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FORM 10-QA
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended January 6, 1996
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Commission File Number 0-26602
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THE GRAND UNION COMPANY
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(Exact name of registrant as specified in its charter)
Delaware 22 - 1518276
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(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
201 Willowbrook Boulevard, Wayne, New Jersey 07470 - 0966
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(Address of principal executive offices) (Zip Code)
201-890-6000
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(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
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Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes X No
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As of May 6, 1996, there were issued and outstanding 10,000,000 shares, par
value $1.00 per share, of the Registrant's common stock.
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PART II - OTHER INFORMATION
ITEM 6.
(a) Exhibits
Exhibit Number
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10.1 The Grand Union Company 1995 Equity Incentive Plan.
10.2 The Grand Union Company 1995 Non-Employee Directors' Stock
Option Plan.
10.3* Supply and Distribution Agreement between The Grand Union
Company and C&S Wholesalers, dated June 15, 1995.
10.4* First Amendment to the Supply and Distribution Agreement
between The Grand Union Company and C&S Wholesalers,
dated June 15, 1995.
10.5* Supply and Distribution Agreement between The Grand Union
Company and C&S Wholesalers, dated January 2, 1996.
27.1 Financial Data Schedule.
* Confidential treatment
There were no reports on Form 8-K during the period.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE GRAND UNION COMPANY
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(Registrant)
Date: May 6, 1996 /s/ Kenneth R. Baum
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Kenneth R. Baum
Senior Vice President, Chief Financial
Officer and Secretary (Principal
Financial Officer and Principal
Accounting Officer)
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Exhibit 10.3
SUPPLY AND DISTRIBUTION AGREEMENT
BETWEEN
THE GRAND UNION COMPANY
AND
C&S WHOLESALE GROCERS, INC.
DATED AS OF JUNE 15, 1995
Portions of this Agreement have been omitted and filed separately with the
Commission. Omitted portions have been replaced with the word CONFIDENTIAL.
SUPPLY AND DISTRIBUTION AGREEMENT, dated as of June 15,
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1995 (this "Agreement"), between THE GRAND UNION COMPANY, a Delaware corporation
("Grand Union"), and C&S WHOLESALE GROCERS, INC., a Vermont corporation ("C&S");
W I T N E S S E T H :
WHEREAS, Grand Union operates supermarkets and food stores in the States of
New York, Vermont and New Hampshire; and
WHEREAS, certain of such stores are presently supplied through a facility
leased by Grand Union in Waterford, New York (the "Waterford Facility"); and
WHEREAS, C&S is a wholesale supplier of food products and other merchandise
sold in supermarkets and food stores; and
WHEREAS, Grand Union intends to terminate its use of the Waterford
Facility, and Grand Union and C&S desire to enter into an arrangement pursuant
to which C&S will supply Grand Union with substantially all merchandise
heretofore provided through the Waterford Facility;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements hereinafter set forth, Grand Union and C&S hereby agree
as follows:
ARTICLE I
CERTAIN DEFINITIONS
SECTION 1.01. Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings:
"Agreement" has the meaning specified in the preamble to this Agreement.
"Contract Year" means any consecutive twelve-month period during the Term
commencing on July 25 and ending the following July 24, the first such Contract
Year to commence July 25, 1995.
"Delivery Schedules" means the store delivery schedules as mutually agreed
to by C&S and Grand Union from time to time. The initial Delivery Schedules are
attached to this Agreement as Exhibit A.
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"Event of Force Majeure" means any event, circumstance or condition
described in any of clauses (a) through (d) below that is beyond the control of
C&S, and is not the result of negligence or failure of C&S to act with due care,
and that prevents C&S from performing, in whole or in part, its obligations
under this Agreement. The following occurrences shall be deemed to be Events of
Force Majeure: (a) Acts of God, fire, explosion, accident, flood, storm or other
natural phenomenon; (b) war (whether declared or undeclared), riot, blockade,
sabotage or acts of public enemies; (c) national defense requirements; (d)
compliance with any law, rule, regulation or governmental order that (x) becomes
effective after the date hereof and (y) is binding on C&S, and compliance
therewith by C&S is not voluntary or optional; and (e) producers or
manufacturers establish industry-wide allocations or restrictions on quantities
of products available to C&S.
"Event of Insolvency" means that, with respect to any Person, such Person
shall admit in writing its inability to pay its debts generally or shall make a
general assignment for the benefit of creditors; or any proceeding shall be
instituted by or against such Person seeking to adjudicate it a bankrupt or
insolvent, or seeking liquidation, winding up, reorganization, arrangement,
adjustment, relief or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors, or seeking the
entry of an order for relief or the appointment of a receiver, trustee,
custodian or other similar official for it or for any substantial part of its
property and, in the case of any such proceeding instituted against it (but not
instituted by it), either such proceeding shall remain undismissed or unstayed
for a period of 60 days, or any of the actions sought in such proceeding
(including, without limitation, the entry of an order for relief against, or the
appointment of a receiver, trustee, custodian or other similar official for, it
or for any substantial part of its property) shall occur; or such Person shall
take any corporate action to authorize any of the actions set forth above in
this definition.
"Forward Buy Reserve" has the meaning specified in Section 4.02.
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"Grand Union Stores" shall mean (i) all existing Grand Union stores
currently supplied by the Waterford Facility as itemized on Exhibit B and (ii)
all new Grand Union stores operated in the Northern Region.
"Merchandise" means products in the following categories currently carried
by Grand Union at the Waterford Facility and which are to be sold by Grand Union
through Grand Union Stores: grocery, candy (full case), meat and deli, dairy,
produce, frozen and ice cream and select supply items. "Merchandise" shall not
include health or beauty products, general merchandise, cigarettes, baby food,
light bulbs, select candy, spices, aerosol products, supplies and other
merchandise supplied through Grand Union's Montgomery, New York facility, unless
C&S and Grand Union mutually agree to change the source of items currently
supplied from Grand Union's Montgomery, New York Facility.
"Northern Region" means the States of Vermont and New Hampshire, and New
York State from Wappingers Falls north to the Canadian border.
"Person" means any individual, partnership, firm, corporation, association,
trust, unincorporated organization or other entity or any government or
governmental authority or agency.
"Service Level" means at any time a percentage reflecting the ratio of (i)
the number of cases of Merchandise actually delivered by C&S to Grand Union
Stores within the delivery periods required hereunder to (ii) the total number
of cases of such Merchandise ordered by Grand Union for delivery by C&S during
such delivery periods, less unauthorized Merchandise and manufacturers' out-of-
stock Merchandise.
"Term" has the meaning specified in Section 2.02.
"Waterford Facility" has the meaning specified in the second recital to
this Agreement.
ARTICLE II
SCOPE OF AGREEMENT; TERM
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SECTION 2.01. Agreement. Grand Union hereby agrees to purchase from C&S,
during the Term, substantially all of Grand Union's requirements for
Merchandise, and C&S hereby agrees to supply to Grand Union, during the Term,
all Merchandise ordered by Grand Union hereunder, upon the terms and subject to
the conditions herein set forth.
[CONFIDENTIAL]
SECTION 2.02. Term. Implementation will begin on June 18, 1995, and the
term of this Agreement (the "Term") will be [CONFIDENTIAL] ; provided, however,
that if the Term has not been extended by written agreement entered
[CONFIDENTIAL] , the Term shall be extended, without any action of the parties
hereto [CONFIDENTIAL] Notwithstanding the foregoing provisions, if the date on
which Grand Union commences purchasing substantially all of its requirements of
Merchandise from C&S occurs after July 25, 1995, the Term will commence on the
first Sunday after such date, and the other dates provided for in this Section
2.02 will be adjusted accordingly.
ARTICLE III
PURCHASE, SALE AND DISTRIBUTION
SECTION 3.01. Agreement. C&S shall purchase Merchandise from vendors
thereof, and shall maintain stock and inventory thereof, at such times and in
such amounts as shall be necessary to provide Merchandise to Grand Union
pursuant to Section 2.01.
SECTION 3.02. Delivery. All Merchandise ordered by Grand Union hereunder
shall be delivered by C&S F.O.B. destination to the applicable Grand Union Store
dock in accordance with the Delivery Schedules, and title to, and risk of loss
with respect to, such Merchandise shall remain with C&S until such delivery. C&S
will be in breach of this Agreement if for any reason, other than a material
default by Grand Union under this Agreement, picketing or other labor disputes
at Grand Union Stores or an Event of Force Majeure, C&S fails, during any period
of two consecutive weeks, to deliver [CONFIDENTIAL] scheduled deliveries within
the delivery windows as provided for
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in the Delivery Schedules. If Grand Union believes that a breach has occurred,
Grand Union shall give notice to C&S and C&S shall use its best efforts to
immediately restore the delivery service. If the on-time delivery level is not
immediately restored, C&S and Grand Union agree to meet to seek to resolve the
issue, provided that Grand Union's rights and remedies hereunder shall remain in
effect if such issue is not resolved.
SECTION 3.03. Base Price. C&S will sell Merchandise to Grand Union at C&S's
actual Base Price, which, for each item, shall be [CONFIDENTIAL] C&S shall
publish the Base Price weekly in the bulletin and price book prepared for Grand
Union.
[CONFIDENTIAL]
SECTION 3.04. Other Pricing Provisions. The following provisions shall be
applicable to the purchase and supply by C&S of Merchandise hereunder:
(a) [CONFIDENTIAL]
(b) [CONFIDENTIAL]
(c) [CONFIDENTIAL]
C&S will equalize cash discounts to [CONFIDENTIAL] on a limited
amount of grocery items and those dairy items for which there is
no discount and will provide Grand Union with lists of the relevant
vendors.
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(d) C&S will carry Grand Union's full assortment of private label
Merchandise and will treat private label Merchandise as it does any other
product, provided that if Grand Union requires C&S to purchase more than
[CONFIDENTIAL] of any such item, the amount in excess of [CONFIDENTIAL]
(e) Grand Union will be responsible for providing C&S with ad quantities.
Any requirement for more than [CONFIDENTIAL] for any ad product with more than
[CONFIDENTIAL]
[CONFIDENTIAL]
[CONFIDENTIAL]
Given equal quality and price, Grand Union will use its best efforts to
utilize C&S's vendors in order to keep additional slots to a minimum.
