Document:

Document

Exhibit 10.4

REVOLVING CREDIT NOTE

												
	$	______________		____________, 20__

FOR  VALUE  RECEIVED,  each  of  the  undersigned,  FORTEGRA  FINANCIAL CORPORATION and LOTS  INTERMEDIATE  CO.  (collectively,  the “Borrowers”),  hereby unconditionally  promise  to  pay  to ___________________ (the  “Lender”)  or  its registered assigns, on the Revolving Credit Maturity Date of the hereinafter defined Credit Agreement, at the principal office of Fifth Third Bank, National Association, as Administrative Agent, in Cincinnati, Ohio (or such other location as the Administrative Agent may designate to the Borrowers), in immediately available funds, the principal sum of __________________ Dollars ($__________) or, if less, the aggregate unpaid principal amount of all Revolving Loans made by the Lender to the Borrowers pursuant to the Credit Agreement, together with interest on the principal amount of each Revolving Loan from time to time outstanding hereunder at the rates, and payable in the manner and on the dates, specified in the Credit Agreement.

This Revolving Credit Note (this “Note”) is one of the Revolving Credit Notes referred to in the Amended and Restated Credit Agreement dated as of August 4, 2020, by and among the Borrowers, the Guarantors party thereto, the Lenders party thereto, and Fifth Third Bank, National Association, as Administrative Agent and Issuing Lender (as amended, restated, modified or supplemented from time to time, the “Credit Agreement”), and this Note and the holder hereof are entitled to all the benefits and security provided for thereby or referred to therein, to which Credit Agreement reference is hereby made for a statement thereof.  All defined terms used in this Note, except terms otherwise defined herein, shall have the same meaning as in the Credit Agreement. This Note shall be governed by and construed in accordance with the laws of the State of New York, without regard to conflicts of law provisions.

[This Note constitutes the renewal, in part, of that certain Third Renewal Revolving Promissory Note in the principal amount of $75,000,000.00, dated December 30, 2019 (the “Existing Note”), executed and delivered by the Borrowers to the Lender. The Existing Note, in turn, (i) renewed that certain Second Renewal Revolving Promissory Note dated April 26, 2019 (the “Second Renewal Note”) in the principal amount of $30,000,000.00, which (ii) renewed that certain Renewal Revolving Promissory Note dated December 20, 2018 (the “First Renewal Note”) in the principal amount of $30,000,000.00, which (iii) renewed that certain Revolving Promissory Note dated December 21, 2017 (the “Original Note”) in the principal amount of $30,000,000.00, each executed and delivered by the Borrowers to Lender. This Note is given in substitution and exchange for, but not in satisfaction of, the Existing Note.]

Voluntary prepayments may be made hereon, certain prepayments are required to be made hereon, and this Note may be declared due prior to the expressed maturity hereof, all in the events, on the terms and in the manner as provided for in the Credit Agreement.

The Borrowers hereby waive demand, presentment, protest or notice of any kind hereunder.

IN WITNESS WHEREOF, Borrowers have caused this Revolving Credit Note to be duly executed as of the date first written above.

						
	BORROWERS:
		
	FORTEGRA FINANCIAL CORPORATION, a Delaware corporation

		
	By:	
	Name:	
	Title:	
		
	LOTS INTERMEDIATE CO., a Delaware corporation

		
	By:	
	Name:	
	Title:	

[Signature Page to Revolving Credit Note (__________)]Document

Exhibit 10.5

SWING NOTE
												
	$	______________		____________, 20__

FOR VALUE RECEIVED, each of the undersigned, FORTEGRA FINANCIAL CORPORATION and LOTS  INTERMEDIATE  CO.  (collectively,  the “Borrowers”),  hereby unconditionally promise to pay to _____________________ (the “Lender”) or its registered assigns, on the Revolving Credit Maturity Date of the hereinafter defined Credit Agreement, at the principal office of Fifth Third Bank, National Association, as Administrative Agent, in Cincinnati, Ohio (or such other location as the Administrative Agent may designate to the Borrowers), in immediately available funds, the principal sum of _____________ Dollars ($__________) or, if less, the aggregate unpaid principal amount of all Swing Loans made by the Lender to the Borrowers pursuant to the Credit Agreement, together with interest on the principal amount of each Swing Loan from time to time outstanding hereunder at the rates, and payable in the manner and on the dates, specified in the Credit Agreement.

