to:
Schulte Roth & Zabel LLP
919 Third Avenue
New York, New York 10022
Attention: Stuart D. Freedman, Esq.
Antonio L. Diaz-Albertini, Esq.
Email: Stuart.Freedman@srz.com
Antonio.Diaz-Albertini@srz.com
If to Schottenstein, to:
Jubilee Limited Partnership
4300 E. Fifth Ave.
Columbus, OH 43219
Attention: Ben Kraner
Tod H. Friedman, Esq.
Email: ben.kraner@spgroup.com
tod.friedman@spgroup.com
If to Klaff, to:
Klaff Realty, L.P.
35 E. Wacker Drive
Suite 2900
Chicago, IL 60601
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Attention: Hersch M. Klaff
Email: hklaff@klaff.com
with a copy (which shall not constitute notice) to:
Fox, Swibel, Levin & Carroll, LLP
200 W. Madison Street, Suite 3000
Chicago, IL 60603
Attention: Laurie A. Levin
Email: LLevin@foxswibel.com
If to Lubert-Adler, to:
Lubert-Adler Partners
The FMC Tower
2929 Walnut Street, Suite 1530
Philadelphia, PA 19104
Attention: Dean Adler
R. Eric Emrich
Email: dadler@lubertadler.com
eemrich@lubertadler.com
with a copy (which shall not constitute notice) to:
Kirkland & Ellis LLP
300 North LaSalle
Chicago, IL 60654
Attention: Richard J. Campbell
Email: rcampbell@kirkland.com
If to Kimco, to:
c/o Kimco Realty Corporation
3333 New Hyde Park Road, Suite 100
New Hyde Park, NY 11042
Attention: Raymond Edwards
Bruce Rubenstein
Email: Redwards@kimcorealty.com
BRubenstein@kimcorealty.com
with a copy (which shall not constitute notice) to:
Fried, Frank, Harris, Shriver & Jacobson LLP
One New York Plaza
New York, New York 10004
Attention: Philip Richter
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Steven G. Scheinfeld, Esq.
Email: Philip.richter@friedfrank.com
Section 4.05. Publicity and Confidentiality. Each of the parties hereto shall keep confidential this Agreement and the transactions contemplated hereby, and any nonpublic information received pursuant hereto, and shall not disclose, issue any press release or otherwise make any public statement relating hereto or thereto without the prior written consent of the Company and the ACI Control Group, unless so required by applicable law or any governmental authority; provided that no such written consent shall be required (and each party shall be free to release such information) for disclosures (a) to each partys partners, members, advisors, employees, agents, accountants, trustee, attorneys, Affiliates and investment vehicles managed or advised by such party or the partners, members, advisors, employees, agents, accountants, trustee or attorneys of such Affiliates or managed or advised investment vehicles, in each case so long as such Persons agree to keep such information confidential or (b) to the extent required by law, rule or regulation.
Section 4.06. Amendment. The terms and provisions of this Agreement may only be amended, modified, waived or terminated at any time and from time to time by a writing executed by the Company and ACI Control Group Approval; provided, that, any amendment, modification or waiver that would affect the rights, benefits or obligations of any Holder shall require the written consent of such Holder only if any of the following is applicable: (i) such amendment, modification, waiver or termination would materially and adversely affect such rights, benefits or obligations of such Holder and (ii) such amendment, modification, waiver or termination would affect such Holder in a materially worse manner than the manner in which such amendment or waiver affects the other Holders.
Section 4.07. Successors, Assigns and Transferees
The rights and obligations of each party hereto may not be assigned, in whole or in part, without the written consent of the Company and ACI Control Group Approval.
Section 4.08. Binding Effect. Except as otherwise provided in this Agreement, the terms and provisions of this Agreement shall be binding on and inure to the benefit of each of the parties hereto and their respective successors.
Section 4.09. Third Party Beneficiaries. Nothing in this Agreement, express or implied, is intended or shall be construed to confer upon any Person not a party hereto any right, remedy or claim under or by virtue of this Agreement.
Section 4.10. Governing Law; Jurisdiction. THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE CONFLICTS OF LAW PRINCIPLES THEREOF. ANY ACTION OR PROCEEDING AGAINST THE PARTIES RELATING IN ANY WAY TO THIS AGREEMENT MAY BE BROUGHT AND ENFORCED EXCLUSIVELY IN THE COURTS OF THE STATE OF NEW YORK OR (TO THE EXTENT SUBJECT MATTER JURISDICTION EXISTS THEREFOR) THE U.S. DISTRICT COURT
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FOR THE SOUTHERN DISTRICT OF NEW YORK, IN EACH CASE SITTING IN THE BOROUGH OF MANHATTAN, AND THE PARTIES IRREVOCABLY SUBMIT TO THE JURISDICTION OF BOTH SUCH COURTS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING.
Section 4.11. Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY. EACH OF THE PARTIES HEREBY (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE 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 AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 4.12.
Section 4.12. Severability. If any provision of this Agreement shall be held to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.
Section 4.13. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, and all of which shall constitute one and the same agreement.
Section 4.14. Headings. The heading references herein and in the table of contents hereto are for convenience purposes only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof.
Section 4.15. Joinder. Any Person may, with ACI Control Group Approval, be admitted as a party to this Agreement upon its execution and delivery of a joinder agreement, in form and substance acceptable to the ACI Control Group, agreeing to be bound by the terms and conditions of this Agreement as if such Person were a party hereto (together with any other documents the ACI Control Group reasonably determines are necessary to make such Person a party hereto), whereupon such Person will be treated as a Holder for all purposes of this Agreement.
[Remainder of Page Intentionally Blank]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.
ALBERTSONS COMPANIES, INC. | ||
By: | ||
Name: | ||
Title: |
HOLDERS: | ||
CERBERUS: | ||
[________] |
By: | ||
Name: | ||
Title: |
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SCHOTTENSTEIN: |
||
[________] |
By: |
||
Name: |
||
Title: |
KLAFF: |
||
[________] |
By: |
||
Name: |
||
Title: |
LUBERT-ADLER: |
||
[________] |
By: |
||
Name: |
||
Title: |
KIMCO: |
||
[________] |
By: |
||
Name: |
||
Title: |
Exhibit 4.2
REGISTRATION RIGHTS AGREEMENT
by and among
ALBERTSONS COMPANIES, INC.
and
the other parties hereto
Dated as of , 2020
TABLE OF CONTENTS
ARTICLE I DEFINITIONS | 1 | |||||
Section 1.1 |
Certain Definitions | 1 | ||||
Section 1.2 |
Other Definitional Provisions; Interpretation |
5 | ||||
ARTICLE II REGISTRATION RIGHTS | 6 | |||||
Section 2.1 |
Right to Demand a Non-Shelf Registered Offering | 6 | ||||
Section 2.2 |
Right to Piggyback on a Non-Shelf Registered Offering |
6 | ||||
Section 2.3 |
Right to Demand and be Included in a Shelf Registration |
6 | ||||
Section 2.4 |
Demand and Piggyback Rights for Shelf Takedowns |
7 | ||||
Section 2.5 |
Right to Reload a Shelf |
7 | ||||
Section 2.6 |
Limitations on Demand and Piggyback Rights |
7 | ||||
Section 2.7 |
Notifications Regarding Registration Statements |
8 | ||||
Section 2.8 |
Notifications From the Company |
8 | ||||
Section 2.9 |
Plan of Distribution, Underwriters and Counsel |
9 | ||||
Section 2.10 |
Cutbacks |
9 | ||||
Section 2.11 |
Lock-Ups |
10 | ||||
Section 2.12 |
Expenses |
11 | ||||
Section 2.13 |
Facilitating Registrations and Offerings |
11 | ||||
ARTICLE III INDEMNIFICATION | 15 | |||||
Section 3.1 |
Indemnification by the Company | 15 | ||||
Section 3.2 |
Indemnification by the Holders and Underwriters |
16 | ||||
Section 3.3 |
Notices of Claims, Etc. |
16 | ||||
Section 3.4 |
Contribution |
17 | ||||
Section 3.5 |
Non-Exclusivity |
17 |
- i -
ARTICLE IV OTHER | 17 | |||||
Section 4.1 |
Notices | 18 | ||||
Section 4.2 |
Assignment |
20 | ||||
Section 4.3 |
Amendments; Waiver |
20 | ||||
Section 4.4 |
Term |
21 | ||||
Section 4.5 |
Third Parties |
21 | ||||
Section 4.6 |
Rule 144 |
21 | ||||
Section 4.7 |
In-Kind Distributions |
21 | ||||
Section 4.8 |
Governing Law |
21 | ||||
Section 4.9 |
CONSENT TO JURISDICTION |
22 | ||||
Section 4.10 |
MUTUAL WAIVER OF JURY TRIAL |
22 | ||||
Section 4.11 |
Specific Performance |
22 | ||||
Section 4.12 |
Entire Agreement |
22 | ||||
Section 4.13 |
Severability |
22 | ||||
Section 4.14 |
Counterparts |
23 | ||||
Section 4.15 |
Effectiveness |
23 |
- ii -
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the Agreement) is dated as of , 2020 and is by and among Albertsons Companies, Inc. (the Company), Cerberus, Colony Financial, Kimco, Klaff, Lubert-Adler, Schottenstein and the Individual Stockholders (each as defined below).
BACKGROUND
WHEREAS, the Company, Albertsons Investor Holdings LLC (AIH) and KIM ACI LLC (KIM ACI) were party to that certain Stockholders Agreement, dated as of December 3, 2017, pursuant to which the Company granted registration rights to AIH, KIM ACI and distributees of shares of Common Stock, from AIH and KIM ACI (the Stockholders Agreement);
WHEREAS, the Company has filed that certain Registration Statement under the Securities Act on Form S-1 with the SEC, providing for the registration with the SEC of the sale of Common Stock by certain holders of Common Stock, including parties to this Agreement, which the SEC has declared effective on , 2020 (the ACI IPO);
WHEREAS, in connection with the ACI IPO, each of AIH and KIM ACI have distributed to its equityholders shares of Common Stock owned by AIH and KIM (the Distribution);
WHEREAS, in connection with the Distribution and the ACI IPO, the Company, AIH and KIM ACI have terminated the Stockholders Agreement, and any registration rights contained therein are of no further force or effect;
WHEREAS, the Company now desires to grant registration rights to Cerberus, Colony Financial, Kimco, Klaff, Lubert-Adler, Schottenstein and the Individual Stockholders, who each own Common Stock after the ACI IPO and the Distribution, on the terms and conditions set out in this Agreement.
NOW, THEREFORE, the parties agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Certain Definitions. As used in this Agreement:
ACI IPO has the meaning set forth in the recitals.
Affiliate has the meaning ascribed thereto in Rule 12b-2 promulgated under the Exchange Act, as in effect on the date hereof.
Agreement has the meaning set forth in the preamble.
Board means the board of directors of the Company.
Business Day means a day other than a Saturday, Sunday, federal or New York State holiday or other day on which commercial banks in New York City are authorized or required by law to close.
Cerberus means the entities listed on the signature pages hereto under the heading Cerberus.
Cerberus Entities means the entities comprising Cerberus, their respective Affiliates and the successors and permitted assigns of the entities and their respective Affiliates.
Colony Financial means the entities listed on the signature pages hereto under the heading Colony Financial.
Colony Financial Entities means the entities comprising Colony Financial, their respective Affiliates and the successors and permitted assigns of the entities and their respective Affiliates.
Company has the meaning set forth in the preamble, including any of its successors by merger, acquisition, reorganization, conversion or otherwise.
Company Lock-Up means those certain Lock-Up Agreements, dated the date hereof, by and among the Company and the respective Holders listed thereto.
Common Stock means the shares of common stock, par value $0.01 per share, of the Company, and any other capital stock of the Company into which such common stock is reclassified or reconstituted.
Demand Holders means the Cerberus Entities, the Colony Financial Entities, the Kimco Entities, the Klaff Entities, the Lubert-Adler Entities and the Schottenstein Entities.
Exchange Act means the U.S. Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder, as the same may be amended from time to time.
FINRA means Financial Industry Regulatory Authority, Inc. or any successor thereto.
Governmental Authority means any nation or government, any state or other political subdivision thereof, and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government.
Holder means each member of Cerberus, Colony Financial, Kimco, Klaff, Lubert-Adler, Schottenstein and each Individual Stockholder that is a holder of Registrable Securities or securities exercisable, exchangeable or convertible into Registrable Securities or any Transferee of such Person to whom registration rights are assigned pursuant to Section 4.2.
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Indemnified Party and Indemnified Parties have the meanings set forth in Section 3.1.
Individual Stockholder means those stockholders of the Company who are identified as Individual Stockholders on Schedule A hereto or any Transferee of such Person to whom registration rights are assigned pursuant to Section 4.2.
Kimco means the entities listed on the signature pages hereto under the heading Kimco.
Kimco Entities means the entities comprising Kimco, their respective Affiliates and the successors and permitted assigns of the entities and their respective Affiliates.
Klaff means the entities listed on the signature pages hereto under the heading Klaff.
Klaff Entities means the entities comprising Klaff, their respective Affiliates and the successors and permitted assigns of the entities and their respective Affiliates.
Law means any statute, law, regulation, ordinance, rule, injunction, order, decree, governmental approval, directive, requirement, or other governmental restriction or any similar form of decision of, or determination by, or any interpretation or administration of any of the foregoing by, any Governmental Authority.
Lock-Up means any agreement pursuant to which a Holder agrees to limitations relating to the transfer of any Registrable Securities, including any agreement entered into with the Company, including pursuant to Section 2.11 hereof, or with any underwriters in connection with any underwritten offering.
Lock-Up Period means, with respect to any Lock-Up, the period during which the restrictions of such Lock-Up are in effect.
Lubert-Adler means the entities listed on the signature pages hereto under the heading Lubert-Adler.
Lubert-Adler Entities means the entities comprising Lubert-Adler, their respective Affiliates and the successors and permitted assigns of the entities and their respective Affiliates.
Person means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, a cooperative, an unincorporated organization, or other form of business organization, whether or not regarded as a legal entity under applicable Law, or any Governmental Authority or any department, agency or political subdivision thereof.
Post-IPO Total Outstanding Common Stock means all of the shares of Common Stock outstanding as of immediately after the closing of the ACI IPO and after giving effect to
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any repurchase of Common Stock by the Company with the proceeds from the offering of preferred stock of the Company concurrent with the ACI IPO.
Registrable Securities means all shares of Common Stock acquired prior to, on or after the date of closing of the ACI IPO, and any securities into which such Common Stock may be converted or exchanged pursuant to any merger, consolidation, sale of all or any part of its assets, corporate conversion or other extraordinary transaction of the Company, that are in each case held by a Holder (including any such securities received by a Holder upon the conversion or exchange of, or pursuant to a transaction with respect to, such Common Stock or other securities). As to any Registrable Securities, such Securities will cease to be Registrable Securities when:
(a) a registration statement covering such Registrable Securities has been declared effective and such Registrable Securities have been disposed of pursuant to such effective registration statement;
(b) such Registrable Securities shall have been sold pursuant to Rule 144 or 145 (or any similar provision then in effect) under the Securities Act;
(c) such Registrable Securities are eligible to be resold without regard to the volume or public information requirements of Rule 144 and the resale of such Registrable Securities is not prohibited by the Company Lock-Up; or
(d) such Registrable Securities cease to be outstanding.
Registration Expenses means any and all expenses incurred in connection with the Companys performance of or compliance with this Agreement, including:
(a) all SEC, stock exchange, or FINRA registration and filing fees;
(b) all fees and expenses of complying with securities or blue sky Laws (including fees and disbursements of one counsel for the underwriters in connection with blue sky qualifications of the Registrable Securities);
(c) all printing, messenger and delivery expenses;
(d) all fees and expenses incurred in connection with the listing of the Registrable Securities on any securities exchange or FINRA;
(e) the fees and disbursements of counsel for the Company and of its independent public accountants, including the expenses of any special audits and/or cold comfort letters required by or incident to such performance and compliance;
(f) any fees and disbursements of counsel (including the fees and disbursements of one separate outside counsel for each Demand Holder up to a cap of $ for each such outside counsel and one counsel for all other Holders, but except as set forth in (b) above, not including any counsel fees of any underwriters) incurred in
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connection with any registration statement or registered offering covering Registrable Securities held by the Holders;
(g) the costs and expenses of the Company relating to analyst and investor presentations or any road show undertaken in connection with the registration and/or marketing of the Registrable Securities; and
(h) any other fees and disbursements customarily paid by the issuers of securities, but not including (i) any other expenses of the Holders, except as set forth in (f) above, or (ii) any underwriting discounts and commissions and transfer taxes, if any.
Schottenstein means the entities listed on the signature pages hereto under the heading Schottenstein.
Schottenstein Entities means the entities comprising Schottenstein, their respective Affiliates and the successors and permitted assigns of the entities and their respective Affiliates.
SEC means the U.S. Securities and Exchange Commission or any successor agency.
Securities Act means the U.S. Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder, as the same may be amended from time to time.
Transfer (including its correlative meanings, Transferor, Transferee and Transferred) shall mean, with respect to any security, directly or indirectly, to sell, contract to sell, give, assign, hypothecate, pledge, encumber, grant a security interest in, offer, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend or otherwise transfer or dispose of any economic, voting or other rights in or to such security. When used as a noun, Transfer shall have such correlative meaning as the context may require.
Section 1.2 Other Definitional Provisions; Interpretation.
(a) The words hereof, herein, and hereunder and words of similar import when used in this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement, and references in this Agreement to a designated Article or Section refer to an Article or Section of this Agreement unless otherwise specified.
(b) The headings in this Agreement are included for convenience of reference only and do not limit or otherwise affect the meaning or interpretation of this Agreement.
(c) The meanings given to terms defined herein are equally applicable to both the singular and plural forms of such terms.
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ARTICLE II
REGISTRATION RIGHTS
Section 2.1 Right to Demand a Non-Shelf Registered Offering. Following the six month anniversary of the date of closing of the ACI IPO, and so long as the Company is not eligible to use Form S-3, upon the demand of one or more Demand Holders (subject to any applicable Lock-Up Period), the Company will facilitate in the manner described in this Agreement a non-shelf registered offering of the Registrable Securities requested by such Demand Holders to be included in such offering. Any demanded non-shelf registered offering may, at the Companys option, include (i) shares to be sold by the Company for its own account, (ii) shares owned by officers or directors of the Company or other Holders who have contractual rights to be included therein, and (iii) shares to be sold by Holders that exercise their related piggyback rights on a timely basis in accordance with Section 2.2. Notwithstanding the foregoing, Demand Holders may not demand a non-shelf registered offering unless (i) (a) the amount of Registrable Securities requested to be sold by the demanding Holders in such offering is equal to at least five percent (5%) of the total amount of Post-IPO Total Outstanding Common Stock, or (b) such request includes all of the remaining Registrable Securities held by such Demand Holders, and (ii) the Holders of a majority of the outstanding Registrable Securities consent in writing to such demand for a non-shelf registered offering.
Section 2.2 Right to Piggyback on a Non-Shelf Registered Offering. In connection with any registered offering of Common Stock covered by a non-shelf registration statement (whether pursuant to the exercise of demand rights or at the initiative of the Company), any non-demanding Holders may exercise piggyback rights to have included in such offering Registrable Securities held by them (subject to any applicable Lock-Up). The Company will facilitate in the manner described in this Agreement any such non-shelf registered offering. For the avoidance of doubt, if one or more Demand Holders exercise the demand set forth in Section 2.1, each Holder (including such Demand Holders) shall have the right to sell shares in the offering on a pro rata basis with pro rata being determined by dividing the number of Registrable Securities held or beneficially owned by a Holder (including such Demand Holder) as of the date of this Agreement by the number of Registrable Securities held or beneficially owned by all Holders as of such date.
Section 2.3 Right to Demand and be Included in a Shelf Registration. Without limiting any obligation under a Lock-Up, upon the demand of one or more Demand Holders, made at any time and from time to time when the Company is eligible to utilize Form S-3 or a successor form to sell the Registrable Securities on a delayed or continuous basis in accordance with Rule 415 under the Securities Act, the Company will facilitate in the manner described in this Agreement a shelf registration of Registrable Securities held by the Holders. Any shelf registration filed by the Company covering shares (whether pursuant to a Demand Holders demand or the initiative of the Company) will cover Registrable Securities held by each of the Holders up to the highest common percentage of their Registrable Securities, which highest common percentage will be agreed upon by the Demand Holders taking into account any advice of any potential underwriters, after consultation with the Company, to limit the number shares included in such shelf registration. Any such shelf registration statement will cover only such
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number of Registrable Securities of each Holder that is permitted to be sold under any Lock-Ups applicable to such Holder.
Section 2.4 Demand and Piggyback Rights for Shelf Takedowns. Upon the demand of one or more of the Demand Holders made at any time and from time to time, the Company will facilitate in the manner described in this Agreement a takedown of shares off of an effective shelf registration statement. In connection with any underwritten shelf takedown (whether pursuant to the exercise of such demand rights or at the initiative of the Company), the Holders may exercise piggyback rights to have included in such takedown shares held by them that are registered on such shelf. Notwithstanding the foregoing, Demand Holders may not demand a shelf takedown for an underwritten offering (including block-trades and overnight transactions) unless (i) the amount of Registrable Securities requested to be sold by the demanding Demand Holders in such transaction is equal to at least five percent (5%) of the total amount of Post-IPO Total Outstanding Common Stock or (ii) such request includes all of the remaining Registrable Securities included in such shelf registration statement held by such demanding Holders.
Section 2.5 Right to Reload a Shelf. Upon the written request of a Demand Holder, the Company will file and seek the effectiveness of a post-effective amendment to an existing shelf in order to register up to the number of Registrable Securities previously taken down off of such shelf by such Holder and not yet reloaded onto such shelf. The Demand Holders and the Company will consult and coordinate with each other in order to accomplish such replenishments from time to time in a sensible manner. Any such shelf registration statement will cover only such number of Registrable Securities of each Holder that is permitted to be sold under any Lock-Ups applicable to such Holder.
Section 2.6 Limitations on Demand and Piggyback Rights.
(a) Notwithstanding anything in this Agreement to the contrary, the first two demands, whether a non-shelf offering or an underwritten takedown, must be for underwritten, marketed, registered offerings only.
(b) Any demand for the filing of a registration statement or for a registered offering or takedown will be subject to the constraints of any applicable Lock-Ups, and such demand must be deferred until such constraints no longer apply. If a demand has been made for a non-shelf registered offering or for an underwritten takedown, no further demands may be made so long as the related offering is still being pursued. Each Demand Holder other than the Colony Financial Entities shall be permitted a maximum of an aggregate of three demands for underwritten offerings pursuant to Section 2.1 or Section 2.4, and the Colony Financial Entities shall be permitted a maximum of an aggregate of one demand for an underwritten offering pursuant to Section 2.1 or Section 2.4. Demand Holders are permitted to make joint demands and aggregate the number of Registrable Securities set forth in their requests so as to meet the minimum requested ownership thresholds set forth in Sections 2.1 and 2.4.
(c) Notwithstanding anything in this Agreement to the contrary, the Company shall not be required to effect more than one demand registration in any 30-day
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period (with such 30-day period commencing on the closing date of any underwritten offering pursuant to a preceding demand registration).
(d) Notwithstanding anything in this Agreement to the contrary, the Holders will not have piggyback or other registration rights with respect to registered primary offerings by the Company (i) covered by a Form S-4 or a Form S-8 registration statement or a successor form, (ii) where the shares of Common Stock are not being sold for cash or (iii) where the offering is a bona fide offering of securities other than shares of Common Stock, even if such securities are convertible into or exchangeable or exercisable for shares of Common Stock.
(e) The Company may postpone the filing or the effectiveness of a demand registration, including an underwritten shelf takedown, if, based on the good faith judgment of the Company, upon consultation with outside counsel, such filing, the effectiveness of a demand registration, or the consummation of an underwritten shelf takedown, as the case may be, would (i) reasonably be expected to materially impede, delay, interfere with or otherwise have a material adverse effect on any material acquisition of assets (other than in the ordinary course of business), merger, consolidation, tender offer, financing or any other material business transaction by the Company or any of its subsidiaries or (ii) require disclosure of information that has not been, and is otherwise not required to be, disclosed to the public, the premature disclosure of which the Company, after consultation with outside counsel to the Company, believes would be detrimental the Company, provided that the Company shall not be permitted to impose any such blackout period more than two times in any 12-month period and provided further that any such delay shall not be more than an aggregate of 120 days in any 12-month period.
Section 2.7 Notifications Regarding Registration Statements. In order for one or more Holders to exercise their right to demand that a registration statement be filed, they must so notify the Company in writing indicating the number of Registrable Securities sought to be registered, the proposed plan of distribution and the requested filing date of the registration statement or pricing date of any requested underwritten offering. The Company will keep the Holders reasonably apprised of any registration of Common Stock, whether pursuant to a Holder demand or otherwise, with respect to which a piggyback opportunity is available, or any shelf takedown. Pending any required public disclosure and subject to applicable legal requirements, the parties will maintain the confidentiality of these discussions.
Section 2.8 Notifications From the Company.
(a) If the Company at any time proposes or is required to register any Common Stock under the Securities Act on its behalf or on behalf of any of its stockholders, including pursuant to an underwritten shelf takedown, whether or not on behalf of Demand Holders exercising a demand under this Agreement, on a form and in a manner that would permit registration of the Registrable Securities, the Company shall give each Holder written notice of its intent to do so not less than 15 days prior to the contemplated filing date for the relevant registration statement or prospectus supplement (provided that, in the case of a block trade or overnight transaction pursuant to an existing
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shelf registration statement, the Company shall notify each Holder as soon as reasonably possible and no later than two days prior to such filing date).
