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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): January 29, 1998
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SUPERMARKETS GENERAL HOLDINGS CORPORATION
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(Exact name of registrant as specified in charter)
DELAWARE 0-16404 13-3408704
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(State or other (Commission (IRS Employer
jurisdiction of File No.) Identification No.)
incorporation)
200 MILIK STREET, CARTERET, NEW JERSEY 07008
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (732) 499-3000
301 BLAIR ROAD, P.O. BOX 5301, WOODBRIDGE, NJ 07095-0915
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(Former Address)
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The Exhibit Index Appears On Page 8
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On January 29, 1998, Pathmark Stores, Inc. ("Pathmark"), an indirect,
wholly-owned subsidiary of the Registrant, completed the sale of its fee
interest in its Woodbridge, New Jersey warehouse complex, its leasehold
interest in two other distribution center facilities in North Brunswick, NJ
and Dayton, NJ, and its banana ripening facility in Avenel, NJ, all to C&S
Wholesale Grocers, Inc. ("C&S"), including the fixtures, equipment and
inventory in each facility (the "Purchase Agreement"). The selling price for
the aforementioned assets was approximately $103.9 million. Simultaneously,
Pathmark and C&S commenced a fifteen year supply agreement (the "Supply
Agreement") pursuant to which C&S will supply Pathmark with substantially all
of its grocery and perishable merchandise requirements. Pathmark used $32.5
million to retire a portion of the term loan under its Credit Agreement dated
as of June 30, 1997 among Pathmark and the institutions referred to therein
and the remainder will be utilized primarily to repay the Company's
borrowings under the working capital facility and trade payables.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Not applicable.
(b) Pro forma financial information.
The attached condensed consolidated pro forma information includes the
statements of operations for the 39 weeks ended November 1, 1997 and for the 52
weeks ended February 1, 1997 and the balance sheet as of November 1, 1997,
giving effect to the aforementioned Purchase Agreement and Supply Agreement (the
"Transaction").
(c) EXHIBITS
DESIGNATION DESCRIPTION METHOD OF FILING
Exhibit 2.1 Amended and Restated Asset Purchase Filed with this Report.
Agreement among Pathmark and
Plainbridge, Inc. and C&S, CSWG LLC
and Woodbridge Logistics LLC
Exhibit 99 News release of Pathmark dated Filed with this Report.
January 30, 1998 announcing the
sale of Pathmark's distribution assets
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SUPERMARKETS GENERAL HOLDINGS CORPORATION
ITEM 7 (B) PRO FORMA FINANCIAL INFORMATION
The following pro forma consolidated financial information of Holdings
consists of a Pro Forma Consolidated Balance Sheet as of November 1, 1997 and
Pro Forma Consolidated Statements of Operations for the 39 weeks ended
November 1, 1997 and the 52 weeks ended February 1, 1997 (collectively, the
"Pro Forma Statements"). The Pro Forma Consolidated Balance Sheet was
prepared to give effect to (i) the Purchase Agreement consisting of the sale
of Pathmark's warehouse complex in Woodbridge, NJ, its leasehold interest in
two other distribution facilities in North Brunswick, NJ and Dayton, NJ, and
its banana ripening facility in Avenel, NJ, all to C&S, including the
fixtures, equipment and inventory in each facility at a selling price of
approximately $103.9 million, (ii) the prepayment of term loan borrowings of
$32.5 million, the repayment of borrowings under the working capital facility
of $25.2 million and the payment of trade accounts payable and other
liabilities of $66.5 million, (iii) the recording of a deferred gain of $34.7
million related to the sale of the distribution facilities; since the fair
value of the assets sold approximates the Company's carrying costs, the sale
proceeds in excess of the net book value have been deferred and will be
amortized over the life of the Supply Agreement, and (iv) the recording of a
$25.0 million payment received for trade discounts and rebates by the Company
upon the execution of the Supply Agreement; such payment will be amortized by
the Company as it is earned. The pro forma adjustments for purposes of the
Pro Forma Consolidated Balance Sheet presentation give effect to the Transaction
as though it had occurred at November 1, 1997.
The Pro Forma Consolidated Statements of Operations were prepared to
give effect to both the Transaction. The pro forma adjustments for purposes
of the Pro Forma Consolidated Statements of Operations presentation give
effect to the Transaction as though it had occurred at the beginning of the
earliest period for which the information is presented. The pro forma
adjustments have only been included to the extent they are factually
supportable, directly related to the Transaction and are expected to have a
continuing impact on the Company's Consolidated Statements of Operations.
The pro forma adjustments are based upon currently available information
and upon certain assumptions that management believes are reasonable under
the circumstances. The Pro Forma Statements do not purport to represent what
Holdings financial position or results of operations would actually have been
if the Transaction in fact had occurred on such date or at the beginning of
the earliest period indicated or to project Holdings financial position or
results of operations at any future date or for any future period.
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SUPERMARKETS GENERAL HOLDINGS CORPORATION
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
39 WEEKS ENDED NOVEMBER 1, 1997
(in millions)
<TABLE>
<CAPTION>
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
<S> <C> <C> <C>
Sales............................................................ $ 2,755.3 $ -- $ 2,755.3
Cost of sales.................................................... 1,984.9 (65.8) (a) 1,967.6
48.7 (b)
(0.2) (c)
---------- ------- ---------
Gross profit..................................................... 770.4 17.3 787.7
Selling, general and administrative expenses..................... 630.8 (0.7) (a) 630.1
Depreciation and amortization.................................... 61.6 (2.2) (d) 59.4
---------- ------- ---------
Operating earnings............................................... 78.0 20.2 98.2
Interest expense................................................. 124.8 (3.7) (e) 121.1
---------- ------- ---------
Income (loss) before income taxes and extraordinary items........ (46.8) 23.9 (22.9)
Income tax benefit (provision)................................... 18.7 (9.6) (f) 9.1
---------- ------- ---------
Income (loss) before extraordinary items......................... $ (28.1) $ 14.3 $ (13.8)
========== ======= =========
</TABLE>
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(a) To reverse the operating costs of the distribution centers sold in the
Transaction.
(b) To reflect the impact on the cost of sales of the Supply Agreement,
including the amortization of the deferred gain, trade discounts and
rebates.
(c) To adjust the LIFO charge resulting from the sale of the inventory.
(d) To adjust depreciation and amortization expense resulting from the sale
of the fixed assets.
(e) To adjust interest expense resulting from the prepayment on the term loan
and the repayment of the borrowings under the working capital facility.
(f) To record the tax impact of the pro forma adjustments.
Note: EBITDA-FIFO was $141.9 million on an historical basis compared to
$159.7 million on a pro forma basis. EBITDA-FIFO represents net earnings
before interest expense, income taxes, depreciation, amortization, the LIFO
charge (credit) and unusual transactions. EBITDA-FIFO is a widely accepted
financial indicator of a company's ability to service and/or incur debt and
should not be construed as an alternative to, or a better indicator of,
operating income or cash flows from operating activities, as determined in
accordance with generally accepted accounting principles.
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SUPERMARKETS GENERAL HOLDINGS CORPORATION
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
52 WEEKS ENDED FEBRUARY 1, 1997
(in millions)
<TABLE>
<CAPTION>
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
<S> <C> <C> <C>
Sales............................................................ $ 3,711.0 $ -- $ 3,711.0
Cost of sales.................................................... 2,619.3 (84.1) (a) 2,600.1
64.0 (b)
0.9 (d)
---------- ------- ---------
Gross profit..................................................... 1,091.7 19.2 1,110.9
Selling, general and administrative expenses..................... 857.4 (0.9) (a) 856.5
Depreciation and amortization.................................... 89.1 (3.2) (d) 85.9
Restructuring charge............................................. 9.1 -- 9.1
Lease commitment charge.......................................... 8.8 -- 8.8
---------- ------- ---------
Operating earnings............................................... 127.3 23.3 150.6
Interest expense................................................. 164.1 (5.0) (e) 159.1
---------- ------- ---------
Income (loss) before income taxes and extraordinary items........ (36.8) 28.3 (8.5)
Income tax benefit (provision)................................... 17.7 (11.9) (f) 5.8
---------- ------- ---------
Income (loss) before extraordinary items......................... $ (19.1) $ 16.4 $ (2.7)
========== ======= =========
</TABLE>
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(a) To reverse the operating costs of the distribution centers sold in the
Transaction.
(b) To reflect the impact on the cost of sales of the Supply Agreement,
including the amortization of the deferred gain, trade discounts and
rebates.
(c) To adjust the LIFO credit resulting from the sale of the inventory.
(d) To adjust depreciation and amortization expense resulting from the sale
of the fixed assets.
(e) To adjust interest expense resulting from the prepayment on the term loan
and the repayment of the borrowings under the working capital facility.
(f) To record the tax impact of the pro forma adjustments.
Note: EBITDA-FIFO was $236.7 million on an historical basis compared to
$257.7 million on a pro forma basis. EBITDA-FIFO represents net earnings
before interest expense, income taxes, depreciation, amortization, the LIFO
charge (credit) and unusual transactions. EBITDA-FIFO is a widely accepted
financial indicator of a company's ability to service and/or incur debt and
should not be construed as an alternative to, or a better indicator of,
operating income or cash flows from operating activities, as determined in
accordance with generally accepted accounting principles.
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SUPERMARKETS GENERAL HOLDINGS CORPORATION
PRO FORMA CONSOLIDATED BALANCE SHEET(UNAUDITED)
AS OF NOVEMBER 1, 1997
(in millions)
<TABLE>
<CAPTION>
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
ASSETS
<S> <C> <C> <C>
Current Assets
Cash and cash equivalents..................................... $ 9.4 $ 99.8 (a) $ 9.4
25.0 (b)
(124.8) (c)
Merchandise inventories....................................... 203.2 (42.3) (a) 161.7
0.8 (d)
Other current assets.......................................... 71.0 (0.6) (a) 70.4
--------- ------ ---------
Total Current Assets........................................ 283.6 (42.1) 241.5
Property and Equipment, Net...................................... 551.6 (22.2) (a) 529.4
Deferred Financing Costs, Net.................................... 19.7 -- 19.7
Deferred Income Taxes............................................ 64.7 17.8 (e) 82.5
Other Assets..................................................... 37.4 -- 37.4
--------- ------ ---------
$ 957.0 $(46.5) $ 910.5
========= ====== =========
LIABILITIES AND STOCKHOLDER'S DEFICIT
Current Liabilities
Accounts payable.............................................. $ 174.0 $(64.4) (c) $ 109.6
Other current liabilities..................................... 222.2 (2.1) (c) 220.1
--------- ------ ---------
Total Current Liabilities................................... 396.2 (66.5) 329.7
Long-Term Debt................................................... 1,289.3 (57.7) (c) 1,231.6
Lease Obligations, Long-Term..................................... 167.5 (0.6) (c) 166.9
Other Noncurrent Liabilities..................................... 305.3 34.7 (a) 365.0
25.0 (b)
Redeemable Securities............................................ 106.7 -- 106.7
Stockholder's Deficit............................................ (1,308.0) 0.8 (d) (1,289.4)
17.8 (e)
--------- ------ ---------
$ 957.0 $(46.5) $ 910.5
========= ====== =========
</TABLE>
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(a) To record the net proceeds, asset disposition and the deferred gain related
to the Transaction. (b) To record payment related to trade discounts and
rebates received upon execution of the Supply Agreement.
(c) To reflect the use of proceeds related to the Transaction.
(d) To reflect the non-recurring LIFO liquidation gain resulting from the sale
of inventory related to the Transaction.
(e) The sale of the assets related to the Transaction generated capital gains
and as such, the adjustment to stockholder's deficit reflects the reversal
of a portion of the income tax valuation allowance related to the capital
tax loss carryforward.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized on the date indicated.
SUPERMARKETS GENERAL HOLDINGS
CORPORATION
-----------------------------
(Registrant)
Date: February 13, 1998 By: /s/Ron Marshall
------------------------------
Ron Marshall
EXECUTIVE VICE PRESIDENT
AND CHIEF FINANCIAL OFFICER
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EXHIBIT INDEX
FINANCIAL STATEMENTS AND EXHIBITS
DESIGNATION DESCRIPTION
Exhibit 2.1 Purchase Agreement
Exhibit 99 News Release of Pathmark dated
January 30, 1998 announcing the
sale of Pathmark's distribution
assets
Page 8
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EXHIBIT 2.1
AMENDED AND RESTATED
ASSET PURCHASE AGREEMENT
AMONG
PATHMARK STORES, INC.
PLAINBRIDGE, INC.
C & S WHOLESALE GROCERS, INC.
