Document:

Exhibit 10.3

 

FIRST
AMENDMENT TO

AMENDED AND RESTATED CREDIT AGREEMENT

 

This First Amendment to Amended and Restated
Credit Agreement (the “First Amendment”) is made as of the 6th day of June,
2005 by and among

 

PATHMARK STORES, INC., a corporation organized
under the laws of the State of Delaware, having a place of business at 200
Milik Street, Carteret, New Jersey 07008;

 

the LENDERS party hereto; and

 

FLEET RETAIL GROUP, LLC (f/k/a Fleet Retail
Group, Inc.), as Administrative Agent and Collateral Agent for the
Lenders, a Delaware corporation, having a place of business at 40 Broad Street,
Boston, Massachusetts 02109

 

THE CIT GROUP/BUSINESS CREDIT, INC, as
Syndication Agent; and

 

GMAC COMMERCIAL FINANCE LLC and GENERAL
ELECTRIC CAPITAL CORPORATION, as Co-Documentation Agents

 

in
consideration of the mutual covenants herein contained and benefits to be
derived herefrom.

 

WITNESSETH

 

WHEREAS, the Borrower, the Administrative
Agent, the Collateral Agent, the Lenders, the Syndication Agent, and the
Co-Documentation Agents have entered into an Amended and Restated Credit
Agreement dated as of October 1, 2004 (as amended and in effect, the “Credit
Agreement”); and

 

WHEREAS, the Borrower has advised the
Administrative Agent, the Collateral Agent, the Lenders, the Syndication Agent,
and the Co-Documentation Agents that the Borrower has agreed to sell certain of
its securities to Yucaipa Corporate Initiatives Fund I, L.P., Yucaipa American
Alliance Fund I, L.P., and Yucaipa America Alliance (Parallel) Fund I, L.P.; and

 

WHEREAS, the consummation of the securities
purchase with Yucaipa Corporate Initiatives Fund I, L.P., Yucaipa American
Alliance Fund I, L.P., and Yucaipa America Alliance (Parallel) Fund I, L.P.
without the consent of the Required Lenders would constitute an Event of
Default under the Credit Agreement; and

 

WHEREAS, the Borrower has requested that the
Lenders consent to the consummation of the securities purchase with Yucaipa
Corporate Initiatives Fund I, L.P., Yucaipa American Alliance Fund I, L.P., and
Yucaipa America Alliance (Parallel) Fund I, L.P. and amend certain of the
provisions of the Credit Agreement; and

 

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WHEREAS, the Borrower, the Administrative
Agent, the Collateral Agent, the Lenders, the Syndication Agent, and the
Co-Documentation Agents have agreed to amend certain provisions of the Credit
Agreement as set forth herein.

 

NOW THEREFORE, it is hereby agreed as
follows:

 

1.                                       Definitions:
All capitalized terms used herein and not otherwise defined shall have the same
meaning herein as in the Credit Agreement.

 

2.                                       Amendments to
Article I.    The provisions of Article I
of the Credit Agreement are hereby amended as follows:

 

a.                                       By deleting the
definition of “Change in Control” and substituting the following in its stead:

 

“Change in Control” means (a) the acquisition of ownership,
directly or indirectly, beneficially or of record, by any Person or group
(within the meaning of the Securities Exchange Act of 1934 and the rules of
the Securities and Exchange Commission thereunder as in effect on the date
hereof), other than (i) the two largest shareholders of the Borrower on
the Effective Date or (ii) Yucaipa, of shares representing more than 25%
of the aggregate ordinary voting power represented by the issued and
outstanding capital stock of the Borrower, (b) occupation of a majority of
the seats (other than vacant seats or seats held by Yucaipa pursuant to the
Stockholders Agreement substantially in the form attached as Exhibit C to
the Securities Purchase Agreement dated as of March 23, 2005 between the
Borrower and Yucaipa) on the board of directors of the Borrower by Persons who
were neither (i) nominated by the board of directors of the Borrower nor (ii) nominated
by a majority of the Independent Directors (as defined in such Stockholders
Agreement) in accordance with such Stockholders Agreement, nor (iii) appointed
by directors so nominated or (c) the occurrence of any change of control
event as defined in any indenture in respect of the Initial Subordinated
Indebtedness requiring the Borrower to prepay, redeem or repurchase (or make an
offer to prepay, redeem or repurchase) any portion of such Initial Subordinated
Indebtedness.

