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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended March 29, 1997
Commission File Number 0-26602
THE GRAND UNION COMPANY
(Exact name of registrant as specified in its charter)
Delaware 22-1518276
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
201 Willowbrook Boulevard, Wayne, New Jersey 07470-0966
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 973-890-6000
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Securities registered pursuant to Section 12 (b) of the Act:
Title of each class Name of each exchange on which registered
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Common Stock, Par Value $0.01 National Market System of NASD
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Securities registered pursuant to Section 12 (g) of the Act: None
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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 requirements for the past 90 days. Yes X No
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Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of the Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. / X /
The aggregate market value of the voting stock held by nonaffiliates
of the registrant as of June 24, 1997 is approximately $16,200,000,
based upon the closing sales price of the Common Stock on such date.
Voting stock includes the Class A Cumulative Convertible Preferred Stock
and the Class B Cumulative Convertible Preferred Stock. For the purpose of
this calculation, all members of the Board of Directors and all
stockholders with sole or shared voting power over 10% or more of the
Company's Common Stock are presumed to be affiliates.
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 June 24, 1997 there were issued and outstanding 10,000,000 shares, par
value $0.01 per share, of the Registrant's Common Stock.
Documents Incorporated by Reference: The Proxy Statement for the 1997 Annual
Meeting of Shareholders has been incorporated by reference partially in Part
III hereof.
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THE GRAND UNION COMPANY
Other than historical information, statements in this report
may be deemed to be forward-looking statements within the meaning of the
federal securities laws. Actual results and the timing of certain events
could differ materially from those projected in the forward-looking
statements due to a number of factors, including those set forth in this
report. See "Special Note Concerning Forward-Looking Statements" in Part II
of this report.
PART I
ITEM 1. BUSINESS
GENERAL
The Grand Union Company, a Delaware corporation ("Grand Union" or the
"Company"), currently operates 225 retail food stores under the "Grand
Union" name in six northeastern states. Grand Union's common stock is
listed on the NASDAQ National Market under the symbol GUCO.
The Grand Union Company's greatest challenge is to increase sales
and margins in an intensely competitive and consolidating retail food
industry. To address this challenge, the Company has adopted strategies
over the past two fiscal years to build on its strengths and reduce its
expenses.
During the fiscal year ended March 29, 1997 ("Fiscal 1997"), the
Company adopted organizational restructuring measures which
substantially eliminated its regional offices and consolidated its
management functions, thereby reducing the number of employees and
associated expenses. After the end of Fiscal 1997, the Company announced
additional restructuring measures to significantly further reduce the
number of its administrative employees. The Company anticipates that these
measures collectively should reduce expenses by more than $8 million per
year.
During Fiscal 1997, the Company continued to renovate and replace its
stores with stores designed under its MASTERS (Maximize All Space, Totally
Expand the Right Stuff) format, designed to significantly increase the
number and variety of product offerings. During Fiscal 1997, six stores
were renovated to this format and two stores were completed during the
fiscal year ended March 30, 1996 ("Fiscal 1996").
The Company anticipates, however, that the number of store
projects completed over the next two fiscal years, including conversion
of stores to the M.A.S.T.E.R.S. format, the renovation and replacement
of existing stores, and the completion of new stores, will be significantly
reduced compared to previous estimates.
During Fiscal 1997, the Company continued to operate under and
improve the strategic initiatives adopted during Fiscal 1996, calculated
to enhance its image as a high-quality, price-conscious operator in the
Northeastern retail food industry, and to improve the efficiency and
profitability of its operations. In connection with that plan, the Company
adopted newspaper, television and radio advertising to introduce and
support its "More Lower Prices" campaign, and to emphasize the
superior quality of its produce departments. In addition, the Company
expanded and emphasized its "Best Take-Out Restaurant in Town" prepared and
ready-to-serve food offerings, and took measures to improve its in-stock
position, the cleanliness and safety of its stores, and the speed and
convenience of the service offered in each department and in its check-out
areas.
In connection with the Company's 1996 strategic plan, the Company
also discontinued operating its internal warehousing and distribution
functions, by replacing its distribution activities with third-party
wholesale supply arrangements. (See "Item 1 -Business - Distribution and
Supply and Management Information Systems.") The Company also completed
voluntary resignation programs which resulted in a reduction in the
Company's number of employees and associated costs.
STORE FORMATS
Grand Union's store sizes and formats vary depending upon the
demographics and competitive conditions in each location it operates,
as well as the availability of real estate. Grand Union supermarkets
offer a wide selection of national brand and private label grocery and
general merchandise products as well as high-quality perishables and
service departments. The majority of the Company's sales are generated
from stores which include high margin specialty and service areas.
Selected stores feature in-store kitchens and pharmacies. Liquor, beer
and wine departments are included in many locations, subject to the
limitations of state and local law. Grand Union's supermarkets range in
size from 7,000 to 64,000 square feet. Newly constructed stores are
typically in excess of 40,000 square feet.
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SELECTED DATA
The table below sets forth certain statistical information with respect
to Grand Union retail stores for the past three years.
<TABLE>
<CAPTION>
Fiscal Fiscal Fiscal
1997 1996 1995
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<S> <C> <C> <C>
Number of stores (at end of year) 226 229 231
Total selling square feet at end of year (in thousands) 4,312 4,305 4,276
Average sales per selling square foot per week $10.28 $10.28 $10.29
</TABLE>
SUMMARY OF OPERATIONS AND COMPETITION
The food retailing business is highly competitive. The Company competes
with numerous national, regional and local supermarket chains. The Company
also competes with convenience stores, stores owned and operated or
otherwise affiliated with large food wholesalers, unaffiliated independent
food stores, warehouse/merchandise clubs, discount drugstore chains and
discount general merchandise chains. Some of the Company's competitors have
greater financial resources than the Company and could use those resources to
take steps which would adversely affect the Company's competitive
position. (See also "Item 7 - Management's Discussion and Analysis of
Financial Condition and Results of Operations").
Grand Union currently operates 225 stores, including 81 in
northeastern New York, 41 in Vermont, 41 in central and northern New
Jersey, 28 in Westchester, Orange, Rockland, Dutchess and Putnam Counties
of New York, 14 on Long Island, New York, 12 in Fairfield County,
Connecticut, 3 in New Hampshire, 3 in New York City, and 2 in Pennsylvania.
In upstate New York, Grand Union generally operates in small cities
and rural communities. The Company's main competitors are Golub
Corporation ("Price Chopper") and Hannaford Brothers, Inc. ("Hannaford").
Commercial development in areas north of Albany is limited and constrained
by zoning and environmental restrictions, particularly in areas regulated
by the Adirondack Park Commission. In the more urban Albany, New York
metropolitan area, Price Chopper and Hannaford have each opened a number of
new stores in the last five years, which are generally larger than the
Company's stores.
In the Mid-Hudson Valley area of New York, the Company's principal
competitors are Big V Supermarkets Inc. (a member of the Wakefern
("ShopRite") cooperative), Price Chopper, Hannaford and The Great Atlantic
& Pacific Tea Company, Inc. ("A&P"). Continuing weak economic conditions in
the Mid-Hudson Valley have constrained business in recent years. In
addition, the Company's results in this region have also been adversely
affected by recent store openings by competitors.
In Vermont, Grand Union's principal competitors are Price Chopper,
Hannaford and A&P. Zoning and environmental regulations in the state
restrict commercial development (including supermarkets which might be
competitors of the Company). Shaws Supermarkets recently opened two stores
in the state.
A number of stores in upstate New York and Vermont are in resort
areas. These generally experience significant increases in sales in the
summer months and in some cases during the winter ski season.
The Company's stores in downstate New York, Connecticut, and New
Jersey serve densely populated communities with demographics particularly
well-suited for store formats emphasizing specialty departments.
Accordingly, the sales mix in these stores includes a larger percentage of
higher margin perishable items. In addition, the high population density as
well as the geographic concentration of stores provide substantial economy
of scale opportunities.
In New Jersey, the Company competes primarily against A&P,
Pathmark Stores, Inc. ("Pathmark"), Ahold Supermarkets, Inc. ("Edwards"
and "Stop and Shop"), ShopRite and various supermarkets supplied by the Twin
County ("Foodtown") cooperative.
In Westchester, Orange, Rockland, Dutchess and Putnam Counties in New
York, the Company generally competes with A&P, Edwards and ShopRite.
On Long Island, the Company's principal competitors are A&P, Waldbaums,
Pathmark, and King Kullen Grocery Co., Inc.
Grand Union's main competitors in Fairfield County, Connecticut are
Stop & Shop and A&P.
CAPITAL INVESTMENT
The Company's capital spending is directed towards renovating and
upgrading existing Grand Union stores and opening new and replacement
stores in existing marketing areas. Cash capital expenditures for Fiscal
1997 and 1996 were approximately $55,000,000 and $44,000,000, respectively,
excluding capital lease additions of $23,000,000 and $29,000,000.
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The Company continues to renovate certain locations using its MASTERS
prototype.
DISTRIBUTION AND SUPPLY AND MANAGEMENT INFORMATION SYSTEMS
DISTRIBUTION AND SUPPLY. The majority of the Company's merchandise
is stocked and distributed to Grand Union stores by C&S Wholesale Grocers,
Inc. ("C&S") pursuant to supply and distribution agreements between the
Company and C&S. Under the agreements, C&S stocks and supplies grocery and
perishable products from its own warehouses, and health and beauty care
and general merchandise products from the Company's Montgomery, New
York warehouse. Grand Union also contracts with a third party for
frozen food distribution. Management believes that the agreements with
C&S enhance the Company's ability to offer consistently fresh and high
quality products to its customers at a favorable cost.
MANAGEMENT INFORMATION SYSTEMS. Financial, purchasing and operating
system requirements are supported through a central computer system located
in Wayne, New Jersey. As of March 29, 1997, Grand Union utilized
scanning systems in 181 stores (representing approximately 94% of total
sales) and intends to continue investing in scanning and other store
systems in the future where economically justified.
COMMISSARY. Grand Union operates a 20,000 square foot commissary
located in Newburgh, New York, in which high quality cooked meat products,
salads, salad ingredients and soups are prepared for sale in the Company's
delicatessen departments.
MANAGEMENT
Between January and May 1997, four of the Company's five
Executive officers retired or resigned, leaving certain positions
temporarily vacant, including, among others, Chief Executive Officer, and
Executive Vice Presidents for Store Operations and Merchandising. Roger
Stangeland, the Company's Chairman and a member of the Board of Directors,
has been named interim Chief Executive Officer, and Jeffrey P. Friemark has
been hired to serve as Executive Vice President, Chief Financial and
Administrative Officer. As an interim measure, the Company is being
managed by an Office of the Chairman comprised of Mr. Stangeland, Mr.
Josephs, Director, Mr. Freimark, and Mr. Vuolo, Senior Vice President,
Human Resources, and Labor Relations. The Company is continuing to identify
and interview appropriate candidates to fill the position of Chief Executive
Officer. Upon selecting a new Chief Executive Officer, the Company
anticipates that such person will seek to fill some or all of the remaining
vacancies.
EMPLOYEES
As of March 29, 1997, Grand Union had approximately 15,000
employees, of whom approximately 67% were employed on a part-time basis.
Approximately 50% of Grand Union's employees are covered by 13 collective
bargaining agreements with 9 different union locals.
On April 13, 1997, the Company entered into a new labor agreement with
United Food and Commercial Workers Local 1262 covering approximately 3,550
clerks in 56 of the Company's stores in New Jersey, Pennsylvania and Rockland
and Orange counties in New York. The agreement expires in April 2001. The
Company's other labor agreements expire between June 1997 and January 2001.
As of March 29, 1997, all employees covered by collective
bargaining agreements were employed at store locations or in the
Company's remaining warehouse.
From December 1996 through May 1997, the Company effected a
corporate reduction in workforce, terminating or reassigning
approximately 130 employees at its headquarters and in its operating
areas. The Company provided severance payments to those employees who
were terminated, in accordance with its severance policy, based on each
employee's position and length of service.
The Company believes that its relationship with its employees is
generally satisfactory.
TRADE NAMES, SERVICE MARKS AND TRADEMARKS
Grand Union owns and actively uses over 20 trade names, service marks
and trademarks (collectively, "Marks"). Among these Marks are "Grand
Union"-Registered Trademark-, the symbol of a red dot, "Grand
Classics"-Registered Trademark-, "Big Gold Top"-Registered Trademark-,
"Holland Hall"-Registered Trademark-, and "Red Dot Special"-Registered
Trademark-, all of which are significant to the Company's business. The
Company also has common law rights in, has filed for, or intends to file for
various other Marks.
RECENT HISTORY
CHANGE IN CONTROL
TRANSACTION
In a series of transactions pursuant to a Stock Purchase Agreement
(the "Stock Purchase Agreement") dated as of July 30, 1996, between the
Company and Trefoil Capital Investors II, L.P. ("Trefoil") and GE
Investment Private Placement Partners, A Limited Partnership ("GEI" and,
collectively with Trefoil, the "Purchasers"), and an Acceleration and
Exchange Agreement dated as of June 5, 1997, among the Company and the
Purchasers, the Purchasers acquired, for aggregate consideration of
$100,000,000, an aggregate of
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1,200,000 shares of the Company's Class A Convertible Preferred Stock (the
"Class A Stock") and an aggregate of 800,000 shares of the Company's Class B
Convertible Preferred Stock (the "Class B Stock" and, collectively with
the Class A Stock, the "Preferred Stock"). In March 1997, the Company's
Chairman and interim Chief Executive Officer also acquired 600,000 shares
of the Class A Stock, for a purchase price of $3,000,000.
VOTING CONTROL
Pursuant to the Certificates of Designation of Preferred Stock
setting forth the powers, preferences, rights, qualifications, limitations
and restrictions of each class of preferred stock (the "Certificates of
Designation"), the holders of the preferred stock have the right to vote
together with the holders of the Company's common stock (the "Common
Stock"), as a single class, on all matters submitted to the Company's
stockholders for a vote, including the election of directors. The number
of votes entitled to be cast by the holder of Preferred Stock is equal to
the number of whole votes which could be cast in such vote by a holder of
the shares of Common Stock into which such shares of Preferred Stock are
convertible on the record date for such vote.
Each share of Class A Stock currently is convertible into 6.8966
shares of Common Stock, and each share of Class B Stock currently is
convertible into 20.8333 shares of Common Stock. The conversion prices
of the Preferred Stock are subject to certain customary anti-dilution
adjustments, and the terms of the Class B Stock provide that the conversion
price of the Class B Stock will be reset during March 1998 to a conversion
price based on a 20% premium to the average trading price of the Common
Stock during a twenty-day period during February 1998.
Based on current conversion prices and including dividends that have
been paid in respect of the outstanding shares of Class A Stock, as of
June 24, 1997 the Purchasers owned an aggregate of 1,240,424 shares of
Class A Stock, and 800,000 shares of Class B Stock, which together were
convertible into an aggregate of 25,221,348 shares of Common Stock. Such
shares of Common Stock would represent approximately 70.77% of the aggregate
voting power outstanding.
The Preferred Stock entitles the holders to quarterly dividends, when,
as and if declared by the Company's Board of Directors, in an amount equal
to 8.5% per annum of the stated value of the preferred stock. Unpaid
dividends shall cumulate, and shall bear additional dividends at such
rate. Until September 17, 1999, such dividends are payable, at the option
of the Company, in additional shares of Preferred Stock or in shares of
Common Stock. From September 18, 1999 to September 17, 2001, dividends are
payable in cash, unless the Company's bank credit agreement or the indenture
governing its 12% Senior Notes due 2004 shall prohibit such cash payments,
in which case such dividends on the Preferred Stock are payable, at the
option of the Company, in shares of Preferred Stock or shares of Common
Stock. To the extent that any dividends on the Preferred Stock are paid in
shares of Common Stock, the Company is required to pay a premium in
additional shares of Common Stock equal to 33-1/3% of the total number
of shares of Common Stock that would otherwise be paid as the dividend.
After September 17, 2001, all dividends are payable in cash.
The Stock Purchase Agreement provides that, for so long as the
Purchasers own at least 50% of the total number of shares purchased by
them pursuant to the Stock Purchase Agreement, the Purchasers shall have
pre-emptive rights with respect to any sale by the Company of any shares of
its Common Stock or securities convertible into or exchangeable for
shares of its Common Stock (with certain limited exceptions) in proportion
to the shares of Preferred Stock then held by the Purchasers.
The Stock Purchase Agreement also provides that, until the third
anniversary of September 17, 1996 (the "Principal Closing"), the Purchasers
will not sell more than one-third of the Class A Stock (or shares of
Common Stock issued upon conversion of such shares (the "Conversion
Shares")).
CHAPTER 11 REORGANIZATION
On January 25, 1995, in connection with a capital restructuring
plan reached with its bank lenders and with members of informal
committees of certain holders of Grand Union notes, the Company filed a
voluntary petition for relief under Chapter 11 of the Code in Bankruptcy
Court. The Bankruptcy Court confirmed the Second Amended Chapter 11 Plan
of The Grand Union Company, dated as of April 19, 1995, on May 31, 1995 and
the Company emerged from Chapter 11 on June 15, 1995. Significant provisions
of the Plan included:
1. Payment in full of all allowed administrative claims and all allowed
general unsecured and priority claims.
2. Payment in full of obligations under the Company's existing bank
credit agreement (the "Bank Credit Agreement"), including
principal and accrued interest. Concurrently, the Company
entered into an Amended and Restated Credit Agreement (the "New
Bank Facility") providing for a five-year revolving credit
facility of $100,000,000 and a seven-year term loan facility of
$104,144,371, secured by a lien on substantially all of the assets
of Grand Union and its subsidiaries.
3. Cancellation of obligations under the Company's 11.375% Senior
Notes due 1999 and 11.25% Senior Notes due 2000 (collectively, the
"Old Senior Notes"), with an aggregate principal amount of
$525,000,000 plus accrued interest, in exchange
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for the issuance of $595,421,000 aggregate principal amount of
12% Senior Notes due 2004 (the "Senior Notes") and cash payments of
$54,922 for fractional shares.
4. Cancellation of obligations under the Company's 12.25% Senior
Subordinated Notes due 2002, 12.25% Senior Subordinated Notes
due 2002, Series A and 13% Senior Subordinated Notes due 1998
(collectively, the "Subordinated Notes"), with an aggregate
principal amount of $566,150,000, in exchange for a pro rata
share of an aggregate of 10,000,000 shares of new common stock (the
"Common Stock").
5. Issuance of warrants, which expire June 15, 2000, to purchase an
aggregate of 900,000 shares of Common Stock to holders of 15%
Senior Zero Coupon Notes due 2004 and 16.5% Senior Subordinated
Zero Coupon Notes due 2007 (collectively, the "Capital Notes")
pursuant to the terms of a settlement reached among the Company,
its then indirect parent companies, the Official Committee of
Unsecured Creditors of its then parent company, and certain
holders of Capital Notes. The warrants are comprised of 300,000
Series 1 Warrants to purchase shares of Common Stock at a
purchase price of $30 per share and 600,000 Series 2 Warrants to
purchase shares of Common Stock at a purchase price of $42 per share.
The Plan made no provision for the holders of the remaining long-term
debt, redeemable preferred stock, common stock, or warrants to purchase
common stock of the Company's then indirect parent.
FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT SALES
Grand Union has no foreign operations or export sales.
ITEM 2. PROPERTIES
Grand Union conducts its operations primarily in leased stores and
offices. The following table indicates the location and number of stores
as of March 29, 1997.
Number of
Locations Stores
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New York 126
New Jersey 42
Vermont 41
Connecticut 12
New Hampshire 3
Pennsylvania 2
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Total 226
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As of March 29, 1997, Grand Union owned 13 and leased 213 of its store
sites pursuant to commercial leases. Management believes no store lease is
individually material to Grand Union. Most store leases contain several
renewal options. Nine store leases do not contain renewal options and
will expire over the next five years. Management anticipates that it
will be able to renegotiate favorable lease terms for most of these
locations, if so desired.
Grand Union currently operates one distribution center in
Montgomery, New York, which is leased, and a commissary, which is housed
in a building owned by the Company on a ground-leased site in Newburgh,
New York. Grand Union owns a 101,000 square foot warehouse in Waverly,
New York that is currently vacant. Grand Union's lease on its
distribution center has 32 years remaining, including options. See Note 9
to the Consolidated Financial Statements, Property Leases, for information on
leases and annual rents.
ITEM 3. LEGAL PROCEEDINGS
CHAPTER 11 PROCEEDINGS. Reference is made to "Item 1 - Business -
Recent History" for information regarding the Company's Chapter 11
proceedings. The Company does not believe that lingering Chapter 11
proceedings will result in any modification or revocation of the order.
ENVIRONMENTAL -- CONNECTICUT. Soil and ground-water contamination
has been detected at a shopping center owned by Grand Union which is located
in Connecticut. The Company is investigating whether such
contamination was caused by improper disposal of perchloroethylene
wastes by a dry cleaner previously operating at this location or by an
off-site source. Grand Union has undertaken, under approval by the
Connecticut Department of Environmental Protection, a proposal for a
remedial investigation designed to identify the sources of such soil and
ground-water contamination and to determine the length, depth and breadth
of the contamination on and off-site. Sampling analyses for the
ground-water at the shopping center and for drinking water in private
residences located in the
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immediately surrounding area confirm that the source of the on-site
contamination, in part, is an off-site shopping center and a gasoline
station located nearby. A Remedial Action and Investigation Report
was submitted to the Connecticut Department of Environmental Protection
on May 21, 1993. The Company is awaiting a response from the
Connecticut Department of Environmental Protection.
The Company's potential responsibility does not arise from any aspect
of its operation of a supermarket at the shopping center but from the
actions of a former tenant. Any contamination caused on-site by a source
located off-site would be the responsibility of another party. The Company
believes that the current intention of the Connecticut Department of
Environmental Protection is to seek reimbursement of past costs and
clean-up costs from some or all of these other parties. The Company is
unable to determine the amount of its potential liability arising from the
on-site contamination, but does not believe, based upon the results of
investigations made to date, that the amount of potential liability is
likely to be materially adverse to the Company's financial condition.
Management presently estimates, based upon investigations made by the
Company's environmental consultant to date, that such liability should not
exceed $2,000,000. Investigations are continuing, and there can be no
assurance that the amount of such liability will not exceed $2,000,000.
ENVIRONMENTAL -- NEW YORK. In 1991, Grand Union's landlord brought
an action against Grand Union, two other tenants at the Apple Valley
Shopping Center in LaGrange, New York, and a supplier of hazardous
substances to one of the tenants, seeking approximately $1,600,000 in
response costs within the meaning of the Comprehensive Environmental
Response Compensation and Liability Act ("CERCLA") and consequential
damages (pursuant to the court's supplemental jurisdiction). The
plaintiff claims that Grand Union and other tenants discharged hazardous
substances from their premises which caused the plaintiff to incur response
costs. The gravamen of the plaintiff's claim is that Grand Union placed
household cleaning products containing volatile organic substances in
a compactor situated at the rear of its premises and that such substances
were released into the environment. In connection with the Company's
Chapter 11 proceedings, the plaintiff filed a proof of claim in the amount
of $4,389,518. The U.S. Environmental Protection Agency carried out a
removal action at this site and recently notified the Company that it was
a potentially responsible party within the meaning of Section 107(a) of
CERCLA. Subsequent to the end of the fiscal year, the Company settled
this action under terms not materially adverse to the Company's financial
condition.
FTC ORDER. At the time of the acquisition of Grand Union by Holdings
in July 1989, Grand Union and P&C Foods, then a subsidiary and currently a
division of Penn Traffic, operated stores in some of the same geographic
areas in Vermont and upstate New York. In order to satisfy the concerns of
federal antitrust authorities arising therefrom in connection with the
acquisition of Grand Union by Holdings, prior to consummation thereof MTH
Holdings, Inc. ("MTH Holdings"), which indirectly controlled Grand Union and
Penn Traffic, an affiliate of Miller Tabak Hirsch + Co., a New York Limited
Partnership, and GUAC entered into an Agreement to Hold Separate with
Salomon Inc. and the Federal Trade Commission ("FTC") and an Agreement
Containing Consent Order (the "Order") with the FTC, which Order was
subsequently modified on February 16, 1996 (collectively, the "FTC
Agreements").
The FTC Agreements required the divestiture by MTH Holdings
and/or Grand Union (including in each case their respective subsidiaries
and affiliates) of sixteen stores located in Vermont and upstate New York.
Such divestitures were completed on July 30, 1990. Thirteen of the sixteen
stores divested were P&C Foods stores and three of the sixteen stores
divested were Grand Union stores. In a related transaction, Grand Union and
P&C Foods entered into an operating agreement (the "Operating Agreement"),
pursuant to which Grand Union acquired the right to operate P&C Foods'
thirteen remaining stores in New England under the Grand Union name until
July 2000, for an average annual rent of approximately $10,700,000 with
an option to extend the term of such operation for an additional five years.
Grand Union paid P&C Foods $7,500,000 for an option to purchase the
stores at an amount defined in the Operating Agreement. Pursuant to the
terms of the Operating Agreement, the 1992 Recapitalization triggered a
$15,000,000 prepayment obligation to P&C Foods. The Operating Agreement was
assumed during the Chapter 11 case and continues on its then current terms.
The FTC Agreements also provide, among other things, that MTH Holdings
and Grand Union (including in each case their respective subsidiaries and
affiliates) shall not acquire, for a period of ten years, any retail
grocery stores in Vermont and certain specified counties in New York without
the prior notification to, and concurrence of, the FTC.
As required by the FTC Agreements, following commencement of the
Chapter 11 proceedings, Grand Union notified the FTC that a change of
control of the Company would occur upon completion of the reorganization.
The Agreement to Hold Separate was, by its terms, applicable only until
certain stores identified therein could be divested. All required
divestitures have occurred and, as of the Effective Date, there is no
longer any control affiliation between Penn Traffic and Grand Union,
which may in the future be direct competitors in certain market areas.
The consummation of the Plan did not result in any change in the
applicability of the FTC Agreements.
OTHER PROCEEDINGS. The Company is also subject to certain other legal
proceedings and claims arising in connection with its business. It is
management's opinion that the ultimate resolution of such claims will
not have a material adverse effect on the Company's consolidated results of
operations or its financial position.
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the Company's securityholders
during the fourth quarter of Fiscal 1997.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDERS'
MATTERS
The Common Stock of the Company is listed on the NASDAQ National
Market under the symbol GUCO. At the close of business on June 24, 1997,
there were 10,000,000 shares of Common Stock, $0.01 par value outstanding
and entitled to vote. There were approximately 3,000 holders of record as
of June 25, 1997.
The quarterly market value of the Company's stock is discussed in Note
16 to the Consolidated Financial Statements.
No cash dividends were declared or paid during each of the three
fiscal years ended March 29, 1997. Payment of dividends to holders of
Common Stock is restricted by the Bank Facility and by the terms of the
Senior Notes and the Preferred Stock.
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ITEM 6. SELECTED FINANCIAL DATA
As discussed in Item 1, the Company emerged from its Chapter 11
proceedings effective June 15, 1995 (the "Effective Date"). For financial
reporting purposes, the Company accounted for the consummation of the Plan
effective June 17, 1995. In accordance with the American Institute of
Certified Public Accountants Statement of Position 90-7, "Financial
Reporting By Entities In Reorganization Under The Bankruptcy Code", the
Company has applied Fresh-Start Reporting as of the Effective Date which
has resulted in significant changes to the valuation of certain of the
Company's assets and liabilities, and to its stockholders' equity. In
connection with the adoption of Fresh-Start Reporting, a new entity has
been deemed created for financial reporting purposes. The periods prior
to the Effective Date have been designated "Predecessor Company" and the
periods subsequent to the Effective Date have been designated "Successor
Company". All information is derived from the consolidated financial
statements of the Company. This information should be read in conjunction
with the historical financial statements of the Company, including the notes
thereto, included elsewhere herein. The financial statements prior to the
Effective Date reflect the accounts of Holdings pushed down to the accounts
of Grand Union. All dollars are in millions, except per share data.
<TABLE>
<CAPTION>
Successor Company Predecessor Company
------------------------------------------------------------------------------
52 Weeks 41 Weeks 11 Weeks 52 Weeks 52 Weeks 53 Weeks
Ended Ended Ended Ended Ended Ended
March 29, March 30, June 17, April 1, April 2, April 3,
1997 1996 1995 1995 1994 1993
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Sales $ 2,312.7 $ 1,819.9 $ 487.9 $ 2,391.7 $ 2,477.3 $ 2,834.0
Gross profit 705.7 569.9 143.8 708.3 731.7 822.3
Operating and administrative expenses 582.9 453.7 117.5 571.6 552.5 627.0
Depreciation and amortization 188.1 143.8 17.2 87.1 78.6 80.6
Unusual items 9.8 22.0 18.6 27.4 4.5 201.5
Interest expense 105.8 79.2 19.8 182.0 183.8 174.5
Loss before income taxes, extraordinary
items and cumulative effect of
accounting change 180.8 128.8 29.3 159.8 87.6 261.2
Income tax (provision) benefit (2.5) 18.9 - - - (4.5)
Extraordinary items - - 854.8 - - (47.7)
Cumulative effect of accounting change - - - - 30.3 -
Net (loss) income (183.4) (109.9) 825.5 (159.8) (118.0) (313.4)
Net loss applicable to common stock 185.4 - - - - -
Net loss per common share (3) 18.54 10.99 - - - -
Ratio of earnings to fixed charges (1) - - - - - -
Deficiency in earnings available to
cover fixed charges 180.8 128.8 29.3 159.8 87.6 261.2
BALANCE SHEET DATA:
Total assets $ 1,060.8 $ 1,178.2 (2) $ 1,394.8 $ 1,394.2 $1,418.2
Total debt and capital lease obligations 888.4 875.1 (2) 1,614.9 1,532.2 1,402.5
Redeemable stock 65.0 - (2) 174.2 154.7 139.8
Nonredeemable stock and stockholders'
equity (deficit) (153.2) 44.1 (2) (824.3) (644.8) (510.3)
OPERATING AND OTHER DATA:
Capital expenditures $ 55.1 $ 43.0 $ 3.0 $ 70.8 $ 86.2 $ 66.2
Number of stores at year end 226 229 N/A 231 254 250
</TABLE>
(1) The ratio of earnings to fixed charges is computed by dividing
(i) earnings before income taxes, extraordinary items, the cumulative effect
of accounting change and fixed charges by (ii) fixed charges. Fixed charges
consist of total interest expense plus the estimated interest component of
operating leases. No ratio is indicated where the ratio is less than one.
(2) Balance sheet data is not applicable at this date.
(3) Loss per share data is not meaningful for periods prior to the
Effective Date due to the significant changes in the capital structure of
the Company.
9
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL:
As discussed in Item 1, the Company emerged from its Chapter 11
proceedings effective June 15, 1995 (the "Effective Date"). For financial
reporting purposes, the Company accounted for the consummation of the Plan
effective June 17, 1995. In accordance with the American Institute of
Certified Public Accountants Statement of Position 90-7, "Financial
Reporting By Entities In Reorganization Under The Bankruptcy Code", the
Company has applied Fresh-Start Reporting as of the Effective Date which
has resulted in significant changes to the valuation of certain of the
Company's assets and liabilities, and to its stockholders' equity. In
connection with the adoption of Fresh-Start Reporting, a new entity has
been deemed created for financial reporting purposes. The periods prior
to the Effective Date have been designated "Predecessor Company" and the
periods subsequent to the Effective Date have been designated "Successor
Company". For purposes of the discussion of Results of Operations and
Liquidity and Capital Resources, the results of the Predecessor Company and
Successor Company for the 52 weeks ended March 30, 1996, have been combined.
RESULTS OF OPERATIONS
The following table sets forth certain statement of operations data
reflecting the combination discussed above (all dollars in millions):
<TABLE>
<CAPTION>
Fiscal Fiscal Fiscal
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Sales $ 2,312.7 $ 2,307.8 $ 2,391.7
Gross profit 705.7 713.7 708.3
Operating and administrative expenses 582.9 571.2 571.6
Depreciation and amortization 85.5 77.1 87.1
Amortization of excess reorganization value 102.6 84.0 -
Unusual items 9.8 40.6 27.4
Interest expense 105.8 99.0 182.0
Income tax (provision) benefit (2.5) 18.9 -
Extraordinary credit - 854.8 -
Net (loss) income (183.4) 715.6 (159.8)
Net (loss) income applicable to common stock (185.4) 715.6 (179.3)
Sales percentage increase (decrease) 0.2% (3.5)% (3.5)%
Gross profit as a percentage of sales 30.5 30.9 29.6
Operating and administrative expenses as a percentage of sales 25.2 24.7 23.9
</TABLE>
Sales for Fiscal 1997 increased $4.9 million or 0.2% compared to
Fiscal 1996. The sales increase in Fiscal 1997 was comprised of 0.9% in
sales from new stores, and 0.5% in sales from same store sales (sales of
stores which were operated during the comparable periods of both fiscal
years, including stores replaced during the year), offset by 1.2%
from sales lost as a result of store closures. Same store sales changes,
by quarter for Fiscal 1997, beginning with the first quarter, were
1.0%, 2.0%, (0.8)% and (0.4)%. Same store sales comparisons were
positively influenced by the Company's marketing and customer service
programs implemented during the year including "More Lower Prices" and
Green Team Produce and the inclusion of two Easter periods compared to one
in the prior year. Same store sales comparisons were negatively influenced
by intensified competition, the overall economic climate in the Company's
operating areas, short term disruptions associated with the store
renovation programs, a generally milder winter, and the shorter than normal
holiday season this year. During Fiscal 1997, the Company opened one new
store, two replacement stores, and completed six major renovations, and
closed four stores.
Sales for Fiscal 1996 decreased $83.9 million or 3.5% compared to
Fiscal 1995. The sales decline in Fiscal 1996 was a result of the sale or
closure of 24 stores during Fiscal 1995 which were not replaced and from
same store sales decreases, partially offset by sales of new stores. Same
store sales declined .9% for the year. Same store sales changes, by
quarter for Fiscal 1996, beginning with the first quarter, were 0.1%,
(2.8)%, (1.3)% and 0.4%. Same store sales comparisons were negatively
influenced by strong promotional programming during the second and third
quarters of Fiscal 1995 and the effects of closing two distribution
centers servicing the metropolitan New York area stores. Same store sales
were positively influenced by the positive impact of the "More Lower
Prices" price repositioning program implemented in most of the Company's
stores during the year, by additional marketing, and store service
programs introduced in the second quarter of this year in the Albany, New
York and Bergen County, New Jersey areas and by a relatively harsh winter.
During Fiscal 1996, the Company opened two new stores, two replacement
stores, and completed three enlargements and four major renovations.
10
<PAGE>
Gross profit, as a percentage of sales, was 30.5% in Fiscal 1997
compared to 30.9% in Fiscal 1996. The decreased gross profit is attributable
to the "More Lower Prices" program and higher promotional activity,
offset by savings from the outsourcing of certain distribution functions to
C&S Wholesale Grocers, Inc. ("C&S").
Gross margin (defined as gross profit as a percent of sales) was
30.9% in Fiscal 1996, compared to 29.6% in Fiscal 1995. The gross profit
percentage in Fiscal 1996 was impacted favorably by savings generated by
replacing the Company's distribution network with a wholesaler
arrangement and the restoration of vendor promotional allowances and other
vendor support not generally available to the Company during the bankruptcy
proceedings in Fiscal 1995. Gross margin was negatively affected by the
"More Lower Prices" price repositioning program implemented in certain of the
Company's stores during Fiscal 1996.
Operating and administrative expenses, as a percentage of sales, were
25.2% during Fiscal 1997, compared to 24.7% during Fiscal 1996. The increase
in operating and administrative expenses, as a percentage of sales,
resulted from investments in store labor and advertising expense to support
key elements of the Company's strategic plan such as "The Green Team",
"Best Takeout Restaurant in Town" and "Fresh at Five" Programs.
Operating and administrative expenses, as a percentage of sales, were
24.7% during Fiscal 1996, compared to 23.9% during Fiscal 1995. Store labor
increased, as a percentage of sales, as a result of the Company's Albany,
New York and Bergen County, New Jersey marketing and customer service
programs, offset by the benefits of the voluntary resignation programs.
Advertising costs increased in Fiscal 1996 in connection with the "More
Lower Prices" price repositioning program and the Albany and Bergen
County marketing and customer service programs. Occupancy costs increased,
as a percentage of sales, principally as a result of decreased sales in
Fiscal 1996. Included in operating and administrative expenses were gains
from the sale of stores totaling $5.4 million in Fiscal 1996 and $2.5
million in Fiscal 1995.
The increase in depreciation and amortization expense during Fiscal
1997 was largely attributable to the application of Financial Accounting
Standard No. 121 ("FAS No. 121"), "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of"; whereby
$6.4 million of an impairment loss was recorded to reduce the estimated fair
value of certain store assets. See Note 4 of the consolidated financial
statements for a discussion of this charge. The decrease in depreciation
and amortization expense during Fiscal 1996 compared to Fiscal 1995
resulted principally from the absence of amortization of goodwill after
the Effective Date.
In accordance with Fresh-Start Reporting, the Company valued its
assets and liabilities at fair values and eliminated its retained
earnings as of the Effective Date. The total reorganization value as of
the Effective Date was determined to be $1,334.0 million which is $521.7
million in excess of the aggregated fair value of the Company's tangible
and identified intangible assets. Such excess is being amortized on a
straight-line basis over a five-year period. See Note 1 of the consolidated
financial statements for a more comprehensive discussion.
Unusual items in Fiscal 1997 consisted of (a) a $7.8 million provision
for restructuring which principally relates to severance costs in
connection with a reduction of administrative overhead and (b) a $2.0
million adjustment of inventory valuation. Unusual items in Fiscal 1996
consisted of (a) a $2.5 million organizational restructuring provision,
(b) a $15.0 million provision related to the closure of the Company's two
New York metropolitan area warehouses, (c) a $4.5 million provision
relating to a voluntary resignation program and (d) $18.6 million of
restructuring charges incurred in connection with the Chapter 11
proceedings. Unusual items in Fiscal 1995 consisted of (a) a store closure
provision totaling $16.9 million offset by $4.0 million of proceeds from
the termination of a warehouse sublease, (b) a charge of $3.7 million for
an early retirement program offered to certain employees, and (c) $10.8
million of restructuring charges incurred in connection with the Chapter 11
proceedings.
The increase in interest expense in Fiscal 1997 compared to Fiscal
1996 is principally a result of higher capitalized lease costs and
renegotiated debt related to the Company's emergence from bankruptcy.
Interest expense was substantially less in Fiscal 1996 than Fiscal 1995 as
a result of the decreased level of debt of the Successor Company. As a
result of the Chapter 11 proceedings, the Company did not accrue interest
expense on its Subordinated Notes, or on the debt of its then parent
companies, subsequent to January 25, 1995 and prior to the Effective Date.
During Fiscal 1997, the Company recorded an income tax provision
of $2.5 million. As a result of lower than anticipated earnings and net
operating loss carryforward limitations as a result of the change in
control of the Company, the Company wrote down $8.5 million of the
previously recorded income tax benefits and recorded a valuation
allowance for the balance of the previously recorded benefits relating to
the use of operating loss carryforwards. During Fiscal 1996, the Company
recorded an income tax benefit of $18.9 million consisting of federal and
state income taxes. Operating loss and credit carryforwards of the
Predecessor Company have been offset by taxable gains realized on the debt
discharged in connection with the Plan. There are no remaining operating
loss or credit carryforwards of the Predecessor Company and there was
no change in the tax basis of the Company's assets as of the Effective
Date. No income taxes were provided in Fiscal 1995.
11
<PAGE>
During Fiscal 1996, in connection with the Company's emergence from
Chapter 11, the Company recorded an extraordinary gain on debt discharge
of $854.8 million.
LIQUIDITY AND CAPITAL RESOURCES
On July 30, 1996, the Company entered into an agreement (the
"Stock Purchase Agreement") to sell $100 million of its 8.5% convertible
preferred stock, $1.00 par value per share (the "Class A Preferred Stock")
to an investment group composed of Trefoil Capital Investors II, L.P., a
Delaware limited partnership, and GE Investment Private Placement Partners
II, A Limited Partnership, a Delaware limited partnership (collectively,
the "Purchasers").
On September 17, 1996 and February 25, 1997, the Company sold
800,000 and 400,000 shares of Class A Preferred Stock, respectively, to
the Purchasers for an aggregate price of $60 million. On March 20, 1997,
the Company sold 60,000 shares of the Class A Preferred Stock to the
Chairman of its Board of Directors for a purchase price of $3 million. The
Company incurred $12 million of costs related to the sale of Class A
Preferred Stock, including one-time fees totaling approximately $9.2 million.
On June 12, 1997, through an acceleration of the original Stock Purchase
Agreement, the Company sold the remaining 800,000 shares of Class A
Preferred Stock to the Purchasers. These shares were immediately converted
to 800,000 shares of Class B Stock.
The Company continues to be highly leveraged. Interest payments during
Fiscal 1997 totaled approximately $105 million. Capital expenditures,
including capitalized leases, totaled approximately $79 million in Fiscal
1997. Capital expenditures during Fiscal 1997 were dedicated to remodels,
new and replacement stores, store systems and maintenance. Fiscal 1998
capital expenditures will also principally be dedicated to remodels, new
and replacement stores, store systems and maintenance, although at a slower
pace than previous estimates. During Fiscal 1997, the Company opened
one new and two replacement stores. The Company has completed a total
of twelve M.A.S.T.E.R.S. ("Maximize All Space, Totally Expand the Right
Stuff") renovations, six of which were reopened during the fiscal year.
There are no significant scheduled debt principal repayments prior to
June 2000.
The Company plans to finance its working capital, interest expense,
and capital expenditure requirements from its operating cash flow,
proceeds received from the sale of the Class A Preferred Stock, its Amended
and Restated Credit Agreement (the "Bank Facility"), and to a limited
extent, equipment leases or purchase money mortgages. The Company's
ability to fund the payment of interest and other obligations when due is
primarily dependent on cash generated from its operations, net of cash
capital expenditures. The Company's ability to continue to pursue its
expanded capital expenditure program is dependent on operating performance.
There can be no assurance as to when, or whether, the Company will have
sufficient funds from operations available to complete the 78 store projects
originally contemplated in its previously announced capital expenditure
program. The Company intends to continue to renovate, remodel and replace
its stores if, as and when funds become available.
The Company's bank lenders waived the EBITDA and interest coverage
covenants of the Bank Facility for the fourth quarter. The Company also
amended the agreements for the 1998 Fiscal year to reduce the EBITDA
requirement to $120 million, changed interest coverage requirements to 1.0,
and lowered the required amount of capital expenditures to $30 million. The
Company is currently in compliance with these amended debt agreements. If
results from operations do not meet management's expectations, the Company
will need to obtain additional amendments to such covenants. There can
be no assurance the Company will be able to obtain such amendments.
As of March 29, 1997, the Company had $36 million of borrowings and
approximately $44 million of letters of credit outstanding under its $100
million revolving credit facility.
Significant expenditures and resources used to finance such
expenditures for the three fiscal years ended March 29, 1997 are reflected
in the following table (in millions):
<TABLE>
<CAPTION>
Fiscal Fiscal Fiscal
1997 1996 1995
------------- ------------- -------------
<S> <C> <C> <C>
Resources used:
Debt and capital lease repayments $ 18.5 $ 102.0 $ 11.3
Capital expenditures 55.1 43.7 63.0
Loan placement fees - 3.1 -
Other - - -
============= ============= =============
$ 73.6 $ 148.8 $ 74.3
============= ============= =============
Financed by:
Net proceeds from sale of Class A Preferred Stock $ 51.0 $ - $ -
Net proceeds from long-term debt 9.0 - -
Proceeds from New Bank Facility - 137.2 -
Property disposals 8.0 11.0 2.1
Operating activities, including cash and temporary investments 5.6 0.6 43.2
Debt incurred - - 29.0
------------- ------------- -------------
$ 73.6 $ 148.8 $ 74.3
============= ============= =============
</TABLE>
12
<PAGE>
IMPACT OF NEW ACCOUNTING STANDARDS
In February 1997, the FASB issued FAS No. 128, "Earnings per Share,"
which is effective for year end periods ending after December 15, 1997. This
Statement requires entities to present, on the face of the income
statement for all periods presented, basic and diluted per share amounts
for income from continuing operations and for net income. Basic earnings
per share ("EPS") is computed by dividing income available to common
stockholders by the weighted average number of common shares outstanding.
Fully-diluted EPS has been renamed diluted EPS with a few changes in the
computation methodology. Diluted EPS gives effect to all dilutive
potential common shares that were outstanding during the reporting period.
The computation excludes security conversions that have an antidilutive
effect on EPS. FAS No. 128 currently has no impact upon the Company's
reported per share results as all common stock equivalents are
anti-dilutive.
FUTURE OUTLOOK
The Company has adopted a number of strategies in Fiscal 1997 and the
preceding fiscal years intended to increase sales and to reduce expenses.
The Company anticipates that it will continue to pursue such strategies
during Fiscal 1998, and will explore additional opportunities to increase
sales and further reduce expenses, including, among other things, improving
and expanding its marketing and promotional activities, and reviewing its
operations to enhance efficiency and productivity. There can be no
assurance, however, as to when, or whether, such measures will be successful
in restoring the Company to profitability. The Company anticipates, in any
event, that improvements, if achieved, will not begin to be significantly
reflected in its operating results until the second half of Fiscal 1998, due
to continued adverse effects on its operating results and margins resulting
from, among other things, continuing competitive pressures on its pricing,
fluctuations in the amount and timing of receipt and recognition of certain
promotional allowances, a continuing high level of advertising expenses until
the Company is able to fully implement new marketing programs, and continuing
weak economic conditions in certain of the regions in which the Company
operates.
SPECIAL NOTE CONCERNING FORWARD-LOOKING STATEMENTS
Except for historical information, statements by the Company under the
caption "Future Outlook" and elsewhere in this report may be considered
"forward-looking statements" within the meaning of federal securities law.
Such forward-looking statements are subject to risks, uncertainties and
other factors that could cause actual results to differ materially from
future results expressed or implied by such forward-looking statements.
Potential risks and uncertainties include, but are not limited to, the
competitive environment in which the Company operates, the ability of the
Company to maintain and improve its gross sales and margins, the
liquidity of the Company on a cash flow basis (including the Company's
ability to comply with the financial covenants of its credit agreement
and to fund the Company's capital expenditure program), the Company's
ability to complete its capital expenditures on a timely basis, the
success of operating initiatives, the viability of the Company's strategic
plan, regional weather conditions, and the general economic conditions in
the geographic areas in which the Company operates.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Financial Statements and Supplementary Data listed below are included
in this report on the page indicated.
INDEX TO FINANCIAL STATEMENTS:
<TABLE>
<CAPTION>
DOCUMENT PAGE
- -------- ----
<S> <C>
Reports of Independent Accountants F-1
Consolidated Statement of Operations for the 52 weeks ended March 29, 1997 and
the 41 weeks ended March 30, 1996 (Successor Company) and the 11 weeks ended
June 17, 1995 and the 52 weeks ended April 1, 1995 (Predecessor Company) F-3
Consolidated Balance Sheet at March 29, 1997 and March 30, 1996 F-4
Consolidated Statement of Cash Flows for the 52 weeks ended March 29, 1997 and
the 41 weeks ended March 30, 1996 (Successor Company) and the 11 weeks ended June 17, 1995
and the 52 weeks ended April 1, 1995 (Predecessor Company) F-5
Notes to Consolidated Financial Statements F-6
</TABLE>
All other schedules are omitted either because they are not
applicable or the required information is disclosed in the consolidated
financial statements or notes thereto.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
13
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required in this item is incorporated by reference
to "Directors and Executive Officers of the Registrant" and "Compliance with
Section 16(a) of the Securities Exchange Act of 1934" contained in the Proxy
Statement, which will be filed with the Commission within 120 days of the
end of the fiscal year covered by this report.
ITEM 11. EXECUTIVE COMPENSATION
The information required in this item is incorporated by reference
to "Executive Compensation", "Compensation of Directors", "Severance
Policy", "Change in Control Provisions", and "Compensation Committee
Interlocks and Insider Participation" contained in the Proxy Statement, which
will be filed with the Commission within 120 days of the end of the fiscal
year covered by this report.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required in this item is incorporated by reference to
"Security Ownership Of Management And Certain Beneficial Owners" contained in
the Proxy Statement, which will be filed with the Commission within 120 days
of the end of the fiscal year covered by this report.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required in this item is incorporated by reference to
"Certain Relationships and Related Transactions" contained in the Proxy
Statement, which will be filed with the Commission within 120 days of the end
of the fiscal year covered by this report.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORT ON FORM 8-K
THE FOLLOWING DOCUMENTS ARE FILED AS A PART OF THIS REPORT:
(a) FINANCIAL STATEMENTS
All financial statements as set forth under Item 8.
(b) REPORT ON FORM 8-K
No reports on Form 8-K were filed during the fourth quarter of
Fiscal 1997.
(c) EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description of Document
- ----- -----------------------
<S> <C>
2.1 Second Amended Chapter 11 Plan of Reorganization of The Grand Union Company ("Grand Union"),
filed with the United States Bankruptcy Court, District of Delaware, on April 19, 1995,
incorporated by reference to Exhibit T3E1 to Grand Union's Form T-3 dated May 8, 1995.
2.2 Findings of Fact, Conclusions of Law and Order Confirming the Second Amended Plan of
Reorganization proposed by Grand Union, dated May 31, 1995, incorporated by reference to
Exhibit 2.2 to Grand Union's Annual Report on Form 10-K for the fiscal year ended April 1, 1995
("Fiscal 1995").
2.3 Minute Order Clarifying Findings of Fact, Conclusions of Law and Order Confirming Second
Amended Plan of Reorganization proposed by Grand Union, dated June 14, 1995, incorporated by
reference to Exhibit 2.3 to Grand Union's Annual Report on Form 10-K for Fiscal 1995.
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
3.1 Certificate of Incorporation of Grand Union, as amended through January 6, 1997.
3.2 Certificate of Designation of Class A Convertible Preferred Stock, incorporated by reference to
Exhibit 10.4 to Grand Union's Quarterly Report on Form 10-Q for the period ended October 12,
1996.
3.3 Certificate of Designation of Class B Convertible Preferred Stock, dated as of June 11, 1997.
3.4 By-laws of The Grand Union Company, as amended through September 12, 1996, incorporated by
reference to Exhibit 3.1 to Grand Union's Quarterly Report on Form 10-Q for the period ended
October 12, 1996.
4.1 Form of New Common Stock Certificate of Grand Union, incorporated by reference to Exhibit 4.1
to Grand Union's Annual Report on Form 10-K for Fiscal 1995.
4.2 Warrant Agreement dated as of June 15, 1995, between Grand Union and American Stock Transfer &
Trust Company, as Warrant Agent for 300,000 Series 1 Warrants and 600,000 Series 2 Warrants,
incorporated by reference to Exhibit 4.5 to Grand Union's Annual Report on Form 10-K for Fiscal
1995.
4.3 Registration Rights Agreement dated as of June 15, 1995, among Grand Union and Each of the
Persons Named in Schedule A thereto for the New Common Stock, incorporated by reference to
Exhibit 4.6 to Grand Union's Annual Report on Form 10-K for Fiscal 1995.
4.4 Registration Rights Agreement dated as of June 15, 1995, by and among Grand Union and The
Holders Named therein for the Registrable Notes, incorporated by reference to Exhibit 4.7 to
Grand Union's Annual Report on Form 10-K for Fiscal 1995.
4.5 Indenture dated as of June 15, 1995, between Grand Union, as Issuer and IBJ Schroeder Bank &
Trust Company, as Trustee for the 12% Senior Notes due September 1, 2004, including form of the
12% Senior Notes due 2004, incorporated by reference to Exhibit 4.2 to Grand Union's Annual
Report on Form 10-K for Fiscal 1995.
4.6 First Supplement Indenture, dated September 9, 1996, to the Indenture dated as of June 15,
1995, between Grand Union, as Issuer, and IBJ Schroeder Bank & Trust Company, as Trustee for
the 12% Senior Notes due September 1, 2004, incorporated by reference to Exhibit 10.3 to Grand
Union's Quarterly Report on Form 10-Q for the period ended October 12, 1996.
4.7 Amended and Restated Borrower Pledge Agreement dated as of June 15, 1995, made by Grand Union
to Bankers Trust Company ("Bankers Trust"), as Collateral Agent, incorporated by reference to
Exhibit 4.3 to Grand Union's Annual Report on Form 10-K for Fiscal 1995.
4.8 Amended and Restated Borrower Security Agreement dated as of June 15, 1995, between Grand Union
and Bankers Trust, as Collateral Agent, incorporated by reference to Exhibit 4.4 to Grand
Union's Annual Report on Form 10-K for Fiscal 1995.
10.1 Agreement to Hold Separate dated July 17, 1989, by and among MTH Holdings Inc. ("MTH Holdings"),
GU Acquisition Corporation ("GUAC"), Salomon Inc. and the Federal Trade Commission (the "FTC")
entered into in the matter of MTH Holdings and GUAC before the FTC, incorporated by reference to
Exhibit No. 10.5 to Grand Union's Registration Statement on Form S-1 (Registration No. 33-29707)
(the "1989 Grand Union Registration Statement").
10.2 Agreement containing Consent Order among MTH Holdings, GUAC and the FTC entered into in the
matter of MTH Holdings and GUAC before the FTC, incorporated by reference to Exhibit No. 10.6 to
the 1989 Grand Union Registration Statement.
10.3 Asset Purchase Agreement, dated as of January 25, 1990, by and between Grand Union and Price
Chopper Operating Co. of Vermont, Inc., incorporated by reference to Exhibit No. 10.15 to
Holdings Registration Statement on Form S-1 (Registration No. 33-32879).
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
10.4 Asset Purchase Agreement, dated as of February 9, 1990, by and between Grand Union and Price
Chopper Operating Co., Inc., incorporated by reference to Exhibit No. 10.49 to GUAC's
Registration Statement on Form S-1 (Registration No. 33-22398).
10.5 Agreement and Master Sublease dated as of July 30, 1990, by and between Grand Union and P&C Food
Markets, Inc. ("P&C Foods"), incorporated by reference to Exhibit No.10.18 to Holdings' Report
on Form 10-Q dated July 21, 1990 (Commission File No. 33-29707).
10.6 Asset Purchase Agreement dated as of February 4, 1993, between The Great Atlantic & Pacific Tea
Company, Inc. and Grand Union, incorporated by reference to Exhibit No. 2.1 to Grand Union's
Report on Form 8-K dated February 4, 1993.
10.7 Asset Purchase Agreement dated as of September 20, 1993 among Foodarama Supermarkets, Inc.,
ShopRite of Malverne, Inc. and Grand Union, incorporated by reference to Exhibit No. 10.19 to
Grand Union's Registration Statement on Form S-1 (Registration No. 33-70956).
10.8 Letter dated June 15, 1995, containing MTH Settlement Agreement between Miller Tabak Hirsch +
Co. ("MTH") and Grand Union in connection with (i) the termination of the Agreement, dated July
22, 1992, between MTH and Grand Union, and (ii) the Second Amended Plan of Reorganization, dated
April 19, 1995, of Grand Union, incorporated by reference to Exhibit 10.15 to Grand Union's
Annual Report on Form 10-K for Fiscal 1995.
10.9 Agreement dated as of April, 1995, among Grand Union, Grand Union Capital Corporation
("Capital"), Holdings, the Official Committee of Unsecured Creditors of Capital and certain
holders of Zero Coupon Notes issued by Capital and guaranteed by Holdings named therein,
incorporated by reference to Exhibit 10.16 to Grand Union's Annual Report on Form 10-K for
Fiscal 1995.
10.10 Waiver dated June 14, 1995, with respect to the Second Amended Chapter 11 Plan of Grand Union,
among Grand Union, Bankers Trust, the Official Committee of Unsecured Creditors of Grand Union
and the Informal Committee of Senior Noteholders, incorporated by reference to Exhibit 10.17 to
Grand Union's Annual Report on Form 10-K for Fiscal 1995.
10.11 Amended and Restated Borrower Pledge Agreement dated as of June 15, 1995, made by Grand Union to
Bankers Trust, as Collateral Agent incorporated by reference to Exhibit 10.10 to Grand Union's
Annual Report on Form 10-K for Fiscal 1995.
10.12 Amended and Restated Borrower Security Agreement dated as of June 15, 1995, between Grand Union
and Bankers Trust, as Collateral Agent (included in Exhibit 4.4), incorporated by reference to
Exhibit 10.11 to Grand Union's Annual Report on Form 10-K for Fiscal 1995.
10.13 Subsidiary Security Agreement dated as of June 15, 1995, among the corporations listed on
Schedule 1 thereto and Bankers Trust, as Collateral Agent, incorporated by reference to Exhibit
10.12 to Grand Union's Annual Report on Form 10-K for Fiscal 1995.
10.14 Subsidiary Guaranty dated as of June 15, 1995, made by each of the corporations from time to
time listed on Annex A attached thereto in favor of the Banks and the Agent from time to time
party to the Credit Agreement, incorporated by reference to Exhibit 10.13 to Grand Union's
Annual Report on Form 10-K for Fiscal 1995.
10.15 Form of Indenture of Open-End Mortgage, Deed of Trust, Deed to Secure Debt, Security Agreement,
Assignment of Leases, Rents and Profits, Financing Statement and Fixture Filing, dated as of
June 15, 1995, made by Grand Union to Bankers Trust, as Collateral Agent, incorporated by
reference to Exhibit 10.14 to Grand Union's Annual Report on Form 10-K for Fiscal 1995.
10.16 Amended and Restated Credit Agreement dated as of June 15, 1995, (the "Credit Agreement"), among
Grand Union, the lending institutions listed from time to time on Schedule 1 thereto, and
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Bankers Trust, as Agent, including Exhibits A-1, A-2 and A-3, and various Schedules thereto,
incorporated by reference to Exhibit 10.9 to Grand Union's Annual Report on Form 10-K for Fiscal
1995.
10.18 Second Amendment to the Credit Agreement, incorporated by reference to Exhibit 10.1 to Grand
Union's Quarterly Report on Form 10-Q for the period ended July 20, 1996.
10.19 Third Amendment to the Credit Agreement, incorporated by reference to Exhibit 10.2 to Grand
Union's Quarterly Report on Form 10-Q for the period ended October 12, 1996.
10.20 Fourth Amendment to the Amended and Restated Credit Agreement incorporated by reference to
Exhibit 10.1 to Grand Union's Quarterly Report on Form 10-Q for the period ended January 4, 1997.
10.21 Fifth Amendment to the Credit Agreement.
10.22 Sixth Amendment to the Credit Agreement.
10.23 Seventh Amendment to the Credit Agreement.
10.24 Eighth Amendment to the Credit Agreement.
10.25** Supply and Distribution Agreement between The Grand Union Company and C&S Wholesalers, dated
June 15, 1995, incorporated by reference to Exhibit 10.3 to Grand Union's Quarterly Report on
Form 10-QA for the period ended January 6, 1996.
10.26** First Amendment to the Supply and Distribution Agreement between The Grand Union Company and C&S
Wholesalers, dated June 15, 1995, incorporated by reference to Exhibit 10.4 to Grand Union's
Quarterly Report on Form 10-QA for the period ended January 6, 1996.
10.27** Supply and Distribution Agreement between The Grand Union Company and C&S Wholesalers, dated
January 2, 1996, incorporated by reference to Exhibit 10.5 to Grand Union's Quarterly Report on
Form 10-QA for the period ended January 6, 1996.
10.28** Agreement with C&S Wholesalers Inc. dated January 21, 1996.
10.29* Third Amendment and Restatement of The Grand Union Company Supplemental Retirement Program for
Key Executives effective as of June 15, 1995, incorporated by reference to Exhibit 10.8 to Grand
Union's Annual Report on Form 10-K for the fiscal year ended March 30, 1996.
10.30 Executive Severance Policy, incorporated by reference to Exhibit 10.2 to Grand Union's Quarterly
Report on Form 10-Q for the period ended July 20, 1996.
10.31* The Grand Union Company 1995 Equity Incentive Plan, incorporated by reference to Exhibit 10.1 to
Grand Union's Quarterly Report on Form 10-Q for the period ended January 6, 1996.
10.32* First Amendment to the 1995 Equity Incentive Plan of the Grand Union Company, incorporated by
reference to Exhibit 10.4 to Grand Union's Quarterly Report on Form 10-Q for the period ended
July 20, 1996.
10.33* Second Amendment to the 1995 Equity Incentive Plan.
10.34* Resolution amending the number of shares issuable under the 1995 Equity Incentive Plan.
10.35* Letters dated December 14, 1995, with respect to the 1995 Equity Incentive Plan, incorporated by
reference to Exhibit 10.3 to Grand Union's Quarterly Report on Form 10-Q for the period ended
July 20, 1996.
10.36* Option Agreement with Jeffrey P. Freimark.
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
10.37 The Grand Union Company 1995 Non-Employee Directors Stock Option Plan, incorporated by
reference to Exhibit 10.2 to Grand Union's Quarterly Report on Form 10-Q for the period ended
January 6, 1996.
10.38* First Amendment to the 1995 Non-Employee Directors' Stock Option Plan of The Grand Union
Company, incorporated by reference to Exhibit 10.6 to Grand Union's Quarterly Report on Form
10-Q for the period ended July 20, 1996.
10.39* Resolution amending the number of shares issuable under the 1995 Non-Employee Directors' Stock
Option Plan.
10.40* Letters dated April 3, 1996, with respect to the 1995 Non-Employee Directors' Stock Option Plan,
incorporated by reference to Exhibit 10.5 to Grand Union's Quarterly Report on Form 10-Q for the
period ended July 20, 1996.
10.41 Non-competition Agreement between The Grand Union Company and Joseph J. McCaig, incorporated by
reference to Exhibit 10.23 of Grand Union's Annual Report on Form 10-K for the fiscal year ended
March 30, 1996.
10.42 Non-competition Agreement between The Grand Union Company and William A. Louttit, incorporated
by reference to Exhibit 10.24 of Grand Union's Annual Report on Form 10-K for the fiscal year
ended March 30, 1996.
10.43 Non-competition Agreement between The Grand Union Company and Kenneth R. Baum, Jr., incorporated
by reference to Exhibit 10.25 of Grand Union's Annual Report on Form 10-K for the fiscal year
ended March 30, 1996.
10.44 Non-competition Agreement between The Grand Union Company and Darrell W. Stine, incorporated by
reference to Exhibit 10.26 of Grand Union's Annual Report on Form 10-K for the fiscal year ended
March 30, 1996.
10.45 Non-competition Agreement between The Grand Union Company and Gilbert C. Vuolo, incorporated by
reference to Exhibit 10.27 of Grand Union's Annual Report on Form 10-K for the fiscal year ended
March 30, 1996.
10.46 Form of Indemnification Agreement between the Company and R. Stangeland, D. Josephs, W. Kagler,
D. McClure, Jr., D. Ying, J. McCaig, W. Louttit, K. Baum, D. Stine, G. Vuolo and J. Schroeder,
incorporated by reference to Exhibit 10.7 to Grand Union's Quarterly Report on Form 10-Q for the
period ended July 20, 1996.
10.47 Form of Indemnification Agreement between the Company and J. Costello, C. Miller, G. Moore and
J.R. Stonesifer, incorporated by reference to Exhibit 10.1 to Grand Union's Quarterly Report on
Form 10-Q for the period ended October 12, 1996.
10.48 Investment Banking Agreement between The Grand Union Company and Donaldson, Lufkin & Jenrette,
incorporated by reference to Exhibit 10.28 of Grand Union's Annual Report on Form 10-K for the
fiscal year ended March 30, 1996.
10.49 Stock Purchase Agreement dated July 30, 1996, among The Grand Union Company, Trefoil Capital
Investors II, L.P. and GE Investment Private Placement Partners II, A Limited Partnership
incorporated by reference to Exhibit 10.1 to The Grand Union Company report filed on Form 8-K
dated July 30, 1996.
10.50 Amendment No. 1 to the Stock Purchase Agreement dated July 30, 1996, among the Grand Union
Company, Trefoil Capital Investors II, L.P., and GE Investment Private Placement Partners II, a
Limited Partnership.
10.51 Management Agreement between The Grand Union Company and Shamrock Capital Advisors,
Inc., dated July 30, 1996, incorporated by reference to Exhibit 10.7 to Grand Union's Quarterly
Report on Form 10-Q for the period ended October 12, 1996.
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
10.52 Stock Purchase Agreement by and between The Grand Union Company and Roger Stangeland, dated
as of February 25, 1997.
10.53 Amendment No. 1, dated March 20, 1997, to the Stock Purchase Agreement between The Grand Union Company
and Roger Stangeland, dated as of February 25, 1997.
10.54 Assignment and Assumption Agreement by and between Roger Stangeland and The Stangeland Family
Limited Partnership, dated March 20, 1997.
10.55 Stockholder Agreement between Trefoil Capital Investors II, L.P., a Delaware limited
partnership, GE Investment Private Placement Partners II, A Limited Partnership, a Delaware
limited partnership, Roger Stangeland, an individual, and The Grand Union Company, a Delaware
corporation.
10.56 Addendum to Stockholder Agreement among Trefoil Capital Investors II, L.P., a Delaware limited
partnership, GE Investment Private Placement Partners II, A Limited Partnership, a Delaware
limited partnership, Roger Stangeland, an individual, and The Grand Union Company, a Delaware
corporation.
10.57 Acceleration and Exchange Agreement, dated as of June 5, 1997, by and among The Grand Union
Company, Trefoil Capital Investors II, L.P., a Delaware limited partnership, and GE Investments
Private Placement Partners II, A Limited Partnership, a Delaware limited partnership, including
Exhibits thereto.
10.58 Amendment No. 1, dated as of June 5, 1997, to the Registration Rights Agreement dated as of
July 30, 1996, by and among The Grand Union Company, Trefoil Capital Investors II, L.P., a
Delaware limited partnership, and GE Investments Private Placement Partners II, A Limited
Partnership, a Delaware limited partnership.
21.1 Subsidiaries of Grand Union.
27.1 Financial Data Schedule.
</TABLE>
* Compensatory plan or arrangement
** Confidential treatment requested
19
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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
(Registrant)
/s/ Jeffrey P. Freimark Date: June 27, 1997
----------------------------------------
Jeffrey P. Freimark
Executive Vice President-Chief Financial
and Administrative Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Title Date
/s/ Roger E. Stangeland Director, Chairman, and interim June 27, 1997
- ---------- -------------- Chief Executive Officer
Roger E. Stangeland (Principal Executive Officer)
/s/ James J. Costello Director June 27, 1997
- -------------------------
James J. Costello
/s/ Daniel E. Josephs Director June 27, 1997
- -------------------------
Daniel E. Josephs
/s/ William G. Kagler Director June 27, 1997
- -------------------------
William G. Kagler
/s/ Clifford A. Miller Director June 27, 1997
- -------------------------
Clifford A. Miller
/s/ Geoffrey T. Moore Director June 27, 1997
- -------------------------
Geoffrey T. Moore
Director June 27, 1997
- --------------------------
J. Richard Stonesifer
/s/ David Y. Ying Director June 27, 1997
- -------------------------
David Y. Ying
/s/ Jeffrey P. Freimark Executive Vice President June 27, 1997
- ------------------------- Chief Financial and
Jeffrey P. Freimark Administrative Officer
(Principal Financial Officer and
Principal Accounting Officer)
20
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
(Post-Emergence)
To the Shareholders and the Board of Directors of
The Grand Union Company
In our opinion, the accompanying consolidated balance sheet and the
related consolidated statements of operations and cash flows present fairly,
in all material respects, the financial position of The Grand Union Company
and its subsidiaries (the "Company") at March 29, 1997 and March 30, 1996 and
the results of their operations and their cash flows for the 52 weeks ended
March 29, 1997 and the 41 weeks ended March 30, 1996 in conformity with
generally accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express
an opinion on these financial statements based on our audits. We conducted
our audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform an audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management
and evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for the opinion expressed above.
As discussed in Note 1 to the consolidated financial statements, on May
31, 1995, the United States Bankruptcy Court for the District of Delaware
confirmed the Company's Plan of Reorganization, as amended (the "Plan").
Confirmation of the Plan resulted in the discharge of all claims against the
Company that arose before January 25, 1995 and terminated all rights and
interests of equity shareholders as provided for in the Plan. The Plan became
effective on June 15, 1995 and the Company emerged from Chapter 11 of Title
11 of the United States Code ("Chapter 11"). In connection with its emergence
from Chapter 11, the Company adopted Fresh-Start Reporting as of June 18,
1995.
PRICE WATERHOUSE LLP
New York, New York
May 29, 1997, except as to the
second, fourth, fifth and sixth
paragraphs of Note 8, which
are as of June 12, 1997
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
(Pre-Emergence)
To the Shareholders and the Board of Directors of
The Grand Union Company
In our opinion, the accompanying consolidated statements of operations
and cash flows present fairly, in all material respects, the results of
operations and cash flows of The Grand Union Company and its subsidiaries
(the "Company") for the 11 weeks ended June 17, 1995 and the 52 weeks ended
April 1, 1995 in conformity with generally accepted accounting principles.
These financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these statements
in accordance with generally accepted auditing standards which require that
we plan and perform an audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements, assessing the accounting principles used and
significant estimates made by management and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for the opinion expressed above.
As discussed in Note 1 to the consolidated financial statements, on
January 25, 1995, the Company filed a voluntary petition for relief under
Chapter 11 of Title 11 of the United States Code ("Chapter 11") in the United
States Bankruptcy Court for the District of Delaware. The Company's Plan of
Reorganization, as amended, became effective on June 15, 1995 and the Company
emerged from Chapter 11. In connection with its emergence from Chapter 11,
the Company adopted Fresh-Start Reporting as of June 18, 1995.
PRICE WATERHOUSE LLP
New York, New York
May 17, 1996
F-2
<PAGE>
THE GRAND UNION COMPANY
CONSOLIDATED STATEMENT OF OPERATIONS
(dollars in thousands, except per share data)
<TABLE>
<CAPTION>
SUCCESSOR COMPANY PREDECESSOR COMPANY
-------------------------- ------------------------
<S> <C> <C> <C> <C>
52 WEEKS 41 WEEKS 11 WEEKS 52 WEEKS
ENDED ENDED ENDED ENDED
MARCH 29, MARCH 30, JUNE 17, APRIL 1,
1997 1996 1995 1995
------------ ------------ ---------- ------------
Sales...................................................... $ 2,312,673 $ 1,819,928 $ 487,882 $ 2,391,696
Cost of sales.............................................. (1,606,926) (1,250,072) (344,041) (1,683,355)
------------ ------------ ---------- ------------
Gross profit............................................... 705,747 569,856 143,841 708,341
Operating and administrative expenses...................... (582,889) (453,620) (117,544) (571,640)
Depreciation and amortization.............................. (85,459) (59,840) (17,215) (87,098)
Amortization of excess reorganization value................ (102,607) (83,985) -- --
Unusual items.............................................. (9,800) (22,000) (18,627) (27,417)
Interest expense, net (contractual interest totaled $43,360
and $203,285 for the 11 weeks ended June 17, 1995 and the
52 weeks ended April 1, 1995, respectively--
See Note 2).............................................. (105,823) (79,194) (19,791) (182,016)
------------ ------------ ---------- ------------
Loss before income taxes and extraordinary gain on debt
discharge................................................ (180,831) (128,783) (29,336) (159,830)
Income tax (provision) benefit............................. (2,523) 18,927 -- --
------------ ------------ ---------- ------------
Loss before extraordinary gain on debt discharge........... (183,354) (109,856) (29,336) (159,830)
Extraordinary gain on debt discharge....................... -- -- 854,785 --
------------ ------------ ---------- ------------
Net (loss) income.......................................... (183,354) (109,856) 825,449 (159,830)
Accrued dividends on preferred stock....................... (2,000) -- -- --
Accrued dividends on old preferred stock................... -- -- -- (19,480)
------------ ------------ ---------- ------------
Net (loss) income applicable to common stock............... $ (185,354) $ (109,856) $ 825,449 $ (179,310)
------------ ------------ ---------- ------------
------------ ------------ ---------- ------------
Net (loss) per common share................................ $ (18.54) $ (10.99)
------------ ------------
------------ ------------
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE>
THE GRAND UNION COMPANY
CONSOLIDATED BALANCE SHEET
(dollars in thousands, except par value and liquidation preference)
MARCH 29, MARCH 30,
1997 1996
---------- -----------
ASSETS
Current assets:
Cash and temporary investments........... $ 34,119 $ 39,425
Receivables.............................. 17,975 20,948
Inventories.............................. 131,409 133,506
Other current assets..................... 14,326 13,709
---------- ----------
Total current assets................... 197,829 207,588
Property, net.............................. 411,911 405,579
Excess reorganization value, net........... 335,065 437,672
Beneficial leases, net..................... 52,266 68,147
Deferred tax asset......................... 51,393 53,916
Other assets............................... 12,375 12,304
---------- ----------
$1,060,839 $1,185,206
---------- ----------
---------- ----------
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
EQUITY
Current liabilities:
Current maturities of long-term debt....... $ 46 $ 1,813
Current portion of obligations under
capital leases........................... 8,045 7,080
Accounts payable and accrued liabilities... 164,549 170,010
---------- ----------
Total current liabilities.................. 172,640 178,903
Long-term debt............................. 740,207 738,067
Obligations under capital leases........... 140,058 128,114
Other noncurrent liabilities............... 96,144 95,978
---------- ----------
Total liabilities.......................... 1,149,049 1,141,062
---------- ----------
Redeemable Class A preferred stock, $1.00
par value, 3,500,000 shares authorized,
1,279,700 shares issued and outstanding;
liquidation preference $65,000,000....... 65,000 --
---------- ----------
Stockholders' (deficit) equity:
Common Stock, $.01 and $1.00 par value at
March 29, 1997 and March 30, 1996,
respectively; 60,000,000 shares
authorized, 10,000,000 shares issued
and outstanding......................... 100 10,000
Preferred Stock, $1.00 par value;
10,000,000 shares authorized, less
amount authorized as Class A preferred
stock, no shares issued and
outstanding............................. -- --
Capital in excess of par value........... 139,900 144,000
Accumulated deficit...................... (293,210) (109,856)
---------- ----------
Total stockholders' (deficit) equity....... (153,210) 44,144
---------- ----------
$1,060,839 $1,185,206
---------- ----------
---------- ----------
See accompanying notes to consolidated financial statements.
F-4
<PAGE>
THE GRAND UNION COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS
(dollars in thousands)
<TABLE>
<CAPTION>
SUCCESSOR COMPANY PREDECESSOR COMPANY
------------------------ -----------------------
52 WEEKS 41 WEEKS 11 WEEKS 52 WEEKS
ENDED ENDED ENDED ENDED
MARCH 29, MARCH 30, JUNE 17, APRIL 1,
1997 1996 1995 1995
----------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES:
Net (loss) income............................................. $ (183,354) $ (109,856) $ 825,449 $ (159,830)
Adjustments to reconcile net (loss) income to net cash
provided by (used for) operating activities before
reorganization items paid:
Extraordinary gain on debt discharge......................... -- -- (854,785) --
Depreciation and amortization................................ 188,066 143,825 17,215 87,098
Deferred taxes............................................... 2,523 (18,927) -- --
Charges relating to pension settlement....................... -- -- -- 3,747
Noncash interest............................................. (188) 14,552 1,126 38,418
Net changes in assets and liabilities:
Receivables.................................................. 2,973 (12,652) 1,769 18,480
Inventories.................................................. 2,097 50,372 12,946 16,596
Other current assets......................................... (617) 123 2,776 657
Accounts payable and accrued liabilities..................... (2,783) (59,509) (34,928) 86,550
Other........................................................ (2,867) (7,733) 4,493 7,330
----------- ----------- ---------- -----------
Net cash provided by (used for) operating activities before
reorganization items........................................ 5,850 195 (23,939) 99,046
Reorganization items.......................................... (5,484) (20,729) (4,913) (10,770)
----------- ----------- ---------- -----------
Net cash provided by (used for) operating activities.......... 366 (20,534) (28,852) 88,276
----------- ----------- ---------- -----------
INVESTMENT ACTIVITIES:
Capital expenditures.......................................... (55,147) (40,402) (3,301) (62,973)
Disposals of property......................................... 8,011 5,555 5,452 2,128
----------- ----------- ---------- -----------
Net cash (used for) provided by investment activities......... (47,136) (34,847) 2,151 (60,845)
----------- ----------- ---------- -----------
FINANCING ACTIVITIES:
Net proceeds from sale of preferred stock..................... 51,000 -- -- --
Proceeds from New Bank debt................................... -- -- 104,144 --
Payment of old bank debt...................................... -- -- (93,144) --
Net proceeds from long-term debt.............................. 9,000 33,089 -- 29,000
Obligations under capital leases discharged................... (10,543) (6,126) (1,707) (10,339)
Loan placement fees........................................... -- -- (3,125) --
Payment of long-term debt..................................... (7,993) (808) (239) (963)
----------- ----------- ---------- -----------
Net cash provided by financing activities..................... 41,464 26,155 5,929 17,698
----------- ----------- ---------- -----------
(Decrease) increase in cash and temporary investments......... (5,306) (29,226) (20,772) 45,129
Cash and temporary investments at beginning of period......... 39,425 68,651 89,423 44,294
----------- ----------- ---------- -----------
Cash and temporary investments at end of period............... $ 34,119 $ 39,425 $ 68,651 $ 89,423
----------- ----------- ---------- -----------
----------- ----------- ---------- -----------
Supplemental disclosure of cash flow information:
Interest payments............................................. $ 105,045 $ 57,565 $ 9,515 $ 89,985
Capital lease obligations incurred............................ 23,452 8,529 20,072 31,686
Accrued dividends on preferred stock.......................... 2,000 -- -- --
Accrued dividends on old preferred stock...................... -- -- -- 19,480
Decrease in common stock par value............................ 9,900 -- -- --
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE>
THE GRAND UNION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1--BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Grand Union Company, a Delaware corporation, ("Grand Union" or the
"Company") is a regional food retailer which currently operates stores in six
northeastern states. The Company has been publicly owned since June 15, 1995 and
its Common Stock is traded on the NASDAQ Stock Market. Prior to June 15, 1995,
Grand Union Capital Corporation ("Capital"), a wholly owned subsidiary of Grand
Union Holdings Corporation ("Holdings"), owned all of Grand Union's Common
Stock.
Basis of Presentation.
As of the Company's emergence from Chapter 11 ("Chapter 11") of Title 11 of
the United States Code (the "Code") on June 15, 1995 (the "Effective Date",
see Note 2), the Company adopted fresh-start reporting in accordance with
American Institute of Certified Public Accountants Statement of Position
90-7, "Financial Reporting By Entities in Reorganization Under the
Bankruptcy Code" ("Fresh-Start Reporting"). In connection with the adoption
of Fresh-Start Reporting, a new entity was deemed created for financial
reporting purposes. The periods presented prior to the Effective Date have
been designated "Predecessor Company" and the periods subsequent to the
Effective Date have been designated "Successor Company".
Principles of Consolidation.
The consolidated financial statements include the accounts of the Company
and its subsidiaries, all of which are wholly owned. Intercompany
transactions and balances have been eliminated.
Fiscal Year.
The Company's fiscal year ends on the Saturday nearest the last day of
March. The years ended March 29, 1997 ("Fiscal 1997"), March 30, 1996
("Fiscal 1996") and April 1, 1995 ("Fiscal 1995") each comprises 52
weeks. Fiscal 1996 includes the 11 weeks prior to the Effective Date,
which have been designated "Predecessor Company," and the 41 weeks
subsequent to the Effective Date, which have been designated "Successor
Company".
Temporary Cash Investments.
Temporary cash investments consist of short-term investments in highly
liquid securities with initial maturities of three months or less.
Inventory Valuation.
Grocery and general merchandise inventories are all valued at the lower of
last-in, first-out ("LIFO") cost or market. At March 29, 1997 and March 30,
1996, approximately $111,923,000 and $111,327,000, respectively, of grocery
and general merchandise inventories were valued using the LIFO method.
Replacement cost exceeded the LIFO cost of these inventories by
approximately $3,800,000 and $1,500,000 at March 29, 1997 and March 30,
1996, respectively. During Fiscal 1995, inventory levels were reduced
resulting in a liquidation of LIFO inventories that had been carried at a
value lower than current cost. Net loss was decreased by approximately
$1,628,000 as a result of the liquidation. Perishable inventories are
valued at the lower of average cost or market, which adequately provides
for the matching of costs and related revenues due to the rapid turnover of
such inventories.
Property.
Land, buildings, fixtures and equipment, and leasehold improvements are
recorded at cost and include interest on the funds borrowed to finance
construction. Depreciation and amortization of buildings and fixtures and
equipment is computed using the straight-line method over estimated useful
lives ranging from three to forty years. Depreciation of leasehold
improvements is computed over the life of the asset or life of the lease,
net of options, whichever is shorter. Properties held under capital leases
are capitalized net of gains on sale leaseback transactions and are
amortized on a straight-line basis over the life of each lease.
Excess Reorganization Value.
Excess Reorganization Value, established in connection with Fresh-Start
Reporting, is being amortized on a straight-line basis over five years.
Accumulated amortization was $186,592,000 and $83,985,000 at March 29,
1997 and March 30, 1996, respectively.
