Document:

Exhibit 10.1

 

Execution

 

AMENDMENT NO. 1 TO AMENDED AND RESTATED CREDIT AGREEMENT

 

AMENDMENT NO. 1 TO AMENDED AND RESTATED CREDIT AGREEMENT, dated as of April 17, 2014 (this “Amendment No. I”), is by and among Wells Fargo Bank, National Association, in its capacity as administrative and collateral agent (in such capacity, “Administrative Agent”) for the parties to the Credit Agreement (as defined below) as lenders, the parties to the Credit Agreement as lenders (individually, each a “Lender” and collectively, “Lenders”), Supervalu Inc., a Delaware corporation (the “Lead Borrower”), the Subsidiaries of Lead Borrower party thereto as borrowers (each a “Borrower” and collectively, together with the Lead Borrower, the “Borrowers”), and the obligors party thereto as guarantors (each individually a “Guarantor” and collectively, “Guarantors”).

 

W  I  T  N  E  S  S  E  T  H :

 

WHEREAS, Agent, Lenders, Borrowers and Guarantors have entered into financing arrangements pursuant to which Lenders (or Administrative Agent on behalf of Lenders) have made and may make loans and advances and provide other financial accommodations to Borrowers as set forth in the Amended and Restated Credit Agreement, dated as of March 21,2013, by and among Administrative Agent, Lenders, Borrowers and Guarantors (as from time to time amended, modified, supplemented, extended, renewed, restated or replaced, the “Credit Agreement”, and together with all agreements, documents and instruments at any time executed and/or delivered in connection therewith or related thereto, as from time to time amended, modified, supplemented, extended, renewed, restated, or replaced, collectively, the “Loan Documents”);

 

WHEREAS, Borrowers and Guarantors have requested that Administrative Agent and Lenders agree to make certain amendments to the Credit Agreement, and Administrative Agent and Lenders are willing to agree to make such amendments, subject to terms and conditions set forth herein; and

 

WHEREAS, by this Amendment No. 1, Administrative Agent, Lenders, Borrowers and Guarantors intend to evidence such amendments;

 

NOW, THEREFORE, in consideration of the foregoing and the mutual agreements and covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

1.              Definitions.

 

(a)         Additional Definitions. The Credit Agreement and the other Loan Documents shall be deemed and are hereby amended to include the following defined terms:

 

“Amendment No. 1” means Amendment No. 1 to Credit Agreement, dated as of April 17, 2014, by and among Administrative Agent, Lenders, Borrowers and Guarantors, as the same now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.

 

“Excluded Real Estate Collateral” shall mean any property that would otherwise constitute a Material Real Estate Asset or Real Estate Collateral Property, (a) where either (i) the valid grant of a Lien in such Material Real Estate Asset or Real Estate Collateral Property to the

 

 

Administrative Agent would constitute or result in a breach, termination or default under a valid and binding contract, agreement, lease, permit, license, charter or license agreement entered into by a Loan Party with a Person that is not an Affiliate of any of the Loan Parties and such breach, termination or default has not been or is not waived or the consent of the other party to such contract, agreement, lease, permit, license, charter or license agreement has not been or is not otherwise obtained or under applicable law such prohibition cannot be waived, or (ii) which is subject to adverse environmental or other conditions that the Term Loan Agent determines makes it unsuitable as Collateral and (b) which the Term Loan Agent designates as Excluded Real Estate Collateral pursuant to the Term Loan Agreement.

 

“Material Debt Reserve’’ means Availability Reserves in an amount equal to outstanding obligations in connection with any Material Indebtedness with a maturity date on or within thirty (30) days of the date of the establishment of such Availability Reserve.

 

“Store Conversion Transaction” means either (a) a transaction in which one or more existing Save-A-Lot Stores owned by the Lead Borrower or a Restricted Subsidiary is transferred to a Person that is not an Affiliate and that is licensed to operate such Stores as a Save-A-Lot Store, provided, in each case that (i) the consideration paid or to be paid at the effectiveness of such transfer or on a deferred basis in connection therewith is in an amount not less than the book value of the assets so transferred and any cash proceeds received by the Loan Parties in respect of such transaction shall be applied to the extent and in the manner set forth in Section 2.05(e), (ii) the purchaser agrees to continue to purchase inventory for such Stores from the Lead Borrower or a restricted subsidiary for a period of not less than one year or, if longer, the period until the consideration described in clause (i) has been paid in full and (iii) all payment obligations and other obligations of the purchaser in connection with such transaction are payable or otherwise owed to Moran Foods or a Subsidiary thereof that is a Loan Party or (b) a transaction in which one or more existing Stores owned by the Lead Borrower or a Restricted Subsidiary is transferred to a joint venture in which the Lead Borrower or other Loan Party owns an Equity Interest, provided that (i) a Loan Party pledges such Equity Interest to the Administrative Agent and any cash proceeds received by the Loan Parties in respect of such transaction shall be applied to the extent and in the manner set forth in Section 2.05(e), (ii) the joint venture agrees to continue to purchase inventory for such Stores from the Lead Borrower or a Restricted Subsidiary for a period of not less than one year and (iii) the Total Leverage Ratio (as such term is defined in the Term Loan Agreement as in effect on the date of Amendment No. 1) of the Lead Borrower shall not exceed 4.00:1.00 on a pro forma basis after giving effect to such transfer and the use of proceeds thereof.

 

(b)         Amendments to Definitions

 

(i)             Section 1.01 of the Credit Agreement is hereby amended by deleting the definition of “Adjustment Date” in its entirety and replacing it with the following:

 

“Adjustment Date” means the first day of each Fiscal Quarter, commencing June 15, 2014.

 

(ii)          Section 1.01 of the Credit Agreement is hereby amended by deleting the pricing grid set forth in the definition of “Applicable LC Fee Rate” and replacing it with the following:

 

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Level
    	
 
    	
 
    	
Quarterly Average Excess Availability
    	
 
    	
 
    	
Letter of Credit Fee
    
	
I
    	
 
    	
 
    	
Equal   to or greater than 66.67% of the Aggregate Commitments
    	
 
    	
 
    	
1.50%
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
II
    	
 
    	
 
    	
Greater   than or equal to 33.33% of the Aggregate Commitments but less than 66.67% of the Aggregate   Commitments
    	
 
    	
 
    	
1.75%
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
III
    	
 
    	
 
    	
Less   than 33.33% of the Aggregate Commitments
    	
 
    	
 
    	
2.00%
    

 

(iii)       Section 1.01 of the Credit Agreement is hereby amended by deleting the pricing grid set forth in the definition of “Applicable Margin” and replacing it with the following:

 

	
Level
    	
 
    	
 
    	
Quarterly Average Excess Availability
    	
 
    	
 
    	
LIBO Rate
   Margin
    	
 
    	
 
    	
Base Rate
   Margin
    
	
I
    	
 
    	
 
    	
Equal   to or greater than 66.67% of the Aggregate Commitments
    	
 
    	
 
    	
1.50%
    	
 
    	
 
    	
0.50%
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
II
    	
 
    	
 
    	
Greater   than or equal to 33.33% of the Aggregate Commitments but less than 66.67% of   the Aggregate Commitments
    	
 
    	
 
    	
1.75%
    	
 
    	
 
    	
0.75%
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
III
    	
 
    	
 
    	
Less   than 33.33% of the Aggregate Commitments
    	
 
    	
 
    	
2.00%
    	
 
    	
 
    	
1.00%
    

 

(iv)      Section 1.01 of the Credit Agreement is hereby amended by deleting the definition of “Audited Financial Statements” in its entirety and replacing it with the following:

 

“Audited Financial Statements” means the audited Consolidated balance sheet of the Lead Borrower and its Subsidiaries for the Fiscal Year ended February 23, 2013 and the related Consolidated statements of income or operations, Shareholders’ Equity and cash flows (in each case, prior to giving effect to the Transactions) of the Lead Borrower and its Subsidiaries, including the notes thereto,

 

(v)         Section 1.01 of the Credit Agreement is hereby amended by deleting the reference to the “SVU 2016 Notes Reserve” in the definition of “Availability Reserves” and replacing it with “Material Debt Reserve”.

 

(vi)      Section 1.01 of the Credit Agreement is hereby amended by deleting the definition of “Customer Support Transactions” in its entirety and replacing it with the following:

 

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

 

(vii)   Section 1.01 of the Credit Agreement is hereby amended by deleting the definition of “Material Real Estate Asset” in its entirety and replacing it with the following:

 

“Material Real Estate Asset” means Real Estate (other than an operating leasehold interest and Excluded Real Estate Collateral) owned by or ground leased to a Loan Party if the property, plant and equipment located at such Real Estate has a book value on Lead Borrower’s financial statements in excess of $1,000,000 as of the Closing Date.”

 

(viii)     Section 1.01 of the Credit Agreement is hereby amended by deleting the definition of “Material Related Collateral Location” in its entirety and replacing it with the following:

 

“Material Related Collateral Location” means any owned or leased Real Estate, other than a Material Real Estate Asset, if the book value of the property, plant and equipment (excluding information technology, leasehold improvements, vehicles and aircraft) located at such owned or leased Real Estate on the Borrower’s financial statements exceeds $150,000 as of the Closing Date.

 

(ix)      Section 1.01 of the Credit Agreement is hereby amended by deleting the definition of “Maturity Date” in its entirety and replacing it with the following:

 

“Maturity Date” means February 21, 2019 or such earlier date as provided in Section 2.07.

 

(x)         Section 1.01 of the Credit Agreement is hereby amended by deleting clause (b) of the definition of “Permitted Dispositions” in its entirety and replacing it with the following:

 

(b)  bulk sales of the Inventory of a Loan Party not in the ordinary course of business in connection with Store closings or Store Conversion Transactions, provided, that, (i) the number of such Store closings and Store Conversion Transactions and in each case, related sales of Inventory, minus the number of new Store locations opened during the same period, shall not exceed in any Fiscal Year of the Lead Borrower and its Subsidiaries, seven and one-half percent

 

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(7.5%) of the number of the Loan Parties’ Stores as of the beginning of such Fiscal Year and shall not exceed, in the aggregate from and after the Closing Date, fifteen percent (15%) of the number of the Loan Parties’ Stores in existence as of the Closing Date), (ii) in connection with each Store closing or Store Conversion Transaction, as the case may be, involving ten (10) or more Stores, or in the event that all Store Closings and Store Conversion Transactions after the delivery of a Borrowing Base Certificate and prior to the delivery of the next Borrowing Base Certificate have involved ten (10) or more Stores, Administrative Agent shall have received an updated Borrowing Base Certificate that gives effect to such Store closing or closings and sales of Inventory or Store Conversion Transaction or Store Conversion Transactions, as the case may be, and (iii) all Net Proceeds received in connection therewith are applied to the Obligations if then required in accordance with Section 2.05 hereof,

 

(xi)      Section 1.01 of the Credit Agreement is hereby amended by deleting clause (e) of the definition of “Permitted Disposition” in its entirety and replacing it with the following:

 

(e) Dispositions of Equipment and fixtures in the ordinary course of business that  are, in the reasonable, good faith judgment of the Lead Borrower, either (A) no longer useful or necessary in its business or that of a Subsidiary or (B) are replaced (concurrently with, or reasonably promptly following, the Disposition thereof) with property serving a substantially similar or replacement function in the operation of the Business as the property so replaced;

 

(xii)   Section 1.01 of the Credit Agreement is hereby amended by deleting clause (h) of the definition of ‘‘Permitted Disposition” in its entirety and replacing it with the following:

 