(g) Grand Union shall have the right to continue to negotiate with
suppliers in the Albany, New York and metropolitan New York City area markets
for promotional allowances and list costs of
[CONFIDENTIAL]
SECTION 3.05. Payments. (a) Grand Union will pay C&S
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[CONFIDENTIAL] by wire transfer an amount equivalent to [CONFIDENTIAL]
(including all fees and charges payable under this Agreement), as estimated
[CONFIDENTIAL] by Grand Union. If the relevant banks are not open for business
on any Monday, Tuesday, Wednesday, Thursday or Friday during a week, Grand
Union's wire transfers [CONFIDENTIAL] shall be in an amount equivalent to
[CONFIDENTIAL] Time is of the essence. It is agreed and understood that C&S
[CONFIDENTIAL] under the terms and conditions of this Agreement, except as may
result from the express provisions of this Agreement. If there is an overage or
shortfall, it will be adjusted on [CONFIDENTIAL] statement, provided that both
parties will use their best efforts to insure that any overage or shortfall is
minimal and does not negatively impact either party. In the event that Grand
Union fails to make any [CONFIDENTIAL] provided in this Section 3.05(a), C&S
will immediately provide written notice to Grand Union that payment has not been
received and Grand Union will
[CONFIDENTIAL]
Notwithstanding the foregoing, Grand Union shall have the right to dispute
the price and quantities and Grand Union will notify C&S promptly if it believes
there is an error. The parties agree to use their best efforts to resolve such
dispute between Grand Union and C&S within [CONFIDENTIAL] If any such dispute is
not resolved within [CONFIDENTIAL] , the parties will submit the dispute to
binding arbitration as provided in Section 9.13.
(b) The parties agree to establish jointly an overage/shortage policy,
attached hereto as Exhibit C (the "Credit Policy"), which will provide for a
shortage adjustment factor on all shipments based on actual audits performed by
C&S personnel and witnessed by Grand Union representatives. The Credit Policy
will also provide for store delivery documentation and remedy procedures in the
event of a "missing pallet".
SECTION 3.06. Service Level. C&S agrees that the Service Level for all
Merchandise ordered by Grand Union hereunder will be maintained at a minimum
level [CONFIDENTIAL]
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C&S will provide Grand Union a weekly Service Level Reconciliation
Report showing, with respect to each invoice, the number of cases ordered,
the number of cases shipped, the number of cases that are out of stock
(including "warehouse scratches") and the number of cases that are
unauthorized. Service Level percentages will not be adversely affected by
any error by Grand Union in booking advertising and feature items, including
sales levels of feature items in excess of projections made by Grand Union
and adjustments to pre-orders where applicable. If the Service Level falls
below [CONFIDENTIAL](a "Service Level Breach"), Grand Union shall give notice
to C&S and C&S shall use its best efforts to immediately restore the required
Service Level. If, during the third week following the occurrence of a
Service Level Breach the required Service Level is achieved, then the Service
Level Breach shall be cured. Failure to achieve the required Service Level
during the third week shall constitute a breach of this Agreement by C&S,
enabling Grand Union to source product from a third party. Once the Service
Level Breach is cured, Grand Union agrees to cease purchases from third party
suppliers (except with respect to products previously ordered).
ARTICLE IV
FEES; OTHER PAYMENTS
SECTION 4.01. Fees. Grand Union shall pay to C&S, for Merchandise
delivered to Grand Union Stores, fees determined in accordance with the
following schedule. Each percentage specified in such schedule shall be a
percentage of the Base Price applicable to each item:
A. Grocery, candy (full case) and supplies [CONFIDENTIAL]
Delivery Fee - first stop [CONFIDENTIAL]
- each additional stop [CONFIDENTIAL]
B. Perishables
Meat and deli [CONFIDENTIAL]
Dairy [CONFIDENTIAL]
Produce [CONFIDENTIAL]
Delivery Fee* - first stop [CONFIDENTIAL]
- each additional stop [CONFIDENTIAL]
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Banana ripening charge [CONFIDENTIAL]
C. Frozen and ice cream [CONFIDENTIAL]
Delivery Fee - first stop [CONFIDENTIAL]
- each additional stop [CONFIDENTIAL]
D. Label Charge [CONFIDENTIAL]
This label charge includes pricing information, item movement and related
category management reports. The fees set forth above are based on full
truckloads, that is, trucks containing 20-24 pallets of product. C&S will
provide to Grand Union, every four weeks, a list of the number of truck
deliveries multiplied by 20 pallets per truck, will subtract the actual number
of pallets shipped and multiply that number by [CONFIDENTIAL] and will invoice
Grand Union for the amount calculated accordingly. Grand Union hereby
acknowledges that the fees set forth in this Section 4.01 have been determined
on the assumption that shipments will be full truckloads. In addition, Grand
Union shall pay C&S [CONFIDENTIAL] for the cost to handle the return of
cardboard bales and, totes, reclamation product from the stores and cross-
docking of health, beauty care and general merchandise and other select grocery
and supply product handled at Grand Union's Montgomery, New York facility.
SECTION 4.02. Forward Buy Reserve.
[CONFIDENTIAL]
SECTION 4.03. Volume Incentives.
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[CONFIDENTIAL]
For any Contract Year, payment under this Section 4.03 will be made upon
the earlier of (i) the date as of which purchases for such Contract Year are at
least [CONFIDENTIAL] (ii) 10 days after the end of such Contract Year, and any
adjustments in any payment for such Contract Year required pursuant to such
Exhibit D shall be made within such 10-day period. Purchases during the period
from June 18 to July 24, 1995 shall be included in purchases for the first
Contract Year for purposes of this Section 4.03.
SECTION 4.04.
[CONFIDENTIAL]
August 1, 1995 [CONFIDENTIAL]
September 1, 1995 [CONFIDENTIAL]
October 1, 1995 [CONFIDENTIAL]
August 1, 1996 [CONFIDENTIAL]
September 1, 1996 [CONFIDENTIAL]
October 1, 1996 [CONFIDENTIAL]
August 1, 1997 [CONFIDENTIAL]
September 1, 1997 [CONFIDENTIAL]
October 1, 1997 [CONFIDENTIAL]
The foregoing schedule assumes that Grand Union commences purchasing
substantially all of its requirements of Merchandise from C&S by July 31, 1995.
If such commencement is delayed beyond July 31, 1995, such schedule would be
delayed by a number of days equal to the number of days in the delay in such
commencement.
SECTION 4.05.
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[CONFIDENTIAL]
ARTICLE V
CERTAIN COVENANTS
SECTION 5.01. Information. C&S agrees to provide Grand Union with such
information as Grand Union may reasonably request from time to time in order to
monitor compliance by C&S with the provisions of, and to carry out the
transactions contemplated by, this Agreement. C&S further agrees that Grand
Union will be allowed to conduct, twice during any twelve-month period, in-depth
audits [CONFIDENTIAL] Such audits will be conducted by no more than two
auditors, and Grand Union will use its best efforts to complete each such audit
within a one-week period. C&S shall cooperate with Grand Union and its
representatives in connection with any such audit.
SECTION 5.02. Reclamation.
[CONFIDENTIAL]
SECTION 5.03. Termination of Ryder Agreement. C&S understands that Grand
Union has a contract with Ryder Dedicated Logistics with an expiration date of
June 1996, a copy of which
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has been provided to C&S. C&S agrees to use its best efforts to eliminate or
minimize any losses due to the termination of such contract.
SECTION 5.04. Quality Control. (a) C&S will provide to Grand Union certain
products, [CONFIDENTIAL] in accordance with the standards set forth in Grand
Union's Product Specification Manual (the "Standards Manual"), a copy of which
has been provided to C&S (such standards to include, without limitation, those
relating to temperature controls, sanitation standards, storage controls, date
code reviews and packaging inspections). All dairy merchandise to be shipped to
Grand Union will be received at store level with a minimum shelf life stipulated
in Grand Union's receiving specifications as set forth in the Standards Manual.
All standards and specifications referred to above,together with such other
reasonable and practicable standards and specifications of a nature similar to
and not more onerous to C&S than those referred to above, as may be agreed to by
Grand Union and C&S in writing from time to time, are referred to herein as the
"Standards".
(b) Grand Union shall not be required to accept Merchandise that does not
meet the Standards, and any such Merchandise shall be returned on the next C&S
delivery and Grand Union will be credited on the C&S billing statement. If
Grand Union, in its sole judgment, determines that C&S is not in compliance with
the Standards, Grand Union will notify C&S in writing. If C&S has not cured the
problem within 45 days of notification, Grand Union and C&S will meet to seek to
resolve the problem. If the problem is not cured within 30 days after this
meeting, Grand Union will be entitled to use one or more secondary suppliers for
that category or department, until such time as C&S cures the problem.
SECTION 5.05. Compliance with Law. Each of Grand Union and C&S covenants
and agrees that in performing its obligations hereunder, it will comply with all
applicable laws, rules, regulations and orders and will have and maintain all
permits, licenses and authorizations necessary for the conduct of its business
and the performance of its obligations hereunder.
SECTION 5.06. Insurance. C&S agrees that all material properties and
risks of C&S shall at all times be covered by
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valid and currently effective insurance policies or binders of insurance or
programs of self-insurance in such types and amounts as are consistent with
customary practices and standards of companies engaged in businesses and
operations similar to those of C&S. Grand Union agrees that all material
properties and risks of Grand Union shall at all times be covered by valid and
currently effective insurance policies or binders of insurance or programs of
self-insurance in such types and amounts as are consistent with customary
practices and standards of companies engaged in businesses and operations
similar to those of Grand Union.
ARTICLE VI
WATERFORD INVENTORY
SECTION 6.01. Purchase of Inventory. C&S agrees to work with Grand Union
to maintain service levels to Grand Union Stores while Grand Union is reducing
inventory at The Waterford Facility in accordance with the Inventory Reduction
Plan and Timetable mutually agreed upon by C&S and Grand Union. C&S agrees to
purchase from Grand Union any such Inventory remaining after such reduction
program, other than out-of-code, discontinued or unsalable Merchandise.
[CONFIDENTIAL] Title to any such products so sold to C&S shall be transferred
free and clear of all liens and encumbrances, and
[CONFIDENTIAL]
ARTICLE VII
TERMINATION
SECTION 7.01. Termination By C&S. C&S may terminate this Agreement (i) in
the event of a default by Grand Union under Section 3.05 which remains uncured
[CONFIDENTIAL] receipt by Grand Union of written notice thereof from C&S
(subject, however,
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to the provisions of such Section for arbitration), (ii) in the event that Grand
Union materially breaches its other obligations under this Agreement and such
breach is curable and remains uncured after 90 days following receipt by Grand
Union of written notice of such breach from C&S or (iii) upon the occurrence of
an Event of Insolvency with respect to Grand Union.