This Swing Note (this “Note”) is the Swing Note referred to in the Amended and Restated Credit Agreement dated as of August 4, 2020, by and among the Borrowers, the Guarantors party thereto, the Lenders party thereto, and Fifth Third Bank, National Association, as Administrative Agent and Issuing Lender (as amended, restated, modified or supplemented from time to time, the “Credit Agreement”), and this Note and the holder hereof are entitled to all the benefits and security provided for thereby or referred to therein, to which Credit Agreement reference is hereby made for a statement thereof. All defined terms used in this Note, except terms otherwise defined herein, shall have the same meaning as in the Credit Agreement.  This Note shall be governed by and construed in accordance with the laws of the State of New York, without regard to conflicts of law provisions.

Voluntary prepayments may be made hereon, certain prepayments are required to be made hereon, and this Note may be declared due prior to the expressed maturity hereof, all in the events, on the terms and in the manner as provided for in the Credit Agreement.

[Signature Page to Follow]

IN WITNESS WHEREOF, Borrowers have caused this Swing Note to be duly executed as of the date first written above.

						
	BORROWERS:
		
	FORTEGRA FINANCIAL CORPORATION, a Delaware corporation

		
	By:	
	Name:	
	Title:	
		
	LOTS INTERMEDIATE CO., a Delaware corporation

		
	By:	
	Name:	
	Title:	

[Signature Page to Swing Note]srg-ex1036_683.htm

 

SECOND MASTER LEASE MODIFICATION AND SETTLEMENT AGREEMENT

 

This Second Master Lease Modification and Settlement Agreement (the “Agreement”) is made and entered into as of this       day of _______________, 2020 and is by and between Transform SR Operations LLC and Transform KM Operations LLC (the “Tenant”) and Seritage SRC Finance LLC and Seritage KMT Finance LLC (the “Landlord”), collectively the “Parties” and each a “Party” to this Agreement.

 

BACKGROUND

 

	
 
	
A.
	
Landlord and Tenant entered into that certain Master Lease dated February 28, 2019, as amended by that certain Master Lease Modification and Settlement Agreement dated June 3, 2020 (collectively, the “Master Lease”).  Capitalized terms used but not defined herein shall have the meaning ascribed to such term in the Master Lease;

 

	
 
	
B.
	
Pursuant to the terms of the Master Lease, Tenant leases from Landlord the Remaining Stores set forth on Exhibit A hereto and as more particularly described in the Master Lease;

 

 

	
 
	
C.
	
On account of the COVID-19 pandemic and for other reasons, Tenant has requested that the Master Lease be modified and, upon the satisfaction of certain conditions as set forth herein, terminate with respect to the five (5) Remaining Stores as defined in the Master Lease and identified on Exhibit A, upon termination of which, there shall no longer be any properties subject to the Master Lease; and

 

	
 
	
D.
	
Landlord and Tenant desire to modify certain terms of the Master Lease with respect to (i) the Remaining Stores as identified on Exhibit A, and (ii) upon the satisfaction of certain conditions as set forth herein, terminate the Master Lease.

 

NOW, THEREFORE, in consideration of the mutual obligations and promises contained herein, Landlord and Tenant agree as follows:

 

	
 
	
1.
	
Surrender of Remaining Stores and Termination of Master Lease. 

 

 (a) Landlord acknowledges that Tenant wishes to surrender the Remaining Stores and terminate the Master Lease on the earlier of (i) Tenant’s completion of the going out of business sales at all such locations or (ii) February 28, 2021 (the “Termination Date”).  Tenant shall provide Landlord with no less than five (5) business days’ notice of the Termination Date.  On or prior to the Termination Date, Tenant shall remit to Landlord a surrender and termination fee equal to $3,800,000 (“Termination Payment”). So long as Tenant continues to maintain the Remaining Stores in the physical condition required under the Master Lease, ordinary wear and tear excepted (consistent with prior surrenders under the Master Lease), subject to receipt by Landlord of the Termination Payment, Landlord agrees to accept the surrender of the Remaining Stores and to terminate the Master Lease as of the Termination Date subject to those continuing obligations of Tenant which survive the Termination Date pursuant to the terms of the Master Lease. Subject to section 4 hereof, any guaranty or other security of any kind or nature pertaining to the Master Lease and/or Tenant’s obligations thereunder or with respect to the Remaining Stores or the Demised Premises (the “Guarantees”) shall be simultaneously terminated upon termination of the Master Lease on the Termination Date subject to those continuing obligations of Tenant which survive the Termination Date pursuant to the terms of the Master Lease. 