(h) (i) Dispositions of interests in Real Estate that constitute, are created, or occur pursuant to Permitted Encumbrances pursuant to clause (f) of the definition thereof (but only to the extent thereof), (ii) sales of Real Estate of any Loan Party pursuant to any arrangement, directly or indirectly, with any person whereby it shall sell or transfer such property and thereafter lease back such property that it intends to use for substantially the same purpose or purposes as the property being sold or transferred (a “Sale-Leaseback Transaction”), other than in connection with a Customer Support Transaction or a Store Conversion Transaction; provided, that, (A) the consideration paid to such Loan Party in connection therewith shall be paid contemporaneously with consummation of the transaction, and shall be in an amount not less than the fair market value of the property disposed of, (B) at any time a Cash Dominion Event exists, subject to the terms of the Term Loan Intercreditor Agreement, the proceeds of such sale are applied to the Obligations in accordance with Section 2.05(e), (C) as of the date of any such sale, and in each case after giving effect thereto, no Default or Event of Default shall exist or have occurred and be continuing, and (D) other than in connection with any Store location, the Administrative Agent shall have received from each such purchaser or transferee a Collateral Access Agreement on terms and conditions reasonably satisfactory to the Administrative (Agent, and (iii) other than in connection with a Customer Support Transaction or Store Conversion Transaction, assignments or terminations of leases, subleases, licenses, and sublicenses of Real Property that, in the reasonable, good faith judgment of a Loan Party are (A) no longer used or useful in the business of any Loan Party or any of their Affiliates or Subsidiaries, and (B) not otherwise material to the business of the Lead Borrower and its Subsidiaries taken as a whole;

 

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(xiii)     Section 1.01 of the Credit Agreement is hereby amended by deleting clause (m)(v) of the definition of “Permitted Disposition” in its entirety and replacing it with the following:

 

(v) such transaction does not involve the Disposition of (A) a minority Equity Interest in any wholly-owned Restricted Subsidiary, (B) any Equity Interests of Moran Foods, LLC, or (C) Accounts of a Borrower;

 

(xiv)    Section 1.01 of the Credit Agreement is hereby amended by deleting clause (n) of the definition of “Permitted Disposition” in its entirety and replacing it with the following:

 

(n) Dispositions by any Loan Party constituting a Customer Support Transaction; provided, that, as of the date of any such Disposition and after giving effect thereto, (i) the aggregate amount of the exposure of the Loan Parties under or pursuant to all Customer Support Transactions (including, without duplication, Customer Support Transactions constituting Permitted Indebtedness, Permitted Investments and Permitted Dispositions) shall not in the aggregate exceed $250,000,000, (ii) the aggregate amount of the exposure under any of the types of transactions described in clauses (a), (b), (c), (e) or (f) of the definition of the term Customer Support Transactions shall not exceed under any one of such clauses $150,000,000 in the aggregate, provided, that, for purposes of this clause (n), at any time of the determination thereof, the exposure in respect of the portion of a Customer Support Transaction that consists of the sale, lease or other transfer of assets shall be deemed to be an amount equal to the net book value of such assets at such time, (iii) no Default or Event of Default shall exist or have occurred and be continuing, (iv) to the extent that such Disposition includes a Sale-Leaseback Transaction, each of the conditions in clause (h)(ii) of the definition of the term Permitted Dispositions shall be satisfied with respect thereto, and  (v) to the extent that such Disposition includes a Store Conversion Transaction, each of the conditions set forth in the definition of the term Store Conversion Transactions and in clause (s) of the definition of Permitted Dispositions shall be satisfied with respect thereto;

 

(xv)       Section 1.01 of the Credit Agreement is hereby amended by deleting clause (p) of the definition of “Permitted Disposition” in its entirety and replacing it with the following:

 

(p) (i) the lease, sublease, license or sublicense of Real Estate owned or leased out by a Loan Party to another Person (other than in connection with a Customer Support Transaction or a Store Conversion Transaction) in the ordinary course of business and (ii) the lease, sublease, license or sublicense of Real Estate owned or leased out by a Loan Party to another Person (other than in connection with a Customer Support Transaction or a Store Conversion Transaction) in the ordinary course of business so long as such Real Estate is (A) no longer used or useful in the business of any Loan Party or any of their Affiliates or Subsidiaries, and (B) is not otherwise material to the business of any Loan Party or any of their Affiliates or Subsidiaries in any respect;

 

(xvi)    Section 1.01 of the Credit Agreement is hereby amended by (A) deleting the word “and” at the end of clause (q) of the definition of “Permitted Disposition” and (B) deleting the “.” at the end of clause (r) of the definition of “Permitted Disposition” and replacing it with “; and”;

 

(xvii) Section 1.01 of the Credit Agreement is hereby amended by adding the following new clause (s) to the end of the definition of “Permitted Disposition”:

 

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(s) any Disposition pursuant to a Store Conversion Transaction, provided, that as of the date of any such Store Conversion Transaction and after giving effect thereto, (i) the number of such Store Conversion Transactions, together with all Store closings as of such date, minus the number of new Store locations opened during the same period, shall not exceed in any Fiscal Year of the Lead Borrower and its Subsidiaries, seven and one-half percent (7.5%) of the number of the Loan Parties’ Stores as of the beginning of such Fiscal Year and shall not exceed, in the aggregate from and after the Closing Date, fifteen percent (15%) of the number of the Loan Parties’ Stores in existence as of the Closing Date, (ii) in connection with each Store Conversion Transaction involving ten (10) or more Stores, or in the event that all Store Conversion Transactions after the delivery of a Borrowing Base Certificate and prior to the delivery of the next Borrowing Base Certificate have involved ten (10) or more Stores, Administrative Agent shall have received an updated Borrowing Base Certificate that gives effect to such Store Conversion Transactions, (iii) all Net Proceeds received in connection therewith are applied to the Obligations if then required in accordance with Section 2.05 hereof, (iv) to the extent that such Disposition includes a Sale-Leaseback Transaction, each of the conditions in clause (h)(ii) of the definition of the term Permitted Dispositions shall be satisfied with respect thereto, and (v) to the extent that such Disposition is also a Customer Support Transaction, each of the conditions set forth in clause (n) of the definition of the term Permitted Dispositions shall be satisfied with respect thereto;

 

(xviii)       Section 1.01 of the Credit Agreement is hereby amended by deleting clause (i) of the definition of “Permitted Indebtedness” in its entirety and replacing it with the following:

 

Indebtedness under the Term Loan Documents in an aggregate outstanding principal amount not to exceed $1,500,000,000 (plus up to an aggregate additional amount of $500,000,000 to the extent that Lead Borrower exercises its right to obtain additional term loans from lenders under the Term Loan Documents in accordance with the terms applicable thereto, provided, that, in the event that the aggregate additional amount exceeds $250,000,000, as to any such additional loans in excess of $250,000,000, (i) the representations, warranties, covenants and events of default applicable to such additional loans shall be identical to those of the other loans under the Term Loan Agreement and to the extent not consistent with such representations, warranties, covenants and events of default shall be reasonably satisfactory to the Administrative Agent, (ii) the final maturity date of any additional loans shall be no earlier than the maturity date under the Term Loan Agreement as in effect on the date of Amendment No. 1, (iii) the average life to maturity of the additional loans shall be no shorter than the remaining average life to maturity of the loans under the Term Loan Agreement outstanding as of the date of Amendment No. 1, (iv) at the time of and immediately after the giving effect to the additional loans, no Default or Event of Default shall have occurred and be continuing, and Administrative Agent shall have received a certificate to that effect dated such date and executed by a Responsible Officer of Lead Borrower, (v) the Lead Borrower’s Total Secured Leverage Ratio (as such term is defined in the Term Loan Agreement as in effect on the date of Amendment No. 1) shall not exceed 2.50 to 1.00 on a pro forma basis after giving effect to such additional loans and the use of proceeds thereof and the Administrative Agent shall have received a certificate to that effect showing such calculations in reasonable detail dated such date and executed by a Responsible Officer of Lead Borrower, and (vi) the terms of the additional loans shall not modify (or have the effect of a modification of) the prepayment provisions of the Term Loan Agreement that require mandatory prepayments in a manner that increases the amount of such required prepayments (as a percentage of the total amount of term loans) or frequency of such required prepayments, or requires additional mandatory prepayments during the term of this Agreement or changes to earlier dates any

 

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scheduled dates for the payment of principal or interest with respect to the Indebtedness under the Term Loan Documents,

 

(xix)    Section 1 .01 of the Credit Agreement is hereby amended by deleting the definition of “Real Estate Collateral Properties” in its entirety and replacing it with the following:

 

“Real Estate Collateral Properties’’ means the Real Estate of the Loan Parties at the sites on the Applicable Collateral List, excluding, however, Excluded Real Estate Collateral.

 

(xx)  Section 1.01 of the Credit Agreement is hereby amended by deleting clause (c) of the definition of “Refinancing Indebtedness” in its entirety and replacing it with the following:

 

(c) the principal amount of such Refinancing Indebtedness shall not exceed the principal amount of the Refinanced Obligations (plus interest and premium, if any, thereon and the amount of reasonable refinancing fees and expenses incurred in connection therewith);

 

(xxi)    Section 1.01 of the Credit Agreement is hereby amended by deleting clause (h) of the definition of “Refinancing Indebtedness” in its entirety and replacing it with the following:

 

(h) except in the case of Term Loan Debt used to refinance the SVU 2016 Notes, if the Refinanced Obligations or any Guarantees thereof are unsecured, such Indebtedness and any Guarantees thereof shall be unsecured;

 

(xxii)          Section 1.01 of the Credit Agreement is hereby amended by deleting clause (l) of the definition of “Refinancing Indebtedness” in its entirety and replacing it with the following:

 

(l) except in the case of Term Loan Debt used to refinance the SVU 2016 Notes, the obligors in respect of the Refinanced Obligations immediately prior to such refinancing, refunding, extending, renewing or replacing thereof shall be the only obligors on such Indebtedness; and

 

(xxiii)       Section 1.01 of the Credit Agreement is hereby amended by deleting clause (m) of the definition of “Refinancing Indebtedness” in its entirety and replacing it with the following:

 

(m) except in the case of Term Loan Debt used to refinance the SVU 2016 Notes, the terms and conditions (excluding as to pricing, premiums and optional prepayment or redemption provisions) of any such Indebtedness, taken as a whole, are not more restrictive with respect to the Lead Borrower and the Restricted Subsidiaries, as reasonably determined by the Lead Borrower in good faith, than the terms and conditions of the Refinanced Obligations.

 

(xxiv)      Section 1.01 of the Credit Agreement is hereby amended by deleting the definition of “Related Real Estate Collateral” in its entirety and replacing it with the following:

 

“Related Real Estate Collateral” means all Equipment now or hereafter owned by Lead Borrower or any Loan Party located on any Material Real Estate Asset or any Material Related Collateral Location.

 

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(xxv)         Section 1.01 of the Credit Agreement is hereby amended by deleting the definition of “Store” in its entirety and replacing it with the following:

 

“Store” means any retail store (which may include any real property, fixtures, equipment, inventory and other property related thereto) operated, or to be operated, by any Loan Party, a Person in which any Loan Party holds an Equity Interest or a Save-A-Lot licensee.

 

(xxvi) Section 1.01 of the Credit Agreement is hereby amended by deleting the definition of “Term Loan Agreement” in its entirety and replacing it with the following:

 

“Term Loan Agreement” means the Amendment Agreement, dated as of January 31, 2014, relating to the Amended and Restated Credit Agreement, dated as of May 16, 2013, among Term Loan Agent, Term Loan Lenders, and the Lead Borrower, together with all schedules and exhibits thereto, including the Second Amended and Restated Term Loan Credit Agreement attached thereto as Exhibit A.

 

(c) Deleted Terms. Section 1.01 of the Credit Agreement is deemed and is hereby amended to delete the defined terms “Maturity Projection Period,” “Post-Maturity Period,”, “Pre-Maturity Period” and “SVU 2016 Notes Reserve,” in their respective entireties.

 

(d) Interpretation. For purposes of this Amendment No. 1, all terms used herein which are not otherwise defined herein, including but not limited to, those terms used in the recitals hereto, shall have the respective meanings assigned thereto in the Credit Agreement as amended by this Amendment No. 1.