SECTION 7.02. Termination by Grand Union. Grand Union may terminate this
Agreement (i) in the event that C&S materially breaches its obligations under
this Agreement and such breach is curable and remains uncured [CONFIDENTIAL]
following written notice of such breach from Grand Union or (ii) upon the
occurrence of an Event of Insolvency with respect to C&S. Grand Union may also
terminate this Agreement [CONFIDENTIAL] written notice to C&S. In the event that
Grand Union exercises its right to terminate [CONFIDENTIAL]written notice to
C&S, Grand Union shall pay to C&S the applicable Termination Fee set forth below
as full and liquidated damages to C&S.
Termination Fees
[CONFIDENTIAL]
SECTION 7.03. Negotiations; Interim Period. (a) The parties shall meet at
least once within each 30 day time period during any 90 day time period provided
for in Section 7.01(ii) or Section 7.02(i) hereof to attempt to cure any breach
as provided in such Sections.
(b) During the period following delivery of any notice of termination and
prior to the termination of this Agreement, each party shall perform its
obligations under this Agreement in substantially the same manner as they were
performed prior to the date of delivery of such notice, with no disruption to
Grand Union's supply of Merchandise; provided, however, that the parties shall
negotiate in good faith to agree to a "winding-up" schedule for such period.
SECTION 7.04. Waiver. Either party to this Agreement
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may (a) extend the time for the performance of any of the obligations or other
acts of the other party or (b) waive compliance with any of the agreements or
conditions of the other party contained herein. Any such extension or waiver
shall be valid only if set forth in an instrument in writing signed by the party
to be bound thereby. Any waiver of any term or condition shall not be construed
as a waiver of any subsequent breach or a subsequent waiver of the same term or
condition, or a waiver of any other term or condition, of this Agreement. The
failure of any party to assert any of its rights hereunder shall not constitute
a waiver of any of such rights.
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
SECTION 8.01. Representations and Warranties of C&S. C&S hereby represents
and warrants to Grand Union as follows:
(a) Corporate Organization and Authority. C&S (i) is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Vermont and is authorized to transact business in the States of New Hampshire
and New York; and (ii) has the corporate power and authority to own and operate
its properties and to carry on its business as now conducted and as proposed to
be conducted.
(b) Authorization. C&S has the corporate power and authority to execute,
deliver and perform its obligations under this Agreement and has taken all
necessary corporate action to authorize its execution, delivery and performance
of this Agreement. This Agreement has been duly executed and delivered on
behalf of C&S and constitutes the legal, valid and binding obligation of C&S,
enforceable in accordance with its terms.
(c) No Consents; Conflicts. No consent, authorization by, approval of or
other action by, and no notice to, or filing or registration with, any
governmental authority, agency, regulatory body, lender, lessor, franchisee or
other Person is required for the execution, delivery or performance of this
Agreement by C&S, other than those that have been obtained and are in full force
and effect. The execution, delivery and performance of this Agreement will not
result in any violation or
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breach of any provision of the charter or by-laws of C&S, any judgment, decree
or order to which C&S is a party or by which it is bound, any indenture,
mortgage or other agreement or instrument to which C&S is a party or by which it
is bound or any statute, rule or regulation applicable to C&S.
SECTION 8.02. Representations and Warranties of Grand Union. Grand Union
hereby represents and warrants to C&S as follows:
(a) Corporate Organization and Authority. Grand Union (i) is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and is authorized to transact business in the States of
New Hampshire, Vermont and New York; and (ii) has the corporate power and
authority to own and operate its properties and to carry on its business as now
conducted and as proposed to be conducted.
(b) Authorization. Grand Union has the corporate power and authority to
execute, deliver and perform its obligations under this Agreement and has taken
all necessary corporate action to authorize the execution, delivery and
performance of this Agreement. This Agreement has been duly executed and
delivered on behalf of Grand Union and constitutes the legal, valid and binding
obligation of Grand Union, enforceable in accordance with its terms.
(c) No Consents; Conflicts. No consent, authorization by, approval of or
other action by, and no notice to, or filing or registration with, any
governmental authority, agency, regulatory body, lender, lessor, franchisee or
other Person is required for the execution, delivery or performance of this
Agreement by Grand Union. The execution, delivery and performance of this
Agreement will not result in any violation or breach of any provision of the
charter or by-laws of Grand Union, any judgment, decree or order to which Grand
Union is a party or by which it is bound, any indenture, mortgage or other
agreement or instrument to which Grand Union is a party or by which it is bound
or any statute, rule or regulation applicable to Grand Union.
ARTICLE IX
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GENERAL PROVISIONS
SECTION 9.01. Entire Agreement. This Agreement, together with the
documents referred to herein, constitutes the entire agreement of the parties
with respect to the subject matter hereof and supersedes all prior agreements
and undertakings, both written and oral, between the parties hereto with respect
to the subject matter hereof.
SECTION 9.02. Expenses. Except as otherwise specified in this Agreement,
all costs and expenses, including, without limitation, fees and disbursements of
counsel, financial advisors and accountants, incurred in connection with this
Agreement and the transactions contemplated hereby shall be borne by the party
incurring the same.
SECTION 9.03. Amendments. This Agreement may not be amended or modified
except (i) by an instrument in writing signed by, or on behalf of, each of Grand
Union and C&S or (ii) by a waiver in accordance with Section 7.04.
SECTION 9.04. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given or made (and
shall be deemed to have been duly given or made upon receipt) by delivery in
person, by courier service, by telecopy or telex or by registered or certified
mail (postage prepaid, return receipt requested) to the respective parties at
the following addresses (or at such other address for a party as shall be
specified in a notice given in accordance with this Section 9.04):
(a) If to Grand Union:
William A. Louttit
Executive Vice President
and Chief Operating Officer
The Grand Union Company
201 Willowbrook Boulevard
Wayne, New Jersey 07470-0966
Telephone: (201) 890-6000
Telecopier: (201) 890-6012
(b) If to C&S:
Richard B. Cohen
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President and Chief Executive Officer
C&S Wholesale Grocers, Inc.
Old Ferry Road
Brattleboro, Vermont 05301
Telephone: (802) 257-6700
Telecopier: (802) 257-6620
SECTION 9.05. Binding Effect; Assignment. This Agreement shall be binding
upon and inure to the benefit of Grand Union and C&S and their respective
successors and assigns; provided that (i) C&S shall not have the right to assign
or subcontract its rights or obligations hereunder or any interest herein
(excluding the transportation of Merchandise) without the prior written consent
of Grand Union, which consent shall not be unreasonably withheld, conditioned or
delayed and (ii) Grand Union may assign its rights and delegate its obligations
hereunder only so long as (x) Grand Union shall assign, and the assignee shall
assume, all such rights and obligations, (y) the assignment is to a Person or
Persons who are acquiring all or substantially all of Grand Union's business or
assets in the Northern Region, and (z) Grand Union demonstrates, to the
reasonable satisfaction of C&S, that such Person has the financial capability to
perform the obligations of Grand Union hereunder. C&S agrees that it shall
respond, in respect of clause (z) above, promptly, and in any event within 10
business days of receipt of notice from Grand Union of any such proposed
assignment. Failure by C&S to respond to Grand Union within such 10 business day
period shall be deemed to be a confirmation by C&S to Grand Union of its
reasonable satisfaction with the financial capability of the proposed assignee.
SECTION 9.06. Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
SECTION 9.07. Confidentiality. Each of Grand Union and C&S agrees to and
will cause its respective authorized agents, representatives, affiliates,
employees, officers, directors, accountants, counsel and other designated
representatives (collectively, "Representatives") to (i) treat and hold as
confidential (and not disclose or provide access to any Person to) all records,
books, contracts, instruments, computer data and other data and information
(collectively,
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"Information") concerning the other in its possession or furnished by the other
or the other's Representatives pursuant to this Agreement, (ii) in the event
that either party or its Representatives become legally compelled to disclose
any such Information, provide the other party with prompt written notice of such
requirement so that such other party may seek a protective order or other remedy
or waive compliance with this Section 9.07 and (iii) in the event that such
protective order or other remedy is not obtained, or the other party waives
compliance with this Section 9.07, furnish only that portion of such Information
which is legally required to be provided and exercise its best efforts to obtain
assurances that confidential treatment will be accorded such Information;
provided, however, that this sentence shall not apply to any Information that,
at the time of disclosure, is available publicly and was not disclosed in breach
of this Agreement by such party or its Representatives; and provided further,
however, that C&S agrees that Grand Union is the owner of all Information
relating to Grand Union's purchasing practices and that Grand Union may in its
sole discretion sell such purchasing related Information to third parties. Each
party agrees and acknowledges that remedies at law for any breach of its
obligations under this Section 9.07 are inadequate and that in addition thereto
the other party shall be entitled to seek equitable relief, including injunction
and specific performance, in the event of any such breach, without the necessity
of demonstrating the inadequacy of monetary damages.
SECTION 9.08. Relationship of Parties. In all matters relating to this
Agreement, both parties shall be acting solely as independent contractors and
shall be solely responsible for the acts of their employees, officers, directors
and agents. Employees, agents or contractors of one party shall not be
considered employees, agents or contractors of the other party.
SECTION 9.09. No Third-Party Beneficiaries. This Agreement shall be binding
upon and inure solely to the benefit of the parties hereto and their permitted
assigns, and nothing herein, express or implied, is intended to or shall confer
upon any other Person any legal or equitable right, benefit or remedy of any
nature whatsoever.
SECTION 9.10. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of
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being enforced by any law or public policy, all other terms and provisions of
this Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any party. Upon such determination
that any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner in order that the transactions contemplated
hereby are consummated as originally contemplated to the greatest extent
possible.
SECTION 9.11. Headings. The descriptive headings contained in this
Agreement are for convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement.
SECTION 9.12. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York, without regard
to the principles of conflicts of laws thereof.
SECTION 9.13. Arbitration. (a) Any matter required to be submitted to
arbitration pursuant to Section 3.05 of this Agreement shall be subject to this
Section 9.13. Any such matter shall be submitted to binding arbitration in
Springfield, Massachusetts (or another location agreed to by the parties) in
accordance with the rules and procedures of the American Arbitration Association
(or another organization agreed to by the parties). The arbitration shall be
conducted in accordance with(i) the terms of this Section 9.13; (ii) the
commercial arbitration rules of the American Arbitration Association (or the
corresponding rules of any such other organization); (iii) the Federal
Arbitration Act (Title 9 of the United States Code); and (iv) to the extent the
foregoing are inapplicable, unenforceable or invalid, the laws of the State of
New York. Judgment upon any award rendered hereunder may be entered in any court
having jurisdiction.
