Exhibit 10.1

 

EXECUTION VERSION

 

TRANSITION SERVICES AGREEMENT

 

by and between

 

SUPERVALU INC.

 

and

 

ALBERTSON’S LLC

 

Dated as of March 21, 2013

 

--------------------------------------------------------------------------------

 

Table of Contents

 

 

 

Page

 

 

 

ARTICLE I AGREEMENT TO PROVIDE AND ACCEPT SERVICES

1

Section 1.1

Services

2

Section 1.2

Books and Records; Availability of Information

2

Section 1.3

Cost of Providing the Services

2

Section 1.4

Required Consents

2

Section 1.5

Intellectual Property Licenses

3

Section 1.6

Heritage Albertson’s System Code

3

Section 1.7

IT Systems

3

 

 

 

ARTICLE II SERVICES; PAYMENT; INDEPENDENT CONTRACTORS SERVICES

4

Section 2.1

Services To Be Provided

4

Section 2.2

Cooperation

6

Section 2.3

Steering Committee

6

Section 2.4

Additional Services

7

Section 2.5

Pricing; Payments

7

Section 2.6

Disclaimer of Warranty

8

Section 2.7

Taxes

8

Section 2.8

Use of Services; Third Party Transferees

8

Section 2.9

Confidential Information; Third Party Transferees

9

Section 2.10

Work-around

9

Section 2.11

Prior Resolution of Certain Disputes

9

Section 2.12

Agency; Power of Attorney

9

Section 2.13

Accounting Adjustment Procedure

10

 

 

ARTICLE III TERM OF SERVICES

10

Section 3.1

Term

10

Section 3.2

Option(s) to Extend Term

10

Section 3.3

Additional Service Extensions

12

Section 3.4

Transition of TSA Services

12

 

 

ARTICLE IV FORCE MAJEURE

13

Section 4.1

Force Majeure

13

 

 

ARTICLE V LIABILITIES

14

Section 5.1

Consequential and Other Damages

14

Section 5.2

Limitation of Liability

14

Section 5.3

Obligation To Re-perform

14

Section 5.4

Indemnity

14

 

 

ARTICLE VI TERMINATION

15

Section 6.1

Termination

15

Section 6.2

Breach of Services Agreement; Dispute Resolution

15

Section 6.3

Sums Due

16

 

i

--------------------------------------------------------------------------------

 

Section 6.4

Service Provider Termination Right

16

Section 6.5

Services Following Expiration or Termination

17

Section 6.6

Effect of Termination

17

 

 

ARTICLE VII MISCELLANEOUS

17

Section 7.1

Notice

17

Section 7.2

Incorporation of Purchase Agreement Provisions

18

Section 7.3

No Third Party Beneficiaries

19

Section 7.4

Assignment

19

Section 7.5

Termination of Existing TSA

19

 

Schedule 1

Procurement of Goods

Schedule 2

Other Services

 

 

Exhibit A

Fees

Exhibit B

System Code Purchase Option

Exhibit C

IT Systems - Redlight Schedule

Exhibit D

Dispute Resolution Process

Exhibit E

Resolution of Certain Disputes

Exhibit F

PCI Compliance

Exhibit G

Services Elimination and Fee Credit

 

ii

--------------------------------------------------------------------------------

 

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

 

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

 

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

 

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

 

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

 

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

 

ARTICLE I

 

AGREEMENT TO PROVIDE AND ACCEPT SERVICES

 

1

--------------------------------------------------------------------------------

 

Section 1.1                                    Services.

 

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

 

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

 

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

 

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

 

2

--------------------------------------------------------------------------------

 

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

 

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

 

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

 

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

 

3

--------------------------------------------------------------------------------

 

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

 

ARTICLE II

 

SERVICES; PAYMENT; INDEPENDENT CONTRACTORS SERVICES

 

Section 2.1                                    Services To Be Provided.

 

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

 

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

 

4

--------------------------------------------------------------------------------

 

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

 

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

 

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

 

5

--------------------------------------------------------------------------------

 

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

 

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

 

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

 

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

 

Section 2.3                                    Steering Committee.

 

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

 

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

 

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

 

6

--------------------------------------------------------------------------------

 

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

 

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

 

Section 2.4                                    Additional Services.

 

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

 

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

 

Section 2.5                                    Pricing; Payments.

 

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

 

7

--------------------------------------------------------------------------------

 

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

 

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

 

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

 

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

 

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

 

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

 

8

--------------------------------------------------------------------------------

 

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

 

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

 

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

 

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

 

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

 

9

--------------------------------------------------------------------------------

 

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

 

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

 

ARTICLE III

 

TERM OF SERVICES

 

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

 

Section 3.2                                    Option(s) to Extend Term.

 

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

 

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

 

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

 

Option Exercise

 

 

 

Defined Term (for

Deadline

 

Extension Period

 

reference purposes in this TSA)

18-month Anniversary of Effective Date

 

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

 

First Annual Extension Term

 

 

 

 

 

 

 

42-month Anniversary of

 

Second Annual Extension Term

 

10

--------------------------------------------------------------------------------

 

Option Exercise

 

 

 

Defined Term (for

Deadline

 

Extension Period

 

reference purposes in this TSA)

30-month Anniversary of Effective Date

 

Effective Date through 54-month Anniversary of Effective Date

 

 

 

 

 

 

 

42-month Anniversary of Effective Date

 

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

 

Third Annual Extension Term

 

 

 

 

 

54-month Anniversary of Effective Date

 

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

 

Fourth Annual Extension Term

 

 

 

 

 

66-month Anniversary of Effective Date

 

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

 

Fifth Annual Extension Term

 

 

 

 

 

78-month Anniversary of Effective Date

 

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

 

Sixth Annual Extension Term

 

 

 

 

 

90-month Anniversary of Effective Date

 

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

 

Seventh Annual Extension Term

 

 

 

 

 

102-month Anniversary of Effective Date

 

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

 

Eighth Annual Extension Term

 

 

 

 

 

114-month Anniversary of Effective Date

 

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

 

Ninth Annual Extension Term

 

 

 

 

 

126-month Anniversary of Effective Date

 

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

 

Tenth Annual Extension Term

 

11

--------------------------------------------------------------------------------

 

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

 

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

 

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

 

Section 3.4                                    Transition of TSA Services.