Beneficial Leases.
Amortization of beneficial leases is computed on a straight-line basis over
the lease life. At March 29, 1997 and March 30, 1996, accumulated
amortization was $27,682,000 and $14,275,000, respectively.
F-6
<PAGE>
Amortization of Debt Premium.
The Company amortizes premiums in connection with the issuance of long-term
debt over the life of the respective issue.
Deferred Financing Fees.
Financing fees are deferred and amortized over the expected life of the
related loan. At March 29, 1997 and March 30, 1996, accumulated
amortization was $802,000 and $356,000, respectively.
Income Taxes.
The Company follows the provisions of Financial Accounting Standard ("FAS")
No. 109, "Accounting for Income Taxes", whereby deferred taxes represent
differences between the financial reporting and tax bases of assets and
liabilities and are measured using enacted tax rates expected to be in
effect when differences reverse. Valuation allowances are recorded to the
extent that it is more likely than not that future tax benefits will not be
realized.
Retirement Plans.
The Company maintains a noncontributory, trusteed pension plan covering
eligible employees and a supplemental nonqualified, nontrusteed plan for
certain executives. The Company's policy is to fund pension amounts which
satisfy the requirements of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"). The Company also maintains a saving plan in
which eligible employees may contribute up to a total of 14% of their
salary, the allowable percentage of pre- and post-tax contributions vary
depending upon the earnings of a particular employee. The Company provides
a match of 25% on the dollar up to the first 4% of employee contributions.
Postretirement Benefits other than Pension.
The Company accrues the estimated cost of retiree benefit payments, other
than pension, during the years each employee provides services.
Stock-Based Compensation.
The Company accounts for stock-based compensation using the intrinsic value
method under which compensation cost is measured as the excess, if any, of
the quoted market price of the Company's stock at the date of grant over
the exercise price of the option granted. Compensation cost for stock
options, if any, is recognized ratably over the vesting period. The Company
provides additional pro forma disclosures as required under FAS No. 123,
"Accounting for Stock-Based Compensation". See Note 13.
Self Insurance.
The Company self insures workers' compensation, automobile liability,
general liability, and non-union employee medical costs to varying
deductible limits, and with the exception of medical costs, carries third
party insurance in excess of such limits. Reserves are provided for the
estimated settlement value up to the deductible limit of all claims
incurred during each policy year.
Advertising Costs.
Advertising costs are expensed as incurred. Advertising expense for Fiscal
1997, the 41 weeks ended March 30, 1996, the 11 weeks ended June 17, 1995
and Fiscal 1995 was $37,481,000, $28,084,000, $7,383,000 and $31,691,000,
respectively.
Store Closure Expense.
Estimated net costs of holding and disposing of closed stores are provided
as of the later of the date the decision is made to close the store or the
date such costs are reasonably estimable.
Pre-opening Costs.
Store pre-opening costs are charged to expense as incurred.
Fair Value of Financial Instruments.
The carrying amount of cash, temporary cash investments, receivables,
accounts payable, accrued liabilities and debt, other than the Senior
Notes, approximates fair value. The fair value of the Senior Notes, based
upon published trading values, is $592,444,000 and $519,505,000 at
March 29, 1997 and March 30, 1996, respectively.
Use of Estimates.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
the disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues, costs and
expenses during the reporting period. Actual results could differ from
those estimates. Areas of significant estimates include self insurance
reserves, realization of deferred tax assets and retirement benefit
reserves.
F-7
<PAGE>
Net Loss Per Share.
Net loss per share for Fiscal 1997 and the 41 weeks ended March 30, 1996 has
been calculated on the basis of 10,000,000 shares outstanding. The effect of
exercising warrants and options and the conversion of Class A Preferred
Stock are excluded from the calculation of earnings per share because their
inclusion would be anti-dilutive. Net loss per common share data is not
meaningful for periods prior to the Effective Date due to the significant
change in the capital structure of the Company.
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of.
In March 1995, the Financial Accounting Standards Board issued FAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of", which establishes accounting standards for the
impairment of long-lived assets, certain identifiable intangibles and
goodwill related to those assets to be held and used and for long-lived
assets and certain identifiable intangibles to be disposed. The Company
adopted FAS No. 121 as of the Effective Date.
NOTE 2--REORGANIZATION
On November 29, 1994, the Company announced that it was not likely to be
able to fund cash interest payments due in early calendar 1995, and that it
intended to develop a capital restructuring plan. Beginning on January 16, 1995,
the Company did not make interest payments required under its outstanding debt
obligations.
On January 24, 1995, the Company announced that it had reached an agreement
in principle with its bank lenders and with members of informal committees of
certain holders of its 11.375% Senior Notes due 1999 (the "11.375% Senior
Notes") and 11.25% Senior Notes due 2000 (the "11.25% Senior Notes" and,
collectively with the 11.375% Senior Notes, the "Old Senior Notes") and certain
holders of its 12.25% Senior Subordinated Notes due 2002 (the "12.25%
Subordinated Notes"), 12.25% Senior Subordinated Notes due 2002, Series A (the
"Series A 12.25% Subordinated Notes") and 13% Senior Subordinated Notes due 1998
(the "13% Subordinated Notes" and, collectively with the 12.25% Subordinated
Notes and the Series A 12.25% Subordinated Notes, the "Subordinated Notes") on
the terms of a capital restructuring.
Chapter 11 Bankruptcy Filings--On January 25, 1995 (the "Filing Date"), as
part of the implementation of such agreement, the Company filed a voluntary
petition for relief under Chapter 11 of the Code in the United States Bankruptcy
Court for the District of Delaware (the "Bankruptcy Court"). From the Filing
Date through the Effective Date, the Company operated as a debtor-in-possession
under Chapter 11 of the Code and was subject to the supervision of the
Bankruptcy Court in accordance with the Code. During this period, the Company's
business was operated under a series of "first day orders" which, among other
things, permitted it to retain certain financial and legal advisors and which
authorized payment of certain pre-petition employee costs, including worker's
compensation benefits, and pre-petition trade claims, subject to the
satisfaction of various requirements.
On January 30, 1995, the Company (as debtor and as debtor-in-possession)
entered into a credit agreement (the "DIP Facility") with the banks party
thereto providing for borrowings of up to $150 million on a revolving credit
basis. On February 16, 1995, final approval of the DIP Facility was granted and
the Bankruptcy Court also issued a Final Cash Collateral Order which allowed the
Company to use cash collateral to pay operating expenses in the ordinary course
of business. The DIP Facility provided for a commitment fee equal to .5% of the
average unused portion. There were no borrowings made under the DIP Facility
during the Chapter 11 proceedings and it was terminated on the Effective Date.
On February 16, 1995, Capital consented to the entry of an order for relief
in respect of an involuntary Chapter 11 petition filed in the Bankruptcy Court
on February 6, 1995 by entities purporting to be holders of Capital's 15% Senior
Zero Coupon Notes due 2004 (the "Capital Senior Zero Notes") and 16.5%
Senior Subordinated Zero Coupon Notes due 2007 (the "Capital Subordinated Zero
Notes" and, collectively with the Capital Senior Zero Notes, the "Capital
Notes"). On February 16, 1995, Holdings, of which Capital was a wholly owned
subsidiary, filed a voluntary Chapter 11 petition in the Bankruptcy Court.
Plan of Reorganization--The Bankruptcy Court confirmed the Second Amended
Chapter 11 Plan of The Grand Union Company, dated April 19, 1995, (the "Plan")
on May 31, 1995 (the "Confirmation Date") and the Company emerged from Chapter
11 on the Effective Date.
On the Effective Date, Grand Union adopted a restated certificate of
incorporation (the "New Certificate"), the principal effects of which were: (i)
to authorize 30,000,000 shares of new common stock (the "Common Stock") (of
which 10,000,000 shares were issued under the Plan) and (ii) to prohibit the
issuance of non-voting equity securities. The Plan provided for full payment of
all allowed administrative expenses and all allowed general unsecured and
priority claims. On the Effective Date, obligations relating to the Company's
existing bank credit agreement (the "Old Bank Credit Agreement") were paid in
full and the Company entered into an Amended and Restated Credit Agreement (the
"Bank Facility") with its bank lending group which provides for a five-
F-8
<PAGE>
year revolving credit facility of $100,000,000 (the "Revolving Credit
Facility") and a seven-year term loan facility of $104,144,371 (the "Term
Loan"). The Bank Facility is secured by a lien on substantially all of the
assets of the Company and its subsidiaries.
As of the Effective Date, the Old Senior Notes, which had an aggregate
principal amount of $525,000,000 plus accrued interest, were deemed cancelled
and each holder of Old Senior Notes became entitled to receive its pro rata
share of the Company's new 12% Senior Notes due 2004 (the "Senior Notes"),
having an aggregate principal amount of $595,475,922, issued pursuant to the
Plan. Subsequent to the Effective Date, the Company issued $595,421,000,
aggregate principal amount of Senior Notes and made cash payments of $54,922 for
fractional amounts to the holders of the Old Senior Notes. The Senior Notes
began to accrue interest beginning on September 1, 1995. Accordingly, the Senior
Notes have been discounted at 12% for the period from June 15, 1995 to September
1, 1995 and imputed interest was charged at 12% during that period. In addition,
the difference between such discounted value and the fair value of the Senior
Notes at the Effective Date was recorded as a debt premium totaling $5,779,000
which is being amortized over the life of the Senior Notes.
As of the Effective Date, the Subordinated Notes, which had an aggregate
principal amount of $566,150,000, and the old capital stock of Grand Union were
deemed cancelled and each holder of Subordinated Notes became entitled to
receive its pro rata share of an aggregate of 10,000,000 shares of Common Stock
issued pursuant to the Plan.
The Plan also provided for the issuance of warrants to purchase an aggregate
of 900,000 shares of Common Stock to holders of several other series of
long-term debt of its then parent company (the "Capital Notes") pursuant to the
terms of a settlement reached among the Company, its then direct and indirect
parent companies, the Official Committee of Unsecured Creditors of its then
parent company and certain holders of the Capital Notes. Such warrants are
comprised of 300,000 Series 1 Warrants to purchase shares of Common Stock at a
purchase price of $30 per share and of 600,000 Series 2 Warrants to purchase
shares of Common Stock at a purchase price of $42 per share. The warrants expire
on June 15, 2000.
The Plan made no provision for the holders of the remaining long-term debt,
Redeemable Preferred Stock, common shares or warrants to purchase common shares
of the Company's then indirect parent. Holdings and Capital were dissolved on
March 28, 1996 and March 27, 1996, respectively.
Interest expense was not accrued on the Subordinated Notes, Capital Notes
and Holdings Junior Notes subsequent to the Filing Date. Accordingly, interest
expense for the 11 weeks ended June 17, 1995 and the 52 weeks ended April 1,
1995 excludes contractual interest expense of $23,569,000 and $21,269,000,
respectively.
For financial reporting purposes, the Company accounted for the
consummation of the Plan effective June 17, 1995. In accordance with
Fresh-Start Reporting, the Company valued its assets and liabilities at fair
values and eliminated its retained earnings at the Effective Date. The
reorganization value of the Company was determined utilizing several methods
which yielded similar results, including (a) the trading value of the
Company's Common Stock for a representative number of days subsequent to the
Effective Date and the fair value of the Company's obligations as of the
Effective Date, (b) discounted cash flows and (c) a multiple of adjusted
trailing year operating cash flow. The total reorganization value as of the
Effective Date was determined to be $1,334,000,000, which was $521,657,000 in
excess of the aggregate fair value of the Company's tangible and identified
intangible assets. Such excess is classified as "Excess reorganization value,
net" in the accompanying consolidated balance sheet.
F-9
<PAGE>
The components of reorganization items included as unusual items in the
consolidated statement of operations are as follows (in thousands):
<TABLE>
<CAPTION>
11 WEEKS 52 WEEKS
ENDED ENDED
JUNE 17, APRIL 1,
1995 1995
---------- ----------
<S> <C> <C>
Fresh-Start Reporting:
Establish excess reorganization value............................... $ 521,657 $ --
Eliminate existing goodwill......................................... (540,434) --
Revalue beneficial leases........................................... 40,633 --
Establish deferred tax asset........................................ 35,414 --
Revalue pension assets and liabilities and postretirement
obligations......................................................... (23,653) --
Record lease rejection liability.................................... (19,734) --
Provide for warehouse closing....................................... (10,450) --
Eliminate LIFO inventory reserve.................................... 7,757 --
Provide for other reorganization liabilities........................ (5,400) --
Record liability for fair value of interest rate protection
agreement........................................................... (3,500) --
Other............................................................... (1,905) --
---------- ----------
Total Fresh-Start Reporting.......................................... 385 --
Professional fees incurred in connection with the reorganization...... (20,000) (5,704)
Interest earned on accumulated cash resulting from the Chapter 11
proceedings......................................................... 988 173
Debtor-in-possession financing fees................................... -- (3,740)
Other................................................................. -- (1,499)
---------- ----------
Total reorganization items....................................... $ (18,627) $ (10,770)
---------- ----------
---------- ----------
</TABLE>
At June 17, 1995, as a result of the debt restructuring, the Company
recorded an extraordinary gain on debt discharge as follows (in thousands):
<TABLE>
<S> <C>
Elimination of Old Debt, deferred financing fees
and accrued interest discharged............................... $1,589,506
Issuance of Senior Notes........................................ (580,721)
Issuance of Common Stock........................................ (154,000)
-----------
Extraordinary gain on debt discharge.......................... $ 854,785
-----------
-----------
</TABLE>
NOTE 3--UNUSUAL ITEMS
Unusual items included in the consolidated statement of operations consist
of the following (in thousands):
<TABLE>
SUCCESSOR COMPANY PREDECESSOR COMPANY
------------------------ --------------------
<S> <C> <C> <C> <C>
52 WEEKS 41 WEEKS 11 WEEKS 52 WEEKS
ENDED ENDED ENDED ENDED
MARCH 29, MARCH 30, JUNE 17, APRIL 1,
1997 1996 1995 1995
----------- ----------- --------- ---------
Charges relating to severance....................................... $ 7,800 $ -- $ -- $ --
Inventory valuation reserve......................................... 2,000 -- -- --
Provision for warehouse closures.................................... -- 15,000 -- --
Charges relating to voluntary resignation programs.................. -- 4,500 -- --
Provision for organizational restructuring.......................... -- 2,500 -- --
Reorganization items (See Note 2)................................... -- -- 18,627 10,770
Provision for store closures........................................ -- -- -- 12,900
Charges relating to pension settlement (See Note 11)................ -- -- -- 3,747
----------- ----------- --------- ---------
$ 9,800 $ 22,000 $ 18,627 $ 27,417
----------- ----------- --------- ---------
----------- ----------- --------- ---------
</TABLE>
F-10
<PAGE>
During the fourth quarter of Fiscal 1997, the Company recorded $9,800,000 of
unusual charges including $7,800,000 of severance and $2,000,000 of an inventory
valuation reserve.
In Fiscal 1996, the Company entered into several supply agreements with C&S
Wholesale Grocers, Inc. ("C&S"), pursuant to which C&S stocks and distributes to
all Grand Union stores substantially all of the merchandise formerly owned and
warehoused by Grand Union. Under the agreements, C&S stocks and supplies grocery
and perishable products from its own warehouses and stocks and supplies health
and beauty care and general merchandise products from the Company's Montgomery,
New York warehouse. Accordingly, the Company recorded a provision relating to
the closure of two metropolitan New York warehouses consisting principally of
the cash costs of severance, pension withdrawal liability, security, and other
expenses directly related to the closing of the warehouses. Substantially all of
the net costs of closing these facilities were paid prior to March 30, 1996.
During the 41 weeks ended March 30, 1996, the Company made cash payments of
$4,500,000 relating to voluntary resignation programs under which certain
classes of store employees accepted monetary incentives to voluntarily resign
from their positions.
The provision for organizational restructuring of $2,500,000 is principally
comprised of the cash cost of severance, all of which was paid at March 29,
1997, and future lease payments.
During Fiscal 1995, the Company established a provision for store closings,
net of a non-recurring item. The provision included a charge of $16,900,000
($8,200,000 of which required cash outlays) relating to the closure of sixteen
stores principally consisting of store closing costs, estimated carrying costs
through expected dates of disposition and the remaining net book value of store
fixed assets. Additionally, the Company realized $4,000,000 of proceeds from the
termination of a warehouse sublease. All stores were closed prior to April 1,
1995. Substantially all of the costs of closing these facilities were paid by
March 30, 1996.
NOTE 4--PROPERTY
Property, at cost, consists of the following (in thousands):
<TABLE>
<CAPTION>
MARCH 29, 1997 MARCH 30, 1996
-------------- --------------
<S> <C> <C>
Property owned:
Land....................................................... $ 19,196 $ 18,776
Buildings.................................................. 60,422 57,309
Fixtures and equipment..................................... 168,053 144,268
Leasehold improvements..................................... 126,002 107,220
-------------- --------------
373,673 327,573
Less: accumulated depreciation and amortization.............. 81,098 32,493
-------------- --------------
Property owned, net.......................................... 292,575 295,080
-------------- --------------
Property held under capital leases:
Land and buildings......................................... 112,056 97,801
Equipment.................................................. 18,081 18,184
-------------- --------------
130,137 115,985
Less: accumulated amortization............................... 10,801 5,486
-------------- --------------
Property held under capital leases, net...................... 119,336 110,499
-------------- --------------
Property..................................................... $ 411,911 $ 405,579
-------------- --------------
-------------- --------------
</TABLE>
Depreciation and amortization of owned and leased property for Fiscal 1997,
the 41 weeks ended March 30, 1996, the 11 weeks ended June 17, 1995 and Fiscal
1995 was $64,256,000, $42,706,000, $11,246,000 and $57,089,000, respectively.
As discussed in Note 1, the Company adopted FAS No. 121 as of the Effective
Date. This statement requires companies to record impairments of long-lived
assets, certain identifiable intangibles, and associated goodwill when there is
evidence that events or changes in circumstances have made recovery of an
asset's carrying value unlikely. In accordance with this statement, during
Fiscal 1997 the Company performed an evaluation of its assets for impairment
considering the present value of estimated net future operating cash flows
(which includes the estimated fair value that would be received upon sublease or
disposition). The result of such review was that an impairment loss of
$6,362,000 was recorded through depreciation in order to write down certain
store impaired assets.
F-11
<PAGE>
NOTE 5--RECEIVABLES AND ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Receivables at March 29, 1997 and March 30, 1996 are net of allowances for
doubtful accounts of $930,000 and $1,146,000, respectively.
Accounts payable and accrued liabilities consist of the following (in
thousands):
<TABLE>
<CAPTION>
MARCH 29, MARCH 30,
1997 1996
------------ ------------
<S> <C> <C>
Accounts payable............................................. $ 89,798 $ 86,638
Accrued liabilities:
Payroll...................................................... 16,294 18,179
Interest..................................................... 9,405 8,740
Insurance.................................................... 16,070 12,098
Other........................................................ 32,982 44,355
------------ ------------
$ 164,549 $ 170,010
------------ ------------
------------ ------------
</TABLE>
NOTE 6--INCOME TAXES
The components of the deferred income tax (provision) benefit are as follows
(in thousands):
<TABLE>
<CAPTION>
SUCCESSOR COMPANY PREDECESSOR COMPANY
------------------------ --------------------------
<S> <C> <C> <C> <C>
52 WEEKS 41 WEEKS 11 WEEKS 52 WEEKS
ENDED ENDED ENDED ENDED
MARCH 29, MARCH 30, JUNE 17, APRIL 1,
1997 1996 1995 1995
----------- ----------- ------------ ------------
Federal............................................. $ (2,154) $ 16,157 $ -- --
State............................................... (369) 2,770 -- --
----------- ----------- ------------ ------------
Income tax (provision) benefit...................... $ (2,523) $ 18,927 $ -- $ --
----------- ----------- ------------ ------------
----------- ----------- ------------ ------------
</TABLE>
The reconciliation of the income tax (provision) benefit computed at the
federal statutory rate to the reported income tax (provision) benefit is as
follows (in thousands):
<TABLE>
<CAPTION>
SUCCESSOR COMPANY PREDECESSOR COMPANY
------------------------ -------------------------
<S> <C> <C> <C> <C>
52 WEEKS 41 WEEKS 11 WEEKS 52 WEEKS
ENDED ENDED ENDED ENDED
MARCH 29, MARCH 30, JUNE 17, APRIL 1,
1997 1996 1995 1995
----------- ----------- ---------- -----------
Benefit computed at federal statutory tax rate.............. $ 63,291 $ 45,074 $ 10,268 $ 55,941
Increase (decrease) in the benefit resulting from:
Amortization of excess reorganization value............... (35,429) (28,992) -- --
Amortization of goodwill.................................. -- -- (6,295) (5,379)
State and local taxes, net of federal tax benefit......... 5,242 2,770 -- --
Deferred tax asset valuation allowance.................... (29,841) -- (3,948) (51,014)
Write-down of unrealizable deferred tax asset............. (8,500) -- -- --
Other..................................................... 2,714 75 (25) 452
----------- ----------- ---------- -----------
Income tax (provision) benefit.............................. $ (2,523) $ 18,927 $ -- $ --
----------- ----------- ---------- -----------
----------- ----------- ---------- -----------
</TABLE>
F-12
<PAGE>
The components of the net deferred tax asset are as follows (in thousands):
<TABLE>
<CAPTION>
MARCH 29, MARCH 30,
1997 1996
------------ ------------
<S> <C> <C>
Deferred tax assets:
Non-cash interest....................................... $ 2,111 $ 5,727
Insurance reserve....................................... 19,597 19,300
Pension................................................. 5,419 4,077
Post retirement benefit liability....................... 14,671 14,676
Other miscellaneous reserves............................ 23,505 25,477
Net operating loss carryfoward.......................... 29,841 15,246
------------ -----------
Total deferred tax assets................................. 95,144 84,503
------------ -----------
Deferred tax liabilities:
Depreciable assets...................................... 9,299 26,016
Other................................................... 4,611 4,571
------------ -----------
Total deferred tax liabilities............................ 13,910 30,587
------------ -----------
Net deferred tax asset before valuation allowance......... 81,234 53,916
Valuation allowance....................................... (29,841) --
------------ -----------
Net deferred tax asset.................................... $ 51,393 $ 53,916
------------ -----------
------------ -----------
</TABLE>
During the fourth quarter of Fiscal 1997, the Company determined that the
likelihood of realizing its entire deferred tax asset had diminished as a
result of the application of Internal Revenue Code Section 382 as well as
other long-term financial prospects. Section 382, which was triggered by the
sale of Class A Preferred Stock (see Note 8), limits the amount of future
annual net operating loss carryforwards which may be utilized subsequent to a
change in control. Consequently, during the fourth quarter of Fiscal 1997,
the Company wrote off $8,500,000 of its deferred tax asset that related to
net operating loss carryforwards expected to expire due to Section 382
limitations and established a valuation allowance to fully reserve for the
portion of its deferred tax asset related to its remaining net operating loss
carryforwards.
As of March 29, 1997, the Company had net operating loss carryforwards of
approximately $73,000,000 for tax purposes, expiring in the years 2011 and
2012. Due to Section 382, there will be a limitation on the amount of annual
net operating loss carryforwards which can be utilized.
Under existing income tax laws, the Company is not required to include in
its taxable income any cancellation of debt income as a result of the debt
forgiven pursuant to the Plan. Accordingly, no income taxes were provided on
the extraordinary gain on debt discharge in the statement of operations for
the 11 weeks ended June 17, 1995. There are no remaining operating loss or
credit carryforwards of the Predecessor Company and there was no change in
the tax basis of the Company's assets as of the Effective Date.
NOTE 7--DEBT
Components of the Company's debt are as follows (in thousands):
<TABLE>
<CAPTION>
MARCH 29, MARCH 30,
1997 1996
----------- -----------
<S> <C> <C>
Equipment mortgage notes.......................... $ 46 $ 2,039
Bank Credit Agreements:
Term Loan....................................... 104,144 104,144
Revolving Credit Facility....................... 36,000 33,000
12% Senior Notes due September 1, 2004
(includes $4,642 and $5,276 of unamortized
debt premium at March 29, 1997 and March
30, 1996, respectively)......................... 600,063 600,697
----------- -----------
740,253 739,880
Less: current maturities of long-term debt........ 46 1,813
----------- -----------
Long-term debt............................ $ 740,207 $ 738,067
----------- -----------
----------- -----------
</TABLE>
On the Effective Date, obligations relating to the Predecessor Company's
Old Bank Credit Agreement were paid in full and the Company entered into the
Bank Facility with a group of lenders. The Bank Facility consists of the
Revolving Credit Facility, expiring
F-13
<PAGE>
June 15, 2000, that provides borrowings and letters of credit aggregating
$100,000,000, and the Term Loan totaling $104,144,000. The Bank Facility is
secured by substantially all of the assets of the Company and its
subsidiaries, whether in existence at the Effective Date or acquired
thereafter, excluding those assets permitted to be financed by third parties.
Outstanding borrowings bear interest at a rate equal to the applicable margin
(1.5% and 2% for the Revolving Credit Facility and Term Loan, respectively)
plus the higher of (a) the prime rate, as defined, (b) the adjusted
certificate of deposit rate, as defined, plus 0.5% or (c) the federal funds
rate, as defined, plus 0.25%. Alternatively, the Company may borrow, at its
option, at the LIBOR rate, as defined, plus the applicable margin (3.0% and
3.5% for the Revolving Credit Facility and Term Loan, respectively). At March
29, 1997, borrowings under the Revolving Credit Facility and the Term Loan
were at weighted interest rates of 8.77% and 9.11%, respectively. At March
30, 1996, borrowings under the Revolving Credit Facility and the Term Loan
were at weighted interest rates of 9.75% and 9.00%, respectively. The Company
is charged a commitment fee of one half of one percent per annum on the
average unused portion of the Revolving Credit Facility. The Term Loan
requires quarterly principal payments of $13,018,000 from September 30, 2000
through June 15, 2002. The Bank Facility provides for mandatory prepayments
based on the occurrence of certain specified transactions. As of March 29,
1997, the Company had issued $44,169,000 of letters of credit.
The Bank Facility contains certain restrictions and financial covenants
relating to, among other things, minimum financial performance and
limitations on the incurrence of additional indebtedness, asset sales,
dividends, capital expenditures and prepayment of other indebtedness. During
the fourth quarter of Fiscal 1997, the Company received a waiver for certain
financial covenants as of March 29, 1997 and certain covenants for future
periods were amended. The Company was in compliance with the remaining terms
and restrictive covenants of the Bank Facility, as amended, as of March 29,
1997.
The Old Term Loan and Old Revolving Credit Facility provided for interest
at either a floating rate of 2% and 1.5%, respectively, per annum above the
prime rate, as defined, or 3.5% and 3%, respectively, per annum above the
LIBOR rate, as defined, at the option of the Predecessor Company.
Pursuant to the Plan, on the Effective Date, the Old Senior Notes were
deemed cancelled and each holder became entitled to receive his pro rata
share of the Successor Company's Senior Notes having an aggregate principal
amount of $595,421,000. Interest on the Senior Notes is payable semi-annually
each March 1 and September 1.
During the next five years, maturities of long-term debt are $46,000 in
Fiscal 1998, $75,054,000 in Fiscal 2001 and $39,054,000 in 2002. There are no
payments scheduled in Fiscal 1999 or 2000.
NOTE 8--ISSUANCE OF PREFERRED STOCK
On July 30, 1996, the Company entered into an agreement (the "Stock
Purchase Agreement") to sell $100 million of 8.5% convertible preferred
stock, $1.00 par value per share, (the "Class A Preferred Stock") to an
investment group composed of Trefoil Capital Investors II, L. P., a Delaware
limited partnership, and GE Investment Private Placement Partners II, A
Limited Partnership, a Delaware limited partnership (collectively, the
"Purchasers").
Pursuant to the Stock Purchase Agreement, on September 17, 1996, the
Company sold 800,000 shares of Class A Preferred Stock to the Purchasers for
aggregate proceeds of $40,000,000 (the "Principal Closing"). On February 25,
1997, the Company sold an additional 400,000 shares of Class A Preferred
Stock to the Purchasers for aggregate proceeds of $20,000,000. Under the
terms of the Stock Purchase Agreement, the Company sold to the Purchasers an
additional 800,000 shares of Class A Preferred Stock at a purchase price of
$50 per share (the "Stated Value") on June 12, 1997, which represents an
acceleration of the original transaction dates, and immediately converted the
shares to the new Class B Preferred Stock. The Class B Preferred Stock ranks
PARI PASSU with the Class A Preferred Stock and has substantially the same
terms as the Class A Preferred Stock.
Dividends are cumulative and payable quarterly at 8.5% of the Stated
Value per annum. Dividends are payable, at the option of the Company, in
additional shares of Preferred Stock or Common Stock through September 17,
1999. From September 17, 1999 through September 17, 2001, dividends are
payable in cash, unless the terms of the Company's Bank Facility or 12%
Senior Notes prohibit cash dividends, in which case dividends may be paid in
Preferred Stock or Common Stock. After September 17, 2001, dividends are
payable in cash. To the extent that any dividends on the Preferred Stock are
paid in shares of Common Stock, the Company is required to pay a premium in
additional shares of Common Stock equal to 33 1/3% of the number of shares of
Common Stock that would otherwise be paid as the dividend. On December 31,
1996 and September 30, 1996, the Company paid dividends on the Class A
Preferred Stock through the issuance of 17,056 and 2,644 shares,
respectively, of Class A Preferred Stock. The aggregate Stated Value of the
dividends at December 31, 1996 and September 30, 1996 was $852,800 and
$132,200, respectively.
Each share of Class A Preferred Stock is convertible at the option of the
holder, at any time, into 6.8966 shares of Common Stock. At March 29, 1997, the
1,279,700 outstanding shares of Class A Preferred Stock were convertible into an
aggregate 8,825,579 shares of Common Stock. Each share of Class B Preferred
Stock is convertible at the option of the holder, at any time, into 20.8333
F-14
<PAGE>
shares of Common Stock, to be reset during February 1998 to a conversion
price based upon a 20% premium to the average trading price of Common Stock
during a twenty-day period during February 1998.
The Company is required to redeem the Class A Preferred Stock and the
Class B Preferred Stock no later than June 1, 2005. Additionally, the Class A
Preferred Stock and the Class B Preferred Stock may be redeemed at the
Company's option at $50 per share plus all accrued and unpaid dividends if
the volume-weighted average price of the Company's Common Stock over a 60-day
period exceeds $13.05 per share after September 17, 1998, or $14.50 per share
after September 17, 1999. After September 17, 2001, the Company's right to
redeem is not contingent on the price of the Common Stock and the redemption
price is approximately $51.60 per share plus all accrued and unpaid
dividends, declining ratably to $50 per share plus all accrued and unpaid
dividends after September 17, 2004.
The Stock Purchase Agreement and the Certificates of Designation of
Preferred Stock, setting forth the powers, preferences, rights,
qualifications, limitations and restrictions of such class of preferred stock
(the "Certificates of Designation"), also contain provisions with respect to
the rights of the Purchasers to elect a specified number of directors, the
number of disinterested directors, voting rights and pre-emptive rights with
respect to any sale by the Company of shares of Common Stock or securities
convertible into, or exchangeable for, Common Stock. The liquidation
preference of Class A Preferred Stock and Class B Preferred Stock is equal to
its Stated Value plus any accrued and unpaid dividends.
The Class A Preferred Stock has been classified as Redeemable Class A
Preferred Stock in the accompanying Consolidated Balance Sheet. The dividends
on the Class A Preferred Stock and the accrued and unpaid dividends through
March 29, 1997 have been accounted for by a charge against Capital in Excess
of Par Value and a corresponding increase in the value of the Class A
Preferred Stock.
During Fiscal 1997, the Company recorded, as a charge to Capital in
Excess of Par Value, costs of $12,000,000 directly related to the sale of
Class A Preferred Stock. The costs included transaction fees paid to Shamrock
Capital Advisors, Inc. and GE Investment Management Corporation of $2,000,000
each, fees paid to Donaldson, Lufkin and Jenrette, the Company's financial
advisor and a then related party, of approximately $5,200,000, and other
expenses, including legal and other professional fees, of $2,800,000.
On March 20, 1997, the Company sold 60,000 shares of Class A Preferred
Stock to the Chairman of the Company's Board of Directors for $3,000,000.
NOTE 9--PROPERTY LEASES
The Company operates principally in leased stores and offices, and in
most cases holds renewal options with varying terms. Many of the leases
contain clauses which provide for increased rentals based upon increases in
real estate taxes and lessors' operating expenses.
Future minimum payments under capital and non-cancelable operating
leases, net of minimum sublease income, as of March 29, 1997 are as follows
(in thousands):
<TABLE>
<CAPTION>
CAPITAL OPERATING
------------ -----------
<S> <C> <C>
Fiscal
1998.......................................................................... $ 26,503 $ 33,510
1999.......................................................................... 24,150 33,089
2000.......................................................................... 22,456 30,888
2001.......................................................................... 20,597 24,076
2002.......................................................................... 19,619 20,082
Later years................................................................... 282,526 143,436
------------ ----------
Total minimum lease payments.................................................. 395,851 285,081
Less: estimated executory costs included in total minimum lease payments...... (250) --
Less: sublease rental income.................................................. (2,139) (18,608)
------------ ----------
Net minimum lease payments.................................................... 393,462 $ 266,473
----------
----------
Less: portion representing interest........................................... 247,498
------------
Present value of net minimum lease payments................................... 145,964
Less: current portion of obligations under capital leases..................... 8,045
------------
Non-current portion of obligations under capital leases
(net of sublease rental income)............................................. $ 137,919
------------
------------
</TABLE>
F-15
<PAGE>
Contingent rentals incurred on capital leases for Fiscal 1997, the 41
weeks ended March 30, 1996, the 11 weeks ended June 17, 1995 and Fiscal 1995
were $106,000, $130,000, $39,000 and $253,000, respectively.
The rental expense for all operating leases was $45,847,000, $33,923,000,
$8,696,000 and $31,900,000 during Fiscal 1997, the 41 weeks ended March 30,
1996, the 11 weeks ended June 17, 1995 and Fiscal 1995, respectively. Contingent
rental expense included in total rental expense was $2,870,000, $2,127,000,
$638,000 and $3,114,000 during Fiscal 1997, the 41 weeks ended March 30, 1996,
the 11 weeks ended June 17, 1995 and Fiscal 1995, respectively.
NOTE 10--Stockholders' (Deficit) Equity and Redeemable Stock
Changes in Stockholders' (Deficit) Equity and Redeemable Stock were as
follows (in thousands):
<TABLE>
<CAPTION>
REDEEMABLE OLD CAPITAL IN
COMMON OLD COMMON COMMON EXCESS OF ACCUMULATED
STOCK STOCK (A) STOCK PAR VALUE DEFICIT
--------------- ----------- ------------- ------------- --------------
<S> <C> <C> <C> <C> <C>
Predecessor Company
Balance at April 2, 1994........................... $ -- $ 9,407 $ 1 $ -- $ (644,617)
Net loss........................................... -- -- -- -- (159,830)
Accrued preferred stock dividends of Predecessor
Company.......................................... -- -- -- -- (19,480)
Pension adjustment................................. -- -- -- -- (257)
--------------- ----------- ------------- ------------- --------------
Balance at April 1, 1995........................... -- 9,407 1 -- (824,184)
Net income for the 11 weeks ended June 17, 1995.... -- -- -- -- 825,449
Extinguishment of stockholders' equity in
connection with bankruptcy....................... -- (9,407) (1) -- (1,265)
--------------- ----------- ------------- ------------- --------------
Balance at June 17, 1995........................... $ -- $ -- $ -- $ -- $ --
--------------- ----------- ------------- ------------- --------------
--------------- ----------- ------------- ------------- --------------
</TABLE>
(a) The Redeemable Old Common Stock represents shares of Holdings held by
management investors, which were redeemable under certain limited circumstances
at the option of the holder.
<TABLE>
<CAPTION>
STOCKHOLDERS' (DEFICIT) EQUITY
------------------------------------------------------------
REDEEMABLE
CLASS A CAPITAL IN
PREFERRED COMMON PREFERRED EXCESS OF ACCUMULATED
STOCK STOCK STOCK PAR VALUE DEFICIT
---------- ----------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Successor Company
Balance at June 17, 1995........................ $ -- $ -- $ -- $ -- $ --
Issuance of Common Stock........................ -- 10,000 -- 144,000 --
Net loss for the 41 weeks ended March 30, 1996.. -- -- -- -- (109,856)
---------- ----------- ------------- ------------ ------------
Balance at March 30, 1996....................... -- 10,000 -- 144,000 (109,856)
Preferred stock issuance charges (see Note 8)... -- -- -- (12,000) --
Decrease in Common Stock par value.............. -- (9,900) -- 9,900 --
Issuance of Class A Preferred Stock............. 63,000 -- -- -- --
Accrued preferred stock dividends............... 2,000 -- -- (2,000) --
Net loss for Fiscal 1997........................ -- -- -- -- (183,354)
---------- ----------- ------------- ------------ ------------
Balance at March 29, 1997....................... $ 65,000 $ 100 $ -- $ 139,900 $ (293,210)
---------- ----------- ------------- ------------ ------------
---------- ----------- ------------- ------------ ------------
</TABLE>
F-16
<PAGE>
The Company's Certificate of Incorporation and Bylaws were restated as of
the Effective Date and subsequently amended. The Certificate of Incorporation
as amended authorizes the issuance of 60,000,000 shares of Common Stock and
10,000,000 shares of preferred stock. On November 7, 1996, the Company's
shareholders approved a decrease in the par value of Common Stock from $1.00
to $0.01 per share.
Under the Plan, on the Effective Date, the Old Common Stock was cancelled
and, as described in Note 2, holders of the Subordinated Notes became
entitled to receive their pro rata share of 10,000,000 shares of Common
Stock. In addition, on the Effective Date, holders of Capital Senior Zero
Notes and Capital Subordinated Zero Notes who executed releases became
entitled to receive Series 1 Warrants to purchase an aggregate of 300,000
shares of Common Stock at an exercise price of $30 per share and Series 2
Warrants to purchase an aggregate of 600,000 shares of Common Stock at an
exercise price of $42 per share. Both the Series 1 Warrants and the Series 2
Warrants expire five years after the Effective Date. As of March 29, 1997, no
warrants have been exercised. The Common Stock and all other equity
securities issued under the Certificate of Incorporation as amended are
voting securities (although the voting rights of any new preferred stock
issued may differ from those of Common Stock) and do not have any preemptive
rights to subscribe for additional shares.
Changes in Redeemable Old Preferred Stock of the Predecessor Company were
as follows (in thousands):
<TABLE>
<CAPTION>
SERIES A SERIES B SERIES C TOTAL
--------- ----------- --------- ----------
<S> <C> <C> <C> <C>
Balance at April 2, 1994.............................................. $ 61,030 $ 7,911 $ 76,371 $ 145,312
Accrued preferred stock dividends..................................... 8,152 1,099 10,229 19,480
--------- ----------- --------- ----------
Balance at April 1, 1995.............................................. 69,182 9,010 86,600 164,792
Extinguishment of Predecessor Company Stock in connection with
bankruptcy.......................................................... (69,182) (9,010) (86,600) (164,792)
--------- ----------- --------- ----------
Balance at June 17, 1995.............................................. $ -- $ -- $ -- $ --
--------- ----------- --------- ----------
--------- ----------- --------- ----------
</TABLE>
The Series A cumulative exchangeable redeemable preferred stock ("Series
A old preferred stock") had a $.01 par value, 500,000 shares authorized and
351,745 shares issued and outstanding. The Series B cumulative redeemable
convertible preferred stock ("Series B old preferred stock") had a $.01 par
value, 500,000 shares authorized and 78,256 shares issued and outstanding.
The Series C cumulative redeemable convertible preferred stock ("Series C old
preferred stock") had a $.01 par value, 500,000 shares authorized and 440,771
shares issued and outstanding.
Through July 23, 1994, dividends accrued on the old preferred stock at a
rate of 12% per annum, reflecting management's estimate that the old
preferred stock would be redeemed prior to the July 14, 1996 dividend step-up
date. As of July 24, 1994, the Company changed its estimate of the date on
which the old preferred stock was expected to be redeemed from on or before
the date of the dividend step-up to an indeterminate date. Accordingly, from
July 24, 1994 through the Filing Date, the Company accrued dividends
recognizing a yield to redemption rate of 18.2% per annum for the Series A
old preferred stock, 19.3% for the Series B old preferred stock and 18.3% for
the Series C old preferred stock. Accrued undeclared dividends were recorded
as an increase of stockholders' deficit and as an increase in the respective
preferred stock carrying value.
NOTE 11--PENSION PLANS
The components of net periodic pension expense for the Company's defined
benefit pension plans are as follows (in thousands):
<TABLE>
<CAPTION>
FISCAL FISCAL FISCAL
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Service cost--benefits earned during the period................................... $ 4,351 $ 4,317 $ 4,715
Interest costs on projected benefit obligations................................... 12,700 12,523 13,706
Return on plan assets............................................................. (16,993) (32,921) (12,179)
Net amortization and deferral..................................................... 3,690 17,877 (4,042)
Charges relating to pension settlement............................................ -- -- 3,747
--------- --------- ---------
Net periodic pension expense...................................................... $ 3,748 $ 1,796 $ 5,947
--------- --------- ---------
--------- --------- ---------
</TABLE>
The Company has not segregated the respective Successor and Predecessor
Company pension expense for Fiscal 1996 because it is impractical to do so.
F-17
<PAGE>
During Fiscal 1995, the Company incurred charges totaling $3,747,000
relating to pension settlements, under both its qualified and nonqualified
pension plans, principally as a result of early retirement programs offered
to certain employees.
The actuarial present value of benefit obligations and the funded status
of the Company's pension plans are as follows (in thousands):
<TABLE>
<CAPTION>
QUALIFIED NONQUALIFIED
------------------------ ------------------------
MARCH 29, MARCH 30, MARCH 29, MARCH 30,
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Actuarial present value of benefit obligations:
Vested benefits................................................. $ 159,438 $ 146,821 $ 4,715 $ 3,968
Nonvested benefits.............................................. 4,038 3,948 -- --
----------- ----------- ----------- -----------
Total benefits.................................................. $ 163,476 $ 150,769 $ 4,715 $ 3,968
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Projected benefit obligations................................... $ (186,207) $ (167,010) $ (5,364) $ (4,618)
Plan assets, primarily stocks and bonds, at fair value.......... 169,707 170,684 -- --
----------- ----------- ----------- -----------
Funded (unfunded) status........................................ (16,500) 3,674 (5,364) (4,618)
Unrecognized net (loss) gain.................................... 8,674 (8,259) 2,073 1,364
Unrecognized prior service cost................................. -- -- (20) (25)
Adjustment required to recognize minimum liability.............. -- -- (1,404) (689)
----------- ----------- ----------- -----------
Pension liability............................................... $ (7,826) $ (4,585) $ (4,715) $ (3,968)
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Significant actuarial assumptions used in all Company sponsored plans were as follows:
</TABLE>
<TABLE>
<CAPTION>
FISCAL 1997 FISCAL 1996 FISCAL 1995
------------- ----------- ------------
<S> <C> <C> <C>
Discount rates............................................................. 7.25% 8.0% 7.5%
Rates of increase in future compensation................................... 3.50% 4.0%-5.0% 3.5%-3.9%
Long-term rate of return on plan assets.................................... 8.75% 9.75% 9.5%
</TABLE>
NOTE 12--POSTRETIREMENT HEALTH CARE AND LIFE INSURANCE BENEFITS
The Company provides certain health care and life insurance benefits for
substantially all of its full-time non-union employees and union employee
groups. The Company's postretirement plans currently are not funded. The
Company's union employee groups are participants in multi-employer plans
which require monthly contributions and which are not subject to the
provisions of FAS No. 106, "Employers' Accounting for Postretirement Benefits
Other Than Pensions".
Net postretirement benefit cost consisted of the following (in thousands):
<TABLE>
<CAPTION>
FISCAL 1997 FISCAL 1996 FISCAL 1995
----------- ----------- -----------
<S> <C> <C> <C>
Service cost--benefits earned during the period............................. $ 728 $ 591 $ 695
Interest cost on accumulated postretirement benefit obligation.............. 2,668 2,594 2,604
----------- ----------- -----------
$ 3,396 $ 3,185 $ 3,299
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
The Company has not segregated the respective Successor and Predecessor
Company postretirement benefit expense for Fiscal 1996 because it is
impractical to do so.
F-18
<PAGE>
The unfunded accumulated postretirement benefit obligation consists of the
following (in thousands):
<TABLE>
<CAPTION>
MARCH 29, MARCH 30,
1997 1996
-------------- --------------
<S> <C> <C>
Retirees..................................................... $ 20,660 $ 17,761
Fully eligible active plan participants...................... 2,482 2,613
Other active plan participants............................... 15,189 16,194
Unrecognized net loss........................................ (2,521) (832)
---------- ----------
$ 35,810 $ 35,736
---------- ----------
---------- ----------
</TABLE>
The assumed health care cost trend rate used in measuring the accumulated
postretirement obligation as of March 29, 1997 and March 30, 1996 was 11.0% and
12.0%, respectively, for participants pre-age 65 and 8.0% and 9.0%,
respectively, for participants post-age 65, decreasing each successive year by
1% until the respective trend rates reach 4.75% after which the trend rate
remains constant. An increase of 1% in the assumed health care cost trend rate
for the current year would increase the annual net post retirement health care
cost by approximately $16,000 and the accumulated postretirement benefit
obligation by approximately $226,000.
The Company provides benefits for all future retirees based on a service
related flat dollar premium allowance. Accordingly, the health care cost trend
rate will not be a significant factor in determining Grand Union's liability for
future retirees under its postretirement health care arrangements. The assumed
discount rate used in determining the accumulated postretirement benefit
obligation was 7.25% for Fiscal 1997 and Fiscal 1996 and 8.0% for Fiscal 1995.
NOTE 13--EQUITY COMPENSATION PLANS
During the 41 weeks ended March 30, 1996, the Board of Directors of the
Company adopted The Grand Union Company 1995 Equity Incentive Plan ("Employees'
Plan"), which provides for issuance of stock options to purchase up to 900,000
shares of the Company's Common Stock, and The Grand Union Company 1995
Non-Employee Directors' Stock Option Plan ("Directors' Plan"), which provides
for the issuance of options to purchase up to 100,000 shares of the Company's
Common Stock. The shareholders approved the plans on November 7, 1996. Both
plans are administered by the Board of Directors. Options granted to date under
both plans expire no later than ten years after the grant date.
Activity with Respect to the Employees' Plan was as follows:
<TABLE>
<CAPTION>
NUMBER OF WEIGHTED AVERAGE
OPTIONS OPTION PRICE
----------- -----------------
<S> <C> <C>
Grants.......................................................... 230,680 $ 6.370
Expirations..................................................... 4,400 6.625
----------- ------
March 29, 1997.................................................. 226,280 $ 6.365
----------- ------
----------- ------
</TABLE>
At March 29, 1997, 206,280 shares were vested under the Employees' Plan. The
range of exercise prices for options outstanding under the Employees' Plan at
March 29, 1997 was $3.688 to $6.625. These options will expire if not exercised
at specific dates ranging from April 3, 1997 to March 3, 2007.
The Directors' Plan included grants of 51,000 shares with a weighted
average option price of $5.941. No options were exercised or expired during
the year. At March 29, 1997, 51,000 shares were exercisable under the
Directors' Plan at exercise prices of $5.750 and $6.125. These options will
expire if not exercised at specific dates ranging from September 16, 1997 to
November 7, 2006.
The following table summarizes information about options outstanding at
March 29, 1997 for both stock option plans:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
-------------------------------------------- ------------------------------
WEIGHTED-AVERAGE
RANGE OF NUMBER REMAINING CONTRACTUAL WEIGHTED-AVERAGE NUMBER WEIGHTED-AVERAGE
EXERCISE PRICES OUTSTANDING LIFE (IN YEARS) EXERCISE PRICE EXERCISABLE EXERCISE PRICE
- ------------------ ----------- ------------------------- ----------------- ----------- -----------------
<S> <C> <C> <C> <C> <C>
$3.688 to $6.625 226,280 6.3 $ 6.365 206,280 $ 6.625
$5.750 to $6.125 51,000 8.4 5.941 51,000 5.941
------- -------
277,280 257,280
------- -------
------- -------
</TABLE>
F-19
<PAGE>
The Company adopted the disclosure only option under FAS No. 123,
"Accounting for Stock-Based Compensation", as of March 29, 1997. If the
accounting provisions of FAS No. 123 had been adopted as of the beginning of
Fiscal 1997, the effect on Fiscal 1997 net loss would have been less than
$100,000.
NOTE 14--RELATED PARTY TRANSACTIONS
In connection with the Stock Purchase Agreement (see Note 8), the Company
paid transaction fees to Shamrock Capital Advisors, Inc. ("SCA"), the investment
managers for Trefoil Capital Advisors II, L.P., and GE Investment Management
Corporation of $2,000,000 each, and the Company paid Donaldson, Lufkin and
Jenrette ("DLJ"), a managing director of which served on the Company's Board of
Directors, approximately $5,200,000 for advisory services, a fairness opinion,
and other miscellaneous expenses.
Also in connection with the Stock Purchase Agreement, the Company entered
into a management contract with SCA pursuant to which the Company paid $300,000
during Fiscal 1997 and is scheduled to pay additional fees of $400,000 and
$500,000 in fiscal years ending in 1998 and 1999, respectively, plus related
expenses.
Also during Fiscal 1997, the Chairman of the Board of Directors purchased
through a family trust 60,000 shares of Class A Convertible Preferred Stock from
the Company for an aggregate price of $3,000,000.
DLJ was paid $1,278,000 in Fiscal 1996 for consulting services in connection
with the bankruptcy proceedings.
Prior to the Effective Date, the Company was party to a financial
advisory agreement with Miller Tabak Hirsch + Co. (the "MTH Agreement")
pursuant to which MTH, which indirectly controlled the Company and Penn
Traffic Company ("Penn Traffic"), was to have provided certain financial
consulting and business management services to the Company through July 1997.
In accordance with the Plan, the MTH Agreement was terminated on the
Effective Date and Grand Union executed a settlement agreement with MTH (the
"MTH Settlement Agreement") which provides for the termination of the MTH
Agreement, payment by Grand Union of accrued and unpaid fees under the MTH
Agreement through the Effective Date and the indemnification of MTH and
certain entities related to MTH from certain claims and liabilities, subject
to the terms and limitations set forth in the MTH Settlement Agreement. The
Company deposited $3,000,000 relating to the indemnification in escrow on the
Effective Date. This amount is included in other assets in the Consolidated
Balance Sheet. During the 11 weeks ended June 17, 1995 and Fiscal 1995, the
Company paid $315,000 and $750,000, respectively, to MTH pursuant to the MTH
Agreement.
From September 1993 until September 1995, Grand Union and Penn Traffic were
parties to a combined purchasing and distribution agreement relating to general
merchandise and health and beauty care products. In September 1995, Grand Union
purchased from Penn Traffic approximately $12,821,000 of merchandise which had
been owned by Penn Traffic under the joint buying arrangement.
NOTE 15--CONTINGENCIES
The Company is subject to certain legal proceedings and claims arising in
connection with its business. It is management's opinion that the ultimate
resolution of such legal proceedings and claims will not have a material adverse
effect on the Company's consolidated results of operations or its financial
position.
F-20
<PAGE>
NOTE 16--Quarterly Financial Information (Unaudited) (in thousands, except
loss per share and market price)
<TABLE>
<CAPTION>
SUCCESSOR COMPANY
---------------------------------------------
1ST (a) 2ND 3RD 4TH
---------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
Fiscal 1997:
Sales............................................................. $ 726,823 $ 533,412 $ 537,151 515,287
Gross profit...................................................... 221,899 162,158 164,335 157,355
Unusual items..................................................... -- -- -- (9,800)
Loss before income taxes.......................................... (48,251) (37,635) (38,364) (56,581)
Net loss.......................................................... (43,812) (30,653) (31,677) (77,212)
Net loss applicable to common stock............................... (43,812) (30,896) (32,465) (78,181)
Net loss per common share......................................... (4.38) (3.09) (3.25) (7.82)
Market Price-high................................................ 7 9/16 6 7/8 7 3/16 5 3/16
Market Price-low................................................. 5 7/8 5 4 1/12 3
</TABLE>
<TABLE>
<CAPTION>
PREDECESSOR
COMPANY SUCCESSOR COMPANY
-----------------------------------------------------------
1ST (a) 2ND 3RD 4TH
----------------------------------------------------------
11 WEEKS 5 WEEKS
ENDED ENDED
JUNE 17, JULY 22,
Fiscal 1996 1995 1995
----------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Sales............................................... $ 487,882 $ 232,663 $ 523,711 $ 543,617 $ 519,937
Gross profit........................................ 143,841 73,080 162,637 166,863 167,276
Unusual items....................................... (18,627) -- (4,500) (15,000) (2,500)
Loss before income taxes and extraordinary gain on
debt discharge.................................... (29,336) (9,023) (35,947) (48,834) (34,979)
Extraordinary gain on debt discharge................ 854,785 -- -- -- --
Net income (loss)................................... 825,449 (9,523) (30,075) (40,994) (29,264)
Net loss per share.................................. -- (0.95) (3.01) (4.10) (2.93)
Market Price-high.................................. -- -- 15 1/8 12 1/4 8 9/16
Market Price-low................................... -- -- 10 4 7/8 5 13/16
</TABLE>
(a) Represents 16 weeks, all other quarters are 12 weeks.
Loss per common share data is not meaningful for the period prior to the
Effective Date due to the significant change in the capital structure of the
Company.
F-21
<PAGE>
Exhibit 3.1
CERTIFICATE OF AMENDMENT
of the
RESTATED CERTIFICATE OF INCORPORATION
of
THE GRAND UNION COMPANY
Pursuant to Section 242 of the General Corporation Law of the State of
Delaware, The Grand Union Company (the "Corporation"), a corporation
organized and existing under the General Corporation Law of the State of
Delaware, in accordance with the provisions of Section 103 of the General
Corporation Law of the State of Delaware, DOES HEREBY CERTIFY:
1. By unanimous vote of the Board of Directors of the Corporation,
resolutions were duly adopted, pursuant to Section 242 of the General
Corporation Law of the State of Delaware, approving the following amendments
to the Certificate of Incorporation of the Corporation, declaring said
amendments to be advisable, and directing that said amendments be submitted
to the stockholders of the Corporation for their approval or disapproval.
The amendments are as follows:
Article FOURTH is amended to read as follows:
FOURTH: (A) The total number of shares of all classes of capital
stock which the Corporation shall have authority to issue is
70,000,000, of which 10,000,000 shares shall be Preferred Stock of
the par value of $1.00 per share and 60,000,000 shares shall be
Common Stock of the par value of $.01 per share.
(B) The Board of Directors is expressly authorized, by
resolution or resolutions, to provide for the issue of all or any
shares of the Preferred Stock, in a one or more series, and to fix
for each such series such voting powers, full or limited, and such
designations, preferences and relative, participating, optional or
other special rights and such qualifications, limitations or
restrictions thereon, as shall be stated and expressed in the
resolution or resolutions adopted by the Board of Directors
providing for the issue of such series (a "Preferred Stock
Designation") and as may be permitted by the DGCL and as are
consistent with paragraph (C) of this Article FOURTH. The number of
authorized shares of Preferred Stock may be increased or decreased
(but not below the number of shares thereof then outstanding) by the
affirmative vote of a majority of the holders of the voting power of
all the then outstanding shares of the capital stock of the
Corporation entitled to vote generally in the election of directors
(the "Voting Stock") voting together as a single class, without a
separate vote of the holders of the Preferred Stock, or any series
thereof, unless a vote of any such holders is required pursuant to
any Preferred Stock Designation.
(C) The Corporation is subject to the requirements of Section
1123(a)(6) of the United States Bankruptcy Code (11 U.S.C.
1123(a)(6)) ("Section 1123(a)(6)") and shall be prohibited from
issuing any nonvoting equity
<PAGE>
securities, and shall, at all times, provide, as to the several
classes of securities from time-to-time possessing voting power, an
appropriate distribution of power among such classes. A Preferred
Stock Designation shall not authorize the issuance of such nonvoting
equity securities, and shall include in its provisions, if the class
designated by such Preferred Stock Designation has a preference in
respect of dividends, adequate provisions for the election of
directors representing such preferred class in the event of default
in the payment of such dividends consistent with the requirements of
Section 1123(a)(6).
Article SEVENTH is hereby deleted in its entirety and replaced by new
Article SEVENTH to read as follows:
SEVENTH: (1) In addition to any affirmative vote required by law or
this Certificate of Incorporation or the By-laws of the Corporation,
and except as otherwise expressly provided in Section 2 of this
Article, a Business Combination (as hereinafter defined) with, or
proposed by or on behalf of, any Interested Stockholder (as
hereinafter defined) or any Affiliate or Associate (as hereinafter
defined) of any Interested Stockholder or any person who thereafter
would be an Affiliate or Associate of such Interested Stockholder
shall require the affirmative vote of not less than seventy-five
percent (75%) of the votes entitled to be cast by the holders of all
the then outstanding shares of Voting Stock, voting together as a
single class, excluding Voting Stock beneficially owned by such
Interested Stockholder. Such affirmative vote shall be required
notwithstanding the fact that no vote may be required, or that a
lesser percentage or separate class vote may be specified, by law or
in any agreement with any national securities exchange or otherwise.
(2) The provisions of Section 1 of this Article shall not be
applicable to any particular Business Combination, and such Business
Combination shall require only such affirmative vote, if any, as is
required by law or by any other provision of this Certificate of
Incorporation or the By-laws of the Corporation, or any agreement
with any national securities exchange or the Nasdaq National Market,
if all of the conditions specified in either of the following
Paragraphs (a) or (b) are met, or in the case of a Business
Combination not involving the payment of consideration to the
holders of the Corporation's outstanding Capital Stock (as
hereinafter defined), if the conditions specified in the following
Paragraph (a) are met:
(a) The Business Combination shall have been approved,
either specifically or as a transaction which is within an
approved category of transactions, by a majority (whether such
approval is made prior to or subsequent to the acquisition of,
or announcement or public disclosure of the intention to
acquire, beneficial ownership of the Voting Stock that caused
the Interested Stockholder to become an Interested
Stockholder) of the Continuing Directors (as hereinafter
defined).
<PAGE>
(b) All of the following conditions shall have been met;
provided, however, that for purposes of all calculations set
forth in this Section 2(b), all acquisitions of Preferred
Stock or Common Stock by Trefoil Capital Investors II, L.P.
and GE Investment Private Placement Partners II, A Limited
Partnership (collectively, the "Purchasers") pursuant to the
Stock Purchase Agreement dated July 30, 1996 (the "Stock
Purchase Agreement") and all acquisitions of Common Stock by
the Purchasers upon the conversion of such Preferred Stock
will be excluded:
(i) The aggregate amount of cash and the Fair
Market Value (as hereinafter defined), as of the date of
the consummation of the Business Combination, of
consideration other than cash to be received per share
by holders of Common Stock in such Business Combination
shall be at least equal to the amount determined under
clause (A) below:
(A) (if applicable) the highest per share
price (including any brokerage commissions,
transfer taxes and soliciting dealers' fees) paid
by or on behalf of the Interested Stockholder for
any share of Common Stock in connection with the
acquisition by the Interested Stockholder of
beneficial ownership of shares of Common Stock (x)
within the two-year period immediately prior to
the first public announcement of the proposed
Business Combination (the "Announcement Date") or
(y) in the transaction in which it became an
Interested Stockholder, whichever is higher, in
either case as adjusted for any subsequent stock
split, stock dividend, subdivision or
reclassification with respect to the Common Stock.
(ii) The aggregate amount of cash and the Fair
Market Value, as of the date of the consummation of the
Business Combination, of consideration other than cash
to be received per share by holders of shares of any
class or series of outstanding Capital Stock, other than
Common Stock, shall be at least equal to the amount
determined under clause (A) below:
(A) (if applicable) the highest per share
price (including any brokerage commissions,
transfer taxes and soliciting dealers' fees) paid
by or on behalf of the Interested Stockholder for
any share of such class or series of Capital Stock
in connection with the acquisition by the
Interested Stockholder of beneficial ownership of
shares of such class or series of Capital Stock
(x) within the two-year period immediately prior
to the Announcement Date or (y) in the transaction
in which it became an Interested Stockholder,
whichever is higher, in either case as adjusted
for any subsequent stock split,
<PAGE>
stock dividend, subdivision or
reclassification with respect to such class or
series of Capital Stock.
(iii) The consideration to be received by holders
of a particular class or series of outstanding Capital
Stock shall be in cash or in the same form as previously
has been paid by or on behalf of the Interested
Stockholder in connection with its direct or indirect
acquisition of beneficial ownership of shares of such
class or series of Capital Stock. If the consideration
so paid for shares of any class or series of Capital
Stock varied as to form, the form of consideration for
such class or series of Capital Stock shall be either
cash or the form used to acquire beneficial ownership of
the largest number of shares of such class or series of
Capital Stock previously acquired by the Interested
Stockholder.
(iv) If a proxy or information statement is
required to be mailed pursuant to the Securities
Exchange Act of 1934, as amended, and the rules and
regulations thereunder (the "Exchange Act") (or any
subsequent provisions replacing such Exchange Act, rules
or regulations), a proxy or information statement
describing the proposed Business Combination and
complying with the requirements of the Exchange Act
shall be mailed to all stockholders of the Corporation
at least 30 days prior to the consummation of such
Business Combination.
(3) The following definitions shall apply with respect to this
Article:
(a) The term "Business Combination" shall mean, with respect
to any particular Interested Stockholder, any event described in
clauses (i), (ii) or (iii) of this Section 3(a) which occurs during
the two-year period commencing on the date on which the Interested
Stockholder becomes an Interested Stockholder:
(i) any merger or consolidation of the Corporation or
any Subsidiary (as hereinafter defined) with (x) any
Interested Stockholder or (y) any other corporation (whether
or not itself an Interested Stockholder) which is or after
such merger or consolidation would be an Affiliate or
Associate of an Interested Stockholder; or
(ii) any merger or consolidation of the Corporation with
any of its Subsidiaries that has the effect, directly or
indirectly, of increasing the proportionate share of any class
or series of Capital Stock, or any securities convertible into
Capital Stock or into equity securities of any Subsidiary,
that is beneficially owned by any Interested Stockholder or
any Affiliate or Associate of any Interested Stockholder; or
<PAGE>
(iii) any agreement, contract or other arrangement
providing for any one or more of the actions specified in the
foregoing clauses (i) or (ii).
(b) The term "Capital Stock" shall mean all capital stock of
the Corporation authorized to be issued from time to time under
Article Fourth of this Certificate of Incorporation, and the term
"Voting Stock" shall mean all Capital Stock which by its terms may
be voted on all matters submitted to stockholders of the Corporation
generally.
(c) The term "person" shall mean any individual, firm,
corporation or other entity and shall include any group comprised of
any person and any other person with whom such person or any
Affiliate or Associate of such person has any agreement arrangement
or understanding, directly or indirectly, for the purpose of
acquiring, holding, voting or disposing of Capital Stock.
(d) The term "Interested Stockholder" shall mean any person
(other than the Corporation or any Subsidiary and other than any
profit-sharing, employee stock ownership or other employee benefit
plan of the Corporation or any Subsidiary or any trustee of or
fiduciary with respect to any such plan when acting in such
capacity) who is or has announced or publicly disclosed a plan or
intention to become the beneficial owner of Voting Stock
representing fifty percent (50%) or more of the votes entitled to be
cast by the holders of all then outstanding shares of Voting Stock.
For purposes of this Article, the Purchasers will not be considered
an Interested Stockholder with respect to any acquisition of
Preferred Stock pursuant to the Stock Purchase Agreement or with
respect to the acquisition of Common Stock by the Purchasers upon
the conversion of such Preferred Stock.
(e) A person shall be a "beneficial owner" of any Capital
Stock (i) which such person or any of its Affiliates or Associates
beneficially owns, directly or indirectly; (ii) which such person or
any of its Affiliates or Associates has, directly or indirectly, (A)
the right to acquire (whether such right is exercisable immediately
or subject only to the passage of time), pursuant to any agreement,
arrangement or understanding or upon the exercise of conversion
rights, exchange rights, warrants or options, or otherwise, or (B)
the right to vote pursuant to any agreement, arrangement or
understanding; or (iii) which is beneficially owned, directly or
indirectly, by any other person with which such person or any of its
Affiliates or Associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or
disposing of any shares of Capital Stock. For the purpose of
determining whether a person is an Interested Stockholder pursuant
to Paragraph (d) of this Section (3), the number of shares of
Capital Stock deemed to be outstanding shall include shares deemed
beneficially owned by such person through application of this
Paragraph (e) of Section (3), but shall not include any other shares
of Capital Stock that may be issuable
<PAGE>
pursuant to any agreement, arrangement or understanding, or upon
exercise of conversion rights, warrants or options, or otherwise.
(f) The terms "Affiliate" and "Associate" shall have the
respective meanings ascribed to such terms in Rule 12b-2 under the
Exchange Act as in effect on the date of filing of this Certificate
of Incorporation with the Secretary of State of the State of
Delaware (the term "registrant" in said Rule 12b-2 meaning in this
case the Corporation).
(g) The term "Subsidiary" means any company of which a
majority of any class of equity security is beneficially owned by
the Corporation; provided, however, that for the purposes of the
definition of Interested Stockholder set forth in Paragraph (d) of
this Section (3), the term "Subsidiary" shall mean only a company of
which a majority of each class of equity security is beneficially
owned by the Corporation.
(h) The term "Continuing Director" means any member of the
Board of Directors, while such person is a member of the Board of
Directors, who is not an Affiliate or Associate or representative of
the Interested Stockholder and was a member of the Board of
Directors prior to the time that an Interested Stockholder became an
Interested Stockholder, and any successor of a Continuing Director
while such successor is a member of the Board of Directors, who is
not an Affiliate or Associate or representative of the Interested
Stockholder and is recommended or elected to succeed the Continuing
Director by a majority of Continuing Directors. For purposes of this
Article, Roger Stangeland will be considered a Continuing Director.
(i) "Fair Market Value" means (i) in the case of cash, the
amount of such cash; (ii) in the case of stock, the highest closing
sale price during the 30-day period immediately preceding the date
in question of a share of such stock on the Composite Tape for New
York Stock Exchange-Listed Stocks, or, if such stock is not quoted
on the Composite Tape, on the New York Stock Exchange, or, if such
stock is not listed on such Exchange, on the principal United States
securities exchange registered under the Exchange Act on which such
stock is listed, or, if such stock is not listed on any such
exchange, the highest closing bid quotation with respect to a share
of such stock during the 30-day period preceding the date in
question on the National Association of Securities Dealers, Inc.
Automated Quotations System or any similar system then in use, or,
if no such quotations are available, the fair market value on the
date in question of a share of such stock as determined by a
majority of the Continuing Directors in good faith; and (iii) in the
case of property other than cash or stock, the Fair Market Value of
such property on the date in question as determined in good faith by
a majority of the Continuing Directors.
<PAGE>
(j) In the event of any Business Combination in which the
Corporation survives, the phrase "consideration other than cash to
be received" as used in Paragraphs (b)(i) and (b)(ii) of Section (2)
of this Article shall include the shares of Common Stock and/or the
shares of any other class or series of Capital Stock retained by the
holders of such shares.
(4) A majority of the Continuing Directors shall have the power and
duty to determine for the purpose of this Article, on the basis of
information known to them after reasonable inquiry, all questions arising
under this Article, including, without limitation, (i) whether a person is
an Interested Stockholder, (ii) the number of shares of Capital Stock or
other securities beneficially owned by any person, (iii) whether a person
is an Affiliate or Associate of another, and (iv) whether a proposed
action is with, or proposed by, or on behalf of an Interested Stockholder
or an Affiliate or Associate of an Interested Stockholder. Any such
determination made in good faith shall be binding and conclusive on all
parties.
(5) Nothing contained in this Article shall be construed to relieve
any Interested Stockholder from any fiduciary obligation imposed by law.
(6) The fact that any Business Combination complies with the
provisions of Section (2) of this Article shall not be construed to impose
any fiduciary duty, obligation or responsibility on the Board of
Directors, or any member thereof, to approve such Business Combination or
recommend its adoption or approval to the stockholders of the Corporation,
nor shall such compliance limit, prohibit or otherwise restrict in any
manner the Board of Directors, or any member thereof, with respect to
evaluations of, or actions and responses taken with respect to, such
Business Combination.
(7) For the purposes of this Article, a Business Combination is
presumed to have been proposed by, or on behalf of, an Interested
Stockholder or an Affiliate or Associate of an Interested Stockholder or a
person who thereafter would become such if (i) after the Interested
Stockholder became such, the Business Combination is proposed following
the election of any director of the Corporation who, with respect to such
Interested Stockholder, would not qualify to serve as a Continuing
Director or (ii) such Interested Stockholder, Affiliate, Associate or
person votes for or consents to the adoption of any such Business
Combination, unless as to such Interested Stockholder, Affiliate,
Associate or person, a majority of the Continuing Directors makes a
good-faith determination that such Business Combination is not proposed by
or on behalf of such Interested Stockholder, Affiliate, Associate or
person, based on information known to them after reasonable inquiry.
(8) Notwithstanding any other provisions of this Certificate of
Incorporation or the By-laws of the Corporation (and notwithstanding the
fact that a lesser percentage or separate class vote may be specified by
law, this Certificate of Incorporation or the By-laws of the Corporation),
the affirmative vote of the holders of not less than seventy-five percent
(75%) of the votes entitled to be cast by the holders of all the then
outstanding shares of Voting
<PAGE>
Stock, voting together as a single class, excluding Voting Stock
beneficially owned by such Interested Stockholder, shall be required to
amend or repeal, or adopt any provisions inconsistent with, this Article;
provided, however, that this Section (8) shall not apply to, and such
seventy-five percent (75%) vote shall not be required for, any amendment,
repeal or adoption unanimously recommended by the Board of Directors if
all of such directors are persons who would be eligible to serve as
Continuing Directors within the meaning of Section (3), Paragraph (h) of
this Article.
2. At a meeting duly called and held upon notice in accordance with
section 222 of the General Corporation Law of the State of Delaware, the
amendments were duly approved by a majority of the outstanding stock entitled to
vote thereon, and by a majority of the outstanding stock of each class entitled
to vote thereon as a class.
3. Such amendments were adopted in accordance with Section 242 of the
General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to be executed in its corporate name by its Chief Executive Officer
and attested by its Secretary this 21st day of November, 1996.
/s/ Joseph J. McCaig
--------------------------
Joseph J. McCaig
President
ATTEST:
/s/ Kenneth R. Baum
- ----------------------
Kenneth R. Baum
Secretary
<PAGE>
EXHIBIT 3.3
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 06/11/1997
971191643 - 0236404
THE GRAND UNION COMPANY
CERTIFICATE OF DESIGNATION
OF CLASS B CONVERTIBLE PREFERRED STOCK
SETTING FORTH THE POWERS,
PREFERENCES, RIGHTS,
QUALIFICATIONS,
LIMITATIONS AND RESTRICTIONS OF
SUCH CLASS OF PREFERRED STOCK
Pursuant to Section 151 of the General Corporation Law of the State
of Delaware, The Grand Union Company (the "Corporation"), a corporation
organized and existing under the General Corporation Law of the State of
Delaware, in accordance with the provisions of Section 103 thereof, DOES
HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of
Directors of the Corporation by Article Fourth of the Certificate of
Incorporation of the Corporation (the "Certificate of Incorporation"), and in
accordance with the provisions of Section 151 of the General Corporation Law
of the State of Delaware, the Board of Directors of the Corporation on June
5th, 1997, adopted the following resolution creating a series of Preferred
Stock designated as Class B Convertible Preferred Stock (the "Class B Stock"):
RESOLVED that, pursuant to the authority vested in the Board of
Directors of the Corporation in accordance with the General Corporation Law
of the State of Delaware and the provisions of the Certificate of
Incorporation, a class of authorized Preferred Stock, par value $1.00 per
share, of the Corporation is hereby created and that the designation and
number of shares thereof and the voting powers, preferences and relative
participating, optional and other special rights of the shares of such class,
and the qualifications, limitations and restrictions thereof, are as follows:
SECTION 1. STATED VALUE.
The Class B Stock shall consist of 1,400,000 shares par value $1.00
per share, each of which shall have a stated value of $50 per share (the
"Stated Value").
SECTION 2. DIVIDENDS AND DISTRIBUTIONS.
(a) The holders of shares of Class B Stock, in preference to the
holders of shares of Junior Dividend Stock (as defined in Section 11 hereof),
shall be entitled to receive, when, as and if declared by the Board of
Directors, out of the assets of the Corporation legally available therefor,
dividends at an annual rate of 8.50% of the Stated Value from and after the
Issue Date (as defined in Section 11 hereof) of such shares as long as shares
of Class B Stock remain outstanding. Dividends shall be payable in cash, or
additional shares of Class B Stock, as
<PAGE>
provided in paragraph (c) of this Section 2, or shares of Common Stock, as
provided in paragraph (c) of this Section 2. Dividends shall be computed on
the basis of the Stated Value, and shall accrue and be payable quarterly, in
arrears, on the last Business Day (as defined in Section 11) of March, June,
September and December in each year (each such date being referred to herein
as a "Quarterly Dividend Payment Date"), commencing on the first Quarterly
Dividend Payment Date after the Issue Date of such shares. To the extent
that dividends on the Class B Stock are payable in cash, such dividends shall
be cumulative. Accrued dividends not paid on any Quarterly Dividend Payment
Date shall accrue additional dividends at an annual dividend rate of 8.50%
until paid in full.
(b) Dividends payable pursuant to paragraph (a) of this Section 2
shall begin to accrue and be cumulative from the Issue Date of each share of
Class B Stock, whether or not earned or declared. The amount of dividends so
payable shall be determined on the basis of twelve 30-day months and a
360-day year. Dividends paid on the shares of Class B Stock in an amount
less than the total amount of such dividends at the time accrued and payable
on such shares shall be allocated pro rata on a share-by-share basis among
all such shares at the time outstanding. The Board of Directors may fix a
record date for the determination of holders of shares of Class B Stock
entitled to receive payment of a dividend declared thereon, which record date
shall be no more than sixty days prior to the date fixed for the payment
thereof.
(c) With respect to dividends paid on or prior to the third
anniversary of the Principal Issue Date (as defined in Section 11), the
Corporation shall have the option to pay such dividends in shares of Class B
Stock valued at $50 per share or in whole shares of Common Stock valued at
Fair Market Value determined as of the close of business on the third Business
Day immediately preceding the date of payment, instead of in cash. With
respect to dividends paid after the third anniversary of the Principal Issue
Date but on or prior to the fifth anniversary of the Principal Issue Date,
the Corporation shall have the option to pay such dividends in shares of
Class B Stock valued at $50 per share or in whole shares of Common Stock
valued at Fair Market Value determined as of the close of business on the
third Business Day immediately preceding the date of payment, instead of in
cash, but only if the Corporation is prohibited from paying such dividends in
cash under the terms of its Bank Credit Agreement on its Senior Notes. To
the extent that the Corporation elects to pay any dividends in shares of
Common Stock, it shall pay a premium in additional shares of Common Stock
equal to 33-1/3% of the total number of shares of Common Stock that would
otherwise be paid as the dividend. After the fifth anniversary of the
Principal Issue Date, all dividends shall be paid in cash. The Corporation
shall only have the right to pay dividends in shares of Common Stock if, on
the Quarterly Dividend Payment Date in question, the Common Stock is listed
and traded on the New York Stock Exchange, the American Stock Exchange or
the Nasdaq National Market System. In connection with any payment of
dividends in shares of Common Stock pursuant to this Section 2(c), no
fractions of shares of Common Stock shall be issued, but in lieu thereof the
Corporation shall either (i) deliver a whole share of Common Stock in respect
of the fractional share which the holder would otherwise have been entitled to
upon such dividend payment or (ii) pay a cash adjustment in respect of such
fractional interest in an amount equal to such fractional interest multiplied
by the Fair Market Value of a share of Common Stock determined as of the close
of business on the third Business Day immediately preceding the date of payment.
2
<PAGE>
(d) The holders of shares of Class B Stock shall not be entitled
to receive any dividends or other distributions except as provided herein.
SECTION 3. VOTING RIGHTS.
In addition to any voting rights provided by law, the holders of
shares of Class B Stock shall have the following voting rights:
(a) In addition to voting rights provided elsewhere in this
Section 3, and as long as any of the Class B Stock is outstanding, each share
of Class B Stock shall entitle the holder thereof to vote on all matters,
including with respect to the election of directors, voted on by holders of
Common Stock voting together as a single class with other shares entitled to
vote at all meetings of the stockholders of the Corporation. With respect to
any such vote, each share of Class B Stock shall entitle the holder thereof
to cast the number of votes determined pursuant to the next sentence;
PROVIDED, HOWEVER, that if more than one share of Class B Stock shall be held
by any holder of shares of Class B Stock, the total number of votes which
such holder shall be entitled to cast pursuant to this Section 3(a) shall be
computed on the basis of the total number of shares of Class B Stock held by
such holder, with any then remaining fractional share disregarded for the
purposes of this Section 3(a). The number of votes which each share of the
Class B Stock shall entitle the holder thereof to cast shall be equal to (i)
6.8966 from the First Issue Date until the Approval Date (as defined herein),
and (ii) from and after the Approval Date, the number of whole votes which
could be cast in such vote by a holder of the shares of capital stock of the
Corporation into which such share of Class B Stock is convertible on the
record date for such vote.
(b) In addition to the voting rights provided elsewhere in this
Section 3, the affirmative vote of the holders of at least a majority of the
outstanding shares of Class B Stock, voting separately as a single class, in
person or by proxy, at a special or annual meeting of stockholders called for
the purpose, shall be necessary to (A) except as contemplated by Section
2(c), authorize, increase the authorized number of shares of, or issue
(including on conversion or exchange of any convertible or exchangeable
securities or by reclassification), any shares of any class or classes, or
any series of any class or classes, of the Corporation's capital stock
ranking pari passu with or prior to (either as to dividends or upon a change
in control of the Corporation, voluntary or involuntary liquidation,
dissolution or winding up) the Class B Stock, (B) except as contemplated
pursuant to Section 2(c) or as permitted pursuant to Section 10(a), increase
the authorized number of shares of, or issue (including on conversion or
exchange of any convertible or exchangeable securities or by
reclassification) any shares of, Class B Stock, (C) alter, amend or repeal any
of the provisions of the Certificate of Incorporation of the Corporation
which in any manner would alter, change or otherwise adversely affect in any
way the powers, preferences or rights of the Class B Stock, (D) approve the
sale, lease or other disposition of all or substantially all of the assets of
the Corporation and its Subsidiaries (as defined in Section 11), or (E)
approve any merger of the Corporation with or into any other entity or any
reorganization, recapitalization, liquidation or other similar "transaction"
(including any issuance of equity securities, or securities convertible into
equity securities by the Corporation, to any person (other
3
<PAGE>
than the Purchasers and their Affiliates) who would then own on a fully
diluted basis more than 50% of the total number of votes entitled to be cast
(giving effect to such issuance) by holders of the Corporation's capital
stock on all matters, including the election of directors) involving the
Corporation; PROVIDED, HOWEVER, that the holders of the outstanding shares of
Class B Stock shall only have a class vote on the transactions described in
clauses (D) and (E) prior to the earlier of the effectiveness of a
registration statement under the Securities Act of 1933 relating to all such
shares and the date on which less than half of the total shares of Class B
Stock originally issued (not including any shares issued in payment of
dividends pursuant to Section 2(c)) remain outstanding. Notwithstanding the
proviso to the preceding sentence, the affirmative vote of the holders of at
least a majority of the outstanding shares of Class B Stock, voting
separately as a single class, in person or by proxy, at a special or annual
meeting of stockholders called for the purpose, shall be necessary to approve
any merger of the Corporation with or into any other entity or any
reorganization, recapitalization, liquidation or other similar transaction
involving the Corporation where (i) the Class B Stock is not remaining
outstanding after such transaction under substantially the same powers,
preferences, rights, qualifications, limitations and restrictions as are set
forth in this Certificate of Designation or (ii) the cash, stock, securities
or other property to be received on conversion of one share of Class B Stock
following such transaction and the application of Section 8(h) has a Fair
Market Value at the closing of such transaction less than 150% of the
Conversion Price. In addition, if the Corporation shall have failed to pay
in full dividends on the Class B Stock for six consecutive quarters, then the
size of the Board of Directors of the Corporation shall be increased by two,
and the holders of shares of Class B Stock, voting together as a single
class, shall have the right to elect such two directors. The right to elect
such two directors under this Section 3(b) shall terminate upon payment in
full of all dividends payable on the Class B Stock, at which time the Board
of Directors shall return to its previous size and the directors elected by
the holders of the Class B Stock shall be removed.
(c) (1) The rights of holders of shares of Class B Stock to take
any actions as provided in this Section 3 may be exercised, subject to the
DGCL (as defined in Section 11 hereof), at any annual meeting of stockholders
or at a special meeting of stockholders held for such purpose as hereinafter
provided or at any adjournment or postponement thereof, or by the written
consent, delivered to the Secretary of the Corporation, of the holders of the
minimum number of shares required to take such action.
