SIXTH AMENDMENT,
ACKNOWLEDGMENT
AND CONSENT AND WAIVER TO
CREDIT AGREEMENT
This SIXTH AMENDMENT, ACKNOWLEDGMENT AND
CONSENT AND WAIVER TO CREDIT AGREEMENT , dated as of
December 18, 2008 (this “ Amendment ”), is by
and among: (a) THE PENN TRAFFIC COMPANY, a Delaware corporation
(“ Penn Traffic ”), PENNY CURTISS BAKING
COMPANY, INC., a New York corporation (“ Penny Curtiss
”), and BIG M SUPERMARKETS, INC., a New York corporation
(“ BIG M ”, and together with Penn Traffic and
Penny Curtiss, jointly, severally and collectively referred to
herein, as “ Borrowers ” and individually as
“ Borrower ”); (b) the other Credit Parties
signatory hereto; (c) GENERAL ELECTRIC CAPITAL CORPORATION, a
Delaware corporation (in its individual capacity, “ GE
Capital ”), for itself, as Lender, and as Agent for
Lenders; and (d) the other Lenders signatory hereto from time to
time (collectively, the “ Lenders ”).
WITNESSETH
:
WHEREAS, the Borrowers, Agent and Lenders are
parties to that certain Credit Agreement, dated as of April 13,
2005 (including all annexes, exhibits and schedules thereto, and as
amended, restated, supplemented or otherwise modified prior to the
date hereof, the “ Credit Agreement
”);
WHEREAS, Penn Traffic and Big M (together, the
“ Seller Companies ”) sold their wholesale
grocery business (the “ Wholesale Business ”)
pursuant to the terms of (i) that certain Asset Purchase Agreement
(a copy of which is annexed hereto as Exhibit A ), dated as
of December 17, 2008, among C&S Wholesale Grocers, Inc.
(“ C&S ”) and the Seller Companies, (ii)
that certain Transition Services Agreement (a copy of which is
annexed hereto as Exhibit B ), dated as of December 21,
2008, among C&S and the Seller Companies and (iii) that certain
Third Party Logistics Agreement (a copy of which is annexed hereto
as Exhibit C ), dated as of December 21, 2008, between
C&S and Penn Traffic (the documents referenced in clauses (i),
(ii) and (iii) together with all annexes, exhibits and schedules
thereto are hereinafter referred to as the “ Asset
Purchase Agreement ”); and
WHEREAS, on December 16, 2008, $519,000 of Net
Proceeds (the “ Escrow Amount ”) from the sale
of the store located at 137 State Route 104, Oswego, New York to
Price Chopper Operating Company, Inc. (the “ Oswego
Sale ”) was wired into the escrow account of Bond,
Schoeneck & King, PLLC (“ Escrow Agent ”)
pursuant to the terms of that certain Escrow Agreement, dated as of
December 15, 2008, among Agent, Supplemental Real Estate Facility
Agent and Escrow Agent;
WHEREAS, Agent and Lenders have agreed to waive,
pursuant to and in accordance with the terms of the Credit
Agreement, certain Events of Default, in the manner and on the
terms and conditions provided for herein;
WHEREAS, the Borrowers have requested that Agent
and Lenders consent to the Seller Companies entry into the Asset
Purchase Agreement and to the transactions contemplated thereby
(the “ Wholesale Business Sale ”) on the terms
and conditions provided for herein; and
WHEREAS, Agent and Lenders have agreed to
consent to the Wholesale Business Sale and amend the Credit
Agreement on the terms and conditions provided for
herein.
NOW THEREFORE, in consideration of the premises
and for other good and valuable consideration, the receipt,
adequacy and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
1. Definitions
. Capitalized
terms not otherwise defined herein shall have the meanings ascribed
to them in the Credit Agreement or Annex A
thereto.
2. Waivers
. (a) As of the Sixth Amendment Effective Date (as
hereinafter defined), Agent and Lenders hereby waive the Event of
Default under Section 8.1(b) of the Credit Agreement
resulting solely from the failure of a Net Proceeds Reserve to be
implemented pursuant to Section 6.8(e)(vii) of the Credit
Agreement in connection with the 2006 sale of BiLo Store #9210
located at 1225 Scalp Avenue, Richland, Pennsylvania.
