FIRST AMENDMENT TO AMENDED AND RESTATED PENN TRAFFIC COMPANY SUPPLY AGREEMENT
THIS
EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS MARKED WITH “*” AND BRACKETS AND HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION
FIRST
AMENDMENT
TO
AMENDED
AND RESTATED PENN TRAFFIC COMPANY SUPPLY AGREEMENT
THIS
FIRST AMENDMENT TO AMENDED AND RESTATED PENN TRAFFIC COMPANY SUPPLY AGREEMENT,
made and effective as of the 21st day of
December, 2008 (this “First Amendment”), is
by and between The Penn Traffic Company (“Penn Traffic”) and
C&S Wholesale Grocers, Inc. (“C&S”).
Preliminary
Statement. C&S and Penn Traffic entered into that certain
Amended and Restated Penn Traffic Company Supply Agreement dated as of
September 10, 2008 (the “Supply Agreement”), whereby C&S agreed to procure and to sell, and
Penn Traffic agreed to purchase from C&S, except as otherwise specifically
set forth therein, Penn Traffic’s entire requirements of Merchandise for the
Penn Traffic Stores, pursuant to the terms
and subject to the conditions set forth in
the Supply Agreement.
All
capitalized terms used but not defined in this First Amendment shall have the
meanings ascribed to such terms in the Supply Agreement.
By that
certain Asset Purchase Agreement dated as of December 17, 2008 (the “APA”), by and between
Penn Traffic and Big M Supermarkets, Inc., as “Sellers”, and
C&S, as “Purchaser”, C&S
purchased certain assets of the Sellers’ Wholesale Business (as such term is
defined in the APA) from Sellers on December 21, 2008 (the “Closing
Date”).
In connection with, and as a condition of, the closing
of the purchase and sale contemplated in the APA, Penn Traffic and C&S now desire to amend certain
provisions of the Supply Agreement, upon the terms and conditions set forth
herein to be effective as of the date of this First
Amendment.
Agreement. In
consideration of the premises and of the mutual covenants and agreements
hereinafter set forth, the parties, intending to be legally bound, agree as
follows:
1. Penn Traffic
Stores. The definition of “Penn Traffic Stores”
in Section 1.5 of the Supply Agreement is hereby deleted in its entirety and
replaced with the following Section 1.5:
“Penn Traffic Corporate
Stores. “Penn Traffic Stores”
shall mean all stores owned and operated by Penn Traffic or any subsidiary or
affiliate of Penn Traffic (excluding any such stores closed by or disposed of by
Penn Traffic subsequent to the date hereof), in all instances above, at any time
during the Term (as defined herein) hereof. For the avoidance of
doubt, and consistent with the definition of Penn Traffic Stores, the sharing of
the [*] and the Procurement Fee and [*] under this Agreement shall apply
exclusively to Penn Traffic’s corporate stores, and shall not include the
Wholesale Customers or any New Customers (as such terms are defined in the APA,
and being referred to herein, together, as the “C&S
Customers”).”
2. [*].
3. [*].
4. Inventory
Policy. Section 12 of the Supply Agreement is hereby deleted
in its entirety and replaced with the following Section 12:
“Penn
Traffic will continue to manage and issue store credits to the Penn Traffic
Stores (and to the C&S Customers, in accordance with that certain Transition
Services Agreement dated as of December 21, 2008, by and between Sellers and
C&S (the “TSA”)), and, while Penn Traffic is obligated to perform such
services under the TSA, handle all call-ins and handle customer service
issues. Penn Traffic is responsible for inventory control and any and
all shortages or gains in the Facilities with regard to the Penn Traffic Stores
and the C&S Customers. Penn Traffic will allocate to the C&S
Customers a portion of the shortages and gains in the Facilities pursuant to
that certain Third Party Logistics Agreement dated as of December 21, 2008, by
and between Penn Traffic and C&S (the “3PL
Agreement”). Further, Penn Traffic is fully responsible for
the cost and disposition of leftover ad product, out-of-code, dead, excess or
discontinued inventory with regard to the Penn Traffic Stores and the C&S
Customers (in the case of the C&S Customers subject to the terms of the 3PL
Agreement). The above is pursuant to and further described on
Schedule 12(a) attached hereto. Amounts due by Penn Traffic or
credited to Penn Traffic pursuant to this Section 12 will be estimated weekly
and trued up at the close of each C&S fiscal period, provided, however, that
all Merchandise governed by PACA will be paid for within thirty (30) days as set
forth in Section 5.2 above. The inventory procedures for the
Facilities will be Penn Traffic's current procedures attached hereto as Schedule
12(b). Penn Traffic agrees to observe a warehouseman’s duty of care
under applicable New York and Pennsylvania law with respect to the Merchandise.