 

2.              Reserves. The first sentence of Section 2.01(b) is hereby amended by deleting the first sentence of such section in its entirety and replacing it with the following:

 

The Administrative Agent shall have the right, at any time and from time to time after the Closing Date in its Permitted Discretion to establish, modify or eliminate Reserves, provided, that, at any time a Material Debt Reserve may be established Administrative Agent shall establish such Reserve, except as otherwise agreed by the Required Lenders.

 

3.              Repayment of Loans. Section 2.07 of the Credit Agreement is hereby amended by deleting such clause (c) of Section 2.07 in its entirety and replacing it with the following: “Reserved”.

 

4.              Subsidiaries; Equity Interests. Section 5.13 of the Credit Agreement is hereby amended by deleting the last sentence of such section in its entirety and replacing it with the following:

 

The copies of the Organization Documents of each Loan Party and each amendment thereto provided pursuant to Section 4.01 are true and correct copies of each such document (subject to amendment as permitted under Section 7.12), each of which is valid and in full force and effect.

 

5.             Notices to Farm Products Sellers. Etc.

 

(a) Section 6.03(j) of the Credit Agreement is hereby deleted in its entirety and replaced with the following:

 

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(j) the receipt of any notice, or amendment to a prior notice, from a supplier, seller, or agent pursuant to the Food Security Act, PACA, the PSA or any other statute if (A) any such notice involves a claim of $50,000 or more or (B) all such notices outstanding involve claims in the aggregate amount of $250,000 or more, and upon the request of Administrative Agent, the Loan Parties shall promptly provide the Administrative Agent with a true, correct and complete copy of such notice or amendment, as the case may be, and other information delivered to or on behalf of the Loan Parties pursuant thereto;

 

(b)         Section 6.20(c) of the Credit Agreement is hereby deleted in its entirety and replaced with the following:

 

Each Borrower shall (i) promptly notify Administrative Agent in writing after receipt by or on behalf of such Borrower of any Food Security Act Notice or amendment to a previous Food Security Act Notice, and including any notice from any Farm Products Seller of the intention of such Farm Products Seller to preserve the benefits of any trust applicable to any assets of any Loan Party under the provisions of the PSA, PACA or any other statute if (A) any such notice involves a claim of $50,000 or more or (B) all such notices outstanding involve claims in the aggregate amount of $250,000 or more, and (ii) upon the request of the Administrative Agent, such Borrower shall promptly provide Administrative Agent with a true, correct and complete copy of such Food Security Act Notice or amendment, or other notice from such Farm Products Seller, as the case may be, and other information delivered to or on behalf of such Borrower pursuant to the Food Security Act, the PSA, PACA or other statute.

 

6.              Escrow Agreement, 2014 Notes and Indemnity. Section 6.22(b) of the Credit Agreement is hereby deleted in its entirety and replaced with the following:

 

(b) Unless the Escrow Fund has been fully released pursuant to the terms of the Escrow Agreement, the Escrow Fund and all other assets and property subject to the Escrow Agreement shall at all times be and remain invested in a MMMF or one or more other investments reasonably satisfactory to the Administrative Agent, except for cash or Cash Equivalents received in connection with liquidations distributing proceeds thereof and except for other liquid non-cash investments of the type described in clauses (a) through (e) of the term “Permitted Investments”.

 

7.              Fundamental Changes. Section 7.04(b) of the Credit Agreement is hereby amended by deleting such clause (b) its entirety and replacing it with the following:

 

(b) any Restricted Subsidiary may merge into any Loan Party, and any Restricted Subsidiary that is not a Loan Party may merge into any other Restricted Subsidiary that is not a Loan Party, provided that, (i) in any merger involving one or more Borrowers, a Borrower shall be the continuing or surviving Person, and (ii) subject to the foregoing clause (i), in any merger involving a Loan Party, the continuing or surviving entity shall be a Loan Party.

 

8.              Commitments. Schedule 2.01 to the Credit Agreement is hereby amended by deleting such Schedule 2.01 in its entirety and replacing it with the Schedule 2.01 annexed hereto as Annex A.

 

9.              Amendment of Intercreditor Agreement. The Lenders hereby authorize Administrative Agent to amend the Term Loan Intercreditor Agreement to amend the definition of the term “Term Loan Cap” to be an amount equal to $1,650,000,000, plus additional term loans in an amount not to exceed $500,000,000.

 

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10.       Representations and Warranties. Each Loan Party, jointly and severally, represents and warrants with and to Administrative Agent and Lenders as  follows, which representations and warranties shall survive the execution and delivery hereof, the truth and accuracy of, or compliance with each, together with the representations, warranties and covenants in the other Loan Documents, being a continuing condition of the making of any Loans by Lenders (or Administrative Agent on behalf of Lenders) to Borrowers:

 

(a) No Default or Event of Default exists or has occurred and is continuing as of the date of this Amendment No. 1.

 

(b) This Amendment No. 1 has been duly authorized, executed and delivered by all necessary action on the part of each Loan Party which is a party hereto and, if necessary, their respective equity holders and is in full force and effect as of the date hereof, as the case may be, and the agreements and obligations of each Loan Party contained herein constitute legal, valid and binding obligations of each Loan Party, enforceable against it in accordance with their terms, except as enforceability is limited by bankruptcy, insolvency, reorganization, moratorium or other laws relating to or affecting generally the enforcement of creditors’ rights and except to the extent that availability of the remedy of specific performance or injunctive relief is subject to the discretion of the court before which any proceeding therefor may be brought.

 

(c) The execution, delivery and performance of this Amendment No. 1 is within each Loan Party’s corporate, limited liability company or limited partnership powers.

 

(d) None of the execution, delivery and/or performance of this Amendment No. 1 is in contravention of law or the terns of any Loan Party’s certificate or articles of incorporation, by laws, or other organizational documentation, or any indenture, agreement or undertaking to which any Borrower or Guarantor is a party or by which any Loan Party or its property are bound.

 

(e) Except to the extent addressed in the certificate provided pursuant to Section 11(d) below, the resolutions of the Board of Directors or Managers of each Loan Party delivered to Agent by such Loan Party on the date of the effectiveness of the Credit Agreement have not been revoked and are in full force and effect.

 

(f) All of the representations and warranties set forth in the Credit Agreement and the other Loan Documents, each as amended hereby, are true and correct in all material respects on and as of the date hereof, as if made on the date hereof, except to the extent any such representation or warranty is made as of a specified date, in which case such representation or warranty shall have been true and correct as of such date.

 

11.      Conditions Precedent. The amendments contained herein shall only be effective upon satisfaction of each of the following conditions precedent in a manner satisfactory to Administrative Agent:

 

(a) Administrative Agent shall have received counterparts of this Amendment No. 1, as duly authorized, executed and delivered by Borrowers, Guarantors and Lenders;

 

(b) Administrative Agent shall have received the Amendment No. 1 Fee Letter by and among Administrative Agent and Lead Borrower, as duly authorized, executed and delivered by Lead Borrower;

 

11

 

(c) Administrative Agent shall have received payment in full in cash of the fees required to be paid pursuant to the Amendment No. 1 Fee Letter referred to above;

 

(d) Administrative Agent shall have received a certificate of a Responsible Officer of Lead Borrower as to (i) the absence of any amendment to its articles of incorporation since certified copies of such articles were delivered to the Administrative Agent on the Closing Date, (ii) a certified copy of its amended by-laws, (iii) certified copies of resolutions and delegations of authority authorizing the Credit Agreement, this Amendment No. 1 and the transactions contemplated therein and herein and (iv) updating of the incumbency certificate; and

 

(e) No Default or Event of Default shall exist or have occurred and be continuing.

 

12.       Effect of Amendment No. 1. Except as expressly set forth herein, no other amendments, changes or modifications to the Loan Documents are intended or implied, and in all other respects the Loan Documents are hereby specifically ratified, restated and confirmed by all parties hereto as of the effective date hereof and Loan Parties shall not be entitled to any other or further amendment by virtue of the provisions of this Amendment No. 1 or with respect to the subject matter of this Amendment No. 1. To the extent of conflict between the terms of this Amendment No. 1 and the other Loan Documents, the terms of this Amendment No. 1 shall control. The Credit Agreement and this Amendment No. 1 shall be read and construed as one agreement. This Amendment No. 1 is a Loan Document. The Credit Agreement remains in full force and effect, and nothing contained in this Amendment No. 1 will constitute a waiver of any right, power or remedy under the Credit Agreement.

 

13.       Governing Law. The validity, interpretation and enforcement of this Amendment No. 1 and any dispute arising out of the relationship between the parties hereto whether in contract, tort, equity or otherwise, shall be governed by the internal laws of the State of New York but excluding any principles of conflicts of law or other rule of law that would cause the application of the law of any jurisdiction other than the laws of the State of New York.

 

14.       Jury Trial Waiver. LOAN PARTIES, ADMINISTRATIVE AGENT AND EACH LENDER PARTY HERETO, EACH HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER THIS AMENDMENT NO. 1 OR ANY OF THE OTHER LOAN DOCUMENTS OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT OF THIS AMENDMENT NO. 1 OR ANY OF THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. LOAN PARTIES, ADMINISTRATIVE AGENT AND EACH LENDER PARTY HERETO, EACH HEREBY AGREES AND  CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT LOAN PARTIES, ADMINISTRATIVE AGENT OR ANY LENDER PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS AMENDMENT NO. 1 WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

 

15.       Binding Effect. This Amendment No. 1 shall be binding upon and inure to the benefit of each of the parties hereto and their respective successors and assigns.

 

16.       Waiver, Modification, Etc. No provision or term of this Amendment No. 1 may be modified,

 

12

 

altered, waived, discharged or terminated orally, but only by an instrument in writing executed by the party against whom such modification, alteration, waiver, discharge or termination is sought to be enforced.

 

17.       Further Assurances. Loan Parties shall execute and deliver such additional documents and take such additional action as may be reasonably requested by Administrative Agent to effectuate the provisions and purposes of this Amendment No. 1.

 

18.       Entire Agreement. This Amendment No. 1 represents the entire agreement and understanding concerning the subject matter hereof among the parties hereto, and supersedes all other prior agreements, understandings, negotiations and discussions, representations, warranties, commitments, proposals, offers and contracts concerning the subject matter hereof, whether oral or written.

 

19.       Headings. The headings listed herein are for convenience only and do not constitute matters to be construed in interpreting this Amendment No. 1.

 

20.       Counterparts. This Amendment No. 1 may be executed in any number of counterparts, each of which shall be an original, but all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of this Amendment No. 1 by telefacsimile or other electronic method of transmission shall have the same force and effect as delivery of an original executed counterpart of this Amendment No. 1. Any party delivering an executed counterpart of this Amendment No. 1 by telefacsimile or other electronic method of transmission shall also deliver an original executed counterpart of this Amendment No. 1, but the failure to do so shall not affect the validity, enforceability, and binding effect of this Amendment No. 1.

 

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

 

13

 

lN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1 to be duly executed and delivered as of the day and year first above written.

 

	
 
    	
BORROWERS:
    
	
 
    	
 
    
	
 
    	
SUPERVALU   INC.
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Bruce H. Besanko
    
	
 
    	
Name:
    	
Bruce   H. Besanko
    
	
 
    	
Title:
    	
Executive   Vice President and Chief
    
	
 
    	
 
    	
Financial   Officer·
    
	
 
    	
 
    
	
 
    	
ADVANTAGE   LOGISTICS - SOUTHEAST, INC.
    
	
 
    	
FF   ACQUISITION, L.L.C.
    
	
 
    	
FOODARAMA   LLC
    
	
 
    	
RICHFOOD, INC.
    
	
 
    	
SHOP   ‘N SAVE ST. LOUIS, INC.
    
	
 
    	
SHOP   ‘N SAVE WAREHOUSE FOODS, INC.
    