As long as such right to vote continues (and unless such right has
been exercised by written consent of not less than the minimum number of
shares required to take such action), the Chairman of the Board of the
Corporation may call, and upon the written request of holders of record of
20% of the outstanding shares of Class B Stock, addressed to the Secretary of
the Corporation at the principal office of the Corporation, shall call, a
special meeting of the holders of shares of Class B Stock entitled to vote as
provided herein. The Corporation shall use its best efforts to hold such
meeting as promptly as practicable, but in any event not later than 120 days
after delivery of such request to the Secretary of the Corporation, at the
place and upon the notice provided by law and in the Bylaws of the
Corporation for the holding of meetings of stockholders.
4
<PAGE>
(2) At each meeting of stockholders at which the holders of shares
of Class B Stock shall have the right, voting separately as a single series,
to take any action, the presence in person or by proxy of the holders of
record of a majority of the total number of shares of Class B Stock then
outstanding and entitled to vote on the matter shall be necessary and
sufficient to constitute a quorum. At any such meeting or at any adjournment
or postponement thereof, in the absence of a quorum of the holders of shares
of Class B Stock, holders of a majority of such shares present in person or
by proxy shall have the power to adjourn the meeting as to the actions to be
taken by the holders of shares of Class B Stock from time to time and place
to place without notice other than announcement at the meeting until a quorum
shall be present.
For the taking of any action as provided in Section 3(b) by the
holders of shares of Class B Stock, each such holder shall have one vote for
each share of Class B Stock standing in his name on the transfer books of the
Corporation as of any record date fixed for such purpose or, if no such date
be fixed, at the close of business on the Business Day next preceding the
day on which notice is given, or if notice is waived, at the close of
business on the Business Day next preceding the day on which the meeting is
held.
SECTION 4. CERTAIN RESTRICTIONS.
(a) As long as any shares of Class B Stock remain outstanding, the
Corporation shall not (A) declare or pay dividends, or make any other
distributions, on any shares of Junior Dividend Stock other than dividends or
distributions payable in Junior Dividend Stock; or (B) declare or pay
dividends, or make any other distributions, on any shares of Parity Dividend
Stock (as defined in Section 11 hereof), except (1) dividends or
distributions payable in Junior Dividend Stock and (2) dividends or
distributions paid ratably on the Class B Stock and all Parity Dividend Stock
on which dividends are payable or in arrears, in proportion to the total
amounts to which the holders of all shares of the Class B Stock and such
Parity Dividend Stock are than entitled.
(b) As long as any shares of Class B Stock remain outstanding, the
Corporation shall not redeem, purchase or otherwise acquire for consideration
any shares of Junior Dividend Stock or Junior Liquidation Stock (as defined
in Section 11 hereof) or Parity Dividend Stock or Parity Liquidation Stock
(as defined in Section 11 hereof); PROVIDED, HOWEVER, that (1) the
Corporation may at any time redeem, purchase or otherwise acquire shares of
Junior Liquidation Stock or Parity Liquidation Stock in exchange for any
shares of capital stock of the Corporation that rank junior to the Class B
Stock as to dividends and upon liquidation, dissolution and winding up; (2)
the Corporation may accept shares of any Parity Liquidation Stock for
conversion into shares of capital stock of the Corporation that rank junior to
the Class B Stock as to dividends and upon liquidation, dissolution and
winding up; and (3) the Corporation may at any time redeem, purchase or
otherwise acquire shares as may be required pursuant to the Corporation's
employee and non-employee director stock plans, as they may be amended from
time to time, or similar employee stock plans hereafter adopted; AND
PROVIDED FURTHER, HOWEVER, that the Corporation (A) may accept shares of
Class B Stock surrendered for conversion into shares of capital stock of the
Corporation pursuant to Section 8 hereof, and (B) may redeem outstanding
shares of Class B Stock pursuant to Section 5 hereof. Whenever quarterly
dividends payable on shares of Class B
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Stock as provided in Section 2 hereof are not paid in full, thereafter and
until all unpaid dividends payable, whether or not declared, on the
outstanding shares of Class B Stock shall have been paid in full, the
Corporation shall not redeem or purchase or otherwise acquire for
consideration any shares of Class B Stock; PROVIDED, HOWEVER, that the
Corporation (A) may accept shares of Class B Stock surrendered for conversion
into shares of capital stock of the Corporation pursuant to Section 8 hereof,
and (B) may elect to redeem outstanding shares of Class B Stock pursuant to
Section 5(a) hereof.
(c) The Corporation shall not permit any Subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
capital stock of the Corporation unless the Corporation could, pursuant to
Section 4(b), purchase such shares at such time and in such manner.
SECTION 5. REDEMPTION.
(a) On and after the second anniversary of the Principal Issue
Date, the Corporation shall have the right, at its sole option and
election made in accordance with Section 5(c), to redeem, out of funds
legally available therefor, shares of Class B Stock, in whole or in part, at
any time and from time to time, at a redemption price equal to the Stated
Value (except as described below), plus an amount per share equal to all
accrued and unpaid dividends, whether or not declared, to the date of
redemption (the "Redemption Price"); PROVIDED, HOWEVER, that the Corporation
shall not have any such right unless (A) if the redemption is to occur
between the second and third anniversary of the Principal Issue Date, the
Redemption Fair Market Value (as defined in Section 11 hereof) of the Common
Stock, as of the close of business on the third Business Day immediately
preceding the date on which notice of redemption is given, is equal to at
least 180% of the Conversion Price (as defined in Section 11 hereof), and (B)
if the redemption is to occur between the third and fifth anniversary of the
Principal Issue Date, the Redemption Fair Market Value (as defined in
Section 11 hereof) of the Common Stock, as of the close of business on the
third Business Day immediately preceding the date on which notice of
redemption is given, is equal to at least 200% of the Conversion Price
(as defined in Section 11 hereof). Notwithstanding the foregoing, if the
redemption is to occur between the fifth and sixth anniversaries of the
Principal Issue Date, the Redemption Price shall be $51.5938; if the
redemption is to occur between the sixth and seventh anniversaries of the
Principal Issue Date, the Redemption Price shall be $51.0628; and if the
redemption is to occur between the seventh and eighth anniversaries of the
Principal Issue Date, the Redemption Price shall be $50.5313; in each case
plus an amount per share equal to all accrued and unpaid dividends, whether
or not declared, to the date of redemption. If less than all shares of
Class B Stock at the time outstanding are to be redeemed, the shares to be
redeemed shall be selected pro rata.
(b) The Corporation shall redeem, at the Redemption Price, all
outstanding shares of Class B Stock on June 1, 2005.
(c) Notice of any redemption of shares of Class B Stock pursuant
to this Section 5 shall be mailed at least 30, but not more than 60, days
prior to the date fixed for redemption to each holder of shares of Class
B Stock to be redeemed, at such holder's address as it appears on
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the transfer books of the Corporation. Any such notice shall be irrevocable
when given. In order to facilitate the redemption of shares of Class B
Stock, the Board of Directors may fix a record date for the determination of
Class B Stock to be redeemed, or may cause the transfer books of the
Corporation for the Class B Stock to be closed, not more than sixty days or
less than thirty days prior to the date fixed fo such redemption.
(d) On the date of any redemption being made pursuant to this
Section 5 which is specified in a notice given pursuant to Section 5(c), the
Corporation shall, and at any time after such notice shall have been mailed
and before the date of redemption the Corporation may deposit for the benefit
of the holders of shares of Class B Stock to be redeemed the funds necessary
for such redemption, including the amount necessary to pay all accrued and
unpaid dividends to the date of redemption, with a bank or trust company in
the City of New York having a capital and surplus of at least
$1,000,000,000. Any moneys so deposited by the Corporation and unclaimed at
the end of one year from the date designated for such redemption shall revert
to the general funds of the Corporation. After such reversion, any such bank
or trust company shall, upon demand, pay over to the Corporation such
unclaimed amounts and thereupon such bank or trust company shall be relieved
of all responsibility in respect thereof and any holder of shares of Class B
Stock to be redeemed shall look only to the Corporation for the payment of
the Redemption Price. In the event that moneys are deposited pursuant to
this paragraph (d) in respect of shares of Class B Stock that are converted
in accordance with the provisions of Section 8, such moneys shall, upon such
conversion, revert to the general funds of the Corporation and, upon demand,
such bank or trust company shall pay over to the Corporation such moneys and
shall be relieved of all responsibility to the holders of such converted
shares in respect thereof. Any interest accrued on funds deposited pursuant
to this paragraph (d) shall be paid from time to time to the Corporation for
its own account.
(e) Notice of redemption having been given as aforesaid, upon the
deposit of funds pursuant to Section 5(d) in respect of shares of Class B
Stock to be redeemed pursuant to this Section 5, notwithstanding that any
certificates for such shares shall not have been surrendered for
cancellation, from and after the date of redemption designated in the notice
of redemption (i) the shares represented thereby shall no longer be deemed
outstanding, (ii) the rights to receive dividends thereon shall cease to
accrue, and (iii) all rights of the holders of shares of Class B Stock to be
redeemed shall cease and terminate, excepting only the right to receive
the Redemption Price therefor, and the right to convert such shares into
shares of Common Stock until the close of business on the Fifth Business Day
next preceding the date of redemption, in accordance with Section 8 hereof.
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SECTION 6. REACQUIRED SHARES.
Any shares of Class B Stock converted, redeemed, purchased or
otherwise acquired by the Corporation in any manner whatsoever shall be
retired and canceled promptly after the acquisition thereof. All such
shares of Class B Stock shall upon their cancellation, in accordance with the
DGCL, become authorized but unissued shares of Preferred Stock of the
Corporation and may be reissued as part of another series of Preferrred Stock
of the Corporation, subject to the conditions or restrictions on issuance set
forth herein.
SECTION 7. LIQUIDATION, DISSOLUTION OR WINDING UP.
(a) If the Corporation shall commence a voluntary case under the
Federal bankruptcy laws or any other applicable Federal or state bankruptcy,
insolvency or similar law, or consent to the entry of an order for relief in
an involuntary case under such law or to the appointment of a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or other similar
official) of the Corporation or of any substantial part of its property, or
make an assignment for the benefit of its creditors, or admit in writing its
inability to pay its debts generally as they become due, or if a decree or
order for relief in respect of the Corporation shall be entered by a court
having jurisdiction in the premises in an involuntary case under the Federal
bankruptcy laws or any other applicable Federal or state bankruptcy,
insolvency or similar law, or appointing a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or other similar official) of the
Corporation or of any substantial part of its property, or ordering the
winding up or liquidation of its affairs, and any such decree or order shall
be unstayed and in effect for a period of ninety consecutive days and on
account of any such event the Corporation shall liquidate, dissolve or wind
up, or if the Corporation shall otherwise liquidate, dissolve or wind up, no
distribution shall be made (i) to the holders of shares of Junior Liquidation
Stock unless, prior thereto, the holders of shares of Class B Stock, subject
to Section 8, shall have received the Liquidation Preference (as defined in
Section 11 hereof) with respect to each share, or (ii) to the holders of
shares of Parity Liquidation Stock, except distributions made ratably to the
holders of the Class B Stock and the Parity Liquidation Stock in proportion
to the total amounts to which the holders of all such shares of Class B Stock
and Parity Liquidation Stock would be entitled upon such liquidation,
dissolution or winding up. Upon any such liquidation, dissolution or winding
up, the holders of shares of Class B Stock shall be entitled to receive the
Liquidation Preference with respect to each such share and no more.
(b) Neither the merger or other business combination of the
Corporation with or into any other Person (as defined in Section 11 hereof)
or Persons nor the sale of all or substantially all the assets of the
Corporation shall be deemed to be a liquidation, dissolution or winding up of
the Corporation for purposes of this Section 7.
SECTION 8. CONVERSION.
(a) Subject to the provisions for adjustment hereinafter set
forth, each share of Class B Stock shall be convertible at the option of the
holder thereof into fully paid and nonassessable shares of Common Stock. The
number of shares of Common Stock deliverable upon conversion
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of a share of Class B Stock, adjusted as hereinafter provided, is referred to
herein as the "Conversion Ratio." The Conversion Ratio shall initially be
20.8333 and the Conversion Price shall initially be $2.40. Upon the Reset
Date, the Conversion Price shall be adjusted to equal 120% of the Reset
Market Value and the Conversion Ratio shall be adjusted to equal 50 divided
by 120% of the Reset Market Value; PROVIDED, HOWEVER, if the Reset Market
Value is (i) $2.71 or greater, the Conversion Price shall be adjusted to equal
$3.25 and the Conversion Ratio shall be adjusted to equal 15.3846 or
(ii) $1.25 or less, the Conversion Price shall be adjusted to equal $1.50 and
the Conversion Ratio shall be adjusted to equal 33.3333. The Conversion
Ratio and the Conversion Price are subject to further adjustment from time
to time pursuant to Section 8(g).
(b) Conversion of the Class B Stock may be effected by any such
holder upon the surrender to the Corporation at the principal office of the
Corporation in the State of Delaware (the "Transfer Agent") or at the office
of any agent or agents of the Corporation, as may be designated by the Board
of Directors of the Corporation, of the certificate for such Class B Stock to
be converted accompanied by a written notice stating that such holder elects
to convert all or a specified whole number of such shares in accordance with
the provisions of this Section 8 and specifying the name or names in which
such holder wishes the certificate or certificates for shares of Common Stock
to be issued. In case such notice shall specify a name or names other than
that of such holder, such notice shall be accompanied by payment of all
transfer taxes payable upon the issuance of shares of Common Stock in such
name or names. Other than such taxes, the Corporation will pay any and all
issue and other taxes (other than taxes based on income) that may be payable
in respect of any issue or delivery of shares of Common Stock on conversion
of Class B Stock pursuant hereto. As promptly as practicable, and in any
event within five Business Days after the surrender of such certificate or
certificates and the receipt of such notice relating thereto and, if
applicable, payment of all transfer taxes (or the demonstration to the
satisfaction of the Corporation that such taxes have been paid), the
Corporation shall deliver or cause to be delivered (i) certificates
representing the number of validly issued, fully paid and nonassessable full
shares of Common Stock to which the holder of shares of Class B Stock being
converted shall be entitled and (ii) if less than the full number of shares
of Class B Stock evidenced by the surrendered certificate or certificates is
being converted, a new certificate or certificates, of like tenor, for the
number of shares evidenced by such surrendered certificate or certificates
less the number of shares being converted. Such conversion shall be deemed to
have been made at the close of business on the date of giving such notice and
of such surrender of the certificate or certificates representing the shares of
Class B Stock to be converted (the "Conversion Date") so that the rights of the
holder thereof as to the shares being converted shall cease except for the
right to receive shares of Common Stock in accordance herewith, and the Person
entitled to receive the shares of Common Stock shall be treated for all
purposes as having become the record holder of such shares of Common Stock at
such time. The Corporation shall not be required to convert, and no surrender
of shares of Class B Stock shall be effective for that purpose, while the
transfer books of the Corporation for the Common Stock are closed for any
purpose (but not for any period in excess of five days); but the surrender of
shares of Class B Stock for conversion during any period while such books are
so closed shall become effective for conversion immediately upon the reopening
of such books, as if the conversion had been made on the date such shares of
Class B Stock were surrendered, and at the Conversion Ratio in effect at the
date of such surrender.
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(c) In case any shares of Class B Stock are to be redeemed
pursuant to Section 5, such right of conversion shall cease and terminate as
to the shares of Class B Stock to be redeemed at the close of business on the
fifth Business Day next preceding the date fixed for redemption unless the
Corporation shall default in the payment of the Redemption Price.
(d) The Conversion Ratio shall be subject to adjustment from time
to time in certain instances as hereinafter provided. Upon conversion, the
holder of shares of Class B Stock shall be entitled to receive any accrued
and unpaid dividends on the shares of Class B Stock surrendered for conversion
to the Conversion Date. Such accrued and unpaid dividends shall be payable
by the Corporation, at its option, in cash (to the extent funds are legally
available therefor) or in shares of Common Stock valued at the Fair Market
Value as of the third Business Day prior to the Conversion Date, instead of
in cash.
(e) In connection with the conversion of any shares of Class B
Stock, no fractions of shares of Common Stock shall be issued, but in lieu
thereof the Corporation shall either (i) deliver a whole share of Common
Stock in respect of the fractional share to which the holder would otherwise
have been entitled upon such conversion or (ii) pay a cash adjustment in
respect of such fractional interest in an amount equal to such fractional
interest multiplied by the Current Market Price per share of Common Stock on
the Trading Day on which such shares of Class B Stock are deemed to have been
converted. If more than one share of Class B Stock shall be surrendered for
conversion by the same holder at the same time, the number of full shares of
Common Stock issuable on conversion thereof shall be computed on the basis of
the total number of shares of Class B Stock so surrendered.
(f) The Corporation shall at all times reserve and keep available
for issuance upon the conversion of the Class B Stock, free from any
preemptive rights, such number of its authorized but unissued shares of
Common Stock as will from time to time be sufficient to permit the conversion
of all outstanding shares of Class B Stock, and shall take all action
required to increase the authorized number of shares of Common Stock if
necessary to permit the conversion of all outstanding shares of Class B Stock.
(g) The Conversion Ratio will be subject to adjustment from time
to time as follows:
(1) In case the Corporation shall at any time or from time to
time after the First Issue Date (A) pay a dividend, or make a distribution,
on the outstanding shares of Common Stock in shares of Common Stock, (B)
subdivide the outstanding shares of Common Stock, (C) combine the outstanding
shares of Common Stock into a smaller number of shares or (D) issue by
reclassification of the shares of Common Stock any shares of capital stock of
the Corporation, then, and in each such case, the Conversion Ratio in effect
immediately prior to such event or the record date therefor, whichever is
earlier, shall be adjusted so that the holder of any shares of Class B Stock
thereafter surrendered for conversion shall be entitled to receive the number
of shares of Common Stock or other securities of the Corporation which such
holder would have owned or have been entitled to receive after the happening
of any of the events described above, had such shares of Class B Stock been
surrendered for conversion immediately
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prior to the happening of such event or the record date therefor, whichever
is earlier. An adjustment made pursuant to this clause (i) shall become
effective (x) in the case of any such dividend or distribution, immediately
after the close of business on the record date for the determination of
holders of shares of Common Stock entitled to receive such dividend or
distribution, or (y) in the case of such subdivision, reclassification or
combination, at the close of business on the day upon which such corporate
action becomes effective. No adjustment shall be made pursuant to this
clause (i) in connection with any transaction to which paragraph (h) applies.
(2) In case the Corporation shall at any time or from time to time
after the First Issue Date declare, order, pay or make a dividend or other
distribution (including, without limitation, any distribution of stock or
other securities or property or rights or warrants to subscribe for
securities of the Corporation or any of its Subsidiaries by way of dividend
or spinoff), on its Common Stock, other than dividends or distributions of
shares of Common Stock which are referred to in clause (1) of this paragraph
(g), then the Conversion Ratio shall be adjusted so that the holder of each
share of Class B Stock shall be entitled to receive, upon the conversion
thereof, the number of shares of Common Stock determined by multiplying (1)
the applicable Conversion Ratio on the day immediately prior to the record
date fixed for the determination of stockholders entitled to receive such
dividend or distribution by (2) a fraction, the numerator of which shall be
the Current Market Price per share of Common Stock for the period of 20
Trading Days preceding such record date, and the denominator of which shall
be such Current Market Price per share of Common Stock less the Fair Market
Value (as defined in Section 11 hereof) per share of Common Stock (as
determined in good faith by the Board of Directors of the Corporation, a
certified resolution with respect to which shall be mailed to each holder of
shares of Class B Stock) of such dividend or distribution; PROVIDED, HOWEVER,
that in the event of a distribution of capital stock of a Subsidiary of the
Corporation (a "Spin-Off") made to holders of shares of Common Stock, the
numerator of such fraction shall be the sum of the Current Market Price per
share of Common Stock for the period of 20 Trading Days preceding the 35th
Trading Day after the effective date of such Spin-Off and the Current Market
Price of the number of shares (or the fraction of a share) of capital stock
of the Subsidiary which is distributed in such Spin-Off in respect of one
share of Common Stock for the period of 20 Trading Days preceding such 35th
Trading Day and the denominator of which shall be the Current Market Price per
share of Common Stock for the period of 20 Trading Days preceding such 35th
Trading Day. An adjustment made pursuant to this clause (2) shall be made
upon the opening of business on the next Business Day following the date on
which any such dividend or distribution is made and shall be effective
retroactively immediately after the close of business on the record date
fixed for the determination of stockholders entitled to receive such dividend
or distribution; PROVIDED, HOWEVER, that if the proviso to the preceding
sentence applies, then such adjustment shall be made and be effective as of
such 35th Trading Day after the effective date of such Spin-Off. No
adjustment shall be made pursuant to this clause (2) in connection with any
transaction to which paragraph (h) applies.
(3) For purposes of this paragraph (g), the number of shares of
Common Stock at any time outstanding shall not include any shares of Common
Stock then owned or held by or for the account of the Corporation.
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(4) The term "dividend," as used in this paragraph (g) shall mean a
dividend or other distribution upon Common Stock of the Corporation.
(5) Anything in this paragraph (g) to the contrary notwithstanding,
the Corporation shall not be required to give effect to any adjustment in the
Conversion Ratio unless and until the net effect of one or more adjustments
(each of which shall be carried forward), determined as above provided, shall
have resulted in a change of the Conversion Ratio by at least one
one-hundredth of one share of Common Stock, and when the cumulative net
effect of more than one adjustment so determined shall be to change the
Conversion Ratio by at least one one-hundredth of one share of Common Stock,
such change in Conversion Ratio shall thereupon be given effect.
(6) The certificate of any firm of independent public accountants of
recognized standing selected by the Board of Directors of the Corporation
(which may be the firm of independent public accountants regularly employed
by the Corporation) shall be presumptively correct for any computation made
under this paragraph (g).
(7) If the Corporation shall take a record of the holders of its
Common Stock for the purpose of entitling them to receive a dividend or other
distribution, and shall thereafter and before the distribution to
stockholders thereof legally abandon its plan to pay or deliver such dividend
or distribution, then thereafter no adjustment in the number of shares of
Common Stock issuable upon exercise of the right of conversion granted by
this paragraph (g) or in the Conversion Ratio then in effect shall be
required by reason of the taking of such record.
(8) There shall be no adjustment of the Conversion Ratio in case of
the issuance of any stock of the Corporation in a merger, reorganization,
acquisition or other similar transaction except as set forth in paragraphs
(g)(1) and (h) of this Section 8.
(h) In case of any capital reorganization or reclassification of
outstanding shares of Common Stock (other than a reclassification covered by
Section 8(g)(1)), or in the case of any merger of the Corporation with or
into another Corporation, or in case of any sale or conveyance to another
Corporation of all or substantially all of the assets or property of the
Corporation (each of the foregoing being referred to as a "Transaction"),
each share of Class B Stock then outstanding shall thereafter be convertible
into, in lieu of the Common Stock issuable upon such conversion prior to
consummation of such Transaction, the kind and amount of shares of stock and
other securities and property receivable (including cash or securities of the
Surviving Person (as defined in Section 11 hereof) upon the consummation of
such Transaction by a holder of that number of shares of Common Stock into
which one share of Class B Stock was convertible immediately prior to such
Transaction (including, on a pro rata basis, the cash, securities or property
received by holders of Common Stock in any tender or exchange offer that is a
step in such Transaction). In any such case, if necessary, appropriate
adjustment (as determined by the Board of Directors) shall be made in the
application of the provisions set forth in this Section 8 with respect to
rights and interests thereafter of the holders of shares of Class B Stock to
the end that the provisions set forth herein for the protection of the
conversion rights of the Class B Stock
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shall thereafter be applicable, as nearly as reasonably may be, to any such
other shares of stock and other securities and property deliverable upon
conversion of the shares of Class B Stock remaining outstanding (with such
adjustments in the conversion price and number of shares issuable upon
conversion and such other adjustments in the provisions hereof as the Board
of Directors shall determine to be appropriate). In case securities or
property other than Common Stock shall be issuable or deliverable upon
conversion as aforesaid, then all references in this Section 8 shall be
deemed to apply, so far as appropriate and as nearly as may be, to such other
securities or property.
Notwithstanding anything contained herein to the contrary, the
Corporation will not effect any Transaction unless, prior to the consummation
thereof, the Surviving Person thereof shall assume, by written instrument
mailed to each holder of shares of Class B Stock, the obligation to deliver
to such holder such cash, property or securities to which, in accordance with
the foregoing provisions, such holder is entitled.
(i) In case at any time or from time to time the Corporation shall
pay any dividend or make any other distribution to the holders of its Common
Stock, or shall offer for subscription pro rata to the holders of its Common
Stock any additional shares of stock of any class or any other right, or
there shall be any capital reorganization or reclassification of the Common
Stock of the Corporation or merger of the Corporation with or into another
Corporation, or any sale or conveyance to another Corporation of the property
of the Corporation as an entirety or substantially as an entirety, or there
shall be a voluntary or involuntary dissolution, liquidation or winding up of
the Corporation, then, in any one or more of said cases the Corporation shall
give at least 20 days prior written notice (the time of mailing of such
notice shall be deemed to be the time of giving thereof) to the registered
holders of Class B Stock at the addresses of each as shown on the books of
the Corporation maintained by the transfer agent thereof as of the date on
which (i) the books of the Corporation shall close or a record shall be taken
for such stock dividend, distribution or subscription rights or (ii) such
reorganization, reclassification, merger, sale or conveyance, dissolution,
liquidation or winding up shall take place, as the case may be, provided that
in the case of any Transaction to which paragraph (h) applies the Corporation
shall give at least thirty days prior written notice as aforesaid. Such
notice shall also specify the date as of which the holders of the Common
Stock of record shall participate in said dividend, distribution or
subscription rights or shall be entitled to exchange their Common Stock for
securities or other property deliverable upon such reorganization,
reclassification, merger, sale or conveyance or participate in such
dissolution, liquidation or winding up, as the case may be. Failure to give
such notice shall not invalidate any action so taken.
SECTION 9. REPORTS AS TO ADJUSTMENTS.
Upon any adjustment of the Conversion Ratio then in effect and any
increase or decrease in the number of shares of Common Stock issuable upon
the operation of the conversion set forth in Section 8 hereof, then, and in
each such case, the Corporation shall promptly deliver to the transfer agent
of the Class B Stock and Common Stock, a certificate signed by the President
or a Vice President and by the Treasurer or an Assistant Treasurer or the
Secretary or an Assistant Secretary of the Corporation setting forth in
reasonable detail the event requiring the adjustment
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and the method by which such adjustment was calculated and specifying the
Conversion Ratio then in effect following such adjustment and the increased
or decreased number of shares issuable upon the conversion set forth in
Section 8 hereof. The Corporation shall also promptly after the making of
such adjustment give written notice to the registered holders of the Class B
Stock at the address of each holder as shown on the books of the Corporation
maintained by the Transfer Agent thereof, which notice shall state the
Conversion Ratio then in effect, as adjusted, and the increased or decreased
number of shares issuable upon the exercise of the right of conversion
granted by Section 8 hereof, and shall set forth in reasonable detail the
method of calculation of each and a brief statement of the facts requiring
such adjustment. Where appropriate, such notice to holders of the Class B
Stock may be given in advance and included as part of the notice required
under the provisions of Section 8(i) hereof.
SECTION 10. CERTAIN COVENANTS
(a) Following the First Issue Date, and except in payment of
dividends pursuant to Section 2(c), the Corporation shall not issue
additional shares of Class B Stock.
(b) Any registered holder of Class B Stock may proceed to protect and
enforce its rights and the rights of such holders by any available remedy by
proceeding at law or in equity to protect and enforce any such rights,
whether for the specific enforcement of any provision in this Certificate of
Designation, or in aid of the exercise of any power granted herein, or to
enforce any other proper remedy.
SECTION 11. DEFINITIONS.
The following terms shall have the meanings indicated:
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified person. For the purposes of this definition,
"control" (including, with correlative meanings, the terms "controlled by"
and "under common control with"), as used with respect to any Person, shall
mean the possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies of such Person, whether through
the ownership of voting securities or by agreement or otherwise.
"Approval Date" shall mean the earlier of (i) the tenth day following
the mailing by the Company of a notice to stockholders of receipt by the
Company of written confirmation of waiver by the NASDAQ of its shareholder
voting requirements with respect to the right of the holders of the Class B
Stock to vote such shares on an as-converted basis, or (ii) the date of
approval by the Company's stockholders of the right of the holders of the
Class B Stock to vote such shares on an as converted basis.
"Bank Credit Agreement" shall mean the Credit Agreement, dated as of
June 15, 1995, among the Company, the banks party thereto, and Bankers Trust
Company as Agent for the bank
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parties thereto, as amended from time to time, and any refinancings, renewals
and replacements thereof.
"Business Day" shall mean any day other than Saturday, Sunday or a day
on which banking institutions in the State of Delaware are authorized or
obligated by law or executive order to close.
"Class A Stock" shall mean the Class A Convertible Preferred Stock, par
value $1.00 per share, of the Corporation.
"Conversion Price" shall mean an amount equal to the Stated Value
divided by the Conversion Ratio (as adjusted pursuant to paragraph (g) of
Section 8 hereof).
"Current Market Price," when used with reference to shares of Common
Stock or other securities on any date, shall mean the volume weighted average
of the sales prices for shares of Common Stock or other such securities on
such date and, when used with reference to shares of Common Stock or other
securities for any period shall mean the volume weighted average of the sale
prices for shares of Common Stock or such other securities for such period.
If the Common Stock is not listed or admitted to trading on a national
securities exchange or an automated quotation system that permits
determination of weighted average sale prices over a period of time, then
"Current Market Price" for any period shall mean the average of the last
quoted sale price or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported by the National
Association of Securities Dealers, Inc. Automated Quotation System or
such other system then in use, or, if on any such date the Common Stock or
such other securities are not quoted by any such organization, the average of
the closing bid and asked prices are furnished by a professional market maker
making a market in the Common Stock or such other securities selected by the
Board of Directors of the Corporation. If the Common Stock or such other
securities are not publicly held or so listed or publicly traded, "Current
Market Price" shall mean the fair market value per share of Common Stock or
such other securities as determined in good faith by the Board of Directors of
the Corporation based on an opinion of an independent investment banking firm
with an established national reputation as a valuer of securities, which
opinion may be based on such assumptions as such firm shall deem to be
necessary and appropriate.
"DGCL" shall mean the Delaware General Corporation Law, as amended.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any similar Federal statute, and the rules and regulations of the
Securities and Exchange Commission thereunder, all as the same shall be in
effect at the time. References to a particular section of the Exchange Act
shall include reference to the comparable section, if any, of any such
similar Federal statute.
"Fair Market Value" shall mean, as to shares of Common Stock or any
other class of capital stock or securities of the Corporation or any other
issuer which are publicly traded, the Current Market Price of such shares or
securities for the 30 Trading Day period preceding the
15
<PAGE>
date as of which the Fair Market Value is to be determined. The "Fair Market
Value" of any security which is not publicly traded or of any other property
shall mean the fair value thereof as determined by an independent investment
banking or appraisal firm experienced in the valuation of such securities or
property selected in good faith by the Board of Directors of the Corporation
or a committee thereof, or, if no such investment banking or appraisal firm
is in the good faith judgment of the Board of Directors or such committee
available to make such determination, as determined in good faith by the
Board of Directors of the Corporation or such committee.
"First Issue Date" shall mean the first date that any shares of Class B
Stock are issued.
"Issue Date" shall mean, with respect to any share of Class B Stock,
the date on which such share of Class B Stock is issued.
"Junior Dividend Stock" shall mean (i) the Common Stock and (ii) any
other capital stock of the Corporation which ranks junior as to dividends to
the Class B Stock.
"Junior Liquidation Stock" shall mean (i) the Common Stock and (ii) any
other capital stock of the Corporation which ranks junior upon liquidation,
dissolution or winding up to the Class B Stock.
"Liquidation Preference" with respect to a share of Class B Stock shall
mean the Stated Value per share, plus an amount equal to all accrued but
unpaid dividends.
"NASDAQ" shall mean the NASDAQ Stock Market.
"NASDAQ Rules" shall mean Rule 4460(i) of the NASDAQ Stock Market Rules
of the NASDAQ Stock Market.
"Parity Dividend Stock" shall mean (i) the Class A Stock and (ii) any
other capital stock of the Corporation ranking on a parity as to dividends with
the Class B Stock.
"Parity Liquidation Stock" shall mean (i) the Class A Stock and (ii) any
other capital stock of the Corporation ranking on a parity upon liquidation,
dissolution or winding up with the Class B Stock.
"Person" shall mean any individual, firm, corporation or other entity,
and shall include any successor (by merger or otherwise) of such entity.
"Principal Issue Date" shall mean September 17, 1996.
"Purchasers" shall mean Trefoil Capital Investors II, L.P., a Delaware
limited partnership, and GE Investment Private Placement Partners II, A
Limited Partnership, a Delaware limited partnership.
16
<PAGE>
"Qualified Person" shall mean any person that, immediately after giving
effect to the applicable Transaction, (i) is a solvent corporation or other
entity organized under the laws of any State of the United States of America
having its common stock or, in case of an entity other than a corporation,
equivalent equity securities, listed on the New York Stock Exchange or the
American Stock Exchange or quoted by the Nasdaq National Market System or any
successor thereto or comparable system, and such common stock or equivalent
equity security continues to meet the requirements for such listing or
quotation and (ii) is required to file, and in each of its three fiscal
years immediately preceding the consummation of the applicable Transaction
(or since its inception) has filed, reports with the Securities and Exchange
Commission pursuant to Section 13 or 15(d) of the Exchange Act.
"Redemption Fair Market Value" shall mean, as to shares of Common
Stock, the Current Market Price of such shares or securities for the 60-day
period preceding the date as of which the Redemption Fair Market Value is to
be determined. The "Redemption Fair Market Value" of the Common Stock if it
is not publicly traded shall mean its Fair Market Value.
"Required Issue Date" shall mean December 31, 1996.
"Reset Date" shall mean the first Trading Day after the end of the 20
Trading Day period utilized to determine the Reset Market Value.
"Reset Market Value" shall mean the Current Market Price of Common
Stock for the 20 Trading Day period following the earlier of (i) the date
which three Trading Days after public announcement of the Corporation's
results for its fiscal quarter ending January 3, 1998 and (ii) February 2,
1998.
"Senior Notes" shall mean the Corporation's 12% Senior Notes due 2004
and any other senior indebtedness of the Corporation the net proceeds of
which are used in full to pay principal, prepayment penalty and accrued
interest on such principal, the incurrence of which is approved by the vote
of the holders of a majority of the outstanding shares of Class B Stock.
"Subsidiary" of any Person means any corporation or other entity of
which a majority of the voting power of the voting equity securities or
equity interest is owned, directly or indirectly, by such Person.
"Surviving Person" shall mean the continuing or surviving Person of a
merger or other business combination, the Person receiving a transfer of all
or a substantial part of the properties and assets of the Corporation, or the
Person merging into the Corporation in a merger or other business combination
in which the Corporation is the continuing or surviving Person, but in
connection with which the Class B Stock or Common Stock of the Corporation is
exchanged or converted into the securities of any other Person or cash or any
other property; PROVIDED, HOWEVER, if such surviving Person is a direct or
indirect Subsidiary of a Qualified Person, the parent entity that is a
Qualified Person shall be the Surviving Person.
17
<PAGE>
"Survivor Common Stock" with respect to any Surviving Person shall
mean any shares of such Surviving Person of any class or series which has no
preference or priority in the payment of dividends or in the distribution of
assets upon any voluntary or involuntary liquidation, dissolution or winding
up of such Surviving Person and which is not subject to redemption by such
Surviving Person; PROVIDED, HOWEVER, that if at any time there shall be more
than one such class or series, the shares of each such class and series
issuable upon conversion of the Class B Stock then being converted shall be
substantially in the proportion to the total number of shares of each such
class and series.
"Trading Day" means a day on which the principal national securities
exchange (including, if applicable, the Nasdaq Stock Market) on which the
Common Stock is listed or admitted to trading is open for the transaction of
business or, if the Common Stock is not listed or admitted to trading on any
national securities exchange, a Business Day.
18
<PAGE>
IN WITNESS WHEREOF, the officers set forth below, acting for and on
behalf of the Grand Union Company, have hereunto subscribed their names on
this 11th day of June 1997.
THE GRAND UNION COMPANY
By: /s/ Jeffrey Freimark
---------------------------
Name: Jeffrey Freimark
Title: Executive Vice President
By: /s/ Donald C. Vaillancourt
-------------------------------
Name: Donald C. Vaillancourt
Title: Secretary
<PAGE>
Exhibit 10.21
FIFTH AMENDMENT
TO THE
AMENDED AND RESTATED CREDIT AGREEMENT
-------------------------------------
FIFTH AMENDMENT dated as of March 7, 1997 (this "Amendment") to the
AMENDED AND RESTATED CREDIT AGREEMENT dated as of June 15, 1995 (as modified
by the Waiver and First Amendment thereto dated as of February 16, 1996, the
Second Amendment thereto dated as of May 10, 1996, the Third Amendment
thereto dated as of September 11, 1996 and the Fourth Amendment thereto dated
as of January 13, 1997, the "Credit Agreement"), each among THE GRAND UNION
COMPANY, a Delaware corporation (the "Borrower"), the institutions from time
to time party thereto as lenders (the "Banks") and BANKERS TRUST COMPANY, as
agent (the "Agent"). Capitalized terms used herein and not defined herein
shall have the respective meanings set forth for such terms in the Credit
Agreement.
W I T N E S S E T H :
WHEREAS, the Borrower desires to issue and sell to Roger E.
Stangeland, the Chairman of its Board of Directors, 60,000 shares of its
Class A Convertible Preferred Stock, stated value $50.00 per share, for an
aggregate purchase price of $3,000,000 (such transaction, the "Stangeland
Convertible Preferred Stock Sale");
WHEREAS, in connection therewith, the Borrower has requested that
the Credit Agreement be amended to, among other things:
(a) permit the Stangeland Convertible
Preferred Stock Sale; and
(b) make the mandatory prepayment
obligations of the Borrower under Section 4.2(A)(e) of
the Credit Agreement inapplicable to the Net Equity
Issuance Proceeds received by the Borrower pursuant
<PAGE>
to the Stangeland Convertible Preferred Stock Sale; and
WHEREAS, subject to and upon the terms and conditions hereinafter
set forth and in the Credit Agreement as amended hereby, the Banks party
hereto are agreeable to the foregoing;
NOW, THEREFORE, the parties hereto hereby agree as
follows:
Section 1. Amendments. Subject to the satisfaction of the
conditions precedent set forth in Section 3 hereof, the Credit Agreement is
hereby amended effective as of the date hereof (the "Effective Date") as
follows:
(a) Section 4.2(A)(e) of the Credit
Agreement is amended by replacing clause (z) thereof with
the following:
", and (z) issuances of convertible preferred stock of
the Borrower and issuances of common stock of the
Borrower on conversion of such convertible preferred
stock (but only so long as no consideration (other than
the preferred stock being converted) is received by the
Borrower or any of its Subsidiaries in connection with
such conversion), in each case pursuant to the
Convertible Preferred Stock Documents".
(b) Section 8.7 of the Credit Agreement is
amended by inserting the phrase "or the Stangeland
Stockholder Agreement" at the end of clause (iv) thereof.
(c) Section 8.13 of the Credit Agreement is
amended by replacing the parenthetical at the end of clause
(iv) thereof with the following:
2
<PAGE>
"(other than issuances of convertible preferred stock
of the Borrower pursuant to the Convertible Preferred
Stock Documents)".
(d) Section 9.12 of the Credit Agreement is
amended by replacing the term "Convertible Preferred Stock
Documents" each place it appears in clauses (ii) and (iv)
thereof with the term "Convertible Preferred Stock Purchase
Agreement".
(e) The definition of the term "Convertible
Preferred Stock Documents" contained in Section 10 of the
Credit Agreement is amended in its entirety to read as
follows:
"'Convertible Preferred Stock Documents' shall mean (a) the
Convertible Preferred Stock Purchase Agreement, (b) the Stangeland
Convertible Preferred Stock Purchase Agreement and (c) the Certificate of
Designation of Class A Convertible Preferred Stock, stated value $50.00 per
share, of the Borrower (the "Class A Certificate of Designation"); as each of
the same may from time to time be amended, supplemented or otherwise modified
from time to time in accordance with the terms hereof and thereof. For
purposes of this Agreement, 'issuance of convertible preferred stock of the
Borrower pursuant to the Convertible Preferred
3
<PAGE>
Stock Documents', 'sales of convertible preferred stock of the Borrower
pursuant to the Convertible Preferred Stock Documents', 'Net Equity Issuance
Proceeds received by the Borrower pursuant to the Convertible Preferred Stock
Documents' and words of similar import do not include any sales or issuances
of convertible preferred stock or any Net Equity Issuance Proceeds other
than, as applicable: (i) the sale and issuance of (and Net Equity Issuance
Proceeds received by the Borrower in respect of) up to 2,000,000 shares of
the Borrower's Class A Convertible Preferred Stock for $50.00 per share in
cash pursuant to the Convertible Preferred Stock Purchase Agreement, (ii) the
sale and issuance of (and Net Equity Issuance Proceeds received by the
Borrower in respect of) up to 60,000 shares of the Borrower's Class A
Convertible Preferred Stock for $50.00 per share in cash pursuant to the
Stangeland Convertible Preferred Stock Purchase Agreement, and (iii)
issuances, for no consideration, pursuant to the terms of the Class A
Certificate of Designation as in effect on the Amendment No. 3 Effective Date
of shares of the Borrower's Class A Convertible Preferred Stock or common
stock as dividends on, and of common stock upon conversion of, outstanding
shares of convertible preferred stock of the Borrower permitted by this
Agreement."
(f) The definition of the term "Cumulative
EBITDA Minus Adjusted Cumulative Consolidated Capital
Expenditures" contained in Section 10 of the Credit
Agreement is amended by deleting the phrase "as in effect on
the Amendment No. 3 Effective Date" in clause (iii) thereof.
(g) The definition of the term "Fixed Charge
Coverage Ratio" contained in Section 10 of the Credit
Agreement is amended by deleting the phrase "as in effect on
the Amendment No. 3 Effective Date" in clause (i)(C)
thereof.
(h) The definition of the term "Net Equity
Proceeds Carryover Amount" contained in Section 10 of the
Credit Agreement is amended by deleting the phrase "as in
effect on the Amendment No. 3 Effective Date" each place
such phrase appears therein.
(i) The following definitions of new terms
are inserted in Section 10 of the Credit Agreement in
alphabetical order:
4
<PAGE>
"'Stangeland Convertible Preferred Stock Purchase
Agreement' shall mean the Stock Purchase Agreement
dated as of February 25, 1997 between the Borrower and
Roger Stangeland."
"'Stangeland Stockholder Agreement' shall mean the
Stockholder Agreement dated as of February 25, 1997 by
and among the Convertible Preferred Stock Purchasers,
Roger Stangeland and the Borrower."
Section 2. Representations and Warranties. The
Borrower hereby represents and warrants to the Agent and
each Bank that on and as of the Effective Date:
(a) no Default or Event of Default has occurred
and is continuing; and
(b) the representations and warranties of
the Borrower and the other Credit Parties contained in the
Credit Agreement and the other Credit Documents are true and
correct on and as of such date as if made on and as of such
date after giving effect to the amendments contemplated
hereby, except to the extent such representations and
warranties expressly relate to a different specific date.
Section 3. Effectiveness. The amendments to the
Credit Agreement set forth in Section 1 hereof shall become
effective as of the Effective Date when:
(a) the Agent shall have executed and delivered
a counterpart of this Amendment and received duly executed
counterparts of this Amendment from the Borrower, each
Subsidiary of the Borrower that is a party to any Credit
Document and as many of the Banks as shall be necessary to
comprise the "Required Banks" or the "Required Class
Creditors", as the case may be; and
5
<PAGE>
(b) the Borrower shall have delivered to the
Agent an executed certificate of the Borrower, dated as of
the later of the Effective Date and the date the condition
in paragraph (a) above has been satisfied, stating that
attached thereto is a true and complete copy of (i) the
Stangeland Convertible Preferred Stock Purchase Agreement
and (ii) the Stangeland Stockholder Agreement (as defined in
the Credit Agreement after giving effect to this Amendment),
in each case as in effect on the date of such certificate,
and that, except as noted in such certificate or otherwise
disclosed to the Agent in writing, such agreements do not
vary in any material respect from the execution versions
thereof provided to the Agent prior to its execution hereof.
Section 4. Status of Credit Documents. (a) This
Amendment is limited solely for the purposes and to the
extent expressly set forth herein, and, except as expressly
modified hereby, (i) the terms, provisions and conditions of
the Credit Documents, (ii) the terms and provisions of the
Further Assurances Agreement dated as of June 15, 1995, as
modified in writing prior to the date hereof, between the
Borrower and the Agent, and (iii) the Liens granted under
the Credit Documents shall continue in full force and effect
and are hereby ratified and confirmed in all respects.
(b) Without limiting the foregoing, this
Amendment (including, without limitation, the confirmations
made pursuant to paragraph (c) below) shall not be construed
in any respect as, and is not intended to be: (i) a consent
by the Agent or any Bank to the consummation by the Borrower
of any of the transactions contemplated by the Convertible
Preferred Stock Documents (as used in this Section 4, such
term has the meaning specified in the Credit Agreement after
giving effect to this Amendment) or the performance by the
Borrower of any term
6
<PAGE>
or provision of any Convertible Preferred Stock Document (including, without
limitation, the Certificate of Designation for the Class A Preferred Stock of
the Borrower, stated value $50.00 per share), in any such case that is
prohibited by the Credit Agreement, as expressly amended hereby, or (ii) a
waiver by the Agent or any Bank of (A) any violation of the Credit Agreement,
as expressly amended hereby, or any Default or Event of Default thereunder
that in any such case arises as a result of the performance or observance by
the Borrower of any of its covenants, agreements and obligations under, or
the consummation of any transaction contemplated by, any Convertible
Preferred Stock Document (including, without limitation, any such violation,
Default or Event of Default that would arise under Section 8.6 of the Credit
Agreement as a result of the performance by the Borrower of any obligation of
the Borrower under the Convertible Preferred Stock Documents to pay cash
dividends on, or redeem, any shares of stock issued and/or sold pursuant
thereto), or (B) any rights and remedies arising in favor of the Agent or any
Bank under the Credit Documents or otherwise as a result of the occurrence of
any such violation, Default or Event of Default.
(c) The Borrower acknowledges that the
performance by the Borrower of its following obligations
under the Convertible Preferred Stock Documents will, unless
consented to in writing by the requisite Banks after the
Effective Date, result in a violation of, and constitute an
Event of Default under, the Credit Agreement as amended
hereby: (i) any obligation of the Borrower under the
Convertible Preferred Stock Documents to pay cash dividends
(in whole or in part) on, or purchase, redeem or otherwise
acquire (in whole or in part) for cash, any shares of
convertible preferred stock issued from time to time
pursuant to the Convertible Preferred Stock Documents, and
(ii) any obligation of the Borrower under the Convertible
Preferred Stock Documents to pay to any pur-
7
<PAGE>
chaser of its Class A Convertible Preferred Stock, stated value $50.00 per
share, or any of their respective Affiliates any management or similar fee at
any time that a Default or an Event of Default has occurred and is
continuing. Each of the Agent and the Borrower confirms to each other on the
terms set forth in paragraph (b) above that it does not have any actual
knowledge that any other term or provisions of the Convertible Preferred
Stock Documents conflicts (or that the performance thereof could conflict)
with the terms and provisions of the Credit Agreement as amended hereby.
(d) No amendment made to the Credit
Agreement pursuant to this Amendment shall relieve the
Borrower from complying with any other term or provision of
the Credit Agreement as amended hereby.
Section 5. Counterparts. This Amendment may be
executed and delivered in any number of counterparts and by
the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an
original, but all of which shall together constitute one and
the same instrument. A complete set of counterparts shall
be lodged with the Borrower and the Agent.
Section 6. Governing Law. THIS AMENDMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH, AND SHALL BE GOVERNED BY, THE
LAWS OF THE STATE OF NEW YORK.
8
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused their respective
duly authorized officers to execute and deliver this Fifth Amendment to the
Amended and Restated Credit Agreement as of the date first above written.
THE GRAND UNION COMPANY
By: /s/ Francis E. Nicastro
--------------------------
Name: Francis E. Nicastro
Title: Vice President and
Treasurer
BANKERS TRUST COMPANY,
Individually and as Agent
By: /s/ Mary Kay Coyle
--------------------------
Name: Mary Kay Coyle
Title: Managing Director
BANKAMERICA BUSINESS CREDIT, INC.
By: /s/ Richard Levenson
------------------------------
Name: Richard Levenson
Title: VP
BANK POLSKA KASA OPIEKI, SA
By:
------------------------------
Name:
9
<PAGE>
Title:
10
<PAGE>
COMPAGNIE FINANCIERE DE CIC ET
DE L'UNION EUROPEENNE
By: /s/ Sean Mounier
----------------------------
Name: Sean Mounier
Title: First Vice President
By: /s/ Brian O'Leary
----------------------------
Name: Brian O'Leary
Title: Vice President
THE FIRST NATIONAL BANK OF BOSTON
By: /s/ Timothy M. Barns
-----------------------------
Name: Timothy M. Barns
Title: Division Executive
FLEET CAPITAL CORPORATION
By: /s/ Eric Rubin
------------------------------
Name: Eric Rubin
Title: Vice President
HELLER FINANCIAL, INC.
By: /s/ Salvatore Salzillo
------------------------------
Name: Salvatore Salzillo
Title: AVP
11
<PAGE>
LEHMAN COMMERCIAL PAPER INC.
By: /s/ Michele Swanson
------------------------------
Name: Michele Swanson
Title: Authorized Signatory
ML CBO IV (CAYMAN) LTD
By: Protective Asset Management, L.L.C.
as Collateral Manager
By: /s/ James Dondero
------------------------------
Name: James Dondero CPA, CFA
Title: President
Protective Asset Management, L.L.C.
QUANTUM PARTNERS LDC
By:
------------------------------
Name:
Title:
SENIOR DEBT PORTFOLIO
By: Boston Management and Research,
as Investment Advisor
By: /s/ Barbara Campbell
------------------------------
Name:
Title:
12
<PAGE>
TRANSAMERICA BUSINESS CREDIT
CORPORATION
By: /s/ Steven Fischer
------------------------------
Name: Steven Fischer
Title: Senior Vice Pres.
VAN KAMPEN AMERICAN CAPITAL PRIME
RATE INCOME TRUST
By: /s/ Jeffrey W. Maillet
-------------------------------
Name: Jeffrey W. Maillet
Title: Senior Vice President & Director
The foregoing Fifth Amendment to the Amended and Restated Credit
Agreement is hereby consented and agreed to, and the Liens and guaranties
under the Credit Documents are hereby confirmed, by:
MERCHANDISING SERVICES, INC.
GRAND UNION STORES, INC. OF VERMONT
GRAND UNION STORES OF NEW HAMPSHIRE, INC.
SPECIALTY MERCHANDISING SERVICES, INC.
By: /s/ Francis E. Nicastro
---------------------------------------
Name: Francis E. Nicastro
Title: Vice President and Treasurer
of each of the above listed
entities
13
<PAGE>
Exhibit 10.22
WAIVER AND SIXTH AMENDMENT
TO THE
AMENDED AND RESTATED CREDIT AGREEMENT
-------------------------------------
WAIVER AND SIXTH AMENDMENT dated as of April 4, 1997 (this
"Amendment") to the AMENDED AND RESTATED CREDIT AGREEMENT dated as of June
15, 1995 (as modified by the Waiver and First Amendment thereto dated as of
February 16, 1996, the Second Amendment thereto dated as of May 10, 1996, the
Third Amendment thereto dated as of September 11, 1996, the Fourth Amendment
thereto dated as of January 13, 1997 and the Fifth Amendment thereto dated as
of March 7, 1997, the "Credit Agreement"), each among THE GRAND UNION
COMPANY, a Delaware corporation (the "Borrower"), the institutions from time
to time party thereto as lenders (the "Banks") and BANKERS TRUST COMPANY, as
agent (the "Agent"). Capitalized terms used herein and not defined herein
shall have the respective meanings set forth for such terms in the Credit
Agreement.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Borrower has requested that the EBITDA and interest
expense covenants in the Credit Agreement for the period of four consecutive
fiscal quarters of the Borrower ending in March 1997 be waived; and
WHEREAS, subject to and upon the terms and conditions hereinafter
set forth, the Banks party hereto are agreeable to the foregoing;
NOW, THEREFORE, the parties hereto hereby agree as follows:
Section 1. Waiver. The undersigned Banks hereby waive compliance by
the Borrower with Sections 8.9 and 8.11 of the Credit Agreement solely with
respect to the period of four consecutive fiscal quarters of the Borrower
ending in March 1997.
Section 2. Amendment. The Credit Agreement is hereby amended by
inserting the following after Section 8.16 thereof as a new Section 8.17:
"8.17 Additional Financial Covenants. The Borrower will not
permit:
<PAGE>
(a) EBITDA for the 13 consecutive fiscal periods of the
Borrower (as set forth on Schedule XII hereto) ending on May 24, 1997 (taken
as one accounting period) to be less than $130,000,000; or
(b) the ratio of EBITDA to Total Cash Interest Expense for the
13 consecutive fiscal periods of the Borrower (as set forth on Schedule XII
hereto) ending on May 24, 1997 (taken as one accounting period) to be less
than 1.22:1."
Section 3. Representations and Warranties.
The Borrower hereby represents and warrants to the Agent and each Bank
that:
(a) after giving effect this Amendment, no Default or Event
of Default has occurred and is continuing on and as of the date hereof; and
(b) the representations and warranties of the Borrower and
the other Credit Parties contained in the Credit Agreement and the other
Credit Documents are true and correct on and as of the date hereof as if made
on and as of the date hereof after giving effect to this Amendment, except to
the extent such representations and warranties expressly relate to a
different specific date.
Section 4. Effectiveness. This Amendment shall become
effective, as of March 30, 1997, when the Agent shall have executed and
delivered a counterpart of this Amendment and received duly executed
counterparts of this Amendment from the Borrower, each Subsidiary of the
Borrower that is a party to any Credit Document and as many of the Banks as
shall be necessary to comprise the "Required Banks" or the "Required Class
Creditors", as the case may be.
Section 5. Status of Credit Documents. (a)
This Amendment is limited solely for the purposes and to the extent expressly
set forth herein, and, except as expressly modified hereby, (i) the terms,
provisions and conditions of the Credit Documents, (ii) the terms and
provisions of the Further Assurances Agreement dated as of June 15, 1995, as
modified in writing prior to the date hereof, between the Borrower and the
Agent, and (iii) the Liens granted under the Credit Documents shall continue
in full force and effect and are hereby ratified
2
<PAGE>
and confirmed in all respects.
(b) No modification made to the Credit Agreement pursuant to
this Amendment shall relieve the Borrower from complying with any other term
or provision of the Credit Agreement as modified hereby.
Section 6. Counterparts. This Amendment may be executed and
delivered in any number of counterparts and by the different parties hereto
on separate counterparts, each of which when so executed and delivered shall
be an original, but all of which shall together constitute one and the same
instrument. A complete set of counterparts shall be lodged with the Borrower
and the Agent.
Section 7. Governing Law. THIS AMENDMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH, AND SHALL BE GOVERNED BY, THE
LAWS OF THE STATE OF NEW YORK.
3
<PAGE>
The foregoing Waiver and Sixth Amendment is
hereby consented and agreed to, and the Liens and guaranties
under the Credit Documents are hereby confirmed, by:
MERCHANDISING SERVICES, INC.
GRAND UNION STORES, INC. OF VERMONT
GRAND UNION STORES OF NEW HAMPSHIRE, INC.
SPECIALTY MERCHANDISING SERVICES, INC.
By: /s/ Francis E. Nicastro
-----------------------
Name: Francis E. Nicastro
Title: Vice President and Treasurer
of each of the above listed
entities
<PAGE>
IN WITNESS WHEREOF, the parties hereto have
caused their respective duly authorized officers to
execute and deliver this Waiver and Sixth Amendment to
the Amended and Restated Credit Agreement as of the date
first above written.
THE GRAND UNION COMPANY
By: /s/ Francis E. Nicastro
-----------------------
Name: Francis E. Nicastro
Title: Vice President and
Treasurer
BANKERS TRUST COMPANY,
Individually and as Agent
By: /s/ Mary Kay Coyle
------------------
Name: Mary Kay Coyle
Title: Managing Director
BANKAMERICA BUSINESS CREDIT, INC.
By: /s/
-----------------------
Name:
Title:
BANK POLSKA KASA OPIEKI, SA
By: /s/ William A. Shea
-------------------
Name: William A. Shea
Title: Vice President
Senior Lending Officer
<PAGE>
COMPAGNIE FINANCIERE DE CIC ET
DE L'UNION EUROPEENNE
By: /s/ Sean Mounier
----------------
Name: Sean Mounier
Title: First Vice President
By: /s/ Brian O'Leary
-----------------
Name: Brian O'Leary
Title: Vice President
THE FIRST NATIONAL BANK OF BOSTON
By: /s/ William M. Clark
-------------------
Name: William M. Clark
Title: Managing Director
FLEET CAPITAL CORPORATION
By: /s/ Eric Rubin
--------------
Name: Eric Rubin
Title: Vice President
HELLER FINANCIAL, INC.
By: /s/ Salvatore Salzillo
----------------------
Name: Salvatore Salzillo
Title: AVP
<PAGE>
LEHMAN COMMERCIAL PAPER INC.
By: /s/ Michelle Swanson
--------------------
Name: Michelle Swanson
Title: Authorized Signatory
ML CBO IV (CAYMAN) LTD, LLC
By: Protective Asset Management,
as Collateral Manager
By: /s/ James Dondero
-----------------
Name: James Dondero CPA, CFA
Title: President
Protective Asset Management, L.L.C.
SENIOR DEBT PORTFOLIO
By: Boston Management and Research,
as Investment Advisor
By: /s/ Scott H. Page
-----------------
Name: Scott H. Page
Title: Vice President
TRANSAMERICA BUSINESS CREDIT
CORPORATION
By: /s/ Perry Vavoules
------------------
Name: Perry Vavoules
Title: Senior Vice President
VAN KAMPEN AMERICAN CAPITAL PRIME
RATE INCOME TRUST
By: /s/ Kathleen A. Zarn
------------------
Name: Kathleen A. Zarn
Title: Vice President
<PAGE>
Exhibit 10.23
SEVENTH AMENDMENT
TO THE
AMENDED AND RESTATED CREDIT AGREEMENT
SEVENTH AMENDMENT dated as of May 6, 1997 (this "Amendment") to the
AMENDED AND RESTATED CREDIT AGREEMENT dated as of June 15, 1995 (as modified
by the Waiver and First Amendment thereto dated as of February 16, 1996, the
Second Amendment thereto dated as of May 10, 1996, the Third Amendment
thereto dated as of September 11, 1996, the Fourth Amendment thereto dated as
of January 13, 1997, the Fifth Amendment thereto dated as of March 7, 1997,
and the Waiver and Sixth Amendment thereto dated as of April 4, 1997, the
"Credit Agreement"), each among THE GRAND UNION COMPANY, a Delaware
corporation (the "Borrower"), the institutions from time to time party
thereto as lenders (the "Banks") and BANKERS TRUST COMPANY, as agent (the
"Agent"). Capitalized terms used herein and not defined herein shall have
the respective meanings set forth for such terms in the Credit Agreement.
W I T N E S S E T H :
WHEREAS, the Borrower has requested that the Credit Agreement be
amended to, among other things, (a) make the clean-down requirements of the
Credit Agreement inapplicable during the 1997 calendar year, (b) lower the
minimum amount of capital expenditures the Borrower is required by the Credit
Agreement to make during the Borrower's fiscal year ending in March 1998 (the
"1998 Fiscal Year"), and (c) change the EBITDA and interest coverage
requirements of the Credit Agreement that are applicable during the 1998
Fiscal Year; and
WHEREAS, subject to and upon the terms and conditions hereinafter
set forth and in the Credit Agreement as amended hereby, the Banks party
hereto are agreeable to the foregoing;
NOW, THEREFORE, the parties hereto hereby agree as follows:
Section 1. Amendments. The Credit Agreement is hereby amended
effective as of the date hereof as follows:
(a) Section 4.2(A)(i) of the Credit Agreement
<PAGE>
is amended by inserting "(other than August 31, 1997 unless a Default or an
Event of Default has occurred and is then continuing)" at such time after the
word "year" in the first line thereof.
(b) Section 7.14 of the Credit Agreement is amended by
replacing the amount "$87,100,000" appearing in the second line of the table
contained therein with the amount "$30,000,000".
(c) Section 8.3 of the Credit Agreement is amended by
inserting the following as a new last paragraph of such Section:
"In respect of any Capitalized Lease Obligations
(Equipment) incurred by the Borrower or any of its
Subsidiaries pursuant to clause (b) of this Section
8.3, the Agent, at the request of the Borrower, may
pursuant to documentation satisfactory to the Agent in
its sole discretion either, at the Agent's option,
release or subordinate the Liens under the Security
Documents on the equipment to which such obligations
relate."
(d) Section 8.9 of the Credit Agreement is amended by deleting
such section in its entirety and replacing it with the following:
"8.9 EBITDA. The Borrower will not permit EBITDA (i) for the
fiscal quarter ending in July 1997 (taken as one accounting period) to be
less than $23,000,000, (ii) for the period of two consecutive fiscal quarters
ending in October 1997 (taken as one accounting period) to be less than
$54,000,000, (iii) for the period of three consecutive fiscal quarters ending
in January 1998 (taken as one accounting period) to be less than $87,000,000
and (iv) for any period of four consecutive fiscal quarters (taken as one
accounting period) ending on the last day of any fiscal quarter set forth
below to be less than the amount set forth opposite such fiscal quarter below:
2
<PAGE>
<TABLE>
<CAPTION>
Fiscal Quarter
Ending in Amount
-------------- ------
<S> <C> <C>
March 1998 120,000,000
July 1998 150,000,000
October 1998 150,000,000
January 1999 150,000,000
April 1999 165,000,000
July 1999 165,000,000
October 1999 165,000,000
January 2000 165,000,000
April 2000 165,000,000
July 2000 165,000,000
October 2000 165,000,000
January 2001 165,000,000
March 2001 165,000,000
July 2001 165,000,000
October 2001 165,000,000
January 2002 165,000,000
March 2002 165,000,000"
</TABLE>
(e) Section 8.11 of the Credit Agreement is amended by
deleting such section in its entirety and replacing it with the following:
"8.11 EBITDA to Total Cash Interest Expense. The Borrower will not
permit the ratio of (i) EBITDA to (ii) Total Cash Interest Expense (x) for
the period of three consecutive fiscal quarters (taken as one accounting
period) ending in January 1998 to be less than 1.0:1, (y) for the period of
four consecutive fiscal quarters (taken as one accounting period) ending in
March 1998 to be less than 1.0:1, and (z) for any period of four consecutive
fiscal quarters (taken as one accounting period) ending during any period set
forth below to be less than the amount set forth opposite such period below:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C> <C>
Fiscal Quarter ending in July 1.4:1
1998 to and including
Fiscal Quarter ending
in January 1999
Fiscal Quarter ending in April 1.5:1
3
<PAGE>
1999 to and including
Fiscal Quarter ending
in January 2000
Fiscal Quarter ending in April 1.7:1
2000 to and including
Fiscal Quarter ending
in January 2001
Fiscal Quarter ending in March 1.7:1
2001 to and including
Fiscal Quarter ending
in January 2002
Thereafter 1.7:1"
</TABLE>
(f) Section 8.17 ("Additional Financial Covenants") of the
Credit Agreement is deleted in its entirety.
(g) The definition of the term "EBITDA" contained in
Section 10 of the Credit Agreement is amended by inserting the following at
the end of such definition:
"; and provided further that, for purposes of
calculating EBITDA for any period, the following
shall be added back to EBIT for such period to the
extent deducted from Consolidated Net Income for
such period: one-time restructuring charges
arising from employee terminations and
administrative cost reductions and one or a series
of related charges arising from inventory
valuation adjustments, in each case that are taken
by the Borrower during its fiscal year ending in
March 1998, but only to the extent (y) such
charges were decided to be taken by the Borrower
prior to the finalization of the Borrower's
financial statements for its fiscal year ending in
March 1997, and (z) the aggregate amount of such
charges, when taken together with any similar or
other restructuring charges taken by the Borrower
and its Subsidiaries in the last quarter of its
fiscal year ending in March 1997, do not exceed
$10,000,000."
(h) The definition of the term "Section 7.14 Credit
Amount" is amended by replacing the reference to the year "1998" with the
following:
4
<PAGE>
"or prior to 1999, zero, and for any fiscal year of the
Borrower ending in 2000".
Section 2. Representations and Warranties. The Borrower hereby represents
and warrants to the Agent and each Bank that:
(a) after giving effect to this Amendment, no Default or
Event of Default has occurred and is continuing on and as of the date hereof;
and
(b) the representations and warranties of the Borrower
and the other Credit Parties contained in the Credit Agreement and the other
Credit Documents are true and correct on and as of the date hereof as if made
on and as of the date hereof after giving effect to the amendments
contemplated hereby, except to the extent such representations and warranties
expressly relate to a different specific date.
Section 3. Effectiveness. This Amendment shall become effective as of the
date specified in Section 1 hereof when the Agent shall have executed and
delivered a counterpart of this Amendment and received duly executed
counterparts of this Amendment from the Borrower, each Subsidiary of the
Borrower that is a party to any Credit Document and as many of the Banks as
shall be necessary to comprise the "Required Banks" or the "Required Class
Creditors", as the case may be; provided that this Amendment shall cease
immediately to be of any further force and effect if (i) the Borrower fails
to comply with Section 4 hereof, or (ii) the aggregate amount of charges
relating to employee terminations, administrative cost reductions and
inventory valuation adjustments and other restructuring charges taken by the
Borrower and its Subsidiaries during the Borrower's fiscal quarter ending in
March 1997 exceeds $10,000,000.
Section 4. Amendment Fee. In the event this Amendment is executed and
delivered by the Agent and the Required Banks, the Borrower shall pay to the
Agent on or prior to May 13, 1997, in immediately available funds, for the
account of each Bank that executes and delivers a signature page to this
Amendment on or prior to May 6, 1997, an amendment fee equal to 12.5 basis
points on the sum of (a) such Bank's Revolving Loan Commitment, and (b)
5
<PAGE>
the aggregate outstanding principal amount of Term Loans held by such Bank.
Section 5. Status of Credit Documents. (a) This Amendment is limited
solely for the purposes and to the extent expressly set forth herein, and,
except as expressly modified hereby, (i) the terms, provisions and conditions
of the Credit Documents, (ii) the terms and provisions of the Further
Assurances Agreement dated as of June 15, 1995, as modified in writing prior
to the date hereof, between the Borrower and the Agent, and (iii) the Liens
granted under the Credit Documents shall continue in full force and effect
and are hereby ratified and confirmed in all respects.
(b) No amendment made to the Credit
Agreement pursuant to this Amendment shall relieve the
Borrower from complying with any other term or provision of
the Credit Agreement as amended hereby.
Section 6. Counterparts. This Amendment may be executed and delivered in
any number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an
original, but all of which shall together constitute one and the same
instrument. A complete set of counterparts shall be lodged with the Borrower
and the Agent.
Section 7. Governing Law. THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH, AND SHALL BE GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK.
6
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused their respective
duly authorized officers to execute and deliver this Seventh Amendment to the
Amended and Restated Credit Agreement as of the date first above written.
THE GRAND UNION COMPANY
By: /s/ Francis E. Nicastro
------------------------
Name: Francis E. Nicastro
Title: Vice President and
Treasurer
BANKERS TRUST COMPANY,
Individually and as Agent
By: /s/ Mary Kay Coyle
------------------------
Name: Mary Kay Coyle
Title: Managing Director
BANKAMERICA BUSINESS CREDIT, INC.
By: /s/ Richard Levenson
------------------------
Name: Richard Levenson
Title: VP
BANK POLSKA KASA OPIEKI, SA
By: /s/ William A. Shea
------------------------
Name: William A. Shea
Title: Vice President
Senior Lending Officer
7
<PAGE>
COMPAGNIE FINANCIERE DE CIC ET
DE L'UNION EUROPEENNE
By: /s/ Sean Mounier
------------------------
Name: Sean Mounier
Title: First Vice President
By: /s/ Brian O'Leary
------------------------
Name: Brian O'Leary
Title: Vice President
THE FIRST NATIONAL BANK OF BOSTON
By: /s/ Timothy M. Barns
------------------------
Name: Timothy M. Barns
Title: Division Executive
FLEET CAPITAL CORPORATION
By: /s/ Eric Rubin
------------------------
Name: Eric Rubin
Title: Vice President
HELLER FINANCIAL, INC.
By: /s/ Salvatore Salzillo
------------------------
Name: Salvatore Salzillo
Title: AVP
LEHMAN COMMERCIAL PAPER INC.
By: /s/ Michele Swanson
------------------------
Name: Michele Swanson
Title: Authorized Signatory
8
<PAGE>
ML CBO IV (CAYMAN) LTD, LLC
By: Protective Asset Management,
as Collateral Manager
By: /s/ James Dondero CPA, CFA
----------------------------
Name: James Dondero CPA, CFA
Title: President
Protective Asset Management, L.L.C.
SENIOR DEBT PORTFOLIO
By: Boston Management and Research,
as Investment Advisor
By: /s/ Payson F. Swaffield
------------------------
Name: Payson F. Swaffield
Title: Vice President
TRANSAMERICA BUSINESS CREDIT
CORPORATION
By: /s/ Steven Fischer
------------------------
Name: Steven Fischer
Title: Sr. Vice Pres
VAN KAMPEN AMERICAN CAPITAL PRIME
RATE INCOME TRUST
By: /s/ Jeffrey W. Maillet
------------------------
Name: Jeffrey W. Maillet
Title: Senior Vice President & Director
9
<PAGE>
The foregoing Seventh Amendment is hereby consented and agreed to,
and the Liens and guaranties under the Credit Documents are hereby confirmed,
by:
MERCHANDISING SERVICES, INC.
GRAND UNION STORES, INC. OF VERMONT
GRAND UNION STORES OF NEW HAMPSHIRE, INC.
SPECIALTY MERCHANDISING SERVICES, INC.
By: /s/ Francis E. Nicastro
---------------------------------
Name: Francis E. Nicastro
Title: Vice President and Treasurer
of each of the above listed
entities
10
<PAGE>
Exhibit 10.24
EIGHTH AMENDMENT
TO THE
AMENDED AND RESTATED CREDIT AGREEMENT
-------------------------------------
EIGHTH AMENDMENT dated as of June 9, 1997 (this "Amendment") to the
AMENDED AND RESTATED CREDIT AGREEMENT dated as of June 15, 1995 (as modified by
the Waiver and First Amendment thereto dated as of February 16, 1996, the Second
Amendment thereto dated as of May 10, 1996, the Third Amendment thereto dated as
of September 11, 1996, the Fourth Amendment thereto dated as of January 13,
1997, the Fifth Amendment thereto dated as of March 7, 1997, the Waiver and
Sixth Amendment thereto dated as of April 4, 1997, and the Seventh Amendment
thereto dated as of May 6, 1997, the "Credit Agreement"), each among THE GRAND
UNION COMPANY, a Delaware corporation (the "Borrower"), the institutions from
time to time party thereto as lenders (the "Banks") and BANKERS TRUST COMPANY,
as agent (the "Agent"). Capitalized terms used herein and not defined herein
shall have the respective meanings set forth for such terms in the Credit
Agreement.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Borrower, Trefoil Capital Investors II, L.P., a Delaware
limited partnership ("Trefoil"), and GE Investment Private Placement Partners
II, A Limited Partnership, a Delaware limited partnership (together with
Trefoil, the "Purchasers") have entered into a Stock Purchase Agreement dated as
of July 30, 1996 (the "Stock Purchase Agreement") as amended, pursuant to which
the Purchasers agreed to purchase, in up to five installments, 2,000,000 shares
of the Borrower's Class A Convertible Preferred Stock (the "Class A Stock") for
an aggregate purchase price of $100,000,000;
WHEREAS, the Purchasers have purchased 1,200,000 shares of Class A
Stock for $60,000,000 prior to the date hereof, and, under the Stock Purchase
Agreement, are required to purchase an additional 400,000 shares of such stock
for $20,000,000 on each of August 25, 1997 and February 25, 1998;
WHEREAS, the Borrower and the Purchasers have entered into an
Acceleration and Exchange Agreement dated June 5, 1997 (the "Exchange
Agreement"), pursuant to
<PAGE>
which (a) the Purchasers have agreed to accelerate their obligations under the
Stock Purchase Agreement to purchase the remaining 800,000 shares of Class A
Stock to June, 1997, (b) the Borrower and the Purchasers have agreed to
immediately thereafter exchange such shares of Class A Stock for 800,000 shares
of the Borrower's Class B Convertible Preferred Stock, and (c) the Company has
agreed to issue up to 2 million shares of its common stock to the Purchasers on
or about March 1998 (the "Reset Shares"), in each case on the terms and
conditions set forth therein and the exhibits thereto (such transaction, the
"Exchange");
WHEREAS, in connection therewith, the Borrower has requested that the
Credit Agreement be amended to, among other things:
(a)permit the Borrower to redeem shares of Class A Stock from the
Purchasers in exchange for the Borrower's Class B Convertible Preferred
Stock pursuant to the Exchange Agreement (Section 1(a) hereof);
(b)permit the Borrower to pay certain costs and expenses of the
Purchasers and their Affiliates (Section 1(b)) hereof); and
(c)permit the Borrower to file a Certificate of Designation in
respect of its Class B Convertible Preferred Stock (Section 2 hereof); and
WHEREAS, subject to and upon the terms and conditions hereinafter set
forth and in the Credit Agreement as amended hereby, the Banks party hereto are
agreeable to the foregoing;
NOW, THEREFORE, the parties hereto hereby agree as follows:
Section 1. AMENDMENTS. Subject to the satisfaction of the conditions
precedent set forth in Section 4 hereof, the Credit Agreement is hereby amended
effective as of the date hereof as follows:
(a) Section 8.6 of the Credit Agreement is amended by inserting the
following at the end of such section:
2
<PAGE>
"; PROVIDED that the Borrower may redeem or retire shares of its Class A
Convertible Preferred Stock solely in exchange for shares of the Borrower's
Class B Convertible Preferred Stock pursuant to the Convertible Preferred
Stock Documents as in effect on the Amendment No. 8 Effective Date".
(b) Section 8.7 of the Credit Agreement is amended by (i) deleting
the word "and" before clause (iv) of the proviso to the first sentence of
Section 8.7; and (ii) inserting the following at the end of such clause (iv):
", and (v) the Borrower may reimburse the Convertible Preferred Stock
Purchasers for up to $400,000 of costs and expenses incurred by the
Convertible Preferred Stock Purchasers in connection with the consummation
of the transactions contemplated by the Exchange Agreement."
(c) Section 9.10 of the Credit Agreement is amended by replacing the
proviso at the end of such section with the following:
"; PROVIDED that the occurrence of any event described in the foregoing
clause (ii) or (iii) shall not constitute an Event of Default under this
Section 9.10 so long as such event arises solely as a direct result of the
acquisition of Voting Stock by the Convertible Preferred Stock Purchasers
pursuant to the Convertible Preferred Stock Documents as in effect on the
Amendment No. 8 Effective Date; or"
(d) The definition of the term "Change of Control Event" contained in
Section 10 of the Credit Agreement is amended by replacing the term "Amendment
No. 3 Effective Date" contained in clause (i) thereof with the term "Amendment
No. 8 Effective Date."
(e) The definition of the term "Convertible Preferred Stock
Documents" contained in Section 10 of the Credit Agreement is hereby amended in
its entirety to read as follows:
"'Convertible Preferred Stock Documents'" shall mean (a) the Convertible
Preferred Stock Purchase Agreement, (b) the Stangeland Convertible
Preferred
3
<PAGE>
Stock Purchase Agreement, (c) the Certificate of Designation of Class A
Convertible Preferred Stock, stated value $50.00 per share, of the Borrower
(the "Class A Certificate of Designation"), (d) the Exchange Agreement, and
(e) the Certificate of Designation of Class B Convertible Preferred Stock,
stated value $50 per share, of the Borrower (the "Class B Certificate of
Designation"); as each of the same may from time to time be amended,
supplemented or otherwise modified from time to time in accordance with the
terms hereof and thereof. For purposes of this Agreement, 'issuance of
convertible preferred stock of the Borrower pursuant to the Convertible
Preferred Stock Documents', 'sales of convertible preferred stock of the
Borrower pursuant to the Convertible Preferred Stock Documents', 'Net
Equity Issuance Proceeds received by the Borrower pursuant to the
Convertible Preferred Stock Documents' and words of similar import do not
include any sales or issuances of convertible preferred stock or any Net
Equity Issuance Proceeds other than, as applicable: (i) the sale and
issuance of (and Net Equity Issuance Proceeds received by the Borrower in
respect of) up to 2,000,000 shares of the Borrower's Class A Convertible
Preferred Stock for $50.00 per share in cash pursuant to the Convertible
Preferred Stock Purchase Agreement, as modified by the Exchange Agreement,
(ii) the sale and issuance of (and Net Equity Issuance Proceeds received by
the Borrower in respect of) up to 60,000 shares of the Borrower's Class A
Convertible Preferred Stock for $50.00 per share in cash pursuant to the
Stangeland Convertible Preferred Stock Purchase Agreement, (iii) issuances,
for no consideration, pursuant to the terms of the Class A Certificate of
Designation and the Class B Certificate of Designation (each as in effect
on the Amendment No. 8 Effective Date) of shares of the Borrower's Class A
Convertible Preferred Stock, Class B Convertible Preferred Stock or common
stock, as applicable, as dividends on, and issuances, for no consideration
(other than the preferred stock being converted), of common stock upon
conversion of, outstanding shares of convertible preferred stock of the
Borrower permitted by this Agreement, (iv) the exchange of the Borrower's
Class A Convertible Preferred Stock for the Borrower's Class B Convertible
Preferred Stock
4
<PAGE>
pursuant to the Exchange Agreement, (v) the issuance of the Class B
Convertible Preferred Stock in the Exchange, and (vi) the issuance of the
Reset Shares pursuant to the Exchange Agreement."
(f) The following definitions of new terms are inserted in Section 10
of the Credit Agreement in alphabetical order:
"'Amendment No. 8 Effective Date' shall mean the 'Effective Date', as
such term is defined in Section 4 of Amendment No. 8 dated as of June __,
1997 to this Agreement."
"'Exchange Agreement' shall mean the Acceleration and Exchange
Agreement dated as of June 5, 1997 among the Borrower and the Convertible
Preferred Stock Purchasers."
Section 2. CONSENT TO AMENDMENTS TO CERTAIN DOCUMENTS.
Notwithstanding anything to the contrary contained in Section 8.13 of the Credit
Agreement, but subject to the satisfaction of the conditions precedent set forth
in Section 4 hereof, the Agent and the Banks party hereto hereby consent to:
(a) the acceleration, pursuant to the Exchange Agreement, of the Purchasers'
obligations under the Stock Purchase Agreement; and (b) the filing by the
Borrower with the Secretary of State of the State of Delaware of a Certificate
of Designation in respect of the Borrower's Class B Convertible Preferred Stock
that is in form and substance substantially similar to the form thereof
previously delivered to the Agent.
Section 3. REPRESENTATIONS AND WARRANTIES. The Borrower hereby
represents and warrants to the Agent and each Bank that:
(a) no Default or Event of Default has occurred and is continuing on
and as of the date hereof;
(b) the Exchange Agreement constitutes the valid and binding
agreement of the Purchasers enforceable against the Purchasers in accordance
with the terms thereof, except that (i) such enforcement may be subject to
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights, and (ii) the remedy of
specific per-
5
<PAGE>
formance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought; and
(c) the representations and warranties of the Borrower and the other
Credit Parties contained in the Credit Agreement and the other Credit Documents
are true and correct on and as of the date hereof as if made on and as of the
date hereof after giving effect to the amendments contemplated hereby, except to
the extent such representations and warranties expressly relate to a different
specific date.