 

b.                                      By deleting the
definition of “Consolidated EBITDA” in its entirety and substituting the
following in its stead:

 

“Consolidated EBITDA” means, for any period, Consolidated Net
Income for such period, plus, without duplication and to the extent
deducted from revenues in determining Consolidated Net Income, the sum of (a) the
aggregate amount of Consolidated Interest Expense for such period, (b) the
aggregate amount of letter of credit fees paid during such period, (c) provisions
for taxes based on income for such period, (d) all amounts attributable to
depreciation and amortization for

 

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such period, (e) other non-cash items (including charges for
inventory accounted for on a last in, first out basis) reducing Consolidated
Net Income for such period (f) all Yucaipa Charges during such period, (g) all
extraordinary charges during such period, and (h) all Strategic Charges
during such period, and minus, without duplication and to the extent
increasing Consolidated Net Income for such period, (h) all extraordinary
gains during such period, (i) net gains (howsoever classified) from the
sale of Real Property Assets in excess of $10,000,000 during any four fiscal
quarter period, and (j) other non-cash items (other than pension income related
to the Borrower’s qualified pension plan, to the extent such pension income
constitutes a non-cash item) during such period, all as determined on a
consolidated basis with respect to the Borrower and its consolidated
Subsidiaries in accordance with GAAP.

 

c.                                       By deleting
clause (vi) of the definition of “Permitted Acquisitions” and substituting
the following in its stead:

 

(vi)                              Each of the Adjusted
Payment Conditions shall have been satisfied.

 

d.                                      By deleting
clause (c) of the definition of “Permitted Investments” and substituting
the following in its stead:

 

(c)  investments in commercial paper maturing within 270 days from
the date of acquisition thereof and having, at such date of acquisition, a
rating of at least A-3 from S&P or at least P-3 from Moody’s;

 

e.                                       By adding the
words “or increased” after  the word “reduced”
in clause (a) of the definition of “Revolving Commitment.”

 

f.                                         By deleting
the definition of “Term Loan Commitment” in its entirety and substituting the
following in its stead:

 

“Term Loan Commitment” means, with respect to each Lender, the
commitment, if any, of such Lender to make a Term Loan hereunder on the
Effective Date or to readvance, in accordance with the terms hereof, any
portion of the Term Loan which has been repaid, expressed as an amount
representing the maximum principal amount of the Term Loan to be made by such
Lender from time to time hereunder, as such commitment may be (a) reduced
from time to time pursuant to SECTION 2.10, or (b) reduced or
increased from time to time pursuant to assignments by or to such Lender
pursuant to SECTION 9.04.  The
initial amount of each Lender’s Term Loan Commitment is set forth on Schedule 2.01,
or in the Assignment and Acceptance pursuant to which such Lender shall have
assumed its Term Loan Commitment, as applicable.  The initial aggregate amount of the Lenders’
Term Loan Commitments is $70,000,000.

 

g.                                      By adding the
following new definitions in appropriate alphabetical order:

 

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“Additional Commitment Lender” shall have the meaning provided
therefor in SECTION 2.10(d).

 

“Adjusted Payment Conditions” means at the time of
determination, that (a) no Default or Event of Default then exists or
would arise as a result of the making such payment, (b) the Borrower has
maintained Average Excess Availability equal to or greater than $50,000,000 for
the thirty (30) days prior to making such payment, (c) after giving effect
to such payment, Excess Availability will be equal to or greater than
$50,000,000, and (d) Consolidated EBITDA, calculated on a trailing twelve
months basis, was at least $140,000,000.

 

“Belgravia Lenders” means collectively, Morgan Stanley Mortgage
Capital, Inc., Morgan Stanley Capital I, Inc., Bear Sterns Securities, Inc.,
and Morgan Stanley Dean Witter Capital, Inc., as successors in interest to
Belgravia Capital Corporation.

 

“Belgravia
Properties” means collectively, the Real Property Assets upon which one of
the Belgravia Lenders hold a mortgage and known as (i) 3901 Lancaster Pike,
Wilmington, Delaware, (ii) 421 South 69th Boulevard, Upper Darby, Pennsylvania,
(iii) 140 North MacDade Boulevard, Glenolden, Pennsylvania, and (iv) 50 Race
Track Road, East Brunswick, New Jersey.

 

“Commitment Increase” shall have the meaning provided therefor
in SECTION 2.10(d).

 

“Commitment Increase Date” shall have the meaning provided
therefor in SECTION 2.10(d).

 

“Strategic Charges” means fees or expenses (in no event in
excess of $2,500,000) incurred by the Borrower in the fourth fiscal quarter of
the fiscal year ended January 29, 2005 and in the first two fiscal
quarters of fiscal 2005 in connection with the Borrower’s consideration of
strategic alternatives.

 

“Yucaipa means collectively, Yucaipa Corporate Initiatives Fund
I, L.P., Yucaipa American Alliance Fund I, L.P., and Yucaipa America Alliance
(Parallel) Fund I, L.P. and their respective Affiliates

 

“Yucaipa Charges” means any closing fees or expense
reimbursements payable to Yucaipa on the closing date of the Borrower’s sale of
certain securities to Yucaipa, including any fees or expenses payable at any
time thereafter, under the Management Services Agreement dated March 23,
2005 by and between the Borrower and The Yucaipa Companies LLC.

 

“Yucaipa Offering” means the sale of certain securities of the
Borrower to Yucaipa (including, without limitation, any securities issued by
virtue of the

 

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exercise of any warrants issued in connection therewith) in accordance
with the terms of a certain Securities Purchase Agreement dated as of March 23,
2005 between the Borrower and Yucaipa.