	
 
    	
SHOPPERS   FOOD WAREHOUSE CORP,
    
	
 
    	
SUPERVALU   HOLDINGS, INC.
    
	
 
    	
SUPERVALU   HOLDINGS- PA LLC
    
	
 
    	
By:   SUPERVALU Holdings, Inc., its sole member
    
	
 
    	
SUPERVALU   PHARMACIES, INC. 
    
	
 
    	
W.   NEWELL & CO., LLC
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Bruce H. Besanko
    
	
 
    	
Name:
    	
Bruce   H. Besanko
    
	
 
    	
Title:
    	
Vice   President 
    
	
 
    	
 
    
	
 
    	
CHAMPLIN   2005 L.L.C.
    
	
 
    	
 
    
	
 
    	
By: SUPERVALU INC., its   sole member
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Bruce H. Besanko
    
	
 
    	
Name:
    	
Bruce   H. Besanko
    
	
 
    	
Title:
    	
Executive   Vice President and Chief
    
	
 
    	
Financial   Officer
    
	
 
    	
 
    	
 
    
	
 
    	
MORAN   FOODS, LLC
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Ritchie L. Casteel
    
	
 
    	
Name:
    	
Ritchie L. Casteel
    
	
 
    	
Title:
    	
Chief   Executive Officer
    
	
 
    	
 
    
	
 
    	
SAVE-A-LOT TYLER GROUP,   LLC
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Ritchie L. Casteel
    
	
 
    	
Name:
    	
Ritchie   L. Casteel
    
	
 
    	
Title:
    	
Chairman,   President and Chief Executive
    
	
 
    	
Officer
    

 

[Amendment No. 1 to Amended and Restated Credit Agreement]

 

 

	
 
    	
GUARANTORS:
    
	
 
    	
 
    
	
 
    	
BUTSON’S   ENTERPRISES, INC.
    
	
 
    	
RICHFOOD  HOLDINGS, INC.
    
	
 
    	
RICHFOOD  PROCUREMENT, L.L.C. 
    
	
 
    	
SCOTT’S   FOOD STORES, INC.
    
	
 
    	
SFW   HOLDING CORP. 
    
	
 
    	
SFW   LICENSING CORP. 
    
	
 
    	
SUPER   RITE FOODS, INC.
    
	
 
    	
SUPERMARKET   OPERATORS  OF AMERICA 
    
	
 
    	
INC.
    
	
 
    	
SVH   REALTY, INC. 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Bruce H. Besanko
    
	
 
    	
Name:
    	
Bruce   H. Besanko
    
	
 
    	
Title:
    	
Vice   President
    

 

[SIGNATURES CONTINUE ON NEXT PAGE]

 

[Amendment No. 1 to Amended and Restated Credit Agreement]

 

 

[SIGNATURES CONTINUED FROM PREVIOUS PAGE]

 

	
 
    	
AGENT   AND LENDERS
    
	
 
    	
 
    
	
 
    	
WELLS   FARGO BANK, NATIONAL ASSOCIATION, 
    
	
 
    	
as   Administrative Agent
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Joseph Burt
    
	
 
    	
Name:
    	
Joseph Burt
    
	
 
    	
Title:
    	
Director
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
WELLS   FARGO BANK, NATIONAL ASSOCIATION,
    
	
 
    	
as   LC Issuer, as a Lender and as Swing Line Lender
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Joseph Burt
    
	
 
    	
Name:
    	
Joseph Burt
    
	
 
    	
Title:
    	
Director
    
				

 

[Amendment No. 1 to Amended and Restated Credit Agreement]

 

 

	
 
    	
COÖPERATIEVE   CENTRALE RAIFFEISEN-
    
	
 
    	
BOERENLEENBANK   B.A., “RABOBANK
    
	
 
    	
NEDERLAND”, NEW YORK BRANCH,   as
    
	
 
    	
LC   Issuer and as a Lender
    
	
 
    	
 
    
	
 
    	
By: 
    	
/s/   William Binder
    
	
 
    	
Name:
    	
William Binder
    
	
 
    	
Title:   
    	
Executive   Director
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   James Purky
    
	
 
    	
Name:
    	
James Purky
    
	
 
    	
Title:   
    	
Vice   President
    

 

[Amendment No. 1 to Amended and Restated Credit Agreement]

 

 

	
 
    	
U.S. BANK NATIONAL   ASSOCIATION, as
    
	
 
    	
LC Issuer and as a Lender
    
	
 
    	
 
    
	
 
    	
By: 
    	
/s/   Lisa N. Freeman
    
	
 
    	
Name:
    	
Lisa N. Freeman
    
	
 
    	
Title:   
    	
Senior   Vice President
    

 

[Amendment No. 1 to Amended and Restated Credit Agreement]

 

 

	
 
    	
BMO   HARRIS BANK NA., as a Lender
    
	
 
    	
 
    
	
 
    	
By: 
    	
/s/   Kara Goodwin
    
	
 
    	
Name:
    	
Kara Goodwin
    
	
 
    	
Title:   
    	
Director
    

 

[Amendment No. 1 to Amended and Restated Credit Agreement]

 

 

	
 
    	
RBS   CITIZENS BUSINESS CAPITAL, A 
    
	
 
    	
DIVISION   OF RBS ASSET FINANCE, INC.,
    
	
 
    	
as   a Lender
    
	
 
    	
 
    
	
 
    	
By:  
    	
/s/   Francis Garvin
    
	
 
    	
Name:
    	
Francis   Garvin
    
	
 
    	
Title:   
    	
SVP
    

 

[Amendment No. 1 to Amended and Restated Credit Agreement]

 

 

	
 
    	
REGIONS   BANK, as a Lender
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Louis Alexander
    
	
 
    	
Name:
    	
Louis   Alexander
    
	
 
    	
Title:
    	
Attorney   in Fact
    

 

[Amendment No. 1 to Amended and Restated Credit Agreement]

 

 

	
 
    	
UNION   BANK, N.A., as a Lender 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Brent Housteau
    
	
 
    	
Name:
    	
Brent   Housteau
    
	
 
    	
Title:
    	
Senior   Vice President
    

 

[Amendment No. 1 to Amended and Restated Credit Agreement]

 

 

	
 
    	
GOLDMAN   SACHS BANK USA, as a Lender
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Mark Walton
    
	
 
    	
Name:
    	
Mark   Walton
    
	
 
    	
Title:
    	
Authorized   Signatory
    

 

[Amendment No. 1 to Amended and Restated Credit Agreement]

 

 

	
 
    	
BANK   OF AMERICA, N.A., as a Lender
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Matthew Potter 
    
	
 
    	
Name:
    	
Matthew   Potter 
    
	
 
    	
Title:
    	
Vice   President
    

 

[Amendment No. 1 to Amended and Restated Credit Agreement]

 

 

	
 
    	
BARCLAYS   BANK PLC, as a Lender
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Marguerite Sutton
    
	
 
    	
Name:
    	
Marguerite   Sutton
    
	
 
    	
Title:
    	
Vice   President
    

 

[Amendment No. 1 to Amended and Restated Credit Agreement]

 

 

	
 
    	
CREDIT   SUISSE AG, CAYMAN ISLANDS
    
	
 
    	
BRANCH,   as a Lender
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Bill O’Daly
    
	
 
    	
Name:
    	
Bill   O’Daly
    
	
 
    	
Title:
    	
Authorized   Signatory
    

 

 

	
 
    	
By:
    	
/s/   Michael D’Onofrio
    
	
 
    	
Name:
    	
Michael   D’Onofrio
    
	
 
    	
Title:
    	
Authorized   Signatory
    

 

[Amendment No. 1 to Amended and Restated Credit Agreement]

 

 

	
 
    	
MORGAN   STANLEY BANK, N.A., as a 
    
	
 
    	
Lender
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Michael King
    
	
 
    	
Name:
    	
Michael   King
    
	
 
    	
Title:
    	
Authorized   Signatory
    

 

[Amendment No. 1 to Amended and Restated Credit Agreement]

 

 

	
 
    	
PNC   BANK, NATIONAL ASSOCIATION, as 
    
	
 
    	
LC   Issuer and as a Lender
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Adam Moss
    
	
 
    	
Name:
    	
Adam   Moss
    
	
 
    	
Title:
    	
Vice   President
    

 

[Amendment No. 1 to Amended and Restated Credit Agreement]

 

 

	
 
    	
CITY   NATIONAL BANK, A NATIONAL
    
	
 
    	
BANKING   ASSOCIATION, as a Lender
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Martin Chin
    
	
 
    	
Name:
    	
Martin Chin
    
	
 
    	
Title:
    	
Senior   Vice President
    

 

[Amendment No. 1 to Amended and Restated Credit Agreement]

 

 

	
 
    	
SIEMENS   FINANCIAL SERVICES, INC., as a
    
	
 
    	
Lender
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   John Finore
    
	
 
    	
Name:
    	
John   Finore
    
	
 
    	
Title:
    	
Vice   President
    

 

 

	
 
    	
By:
    	
/s/   Uri Sky
    
	
 
    	
Name:
    	
Uri   Sky
    
	
 
    	
Title:
    	
VP
    

 

[Amendment No. 1 to Amended and Restated Credit Agreement]

 

 

	
 
    	
GENERAL   ELECTRIC CAPITAL
    
	
 
    	
CORPORATION,   as a Lender
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Kristina M. Miller
    
	
 
    	
Name:
    	
Kristina   M. Miller
    
	
 
    	
Title:
    	
Duly   Authorized Signatory
    

 

[Amendment No. 1 to Amended and Restated Credit Agreement]

 

 

Annex A

to

Amendment No. 1

Schedule 2.01

 

Commitments and Applicable Percentages

 

COMMITMENT SCHEDULE

 

	
Lender
    	
 
    	
Commitment
    	
 
    	
Applicable Percentage
    	
 
    
	
Wells Fargo Bank, National Association
    	
 
    	
$
    	
300,000,000
    	
 
    	
30.00%
    	
 
    
	
Coöperatieve Centrale Raiffeisen-Boerenleenbank   B.A., “Rabobank Nederland”, New York Branch
    	
 
    	
$
    	
125,000,000
    	
 
    	
12.50%
    	
 
    
	
U.S. Bank National Association
    	
 
    	
$
    	
100,000,000
    	
 
    	
10.00%
    	
 
    
	
BMO Harris Bank N.A.
    	
 
    	
$
    	
68,000,000
    	
 
    	
6.80%
    	
 
    
	
RBS Citizens Business Capital, a division of RBS   Asset Finance, Inc.
    	
 
    	
$
    	
50,000,000
    	
 
    	
5.00%
    	
 
    
	
Regions Bank
    	
 
    	
$
    	
50,000,000
    	
 
    	
5.00%
    	
 
    
	
Union Bank, N.A.
    	
 
    	
$
    	
44,500,000
    	
 
    	
4.45%
    	
 
    
	
Goldman Sachs Bank USA
    	
 
    	
$
    	
42,500,000
    	
 
    	
4.25%
    	
 
    
	
Bank of America, N.A.
    	
 
    	
$
    	
32,500,000
    	
 
    	
3.25%
    	
 
    
	
Barclays Bank PLC
    	
 
    	
$
    	
32,500,000
    	
 
    	
3.25%
    	
 
    
	
Credit Suisse AG, Cayman Islands Branch
    	
 
    	
$
    	
32,500,000
    	
 
    	
3.25%
    	
 
    
	
Morgan Stanley Bank
    	
 
    	
$
    	
32,500,000
    	
 
    	
3.25%
    	
 
    
	
PNC Bank, National Association
    	
 
    	
$
    	
30,000,000
    	
 
    	
3.00%
    	
 
    
	
City National Bank, a National Banking Association
    	
 
    	
$
    	
25,000,000
    	
 
    	
2.50%
    	
 
    
	
Siemens Financial Services, Inc.
    	