Section 4. EFFECTIVENESS. The amendments to the Credit Agreement set
forth in Section 1 hereof and the consents set forth in Section 2 hereof shall
become effective on the date (the "Effective Date") that each of the following
conditions precedent has been satisfied:
(a) the Agent shall have executed and delivered a counterpart of this
Amendment and received duly executed counterparts of this Amendment from the
Borrower, each Subsidiary of the Borrower that is a party to any Credit Document
and as many of the Banks as shall be necessary to comprise the "Required Banks"
or the "Required Class Creditors", as the case may be;
(b) (i) the Exchange Agreement and all agreements, instruments and
other documents entered into by the Borrower and/or the Purchasers in connection
therewith (including, without limitation, the Certificate of Designation for the
Class B Convertible Preferred Stock to be issued pursuant to the Exchange
Agreement, collectively, the "New Equity Documents"), and all amendments to, and
other deviations in the New Equity Documents from, the execution copies of the
New Equity Documents delivered to the Agent prior to the New Agent's execution
of this Amendment either shall not have an adverse effect on the Banks in any
way or shall be reasonably satisfactory in form and substance to the Agent; (ii)
the Exchange Agreement and all of the other New Equity Documents shall be in
full force and effect; and (iii) the aggregate amount of fees (other than
reimbursements of costs and expenses, including legal fees) required to be paid
from time to time by the Borrower to investment banks, brokers, finders, the
Purchasers and the
6
<PAGE>
Purchasers' respective Affiliates in connection with the consummation of the
transactions contemplated by the Exchange Agreement shall not exceed $500,000;
(c) the Borrower shall have delivered to the Agent an executed
certificate of the Borrower, dated as of the Effective Date, stating that: (i)
the representations and warranties of the Borrower set forth in Section 3 hereof
and in the Exchange Agreement and the other New Equity Documents were true and
correct when made and are true and correct on and as of the Effective Date as if
made on the Effective Date; (ii) the conditions precedent set forth in clause
(b) above are satisfied on and as of the Effective Date; and (iii) attached
thereto are true and complete copies of each of the New Equity Documents and the
other Convertible Preferred Stock Documents as in effect on the Effective Date,
and, except as noted in such certificate or otherwise disclosed to the Agent in
writing, such documents do not vary in any material respect from the execution
versions thereof provided to the Agent prior to its execution hereof; and
(d) the Borrower shall have delivered to the Agent a copy of each
certificate and legal opinion delivered to, or by or on behalf of, the Borrower
pursuant to the Exchange Agreement in connection with the initial closing
thereunder, and the Agent and the Banks shall be addresses of (or otherwise
entitled to rely upon) each such opinion delivered by counsel for the Borrower.
Section 5. STATUS OF CREDIT DOCUMENTS. (a) This Amendment is limited
solely for the purposes and to the extent expressly set forth herein, and,
except as expressly modified hereby, (i) the terms, provisions and conditions of
the Credit Documents, (ii) the terms and provisions of the Further Assurances
Agreement dated as of June 15, 1995, as modified in writing prior to the date
hereof and herein, between the Borrower and the Agent, and (iii) the Liens
granted under the Credit Documents shall continue in full force and effect and
are hereby ratified and confirmed in all respects.
(b) Without limiting the foregoing, neither this Amendment
(including, without limitation, the consents granted in Section 2 hereof and the
confirmations made pursuant to paragraph (c) below) nor the deeming by the Agent
pursuant hereto of any New Equity Document as
7
<PAGE>
being satisfactory to it shall be construed in any respect as, and is not
intended to be: (i) a consent by the Agent or any Bank to the consummation by
the Borrower of any of the transactions contemplated by the New Equity Documents
(other than the entering into or filing, as applicable, by the Borrower of the
documents referred to in Section 2 hereof) or the performance by the Borrower of
any term or provision of any New Equity Document (including, without limitation,
the Certificate of Designation for the Borrower's Class B Convertible Preferred
Stock), in any such case that is prohibited by the Credit Agreement, as
expressly amended hereby, or (ii) a waiver by the Agent or any Bank of (A) any
violation of the Credit Agreement, as expressly amended hereby, or any Default
or Event of Default thereunder that in any such case arises as a result of the
performance or observance by the Borrower of any of its covenants, agreements
and obligations under, or the consummation of any transaction (other than those
expressly consented to pursuant to Section 2 hereof) contemplated by, any New
Equity Document (including, without limitation, any such violation, Default or
Event of Default that would arise under Section 8.6 of the Credit Agreement, as
expressly amended hereby, as a result of the performance by the Borrower of any
obligation of the Borrower under the New Equity Documents to pay cash dividends
on, or redeem (other than pursuant to the Exchange Agreement), any shares of
stock issued, sold and/or exchanged pursuant to the New Equity Documents), or
(B) any rights and remedies arising in favor of the Agent or any Bank under the
Credit Documents or otherwise as a result of the occurrence of any such
violation, Default or Event of Default.
(c) The Borrower acknowledges that the performance by the Borrower of
its following obligations under the New Equity Documents will, unless consented
to in writing by the requisite Banks after the Effective Date, result in a
violation of, and constitute an Event of Default under, the Credit Agreement as
amended hereby: (i) any obligation of the Borrower under the New Equity
Documents to pay cash dividends (in whole or in part) on, or purchase, redeem or
otherwise acquire (in whole or in part) for cash or stock, any shares of
convertible preferred stock issued from time to time pursuant to the New Equity
Documents, and (ii) any obligation of the Borrower under the New Equity
Documents to pay to any Purchaser or any of their respective Affiliates any
management or
8
<PAGE>
similar fee at any time that a Default or an Event of Default has occurred and
is continuing. Each of the Agent and the Borrower confirms to each other on the
terms set forth in paragraph (b) above that it does not have any actual
knowledge that any other term or provisions of the New Equity Documents
conflicts (or that the performance thereof could conflict) with the terms and
provisions of the Credit Agreement as amended hereby.
(d) No amendment made to the Credit Agreement pursuant to this
Amendment shall relieve the Borrower from complying with any other term or
provision of the Credit Agreement as amended hereby.
Section 6. COUNTERPARTS. This Amendment may be executed and
delivered in any number of counterparts and by the different parties hereto on
separate counterparts, each of which when so executed and delivered shall be an
original, but all of which shall together constitute one and the same
instrument. A complete set of counterparts shall be lodged with the Borrower
and the Agent.
Section 7. GOVERNING LAW. THIS AMENDMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH, AND SHALL BE GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK.
9
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused their respective
duly authorized officers to execute and deliver this Eighth Amendment to the
Amended and Restated Credit Agreement as of the date first above written.
THE GRAND UNION COMPANY
By: /s/ Francis E. Nicastro
--------------------------
Name: Francis E. Nicastro
Title: Vice President and
Treasurer
BANKERS TRUST COMPANY,
Individually and as Agent
By: /s/ Mary Kay Coyle
--------------------------
Name: Mary Kay Coyle
Title: Managing Director
BANKAMERICA BUSINESS CREDIT, INC.
By: /s/ Richard Levenson
--------------------------
Name: Richard Levenson
Title: VP
BANK POLSKA KASA OPIEKI, SA
Pekao S.A. Group
By: /s/ William A. Shea
--------------------------
Name: William A. Shea
Title: Vice President
Senior Lending Officer
10
<PAGE>
COMPAGNIE FINANCI RE DE CIC ET
DE L'UNION EUROPEENNE
By: /s/ Sean Mounier
--------------------------
Name: Sean Mounier
Title: First Vice President
By: /s/ Brian O'Leary
--------------------------
Name: Brian O'Leary
Title: Vice President
DLJ CAPITAL FUNDING, INC.
By: /s/ Stephen
--------------------------
Name: Stephen
Title:
THE FIRST NATIONAL BANK OF BOSTON
By: /s/ Timothy M. Barns
--------------------------
Name: Timothy M. Barns
Title: Division Executive
FIRST UNION BANK OF NORTH CAROLINA
By: /s/ Jeanette W. Bumgarner
--------------------------
Name: Jeanette W. Bumgarner
Title: Assistant Vice President
FLEET CAPITAL CORPORATION
By: /s/ Eric Rubin
--------------------------
Name: Eric Rubin
Title: Vice President
11
<PAGE>
HELLER FINANCIAL, INC.
By: /s/ Salvatore Salzalto
--------------------------
Name: Salvatore Salzalto
Title: AVP
LEHMAN COMMERCIAL PAPER INC.
By: /s/ Michele Swanson
--------------------------
Name: Michele Swanson
Title: Authorized Signatory
ML CBO IV (CAYMAN) LTD, LLC
By: Protective Asset Management,
as Collateral Manager
By: /s/ James Dondero
--------------------------
Name: James Dondero
Title: CPA, CFA President
Protective Asset
Management, L.L.C.
SENIOR DEBT PORTFOLIO
By: Boston Management and Research,
as Investment Advisor
By: /s/ Scott H. Page
--------------------------
Name: Scott H. Page
Title: Vice President
TRANSAMERICA BUSINESS CREDIT
CORPORATION
By: /s/ Perry Vavoules
--------------------------
Name: Perry Vavoules
Title: Senior Vice President
12
<PAGE>
The foregoing Eighth Amendment to the Amended and Restated Credit
Agreement is hereby consented and agreed to, and the Liens and guaranties under
the Credit Documents are hereby confirmed, by:
MERCHANDISING SERVICES, INC.
GRAND UNION STORES, INC. OF VERMONT
GRAND UNION STORES OF NEW HAMPSHIRE, INC.
SPECIALTY MERCHANDISING SERVICES, INC.
By: /s/ Francis E. Nicastro
---------------------------------
Name: Francis E. Nicastro
Title: Vice President and Treasurer
of each of the above listed
entities
13
<PAGE>
Exhibit 10.28
SUPPLY AND OPERATING AGREEMENT
BETWEEN
THE GRAND UNION COMPANY
AND
C&S WHOLESALE GROCERS, INC.
DATED AS OF JANUARY 21, 1996
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I. CERTAIN DEFINITIONS ......................................... 1
SECTION 1.1. Certain Defined Terms ....................................... 1
ARTICLE II. SCOPE AND TERM AGREEMENT, CHANGEOVER
PROVISIONS, MERCHANDISE ..................................... 5
SECTION 2.1. Agreement ................................................... 5
SECTION 2.2. Term ........................................................ 5
SECTION 2.3. Changeover Provisions ....................................... 6
SECTION 2.4. Provisions Relating to Merchandise .......................... 6
ARTICLE III. PURCHASE, SALE AND DISTRIBUTION ............................. 8
SECTION 3.1. Agreement ................................................... 8
SECTION 3.2. Delivery .................................................... 8
SECTION 3.3. Price ....................................................... 9
SECTION 3.4. Other Pricing Provisions .................................... 9
SECTION 3.5. Payments .................................................... 10
SECTION 3.6. Service Level ............................................... 11
ARTICLE IV. OPERATION AND FEES .......................................... 12
SECTION 4.1. Operation of Facility ....................................... 12
SECTION 4.2. Non-Merchandise Inventory ................................... 12
SECTION 4.3. Use of Slots; Storage ....................................... 13
SECTION 4.4. Payment of Costs and Fees ................................... 13
SECTION 4.5. Determination of Operating Expense Amount
and Other Costs ............................................. 13
SECTION 4.6. Cooperation ................................................. 14
SECTION 4.7. Maintenance of Fees ......................................... 14
*
ARTICLE V. CERTAIN COVENANTS ........................................... 15
SECTION 5.1. Information ................................................. 15
*
SECTION 5.3. Sublease; Assignment ........................................ 15
*
SECTION 5.5. Compliance with Law ......................................... 16
SECTION 5.6. Insurance ................................................... 16
*
SECTION 5.8. Affirmation and Acknowledgment .............................. 17
ARTICLE VI. MONTGOMERY INVENTORY ........................................ 17
SECTION 6.1. Initial Inventory ........................................... 17
SECTION 6.2. Inventory Administrative Charge ............................. 18
SECTION 6.3. Inventory Limits ............................................ 18
ARTICLE VII. ADDITIONAL BUSINESS ......................................... 19
SECTION 7.1. Additional Business ......................................... 19
ARTICLE VIII. TERMINATION ................................................. 20
SECTION 8.1. Termination by C&S .......................................... 20
*Material omitted and filed separately with the SEC pursuant to a request for
Confidential Treatment.
i
<PAGE>
SECTION 8.2. Termination by Grand ........................................ 21
SECTION 8.3. Termination of Sublease ..................................... 22
SECTION 8.4. Negotiations, Interim Period ................................ 22
SECTION 8.5. Waiver ...................................................... 23
ARTICLE IX. REPRESENTATIONS AND WARRANTIES .............................. 23
SECTION 9.1. Representations and Warranties of C&S ....................... 23
SECTION 9.2. Representation and Warranties of Grand Union ................ 24
ARTICLE X. GENERAL PROVISIONS .......................................... 24
SECTION 10.1. Entire Agreement ............................................ 24
SECTION 10.2. Expenses .................................................... 24
SECTION 10.3. Amendments .................................................. 25
SECTION 10.4. Notices ..................................................... 25
SECTION 10.5. Binding Effect; Assignment .................................. 25
SECTION 10.6. Counterparts ................................................ 26
SECTION 10.7. Confidentiality ............................................. 26
SECTION 10.8. Relationship of Parties ..................................... 27
SECTION 10.9. No Third-Party Beneficiaries ................................ 27
SECTION 10.l0.Severability ................................................ 27
SECTION 10.11.Headings .................................................... 28
SECTION 10.12.Governing Law ............................................... 28
SECTION 10.13.Arbitration ................................................. 28
Exhibit A - Montgomery Lease Agreement dated September 29, 1989
Exhibit B - Existing Grand Union Stores
Exhibit C - Merchandise
*
Exhibit E - Forms of Notices
Exhibit F - Form of Landlord Consent
*
Exhibit H - Montgomery Facility Slots
Exhibit I - Montgomery Facility Storage
*
Exhibit K - Terms of Sublease
*
*Material omitted and filed separately with the SEC pursuant to a request for
Confidential Treatment.
ii
<PAGE>
SUPPLY AND OPERATING AGREEMENT, dated as of January 21, 1996 (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, New Jersey, Connecticut, Pennsylvania and New Hampshire;
and
WHEREAS, certain of such stores are presently supplied through a facility
leased by Grand Union in Montgomery, New York, pursuant to that certain lease
agreement attached hereto as Exhibit A (the "Montgomery 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 retain possession of the Montgomery
Facility (except as otherwise provided herein), and Grand Union and C&S desire
to enter into an agreement relating to Merchandise to be provided to Grand Union
through the Montgomery 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 1.1. 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.
"Assignment" has the meaning specified in Section 5.3.
*
"Bank Agreement" shall mean the Amended and Restated Credit
Agreement dated as of June 15, 1995 among Grand Union, Bankers Trust Company, as
agent, and the lending institutions
*Material omitted and filed separately with the SEC pursuant to a request for
Confidential Treatment.
<PAGE>
party thereto, as amended from time to time, and any other revolving credit
agreement that provides for the refinancing or replacement of the revolving
credit obligations of Grand Union under such Credit Agreement.
"Base Costs" has the meaning specified in section 8.2.
*
"Business Day" means a day on which banks in New York, New York and
Boston, Massachusetts are open for business.
"Changeover Date" means the date specified in the Changeover
Election Notice as the date on which the C&S Purchase Period shall commence.
"Changeover Election Notice" has the meaning specified in Section
2.3
"Contract Year" means any consecutive twelve-month period during the
Term commencing on January 21 and ending the following January 20, the first
such Contract Year to commence January 21, 1996.
"C&S Purchase Period" means the period commencing on the Changeover
Date and ending on the date on which this Agreement expires or otherwise
terminates.
"C&S Supply Agreements" means the two Supply and Distribution
Agreements between C&S and Grand Union dated as of June 15, 1995 and January 2,
1996, as amended from time to time.
"Employee Costs" means payroll, fringe benefits and other amounts
payable to employees of Grand Union, pursuant to the Labor Service Agreement or
otherwise, for their services in connection with the operation of the Montgomery
Facility.
"Event of Force Majeure" means, with respect to any Person, any
event, circumstance or condition described in any of clauses (a) through (e)
below that is beyond the control of such Person, and is not the result of
negligence or failure of such Person to act with due care, and that prevents
such Person 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 such Person, and compliance therewith by such Person is not voluntary
or optional; and (e) producers or manufacturers establish industry-wide
allocations or restrictions on quantities of products available to such Person.
*Material omitted and filed separately with the SEC pursuant to a request for
Confidential Treatment.
2
<PAGE>
"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 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.
*
"Grand Union Merchandise" means Merchandise owned by Grand Union and
held at the Montgomery Facility as of the commencement date of this Agreement.
"Grand Union Purchase Period" means the period commencing on the
first day of the Term and ending on the day prior to the Changeover Date.
"Grand Union Stores" shall mean (i) all existing Grand Union stores
currently supplied by the Montgomery Facility as itemized on Exhibit B and (ii)
all new Grand Union stores hereafter acquired.
"Indenture" means the Indenture dated as of June 15, 1995 between
Grand Union and IBJ Schroder Bank & Trust Company, as Trustee, as amended from
time to time, and any indenture or other agreement that provides for the
refinancing or replacement of the Notes issued by Grand Union under such
Indenture.
"Labor Service Agreement" means the agreement referred to in Section
5.4.
"Lease" has the meaning specified in Section 5.3(a).
"Liquidity Amount" means at any time of determination hereunder, the
amount then available for borrowing by Grand Union under the Bank Agreement.
*Material omitted and filed separately with the SEC pursuant to a request for
Confidential Treatment.
3
<PAGE>
"Merchandise" means products in the following categories currently
carried by Grand Union at the Montgomery Facility and which are to be sold by
Grand Union through Grand Union Stores: health, beauty care and cosmetics
products and general merchandise supplied through the Montgomery Facility. The
Merchandise is more particularly described in Exhibit C hereto.
"Montgomery Facility" has the meaning specified in the second
recital to this Agreement.
"Non-Merchandise Inventory" has the meaning specified in Section
4.2.
"Operating Expense Amount" has the meaning provided in Section
4.5(a).
"Operating Expenses" means the *
"Order and Polling Schedules" means the order and polling schedules
as mutually agreed to by C&S and Grand Union from time to time.
"Other Costs" means costs incurred by C&S in connection with the
Montgomery Facility of the kinds specified in Part II of Exhibit D hereto.
"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 during the C&S Purchase Period a
percentage reflecting the ratio of (i) the number of cases of Merchandise
actually delivered or available for pick-up within the delivery windows as
provided in the applicable delivery schedules and in accordance with the
requirements of Section 3.2 hereof to (ii) the total number of cases of such
Merchandise ordered by Grand Union for delivery or pick-up, as the case may be,
during the same period, less unauthorized Merchandise and manufacturers'
out-of-stock Merchandise, and as otherwise determined in accordance with the
provisions of Section 3.6.
"Service Level Breach" has the meaning specified in Section 3.6.
"Sublease" has the meaning specified in section 5.3.
"Sublease Effective Date" has the meaning specified in Section 5.3.
*Material omitted and filed separately with the SEC pursuant to a request for
Confidential Treatment.
4
<PAGE>
"Term" has the meaning specified in Section 2.2.
"Termination Fee" has the meaning specified in section 8.2.
"Weekly Fee" has the meaning specified in section 4.4.
ARTICLE II.
SCOPE AND TERM OF AGREEMENT; CHANGEOVER PROVISIONS; MERCHANDISE
SECTION 2.1. Agreement.
Grand Union hereby agrees to purchase from C&S, subsequent to the
shipment of the Grand Union Merchandise to Grand Union Stores, substantially all
of Grand Union's requirements for Merchandise, and C&S hereby agrees to supply
to Grand Union all merchandise ordered by Grand Union hereunder, upon the terms
and subject to the conditions herein set forth.
(a) Grand Union Purchase Period. C&S authorizes Grand Union, during
the Grand Union Purchase Period, to act as agent of C&S for the procurement of
Merchandise. Grand Union shall negotiate, procure, process, purchase and pay for
such Merchandise, which shall be delivered to the Montgomery Facility. C&S shall
reimburse Grand Union for such purchases based on the provisions of section 3.5.
At all times during the Grand Union Purchase Period, Grand Union shall purchase
Merchandise only in such amounts and on such terms as may be permitted under
Article VI of this Agreement. Grand Union shall not hold itself out as an agent
for C&S except for the limited purpose set forth in this Section 2.1(a).
(b) Direct-to-Store Purchases. Subject to the provisions of the
first paragraph of this Section 2.1, Grand Union shall have the right to supply
Merchandise to Grand Union Stores on a "direct-to-store" basis, rather than
through purchases from the Montgomery Facility as provided herein. Subject to
such provisions, Grand Union may supply Merchandise on a direct-to-store basis
at any time and from time to time and notwithstanding that Merchandise of any
particular kind had previously been, or may thereafter be, supplied through
purchase from the Montgomery Facility. Merchandise supplied on a direct-to-store
basis may be delivered for cross-docking at the Montgomery Facility.
SECTION 2.2. Term.
(a) Implementation will begin on January 21, 1996, and the term of
this Agreement (the "Term") will begin on January 21, 1996 and end on *;
provided, however, that if the Term has not been extended by written
agreement
*Material omitted and filed separately with the SEC pursuant to a request for
Confidential Treatment.
5
<PAGE>
entered into prior to * the Term shall be extended, without any
action of the parties hereto, for an additional year, to expire *.
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 January 21, 1996, the Term will commence on the first Sunday
after such date.
(b) C&S has the right, which may be exercised by giving notice to
Grand Union at any time prior to * 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 *. Grand Union shall also have the
right, which may be exercised by giving notice to C&S at any time prior to *
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 *. All fees set
forth in this Agreement shall remain unchanged during such extension, except
as otherwise expressly provided herein.
SECTION 2.3. Changeover Provisions. During the Grand Union Purchase
Period, Grand Union will purchase Merchandise directly from vendors as provided
in Section 2.1(a), and certain provisions of this Agreement, as specified
herein, are applicable only during the Grand Union Purchase Period. C&S shall
have the right, by written notice given to Grand Union at any time, to elect
that C&S shall purchase Merchandise hereunder directly from vendors. Such notice
shall state that C&S elects to have the C&S Purchase Period commence, stating
the commencement date of such Period, which shall be not earlier than 90 days
after the date of such notice. Certain provisions of this Agreement, as
specified herein, shall be applicable only during the C&S Purchase Period. All
provisions of this Agreement that do not by their terms apply only to the Grand
Union Purchase Period or the C&S Purchase Period shall apply to both such
Periods.
SECTION 2.4. Provisions Relating to Merchandise.
(a) At all times during the Term, Grand Union agrees to take all
reasonable measures to assure that the Merchandise (other than Grand Union
Merchandise) is deemed for all purposes to be the property of C&S. Such measures
shall include, but not be limited to, segregating such Merchandise from
Non-Merchandise Inventory and other property of Grand Union; posting signs
identifying such Merchandise as property of C&S; and correctly identifying the
ownership of such Merchandise in all relevant communications with third parties,
including any collateral certificates furnished by Grand Union to its lenders.
If so requested by C&S, Grand Union agrees to execute and deliver appropriate
UCC-1 financing statements or other documentation for filing in public records.
(b) Promptly upon commencement of the Term, Grand Union shall give
written notice (the forms of which are appended
*Material omitted and filed separately with the SEC pursuant to a request for
Confidential Treatment.
6
<PAGE>
to this Agreement as Exhibit E) (i) to all vendors of Merchandise, that Grand
Union is making purchases of Merchandise in its capacity as agent for C&S and
(ii) to its bank agent and the landlord under the Lease, that Merchandise (other
than Grand Union Merchandise) in the Montgomery Facility is the property of C&S.
Upon commencement of the C&S Purchase Period, Grand Union shall give notice to
such vendors that Grand Union's authority to act as C&S' agent has terminated.
Grand Union shall deliver copies of each such notice to C&S.
(c) Within 30 days following commencement of the Term, Grand Union
shall obtain from each holder of a security interest in inventory at the
Montgomery Facility that filed a UCC-1 financing statement with respect to such
inventory UCC-3s suitable for filing in all locations where such holders have
filed UCC-1 financing statements, acknowledging C&S' rights with respect to
Merchandise, such UCC-3s to be in form and substance reasonably satisfactory to
C&S. Further, within 60 days following commencement of the Term, Grand Union
shall furnish C&S with a search report from a recognized search firm identifying
all holders of security interests in inventory at the Montgomery Facility with
filed UCC-1 financing statements with respect to such inventory. Such search
report shall be conducted for filings during the period from October 15, 1995
through the date of the search. Grand Union shall, within 30 days after delivery
of such search report to C&S, deliver appropriate UCC-3s suitable for filing in
all locations where such holders have filed UCC-1 financing statements if UCC-3s
were not previously delivered with respect to such holders pursuant to this
subsection (c).
(d) On Friday of each week during the Grand Union Purchase Period,
Grand Union agrees to furnish to C&S a certificate, signed by its Chief
Financial Officer (or his designee), certifying the quantity of Merchandise in
the Montgomery Facility (by shopkeeping unit) and that payments to vendors are
being made in accordance with normal terms.
(e) To provide C&S collateral security for Grand Union's obligation
to act as C&S' agent to pay for Merchandise, as well as to provide collateral
security for the payment and performance of all other obligations owing from
Grand Union to C&S under this Agreement and the C&S Supply Agreements, Grand
Union agrees to provide a stand-by, irrevocable letter of credit in favor of C&S
in the amount of $2,625,000. Such letter of credit shall be issued by a bank
reasonably satisfactory to C&S and shall be delivered to C&S no later than
February 15, 1996. The letter of credit shall provide that it may be drawn upon
(i) the occurrence of any event permitting C&S to terminate this Agreement or
either of the C&S Supply Agreements; or (ii) failure by Grand Union to provide
C&S a replacement letter of credit not less than thirty days prior to the
expiration date of the existing letter of credit. Grand Union shall have the
right to require that C&S release and return to Grand Union any such letter of
credit and any proceeds of any drawing on such letter
7
<PAGE>
of credit obtained pursuant to clause (ii) if, as of any date within 30 days
after any interest payment date under the Indenture on which Grand Union shall
have paid the full amount of the interest then due on the Notes outstanding
under the Indenture, the Liquidity Amount is at least $40 million and Grand
Union shall have delivered to C&S a certificate of the Chief Financial Officer
(or his designee) of Grand Union setting forth such Liquidity Amount and the
calculation thereof. Thereafter, the Chief Financial Officer of Grand Union (or
his designee) shall provide quarterly certificates setting forth the Liquidity
Amount and the calculation thereof. If at any time following the release and
return of any such letter of credit the Liquidity Amount falls below $40
million, Grand Union shall deliver to C&S another letter of credit on the same
terms and conditions set forth above.
ARTICLE III.
PURCHASE, SALE AND DISTRIBUTION
SECTION 3.1. Agreement. During the C&S Purchase Period, C&S shall
negotiate, procure, process, purchase and pay for Merchandise from vendors
thereof, and shall maintain stock and inventory thereof at the Montgomery
Facility, at such times and in such amounts as shall be necessary to provide
Merchandise to Grand Union pursuant to section 2.1.
SECTION 3.2. Delivery.
(a) All Merchandise and Non-Merchandise Inventory ordered hereunder
for Grand Union Stores whose grocery and perishable inventory requirements are
serviced by C&S pursuant to the C&S Supply Agreements shall be delivered by C&S
F.O.B. destination to the C&S distribution center applicable to each such Grand
Union Store where such Merchandise shall be "cross-docked" in accordance with
the C&S Supply Agreements (or any future agreements) and delivered to such Grand
Union Stores in accordance with the C&S Supply Agreements (or future
agreements). Title to, and risk of loss with respect to, such Merchandise shall
remain with C&S until delivery to the respective Grand Union Store.
(b) All Merchandise and Non-Merchandise Inventory ordered hereunder
for Grand Union Stores that are not serviced by C&S pursuant to the C&S Supply
Agreements shall be picked up at the Montgomery Facility by Grand Union in
accordance with schedules to be agreed to by the parties from time to time.
Title to, and risk of loss with respect to, such Merchandise shall pass to Grand
Union upon pick-up from the Montgomery Facility.
8
<PAGE>
SECTION 3.3. Price.
(a) Grand Union Purchase Period. During the Grand Union Purchase
Period, C&S will sell Merchandise to Grand Union based on *
(b) C&S Purchase Period. During the C&S Purchase Period, C&S will
sell Merchandise to Grand Union at *
SECTION 3.4. Other Pricing Provisions. In addition to the provisions
of Section 3.3(b), the following provisions shall be applicable to the purchase
and supply by C&S of Merchandise hereunder during the C&S Purchase Period:
*
*Material omitted and filed separately with the SEC pursuant to a request for
Confidential Treatment.
9
<PAGE>
(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.
(e) Grand Union will be responsible for providing C&S with ad
quantity requirements.
*
SECTION 3.5. Payments.
(a) During the Grand Union Purchase Period, C&S will pay Grand Union
* the purchase price of the Merchandise purchased by Grand Union as C&S'
agent *
(b) During the Grand Union Purchase Period, Grand Union will pay C&S
* the Merchandise shipped to Grand Union Stores during the preceding week. *
(c) During the C&S Purchase Period, Grand Union will pay C&S *
Merchandise shipped to Grand Union Stores, based on *
*Material omitted and filed separately with the SEC pursuant to a request for
Confidential Treatment.
10
<PAGE>
(d) Grand Union will pay C&S * for fees and charges, other than
Merchandise payments, under this Agreement.
(e) Grand Union will provide to C&S * C&S will pay Grand Union
by wire transfer *
(f) In the event Grand Union or C&S fails to make any payment as
provided in this Section 3.5, C&S or Grand Union will immediately provide
written notice to the counterparty that payment has not been received and the
counterparty will have *. If the payment is not received within * C&S shall
have the right *. If payment is not received within * from receipt by Grand
Union or C&S of such notice, C&S or Grand Union shall have the right to
terminate this Agreement as provided in Section 8.1 or 8.2. Notwithstanding
the foregoing, each party agrees to notify the other promptly if it believes
there is an error. The parties agree to use their best efforts to resolve any
disputes * of such notice. If any such dispute is not resolved *, the parties
will submit the dispute to binding arbitration as provided in Section 10.13.
For purposes of this Section 3.5, time is of the essence, subject to the
express provisions hereof.
(g) The parties agree to establish jointly an overage/shortage
policy, attached hereto as Exhibit G (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 3.6. Service Level. C&S agrees that, during the C&S Purchase
Period, the Service Level for all Merchandise ordered by Grand Union hereunder
will be maintained at a minimum *. C&S will provide Grand Union, during such
Period, a weekly Service Level Reconciliation Report showing, with respect to
each invoice, the number of cases ordered, the number of cases shipped or
available for pick-up, as the case may be, 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. If the
Service Level for any week falls below the level
*Material omitted and filed separately with the SEC pursuant to a request for
Confidential Treatment.
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required by the first sentence of this Section 3.6 (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 * 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 * shall constitute a breach of this
Agreement by C&S, * Notwithstanding the foregoing provisions, C&S will not be
in breach of this Section 3.6 if its failure to maintain the Service Level as
provided herein is a result of a material default by Grand Union under this
Agreement, picketing or other labor disputes at Grand Union Stores or an Event
of Force Majeure.
ARTICLE IV.
OPERATION AND FEES
SECTION 4.1. Operation of Facility. (a) Prior to the Sublease
Effective Date, Grand Union shall operate and manage the Montgomery Facility in
accordance with normal operating procedures and subject to the provisions of
this Agreement. From and after the Sublease Effective Date, C&S shall operate
and manage the Montgomery Facility in accordance with normal operating
procedures and subject to the provisions of the Sublease, the Assignment, if
entered into, and this Agreement, provided that Grand Union shall provide
employees for such operation in accordance with the Labor Service Agreement. The
provisions of Section 3.2 hereof with respect to title to, and risk of loss with
respect to, Merchandise will be applicable both before and after the Sublease
Effective Date.
SECTION 4.2. Non-Merchandise Inventory. The parties acknowledge that
Grand Union currently utilizes, and will continue to utilize, the Montgomery
Facility for cigarettes and certain grocery and other products that do not
constitute Merchandise and that C&S will have no rights hereunder in respect of
such inventory ("Non-Merchandise Inventory"). The parties agree to cooperate in
establishing procedures for segregation, handling and recordkeeping, and for
other administrative matters, relating to Non-Merchandise Inventory. Physical
inventories with respect to Non-Merchandise Inventory and with respect to
inventory acquired by or through C&S hereunder will be taken on the same date as
agreed to by the parties. Costs solely and exclusively relating to
Non-Merchandise Inventory shall be allocated solely and exclusively to Grand
Union, and C&S shall bear none of such costs. Costs that relate to both
Non-Merchandise Inventory and Merchandise inventory *
*Material omitted and filed separately with the SEC pursuant to a request for
Confidential Treatment.
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* C&S agrees that, if the Sublease or the Assignment is
entered into, C&S will enter into or will provide such agreements as shall be
necessary so that Grand Union may continue to utilize the Montgomery Facility
for Non-Merchandise Inventory as referred to above.
SECTION 4.3. Use of Slots; Storage.
(a) Grand Union and C&S acknowledge that Exhibit H hereto reflects
the current numbers of in-use and open slots in the "quick-pick" portion of the
Montgomery Facility. Grand Union and C&S further acknowledge that Grand Union
will have the right, in its sole discretion, to add selected single items to the
products for which such slots are used, but that Grand Union will use reasonable
efforts, consistent with business requirements, to maintain slot counts
generally at current levels in order to accommodate C&S' needs as contemplated
by Section 7.1.
(b) Grand Union and C&S will segregate the storage section of the
Montgomery Facility based on the diagram set forth as Exhibit I hereto.
SECTION 4.4. Payment of Costs and Fees.
(a) Prior to the Sublease Effective Date, Grand Union shall pay (i)
to the Persons entitled thereto, * (ii) to C&S for its provision of
Merchandise hereunder, * the amount determined pursuant to Section 4.5(b)
hereof.
(b) Prior to the Sublease Effective Date, C&S shall pay to Grand
Union, *
(c) From and after the Sublease Effective Date:
(i) C&S shall pay, to the Persons entitled thereto (or to
Grand Union, for the purpose of making such payments),*; and
(ii) Grand Union shall pay to C&S *
SECTION 4.5. *
(a) * shall consist of the amount determined in accordance with
the following provisions of this Section, as adjusted on an annual basis to
reflect *
*Material omitted and filed separately with the SEC pursuant to a request for
Confidential Treatment.
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*
(c) Notwithstanding the foregoing provisions, determinations with
respect to *
(d) Notwithstanding any other provision of this Agreement to the
contrary, *.
SECTION 4.6. Cooperation. The parties agree to cooperate and
negotiate in good faith in the determination of the amounts and adjustments
provided for in Sections 4.4 and 4.5.
SECTION 4.7. Maintenance of Fees. *
*Material omitted and filed separately with the SEC pursuant to a request for
Confidential Treatment.
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ARTICLE V.
CERTAIN COVENANTS
SECTION 5.1. Information. During the C&S Purchase Period, C&S agrees
to provide Grand Union, in addition to the pricing reports provided for in
Section 3.3, 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, * Grand Union agrees to
provide C&S with such information and with such access to the Montgomery
Facility as C&S may reasonably request in order to monitor compliance by Grand
Union with the provisions of, and to carry out the transactions contemplated
by, this Agreement.
SECTION 5.2. Reclamation. *
SECTION 5.3. Sublease; Assignment.
(a) C&S shall have the right to request that Grand Union enter into
a sublease of the Montgomery Facility (the "Sublease") upon the terms set forth
in Exhibit K. Grand Union will agree to indemnify C&S against any environmental
liabilities with respect to the leased premises arising out of a release of
hazardous substances occurring prior to the effective date of the Sublease. The
Sublease shall take effect no later than 90 days following the date of C&S'
request that the parties enter into a Sublease. Grand Union represents and
warrants to C&S that a true and correct copy of the Lease for the Montgomery
Facility (the "Lease"), as in effect on the date of this Agreement, is appended
to this Agreement as Exhibit A. During the Term, Grand Union agrees to comply
with the terms of the Lease (except for any non-compliance that would not
materially affect C&S' rights or obligations hereunder) and agrees not to amend,
modify or extend that Lease without the prior written consent of C&S, which
consent shall not be unreasonably withheld, delayed or conditioned.
(b) C&S shall have the right to request that Grand Union's rights,
interests and obligations under the Lease (including for this purpose the
Sublease) be assigned to C&S, effective as of a date not earlier than the fourth
anniversary of
*Material omitted and filed separately with the SEC pursuant to a request for
Confidential Treatment.
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the date of this Agreement. C&S shall give Grand Union notice of such request
not later than 90 days prior to the date on which such assignment (the
"Assignment") is to be effective as aforesaid, specifying such date, provided
that no such notice shall be given, and no assignment shall be effective, unless
the Sublease is in effect at each such time. Grand Union and C&S agree to
negotiate in good faith with respect to the terms of the Assignment, taking into
consideration the purposes of this Agreement and the terms of the Sublease.
(c) Within 45 days following the commencement of the Term, Grand
Union shall obtain (i) from the landlord under the Lease a Consent and Waiver in
substantially the form appended to this Agreement as Exhibit F and (ii) all
lender approvals to the Sublease and the Assignment. The Sublease and the
Assignment shall by their terms be subject to the provisions of this Agreement.
(d) C&S agrees that, if the Assignment becomes effective, C&S will
not (i) further assign its rights or interests in and to the Assignment or the
Lease, (ii) cease operations at or otherwise close the Montgomery Facility or
(iii) enter into any agreement providing for any action referred to in clauses
(i) or (ii), unless it shall have offered Grand Union the right to re-acquire
the Lease upon the terms upon which the Assignment was made.
SECTION 5.4. *
SECTION 5.5. 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 5.6. 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
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.
*Material omitted and filed separately with the SEC pursuant to a request for
Confidential Treatment.
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SECTION 5.7. *
SECTION 5.8. Affirmation and Acknowledgment. Grand Union affirms and
acknowledges that (i) 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 3.5 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 (ii) upon a failure of Grand
Union to make any payment when due under this Agreement or either of the C&S
Supply Agreements (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 of the C&S Supply Agreements, 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), to set off and apply any and
all amounts owed by C&S to Grand Union under this Agreement, including without
limitation 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 5.8.
ARTICLE VI.
MONTGOMERY INVENTORY
SECTION 6.1. Initial Inventory. Grand Union Merchandise will be
shipped to Grand Union Stores *. In the event that any portion of such
Merchandise is identified as being unsalable *. The parties agree that for
purposes of payment and
*Material omitted and filed separately with the SEC pursuant to a request for
Confidential Treatment.
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purchase terms under this Agreement, shipments of Merchandise to Grand Union
Stores from the date of commencement of this Agreement *
SECTION 6.2. Inventory Administrative Charge. Grand Union agrees to
minimize excess inventory under this Agreement at all times. Grand Union will
pay an annual inventory administrative charge at a rate per annum equal to * In
determining charges under this Section 6.2, appropriate allocations will be made
to reflect proportionate inventory drawn in the event that C&S is serving other
Persons at the Montgomery Facility pursuant to Section 7.1 hereof.
SECTION 6.3. Inventory Limits. During the Grand Union Purchase
Period, C&S shall not be required to reimburse Grand Union, pursuant to Section
2.1(a), for purchases of inventory by Grand Union to the extent the respective
week's C&S inventory balance exceeds *. During the C&S Purchase Period, the
inventory purchased and kept for Grand Union will not exceed *. For purposes of
this Section 6.3, inventory shall be measured as of *. Prior
to commencement of the Term, Grand Union and C&S shall analyze the categories of
inventory at the Montgomery Facility and measure each of the following
categories: (i) "turn" inventory, (ii) "all other" inventory, *. Based upon
this analysis, Grand Union and C&S shall establish the amount of inventory in
each category required by Grand Union for its everyday business needs and its
seasonal business needs. The parties will measure "all other" inventory on a
weekly basis, and *
The following example illustrates this analysis:
*
*Material omitted and filed separately with the SEC pursuant to a request for
Confidential Treatment.
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* Grand Union will
communicate to C&S its requirements and needs in these areas on a basis
consistent with the practices established in the C&S Supply Agreement dated June
15, 1995.
Grand Union has advised C&S that as of December 1995, "turn"
inventory amounts to * and "all other" inventory amounts to *. Within 90 days
of commencement of the Term, the parties shall recalculate the levels of
"turn" inventory and "all other" inventory and adjust such inventory levels
accordingly. The inventory levels are based upon annual estimated inventory
purchases by Grand Union of *. If the annual level of inventory
purchases by Grand Union changes during the Term of the Agreement, the
inventory levels provided for in Section 6.3 shall change by mutual agreement of
the parties.
C&S agrees that, upon delivery of the Merchandise, it will *.
Notwithstanding the foregoing, the provisions of this Section 6.3
shall be reevaluated and adjusted as appropriate and on a periodic basis to take
into account other business serviced by C&S pursuant to Section 7.1.
ARTICLE VII.
ADDITIONAL BUSINESS
SECTION 7.1. Additional Business.
(a) Grand Union agrees that, if the Changeover Date has occurred,
C&S may utilize the Montgomery Facility to supply food products and other
merchandise to supermarkets and food stores other than Grand Union. C&S agrees
that any such increase in the utilization of the Montgomery Facility shall not
interfere
*Material omitted and filed separately with the SEC pursuant to a request for
Confidential Treatment.
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in any significant respect with C&S' obligations to Grand Union under this
Agreement. In the event of any conflict (as to, for example, scheduling or
allocation of employees) between the requirements of Grand Union under this
Agreement and the requirements of or relating to other business serviced by C&S
pursuant to this Section 7.1, the *
(b) Physical inventories shall be taken *. The costs of such
physical inventories shall be allocated to Grand Union and C&S based upon
the respective amounts of inventory held for Grand Union and for such other
customers.
(c) During the C&S Purchase Period, for purposes of Grand Union's
annual store LIFO calculation, C&S will supply Grand Union *
ARTICLE VIII.
TERMINATION
SECTION 8.1. Termination by C&S. C&S may terminate this Agreement
(i) in the event of a default by Grand Union under Section 3.5 which remains
uncured * 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 materially breaches its other obligations under
this Agreement and such breach is curable and remains uncured after * 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 either of the C&S Supply Agreements pursuant to Section 7.01 thereof.
Notwithstanding the foregoing, in the event that Grand Union defaults under
Section 3.5 * C&S may, on the occurrence of * terminate this Agreement
immediately upon notice to Grand Union. In the event of termination by C&S
under this Section 8.1, Grand Union shall pay to C&S, as full and liquidated
damages (including damages for lost profits), the applicable termination fee
set forth in this Article VIII.
*Material omitted and filed separately with the SEC pursuant to a request for
Confidential Treatment.
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SECTION 8.2. Termination by Grand Union. Grand Union may terminate
this Agreement (i) in the event of a default by C&S under Section 3.5 which
remains uncured for * of written notice thereof from Grand Union (subject to
the provisions of such Section for arbitration), (ii) in the event that C&S
materially breaches its other obligations under this Agreement and such breach
is curable and remains uncured after * written notice of such breach from
Grand Union, (iii) upon the occurrence of an Event of Insolvency with respect
to C&S (provided, however that Grand Union shall not terminate this Agreement
upon the occurrence of an Event of Insolvency in the event that C&S is
otherwise in compliance with the terms of this Agreement and C&S provides
adequate assurance of future performance under this Agreement) or (iv) upon
the termination of either of the C&S Supply Agreements pursuant to Section 7.02
thereof. Notwithstanding the foregoing, in the event that C&S defaults under
Section *, or if a Service Level Breach occurs under Section *, Grand Union
may, on the occurrence of any subsequent default under Section 3.5 or any
subsequent Service Level Breach, as the case may be, occurring in the same
Contract Year, terminate this Agreement immediately upon notice to C&S.
Grand Union may also terminate this Agreement *. In the event that
Grand Union exercises its rights to terminate *, Grand Union * shall pay to C&S
the applicable Termination Fee as full and liquidated damages to C&S. Grand
Union shall pay the Termination Fee and all amounts due and owing C&S resulting
from the inventory repurchase upon the expiration of the *. As used herein,
"Termination Fee" shall mean that amount equal to *
The following example illustrates the calculation of the Termination
Fee:
*
*Material omitted and filed separately with the SEC pursuant to a request for
Confidential Treatment.
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*
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 *.
Nonetheless, the parties believe that the termination fee provisions set forth
above are 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).
Notwithstanding any of the foregoing provisions of this Article VIII
or any other provision of this Agreement to the contrary, (i) no Termination Fee
(or any damages) shall be payable by Grand Union as a result of or in connection
with any termination of this Agreement (x) as a result of the failure of Grand
Union to obtain any consent or other document provided for in Section 2.4(c) or
5.3(c) or the failure to obtain any such consent or document within the period
required therefor or (y) pursuant to clause (iv) of Section 8.1 and (ii) no
damages shall be payable by either party hereto on account of any breach of this
Agreement (other than breach of a payment obligation) that results from an Event
of Force Majeure.
SECTION 8.3. Termination of Sublease. Upon any termination of this
Agreement pursuant to Section 8.1 or 8.2, the Sublease, if any, shall
automatically terminate at the same time.
SECTION 8.4. Negotiations; Interim Period.
(a) The parties shall meet at least * provided for in
Section 8.1(ii) or Section 8.2(ii) 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.
*Material omitted and filed separately with the SEC pursuant to a request for
Confidential Treatment.
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SECTION 8.5. 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 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 IX.
REPRESENTATIONS AND WARRANTIES
SECTION 9.1. 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 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.
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SECTION 9.2. Representation 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.
(a) 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, other than any consents (including consent of any
lender) necessary in connection with the Sublease and the Assignment, which
consents will be obtained in accordance with Sections 2.4(c) and 5.3(c). 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 X.
GENERAL PROVISIONS
SECTION 10.1. 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 10.2. Expenses. Except as otherwise specified in this
Agreement, all costs and expenses, including, without limitation, fees and
disbursements of counsel, financial advisors
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and accountants, incurred in connection with this Agreement and the transactions
contemplated hereby shall be borne by the party incurring the same.
SECTION 10.3. 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 8.5.
SECTION 10.4. 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 (such telecopy transmission to be
effective only if made by confirmed transmission to the telecopier number set
forth below for such party) 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 10.4);
(a) If to Grand Union:
William A. Louttit
Executive Vice President and Chief Operating Officer
The Grand Union Company
20 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) 275-6700
Telecopier: (802) 257-6620
SECTION 10.5. Binding Effect; Assignment.
(a) 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 (w)
Grand Union is not in default under this Agreement, (x) Grand Union shall
assign, and the assignee shall assume, all such rights and obligations,
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(y) the assignment is to a Person or Persons who are acquiring all or
substantially all of Grand Union's business or assets, 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 with 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.
(b) The provisions of subsection (a) of this Section 10.5 shall not
prohibit the assignment by Grand Union of its duties, obligations, rights and
interests under this Agreement to the lenders (or an agent therefor) under the
Bank Agreement as security for obligations of Grand Union thereunder or under
agreements or instruments provided for therein, and C&S hereby consents to any
such assignment; provided, however, that such C&S consent is expressly
conditioned upon the assignee's assumption of all of Grand Union's duties and
obligations under this Agreement. C&S agrees to execute and deliver such further
consents or other instruments as Grand Union or any such lender may reasonably
request to confirm or implement any such assignment, provided that (i) the
rights and interests of C&S hereunder are not thereby affected in any material
respect and (ii) such other consent or instrument expressly acknowledges the
assignee's assumption of Grand Union's duties and obligations under this
Agreement.
SECTION 10.6. 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 10.7. 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 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 10.7, and
(iii) in the event that such protective order or other remedy is not obtained,
or the other party waives
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compliance with this Section 10.7, 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. The
provisions of clauses (i) and (ii) above shall not preclude a party from
disclosing Information to its Representatives or to its lenders or their
Representatives (provided that each such Representative shall be advised of the
confidential nature of such Information) or from disclosing Information to or
filing Information within any governmental authority or agency with jurisdiction
over such party. Each party agrees and acknowledges that remedies at law for any
breach of its obligations under this Section 10.7 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 10.8. 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 (except for the limited purpose specified in
Section 2.1(a)) or contractors of the other party.
SECTION 10.9. 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.
SECTION 10.10. 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.
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SECTION 10.11. 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 10.12. 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 10.13. Arbitration.
(a) Any matter required to be submitted to arbitration pursuant to
Section 3.5 of this Agreement shall be subject to this Section 10.13. 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 10.13; (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 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 mater 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 conducted as promptly as
practicable.
(e) The provisions of this Section 10.13 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 3.5 of
this Agreement.
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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: /s/ William A. Louttit
---------------------------------
Name: William A. Louttit
Title: Executive Vice President
Chief Operating Officer
C&S WHOLESALE GROCERS, INC.
By: /s/ William C. Hamlin
---------------------------------
Name: William C. Hamlin
Title: Senior Vice President
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EXHIBITS
Exhibit A - Montgomery Lease Agreement dated September 29, 1989
Exhibit B - Existing Grand Union Stores
Exhibit C - Merchandise
Exhibit D - Operating Expenses and Other Costs
Exhibit E - Forms of Notices
Exhibit F - Form of Landlord Consent
Exhibit G - Overage/Shortage Policy (eliminated by agreement of the parties)
Exhibit H - Montgomery Facility Slots
Exhibit I - Montgomery Facility Storage (eliminated by agreement of the
parties)
Exhibit J - Assumptions and Information Relating to Operating
Expenses and Other Costs
Exhibit K - Terms of Sublease
Exhibit L - *
* Material omitted and filed separately with the SEC pursuant to a request for
Confidential Treatment.
<PAGE>
EXHIBIT A
THIS LEASE, dated the 29TH day of September 1989, between MACK BRACKEN
ROAD PROPERTIES LIMITED and MONTGOMERY '89 ASSOCIATES L.P., doing business as
BRACKEN '89 JOINT VENTURE, with offices at c/o The Mack Company, 370 West
Passaic Street, Rochelle Park, New Jersey 07662 (hereinafter referred to as
the "Landlord"); and THE GRAND UNION COMPANY, with offices at 201 Willowbrook
Boulevard, Wayne, New Jersey 07470-0966 (hereinafter referred to as the
"Tenant").
W I T N E S S E T H:
ARTICLE I
DEMISE OF PREMISES
SECTION 1.01. The Landlord, for and in consideration of the rents to be
paid and of the covenants and agreements hereinafter contained to be kept and
performed by the Tenant, hereby demises and leases unto the Tenant, and the
Tenant hereby hires and takes from the Landlord, for the term and the rent,
and upon the covenants and agreements hereinafter set forth, the premises
situated in the Town of Montgomery, County of Orange, State of New York,
commonly known as Bracken Road, Montgomery, New York, and identified on the
tax assessment map of said Town as Section 30, Lot 65.2 in Block 1, and about
to be identified as Section 30, Lot 71 in Block 1, as more particularly
described on Exhibit A attached hereto and made a part hereof (such premises
together with the Building as hereinafter defined being hereinafter referred
to as the "Demised Premises").
The Landlord and the Tenant covenant and agree as follows:
ARTICLE II
TERM OF LEASE
SECTION 2.01. The term of this Lease and the demise of the Demised
Premises shall be for twenty (20) years beginning on September 29, 1989 and
ending at 12:00 midnight on September 28, 2009 or on such earlier or later
termination as hereinafter set forth (which term is hereinafter called the
"Term").
ARTICLE III
RENT
SECTION 3.01. The Tenant shall pay to the Landlord, during the Term
without counterclaim, deduction or setoff, rent in the amount of Twenty-seven
Million Nine Hundred Twelve Thousand Nine Hundred Twenty-five and 00/100
($27,912,925.00) Dollars, payable in such coin or currency of the United
States of America as at the time of payment shall be legal tender for the
payment of public and private debts.
SECTION 3.02. The rent shall accrue at the following yearly and monthly
rates:
COPR. 1989 DOLLINGER & DOLLINGER, P.A.
<PAGE>
YEARS YEARLY RENT MONTHLY RENT
1-10 $1,292,000.00 $107,666.67
11-15 $1,428,260.00 $119,021.67
16-20 $1,570,325.00 $130,860.42
The aforesaid monthly rents shall be payable in advance on the first day of each
calendar month during the Term, except that a proportionately lesser sum may be
paid for the first and last months of the Term of this Lease if the Term
commences on a date other than the first day of the month, in accordance with
the provisions of this Lease hereinafter set forth. The rent shall be payable
at the office of the Landlord, at the address above set forth, or as may
otherwise be directed by notice from the Landlord to the Tenant.
SECTION 3.03. The Tenant shall, and will, during the Term well and truly
pay, or cause to be paid, to the Landlord, the monthly payments of rent as
herein provided and all other sums that may become due and payable by the
Tenant, hereunder, at the time and in the manner herein provided, without
counterclaim, offset or deduction; and all other sums due and payable by the
Tenant hereunder may, at the Landlord's option, be deemed to be, and treated as,
additional rent, and added to any fixed rent due and payable by the Tenant
hereunder, and, in the event of nonpayment of such other sums, the Landlord
shall have all the rights and remedies herein provided for in the case of the
nonpayment of rent, or of a breach of any covenant to be performed by the
Tenant.
SECTION 3.04. The rent payable by the Tenant pursuant to this Lease is
intended to be net to the Landlord, and all other charges and expenses imposed
upon the Demised Premises or incurred in connection with its use, occupancy,
care, maintenance, operation and control, including but not limited to the
charges and expenses payable pursuant to Articles VII and VIII of this Lease,
shall be paid by the Tenant, excepting liens resulting from acts or omissions of
the Landlord and other payments to be paid or obligations undertaken by the
Landlord as specifically provided in this Lease.
ARTICLE IV
THE DEMISED PREMISES
SECTION 4.01. The Demised Premises consists of a building of approximately
225,000 gross rentable square feet (which building is hereinafter called the
"Building") previously erected thereon and approximately 12.066 acres of land,
which the Tenant acknowledges that it has inspected and is fully familiar with
its condition and is leasing the same in an "AS IS" condition.
SECTION 4.02. The Demised Premises hereinabove described constitutes a
self-contained unit and nothing in this Lease shall impose upon the Landlord any
obligation to provide any services for the benefit of the Tenant, including but
not limited to water, gas, electricity, heat or janitorial, unless and to the
extent expressly provided in this Lease.
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ARTICLE V
USE
SECTION 5.01. The Demised Premises may be used for any lawful use by the
Tenant.
SECTION 5.02. The aforesaid permitted use does not permit the stacking of
merchandise and/or materials against walls or columns, nor does it permit the
hanging of equipment from (or otherwise loading) the roof or structural members
of the Building except in accordance with the standards set forth with respect
to good and sound engineering practices. Notwithstanding anything contained
herein to the contrary, any damage or wear and tear to the walls, columns, roof
or structural members of the Building arising out of or in connection with any
of the activities described in this Section 5.02 shall not be deemed to be
ordinary wear and tear and shall be repaired, restored and/or replaced by Tenant
at its sole cost and expense.
ARTICLE VI
QUIET ENJOYMENT
SECTION 6.01. The Landlord covenants that if, and so long as, the Tenant
pays the rent, and any additional rent as herein provided, and performs the
covenants hereof, the Landlord shall do nothing to affect the Tenant's right to
peaceably and quietly have, hold and enjoy the Demised Premises for the Term
herein mentioned, subject to the provisions of this Lease.
ARTICLE VII
ADDITIONAL RENT, TAXES, ASSESSMENTS,
WATER RATES, CHARGES, ETC.
SECTION 7.01. The Tenant shall pay, before any interest or penalties accrue
thereon, all real estate taxes, water and sewer rates and charges and all other
governmental charges imposed during the Term on the Demised Premises or on the
rents, as such, payable to the Landlord hereunder, and on request shall exhibit
to the Landlord receipted bills or other proof of payment. There shall be
apportioned any tax or charge relating to the fiscal year in which the Term of
this Lease terminates. The Tenant shall be responsible for any tax or charge
relating to the fiscal year in which the Term of this commenced.
SECTION 7.02. The Tenant shall not be required to pay any estate,
inheritance, devolution, succession, transfer, legacy or gift tax charged
against the Landlord or the estate or interest of the Landlord in the Demised
Premises or upon the right of any person to succeed to the same or any part
thereof by inheritance, succession, transfer or gift, nor any capital stock tax
or corporate franchise tax incurred by the Landlord, nor any income tax upon or
against the income of the Landlord (including any rental income derived by the
Landlord from the Demised Premises).
SECTION 7.03. The Tenant shall pay all assessments that may be imposed upon
the Demised Premises by reason of any specific public improvement (including but
not limited to
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assessments for street openings, grading, paving and sewer installations and
improvements) except that if by law any such special assessment is payable, or
may, at the option of the taxpayer, be paid, in installments, the Tenant may,
whether or not interest accrues on the unpaid balance thereof, pay the same and
any accrued interest on any unpaid balance thereof in installments as each
installment becomes due and payable, but in any event before any penalty or cost
may be added thereto for nonpayment of any installment or interest. Any such
benefit, assessment or installment thereof relating to a fiscal period in which
the Term of this Lease begins or ends shall be apportioned.
SECTION 7.04. The Tenant, in its name or the Landlord's name shall have the
right to contest, or review, by appropriate proceedings, in such manner as it
may deem suitable, at its own expense, and without expense to the Landlord, any
tax, assessment, water and sewer rents or charges, or other charges payable by
the Tenant pursuant to this Lease, and upon the request of the Tenant, the
Landlord will protest any tax, assessment, water or sewer rent or charge, or any
other charge payable by the Tenant pursuant to this Lease, which shall be
contested or reviewed by the Tenant. Any refund resulting from such contest or
review shall be assigned to and belong to the Tenant and shall be paid to the
Tenant promptly upon its receipt by the Landlord. If the refund relates to a
tax year that is apportioned between the Landlord and the Tenant, the refund
shall be apportioned between the Landlord and the Tenant.
ARTICLE VIII
INSURANCE
SECTION 8.01. During the Term, Tenant shall maintain the following
insurance, insuring the Landlord and ground lessor, if any, and any
mortgagee(s), as their respective interests may appear:
(A) Insurance against damage to the Building by all risks of direct
physical loss (at Landlord's option to include earthquake and flood) with
the policy to contain either the agreed amount endorsement or a replacement
cost endorsement, in amounts sufficient to prevent the Landlord from
becoming a co-insurer, but in no event less than one hundred (100%) percent
of the Building's then replacement value. Policy to include a contingent
liability endorsement and/or demolition and increased cost of construction
endorsement in order for the Building to be constructed in accordance with
all requirements and regulations which may be applicable at the time of
loss or damage, of all governmental agencies having jurisdiction over the
Building and construction of such Building.
(B) If appropriate, boiler and machinery insurance coverage for all
eligible objects, including pressure vessels and air conditioning
equipment, with the electrical apparatus clause, with such limits as may be
reasonably necessary to properly insure the values at risk in the Building.
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(C) Plate glass insurance. At the option of the Tenant, Tenant may elect
to self-insure for plate glass.
(D) The policies of insurance provided for herein shall be from a company
rated in the A.M. Best Key Rating Guide with a policyholder's service
rating of A+ and a financial rating of XV. The company shall be licensed by
the State of New York and a certificate (s) evidencing the existence of
such policy shall be delivered to the Landlord, together with evidence of
the payment of the premiums therefor, not less than fifteen (15) days prior
to the commencement of the Term. At least fifteen (15) days prior to the
expiration or termination date of any policy, the Tenant shall deliver a
renewal or replacement policy, or certificate (s) evidencing the existence
thereof, to Landlord together with proof of the payment of the premium
therefor.
All insurance maintained pursuant to this Article VIII may be effected by
blanket insurance policies.
SECTION 8.02. The Tenant shall provide and keep in force, during the Term
of this Lease, for the benefit of the Landlord and ground lessor, if any,
comprehensive general liability insurance policies in standard form (containing
the so-called "occurrence clause"), insuring the Landlord and Landlord's
managing agent as an additional named insured with respect to ownership,
operation, maintenance, use and control against liability for injury or damage
to persons or property in or upon the Demised Premises during the Term of this
Lease, which shall include a contractual liability endorsement. Said policies
shall be written by insurance companies licensed to do business in the State of
New York and shall cover the entire Demised Premises as well as any sidewalk in
front of the same, and shall be in the minimum amount of Three Million and
00/100 ($3,000,000.00) Dollars.
SECTION 8.03. Tenant represents, said representation being specifically
designed to induce the Landlord to execute this Lease, that Tenant's personal
property, fixtures, betterments, improvements, goods and inventory at the
Demised Premises and any other items which Tenant may bring to the Premises or
which may be under Tenant's care, custody and control which may be subject to
any claim for damages or destruction shall never exceed the amount of insurance
which Tenant is required to carry pursuant to this Lease and for which Tenant
shall name the Landlord as an additional named insured as its interest may
appear. If at any time the value of the aforesaid exceeds the amount of such
insurance, Tenant covenants to so notify Landlord and at the same time to
immediately increase the amount of insurance required to be carried pursuant to
Section 8.01 to an amount sufficient to cover the aforesaid to preclude any
liability on Landlord's or Landlord's ground lessor's or mortgagee's part to
Tenant. Should Tenant fail to do so, or fail to maintain insurance coverage
adequate to cover the aforesaid, then Tenant shall not be in default hereunder
unless Tenant makes a claim against Landlord for damages or destruction which
would have been covered by insurance but for Tenant's failure to meet its
obligations as set forth in this Article VIII.
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SECTION 8.04. Tenant is and shall be in exclusive control and
possession of the Demised Premises as provided herein, and Landlord shall not in
any event whatsoever be liable for any injury or damage to any property or to
any person happening on or about the Demised Premises, nor for any injury or
damage to the Demised Premises, nor to any property of Tenant, or of any other
person contained therein.
Tenant shall indemnify and save Landlord harmless against and
from all liabilities, claims, suits, fines, penalties, damages,
losses, fees, costs and expenses (including reasonable attorneys'
fees) which may be imposed upon, incurred by or asserted against
Landlord by reason of:
(A) Any work or thing done in, on or about the Demised
Premises or any part thereof by or on behalf of Tenant;
(B) Any use, occupation, condition, operation of the Demised
Premises or any part thereof or of any street, alley, sidewalk, curb,
vault, passageway or space adjacent thereto or any occurrence on any
of the same on the part of Tenant;
(C) Any act or omission on the part of Tenant or any subtenant
or any employees, licensees or invitees;
(D) Any accident, injury (including death) or damage to any
person or property occurring in, on or about the Demised Premises, or
any part thereof or in, on or about any street, alley, sidewalk, curb,
vault, passageway or space adjacent thereto alleged to have been
caused by Tenant's acts or omissions; and
(E) Any failure on the part of Tenant to perform or comply with
any of the covenants, agreements, terms or conditions contained in
this Lease, or recording of this Lease. The provisions of this
Paragraph shall survive the expiration or earlier termination thereof
for as long as any applicable statute of limitations.
SECTION 8.05. All losses paid under the policy or policies carried pursuant
to Section 8.01 shall be adjusted by the Landlord and Tenant and the proceeds
thereof shall be payable to the Landlord, to be held in trust to be used for
repair and restoration of the Demised Premises by the Tenant. If the proceeds
of insurance are not sufficient to cover the cost of restoration as required by
Tenant, then Tenant shall be responsible for the cost of any deficiency. Each
insurance policy carried by Tenant and insuring the Demised Premises and its
fixtures and contents against loss by fire, water and causes covered by standard
extended coverage, shall be written in a manner so as to provide that the
insurance company waive all rights of recovery by way of subrogation against
Landlord in connection with any loss or damage covered by such policies.
Neither party shall be liable to the other for any loss or damage caused by
fire, water or any of the risks enumerated in standard extended coverage
insurance, provided such insurance was obtainable at the time of such loss or
damage. If such insurance policies are obtainable only by the payment of an
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additional premium charge, the same shall be obtained and such additional
premium paid for by the Tenant. If the release of either Landlord or Tenant, as
set forth in the third sentence of this Paragraph, shall contravene any law with
respect to exculpatory agreements, the liability of the party in question shall
be deemed not released but shall be deemed secondary to the latter's insurer.
SECTION 8.06. The Tenant shall also furnish insurance for such other
hazards and in such amounts as the Landlord may reasonably require and as at the
time are commonly insured against with respect to buildings similar in
character, general location and use and occupancy to the Demised Premises in
relative amounts normally carried with respect thereto. The Landlord reserves
the right at any time and from time to time to require that the limits for any
of the insurance required pursuant to Article VIII be increased to limits as at
the time are reasonable with respect to Tenant's use and to buildings similar in
character, general location and use and occupancy to the Demised Premises.
SECTION 8.07. Landlord shall maintain rent insurance against the loss of
rent and additional rent for no less than one (1) year as provided herein, and
Tenant shall reimburse Landlord for the entire cost of said rent insurance,
promptly when billed, as additional rent.
SECTION 8.08. All policies required pursuant to this Article VIII shall
contain provision for thirty (30) days' written notice by registered mail to the
Landlord of any change or cancellation of said policy.
ARTICLE IX
REPAIRS
SECTION 9.01. The Tenant shall keep the Demised Premises in good condition
and repair, and shall redecorate, paint and renovate the Demised Premises as may
be necessary to keep them in good condition and repair and good appearance. The
Tenant shall keep the Demised Premises and all parts thereof in a clean and
sanitary condition and free from trash, inflammable material and other
objectionable matter. The Tenant shall keep the sidewalks and roadways forming
part of the Demised Premises clean and free of obstructions, snow and ice.
Throughout the Term of this Lease, the Tenant, at its sole cost and expense,
will take good care of the Demised Premises and the sidewalks and curbs
adjoining the Demised Premises and will keep the same in good order and
condition and make all necessary repairs thereto, structural and nonstructural,
interior and exterior, ordinary and extraordinary, foreseen and unforeseen.
The Tenant shall replace, at the Tenant's expense, all glass in and on the
Demised Premises which may become broken after the date of Tenant's occupancy.
When used in this Article, the term "repairs" shall include all necessary
replacements and renewals. All repairs made by Tenant shall be equal in quality
and class to the original work. The Tenant shall quit and surrender the Demised
Premises at the end of the Term in as good condition as the reasonable use
thereof will permit and in compliance with the requirements stated herein and in
a "broom-clean" condition, and shall, by way of example and not by way of
limitation, clean and reseal all concrete floors.
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SECTION 9.02. The Tenant shall not make any alterations, additions or
improvements to the Demised Premises without the prior written consent of the
Landlord, which Landlord shall not unreasonably withhold. In making its
determination, Landlord shall consider, among other considerations, the
standards set forth with respect to good and sound engineering practices.
Notwithstanding the provisions of this Section 9.02, Landlord's prior written
consent shall not be required for any alterations, additions or improvements
which, in the aggregate, do not exceed the cost of Five Hundred Thousand and
00/100 ($500,000.00) Dollars per lease year, and which do not adversely affect
any structural portion of the Building or any Building mechanical, electrical,
HVAC, or plumbing system. All erections, alterations, additions and
improvements, whether temporary or permanent in character, which may be made
upon or to the Demised Premises either by the Landlord or the Tenant, except
furniture or movable trade fixtures installed at the expense of the Tenant,
shall be the property of the Landlord and shall remain upon and be surrendered
with the Demised Premises as a part thereof at the expiration or sooner
termination of this Lease, without compensation to the Tenant; or, in the
alternative and at the direction of Landlord, Tenant shall remove all or so much
of the property therefrom as directed or such property shall be conclusively
deemed abandoned and may be removed by Landlord, and Tenant shall reimburse
Landlord for the cost of such removal. Landlord may have any such property
stored at Tenant's risk and expense. Landlord, at Landlord's option, may require
as a condition of its consent, that Tenant remove, at the expiration or sooner
termination of the Lease Term, any erections, alterations, additions or
improvements made by Tenant, and restore the Demised Premises to a substantially
similar condition to that in existence as of the commencement date of the Lease,
and that the Tenant use contractors approved by Landlord.
ARTICLE X
CASUALTY
SECTION 10.01. If the Demised Premises or the Building is damaged or
destroyed by fire, explosion, the elements or otherwise during the Term so as to
render the Demised Premises wholly untenantable or unfit for occupancy, or
should the Demised Premises be so badly injured that the same cannot be repaired
within one hundred eighty (180) days from the happening of such injury, then,
and in such case, the Term hereby created shall, at the option of either the
Landlord or the Tenant, terminate upon the giving of a notice of termination.
If a notice of termination is given, the Term of this Lease shall terminate
effective as of the date of such damage or destruction, and the Tenant shall
immediately surrender the Demised Premises and all the Tenant's interest therein
to the Landlord, and pay rent to the time of such damage or destruction, and the
Landlord may re-enter and repossess the Demised Premises discharged from this
Lease and may remove all parties therefrom.
SECTION 10.02. Should the Demised Premises be rendered untenantable and
unfit for occupancy, but yet be repairable within one hundred eighty (180) days
from the happening of said injury, the Landlord will make the proceeds of
insurance available to Tenant so that Tenant may repair the Demised Premises
with reasonable speed, and the rent shall not
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accrue after said injury and while repairs are being made, provided Landlord
receives the proceeds of rent insurance, but shall recommence immediately after
such repairs shall be completed.
SECTION 10.03. If the Demised Premises shall be so slightly injured as not
to be rendered untenantable and unfit for occupancy, the Tenant shall repair the
same with reasonable promptness and the rent accrued and accruing shall not
cease or terminate. The Tenant shall immediately notify the Landlord in case of
fire or other damage to the Demised Premises.
SECTION 10.04. Notwithstanding anything to the contrary in Section 10.01,
neither the Landlord nor the Tenant shall have any option to terminate this
Lease upon the happening of an injury referred to in Section 10.01 provided that
the happening of such injury occurs at a time when the unexpired Term of this
Lease is one (1) year or more. In such event, the Landlord shall make the
proceeds of insurance available to the Tenant and the Tenant shall repair the
Demised Premises, even to the extent of rebuilding the Building if necessary.
The Tenant shall promptly enter and repair the Demised Premises with reasonable
speed, making due allowance for conditions beyond the Tenant's control,
including, but not limited to time lost in adjusting insurance claims and
strikes, and the rent shall not accrue after such injury and while repairs are
being made, provided Landlord receives the proceeds of rent insurance, but shall
recommence immediately after said repairs shall be completed. Landlord shall
have no obligation to repair or restore Tenant's improvements. Notwithstanding
anything contained herein to the contrary, in the event the happening of an
injury referred to in Section 10.01 occurs when the unexpired Term of this Lease
is less than one (1) year and Landlord exercises its option to terminate this
Lease, then and in that event, Tenant can negate Landlord's termination by
exercising its option to renew in accordance with Article XXXII.
SECTION 10.05. Prior to the performance of any work by Tenant pursuant
to the provisions of this Article X, Tenant shall first submit plans and
specifications to Landlord and Landlord shall have the right to review and
approve said plans and specifications and to require modifications thereto. All
work shall be performed by Tenant in accordance with good and sound engineering
practices and in compliance with all laws, ordinances and regulations.
SECTION 10.06. Notwithstanding anything contained to the contrary in this
Article X, in the event the proceeds of insurance are not sufficient to cover
the cost of restoration, the Tenant shall be responsible for the cost of any
deficiency.
ARTICLE XI
CONDEMNATION
SECTION 11.01. If, during the Term, twenty-five (25%) percent or more of the
area of the Demised Premises shall be taken under any power of eminent domain or
condemnation then, at the option of the Tenant, to be exercised in writing
within thirty (30) days of the taking of title thereto, this Lease shall expire
within thirty (30) days of the date of such notice and the rent herein reserved
shall be apportioned as of said date. However, if the Tenant does not exercise
the afore-
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mentioned option, or if the taking does not deprive the Tenant of at least
twenty-five (25%) percent of the area of the Demised Premises, this Lease shall
not expire but the rent shall be equitably apportioned. If the Landlord and the
Tenant fail to agree upon an equitable apportionment, the rent for the Building,
after such taking, shall be determined in accordance with the Commercial Rules
of the American Arbitration Association, in the City of New York, New York, and
the arbitrator shall be empowered to assess the costs and expenses of the
proceedings as part of the determination. Pending such determination the Tenant
shall pay, on account of the rent, such proportion of the rent reserved in this
Lease as the total area of the Building after the taking bears to the total area
of the Building before the taking, subject to adjustment in accordance with the
arbitrator's award. If the Landlord can, after such taking, construct an
addition to the remaining Building so as to restore all of the Building area and
Building facilities theretofore taken, the Landlord shall, subject to the
adequacy of the condemnation award and to the mortgagee making the same
available to the Landlord, promptly construct such addition and restore such
facilities so taken and upon the completion of such restoration, the full rent
reserved by this Lease shall be reinstated, as of the date of such restoration,
and, if the Tenant is able to occupy and use the Building, the proportionate
rent shall be paid by the Tenant as herein provided, during the period between
the taking and the restoration of the Building and facilities. No part of any
award shall belong to the Tenant except that nothing contained herein is
intended to affect or limit the Tenant's claim for fixtures or other
improvements owned by Tenant provided the same does not diminish the Landlord's
award. It is expressly understood and agreed that the provisions of this
Article XI shall not be applicable to any condemnation or taking for
governmental occupancy for a limited period of time.
ARTICLE XII
COMPLIANCE WITH LAWS, ETC.
SECTION 12.01. The Tenant shall not do or permit anything to be done in
the Demised Premises which shall constitute a public nuisance or which will
conflict with the regulations of the Fire Department or with any insurance
policy upon said improvements or any part thereof.
SECTION 12.02. The Tenant shall, at its own expense, obtain all necessary
environmental and operating permits and comply with all requirements of law and
with all ordinance or orders, rules and regulations of any State, Municipal or
other public authority affecting the Demised Premises and with all requirements
of the Fire Insurance Exchange or similar body, and of any liability insurance
company insuring the Landlord against liability for accidents in or connected
with the Demised Premises including, but not limited to laws, ordinance, orders,
rules and regulations which apply to the interior or exterior of the Demised
Premises, the structural or nonstructural parts thereof, and to make all
improvements and repairs required by such laws, ordinances, orders, rules and
regulations, ordinary or extraordinary, foreseen or unforeseen.
SECTION 12.03. Tenant acknowledges the existence of environmental laws,
rules and regulations now or hereafter
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enacted by any federal, state or municipal authority and Tenant agrees to comply
therewith.
Tenant agrees not to generate, store, manufacture, refine, transport,
treat, dispose of, or otherwise permit to be present on or about the Demised
Premises, any Hazardous Substances. As used herein, Hazardous Substances shall
be defined as any "hazardous chemical," "hazardous substance" or similar term as
defined in the Comprehensive Environmental Responsibility Compensation and
Liability Act, as amended (42 U.S.C. 9601, ET SEQ.), any rules or regulations
promulgated thereunder, or in any other applicable federal, state or local law,
rule or regulation dealing with environmental protection. It is understood and
agreed that the provisions contained in this Article shall be applicable
notwithstanding the fact that any substance shall not be deemed to be a
Hazardous Substance at the time of its use by the Tenant but shall thereafter be
deemed to be a Hazardous Substance.
Tenant agrees to indemnify and hold harmless the Landlord and each
mortgagee of the Demised Premises from and against any and all liabilities,
damages, claims, losses, judgments, causes of action, costs and expenses
(including the reasonable fees and expenses of counsel) which may be incurred by
the Landlord or any such mortgagee or threatened against the Landlord or such
mortgagee, relating to or arising out of any breach by Tenant of the
undertakings set forth in this Article, said indemnity to survive the Lease
expiration or sooner termination.
ARTICLE XIII
SUBORDINATION
SECTION 13.01. This Lease is and shall be subject and subordinate to all
present and future first mortgages or deeds of trust affecting the Demised
Premises, provided (i) that any such mortgage, deed of trust, or ground lease
shall include therein a covenant on the part of the holder thereof or the
landlord thereunder (as the case may be) substantially to the effect that it
will not at any time join Tenant as a party defendant in any action which may be
brought to foreclose said mortgage or deed of trust or terminate said ground
lease (as the case may be), or disturb Tenant's possession of the Demised
Premises, so long as Tenant is not in default under any provision of this Lease,
or provided Landlord obtains a non-disturbance agreement in favor of Tenant from
said first mortgagee or holder of any deed of trust or the landlord thereunder
(as the case may be) providing the above, and provided further that in either
event Tenant agrees, at the first mortgagee's option or at the option of the
holder of any deed of trust or at the option of the landlord under the ground
lease (as the case may be), to attorn to said mortgagee or holder of said trust
deed or landlord (as the case may be), and (ii) that any such mortgagee shall
agree to make the proceeds of casualty insurance available to Landlord for
restoration. The Tenant shall execute, any instrument which may be deemed
necessary or desirable by the Landlord to further effect or to evidence the
subordination of this Lease to any such mortgage or deed of trust. The Landlord
may assign this Lease to any such mortgagee or trust deed holder in connection
with any such lien superior to this Lease, and the Tenant shall execute, at no
expense to the Tenant, any instrument which may be necessary or desirable by the
Landlord or the
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holder of said lien in connection with said assignment. Any expense incurred in
the preparing, executing or recording of such assignment to any such holder
shall be without expense or cost to the Tenant. The Tenant further agrees, upon
not less then ten (10) days' prior written request of the Landlord, to certify
by written instrument duly executed and acknowledged to any mortgagee, trust
deed holder or purchaser, or any proposed mortgage lender, trust deed holder or
purchaser, that this Lease is in full force and effect, or if not, in what
respect it is not, that this Lease has not been modified, or the extent to which
it has been modified, that there are no existing defaults hereunder to the best
of the knowledge of the party so certifying, or specifying the defaults, if any.
Any such certification in connection with a mortgage shall be without prejudice
as between the Landlord and the Tenant, it being agreed that any document
required hereunder shall not be used in any litigation between the Landlord and
the Tenant.
ARTICLE XIV
DEFAULTS, REMEDIES
SECTION 14.01. If, during the Term, any one or more of the following acts
or occurrences (any one of such occurrences or acts being hereinafter called an
Event of Default) shall happen:
(A) The Tenant shall default in making any payment of rent or any
additional rent as and when the same shall become due and payable, and such
default shall continue for a period of ten (10) days after notice from the
Landlord that such payment is due and unpaid; or
(B) The Tenant shall default in the performance of or compliance with
any of the other covenants, agreements, terms or conditions of this Lease
to be performed by the Tenant (other than any default curable by payment of
money), and such default shall continue for a period of thirty (30) days
after written notice thereof from the Landlord to the Tenant, or, in the
case of a default which cannot with due diligence be cured within thirty
(30) days, the Tenant shall fail to proceed promptly (except for
unavoidable delays) after the giving of such notice and with all due
diligence to cure such default and thereafter to prosecute the curing
hereof with all due diligence (it being intended that as to a default not
susceptible of being cured with due diligence within thirty (30) days, the
time within which such default may be cured shall be extended for such
period as may be reasonably necessary to permit the same to be cured with
all due diligence); or
(C) The Tenant or any guarantor of this Lease shall make an
assignment for the benefit of creditors or file a voluntary petition in
bankruptcy or shall be adjudicated a bankrupt or insolvent, or shall file
any petition or answer seeking any reorganization, composition,
readjustment or similar relief under any present or
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future bankruptcy or other applicable law, or shall seek or consent to or
acquiesce in the appointment of any trustee, receiver, or liquidator of the
Tenant or any guarantor of this Lease or of all or any substantial part of
its properties or of all or any part of the Demised Premises; or
(D) If, within sixty (60) days after the filing of an involuntary
petition in bankruptcy against the Tenant or any guarantor of this Lease,
or the commencement of any proceeding against the Tenant or such guarantor
seeking any reorganization, composition, readjustment or similar relief
under any law, such proceeding shall not have been dismissed, or if, within
sixty (60) days after the appointment, without the consent or acquiescence
of the Tenant or such guarantor, of any trustee, receiver or liquidator of
the Tenant or such guarantor, or of all or any part of the Demised
Premises, such appointment shall not have been vacated or stayed on appeal
or otherwise, or if, within sixty (60) days after the expiration of any
such stay, such appointment shall have been vacated, or if, within sixty
(60) days after the taking possession, without the consent or acquiescence
of the Tenant or such guarantor, of the property of the Tenant, or of such
guarantor by any governmental office or agency pursuant to statutory
authority for the dissolution or liquidation of the Tenant or such
guarantor, such taking shall not have been vacated or stayed on appeal or
otherwise; or
(E) If the Demised Premises shall be abandoned by the Tenant for a
period of thirty (30) consecutive days,
then, and in any such event, and during the continuance thereof, the Landlord
may, at its option, then or thereafter while any such Event of Default shall
continue and notwithstanding the fact that the Landlord may have any other
remedy hereunder or at law or in equity, by notice to the Tenant, designate a
date, not less than ten (10) days after the giving of such notice, on which this
Lease shall terminate; and thereupon, on such date the Term of this Lease and
the estate hereby granted shall expire and terminate upon the date specified in
such notice with the same force and effect as if the date specified in such
notice was the date hereinbefore fixed for the expiration of the Term of this
Lease, and all rights of the Tenant hereunder shall expire and terminate, but
the Tenant shall remain liable as hereinafter provided. Additionally, Tenant
agrees to pay, as additional rent, all attorney's fees and other expenses
incurred by the Landlord in enforcing any of the obligations under this Lease,
this covenant to survive the expiration or sooner termination of this Lease.
Notwithstanding anything contained herein to the contrary, the abandonment of
the Demised Premises shall not be deemed to be a default hereunder so long as
Tenant shall continue to pay rent and additional rent and shall otherwise comply
with all of the terms and conditions of this Lease, including but not limited to
repair, maintenance and insurance obligations.