(b) Any Holder wishing to exercise its piggyback rights must notify the Company of the number of Registrable Securities it wishes to include in such offering. Such notice must be given as soon as practicable, but in no event later than 5:00 pm, New York City time, on (i) if applicable, the fifth trading day prior to the date on which the preliminary prospectus or prospectus supplement intended to be used in connection with marketing efforts for the relevant offering is expected to be finalized, and (ii) in all cases, the fifth trading day prior to the date on which the pricing of the relevant takedown occurs; provided that in the case of a block-trade or an overnight transaction, such written requests for inclusion must be received within one day after the date such Company notice is provided.
(c) Pending any required public disclosure and subject to applicable legal requirements, the parties will maintain appropriate confidentiality of their discussions regarding a prospective underwritten takedown.
Section 2.9 Plan of Distribution, Underwriters and Counsel.
(a) Non-Shelf Registered Offerings. Each underwritten offering through a non-shelf registration statement or through an underwritten marketed shelf takedown will have at least two active joint book-runners, one selected by the Demand Holder or Demand Holders, and the other chosen by the Company, in each case, reasonably acceptable to the other party. Such Demand Holder or Demand Holders will also be entitled to select one counsel for the selling Holders (which may be the same as counsel for the Company).
(b) Shelf Registration Statements. Each shelf registration statement, or a prospectus supplement relating to such shelf registration statement, shall include a plan of distribution that provides as much flexibility as is reasonably possible, including with respect to resales by transferee Holders.
(c) Block-Trade or Overnight Transactions. To the extent that an Registrable Securities are permitted to be sold in a block-trade or overnight transaction, the relevant Demand Holder or Demand Holders may select the underwriter and determine the plan of distribution.
Section 2.10 Cutbacks. If the managing underwriters advise the Company and the selling Holders that, in their opinion, the number of shares of Common Stock requested to be included in an underwritten offering exceeds the amount that can be sold in such offering without adversely affecting the distribution (including the price) of the shares of Common Stock being offered, such offering will include only the number of shares of Common Stock that the underwriters advise can be sold in such offering.
(a) In the case of an offering pursuant to a demand from one or more Demand Holders, the Registrable Securities to be included in such offering will be reduced by (i) only including the total number of Registrable Securities of the Holders in
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such offering as can be included with each such Holder entitled to include its pro rata share (determined in accordance with Section 2.2), (ii) second, to the extent that all Registrable Securities being sold for the account of the Holders can be included, then if the Company elects to sell shares in the offering, only including the total number of shares to be offered by the Company as can be included (in addition to all such Registrable Securities being sold for the account of the Holders) and (iii) third, if all shares being sold for the account of the Holders and the Company can be included, any other shares held by stockholders other than the Holders entitled to be included therein.
(b) In the case of an offering not pursuant to a demand from one or more Demand Holders, the Registrable Securities to be included in such offering will be reduced by (i) first only including any shares of Common Stock being sold for the account of the Company, (ii) second, to the extent that all shares of Common Stock being sold for the account of the Company can be included, then only including the total number of Registrable Securities of the Holders in such offering as can be included (in addition to any such shares of Common Stock being sold for the account of the Company) with each such Holder entitled to include its pro rata share (determined in accordance with Section 2.2), or such other share as the Holders agree and (iii) third, if all shares of Common Stock being sold for the account of the Company and the Holders can be included, any other shares of Common Stock held by stockholders other than the Holders entitled to be included therein.
Section 2.11 Lock-Ups.
(a) In connection with any demanded underwritten offering of shares of Common Stock pursuant to this Agreement, the Company, and its directors and executive officers will agree (whether or not such party is participating in the offering) to be bound by the Lock-Up restrictions (i) set forth in the underwriting agreement, with respect to the Company, and (ii) agreed to with the underwriters in such offering, with respect to the directors and executive officers of the Company (which shall be up to 90 days in connection with the first two underwritten demand offerings, and up to 45 days in connection with the third underwritten demand and thereafter, in each case, from the pricing date of such offering). The Lock-Ups for Company directors and executive officers shall contain customary carve-outs, including, but not limited to, sales pursuant to Rule 10b5-1 plans entered into before any notice of such underwritten offering, sales in connection with the payment of taxes and sales of Common Stock underlying expiring options or similar securities within six months of the date of such Lock-Up. In the event a Form 4 needs to be filed as a result of such transaction, notice shall be provided to the managing underwriters.
(b) In connection with any primary underwritten offering of shares of Common Stock at the initiation of the Company or a secondary offering pursuant to this Agreement, each Holder will enter into a customary lock-up agreement with the underwriters of any such offering, which lock-up agreements shall not be materially more restrictive than the lock-up agreements entered into by the Company directors and executive officers in such offering and, in any event, under which the lock-up period shall not exceed (i) 90 days in the case of a marketed underwritten offering in connection with
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or prior to the second offering pursuant to a demand from one or more Demand Holders and (ii) 45 days otherwise.
(c) In connection with any secondary underwritten offering of shares of Common Stock other than pursuant to this Agreement, each Holder that beneficially owns (as such term is defined under the Exchange Act) five percent (5%) or more of the outstanding Common Stock will enter into a customary lock-up agreement with the underwriters of any such offering, which lock-up agreements shall not be materially more restrictive than the lock-up agreements entered into by the Company directors and executive officers in such offering and, in any event, under which the lock-up period shall not exceed 30 days.
Section 2.12 Expenses. All Registration Expenses incurred in connection with any registration statement or registered offering covering Registrable Securities held by Holders will be borne by the Company, including the reasonable and documented fees and expenses of one counsel for each Demand Holder up to a cap of $ for each such outside counsel and one counsel for all other participating Holders in an underwritten offering. However, underwriters, brokers and dealers discounts and commissions applicable to Registrable Securities sold for the account of a Holder will be borne by such Holder. Notwithstanding anything to the contrary in this Section 2.12, if a Demand Holder withdraws its demand, the Company shall not be required to pay the Registration Expenses unless such withdrawal counts as one of the three available demands.
Section 2.13 Facilitating Registrations and Offerings.
(a) If the Company becomes obligated under this Agreement to facilitate a registration and offering of Registrable Securities on behalf of Holders, the Company will fulfill its specific obligations as described in this Section 2.13.
(b) In connection with each registration statement that is demanded by Holders or as to which piggyback rights otherwise apply, the Company will use its reasonable best efforts to:
(i) prepare and file with the SEC a registration statement covering the applicable Registrable Securities, file amendments thereto as warranted, seek the effectiveness thereof, and file with the SEC prospectuses and prospectus supplements as may be required, all in consultation with the Holders and as reasonably necessary in order to permit the offer and sale of such Registrable Securities in accordance with the applicable plan of distribution;
(ii) within a reasonable time prior to the filing of any registration statement, any prospectus, any amendment (other than Exchange Act filings incorporated by reference and unrelated to the offering) to a registration statement, amendment or supplement to a prospectus or any free writing prospectus, provide copies of such documents to the selling Holders and to the underwriter or underwriters of an underwritten offering, if applicable, and to their respective counsel; reasonably consider such reasonable changes in any such
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documents prior to or after the filing thereof as the counsel to the Holders or the underwriter or the underwriters may request; and make such of the representatives of the Company as shall be reasonably requested by counsel for the selling Holders or any underwriter available for discussion of such documents;
(iii) within a reasonable time prior to the filing of any document which is to be incorporated by reference into a registration statement or a prospectus (other than Exchange Act filings incorporated by reference and unrelated to the offering), provide copies of such document to counsel for the Holders and underwriters; reasonably consider such reasonable changes in such document prior to or after the filing thereof as counsel for such Holders or such underwriter shall request; and make such of the representatives of the Company as shall be reasonably requested by such counsel available for discussion of such document;
(iv) cause each registration statement and the related prospectus and any amendment or supplement thereto, as of the effective date of such registration statement, amendment or supplement and during the distribution of the registered shares (x) to comply in all material respects with the requirements of the Securities Act and the rules and regulations of the SEC and (y) not to contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading;
(v) notify each Holder promptly, and, if requested by such Holder, confirm such advice in writing, (A) when a registration statement has become effective and when any post-effective amendments and supplements thereto become effective if such registration statement or post-effective amendment is not automatically effective upon filing pursuant to Rule 462 of the Securities Act, (B) of the issuance by the SEC or any state securities authority of any stop order, injunction or other order or requirement suspending the effectiveness of a registration statement or the initiation of any proceedings for that purpose, (C) if, between the effective date of a registration statement and the closing of any sale of securities covered thereby pursuant to any agreement to which the Company is a party, the representations and warranties of the Company contained in such agreement cease to be true and correct in all material respects or if the Company receives any notification with respect to the suspension of the qualification of the securities for sale in any jurisdiction or the initiation of any proceeding for such purpose, and (D) of the happening of any event during the period a registration statement is effective as a result of which such registration statement or the related Prospectus contains any untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading;
(vi) furnish counsel for each underwriter, if any, and one counsel for the Holders copies of any correspondence with the SEC or any state securities authority relating to the registration statement or prospectus;
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(vii) comply with all applicable rules and regulations of the SEC, including making available to its security holders an earnings statement covering at least 12 months which shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder (or any similar provision then in force); and
(viii) obtain the withdrawal of any order suspending the effectiveness of a registration statement at the earliest possible time.
(c) In connection with any non-shelf registered offering or shelf takedown that is demanded by Holders or as to which piggyback rights otherwise apply, the Company will:
(i) reasonably cooperate with the selling Holders and the sole underwriter or managing underwriter of an underwritten offering, if any, to facilitate the timely preparation and delivery of certificates representing the shares to be sold, if any, and not bearing any restrictive legends; and enable such shares to be in such denominations (consistent with the provisions of the governing documents thereof) and registered in such names as the selling Holders or the sole underwriter or managing underwriter of an underwritten offering of shares, if any, may reasonably request at least five days prior to any sale of such shares;
(ii) furnish to each Holder and to each underwriter, if any, participating in the relevant offering, without charge, as many copies of the applicable prospectus, including each preliminary prospectus, and any amendment or supplement thereto and such other documents as such Holder or underwriter may reasonably request in order to facilitate the public sale or other disposition of the shares of Common Stock; the Company hereby consents to the use of the prospectus, including each preliminary prospectus, by each such Holder and underwriter in connection with the offering and sale of the shares of Common Stock covered by the prospectus or the preliminary prospectus;
(iii) use reasonable best efforts to register or qualify the shares of Common Stock being offered and sold, no later than the time the applicable registration statement becomes effective, under all applicable state securities or blue sky laws of such jurisdictions as each underwriter, if any, or any Holder holding Registrable Securities covered by a registration statement, shall reasonably request; use reasonable best efforts to keep each such registration or qualification effective during the period such registration statement is required to be kept effective; and do any and all other acts and things which may be reasonably necessary or advisable to enable each such underwriter, if any, and each such Holder to consummate the disposition in each such jurisdiction of such Registrable Securities owned by such Holder; provided, however, that in each case under this paragraph (iii), the Company shall not be obligated to qualify as a foreign corporation or as a dealer in securities in any jurisdiction in which it is not so qualified or to consent to be subject to general service of process (other than
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service of process in connection with such registration or qualification or any sale of shares in connection therewith) in any such jurisdiction;
(iv) cause all shares of Common Stock being sold to be qualified for inclusion in or listed on the New York Stock Exchange or the primary securities exchange on which shares issued by the Company are then so qualified;
(v) reasonably cooperate and assist in any filings required to be made with FINRA and in the performance of any due diligence investigation by any underwriter in an underwritten offering;
(vi) use reasonable best efforts to facilitate the distribution and sale of any Registrable Securities to be offered pursuant to this Agreement, including without limitation by making road show presentations, holding meetings with potential investors and taking such other actions as shall be reasonably requested by the Holders or the lead managing underwriter of an underwritten offering; and
(vii) enter into customary agreements (including, in the case of an underwritten offering, underwriting agreements in customary form, and including provisions with respect to indemnification and contribution in customary form and consistent with the provisions relating to indemnification and contribution contained herein) and take all other customary and appropriate actions in order to expedite or facilitate the disposition of such shares and in connection therewith:
(A) make such representations and warranties to the selling Holders and the underwriters, if any, in form, substance and scope as are customarily made by issuers to underwriters in similar underwritten offerings;
(B) obtain opinions of counsel to the Company and updates thereof (which counsel and opinions (in form, scope and substance) shall be reasonably satisfactory to the lead managing underwriter, if any) addressed to the underwriters, if any, covering the matters customarily covered in opinions requested in sales of securities or underwritten offerings and such other matters as may be reasonably requested by such underwriters;
(C) obtain cold comfort letters and updates thereto from the Companys independent certified public accountants addressed to the underwriters, if any, which letters shall be customary in form and shall cover matters of the type customarily covered in cold comfort letters to underwriters in connection with primary underwritten offerings; and
(D) to the extent requested and customary for the relevant transaction, enter into a securities sales agreement with the
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Holders providing for, among other things, the appointment of an agent for the selling Holders for the purpose of soliciting purchases of shares, which agreement shall be customary in form, substance and scope and shall contain customary representations, warranties and covenants.
The above shall be done at such times as customarily occur in similar registered offerings or shelf takedowns.
(d) In connection with each registration and offering of shares to be sold by Holders, the Company will, in accordance with customary practice, make available for inspection by one representative of the Demand Holders and underwriters and any counsel or accountant retained by the Demand Holders or underwriters all relevant financial and other records, pertinent corporate documents and properties of the Company and cause appropriate officers, managers and employees of the Company to supply all information reasonably requested by any such representative, underwriter, counsel or accountant in connection with their due diligence exercise.
(e) Each Holder that holds shares covered by any registration statement will furnish to the Company such information regarding itself as is required to be included in the registration statement, the ownership of shares by such Holder and the proposed distribution by such Holder of such shares as the Company may from time to time reasonably request in writing.
ARTICLE III
INDEMNIFICATION
Section 3.1 Indemnification by the Company. In the event of any registration of any Registrable Securities of the Company under the Securities Act pursuant to Article II, the Company hereby indemnifies and agrees to hold harmless, to the fullest extent permitted by Law, each Holder who sells Registrable Securities covered by such registration statement, each Affiliate of such Holder and their respective directors and officers or general and limited partners or members (and the directors, officers, employees, members, Affiliates and controlling Persons of any of the foregoing), each other Person who participates as an underwriter in the offering or sale of such Registrable Securities and each other Person, if any, who controls such Holder or any such underwriter within the meaning of the Securities Act (each, and Indemnified Party and collectively, the Indemnified Parties), against any and all losses, claims, damages or liabilities, joint or several, and reasonable and documented expenses to which such Indemnified Party may become subject under the Securities Act, common law or otherwise, insofar as such losses, claims, damages or liabilities (or actions or proceedings in respect thereof, whether or not such Indemnified Party is a party thereto) arise out of or are based upon: (a) any untrue statement or alleged untrue statement of any material fact contained in any registration statement under which such Registrable Securities were registered under the Securities Act, any preliminary, final or summary prospectus contained therein, or any amendment or supplement thereto, or any document incorporated by reference therein, or any other such disclosure document (including reports and other documents filed under the Exchange Act and any document incorporated by reference therein) or related document or report; or (b) any omission or alleged omission to state
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therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in the case of a prospectus, in the light of the circumstances when they were made, and the Company will reimburse such Indemnified Party for any legal or other expenses reasonably incurred by it in connection with investigating or defending any such loss, claim, liability, action or proceeding; provided that the Company will not be liable to any Indemnified Party in any such case to the extent that any such loss, claim, damage, liability (or action or proceeding in respect thereof) or expense arises out of or is based upon any untrue statement or alleged untrue statement or omission or alleged omission made in such registration statement, in any such preliminary, final or summary prospectus, or any amendment or supplement thereto in reliance upon and in conformity with written information with respect to such Indemnified Party furnished to the Company by such Indemnified Party expressly for use in the preparation thereof. Such indemnity will remain in full force and effect regardless of any investigation made by or on behalf of such Holder or any Indemnified Party and will survive the Transfer of such Registrable Securities by such Holder or any termination of this Agreement.
Section 3.2 Indemnification by the Holders and Underwriters. The Company may require, as a condition to including any Registrable Securities in any registration statement filed in accordance with Article II, that the Company shall have received an undertaking reasonably satisfactory to it from the Holder of such Registrable Securities or any prospective underwriter to indemnify and hold harmless (in the same manner and to the same extent as set forth in Section 3.1) the Company, all other Holders or any prospective underwriter, as the case may be, and any of their respective Affiliates, directors, officers and controlling Persons, with respect to any untrue statement in or omission from such registration statement, any preliminary, final or summary prospectus contained therein, or any amendment or supplement, if such untrue statement or omission was made in reliance upon and in conformity with written information with respect to such Holder or underwriter furnished to the Company by such Holder or underwriter expressly for use in the preparation of such registration statement, preliminary, final or summary prospectus or amendment or supplement, or a document incorporated by reference into any of the foregoing. Such indemnity will remain in full force and effect regardless of any investigation made by or on behalf of the Company or any of the Holders, or any of their respective Affiliates, directors, officers or controlling Persons and will survive the Transfer of such Registrable Securities by such Holder. In no event shall the liability of any selling Holder of Registrable Securities hereunder be greater in amount than the dollar amount of the proceeds actually received by such Holder upon the sale of the Registrable Securities giving rise to such indemnification obligation.
Section 3.3 Notices of Claims, Etc. Promptly after receipt by an Indemnified Party hereunder of written notice of the commencement of any action or proceeding with respect to which a claim for indemnification may be made pursuant to this Article III, such Indemnified Party will, if a claim in respect thereof is to be made against an indemnifying party, give written notice to the latter of the commencement of such action; provided that the failure of the Indemnified Party to give notice as provided herein will not relieve the indemnifying party of its obligations under Section 3.1 or Section 3.2, except to the extent that the indemnifying party is actually prejudiced by such failure to give notice. In case any such action is brought against an Indemnified Party, unless in such Indemnified Partys reasonable judgment a conflict of interest between such indemnified and indemnifying parties may exist in respect of such claim, the indemnifying party will be entitled to participate in and to assume the defense thereof, jointly
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with any other indemnifying party similarly notified to the extent that it may wish, with counsel selected by such indemnifying party, and after notice from the indemnifying party to such Indemnified Party of its election so to assume the defense thereof, the indemnifying party will not be liable to such Indemnified Party for any legal or other expenses subsequently incurred by the latter in connection with the defense thereof other than reasonable costs of investigation. If, in such Indemnified Partys reasonable judgment, having common counsel would result in a conflict of interest between the interests of such indemnified and indemnifying parties, then such Indemnified Party may employ separate counsel reasonably acceptable to the indemnifying party to represent or defend such Indemnified Party in such action. No indemnifying party will consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect of such claim or litigation.
Section 3.4 Contribution. If the indemnification provided for hereunder from the indemnifying party is unavailable to an Indemnified Party hereunder in respect of any losses, claims, damages, liabilities or expenses referred to herein for reasons other than those described in the proviso in the first sentence of Section 3.1, then the indemnifying party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such losses, claims, damages, liabilities or expenses in such proportion as is appropriate to reflect the relative fault of the indemnifying party and Indemnified Parties in connection with the actions which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The relative fault of such indemnifying party and Indemnified Parties shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, has been made by, or relates to information supplied by, such indemnifying party or Indemnified Parties, and the parties relative intent, knowledge, access to information and opportunity to correct or prevent such action. The amount paid or payable by a party under this Section 3.4 as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include any legal or other fees or expenses reasonably incurred by such party in connection with any investigation or proceeding. In no event shall the liability of any selling Holder of Registrable Securities hereunder be greater in amount than the dollar amount of the proceeds actually received by such Holder upon the sale of the Registrable Securities giving rise to such contribution obligation.
The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 3.4 were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation.
Section 3.5 Non-Exclusivity. The obligations of the parties under this Article III will be in addition to any liability which any party may otherwise have to any other party.
ARTICLE IV
OTHER
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Section 4.1 Notices. Any notice, request, instruction or other document to be given hereunder by any party hereto to another party hereto shall be in writing and shall be deemed given (a) when delivered personally, (b) five (5) Business Days after being sent by certified or registered mail, postage prepaid, return receipt requested, (c) one (1) Business Day after being sent by Federal Express or other nationally recognized overnight courier, or (d) if transmitted by facsimile, if confirmed within 24 hours thereafter by a signed original sent in the manner provided in clause (a), (b) or (c) to parties at the following addresses (or at such other address for a party as shall be specified by prior written notice from such party):
if to the Company:
Albertsons Companies, Inc.
250 Parkcenter Blvd.
Boise, ID 83706
Attention: Robert A. Gordon, Esq.
if to Cerberus:
c/o Cerberus Capital Management, L.P.
875 Third Avenue, 11th Floor
New York, NY 10022
Attention: Lenard Tessler
Alex Benjamin, Esq.
with an additional copy (not constituting notice) to:
Schulte Roth & Zabel LLP
919 Third Avenue
New York, NY 10022
Attention: Stuart D. Freedman, Esq.
Antonio L. Diaz-Albertini, Esq.
if to Colony Financial:
c/o Colony NorthStar, Inc.
2450 Broadway, 6th Floor
Santa Monica, CA 90404
Attention: Director / Legal Assistant
and:
c/o Colony NorthStar, Inc.
712 Fifth Avenue
35th Floor
New York, NY 10019
Attention: David Schwarz
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with an additional copy (not constituting notice) to:
Willkie Farr & Gallagher LLP
787 Seventh Avenue
New York, NY 10019
Attention: Adam Turteltaub
if to Kimco:
c/o Kimco Realty Corporation
3333 New Hyde Park Road, Suite 100
New Hyde Park, NY 11042
Attention: Raymond Edwards and Bruce Rubenstein
with an additional copy (not constituting notice) to:
Fried, Frank, Harris, Shriver & Jacobson LLP
One New York Plaza
New York, New York 10004
Attention: Philip Richter and Steven G. Scheinfeld, Esq.
if to Klaff:
Klaff Realty, L.P.
35 E. Wacker Drive
Suite 2900
Chicago, IL 60601
Attention: Hersch M. Klaff
with an additional copy (not constituting notice) to:
Fox, Swibel, Levin & Carroll, LLP
200 W. Madison Street, Suite 3000
Chicago, IL 60603
Attention: Laurie A. Levin
if to Lubert-Adler:
Lubert-Adler Partners
The FMC Tower
2929 Walnut Street, Suite 1530
Philadelphia, PA 19104
Attention: Dean Adler
R. Eric Emrich
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with an additional copy (not constituting notice) to:
Kirkland & Ellis LLP
300 North LaSalle
Chicago, IL 60654
Attention: Richard J. Campbell
if to Schottenstein:
Jubilee Limited Partnership
4300 E. Fifth Ave.
Columbus, OH 43219
Attention: Ben Kraner
Tod H. Friedman, Esq.
if to any Individual Stockholder:
c/o Albertsons Companies, Inc.
250 Parkcenter Blvd.
Boise, ID 83706
Attention: Robert A. Gordon, Esq.
Section 4.2 Assignment. Neither the Company nor any Holder shall assign all or any part of this Agreement without the prior written consent of the Company; provided, however, that any Holder may assign its respective rights and obligations under this Agreement in whole or in part to any of its respective Affiliates (in each case under this Section 4.2, not including a portfolio company), or through an in-kind distribution to its direct or indirect equityholders without the consent of any other party (unless such in-kind distribution would be prohibited under any applicable Lock-Up); provided, further, that no Holder shall transfer any Registrable Securities to its Affiliates or through such an in-kind distribution unless such transferees assume the respective rights and obligations of such Holder under this Agreement, including the obligation to deliver Lock-Ups pursuant to Section 2.11. Except as otherwise provided herein, this Agreement will inure to the benefit of and be binding on the parties hereto and their respective successors and permitted assigns. Any such transfer of registration rights will be effective upon receipt by the Company of (i) written notice from such Holder stating the name and address of any transferee and identifying the number of shares with respect to which rights under this Agreement are being transferred and the nature of the rights so transferred, and (ii) a written agreement from such transferee to be bound by the terms of this Agreement.
Section 4.3 Amendments; Waiver. This Agreement may be amended, supplemented or otherwise modified, or any provision waived, only by a written instrument executed by the Company and the Holders holding a majority of the Registrable Securities subject to this Agreement; provided that no such amendment, supplement or other modification or waiver shall adversely affect the economic interests of any Holder hereunder, or increase the obligations of any Holder, disproportionately to other Holders without the written consent of such Holder. For the avoidance of doubt, no consent pursuant to this Section 4.3 shall be required in connection with any amendment or revision to Schedule A unless such amendment or
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revision is to remove a Holder from such schedule at a time when such Holder would otherwise be entitled to registration rights herein. No waiver by any party of any of the provisions hereof will be effective unless explicitly set forth in writing and executed by the party so waiving. Except as provided in the preceding sentence, no action taken pursuant to this Agreement, including without limitation, any investigation by or on behalf of any party, will be deemed to constitute a waiver by the party taking such action of compliance with any covenants or agreements contained herein. The waiver by any party hereto of a breach of any provision of this Agreement will not operate or be construed as a waiver of any subsequent breach.
Section 4.4 Term. In the event that (i) a Holder ceases to hold any Registrable Securities and (ii) such Holder is not a party to any agreement with the Company restricting such Holder from selling any Registrable Securities other than pursuant to an underwritten offering, then all of such Holders rights and obligations under this Agreement shall expire and such Holder will cease to be a Holder for all purposes hereunder without any further action of the Company or any other party hereto, provided that the provisions of Article III shall survive the termination of this Agreement with respect to a Holder.