(b) A single arbitrator shall be selected by mutual agreement of the
parties, or, if the parties fail to reach such
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agreement within ten days after either party has requested arbitration hereunder
in writing, by, or in a manner provided by, the American Arbitration Association
(or such other organization referred to above).
(c) The arbitrator is empowered to resolve the matter in dispute by summary
ruling substantially similar to a summary judgment and motion to dismiss. The
arbitrator shall resolve all disputes in accordance with applicable substantive
law. The determination of the arbitrator shall be binding on all parties and
shall not be subject to further review or appeal except as allowed by applicable
law. The costs and expenses of the arbitrator shall be apportioned between the
parties hereto as determined by the arbitrator in such manner as the arbitrator
deems reasonable.
(d) The arbitrator and the parties shall take all actions necessary to the
end that the arbitration proceeding shall be concluded as promptly as
practicable.
(e) The provisions of this Section 9.13 shall not preclude a party from
exercising any right or remedy with respect to any matter that is not expressly
required to be submitted to arbitration pursuant to Section 3.05 of this
Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
first written above.
THE GRAND UNION COMPANY
By
------------------------------
Name: William A. Louttit
Title: Executive Vice President,
Chief Operating Officer
C&S WHOLESALE GROCERS, INC.
By
------------------------------
Name: Richard B. Cohen
Title: President
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* All perishables are delivered on the same truck
221-20-
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Exhibit 10.4
FIRST AMENDMENT TO
SUPPLY AND DISTRIBUTION AGREEMENT
(Northern Region)
This First Amendment to Supply and Distribution Agreement, dated as of
, is by and between The Grand Union Company, a Delaware
corporation ("Grand Union") and C&S Wholesale Grocers, Inc., a Vermont
corporation ("C&S").
Preliminary Statement. Grand Union and C&S have entered into the Supply and
Distribution Agreement dated as of June 15, 1995 pursuant to which C&S supplies
certain merchandise to stores in Grand Union's Northern Region (the "Northern
Region Agreement"). Contemporaneously with the execution and delivery of this
First Amendment, Grand Union and C&S have executed and delivered the Supply and
Distribution Agreement dated as of January 2, 1996 pursuant to which C&S
supplies certain merchandise to stores in Grand Union's New York Region (the
"New York Region Agreement"). The purpose of this First Amendment is to amend
the Northern Region Agreement.
Agreement. The parties, intending to be bound, agree to amend the Northern
Region Agreement as follows:
1. Definitions. The following definition is added to Section 1.1:
"New York Region Agreement" means the Supply and Distribution Agreement
dated as of January 2, 1996 between Grand Union and C&S.
2. Amendment of Section 2.02. Section 2.02 is amended to read, in its
entirety, as follows:
SECTION 2.02. Term.
(a) Implementation will begin on June 18, 1995, and the term of this
Agreement (the "Term") will be [CONFIDENTIAL]beginning July 25, 1995; provided,
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however, that if the Term has not been extended by written agreement entered
into[CONFIDENTIAL], the Term shall be extended, without any action of the
parties hereto, for an additional year, to expire [CONFIDENTIAL]
(b) C&S has the right, which may be exercised by giving notice to Grand
Union at any time [CONFIDENTIAL] to extend the Term for two additional Contract
Years and a portion of a third additional Contract Year so that the Term is
extended to [CONFIDENTIAL] Grand Union shall also have the right, which may be
exercised by giving notice to C&S at any time [CONFIDENTIAL], to extend the Term
for two additional Contract Years and a portion of a third additional Contract
Year so that the Term is extended to
[CONFIDENTIAL]
3. Amendment of Section 3.04. The following paragraph is added to Section
3.04:
[CONFIDENTIAL]
4. Amendment of Section 3.05. Section 3.05 is amended to read, in its
entirety, as follows:
SECTION 3.05. Payments.
(a) With respect to all categories of Merchandise except produce, Grand
Union will pay C&S [CONFIDENTIAL] by wire transfer an amount equivalent to
[CONFIDENTIAL] of all such Merchandise (including all fees and
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charges payable under this Agreement), as estimated[CONFIDENTIAL]by Grand Union.
It is agreed and understood that C&S [CONFIDENTIAL] under the terms and
conditions of this paragraph, except as may result from the express provisions
of this Agreement. If there is an overage or shortfall, it will be adjusted on
the [CONFIDENTIAL] , provided that both parties will use their best efforts to
insure that any overage or shortfall is minimal and does not negatively impact
either party.
(b) Commencing with [CONFIDENTIAL] [CONFIDENTIAL] Grand Union shall pay C&S
[CONFIDENTIAL] by wire transfer an amount equal to [CONFIDENTIAL] as set forth
on such statement; provided, however, that the total amount owing from Grand
Union to C&S with respect to produce purchases for the Northern region shall at
no time exceed [CONFIDENTIAL]
(c) If the relevant banks are not open for business on any Monday, Tuesday,
Wednesday, Thursday or Friday during a week, Grand Union's wire transfers
[CONFIDENTIAL] shall be in an amount equivalent to [CONFIDENTIAL] under Sections
3.05(a) and 3.05(b) [CONFIDENTIAL]. Time is of the essence. In the event that
Grand Union fails to make any [CONFIDENTIAL] provided in Sections 3.05(a) or
3.05(b), C&S will immediately provide written notice to Grand Union that payment
has not been received and Grand Union will [CONFIDENTIAL] [CONFIDENTIAL]
Notwithstanding the foregoing, Grand
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Union shall have the right to dispute the price and quantities and Grand Union
will notify C&S promptly if it believes there is an error. The parties agree to
use their best efforts to resolve such dispute between Grand Union and C&S
within [CONFIDENTIAL] If any such dispute is not resolved within [CONFIDENTIAL]
the parties will submit the dispute to binding arbitration as provided in
Section 9.13.
(d) Grand Union will provide a stand-by, irrevocable letter of credit in
favor of C&S to further limit C&S' credit risk, on August 1, 1996, in the amount
of $2,000,000. Such letter of credit shall expire on October 31, 1996. The
letter of credit may be drawn only upon the occurrence of an Event of Insolvency
with respect to Grand Union.
(e) The parties have established an overage/shortage policy, attached to
the Northern Region Agreement as Exhibit B (the "Credit Policy"), which provides
for a shortage adjustment factor on all shipments based on actual audits
performed by C&S personnel and witnessed by Grand Union representatives. The
Credit Policy also provides for store delivery documentation and remedy
procedures in the event of a "missing pallet".
5. Amendment of Section 4.02. Section 4.02 is amended to read, in its
entirety, as follows:
SECTION 4.02.
[CONFIDENTIAL]
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6. Amendment of Section 4.03. The following text is added at the end of
Section 4.03:
In the event this Agreement is extended so that the Term expires
[CONFIDENTIAL], the dollar amounts in this Section shall be prorated to
reflect the shortening of the final Contract Year.
7. Amendment to Section 4.04. The following paragraph is added to Section
4.04:
[CONFIDENTIAL]
8. Amendment to Section 4.05. The following text is added at the end of
Section 4.05:
In the event this Agreement is extended so that the Term expires
[CONFIDENTIAL], the dollar amounts in this Section shall be prorated to
reflect the shortening of the final Contract Year.
9. Amendment to Section 5.02. Section 5.02 is amended to read, in its
entirety, as follows:
SECTION 5.02. Reclamation.
[CONFIDENTIAL]
10. Addition of Section 5.07. A new Section 5.07 is added to read as
follows:
SECTION 5.07. Certain Financial Information. Grand Union shall immediately
give notice to C&S, in the form of a Certificate signed by Grand Union's Chief
Financial Officer, of any defaults occurring under either the Credit Agreement
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between Grand Union and its lending institutions or the Indenture and other
documentation with respect to the notes issued by Grand Union to its senior
noteholders. In addition, Grand Union shall immediately give notice to C&S, in
the form of a Certificate signed by Grand Union's Chief Financial Officer, in
the event that the remaining amount of credit available to Grand Union under its
lines of credit falls below $20,000,000.
11. Addition of Section 5.08. A new Section 5.08 is added to read as
follows:
SECTION 5.08. Affirmation and Acknowledgment. Grand Union affirms and
acknowledges that (i) upon a failure by Grand Union to make any payment when due
pursuant to Section 3.05(b) of this Agreement, C&S may fully enforce against
Grand Union any and all rights that C&S may possess pursuant to the Perishable
Agricultural Commodities Act, 1930, as amended, codified at 7 U.S.C.A. Section
499a et seq. ("PACA"), (ii) upon an Event of Insolvency with respect to Grand
Union or a failure by Grand Union to make any payment when due pursuant to
Section 3.05 of this Agreement, C&S may fully enforce against Grand Union any
and all rights that C&S may possess pursuant to Section 2-702 of the Uniform
Commercial Code as enacted in the State of New York ("Section 2-702"), including
without limitation, the right to reclaim goods delivered to Grand Union upon the
terms and conditions set forth in Section 2-702, and (iii) upon a failure of
Grand Union to make any payment when due under this Agreement or the New York
Region Agreement (a "Grand Union Payment Obligation"), including without
limitation, those payment obligations arising under each of Sections 3.05, 4.01,
4.05 and 7.04 of either such agreement, C&S may, and is hereby authorized by
Grand Union, at any time and from time to time, to the fullest extent permitted
by applicable law, without advance notice to Grand Union
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(any such notice being expressly waived by Grand Union), set off and apply any
and all amounts owed by C&S to Grand Union under this Agreement, including
without limitation, amounts payable [CONFIDENTIAL] pursuant to Section 4.03 of
this Agreement, against any or all of the Grand Union Payment Obligations that
have not been paid when due and remain unpaid, irrespective of whether or not
C&S has exercised any other rights that it has or may have with respect to such
Grand Union Payment Obligations. Grand Union shall execute and deliver to C&S,
from time to time during the term of this Agreement, such documents as C&S may
reasonably request to create, maintain, acknowledge or confirm the rights of C&S
affirmed and acknowledged by Grand Union pursuant to this Section 5.08.
12. Amendment of Article VII. Article VII is amended to read, in its
entirety, as follows:
ARTICLE VII
TERMINATION
SECTION 7.01. Termination by C&S. C&S may terminate this Agreement for
cause (i) in the event of a default by Grand Union under Section 3.05 which
remains[CONFIDENTIAL] receipt by Grand Union of written notice thereof from C&S
(subject, however, to the provisions of such Section for arbitration), (ii) in
the event that Grand Union breaches any other material obligation under this
Agreement and such breach is curable and remains uncured [CONFIDENTIAL] receipt
by Grand Union of written notice of such breach from C&S, (iii) upon the
occurrence of an Event of Insolvency with respect to Grand Union (provided,
however, that C&S shall not terminate this Agreement upon the occurrence of an
Event of Insolvency in the event that Grand Union is otherwise in compliance
with the terms of this Agreement and Grand Union provides adequate assurance of
future performance under this Agreement), or (iv) upon termination of the New
York Region Agreement pursuant to Section 7.01 thereof.
