<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 23, 1995
FOODARAMA SUPERMARKETS, INC.
(Exact name of registrant as specified in charter)
New Jersey 1-5745 21-0717108
(State or other jurisdiction (Commission (IRS Employer
of incorporation) file number) Identification No.)
Building 6, Suite 1, 922 Highway 33, Freehold, New Jersey 07728
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code:(908) 462-4700
<PAGE>
Item 5. Other Events
On May 23, 1995 the Registrant sold its two operating supermarket
locations in Pennsylvania. While, the assets sold represent less
than 10% of total assets, the Registrant deemed this sale to be
of importance. The following documents give the details of the
transaction.
1. Asset purchase Agreement, dated April 20, 1995, among
Foodarama Supermarkets, Inc., Shop Rite of Reading, Inc., as
Seller, and Wakefern Food Corp. as Buyer.
2. Amendment No. 1, dated May 24, 1995, to Asset Purchase
Agreement.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
FOODARAMA SUPERMARKETS, INC.
By:\S\ Michael Shapiro
Michael Shapiro
Senior Vice President
Date: July 27, 1995
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ASSET PURCHASE AGREEMENT
By and Among
FO ODARAMA SUPERMARKETS, INC.,
a New Jersey corporation,
an d
SH OP RITE OF READING, INC.,
a Pennsylvania corporation,
as Seller
an d
WA KEFERN FOOD CORP.,
a New Jersey corporation,
as Buyer
April 20, 1995
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
SALE AND TRANSFER OF ASSETS
1.1. Sale and Transfer of Assets....... 2
1.2. Purchase Price . . . . . . . . . . 4
ARTICLE II
ASSUMPTION OF LIABILITIES
2.1. Assumption of Liabilities.................... 5
2.2. Accrued Amounts and Reimbursement ................... 6
ARTICLE III
THE CLOSING
3.1. The Closing.......................................... 7
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
4.1. Organization, Standing and Qualification......... 8
4.2. Authorization of Agreement....................... 8
4.3. Corporate Records................................ 9
4.4. Consents of Third Party.......................... 9
4.5. Financial Information............................ 9
4.6. Tax Matters...................................... 9
4.7. Compliance with Laws............................. 10
4.8. Litigation....................................... 11
4.9. Leases........................................... 11
4.10. Contracts........................................ 13
4.11. Titles to and Use of Properties; Absence of
Liens............................................ 14
4.12. Inventory........................................ 14
4.13. Employee Benefits; ERISA Matters................. 14
4.14. Labor Matters.................................... 17
4.15. Environmental Matters............................ 18
4.16. Insurance........................................ 21
4.17. Affiliate Transactions........................... 21
i
Page
4.18. Absence of Certain Events; No Material Adverse
Change........................................... 22
4.19. Full Disclosure.................................. 22
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
5.1. Organization.................................... 23
5.2. Authorization Of Agreement...................... 23
5.3. Consents of Third Parties....................... 23
ARTICLE VI
FURTHUR AGREEMENTS OF THE PARTIES
6.1. Conduct of the Business Pending the Closing...... 24
6.2. Covenants of Buyer............................... 27
6.3. Access to Information............................ 27
6.4. Publicity........................................ 28
6.5. Casuality or Destruction or Condemnation......... 28
6.6. Furthur Covenants of Seller...................... 30
ARTICLE VII
CONDITIONS TO CLOSING
7.1. Conditions Precedent to Obligations of Buyer..... 30
7.2. Conditions Precedent to Obligations of Seller.... 33
ARTICLE V111
INDEMNIFICATION
8.1. Survival........................................ 34
8.2. Indemnification by Seller....................... 34
8.3. Indemnification by Buyer........................ 35
8.4. Indemnification Procedures...................... 35
8.5. Determination of Damages and Related Matters.... 36
ii
Page
ARTICLE IX
TERMINATION
9.1. Termination....................................... 36
ARTICLE X
MISCELLANEOUS
10.1. Expenses......................................... 36
10.2. Absence of Brokers............................... 37
10.3. Waiver........................................... 37
10.4. Transfer of Taxes................................ 37
10.5. Bulk Sales Requirements.......................... 37
10.6. Notices.......................................... 37
10.7. Governing Law.................................... 38
10.8. Counterparts..................................... 38
10.9. Headings......................................... 38
10.10. Severability..................................... 38
10.11. Entire Agreement................................. 39
10.12. Amendment and Modification....................... 39
10.13. Binding Effect; Benefits......................... 39
10.14. Assignability.................................... 39
iii
LIST OF EXHIBITS AND SCHEDULES
Exhibit A Form of Assumption Agreement
Exhibit B [Intentionally Omitted]
Exhibit C [Intentionally Omitted]
Schedule 1 The Allentown Store
Schedule 2 The Bethlehem Store
Schedule 3 The Leases
Schedule 4 The Fixed Assets
Schedule 5 The Contracts
Schedule 6 Licenses
Schedule 7 Inventory Percentages
Schedule 8 Allocations
Schedule 4.4 Third Party Consents
Schedule 4.5 Financial Statements
Schedule 4.11 Liens
Schedule 4.13 ERISA Matters
Schedule 4.14(a) Labor Matters
Schedule 4.14(b) Union Contracts
Schedule 4.14(e) Employee Complaints, Charges and Claims
Schedule 4.14(g) Certain Employees
Schedule 4.16 Insurance
Schedule 4.17 Affiliate Transactions
Schedule 6.6 Credit Support for Leases
iv
ASSET PURCHASE AGREEMENT
AGREEMENT made and entered into on this 20th day of
April, 1995, by and among FOODARAMA SUPERMARKETS, INC., a New
Jersey corporation (IIFSI"), SHOP RITE OF READING, INC., a
Pennsylvania corporation and a wholly owned subsidiary of FSI
("SRRI" and, together with FSI, the "Seller"), and WAKEFERN FOOD
CORP., a New Jersey corporation (the "Buyer").
WITNESSETH:
WHEREAS, Seller currently owns and operates (a) a
supermarket located in Allentown, Pennsylvania, which is more
particularly described on Schedule 1 hereto (the "Allentown
Store"), and (b) a supermarket located in Bethlehem,
Pennsylvania, which is more particularly described on Schedule 2
hereto (the "Bethlehem Store" and, together with the Allentown
Store, the "Stores", and each, a "Store"); and
WHEREAS, Seller desires to sell, assign and transfer to
Buyer, and Buyer desires to purchase from Seller, all of Seller's
right, title and interest in the Stores and the machinery,
equipment, inventory, leasehold interests and other tangible and
intangible assets used in or necessary to the operation of the
Stores (the "Business"), as more particularly described in Section
1 below, on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and of
the mutual agreements and covenants contained herein, the parties
hereto hereby agree as follows:
ARTICLE I
SALE AND TRANSFER OF ASSETS
1.1. Sale and Transfer of Assets. Upon the terms and
subject to the conditions hereinafter set forth, on the Closing
Date (as hereinafter defined), Seller shall sell, transfer,
assign and deliver to Buyer, and Buyer shall purchase and acquire
from Seller, all of Seller's right, title and interest in, to and
under the Stores and all of the assets, properties, rights,
contracts and operations of Seller related to or necessary for
the ownership or operation of the Business (collectively, the
"Store Assets") including, without limitation, the following:
(a) all of Seller's and its subsidiaries' right, title
and interest, as lessee, in, to and under the leases (each a
"Lease" and collectively the "Leases") of each of the Stores,
including, without limitation, Seller's rights to amounts
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previously deposited by Seller with the respective lessors under
the Leases as security for Seller's obligations thereunder (all
of such Leases being specifically listed on Schedule 3 hereto);
provided, however, that with respect to the Lease for the
Allentown Store, Seller's interest therein shall be conveyed to
Buyer pursuant to the Sublease Agreement (as such term is defined
in Section 7.1(d) hereof);
(b) all of the leasehold improvements, fixtures,
furniture, machinery, equipment, display cases, cash registers,
shopping carts, shopping baskets and other tangible personal
property owned by Seller or its subsidiaries, as the case may be,
and located in each of the Stores (collectively, the "Fixed
Assets"), including those listed on Schedule 4 hereto;
(c) all expendable supplies (including, but not
limited to, paper and plastic bags and other packaging and
wrapping materials, lightbulbs, maintenance and cleaning
materials and blank cash register tapes) located in each of the
Stores (collectively, the "Supplies");
(d) all merchandise inventories, perishable and non-
perishable, located in each of the Stores (collectively, the
"Inventory") ;
(e) all of Seller's and its subsidiaries, rights in,
to and under the equipment leases, lease/purchase financing
agreements, service contracts and other agreements relating to
the operation of each of the Stores and the Business listed on
Schedule 5 hereto (collectively, the "Contracts");
(f) all of Seller's rights in, to and under all
licenses, consents, permits, certificates (including the
certificates of occupancy for each Store), approvals, orders,
registrations, exemptions, variances, consents and other
authorizations relating to the ownership, occupancy, use and
operation of each of the Stores and the Business and the conduct
of a pharmacy business at each of the Stores, all of which are
more particularly described on Schedule 6 hereto (collectively,
the "Licenses"). Seller shall use its best efforts to, and will
cooperate with Buyer in any reasonable arrangement requested by
Buyer designed to, obtain all approvals, consents and waivers
necessary to transfer to Buyer such Licenses and any claim, right
or benefit arising thereunder or resulting therefrom;
(g) all store and office procedural manuals relating to
the operation of the Business at the Stores and all personnel
manuals, written statements of personnel policy and employee
records (or copies thereof) with respect to employees of Seller
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(i)in an executive or buying capacity with respect to the
Seller's supermarket business and (ii) at each of the Stores
(collectively, the "Records"); and
(h) all cash and United States postage stamps located
at each of the Stores (collectively, the "Cash"). -
1.2.Purchase Price.
(a)Store Assets Purchase Price. The purchase price
(subject to reduction as set forth herein and in Section 2.2
hereof) to be paid to Seller by Buyer for the Store Assets (the
"Purchase Price") shall be equal to and payable as follows:
(i) delivery of $5,700,000 in U.S. dollars on the
Closing Date by wire transfer of immediately available funds
to the bank account designated by Seller (the "Seller's
Account");
(ii) delivery on the Closing Date, by wire
transfer of immediately available funds to the Seller's
Account, U.S. dollars in an amount equal to the value of the
Inventory and Supplies located at the Stores as of the
Closing Date, as determined as provided in Section 1.2(b)
hereof; and
(iii) delivery on the Closing Date by wire
transfer of immediately available funds to the Seller's
Account U.S. dollars in an amount equal to the amount of
Cash located at the Stores on the Closing Date.
Notwithstanding anything to the contrary in this
Section 1.2(a), the Purchase Price and the amount of cash to be
delivered to Seller by Buyer pursuant to this Section 1.2(a)
shall be reduced by an amount equal to the sum of the aggregate
amount of all invoices from Buyer to Seller for products and
services pertaining to the Stores provided by Buyer to Seller
which have been received by Seller but not paid for by Seller
prior to the Closing.
(b) Inventory Valuation. RGIS Inventory Specialists
and/or any other inventory evaluation service selected by Buyer
and reasonably acceptable to Seller (collectively, 'IRGIS'l) shall
take a physical count of the Inventory and Supplies. The fees
for the services of RGIS shall be borne equally by Buyer and
Seller. Representatives of RGIS shall take the physical
inventory in each Store immediately following the close of
business on the Saturday or Sunday (at Seller's discretion)
immediately preceding the Closing Date. A copy of the physical
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inventory shall be furnished to Buyer and Seller who agree
promptly to determine the value thereof based on the following
calculations:
(i) all Supplies and all items of Inventory
classified as(A) perishable (namely, food products
registered atcash registers in the Stores as "meat-
backroom", "fish", "cheese", "bakery ingredient", "produce"
(including salad bar products) and "delicatessen") and (B)
drugs, other than filled prescription drugs, shall be valued
at Seller's actual cost thereof as determined by reference
to Seller's purchase records; and
(ii) items of Inventory other than those referred
to in clause (i) above shall be valued by multiplying (A)
Seller's normal retail selling price for such items of
Inventory by (B) the applicable percentages set forth in
Schedule 7 hereto opposite such items.