 

3.                                       Amendments to
Article II.    The provisions of
Article II of the Credit Agreement are hereby amended as follows:

 

a.                                       The last
sentence of Section 2.01 is hereby deleted in its entirety and the
following substituted in its stead:

 

Except as provided in the following sentence, amounts repaid in respect
of Term Loans may not be reborrowed. 
Notwithstanding the foregoing, subject to the satisfaction of the
conditions set forth in SECTIONS 4.02 and 4.03 hereof, each Lender agrees, upon
the written request of the Borrower in accordance with the provisions of SECTION 2.04,
to readvance to the Borrower, and make a new Term Loan to the Borrower, in an
amount equal to that portion of the Term Loan which had previously been repaid.

 

b.                                      The provisions of
SECTION 2.06(b)(i) are hereby amended by deleting the number “$125,000,000”
and substituting the number “$150,000,000” in its stead.

 

c.                                       The provisions
of SECTION 2.10(a) are hereby deleted in their entirety and the
following substituted in their stead:

 

(a)   Scheduled
Termination and Reduction.  Unless
previously terminated, (i) the Term Loan Commitments shall terminate on
the Term Loan Maturity Date, and (ii) the Revolving Commitments shall
terminate on the Revolving Maturity Date.

 

d.                                      The provisions of
SECTION 2.10 are hereby amended by changing the heading to read “Termination,
Reduction or Increase of Commitments” and by adding the following new clause (d) thereto:

 

(d)   Increase in
Revolving Commitments.  (i)  So
long as no Default or Event of Default exists or would arise therefrom, the
Borrower shall have the right at any time, and from time to time, to request an
increase of the aggregate of the Revolving Commitments by an amount not to
exceed $25,000,000.  Any such requested
increase shall be first made to all existing Lenders on a pro rata basis.  To the extent that the existing Lenders
decline to increase their Commitments, or decline to increase their Commitments
to the amount requested by the Borrower, the Administrative Agent, in
consultation with the Borrower, will use its reasonable efforts to arrange for
other Persons to become a Lender hereunder and to issue commitments in an
amount equal to the amount of the increase in the Revolving Commitments
requested by the Borrower and not accepted by the existing Lenders (each such
increase by either means, a “Commitment Increase,”

 

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and each Person issuing, or Lender increasing, its Revolving
Commitment, an “Additional Commitment Lender”), provided, however, that (i) no Lender
shall be obligated to provide a Commitment Increase as a result of any such
request by the Borrower, (ii) any Additional Commitment Lender which is
not an existing Lender shall be subject to the approval of the Administrative
Agent and the Borrower (which approval shall not be unreasonably withheld), and
(iii) without the consent of the Administrative Agent, at no time shall
the Revolving Commitment of any Additional Commitment Lender be less than $5,000,000.  Each Commitment Increase shall be in a
minimum aggregate amount of at least $5,000,000 and in integral multiples of
$5,000,000 in excess thereof.

 

(ii)   No Commitment
Increase shall become effective unless and until each of the following conditions
has been satisfied:

 

(A)          The
Borrower, the Administrative Agent, and any Additional Commitment Lender shall
have executed and delivered a joinder to the Loan Documents in such form as the
Administrative Agent shall reasonably require;

 

(B)           The
Borrower shall have paid such reasonable fees and other compensation to the
Additional Commitment Lenders as the Borrower and such Additional Commitment
Lenders shall agree;

 

(C)           The
Borrower shall have paid such reasonable arrangement fees to the Administrative
Agent as the Borrower and the Administrative Agent may agree;

 

(D)          If
requested by the Administrative Agent, the Borrower shall deliver to the
Administrative Agent and the Lenders an opinion or opinions, in form and
substance reasonably satisfactory to the Administrative Agent, from counsel to
the Borrower reasonably satisfactory to the Administrative Agent;

 

(E)           (1) 
The Borrower shall have repaid (from the proceeds of the Yucaipa Offering, any
Revolving Loans or any combination thereof) or defeased (or on the Commitment
Increase Date shall repay or defease) all Indebtedness owed to the Belgravia
Lenders which is secured by the Belgravia Properties, and (2) the Mortgage
of the Belgravia Lenders on the Belgravia Properties shall have been terminated
and released of record, and (3) the provisions of SECTION 4.03 hereof
shall have been satisfied with respect to the Belgravia Properties as if a Term
Loan were then being made; provided that if all Indebtedness owed to the
Belgravia Lenders which is secured by the Belgravia Properties is paid or
defeased in part, but not in full, the Borrower may, if all other conditions of
this Agreement have been satisfied, including without limitation, the
conditions set forth

 

6

 

in this clause (E) with respect to any one or more of the
Belgravia Properties, may obtain a Commitment Increase equal to the lesser of
(x) $25,000,000, or (y) an amount equal to 60% of the fair market value of the
Belgravia Properties as to which the Indebtedness to the Belgravia Lenders has
been paid in full or defeased and which are no longer subject to Mortgages to
the Belgravia Lenders; and

 

(F)           The
Borrower and the Additional Commitment Lender shall have delivered such other
instruments, documents and agreements as the Administrative Agent may
reasonably have requested, including, without limitation, amendments to the
Mortgages to the extent necessary to secure the Obligations as increased by the
Commitment Increase.

