Document:

Exhibit 10.3

 

EXECUTION
COPY

 

JOINDER
AGREEMENT

 

This JOINDER AGREEMENT (this
“Joinder”) is made as of January 29, 2010 by and between:

 

TOPS PT, LLC, a New York limited liability company (the “New
Borrower”), with its principal executive offices at 6363 Main Street,
Williamsville, New York 14221; and

 

BANK OF AMERICA, N.A., as Administrative Agent,
Collateral Agent, Swing Line Lender and L/C Issuer;

 

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

 

W I T N E S S E T H :

 

A.            Reference is made to a certain Credit Agreement, dated as
of October 9, 2009 (as amended, modified, supplemented or restated and in
effect from time to time, the “Credit Agreement”), by and among (i) Tops
Markets, LLC, a New York limited liability company, for itself and as agent (in
such capacity, the “Lead Borrower”) for the other Borrowers from time to
time party thereto (individually, an “Existing Borrower” and,
collectively with the Lead Borrower, the “Existing Borrowers”), (ii) the
Existing Borrowers, (iii) the Guarantors from time to time party thereto
(the “Existing Guarantors”), (iv) the Lenders from time to time
party thereto (individually, a “Lender” and, collectively, the “Lenders”),
and (v) Bank of America, N.A, as Administrative Agent, Collateral Agent,
Swing Line Lender and L/C Issuer.  All
capitalized terms used herein, and not otherwise defined herein, shall have the
meanings assigned to such terms in the Credit Agreement.

 

B.            The New Borrower desires to become a party to, and be
bound by the terms of, the Credit Agreement and the other Loan Documents in the
same capacity and to the same extent as the Existing Borrowers thereunder.

 

C.            Pursuant to the terms of the Credit Agreement, in order
for the New Borrower to become a party to the Credit Agreement and the other
Loan Documents as provided herein, the New Borrower and the Existing Borrowers
and Existing Guarantors are required to execute this Joinder.

 

1

 

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

 

1.                                       Joinder and Assumption of Obligations. 
Effective as of the date of this Joinder, the New Borrower hereby
acknowledges that the New Borrower has received and reviewed a copy of the
Credit Agreement and the other Loan Documents, and hereby:

 

(a)                                  joins in the execution of, and becomes a
party to, the Credit Agreement and the other Loan Documents as a Borrower
thereunder, as indicated with its signature below;

 

(b)                                 covenants and agrees to be bound by all
covenants, agreements, liabilities and acknowledgments of a Borrower under the
Credit Agreement and the other Loan Documents as of the date hereof (other than
covenants, agreements, liabilities and acknowledgments that relate solely to an
earlier date), in each case, with the same force and effect as if such New
Borrower was a signatory to the Credit Agreement and the other Loan Documents
and was expressly named as a Borrower therein;

 

(c)                                  makes all representations, warranties,
and other statements of a Borrower under the Credit Agreement and the other
Loan Documents, as of the date hereof (other than representations, warranties
and other statements that relate solely to an earlier date), in each case, with
the same force and effect as if such New Borrower was a signatory to the Credit
Agreement and the other Loan Documents and was expressly named as a Borrower
therein; and

 

(d)                                 assumes and agrees to perform all
applicable duties and Obligations of a Borrower under the Credit Agreement and
the other Loan Documents.

 

2.                                       Grant of Security Interest.  To
secure the prompt and complete payment, performance and observance of all of
the Obligations and all renewals, extensions, restructurings and refinancings
thereof, the New Borrower hereby grants, mortgages, pledges and hypothecates to
the Collateral Agent, for the benefit of the Collateral Agent and the Credit
Parties, a Lien upon all of its right, title and interest in, to and under the
Collateral.

 

3.                                       Supplemental Schedules. 
To the extent that any changes in any representations, warranties, and
covenants require any amendments to the schedules to the Credit Agreement or
any of the other Loan Documents, such schedules are hereby updated, as
evidenced by the supplemental schedules (if any) annexed to this Joinder.

 

4.                                       Ratification of Loan Documents. 
Except as specifically amended by this Joinder and the other documents
executed and delivered in connection herewith, all of the terms and conditions
of the Credit Agreement and of the other Loan Documents shall remain in full 

 

2

 

force and effect as in effect prior to the date hereof, without
releasing any Loan Party thereunder or Collateral therefor.

 

5.                                       Conditions Precedent to Effectiveness. 
This Joinder shall not be effective until each of the following
conditions precedent has been fulfilled to the reasonable satisfaction of the
Administrative Agent:

 

(a)                                  This Joinder shall have been duly
executed and delivered by the respective parties hereto, and shall be in full
force and effect.

 

(b)                                 All action on the part of the New
Borrower and the other Loan Parties necessary for the valid execution, delivery
and performance by the New Borrower and the other Loan Parties of this Joinder
and all other documentation, instruments, and agreements to be executed in
connection herewith shall have been duly and effectively taken and evidence thereof
reasonably satisfactory to the Administrative Agent shall have been provided to
the Administrative Agent.

 

(c)                                  The New Borrower shall have delivered the
following to the Administrative Agent, in form and substance reasonably
satisfactory to the Administrative Agent:

 

(i)                                     Certificate of Legal Existence and Good
Standing (or its equivalent, as applicable) issued by the Secretary of the
State of its incorporation or organization.

 

(ii)                                  A certificate of an authorized officer of
the due adoption, continued effectiveness, and setting forth the text, of each
corporate resolution adopted in connection with the assumption of obligations
under the Credit Agreement and the other Loan Documents, and attesting to the
true signatures of each Person authorized as a signatory to any of the Loan
Documents, together with true and accurate copies of all Organization
Documents.

 

(iii)                               Such other documents and agreements as the
Administrative Agent or the Collateral Agent may reasonably require to
accomplish the purposes hereof.

 

(d)                                 Upon the request of the Administrative
Agent in its sole discretion, the Administrative Agent shall have received a
written legal opinion of the New Borrower’s counsel, addressed to the
Administrative Agent, the Collateral Agent and the other Credit Parties,
covering such matters relating to the New Borrower, the Loan Documents and/or
the transactions contemplated hereby as the Administrative Agent may reasonably
request.

 

3

 

(e)                                  The Collateral Agent shall have received
all documents and instruments, including UCC financing statements and Blocked
Account Agreements, required by Law or reasonably requested by the
Administrative Agent or the Collateral Agent to create or perfect the Lien
intended to be created under the Security Documents and all such documents and
instruments shall have been so filed, registered or recorded to the
satisfaction of the Administrative Agent; provided that, with respect to any
Blocked Account Agreement required to be delivered by the New Borrower under
the Loan Agreement, the New Borrower shall, within thirty (30) days after the
date hereof (or such longer period of time as may be agreed to by the
Administrative Agent in its reasonable discretion), deliver or cause to be delivered
to the Collateral Agent any such Blocked Account Agreement.

 

(f)                                    All reasonable fees and Credit Party
Expenses incurred by the Agents and the other Credit Parties in connection with
the preparation and negotiation of this Joinder and related documents
(including, without limitation, the reasonable fees and expenses of counsel to
the Agents  in
connection with the preparation, negotiation, execution and delivery of this
Joinder and the other documents, instruments and agreements required pursuant
to this Section 5) shall have been paid in full by the New
Borrower.

 

6.                                       Miscellaneous.

 

(a)                                  This Joinder may be executed in several
counterparts and by each party on a separate counterpart, each of which when so
executed and delivered shall be an original, and all of which together shall
constitute one instrument.  Delivery of
an executed signature page of this Joinder by facsimile or other
electronic transmission shall be binding on the parties hereto as if the
original of such facsimile or other electronic transmission had been delivered.

 

(b)                                 This Joinder expresses the entire
understanding of the parties with respect to the transactions contemplated
hereby.  No prior negotiations or
discussions shall limit, modify, or otherwise affect the provisions hereof.

 

(c)                                  Any determination that any provision of
this Joinder or any application hereof is invalid, illegal or unenforceable in
any respect and in any instance shall not affect the validity, legality, or
enforceability of such provision in any other instance, or the validity,
legality or enforceability of any other provisions of this Joinder.

 

(d)                                 To the extent not paid by the New
Borrower pursuant to Section 5(f) above, the Existing
Borrowers and Existing Guarantors shall, within ten (10) days after demand
therefor, pay all reasonable fees and other Credit Party Expenses of the 

 

4

 

Agents and the other Credit Parties required to be paid by the New
Borrower pursuant to Section 5(f) above.

 

(e)                                  The New Borrower warrants and represents
that the New Borrower is not relying on any representations or warranties of
the Administrative Agent, the Collateral Agent or the other Credit Parties or
their counsel in entering into this Joinder.

 

(f)                                    THIS JOINDER SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

 

[SIGNATURE
PAGES FOLLOW]  

 

5

 

IN WITNESS WHEREOF, each of
the undersigned has caused this Joinder to be duly executed and delivered by its
proper and duly authorized officer as of the date set forth below.

 

	
   

  	
  NEW
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  TOPS
  PT, LLC

  
	
   

  	
   

  
	
   

  	
  By:
  TOPS MARKETS, LLC, as sole member

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Frank Curci

  
	
   

  	
  Name:

  	
  Frank
  Curci

  
	
   

  	
  Title:
  

  	
  President
  and Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ADMINISTRATIVE
  AGENT:

  
	
   

  	
   

  
	
   

  	
  BANK
  OF AMERICA, N.A.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Roger Malouf

  
	
   

  	
  Name:

  	
  Roger
  Malouf

  
	
   

  	
  Title:
  

  	
  Vice
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  COLLATERAL AGENT:

  
	
   

  	
   

  
	
   

  	
  BANK
  OF AMERICA, N.A.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Roger Malouf

  
	
   

  	
  Name:

  	
  Roger
  Malouf

  
	
   

  	
  Title:

  	
  Vice
  President

  

 

Signature
Page 

Tops
PT Joinder Agreement

 

 

	
  Acknowledged
  and Agreed:

  	
   

  
	
   

  	
   

  
	
  EXISTING
  BORROWERS:

  	
   

  
	
   

  	
   

  
	
  TOPS
  MARKETS, LLC

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Frank Curci

  	
   

  
	
  Name:

  	
  Frank
  Curci

  	
   

  
	
  Title:

  	
  Chief
  Executive Officer

  	
   

  
	
   

  	
   

  
	
  EXISTING
  GUARANTORS:

  	
   

  
	
   

  	
   

  
	
  TOPS
  HOLDING CORPORATION

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Eric Kanter

  	
   

  
	
  Name:

  	
  Eric
  Kanter

  	
   

  
	
  Title:

  	
  Vice
  President and Treasurer

  	
   

  
	
   

  	
   

  
	
  TOPS
  GIFT CARD COMPANY, LLC

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Frank Curci

  	
   

  
	
  Name:

  	
  Frank
  Curci

  	
   

  
	
  Title:

  	
  Chief
  Executive Officer

  	
   

  

 

Signature Page

Tops PT Joinder AgreementExhibit 10.4†

 

Execution Copy

 

TOPS MARKETS, LLC

 

SUPPLY AGREEMENT

 

THIS
SUPPLY AGREEMENT (the “Agreement”) is made as of November 12, 2009 (the “Effective
Date”) between TOPS MARKETS, LLC, a New York limited liability company with
principal offices located at 6363 Main Street, Williamsville, NY 14221-5898
(together with its successors and assigns, “Tops”) and C&S WHOLESALE
GROCERS, INC., a Vermont corporation with principal offices located at 7
Corporate Drive, Keene, New Hampshire 03431 (“C&S”) and, for purposes of
Sections 9.2(b), *, 9.4 and 10.3 of this Agreement, Erie Logistics, LLC (“Erie”).  Each of C&S and Tops, individually, is a “Party”
and together, they are “Parties” and Erie is a “Party” for purposes of the
Sections listed above.  Capitalized terms
set forth herein shall have the meanings ascribed to them in Section 10.18
of this Agreement.

 

W I T N E S S E T H :

 

WHEREAS, C&S operates warehouse and distribution centers, performs
procurement and wholesale supply services, and provides related operational
services to its retail grocery customers;

 

WHEREAS, Tops engaged C&S to provide Tops with certain warehousing,
distribution and procurement services related to the supply of supermarket
products to Tops pursuant to the terms and conditions set forth in the Amended and Restated Supply Agreement by and
among Tops, C&S and certain Affiliates of C&S, dated as of June 15,
2007, together with any and all amendments thereto (the “Prior Agreement”);
and

 

WHEREAS, the Parties wish to materially change their contracting
relationship as it exists under the Prior Agreement in accordance with the
terms and conditions set forth in this Agreement.

 

NOW, THEREFORE, in consideration of the mutual covenants and
obligations hereinafter set forth, the Parties hereto, intending to be legally
bound, hereby agree as follows:

 

ARTICLE 1

 

PRELIMINARY
MATTERS

 

1.1                   Preliminary
Statement.  The Parties
wish to establish, as of the Effective Date, a * (defined below) provided to
Tops by C&S pursuant to this Agreement in connection with the sale to Tops
of supermarket products for resale at the Tops Stores.  The Parties further desire to collaborate
with respect to the exploration, evaluation and implementation of opportunities
to reduce Tops’ supply chain costs and allow the Parties to benefit from such
opportunities as they may arise, subject to the terms of this Agreement.

 

1.2                   Services.  During the Term (as defined in Section 9.1),
C&S shall provide to Tops warehousing, transportation, procurement,
purchasing and related services on the terms and conditions set forth in this
Agreement.  Collectively, the Warehousing
Services, the Transportation Services, the Procurement and Purchasing Services,
and the Additional Services (each as more specifically defined and described in
this Agreement) shall be referred to as the “Services”).

 

† Confidential portions of
this agreement have been omitted and filed separately with the Securities and
Exchange Commission under a request for confidential treatment. The portions of
this agreement that have been omitted and filed separately with the Securities
and Exchange Commission are denoted by the use of an asterisk in this
agreement.

 

* Confidential treatment has been
requested and the redacted material has been filed separately with the Securities
and Exchange Commission.

 

1

 

1.3                   Services Commencement Date; Term.  The “Services Commencement Date” shall be the
date on which C&S will begin providing the Services to Tops pursuant to the
terms of this Agreement, which date shall be November 22, 2009.  The Term of this Agreement
is as set forth in Section 9.1 hereof. 
The schedule of Contract Years during the Term is set forth on Exhibit 1.3
attached hereto.

 

1.4                   Prior Agreement. Subject to the
terms set forth in this Section 1.4, the Prior Agreement shall remain in
force and effect until the Services Commencement Date.  On the Services Commencement Date, this
Agreement shall in all respects replace and supersede the Prior Agreement, which
shall be terminated and no longer in effect as of the Services Commencement
Date (except the relevant provisions of the Prior Agreement may survive for the
limited purposes set forth in this Section 1.4); provided,
however, with respect to any claim or cause of action that becomes
known subsequent to the Services Commencement Date (and could not have been
known, through ordinary diligence, prior to the Services Commencement Date) and
arises from or is related to any set of facts or circumstances which arose or
existed prior to the Services Commencement Date, the terms and conditions of
the Prior Agreement (including those related to dispute resolution) shall
control.  However, all claims that were
known to a complaining Party, or through ordinary diligence could have been
known by such Party, prior to the Services Commencement Date shall be deemed
waived and the complaining Party shall be forever barred from raising such
claims as against the other Party, except with respect to such amounts as have
been billed before the Services Commencement Date but not paid as of the
Services Commencement Date and any amounts subject to any claims related to
deducted amounts disputed by a third party or amounts charged back by any third
party against C&S with respect to Tops business.  For the avoidance of doubt, no Affiliate of
either Party (other than Erie) is or shall be deemed to be a Party to this
Agreement.  Notwithstanding anything
above in this Section 1.4, each Party represents and warrants to the other
Party that, as of the Effective Date, such Party does not know of any claims it
or any of its Affiliates may possess against such other Party or any of its
Affiliates under the Prior Agreement (other than possible claims relating to
any amounts billed and outstanding as of the Effective Date).  *

 

1.5                   Operating
Budget.   Commencing
with the Services Commencement Date, the Parties shall operate in accordance
with the budgeted costs and income items set forth in the applicable Approved
Budget (each such budget subject to the approval and adjustment provisions set
forth Article 4).  Exhibits
1.5(a)-(d) to this Agreement and referred to below comprise the C&S
budget for its 2009 fiscal year (i.e., beginning September 27, 2008 and
ending September 26, 2009) (collectively, the “2009 Budget”).  Such Exhibits are attached to this Agreement
strictly for the purpose of reflecting the basis for the components of the
Baseline Budget (which Baseline Budget, attached as Exhibit 4.7(a) hereto,
is hereby agreed to by the Parties and, subject to adjustment of the Baseline
Budget as set forth herein, is binding on the Parties, including without
limitation, in connection with the calculation of the Gainshare in accordance
with Section 4.7) and for illustrating an example of a future Approved
Budget.  The 2009 Budget reflects the
budgeted costs and income items applicable to C&S’s 2009 fiscal year as
follows:

 

(a)                                  For services
provided by C&S with respect to all Merchandise other than the GM/HBC
Merchandise (for purposes hereof, the “Mainline Operations”):

 

·  Exhibit 1.5(a) — (1) (Summary
of Budgeted Costs — Mainline Operations)

·  Exhibit 1.5(b) — (1) (Total
Warehousing Costs — Mainline Operations)

·  Exhibit 1.5(c) — (1) (Total
Transportation Costs — Mainline Operations)

 

(b)                                 For services
provided by C&S with respect to the GM/HBC Merchandise only (the “GM/HBC
Operations”):

 

·  Exhibit 1.5(a) — (2) (Summary
of Budgeted Costs — GM/HBC)

·  Exhibit 1.5(b) — (2) (Total
Warehousing Costs — GM/HBC (under the heading “Tops Allocation”) )

·  Exhibit 1.5(c) — (2) (Total
Transportation Costs — GM/HBC)

 

(c)                                  For procurement
and purchasing services with respect to all Merchandise including GM/HBC):

 

· *

 

The Parties shall use the Baseline Budget for the purpose of computing
whether and to what extent a Cost Savings Gainshare Incentive Fee is payable to
C&S, as described in Section 4.7(d) hereof.  All future Approved Budgets will comport
substantially with the form of the 2009 Budget, and will similarly include a
“Summary of Budgeted Costs” and categories of expenses and revenues, subject to
modifications mutually agreed to by the Parties.  The Parties agree that the 2009 Budget does,
and each subsequent Approved Budget shall, cover periods corresponding to
C&S’s fiscal year, which is each 52-week period (or 53-week period every
five to six years) terminating on the last Saturday in September of each
year.  The Parties will make any
prorations (for example, to the Baseline Budget and the Services Fees)
necessary to account for any 53-week Contract Year.

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

2

 

1.6                   Performance
Standards.  C&S covenants and agrees to perform the
Services and the Other Services, subject to the terms and conditions contained
in this Agreement, and to maintain and operate the Facilities (including the
cleanliness thereof) with the degree of care, skill and diligence consistent
with an experienced, reputable entity operating a warehouse and distribution
center; provided however, that with respect to the maintenance and operation of
any Tops owned Facility, C&S’s obligations under this Agreement will not
exceed its obligations agreed to by C&S under the applicable lease with
respect to such Facility.  C&S
covenants and agrees that it shall use commercially reasonable efforts to
identify for Tops all necessary and desirable steps and measures to permit
C&S to comply with its obligations under this Agreement and to reflect the
same in the applicable Approved Budget or Flex Budget.  In addition to any of its other obligations
as set forth in this Agreement, C&S covenants and agrees that during the
Term, it will:

 

(a)                                  take all
necessary and reasonable steps and precautions to protect Merchandise from
weather, water, theft, vandalism and all other reasonably foreseeable hazards
and damages;

 

(b)                                 comply with all
material federal, state and local Laws, rules, regulations, by-laws, zoning
legislation, guidelines, ordinances, orders and any other restrictions,
covenants and other limitations (including, without limitation, those in
respect of environmental and health and safety matters) applicable to the
occupation and operation of the Facilities, the providing of the Services and
Other Services and to otherwise comply with the terms and conditions of this
Agreement.  C&S shall keep in full
force and effect all licenses, registrations and other qualifications imposed
by any applicable governmental authorities necessary to occupy and operate the
Facilities, and to provide the Services and Other Services and to otherwise
fulfill the terms and conditions of this Agreement;

 

(c)                                  except as
otherwise instructed by Tops in writing, not place any Merchandise in proximity
to any other products or any material that is or may be noxious, flammable,
hazardous or whose characteristics may adversely affect the quality, fitness or
intended purpose, merchantability and other characteristics of the Merchandise
or otherwise cause in any manner whatsoever Merchandise to be adulterated or
deteriorate;

 

(d)                                 deliver
Merchandise that meets Tops’ reasonable quality standards as set forth in Exhibit 1.6(d) attached
hereto, and that is materially free from damage including, 

 

* Confidential treatment has been requested
and the redacted material has been filed separately with the Securities and
Exchange Commission.