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SECTION 14.02. If this Lease is terminated as provided in Section 14.01, or
as permitted by law, the Tenant shall peaceably quit and surrender the Demised
Premises to the Landlord, and the Landlord may, without further notice, enter
upon, re-enter, possess and repossess the same by summary proceedings, ejectment
or other legal proceedings, and again have, repossess and enjoy the same as if
this Lease had not been made, and in any such event neither the Tenant nor any
person claiming through or under the Tenant by virtue of any law or an order of
any court shall be entitled to possession or to remain in possession of the
Demised Premises, and the Landlord, at its option, shall forthwith,
notwithstanding any other provision of this Lease, be entitled to recover from
the Tenant in lieu of all other claims for damages on account of such
termination) as and for liquidated damages an amount equal to the excess of all
rents reserved hereunder for the unexpired portion of the Term of this Lease
discounted at the rate of six (6%) percent per annum to the then present worth,
over the fair rental value of the Demised Premises at the time of termination
for such unexpired portion of the Term (the rent received on a reletting shall
be conclusively accepted as the fair rental value). Nothing herein contained
shall limit or prejudice the right of the Landlord, in any bankruptcy or
reorganization or insolvency proceeding, to prove for and obtain as liquidated
damages by reason of such termination an amount equal to the maximum allowed by
any bankruptcy or reorganization or insolvency proceedings, or to prove for and
obtain as liquidated damages by reason of such termination, an amount equal to
the maximum allowed by any statute or rule of law whether such amount shall be
greater or less than the excess referred to above.
SECTION 14.03. If the Landlord re-enters and obtains possession of the
Demised Premises, as provided in Section 14.02 of this Lease, following an Event
of Default, the Landlord shall have the right, without notice, to repair or
alter the Demised Premises in such manner as the Landlord may deem necessary or
advisable so as to put the Demised Premises in good order and to make the same
rentable, and shall have the right, at the Landlord's option, to relet the
Demised Premises or a part thereof, and the Tenant shall pay to the Landlord on
demand all reasonable expenses incurred by the Landlord in obtaining possession,
and in altering, repairing and putting the Demised Premises in good order and
condition and in reletting the same, including reasonable fees of attorneys and
architects, and all other reasonable expenses or commissions, and the Tenant
shall pay to the Landlord upon the rent payment dates following the date of such
re-entry and including the date for the expiration of the Term of this Lease in
effect immediately prior to such re-entry, the sum of money which would have
been payable by the Tenant as rent hereunder on such rent payment dates if the
Landlord has not re-entered and resumed possession of the Demised Premises,
deducting only the net amount of rent, if any, which the Landlord shall actually
receive (after deducting from the gross receipts the expenses, costs and
payments of the Landlord which in accordance with the terms of this Lease would
have been borne by the Tenant) in the meantime from and by any reletting of the
Demised Premises, and the Tenant shall remain liable for all sums otherwise
payable by the Tenant under this Lease, including but not limited to the expense
of the Landlord aforesaid, as well as for any deficiency aforesaid, and the
Landlord shall have the right from time to time to begin and maintain successive
actions or other legal proceedings against the Tenant for the recovery of such
deficiency, expenses or damages or for a sum equal to any rent payment and
additional
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rent. As an alternative remedy, the Landlord shall be entitled to damages
against the Tenant for breach of this Lease, at any time (whether or not the
Landlord shall have become entitled to or shall have received any damages as
hereinabove provided) in an amount equal to the excess, if any, of the rent and
additional rent which would be payable under this Lease at the date of the
expiration of the Term, less the amount of rent and additional rent received by
the Landlord upon any reletting, both discounted to present worth at the rate of
six (6%) percent per annum, semiannually. The obligation and liability of the
Tenant to pay the rent and the additional rent shall survive the commencement,
prosecution and termination of any action to secure possession of the Demised
Premises. Nothing herein contained shall be deemed to require the Landlord to
wait to begin such action or other legal proceedings until the date when this
Lease would have expired had there not been an Event of Default.
SECTION 14.04. The Tenant hereby waives all right of redemption to which
the Tenant or any person under it may be entitled by any law now or hereafter in
force. The Landlord's remedies hereunder are in additional to any remedy
allowed by law.
SECTION 14.05. In the event of any breach or threatened breach by Tenant of
any of the agreements, terms, covenants or conditions contained in this Lease,
Landlord shall be entitled to enjoin such breach or threatened breach and shall
have the right to invoke any right or remedy allowed at law or in equity or by
statute or otherwise as though re-entry, summary dispossess proceedings, and
other remedies were not provided for in this Lease. During the pendency of any
proceedings brought by Landlord to recover possession by reason of default,
Tenant shall continue all money payments required to be made to Landlord, and
Landlord may accept such payments for use and occupancy of the Demised Premises.
In such event, Tenant waives its right in such proceedings to claim as a defense
that the receipt of such money payments by Landlord constitutes a waiver by
Landlord of such default.
ARTICLE XV
ASSIGNMENT AND SUBLEASE
SECTION 15.01. (A) The Tenant may assign this Lease and sublet the whole or
any part of the Demised Premises, with the consent of the Landlord which consent
shall not be unreasonably withheld subject to the following conditions:
(1) A copy of the assignment or sublease shall be furnished to the
Landlord.
(2) The assignee shall assume by written instrument all of the obligations
of this Lease, and a copy of such assumption agreement shall be furnished to the
Landlord within ten (10) days of its execution.
(3) The Tenant and each assignee shall be and remain liable for the
observance of all of the covenants and provisions of this Lease, including but
not limited to the payment of the rent reserved herein, through the entire Term
of
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this Lease, as the same may be renewed, extended or otherwise modified.
(4) The Tenant and any assignee shall promptly pay to Landlord
one-half (1/2) of any net consideration received for any assignment or
one-half (1/2) of the net rent, as and when received in excess of the rent
required to be paid by Tenant for the area sublet, computed on the basis of
an average square foot rent for the entire Building. As used herein, net
consideration and/or net rent shall mean gross rent or gross consideration
less any reasonable brokerage or tenant work paid by Tenant in connection
with the assignment or sublet, said brokerage or tenant work to be
amortized over the term of the assignment or sublet.
(B) Notwithstanding anything herein contained, the Tenant may assign or
sublet the whole or any part of the Demised Premises to an affiliated
corporation, or to any corporation with which it shall be merged or which shall
acquire the assets of the Tenant, all without notice to the Landlord.
(C) In any event, the acceptance by the Landlord of any rent from the
assignee, or of any of the subtenants, or the failure of the Landlord to insist
upon a strict performance of any of the terms, conditions and covenants herein
shall not release the Tenant herein, nor any assignee assuming this Lease, from
any and all of the obligations herein during and for the entire Term of this
Lease.
(D) Notwithstanding anything herein contained, prior to any sublet of the
whole or any portion of the Demised Premises or an assignment of the within
Lease to any other party, other than sublets or assignments permitted by
Subsection (B) hereof, the Tenant shall first offer, in writing, to surrender
the Demised Premises to the Landlord, and the Landlord shall either accept or
refuse to accept such surrender within ten (10) days after the receipt of such
offer, failing which the offer shall automatically be deemed refused. In the
event Landlord shall accept such surrender, the within tenant shall be released
from any and all obligations hereunder.
(E) The Landlord may require a payment to cover its handling charges for
each request for consent to any sublet or assignment prior to its consideration
of the same, which payment shall be equal to those charges, if any, assessed by
Landlord's mortgagee.
(F) The Tenant acknowledges that its sole remedy with respect to any
assertion that the Landlord's failure to consent to any sublet or assignment is
unreasonable shall be the remedy of specific performance and the Tenant shall
have no other claim or cause of action against the Landlord as a result of the
Landlord's actions in refusing to consent thereto.
(G) Without limiting any of the provisions of Article XIV, if pursuant to
the Federal Bankruptcy Code (or any similar Law hereafter enacted having the
same general purpose), Tenant is permitted to assign this Lease, notwithstanding
the restrictions contained in this Lease, adequate assurance of future
performance by an assignee expressly permitted under such Code shall be deemed
to mean the deposit of cash security in an
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amount equal to the sum of one (1) year's fixed rent plus an amount equal to the
sum of all other charges due and payable by Tenant hereunder for the Calendar
Year preceding the year in which such assignment is intended to become
effective, which deposit shall be held by Landlord for the balance of the Term,
without interest, as security for the full performance of all of Tenant's
obligations under this Lease, to be held and applied in the manner specified for
security in Section 22.02.
(H) Except as specifically set forth above, no portion of the Demised
Premises or of Tenant's interest in this Lease may be acquired by any other
person or entity, whether by assignment, mortgage, sublease, transfer, operation
of law or act of the Tenant, nor shall Tenant pledge its interest in this Lease
or in any security deposit required hereunder.
ARTICLE XVI
NOTICES
SECTION 16.01. All notices, demands, consents, approvals, requests and
instruments or documents by this Lease required or permitted to be given to or
served upon the Landlord or the Tenant shall be in writing. Any such notice,
demand, consent, approval, request, instrument or document shall be sufficiently
given or served if sent by certified or registered mail, postage prepaid,
addressed at the address set forth below, or at such other address as it shall
designate by notice, as follows:
If to the Landlord: MACK BRACKEN ROAD PROPERTIES
LIMITED and MONTGOMERY '89 ASSOCIATES L.P. doing
business as BRACKEN '89 JOINT VENTURE
c/o The Mack Company
370 West Passaic Street
Rochelle Park, NJ 07662
With Copy to: DOLLINGER & DOLLINGER, P.A.
365 West Passaic Street
Rochelle Park, NJ 07662
Attn: Martin E. Dollinger
If to the Tenant: THE GRAND UNION COMPANY
201 Willowbrook Boulevard
Wayne, NJ 07470-0966
Attn: Vice President, Real Estate
Any notice so sent shall be deemed given or served on the second (2nd)
business day following the date mailed as aforesaid.
ARTICLE XVII
HOLDING OVER
SECTION 17.01. If the Tenant shall remain in the Demised Premises after the
expiration of the Term without having executed and delivered a new lease with
the Landlord, such holding over shall not constitute a renewal or extension of
this
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Lease. The Landlord may, at its option, elect to treat the Tenant as one who
has not removed at the end of its Term, and thereupon be entitled to all the
remedies against the Tenant provided by law in that situation, or the Landlord
may elect, at its option, to construe such holding over as a tenancy from month
to month, subject to all the terms and conditions of this Lease, except as to
duration thereof, and in that event the Tenant shall pay monthly rent in advance
which is the greater of (i) two hundred (200%) percent of the fair rental value
then being obtained for the Demised Premises or (ii) two hundred (200%) percent
of the rent payable for the month immediately preceding such holdover.
ARTICLE XVIII
LIENS
SECTION 18.01. This Lease may be cancelled by the Landlord if any
mechanic's lien is filed against the Demised Premises as a result of
alterations, additions or improvements made by the Tenant and not discharged by
payment or bonding within thirty (30) days after notice by the Landlord to the
Tenant. In addition, after thirty (30) days' written notice to the Tenant, the
Landlord, at its option, may pay and discharge such lien, without inquiring into
the validity thereof, and the Tenant shall, on demand of the Landlord, reimburse
the Landlord as additional rent hereunder for the total expense incurred by the
Landlord in discharging such lien.
ARTICLE XIX
CONDITION OF DEMISED PREMISES, LOSS, ETC.
SECTION 19.01. After the commencement of the Tenant's occupancy, the
Landlord shall not be responsible for the loss of, or damage to, property or
injury to persons occurring in or about the Demised Premises, for any reason
whatsoever, to include but not be limited to: any existing or future condition,
defect, matter or thing in the Demised Premises; the acts, omissions or
negligence of other persons or tenants in and about the Demised Premises; theft
or burglary from the Demised Premises; the negligence of Landlord, its agents,
servants or invitees; and defects, errors or omissions in the construction or
design of the Demised Premises and/or the Building including the structural and
nonstructural portions thereof. Tenant covenants and agrees to make no claim
for any such loss, damage or injury at any time.
ARTICLE XX
INSPECTION, FOR SALE AND FOR RENT SIGNS
SECTION 20.01. The Landlord, or its agents, shall have the right to enter
the Demised Premises at reasonable hours to examine the same, or to exhibit the
Demised Premises to prospective purchasers. For twelve (12) months prior to the
expiration of the Term, the Landlord, or its agents, may exhibit the Demised
Premises to prospective tenants and may place the usual "To Let" signs thereon.
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ARTICLE XXI
SIGNS
SECTION 21.01. No sign, advertisement or notice shall be affixed to or
placed upon any part of the Demised Premises by the Tenant, except in such
manner of annexation as shall be in accordance with good and sound engineering
practices, provided: (i) that Tenant shall comply with all applicable
governmental ordinances and regulations and receives all necessary governmental
approvals required for erection and maintenance of the sign and (ii) no later
than the last day of the Term, Tenant shall, at Tenant's expense, remove the
sign and repair all injury done by or in connection with the installation or
removal of the sign.
ARTICLE XXII
ADVANCE RENT, SECURITY AND LATE CHARGE
SECTION 22.01. Simultaneously herewith, the Tenant has deposited with the
Landlord the sum of One Hundred Seven Thousand Six Hundred Sixty-six and 67/100
($107,666.67) Dollars, as advance rent for the first month of the Tenant's
rental obligation.
SECTION 22.02. In the event of the insolvency of Tenant or in the event of
the entry of a judgment in bankruptcy in any court against Tenant which is not
discharged within thirty (30) days after entry, or in the event a petition is
filed by or against Tenant under any chapter of the bankruptcy laws of the State
of New York or the United States of America, then and in such event Landlord may
require the Tenant to deposit security in an amount which in Landlord's sole
judgment would be sufficient to adequately assure Tenant's performance of all of
its obligations under this Lease, including all payments subsequently accruing.
Failure of Tenant to deposit the security required by this Section within ten
(10) days after Landlord's written demand shall constitute a material breach of
this Lease by Tenant.
SECTION 22.03. Anything in this Lease to the contrary notwithstanding, at
Landlord's option, Tenant shall pay a "Late Charge" of eight (8%) percent of any
installment of rent or additional rent paid more than ten (10) days after the
due date thereof, to cover the extra expense involved in handling delinquent
payments. Notwithstanding anything contained herein to the contrary, in the
event that Landlord shall be charged a late charge on any mortgage, then and in
that event, Tenant shall pay a Late Charge of eight (8%) percent of any
installment of rent or additional rent paid after the due date thereof,
provided, however, that the first time during any Lease year that Tenant shall
be late in the payment of rent, Landlord shall not impose a Late Charge.
ARTICLE XXIII
FINANCIAL STATEMENTS
SECTION 23.01. The Tenant agrees, within ninety (90) days after the end of
the Tenant's accounting year, at the request of the Landlord, or at the request
of the holder of any
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first mortgage upon the Demised Premises, to furnish to the Landlord or
mortgagee, a certified balance sheet and profit and loss statement for the last
accounting year.
ARTICLE XXIV
BROKER
SECTION 24.01. The Landlord and the Tenant represent and warrant one to
the other that no broker brought about this transaction, and the Landlord and
the Tenant agree to indemnify and hold each other harmless from any and all
claims of any brokers arising out of or in connection with the negotiations of
or the entering into this Lease by the Landlord and the Tenant.
ARTICLE XXV
SHORT FORM OR MEMORANDUM OF LEASE
SECTION 25.01. At the request of either party the Landlord and the Tenant
will execute and deliver, in duplicate original counterparts, a recordable
memorandum of this Lease identifying the Demised Premises and stating the
commencement and termination dates of the Term of this Lease.
ARTICLE XXVI
WAIVER OF TRIAL BY JURY
SECTION 26.01. The Landlord and the Tenant waive trial by jury in any
action, proceeding or counterclaim brought by either the Landlord or the Tenant
against the other in any matters whatsoever arising out of or in any way
connected with this Lease, the Tenant's use or occupancy of the Demised
Premises, and/or any claim of injury or damage.
ARTICLE XXVII
WAIVER OF DISTRAINT
SECTION 27.01. Landlord waives all lien, right, interest and claim it
might otherwise have in and waives its right of distraint of, the machinery,
fixtures and other property of the Tenant, and in any other property of any
nature whether on or off the Demised Premises, belonging to the Tenant. The
provisions of this section are intended to apply to the Landlord's common law
(if any) and statutory right of distraint because of failure to pay rent.
ARTICLE XXVIII
MISCELLANEOUS
SECTION 28.01. PARTIAL INVALIDITY. If any term or provision of this Lease or
the application thereof to any party or circumstances shall to any extent be
invalid or unenforceable, the remainder of this Lease or the application of
such term or provision to parties or circumstances other than those to which
it is held invalid or unenforceable, shall not be
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affected thereby, and each term and provision of this Lease shall be valid and
enforced to the fullest extent permitted by law.
SECTION 28.02. WAIVERS. One or more waivers by either party of the
obligation of the other to perform any covenant or condition shall not be
construed as a waiver of a subsequent breach of the same or any other covenant
or condition.
The receipt of rent by the Landlord, with knowledge of any breach of
this Lease by the Tenant or of any default on the part of the Tenant in the
observance or performance of any of the conditions or covenants of this Lease,
shall not be deemed to be a waiver of any provision of this Lease. Neither
acceptance of the keys nor any other act or thing done by the Landlord or any
agent or employee during the Term herein demised shall be deemed to be an
acceptance of a surrender of said Demised Premises, excepting only an agreement
in writing signed by the Landlord accepting or agreeing to accept such a
surrender.
SECTION 28.03. NUMBER, GENDER. Wherever herein the singular number is
used, the same shall include the plural, and the masculine gender shall include
the feminine and neuter genders.
SECTION 28.04. SUCCESSORS, ASSIGNS. The terms, covenants and conditions
herein contained shall be binding upon and inure to the benefit of the
respective parties and their successors and assigns.
SECTION 28.05. HEADINGS. The Article and marginal headings herein are
intended for convenience in finding the subject matters, are not to be taken as
part of this Lease and are not to be used in determining the intent of the
parties to this Lease.
SECTION 28.06. ENTIRE AGREEMENT. This instrument contains the entire and
only agreement between the parties and no oral statements or representations or
prior written matter not contained in this instrument shall have any force or
effect. This Lease shall not be modified in any way or terminated except by a
writing executed by both parties.
SECTION 28.07. LANDLORD. The term "Landlord" as used in this Lease means
only the holder, for the time being, of the Landlord's interest under this Lease
so that in the event of any transfer of title to the Demised Premises the
Landlord shall be and hereby is entirely freed and relieved of all obligations
of the Landlord hereunder accruing after such transfer, and it shall be deemed
without further agreement between the parties that such grantee, transferee or
assignee has assumed and agreed to observe and perform all obligations of the
Landlord hereunder arising during the period it is the holder of the Landlord's
interest hereunder.
SECTION 28.08. WORDS OF DUTY. Whenever in this Lease any words of
obligation or duty are used, such words or expressions shall have the same force
and effect as though made in the form of covenants.
SECTION 28.09. CUMULATIVE REMEDIES. The specified remedies to which the
Landlord or the Tenant may resort under
PAGE 21
<PAGE>
the terms of this Lease are cumulative and are not intended to be exclusive of
any other remedies or means of redress to which the Landlord or the Tenant may
lawfully be entitled in case of any breach or threatened breach of any provision
of this Lease.
SECTION 28.10. NO OPTION. The submission of this Lease Agreement for
examination does not constitute a reservation of, or option for, the Demised
Premises, and this Lease Agreement becomes effective as a Lease Agreement only
upon execution and delivery thereof by Landlord and Tenant.
SECTION 28.11. ACCORD AND SATISFACTION. No payment by Tenant or receipt by
Landlord of a lesser amount than the rent and additional charges payable
hereunder shall be deemed to be other than a payment on account of the earliest
stipulated basic rent and additional rent, nor shall any endorsement or
statement on any check or any letter accompanying any check or payment for rent
or additional rent be deemed an accord and satisfaction, and Landlord may accept
such check or payment without prejudice to Landlord's right to recover the
balance of such rent and additional rent or pursue any other remedy provided
herein or by law.
SECTION 28.12. CORPORATE AUTHORITY. If Tenant is a corporation, Tenant
represents and warrants that this Lease and the undersigned's execution of this
Lease has been duly authorized and approved by the corporation's Board of
Directors. The undersigned officers and representatives of the corporation
executing this Lease on behalf of the corporation represent and warrant that
they are officers of the corporation with authority to execute this Lease on
behalf of the corporation, and within fifteen (15) days of execution hereof,
Tenant will provide Landlord with a corporate resolution confirming the
aforesaid.
ARTICLE XXIX
PERSONAL LIABILITY
SECTION 29.01. Notwithstanding anything to the contrary provided in this
Lease, it is specifically understood and agreed, such agreement being a primary
consideration for the execution of this Lease by Landlord, that there shall be
absolutely no personal liability on the part of Landlord, its successors,
assigns or any mortgagee in possession (for the purposes of this Paragraph,
collectively referred to as "Landlord"), with respect to any of the terms,
covenants and conditions of this Lease, and that Tenant shall look solely to the
equity of Landlord in the Building for the satisfaction of each and every remedy
of Tenant in the event of any breach by Landlord of any of the terms, covenants
and conditions of this Lease to be performed by Landlord, such exculpation of
liability to be absolute and without any exceptions whatsoever.
ARTICLE XXX
GUARANTY
SECTION 30.01. This Lease is expressly conditioned on the execution by
CAVENHAM HOLDINGS and THE GRAND UNION ACQUISITION CORP. of the guaranty of the
terms, covenants and conditions in this Lease to be performed and observed by
Tenant
PAGE 22
<PAGE>
in the form and substance attached hereto and made a part hereof as Exhibit B.
ARTICLE XXXI
CROSS-COLLATERALIZATION
SECTION 31.01. Tenant acknowledges that this Lease shall be
cross-collateralized with its lease with Mack Waterford Properties Limited and
Bells Lane '89 Associates L.P. doing business as Waterford '89 Joint Venture
dated May 1, 1989 covering the property located in the Town of Waterford,
Saratoga County, New York, so that a default under that lease shall be deemed a
default under this Lease and, similarly, a default under this Lease shall be
deemed a default under the aforesaid lease dated May 1, 1989.
ARTICLE XXXII
RENEWAL OPTIONS
SECTION 32.01. Tenant is hereby granted four (4) options to renew this
Lease upon the following terms and conditions:
(A) At the time of each renewal, the Tenant shall not be in default
in accordance with the terms and provisions of this Lease, and shall be in
possession of the Demised Premises pursuant to this Lease.
(B) Each of the renewal options shall be deemed automatically
exercised unless Tenant notifies Landlord to the contrary, in writing, at
least twelve (12) months before the expiration of the Term, or twelve (12)
months before the expiration of the preceding renewal term, as the case may
be.
(C) The renewal terms shall be for the term of five (5) years each,
the first renewal term to commence at the expiration of the Term of this
Lease, the second renewal term to commence upon the expiration of the first
renewal term, the third renewal term to commence upon the expiration of the
second renewal term, and the fourth renewal term to commence upon the
expiration of the third renewal term, and all of the terms and conditions
of this Lease, other than the rent, shall apply during any such renewal
terms.
(D) The basic rent to be paid during the first renewal term shall be
Eight Million Two Hundred Ninety-eight Thousand Nine Hundred Sixty-five and
00/100 ($8,298,965.00) Dollars; the basic rent to be paid during the second
renewal term shall be Nine Million One Hundred Twenty-eight Thousand Eight
Hundred Sixty and 00/100 ($9,128,860.00) Dollars; the basic rent to be paid
during the third renewal term shall be Ten Million Forty-one Thousand Seven
Hundred Fifty and 00/100 ($10,041,750.00) Dollars; and
PAGE 23
<PAGE>
the basic rent to be paid during the fourth renewal term shall be Eleven
Million Forty-five Thousand Nine Hundred Twenty-five and 00/100
($11,045,925.00) Dollars. The basic rent during each of the renewal terms
shall be payable in such coin or currency of the United States of America
as at the time of payment shall be legal tender for the payment of public
and private debts and shall accrue at the following yearly and monthly
rates:
Renewal Term Yearly Rent Monthly Rent
First
(Years 21-25) $1,659,793.00 $138,316.08
Second
(Years 26-30) $1,825,772.00 $152,147.67
Third
(Years 31-35) $2,008,350.00 $167,362.50
Fourth
(Years 36-40) $2,209,185.00 $184,098.75
The aforesaid monthly rents shall be payable in advance on the first day of each
calendar month during the respective renewal term, except that a proportionately
lesser sum may be paid for the first month of any of the renewal terms if said
renewal term commences on a date other than the first of the month.
ARTICLE XXXIII
RIGHT OF FIRST OFFER TO PURCHASE
SECTION 33.01. Tenant shall have the right of first offer to purchase the
Demised Premises during the Term of this Lease as the same may be renewed.
Landlord will advise the Tenant of the terms and conditions Landlord would be
willing to accept with respect to the sale of the Demised Premises, and Tenant
shall have thirty (30) days within which to respond to Landlord's offer. Should
Tenant decline Landlord's offer or fail to respond, then, and in such event,
Tenant shall lose any prospective rights of first offer and Landlord shall be
free to sell to any other party upon substantially similar terms but at the
basic price no less than that quoted to Tenant, provided that title closes
within twelve (12) months from the date of Tenant's refusal or from the
expiration of said thirty (30) day period should Tenant fail to respond. Any
downward deviation from the basic price as quoted to Tenant or any proposed sale
after the aforesaid twelve (12) month period will necessitate a
PAGE 24
<PAGE>
re-offer to the Tenant, upon the terms and conditions contained in this Article.
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands and
seals the day and year first above written.
BRACKEN '89 JOINT VENTURE
BY: MACK BRACKEN ROAD PROPERTIES LIMITED
By:/S/
--------------------------------
BY: MONTGOMERY '89 ASSOCIATES L.P.
BY: HAMPSHIRE MANAGEMENT COMPANY,
General Partner
By: /S/ James E. Hanson II
----------------------
JAMES E. HANSON II, PRESIDENT
THE GRAND UNION COMPANY, Tenant
By: /S/ Robert F. Catherman
-----------------------------------
PAGE 25
<PAGE>
Exhibit B
GUARANTY OF LEASE
WHEREAS, THE GRAND UNION COMPANY, with offices at 201 Willowbrook
Boulevard, Wayne, New Jersey 07470-0966 (hereinafter referred to as "Tenant") is
desirous of entering into the lease hereinafter mentioned; and
WHEREAS, CAVENHAM HOLDINGS and THE GRAND UNION ACQUISITION CORP., with
offices at 201 Willowbrook Boulevard, Wayne, New Jersey 07470-0966 (hereinafter,
individually and collectively, referred to as "Guarantor") has requested MACK
BRACKEN ROAD PROPERTIES LIMITED AND MONTGOMERY 89 ASSOCIATES L.P. DOING
BUSINESS AS BRACKEN 89 JOINT VENTURE, WITH OFFICES AT C/O THE MACK COMPANY, 370
West Passaic Street, Rochelle Park, New Jersey 07662 (hereinafter referred to as
"Landlord") to enter into a lease with the Tenant, for a Term of twenty (20)
years with four (4), five (5) year renewal options, for a building situated in
the Town of Montgomery, County of Orange, State of New York, commonly known as
Bracken Road, Montgomery, New York (hereinafter referred to as "Lease"); and
WHEREAS, the Landlord has refused to enter into the said Lease unless the
Guarantor guarantees said Lease in the manner hereinafter set forth.
NOW, THEREFORE, to induce the Landlord to enter into said Lease, which
Lease is dated this day and is being executed simultaneously herewith, the
Guarantor hereby agrees as follows:
1. (a) The Guarantor jointly and severally unconditionally guarantees to
the Landlord and the successors and assigns of the Landlord the full and
punctual performance and observance, by the Tenant, of all of the terms,
covenants and conditions in said Lease contained on Tenant's part to be kept,
performed or observed.
(b) If, at any time, default shall be made by the Tenant in the
performance or observance of any of the terms, covenants or conditions in said
Lease contained on the Tenant's part to be kept, performed or observed, the
Guarantor will keep, perform and observe the same, as the case may be, in place
and stead of the Tenant.
(c) The liability of the Guarantor hereunder shall be enforceable
against the Guarantor without the necessity for any suit or proceedings on the
Landlord's part of any kind or nature whatsoever against the Tenant.
2. Any act of the Landlord, or the successors or assigns of the Landlord,
consisting of a waiver of any of the terms or conditions of said Lease, or the
giving of any consent to any manner or thing relating to said Lease, or the
granting of any indulgences or extensions of time, to the Tenant, may be done
without notice to the Guarantor and without releasing the obligations of the
Guarantor hereunder.
3. The obligations of the Guarantor hereunder shall not be released by
Landlord's receipt, application or release of security given for the performance
and observance of covenants and conditions in said Lease contained on the
Tenant's part to be performed or observed; nor by any modification of such
Lease,
<PAGE>
but in the case of any such modification the liability of the Guarantor shall be
deemed modified in accordance with the terms of any such modification of the
Lease.
4. The liability of the Guarantor hereunder shall in no way be affected
by (a) the release or discharge of the Tenant in any creditors' receivership,
bankruptcy or other proceedings; (b) the impairment, limitation or modification
of the liability of the Tenant or the estate of the Tenant in bankruptcy, or of
any remedy for the enforcement of the Tenant's said liability under the Lease,
resulting from the operation of any present or future provision of the National
Bankruptcy Act or other statute or from the decision in any court; (c) the
rejection or disaffirmance of the Lease in any such proceedings; (d) the
assignment or transfer of the Lease by the Tenant; (e) any disability or other
defense of the Tenant, or (f) the cessation from any cause whatsoever of the
liability of the Tenant.
5. Until all the covenants and conditions in said Lease on the Tenant's
part to be performed and observed are fully performed and observed, the
Guarantor: (a) shall have no right of subrogation against the Tenant by reasons
of any payments or acts of performance by the Guarantor hereunder; (b) waives
any right to enforce any remedy which the Guarantor now or hereafter shall have
against the Tenant by reason of any one or more payment or acts of performance
in compliance with the obligations of the Guarantor hereunder.
6. This Guaranty shall apply to the said Lease and to any renewal or
extension thereof.
7. This instrument may not be changed, modified, discharged or terminated
orally or in any manner other than by an agreement in writing signed by the
Guarantor and the Landlord.
IN WITNESS WHEREOF, the Guarantor has hereunto set his hands and seals
the 29TH day of SEPTEMBER 1989.
GUARANTOR:
CAVENHAM HOLDINGS
BY: /S/ Robert Terrence Galvin
---------------------------
VICE PRESIDENT
THE GRAND UNION ACQUISITION CORP.
BY: /S/ Robert Terrence Galvin
-------------------------
VICE PRESIDENT
PAGE 2
<PAGE>
GUARANTY OF LEASE
WHEREAS, THE GRAND UNION COMPANY, with offices at 201 Willowbrook
Boulevard, Wayne, New Jersey 07470-0966 (hereinafter referred to as "Tenant") is
desirous of entering into the lease hereinafter mentioned; and
WHEREAS, CAVENHAM HOLDINGS and THE GRAND UNION ACQUISITION CORP., with
offices at 201 Willowbrook Boulevard, Wayne, New Jersey 07470-0966 (hereinafter,
individually and collectively, referred to as "Guarantor") has requested MACK
BRACKEN ROAD PROPERTIES LIMITED and MONTGOMERY 89 ASSOCIATES L.P. doing
business as BRACKEN 89 JOINT VENTURE, with offices at c/o The Mack Company, 370
West Passaic Street, Rochelle Park, New Jersey 07662 (hereinafter referred to as
"Landlord") to enter into a lease with the Tenant, for a Term of twenty (20)
years with four (4), five (5) year renewal options, for a building situated in
the Town of Montgomery, County of Orange, State of New York, commonly known as
Bracken Road, Montgomery, New York (hereinafter referred to as "Lease"); and
WHEREAS, the Landlord has refused to enter into the said Lease unless the
Guarantor guarantees said Lease in the manner hereinafter set forth.
NOW, THEREFORE, to induce the Landlord to enter into said Lease, which
Lease is dated this day and is being executed simultaneously herewith, the
Guarantor hereby agrees as follows:
1. (a) The Guarantor jointly and severally unconditionally guarantees to
the Landlord and the successors and assigns of the Landlord the full and
punctual performance and observance, by the Tenant, of all of the terms,
covenants and conditions in said Lease contained on Tenant's part to be kept,
performed or observed.
(b) If, at any time, default shall be made by the Tenant in the
performance or observance of any of the terms, covenants or conditions in said
Lease contained on the Tenant's part to be kept, performed or observed, the
Guarantor will keep, perform and observe the same, as the case may be, in place
and stead of the Tenant.
(c) The liability of the Guarantor hereunder shall be enforceable
against the Guarantor without the necessity for any suit or proceedings on the
Landlord's part of any kind or nature whatsoever against the Tenant.
2. Any act of the Landlord, or the successors or assigns of the Landlord,
consisting of a waiver of any of the terms or conditions of said Lease, or the
giving of any consent to any manner or thing relating to said Lease, or the
granting of any indulgences or extensions of time, to the Tenant, may be done
without notice to the Guarantor and without releasing the obligations of the
Guarantor hereunder.
3. The obligations of the Guarantor hereunder shall not be released by
Landlord's receipt, application or release of security given for the performance
and observance of covenants
<PAGE>
and conditions in said Lease contained on the Tenant's part to be performed or
observed; nor by any modification of such Lease, but in the case of any such
modification the liability of the Guarantor shall be deemed modified in
accordance with the terms of any such modification of the Lease.
4. The liability of the Guarantor hereunder shall in no way be affected
by (a) the release or discharge of the Tenant in any creditors' receivership,
bankruptcy or other proceedings; (b) the impairment, limitation or modification
of the liability of the Tenant or the estate of the Tenant in bankruptcy, or of
any remedy for the enforcement of the Tenant's said liability under the Lease,
resulting from the operation of any present or future provision of the National
Bankruptcy Act or other statute or from the decision in any court; (c) the
rejection or disaffirmance of the Lease in any such proceedings; (d) the
assignment or transfer of the Lease by the Tenant; (e) any disability or other
defense of the Tenant, or (f) the cessation from any cause whatsoever of the
liability of the Tenant.
5. Until all of the covenants and conditions in said Lease on the
Tenant's part to be performed and observed are fully performed and observed, the
Guarantor: (a) shall have no right of subrogation against the Tenant by reasons
of any payments or acts of performance by the Guarantor hereunder; and (b)
waives any right to enforce any remedy which the Guarantor now or hereafter
shall have against the Tenant by reason of any one or more payment or acts of
performance in compliance with the obligations of the Guarantor hereunder.
6. This Guaranty shall apply to the said Lease and to any renewal or
extension thereof.
7. This instrument may not be changed, modified, discharged or terminated
orally or in any manner other than by an agreement in writing signed by the
Guarantor and the Landlord.
IN WITNESS WHEREOF, the Guarantor has hereunto set his hands and seals
the ____day of September 1989.
GUARANTOR:
CAVENHAM HOLDINGS
BY:__________________________________
THE GRAND UNION ACQUISITION CORP.
BY:__________________________________
PAGE 2
<PAGE>
DESCRIPTION
ALL THAT CERTAIN PLOT, piece or parcel of land situate, lying and being in
the Town of Montgomery, County of Orange and State of New York, and being more
particularly bounded and described as follows:
BEGINNING at a point on the northerly side of Bracken Road, said point
being the southeasterly corner of the premises, being marked by an iron pipe,
being the southwesterly corner of the lands now or formerly of Toohey (Tax Lot
30-1-25 on the Town of Montgomery tax map) and running thence (1) North 84 32
22 West along the northerly side of Bracken Road 583.56 feet to the
southwesterly corner of the premises and the southeasterly corner of lands to be
retained by Anthonisen, thence; (2) northeasterly along the westerly line of the
premises and the easterly line of those lands to be retained by Anthonisen the
following two (2) courses and distances: (a) North 05 27 38 East 190.97 feet,
thence; (b) North 21 43 58 East 636.85 feet to a point in the southerly line
of lands now or formerly of Geraghty, being the northwesterly corner of the
premises and the northeasterly corner of those lands to be retained by
Anthonisen, thence; (3) South 68 16 02 East along the northerly line of the
premises (and through a stone wall for a portion thereof) and the southerly line
of lands now or formerly of Geraghty (Tax Lot 24-1-7.1), Yannone (Tax Lot
24-1-7.2), Compa (Tax Lot 24-1-18.1) and DeWitt (Tax Lot 24-1-13) the distance
of 768.00 feet to a point in the westerly line of lands now or formerly of
Bromberg, Jacobowitz and Kramer (Tax Lot 23-1-57.1) and being the northeasterly
corner of the premises and the southeasterly corner of lands now or formerly of
DeWitt, thence; (4) South 22 45 57 West along the westerly line of said lands
now or formerly of Bromberg, Jacobowitz and Kramer 367.78 feet to an iron
marking the southwesterly corner of said lands of Bromberg, Jacobowitz and
Kramer and being the northwesterly corner of other lands to be retained by
CONTINUED
<PAGE>
DESCRIPTION CONTINUED PAGE 2
Anthonisen, thence; (5) South 22 59 41 West along the westerly line of said
others lands to be retained by Anthonisen 99.71 feet to an iron pipe marking the
northeasterly corner of lands now or formerly of Toohey (as aforesaid), thence;
(6) North 76 53 32 West along the northerly line of said lands now or
formerly of Toohey 132.45 feet to the northwesterly corner of said lands now or
formerly of Toohey, thence; (7) South 26 38 04 West along the westerly line
of said lands now or formerly of Toohey 170.01 feet to an iron pipe on the
northerly side of Bracken Road, being the southwesterly corner of said lands now
or formerly of Toohey, the southeasterly corner of the premises and the point
or place of beginning.
<PAGE>
October 2, 1989
The Grand Union Company
201 Willowbrook Boulevard
Wayne, New Jersey 07470-0966
Re: Lease Agreement between Mack Bracken Road Properties
Limited and Montgomery 89 Associates L.P., and
The Grand Union Company; Bracken Road, Montgomery, NY
Gentlemen:
Notwithstanding anything contained in the above-referenced lease to the
contrary, in the event our lender shall require the maintenance of an escrow
reserve for the tax or insurance obligations of the Tenant or for any other
reoccurring charges required pursuant to the lease, you agree to promptly pay to
the escrowee appointed by the lender the required amount as same may be
periodically adjusted from time to time.
You shall be free to deal directly with said lender in an effort to obtain said
lender's waiver of any such requirement or to arrange for the escrowee to
maintain any such escrow reserve in an interest-bearing account for your
benefit.
If the foregoing accurately reflects our understanding, please sign and return a
copy of this letter to the undersigned.
Very truly yours,
MACK BRACKEN ROAD PROPERTIES
LIMITED
BY:
-------------------------
MONTGOMERY 89 ASSOCIATES L.P.
BY: HAMPSHIRE MANAGEMENT COMPANY,
General Partner
By: /s/ James E. Hanson II
-------------------------
JAMES E. HANSON II
THE GRAND UNION COMPANY
BY: Raymond H. Ayers
----------------------
Raymond H. Ayers
Vice President
<PAGE>
October 2, 1989
The Grand Union Company
201 Willowbrook Boulevard
Wayne, New Jersey 07470-0966
Re: Lease Agreement between Mack Bracken Road Properties
Limited and Montgomery 89 Associates L.P. ("Landlord"), and The Grand
Union Company ("Tenant"); Bracken Road, Montgomery, New York
Gentlemen:
Notwithstanding anything contained in the above-referenced lease to the
contrary, in the event Landlord is unable to obtain a nondisturbance agreement
from a future mortgagee as required by Section 13.01 of the Lease as a result of
the requirements set forth in said Section 13.01 that said mortgagee must agree
to make the proceeds of casualty insurance available to Landlord for
restoration, then, and in that event, you hereby agree that said requirement
obligating said mortgagee to make the proceeds of casualty insurance available
to Landlord for restoration shall be deemed waived and eliminated from the
provisions of said Section 13.01 with the express understanding that in the
event of a casualty Landlord will make available to the Tenant for restoration
of the Premises an amount equal to the proceeds of insurance, provided that at
the time of the casualty there shall be at least ten (10) years remaining in the
Term of the Lease, failing which you shall be required to exercise the next
successive renewal option(s) such that the remaining term of the Lease shall be
at least ten (10) years. In the event casualty occurs at any time after the
expiration of the first year of the third renewal term and if Landlord does not
elect to make available to the Tenant an amount equal to the insurance proceeds,
then, and in that event, Tenant shall have the right to cancel and terminate the
Lease provided that Tenant shall pay to Landlord any difference in the amount of
insurance proceeds and the costs of restoration of the Premises, in the event
the cost of restoration shall exceed the amount of insurance proceeds.
<PAGE>
The Grand Union Company
October 2, 1989
Page Two
If the foregoing accurately reflects our understanding, please sign and return a
copy of this letter to the undersigned.
Very truly yours,
MACK BRACKEN ROAD PROPERTIES
LIMITED
BY:
-------------------------
MONTGOMERY 89 ASSOCIATES L.P.
BY: HAMPSHIRE MANAGEMENT COMPANY,
General Partner
By: /s/ James E. Hanson II
-------------------------
JAMES E. HANSON II
THE GRAND UNION COMPANY
BY: Raymond H. Ayers
----------------------
Raymond H. Ayers
Vice President
<PAGE>
New York Region
EXHIBIT B KIM KOHLER
as of 1/15/96
102 OPERATING
STORE LOCATION STATE COUNTY
OPERATING STORES
1 PORT JEFFERSON NY SUFFOLK
6 LITTLE NECK NY QUEENS
7 HERRICKS NY NASSAU
8 NORTH PORT WASHINGTON NY NASSAU
36 MASSAPEQUA NY NASSAU
38 SMITHTOWN NY SUFFOLK
39 WEST HEMPSTEAD NY NASSAU
52 GARDEN CITY NY NASSAU
64 NORTH BELLMORE NY NASSAU
65 WEST BABYLON NY SUFFOLK
68 DEER PARK NY SUFFOLK
82 SAYVILLE NY SUFFOLK
84 COMMACK NY SUFFOLK
95 NORTH PORT NY SUFFOLK
98 WEST ISLIP NY SUFFOLK
107 MAHOPAC NY PUTNAM
114 PEEKSKILL NY WESTCHESTER
130 TARRYTOWN NY WESTCHESTER
137 LARCHMONT NY WESTCHESTER
155 DARIEN CT FAIRFIELD
203 PLEASANTVILLE NY WESTCHESTER
207 NEW CANAAN CT FAIRFIELD
212 RIDGEFIELD CT FAIRFIELD
213 NORWALK CT FAIRFIELD
227 CROTON-ON-HUDSON NY WESTCHESTER
231 NEWTOWN CT FAIRFIELD
239 DOBBS FERRY NY WESTCHESTER
242 TRUMBULL CT FAIRFIELD
247 MT KISCO NY WESTCHESTER
248 CHAPPAQUA NY WESTCHESTER
416 BLEEKER ST. NY MANHATTAN
422 COLD SPRING NY PUTNAM
434 BRONX-TREMONT NY BRONX
437 GLENVILLE CT FAIRFIELD
801 BEACON NY DUTCHESS
805 EASTCHESTER NY WESTCHESTER
810 WESTPORT CT FAIRFIELD
811 GREENWICH CT FAIRFIELD
812 GLENBROOK CT FAIRFIELD
820 FISHKILL NY DUTCHESS
823 CARMEL NY PUTNAM
825 MONROE CT FAIRFIELD
827 NEW FAIRFIELD CT FAIRFIELD
828 SOUTHBURY CT NEW HAVEN
829 PAWLING NY DUTCHESS
3100 ELMWOOD PARK NJ BERGEN
3101 DOVER TOWNSHIP NJ OCEAN
3103 SUFFERN NY ROCKLAND
3109 HACKENSACK NJ BERGEN
3110 MATAMORAS PA PIKE
3112 WOODRIDGE NJ BERGEN
<PAGE>
EXHIBIT B KIM KOHLER
as of 1/15/96
STORE LOCATION STATE COUNTY
3109 HACKENSACK NJ BERGEN
3110 MATAMORAS PA PIKE
3112 WOODBRIDGE NJ BERGEN
3114 MONROE NY ORANGE
3116 WASHINGTONVILLE NY ORANGE
3120 MANALAPAN NJ MONMOUTH
3122 LIVINGSTON NJ ESSEX
3150 GOSHEN NY ORANGE
3151 FAIRLAWN-RADBURN NJ BERGEN
3180 RIDGEWOOD NJ BERGEN
3197 SOMMERVILLE NJ SOMERSET
3250 BERKELEY HEIGHTS NJ UNION
3253 NORTH BRUNSWICK NJ MIDDLESEX
3269 CORNWALL NY ORANGE
3273 DENVILLE NJ MORRIS
3277 HIGHLAND FALLS NY ORANGE
3281 TENAFLY NJ BERGEN
3282 CLIFTON-LEXINGTON NJ PASSAIC
3286 CLOSTER NJ BERGEN
3291 TEANECK NJ BERGEN
3400 MILFORD PA PIKE
3451 CLIFTON-BROAD NJ PASSAIC
3457 WALDWICK NJ BERGEN
3463 RAMAPO NY ROCKLAND
3472 MONTVALE-CHESTNUT NJ BERGEN
3477 DUMONT NJ BERGEN
3480 LAKE HIAWATHA NJ MORRIS
3481 GREENWOOD LAKE NY ORANGE
3486 BUTLER NJ MORRIS
3489 BASKING RIDGE NJ SOMERSET
3491 MT IVY NY ROCKLAND
3492 POINT PLEASANT NJ OCEAN
3498 MONTVALE-KINDERKAMACK NJ BERGEN
3499 STONY POINT NY ROCKLAND
3545 SOUTH BRUNSWICK NJ MIDDLESEX
3551 WARWICK NY ORANGE
3552 OAKLAND NJ BERGEN
3553 PARAMUS NJ BERGEN
3554 SPARTA NJ SUSSEX
3556 LANDING NJ MORRIS
3558 HOWELL TOWNSHIP NJ MONMOUTH
3562 BRICKTOWNSHIP NJ OCEAN
3563 FLEMINGTON NJ HUNTERDON
3564 ROCKY HILL NJ SOMERSET
3565 RAMSEY NJ BERGEN
3568 MATAWAN NJ MONMOUTH
3570 WESTWOOD NJ BERGEN
3571 RINGWOOD NJ PASSAIC
3572 TOMS RIVER NJ OCEAN
3573 BELLEVILLE NJ ESSEX
3574 WYCKOFF NJ BERGEN
3575 WEST NYACK NY ROCKLAND
3576 FORT LEE NJ BERGEN
3580 MIDDLETOWN NJ MONMOUTH
<PAGE>
NORTHERN REGION
- ---------------
EXHIBIT B KIM KOHLER
as of 1/15/96
128 OPERATING
OPERATING STORES
1103 JOHNSON VT LAMOILLE
1106 FORT EDWARDS NY WASHINGTON
1107 ROUSES POINT NY CLINTON
1112 ALBANY-LIQUOR STORE NY ALBANY
1113 POULTNEY VT RUTLAND
1114 CORINTH NY SARATOGA
1134 BURLINGTON VT CHITTENDON
1135 KEESVILLE NY ESSEX
1139 WOODSTOCK NY ULSTER
1147 LA GRANGE NY DUTCHESS
1153 PORT HENRY NY ESSEX
1160 MANCHESTER VT BENNINGTON
1161 ENOSBURG FALLS VT FRANKLIN
1166 STOWE VT LAMOILLE
1167 SOUTH BURLINGTON VT CHITTENDEN
1169 RUTLAND VT RUTLAND
1171 SARANAC LAKE NY FRANKLIN
1175 WHITEHALL NY WASHINGTON
1183 PLATTSBURG-AIRBASE NY CLINTON
1195 SCHROON LAKE NY ESSEX
1197 ST. ALBANS VT FRANKLIN
1198 NORTHVILLE NY FULTON
1370 TUPPER LAKE NY FRANKLIN
1802 FORT PLAIN NY MONTGOMERY
1803 STAMFORD NY DELAWARE
1804 INDIAN LAKE NY HAMILTON
1805 SARANAC LAKE NY ESSEX
1810 LUDLOW VT WINDSOR
1811 WINDSOR VT WINDSOR
1812 BRUNSWICK-TROY NY RENSSLAER
1814 SOUTH BURLINGTON VT CHITTENDEN
1815 GRANVILLE NY WASHINGTON
1816 PLEASANT VALLEY NY DUTCHESS
1818 WAITSFIELD VT WASHINGTON
1819 ESSEX CENTER VT CHITTENDON
1820 NEWPORT VT ORLEANS
1821 ESSEX JUNCTION VT CHITTENDON
1823 BURNT HILLS NY SARATOGA
1824 RHINEBECK NY DUTCHESS
1825 ELIZABETHTOWN NY ESSEX
1826 CHESTERTOWN NY WARREN
1828 NORTHFILED VT WASHINGTON
1836 BENNINGTON VT BENNINGTON
1844 BALLSTON SPA NY SARATOGA
1845 CHAMPLAIN NY CLINTON
1852 HOOSICK FALLS NY RENSSELAER
1855 ELSMERE NY ALBANY
1859 PERU NY CLINTON
1861 BRATTLEBORO VT WINDHAM
1867 GREENWICH NY WASHINGTON
<PAGE>
EXHIBIT B KIM KOHLER
as of 1/15/96
128 OPERATING
STORE LOCATION STATE COUNTY
1870 BARRE VT WASHINGTON
1872 PALANTINE BRIDGE NY MONTGOMERY
1873 TICONDEROGA NY ESSEX
1874 HYDE PARK NY DUTCHESS
1876 MILTON VT CHITTENDON
1878 DOVER PLAIN NY DUTCHESS
1879 LOUDONVILLE NY ALBANY
1884 BRISTOL VT ADDISON
1885 HARDWICK VT ULSTER
1888 ELLENVILLE NY ULSTER
1892 MALTA NY SARATOGA
1893 WINOOSKI VT CHITTENDEN
1895 AMENIA NY DUTCHESS
1897 HUDSON FALLS NY WASHINGTON
1899 RAVENA NY ALBANY
1900 MIDDLEBURGH NY SCHOHARIE
1902 LAKE PLACID NY ESSEX
1903 COXSACKIE NY GREENE
1905 WATERVLIET NY ALBANY
1906 GLENMONT NY ALBANY
1907 HIGHLAND NY ULSTER
1908 FAIR HAVEN VT RUTLAND
1909 NORTH CREEK NY WARREN
1914 HANOVER NH GRAFTON
1915 WEST LEBANON NH GRAFTON
1922 MORRISVILLE VT LAMOILLE
1925 KINGSTON NY ULSTER
1928 SPRINGFIELD VT WINDSOR
1930 GUILDERLAND NY ALBANY
1933 MONTPELIER VT WASHINGTON
1935 SCHENECTADY NY SCHENECTADY
1937 AUSABLE FORKS NY ESSEX
1938 LINCOLN NH GRAFTON
1939 BRADFORD VT ORANGE
1940 NISKAYUNA NY SCHENECTADY
1941 BOLTON LANDING NY WARREN
1942 WILLSBORO NY ESSEX
1943 HOPEWELL JUNCTION NY DUTCHESS
1946 WATERFORD NY SARATOGA
1947 SCOTIA NY SCHENECTADY
1950 SAUGERTIES NY ULSTER
1951 WILMINGTON VT WINDHAM
1953 SCHODACK NY RENSSELAER
1954 WARRENSBURG NY WARREN
1955 CAMBRIDGE NY WASHINGTON
1957 MECHANICVILLE NY SARATOGA
1958 SWANTON VT FRANKLIN
1960 EAST GREENBUSH NY RENNSELAER
1962 BROADALBIN NY FULTON
1966 COLCHESTER VT CHITTENDON
1967 RANDOLPH VT ORANGE
1968 WATERBURY VT WASHINGTON
1969 WHITE RIVER VT WINDSOR
1973 TANNERSVILLE NY GREENE
1974 ROTTERDAM NY SCHENECTADY
1975 CLIFTON PARK NY SARATOGA
<PAGE>
EXHIBIT B KIM KOHLER
as of 1/15/96
STORE LOCATION STATE COUNTY
1974 ROTTERDAM NY SCHENECTADY
1975 CLIFTON PARK NY SARATOGA
1977 VALATIE NY COLUMBIA
1979 WAPPINGERS FALLS NY DUTCHESS
1981 WOODSTOCK VT WINDSOR
1983 ST. JOHNSBURY VT CALEDONIA
1985 NORTH CLARENDON VT RUTLAND
1988 CHATHAM NY COLUMBIA
1989 SCHAGHTICOKE NY RENSSELAER
1992 BRANDON VT RUTLAND
1993 MIDDLEBURY VT ADDISON
1994 SOUTH GLENS FALLS NY SARATOGA
1996 PLATTSBURG NY CLINTON
1997 SARATOGA NY SARATOGA
2101 SIDNEY NY DELAWARE
2110 BINGHAMTON NY BROOME
2133 VESTAL NY BROOME
2150 HAMILTON NY MADISON
2312 VESTAL PLAZA NY BROOME
2356 HANCOCK NY DELAWARE
2359 NORWICH NY CHENAGO
2362 ONEONTA NY OTSEGO
2370 BINGHAMTON NY BROOME
2373 DELHI NY DELAWARE
<PAGE>
CGX080 GU Category Code Listing RUN DATE 11/03/95
RCG080
Exhibit C
- -GU CATEGORY CODE- DESCRIPTION
MAJ INT MIN
085 00 00 HEALTH & BEAUTY AIDS
085 01 00 ORAL HYGIENE
085 01 01 TOOTHPASTE - TUBE - TARTAR
085 01 02 TOOTHPASTE - TUBE - NON TARTAR
085 01 03 TOOTHPASTE - PUMP - TARTAR
085 01 04 TOOTHPASTE - PUMP - NON TARTAR
085 01 05 TOOTHPASTE - SMOKERS/MISC
085 01 06 TOOTH POLISH
085 01 10 DENTURE CLEANSERS
085 01 11 DENTURE ADHESIVES
085 01 12 ORAL HYGIENE MEDICATIONS
085 01 20 TOOTHBRUSHES
085 01 21 DENTAL FLOSS
085 01 30 MOUTHWASH
085 01 31 BREATH SPRAY/DROPS
085 01 98 ORAL HYGIENE PREPACKS
085 01 99 ORAL HYGIENE RACKS
085 02 00 HAIR CARE PREPARATIONS
085 02 01 HAIR CARE PREPARATIONS HAIR SPRAY AEROSOL
085 02 02 HAIR CARE PREPARATIONS HAIR SPRAY NON AEROSOL
085 02 03 HAIR CARE PREPARATIONS WIG ACCESSORIES
085 02 04 HAIR CARE PREPARATIONS WAVESET GEL & LOTIONS
085 02 05 HAIR CARE PREPARATIONS SHAMPOOS REG
<PAGE>
CGX080 GU Category Code Listing RUN DATE 11/03/95
RCG080
- -GU CATEGORY CODE- DESCRIPTION
MAJ INT MIN
085 02 06 HAIR CARE PREPARATIONS DANDRUFF SHAMPOOS
085 02 07 HAIR CARE PREPARATIONS CREME RINSES
085 02 08 HAIR CARE PREPARATIONS CONDITIONERS
085 02 09 HAIR CARE PREPARATIONS HAIR COLORINGS
085 02 10 HAIR CARE PREPARATIONS HAIR COLORINGS ACCESSORIES
085 02 11 HAIR CARE PREPARATIONS HOME PERMANENTS
085 02 12 HAIR CARE PREPARATIONS MEN'S HAIR SPRAYS
085 02 13 HAIR CARE PREPARATIONS MEN'S TONIC & CREAMS
085 02 14 HAIR CARE PREPARATIONS STYLING SPRITZS
085 03 00 DEODORANTS & ANTI PERSPIRANTS
085 03 01 DEODORANTS CREAM & PAD
085 03 02 DEODORANTS STICK
085 03 03 ANTI PERSPIRANTS STICK
085 03 04 DEODORANTS ROLL ON
085 03 05 ANTI PERSPIRANTS ROLL ON
085 03 06 DEODORANTS SPRAYS
085 03 07 ANTI PERSPIRANTS SPRAYS
085 03 08 BODY SPRAYS (IMPULSE, ETC)
085 03 99 MISC DEOD & ANTI PERSPIRANTS
085 04 00 SHAVING SUPPLIES
085 04 01 SHAVING SUPPLIES RAZORS
085 04 02 SHAVING SUPPLIES BLADES
085 04 03 SHAVING SUPPLIES CREAMS & GELS
085 04 04 SHAVING SUPPLIES AFTER SHAVE & COLOGNE
085 04 99 SHAVING SUPPLIES, OTHERS
085 05 00 BABY PRODUCTS/BABY NEEDS NON-HBA
085 05 01 BABY PRODUCTS POWDER
085 05 02 BABY PRODUCTS BABY OILS
085 05 03 BABY PRODUCTS BABY LOTIONS & CREAMS
085 05 04 BABY PRODUCTS BABY OINTMENTS
085 05 05 BABY PRODUCTS BABY SHAMPOOS
085 05 06 BABY PRODUCTS BABY BOTTLES & ACCESSORIES
085 05 07 BABY PRODUCTS BABY WIPES & CLOTH
085 05 08 BABY PRODUCTS MISC. BABY
085 05 20 BABY NEEDS NON-HBA CLOTHING-EXCEPT PANTS
085 05 21 BABY NEEDS NON-HBA PANTS
085 05 22 BABY NEEDS NON-HBA FEEDING IMPLEMENTS TEETHERS & PACIF
085 05 23 BABY NEEDS NON-HBA MEDICAL ITEMS
085 05 24 BABY NEEDS NON-HBA BATH AND PERSONAL CARE
085 05 25 BABY NEEDS NON-HBA TOYS
085 05 29 BABY NEEDS NON-HBA MISCL
085 06 00 FIRST AID PRODUCTS
085 06 01 FIRST AID PRODUCTS PLASTIC STRIPS
<PAGE>
CGX080 GU Category Code Listing RUN DATE 11/03/95
RCG080
- -GU CATEGORY CODE- DESCRIPTION
MAJ INT MIN
085 06 02 FIRST AID PRODUCTS TAPE BANDAGE GUAZE DRESSING
085 06 03 FIRST AID PRODUCTS COTTON BALLS
085 06 04 FIRST AID PRODUCTS COTTON SWABS
085 06 05 FIRST AID PRODUCTS PETROLEUM JELLY
085 06 06 FIRST AID PRODUCTS FIRST AID LIQUID CREAMS ANTISEPTI
085 06 07 FIRST AID PRODUCTS SUPPOSITORIES & OINTMENTS
085 06 08 FIRST AID - WRAPS/BRACES
085 07 00 SKIN PREPARATIONS
085 07 01 SKIN PREPARATIONS ACNE MEDICATIONS
085 07. 02 SKIN PREPARATIONS MEDICATED/SPECIAL SOAPS
085 07 03 SKIN PREPARATIONS FACE CREAMS & LOTIONS
085 07 04 SKIN PREPARATIONS HAND LOTIONS & CREAMS
085 07 05 SKIN PREPARATIONS BATH OILS & BEADS
085 07 06 SKIN PREPARATIONS TALC & DUSTING POWDERS
085 07 07 SKIN PREPARATIONS COLOGNES & PERFUMES
085 07 08 SKIN PREPARATIONS MISC SKIN PREPARATIONS
085 07 09 SKIN PREPARATIONS NAIL POLISH REMOVERS
085 07 10 SKIN PREPARATIONS-FACIAL SCRUBS, FRESHENERS ETC.
085 08 00 EYE & EAR PREPARATIONS
085 08 01 EYE DROPS & LOTIONS
085 08 02 CONTACT LENS PREPARATIONS
085 08 03 EAR ITEMS
085 08 04 READING GLASSES/ACCESSORIES
085 09 00 ANTACIDS & LAXATIVES
085 09 01 LIQUID ANTACIDS
085 09 02 ANTACID TABLETS
085 09 03 POWDER & GRANULE ANTACIDS
085 09 04 PILL TABLET & GRANULE LAXATIVES
085 09 05 LIQUID LAXATIVES
085 09 06 SUPPOSITORIES & ENEMAS
085 09 07 MISC ANTACIDS & LAXATIVES
085 10 00 COUGH & COLD REMEDIES
085 10 01 LIQUID COUGH & COLD MEDICINES
085 10 02 NASAL SPRAY-NOSE DROPS
085 10 03 THROAT LOZENGES
085 10 04 COLD TABLETS
085 10 05 DECONGESTANT TABLETS & CAPSULES
085 10 06 SINUS TABLETS & CAPSULES
085 10 07 BRONCHIAL SPRAYS & TABLETS
085 10 08 ALLERGY TABLETS & CAPSULES
085 10 09 MISC COUGH & COLD
085 11 00 ANALGESICS
<PAGE>
CGX080 GU Category Code Listing RUN DATE 11/03/95
RCG080
- -GU CATEGORY CODE- DESCRIPTION
MAJ INT MIN
085 11 01 ASPIRIN TABLETS
085 11 02 ASPIRIN CAPSULES
085 11 03 NON ASPIRIN TABLETS
085 11 04 NON ASPIRIN CAPSULES
085 11 05 ARTHRITIS STRENGTH TABLETS & CAPSULES
085 11 06 SLEEP AIDS (DOWNERS)
085 11 07 NON SLEEP AIDS (UPPERS)
085 11 08 EXTERNAL ANALGESICS (BEN GAY, ABSORBINE JR, ETC)
085 11 09 MENSTRUAL ANALGESICS (PAMPRIN, MIDOL, ETC)
085 11 99 MISC ANALGESICS
085 12 00 VITAMINS
085 12 01 PRIVATE LABEL NATURAL
085 12 02 NATIONAL BRAND NATURAL
085 12 03 NATIONAL BRAND MULTIPLES
085 12 04 PRIVATE LABEL MULTIPLES
085 12 05 VITAMIN/DIETARY SUPPLEMENTS - ALL
085 13 00 FEMININE HYGIENE PRODUCTS
085 13 01 FEMININE HYGIENE PRODUCTS TAMPONS
085 13 02 FEMININE HYGIENE PRODUCTS SANITARY NAPKINS
085 13 03 FEMININE HYGIENE PRODUCTS SANITARY BELTS
085 13 04 FEMININE HYGIENE PRODUCTS FEMININE DEODORANTS
085 13 05 FEMININE HYGIENE PRODUCTS DOUCHE POWDERS & LIQUIDS
085 13 06 FEMININE HYGIENE PRODUCTS MISC
085 13 07 FEMININE HYGIENE PRODUCTS, PANTY LINERS
085 14 00 FOOT PRODUCTS
085 14 01 FOOT PRODUCTS DR. SCHOLLS
085 14 02 FOOT PRODUCTS, OTHERS
085 15 00 DIET AIDS - SUPPLEMENTS & BARS
085 15 01 DIET AIDS - SUPPLEMENTS & BARS - ALL
085 16 00 BIRTH CONTROL DEVICES
085 16 01 BIRTH CONTROL DEVICES, ALL
085 17 00 HOME HEALTH & SUPPLIES
085 17 01 HOME HEALTH & SUPPLIES, ALL
085 18 00 DIABETIC SUPPLIES
085 18 01 DIABETIC SUPPLIES, ALL
085 19 00 HEALTH APPLIANCES
085 19 01 HEALTH APPLIANCES, ALL
085 20 00 INCONTINENTS
<PAGE>
CGX080 GU Category Code Listing RUN DATE 11/03/95
RCG080
- -GU CATEGORY CODE- DESCRIPTION
MAJ INT MIN
085 20 01 INCONTINENTS, ALL
085 70 00 HEALTH CARE 8 BEAUTY CARE (GREENHOUSE)
085 70 01 HEALTH CARE
085 70 02 BEAUTY CARE
085 80 00 SEASONAL & PROMOTIONAL H.B.A.
085 80 01 SUNTAN CREAMS, LOTIONS, SPRAYS
085 80 02 SUNGLASSES
085 90 00 WAREHOUSE BUYS GEN MDSE & H.B.A.
085 90 01 WAREHOUSE BUYS GEN MDSE & H.B.A.
085 99 00 MISCELLANEOUS H.B.A.
085 99 01 MISCELLANEOUS ALL
085 99 02 GENERAL MERCHANDISE PREPACK/ HBA PREPACK
085 99 03 HBC TEST
085 99 04 GM TEST
085 99 05 TRAIL SIZE
086 00 00 HAIR CARE & COSMETICS
086 03 00 HAIR CARE
086 03 01 HAIR CARE CURLERS & ROLLERS
086 03 02 HAIR CARE PINS & CLIPS
086 03 03 HAIR CARE NETS, PAPERS, TAPES, ACCOUTREMENTS
086 03 04 HAIR CARE COMBS
086 03 05 HAIR CARE BRUSHES
086 03 06 HAIR CARE BARRETTES
086 03 07 HAIR CARE HEADBANDS, PONYTAIL HOLDERS, ETC
086 03 08 HAIR CARE CAPS-SHOWER, SLUMBER, RAIN
086 03 09 HAIR IMPLEMENTS, TWEEZERS, OTHER TOOLS
086 03 99 MIRRORS
086 04 00 COSMETICS
086 04 01 MAYBELLINE EYE COSMETICS
086 04 02 MAYBELLINE LIPSTICKS, ETC
086 04 03 MAYBELLINE ROUGES, POWDERS, ETC
086 04 04 MAYBELLINE NAIL POLISHES
086 04 05 MAX FACTOR EYE COSMETICS
086 04 06 MAX FACTOR LIPSTICKS, ETC
086 04 07 MAX FACTOR ROUGE, POWDER, ETC
086 04 08 MAX FACTOR NAIL POLISHES
086 04 09 ANDREA EYE COSMETICS
086 04 10 ANDREA NAIL POLISHES
086 04 11 COVER GIRL EYE COSMETICS
<PAGE>
CGX080 GU Category Code Listing RUN DATE 11/03/95
RCG080
- -GU CATEGORY CODE- DESCRIPTION
MAJ INT MIN
086 04 12 COVER GIRL LIPSTICKS, ETC
086 04 13 COVER GIRL ROUGES, POWDERS, ETC
086 04 14 COVER GIRL NAIL POLISHES
086 04 15 BONNE BELL EYE COSMETICS
086 04 16 BONNE BELL LIPSTICKS, ECT
086 04 17 BONNE BELL ROUGE, POWDERS, ECT
086 04 18 AZIZA EYE COSMETICS
086 04 19 AZIZA ROUGE, POWDERS, ECT
086 04 20 ALMAY EYE COSMETICS
086 04 21 ALMAY LIPSTICKS, ETC
086 04 22 ALMAY ROUGES, POWDERS, ETC
086 04 23 ALMAY NAIL POLISHES, ETC
086 04 28 CUTEX LIPSTICKS, ETC
086 04 29 CUTEX EYE COSMETICS
086 04 30 CUTEX NAIL POLISHES, ETC
086 04 37 POSNER LIPSTICKS, ALL
086 04 38 POSNER NAIL POLISHES, ETC
086 04 40 HONEY & SPICE LIPSTICKS
086 04 44 L'OREAL EYE COSMETICS
086 04 45 L'OREAL LIPSTICKS, ETC
086 04 46 L'OREAL ROUGES, POWDERS, ETC
086 04 47 L'OREAL NAIL POLISHES, ETC
086 04 51 QUENCHER LIPSTICKS, ETC
086 04 53 QUENCHER NAIL POLISHES, ETC
086 04 54 REVLON EYE COSMETICS
086 04 55 REVLON LIPSTICKS, ETC
086 04 56 REVLON ROUGES, POWDERS, ETC
086 04 57 REVLON NAIL POLISHES, ETC
086 04 61 SALLY HANSEN EYE COSMETICS
086 04 62 SALLY HANSEN LIPSTICKS, ETC
086 04 63 SALLY HANSEN ROUGE, POWDERS, ETC
086 04 64 SALLY HANSEN NAIL POLISH, ETC
086 04 66 ARTMATIC EYE COSMETICS
086 04 67 ARTMATIC LIPSTICKS, ETC
086 04 68 ARTMATIC ROUGE, POWDERS, ETC
086 04 69 ARTMATIC NAIL POLISHES, ETC
086 04 70 FLAME GLO EYE COSMETICS
086 04 71 FLAME GLO LIPSTICKS, ETC
086 04 72 FLAME GLO ROUGES, POWDERS, ETC
086 04 76 HAZEL BISHOP EYE COSMETICS
086 04 77 HAZEL BISHOP LIPSTICKS, ETC
086 04 78 HAZEL BISHOP ROUGES, POWDERS ETC
086 04 79 HAZEL BISHOP NAIL POLISHES, ETC
086 04 80 WET N WILD EYE COSMETICS
086 04 81 WET N WILD LIPSTICKS, ETC
086 04 82 WET N WILD ROUGES, PWDERS, ETC
086 04 83 WET N WILD NAIL POLISHES, ETC
<PAGE>
CGX080 GU Category Code Listing RUN DATE 11/03/95
RCG080
- -GU CATEGORY CODE- DESCRIPTION
MAJ INT MIN
086 04 87 CORN SILK ROUGES, POWDERS, ETC
086 04 92 ULTRA SHEEN ROUGES, POWDERS ETC.
086 04 99 COSMETICS, OTHERS
087 00 00 HOSIERY
087 01 00 PRIVATE LABEL ASSTD PREPACKS
087 01 01 PRIVATE LABEL ASSTD PREPACKS, ALL
087 05 00 P/L THRIFTIES HOSIERY
087 05 01 THRIFTIES PANTY HOSE
087 05 02 THRIFTIES KNEE HIGH
087 06 00 P/L FASHION HOSIERY
087 06 01 P/L FASHION PANTY HOSE
087 06 02 P/L FASHION KNEE HIGHS
087 07 00 P/L DELUXE HOSIERY
087 07 03 DANCERS KNEE HIGH STOCKINGS
087 07 04 DANCERS SHEER TO WAIST P/H
087 07 06 DANCERS DELUXE P/H
087 07 07 DANCERS SHEER SUPPORT P/H
087 07 08 DANCERS CLASSIC EX LARGE P/H
087 07 09 DANCERS REAL P/H
087 07 10 DANCERS TRIM TOP P/H
087 07 11 ULTRA SHEER P/H
087 07 99 PRIVATE LABEL FIXTURES
087 08 00 NO NONSENSE - HOSIERY
087 08 01 NO NONSENSE - REGULAR
087 08 02 NO NONSENSE - SHEER TO WAIST
087 08 03 NO NONSENSE - KNEE HIGH
087 08 04 NO NONSENSE - CONTROL TOP
087 08 05 NO NONSENSE - LIGHT SUPPORT
087 08 06 NO NONSENSE - SHEER & SILKY
087 08 07 NO NONSENSE - FASHION COLORS
087 08 08 NO NONSENSE 2PACKS-
087 08 99 NO NONSENSE - RACKS
087 09 00 L`EGGS HOSIERY
087 09 01 L`EGGS REGULAR
087 09 02 L`EGGS SHEER ENERGY
087 09 03 L`EGGS SHEER ELEGANCE
087 09 04 L`EGGS KNEE HIGHS
087 09 05 L`EGGS CONTROL TOP
087 09 06 L`EGGS ACTIVE SUPPORT
<PAGE>
CGX080 GU Category Code Listing RUN DATE 11/03/95
RCG080
- -GU CATEGORY CODE- DESCRIPTION
MAJ INT MIN
087 09 99 L`EGGS PREPACKS
087 99 00 HOSIERY, MISCELLANEOUS
087 99 01 AFRO-TIQUE HOSIERY
087 99 99 HOSIERY, MISCELLANEOUS
088 00 00 MISC GENERAL MERCHANDISE
088 01 00 FILM FLASH
088 01 01 NEGATIVE FILM
088 01 02 POSITIVE FILM
088 01 03 INSTANT FILM
088 01 10 PHOTO FINISHING
088 01 11 ENLARGING
088 01 20 CAMERAS
088 01 50 FLASH
088 01 99 FILM FLASH, MISC
088 02 00 BLANK VIDEO TAPES
088 02 01 VHS-REGULAR
088 02 02 VHS-HI GRADE
088 02 03 VHS-PREMIUM GRADE
088 02 04 BETA-HI GRADE
088 02 05 BETA-REGULAR
088 02 09 CLEANING KITS
088 02 98 TAPE LIBRARIES
088 02 99 VIDEO TAPE PREPACKS
088 03 00 VIDEO RENTALS
088 04 00 BLANK AUDIO TAPES
088 04 01 LOW NOISE/NORMAL BIAS (GOOD)
088 04 02 NORMAL BIAS (BETTER)
088 04 03 NORMAL BIAS (BEST)
088 04 04 HIGH BIAS (PREMIUM)
088 04 09 CLEANING KITS
088 04 98 AUDIO LIBRARY/CARRY CASES
088 05 00 PRE-RECORDED AUDIO CASSETTE TAPES
088 05 01 PRE-RECORDED AUDIO CASSETTE TAPES, ALL TITLES
088 10 00 MISC GENERAL MERCHANDISE TOYS, GAMES, OTHERS
088 10 01 MISC GENERAL MERCHANDISE TOYS
088 10 10 MISC GENERAL MERCHANDISE GAMES
088 10 99 MISC GENERAL MERCHANDISE, OTHERS
088 15 00 GENERAL MERCHANDISE SOUVENIRS
<PAGE>
CGX080 GU Category Code Listing RUN DATE 11/03/95
RCG080
- -GU CATEGORY CODE- DESCRIPTION
MAJ INT MIN
088 15 01 GENERAL MERCHANDISE SOUVENIRS, ALL
088 20 00 SEWING NOTIONS
088 20 10 SEWING NOTIONS ALL
088 50 00 CIGARETTE LIGHTERS
088 50 01 CIGARETTE LIGHTERS, DISPOSABLE
088 60 00 CANDLES & ACCESSORIES
088 60 01 COLUMNS
088 60 02 VOTIVES
088 60 03 TAPERS
088 60 04 FEDERALS
088 60 05 SPIRALS
088 60 06 COUNTY PEGS
088 60 07 SPECIALTIES
088 60 08 HOUSEHOLD
088 60 97 VOTIVE CUPS
088 60 98 HOLDERS
088 60 99 MISCELLANEOUS
088 70 00 SEASONAL
088 70 01 FURNITURE
088 90 00 CONTINUITIES
088 90 01 NEWCOR KNIFE, CONTINUITY
088 90 02 COVINGTON STONEWARE, CONTINUITY
088 90 03 PLAYFOLD, CONTINUITY
088 90 04 READERS DIGEST, CONTINUITY
088 90 05 ENCYCLOPEDIA
088 90 06 SESAME STREET
088 90 07 PALMER COOKWARE
088 90 08 FRESH FLOWERS DINNERWARE
088 90 09 FRONT END PEG H.B.C.
089 00 00 CLEANING AIDS
089 01 00 STICK GOODS & REFILLS
089 01 01 BROOMS
089 01 02 SPONGE MOPS
089 01 03 SPONGE MOPS REFILLS
089 01 04 COTTON MOPS (DECK MOPS)
089 01 05 COTTON MOPS (DECK MOPS) REFILLS
089 01 06 DUST MOPS
089 01 07 DUST MOPS REFILLS
089 01 08 WAX APPLICATORS
<PAGE>
CGX080 GU Category Code Listing RUN DATE 11/03/95
RCG080
- -GU CATEGORY CODE- DESCRIPTION
MAJ INT MIN
089 01 09 WAX APPLICATORS REFILLS
089 01 99 STICK GOODS & REFILLS, MISC.
089 10 00 BRUSHES
089 10 01 BOWL BRUSHES
089 10 02 BODY BRUSHES
089 10 03 HAND/NAIL BRUSHES
089 10 04 KITCHEN BRUSHES
089 10 06 DUST PAN BRUSHES
089 10 08 SCRUB BRUSHES
089 10 10 CLOTHES BRUSHES, DELINTERS
089 20 00 DISH/DUST CLOTHS, VAC BAGS, GLOVES
089 20 03 DISH, DUST, ALL PURPOSE CLOTHS
089 20 04 GLOVES, RUBBER
089 20 05 GLOVES, WORK
089 20 06 DUST PANS
089 20 07 VACUUM BAGS, BELTS, FRESHNERS ETC.
089 20 08 30 QT STEP BKT ALM 28581
089 20 09 11 QT NT/TIDY BKT AL 29631
089 30 00 CLOTHESPINS, CLOTHESLINE, MOTHBALLS
089 30 01 CLOTHESPINS
089 30 02 CLOTHESLINE
089 30 03 MOTHBALLS
089 30 04 CLOSET
089 99 00 MISC DEODORIZERS
089 99 01 TOILET BOWL DEODORIZERS
090 00 00 MAGAZINES, BOOKS, NEWSPAPERS
090 01 00 MAGAZINES, FAMILY CIRCLE
090 01 01 MAGAZINES, FAMILY CIRCLE, REGULAR ISSUES
090 01 02 MAGAZINES, FAMILY CIRCLE, SPECIAL ISSUES
090 02 00 MAGAZINES, WOMAN'S DAY
090 02 01 MAGAZINES, WOMAN'S DAY, REGULAR ISSUES
090 02 02 MAGAZINES, WOMAN'S DAY, SPECIAL ISSUES
090 03 00 MAGAZINES/COMIC BOOKS
090 03 01 MAGAZINES, ALL
090 03 02 COMIC BOOKS, ALL
090 05 00 HARDCOVER BOOK-BESTSELLER
090 05 01 HARDCOVER BOOKS-BESTSELLER
<PAGE>
CGX080 GU Category Code Listing RUN DATE 11/03/95
RCG080
- -GU CATEGORY CODE- DESCRIPTION
MAJ INT MIN
090 10 00 PAPERBACK & HARDCOVER BOOKS (SUPERMART)
090 10 01 HARDCOVER BOOK, NEW RELEASE
090 10 02 PAPERBACK-MASS MARKET & TRADE PAPERBACK
090 10 03 PAPERBACK PROMO
090 10 04 HARDCOVER BOOK PROMO
090 10 05 HARDCOVER BOOK-BESTSELLER
090 10 06 PAPERBACK BOOK-BESTSELLER
090 10 07 PAPERBACK BOOKS, MISCELLANEOUS
090 20 00 HARDCOVER & PAPERBACK BOOKS (SHER)
090 20 01 PAPERBACK
090 20 02 PROMOTIONAL BOOKS
090 20 03 CHILDREN AND TRADE BOOKS
090 20 04 COLORING AND ACTIVITY BOOKS
090 20 05 NEW YORK TIMES BEST SELLERS HARDCOVER
090 20 06 PAPERBACK BEST SELLERS
090 20 09 FORMER BEST SELLERS
090 20 99 MISCELLANEOUS
090 50 00 NEWSPAPERS
090 50 01 NEWSPAPERS, ALL
090 60 00 MAPS
090 60 01 MAPS, ALL
091 00 00 PET SUPPLIES
091 01 00 DOG SUPPLIES
091 01 01 FLEA COLLARS
091 01 02 CHEMICALS
091 01 03 RAWHIDE CHEWABLES
091 01 04 TOYS (RUBBER, LATEX)
091 01 05 GROOMING AIDS
091 01 06 COLLARS, CHAINS
091 01 07 LEADS, LEASHES
091 01 08 TIE OUT CHAINS
091 01 09 FEEDING DISHES
091 01 10 PRESSED GELATIN (RAWHIDE) CHEWABLES
091 01 11 TREATS & EDIBLES
091 01 99 MISC DOG PET SUPPLIES
091 02 00 CAT SUPPLIES
091 02 01 CHEMICALS, FLEA COLLARS
091 02 02 TOYS
091 02 03 COLLARS (EXCEPT FLEA)
091 02 04 SNACKS, TREATS
<PAGE>
CGX080 GU Category Code Listing RUN DATE 11/03/95
RCG080
- -GU CATEGORY CODE- DESCRIPTION
MAJ INT MIN
091 02 05 PANS, LINERS, SCOOPS, ETC
091 03 00 BIRD SUPPLIES
091 03 01 FOOD
091 03 02 BIRD TOYS & ACCESSORIES
091 03 03 CAGE SUPPLIES
091 04 00 FISH SUPPLIES
091 04 01 FOOD
091 04 99 FISH SUPPLIES, OTHERS
091 05 00 HAMSTER/GERBIL SUPPLIES
091 05 01 FOOD
091 05 03 CAGE SUPPLIES, LITTER, ETC
091 10 00 PET SUPPLIES, MISC
091 10 99 PET SUPPLIES-MISC
092 00 00 HOUSEWARES
092 01 00 BAKEWARE
092 01 01 FOIL BAKEWARE
092 01 99 FOIL, MISC
092 02 00 BAKEWARE/COOKWARE
092 02 01 COOKWARE ALUMINUM
092 02 02 COOKWARE COATED
092 02 03 BAKEWARE COATED
092 02 04 COOKWARE MICROWAVE
092 02 05 BAKEWARE/GLASS
092 02 06 BAKEWARE TIN
092 02 08 BAKEWARE ALUMINUM
092 02 10 BOXED COOKWARE/ACCESSORIES
092 02 99 COOKWARE/BAKEWARE, MISC
092 03 00 COOKING UTENSILS
092 03 01 COOKING TOOLS
092 03 02 COOKING GADGETS
092 03 99 COOKING UTENSILS, MISC
092 06 00 GADGETS
092 06 01 GADGETS CAN OPENER
092 06 02 GADGETS BOTTLE OPENER
092 06 03 GADGETS PEELERS
092 06 04 GADGETS CHEESE IMPLEMENTS
092 06 05 GADGETS MEASURING
<PAGE>
CGX080 GU Category Code Listing RUN DATE 11/03/95
RCG080
- -GU CATEGORY CODE- DESCRIPTION
MAJ INT MIN
092 06 06 GADGETS GRATERS
092 06 07 GADGETS TIMERS
092 06 08 GADGETS SPATULAS
092 06 09 GADGETS WHISKS
092 06 10 GADGETS THERMOMETERS
092 06 11 GADGETS FUNNELS
092 06 12 GADGETS CUTTING/SERVING BOARDS
092 06 13 GADGETS TEA ITEMS
092 06 14 GADGETS STEAMERS
092 06 15 GADGETS BAKING ITEMS
092 06 16 GADGETS MAGNETS
092 06 99 GADGETS MISC
092 07 00 KITCHEN ACCESSORIES
092 07 01 K/A SINK ITEMS
092 07 02 K/A RANGE ITEMS
092 07 03 K/A CABINET ITEMS
092 07 04 KITCHEN ACCESSORIES, SHELF PAPER & LINERS
092 07 99 KITCHEN ACCESSORIES MISC
092 09 00 STORAGE CONTAINERS
092 09 01 STORAGE CONTAINERS DRY
092 09 02 STORAGE CONTAINERS FREEZER
092 09 03 STORAGE CONTAINERS REFRIGERATOR
092 09 04 STORAGE CONTAINERS ICE TRAYS
092 09 05 STORAGE CONTAINERS PITCHERS, WATER BOTTLES
092 09 06 STORAGE CONTAINERS HOT COLD
092 09 99 STORAGE CONTAINERS MISC
092 10 00 COFFEE FILTERS, SUPPLIES
092 10 03 COFFEE FILTERS, STAR
092 10 04 COFFEE FILTERS, MR. COFFEE
092 10 05 COFFEE FILTERS, MELITTA
092 10 06 COFFEE FILTERS, PRIVATE LABEL
092 10 07 COFFEE POT CLEANERS
092 10 08 COFFEE POTS
092 10 09 TEA POTS
092 10 10 THERMOS
092 10 11 COFFEE MUGS
092 10 12 OTHER MUGS
092 10 99 COFFEE SUPPLIES MISC
092 15 00 SMALL ELECTRICAL APPLIANCES
092 15 01 SMALL ELECTRICAL APPLIANCES, ALL
092 50 00 MISC SEASONAL GEN MDSE
092 50 01 MISC SEASONAL BARBECUE GRILLS
<PAGE>
CGX080 GU Category Code Listing RUN DATE 11/03/95
RCG080
- -GU CATEGORY CODE- DESCRIPTION
MAJ INT MIN
092 50 02 MISC SEASONAL, COOLERS, CHESTS, ETC.