 

(iii)          The
Administrative Agent shall promptly notify each Lender as to the effectiveness
of each Commitment Increase (with each date of such effectiveness being
referred to herein as a “Commitment Increase Date”), and at such time (A) the
Revolving Commitments under, and for all purposes of, this Agreement shall be
increased by the aggregate amount of such Commitment Increases, (B) Schedule 2.01
shall be deemed modified, without further action, to reflect the revised
Revolving Commitments of the Lenders, and (C) this Agreement shall be deemed
amended, without further action, to the extent necessary to reflect such
increased Revolving Commitments.

 

(iv)          In
connection with Commitment Increases hereunder, the Lenders and the Borrower
agree that, notwithstanding anything to the contrary in this Agreement, (A) the
Borrower shall, in coordination with the Administrative Agent, (x) repay
outstanding Revolving Loans of certain Lenders, and obtain Revolving Loans from
certain other Lenders (including the Additional Commitment Lenders), (y)
consent to the assignment from any existing Lenders to any Additional
Commitment Lenders of a portion of the Term Loans and Term Loan Commitments,
and (y) take such other actions as reasonably may be required by the
Administrative Agent, in each case to the extent necessary so that all of the
Lenders effectively participate in each of the outstanding Revolving Loans and
Term Loans pro rata on the basis of their respective Commitments (determined
after giving effect to any increase or decrease in the Commitments pursuant to
this SECTION 2.10(d)) as required pursuant to SECTION 9.04(b)(iii) hereof,
and (B) the Borrower shall pay to the Lenders any costs of the type
referred to in SECTION 2.17 in connection with any repayment and/or Loans
required pursuant to preceding clause (A). 
Without limiting the obligations of the Borrower provided for in this SECTION 2.10(d),
the Administrative Agent and the Lenders agree that they will use their best
efforts to attempt to minimize

 

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the costs of the type referred to in SECTION 2.17 which the
Borrower would otherwise incur in connection with the implementation of an
increase in the Revolving Commitments.

 

e.             The
provisions of SECTION 2.12(a) are hereby deleted in their entirety
and the following substituted in their stead:

 

(a)  Optional Prepayments. 
The Borrower shall have the right at any time and from time to time to
prepay any Revolving Loans in whole or in part, subject to the requirements of
this Section.  The Borrower may not
voluntarily prepay the Term Loans without the consent of the Administrative
Agent and the Required Lenders unless either (i) prior thereto or
contemporaneously therewith the Revolving Commitments are terminated and all
other Obligations are or have been paid in full, or (ii) such prepayment
is to be made from sources other than (A) the proceeds of the Mortgaged
Property or (B) the proceeds of other Collateral sold or disposed of
outside of the ordinary course of business, or, (C) unless the provisions
of SECTION 5.13(f) have been satisfied, any Revolving Loans, and the
Average Liquidation Value of the then Mortgaged Properties is equal to or
greater than $275,000,000.

 

f.              The
provisions of SECTION 2.12(c) are hereby amended by adding the words “(other
than Net Proceeds from the Yucaipa Offering)” after the words “Prepayment Event”
in the second line thereof and after the words “Net Proceeds received” in the
sixth line thereof.

 

g.                                      The provisions of
SECTION 2.13 are hereby amended by renumbering clause (a) as clause
(a)(i) and adding the following new clause (a)(ii):

 

(ii)                                  Term
Loan Commitment Fees.  The Borrower
agrees to pay to the Administrative Agent for the account of each Lender a Term
Loan commitment fee, which shall accrue at a rate per annum equal to 0.375% on
the average daily unused amount of the Term Commitment of such Lender during
the period from and including the date hereof to but excluding the date on
which such Term Commitment terminates. 
Accrued Term Loan commitment fees shall be payable in arrears on the
first day of each month of each year and on the date on which the Term
Commitments terminate, commencing on the first such date to occur after the
Effective Date.  All Term Loan commitment
fees shall be computed on the basis of a year of 360 days and shall be payable
for the actual number of days elapsed (including the first day but excluding
the last day).