Notwithstanding the foregoing, any unsaleable Inventory
as determined by Buyer in accordance with reasonable industry
standards, including, but not limited to, out-of-code products,
out-of-date products and damaged products, as well as any
Supplies that are broken, damaged or otherwise unusable, shall be
assigned no value and shall be processed in accordance with
Buyer's Reclaimation Program, a copy of which has previously been
delivered to FSI, and any amounts received by Buyer pursuant
thereto shall be promptly paid by Buyer to Seller.
(c) The Purchase Price shall be allocated among the
various categories of the Assets as set f orth on Schedule 8
hereto. Seller and Buyer agree to prepare and file all federal,
state and local tax returns and other filings reflecting the
transactions contemplated by this Agreement on a basis consistent
with such allocation.
ART ICLE II
ASS UMPTION OF LIABILITIES
2.1. Assumption of Liabilities. On and effective as
of the Closing Date, Buyer shall assume and agree to perform and
discharge when due those liabilities and obligations of Seller or
any of its subsidiaries, as the case may be, to be performed or
discharged from and after the Closing Date under those of the
Leases, the Contracts and the Licenses that are assigned,
subleased and transferred to Buyer pursuant to this Agreement and
only under such Leases, Contracts and Licenses (collectively, the
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"Assumed Liabilities"). Buyer shall not assume or incur, and
Seller shall remain fully liable to pay, perform and discharge,
all liabilities and obligations of Seller or otherwise related to
the Stores or the Store Assets other than the Assumed Liabilities
(the "Excluded Liabilities"), including, without limitation,
those (a) arising out of or resulting from any and all operations
of Seller prior to the Closing Date (including those relating to
merchant association dues, utility bills, the employment, failure
to employ or termination of employment of any individual with
respect to the Business, employee compensation and benefit
arrangements, plans, programs, policies, practices or agreements,
including accrued vacation pay and accrued sick pay, and any and
all liabilities, including withdrawal liabilities, and expenses
under the Employee Benefit Plans and Multiemployer Plans (as
defined in Section 4.13 hereof)), (b) to be performed or
discharged by Seller under the Leases, the Contracts and the
Licenses prior to the Closing Date but not theretofore performed
or discharged, and (c) to be performed or discharged by Seller on
or subsequent to the Closing Date and not expressly assumed by
Buyer pursuant hereto, including without limitation, all
liabilities and obligations (i) with respect to federal, state
and local taxes of every kind and character, (ii) with respect to
pending or threatened litigation, whether or not disclosed to
Buyer, including accrued fees and expenses, if any, of counsel in
respect thereof, (iii) for any violation by Seller or any of the
Stores of any statute, ordinance, regulation, order, judgment or
decree, and (iv) for the payment of any brokers' commissions,
finder's fees, investment banking fees or legal or accounting
fees (other than such fees of Buyer) accrued and payable with
respect to the sale of the Store Assets to Buyer.
2.2. Accrued Amounts and Reimbursement. Seller
expressly understands and agrees that Buyer shall not assume or
become liable for any obligations, liabilities or indebtedness of
Seller or otherwise related to the Stores or the Store Assets,
except for the Assumed Liabilities. At the Closing, Buyer and
Seller shall make appropriate adjustments, apportionments and
prorations as of the midnight on the day immediately prior to the
Closing Date with respect to taxes payable pursuant to or as
required by the Leases and utility, common area charges, fees and
fuel payments, if any, relating to the Stores and accrued and
unpaid amounts as of the Closing Date under the Leases, Contracts
and Licenses to be assumed hereunder by Buyer, which accrued and
unpaid amounts (collectively, the "Accrued Amounts"), shall be
deducted from the Purchase Price and paid when due by Buyer. If
after the Closing Date any amounts of any nature (including,
without limitation, rents and fees, conunon area charges, utility
charges and taxes), other than the Accrued Amounts, shall become
payable under the Leases or with respect to the Stores for
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periods prior to the Closing Date, then Buyer shall send a notice
or notices thereof to Seller which describe such amounts in
reasonable detail and Seller shall remit payment of such amounts
to Buyer promptly following the receipt of such notice or
notices. If Buyer obtains a refund of any amount Seller had paid
to the landlords under the Leases on account of estimated charges
and fees accrued prior to the Closing Date, other than the
Accrued Amounts, then Buyer shall promptly remit such refund to
Seller.
ARTICLE III
THE CLOSING
3.1. The Closing. (a) Subject to the satisfaction of
each of the conditions set forth in Article VII (or the waiver
thereof by the party entitled to waive such conditions), the
closing ("Closing") of the sale and purchase of the Store Assets
shall take place at the offices of Weil, Gotshal & Manges, 767
Fifth Avenue, New York, New York 10153 at 10:00 A.M. on May 15,
1995, or on such other date and time or at such other place as
may be agreed to in writing by the parties hereto; provided,
however, that in no event shall the Closing be held on any date
after May 31, 1995, unless agreed to in writing by the parties
hereto (the "Closing Date"). The following action shall be taken
at the Closing:
(b) At the Closing, each party hereto shall execute
and deliver to the other party hereto such further instruments
and documents, in form and substance reasonably satisfactory to
such other party, as may be necessary or appropriate to
consummate the transactions contemplated hereby and by the other
Buyer Documents and Seller Documents (each as defined below),
including, without limitation, all such instruments and documents
set forth in Article VII.
(c) Within ten business days after the Closing Date,
Buyer shall pay to Seller, without interest, an amount in respect
of Inventory and Supplies equal to the difference, if any,
between the actual value of the Inventory and Supplies as of the
Closing Date (as determined pursuant to Section 1.2(b) hereof and
after giving effect to any post-closing reconciliation thereof)
and the amount paid to Seller pursuant to Section 1.2(a)(ii)
hereof. If the parties cannot agree on the amount owed to Seller
in respect of the Inventory and Supplies, if any, the matter
shall be submitted to an arbitrator for his/her final and binding
resolution.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer as
follows:
4.1. Organization. Standing and Oualification. Each
of FSI and SRRI is a corporation duly organized, validly existing
and in good standing under the laws of the States of New Jersey
and Pennsylvania, respectively, and has full corporate power and
authority to enter into this Agreement and each of the other
agreements, documents and instruments to be delivered by Seller
pursuant hereto (together with this Agreement, the "Seller
Documents") and to own, operate and lease its properties and
carry on its business as now being conducted and to perform the
transactions contemplated hereby and thereby. Seller is duly
licensed and qualified to do business and is in good standing in
each jurisdiction where the nature of the Business or properties
or assets owned or leased by Seller in connection with the
Business requires it to be so licensed and qualified.
4.2. Authorization of Agreement. The execution and
delivery of this Agreement and each other Seller Document and the
performance of the transactions contemplated hereby and thereby
have been duly authorized by all necessary corporate action of
FSI and all necessary corporate and shareholder action of SRRI.
This Agreement and each other Seller Document have been duly
executed and delivered by Seller. This Agreement and each other
Seller Document constitutes the legal, valid and binding
obligation of Seller enforceable against it in accordance with
their respective terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors, rights in general and
subject to general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at
law). The Bill of Sale (as defined in Section 7.1(f)), when
executed and delivered by Seller, will vest in Buyer all of
Seller's right title and interest in and to the Store Assets,
free and clear of all liens, charges, mortgages, pledges,
imperfections of title, security interests, restrictions, prior
assignments, levies, conditional sale or title retention
contracts, encumbrances and claims of any kind or nature
whatsoever (each, a "Lien" and collectively, "Liens").
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4.3. Corporate Recording. The copies of the
certificate of incorporation and by-laws of Seller that have been
delivered to Buyer are true, complete and correct, and the minute
books of Seller that have been exhibited to Buyer are true,
complete and correct and reflect all material action taken by
Seller's board of directors and shareholders.
4.4. Consents of Third Parties. Subject to receipt of
the consents and approvals referred to in Schedule 4.4 (the
"Consents"), the execution and delivery of this Agreement and
each other Seller Document, the performance by Seller of its
obligations hereunder and thereunder and the consummation of the
transactions contemplated hereby or thereby will not (a) violate
or conflict with the certificate of incorporation or by-laws of
Seller, (b) conflict with, or result in the breach or termination
of or acceleration under, or result in the creation of any lien,
charge or encumbrance upon any of the properties or assets of
Seller, or constitute a default or require any approval, waiver
or consent under, any lease, agreement, commitment or other
instrument, or any order, judgment or decree, to which Seller is
a party or by which Seller or any of its properties or assets may
be bound, or (c) constitute a violation of any Law (as defined in
Section 4.7), including any Environmental Law (as defined in
Section 4.15) applicable to Seller or any of its properties.
Except for the Consents, no consent, registration, application,
approval, permit, license or authorization of, or designation,
declaration or filing with, any public or governmental authority
is required on the part of Seller in connection with the
execution and delivery of this Agreement or any other Seller
Document or the consummation of the transactions contemplated
hereby or thereby.
4.5. Financial Information. The audited consolidated
balance sheet (and the related notes and schedules thereto) of
FSI as of October 29, 1994, and the unaudited consolidated
balance sheet (and the related notes and schedules thereto) of
FSI as of January 28, 1995, and in each case the related
statements of income and cash flows (each as attached as Schedule
4.5) fairly present the financial position of FSI at such date
and the results of operations and cash flows for the periods
covered thereby, in each case, in conformity with generally
accepted accounting principles consistently applied, except in
the case of the interim statements for normal year-end audit
adjustments.
4.6. Tax Matters. (a) Seller has (i) filed when due
with the appropriate federal, state, local, foreign and other
governmental agencies, all tax returns, estimates, reports and
statements required to be filed by it, and (ii) paid when due and
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payable all requisite federal, state, local and foreign taxes,
charges, fees, imposts, levies or other assessments, including,
without limitation, all net income, franchise, profits, gross
receipts, capital, sales, use, ad valorem, value added, transfer,
transfer gains, inventory, capital stock, license, withholding,
payroll, employment, social security, unemployment, excise,
severance, stamp, occupation, real or personal property and
estimated taxes, customs duties, fees, assessments and charges of
any kind or nature whatsoever, together with any interest and any
penalties, fines, additions to tax or additional amounts thereon
and any transferee liability with respect thereof ("Taxes").
True and complete copies of all Federal and Pennsylvania tax
returns of Seller for taxable periods since October 31, 1992 have
been delivered to Buyer, and the Taxes shown due on such returns
have been paid. There are no Taxes claimed in writing to be due
from Seller by any authority or otherwise which are not fully
reserved for on the financial statements referred to in Section
4.5. Seller has withheld any and all Taxes required to be
withheld under all applicable federal, state, local and foreign
tax laws and regulations, and such withholdings have either been
paid to the respective governmental agencies or set aside in
accounts for such purpose.
(b) Since October 31, 1992, none of the tax returns of
Seller have been reviewed or audited by the Internal Revenue
Service (the "IRS") or any other applicable taxing authority.
Seller has not executed or filed with the IRS or any other taxing
authority any agreement or other document extending, or having
the effect of extending, the period of assessment or collection
of Taxes.
(c) None of the Store Assets is "tax-exempt use
property" within the meaning of Section 168(j) of the Internal
Revenue Code of 1986 (the "Code") nor property that Buyer will be
required to treat as being owned by another person pursuant to
the provision of Section 168(f) of the Code.
(d) Seller has not executed or entered into and will
not enter into a closing agreement pursuant to Section 7121 of
the Code or any predecessor provision thereof or any similar
provision of state or local law that relates to the Store Assets
or operations carried on at the Stores.
4.7. Compliance with Laws. The Business has been and
is presently being conducted and the products sold at the Stores
by Seller have been and are presently being sold in compliance
with all applicable federal, state, foreign and local ordinances,
statutes, regulations, rules and laws (collectively, "Laws"),
except for such non-compliance as is not reasonably likely to
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have a material adverse effect on the business, prospects,
condition (financial or otherwise), assets or results of
operations of any of the Store Assets or the Stores (a "Material
Adverse Effect"). Each License is in full force and effect, no
violations are or have been recorded in respect of any License,
and no proceeding is pending or threatened, to revoke, suspend or
limit any License. None of the Licenses will be revoked, invali-
dated, violated or otherwise adversely affected by the
transactions contemplated hereby.