CSWG LLC
and
WOODBRIDGE LOGISTICS LLC
Dated as of September 26, 1997
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AMENDED AND RESTATED ASSET PURCHASE AGREEMENT
THIS AMENDED AND RESTATED ASSET PURCHASE AGREEMENT, dated as of
September 26, 1997 (this "Agreement"), is made by and among Pathmark Stores,
Inc., a Delaware corporation ("Pathmark"), Plainbridge, Inc., a Delaware
corporation wholly owned by Pathmark ("Plainbridge"), C & S Wholesale Grocers,
Inc., a Vermont corporation ("C&S"), CSWG LLC, a Delaware limited liability
company and wholly owned subsidiary of C&S ("CSWG"), and Woodbridge Logistics
LLC, a Delaware limited liability company and wholly owned subsidiary of C&S
("Woodbridge" collectively, together with C&S, CSWG, Pathmark and Plainbridge,
the "Parties").
W I T N E S S E T H
WHEREAS, C&S, CSWG and Woodbridge (collectively, "Purchasers") desire
to purchase certain assets of Pathmark and Plainbridge, and Pathmark and
Plainbridge desire to sell such assets, on the terms and subject to the
conditions set forth in this Agreement;
WHEREAS, at or prior to the Closing herewith, the Parties will enter
into the following agreements (the "Related Agreements"): (i) a supply
agreement, whereby C&S will supply Pathmark with all of its requirements of
groceries, perishables, frozen food and other merchandise in the product
categories carried by C&S (the "Supply Agreement"); (ii) an assignment of the
existing lease for the Pathmark freezer facility located in Dayton, New Jersey
(the "Dayton Facility Assignment"); (iii) an assignment of the existing lease
for the Pathmark warehouse facility located in North Brunswick, New Jersey (the
"Brunswick Facility Assignment"); and (iv) an assignment of the existing lease
for the Pathmark banana ripening facility located in Avenel, New Jersey (the
"Banana Ripening Facility Assignment");
WHEREAS, C&S, Pathmark and Plainbridge entered into the original Asset
Purchase Agreement on September 26, 1997 and desire to amend and restate such
original Agreement in its entirety as of the date of such original agreement.
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NOW, THEREFORE, in consideration of the promises, warranties, and
covenants contained in this Agreement, and intending to be legally bound hereby,
the Parties agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings:
(a) "Acquired Assets" shall have the meaning specified in
Section 2.1.
(b) "Acquired Facilities" shall have the meaning specified in
Section 2.1(f).
(c) "Actual Cost" means the average amount paid by Pathmark for
any item contained in the Transferred Inventory as reflected on Pathmark's books
and records, which amount shall not include any earned cash discounts,
off-invoice allowances and retail billbacks.
(d) "Affected Employees" shall mean all individuals who are
employed by Pathmark or any of its Affiliates at the Facilities on the date
hereof.
(e) "Affiliate" shall mean, as to any entity, any person or
entity that directly or indirectly controls, is controlled by or is under common
control with such first entity. For purposes of the foregoing definition,
"control" means the power to direct the business policies and affairs of an
entity whether by reason of ownership of voting securities, by control or
otherwise.
(f) "Assigned Leases" shall mean the Dayton Facility Lease, the
Brunswick Facility Lease, and the Banana Ripening Facility Lease.
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(g) "Assumed Collective Bargaining Agreements" shall mean the
collective bargaining agreements listed on Schedule 1.1(g) hereto, true and
complete copies of which are attached to such Schedule (other than the agreement
covering thirteen clerical employees).
(h) "Assumed Contracts" shall mean the equipment leases and
other contracts itemized on Exhibit A-1 and Exhibit A-2 hereto.
(i) "Assumed Liabilities"shall have the meaning specified in
Section 4.1. The amount of each Assumed Liability which is a fixed amount shall
be set forth with its respective Assumed Contract on Exhibit A.
(j) "Banana Ripening Facility" shall mean the Pathmark facility
located at Building 5-C, Terminal Way, Avenel, New Jersey.
(k) "Banana Ripening Facility Assignment" shall have the meaning
specified in the preamble to this Agreement.
(l) "Banana Ripening Facility Lease" shall have the meaning
specified in Section 2.1(f).
(m) "Brunswick Facility" shall mean the Pathmark facility
located at Route 130 and Finnegan Lane, North Brunswick, New Jersey.
(n) "Brunswick Facility Assignment" shall have the meaning
specified in the preamble to this Agreement.
(o) "Brunswick Facility Lease" shall have the meaning specified
in Section 2.1(f).
(p) "Claim" shall have the meaning specified in Section 10.4.
(q) "Closing" shall have the meaning specified in Section 8.1.
(r) "Closing Date" shall mean the first day of the Term (as
defined in the Supply Agreement).
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(s) "Contribution Period" shall have the meaning specified in
Section 4.3.
(t) "Conveyance Taxes" shall have the meaning specified in
Section 9.6.
(u) "Dayton Facility" shall mean the Pathmark freezer facility
located at 20 Tower Road, Jamesburg Road Corporate Park, Dayton, New Jersey.
(v) "Dayton Facility Assignment" shall have the meaning
specified in the preamble to this Agreement.
(w) "Dayton Facility Lease" shall have the meaning specified in
Section 2.1(f).
(x) "Dayton Fee Mortgagee" shall have the meaning set forth in
Section 9.9 hereof.
(y) "Environmental Condition" shall have the meaning specified
in Section 10.2(b).
(z) "Environmental Laws" shall mean all federal, state and local
laws, regulations, rules and ordinances relating to pollution or protection of
the environment or human health or safety in relation thereto, including,
without limitation, laws relating to Releases or threatened Releases of
Hazardous Substances into the indoor or outdoor environment (including, without
limitation, ambient air, surface water, groundwater and surface and subsurface
strata) or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, Release, transport or handling of Hazardous Substances, and
all laws and regulations with regard to record keeping, notification, disclosure
and reporting requirements respecting Hazardous Substances, and all laws
relating to endangered or threatened species of fish, wildlife and plants.
(aa) "ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended.
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(bb) "ERISA Affiliate" shall have the meaning specified in
Section 4.1.
(cc) "Estimated Inventory Payment" shall have the meaning
specified in Section 9.3
(dd) "Excluded Assets" shall have the meaning specified in
Section 2.1.
(ee) "Excluded Liabilities" shall have the meaning specified in
Section 4.1.
(ff) "Facilities" shall mean the Grocery Facilities and Dayton
Facility.
(gg) "Frozen Food Assets" shall have the meaning specified in
Section 2.1(d).
(hh) "GAAP" shall mean generally accepted accounting principles
as of the date hereof.
(ii) "Governmental Authority" shall mean any foreign, federal,
state, local or other governmental, administrative or regulatory authority,
body, agency, court, tribunal or similar entity.
(jj) "Grocery Assets" shall have the meaning specified in
Section 2.1(c).
(kk) "Grocery Facilities" shall mean the following facilities of
Plainbridge: (i) the Woodbridge Facility, (ii) the Brunswick Facility and (iii)
the Banana Ripening Facility.
(ll) "Hazardous Substances" shall mean any toxic, hazardous,
radioactive, caustic or dangerous substances, wastes, pollutants or contaminants
or any other substances that are defined as any of the above by, or regulated as
such under, any Environmental Law, including, without limitation, petroleum and
asbestos.
(mm) "HSR Act" shall mean the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
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(nn) "Improvements" shall mean all buildings, structures and
other improvements (except paved parking areas) included within each Acquired
Facility.
(oo) "Incremental Facility Use Expenses" shall mean any
incremental cost, expense or liability (including, without limitation, any
rental payment for temporary facilities or replacement facilities (if Pathmark
or Plainbridge is unable to deliver an Acquired Facility), severance payment,
additional labor or transportation cost or similar charge) that C&S reasonably
incurs in order to perform its obligations under the Supply Agreement as a
result, directly or indirectly, of Pathmark's or Plainbridge's failure to
deliver at Closing the full use of the Facilities (including, without
limitation, due to remediation, casualty or destruction of any Facility) and
which incremental cost, expense or liability would not have been incurred had
such Facility been fully and completely available for use by Purchasers.
(pp) "Indemnitee" shall mean any of the Purchasers Indemnitees
or Pathmark Indemnitees.
(qq) "Inventory List" shall have the meaning specified in
Section 9.3.
(rr) "ISRA" shall have the meaning specified in Section 9.8.
(ss) "ISRA Clearance" shall have the meaning specified in
Section 9.8.
(tt) "Liens" shall mean any lien, charge, claim, pledge,
covenant, security interest, conditional sale agreement or other title retention
agreement, lease, mortgage, restriction, reservation, reversion, license,
security agreement, option, right to purchase or other encumbrance, other than
the Permitted Encumbrances.
(uu) "Loss" shall have the meaning specified in Section 13.6.
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(vv) "Losses" shall have the meaning specified in Section 10.2.
(ww) "Multiemployer Pension Plans" shall have the meaning
specified in Section 5.1(n).
(xx) "NJDEP" shall have the meaning specified in Section 9.8.
(yy) "Non-Applicability Letter" shall have the meaning specified
in Section 9.8.
(zz) "Operations" shall have the meaning specified in Section
4.3.
(aaa) "Out-of-Code Merchandise" shall mean merchandise that C&S
cannot reasonably sell and deliver to C&S' customers with at least sixty (60)
days remaining on the manufacturer's recommended shelf life for the product.
(bbb) "Pathmark Indemnitee" shall have the meaning specified in
Section 10.3.
(ccc) "Pathmark Indemnitees" shall have the meaning specified in
Section 10.3.
(ddd) "PBGC" shall have the meaning specified in Section 4.3.
(eee) "Permitted Encumbrances" shall mean, with respect to the
Woodbridge Facility: (a) such state of facts as shown on that certain ALTA/ASCM
Land Title Survey prepared by St. Louis & Mazurek, dated August 25, 1997 and
referred to as job number 85044, or any update thereof dated up to the Closing
Date; (b) agreements, easements, rights of way, rights of access or entry,
conditions, covenants, and restrictions of record, if any, specifically shown on
title insurance commitment dated August 26, 1997, prepared by First American
Title Insurance Company of New York under its title number 135-NJ-22371
(GLA-156376) and (c) any other matters of record which do not materially
interfere with the present use of the Woodbridge Facility; and with respect to
all of the
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Acquired Facilities: (a) Liens for Taxes that are not yet due or payable; and
(b) any municipal ordinances or governmental rules and regulations affecting the
use or condition of any Acquired Facility, including, without limitation, zoning
and land use ordinances; and in addition to the foregoing, with respect to the
Assigned Leases only, all matters to which such leasehold interests of Pathmark
are subject.
(fff) "Property Payment" shall have the meaning specified in
Section 3.1(b).
(ggg) "Purchase Price" shall have the meaning specified in
Section 3.1(a).
(hhh) "Purchased Property" shall mean the items specified in
Section 2.1(c) and 2.1(d).
(iii) "Purchaser Indemnitee" shall have the meaning specified in
Section 10.2.
(jjj) "Purchasers Indemnitees" shall have the meaning specified
in Section 10.2.
(kkk) "Readily Saleable Merchandise" shall mean merchandise that
(i) is not Out-Of-Code and (ii) in C&S' reasonable judgment based upon C&S'
previous experience, C&S can resell promptly without discounts.
(lll) "Related Agreements" shall have the meaning specified in
the preamble to this Agreement.
(mmm) "Release" shall mean any release, spill, emission,
leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching
or migration into the indoor or outdoor environment (including, without
limitation, ambient air, surface water, groundwater, and surface or subsurface
strata) or into or out of any property, including the movement of Hazardous
Substances through or in the air, soil, surface water or groundwater.
(nnn) "Rent" shall have the meaning specified in Section 9.7(b).
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(ooo) "Retained Acreage" shall have the meaning specified in
Section 7.1(n).
(ppp) "Supply Agreement" shall have the meaning specified in the
preamble to this Agreement.
(qqq) "Tax" shall mean any foreign, federal, state or local
income, gross receipts, franchise, license, severance, occupation, premium,
environmental (including taxes under Code Section 59A), customs duties, profits,
disability, registration, alternative or add-on minimum, estimated, withholding,
payroll, employment, unemployment insurance, social security (or similar),
excise, sales, use, value-added, occupancy, franchise, real property, personal
property, business and occupation, mercantile, windfall profits, capital stock,
stamp, transfer, workmen's compensation, litter control, or other tax, fee or
imposition of any kind whatsoever, including any interest, penalties, additions,
assessments or deferred liability with respect thereto, whether disputed or not.
(rrr) "Tax Return" shall mean any return, report, declaration,
claim for refund, estimate, election, or information statement or return
relating to any Tax, including any schedule or attachment thereto, and any
amendment thereof.
(sss) "Third Party Claim" shall have the meaning specified in
Section 10.4.
(ttt) "Title Company" shall have the meaning specified in
Section 7.1(g).
(uuu) "Transferred Inventory" shall mean the inventory specified
in Section 2.1(a).
(vvv) "Utility Charges" shall have the meaning specified in
Section 9.7(a)(ii).
(www) "Woodbridge Facility" shall have the meaning specified in
Section 2.1(e).
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(xxx) "Woodbridge Remediation" shall have the meaning specified
in Section 13.8(a).