 

4.                                       Amendments to
Article IV.    The provisions of
Article IV of the Credit Agreement are hereby amended by adding the
following new section at the end thereof:

 

SECTION 4.03.                               Additional
Conditions for Term Loan Readvances. 
The obligation of each Lender to readvance the Term Loan and to make
each new

 

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Term Loan pursuant to SECTION 2.01 hereof is subject to
satisfaction of the conditions set forth in SECTION 4.01 and SECTION 4.02
and satisfaction of the following conditions:

 

(a)                                  Opinions.  The Administrative Agent shall have received
a favorable written opinion (addressed to the Administrative Agent and the
Lenders and dated the Effective Date) of each of (i) outside counsel for
the Borrower, (ii) the general counsel of the Borrower, and (iii) local
counsel in each jurisdiction where a Mortgaged Property is located, and, in the
case of each such opinion required by this paragraph, covering such matters
relating to the Loan Parties, the Loan Documents, the perfection and priority
of the Collateral Agent’s Liens, or the Financing Transactions as the Required
Lenders shall reasonably request.  The
Borrower hereby requests such counsel to deliver such opinions.

 

(b)                                 Mortgages.  The Administrative Agent shall have received
a Mortgage or an amendment to any then existing Mortgage satisfactory in form
and substance to the Administrative Agent.

 

(c)                                                          Other
Real Estate Requirements.  (i) 
With respect to each Mortgaged Property that is owned by a Loan Party, the
Administrative Agent shall have received a policy or policies of title
insurance (or an endorsement to any existing policy of title insurance) issued
by a nationally recognized title insurance company, insuring the Lien of each
such Mortgage as a valid first Lien on the Mortgaged Property described
therein, free of any other Liens except as permitted by SECTION 6.02, in
form and substance reasonably acceptable to the Administrative Agent, together
with such endorsements, coinsurance and reinsurance as the Administrative Agent
or the Required Lenders may reasonably request, and

 

(ii)                                                          With
respect to each Mortgaged Property that is leased by a Loan Party, the
Administrative Agent shall have received a consent in form satisfactory to the
Administrative Agent from the lessor under the respective lease to the extent
required under SECTION 5.13(c), covering such Mortgaged Properties as the
Administrative Agent may reasonably request.

 

(d)                                 Valuations.  If requested by the Administrative Agent in
its reasonable discretion, the Administrative Agent shall have received a then
current opinion of value of each Mortgaged Property, in form and substance
reasonably satisfactory to the Administrative Agent.  As used herein, the term “current opinion of
value” shall mean an opinion of value which is dated no more than six months
prior to the date of any readvance of the Term Loan.

 

9

 

(e)                                  Fees
and Taxes.   The Lenders and their
Affiliates shall have received all fees and other amounts due and payable,
including, to the extent invoiced, reimbursement or payment of all reasonable
out-of-pocket expenses required to be reimbursed or paid by any Loan Party
hereunder or under any other Loan Document and the Borrower shall have paid all
mortgage or similar taxes required under applicable law.

 

(f)                                    Indenture
Compliance Certificate.  The Borrower
shall have furnished the Administrative Agent a certificate of a Financial
Officer of the Borrower (i) certifying as to whether, after giving effect
to the making of any such Term Loan, the Borrower would be permitted to incur
such Indebtedness under the indenture evidencing the Initial Subordinated
Indebtedness, and, (ii) setting forth reasonably detailed calculations
demonstrating compliance with the provisions of such indenture.

 

(g)                                 Further
Assurances.   The Borrower shall have
executed such other documents, and taken such further action, as the
Administrative Agent shall have reasonably requested.

 

5.                                       Amendment to Article V.   The provisions of Section 5.13(f) of
the Credit Agreement are hereby deleted in their entirety and the following
substituted in their stead:

 

(f)  
New York Mortgages.   As of
the Effective Date, the Mortgages covering the Mortgaged Property located in
New York secure only certain of the Obligations.  In the event that either (i) the
outstanding Credit Extensions are equal to or greater than $225,000,000 (plus
the amount of any Commitment Increases actually made under Section 2.10(d) hereof)
for fifteen (15) consecutive Business Days, or (ii) the outstanding
Revolving Loans would, after giving effect to any requested Revolving Loan,
exceed $120,000,000 (plus the amount of any Commitment Increases actually made
under Section 2.10(d) hereof), upon the request of the Administrative
Agent (or at the direction of the Supermajority Lenders), prior to receiving
any further Credit Extensions, the Loan Parties shall execute such documents as
may be reasonably necessary to amend such Mortgages in order that they secure
all of the Obligations.

 

6.                                       Amendments to
Article VI.    The provisions of
Article VI of the Credit Agreement are hereby amended as follows:

 

a.                                       The provisions of
Section 6.04(d) are hereby amended by adding the words “other than
Investments permitted under Section 6.04(m)” after the words “provided
that” appearing therein.