092 50 99 MISC SEASONAL, OTHERS
092 60 00 HARDWARE/TOOLS
092 60 01 HARDWARE, ALL
092 60 02 TOOLS, ALL
092 90 00 BATHROOM ACCESSORIES
092 90 01 BATHROOM ACCESSORIES WASTE
092 90 02 BATHROOM ACCESSORIES LAUNDRY
092 90 99 BATHROOM ACCESSORIES MISC
092 99 00 MISCELLANEOUS
092 99 01 MISCELLANEOUS OVEN MITTENS, POT HOLDERS
092 99 02 MISCELLANEOUS CLIP STRIP PROGRAM
092 99 11 MISCELLANEOUS CANDLES, TABLE/EMERG, STERNO
092 99 21 MISCELLANEOUS STRING (TWINE IN 0930503)
092 99 31 MISCELLANEOUS ASH TRAYS
092 99 99 MISCELLANEOUS, OTHERS
093 00 00 STATIONERY
093 02 00 WRITING IMPLEMENTS
093 02 01 WRITING IMPLEMENTS PENS
093 02 02 WRITING IMPLEMENTS PENCILS
093 02 03 WRITING IMPLEMENTS MARKERS
093 02 04 WRITING IMPLEMENTS CRAYONS
095 02 05 WRITING IMPLEMENTS CHALK
093 02 99 WRITING KITS, PENCILS BOXES
093 03 00 SCHOOL SUPPLIES
093 03 01 SCHOOL SUPPLIES FILLER PAPER
093 03 02 SCHOOL SUPPLIES WIRE BOUND NOTEBOOKS
093 03 03 SCHOOL SUPPLIES LOOSELEAF BINDERS, ETC
093 03 04 SCHOOL SUPPLIES TABLETS
093 03 99 SCHOOL SUPPLIES, OTHERS
093 04 00 HOME AND OFFICE SUPPLIES
093 04 01 HOME AND OFFICE SUPPLIES SUNDRIES
093 04 02 HOME AND OFFICE SUPPLIES SCRATCH/MEMO PADS, TABLETS
093 04 03 HOME AND OFFICE SUPPLIES ENVELOPES
093 04 04 TYPING & CARBON PAPER
093 04 99 HOME AND OFFICE SUPPLIES MISC DESK, ACCOUTREMENTS
093 05 00 TAPES, GLUES, ADHESIVES, TWINE
093 05 01 TGAT - TAPES
<PAGE>
CGX080 GU Category Code Listing RUN DATE 11/03/95
RCG080
- -GU CATEGORY CODE- DESCRIPTION
MAJ INT MIN
093 05 02 TGAT - GLUE, ETC
093 05 03 TGAT - TWINE
093 20 00 ARTIST SUPPLIES
093 20 01 SKETCH PADS, DRAWING TABLETS, ETC
093 20 02 BROWSE, PENS, PENCILS
093 20 03 PAINTS, INKS
093 20 99 MISCELLANEOUS
093 30 00 CHILDRENS ITEMS
093 30 01 CONSTRUCTION PAPER
093 30 02 LEARNING CENTER CHILDRENS TOYS, GAMES, CARDS, ETC
093 30 03 LEARNING CENTER CHILDRENS BOOKS
093 30 99 MISCELLANEOUS
093 50 00 PLAYING CARDS
093 50 01 PLAYING CARDS, ALL TYPES
093 99 00 STATIONERY MISCELLANEOUS
093 99 01 STATIONERY MISCELLANEOUS
094 00 00 BATTERIES, ELECTRICAL, SHOE CARE
094 01 00 BATTERIES, FLASHLIGHTS, BULBS
094 01 01 BATTERIES, DURACELL ALKALINE
094 01 02 BATTERIES, ENERGIZER ALKALINE
094 01 03 BATTERIES, RAYOVAC ALKALINE
094 01 04 BATTERIES, KODAK
094 01 05 BATTERIES, PRIVATE LABEL
094 01 08 BATTERIES, CONDUCTOR
094 01 11 BATTERIES, HEAVY DUTY
094 01 21 BATTERIES, GENERAL PURPOSE
094 01 31 FLASHLIGHT
094 01 80 MARKUP SHIPPERS 3%
094 01 81 MARKUP SHIPPERS 5%
094 01 82 MARKUP SHIPPERS 10%
094 01 98 LIGHT BULBS
094 01 99 MISCELLANEOUS
094 02 00 ELECTRICAL EQUIPMENT
094 02 01 ELECTRICAL EQUIPMENT, ALL
094 02 02 TELEPHONE ACCESSORIES
094 03 00 ELECTRICAL EQUIPMENT RENTALS
094 03 01 ELECTRICAL EQUIPMENT RENTALS, ALL
094 50 00 SHOE BRUSHES, ACCESSORIES
<PAGE>
CGX080 GU Category Code Listing RUN DATE 11/03/95
RCG080
- -GU CATEGORY CODE- DESCRIPTION
MAJ INT MIN
094 50 01 SHOE BRUSHES, ACCESSORIES
094 51 00 SHOE LACES
094 51 01 SHOE LACES, DRESS
094 51 02 SHOE LACES, CASUAL
094 51 03 SHOE LACES, ATHLETIC
094 51 04 SHOE LACES, BOOT/WORK
094 51 05 SHOE LACES, SPECIALTY
094 51 99 SHOE LACES, RACKS W/MDSE
094 52 00 SHOE POLISHES
094 52 01 SHOE POLISHES, PASTE, CREAM, KITS, ETC.
094 52 02 SHOE POLISHES, LIQUID
094 52 03 SHOE POLISHES, AEROSOL
094 52 04 SHOE POLISHES, WATERPROOF ITEMS
094 99 00 SHOE CARE RACKS/FIXTURES(NO CHARGE)
094 99 01 SHOE CARE RACKS/FIXTURES(NO CHARGE)
095 00 00 GREETING CARDS, PARTY SUPPLIES
095 10 00 GREETING CARDS
095 10 01 GREETING CARDS, SINGLES
095 10 02 GREETING CARDS HOLIDAY SINGLES
095 10 03 GREETING CARDS HOLIDAY TRAYS
095 10 99 GREETING CARDS, OTHERS
095 11 00 GIFT WRAP, TRIM, ENCL.CARDS
095 11 01 GIFT WRAP, TRIM, ENCL.CARDS
095 50 00 PARTY SUPPLIES
095 50 01 PARTY SUPPLIES CAKE DECORATIONS
095 50 02 PARTY SUPPLIES BIRTHDAY CANDLES
095 50 03 PARTY SUPPLIES, OTHER CANDLES
095 50 08 PARTY SUPPLIES, MISC PAPER, TOYS, ETC
096 00 00 VIDEO RENTALS/SELL THROUGH
096 01 00 VIDEO EQUIPMENT RENTALS
096 01 01 VIDEO EQUIPMENT RENTALS, ALL
096 02 00 VIDEO TAPE RENTALS
096 02 01 VIDEO TAPE RENTALS, ALL
096 03 00 VIDEO SELL THROUGH
<PAGE>
CGX080 GU Category Code Listing RUN DATE 11/03/95
RCG080
- -GU CATEGORY CODE- DESCRIPTION
MAJ INT MIN
096 03 01 VIDEO SELL THROUGH, ALL
096 03 02 PRE-VIEWED VIDEOS, ALL
097 00 00 SOFT GOODS
097 01 00 SOFT GOODS KITCHEN
097 01 01 SOFT GOODS KITCHEN TOWELS
097 01 02 SOFT GOODS KITCHEN DISH CLOTHS
097 01 04 SOFT GOODS KITCHEN POT HOLDERS
097 01 05 SOFT GOODS KITCHEN MITTS
097 01 10 SOFT GOODS KITCHEN ASSTD SET
097 01 12 SOFT GOODS PLACE MATS/TABLECLOTHS
097 01 99 SOFT GOODS, MISC
097 10 00 MENS UNDERWEAR
097 10 01 MENS BRIEF
097 10 02 MENS FASHION BRIEF
097 10 03 MENS A-SHIRT
097 10 04 MENS V-SHIRT
097 10 05 MENS T-SHIRT
097 10 99 MENS MISCELLANEOUS
097 11 00 BOYS UNDERWEAR
097 11 01 BOYS BRIEF
097 11 02 BOYS FASHION BRIEF
097 11 99 BOYS MISCELLANEOUS
097 12 00 GIRLS UNDERWEAR
097 12 01 GIRLS BRIEF
097 12 02 GIRLS FASHION BRIEF
097 12 99 GIRLS MISCELLANEOUS
<PAGE>
EXHIBIT D
OPERATING EXPENSES AND OTHER COSTS
*
*Material omitted and filed separately with the SEC pursuant to a request for
Confidential Treatment.
<PAGE>
EXHIBIT E
[Form of Notice to Vendors]
TO: Grand Union Vendors
FROM: ___________________
RE: Agreement with C&S Wholesale Grocers for
Montgomery Facility
DATED: January ___, 1996
- --------------------------------------------------------------------------------
Grand Union and C&S Wholesale Grocers, Inc. ("C&S") have entered into an
agreement effective January 21, 1996 under which C&S will supply health and
beauty care and general merchandise products to our Montgomery, New York
distribution center. While this arrangement will not change the manner in which
Grand Union does business with its vendors, please note that in purchasing
merchandise on behalf of C&S under this arrangement, Grand Union will be acting
as agent for C&S and C&S shall be the owner of title to the merchandise.
Payments to vendors will continue to be made by Grand Union. Grand Union is not
authorized to act as agent for C&S for any purpose other than the purchase of
such merchandise.
If you have any questions, please feel free to contact _______ at
__________________.
cc: C&S Wholesale Grocers, Inc.
<PAGE>
[Form of Notice to Bank Agent and Landlord]
TO: _________________
FROM: _________________
RE: Agreement with C&S Wholesale Grocers for
Montgomery Facility
DATED: January ___, 1996
- --------------------------------------------------------------------------------
Grand Union has entered into an agreement with C&S Wholesale Grocers, Inc.
("C&S") effective January 21, 1996 pursuant to which C&S will supply health and
beauty care and general merchandise to our Montgomery, New York distribution
center. Such products will be acquired from vendors either by Grand Union
acting as agent for C&S or by C&S directly. All such products to be held at the
Montgomery facility will be owned by C&S and will not constitute property or
inventory of Grand Union.
Health and beauty care and general merchandise products that are presently
owned by Grand Union and held at the Montgomery facility as of the effective
date of the agreement, as well as other kinds of merchandise owned by Grand
Union and held or to be held at such facility, will constitute Grand Union-owned
inventory.
If you have any questions, please contact _________ at _____________.
cc: C&S Wholesale Grocers, Inc.
<PAGE>
EXHIBIT F
CONSENT AND WAIVER
THIS CONSENT AND WAIVER, dated the ______ day of _______________, 1996, is
among MACK BRACKEN ROAD PROPERTIES LIMITED and MONTGOMERY '89 ASSOCIATES L.P.,
doing business as BRACKEN '89 JOINT VENTURE, with offices at c/o The Mack
Company, 370 West Passaic Street, Rochelle Park, New Jersey 07662 ("Landlord");
THE GRAND UNION COMPANY, with offices at 201 Willowbrook Boulevard, Wayne, New
Jersey 07470-0966 ("Tenant") and C&S WHOLESALE GROCERS, INC., with offices at
Old Ferry Road, P.O. Box 821, Brattleboro, Vermont 05302 ("C&S").
WHEREAS, Tenant is the tenant under the following lease (together with any
and all amendments thereto, the "Lease"):
Lease between Landlord and Tenant dated September 29, 1989 with
respect to land and improvements now or hereafter located thereon
located at Bracken Road, Montgomery, New York (the "Leased Premises");
WHEREAS, C&S and Tenant have entered into a Supply and Operating Agreement
dated as of January 21, 1996 (the "Supply Agreement") pursuant to which, during
the "Grand Union Purchase Period" (as defined therein), Tenant purchases
certain merchandise as the agent for C&S and receives delivery of such
merchandise at the Leased Premises;
WHEREAS, during the "C&S Purchase Period" (as defined in the Supply
Agreement) C&S purchases certain merchandise and receives delivery of such
merchandise at the Leased Premises;
WHEREAS, at all times during the Grand Union Purchase Period and the C&S
Purchase Period, C&S holds title to and is the owner of the merchandise
purchased by Tenant in its capacity as agent for C&S, as well as merchandise
purchased directly by C&S (all such merchandise being referred to in this
Consent and Waiver as the "Merchandise");
WHEREAS, C&S and Tenant have requested Landlord to execute a Consent and
Waiver with respect to certain aspects of such transactions and Landlord is
prepared to do so on the terms and conditions set forth herein.
NOW, THEREFORE, based on these premises and for good and valuable
consideration, receipt of which is hereby acknowledged:
1. Landlord disclaims any title to or right in the Merchandise and
subordinates to the interest of C&S any security interest, lien, encumbrance,
attachment or other interest which Landlord may now or hereafter have or acquire
in the Merchandise by statute, agreement or otherwise.
2. Landlord agrees that, on default of Tenant's obligations to C&S, C&S
or its agents may remove the Merchandise from the Leased Premises and Landlord
agrees that it will grant C&S or its agents the right of entry at all reasonable
times and after reasonable notice, from time to time, to remove such property
from the Leased Premises. In connection with such removal, however, C&S shall
be required to use reasonable care, and to repair promptly any physical damage
done to the Leased Premises caused by such removal.
<PAGE>
3. Landlord agrees not to interfere with and to reasonably cooperate with
C&S or its agents in the event of any foreclosure, assignment, taking of
possession, sale (by auction or otherwise) or other enforcement by C&S of its
rights as owner of the Merchandise and creditor of the Tenant, provided C&S and
its agents shall use best efforts not to disrupt the ongoing business of
other tenants or Landlord in the vicinity of the Leased Premises.
4. Landlord shall send to C&S expeditiously and concurrently with any
default or termination notices sent to Tenant a copy of any such default or
termination notice, and Landlord shall accept a cure of such default from C&S if
C&S chooses to cure the default, as its option, on or before thirty days after
the grace period provided for in the Lease.
5. Landlord and Tenant agree that they shall not materially alter or
amend or and shall not cancel the Lease without C&S' prior written consent so
long as C&S owns Merchandise located on or in the Leased Premises, which consent
shall not be unreasonably withheld, delayed or conditioned.
6. Landlord acknowledges that true copies as executed of the Lease is
annexed hereto and that, to Landlord's knowledge, Tenant is not now in default
thereunder.
7. Landlord hereby consents to the assignment or subleasing to C&S of
Tenant's rights, title and interest under the Lease.
8. This Consent and Waiver shall be binding upon the Landlord, Tenant,
and C&S and shall inure to the benefit of Landlord and C&S, and their successors
and assigns and transferees.
IN WITNESS WHEREOF, Landlord, Tenent and C&S have hereby caused this
Consent and Waiver to be executed under seal as of the date above first written.
BRACKEN 89 JOINT VENTURE
BY: MACK BRACKEN ROAD PROPERTIES LIMITED
By:
-----------------------------------------
Name:
Title:
BY: MONTGOMERY '89 ASSOCIATES L.P.
By: HAMPSHIRE MANAGEMENT COMPANY,
General Partner
BY:
-----------------------------------------
Name:
Title:
THE GRAND UNION COMPANY
By:
-----------------------------------------
Name:
Title:
C&S WHOLESALE GROCERS, INC.
By:
-----------------------------------------
Name:
Title:
<PAGE>
EXHIBIT H
January 18, 1996
To: Mr. J. Hinkel
From: Jim O'Keefe
Re: Slotting Information - Montgomery S & G
Item count as of 11/95:
Dept. 00 1473 items
422 Full Case
1051 S,T,U
Dept. 01 1824 items
548 Quick Pick
298 Cigarettes
975 Full Case
Dept. 02 7741 items
6583 Quick Pick
1161 Full Case
Total Items: 11,038
2558 Full Case
7131 Quick Pick
298 Cigarettes
1051 S,T,U
Quick Pick: 9011 slots
7131 items
1880 available slots
Full Case: 3282 slots
2558 items
724 available slots
Reserves: 13,570 total
4091 available
Total Pick Slots Q.P. and F.C. 12,293
Available Pick Slots Q.P. and F.C. 2604
<PAGE>
Exhibit J
C&S Wholesale Grocers, Inc.
Corporate Offices
Old Ferry Road, P.O. Box 821
Brattleboro, Vermont 05302
(802) 257-4371
October 10, 1995
John Hinkel
Corporate Vice President Distribution
The Grand Union Company
201 Willowbrook Blvd.
Wayne, N.J. 07470-0966
Dear John:
Thanks for the time you and Jim O'Keefe spent with Duane and myself reviewing
the Montgomery operation. Using Jack's proforma numbers and adding other
expenses discussed, we should be able to agree on the methodology used in
determining base operating cost in the near term and the future. Until the
total effects of Penn Traffic's deletion have been completed, we both agree that
it would be difficult to determine those base costs. We also agree that 90 days
from the date you cease servicing Penn Traffic should be sufficient time to
establish base operating expenses, after which we would meet again to review and
agree upon any changes. Below you'll find a line by line review of the
proforma a copy of which is enclosed.
Montgomery Warehouse Expenses
*
Labor
1. Productive wages *
Productivity using a 10 week average:
*
*Material omitted and filed separately with the SEC pursuant to a request for
Confidential Treatment.
<PAGE>
3. Fringe Salaries
Vacation Pay - Contractual for union employees - need Grand Union
vacation policy and what are the entitlements for
non-union employees.
Holiday Pay - same as vacation pay
Sick Pay - Same as vacation pay
4. Fringe Tax
Payroll Tax - Per state and federal schedules
*
5. Other Department Expense
*
6. Administrative Salary
*
7. Administrative Expense
*
Walter: Tony needs to review detail confirm numbers or revise based on
required modifications. Also need to establish replacement and upgrade policy.
8. Occupation Expenses
Building Repair and Maintenance Outside
Jim O'Keefe has supplied agreements covering
Landscaping/snowplowing - V.V. Landscaping Inc.
Plumbing - Capitol Plumbing/Heating
Electrician - Castleberry Electrical Services
Fencing - B.J. Fencing Contractors
Security - S.E.M. Security Systems, Inc.
Sanitation - BFI
Time Clocks - Simplex
*Material omitted and filed separately with the SEC pursuant to a request for
Confidential Treatment.
<PAGE>
HVAC - Mechanical Construction Corp.
Elevator - Otis
Cigarette Stamp Machine - Meyercord
Copy Machines - Pitney Bowes - lease held in Wayne corporate account
Equipment Repair Outside - included above in building room outside
Parts/Materials - parts or materials purchased to make building and
equipment repairs.
9. Occupation Expenses
Heat, power, water - Should be the actual cost for each
Security/Protection - SEM Security Systems
Telephone - Telephone - should be what actual cost is each
month
Rubbish Removal - BFI monthly invoices
Rent - Per lease agreement
Real Estate tax - Per current base (local/school) and any
increases
Insurance Charge back - With comp - need to get workmen's compensation
history
*
Fixed Insurance/Liability *
improvements based on insurance carrier
coverage requirements. Aerosols, Class I,
Class II, flammables, etc.
Depreciation/Amortization - *
Please review the enclosed and I'll call you next week to discuss it's content
or answer any questions you may have.
Thanks again.
Very truly yours,
C & S WHOLESALE GROCERS, INC.
Steve Albanese
Vice President Distribution Projects
SA/tw
Encs.
cc: Ron Wright
Bill Hamlin
Duane Wilkes
Paul Moshovetis
*Material omitted and filed separately with the SEC pursuant to a request for
Confidential Treatment.
<PAGE>
CROWN CREDIT #A
*
________________________________________________________________________
EQUIPMENT COUNT
*
*Material omitted and filed separately with the SEC pursuant to a request for
Confidential Treatment.
<PAGE>
#B
August 28, 1995
To: Mr. J. Hinkel
From: Jim O'Keefe
Re: Crown Credit/Miscellaneous
CROWN: We presently have an arrangement with Crown to provide
service/maintenance known as a "Planned Maintenance Agreement." The arrangement
works as follows:
*
MISCELLANEOUS: The items contained in this account are varied. Some examples
are:
*
*Material omitted and filed separately with the SEC pursuant to a request for
Confidential Treatment.
<PAGE>
September 17, 1995
To: Mr. S. Albanese
Mr. D. Wilks
From: Jim O'Keefe
Re: Meeting 9/13/95
Below and attached are some of the items requested at our meeting on the 13th of
this month:
Number of Purchase Orders Received/Trucks/Pieces
*
List of Major Contractors:
*
Copy of last telephone bills, utility bills are also attached. You'll
note a small cellular bill as well. This is a backup to the main
telephone line in the event the lines are cut or out of service when the
building is alarmed.
Also attached please find a list of equipment leases covering forklifts,
batteries the yard horse and the cigarette stamping machines. These
figures are based on a per month payment.
cc: Mr. J. Hinkel
*Material omitted and filed separately with the SEC pursuant to a request for
Confidential Treatment.
<PAGE>
MONTGOMERY WHSE EXPENSES
ACTUAL WITH PENN TRAFFIC
*
*Material omitted and filed separately with the SEC pursuant to a request for
Confidential Treatment.
<PAGE>
MONTGOMERY WHSE EXPENSES
BUDGET GRAND UNION ONLY
*
*Material omitted and filed separately with the SEC pursuant to a request for
Confidential Treatment.
<PAGE>
EXHIBIT K
SUBLEASE TERMS AND CONDITIONS
LESSEE: C&S Wholesale Grocers, Inc.
LOCATION: Montgomery, Orange County, New York
Bracken Road
SIZE AND TYPE 215,000 square feet plus 10,000 square foot mezzanine warehouse
RENT: 2/21/96-9/28/99 $1,292,000.00 p.a. ($107,666.67 p.m.)
9/29/99-9/28/04 $1,428,260.00 p.a. ($119,021.67 p.m.)
9/29/04-9/28/09 $1,570,325.00 p.a. ($130,860.42 p.m.)
COMMENCEMENT DATE: Date of Sublease Effective Date through 9/29/2009
RENEWAL OPTIONS: 4 AT 5 YEARS EACH
OPTION RENT:
First $1,659,793.00 p.a. $138,316.08 p.m.
Second $1,825,772.00 p.a. $152,147.67 p.m.
Third $2,008,350.00 p.a. $167,362.50 p.m.
Fourth $2,209,185.00 p.a. $184,098.75 p.m.
LAST DATE FOR NOTICE TO CANCEL OPTIONS: 18 months prior to expirarion of
initial term or renewal term, as the case may be.
CO-OCCUPANCY: Changes to take into account that Grand Union will be a
co-occupant of a portion of the premises. This will include acknowledging that
Tenant will not have exclusive possession and control, and that each party will
have liability for the portions they do possess and control.
CROSS-INDEMNITIES: A provision requiring Grand Union and C&S to each indemnify
the other for the negligent and intentional misconduct of their own employees,
subject to the allocation of responsibilities in the Agreement.
SUBSIDIARY: A provision permitting C&S to sublease and or assign to a
wholly-owned subsidiary, limited liability company or similar entity.
The Sublease shall contain the following clauses and such additional clauses as
is customary and usual for this type of transaction. It is intended that C&S
will Sublease on substantially the same terms and conditions as are in the
underlying lease, but subject to the provisions of the Agreement.
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THE DEMISED PREMISES
The Demised Premises consists of a building of approximately 215,000 gross
rentable square feet (which building is hereinafter called the "Building")
previously erected thereon and approximately 12.066 acres of land, which the
Tenant acknowledges that it has inspected and is fully familiar with its
condition and is leasing the same in an "AS IS" condition.
The Demised Premises hereinabove described constitutes a self-contained
unit and nothing in this Lease shall impose upon the Landlord any obligation
to provide any services for the benefit of the Tenant, including but not
limited to water, gas, electricity, heat or janitorial, unless and to the
extent expressly provided in this Lease.
USE
The Demised Premises may be used for any lawful use by the Tenant.
The aforesaid permitted use does not permit the stacking of merchandise
and/or materials against walls or columns, nor does it permit the hanging of
equipment from (or otherwise loading) the roof or structural members of the
Building except in accordance with the standards set forth with respect to
good and sound engineering practices. Notwithstanding anything contained
herein to the contrary, any damage or wear and tear to the walls, columns,
roof or structural members of the Building arising out of or in connection
with any of the activities described in this Section 5.02 shall not be deemed
to be ordinary wear and tear and shall be repaired, restored and/or replaced
by Tenant at its sole cost and expense.
QUIET ENJOYMENT
The Landlord covenants that if, and so long as, the Tenant pays the
rent, and any additional rent as herein provided, and performs the covenants
hereof, the Landlord shall do nothing to affect the Tenant's right to
peaceably and quietly have, hold and enjoy the Demised Premises for the Term
herein mentioned, subject to the provisions of this Lease.
ADDITIONAL RENT, TAXES, ASSESSMENTS, WATER RATES, CHARGES, ETC.
The Tenant shall pay, before any interest or penalties accrue thereon,
all real estate taxes, water and sewer rates and charges and all other
governmental charges imposed during the Term on the Demised Premises or on
the rents, as such, payable to the Landlord hereunder, and on request shall
exhibit to the Landlord receipted bills or other proof of payment. There
shall be apportioned any tax or charge relating to the fiscal year in which
the Term of this Lease terminates. The Tenant shall be responsible for any
tax or charge relating to the fiscal year in which the Term of this
commenced.
The Tenant shall pay all assessments that may be imposed upon the
Demised Premises by reason of any specific public improvement (including but
not limited to assessments for street openings, grading, paving and sewer
installations and
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improvements) except that \if by law any such special assessment is payable,
or may, at the option of the taxpayer, be paid, in installments, the Tenant
may, whether or not interest accrues on the unpaid balance thereof, pay the
same and any accrued interest on any unpaid balance thereof in installments
as each installment becomes due and payable, but in any event before any
penalty or cost may be added thereto for nonpayment of any installment or
interest. Any such benefit, assessment or installment thereof relating to a
fiscal period in which the Term of this Lease begins or ends shall be
apportioned.
The Tenant shall not be required to pay any estate, inheritance,
devolution, succession, transfer, legacy or gift tax charged against the
Landlord or the estate or interest of the Landlord in the Demised Premises or
upon the right of any person to succeed to the same or any part thereof by
inheritance, succession, transfer or gift, nor any capital stock tax or
corporate franchise tax incurred by the Landlord, nor any income tax upon or
against the income of the Landlord (including any rental income derived by
the Landlord from the Demised Premises).
The Tenant, in its name or the Landlord's name shall have the right to
contest, or review, by appropriate proceedings, in such manner as it may deem
suitable, at its own expense, and without expense to the Landlord, any tax,
assessment, water and sewer rents or charges, or other charges payable by the
Tenant pursuant to this Lease, and upon the request of the Tenant, the
Landlord will protest any tax, assessment, water or sewer rent or charge, or
any other charge payable by the Tenant pursuant to this Lease, which shall be
contested or reviewed by the Tenant. Any refund resulting from such contest
or review shall be assigned to and belong to the Tenant and shall be paid to
the Tenant promptly upon its receipt by the Landlord. If the refund relates
to a tax year that is apportioned between the Landlord and the Tenant, the
refund shall be apportioned between the Landlord and the Tenant.
INSURANCE
During the Term, Tenant shall maintain the following insurance, insuring
the Landlord and ground lessor, if any, and any mortgagee(s), as their
respective interests may appear:
(A) Insurance against damage to the Building by all risks of
direct physical loss (at Landlord's option to include earthquake and
flood) with the policy to contain either the agreed amount endorsement
or a replacement cost endorsement, in amounts sufficient to prevent the
Landlord from becoming a co-insurer, but in no event less than one
hundred (100%) percent of the Building's then replacement value. Policy
to include a contingent liability endorsement and/or demolition
and increased cost of construction endorsement in order for the Building
to be constructed in accordance with all requirements and regulations which
may be applicable at the time of loss or damage, of all governmental
agencies having jurisdiction over the Building and construction of such
Building.
<PAGE>
(B) If appropriate, boiler and machinery insurance coverage for all
eligible objects, including pressure vessels and air conditioning
equipment, with the electrical apparatus clause, with such limits as may
be reasonably necessary to properly insure the values at risk in the
Building.
(C) Plate glass insurance. At the option of the Tenant, Tenant may
elect to self-insure for plate glass.
(D) The policies of insurance provided for herein shall be from a
company rated in the A.M. Best Key Rating Guide with a policyholder's
service rating of A+ and a financial rating of XV. The company shall be
licensed by the State of New York and a certificate(s) evidencing the
existence of such policy shall be delivered to the Landlord, together with
evidence of the payment of the premiums therefor, not less than fifteen
(15) days prior to the commencement of the Term. At least fifteen (15)
days prior to the expiration or termination date of any policy, the Tenant
shall deliver a renewal or replacement policy, or certificate(s) evidencing
the existence thereof, to Landlord together with proof of the payment of
the premium therefor.
All insurance maintained pursuant to this Article may be effected by blanket
insurance policies.
The Tenant shall provide and keep in force, during the Term of this
Lease, for the benefit of the Landlord and ground lessor, if any,
comprehensive general liability insurance policies in standard form
(containing the so-called "occurrence clause"), insuring the Landlord and
Landlord's managing agent as an additional named insured with respect to
ownership, operation, maintenance, use and control against liability for
injury or damage to persons or property in or upon the Demised Premises
during the Term of this Lease, which shall include a contractual liability
endorsement. Said policies shall be written by insurance companies licensed
to do business in the State of New York and shall cover the entire Demised
Premises as well as any sidewalk in front of the same, and shall be in the
minimum amount of Three Million and 00/100 ($3,000,000.00) Dollars.
Tenant represents, said representation being specifically designed to
induce the Landlord to execute this Lease, that Tenant's personal property,
fixtures, betterments, improvements, goods and inventory at the Demised
Premises and any other items which Tenant may bring to the Premises or which
may be under Tenant's care, custody and control which may be subject to any
claim for damages or destruction shall never exceed the amount of insurance
which Tenant is required to carry pursuant to this Lease and for which Tenant
shall name the Landlord as an additional named insured as its interest may
appear. If at any time the value of the aforesaid exceeds the amount of such
insurance, Tenant covenants to so notify Landlord and at the same time to
immediately increase the amount of insurance required to be carried pursuant
to Section 3.01 to an amount sufficient to cover the aforesaid to preclude
any liability on Landlord's or Landlord's ground lessor's or mortgagee's part
to Tenant. Should Tenant fail to do so, or fail to maintain insurance
coverage adequate to cover the aforesaid, then Tenant shall not be in default
hereunder unless Tenant makes a claim against Landlord for
<PAGE>
damages or destruction which would have been covered by insurance but for
Tenant's failure to meet its obligations as set forth in this Article.
Tenant shall indemnify and save Landlord harmless against and from all
liabilities, claims, suits, fines, penalties, damages, losses, fees, costs
and expenses (including reasonable attorneys' fees) which may be imposed
upon, incurred by or asserted against Landlord by reason of:
(A) Any work or thing done in, on or about the Demised Premises or any
part thereof by or on behalf of Tenant;
(B) Any use, occupation, condition, operation of the Demised Premises
or any part thereof or of any street, alley, sidewalk, curb, vault,
passageway or space adjacent thereto or any occurrence on any of the same
on the part of Tenant;
(C) Any act or omission on the part of Tenant or any subtenant or any
employees, licensees or invitees;
(D) Any accident, injury (including death) or damage to any person or
property occurring in, on or about the Demised Premises, or any part
thereof or in, on or about any street, alley, sidewalk, curb, vault,
passageway or space adjacent thereto alleged to have been caused by
Tenant's acts or omissions; and
(E) Any failure on the part of Tenant to perform or comply with any
of the covenants, agreements, terms or conditions contained in this Lease,
or recording of this Lease. The provisions of this Paragraph shall survive
the expiration or earlier termination thereof for as long as any applicable
statute of limitations.
Providing, however, Tenant shall not be responsible for nor required to
indemnify Landlord for any acts or omissions resulting in liability, fees,
costs, etc., to Landlord arising from or in connection with Labor Services
Agreement.
All losses paid under the policy or policies carried pursuant to Section
8.01 shall be adjusted by the Landlord and Tenant and the proceeds thereof
shall be payable to the Landlord, to be held in trust to be used for repair
and restoration of the Demised Premises by the Tenant. If the proceeds of
insurance are not sufficient to cover the cost of restoration as required by
Tenant, then Tenant shall be responsible for the cost of any deficiency.
Each insurance policy carried by Tenant and insuring the Demised Premises and
its fixtures and contents against loss by fire, water and causes covered by
standard extended coverage, shall be written in a manner so as to provide
that the insurance company waive all rights of recovery by way of subrogation
against Landlord in connection with any loss or damage covered by such
policies, Neither party shall be liable to the other for any loss or damage
caused by fire, water or any of the risks enumerated in standard extended
coverage insurance, provided such insurance was obtainable at the time of
such loss or damage. If such insurance policies are obtainable only by the
payment of an additional premium charge, the same shall be obtained and such
additional premium paid for by the Tenant. If the release of either Landlord
or
<PAGE>
Tenant, as set forth in the third sentence of this Paragraph, shall
contravene any law with respect to exculpatory agreements, the liability of
the party in question shall be deemed not released but shall be deemed
secondary to the latter's insurer.
The Tenant shall also furnish insurance for such other hazards and in such
amounts as the Landlord may reasonably require and as at the time are commonly
insured against with respect to buildings similar in character, general location
and use and occupancy to the Demised Premises in relative amounts normally
carried with respect thereto. The Landlord reserves the right at any time and
from time to time to require that the limits for any of the insurance required
pursuant to Article VIII be increased to limits as at the time are reasonable
with respect to Tenant's use and to buildings similar in character, general
location and use and occupancy to the Demised Premises.
Landlord shall maintain rent insurance against the loss of rent and
additional rent for no less than one (1) year as provided herein, and Tenant
shall reimburse Landlord for the entire cost of said rent insurance, promptly
when billed, as additional rent.
All policies required pursuant to this Article shall contain provision for
thirty (30) days' written notice by registered mail to the Landlord of any
change or cancellation of said policy.
REPAIRS
The Tenant shall keep the Demised Premises in good condition and repair,
and shall redecorate, paint and renovate the Demised Premises as may be
necessary to keep them in good condition and repair and good appearance. The
Tenant shall keep the Demised Premises and all parts thereof in a clean and
sanitary condition and free from trash, inflammable material and other
objectionable matter. The Tenant shall keep the sidewalks and roadways forming
part of the Demised Premises clean and free of obstructions, snow and ice.
Throughout the Term of this Lease, the Tenant, at its sole cost and expense,
will take good care of the Demised Premises and the sidewalks and curbs
adjoining the Demised Premises and will keep the same in good order and
condition and make all necessary repairs thereto, structural and nonstructural,
interior and exterior, ordinary and extraordinary, foreseen and unforeseen.
The Tenant shall replace, at the Tenant's expense, all glass in and on the
Demised Premises which may become broken after the date of Tenant's occupancy.
When used in this Article, the term "repairs" shall include all necessary
replacements and renewals. All repairs made by Tenant shall be equal in quality
and class to the original work. The Tenant shall quit and surrender the Demised
Premises at the end of the Term in as good condition as the reasonable use
thereof will permit and in compliance with the requirements stated herein and in
a "broom-clean" condition, and shall, by way of example and not by way of
limitation, clean and reseal all concrete floors.
The Tenant shall not make any alterations, additions or improvements to the
Demised Premises without the prior written consent of the Landlord, which
Landlord shall not unreasonably withhold. In making its determination, Landlord
shall consider,
<PAGE>
among other considerations, the standards set forth with respect to good and
sound engineering practices. Notwithstanding the provisions of this Section
9.02, Landlord's prior written consent shall not be required for any
alterations, additions or improvements which, in the aggregate, do not exceed
the cost of Five Hundred Thousand and 00/100 ($500,000.00) Dollars per lease
year, and which do not adversely affect any structural portion of the
Building or any Building mechanical, electrical, HVAC, or plumbing system.
All erections, alterations, additions and improvements, whether temporary or
permanent in character, which may be made upon or to the Demised Premises
either by the Landlord or the Tenant, except furniture or movable trade
fixtures installed at the expense of the Tenant, shall be the property of the
Landlord and shall remain upon and be surrendered with the Demised Premises
as a part thereof at the expiration or sooner termination of this Lease,
without compensation to the Tenant; or, in the alternative and at the
direction of Landlord, Tenant shall remove all or so much of the property
therefrom as directed or such property shall be conclusively deemed abandoned
and may be removed by Landlord, and Tenant shall reimburse Landlord for the
cost of such removal. Landlord may have any such property stored at Tenant's
risk and expense. Landlord, at Landlord's option, may require as a condition
of its consent, that Tenant remove, at the expiration or sooner termination
of the Lease Term, any erections, alterations, additions or improvements made
by Tenant, and restore the Demised Premises to a substantially similar
condition to that in existence as of the commencement date of the Lease, and
that the Tenant use contractors approved by Landlord.
CASUALTY
If the Demised Premises or the Building is damaged or destroyed by fire,
explosion, the elements or otherwise during the Term so as to render the
Demised Premises wholly untenantable or unfit for occupancy, or should the
Demised Premises be so badly injured that the same cannot be repaired within
one hundred eighty (180) days from the happening of such injury, then, and in
such case, the Term hereby created shall, at the option of either the
Landlord or the Tenant, terminate upon the giving of a notice of termination.
If a notice of termination is given, the Term of this Lease shall terminate
effective as of the date of such damage or destruction, and the Tenant shall
immediately surrender the Demised Premises and all the Tenant's interest
therein to the Landlord, and pay rent to the time of such damage or
destruction, and the Landlord may re-enter and repossess the Demised Premises
discharged from this Lease and may remove all parties therefrom.
Should the Demised Premises be rendered untenantable and unfit for
occupancy, but yet be repairable within one hundred eighty (180) days from the
happening of said injury, the Landlord will make the proceeds of insurance
available to Tenant so that Tenant may repair the Demised Premises with
reasonable speed, and the rent shall not accrue after said injury and while
repairs are being made, provided Landlord receives the proceeds of rent
insurance, but shall recommence immediately after such repairs shall be
completed.
If the Demised Premises shall be so slightly injured as not to be rendered
untenantable and unfit for occupancy, the Tenant shall repair the same with
reasonable promptness and the rent accrued and accruing shall not cease or
terminate. The Tenant
<PAGE>
shall immediately notify the Landlord in case of fire or other damage to the
Demised Premises.
Notwithstanding anything to the contrary in Section 10.01, neither the
Landlord nor the Tenant shall have any option to terminate this Lease upon the
happening of an injury referred to in Section 10.01 provided that the happening
of such injury occurs at a time when the unexpired Term of this Lease is one (1)
year or more. In such event, the Landlord shall make the proceeds of insurance
available to the Tenant and the Tenant shall repair the Demised Premises, even
to the extent of rebuilding the Building if necessary. The Tenant shall promptly
enter and repair the Demised Premises with reasonable speed, making due
allowance for conditions beyond the Tenant's control, including, but not limited
to time lost in adjusting insurance claims and strikes, and the rent shall not
accrue after such injury and while repairs are being made, provided Landlord
receives the proceeds of rent insurance, but shall recommence immediately after
said repairs shall be completed. Landlord shall have no obligation to repair or
restore Tenant's improvements. Notwithstanding anything contained herein to the
contrary, in the event the happening of an injury referred to in Section 10.01
occurs when the unexpired Term of this Lease is less than one (1) year and
Landlord exercises its option to terminate this Lease, then and in that event,
Tenant can negate Landlord's termination by exercising its option to renew in
accordance with Article.
Prior to the performance of any work by Tenant pursuant to the provisions
of this Article, Tenant shall first submit plans and specifications to Landlord
and Landlord shall have the right to review and approve said plans and
specifications and to require modifications thereto. All work shall be performed
by Tenant in accordance with good and sound engineering practices and in
compliance with all laws, ordinances and regulations.
Notwithstanding anything contained to the contrary in this Article, in the
event the proceeds of insurance are not sufficient to cover the cost of
restoration, the Tenant shall be responsible for the cost of any deficiency.
CONDEMNATION
Section 11.01. If, during the Term, twenty-five (25%) percent or more of
the area of the Demised Premises shall be taken under any power of eminent
domain or condemnation then, at the option of the Tenant, to be exercised in
writing within thirty (30) days of the taking of title thereto, this Lease shall
expire within thirty (30) days of the date of such notice and the rent herein
reserved shall be apportioned as of said date. However, if the Tenant does not
exercise the aforementioned option, or if the taking does not deprive the Tenant
of at least twenty-five (25%) percent of the area of the Demised Premises, this
Lease shall not expire but the rent shall be equitably apportioned. If the
Landlord and the Tenant fail to agree upon an equitable apportionment, the rent
for the Building, after such taking, shall be determined in accordance with the
Commercial Rules of the American Arbitration Association, in the City of New
York, New York, and the arbitrator shall be empowered to assess the costs and
expenses of the proceedings as part of the determination. Pending such
determination the Tenant shall pay, on account of the rent, such proportion of
the rent reserved in this Lease as the total area of the Building after the
taking bears to the total
<PAGE>
area of the Building before the taking, subject to adjustment in accordance
with the arbitrator's award. If the Landlord can, after such taking,
construct an addition to the remaining Building so as to restore all of the
Building area and Building facilities theretofore taken, the Landlord shall,
subject to the adequacy of the condemnation award and to the mortgagee making
the same available to the Landlord, promptly construct such addition and
restore such facilities so taken and upon the completion of such restoration,
the full rent reserved by this Lease shall be reinstated, as of the date of
such restoration, and, if the Tenant is able to occupy and use the Building,
the proportionate rent shall be paid by the Tenant as herein provided, during
the period between the taking and the restoration of the Building and
facilities. No part of any award shall belong to the Tenant except that
nothing contained herein is intended to affect or limit the Tenant's claim
for fixtures or other improvements owned by Tenant provided the same does not
diminish the Landlord's award. It is expressly understood and agreed that the
provisions of this Article XI shall not be applicable to any condemnation or
taking for governmental occupancy for a limited period of time.
COMPLIANCE WITH LAWS, ETC.
The Tenant shall not do or permit anything to be done in the Demised
Premises which shall constitute a public nuisance or which will conflict with
the regulations of the Fire Department or with any insurance policy upon said
improvements or any part thereof.
The Tenant shall, at its own expense, obtain all necessary environmental
and operating permits and comply with all requirements of law and with all
ordinance or orders, rules and regulations of any State, Municipal or other
public authority affecting the Demised Premises and with all requirements of the
Fire Insurance Exchange or similar body, and of any liability insurance company
insuring the Landlord against liability for accidents in or connected with the
Demised Premises including, but not limited to laws, ordinance, orders, rules
and regulations which apply to the interior or exterior of the Demised Premises,
the structural or nonstructural parts thereof, and to make all improvements and
repairs required by such laws, ordinances, orders, rules and regulations,
ordinary or extraordinary, foreseen or unforeseen.
Tenant acknowledges the existence of environmental laws, rules and
regulations now or hereafter enacted by any federal, state or municipal
authority and Tenant agrees to comply therewith.
Tenant agrees not to generate, store, manufacture, refine, transport,
treat, dispose of, or otherwise permit to be present on or about the Demised
Premises, any Hazardous Substances. As used herein, Hazardous Substances shall
be defined as any "hazardous chemical", "hazardous substance" or similar term as
defined in the Comprehensive Environmental Responsibility Compensation and
Liability Act, as amended (42 U.S.C. 9601, ET SEQ.), any rules or regulations
promulgated thereunder, or in any other applicable federal, state or local law,
rule or regulation dealing with environmental protection. It is understood and
agreed that the provisions contained in this Article shall be applicable
notwithstanding the fact that any substance shall not be deemed to be a
Hazardous Substance at the time of its use by the Tenant but shall thereafter be
deemed to be a Hazardous Substance.
<PAGE>
Tenant agrees to indemnify and hold harmless the Landlord and each
mortgagee of the Demised Premises from and against any and all liabilities,
damages, claims, losses, judgments, causes of action, costs and expenses
(including the reasonable fees and expenses of counsel) which may be incurred by
the Landlord or any such mortgagee or threatened against the Landlord or such
mortgagee, relating to or arising out of any breach by Tenant of the
undertakings set forth in this Article, said indemnity to survive the Lease
expiration or sooner termination.
ASSIGNMENT AND SUBLEASE
(A) The Tenant may assign this Lease and sublet the whole or any part of
the Demised Premises, with the consent of the Landlord which consent shall not
be unreasonably withheld subject to the following conditions:
(1) A copy of the assignment or sublease shall be furnished to the
Landlord.
(2) The assignee shall assume by written instrument all of the
obligations of this Lease, and a copy of such assumption agreement shall
be furnished to the Landlord within ten (10) days of its execution.
(3) The Tenant and each assignee shall be and remain liable for the
observance of all of the covenants and provisions of this Lease, including
but not limited to the payment of the rent reserved herein, through the
entire Term of this Lease, as the same may be renewed, extended or
otherwise modified.
(4) The Tenant and any assignee shall promptly pay to Landlord one-half
(1/2) of any net consideration received for any assignment or one-half
(1/2) of the net rent, as and when received in excess of the rent required
to be paid by Tenant for the area sublet, computed on the basis of an
average square foot rent for the entire Building. As used herein, net
consideration and/or net rent shall mean gross rent or gross consideration
less any reasonable brokerage or tenant work paid by Tenant in connection
with the assignment or sublet, said brokerage or tenant work to be
amortized over the term of the assignment or sublet.
(B) Notwithstanding anything herein contained, the Tenant may assign
or sublet the whole or any part of the Demised Premises to an affiliated
corporation, or to any corporation with which it shall be merged or which
shall acquire the assets of the Tenant, all without notice to the Landlord.
(C) In any event, the acceptance by the Landlord of any rent from the
assignee, or of any of the subtenants, or the failure of the Landlord to
insist upon a strict performance of any of the terms, conditions and
covenants herein shall not release the Tenant herein, nor any assignee
assuming this Lease, from any and all of the obligations herein during and
for the entire Term of this Lease.
(D) Notwithstanding anything herein contained, prior to any sublet of the
whole or any portion of the Demised Premises or an assignment of the within
Lease to any other
<PAGE>
party, other than sublets or assignments permitted by Subsection (B) hereof,
the Tenant shall first offer, in writing, to surrender the Demised Premises
to the Landlord, and the Landlord shall either accept or refuse to accept
such surrender within ten (10) days after the receipt of such offer, failing
which the offer shall automatically be deemed refused. In the event Landlord
shall accept such surrender, the within tenant shall be released from any and
all obligations hereunder.
(E) The Landlord may require a payment to cover its handling charges for
each request for consent to any sublet or assignment prior to its consideration
of the same, which payment shall be equal to those charges, if any, assessed by
Landlord's mortgagee.
(F) The Tenant acknowledges that its sole remedy with respect to any
assertion that the Landlord's failure to consent to any sublet or assignment is
unreasonable shall be the remedy of specific performance and the Tenant shall
have no other claim or cause of action against the Landlord as a result of the
Landlord's actions in refusing to consent thereto.
(G) Without limiting any of the provisions of Article XIV, if pursuant to
the Federal Bankruptcy Code (or any similar Law hereafter enacted having the
same general purpose), Tenant is permitted to assign this Lease, notwithstanding
the restrictions contained in this Lease, adequate assurance of future
performance by an assignee expressly permitted under such Code shall be deemed
to mean the deposit of cash security in an amount equal to the sum of one (1)
year's fixed rent plus an amount equal to the sum of all other charges due and
payable by Tenant hereunder for the Calendar Year preceding the year in which
such assignment is intended to become effective, which deposit shall be held by
Landlord for the balance of the Term, without interest, as security for the full
performance of all of Tenant's obligations under this Lease, to be held and
applied in the manner specified for security in Section 22.02.
(H) Except as specifically set forth above, no portion of the Demised
Premises or of Tenant's interest in this Lease may be acquired by any other
person or entity, whether by assignment, mortgage, sublease, transfer, operation
of law or act of the Tenant, nor shall Tenant pledge its interest in this Lease
or in any security deposit required hereunder.
RENEWAL OPTIONS
Tenant is hereby granted four (4) options to renew this Lease upon the
following terms and conditions:
(A) At the time of each renewal, the Tenant shall not be in default in
accordance with the terms and provisions of this Lease, and shall be in
possession of the Demised Premises pursuant to this Lease.
(B) Each of the renewal options shall be deemed automatically exercised
unless Tenant notifies Landlord to the contrary, in writing, at least
eighteen (18) months before the expiration of the Term, or eighteen (18)
months before the expiration of the preceding renewal term, as the case
may be.
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(C) The renewal terms shall be for the term of five (5) years each, the
first renewal term to commence at the expiration of the term of this
Lease, the second renewal term to commence upon the expiration of the first
renewal term, the third renewal term to commence upon the expiration of the
second renewal term, and the fourth renewal term to commence upon the
expiration of the third renewal term, and all of the terms and conditions of
this Lease, other than the rent, shall apply during any such renewal terms.
(D) The basic rent to be paid during the first renewal term shall be
Eight Million Two Hundred Ninety-eight Thousand Nine Hundred Sixty-five and
00/100 ($8,298,965.00) Dollars; the basic rent to be paid during the second
renewal term shall be Nine Million One Hundred Twenty-eight Thousand Eight
Hundred Sixty and 00/100 ($9,128,860.00) Dollars; the basic rent to be paid
during the third renewal term shall be Ten Million Forty-one Thousand Seven
Hundred Fifty and 00/100 ($10,041,750.00) Dollars; and the basic rent to be
paid during the fourth renewal term shall be Eleven Million Forty-five
Thousand Nine Hundred Twenty-five and 00/100 ($11,045,925.00) Dollars. The
basic rent during each of the renewal terms shall be payable in such coin
or currency of the United States of America as at the time of payment shall
be legal tender for the payment of public and private debts and shall
accrue at the following yearly and monthly rates:
Renewal Term Yearly Rent Monthly Rent
First
(Years 21-25) $1,659,793.00 $138,316.08
Second
(Years 26-30) $1,825,772.00 $152,147.67
Third
(Years 31-35) $2,008,350.00 $167,362.50
Fourth
(Years 36-40) $2,209,185.00 $184,098.75
The aforesaid monthly rents shall be payable in advance on the first day of
each calendar month during the respective renewal term, except that a
proportionately lesser sum may be paid for the first month of any of the
renewal terms if said renewal term commences on a date other than the first
of the month.
<PAGE>
Exhibit L
*
*Material omitted and filed separately with the SEC pursuant to a request for
Confidential Treatment.
<PAGE>
Exhibit 10.33
Second Amendment
to the
1995 Equity Incentive Plan
of the Grand Union Company
1. Amend the first paragraph of section 2 to read as follows:
The Plan shall be administered by a committee (the "Committee") of the
Board of Directors (the "Board") of the Company designated by the Board
for that purpose. Unless and until a Committee is appointed, the Plan
shall be administered by the entire Board, and references in the Plan to
the "Committee" shall be deemed references to the Board. A majority of the
members of the Committee shall constitute a quorum, and all determinations
of the Committee shall be made by a majority of its members. Any
determination of the Committee under the Plan may be made without notice
or meeting of the Committee by a writing signed by a majority of the
Committee members.
2. This amendment shall take effect November 1, 1996.
THE GRAND UNION COMPANY
by action of the Board of Directors
Dated: 4 Oct 1996 /s/ John W. Schroeder
-------------------------------
John W. Schroeder
Assistant Secretary
<PAGE>
EXHIBIT 10.34
THE GRAND UNION COMPANY
MINUTES OF A MEETING OF THE BOARD OF DIRECTORS
----------------------------------------------
October 26, 1995
RESOLVED: THAT the 1995 Equity Incentive Plan for employees of The Grand
Union Company presented to this Board of Directors be and it is
hereby approved; that 950,000 shares of this Corporation's Common
Stock be subject to such Plan; and that such Plan be submitted to
the stockholders of this Corporation for their approval.
-1-
<PAGE>
Exhibit 10.36
[Letterhead of Grand Union]
- ------------------------------------------------------------------------------
March 3, 1997
Jeffrey P. Freimark
21180 Oakley Court
Boca Raton, FL 33437
RE: Stock Option Grant
Dear Jeff:
This is to confirm for you that by action of the Board of Directors you
have been granted an Incentive Stock Option (ISO) giving you the right to
purchase Twenty Thousand (20,000) shares of Grand Union Common Stock at an
exercise price of $3.6875 per share. Your option is subject to the terms and
conditions, including exercise provisions and expiration terms, as set forth in
the 1995 Equity Incentive Plan, except for such additional terms or
modifications noted below.
Your option will become fully exercisable according to the following
schedule:
No. of Shares Vesting Date
------------- ------------
5,000 March 3, 1998
5,000 March 3, 1999
5,000 March 3, 2000
5,000 March 3, 2001
This Incentive Stock Option may be exercised in accordance with the terms
of the 1995 Equity Incentive Plan and pursuant to regulations adopted by the
Board of Directors, including exercise by delivery of previously owned shares or
by a cashless exercise, as set forth in those regulations.
Sincerely,
/s/ John W. Schroeder
John W. Schroeder
Assistant Corporate Secretary
Acknowledged and Accepted
/s/ Jeffrey P. Freimark
- ---------------------------------
Jeffrey P. Freimark
<PAGE>
Exhibit 10.39
THE GRAND UNION COMPANY
MINUTES OF A MEETING OF THE BOARD OF DIRECTORS
----------------------------------------------
December 12, 1995
RESOLVED: THAT the 1995 Non-Employee Directors' Stock Option Plan for
non-employee directors of The Grand Union Company presented to
this Board of Directors be and it is hereby approved; that
50,000 shares of this Corporation's Common Stock be subject
to such Plan; and that such Plan be submitted to the
stockholders of this Corporation for their approval.
1
<PAGE>
Exhibit 10.50
AMENDMENT NO. 1 TO THE STOCK PURCHASE
AGREEMENT DATED AS OF JULY 30, 1996, AMONG THE
GRAND UNION COMPANY, TREFOIL CAPITAL
INVESTORS II, L.P., AND GE INVESTMENT PRIVATE
PLACEMENT PARTNERS II, A LIMITED PARTNERSHIP
Amendment (this "Amendment"), dated as of March 20, 1997, to the Stock
Purchase Agreement (the "July Stock Purchase Agreement"), dated as of July
30, 1996, among each of (i) The Grand Union Company, a Delaware corporation
(the "Company"), and (ii) Trefoil Capital Investors II, L.P., a Delaware
limited partnership ("Trefoil"), and GE Investment Private Placement Partners
II, a Limited Partnership, a Delaware limited partnership ("GEI") (each, a
"Purchaser" and, collectively, the "Purchasers"). Capitalized terms used
herein without definitions shall have the meanings given them in the July
Stock Purchase Agreement.
WHEREAS, the Company has entered into a Stock Purchase Agreement, dated
as of February 25, 1997, as amended as of the date hereof (the "Stangeland
Stock Purchase Agreement"), between the Company and Roger Stangeland
("Stangeland") and the parties hereto have entered into a Stockholder
Agreement (the "Stangeland Stockholder Agreement"), dated as of February 25,
1997, among Trefoil, GEI, Stangeland, and the Company;
WHEREAS, the Purchasers desire to amend the July Stock Purchase
Agreement for the purpose of permitting and facilitating the transactions
contemplated by the Stangeland Stock Purchase Agreement and the Stangeland
Stockholder Agreement;
NOW, THEREFORE, in consideration of the foregoing, and the mutual
agreements and covenants contained herein, the parties hereto agree as
follows:
Section 1. Amendment. The July Stock Purchase Agreement is hereby
amended to add a new ARTICLE 9 - CONSENT AND WAIVER, to read in full as
follows:
"ARTICLE 9 - CONSENT AND WAIVER
Section 9.1. February Transaction Documents.
(a) Notwithstanding anything else herein to the contrary, the
Purchasers hereby authorize, approve and consent to the issuance and sale by
the Company to Roger Stangeland ("Stangeland") of 60,000 shares of the
Preferred Stock (the "Stangeland Shares"), on the terms and subject to the
conditions contained in the Stock Purchase Agreement, dated as of February
25, 1997, as amended as of March __, 1997 (the "Stangeland Stock Purchase
Agreement"), between the Company and Stangeland and the Stockholder Agreement
(the "Stangeland Stockholder Agreement" and collectively with the Stangeland
Stock Purchase Agreement, the "February Transaction Documents"), dated as of
February 25, 1997, between Trefoil, GEI, Stangeland, and the Company, and the
issuance of additional shares of the Preferred Stock, or common stock of the
Company, as dividends on outstanding shares of the Preferred Stock, as
1
<PAGE>
provided in the Certificate of Designation filed with the Secretary of State
of the State of Delaware on September 5, 1996, setting forth the terms of the
Preferred Stock.
(b) The Company shall issue and sell the Stangeland Shares as set forth
in the preceding paragraph. The Purchasers hereby acknowledge and agree that
the issuance and sale of the Stangeland Shares is made by the Company
pursuant to and in accordance with this Agreement, as amended.
(c) The issuance and sale of the Stangeland Shares shall be in addition
to, and not in lieu of, the shares of Preferred Stock to be purchased by the
Purchasers hereunder. Except as specifically set forth in this Amendment,
Stangeland shall not be deemed to be a beneficiary of this Agreement in any
respect, or a successor to, assignee of, or otherwise entitled to enforce any
of the rights or obligations of any of the parties to this Agreement."
Section 2. Miscellaneous.
(a) Notices. Any notice under or relating to this Amendment shall
be given in writing and shall be deemed sufficiently given when delivered by
hand or by conformed facsimile transmission, on the second business day after
a writing is consigned (freight prepaid) to a commercial overnight courier,
and on the fifth business day after a writing is deposited in the mail,
postage and other charges prepaid, addressed as follows:
Trefoil II: 4444 Lakeside Drive
Burbank, California 91505
Attention: Mr. Geoffrey T. Moore
Telecopy: (818) 842-3142
with a copy to: Fried, Frank, Harris, Shriver & Jacobson
350 South Grand Avenue
Los Angeles, California 90071
Attention: David K. Robbins, Esq.
Telecopy: (213) 473-2222
GEIPPPII: GE Investment Management Incorporated
3003 Summer Street
Stamford, Connecticut 06904
Attention: Michael Pastore, Esq.
Telecopy: (203) 326-4177
2
<PAGE>
with a copy to: Dewey Ballantine
1301 Avenue of the Americas
New York, New York 10019
Attention: William J. Phillips, Esq.
Telecopy: (212) 259-6333
the Company: Chief Executive Officer
The Grand Union Company
201 Willowbrook Boulevard
Wayne, NJ 07470-0966
Attention: Joseph J. McCaig
Telecopy: (201) 890-6012
with a copy to: General Counsel
The Grand Union Company
201 Willowbrook Boulevard
Wayne, New Jersey 07470-0966
Attention: John W. Schroeder, Esq.
Telecopy: (201) 890-6012
and
Ropes & Gray
One International Place
Boston, MA 02110
Attention: Winthrop G. Minot, Esq.
Telecopy: (617) 951-7050
and
Fried, Frank, Harris, Shriver & Jacobson
350 South Grand Avenue
Los Angeles, California 90071
Attention: David K. Robbins, Esq.
Telecopy: (213) 473-2222
or to such other address or facsimile number as either party may, from time
to time, designate in a written notice given in like manner.
(b) Binding Effect. The provisions of this Amendment shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors, assigns, heirs, and personal representatives.
(c) Modification. This Amendment may only be modified by a
written instrument duly executed by each party hereto.
3
<PAGE>
(d) Waiver. Any waiver by either party of a breach of any
provision of this Amendment shall not operate as or be construed to be a
waiver of any other breach of such provision or of any breach of any other
provision of this Amendment. Any waiver of any provision of this Amendment
must be in writing.
(e) Headings. The headings to the sections of this Amendment are
inserted for convenience only and shall not constitute a part hereof or
affect in any way the meaning or interpretation of this Amendment.
(f) Separability. If any provision of this Amendment is invalid,
illegal or unenforceable, the balance of this Amendment shall remain in
effect, and if any provision is inapplicable to any person or circumstance,
it shall nevertheless remain applicable to all other persons and
circumstances.
(g) Counterparts. This Amendment may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
(h) Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York applicable to
contracts executed and to be fully performed within the State of New York.
4
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Amendment
as of the date first written above.
TREFOIL CAPITAL INVESTORS II, L.P.
By: Trefoil Investors II, Inc.
its general partner
By: /s/ Robert G. Moskowitz
--------------------------------
Name: Robert G. Moskowitz
Title: Vice President
GE INVESTMENT PRIVATE PLACEMENT
PARTNERS II, A LIMITED PARTNERSHIP
By: GE Investment Management Incorporated
By: /s/ Michael M. Pastore
---------------------------------
Name: Michael M. Pastore
Title: Vice President
THE GRAND UNION COMPANY
By: /s/ Joseph J. McCaig
---------------------------------
Name: Joseph J. McCaig
Title: President and Chief Executive
Officer
5
<PAGE>
Exhibit 10.52
Execution Copy
- ------------------------------------------------------------------------------
STOCK PURCHASE AGREEMENT
by and between
THE GRAND UNION COMPANY
and
ROGER STANGELAND
Dated as of February 25, 1997
- ------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
THE PURCHASE................................................................1
Section 1.1. Definitions.............................................1
Section 1.2. Sale and Purchase of Preferred Stock....................1
Section 1.3. Price for Shares........................................1
Section 1.4. The Closing.............................................1
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY...............................2
Section 2.1. Organization and Qualification..........................2
Section 2.2. Certificate of Incorporation and By-Laws................2
Section 2.3. Capitalization..........................................2
Section 2.4. Authority Relative to this Agreement....................3
Section 2.5. No Conflicts............................................3
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.............................3
Section 3.1. Authority...............................................3
Section 3.2. No Conflicts............................................3
Section 3.3. Acquisition For Investment..............................4
Section 3.4. Speculative Investment..................................4
Section 3.5. Receipt of Reports......................................4
Section 3.6. Financial Condition.....................................4
Section 3.7. Financial Experience....................................4
Section 3.8. Review of Risk Factors..................................4
Section 3.9. Independent Investigation...............................4
Section 3.10. Examination of Documents................................5
Section 3.11. No Other Representations................................5
Section 3.12. Accredited Investor.....................................5
Section 3.13. Purchaser's Principal Residence.........................5
Section 3.14. Brokers or Finders......................................5
Section 3.15. Determination Not to Obtain Independent Counsel.........5
ARTICLE IV
ADDITIONAL AGREEMENTS.......................................................5
Section 4.1. Waiver of Donaldson, Lufkin & Jenrette..................5
Section 4.2. Consent of Banks........................................6
Section 4.3. Consent of Trefoil II and GEIPPPII......................6
Section 4.4. Consents, Approvals.....................................6
Section 4.5. Notification of Certain Matters.........................6
Section 4.6. Public Announcements....................................6
i
<PAGE>
Section 4.7. Conveyance Taxes........................................7
Section 4.8. Consent of Board of Directors...........................7
Section 4.9. Election of Directors...................................7
ARTICLE V
CONDITIONS TO THE STOCK PURCHASE............................................7
Section 5.1. Conditions to Obligation of Each Party to Effect
Any Closing.............................................7
Section 5.2. Additional Conditions to Obligations of the Purchaser...8
Section 5.3. Additional Conditions to Obligation of the Company......8
ARTICLE VI
GENERAL PROVISIONS..........................................................9
Section 6.1. Restrictive Legends.....................................9
Section 6.2. Notices.................................................10
Section 6.3. Certain Definitions.....................................11
Section 6.4. Amendment...............................................13
Section 6.5. Cooperation.............................................13
Section 6.6. Headings................................................13
Section 6.7. Severability............................................13
Section 6.8. Entire Agreement........................................13
Section 6.9. Assignment..............................................13
Section 6.10. Parties in Interest.....................................13
Section 6.11. Failure or Indulgence Not Waiver, Remedies
Cumulative..............................................13
Section 6.12. Governing Law...........................................14
Section 6.13. Counterparts............................................14
ii
<PAGE>
Schedules and Exhibits
Schedule I Wire Transfer Instructions
Exhibit A Certificate of Designation
Exhibit B Stockholder Agreement
<PAGE>
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement, dated as of February 25, 1997 (this
"Agreement"), is by and between The Grand Union Company, a Delaware
corporation (the "Company"), and Roger Stangeland (the "Purchaser").
WITNESSETH:
WHEREAS, the Purchaser wishes to purchase from the Company, and the
Company wishes to sell and issue to the Purchaser (the "Stock Purchase"), an
aggregate of Sixty Thousand (60,000) shares of the Company's Class A
Convertible Preferred Stock, $1.00 par value per share (the "Preferred
Stock"); and
WHEREAS, the Purchaser and the Company are entering into this Agreement
to provide for such purchase and sale and to establish various rights and
obligations in connection therewith.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein set forth, the parties agree as follows:
ARTICLE I
THE PURCHASE
Section 1.1. Definitions. Certain terms are used in this Agreement as
specifically defined herein. These definitions are set forth or referred to
in Section 7.4 hereof.
Section 1.2. Sale and Purchase of Preferred Stock. Subject to the terms
and conditions of this Agreement, and in reliance on the representations and
warranties set forth in this Agreement, the Company hereby agrees to sell to
the Purchaser, and the Purchaser hereby agrees to purchase from the Company,
at a purchase price of $50.00 per share, Sixty-Thousand (60,000) shares of
the Preferred Stock (such shares of Preferred Stock purchased hereunder, the
"Shares") at the Closing as defined in Section 1.4 hereof. The terms and
conditions of the Preferred Stock are set forth in the Certificate of
Designation filed with the Secretary of State of Delaware on September 5,
1996, a copy of which is attached hereto as Exhibit A.
Section 1.3. Price for Shares. The consideration for the purchase of
the Shares shall be Three Million Dollars ($3,000,000) (the "Purchase
Price"). The Purchase Price will be paid at the Closing by wire transfer of
immediately available funds to the Company's account as set forth on Schedule
I hereto.
Section 1.4. The Closing. Subject to the satisfaction or waiver of the
conditions applicable to such Closing set forth in Article V, the closing of
the transactions contemplated by this Agreement (the "Closing"), at the
offices of Fried, Frank, Harris, Shriver & Jacobson,
<PAGE>
350 South Grand Avenue, 32nd Floor, Los Angeles, California, on March 10,
1997 (the "Closing Date"), unless another date, time or place is agreed to in
writing by the parties hereto. At the Closing, the Company will deliver to
the Purchaser a certificate (or, if requested in writing at least two
business days prior to the Closing, certificates), registered in the
Purchaser's name, representing the Shares, against payment of the Purchase
Price therefor.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Purchaser that the
statements contained in this Article II are true and correct as of the date
hereof, and shall remain true and correct up to and including the Closing
Date (as though made then and as though the Closing Date were substituted for
the date of this Agreement throughout this Article II).
Section 2.1. Organization and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. The Company has the requisite corporate power
and authority to carry on its business as it is now being conducted.
Section 2.2. Certificate of Incorporation and By-Laws. The Company has
heretofore furnished to the Purchaser a complete and correct copy of its
Certificate of Incorporation and By-Laws as most recently restated and
subsequently amended to date.
Section 2.3. Capitalization. The authorized capital stock of the
Company consists of (A) 60,000,000 shares of Common Stock, par value $1.00
per share ("Common Stock"), and (B) 3,500,000 shares of the Preferred Stock,
par value $1.00 per share. As of the date hereof, (i) 10,000,000 shares of
Common Stock were issued and outstanding, all of which are validly issued,
fully paid and nonassessable, and no shares of Common Stock were held in
treasury, (ii) 1,219,701 shares of the Preferred Stock were issued and
outstanding, all of which are validly issued, fully paid and nonassessable,
and no shares of Preferred Stock were held in treasury, (iii) no shares of
Common Stock were held by subsidiaries of the Company, (iv) 1,000,000 shares
of Common Stock were reserved for future issuance pursuant to stock options
granted or to be granted under the Company's 1995 Equity Incentive Option
Plan or the Company's 1995 Non-Employee Directors' Stock Option Plan; (v)
900,000 shares of Common Stock were reserved for future issuance upon the
exercise of certain warrants pursuant to that certain Warrant Agreement
between the Company and American Stock Transfer & Trust Company, dated as of
June 15, 1995; (vi) 8,411,787 shares of Common Stock were authorized for
future issuance upon the conversion of shares of Preferred Stock outstanding
on such date; (vii) 5,517,280 shares of Common Stock are authorized for
future issuance upon conversion of shares of Preferred Stock to be sold
pursuant to the Stock Purchase Agreement, dated as of July 30, 1996, among
Trefoil Capital Investors II, L.P., a Delaware limited partnership ("Trefoil
II"), and GE Investment Private Placement Partners II, A Limited Partnership,
a Delaware limited partnership
2
<PAGE>
("GEIPPPII") (the "July 1996 Stock
Purchase Agreement"); and (viii) 800,000 shares of Preferred
Stock were authorized for future issuance pursuant to the
terms of the July 1996 Stock Purchase Agreement.
Section 2.4. Authority Relative to this Agreement. The Company has all
necessary corporate power and authority to execute and deliver this
Agreement, and the Stockholder Agreement (collectively, the "Transaction
Documents") and to perform its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby. The execution
and delivery of each of the Transaction Documents by the Company and the
consummation by the Company of the transactions contemplated thereby have
been duly and validly authorized by all necessary corporate action, and no
other corporate proceedings on the part of the Company are necessary to
authorize the Transaction Documents or to consummate the transactions so
contemplated, other than as contemplated by Section 4.3 and 4.8.
Section 2.5. No Conflicts. The execution and delivery of this Agreement
by the Company does not, and the performance of this Agreement by the Company
and the consummation of the transactions contemplated hereby will not: (i)
conflict with or violate the Certificate of Incorporation or By-Laws of the
Company; (ii) conflict with or violate any federal, foreign, state or
provincial law, rule, regulation, order, judgment or decree applicable to the
Company or by which its properties are bound or affected; or (iii) result in
any breach of or constitute a default under any material contract, agreement,
license, permit, franchise or other instrument or obligation, to which the
Company is a party or by which the Company or its properties are bound or
affected, except for any conflict or violation which would not have a
material adverse effect on the Company and its subsidiaries, taken as a whole.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Company that the statements
contained in this Article III are true and correct as of the date hereof, and
shall remain true and correct up to and including the Closing Date (as though
made then and as though the Closing Date were substituted for the date of
this Agreement throughout this Article III).
Section 3.1. Authority. The Purchaser has all requisite authority and
capacity to enter into this Agreement and to purchase the Shares.
Section 3.2. No Conflicts. The execution and delivery of this Agreement
by the Purchaser does not, and the performance of this Agreement by the
Purchaser and the consummation of the transactions contemplated hereby will
not (i) conflict with or violate any federal, foreign, state or provincial
law, rule, regulation, order, judgment or decree applicable to the Purchaser
or by which the Purchaser's properties are bound or affected; or (ii) result
in any breach of or constitute a default under any material contract,
agreement, license, permit,
3
<PAGE>
franchise or other instrument or obligation, to which the Purchaser is a
party or by which the Purchaser or his properties are bound or affected.
Section 3.3. Acquisition For Investment. The Purchaser is acquiring the
Shares solely for investment, for the Purchaser's own account and not with a
view to, or for resale in connection with, the distribution or other
disposition thereof, except for such distributions and dispositions which are
(i) explicitly permitted or contemplated under the terms of the Transaction
Documents, as well as (ii) effected in compliance with the Securities Act of
1933, as amended (the "Securities Act"), the rules and regulations of the
Securities and Exchange Commission promulgated thereunder, and all applicable
state securities and "blue sky" laws.
Section 3.4. Speculative Investment. The Purchaser understands that
there are substantial restrictions on the transferability of the Shares under
the Securities Act, and the rules and regulations of the Securities and
Exchange Commission (the "SEC") thereunder, and there may never be a public
market for the Shares and, accordingly, it may be difficult to liquidate the
Purchaser's investment in the Company in case of emergency or otherwise.
Section 3.5. Receipt of Reports. The Purchaser currently serves as the
Chairman and a member of the Board of Directors of the Company and, as such,
has received reports from and other information concerning the Company. In
connection with the transaction contemplated hereby, the Purchaser has not
relied on financial information regarding the Company provided by the Company.
Section 3.6. Financial Condition. The Purchaser's financial situation
is such that the Purchaser can afford to bear the economic risk of holding
the Shares for an indefinite period of time and suffer a complete loss of the
Purchaser's investment in the Company.
Section 3.7. Financial Experience. The Purchaser's knowledge and
experience in financial and business matters are such that the Purchaser is
capable of evaluating the merits and risks of the Purchaser's purchase of the
Shares or the Purchaser has been advised by a representative possessing such
knowledge and experience.
Section 3.8. Review of Risk Factors. The Purchaser and the Purchaser's
representatives as deemed necessary by the Purchaser, including the
Purchaser's professional, tax and other advisors, have reviewed the purchase
of the Shares and the Purchaser understands and has taken cognizance of (or
has been advised by the Purchaser's representatives as to) all the risk
factors related to the purchase of the Shares.
Section 3.9. Independent Investigation. In making the Purchaser's
decision to purchase the Shares, the Purchaser has relied upon independent
investigations made by the Purchaser and, to the extent believed by the
Purchaser to be appropriate, the Purchaser's representatives.
4
<PAGE>
Section 3.10. Examination of Documents. The Purchaser and the
Purchaser's representatives and advisors, if any, have been afforded the
opportunity to examine all documents related to and, if applicable, executed
in connection with, the Company and the transactions contemplated hereby,
which the Purchaser or the Purchaser's representatives or advisors, if any,
desire to examine.
Section 3.11. No Other Representations. The Company or its
representatives have provided the Purchaser with the opportunity to ask
questions of, and to receive answers from, the Company and its
representatives concerning the terms and conditions of the purchase of the
Shares. No representations or warranties have been made to the Purchaser or
the Purchaser's representatives concerning the Shares or the Company, its
prospects or other matters, except as set forth in this Agreement.
Section 3.12. Accredited Investor. The Purchaser is an "accredited
investor" within the meaning of Rule 501(a) under the Securities Act.
Section 3.13. Purchaser's Principal Residence. The Purchaser is an
individual with a principal place of residence is located in the State of
California.
Section 3.14. Brokers or Finders. No agent, broker, investment banker
or other firm or person acting on behalf of the Purchaser, including any of
the foregoing that is an affiliate of the Purchaser, is or will be entitled
to receive any broker's or finder's fee or any other commission or similar
fee in connection with any of the transactions contemplated by this Agreement.
Section 3.15. Determination Not to Obtain Independent Counsel. In
connection with the Purchaser's execution of this Agreement, the Purchaser
has been advised by the Company to obtain and consult with independent
counsel of his choice regarding the terms and conditions of this Agreement
and its consequences, as well as, the desirability of entering into this
Agreement. Notwithstanding such advice, the Purchaser has determined not to
be represented by counsel in connection with the Stock Purchase with full
knowledge and understanding of the risks involved with such determination.
ARTICLE IV
ADDITIONAL AGREEMENTS
Section 4.1. Waiver of Donaldson, Lufkin & Jenrette. The Company
shall use all reasonable efforts to obtain a written waiver (the "DLJ
Waiver") by Donaldson, Lufkin & Jenrette Securities Corporation, of any
placement, brokerage, finder's or other fee or commission under the DLJ
Engagement Letter, as defined in Section 7.4(i) hereof, in connection with
the transactions contemplated by this Agreement.
5
<PAGE>
Section 4.2. Consent of Banks. The Company shall use all reasonable
efforts to obtain from Bankers Trust Company, as Agent for the banks party to
the Company Credit Agreement, a written consent of the Required Banks (as
defined in the Company Credit Agreement) (the "Bank Consent") to the
transactions contemplated hereby and a waiver of any defaults or required
prepayments under the Company Credit Agreement which may be caused hereby.
Section 4.3. Consent of Trefoil II and GEIPPPII. The Company shall use
all reasonable efforts to obtain the written consent of Trefoil II and
GEIPPPII (the "Trefoil/GE Consent") to the Stock Purchase Agreement and the
transactions contemplated thereby, in form and substance satisfactory to the
Company.
Section 4.4. Consents, Approvals. The Company shall use all reasonable
efforts to obtain all consents, waivers, approvals, authorizations or orders
(including, without limitation, all United States and foreign governmental
and regulatory rulings and approvals), and the Company shall make all filings
(including, without limitation, all filings with United States and foreign
governmental or regulatory agencies) required in connection with the
authorization, execution and delivery of this Agreement by the Company and
the consummation by it of the transactions contemplated hereby, in each case
as promptly as practicable. The Company also shall use its reasonable
efforts to obtain all necessary state securities laws or blue sky permits and
approvals required to carry out the transactions contemplated hereby and
shall furnish all information as may be reasonably requested in connection
with any such action.
Section 4.5. Notification of Certain Matters. The Company shall give
prompt notice to the Purchaser and the Purchaser shall give prompt notice to
the Company, of (i) the occurrence or nonoccurrence of any event the
occurrence or nonoccurrence of which would be likely to cause any
representation or warranty contained in this Agreement to become untrue or
inaccurate, or (ii) any failure of the Company or the Purchaser, as the case
may be, materially to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder; provided,
however, that the delivery of any notice pursuant to this Section shall not
limit or otherwise affect the remedies available hereunder to the party
receiving such notice; and provided, further, that such notice shall be
required only if the certificates referred to in Sections 5.2(a) or 5.2(b)
would not be able to be given if the applicable Closing were to occur on such
date.
Section 4.6. Public Announcements. The Purchaser and the Company shall
consult with each other before issuing any press release with respect to the
Stock Purchase or this Agreement and shall not issue any such press release
or make any such public statement without the prior consent of the other
party, which consent shall not be unreasonably withheld; provided, however,
that a party may, without the prior consent of the other party, issue such
press release or make such public statement as may upon the advice of counsel
be required by law or the rules and regulations of the NASDAQ National
Market, if it has used all reasonable efforts to consult with the other party
prior thereto, and shall promptly notify the other parties hereto thereof.
6
<PAGE>
Section 4.7. Conveyance Taxes. The Purchaser and the Company shall
cooperate in the preparation, execution and filing of all returns,
questionnaires, applications, or other documents regarding any real property
transfer or gains, sales, use, transfer, value added, stock transfer and
stamp taxes, any transfer, recording, registration and other fees, and any
similar taxes which become payable in connection with the transactions
contemplated hereby that are required or permitted to be filed at or before
the Closing.
Section 4.8. Consent of Board of Directors. The Company shall obtain
the consent of the Board of Directors of the Company (the "Board Consent") to
the Stock Purchase Agreement and the transactions contemplated thereby.
Section 4.9. Election of Directors. The Purchaser hereby agrees, for as
long as a majority of the Board of Directors of the Company shall consist of
directors designated (other than disinterested directors) by Trefoil II and
GEIPPPII, that the Purchaser shall not exercise any right to which the
Purchaser would otherwise be entitled pursuant to the Certificate of
Designation to elect two directors voting separately as a class due to
defaults in dividend payments.