ARTICLE II
CONVEYANCE OF THE ACQUIRED ASSETS
Section 2.1 Acquired Assets. Upon the terms and subject to the
conditions of this Agreement, at the Closing, Pathmark and Plainbridge, as
applicable, shall sell, transfer, assign, convey, and deliver to Purchasers (as
designated by Purchasers), and Purchasers shall purchase, accept, and acquire
from Pathmark and Plainbridge, as applicable, free and clear of any and all
Liens, all of the right, title and interest of Pathmark and Plainbridge, as
applicable, in and to the following assets (collectively, the "Acquired
Assets"), except for the assets listed on Schedule 2.1 hereto (the "Excluded
Assets"):
(a) Readily Saleable Merchandise remaining on the Closing Date
after Pathmark has reduced the inventory level to a level as low as reasonably
practicable while maintaining adequate service levels, which shall not exceed
(including "price break" inventory) 2,825,000 cases collectively at the Grocery
Facilities and at the Dayton Facility (collectively, the "Transferred
Inventory"), but Pathmark and Plainbridge will have no "external price-break"
inventory;
(b) All of Pathmark's rights and benefits under the Assumed
Contracts and the Assumed Collective Bargaining Agreements;
(c) All machinery, equipment (including, without limitation, all
computers located in or at the Grocery Facilities), office materials, tools,
pallets, spare parts, supplies and all other tangible personal property located
in and at the Grocery Facilities or otherwise primarily benefitting the Grocery
Facilities, and the leasehold improvements currently in, on, or attached to the
Grocery Facilities including, without limitation, the equipment itemized on
Exhibit B hereto
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and the racks at or attached to each of the Grocery Facilities and all parking
lot improvements (collectively, the "Grocery Assets"). A list of all leasehold
improvements at the Grocery Facilities is attached hereto as Exhibit B;
(d) All machinery, equipment (including, without limitation, all
computers located in or at the Dayton Facility), office materials, tools,
pallets, spare parts, supplies and all other tangible personal property located
in and at the Dayton Facility or otherwise primarily benefitting the Dayton
Facility, and the leasehold improvements currently in, on or attached to the
Dayton Facility including, without limitation, the equipment itemized on Exhibit
B hereto and the racks at or attached to the Dayton Facility and all parking lot
improvements (collectively, the "Frozen Food Assets"). A list of all leasehold
improvements at the Dayton Facility is attached hereto as Exhibit B;
(e) All of Plainbridge's right, title and interest in and to
certain real property more particularly described in Exhibit D hereto located in
Woodbridge, Middlesex County, New Jersey, including all structures and
improvements thereon, all easements, rights-of-way, privileges, zoning and
development rights and other rights and benefits, if any, which are appurtenant
to such real property, and all right, title and interest of Plainbridge in and
to any gaps, strips or gores adjoining or adjacent to such real property and in
and to any land lying in the bed of any street, road or avenue, open or
proposed, in front of or adjoining such real property (the "Woodbridge
Facility"); and
(f) All of Pathmark's right, title and interest (i) as tenant
under (A) that certain Lease dated June 15, 1994 by Dayton Properties
Associates, as landlord, and Pathmark, as tenant, relating to the Dayton
Facility, as amended by First Amendment to Lease dated January 16, 1995 (the
"Dayton Facility Lease"), and (B) that certain Four Party Agreement among Dayton
Properties Associates, DKM Properties Corp., Dayton Property Owners Association,
and Pathmark dated June 15, 1994; (ii) as tenant under that certain Net Lease
dated March 11, 1996
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by Finnegan Lane Associates, as landlord, and Pathmark, as tenant (the
"Brunswick Facility Lease") relating to the Brunswick Facility; and (iii) as
tenant under that certain Agreement of Lease dated October 1, 1983 by Eden Wood
Corporation, as landlord, and Pathmark (formerly known as Supermarkets General
Corporation), as tenant, as amended by Renewal Agreement and Lease Amendment
dated April 30, 1993, (the "Banana Ripening Facility Lease"; together with the
Dayton Facility Lease, the Brunswick Facility Lease and the Woodbridge Facility,
collectively referred to herein as the "Acquired Facilities"). Notwithstanding
anything to the contrary in this Agreement, Plainbridge's sale of the Woodbridge
Facility and Pathmark's assignment of its interests under the Assigned Leases to
CSWG will be made subject to the Permitted Encumbrances.
ARTICLE III
PURCHASE PRICE
Section 3.1 Purchase Price; Payment.
(a) The aggregate purchase price for the Acquired Assets (the
"Purchase Price") shall be the amount of:
(i) the aggregate amount of Pathmark's Actual Cost for the
Transferred Inventory as of the Closing Date as calculated in accordance with
Section 9.3 hereof; plus
(ii) $28,830,500 for the Acquired Facilities; plus
(iii) $10,000,000 for the Grocery Assets and the Frozen Food Assets,
less (x) the portion of the Assumed Liabilities that as of Closing constitute
indebtedness on the books of Pathmark or Plainbridge under GAAP and (y) the net
present value (at a 7 1/4% discount rate) of the payments to be made under the
operating leases set forth on page two of Exhibit A; provided however, if the
Brunswick Facility is not assigned to Purchasers, Purchasers shall have the
right not to purchase the Acquired
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Assets located at the Brunswick Facility and the Purchase Price shall be reduced
by the pro rata portion of such Assets which are not purchased; plus
(iv) $21,000,000 for goodwill associated with the Acquired Assets and
Acquired Facilities.
(b) At the Closing Purchasers shall pay to Pathmark, in
immediately available funds, (x) 95% of the amount referred to in Subsection
3.1(a)(i), (y) the amount referred to in Subsection 3.1(a)(iii) (the "Property
Payment") and (z) the amount referred to in Subsection 3.1(a)(iv). At the
Closing, Purchasers shall also pay to Plainbridge, in immediately available
funds, $27,690,500 as partial payment of the sum due under Section 3.1(a)(ii),
with the remaining $1,140,000 of the sum set forth in Section 3.1(a)(ii) (the
"Holdback Amount") being retained by Purchasers until substantial completion of
those activities listed on Schedule 3.1(b) hereto. Within 10 days after the
completion of the activities listed on Schedule 3.1(b), Purchasers shall pay to
Plainbridge, in immediately available funds, the Holdback Amount. If Purchasers
fail to pay when due any portion of the Holdback Amount, interest will accrue on
the Holdback Amount from and after such failure at the rate of 12.625% per
annum. No later than 3:00 p.m. (New York time) on the seventh day following the
Closing Date, the applicable party shall pay to other party, in immediately
available funds, the remaining portion of the monies due to Pathmark under
Section 3.1(a)(i) hereof determined in accordance with the provisions of Section
9.3 hereof.
(c) The Purchase Price shall be allocated among the Acquired
Assets as specified in Schedule 3.1(c) attached hereto.
ARTICLE IV
LIABILITIES
Section 4.1 Excluded Liabilities. Except for the liabilities and
obligations with respect to the Assumed Contracts, the Assumed Collective
Bargaining
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Agreements (subject to Pathmark's and Plainbridge's obligation to pay accrued
vacation and sick time pursuant to Section 6.1) and the Assigned Leases (the
"Assumed Liabilities") and the ERISA Section 4204 Obligation described in
Section 4.3 hereof, Purchasers will not assume any liabilities or obligations
arising out of or in connection with or otherwise related to the Acquired Assets
existing on the date of the Closing or arising after the Closing in connection
with or as a result of the ownership of the Acquired Assets by Pathmark or
Plainbridge prior to the Closing (whether absolute, accrued, contingent, known
or unknown or otherwise, and whether filed or asserted prior to or after the
Closing Date) (the "Excluded Liabilities"), including, without limitation, any
liabilities or obligations with respect to employee matters, products liability,
environmental matters, litigation with respect to the Acquired Assets, or any
other liabilities, including, without limitation, any liability attributable to
or incurred by Pathmark or Plainbridge arising from, or relating to, any
collective bargaining agreement, bonus, incentive, deferred compensation,
insurance, severance, termination, retention, change of control, employment,
stock option, stock appreciation, stock purchase, phantom stock or other
equity-based, performance, vacation, retiree benefit plan, program, agreement or
arrangement (except to the extent paid for by Pathmark or Plainbridge under
Section 6.1 hereof) (including, without limitation, any "employee benefit plan"
as defined in ERISA Section 3(3), sponsored, maintained, contributed to or
required to be contributed to by Pathmark or any trade or business which
together with Pathmark would be deemed a "single employer" within the meaning of
Section 4001 of ERISA (each, an "ERISA Affiliate"), for the benefit of any
current or former employee of Pathmark or any of its Affiliates.
Section 4.2 Assumed Liabilities. Subject to the assignment of the
Assumed Contracts, the Assumed Collective Bargaining Agreements and the Assigned
Leases, effective at Closing, (i) Woodbridge will assume all of Pathmark's
obligations arising on or after the Closing Date under the Assumed Contracts
listed on Exhibit A-1 and the Assumed Collective Bargaining Agreements (subject
to Pathmark's and Plainbridge's obligation to pay accrued
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vacation, personal days and sick time pursuant to Section 6.1) and (ii) CSWG
will assume all of Pathmark's obligations arising on or after the Closing Date
under the Assumed Contracts listed on Exhibit A-2 and (iii) C&S will assume all
of Pathmark's obligations arising on or after the Closing Date under the
Assigned Leases. If C&S, CSWG or Woodbridge is willing to assume a contract,
agreement or lease pursuant to the terms of this Agreement and consent by any
party whose consent to such assumption is required is not given, then Purchasers
shall have no liability in connection with such contract, agreement or lease and
shall not be in breach of this Agreement.
Section 4.3 ERISA Section 4204 Obligation.
(1) Immediately after the Closing Date, Woodbridge shall make
contributions to each Multiemployer Pension Plan, in accordance with the Assumed
Collective Bargaining Agreements, for substantially the same number of
contribution base units for which Pathmark or Plainbridge had an obligation to
contribute with respect to the operations covering such Affected Employees (the
"Operations"). Nothing in this paragraph shall impair or limit Woodbrdge's,
right to discharge, lay off or hire employees or otherwise to manage the
operations of the Acquired Assets, including but not limited to the right to
amend, revise or terminate any collective bargaining agreement currently in
effect and, as a consequence, reduce to any extent the number of contribution
base units with respect to which Woodbridge has an obligation to contribute to
any Plan; provided that if, as a result of any such action by Woodbridge,
Pathmark or Plainbridge incurs, with respect to operations, any withdrawal
liability under any Multiemployer Pension Plan and the Supply Agreement has not
been terminated by Pathmark (other than as a result of C&S' default) or by C&S
as a result of a default by Pathmark, then Woodbridge shall indemnify, defend
and hold Pathmark and its ERISA Affiliates harmless from and against any such
liability and all related costs and expenses including reasonable attorneys'
fees, offsetting any amounts paid to, on behalf of, or for the benefit of
Pathmark against amounts to be paid by C&S to Pathmark, all as set forth in
Sec-
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tion 4.10(b)(ii) of the Supply Agreement. Pathmark and Plainbridge shall retain
liability for, and shall pay when due, any contributions required to be made by
them with respect to the Multiemployer Pension Plans under the applicable
collective bargaining agreements with respect to the period preceding the
Closing Date.
(2) Subject to Subsection 4.3(5), during the period commencing on the
first day of the plan year following the Closing Date and ending on the
expiration of the fifth such plan year (the "Contribution Period"), Woodbridge
shall provide to each Multiemployer Pension Plan either a bond, letter of credit
or an escrow in an amount and manner meeting the requirements of section 4204 of
ERISA. Notwithstanding anything contained in this Subsection 4.3(2) to the
contrary, Woodbridge shall not be obligated to provide any bond, letter of
credit or escrow required herein in the event and to the extent Woodbridge
obtains from the Pension Benefit Guaranty Corporation (the "PBGC") a proper
variance or exemption under section 4204(c) of ERISA and the applicable
regulations thereunder, provided any and all requirements of said variance or
exemption are met. Pathmark agrees to cooperate with Woodbridge in connection
with any application for such a variance or exemption made by Woodbridge to the
PBGC. Subject to Subsection 4.3(5), the cost of any bond, letter of credit or
escrow provided under this Subsection 4.3(2) shall be paid by Pathmark.
(3) From and after the Closing Date until final determination,
Pathmark authorizes Woodbridge to initiate arbitration, litigation or to do any
other act which Woodbridge deems, in its discretion appropriate in order to
reduce or eliminate any withdrawal liability or any escrow or bonding
requirement imposed by any of the Multiemployer Pension Plans which Woodbridge
is required to satisfy under the terms of this Section 4.3. Pathmark agrees to
reasonably assist Woodbridge, at the sole cost and expense of Woodbridge, in any
proceedings commenced in accordance with this Subsection 4.3(3).