 

b.                                      The provisions of
Section 6.04 are hereby amended by deleting the word “and” at the end of
clause (l), relettering clause (m) as (n) and adding the following new clause:

 

10

 

(m)   Investments in Subsidiaries
that are not Loan Parties in an aggregate amount necessary to defease or repay
any or all Indebtedness owed to the Belgravia Lenders which is secured by any
or all of the Belgravia Properties, but in no event in excess of $25,000,000;
and

 

c.                                       The provisions
of Section 6.05(c) are hereby deleted in their entirety and the
following substituted in their stead:

 

(c)                                  the
Borrower and the Subsidiaries may make Asset Sales, provided that the aggregate fair market value of (i) fee
owned Real Property Assets sold pursuant to Asset Sales after the Effective
Date shall not exceed $30,000,000 in the aggregate, and (ii) other assets
(including, without limitation, leasehold interests, goodwill and other
intangible assets) sold pursuant to Asset Sales (other than Excluded Asset
Sales and Replacement Store Sales) after the Effective Date shall not exceed in
the aggregate the difference between $135,000,000 and the amount of Real
Property Assets sold pursuant to clause (c)(i) hereof, and provided  further
that (A) the consideration received for the related assets shall be in an
amount at least equal to (1) the fair market value thereof (taking into
account any restrictions on the use of such related assets that the Borrower or
any such Subsidiary may require in connection with the asset sale in question)
or (2) a lower amount if the Board of Directors of the Borrower or such
Subsidiary, as the case may be, shall determine in good faith that the sale of
such related assets for such lower amount is desirable in order to minimize
losses being incurred by the Borrower or such Subsidiary, as the case may be,
with respect to such related assets and that such sale for such lower amount is
in the best interest of the Borrower or such Subsidiary, as the case may be; (B) at
least 80% of the consideration received (excluding any non-cash consideration
received in connection with the exchange of assets of the Borrower or any
Subsidiary for similar assets of any third party) for the related assets shall
be cash (provided that the
Borrower and its Subsidiaries may assign leasehold interests without regard to
the condition set forth in this clause (C) as long as the Average
Liquidation Value of the remaining Mortgaged Properties after giving effect to
such assignment is equal to or greater than $275,000,000); (D) after
giving effect to such transaction, the Borrower shall be in compliance with SECTION 6.04;
and (E) the Net Proceeds of such Asset Sales shall be applied in the
manner and to the extent required by SECTION 2.12;

 

d.                                      The provisions of
Section 6.05 are hereby amended by deleting the word “and” at the end of
clause (h), deleting the period at the end of clause (i) and inserting “;
and” in its stead, and adding the following new clause thereafter:

 

(j)                                     the
issuance of shares of the capital stock and warrants of the Borrower pursuant
to the Yucaipa Offering, including, without limitation, the issuance of shares
of capital stock of the Borrower upon the exercise of such warrants.

 

11

 

e.                                       The provisions
of Section 6.08 are hereby amended by deleting the period at the end of
clause (d) and substituting “; and” in its stead and adding the following
new clause thereto:

 

(e)  the Borrower may make Restricted Payments required under the
Yucaipa Offering as long as the Payment Conditions are satisfied.  For purposes of clarification, “Restricted
Payments” under this clause (e) do not include payments under the
Management Services Agreement dated March 23, 2005 by and between the
Borrower and The Yucaipa Companies LLC.

 

f.                                         The provisions
of Section 6.09 are hereby deleted in their entirety and the following
substituted in their stead:

 

SECTION 6.09                                 Transactions
with Affiliates  The Borrower will
not, and it will not permit any Subsidiary to, declare or make, or agree to pay
or make, directly or indirectly, any Restricted Payment, sell, lease or
otherwise transfer any property or assets to, or purchase, lease or otherwise
acquire any property or assets from, or otherwise engage in any other
transactions with, any of its Affiliates, except (a) transactions that are
at prices and on terms and conditions not less favorable to the Borrower or
such Subsidiary than could be obtained on an arm’s-length basis from unrelated
third parties, (b) transactions between or among the Borrower and the
Subsidiary Loan Parties, (c) any Restricted Payment permitted by SECTION 6.08,
(d) reasonable and customary fees paid to members of the Boards of
Directors of the Borrower and the Subsidiaries, (e) payments to Yucaipa
under the Management Services Agreement dated March 23, 2005 by and
between the Borrower and The Yucaipa Companies LLC (provided that, if an
Event of Default then exists and is continuing or would arise after giving
effect to such payment, in the Administrative Agent’s discretion, no proceeds
of (1) the Loans or (2) the Mortgaged Property or (3) other
Collateral sold or disposed of outside of the ordinary course of business, may
be used to fund such payments), it being the intent of this Section that
transactions between any Loan Party and any Subsidiary that is not a Loan Party
shall be required to satisfy the requirements of the foregoing clause (a).