Section 4.5 Third Parties. This Agreement does not create any rights, claims or benefits inuring to any person that is not a party hereto nor create or establish any third party beneficiary hereto.
Section 4.6 Rule 144. Without limiting the limitations on sales pursuant to the Company Lock-Up or any Lock-Up with an Underwriter pursuant to an offering of Common Stock, for so long as the Company is subject to the requirements of Section 13, 14 or 15(d) of the Exchange Act, the Company covenants that it will file any reports required to be filed by it under the Securities Act and the Exchange Act (or, if the Company is subject to the requirements of Section 13, 14 or 15(d) of the Exchange Act but is not required to file such reports, it will, upon the request of any Holder, make publicly available such information), and it will take such further action as any Holder may reasonably request (including by providing customary legal opinions and certificates required by a transfer agent) so as to enable such Holder to sell shares without registration under the Securities Act within the limitation of the exemptions provided by (a) Rule 144 under the Securities Act, as such Rule may be amended from time to time, or (b) any similar rule or regulation hereafter adopted by the SEC, in each case, only to the extent such sales would be permitted under all applicable Lock-Ups. Upon the request of any Holder, the Company will deliver to such Holder a written statement as to whether it has complied with such requirements.
Section 4.7 In-Kind Distributions. If any Holder seeks to effectuate an in-kind distribution of all or part of its shares to its direct or indirect equityholders, the Company will, only to the extent such in-kind distribution would be permitted under all applicable Lock-Ups, cooperate with such Holder and the Companys transfer agent to facilitate such in-kind distribution in the manner reasonably requested by such Holder, as well as any resales by such transferees under a shelf registration statement covering such distributed shares.
Section 4.8 Governing Law. This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of New York.
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Section 4.9 CONSENT TO JURISDICTION. EACH OF THE PARTIES HERETO CONSENTS TO THE EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE STATE OF NEW YORK AND IRREVOCABLY AGREES THAT ALL ACTIONS OR PROCEEDINGS RELATING TO THIS AGREEMENT SHALL BE LITIGATED IN SUCH COURTS. EACH OF THE PARTIES HERETO ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS RESPECTIVE PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS, AND IRREVOCABLY AGREES TO BE BOUND BY ANY FINAL AND NONAPPEALABLE JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT. EACH OF THE PARTIES HERETO FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF VIA OVERNIGHT COURIER, TO SUCH PARTY AT THE ADDRESS SPECIFIED IN THIS AGREEMENT, SUCH SERVICE TO BECOME EFFECTIVE FOURTEEN CALENDAR DAYS AFTER SUCH MAILING. NOTHING HEREIN SHALL IN ANY WAY BE DEEMED TO LIMIT THE ABILITY OF EITHER PARTY HERETO TO SERVE ANY SUCH LEGAL PROCESS, SUMMONS, NOTICES AND DOCUMENTS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW OR TO OBTAIN JURISDICTION OVER OR TO BRING ACTIONS, SUITS OR PROCEEDINGS AGAINST THE OTHER PARTY HERETO IN SUCH OTHER JURISDICTIONS, AND IN SUCH MANNER, AS MAY BE PERMITTED BY ANY APPLICABLE LAW.
Section 4.10 MUTUAL WAIVER OF JURY TRIAL. THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING BROUGHT TO ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES UNDER THIS AGREEMENT.
Section 4.11 Specific Performance. Each of the parties hereto acknowledges and agrees that in the event of any breach of this Agreement by any of them, the non-breaching party would be irreparably harmed and could not be made whole by monetary damages. Each party accordingly agrees to waive the defense in any action for specific performance that a remedy at law would be adequate and that the parties, in addition to any other remedy to which they may be entitled at law or in equity, shall be entitled to compel specific performance of this Agreement.
Section 4.12 Entire Agreement. This Agreement sets forth the entire understanding of the parties hereto with respect to the subject matter hereof. There are no agreements, representations, warranties, covenants or undertakings with respect to the subject matter hereof other than those expressly set forth herein. This Agreement supersedes all other prior agreements and understandings between the parties with respect to such subject matter.
Section 4.13 Severability. If one or more of the provisions, paragraphs, words, clauses, phrases or sentences contained herein, or the application thereof in any circumstances, is held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision, paragraph, word, clause, phrase or sentence in every other
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respect and of the remaining provisions, paragraphs, words, clauses, phrases or sentences hereof shall not be in any way impaired, it being intended that all rights, powers and privileges of the parties hereto shall be enforceable to the fullest extent permitted by Law.
Section 4.14 Counterparts. This Agreement may be executed in any number of counterparts, each of which will be deemed to be an original and all of which together will be deemed to be one and the same instrument.
Section 4.15 Effectiveness. This Agreement shall become effective, as to any Holder, as of the date signed by the Company and countersigned by such Holder.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first written above.
COMPANY: | ||
ALBERTSONS COMPANIES, INC. |
By: | ||
Name: | ||
Title: |
[Signature Page to Registration Rights Agreement]
CERBERUS: | ||
[_______] |
By: | ||
Name: | ||
Title: |
SCHOTTENSTEIN: | ||
[_______] |
By: | ||
Name: | ||
Title: |
KLAFF: | ||
[_______] |
By: | ||
Name: | ||
Title: |
LUBERT-ADLER: | ||
[_______] |
By: | ||
Name: | ||
Title: |
KIMCO: | ||
[_______] |
By: | ||
Name: | ||
Title: |
COLONY FINANCIAL: | ||
[_______] |
By: | ||
Name: | ||
Title: |
Schedule A
Individual Stockholders
[_______]
Exhibit 4.3
Albertsons Companies, Inc.
250 Parkcenter Blvd.
Boise, ID 83706
Re: Albertsons Companies, Inc.Lock-Up Agreement
Ladies and Gentlemen:
In connection with the proposed initial public offering (the IPO) of shares of Common Stock (the Shares) of Albertsons Companies, Inc., a Delaware corporation (the Company), the undersigned hereby agrees that, during the Lock-Up Period specified below, the undersigned will not offer, sell, contract to sell, pledge, grant any option to purchase, make any short sale or otherwise dispose of any Shares, or any options or warrants to purchase any Shares, or any securities convertible into, exchangeable for or that represent the right to receive Shares, owned directly by the undersigned (including holding as a custodian) or with respect to which the undersigned has beneficial ownership within the rules and regulations of the Securities and Exchange Commission (the SEC) acquired on or prior to the consummation of the IPO (the IPO Date) (or acquired from the Company in exchange for or with respect to such securities) (collectively, the Undersigneds Shares). The foregoing restriction is expressly agreed to preclude the undersigned from engaging in any hedging or other transaction which is designed to or which reasonably could be expected to lead to or result in a sale or disposition of the Undersigneds Shares even if such Shares would be disposed of by someone other than the undersigned. Such prohibited hedging or other transactions would include without limitation any short sale or any purchase, sale or grant of any right (including without limitation any put or call option or forward sale or similar contract) with respect to any of the Undersigneds Shares or with respect to any security that includes, relates to, or derives any significant part of its value from such Shares.
The first lock-up period (the First Lock-Up Period) will commence on the date of this Lock-Up Agreement and continue until six months after the IPO Date.
The second lock-up period (the Second Lock-Up Period) will commence upon the expiration of the First Lock-Up Period and continue until 12 months after the IPO Date.
The third lock-up period (the Third Lock-Up Period) will commence upon the expiration of the Second Lock-Up Period and continue until 18 months after the IPO Date.
The fourth lock-up period (the Fourth Lock-Up Period and, together with the First Lock-Up Period, the Second Lock-Up Period and the Third Lock-Up Period, the Lock-Up Period) will commence upon the expiration of the Third Lock-Up Period and continue until 24 months after the IPO Date.
Notwithstanding the foregoing, the undersigned may transfer the Undersigneds Shares (i) as a bona fide gift or gifts, provided that the donee or donees thereof agree to be bound in writing by the restrictions set forth herein, (ii) to any trust for the direct or indirect benefit of the undersigned or the immediate family of the undersigned, provided that the trustee of the trust agrees to be bound in writing by the restrictions set forth herein, and provided further that any
such transfer shall not involve a disposition for value, (iii) to any Affiliate of the undersigned or any investment fund or other entity controlled or managed by the undersigned or its Affiliates, (but in each case under this clause (iii), not including a portfolio company), provided that such person agrees to be bound in writing by the restrictions set forth herein, (iv) to a nominee or custodian of a person or entity to whom a disposition or transfer would be permissible under clauses (i) through (iii) above provided that such person agrees to be bound in writing by the restrictions set forth herein, (v) pursuant to an order of a court or regulatory agency, (vi) the pledge, hypothecation or other granting of a security interest in the Undersigneds Shares to one or more banks or financial institutions as bona fide collateral or security for any loan, advance or extension of credit and any transfer upon foreclosure upon such Shares or thereafter, (vii) to the Underwriters (as defined in the Underwriting Agreement) pursuant to that certain Underwriting Agreement to sell Shares of the Company, dated as of , 2020, by and among the Company, the Selling Stockholders (as defined in the Underwriting Agreement) and the Underwriters party thereto (the Underwriting Agreement), (viii) to the Company in connection with the repurchase of Shares by the Company with the proceeds from the public offering of the Companys Mandatory Convertible Preferred Stock (including in connection with an exercise of the green shoe option) or (ix) with the prior written consent of the Company. For purposes of this Lock-Up Agreement immediate family shall mean any relationship by blood, marriage or adoption, not more remote than first cousin. The undersigned now has, and, except as contemplated by clauses (i)-(ix) above, for the duration of this Lock-Up Agreement will have, good and valuable title to the Undersigneds Shares. The undersigned also agrees and consents to the entry of stop transfer instructions with the Companys transfer agent and registrar against the transfer of the Undersigneds Shares except in compliance with the foregoing restrictions. For purposes of this agreement, Affiliate) shall have the meaning ascribed thereto in Rule 12b-2 promulgated under the Securities Exchange Act of 1934, as in effect on the date hereof.
Furthermore, notwithstanding the foregoing:
(a) during the Second Lock-Up Period, the undersigned will be permitted to sell up to twenty-five percent (25%) of the number of the Undersigneds Shares that the undersigned beneficially owned as of immediately after the IPO Date and after giving effect to (i) any sale of Shares by the undersigned from the exercise of the green shoe option by the underwriters in the IPO and (ii) any repurchase of Shares by the Company from the undersigned with the proceeds from the offering of preferred stock of the Company concurrent with the IPO (such number of the Undersigneds Shares, the Post-IPO Ownership Amount) (as adjusted to give effect to any stock split, stock distribution or similar transaction after the IPO Date, as so adjusted the Second Period Amount); provided that such Shares may only be sold in a registered, underwritten offering made in accordance with the terms of the Registration Rights Agreement among the Company, the undersigned and certain other stockholders, dated the date hereof, as the same may be amended (the Registration Rights Agreement); provided further that the undersigned shall be permitted to sell additional Shares in any such registered, underwritten offering to the extent that the managing underwriters of such registered, underwritten offering conclude that additional Shares may be sold in such offering without adversely affecting the distribution (including the price) of the Shares being offered by the undersigned and other holders; provided further that, to the extent the undersigned elects not to participate in an any such registered, underwritten offering or does not elect to sell the maximum
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number of Shares permitted pursuant to this paragraph (but not more than the Second Period Amount), the undersigned may then sell up to that maximum amount of Shares in a non-underwritten registered shelf takedown (provided that the Company is not required to participate in any due diligence or comfort letter process in connection with such takedown) or an unregistered sale pursuant to Rule 144 or another exemption from registration under the Securities Act of 1933, as amended (the Securities Act) (unless the holder is otherwise restricted, such as pursuant to a lock-up delivered to an underwriter or pursuant to the terms of the Registration Rights Agreement);
(b) during the Third Lock-Up Period, the undersigned will be permitted to sell a number of shares up to the remainder of (i) fifty percent (50%) of the Post-IPO Ownership Amount minus (ii) the number of Shares up to the Second Period Amount that the undersigned sold during the Second Lock-Up period or could have been sold pursuant to the third proviso of the preceding paragraph (as adjusted to give effect to any stock split, stock distribution or similar transaction after the IPO Date, as so adjusted, the Third Period Amount); provided that such Shares may only be sold in a registered, underwritten offering made in accordance with the terms of the Registration Rights Agreement; provided further that the undersigned shall be permitted to sell additional Shares in any such registered, underwritten offering to the extent that the managing underwriters of such registered, underwritten offering conclude that additional Shares may be sold in such offering without adversely affecting the distribution (including the price) of the Shares being offered by the undersigned and other holders; provided further that, to the extent the undersigned elects not to participate in an any such registered, underwritten offering or does not elect to sell the maximum number of Shares permitted pursuant to this paragraph or the preceding paragraph, the undersigned may then sell up to that maximum amount of Shares in a non-underwritten registered shelf-takedown (provided that the Company is not required to participate in any due diligence or comfort letter process in connection with such takedown) or an unregistered sale pursuant to Rule 144 or another exemption from registration under the Securities Act (unless the holder is otherwise restricted, such as pursuant to a lock-up delivered to an underwriter or pursuant to the terms of the Registration Rights Agreement); and
(c) during the Fourth Lock-Up Period, the undersigned will be permitted to sell a number of shares up to the remainder of (i) seventy-five percent (75%) of the Post-IPO Ownership Amount minus (ii) the number of Shares up to the Third Period Amount that the undersigned sold during the Second Lock-Up period or Third Lock-Up period or could have been sold pursuant to the third proviso of the preceding two paragraphs (as adjusted to give effect to any stock split, stock distribution or similar transaction after the IPO Date, as so adjusted) of the number of the Undersigneds Shares; provided that such Shares may only be sold in a registered, underwritten offering made in accordance with the terms of the Registration Rights Agreement; provided further that the undersigned shall be permitted to sell additional Shares in any such registered, underwritten offering to the extent that the managing underwriters of such registered, underwritten offering conclude that additional Shares may be sold in such offering without adversely affecting the distribution (including the price) of the Shares being offered by the undersigned and other holders; provided further that, to the extent the undersigned elects not to participate in an any registered, underwritten offering or does not elect to sell the maximum number of Shares
3
permitted pursuant to the preceding two paragraphs, the undersigned may then sell up to that maximum amount of Shares in a non-underwritten registered shelf-takedown (provided that the Company is not required to participate in any due diligence or comfort letter process in connection with such takedown) or an unregistered sale pursuant to Rule 144 or another exemption from the registration requirements under the Securities Act (unless the holder is otherwise restricted, such as pursuant to a lock-up delivered to an underwriter or pursuant to the terms of the Registration Rights Agreement).
In addition, to the extent that the undersigned is permitted to sell any number of the Undersigneds Shares without the requirement to sell in a registered, underwritten offering pursuant to the preceding requirements, the undersigned may transfer such Undersigneds Shares as part of a distribution to direct or indirect members or partners of the undersigned (which, for the avoidance of doubt, may be accomplished by a redemption of one or more members or partners interest in the undersigned in exchange for Shares), provided that the distributee agrees to be bound in writing by the restrictions set forth herein.
Notwithstanding anything to the contrary contained in paragraphs (a), (b) or (c) above, no registered sales may be made prior to the consummation of the second demand registration pursuant to the Registration Rights Agreement, except as part of a registered, underwritten offering made pursuant to the Registration Rights Agreement.
In the event that any holder of Common Stock subject to a similar agreement other than the undersigned is permitted by the Company to sell or otherwise transfer or dispose of any Shares of Common Stock for value (whether in one or multiple releases), then the same percentage of Shares of Common Stock held by the undersigned (the Pro-Rata Release) shall be immediately and fully released on the same terms from any remaining lock-up restrictions set forth herein; provided that such Pro-Rata Release shall not apply in the event of any registered, underwritten offering, whether or not such offering or sale is wholly or partially a secondary offering of the Companys Common Stock during the Lock-Up Period if the undersigned, to the extent the undersigned has a contractual right to demand or require the registration of the Undersigneds Shares or otherwise piggyback on a registration statement filed by the Company for the offer and sale of its Common Stock, is offered the opportunity to participate on a basis consistent with such contractual rights in such registered, underwritten offering. The foregoing shall also not apply to any release of a lock-up entered into with the managing underwriter(s) of any underwritten offering.
[Remainder of the page left intentionally blank.]
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The undersigned understands that this Lock-Up Agreement is irrevocable and shall be binding upon the undersigneds heirs, legal representatives, successors, and assigns.
Very truly yours, |
Exact Name of Stockholder |
Authorized Signature |
Title |
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Exhibit 4.12.6
EXECUTION COPY
SIXTH SUPPLEMENTAL INDENTURE
SIXTH SUPPLEMENTAL INDENTURE (this Supplemental Indenture) dated as of November 16, 2018 (the Effective Date), among ALBERTSONS COMPANIES, INC., a Delaware corporation (the Company), NEW ALBERTSONS L.P., a Delaware limited partnership (NALP), SAFEWAY INC., a Delaware corporation (Safeway) and ALBERTSONS LLC, a Delaware limited liability company (Albertsons, together with the Company, Safeway and NALP, collectively, the Lead Issuers), the Existing Additional Issuers and Existing Subsidiary Guarantors that are signatories hereto under the heading Existing Additional Issuers and Existing Subsidiary Guarantors (each, a Existing Subsidiary Note Party, and collectively, the Existing Subsidiary Note Parties), the New Additional Issuer and New Subsidiary Guarantor signatory hereto under the heading New Additional Issuer and New Subsidiary Guarantor (the New Subsidiary Note Party) and WILMINGTON TRUST, NATIONAL ASSOCIATION, a national banking association, as trustee (in such capacity, together with its successors and assigns in such capacity, the Trustee).
W I T N E S S E T H :
WHEREAS the Lead Issuers and the Existing Subsidiary Note Parties have executed and delivered to the Trustee an indenture (as amended, supplemented or otherwise modified, the Indenture) dated as August 9, 2016, providing for the issuance of the Issuers 5.750% Senior Notes due 2025 (the Securities), initially in the aggregate principal amount of $1,250,000,000; and
WHEREAS pursuant to Section 9.01 of the Indenture, the Trustee and the Company are authorized to execute and deliver this Supplemental Indenture;
NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Company and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Securities as follows:
1. Defined Terms. As used in this Supplemental Indenture, terms defined in the Indenture or in the preamble or recital hereto are used herein as therein defined. The words herein, hereof and hereby and other words of similar import used in this Supplemental Indenture refer to this Supplemental Indenture as a whole and not to any particular section hereof.
2. Subsidiary Guarantee.
(a) Each Existing Subsidiary Note Party, as a Subsidiary Guarantor, hereby confirms, jointly and severally, that its Guarantee shall apply to the Issuers Obligations under the Securities and the Indenture on the terms and subject to the conditions set forth in Article X of the Indenture and will continue to be bound by all other applicable provisions of the Indenture and the Securities and to perform all of the obligations and agreements of a Guarantor under the Indenture.
(b) The New Subsidiary Note Party, as a Subsidiary Guarantor, hereby agrees, jointly and severally with all existing Guarantors, to unconditionally guarantee the Issuers obligations under the Securities on the terms and subject to the conditions set forth in Article X of the Indenture and to be bound by all other applicable provisions of the Indenture and the Securities and to perform all of the obligations and agreements of a Guarantor under the Indenture.
3. Agreement to Assume Issuer Obligations.
(a) The New Subsidiary Note Party, as an Additional Issuer, hereby agrees, to unconditionally assume, jointly and severally with the Lead Issuers, the Obligations under the Securities and the Indenture as an Issuer (as defined in the Indenture) under the Indenture.
(b) Each Lead Issuer, joint and severally, confirms that nothing in this Supplemental Indenture relieves any Lead Issuer of its Obligations under the Securities and the Indenture.
4. Ratification of Indenture; Supplemental Indentures Part of Indenture. Except as expressly amended hereby, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect. This Supplemental Indenture shall form a part of the Indenture for all purposes, and every Holder of Securities heretofore or hereafter authenticated and delivered shall be bound hereby.
5. Governing Law. THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
6. Trustee Makes No Representation. The Trustee makes no representation as to the recitals or the validity or sufficiency of this Supplemental Indenture.
7. Counterparts. The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement.
8. Effect of Headings. The Section headings herein are for convenience only and shall not affect the construction thereof.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed as of the date first above written.
Lead Issuers | ||
ALBERTSONS COMPANIES, INC. | ||
By: |
/s/ Robert B. Dimond |
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Name: Robert B. Dimond | ||
Title: Executive Vice President & Chief Financial Officer |
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ALBERTSONS LLC | ||
By: |
/s/ Robert B. Dimond |
|
Name: Robert B. Dimond | ||
Title: Executive Vice President & Chief Financial Officer |
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NEW ALBERTSONS L.P. | ||
By: |
/s/ Robert B. Dimond |
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Name: Robert B. Dimond | ||
Title: Executive Vice President & Chief Financial Officer |
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SAFEWAY INC. | ||
By: |
/s/ Robert Gordon |
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Name: Robert Gordon | ||
Title: Executive Vice President, General Counsel & Secretary |
[Sixth Supplemental Indenture (2025 Notes)]
Existing Additional Issuers and Existing Subsidiary Guarantors | ||
UNITED SUPERMARKETS, L.L.C. | ||
By: |
/s/ Bradley R. Beckstrom |
|
Name: Bradley R. Beckstrom | ||
Title: Group Vice President, Real Estate & Business Law & Assistant Secretary |
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SPIRIT ACQUISITION HOLDINGS LLC | ||
By: |
/s/ Bradley R. Beckstrom |
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Name: Bradley R. Beckstrom | ||
Title: Group Vice President, Real Estate & Business Law & Assistant Secretary |
[Sixth Supplemental Indenture (2025 Notes)]
ABS FINANCE CO., INC.
ACME MARKETS, INC. AMERICAN DRUG STORES LLC AMERICAN PARTNERS, L.P. AMERICAN PROCUREMENT AND LOGISTICS COMPANY LLC AMERICAN STORES COMPANY, LLC APLC PROCUREMENT, INC. ASC MEDIA SERVICES, INC. ASP REALTY, LLC CLIFFORD W. PERHAM, INC. JETCO PROPERTIES, INC. JEWEL COMPANIES, INC. JEWEL FOOD STORES, INC. LUCKY STORES LLC OAKBROOK BEVERAGE CENTERS, INC. SHAWS REALTY CO. SHAWS SUPERMARKETS, INC. SSM HOLDINGS COMPANY STAR MARKETS COMPANY, INC. STAR MARKETS HOLDINGS, INC. WILDCAT MARKETS OPCO LLC NAI SATURN EASTERN LLC COLLINGTON SERVICES LLC GIANT OF SALISBURY, INC. ALBERTSONS COMPANIES SPECIALTY CARE, LLC MEDCART SPECIALTY CARE, LLC |
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By: |
/s/ Gary Morton |
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Name: Gary Morton | ||
Title: Vice President, Treasurer & Assistant Secretary |
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SHAWS REALTY TRUST | ||
By: |
/s/ Gary Morton |
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Name: Gary Morton | ||
Title: Trustee |
[Sixth Supplemental Indenture (2025 Notes)]
FRESH HOLDINGS LLC AMERICAN FOOD AND DRUG LLC EXTREME LLC NEWCO INVESTMENTS, LLC NHI INVESTMENT PARTNERS, LP AMERICAN STORES PROPERTIES LLC JEWEL OSCO SOUTHWEST LLC SUNRICH MERCANTILE LLC ABS REAL ESTATE HOLDINGS LLC ABS REAL ESTATE INVESTOR HOLDINGS LLC ABS REAL ESTATE OWNER HOLDINGS LLC ABS MEZZANINE I LLC ABS TX INVESTOR GP LLC ABS FLA INVESTOR LLC ABS TX INVESTOR LP ABS SW INVESTOR LLC ABS RM INVESTOR LLC ABS DFW INVESTOR LLC ASP SW INVESTOR LLC ABS TX LEASE INVESTOR GP LLC ABS FLA LEASE INVESTOR LLC ABS TX LEASE INVESTOR LP ABS SW LEASE INVESTOR LLC ABS RM LEASE INVESTOR LLC ASP SW LEASE INVESTOR LLC AFDI NOCAL LEASE INVESTOR LLC ABS NOCAL LEASE INVESTOR LLC ASR TX INVESTOR GP LLC ASR TX INVESTOR LP ABS REALTY INVESTOR LLC ASR LEASE INVESTOR LLC |
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By: |
/s/ Bradley R. Beckstrom |
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Name: Bradley R. Beckstrom | ||
Title: Group Vice President, Real Estate & Business Law, and Assistant Secretary |
[Sixth Supplemental Indenture (2025 Notes)]
GOOD SPIRITS LLC | ||
By: |
/s/ Bradley R. Beckstrom |
|
Name: Bradley R. Beckstrom | ||
Title: Group Vice President, Real Estate & Business Law & Assistant Secretary |
[Sixth Supplemental Indenture (2025 Notes)]
ABS REALTY LEASE INVESTOR LLC ABS MEZZANINE II LLC ABS TX OWNER GP LLC ABS FLA OWNER LLC ABS TX OWNER LP ABS TX LEASE OWNER GP LLC ABS TX LEASE OWNER LP ABS SW OWNER LLC ABS SW LEASE OWNER LLC LUCKY (DEL) LEASE OWNER LLC SHORTCO OWNER LLC ABS NOCAL LEASE OWNER LLC LSP LEASE LLC ABS RM OWNER LLC ABS RM LEASE OWNER LLC ABS DFW OWNER LLC ASP SW OWNER LLC ASP SW LEASE OWNER LLC NHI TX OWNER GP LLC EXT OWNER LLC NHI TX OWNER LP SUNRICH OWNER LLC NHI TX LEASE OWNER GP LLC ASR OWNER LLC EXT LEASE OWNER LLC NHI TX LEASE OWNER LP ASR TX LEASE OWNER GP LLC ASR TX LEASE OWNER LP ABS MEZZANINE III LLC ABS CA-O LLC ABS CA-GL LLC ABS ID-O LLC ABS ID-GL LLC ABS MT-O LLC ABS MT-GL LLC ABS NV-O LLC ABS NV-GL LLC |
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By: |
/s/ Bradley R. Beckstrom |
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Name: Bradley R. Beckstrom | ||
Title: |
Group Vice President, Real Estate & Business Law & Assistant Secretary |
[Sixth Supplemental Indenture (2025 Notes)]
ABS OR-O LLC
ABS OR-GL LLC ABS UT-O LLC ABS UT-GL LLC ABS WA-O LLC ABS WA-GL LLC ABS WY-O LLC ABS WY-GL LLC ABS CA-O DC1 LLC ABS CA-O DC2 LLC ABS ID-O DC LLC ABS OR-O DC LLC ABS UT-O DC LLC ABS DFW LEASE OWNER LLC |
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By: |
/s/ Bradley R. Beckstrom |
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Name: Bradley R. Beckstrom | ||
Title: Group Vice President, Real Estate & Business Law & Assistant Secretary |
[Sixth Supplemental Indenture (2025 Notes)]
USM MANUFACTURING L.L.C.