(4) If Woodbridge at any time withdraws from any of the Multiemployer
Pension Plans in a complete or partial withdrawal with respect to the Acquired
Assets
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during the Contribution Period, Pathmark shall be secondarily liable for any
withdrawal liability Pathmark would have had to the Plan with respect to the
Acquired Assets (but for the provisions of section 4204 of ERISA) if the
withdrawal liability of Woodbridge with respect to such Multiemployer Pension
Plan is not paid. Woodbridge agrees to provide Pathmark with reasonable advance
notice of any action or event which could result in the imposition of withdrawal
liability contemplated by this Section 4.3, and in any event Woodbridge shall
immediately furnish Pathmark with a copy of any notice of withdrawal liability
it may receive with respect to the Multiemployer Pension Plans, together with
all the pertinent details. If any such withdrawal liability shall be assessed
against Woodbridge, Woodbridge further agrees to provide Pathmark with
reasonable advance notice of any intention on the part of Woodbridge not to make
full payment of any withdrawal liability when the same shall become due.
(5) With respect to any Multiemployer Pension Plans to which Pathmark
or Plainbridge would have incurred a complete withdrawal as a result of the
transactions contemplated by this Agreement, Woodbridge shall not be required to
provide a bond, letter of credit, escrow or other security pursuant to
Subsection 4.3(2) or section 4204 of ERISA if no withdrawal liability (after
giving effect to the de minimis rules under section 4209 of ERISA) would be
assessed against Pathmark or Plainbridge with respect to such plan. With
respect to any Multiemployer Pension Plan as to which Pathmark would not have
incurred a complete withdrawal as a result of the transactions contemplated by
this Agreement, Woodbridge shall not be required to pay the cost of providing a
bond, letter of credit, escrow or other security pursuant to Subsection 4.3(2)
hereof or section 4204 of ERISA if no withdrawal liability (after giving effect
to the de minimis rules of section 4209 of ERISA) would have been assessed
against Pathmark with respect to such plan if Pathmark had completely withdrawn
from such plan; Woodbridge shall, however, at the request and with the
cooperation of Pathmark, use its best efforts to obtain from the affected
Multiemployer Pension Plan or PBGC a variance or exemption under section 4204(c)
of
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ERISA from such security requirement. Any bond, letter of credit, escrow or
other security the cost of which Woodbridge is not required to pay pursuant to
the preceding sentence, and Pathmark does not pay, shall not be required to be
provided pursuant to Subsection 4.3(2).
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Section 5.1 Representations and Warranties of Pathmark and
Plainbridge. Pathmark and Plainbridge each represent and warrant to each
Purchaser, jointly and severally, as follows:
(a) Organization; Standing. Each of Pathmark and Plainbridge is
a corporation duly organized, validly existing, and in good standing under the
laws of the State of Delaware.
(b) Authority; Binding Effect. Each of Pathmark and Plainbridge
has the requisite corporate power and corporate authority to execute and deliver
this Agreement, and to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement, and the consummation of the transactions contemplated hereby,
have been duly authorized by all necessary corporate action on the part of each
of Pathmark and Plainbridge, and no other corporate action or proceeding on the
part of Pathmark or Plainbridge is required to authorize the execution, delivery
or performance of, or consummation of the transactions contemplated by, this
Agreement. This Agreement has been duly executed and delivered by each of
Pathmark and Plainbridge, and is the valid and binding obligation of each of
Pathmark and Plainbridge, enforceable against Pathmark and Plainbridge in
accordance with its terms.
(c) Equipment Leases. Except as set forth on Exhibit A, all
material equipment leases which form a part of the Assumed Contracts itemized on
Exhibit
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A annexed hereto are capitalized on the books of Pathmark or Plainbridge.
(d) Title. Other than for the Acquired Facilities, Pathmark has
good title to the Acquired Assets, free and clear of any and all Liens.
(e) Title to the Acquired Facilities.
(i) (A) Plainbridge has good, valid and marketable title to the
Woodbridge Facility subject only to Permitted Encumbrances; (B) Pathmark owns
the leasehold interest in the Assigned Leases free and clear of all Liens (other
than any Liens that may be paid or released at Closing);
(ii) except as stated in any Assigned Lease, neither Pathmark nor
Plainbridge is a party to, or, to its knowledge, is obligated under any option,
right of first refusal or other contractual right to sell, dispose of or lease
any of the Acquired Facilities or any portion thereof or interest therein to any
person or entity other than Purchasers;
(iii) except as may be provided in the documents, instruments and
other items referred to in the definition of Permitted Encumbrances, there is no
contract or agreement to which Pathmark or Plainbridge is a party, other than
the Assumed Contracts and the Assigned Leases affecting any of the Acquired
Facilities for which any Purchaser will be responsible or liable after Closing,
or which are not terminable on thirty (30) days notice without premium or
penalty;
(iv) there are no leases or other occupancy agreements to which
Pathmark or Plainbridge is a party, pursuant to which any persons or entities
other than Pathmark or Plainbridge have a possessory interest in any of the
Acquired Facilities;
(v) neither Pathmark nor Plainbridge has received any written notice
of any pending, threatened or contemplated condemnation proceeding affecting any
of the Acquired Facilities or any part thereof or of any sale or
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other disposition of any of the Acquired Facilities or any part thereof in lieu
of condemnation;
(vi) after giving effect to Section 7.1(n), to the best of Pathmark's
and Plainbridge's knowledge, each of the parcels included in the Woodbridge
Facility is assessed for real estate tax purposes as a wholly independent tax
lot, separate from any adjoining land, buildings, structures or other
improvements not included in the Acquired Assets or Woodbridge Facility.
Exhibit F annexed hereto sets forth copies of the most recent Tax bills received
by Pathmark or Plainbridge for each and every such parcel within the Acquired
Facilities and sets forth with respect to each such parcel in such year if, to
Pathmark's or Plainbridge's knowledge, certiorari proceedings were instituted
and, if so, whether the same are pending or have been adjudicated or settled
(and if adjudicated or settled, the terms of such judgment or settlement). To
Pathmark's and Plainbridge's knowledge, the assessment of each Improvement on
each Acquired Facility reflects the current state of completion and condition of
such Improvement;
(vii) neither Pathmark nor Plainbridge has received any written
notices from any Governmental Authority stating or alleging that any
Improvements have not been constructed in compliance with law or are being
operated in violation of applicable law;
(viii) except as disclosed in the environmental studies delivered to
Purchasers, no written notice has been received by Pathmark or Plainbridge from
any Governmental Authority requiring or advising as to the need for any repair,
alteration, restoration or improvement in connection with each Acquired
Facility.
(ix) as to the Dayton Facility, the Brunswick Facility and the Banana
Ripening Facility:
(1) the Dayton Facility Lease, the Brunswick Facility Lease, and the
Banana Ripening Facility Lease (collectively, the "Assigned Leases") are in full
force and effect and neither Pathmark nor Plainbridge has received any notice,
written or otherwise, that any
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default, or condition which with the passage of time would constitute a default,
exists under the Assigned Leases, except such notices as to which the alleged
defaults have been cured or otherwise resolved;
(2) true, correct and complete copies of the Assigned Leases are
annexed hereto as Exhibit G-1, G-2, and G-3 and such Assigned Leases have not
been amended or modified except as set forth therein;
(3) other than for the Brunswick Facility Assignment and the Banana
Ripening Facility Assignment, no consent by the landlord under the Assigned
Leases is required for the assignment contemplated hereby;
(4) Pathmark has a non-disturbance agreement with the Dayton Fee
Mortgagee with respect to the Dayton Facility Lease; and
(5) the leasehold interest of Pathmark and Plainbridge in the Assigned
Leases has not been pledged by Pathmark or Plainbridge and is not subject to any
Lien.
(f) Inventory Statements. Prior to Closing Date, Pathmark will
deliver to Purchasers the Inventory List which will accurately and fairly
reflect in all material respects the Actual Cost of the Transferred Inventory.
(g) Inventory Quality. All of the Transferred Inventory shall,
as of the Closing Date, be: (i) Readily Saleable Merchandise; (ii) in
conformity with warranties given by C&S to Pathmark under the Supply Agreement,
and (iii) not subject to recall by the manufacturer or distributor or any
governmental or regulatory agency and not be the subject of any notice by any
such governmental or regulatory agency not to distribute such product.
(h) Quality of Purchased Property. The Purchased Property taken
as a whole is in all material respects in satisfactory condition and repair for
its continued use as it has been used, and adequate in all
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material respects for the continued conduct of the business to which it relates.
(i) Litigation. There is no claim, action, suit, proceeding,
investigation, or inquiry by or before any court of competent jurisdiction or
governmental or regulatory agency, whether at law or in equity, pending or, to
Pathmark's or Plainbridge's knowledge, threatened by or against Pathmark or any
of its Affiliates with respect to, or affecting, the Acquired Assets, or which
challenges or otherwise questions this Agreement, or any action taken or to be
taken pursuant hereto or in connection with the purchase and sale of the
Acquired Assets, and there is no judgment, order or decree of court of competent
jurisdiction or governmental or regulatory agency with respect to the Acquired
Assets.
(j) Absence of Conflicting Agreements. The execution and
delivery by each of Pathmark and Plainbridge of this Agreement does not, and the
performance by each of Pathmark and Plainbridge of this Agreement and the
consummation of the transactions contemplated hereby will not, (i) conflict with
or violate the articles of incorporation or by-laws, in each case as currently
in effect, of Pathmark or Plainbridge, (ii) conflict with or violate any law
applicable to Pathmark or Plainbridge or by or to which Pathmark or Plainbridge
is bound or subject or (iii) result in any breach of, or constitute a default
(or an event that with notice or lapse of time or both would constitute a
default) under, or give to any person or entity any right of termination,
amendment, acceleration or cancellation of, or require payment under, or result
in the creation of a Lien on any of the Acquired Assets under, any note, bond,
mortgage, indenture, contract, agreement, arrangement, commitment, lease,
license, permit, franchise or other instrument or obligation to which Pathmark
or Plainbridge is a party or by or to which Pathmark or Plainbridge is bound or
subject or which relate to the Acquired Assets (other than any Liens that are
being paid off or otherwise released at the time of Closing).
(k) No Consents Required. Except for the leases set forth on
the first page of Exhibit A and the
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consents required by the landlords under the Brunswick Facility Lease and the
Banana Ripening Facility Lease, no consent, approval, waiver, license, order,
authorization, governmental consent or permit of, or registration, declaration,
or filing with, or notice to, any Governmental Authority or any other person or
entity, except such filings, permits, consents or approvals as may be required
under the HSR Act, is required in connection with the execution, delivery, and
performance by Pathmark or Plainbridge of this Agreement, or the consummation by
Pathmark or Plainbridge of the transactions contemplated hereby.
(l) Absence of Liabilities. Neither Pathmark nor Plainbridge
has any material liabilities or obligations arising from or relating to the
Acquired Assets and the business and operations conducted in connection
therewith (whether absolute, accrued, fixed, contingent, liquidated,
unliquidated or otherwise, and whether due or to become due), except for
liabilities or obligations disclosed in the studies referred to in Section
5.1(m)(iii) and other liabilities and obligations incurred in the ordinary
course of business consistent with past practice, which ordinary course
liabilities (other than Assumed Liabilities) shall be retained by Pathmark or
Plainbridge, as applicable.
(m) Environmental Protection.
(i) To the knowledge of Pathmark and Plainbridge, Pathmark and its
Affiliates have obtained all permits, licenses and other authorizations which
are required under the Environmental Laws for the ownership, use and operation
of the Dayton Facility, the Grocery Facilities and the Acquired Assets; all such
permits, licenses and authorizations are in effect; no appeal or any other
action is pending to revoke any such permit, license or authorization; and
Pathmark and its Affiliates are in compliance in all material respects with all
terms and conditions of all such permits, licenses and authorizations.
(ii) To the knowledge of Pathmark and Plainbridge, Pathmark and its
Affiliates are in compli-
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ance in all material respects with all Environmental
Laws with respect to the operations and activities of the Dayton Facility, the
Grocery Facilities and Acquired Assets.
(iii) Pathmark and its Affiliates have delivered to Purchasers true
and complete copies of any environmental studies made in the last five years
relating to the Dayton Facility, the Grocery Facilities and the Acquired Assets.
(iv) There is no civil, criminal or administrative action, suit,
demand, claim, hearing, notice of violation, investigation, proceeding, notice
or demand letter existing or pending, or, to the knowledge of Pathmark or
Plainbridge, threatened against or involving the Dayton Facility, the Grocery
Facilities or the Acquired Assets that relate in any way to the Environmental
Laws or any order, decree, judgment, injunction, notice or demand letter issued
to Pathmark or Plainbridge thereunder. Except as set forth in the environmental
studies delivered to Purchasers, neither Pathmark nor any of its Affiliates has
received any written notice or order affecting the Dayton Facility, the Grocery
Facilities or the Acquired Assets from any Governmental Authority or other third
party advising Pathmark or any of its Affiliates that they are responsible or
potentially responsible for cleanup or paying the cost of cleanup of any
Hazardous Substances and Pathmark or any of its Affiliates have not entered into
any agreements concerning any such cleanup.
(v) Except as set forth in the environmental studies delivered to
Purchasers, to the knowledge of Pathmark and Plainbridge, Pathmark and its
Affiliates have not Released, discharged, buried, dumped or disposed of any
Hazardous Substances on, or beneath or adjacent to the Dayton Facility, the
Grocery Facilities or the Acquired Assets, except in compliance with applicable
Environmental Laws.