 

g.                                      The provisions of
SECTION 6.14(b) are hereby deleted in their entirety and the
following substituted in their stead:

 

(b)  as long as each of the Payment Conditions is satisfied,
payments for purchase, redemption, retirement, acquisition, cancellation,
defeasance, satisfaction and discharge or termination of the Initial
Subordinated Indebtedness (including any fees, expenses, and premiums associate
therewith); or

 

h.                                      The provisions of
SECTION 6.15 are hereby deleted in their entirety and the following
substituted in their stead:

 

12

 

6.15   Cash Capital
Expenditures.  The Borrower will not
permit the aggregate amount of Cash Capital Expenditures made by the Borrower
and the Subsidiaries in any Fiscal Year to exceed the lesser of $150,000,000 or
an amount equal to the Borrower’s Consolidated EBITDA for the immediately
preceding Fiscal Year. The amount of permitted Cash Capital Expenditures in
respect of any Fiscal Year shall be increased by the lesser of (a) the
amount of unused Cash Capital Expenditures for the immediately preceding Fiscal
Year (less an amount equal to any unused Cash Capital Expenditures carried
forward to such preceding Fiscal Year) and (b) $20,000,000; provided that in no event shall the amount
of permitted Cash Capital Expenditures exceed $150,000,000 in any Fiscal Year.

 

i.                                          The
provisions of SECTION 6.17 are hereby deleted in their entirety and the
following substituted in their stead:

 

6.17   Ratio of Credit
Extensions to Consolidated EBITDA. 
The Borrower shall not, at any time, permit the ratio of the Credit
Extensions to Consolidated EBITDA (calculated on a trailing four fiscal quarter
basis) at the end of any fiscal quarter to be more than 1.90:1.00.

 

7.                                       Conditions to
Effectiveness.  This First Amendment
shall not be effective until each of the following conditions precedent have
been fulfilled to the satisfaction of the Agent:

 

a.                                       This First
Amendment shall have been duly executed and delivered by the Borrower, the
Administrative Agent, the Collateral Agent and the Required Lenders.  The Administrative Agent shall have received
a fully executed copy hereof and of each other document required hereunder.

 

b.                                      All action on the
part of the Borrower necessary for the valid execution, delivery and
performance by the Borrower of this First Amendment shall have been duly and
effectively taken.  The Administrative
Agent shall have received from the Borrower true copies of their respective
certificate of the resolutions authorizing the transactions described herein,
each certified by their secretary or other appropriate officer to be true and
complete.

 

c.                                       The Borrower
shall have paid the Administrative Agent all fees and expenses due and payable
in connection herewith, including, without limitation, its reasonable attorneys’
fees.

 

d.                                      The Borrower
shall have paid to the Administrative Agent, for the account of each Lender, an
amendment fee in an amount equal to 0.15% of each such Lender’s total Commitment..

 

e.                                       The Yucaipa
Offering shall have been consummated (or shall be consummated contemporaneously
with this First Amendment) and the Borrower shall have

 

13

 

received (or shall receive immediately after the effective date of this
First Amendment) the Net Proceeds therefrom.

 

f.                                         No Default or
Event of Default shall have occurred and be continuing (after giving effect to
the waiver of Defaults and Events of Default in accordance with the provisions
of Paragraph 8(a) hereof).

 

g.                                      The Borrower
shall have provided such additional instruments, documents, and opinions of
counsel to the Administrative Agent as the Administrative Agent and its counsel
may have reasonably requested.

 

8.                                       Miscellaneous.

 

a.                                       As of the
effective date of this First Amendment, the Agent and the Lenders waive any
Default or Event of Default under SECTION 7(f) or 7(g) of the
Credit Agreement arising as a result of the breach by the Borrower or any of
its Subsidiaries (which breach exists as of such effective date) of any
obligations to the Belgravia Lenders with respect to the loan arrangements
secured by the Belgravia Properties.

 

b.                                      Except as
provided herein, all terms and conditions of the Credit Agreement and the other
Loan Documents remain in full force and effect. 
The Borrower hereby ratifies, confirms, and reaffirms all of the
representations, warranties and covenants therein contained.  Without limiting the generality of the
foregoing, the Borrower hereby acknowledges, confirms and agrees that all
Collateral shall continue to secure the Obligations as modified and amended
pursuant to this First Amendment, and any future modifications, amendments,
substitutions or renewals thereof.

 

c.                                       The Borrower
shall pay all costs and expenses incurred by the Agent in connection with this
First Amendment, including, without limitation, all  reasonable attorneys’ fees.

 

d.                                      This First
Amendment may be executed in several counterparts and by each party on a
separate counterpart, each of which when so executed and delivered, each shall
be an original, and all of which together shall constitute one instrument.  Delivery of an executed counterpart of a
signature page hereto by telecopy shall be effective as delivery of a
manually executed counterpart hereof.

 

e.                                       This First
Amendment expresses the entire understanding of the parties with respect to the
matters set forth herein and supersedes all prior discussions or negotiations
hereon.  Any determination that any
provision of this First Amendment or any application hereof is invalid, illegal
or unenforceable in any respect and in any instance shall not effect the
validity, legality, or enforceability

 

14

 

of such provision in any other instance, or the validity, legality or
enforceability of any other provisions of this First Amendment.

 

15

 

IN WITNESS
WHEREOF, the parties hereto have caused this First Amendment to be executed and
their seals to be hereto affixed as the date first above written.