ARTICLE V
CONDITIONS TO THE STOCK PURCHASE
Section 5.1. Conditions to Obligation of Each Party to Effect Any
Closing. The respective obligations of each party to effect any Closing of
the Stock Purchase shall be subject to the satisfaction at or prior to the
Closing Date of the following conditions:
(a) No Injunctions or Restraints; Illegality. No
temporary restraining order, preliminary or permanent
injunction or other order issued by any court of
competent jurisdiction or other legal restraint or
prohibition preventing the consummation of the Stock
Purchase shall be in effect, nor shall any proceeding
brought by any administrative agency or commission or
other governmental authority or instrumentality,
domestic or foreign, seeking any of the foregoing be
pending; and there shall not be any action taken, or
any statute, rule, regulation or order enacted,
entered, enforced or deemed applicable to the Stock
Purchase, which makes the consummation of the Stock
Purchase illegal; and
(b) Governmental Actions. There shall not have
been instituted, pending or threatened any action or
proceeding (or any investigation or other inquiry that
might result in such an action or proceeding) by any
governmental authority or administrative agency before
any governmental authority, administrative agency or
court of competent jurisdiction, nor shall there be in
effect any judgment, decree or order of any
governmental authority, administrative agency or court
of competent jurisdiction, in either case, seeking to
prohibit or limit the Purchaser from exercising all
material rights and privileges pertaining to its
ownership of the Common Stock, or seeking to compel the
7
<PAGE>
Company or any of its subsidiaries to dispose of or
hold separate all or any material portion of the
business or assets of the Company or any of its
subsidiaries, as a result of the Stock Purchase or the
transactions contemplated by this Agreement.
Section 5.2. Additional Conditions to Obligations of the Purchaser. The
obligation of the Purchaser to effect the purchase of the Shares is also
subject to the following conditions:
(a) Representations and Warranties. All
representations and warranties of the Company herein
contained shall have been true and correct when made in
all respects and shall be true and correct at and as of
the Closing Date as if made at and as of such time,
except for (i) changes not prohibited by this
Agreement, and (ii) those representations and
warranties which address matters only as of a
particular date (which shall have been true and correct
as of such date, subject to clause (iii)), or (iii) at
and as of the Closing Date where the failure to be true
and correct could not, if any qualification in such
representations or warranties as to materiality were
deleted therefrom (including dollar thresholds),
individually or in the aggregate reasonably be expected
to have a Material Adverse Effect and the Purchaser
shall have received a certificate dated the Closing
Date to such effect signed by the President and the
Chief Financial Officer of the Company;
(b) Agreements and Covenants. The Company shall
have performed or complied in all material respects
with all agreements and covenants required by this
Agreement to be performed or complied with by it at or
prior to the Closing Date and the Purchaser shall have
received a certificate dated the Closing Date to such
effect signed on behalf of the Company by the President
and the Chief Financial Officer of the Company;
(c) Consents Obtained. All consents, waivers,
approvals, authorizations or orders required to be
obtained, and all filings or notices required to be
made, by the Company for the due authorization,
execution and delivery of this Agreement and the
consummation by it of the transactions contemplated
hereby shall have been obtained and made by the
Company, except for consents required to be obtained
under contracts not material to the operation of the
business of the Company;
(d) Stockholders Agreement. The Company, the
Purchaser, Trefoil II, and GEIPPPII shall have entered
into a stockholder agreement substantially in the form
of Exhibit B attached hereto; and
(e) Delivery of Shares. The Company shall have
delivered the Shares to be delivered pursuant to
Section 1.4 hereof, against payment of the Purchase
Price.
Section 5.3. Additional Conditions to Obligation of the Company. The
obligation of the Company to effect the Stock Purchase is also subject to the
following conditions:
8
<PAGE>
(a) Representations and Warranties. The
representations and warranties of the Purchaser
contained in this Agreement shall have been true and
correct in all respects when made and shall be true and
correct in all respects on and as of the Closing Date,
except for (i) changes contemplated by this Agreement
and (ii) those representations and warranties which
address matters only as of a particular date (which
shall have been true and correct in all material
respects as of such date), with the same force and
effect as if made on and as of the Closing Date and the
Company shall have received a certificate dated the
Closing Date to such effect signed by the Purchaser;
(b) Agreements and Covenants. The Purchaser
shall have performed or complied in all material
respects with all agreements and covenants required by
this Agreement to be performed or complied with by the
Purchaser on or prior to the Closing Date, and the
Company shall have received a certificate to such
effect dated the Closing Date signed by the Purchaser;
(c) Consents Obtained. All consents, waivers,
approvals, authorizations or orders required to be
obtained, and all filings required to be made, by the
Purchaser for the due authorization, execution and
delivery of this Agreement and the consummation by it
of the transactions contemplated hereby shall have been
obtained and made by the Purchaser, and the Company
shall have obtained, in form and substance satisfactory
to the Company, the DLJ Waiver (referred to in Section
4.1 hereof), the Bank Consent (referred to in Section
4.2 hereof), the Trefoil/GE Consent (referred to in
Section 4.3 hereof), and the Board Consent (referred to
in Section 4.8 hereof), and the Company shall not have
the right, nor be entitled to, waive the requirement of
the DLJ Waiver as a closing condition without the prior
written consent of Trefoil II and GEIPPPII; and
(d) Payment of Purchase Price. The Purchaser
shall have delivered payment of the Purchase Price in
accordance with Section 1.3 hereof.
ARTICLE VI
GENERAL PROVISIONS
Section 6.1. Restrictive Legends. Each certificate representing Shares
and Conversion Shares shall bear legends in substantially the following form:
The securities represented by this
certificate have not been registered
under the Securities Act of 1933 or the
securities laws of any state and may not
be sold or otherwise disposed of except
pursuant to an effective registration
statement under such Act and applicable
state securities laws or an applicable
exemption to the registration
requirements of such Act or such laws.
9
<PAGE>
The Grand Union Company (the
"Company") will furnish without charge
to each stockholder who so requests
through the Company's principal office,
a statement of the powers, designations,
preferences and relative, participating,
optional or other special rights of each
class of stock or series thereof and the
qualifications, limitations or
restrictions of such preferences and/or
rights.
The securities represented by this
certificate are subject to restrictions
on transfer, as provided in: (i) a
Stockholders Agreement dated as of
February 25, 1997 among the Company and
the purchasers executing the agreement
(the "Agreement"); and (ii) the
Company's Certificate of Designation of
Class A Convertible Preferred Stock
Setting Forth the Powers, Preferences,
Rights, Qualifications, Limitations and
Restrictions of Such Class of Preferred
Stock (the "Certificate"). Copies of
the Agreement and the Certificate are on
file with the Secretary of the Company
and, upon request of any stockholder of
the Company, will be made available to
said stockholder.
The securities represented by this
certificate were issued pursuant to, and
the holder hereof is entitled to certain
rights and subject to certain
obligations contained in, a Stockholders
Agreement dated as of February 25, 1997,
a copy of which is available for
inspection at the principal office of
the issuer hereof, and will be furnished
without charge to the holder of such
securities upon written request.
Section 6.2. Notices. All notices and other communications given or
made pursuant hereto shall be in writing and shall be deemed to have been
duly given or made if and when delivered personally or by overnight courier
to the parties at the following addresses or sent by electronic transmission,
with confirmation received, to the telecopy numbers specified below (or at
such other address or telecopy number for a party as shall be specified by
like notice):
(a) If to the Purchaser:
Roger Stangeland
c/o The Vons Companies, Inc.
300 North Lake Avenue
Suite 925
Pasadena, CA 91101
Telecopier No.: (818) 304-2873
Telephone No.: (818) 304-2870
10
<PAGE>
(b) If to the Company:
Chief Executive Officer
The Grand Union Company
201 Willowbrook Blvd.
Wayne, NJ 07470-0966
Attn: Joseph J. McCaig
Telecopier No.: (201) 890-6012
Telephone No.: (201) 890-6000
With a copy to:
General Counsel
The Grand Union Company
201 Willowbrook Boulevard
Wayne, NJ 07470-0966
Attn: John W. Schroeder, Esq.
Telecopier No.: (201) 890-6012
Telephone No.: (201) 890-6761
and
Fried, Frank, Harris, Shriver & Jacobson
350 South Grand Avenue, 32nd Floor
Los Angeles, CA 90071
Attn: David K. Robbins, Esq.
Telecopier No.: (213) 473-2005
Telephone No.: (213) 473-2222
Section 6.3. Certain Definitions. For purposes of this Agreement, the
term:
(a) "affiliate" means a person that directly or
indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control
with, the first mentioned person; including, without
limitation, any partnership or joint venture in which
the first mentioned person (either alone, or through or
together with any other subsidiary) has, directly or
indirectly, an interest of 10% or more;
(b) "business day" means any day other than a day
on which banks in the State of New York are required or
authorized to be closed;
(c) "Company Credit Agreement" means that certain
Amended and Restated Credit Agreement dated as of June
15, 1995, as from time to time in effect among the
11
<PAGE>
Company, the banks party thereto, and Bankers Trust
Company, as Agent for the banks party thereto, as filed
in the Company's public filings with SEC, together with
such related transaction documents, amendments,
extensions and waivers in effect as of the date hereof,
and the consent and waiver secured pursuant to Section
4.2 hereof.
(d) "Conversion Shares" means the shares of
Common Stock issuable upon conversation of the Shares;
(e) "DLJ Engagement Letter" means the letter
dated January 17, 1996 between DLJ and the Company, in
the form filed as Exhibit 10.28 to the Company's annual
report on Form 10-K for the fiscal year ended March 30,
1996.
(f) "Exchange Act" means the Securities Exchange
Act of 1934, as amended.
(g) "person" means an individual, corporation,
partnership, association, trust, unincorporated
organization, other entity or group (as defined in
Section 13(d)(3) of the Exchange Act);
(h) "subsidiary" or "subsidiaries" of the Company
or any other person means any corporation, partnership,
joint venture or other legal entity of which the
Company, or such other person, as the case may be
(either alone or through or together with any other
subsidiary), owns, directly or indirectly, more dm 50%
of the stock or other equity interests the holders of
which are generally entitled to vote for the election
of the board of directors or other governing body of
such corporation or other legal entity.
Each of the following terms shall have the meaning ascribed to it in the
section set forth beside such term in the table below:
Term Section
"Agreement" Recitals
"Bank Consent" 4.2
"Board Consent" 4.8
"Certificate of Designation" 1.2
"Closing" 1.4
"Closing Date" 1.4
"Common Stock" 2.3
"Company" Recitals
"DLJ Engagement Letter" 7.4(i)
"DLJ Waiver" 4.1
"GEIPPPII" 2.3
"July 1996 Stock Purchase Agreement" 2.3
"Preferred Stock" Recitals
"Purchase Price" 1.2
12
<PAGE>
"Purchaser" Recitals
"SEC" 3.4
"Securities Act" 3.3
"Shares" 1.2
"Stock Purchase" Recitals
"Transaction Documents" 2.4
"Trefoil II" 2.3
"Trefoil/GE Consent" 4.3
Section 6.4. Amendment. This Agreement may not be amended except by an
instrument in writing signed by the Company and of the Purchaser.
Section 6.5. Cooperation. The Purchaser and the Company agree to take,
or to cause to be taken, all such reasonable and lawful action as may be
necessary to make effective and consummate the transactions contemplated by
this Agreement.
Section 6.6. Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 6.7. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of
law, or public policy, all other conditions 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 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 to the end that the transactions contemplated hereby are
fulfilled to the fullest extent possible.
Section 6.8. Entire Agreement. This Agreement constitutes the entire
agreement and supersedes all prior agreements and undertakings, both written
and oral, among the parties, or any of them, with respect to the subject
matter hereof.
Section 6.9. Assignment. This Agreement shall not be assigned by
operation of law or otherwise.
Section 6.10. Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any right, benefit or remedy of any nature whatsoever under or by
reason of this Agreement, including, without limitation, by way of
subrogation.
Section 6.11. Failure or Indulgence Not Waiver, Remedies Cumulative. No
failure or delay on the part of any party hereto in the exercise of any right
hereunder shall impair such right
13
<PAGE>
or be construed to be a waiver of, or acquiescence in, any breach of any
representation, warranty or agreement herein, nor shall any single or partial
exercise of any such right preclude any other or further exercise thereof or
of any other right. All rights and remedies existing under this Agreement
are cumulative to, and not exclusive of, any rights or remedies otherwise
available.
Section 6.12. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the internal laws of the State of New York
applicable to contracts executed and fully performed within the State of New
York.
Section 6.13. 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.
IN WITNESS WHEREOF, the Company and the Purchaser have executed this
Stock Purchase Agreement as of the date first set forth above.
THE COMPANY
THE GRAND UNION COMPANY
By: /s/ Joseph J. McCaig
----------------------------------------
Name: Joseph J. McCaig
Title: President and Chief Executive Officer
PURCHASER
/s/ Roger Stangeland
--------------------------------------------
Roger Stangeland
14
<PAGE>
Schedule I
Wire Transfer Instructions
Account Name: The Grand Union Company
Account Number: 00319409
ABA Number: 021001033
Bank Name: Banker's Trust Company
15
<PAGE>
Exhibit 10.53
AMENDMENT NO. 1 TO STOCK PURCHASE AGREEMENT
This Amendment No. 1, dated as of March 20, 1997 (this "Amendment No.
1"), to Stock Purchase Agreement, dated as of February 25, 1997 (the
"Agreement"), is by and between The Grand Union Company, a Delaware
corporation (the "Company"), and Roger Stangeland (the "Purchaser").
WITNESSETH:
WHEREAS, pursuant to the Agreement, the Purchaser agreed to purchase
from the Company, and the Company agreed to sell and issue to the Purchaser
(the "Stock Purchase"), an aggregate of Sixty Thousand (60,000) shares of the
Company's Class A Convertible Preferred Stock, $1.00 par value per share (the
"Preferred Stock"); and
WHEREAS, the Purchaser desires to be permitted to assign his rights and
obligations pursuant to the Agreement, and the Company is willing to permit
such assignment, on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein set forth, the parties agree as follows:
Section 1. Representations and Warranties of the
Purchaser. Sections 3.5 and 3.13 of the Agreement are
hereby amended to read as follows:
"Section 3.5. Receipt of Reports. Roger Stangeland currently serves as
the Chairman and a member of the Board of Directors of the Company and as
co-trustee of the general partner of the Partnership and, as Chairman of the
Board of Directors of the Company, has received reports from and other
information concerning the Company, and the Partnership is aware of the
contents of all of such reports and information. In connection with the
transaction contemplated hereby, the Purchaser has not relied on financial
information regarding the Company provided by the Company."
"Section 3.13. Purchaser's Principal Residence. Roger Stangeland
is an individual with a principal place of residence located in the State of
California, and the Partnership is a limited partnership organized under the
laws of the State of California."
Section 2. Assignment. Section 6.9 of the Agreement is hereby amended
to read as follows:
"Section 6.9. Assignment. This Agreement shall not be assigned by
operation of law or otherwise; provided, however, that the Purchaser's right
and obligation to consummate the Stock Purchase may be assigned, on the terms
and conditions set forth herein, pursuant to an assignment and assumption
agreement substantially in the form set forth as Exhibit A hereto (the
<PAGE>
"Assignment") to The Stangeland Family Limited Partnership, a California
limited partnership (the "Partnership") of which the general partner is The
Roger and Lilah Stangeland Living Trust (the "Trust"), and it is acknowledged
and agreed by the Company that the Purchaser may, and intends to, so assign
his rights and obligations hereunder."
Section 3. Binding Effect. Section 6.10 of the Agreement is hereby
amended to read as follows:
"Section 6.10. Parties in Interest. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto and, upon the
Assignment, to the Partnership, and nothing in this Agreement, express or
implied, is intended to or shall confer upon any other person any right,
benefit or remedy of any nature whatsoever under or by reason of this
Agreement, including, without limitation, by way of subrogation."
Section 4. Additional Conditions to the Company's Obligation to Effect
the Closing. In addition to the satisfaction or waiver of all of the
conditions set forth in Section 5 of the Agreement, the Company's obligation
to effect the Closing pursuant to the Agreement and the Assignment is subject
to the following additional conditions:
(a) Conditions to Obligations of Each Party to
Effect the Closing. The conditions set forth in
Section 5.1 of the Agreement shall be satisfied with
respect to the Stock Purchase giving effect to the
Assignment as applied to the Partnership.
(b) Additional Conditions to Obligations of the
Company. The conditions set forth in Section 5.3 of
the Agreement shall be satisfied giving effect to the
Assignment, as though the Partnership shall have been
substituted for the Purchaser in such Agreement in all
respects, including but not limited to the truth and
accuracy of the representations and warranties of the
Purchaser set forth in Article III of the Agreement as
though the Partnership shall have made such
representations and warranties as of the date of the
Agreement and as of the Closing Date, and the
Partnership shall have delivered to the Company a
certificate, in form and substance satisfactory to the
Company, to such effect.
Section 5. Notices. Section 6.2(a) of the Agreement is hereby amended
to add the following at the end of Section 6.2:
"(c) If to the Partnership:
The Stangeland Family Limited Partnership
300 North Lake Avenue
Suite 925
Pasadena, CA 91101
Telecopier No.: (818) 304-2873
Telephone No.: (818) 304-2870
2
<PAGE>
With a copy to:
Munger, Tolles & Olson
355 S. Grand Avenue, 35th Floor
Los Angeles, CA 90071
Attention: Steven L. Guise, Esq.
Telecopy: (213) 683-3702"
Section 6. Certain Definitions. Section 6.3 of the Agreement is hereby
amended to add the following definitions:
(a) "Amendment" means Amendment No. 1, dated as
of March __, 1997, to this Agreement.
(b) "Assignment" means the Assignment and
Assumption Agreement, dated as of March __, 1997,
between Roger Stangeland and the Partnership, and the
transactions contemplated thereby;
(c) "Partnership" means The Stangeland Family
Limited Partnership, a California limited partnership,
of which the general partner is The Roger and Lilah
Stangeland Living Trust; and
(d) "Purchaser" when used herein, shall have the
definition set forth in the Preamble to the Agreement;
provided, however, that from and after the date of the
Assignment, as contemplated by the Amendment, shall
mean the Partnership.
Section 7. Entire Agreement. This Amendment, together with the
Agreement, constitutes the entire agreement and supersedes all prior
agreements and undertakings, both written and oral, among the parties, or any
of them, with respect to the subject matter hereof.
Section 8. Governing Law. This Amendment shall be governed by, and
construed in accordance with, the internal laws of the State of New York
applicable to contracts executed and fully performed within the State of New
York.
Section 9. 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.
3
<PAGE>
IN WITNESS WHEREOF, the Company and the Purchaser have
executed this Amendment No. 1 as of the date first set forth
above.
THE COMPANY
THE GRAND UNION COMPANY
By: /s/ Joseph J. McCaig
-------------------------
Name: Joseph J. McCaig
Title: President and Chief Executive Officer
PURCHASER
/s/ Roger Stangeland
----------------------------
Roger Stangeland
4
<PAGE>
Exhibit 10.54
ASSIGNMENT AND ASSUMPTION AGREEMENT
This Assignment and Assumption Agreement (the
"Agreement"), dated as of March 20, 1997, by and between
Roger Stangeland, an individual ("Stangeland"), and The
Stangeland Family Limited Partnership, a California limited
partnership (the "Partnership") of which the general partner
is The Roger and Lilah Stangeland Living Trust (the
"Trust").
WITNESSETH:
WHEREAS, pursuant to the Stock Purchase Agreement,
dated as of February 25, 1997, by and between The Grand
Union Company, a Delaware corporation (the "Company"), and
Stangeland, as amended by Amendment No. 1, dated as of March
20, 1997 (as so ameded, the "Purchase Agreement"),
Stangeland agreed to purchase from the Company, and the
Company agreed to sell and issue to Stangeland (the "Stock
Purchase"), an aggregate of Sixty Thousand (60,000) shares
(the "Stangeland Shares") of the Company's Class A
Convertible Preferred Stock, $1.00 par value per share (the
"Preferred Stock"); and
WHEREAS, pursuant to the Purchase Agreement, Stangeland
has acquired the right to assign its rights thereunder to
the Partnership, and thereby cause the Partnership to
purchase the Stangeland Shares;
WHEREAS, Stangeland desires to assign to the
Partnership his right to purchase the Stangeland Shares, and
the Partnership desires to accept such right and assume all
the obligations imposed on Stangeland pursuant to the
Purchase Agreement with respect to the Stangeland Shares
under the Purchase Agreement, in accordance with its terms.
NOW, THEREFORE, in consideration of the premises and
the mutual covenants herein set forth, the parties agree as
follows:
Section 1. Effective as of the date hereof,
Stangeland hereby assigns all of his rights to acquire the
Stangeland Shares in accordance with the terms and
conditions of the Purchase Agreement to the Partnership,
which hereby agrees to, and hereby accepts, such assignment.
Section 2. The Partnership hereby agrees to, and
hereby does, assume any and all obligations of Stangeland
pursuant to the Purchase Agreement, and hereby agrees to
perform (and Stangeland hereby agrees to cause the
Partnership to perform), such obligations subject to the
terms and conditions of the Purchase Agreement.
Section 3. The parties hereto hereby acknowledge
and agree that the Company is entitle to enforce and rely on
the provisions of this Agreement as third party beneficiary
hereof.
Section 4. This Agreement, together with the
Purchase Agreement and the Addendum to the Stockholder
Agreement by and among the Company, Trefoil Capital
<PAGE>
Investors II, L.P. and GE Investment Private Placement
Partners II, a Limited Partnership, contains the entire
understanding of the parties hereto with respect to the
subject matter hereof.
Section 5. This Agreement shall be governed by, and
construed in accordance with, the internal laws of the State
of New York applicable to contracts executed and fully
performed within the State of New York.
Section 6. This Agreement shall not be assignable.
IN WITNESS WHEREOF, Stangeland and the Partnership have
executed this Agreement as of the date first set forth
above.
STANGELAND
/s/ Roger Stangeland
----------------------------------
Roger Stangeland
THE STANGELAND FAMILY LIMITED
PARTNERSHIP, a California limited partnership
By: THE ROGER AND LILAH STANGELAND
LIVING TRUST
Its: General Partner
/s/ Roger Stangeland
----------------------------------
By: Roger Stangeland, Co-Trustee
/s/ Lilah Stangeland
----------------------------------
By: Lilah Stangeland, Co-Trustee
2
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Exhibit 10.55
STOCKHOLDER AGREEMENT
Stockholder Agreement (this "Agreement"), dated as
of February 25, 1997, between Trefoil Capital Investors II,
L.P., a Delaware limited partnership ("Trefoil II"), GE
Investment Private Placement Partners II, A Limited
Partnership, a Delaware limited partnership ("GEIPPPII" and,
collectively with Trefoil II, the "Purchasers")), Roger
Stangeland, an individual ("Stangeland" and, collectively
with the Purchasers, the "Stockholders"), and The Grand
Union Company, a Delaware corporation (the "Company").
W I T N E S S E T H:
--------------------
WHEREAS, pursuant to a Stock Purchase Agreement of
even date herewith (the "Purchase Agreement") by and among
the Company and Stangeland, Stangeland will purchase an
aggregate of 60,000 shares (the "Stangeland Shares") of
Class A Convertible Preferred Stock, stated value $50.00 per
share (the "Preferred Stock"), of the Company;
WHEREAS, the Purchasers are parties to a
Stockholder Agreement (the "Purchasers Stockholder
Agreement"), and the Purchasers and the Company are parties
to a Stock Purchase Agreement (the "Purchasers Stock
Purchase Agreement") and a Registration Rights Agreement
(the "Purchasers Registration Rights Agreement"), each dated
as of July 30, 1996, creating certain rights and obligations
among the parties thereto; and
WHEREAS, in connection with the acquisition of the
Stangeland Shares, and any other shares of the Preferred
Stock and common stock, par value $1.00 per share, of the
Company (the "Common Stock") paid as dividends on such
Stangeland Shares (collectively with the Preferred Stock,
the "Stangeland Securities"), Stangeland will have the right
to participate in the registration by the Company of shares
of Preferred Stock and Common Stock to be sold by the
Purchasers to include all or any portion of the Stangeland
Securities for public sale in the United States as provided
herein (the "Stangeland Registration Rights"); and
WHEREAS, the Stockholders wish to provide for
certain arrangements with respect to their shares of
Securities;
NOW, THEREFORE, in consideration of the foregoing,
and the mutual agreements and covenants contained herein,
the parties hereto agree as follows:
1. Definitions. All terms defined herein in the
plural form shall have correlative meanings in the singular
form and vice versa. For purposes of this Agreement, the
following terms shall have the respective meanings given
below:
"Securities" means shares of the Preferred Stock and
Common Stock paid as dividends on shares of Preferred Stock
owned by any Stockholder.
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"Voting Stock" means the Common Stock, the Preferred
Stock and any other capital stock of the Company that is
entitled to vote with the Common Stock on all matters
submitted to the stockholders of the Company for voting;
2. Tag-Along Rights.
(a) If, at any time, either Purchaser proposes to
sell shares of Securities representing 50% or more of such
Purchaser's aggregate Securities then held, in one
transaction or in any series of transactions (other than
through a sale of such shares in a public offering), then
such party (the "Selling Party") shall notify Stangeland
(the "Tag-Along Seller"), describing in such notification
the material terms of the proposed sale. The Tag-Along
Seller shall have the option, exercisable by written notice
to the Selling Party, within ten business days after the
Selling Party notifies the Tag-Along Seller of its intention
to effect such sale, to require the Selling Party to provide
as part of its proposed sale that the Tag-Along Seller be
given the right to participate, pro rata in proportion to
the respective number of shares of Securities owned by each
party, in such transaction or series of transactions on the
same terms and conditions (including but not limited to
obligations with respect to indemnification) as the Selling
Party, and, if such option is exercised by the Tag-Along
Seller, the Selling Party shall not proceed with such sale
unless the Tag-Along Seller is given the right so to
participate.
(b) The provisions of this Section 2 shall
terminate on the earlier of (i) the date that Stangeland
shall first own less than 30,000 shares of Preferred Stock,
or (ii) date that the Purchasers shall first collectively
own Securities (r) with a stated value, in the case of
Preferred Stock, or (s) valued at $7.25 per share, in the
case of shares of Common Stock, equal to less than an
aggregate of $50,000,000; provided, however, that if on such
date there shall be a sale of Securities previously
commenced in which Stangeland shall have delivered written
notice of his election to participate in such sale pursuant
to this Section, then the provisions of this Section shall
continue to apply and be enforceable until the earlier of
(x) the sale of Stangeland Shares pursuant to such
transaction, or (y) the termination of such transaction by
the Selling Party prior to its consummation.
3. Take-Along Rights.
(a) If, at any time, either Purchaser proposes to
sell shares of Securities representing 50% or more of such
Purchaser's aggregate Securities then held, in one
transaction or in any series of transactions (other than
through a sale of such shares in a public offering) to any
third party (the "Buyer"), then such party (the "Selling
Party") shall have the right (the "Take-Along Right") to
require Stangeland to participate, pro rata in proportion to
the respective number of shares of Securities owned by each
party, in such transaction or series of transactions on the
same terms and conditions (including but not limited to
obligations with respect to indemnification) as the Selling
Party. The Selling Party shall exercise the Take-Along
Right by delivering written notice thereof to Stangeland,
describing in such notification the material terms of the
proposed sale.
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<PAGE>
(b) On the closing date of the sale of Securities
to the Buyer, the Selling Party and Stangeland shall deliver
the certificates representing the Securities owned by it and
him, in proper form for transfer with appropriate stock
powers executed in blank attached and all documentary and
transfer tax stamps affixed, against payment of the purchase
price therefor. By delivering such certificates, the
Selling Party and Stangeland each shall be deemed to
represent and warrant that the Buyer will receive good title
to the Securities transferred by them represented by such
certificates, free and clear of all liens, security
interests, pledges, charges, encumbrances, stockholders
agreements, and voting trusts.
(c) The provisions of this Section 3 shall
terminate on the date that the Purchasers shall first
collectively own Securities (i) with a stated value, in the
case of Preferred Stock, or (ii) valued at $7.25 per share,
in the case of shares of Common Stock, equal to less than an
aggregate of $50,000,000; provided, however, that if on such
date there shall be a sale of Securities previously
commenced in which a Selling Party shall have delivered
written notice of its election to require Stangeland to
participate in such sale pursuant to this Section, then the
provisions of this Section shall continue to apply and be
enforceable until the earlier of (i) the sale of Securities
to the Buyer pursuant to such transaction, or (ii) the
termination of such transaction by the Selling Party prior
to its consummation.
4. Exercise of Demand Registration Rights.
(a) If, at any time, either Purchaser elects to
request or require the Company to register all or any of the
Securities then owned by such Purchaser for public sale
pursuant to the Purchasers Registration Rights Agreement
(whether a Demand Registration, in connection with a
registration of securities for sale by the Company, or a
registration on Form S-3), such party (the "Registering
Party") shall notify Stangeland (the "Tag-Along Registrant")
and the Tag-Along Registrant shall have the option,
exercisable by written notice to the Registering Party,
within ten business days after the Registering Party
notifies the Tag-Along Registrant of its intention to
exercise such Demand Registration Right, to require the
Registering Party to provide that the Tag-Along Registrant
be given the right to participate in such registration, pro
rata in proportion to the respective number of shares of
Securities owned by the Registering Party, the other
Purchaser, if such other Purchaser has elected to
participate in such registration, and the Tag-Along
Registrant, and, if such option is exercised by the
Tag-Along Registrant, the Registering Party shall not
proceed with such registration unless the Tag-Along
Registrant is given the right so to participate.
(b) The Company and Stangeland hereby agree that
if the provisions of clause (a) of this Section 4 are
complied with, that the Company will include the Securities
of the Tag-Along Registrant in such registration on the same
terms, and subject to the same conditions, including, among
other things, delays in the filing and effectiveness of the
registration, reductions and allocations of Securities among
participants in the registration, and the payment of
registration expenses, as the terms and conditions
applicable to the Purchasers pursuant to the Purchaser
Registration Rights Agreement, except as may be otherwise
expressly set forth herein.
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(c) The provisions of this Section 4 shall
terminate on the date that Stangeland shall first own less
than 30,000 shares of Preferred Stock; provided, however,
that if on such date there shall be a registration of
Securities previously commenced in which Stangeland shall
have delivered written notice of his election to participate
in such registration pursuant to this Section, then the
provisions of this Section shall continue to apply and be
enforceable until the earlier of (i) the sale of Stangeland
Shares pursuant to such registration, or (ii) the withdrawal
or abandonment of such registration prior to its
effectiveness.
5. Legend on Certificates. Except as set forth
herein to the contrary, the following legend shall be noted
conspicuously on all certificates representing shares of
Securities issued after the date hereof which are subject to
the terms of this Agreement:
The securities represented by this
certificate have not been registered under
the Securities Act of 1933 or the securities
laws of any state and may not be sold or
otherwise disposed of except pursuant to an
effective registration statement under such
Act and applicable state securities laws or
an applicable exemption to the registration
requirements of such Act or such laws.
The Grand Union Company (the "Company")
will furnish without charge to each
stockholder who so requests through the
Company's principal office, a statement of
the powers, designations, preferences and
relative, participating, optional or other
special rights of each class of stock or
series thereof and the qualifications,
limitations or restrictions of such
preferences and/or rights.
The securities represented by this
certificate are subject to restrictions on
transfer, as provided in: (i) a Stockholders
Agreement dated as of February 25, 1997 among
the Company and the purchasers executing the
agreement (the "Agreement"); and (ii) the
Company's Certificate of Designation of Class
A Convertible Preferred Stock Setting Forth
the Powers, Preferences, Rights,
Qualifications, Limitations and Restrictions
of Such Class of Preferred Stock (the
"Certificate"). Copies of the Agreement and
the Certificate are on file with the
Secretary of the Company and, upon request of
any stockholder of the Company, will be made
available to said stockholder.
The securities represented by this
certificate were issued pursuant to, and the
holder hereof is entitled to certain rights
and subject to certain obligations contained
in, a Stockholders Agreement dated as of
February 25, 1997, a copy of which is
available for inspection at the principal
office of the issuer hereof, and will be
furnished without charge to the holder of
such securities upon written request.
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<PAGE>
6. Consent of Purchasers. Each of the
Purchasers agrees to provide its consent to Stangeland's
acquisition of the Stangeland Shares on the terms and
conditions set forth in the Purchase Agreement and this
Agreement.
7. Election of Directors. Stangeland hereby
agrees, for as long as a majority of the Board of Directors
of the Company shall consist of directors designated (other
than disinterested directors) by the Purchasers, that
Stangeland shall not exercise any right to which Stangeland
would otherwise be entitled pursuant to the Company's
Certificate of Designation of Class A Convertible Preferred
Stock Setting Forth the Powers, Preferences, Rights,
Qualifications, Limitations and Restrictions of Such Class
of Preferred Stock to elect two directors voting separately
as a class due to defaults in dividend payments.
8. After Acquired Securities. The provisions of
this Agreement shall apply with equal force to any
additional shares of Common Stock or Preferred Stock
acquired by any Stockholder during the term of this
Agreement.
9. Binding Effect. The provisions of this
Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors, assigns,
heirs, and personal representatives. Stangeland shall not
sell, assign or otherwise transfer any interest in the
Securities owned by him (other than pursuant to Sections 2,
3 or 4 hereof) unless each such transferee becomes a party
to this Agreement and agrees to be bound by the terms
hereof.
10. Entire Agreement. This Agreement sets forth
the entire understanding between the parties with respect to
the subject matter hereof, and supersedes any existing
agreements between them concerning such subject matter.
11. Notices. Any notice under or relating to
this Agreement shall be given in writing and shall be deemed
sufficiently given when delivered by hand or by conformed
facsimile transmission, on the second business day after a
writing is consigned (freight prepaid) to a commercial
overnight courier, and on the fifth business day after a
writing is deposited in the mail, postage and other charges
prepaid, addressed as follows:
Trefoil II: 4444 Lakeside Drive
Burbank, California 91505
Attention: Mr. Geoffrey T. Moore
Telecopy: (818) 842-3142
with a copy to: Fried, Frank, Harris, Shriver & Jacobson
350 South Grand Avenue
Los Angeles, California 90071
Attention: David K. Robbins, Esq.
Telecopy: (213) 473-2222
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<PAGE>
GEIPPPII: GE Investment Management Incorporated
3003 Summer Street
Stamford, Connecticut 06904
Attention: Michael Pastore, Esq.
Telecopy: (203) 326-4177
with a copy to: Dewey Ballantine
1301 Avenue of the Americas
New York, New York 10019
Attention: William J. Phillips, Esq.
Telecopy: (212) 259-6333
Stangeland: Roger Stangeland
c/o The Vons Companies, Inc.
300 North Lake Avenue
Suite 925
Pasadena, CA 91101
Telecopy: (818) 304-2873
the Company: Chief Executive Officer
The Grand Union Company
201 Willowbrook Boulevard
Wayne, NJ 07470-0966
Attention: Joseph J. McCaig
Telecopy: (201) 890-6012
with a copy to: Counsel General
The Grand Union Company
201 Willowbrook Boulevard
Wayne, New Jersey 07470-0966
Attention: John W. Schroeder, Esq.
Telecopy: (201) 890-6012
and
Fried, Frank, Harris, Shriver & Jacobson
350 South Grand Avenue
Los Angeles, California 90071
Attention: David K. Robbins, Esq.
Telecopy: (213) 473-2222
or to such other address or facsimile number as either party
may, from time to time, designate in a written notice given
in like manner.
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<PAGE>
12. Modification. This Agreement may only be
modified by a written instrument duly executed by each party
hereto.
13. Waiver. Any waiver by either party of a
breach of any provision of this Agreement shall not operate
as or be construed to be a waiver of any other breach of
such provision or of any breach of any other provision of
this Agreement. Any waiver of any provision of this
Agreement must be in writing.
14. Headings. The headings to the sections of
this Agreement are inserted for convenience only and shall
not constitute a part hereof or affect in any way the
meaning or interpretation of this Agreement.
15. Separability. If any provision of this
Agreement is invalid, illegal or unenforceable, the balance
of this Agreement shall remain in effect, and if any
provision is inapplicable to any person or circumstance, it
shall nevertheless remain applicable to all other persons
and circumstances.
16. Counterparts. This Agreement may be executed
in counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same
instrument.
17. Governing Law. This Agreement shall be
governed by, and construed in accordance with, the laws of
the State of New York.
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<PAGE>
IN WITNESS WHEREOF, the parties have duly executed
this Agreement as of the date first written above.
TREFOIL CAPITAL INVESTORS II, L.P.
By: Trefoil Investors II, Inc.
its general partner
By: /s/ Geoffrey T. Moore
------------------------------------
Name: Geoffrey T. Moore
Title: Managing Director
GE INVESTMENT PRIVATE PLACEMENT
PARTNERS II, A LIMITED PARTNERSHIP
By: GE Investment Management Incorporated
By: /s/ Michael M. Pastore
--------------------------------------
Name: Michael M. Pastore
Title: Vice President
/s/ Roger Stangeland
--------------------------------------
Roger Stangeland
THE GRAND UNION COMPANY
By: /s/ Joseph J. McCaig
--------------------------------------
Name: Joseph J. McCaig
Title: President and Chief Executive
Officer
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<PAGE>
Exhibit 10.56
ADDENDUM TO STOCKHOLDER AGREEMENT
This Addendum to Stockholder Agreement is made to that certain
Stockholder Agreement, dated as of February 25, 1997 (the "Agreement"), among
Trefoil Capital Investors II, L.P., a Delaware limited partnership, GE
Investment Private Placement Partners II, A Limited Partnership, a Delaware
limited partnership, Roger Stangeland, an individual, and The Grand Union
Company, a Delaware corporation (the "Company").
The Stangeland Family Limited Partnership, a California limited
partnership (the "Partnership") hereby acknowledges and agrees, in connection
with its acquisition from the Company of 60,000 shares of the Class A
Preferred Stock of the Company on the date hereof, as follows:
1. The Partnership has succeeded to all of the rights, and hereby
assumes all of the obligations, of Stangeland set forth in the Agreement.
2. The Partnership hereby agrees to be bound by all of the terms of
the Agreement formerly applicable to Stangeland, as contemplated by Section 9
of the Agreement.
3. The term "Stangeland", wherever used in the Agreement, shall
hereafter be deemed to refer to the Partnership in all respects.
4. The address for notices to the Partnership pursuant to Section 11
of the Agreement is:
Stangeland: The Stangeland Family Limited Partnership
300 North Lake Avenue
Suite 925
Pasadena, CA 91101
Telecopy: (818) 304-2873
with a copy to: Munger, Tolles & Olson
355 S. Grand Avenue, 35th Floor
Los Angeles, CA 90071
Attention: Steven L. Guise, Esq.
Telecopy: (213) 683-3702
5. The Partnership has full partnership power and authority to
execute, deliver and perform this Addendum and the Agreement, and the
execution, delivery and performance of this Addendum and the Agreement will
not violate or, with or without notice or the passage of time constitute a
breach of or default under the terms of (a) any governing agreement,
certificate or other similar document of the Partnership, (b) any law, rule
or regulation to which the Partnership is subject, or (c) any document or
instrument to which the Partnership is a party or by which the Partnership is
bound.
<PAGE>
The undersigned, duly authorized, hereby execute this Addendum
and, thereby, the Agreement, on behalf of the Partnership on this 20th day of
March, 1997.
THE STANGELAND FAMILY LIMITED
PARTNERSHIP, a California limited partnership
By: THE ROGER AND LILAH STANGELAND
LIVING TRUST
Its: General Partner
/s/ Roger Stangeland
---------------------------------
By: Roger Stangeland, Co-Trustee
/s/ Lilah Stangeland
---------------------------------
By: Lilah Stangeland, Co-Trustee
Acknowledged and agreed as of
the date set forth above:
TREFOIL CAPITAL INVESTORS II, L.P.
By: Trefoil Investors II, Inc.
Its: General Partner
By: /s/ Robert G. Moskowitz
--------------------------
Name: Robert G. Moskowitz
Title: Vice President
GE INVESTMENT PRIVATE PLACEMENT
PARTNERS II, A LIMITED PARTNERSHIP
By: GE Investment Management Incorporated
Its: General Partner
By: /s/ Michael M. Pastore
-------------------------
Name: Michael M. Pastore
Title: Vice President
2
<PAGE>
Exhbit 10.57
ACCELERATION AND EXCHANGE AGREEMENT
This ACCELERATION AND EXCHANGE AGREEMENT is made as of the 5th day of
June, 1997 (this "Agreement"), among THE GRAND UNION COMPANY, a Delaware
corporation (the "Company"), TREFOIL CAPITAL INVESTORS II, L.P., a Delaware
limited partnership ("Trefoil"), and GE Investment Private Placement Partners
II, A Limited
<PAGE>
Partnership, a Delaware limited partnership ("GEI") (GEI together with
Trefoil, the "Purchasers").
WITNESSETH:
WHEREAS, pursuant to a Stock Purchase Agreement, dated as of July 30,
1996, as amended by Amendment No. 1 thereto dated as of March 20, 1997, among
the Company and the Purchasers (as so amended, the "Purchase Agreement"), the
Company has agreed to sell to the Purchasers, and the Purchasers have agreed
to purchase from the Company, 2,000,000 shares of the Company's Class A
Convertible Preferred Stock, par value $1.00 per share, issuable in
denominations of $50 stated value per share (the "Class A Preferred Shares");
WHEREAS, the Company and the Purchasers desire, on the terms and subject
to the conditions set forth herein, to accelerate the Fourth Closing and the
Fifth Closing (as such terms are defined in the Purchase Agreement); and
WHEREAS, in order to induce the Purchasers to accelerate the Fourth
Closing and the Fifth Closing, the Company and the Purchasers have agreed to
certain other arrangements set forth herein;
NOW, THEREFORE, in consideration of the premises, obligations and
agreements contained herein, and for other good
<PAGE>
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and subject to and on the terms and conditions herein set
forth, the parties hereto agree as follows:
ARTICLE 1
ACCELERATION AND EXCHANGE; CLOSINGS
Section 1.1 Definitions. Certain capitalized terms used in this
Agreement have the meanings set forth, or referred to, in Sections 8.1 and
8.2 hereof.
Section 1.2 Purchase and Sale of Class A Preferred Shares. On the
terms and subject to the conditions set forth herein, the purchase and sale
of the 800,000 Class A Preferred Shares to have occurred pursuant to the
Purchase Agreement at the Fourth Closing and the Fifth Closing (the
"Accelerated Shares") shall be accelerated, as contemplated pursuant to
Section 5.15(b)(1) of the Purchase Agreement. At the Class A Closing (as
hereinafter defined), the Company shall, in accordance with and pursuant to
the Purchase Agreement, sell, assign, transfer, convey and deliver to each of
the Purchasers, and each of the Purchasers shall purchase, acquire and
accept, one-half of the Accelerated Shares. At the Class A Closing, the
Company shall deliver to the Purchasers, against payment therefor as provided
herein, certificates representing the Accelerated Shares, in such
denominations as shall be requested by the Purchasers no less than one
Business Day prior to the Class A Closing Date.
<PAGE>
Section 1.3 Purchase Price for Shares. The Purchase Price (as defined
in the Purchase Agreement) shall be paid to the Company at the Class A
Closing, against receipt of the Accelerated Shares, by wire transfer of
immediately available funds to an account designated by the Company in
writing at least two (2) days prior to the Class A Closing Date.
Section 1.4 Other Deliveries. At the Class A Closing, the parties
shall deliver executed copies of the other documents and instruments required
by Article 5 and such other documents and instruments as shall be reasonably
requested by any of the parties hereto.
Section 1.5. The Exchange. On the terms and subject to the conditions
set forth in this Agreement, at the Exchange Closing (as hereinafter defined):
(a) the Company shall issue and deliver to each of the Purchasers
four hundred thousand (400,000) Class B Preferred Shares. The Company shall
deliver to the Purchasers certificates representing the Class B Preferred
Shares to which the Purchasers are entitled in accordance with this Section,
in such denominations as shall be requested by the Purchasers no less than
one Business Day prior to the Exchange Closing Date; and
(b) following delivery by the Company of certificates
<PAGE>
representing the number of shares of Class B Preferred Shares to which the
Purchasers are entitled pursuant to clause (a) of this Section, each of the
Purchasers shall assign, transfer, and convey to the Company the four hundred
thousand (400,000) Class A Preferred Shares acquired at the Class A Closing.
The Purchasers shall deliver at the Closing certificates representing such
shares, duly endorsed in blank or accompanied by stock powers duly endorsed
in blank.
The transactions contemplated by this Section are referred to herein as the
"Exchange."
Section 1.6 Consummation of the Sale of the Accelerated Shares and
the Exchange. The sale of the Accelerated Shares (the "Class A Closing")
will be consummated at the offices of Davis Polk & Wardwell, 450 Lexington
Avenue, New York, New York, on June 16, 1997, or such other date prior to
July 1, 1997 as the parties hereto shall mutually agree (the "Class A Closing
Date"), unless this Agreement has been earlier terminated in accordance with
its terms. The Exchange (the "Exchange Closing") will be consummated at the
same place as the Class A Closing, commencing immediately following the
completion of the Class A Closing on the Class A Closing Date (the "Exchange
Closing Date").
Section 1.7. The Reset Closing. On the Reset Date (as defined in the
Certificate of Designation):
<PAGE>
(a) The Company shall issue to each of the Purchasers (the "Reset
Shares") a number of shares of the Company's Common Stock, par value $1.00
per share (the "Common Stock") equal to one half of the aggregate number of
Reset Shares, determined in accordance with the following formula, rounded,
in the case of a fractional result, to the nearest whole share:
Aggregate
Number of = RCP - $1.50 X 2,000,000 shares
----------------
Reset Shares $3.25 - $1.50 of Common Stock
where "RCP" means the Conversion Price of the Class B Preferred Shares on the
Reset Date.
(b) The delivery of the Reset Shares (the "Reset Closing") will be
consummated at the offices of Davis Polk & Wardwell, 450 Lexington Avenue,
New York, New York, on the Reset Date (the "Reset Closing Date"). At the
Reset Closing, the Company shall deliver to the Purchasers certificates
representing the Reset Shares to which the Purchasers are entitled in
accordance with this Section, in such denominations as shall be requested by
the Purchasers no less than one Business Day prior to the Reset Date.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
<PAGE>
Section 2.1. Organization and Qualification; Subsidiaries. The Company
is a corporation duly organized, validly existing and in good standing under
the laws of the State of Delaware. Each of the Company's subsidiaries is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation.
Section 2.2. Certificate of Incorporation and By-Laws. The Company's
Certificate of Incorporation and By-Laws as most recently restated and
subsequently amended to date are in full force and effect. The Company is
not in violation of any of the provisions of its Certificate of Incorporation
or By-Laws.
Section 2.3. Capitalization.
(a) On or prior to the Exchange Closing Date, the Certificate of
Designation will have been duly adopted and filed with the Secretary of State
of Delaware. The Class B Preferred Shares when issued on the Exchange
Closing Date will be validly issued, fully paid and nonassessable.
(b) On or prior to the Exchange Closing Date (i) the number of
shares of Common Stock equal to the number of such shares issuable upon the
conversion of all Class A Preferred Shares and Class B Preferred Shares (the
"Conversion Shares"), subject to paragraph (c) of this Section 2.3, shall
have been
<PAGE>
reserved for issuance upon such conversion and (ii) 2,000,000 shares of
Common Stock shall have been reserved for issuance pursuant to Section 1.7
hereof. All shares of Common Stock, including the Conversion Shares and the
Reset Shares, subject to issuance as aforesaid, upon issuance on the terms
and conditions specified in the instruments pursuant to which they are
issuable, will be duly authorized, subject to paragraph (c) of this Section
2.3, validly issued, fully paid and nonassessable.
(c) The representations set forth in paragraph (b) of this Section
2.3 assume that if the total number of Common Shares reserved for issuance or
issued as (i) Reset Shares, plus (ii) Conversion Shares (including Conversion
Shares in respect of additional shares of Class A Preferred Shares and Class
B Preferred Shares paid as dividends on the Class A Preferred Shares and
Class B Preferred Shares), plus (iii) shares of Common Stock paid as
dividends on the Class A Preferred Shares and Class B Preferred Shares, plus
(iv) 900,000 shares of Common Stock issued or to be issued upon exercise of
certain warrants pursuant to the Warrant Agreement, dated as of June 15,
1995, between the Company and American Stock Transfer & Trust Company, plus
(v) 1,000,000 shares of Common Stock issued or to be issued upon exercise of
options granted under the Company's 1995 Equity Incentive Option Plan or the
Company's 1995 Non-Employee Directors' Stock Option Plan, shall exceed
50,000,000 (plus any shares of Common Stock reacquired by the Company and
canceled), then the Company shall use its best efforts to cause an amendment
<PAGE>
to the Company's Certificate of Incorporation, increasing the number of
authorized shares of authorized Common Stock pursuant to its Certificate of
Incorporation at least to the extent of such excess, to be properly
authorized, approved, adopted, filed, and made effective.
Section 2.4. Authority Relative to this Agreement. The Company has
all necessary corporate power and authority to execute and deliver this
Agreement, the Certificate of Designation, and the Registration Rights
Amendment (collectively, the "Transaction Documents") and to perform its
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of each of the
Transaction Documents by the Company and the consummation by the Company of
the transactions contemplated thereby have been duly and validly authorized
by all necessary corporate action, and no other corporate proceedings on the
part of the Company are necessary to authorize the Transaction Documents or
to consummate the transactions so contemplated, other than as contemplated by
Section 4.1. The Special Committee (the "Special Committee") of the Board of
Directors (all of such committee members being Disinterested Directors) and
the Board of Directors of the Company have each determined that it is
advisable and in the best interest of the holders of the Company's Common
Stock for the Company to consummate the transactions contemplated by this
Agreement upon the terms and subject to the conditions herein. Each of this
Agreement and
<PAGE>
each of the other Transaction Documents has been duly and validly executed
and delivered by the Company and, assuming the due authorization, execution
and delivery by the Purchasers, constitutes a legal, valid and binding
obligation of the Company enforceable against the Company in accordance with
its terms, except that (i) such enforcement may be subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter
in effect relating to creditors' rights, and (ii) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject
to equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
Section 2.5. No Conflict; Required Filings and Consents.
(a) The execution and delivery of the Transaction Documents by the
Company do not, and the performance of the Transaction Documents by the
Company and the consummation of the transactions contemplated hereby and
thereby will not: (i) conflict with or violate the Certificate of
Incorporation or By-Laws of the Company; (ii) conflict with or violate any
federal, foreign, state or provincial law, rule, regulation, order, judgment
or decree (collectively, "Laws") applicable to the Company or any of its
subsidiaries or by which its or any of their respective properties are bound
or affected; (iii) result in any breach of or constitute a default (or an
event that with notice or lapse of time or both would become a default
under), or impair the
<PAGE>
Company's or any of its subsidiaries' rights or alter the rights or
obligations of any third party under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a Lien on any of the properties or assets of the Company or any
of its subsidiaries pursuant to, (x) any note, bond, mortgage, indenture,
real property lease or other material lease, or (y) any material contract,
agreement, license, permit, franchise or other instrument or obligation, to
which the Company or any of its subsidiaries is a party or by which the
Company or any of its subsidiaries or its or any of their respective
properties are bound or affected or (iv) assuming compliance with Sections
4.4 and 4.5 hereof, conflict with or violate the Company's obligations under
Rule 4460(i) of the NASDAQ Stock Market Rules (the "NASDAQ Rules") of the
NASDAQ Stock Market (the "NASDAQ") or otherwise require the vote or consent
of the holders of the Company's Common Stock, except as required by Section
3(a) of the Certificate of Designation.
(b) The execution and delivery of the Transaction Documents by the
Company does not, and the performance of the Transaction Documents by the
Company will not, require any consent, approval, authorization or permit of,
or filing with or notification to, any federal, foreign, state or provincial
governmental or regulatory authority except (i) for applicable requirements,
if any, of the Securities Act, the Exchange Act, and Blue Sky Laws, (ii) as
contemplated by Section 4.2, and (iii) for any consent, approval,
authorization or permit of, or filing with or
<PAGE>
notification to, any other federal, foreign, state or provincial governmental
or regulatory authority which will be obtained, filed or provided, as the
case may be, prior to the Exchange Closing.
Section 2.6. Absence of Litigation. There are no claims, actions,
suits, proceedings or investigations pending or, to the knowledge of the
Company, threatened against the Company before any federal, foreign, state or
provincial court, arbitrator or administrative, governmental or regulatory
authority or body relating to this Agreement or the transactions contemplated
by the Transaction Documents or the Purchase Agreement.
Section 2.7. Opinion of Financial Advisor. The Special Committee has
received from its financial advisor, Donaldson, Lufkin & Jenrette Securities
Corporation ("DLJ"), its written opinion (the "Fairness Opinion"), in the
form previously delivered to the Purchasers.
Section 2.8. Brokers. Except for fees payable to DLJ pursuant to the
terms of that certain engagement letter dated May 22, 1997, between the
Company and DLJ, a true and complete copy of which has been provided to the
Purchasers prior to the date hereof, no broker, finder or investment banker
is entitled to any brokerage, finder's or other fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Company or its
<PAGE>
subsidiaries or affiliates, whether pursuant to the letter dated January 17,
1996 between DLJ and the Company, in the form filed as Exhibit 10.28 to the
Company's annual report on Form 10-K for the fiscal year ended March 30, 1996
(the "DLJ Engagement Letter") or otherwise. The Company has obtained from
DLJ an executed DLJ Waiver Letter and has delivered a true and complete copy
thereof to the Purchasers.
Section 2.9. Securities Laws. Assuming that the Purchasers'
representations and warranties contained in Section 3 hereof are, and
continue to be at each Closing hereunder, true and correct, the offer,
issuance and sale of the Accelerated Shares, the Class B Preferred Shares,
and the Reset Shares is, and will be as of each Closing hereunder, exempt
from the registration and prospectus delivery requirements of the Securities
Act, and have been registered or qualified (or are exempt from registration
and qualification) under the registration, permit or qualification
requirements of all applicable Blue Sky Laws.
Section 2.10. NASDAQ Approval. Prior to the date hereof, the Company
has prepared and filed with the NASDAQ a request for confirmation that the
Company may consummate the Closings without approval by the Company's
stockholders at a meeting without violating the NASDAQ Rules, except as
required by Section 3(a) of the Certificate of Designation.
<PAGE>
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each of the Purchasers severally represents and warrants to the Company
that:
Section 3.1. Organization. Such Purchaser is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization.
Section 3.2. Due Authorization. Such Purchaser has all right, power
and authority to enter into the Transaction Documents to which it is a party
and to consummate the transactions contemplated hereby and thereby. The
execution and delivery of the Transaction Documents to which it is a party by
such Purchaser and the consummation by such Purchaser of the transactions
contemplated hereby have been duly authorized by all necessary action on
behalf of such Purchaser. The Transaction Documents to which it is a party
have been duly executed and delivered by such Purchaser and, assuming the due
authorization, execution and delivery by the other parties thereto,
constitutes the valid and binding agreement of such Purchaser enforceable in
accordance with their respective terms, except that (i) such enforcement may
be subject to bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights, and
(ii) the remedy of
<PAGE>
specific performance and injunctive and other forms of equitable relief may
be subject to equitable defenses and to the discretion of the court before
which any proceeding therefor may be brought.
Section 3.3. Acquisition for Investment; Source of Funds. Such
Purchaser is acquiring the Shares for its own account for the purpose of
investment and not with a view to or for sale in connection with any
distribution thereof, and such Purchaser has no present intention or plan to
effect any distribution of Shares other than in an offering registered under
the Securities Act or a disposition exempt from registration under the
Securities Act.
Section 3.4. Brokers or Finders. No agent, broker, investment banker
or other firm or Person acting on behalf of such Purchaser, including any of
the foregoing that is an affiliate of such Purchaser, is or will be entitled
to receive any broker's or finder's fee or any other commission or similar
fee in connection with any of the transactions contemplated by this
Agreement, except for the fees to be paid to Shamrock Capital Advisors, Inc.
("SCA") pursuant to the Management Agreement.
Section 3.5. Accredited Investor. Such Purchaser is an "accredited
investor" within the meaning of Rule 501(a) under the Securities Act.
ARTICLE 4
<PAGE>
COVENANTS
Section 4.1. Consent of Banks. The Company shall use its reasonable
efforts to promptly obtain from Bankers Trust Company, as Agent for the banks
party to the Company Credit Agreement, a consent of the Required Banks (as
defined in the Company Credit Agreement) to the transactions contemplated
hereby and a waiver of any defaults or required prepayments under the Company
Credit Agreement caused hereby; provided, however, no payment or
accommodation shall be made by the Company in connection with obtaining the
foregoing without the Purchasers' consent.
Section 4.2. Certificate of Designation. The Company shall, prior to
the Class A Closing, cause the Certificate of Designation to be filed with
the Secretary of State of Delaware.
Section 4.3. Issuances of Common Stock. Prior to the Reset Date, the
Company shall not (or set a record date in connection therewith) (i) pay a
dividend or make a distribution on its Common Stock, (ii) subdivide or
combine its Common Stock, (iii) issue shares of capital stock by
reclassification of its Common Stock, (iv) issue rights, options or warrants
to all holders of Common Stock entitling them to subscribe for or purchase
Common Stock or any other securities of the Company, or (v) issue or
distribute to all holders of its Common Stock any shares of its capital stock
or securities convertible into capital stock or evidence of its indebtedness
or assets.
<PAGE>
Section 4.4. Stockholder Notice . Upon delivery by the Purchasers to
the Company of the Voting and Ratification Agreements described in Section
4.5 hereof at the completion of the Class A Closing, the Company shall send
to each of its stockholders a Stockholder Notice, in form and substance
satisfactory to the Purchasers.
Section 4.5. Stockholder Approval. Immediately following the Class A
Closing, the Purchasers shall deliver to the Company, Voting and Ratification
Agreements, substantially in the form of Exhibit G hereto, approving the
transactions contemplated hereby.
Section 4.6. Company Action. The Company shall take all corporate
actions necessary to amend its Certificate of Incorporation to the extent
required as contemplated by Section 2.3(c) hereof.
ARTICLE 5
CONDITIONS TO THE CLASS A CLOSING AND THE EXCHANGE CLOSING
Section 5.1. Conditions to Obligation of Each Party to Effect the
Class A Closing and the Exchange Closing. The respective obligations of each
party to effect the Class A Closing and the Exchange Closing shall be subject
to the satisfaction at or prior to the Class A Closing Date of the
<PAGE>
following conditions, unless waived by the Purchasers:
(a) No Injunctions or Restraints; Illegality. No temporary
restraining order, preliminary or permanent injunction or other order issued
by any court of competent jurisdiction or other legal restraint or
prohibition preventing the consummation of the sale of the Accelerated
Shares, the Exchange or the issuance of the Reset Shares shall be in effect,
nor shall any proceeding brought by any administrative agency or commission
or other governmental authority or instrumentality, domestic or foreign,
seeking any of the foregoing be pending; and there shall not be any action
taken, or any statute, rule, regulation or order enacted, entered, enforced
or deemed applicable to the sale of the Accelerated Shares, the Exchange, or
the issuance of the Reset Shares, which makes the consummation of the sale of
the Accelerated Shares, the Exchange, or the issuance of the Reset Shares,
illegal.
(b) Governmental Actions. There shall not have been instituted,
pending or threatened any action or proceeding (or any investigation or other
inquiry that might result in such an action or proceeding) by any
governmental authority or administrative agency before any governmental
authority, administrative agency or court of competent jurisdiction, nor
shall there be in effect any judgment, decree or order of any governmental
authority, administrative agency or court of competent jurisdiction, in
either case, seeking to prohibit or
<PAGE>
limit the Purchaser from exercising all material rights and privileges
pertaining to its ownership of the Shares.
(c) NASDAQ Approval. The Company shall have received written
confirmation from NASDAQ that the Company may consummate the Closings without
approval by the Company's stockholders at a meeting without violating the
Company's obligations under the NASDAQ Rules, and all conditions to such
written confirmation, if any, shall have been satisfied.
(d) Fairness Opinion. The Fairness Opinion shall not have been
modified, amended, revoked or rescinded, and shall be in full force and
effect.
Section 5.2. Additional Conditions to Obligation of the Purchasers at
the Class A Closing. The obligations of the Purchasers to effect the Class A
Closing are also subject to the following conditions, unless waived by the
Purchasers:
(a) Representations and Warranties. The representations and
warranties of the Company shall have been true and correct when made in all
respects and shall be true and correct in all respects at and as of the Class
A Closing Date as if made at and as of such time, except for (i) changes not
prohibited by this Agreement, or (ii) those representations and warranties
which address matters only as of a particular date (which shall have been
true and correct as of such date), and the
<PAGE>
Purchasers shall have received a certificate to such effect signed by the
President and the Chief Financial Officer of the Company.
(b) Agreements and Covenants. The Company shall have
performed or complied in all material respects with all
agreements and covenants required by the Purchase Agreement, or
this Agreement to be performed or complied with by it at or prior
to the Class A Closing Date, and the Purchasers shall have
received a certificate to such effect signed on behalf of the
Company by the President and the Chief Financial Officer of the
Company.
(c) Consents Obtained. All consents, waivers, approvals,
authorizations or orders required to be obtained, and all filings required to
be made, by the Company for the due authorization, execution and delivery of
this Agreement and the consummation by it of the transactions contemplated
hereby shall have been obtained and made by the Company, including without
limitation the consent referred to in Section 4.1, except for consents
required to be obtained under contracts not material to the operation of the
business of the Company; the Company shall have obtained all required
approvals and consents, and shall have delivered all required notices, of the
transfer of ownership or control of the Company as contemplated by the
Purchase Agreement, with respect to material licenses and permits held by the
Company or any of its subsidiaries pursuant to any federal, state or
<PAGE>
local laws governing the sale of alcoholic beverages, pharmaceutical
products, and cigarettes.
(d) Opinion of Counsel. The Purchasers shall have received a
written opinion of each of Ropes & Gray and Davis Polk & Wardwell, in form
and substance reasonably satisfactory to the Purchasers, substantially in the
form of Exhibits B and C hereto, respectively.
(e) Blue Sky Laws. The Company shall have received all permits
and other authorizations necessary under the Blue Sky Laws to issue the
Shares.
(f) DLJ Waiver. The DLJ Waiver Letter shall be in full force and
effect, and shall not have been amended, modified, revoked or rescinded.
(g) Stangeland Waiver. The Stangeland Waiver shall be in full
force and effect, and shall not have been amended, modified, revoked or
rescinded.
(h) Registration Rights Amendment. The Registration Rights
Amendment shall be in full force and effect, and shall not have been amended,
modified, revoked or rescinded.
(i) Delivery of Shares. At the Class A Closing, the Company shall
have delivered the Accelerated Shares against the
<PAGE>
payment of the Purchase Price.
(j) Bankruptcy. The Company shall not on the Class A Closing Date
be a party to any bankruptcy, insolvency, or reorganization proceedings,
whether voluntary or involuntary (other than the proceeding pursuant to the
Reorganization Plan), the Reorganization Plan shall not have been amended,
modified or rescinded, and shall be in full force and effect.
Section 5.3. Additional Conditions to Obligation of the Purchasers at
the Exchange Closing. The obligation of the Purchasers to effect the
Exchange at the Exchange Closing is also subject to the following condition:
(a) Delivery of Shares. At the Exchange Closing, the Company
shall have delivered the Class B Preferred Shares.
(b) Stockholder Notice. Upon completion of the Class A Closing,
the Company shall have mailed to its stockholders the Stockholder Notice
described in Section 4.4 hereof.
Section 5.4. Additional Conditions to Obligation of the Company at the
Exchange Closing. The obligation of the Company to effect the Exchange at
the Exchange Closing is also subject to the following conditions, unless
waived by the Company:
(a) Representations and Warranties. The
<PAGE>
representations and warranties of the Purchasers contained in this Agreement
shall have been true and correct in all respects when made and shall be true
and correct in all respects on and as of the Exchange Closing Date, except
for (i) changes contemplated by this Agreement and (ii) those representations
and warranties which address matters only as of a particular date (which
shall have been true and correct in all material respects as of such date),
with the same force and effect as if made on and as of the Closing Date, and
the Company shall have received a certificate to such effect signed by the
President and the Chief Financial Officer of the general partner of each of
the Purchasers.
(b) Agreements and Covenants. The Purchasers shall have performed
or complied in all material respects with all agreements and covenants
required by the Purchase Agreement or this Agreement to be performed or
complied with by them on or prior to the Closing Date, and the Company shall
have received a certificate to such effect signed by the President and the
Chief Financial Officer of the general partner of each of the Purchasers.
(c) Consents Obtained. All consents, waivers, approvals,
authorizations or orders required to be obtained, and all filings required to
be made, by the Purchasers for the due authorization, execution and delivery
of this Agreement and the consummation by it of the transactions contemplated
hereby shall have been obtained and made by the Purchasers.
<PAGE>
(d) Delivery of Class A Preferred Shares. After delivery to the
Purchasers of the Class B Preferred Shares, the Purchasers shall have
delivered the Class A Preferred Shares to be delivered by the Purchasers
pursuant to Section 1.5 hereof.
ARTICLE 6
TERMINATION; FEES AND EXPENSES
Section 6.1. Termination. Subject to Section 6.2, this Agreement may
be terminated at any time prior to the Class A Closing Date:
(a) by mutual written consent duly authorized by the Disinterested
Directors and the Purchasers; or
(b) by either the Purchasers or the Disinterested Directors if the
Class A Closing and Exchange Closing have not been consummated by June 30,
1997 (provided that the right to terminate this Agreement under this Section
6.1(b) shall not be available to any party whose failure to fulfill any
obligation under the Purchase Agreement or this Agreement has been the cause
of or resulted in the failure of the Class A Closing and Exchange Closing to
occur on or before such date); or
(c) by either the Purchasers or the Company if a court of
competent jurisdiction or governmental, regulatory or
<PAGE>
administrative agency or commission shall have issued a nonappealable final
order, decree or ruling or taken any other action having the effect of
permanently restraining, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement.
Section 6.2. Fees and Expenses. All reasonable fees and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the Company, whether or not the sale of the
Accelerated Shares and the Exchange is consummated; provided, however, that
with respect to the Purchasers, such reasonable fees and expenses of legal
counsel shall not exceed $400,000. Notwithstanding anything to the contrary
herein, this Section 6.2 shall survive any termination of this Agreement.
ARTICLE 7
GENERAL PROVISIONS
7.1. Effectiveness of Representations and Warranties. The
representations, warranties, and agreements of each party hereto in this
Agreement and in any certificates delivered at or prior to any Closing
hereunder shall survive indefinitely; provided, however, that all of such
representations, warranties, and agreements shall terminate upon the
termination of this agreement in accordance with Section 6.1 hereof except
that the agreements set forth in Section 6.2 hereof shall survive such
termination
<PAGE>
indefinitely.
7.2. Captions. The captions or headings in this Agreement are for
convenience and reference only, and in no way define, describe, extend or
limit the scope or intent of this Agreement.
7.3 Restrictive Legends. No restricted shares may be transferred
without registration under the Securities Act and applicable state securities
laws unless in the opinion of Davis Polk & Wardwell or other counsel to the
Company such transfer may be effected without such registration. Each
certificate representing restricted shares of Class B Preferred Shares or
Common Stock issued pursuant to this Agreement shall bear legends in
substantially the following form:
The securities represented by this certificate have not been registered
under the Securities Act of 1933 (the "Act") or the securities laws of
any state and may not be sold or otherwise disposed of except pursuant
to an effective registration statement under such Act and applicable
state securities laws or an applicable exemption to the registration
requirements of such Act or such laws.
The securities represented by this certificate were issued pursuant to,
and the holder hereof is entitled to certain rights and subject to
certain obligations contained in, an Acceleration and Exchange
Agreement, dated as of June 5,
<PAGE>
1997, a copy of which is available for inspection at the principal
office of the issuer hereof, and will be furnished without charge to the
holder of such securities upon written request.
7.4. Further Assurances. The Purchasers and the Company
agree to take, or cause to be taken, all reasonable actions as
may be necessary to make effective and consummate the
transactions contemplated by this Agreement.
7.5. Failure or Indulgence Not Waiver. No failure or delay on the part
of any party hereto in the exercise of any right hereunder shall impair such
right or be construed to be a waiver of, or acquiescence in, any breach of
any representation, warranty, or agreement herein, nor shall any single or
partial exercise of any such right preclude any other or further exercise
thereof or of any other right.
7.6. Modification and Amendment. This Agreement may not be changed,
modified, discharged or amended, except by an instrument signed by all of the
parties hereto.
7.7. Successors and Assigns. This Agreement shall be
binding upon and inure solely to the benefit of each of the
parties hereto.
7.8. Entire Agreement. The Purchase Agreement, the Exhibits
<PAGE>
and Schedules thereto, this Agreement and the Exhibits hereto, are intended
by the parties as a final expression of their agreement and intended to be a
complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein and therein.
There are no restrictions, premises, warranties or undertakings, other than
those set forth or referred to in the Purchase Agreement or herein and the
documents or instruments executed or delivered in connection therewith or
herewith. This Agreement supersedes all prior agreements and understandings
between the parties with respect to the acceleration of the purchase of Class
A Preferred Shares, the exchange of Class A Preferred Shares for Class B
Preferred Shares and the issuance of the Reset Shares.
7.9. Governing Law. This Agreement shall be construed and enforced in
accordance with the laws of the State of New York.
7.10. Counterparts. This Agreement may be executed in counterparts,
each of which shall be an original, but all of which together shall
constitute one and the same instrument.
7.11. Notices. All notices and other communications given or made
pursuant to this Agreement shall be in writing and shall be deemed to have
been duly given or made if and when delivered personally, or by overnight
courier to the parties at the following addresses or sent by electronic
transmission, with confirmation received, to the telecopy numbers specified
below
<PAGE>
(or such other address or telecopy number for a party as shall be specified
by like notice):
(a) If to the Purchasers:
Trefoil Capital Investors II, L.P.
c/o Shamrock Capital Advisors, Inc.
4444 Lakeside Drive
Burbank, CA 91505
Attn: Stanley P. Gold, President
Telecopier No.: (818) 845-9718
Telephone No.: (818) 845-4444
and
GE Investment Private Placement Partners II, A Limited
Partnership
3003 Summer Street
Stamford, CT 06905
Attn: Michael Pastore
Telecopier No.: (303) 326-4177
Telephone No.: (303) 326-2300
With copies to:
Fried, Frank, Harris, Shriver & Jacobson
350 South Grand Avenue, Suite 3200
<PAGE>
Los Angeles, CA 90071
Attn: David K. Robbins, Esq.
Telecopier No.: (213) 473-2222
Telephone No.: (213) 473-2005
and
Dewey Ballantine
1301 Avenue of the Americas
New York, NY 10019
Attn: Sanford W. Morhouse, Esq.
Telecopier No.: (212) 259-6333
Telephone No.: (212) 259-8000
(b) if to the Company,
Chief Executive Officer
The Grand Union Company
201 Willowbrook Boulevard
Wayne, NJ 07470-0966
Telecopier No.: (201) 890-6012
Telephone No.: (201) 890-6000
With copies to:
Davis Polk & Wardwell
450 Lexington Avenue
<PAGE>
New York, New York 10017
Attn: William L. Rosoff, Esq.
Telecopier No.: (212) 450-4800
Telephone No.: (212) 450-4000
Section 7.12. The Purchase Agreement. The acceleration of the purchase
and sale of the Class A Preferred Shares as contemplated herein shall for all
purposes be deemed to be the purchase and sale of Class A Preferred Shares
pursuant to the Purchase Agreement except that the Fourth and Fifth Closings
have been accelerated. For purposes of the indemnification provisions
contained in Section 8.1 of the Purchase Agreement, in determining damages
sustained by the Purchasers, such damages shall include any diminution in
value of the Class B Preferred Shares arising with respect to a breach of a
representation, warranty, covenant or agreement in the Purchase Agreement.
ARTICLE 8
CERTAIN DEFINITIONS
8.1. Definitions. As used herein, unless the context otherwise
requires, the following terms have the following respective meanings:
"Business Day" means any day other than a Saturday, Sunday or any other
day on which commercial banks are authorized to close in New York, New York.
<PAGE>
"Certificate of Designation" means the Certificate of Designation of
Class B Convertible Preferred Stock setting forth the Powers, Preferences,
Rights, Qualifications, Limitations, and Restrictions of such Class of
Preferred Stock, substantially in the form attached hereto as Exhibit A.
"Class B Preferred Shares" means the Class B Convertible Preferred Stock
having the Powers, Preferences, Rights, Qualifications, Limitations, and
Restrictions set forth in the Certificate of Designation.
"Closing" or "Closings" means one or all, as applicable, of the Class A
Closing, the Class B Closing, and/or the "Reset Closing."
"Company Credit Agreement" means the amended and restated Credit
Agreement, dated as of June 15, 1995, as from time to time in effect among
the Company, the banks party thereto, and Bankers Trust Company as Agent for
the banks party thereto, and the consent and waiver secured pursuant to
Section 4.1 hereof.
"Disinterested Director" shall have the meaning given in the Purchase
Agreement.
"DLJ Waiver Letter" means a letter from DLJ substantially in the form
attached hereto as Exhibit D.
<PAGE>
"Exchange Act" means the Securities Exchange Act of 1934, as amended, or
any similar federal statute, and the rules and regulations of the SEC
thereunder, all as the same shall be in effect from time to time, and a
reference to a particular section thereof shall be deemed to include a
reference to the comparable section, if any, of any such similar federal
statute.
"Management Agreement" has the meaning given in the Purchase Agreement.
"Person" means an individual, a partnership (general or limited),
corporation, joint venture, business trust, cooperative, association or other
form of business organization, whether or not regarded as a legal entity
under applicable law, a trust (inter vivos or testamentary), an estate of a
deceased, insane or incompetent person, a quasi-governmental entity, a
government or any agency, authority, political subdivision or other
instrumentality thereof, or any other entity.
"Registration Rights Amendment" means the Amendment No. 1, of even date
herewith, to the Registration Rights Agreement, dated as of July 30, 1996,
among the Company, Trefoil, and GEI, substantially in the form attached
hereto as Exhibit E.
"Reorganization Plan" has the meaning given in the Purchase Agreement.
<PAGE>
"SEC" means the Securities and Exchange Commission or its successor.
"Securities Act" means the Securities Act of 1933, as amended, or any
similar federal statute, and the rules and regulations of the SEC thereunder,
all as the same shall be in effect from time to time, and a reference to a
particular section thereof shall be deemed to include a reference to the
comparable section, if any, of any such similar federal statute.
"Shares" means the Accelerated Shares, the Class B Preferred Shares,
and/or the Reset Shares, as applicable.
"Stangeland Partnership" means the Roger and Lilah Stangeland Family
Limited Partnership.
"Stangeland Waiver" means the waiver letter, of even date herewith, by
the Stangeland Partnership to the Company and the Purchasers, relating to the
Stockholder Agreement, dated as of February 25, 1997, as amended by the
Amendment No. 1 thereto dated as of March 20, 1997, among Trefoil, GEI, the
Stangeland Partnership and the Company, substantially in the form attached
hereto as Exhibit F.
"Stockholder Notice" means the form of notice to all stockholders of the
Company describing the transactions
<PAGE>
contemplated hereby and announcing receipt of the written consent of the
holders of at least a majority of the Company's total voting power
outstanding, and the approval of the NASDAQ to consummate the transactions
contemplated hereby, without the approval of the Company's stockholders at a
meeting held for such purpose, substantially in the form attached hereto as
Exhibit G.
Section 8.2. Other Definitions. Each of the following terms shall
have the meanings given them in the Section listed opposite such term below:
Term Section
"Accelerated Shares" 1.2
"Agreement" Preamble
"Blue Sky Laws" 2.5(b)
"Class A Closing" 1.6
"Class A Closing Date" 1.6
"Class A Preferred Shares" Preamble
"Common Stock" 1.7(a)
"Company" Preamble
"Conversion Shares" 2.3
"DLJ" 2.7
"DLJ Engagement Letter" 2.8
"Exchange" 1.5
"Exchange Closing" 1.6
"Exchange Closing Date" 1.6
<PAGE>
"Fairness Opinion" 2.7
"Fifth Closing" Preamble
"Fourth Closing" Preamble
"GEI" Preamble
"Laws" 2.5(a)
"NASDAQ" 2.5(a)
"NASDAQ Rules" 2.5(a)
"Purchase Agreement" Preamble
"Purchase Price" 1.3
"Purchasers" Preamble
"RCP" 1.7(a)
"Reset Closing" 1.7(b)
"Reset Closing Date" 1.7(b)
"Reset Date" 1.7
"Reset Shares" 1.7(a)
"SCA" 3.4
"Special Committee" 2.4
"Transaction Documents" 2.4
"Trefoil" Preamble
* * * *
IN WITNESS WHEREOF, the parties hereto have executed this Acceleration
and Exchange Agreement or caused this Acceleration and Exchange Agreement to
be executed as of the day and year first above written.
<PAGE>
TREFOIL CAPITAL INVESTORS II, L.P.
By: TREFOIL INVESTORS II, INC.,
its managing general partner
By: Michael J. McConnell
---------------------------------
Name: Michael J. McConnell
Title: Vice President
GE INVESTMENT PRIVATE PLACEMENT
PARTNERS II, A LIMITED PARTNERSHIP
By: GE INVESTMENT MANAGEMENT
INCORPORATED, its general partner
By: Don W. Torey
---------------------------------
Name: Don W. Torey
Title: Executive Vice President
<PAGE>
THE GRAND UNION COMPANY
By: Jeffrey P. Freimark
----------------------------------
Name: Jeffrey P. Freimark
Title: Executive Vice President,
Chief Financial Officer and
Chief Administrator Officer
List of Exhibits
Exhibit A Certificate of Designation
Exhibit B Form of Opinion of Ropes & Gray
Exhibit C Form of Opinion of Davis Polk & Wardwell
Exhibit D DLJ Waiver Letter
Exhibit E Registration Rights Amendment
Exhibit F Stangeland Waiver
Exhibit G Form of Voting and Ratification Agreement
<PAGE>
Exhibit A
THE GRAND UNION COMPANY
CERTIFICATE OF DESIGNATION
OF CLASS B CONVERTIBLE PREFERRED STOCK
SETTING FORTH THE POWERS, PREFERENCES, RIGHTS,
QUALIFICATIONS, LIMITATIONS AND RESTRICTIONS OF
SUCH CLASS OF PREFERRED STOCK
Pursuant to Section 151 of the General Corporation Law of the State of
Delaware, The Grand Union Company (the "Corporation"), a corporation
organized and existing under the General Corporation Law of the State of
Delaware, in accordance with the provisions of Section 103 thereof, DOES
HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors of
the Corporation by Article Fourth of the Certificate of Incorporation of the
Corporation (the "Certificate of Incorporation"), and in accordance with the
provisions of Section 151 of the General Corporation Law of the State of
Delaware, the Board of Directors of the Corporation on June 5, 1997, adopted
the following resolution creating a series of Preferred Stock designated as
Class B Convertible Preferred Stock (the "Class B Stock"):
RESOLVED that, pursuant to the authority vested in the Board of
Directors of the Corporation in accordance with the General Corporation Law
of the State of Delaware and the provisions of the Certificate of
Incorporation, a class of authorized Preferred Stock, par value $1.00 per
share, of the Corporation is hereby
<PAGE>
created and that the designation and number of shares thereof and the voting
powers, preferences and relative participating, optional and other special
rights of the shares of such class, and the qualifications, limitations and
restrictions thereof, are as follows:
Section 1. Stated Value.
The Class B Stock shall consist of 1,400,000 shares, par
value $1.00 per share, each of which shall have a stated value of
$50 per share (the "Stated Value").
Section 2. Dividends and Distributions.
(a) The holders of shares of Class B Stock, in preference to the
holders of shares of Junior Dividend Stock (as defined in Section 11 hereof),
shall be entitled to receive, when, as and if declared by the Board of
Directors, out of the assets of the Corporation legally available therefor,
dividends at an annual rate of 8.50% of the Stated Value from and after the
Issue Date (as defined in Section 11 hereof) of such shares as long as shares
of Class B Stock remain outstanding. Dividends shall be payable in cash, or
additional shares of Class B Stock, as provided in paragraph (c) of this
Section 2, or shares of Common Stock, as provided in paragraph (c) of this
Section 2. Dividends shall be computed on the basis of the Stated Value, and
shall accrue and be payable quarterly, in arrears, on the last Business
<PAGE>
Day (as defined in Section 11) of March, June, September and December in each
year (each such date being referred to herein as a "Quarterly Dividend
Payment Date"), commencing on the first Quarterly Dividend Payment Date after
the Issue Date of such shares. To the extent that dividends on the Class B
Stock are payable in cash, such dividends shall be cumulative. Accrued
dividends not paid on any Quarterly Dividend Payment Date shall accrue
additional dividends at an annual dividend rate of 8.50% until paid in full.