(b) As of the Sixth
Amendment Effective Date, Agent and Lenders hereby waive any Event
of Default under Section 8.1(b) of the Credit Agreement
resulting solely from the consummation of the Wholesale Business
Sale to the extent it violated Section 6.8 of the Credit
Agreement.
3. Acknowledgment
and Consent . Notwithstanding the provisions of
Sections 1.3(b)(ii) and 6.8 of the Credit Agreement
and the terms of the Intercreditor Agreement, Agent and Lenders
hereby consent to the Wholesale Business Sale pursuant to the Asset
Purchase Agreement (it being understood that any amendments or
modifications to the Asset Purchase Agreement following the
effectiveness of this Amendment that in the reasonable discretion
of the Agent could adversely affect any of the rights or remedies
of the Agent or any Lender must be acceptable to the Agent in its
sole discretion) for an aggregate purchase price (the “
Purchase Price ”) of (i) not less than $27,000,000 in
cash, plus (ii) not less than $11,000,000 for the accounts
receivable of the Wholesale Business, provided that: (a)
Borrowers may use the Escrow Amount, plus up to $10,000,000
of the Net Proceeds from the Wholesale Business Sale to prepay the
Supplemental Real Estate Facility (without penalty or premium) in
an amount that would result in the remaining outstanding principal
amount of the Supplemental Real Estate Facility being no less than
$10,000,000 (the “ SREF Prepayment ”), (b) the
remaining amount of the Net Proceeds from the Wholesale Business
Sale after payment of the SREF Prepayment (the “ Diverted
Amount ”) shall be deposited in the Diversion Account,
(c) upon satisfaction of the conditions set forth in Section
11 of this Amendment, the Diverted Amount shall be used to
repay the outstanding Revolving Loans (and not the Term Loan) in
full in cash in accordance with Section 1.10 of the Credit
Agreement (including the payment, if any, of LIBOR funding breakage
costs in accordance with Section 1.13(b) of the Credit
Agreement), and (d) to the extent the Revolving Loans have been
paid in full in cash, the remaining amount of the Diverted Amount
shall remain in the Diversion Account in accordance with the Credit
Agreement. In addition, Agent and Lenders hereby
acknowledge and agree that the sale of the Wholesale Business as
contemplated by the Asset Purchase Agreement shall be free and
clear of all existing and future liens, claims and encumbrances of
Agent and Lenders, and Agent and Lenders hereby agree that upon
payment by C&S to the Seller Companies of the Purchase Price
Agent and Lenders shall release any and all liens, claims or
encumbrances any of them has or may have on the assets being
transferred pursuant to the Asset Purchase
Agreement. With respect to the provisions of the
foregoing sentence only, C&S shall be deemed a third party
beneficiary of this Amendment, coupled with the power of
enforcement thereof.
4. Amendments to
the Credit Agreement. The Credit Agreement is
hereby amended as of the Sixth Amendment Effective Date as
follows:
(a) Section
1.1(a) of the Credit Agreement is hereby amended by deleting
the first sentence of such Section 1.1(a) in its entirety
and substituting in lieu thereof the following:
“Subject
to the terms and conditions hereof and at the sole and absolute
discretion of Agent, each Revolving Lender agrees to make available
to Borrowers from time to time until the Commitment Termination
Date its Pro Rata Share of advances (each, a “ Revolving
Credit Advance ”); provided , however ,
Borrowers shall not request, and Lenders shall have no obligation
to make, any Revolving Loan to Borrowers at any time if (x) during
the period commencing on the Closing Date and ending on the Sixth
Amendment Effective Date, Excess Revolver Availability is equal to
or less than $26,000,000, (y) during the period commencing on the
Sixth Amendment Effective Date and ending on the Commitment
Termination Date, Excess Revolver Availability is equal to or less
than $13,500,000, and (z) the unfunded portion of the aggregate
commitments of the lenders under the Supplemental Real Estate
Facility is greater than $0.”