 

3

 

but not limited to, temperature damage, and materially free from
evidence of rodents or insects; and

 

(e)                                  maintain all of
the Fixed Assets in good working order and promptly (or as soon as practicable
in the case of refrigeration equipment) repair and/or replace any Fixed Assets
that may prevent or hinder C&S’s ability to provide the Services and/or
Other Services in accordance with the terms and conditions of this
Agreement.  C&S covenants and agrees
that it shall use commercially reasonable efforts to identify all necessary and
desirable maintenance and repair requirements outlined in this clause (e) to
Tops and to reflect the same in the applicable Approved Budget or Flex Budget,
as the case may be.

 

ARTICLE 2

 

WAREHOUSING AND TRANSPORTATION SERVICES; FACILITIES; FIXED ASSETS

 

2.1                   Warehousing
and Transportation Services Generally.  As of the Services Commencement Date, C&S
shall perform the Warehousing Services and Transportation Services (each as
defined below) from the Facilities in accordance with and subject to the terms
and conditions set forth in this Agreement. 
C&S will charge Tops for all Costs related to providing the
Warehousing and Transportation Services, on an actual cost, pass-through basis,
as more specifically described in Article 4 of this Agreement.  For clarification, the amount of Costs
payable by Tops in respect of the Warehousing Services and Transportation
Services for any Contract Year will not exceed the Costs actually incurred by
C&S in connection with such Warehousing Services and Transportation
Services for such Contract Year.

 

2.2                   Warehousing
Services.  During the
Term, C&S shall provide to Tops warehousing services related to the supply
of Merchandise on the terms and conditions set forth in this Agreement
(collectively, the “Warehousing Services”). 
Such Warehousing Services will include, but are not limited to: the daily
operation and maintenance of the Facilities; handling and confirming receipt of
inbound orders; loading and unloading; cross-docking; storage; selection;
pallet building; case labeling (where applicable); cardboard baling (for
pick-up and disposal by Tops); monitoring vendor compliance; tracking warehouse
income, where applicable; processing claims for recovery of lost or damaged
Merchandise, as applicable; banana ripening; employing personnel for the
provision of the Warehousing Services whose training and skill are consistent
with industry standards; and interfacing with Tops personnel, as appropriate.

 

2.3                   Transportation
Services.

 

(a)                                  General.  C&S shall be responsible for inbound
transportation of Merchandise from Tops’ vendors to the Facilities and for the
routing and overall management of outbound transportation and the delivery of
Merchandise from the Facilities to Tops Stores. 
C&S’s management of the inbound and outbound transportation of
Merchandise, including undertaking to arrange for delivery by third party
contract carriers, shall be referred to as the “Transportation Services”.

 

(i)                                     Inbound
Transportation.  As part of
the Transportation Services, C&S shall manage inbound delivery of
Merchandise as it is shipped from vendors thereof to the Facilities.

 

(ii)                                  Outbound
Transportation.  As part of
the Transportation Services, C&S shall manage the design, development and
implementation of outbound Transportation Services, including, but not limited
to, transportation network configuration and routing and the overall management
of such Transportation Services supporting the Tops Stores.  C&S shall arrange for the diligent,
professional and reasonably expeditious transport of such Merchandise to the
Tops Stores, which may be through the hiring of reputable contract carriers on
a sub-contracted basis.  C&S
acknowledges and agrees that it will be responsible for the management of any
such contract carriers in connection with the performance of the Transportation
Services, and the costs related thereto will be incorporated into the Approved
Budget and/or any Flex Budget as applicable. 
Notwithstanding the foregoing, at any time Tops may, at its option and
cost, elect to pick up all Merchandise (rather than continue to receive
deliveries from C&S) from each applicable Facility from and after the date
specified in Tops’ notice of such election, so long as Tops provides to C&S
reasonable advance 

 

* Confidential treatment has been requested
and the redacted material has been filed separately with the Securities and
Exchange Commission.

 

4

 

notice
of such election to commence the pick up of Merchandise.  In connection with the pick up of Merchandise
by Tops, the parties will develop mutually agreed timelines and procedures.  Tops will remain responsible for any and all
Costs of C&S related to the pick up of Merchandise and for any and all
Costs related to Transportation Services reflecting actual costs incurred by
C&S * For clarification, none of the Services Fees payable by Tops to
C&S will be reduced in connection with the pick up of Merchandise by Tops.

 

(b)                                 Costs and Other
Matters.  All costs associated with the
Transportation Services to Tops, which shall be part of the overall Costs
payable by Tops, shall be incorporated by C&S into and made a part of each
Approved Budget or Flex Budget, as the case may *.  For clarification, title to Merchandise shall
remain with C&S until (i) such time as the trailer containing
Merchandise exits the loading dock of the applicable Facility, in the case of
Merchandise that is picked up from the Facility by a Tops driver or contract
carrier arranged for by Tops; or (ii) such time as the trailer containing
Merchandise is received at the destination Tops Store, in the case of Merchandise
that is transported by a C&S driver or otherwise picked up from the
Facility by a contract carrier arranged for by C&S; provided, that for
clarification, any costs associated with theft or damage to Merchandise and/or
Fixed Assets shall constitute Costs for which Tops is responsible.  Store polling and deliveries will be made in
accordance with a polling and delivery schedule that the Parties will jointly
establish and may subsequently modify from time to time. *.

 

(c)                                  Cooperation in Developing
Network Efficiencies.  The Parties
shall, from time to time, mutually discuss and use commercially reasonable
efforts to explore opportunities to achieve efficiencies in the distribution
network for Tops with respect to the delivery of Merchandise to Tops Stores,
which may include seeking efficiencies through reduced or alternative shipping
points, reduced or alternative delivery frequencies, increased full truckload
deliveries and modifications to delivery schedules.  If the Parties determine to jointly pursue any
opportunities, the Parties will cooperate in the development and implementation
of initiatives designed to take advantage of such opportunities.

 

(d)                                 Recalls.  As part of the Services, if any Merchandise
supplied to Tops Stores is recalled or withdrawn as part of formal recall
procedures (the “Recalled Merchandise”),
at Tops’ request C&S will arrange for the pick up of any such Recalled
Merchandise from Tops Stores for disposal or return to the applicable vendor,
so long as such request is not inconsistent with any Laws or procedures C&S
is subject to in connection with such recall. 
Tops will prepare the Recalled Merchandise for shipment and clearly
identify such product as “Recalled Merchandise” prior to pick up by
C&S.  Notwithstanding anything herein
to the contrary, Tops will remain responsible for its compliance with any Laws
and recall procedures applicable to any such Recalled Merchandise, including
the removal of any such Recalled Merchandise from Tops’ Store shelves and
preparation for pick up.   C&S will
replenish Tops Stores with replacement Merchandise purchased by Tops, to the
extent comparable replacement Merchandise is available. * For clarification, no
product credits will be issuable to Tops in connection with any product
supplied to Tops by DSD vendors or otherwise not supplied by C&S.

 

2.4                   Facilities;
Facility Decisions.

 

(a)                                  The Parties acknowledge and
agree that as of the Effective Date, the * Facilities are utilized to support
the Tops Stores; provided, however, that nothing herein shall prohibit or
restrict C&S from performing any services or activities of any sort
whatsoever from any Facility on behalf of its other customers or for its own
account.

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

5

 

(b)                                 During the Term, if C&S
wishes to undertake a closure of any Facility and/or a relocation of the
Services so as to be provided from any Replacement Facility, or otherwise
automate all or any portion of the labor function at any such Facility (a
“Facility Decision”), then C&S will so notify Tops, including written
notice whether such Facility Decision is reasonably expected to result in a partial
or complete withdrawal from a multiemployer pension plan and a good faith
estimate of any expected withdrawal liability, and the Parties will review and
discuss in good faith the details of such a Facility Decision, including the *
anticipated as a result of such Facility Decision.  In connection with any Facility Decision
which Tops has *, and which would *, then * Tops will *.  In connection with any Facility Decision for
which Tops *, then * Tops * C&S shall be entitled to receive *.  Any other * related to any such Facility
Decision,* will be considered by the Parties and addressed consistent with the
foregoing.  If the Parties *, then
C&S *.

 

2.5                   Fixed
Assets.  Tops recognizes, understands and agrees that
C&S may be required to purchase, lease or license equipment or systems
specifically dedicated to support the Services and necessary to meet C&S’s
obligations to Tops under this Agreement. 
C&S shall not purchase, lease, license or otherwise acquire any new
Fixed Assets, or change the financing terms of any current Fixed Asset
financing arrangements, which would give rise to or increase Costs in any
Fiscal Accounting Period in excess of what is set forth in an Approved Budget
or Flex Budget without first obtaining the written consent of Tops, which consent
shall not be unreasonably withheld, delayed or conditioned.  Any and all Fixed Assets which give rise to
or increase Costs chargeable to Tops hereunder shall be depreciated in
accordance with C&S’s depreciation schedule for such Fixed Assets as set
forth on Exhibit 2.5.

 

ARTICLE 3

 

PROCUREMENT AND PURCHASING SERVICES; NET COST

 

3.1                   Merchandise.  Subject to the terms and conditions set forth
in this Agreement, Tops shall purchase from C&S, and C&S shall sell to
Tops, for use or resale at the Tops Stores (defined below), Tops’ entire
requirements of merchandise in the following categories (collectively, “Merchandise”):  grocery, dry bakery, candy, spices, store
supplies, dried produce, packaged meat, fresh meat, fresh deli, fresh seafood,
produce, dairy, floral, frozen (mainline), frozen bakery, ice, ice cream,
frozen commodity meat, frozen seafood, frozen deli, tobacco and GM/HBC
(excluding cosmetics, panty hose and toys merchandise), but excluding the
products set forth in the last sentence of this Section, for use or resale at
the Tops Stores.  In connection with the
foregoing Merchandise, C&S will provide the Procurement and Purchasing
Services, subject to the terms and conditions set forth in this Article 3.  In addition to the specifically excluded GM/HBC
items, Merchandise does not include products that are available for purchase by
Tops through direct store delivery (“DSD”) vendors or cross dock vendors and
designated as DSD or cross dock by the Parties from time to time.

 

3.2                   Tops
Stores.  The term “Tops
Stores” or “Stores” means all supermarket stores owned and operated by Tops or
any of its subsidiaries as set forth on Exhibit 3.2, attached
hereto.  In addition, the Parties intend
that the term “Tops Stores” or “Stores” shall include any replacement store and
any new supermarket store or supermarket store hereafter acquired by Tops or
any of its subsidiaries, to the extent that *. 
With respect to the inclusion of any such replacement, new or acquired
store as a Tops Store, any time there is a net increase in the number of Tops
Stores from the then current level of Tops Stores the Parties will *, and the
Parties will make such other adjustments or modifications to this Agreement as
may be appropriate.  Furthermore, C&S
will make such adjustments to the then applicable Approved Budget (or Flex
Budget, as applicable), as are necessary and appropriate to reflect the * to
all of the Tops Stores, including such new stores.  With respect to any store or group of stores acquired
by Tops *: (a) if such store or stores remain subject to a pre-existing
agreement for the provision of logistics, procurement and/or purchasing
services (a “Pre-existing Agreement”) with a provider other than C&S, Tops
will not permit the renewal of such Pre-existing Agreement beyond its
then-current term and, subject to the Parties’ agreement on any proposed
modifications to this Agreement, this Agreement will apply with respect to such
store or stores upon the expiration or termination (as appropriate) of such
Pre-existing Agreement; and (b) *.

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

6

 

3.3                   Procurement
and Purchasing Services.

 

(a)                                  During the Term, C&S
will procure and purchase all Merchandise intended for use or resale at the
Tops Stores, and manage all inventory of such Merchandise (collectively, the “Procurement
and Purchasing Services”), subject to Section 3.3(b) below.  Tops may assume certain functions with
respect to the procurement of the Merchandise, subject to any necessary
modifications to this Agreement and the applicable Approved Budget (or Flex
Budget, as applicable), *, and provided that none of the Services Fees payable to
C&S under this Agreement shall be reduced. 
For purposes of this Agreement, to “procure” shall mean to negotiate
directly or indirectly with the applicable vendor with respect to all terms of
the purchase of goods including, but not limited to, price, specifications,
quantity, freight * (the “Purchase Terms”). 
For the purposes of this Agreement, to “purchase” shall mean to:  (i) perform the physical act of
purchasing goods through the execution and tender of purchase orders to an
applicable vendor; (ii) to pay for such goods; and (iii) to own such
goods for the period immediately preceding their resale to Tops.  The Procurement and Purchasing Services may
include *  For clarification, Tops will
be responsible for the procurement and purchase of any goods that are excluded
from “Merchandise” to be supplied by C&S as set forth in Section 3.1
above.

 

(b)                                 Notwithstanding
clause (a) above, Tops may from time to time, * otherwise to be procured
by C&S hereunder, provided that none of the Services Fees payable to C&S
under this Agreement shall be reduced. 
If *, C&S will issue the purchase order to the vendor, arrange for
transportation (with respect to produce), confirm on receipt that the shipment
meets Tops’ quality and receiving standards, as set forth on Exhibit 3.3(b),
and receive the shipment at the applicable Facility. Tops shall be responsible
for the spoilage of all *, consistent with Section 4.3(a)(x).  Furthermore, Tops will * with the vendor and
C&S will * Tops Stores consistent with current practice.

 

(c)                                  Each Party
shall, with respect to the Merchandise it procures hereunder (i) procure
such Merchandise, and otherwise operate, in accordance with all applicable Law
and with prudent and ethical business practices; and (ii) in all cases use
commercially reasonable efforts to negotiate for the most competitive price
available with respect to the Merchandise that it procures.

 

3.4                   Collaboration
with respect to Vendors.  Tops and C&S may collaborate, as jointly
determined, in the procurement process. 
For example, Tops and C&S may determine specifications applicable to
the purchase by C&S of fresh produce and designate vendor(s) from whom
specific fresh produce items shall be purchased.  Except as otherwise contemplated by Section 3.3(b),
C&S will negotiate with vendors on all Purchase Terms for Merchandise,
including but not limited to, cost and quantity, delivery date and *; provided,
however, that Tops will assist C&S with any such negotiations as requested
by C&S.  Tops understands that
C&S may also negotiate inbound freight contracts with respect to
Merchandise and assess logistics-related charges and penalties to vendors that
do not meet inbound delivery standards. 
At C&S’s request, Tops will assist C&S with any disputes that
arise in connection with such assessments. 
*

 

* Confidential treatment has been requested
and the redacted material has been filed separately with the Securities and
Exchange Commission.

 

7

 

3.5                   *
Generally.  In performing the Procurement and Purchasing
Services described hereunder, neither C&S nor any of its Affiliates *;
rather, C&S * with the intended result being *.  Tops understands and acknowledges that
C&S’s *, and that C&S *.  In
connection with the procurement of Merchandise by C&S for Tops, Tops will
work together with C&S * they relate to the volume of other C&S
customers.

 

3.6                   Retailer
Performance Funds. 
Notwithstanding anything herein to the contrary, *, and C&S will not
be responsible for *.

 

If and to the extent *  If Tops
has any * with respect to *, Tops will resolve such *, and C&S will *.

 

3.7                   Promotional
Purchases.  Unless Tops
and C&S jointly determine otherwise, C&S shall book and purchase (*)
promotional or other high-velocity Merchandise intended for use or resale at
the Tops Stores, based upon Tops’ advance estimates of promotional volumes,
product specifications, vendor designations, purchase quantities, delivery
dates, store specific volume allocations, and other projections and information
provided by Tops to C&S.

 

3.8                   Leftover
Ad. For the purposes of this Agreement, “Leftover Ad Volume” shall mean
the volume of any Merchandise originally comprising a promotional order that
remains unshipped to Tops Stores as of the date upon which the applicable
promotion concluded.  *.

 

3.9                   Inventory
Control; Product Allocation.

 

(a)                                  C&S will
utilize appropriate inventory control procedures (e.g., physical inventories
and cycle counts, as applicable) for regulating inventory levels (including
investment buy formulas, taking into account the cost of money, and allocations
of responsibility for inventory level overages or shortfalls) and handling
short-coded or excess product.  In
connection with the foregoing, with respect to any Shared Facilities, Tops will
cooperate with C&S in regulating inventory levels as necessary to minimize
any adverse impact on C&S’s business with its other customers.

 

(b)                                 Any Merchandise
located in any of the Shared Facilities which is available to C&S in
limited quantities that are insufficient to support the demands of C&S’s
customers being serviced from any such Facilities shall be allocated among Tops
and such other customers during such period of limited supply based *.  In addition, if a vendor makes product
available in limited quantities and the product has not been delivered to
C&S, C&S shall use commercially reasonable efforts to allocate any such
Merchandise among all of its facilities (including the Facilities) based upon
*.  For the avoidance of doubt, all costs
associated with inter-facility transfers of Merchandise that are necessary in
order for C&S to satisfy the foregoing obligation to Tops constitute Costs
chargeable to Tops consistent with Article 4.

 

3.10            Procurement
Service Levels.  With
respect to the procurement service level applicable to the supply of
Merchandise, the Parties agree as follows:

 

(a)                                  Required
Service Level.  The Parties’
mutual objective is to maintain: (i) a * service level on the Merchandise
* (* the “Required Service Level”).

 

(b)                                 Calculation of Service Level.     C&S will provide Tops a * “Service Level
Reconciliation Report” showing, with respect to all orders processed for the
given period, *.  In computing service
level percentages,* for each computation, the numerator shall *, and the
denominator shall *.

 

The term “ad overpull” means any promotional Merchandise volume in
excess of the volume projections timely provided by Tops.  The term “manufacturer’s out-of-stock” refers
to cases or shipping units (as the case may be) that: (i) were

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

8

 

subject to a product recall; (ii) C&S provides within* after
shipment to the Tops Stores written proof of out-of-stock status (e.g., a
letter from the manufacturer indicating the quantity of the item that was
unavailable from the manufacturer for the period in question, or a received
purchase order issued within proper lead time indicating the quantity of the
item that was cut by the manufacturer); or (iii) the manufacturer has
refused to ship product due to a dispute over an Accounts Receivables * and
C&S provides such evidence as described in clause (ii) of this
paragraph.  C&S’s Service Level
Reconciliation Report will be used to establish whether the Required Service
Level has been attained, which service level report shall set forth *.

 

(c)                                  Service Level
Default.  A “Service Level Default”
shall be deemed to have occurred if, for any reason (except to the extent
caused by a default by Tops under this Agreement or an event of Force Majeure),
C&S fails to maintain the applicable Required Service Level during *.  Each period * shall be a “Measurement Period.”

 

(d)                                 Cure of Service
Level Default.  Should Tops
believe that a Service Level Default has occurred, Tops shall notify C&S
and C&S shall use its best efforts to immediately restore the applicable
Required Service Level.  If during or
prior to the * following the occurrence of a Service Level Default the
applicable Required Service Level is achieved, then the Service Level Default
shall be cured and new Measurement Periods shall begin.  Failure to achieve the applicable Required
Service Level during or prior to the end of such * shall constitute a Service
Level Default by C&S and Tops will be entitled to a penalty payment (the “Penalty
Payment”) to the extent that the actual service level is below the applicable
Required Service Level during such week until the Required Service Level is restored
(“Penalty Period”).  The amount of the
Penalty Payment shall be equal to: *. 
The Penalty Payment shall be paid within *. *.

 

To the extent that the average actual service level percentage for any
week is above *, C&S shall be given a credit equal to *.  C&S shall use the aggregate of any
Service Level Credits to set-off against any Penalty Payment that it may owe
for service levels below the applicable Required Service Level but above *.