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Notwithstanding the foregoing, in the event that Grand Union defaults under
Section 3.05 on two occasions in any Contract Year and thereafter cures its
default [CONFIDENTIAL] above, C&S may, on the occurrence of any subsequent
default under Section 3.05 occurring in the same Contract Year, terminate this
agreement immediately upon notice to Grand Union. In the event of termination by
C&S under this Section 7.01, Grand Union shall pay to C&S, as full and
liquidated damages (including damages for lost profits), the applicable
termination fee set forth in Section 7.04 below.
SECTION 7.02. Termination by Grand Union. Grand Union may terminate this
Agreement for cause (i) in the event that C&S breaches any material obligation
under this Agreement and such breach is curable and remains uncured
[CONFIDENTIAL] written notice of such breach from Grand Union, (ii) upon the
occurrence of an Event of Insolvency with respect to C&S, or (iii) upon
termination of the New York Region Agreement pursuant to Section 7.02 thereof.
Grand Union may also terminate this Agreement [CONFIDENTIAL] written notice to
C&S; provided, however, that in the event Grand Union exercises such right
[CONFIDENTIAL] Grand Union shall pay to C&S, as full and liquidated damages
(including damages for lost profits), the applicable termination fee set forth
in Section 7.04 below.
SECTION 7.03. Negotiations; Interim Period.
(a) The parties shall meet at least [CONFIDENTIAL] provided for in Section
7.01(ii) or Section 7.02(i) hereto to attempt to cure any breach as provided in
such Sections.
(b) During the period following delivery of any notice of termination and
prior to the termination of this Agreement, each party shall perform its obli-
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gations under this Agreement in substantially the same manner as they were
performed prior to the date of delivery of such notice, with no disruption to
Grand Union's supply of Merchandise; provided, however, that the parties shall
negotiate in good faith to agree to a "winding-up" schedule for such period.
SECTION 7.04. Termination Fees. In the event C&S terminates this Agreement
for cause pursuant to Section 7.01 above, or Grand Union terminates this
Agreement [CONFIDENTIAL]pursuant to Section 7.02 above, Grand Union shall pay to
C&S a termination fee calculated in accordance with the following schedule:
Contract Year
During which Termination Occurs Termination Fee
[CONFIDENTIAL]
The parties acknowledge that it would be difficult and costly to assess and
establish C&S' losses arising out of termination of this Agreement on account of
Grand Union's breach or Grand Union's early termination for its convenience.
Nonetheless, the parties believe that the termination fee schedule set forth
above is reasonable in light of the costs C&S will incur to perform its
obligations under this Agreement and the damages C&S will suffer in the event of
such termination (including but not limited to damages for lost profits,
incidental damages and other consequential damages).
SECTION 7.05. Waiver. Either party to this Agreement may (a) extend the
time for the performance of any of the obligations or other acts of the other
par-
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ty or (b) waive compliance with any of the agreements or conditions of the other
party contained herein. Any such extension or waiver shall be valid only if set
forth in an instrument in writing signed by the party to be bound thereby. Any
waiver of any term or condition shall not be construed as a waiver of any
subsequent breach or a subsequent waiver of the same term or condition, or a
waiver of any other term or condition, of this Agreement. The failure of any
party to assert any of its rights hereunder shall not constitute a waiver of any
of such rights.
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to
be executed by their respective officers thereunto duly authorized as of the
date first written above.
THE GRAND UNION COMPANY
By:_______________________________
Name: William A. Louttit
Title: Executive Vice President
Chief Operating Officer
C&S WHOLESALE GROCERS, INC.
By: _______________________________
Name: Richard B. Cohen
Title: President
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Exhibit 10.5
SUPPLY AND DISTRIBUTION AGREEMENT
BETWEEN
THE GRAND UNION COMPANY
AND
C&S WHOLESALE GROCERS, INC.
DATED AS OF JANUARY 2, 1996
Portions of this Agreement have been omitted and filed separately with the
Commission. Omitted portions have been replaced with the word CONFIDENTIAL.
SUPPLY AND DISTRIBUTION AGREEMENT, dated as of January 2, 1996 (this
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"Agreement"), between THE GRAND UNION COMPANY, a Delaware corporation ("Grand
Union"), and C&S WHOLESALE GROCERS, INC., a Vermont corporation ("C&S");
W I T N E S S E T H :
WHEREAS, Grand Union operates supermarkets and food stores in the States of
Connecticut, New Hampshire, New Jersey, New York, Pennsylvania and Vermont, and
has grouped its stores into a "Northern Region" and a "New York Region"; and
WHEREAS, C&S is a wholesale supplier of food products and other merchandise
sold in supermarkets and food stores; and
WHEREAS, pursuant to the Supply and Distribution Agreement between Grand
Union and C&S dated June 15, 1995, and amended contemporaneously with execution
of this Agreement, C&S has agreed to supply the stores in Grand Union's Northern
Region; and
WHEREAS, Grand Union and C&S desire to enter into an arrangement pursuant
to which C&S will supply merchandise to stores in Grand Union's New York Region;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements hereinafter set forth, Grand Union and C&S hereby agree
as follows:
ARTICLE I
CERTAIN DEFINITIONS
SECTION 1.01. Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings:
"Agreement" has the meaning specified in the preamble to this Agreement.
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"Base Price" has the meaning specified in Section 3.03.
"Contract Year" means any consecutive twelve-month period during the Term
commencing on February 25 and ending the following February 24, the first such
Contract Year to commence February 25, 1996.
"Delivery Schedules" means the store delivery schedules as mutually agreed
to by C&S and Grand Union from time to time. The initial Delivery Schedules are
attached to this Agreement as Exhibit A.
"Event of Force Majeure" means any event, circumstance or condition
described in any of clauses (a) through (e) below that is beyond the control of
C&S, and is not the result of negligence or failure of C&S to act with due care,
and that prevents C&S from performing, in whole or in part, its obligations
under this Agreement. The following occurrences shall be deemed to be Events of
Force Majeure: (a) Acts of God, fire, explosion, accident, flood, storm or other
natural phenomenon; (b) war (whether declared or undeclared); (c) national
defense requirements; (d) compliance with any law, rule, regulation or
governmental order that (x) becomes effective after the date hereof and (y) is
binding on C&S, and compliance therewith by C&S is not voluntary or optional;
and (e) producers or manufacturers establish industry-wide allocations or
restrictions on quantities of products available to C&S.
"Event of Insolvency" means that, with respect to any Person, such Person
shall admit in writing its inability to pay its debts generally or shall make a
general assignment for the benefit of creditors; or any proceeding shall be
instituted by or against such Person seeking to adjudicate it a bankrupt or
insolvent, or seeking liquidation, winding up, reorganization, arrangement,
adjustment, relief or composition of it or its debts under any law
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relating to bankruptcy, insolvency or reorganization or relief of debtors, or
seeking the entry of an order for relief or the appointment of a receiver,
trustee, custodian or other similar official for it or for any substantial part
of its property and, in the case of any such proceeding instituted against it
(but not instituted by it), either such proceeding shall remain undismissed or
unstayed for a period of 60 days, or any of the actions sought in such
proceeding (including, without limitation, the entry of an order for relief
against, or the appointment of a receiver, trustee, custodian or other similar
official for, it or for any substantial part of its property) shall occur; or
such Person shall take any corporate action to authorize any of the actions set
forth above in this definition.
"Forward Buy Reserve" has the meaning specified in Section 4.02.
"Grand Union Stores" shall mean (i) all existing Grand Union stores in the
New York Region as itemized on Exhibit B and (ii) all new Grand Union stores
operated in the New York Region.
"Merchandise" means products in the following categories which are to be
sold by Grand Union through Grand Union Stores: grocery, candy (full case), meat
and deli, produce, and all store supply items. Commencing October 31, 1997,
"Merchandise" includes products in the dairy category. Commencing March 31,
2001, "Merchandise" also includes products in the frozen food category.
"Merchandise" shall not include health or beauty products, general merchandise,
cigarettes, baby food, light bulbs, select candy, spices, aerosol products, and
other merchandise supplied through Grand Union's Montgomery, New York faci-
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lity, unless C&S and Grand Union mutually agree to change the source of these
items currently supplied from Grand Union's Montgomery, New York Facility.
"New York Region" means the States of Connecticut, Pennsylvania, New Jersey
and New York State south of Wappingers Falls.
"Northern Region Agreement" means the Supply and Distribution Agreement
between Grand Union and C&S dated June 15, 1995, as amended from time to time.
"Person" means any individual, partnership, firm, corporation, association,
trust, unincorporated organization or other entity or any government or
governmental authority or agency.
"Service Level" means at any time a percentage reflecting the ratio of (i)
the number of cases of Merchandise actually delivered by C&S to Grand Union
Stores within the delivery periods required hereunder to (ii) the total number
of cases of such Merchandise ordered by Grand Union for delivery by C&S during
such delivery periods, less unauthorized Merchandise and manufacturers' out-of-
stock Merchandise.
"Term" has the meaning specified in Section 2.02.
ARTICLE II
SCOPE OF AGREEMENT; TERM
SECTION 2.01. Agreement. Grand Union hereby agrees to purchase from C&S,
during the Term, substantially all of Grand Union's requirements for
Merchandise, and C&S hereby agrees to supply to Grand Union, during the Term,
all Merchandise ordered by Grand Union hereunder, upon the terms and subject to
the conditions herein set forth.
[CONFIDENTIAL]
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SECTION 2.02. Term.
(a) Implementation will begin on January 2, 1996, and the term of this
Agreement (the "Term") will be [CONFIDENTIAL], beginning February 25, 1996;
provided, however, that if the Term has not been extended by written agreement
entered into [CONFIDENTIAL] the Term shall be extended, without any action of
the parties hereto, for an additional Contract Year, to expire [CONFIDENTIAL]
(b) C&S has the right, which may be exercised by giving notice to
Grand Union at any time [CONFIDENTIAL], to extend the Term for two additional
Contract Years so that the Term is extended to [CONFIDENTIAL]. Grand Union shall
also have the right, which may be exercised by giving notice to C&S at any time
[CONFIDENTIAL] to extend the Term for two additional Contract Years so that the
Term is extended to
[CONFIDENTIAL]
[CONFIDENTIAL]
(c) Notwithstanding the foregoing provisions, if the date on which Grand
Union commences purchasing substantially all of its requirements of Merchandise
from C&S occurs after February 25, 1996, the Term will commence on the first
Sunday after such date, and the other dates provided for in this Section 2.02
will be adjusted accordingly.