4.8. Litigation. There are no judicial,
administrative or arbitral actions, suits, claims, inquiries,
investigations or proceedings (public or private) pending or
threatened against Seller or any of the Store Assets or either of
the Stores which, if adversely determined, could have a Material
Adverse Effect or could otherwise prevent, impair, hinder or
delay the consummation of the transactions contemplated by this
Agreement or any other Seller Document. There are no existing or
threatened orders, judgments or decrees of any court or
governmental agency against Seller that have not been fully
performed.
4.9.Leases. (a) Schedule 3 sets forth a complete
list of the Leases for the two Store locations (the
Properties"), including any modifications, amendments or
supplements to such Leases.
(b) True, complete and correct copies of the Leases,
including any non-disturbance agreements relating thereto, have
been delivered to Buyer by Seller. Except as set forth on
Schedule 4.11, the Leases have not been, and will not prior to
the Closing be, modified, amended, supplemented, assigned or
encumbered and each Lease is valid, binding and in full force and
effect, in each case free and clear of any Lien of any kind.
(c) There is no default under any Lease by Seller or
any subsidiary of Seller, or, to the best knowledge of Seller
after due inquiry, by any other party thereto, and no event has
occurred which, with notice, lapse of time or both, would
constitute a default thereunder. No previous or current party to
any such Lease has furnished notice of or made a claim with
respect to any breach or default thereunder.
(d) The lessor under each Lease has fully and
faithfully performed all of the terms, covenants and conditions
on its part to be performed under such Lease and Seller has not
received any notice from any such lessor of such lessor's
intention to exercise any option thereunder, the exercise of
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which could adversely affect or terminate Seller's use and
occupancy of the Property that is the subject of the Lease.
(e) With respect to those Leases that were assigned or
subleased to Seller or a subsidiary of Seller by a third party,
all necessary consents to such assignments or subleases have been
obtained and are in full force and effect and neither Seller nor
such subsidiary has received any notice that any such third
party's acts or omissions has given rise to any breach of the
underlying lease or sublease to which it is a party.
(f) Each Property complies with all applicable Laws,
including without limitation zoning, fire, safety and signage,
except for such non-compliance as is not reasonably likely to
have a Material Adverse Effect and no notice of violation of any
such Law has been received by Seller or has been issued by any
public or governmental authority with respect to any Property.
(g) No portion of or interest in any Property is
subject to any building or use restrictions (public or otherwise)
that could restrict or prevent the continuation of the present
use and operation of such Property as a supermarket (which may,
where applicable, sell and distribute pharmaceutical products).
No condemnation or eminent domain proceedings are pending or
threatened with respect to any Property that is subject of a
Lease.
(h) All of the Properties, and all components of all
improvements included within the Properties, including, without
limitation, the roofs and structural elements thereof and the
heating, ventilation, air conditioning, plumbing, electrical,
mechanical, sewer, waste water, storm water, paving and parking
equipment, systems and facilities included therein, are in
sufficient condition, working order and repair and do not require
repair or replacement in order to serve their intended purpose.
All water, gas, electrical, steam, compressed air, telecommuni-
cation, sanitary and storm sewage lines and systems and other
similar systems serving the Properties are installed and
operating and are sufficient to enable the Properties to continue
to be used and operated in the manner currently being used and
operated. Seller or a subsidiary of Seller has made all repairs
and replacements required under the Leases to be made by Seller
or such subsidiary.
(i) No Property is dependent for its access, operation
or utility on any land, building or other improvement not part of
the Property, except pursuant to an easement that is coterminous
with Seller's occupancy right. Each Property has legal,
unobstructed access, both pedestrian and vehicular, to public
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rights of way. All utility systems required in connection with
use, occupancy and operation of each Property are sufficient for
their present purposes, are fully operational and in working
order, and are benefitted by customary utility easements
providing for the continued use and maintenance of such systems.
(j) Except as set forth on Schedule 4.11 and other
than options, rights of first refusal or other similar
arrangements in favor of Seller or a subsidiary of Seller under
the Leases, which neither Seller nor such subsidiary has
exercised as of the date hereof, neither Seller nor such
subsidiary has entered into any contract, arrangement or
understanding with respect to the future ownership, development,
use, occupancy or operation of any of the Properties.
(k) No termination rights have been exercised by any
landlords with respect to the Leases.
(1) The lessors under the Leases have not encumbered
the Properties by any Lien to which the Leases are subordinate,
except for Liens where the holder thereof has entered into a non-
disturbance agreement with Seller as required under the Leases.
Such non-disturbance agreements are in full force and effect and
shall inure to the benefit of Buyer as assignee of the Lease for
the Bethlehem Store and sublessee of the Lease for the Allentown
Store.
4.10. Contracts.
(a) Schedule 5 sets forth a complete list of the
Contracts, including any modifications, amendments or supplements
thereto and any assignments thereof. True, complete and correct
copies of the Contracts have been delivered to Buyer by Seller.
The Contracts have not been modified, amended, supplemented,
assigned or encumbered except as provided on Schedules 5 or 4.11.
(b) Each of the Contracts is valid, binding, in full
force and effect and enforceable in accordance with its terms.
(c) There is no default under any Contract by Seller
or any subsidiary of Seller, or, to the knowledge of Seller after
due inquiry, by any other party thereto, and no event has
occurred which, with notice, lapse of time or both, would
constitute a default thereunder. No previous or current party to
any Contract has furnished notice of or made a claim with respect
to any breach or default thereunder.
(d) Each other party under each Contract has fully and
faithfully performed all of the terms, covenants and conditions
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on its part to be performed under such Contract and neither
Seller nor a subsidiary of Seller has received any notice from
any such party of such party's intention to exercise any option
thereunder, the exercise of which could adversely affect or
terminate Seller's use of the Store Assets that are subject to
the Contract.
(e) With respect to those Contracts that were assigned
or subleased to Seller or a subsidiary of Seller by a third
party, all necessary consents to such assignments or subleases,
as the case may be, have been obtained and are in full force and
effect and neither Seller nor such subsidiary has received any
notice that any such third party's acts or omissions has given
rise to any breach of the underlying contract, lease or sublease
to which it is a party.
4.11. Title to and Use of Properties; Absence of
Liens. Seller owns or has the right to use all tangible and
intangible personal property used in the operation of the Stores.
Except as set forth on Schedule 4.11, there are no Liens on any
of the Store Assets as of the date hereof. Seller has good and
marketable title to and, subject to obtaining the Consents,
unrestricted power to sell, all of the Store Assets to Buyer, and
on the Closing Date Seller shall deliver to Buyer title to the
Store Assets, including, without limitation, all of the Fixed
Assets, free and clear of all Liens and, on the Closing Date, no
unreleased Lien or other instrument encumbering any of the Store
Assets shall have been recorded, filed, executed or delivered.
Upon the acquisition of the Store Assets by Buyer pursuant to the
provisions of this Agreement, Buyer shall possess the assets
sufficient to conduct a supermarket business (and, where
applicable, to sell and distribute pharmaceutical products) at
each of the Stores to the full extent such business was conducted
by Seller during the six month period immediately preceding the
Closing Date without having to acquire or utilize any additional
property or asset. All Fixed Assets are in good and safe
operating order, condition, maintenance and repair (subject to
wear and tear from ordinary use), and are suitable for the
purposes on behalf of which used.
4.12. Inventory. The Inventory is in good and
marketable condition, and is and will be saleable in the ordinary
course of business.
4.13.Employee Benefits; ERISA Matters.
(a) Schedule 4.13 hereto sets forth a true, complete
and correct list of all "employee benefit plans", as defined in
Section 3(3) of the Employee Retirement Income Security Act of
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1974, as amended (IIERISAII), and any other pension plans or
employee benefit arrangements or payroll practices (including,
without limitation, severance pay, vacation pay, company awards,
salary continuation for disability, sick-leave, deferred
compensation, bonus or other incentive compensation, stock
purchase arrangements or policies) maintained by Seller, or any
trade or business (whether or not incorporated) which is under
common control with Seller or which is treated as a single
employer with Seller under Section 414(b), (c), (m), or (o) of
the Code (an NERISA Affiliate,,) (or to which Seller or any ERISA
Affiliate contributes or is otherwise required to contribute
thereunder) with respect to (i) salaried and non-salaried
employees involved in the operation of the Business of Seller, or
(ii) any ERISA Affiliate ("Employee Benefit Plans"). No Employee
Benefit Plan that is a welfare plan provides continuing benefits
after the termination of employment of covered employees (other
than as required by Section 4980B of the Code and at 100% of the
former employee's own expense). Except as described on Schedule
4.13, none of the Employee Benefit Plans are subject to Section
4063 and 4064 of ERISA ("Multiple Employer Plans") or are
multiemployer plans (as defined in Section 4001(a) of ERISA)
("Multiemployer Plans").
(b) True, complete and correct copies of the following
documents, with respect to each of the Employee Benefit Plans (as
applicable), have been heretofore delivered or otherwise made
available to Buyer: (i) the most recent plan and related trust
documents, together with all amendments and modifications
thereto, (ii) the most recent Forms 5500 and schedules thereto,
(iii) the most recent IRS determination letter, if any, (iv) the
most recent summary plan descriptions, and (v) written
descriptions of all non-written agreements relating to the
Employee Benefit Plans.
(c) Each of the Employee Benefit Plans intended to
qualify under Section 401 of the Code ("Qualified Plans") has
been determined by the IRS to so qualify, and nothing has
occurred with respect to the operation of any such plan which
could cause the loss of such qualification or the imposition of
any material liability, penalty or tax under ERISA or the Code.
(d) All contributions and premiums required to be made
by law or by the terms of any Employee Benefit Plan or any
agreement relating thereto have been timely made (without regard
to any waivers granted with respect thereto), and no accumulated
funding deficiencies exist in any of the Employee Benefit Plans
subject to Section 412 of the Code.
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(e) The funding status of each of the Employee Benefit
Plans subject to Title IV of ERISA is accurately reflected on the
most recent Form 5500 completed for such plan, and there has been
no material adverse change in the funding status of any such plan
since the effective date thereof. The benefit liabilities (as
defined in Section 4001(a)(16) of ERISA) of each of the Employee
Benefit Plans subject to Title IV of ERISA determined as of
June 30, 1993 and December 31, 1993, respectively, using the
actuarial assumptions that would be used as of that date by the
Pension Benefit Guaranty Corporation (the "PBGC") in the event it
terminated each such plan as of such date, do not exceed the fair
market value of the assets of each such plan as of such date by
any material amount. The liabilities of each former Employee
Benefit Plan that has been terminated or otherwise wound up have
been fully discharged in full compliance with applicable Law, and
the obligations of any such plan have not been discharged by the
purchase of annuities.
(f) There has been no "reportable event" (as defined
in Section 4043 of ERISA and the regulations thereunder) with
respect to any of the Employee Benefit Plans subject to Title IV
of ERISA which would require providing the PBGC with a 30-day
notice, or any event requiring notice to be provided under
Section 4063(a) of ERISA.
(g) There has been no material violation of ERISA with
respect to the filing of applicable returns, reports, documents
and notices regarding any of the Employee Benefit Plans with the
Secretary of Labor or the Secretary of the Treasury or the
furnishing of such notices or documents to the participants or
beneficiaries of the Employee Benefit Plans.
(h) There are no pending or threatened legal
proceedings against any of the Employee Benefit Plans, the assets
of any such plans, Seller or any of the ERISA Affiliates, or the
plan administrator or any fiduciary of the Employee Benefit Plans
with respect to the operation of such plans (other than routine,
uncontested benefit claims), and to Seller's knowledge after due
inquiry, there are no facts or circumstances which could form the
basis for any such legal proceedings.