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(n) Labor Matters.
(i) Schedule 5.1-1 is a true, correct and complete list, as of the
date shown thereon, of the Affected Employees and each such employee's
department, hiring date and salary. Except as set forth on Schedule 5.1-2(A),
there are no employment agreements, severance agreements or severance plans and
policies with respect to the Affected Employees, and (B) there are no labor or
employment disputes or claims involving any Affected Employees pending or, to
Pathmark's or Plainbridge's knowledge, threatened against Pathmark or its
Affiliates.
(ii) Schedule 5.1-3 is a true, correct and complete list of each
pension plan, fund or program (within the meaning of section 3(2) of ERISA)
which is a "Multiemployer Pension Plan," as defined in section 3(37) of ERISA,
maintained or contributed to or required to be contributed to by Pathmark or any
ERISA Affiliate for the benefit of any Affected Employee (the "Multiemployer
Pension Plans").
(iii) No event has occurred with respect to any Affected Employees
which could result in a "partial withdrawal" under section 4205 of ERISA with
respect to any Multiemployer Pension Plan. Attached hereto as Schedule 5.1-4 is
a schedule of contributions made by Pathmark and its ERISA Affiliates to each
Multiemployer Pension Plan for the Operations for the most recent five (5) plan
years. With respect to all Multiemployer Pension Plans, to the knowledge of
Pathmark and Plainbridge, the aggregate withdrawal liability of Pathmark and its
ERISA Affiliates, computed as if a complete withdrawal by Pathmark and the ERISA
Affiliates with respect to the Operations had occurred under each such
Multiemployer Pension Plan on the date hereof, would not exceed $16,000,000.00.
Section 5.2 Representations and Warranties of Purchasers. Each
Purchaser represents and warrants to Pathmark and Plainbridge, jointly and
severally, as follows:
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(a) Organization; Standing. C&S is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Vermont. CSWG is a limited liability company duly organized, validly existing
and in good standing under the laws of the State of Delaware. Woodbridge is a
limited liability company duly organized, validly existing and in good standing
under the laws of the State of Delaware.
(b) Authority; Binding Effect. Each of Purchasers has the
requisite corporate or company power and authority to execute and deliver this
Agreement and to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement, and the consummation of the transactions contemplated hereby,
have been duly authorized by all necessary corporate or company action on the
part of Purchasers, and no other corporate or company action or proceeding on
the part of Purchasers is required to authorize the execution, delivery and
performance of, or consummation of the transactions contemplated by, this
Agreement. This Agreement has been duly executed and delivered by Purchasers
and is the valid and binding obligation of Purchasers, enforceable against
Purchasers in accordance with its terms.
(c) No Consent Required. No consent of any Governmental
Authority or regulatory agency or any other person or entity is required in
connection with the execution, delivery, and performance by Purchasers of this
Agreement or the consummation by Purchasers of the transactions contemplated
hereby, other than pursuant to the HSR Act.
(d) Absence of Conflicting Agreements. The execution and
delivery by Purchasers of this Agreement does not, and the performance by
Purchasers of this Agreement and the consummation of the transactions
contemplated hereby will not, (i) conflict with or violate the articles of
incorporation or by-laws or other organizational document, in each case as
currently in effect, of Purchasers, (ii) conflict with or violate any law
applicable to Purchasers or by or to which Purchasers are
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bound or subject or (iii) result in any breach of, or constitute a default (or
an event that with notice or lapse of time or both would constitute a default)
under any note, bond, mortgage, indenture, contract, agreement, arrangement,
commitment, lease, license, permit, franchise or other instrument or obligation
to which any Purchaser is a party or by or to which any Purchaser is bound or
subject.
(e) Litigation. There is no injunction or restraining order by
any court of competent jurisdiction or Governmental Authority which prohibits
the transactions contemplated by this Agreement.
ARTICLE VI
EMPLOYEE MATTERS
Section 6.1 Responsibility for Employees. Except as set forth in
Section 4.3 hereof with respect to Multiemployer Plan withdrawal liability and
in the Assumed Collective Bargaining Agreements, Pathmark and Plainbridge, as
applicable, shall retain all liability relative to any current or former
employee of Pathmark and its Affiliates and all liability arising from, or
relating to, any collective bargaining agreement, bonus, incentive, deferred
compensation, insurance, severance, termination, retention, change of control,
employment, stock option, stock appreciation, stock purchase, phantom stock or
other equity-based, performance, vacation, accrued but unpaid benefits, retiree
benefit plan, program, agreement or arrangement, (including, without limitation,
any "employee benefit plan" as defined in ERISA section 3(3)), sponsored,
maintained, contributed to or required to be contributed to by Pathmark or any
"ERISA Affiliate" for the benefit of any current or former employee of Pathmark
or any of its Affiliates except that Woodbridge and C&S shall assume Pathmark's
and Plainbridge's liability for accrued vacation, personal days and sick time
for the respective Affected Employees hired by C&S or Woodbridge, and Pathmark
and Plainbridge will pay to Purchasers at the Closing an amount equal to such
accrued liability. To the extent
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that such payment is an estimated amount at Closing, it shall be paid as
estimated at Closing and adjusted by the Parties within 30 days after Closing.
Section 6.2 Offers of Employment. Woodbridge agrees that it will
offer employment effective as of the Closing Date to all of the active Affected
Employees who are covered by the Assumed Collective Bargaining Agreements and
thereafter to offer employment to any inactive Affected Employee covered by the
Assumed Collective Bargaining Agreements who seeks to return to active
employment. Such offers of employment will be upon the terms set forth in the
Assumed Collective Bargaining Agreements. C&S further agrees to review for
possible employment effective as of the Closing Date all Affected Employees who
are not covered by the Assumed Collective Bargaining Agreements. The decision
whether to offer employment to Affected Employees not covered by the Assumed
Collective Bargaining Agreements shall be in the sole discretion of C&S. C&S
agrees, however, that employment offers by it to Affected Employees not covered
by the Assumed Collective Bargaining Agreements will be on terms that are
substantially similar in the aggregate to the terms of employment for such
Affected Employees as presently in effect with Pathmark or Plainbridge. C&S and
Woodbridge agree that they will credit any Affected Employee hired by C&S or
Woodbridge with service for Pathmark or Plainbridge and any predecessor for
purposes of eligibility under all employment benefit plans and vesting under
qualified retirement plans implemented or extended to Affected Employees by C&S
or Woodbridge following the Closing Date, subject to the consent if required of
any carrier, administrator, or other third party having effective control over
extension of coverage under such plans. To the extent permitted under the terms
of C&S' or Woodbridge's plans, C&S and Woodbridge agree to waive any
pre-existing condition limitation and waiting period under C&S' or Woodbridge's
group health plans. Pathmark and Plainbridge agree to provide C&S and
Woodbridge with such records and information and access to employees as C&S or
Woodbridge may reasonably request in order to carry out its obligations under
this Section 6.2 and to facilitate the transition of former employees of
Pathmark and Plainbridge into employee benefit plans
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of C&S or Woodbridge. C&S shall provide to Pathmark and Plainbridge, prior to
the Closing Date, a list of all Affected Employees not covered by the Assumed
Collective Bargaining Agreements to whom C&S intends to offer employment in
accordance with this Agreement.
Section 6.3 Union Matters. Prior to the Closing Date, Purchasers
shall not (i) directly or indirectly engage in any negotiations concerning the
Assumed Collective Bargaining Agreements or (ii) issue any announcements
concerning the Affected Employees covered by an Assumed Collective Bargaining
Agreement, or the Assumed Collective Bargaining Agreements or Purchasers' plans
for the Acquired Facilities which, in each case, would reasonably be expected to
disrupt in any manner the relationship between Pathmark or Plainbridge and any
of their respective employees, without the prior written approval of Pathmark.
ARTICLE VII
CONDITIONS TO CLOSING
Section 7.1 Conditions to Obligations of Purchasers. The obligations
of Purchasers to consummate the transactions contemplated by this Agreement
shall be subject to the fulfillment at or prior to the Closing of the following
conditions (any one or more of which may be waived, to the extent permitted by
applicable law, in whole or in part by Purchasers):
(a) Accuracy of Representations and Warranties. The
representations and warranties of Pathmark and Plainbridge set forth in this
Agreement shall be true and correct in all material respects as of the date
hereof and, except to the extent such representations and warranties relate to
an earlier date, at and as of the Closing Date as though made on such date.
(b) Performance of Covenants. Each of Pathmark and Plainbridge
shall have performed and complied in all material respects with all agreements,
obligations, covenants and conditions required by this
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Agreement to be performed or complied with by it at or prior to the Closing.
(c) No Litigation. No claim, suit, action, proceeding,
investigation or inquiry shall be threatened by any Governmental Authority,
pending by or before any court of competent jurisdiction or Governmental
Authority in which it is sought to restrain or prohibit or to obtain material
damages or other material relief in connection with this Agreement or the
consummation of the transactions contemplated hereby or which is reasonably
likely to affect materially the value or utility of the Acquired Assets;
provided, however, that the Parties hereby agree that no condemnation proceeding
shall be deemed to "affect materially the value or utility" of any of the
Acquired Facilities unless that proceeding seeks to condemn: (i) any portion of
the land on which any material Improvement is located; or (ii) any land within
such proximity to any material Improvement such that the taking of such land
shall deny reasonable access to such material Improvement for the conduct of
business as a whole thereat; or (iii) all reasonable means of vehicular access
to any of the Acquired Facilities for the conduct of business as a whole
thereat; or (iv) the land on which more than fifteen percent (15%) of the
vehicular parking area is located.
(d) Consents to Assignment of Certain Contracts.
Notwithstanding any provision hereof to the contrary, Pathmark and Plainbridge
shall have obtained and delivered to Woodbridge and CSWG all consents necessary
to assign the Assumed Contracts (except to the extent good title, free and clear
of all Liens, is delivered with respect to any equipment covered by the
applicable Assumed Contract) in form and substance reasonably satisfactory to
Woodbridge and CSWG, or the third parties to any Assumed Contracts requiring
such consent shall have agreed in writing to terminate such Assumed Contracts
(without penalty to CSWG or Woodbridge) and shall have entered into a
substantially similar agreement with CSWG or Woodbridge, each of which shall be
in full force and effect and the valid and binding obligation of each party
thereto.
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(e) Related Agreements. Purchasers (to the extent a party
thereto) and Pathmark shall have entered into each and every one of the Related
Agreements (except for any Related Agreement for which a third party consent was
required but not obtained) and the Related Agreements shall be in full force and
effect and shall have become effective in accordance with their terms.
(f) HSR Act. Any applicable waiting period under the HSR Act in
connection with the transactions contemplated by this Agreement shall have
expired or been terminated.
(g) Title Insurance. Title to the Woodbridge Facility shall at
closing be good and marketable and insurable as such under an A.L.T.A. Owner's
Title Policy by First American Title Insurance Company of New York or another
reputable title insurance company selected by Purchasers (the "Title Company")
at regular rates, free and clear of all Liens and without exceptions,
disclaimers of liability or objections except Permitted Encumbrances and any
matters which the Title Company has committed to insure over or omit. As a
condition to closing the Title Company shall insure the Woodbridge Facility
under the terms described above.
(h) Environmental Reports. The environmental studies performed
against each of the Acquired Facilities for or on behalf of Purchasers shall not
have revealed any Environmental Condition that in the reasonable opinion of
Purchasers imposes significant risk of material liability to Purchasers (taking
into account Pathmark's and Plainbridge's indemnification and remediation
obligations hereunder), including the effect of such Environmental Condition on
C&S's ability to carry out its obligations under the Supply Agreement.
Purchasers agree to use their best efforts to complete such environmental
studies as soon as practicable and, in any event, within 90 days of the date
hereof. Purchasers further agree to notify Pathmark of any Environmental
Condition that would cause this condition not to be met within 15 days of the
completion of all environmental studies at a Facility relating to Environmental
Conditions at such Facility and that if such notice is not
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timely provided by Purchasers, Purchasers shall be deemed to have waived this
condition with respect to that Facility.
(i) Engineering Studies. Purchasers shall have received
engineering reports and studies as to the structural condition of the
Improvements at each of the Acquired Facilities, which reports shall be
reasonably satisfactory to Purchasers. Purchasers agree to complete such
engineering studies within thirty (30) days of the date hereof. If Purchasers
shall not have given written notice to Pathmark within 45 days of the date
hereof (along with copies of all reports) specifying the extent to which the
structural condition of the Improvements is unacceptable to Purchasers,
Purchasers shall be deemed to have waived this condition. Pathmark shall have
30 days from its receipt of Purchasers' notice to notify Purchasers whether
Pathmark elects to make the required repairs. If Pathmark will not make such
repairs, Purchasers may terminate this Agreement with respect to the affected
Acquired Facility by delivering written notice to that effect to Pathmark within
15 days of Pathmark's notice to Purchasers that Pathmark would not make the
required repairs. If Purchasers do not give a timely termination notice, the
Parties shall proceed to Closing (with no obligation on Pathmark or Plainbridge
to repair any structural defects) without any adjustment to the Purchase Price.