ARTICLE III
PURCHASE, SALE AND DISTRIBUTION
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SECTION 3.01. Agreement. C&S shall purchase Merchandise from vendors
thereof, and shall maintain stock and inventory thereof, at such times and in
such amounts as shall be necessary to provide Merchandise to Grand Union
pursuant to Section 2.01.
SECTION 3.02. Delivery. All Merchandise ordered by Grand Union hereunder
shall be delivered by C&S F.O.B. destination to the applicable Grand Union Store
dock in accordance with the Delivery Schedules, and title to, and risk of loss
with respect to, such Merchandise shall remain with C&S until such delivery. C&S
will be in breach of this Agreement if for any reason, other than a material
default by Grand Union under this Agreement, picketing or other labor disputes
at Grand Union Stores or an Event of Force Majeure, C&S fails, during any period
of two consecutive weeks, to deliver [CONFIDENTIAL] scheduled deliveries within
the delivery windows as provide for in the Delivery Schedules. If Grand Union
believes that a breach has occurred, Grand Union shall give notice to C&S and
C&S shall use its best efforts to immediately restore the delivery service. If
the on-time delivery level is not immediately restored, C&S and Grand Union
agree to meet to seek to resolve the issue, provided that Grand Union's rights
and remedies hereunder shall remain in effect if such issue is not resolved.
SECTION 3.03. Base Price. C&S will sell Merchandise to Grand Union at C&S's
actual Base Price, which, for each item except store supply items, shall be
[CONFIDENTIAL]
C&S shall publish the Base Price weekly in the bulletin and price book
prepared for Grand Union.
[CONFIDENTIAL]
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SECTION 3.04. Other Pricing Provisions. The following provisions shall be
applicable to the purchase and supply by C&S of Merchandise hereunder:
[CONFIDENTIAL]
C&S will equalize cash discounts to [CONFIDENTIAL] on a limited amount of
grocery items and those dairy items for which there is no discount and will
provide Grand Union with lists of the relevant vendors.
(d) C&S will carry Grand Union's full assortment of private label
Merchandise and will treat private label Merchandise as it does any other
product, provided that if Grand Union requires C&S to purchase more than
[CONFIDENTIAL] of any such item, the amount in excess of [CONFIDENTIAL]
(e) Grand Union will be responsible for providing C&S with ad quantities.
Any requirement for more than [CONFIDENTIAL] for any ad product with more than
[CONFIDENTIAL]
(f)
[CONFIDENTIAL]
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(g) Grand Union shall have the right to continue to negotiate with
suppliers in the Albany, New York and metropolitan New York City area markets
for promotional allowances and list costs of
[CONFIDENTIAL]
[CONFIDENTIAL]
SECTION 3.05. Payments.
(a) With respect to all categories of Merchandise except produce, Grand
Union will pay C&S [CONFIDENTIAL] by wire transfer an amount equivalent to
[CONFIDENTIAL] of all such Merchandise (including all fees and charges payable
under this Agreement), as estimated [CONFIDENTIAL] by Grand Union. It is agreed
and understood that C&S [CONFIDENTIAL] under the terms and conditions of this
paragraph, except as may result from the express provisions of this Agreement.
If there is an overage or shortfall, it will be adjusted [CONFIDENTIAL]
statement, provided that both parties will use their best efforts to insure that
any overage or shortfall is minimal and does not negatively impact either party.
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(b) Commencing with [CONFIDENTIAL] Grand Union shall pay C&S [CONFIDENTIAL]
by wire transfer an amount equal to [CONFIDENTIAL] as set forth on such
statement; provided, however, that the total amount owing from Grand Union to
C&S with respect to produce purchases for the New York region shall at no time
exceed
[CONFIDENTIAL]
(c) If the relevant banks are not open for business on any Monday, Tuesday,
Wednesday, Thursday or Friday during a week, Grand Union's wire transfers
[CONFIDENTIAL] shall be in an amount equivalent to [CONFIDENTIAL] under Sections
3.05(a) and 3.05(b) [CONFIDENTIAL] Time is of the essence. In the event that
Grand Union fails to make any [CONFIDENTIAL] provided in Sections 3.05(a) or
3.05(b), C&S will immediately provide written notice to Grand Union that payment
has not been received and Grand Union will
[CONFIDENTIAL]
Notwithstanding the foregoing, Grand Union shall have the right to dispute
the price and quantities and Grand Union will notify C&S promptly if it believes
there is an error. The parties agree to use their best efforts to resolve such
dispute between Grand Union and C&S within [CONFIDENTIAL] If any such dispute is
not resolved within [CONFIDENTIAL] the parties will submit the dispute to
binding arbitration as provided in
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Section 9.13.
(d) Grand Union will provide a stand-by, irrevocable letter of credit in
favor of C&S to further limit C&S' credit risk, on February 2, 1996, in an
amount totaling $2,000,000. Such letter of credit will expire on May 3, 1996.
The letter of credit may be drawn only upon the occurrence of an Event of
Insolvency with respect to Grand Union.
(e) The parties have established an overage/shortage policy, attached
hereto as Exhibit E (the "Credit Policy"), which provides for a shortage
adjustment factor on all shipments based on actual audits performed by C&S
personnel and witnessed by Grand Union representatives. The Credit Policy also
provides for store delivery documentation and remedy procedures in the event of
a "missing pallet".
SECTION 3.06. Service Level. C&S agrees that the Service Level for all
Merchandise ordered by Grand Union hereunder will be maintained at a minimum
level [CONFIDENTIAL] C&S will provide Grand Union a weekly Service Level
Reconciliation Report showing, with respect to each invoice, the number of cases
ordered, the number of cases shipped, the number of cases that are out of stock
(including "warehouse scratches") and the number of cases that are unauthorized.
Service Level percentages will not be adversely affected by any error by Grand
Union in booking advertising and feature items, including sales levels of
feature items in excess of projections made by Grand Union and adjustments to
pre-orders where applicable. If the Service Level falls below [CONFIDENTIAL](a
"Service Level Breach"), Grand Union shall give notice to C&S and C&S shall use
its best efforts to immediately restore the required Service Level. If, during
the third week following the occurrence of a Service Level Breach the required
Service Level is achieved, then the Service Level Breach shall be cured. Failure
to achieve the
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required Service Level during the third week shall constitute a breach of this
Agreement by C&S, enabling Grand Union to source product from a third party.
Once the Service Level Breach is cured, Grand Union agrees to cease purchases
from third party suppliers (except with respect to products previously ordered).
ARTICLE IV
FEES; OTHER PAYMENTS
SECTION 4.01. Fees. Grand Union shall pay to C&S, for Merchandise delivered
to Grand Union Stores, fees determined in accordance with the following
schedule. Each percentage specified in such schedule shall be a percentage of
the Base Price applicable to each item:
A. Grocery,* candy (full case) upcharge [CONFIDENTIAL]
Delivery Fee - first stop [CONFIDENTIAL]
- each additional stop [CONFIDENTIAL]
B. Perishables
Meat and deli upcharge [CONFIDENTIAL]
Produce upcharge [CONFIDENTIAL]
[CONFIDENTIAL]
[CONFIDENTIAL]
[CONFIDENTIAL]
[CONFIDENTIAL]
[CONFIDENTIAL]
Dairy upcharge [CONFIDENTIAL]
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Delivery Fee** - first stop [CONFIDENTIAL]
- each additional stop [CONFIDENTIAL]
Banana ripening charge [CONFIDENTIAL]
C. Frozen and ice cream upcharge [CONFIDENTIAL]
Delivery fee - first stop [CONFIDENTIAL]
- each additional stop [CONFIDENTIAL]
D. Label Charge [CONFIDENTIAL]
This label charge includes pricing information, item movement and related
category management reports.
The upcharges and fees set forth above are based on full truckloads, that
is, trucks containing 20-24 pallets of product. C&S will provide to Grand Union,
every four weeks, a list of the number of truck deliveries multiplied by 20
pallets per truck, will subtract the actual number of pallets shipped and
multiply that number by[CONFIDENTIAL]and will invoice Grand Union for the amount
calculated accordingly. Grand Union hereby acknowledges that the upcharges and
fees set forth in this Section 4.01 have been determined on the assumption that
shipments will be full truckloads.
In addition, Grand Union shall pay C&S [CONFIDENTIAL] for the service of
handling the return of cardboard bales, totes, and reclamation product from the
stores and cross-docking of health, beauty care and general merchandise and
other select grocery and supply product handled at Grand Union's Montgomery, New
York facility. If C&S supplies trailers to handle cardboard bales, Grand Union
will pay C&S [CONFIDENTIAL]
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SECTION 4.02.
[CONFIDENTIAL]
SECTION 4.03.
[CONFIDENTIAL]
For any Contract Year, any payments due under this Section 4.03(a) will be
made within 10 days after the end of such Contract Year, and any adjustments in
any payment for such Contract Year required pursuant to such Exhibit F shall be
made within such 10-day period
[CONFIDENTIAL]
Such payment shall be paid within ten days following the beginning of the
succeeding Contract Year.
(c) Purchases during the period from commencement of implementation through
day of the First Contract Year shall be included in purchases for the
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First Contract Year for purposes of this Section 4.03.
[CONFIDENTIAL]
January 3, 1996 [CONFIDENTIAL]
February 2, 1996 [CONFIDENTIAL]
March 25, 1996 [CONFIDENTIAL]
April 25, 1996 [CONFIDENTIAL]
February 25, 1997 [CONFIDENTIAL]
March 25, 1997 [CONFIDENTIAL]
April 25, 1997 [CONFIDENTIAL]
February 25, 1998 [CONFIDENTIAL]
March 25, 1998 [CONFIDENTIAL]
April 25, 1998 [CONFIDENTIAL]
February 25, 1999 [CONFIDENTIAL]
March 25, 1999 [CONFIDENTIAL]
April 25, 1999 [CONFIDENTIAL]
The foregoing schedule assumes that Grand Union commences purchasing
substantially all of its requirements of Merchandise from C&S by February 25,
1996. If such commencement is delayed beyond February 25, 1996, such schedule of
payments beginning March 25, 1996 would be delayed by a number of days equal to
the number of days in the delay in such commencement.