 

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

 

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

 

12

--------------------------------------------------------------------------------

 

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

 

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

 

ARTICLE IV

 

FORCE MAJEURE

 

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

 

13

--------------------------------------------------------------------------------

 

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

 

ARTICLE V

 

LIABILITIES

 

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

 

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

 

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

 

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

 

14

--------------------------------------------------------------------------------

 

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

 

ARTICLE VI

 

TERMINATION

 

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

 

Section 6.2            Breach of Services Agreement; Dispute Resolution.

 

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

 

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

 

15

--------------------------------------------------------------------------------

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

16

--------------------------------------------------------------------------------

 

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

 

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

 

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

 

ARTICLE VII

 

MISCELLANEOUS

 

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

 

To Albertson’s:

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

 

17

--------------------------------------------------------------------------------

 

 

Attn: Paul Rowan, Esq.

 

Facsimile: (208) 395 - 4625

 

 

 

with a copy to:

 

 

 

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

 

 

To SVU:

SUPERVALU INC.

Attn: Legal Department
Mailing Address:

PO Box 990

Minneapolis, MN 55440-0990

Street Address:

7075 Flying Cloud Drive

Eden Prairie, MN 55344-3691

 

 

 

with a copy to:

 

 

 

SUPERVALU INC.

7075 Flying Cloud Drive

Eden Prairie, MN 55344-3691

Attn: J. Andrew Herring

 

 

 

and:

 

 

 

Wachtell, Lipton, Rosen & Katz

51 West 52nd Street

New York, NY 10019

Attn: David Silk, Esq.

Igor Kirman, Esq.

DongJu Song, Esq.

Facsimile: (212) 403-2393

 

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

 

18

--------------------------------------------------------------------------------

 

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

 

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

 

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

 

19

--------------------------------------------------------------------------------

 

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

 

 

SUPERVALU INC.

 

 

 

 

 

By:

/s/ Todd N. Sheldon

 

 

Name:

 

 

Title:

 

 

 

 

 

ALBERTSON’S LLC

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

[Signature Page to LLC Transition Services Agreement]

 

20

--------------------------------------------------------------------------------

 

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

 

 

ALBERTSON’S LLC

 

 

 

 

 

By:

/s/ Susan McMillan

 

 

Name: Susan McMillan

 

 

Title:

 

[Signature Page to SVU/ABS TSA]

 

21

--------------------------------------------------------------------------------

 

Schedule 1 — Procurement of Goods

 

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

 

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

 

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

 

Schedule 1-1

--------------------------------------------------------------------------------

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Schedule 1-2

--------------------------------------------------------------------------------

 

Schedule 2 — Other Service

 

[**]

 

--------------------------------------------------------------------------------

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

 

--------------------------------------------------------------------------------

 

 

Exhibit A — Fees

 

I.                                        Fees for Services to be provided by
SVU

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Exhibit A-1

--------------------------------------------------------------------------------

 

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

 

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

 

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

 

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

 

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

 

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

 

Exhibit A-2

--------------------------------------------------------------------------------

 

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

 

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

 

E.                                     Fees for New or Acquired Supermarkets

 

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

 

F.                                      Store and Distribution Center Counts.

 

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

 

Exhibit A-3

--------------------------------------------------------------------------------

 

G.                                    No Proration of Weekly Payments.

 

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

 

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

 

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

 

Exhibit A-4

--------------------------------------------------------------------------------

 

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

 

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

 

A.                                    General Office Services.

 

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

 

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

 

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

 

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

 

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

 

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

 

1.                                      Cafeteria, Catering and/or Vending
Services;

 

2.                                      Mailroom Services;

 

3.                                      Security;

 

4.                                      Common Area Maintenance; and

 

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

 

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

 

Exhibit A-5

--------------------------------------------------------------------------------

 

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

 

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

 

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

 

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

 

B.                                    Records Center Services.

 

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

 

C.                                    Environmental Services.

 

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

 

Exhibit A-6

--------------------------------------------------------------------------------

 

Exhibit B — System Code Purchase Option

 

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

 

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

 

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

 

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

 

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

 

Exhibit B-1

--------------------------------------------------------------------------------

 

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

 

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

 

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

 

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

 

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

 

Exhibit B-2

--------------------------------------------------------------------------------

 

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

 

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

 

Exhibit B-3

--------------------------------------------------------------------------------

 

Exhibit C — IT Systems - Redlight Schedule

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Exhibit C-1

--------------------------------------------------------------------------------

 

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

 

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

 

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

 

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

 

Exhibit C-2

--------------------------------------------------------------------------------

 

Exhibit D — Dispute Resolution Process

 

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

 

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

 

Exhibit D-1

--------------------------------------------------------------------------------

 

Exhibit E - Resolution of Certain Disputes

 

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

 

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

 

Exhibit E-1

--------------------------------------------------------------------------------

 

Exhibit F — PCI Compliance

 

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

 

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

 

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

 

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

 

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

 

--------------------------------------------------------------------------------

 

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

 

--------------------------------------------------------------------------------

 

Exhibit G — Services Elimination and Fee Credit

 

[**]

 

--------------------------------------------------------------------------------

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

 

--------------------------------------------------------------------------------