(i) Each of the Employee Benefit Plans has been
maintained in all material respects in accordance with its terms
and all provisions of applicable Law. All amendments and actions
required to bring each of the Employee Benefit Plans into
conformity with the applicable provisions of ERISA and other
applicable Laws have been made or taken. No amendment to any
Employee Benefit Plan is presently contemplated that would
materially increase the liabilities of any such plan.
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(j) Seller and, to Seller's knowledge after due
inquiry, each ERISA Affiliate, has complied in all material
respects with the notice and continuation requirements of Section
4980B of the Code and the regulations thereunder.
(k) None of Seller, any ERISA Affiliate nor any
organization to which any is a successor or parent corporation,
has divested any business or entity maintaining or sponsoring a
defined benefit pension plan having unfunded benefit liabilities
(within the meaning of Section 4001(a)(18) of ERISA) or
transferred any such plan to any person other than Seller or any
ERISA Affiliate during the five-year period ending on the date
hereof.
4.14. Labor Matters. (a) Schedule 4.14(a) sets forth
a list containing the name, current base salary or wage rate and
title of each employee of Seller actively employed in the
operation of the Stores and those employees employed in the
operation of the Stores out on disability, approved leave of
absence or other inactive status and indicating the status of the
employee (e.g. active, disability, leave of absence, etc.) (the
"Employees") and indicating whether such Employee is subject to
any of the Union Contracts referred to in Section 4.14(b).
Seller is not a party to any employment, managerial, advisory or
consulting agreement with any such Employees.
(b) Except as described on Schedule 4.14(b), Seller is
not a party to any collective bargaining agreement and there are
no collective bargaining agreements which pertain to the
Employees. Seller has heretofore delivered to the Buyer true,
complete and correct copies of the collective bargaining
agreements described on Schedule 4.14(b), together with all
amendments, modifications, supplements or side letters affecting
the duties, rights and obligations of any party thereunder
(collectively, the "Union Contracts").
(c) Except as set forth in Schedule 4.14(b), (i) no
Employees are represented by any labor organization, (ii) no
labor organization or any of the Employees has made a pending
demand for recognition or certification, (iii) there are no
representation or certification proceedings or petitions seeking
a representation proceeding presently pending or threatened to be
brought or filed, with the National Labor Relations Board (the
"NLRB") or any other labor relations tribunal or authority, and
(iv) there are no organizing activities involving Seller pending
with, or threatened by, any labor organization or any of the
Employees.
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(d) There are no strikes, work stoppages, slowdowns,
lockouts, arbitrations or grievances or other labor disputes
pending or threatened, against or involving Seller and the
operation of the Business and the Stores.
(e) Except as set forth in Schedule 4.14(e), there are
no complaints, charges or claims against Seller pending or
threatened to be brought or filed with any public or governmental
authority, or court based on, arising out of, in connection with,
or otherwise relating to the employment by Seller in the
operation of the Business and the Stores of any individual,
including, without limitation, any claim for workers'
compensation.
(f) Seller is in compliance with all Laws and orders
relating to the employment of labor or termination thereof in the
operation of the Business and the Stores, including all such Laws
and orders relating to wages, hours, collective bargaining,
discrimination, civil rights, safety and health, workers,
compensation, equal pay and the collection and payment of
withholding and/or any payroll taxes.
(g) Schedule 4.14(g) sets forth the number of
employees of Seller at each "site of employment" as that term is
used in the Worker Adjustment and Retraining Notification Act
(the "WARN Act") of the Business and the number of employees of
Seller at each site of employment of the Business who have
suffered an "employment loss" (as defined in the WARN Act) since
ninety days prior to the Closing Date. Seller is in compliance
with the WARN Act.
4.15. Environmental Matters. (a) The operations of
Seller at the Stores have been in compliance with all
Environmental Laws;
(b) Seller has obtained and currently maintains and is
in possession of, all Environmental Permits necessary for the
continued operation of the Stores; all such Environmental Permits
are in good standing; there are no legal proceedings pending or
threatened to revoke such Environmental Permits; and Seller is in
compliance with such Environmental Permits;
(c) None of Seller, any of the Stores or their
operations are subject to any outstanding written orders,
agreements or recorded environmental Liens by or with any public
or governmental authority, or subject to any federal, state or
local investigation respecting (i) Environmental Laws, (ii)
Remedial Action or (iii) any Environmental Claim arising from the
Release or threatened Release of Hazardous Materials;
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(d) Seller is not subject to any legal proceeding
alleging the violation of any Environmental Law or Environmental
Permit with respect to the Business or the Stores or their
operations;
(e) Seller has not received (nor, to the knowledge of
Seller after due inquiry, has there been issued) any written
communication, whether from a public or governmental authority,
citizens, group, employee or any other person or entity, that
alleges that Seller, the Stores, the Business, the Properties, or
the Store Assets is not or are not in compliance with any
Environmental Law or Environmental Permit;
(f) Seller has not caused or permitted any Hazardous
Materials to be disposed of, either on or under any Store or any
of the Properties;
(g) there are no facts or circumstances associated
with the Stores or operations of Seller which, in the aggregate,
could give rise to liabilities with respect to Hazardous
Materials;
(h) none of the operations of Seller with respect to
the Stores or the Business involve the generation,
transportation, treatment, storage or disposal of hazardous
waste, as defined and regulated under 40 C.F.R. Parts 260-270;
and
(i) there is not now on or in any property of Seller
used in the operation of the Stores or the Business any of the
following: (i) any underground storage tanks or surface
impoundments, (ii) any asbestos-containing materials, or (iii) any
polychlorinated biphenyls.
For purposes of this Section 4.15:
"Environmental Claim" means any written accusation,
allegation, notice of violation, action, claim, Lien, demand,
abatement or other order or direction (conditional or otherwise)
by any public or governmental authority or any person for
personal injury (including sickneBS, disease or death), tangible
or intangible property damage, damage to the environment,
nuisance, pollution, contamination or other adverse effects on
the environment, or for fines, penalties or restrictions
resulting from or based upon: (i) the existence, or the
continuation of the existence, of a Release (including, without
limitation, sudden or non-sudden accidental or non-accidental
Releases) of, or exposure to, any Hazardous Materials or other
substance, chemical, material, pollutant, contaminant, odor,
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audible noise, or other Release in, into or onto the environment
(including, without limitation, the air, soil, surface water or
groundwater) at, in, by, from or related to the Stores or the
Properties or any activities conducted thereon, (ii) the
environmental aspects of the transportation, storage, treatment
or disposal of Hazardous Materials in connection with the
operation of the Stores, or (iii) the violation, or alleged
violation, of any Environmental Laws, orders or permits of or
from any public or governmental authority relating to
Environmental Laws, orders or permits of or from any Gover=ental
Body relating to environmental matters connected with either Store
or any of the Properties;
"Environmental Laws" means any applicable Law
concerning Releases into any part of the natural environment, or
protection of natural resources, the environment and public and
employee health and safety including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability
Act ("CERCLAII) (42 U.S.C. & 9601 et secf.), the Hazardous
Materials Transportation Act (49 U.S.C. & 1801 et sea.), the
Resource Conservation and Recovery Act (42 U.S.C. & 6901 et
seq.), the Clean Water Act (33 U.S.C. & 1251 e-t sea.), the Clean
Air Act (42 U.S.C. & 7401 et sea.), the Toxic Substances Control
Act (15 U.S.C. & 2601 et sea.), the Federal Insecticide,
Fungicide, and Rodenticide Act (7 U.S.C. & 136 et sea.), the
Occupational Safety and Health Act (29 U.S.C. & 651 et sea.)
("OSHA"), as such laws have been and may be amended or
supplemented through the Closing Date, and the regulations
promulgated pursuant thereto, and any applicable state or local
statutes, and the regulations promulgated pursuant thereto;
"Environmental Permit" means any Permit, approval,
authorization, license, variance, registration, or permission
required under any applicable Environmental Laws and all
supporting documents associated therewith;
"Hazardous Materials" means any substance, material or
waste which is regulated by any public or governmental authority
in the jurisdictions in which Seller conducts business, or the
United States, including, without limitation, any material or
substance which is defined as a "hazardous waste," "hazardous
material," "hazardous substance," "extremely hazardous waste" or
"restricted hazardous waste," "contaminant," "toxic waste" or
"toxic substance" under any provision of Environmental Law,
including but not limited to, petroleum products, asbestos and
polychlorinated biphenyls;
"Release" means any release, spill, effluent, emission,
leaking, pumping, injection, deposit, disposal, discharge,
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dispersal, leaching, or migration into the indoor or outdoor
environment, or into or out of any property owned, operated or
leased by Seller, including the movement or transport of any
Hazardous Materials or other substance through or in the air,
soil, surface water, groundwater, or property; and
"Remedial Action" means all actions, including, without
limitation, any capital expenditures, required or voluntarily
undertaken to (i) clean up, remove, treat, or in any other way
ameliorate, address, redress or remediate any Hazardous Materials
or other substance in the indoor or outdoor environment, (ii)
prevent the Release or threat of Release, or minimize the further
Release of any Hazardous Materials or other substance so it does
not migrate or endanger or threaten to endanger the public health
or welfare of the indoor or outdoor environment, (iii) perform
pre-remedial studies and investigations or post-remedial
monitoring and care, or (iv) bring either Store or any Properties
into compliance with all Environmental Laws and Environmental
Permits.
4.16. Insurance. Schedule 4.16 hereto sets forth all
insurance contracts and other surety arrangements, other than
those provided through Buyer, which are in force in respect of
the current insurance year with respect to the Stores or the
Store Assets as well as policies of group health, hospital and
life insurance covering any of the Employees, in each case,
specifying the insurance carrier, the type of insurance coverage,
the policy number (or with respect to binders, the converting
note number), the aggregate amount of insurance coverage per
claim or per occurrence, as the case may be, applicable self-
retention limits and/or self or co-insurance requirements, and
describing in reasonable detail each pending claim thereunder.
Such insurance, including the insurance provided to Seller
through Buyer, provides coverage against, among other matters,
property damage and other casualty loss, personal injury,
workers' compensation claims, general liability, director and
officer liability, and other similar risks and matters incident
to the conduct of the Business and includes coverage against all
risks and is in such amounts as are usually insured against by
similarly situated businesses. All policies of such insurance
are binding and effective upon the issuers thereof (each of whom
are reputable and creditworthy) in accordance with their
respective terms; there are no defaults under such policies and
no event has occurred which, with the passage of time or the
giving of notice or both, would constitute a default by Seller
thereunder.
4.17. Affiliate Transactions. Schedule 4.17 sets
forth a description of each Contract, Lease operating
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arrangement, course of dealing or otherwise pursuant to which
Seller or any director or executive officer thereof, any entity
controlled by or under common control with Seller or any director
or executive officer thereof or any entity in which Seller or any
director or executive officer thereof has an economic interest
currently receives or provides or has within the past year
received or provided goods or services (including the lease of
Properties) to Seller in connection with the business conducted
by the Stores, other than agreements, transactions, arrangements
or course of dealings involving such persons and Buyer.
4.18. Absence of Certain Events; No Material Adverse
Change. Seller has conducted its business operations as carried
on at the Stores in the ordinary course and there has not
occurred any event or condition which could have a Material
Adverse Effect. Without limiting the generality of the
foregoing, there has not occurred:
(a) any change or agreement to change the character or
nature of the business of Seller as carried on at the Stores;
(b) any purchase, sale, transfer, assignment,
conveyance or pledge of the Store Assets, including, without
limitation, the Fixed Assets or Properties, except purchases and
sales of Inventory in the ordinary course of business and the
Liens described on Schedule 4.11;
(c) any waiver or modification by Seller of any right
or rights of substantial value, or any payment, direct or
indirect, in satisfaction of any liability, in each case, which
could have a Material Adverse Effect; or
(d)any change in the accounting principles, methods,
practices or procedures followed by Seller in connection with its
business as carried on at the Stores.