LLANO LOGISTICS, INC. |
||
By: |
/s/ Bradley R. Beckstrom |
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Name: Bradley R. Beckstrom | ||
Title: Group Vice President, Real Estate & Business Law & Assistant Secretary |
[Sixth Supplemental Indenture (2025 Notes)]
SAFEWAY NEW CANADA, INC. SAFEWAY CORPORATE, INC. SAFEWAY STORES 67, INC. SAFEWAY DALLAS, INC. SAFEWAY STORES 78, INC. SAFEWAY STORES 79, INC. SAFEWAY STORES 80, INC. SAFEWAY STORES 85, INC. SAFEWAY STORES 86, INC. SAFEWAY STORES 87, INC. SAFEWAY STORES 88, INC. SAFEWAY STORES 89, INC. SAFEWAY STORES 90, INC. SAFEWAY STORES 91, INC. SAFEWAY STORES 92, INC. SAFEWAY STORES 96, INC. SAFEWAY STORES 97, INC. SAFEWAY STORES 98, INC. SAFEWAY DENVER, INC. SAFEWAY STORES 44, INC. SAFEWAY STORES 45, INC. SAFEWAY STORES 46, INC. SAFEWAY STORES 47, INC. SAFEWAY STORES 48, INC. SAFEWAY STORES 49, INC. SAFEWAY STORES 58, INC. SAFEWAY SOUTHERN CALIFORNIA, INC. SAFEWAY STORES 28, INC. SAFEWAY STORES 42, INC. SAFEWAY STORES 71, INC. SAFEWAY STORES 72, INC. SSI AK HOLDINGS, INC. DOMINICKS SUPERMARKETS, LLC DOMINICKS FINER FOODS, LLC RANDALLS FOOD MARKETS, INC. SAFEWAY GIFT CARDS, LLC SAFEWAY HOLDINGS I, LLC GROCERYWORKS.COM, LLC |
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By: |
/s/ Laura A. Donald |
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Name: Laura A. Donald | ||
Title: Vice President & Assistant Secretary |
[Sixth Supplemental Indenture (2025 Notes)]
GROCERYWORKS.COM OPERATING COMPANY, LLC THE VONS COMPANIES, INC. STRATEGIC GLOBAL SOURCING, LLC GFM HOLDINGS LLC RANDALLS HOLDINGS, INC. SAFEWAY AUSTRALIA HOLDINGS, INC. SAFEWAY CANADA HOLDINGS, INC. AVIA PARTNERS, INC. SAFEWAY PHILTECH HOLDINGS, INC. CONSOLIDATED PROCUREMENT SERVICES, INC. CARR-GOTTSTEIN FOODS CO. SAFEWAY HEALTH INC. LUCERNE FOODS, INC. EATING RIGHT LLC LUCERNE DAIRY PRODUCTS LLC LUCERNE NORTH AMERICA LLC O ORGANICS LLC DIVARIO VENTURES LLC CAYAM ENERGY, LLC GFM HOLDINGS I, INC. |
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By: |
/s/ Laura A. Donald |
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Name: Laura A. Donald | ||
Title: Vice President & Assistant Secretary |
[Sixth Supplemental Indenture (2025 Notes)]
GENUARDIS FAMILY MARKETS LP | ||
By: | GFM HOLDINGS, its general partner | |
By: |
/s/ Laura A. Donald |
|
Name: Laura A. Donald | ||
Title: Vice President & Assistant Secretary |
[Sixth Supplemental Indenture (2025 Notes)]
RANDALLS FOOD & DRUGS LP | ||
By: | RANDALLS FOOD MARKETS, INC., its general partner | |
By: |
/s/ Laura A. Donald |
|
Name: Laura A. Donald | ||
Title: Vice President & Assistant Secretary |
[Sixth Supplemental Indenture (2025 Notes)]
RANDALLS MANAGEMENT COMPANY, INC. RANDALLS BEVERAGE COMPANY, INC. |
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By: |
/s/ Gary Owen |
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Name: Gary Owen | ||
Title: Vice President |
[Sixth Supplemental Indenture (2025 Notes)]
RANDALLS INVESTMENTS, INC. | ||
By: |
/s/ Elizabeth A. Harris |
|
Name: Elizabeth A. Harris | ||
Title: Vice President & Secretary |
[Sixth Supplemental Indenture (2025 Notes)]
ALBERTSONS STORES SUB LLC | ||
By: |
/s/ Bradley Beckstrom |
|
Name: Bradley Beckstrom | ||
Title: Group Vice President, Real Estate & Business Law & Assistant Secretary |
[Sixth Supplemental Indenture (2025 Notes)]
AB MANAGEMENT SERVICES CORP. | ||
By: |
/s/ Robert B. Dimond |
|
Name: Robert B. Dimond | ||
Title: Executive Vice President & Chief Financial Officer |
[Sixth Supplemental Indenture (2025 Notes)]
ABS REAL ESTATE COMPANY LLC | ||
By: |
/s/ Robert Gordon |
|
Name: Robert Gordon | ||
Title: Executive Vice President, General Counsel & Secretary |
[Sixth Supplemental Indenture (2025 Notes)]
ALBERTSONS STORES SUB HOLDINGS LLC | ||
By: |
/s/ Bradley R. Beckstrom |
|
Name: Bradley R. Beckstrom | ||
Title: Group Vice President, Real Estate & Business Law & Assistant Secretary |
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AB ACQUISITION LLC | ||
By: |
/s/ Bradley R. Beckstrom |
|
Name: Bradley R. Beckstrom | ||
Title: Group Vice President, Real Estate & Business Law & Assistant Secretary |
[Sixth Supplemental Indenture (2025 Notes)]
NAI HOLDINGS GP LLC | ||
By: |
/s/ Robert B. Dimond |
|
Name: Robert B. Dimond | ||
Title: Executive Vice President & Chief Financial Officer |
[Sixth Supplemental Indenture (2025 Notes)]
DINEINFRESH, INC. | ||
By: |
/s/ Laura A. Donald |
|
Name: Laura A. Donald | ||
Title: Vice President & Assistant Secretary |
[Sixth Supplemental Indenture (2025 Notes)]
New Additional Issuer and New Subsidiary Guarantor | ||
INFINITE AISLE LLC | ||
By: |
/s/ Laura A. Donald |
|
Name: Laura A. Donald | ||
Title: Vice President & Assistant Secretary |
[Sixth Supplemental Indenture (2025 Notes)]
WILMINGTON TRUST, NATIONAL ASSOCIATION, as Trustee | ||
By: |
/s/ Hallie E. Field |
|
Name: Hallie E. Field | ||
Title: Assistant Vice President |
[Sixth Supplemental Indenture (2025 Notes)]
Exhibit 5.1
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Writers Direct Number
212.756.2407 |
Writers E-mail Address Stuart.Freedman@srz.com |
FORM OF OPINION
, 2020
Albertsons Companies, Inc.
250 Parkcenter Blvd.
Boise, ID 83706
Ladies and Gentlemen:
We have acted as counsel to Albertsons Companies, Inc., a Delaware corporation (the Company), in connection with the preparation and filing by the Company with the Securities and Exchange Commission (the Commission) of a Registration Statement on Form S-1 (the Registration Statement), under the Securities Act of 1933, as amended (the Securities Act), relating to (i) the offer and sale by certain selling stockholders (the Selling Stockholders), of a maximum of shares of common stock, par value $0.01 per share (the Common Stock) of the Company, which includes shares of Common Stock that are subject to an over-allotment option granted by the Selling Stockholders to the underwriters (the Common Shares), (ii) the issuance by the Company of up to shares of Series A Mandatory Convertible Preferred Stock, with an initial liquidation preference of $ per share, which includes shares of Series A Mandatory Convertible Preferred Stock that are subject to an over-allotment option granted by the Company to the underwriters (the Preferred Shares), and (iii) the registration by the Company of an indeterminable number of shares of Common Stock issuable upon conversion of the Preferred Shares (the Conversion Shares) and up to shares of Common Stock that may be issued as dividends on the Preferred Shares (the Dividend Shares), both in accordance with the Certificate of Designations (as defined below). The Common Shares are to be purchased by certain underwriters and offered for sale to the public pursuant to the terms of an underwriting agreement, the form of which has been filed as an exhibit to the Registration Statement. The Preferred Shares are to be purchased by certain underwriters and offered for sale to the public pursuant to the terms of a separate underwriting agreement, the form of which has been filed as an exhibit to the Registration Statement. The Preferred Shares are being issued under a Certificate of Designations to be dated as of the date of issuance thereof (the Certificate of Designations).
In connection with the opinions expressed below, we have examined originals or copies, certified or otherwise identified to our satisfaction, of the Registration Statement, the Certificate of Incorporation and Bylaws of the Company, a form of the Amended and Restated Certificate of Incorporation of the Company (the Amended and Restated Certificate of Incorporation), a form of the Amended and Restated Bylaws of the Company (the Amended and Restated Bylaws) and a form of the Certificate of Designations, each of which have been filed with the Commission as exhibits to the Registration Statement, and such other agreements, certificates and documents of public officials, officers and other representatives of the Company and others as we have deemed necessary as a basis for our opinions set forth below.
In our examination, we have assumed (a) the legal capacity of all natural persons executing the Registration Statement, and such other agreements, certificates and documents, (b) the genuineness of all signatures thereon, (c) the authority of all persons signing the Registration Statement and such other agreements, certificates and documents on behalf of the parties thereto, (d) the authenticity of all documents submitted to us as originals, (e) the conformity to original documents of all documents submitted to us as certified or photostatic copies and (f) the authenticity of the originals of such latter documents. We have also assumed that the Amended and Restated Certificate of Incorporation, the Amended and Restated Bylaws and the Certificate of Designations are filed with the Secretary of State for the State of Delaware in the respective forms filed with the Commission as exhibits to the Registration Statement prior to the issuance of any of the Preferred Shares, Conversion Shares or Dividend Shares. As to any facts material to this opinion that were not independently established or verified, we have relied upon statements and representations of officers and other representatives of the Company and others.
Albertsons Companies, Inc.
, 2020
Page 2
Based upon the foregoing, and such other investigations as we have deemed necessary and subject to the qualifications included in this letter, we are of the opinion that (i) the Common Shares have been validly issued and are fully paid and non-assessable, (ii) upon payment and delivery in accordance with the applicable underwriting agreement, the Preferred Shares will be validly issued, fully paid and non-assessable and (iii) the Conversion Shares and Dividend Shares issuable pursuant to the Certificate of Designations, when issued and delivered in accordance with the Certificate of Designations, will be validly issued, fully paid and non-assessable.
We do not express any opinion herein concerning any laws other than the General Corporation Law of the State of Delaware.
We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference to this firm under the heading Legal Matters in the prospectus which forms a part thereof. In giving such consent, we do not thereby admit that we are in the category of persons whose consent is required under Section 7 of the Securities Act or the rules and regulations of the Commission promulgated thereunder.
Very truly yours, |
Exhibit 10.20
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this Agreement), dated as of August 19, 2019 (the Effective Date), between Albertsons Companies, Inc., a Delaware corporation (the Company), and Michael Theilmann (the Executive, and together with the Company, the Parties).
WHEREAS, the Executive is joining the Company as an employee; and
WHEREAS, the Parties desire to set forth the terms and conditions of the Executives employment with the Company under this Agreement.
NOW THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements set forth herein and other good and valuable consideration, the Parties agree to the following:
1. Employment and Acceptance. The Company shall offer to employ the Executive, and the Executive shall accept employment with the Company, subject to the terms of this Agreement effective on the Effective Date.
2. Term. Subject to earlier termination pursuant to Section 5 of this Agreement, this Agreement and the employment relationship hereunder shall continue from the Effective Date until January 30, 2023 (the Term Date). As used in this Agreement, the Term shall refer to the period beginning on the Effective Date and ending on the date the Executives employment hereunder terminates in accordance with this Section 2 or Section 5. In the event that the Executives employment with the Company terminates (such date, the Termination Date) prior to the Term Date, the Companys obligation to continue to pay all base salary, as adjusted, bonus and other benefits then accrued shall terminate except as may be provided for in Section 5 of this Agreement.
3. Duties and Title.
3.1 Title. The Executive shall be employed to render exclusive and full-time services to the Company and its subsidiaries and affiliates. The Executive shall serve in the capacity of Executive Vice President and Chief Human Resources Officer.
3.2 Duties. The Executive shall have such authority and responsibilities and shall perform such executive duties customarily performed by a similarly titled executive of a company in similar lines of business as the Company, its subsidiaries and its affiliates or as may be assigned to the Executive by the Chief Executive Officer of the Company (the CEO). The Executive shall devote all of the Executives full working-time and best efforts to the performance of such duties and to the promotion of the business and interests of the Company, its subsidiaries and its affiliates. Notwithstanding the foregoing, during the Term, subject to disclosure to, and approval by the Board of Directors of the Company (the Board) or the CEO, the Executive may (a) continue to serve on any boards of directors upon which the Executive serves as of the Effective Date, and (b) serve on other corporate, industry, civic or charitable boards and committees, provided that with respect to (a) and (b), (x) such activities, in the Boards or CEOs discretion, do not materially interfere with and are not inconsistent with the Executives performance of the Executives duties under this Agreement and (y) any such entity does not engage in the Business (as defined below).
4. Compensation and Benefits by the Company.
4.1 Base Salary. During the Term, the Company shall pay to the Executive an annual base salary of $600,000, payable in accordance with the customary payroll practices of the Company (Base Salary). The Executive shall be entitled to such increases, if any, in Base Salary as may be determined from time to time by the Board or the Compensation Committee of the Board (the Compensation Committee).
4.2 Bonuses. During the Term, the Executive shall be eligible to receive a bonus or bonuses (collectively, the Bonus) for each fiscal year of the Company subject to a plan (or plans) established by the Company (the Bonus Plan) in an amount determined by the Board or Compensation Committee based upon achievement of performance measures derived from the business plan presented by management and approved by the Board or Compensation Committee. The target amount of the Executives Bonus for each fiscal year shall be 100% of the Base Salary (the Target Bonus). If such performance measures are only partially achieved or not achieved, the Executive shall only be entitled to such Bonus, if any, as provided under the applicable Bonus Plan or as otherwise determined in the sole discretion of the Board or Compensation Committee.
4.3 Participation in Employee Benefit Plans. The Executive shall be entitled, if and to the extent eligible, to participate in all of the applicable benefit plans of the Company or its affiliates, which may be available to other senior executives of the Company, on the same terms as such other executives. The Company or its affiliates may at any time or from time to time amend, modify, suspend or terminate any employee benefit plan, program or arrangement for any reason without the Executives consent if such amendment, modification, suspension or termination is consistent with the amendment, modification, suspension or termination for other similarly-situated employees of the Company and its affiliates.
4.4 Expense Reimbursement. The Executive shall be entitled to receive reimbursement for all of the Executives appropriate business expenses incurred in connection with the Executives duties under this Agreement in accordance with the policies of the Company as in effect from time to time, as well as reimbursement for the costs incurred by the Executive in connection with the preparation of the Executives applicable tax returns, up to a maximum of $8,000 annually.
5. Termination of Employment.
5.1 By the Company for Cause or by the Executive Without Good Reason. If: (i) the Company terminates the Executives employment with the Company for Cause (as defined below); or (ii) the Executive voluntarily terminates the Executives employment without Good Reason (as defined below), the Executive shall be entitled to receive the following:
(a) payment for accrued but unused vacation days, payable in accordance with Company policy;
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(b) the Executives accrued but unpaid Base Salary and vested benefits, if any, through the Termination Date;
(c) the earned but unpaid portion of any Bonus earned in respect of any completed performance period prior to the Termination Date; and
(d) expenses reimbursable under Section 4.7 incurred but not yet reimbursed to the Executive through the Termination Date (Sections 5.1(a), 5.1(b), 5.1(c) and 5.1(d), collectively, the Accrued Benefits).
For the purposes of this Agreement, Cause means, as determined by the Board or its designee), with respect to conduct during the Executives employment with the Company, whether or not committed during the Term, (i) conviction of a felony by the Executive; (ii) acts of intentional dishonesty by the Executive resulting or intending to result in personal gain or enrichment at the expense of the Company, its subsidiaries or its affiliates; (iii) the Executives material breach of the Executives obligations under this Agreement; (iv) conduct by the Executive in connection with the Executives duties hereunder that is fraudulent, unlawful or grossly negligent; (v) engaging in personal conduct by the Executive (including but not limited to employee harassment or discrimination, the use or possession at work of any illegal controlled substance) which seriously discredits or damages the Company, its subsidiaries or its affiliates; (vi) contravention of specific lawful direction from the Board; or (vii) breach of the Executives covenants set forth in Section 6 below before termination of employment. The Executive shall have fifteen (15) business days after notice from the Company to cure the deficiency leading to the Cause determination (except with respect to (i) above), if curable. A termination for Cause shall be effective immediately (or on such other date set forth by the Company).
For the purposes of this Agreement, Good Reason means the occurrence of one or more of the following events (regardless of whether any other reason, other than Cause, for such termination exists or has occurred): (i) a reduction in the Executives Base Salary or Target Bonus, provided that, the Company may at any time or from time to time amend, modify, suspend or terminate any bonus, incentive compensation or other benefit plan or program provided to the Executive for any reason and without the Executives consent if such modification, suspension or termination (x) is a result of the underperformance of the Company under its business plan, or (y) is consistent with an across the board reduction for all senior executives of the Company, and, in each case, is undertaken in the Boards reasonable business judgment, acting in good faith, and engaging in fair dealing with the Executive; or (ii) without the Executives prior written consent, relocation of the Executives principal location of work to any location that is in excess of fifty (50) miles from the location thereof on the Effective Date.
The Company shall have fifteen (15) business days after receipt from the Executive of a written notice specifying the deficiency to cure the deficiency that would result in Good Reason.
5.2 Due to Death or Disability. If either: (a) the Executives employment terminates due to the Executives death; or (b) the Company terminates the Executives employment with the Company due to the Executives Disability (as defined below), the Executive or the Executives beneficiaries (in the case of the Executives death), shall be entitled to receive (i) the Accrued Benefits and (ii) subject to Section 5.4, a lump sum payment in an amount equal twenty-five percent (25%) of the Executives then Base Salary.
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For the purposes of this Agreement, Disability means a determination by the Company in accordance with applicable law that as a result of a physical or mental injury or illness, the Executive is unable to perform the essential functions of the Executives job with or without reasonable accommodation for a period of (i) ninety (90) consecutive days; or (ii) one hundred eighty (180) days in any one (1) year period.
The Company shall have no obligation to provide the benefits set forth above (other than the Accrued Benefits) in the event that the Executive breaches the provisions of Section 6.
5.3 By the Company Without Cause or By the Executive for Good Reason. If the Company terminates the Executives employment without Cause or the Executive the Executive voluntarily terminates the Executives employment for Good Reason, the Executive shall be entitled to receive the Accrued Benefits and, subject to Section 5.4:
(a) a lump sum payment in an amount equal to two hundred percent (200%) of the sum of (i) the Base Salary, plus (ii) the Target Bonus, each based on the then Base Salary; and
(b) reimbursement on a monthly basis of the cost of continuation coverage of group health coverage (including family coverage) for twelve (12) months; provided that the Executive elects continuation coverage under a policy, plan, program or arrangement of the Company or its affiliate pursuant to COBRA. The twelve (12) month period shall include, and run concurrently with, the maximum continuation coverage period pursuant to COBRA. If, and to the extent, that any benefit described in this Section 5.3(c) cannot be paid or provided under any policy, plan, program or arrangement of the Company, then the Company itself shall pay or provide for the payment to the Executive, the Executives dependents, eligible family members and beneficiaries, of such benefits, along with, in the case of any benefit described in this Section 5.3(c) which is subject to tax because it is not or cannot be paid or provided under any such policy, plan, program or arrangement of the Company, an additional amount such that after payment by the Executive, or the Executives dependents, eligible family members or beneficiaries, as the case may be, of all taxes so imposed, the recipient retains an amount equal to such taxes. Notwithstanding the foregoing, benefits under this Section 5.3(c) shall cease when the Executive is covered under another group health plan.
5.4 Continued Compliance and Release. The Company shall have no obligation to provide the payments and benefits provided in Section 5.2 and Section 5.3 (other than the Accrued Benefits) (the Severance Benefits) in the event (a) the Executive breaches the provisions of Section 6 of this Agreement and (b) unless the Executive signs, and does not revoke, a valid release agreement in a form reasonably acceptable to the Company (the Release), not later than sixty (60) days following the Termination Date. If the Severance Benefits are subject to Section 409A of the Internal Revenue Code of 1986, as amended (the Code), such Severance Benefits shall begin (or be paid, as applicable) on the first pay period following the date that is sixty (60) days after the Termination Date. If the Severance Benefits are not otherwise subject to Section 409A of the Code, they shall begin (or be paid, as applicable) on the first pay period after the Release becomes effective.
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5.5 No Mitigation. The obligations of the Company to the Executive which arise upon the termination of the Executives employment pursuant to this Section 5 shall not be subject to mitigation or offset.
5.6 Removal from any Boards and Position. If the Executives employment is terminated for any reason under this Agreement, the Executive shall be deemed to resign (i) if a member, from the Board or board of directors of any subsidiary or affiliate of the Company or any other board to which the Executive has been appointed or nominated by or on behalf of the Company and (ii) from any position with the Company or any subsidiary or affiliate of the Company, including, but not limited to, as an officer of the Company and any of its subsidiaries.
5.7 Continued Employment Beyond the Expiration of the Term. Unless the Company and the Executive otherwise agree in writing, continuation of the Executives employment with the Company beyond the expiration of the Term shall be deemed an employment at-will and shall not be deemed to extend any of the provisions of this Agreement and the Executives employment may thereafter be terminated at will by either the Executive or the Company; provided that Sections 6, 7, 8, 9.7 and 9.12 of this Agreement shall survive any termination of this Agreement or the termination of the Executives employment hereunder.
6. Restrictions and Obligations of the Executive.
6.1 Confidentiality.
(a) During the course of the Executives employment by the Company and its affiliates (prior to, during, and if applicable, after, the Term), the Executive has had and shall have access to certain trade secrets and confidential information relating to the Company, its subsidiaries and its affiliates (the Protected Parties) which is not readily available from sources outside the Protected Parties. The confidential and proprietary information and, in any material respect, trade secrets of the Protected Parties are among their most valuable assets, including but not limited to, their customer, supplier and vendor lists, databases, competitive strategies, computer programs, frameworks, or models, their marketing programs, their sales, financial, marketing, training and technical information, their product development (and proprietary product data) and any other information, whether communicated orally, electronically, in writing or in other tangible forms concerning how the Protected Parties create, develop, acquire or maintain their products and marketing plans, target their potential customers and operate their retail and other businesses. The Protected Parties invested, and continue to invest, considerable amounts of time and money in their process, technology, know-how, obtaining and developing the goodwill of their customers, their other external relationships, their data systems and data bases, and all the information described above (hereinafter collectively referred to as Confidential Information), and any misappropriation or unauthorized disclosure of Confidential Information in any form would irreparably harm the Protected Parties. The Executive acknowledges that such Confidential Information constitutes valuable, highly confidential, special and unique property of the Protected Parties. The Executive shall hold in a fiduciary capacity for the benefit of the Protected Parties all Confidential Information relating to the Protected Parties and their businesses, which shall have
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been obtained by the Executive during the Executives employment by the Company or its affiliates and which shall not be or become public knowledge (other than by acts by the Executive or representatives of the Executive in violation of this Agreement). Except as required by law or an order of a court or governmental agency with jurisdiction, the Executive shall not, during the period the Executive is employed by the Company, its subsidiaries or its affiliates, or at any time thereafter disclose any Confidential Information, directly or indirectly, to any person or entity, nor shall the Executive use it in any way, except in the course of the Executives employment with, and for the benefit of, the Protected Parties or to enforce any rights or defend any claims hereunder or under any other agreement to which the Executive is a party, provided that such disclosure is relevant to the enforcement of such rights or defense of such claims and is only disclosed in the formal proceedings related thereto. The Executive shall take all reasonable steps to safeguard the Confidential Information and to protect it against disclosure, misuse, espionage, loss and theft. The Executive understands and agrees that the Executive shall acquire no rights to any such Confidential Information.