[CONFIDENTIAL]
on the dates set forth above shall be suspended if any of the following events
shall have occurred: (i) an Event of Insolvency with respect to Grand Union;
(ii) a payment default on the notes issued by Grand Union to its senior
noteholders; or (iii) a payment default under the Credit Agreement between Grand
Union and its lending institutions. At such time as Grand Union cures such
defaults,
[CONFIDENTIAL].
SECTION 4.05
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<PAGE>
[CONFIDENTIAL]
[CONFIDENTIAL]
ARTICLE V
CERTAIN COVENANTS
SECTION 5.01. Information. C&S agrees to provide Grand Union with such
information as Grand Union may reasonably request from time to time in order to
monitor compliance by C&S with the provisions of, and to carry out the
transactions contemplated by, this Agreement. C&S further agrees that Grand
Union will be allowed to conduct, twice during any twelve-month period, in-depth
audits of [CONFIDENTIAL] Such audits will be conducted by no more than two
auditors, and Grand Union will use its best efforts to complete each such audit
within a one- week period. C&S shall cooperate with Grand Union and its
representatives in connection with any such audit.
SECTION 5.02. Reclamation
[CONFIDENTIAL]
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<PAGE>
SECTION 5.03. Quality Control.
(a) C&S will provide to Grand Union certain products, [CONFIDENTIAL] , in
accordance with the standards set forth in Grand Union's Product Specification
Manual (the "Standards Manual"), a copy of which has been provided to C&S (such
standards to include, without limitation, those relating to temperature
controls, sanitation standards, storage controls, date code reviews and
packaging inspection). All dairy merchandise to be shipped to Grand Union will
be received at store level with a minimum shelf life stipulated in Grand Union's
receiving specifications as set forth in the Standards Manual.
All standards and specifications referred to above, together with such
other reasonable and practicable standards and specifications of a nature
similar to and not more onerous to C&S than those referred to above, as may be
agreed to by Grand Union and C&S in writing from time to time, are referred to
herein as the "Standards."
(b) Grand Union shall not be required to accept Merchandise that does not
meet the Standards, and any such Merchandise shall be returned on the next C&S
delivery and Grand Union will be credited on the C&S billing statement. If Grand
Union, in its sole judgment, determines that C&S is not in compliance with the
Standards, Grand Union will notify C&S in writing. If C&S has not cured the
problem within 45 days of notification, Grand Union and C&S will meet to seek to
resolve the problem. If the problem is not cured within 30 days after this
meeting, Grand Union will be entitled to use one or more secondary suppliers for
that category or department,
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until such time as C&S cures the problem.
SECTION 5.04 Compliance with Law. Each of Grand Union and C&S covenants and
agrees that in performing its obligations hereunder, it will comply with all
applicable laws, rules, regulations and orders and will have and maintain all
permits, licenses and authorizations necessary for the conduct of its business
and the performance of its obligations hereunder.
SECTION 5.05. Insurance. C&S agrees that all material properties and risks
of C&S shall at all times be covered by valid and currently effective insurance
policies or binders of insurance or programs of self-insurance in such types and
amounts as are consistent with customary practices and standards of C&S. Grand
Union agrees that all material properties and risks of Grand Union shall at all
times be covered by valid and currently effective insurance policies or binders
of insurance or programs of self-insurance in such types and amounts as are
consistent with customary practices and standards of companies engaged in
businesses and operations similar to those of Grand Union.
SECTION 5.06. Certain Financial Information. Grand Union shall immediately
give notice to C&S, in the form of a Certificate signed by Grand Union's Chief
Financial Officer, of any defaults occurring under either the Credit Agreement
between Grand Union and its lending institutions or the Indenture and other
documentation with respect to the notes issued by Grand Union to its senior
noteholders. In addition, Grand Union shall immediately give notice to C&S, in
the form of a Certificate signed by Grand Union's Chief Financial Officer, in
the event that the remaining amounts of credit available to Grand Union under
its lines of credit falls below $20,000,000.
SECTION 5.07. Certain Leases. C&S understands that Grand Union
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is the lessee under certain equipment leases as set forth on Exhibit G.
Grand Union represents that it has furnished C&S with a true and correct copy of
each such lease and that there are currently no defaults under such leases. C&S
agrees to use its best efforts to eliminate or minimize any losses due to the
termination of such leases.
SECTION 5.08. Affirmation and Acknowledgment. Grand Union affirms and
acknowledges that (i) upon a failure by Grand Union to make any payment when due
pursuant to Section 3.05(b) of this Agreement, C&S may fully enforce against
Grand Union any and all rights that C&S may possess pursuant to the Perishable
Agricultural Commodities Act, 1930, as amended, codified at 7 U.S.C.A. ' 499a et
seq. ("PACA"), (ii) upon an Event of Insolvency with respect to Grand Union or a
failure by Grand Union to make any payment when due pursuant to Section 3.05 of
this Agreement, C&S may fully enforce against Grand Union any and all rights
that C&S may possess pursuant to Section 2-702 of the Uniform Commercial Code as
enacted in the State of New York ("Section 2-702"), including without
limitation, the right to reclaim goods delivered to Grand Union upon the terms
and conditions set forth in Section 2-702, and (iii)upon a failure of Grand
Union to make any payment when due under this Agreement or the Northern Region
Agreement (a "Grand Union Payment Obligation"), including without limitation,
those payment obligations arising under each of Sections 3.05, 4.01, 4.05 and
7.04 of either such agreement, C&S may, and is hereby authorized by Grand Union,
at any time and from time to time, to the fullest extent permitted by applicable
law, without advance notice to Grand Union (any such notice being expressly
waived by Grand Union), set off and apply any and all amounts owed by C&S to
Grand Union under this Agreement, including without limitation, amounts
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<PAGE>
payable by C&S as volume incentives pursuant to Section 4.03 of this Agreement,
against any or all of the Grand Union Payment Obligations that have not been
paid when due and remain unpaid, irrespective of whether or not C&S has
exercised any other rights that it has or may have with respect to such Grand
Union Payment Obligations. Grand Union shall execute and deliver to C&S, from
time to time during the term of this Agreement, such documents as C&S may
reasonably request to create, maintain, acknowledge or confirm the rights of C&S
affirmed and acknowledged by Grand Union pursuant to this Section 5.08.
ARTICLE VI
GRAND UNION INVENTORY
SECTION 6.01. Purchase of Inventory. C&S agrees to work with Grand Union to
maintain service levels to Grand Union Stores while Grand Union is reducing
inventory at the facilities used by Grand Union to service the New York Region
in accordance with the Inventory Reduction Plan and Timetable mutually agreed
upon by C&S and Grand Union. C&S agrees to purchase from Grand Union any such
inventory remaining after such reduction program, other than out-of-code,
discontinued or unsalable Merchandise; provided, however, that the total value
of inventory purchased by C&S from Grand Union (including store supplies) shall
not exceed [CONFIDENTIAL]Title to any such products so sold to C&S shall be
transferred free and clear of all liens and encumbrances,
[CONFIDENTIAL]
ARTICLE VII
TERMINATION
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<PAGE>
SECTION 7.01. Termination by C&S. C&S may terminate this Agreement for
cause (i) in the event of a default by Grand Union under Section 3.05 which
remains uncured [CONFIDENTIAL]by Grand Union of written notice thereof from C&S
(subject, however, to the provisions of such Section for arbitration), (ii) in
the event that Grand Union breaches any other material obligation under this
Agreement and such breach is curable and remains uncured after[CONFIDENTIAL]
receipt by Grand Union of written notice of such breach from C&S, (iii) upon the
occurrence of an Event of Insolvency with respect to Grand Union (provided,
however, that C&S shall not terminate this Agreement upon the occurrence of an
Event of Insolvency in the event that Grand Union is otherwise in compliance
with the terms of this Agreement and Grand Union provides adequate assurance of
future performance under this Agreement), or (iv) upon termination of the
Northern Region Agreement pursuant to Section 7.01 thereof. Notwithstanding the
foregoing, in the event that Grand Union defaults under section 3.05 on two
occasions in any Contract Year and thereafter cures its default within the 72
hour period set forth above, C&S may, on the occurrence of any subsequent
default under Section 3.05 occurring in the same Contract Year, terminate this
agreement immediately upon notice to Grand Union. In the event of termination by
C&S under this Section 7.01, Grand Union shall pay to C&S, as full and
liquidated damages (including damages for lost profits), the applicable
termination fee set forth in Section 7.04 below.
SECTION 7.02. Termination by Grand Union. Grand Union may terminate this
Agreement for cause (i) in the event that C&S breaches any material obligation
under this Agreement and such breach is curable and remains uncured
[CONFIDENTIAL] written notice of such breach from Grand Union, (ii) upon the
occurrence of an Event of Insolvency with respect to C&S, or (iii) upon
termination of the Northern Region Agreement
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pursuant to Section 7.02 thereof. Grand Union may also terminate this
Agreement [CONFIDENTIAL] written notice to C&S; provided, however, that in the
event Grand Union exercises such right to terminate for convenience Grand Union
shall pay to C&S, as full and liquidated damages (including damages for lost
profits), the applicable termination fee set forth in Section 7.04 below.
SECTION 7.03. Negotiations; Interim Period
(a) The parties shall meet at least once within each 30 day time period
during any 90 day time period provided for in Section 7.01(ii) or Section
7.02(i) hereto to attempt to cure any breach as provided in such Sections.
(b) During the period following delivery of any notice of termination and
prior to the termination of this Agreement, each party shall perform its
obligations under this Agreement in substantially the same manner as they were
performed prior to the date of delivery of such notice, with no disruption to
Grand Union's supply of Merchandise; provided, however, that the parties shall
negotiate in good faith to agree to a "winding- up" schedule for such period.
SECTION 7.04. Termination Fees. In the event C&S terminates this Agreement
for cause pursuant to Section 7.01 above, or Grand Union terminates this
Agreement for convenience pursuant to Section 7.02 above, Grand Union shall pay
to C&S a termination fee calculated in accordance with the following schedule:
Contract Year Termination Fee
During which Termination Occurs
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<PAGE>
[CONFIDENTIAL]
The parties acknowledge that it would be difficult and costly to assess and
establish C&S' losses arising out of termination of this Agreement on account of
Grand Union's breach or Grand Union's early termination for its convenience.
Nonetheless, the parties believe that the termination fee schedule set forth
above is reasonable in light of the costs C&S will incur to perform its
obligations under this Agreement and the damages C&S will suffer in the event of
such termination (including but not limited to damages for lost profits,
incidental damages and other consequential damages).