 

Example of Penalty Payment.  If a Penalty Period lasted for one week, the
average actual service level during such Penalty Period was *, the number of
cases of Merchandise * delivered during such Penalty Period was * and the
Service Level Credit was *, then the Penalty Payment would be equal to *.

 

(e)                                  Holiday Service
Default.  The holiday
seasons, i.e. * Easter, Memorial Day, July 4th, Thanksgiving, Christmas and New Year’s Eve, are
critical to Tops.  If C&S fails to
meet the applicable Required Service Levels for any such * period, then C&S
shall pay a Penalty Payment as set forth in Section 3.10(d), above, with *
with respect to such * period, and with no reduction for Service Level Credit.

 

(f)                                    Escalation;
Service Level Termination.  A
member of C&S’s senior level management will be made available to discuss
any service level concerns of Tops related to Service Level Defaults as Tops
may request.  If the average actual
service level percentage is below * for *, and Tops has provided C&S with
Timely Notice of Termination, then Tops may terminate this Agreement within *
following the end of the last applicable Measurement Period.  “Timely Notice of Termination” means
(a) in the case of Section 3.10(f)(i), within * following the end of
the * Measurement Period, Tops has provided C&S with written notice 

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

9

 

that it intends to terminate this Agreement if the actual service level
is below * for *, and (b) in the case of Section 3.10(f)(ii), within
* following the end of the * Measurement Period, Tops has provided C&S with
written notice that it intends to terminate this Agreement if the actual
service level is below *.

 

3.11            *  The * will be *, as defined
herein.  The * shall mean the * (as
defined and set forth below) of such * and *, all as more fully set forth
below.

 

(a)                                  *.  The * to be* for any * shall be as follows:

 

(i)                                     For purposes
hereof:

 

(A)                              * is hereby
defined as:

 

(x)                                   for * with*,
the*;

 

(y)                                 for * without
*; and

 

(z)                                   for *, the *.

 

(B)                                *, for purposes
of this Agreement, means *.

 

(C)                                *, for purposes
of this Agreement, means *  The Parties
understand and agree *.

 

(ii)                                  C&S *.  The *. 
Tops acknowledges *.  Tops further
acknowledges that *.

 

(iii)                               Any and all *,
but in no event *.  Accordingly, C&S
may * for any * or other *; and to the extent *, C&S will be entitled to *
in accordance with and to the extent *.

 

(iv)                              The * will * set forth in *
so long as the * to * from such * in the *:

 

(A)                              *.  In *, will *, the * and *.

 

(B)                                *.  * will * from * and *.

 

(C)                                *.  * after * if the *; otherwise, * will *.

 

Accordingly, the * of the *.  As
and when agreed to by * from the * then such * will be * and *without any *.

 

(b)                                 * of *.  * will *, except * with respect to *.  For clarification, * and * set forth *
(defined below).  * will *.

 

(c)                                  *.  The *, as and *, in accordance * will * (for
purposes hereof, *). * will *.  For
clarification, * that the* for any * during*, without * from the * for such *
as set forth *  as the *.

 

(d)                                 *. The * shall *
the*, whereby * on * and * on.  It is the
intent of * that the * of such *.  To the
extent * seeks pursuant to any audit under Section 10.2 to review * which
are subject to an agreement of confidentiality *, and to the extent C&S
reasonably determines that such a review is permissible under any such

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

10

 

agreement of confidentiality, Tops will comply with C&S’s
reasonable requests as necessary in connection with such confidentiality
obligations, including entering into separate confidentiality agreements, and
comply with the provisions of paragraph (e) below where applicable.

 

(e)           Restricted Information.  Tops understands and agrees that information
related to * (“Restricted Information”) is highly sensitive and shall be
subject to a heightened level of confidentiality and restricted access.  Accordingly, in order for C&S to agree to
provide such Restricted Information, Tops agrees that it will abide by such
procedures and requirements and enter into such additional agreements or
instruments, as requested by C&S, which C&S determines are reasonably
necessary to protect such information.  
Such procedures and requirements may include, for example, permitting
limited access to such Restricted Information (which may consist of making such
information available for viewing only, including redacted versions of documents
containing such information, and prohibiting copies or other reproductions
thereof) only to (x) a third party independent auditing firm engaged by
Tops with the understanding that such firm may disclose the overall results of
its audit to Tops so long as it does not disclose any Restricted Information to
Tops, or (y), if expressly permitted by C&S, to only those limited,
specifically designated officers, directors, employees representatives,
counsel, advisors and other agents of Tops who have a need to know such
Restricted Information in connection with Tops’ confirmation of * (the “Permitted
Use”), who have been reasonably approved of by C&S, and who will each
individually be required to execute affirmations of the confidentiality
obligations stated herein (“Permitted Individuals”).  In any such case, Tops agrees that, to the
extent any Restricted Information is disclosed to Tops (by C&S or
otherwise), then Tops shall not disclose such information to any other person
or party, other than the Permitted Individuals. 
All such Restricted Information may not be copied or reproduced by Tops
or its independent auditors, as the case may be, in any form, and may only be
used for the Permitted Use.

 

(f)            *.  For the avoidance of doubt, the * will * to
*.

 

3.12    * and *.

 

(a)           *.  The  * as part of
the * sets forth, based on * with respect to * in the * (such * for * only, the
*).  For the Contract Year * and *, and
for each subsequent Contract Year, a * will * as part of * for such *,
substantially * to be * by * for such *. The *across * or the *, as the *, for
any Contract Year, * of * from * in the * in the * set foth *, shall be for
purposes hereof, the *.

 

(b)           *. For each *,
if at the *, the * for the * from the *the * set forth * for such * (without *,
except * pursuant to which * for such * to a * the * between * or *, as *, then
the * the * such * such * from * such*, with respect to * be * such specific *
for such *. * the * the *, then * any *, as * from * for the * through such *
be * for the * for such *, and then * of the * suchy * for such * from *. For
the *, and through the * be * for the same * for the * and the * for the * as *
in the *.

 

In
connection with the quarter end reconciliations contemplated by Section 4.5.2,
and year-end reconciliations contemplated by Section 4.5.3, Tops and
C&S shall determine whether any amounts are due and owing to C&S
pursuant to this Section 3.12(b) for the applicable cumulative
period.  Any * through * to *.

 

* Confidential treatment has been requested
and the redacted material has been filed separately with the Securities and
Exchange Commission.

 

11

 

be
* in accordance with *, and * be *. If * of the * that *, the * for such * for
such *, then * of * that was * as part of *.

 

*

 

3.13    Additional
*.  The * to * for
Tops with respect to * and*  To the
extent Tops * within the * the * that may *.

 

3.14    Credit
Policy.  The Parties agree to the terms and conditions
of the Credit Policy attached hereto as Exhibit 3.14.

 

ARTICLE 4

 

PREPARATION OF ANNUAL BUDGETS;
SHARED SAVINGS

 

4.1      Costs; Budget and Remuneration
Procedures Generally.    Tops shall be responsible for any and all
costs and expenses directly relating to the performance of the Services during
the Term (collectively, the “Costs”) and, accordingly and subject to the terms
of this Agreement, Tops will pay C&S for all Costs incurred by C&S,
together with other remuneration due under this Agreement, in the time and
manner set forth in Article 7. 
Annual budgets applicable to each Contract Year, reflecting projected
annual costs with respect to the Warehousing Services and Transportation
Services, shall be prepared, reviewed and approved in accordance with the terms
and conditions set forth in this Article 4, and shall become the Approved
Budgets for purposes of this Agreement. 
This Article 4 also sets forth certain procedures for the Parties
to establish Flex Budgets.

 

4.2      Annual Approved Budgets.  The 2009 Budget, attached as Exhibits
1.5(a)-(d), sets forth C&S’s annual budget applicable to the Tops
Volume for its fiscal year ended September 26, 2009.  For each Contract Year during the Term,
beginning with the Contract Year September 27, 2009 through
September 25, 2010, an annual budget will be prepared in accordance with
the 2009 Budget format (each such annual budget, as approved by the Parties, an
“Approved Budget”), and substantially consistent with the format of the 2009
Budget, shall be comprised of the separate budgets for the Costs of C&S for
the applicable Contract Year with respect to each of the Mainline Operations
(the “Mainline Operating Costs”) and the GM/HBC Operations (the “GM/HBC
Operating Costs”), with each such budget reflecting separately the Total
Warehousing Costs and Total Transportation Costs for such portion of C&S’s
operations, respectively, *.  For the
purposes of this Agreement, all calculations related to the Approved Budget and
any other matters in connection with the terms of this Agreement shall be
calculated consistent with GAAP.

 

4.3      Budgeted Costs.  The Approved Budgets shall set forth Costs
reasonably anticipated by the Parties to be incurred for the applicable
Contract Year in connection with the performance of the Services, the operation
of the Facilities by C&S, and purchases and other investments in Fixed
Assets in the applicable Contract Year.

 

(a)           Costs will include costs and
expenses reasonably incurred in connection with the performance of the Services
and the operation of the Facilities during the Term. Without limiting any of the
foregoing, the term “Costs” shall include, but not be limited to, the following
categories of costs and expenses:

 

(i)            “occupancy
costs” for all Facilities, which shall be comprised of:

 

(A)          With
respect to leased Facilities - all rent, additional rent, leasehold
improvements, rental subsidies, and other costs, liabilities and obligations
relating to any leases or subleases of the Facilities;

 

(B)          With
respect to owned Facilities — all imputed rental amounts and depreciation
expense for each applicable Facility; and

 

(C)          all
real estate carrying costs including, but not limited to, common area
maintenance, real estate, personal property and business taxes, utilities,
insurance and customary maintenance and repair expenses (including the cost of
supplies);

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

12

 

(ii)           all imputed rental amount and depreciation expense for
all Fixed Assets owned by C&S;

 

(iii)          all amounts in respect of equipment maintenance,
repair and rentals and all charges under any leases of equipment assumed by
C&S or entered into by C&S in accordance with the terms of this
Agreement (including without limitation, leases which constitute capital leases
under GAAP) and relating to the provision of the Services;

 

(iv)          all reasonable and necessary transportation, freight
and other costs relating to the provision of the Transportation Services,
including but not limited to, fuel, tolls, insurance, lease and rental
payments, repair and maintenance costs, payments made to contract carriers for
freight services, and costs associated with inter-facility transfers of
Merchandise and assets in connection with the provision of the Services;

 

(v)           all warehouse related operational costs relating to the provision of the
Services, including any cost related to outside storage;

 

(vi)          *;

 

(vii)         all amounts charged by and payable to third party
contractors and service providers (which may include any Affiliate of a Party,
including ES3) engaged in connection with the provision of the Services or the
performance of this Agreement;

 

(viii)        all reasonable pay in lieu of notice, reasonable
termination and severance payments and like amounts (without limiting the
obligations set forth in Article 9 of this Agreement), and all related
costs and expenses in accordance with C&S’s procedures and policies,
relating to the termination of employment of any one or more employees employed
in connection with the provision of the Services;

 

(ix)          all premiums
payable with respect to all policies of insurance obtained in connection with
providing the Services, including the insurance referred to in
Section 8.1(d)(i) of this Agreement, together with all deductibles,
retentions, expenses and out-of-pocket settlements paid by C&S from time to
time with respect to any of such policies of insurance;

 

(x)           all product shrink, and out of code, damaged or
unsalable Merchandise, as well as carrying and interest costs related to
Leftover Ad Volume;

 

(xi)          all reasonable and necessary costs with respect to any
information processing and related communications devices, equipment, systems,
information, data, or software used in connection with the Services, including
an appropriate allocation of corporate depreciation expense related to capital
expenditures that are intended for the benefit of Tops as relating to the
provision of the Services;

 

(xii)         all printing and postage costs;

 

(xiii)        all costs of compliance with applicable Law in
connection with the provision of the Services, and any remedial costs in
connection therewith, and all costs and expenses related to claims of any third
party related to or arising from the performance of the Services and this Agreement
(other than claims arising out of 

 

* Confidential treatment has been requested
and the redacted material has been filed separately with the Securities and
Exchange Commission.

 

13

 

or resulting from the gross
negligence or intentional misconduct of C&S, to the extent such gross
negligence or intentional misconduct is judicially determined or expressly
agreed to by C&S);

 

(xiv)        all overhead costs to
the extent such overhead costs are incurred by C&S as the result of any
specific request by Tops, including overhead costs hereinafter required by
C&S to be incurred in connection with the provision of any expanded
Services that are not provided to Tops as of the Effective Date but are
requested by Tops;

 

(xv)         all
taxes, surcharges, assessments and the like (other than income taxes) that may
be imposed in connection with the provision of the Services by any federal,
state or local government or municipality, or any other governmental or
quasi-governmental entity or authority; and

 

(xvi)        all other costs
reasonably incurred by C&S directly related to the provision of the
Services or the performance of this Agreement.

 

(b)           Allocation of Costs for
Facilities.  Tops will
be allocated 100% of Costs in connection with the operation of, and the
performance of any Services from, any Dedicated Facility.  Costs in connection with any Shared Facility
during a Fiscal Accounting Period shall be allocated to Tops according to a
ratio equal to (x) Tops’ actual shipped case (or shipping units, in the
case of GM/HBC Merchandise) volume for such Shared Facility for such Fiscal
Accounting Period, divided by (y) the total case (or shipping units, in
the case of GM/HBC Merchandise) volume shipped from such Shared Facility, expressed
as a percentage for that same Fiscal Accounting Period (the “Allocation
Ratio”); *.  The Credit Policy attached
hereto as Exhibit 3.14 reflects the *.  Notwithstanding anything in this Agreement to
the contrary, the Parties acknowledge that any cost, expense, or other charge
which is incurred or expended by C&S that is allocable between Tops and one
or more clients or customers of C&S, shall be so allocated according to the
Allocation Ratio.

 

4.4  Flex Budgets, Fuel.

 

4.4.1       Flexing an Approved Budget.  Any Approved Budget or Flex Budget will be
adjusted at any time for any of the following factors (any such budget as
adjusted hereby, a “Flex Budget”):

 

(i)            changes in regulatory
requirements, compliance with GAAP, and compliance with Laws (provided such
adjustment is not required to correct C&S’s non-compliance for any prior
Fiscal Accounting Period),

 

(ii)           market fluctuations in
C&S’s actual cost of fuel, or any other uncontrollable costs,

 

(iii)          changes in Facilities’ case
volumes and other volume fluctuations, including changes related to startup or
shutdown activities,

 

(iv)          changes to the product mix,

 

(v)           *,

 

(vi)          the implementation of any
project intended to result in cost savings or other benefits in connection with
the performance of the Services to Tops,

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

14

 

(vii)         the occurrence of any events
(planned or otherwise) affecting C&S’s operations with respect to the
performance of the Services to Tops, or any other material changes affecting
such operations, and

 

(viii)        any other such similar
factors as may be appropriate as mutually agreed to by the Parties.

 

Each Flex Budget prepared and delivered by C&S to Tops will be
deemed to be approved by Tops . * will thereafter be and is deemed by the
Parties hereby to be, the Flex Budget to be used by the Parties for all
purposes requiring the use of an Approved Budget or Flex Budget under this
Agreement, until the next Approved Budget or Flex Budget as the case may
be.  For clarification, during any
Contract Year, each Flex Budget shall supersede and replace in its entirety the
immediately preceding Approved Budget or Flex Budget, until the next Approved
Budget or the Flex Budget, as the case may be.

 

4.4.2       Fuel Cost Adjustment.  The Parties intend that Tops will pay the
actual delivered cost of fuel, exclusive of any financial hedging that C&S
may undertake for its own account.  Each
Approved Budget will reflect a budgeted fuel cost based on the best information
available to the Parties with respect to the then applicable rates and
consumption estimates.  The Parties will
then update and/or adjust the fuel cost from such Approved Budget as necessary
pursuant to the Flex Budget process.

 

4.5  Reporting of Variances.

 

4.5.1       Monthly Reconciliations.  Within twenty
(20) days of the end of each Fiscal Accounting Period, C&S shall provide to
Tops a detailed report (the “Monthly P&L”) containing a comparison of
variances between (i) Costs actually incurred by C&S in performing the
Services (the “Actual Costs”) and (ii) Costs set forth in the Approved
Budget for the applicable Contract Year or the Flex Budget for the immediately
preceding period, if applicable.  Tops
will either (a) receive a credit on its next * Statement equal to the
amount by which C&S’s Actual Costs set forth on the Monthly P&L for
such Fiscal Accounting Period were less than the amount of Costs set forth on
the Approved Budget (or Flex Budget, as applicable) paid by Tops for such
Fiscal Accounting Period or (b) pay C&S, in connection with the next *
Statement, any amount by which C&S’s Actual Costs set forth on the Monthly
P&L for such Fiscal Accounting Period were greater than the Costs set forth
on the Approved Budget (or Flex Budget as applicable) which were paid by Tops
for such Fiscal Accounting Period.

 

4.5.2       Quarterly Reconciliations.  Within forty-five (45) days of the end of
each Contract Quarter, C&S will reconcile the Monthly P&Ls for such
Contract Quarter and either (i) provide to Tops a credit on Tops’ next *
Statement equal to the amount by which C&S’s Actual Costs set forth on the
Monthly P&Ls for such Contract Quarter were less than the amount of Costs set
forth on the Approved Budget (or Flex Budget as applicable) for such Contract
Quarter paid by Tops or (ii) Tops will pay C&S the amount by which
C&S’s Actual Costs set forth on the Monthly P&Ls for such Contract
Quarter were in excess of the Costs set forth on the Approved Budget (or Flex
Budget, as applicable) for such Contract Quarter and paid by Tops for such
Contract Quarter, in either case of (i) or (ii) taking into account
any amounts credited to or paid by Tops in connection with the monthly reconciliations.  Quarterly reconciliations will be completed
in conjunction with the closing of the accounts for the C&S fiscal quarter
in which such Contract Quarter concludes.

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

15

 

4.5.3       Year-End Reconciliations.  Within ninety (90) days of the end of each
Contract Year, C&S will reconcile the final Contract Quarter for such
Contract Year and either (i) provide to Tops a credit on Tops’ next *
Statement equal to the amount by which C&S’s Actual Costs for such Contract
Year were less than the amount of Costs set forth on the Approved Budget (or
Flex Budget, as applicable)  for such
Contract Year paid by Tops, or (ii) Tops will pay C&S the amount by
which C&S’s Actual Costs for such Contract Year were in excess of the Costs
set forth on the Approved Budget (or Flex Budget as applicable) for such
Contract Year and paid by Tops for such Contract Year, in either case of
(i) or (ii) taking into account any amounts credited to or paid by
Tops in connection with the monthly and quarterly reconciliations.  The year-end reconciliations will be
completed in conjunction with the closing of the accounts for the C&S
fiscal year, which is coterminous with the Contract Year.

 

4.5.4       Review of Reconciliations.  Within * days after the receipt of each of
the monthly and quarterly reconciliation reports or within * after the receipt
of the yearly reconciliation report, representatives of the Parties shall meet
to review the report.  Tops shall have
access to C&S internal accounting records to verify Costs incurred by
C&S and presented to Tops are accurate. 
C&S will bring to each meeting sufficient authentic documentation of
costs incurred (e.g., general ledger to verify depreciation taken on equipment,
invoices to verify any material/equipment purchased, etc.) to support and
permit analysis of all reconciliations.

 

4.5.5       Effect of Reconciliations.  Consistent with this Article 4, in all
instances the amount of Actual Costs will supersede the amount of Costs set
forth in any Approved Budget and/or Flex Budget.