(b) All files, records, documents, drawings, specifications, data, computer programs, evaluation mechanisms and analytics and similar items relating thereto or to the Business, as well as all customer lists, specific customer information, compilations of product research and marketing techniques of the Company and its affiliates, whether prepared by the Executive or otherwise coming into the Executives possession, shall remain the exclusive property of the Company, its subsidiaries and its affiliates, and the Executive shall not remove any such items from the premises of the Company, its subsidiaries and its affiliates, except in furtherance of the Executives duties under any employment agreement.
(c) It is understood that while employed by the Company, its subsidiaries or its affiliates, the Executive shall promptly disclose to it, and assign to it the Executives interest in any invention, improvement or discovery made or conceived by the Executive, either alone or jointly with others, which arises out of the Executives employment. At the Companys request and expense, the Executive shall assist the Company, its subsidiaries and its affiliates during the period of the Executives employment by the Company, its subsidiaries and its affiliates and thereafter in connection with any controversy or legal proceeding relating to such invention, improvement or discovery and in obtaining domestic and foreign patent or other protection covering the same.
(d) As requested by the Company and at the Companys expense, from time to time and upon the termination of the Executives employment with the Company for any reason, the Executive shall promptly deliver to the Company, its subsidiaries and its affiliates all copies and embodiments, in whatever form, of all Confidential Information in the Executives possession or within the Executives control (including, but not limited to, memoranda, records, notes, plans, photographs, manuals, notebooks, documentation, program listings, flow charts, magnetic media, disks, diskettes, tapes and all other materials containing any Confidential Information) irrespective of the location or form of such material. If requested by the Company, the Executive shall provide the Company with written confirmation that all such materials have been delivered to the Company as provided herein.
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(e) The Executive understands that nothing contained in this Agreement limits the Executives ability to file a charge or complaint with the Equal Employment Opportunity Commission, the National Labor Relations Board, the Securities and Exchange Commission or any other federal, state or local governmental agency or commission (each, a Government Agency). The Executive further understands that this Agreement does not limit the Executives ability to communicate with any Government Agency, including to report possible violations of federal law or regulation or making other disclosures that are protected under the whistleblower provisions of federal law or regulation, or otherwise participate in any investigation or proceeding that may be conducted by any Government Agency, including providing documents or other information, without notice to the Company.
(f) This Agreement does not limit the Executives right to receive an award for information provided to any Government Agency. The Executive will not be criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that (i) is made (x) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney; and (y) solely for the purpose of reporting or investigating a suspected violation of law; or (ii) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.
6.2 Non-Solicitation or Hire. During the Term and for the Restricted Period (as defined below) following the termination of the Executives employment for any reason, the Executive shall not directly or indirectly solicit or attempt to solicit or induce, directly or indirectly, (a) any supplier, vendor or service provider to the Company, its subsidiaries or its affiliates to terminate, reduce or alter negatively its relationship with the Company, its subsidiaries or its affiliates or in any manner interfere with any agreement or contract between the Company, its subsidiaries or its affiliates and such supplier, vendor or service provider; or (b) any employee of the Company, its subsidiaries or its affiliates or any person who was an employee of the Company, its subsidiaries or its affiliates during the twelve (12) month period immediately prior to the date the Executives employment terminates to terminate such employees employment relationship with the Protected Parties in order, in either case, to enter into a similar relationship with the Executive, or any other person or any entity in competition with the Business.
For the purposes of this Agreement, Restricted Period means a period equal to the period of severance under Section 5.3(a).
6.3 Non-Competition. During the Term and for the Restricted Period following the termination of the Executives employment (for any reason), the Executive shall not, whether individually, as a director, manager, member, stockholder, partner, owner, employee, consultant or agent of any business, or in any other capacity, other than on behalf of the Company, its subsidiaries or its affiliates, organize, establish, own, operate, manage, control, engage in, participate in, invest in, permit the Executives name to be used by, act as a consultant or advisor to, render services for (alone or in association with any person, firm, corporation or business organization), or otherwise assist any person or entity that engages in or owns, invests in, operates, manages or controls any venture or enterprise which engages or proposes to engage in any business conducted by the Company, its subsidiaries or its affiliates on the Termination Date or within twelve (12) months of the Executives termination of employment in the geographic locations where the Company, its subsidiaries or its affiliates engage or, to the Executives knowledge, propose to engage in such business (the Business). Notwithstanding the foregoing, nothing in this Agreement shall prevent the Executive from owning for passive investment purposes not
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intended to circumvent this Agreement, less than five percent (5%) of the publicly traded common equity securities of any company engaged in the Business (so long as the Executive has no power to manage, operate, advise, consult with or control the competing enterprise and no power, alone or in conjunction with other affiliated parties, to select a director, manager, general partner, or similar governing official of the competing enterprise other than in connection with the normal and customary voting powers afforded the Executive in connection with any permissible equity ownership).
6.4 Property. The Executive acknowledges that all originals and copies of materials, records and documents generated by the Executive or coming into the Executives possession during the Executives employment by the Company, its subsidiaries or its affiliates are the sole property of the Company, its subsidiaries and its affiliates (Company Property). During the Term, and at all times thereafter, the Executive shall not remove, or cause to be removed, from the premises of the Company, its subsidiaries or its affiliates copies of any record, file, memorandum, document, computer related information or equipment, or any other item relating to the business of the Company, its subsidiaries or its affiliates, except in furtherance of the Executives duties under this Agreement. When the Executives employment with the Company terminates, or upon request of the Company at any time, the Executive shall promptly deliver to the Company all copies of Company Property in the Executives possession or control.
6.5 Nondisparagement. The Executive agrees that the Executive shall not at any time (whether during or after the Term) publish or communicate to any person or entity any Disparaging (as defined below) remarks, comments or statements concerning the Company, Cerberus Capital Management, L.P., their parents, subsidiaries and affiliates, and their respective present and former members, partners, directors, officers, shareholders, employees, agents, attorneys, successors and assigns. Disparaging remarks, comments or statements are those that impugn the character, honesty, integrity or morality or business acumen or abilities in connection with any aspect of the operation of business of the individual or entity being disparaged.
7. Remedies; Specific Performance. The Company and the Executive acknowledge and agree that the Executives breach or threatened breach of any of the restrictions set forth in Section 6 shall result in irreparable and continuing damage to the Protected Parties for which there may be no adequate remedy at law and that the Protected Parties shall be entitled to equitable relief, including specific performance and injunctive relief as remedies for any such breach or threatened or attempted breach. The Executive hereby consents to the grant of an injunction (temporary or otherwise) against the Executive or the entry of any other court order against the Executive prohibiting and enjoining the Executive from violating, or directing the Executive to comply with any provision of Section 6. The Executive also agrees that such remedies shall be in addition to any and all remedies, including damages, available to the Protected Parties against the Executive for such breaches or threatened or attempted breaches. In addition, without limiting the Protected Parties remedies for any breach of any restriction on the Executive set forth in Section 6, except as required by law, the Executive shall not be entitled to any Severance Benefits if the Executive has breached the covenants applicable to the Executive contained in Section 6, the Executive shall immediately return to the Protected Parties any such Severance Benefits previously received, upon such a breach, and, in the event of such breach, the Protected Parties shall have no obligation to pay any of the amounts that remain payable by the Company under Section 5.3.
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8. Indemnification. The Company agrees, to the extent permitted by applicable law and its organizational documents, to indemnify, defend and hold harmless the Executive from and against any and all losses, suits, actions, causes of action, judgments, damages, liabilities, penalties, fines, costs or claims of any kind or nature (Indemnified Claim), including reasonable legal fees and related costs incurred by the Executive in connection with the preparation for or defense of any Indemnified Claim, whether or not resulting in any liability, to which the Executive may become subject or liable or which may be incurred by or assessed against the Executive, relating to or arising out of the Executives employment by the Company or the services to be performed pursuant to this Agreement, provided that the Company shall only defend, but not indemnify or hold the Executive harmless, from and against an Indemnified Claim in the event there is a final, non-appealable, determination that the Executives liability with respect to such Indemnified Claim resulted from the Executives willful misconduct or gross negligence. The Companys obligations under this section shall be in addition to any other right, remedy or indemnification which the Executive may have or be entitled to at common law or otherwise.
9. Other Provisions.
9.1 Notices. Any notice or other communication required or which may be given hereunder shall be in writing and shall be delivered personally, telegraphed, telexed, sent by facsimile transmission or sent by certified, registered or express mail, postage prepaid or overnight mail and shall be deemed given when so delivered personally, telegraphed, telexed, or sent by facsimile transmission or, if mailed, four (4) days after the date of mailing or one (1) day after overnight mail, as follows:
(a) If the Company, to:
Albertsons Companies, Inc.
Attention: Executive Vice President, General Counsel
Telephone: (208) 395-6200
(b) If the Executive, to the Executives home address reflected in the Companys records.
9.2 Entire Agreement. This Agreement contains the entire agreement between the Parties with respect to the subject matter hereof and supersedes all prior agreements, written or oral, with respect thereto.
9.3 Limitation on Payments and Benefits. Notwithstanding any provision of this Agreement to the contrary, if any amount or benefit to be paid or provided under this Agreement would be an Excess Parachute Payment, within the meaning of Section 280G of the Code, but for the application of this sentence, then the payments and benefits to be paid or provided under this Agreement shall be reduced to the minimum extent necessary (but in no event to less than zero) so that no portion of any such payment or benefit, as so reduced, constitutes an Excess Parachute Payment; provided, however, that the foregoing reduction shall be made only if and to the extent that such reduction would result in an increase in the aggregate payment and benefits to be provided, determined on an after-tax basis (taking into account the excise tax imposed pursuant to Section 4999 of the Code, any tax imposed by any comparable provision of state law, and any
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applicable federal, state and local income and employment taxes). Whether requested by the Executive or the Company, the determination of whether any reduction in such payments or benefits to be provided under this Agreement or otherwise is required pursuant to the preceding sentence shall be made at the expense of the Company by the Companys independent accountant. The fact that the Executives right to payments or benefits may be reduced by reason of the limitations contained in this Section 9.3 shall not of itself limit or otherwise affect any other rights of the Executive other than pursuant to this Agreement. In the event that any payment or benefit intended to be provided under this Agreement or otherwise is required to be reduced pursuant to this Section 9.3, cash Severance Benefits payable hereunder shall be reduced first, then other cash payments that qualify as Excess Parachute Payments payable to the Executive, then non-cash benefits shall be reduced, as determined by the Company.
9.4 Representations and Warranties by the Executive. The Executive represents and warrants that the Executive is not a party to or subject to any restrictive covenants, legal restrictions or other agreements in favor of any entity or person which would in any way preclude, inhibit, impair or limit the Executives ability to perform the Executives obligations under this Agreement, including, but not limited to, non-competition agreements, non-solicitation agreements or confidentiality agreements.
9.5 Waiver and Amendments. This Agreement may be amended, modified, superseded, canceled, renewed or extended, and the terms and conditions hereof may be waived, only by a written instrument signed by the Parties or, in the case of a waiver, by the Party waiving compliance. No delay on the part of any Party in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any waiver on the part of any right, power or privilege hereunder, nor any single or partial exercise of any right, power or privilege hereunder, preclude any other or further exercise thereof or the exercise of any other right, power or privilege hereunder.
9.6 Section 409A. The Company and the Executive intend that the payments and benefits provided for in this Agreement either be exempt from Section 409A of the Code, or be provided in a manner that complies with Section 409A of the Code, and any ambiguity herein shall be interpreted so as to be consistent with the intent of this Section 9.6. Notwithstanding anything contained herein to the contrary, to the extent that any Severance Benefits constitute nonqualified deferred compensation subject to Section 409A of the Code, all such Severance Benefits shall be paid or provided only upon the Executives separation from service within the meaning of Section 409A of the Code and the regulations and guidance promulgated thereunder (determined after applying the presumptions set forth in Treas. Reg. Section 1.409A-1(h)(1)). Further, if as of the Executives Termination Date, the Executive is a specified employee as defined in Section 409A of the Code as determined by the Company in accordance with Section 409A of the Code, and the deferral of the commencement of any payments or benefits otherwise payable hereunder as a result of such termination of employment is necessary in order to prevent any accelerated or additional tax under Section 409A of the Code, then the Company shall defer the commencement of the payment of any such payments or benefits hereunder (without any reduction in payments or benefits ultimately paid or provided to the Executive) until the date that is at least six (6) months following the Executives Termination Date (or the earliest date permitted under Section 409A of the Code), whereupon the Company shall pay the Executive a lump-sum amount equal to the cumulative amounts that would have otherwise been previously paid to the Executive under this Agreement during the period in which such payments or benefits were deferred. Thereafter, payments shall resume in accordance with this Agreement.
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Notwithstanding anything to the contrary in this Agreement, in-kind benefits and reimbursements provided under this Agreement during any calendar year shall not affect in-kind benefits or reimbursements to be provided in any other calendar year, other than an arrangement providing for the reimbursement of medical expenses referred to in Section 105(b) of the Code, and are not subject to liquidation or exchange for another benefit. Notwithstanding anything to the contrary in this Agreement, reimbursement requests must be timely submitted by the Executive and, if timely submitted, reimbursement payments shall be promptly made to the Executive following such submission, but in no event later than December 31st of the calendar year following the calendar year in which the expense was incurred. In no event shall the Executive be entitled to any reimbursement payments after December 31st of the calendar year following the calendar year in which the expense was incurred. This paragraph shall only apply to in-kind benefits and reimbursements that would result in taxable compensation income to the Executive.
Additionally, in the event that following the date hereof the Company or the Executive reasonably determines that any compensation or benefits payable under this Agreement may be subject to Section 409A of the Code, the Company and the Executive shall work together to adopt such amendments to this Agreement or adopt other policies or procedures (including amendments, policies and procedures with retroactive effect), or take any other commercially reasonable actions necessary or appropriate to (x) exempt the compensation and benefits payable under this Agreement from Section 409A of the Code and/or preserve the intended tax treatment of the compensation and benefits provided with respect to this Agreement or (y) comply with the requirements of Section 409A of the Code and related Department of Treasury guidance.
9.7 Governing Law, Dispute Resolution and Venue. This Agreement shall be governed and construed in accordance with the laws of the State of Idaho applicable to agreements made and not to be performed entirely within such state, without regard to conflicts of laws principles.
9.8 Assignability by the Company and the Executive. This Agreement, and the rights and obligations hereunder, may not be assigned by the Company or the Executive without written consent signed by the other Party; provided that the Company may assign this Agreement to any successor that continues the business of the Company.
9.9 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original but all of which shall constitute one and the same instrument.
9.10 Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning of terms contained herein.
9.11 Severability. If any term, provision, covenant or restriction of this Agreement, or any part thereof, is held by a court of competent jurisdiction of any foreign, federal, state, county or local government or any other governmental, regulatory or administrative agency or authority to be invalid, void, unenforceable or against public policy for any reason, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected or impaired or invalidated. The Executive acknowledges that the restrictive covenants contained in Section 6 are a condition of this Agreement and are reasonable and valid in temporal scope and in all other respects.
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9.12 Judicial Modification. If any court determines that any of the covenants in Section 6, or any part of any of them, is invalid or unenforceable, the remainder of such covenants and parts thereof shall not thereby be affected and shall be given full effect, without regard to the invalid portion. If any court determines that any of such covenants, or any part thereof, is invalid or unenforceable because of the geographic or temporal scope of such provision, such court shall reduce such scope to the minimum extent necessary to make such covenants valid and enforceable.
9.13 Tax Withholding. The Company or other pay or is authorized to withhold from any benefit provided or payment due hereunder, the amount of withholding taxes due any federal, state or local authority in respect of such benefit or payment and to take such other action as may be necessary in the opinion of the Board to satisfy all obligations for the payment of such withholding taxes.
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IN WITNESS WHEREOF, the Parties hereto, intending to be legally bound hereby, have executed this Agreement as of the day and year first above mentioned.
EXECUTIVE | ||
/s/ Michael Theilmann |
||
Michael Theilmann | ||
ALBERTSONS COMPANIES, INC. | ||
By: |
/s/ Robert A. Gordon |
|
Name: | Robert A. Gordon | |
Title: | Executive Vice President |
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Exhibit 10.21
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this Agreement), dated as of December 1, 2019 (the Effective Date), is between Albertsons Companies, Inc., a Delaware corporation (the Company), and Christine A. Rupp (the Executive, and together with the Company, the Parties).
WHEREAS, the Executive is joining the Company as an employee; and
WHEREAS, the Parties entered into an original Employment Agreement that contained an inaccuracy; and
WHEREAS, the Parties desire to set forth the accurate terms and conditions of the Executives employment with the Company under this Agreement, which supersedes the original Employment Agreement in its entirety.
NOW THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements set forth herein and other good and valuable consideration, the Parties agree to the following:
1. Employment and Acceptance. The Company shall employ the Executive, and the Executive shall accept employment with the Company, subject to the terms of this Agreement effective on the Effective Date.
2. Term. Subject to earlier termination pursuant to Section 5 of this Agreement, this Agreement and the employment relationship hereunder shall continue from the Effective Date until January 30, 2023 (the Term Date). As used in this Agreement, the Term shall refer to the period beginning on the Effective Date and ending on the date the Executives employment hereunder terminates in accordance with this Section 2 or Section 5. In the event that the Executives employment with the Company terminates (such date, the Termination Date) prior to the Term Date, the Companys obligation to continue to pay all base salary, as adjusted, bonus and other benefits then accrued shall terminate except as may be provided for in Section 5 of this Agreement.
3. Duties and Title.
3.1 Title. The Executive shall be employed to render exclusive and full-time services to the Company and its subsidiaries and affiliates. The Executive shall serve in the capacity of Executive Vice President and Chief Customer & Digital Officer.
3.2 Duties. The Executive shall have the authority and responsibilities and shall perform such executive duties in the areas of e-commerce, data collection and use, data analytics, digital environment and loyalty programs, or such duties and responsibilities as may be assigned to the Executive by the Chief Executive Officer of the Company (the CEO). The Executive shall devote all of the Executives full working-time and best efforts to the performance of such duties and to the promotion of the business and interests of the Company, its subsidiaries and its affiliates. Notwithstanding the foregoing, during the Term, subject to disclosure to, and approval by the Board of Directors of the Company (the Board) or the CEO, the Executive may (a) continue to
serve on any boards of directors upon which the Executive serves as of the Effective Date, and (b) serve on other corporate, industry, civic or charitable boards and committees, provided that with respect to (a) and (b), (x) such activities, in the Boards or CEOs discretion, do not materially interfere with and are not inconsistent with the Executives performance of the Executives duties under this Agreement and (y) any such entity does not engage in the Business (as defined below).
4. Compensation and Benefits by the Company.
4.1 Base Salary. During the Term, the Company shall pay to the Executive an annual base salary of $750,000, payable in accordance with the customary payroll practices of the Company (Base Salary). The Executive shall be entitled to such increases, if any, in Base Salary as may be determined from time to time by the Board or the Compensation Committee of the Board (the Compensation Committee).
4.2 Bonuses. During the Term, the Executive shall be eligible to receive a bonus or bonuses (collectively, the Bonus) for each fiscal year of the Company subject to a plan (or plans) established by the Company (the Bonus Plan) in an amount determined by the Board or Compensation Committee based upon achievement of performance measures derived from the business plan presented by management and approved by the Board or Compensation Committee. The target amount of the Executives Bonus for each fiscal year shall be 100% of the Base Salary (the Target Bonus). If such performance measures are only partially achieved or not achieved, the Executive shall only be entitled to such Bonus, if any, as provided under the applicable Bonus Plan or as otherwise determined in the sole discretion of the Board or Compensation Committee.
4.3 Annual Equity Grant. During the Term, the Company shall award the Executive with an annual equity grant (which may include phantom equity) valued at $2,000,000, as determined by the Board or the Compensation Committee, allocated between time-based equity and performance-based equity as the Board or Compensation Committee shall determine, subject to increases or decreases in the annual equity grant value as determined by the Board or Compensation Committee, and subject to the terms and conditions of the Companys equity program and the award agreement applicable to each grant. The first such grant shall be awarded at the Companys customary grant date following the Effective Date.
4.4 Participation in Employee Benefit Plans. During the Term, the Executive shall be entitled, if and to the extent eligible, to participate in all of the applicable benefit plans of the Company or its affiliates, which may be available to other senior executives of the Company, on the same terms as such other executives. The Company or its affiliates may at any time or from time to time amend, modify, suspend or terminate any employee benefit plan, program or arrangement for any reason without the Executives consent if such amendment, modification, suspension or termination is consistent with the amendment, modification, suspension or termination for other similarly-situated employees of the Company and its affiliates.
4.5 Expense Reimbursement. During the Term, the Executive shall be entitled to receive reimbursement for all of the Executives appropriate business expenses incurred in connection with the Executives duties under this Agreement in accordance with the policies of the Company as in effect from time to time, as well as reimbursement for the costs incurred by the Executive in connection with the preparation of the Executives applicable tax returns, up to a maximum of $8,000 annually.
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4.6 Special Sign-On Terms. As an incentive to accept employment, and as compensation for benefits left behind at Executives previous place of employment, Executive shall be entitled to the following special one-time benefits:
(a) Executive shall receive a portion of the Annual Bonus for the Companys 2019 fiscal year, prorated for the amount of time that Executive is employed during Fiscal Year 2019;
(b) Executive shall receive a cash payment of $1,500,000 within 30 days of the Effective Date;
(c) Executive shall receive a cash payment of $500,000 on the first anniversary of the Effective Date, provided that Executive is employed in good standing on such date;
(d) Executive shall receive a time-based equity grant (which may consist of or include phantom equity) valued at $2,000,000 (as determined by the Board or the Compensation Committee), subject to the terms and conditions of the Companys equity program and the award agreement applicable to such grant, and subject to vesting (i) 50% on the second anniversary of the Effective Date, (ii) 25% on the third anniversary of the Effective Date, and (iii) 25% on the fourth anniversary of the Effective Date, provided that Executive is employed in good standing on each such vesting date; and
(e) Executive shall receive a performance-based equity grant (which may consist of or include phantom equity) valued at $1,000,000 (as determined by the Board or Compensation Committee), subject to the terms and conditions of the Companys equity program and the award agreement applicable to such grant, with the first of the three performance period tranches prorated for the amount of time that Executive is employed during the Fiscal Year 2019 performance period.
5. Termination of Employment.
5.1 By the Company for Cause or by the Executive Without Good Reason. If: (i) the Company terminates the Executives employment with the Company for Cause (as defined below); or (ii) the Executive voluntarily terminates the Executives employment without Good Reason (as defined below), the Executive shall be entitled to receive the following:
(a) payment for accrued but unused vacation days, payable in accordance with Company policy;
(b) the Executives accrued but unpaid Base Salary and vested benefits, if any, through the Termination Date;
(c) the earned but unpaid portion of any Bonus earned in respect of any completed performance period prior to the Termination Date; and
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(d) expenses reimbursable under Section 4.5 incurred but not yet reimbursed to the Executive through the Termination Date (Sections 5.1(a), 5.1(b), 5.1(c) and 5.1(d), collectively, the Accrued Benefits).
For the purposes of this Agreement, Cause means, as determined by the Board or its designee), with respect to conduct during the Executives employment with the Company, whether or not committed during the Term, (i) conviction of a felony by the Executive; (ii) acts of intentional dishonesty by the Executive resulting or intending to result in personal gain or enrichment at the expense of the Company, its subsidiaries or its affiliates; (iii) the Executives material breach of the Executives obligations under this Agreement; (iv) conduct by the Executive in connection with the Executives duties hereunder that is fraudulent, unlawful or grossly negligent; (v) engaging in personal conduct by the Executive (including but not limited to employee harassment or discrimination, the use or possession at work of any illegal controlled substance) which seriously discredits or damages the Company, its subsidiaries or its affiliates; (vi) contravention of specific lawful direction from the Board; or (vii) breach of the Executives covenants set forth in Section 6 below before termination of employment. The Executive shall have fifteen (15) business days after notice from the Company to cure the deficiency leading to the Cause determination (except with respect to (i) above), if curable. A termination for Cause shall be effective immediately (or on such other date set forth by the Company).
For the purposes of this Agreement, Good Reason means the occurrence of one or more of the following events (regardless of whether any other reason, other than Cause, for such termination exists or has occurred): (i) a reduction in the Executives Base Salary or Target Bonus, provided that, the Company may at any time or from time to time amend, modify, suspend or terminate any bonus, incentive compensation or other benefit plan or program provided to the Executive for any reason and without the Executives consent if such modification, suspension or termination (x) is a result of the underperformance of the Company under its business plan, or (y) is consistent with an across the board reduction for all senior executives of the Company, and, in each case, is undertaken in the Boards reasonable business judgment, acting in good faith, and engaging in fair dealing with the Executive; or (ii) without the Executives prior written consent, relocation of the Executives principal location of work to any location that is in excess of fifty (50) miles from the location thereof on the Effective Date.
The Company shall have fifteen (15) business days after receipt from the Executive of a written notice specifying the deficiency to cure the deficiency that would result in Good Reason.
5.2 Due to Death or Disability. If either: (a) the Executives employment terminates due to the Executives death; or (b) the Company terminates the Executives employment with the Company due to the Executives Disability (as defined below), the Executive or the Executives beneficiaries (in the case of the Executives death), shall be entitled to receive (i) the Accrued Benefits and (ii) subject to Section 5.4, a lump sum payment in an amount equal to twenty-five percent (25%) of the Executives then Base Salary.