 
    	
$
    	
20,000,000
    	
 
    	
2.00%
    	
 
    
	
General Electric Capital Corporation
    	
 
    	
$
    	
15,000,000
    	
 
    	
1.50%
    	
 
    
	
Total
    	
 
    	
$
    	
1,000,000,000
    	
 
    	
100%
    	
 
    

 

[Amendment No. 1 to Amended and Restated Credit Agreement]ginsbergemployment.htm

Exhibit 10.1

 

 

AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”) made April 14, 2014 and effective as of January 1, 2014 (the “Effective Date”) between TIME WARNER INC., a Delaware corporation (the “Company”), and GARY GINSBERG (“You”).

You are currently employed by the Company pursuant to an Employment Agreement made and effective as of February 17, 2010 (the “Prior Agreement”).  The Company wishes to amend and restate the terms of your employment with the Company and to secure your services on a full-time basis for the period to and including December 31, 2016 on and subject to the terms and conditions set forth in this Agreement, and you are willing to provide such services on and subject to the terms and conditions set forth in this Agreement.  You and the Company therefore agree as follows:

1.   Term of Employment.   Your “term of employment” as this phrase is used throughout this Agreement shall be for the period beginning on the Effective Date and ending on December 31, 2016 (the “Term Date”), subject, however, to earlier termination as set forth in this Agreement.

2.   Employment.   During the term of employment, you shall serve as Executive Vice President, Corporate Marketing & Communications of the Company and you shall have the authority, functions, duties, powers and responsibilities normally associated with such position and such additional authority, functions, duties, powers and responsibilities as may be assigned to you from time to time by the Company consistent with your senior position with the Company.  During the term of employment, (i) your services shall be rendered on a substantially full-business time, exclusive basis and you will apply on a full-business time basis all of your skill and experience to the performance of your duties, (ii) you shall have no other employment and, without the prior written consent of your manager or other more senior officer of the Company in your reporting line, no outside business activities which require the devotion of substantial amounts of your time, and (iii) the place for the performance of your services shall be the principal executive offices of the Company in the New York City metropolitan area, subject to such reasonable travel as may be required in the performance of your duties.  The foregoing shall be subject to the Company’s written policies, as in effect from time to time, regarding vacations, holidays, illness and the like.

  

  

 

  

3.   Compensation.

3.1           Base Salary.   The Company shall pay you a base salary at the rate of not less than $875,000 per annum during the term of employment (“Base Salary”).  The Company may increase, but not decrease, your Base Salary during the term of employment.  Base Salary shall be paid in accordance with the Company’s customary payroll practices.

3.2           Bonus. In addition to Base Salary, the Company typically pays its executives an annual cash bonus (“Bonus”).  Although your Bonus is fully discretionary, your target annual Bonus as a percentage of Base Salary is 200%.  The Company may increase, but not decrease without your consent, your target annual Bonus during the term of employment.  Each year, your personal performance will be considered in the context of your executive duties and any individual goals set for you, and your actual Bonus will be determined based on your personal performance and the Company’s performance.  Your Bonus amount, if any, will be paid to you between January 1 and March 15 of the calendar year immediately following the performance year in respect of which such Bonus is earned.

3.3           Long Term Incentive Compensation.   So long as the term of employment has not terminated, you shall be eligible to receive annually from the Company long term incentive compensation with a target value of $900,000 (based on the valuation method used by the Company for its senior executives) through a combination of stock option grants, restricted stock units, performance shares or other equity-based awards, cash-based long-term plans or other components as may be determined by the Compensation and Human Development Committee of the Company’s Board of Directors from time to time  in its sole discretion.

3.4           Indemnification.   You shall be entitled throughout the term of employment (and after the end of the term of employment, to the extent relating to service during the term of employment) to the benefit of the indemnification provisions contained on the date hereof in the Restated Certificate of Incorporation and By-laws of the Company (not including any amendments or additions after the Effective Date that limit or narrow, 

  

2  

 

but including any that add to or broaden, the protection afforded to you by those provisions).

4.   Termination.

4.1   Termination for Cause.   The Company may terminate the term of employment and all of the Company’s obligations under this Agreement, other than its obligations set forth below in this Sections 4.1 and in Section 3.4, for “cause”.  Termination by the Company for “cause” shall mean termination because of your (a) conviction (treating a nolo contendere plea as a conviction) of a felony (whether or not any right to appeal has been or may be exercised) other than as a result of a moving violation or a Limited Vicarious Liability, (b) willful failure or refusal without proper cause to perform your material duties with the Company, including your material obligations under this Agreement (other than any such failure resulting from your incapacity due to physical or mental impairment), (c) willful misappropriation, embezzlement or reckless or willful destruction of Company property having a significant adverse financial effect on the Company or a significant adverse effect on the Company’s reputation, (d) willful and material breach of any statutory or common law duty of loyalty to the Company having a significant adverse financial effect on the Company or a significant adverse effect on the Company’s reputation, or (e) material and willful breach of any of the covenants provided for in Sections 8 and 9.  Such termi­nation shall be effected by written notice thereof delivered by the Company to you and shall be effective as of the date of such notice; provided, however, that if (i) such termination is because of your willful failure or refusal without proper cause to perform your material duties with the Company including any one or more of your material obligations under this Agreement or for intentional and improper conduct, and (ii) within 30 days following the date of such notice you shall cease your refusal and shall use your best efforts to perform such obligations or cease such intentional and improper conduct, the termination shall not be effective.  For purposes of this definition of Cause, no act, or failure to act, on your part shall be considered “willful” or “intentional” unless done, or omitted to be done, by you not in good faith and without reasonable belief that such action or omission was opposed to the best interest of the Company.  The term “Limited Vicarious Liability” shall mean any liability which is based on acts of the Company for which you are responsible solely as a result of your office(s) with the Company; provided that (x) you are not directly involved in such acts and either had no prior knowledge of such intended actions or, upon obtaining such knowledge,

  

3

 

promptly acted reasonably and in good faith to attempt to prevent the acts causing such liability or (y) after consulting with the Company’s counsel, you reasonably believed that no law was being violated by such acts.

In the event of termination of your employment by the Company for cause, without prejudice to any other rights or remedies that the Company may have at law or in equity, the Company shall have no further obligation to you other than (i) to pay Base Salary through the effective date of the termination of employment (the “Effective Termination Date”), (ii) to pay any Bonus for any year which has ended prior to the year in which such termination occurs that has been determined but not yet paid as of the Effective Termination Date, and (iii) with respect to any rights you have pursuant to any insurance or other benefit plans or arrangements of the Company (including rights under Section 7.2 hereof).   You hereby disclaim any right to receive a pro rata portion of any Bonus with respect to the year in which such termination occurs.

4.2   Termination by You for Material Breach by the Company and Termination by the Company Without Cause.   Unless previously terminated pursuant to any other provision of this Agreement and unless a Disability Period shall be in effect, you shall have the right, exercisable by written notice to the Company, to terminate the term of employment under this Agreement with an Effective Termination Date 30 days after the giving of such notice, if, at the time of the giving of such notice, the Company is in material breach of its obligations under this Agreement; provided, however, that, with the exception of clause (i) below, this Agreement shall not so terminate if such notice is the first such notice of termination delivered by you pursuant to this Section 4.2 and within such 30-day period the Company shall have cured all such material breaches; and provided further, that such notice is provided to the Company within 90 days after your knowledge of the occurrence of such material breach.  A material breach by the Company shall include, but not be limited to (i) the Company violating Section 2 with respect to authority, reporting lines, duties, or place of employment and (ii) the Company failing to cause any successor to all or substantially all of the business and assets of the Company expressly to assume the obligations of the Company under this Agreement.

The Company shall have the right, exercisable by written notice to you delivered at least 60 days prior to the Effective Termination Date, to terminate your employment under this Agreement without cause, which notice shall specify the Effective 

  

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Termination Date.  If such notice is delivered on or after the date which is 60 days prior to the Term Date, the provisions of Section 4.3 shall apply.

4.2.1   In the event of a termination of employment pursuant to this Section 4.2 (a “termination without cause”), you shall receive Base Salary and a pro rata portion of your Average Annual Bonus (as defined below) through the Effective Termination Date.  Your Average Annual Bonus shall be equal to the average of the regular annual bonus amounts (excluding the amount of any special or spot bonuses) in respect of the two calendar years during the most recent three calendar years for which the annual bonus received by you from the Company was the greatest. Your pro rata Average Annual Bonus pursuant to this Section 4.2.1 shall be paid to you at the times set forth in Section 4.6.

4.2.2   After the Effective Termination Date, you shall continue to be treated like an employee of the Company for a period ending on the date which is  twenty-four months after the Effective Termination Date if the Effective Termination Date occurs prior to the Term Date and twelve months after the Effective Termination Date if the Effective Termination Date occurs on or after the Term Date (such date, the “Severance Term Date”), and during such period you shall be entitled to receive, whether or not you become disabled during such period but subject to Section 6, (a) Base Salary (on the Company’s normal payroll payment dates as in effect immediately prior to the Effective Termination Date) at an annual rate equal to your Base Salary in effect immediately prior to the notice of termination, and (b) an annual Bonus in respect of each calendar year or portion thereof (in which case a pro rata portion of such Bonus will be payable) during such period equal to your Average Annual Bonus.  Except as provided in the next sentence, if you accept other full-time employment during such period or notify the Company in writing of your intention to terminate your status of being treated like an employee during such period, you shall cease to be treated like an employee of the Company for purposes of your rights to receive certain post-termination benefits under Section 7.2 effective upon the commencement of such other employment or the date specified by you in the notice as the date you wish to terminate your status of being treated as an employee, whichever is applicable (the “Equity Cessation Date”), and you shall receive the remaining payments of Base Salary and Bonus pursuant to this Section 4.2.2 at the times specified in Section 4.6 of the Agreement. Notwithstanding the foregoing, if you accept employment with any not-for-profit entity or governmental entity, then you may 

  

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continue to be treated like an employee of the Company for purposes of your rights to receive certain post-termination benefits pursuant to Section 7.2 and you will continue to receive the payments as provided in the first sentence of this Section 4.2.2; and if you accept full-time employment with any affiliate of the Company, then the payments provided for in this Section 4.2.2 shall immediately cease and you shall not be entitled to any further payments.  For purposes of this Agreement, the term “affiliate” shall mean any entity which, directly or indirectly, controls, is controlled by, or is under common control with, the Company.

4.3   After the Term Date.   If, at the Term Date, the term of employment shall not have been previously terminated pursuant to the provisions of this Agreement, no Disability Period is then in effect and the parties shall not have agreed to an extension or renewal of this Agreement or on the terms of a new employment agreement, then the term of employment shall continue on a month-to-month basis and you shall continue to be employed by the Company pursuant to the terms of this Agreement, subject to termination by either party hereto on 60 days written notice delivered to the other party (which notice may be delivered by either party at any time on or after the date which is 60 days prior to the Term Date).  If the Company shall terminate the term of employment on or after the Term Date for any reason (other than for cause as defined in Section 4.1, in which case Section 4.1 shall apply), which the Company shall have the right to do so long as no Disability Date (as defined in Section 5) has occurred prior to the delivery by the Company of written notice of termination, then such termination shall be deemed for all purposes of this Agreement to be a “termination without cause” under Section 4.2 and the provisions of Sections 4.2.1 and 4.2.2 shall apply.

4.4   Release.   A condition precedent to the Company’s obligation with respect to the payments associated with a termination without cause shall be your execution and delivery of a release in the form attached hereto as Annex A, as such form may be revised as required by law, within 60 days following your Effective Termination Date. If you shall fail to timely execute and deliver such release, or if you revoke such release as provided therein, then in lieu of continuing to receive the payments provided for herein, you shall receive a severance payment determined in accordance with the Company’s policies relating to notice and severance reduced by the aggregate amount of severance payments paid pursuant to this Agreement, if any, prior to the date of your refusal to deliver, or revocation of, such release.