Penn Traffic agrees, upon C&S's request, to allow C&S reasonable access
to the Facilities to inspect its inventory (subject to exigent circumstances),
and to confirm that Penn Traffic is following the attached procedures and
otherwise accurately accounting for the inventory under GAAP
principles. Notwithstanding anything to the contrary set forth
herein, each party shall be responsible for its own leftover ad product and the
disposition of unique items. The parties will work together in good
faith to allocate such leftover ad or unique items
appropriately.”
5. Termination by
C&S. Section 14.1(a) of the Supply Agreement is hereby
deleted in its entirety and replaced with the following Section
14.1(a):
“(a)
C&S
may terminate this Agreement for cause (i) if Penn Traffic fails to pay any
undisputed amount or amounts cumulatively exceeding $[*] to C&S when due,
under this Agreement, the GM/HBC Agreement (as defined herein) or any other
agreement between Penn Traffic and C&S or their respective controlled
affiliates or subsidiaries, and such failure continues for 1 business day (where
banks in New York are legally open) after C&S has provided Penn Traffic
written notice of such failure; (ii) if Penn Traffic has breached any material
obligation (other than a payment obligation which is covered under (i) above)
under this Agreement or the Inventory Agreement, and if such breach is curable,
remains uncured after 60 days following written notice of such breach from
C&S; (iii) if C&S terminates the 3PL Agreement pursuant to Section
12.1(b)(ii) thereof, (iv) if Penn Traffic has filed for bankruptcy protection or
a proceeding shall be instituted against Penn Traffic seeking to
adjudicate it bankrupt or insolvent and such proceeding shall remain undismissed
or unstayed for a period of 60 days, provided that C&S shall not terminate
this Agreement in such an event if Penn Traffic is otherwise in compliance with
the terms of this Agreement and Penn Traffic provides adequate assurance of
future performance under this Agreement; or (v) if General Electric Capital
Corporation or Kimco Capital Corp. or any other material credit or lending party
has declared that Penn Traffic has committed an Event of Default as defined
under its respective credit agreement with Penn Traffic and has ceased extending
Penn Traffic credit, provided that C&S shall not terminate this Agreement in
such an event if Penn Traffic is otherwise in compliance with the terms of this
Agreement and Penn Traffic provides adequate assurance of future performance
under this Agreement.”
6. Termination by Penn
Traffic. Section 14.2 of the Supply Agreement is hereby
deleted in its entirety and replaced with the following Section
14.2:
“Penn
Traffic may terminate this Agreement for cause (i) if C&S has breached any
material obligations under this Agreement or the Inventory Agreement and if such
breach is curable, remains uncured after 60 days following written notice of
such breach from Penn Traffic; or (ii) if C&S has filed for bankruptcy
protection, or a proceeding shall be instituted against C&S seeking to
adjudicate it bankrupt or insolvent and such proceeding shall remain undismissed
or unstayed for a period of 60 days, provided that Penn Traffic shall not
terminate this Agreement in such an event if C&S is otherwise in compliance
with the terms of this Agreement and C&S provides adequate assurance of
future performance under this Agreement.
*
Material omitted and filed separately with the Securities and Exchange
Commission pursuant to a request for confidential treatment under Rule 24b-2 of
the Securities and Exchange Act of 1934, as amended.
2
Penn
Traffic shall have the right to terminate all components of this Agreement, with
the exception of the produce-related components of the Agreement which will
remain in full force and effect, for cause if (x) C&S fails to pay any
undisputed amount or amounts cumulatively exceeding $[*] to Penn Traffic when
due, under this Agreement, the GM/HBC Agreement or any other agreement between
Penn Traffic and C&S or their respective controlled affiliates or
subsidiaries, and such failure continues for 1 business day (where banks in New
York are legally open) after Penn Traffic has provided C&S written notice of
such failure; or (y) Penn Traffic terminates the 3PL Agreement pursuant to
Section 12.2(b)(ii), (iii) or (iv) thereof; or (z) C&S elects to terminate
the 3PL Agreement pursuant to Section 12.1(a) thereof, [*].
[*].
