ex10-2.htm


    EXECUTION
VERSION

    


    FIFTH AMENDMENT,
ACKNOWLEDGMENT

    AND CONSENT TO CREDIT
AGREEMENT

     

    This
FIFTH AMENDMENT, ACKNOWLEDGMENT
AND CONSENT TO CREDIT
AGREEMENT, dated as of October 10, 2008 (this “Amendment”) is by and
among: (a) THE PENN TRAFFIC COMPANY, a Delaware corporation (“Penn Traffic”), PENNY
CURTISS BAKING COMPANY, INC., a New York corporation, and BIG M SUPERMARKETS,
INC., a New York corporation (jointly, severally and collectively referred to
herein, together with Penn Traffic, as “Borrowers” and
individually as “Borrower”); (b) the
other Credit Parties signatory hereto; (c) GENERAL ELECTRIC CAPITAL CORPORATION,
a Delaware corporation (in its individual capacity, “GE Capital”), for
itself, as Lender, and as Agent for Lenders; and (d) the other Lenders signatory
hereto from time to time (collectively, the “Lenders”).

     

    WITNESSETH:

     

    WHEREAS,
the Borrowers, Agent and Lenders are parties to that certain Credit Agreement,
dated as of April 13, 2005 (including all annexes, exhibits and schedules
thereto, and as amended, restated, supplemented or otherwise modified from time
to time, the “Credit
Agreement”); and

     

    WHEREAS,
Penn Traffic has entered into a Supply Agreement, dated as of January 29, 2008
(together with the related Inventory Agreement, the “Existing Supply
Agreement”), with C&S Wholesale Grocers, Inc. (“C&S”) pursuant to
which Penn Traffic agreed, among other things, to purchase produce from C&S
on the terms described therein;

     

    WHEREAS,
Penn Traffic and C&S have agreed to amend and restate the Existing Supply
Agreement (the “Amended Supply
Agreement”), together with all exhibits and schedules thereto, including
the related inventory agreement (the “Non-Produce Inventory
Agreement”) for additional categories of inventory, to provide for, among
other arrangements as set forth below and in the Amended Supply Agreement, the
procurement and sale by C&S, and the purchase by Penn Traffic, of
substantially all other categories of merchandise (excluding tobacco and
pharmacy) and to make certain other modifications;

     

    WHEREAS,
for the avoidance of doubt, particularly in light of the provisions in the
Amended Supply Agreement requiring Penn Traffic and the other Borrowers to sell
certain existing inventory to C&S, among other arrangements as described in
the Amended Supply Agreement, Borrowers have requested that Agent and Lenders
consent to Penn Traffic’s entry into the Amended Supply Agreement and to the
transactions contemplated thereby on the terms and conditions provided for
herein.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

       

    

    NOW
THEREFORE, in consideration of the premises and for other good and valuable
consideration, the receipt, adequacy and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:

     

    1.           Definitions. Capitalized
terms not otherwise defined herein shall have the meanings ascribed to them in
the Credit Agreement or Annex A
thereto.

     