 

4.6      Preparation of Approved Budgets.

 

(a)           At least * prior to the end of each Contract Year
during the Term (or such other reasonable period agreed to by the Parties),
Tops and C&S will begin to meet to review the Approved Budget prepared by
C&S for the upcoming Contract Year. 
The Parties shall use their commercially reasonable efforts to complete
the approval process within the * period immediately prior to the commencement
of the upcoming Contract Year (such commencement date, “Budget Approval
Deadline”, unless the Budget Approval Deadline is some other date agreed upon
by the Parties hereafter).  Upon the
issuance of the initial draft Approved Budget by C&S, such Approved Budget
will be subject to revision as necessary by the Parties, upon each Party’s good
faith request for adjustments or modifications, until the Budget Approval
Deadline.  Prior to the * period
preceding the Budget Approval Deadline, C&S will make a final presentation
of the Approved Budget.  If such Approved
Budget is approved by Tops or if Tops does not object in good faith during *
period preceding the Budget Approval Deadline, such presented budget will be as
of the Budget Deadline Approval Date, and is deemed by the Parties hereby to
be, the Approved Budget to be utilized by the Parties for the upcoming Contract
Year.  The Parties understand and agree
that timely completion of the Approved Budget is a critical component of the
transparent relationship between the Parties, and that if there is a delay in
the budgeting process the Parties will dedicate whatever executive-level
resources are necessary to ensure timely completion.  Until such subsequent Approved Budget is
determined as set forth above, the Approved Budget for the immediately
preceding Contract Year shall remain in full force and effect.  For clarification, each Approved Budget, once
determined, shall supersede and replace in its entirety the immediately
preceding Approved Budget or Flex Budget until the next Approved Budget or Flex
Budget, as the case may be.  For the
Contract Year beginning *, the Parties shall cooperate and make commercially
reasonable efforts to review and approve the 

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

16

 

Approved
Budget for such Contract *.  Attached as Exhibit 4.6,
entitled *, is the * for the year beginning * (with all references to *, and
related information therein, being included for *).

 

(b)           Tops hereby agrees that from
time to time in future Approved Budgets, certain items of revenue and/or
expense may be reclassified from an existing cost aggregation grouping into
different cost aggregation grouping, as required by GAAP.  *.  Any
such reclassification will also be made to the Baseline Budget for consistency,
however, such reclassification will not impact the total budgeted amount of
costs reflected in the Baseline Budget or the calculation of any Gainshare.

 

4.7      Shared Savings; Cost Savings
Gainshare Incentive Fee.

 

(a)           Baseline Budget.  For purposes of determining the eligibility
for Gainshare (defined below) for each Contract Year, the Parties will use the
“Baseline Budget”, attached to this Agreement as Exhibit 4.7(a),
which is comprised of the following components from the 2009 Budget:  (x) “Total Mainline Operating Costs” reflecting
budgeted Costs (other than occupancy-related Costs) for C&S’s fiscal year
ended September 26, 2009 related to Mainline Operations relative to Tops,
(y) “Total Occupancy Costs” reflecting budgeted occupancy-related Costs for
C&S’s fiscal year ended September 26, 2009 related to Mainline
Operations relative to Tops, and (z) “Total GM/HBC Operating Costs”
reflecting budgeted Costs for C&S’s fiscal year ended September 26,
2009 related only to GM/HBC Operations relative to Tops.  The Baseline Budget is subject to adjustment
and modification only as specifically set forth in this Agreement.  The Baseline Budget will be used for each
Contract Year to calculate the total Cost Savings Gainshare Incentive Fee
(“Gainshare”), if any, payable to C&S for cost savings for the applicable
Contract Year compared against the costs reflected in the Baseline Budget, as
calculated in accordance with this Section 4.7.  *.

 

(b)           Baseline Costs.  The Baseline Budget will express costs as
follows (for purposes hereof, the “Baseline Costs”):  (I) for the Total Mainline Operating
Costs portion of the Baseline Budget, budgeted Costs are expressed as a cost
per case; (II) for the Total Occupancy Costs portion of the Baseline Budget,
budgeted Costs are expressed as absolute dollars; and (III) for the Total
GM/HBC Operating Costs portion of Baseline Budget, budgeted Costs are expressed
as a percentage of sales.  The applicable
Baseline Cost measure shall be utilized in calculating the Shared Savings and
the resulting Gainshare payable to C&S, if any, for each Contract Year in
accordance with sub-section (c) below. 
For any applicable measurement period, the Parties will determine the
actual Costs (expressed as a cost per case, absolute dollars or percentage of
sales as applicable for the categories of Baseline Costs as set forth in this
paragraph (b)) for such period for the Mainline Operations (with the
occupancy-related Costs calculated separately) and the GM/HBC Operations,
respectively, based on the actual Costs incurred by C&S and calculated on a
similar basis as reflected in the applicable Baseline Budget (such actual
Costs, for purposes of this Section 4.7, the “Actual Gainshare Costs”).

 

(c)           Adjustments to Baseline
Budget.  The Baseline Budget will be
adjusted annually as follows (the “Adjusted Baseline Budget”):

 

(i)            All costs comprising the
Total Mainline Operating Costs and Total Occupancy Costs portions of the
Baseline Budget will be adjusted annually (at the conclusion of each Contract
Year) based on increases in the Index (as defined in Section 5.4 below)
calculated and applied in the same manner as set forth in
Section 5.4.*.  

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

17

 

The Baseline Budget, as adjusted as set forth above at the conclusion
of each Contract Year, and as otherwise adjusted pursuant to this
Section 4, will be applied accordingly in determining the Gainshare for
such year.

 

(ii)           If there is any material
change in Tops’ Services requirements that increases C&S’s costs to provide
Services to Tops, the Parties will meet in good faith and revise the Baseline
Budget.

 

(iii)          For any fifty-three (53)
week Contract Year, the Total Occupancy Costs portion of the Baseline Budget
will be adjusted for the additional Costs applicable to the additional week of
operation.

 

(iv)          If there is case or unit
volume deviation of more than * from the volume reflected in the Baseline Budget,
up or down, the Parties will examine the fixed and variable cost components
within the Baseline Budget and make any necessary adjustments to the Baseline
Budget to allow an appropriate comparison of the Actual Gainshare Costs
reflecting costs incurred in the applicable Contract Year to the Baseline Costs
reflecting the costs set forth in the Baseline Budget.

 

(v)           If there is any other matter
or development that prevents a legitimate and meaningful comparison of the
Baseline Costs to the Actual Gainshare Costs, then the Parties shall meet and
in good faith adjust such Baseline Budget to permit such a meaningful
comparison.

 

(vi)          The Baseline Costs set forth
in the Baseline Budget shall be re-calculated following any adjustment to the
Baseline Budget, and any adjustments or modifications to the Baseline Budget
will be reflected in a revised Baseline Budget prepared and delivered by
C&S to Tops, which will supersede and replace in its entirety the
immediately preceding Baseline Budget for all purposes that the Baseline Budget
is utilized under this Agreement.

 

(d)           Calculation of Shared
Savings and Cost Savings Gainshare Incentive Fee.  For each Contract Year, the amount of “Shared
Savings”, if any, to be allocated between Tops and C&S on * (subject to the
terms of this Agreement), shall be calculated utilizing the Actual Gainshare
Costs determined (as set forth in Section 4.7(b)) based on the actual
Costs incurred by C&S and charged to Tops for each of the Mainline
Operations (less occupancy Costs), the occupancy Costs related to the Mainline
Operations, and the GM/HBC Operations, and the Baseline Costs reflected in the
Baseline Budget or the Adjusted Baseline Budget (as applicable) for such year,
as more specifically set forth in sub-sections 4.7(d)(i)-(iv) below:

 

(i)            Mainline Operating Cost
Savings (excluding Occupancy Costs).  Total Mainline Operating Cost savings shall
be calculated by multiplying: A) the positive difference between (x) the
Baseline Costs for Total Mainline Operating Costs as reflected in the Baseline
Budget or the Adjusted Baseline Budget (as applicable) and (y) the Actual
Gainshare Cost based on the actual total Costs incurred by C&S and charged
to Tops in connection with the Mainline Operations for the 

 

* Confidential treatment has been requested
and the redacted material has been filed separately with the Securities and
Exchange Commission.

 

18

 

applicable Contract Year for which the Gainshare is being determined; and
B) the number of Mainline cases for the applicable Contract Year for which the
Gainshare is being determined.

 

(ii)           Mainline Operating Occupancy
Cost Savings.  Total
Occupancy Cost savings shall be calculated by determining the positive
difference in absolute dollars between (x) the Baseline Costs for Total
Occupancy Costs as reflected in the Baseline Budget or the Adjusted Baseline
Budget (as applicable) and (y) the Actual Gainshare Costs based on the
actual total Costs incurred by C&S and charged to Tops in connection with
the occupancy costs related to the Mainline Operations for the applicable
Contract Year for which the Gainshare is being determined.

 

(iii)          GM/HBC Operating Cost
Savings.   Total GM/HBC Operating Cost
savings shall be calculated by multiplying: A) the positive difference between
(x) the Baseline Costs for the Total GM/HBC Operating Costs as reflected
in the Baseline Budget or the Adjusted Baseline Budget (as applicable) and
(y) the Actual Gainshare Costs based on the actual total Costs incurred by
C&S and charged to Tops in connection with the GM/HBC Operations for
applicable Contract Year for which the Gainshare is being determined; and
B) the total GM/HBC sales (in dollars) for the Contract Year for which the
Gainshare is being determined.

 

(iv)          Total Shared Savings.  The total Shared Savings, for each Contract
Year, shall be determined by adding the amounts calculated pursuant to (i),
(ii) and (iii) above, except
that, for the *, the * will * from * the * for such * to the * in the * for the
*.  Any favorable difference will
be applied, consistent with clauses (i), (ii) and (iii) above, to the
total sales (in cases or dollars, as applicable) during such period. *.

 

(e)           Payment of Cost Savings
Gainshare Incentive Fee.

 

(i)            C&S and Tops shall
reconcile the Gainshare in connection with each year-end reconciliation (as set
forth in Section 4.5.3 hereof).  To
the extent any portion of the Cost Savings Gainshare Incentive Fee is disputed,
Tops shall nonetheless pay to C&S the undisputed portion of such Fee on the
next applicable * Statement.

 

(ii)           Payment of the Cost Savings
Gainshare Incentive Fee shall be made to C&S in accordance with the terms
and conditions set forth in this Section 4.7 and Article 7 hereof.

 

(f)            Other Savings.  Notwithstanding the foregoing, if savings
result from the assumption by Tops of the performance of any of the Services
(as contemplated or expressly permitted by this Agreement) or Tops effects a
change that reduces its occupancy costs or other direct expenses, the Parties
will account for such savings in calculating the Gainshare and take all
necessary steps in connection therewith. 
For example, Tops may elect to assume, as permitted by
Section 2.3(c), the delivery of Merchandise to Tops Stores by picking-up
Merchandise at the applicable Facility. 
If such activity results in a reduction in 

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

19

 

Costs, such savings will be
reflected in the calculation of the Gainshare for the applicable period.

 

4.8      GM/HBC Start-Up Costs.   All costs incurred by C&S in connection
with the start-up of the supply of the GM/HBC Merchandise to Tops will be
charged to, and paid by, Tops as of the Services Commencement Date.

 

4.9      *.   Tops will indemnify C&S for * provided,
however, that, *, any such * will not *.

 

4.10  *.

 

ARTICLE 5

 

SERVICES FEES

 

5.1.     General.  In addition to any other amounts payable
hereunder, as consideration for performing the obligations under this
Agreement, Tops shall pay to C&S the Services Fees, as set forth and
defined below.  In addition to the Base
Management Fee, Tops shall also pay to C&S the Cost Savings Gainshare
Incentive Fee * if certain conditions are satisfied, as described below.  For purposes of this Agreement, the Base
Management Fee, the Cost Savings Gainshare Incentive Fee * shall be referred to
herein as the “Services Fees.”  Services
Fees shall also include any fees later agreed to by the Parties, including fees
for Additional Services.

 

5.2    Base Management Fee.  The “Base Management Fee”
will be * per Contract Year, will be adjusted annually pursuant to
Section 5.4 hereof and will be payable on a * basis, * (subject to Section 7.1(c)(i)(A)(I)),
commencing on the Services Commencement Date. 
Such amount is based on a 52-week Contract Year and, accordingly, will
be increased proportionally for any 53-week Contract Year.  The Base Management Fee shall be payable to
C&S in accordance with the terms and conditions set forth in Article 7
hereof.

 

5.3      Incentive Compensation Fees.  In addition to the Base
Management Fee, C&S will be entitled to receive the following fees:

 

(a)           Cost Savings Gainshare
Incentive Fee.  For each
Contract Year, C&S will be eligible to receive a “Cost Savings Gainshare
Incentive Fee”, as described and calculated in accordance with Section 4.7
hereof, for such Contract Year.

 

(b)           *.  For each Contract
Year, C&S will be eligible to receive *.

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

20

 

5.4      Adjustments
to Certain Services Fees. 
The then applicable Base Management Fee shall be adjusted at the start
of each Contract Year commencing with the Contract Year beginning
September 26, 2010, by *.  (The
above * references and calculated amounts are not actual and are referenced herein
for illustrative purposes only.)

 

As
set forth in Section 4.7(c), the * set forth in the Baseline Budget are
also subject to an annual Index adjustment substantially consistent with this
Section 5.4, except that the Baseline Budget will be adjusted at the
conclusion of the applicable Contract Year as set forth therein.

 

5.5      Additional Services.  From time to time, Tops may request the
provision of additional services that are outside of the scope of both the then
current Services and the Other Services. 
In such event, Tops and C&S shall negotiate in good faith to
mutually agree upon a description of such additional services, including an
adjustment of the then applicable Approved Budget (as determined or adjusted in
accordance with Article 4), and the appropriate adjustment to the Base Management
Fee to reflect any additional expense to C&S and C&S’s profit
expectation for such additional services. 
To the extent the Parties mutually agree, any of the foregoing requested
additional services (the “Additional Services”) may form part of the Services
hereunder for the purposes of this Agreement, and the Parties will make such
modifications to this Agreement, and to each of the Baseline Budget and
Approved Budget (or Flex Budget, as applicable), as appropriate and necessary
to reflect the agreed upon Additional Services and budgeted Costs related
thereto.

 

ARTICLE 6

 

OTHER SERVICES

 

6.1      General.  C&S shall perform
certain services (the “Other Services”) on Tops’ behalf that are incidental or
in addition to the Services, as specified in this Article 6.  The Parties agree that the costs incurred by
C&S in connection with the rendering of the Other Services shall not
constitute Costs payable by Tops but shall remain the sole responsibility of
C&S, are excluded from the calculation of the 2009 Budget and shall not be
incorporated into or made a part of any Approved Budgets, and accordingly,
C&S will retain all income earned in connection therewith.

 

6.2      Coupon Processing Services.    During the Term, C&S will perform coupon
processing services (the “Coupon Processing Services”) with respect to all of
the Tops Stores, in accordance with, and subject to, the terms and conditions
set forth in Exhibit 6.2, which are incorporated hereby and made a
part of this Agreement.

 

6.3      Accounts Receivables *.  From time to time, Tops may
ask C&S *due from manufacturers to Tops *. 
C&S has the right, in its discretion, to refuse to honor any *
request that Tops may make; *. Tops will provide C&S with all documentation
in support of each requested Accounts Receivable *.  If C&S * and * made by C&S, Tops
shall indemnify, defend and hold C&S harmless from any claim by*.  If after * Tops will, upon notice from
C&S, *, either by* or* to Tops’ next * Statement.  Tops will use commercially reasonable efforts
to insure that the supply of Merchandise from manufacturers to C&S is not
adversely affected by any Accounts Receivables *.  The Required Service Level shall not be
adversely affected by an interruption in the supply of Merchandise from a
manufacturer to C&S if the interruption is caused by the refusal of the
manufacturer to ship product to C&S and such refusal is attributable (in
whole or in part) to *.

 

6.4      Reclamation; *.  During the Term, C&S will perform
services with respect to all damaged, discontinued or unsalable Merchandise
located at the Tops Stores (the “Reclamation Services”).  All non-perishable qualifying product will be
accumulated at each store in banana boxes, and will be picked up by C&S
after Tops notifies C&S that there is a full pallet (typically twenty
cases, but at least five cases) of banana boxes.  C&S will scan items at its reclamation
center and create a scan file.  Each week
Tops will provide C&S 

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the Securities
and Exchange Commission.

 

21

 

with a scan file of all perishable qualifying
product.  *.  Private label product shall be excluded from
the reclamation program, unless the vendor of any such product is an authorized
vendor allowing C&S to deduct reclamation amounts from such vendor.  *.  To
the extent a manufacturer pays or institutes a swell allowance on Merchandise,
then C&S shall receive the full amount of such allowance.  *.

 

ARTICLE 7

 

REMUNERATION AND PAYMENT OF OPERATING COSTS AND SERVICES FEES

 

7.1      Payment
of * and Services Fees.  Tops will pay to C&S * all Services Fees,
and will * under this Agreement in accordance with the terms hereof, as
follows:

 

(a)           * Statements.  On * during the Term, C&S will
electronically transmit to Tops files (such files shall be referred to
collectively as the “* Statement”) setting forth all amounts actually due to
C&S (including* for * (such amounts, for the applicable *, the “* Statement
Amount”).  The * Statement will include:
a shipment file with all Merchandise charged to the Tops Stores *; and an
expense/charge file reflecting * and the Services Fees payable by Tops which
will be billed * on such * Statement in the amount which has been budgeted by
C&S for the applicable Fiscal Accounting Period on the then applicable
Approved Budget or Flex Budget, as the case may be, allocated on a per * basis.
 The
* Statement will also periodically reflect a * (which will be part of the *
Statement Amount), consistent with the reconciliation process set forth in
Section 4.5, *  The * will be
budgeted in the Approved Budget (or the Flex Budget, if applicable) for each
Contract Year and trued up in connection with the year-end reconciliation.  Each *, the * Statement will reflect, and
Tops will pay in accordance with Section 7.1(b) below, the budgeted
amount of the * budgeted for the preceding *. 
Upon the year-end reconciliation (as set forth in Section 4.5.3),
any previously unpaid portion of the * for the applicable Contract Year will be
reflected as a charge on the next applicable * Statement payable by Tops.

 

(b)           Payment.  Tops will pay C&S by wire transfer or ACH
payment in the full amount of the * Statement Amount for settlement and receipt
by C&S by *.  If the relevant banks
are not open for business on the date payment is due, then the due date shall
be accelerated to the previous day that the relevant banks may be legally open
(payment being due by *) on such day). 
Tops hereby acknowledges that it has C&S’s current payment
instructions, and C&S will provide Tops with advance notice of any change
in the same.  If Tops disputes any
portion of the * Statement, absent manifest error, Tops shall nonetheless pay
the full amount of the * Statement Amount by the payment due date, without any
deductions or offsets.  In the event of
such manifest error (i.e., the * Statement reflects an indisputable error in
the mathematical calculation thereof), then such amount that is the subject of
such claimed manifest error, if mutually agreed to by the Parties, may be
deducted from the * Statement Amount then payable by Tops.  Similarly, if C&S disputes any portion of
a statement for goods that Tops sends to C&S, C&S shall nonetheless pay
the full amount of the statement by the payment due date, without any
deductions or offsets. Tops or C&S shall give notice to the other Party of
any billing adjustments it believes should be made, and the Parties shall
attempt to reach agreement on any adjustments within *.  If an agreement cannot be reached on disputed
adjustments within said *, the Parties will settle the dispute in accordance
with the dispute resolution procedures set forth in Section 10.1
hereof.  Further, without 

 

* Confidential treatment has been requested
and the redacted material has been filed separately with the Securities and
Exchange Commission.

 

22

 

limiting any rights and remedies set forth herein and otherwise
available to C&S, and subject to Section 7.1(d), any payment not received
pursuant to this Section 7.1(b) (or pursuant to
Section 7.1(c)(i)(A)* (II) following a Triggering Event) will be
immediately subject to a variable late fee equal to * calculated on a daily
basis from the date any such payment is overdue.

 

(c)           Miscellaneous Billing and
Payment Matters.  Time is of
the essence with respect to any payment obligation of Tops under this
Agreement.

 

(i)            The following provisions describe Triggering Events
(as defined below) and the effects of the occurrence thereof:

 

(A)          Immediately upon the
occurrence of any Triggering Event, each of the following shall apply (and the
same shall apply independently for each subsequent Triggering Event as it
occurs), automatically and without further action by any person or entity:

 

(I)            *.  C&S may elect not to ship any Merchandise
ordered by Tops in excess of *.  C&S
may, in its sole discretion, elect to accept a standby, irrevocable letter of
credit in amount, form, scope and substance, and from a U.S. financial
institution, satisfactory to C&S, or some other adequate security
satisfactory to C&S in respect of payments to be made hereunder.

 

(II)          Tops will be obligated to pay, and will promptly pay
to C&S, all outstanding and unpaid amounts (including all amounts whether
or not previously billed to Tops in a * Statement) incurred by Tops in
connection with the supply of Merchandise (including *, Services Fees *).