[*]. In
the event that Penn Traffic terminates the Agreement pursuant to this Section
14.2, C&S shall pay any and all amounts outstanding, rebates, charges and
fees incurred through termination. The parties agree and acknowledge
that the remedies under this section are nonexclusive, cumulative of and
additional to all other rights or remedies in law or equity of Penn
Traffic. Further, all provisions surviving termination of this
Agreement (such as an indemnification obligation) shall remain in full force and
effect.
[*]
[*].
In
addition to the foregoing, in the event that C&S terminates the 3PL
Agreement pursuant to Section 12.1(b)(iii), (iv) or (v) thereof and C&S has
not otherwise already terminated (or initiated steps to terminate) this
Agreement pursuant to Section 14.1(a) herein, Penn Traffic may elect to
terminate this Agreement, in which case such termination shall be treated for
all purposes as an expiration of the Term pursuant to Section 14.3 of this
Agreement and the rights and obligations of the parties hereto shall be as set
forth in Section 14.3. Penn Traffic shall provide C&S with
written notice of such election within thirty (30) days of C&S’s termination
of such 3PL Agreement.”
7. Confidentiality. Section
18.9(b) of the Supply Agreement is hereby deleted in its entirety and replaced
with the following Section 18.9(b):
“(b) Price Verification
and
[*]. Without limiting the above or any other
terms of this Agreement, the reports, documents, information and materials
provided to Penn Traffic and its auditors in connection with price
verification and audit procedures pursuant to Sections 6.1 and 6.2 are
highly confidential, non-public information which shall be protected from
disclosure pursuant to Section
18.9(a) above. In certain cases,
notwithstanding the execution of this Agreement and the confidentiality
obligations set forth herein, due to the sensitive nature of certain information
and/or other confidentiality obligations of C&S, C&S may not disclose
certain information to Penn Traffic in its original format (e.g. [*]). [*]. Further, Penn Traffic agrees, prior to
disclosure by C&S, to require its third party auditors to execute a
confidentiality agreement in a form reasonably satisfactory
to C&S. In addition to the above, Penn Traffic
understands and agrees that information related to [*]. Accordingly, in order for C&S to
agree to provide such confidential information, Penn Traffic agrees that it will
only allow access to such confidential information by Penn Traffic’s third party
auditors when they have a need to know such confidential information
in connection with Penn Traffic's price verification and [*]. All
such confidential information may not be copied or reproduced by Penn Traffic’s
third party auditors or provided to Penn Traffic or any other party in any form,
and may only be used pursuant to the uses permitted hereunder.”
8. [*].
9. Further
Assurances. Penn Traffic and C&S shall each execute such
other instruments, certificates and agreements as is necessary or appropriate to
fully carry out the intent of this First Amendment and the transactions
contemplated herein.
10. Full Force and
Effect. All terms and conditions of the Supply Agreement,
except those which are expressly modified by this First Amendment, shall remain
in full force and effect, and Penn Traffic and C&S each hereby ratifies and
confirms the Supply Agreement, as amended and modified by this First
Amendment.
11. Authority. Penn
Traffic and C&S each hereby represents to the other that the person
executing this First Amendment on behalf of such party is authorized to do so by
all requisite corporate action of such party.
*
Material omitted and filed separately with the Securities and Exchange
Commission pursuant to a request for confidential treatment under Rule 24b-2 of
the Securities and Exchange Act of 1934, as amended.
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12. Applicable
Law. THIS FIRST AMENDMENT SHALL BE GOVERNED BY AND
CONSTRUED PURSUANT TO THE INTERNAL APPLICABLE LAW (AND NOT THE CONFLICTS
LAW) OF THE STATE OF NEW
YORK.
13. Binding
Effect. This First Amendment shall be binding upon the parties
and their respective successors or assigns, as well as any transferee of
substantially all of the assets of a party, provided, however, that neither
party may assign this First Amendment without the written consent of the other
party.
14. Counterparts. This
First Amendment may be executed in any number of counterparts, each of which
when so executed and delivered shall be deemed an original and all of which when
taken together shall constitute but one and the same instrument.
[SIGNATURE
PAGE TO FOLLOW]
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IN
WITNESS WHEREOF, the parties have duly executed this First Amendment to Amended
and Restated Penn Traffic Company Supply Agreement under seal as of the date
first above written.
| THE PENN TRAFFIC COMPANY | |||
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By:
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| Name | |||
| Title | |||
| C&S WHOLESALE GROCERS, INC. | |||
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By:
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| Name | |||
| Title | |||
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