    2.           Acknowledgment and
Consent.  Notwithstanding the provisions of Sections 1.3(b)(ii)
and 6.8 of the
Credit Agreement, Agent and Lenders hereby consent to (i) Penn Traffic’s
execution and delivery of the Amended Supply Agreement, a copy of which is
attached hereto as Exhibit A (it being
understood that any amendments or modifications to the Amended Supply Agreement
attached hereto as Exhibit A following the effectiveness of this Amendment that
adversely affects any of the rights and remedies of the Agent or any Lender must
be acceptable to the Agent in its sole discretion), (ii) the transactions
contemplated thereby and (iii) Borrowers’ and the other Credit Parties’
performance of their respective obligations thereunder.  Furthermore,
any temporary dip in Excess Revolver Availability below any required minimums in
the Credit Agreement shall not constitute an Event of Default so long as it has
been cured on or prior to the date hereof.  In addition, Agent and
Lenders hereby acknowledge and agree that: (a) the sale of the Existing
Inventory (as such term is defined in the Non-Produce Inventory Agreement) to
C&S as contemplated by the Amended Supply Agreement shall be free and clear
of all existing and future liens, claims and encumbrances of Agent and the
Lenders, and Agent and Lenders hereby release any and all liens, claims or
encumbrances any of them has or may have on the Existing Inventory (as defined
in the Non-Produce Inventory Agreement) (including any Proceeds thereof until
the Transfer of Ownership (as defined below)); and (b) the Merchandise (as
defined in the Amended Supply Agreement) shall not constitute Collateral (and no
lien, claim or encumbrance of Agent or any Lender shall attach and neither the
Agent nor any Lender shall have any remedial rights with respect thereto) until
the time that such Merchandise is loaded and sealed at a Facility (as defined in
the Amended Supply Agreement) and such Merchandise has left such Facility and is
in transit to a Penn Traffic Store (as defined in the Amended Supply Agreement;
such time, the “Transfer of
Ownership”).  Agent, Lenders, Borrowers and the other Credit
Parties agree that until the Transfer of Ownership, C&S shall retain
ownership (as seller, consignor and/or bailor, as the case may be) of and hold a
lien and security interest in and to such Merchandise (including the Proceeds
thereof) until the Transfer of Ownership to secure all sums owing to C&S
pursuant to the Amended Supply Agreement or any other agreements between C&S
and the Borrowers (and, until the Transfer of Ownership, neither the Agent, the
Lenders, the Borrowers nor any Credit Party shall have any lien, claim or
encumbrances thereon, including any Proceeds thereof), and C&S may, in its
sole and absolute discretion, exercise any of its rights and remedies with
respect to all or any part of such Merchandise until the Transfer of Ownership,
and none of Agent, Lenders, Borrowers or any other Credit Party shall have any
lien, claim or encumbrance including, without limitation, any security interest
in any such Merchandise until the Transfer of
Ownership.  Notwithstanding anything to the contrary contained herein,
upon the Transfer of Ownership, any lien or security interest granted to C&S
under the Supply Agreement and held by C&S upon such Merchandise shall
automatically and without further action required by any Person be released,
provided that
any such release shall not prejudice any statutory rights or liens otherwise
available to C&S under PACA, the Code or other applicable law as a seller of
goods.  With respect to the provisions of this Section 2 only,
C&S shall be deemed a third party beneficiary of this Amendment, coupled
with the power of enforcement thereof.

     

    
      
         

      

      
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    3.           Amendment to Section 11.2(d)
of the Credit Agreement.  Section 11.2(d) of
the Credit is hereby amended as of the Fifth Amendment Effective Date by
amending and restating clause (i) thereof in
its entirety to read as follows:

     

    “(i)           requiring
the consent of all affected Lenders, the consent of Lenders holding 51% or more
of the aggregate Commitments is obtained, but the consent of other Lenders whose
consent is required is not obtained (any such Lender whose consent is not
obtained as described in this clause (i) and in clauses (ii), (iii) and (iv)
below being referred to as a “Non-Consenting Lender”),”

     

    4.           Amendments to Annex A of the
Credit Agreement.

     

    (a)           The
definition of “Requisite Lenders” set forth in Annex A of the Credit
Agreement is amended as of the Fifth Amendment Effective Date by inserting the
following new clause before the period at the end thereof:

     

    “; provided that if any
single Lender holds (a) more than 50% of the Commitments of all Lenders, or (b)
if the Commitments have been terminated, more than 50% of the aggregate
outstanding amount of all Loans, “Requisite Lenders” means such Lender plus one additional
Lender”

     

    (b)           The
definition of “Requisite Revolving Lenders” set forth in Annex A of the Credit
Agreement is amended as of the Fifth Amendment Effective Date by inserting the
following new clause before the period at the end thereof:

     

    “; provided that if any
single Lender holds (a) more than 50% of the Revolving Loan Commitments of all
Lenders, or (b) if the Revolving Loan Commitments have been terminated, more
than 50% of the aggregate outstanding amount of the Revolving Loan (including
any Swing Line Loan), “Requisite Revolving Lenders” means such Lender plus one additional
Lender”

     

    (c)           The
definition of “Requisite Term Lenders” set forth in Annex A of the Credit
Agreement is amended as of the Fifth Amendment Effective Date by inserting the
following new clause before the period at the end thereof:

     

    “; provided that if any
single Lender holds (a) more than 50% of the Term Loan Commitments of all such
Lenders, or (b) if the Term Loan Commitments have been terminated, more than 50%
of the aggregate outstanding amount of the Term Loan, “Requisite Term Lenders”
means such Lender plus one additional
Lender”

     

    
      
         

      

      
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    5.           Amendment to Annex J of the
Credit Agreement.  Annex J to the Credit
Agreement is hereby amended as of the Fifth Amendment Effective Date by
replacing such Annex
J in its entirety with the Annex J attached as
Exhibit B
hereto.