SECTION 7.05. Waiver. Either party to this Agreement may (a) extend the
time for the performance of any of the obligations or other acts of the other
party or (b) waive compliance with any of the agreements or conditions of the
other party contained herein. Any such extension or waiver shall be valid only
if set forth in an instrument in writing signed by the party to be bound
thereby. Any waiver of any term or condition shall not be construed as a waiver
of
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<PAGE>
any subsequent breach or a subsequent waiver of the same term or condition, or a
waiver of any other term or condition, of this Agreement. The failure of any
party to assert any of its rights hereunder shall not constitute a waiver of any
of such rights.
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
SECTION 8.01. Representations and Warranties of C&S. C&S hereby represents
and warrants to Grand Union as follows:
(a) Corporate Organization and Authority. C&S (i) is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Vermont and is authorized to transact business in the States of Connecticut, New
Jersey, New York and Pennsylvania; and (ii) has the corporate power and
authority to own and operate its properties and to carry on its business as now
conducted and as proposed to be conducted.
(b) Authorization. C&S has the corporate power and authority to execute,
deliver and perform its obligations under this Agreement and has taken all
necessary corporate action to authorize its execution, delivery and performance
of this Agreement. This Agreement has been duly executed and delivered on behalf
of C&S and constitutes the legal, valid and binding obligation of C&S,
enforceable in accordance with its terms
(c) No Consents; Conflicts. No consent, authorization by, approval of or
other action by, and no notice to, or filing or registration with, any
governmental authority, agency, regulatory body, lender, lessor, franchisee or
other Person is required for the
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execution, delivery or performance of this Agreement by C&S, other than those
that have been obtained and are in full force and effect. The execution,
delivery and performance of this Agreement will not result in any violation or
breach of any provision of the charter or by-laws of C&S, any judgment, decree
or order to which C&S is a party or by which it is bound, any indenture,
mortgage or other agreement or instrument to which C&S is a party or by which it
is bound or any statute, rule or regulation applicable to C&S.
SECTION 8.02. Representations and Warranties of Grand Union. Grand Union
hereby represents and warrants to C&S as follows:
(a) Corporate Organization and Authority. Grand Union (i) is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and is authorized to transact business in the States of
Connecticut, New Jersey, New York and Pennsylvania; and (ii) has the corporate
power and authority to own and operate its properties and to carry on its
business as now conducted and as proposed to be conducted.
(b) Authorization. Grand Union has the corporate power and authority to
execute, deliver and perform its obligations under this Agreement and has taken
all necessary corporate action to authorize its execution, delivery and
performance of this Agreement. This Agreement has been duly executed and
delivered on behalf of Grand Union and constitutes the legal, valid and binding
obligation of Grand Union, enforceable in accordance with its terms.
(c) No Consents; Conflicts. No consent, authorization by, approval of or
other action by, and no notice to, or filing or registration with, any
governmental authority,
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agency, regulatory body, lender, lessor, franchisee or other Person is required
for the execution, delivery or performance of this Agreement by Grand Union,
other than those that have been obtained and are in full force and effect. The
execution, delivery and performance of this Agreement will not result in any
violation or breach of any provision of the charter or by-laws of Grand Union,
any judgment, decree or order to which Grand Union is a party or by which it is
bound, any indenture, mortgage or other agreement or instrument to which Grand
Union is a party or by which it is bound or any statute, rule or regulation
applicable to Grand Union.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. Entire Agreement. This Agreement, together with the documents
referred to herein, constitutes the entire agreement of the parties with respect
to the subject matter hereof and supersedes all prior agreements and
undertakings, both written and oral, between the parties hereto with respect to
the subject matter hereof.
SECTION 9.02. Expenses. Except as otherwise specified in this Agreement,
all costs and expenses, including, without limitation, fees and disbursements of
counsel, financial advisors and accountants, incurred in connection with this
Agreement and the transactions contemplated hereby shall be borne by the party
incurring the same.
SECTION 9.03. Amendments. This Agreement may not be amended or modified
except (i) by an instrument in writing signed by, or on behalf of, each of Grand
Union and C&S or (ii) by a waiver in accordance with Section 7.05.
SECTION 9.04. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given or made (and
shall be deemed
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to have been duly given or made upon receipt) by delivery in person, by courier
service, by telecopy or telex or by registered or certified mail (postage
prepaid, return receipt requested) to the respective parties at the following
addresses (or at such other address for a party as shall be specified in a
notice given in accordance with this Section 9.04):
(a) If to Grand Union:
William A. Louttit
Executive Vice President
and Chief Operating Officer
The Grand Union Company
201 Willowbrook Boulevard
Wayne, New Jersey 07470-0966
Telephone: (201) 890-6000
Telecopier: (201) 890-6012
(b) If to C&S:
Richard B. Cohen
President and Chief Executive Officer
C&S Wholesale Grocers, Inc.
Old Ferry Road
Brattleboro, Vermont 05301
Telephone: (802) 257-6700
Telecopier: (802) 257-6620
SECTION 9.05. Binding Effect; Assignment. This Agreement shall be binding
upon and inure to the benefit of Grand Union and C&S and their respective
successors and assigns; provided that (i) C&S shall not have the right to assign
or subcontract its rights or obligations hereunder or any interest herein
(excluding the transportation of Merchandise) without the prior written consent
of Grand Union, which consent shall not be unreasonably withheld, conditioned or
delayed and (ii) Grand Union may assign its rights and delegate its obligations
hereunder only
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so long as (x) Grand Union shall assign, and the assignee shall assume, all such
rights and obligations, (y) the assignment is to a Person or Persons who are
acquiring all or substantially all of Grand Union's business or assets in the
New York Region, and (z) Grand Union demonstrates, to the reasonable
satisfaction of C&S, that such Person has the financial capability to perform
the obligations of Grand Union hereunder. C&S agrees that it shall respond, in
respect of clause (z) above, promptly, and in any event within 10 business days
of receipt of notice from Grand Union of any such proposed assignment. Failure
by C&S to respond to Grand Union within such 10 business day period shall be
deemed to be a confirmation by C&S to Grand Union of its reasonable satisfaction
with the financial capability of the proposed assignee.
SECTION 9.06. Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
SECTION 9.07. Confidentiality. Each of Grand Union and C&S agrees to and
will cause its respective authorized agents, representatives, affiliates,
employees, officers, directors, accountants, counsel and other designated
representatives (collectively, "Representatives") to (i) treat and hold as
confidential (and not disclose or provide access to any Person to) all records,
books, contracts, instruments, computer data and other data and information
(collectively, "Information") concerning the other in its possession or
furnished by the other or the other's Representatives pursuant to this
Agreement, (ii) in the event that either
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party or its Representatives become legally compelled to disclose any such
Information, provide the other party with prompt written notice of such
requirement so that such other party may seek a protective order or other remedy
or waive compliance with this Section 9.07, and (iii) in the event that such
protective order or other remedy is not obtained, or the other party waives
compliance with this Section 9.07, furnish only that portion of such Information
which is legally required to be provided and exercise its best efforts to obtain
assurances that confidential treatment will be accorded such Information;
provided, however, that this sentence shall not apply to any Information that,
at the time of disclosure, is available publicly and was not disclosed in breach
of this Agreement by such party or its Representatives; and provided further,
however, that C&S agrees that Grand Union is the owner of all Information
relating to Grand Union's purchasing practices and that Grand Union may in its
sole discretion sell such purchasing related Information to third parties. Each
party agrees and acknowledges that remedies at law for any breach of its
obligations under this Section 9.07 are inadequate and that in addition thereto
the other party shall be entitled to seek equitable relief, including injunction
and specific performance, in the event of any such breach, without the necessity
of demonstrating the inadequacy of monetary damages.
SECTION 9.08. Relationship of Parties. In all matters relating to this
Agreement, both parties shall be acting solely as independent contractors and
shall be solely responsible for the acts of their employees, officers, directors
and agents. Employees, agents or contractors of one party shall not be
considered employees, agents or contractors of the other party.
SECTION 9.09. No Third-Party Beneficiaries. This Agreement shall be binding
upon and inure solely to the benefit of the parties thereto and their permitted
assigns, and nothing herein, express or implied, is intended to or shall confer
upon any other Person any legal or equitable right, benefit or remedy of any
nature whatsoever.
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SECTION 9.10. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any law or
public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner in
order that the transactions contemplated hereby are consummated as originally
contemplated to the greatest extent possible.
SECTION 9.11. Headings. The descriptive headings contained in this
Agreement are for convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement.
SECTION 9.12. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York, without regard
to the principles of conflicts of laws thereof.
SECTION 9.13. Arbitration.
(a) Any matter required to be submitted to arbitration pursuant to Section
3.05 of this Agreement shall be subject to this Section 9.13. Any such matter
shall be submitted to binding arbitration in Springfield, Massachusetts (or
another location agreed to by the parties) in accordance with the rules and
procedures of the American Arbitration Association (or another organization
agreed to by the parties). The arbitration shall be conducted in accordance with
(i) the terms of this Section 9.13; (ii) the commercial arbitration rules of the
American Arbitration Association (or the corresponding rules of any such other
organization); (iii) the Federal Arbitration Act (Title 9 of the United States
Code); and (iv) to the extent the foregoing are inapplicable, unenforceable or
invalid, the laws of the State of New York. Judgment upon any award rendered
hereunder may be entered in any court having jurisdiction.
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(b) A single arbitrator shall be selected by mutual agreement of the
parties, or, if the parties fail to reach such agreement within ten days after
either party has requested arbitration hereunder in writing, by, or in a manner
provided by the American Arbitration Association (or such other organization
referred to above).
(c) The arbitrator is empowered to resolve the matter in dispute by summary
ruling substantially similar to a summary judgment and motion to dismiss. The
arbitrator shall resolve all disputes in accordance with applicable substantive
law. The determination of the arbitrator shall be binding on all parties and
shall not be subject to further review or appeal except as allowed by applicable
law. The costs and expenses of the arbitrator shall be apportioned between the
parties hereto as determined by the arbitrator in such manner as the arbitrator
deems reasonable.
(d) The arbitrator and the parties shall take all actions necessary to the
end that the arbitration proceeding shall be concluded as promptly as
practicable.
(e) The provisions of this Section 9.13 shall not preclude a party from
exercising any right or remedy with respect to any matter that is not expressly
required to be submitted to arbitration pursuant to Section 3.05 of this
Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
first written above.
THE GRAND UNION COMPANY
By:_________________________________
Name: William A. Louttit
Title: Executive Vice President
Chief Operating Officer
C&S WHOLESALE GROCERS, INC.
By:_________________________________
Name: Richard B. Cohen
Title: President
* Includes store supplies in the categories listed on Exhibit D.
** All perishables are delivered on the same truck.
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