 

(III)        C&S shall have the right to elect any of the
following:

 

(x)           C&S may continue to
deliver Merchandise *;

 

(y)           C&S may defer any
subsequent delivery of Merchandise; provided, that:

 

(aa)         if such Triggering Event is
due to the failure by Tops to satisfy the Reporting Requirement (as defined
below) set forth in Section 7.1(c)(iii)(D) relating to a Financial
Covenant Default (as defined below), C&S may not defer any delivery of
Merchandise unless and until the applicable lender exercises a remedy available
to it under the applicable Senior Debt Agreement following the applicable
Financial Covenant Default, constituting a Triggering Event under
Section 7.1(c)(ii)(C)(II); and further, provided, that

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

23

 

(bb)         if such Triggering Event is,
under Section 7.1(c)(ii)(B), due to C&S not having timely received any
* amount payable *, C&S may defer any subsequent delivery of Merchandise
unless and until Tops has paid to C&S within the * period following the
occurrence of such Triggering Event all unpaid amounts * corresponding to the
next applicable day’s (or days’, as the case may be) deliveries *, in which
case C&S shall resume the delivery of Merchandise on the day following
receipt of such payment; provided, that
if Tops has not paid such amounts to C&S within the * period following the
occurrence of such Triggering Event, then C&S may terminate this Agreement
pursuant to Section 9.2(a), and defer any subsequent delivery of
Merchandise, subject to Section 7.1(c)(i)(C) below, provided that in
such case, the * (as defined below) shall begin on the day following the
expiration of such * period; provided, however that, notwithstanding the
foregoing, C&S’s receipt of any * amount from Tops shall not affect
C&S’s right to defer any subsequent delivery of Merchandise pursuant to
7.1(c)(i)(A)(III)(y) in connection with any prior Triggering Event or
subsequent Triggering Event; and

 

(z)           if C&S has elected to
defer any subsequent delivery of Merchandise pursuant to clause (y) above,
then C&S may, during the * Period (as defined below), subsequently elect to
resume the delivery of Merchandise *.

 

(B)          If any Triggering Event occurs and, in connection
with the event or occurrence constituting such Triggering Event, C&S has
the right to terminate this Agreement pursuant to Section 9.2(a), C&S
may (but has no obligation to) exercise that right by delivering written notice
to Tops not later than the later to expire of (x) the * period following
the date on which such Triggering Event occurs or (y) the * period
following the date on which the right to terminate under
Section 9.2(a) arises (the applicable * period, the “* Period”).  If C&S fails to notify Tops in writing
prior to the expiration of the * Period that it elects to terminate this
Agreement, C&S will be deemed to have waived its right to terminate this
Agreement in connection with the event or occurrence constituting such
Triggering Event.  If C&S
(i) elects to waive (or is deemed to have waived) its right to terminate
this Agreement in accordance with the foregoing, and (ii) has previously
elected to defer delivery of Merchandise pursuant to
Section 7.1(c)(i)(A)(III)(y) as a result of such Triggering Event,
then immediately following the expiration of the * Period, C&S shall resume
delivering Merchandise in accordance with the

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

24

 

terms of this Agreement * subject to any subsequent Triggering Event.

 

(C)                               If at any time C&S is
permitted and has elected to defer deliveries of Merchandise in accordance with
Section 7.1(c)(i)(A)(III)(y), and if C&S then has the right to
terminate this Agreement pursuant to Section 9.2(a) (or if such right
subsequently arises in connection with the applicable Triggering Event during
the period C&S is deferring any such deliveries), and if Tops has paid
C&S all amounts contemplated by * Section 7.1(c)(i)(A)(II), then upon
reasonable prior written notice to C&S of its intent to do so, Tops may
purchase Merchandise from an alternate supply source but only to the extent and
only until the earlier to occur of: (i) C&S’s election during the *
Period (applicable to such Triggering Event) to thereafter deliver Merchandise
to Tops *, (ii) the expiration of the * Period (applicable to such
Triggering Event) to the extent C&S has elected to waive (or is deemed to
have waived) its right to terminate this Agreement during such * Period, or (iii) if
C&S has the right to terminate this Agreement simultaneously in connection
with more than one Triggering Event, then the expiration of the last applicable
* Period.  If at any time following a
Triggering Event C&S does not have the right to terminate this Agreement
pursuant to Section 9.2(a) as a result thereof and/or Tops has not
paid to C&S all amounts payable pursuant to * Section 7.1(c)(i)(A)(II),
Tops may not purchase any Merchandise from an alternate supply source following
any election by C&S to defer deliveries.

 

(D)                               In the event of a Triggering
Event as contemplated by Section 7.1(c)(ii)(D) resulting from the
failure of Tops to comply with Section 7.1(c)(iii)(A) or Section 7.1(c)(iii)(D),
if Tops cures such failure to comply within * of the occurrence of such
Triggering Event, and no other Triggering Event occurs during the * period
immediately following the date of such Triggering Event pursuant to Section 7.1(c)(ii)(D*.

 

(ii)                                  Each of the
following is a “Triggering Event”:

 

(A)                               An Event of
Bankruptcy involving Tops.

 

(B)                               Any * Statement
Amount is not received by C&S in accordance with Section 7.1(b) (subject
to any agreed upon deduction for manifest error in accordance with Section 7.1(b));
and/or following any Triggering Event, any amount payable pursuant to * Section 7.1(c)(i)(A)(II) is
not received by C&S.

 

(C)                         (I)                                         The occurrence
of any default in the payment of any amount due with respect to any Senior Debt
after giving effect to all applicable cure periods set forth in the Senior Debt
Agreement corresponding to such Senior Debt.

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

25

 

(II)                              The exercise by
any lender of any remedy available to it under the applicable Senior Debt
Agreement following any violation or breach of, or failure to comply with, any
Financial Covenant (defined in Section 7.1(e) below) (any such
violation, breach or failure to comply, a “Financial Covenant Default”),*;
provided, that if, prior to the exercise of any such remedy by a lender, Tops (x) provides
evidence that the lender thereunder has waived such Financial Covenant Default,
and *, then no Triggering Event shall be deemed to have occurred.  *

 

(D)                               Any failure by
Tops to fulfill any Reporting Requirement, *.

 

(iii)                               Each of the
following is a “Reporting Requirement”:

 

(A)                               Tops will
provide C&S with copies of any periodic financial reports at such times as
required pursuant to Section 10.2(b), together with any and all
certificates and other information that is required to be provided under the
applicable Senior Debt Agreement, in the same manner and, in any event, within
the same time periods as required under such Senior Debt Agreement; provided
however that, if at any time Tops is unable to timely deliver to C&S
audited financial statements when due under Section 10.2(b) because
Tops’ financial auditing firm withholds any certification or similar documentation
that would result in such financial statements not being qualified as “audited”,
and such withholding would directly prevent Tops from delivering to C&S
audited financial statements as required pursuant to Section 10.2(b), then
the failure of Tops to deliver audited financial statements as required
pursuant to Section 10.2(b) shall not be deemed to constitute a
breach of this Agreement or a failure to satisfy the Reporting Requirement set
forth in this Section 7.1(c)(iii)(A) if, within*of the date such
financials are due under Section 10.2(b), Tops notifies C&S of such
circumstance and Tops provides to C&S: (1) a letter executed on behalf
of the auditor, addressed to C&S, indicating that such auditor is unable to
deliver its audit report on Tops’ financial statements; (2) copies of the
unaudited financial statements of Tops for the same period that is the subject
of the applicable audit; and (3) the audited financial statements for the
applicable period promptly following the date on which the same are certified
by the auditor.

 

(B)                               Within * of the
date which is the end of each Contract Quarter, the senior financial officer of
Tops shall (x) certify to C&S the amount of availability under each
Senior Debt Agreement and (y) certify to C&S that, other than with
respect to any Triggering Event (if any) with respect to which Tops has
previously provided notice to C&S, no Triggering Event has occurred through
the date of the delivery of such certification to C&S; and with respect to
any Financial Covenant Default, such certificate shall provide C&S with the
calculations used to support such determination.

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

26

 

(C)                               Tops will
promptly * provide notice to C&S at the notice address provided in this
Agreement at any time that there is any default with respect to any payment due
in respect of any Senior Debt and the period, if any, as set forth in the
corresponding Senior Debt Agreement during which such default may be cured has
expired.

 

(D)                               Tops will
promptly * provide notice to C&S at the notice address provided in this
Agreement at any time that there has been a Financial Covenant Default, and the
period, if any, set forth in the corresponding Senior Debt Agreement during
which such Financial Covenant Default may be cured has expired.

 

(E)                          (I)                                         With respect to
any notice Tops has provided relating to a Financial Covenant Default, Tops
will thereafter notify C&S promptly * of any waiver by the lender of such
Financial Covenant Default and will specify in such notice any and all
consideration or any other accommodations made in connection with the grant of
such waiver.  Such notice shall also
indicate the amount then outstanding under the applicable Senior Debt.  Tops will also notify C&S promptly * if
the lender has elected to exercise any remedy available to it under the
applicable Senior Debt Agreement following any Financial Covenant Default.

 

(II)                                   In the event of
any of the following: any change in any then applicable Financial Covenant with
respect to any Senior Debt, whether by amendment to the applicable Senior Debt
Agreement, refinancing and entering into a new or replacement Senior Debt
Agreement or otherwise; or if any new or additional Senior Debt undertaken or
otherwise incurred; then Tops will promptly * notify C&S of such event
including the nature of such change or the new or additional Senior Debt, and of
any new or modified Financial Covenants (as applicable) in connection
therewith, the senior financial officer of Tops will describe and certify in
full to C&S the Financial Covenants following any such amendment,
refinancing or entering into a new or replacement Senior Debt Agreement or new
or additional Senior Debt undertaking or otherwise being incurred, including
any new or modified Financial Covenant(s) (as applicable), and Tops will
promptly * provide C&S with copies of all Financial Covenants then applicable
to the corresponding Senior Debt, together with any documentation (including
each Senior Debt Agreement) reasonably requested by C&S in connection with
such change in any Financial Covenant, subject to any applicable
confidentiality obligations, provided that Tops will use commercially
reasonable efforts to obtain all consents that are necessary in order for Tops
to disclose and make available to C&S such Financial Covenants, copies of
each then applicable Senior Debt Agreement and any other documentation for
purposes of this Section 7.1(c).

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

27

 

(F)                                 Tops will promptly
* provide notice to C&S at the notice address provided in this Agreement
that an Event of Bankruptcy involving Tops has commenced.

 

*

 

(iv)                              Each of the rights and
remedies set forth in Section 7.1(c)(i)(A)-(D) above is nonexclusive,
cumulative of and in addition to each other right and remedy and any and all
rights and remedies available to C&S, hereunder or otherwise, including
without limitation, C&S’s right to terminate this Agreement in accordance
with Section 9.2(a) hereof.  It
is expressly agreed that C&S’s election or waiver of any such right(s) or
remedy(ies) does not constitute a waiver of any other right or remedy available
to C&S, and any or all such rights and remedies may be exercised by C&S
in the future.  Consistent with Section 10.15
hereof, no act or omission by C&S or course of dealing of the Parties shall
be construed to constitute a waiver of any rights or remedies of C&S in
connection with any Triggering Event * unless such waiver is set forth in
writing.  The effects, as set forth in
this Section 7.1(c), of any Triggering Event that occurs following any
prior Triggering Event will not in any way supersede or otherwise adversely
impact any of the effects of any such prior Triggering Event.

 

(d)                                 Inadvertent
Non-compliance with Section 7.1(b).  In the event Tops does not comply with Section
7.1(b) and Tops promptly and reasonably demonstrates to C&S (x) that
any such non-compliance is the result of an inadvertent act or omission on the
part of Tops or its personnel, (y) it is solvent and financially capable
of satisfying its future payment obligations under this Agreement, and (z) that
such occurrence is not part of a series of similar such occurrences, and Tops
promptly makes payment to C&S of all outstanding * Statement Amounts, then
C&S will waive in such instance its available remedies related to such
non-compliance with Section 7.1(b), and notwithstanding that a Triggering
Event has occurred and the requirement that Tops must * with respect to any
subsequent sale of any Merchandise to Tops, *, is automatically effective,* and
the same shall apply until any future Triggering Event.

 

(e)                                  Financial
Covenants.  “Financial
Covenant” means, with respect to any Senior Debt, any obligation in the Senior
Debt Agreement corresponding to such Senior Debt that requires Tops to meet any
specified financial ratio or satisfy any another specified financial test.  The Financial Covenants in effect as of the
Effective Date are set forth in Exhibit 7.1(e).  The Parties understand that such Financial
Covenants are subject to change from time to time during the Term, as
contemplated by Section 7.1(c)(iii)(E)(II).  Tops has provided C&S with a true,
correct and complete copy of each Senior Debt Agreement in effect as of the
Effective Date of this Agreement.

 

7.2.                Taxes.  All amounts payable by Tops
under this Agreement shall be paid together with any applicable taxes and
duties including any sales taxes and any other miscellaneous taxes related to
the provision of Services hereunder which are assessed against C&S or its
Affiliates, other than income taxes.

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

28

 

ARTICLE 8

 

INDEMNIFICATION, CERTAIN OTHER REMEDIES AND INSURANCE; FORCE MAJEURE

 

8.1                   Indemnification.

 

(a)                                 C&S.  C&S shall defend, indemnify and hold
harmless Tops and its Affiliates, and their respective owners, directors,
officers, employees, servants, agents, independent contractors, successors and
assigns (collectively, “Tops Indemnitees”) from any and all losses, damages, demands, claims,
judgments, fines, penalties, liabilities, causes of action, amounts paid in
settlement, charges, costs and expenses, including but not limited to
reasonable legal fees and expenses (whether incurred as the result of a third
party claim or a claim to enforce this provision) or costs of settlement
(collectively, “Losses”) arising out of, resulting from or related to any
dispute, demand, claim, lawsuit, action or proceeding brought or initiated by
any third party (each, a “Third Party Claim”) against any of the Tops
Indemnitees to the extent that such Third Party Claim arises out of, is in
connection with or results from: (i) acts or omissions of C&S in any
manner related to the handling, storage, use or transportation of the
Merchandise supplied to Tops pursuant to the terms of this Agreement;
(ii) the willful misconduct or negligent acts of C&S, its employees or
subcontractors related to its performance of the Services or its other
obligations under this Agreement; or (iii) a breach of any representation
or warranty made by C&S in this Agreement; provided, however, this
indemnification and hold harmless with respect to sub-sections (i)-(iii) shall
not apply to the extent of any Losses arising out of or relating to any Third
Party Claim in connection with or resulting from resulting from the negligence
or willful misconduct of Tops, its Affiliates or their respective employees, representatives
or agents.  Whenever Tops receives notice
of any Third Party Claim against any Tops Indemnitee that would be covered by
this provision, Tops shall in turn provide C&S with prompt written notice
of such Third Party Claim; provided, that the failure to so notify C&S will
not relieve C&S of any liability that it may have hereunder, except to the
extent C&S demonstrates that the defense of such action is prejudiced by
Tops’ failure to give such notice. 
Notwithstanding anything to the contrary set forth herein, nothing in
this Section 8.1(a) shall be interpreted to excuse Tops from its
obligation to reimburse C&S for Costs as set forth in Article 4.

 

(b)                                 Tops.  Tops shall defend, indemnify and hold
harmless C&S and its Affiliates, and their respective owners, directors,
officers, employees, servants, agents, successors and assigns (collectively,
the “C&S Indemnitees”) from any and all Losses arising out of or related to
any Third Party Claim against any of the C&S Indemnitees to the extent that
such Third Party Claim arises out of, is in connection with or results from: (i) acts  or omissions of Tops in any manner related to
the handling, storage, use or transportation of the Merchandise supplied to
Tops pursuant to the terms of this Agreement; (ii) the willful misconduct
or negligent acts of Tops, its employees or subcontractors related to its
performance of the Services or its other obligations under this Agreement; or (iii) a
breach of any representation or warranty made by Tops in this Agreement; provided,
however, this indemnification and hold harmless with respect to sub-sections
(i)-(iii) shall not apply to the extent of any Losses arising out of or
relating to any Third Party Claim in connection with or resulting from the
negligence or willful misconduct of C&S, its Affiliates or their respective
employees, representatives or agents. 
Whenever C&S receives notice of a Third Party Claim against any
C&S Indemnitee that would be covered by this provision, C&S shall in
turn provide Tops with prompt written notice of such Third Party Claim;
provided, that the failure to so notify Tops will not relieve Tops of any 

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

29

 

liability that it may have
hereunder, except to the extent that Tops demonstrates that the defense of such
action is prejudiced by C&S’s failure to give such notice.

 

(c)                                  Product
Liability - Infringement.  Each
Party shall use its commercially reasonable efforts to seek indemnity from the
manufacturer of any Merchandise with respect to any and all Losses arising out
of, or relating to any Third Party Claim in connection with or  resulting from (i) actual or alleged
product liability or the handling, possession, storage, use or any other
dealing by any person of any Merchandise, or (ii) any actual or alleged
infringement of any trademark, patent, copyright or other intellectual property
right.  To the extent C&S has
exhausted its efforts to seek indemnity from the manufacturer as set forth in
this Section 8.1(c), but was unable to secure such indemnity, Tops shall
indemnify C&S solely with respect to Losses to the extent (a) such
Losses are related to private label or Tops unique items or any items acquired
and supplied at the direction of Tops, and (b) such Losses do not arise
from or are not related to the actual or alleged negligence or willful
misconduct of C&S.  To the extent
Tops has exhausted its efforts to seek indemnity from the manufacturer as set
forth in this Section 8.1(c), but was unable to secure such indemnity,
C&S shall indemnify Tops solely with respect to any Losses arising out of
or relating Third Party Claim as described in clause (i) or (ii) of
this paragraph (c) related to C&S’s handling, possession, storage or
use of Merchandise, to the extent such Losses do not arise from or are not
related to any actual or alleged negligence or willful misconduct of Tops.

 

(d)                                 Insurance.

 

(i)                                     By C&S.   During
the Term of this Agreement, C&S shall carry and maintain the following
policies of insurance issued by recognized, reputable insurers reasonably
acceptable to Tops, in forms satisfactory to Tops acting reasonably, and naming
Tops as an additional insured on all policies except the Workers’ Compensation
policy of insurance:

 

(A)                               Comprehensive
General Liability Insurance with limits of liability for each occurrence of no
less than $*. Such policy shall include blanket contractual liability coverage
and products/completed operations liability coverage. Products /completed
operations coverage shall remain in effect for not less than two (2) years
after expiration or earlier termination of this Agreement.

 

(B)                               Automobile
liability insurance in a combined value of $* for bodily injury, personal
injury and property damage to any person, or persons.

 

(C)                               Workers’
Compensation as required by state statute and Employers’ Liability coverage in
a minimum amount of $* per accident/disease.

 

Within * following a request, C&S shall provide to Tops
certificates evidencing the insurance coverages required of C&S under this Section 8.1(d)(i),
stating that that all policies of insurance evidenced therein may not be
terminated, cancelled or modified except upon no less than thirty (30) days
prior written notice to Tops, and reflecting Tops Markets LLC, 6363 Main
Street, Williamsville, NY 14221-5898 as the certificate holder and additional
insured.  In addition, within * of a
request, C&S shall

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

30

 

deliver renewal certificates to Tops, and C&S will provide evidence
that such coverage did not lapse.

 

(ii)                                  By Tops.  During the Term of this Agreement, Tops shall
carry and maintain, at its sole cost and expense, the following policies of
insurance issued by recognized, reputable insurers reasonably acceptable to
C&S, in forms satisfactory to C&S acting reasonably, and naming C&S
as an additional insured on all policies except the Workers’ Compensation
policy of insurance:

 

(A)                               Comprehensive
General Liability Insurance with limits of liability for each occurrence of no
less than $*. Such policy shall include blanket contractual liability coverage
and products/completed operations liability coverage. Products /completed
operations coverage shall remain in effect for not less than two (2) years
after expiration or earlier termination of this Agreement.

 

(B)                               Automobile
liability insurance in a combined value of $* for bodily injury, personal
injury and property damage to any person, or persons,

 

                                (C)                          Workers’ Compensation as
required by state statute and Employers’ Liability coverage in a minimum amount
of * per accident/disease.