For the purposes of this Agreement, Disability means a determination by the Company in accordance with applicable law that as a result of a physical or mental injury or illness, the Executive is unable to perform the essential functions of the Executives job with or without reasonable accommodation for a period of (i) ninety (90) consecutive days; or (ii) one hundred eighty (180) days in any one (1) year period.
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The Company shall have no obligation to provide the benefits set forth above (other than the Accrued Benefits) in the event that the Executive breaches the provisions of Section 6.
5.3 By the Company Without Cause or By the Executive for Good Reason. If the Company terminates the Executives employment without Cause or the Executive voluntarily terminates the Executives employment for Good Reason, the Executive shall be entitled to receive the Accrued Benefits and, subject to Section 5.4:
(a) a lump sum payment in an amount equal to two hundred percent (200%) of the sum of (i) the Base Salary, plus (ii) the Target Bonus, each based on the then Base Salary; and
(b) reimbursement on a monthly basis of the cost of continuation coverage of group health coverage (including family coverage) for twelve (12) months; provided that the Executive elects continuation coverage under a policy, plan, program or arrangement of the Company or its affiliate pursuant to COBRA. The twelve (12) month period shall include, and run concurrently with, the maximum continuation coverage period pursuant to COBRA. If, and to the extent, that any benefit described in this Section 5.3(b) cannot be paid or provided under any policy, plan, program or arrangement of the Company, then the Company itself shall pay or provide for the payment to the Executive, the Executives dependents, eligible family members and beneficiaries, of such benefits, along with, in the case of any benefit described in this Section 5.3(b) which is subject to tax because it is not or cannot be paid or provided under any such policy, plan, program or arrangement of the Company, an additional amount such that after payment by the Executive, or the Executives dependents, eligible family members or beneficiaries, as the case may be, of all taxes so imposed, the recipient retains an amount equal to such taxes. Notwithstanding the foregoing, benefits under this Section 5.3(b) shall cease when the Executive is covered under another group health plan.
5.4 Continued Compliance and Release. The Company shall have no obligation to provide the payments and benefits provided in Section 5.2 and Section 5.3 (other than the Accrued Benefits) (the Severance Benefits) in the event (a) the Executive breaches the provisions of Section 6 of this Agreement and (b) unless the Executive signs, and does not revoke, a valid release agreement in a form reasonably acceptable to the Company (the Release), not later than sixty (60) days following the Termination Date. If the Severance Benefits are subject to Section 409A of the Internal Revenue Code of 1986, as amended (the Code), such Severance Benefits shall begin (or be paid, as applicable) on the first pay period following the date that is sixty (60) days after the Termination Date. If the Severance Benefits are not otherwise subject to Section 409A of the Code, they shall begin (or be paid, as applicable) on the first pay period after the Release becomes effective.
5.5 No Mitigation. The obligations of the Company to the Executive which arise upon the termination of the Executives employment pursuant to this Section 5 shall not be subject to mitigation or offset.
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5.6 Removal from any Boards and Position. If the Executives employment is terminated for any reason under this Agreement, the Executive shall be deemed to resign (i) if a member, from the Board or board of directors of any subsidiary or affiliate of the Company or any other board to which the Executive has been appointed or nominated by or on behalf of the Company and (ii) from any position with the Company or any subsidiary or affiliate of the Company, including, but not limited to, as an officer of the Company and any of its subsidiaries.
5.7 Continued Employment Beyond the Expiration of the Term. Unless the Company and the Executive otherwise agree in writing, continuation of the Executives employment with the Company beyond the expiration of the Term shall be deemed an employment at-will and shall not be deemed to extend any of the provisions of this Agreement and the Executives employment may thereafter be terminated at will by either the Executive or the Company; provided that Sections 6, 7, 8, 9.7 and 9.12 of this Agreement shall survive any termination of this Agreement or the termination of the Executives employment hereunder.
6. Restrictions and Obligations of the Executive.
6.1 Confidentiality.
(a) During the course of the Executives employment by the Company and its affiliates (prior to, during, and if applicable, after, the Term), the Executive has had and shall have access to certain trade secrets and confidential information relating to the Company, its subsidiaries and its affiliates (the Protected Parties) which is not readily available from sources outside the Protected Parties. The confidential and proprietary information and, in any material respect, trade secrets of the Protected Parties are among their most valuable assets, including but not limited to, their customer, supplier and vendor lists, databases, competitive strategies, computer programs, frameworks, or models, their marketing programs, their sales, financial, marketing, training and technical information, their product development (and proprietary product data) and any other information, whether communicated orally, electronically, in writing or in other tangible forms concerning how the Protected Parties create, develop, acquire or maintain their products and marketing plans, target their potential customers and operate their retail and other businesses. The Protected Parties invested, and continue to invest, considerable amounts of time and money in their process, technology, know-how, obtaining and developing the goodwill of their customers, their other external relationships, their data systems and data bases, and all the information described above (hereinafter collectively referred to as Confidential Information), and any misappropriation or unauthorized disclosure of Confidential Information in any form would irreparably harm the Protected Parties. The Executive acknowledges that such Confidential Information constitutes valuable, highly confidential, special and unique property of the Protected Parties. The Executive shall hold in a fiduciary capacity for the benefit of the Protected Parties all Confidential Information relating to the Protected Parties and their businesses, which shall have been obtained by the Executive during the Executives employment by the Company or its affiliates and which shall not be or become public knowledge (other than by acts by the Executive or representatives of the Executive in violation of this Agreement). Except as required by law or an order of a court or governmental agency with jurisdiction, the Executive shall not, during the period the Executive is employed by the Company, its subsidiaries or its affiliates, or at any time thereafter disclose any Confidential Information, directly or indirectly, to any person or entity, nor shall the Executive use it in any way, except in the course of the Executives employment with,
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and for the benefit of, the Protected Parties or to enforce any rights or defend any claims hereunder or under any other agreement to which the Executive is a party, provided that such disclosure is relevant to the enforcement of such rights or defense of such claims and is only disclosed in the formal proceedings related thereto. The Executive shall take all reasonable steps to safeguard the Confidential Information and to protect it against disclosure, misuse, espionage, loss and theft. The Executive understands and agrees that the Executive shall acquire no rights to any such Confidential Information.
(b) All files, records, documents, drawings, specifications, data, computer programs, evaluation mechanisms and analytics and similar items relating thereto or to the Business, as well as all customer lists, specific customer information, compilations of product research and marketing techniques of the Company and its affiliates, whether prepared by the Executive or otherwise coming into the Executives possession, shall remain the exclusive property of the Company, its subsidiaries and its affiliates, and the Executive shall not remove any such items from the premises of the Company, its subsidiaries and its affiliates, except in furtherance of the Executives duties under any employment agreement.
(c) It is understood that while employed by the Company, its subsidiaries or its affiliates, the Executive shall promptly disclose to it, and assign to it the Executives interest in any invention, improvement or discovery made or conceived by the Executive, either alone or jointly with others, which arises out of the Executives employment. At the Companys request and expense, the Executive shall assist the Company, its subsidiaries and its affiliates during the period of the Executives employment by the Company, its subsidiaries and its affiliates and thereafter in connection with any controversy or legal proceeding relating to such invention, improvement or discovery and in obtaining domestic and foreign patent or other protection covering the same.
(d) As requested by the Company and at the Companys expense, from time to time and upon the termination of the Executives employment with the Company for any reason, the Executive shall promptly deliver to the Company, its subsidiaries and its affiliates all copies and embodiments, in whatever form, of all Confidential Information in the Executives possession or within the Executives control (including, but not limited to, memoranda, records, notes, plans, photographs, manuals, notebooks, documentation, program listings, flow charts, magnetic media, disks, diskettes, tapes and all other materials containing any Confidential Information) irrespective of the location or form of such material. If requested by the Company, the Executive shall provide the Company with written confirmation that all such materials have been delivered to the Company as provided herein.
(e) The Executive understands that nothing contained in this Agreement limits the Executives ability to file a charge or complaint with the Equal Employment Opportunity Commission, the National Labor Relations Board, the Securities and Exchange Commission or any other federal, state or local governmental agency or commission (each, a Government Agency). The Executive further understands that this Agreement does not limit the Executives ability to communicate with any Government Agency, including to report possible violations of federal law or regulation or making other disclosures that are protected under the whistleblower provisions of federal law or regulation, or otherwise participate in any investigation or proceeding that may be conducted by any Government Agency, including providing documents or other information, without notice to the Company.
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(f) This Agreement does not limit the Executives right to receive an award for information provided to any Government Agency. The Executive will not be criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that (i) is made (x) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney; and (y) solely for the purpose of reporting or investigating a suspected violation of law; or (ii) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.
6.2 Non-Solicitation or Hire. During the Term and for the Restricted Period (as defined below) following the termination of the Executives employment for any reason, the Executive shall not directly or indirectly solicit or attempt to solicit or induce, directly or indirectly, (a) any supplier, vendor or service provider to the Company, its subsidiaries or its affiliates to terminate, reduce or alter negatively its relationship with the Company, its subsidiaries or its affiliates or in any manner interfere with any agreement or contract between the Company, its subsidiaries or its affiliates and such supplier, vendor or service provider; or (b) any employee of the Company, its subsidiaries or its affiliates or any person who was an employee of the Company, its subsidiaries or its affiliates during the twelve (12) month period immediately prior to the date the Executives employment terminates to terminate such employees employment relationship with the Protected Parties in order, in either case, to enter into a similar relationship with the Executive, or any other person or any entity in competition with the Business.
For the purposes of this Agreement, Restricted Period means a period equal to the period of severance under Section 5.3(a).
6.3 Non-Competition. During the Term and for the Restricted Period following the termination of the Executives employment (for any reason), the Executive shall not, whether individually, as a director, manager, member, stockholder, partner, owner, employee, consultant or agent of any business, or in any other capacity, other than on behalf of the Company, its subsidiaries or its affiliates, organize, establish, own, operate, manage, control, engage in, participate in, invest in, permit the Executives name to be used by, act as a consultant or advisor to, render services for (alone or in association with any person, firm, corporation or business organization), or otherwise assist any person or entity that engages in or owns, invests in, operates, manages or controls any venture or enterprise which engages or proposes to engage in any business conducted by the Company, its subsidiaries or its affiliates on the Termination Date or within twelve (12) months of the Executives termination of employment in the geographic locations where the Company, its subsidiaries or its affiliates engage or, to the Executives knowledge, propose to engage in such business (the Business). Notwithstanding the foregoing, nothing in this Agreement shall prevent the Executive from owning for passive investment purposes not intended to circumvent this Agreement, less than five percent (5%) of the publicly traded common equity securities of any company engaged in the Business (so long as the Executive has no power to manage, operate, advise, consult with or control the competing enterprise and no power, alone or in conjunction with other affiliated parties, to select a director, manager, general partner, or similar governing official of the competing enterprise other than in connection with the normal and customary voting powers afforded the Executive in connection with any permissible equity ownership).
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6.4 Property. The Executive acknowledges that all originals and copies of materials, records and documents generated by the Executive or coming into the Executives possession during the Executives employment by the Company, its subsidiaries or its affiliates are the sole property of the Company, its subsidiaries and its affiliates (Company Property). During the Term, and at all times thereafter, the Executive shall not remove, or cause to be removed, from the premises of the Company, its subsidiaries or its affiliates copies of any record, file, memorandum, document, computer related information or equipment, or any other item relating to the business of the Company, its subsidiaries or its affiliates, except in furtherance of the Executives duties under this Agreement. When the Executives employment with the Company terminates, or upon request of the Company at any time, the Executive shall promptly deliver to the Company all copies of Company Property in the Executives possession or control.
6.5 Nondisparagement. The Executive agrees that the Executive shall not at any time (whether during or after the Term) publish or communicate to any person or entity any Disparaging (as defined below) remarks, comments or statements concerning the Company, Cerberus Capital Management, L.P., their parents, subsidiaries and affiliates, and their respective present and former members, partners, directors, officers, shareholders, employees, agents, attorneys, successors and assigns. Disparaging remarks, comments or statements are those that impugn the character, honesty, integrity or morality or business acumen or abilities in connection with any aspect of the operation of business of the individual or entity being disparaged.
7. Remedies; Specific Performance. The Company and the Executive acknowledge and agree that the Executives breach or threatened breach of any of the restrictions set forth in Section 6 shall result in irreparable and continuing damage to the Protected Parties for which there may be no adequate remedy at law and that the Protected Parties shall be entitled to equitable relief, including specific performance and injunctive relief as remedies for any such breach or threatened or attempted breach. The Executive hereby consents to the grant of an injunction (temporary or otherwise) against the Executive or the entry of any other court order against the Executive prohibiting and enjoining the Executive from violating, or directing the Executive to comply with any provision of Section 6. The Executive also agrees that such remedies shall be in addition to any and all remedies, including damages, available to the Protected Parties against the Executive for such breaches or threatened or attempted breaches. In addition, without limiting the Protected Parties remedies for any breach of any restriction on the Executive set forth in Section 6, except as required by law, the Executive shall not be entitled to any Severance Benefits if the Executive has breached the covenants applicable to the Executive contained in Section 6, the Executive shall immediately return to the Protected Parties any such Severance Benefits previously received, upon such a breach, and, in the event of such breach, the Protected Parties shall have no obligation to pay any of the amounts that remain payable by the Company under Section 5.3.
8. Indemnification. The Company agrees, to the extent permitted by applicable law and its organizational documents, to indemnify, defend and hold harmless the Executive from and against any and all losses, suits, actions, causes of action, judgments, damages, liabilities, penalties, fines, costs or claims of any kind or nature (Indemnified Claim), including reasonable legal fees and related costs incurred by the Executive in connection with the preparation for or
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defense of any Indemnified Claim, whether or not resulting in any liability, to which the Executive may become subject or liable or which may be incurred by or assessed against the Executive, relating to or arising out of the Executives employment by the Company or the services to be performed pursuant to this Agreement, provided that the Company shall only defend, but not indemnify or hold the Executive harmless, from and against an Indemnified Claim in the event there is a final, non-appealable, determination that the Executives liability with respect to such Indemnified Claim resulted from the Executives willful misconduct or gross negligence. The Companys obligations under this section shall be in addition to any other right, remedy or indemnification which the Executive may have or be entitled to at common law or otherwise.
9. Other Provisions.
9.1 Notices. Any notice or other communication required or which may be given hereunder shall be in writing and shall be delivered personally, telegraphed, telexed, sent by facsimile transmission or sent by certified, registered or express mail, postage prepaid or overnight mail and shall be deemed given when so delivered personally, telegraphed, telexed, or sent by facsimile transmission or, if mailed, four (4) days after the date of mailing or one (1) day after overnight mail, as follows:
(a) If the Company, to:
Albertsons Companies, Inc.
Attention: Executive Vice President, General Counsel
Telephone: (208) 395-6200
(b) If the Executive, to the Executives home address reflected in the Companys records.
9.2 Entire Agreement. This Agreement contains the entire agreement between the Parties with respect to the subject matter hereof and supersedes all prior agreements, written or oral, with respect thereto.
9.3 Limitation on Payments and Benefits. Notwithstanding any provision of this Agreement to the contrary, if any amount or benefit to be paid or provided under this Agreement would be an Excess Parachute Payment, within the meaning of Section 280G of the Code, but for the application of this sentence, then the payments and benefits to be paid or provided under this Agreement shall be reduced to the minimum extent necessary (but in no event to less than zero) so that no portion of any such payment or benefit, as so reduced, constitutes an Excess Parachute Payment; provided, however, that the foregoing reduction shall be made only if and to the extent that such reduction would result in an increase in the aggregate payment and benefits to be provided, determined on an after-tax basis (taking into account the excise tax imposed pursuant to Section 4999 of the Code, any tax imposed by any comparable provision of state law, and any applicable federal, state and local income and employment taxes). Whether requested by the Executive or the Company, the determination of whether any reduction in such payments or benefits to be provided under this Agreement or otherwise is required pursuant to the preceding sentence shall be made at the expense of the Company by the Companys independent accountant.
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The fact that the Executives right to payments or benefits may be reduced by reason of the limitations contained in this Section 9.3 shall not of itself limit or otherwise affect any other rights of the Executive other than pursuant to this Agreement. In the event that any payment or benefit intended to be provided under this Agreement or otherwise is required to be reduced pursuant to this Section 9.3, cash Severance Benefits payable hereunder shall be reduced first, then other cash payments that qualify as Excess Parachute Payments payable to the Executive, then non-cash benefits shall be reduced, as determined by the Company.
9.4 Representations and Warranties by the Executive. The Executive represents and warrants that the Executive is not a party to or subject to any restrictive covenants, legal restrictions or other agreements in favor of any entity or person which would in any way preclude, inhibit, impair or limit the Executives ability to perform the Executives obligations under this Agreement, including, but not limited to, non-competition agreements, non-solicitation agreements or confidentiality agreements.
9.5 Waiver and Amendments. This Agreement may be amended, modified, superseded, canceled, renewed or extended, and the terms and conditions hereof may be waived, only by a written instrument signed by the Parties or, in the case of a waiver, by the Party waiving compliance. No delay on the part of any Party in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any waiver on the part of any right, power or privilege hereunder, nor any single or partial exercise of any right, power or privilege hereunder, preclude any other or further exercise thereof or the exercise of any other right, power or privilege hereunder.
9.6 Section 409A. The Company and the Executive intend that the payments and benefits provided for in this Agreement either be exempt from Section 409A of the Code, or be provided in a manner that complies with Section 409A of the Code, and any ambiguity herein shall be interpreted so as to be consistent with the intent of this Section 9.6. Notwithstanding anything contained herein to the contrary, to the extent that any Severance Benefits constitute nonqualified deferred compensation subject to Section 409A of the Code, all such Severance Benefits shall be paid or provided only upon the Executives separation from service within the meaning of Section 409A of the Code and the regulations and guidance promulgated thereunder (determined after applying the presumptions set forth in Treas. Reg. Section 1.409A-1(h)(1)). Further, if as of the Executives Termination Date, the Executive is a specified employee as defined in Section 409A of the Code as determined by the Company in accordance with Section 409A of the Code, and the deferral of the commencement of any payments or benefits otherwise payable hereunder as a result of such termination of employment is necessary in order to prevent any accelerated or additional tax under Section 409A of the Code, then the Company shall defer the commencement of the payment of any such payments or benefits hereunder (without any reduction in payments or benefits ultimately paid or provided to the Executive) until the date that is at least six (6) months following the Executives Termination Date (or the earliest date permitted under Section 409A of the Code), whereupon the Company shall pay the Executive a lump-sum amount equal to the cumulative amounts that would have otherwise been previously paid to the Executive under this Agreement during the period in which such payments or benefits were deferred. Thereafter, payments shall resume in accordance with this Agreement.
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Notwithstanding anything to the contrary in this Agreement, in-kind benefits and reimbursements provided under this Agreement during any calendar year shall not affect in-kind benefits or reimbursements to be provided in any other calendar year, other than an arrangement providing for the reimbursement of medical expenses referred to in Section 105(b) of the Code, and are not subject to liquidation or exchange for another benefit. Notwithstanding anything to the contrary in this Agreement, reimbursement requests must be timely submitted by the Executive and, if timely submitted, reimbursement payments shall be promptly made to the Executive following such submission, but in no event later than December 31st of the calendar year following the calendar year in which the expense was incurred. In no event shall the Executive be entitled to any reimbursement payments after December 31st of the calendar year following the calendar year in which the expense was incurred. This paragraph shall only apply to in-kind benefits and reimbursements that would result in taxable compensation income to the Executive.
Additionally, in the event that following the date hereof the Company or the Executive reasonably determines that any compensation or benefits payable under this Agreement may be subject to Section 409A of the Code, the Company and the Executive shall work together to adopt such amendments to this Agreement or adopt other policies or procedures (including amendments, policies and procedures with retroactive effect), or take any other commercially reasonable actions necessary or appropriate to (x) exempt the compensation and benefits payable under this Agreement from Section 409A of the Code and/or preserve the intended tax treatment of the compensation and benefits provided with respect to this Agreement or (y) comply with the requirements of Section 409A of the Code and related Department of Treasury guidance.
9.7 Governing Law, Dispute Resolution and Venue. This Agreement shall be governed and construed in accordance with the laws of the State of Idaho applicable to agreements made and not to be performed entirely within such state, without regard to conflicts of laws principles.
9.8 Assignability by the Company and the Executive. This Agreement, and the rights and obligations hereunder, may not be assigned by the Company or the Executive without written consent signed by the other Party; provided that the Company may assign this Agreement to any successor that continues the business of the Company.
9.9 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original but all of which shall constitute one and the same instrument.
9.10 Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning of terms contained herein.
9.11 Severability. If any term, provision, covenant or restriction of this Agreement, or any part thereof, is held by a court of competent jurisdiction of any foreign, federal, state, county or local government or any other governmental, regulatory or administrative agency or authority to be invalid, void, unenforceable or against public policy for any reason, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected or impaired or invalidated. The Executive acknowledges that the restrictive covenants contained in Section 6 are a condition of this Agreement and are reasonable and valid in temporal scope and in all other respects.
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9.12 Judicial Modification. If any court determines that any of the covenants in Section 6, or any part of any of them, is invalid or unenforceable, the remainder of such covenants and parts thereof shall not thereby be affected and shall be given full effect, without regard to the invalid portion. If any court determines that any of such covenants, or any part thereof, is invalid or unenforceable because of the geographic or temporal scope of such provision, such court shall reduce such scope to the minimum extent necessary to make such covenants valid and enforceable.
9.13 Tax Withholding. The Company or other payor is authorized to withhold from any benefit provided or payment due hereunder, the amount of withholding taxes due any federal, state or local authority in respect of such benefit or payment and to take such other action as may be necessary in the opinion of the Board to satisfy all obligations for the payment of such withholding taxes.
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IN WITNESS WHEREOF, the Parties hereto, intending to be legally bound hereby, have executed this Agreement as of the day and year first above mentioned.
EXECUTIVE | ||
/s/ Christine A. Rupp |
||
Christine A. Rupp | ||
ALBERTSONS COMPANIES, INC. | ||
By: |
/s/ Robert A. Gordon |
|
Name: | Robert A. Gordon | |
Title: | Executive Vice President |
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Exhibit 10.22
FORM OF INDEMNIFICATION AGREEMENT
This Indemnification Agreement (Agreement) is made as of , 2020 by and between Albertsons Companies, Inc., a Delaware corporation (the Corporation), and (Indemnitee).
RECITALS
WHEREAS, directors, officers and other persons in service to public corporations or business enterprises are being increasingly subjected to expensive and time-consuming litigation;
WHEREAS, the Amended and Restated Bylaws (the Bylaws) and the Amended and Restated Certificate of Incorporation (the Certificate of Incorporation) of the Corporation require indemnification of the officers and directors of the Corporation, Indemnitee may also be entitled to indemnification pursuant to the General Corporation Law of the State of Delaware (the DGCL), and the Bylaws, the Certificate of Incorporation and the DGCL expressly provide that contracts may be entered into between the Corporation, directors, officers and other persons with respect to indemnification;
WHEREAS, the Board of Directors of the Corporation (the Board) deems it reasonable, prudent and necessary for the Corporation contractually to obligate itself to indemnify, and to advance expenses on behalf of, such persons to the fullest extent permitted by applicable law so that they will serve or continue to serve the Corporation free from undue concern that they will not be so indemnified;
WHEREAS, this Agreement is a supplement to and in furtherance of the Bylaws, the Certificate of Incorporation and any resolutions adopted pursuant thereto, and shall not be deemed a substitute therefor, nor to diminish or abrogate any rights of Indemnitee thereunder;
WHEREAS, Indemnitee does not regard the protection available under the Bylaws, the Certificate of Incorporation and insurance as adequate in the present circumstances, and may not be willing to serve as an officer or director without adequate protection, and the Corporation desires Indemnitee to serve in such capacity; and
WHEREAS, Indemnitee is willing to serve, continue to serve and to take on additional service for or on behalf of the Corporation on the condition that he or she be so indemnified.
NOW, THEREFORE, in consideration of the premises and the covenants contained herein, the Corporation and Indemnitee do hereby covenant and agree as follows:
Section 1. Definitions. As used in this Agreement:
(a) Affiliate has the meaning set forth in Rule 12b-2 of the Exchange Act, or any successor provision.
(b) Agent means any person who is or was a director, officer or employee of the Corporation or a subsidiary of the Corporation or other person authorized by the Corporation to act for the Corporation, to include such person serving in such capacity as a director, officer, employee, fiduciary or other official of another Enterprise at the request of, for the convenience of, or to represent the interests of the Corporation or any Enterprise.
(c) Agreement means this Indemnification Agreement.
(d) Beneficial Ownership has the meaning set forth in Rule 13d-3 under the Exchange Act, or any successor provision.
(e) Board means the Board of Directors of the Corporation.
(f) Bylaws means the Bylaws of the Corporation.
(g) Certificate of Incorporation means the Certificate of Incorporation of the Corporation.
(h) Change in Control means the occurrence of any of the following:
i. Acquisition of Stock by Third Party. The acquisition by any Person or Group (other than the Sponsor Group Members) of Beneficial Ownership, directly or indirectly, of thirty-five percent (35%) or more of the total voting power of the Corporation, unless the Sponsor Group Members, collectively, have Beneficial Ownership of the voting power of the Corporation exceeding that of such acquiring Person or Group;
ii. Change in Board of Directors. During any period of two (2) consecutive years (not including any period prior to the execution of this Agreement), individuals who at the beginning of such period constitute the Board, and any new director (other than a director designated by a person who has entered into an agreement with the Corporation to effect a transaction described in Sections 1(i)(iii) or 1(i)(iv)) whose election by the Board or nomination for election by the Corporations stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute at least a majority of the members of the Board;
iii. Corporate Transactions. The effective date of a merger or consolidation of the Corporation with any other entity, other than a merger or consolidation which would result in the voting securities of the Corporation outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than fifty-one percent (51%) of the combined voting power of the voting securities of the surviving entity outstanding immediately after such merger or consolidation and with the power to elect at least a majority of the board of directors or other governing body of such surviving entity;
iv. Liquidation. The approval by the stockholders of the Corporation of a complete liquidation of the Corporation or an agreement for the sale or disposition by the Corporation of all or substantially all of the Corporations assets; and
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v. Other Events. There occurs any other event of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or a response to any similar item on any similar schedule or form) promulgated under the Exchange Act, whether or not the Corporation is then subject to such reporting requirement.