4.19. Full Disclosure. All of the statements made by
Seller in this Agreement (including, without limitation, the
representations and warranties made by Seller herein and in the
Schedules and Exhibits hereto which are incorporated by reference
herein and which constitute an integral part of this Agreement)
and the other Seller Documents and in all other written materials
heretofore furnished (and to be furnished on, after or prior to
the Closing Date) to the Buyer, its representatives, legal
counsel and accountants do not and will not include or contain
any untrue statement of a material fact, and do not and will not
omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
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There is no material fact which Seller has not disclosed to the
Buyer which has had, or could have, a Material Adverse Effect.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
5.1. Organization. Buyer is a corporation duly
organized, validly existing and in good standing under the laws
of the State of New Jersey and has the full corporate power and
authority to enter into this Agreement and each of the other
agreements, documents and instruments to be delivered by Buyer
pursuant hereto (together with this Agreement, the "Buyer
Documents") and to perform the transactions contemplated hereby
and thereby.
5.2. Authorization of Agreement. The execution and
delivery by Buyer of this Agreement and each of the other Buyer
Documents and the performance of the transactions contemplated
hereby and thereby have been duly authorized by all necessary
corporate action of Buyer. This Agreement and each of the other
Buyer Documents constitutes the valid and binding obligation of
Buyer enforceable against it in accordance with their respective
terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the
enforcement of creditors, rights in general and subject to
general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at
law).
5.3. Consents of Third Parties. The execution and
delivery by Buyer of this Agreement and each other Buyer
Document, the performance by Buyer of its obligations hereunder
and thereunder and the consummation of the transactions
contemplated hereby and thereby will not (a) violate or conflict
with the certificate of incorporation or by-laws of Buyer, (b)
conflict with, or result in the breach or termination of, or
constitute a default or require any approval, waiver or consent
under, any lease, agreement, commitment or other instrument, or
any order, judgment or decree, to which Buyer is a party or by
which Buyer or its properties is bound or (c) constitute a
violation by Buyer of any Law applicable to Buyer. No consent,
registration, application, approval, permit, license or
authorization of, or designation, declaration or filing with, any
govermental authority is required on the part of Buyer in
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connection with the execution, delivery and performance of this
Agreement or any other Buyer Document.
ARTICLE VI
FURTHER AGREEMENTS OF THE PARTIES
6.1. Conduct of the Business Pending the Closing.
Until the Closing, Seller shall comply with the covenants set
forth below:
(a) Seller will cause the business carried on at the
Stores to be continued in the ordinary course consistent with
prior practice, including, without limitation, the purchase of
Inventory and Supplies, the maintenance of books and records, the
timely performance and observance of the obligations of Seller
under the Contracts and the Leases and payment of all amounts due
prior to the Closing for all Inventories, Supplies and Taxes, the
continuation of advertising, coupon promotion and maintenance of
sales volumes, the hiring, employment and termination of
employees (including paying all withholding, social security and
unemployment taxes related thereto), and customary repair and
maintenance activities (and, in connection therewith, shall
maintain the Fixed Assets in good and safe operating order,
condition and repair, subject to wear and tear from ordinary
use);
(b) Seller shall not take or fail to take any action
that would cause any of the representations and warranties made
by Seller in this Agreement not to be true and correct on and as
of the Closing Date with the same force and effect as if such
representations and warranties had been made on and as of the
Closing Date, and Seller shall promptly notify Buyer in writing
of, and furnish to Buyer any information Buyer may request with
respect to, the occurrence of any event or the existence of any
state of facts that would result in any of Seller's
representations and warranties so to be not true and correct or
that otherwise shall be necessary to supplement the information
contained herein or made a part hereof in order that the
information herein be complete and accurate in all material
respects;
(c) Seller shall maintain in full force and effect all
insurance polices, including self-insured plans, in an amount not
less than is currently in effect;
(d) Seller shall cooperate with Buyer to cause the
transactions contemplated by this Agreement to be consummated
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and, without limiting the generality of the foregoing, Seller
shall obtain all Consents and other necessary third party
consents and governmental and judicial approvals, and make all
filings with and give all notices to third parties (and
governmental authorities), other than those which are the sole
and exclusive responsibility of Buyer, provided that Seller shall
cooperate with Buyer in connection therewith, which may be
necessary or reasonably required in order to consummate the
transactions contemplated hereby;
(e) Seller will use its best efforts to maintain and
preserve and cause to be maintained and preserved the business
operations as carried on at the Stores including the preservation
of the Leases (by exercising all renewal rights after
consultation with Buyer) and the goodwill of its present
employees, customers, suppliers, lessors and others having
business relations with Seller;
(f) Seller shall comply with all Laws applicable to
the Stores, the Store Assets and the Business;
(g)Seller shall not:
(i) enter into any employment agreement with
any Employee or become liable for any bonus, profit-sharing
or incentive payment to any Employee, except pursuant to
presently existing plans, arrangements or agreements
disclosed herein, or promote, transfer or increase the salary
of any managerial Employee;
(ii) enter into any collective bargaining
agreement or modification of any collective bargaining
agreement relating to the operation of the Business without
first consulting with and obtaining the prior written
consent of Buyer;
(iii) mortgage, Pledge or otherwise encumber
or voluntarily permit any part of the Store Assets to become
subject to any Lien, other than existing Liens;
(iv) make any material changes in the
customary method ofoperations as carried on at the Stores,
including marketingand pricing policies;
(v) make or commit to make any capital
expenditures with respect to the Stores in excess of
$25,000; or
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(vi) do or fail to do any act which will
materially impair the value of any Store or the Store Assets taken
as a whole;
(h) Seller (i) shall not, directly or indirectly,
solicit offersor negotiate from or with any other person or
entity for thesale of all or any portion of the equity of Seller
or of the Store Assets (other than with respect to sales of
Inventory in the ordinary course of business), and (ii) shall
cause all discussion and negotiations, if any, with other parties
concerning any such transactions to cease;
(i) Seller will fully, faithfully and in a timely
manner, perform all of the terms, covenants and conditions on
Seller's part to be performed under the Leases, including
Seller's obligation to pay rent and additional rent. If the
Closing Date is other than the first day of a month, Seller shall
pay to its respective landlords rent and additional rent payable
under the Leases for the period during which the Closing Date
shall occur and, in such event, Buyer covenants and agrees to
reimburse Seller an amount calculated by multiplying (A) the
rental and other prepaid expenses under the Leases for such
period by (B) a fraction, the numerator of which shall equal the
number of days during the period commencing on the Closing Date
and terminating with the last day of the rental period during
which the Closing Date occurs, and the denominator of which is
the number of days in the rental period during which the Closing
Date occurs. Seller shall not amend, modify, supplement or
terminate any of the Leases without Buyer's prior written
consent;
(j) Up to and including the Closing Date, Seller will
fully, faithfully and in a timely manner, perform all of the
terms, covenants and conditions on Seller's part to be performed
under the Contracts. Seller shall pay under all Contracts to
which it is a party all fees, costs, expenses and other amounts
required to be paid by Seller thereunder prior to the Closing
Date for periods up to and including the Closing Date. Seller
shall not amend, modify, supplement or terminate any of the
Contracts to which it is a party without Buyer's prior written
consent;
(k) Seller agrees to pay all ad valorem and personal
property taxes assessed with respect to the Store Assets for all
applicable taxperiods ending prior to the Closing Date and the
Buyer agrees to pay all such taxes assessed for all applicable tax
periods beginning on or subsequent to the Closing Date. All
such taxes assessed for any applicable property tax period
beginning prior to the Closing Date and extending through or
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beyond such date shall be allocated and adjusted as follows:
Seller shall pay that portion of such taxes due with respect to
such applicable property tax period through the day preceding the
Closing Date and Buyer shall pay the balance thereof; and
(1) Buyer shall have the right, but not the
obligation, to offer employment (commencing after the Closing
Date) to all of Seller's employees engaged in the operation of
the Stores and Seller shall refrain from any acts calculated to
dissuade or having the effect of dissuading any of such employees
from accepting employment with Buyer or calculated to induce or
having the effect of inducing any such employees thereafter to
terminate employment with Buyer or any affiliate thereof.
Nothing contained herein shall or shall be deemed to obligate
Buyer to offer employment or any particular term or condition of
employment to any employee or former employee of Seller or any
other person. Seller shall deliver all notices required by and
otherwise comply with all applicable provisions of the WARN Act
to the extent required as a result of the transactions
contemplated hereby. Buyer shall have the right, but not the
obligation, to assume any employee insurance benefit plans
maintained by Seller for its Store employees, such as those
relating to hospital, group health and life insurance, to the
extent transferrable, by giving Seller at least ten days, prior
notice with respect thereto, and Seller agrees to fully cooperate
with Buyer in respect of the assumption of such plans. Nothing
contained herein shall or shall be deemed to obligate Buyer to
assume any such plan.
6.2. Covenants of Buyer. Buyer agrees that from the
date hereof through and until the Closing Date, unless this
Agreement is earlier terminated as provided herein, Buyer shall
(a) cooperate reasonably with Seller, but with no obligation to
incur any cost or expense, in obtaining the Consents and provided
that Buyer shall not be required to agree to the imposition by
any government agency of any conditions to the consummation of
the transactions contemplated hereby that Buyer believes would
interfere in any material respect with the operation of either
Store following the Closing, and (b) use its best efforts to
cause the conditions precedent set forth in Section 7.2 hereof to
be satisfied.
6.3. Access to Information. Prior to the Closing,
Buyer may make such investigation of Seller, the Stores and Store
Assets as Buyer may desire and Seller shall give to Buyer and its
counsel, accountants and other representatives reasonable access
during normal business hours throughout the period prior to the
Closing to the property, books, commitments, agreements, records,
files and personnel of Seller insofar as they relate to the
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Stores and Store Assets and to Seller's counsel, accountants and
other professional advisors, and Seller shall furnish to Buyer
during that period all copies of documents and information
concerning the Stores and their operations as Buyer may reasonably
request.
6.4. Publicity. Unless the parties shall have
consulted in advance with respect thereto and except as may be
required to comply with the requirements of any applicable Law,
neither Buyer nor Seller shall issue any press release or public
announcement of any kind nor disclose any information to any
third person (other than its executive officers, directors and
agents with a need to know) concerning the negotiation, execution
or delivery of this Agreement or the transactions contemplated
hereby.
6.5. Casualty or Destruction or Condemnation. (a) If
any of the Store Assets shall be damaged or destroyed prior to
the day immediately prior to the Closing Date, Seller shall
promptly notify Buyer if the cost of repairs shall exceed $5,000
and, in any case regardless of cost, shall promptly repair,
replace and restore the same to the condition thereof existing
immediately prior to such damage or destruction. In the event
that such repair, replacement and restoration has not been
completed (in Buyer's sole discretion) prior to the Closing, then
at the Closing, Buyer at its election shall be entitled, in its
sole discretion, either (i) to deduct from the Purchase Price
payable at Closing an amount sufficient to fully repair, replace
and restore the same after the Closing, except to the extent that
the lessor under the Lease for the Bethlehem Store is obligated
to repair, replace and restore the same or (ii) to deduct an
amount equal to all insurance proceeds recovered prior to the
Closing by Seller in connection therewith (if any, and only to
the extent not properly applied to restoration as required under
the applicable Leases) and receive an assignment of all such
insurance proceeds recoverable after the Closing (including all
business interruption insurance attributable to post-Closing
business and all casualty insurance) to the extent such
assignment is permitted under the terms of the applicable Leases;
provided, however, that if in Buyer's sole discretion it shall be
impossible or impractical to operate the affected Store after
such damage or destruction in the same manner as the Store was
being operated immediately prior to such damage or destruction,
then Buyer may (i) postpone the Closing (with respect to, at
Buyer's option, both Stores or only the affected Store) until
such repair, replacement or restoration has been completed, (ii)
terminate this Agreement by delivery to Seller of a written
notice to such effect, or (iii) proceed with the Closing with
respect to the unaffected Store and terminate this Agreement with
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respect to the affected Store (by delivery to Seller of a written
notice to that effect). If any of the Properties shall be
damaged or destroyed to such an extent that (x) the landlord
under the applicable Lease would have the right to terminate such
Lease, (y) the possession of the tenant under such Lease may be
disturbed by any mortgagee or other encumbrancer or the landlord,
or (z) it shall be impossible or impractical in Buyer's sole
discretion to repair, replace and restore such Properties to
their condition immediately prior to such damage or destruction,
then Buyer may elect, in its sole discretion, either (A) to
terminate this Agreement by delivery to Seller of a written
notice to such effect, (B) to proceed with the Closing and deduct
from the Purchase Price payable at Closing an amount equal to all
insurance proceeds recovered prior to the Closing by Seller in
connection therewith (if any, and only to the extent not properly
applied to restoration as required under the applicable Leases)
and receive an assig=ent of all such insurance proceeds
recoverable after the Closing (including all business
interruption insurance attributable to post-Closing business and
all casualty insurance) to the extent such assigmnent is
permitted under the terms of the applicable Leases or (C) proceed
with the Closing with respect to the unaffected Store and
terminate this Agreement with respect to the affected Store (by
delivery to Seller of a written notice to that effect).
