Common use of Significant Financial Constraint Clause in Contracts

Significant Financial Constraint. 1. Walgreens may suspend its payments if, as of thirty (30) calendar days preceding an annual Payment Date, Walgreens’ credit rating from one or more of the three nationally recognized rating agencies is below BBB- or Baa3, except if within the prior three (3) months it repurchased any shares (other than those shares required to make the Company’s compensation programs non-dilutive), funded new acquisitions with a purchase price greater than $250 million, or paid a dividend. Walgreens shall not utilize this provision until after payment of the first two Annual Remediation Payments. 2. The suspension shall last until thirty (30) days after Walgreens achieves a BBB- or Baa3 or higher credit rating from all nationally recognized rating agencies that rate Walgreens, at which point Walgreens shall make a payment equal to the lowest of the remaining Total Available Amount or one-thirtieth (1/30th) of the Total Available Amount (the “Post- Suspension Payment”). 3. Annual Remediation Payments and Annual Fees Payments shall be made on the schedule prescribed in Exhibit M-2 and Exhibit M-3 beginning in the Payment Year following the Post-Suspension Payment (i.e., if the last payment made pre-suspension was the Annual Remediation Payment 6, the Post-Suspension Payment would be made on schedule for Annual Remediation Payment 7), but shall remain capped at one-thirtieth (1/30th) of the Total Available Amount for two Payment Years until and unless Walgreens’ credit rating from all of the three nationally recognized rating agencies that rate Walgreens increases to BBB or Baa2 (the “Reduced Payment Termination Date”). 4. If Walgreens has reason to believe that it will not be able to the Annual Remediation Payment or Annual Fees Payment for a Payment Year, it shall provide at least ninety (90) calendar days’ prior written notice to the Settlement Fund Administrator and Enforcement Committee (a “Deferred Payment Notice”). Any Deferred Payment Notice shall specify and include: (a) the gross amount of the payments owed, (b) the amount that Walgreens believes it will be unable to pay, (c) the accounting and audited financial documents upon which Xxxxxxxxx relied for making this determination, and (d) any other relevant information for the Enforcement Committee to consider. 5. Deferrals and payments made pursuant to Section IV.K.2-3 will apply proportionally across Base Payments and Incentive Payments. For the avoidance of doubt, this Section IV.K applies fully to Payment Years after the first two (2) Annual Remediation Payment Dates, including the Base Payments and all Incentive Payments due pursuant to this Agreement during the Payment Year at issue. 6. Walgreens shall pay any amounts deferred due to suspension or reduced Post- Suspension Payments, including applicable interest, or before the Payment Date for Payment Year 15. 7. If Walgreens defers some or all of the payments due in a Payment Year pursuant to this Section IV.K, it shall not repurchase any shares (other than those shares required to make the Company’s compensation programs non-dilutive), or fund new acquisitions with a purchase price greater than $250 million during the deferral period or until the deferred amount is fully repaid with interest. 8. Any payments deferred under this Section IV.K shall bear interest at a 7% per annum. 9. In the event that Walgreens suspends and/or defers Annual Payments pursuant to Section IV.K.1-2, Walgreens shall repay the suspended and/or deferred payments as follows: a. If Walgreens suspends payments for up to one year, it shall repay the suspended and/or deferred payments within three Payment Years after the Reduced Payment Termination Date. For each of those three Payment Years, Walgreens shall pay its Annual Remediation Payment and Annual Fee Payment, if applicable, plus the sum of (1) the amount of payments suspended pursuant to Section IV.K.1; (2) the amount of underpayments due to deferral pursuant to Section IV.K.2; and (3) interest pursuant to Section IV.K.8, divided by three or the remaining number of Payment Years, whichever is smaller. b. If Walgreens suspends payments for longer than one year and up to three years, it shall repay the suspended and/or deferred payments within six Payment Years after the Reduced Payment Termination Date. For each of those six Payment Years, Walgreens shall pay its Annual Remediation Payment and Annual Fee Payment, if applicable, plus the sum of (1) the amount of payments suspended pursuant to Section IV.K.1; (2) the amount of underpayments due to deferral pursuant to Section IV.K.2; and (3) interest pursuant to Section IV.K.8, divided by six or the remaining number of Payment Years, whichever is smaller. c. If Walgreens suspends payments for longer than three years, it shall repay the suspended and/or deferred payments by no later than the Payment Date for Payment Year 15. For each of the remaining Payment Years, Walgreens shall pay its Annual Remediation Payment and Annual Fee Payment, if applicable, plus the sum of (1) the amount of payments suspended pursuant to Section IV.K.1; (2) the amount of underpayments due to deferral pursuant to Section IV.K.2; and (3) interest pursuant to Section IV.K.8, divided by the number of remaining Payment Years.