(j) Estoppel and Consents. Purchasers shall have received (a)
such estoppel certificates as are required under Section 8.2(f) hereof from the
landlords under the Assigned Leases, dated within thirty (30) days of the
Closing, and (b) a written consent to assignment from the landlord under the
Assigned Leases, as the same may be required under the terms of the Assigned
Leases;
(k) Certificates of Occupancy. Purchasers shall have received
from Plainbridge copies of all current certificates of occupancy for the
Woodbridge Facility.
(l) ISRA Compliance. Pathmark or Plainbridge shall have
delivered to Purchasers a Non-
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Applicability Letter with respect to the Woodbridge Facility or evidence of
compliance as described in Section 9.8 hereof.
(m) Subdivision Approval. Purchasers shall have received from
Plainbridge reasonably sufficient evidence that all necessary governmental
approvals to subdivide the Woodbridge Facility from and out of the larger tax
lot of which it is currently a part (the remaining portion of such tax lot to be
referred to herein as the "Retained Acreage" and is described on Exhibit E
annexed hereto) have been granted; provided, however, that in the event this
condition is not fulfilled, Purchasers shall waive such condition to Closing and
at the Closing Plainbridge will convey the Retained Acreage to CSWG, at no
increase in Purchase Price, and subject to any and all Liens, and provided that
once such subdivision is properly and finally effected, CSWG will reconvey the
Retained Acreage by quit-claim deed to Plainbridge (or as otherwise designated
by Pathmark) at the sole cost and expense of Pathmark or Plainbridge, without
representation or warranty of any kind on the part of CSWG, but free of all
Liens created by CSWG.
Section 7.2 Conditions to Obligations of Pathmark and Plainbridge.
The obligations of Pathmark and Plainbridge to consummate the transactions
contemplated by this Agreement shall be subject to the fulfillment at or prior
to the Closing of the following conditions (any one or more of which may be
waived, to the extent permitted by applicable law, in whole or in part by
Pathmark and Plainbridge):
(a) Accuracy of Representations and Warranties. The material
representations and warranties of Purchasers set forth in this Agreement shall
be true and correct in all material respects as of the date hereof and, except
to the extent such representations and warranties relate to an earlier date, as
of the Closing as though made on such date.
(b) Performance of Covenants. Purchasers shall have performed
and complied in all material respects with all material agreements, obligations,
cove-
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nants and conditions required by this Agreement to be performed or complied
with by it at or prior to the Closing.
(c) Related Agreements. Purchasers (to the extent a party
thereto) and Pathmark shall have entered into each and every one of the Related
Agreements (except for any Related Agreement for which a third party consent was
required but not obtained) and such Related Agreements shall be in full force
and effect and shall have become effective in accordance with their terms.
(d) HSR Act. Any applicable waiting period under the HSR Act in
connection with the transactions contemplated by this Agreement shall have
expired or been terminated.
Section 7.3 Condition to Both Parties Obligations. The obligations
of the Parties to consummate the transactions contemplated by this Agreement
shall be conditioned on the absence of any legal impediment to the transfer and
sale or lease of the Woodbridge Facility by Plainbridge to CSWG.
ARTICLE VIII
CLOSING
Section 8.1 The Closing. The closing (the "Closing") of the
transactions contemplated hereby shall take place at Pathmark's executive
offices on the Closing Date, or if the conditions to Closing set forth in
Article VII shall not have been fulfilled or, to the extent permitted by
applicable law, waived by such date, as soon as practicable (but in no event
less than five (5) business days) after such conditions shall have been
fulfilled or satisfied, or on such other date or at such other time as the
Parties may agree in writing.
Section 8.2 Pathmark's and Plainbridge's Obligations. At the
Closing, Pathmark or Plainbridge, as applicable, shall deliver or cause to be
delivered to Purchasers the following:
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(a) All appropriate transfer documents including any bills of
sale necessary to sell, transfer, assign, convey and deliver to Purchasers the
Acquired Assets (other than the Woodbridge Facility), free and clear of any and
all Liens;
(b) A bargain and sale deed with covenants against grantor's
acts sufficient to convey to CSWG title to the Woodbridge Facility, with such
conveyance made subject only to the Permitted Encumbrances. The deed shall
describe the property by metes and bounds using the description contained on
Exhibit D hereto (or, if CSWG obtains an updated survey certified by the
surveyor to Plainbridge, using the description contained in the updated survey);
(c) An affidavit of title in such form as may be reasonably
required by CSWG's title insurance company to allow such company to issue an
owner's title insurance policy in favor of CSWG with respect to the Woodbridge
Facility subject only to the Permitted Encumbrances;
(d) An affidavit that Plainbridge is not a "foreign person"
within the meaning of Section 1445(b)(2) of the Internal Revenue Code;
(e) An Assignment of Lease Agreement substantially in the form
annexed hereto as Exhibit I, for each of the Dayton Facility, the Brunswick
Facility and the Banana Ripening Facility;
(f) To the extent Pathmark or Plainbridge is able, using
commercially reasonable efforts, to so obtain, an estoppel certificate from the
landlord under the Assigned Leases certifying that each lease is in full force
and effect and that there are no defaults thereunder or any conditions that with
the passage of time would constitute a default thereunder, or an estoppel
certificate in the form so provided for under any such Assigned Lease; provided,
however, that in the event that Pathmark or Plainbridge is unable to deliver an
estoppel for any of the Assigned Leases, Purchasers shall waive such condition
to closing provided Pathmark indemnifies Pur-
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chasers against any loss, cost, liability or expense which Purchasers may
incur as a result of the failure of Pathmark or Plainbridge to deliver such
estoppel;
(g) A written consent from each landlord under the Assigned
Leases consenting to the assignment of such Leases as contemplated herein, to
the extent such written consent is required under any such Assigned Lease;
(h) Appropriate receipts; and
(i) All other documents and papers reasonably requested by
Purchasers to effect the transactions contemplated hereby.
Section 8.3 Purchasers' Obligations. At the Closing, Purchasers
shall deliver to Pathmark and Plainbridge the following:
(a) The cash payments required by Section 3.1.
(b) All other documents and papers requested by Pathmark or
Plainbridge, including an assumption agreement with respect to the Assumed
Liabilities, to effect the transactions contemplated hereby.
ARTICLE IX
CERTAIN ADDITIONAL COVENANTS
Section 9.1 Further Assurances.
(a) At any time and from time to time, without further
consideration, the Parties shall take all action and do all things as may
reasonably be requested and shall each use their commercially reasonable best
efforts in order to satisfy the conditions to the Closing and to consummate and
make effective the transactions contemplated by this Agreement, including,
without limitation, obtaining all required consents of third parties and
approvals of all requisite Governmental Authorities.
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(b) If at any time after the Closing any further action is
necessary or desirable to carry out the purposes of this Agreement (including,
without limitation, the transfer of the Acquired Assets free and clear of any
Liens), each of the Parties will take such further action (including the
execution and delivery of such further instructions and documents) as any other
Party reasonably may request, all at the sole cost and expense of the requesting
Party (unless the requesting Party is entitled to indemnification therefor under
this Agreement).
Section 9.2 Reasonable Access. Until the Closing, Pathmark and
Plainbridge will cause their respective officers and employees to afford
Purchasers and their representatives (including, without limitation,
environmental consultants and engineers) with access to the Acquired Facilities,
using consultants reasonably satisfactory to Pathmark and, in the case of the
Brunswick Facility, the Dayton Facility, and the Banana Ripening Facility,
satisfactory to the landlord under each of the Assigned Leases to the extent
required, and a full opportunity to conduct environmental due diligence of the
Acquired Facilities and to examine and inspect the Acquired Assets, by
conducting such studies (Phase I studies for all Acquired Facilities and Phase
II studies for the Woodbridge Facility and any other Acquired Facility if the
Phase I study indicates that it is appropriate to conduct a Phase II study on
such Acquired Facility and the landlord of such Acquired Facility consents to
such a study) and taking such samples from the Woodbridge Facility as Purchasers
and their representatives deem desirable. Purchasers agree that they will cause
their environmental consultants and engineers to conduct their studies,
examinations and inspections of the Acquired Facilities during normal business
hours and in a manner designed to cause minimal interference to the operations
conducted at the Acquired Facilities. In addition, Purchasers will use their
best efforts to restore the Acquired Facilities to their pre-existing condition
as a result of any damage (e.g. drilling of holes for environmental studies)
caused by the studies or examinations conducted by Purchasers' environmental
consultants and engineers.
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Section 9.3 Identification of Transferred Inventory. For purposes of
establishing the initial amount to be paid by Purchasers to Pathmark on the
Closing Date under Section 3.1(a)(i), Pathmark shall deliver to C&S on the
Closing Date a preliminary inventory list (the "Preliminary Inventory") compiled
by Pathmark in good faith listing that portion of Pathmark's inventory that,
according to Pathmark's records, is available for transfer to C&S as the
Transferred Inventory. Pursuant to the requirements of Section 3.1(b) hereof,
Purchasers will pay to Pathmark on the Closing Date a sum equal to 95% of
Pathmark's estimated Actual Cost of the Transferred Inventory listed on the
Preliminary Inventory (the "Estimated Inventory Payment"). On the Saturday
immediately following the Closing, Purchasers shall begin taking a physical
inventory of the Transferred Inventory, which physical inventory shall be
completed no later than the fifth day following the Closing Date. Pathmark
shall have the right to be present when such physical inventory is performed.
The written record of such physical inventory (the "Inventory List") shall
exclude all inventory that fails to conform to the warranties set forth in
Sections 5.1(c) and 5.1(f) and such written record shall value the items
included in the Transferred Inventory at Actual Cost. No later than the seventh
day following the Closing Date, the parties shall reconcile the Estimated
Inventory Payment with the Actual Cost of the Transferred Inventory. To the
extent that the Estimated Inventory Payment is greater than the Actual Cost of
the Transferred Inventory, then Pathmark, shall pay such difference, so that,
when added to the Estimated Inventory Payment, the Purchasers shall have paid
the entire amount due to Pathmark pursuant to Section 3.1(a)(i). To the extent
that the Estimated Inventory Payment is less than the Actual Cost of the
Transferred Inventory, then C&S, shall pay such difference, so that, when added
to the Estimated Inventory Payment, the Purchasers shall have paid the entire
amount due to Pathmark pursuant to Section 3.1(a)(i).
Section 9.4 Inventory Repurchase. Pathmark shall repurchase all of
the Transferred Inventory from C&S within one hundred twenty (120) days of the
Closing Date or, if shorter for any product in the Transferred
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Inventory, the days remaining on the manufacturer's recommended shelf life for
such product as of the Closing Date.
Section 9.5 Injunctions/Orders. In the event that any temporary,
interim or other non-final injunction, order or decree is issued by a court of
competent jurisdiction which restrains, prohibits or limits consummation by any
Party of the transactions contemplated hereby each Party shall use its
reasonable best efforts to have such injunction, order or decree lifted,
rescinded or revoked as soon as possible.
Section 9.6 Conveyance Taxes. Notwithstanding any other provision of
this Agreement to the contrary, all transfer, gross receipts, litter control,
documentary, sales, use, gross receipts, stamp, registration and other such
taxes incurred in connection with this Agreement (collectively, "Conveyance
Taxes") shall be paid by Pathmark or Plainbridge on the Closing Date or as soon
thereafter as necessary or required. Pathmark or Plainbridge shall file all
necessary tax returns with respect to all such Conveyance Taxes, and, to the
extent required by applicable law, the Purchasers will, and will cause its
Affiliates to join in the execution of any such tax returns.
Section 9.7 Apportionments and Prepaid Expenses.
(a) All Tax assessments and utility charges with respect to the
Woodbridge Facility shall be apportioned between Plainbridge and CSWG as set
forth below:
(i) Pathmark shall pay all Taxes assessed against each of the
Acquired Facilities with respect to the period through and including the Closing
Date. CSWG shall pay all Taxes assessed against each of the Acquired Facilities
with respect to the period from and after the day following the Closing Date.
Plainbridge shall pay to Purchasers at Closing its prorated share of any unpaid
Taxes pertaining to the Woodbridge Facility with respect to the calendar year in
which the Closing occurs and shall be responsible for any interest and penalties
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accrued at the time of Closing with respect to the period prior to the date of
Closing. In the absence of any assessment establishing the tax payments due for
the year in which the Closing occurs, for purposes of proration under this
Section 9.7(a), Taxes shall be calculated as one hundred percent (100%) of the
most recent tax assessed valuation figures at the time of Closing. Upon receipt
of an actual assessment for the Taxes due during the year of Closing,
Plainbridge and CSWG will, if necessary, adjust the apportionment between them
within thirty (30) days after Purchasers deliver to Plainbridge the actual
assessment.