  

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                                4.5   Mitigation. In the event of a termination without cause under this Agreement, you shall not be required to take actions in order to mitigate your damages hereunder, unless Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”),would apply to any payments to you by the Company and your failure to mitigate would result in the Company losing tax deductions to which it would otherwise have been entitled.  In such an event, Section 4.7 shall govern.  With respect to the preceding sentences, any payments or rights to which you are entitled by reason of the termination of employment without cause shall be considered as damages hereunder. Any obligation to mitigate your damages pursuant to this Section 4.5 shall not be a defense or offset to the Company’s obligation to pay you in full the amounts provided in this Agreement upon the occurrence of a termination without cause, at the time provided herein, or the timely and full performance of any of the Company’s other obligations under this Agreement.

4.6   Payments.  Payments of Base Salary and Bonus required to be made to you after any termination shall be made at the same times as such payments otherwise would have been paid to you pursuant to Sections 3.1 and 3.2 if you had not been terminated, subject to Section 11.17.

4.7   Limitation on Certain Payments.  Notwithstanding any other provision of this Agreement:

4.7.1.           In the event it is determined by  an independent nationally recognized public accounting firm engaged and paid for by the Company prior to the consummation of any transaction constituting a Change in Control (which for purposes of this Section 4.7 shall mean a change in ownership or control as determined in accordance with the regulations promulgated under Section 280G of the Code), which accounting firm shall in no event be the accounting  firm for the entity seeking to effectuate the Change in Control (the “Accountant”), which determination shall be certified by the Accountant and set forth in a certificate delivered to you setting forth in reasonable detail the basis of the Accountant’s calculations, that part or all of the consideration, compensation or benefits to be paid to you under this Agreement constitute “parachute payments” under Section 280G(b)(2) of the Code, then, if the aggregate present value of such parachute payments, singularly or together with the aggregate present value of any consideration, compensation or benefits to be paid to you under any other plan, arrangement or agreement which constitute “parachute payments” (collectively, the

  

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 “Parachute Amount”) exceeds the maximum amount that would not give rise to any liability under Section 4999 of the Code, the amounts constituting “parachute payments” which would otherwise be payable to you or for your benefit shall be reduced to the maximum amount that would not give rise to any liability under Section 4999 of the Code (the “Reduced Amount”); provided that such amounts shall not be so reduced if the Accountant determines that without such reduction you would be entitled to receive and retain, on a net after-tax basis (including, without limitation, any excise taxes payable under Section 4999 of the Code), an amount which is greater than the amount, on a net after-tax basis, that you would be entitled to retain upon receipt of the Reduced Amount.  In connection with making determinations under this Section 4.7, the Accountant shall take into account the value of any reasonable compensation for services to be rendered by you before or after the Change in Control, including any amounts payable to you following your termination of employment hereunder with respect to any non-competition provisions that may apply to you, and the Company shall cooperate in the valuation of any such services, including any non-competition provisions.

4.7.2.           If the determination made pursuant to Section 4.7.1 results in a reduction of the payments that would otherwise be paid to you except for the application of Section 4.7.1, the Company shall promptly give you notice of such determination.  Such reduction in payments shall be first applied to reduce any cash severance payments that you would otherwise be entitled to receive hereunder and shall thereafter be applied to reduce other payments and benefits, in each case, in reverse order beginning with the payments or benefits that are to be paid the furthest in time from the date of such determination, unless you elect to have the reduction in payments applied in a different order; provided that, in no event may such payments be reduced in a manner that would result in subjecting you to additional taxation under Section 409A of the Code.

4.7.3.           As a result of the uncertainty in the application of Sections 280G and 4999 of the Code at the time of a determination hereunder, it is possible that amounts will have been paid or distributed by the Company to or for your benefit pursuant to this Agreement which should not have been so paid or distributed (each, an “Overpayment”) or that additional amounts which will have not been paid or distributed by the Company to or for your benefit pursuant to this Agreement could have been so paid or distributed (each, an “Underpayment”), in each case, consistent with the calculation of the Reduced Amount hereunder.  In the event that the Accountant, based upon the assertion of 

  

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a deficiency by the Internal Revenue Service against either the Company or you which the Accountant believes has a high probability of success, determines that an Overpayment has been made, any such Overpayment paid or distributed by the Company to or for your benefit shall be repaid by you to the Company together with interest at the applicable federal rate provided for in Section 7872(f)(2)(A) of the Code; provided, however, that no such repayment shall be required if and to the extent such deemed repayment would not either reduce the amount on which you are subject to tax under Sections 1 and 4999 of the Code or generate a refund of such taxes.  In the event that the Accountant, based on controlling precedent or substantial authority, determines that an Underpayment has occurred, any such Underpayment shall be promptly paid by the Company to or for your benefit together with interest at the applicable federal rate provided for in Section 7872(f)(2)(A) of the Code.

4.8  Retirement.   Notwithstanding the provisions of this Agreement relating to a termination without cause and Disability, on the date you reach age 65 (the “Retirement Date”), then this Agreement shall terminate automatically on such date and your employment with the Company shall thereafter be governed by the policies generally applicable to employees of the Company, and you shall not thereafter be entitled to the payments provided in this Agreement to the extent not received by you on or prior to the Retirement Date.   In addition, no benefits or payments provided in this Agreement relating to termination without cause and Disability shall include any period after the Retirement Date and if the provision of benefits or calculation of payments provided in this Agreement with respect thereto would include any period subsequent to the Retirement Date, such provision of benefits shall end on the Retirement Date and the calculation of payments shall cover only the period ending on the Retirement Date.

5.   Disability.

           5.1   Disability Payments.   If during the term of employment and prior to the delivery of any notice of termination without cause, you become physically or mentally disabled, whether totally or partially, so that you are prevented from performing your usual duties for a period of six consecutive months, or for shorter periods aggregating six months in any twelve-month period, the Company shall, nevertheless, continue to pay your full compensation through the last day of the sixth consecutive month of disability or the date on which the shorter periods of disability shall have equaled a total of six months 

  

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in any twelve-month period (such last day or date being referred to herein as the “Disability Date”), subject to Section 11.17.  If you have not resumed your usual duties on or prior to the Disability Date, the Company shall pay you a pro rata Bonus (based on your Average Annual Bonus) for the year in which the Disability Date occurs and thereafter shall pay you disability benefits for the period ending on the later of (i) the Term Date or (ii) the date which is twelve months after the Disability Date (in the case of either (i) or (ii), the “Disability Period”), in an annual amount equal to 75% of (a) your Base Salary at the time you become disabled and (b) the Average Annual Bonus, in each case, subject to Section 11.17.

           5.2   Recovery from Disability.   If during the Disability Period you shall fully recover from your disability, the Company shall have the right (exercisable within 60 days after notice from you of such recovery), but not the obligation, to restore you to full-time service at full compensation.  If the Company elects to restore you to full-time service, then this Agreement shall continue in full force and effect in all respects and the Term Date shall not be extended by virtue of the occurrence of the Disability Period.  If the Company elects not to restore you to full-time service, you shall be entitled to obtain other employment, subject, however, to the following:  (i) you shall perform advisory services during any balance of the Disability Period; and (ii) you shall comply with the provisions of Sections 8 and 9 during the Disability Period.  The advisory services referred to in clause (i) of the immediately preceding sentence shall consist of rendering advice concerning the business, affairs and management of the Company as requested by the Chief Executive Officer or other senior officer of the Company but you shall not be required to devote more than five days (up to eight hours per day) each month to such services, which shall be performed at a time and place mutually convenient to both parties.  Any income from such other employment shall not be applied to reduce the Company’s obligations under this Agreement.

           5.3   Other Disability Provisions.   The Company shall be entitled to deduct from all payments to be made to you during the Disability Period pursuant to this Section 5 an amount equal to all disability payments received by you during the Disability Period from Worker’s Compensation, Social Security and disability insurance policies maintained by the Company; provided, however, that for so long as, and to the extent that, proceeds paid to you from such disability insurance policies are not includible in your income for federal income tax purposes, the Company’s deduction with respect to such 

  

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payments shall be equal to the product of (i) such payments and (ii) a fraction, the numerator of which is one and the denominator of which is one less the maximum marginal rate of federal income taxes applicable to individuals at the time of receipt of such payments.  All payments made under this Section 5 after the Disability Date are intended to be disability payments, regardless of the manner in which they are computed.  Except as otherwise provided in this Section 5, the term of employment shall continue during the Disability Period and you shall be entitled to all of the rights and benefits provided for in this Agreement, except that Sections 4.2 and 4.3 shall not apply during the Disability Period, and unless the Company has restored you to full-time service at full compensation prior to the end of the Disability Period, the term of employment shall end and you shall cease to be an employee of the Company at the end of the Disability Period and shall not be entitled to notice and severance or to receive or be paid for any accrued vacation time or unused sabbatical.

6.   Death.   If you die during the term of employment, this Agreement and all obligations of the Company to make any payments hereunder shall terminate except that your estate (or a designated beneficiary) shall be entitled to receive Base Salary to the last day of the month in which your death occurs and Bonus compensation (at the time bonuses are normally paid) based on the Average Annual Bonus, but prorated according to the number of whole or partial months you were employed by the Company in such calendar year.

7.   Other Benefits.

7.1   General Availability.   To the extent that (a) you are eligible under the general provisions thereof (including without limitation, any plan provision providing for participation to be limited to persons who were employees of the Company or certain of its subsidiaries prior to a specific point in time) and (b) the Company maintains such plan or program for the benefit of its executives, during the term of your employment with the Company, you shall be eligible to participate in any savings plan, or similar plan or program and in any group life insurance, hospitalization, medical, dental, accident, disability or similar plan or program of the Company now existing or established hereafter on a basis no less favorable to you then is provided to any other executive vice president of the Company.

  

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                                7.2    Benefits After a Termination or Disability.   After the Effective Termination Date of a termination of employment pursuant to Section 4.2 and prior to the Severance Term Date or during the Disability Period, you shall continue to be treated like an employee of the Company for purposes of eligibility to participate in the Company’s health and welfare benefit plans other than disability programs and to receive the health and welfare benefits (other than disability programs) required to be provided to you under this Agreement to the extent such health and welfare benefits are maintained in effect by the Company for its executives.  After the Effective Termination Date of a termination of employment pursuant to Section 4 or during a Disability Period, you shall not be entitled to any additional awards or grants under any stock option, restricted stock or other stock-based incentive plan and you shall not be entitled to continue elective deferrals in or accrue additional benefits under any qualified or nonqualified retirement programs maintained by the Company.  At the Severance Term Date, your rights to benefits and payments under any health and welfare benefit plans or any insurance or other death benefit plans or arrangements of the Company shall be determined in accordance with the terms and provisions of such plans. At the Severance Term Date or, if earlier, the Equity Cessation Date, your rights to benefits and payments under any stock option, restricted stock, stock appreciation right, bonus unit, management incentive or other long-term incentive plan of the Company shall be determined in accordance with the terms and provisions of such plans and any agreements under which such stock options, restricted stock or other awards were granted. However, consistent with the terms of the Prior Agreement, notwithstanding the foregoing or any more restrictive provisions of any such plan or agreement, if your employment with the Company is terminated as a result of a termination pursuant to Section 4.2, then, subject to the application of any more favorable terms of the applicable stock option agreement, (i) all stock options to purchase shares of Time Warner Common Stock shall continue to vest, through the earlier of the Severance Term Date or the Equity Cessation Date; (ii) except if you shall then qualify for retirement under the terms of the applicable stock option agreement and would receive more favorable treatment under the terms of the stock option agreement, (x) all stock options to purchase shares of Time Warner Common Stock granted to you on or after February 17, 2010 (the “Term Options”) that would have vested on or before the later of the Term Date and the Severance Term Date (or the date that is comparable to the Severance Term Date under any employment agreement that amends, replaces or supersedes this Agreement) shall vest and become immediately exercisable upon the earlier of the Severance Term Date or the Equity Cessation Date, and (y) all your vested Term Options shall remain exercisable for a period 

  

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of three years after the earlier of the Severance Term Date or the Equity Cessation Date (but not beyond the term of such stock options); and (iii) the Company shall not be permitted to determine that your employment was terminated for “unsatisfactory performance” within the meaning of any stock option agreement between you and the Company. With respect to awards of restricted stock units (“RSUs”) held at the Effective Termination Date of a termination of employment pursuant to Section 4.2, subject to potential further delay in payment pursuant to Section 11.17, the treatment of the RSUs will be determined in accordance with the terms of the applicable award agreement(s).