     

    6.           Covenants.  In
consideration of the foregoing:

     

    (a)           Penn
Traffic agrees to provide Agent with (i) not less than ten (10) Business Days’
prior written notice of its intention to exercise the right of early termination
pursuant to Section
14.2 of the Amended Supply Agreement, (ii) written notice of any material
breach by C&S under the Amended Supply Agreement that gives Penn Traffic the
right to terminate the Amended Supply Agreement as soon as practicable following
Penn Traffic becoming aware thereof and (iii) written notice as soon as
practicable following Penn Traffic being notified of C&S’s early termination
pursuant to Section
14.1 of the Amended Supply Agreement.  In addition, Penn
Traffic agrees to provide Agent with not less than three (3) Business Days’
prior written notice of its intention or requirement to make a payment to
C&S pursuant to Section 14 of the
Amended Supply Agreement, except with respect to any termination by C&S
pursuant to Section
14.1(a).  By signing the acknowledgement below, C&S agrees
to provide Agent with not less than three (3) Business Days’ prior written
notice of its intention to exercise the right of early termination pursuant to
Section 14.1(a)(ii),
(iii) or (iv) of the Amended Supply Agreement and one (1) Business Day’s
prior written notice of its intention to exercise the right of early termination
pursuant to Section
14.1(a)(i) of the Amended Supply Agreement.

     

    (b)           Penn
Traffic agrees for the benefit of the Agent and the Lenders to segregate any
inventory held at any Facility (as defined in the Amended Supply Agreement) that
does not constitute Merchandise (as defined in the Amended Supply
Agreement).

     

    Failure
by Penn Traffic to comply with any covenant contained in Section 6(a) or 6(b)
above shall constitute an immediate Event of Default under the Credit
Agreement.

     

    7.           Representations and
Warranties.  To induce Agent to enter into this Amendment, each
of the Credit Parties, jointly and severally, makes the following
representations and warranties to Agent and Lenders:

     

    (a)           The
execution, delivery and performance of this Amendment and the performance of the
Credit Agreement after giving effect to this Amendment by such Credit Party
party thereto: (i) are within such Person’s corporate or limited liability
company power, as applicable; (ii) have been duly authorized by all necessary
corporate or limited liability company; (iii) do not contravene any provision of
such Person’s charter, bylaws or operating agreement as applicable; (iv) do not
violate any law or regulation, or any order or decree of any court or
Governmental Authority by which such Person or its assets are bound; (v) do not
conflict with or result in the breach or termination of, constitute a default
under or accelerate or permit the acceleration of any performance required by,
any indenture, mortgage, deed of trust, material lease, material agreement or
other material instrument to which such Person is a party or by which such
Person or any of its property is bound; (vi) do not result in the creation or
imposition of any Lien upon any of the property of such Person other than those
in favor of Agent, on behalf of itself and Lenders, pursuant to the Loan
Documents; and (vii) other than the consents being obtained on or prior to the
date hereof, do not require the consent or approval of any Governmental
Authority or any other Person.

     

    
      
         

      

      
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    (b)           This
Amendment has been duly executed and delivered by or on behalf of such Credit
Party.

     

    (c)           This
Amendment constitutes a legal, valid and binding obligation of such Credit
Party, enforceable against such Credit Party in accordance with its
terms.

     

    (d)           No
Default or Event of Default has occurred and is continuing after giving effect
to this Amendment.

     

    (e)           After
giving effect to this Amendment, the representations and warranties of such
Credit Party contained in the Credit Agreement and each other Loan Document
shall be true and correct on and as of the date hereof with the same effect as
if such representations and warranties had been made on and as of such date,
except that any such representation or warranty which is expressly made only as
of a specified date need be true only as of such date and except for changes
therein expressly permitted by the Credit Agreement.