(b) If any portion of a Property (or the Fixed Assets
thereat) shallbe the subject of a condemnation or taking by
eminent domainor otherwise by any governmental or quasi-
governmental authority or by deed in lieu thereof (a "Taking")
prior to the Closing Date, Seller promptly shall repair, replace
and restore the same so that on the Closing Date Buyer may
operate the Store so affected in the same manner in which the
same had been operated prior to such Taking. If, as of the
Closing Date, such repair, replacement and restoration shall not
have been completed (in Buyer's sole discretion), then, at
Closing, Buyer shall be entitled, in its sole discretion, either
(i) to postpone the Closing (with respect to, at Buyer's option,
both Stores or only the affected Store), (ii) to deduct from the
Purchase Price payable at Closing an amount sufficient to fully
complete such repair, replacement or restoration after the
Closing, except to the extent that the lessor under the Lease for
the Bethlehem Store is obligated to repair, replace and restore
the same, or (iii) to deduct an amount equal to all condemnation
awards or other payments or awards received in connection with
such Taking and all insurance proceeds recovered prior to the
Closing by Seller in connection therewith (if any, and only to
the extent not properly applied to restoration as required under
the applicable Leases) and receive an assignment of all such
payments or awards and all such insurance proceeds recoverable
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after the Closing (including all business interruption insurance
for post-Closing business and all other insurance proceeds
recoverable in connection therewith) to the extent such
assignment is permitted under the terms of the applicable Leases.
If (i) in Buyer's sole discretion, the character of the Taking
prior to the Closing is such that it shall be impossible or
impractical to operate the affected Store after such Taking, in
the same manner as such Store was being operated immediately
prior to such Taking, (ii) the landlord under the applicable
Lease shall have a right to terminate such Lease or (iii) the
possession of the tenant under such Lease may be disturbed by any
mortgagee or other encumbrancer or the landlord, then Buyer may
elect, in its sole discretion, either (x) to terminate this
Agreement by delivery to Seller of a written notice to such
effect, (y) proceed with the Closing and (A) deduct from the
Purchase Price payable at Closing an amount equal to all
condemnation awards or other payments or awards received in
connection with such Taking and all insurance proceeds recovered
by Seller in connection therewith (if any, and only to the extent
not properly applied to restoration as required under the
applicable Leases) and (B) receive an assignment of all
condemnation awards or other payments or awards to be received in
connection with such Taking, together with an assignment of all
of Seller's rights to claims for such condemnation awards, and
all business interruption for post-Closing business and all other
insurance proceeds recoverable in connection therewith to the
extent such assignment is permitted under the terms of the
applicable Leases, or (z) proceed with the Closing as to the
unaffected Store and terminate this Agreement with respect to the
affected Store (by delivery to Seller of a written notice to that
effect).
6.6. Further Covenants of Seller. Seller agrees that
any existing guarantees or other credit support for the
performance of the Leases shall remain and be maintained by
Seller after the Closing to the extent required by the lessors,
including without limitation those items set forth on Schedule
6.6.
ARTICLE VII
CONDITIONS TO CLOSING
7.1. Conditions Precedent to Obligations of Buyer.
The obligation of Buyer to consummate the purchase under this
Agreement is subject to the fulfillment (or waiver by Buyer, with
respect to any or all Stores) of each of the following
conditions:
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(a) The representations and warranties of Seller
contained in this Agreement or in any other Seller Document shall
be true and correct in all respects on and as of the Closing
Date, except that representations and warranties made at and as
of a specific date shall be deemed made at and as of such date.
Seller shall have performed and complied with all agreements and
conditions required by this Agreement or any other Seller
Document to be performed or complied with by Seller prior to or on
the Closing Date.
(b) No action, suit, or proceeding before any court or
governmental or regulatory authority shall be pending, no
investigation by any governmental or regulatory authority shall
have been commenced, and no action, suit or proceeding by any
governmental or regulatory authority shall have been threatened,
against Buyer or Seller, or any of the principals, officers or
directors of any of them, seeking to restrain, prevent, or change
the transactions contemplated hereby or questioning the legality
or validity of any such transactions or seeking damages in
connection with any such transactions or which in the reasonable
judgment of Buyer could be expected to have a Material Adverse
Effect or to materially and adversely affect the transactions
contemplated hereby.
(c) All consents of governmental authorities and
agencies, all material permits and filings with and notifications
of governmental authorities and agencies necessary on the part of
Buyer or Seller to the execution and delivery of this Agreement
and the other Buyer Documents and Seller Documents and the
consummation of the transactions contemplated hereby and thereby
and to permit the continued operation of the Stores in
substantially the same manner after the Closing Date as
theretofore conducted (including receipt of the requisite
approvals regarding the retail tobacco Permits), other than
routine post-closing notifications or filings, shall have been
obtained, made or effected.
(d) The lessor under each Lease shall have executed
and delivered to Seller, and Seller shall have delivered to Buyer
(i) a consent (the "Consent"), where under the applicable Lease
such Consent by such lessor is required, in which such lessor
unconditionally consents to (A) the subletting by Seller to Buyer
of Seller's tenant's estate in the Lease for the Allentown Store
pursuant to a sublease agreement, substantially in the form of
Exhibit B (the "Sublease Agreement"), or (B) the assig=ent by
Seller to Buyer of Seller's estate in the Lease for the Bethlehem
Store pursuant to an assignment and assumption of lease
agreement, substantially in the form of Exhibit C (the
"Assignment and Assumption of Lease") (the subletting and
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assignment referred to in clauses (A) and (B) above are
collectively referred to as the "Permitted AssigrLments") and (ii)
a landlord's estoppel certificate, in form and substance
satisfactory to Buyer (an "Estoppel Certificate"). Anything
herein to the contrary notwithstanding, in the event that any
lessor proposes a lease modification as a condition to the
delivery of its Consent to the Permitted Assignments, Seller
agrees that upon receipt thereof, it will deliver the proposed
lease modification or an outline thereof to Buyer and Buyer, at
its option, may elect to accept such proposed lease modification
or reject the same whereupon, if Buyer elects to reject such
proposed lease modification, the Consent of such lessor, for the
purposes of this Agreement, shall be deemed not to have been
delivered.
(e) Buyer shall have received (i) a certified copy of
the resolutions of the Board of Directors of FSI and the Board of
Directors and shareholders of SRRI authorizing the execution and
delivery of this Agreement and each of the other Seller Documents
and the consummation of the transactions contemplated hereby and
thereby, (ii) a certificate of Seller, signed by an authorized
officer of FSI and SRRI, respectively, dated the Closing Date, to
the effect set forth in paragraph (a) of this Section 7.1, (iii)
a certificate of the secretary or assistant secretary of FSI and
SRRI, respectively, attesting to the incumbency of each officer
of Seller who shall execute this Agreement or any other Seller
Documents, (iv) a copy of the certificate of incorporation and
by-laws of Seller, certified by an authorized officer of such
Seller and, in the case of the certificate of incorporation, by
the Secretary of State of the States of New Jersey and
Pennsylvania, and (v) an opinion of Howard Snowiss, General
Counsel of FSI and counsel to Seller, in form and substance
satisfactory to Buyer and its counsel.
(f) Buyer shall have received (i) a bill of sale and
assigrunent in respect of the sale to Buyer of the Store Assets,
duly executed by Seller (the "Bill of Sale"), transferring good
and marketable title to all of the Store Assets free and clear of
all Liens, and (ii) instruments of assignment to Buyer of the
Contracts and the Licenses included in the Store Assets, duly
executed by Seller (the "Assignments"). Simultaneously with such
deliveries, Seller shall take all such steps as may be reasonably
required to put Buyer in actual possession of the Stores and the
Store Assets.
(g) Buyer shall have received copies of UCC-3
Termination Statements, duly executed by all appropriate parties,
and such other evidence as Buyer may reasonably request,
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releasing or showing that all Liens on all Store Assets have been
released.
(h) Buyer shall have entered into conditional
collective bargaining agreements to take effect on the day
following the Closing Date with the unions representing the
employees of the Stores on terms satisfactory to the Buyer in its
sole discretion.
(i) Buyer shall have received the Sublease Agreement,
substantially in the form of Exhibit B, duly executed by Seller
and the Assigriment and ASSumption of Lease, substantially in the
form of Exhibit C, duly executed by Seller.
7.2. Conditions Precedent to Obligations of Seller.
The obligation of Seller to consummate the sale under this
Agreement is subject to the fulfillment (or waiver by Seller) of
each of the following conditions:
(a) The representations and warranties of Buyer
contained in this Agreement or in any other Buyer Document shall
be true and correct in all respects on and as of the Closing
Date, except that representations and warranties made at and as
of a specific date shall be deemed made at and as of such date.
Buyer shall have performed and complied with all agreements and
conditions required by this Agreement to be performed or complied
with by it prior to or on the Closing Date.
(b) No action, suit or proceeding before any court or
governmental or regulatory authority shall be pending, no
investigation by any governmental or regulatory authority shall
have been commenced, and no action, suit or proceeding by any
governmental or regulatory authority shall have been threatened,
against Seller, the Buyer, or any of the principals, officers or
directors of any of them, seeking to restrain, prevent, or change
the transactions contemplated hereby or questioning the legality
or validity of any such transactions.
(c) All consents of governmental authorities, and
agencies, and all material permits and filings with and
notifications of governmental authorities and agencies necessary
on the part of Buyer to the execution and delivery of this
Agreement and the consununation of the transactions contemplated
hereby, other than routine post-closing notifications or filings,
shall have been obtained, made or effected.
(d) Seller shall have received (i) a certified copy of
the resolutions of the Board of Directors of Buyer authorizing
the execution and delivery of this Agreement and each of the
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other Buyer Documents and the consummation by Buyer of the
transactions contemplated hereby and thereby, (ii) a certificate
of the secretary or assistant secretary of Buyer attesting as to
the incumbency of each officer of Buyer who shall execute this
Agreement or any other Buyer Agreement and (iii) a certificate of
Buyer, signed by an authorized officer of Buyer, dated the
Closing Date, to the effect set forth in paragraph (a) of this
Section 7.2.
(e) Seller shall have received the Purchase Price set
forth in Section 1.2(a).
(f) Seller shall have received an Assumption Agreement,
substantially in the form of Exhibit A, duly executed by Buyer.
(g) Seller shall have received the Sublease Agreement,
substantially in the form of Exhibit B, duly executed by Buyer
and the Assig=ent and Assumption of Lease, substantially in the
form of Exhibit C, duly executed by Buyer.
ARTICLE VIII
INDEMNIFICATION
8.1. Survival. The representations, warranties,
covenants and agreements of the parties hereto contained herein
or in any Buyer Document or Seller Document shall survive the
execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby and shall remain in full
force and effect, regardless of any investigation made by or on
behalf of Buyer or Seller.