 

 

 

(b) Tenant on behalf of itself and its affiliates (collectively, “Transform”) agrees that (i) if Transform enters into an agreement with any other Portfolio Landlord (as defined below) for the surrender of any locations leased to Transform by such Portfolio Landlord and (ii) the surrender payment or other monetary consideration paid by Transform to such Portfolio Landlord, on a recovery percentage basis exceeds the amount of the Termination Payment that Landlord has agreed to accept pursuant to this Agreement, then in such instance Landlord shall be entitled to additional consideration in the amount necessary to provide Landlord with the same recovery percentage as such Portfolio Landlord. As used herein “Portfolio Landlord” means any landlord that currently leases four (4) or more locations to Transform. 

 

	
 
	
2.
	
Abatement of Base Rent on the Remaining Stores.  Landlord and Tenant agree that Tenant shall be entitled to abate Base Rent at the Remaining Stores (the “Abated Rent”) for the period commencing on April 1, 2020 and ending on the Termination Date (the “Abatement Period”).  During the Abatement Period, Tenant shall continue to pay all Additional Rent as required pursuant to the Master Lease (including Tenant’s Proportionate Share of any past due real estate taxes at the Remaining Stores). Tenant shall not be obligated to pay any Abated Rent; provided, however, in the event that Tenant (i) fails to make the Termination Payment in accordance with this Agreement, or (ii) fails to pay any Additional Rent on the Remaining Stores as required pursuant to the Master Lease, then in any of the foregoing circumstances and at Landlord’s option, all Abated Rent shall become immediately due and payable.

 

	
 
	
3.
	
Acknowledgment of Liability of Tenant to Landlord Regarding the Remaining Stores.  Tenant agrees and acknowledges that, as of the date that this Agreement is entered into, but for the terms and conditions of this Agreement Tenant is and remains liable to Landlord with respect to all Base Rent, Additional Charges, and other payments related to the Remaining Stores through the Initial Term (the “Remaining Liable Amount”).

 

	
 
	
4.
	
Effectiveness of Release by Landlord. Subject to payment of the Termination Payment, Landlord hereby releases Tenant and its affiliates, and all persons or entities claiming by, through or under them, and their respective heirs, predecessors, successors, and assigns (collectively, the “Tenant Parties”), from the Remaining Liable Amount, subject to automatic rescission of such releases and reinstatement of the Guarantees and the Remaining Liable Amount in full in the event (a) Tenant or any third-party commences any Insolvency Proceeding (as defined by the Master Lease),  and (b) in or as a result of such Insolvency Proceeding Landlord is required to disgorge all or any portion of the Termination Payment (whether pursuant to 11 U.S.C. §§ 547 or 548 or any analogous law of any jurisdiction).   

 

	
 
	
5.
	
Termination of Tenant’s PR ROFO Rights.  As of the Termination Date, upon termination of the Master Lease and subject to Landlord’s release of Tenant and the Tenant Parties pursuant to Paragraph 4 above, Tenant’s PR ROFO Rights under the Master Lease shall be deemed terminated, of no further force and effect, and shall not survive the termination of the Master Lease.  Tenant and the Tenant Parties shall execute (at Tenant’s cost and expense in accordance with Section 1.6 of the Master Lease) all documentation reasonably necessary to release Tenant’s PR ROFO Rights from the public record in Puerto Rico.

 

	
 
	
6.
	