(ii) All utility charges, including, without limitation, sewer and
water charges (collectively, "Utility Charges") and all payments under any
Assumed Contracts shall be prorated and apportioned as of the Closing Date, the
period through and including the Closing Date being Plainbridge's responsibility
and the period commencing on the day immediately following the Closing Date
being CSWG's responsibility. Any undetermined or unbilled Utility Charges shall
be apportioned as of the Closing Date on the basis of the most recent bill
issued prior to Closing and CSWG, Pathmark and Plainbridge shall adjust the
apportionment, if necessary, within thirty (30) days after CSWG submits to
Plainbridge actual invoices for such charges.
(b) (i) Pathmark or Plainbridge shall pay all base, minimum,
fixed and additional rent ("Rent") due and payable under each of the Assigned
Leases with respect to the period through and including the Closing Date. CSWG
shall pay all Rent due and payable under each of the Assigned Leases with
respect to the period from and after the day following the Closing Date. CSWG
shall pay to Pathmark at the Closing its prorated share of any Rent paid by
Pathmark or Plainbridge relating to the period after the Closing Date.
(ii) To the extent any Rent referred to in subsection (b)(i) above is
computed based on estimated amounts subject to adjustment at a later date, CSWG,
Pathmark and Plainbridge agree that in the event such adjustment occurs after
the date of Closing, if any amounts
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are determined to be owing to either Pathmark or Plainbridge by CSWG or to CSWG
by either Pathmark or Plainbridge, then the party owing such amounts shall pay
the same to the owed party within ten (10) days of written demand therefor by
the party to which such amounts are owed.
(iii) At the Closing, Pathmark or Plainbridge shall be entitled to an
adjustment to the Purchase Price in connection with any security deposit paid by
Pathmark or Plainbridge under any of the Assigned Leases.
(c) Pathmark and Plainbridge covenant and agree that if there
are any Liens of a fixed and ascertainable amount affecting the Woodbridge
Facility as of the Closing Date, Plainbridge shall discharge and pay such Liens
at the Closing or give Purchasers a credit against the Purchase Price in the
amount necessary for Purchasers to discharge and pay such Liens.
Section 9.8 ISRA Compliance. Prior to the Closing, Pathmark or
Plainbridge, as the case may be, shall apply for a letter (the
"Non-Applicability Letter") from the New Jersey Department of Environmental
Protection ("NJDEP") confirming that the New Jersey Industrial Site Recovery
Act, N.J.S.A. 13:1K-6 et. seq. ("ISRA") does not apply to the sale of the
Woodbridge Facility or the assignment of the Assigned Leases contemplated by
this Agreement. If the NJDEP determines that ISRA applies to any one of the
Acquired Facilities, Pathmark or Plainbridge, as the case may be, shall endeavor
to obtain from the NJDEP either an approved Negative Declaration or No Further
Action Letter (the Non-Applicability Letter, Negative Declaration or No Further
Action Letter, as the case may be, are hereinafter referred to collectively as
the "ISRA Clearance") with respect to that particular Acquired Facility which is
subject to ISRA. If Pathmark or Plainbridge is unable to obtain ISRA Clearance
by the date set for Closing, then, Pathmark or Plainbridge, as applicable, shall
proceed to close by entering into a Remediation Agreement with NJDEP allowing
the transaction to close prior to Pathmark's or Plainbridge's obtaining ISRA
Clearance.
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Section 9.9 Dayton Facility Letter of Credit. The Parties agree to
cooperate with each other to cause the landlord under the Dayton Facility Lease
to eliminate Pathmark's obligation to maintain a letter of credit in favor of
Summit Bank (the "Dayton Fee Mortgagee"). If the landlord and the Dayton Fee
Mortgagee do not agree to such elimination, Pathmark agrees to keep such letter
of credit in place and Purchasers agree to indemnify Pathmark if such letter of
credit is drawn upon or is required to be honored as a result of C&S failing to
perform its obligations under the Dayton Facility Lease.
ARTICLE X
INDEMNIFICATION
Section 10.1 Survival. The representations and warranties contained
in this Agreement (except for the representation contained in Section
5.1(e)(i)(A), which shall not survive the Closing) shall survive the Closing and
continue in full force and effect for a period of one (1) year after the
Closing, except that Section 5.1(m) (environmental protection) shall survive for
four (4) years from the Closing and Section 5.1(n) (Labor Matters) shall survive
for two (2) years from the Closing. Any claim for indemnity arising from a
breach of a representation or warranty must be asserted by the close of business
of the date the survival period terminates in order to be valid. If, prior to
the close of business on the date the survival period terminates with respect to
any representation or warranty, Pathmark or Plainbridge on the one hand, or
Purchasers, on the other hand, shall have notified the other of a claim for
indemnity hereunder and such claim shall not have been finally resolved or
disposed of at such date, then such representation or warranty that is the basis
for such claim shall continue to survive as to that claim and shall remain a
basis for indemnity until such claim is finally resolved. All of the covenants
of the Parties set forth in this Agreement shall survive the Closing and
continue in full force and effect according to their respective terms.
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Section 10.2 Indemnification Provisions for Benefit of Purchasers.
(a) Subject to and in accordance with the terms of this Article
X, from and after the Closing Date, Pathmark and Plainbridge, jointly and
severally, shall indemnify, hold harmless and defend Purchasers and their
Affiliates, and their respective directors, employees, and agents (individually,
a "Purchaser Indemnitee" and, collectively, the "Purchasers Indemnitees"), from
and against all demands, claims, actions or causes of action, assessments,
losses, damages, liabilities, costs and expenses (including interest and
penalties and reasonable expenses of investigation and attorney's fees)
(collectively, "Losses") to the extent arising, directly or indirectly, out of:
(i) any breach of any representation or warranty of Pathmark or Plainbridge
contained in this Agreement; (ii) any breach of any covenant of Pathmark or
Plainbridge set forth in this Agreement; (iii) except for matters relating to
any Environmental Condition, which are covered by the indemnification provided
for in Section 10.2(b) hereof, any failure of Pathmark or Plainbridge to pay,
perform or discharge the Excluded Liabilities or any other liabilities or
obligations of Pathmark (other than the Assumed Liabilities and liabilities
expressly assumed by any Purchaser in Sections 4.3 and 6.1 hereof); (iv) any
Multiemployer Pension Plan withdrawal liability as provided in the Supply
Agreement; (v) except for matters relating to any Environmental Condition, which
are covered by the indemnification provided for in Section 10.2(b) hereof,
directly or indirectly, the ownership or operation of the Acquired Assets prior
to the Closing (other than the Assumed Liabilities and liabilities expressly
assumed by Purchaser in Sections 4.3 and 6.1 hereof); (vi) the amount that any
Loss that relates to, arises out of or is with respect to an Assumed Liability
in a fixed amount that exceeds the amount set forth on Exhibit A opposite such
Assumed Liability; and (vii) Incremental Facility Use Expenses. No
indemnification by Pathmark pursuant to clause (i) above shall be made unless
the aggregate amount of Losses incurred by the Purchasers Indemnitees exceeds
$50,000, and in such event, indemnification shall be made by Pathmark for the
full amount of such Losses. In addi-
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tion, in no event shall Pathmark's obligation to so indemnify the Purchasers
Indemnitees exceed the Purchase Price. Purchasers shall have the right to (x)
set-off against the payment of the Purchase Price any Losses incurred which are
subject to an undisputed claim for indemnification under clause (i), (ii), (iii)
or (vi) of this Section 10.2(a), and (y) place into a separate escrow account
(which shall be identified to Pathmark), pursuant to a mutually agreed upon
escrow agreement (which shall provide that interest on the escrowed amount shall
be payable to the prevailing party), and withhold from the payment of the
Purchase Price, the amount of any disputed claim for indemnification under
clauses (i), (ii), (iii) or (vi) of this Section 10.2.
(b) Notwithstanding anything to the contrary contained herein
and in addition to the indemnification set forth in Section 10.2(a) above, from
and after the Closing Date, Pathmark and Plainbridge, as applicable, shall
indemnify, hold harmless and defend the Purchasers Indemnitees from and against
all Losses arising, directly or indirectly, out of: (i) any condition,
circumstances, activity, practice or incident (on-site or off-site) related to
or in connection with the Acquired Facilities (or any off-site location relating
to the business conducted at the Acquired Facilities) which forms or is
reasonably likely to form the basis of any claim, action, suit, expense or
liability under any Environmental Law (an "Environmental Condition") discovered
by Purchasers during its due diligence investigation of the Acquired Facilities
and with respect to which Purchasers delivered written notice to Pathmark prior
to the Closing; and (ii) any other Environmental Condition that existed on the
Closing Date at the Acquired Facilities (or any off-site location relating to
the business conducted at the Acquired Facilities) so long as (x) the
Environmental Condition existed on or prior to the Closing Date and (y)
Purchasers assert a claim for indemnification for such Environmental Condition
prior to the fourth anniversary of the Closing Date. Pathmark's and
Plainbridge's indemnification obligations in this Section 10.2(b) shall include
remediating, at their sole cost and expense, any Environmental Condition for
which indemnification is granted under this Section 10.2(b), subject,
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however, to the limitations and conditions specified in Sections 10.2(c) through
(i) below. Purchasers hereby agree to indemnify, defend and hold Pathmark and
Plainbridge harmless from any liability associated with an Environmental
Condition caused by Purchasers after the Closing Date.
(c) Pathmark's and Plainbridge's indemnity obligations under
Section 10.2(b) for Environmental Conditions which Purchasers discover after the
Closing Date shall be limited to Environmental Conditions neither Purchasers nor
any of their Affiliates actively sought out. Purchasers shall be deemed not to
have "actively sought out" an Environmental Condition where: (i) such
Environmental Condition is discovered as a result of any claim, demand,
investigation or inquiry made against Purchasers or any Purchaser Indemnitee by
any Governmental Authority or other third Person for any Environmental Condition
(so long as such claim, demand, investigation or inquiry was not requested or
otherwise encouraged by Purchasers or any of their Affiliates); and (ii) such
Environmental Condition was discovered in the ordinary course of Purchasers'
operation of the Acquired Facilities, including in the course of any
maintenance, alteration, construction, expansion or renovation of any
Improvement undertaken by Purchasers.
(d) Pathmark's and Plainbridge's indemnity obligations for
remediation at any Acquired Facility shall be limited to such remediation or
other action as would be or is required by appropriate regulatory authorities
under applicable Environmental Laws. Once an Environmental Condition for which
Pathmark or Plainbridge have indemnification obligations under Section 10.2(b)
has been remediated to the levels required under applicable Environmental Laws,
Pathmark and Plainbridge shall have no further indemnification obligations with
respect to that Environmental Condition.
(e) If an Environmental Condition for which Pathmark or
Plainbridge has liability in accordance with Section 10.2(b) arises from
occurrences that take place both before and after the Closing Date and to which
both Pathmark/Plainbridge and Purchasers (or their re-
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spective Affiliates) have contributed, liability shall be apportioned between
Pathmark and Plainbridge, on the one hand, and Purchasers, on the other hand, on
the basis of the relative degrees of contribution to the Environmental Condition
on the part of Pathmark/Plainbridge and Purchasers.
(f) For so long as Pathmark's and Plainbridge's indemnification
with respect to Environmental Conditions shall be in effect, Pathmark,
Plainbridge and Purchasers shall each provide to the others a copy of any
material information or report that is obtained with regard to any matter for
which there is an indemnification liability for Pathmark or Plainbridge.
(g) Purchasers shall afford Pathmark and Plainbridge, and their
respective employees, consultants and contractors, reasonable access to the
Acquired Facilities and the right to investigate and remediate the Acquired
Facilities and inspect and copy all relevant documents and records relating to
any Environmental Conditions for which Pathmark or Plainbridge has
responsibility. The following conditions and agreements shall apply with
respect to the foregoing: (i) no entry or investigation upon such Acquired
Facilities shall be made by Pathmark or Plainbridge except upon reasonable prior
notice to Purchasers, and all consultants and contractors utilized shall be
reasonably acceptable to Purchasers; (ii) all testing and work plans proposed by
Pathmark or Plainbridge shall be reasonably satisfactory to Purchasers; (iii)
Purchasers shall be entitled to require that any persons entering upon such
Acquired Facilities shall be accompanied by a representative of Purchasers; (iv)
testing and remediation activities shall be conducted so as to minimize to the
extent reasonably practicable any interference with Purchasers' business; (v)
any samples taken shall be split between Purchasers' and
Pathmark's/Plainbridge's representatives if so requested by Purchasers; (vi)
Pathmark or Plainbridge, or Purchasers, as applicable, shall provide to the
others a copy of any report or other written information delivered to Pathmark
or Plainbridge, or Purchasers, as the case may be, by any Governmental Authority
with regard to any investigations or other activities of such Governmental
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Authority upon the Acquired Facilities; (vii) Purchasers shall provide
reasonable accommodations in their operations to facilitate any testing or
remediation undertaken by Pathmark or Plainbridge; and (viii) to the extent the
condition of any property of Purchasers is disturbed in any material respect as
a result of any such activities, Pathmark or Plainbridge shall, at their sole
cost and expense, cause the property to be restored to substantially its
condition prior to the occurrence of such activities.