8.2. Indemnification by Seller. Seller hereby agrees
to defend, indemnify and hold harmless Buyer and its successors,
assigns and affiliates from and against:
(a) any and all losses, costs, expenses (including
reasonable attorneys, fees), liabilities, deficiencies and
damages (collectively, "Losses") arising out of or resulting from
(i) breaches of any representations or warranties hereunder or
under any other Seller Document on the part of Seller, and (ii)
failures by Seller to perform or otherwise fulfill any agreement
or obligation hereunder or under any Seller Document;
(b) any and all Losses (including, without limitation,
any and all Losses arising out of or resulting from the ownership
or operation of any Store or Store Assets on or before the
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Closing Date) to the extent such Losses are not Liabilities
expressly assumed by Buyer under Article II of this Agreement,
including, without limitation, any Losses arising from the
withdrawal by Seller or any ERISA Affiliate from any
Multiemployer Plan, including, without limitation, any withdrawal
resulting from the transactions contemplated hereby;
(c) any claims by any persons employed by Seller or
any governmental agency relating to severance pay, shutdown
benefits, or any other similar obligations under any Law,
including, without limitation, under the WARN Act, collective
bargaining agreement, employment agreement, contract, benefit
plan, policy or practice, relating to the termination of such
employees, employment, or constructive termination thereof,
arising at any time prior to or within six years after the
Closing Date; and
(d) any and all actions, suits, proceedings, claims,
demands, assessments and judgments, incident to any of the
foregoing or the enforcement of such indemnification.
8.3. Indemnification by Buyer. Buyer hereby agrees to
defend, indemnify and hold harmless Seller and its successors,
assigns and affiliates from and against:
(a) any and all Losses resulting from (i) breaches of
any representations and warranties hereunder or under any other
Buyer Document on the part of Buyer, and (ii) failures by Buyer
to perform or otherwise fulfill any agreement or obligation
hereunder or under any other Buyer Document;
(b) if the Closing shall occur, all Losses
constituting Liabilities expressly assumed by Buyer pursuant to
Article II hereof; and
(c) any and all actions, suits, proceedings, claims,
demands, assessments and judgments, incident to any of the
foregoing or the enforcement of such indemnification.
8.4. Indemnification Procedures. If any Loss shall be
asserted against an indemnified party or any of its successors or
assigns in respect of which they propose to demand
indemnification (an "Indemnified Claim"), such indemnified party
shall notify the indemnifying party thereof as promptly as
practicable, such notice to be in reasonable detail; provided
however that the failure to give such notice shall not affect the
obligations of an indemnifying party hereunder except to the
extent of actual prejudice. The indemnified party shall not
compromise or settle any such Indemnified Claim without the prior
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written consent of the indemnifying party (which consent, in the
event that Buyer is the indemnified party, shall not be
unreasonably withheld). The indemnifying party (but in no event
more than one indemnifying party) shall have the right at its own
expense to participate in the defense of any Indemnified Claim.
8.5. Determination of Damages and Related Matters. In
calculating any amounts payable by Seller pursuant to Section 8.2
or by Buyer pursuant to Section 8.3, Seller or Buyer, as the case
may be, shall receive credit for any insurance recoveries.
ARTICLE IX
TERMINATION
9.1. Termination. This Agreement may be terminated,
and the transactions contemplated hereby may be abandoned, at any
time prior to the Closing without liability on the part of any
party hereto (unless such liability is occasioned by reason of a
failure of one of the parties hereto to perform its obligations
hereunder or a breach by one of the parties of its
representations and warranties):
(a) by mutual written consent of Buyer and Seller; or
(b) by Buyer pursuant to Section 6.5; or
(c) by Buyer, on one hand, or Seller, on the other
hand, if the other party shall breach its representations,
warranties or obligations hereunder or if such representations,
warranties or obligations become incapable of fulfillment; or
(d) by Seller or Buyer, if the Closing shall not have
occurred by May 31, 1995; provided that the right to terminate
this Agreement under this Section 9.1(d) shall not be available
to any party whose breach of representations or warranties or
failure to fulfill any obligation under this Agreement shall have
been the cause of, or shall have resulted in, the failure of the
Closing to occur prior to such date.
ARTICLE X
MISCELLANEOUS
10.1. Expenses. Except as otherwise expressly
provided herein, each of the parties hereto shall bear all
expenses incurred by it in connection with negotiation,
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preparation, execution and delivery of this Agreement, the other
documents contemplated hereby, and the consummation of the
transactions contemplated hereby and thereby, including without
limitation, the fees and disbursements of its counsel, financial
advisers and accountants; provided, however, that if no Closing
takes place hereunder (other than by reason of a breach by Buyer
of its representations, warranties or obligations hereunder)
Seller agrees to pay all such expenses of Buyer.
10.2. Absence of Brokers. Each party represents and
warrants that no finder's fee or broker's commission shall by
reason of its actions be payable by any other party in connection
with the transactions contemplated hereby.
10.3. Waiver. Any failure of Seller to comply with
any of its obligations or agreements herein contained may be
waived only in writing by Buyer. Any failure of Buyer to comply
with any of its obligations or agreements herein contained may be
waived only in writing by Seller.
10.4. Transfer Taxes. Seller shall pay when due (a)
all transfer, excise, stamp and documentary Taxes and fees
imposed with respect to instruments of conveyance in the
transaction contemplated hereby, if any, and (b) all sales, use,
excise, real or personal property transfer, gains and other
transfer or similar Taxes on the transfer of the Store Assets
contemplated hereunder. Buyer shall execute and deliver to
Seller at the Closing any certificates or other documents as
Seller may reasonably request to perfect any exemption from any
such Taxes.
10.5. Bulk Sales Reauirements. The parties hereto
waive compliance with any applicable bulk sales law, including,
without limitation, the Uniform Corrmercial Code Bulk Transfer
Provisions. Seller agrees to pay and discharge in due course,
and will indemnify and hold harmless Buyer from and against, any
and all claims, demands, liabilities, obligations and losses
arising out of or in any way relating to claims made by creditors
of Seller.
10.6. Notices. All notices and other communications
hereunder shall be in writing and shall be deemed to have been
duly given if delivered, telecopied or mailed, certified or
registered mail, effective in the case of mailing, five days
after postmarked, return receipt requested:
37
NYFS03...:\21\79421\0001\2042\AGR2165P.03E
(a) If to Seller, to:
Foodarama Supermarkets, Inc.
922 Highway 33
Building Six - Suite One
Freehold, New Jersey 07728
Attention: Mr. Joseph Saker, President
Telecopy No.: (908) 294-2322
(with a copy to)
Foodarama Supermarkets, Inc.
922 Highway 33
Building Six - Suite One
Freehold, New Jersey 07728
Attention: Howard Snowiss, Esq., General Counsel
Telecopy No.: (908) 294-2322
(b) If to Buyer, to:
Wakefern Food Corporation
600 York Street
Elizabeth, New Jersey 07207-0506
Attention: James F. Watson, Esq., General Counsel
Telecopy No.: (908) 527-3397
(with a copy to)
Weil, Gotshal & Manges
767 Fifth Avenue
New York, New York 10153
Attention: Dennis J. Block, Esq.
Telecopy No.: (212) 310-8007
Such names and addresses may be changed by written notice to each
person listed above.
10.7. Governing Law. This Agreement shall be governed
by and construed in accordance with the law of the State of New
Jersey without giving effect to the principles of conflict of laws
thereunder.
10.8. Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall
be deemed an original but all of which together shall constitute
one and the same instrument.
10.9. Headings. The section headings contained in
this Agreement are for reference purposes only and shall not
38
WYFS03...:\21\79421\0001\2042\AGR2165P.03E
affect in any way the meaning or interpretation of this
Agreement.
10.10. 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 a mutually acceptable
manner in order that the transactions contemplated hereby be
consummated as originally contemplated to the greatest extent
possible.
10.11. Entire Agreement. This Agreement constitutes
the entire agreement of the parties hereto with respect to the
subject matter hereof and supersedes all prior agreements and
undertakings, both written and oral, between Seller and Buyer
with respect to the subject matter hereof and except as otherwise
expressly provided herein.
10.12. Amendment and Modification. This Agreement may
be amended or modified only by written agreement of the parties
hereto.
10.13. Binding Effect; Benefits. This Agreement shall
inure to the benefit of and be binding upon the parties hereto
and their respective successors and assigns. Nothing in this
Agreement, express or implied, is intended to confer on any
person other than the parties hereto or their respective
successors and assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
10.14. Assignability. This Agreement shall not be
assigned by Seller without the prior written consent of Buyer.
Buyer may assign its rights and obligations hereunder to one or
more of its affiliates or third parties.
39
NYFS03...:\21\79421\0001\2042\AGR2165P.03E
IN WITNESS WHEREOF, the parties hereto have duly
executed this Agreement as of the date first abcve written.
FOODARAMA SUPERMARKETS, INC.
BY:
Name: JOSEPH SAKER
Title: PRESIDENT
SHOPRITE OF READING, INC.
By:
Name: JOSEPH SAKER
Title: PRESIDENT
WAKEFERN FOOD CORP.
By:
Name: THOMAS P. INFUSINO
Title: CHAIRMAN OF THE BOARD
40
AMENDMENT NO. 1 TO ASSET PURCHASE AGREEMENT
THIS AMENDMENT NO. 1 (the "Amendment"), is entered
into this 24TH day of May, 1995, among Foodarama
Supermarkets, Inc., a New Jersey corporation ("FSI"), Shop
Rite of Reading, Inc., a Pennsylvania corporation and a
wholly owned subsidiary of FSI ("SRRI", and together with
FSI, the "Seller"), Wakefern Food Corp., a New Jersey
corporation ("Wakefern"), and Gemini Food Markets, L.P., a
Delaware limited partnership ("Gemini,,).
W I T N E S S E T H:
WHEREAS, Seller and Wakefern are parties to that
certain Asset Purchase Agreement, dated April 20, 1995 (the
"Agreement"), and capitalized terms used herein and not
otherwise defined shall have the meanings given to them in
the Agreement; and
WHEREAS, as permitted by the Agreement, Wakefern
desires to assign all of its rights in and under the
Agreement to Gemini and Gemini desires to assume all of
Wakefern's obligations in and under the Agreement (the
"Assignment"); and
WHEREAS, after giving effect to the Assignment,
pursuant to the Agreement Seller is required (i) to sublet
to Gemini, Seller's tenant's estate in the Lease for the
Allentown Store pursuant to the Sublease Agreement, and (ii) to
assign to Gemini, Seller's estate in the Lease for the
Bethlehem Store pursuant to the Assignment and Assumption of
Lease; and
WHEREAS, the parties hereto desire to make certain
amendments to the Agreement and certain of the Exhibits thereto as
hereinafter described and to enter into certain additional
arrangements to effectuate the transactions contemplated by the
Agreement on the terms and subject to the conditions set forth
herein;
NOW, THEREFORE, in donsideration of the premises and of
the mutual agreements and covenants contained herein, the parties
hereto agree as follows:
1. Wakefern hereby assigns all of its rights in
and under the Agreement to Gemini and Gemini hereby assumes
NYFS03... :\21\79421\0001\2042\AMD4285K.040
all of Wakefern's obligations in and under the Agreement. The
parties hereto hereby agree that except as otherwise provided in
this agreement, Wakefern shall have no furthur obligations or
liabilities with respect to the Agreement and all references in
the Agreement to "Buyer" shall be deemed to be references to
Gemini. Accordingly, Section 10.6(b) of the Agreement is hereby
amended to read as follows:
"(b) If to Buyer to:
Gemini Food Markets, L.P.
10 Wilmont Street
Morristown, New Jersey 07960
Attention: Michael J. Larkin
Telecopy No.: (610) 266-4222
(with a copy to)
Lowenstein, Sandler, Kohl, Fisher & Boylan
65 Livingston Avenue
Roseland, New Jersey 07068
Attention: Joseph L. Steinberg
Telecopy No.: (201) 992-5820
Such names and addresses may be changed by written notice to
each person listed above."