Tenant Warranties.  In consideration of Landlord’s agreement to the terms and conditions of this Agreement, Landlord relies upon Tenant’s warranty that it has reviewed its financial situation and that it currently is solvent within the meaning of 11 U.S.C. § § 547(b)(3) and 548(a)(I)(B)(ii)(I), and will remain solvent following its payment to the Landlord of the Termination  Payment. Furthermore, the Parties warrant that, in evaluating whether to execute this Agreement, they (a) intended that the mutual promises, covenants, and obligations set forth herein constitute a contemporaneous exchange for new value given to Tenant, within the meaning of 11 U.S.C. § 547(c)(1); and (b) concluded that the mutual promises, covenants, and 

2

 

	
 
		
obligations set forth herein do, in fact, constitute such a contemporaneous exchange. In addition, the Parties warrant that the mutual promises, covenants, and obligations set forth herein are intended to and do, in fact, represent a reasonably equivalent exchange of value which is not meant to hinder or delay payment to, or to defraud any entity to which Tenant was or became indebted on or after the date of this transfer, all within the meaning of 11 U.S.C. § 548(a)(l).

 

If Tenant commences, or a third-party commences, any Insolvency Proceeding, Tenant agrees as follows:

 

	
 
	
a.
	
Tenant’s obligations under this Agreement may not be avoided pursuant to 11 U.S.C. §§ 547 or 548 or any analogous law of any jurisdiction, and Tenant will not argue or otherwise take the position in any such case, proceeding, or action that: (i) Tenant’s obligations under this Agreement may be avoided under 11  U.S.C. §§ 547 or 548 or any analogous law of any jurisdiction; (ii) Tenant was insolvent at the time this Agreement was entered into, or became insolvent as a result of the payment made to the Landlord hereunder; or (iii) the mutual promises, covenants, and obligations set forth in this Agreement do not constitute a contemporaneous exchange for new value given to Tenant;
	
 

 

b.   If Landlord is required to disgorge all or any portion of the Termination Payment, Landlord shall have an allowed claim for the entire Remaining Liable Amount against (i) the Tenant and (ii) any and all guarantors pursuant to the Guarantees; and 

 

c.Tenant acknowledges that its agreements in this Paragraph are provided in exchange for valuable consideration provided by and through this Agreement. 

 

	
 
	
7.
	
Release. (a) In consideration of the promises contained in this Agreement, the receipt and sufficiency of which are acknowledged, and except for the obligations set forth in this Agreement Tenant on behalf of itself and its affiliates, and all persons or entities claiming by, through or under them, and their respective heirs, predecessors, successors, and assigns, hereby fully, completely, and finally waive, release, remise, acquit, and forever discharge and covenant not to sue Landlord, as well as Landlord’s respective predecessors, successors, affiliates, subsidiaries, parents, divisions, partnerships, and joint ventures, and all of the foregoing entities’ respective past, present, and future associates, representatives, owners, members, estates, assigns, insurers, reinsurers, shareholders, creditors, administrators, executors, partners, principals, trustees, directors, officers, employees, committee members, independent contractors, attorneys, agents, and all others acting or claiming by, through, under, or in concert with any of the foregoing with respect to any and all claims, demands, suits, manner of obligation, debt, liability, tort, covenant, contract, or causes of action of any kind whatsoever, at law or in equity, relating to the Master Lease and that certain Master Lease dated July 7, 2015 by and between Landlord, as landlord and Kmart Operations LLC and Sears Operations LLC, as tenant.  

 

(b) Tenant warrants and represents that they have not assigned or otherwise transferred any claim or cause of action released by this Agreement.  Tenant acknowledges and agrees that the release set forth herein is a general release and further expressly waives and assumes the risk of any and all claims for damages which exist as of this date but which they do not know or 

3

 

expect to exist, whether through ignorance, oversight, error, negligence, or otherwise, and which, if known, would materially affect Tenant’s decision to enter into this Agreement. 

 

	
 
	
8.
	
No Further Modification.  Except as set forth in this Agreement, all of the terms and provisions of the Master Lease are hereby ratified, approved and confirmed and shall remain unmodified and in full force and effect.  

 

	
 
	
9.
	
Entire Agreement. The Parties represent and agree that no promise, inducement, or agreement other than as expressed herein has been made to them and that subject to the terms and conditions of the Master Lease this Agreement is fully integrated, supersedes all prior agreements and understandings between the Parties, and contains the entire agreement between the Parties. This Agreement shall bind and inure to the benefit of the heirs, beneficiaries, representatives, successors, and assigns of the Parties.

 

	
 
	
10.
	