(b) Section
1.1(c)(i) of the Credit Agreement is hereby amended by deleting
the first sentence of such Section 1.1(c)(i) in its entirety
and inserting the following sentence in place thereof:
“Agent
shall notify the Swing Line Lender upon Agent’s receipt of
any Notice of Revolving Credit Advance (other than any Notice of
Revolving Credit Advance with regard to which Agent uses its
discretion not fund such request pursuant to Section 2.2(d)
).”
(c) Section
1.5(a) of the Credit Agreement is hereby amended by deleting
such Section 1.5(a) in its entirety and substituting in lieu
thereof the following new Section 1.5(a) :
“(a) Borrowers
shall pay interest to Agent, for the ratable benefit of Lenders in
accordance with the various Loans being made by each Lender, in
arrears on each applicable Interest Payment Date, at the following
rates: (i) with respect to the Revolving Credit
Advances, the Index Rate plus the Applicable Revolver Index Margin
per annum or, at the election of Borrower Representative, the
applicable LIBOR Rate plus the Applicable Revolver LIBOR Margin per
annum, based on the aggregate Revolving Credit Advances outstanding
from time to time as described below; (ii) with respect to the Term
Loan, the Index Rate plus the Applicable Term Loan Index Margin per
annum; and (iii) with respect to the Swing Line Loan, the Index
Rate plus the Applicable Revolver Index Margin per annum, based on
the aggregate Swing Line Advances outstanding from time to time as
described below.
The Applicable Margins are as
follows:
|
Applicable
Revolver Index Margin
|
1.50%
|
|
|
|
|
Applicable
Revolver LIBOR Margin
|
3.00%
|
|
|
|
|
Applicable Term
Loan Index Margin
|
5.00%
|
|
|
|
|
Applicable
Unused Facility Fee Margin
|
0.500%”
|
(d) Clause (ii)
of the second sentence of Section 1.14 of the Credit
Agreement is hereby amended by deleting “at Agent’s
discretion” where it appears in such clause (ii).
(e) Section
2.2(d) is hereby amended by deleting such Section 2.2(d)
in its entirety and substituting in lieu thereof the following new
Section 2.2(d) :
“(d) on
and after the Sixth Amendment Effective Date, in addition to the
Borrowers’ satisfaction of the other conditions to borrowing
set forth in this Section 2.2 , all Revolving Credit
Advances shall be made at Agent’s
discretion;”
(f) Section
6.8(e)(vii) of the Credit Agreement is hereby amended by
deleting such Section 6.8(e)(vii) in its entirety and
inserting the following new Section 6.8(e)(vii) in place
thereof:
“(vii) upon
any such sale, Agent shall establish a Reserve in an amount equal
to (i) for any owned Real Estate located in New York, 74% of the
Net Proceeds from such sale or (ii) for any owned Real Estate
(other than owned Real Estate located in New York) 45% of the Net
Proceeds from such sale (the “ Net Proceeds Reserve
”); provided , that, the amount of any such Reserve
shall not exceed the then outstanding principal amount of the
Supplemental Real Estate Facility,”
(g) Section
6.8(e) of the Credit Agreement is hereby further amended by
deleting the last paragraph of such Section 6.8(e) in its
entirety and inserting the following new paragraph in place
thereof:
“
provided , further , that Borrowers may (x) upon
written notice to Agent, sell and transfer, close or otherwise
dispose of assets in connection with the sale or closure of those
locations listed on Schedule 1A to the Sixth Amendment so
long as such sale or other disposition otherwise complies with each
of the conditions set forth in clauses (iii), (iv), (vi), (vii),
(ix), (x) and (xi) of this Section 6.8(e) , as reasonably
determined by Agent, and Borrowers provide Agent with a detailed
closing statement for any such sale, and (y) upon written notice to
Agent, sell and transfer, close or otherwise dispose of assets in
connection with the sale or closure of up to 6 additional locations
so long as such sale, closure or other disposition otherwise
complies with each of the conditions set forth in clauses (iii),
(iv), (vi), (vii), (ix), (x) and (xi) of this Section 6.8(e)
, as reasonably determined by Agent (except that if (I) the
“four wall EBITDA” of such location for the twelve (12)
month period most recently ended is greater than $200,000 and (II)
such location is an owned Real Estate location, such disposition
shall require Agent’s written consent, to be given at
Agent’s discretion). It being understood that (A)
notwithstanding anything to the contrary set forth in the
Intercreditor Agreement, upon the sale or other disposition of the
lease of a location listed as a “Minor Lease Location”
on Schedule 1B to the Sixth Amendment, Borrowers shall be
permitted to make a payment to Supplemental Real Estate Facility
Agent in an amount equal to 75% of the Net Proceeds from the sale
or disposition of such lease, and (B) such location dispositions
referred to in clauses (x) and (y) above shall not be included in
clause (i) of this Section 6.8(e) for any
purpose.”