         

              7.3   Payments in Lieu of Other Benefits.   In the event the term of employment and your employment with the Company is terminated pursuant to any section of this Agreement, you shall not be entitled to notice and severance under the Company's general employee policies or to be paid for any accrued vacation time or unused sabbatical, the payments provided for in such sections being in lieu thereof.

7.4    Life Insurance.   During your employment with the Company, the Company shall (i) provide you with $50,000 of group life insurance and (ii) pay you annually an amount equal to two times the premium you would have to pay to obtain life insurance under a standard group universal life insurance program in an amount equal to $3,000,000.  The Company shall pay you such amount no later than March 15 of the calendar year following any calendar year in which you are entitled to this amount. You shall be under no obligation to use the payments made by the Company pursuant to the preceding sentence to purchase any additional life insurance.  The payments made to you hereunder shall not be considered as “salary” or “compensation” or “bonus” in determining the amount of any payment under any retirement, profit-sharing or other benefit plan of the Company or any subsidiary of the Company.

                                 8.   Protection of Confidential Information; Non-Compete.

8.1   Confidentiality Covenant.   You acknowledge that your employment by the Company (which, for purposes of this Section 8 shall mean Time Warner Inc. and its affiliates) will, throughout your employment, bring you into close contact with many confidential affairs of the Company, including information about costs, profits, markets, sales, products, key personnel, pricing policies, operational methods, technical processes, trade secrets, plans for future development, strategic plans of the most 

  

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valuable nature and other business affairs and methods and other information not readily available to the public.  You further acknowledge that the services to be performed under this Agreement are of a special, unique, unusual, extraordinary and intellectual character.  You further acknowledge that the business of the Company is global in scope, that its products and services are marketed throughout the world, that the Company competes in nearly all of its business activities with other entities that are or could be located in nearly any part of the world and that the nature of your services, position and expertise are such that you are capable of competing with the Company from nearly any location in the world.  In recognition of the foregoing, you covenant and agree:

8.1.1   You shall keep secret all confidential matters of the Company and shall not disclose such matters to anyone outside of the Company, or to anyone inside the Company who does not have a need to know or use such information, and shall not use such information for personal benefit or the benefit of a third party, either during or after the term of employment, except with the Company’s written consent, provided that (i) you shall have no such obligation to the extent such matters are or become publicly known other than as a result of your breach of your obligations hereunder and (ii) you may, after giving prior notice to the Company to the extent practicable under the circumstances, disclose such matters to the extent required by applicable laws or governmental regulations or judicial or regulatory process;

8.1.2   You shall deliver promptly to the Company on termination of your employment, or at any other time the Company may so request, all memoranda, notes, records, reports and other documents (and all copies thereof) relating to the Company’s business, which you obtained while employed by, or otherwise serving or acting on behalf of, the Company and which you may then possess or have under your control; and

8.1.3   For a period of one year after the effective date of your retirement or other termination by you of your employment with the Company or for one year after the Effective Termination Date of a termination of employment pursuant to Section 4, without the prior written consent of the Company, you shall not employ, and shall not cause any entity of which you are an affiliate to employ, any person who was a full-time employee of the Company at the date of such termination of employment or within six months prior thereto, but such prohibition shall not apply to your secretary or 

  

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executive assistant or to any other employee eligible to receive overtime pay.

8.2.           Non-Compete Covenant.

8.2.1           During the term of employment and for the twelve-month period after (i) the effective date of your retirement or other termination by you of your employment or (ii) the Effective Termination Date of a termination of employment pursuant to Section 4, you shall not, directly or indirectly, without the prior written consent of the Chief Executive Officer of the Company: (x) render any services to, manage, operate, control, or act in any capacity (whether as a principal, partner, director, officer, member, agent, employee, consultant, owner, independent contractor or otherwise and whether or not for compensation) for, any person or entity that is a Competitive Entity, or (y) acquire any interest of any type in any Competitive Entity, including without limitation as an owner, holder or beneficiary of any stock, stock options or other equity interest (except as permitted by the next sentence). Nothing herein shall prohibit you from acquiring solely as an investment and through market purchases (i) securities of any Competitive Entity that are registered under Section 12(b) or 12(g) of the Securities Exchange Act of 1934 (the “Exchange Act”) and that are publicly traded, so long as you or any entity under your control are not part of any control group of such Competitive Entity and such securities, including converted or convertible securities, do not constitute more than one percent (1%) of the outstanding voting power of that entity and (ii) securities of any Competitive Entity that are not registered under Section 12(b) or 12(g) of the Exchange Act and are not publicly traded, so long as you or any entity under your control is not part of any control group of such Competitive Entity and such securities, including converted securities, do not constitute more than three percent (3%) of the outstanding voting power of that entity, provided that in each case you have no active participation in the business of such entity.

8.2.2           “Competitive Entity” shall be defined as a business (whether conducted through an entity or by individuals including employee in self-employment) that is engaged in any business that competes, directly or indirectly through any parent, subsidiary, affiliate, joint venture, partnership or otherwise, with (x) any of the business activities carried on by the Company in any geographic location where the Company conducts business (including without limitation a Competitive Activity as defined below), (y) any business activities being planned by the Company or in the process of development at the time of your termination of employment (as evidenced by written 

  

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proposals, market research, RFPs and similar materials) or (z) any business activity that the Company has covenanted, in writing, not to compete with in connection with the disposition of such a business.

8.2.3           “Competitive Activity” refers to business activities within the lines of business of the Company, including without limitation, the following:

	
(a)  

	
The operation of domestic and international networks and premium pay television services (including the production, provision and/or delivery of programming to cable system operators, satellite distribution services, telephone companies, Internet Protocol Television systems, mobile operators, broadband and other distribution platforms and outlets) and websites and digital applications associated with such networks and pay television services;

	
(b)  

	
The sale, licensing and/or distribution of content on DVD and Blu-ray discs, video on demand, electronic sell-through, applications for mobile devices, the Internet or other digital services;

	
(c)  

	
The production, distribution and licensing of motion pictures and other entertainment assets, television programming, animation, interactive games (whether distributed in physical form or digitally) and other video products and the operation of websites and digital applications associated with the foregoing;

	
(d)  

	
The publication and distribution of print and digital editions of magazines and other publishing and publishing-related ventures, including digital storefronts, websites and digital applications associated with such magazines and other publishing and publishing-related ventures; direct-marketing; marketing services businesses and book publishing.

8.3.           Injunctive Relief.  You acknowledge that your services are of a special, unique and extraordinary value to the Company and that you develop goodwill on behalf of Time Warner.  Because your services are unique and because you have access to confidential information and strategic plans of the Company of the most valuable nature 

  

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and will help the Company develop goodwill, the parties agree that the covenants contained in this Section 8 are necessary to protect the value of the business of the Company and that a breach of any such non-competition covenant would result in irreparable and continuing damage for which there would be no adequate remedy at law. The parties agree therefore that in the event of a breach or threatened breach of this Section 8, the Company may, in addition to other rights and remedies existing in its favor, apply to any court of competent jurisdiction for specific performance and/or injunctive or other relief in order to enforce, or prevent any violations of, the provisions hereof.  The parties further agree that in the event the Company is granted any such injunctive or other relief, the Company shall not be required to post any bond or security that may otherwise normally be associated with such relief.

9.   Ownership of Work Product.   You acknowledge that during the term of employment, you may conceive of, discover, invent or create inventions, improvements, new contributions, literary property, material, ideas and discoveries, whether patentable or copyrightable or not (all of the foregoing being collectively referred to herein as “Work Product”), and that various business opportunities shall be presented to you by reason of your employment by the Company.  You acknowledge that all of the foregoing shall be owned by and belong exclusively to the Company and that you shall have no personal interest therein, provided that they are either related in any manner to the business (commercial or experimental) of the Company, or are, in the case of Work Product, conceived or made on the Company’s time or with the use of the Company’s facilities or materials, or, in the case of business opportunities, are presented to you for the possible interest or participation of the Company.  You shall (i) promptly disclose any such Work Product and business opportunities to the Company; (ii) assign to the Company, upon request and without additional compensation, the entire rights to such Work Product and business opportunities; (iii) sign all papers necessary to carry out the foregoing; and (iv) give testimony in support of your inventorship or creation in any appropriate case.  You agree that you will not assert any rights to any Work Product or business opportunity as having been made or acquired by you prior to the date of this Agreement except for Work Product or business opportunities, if any, disclosed to and acknowledged by the Company in writing prior to the date hereof.

10.   Notices.   All notices, requests, consents and other communications required or permitted to be given under this Agreement shall be effective only if given in 

  

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writing and shall be deemed to have been duly given if delivered personally or sent by a nationally recognized overnight delivery service, or mailed first-class, postage prepaid, by registered or certified mail, as follows (or to such other or additional address as either party shall designate by notice in writing to the other in accordance herewith):

10.1   If to the Company:

Time Warner Inc.

One Time Warner Center

New York, New York  10019

Attention:  Senior Vice President - Global

Compensation and Benefits

(with a copy, similarly addressed

but Attention:  General Counsel)

10.2   If to you, to your residence address set forth on the records of the Company.

11.   General.

11.1   Governing Law.   This Agreement shall be governed by and construed and enforced in accordance with the substantive laws of the State of New York applicable to agreements made and to be performed entirely in New York.

11.2   Captions.   The section headings contained herein are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement.

11.3   Entire Agreement.   This Agreement, including Annexes A and B, set forth the entire agreement and understanding of the parties relating to the subject matter of this Agreement and supersedes all prior agreements, arrangements and understandings, written or oral, between the parties.

11.4   No Other Representations.   No representation, promise or inducement has been made by either party that is not embodied in this Agreement, and neither party shall be bound by or be liable for any alleged representation, promise or inducement not so set forth.

  

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                                                11.5   Assignability.   This Agreement and your rights and obligations hereunder may not be assigned by you and except as specifically contemplated in this Agreement, neither you, your legal representative nor any beneficiary designated by you shall have any right, without the prior written consent of the Company, to assign, transfer, pledge, hypothecate, anticipate or commute to any person or entity any payment due in the future pursuant to any provision of this Agreement, and any attempt to do so shall be void and shall not be recognized by the Company. The Company may not assign this Agreement or its rights or obligations hereunder except that the Company shall assign its rights together with its obligations hereunder in connection with any sale, transfer or other disposition of all or substantially all of the Company’s business and assets, whether by merger, purchase of stock or assets or otherwise, as the case may be. Upon any such assignment, the Company shall cause any such successor expressly to assume such obligations, and such rights and obligations shall inure to and be binding upon any such successor.

11.6   Amendments; Waivers.   This Agreement may be amended, modified, superseded, cancelled, renewed or extended and the terms or covenants hereof may be waived only by written instrument executed by both of the parties hereto, or in the case of a waiver, by the party waiving compliance.  The failure of either party at any time or times to require performance of any provision hereof shall in no manner affect such party’s right at a later time to enforce the same.  No waiver by either party of the breach of any term or covenant contained in this Agreement, in any one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of any such breach, or a waiver of the breach of any other term or covenant contained in this Agreement.