(b) Dividends payable pursuant to paragraph (a) of this Section 2 shall
begin to accrue and be cumulative from the Issue Date of each share of Class
B Stock, whether or not earned or declared. The amount of dividends so
payable shall be determined on the basis of twelve 30-day months and a
360-day year. Dividends paid on the shares of Class B Stock in an amount less
than the total amount of such dividends at the time accrued and payable on
such shares shall be allocated pro rata on a share-by-share basis among all
such shares at the time outstanding. The Board of Directors may fix a record
date for the determination of holders of shares of Class B Stock entitled to
receive payment of a dividend declared thereon, which record date shall be no
more than sixty days prior to the date fixed for the payment thereof.
(c) With respect to dividends paid on or prior to the third anniversary
of the Principal Issue Date (as defined in Section 11), the Corporation shall
have the option to pay such dividends
<PAGE>
in shares of Class B Stock valued at $50 per share or in whole shares of
Common Stock valued at Fair Market Value determined as of the close of
business on the third Business Day immediately preceding the date of payment,
instead of in cash. With respect to dividends paid after the third
anniversary of the Principal Issue Date but on or prior to the fifth
anniversary of the Principal Issue Date, the Corporation shall have the
option to pay such dividends in shares of Class B Stock valued at $50 per
share or in whole shares of Common Stock valued at Fair Market Value
determined as of the close of business on the third Business Day immediately
preceding the date of payment, instead of in cash, but only if the
Corporation is prohibited from paying such dividends in cash under the terms
of its Bank Credit Agreement or its Senior Notes. To the extent that the
Corporation elects to pay any dividends in shares of Common Stock, it shall
pay a premium in additional shares of Common Stock equal to 33-1/3% of the
total number of shares of Common Stock that would otherwise be paid as the
dividend. After the fifth anniversary of the Principal Issue Date, all
dividends shall be paid in cash. The Corporation shall only have the right
to pay dividends in shares of Common Stock if, on the Quarterly Dividend
Payment Date in question, the Common Stock is listed and traded on the New
York Stock Exchange, the American Stock Exchange or the Nasdaq National
Market System. In connection with any payment of dividends in shares of
Common Stock pursuant to this Section 2(c), no fractions of shares of Common
Stock shall be issued, but in lieu thereof the Corporation shall either
<PAGE>
(i) deliver a whole share of Common Stock in respect of the fractional share
which the holder would otherwise have been entitled to upon such dividend
payment or (ii) pay a cash adjustment in respect of such fractional interest
in an amount equal to such fractional interest multiplied by the Fair Market
Value of a share of Common Stock determined as of the close of business on
the third Business Day immediately preceding the date of payment.
(d) The holders of shares of Class B Stock shall not be entitled to
receive any dividends or other distributions except as provided herein.
Section 3. Voting Rights.
In addition to any voting rights provided by law, the holders of shares
of Class B Stock shall have the following voting rights:
(a) In addition to voting rights provided elsewhere in this Section 3,
and as long as any of the Class B Stock is outstanding, each share of Class B
Stock shall entitle the holder thereof to vote on all matters, including with
respect to the election of directors, voted on by holders of Common Stock
voting together as a single class with other shares entitled to vote at all
meetings of the stockholders of the Corporation. With respect to any such
vote, each share of Class B Stock shall
<PAGE>
entitle the holder thereof to cast the number of votes determined pursuant to
the next sentence; provided, however, that if more than one share of Class B
Stock shall be held by any holder of shares of Class B Stock, the total
number of votes which such holder shall be entitled to cast pursuant to this
Section 3(a) shall be computed on the basis of the total number of shares of
Class B Stock held by such holder, with any then remaining fractional share
disregarded for the purposes of this Section 3(a). The number of votes which
each share of the Class B Stock shall entitle the holder thereof to cast
shall be equal to (i) 6.8966 from the First Issue Date until the Approval
Date (as defined herein), and (ii) from and after the Approval Date, the
number of whole votes which could be cast in such vote by a holder of the
shares of capital stock of the Corporation into which such share of Class B
Stock is convertible on the record date for such vote.
(b) In addition to the voting rights provided elsewhere in this Section
3, the affirmative vote of the holders of at least a majority of the
outstanding shares of Class B Stock, voting separately as a single class, in
person or by proxy, at a special or annual meeting of stockholders called for
the purpose, shall be necessary to (A) except as contemplated by Section
2(c), authorize, increase the authorized number of shares of, or issue
(including on conversion or exchange of any convertible or exchangeable
securities or by reclassification), any shares of any class or classes, or
any series of any class or classes, of
<PAGE>
the Corporation's capital stock ranking pari passu with or prior to (either
as to dividends or upon a change in control of the Corporation, voluntary or
involuntary liquidation, dissolution or winding up) the Class B Stock, (B)
except as contemplated pursuant to Section 2(c) or as permitted pursuant to
Section 10(a), increase the authorized number of shares of, or issue
(including on conversion or exchange of any convertible or exchangeable
securities or by reclassification) any shares of, Class B Stock, (C) alter,
amend or repeal any of the provisions of the Certificate of Incorporation of
the Corporation which in any manner would alter, change or otherwise
adversely affect in any way the powers, preferences or rights of the Class B
Stock, (D) approve the sale, lease or other disposition of all or
substantially all of the assets of the Corporation and its Subsidiaries (as
defined in Section 11), or (E) approve any merger of the Corporation with or
into any other entity or any reorganization, recapitalization, liquidation or
other similar transaction (including any issuance of equity securities, or
securities convertible into equity securities by the Corporation, to any
person (other than the Purchasers and their Affiliates) who would then own on
a fully diluted basis more than 50% of the total number of votes entitled to
be cast (giving effect to such issuance) by holders of the Corporation's
capital stock on all matters, including the election of directors) involving
the Corporation; provided, however, that the holders of the outstanding
shares of Class B Stock shall only have a class vote on the transactions
described in clauses (D) and (E) prior to the
<PAGE>
earlier of the effectiveness of a registration statement under the Securities
Act of 1933 relating to all such shares and the date on which less than half
of the total shares of Class B Stock originally issued (not including any
shares issued in payment of dividends pursuant to Section 2(c)) remain
outstanding. Notwithstanding the proviso to the preceding sentence, the
affirmative vote of the holders of at least a majority of the outstanding
shares of Class B Stock, voting separately as a single class, in person or by
proxy, at a special or annual meeting of stockholders called for the purpose,
shall be necessary to approve any merger of the Corporation with or into any
other entity or any reorganization, recapitalization, liquidation or other
similar transaction involving the Corporation where (i) the Class B Stock is
not remaining outstanding after such transaction under substantially the same
powers, preferences, rights, qualifications, limitations and restrictions as
are set forth in this Certificate of Designation or (ii) the cash, stock,
securities or other property to be received on conversion of one share of
Class B Stock following such transaction and the application of Section 8(h)
has a Fair Market Value at the closing of such transaction less than 150% of
the Conversion Price. In addition, if the Corporation shall have failed to
pay in full dividends on the Class B Stock for six consecutive quarters, then
the size of the Board of Directors of the Corporation shall be increased by
two, and the holders of shares of Class B Stock, voting together as a single
class, shall have the right to elect such two directors. The right to elect
<PAGE>
such two directors under this Section 3(b) shall terminate upon payment in
full of all dividends payable on the Class B Stock, at which time the Board
of Directors shall return to its previous size and the directors elected by
the holders of the Class B Stock shall be removed.
(c) (1) The rights of holders of shares of Class B Stock to take any
actions as provided in this Section 3 may be exercised, subject to the DGCL
(as defined in Section 11 hereof), at any annual meeting of stockholders or
at a special meeting of stockholders held for such purpose as hereinafter
provided or at any adjournment or postponement thereof, or by the written
consent, delivered to the Secretary of the Corporation, of the holders of the
minimum number of shares required to take such action.
As long as such right to vote continues (and unless such right has been
exercised by written consent of not less than the minimum number of shares
required to take such action), the Chairman of the Board of the Corporation
may call, and upon the written request of holders of record of 20% of the
outstanding shares of Class B Stock, addressed to the Secretary of the
Corporation at the principal office of the Corporation, shall call, a special
meeting of the holders of shares of Class B Stock entitled to vote as
provided herein. The Corporation shall use its best efforts to hold such
meeting as promptly as practicable, but in any event not later than 120 days
after delivery of such
<PAGE>
request to the Secretary of the Corporation, at the place and upon the notice
provided by law and in the Bylaws of the Corporation for the holding of
meetings of stockholders.
(2) At each meeting of stockholders at which the holders of shares
of Class B Stock shall have the right, voting separately as a single series,
to take any action, the presence in person or by proxy of the holders of
record of a majority of the total number of shares of Class B Stock then
outstanding and entitled to vote on the matter shall be necessary and
sufficient to constitute a quorum. At any such meeting or at any adjournment
or postponement thereof, in the absence of a quorum of the holders of shares
of Class B Stock, holders of a majority of such shares present in person or
by proxy shall have the power to adjourn the meeting as to the actions to be
taken by the holders of shares of Class B Stock from time to time and place
to place without notice other than announcement at the meeting until a quorum
shall be present.
For the taking of any action as provided in Section 3(b) by the holders
of shares of Class B Stock, each such holder shall have one vote for each
share of Class B Stock standing in his name on the transfer books of the
Corporation as of any record date fixed for such purpose or, if no such date
be fixed, at the close of business on the Business Day next preceding the day
on which notice is given, or if notice is waived, at the close of business on
the Business Day next preceding the day on which the
<PAGE>
meeting is held.
Section 4. Certain Restrictions.
(a) As long as any shares of Class B Stock remain outstanding, the
Corporation shall not: (A) declare or pay dividends, or make any other
distributions, on any shares of Junior Dividend Stock other than dividends or
distributions payable in Junior Dividend Stock; or (B) declare or pay
dividends, or make any other distributions, on any shares of Parity Dividend
Stock (as defined in Section 11 hereof), except (1) dividends or
distributions payable in Junior Dividend Stock and (2) dividends or
distributions paid ratably on the Class B Stock and all Parity Dividend Stock
on which dividends are payable or in arrears, in proportion to the total
amounts to which the holders of all shares of the Class B Stock and such
Parity Dividend Stock are then entitled.
(b) As long as any shares of Class B Stock remain outstanding, the
Corporation shall not redeem, purchase or otherwise acquire for consideration
any shares of Junior Dividend Stock or Junior Liquidation Stock (as defined
in Section 11 hereof) or Parity Dividend Stock or Parity Liquidation Stock
(as defined in Section 11 hereof); provided, however, that (1) the
Corporation may at any time redeem, purchase or otherwise acquire shares of
Junior Liquidation Stock or Parity Liquidation Stock in exchange for any
shares of capital stock of the Corporation that
<PAGE>
rank junior to the Class B Stock as to dividends and upon liquidation,
dissolution and winding up; (2) the Corporation may accept shares of any
Parity Liquidation Stock for conversion into shares of capital stock of the
Corporation that rank junior to the Class B Stock as to dividends and upon
liquidation, dissolution and winding up; and (3) the Corporation may at any
time redeem, purchase or otherwise acquire shares as may be required pursuant
to the Corporation's employee and non-employee director stock plans, as they
may be amended from time to time, or similar employee stock plans hereafter
adopted; and provided further, however, that the Corporation (A) may accept
shares of Class B Stock surrendered for conversion into shares of capital
stock of the Corporation pursuant to Section 8 hereof, and (B) may redeem
outstanding shares of Class B Stock pursuant to Section 5 hereof. Whenever
quarterly dividends payable on shares of Class B Stock as provided in Section
2 hereof are not paid in full, thereafter and until all unpaid dividends
payable, whether or not declared, on the outstanding shares of Class B Stock
shall have been paid in full, the Corporation shall not redeem or purchase or
otherwise acquire for consideration any shares of Class B Stock; provided,
however, that the Corporation (A) may accept shares of Class B Stock
surrendered for conversion into shares of capital stock of the Corporation
pursuant to Section 8 hereof, and (B) may elect to redeem outstanding shares
of Class B Stock pursuant to Section 5(a) hereof.
(c) The Corporation shall not permit any Subsidiary of the
<PAGE>
Corporation to purchase or otherwise acquire for consideration any shares of
capital stock of the Corporation unless the Corporation could, pursuant to
Section 4(b), purchase such shares at such time and in such manner.
Section 5. Redemption.
(a) On and after the second anniversary of the Principal Issue Date,
the Corporation shall have the right, at its sole option and election made in
accordance with Section 5(c), to redeem, out of funds legally available
therefor, shares of Class B Stock, in whole or in part, at any time and from
time to time, at a redemption price equal to the Stated Value (except as
described below), plus an amount per share equal to all accrued and unpaid
dividends, whether or not declared, to the date of redemption (the
"Redemption Price"); provided, however, that the Corporation shall not have
any such right unless (A) if the redemption is to occur between the second
and third anniversary of the Principal Issue Date, the Redemption Fair Market
Value (as defined in Section 11 hereof) of the Common Stock, as of the close
of business on the third Business Day immediately preceding the date on which
notice of redemption is given, is equal to at least 180% of the Conversion
Price (as defined in Section 11 hereof), and (B) if the redemption is to
occur between the third and fifth anniversary of the Principal Issue Date,
the Redemption Fair Market Value (as defined in Section 11 hereof) of the
Common Stock, as of the close of business on the third Business Day
<PAGE>
immediately preceding the date on which notice of redemption is given, is
equal to at least 200% of the Conversion Price (as defined in Section 11
hereof). Notwithstanding the foregoing, if the redemption is to occur
between the fifth and sixth anniversaries of the Principal Issue Date, the
Redemption Price shall be $51.5938; if the redemption is to occur between the
sixth and seventh anniversaries of the Principal Issue Date, the Redemption
Price shall be $51.0625; and if the redemption is to occur between the
seventh and eighth anniversaries of the Principal Issue Date, the Redemption
Price shall be $50.5313; in each case plus an amount per share equal to all
accrued and unpaid dividends, whether or not declared, to the date of
redemption. If less than all shares of Class B Stock at the time outstanding
are to be redeemed, the shares to be redeemed shall be selected pro rata.
(b) The Corporation shall redeem, at the Redemption Price, all
outstanding shares of Class B Stock on June 1, 2005.
(c) Notice of any redemption of shares of Class B Stock pursuant to
this Section 5 shall be mailed at least 30, but not more than 60, days prior
to the date fixed for redemption to each holder of shares of Class B Stock to
be redeemed, at such holder's address as it appears on the transfer books of
the Corporation. Any such notice shall be irrevocable when given. In order
to facilitate the redemption of shares of Class B Stock, the Board of
Directors may fix a record date for the
<PAGE>
determination of Class B Stock to be redeemed, or may cause the transfer
books of the Corporation for the Class B Stock to be closed, not more than
sixty days or less than thirty days prior to the date fixed for such
redemption.
(d) On the date of any redemption being made pursuant to this Section 5
which is specified in a notice given pursuant to Section 5(c), the
Corporation shall, and at any time after such notice shall have been mailed
and before the date of redemption the Corporation may deposit for the benefit
of the holders of shares of Class B Stock to be redeemed the funds necessary
for such redemption, including the amount necessary to pay all accrued and
unpaid dividends to the date of redemption, with a bank or trust company in
the City of New York having a capital and surplus of at least $1,000,000,000.
Any moneys so deposited by the Corporation and unclaimed at the end of one
year from the date designated for such redemption shall revert to the general
funds of the Corporation. After such reversion, any such bank or trust
company shall, upon demand, pay over to the Corporation such unclaimed
amounts and thereupon such bank or trust company shall be relieved of all
responsibility in respect thereof and any holder of shares of Class B Stock
to be redeemed shall look only to the Corporation for the payment of the
Redemption Price. In the event that moneys are deposited pursuant to this
paragraph (d) in respect of shares of Class B Stock that are converted in
accordance with the provisions of Section 8, such moneys shall, upon such
conversion, revert to the general funds of the
<PAGE>
Corporation and, upon demand, such bank or trust company shall pay over to
the Corporation such moneys and shall be relieved of all responsibility to
the holders of such converted shares in respect thereof. Any interest
accrued on funds deposited pursuant to this paragraph (d) shall be paid from
time to time to the Corporation for its own account.
(e) Notice of redemption having been given as aforesaid, upon the
deposit of funds pursuant to Section 5(d) in respect of shares of Class B
Stock to be redeemed pursuant to this Section 5, notwithstanding that any
certificates for such shares shall not have been surrendered for
cancellation, from and after the date of redemption designated in the notice
of redemption (i) the shares represented thereby shall no longer be deemed
outstanding, (ii) the rights to receive dividends thereon shall cease to
accrue, and (iii) all rights of the holders of shares of Class B Stock to be
redeemed shall cease and terminate, excepting only the right to receive the
Redemption Price therefor, and the right to convert such shares into shares
of Common Stock until the close of business on the Fifth Business Day next
preceding the date of redemption, in accordance with Section 8 hereof.
Section 6. Reacquired Shares.
Any shares of Class B Stock converted, redeemed, purchased or otherwise
acquired by the Corporation in any manner whatsoever shall be retired and
canceled promptly after the acquisition
<PAGE>
thereof. All such shares of Class B Stock shall upon their cancellation, in
accordance with the DGCL, become authorized but unissued shares of Preferred
Stock of the Corporation and may be reissued as part of another series of
Preferred Stock of the Corporation, subject to the conditions or restrictions
on issuance set forth herein.
Section 7. Liquidation, Dissolution or Winding Up.
(a) If the Corporation shall commence a voluntary case under the
Federal bankruptcy laws or any other applicable Federal or state bankruptcy,
insolvency or similar law, or consent to the entry of an order for relief in
an involuntary case under such law or to the appointment of a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or other similar
official) of the Corporation or of any substantial part of its property, or
make an assignment for the benefit of its creditors, or admit in writing its
inability to pay its debts generally as they become due, or if a decree or
order for relief in respect of the Corporation shall be entered by a court
having jurisdiction in the premises in an involuntary case under the Federal
bankruptcy laws or any other applicable Federal or state bankruptcy,
insolvency or similar law, or appointing a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or other similar official) of the
Corporation or of any substantial part of its property, or ordering the
winding up or liquidation of its affairs, and any such decree or order shall
be unstayed and in
<PAGE>
effect for a period of ninety consecutive days and on account of any such
event the Corporation shall liquidate, dissolve or wind up, or if the
Corporation shall otherwise liquidate, dissolve or wind up, no distribution
shall be made (i) to the holders of shares of Junior Liquidation Stock
unless, prior thereto, the holders of shares of Class B Stock, subject to
Section 8, shall have received the Liquidation Preference (as defined in
Section 11 hereof) with respect to each share, or (ii) to the holders of
shares of Parity Liquidation Stock, except distributions made ratably to the
holders of the Class B Stock and the Parity Liquidation Stock in proportion
to the total amounts to which the holders of all such shares of Class B Stock
and Parity Liquidation Stock would be entitled upon such liquidation,
dissolution or winding up. Upon any such liquidation, dissolution or winding
up, the holders of shares of Class B Stock shall be entitled to receive the
Liquidation Preference with respect to each such share and no more.
(b) Neither the merger or other business combination of the Corporation
with or into any other Person (as defined in Section 11 hereof) or Persons
nor the sale of all or substantially all the assets of the Corporation shall
be deemed to be a liquidation, dissolution or winding up of the Corporation
for purposes of this Section 7.
Section 8. Conversion.
<PAGE>
(a) Subject to the provisions for adjustment hereinafter set forth,
each share of Class B Stock shall be convertible at the option of the holder
thereof into fully paid and nonassessable shares of Common Stock. The number
of shares of Common Stock deliverable upon conversion of a share of Class B
Stock, adjusted as hereinafter provided, is referred to herein as the
"Conversion Ratio." The Conversion Ratio shall initially be 20.8333 and the
Conversion Price shall initially be $2.40. Upon the Reset Date, the
Conversion Price shall be adjusted to equal 120% of the Reset Market Value
and the Conversion Ratio shall be adjusted to equal 50 divided by 120% of the
Reset Market Value; provided, however, if the Reset Market Value is (i) $2.71
or greater, the Conversion Price shall be adjusted to equal $3.25 and the
Conversion Ratio shall be adjusted to equal 15.3846 or (ii) $1.25 or less,
the Conversion Price shall be adjusted to equal $1.50 and the Conversion
Ratio shall be adjusted to equal 33.3333. The Conversion Ratio and the
Conversion Price are subject to further adjustment from time to time pursuant
to Section 8(g).
(b) Conversion of the Class B Stock may be effected by any such holder
upon the surrender to the Corporation at the principal office of the
Corporation in the State of Delaware (the "Transfer Agent") or at the office
of any agent or agents of the Corporation, as may be designated by the Board
of Directors of the Corporation, of the certificate for such Class B Stock to
be converted accompanied by a written notice stating that such
<PAGE>
holder elects to convert all or a specified whole number of such shares in
accordance with the provisions of this Section 8 and specifying the name or
names in which such holder wishes the certificate or certificates for shares
of Common Stock to be issued. In case such notice shall specify a name or
names other than that of such holder, such notice shall be accompanied by
payment of all transfer taxes payable upon the issuance of shares of Common
Stock in such name or names. Other than such taxes, the Corporation will pay
any and all issue and other taxes (other than taxes based on income) that may
be payable in respect of any issue or delivery of shares of Common Stock on
conversion of Class B Stock pursuant hereto. As promptly as practicable, and
in any event within five Business Days after the surrender of such
certificate or certificates and the receipt of such notice relating thereto
and, if applicable, payment of all transfer taxes (or the demonstration to
the satisfaction of the Corporation that such taxes have been paid), the
Corporation shall deliver or cause to be delivered (i) certificates
representing the number of validly issued, fully paid and nonassessable full
shares of Common Stock to which the holder of shares of Class B Stock being
converted shall be entitled and (ii) if less than the full number of shares
of Class B Stock evidenced by the surrendered certificate or certificates is
being converted, a new certificate or certificates, of like tenor, for the
number of shares evidenced by such surrendered certificate or certificates
less the number of shares being converted. Such conversion shall be deemed
to have been made at the close of
<PAGE>
business on the date of giving such notice and of such surrender of the
certificate or certificates representing the shares of Class B Stock to be
converted (the "Conversion Date") so that the rights of the holder thereof as
to the shares being converted shall cease except for the right to receive
shares of Common Stock in accordance herewith, and the Person entitled to
receive the shares of Common Stock shall be treated for all purposes as
having become the record holder of such shares of Common Stock at such time.
The Corporation shall not be required to convert, and no surrender of shares
of Class B Stock shall be effective for that purpose, while the transfer
books of the Corporation for the Common Stock are closed for any purpose (but
not for any period in excess of five days); but the surrender of shares of
Class B Stock for conversion during any period while such books are so closed
shall become effective for conversion immediately upon the reopening of such
books, as if the conversion had been made on the date such shares of Class B
Stock were surrendered, and at the Conversion Ratio in effect at the date of
such surrender.
(c) In case any shares of Class B Stock are to be redeemed pursuant to
Section 5, such right of conversion shall cease and terminate as to the
shares of Class B Stock to be redeemed at the close of business on the fifth
Business Day next preceding the date fixed for redemption unless the
Corporation shall default in the payment of the Redemption Price.
(d) The Conversion Ratio shall be subject to adjustment
<PAGE>
from time to time in certain instances as hereinafter provided. Upon
conversion, the holder of shares of Class B Stock shall be entitled to
receive any accrued and unpaid dividends on the shares of Class B Stock
surrendered for conversion to the Conversion Date. Such accrued and unpaid
dividends shall be payable by the Corporation, at its option, in cash (to the
extent funds are legally available therefor) or in shares of Common Stock
valued at the Fair Market Value as of the third Business Day prior to the
Conversion Date, instead of in cash.
(e) In connection with the conversion of any shares of Class B Stock,
no fractions of shares of Common Stock shall be issued, but in lieu thereof
the Corporation shall either (i) deliver a whole share of Common Stock in
respect of the fractional share to which the holder would otherwise have been
entitled upon such conversion or (ii) pay a cash adjustment in respect of
such fractional interest in an amount equal to such fractional interest
multiplied by the Current Market Price per share of Common Stock on the
Trading Day on which such shares of Class B Stock are deemed to have been
converted. If more than one share of Class B Stock shall be surrendered for
conversion by the same holder at the same time, the number of full shares of
Common Stock issuable on conversion thereof shall be computed on the basis of
the total number of shares of Class B Stock so surrendered.
(f) The Corporation shall at all times reserve and keep
<PAGE>
available for issuance upon the conversion of the Class B Stock, free from
any preemptive rights, such number of its authorized but unissued shares of
Common Stock as will from time to time be sufficient to permit the conversion
of all outstanding shares of Class B Stock, and shall take all action
required to increase the authorized number of shares of Common Stock if
necessary to permit the conversion of all outstanding shares of Class B Stock.
(g) The Conversion Ratio will be subject to adjustment from time to
time as follows:
(1) In case the Corporation shall at any time or from time to time
after the First Issue Date (A) pay a dividend, or make a distribution, on the
outstanding shares of Common Stock in shares of Common Stock, (B) subdivide
the outstanding shares of Common Stock, (C) combine the outstanding shares of
Common Stock into a smaller number of shares or (D) issue by reclassification
of the shares of Common Stock any shares of capital stock of the Corporation,
then, and in each such case, the Conversion Ratio in effect immediately prior
to such event or the record date therefor, whichever is earlier, shall be
adjusted so that the holder of any shares of Class B Stock thereafter
surrendered for conversion shall be entitled to receive the number of shares
of Common Stock or other securities of the Corporation which such holder
would have owned or have been entitled to receive after the happening of any
of the events described above, had such shares of Class B Stock been
surrendered for conversion
<PAGE>
immediately prior to the happening of such event or the record date therefor,
whichever is earlier. An adjustment made pursuant to this clause (i) shall
become effective (x) in the case of any such dividend or distribution,
immediately after the close of business on the record date for the
determination of holders of shares of Common Stock entitled to receive such
dividend or distribution, or (y) in the case of such subdivision,
reclassification or combination, at the close of business on the day upon
which such corporate action becomes effective. No adjustment shall be made
pursuant to this clause (i) in connection with any transaction to which
paragraph (h) applies.
(2) In case the Corporation shall at any time or from time to time
after the First Issue Date declare, order, pay or make a dividend or other
distribution (including, without limitation, any distribution of stock or
other securities or property or rights or warrants to subscribe for
securities of the Corporation or any of its Subsidiaries by way of dividend
or spinoff), on its Common Stock, other than dividends or distributions of
shares of Common Stock which are referred to in clause (1) of this paragraph
(g), then the Conversion Ratio shall be adjusted so that the holder of each
share of Class B Stock shall be entitled to receive, upon the conversion
thereof, the number of shares of Common Stock determined by multiplying (1)
the applicable Conversion Ratio on the day immediately prior to the record
date fixed for the determination of stockholders entitled to receive such
dividend or distribution by (2) a
<PAGE>
fraction, the numerator of which shall be the Current Market Price per share
of Common Stock for the period of 20 Trading Days preceding such record date,
and the denominator of which shall be such Current Market Price per share of
Common Stock less the Fair Market Value (as defined in Section 11 hereof) per
share of Common Stock (as determined in good faith by the Board of Directors
of the Corporation, a certified resolution with respect to which shall be
mailed to each holder of shares of Class B Stock) of such dividend or
distribution; provided, however, that in the event of a distribution of
capital stock of a Subsidiary of the Corporation (a "Spin-Off") made to
holders of shares of Common Stock, the numerator of such fraction shall be
the sum of the Current Market Price per share of Common Stock for the period
of 20 Trading Days preceding the 35th Trading Day after the effective date of
such Spin-Off and the Current Market Price of the number of shares (or the
fraction of a share) of capital stock of the Subsidiary which is distributed
in such Spin-Off in respect of one share of Common Stock for the period of 20
Trading Days preceding such 35th Trading Day and the denominator of which
shall be the Current Market Price per share of Common Stock for the period of
20 Trading Days preceding such 35th Trading Day. An adjustment made pursuant
to this clause (2) shall be made upon the opening of business on the next
Business Day following the date on which any such dividend or distribution is
made and shall be effective retroactively immediately after the close of
business on the record date fixed for the determination of stockholders
entitled to receive such dividend or distribution;
<PAGE>
provided, however, that if the proviso to the preceding sentence applies,
then such adjustment shall be made and be effective as of such 35th Trading
Day after the effective date of such Spin-Off. No adjustment shall be made
pursuant to this clause (2) in connection with any transaction to which
paragraph (h) applies.
(3) For purposes of this paragraph (g), the number of shares of
Common Stock at any time outstanding shall not include any shares of Common
Stock then owned or held by or for the account of the Corporation.
(4) The term "dividend," as used in this paragraph (g) shall mean
a dividend or other distribution upon Common Stock of the Corporation.
(5) Anything in this paragraph (g) to the contrary
notwithstanding, the Corporation shall not be required to give effect to any
adjustment in the Conversion Ratio unless and until the net effect of one or
more adjustments (each of which shall be carried forward), determined as
above provided, shall have resulted in a change of the Conversion Ratio by at
least one one-hundredth of one share of Common Stock, and when the cumulative
net effect of more than one adjustment so determined shall be to change the
Conversion Ratio by a least one one-hundredth of one share of common Stock,
such change in Conversion Ratio shall thereupon be given effect.
<PAGE>
(6) The certificate of any firm of independent public accountants
of recognized standing selected by the Board of Directors of the Corporation
(which may be the firm of independent public accountants regularly employed
by the Corporation) shall be presumptively correct for any computation made
under this paragraph (g).
(7) If the Corporation shall take a record of the holders of its
Common Stock for the purpose of entitling them to receive a dividend or other
distribution, and shall thereafter and before the distribution to
stockholders thereof legally abandon its plan to pay or deliver such dividend
or distribution, then thereafter no adjustment in the number of shares of
Common Stock issuable upon exercise of the right of conversion granted by
this paragraph (g) or in the Conversion Ratio then in effect shall be
required by reason of the taking of such record.
(8) There shall be no adjustment of the Conversion Ratio in case
of the issuance of any stock of the Corporation in a merger, reorganization,
acquisition or other similar transaction except as set forth in paragraphs
(g)(1) and (h) of this Section 8.
(h) In case of any capital reorganization or reclassification of
outstanding shares of Common Stock (other than a reclassification covered by
Section 8(g)(1)), or in case of any merger of the Corporation with or into
another
<PAGE>
Corporation, or in case of any sale or conveyance to another Corporation of
all or substantially all of the assets or property of the Corporation (each
of the foregoing being referred to as a "Transaction"), each share of Class B
Stock then outstanding shall thereafter be convertible into, in lieu of the
Common Stock issuable upon such conversion prior to consummation of such
Transaction, the kind and amount of shares of stock and other securities and
property receivable (including cash or securities of the Surviving Person (as
defined in Section 11 hereof)) upon the consummation of such Transaction by a
holder of that number of shares of Common Stock into which one share of Class
B Stock was convertible immediately prior to such Transaction (including, on
a pro rata basis, the cash, securities or property received by holders of
Common Stock in any tender or exchange offer that is a step in such
Transaction). In any such case, if necessary, appropriate adjustment (as
determined by the Board of Directors) shall be made in the application of the
provisions set forth in this Section 8 with respect to rights and interests
thereafter of the holders of shares of Class B Stock to the end that the
provisions set forth herein for the protection of the conversion rights of
the Class B Stock shall thereafter be applicable, as nearly as reasonably may
be, to any such other shares of stock and other securities and property
deliverable upon conversion of the shares of Class B Stock remaining
outstanding (with such adjustments in the conversion price and number of
shares issuable upon conversion and such other adjustments in the provisions
hereof as the Board of Directors shall determine to be
<PAGE>
appropriate). In case securities or property other than Common Stock shall
be issuable or deliverable upon conversion as aforesaid, then all references
in this Section 8 shall be deemed to apply, so far as appropriate and as
nearly as may be, to such other securities or property.
Notwithstanding anything contained herein to the contrary, the
Corporation will not effect any Transaction unless, prior to the consummation
thereof, the Surviving Person thereof shall assume, by written instrument
mailed to each holder of shares of Class B Stock, the obligation to deliver
to such holder such cash, property or securities to which, in accordance with
the foregoing provisions, such holder is entitled.
(i) In case at any time or from time to time the Corporation shall pay
any dividend or make any other distribution to the holders of its Common
Stock, or shall offer for subscription pro rata to the holders of its Common
Stock any additional shares of stock of any class or any other right, or
there shall be any capital reorganization or reclassification of the Common
Stock of the Corporation or merger of the Corporation with or into another
Corporation, or any sale or conveyance to another Corporation of the property
of the Corporation as an entirety or substantially as an entirety, or there
shall be a voluntary or involuntary dissolution, liquidation or winding up of
the Corporation, then, in any one or more of said cases the Corporation shall
give at least 20 days prior written notice (the
<PAGE>
time of mailing of such notice shall be deemed to be the time of giving
thereof) to the registered holders of the Class B Stock at the addresses of
each as shown on the books of the Corporation maintained by the transfer
agent thereof as of the date on which (i) the books of the Corporation shall
close or a record shall be taken for such stock dividend, distribution or
subscription rights or (ii) such reorganization, reclassification, merger,
sale or conveyance, dissolution, liquidation or winding up shall take place,
as the case may be, provided that in the case of any Transaction to which
paragraph (h) applies the Corporation shall give at least thirty days prior
written notice as aforesaid. Such notice shall also specify the date as of
which the holders of the Common Stock of record shall participate in said
dividend, distribution or subscription rights or shall be entitled to
exchange their Common Stock for securities or other property deliverable upon
such reorganization, reclassification, merger, sale or conveyance or
participate in such dissolution, liquidation or winding up, as the case may
be. Failure to give such notice shall not invalidate any action so taken.
Section 9. Reports As to Adjustments.
Upon any adjustment of the Conversion Ratio then in effect and any
increase or decrease in the number of shares of Common Stock issuable upon
the operation of the conversion set forth in Section 8 hereof, then, and in
each such case, the Corporation shall promptly deliver to the transfer agent
of the Class B Stock
<PAGE>
and Common Stock, a certificate signed by the President or a Vice President
and by the Treasurer or an Assistant Treasurer or the Secretary or an
Assistant Secretary of the Corporation setting forth in reasonable detail the
event requiring the adjustment and the method by which such adjustment was
calculated and specifying the Conversion Ratio then in effect following such
adjustment and the increased or decreased number of shares issuable upon the
conversion set forth in Section 8 hereof. The Corporation shall also
promptly after the making of such adjustment give written notice to the
registered holders of the Class B Stock at the address of each holder as
shown on the books of the Corporation maintained by the Transfer Agent
thereof, which notice shall state the Conversion Ratio then in effect, as
adjusted, and the increased or decreased number of shares issuable upon the
exercise of the right of conversion granted by Section 8 hereof, and shall
set forth in reasonable detail the method of calculation of each and a brief
statement of the facts requiring such adjustment. Where appropriate, such
notice to holders of the Class B Stock may be given in advance and included
as part of the notice required under the provisions of Section 8(i) hereof.
Section 10. Certain Covenants.
(a) Following the First Issue Date, and except in payment of dividends
pursuant to Section 2(c), the Corporation shall not issue additional shares
of Class B Stock.
<PAGE>
(b) Any registered holder of Class B Stock may proceed to protect and
enforce its rights and the rights of such holders by any available remedy by
proceeding at law or in equity to protect and enforce any such rights,
whether for the specific enforcement of any provision in this Certificate of
Designation, or in aid of the exercise of any power granted herein, or to
enforce any other proper remedy.
Section 11. Definitions.
The following terms shall have the meanings indicated:
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified person. For the purposes of this definition,
"control" (including, with correlative meanings, the terms "controlled by"
and "under common control with"), as used with respect to any Person, shall
mean the possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies of such Person, whether through
the ownership of voting securities or by agreement or otherwise.
"Approval Date" shall mean the earlier of (i) the tenth day following
the mailing by the Company of a notice to stockholders of receipt by the
Company of written confirmation of waiver by the NASDAQ of its shareholder
voting requirements with respect to
<PAGE>
the right of the holders of the Class B Stock to vote such shares on an
as-converted basis, or (ii) the date of approval by the Company's
stockholders of the right of the holders of the Class B Stock to vote such
shares on an as converted basis.
"Bank Credit Agreement" shall mean the Credit Agreement, dated as of
June 15, 1995, among the Company, the banks party thereto, and Bankers Trust
Company as Agent for the bank parties thereto, as amended from time to time,
and any refinancings, renewals and replacements thereof.
"Business Day" shall mean any day other than Saturday, Sunday or a day
on which banking institutions in the State of Delaware are authorized or
obligated by law or executive order to close.
"Class A Stock" shall mean the Class A Convertible Preferred Stock, par
value $1.00 per share, of the Corporation.
"Conversion Price" shall mean an amount equal to the Stated Value
divided by the Conversion Ratio (as adjusted pursuant to paragraph (g) of
Section 8 hereof).
"Current Market Price," when used with reference to shares of Common
Stock or other securities on any date, shall mean the volume weighted average
of the sales prices for shares of Common Stock or such other securities on
such date and, when used with
<PAGE>
reference to shares of Common Stock or other securities for any period shall
mean the volume weighted average of the sale prices for shares of Common
Stock or such other securities for such period. If the Common Stock is not
listed or admitted to trading on a national securities exchange or an
automated quotation system that permits determination of weighted average
sale prices over a period of time, then "Current Market Price" for any period
shall mean the average of the last quoted sale price or, if not so quoted,
the average of the high bid and low asked prices in the over-the-counter
market, as reported by the National Association of Securities Dealers, Inc.
Automated Quotation System or such other system then in use, or, if on any
such date the Common Stock or such other securities are not quoted by any
such organization, the average of the closing bid and asked prices are
furnished by a professional market maker making a market in the Common Stock
or such other securities selected by the Board of Directors of the
Corporation. If the Common Stock or such other securities are not publicly
held or so listed or publicly traded, "Current Market Price" shall mean the
fair market value per share of Common Stock or of such other securities as
determined in good faith by the Board of Directors of the Corporation based
on an opinion of an independent investment banking firm with an established
national reputation as a valuer of securities, which opinion may be based on
such assumptions as such firm shall deem to be necessary and appropriate.
<PAGE>
"DGCL" shall mean the Delaware General Corporation Law, as amended.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any similar Federal statute, and the rules and regulations of the
Securities and Exchange Commission thereunder, all as the same shall be in
effect at the time. Reference to a particular section of the Exchange Act
shall include reference to the comparable section, if any, of any such
similar Federal statute.
"Fair Market Value" shall mean, as to shares of Common Stock or any
other class of capital stock or securities of the Corporation or any other
issuer which are publicly traded, the Current Market Price of such shares or
securities for the 30 Trading Day period preceding the date as of which the
Fair Market Value is to be determined. The "Fair Market Value" of any
security which is not publicly traded or of any other property shall mean the
fair value thereof as determined by an independent investment banking or
appraisal firm experienced in the valuation of such securities or property
selected in good faith by the Board of Directors of the Corporation or a
committee thereof, or, if no such investment banking or appraisal firm is in
the good faith judgment of the Board of Directors or such committee available
to make such determination, as determined in good faith by the Board of
Directors of the Corporation or such committee.
<PAGE>
"First Issue Date" shall mean the first date that any shares of Class B
Stock are issued.
"Issue Date" shall mean, with respect to any share of Class B Stock, the
date on which such share of Class B Stock is issued.
"Junior Dividend Stock" shall mean (i) the Common Stock and (ii) any
other capital stock of the Corporation which ranks junior as to dividends to
the Class B Stock.
"Junior Liquidation Stock" shall mean (i) the Common Stock and (ii) any
other capital stock of the Corporation which ranks junior upon liquidation,
dissolution or winding up to the Class B Stock.
"Liquidation Preference" with respect to a share of Class B Stock shall
mean the Stated Value per share, plus an amount equal to all accrued but
unpaid dividends.
"NASDAQ" shall mean the NASDAQ Stock Market.
"NASDAQ Rules" shall mean Rule 4460(i) of the NASDAQ Stock Market Rules
of the NASDAQ Stock Market.
"Parity Dividend Stock" shall mean (i) the Class A Stock and (ii) any
other capital stock of the Corporation ranking on a parity as to dividends
with the Class B Stock.
<PAGE>
"Parity Liquidation Stock" shall mean (i) the Class A Stock and (ii) any
other capital stock of the Corporation ranking on a parity upon liquidation,
dissolution or winding up with the Class B Stock.
"Person" shall mean any individual, firm, corporation or other entity,
and shall include any successor (by merger or otherwise) of such entity.
"Principal Issue Date" shall mean September 17, 1996.
"Purchasers" shall mean Trefoil Capital Investors II, L.P., a Delaware
limited partnership, and GE Investment Private Placement Partners II, A
Limited Partnership, a Delaware limited partnership.
"Qualified Person" shall mean any Person that, immediately after giving
effect to the applicable Transaction, (i) is a solvent corporation or other
entity organized under the laws of any State of the United States of America
having its common stock or, in the case of an entity other than a
corporation, equivalent equity securities, listed on the New York Stock
Exchange or the American Stock Exchange or quoted by the Nasdaq National
Market System or any successor thereto or comparable system, and such common
stock or equivalent equity security continues to meet the requirements for
such listing or quotation and (ii) is required
<PAGE>
to file, and in each of its three fiscal years immediately preceding the
consummation of the applicable Transaction (or since its inception) has
filed, reports with the Securities and Exchange Commission pursuant to
Section 13 or 15(d) of the Exchange Act.
"Redemption Fair Market Value" shall mean, as to shares of Common Stock,
the Current Market Price of such shares or securities for the 60-day period
preceding the date as of which the Redemption Fair Market Value is to be
determined. The "Redemption Fair Market Value" of the Common Stock if it is
not publicly traded shall mean its Fair Market Value.
"Required Issue Date" shall mean December 31, 1996.
"Reset Date" shall mean the first Trading Day after the end of the 20
Trading Day period utilized to determine the Reset Market Value.
"Reset Market Value" shall mean the Current Market Price of Common Stock
for the 20 Trading Day period following the earlier of (i) the date which is
three Trading Days after public announcement of the Corporation's results
for its fiscal quarter ending January 3, 1998 and (ii) February 2, 1998.
"Senior Notes" shall mean the Corporation's 12% Senior Notes due 2004
and any other senior indebtedness of the Corporation the
<PAGE>
net proceeds of which are used in full to pay principal, prepayment penalty
and accrued interest on such principal, the incurrence of which is approved
by the vote of the holders of a majority of the outstanding shares of Class B
Stock.
"Subsidiary" of any Person means any corporation or other entity of
which a majority of the voting power of the voting equity securities or
equity interest is owned, directly or indirectly, by such Person.
"Surviving Person" shall mean the continuing or surviving Person of a
merger or other business combination, the Person receiving a transfer of all
or a substantial part of the properties and assets of the Corporation, or the
Person merging into the Corporation in a merger or other business combination
in which the Corporation is the continuing or surviving Person, but in
connection with which the Class B Stock or Common Stock of the Corporation is
exchanged or converted into the securities of any other Person or cash or any
other property; provided, however, if such surviving Person is a direct or
indirect Subsidiary of a Qualified Person, the parent entity that is a
Qualified Person shall be the Surviving Person.
"Survivor Common Stock" with respect to any Surviving Person shall mean
any shares of such Surviving Person of any class or series which has no
preference or priority in the payment of dividends or in the distribution of
assets upon any voluntary or
<PAGE>
involuntary liquidation, dissolution or winding up of such Surviving Person
and which is not subject to redemption by such Surviving Person; provided,
however, that if at any time there shall be more than one such class or
series, the shares of each such class and series issuable upon conversion of
the Class B Stock then being converted shall be substantially in the
proportion to the total number of shares of each such class and series.
"Trading Day" means a day on which the principal national securities
exchange (including, if applicable, the Nasdaq Stock Market) on which the
Common Stock is listed or admitted to trading is open for the transaction of
business or, if the Common Stock is not listed or admitted to trading on any
national securities exchange, a Business Day.
IN WITNESS WHEREOF, the officers set forth below, acting for and on
behalf of The Grand Union Company, have hereunto subscribed their names on
this ___ day of June 1997.
THE GRAND UNION COMPANY
By:
<PAGE>
-------------------------
Name:
Title:
Attest:
By:
---------------------------
Name:
Title:
Exhibit B
Form of Opinion to be rendered by Ropes & Gray in connection with the
Fourth and Fifth Closings under the Stock Purchase Agreement, dated as of
July 30, 1996 (the "Purchase Agreement"), among The Grand Union Company (the
"Company"), Trefoil Capital Investors II, L.P. ("Trefoil") and GE Investment
Private Placement Partners II, A Limited Partnership ("GEI" and, collectively
with Trefoil, the "Purchasers"), as accelerated
<PAGE>
pursuant to the terms of the Acceleration and Exchange Agreement between the
Company, Trefoil, and GEI. Capitalized terms used herein without definition
have the meanings given in the Opinion Letter of Ropes & Gray delivered in
connection with the Third Closing on February 25, 1997.
1. The Company is duly incorporated, validly existing and in good
standing under the laws of the State of Delaware, with corporate power and
authority under such laws perform its obligations under the Purchase
Agreement, including without limitation to issue and sell the Shares and to
issue the shares of Common Stock issuable upon conversion of the Shares.
2. The Shares delivered at this Closing (the "Accelerated Shares")
have been duly authorized and validly issued and are fully paid and
non-assessable; and the shares of Common Stock issuable upon the conversion
of the Accelerated Shares (the "Conversion Shares") have been duly authorized
and reserved for issuance and, when issued in accordance with the provisions
of the Company's Certificate of Incorporation, will be validly issued, fully
paid and nonassessable.
Exhibit C
Form of Opinion to be rendered by Davis Polk & Wardwell. Capitalized
terms used herein without definition have the meanings given in the
Acceleration and Exchange Agreement.
<PAGE>
1. The Company is a validly existing corporation in good standing
under the laws of the State of Delaware, with all requisite corporate power
and authority to own its properties and assets and to carry on its business.
2. The Certificate of Designation has been duly authorized and adopted
by the Company, has been filed with the Secretary of State for the State of
Delaware and is in full force and effect.
3. The Company has all requisite corporate power and authority to
execute and deliver the Transaction Documents to which it is a party and all
other agreements therein contemplated to be executed by the Company, to
perform its obligations thereunder, to consummate the transactions
contemplated thereby and to sell, assign, transfer and deliver the Class B
Preferred Shares and the Reset Shares to the Purchasers pursuant to the terms
of the Acceleration and Exchange Agreement.
4. The Transaction Documents have been duly authorized, executed and
delivered by the Company, and are the legal, valid and binding obligations of
the Company and (subject to applicable bankruptcy, insolvency, and other laws
affecting the enforceability of creditors' rights generally and general
equitable principles) are enforceable against the Company in accordance with
their respective terms.
<PAGE>
5. The Class B Preferred Shares have been validly authorized and, upon
delivery to Purchasers pursuant to the Exchange Agreement, will be validly
issued, fully paid and nonassessable.
6. The shares of (A) Common Stock to be issued (i) on the Reset Date,
(ii) upon the conversion of the Class B Preferred Stock, and (iii) as
dividends on the Preferred Shares in accordance with the terms of the
Certificate of Designation, and (B) Class B Preferred Stock to be issued as
dividends on the Preferred Shares in accordance with the terms of the
Certificate of Designation have been validly authorized and, when such (x)
Reset Shares are issued in accordance with the Acceleration and Exchange
Agreement, and (y) such shares of Common Stock are delivered in accordance
with the terms of the Certificate of Designation upon the conversion of the
Class B Preferred Stock or the payment of dividends on the Preferred Stock,
or (z) shares of Class B Preferred Stock are delivered in accordance with the
terms of the Certificate of Designation as payment of dividends thereon, such
shares of Common Stock and shares of Preferred Stock will be validly issued,
fully paid and non-assessable. Depending on a number of factors, including
the time of the conversion of the Class B Preferred Stock and the form in
which dividends thereon are paid, the number of shares of Common Stock
currently authorized may be insufficient to permit the conversion of all
securities of the Company convertible into or exercisable for shares of
Common Stock and the payment of all dividends on
<PAGE>
the Preferred Shares in the form of shares of Common Stock.
7. The consummation of the Exchange and the issuance of the Reset
Shares pursuant to the Acceleration and Exchange Agreement and the
fulfillment of and compliance with the terms and conditions contained in the
Acceleration and Exchange Agreement with respect to the Exchange and the
issuance of the Reset Shares will not (a) conflict with any terms, conditions
or provisions of the Certificate of Incorporation or Bylaws of the Company;
(b) result in a termination or breach of, or constitute a default under, or
accelerate or permit the acceleration of any performance required by, any of
the agreements listed on Schedule A hereto; or (c) violate any federal law or
laws of the state of New York or the state of Delaware.
8. To our knowledge after due inquiry, the Company is not a party to,
subject to or bound by any judgment, award, judicial or administrative order,
writ, prohibition, or decree (including a consent decree) of any court,
governmental body or arbitrator, which would prevent the execution, delivery,
or performance of the Transaction Documents by the Company and all other
agreements therein contemplated to be entered into by the Company or the
transfer, conveyance or sale of the Shares by the Company to the Purchasers
pursuant to the Acceleration and Exchange Agreement.
9. After due inquiry, we have no knowledge of any litigation,
arbitration, or governmental proceeding with respect
<PAGE>
to the Company that seeks to prohibit or otherwise challenge the consummation
of the transactions contemplated by the Transaction Documents, or to obtain
substantial damages with respect thereto.
With respect to the opinions expressed in paragraph 8
hereof, "after due inquiry" means that we have made inquiry of
Jeff Freimark of the Company.
Exhibit D
[Letterhead of Donaldson, Lufkin & Jenrette Securities
Corporation]
June 5, 1997
The Grand Union Company
201 Willowbrook Boulevard
Wayne, NJ 07470-6799
Attention: Jeffrey P. Freimark
Chief Financial Officer
Re: Fee Waiver
Gentlemen:
<PAGE>
This letter is written in connection with our engagement
letter with The Grand Union Company (the "Company") dated January
17, 1996 (the "Engagement Letter") and the Company's proposed
transaction (the "Proposed Transaction") to issue $40,000,000 of
Class B Convertible Preferred Stock of the Company and, under
certain circumstances, up to 2 million shares of Common Stock of
the Company, pursuant to the Acceleration and Exchange Agreement
dated June 5, 1997, by and between the Company and Trefoil
Capital Investors II, L.P. and GE Investment Private Placement
Partners II, A Limited Partnership.
The purpose of this letter is to acknowledge and agree that
Donaldson, Lufkin & Jenrette Securities Corporation hereby waives
any additional fee or other payment to which it may be entitled
in connection with the Proposed Transaction pursuant to the
Engagement Letter.
Sincerely,
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By:
-------------------------
Martin C. Murrer
Managing Director
<PAGE>
EXHIBIT E
AMENDMENT NO. 1 TO THE REGISTRATION RIGHTS
AGREEMENT DATED AS OF JULY 30, 1996, AMONG
THE GRAND UNION COMPANY, TREFOIL CAPITAL
INVESTORS II, L.P., AND GE INVESTMENT PRIVATE
PLACEMENT PARTNERS II, A LIMITED PARTNERSHIP
Amendment (this "Amendment"), dated as of June 5, 1997, to the
Registration Rights Agreement (the "Registration Rights Agreement"), dated as
of July 30, 1996, among each of (i) The Grand Union Company, a Delaware
corporation (the "Company"), and (ii) Trefoil Capital Investors II, L.P., a
Delaware limited partnership ("Trefoil"), and GE Investment Private Placement
Partners II, a Limited Partnership, a Delaware limited partnership ("GEI,"
and together with Trefoil, the "Purchasers"). Capitalized terms used herein
without definitions shall have the meanings given them in the Registration
Rights Agreement.
WHEREAS, the Company has entered into an Acceleration and Exchange
Agreement, dated as of June 5, 1997 (the "Acceleration
<PAGE>
Agreement"), among the Company, Trefoil, and GEI;
WHEREAS, the Company and the Purchasers desire to amend the Registration
Rights Agreement for the purpose of facilitating the transactions
contemplated by the Acceleration Agreement;
NOW, THEREFORE, in consideration of the foregoing, and the mutual
agreements and covenants contained herein, the parties hereto agree as
follows:
Section 1. Preamble. (a) The second paragraph of the preamble is
hereby amended to read as follows:
"WHEREAS, pursuant to a Stock Purchase Agreement among the Company and
the Purchasers (the "Purchase Agreement"), the Company is selling to the
purchasers up to 2,000,000 shares of the Company's Class A Convertible
Preferred Stock, issuable in denominations of $50 stated value per share,
dividends on which may be paid in additional shares of such preferred stock
(collectively, the "Class A Preferred Shares"), which Class A Preferred
Shares are convertible into shares of the Company's common stock, par value
$1.00 per share (the "Common Stock");"
(b) The Preamble of the Registration Rights Agreement is hereby amended
to add a new third paragraph to read as follows:
"WHEREAS, pursuant to an Acceleration and Exchange Agreement
<PAGE>
(the "Acceleration Agreement"), dated as of June 5, 1997, the Company has
agreed to issue (i) 800,000 shares of the Company's Class B Convertible
Preferred Stock, issuable in denominations of $50 stated value per share,
dividends on which may be paid in additional shares of such preferred stock
(collectively, the "Class B Preferred Shares," and collectively with the
Class A Preferred Shares, the "Preferred Shares"), which Class B Preferred
Shares are convertible into shares of Common Stock, and (ii) up to 2,000,000
shares of Common Stock under certain circumstances (such shares of the Common
Stock, together with shares of Common Stock into which the Preferred Shares
are convertible and shares of Common Stock which may be issued as dividends
on the Preferred Shares, the "Common Shares" and, collectively with the
Preferred Shares, the "Securities");
Section 2. Definitions. The definition of the term "Registrable
Securities" in Section 1.1 of the Registration Rights Agreement is hereby
amended to read as follows:
""Registrable Securities" shall mean any Securities issued at any time
to any of the Purchasers pursuant to the Purchase Agreement or the
Acceleration Agreement and any Securities issued at any time as dividends
upon or on conversion of any of the Securities. As to any proposed offer or
sale of Registrable Securities, such securities shall cease to be Registrable
Securities with respect to such proposed offer or sale when (i) a
registration statement with respect to the sale of such
<PAGE>
securities shall have become effective under the Securities Act and such
securities shall have been disposed of in accordance with such registration
statement or (ii) such securities are permitted to be disposed of pursuant to
Rule 144(k) (or any successor provision to such Rule) under the Securities
Act as confirmed in a written opinion of counsel to the Company addressed to
the Holders, or (iii) such securities shall have been otherwise transferred
pursuant to an applicable exemption under the Securities Act, new
certificates for such securities not bearing a legend restricting further
transfer shall have been delivered by the Company and such securities shall
be freely transferable to the public without registration or qualification
under the Securities Act or any state securities or blue sky law then in
place.
Section 3. Miscellaneous.
(a) Notices. Any notice under or relating to this Amendment shall
be given in writing and shall be deemed sufficiently given when delivered by
hand or by conformed facsimile transmission, on the second business day after
a writing is consigned (freight prepaid) to a commercial overnight courier,
and on the fifth business day after a writing is deposited in the mail,
postage and other charges prepaid, addressed as follows:
Trefoil II: 4444 Lakeside Drive
<PAGE>
Burbank, California 91505
Attention: Mr. Geoffrey T. Moore
Telecopy: (818) 842-3142
with a copy to: Fried, Frank, Harris, Shriver &
Jacobson
350 South Grand Avenue
Los Angeles, California 90071
Attention: David K. Robbins, Esq.
Telecopy: (213) 473-2222
GEI: GE Investment Management
Incorporated
3003 Summer Street
Stamford, Connecticut 06904
Attention: Michael Pastore, Esq.
Telecopy: (203) 326-4177
with a copy to: Dewey Ballantine
1301 Avenue of the Americas
New York, New York 10019
Attention: Sanford W. Morhouse, Esq.
Telecopy: (212) 259-6333
the Company: Chief Executive Officer
The Grand Union Company
<PAGE>
201 Willowbrook Boulevard
Wayne, NJ 07470-0966
Telecopy: (201) 890-6012
with a copy to: General Counsel
The Grand Union Company
201 Willowbrook Boulevard
Wayne, New Jersey 07470-0966
Telecopy: (201) 890-6012
and
Davis Polk & Wardwell
450 Lexington Avenue
New York, NY 10017
Attn: William L. Rosoff, Esq.
Telecopy: (212) 450-4800
and
Fried, Frank, Harris, Shriver &
Jacobson
350 South Grand Avenue
Los Angeles, California 90071
Attention: David K. Robbins, Esq.
Telecopy: (213) 473-2222
<PAGE>
and
Dewey Ballantine
1301 Avenue of the Americas
New York, New York 10019
Attention: Sanford W. Morhouse, Esq.
Telecopy: (212) 259-6333
or to such other address or facsimile number as either party may, from time
to time, designate in a written notice given in like manner.
(b) Binding Effect. The provisions of this Amendment shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors, assigns, heirs, and personal representatives.
(c) Modification. This Amendment may only be modified by a
written instrument duly executed by each party hereto.
(d) Waiver. Any waiver by either party of a breach of any
provision of this Amendment shall not operate as or be construed to be a
waiver of any other breach of such provision or of any breach of any other
provision of this Amendment. Any waiver of any provision of this Amendment
must be in writing.
(e) Headings. The headings to the sections of this
<PAGE>
Amendment are inserted for convenience only and shall not constitute a part
hereof or affect in any way the meaning or interpretation of this Amendment.
(f) Separability. If any provision of this Amendment
is invalid, illegal or unenforceable, the balance of this
Amendment shall remain in effect, and if any provision is
inapplicable to any person or circumstance, it shall nevertheless
remain applicable to all other persons and circumstances.
(g) Counterparts. This Amendment may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
(h) Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York applicable to
contracts executed and to be fully performed within the State of New York.
IN WITNESS WHEREOF, the parties have duly executed this Amendment
No. 1 to the Registration Rights Agreement dated as of July 30, 1996 as of
the date first written above.
TREFOIL CAPITAL INVESTORS II, L.P.
By: Trefoil Investors II, Inc.
its general partner
<PAGE>
By:
----------------------------------
Name: Michael J. McConnell
Title: Vice President
GE INVESTMENT PRIVATE PLACEMENT
PARTNERS II, A LIMITED PARTNERSHIP
By: GE INVESTMENT MANAGEMENT
INCORPORATED, its general partner
By:
----------------------------------
Name: Don W. Torey
Title: Executive Vice President
THE GRAND UNION COMPANY
By:
<PAGE>
----------------------------------
Name: Jeffrey P. Freimark
Title: Executive Vice President,
Chief Financial Officer and
Chief Administrator Officer
EXHIBIT F
THE STANGELAND FAMILY LIMITED PARTNERSHIP
300 North Lake Avenue, Suite 925
Pasadena, California 91101
June 5, 1997
Trefoil Capital Investors II, L.P. The Grand Union Company
4444 Lakeside Drive 201 Willowbrook Boulevard
Burbank, California 91505 Wayne, New Jersey 07470-0966
Attn: Geoffrey T. Moore Attn: Roger Stangeland
GE Investment Private Placement
Partners II, A Limited Partnership
c/o GE Investment Management
Incorporated
3003 Summer Street
Stamford, Connecticut 06904
Attn: Michael Pastore, Esq.
<PAGE>
Dear Messrs. Moore, Pastore and Stangeland:
Reference is made to the Stockholder Agreement (the "Stockholder
Agreement"), dated February 25, 1997, among Trefoil Capital Investors II,
L.P., a Delaware limited partnership ("Trefoil II"), GE Investment Private
Placement Partners II, A Limited Partnership, a Delaware limited partnership
("GEIPPPII" and collectively with Trefoil II, the "Purchasers"), The
Stangeland Family Limited Partnership, a California limited partnership, as
successor to all of the rights and obligations of Roger Stangeland pursuant
to an Addendum to Stockholder Agreement dated March 20, 1997 ("Stangeland")
and The Grand Union Company (the "Company"), and to the Acceleration and
Exchange Agreement, dated the date hereof, among the Company and the
Purchasers (the "Acceleration and Exchange Agreement").
Stangeland hereby acknowledges that the transactions contemplated by the
Acceleration and Exchange Agreement will not create any Tag-Along Rights in
favor of Stangeland, individually or collectively, pursuant to Section 2 of
the Stockholder Agreement.
Very truly yours,
THE STANGELAND FAMILY LIMITED PARTNERSHIP,
<PAGE>
a California limited partnership
By: THE ROGER AND LILAH STANGELAND
LIVING TRUST
Its: General Partner
By:
-----------------------------
Roger Stangeland, Co-Trustee
By:
-----------------------------
Lilah Stangeland, Co-Trustee
Exhibit G
RATIFICATION AND VOTING AGREEMENT
RATIFICATION AND VOTING AGREEMENT (the "Agreement"), dated as of
June --, 1997, among Trefoil Capital Investors II, L.P., a Delaware limited
partnership ("Trefoil II"), GE Investment Private Placement Partners II, A
Limited Partnership, a Delaware limited partnership (together with Trefoil
II, the
<PAGE>
"Purchasers"), and the shareholders of The Grand Union Company, a
Delaware corporation (the "Company") named on Schedule I hereto (each, a
"Stockholder" and collectively, the "Stockholders").
PREAMBLE
The Company and the Purchasers are parties to a Stock Purchase
Agreement (the "Purchase Agreement"), dated as of July 30, 1996, which
provided, among other things, for the acquisition by the Purchasers of shares
of the Company's Class A Convertible Preferred Stock (the "Class A Preferred
Stock"). A copy of the Purchase Agreement has previously been made available
to the Stockholders.
The Company and the Purchasers are parties to an Acceleration and
Exchange Agreement (the "Acceleration and Exchange Agreement"), dated as of
June 5, 1997, which provides, among other things, for the acquisition by the
Purchasers of shares of the Company's Class B Convertible Preferred Stock
(the "Class B Preferred Stock"). A copy of the Acceleration and Exchange
Agreement has previously been made available to the Stockholders.
As of the date hereof, each of the Stockholders named on Schedule I
hereto is the beneficial owner of and holds sole voting power with respect to
shares of Class A Preferred Stock of
<PAGE>
the Company entitled to the number of votes, or the number of shares of the
common stock of the Company, par value $1.00 per share (the "Common Stock"
and, together with the number of votes represented by the shares of Class A
Preferred Stock set forth on Schedule I hereto, the "Voting Securities") set
forth opposite such Stockholder's name on Schedule I (the "Subject Shares").
In order to induce the Purchasers to consummate the transactions
contemplated by the Acceleration and Exchange Agreement (the "Transactions")
and for other good and valuable consideration, each Stockholder agrees to
take reasonable steps to facilitate the Transactions and to vote the Subject
Shares held by it as contemplated by this Agreement.
ACCORDINGLY, the parties hereto agree as follows:
1. Voting in Favor of Acceleration and Exchange Agreement. Each
Stockholder agrees to support the Acceleration and Exchange Agreement and the
Transactions in any reasonable manner, including by taking any reasonable
action requested by the Purchasers; provided, however, that the foregoing
shall not be deemed to restrict such Stockholder's ability to transfer or
dispose of such Subject Shares. Each Stockholder will vote all of the
Subject Shares held by it in favor of the Acceleration and Exchange Agreement
and the Transactions, and against any agreement or course of action that
would prohibit, delay, interfere with or otherwise be inconsistent with the
Acceleration
<PAGE>
and Exchange Agreement or the Transactions, (a) at any annual or special
meeting (or any adjournment or postponement thereof) of the stockholders of
the Company at which the Acceleration and Exchange Agreement or the
Transactions are submitted to a vote or (b) at the request of the Purchasers,
by its written consent.
2. Granting of Irrevocable Proxy. Upon the request of the
Purchasers, each Stockholder will deliver to one or more persons an
irrevocable proxy (the "Proxy") with respect to all of the Subject Shares
held by it, which such Proxy shall be deemed to be coupled with an interest,
to vote all of the Subject Shares held by it in favor of the Acceleration and
Exchange Agreement and the Transactions at any annual or special meeting of
the stockholders of the Company at which the Acceleration and Exchange
Agreement or the Transactions are submitted to a vote in the same manner and
with the same effect as if such Stockholder was personally present at such
meeting. Any such Proxy shall expire upon the Expiration Date as defined in
Section 5 hereof.
3. Third Party Offers. Between the date hereof and the
Expiration Date, each Stockholder agrees that it shall not directly or
indirectly solicit, initiate or encourage inquiries or proposals, or
participate in any negotiations leading to any proposal, concerning any
transaction involving the Company that would cause the Company to fail to
consummate the Transactions or that would otherwise be inconsistent with,
violate or breach the terms of this Agreement or the Acceleration and Exchange
<PAGE>
Agreement. Each Stockholder will promptly advise the Purchasers of any
offers or proposals it may receive relating to any such transaction.
4. Representations and Warranties of the Stockholder. Each
Stockholder hereby severally, not jointly, represents and warrants to each of
the Purchasers as follows:
4.1. The Stockholder is validly existing and in good standing
under the laws of the jurisdiction of its organization.
4.2. The Stockholder is the sole true and lawful record and
beneficial owner of the Subject Shares set forth opposite its name on
Schedule I hereto and has all necessary power and authority to enter into
this Agreement and to perform such Stockholder's obligations hereunder.
4.3. None of the Subject Shares owned by any Stockholder other
than the Purchasers and the Roger and Lilah Stangeland Family Limited
Partnership (the "Stangeland Partnership") is subject to any voting trust or,
except pursuant to this Agreement, other agreement or arrangement with
respect to the voting of such Subject Shares. None of the Subject Shares
owned by the Purchasers or the Stangeland Partnership is subject to any
voting trust or, except pursuant to this Agreement, the Stockholders
Agreement dated as of February 25, 1997, and the
<PAGE>
Addendum thereto, among the Company, the Purchasers and the Stangeland
Partnership (the "Stangeland Stockholder Agreement") or the Stockholder
Agreement dated as of July 30, 1996 between the Purchasers, as amended (the
"Purchasers Stockholder Agreement"), other agreement or arrangement with
respect to the voting of such Subject Shares.
4.4. The execution, delivery and performance of this Agreement
by the Stockholder and the consummation by it of the transactions
contemplated hereby have been approved by all necessary action on the part of
the Stockholder.
4.5. This Agreement is the legal, valid and binding agreement
of the Stockholder.
4.6. The execution, delivery and performance of this Agreement
by the Stockholder does not and will not constitute a violation of, conflict
with or result in a default under (a) any contract, understanding or
arrangement to which the Stockholder is a party or by which such Stockholder
is bound, or require the consent of any other person or any party pursuant
thereto, or (b) any judgment, decree or order applicable to the Stockholder.
4.7. The number of Subject Shares set forth opposite such
Stockholder's name on Schedule I hereto are the only Voting Securities of the
Company beneficially owned by the
<PAGE>
Stockholder and the Stockholder owns no options to purchase or rights to
subscribe for or otherwise acquire any other Voting Securities of the Company
except for (i) pursuant to the Acceleration and Exchange Agreement, or (ii)
certain warrants of the Company issued pursuant to the Warrant Agreement
between the Company and American Stock Transfer & Trust Company, dated as of
June 15, 1995.
5. Termination. This Agreement shall terminate on the earlier of
(a) the date of the Exchange Closing (as defined in the Acceleration and
Exchange Agreement) and (b) the tenth (10th) day following termination of the
Acceleration and Exchange Agreement in accordance with its terms (the
"Expiration Date").
6. Remedies. The parties hereto acknowledge that damages would
be an inadequate remedy for a breach of the provisions of this Agreement and
that, in addition to any other remedy available at law, the obligations of
the Stockholder shall be specifically enforceable.
7. Miscellaneous.
7.1. Assignment. This Agreement shall not be assignable by
the parties hereto, except by operation of law and except that any Proxy
granted pursuant to the terms of this Agreement may be assigned by the
Purchasers to any person affiliated with the Purchasers.
<PAGE>
7.2. Amendments. This Agreement may not be modified, amended,
altered or supplemented, except upon the execution and delivery of a written
agreement executed by the Purchasers and the Stockholder.
7.3. Notices. All notices, requests, claims, demands and
other communications hereunder shall be given in writing and shall be deemed
sufficiently given when delivered by hand or by conformed facsimile
transmission, on the second business day after a writing is consigned
(freight prepaid) to a commercial overnight courier, and on the fifth
business day after a writing is deposited in the mail, postage and other
charges prepaid, addressed as follows:
(a) If to the Purchasers:
Trefoil Capital Investors II, L.P.
c/o Shamrock Capital Advisors, Inc.
4444 Lakeside Drive
Burbank, CA 91505
Attn: Stanley P. Gold, President
Telecopier No.: (818) 845-9718
Telephone No.: (818) 845-4444
and
<PAGE>
GE Investment Private Placement Partners
II, A Limited Partnership
3003 Summer Street
Stamford, CT 06905
Attn: Michael Pastore
Telecopier No.: (303) 326-4177
Telephone No.: (303) 326-2300
With copies to:
Fried, Frank, Harris, Shriver & Jacobson
350 South Grand Avenue, Suite 3200
Los Angeles, CA 90071
Attn: David K. Robbins, Esq.
Telecopier No.: (213) 473-2222
Telephone No.: (213) 473-2000
and
Dewey Ballantine
1301 Avenue of the Americas
New York, NY 10019
Attn: Sanford W. Morhouse, Esq.
Telecopier No.: (212) 259-6333
Telephone No.: (212) 259-8000
With copies to:
<PAGE>
Chief Executive Officer
The Grand Union Company
201 Willowbrook Boulevard
Wayne, NJ 07470-0966
Telecopier No.: (201) 890-6012
Telephone No.: (201) 890-6000
and
Davis Polk &Wardwell
450 Lexington Avenue
New York, NY 10017
Attn: William L. Rosoff, Esq.
Telecopier No.: (212) 450-4800
Telephone No.: (212) 450-4000
(b) If to the Stockholder, to the address set
forth on Schedule I hereto.
With copies to:
Chief Executive Officer
The Grand Union Company
201 Willowbrook Boulevard
Wayne, NJ 07470-0966
<PAGE>
Telecopier No.:
Telephone No.: (201) 890-6000
and
Fried, Frank, Harris, Shriver & Jacobson
350 South Grand Avenue, Suite 3200
Los Angeles, CA 90071
Attn: David K. Robbins, Esq.
Telecopier No.: (213) 473-2222
Telephone No.: (213) 473-2000
and
Dewey Ballantine
1301 Avenue of the Americas
New York, NY 10019
Attn: Sanford W. Morhouse, Esq.
Telecopier No.: (212) 259-6333
Telephone No.: (212) 259-8000
or to such other address as the Purchasers may have furnished to the
Stockholders or a Stockholder may have furnished to the Purchasers, in either
case in writing in accordance herewith, except that notices of change of
address shall be effective only upon receipt.
<PAGE>
7.4. Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York.
7.5. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to
be invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall continue in full force and
effect and shall in no way be affected, impaired or invalidated.
7.6. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same Agreement.
IN WITNESS WHEREOF, the Purchasers and the Stockholders have caused
this Ratification and Voting Agreement to be duly executed as of the day and
year first above written.
TREFOIL CAPITAL INVESTORS II, L.P.
By: TREFOIL INVESTORS II, INC.,
its managing general
partner
<PAGE>
By:
-----------------------------
Name:
Title:
GE INVESTMENT PRIVATE PLACEMENT
PARTNERS II, A LIMITED PARTNERSHIP
By: GE INVESTMENT MANAGEMENT
INCORPORATED, a general
partner
By:
----------------------------
Name:
Title:
Stockholder's Signature Page to Ratification and Voting
Agreement:
<PAGE>
------------------------------
Stockholder
By:
--------------------------
Name:
Title:
SCHEDULE I
Currently
Outstanding
Number of Voting
Voting Securities
Name and Address of Securities of the
Stockholder Held Company
Trefoil Capital Investors II, 7,035,994 28.74%
L.P.
c/o Shamrock Capital Advisors,
Inc.
4444 Lakeside Drive
Burbank, CA 91505
GE Investment Private 7,035,994 28.74%
Placement Partners
II, A Limited Partnership
3003 Summer Street
Stamford, CT 06905
<PAGE>
Exhibit 10.58
AMENDMENT NO. 1 TO THE REGISTRATION RIGHTS
AGREEMENT DATED AS OF JULY 30, 1996, AMONG THE
GRAND UNION COMPANY, TREFOIL CAPITAL
INVESTORS II, L.P., AND GE INVESTMENT PRIVATE
PLACEMENT PARTNERS II, A LIMITED PARTNERSHIP
Amendment (this "Amendment"), dated as of June 5, 1997, to the Registration
Rights Agreement (the "Registration Rights Agreement"), dated as of July 30,
1996, among each of (i) The Grand Union Company, a Delaware corporation (the
"Company"), and (ii) Trefoil Capital Investors II, L.P., a Delaware limited
partnership ("Trefoil"), and GE Investment Private Placement Partners II, a
Limited Partnership, a Delaware limited partnership ("GEI," and together with
Trefoil, the "Purchasers"). Capitalized terms used herein without definitions
shall have the meanings given them in the Registration Rights Agreement.
WHEREAS, the Company has entered into an Acceleration and Exchange
Agreement, dated as of June 5, 1997 (the "Acceleration Agreement"), among the
Company, Trefoil, and GEI;
WHEREAS, the Company and the Purchasers desire to amend the Registration
Rights Agreement for the purpose of facilitating the transactions contemplated
by the Acceleration Agreement;
NOW, THEREFORE, in consideration of the foregoing, and the mutual
agreements and covenants contained herein, the parties hereto agree as follows:
Section 1. PREAMBLE. (a) The second paragraph of the preamble is hereby
amended to read as follows:
"WHEREAS, pursuant to a Stock Purchase Agreement among the Company and the
Purchasers (the "Purchase Agreement"), the Company is selling to the purchasers
up to 2,000,000 shares of the Company's Class A Convertible Preferred Stock,
issuable in denominations of $50 stated value per share, dividends on which may
be paid in additional shares of such preferred stock (collectively, the "Class A
Preferred Shares"), which Class A Preferred Shares are convertible into shares
of the Company's common stock, par value $1.00 per share (the "Common Stock");"
(b) The Preamble of the Registration Rights Agreement is hereby amended to
add a new third paragraph to read as follows:
"WHEREAS, pursuant to an Acceleration and Exchange Agreement (the
"Acceleration Agreement"), dated as of June 5, 1997, the Company has agreed to
issue (i) 800,000 shares of the Company's Class B Convertible Preferred Stock,
issuable in denominations of $50 stated value per share, dividends on which may
be paid in additional shares of such preferred stock (collectively, the "Class B
Preferred Shares," and collectively with the Class A Preferred Shares, the
"Preferred Shares"), which Class B Preferred Shares are convertible into shares
of Common Stock, and (ii) up to 2,000,000 shares of Common Stock under certain
circumstances (such
<PAGE>
shares of the Common Stock, together with shares of Common Stock into which the
Preferred Shares are convertible and shares of Common Stock which may be issued
as dividends on the Preferred Shares, the "Common Shares" and, collectively with
the Preferred Shares, the "Securities");
Section 2. DEFINITIONS. The definition of the term "Registrable
Securities" in Section 1.1 of the Registration Rights Agreement is hereby
amended to read as follows:
""REGISTRABLE SECURITIES" shall mean any Securities issued at any time to
any of the Purchasers pursuant to the Purchase Agreement or the Acceleration
Agreement and any Securities issued at any time as dividends upon or on
conversion of any of the Securities. As to any proposed offer or sale of
Registrable Securities, such securities shall cease to be Registrable Securities
with respect to such proposed offer or sale when (i) a registration statement
with respect to the sale of such securities shall have become effective under
the Securities Act and such securities shall have been disposed of in accordance
with such registration statement or (ii) such securities are permitted to be
disposed of pursuant to Rule 144(k) (or any successor provision to such Rule)
under the Securities Act as confirmed in a written opinion of counsel to the
Company addressed to the Holders, or (iii) such securities shall have been
otherwise transferred pursuant to an applicable exemption under the Securities
Act, new certificates for such securities not bearing a legend restricting
further transfer shall have been delivered by the Company and such securities
shall be freely transferable to the public without registration or qualification
under the Securities Act or any state securities or blue sky law then in place.
Section 3. MISCELLANEOUS.
(a) NOTICES. Any notice under or relating to this Amendment shall be
given in writing and shall be deemed sufficiently given when delivered by hand
or by conformed facsimile transmission, on the second business day after a
writing is consigned (freight prepaid) to a commercial overnight courier, and on
the fifth business day after a writing is deposited in the mail, postage and
other charges prepaid, addressed as follows:
Trefoil II: 4444 Lakeside Drive
Burbank, California 91505
Attention: Mr. Geoffrey T. Moore
Telecopy: (818) 842-3142
with a copy to: Fried, Frank, Harris, Shriver & Jacobson
350 South Grand Avenue
Los Angeles, California 90071
Attention: David K. Robbins, Esq.
Telecopy: (213) 473-2222
2
<PAGE>
GEI: GE Investment Management Incorporated
3003 Summer Street
Stamford, Connecticut 06904
Attention: Michael Pastore, Esq.
Telecopy: (203) 326-4177
with a copy to: Dewey Ballantine
1301 Avenue of the Americas
New York, New York 10019
Attention: Sanford W. Morhouse, Esq.
Telecopy: (212) 259-6333
the Company: Chief Executive Officer
The Grand Union Company
201 Willowbrook Boulevard
Wayne, NJ 07470-0966
Telecopy: (201) 890-6012
with a copy to: General Counsel
The Grand Union Company
201 Willowbrook Boulevard
Wayne, New Jersey 07470-0966
Telecopy: (201) 890-6012
and
Davis Polk & Wardwell
450 Lexington Avenue
New York, NY 10017
Attn: William L. Rosoff, Esq.
Telecopy: (212) 450-4800
and
Fried, Frank, Harris, Shriver & Jacobson
350 South Grand Avenue
Los Angeles, California 90071
Attention: David K. Robbins, Esq.
Telecopy: (213) 473-2222
and
3
<PAGE>
Dewey Ballantine
1301 Avenue of the Americas
New York, New York 10019
Attention: Sanford W. Morhouse, Esq.
Telecopy: (212) 259-6333
or to such other address or facsimile number as either party may, from time to
time, designate in a written notice given in like manner.
(b) BINDING EFFECT. The provisions of this Amendment shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors, assigns, heirs, and personal representatives.
(c) MODIFICATION. This Amendment may only be modified by a written
instrument duly executed by each party hereto.
(d) WAIVER. Any waiver by either party of a breach of any provision
of this Amendment shall not operate as or be construed to be a waiver of any
other breach of such provision or of any breach of any other provision of this
Amendment. Any waiver of any provision of this Amendment must be in writing.
(e) HEADINGS. The headings to the sections of this Amendment are
inserted for convenience only and shall not constitute a part hereof or affect
in any way the meaning or interpretation of this Amendment.
(f) SEPARABILITY. If any provision of this Amendment is invalid,
illegal or unenforceable, the balance of this Amendment shall remain in effect,
and if any provision is inapplicable to any person or circumstance, it shall
nevertheless remain applicable to all other persons and circumstances.
(g) COUNTERPARTS. This Amendment may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
(h) GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York applicable to
contracts executed and to be fully performed within the State of New York.
4
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Amendment No. 1 to
the Registration Rights Agreement dated as of July 30, 1996 as of the date first
written above.
TREFOIL CAPITAL INVESTORS II, L.P.
By: Trefoil Investors II, Inc.
its general partner
By: /s/ Michael J. McConnell
--------------------------------
Name: Michael J. McConnell
Title: Vice President
GE INVESTMENT PRIVATE PLACEMENT PARTNERS II,
A LIMITED PARTNERSHIP
By: GE INVESTMENT MANAGEMENT
INCORPORATED, its general partner
By: /s/ Don W. Torey
------------------------------------
Name: Don W. Torey
Title: Executive Vice President
THE GRAND UNION COMPANY
By: /s/ Jeffrey P. Freimark
--------------------------------------
Name: Jeffrey P. Freimark
Title: Executive Vice President,
Chief Financial Officer and
Chief Administrator Officer
<PAGE>
Exhibit 21.1
The Grand Union Company
Subsidiary Listing
Grand Union Stores of New Hampshire, Inc.
Grand Union Stores of Vermont
Merchandising Services, Inc.
Specialty Merchandising Services, Inc.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from the company's
consolidated financial statements and is qualified in its entirety by reference
to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-29-1997
<PERIOD-START> MAR-31-1996
<PERIOD-END> MAR-29-1997
<CASH> 34,119
<SECURITIES> 0
<RECEIVABLES> 17,975
<ALLOWANCES> 0
<INVENTORY> 131,409
<CURRENT-ASSETS> 197,829
<PP&E> 910,820
<DEPRECIATION> 446,643
<TOTAL-ASSETS> 1,060,839
<CURRENT-LIABILITIES> 172,640
<BONDS> 600,063
65,000
0
<COMMON> 100
<OTHER-SE> (153,310)
<TOTAL-LIABILITY-AND-EQUITY> 1,060,839
<SALES> 2,312,673
<TOTAL-REVENUES> 2,312,673
<CGS> 1,606,926
<TOTAL-COSTS> 1,606,926
<OTHER-EXPENSES> 780,755
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 105,823
<INCOME-PRETAX> (180,831)
<INCOME-TAX> (2,523)
<INCOME-CONTINUING> (183,354)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (185,354)
<EPS-PRIMARY> (18.54)
<EPS-DILUTED> 0
</TABLE>