Significant Financial Constraint. 1. Walgreens may suspend its payments if, as of thirty (30) calendar days preceding an annual Payment Date, Walgreens’ credit rating from one or more of the three nationally recognized rating agencies is below BBB- or Baa3, except if within the prior three (3) months it repurchased any shares (other than those shares required to make the Company’s compensation programs non-dilutive), funded new acquisitions with a purchase price greater than $250 million, or paid a dividend. Walgreens shall not utilize this provision until after payment of the first two Annual Remediation Payments. 2. The suspension shall last until thirty (30) days after Walgreens achieves a BBB- or Baa3 or higher credit rating from all nationally recognized rating agencies that rate Walgreens, at which point Walgreens shall make a payment equal to the lowest of the remaining Total Available Amount or one-thirtieth (1/30th) of the Total Available Amount (the “Post- Suspension Payment”). 3. Annual Remediation Payments and Annual Fees Payments shall be made on the schedule prescribed in Exhibit M-2 and Exhibit M-3 beginning in the Payment Year following the Post-Suspension Payment (i.e., if the last payment made pre-suspension was the Annual Remediation Payment 6, the Post-Suspension Payment would be made on schedule for Annual Remediation Payment 7), but shall remain capped at one-thirtieth (1/30th) of the Total Available Amount for two Payment Years until and unless Walgreens’ credit rating from all of the three nationally recognized rating agencies that rate Walgreens increases to BBB or Baa2 (the “Reduced Payment Termination Date”). 4. If Walgreens has reason to believe that it will not be able to the Annual Remediation Payment or Annual Fees Payment for a Payment Year, it shall provide at least ninety (90) calendar days’ prior written notice to the Settlement Fund Administrator and Enforcement Committee (a “Deferred Payment Notice”). Any Deferred Payment Notice shall specify and include: (a) the gross amount of the payments owed, (b) the amount that Walgreens believes it will be unable to pay, (c) the accounting and audited financial documents upon which Xxxxxxxxx Walgreens relied for making this determination, and (d) any other relevant information for the Enforcement Committee to consider. 5. Deferrals and payments made pursuant to Section IV.K.2-3 will apply proportionally across Base Payments and Incentive Payments. For the avoidance of doubt, this Section IV.K applies fully to Payment Years after the first two (2) Annual Remediation Payment Dates, including the Base Payments and all Incentive Payments due pursuant to this Agreement during the Payment Year at issue. 6. Walgreens shall pay any amounts deferred due to suspension or reduced Post- Suspension Payments, including applicable interest, or before the Payment Date for Payment Year 15. 7. If Walgreens defers some or all of the payments due in a Payment Year pursuant to this Section IV.K, it shall not repurchase any shares (other than those shares required to make the Company’s compensation programs non-dilutive), or fund new acquisitions with a purchase price greater than $250 million during the deferral period or until the deferred amount is fully repaid with interest. 8. Any payments deferred under this Section IV.K shall bear interest at a 7% per annum. 9. In the event that Walgreens suspends and/or defers Annual Payments pursuant to Section IV.K.1-2, Walgreens shall repay the suspended and/or deferred payments as follows: a. If Walgreens suspends payments for up to one year, it shall repay the suspended and/or deferred payments within three Payment Years after the Reduced Payment Termination Date. For each of those three Payment Years, Walgreens shall pay its Annual Remediation Payment and Annual Fee Payment, if applicable, plus the sum of (1) the amount of payments suspended pursuant to Section IV.K.1; (2) the amount of underpayments due to deferral pursuant to Section IV.K.2; and (3) interest pursuant to Section IV.K.8, divided by three or the remaining number of Payment Years, whichever is smaller. b. If Walgreens suspends payments for longer than one year and up to three years, it shall repay the suspended and/or deferred payments within six Payment Years after the Reduced Payment Termination Date. For each of those six Payment Years, Walgreens shall pay its Annual Remediation Payment and Annual Fee Payment, if applicable, plus the sum of (1) the amount of payments suspended pursuant to Section IV.K.1; (2) the amount of underpayments due to deferral pursuant to Section IV.K.2; and (3) interest pursuant to Section IV.K.8, divided by six or the remaining number of Payment Years, whichever is smaller. c. If Walgreens suspends payments for longer than three years, it shall repay the suspended and/or deferred payments by no later than the Payment Date for Payment Year 15. For each of the remaining Payment Years, Walgreens shall pay its Annual Remediation Payment and Annual Fee Payment, if applicable, plus the sum of (1) the amount of payments suspended pursuant to Section IV.K.1; (2) the amount of underpayments due to deferral pursuant to Section IV.K.2; and (3) interest pursuant to Section IV.K.8, divided by the number of remaining Payment Years.