     

    8.           No Other
Amendments/Waivers.  Except as expressly amended herein, the
Credit Agreement and the other Loan Documents shall be unmodified and shall
continue to be in full force and effect in accordance with their
terms.  In addition, except as expressly set forth herein, this
Amendment shall not be deemed a waiver of any term or condition of any Loan
Document and shall not be deemed to prejudice any right or rights which Agent,
for itself and Lenders, may now have or may have in the future under or in
connection with any Loan Document or any of the instruments or agreements
referred to therein, as the same may be amended from time to time.

     

    9.           Expenses.  (a)
In connection with this Amendment, Borrowers agree to pay to Agent for the
ratable benefit of the Lenders, in immediately available funds, on or before the
Fifth Amendment Effective Date, a non-refundable amendment fee in the amount of
$100,000 (the “Amendment
Fee”).

     

    (b)           Each
Borrower hereby reconfirms its respective obligations pursuant to Section 11.3 of the
Credit Agreement to pay and reimburse Agent, for all reasonable costs and
expenses (including, without limitation, reasonable fees of counsel) incurred in
connection with the negotiation, preparation, execution and delivery of this
Amendment and all other documents and instruments delivered in connection
herewith.

     

    10.           Effectiveness.  This
Amendment shall become effective as of the date hereof (the “Fifth Amendment Effective
Date”) only upon satisfaction in full in the reasonable judgment of Agent
of each of the following conditions:

     

    (a)           Payment of the Amendment
Fee.  Borrower shall have paid the Amendment Fee to
Agent.

     

    
      
         

      

      
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    (b)           Amendment.  Agent
shall have received counterpart signature pages of this Amendment duly executed
and delivered by each of Agent, Lenders and the Borrowers.

     

    (c)           Consent to Supplemental Real
Estate Facility.  Agent shall have received evidence that
Borrowers have received a duly executed acknowledgement and consent to the
Supplemental Real Estate Facility, in substantially the form attached hereto as
Exhibit
C.

     

    (d)           Representations and
Warranties.  The representations and warranties of the Credit
Parties in this Amendment shall be true and correct on and as of the date
hereof, except that any such representation or warranty which is expressly made
only as of a specified date need be true only as of such date.

     

    (e)           Net Sale
Proceeds.  The proceeds payable by C&S under the Amended
Supply Agreement with respect to purchase of the Existing Inventory by C&S
as described in the second sentence of Section 2 hereof
shall be received by the Agent by wire transfer in immediately available funds
at the account identified on Schedule 1
hereto.

     

    11.           GOVERNING
LAW.  THIS AMENDMENT SHALL BE GOVERNED BY, AND INTERPRETED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK.

     

    12.           Counterparts.  This
Amendment may be executed by the parties hereto on any number of separate
counterparts and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.

     

    13.           Notice.  Any
notice to be delivered to Agent hereunder shall be delivered to following
addresses:

     

    General
Electric Capital Corporation

    201
Merritt 7 – 3rd Floor

    P.O. Box
5201

    Norwalk,
Connecticut  06856

    Attention:
The Penn Traffic Company Account Manager

    Telecopier
No.:  (203) 956-4002

    Telephone
No.:  (203) 956-4413

    


    with
copies to:

    


    Paul,
Hastings, Janofsky & Walker LLP

    75 East
55th Street

    New York,
New York 10022

    Attention:
Rick Denhup, Esq.

    Telecopier
No.:  (212) 318-6366

    Telephone
No.:  (212) 230-5161

     

    
      
         

      

      
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    and

    


    General
Electric Capital Corporation

    201
Merritt 7 – 3rd Floor

    P.O. Box
5201

    Norwalk,
Connecticut  06856

    Attention:  Corporate
Counsel - Commercial Finance

    Telecopier
No.: 203-956-4001

    Telephone
No.: 203-956-4383

    


    Any
notice to be delivered to C&S hereunder shall be delivered to following
addresses:

     

    C&S Wholesale Grocers,
Inc.

    7 Corporate Drive

    Keene, New
Hampshire  03431

    Attention: Richard B. Cohen, Chief
Executive Officer

    Telecopier No.: (603)
354-4692

    Telephone No.: (603)
354-4601

    


    With a copy to:

    


    General Counsel

    C&S Wholesale Grocers,
Inc.

    7 Corporate Drive

    Keene, New
Hampshire  03431

    Telecopier No.: (603)
354-4694

    Telephone No.: (603)
354-5885

    


    [SIGNATURE
PAGES FOLLOW]

    


    
      
         

      

      
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    IN
WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed and delivered as of the day and year first above written.