 

Within 10 days following a request, C&S shall provide to Tops
certificates evidencing the insurance coverages required of C&S under this
Section 8.1(d)(i), stating that that all policies of insurance evidenced
therein may not be terminated, cancelled or modified except upon no less than
thirty (30) days prior written notice to Tops, and reflecting Tops Markets LLC,
6363 Main Street, Williamsville, NY 14221-5898 as the certificate holder and
additional insured.  In addition, within
10 days of a request, C&S shall deliver renewal certificates to Tops, and
C&S will provide evidence that such coverage did not lapse.

 

(e)                                  The limitation on a Party’s
liability to the other Party set forth in Section 8.2(b) to proven or
actual direct damages (including Damages) made or suffered or incurred by the
other Party, will not apply with respect to claims under this Section 8.1
for indemnification of Losses incurred by a Party as the result of Third Party
Claims.

 

8. 2                Other Remedies.

 

(a)                                 Notwithstanding anything set forth in this Agreement to the contrary, if
Tops believes in good faith that (A) C&S (i) has breached or
otherwise failed to perform or comply with any of C&S’s covenants,
obligations or agreements under this Agreement, including, without limitation,
the provisions of Section 1.6 hereof, (ii) has breached any of its
representations or warranties set forth in this Agreement or (iii) has
engaged in any action (or failed to engage in any action) constituting willful
misconduct or gross negligence in the performance of any Services or Other
Services hereunder (each of the actions contemplated in clauses (i),
(ii) and (iii) above, a “Breach”), and (B) any such Breach has
resulted in any losses, damages, liabilities, charges, costs or expenses
(collectively, “Damages”) to Tops, then Tops shall give written notice thereof
to C&S, which

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

31

 

notice will reasonably specify the nature of
the Breach (and will cite the relevant provision(s) of this Agreement, if
applicable) and the amount of Damages Tops alleges has resulted from such
Breach.  C&S shall respond to Tops in
writing within 30 days after the date on which C&S receives Tops’ written
notice (or such other reasonable time period as agreed to by the Parties in
writing, provided such writing expressly sets forth an intention to modify such
30-day period).  If C&S fails to
respond to Tops in writing within such 30-day period, or if C&S does not
dispute the matters set forth in Tops’ written notice in its written response,
then the amount of Damages alleged in Tops’ written notice will be conclusively
deemed to be an obligation of C&S, and C&S shall pay, in cash, to Tops,
within fifteen days after the expiration of such 30-day period, the amount
specified in Tops’ written notice.  If
C&S delivers a written response to Tops within such 30-day period indicating
that it disputes one or more of the matters identified in Tops’ written notice,
the dispute shall be resolved in accordance with Section 10.1; provided,
that if such resolution results in a determination that (x) C&S has
committed a Breach and (y) such Breach has resulted in Damages to Tops,
then C&S shall be responsible for the amount of any and all such Damages
and Tops may pursue all legal remedies against C&S in respect thereof.  The remedies provided in this
Section 8.2(a) will not be exclusive of or limit any other remedies
that may be available to Tops in law or equity, subject to
Section 10.1.  The Parties
hereto agree that the prevailing party shall be entitled to recover in addition
to any other appropriate amounts, from the other Party, upon final resolution
of any dispute hereunder, reasonable attorneys’ fees and expenses.  In
the event C&S has a claim for Damages to C&S resulting from (x) a
breach or failure to perform or comply by Tops with any of Tops’ covenants,
obligations or agreements under this Agreement, including, without limitation,
the provisions of Section 7.1(c) hereof, (y) Tops’ breach of any
of its representations or warranties set forth in this Agreement or
(z) Tops’ engagement in any action (or failure to engage in any action)
constituting willful misconduct or gross negligence in the performance of any
of its obligations hereunder (each of the actions contemplated in clauses (x),
(y) and (z) above, a “Tops Breach”), C&S may initiate the dispute
resolution process in the same manner as set forth above and the term “Breach”
shall be replaced with the term “Tops Breach” for purposes hereof.  This Section 8.2 in no way limits the
right of either Party to pursue all legal remedies against the other Party for
any Damages resulting to the Party pursuing such remedies from a Breach or Tops
Breach, as the case may be.

 

(b)                                 Notwithstanding anything
herein to the contrary (but subject to Section 8.1(e)), no Party shall be liable to the other Party for
any damages (including without limitation, Damages) other than any
proven or actual direct damages
(including without limitation Damages) made
against or suffered or incurred by the other Party; provided that “direct
damages” is hereby deemed to include the Termination Fee.

 

(c)                                  Consistent with
Section 2.3(b)(ii), Tops shall be responsible for costs associated with
theft or damage to Merchandise and/or Fixed Assets; provided, however that to
the extent any of such costs are determined to be Damages, in accordance with
Sections 8.2(a) and 10.1, that have resulted from a Breach by C&S,
such costs shall be recoverable by Tops. 
Consistent with Section 4.3(a)(x), Tops shall be responsible for
costs associated with product shrink or out of code, damaged or unsalable
Merchandise; provided, however, that to the extent that any of such costs are
determined to be Damages, in accordance with Sections 8.2(a) and 10.1, to
have resulted from a Breach by C&S, such costs shall be recoverable by
Tops.  Nothing set forth herein this
Section 8.2 shall limit the responsibility of Tops for Costs as set forth
in this Agreement.

 

(d)                                 Notwithstanding Tops’
responsibility to indemnify and/or reimburse C&S for the Transition
Liabilities (as defined below), Tops shall not be responsible for, and shall
not be obligated to indemnify and/or reimburse C&S for, the Transition
Liabilities to the extent any portion thereof is determined to be Damages, in
accordance with Sections 8.2(a) and 10.1, that have resulted from a Breach
by C&S of its obligation to cooperate in good faith to transition the
Services referred

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

32

 

to in Section 10.3(b) to Tops or Tops’ designee during the 60
day period referred to in Section 10.3(b) (it being understood that
it is not a Breach by C&S if C&S has cooperated in good faith to
transition such Services, notwithstanding the actual timing of the completion
of such transition).

 

8.3                   Force
Majeure.

 

(a)                                 To the extent a Party is
rendered unable at any time to perform or comply with any of its obligations
under this Agreement, other than obligations regarding the payment of money, by
reason of act of God, force of nature, fire, or other casualty, eminent domain,
war-like activity, utility failure, insurrection, or civil commotion, shortage
of raw materials or supplies, any Law, or any other cause beyond its reasonable
control, or beyond the control of any person directly or indirectly engaged by
it (any such event being referred to as a “Force Majeure”), the obligations of
such Party  shall be suspended for the duration of
the Force Majeure, but only to the extent such event of Force Majeure impairs
the Party’s ability to perform its obligations under this Agreement.

 

(b)                                 As soon as the Party whose
performance is affected by a Force Majeure (the “Affected Party”) becomes aware
that an event of Force Majeure has occurred or is likely to occur, such
Affected Party  will notify the other Party.  Upon receipt of such notice by the other
Party,  representatives of the Parties shall
meet to establish plans and procedures to overcome or mitigate the effects of
the Force Majeure and the Affected Party  shall use
commercially reasonable efforts to minimize any adverse effects on the other
Party.  Tops shall pay all reasonable
costs and expenses incurred by C&S in overcoming or mitigating the effects
of the Force Majeure and shall continue to pay to C&S all * Services Fees  otherwise payable under this Agreement.

 

(c)                                  The foregoing
notwithstanding, if the Force Majeure causes C&S to be unable to render
material performance of its obligations under this Agreement, which inability
causes (or in Tops’ reasonable business judgment after discussion and review
with C&S, may cause) material damage to Tops, and C&S and Tops are
unable to mutually agree on an alternative course of action which would permit
C&S to continue to provide the Services to Tops, Tops  can
either render such performance itself or obtain such performance from a third
party until C&S is able to resume the performance of the Services.  To the extent C&S is able to perform any
Services for Tops under the circumstances reflected in this clause (c), Tops
will continue to pay to C&S such * Services Fees commensurate with the
Services C&S is able to provide.

 

(d)                                 If an event of Force Majeure
affects C&S’s ability to supply Tops Stores from any Facility but does not
otherwise affect C&S’s operations, then C&S will use commercially reasonable
efforts to supply Tops Stores from another facility operated by C&S,
provided that Tops pays *.

 

(e)                                  Each Party shall maintain a
disaster and recovery plan that is specific to the performance of its
obligations under this Agreement and to the information systems maintained by
it in connection with this Agreement. 
Each Party shall have the right to audit, test, and review the other
Party’s disaster and recovery plan and may conduct on-site interviews with
relevant officers and employees.

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

33

 

ARTICLE 9

 

TERM AND TERMINATION

 

9.1                   Term.  This Agreement will commence
on the Effective Date and shall remain in effect and continue through September 24,
2016 (the “Term”), unless earlier terminated in accordance with this Article 9.  For purposes of this Agreement, the Initial
Contract Year will consist of the period from the Services Commencement Date
until September 25, 2010, as more fully set forth on Exhibit 1.3
hereto.  For clarification, the Term
shall consist of successive 52-week Contract Years (as described in Sections
1.3 and 1.5 and reflected in Exhibit 1.3 hereto) except where a
53-week year is necessary for accounting purposes or to account for the 365 day calendar year.  The Parties shall cooperate in good faith to
ensure that upon the expiration or earlier termination of the Term, the
Services, Other Services and inventory of Merchandise held on Tops’ behalf at
the Facilities is transitioned and transferred to Tops or Tops’ designee (at
Tops’ expense).

 

9.2                   Termination
by C&S.

 

(a)                                 C&S may
terminate this Agreement for cause: (i) if Tops fails to pay any amount to
C&S when due (including without limitation, any amount as contemplated by
the Triggering Event set forth in Section 7.1(c)(ii)(B)) and such failure
continues for * after C&S has provided Tops with written notice of such
failure; (ii) if Tops has breached any other material obligation (other
than a payment obligation which is covered under clause (i) above) under
this Agreement, and if such breach is curable, remains uncured after *
following written notice of such breach from C&S; (iii) if Tops is subject
to an Event of Bankruptcy and such termination is effected prior to the
approval of the applicable plan of confirmation by the applicable bankruptcy
court with respect to the applicable Event of Bankruptcy; (iv) *; or (v) upon
the occurrence of a Triggering Event under Section 7.1(c)(ii)(C)(I) or
(II) of this Agreement or (y) if default shall occur under any
mortgage for which Tops is an obligor with respect to any Facility from which
any of the Services are provided and, in each case, Tops has not cured such
default within the permitted cure period, if any.  In the event of termination by C&S,
C&S will reasonably cooperate with the orderly transfer of operations to
another supplier, provided that Tops will reimburse C&S for any and all
reasonable documented out of pocket expenses incurred by C&S in connection
with such transfer and will pay C&S in full for any services, including any
Services, required of C&S in order to effectuate such orderly transfer or
otherwise requested by Tops to be performed by C&S.

 

(b)                                 If C&S
terminates this Agreement pursuant to this Section 9.2 or if Tops
terminates this Agreement pursuant to Section 9.3(b), or in connection
with a termination pursuant to Section 9.6, then, to the extent so
requested by C&S, Tops will immediately:

 

(i)                                     pay C&S all
sums due to C&S under the Agreement through the effective date of
termination;

 

(ii)                                  pay the
Termination Fee set forth in Section 9.5; provided that such Termination
Fee shall not be payable in connection with a termination pursuant to Section 9.6;

 

(iii)                               if requested by
C&S, purchase (A) any or all of the assets employed by C&S in any
Dedicated Facility, including any or all Fixed Assets * and (B)

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

34

 

any and all other assets purchased by C&S with Tops’ knowledge in
connection with the Services provided to Tops from a Shared Facility, in each
case, at each such asset’s respective book value (the “Assets”);

 

(iv)                              purchase at the
* any and all saleable inventory purchased by C&S for delivery to Tops (the
“Inventory”) and pay any costs related to the transfer or disposition thereof;

 

(v)                                 assume by way
of assignment any and all of C&S’s obligations arising out of or related to
the collective bargaining agreements at the Facilities, unless Tops elects to
have C&S terminate the employment of all employees covered by such
collective bargaining agreements with Tops to pay any and all costs related
thereto;

 

(vi)                              reimburse
C&S for any and all severance costs incurred by C&S as a result of
C&S terminating the employment of individuals providing services to Tops
hereunder at any Facility from which C&S is then providing Services,
including, but not limited to any and all WARN costs incurred by C&S except
costs that C&S could reasonably avoid in connection with any termination of
employees related to a termination of this Agreement pursuant to Section
9.3(b); and

 

(vii)                           indemnify,
defend and hold C&S and/or any its Affiliates including Erie, harmless from
and against any and all occupancy costs (including without limitation
maintenance, security, depreciation, property taxes, rent, heat, electricity,
sewer and water, license fees, and insurance) related to or arising out of any
leases with respect to any * Facility, *.

 

C&S will use its commercially reasonable efforts to mitigate the
amounts that Tops is required to pay C&S under this Section 9.2(b).   C&S will communicate its decision as to
whether it wishes for Tops to purchase the Assets and Inventory or undertake any
of the other obligations set forth above within (i) * following the last day of
this Agreement following a termination under Section 9.2(a) (other than Section
9.2(a)(ii)),  * or 9.3(b), or (ii) *
prior to the day this Agreement terminates in the event of a termination under
Section 9.2(a)(ii).

 

(c)                                  The Parties
agree and acknowledge that, in connection with a termination pursuant to
Section 9.2(a), the remedies under this Section 9.2 are nonexclusive and
additional to all other rights or remedies in law or equity of C&S.

 

(d)                                 *

 

(i)                                     *

 

(ii)                                  *

 

*

 

9.3                   Termination
by Tops.

 

(a)                                  Tops may
terminate this Agreement for cause: (i) if C&S fails to pay any material
amount to Tops when due and such failure continues for * after Tops has
provided C&S written notice of such failure; (ii) if C&S has breached
any other material obligations under this Agreement, and if such breach is
curable, remains 

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

35

 

uncured after * following written notice of such breach from Tops;
(iii) if C&S is subject to an Event of Bankruptcy; or (iv) in the event of
a Service Level Default as described under Section 3.10(f) hereof.  In the event of termination by Tops
hereunder, C&S will reasonably cooperate with the orderly transfer of
operations to another supplier, provided that Tops will reimburse C&S for
any and all reasonable documented out-of-pocket expenses incurred by C&S in
connection with such transfer, and that Tops will pay C&S in full for any
services in connection therewith, including any Services C&S is required to
perform in order to effectuate such orderly transfer or otherwise requested by
Tops to be performed by C&S. 
Termination by Tops under this Section 9.3(a) will not trigger Section
9.4 or Section 9.5.  The remedies under
this Section are nonexclusive and additional to all other rights or remedies in
law or equity of Tops.   Tops will use
its commercially reasonable efforts to mitigate any damages related to a
termination under this Section 9.3.

 

(b)                                 Tops may
terminate this Agreement prior to its expiration at the end of the Term,
without cause, including by way of a rejection of this Agreement in connection
with an Event of Bankruptcy, provided that Tops has notified C&S in writing
of its intent to terminate this Agreement at least * prior to the effective
date of termination (other than in connection with a rejection in connection
with an Event of Bankruptcy).  If the
circumstances relating to such termination relate to a sale of Tops or
substantially all of its assets to any self-distributor, such notice shall also
describe in reasonable detail the circumstances relating to such termination.  Notwithstanding anything herein to the
contrary, any termination pursuant to this Section 9.3(b) shall be effective
only upon Tops’ performance in full of all of its obligations under Section
9.2(b) including, but not limited to, payment in full of the Termination Fee
set forth in Section 9.5.  In the event
of termination by Tops hereunder, C&S will reasonably cooperate with the
orderly transfer of operations to another supplier, provided that Tops will
reimburse C&S for any and all reasonable documented out-of-pocket expenses
incurred by C&S in connection with such transfer, and that Tops will pay
C&S in full for any services in connection therewith, including any
Services C&S is required to perform in order to effectuate such orderly
transfer or otherwise requested by Tops to be performed by C&S.

 

9.4                   Expiration
of Term.  Unless
earlier terminated as provided under Sections 9.2 or 9.3, this Agreement shall
expire at the end of the Term.  Upon the
expiration of the Term, C&S, at its discretion, may seek to sell the
Assets.  If C&S elects to sell the
Assets, then upon such sale, Tops shall pay to C&S * C&S will
communicate its decision as to whether it wishes to sell the Assets at least *
prior to the last day of the Term.  In
addition, upon the expiration of the Term and at the request of C&S, Tops
will:

 

(a)                                  pay C&S all
sums due to C&S under the Agreement through the effective date of
termination;

 

(b)                                 purchase the
Inventory at the *, and pay any costs related to the transfer or disposition
thereof;

 

(c)                                  assume by way
of assignment any and all of C&S’s obligations arising out of or related to
the collective bargaining agreements at the Facilities, unless Tops elects to
have C&S terminate the employment of all employees covered by such
collective bargaining agreements with Tops to pay any and all costs related
thereto; and

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

36

 

(d)                                 reimburse
C&S for any and all severance costs incurred by C&S as a result of
C&S terminating the employment of individuals providing services to Tops
hereunder at any Facility from which C&S is then providing Services,
including, but not limited to any and all WARN costs incurred by C&S in
terminating  employees; and

 

(e)                                  if Tops has
approved in writing the entry into any lease with respect to any * Facility
having a term in excess of the Term, then Tops will indemnify, defend and hold
C&S and/or any its Affiliates harmless from and against any and all
occupancy costs (including without limitation maintenance, security,
depreciation, property taxes, rent, heat, electricity, sewer and water, license
fees, and insurance) related to or arising out of any leases with respect to
such * Facility.

 

9.5                   Termination
Fee.  Commencing as of the Effective
Date of this Agreement, a  “Termination
Fee”, in the amount set forth below, shall be immediately payable by Tops to
C&S if this Agreement is terminated either: (i) by C&S pursuant to
Section 9.2(a) (as contemplated by Section 9.2(b)); (ii) *; or (iii) by Tops
pursuant to Section 9.3(b).  The amount
of the Termination Fee payable shall be as follows:

 

*

 

The Parties acknowledge that it would be difficult and costly to assess
and establish C&S’s losses arising out of a termination of this Agreement
without cause by Tops under Section 9.3(b) and that the Termination Fee set
forth herein, plus the remedies stated under 9.2(b), are the exclusive, liquidated
remedy available to C&S for a termination by Tops under such
provision.  Nonetheless, the Parties
agree that the Termination Fee, together with all other applicable payments and
remedies set forth in Section 9.2(b), are reasonable in light of the costs
C&S will incur to perform its obligations under this Agreement and the
damages C&S will suffer in the event of such termination.  Nothing herein, however, shall act as a
waiver of C&S’s rights to collect amounts properly due and owing under this
Agreement, including but not limited to payments for Merchandise and Service
Fees, any other amounts accrued prior to the termination of this Agreement, and
amounts payable in respect of Tops’ indemnification obligations set forth in
Section 10.3.

 

9.6                   Force Majeure.   Either Party shall have the right to
terminate this Agreement without penalty if due to a Force Majeure event which
has occurred and is continuing, C&S is unable to perform any material
obligation, as and when required, under this Agreement for more than *.

 

ARTICLE 10

 

MISCELLANEOUS

 

10.1    Dispute
Resolution.  The Parties
shall attempt in good faith to resolve any dispute arising out of or relating
to this Agreement promptly by negotiation between executives who have authority
to settle the controversy and who are at a higher level of management than the
persons with direct responsibility for administration of this Agreement. Any
Party may give the other Party written notice of any dispute not resolved in
the normal course of business. Within 15 days after delivery of the notice, the
receiving Party shall submit to the other a written response. The notice and
the response shall include (a) a statement of each Party’s position and a
summary of arguments supporting that position, and (b) the name and title
of the executive who will represent that Party and of any other person who will

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

37

 

accompany
the executive. Within 30 days after delivery of the disputing Party’s notice,
the executives of both Parties shall meet at a mutually acceptable time and
place, and thereafter as often as they reasonably deem necessary, to attempt to
resolve the dispute.  All reasonable
requests for information made by one Party to the other will be honored.

 

If the matter has not been resolved within 60 days
of the disputing Party’s notice, or if the Parties fail to meet within 30 days,
either Party may initiate arbitration of the controversy or claim as provided
hereinafter.

 

All negotiations pursuant to this Section 10.1
are confidential and shall be treated as compromise and settlement negotiations
for purposes of the Federal Rules of Evidence and state rules of
evidence.