(i) Corporate Status means the status of a person who is or was a director, trustee, partner, managing member, officer, employee, Agent or fiduciary of any Enterprise.
(j) Corporation means Albertsons Companies, Inc.
(k) Delaware Court means the Delaware Court of Chancery.
(l) DGCL means the General Corporation Law of the State of Delaware.
(m) Disinterested Director means a director of the Corporation who is not and was not a party to the Proceeding in respect of which indemnification is sought by Indemnitee.
(n) Enterprise means the Corporation and any other corporation, limited liability company, partnership, joint venture, trust, employee benefit plan or other enterprise of which Indemnitee is or was serving at the request of the Corporation as a director, officer, trustee, partner, managing member, employee, Agent or fiduciary.
(o) Exchange Act means the Securities Exchange Act of 1934, as amended, and any successor thereto, and any rules and regulations promulgated thereunder, all as the same shall be in effect from time to time.
(p) Expenses shall include all reasonable attorneys fees, retainers, court costs, transcript costs, fees of experts and other professionals, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, fax transmission charges, secretarial services, any federal, state, local or foreign taxes imposed as a result of the actual or deemed receipt of any payments under this Agreement, ERISA and employee benefit plan excise taxes and penalties, and all other disbursements, obligations or expenses of the types customarily incurred in connection with, or as a result of, prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be a deponent or witness in, or otherwise participating in, a Proceeding. Expenses also shall include (i) expenses incurred in connection with any appeal resulting from any Proceeding, including without limitation the premium, security for, and other costs relating to any cost bond, supersede as bond or other appeal bond or its equivalent, and (ii) expenses incurred in connection with recovery under any directors and officers liability insurance policies maintained by the Corporation, regardless of whether Indemnitee is ultimately determined to be entitled to such indemnification, advancement or expenses or insurance recovery, as the case may be, and (iii) for purposes of Section 15(d) only, expenses incurred by or on behalf of Indemnitee in connection with the interpretation, enforcement or defense of Indemnitees rights under this Agreement, by litigation or otherwise. Expenses, however, shall not include amounts paid in settlement by Indemnitee or the amount of judgments or fines against Indemnitee. The parties agree that for the purposes of any advancement of Expenses for which Indemnitee has made written demand to the Corporation in accordance with this Agreement, all Expenses included in such demand that are certified by affidavit of Indemnitees counsel as being reasonable shall be presumed conclusively to be reasonable.
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(q) Group has the meaning set forth in Sections 13(d)(3) or 14(d)(2) of the Exchange Act, or any successor provision.
(r) Indemnitee means the person indicated in the signature page of this Agreement.
(s) Independent Counsel shall mean a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither presently is, nor in the past five (5) years has been, retained to represent: (i) the Corporation or Indemnitee in any matter material to either such party (other than with respect to matters concerning the Indemnitee under this Agreement, or of other indemnitees under similar indemnification agreements), or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, Independent Counsel shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Corporation or Indemnitee in an action to determine Indemnitees rights under this Agreement. The Corporation agrees to pay the reasonable fees and expenses of the Independent Counsel referred to above and to fully indemnify such counsel against any and all expenses, claims, liabilities and damages arising out of or relating to this Agreement or its engagement pursuant hereto.
(t) Losses means any and all Expenses, damages, losses, liabilities, judgments, fines, penalties (whether civil, criminal or other), amounts paid or payable in settlement, including any interest, assessments, and all other charges paid or payable in connection with investigating, defending, being a witness in or participating in (including on appeal), or preparing to defend, be a witness or participate in, any Proceeding.
(u) Person has the meaning set forth in Sections 13(d) and 14(d) of the Exchange Act, or any successor provision.
(v) Proceeding means any threatened, pending or completed action, suit, claim, counterclaim, cross claim, arbitration, mediation, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding, whether brought in the right of the Corporation or otherwise and whether of a civil, criminal, administrative, regulatory, legislative or investigative (formal or informal) nature, including any appeal therefrom, in which Indemnitee was, is or will be involved as a party, potential party, non-party witness or otherwise by reason of Indemnitees Corporate Status, by reason of any action taken by Indemnitee (or a failure to take action by Indemnitee) or of any action (or failure to act) on Indemnitees part while acting pursuant to his or her Corporate Status, in each case whether or not serving in such capacity at the time any Loss is incurred for which indemnification, reimbursement or advancement of Expenses can be provided under this Agreement. If Indemnitee believes in good faith that a given situation may lead to or culminate in the institution of a Proceeding, this shall be considered a Proceeding under this paragraph.
(w) Sarbanes-Oxley Act means the Sarbanes-Oxley Act of 2002.
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(x) Sponsor Group Member means each of the following: (i) Cerberus Capital Management, L.P., Lubert-Adler Partners, L.P., Klaff Realty, LP, Schottenstein Stores Corporation, and Kimco Realty Corporation, (ii) each other fund or managed account advised or managed by any of the foregoing, and (iii) each of their respective Affiliates (other than the Corporation and its subsidiaries), including Albertsons Investor Holdings LLC, a Delaware limited liability company, and KIM ACI, LLC, a Delaware limited liability company.
Section 2. Services to the Corporation. Indemnitee agrees to serve as a director, officer, employee or Agent of the Corporation, as applicable, or, by mutual agreement of the Corporation and Indemnitee, as a director, officer, employee, Agent or fiduciary of another Enterprise, as applicable. Indemnitee may at any time and for any reason resign from such position (subject to any other contractual obligation or any obligation imposed by operation of law), in which event the Corporation shall have no obligation under this Agreement to continue Indemnitee in such position. This Agreement shall not be deemed an employment contract between the Corporation (or any Enterprise) and Indemnitee. Indemnitee specifically acknowledges that Indemnitees employment with the Corporation (or any Enterprise), if any, is at will, and the Indemnitee may be discharged at any time for any reason, with or without cause, except as may be otherwise provided in any written employment contract between Indemnitee and the Corporation (or any Enterprise), other applicable formal severance policies duly adopted by the Board, or, with respect to service as a director or officer of the Corporation, by the Certificate of Incorporation, the Bylaws and the DGCL. The foregoing notwithstanding, this Agreement shall continue in force after Indemnitee has ceased to serve as a director, officer, employee or Agent of any Enterprise, as applicable, as provided in Section 17 hereof.
Section 3. Indemnity in Third-Party Proceedings. The Corporation shall indemnify Indemnitee in accordance with the provisions of this Section 3 if Indemnitee is, or is threatened to be made, a party to or a participant in any Proceeding, other than a Proceeding by or in the right of the Corporation to procure a judgment in its favor. Pursuant to this Section 3, Indemnitee shall be indemnified to the fullest extent permitted by applicable law against all Losses actually and reasonably incurred by Indemnitee or on his or her behalf in connection with such Proceeding, if Indemnitee acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal Proceeding, had no reasonable cause to believe that his or her conduct was unlawful. The parties hereto intend that this Agreement shall provide to the fullest extent permitted by law for indemnification in excess of that expressly permitted by statute, including, without limitation, any indemnification provided by the Certificate of Incorporation, the Bylaws, or the vote of its stockholders or Disinterested Directors.
Section 4. Indemnity in Proceedings by or in the Right of the Corporation. The Corporation shall indemnify Indemnitee in accordance with the provisions of this Section 4 if Indemnitee is, or is threatened to be made, a party to or a participant in any Proceeding by or in the right of the Corporation to procure a judgment in its favor. Pursuant to this Section 4, Indemnitee shall be indemnified to the fullest extent permitted by applicable law against all Expenses actually and reasonably incurred by him or her or on his or her behalf in connection with such Proceeding, if Indemnitee acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Corporation. No indemnification for Expenses shall be made under this Section 4 in respect of any claim, issue or matter as to which Indemnitee shall have been finally adjudged by a court to be liable to the Corporation, unless and only to the extent that the Delaware Court or any court in which the Proceeding was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnification.
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Section 5. Indemnification for Expenses of a Party Who is Wholly or Partly Successful. Notwithstanding any other provisions of this Agreement, to the fullest extent permitted by applicable law and to the extent that Indemnitee is a party to (or a participant in) and is successful, on the merits or otherwise, in any Proceeding or in defense of any claim, issue or matter therein, in whole or in part, the Corporation shall indemnify Indemnitee against all Expenses actually and reasonably incurred by him or her in connection therewith. If Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Corporation shall indemnify Indemnitee against all Expenses actually and reasonably incurred by him or her or on his or her behalf in connection with or related to each successfully resolved claim, issue or matter to the fullest extent permitted by law. For purposes of this Section 5 and without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.
Section 6. Indemnification for Expenses of a Witness. Notwithstanding any other provision of this Agreement, to the fullest extent permitted by applicable law and to the extent that Indemnitee is, by reason of his or her Corporate Status, a witness or otherwise asked to participate in any aspect of a Proceeding to which Indemnitee is not a party, he or she shall be indemnified against all Expenses actually and reasonably incurred by him or her on his or her behalf in connection therewith.
Section 7. Partial Indemnification. If Indemnitee is entitled under any provision of this Agreement to indemnification by the Corporation for some or a portion of Expenses, but not, however for the total amount thereof, the Corporation shall nevertheless indemnify Indemnitee for the portion thereof to which Indemnitee is entitled.
Section 8. Additional Indemnification. Notwithstanding any limitation in Sections 3, 4, 5 or 7, the Corporation shall indemnify Indemnitee to the fullest extent permitted by applicable law (as now in effect or as may from time to time hereafter be amended to increase the scope of such permitted indemnification) if Indemnitee is a party to or threatened to be made a party to or a participant in any Proceeding against all Losses actually and reasonably incurred by or on behalf of Indemnitee in connection with the Proceeding.
Section 9. Sponsor Indemnification. If a Sponsor Group Member with which Indemnitee is affiliated is, or is threatened to be made, a party to or a participant in any Proceeding relating to or arising by reason of such Sponsor Group Members position as a direct or indirect stockholder of the Corporation or appointment of, or affiliation with, Indemnitee or any other Agent, including without limitation, any alleged misappropriation of an asset or corporate opportunity of any Enterprise, any alleged misappropriation or infringement of intellectual property relating to any Enterprise, any alleged false or misleading statement or omission made by any Enterprise (or on its behalf) or its employees or Agents, or any allegation of inappropriate control or influence over the Corporation or its directors, officers, stockholders or debt holders; then such Sponsor Group Member will be entitled to indemnification hereunder to the same extent as Indemnitee, and the terms of this Agreement as they relate to procedures for indemnification of
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Indemnitee and advancement of Expenses shall apply to any such indemnification of such Sponsor Group Member. The rights provided to such Sponsor Group Member under this Section 9 shall be suspended during any period during which such Sponsor Group Member, does not have a representative on the Board; provided, however, that in the event of any such suspension, such Sponsor Group Members rights to indemnification will not be suspended with respect to any Proceeding based in whole or in part on facts and circumstances occurring at any time prior to such suspension regardless of whether the Proceeding arises before or after such suspension. The Corporation and Indemnitee agree that each of the Sponsor Group Members are express third-party beneficiaries of the terms of this Section 9.
Section 10. Exclusions. Notwithstanding any provision in this Agreement, the Corporation shall not be obligated under this Agreement to make any indemnification payment in connection with any claim made against Indemnitee:
(a) for which payment has actually been made to or on behalf of Indemnitee under any insurance policy or other indemnity provision, except with respect to any excess beyond the amount paid under any insurance policy or other indemnity provision; provided that the foregoing shall not affect any rights of Indemnitee or any Sponsor Group Member set forth in Section 16(c);
(b) for (i) an accounting of profits made from the purchase and sale (or sale and purchase) by Indemnitee of securities of the Corporation within the meaning of Section 16(b) of the Exchange Act or similar provisions of state statutory law or common law, or (ii) any reimbursement of the Corporation by Indemnitee of any bonus or other incentive-based or equity-based compensation or of any profits realized by Indemnitee from the sale of securities of the Corporation, as required in each case under the Exchange Act (including any such reimbursements that arise from an accounting restatement of the Corporation pursuant to Section 304 of the Sarbanes-Oxley Act, or the payment to the Corporation of profits arising from the purchase and sale by Indemnitee of securities in violation of Section 306 of the Sarbanes-Oxley Act); or
(c) except as provided in Section 15(d) in connection with any Proceeding (or any part of any Proceeding) initiated by Indemnitee, including any Proceeding (or any part of any Proceeding) initiated by Indemnitee against the Corporation or its directors, officers, employees or other indemnitees, unless (i) the Board authorized the Proceeding (or any part of any Proceeding) prior to its initiation, (ii) such payment arises in connection with any mandatory counterclaim or cross-claim or affirmative defense brought or raised by Indemnitee in any Proceeding (or any part of any Proceeding), or (iii) the Corporation provides the indemnification, in its sole discretion, pursuant to the powers vested in the Corporation under applicable law.
Section 11. Advances of Expenses. Notwithstanding any provision of this Agreement to the contrary (other than Section 15(d)), the Corporation shall advance, to the extent not prohibited by law, the Expenses incurred by or on behalf of Indemnitee in connection with any Proceeding (or any part of any Proceeding) not initiated by Indemnitee, and such advancement shall be made within thirty (30) days after the receipt by the Corporation of a statement or statements requesting such advances from time to time (which shall include invoices received by Indemnitee in connection with such Expenses but, in the case of invoices in connection with legal services, any references to legal work performed or to expenditures made that would cause
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Indemnitee to waive any privilege accorded by applicable law shall not be so included), whether prior to or after final disposition of any Proceeding. Advances shall be unsecured and interest free. Advances shall be made without regard to Indemnitees ability to repay the Expenses and without regard to Indemnitees ultimate entitlement to indemnification under the other provisions of this Agreement. In accordance with Section 15(d), advances shall include any and all reasonable Expenses incurred pursuing an action to enforce this right of advancement, including Expenses incurred preparing and forwarding statements to the Corporation to support the advances claimed. Indemnitee shall qualify for advances upon the execution and delivery to the Corporation of this Agreement, which shall constitute an undertaking by Indemnitee to repay the amounts advanced (without interest) to the extent that it is ultimately determined that Indemnitee is not entitled to be indemnified by the Corporation. No other form of undertaking shall be required other than the execution of this Agreement. This Section 11 shall not apply to any claim made by Indemnitee for which indemnification is excluded pursuant to Section 10.
Section 12. Procedure for Notification and Defense of Claim.
(a) Indemnitee shall notify the Corporation in writing of any matter with respect to which Indemnitee intends to seek indemnification or advancement of Expenses hereunder as soon as reasonably practicable following the receipt by Indemnitee of written notice thereof or Indemnitees becoming aware thereof. The written notification to the Corporation shall include a description of the nature of the Proceeding and the facts underlying the Proceeding, in each case to the extent known to Indemnitee. To obtain indemnification under this Agreement, Indemnitee shall submit to the Corporation a written request, including therein or therewith such documentation and information as is reasonably available to Indemnitee and is reasonably necessary to determine whether and to what extent Indemnitee is entitled to indemnification following the final disposition of such Proceeding. The failure by Indemnitee to notify the Corporation hereunder will not relieve the Corporation from any liability which it may have to Indemnitee hereunder or otherwise than under this Agreement, and any delay in so notifying the Corporation shall not constitute a waiver by Indemnitee of any rights under this Agreement, except to the extent (solely with respect to the indemnity hereunder) that such failure or delay materially prejudices the Corporation. The Secretary of the Corporation shall, promptly upon receipt of such a request for indemnification, advise the Board in writing that Indemnitee has requested indemnification.
(b) The Corporation will be entitled to participate in the Proceeding at its own expense.
(c) Settlement of Proceedings.
i. The Corporation shall not settle, compromise or consent to the entry of any judgment as to Indemnitee in any Proceeding (in whole or in part) without Indemnitees prior written consent, which consent shall not be unreasonably withheld, unless such settlement, compromise or consent includes an unconditional release of Indemnitee and does not (A) require or impose any injunctive or other non-monetary remedy on Indemnitee, (B) require or impose an admission or consent as to any wrongdoing by Indemnitee or (C) otherwise result in a direct or indirect payment by or monetary cost to Indemnitee personally (as opposed to a payment to be made or cost to be paid by the Corporation on Indemnitees behalf).
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ii. Indemnitee shall not settle, compromise or consent to the entry of any judgment as to Indemnitee in any Proceeding (in whole or in part) without the Corporations prior written consent, which consent shall not be unreasonably withheld, unless such settlement, compromise or consent includes an unconditional release of the Enterprises and does not (A) require or impose any injunctive or other non-monetary remedy on any Enterprise, (B) require or impose an admission or consent as to any wrongdoing by any Enterprise, or (C) otherwise result in a direct or indirect payment by or monetary cost to any Enterprise.
Section 13. Procedure Upon Application for Indemnification.
(a) Upon written request by Indemnitee for indemnification pursuant to Section 12(a), a determination, if required by applicable law, with respect to Indemnitees entitlement thereto shall be made in the specific case: (i) if a Change in Control shall have occurred, by Independent Counsel in a written opinion to the Board, a copy of which shall be delivered to Indemnitee; or (ii) if a Change in Control shall not have occurred, (A) by a majority vote of the Disinterested Directors, even though less than a quorum of the Board, (B) by a committee of Disinterested Directors designated by a majority vote of the Disinterested Directors, even though less than a quorum of the Board, or (C) if there are no such Disinterested Directors, by Independent Counsel in a written opinion to the Board, a copy of which shall be delivered to Indemnitee. If it is so determined that Indemnitee is entitled to indemnification, payment to Indemnitee shall be made within ten (10) days after such determination. Indemnitee shall cooperate with the person, persons or entity making such determination with respect to Indemnitees entitlement to indemnification, including providing to such person, persons or entity upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary to such determination. Any Expenses incurred by or on behalf of Indemnitee in so cooperating with the person, persons or entity making such determination shall be borne by the Corporation (irrespective of the determination as to Indemnitees entitlement to indemnification), and the Corporation hereby indemnifies and agrees to hold Indemnitee harmless therefrom. The Corporation promptly will advise Indemnitee in writing with respect to any determination that Indemnitee is or is not entitled to indemnification, including a description of any reason or basis for which indemnification has been denied.
(b) In the event the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 13(a), the Independent Counsel shall be selected as provided in this Section 13(b). If a Change in Control shall not have occurred, the Independent Counsel shall be selected by the Board, and the Corporation shall give written notice to Indemnitee advising him or her of the identity of the Independent Counsel so selected. If a Change in Control shall have occurred, the Independent Counsel shall be selected by Indemnitee (unless Indemnitee shall request that such selection be made by the Board, in which event the preceding sentence shall apply), and Indemnitee shall give written notice to the Corporation advising it of the identity of the Independent Counsel so selected. In either event, Indemnitee or the Corporation, as the case may be, may, within ten (10) days after such written notice of selection shall have been given, deliver to the Corporation or to Indemnitee, as the case may be, a written objection to such selection; provided, however, that such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements set forth in Section 1(t), and the objection shall set forth with particularity the factual basis of such assertion. Absent a proper and
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timely objection, the person so selected shall act as Independent Counsel. If such written objection is so made and substantiated, the counsel so selected may not serve as Independent Counsel unless and until such objection is withdrawn or the Delaware Court has determined that such objection is without merit. If, within twenty (20) days after the later of submission by Indemnitee of a written request for indemnification pursuant to Section 12(a) hereof and the final disposition of the Proceeding, no Independent Counsel shall have been selected and not objected to, either the Corporation or Indemnitee may petition the Delaware Court for resolution of any objection which shall have been made by the Corporation or Indemnitee to the others selection of Independent Counsel and/or for the appointment as Independent Counsel of a person selected by such court or by such other person as such court shall designate, and the person with respect to whom all objections are so resolved or the person so appointed shall act as Independent Counsel under Section 13(a) hereof. Upon the due commencement of any Proceeding pursuant to Section 15(a), Independent Counsel shall be discharged and relieved of any further responsibility in such capacity (subject to the applicable standards of professional conduct then prevailing).
(c) If the Corporation disputes a portion of the amounts for which indemnification is requested, the undisputed portion shall be paid and only the disputed portion withheld pending resolution of any such dispute.
Section 14. Presumptions and Effect of Certain Proceedings.
(a) In making a determination with respect to entitlement to indemnification hereunder, the person or persons or entity making such determination shall, to the fullest extent not prohibited by law, presume that Indemnitee is entitled to indemnification under this Agreement if Indemnitee has submitted a request for indemnification in accordance with Section 12(a), and the Corporation shall, to the fullest extent not prohibited by law, have the burden of proof to overcome that presumption in connection with the making by any person, persons or entity of any determination contrary to that presumption. Neither the failure of the Corporation (including by its directors or Independent Counsel) to have made a determination prior to the commencement of any action pursuant to this Agreement that indemnification is proper in the circumstances because Indemnitee has met the applicable standard of conduct, nor an actual determination by the Corporation (including by its directors or Independent Counsel) that Indemnitee has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that Indemnitee has not met the applicable standard of conduct.
(b) Subject to Section 15(e), if the person, persons or entity empowered or selected under Section 13 to determine whether Indemnitee is entitled to indemnification shall not have made a determination within sixty (60) days after receipt by the Corporation of the request therefor, the requisite determination of entitlement to indemnification shall, to the fullest extent not prohibited by law, be deemed to have been made and Indemnitee shall be entitled to such indemnification, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitees statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law; provided, however, that such sixty (60)-day period may be extended for a reasonable time, not to exceed an additional thirty (30) days, if the person, persons or entity making the determination with respect to entitlement to indemnification in good faith requires such additional time for the obtaining or evaluating of documentation and/or information relating thereto; and provided, further, that the foregoing provisions of this Section 14(b) shall not apply if the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 13(a).
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(c) The termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall not of itself adversely affect the right of Indemnitee to indemnification or create a presumption that Indemnitee did not act in good faith and in a manner which he or she reasonably believed to be in or not opposed to the best interests of the Corporation or, with respect to any criminal Proceeding, that Indemnitee had reasonable cause to believe that his or her conduct was unlawful.
(d) For purposes of any determination of good faith, Indemnitee shall be deemed to have acted in good faith if Indemnitees action is based on the records or books of account of any Enterprise, including financial statements, or on information supplied to Indemnitee by the directors or officers of such Enterprise in the course of their duties, or on the advice of legal counsel for the Enterprise or on information or records given or reports made to the Enterprise by an independent certified public accountant or by an appraiser or other expert selected with reasonable care by the Enterprise. The provisions of this Section 14(d) shall not be deemed to be exclusive or to limit in any way the other circumstances in which Indemnitee may be deemed to have met the applicable standard of conduct set forth in this Agreement. Whether or not the foregoing provisions of this Section 14(d) are satisfied, it shall in any event be presumed that Indemnitee has at all times acted in good faith and in a manner reasonably believed to be in or not opposed to the best interests of the Corporation.
(e) The knowledge and/or actions, or failure to act, of any director, officer, trustee, partner, managing member, fiduciary, Agent or employee of any Enterprise shall not be imputed to Indemnitee for purposes of determining the right to indemnification under this Agreement.
Section 15. Remedies of Indemnitee.
(a) Subject to Section 15(e), in the event that (i) a determination is made pursuant to Section 12 that Indemnitee is not entitled to indemnification under this Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 11, (iii) no determination of entitlement to indemnification shall have been made pursuant to Section 13(a) within ninety (90) days after receipt by the Corporation of the request for indemnification, (iv) payment of indemnification is not made pursuant to Sections 5 or 6 or the last sentence of Section 13(a) within ten (10) days after receipt by the Corporation of a written request therefor, (v) payment of indemnification pursuant to Sections 3, 4, 8 or 9 is not made within ten (10) days after a determination has been made that Indemnitee is entitled to indemnification, or (vi) the Corporation or any other person takes or threatens to take any action to declare this Agreement void or unenforceable, or institutes any Proceeding designed to deny, or to recover from, the Indemnitee the benefits provided or intended to be provided to the Indemnitee hereunder, Indemnitee shall be entitled to an adjudication by a court of his or her entitlement to such indemnification or advancement of Expenses. Alternatively, Indemnitee, at his or her option, may seek an award in arbitration to be conducted by a single arbitrator pursuant to the Commercial Arbitration Rules of
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the American Arbitration Association. Indemnitee shall commence such Proceeding seeking an adjudication or an award in arbitration within one hundred eighty (180) days following the date on which Indemnitee first has the right to commence such Proceeding pursuant to this Section 15(a); provided, however, that the foregoing clause shall not apply in respect of a Proceeding brought by Indemnitee to enforce his or her rights under Section 5. The Corporation shall not oppose Indemnitees right to seek any such adjudication or award in arbitration.
(b) In the event that a determination shall have been made pursuant to Section 12(a) that Indemnitee is not entitled to indemnification, any judicial proceeding or arbitration commenced pursuant to this Section 15 shall be conducted in all respects as a de novo trial, or arbitration, on the merits and Indemnitee shall not be prejudiced by reason of that adverse determination. In any Proceeding commenced pursuant to this Section 15, the Corporation shall have the burden of proving Indemnitee is not entitled to indemnification or advancement of Expenses, as the case may be.