11.7   Specific Remedy.   In addition to such other rights and remedies as the Company may have at equity or in law with respect to any breach of this Agreement, if you commit a material breach of any of the provisions of Sections 8.1, 8.2, or 9, the Company shall have the right and remedy to have such provisions specifically enforced by any court having equity jurisdiction, it being acknowledged and agreed that any such breach or threatened breach will cause irreparable injury to the Company.

11.8   Resolution of Disputes.   Except as provided in the preceding Section 11.7, any dispute or controversy arising with respect to this Agreement and your employment hereunder (whether based on contract or tort or upon any federal, state or

  

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local statute, including but not limited to claims asserted under the Age Discrimination in Employment Act, Title VII of the Civil Rights Act of 1964, as amended, any state Fair Employment Practices Act and/or the Americans with Disability Act) shall, at the election of either you or the Company, be submitted to JAMS for resolution in arbitration in accordance with the rules and procedures of JAMS.  Either party shall make such election by delivering written notice thereof to the other party at any time (but not later than 45 days after such party receives notice of the commencement of any administrative or regulatory proceeding or the filing of any lawsuit relating to any such dispute or controversy) and thereupon any such dispute or controversy shall be resolved only in accordance with the provisions of this Section 11.8.  Any such proceedings shall take place in New York City before a single arbitrator (rather than a panel of arbitrators), pursuant to any streamlined or expedited (rather than a comprehensive) arbitration process, before a non-judicial (rather than a judicial) arbitrator, and in accordance with an arbitration process which, in the judgment of such arbitrator, shall have the effect of reasonably limiting or reducing the cost of such arbitration.  The resolution of any such dispute or controversy by the arbitrator appointed in accordance with the procedures of JAMS shall be final and binding.  Judgment upon the award rendered by such arbitrator may be entered in any court having jurisdiction thereof, and the parties consent to the jurisdiction of the New York courts for this purpose.  The prevailing party shall be entitled to recover the costs of arbitration (including reasonable attorneys fees and the fees of experts) from the losing party.  If at the time any dispute or controversy arises with respect to this Agreement, JAMS is not in business or is no longer providing arbitration services, then the American Arbitration Association shall be substituted for JAMS for the purposes of the foregoing provisions of this Section 11.8.  If you shall be the prevailing party in such arbitration, the Company shall promptly pay, upon your demand, all legal fees, court costs and other costs and expenses incurred by you in any legal action seeking to enforce the award in any court.

11.9   Beneficiaries.   Whenever this Agreement provides for any payment to your estate, such payment may be made instead to such beneficiary or beneficiaries as you may designate by written notice to the Company.  You shall have the right to revoke any such designation and to redesignate a beneficiary or beneficiaries by written notice to the Company (and to any applicable insurance company) to such effect.

11.10   No Conflict.   You represent and warrant to the Company that this Agreement is legal, valid and binding upon you and the execution of this

  

  

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Agreement and the performance of your obligations hereunder does not and will not constitute a breach of, or conflict with the terms or provisions of, any agreement or understanding to which you are a party (including, without limitation, any other employment agreement).  The Company represents and warrants to you that this Agreement is legal, valid and binding upon the Company and the execution of this Agreement and the performance of the Company’s obligations hereunder does not and will not constitute a breach of, or conflict with the terms or provisions of, any agreement or understanding to which the Company is a party.

11.11   Conflict of Interest.  Attached as Annex B and made part of this Agreement is the Time Warner Corporate Standards of Business Conduct.  You confirm that you have read, understand and will comply with the terms thereof and any reasonable amendments thereto.  In addition, as a condition of your employment under this Agreement, you understand that you may be required periodically to confirm that you have read, understand and will comply with the Standards of Business Conduct as the same may be revised from time to time.

11.12   Withholding Taxes.   Payments made to you pursuant to this Agreement shall be subject to withholding and social security taxes and other ordinary and customary payroll deductions.

11.13   No Offset.  Neither you nor the Company shall have any right to offset any amounts owed by one party hereunder against amounts owed or claimed to be owed to such party, whether pursuant to this Agreement or otherwise, and you and the Company shall make all the payments provided for in this Agreement in a timely manner.

11.14   Severability.   If any provision of this Agreement shall be held invalid, the remainder of this Agreement shall not be affected thereby; provided, however, that the parties shall negotiate in good faith with respect to equitable modification of the provision or application thereof held to be invalid.  To the extent that it may effectively do so under applicable law, each party hereby waives any provision of law which renders any provision of this Agreement invalid, illegal or unenforceable in any respect.

  

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11.15   Survival.   Sections 3.4, 7.3 and 8 through 11 shall survive any termination of the term of employment by the Company for cause pursuant to Section 4.1.  Sections 3.4, 4.4, 4.5, 4.6, 4.7 and 7 through 11 shall survive any termination of the term of employment pursuant to Sections 4.2, 4.3, 5 or 6.  Sections 3.4, 4.6 and Sections 8 through 11 shall survive any termination of employment due to resignation.

11.16   Definitions.   The following terms are defined in this Agreement in the places indicated:

Accountant – Section 4.7.1

affiliate - Section 4.2.2

Average Annual Bonus – Section 4.2.1

Base Salary - Section 3.1

Bonus – Section 3.2

cause - Section 4.1

Code - Section 4.5

Company - the first paragraph on page 1 and Section 8.1

Competitive Entity – Section 8.2

Disability Date - Section 5

Disability Period - Section 5

Effective Date - the first paragraph on page 1

Effective Termination Date – Section 4.1

Equity Cessation Date – Section 4.2.2

Overpayment - Section 4.7.3

Parachute Amount - Section 4.7.1

Reduced Amount - Section 4.7.1

Severance Term Date – Section 4.2.2

Term Date – Section 1

term of employment - Section 1

termination without cause – Section 4.2.1

Work Product - Section 9

 

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11.17                      Compliance with IRC Section 409A.  This Agreement is intended to comply with Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and will be interpreted in a manner intended to comply with Section 409A of the Code.  Notwithstanding anything herein to the contrary, (i) if at the time of your termination of employment with the Company you are a “specified employee” as defined in Section 409A of the Code (and any related regulations or other pronouncements thereunder) and the deferral of the commencement of any payments or benefits otherwise payable hereunder as a result of such termination of employment is necessary in order to prevent any accelerated or additional tax under Section 409A of the Code, then the Company will defer the commencement of the payment of any such payments or benefits hereunder (without any reduction in such payments or benefits ultimately paid or provided to you) until the date that is six months following your termination of employment with the Company (or the earliest date as is permitted under Section 409A of the Code) and (ii) if any other payments of money or other benefits due to you hereunder could cause the application of an accelerated or additional tax under Section 409A of the Code, such payments or other benefits shall be deferred if deferral will make such payment or other benefits compliant under Section 409A of the Code, or otherwise such payment or other benefits shall be restructured, to the extent possible, in a manner, determined by the Company, that does not cause such an accelerated or additional tax.  To the extent any reimbursements or in-kind benefits due to you under this Agreement constitutes “deferred compensation” under Section 409A of the Code, any such reimbursements or in-kind benefits shall be paid to you in a manner consistent with Treas. Reg. Section 1.409A-3(i)(1)(iv).  Each payment made under this Agreement shall be designated as a “separate payment” within the meaning of Section 409A of the Code. References in this Agreement to your termination of active employment or your Effective Termination Date shall be deemed to refer to the date upon which you have a “separation from service” with the Company and its affiliates within the meaning of Section 409A of the Code.   The Company shall consult with you in good faith regarding the implementation of the provisions of this Section 11.17; provided that neither the Company nor any of its employees or representatives shall have any liability to you with respect to thereto.

  

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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first above written.

 

 

	 	
TIME WARNER INC.

 

 

	 	By	/s/ James Cummings	 

 

	 	Title:  	Senior Vice President	 

 

 

	 	/s/ Gary Ginsberg	 
	 	Gary Ginsberg	 

 

 

 

 

 

  

 

  

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ANNEX A

                                                                                                                      

RELEASE

This Release is made by and among                                         (“You” or “Your”) and TIME WARNER INC. (the “Company”), One Time Warner Center, New York, New York 10019, as of the date set forth below in connection with the Employment Agreement dated        , and effective as of        , and the letter agreement (the “Letter Agreement” between You and the Company dated as of (as so amended, the “Employment Agreement”), and in association with the termination of your employment with the Company.

In consideration of payments made to You and other benefits to be received by You by the Company and other benefits to be received by You pursuant to the Employment Agreement, as further reflected in the Letter Agreement, You, being of lawful age, do hereby release and forever discharge the Company, its successors, related companies, Affiliates, officers, directors, shareholders, subsidiaries, agents, employees, heirs, executors, administrators, assigns, benefit plans (including but not limited to the Time Warner Inc. Severance Pay Plan For Regular Employees), benefit plan sponsors and benefit plan administrators of and from any and all actions, causes of action, claims, or demands for general, special or punitive damages, attorney’s fees, expenses, or other compensation or damages (collectively, “Claims”), whether known or unknown, which in any way relate to or arise out of your employment with the Company or the termination of Your employment, which You may now have under any federal, state or local law, regulation or order, including without limitation, Claims related to any stock options held by You or granted to You by the Company that are scheduled to vest subsequent to the Severance Term Date that applies to Your termination of employment and Claims under the Age Discrimination in Employment Act (with the exception of Claims that may arise after the date You sign this Release), Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act of 1990, as amended, the Family and Medical Leave Act and the Employee Retirement Income Security Act of 1974, as amended, through and including the date of this Release;  provided, however, that the execution of this Release shall not prevent You from bringing a lawsuit against the Company to enforce its obligations under  the Employment Agreement and this Release.

Notwithstanding anything to the contrary, nothing in this Release shall prohibit or restrict You from (i) making any disclosure of information required by law;  (ii) filing a charge with, providing information to, or testifying or otherwise assisting in any investigation or proceeding brought by, any federal regulatory or law enforcement agency or legislative body, any self-regulatory organization, or the Company’s legal, compliance or human resources officers; (iii) filing, testifying or participating in or otherwise assisting in a proceeding relating to an alleged violation of any federal, state or municipal law relating to fraud or any rule or regulation of the Securities and Exchange Commission or any self-regulatory organization; or (iv) challenging the validity of my release of claims under the Age Discrimination in Employment Act. Provided, however, You acknowledge that You cannot recover any monetary damages or equitable relief in connection with a charge brought by You or through any action brought by a third party with respect to the Claims released and waived in the Agreement.  Further, notwithstanding the above, You are not waiving or releasing: (i) any claims arising after the Effective Date of this Agreement; (iii) any claims for enforcement of this Agreement; (iii) any rights or claims You may have to workers compensation or unemployment benefits; (iv) claims for accrued, vested benefits under any employee benefit plan of the Company in accordance with the terms of such plans and applicable law; and/or (v) any claims or rights which cannot be waived by law.

You further state that You have reviewed this Release, that You know and understand its contents, and that You have executed it voluntarily.

You acknowledge that You have been given               days to review this Release and to sign it.  You also acknowledge that by signing this Release You may be giving up valuable legal rights and that You have been advised to consult with an attorney. You understand that You have the right to revoke Your consent to the Release for seven days following Your signing of the Release.  You further understand that You will cease to receive any payments or benefits under this Agreement (except as set forth in Section 4.4 of the Agreement) if You do not sign this Release or if You revoke Your consent to the Release within seven days after signing the Release. The Release shall not become effective or enforceable with respect to claims under the Age Discrimination Act until the expiration of the seven-day period following Your signing of this Release. To revoke, You send a written statement of revocation by certified mail, return receipt requested, or by hand delivery.  If You do not revoke, the Release shall become effective on the eighth day after You sign it.

Accepted and Agreed to:

 

	 	 	 
	
 Gary Ginsberg

 

 

	 	 
	
Dated:

	 	 	 

 

 

  

  

 

  

ANNEX B

TIME WARNER CORPORATE

STANDARDS OF BUSINESS CONDUCT

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