 

Any dispute arising out of or relating to this
Agreement, directly or indirectly, or the subject matter, breach, termination
or validity hereof, which has not been resolved by a non-binding procedure as
provided herein, shall be settled by arbitration in accordance with the rules of
the American Arbitration Association (“AAA”) with the sole exception of
circumstances involving irreparable injury to the other Party that is not
adequately compensable in damages or at law, in which case the injured Party
shall have the right to bring an action in a court of competent jurisdiction to
seek an appropriate equitable relief, including injunctive relief. The
arbitration shall be conducted by a single independent and impartial arbitrator
having experience in the grocery industry who shall be selected by the Parties
within 20 days after the commencement of the arbitration proceeding; provided,
however, that if the Parties cannot agree on the selection of the arbitrator by
the expiration of such 20 day period, the Party requesting the arbitration may
initiate arbitration and request the AAA to appoint the arbitrator.  The arbitration shall be governed by the
United States Arbitration Act, 9 U.S.C. § 1- 16, and judgment upon the award rendered
by the arbitrator may be entered by any competent federal or state court having
jurisdiction thereof. The place of arbitration shall be Albany, New York. The
arbitrator’s award shall be duly made in writing within thirty (30) days after
the hearings in the arbitration proceedings are closed, and such award shall be
binding and conclusive on all Parties to this Agreement.  The arbitrator is empowered to award damages
in excess of compensatory damages, subject to the terms of this Agreement.

 

Judgment
upon the Award may be sought and entered in any competent federal or state
court located in the United States of America. 
An application may be made to such court for confirmation of the Award
and for any other equitable or legal remedies that may be necessary to
effectuate such Award or otherwise preserve any rights for which no adequate
remedy at law exists.

 

The
Parties understand and agree that they hereby are giving up and waiving any
claim or right to litigate in court or by a jury trial, unless or to the extent
that such rights are specially provided for under this Agreement or cannot be
waived under applicable Law.

 

10.2    Audit and Access Rights.

 

(a)           Books
and Records. C&S shall maintain complete and detailed records, data,
information and statements in auditable form and quality in respect of its
activities related to the provision of the Services and as to all of C&S’s
other obligations under this Agreement, as information integrated into the
overall financial statements maintained by C&S in the ordinary course of
business.  C&S shall maintain such
records consistent with GAAP.  C&S
shall prepare and maintain in for a period of not less than five (5) years
following the end of each of its fiscal years, adequate books and records with
respect to: (i) the

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

38

 

performance
of the Services, and all of its other obligations under this Agreement with
respect to the Services; (ii) all amounts charged or credited by C&S
to Tops hereunder; (iii) all Costs arising under this Agreement, (iv) such
other records, data or information as may be otherwise required under this Agreement
or reasonably requested by Tops from time to time,  and (v) with respect to the Other
Services, such records as are necessary for Tops to verify the amounts received
by Tops pursuant to such Other Services, it being expressly understood that any
records or other information with respect to C&S’s costs and income with
respect to such Services are not subject to the rights set forth in this
Section 10.2 (collectively, the “Books and Records”).  The Books and Records shall be maintained
consistent with GAAP, consistently applied, and shall be in a form suitable for
audit, review and copying and shall be made available as reports produced from
C&S’s overall financial statements maintained by C&S for its entire
operations in the ordinary course of business. 
All Books and Records shall be maintained in accordance with C&S’s
then current document retention policy. 
Tops will be provided access to, and the right to audit, any information
Tops reasonably determines it needs in order to verify any of the items listed
in subsections (i) through (iv) above or any matters to be audited
pursuant to Section 10.2(c), provided, however, that Tops will not be
provided access to data or information relating to the Other Services as
relates to C&S’s costs and income with respect to such Services, or other
customers of C&S or information unrelated to the performance of the
Services and the Other Services, except to such limited extent as may be
necessary to verify cost allocations at a Shared Facility.

 

(b)           Financial
Statements.  Tops shall promptly
deliver to C&S (i) annual financial statements for the operations of Tops
all prepared in accordance with GAAP (such financial statements to include
income statements, balance sheets and cash flow statements) audited and certified
to by an independent registered public accounting firm, after such financial
statements have been issued by such public accounting firm, within 90 days
following the end of Tops’ fiscal year, and (ii) internally prepared quarterly
financial statements within 45 days following the end of each of Tops’ fiscal
quarters. C&S will promptly deliver to Tops audited financial statements
for the year-end period, which have been certified to by a registered public
accounting firm, after such financial statements have been issued by such
accounting firm. 

 

(c)           Right
to Audit/Access to Books and Records. 
Subject to clause (d) below and to Section 3.11(e), C&S
shall permit Tops and its officers, directors, representatives, counsel,
advisors and other agents (and subject to each such individual’s agreement to
comply with C&S’s requested policies and procedures as referred to in
Section 3.11(e), if so permitted), upon reasonable notice (which Tops
acknowledges shall in no event be less than two (2) weeks) and during normal
business hours, the inspection of and access to the Facilities and the Books
and Records for the purpose of auditing: 
(i) the performance of the Services and the Other Services (but
with respect to the Other Services, only as necessary for Tops to verify the
amounts received by Tops pursuant to such Other Services, it being expressly
understood that any records or other information with respect to C&S’s
costs and income with respect to such Other Services are not subject to the
rights set forth in this Section 10.2); (ii) the conformity to this
Agreement of charges and calculations of charges for all Costs * to Tops, and
for all other calculations related to this Agreement and the performance of the
Services, including, without limitation (a) *, and (b) the
calculation and administration of any Cost Savings Gainshare Incentive Fee;
(iii) preparation and maintenance of records related to the Services and
Other Services in so far as such records relate to the verification of amounts
received by Tops pursuant to such Other Services; (iv) the Costs and
back-up and other information supporting the calculations for any payments
required to be made by Tops hereunder; (v) Service Level Reconciliation 

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

39

 

Reports,
Required Service Levels and actual service levels; and (vi) C&S’s
records in order to confirm that *, and any other amount due to or charged to
Tops are calculated and administered in accordance with the terms and
conditions of this Agreement and (vii) any other matter relating to
amounts that were (or reasonably should have been) charged to, or that were (or
reasonably should have been) *, subject to the limitations set forth in this
Agreement.  The right of access under
this Section 10.2(c) shall, subject to Section 3.11(e), include
the right to discuss such documentation with C&S’s employees,
representatives and, if expressly permitted by C&S in each instance,
outside vendors having knowledge of their contents, and C&S shall instruct
all such employees, representatives or, if applicable, third-party vendors to
fully cooperate with any request for information made by Tops to such employee,
representative or third-party vendor.  To
the extent Tops engages any third party auditing firm in connection with any
audit, upon C&S’s request, prior to commencement of the audit, Tops shall
require such third party auditing firm to execute any reasonable
confidentiality agreement provided by C&S and otherwise adhere to any
policies and procedures which may be required by C&S as contemplated by
Section 3.11(e).

 

(d)           Frequency
and Scope.  Tops will be limited to
no more than one (1) audit during each Contract Year and each audit will
be limited to the review of information related to the * period immediately
preceding the audit, and any remedies or recoupment of monies due as the direct
result of any errors discovered pursuant to any such audit will be limited to
such * period, excluding any months that were covered by an audit in a prior
year.  Any audit will be conducted at
C&S’s premises and shall be completed within 60 days or such other
reasonable time period agreed to by the Parties.  The Parties’ mutual objective is to identify
and resolve any errors promptly after they occur rather than to rely upon the
audit procedure to identify errors.  All
Books and Records subject to audit and review hereunder will be subject to the
confidentiality provisions set forth in Section 10.17.  Notwithstanding anything to the contrary set
forth herein, failure by Tops to challenge the amount of any *, Cost, or the
Services Fee or information related thereto within the * period immediately
following the date such amount is invoiced or rebated to Tops shall be deemed
to be Tops’ agreement and consent to such invoiced or rebated amounts, and Tops
shall thereafter waive any claim or right to adjust, modify or recover any
amounts related thereto.

 

(e)           Deficiencies.  Subject to the foregoing, if an audit or
review reveals that any amounts paid or charged to Tops have been overstated or
understated, then C&S shall issue a charge or credit, as applicable, to
correct such overstatement or understatement. 
The amount of the credit or charge will be subject to a variable late
fee equal to * calculated on a daily basis from the date any payment
constituting the credit or charge, as the case may be, was due.

 

(f)            Confidentiality.  For clarification, any and all information
provided by C&S in connection with an audit to Tops and/or its accounting
firm pursuant to this Section 10.2 including, but not limited to any
audited financial statements and other financial information, will be subject
to Section 3.11(e) and the Confidential Information provisions set
forth in Section 10.17 below and in any separate confidentiality agreement
C&S may require the third party accounting firm to execute.

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

40

 

10.3            *

 

(a)                                  *:

 

(i)                                     *

 

(ii)                                  *

 

(iii)                               *.

 

(iv)                              *

 

(v)                                 *

 

*

 

*

 

*

 

*

 

(A)                              *

 

(B)                                *

 

(b)                                 *:

 

(i)                                     *

 

(ii)                                  *

 

*

 

*

 

*

 

(c)                                  *  Notwithstanding anything to the contrary set
forth in this Agreement, in no event shall *, including without limitation, any
* in connection with any *. 
Notwithstanding anything to the contrary set forth in this Agreement, in
no event will * in connection with, any * as the result of *.

 

(d)                                 Other Matters.  Promptly, and in any event within * after
C&S receives any written communication from* C&S *.  The provisions of this * are solely intended
to bind Tops and C&S and may not be relied on or enforced by any person not
a party to this Agreement *; provided that any applicable Affiliate of C&S
*, may rely on or enforce such provisions.

 

10.4            Headings. The insertion
of headings are for convenience of reference only and shall not affect the
construction or interpretation of this Agreement.

 

10.5            Extended
Meanings.     In this Agreement words importing the
singular number only include the plural and vice versa, words importing the
masculine gender include the feminine and neuter genders and vice versa and
words importing persons include 

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

41

 

Execution Copy

 

individuals,
partnerships, associations, trusts, unincorporated organizations and
corporations.

 

10.6            Accounting
Principles. Wherever in this Agreement
reference is made to a calculation to be made in accordance with generally
accepted accounting principles consistently applied (“GAAP”), such reference
shall be to generally accepted accounting principles of the United States of
America from time to time recommended by the Financial Accounting Standards
Board (FASB), or any successor, applicable as at the date on which such
calculation is made or required to be made.

 

10.7            Currency.  All references to dollar amounts in this
Agreement are to lawful money of The United States of America.

 

10.8            Applicable
Law of Contract. This Agreement shall be
governed by the laws of the State of New York, without regard to its conflict
of laws provisions, and the laws of The United States of America as applicable
in such State.

 

10.9            Legal
Relationship/Independent Contractor.

 

(a)                                  The legal relationship of
C&S and Tops to each other shall be that of independent contractors, and
neither Party shall be the agent or legal representative of the other for any
purpose.  Neither Party shall have the
right or authority to bind or obligate the other to any third party for any purpose
whatsoever.

 

(b)                                 It is expressly intended by
the Parties, and each Party hereby specifically warrants, represents and agrees
that it (the “Performing Party” for the purposes of this Section) is an
independent contractor having its own respective established place of business
and all persons assisting the Performing Party in the performance of its
obligations under this Agreement are and shall be deemed the employees of the
Performing Party or under contract to the Performing Party for all purposes,
and not of the other Party or any Affiliate of the other Party.  It is further intended and agreed that each
Party shall have sole control of the manner and means of performing its
obligations under this Agreement.  The
specific means of accomplishing the purposes of this Agreement shall be left to
the discretion of the Performing Party. 
Each Party agrees that its officers, managers, or other management or
supervisory personnel employed by them shall effect such management, direction
and control in the sole and complete discretion of such Party.  Furthermore, Tops agrees and acknowledges
that, in connection with the performance of the Services or its obligations
under this Agreement, C&S may at any time enter into a subcontract for
services with a third party contractor, which may include any Affiliate of
C&S.

 

10.10     Notices.   Any demand, notice or other communication to
be given in connection with this Agreement shall be in writing and shall be
given by personal delivery, by overnight courier, by registered mail or by
facsimile or electronic means of communication addressed to the recipient at
the address set forth below or to such other address, individual or electronic
communication number as may be designated by notice given by either Party to
the other.  Any demand, notice or other
communication shall be conclusively deemed to have been given (i) on the day of
actual delivery if given by personal delivery; (ii) on the next business day if
given by overnight courier; (iii) on the third business day following 

 

42

 

deposit
in the mail if given by registered mail; and (iv) on the day of transmittal if
given by facsimile or electronic communication during the normal business hours
of the recipient and on the next following business day if not given during
such hours on any day.

 

If
to C&S:

 

C&S
Wholesale Grocers, Inc.

7
Corporate Drive

Keene,
NH 03431

Attn:
Richard B. Cohen, Chairman and Chief Executive Officer

Phone:
(603) 354-4601

Fax:
(603) 354-4692

 

   with
a copy to:

 

General
Counsel

Phone:
(603) 354-5885

Fax:
(603) 354-4694

 

If
to Tops:

 

Tops Markets, LLC

P.O. Box 1027

Buffalo, NY 14240-1027

Attention:
Frank Curci, Chief Executive Officer

Phone:  (716) 635-5124

Fax:  (716) 635-5102

 

   with
a copy to:

 

Kevin
Darrington, Chief Financial Officer

Phone:  (716) 635-5170

Fax:  (716) 635-5107

 

   with
a copy to:

 

Morgan
Stanley Capital Partners V U.S. Holdco, LLC

1585
Broadway, Floor 29

New
York, New York  10036

Attention:  Gary S. Matthews

Phone:  (212) 761-4737

Fax:  (201) 214-6371

 

10.11     Further
Assurances. Each of C&S and Tops
shall from time to time execute and deliver all such further documents and
instruments and do all acts and things as the other Party may reasonably
require to effectively carry out or better evidence or perfect the full intent
and meaning of this Agreement.

 

10.12     Benefit
of the Agreement. This Agreement shall inure
to the benefit of and be binding upon C&S, Tops and their respective
assigns and successors, including any transferee of substantially all of the
assets of either Party.  Tops further
agrees that any Affiliate of C&S, though it may not be a party to this
Agreement, may be a third party beneficiary of certain of the terms and
conditions set forth in this Agreement, and that in addition to C&S, any 

 

43

 

such
Affiliate may enforce such term or condition directly against Tops as if it
were a party to this Agreement.

 

10.13     Continued
Provisions.  Notwithstanding any expiration or termination
of this Agreement, (i) the indemnification obligation of both Parties as set
forth in Article 8; (ii) the obligations of the both Parties upon
termination of this Agreement as set forth in Article 9; (iii) the
confidentiality and non-solicitation provisions set forth below; (iv) the obligations
to pay any and all amounts payable and outstanding as of the expiration or
termination of this Agreement, including those which may arise as the result of
the expiration and termination of this Agreement, and (v) any other provision
which expressly or by its nature is intended to survive termination of this
Agreement (which will include, without limitation, this Article 10) shall
survive and such expiration or termination, shall continue in full force and
effect, and remain enforceable in accordance with their terms.

 

10.14     Entire
Agreement.  This Agreement together with all Schedules
and Exhibits hereto constitutes the entire agreement between the Parties with
respect to its subject matter and cancels and supersedes any prior
understandings and agreements between the Parties with respect to such subject
matter,*.  There are no representations,
warranties, terms, conditions, undertakings or collateral agreements, express,
implied or statutory, between the Parties other than as expressly set forth in
this Agreement.

 

10.15     Amendments
and Waiver.   No modification of or amendment to this
Agreement shall be valid or binding unless in writing and duly executed by both
of the Parties and no waiver of any breach of any term or provision of this
Agreement shall be effective or binding unless made in writing and signed by
the Party purporting to give the same and, unless otherwise provided, shall be
limited to the specific breach waived.

 

10.16     Authority;
Assignment.

 

(a)                                  Each Party hereby represents
and warrants that it has the full power and authority to enter into this
Agreement and the individual signing this Agreement is authorized to bind such
Party hereby.

 

(b)                                 This Agreement shall be
binding upon the Parties and their respective successors or assigns, including
any transferee of substantially all of the assets of a Party.  Tops may not assign this Agreement without
the prior written consent of C&S which shall not be unreasonably withheld.  C&S shall not assign this Agreement
without first giving notice to Tops of the intention to make such
assignment.  Tops shall then have * in
which to object, and if Tops objects, C&S shall not carry out the
assignment.

 

10.17     Confidentiality. Each Party (a “Receiver”)
shall not, during the Term or at any time thereafter, transmit Confidential
Information of the other Party (a “Discloser”) to any third person either in
whole or in part.  Each Receiver shall
take all reasonable precautions to safeguard the Confidential Information of
the Discloser from unauthorized disclosure and, at a minimum, shall afford such
Confidential Information such precautions and safeguards as the Receiver
affords to its own confidential information of a similar nature.  Tops also agrees to the heightened confidentiality
restrictions requested or imposed by C&S in connection with the disclosure
of Confidential Information, as contemplated by Section 3.11(e). “Confidential
Information” for purposes of this Agreement shall mean all non-public,
confidential or proprietary information of a Discloser and its clients,
suppliers and customers, including but not limited to, Restricted Information,
information regarding costing, merchandising, procurement, incentive programs,
inventory systems, technology, formulations, transportation, warehouse,
administrative and other technical, financial and

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

44

 

economic data and information, received by the
Receiver in the course of the negotiation of, or performance of its obligations
under, this Agreement.  Accordingly, each
Receiver will also indemnify, defend and hold harmless the Discloser from any
and all claims, demands, suits, actions, proceedings, undertakings, judgments,
liabilities, damages, losses, expenses and costs, including without limitation,
attorney’s fees and costs, involving or incurred by such Discloser, or which
such Discloser may incur, with respect to any claims of third parties arising
with respect to or resulting from any unpermitted disclosure or breach of this Section 10.17
by such Receiver.  The above restrictions
shall not apply to the extent that Confidential Information comes into the
public domain through no fault of the Receiver, is received by the Receiver
from a third party having a bona fide right to disclose such information, is
demonstrably developed or learned by Receiver without reliance on the
Confidential Information (that the presumption being, as hereby agreed to by
the Parties, that such information was developed or learned with reliance on
the Confidential Information once disclosed to the Receiver), is required to be
disclosed by Law (subject to clause (b) below), or required to be
disclosed to enforce any right or obligation under this Agreement (subject to
clause (b) below).

 

(a)                                  Public Notices.  Neither Party shall make any press release or
public announcement regarding this Agreement or otherwise publicly disclose any
of the terms of this Agreement without the prior written consent of the other
Party,  except where required to do so by
the terms of the indenture constituting a Senior Debt Agreement in existence as
of the date hereof (pursuant to which Tops or its Affiliate is the borrower of
Senior Debt in connection with an offering of publicly traded bonds), by Law or
by the applicable regulations or policies of any Federal, State or other
regulatory agency of competent jurisdiction or any stock exchange but only after
prior consultation with the other Party, and the disclosing Party shall
cooperate with the other Party and use commercially reasonable efforts to
ensure that all Confidential Information and other information that is required
to be disclosed in accordance with the above will be accorded confidential
treatment to the fullest extent allowable.

 

(b)                                 Requirement to Disclose.   Wherever in this
Agreement disclosure is permitted if “required by Law”, such disclosure shall
be permitted only if, as promptly as practicable after determining that
disclosure is required or after receipt of any such order, demand or subpoena,
Receiver shall notify the Discloser of such requirement and the scope of the
proposed disclosure and shall simultaneously deliver to the Discloser a copy of
such order, demand or subpoena or, if there is none, a written opinion of its
counsel describing the legal basis upon which such disclosure is required.  The Receiver shall cooperate with all
reasonable requests of the Discloser  for
assistance in preventing or limiting such disclosure.

 

10.18     Definitions.  Exhibit 10.18
attached hereto, which is hereby incorporated into this Agreement, and made a
part of this Agreement for all respects, sets forth the meanings ascribed to
certain capitalized terms used in this Agreement.

 

10.19  Counterparts.  This Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an original and all
of which together shall constitute one and the same instrument.

 

[Signature page follows]

 

45

 

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

 

	
  TOPS
  MARKETS, LLC

  	
   

  	
  C&S
  WHOLESALE GROCERS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Frank Curci

  	
   

  	
  By:

  	
  /s/
  Michael F. Newbold

  
	
  Name:

  	
  Frank
  Curci

  	
   

  	
  Name:

  	
  Michael
  F. Newbold

  
	
  Title:

  	
  President
  and CEO

  	
   

  	
  Title:

  	
  EVP

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  For
  purposes of Sections 9.2(b), *,

  9.4 and 10.3 of this Agreement:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ERIE
  LOGISTICS, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  William M. Boyd, III

  
	
   

  	
   

  	
  Name:

  	
  William
  M. Boyd, III

  
	
   

  	
  Title:

  	
  SVP
  and Secretary

  

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

46

 

LIST OF EXHIBITS

 

	
  Exhibit No.

  	
   

  	
  Name

  
	
  Exhibit 1.3

  	
   

  	
  Contract
  Years

  
	
  *

  	
   

  	
  *

  
	
   

  	
   

  	
      *

  
	
   

  	
   

  	
         *

  
	
  *

  	
   

  	
  *

  
	
   

  	
   

  	
      *

  
	
   

  	
   

  	
         *

  
	
  *

  	
   

  	
  *

  
	
   

  	
   

  	
      *

  
	
   

  	
   

  	
      *

  
	
  *

  	
   

  	
  *

  
	
  *

  	
   

  	
  *

  
	
  *

  	
   

  	
  *

  
	
  Exhibit 3.2

  	
   

  	
  Tops
  Stores (as of the Effective Date)

  
	
  *

  	
   

  	
  *

  
	
   

  	
   

  	
  *

  
	
  *

  	
   

  	
  *

  
	
  *

  	
   

  	
  *

  
	
  *

  	
   

  	
  *

  
	
  *

  	
   

  	
  *

  
	
   

  	
   

  	
      *

  
	
   

  	
   

  	
      *

  
	
   

  	
   

  	
      *

  
	
   

  	
   

  	
      *

  
	
  *

  	
   

  	
  *

  
	
  Exhibit 6.2

  	
   

  	
  Coupon
  Processing Agreement

  
	
  Exhibit 7.1(e)

  	
   

  	
  Financial
  Covenants

  
	
  Exhibit 10.18

  	
   

  	
  Definitions

  

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

47

 

Exhibit 1.3

Schedule
of Contract Years

 

	
   

  	
   

  	
  Start Date

  	
   

  	
  End Date

  	
   

  	
  Weeks

  	
   

  
	
  Initial
  Contract Year

  	
   

  	
  11/22/2009

  	
   

  	
  9/25/2010

  	
   

  	
  44

  	
   

  
	
  Contract
  Year 2

  	
   

  	
  9/26/2010

  	
   

  	
  9/24/2011

  	
   

  	
  52

  	
   

  
	
  Contract
  Year 3

  	
   

  	
  9/25/2011

  	
   

  	
  9/29/2012

  	
   

  	
  53

  	
   

  
	
  Contract
  Year 4

  	
   

  	
  9/30/2012

  	
   

  	
  9/28/2013

  	
   

  	
  52

  	
   

  
	
  Contract
  Year 5

  	
   

  	
  9/29/2013

  	
   

  	
  9/27/2014

  	
   

  	
  52

  	
   

  
	
  Contract
  Year 6

  	
   

  	
  9/28/2014

  	
   

  	
  9/26/2015

  	
   

  	
  52

  	
   

  
	
  Contract
  Year 7

  	
   

  	
  9/27/2015

  	
   

  	
  9/24/2016

  	
   

  	
  52

  	
   

  

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

48

 

*

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the Securities
and Exchange Commission.

 

49

 

*

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

50

 

*

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

51

 

*

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

52

 

*

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

53

 

*

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

54

 

*

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

55

 

*

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

56

 

*

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

57

 

*

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

58

 

*

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

59

 

*

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

60

 

*

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

61

 

*

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

62

 

*

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

63

 

*

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

64

 

*

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

65

 

*

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

66

 

*

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

67

 

*

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

68

 

*

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

69

 

*

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

70

 

*

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

71

 

*

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

72

 

*

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

73

 

*

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

74

 

*

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

75

 

*

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

76

 

*

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

77

 

*

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

78

*

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

79

 

*

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

80

 

*

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

81

 

Exhibit 3.2

TOPS STORES

 

*

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

82

 

*

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

83

 

*

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

84

 

*

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

85

 

*

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

86

 

*

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

87

 

*

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

88

 

*

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

89

 

*

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

90

 

*

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

91

 

*

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

92

 

*

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

93

 

*

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

94

 

*

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

95

 

*

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

96

 

*

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

97

 

*

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

98

 

*

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

99

 

*

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

100

 

*

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

101

 

*

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

102

 

*

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

103

 

*

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

104

 

*

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

105

 

*

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

106

 

*

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

107

 

*

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

108

 

*

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

109

 

*

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

110

 

*

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

111

 

*

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

112

 

*

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

113

 

*

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

114

 

*

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

115

 

*

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

116

 

*

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

117

 

*

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

118

 

*

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

119

 

*

 

*

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

120

 

*

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

121

 

*

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

122

 

*

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

123

 

EXHIBIT 6.2

 

Coupon Processing Services for Tops Markets

 

C&S
Wholesale Grocers, Inc. (“C&S”), is pleased to provide the following terms
applicable to C&S’s manufacturer coupon processing services program for
Tops Markets, LLC (“Tops”), pursuant to which C&S will process coupons *
(the “Coupon Services”) for valid manufacturer coupons (the “Coupons”) that are
submitted by Tops for redemption.  The
terms and conditions set forth in this Exhibit 6.2 to the Supply
Agreement, made as of November 12, 2009 (the “Effective Date”), among
Tops, C&S and, for the purposes set forth therein, Erie Logistics, LLC (the
“Supply Agreement”), are referred collectively as the “Coupon Processing
Agreement”.  Capitalized terms not
defined herein have the meanings set forth in the Supply Agreement.

 

1.                                      *

 

2.                                      Coupons Covered.  This
Coupon Processing Agreement applies to coupon processing for all stores owned
and operated by Tops and its subsidiaries as of the Effective Date of the
Supply Agreement.

 

3.                                      Coupon Processing Procedures.  In connection with the Coupon Services,
C&S will:

 

(a)                                 *,  for
the * pick-up of Coupons at Tops’ headquarters * through an overnight or
less-than-truckload carrier, or as otherwise designated by C&S.

 

(b)                                 *.

 

(c)                                  *

 

(d)                                 *, sort, count and validate the Coupons.  Following verification of the Coupon count
and face values *, C&S will reconcile the actual count, face value *

 

(e)                                  Submit Coupons for redemption to each
applicable vendor and invoice such vendor *.

 

4.                                      Duties of Tops.

 

(a)                                 With respect to each submission of Coupons by
Tops, *, Tops will provide to C&S * report which * designates such *
aggregate Coupon submissions *.

 

(b)                                 Tops will cause each submission of Coupons to
be boxed and properly prepared for shipment at its own expense and in
accordance with instructions provided by C&S.

 

(c)                                  Tops and its stores will only submit Coupons
which have been properly credited to its retail customers in accordance with
the manufacturers’ requirements.  Coupons
which appear to be misredeemed * (collectively referred to as “Misredeemed
Coupons”) will not be accepted or credited. *

 

5.                                      Additional Agreements.

 

(a)                                 To the extent that vendor coupon invoices are
not paid, C&S will attempt to collect unpaid amounts from the applicable
Vendor.  However, Tops will be responsible
for any 

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

124

 

and
all uncollectible coupon invoices, and accordingly, Tops will reimburse C&S
for all amounts previously paid to Tops *.

 

(b)                                 The Parties acknowledge and agree that Tops
shall retain whatever title it has to, and ownership of, any coupons (including
Coupons) submitted for processing. 
C&S will acquire no title or interest in any Coupons received from
Tops or its stores.  *  Tops shall indemnify C&S for any Losses
to which C&S is or may be subject, arising out of or related to
(i) any Misredeemed Coupons, (ii) any coupons submitted by Tops which,
or the processing of which, violates or fails to comply with any state, federal
or local laws, rules, regulations or policies or accepted industry guidelines
and practices,* and (iii) the negligence or willful misconduct of Tops in
connection with the Coupon Services, including without limitation, the
submission of coupons for processing hereby.

 

(c)                                  *

 

(d)                                 *

 

6.                                      Effective Date.  This
Coupon Processing Agreement shall be effective as of the Effective Date.

 

7.                                      Term; Termination.  The “Term” of this Agreement will begin on
the Effective Date and continue through and until expiration of the Term as
defined in the Supply Agreement (subject to the earlier termination of the
Supply Agreement as set forth therein or this Coupon Services Agreement).  *

 

8.                                      Confidentiality.  Each
Party shall keep the terms of this Coupon Processing Agreement confidential and
neither will disclose the same to any third party except in compliance with
Section 10.17 of the Supply Agreement.

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

125

 

Exhibit 7.1(e)

 

Financial Covenants

 

The
only Financial Covenant in effect as of the Effective Date is as follows:

 

Pursuant
to the Senior Debt Agreement, during the continuance of a Covenant Compliance
Event (as defined in the Senior Debt Agreement), Tops may not permit the
Consolidated Fixed Charge Coverage Ratio (as defined in the Senior Debt Agreement),
calculated as of the occurrence of such Covenant Compliance Event and as of the
last day of each Fiscal Period (as defined in the Senior Debt Agreement)
thereafter based upon the most recent Measurement Period (as defined in the
Senior Debt Agreement) to be less than 1.10 to 1.00.

 

126

 

EXHIBIT 10.18

 

DEFINITIONS

 

“* Period” has the
meaning set forth in Section 7.1(c)(i)(B).

 

“2009 Budget” has the
meaning set forth of Section 1.5.

 

*

 

“Accounts Receivables *” has the
meaning set forth in Section 6.3.

 

“Actual Costs” has the
meaning set forth in Section 4.5.1.

 

“Actual Gainshare Costs” has the
meaning set forth in Section 4.7(b).

 

*

 

“Additional Services”  has the meaning
set forth in Section 5.5.

 

“Adjusted Baseline Budget” has the meaning
set forth in Section 4.7(c).

 

*

 

“Affected Party” has the
meaning set forth in Section 8.3(b).

 

“Affiliate”  , with respect to a Party, means any person or entity that, directly or
indirectly, is controlled by, controls or is under common control with such
Party; provided, that neither Morgan Stanley
nor Morgan Stanley Capital Partners V Funding LP nor any of their respective
Affiliates (other than Tops Holding Corporation and its subsidiaries) shall be
deemed to be an “Affiliate” of Tops for any purpose under this Agreement.

 

“Agreement” means this Supply Agreement, including the Schedules and Exhibits to
this Agreement, as it or they may be amended or supplemented from time to time,
and the expressions “hereof”, “herein”, “hereto”, “hereunder” and similar
expressions refer to this Agreement and not to any particular portion or
section of this Agreement.

 

“Allocation Ratio” has the meaning
set forth in Section 4.3(b).

 

“Approved Budget” has the
meaning set forth in Section 4.2.

 

“Asset” has the
meaning set forth in Section 9.2(b)(iii).

 

“Baseline Budget” has the
meaning set forth in Section 4.7(a).

 

“Baseline Costs” has the
meaning set forth in Section 4.7(b).

 

“Base Management Fee” has the
meaning set forth in Section 5.2.

 

*

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

127

 

“Books and Records” has the
meaning set forth in Section 10.2(a).

 

*

 

“C&S” has the
meaning set forth in the introductory paragraph, and unless expressly provided
otherwise in this Agreement, such term does not include any Affiliate of
C&S for any purpose under this Agreement.

 

“Confidential Information” has the meaning set forth in Section 10.17.

 

“Contract Quarter”  means C&S’s
four (4) fiscal quarters, which together comprise C&S’s fiscal year.

 

“Contract Week” means any
period of seven (7) consecutive calendar days commencing on a Sunday and
concluding on a Saturday during any Contract Year.

 

“Contract Year”  means a 52-week
period (or 53-week period every five to six years) that runs through the last
Saturday in September.  Each Contract
Year is comprised of four (4) Contract Quarters.  The schedule of Contract Years for the Term
is set forth on Exhibit 1.3.

 

“Costs” has the
meaning set forth in Section 4.1.

 

“Cost Savings Gainshare
Incentive Fee” has the meaning set forth in Section 5.3(a).

 

“Coupon Processing Services” has the
meaning set forth in Section 6.2.

 

*

 

“Dedicated Facility” means any
Facility (or Facilities) utilized for the performance of Services hereunder to
the extent, and for so long, that it is dedicated to the performance of such
Services exclusively to Tops, else it is a Shared Facility.

 

“Effective Date” has the
meaning set forth in the introductory paragraph to this Agreement.

 

“ES3” means ES3, LLC,
an Affiliate of C&S.

 

“Event of Bankruptcy” means, with
respect to a Party, that such Party (i) becomes insolvent;
(ii) commits an act of bankruptcy; (iii) becomes subject to any
voluntary or involuntary bankruptcy proceedings * (iv) makes an assignment
for the benefit of creditors; (v) appoints or submits to the appointment
of a receiver or a receiver manager for all or any of its assets; (vi) admits
in writing its inability to pay its debts as they become due; or
(vii) enters into or becomes subject to any type of voluntary or
involuntary liquidation or dissolution.

 

“Facilities”  means, for
purposes of this Agreement, any facility from which C&S currently provides,
or may in the future provide, Warehousing Services and/or Transportation
Services, or any portion thereof, * any Dedicated Facility, any Shared Facility
or any Replacement Facility.  Any of the
Facilities referred individually is a “Facility”.

 

“Facility Decision” has the
meaning set forth in Section 2.4(b).

 

“Financial Covenants” has the
meaning set forth in Section 7.1(e).

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

128

 

“Fiscal Accounting Period” means periods
of four consecutive Contract Weeks beginning on the Services Commencement
Date.  In a 53-week Contract Year, one
Fiscal Accounting Period will be comprised five (5) consecutive Contract
Weeks.  Thirteen (13) Fiscal Accounting
Periods comprise each Contract Year.

 

“Fixed Assets” means the
existing fixed assets or items of plant, machinery, equipment and leasehold
improvements directly related to the Services, together with any additional
items of plant, machinery, equipment and leasehold improvements acquired by
C&S during the Term and directly related to the provision of Services.

 

“Flex Budget” has the
meaning set forth in Section 4.4.1.

 

“Flex” or “Flexing” shall mean the process of
adjusting an Approved Budget in accordance with the terms and conditions set
forth in Section 4.4 hereto.

 

“Force Majeure” has the meaning
set forth in Section 8.3(a).

 

“GAAP” has the
meaning set forth in Section 10.6.

 

“Gainshare” has the meaning
set forth in Section 4.7(a).

 

“GM/HBC” means general
merchandise/health and beauty care.

 

“GM/HBC Operations” has the
meaning set forth in Section 1.5(b).

 

“GM/HBC Operating Costs” has the
meaning set forth in Section 4.2.

 

“Index” has the
meaning set forth in Section 5.4.

 

“Initial
Contract Quarter” means the period from the
Services Commencement Date through December 26, 2009.

 

“Initial
Contract Year” has the meaning set forth in Section 9.1.

 

*

 

*

 

“Law” shall be deemed to include
(A) any applicable statute, regulation or policy of The United States of
America or other government, any State or local government or any agency or
authority of any of them having jurisdiction over a Party or its business or
any stock exchange or self-regulatory organization in the securities industry
and (B) any order, demand or subpoena of any such government, agency,
authority, exchange or organization or any court of competent jurisdiction.

 

“Leftover Ad Volume” has the
meaning set forth in Section 3.8.

 

“Losses” has the
meaning set forth in Section 8.1(a).

 

“Mainline Operations” has the
meaning set forth in Section 1.5(a).

 

“Mainline
Operating Costs” has
the meaning set forth in Section 4.2.

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

129

 

*

 

*

 

*

 

“Measurement
Period” has the meaning set
forth in Section 3.10(c).

 

“Merchandise”
has the meaning set forth in
Section 3.1.

 

“Monthly
P&L” has the meaning set
forth in Section 4.5.1.

 

*

 

*

 

*

 

“Other
Services” has the meaning set
forth in Section 6.1, and specifically means the Coupon Processing
Services, the Accounts Receivables *, and the Reclamation Services.

 

“Party”
and
“Parties” has the meaning set forth in the introductory
paragraph to the Agreement.

 

“Penalty
Payment” has the meaning set
forth in Section 3.10(d).

 

“Penalty
Period” has the meaning set
forth in Section 3.10(d).

 

*

 

“Performing
Party” has the meaning set
forth in Section 10.9(b).

 

“Permitted Individuals” has the
meaning set forth in Section 3.11(e).

 

“Permitted Use” has the
meaning set forth in Section 3.11(e).

 

“Person” means any corporation, trust, partnership, limited liability
company, joint venture, or other enterprise or entity.

 

“Prior
Agreement” has the meaning set
forth in the “Witnesseth” section.

 

“Procurement
and Purchasing Services” has
the meaning set forth in Section 3.3(a).

 

“Purchase Terms” has the
meaning set forth in Section 3.3(a).

 

“Recalled Merchandise”
has the meaning set forth in Section 2.3(d).

 

“Reclamation Services” has the
meaning set forth in Section 6.4.

 

“Replacement Facility” means any new
or alternate facility (which may be a Shared Facility) to which C&S may
elect to transition the Warehousing Services and/or Transportation Services, or
any portion thereof, from any of the Facilities then being utilized for such
services, and any facility which C&S may otherwise elect to deliver Merchandise
from, during the Term, which in any case may include any facility operated by
C&S or any Affiliate of C&S.

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

130

 

“Reporting
Requirement” has the meaning set forth in Section 7.1(c)(iii)(A)-(F).

 

“Required Service Level” has the meaning
set forth in Section 3.10(a).

 

“Restricted Information” has the
meaning set forth in Section 3.11(e).

 

*

 

*

 

*

 

*

 

*

 

*

 

*

 

*

 

*

 

*

 

*

 

*

 

*

 

*

 

“Senior
Debt” means, with respect to Tops and/or any direct parent
(which includes Tops Holding Corporation) or direct or indirect subsidiary of
Tops, such entity’s most senior tranche of debt or extension of credit (and any
other tranche of debt or extension of credit that is not subordinated thereto),
which includes without limitation, any bond issuance by such entity, whether
such bond is issued to any private lender or is publicly traded.

 

“Senior Debt Agreement” means any
agreement or agreements (or indenture or indentures), with respect to any
Senior Debt, which reflects the terms and conditions thereof, and includes any
above-described agreement effective as of the Effective Date of this Agreement,
and any amendment thereto and any replacement or future agreement with respect
to any Senior Debt.

 

“Service Level Credit” has the
meaning set forth in Section 3.10(d).

 

“Service Level Default” has the
meaning set forth in Section 3.10(c).

 

“Service Level
Reconciliation Report” has the meaning set forth
in Section 3.10(b).

 

“Services”  means
Warehousing Services, the Transportation Services, the Procurement and
Purchasing Services and Additional Services, but expressly excludes Other
Services.

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

131

 

“Services Commencement
Date” has the meaning set forth in Section 1.3.

 

“Services Fees” has the meaning
set forth in Section 5.1.

 

“Shared Facility(ies)” means a
Facility (or Facilities) from which services are provided to Tops and at least
one other customer.

 

“Shared Savings” has the meaning
set forth in Section 4.7(d).

 

“Term” has the
meaning set forth in Section 9.1.

 

“Tops”  has the meaning
set forth in the introductory paragraph.

 

*

 

“Tops Stores” or “Stores” has the meaning set forth
in Section 3.2.

 

“Tops Volume”  means any
volume of Merchandise intended for use or resale at the Tops Stores or
otherwise procured or purchased on Tops’ behalf, at Tops’ direction or with any
other reference to Tops’ account, business, operations or name.

 

*

 

“Transportation Services” has the
meaning set forth in Section 2.3.

 

*

 

“Triggering Event” has the meaning
set forth in Section 7.1(c)(ii)(A)-(D).

 

“Warehousing Services”  has the meaning
set forth in Section 2.2.

 

“* Statement” has the
meaning set forth in Section 7.1(a).

 

“* Statement Amount” has the
meaning set forth in Section 7.1(a).

 

*

 

* Confidential treatment has
been requested and the redacted material has been filed separately with the
Securities and Exchange Commission.

 

132

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