(c) If a determination shall have been made pursuant to Section 12(a) that Indemnitee is entitled to indemnification, the Corporation shall be bound by such determination in any Proceeding commenced pursuant to this Section 15, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitees statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law.
(d) The Corporation shall, to the fullest extent not prohibited by law, be precluded from asserting in any Proceeding commenced pursuant to this Section 15 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such Proceeding that the Corporation is bound by all the provisions of this Agreement. It is the intent of the Corporation that, to the fullest extent permitted by law, the Indemnitee not be required to incur legal fees or other Expenses associated with the interpretation, enforcement or defense of Indemnitees rights under this Agreement by litigation or otherwise because the cost and expense thereof would substantially detract from the benefits intended to be extended to the Indemnitee hereunder. The Corporation shall, to the fullest extent permitted by law, indemnify Indemnitee against any and all Expenses and, if requested by Indemnitee, shall (within ten (10) days after receipt by the Corporation of a written request therefor) advance, to the extent not prohibited by law, such Expenses to Indemnitee, which are incurred by or on behalf of Indemnitee in connection with any action brought by Indemnitee for indemnification or advancement of Expenses from the Corporation under this Agreement or under any directors and officers liability insurance policies maintained by the Corporation if, in the case of indemnification, Indemnitee is wholly successful on the underlying claims; if Indemnitee is not wholly successful on the underlying claims, then such indemnification shall be only to the extent Indemnitee is successful on such underlying claims or otherwise as permitted by law, whichever is greater.
(e) Notwithstanding anything in this Agreement to the contrary, no determination as to entitlement of Indemnitee to indemnification under this Agreement shall be required to be made prior to the final disposition of the Proceeding.
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Section 16. Non-exclusivity; Survival of Rights; Insurance; Subrogation.
(a) The rights of indemnification and to receive advancement of Expenses as provided by this Agreement (i) shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the Certificate of Incorporation, the Bylaws, any agreement, a vote of stockholders, a resolution of directors or otherwise, and (ii) shall be interpreted independently of, and without reference to, any other such rights to which Indemnitee may at any time be entitled. No amendment, alteration or repeal of this Agreement or of any provision hereof shall limit or restrict any right of Indemnitee under this Agreement in respect of any action taken or omitted by such Indemnitee in his or her Corporate Status prior to such amendment, alteration or repeal. To the extent that a change in Delaware law, whether by statute or judicial decision, permits greater indemnification or advancement of Expenses than would be afforded currently under the Bylaws, the Certificate of Incorporation and this Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change. No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right and remedy shall be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other right or remedy.
(b) To the extent that the Corporation maintains an insurance policy or policies providing liability insurance for directors, officers, employees or Agents of any Enterprise, Indemnitee shall be covered by such policy or policies in accordance with its or their terms to the maximum extent of the coverage available for any such director, officer, employee or Agent under such policy or policies. If, at the time of the receipt of a notice of a claim pursuant to the terms hereof, the Corporation has director and officer liability insurance in effect, the Corporation shall give prompt notice of such claim or of the commencement of a Proceeding, as the case may be, to the insurers in accordance with the procedures set forth in the respective policies. The Corporation shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of Indemnitee, all amounts payable as a result of such Proceeding in accordance with the terms of such policies.
(c) The Corporation acknowledges that Indemnitee may have certain rights to indemnification, advancement of Expenses, or insurance provided by a Sponsor Group Member(s). The Corporation hereby agrees (i) that it is the indemnitor of first resort, its obligations to Indemnitee hereunder are primary, and any obligation of the applicable Sponsor Group Member(s) to advance Expenses or to provide indemnification for the same Expenses or Losses incurred by Indemnitee are secondary; (ii) that it shall be required to advance the full amount of Expenses incurred by Indemnitee and shall be liable for the full amount of all Losses paid in settlement to the extent legally permitted and as required by the terms of this Agreement, the Certificate of Incorporation, the Bylaws, and any other agreement between the Corporation and Indemnitee, without regard to any rights Indemnitee may have against such Sponsor Group Member(s); and (iii) that it irrevocably waives, relinquishes and releases such Sponsor Group Member(s) from any and all claims against such Sponsor Group Member(s) for contribution, subrogation or any other recovery of any kind in respect thereof. The Corporation further agrees that no advancement or payment by such Sponsor Group Member(s) on behalf of Indemnitee with respect to any claim for which Indemnitee has sought indemnification from the Corporation shall affect the foregoing, and such Sponsor Group Member(s) shall have a right of contribution and/or be subrogated to the extent of such advancement or payment to all of the rights of recovery of Indemnitee against the Corporation. The Corporation and Indemnitee agree that each Sponsor Group Member are express third-party beneficiaries of the terms of this Section 16(c).
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(d) Except as to all entities described in Section 16(c), in the event of any payment under this Agreement, the Corporation shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Corporation to bring suit to enforce such rights.
(e) Except as provided in Section 16(c), the Corporation shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable hereunder (or for which advancement is provided hereunder) if and to the extent that Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise.
(f) Except as provided in Section 16(c), the Corporations obligation to indemnify or advance Expenses hereunder to Indemnitee who is or was serving at the request of the Corporation as a director, officer, trustee, partner, managing member, fiduciary, employee or Agent of another Enterprise shall be reduced by any amount Indemnitee has actually received as indemnification or advancement of Expenses from such other Enterprise.
Section 17. Duration of Agreement. This Agreement shall continue until and terminate upon the later of: (a) ten (10) years after the date that Indemnitee shall have ceased to serve as a director, officer, employee or Agent of any Enterprise, as applicable, or (b) one (1) year after the final termination of any Proceeding then pending in respect of which Indemnitee is granted rights of indemnification or advancement of Expenses hereunder and of any Proceeding commenced (including any appeal thereof) by Indemnitee pursuant to Section 15 relating thereto. The indemnification and advancement of Expenses rights provided by or granted pursuant to this Agreement shall be binding upon and be enforceable by the parties hereto and their respective successors and assigns (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business or assets of the Corporation), shall continue as to an Indemnitee who has ceased to be a director, officer, employee or Agent of any Enterprise, and shall inure to the benefit of Indemnitee and his or her spouse, assigns, heirs, devisees, executors and administrators and other legal representatives. The Corporation shall require and shall cause any successor (whether direct or indirect by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Corporation to, by written agreement, expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Corporation would be required to perform if no such succession had taken place.
Section 18. Severability. If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (a) the validity, legality and enforceability of the remaining provisions of this Agreement (including without limitation, each portion of any Section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and shall remain enforceable to the fullest extent permitted by law; (b) such provision or provisions shall be deemed reformed to the extent necessary to conform to applicable law and to give the maximum effect to the intent of the parties hereto; and (c) to the
14
fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of any Section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested thereby.
Section 19. Enforcement.
(a) The Corporation expressly confirms and agrees that it has entered into this Agreement and assumed the obligations imposed on it hereby in order to induce Indemnitee to serve as a director or officer of the Corporation, and the Corporation acknowledges that Indemnitee is relying upon this Agreement in serving as a director or officer of the Corporation.
(b) This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral, written and implied, between the parties hereto with respect to the subject matter hereof; provided, however, that this Agreement is a supplement to and in furtherance of the Certificate of Incorporation, the Bylaws, any directors and officers insurance maintained by the Corporation and applicable law, and shall not be deemed a substitute therefor, nor to diminish or abrogate any rights of Indemnitee thereunder.
Section 20. Modification and Waiver. Except as provided in Section 8 with respect to changes in Delaware law which broaden the right of Indemnitee to be indemnified by the Corporation, no supplement, modification or amendment of this Agreement shall be binding unless executed in writing by the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions of this Agreement nor shall any waiver constitute a continuing waiver.
Section 21. Notices. All notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed to have been duly given if (a) delivered by hand and receipted for by the party to whom said notice or other communication shall have been directed, (b) mailed by certified or registered mail with postage prepaid, on the third (3rd) business day after the date on which it is so mailed, (c) mailed by reputable overnight courier and receipted for by the party to whom said notice or other communication shall have been directed, or (d) sent by facsimile transmission, with receipt of oral confirmation that such transmission has been received:
If to Indemnitee, to the address indicated on the signature page of this Agreement, or such other address as Indemnitee shall provide to the Corporation.
If to the Corporation, to:
Robert A. Gordon
Executive Vice President & General Counsel
Albertsons Companies, Inc.
250 Parkcenter Blvd.
Boise, ID 83706
Facsimile: (208) 395-4625
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or to any other address as may have been furnished to Indemnitee by the Corporation.
Section 22. Contribution. To the fullest extent permissible under applicable law, if the indemnification provided for in this Agreement is unavailable to Indemnitee for any reason whatsoever, the Corporation, in lieu of indemnifying Indemnitee, shall contribute to the Losses incurred by or on behalf of Indemnitee in connection with any claim relating to an indemnifiable event under this Agreement, in such proportion as is deemed fair and reasonable in light of all of the circumstances of such Proceeding in order to reflect (a) the relative benefits received by the Corporation and Indemnitee as a result of the event(s) and/or transaction(s) giving cause to such Proceeding; and/or (b) the relative fault of the Corporation (and its directors, officers, employees and Agents) and Indemnitee in connection with such event(s) and/or transaction(s).
Section 23. Applicable Law and Consent to Jurisdiction. This Agreement and the legal relations among the parties shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware, without regard to its conflict of laws rules. Except with respect to any arbitration commenced by Indemnitee pursuant to Section 15(a), the Corporation and Indemnitee hereby irrevocably and unconditionally (a) agree that any Proceeding arising out of or in connection with this Agreement shall be brought only in the Delaware Court, and not in any other state or federal court in the United States of America or any court in any other country, (b) consent to submit to the exclusive jurisdiction of the Delaware Court for purposes of any Proceeding arising out of or in connection with this Agreement, (c) appoint, to the extent such party is not otherwise subject to service of process in the State of Delaware, The Corporation Trust Company, 1209 Orange Street, Wilmington, Delaware 19801, as its agent in the State of Delaware for acceptance of legal process in connection with any such Proceeding against such party with the same legal force and validity as if served upon such party personally within the State of Delaware, (d) waive any objection to the laying of venue of any such Proceeding in the Delaware Court, and (e) waive, and agree not to plead or to make, any claim that any such Proceeding brought in the Delaware Court has been brought in an improper or inconvenient forum.
Section 24. Identical Counterparts. This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original but all of which together shall constitute one and the same Agreement. Only one such counterpart signed by the party against whom enforceability is sought needs to be produced to evidence the existence of this Agreement.
Section 25. Headings. The headings of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof.
[Signature Page Follows]
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Exhibit 21.1
ALBERTSONS COMPANIES, INC.
SCHEDULE OF SUBSIDIARIES
The following is a list of the Companys subsidiaries and includes all subsidiaries deemed significant. The jurisdiction of each company is listed in parentheses. Forty (40) companies are not listed because they are not actively conducting business, they are maintained solely for the purpose of holding licenses, they hold no assets or because they are less than majority owned.
Albertsons Stores Sub Holdings LLC and its subsidiary: (DE)
AB Acquisition LLC and its subsidiary: (DE) (99% owned by Albertsons Companies, Inc. and 1% owned by Albertsons Stores Sub Holdings LLC)
Albertsons Stores Sub LLC (DE)
AB Management Services Corp. (DE)
Albertsons LLC and its subsidiaries: (DE)
ABS Real Estate Holdings LLC and its subsidiaries: (DE)
ABS Mezzanine III LLC and its subsidiaries: (DE)
ABS CA-GL LLC (DE)
ABS CA-O DC1 LLC (DE)
ABS CA-O DC2 LLC (DE)
ABS CA-O LLC (DE)
ABS ID-GL LLC (DE)
ABS ID-O DC LLC (DE)
ABS ID-O LLC and its subsidiary: (DE)
Warm Springs Development, LLC and its subsidiary: (ID)
Warm Springs & 10th LLC (ID)
ABS MT-GL LLC (DE)
ABS MT-O LLC (DE)
ABS NV-GL LLC (DE)
ABS NV-O LLC (DE)
ABS OR-GL LLC (DE)
ABS OR-O DC LLC (DE)
ABS OR-O LLC (DE)
ABS Surplus-O LLC (DE)
ABS UT-GL LLC (DE)
ABS UT-O DC LLC (DE)
ABS UT-O LLC (DE)
ABS WA-GL LLC (DE)
ABS WA-O LLC (DE)
ABS WY-GL LLC (DE) ABS WY-O LLC (DE)
ABS Real Estate Company LLC (DE)
ABS Real Estate Investor Holdings LLC and its subsidiary: (DE)
ABS Mezzanine I LLC and its subsidiaries: (DE)
ABS DFW Investor LLC and its subsidiary: (DE)
SCHEDULE OF SUBSIDIARIES, Continued
ABS DFW Lease Investor LLC (DE)
ABS FLA Investor LLC and its subsidiary: (DE)
ABS FLA Lease Investor LLC (DE)
ABS Realty Investor LLC (DE)
ABS RM Investor LLC and its subsidiary: (DE)
ABS RM Lease Investor LLC (DE)
ABS SW Investor LLC and its subsidiary: (DE)
ABS SW Lease Investor LLC (DE)
ABS TX Investor GP LLC (DE)
ABS TX Investor LP and its subsidiaries: (TX)
ABS TX Lease Investor GP LLC (DE)
ABS TX Lease Investor LP (TX)
ASP SW Investor LLC (DE)
ASR TX Investor GP LLC (DE)
ASR TX Investor LP and its subsidiary: (TX)
ASR Lease Investor LLC (DE)
ABS Real Estate Owner Holdings LLC and its subsidiary: (DE)
ABS Mezzanine II LLC and its subsidiaries: (DE)
ABS DFW Owner LLC and its subsidiary: (DE)
ABS DFW Lease Owner LLC (DE)
ABS FLA Owner LLC and its subsidiary: (DE)
ABS FLA Lease Owner LLC (DE)
ABS RM Owner LLC and its subsidiary: (DE)
ABS RM Lease Owner LLC (DE)
ABS SW Owner LLC and its subsidiaries: (DE)
ABS NoCal Lease Owner LLC (DE)
ABS SW Lease Owner LLC (DE)
ASP NoCal Lease Owner LLC (DE)
Lucky (Del) Lease Owner LLC (DE)
ABS TX Owner GP LLC (DE)
ABS TX Owner LP and its subsidiaries: (TX)
ABS TX Lease Owner GP LLC (DE)
ABS TX Lease Owner LP (TX)
ASP SW Owner LLC and its subsidiary: (DE)
ASP SW Lease Owner LLC (DE)
ASR Owner LLC and its subsidiary: (DE)
ASR TX Lease Owner GP LLC (TX)
ASR TX Lease Owner LP (TX)
EXT Owner LLC and its subsidiary: (DE)
EXT Lease Owner LLC (DE)
NHI TX Owner GP LLC (DE)
NHI TX Owner LP and its subsidiaries: (TX)
NHI TX Lease Owner GP LLC (TX)
NHI TX Lease Owner LP (TX)
Albertsons Liquors, Inc. (WY)
American Food and Drug LLC and its subsidiaries: (DE)
2
SCHEDULE OF SUBSIDIARIES, Continued
American Stores Properties LLC (DE)
Jewel Osco Southwest LLC (IL)
Sunrich Mercantile LLC (CA)
American Stores Realty Company, LLC (DE)
Fresh Holdings LLC and its subsidiary: (DE)
Extreme LLC and its subsidiaries: (DE)
Newco Investments, LLC (DE)
NHI Investment Partners, LP (DE)
Good Spirits LLC (TX)
Malin Acquisitions, LLC (DE)
Spirit Acquisition Holdings LLC and its subsidiary: (DE)
United Supermarkets, L.L.C. and its subsidiary: (TX)
LLano Logistics, Inc. (DE)
Ink Holdings, LLC (DE)
Safeway Inc. and its subsidiaries: (DE)
Better Living Brands LLC (DE)
Casa Ley Services, Inc. (DE)
Cayam Energy, LLC (DE)
DineInFresh, Inc. (DE)
Divario Ventures LLC (DE)
Dominicks Supermarkets, LLC and its subsidiary: (DE)
Dominicks Finer Foods, LLC and its subsidiary: (DE)
Dominicks Finer Foods, Inc. of Illinois (IL)
Eureka Land Management LLC and its subsidiary: (WA)
Eureka Development LLC (WA)
GFM Holdings I, Inc. and its subsidiary: (DE)
GFM Holdings LLC and its subsidiary: (DE)
Genuardis Family Markets LP (DE)
JA Procurement LLC (DE)
Lehua Insurance Company, Inc. (HI)
Lucerne Foods, Inc. and its subsidiaries: (DE)
Eating Right LLC (DE)
Lucerne Dairy Products LLC (DE)
Lucerne North America LLC (DE)
O Organics LLC (DE)
Milford Insurance Brokerage Services, Inc. (DE)
Milford Insurance Ltd. (Bermuda)
NAI Holdings GP LLC (DE)
New Albertsons L.P. and its subsidiaries: (DE) (NAI Holdings GP LLC 5% General Partner and Safeway Inc. 95% Limited Partner)
ABS Finance Co., Inc. (DE)
Albertsons Companies Specialty Care, LLC (DE)
American Stores Company, LLC and its subsidiaries: (DE)
American Drug Stores LLC and its subsidiary: (DE)
American Partners, L.P. (IN)
American Procurement and Logistics Company LLC and its subsidiary:
3
SCHEDULE OF SUBSIDIARIES, Continued
(DE)
APLC Procurement, Inc. (UT)
ASC Media Services, Inc. and its subsidiary: (UT)
U.S. Satellite Corporation (UT)
ASP Realty, LLC (DE)
Beryl American Corporation (VT)
Jewel Companies, Inc. and its subsidiaries: (DE)
Acme Markets, Inc. and its subsidiary: (DE)
Giant of Salisbury, Inc. (MD)
Jewel Food Stores, Inc. and its subsidiary: (OH)
Jetco Properties, Inc. (DE)
Lucky Stores LLC (OH)
Scolaris Stores LLC (CA)
Medcart Specialty Care, LLC (DE)
NAI Saturn Eastern LLC and its subsidiary: (DE)
Collington Services LLC (DE)
SSM Holdings Company and its subsidiary: (DE)
Shaws Supermarkets, Inc. and its subsidiaries: (MA)
28 Pond Street Realty, LLC (NH)
300 Main Street Realty, LLC (NH)
360 Chauncy Street Realty Trust (MA)
675 Randolph Realty Trust (MA)
693 Randolph Avenue LLC (MA)
739 Realty Trust (MA)
861 Edgell Road LLC (MA)
99 Water Street LLC (MA)
Adrian Realty Trust (MA)
Border Street Realty Trust (MA)
BP Realty, LLC (MA)
CH Project LLC (MA)
Clifford W. Perham, Inc. (ME)
Gorham Markets, LLC (NH)
Hayward Street Investment Trust and its subsidiary: (MA)
DLS Realty Trust (MA)
Heath Street, LLC (MA)
HNHP Realty, LLC (NH)
K&J Realty Trust (MA)
Keene Realty Trust (NH)
LRT Realty Trust (MA)
Mashpee Realty LLC (MA)
Michaels Realty Trust and its subsidiary: (MA)
EP Realty LLC (MA)
Milford Realty LLC (MA)
MK Investments LLC (MA)
PNHP Realty LLC (NH)
Shaws Realty Co. and its subsidiary: (ME)
4
SCHEDULE OF SUBSIDIARIES, Continued
Arles, LLC (NH)
Shaws Realty Trust and its subsidiary: (MA)
Galway Realty Trust (MA)
SNH Realty, LLC (MA)
SRA REALTY LLC (MA)
Star Markets Holdings, Inc. and its subsidiary: (MA)
Star Markets Company, Inc. (MA)
WP Properties, LLC (RI)
Wildcat Acquisition Holdings LLC and its subsidiary: (DE)
Vons REIT, Inc. and its subsidiary: (DE)
Wildcat Markets Opco LLC (DE)
Oakland Property Brokerage Inc. (DE)
Pak N Save, Inc. (CA)
Paradise Development LLC and its subsidiaries: (WA)
Paradise Real Property LLC and its subsidiary: (WA)
Boulder Investco LLC (DE)
Randalls Holdings, Inc. and its subsidiaries: (DE)
Randalls Finance Company, Inc. (DE)
Randalls Food Markets, Inc. and its subsidiary: (DE)
Randalls Food & Drugs LP and its subsidiary: (DE)
Randalls Management Company, Inc. and its subsidiary: (DE)
Randalls Beverage Company, Inc. (TX)
Randalls Investments, Inc. (DE)
Safeway #0638 Exchange, LLC (OR)
Safeway Australia Holdings, Inc. (DE)
Safeway Canada Holdings, Inc. and its subsidiary: (DE)
Safeway New Canada, Inc. and its subsidiary: (DE)
CSL IT Services ULC (formerly Canada Safeway Limited) and its subsidiaries: (British Columbia)
0984093 B.C. Unlimited Liability Company (British Columbia)
0984354 B.C. Unlimited Liability Company (formerly Canada
Safeway Liquor Stores ULC) (British Columbia)
Safeway Corporate, Inc. and its subsidiaries: (DE)
Safeway Stores 67, Inc. (DE)
Safeway Stores 68, Inc. (DE)
Safeway Stores 69, Inc. (DE)
Safeway Stores 70, Inc. (DE)
Safeway Dallas, Inc. and its subsidiaries: (DE)
Avia Partners, Inc. (DE)
Safeway Stores 78, Inc. (DE)
Safeway Stores 79, Inc. (DE)
Safeway Stores 80, Inc. (DE)
Safeway Stores 82, Inc. (DE)
Safeway Stores 85, Inc. (DE)
Safeway Stores 86, Inc. (DE)
Safeway Stores 87, Inc. (DE)
5
SCHEDULE OF SUBSIDIARIES, Continued
Safeway Stores 88, Inc. (DE)
Safeway Stores 89, Inc. (DE)
Safeway Stores 90, Inc. (DE)
Safeway Stores 91, Inc. (DE)
Safeway Stores 92, Inc. (DE)
Safeway Stores 96, Inc. (DE)
Safeway Stores 97, Inc. (DE)
Safeway Stores 98, Inc. (DE)
Safeway Denver, Inc. and its subsidiaries: (DE)
Safeway Stores 44, Inc. (DE)
Safeway Stores 45, Inc. (DE)
Safeway Stores 46, Inc. (DE)
Safeway Stores 47, Inc. (DE)
Safeway Stores 48, Inc. (DE)
Safeway Stores 49, Inc. (DE)
Safeway Stores 50, Inc. (DE)
Safeway Gift Cards, LLC (AZ)
Safeway Holdings I, LLC and its subsidiary: (DE)
Groceryworks.com, LLC and its subsidiary: (DE)
Groceryworks.com Operating Company, LLC (DE)
Safeway Leasing, Inc. (DE)
Safeway Philtech Holdings, Inc. and its subsidiary: (DE)
Safeway Philtech Inc. (Philippines)
Safeway Richmond, Inc. and its subsidiary: (DE)
Safeway Stores 58, Inc. and its subsidiary: (DE)
Safelease, Inc. (DE)
Safeway Select Gift Source, Inc. (DE)
Safeway Southern California, Inc. and its subsidiaries: (DE)
Safeway Stores 18, Inc. (DE)
Safeway Stores 26, Inc. (DE)
Safeway Stores 28, Inc. (DE)
Safeway Stores 31, Inc. (DE)
The Vons Companies, Inc. and its subsidiary: (MI)
Vons Sherman Oaks, LLC (OR)
Safeway Stores 42, Inc. (DE) Safeway Stores 43, Inc. (DE)
Safeway Supply, Inc. and its subsidiaries: (DE)
Consolidated Procurement Services, Inc. (DE)
Safeway Stores 71, Inc. (DE)
Safeway Stores 72, Inc. (DE)
Safeway Stores 73, Inc. (DE)
Safeway Stores 74, Inc. (DE)
Safeway Stores 75, Inc. (DE)
Safeway Stores 76, Inc. (DE)
Safeway Stores 77, Inc. (DE)
Safeway Trucking, Inc. (DE)
6
SCHEDULE OF SUBSIDIARIES, Continued
Saturn Development I, Inc. (DE)
Saturn Development LLC (DE)
SRG, Inc. (DE)
SSI AK Holdings, Inc. and its subsidiary: (DE)
Carr-Gottstein Foods Co. and its subsidiaries: (DE)
AOL Express, Inc. (AK)
APR Forwarders, Inc. (AK)
Stoneridge Holdings, LLC and its subsidiary: (DE)
Safeway Health Inc. (DE)
Taylor Properties, Inc. (DE)
7
Exhibit 23.2
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the use in this Registration Statement on Form S-1 of our report dated April 24, 2019, (October 23, 2019, as to Note 16 Net Income (Loss) Per Common Share) relating to the consolidated financial statements of Albertsons Companies, Inc. We also consent to the reference to us under the heading Experts in such Registration Statement.
/s/ Deloitte & Touche LLP
Boise, Idaho
March 6, 2020
Exhibit 23.3
CONSENT OF CUSHMAN & WAKEFIELD, INC.
We hereby consent to the use of our name in this Registration Statement of Albertsons Companies, Inc. on Form S-1 (the Registration Statement), and to the references to information contained in Cushman & Wakefield, Inc. appraisals wherever appearing in the Registration Statement.
/s/ George J. Rago |
Name: George J. Rago |
Title: Executive Managing Director |
Cushman & Wakefield, Inc.
New York, New York 10104
March 6, 2020