Authority. The Parties represent and warrant that they possess full authority to enter into this Agreement and to lawfully and effectively release the opposing Party as set forth herein, free of any rights of settlement, approval, subrogation, or other condition or impediment. This undertaking includes specifically, without limitation, the representation and warranty that no third party has now acquired or will acquire rights to present or pursue any claims arising from or based upon the claims that have been released herein.  Landlord represents and warrants that no consent of any lender is required for this Amendment or if required has been obtained.

 

	
 
	
11.
	
Severability. The Parties agree that if, for any reason, a provision of this Agreement is held unenforceable by any court of competent jurisdiction, this Agreement shall be automatically conformed to the law, and otherwise this Agreement shall continue in full force and effect.

 

	
 
	
12.
	
Counterparts. This Agreement may be executed in several counterparts and all counterparts so executed shall constitute one agreement binding on all Parties hereto, notwithstanding that all the Parties are not signatories to the original or the same counterpart.  Facsimile and e-mailed signatures shall be accepted the same as an original signature. A photocopy of this Agreement may be used in any action brought to enforce or construe this Agreement.

 

	
 
	
13.
	
Governing Law. This Agreement will be interpreted and construed in accordance with the laws of the State of New York (without regard to principles of conflicts of laws).

4

 

 

IN WITNESS WHEREOF, Landlord and Tenant have executed the Agreement on the day and year first above-written.

 

 

 

		
	
Landlord:
	
 

	
 
	
 

	
Seritage SRC Finance LLC
	
Seritage KMT Finance LLC

	
 

 

 

 

By:_________________________
	
 

 

 

 

By:_________________________

	
Name:  Matthew Fernand
	
Name:  Matthew Fernand

	
Title: Vice President
	
Title: Vice President

	
 
	
 

	
 
	
 

 

		
	
Tenant
	
 

	
 
	
 

	
Transform SR Operations LLC
	
Transform KM Operations LLC

	
 

 

 

 

By:_________________________
	
 

 

 

 

By:_________________________

	
Name:  
	
Name:  

	
Title:
	
Title:

	
 
	
 

 

5

 

 

		
	
Agreed to and acknowledged by:

 
	
ORIGINAL GUARANTORS:

	
 
	
TRANSFORM MIDCO LLC, 

a Delaware limited liability company

	
 
	
 

 

By:___________________________________

Name: Harold Talisman

Title:   Authorized Signatory

 

 

	
 
	
TRANSFORM SR HOLDINGS LLC, 

a Delaware limited liability company

	
 
	
 

 

By:___________________________________

Name:

Title:   Authorized Signatory

 

 

 

	
 
	
TRANSFORM A&E FACTORY SERVICE LLC

TRANFORM A&E LAWN AND GARDEN LLC

TRANSFORM CALIFORNIA BUILDER APPLIANCES   

  LLC

TRANSFORM FLORIDA BUILDER APPLIANCES   

  LLC

TRANSOFRM INNOVEL SOLUTIONS LLC

TRANSFORM KM LLC

TRANSFORM KM OF MICHIGAN LLC

TRANSFORM KM OF WASHINGTON LLC

TRANSFORM KM OPERATIONS LLC

TRANSFORM KM STORES OF ILLINOIS LLC

TRANSFORM KM STORES OF TEXAS LLC

TRANSFORM KM.COM LLC

TRANSFORM MAXSERV LLC

TRANSFORM MYGOFER LLC

TRANSFORM SERVICELIVE LLC

TRANSFORM SR BRANDS MANAGEMENT LLC

TRANSFORM SR DE PUERTO RICO LLC

TRANSFORM SR HOLDINGS LLC

TRANSFORM SR HOME & BUSINESS 

  FRANCHISES LLC

TRANSFORM SR HOME IMPROVEMENT 

  PRODUCTS LLC

TRANSFORM SR LLC

TRANSFORM SR OPERATIONS LLC

TRANSFORM STARWEST LLC

TRANSFORM WALLY LABS LLC

	
 
	
 

 

By:___________________________________

Name: Harold Talisman

Title:   Authorized Signatory

 

6

 

Exhibit A

Stores

 

			
	
City
	
State
	
Category

	
Big Bear Lake
	
CA
	
Remaining

	
Bayamon
	
PR
	
Remaining

	
Caguas
	
PR
	
Remaining

	
Carolina
	
PR
	
Remaining

	
Mayaguez
	
PR
	
Remaining

 

 

 

 

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