(h) Section
8.1(m) of the Credit Agreement is hereby amended by deleting
such Section 8.1(m) in its entirety and substituting in lieu
thereof the following new Section 8.1(m) :
“(m) If
at any time the sum of (A) the Borrowing Base, plus all
collected and available funds in the Diversion Account as of such
date, in each case, less (B) the sum of the aggregate
Revolving Loan and the Swing Line Loan then outstanding is less
than $13,500,000.”
(i) Sections 8.1
(q) and (r) of the Credit Agreement are hereby amended
by deleting such sections in their entirety.
(j) Section
9.9(a)(i) is hereby amended by adding a new sentence at the end
thereof as follows:
“Agent
shall give Revolving Lenders prompt notice of the exercise of its
discretion pursuant to Section 2.2(d) not to fund a
Revolving Credit Advance.”
(k) Section
11.2(c) of the Credit Agreement is hereby amended by adding a
new sentence immediately following the first sentence of such
Section 11.2(c) as follows:
“No
amendment, modification, termination or waiver of or consent with
respect to Sections 1.1(a) and 8.1(m) shall be
effective unless the same shall be in writing and signed by Agent,
each Lender and Borrowers.”
(l) Section
11.7 of the Credit Agreement is hereby amended by amending and
restating the parenthetical in such Section 11.7 in its
entirety as follows:
“(other
than the SREF Intercreditor Agreement and the Trade Lien
Intercreditor Agreement, which notwithstanding anything to the
contrary contained herein, shall govern and control in case of any
such conflict (except any conflict with Section 6.8(e) of
this Agreement for which such Section 6.8(e) shall
control))”
(m) Annex A of
the Credit Agreement is hereby amended by:
(i) amending the
definition of “ Applicable L/C Margin ” by
deleting such definition in its entirety and substituting in lieu
thereof the following new definition:
“‘
Applicable L/C Margin ’ means an amount equal to the
Applicable Revolver LIBOR Margin.”
(ii) amending and
restating the definition of “ Borrowing Base ”
in its entirety to read as follows:
“‘
Borrowing Base ’ means, as of any date of
determination by Agent from time to time, an amount equal to the
sum at such time of:
(a) 85%
of Borrowers’ Eligible Credit Card Receivables,
and
(b) 85%
of Borrowers’ Eligible Accounts, and
(c) the
lesser of (i) 65% of Borrowers’ Eligible Inventory valued at
the lower of cost (determined on a first-in, first-out basis) or
market or (ii) 85% of the net orderly liquidation value of
Borrowers’ Eligible Inventory, and
(d) 80%
of the net appraised value of Borrowers’ Eligible Scripts,
and
(e) 40%
of the fair market value of Borrowers’ and Guarantors’
Eligible Real Estate, and
(f) the
lesser of (i) 35% of the net orderly liquidation value of
Borrowers’ Eligible Machinery and Equipment and (ii)
$2,500,000, and
(g) the
lesser of (i) the Loan Value Reserve and (ii) 50% of the fair
market value of Eligible New York Real Estate,
in each case,
less Reserv