 

	
   

  	
  PATHMARK
  STORES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Frank G.
  Vitrano

  
	
   

  	
  Print Name:

  	
  Frank G.
  Vitrano

  
	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  FLEET RETAIL
  GROUP, LLC, as

  Administrative Agent, Collateral Agent and

  Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Keith
  Vercauteren

  
	
   

  	
  Print Name:

  	
  Keith
  Vercauteren

  
	
   

  	
  Title:

  	
  Director

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  GMAC
  COMMERCIAL FINANCE LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By 

  	
  /s/ Thomas
  Maiale

  
	
   

  	
  Print Name:

  	
  Thomas
  Maiale

  
	
   

  	
  Title:

  	
  Director

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  GENERAL
  ELECTRIC CAPITAL

  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By 

  	
  /s/ Charles
  O. Chiodo

  
	
   

  	
  Print Name:

  	
  Charles O. Chiodo

  
	
   

  	
  Title:

  	
  Duly
  Authorized Signatory

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  THE CIT
  GROUP/BUSINESS CREDIT,

  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Steven
  Schuit

  
	
   

  	
  Print Name: 

  	
  Steven
  Schuit

  
	
   

  	
  Title:

  	
  Vice
  President

  
					

 

16

 

	
   

  	
  WELLS FARGO
  FOOTHILL, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Eunnie
  Kim

  
	
   

  	
  Print Name:

  	
  Eunnie Kim

  
	
   

  	
  Title:

  	
  Vice
  President

  
					

 

17Exhibit 4.11

 

Amendment No. 1 to the

 

Amended and Restated

WARRANT AGREEMENT

dated July 26, 2001 (which was effective as of August 31, 2001),

which amended and restated that certain

Amended and Restated Warrant Agreement dated December 12, 2000,

which amended and restated

the Warrant Agreement dated as of June 1, 2000,

as amended as of August 9, 2000

 

Between

 

ISONICS CORPORATION

AND

CONTINENTAL STOCK TRANSFER & TRUST COMPANY

 

THIS FIRST AMENDMENT TO THE
AMENDED AND RESTATED WARRANT AGREEMENT between ISONICS CORPORATION and
CONTINENTAL STOCK TRANSFER & TRUST COMPANY dated as of July 26, 2001 (the “Warrant
Agreement”) is entered into this 10th day of June 2005
effective as of June 17, 2005. 
Capitalized terms used herein, but not defined shall have the meanings
ascribed to such terms in the Warrant Agreement.

 

W I T N E S S E T H
:

 

WHEREAS, pursuant to the Warrant Agreement, the Class B Warrants
and the Class C Warrants are scheduled to expire at the close of business
on December 31, 2005, unless previously exercised; and

 

WHEREAS, the parties desire to amend the Warrant Agreement to extend
the expiration date of the Class B Warrants and the Class C Warrants
to the close of business on December 29, 2006.

 

NOW, THEREFORE, ISONICS CORPORATION, a California corporation
(the “Company”), and CONTINENTAL STOCK TRANSFER & TRUST COMPANY (the “Warrant
Agent”), hereby agree to amend
the Warrant Agreement as follows:

 

1.                                       Paragraph
(w) of Section 1 be and hereby is amended in its entirety so that it now
reads as follows:

 

“Warrant
Expiration Date” shall mean, unless the Warrants are redeemed as provided in Section 9
hereof prior to such date, 5:00 p.m. (New York time): (i) with
respect to the Class B Warrants, on December 29, 2006, and (ii) with
respect to the Class C Warrants, on December 29, 2006, or if earlier,
the Redemption Date

 

 

as defined
herein, whichever date is earlier; provided that if such date shall in the
State of New York be a holiday or a day on which banks located in the State of
New York are authorized to close, then 5:00 p.m. (New York time)on the
next following day which, in the State of New York, is neither a holiday nor a
day on which such banks are authorized to close. Upon prior written notice to
the Registered Holders, the Company (in its sole discretion) shall have the
right to extend the Warrant Expiration Date.”

 

2.                                       Exhibit “A”
to the Warrant Agreement is hereby modified to conform with the extension of
the expiration date of the Class B Warrants and the Class C Warrants
to and including December 29, 2006.

 

3.                                       Except
as modified herein, the terms and conditions of the Warrant Agreement shall
remain in full force and effect.

 

4.                                       This
First Amendment may be executed in one or more counterparts, and by different
parties hereto on separate counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.

 

IN WITNESS
WHEREOF, this First Amendment has been executed as of the date first written
above.

 

	
  ATTEST:

  	
  ISONICS
  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
    /s/ John
  V. Sakys

  	
   

  	
  By:

  	
    James
  E. Alexander

  	
   

  
	
  John V.
  Sakys, Secretary

  	
  James E.
  Alexander, President

  
						

 

 

	
  CONTINENTAL
  STOCK TRANSFER & TRUST COMPANY, as Warrant Agent

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ William
  Seegraber

  	
   

  
	
   

  	
  Name:

  	
  William
  Seegraber

  	
   

  
	
   

  	
  Title: Vice
  President

  
						

 

2

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