2.FSI and Gemini hereby agree that FSI shall not be
obligated to sublease its tenant's estate in the Lease for the
Allentown Store to Gemini and Gemini shall not be obligated to
take such tenant's estate from FSI pursuant to the Agreement and
the Sublease Agreement. Accordingly, Exhibit B to the Agreement
and all references in the Agreement to the Sublease Agreement are
hereby deleted in their entirety and FSI and Gemini shall have no
further obligations or liabilities with respect thereto. In lieu
thereof, FSI and Wakefern hereby agree that FSI shall sublease its
tenant's estate in the Lease for the Allentown Store to Wakefern
and Wakefern shall take such tenant's estate from FSI pursuant to
the sublease agreement attached hereto as Exhibit I (the "First
Allentown Sublease"). The parties hereto hereby agree that the
First Allentown Sublease shall be added to the Agreement as
Exhibit I thereto and that the First Allentown Sublease shall be
construed in accordance with the Agreement, and the rights and
obligations of the parties thereunder shall be subject to all of
the terms and conditions of the Agreement. Wakefern represents
and warrants to FSI that it is an
2
operator of ShopRite supermarkets. FSI represents, warrants and
covenants to Wakefern and Gemini that FSI's execution and delivery
of the First Allentown Sublease and its performance of its
obligations thereunder will not conflict with or result in the
breach or termination of or constitute a default or require any
approval, waiver or consent under the Lease for the Allentown
Store. Simultaneously with the execution and delivery hereof,
each of FSI and Wakefern shall execute and deliver to one another
the First Allentown Sublease.
3.Wakefern and Gemini hereby agree that Wakefern shall
sublease its subtenant's estate in the Lease for the Allentown
Store to Gemini and Gemini shall take such subtenant's estate from
Wakefern pursuant to the sublease agreement attached hereto as
Exhibit II (the "Second Allentown Sublease"). Gemini hereby
represents and warrants to FSI that Gemini has been approved by
the Board of Directors of Wakefern as a stockholder of Wakefern
and an operator of ShopRite supermarkets. FSI represents,
warrants and covenants to Wakefern and Gemini (i) that the
execution and delivery by Wakefern and Gemini of the Second
Allentown Sublease and the performance by them of their respective
obligations thereunder will not conflict with or result in the
breach or termination of or constitute a default or require any
approval, waiver or consent under the Lease for the Allentown
Store, and (ii) that prior to the execution and delivery of the
Second Allentown Sublease, the First Allentown Sublease shall not
be modified or amended and shall be in full force and effect.
Immediately following the execution and delivery of the First
Allentown Sublease by the parties thereto, Wakefern and Gemini
shall execute and deliver to one another the Second Allentown
Sublease.
4.FSI and Gemini hereby agree that FSI shall not be
obligated to assign its estate in the Lease for the Bethlehem
Store to Gemini and Gemini shall not be obligated to take such
estate from FSI pursuant to the Agreement and the Assignment and
Assumption of Lease. Accordingly, Exhibit C to the Agreement and
all references in the Agreement to the Assigmnent and Assumption
of Lease are hereby deleted in their entirety and FSI and Gemini
shall have no further obligations or liabilities with respect
thereto. In lieu thereof, FSI and Wakefern hereby agree that FSI
shall assign its estate in the Lease for the Bethlehem Store to
Wakefern and Wakefern shall take such estate from FSI pursuant to
the assignment and assumption of lease agreement attached hereto
as Exhibit III (the "First
NYFS03... :\21\79421\0001\2042\AMD4285K.040
Bethlehem Assignment"). The parties hereto hereby agree that the
First Bethlehem Assignment shall be added to the Agreement as
Exhibit III thereto and that the First Bethlehem Assignment shall
be construed in accordance with the Agreement, and the rights and
obligations of the parties thereunder shall be subject to all of
the terms and conditions of the Agreement. FSI represents,
warrants and covenants to Wakefern and Gemini that FSI's execution
and delivery of the First Bethlehem Assignment and its performance
of its obligations thereunder will not conflict with or result in
the breach or termination of or constitute a default or require
any approval, waiver or consent under the Lease for the Bethlehem
Store. Simultaneously with the execution and delivery hereof,
each of FSI and Wakefern shall execute and deliver to one another
the First Bethlehem Assignment.
5. Wakefern and Gemini hereby agree that Wakefern shall
assign its estate in the Lease for the Bethlehem Store to Gemini
and Gemini shall take such estate from Wakefern pursuant to the
assignment and assumption of lease agreement attached hereto as
Exhibit IV (the "Second Bethlehem Assignment"). FSI represents,
warrants and covenants to Wakefern and Gemini (i) that the
execution and delivery by Wakefern and Gemini of the Second
Bethlehem Assignment and the performance by them of their
respective obligations thereunder will not conflict with or result
in the breach or termination of or constitute a default or require
any approval, waiver or consent under the Lease for the Bethlehem
Store, and (ii) that prior to the execution and delivery of the
Second Bethlehem Assignment, the First Bethlehem Assignment shall
not be modified or amended and shall be in full force and effect.
Immediately following the execution and delivery of the First
Bethlehem Assignment by the parties thereto, Wakefern and Gemini
shall execute and deliver to one another the Second Bethlehem
Assignment.
6. FSI and SRRI jointly and severally represent and
warrant to Gemini that as of the date hereof all obligations of
and amounts payable by FSI and SRRI under that certain (i) Term
Promissory Note, dated September 28, 1992, by SRRI in favor of
MetLife Capital Corporation ("MetLifell), (ii) Loan and Security
Agreement, dated September 28, 1992, between MetLife and SRRI,
(iii) Supplemental Security Agreement, dated September 28, 1992,
between SRRI and MetLife, and (iv) Master Lease Agreement (Lease
No. 1330816), dated September 30, 1988, as amended by various
Addenda thereto, between GE Capital Corporation
4
NYFS03... :\21\79421\0001\2042\AMD4285K.040
(f/k/a Chrysler Capital Corporation) and FSI (collectively, the
"Financing Arrangements"), have been satisfied in full and that
the Fixed Assets subject of such Financing Arrangements have been
delivered to Gemini free and clear of all Liens. FSI, SRRI and
Gemini hereby agree that notwithstanding anything to the contrary
in the Agreement, that certain Assumption Agreement of even date
herewith, between Seller and Gemini (the "Assumption Agreement"),
or any other instrument, document or agreement executed and
delivered in connection with the Closing of the transactions
contemplated by the Agreement, Gemini shall not assume any
liabilities and obligations under the Financing Arrangements and
Seller shall remain fully liable therefor.
7. Seller hereby agrees, to the extent it has not
obtained as of the Closing Date the consents of any third party
required under the Contracts listed on Schedule 4.4 to the
Agreement, to use its best efforts for a period of 10 business
days from and after the Closing Date (i) to obtain such consents
from such third parties and Gemini shall cooperate with Seller in
connection therewith, and (ii) to provide Gemini with the benefits
of such Contracts. If such consents in a form reasonably
satisfactory to Gemini and its counsel are not obtained as of the
conclusion of such 10 business day period, then notwithstanding
anything to the contrary in the Agreement, the Assumption
Agreement or any other instrument, agreement or document executed
and delivered in connection with the Closing of the transactions
contemplated by the Agreement, Gemini shall have the right to
terminate its obligations to assume such Contracts by notice
thereof to Seller and Gemini shall thereafter promptly discontinue
availing itself of the benefits thereof. Gemini shall promptly
reimburse Seller for all payments made by Seller under such
Contracts to the extent Gemini has received the benefits thereof,
based on the terms of such Contracts and the number of days Gemini
received such benefits.
8. Seller hereby represents and warrants to Gemini, that
since April 1, 1995, none of the Fixed Assets have been removed
from either of the Stores. Seller and Gemini hereby agree that
notwithstanding anything to the contrary in the Agreement, Seller
shall have the right to delete duplicative listings of Fixed
Assets in Schedule 4 to the Agreement by delivery of written
notice thereof to Gemini within two weeks of the Closing Date
provided such notice is accompanied by proof reasonably
satisfactory to Gemini and its counsel that such listings are
duplicative.
NYFS03... :\21\79421\0001\2042\AMD4285K.040
9. (i) Seller and Gemini hereby agree that as of the
Closing Date, Gemini shall make contributions to the U.F.C.W. and
Participating Food Employers Tri-State Pension Fund (the
"Multiemployer Plan"), in accordance with the collective
bargaining agreement applicable to the Employees who become
employees of Gemini ("Transferred Employees"), for substantially
the same number of contribution base units for which Seller had an
obligation to contribute with respect to the operations covering
such Transferred Employees (the "Operations"). Seller and Gemini
acknowledge and agree that Gemini has entered into a Memorandum of
Agreement with U.F.C.W. Local 1776 and Local 56, which is intended
to amend the collective bargaining agreements applicable to the
Transferred Employees. Such Memorandum of Agreement provides,
among other things, that subject to the approval of the
Multiemployer Plan, Gemini shall not be required to make
contributions to the Multiemployer Plan for up to 3 months.
Seller and Gemini hereby agree that if such approval is not
granted, Seller shall promptly pay to Gemini the amount of $42,000
to induce Gemini to not withdraw from the Multiemployer Plan.
(ii) During the period commencing on the first day of the
first plan year following the Closing Date and ending on the
expiration of the fifth such plan year (the "Contribution
Period"), Gemini shall provide to the Multiemployer Plan either a
bond, letter of credit, or an escrow, in an amount, form and
manner meeting the requirements of ERISA section 4204(a)(1)(B).
Notwithstanding anything contained in this paragraph 9 to the
contrary, Gemini shall not be obligated to provide any bond,
letter of credit or escrow required herein in the event and to the
extent Gemini obtains from PBGC a proper variance or exemption
under ERISA section 4204(c). Seller represents, warrants and
covenants to Gemini that the criteria set forth in PBGC Reg. &
2643.13 will be satisfied on the first day of the first plan year
following the Closing Date and that Gemini will not be required to
post a bond or otherwise comply with Section 4204(a)(i)(B). In
the event that Gemini is required to post such a bond, Seller
shall promptly reimburse Gemini for any and all costs thereof.
Seller agrees to cooperate with Gemini in connection with any
application for such a variance or exemption made by Gemini to
PBGC. The cost of any bond, letter of credit or escrow provided
under this paragraph shall be paid by Gemini.
NYFS03... :\21\79421\0001\2042\AMD4285K.040
(iii) If Gemini at any time withdraws from the
Multiemployer Plan in a complete or partial withdrawal during the
Contribution Period, Seller shall be secondarily liable for any
withdrawal liability Seller would have had to the Multiemployer
Plan with respect to the Operations (but for the provisions of
ERISA Section 4202) if the withdrawal liability of Gemini with
respect to such Multiemployer Plan is not paid. Gemini shall use
its best efforts to provide Seller with reasonable advance notice
of any action or event which could result in the imposition of
withdrawal liability contemplated hereunder, and in any event
Gemini shall immediately furnish Seller with a copy of any notice
of withdrawal liability it may receive with respect to the
Multiemployer Plan. In the event that any such withdrawal
liability shall be assessed against Gemini, Gemini shall use its
best efforts to provide Seller with reasonable advance notice of
any intention on the part of the Gemini not to make full payment
of any withdrawal liability when the same shall become due and
payable. The failure of Gemini to provide Seller with any such
advance notice shall not adversely affect any of Gemini's rights
in this Amendment or under the law. Seller hereby agrees to
defend, indemnify and hold Gemini and its successors, assigns and
affiliates harmless from and against any and all losses, costs,
expenses (including reasonable attorneys' fees), liabilities,
deficiencies and damages incurred at any time as a result of being
liable for withdrawal liability under the Multiemployer Plan,
provided however that this indemnity will not extend to any
assessed withdrawal liability in excess of $100,000.
10. Except as expressly amended herein, the Agreement,
including the Exhibits and Schedules thereto, shall remain in full
force and effect.
This Amendment may be executed in two or more
counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same instrument.
NYFS03... :\21\79421\0001\2042\AMD4285K.040
IN WITNESS WHEREOF, the parties have duly executed
this Amendment on the day and year first set forth above.
FOODARAMA SUPERMARKETS, INC.
BY:
Richard J. Saker
Senior Vice President and
Secretary
SHOP RITE OF READING, INC.
By:
Joseph C. Troilo
Senior Vice President and
Assistant Secretary
WAKEFERN FOOD CORP.
By:
Thomas P. Infusino
Chairman of the Board
GEMINI FOOD MARKETS, L.P.
By: GEMINI FOODMARKETS,L.L.C.,
as General Partner
By:
Michael J. Larkin
Member