    


    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                	
                                        BORROWERS

                                      
	 
      
	
                                        THE
      PENN TRAFFIC COMPANY

                                      
	 	 
	
                                        By:

                                      	 
      
	
                                        Name:

                                      	 
      
	
                                        Title:

                                      	 
      
	 
      	 
      
	
                                        PENNY
      CURTISS BAKING COMPANY, INC.

                                      
	 
      	 
      
	
                                        By:

                                      	 
      
	
                                        Name:

                                      	 
      
	
                                        Title:

                                      	 
      
	 
      	 
      
	
                                        BIG
      M SUPERMARKETS, INC.

                                      
	 
      	 
      
	
                                        By:

                                      	 
      
	
                                        Name:

                                      	 
      
	
                                        Title:

                                      	 
      


                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

     

    [SIGNATURE
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                      LENDERS

                    
	 
      
	
                      GENERAL
      ELECTRIC CAPITAL

                    
	
                      CORPORATION, as Agent
      and Lender

                    
	 
      	 
      
	
                      By:

                    	 
      
	
                      Name:

                    	 
      
	
                      Title:

                    	
                      Duly
      Authorized
Signatory

                    


            

          

        

      

    

    


    [SIGNATURE
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                        BANK
      OF AMERICA, N.A.,

                      
	
                        as
      Lender

                      
	 
      	 
      
	
                        By:

                      	 
      
	
                        Name:

                      	 
      
	
                        Title:

                      	 
      


              

            

          

        

      

    

     

    [SIGNATURE
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                      WELLS
      FARGO RETAIL FINANCE, LLC,

                    
	
                      as
      Lender

                    
	 
      	 
      
	
                      By:

                    	 
      
	
                      Name:

                    	 
      
	
                      Title:

                    	 
      


            

          

        

      

    

     

    [SIGNATURE
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                      WACHOVIA
      CAPITAL FINANCE

                      CORPORATION
      (NEW ENGLAND) (f/k/a

                      CONGRESS
      FINANCIAL CORPORATION

                      (NEW
      ENGLAND)), as Lender

                    
	 
      	 
      
	
                      By:

                    	 
      
	
                      Name:

                    	 
      
	
                      Title:

                    	 
      


            

          

        

      

    

     

    [SIGNATURE
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    The
following Persons are signatories to this Amendment in their capacity as Credit
Parties and not as Borrowers.

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      	
                                              SUNRISE
      PROPERTIES, INC.

                                            
	 
      	 
      
	
                                              By:

                                            	 
      
	
                                              Name:

                                            	 
      
	
                                              Title:

                                            	 
      
	 
      	 
      
	
                                              PENNWAY
      EXPRESS, INC.

                                            
	 
      	 
      
	
                                              By:

                                            	 
      
	
                                              Name:

                                            	 
      
	
                                              Title:

                                            	 
      
	 
      	 
      
	
                                              COMMANDER
      FOODS INC.

                                            
	 
      	 
      
	
                                              By:

                                            	 
      
	
                                              Name:

                                            	 
      
	
                                              Title:

                                            	 
      
	 
      	 
      
	
                                              P
      AND C FOOD MARKETS INC. OF VERMONT

                                            
	 
      	 
      
	
                                              By:

                                            	 
      
	
                                              Name:

                                            	 
      
	
                                              Title:

                                            	 
      
	 
      	 
      
	
                                              P.T.
      DEVELOPMENT, LLC

                                            
	 
      	 
      
	
                                              By:

                                            	 
      
	
                                              Name:

                                            	 
      
	
                                              Title:

                                            	 
      


                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

     

    [SIGNATURE
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                      P.T.
      FAYETTEVILLE/UTICA, LLC

                    
	 
      	 
      
	
                      By:

                    	 
      
	
                      Name:

                    	 
      
	
                      Title:

                    	 
      


            

          

        

      

    

     

    [SIGNATURE
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                      ACKNOWLEDGED AND AGREED:

                    
	 
      
	
                      C&S
      WHOLESALE GROCERS, INC.

                    
	 
      	 
      
	
                      By:

                    	 
      
	
                      Name:

                    	 
      
	
                      Title: