Document:

fred-ex1032_870.htm

Exhibit 10.32

 

SIXTH AMENDMENT TO CREDIT AGREEMENT and

RATIFICATION, REAFFIRMATION AND ASSUMPTION

THIS SIXTH AMENDMENT TO CREDIT AGREEMENT AND RATIFICATION, REAFFIRMATION AND ASSUMPTION (this "Amendment") is dated as of April 5, 2018, by and among (A) FRED'S, INC., a Tennessee corporation ("Parent"); (B) the Subsidiaries of Parent identified on the signature pages hereto as Borrowers (each of such Subsidiaries, together with Parent, jointly and severally, "Borrowers" and, each, a "Borrower"); (C) the Subsidiaries of Parent identified as Guarantors on the signature pages hereto (each of such Subsidiaries, jointly and severally, "Guarantors" and, each, a "Guarantor"; it being understood that, as of the date hereof, there are no Guarantors); (D) the Lenders party to the Credit Agreement defined below; (E) the Co-Collateral Agents party to the Credit Agreement; and (F) REGIONS BANK, an Alabama bank, in its capacity as administrative agent for Lenders, LC Issuer and other Secured Parties (as defined in the Credit Agreement) (in such capacity, "Administrative Agent" or "Agent").

 

W I T N E S S E T H :

WHEREAS, Borrowers, Guarantors, Lenders, Swingline Lender, LC Issuer, Co-Collateral Agents and Administrative Agent are parties to that certain Credit Agreement dated as of April 9, 2015, as amended by that certain First Amendment to Credit Agreement dated as of October 23, 2015, that certain Second Amendment to Credit Agreement dated as of December 28, 2016, that certain Third Amendment to Credit Agreement dated as of January 27, 2017, that certain Fourth Amendment to Credit Agreement, First Amendment to Amended and Restated Addendum to Credit Agreement, and First Amendment to Security Agreement dated as of July 31, 2017, and that certain Fifth Amendment to Credit Agreement dated as of August 22, 2017 (as so amended, and as the same may be further amended, restated, supplemented, or otherwise modified from time to time, the "Credit Agreement");

WHEREAS, Borrowers have advised Administrative Agent, Co-Collateral Agents and Lenders that, effective as of the date hereof, Fred's Stores of Tennessee, Inc., a Tennessee corporation (the "Predecessor Borrower"), intends to consummate a migratory merger to Delaware, as described on Annex I hereto, which is hereby incorporated by reference into this Amendment and made an integral part hereof (the "Migratory Merger");  

WHEREAS, Borrowers have advised Administrative Agent, Co-Collateral Agents and Lenders that the Migratory Merger is permitted pursuant to Sections 5.2 and 7.3 of the Credit Agreement, so long as, at the time thereof and immediately after giving effect thereto, no Default or Event of Default shall have occurred and be continuing;

 

WHEREAS, Borrowers have further requested that Administrative Agent, Co-Collateral Agents and Lenders amend certain other provisions of the Credit Agreement as set forth herein; and

 

WHEREAS, Administrative Agent, Co-Collateral Agents and Lenders have agreed to such amendments, subject to the terms and conditions hereof.

 

NOW, THEREFORE, for and in consideration of the above premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties hereto, Borrowers, Administrative Agent, Co-Collateral Agents and Lenders hereby covenant and agree as follows:

SECTION 1.Definitions.  Unless otherwise specifically defined herein, each term used herein (and in the recitals above) which is defined in the Credit Agreement shall have the meaning assigned to such term in the Credit Agreement.  Each reference to "hereof", "hereunder", "herein" and "hereby" and 

 
 

each other similar reference and each reference to "this Agreement" and each other similar reference contained in the Credit Agreement shall from and after the date hereof refer to the Credit Agreement as amended hereby.

SECTION 2.Ratification, Reaffirmation and Assumption.  Each Borrower (including the Surviving Borrower (as defined in Annex I hereto)) hereby:

(a)acknowledges, stipulates, and agrees that:

(i)the Migratory Merger has been consummated effective as of the date hereof in accordance with Applicable Law, and Borrowers have complied with all of the requirements of Sections 5.2 and 7.3 of the Credit Agreement with respect thereto; 

(ii)upon the effectiveness of the Migratory Merger, (x) the Surviving Borrower, without further act, deed or other transfer, shall have assumed and succeeded to all debts, liabilities, obligations and duties of the Predecessor Borrower under the Credit Agreement and the other Loan Documents, including, without limitation, the Obligations, and all such debts, liabilities, obligations and duties of the Predecessor Borrower shall thereafter be deemed to be held by the Surviving Borrower without further act, deed or other transfer, and (y) all of the rights of Administrative Agent, Lenders and the other Secured Parties as creditors of the Predecessor Borrower shall be preserved unimpaired, and shall continue as rights of each such Person as creditors of the Surviving Borrower, to the same extent and may be enforced against it to the same extent as if all of such Obligations had been incurred or contracted by it, and all Liens upon the Collateral of the Predecessor Borrower granted to Administrative Agent, for the benefit of Secured Parties, shall be preserved unimpaired and shall continue as Liens granted upon such Collateral by the Surviving Borrower and may be enforced against it to the same extent as if all of such Liens had been granted by it, and all Obligations of the Predecessor Borrower shall thenceforth remain with the Surviving Borrower and may be enforced against it to the same extent as if all of such Obligations had been incurred or contracted by it;

(iii)the Credit Agreement and the other Loan Documents executed by such Borrower (including, in the case of the Surviving Borrower, as successor to the Predecessor Borrower) are legal, valid and binding obligations of such Borrower that are enforceable against such Borrower in accordance with the terms thereof, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally and by general principles of equity; 

(iv)neither the Credit Agreement nor any of the other Loan Documents executed by such Borrower (including, in the case of the Surviving Borrower, as successor to the Predecessor Borrower) shall be impaired in any way by the Migratory Merger, and Administrative Agent's Liens in all of the Collateral, for the benefit of Secured Parties, shall continue uninterrupted notwithstanding the consummation of the Migratory Merger;

(v)all of the Obligations are absolutely due and owing by Borrowers (including the Surviving Borrower) to Administrative Agent and the other Secured Parties as of the date hereof without any right of offset, defense, deduction, counterclaim, claim, or objection in favor of any Borrower (and, to the extent any Borrower has any right of offset, defense, deduction, counterclaim, claim or objection on the date hereof, the same is hereby waived by such Borrower);

(vi)as of the date hereof, and immediately after giving effect to the Migratory Merger, no Default or Event of Default has occurred and is continuing;

(vii)in the case of the Surviving Borrower, all representations, warranties, terms, covenants, conditions, agreements, waivers and consents set forth in the Credit Agreement and the other Loan Documents executed by the Predecessor Borrower shall apply to the Surviving Borrower with the same force and effect as if such Loan Documents had been originally executed in the name of the Surviving Borrower; and

(viii)each reference in the Loan Documents to the Predecessor Borrower shall hereafter be deemed to be a reference to the Surviving Borrower as successor in interest thereto after giving effect to the Migratory Merger;

(b)(i) restates, ratifies and reaffirms the Obligations, the Credit Agreement and the other Loan Documents executed by such Borrower (including, in the case of the Surviving Borrower, as successor to the Predecessor Borrower), and each and every term, covenant, and condition of such Borrower (including, in the case of the Surviving Borrower, as successor to the Predecessor Borrower) set forth in the Credit Agreement and the other Loan Documents, effective as of the date hereof; (ii) restates and renews each and every representation and warranty heretofore made by such Borrower (including, in the case of the Surviving Borrower, as successor to the Predecessor Borrower) in the Credit Agreement and the other Loan Documents as fully as if made on the date hereof, after giving effect to the Migratory Merger, and with specific reference to this Amendment and any other Loan Documents executed or delivered in connection herewith (except with respect to representations and warranties made as of an expressed date, in which case such representations and warranties shall be true and correct as of such date); and (iii) ratifies and reaffirms the grant by such Borrower (including, in the case of the Surviving Borrower, as successor to the Predecessor Borrower) of, and hereby renews and continues, a continuing security interest in and to, and Lien upon, all right, title, and interest in all of the Collateral in favor of Administrative Agent, for the benefit of Secured Parties, and acknowledges and stipulates that such security interests and Liens are duly perfected, first priority security interests and Liens, subject to Liens permitted by Section 7.2 of the Credit Agreement, and that all of the Obligations continue to be secured, without interruption, by such security interests and Liens; and

(c)represents and warrants that (i) the consummation of the Migratory Merger has not required Governmental Approvals, or any other consent or approval of, registration or filing with, or any action by, any Governmental Authority or any other Person, except those as have been obtained or made and are in full force and effect and except those with respect to Governmental Approvals or leases that are not individually or in the aggregate material to the business or operations of Parent and its Subsidiaries; (ii) the execution, delivery and performance by such Borrower of this Amendment and the consummation of the transactions contemplated hereby (w) are within such Borrower's organizational powers and have been duly authorized by all necessary organizational action, (x) to such Borrower's knowledge, do not require Governmental Approvals, or any other consent or approval of, registration or filing with, or any action by, any Governmental Authority, except those as have been obtained or made and are in full force and effect, (y) will not violate any Organizational Document of such Borrower or any of its Subsidiaries, any law, treaty, rule or regulation, or determination of a Governmental Authority, in each case applicable to or binding upon such Borrower or any of its Subsidiaries or any of such Person's Property or to which such Borrower or any of its Subsidiaries or any of such Person's Property is subject, or any judgment, order or ruling of any Governmental Authority, and (z) will not violate or result in a default under any Material Contract of such Borrower or any of its Subsidiaries or any of its assets or give rise to a right thereunder to require any payment to be made by such Borrower or any of its Subsidiaries; and (iii) this Amendment has been duly executed and delivered by such Borrower and constitutes the valid and binding obligation of such Borrower, enforceable against it in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally and by general principles of equity.

SECTION 3.Amendments to Credit Agreement.

(a)Addition of New Definitions.  Section 1.1 of the Credit Agreement is hereby amended by adding each of the following new definitions in appropriate alphabetical order:

"Benefit Plan" shall mean any of (a) an "employee benefit plan" (as defined in Section 3(3) of ERISA) that is subject to Title I of ERISA, (b) a "plan" to which Section 4975 of the Code applies or (c) any Person whose underlying assets include "plan assets" of any such "employee benefit plan" or "plan" within the meaning of 29 CFR 2510.3-101 as modified by Section 3(42) of ERISA.

"Cardinal Obligations" shall mean, collectively, (i) trade payables owing to Cardinal under the Cardinal Supply Agreement from time to time in the Ordinary Course of Business that are not more than 33.5 DSO payment terms (Weekly statement (M-F), due 31 days from the Friday of the applicable week) and are paid not more than 31 days from the Friday of the week such trade payables were properly invoiced in the normal course of business, (ii) trade payables owing to Cardinal under the Cardinal Supply Agreement with respect to Inventory delivered on or about the Sixth Amendment Effective Date that are paid within 90 days from the invoice date in an aggregate principal amount at any time outstanding not to exceed $20,000,000, and (iii) any other trade payables owing to Cardinal under the Cardinal Supply Agreement from time to time that are being disputed in good faith and by appropriate measures or that are otherwise acceptable to Administrative Agent in its sole discretion.

"Cardinal Security Agreement" shall mean that certain Subordinated Security Agreement dated as of the Sixth Amendment Effective Date by and among Borrowers and Cardinal, and as further amended, restated, supplemented, or otherwise modified from time to time in accordance with the Cardinal Intercreditor Agreement.

"Cardinal Supply Agreement" shall mean that certain Prime Vendor Agreement dated as of April 29, 2017, among Cardinal and Borrowers, as amended by that certain Fifth Amendment to the Prime Vendor Agreement dated as of the Sixth Amendment Effective Date, and as further amended, restated, supplemented, or otherwise modified from time to time in accordance with the Cardinal Intercreditor Agreement. 

"Hong Kong Documentary Letters of Credit" shall mean the documentary Letters of Credit listed on Schedule 3, including any renewals and extensions thereof.

"ISP" shall mean, with respect to any Letter of Credit, the "International Standby Practices 1998" published by the Institute of International Banking Law & Practice, Inc. (or such later version thereof as may be in effect at the time of issuance of such Letter of Credit).

"LC Issuer Indemnitees" shall mean LC Issuer and its officers, directors, employees, managers, Affiliates, agents, consultants, attorneys and other representatives.

"LIBOR Replacement Rate" shall have the meaning set forth in Section 2.28.  

"LIBOR Scheduled Unavailability Date" shall have the meaning set forth in Section 2.28. 

"PTE" shall mean a prohibited transaction class exemption issued by the U.S. Department of Labor, as any such exemption may be amended from time to time.

"Sixth Amendment" shall mean that certain Sixth Amendment to Credit Agreement and Ratification, Reaffirmation and Assumption dated as of the Sixth Amendment Effective Date, by and among Borrowers, Administrative Agent, Co-Collateral Agents and Lenders, which amends this Agreement. 

"Sixth Amendment Effective Date" shall mean April 5, 2018. 

(b)Amendments to Existing Definitions.  

(i)Section 1.1 of the Credit Agreement is hereby amended by deleting the following definitions therein in their entirety and substituting the following in lieu thereof, respectively:

"Cardinal" shall mean, collectively, Cardinal Health 110, LLC, a Delaware limited liability company, Cardinal Health 112, LLC, a Delaware limited liability company, and any other subsidiaries and affiliates of Cardinal Health, Inc. that become parties to the Cardinal Supply Agreement.

"Cardinal Intercreditor Agreement" shall mean that certain Intercreditor Agreement dated as of the Sixth Amendment Effective Date among Administrative Agent and Cardinal and acknowledged by Loan Parties.

"LC Issuer" shall mean each of (i) Regions Bank or an Affiliate of Regions Bank, together with its successors and assigns, and (ii) Bank of America, N.A. or an Affiliate of Bank of America, N.A., together with its successors and assigns (including with respect to the Hong Kong Documentary Letters of Credit).

"Letter of Credit" shall mean any standby or documentary letter of credit issued by LC Issuer for the account of a Borrower and including, without limitation, each of the Existing Letters of Credit and the Hong Kong Documentary Letters of Credit. 

"LIBOR" shall mean, for any Interest Period, the rate per annum obtained by dividing (x) (i) the rate per annum (rounded upward to the nearest 1/16th of 1%), determined by Administrative Agent at approximately 11:00 a.m. (London, England time) two (2) Business Days before the commencement of such Interest Period, for a term comparable to such Interest Period in Dollars, equal to the London Interbank Offered Rate as published by Reuters (or other commercially available source designated by Administrative Agent) or (ii) or in the event the rate referenced in the preceding subclause (i) does not appear on such page or service or if such page or service shall cease to be available, the rate per annum (rounded upward to the nearest 1/16 of 1%) equal to the rate determined by Administrative Agent to be the offered rate on such other page or other service which displays an average settlement rate for deposits with a term equivalent to such Interest Period in Dollars, determined as of approximately 11:00 a.m. (London, England time) two (2) Business Days before the commencement of such Interest Period; by (y) the sum of 1 minus the Applicable Reserve Requirement.  Notwithstanding anything contained herein to the contrary, LIBOR shall not be less than zero.

"Material Indebtedness" shall mean (i) any Indebtedness (other than the Loans) of Parent or any of its Subsidiaries individually or in an aggregate committed or outstanding 

principal amount exceeding $10,000,000, (ii) any Subordinated Debt of any amount, and (iii) any Cardinal Obligations of any amount.

(ii)The definition of "Indebtedness" in Section 1.1 of the Credit Agreement is hereby amended by deleting clauses (a) and (b) thereof in its entirety and substituting the following in lieu thereof:

(a) which (i) arises in respect of borrowed money, (ii) is evidenced by bonds, notes, debentures, or similar instruments, or (iii) accrues interest or is a type upon which interest or finance charges are customarily paid (excluding trade payables owing in the Ordinary Course of Business, including Cardinal Obligations), (b) representing the balance deferred and unpaid of the purchase price of any Property or services (other than an account payable to a trade creditor incurred in the Ordinary Course of Business of such Person and payable in accordance with customary trade practices, including Cardinal Obligations to the extent applicable), 

(c)Deletion of Existing Definition.  Section 1.1 of the Credit Agreement is hereby amended by deleting the definition of "Cardinal Inventory" therein in its entirety.

(d)Amendment to Section 2.12 (Fees).  Section 2.12 of the Credit Agreement is hereby amended by deleting the second sentence of clause (c) thereof in its entirety and substituting the following in lieu thereof:

Borrowers shall pay to LC Issuer, quarterly in arrears and for its own account, a fronting fee (i) with respect to Regions Bank or an Affiliate of Regions Bank acting as LC Issuer, at the rate per annum specified in the Fee Letter, (ii) with respect to Bank of America, N.A. or an Affiliate of Bank of America, N.A. acting as LC Issuer, at a rate equal to 0.125% per annum, or (iii) if applicable, at such other rate specified in any LC Document or as otherwise separately agreed among LC Issuer and Borrowers, in each case, on the daily maximum amount available to be drawn under such Letter of Credit (whether or not such maximum amount is then in effect under such Letter of Credit if such maximum amount increases or decreases periodically pursuant to the terms of such Letter of Credit), which fee shall be fully earned upon issuance of the Letter of Credit, and none of such fee shall be refundable, in whole or in part, regardless of any cancellation, termination, or draw upon the Letter of Credit; provided that LC Issuer may elect instead that such fronting fee be payable to it upon issuance of any such Letter of Credit.

(e)Amendment to Section 2.14 (Inability to Determine Interest Rates).  Section 2.14 of the Credit Agreement is hereby amended by deleting clause (a) thereof in its entirety and substituting the following in lieu thereof:

(a)Administrative Agent shall have determined (which determination shall be conclusive and binding upon Borrowers) that (i) by reason of circumstances affecting the relevant interbank market, adequate means do not exist for ascertaining LIBOR for such Interest Period or (ii) the LIBOR Scheduled Unavailability Date has occurred, or

(f)Amendments to Section 2.22 (Letter of Credit Facility).  

(i)Section 2.22(a) of the Credit Agreement is hereby amended by deleting clauses (i) and (ii) thereof in their entirety and substituting the following in lieu thereof, respectively:

(i)LC Issuer shall have no obligation to issue, and LC Issuer shall not issue, any Letter of Credit unless each of the LC Conditions has been satisfied (as determined by LC Issuer and Administrative Agent).  In no event shall LC Issuer be obligated to issue, and LC Issuer shall not issue, any Letter of Credit when an Overadvance exists or would result therefrom or if, after giving effect to such issuance, the Aggregate Revolving Obligations would exceed the Aggregate Revolving Commitments.

(ii)If LC Issuer receives written notice from Administrative Agent or a Lender at least five (5) Business Days before issuance of a Letter of Credit that any LC Condition has not been satisfied, LC Issuer shall have no obligation to issue, and LC Issuer shall not issue, the requested Letter of Credit (or any other Letter of Credit) until such notice is withdrawn in writing by Administrative Agent or such Lender or until the Required Lenders have waived the applicable LC Condition in accordance with this Agreement.  Before receipt of any such notice, LC Issuer shall not be deemed to have knowledge of any failure to satisfy any LC Condition.

(ii)Section 2.22(a) of the Credit Agreement is hereby amended by adding the following new clauses (v) and (vi) immediately after clause (iv) thereof:

(v)Unless otherwise specified herein, the amount of a Letter of Credit at any time shall be deemed to be the stated amount of such Letter of Credit in effect at such time (after giving effect to any permanent reduction in the stated amount of such Letter of Credit pursuant to the terms of such Letter of Credit); provided that with respect to any Letter of Credit that, by its terms or the terms of any LC Document related thereto, provides for one or more automatic increases in the stated amount thereof, the amount of such Letter of Credit shall be deemed to be the maximum stated amount of such Letter of Credit after giving effect to all such increases, whether or not such maximum stated amount is in effect at such time.

(vi)Unless otherwise expressly agreed by LC Issuer and Borrowers when a Letter of Credit is issued, (i) the rules of the "International Standby Practices 1998" published by the Institute of International Banking Law & Practice, Inc., or such later version thereof as may be in effect at the time of issuance, shall apply to each standby Letter of Credit and (ii) the rules of the Uniform Customs and Practice for Documentary Credits, as most recently published by the International Chamber of Commerce at the time of issuance, shall apply to each documentary Letter of Credit.

(iii)Section 2.22(b) of the Credit Agreement is hereby amended by adding the following new sentence to the beginning of clause (i) thereof:

Upon receipt from the beneficiary of any Letter of Credit of any notice of a draw under such Letter of Credit, LC Issuer shall notify Administrative Agent thereof.

(iv)Section 2.22(b) of the Credit Agreement is hereby amended by deleting the first sentence of clause (ii) thereof in its entirety and substituting the following in lieu thereof:

Upon the issuance of a Letter of Credit (or, in the case of the Hong Kong Documentary Letters of Credit, on the Sixth Amendment Effective Date), each Lender shall be deemed to have irrevocably and unconditionally purchased from LC Issuer, without recourse or warranty, an undivided interest and participation in all LC Obligations relating to such Letter of Credit in an amount equal to such Lender's Pro Rata Share thereof. 

(v)Section 2.22 of the Credit Agreement is hereby amended by adding the following new clauses (d) and (e) immediately after clause (c) thereof:

(d)LC Issuer Reports to Administrative Agent.  Unless otherwise agreed by Administrative Agent, LC Issuer shall, in addition to its notification obligations set forth elsewhere in this Section 2.22, provide Administrative Agent the following:

(i)on any Business Day, such information as Administrative Agent shall reasonably request as to the Letters of Credit issued by LC Issuer; and

(ii)for so long as any Letter of Credit issued by LC Issuer is outstanding, LC Issuer shall deliver to Administrative Agent (A) on the last Business Day of each calendar month and (B) on the date of any issuance, extension of the expiration date, increase in the amount, expiration, cancellation or disbursement of any Letter of Credit, a report, in form and substance satisfactory to Administrative Agent, accurately completed with information for every outstanding Letter of Credit issued by LC Issuer. 

(e)References to "LC Issuer".  At any time there is more than one LC Issuer, any singular references to "LC Issuer" in this Agreement and any of the other Loan Documents shall mean any LC Issuer, each LC Issuer, the LC Issuer that has issued the applicable Letter of Credit, or all LC Issuers, as the context may require.

(g)Amendments to Section 2.23 (Defaulting Lender) and Section 2.26 (Cash Collateral).  Section 2.23 and Section 2.26 of the Credit Agreement are hereby amended by deleting all references to "Issuing Bank" and "Issuing Banks" therein in their entirety and substituting "LC Issuer" and "LC Issuers" in lieu thereof, respectively.  

(h)Amendment to Article 2 (Amount and Terms of the Commitments).  Article 2 of the Credit Agreement is hereby amended by adding the following new Section 2.28 immediately after Section 2.27 thereof:

Section 2.28LIBOR Replacement Rate.  Notwithstanding anything to the contrary contained in this Agreement or any other Loan Document, but without limiting Section 2.14 or 2.15, if Administrative Agent shall have determined (which determination shall be final and conclusive and binding upon all parties hereto), or Borrowers or the Required Lenders notify Administrative Agent (with, in the case of the Required Lenders, a copy to Borrower Agent) that Borrowers or the Required Lenders (as applicable) shall have determined (which determination likewise shall be final and conclusive and binding upon all parties hereto) that (i) the circumstances described in Section 2.14(a)(i) have arisen and that such circumstances are unlikely to be temporary, (ii) the relevant administrator of LIBOR or a Governmental Authority having or purporting to have jurisdiction over Administrative Agent has made a public statement identifying a specific date after which LIBOR shall no longer be made available or used for determining interest rates for loans in the applicable currency (such specific date, the "LIBOR Scheduled Unavailability Date"), or (iii) syndicated credit facilities among national and/or regional banks active in leading and participating in such facilities currently being executed, or that include language similar to that contained in this Section 2.28, are being executed or amended (as applicable) to incorporate or adopt a new interest rate to replace LIBOR for determining interest rates for loans in the applicable currency, then, reasonably promptly after such determination by Administrative Agent or receipt by Administrative Agent of 

such notice, as applicable, Administrative Agent, Co-Collateral Agents and Borrowers may amend this Agreement to replace LIBOR with an alternate interest rate, giving due consideration to any evolving or then existing convention for similar U.S. dollar denominated syndicated credit facilities for such alternative interest rates (any such proposed rate, a "LIBOR Replacement Rate"), and make such other related changes to this Agreement and the other Loan Documents as may be necessary or appropriate, in the opinion of Administrative Agent and Co-Collateral Agents, to effect the provisions of this Section 2.28 (provided that any definition of a LIBOR Replacement Rate shall specify that in no event shall such LIBOR Replacement Rate be less than zero for purposes of this Agreement), and any such amendment shall become effective at 5:00 p.m. on the fifth Business Day after Administrative Agent shall have posted such proposed amendment to all Lenders and Borrowers unless, prior to such time, Lenders comprising the Required Lenders have delivered to Administrative Agent written notice that such Required Lenders do not accept such amendment.  Any LIBOR Replacement Rate shall be applied in a manner consistent with market practice; provided that, in each case, to the extent such market practice is not administratively feasible for Administrative Agent, such LIBOR Replacement Rate shall be applied as otherwise reasonably determined by Administrative Agent (it being understood that any such modification to application by Administrative Agent made as so determined shall not require the consent of, or consultation with, any of Lenders).  For the avoidance of doubt, the parties hereto agree that unless and until a LIBOR Replacement Rate is determined and an amendment to this Agreement is entered into to effect the provisions of this Section 2.28, if the circumstances under Section 2.14 or 2.15 exist, the provisions of Section 2.14 or 2.15, respectively, shall apply.

(i)Amendment to Section 7.2 (Liens).  Section 7.2 of the Credit Agreement is hereby amended by deleting clause (f) thereof in its entirety and substituting the following in lieu thereof:

(f)Liens in favor of Cardinal securing the Cardinal Obligations so long as such Liens are subject to the Cardinal Intercreditor Agreement;

(j)Amendment to Section 7.3 (Fundamental Changes).  Section 7.3 of the Credit Agreement is hereby amended by adding the following sentence immediately after the "." set forth therein:

Notwithstanding anything to the contrary set forth herein, to the extent Secured Parties would otherwise be required to release any Loan Party hereunder, any such requirement also shall be subject to Cardinal's concurrent release of such Loan Party from all obligations of Loan Parties to Cardinal.

(k)Amendment to Section 8.1 (Events of Default).  Section 8.1 of the Credit Agreement is hereby amended by deleting clause (f) thereof in its entirety and substituting the following in lieu thereof:

(f)(i) Parent or any of its Subsidiaries (whether as primary obligor or as guarantor or other surety) shall fail (x) to make any payment on the Cardinal Obligations when due, subject to any applicable grace periods provided with respect thereto, or (y) to pay any principal or interest on any other Material Indebtedness as the same shall become due and payable upon a default being declared thereunder, (ii) an "Event of Default" under (and as defined in) the Cardinal Security Agreement shall occur, (iii) a material breach by a Borrower under the Cardinal Supply Agreement shall occur and such breach is not cured within forty-five days, or (iv) any other event or condition shall occur which enables Cardinal to take any remedies with respect to the Cardinal Obligations; or

(l)Amendment to Article 10 (Miscellaneous).  Article 10 of the Credit Agreement is hereby amended by adding the following new Section 10.17 immediately after Section 10.16 thereof:

Section 10.17Certain ERISA Matters.  

(a) Each Lender (x) represents and warrants, as of the date such Person became a Lender party hereto, to, and (y) covenants, from the date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of, Administrative Agent, Arranger and their respective Affiliates, and not, for the avoidance of doubt, to or for the benefit of any Borrower or any other Loan Party, that at least one of the following is and will be true:

(i)such Lender is not using "plan assets" (within the meaning of 29 CFR §2510.3-101, as modified by Section 3(42) of ERISA) of one or more Benefit Plans in connection with such Lender's entrance into, participation in, administration of and performance in respect of any Loans, Letters of Credit and Commitments and this Agreement; 

(ii)the transaction exemption set forth in one or more PTEs, such as PTE 84-14 (a class exemption for certain transactions determined by independent qualified professional asset managers), PTE 95-60 (a class exemption for certain transactions involving insurance company general accounts), PTE 90-1 (a class exemption for certain transactions involving insurance company pooled separate accounts), PTE 91-38 (a class exemption for certain transactions involving bank collective investment funds) or PTE 96-23 (a class exemption for certain transactions determined by in-house asset managers), is applicable with respect to such Lender's entrance into, participation in, administration of and performance in respect of any Loans, Letters of Credit and Commitments and this Agreement; or

(iii)(A) such Lender is an investment fund managed by a "Qualified Professional Asset Manager" (within the meaning of Part VI of PTE 84-14), (B) such Qualified Professional Asset Manager made the investment decision on behalf of such Lender to enter into, participate in, administer and perform in respect of any Loans, Letters of Credit and Commitments and this Agreement, (C) the entrance into, participation in, administration of and performance in respect of any Loans, Letters of Credit and Commitments and this Agreement satisfies the requirements of sub-sections (b) through (g) of Part I of PTE 84-14, and (D) to the best knowledge of such Lender, the requirements of subsection (a) of Part I of PTE 84-14 are satisfied with respect to such Lender's entrance into, participation in, administration of and performance in respect of any Loans, Letters of Credit and Commitments and this Agreement.

(b) In addition, unless clause (i) of Section 10.17(a) is true with respect to a Lender, such Lender further (x) represents and warrants, as of the date such Person became a Lender party hereto, to, and (y) covenants, from the date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of, Administrative Agent, Arranger and their respective Affiliates, and not, for the avoidance of doubt, to or for the benefit of any Borrower or any other Loan Party, that:

(i)none of Administrative Agent, Arranger or any of their respective Affiliates is a fiduciary with respect to the assets of such Lender (including in connection with the reservation or exercise of any rights by Administrative Agent under this Agreement, any other Loan Document or any documents related hereto or thereto);

(ii)the Person making the investment decision on behalf of such Lender with respect to its entrance into, participation in, administration of and performance in respect of any Loans, Letters of Credit and Commitments and this Agreement is independent (within the meaning of 29 CFR §2510.3-21) and is a bank, an insurance carrier, an investment adviser, a broker-dealer or any other person that has under management or control, total assets of at least $50,000,000, in each case as described in 29 CFR §2510.3-21(c)(1)(i)(A)-(E);

(iii)the Person making the investment decision on behalf of such Lender with respect to its entrance into, participation in, administration of and performance in respect of any Loans, Letters of Credit and Commitments and this Agreement is capable of evaluating investment risks independently, both in general and with regard to particular transactions and investment strategies;

(iv)the Person making the investment decision on behalf of such Lender with respect to its entrance into, participation in, administration of and performance in respect of any Loans, Letters of Credit and Commitments and this Agreement is a fiduciary under ERISA or the Code, or both, with respect to any Loans, Letters of Credit and Commitments and this Agreement and is responsible for exercising independent judgment in evaluating the transactions hereunder; and

(v)no fee or other compensation is being paid by such Lender or any Person making the investment decision on behalf of such Lender directly to Administrative Agent, Arranger or any of their respective Affiliates for investment advice (as opposed to other services) in connection with such Lender's entrance into, participation in, administration of and performance in respect of any Loans, Letters of Credit and Commitments and this Agreement.

(c)Administrative Agent and Arranger hereby inform the Lenders that each such Person is not undertaking to provide impartial investment advice, or to give advice in a fiduciary capacity, in connection with the transactions contemplated hereby, and that such Person has a financial interest in the transactions contemplated hereby in that such Person or an Affiliate thereof (i) may receive interest or other payments with respect to any Loans, Letters of Credit and Commitments and this Agreement, (ii) may recognize a gain if it extended any Loans, Letters of Credit or Commitments for an amount less than the amount being paid for an interest in such Loans, Letters of Credit or Commitments by such Lender or (iii) may receive fees or other payments in connection with the transactions contemplated hereby, the other Loan Documents or otherwise, including structuring fees, commitment fees, arrangement fees, facility fees, upfront fees, underwriting fees, ticking fees, agency fees, administrative agent or collateral agent fees, utilization fees, minimum usage fees, letter of credit fees, fronting fees, deal-away or alternate transaction fees, amendment fees, processing fees, term out premiums, banker's acceptance fees, breakage or other early termination fees or fees similar to the foregoing.

(m)Addition of New Schedule to Credit Agreement.  The Credit Agreement is hereby amended by adding Schedule 3 attached to this Amendment as a new Schedule 3 to the Credit Agreement in appropriate numerical order. 

SECTION 4.Conditions Precedent.  This Amendment shall become effective only upon satisfaction of the following conditions precedent, as determined by Administrative Agent in its discretion:

(a)Administrative Agent shall have received this Amendment, duly executed and delivered by Borrowers, Co-Collateral Agents and Lenders; 

(b)Administrative Agent shall have received an amendment to the Fee Letter, in form and substance satisfactory to Administrative Agent, duly executed and delivered by Borrowers;

(c)Administrative Agent shall have received a certificate, in form and substance satisfactory to Administrative Agent, attaching true, correct and complete copies of all articles of merger, agreements and plans of merger, and other documents filed or executed in connection with the Migratory Merger and shall have approved all material terms thereof;

(d)Administrative Agent shall have received a written opinion of legal counsel to Loan Parties, in form and substance satisfactory to Administrative Agent;

(e)Administrative Agent shall have received the Cardinal Intercreditor Agreement, in form and substance satisfactory to Administrative Agent, duly executed and delivered by Cardinal and Borrowers;

(f)Administrative Agent shall have received a certificate, in form and substance satisfactory to it, attaching true, correct and complete copies of the Cardinal Supply Agreement (including the Fifth Amendment to the Prime Vendor Agreement thereto), the security agreement with respect thereto, and any other material documents, instruments, certificates and agreements delivered in connection therewith; and

(g)Administrative Agent shall have received all other documents, instruments, certificates and agreements (if any) as Administrative Agent shall have reasonably requested in connection with the foregoing, each in form and substance satisfactory to Administrative Agent.

SECTION 5.Post-Closing Covenants.  

(a)On or before May 30, 2018 (or such later date as agreed to by Co-Collateral Agents in writing in their respective sole discretion), Borrowers shall deliver to Administrative Agent (i) a duly executed Collateral Disclosure Certificate, after giving effect to the Migratory Merger and in form and substance satisfactory to Administrative Agent, and (ii) supplements to Schedules 4.19 and 4.20 to the Credit Agreement and Schedules 1 and 2 to the Security Agreement to the extent required by Section 9(ii) of the Security Agreement.

(b)On or before May 30, 2018 (or such later date as agreed to by Co-Collateral Agents in writing in their respective sole discretion), Borrowers shall deliver to Administrative Agent (i) evidence that the Migratory Merger and the assignment of all intellectual property of the Predecessor Borrower to the Surviving Borrower has been made of record in the United States Patent and Trademark Office and the United States Copyright Office and (ii) duly executed intellectual property security agreements, in form and substance satisfactory to Administrative Agent, with respect to such intellectual property.

(c)On or before June 29, 2018 (or such later date as agreed to by Co-Collateral Agents in writing in their respective sole discretion), Borrowers shall deliver to Administrative Agent good standing certificates for the Surviving Borrower issued by the Secretary of State or other appropriate official of each jurisdiction where the Surviving Borrower's business activities or ownership of Property necessitates qualification.

(d)On or before May 30, 2018 (or such later date as agreed to by Co-Collateral Agents in writing in their respective sole discretion), Borrowers shall deliver to Administrative Agent certificates of insurance for the insurance policies carried by Loan Parties, reflecting the Migratory Merger.

(e)On or before July 31, 2018 (or such later date as agreed to by Co-Collateral Agents in writing in their respective sole discretion), Borrowers shall deliver to Administrative Agent evidence that all consents, approvals and waivers of all Persons required in connection with the consummation of the Migratory Merger (including with respect to any leases) have been obtained and are in full force and effect.

SECTION 6.Miscellaneous Terms.

(a)Loan Document.  For avoidance of doubt, the parties hereto hereby acknowledge and agree that this Amendment is a Loan Document.

(b)Effect of Amendment.  All amendments set forth herein shall become effective as of the Sixth Amendment Effective Date.  Except as otherwise may be set forth expressly hereinabove, all terms of the Credit Agreement and the other Loan Documents shall be and remain in full force and effect, and shall constitute the legal, valid, binding, and enforceable obligations of Borrowers.  Except to the extent otherwise expressly set forth herein, the amendments set forth herein shall have prospective application only from and after the Sixth Amendment Effective Date.

(c)No Novation or Mutual Departure.  Borrowers expressly acknowledge and agree that (i) there has not been, and this Amendment does not constitute or establish, a novation with respect to the Credit Agreement or any of the other Loan Documents, or a mutual departure from the strict terms, provisions, and conditions thereof, other than with respect to the limited amendments contained in Section 3 above, and (ii) nothing in this Amendment shall affect or limit Administrative Agent's or Lenders' right to demand payment of liabilities owing from Borrowers to Administrative Agent or Lenders under, or to demand strict performance of the terms, provisions and conditions of, the Credit Agreement and the other Loan Documents, to exercise any and all rights, powers, and remedies under the Credit Agreement or the other Loan Documents or at law or in equity, or to do any and all of the foregoing, immediately at any time after the occurrence of a Default or an Event of Default under the Credit Agreement or the other Loan Documents.

(d)[Reserved].  

(e)[Reserved].  

(f)Counterparts.  This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which counterparts, taken together, shall constitute but one and the same instrument.  This Amendment may be executed by each party on separate copies, which copies, when combined so as to include the signatures of all parties, shall constitute a single counterpart of this Amendment.

(g)Fax or Other Transmission.  Delivery by one or more parties hereto of an executed counterpart of this Amendment via facsimile, telecopy, or other electronic method of transmission pursuant to which the signature of such party can be seen (including, without limitation, Adobe Corporation's Portable Document Format) shall have the same force and effect as the delivery of an original executed counterpart of this Amendment.  Any party delivering an executed counterpart of this Amendment by facsimile, telecopy, or other electronic method of transmission shall also deliver an original executed counterpart, but the failure to do so shall not affect the validity, enforceability, or binding effect of this Amendment.

(h)Recitals Incorporated Herein.  The preamble and the recitals to this Amendment are hereby incorporated herein by this reference.

(i)Section References.  Section titles and references used in this Amendment shall be without substantive meaning or content of any kind whatsoever and are not a part of the amendments and other agreements among the parties hereto evidenced hereby.

(j)Further Assurances.  Each Borrower agrees to take, at such Borrower's expense, such further actions as Administrative Agent shall reasonably request from time to time to evidence the Migratory Merger, the amendments and other agreements set forth herein and the transactions contemplated hereby.  

(k)Governing Law.  This Amendment shall be governed by and construed and interpreted in accordance with the laws of the State of Georgia, without giving effect to any conflict of law principles or other rule of law which would cause the application of the law of any jurisdiction other than the laws of the State of Georgia (but giving effect to federal laws relating to national banks).

(l)Severability.  Any provision of this Amendment which is prohibited or unenforceable shall be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof in that jurisdiction or affecting the validity or enforceability of such provision in any other jurisdiction.

[REMAINDER OF THIS PAGE LEFT BLANK INTENTIONALLY.] 

 

1)

 

IN WITNESS WHEREOF, each party hereto has caused this Amendment to be duly executed and delivered under seal by its duly authorized officer or other representative as of the day and year first above written. 

 

BORROWERS:

FRED'S, INC., a Tennessee corporation, 

as "Borrower Agent" and a "Borrower"

 

By: /s/ Michael K. Bloom

Name:Michael K. Bloom

Title: President and Chief Executive Officer

[CORPORATE SEAL]

FRED'S STORES OF TENNESSEE, INC., 
a Delaware corporation, as a "Borrower" and 
the "Surviving Borrower"

 

 

By: /s/ Michael K. Bloom

Name:Michael K. Bloom

Title: President and Chief Executive Officer 

[CORPORATE SEAL]

 

FRED'S DOLLAR STORE OF MCCOMB, INC., 
a Mississippi corporation, as a "Borrower"

 

By: /s/ Michael K. Bloom

Name:Michael K. Bloom

Title: President and Chief Executive Officer 

    
[CORPORATE SEAL]

NATIONAL PHARMACEUTICAL NETWORK, INC., a Florida corporation, as a "Borrower"

 

By: /s/ Michael K. Bloom

Name:Michael K. Bloom

Title: President and Chief Executive Officer 

 

[CORPORATE SEAL]

Sixth Amendment to Credit Agreement and Ratification, Reaffirmation and Assumption (Fred's)

BORROWERS:

 

REEVES-SAIN DRUG STORE, INC., 
a Tennessee corporation, as a "Borrower" 

 

By: /s/ Michael K. Bloom

Name:Michael K. Bloom

Title: President and Chief Executive Officer 

[CORPORATE SEAL]

Section 1.1.

Sixth Amendment to Credit Agreement and Ratification, Reaffirmation and Assumption (Fred's)

 

ADMINISTRATIVE AGENT:

 

REGIONS BANK, as "Administrative Agent"

 

 

By: /s/ Louis Alexander

Name:Louis Alexander

Title: Managing Director

 

 

[Signatures continue on following pages.]

Section 1.1.

Sixth Amendment to Credit Agreement and Ratification, Reaffirmation and Assumption (Fred's)

 

CO-COLLATERAL AGENTS:

 

REGIONS BANK, as "Co-Collateral Agent"

 

 

By: /s/ Louis Alexander

Name:Louis Alexander

Title: Managing Director

 

 

[Signatures continue on following pages.]

 

 

Sixth Amendment to Credit Agreement and Ratification, Reaffirmation and Assumption (Fred's)

CO-COLLATERAL AGENTS:

 

BANK OF AMERICA, N.A., as "Co-Collateral Agent"

 

 

By: /s/ Roger Malouf

Name:Roger Malouf

Title:Director

 

 

[Signatures continue on following pages.]

 

 

 

Sixth Amendment to Credit Agreement and Ratification, Reaffirmation and Assumption (Fred's)

LENDERS:

 

REGIONS BANK 

 

 

By: /s/ Louis Alexander

Name:Louis Alexander

Title: Managing Director

 

 

[Signatures continue on following page.]

Section 0.0.

Sixth Amendment to Credit Agreement and Ratification, Reaffirmation and Assumption (Fred's)

 

LENDERS:

 

BANK OF AMERICA, N.A.

 

 

By: /s/ Roger Malouf

Name:Roger Malouf

Title:Director

 

 

 

 

 

 

 

Sixth Amendment to Credit Agreement and Ratification, Reaffirmation and Assumption (Fred's)

 

ANNEX I

 

Description of Migratory Merger

 

(a)Fred's Stores of Tennessee, Inc., a Delaware corporation (the "Surviving Borrower"), was organized (but did not issue any shares) in the State of Delaware; and  

 

(b)the Predecessor Borrower merged with and into the Surviving Borrower, with the Surviving Borrower as the surviving Person.

 

 

 

 

 

SCHEDULE 3 
to Credit Agreement

 

Hong Kong Documentary Letters of Credit

 

					
	
Reference No.
	
Issue Date
	
Maturity Date
	
Face Amount
	
Beneficiary Name

	
IM011391/17
	
12/19/2017
	
03/31/2018
	
$107,275.40
	
Hasbro International Trading B.V.

	
IM016198/18
	
01/12/2018
	
03/01/2018
	
$98,508.92
	
Spin Master Toys Far East Limited

	
IM018996/18
	
01/26/2018
	
03/31/2018
	
$15,668.70
	
Mattel Direct Import, Inc.

	
IM021034/18
	
02/07/2018
	
03/31/2018
	
$13,420.16
	
Mattel Direct Import, Inc.

	
IM023469/18
	
02/22/2018
	
03/31/2018
	
$19,916.58
	
Vtech Electronics Ltd.

	
IM024496/18
	
02/28/2018
	
03/30/2018
	
$11,988.00
	
Spin Master Toys Far East 

	
IM024665/18
	
03/01/2018
	
03/31/2018
	
$4,538.40
	
May Cheong Toy Products Fty Ltd.

	
IM025094/18
	
03/05/2018
	
03/24/2018
	
$131,292.00
	
Wowwee Group LimitedExhibit

F. Samuel Eberts III                                    February 8, 2019
402 Westwood Dr.
Chapel Hill, NC 27516

Re:    Retirement Agreement

Dear Sam,
On behalf of Laboratory Corporation of America Holdings (the “Company”), I want to thank you for your valued service to the Company and offer you (the “Executive”) the following Retirement Agreement (this “Agreement”) in connection with your retirement from the Company.
1.0    Retirement from Employment
1.1    Effective February 15, 2019 (the “Retirement Date”), Executive will retire from the Company and Executive’s employment with the Company will terminate.  As of the Retirement Date, Executive shall perform no further services for the Company and his status as an employee and officer of the Company shall cease on that date. Executive shall execute all other documentation and undertake all other actions necessary to effect his resignation from all positions with the Company. Executive further agrees that all payments and benefits payable pursuant to this Agreement are contingent upon Executive’s execution and fulfillment of his obligations under this Agreement. 

2.0    Retirement Bonus

2.1    In consideration for the covenants, promises and agreements herein, and in particular, Executive’s release of claims as well as covenants not to solicit, not to compete and not to disclose Confidential Information, the Company will pay Executive the total amount of $900,000 less applicable taxes and withholdings (the “Retirement Bonus”), in addition to the compensation payable under Section 2.2 and the treatment of equity set forth in Section 2.3 of this Agreement. The Retirement Bonus shall be paid in two installments, with the first installment of $450,000, less all applicable withholdings, payable within 30 days following the Retirement Date and the second installment of $450,000, less all applicable withholdings, payable 30 days following the one-year anniversary of the Retirement Date.

2.2    In addition to the compensation payable under Section 2.1 of this Agreement, Executive shall be eligible to receive his Management Incentive Bonus (“MIB”) for 2018. If and to the extent earned, the MIB payment shall be made at the time that bonuses are normally paid under the MIB Plan but no later than March 15, 2019.

2.3    All outstanding options and restricted stock units under the Company’s equity incentive plans will vest in full as of the Retirement Date and all options will remain exercisable until the one-year anniversary of the Retirement Date. All outstanding performance share awards will continue to vest as if Executive remained employed with the Company through the Vesting Date of the award; all performance share awards will remain subject to the Company’s achievement of established performance metrics. To the extent necessary to reflect the prior sentence, each award agreement for any outstanding stock options, restricted stock units and performance share awards is hereby amended. Except as expressly set forth in this Section, this Agreement does not modify, change, alter or amend the terms and conditions of any outstanding stock options, restricted stock units and performance share awards, and such awards will remain governed by the terms and conditions of the applicable incentive plan and grant agreements. 

2.4    If Executive is a participant in the Company’s welfare plans as of the Retirement Date, Executive, his spouse, and his other dependent(s) may be eligible to elect continued health care coverage under the welfare plans sponsored by the Company, as provided in the applicable provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), which provides generally that certain employees and their dependents may elect to continue coverage under employer-sponsored group health plans for a period of at least eighteen (18) months under certain conditions, including payment by Executive of the “Applicable Premium” as defined in Section 604 of the Executive Retirement Income Security Act of 1974, as amended, 29 U.S.C. §§ 1001 et seq. (“ERISA”).  In the event Executive elects continuation of coverage under COBRA for himself and his spouse and dependents, the Company will reimburse Executive for the Applicable Premium for such coverage (medical, dental, optical and prescription coverage for Executive, his spouse and dependents) for twelve (12) months, thereof, to the extent actually paid by the Executive.  Executive shall bear full responsibility for applying for COBRA coverage and nothing herein shall constitute 

a guarantee of COBRA benefits. Under no circumstances will Executive be entitled to a cash payment or other benefit in lieu of reimbursements for the actual costs of premiums for COBRA continuation hereunder.

2.5    Executive shall be eligible for such benefits under the Company’s existing qualified plans as are provided under the circumstances (taking into account separation of employment as of the Retirement Date) pursuant to the terms of the plan documents governing each of these plans.  Except as otherwise provided herein or in the terms of any documents governing any employee benefit plan maintained by the Com-pany, Executive will cease to be a participant in and will no longer have any coverage or entitlement to benefits, accruals, or contributions under any of the Company’s employee benefit plans effective as of the Retirement Date. Executive agrees that the payments made to him by the Company pursuant to this Agreement do not constitute compensation for purposes of calculating the amount of benefits. Executive may be entitled to under the terms of any pension plan or for the purposes of accruing any benefit, receiving any allocation of any contribution, or having the right to defer any income in any profit-sharing or other employee pension benefit plan, including any cash or deferred arrangement. 

2.6    Executive shall submit for reimbursement any and all unpaid business expenses to the Company within 30 days of the Retirement Date.  The Company will reimburse said expenses provided that they are consistent with, and reimbursable under, the Company’s travel and entertainment expense policy. The Company will not be responsible for reimbursing the Executive for any business expenses incurred during employment but submitted after said 30-day period.

2.7    This Agreement shall never be construed as an admission by the Company of any liability, wrongdoing or responsibility on its part or on the part of any other person or entity described in Section 3.1 of this Agreement. The Company expressly denies any such liability, wrongdoing or responsibility.

3.0    Release

3.1    Executive, on behalf of himself and his heirs, assigns, transferees and representatives, hereby releases and forever discharges the Company, and its predecessors, successors, parents, subsidiaries, affiliates, assigns, representatives and agents, as well as all of their present and former directors, officers, employees, agents, shareholders, representatives, attorneys and insurers (collectively, the “Releasees”), from any and all claims, causes of actions, demands, damages or liability of any nature whatsoever, known or unknown, which Executive has or may have which arise out of his employment or cessation of employment with the Company, or which concern or relate in any way to any acts or omissions done or occurring prior to and including the date of this Agreement, including, but not limited to, claims arising under Federal law including but not limited to the Fair Labor Standards Act, 29 U.S.C. § 201 et seq.; the Equal Pay Act, 29 U.S.C. § 206(a); Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. § 2000e et seq.; 42 U.S.C. § 1981 et seq.; the Americans with Disabilities Act, 42 U.S.C. § 12101 et seq.; the Family and Medical Leave Act, 29 U.S.C. § 2601 et seq.; the Employee Retirement Income Security Act of 1974, as amended, 29 U.S.C. § 1001 et seq.; the Worker Adjustment and Retraining Notification Act, 29 U.S.C. §§ 2101 et seq.; the Age Discrimination in Employment Act, as amended, 29 U.S.C. §§ 621 et seq.; any and all State law claims for discrimination, wrongful termination and/or retaliation; claims for breach of contract, express or implied; claims for breach of the covenant of good faith and fair dealing; claims for compensation, including but not limited to wages, bonuses, or commissions except as otherwise contained herein; claims for benefits or fringe benefits, including, but not limited to, claims for severance pay and/or termination pay, except as otherwise contained herein; claims for, or relating to stock or stock options (except that nothing in this Agreement shall prohibit Executive from exercising any vested stock or stock options or affect Executive’s claims to vested benefits in the Company’s Employees’ Retirement Savings Plan, Deferred Compensation Plan, Employee Stock Purchase Plan, or Cash Balance Retirement Plan, in accordance with the terms of the applicable stock option agreement(s) and applicable plan documents); claims for unaccrued vacation pay; claims arising in tort, including, but not limited to, claims for invasion of privacy, intentional infliction of emotional distress and defamation; claims for quantum meruit and/or unjust enrichment; claims for attorneys’ fees and any and all other claims arising under any other federal, state, local or foreign laws, as well as any and all other common law legal or equitable claims.

3.2    Executive represents that he has not initiated any action or charge against any of the Releasees with any Federal, State or local court or administrative agency. If such an action or charge has been filed by Executive, or on Executive’s behalf, he will use his best efforts to cause it immediately to be withdrawn and dismissed with prejudice. Failure to cause the withdrawal and dismissal with prejudice of any action or charge shall render this Agreement null and void, and any consideration paid hereunder shall be repaid immediately by the Executive upon receipt of such notice. 

3.3    Executive  agrees that he will not institute any lawsuits, either individually or as a class representative or member, or join as a party with others who may sue on any such claims, or opt-in to an action brought by others asserting such claims, against any of the Releasees as to any matter based upon, arising from or relating to his employment relationship with the Company from the beginning of time to the date of execution of this Agreement, with the exception of claims and challenges set forth below in Section 3.5. In the event that Executive is made a member of any class asserting such claims without his knowledge or consent, Executive 

shall opt out of such action at the first opportunity.

3.4    Executive is hereby advised that: (i) he should consult with an attorney (at his own expense) prior to executing this Agreement; (ii) he is waiving, among other things, any age discrimination claims under the Age Discrimination in Employment Act, provided, however, he is not waiving any claims that may arise after the date this Agreement is executed; (iii) he has twenty-one (21) days within which to consider the execution of this Agreement, before signing it; and (iv) for a period of seven (7) days following the execution of this Agreement, he may revoke this Agreement by delivering written notice (by the close of business on the seventh day) to the Company in accordance with Section 9.7 herein.

3.5    Notwithstanding the provisions of Section 3.1, said release does not apply to any and all statutory or other claims (i) that are prohibited from waiver by Federal, State or local law, (ii) for enforcement of any covenant under this Agreement, (iii) for any claim for any vested, accrued benefits to which Executive is (or becomes) otherwise entitled pursuant to the terms and conditions of any of the benefit plans in which Executive participated prior to the Retirement Date (but not any incentive or severance plans excepted as provided in Sections 2.0 or 3.0, above), (iv) for unemployment insurance benefits or workers’ compensation benefits, or  (v) for indemnification under applicable statutory, or common law or any insurance, charter, or bylaws of the Company or any of its affiliates, it being understood and agreed that this Agreement does not create or expand upon any such rights, (if any) to indemnification. In addition, the release of claims set forth in this Agreement does not bar a challenge under the Older Workers Benefit Protection Act of 1990 (OWBPA) to the enforceability of the waiver and release of ADEA claims set forth in this Agreement or prohibit Executive from filing a charge with or participating in an investigation by the U.S. Equal Employment Opportunity Commission or other governmental agency with jurisdiction concerning the terms, conditions and privileges of employment or jurisdiction over the Company’s business or assisting with an investigation conducted internally by the Company; provided, however, that by signing this Agreement, Executive waives the right to, and shall not seek or accept, any monetary or other relief of any nature whatsoever in connection with any such charges, investigations or proceedings. This Agreement does not limit Executive’s right to receive an award for information provided to any securities regulatory agency or authority.

3.6    The parties agree that the Company has no prior legal obligation to make the additional payments set forth above in Section 2.0 (including the sub-parts thereto) and that it has been exchanged for the promises of Executive stated in this Agreement.  It is specifically understood and agreed that the additional payments, and each of them, are good and adequate consideration to support the waivers, releases and obligations contained herein, including, without limitation, Sections 3.0, 4.0, 5.0, 6.0, 7.0, and 8.0, and their respective sub-parts, and that all of the payments set forth in Section 2.0 (including the sub-parts thereto) are of value in addition to anything to which Executive already was entitled prior to the execution of this Agreement.

4.0    Confidentiality

4.1    The parties acknowledge that during the course of Executive’s employment with the Company, he was given access, on a confidential basis, to Confidential Information which the Company has for years collected, developed, and/or discovered through a significant amount of effort and at great expense.  The parties acknowledge that the Confidential Information of the Company is not generally known or easily obtained in the Company’s trade, industry, business, or otherwise and that maintaining the secrecy of the Confidential Information is extremely important to the Company’s ability to compete with its competitors.

4.2    Executive agrees that for a period of seven (7) years from the date of this Agreement, Executive shall not, without the prior written consent of the Company, divulge to any third party or use for his own benefit, or for any purpose other than the exclusive benefit of the Company, any Confidential Information of the Company; provided, however, that nothing herein contained shall restrict Executive’s ability to make such disclosures as such disclosures may be required by law; and further providing that nothing herein contained shall restrict Executive from divulging information that is readily available to the general public as long as such information did not become available to the general public as a direct or indirect result of Executive’s breach of this section of this Agreement.
    
4.3    The term “Confidential Information” in this Agreement shall mean information that is not readily and easily available to the public or to persons in the same business, trade, or industry of the Company, and that concerns the Company’s prices, pricing methods, costs, profits, profit margins, suppliers, methods, procedures, processes or combinations or applications thereof developed in, by, or for the Company’s business, research and development projects, data, business strategies, marketing strategies, sales techniques, customer lists, customer information, or any other information concerning the Company or its business that is not readily and easily available to the public or to those persons in the same business, trade, or industry of the Company. The term “customer information” as used in this Agreement shall mean information that is not readily and easily available to the public or to those persons in the same business, trade, or industry and that concerns the course of dealings between the Company and its customers or potential customers solicited by the Company, customer preferences, particular contracts or locations of customers, negotiations with customers, and any other information concerning customers obtained by the Company that is not readily and easily available to the public or to those in the business, trade, or industry of the Company.

4.4    Executive acknowledges that all information, the disclosure of which is prohibited hereby, is of a confidential and proprietary character and of great value to the Company, and upon the execution of this Agreement (or as soon thereafter as is reasonably practicable), Executive shall forthwith deliver up to the Company all records, memoranda, data, and documents of any description that refer to or relate in any way to such information and shall return to the Company any of its equipment and property which may then be in Executive’s possession or under Executive’s personal control.

4.5    Executive hereby agrees that any failure to fully and completely comply with this provision shall entitle the Company to seek damages for a demonstrated breach of the confidentiality provision, and to include recoupment of monies paid hereunder.  
Notwithstanding the restrictions set forth in Section 4.0 and its subparts, Executive may disclose information protected under Section 4.0 and its subparts if and only if such is (i) lawfully required by any government agency; (ii) otherwise required to be disclosed by law (including legally required financial reporting) and/or by court order; (iii) necessary in any legal proceeding in order to enforce any provision of this Agreement or (iv) made to the Securities Exchange Commission regarding security law issues.  Moreover, notwithstanding the foregoing or any other provision in this Agreement, Executive cannot be held criminally or civilly liable under any federal or state trade secret law if he discloses a trade secret  to federal, state, or local government officials, to his attorneys, or in a sealed court document, for the purpose of reporting or investigating a suspected violation of the law; or to his attorneys or in a sealed court document in connection with a lawsuit for retaliation by an employer for reporting a suspected violation of the law. Notwithstanding the foregoing, Executive may not disclose to any person or government agency any information protected under the Attorney-Client privilege.
4.6    Executive further agrees that he will notify the Company in writing within five (5) calendar days of the receipt of any subpoena, court order, administrative order or other legal process requiring disclosure of information subject to Section 4.0 and sub-parts thereto.

5.0    Non-Solicitation/Non-Compete

5.1    For a period of twelve (12) months following the Retirement Date, Executive shall not become an owner in, shareholder with more than a 2% equity interest in, investor in, or an employee, contractor, consultant, advisor, representative, officer, director, or agent of, a trade or business that offers products and services that are the same or substantially similar to the products and services provided by the  Company in any geographic market in which the  Company conducts business (“Competitor”); provided, however, that the duties and responsibilities of said employment or engagement as an owner in, shareholder with more than 2% equity interest in, investor in, contractor, consultant, advisor, representative, officer, director or agent are (i) the same, similar, or substantially related to current duties and responsibilities or duties or responsibilities performed by Executive while employed by the Company at any time during a six (6) month period prior to Executive’s Retirement Date and (ii) related to or concerning the Competitor’s business activities in the Restricted Territory.  The parties agree and affirm that their intention with respect to Section 5.1 is that Executive’s activities shall be limited only for the twelve (12) month period after the Retirement Date.  The provisions calling for a "look back" of six (6) calendar months prior to the Retirement Date are intended solely as a means of identifying the duties and responsibilities that will define the restricted activities covered by Section 5.1 and are not intended to nor shall they, under any circumstances, be construed to define the length or term of any such restriction.  For purposes of Section 5.1, the term “Restricted Territory” means the geographic area that was part of Executive’s duties and responsibilities within the six (6) month period prior to the Retirement Date.  If a court of competent jurisdiction determines that the Restricted Territory as defined herein is too restrictive, then the parties agree that said court may reduce or limit the Restricted Territory to the largest acceptable area so as to enable the enforcement of Section 5.1.

5.2    For a period of twelve (12) months following the Retirement Date, Executive will not, either directly or indirectly, or on behalf of any person, business, partnership, or other entity, call upon, contact, or solicit any customer or customer prospect of the Company, or any representative of the same, with a view toward the sale or providing of any service or product competitive with the products or services provided by the Company; provided, however, the restrictions set forth in this Section shall apply only to customers or prospects of the Company, or representatives of the same, with which during the past twelve (12) month period the Executive had contact or about whom Executive received Confidential Information as part of his duties and responsibilities while employed with the Company within the twelve (12) month period prior to his Retirement Date. The parties agree and affirm that their intention with respect to Section 5.2 of this Agreement is that Executive's activities be limited only for a twelve (12) month period after the Retirement Date.  The provisions calling for a "look back" of twelve (12) calendar months prior to the Retirement Date are intended solely as a means of identifying the clients to which such restrictions apply and are not intended to nor shall they, under any circumstances, be construed to define the length or term of any such restriction.
5.3    For a period of twelve (12) months following the Retirement Date, Executive shall not directly or indirectly through a subordinate, co-worker, peer, or any other person or entity contact, solicit, encourage or induce any officer, director or employee of the Company to work for or provide services to Executive and/or any other person or entity.

5.4    Executive acknowledges and agrees that the foregoing restrictions are necessary for the reasonable and proper protection of the Company; are reasonable in respect to subject matter, length of time, geographic scope, customer scope, and scope of activity to be restrained; and are not unduly harsh and oppressive so as to deprive Executive of his livelihood or to unduly restrict Executive’s opportunity to earn a living after separation of Executive’s employment with the Company. Executive further acknowledges and agrees that if any restrictions set forth in Section 6.0 and its subparts are found by any court of competent jurisdiction to be unenforceable or otherwise against public policy, the restriction shall be interpreted to extend only over the maximum period of time or other restriction as to which it would otherwise be enforceable.
5.5    Executive acknowledges and agrees that because the violation, breach, or threatened breach of this Section and its sub-parts would result in immediate and irreparable injury to the Company, the Company shall be entitled, without limitation of remedy, to (i) temporary and permanent injunctive and other equitable relief restraining Executive from activities constituting a violation, breach or threatened breach of this Section and its sub-parts to the fullest extent allowed by law; (ii) all such other remedies available at law or in equity, including without limitation the recovery of damages, reasonable attorneys’ fees and costs; and (iii) withhold any further rights, payments or benefits under this Agreement which become due and owing after the occurrence of said violation, breach, or threatened breach, including, without limitation, any rights or claims under Section 2.0 and the sub-parts thereto.
6.0    Return of Company Property

6.1    Executive agrees that within ten (10) days after execution of this Agreement, he will return any and all Company documents and any copies thereof, in any form whatsoever, including computer records or files, containing secret, confidential and/or proprietary information or ideas, and any other Company property (including, but not limited to, any cell phones, pagers and/or computer equipment) in Executive’s possession or control.

7.0    Duty to Cooperate and of Loyalty/Nondisparagement

7.1    Without limitation as to time, Executive agrees to cooperate and make all reasonable and lawful efforts to assist the Company in addressing any issues which may arise concerning any matter with which he was involved during his employment with the Company, including, but not limited to cooperating in any litigation arising therefrom. The Company shall reimburse Executive at a fair and reasonable rate for services provided by the Executive to the Company in connection with services provided under this provision.

7.2    Executive will not (except as required by law) communicate to anyone, whether by word or deed, whether directly or indirectly through an intermediary, and whether expressly or by suggestion or innuendo, any statement, whether characterized as one of fact or opinion, that is intended to cause or that reasonably would likely cause disparagement, a negative impression of, or damage to the business or business reputation of the Company, its affiliated companies, or any Releasee as defined in Section 3.1. Nothing in this section or in this Agreement is intended, nor shall be construed, to (i) prohibit Executive from any communications to, or participation in any investigation or proceeding conducted by, any governmental agency, or (ii) prevent Executive from otherwise engaging in legally protected activity.  

8.0    Section 409A of the Code  

8.1    Notwithstanding any provisions of this Agreement to the contrary, if the Executive is a “specified employee” (within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and determined pursuant to procedures adopted by the Company) at the Retirement Date and if any portion of the payments or benefits to be received by the Executive would be considered deferred compensation under Section 409A of the Code, amounts that would otherwise be payable pursuant to this Agreement during the six-month period immediately following the Executive’s Retirement Date (the “Delayed Payments”) and benefits that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”) during the six-month period immediately following the Executive’s Retirement Date (such period, the “Delay Period”) shall instead be paid or made available on the earlier of (i) the first business day of the seventh (7th) month following the Retirement Date or (ii) the Executive’s death (the applicable date, the “Permissible Payment Date”).  The Company shall also reimburse the Executive for the after-tax cost incurred by the Executive in independently obtaining any Delayed Benefits (the “Additional Delayed Payments”).

8.2    With respect to any amount of expenses eligible for reimbursement under Sections 2.3 and 2.6, such expenses shall be reimbursed by the Company within thirty (30) calendar days following the date on which the Company receives the applicable invoice from the Executive but in no event later than December 31 of the year following the year in which the Executive incurs the related expenses; provided, that with respect to reimbursement relating to the Additional Delayed Payments, such reimbursement shall be made on the Permissible Payment Date.  In no event shall the reimbursements or in-kind benefits to be provided by the Company in one taxable year affect the amount of reimbursements or in-kind benefits to be provided in any other taxable year, 

nor shall the Executive’s right to reimbursement or in-kind benefits be subject to liquidation or exchange for another benefit.

8.3    It is the intention of the parties that payments or benefits payable under this Agreement not be subject to the additional tax imposed pursuant to Section 409A of the Code.  To the extent such potential payments or benefits could become subject to such Section, the Company may amend this Agreement with the goal of giving the Executive the economic benefits described herein in a manner that does not result in such tax being imposed.

8.4    For purposes of Section 409A of the Code, an Executive’s right to receive any “installment” payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct payments.

9.0    Miscellaneous

9.1    This Agreement is binding on, and shall inure to the benefit of, the parties hereto and their heirs, representatives, transferees, principals, executors, administrators, predecessors, successors, parents, subsidiaries, affiliates, assigns, agents, directors, officers and employees.  In the event that Executive dies before payment of all amounts described in this Agreement is made, and this Agreement has been executed and not revoked, the Company agrees to pay unpaid amounts to Executive’s estate.

9.2    This Agreement constitutes the complete agreement between, and contains all of the promises and undertakings by the parties. For the avoidance of doubt, Executive will not be separately entitled to any payments under the terms of the Laboratory Corporation of America Holdings Amended and Restated Master Senior Executive Severance Plan (“Plan”).  Executive agrees that the only considerations for signing this Agreement are the terms stated herein above and that no other representations, promises, or assurances of any kind have been made to him by the Company, its attorneys, or any other person as an inducement to sign this Agreement.  Any and all prior agreements, representations, negotiations and understandings among the parties, oral or written, express or implied, with respect to the subject matter hereof are hereby superseded and merged herein, except that this Agreement supplements and does not amend, alter, void, replace, or otherwise override any confidentiality, non-solicitation, non-compete agreement executed by Executive that is part of any equity award agreement executed by the Executive. To be clear and to avoid any doubt, the parties expressly agree that any confidentiality, non-solicitation, non-compete agreement executed by Executive that is part of any equity award agreement executed by the Executive remains in full force and effect and is not modified in any way by this Agreement.

9.3    This Agreement may not be revised or modified without the mutual written consent of the parties.

9.4    The parties acknowledge and agree that they have each had sufficient time to consider this Agreement and consult with legal counsel of their choosing concerning its meaning prior to entering into this Agreement. In entering into this Agreement, no party has relied on any representations or warranties of any other party other than the representations or warranties expressly set forth in this Agreement.  Executive acknowledges that he has read this Agreement and that he possesses sufficient education and experience to fully understand the terms of this Agreement as it has been written, the legal and binding effect of this Agreement, and the exchange of benefits and payments for promises hereunder, and that he has had a full opportunity to discuss or ask questions about all such terms.

9.5    Except as otherwise provided in this Section, if any provision of this Agreement shall be determined to be invalid or unenforceable by a court of competent jurisdiction, that part shall be ineffective to the extent of such invalidity or unenforceability only, without in any way affecting the remaining parts of said provision or the remaining provisions of this Agreement; provided that, if any provision contained in this Agreement shall be adjudicated to be invalid or unenforceable because such provision is held to be excessively broad as to duration, geographic scope, activity or subject, such provision shall be deemed amended by limiting and reducing it so as to be valid and enforceable to the maximum extent compatible with the applicable laws of such jurisdiction, and such amendment only to apply with respect to the operation of such provision in the applicable jurisdiction in which the adjudication is made.  If Section 3.0 and/or Section 5.0 or any of the sub-parts thereto are deemed invalid or unenforceable, in whole or in part, by a court of competent jurisdiction, this entire Agreement shall be null and void, and any consideration paid hereunder shall be repaid immediately by Executive upon receipt of notice thereof.

9.6    Executive agrees that because he has rendered services of a special, unique, and extraordinary character, damages may not be an adequate or reasonable remedy for breach of his obligations under this Agreement.  Accordingly, in the event of a breach or threatened breach by Executive of the provisions of this Agreement, the Company shall be entitled to (i) an injunction restraining Executive from violating the terms hereof, or from rendering services to any person, firm, corporation, association, or other entity to which any confidential information, trade secrets, or proprietary materials of the Company have been disclosed or are threatened to be disclosed, or for which Executive is working or rendering services, or threatens to work or render services, (ii) all such other remedies available at law or in equity, including without limitation the recovery of damages, reasonable attorneys’ fees and costs, and (iii) withhold any further payments under this Agreement which become due and owing after the occurrence of said violation, 

breach or threatened breach.  Nothing herein shall be construed as prohibiting the Company from pursuing any other remedies available to it for such breach or threatened breach of this Agreement, including the right to terminate any payments to Executive pursuant to this Agreement or the recovery of damages from Executive.  

9.7    Such notice and any other notices required under this Agreement shall be served upon the Company by certified mail, return receipt requested, or by express delivery by a nationally recognized delivery service company such as Federal Express as follows:
If to the Company:
Laboratory Corporation of America Holdings
531 S. Spring Street
Burlington, NC  27215
Attention:  VP, Employment Law 
With a copy to:
Laboratory Corporation of America Holdings
531 S. Spring Street
Burlington, NC  27215
Attention:  Director of HR Compliance
If to the Executive:
F. Samuel Eberts III
402 Westwood Dr.
Chapel Hill, NC 27516

Consistent with the requirements of this Section, each party shall notify the other party of any change of address for the receipt of a notice under this Agreement.
9.8    This Agreement shall be construed in accordance with and governed by the laws, except choice of law provisions, of the State of North Carolina and shall govern to the exclusion of the laws of any other forum.  The parties further agree that any action, special proceeding or other proceeding with respect to this Agreement shall be brought exclusively in the federal or state courts of the State of North Carolina. Executive and Company irrevocably consent to the jurisdiction of the Federal and State courts of North Carolina and that Executive hereby consents and submits to personal jurisdiction in the State of North Carolina. Executive and Company irrevocably waive any objection, including an objection or defense based on lack of personal jurisdiction, improper venue or forum non-conveniens which either may now or hereafter have to the bringing of any action or proceeding in connection with this Agreement.  Executive acknowledges and recognizes that in the event that he has breached this Agreement, the Company may initiate a lawsuit against him in North Carolina, that Executive waives his right to have that lawsuit be brought in a court located closer to where he may reside, and that Executive will be required to travel to and defend himself in North Carolina.

The Effective Date of this Agreement shall be either (a) the Retirement Date or (b) the day after expiration of the seven (7) day revocation period set forth in Section 3.4 of this Agreement, whichever date is later.
Again, I want to thank you for your dedicated service to LabCorp and want to wish you all the best with your next endeavors.  If you agree with the foregoing, please sign below and return two (2) originals to me.  You should retain one (1) original copy of this Agreement for your records.
Sincerely,
/s/ David P. King
David P. King
Chairman and Chief Executive Officer
Agreed to and accepted:
/s/ F. Samuel Eberts III
F. Samuel Eberts III
Date: 2/15/19

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