(h) Neither Pathmark nor Plainbridge shall be required to
remediate any Environmental Condition at any leased Acquired Facility except to
the extent permitted under the terms of the Assigned Lease or consented to by
the landlord under such Assigned Lease.
(i) Pathmark and Plainbridge agree that any such remediation
efforts contemplated by the terms of this Section 10.2 shall be commenced, if
reasonably possible, prior to the Closing Date.
Section 10.3 Indemnification Provisions for Benefit of Pathmark.
Subject to and in accordance with the terms of this Article X, from and after
the Closing Date, Purchasers, jointly and severally, shall indemnify, hold
harmless and defend Pathmark and its Affiliates, and their respective officers,
directors, employees, and agents (individually, a "Pathmark Indemnitee" and,
collectively, the "Pathmark Indemnitees") from and against all Losses to the
extent arising out of or related to: (i) any breach of any representation or
warranty of Purchasers contained in this Agreement; (ii) any breach of any
covenant of Purchasers set forth in this Agreement; (iii) any failure of
Purchasers to pay, perform or discharge any of the Assumed Liabilities; or (iv)
any Environmental Condition which is caused by Purchasers and arises after the
date of the Closing.
Section 10.4 Procedures Relating to Indemnification. (a) In order
for an Indemnitee to be entitled to any indemnification provided for under this
Agreement in respect of, arising out of or involving a claim made by any Person
who is not an Indemnitee against the Indem-
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nitee (a "Third Party Claim"), such Indemnitee must notify the party who
may become obligated to provide Indemnification hereunder (the "indemnifying
party") in writing, and in reasonable detail, of the Third Party Claim promptly;
provided, however, that failure to give such notification shall not affect the
indemnification provided hereunder except to the extent the indemnifying party
shall have been prejudiced as a result of such failure. After any required
notification (if applicable), the Indemnitee shall deliver to the indemnifying
party, promptly after the Indemnitee's receipt thereof, copies of all notices
and documents (including court papers) received by the Indemnitee relating to
the Third Party Claim.
(b) If a Third Party Claim is made against an Indemnitee, the
indemnifying party will be entitled to participate in the defense thereof and,
if it so chooses, to assume the defense thereof (at the expense of the
indemnifying party) with counsel selected by the indemnifying party and
reasonably satisfactory to the Indemnitee. Should the indemnifying party so
elect to assume the defense of a Third Party Claim, the indemnifying party will
not be liable to the Indemnitee for any legal expenses subsequently incurred by
the Indemnitee in connection with the defense thereof; provided that if, under
applicable standards of professional conduct (as advised by counsel to the
indemnifying party), a conflict on any significant issue between the Indemnitee
and the indemnifying party or between any two or more Indemnities exists in
respect of such Third Party Claim, the indemnifying party shall pay the
reasonable fees and expenses of one such additional counsel as may be required
to be retained in order to resolve such conflict. If the indemnifying party
assumes such defense, the Indemnitee shall have the right to participate in the
defense thereof and to employ counsel, at its own expense, separate from the
counsel employed by the indemnifying party, it being understood that the
indemnifying party shall control such defense. The indemnifying party shall be
liable for the fees and expenses of counsel employed by the Indemnitee for any
period during which the indemnifying party has not assumed the defense thereof
(other than during any period in which the Indemnitee shall have
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failed to give notice of the Third Party Claim as provided above). If the
indemnifying party chooses to defend or prosecute a Third Party Claim, all the
parties hereto shall cooperate in the defense or prosecution thereof, which
cooperation shall include the retention and the provision to the indemnifying
party of records and information which are reasonably relevant to such Third
Party Claim, and making employees available on a mutually convenient basis to
provide additional information and explanation of any material provided
hereunder. If the indemnifying party chooses to defend or prosecute any Third
Party Claim, the Indemnitee will agree to any settlement, compromise or
discharge of such Third Party Claim which the indemnifying party may recommend
and which by its terms obligates the indemnifying party to pay the full amount
of liability in connection with such Third Party Claim; provided, however, that,
without the Indemnitee's consent, the indemnifying party shall not consent to
entry of any judgement or enter into any settlement (x) that provides for
injunctive or other non-monetary relief affecting the Indemnitee or (y) that
does not include as an unconditional term thereof the giving by each claimant or
plaintiff to such Indemnitee of a release from all liability with respect to
such claim. Whether or not the indemnifying party shall have assumed the
defense of a Third Party Claim, the Indemnitee shall not admit any liability
with respect to, or settle, compromise or discharge, such Third Party Claim
without the indemnifying party's prior written consent.
(c) In order for an Indemnitee to be entitled to any
indemnification provided for under this Agreement in respect of a claim that
does not involve a Third Party Claim, the Indemnitee shall deliver notice of
such claim with reasonable promptness to the indemnifying party. The failure by
any Indemnitee to so notify the indemnifying party shall not relieve the
indemnifying party from any liability which it may have to such Indemnitee under
this Agreement, except to the extent that the indemnifying party shall have been
actually prejudiced by such failure. Any notice pursuant to this Section 10.4
shall state, in conspicuous type, that if the indemnifying party does not
dispute its liability to the Indemnitee with respect to the claim made in such
notice (the
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"Claim") by notice to the Indemnitee prior to the expiration of a
30-calendar-day period following the indemnifying party's receipt of the second
notice of the Claim, the Claim shall be conclusively deemed a liability of the
indemnifying party. If the Indemnitee has provided the indemnifying party two
(2) such notices not less than thirty (30) days apart and the indemnifying party
does not notify the Indemnitee prior to the expiration of a 30-calendar-day
period following its receipt of the second such notice that the indemnifying
party disputes its liability to the Indemnitee under this Agreement, the Claim
shall be conclusively deemed a liability of the indemnifying party under this
Agreement and the indemnifying party shall pay the amount of such liability to
the Indemnitee on demand or, in the case of any notice in which the amount of
the Claim (or any portion thereof) is estimated, on such later date when the
amount of the Claim (or any portion thereof) becomes finally determined. If the
indemnifying party has timely disputed its liability with respect to the Claim,
as provided above, the indemnifying party and the Indemnitee shall proceed in
good faith to negotiate resolution of the Claim and, if the Claim is not
resolved through negotiations, such Indemnitee shall be free to pursue such
remedies as may be available to it under applicable law.
Section 10.5 Exclusive Remedy. The provisions of this Article X
shall be considered the exclusive remedy with respect to the matters covered by
this Article X (including any claim for a breach of representation or warranty
or claim in respect of any Environmental Condition) and neither Party shall seek
any other remedy or relief, except for a claim of fraud or any action or suit to
enforce a Party's rights under this Agreement.
ARTICLE XI
TERMINATION
Section 11.1 Termination. This Agreement may be terminated by giving
written notice prior to the Closing as follows:
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(a) by mutual written agreement of the Parties;
(b) by Pathmark, Plainbridge or Purchasers, if there shall be
any order that is final and nonappealable preventing the consummation of the
transactions contemplated hereby and the Party seeking to terminate the
Agreement pursuant to this Section 11.1(b) has complied in all respects with its
obligations under Section 9.4 hereof;
(c) by Purchasers, if Pathmark or any of its Affiliates shall
have breached or violated in any material respect any of its covenants set
forth in this Agreement, and such breach or violation shall not have been
cured within ten (10) days (or such longer period as may be necessary to cure
the same with due diligence) after written notice thereof has been given by
Purchasers to Pathmark or if any of Pathmark's and Plainbridge's material
representations and warranties made herein are not true in any material
respects;
(d) by Purchasers, as to any Acquired Facility, in the event any
condition(s) to Closing set forth in Article VII hereof has not been met as to
such Acquired Facility and Purchasers have not waived such unmet condition as to
such Acquired Facility, provided that if Purchasers terminate this Agreement as
to such affected Acquired Facility, that portion of the Purchase Price allocated
to the affected Acquired Facility as set forth in Schedule 3.1(c), will be
reduced accordingly and, provided, further that in the event that the affected
Acquired Facility is the Woodbridge Facility, Purchasers and Pathmark shall use
their best efforts to negotiate a lease of the Woodbridge Facility to CSWG, as
provided in the last sentence of Section 13.8(a), and in the absence of reaching
agreement, after good faith negotiations, on the terms of such lease, either
Pathmark or Purchasers may terminate this Agreement; and
(e) by Pathmark or Plainbridge if Purchasers or any of their
Affiliates shall have breached or violated in any material respect any of its
covenants set forth in this Agreement, and such breach or violation
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shall not have been cured within ten (10)days (or such longer period as may
be necessary to cure the same with due diligence) after written notice
thereof has been given by Pathmark to Purchasers or if any of Purchasers'
material representations and warranties made herein are not true in any
material respects.
Section 11.2 Effect of Termination. Except as set forth in this
Section 11.2, in the event of the termination of this Agreement pursuant to
Section 11.1 hereof, this Agreement shall forthwith become null and void, there
shall be no liability on the part of any Party or any of their respective
officers, directors, subsidiaries, Affiliates or associates to any other Party
and all rights and obligations of any Party hereto shall cease; provided,
however, that the foregoing shall not restrict or otherwise limit the liability
of any Party arising out of or relating to such Party's willful breach of this
Agreement. Without limiting the generality of the foregoing, the
representations, warranties, covenants and agreements in this Agreement shall
terminate at or upon the termination of this Agreement pursuant to Section 11.1
hereof, except that the agreements set forth in Section 13.2 hereof and those
set forth in this Section 11.2 shall survive termination of this Agreement in
accordance with their respective terms.
ARTICLE XII
OPERATIONS PENDING CLOSING
Section 12.1 Pending Operations. From and after the date hereof and
continuing until Closing, Pathmark or Plainbridge, as the case may be, shall (i)
continue to operate, maintain and manage the Dayton Facility, the Brunswick
Facility, and the Banana Ripening Facility in accordance with the terms of the
Assigned Leases, respectively, and, along with the Woodbridge Facility,
consistent with past practices, and in accordance with the terms of this
Agreement and (ii) operate the business conducted at the Facilities in the
ordinary course consistent with past practice and shall use all reasonable
efforts to preserve intact its goodwill, keep
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available the services of its employees and preserve the goodwill and business
relationships with its suppliers and others having business relationships with
it at the Acquired Facilities. Further, during the aforesaid period, (i)
Pathmark and Plainbridge shall not place any liens on or encumber the Acquired
Facilities or the Acquired Assets or take any action which would cause either of
them to be unable to perform under this Agreement; (ii) Pathmark and Plainbridge
shall keep all permits and licenses required for the operations of the Acquired
Facilities and the Acquired Assets and which are in Pathmark's or Plainbridge's
name in full force and effect to the extent required by law; (iii) Pathmark and
Plainbridge will not enter into any new service contract with respect to the
Acquired Facilities and the Acquired Assets unless same shall be cancelable for
any reason or no reason at all and without penalty by Pathmark or Plainbridge
upon thirty (30) days notice or less; (iv) Pathmark or Plainbridge shall
maintain all insurance policies now affecting the Acquired Facilities and the
Acquired Assets (and which are presently maintained by Pathmark or Plainbridge)
in full force and effect and pay all premiums and charges required thereunder
provided that such policies remain available at commercially reasonable rates
and provided further that Pathmark or Plainbridge may substitute the existing
insurance policies with a substantially similar policy or policies including
through another insurer of comparable rating; (v) Pathmark and Plainbridge shall
pay all Liens that are now or may become attached to any of the Acquired
Facilities and the Acquired Assets that are of a fixed and ascertainable amount;
(vi) Pathmark or Plainbridge shall not sell, lease, sublease, transfer, mortgage
or pledge any of the Acquired Facilities and the Acquired Assets; and (vii)
neither Pathmark or Plainbridge will amend, modify or terminate any of the
Assigned Leases, and shall pay all amounts and perform all obligations under
each such lease.
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ARTICLE XIII
MISCELLANEOUS
Section 13.1 Entire Agreement. This Agreement, together with the
exhibits hereto, the Confidentiality Agreement dated January 24, 1997, and the
documents referred to herein, including, without limitation, the Related
Agreements, constitutes the entire agreement of the Parties with respect to the
subject matter hereof and supersedes all prior agreements and undertakings both
written and oral, between the parties hereto with respect to the subject matter
hereof.
Section 13.2 Expenses. Except as otherwise specified in this
Agreement, all costs and expenses, including, without limitation, fees and
disbursements of counsel, financial advisors and accountants, incurred in
connection with this Agreement and the transaction contemplated hereby shall be
borne by the Party incurring the same. The cost of the search, and examination
fee and the insurance premium for any title insurance commitment or policy that
Purchasers may elect to obtain for the Woodbridge Facility shall be paid solely
by Purchasers.
Section 13.3 No Recording of Agreement. Neither this Agreement nor
any description of any of the transactions contemplated by this Agreement shall
be recorded in the public records in any jurisdiction without the prior written
consent of all Parties. Notwithstanding the foregoing: (i) the Parties may
deliver copies of this Agreement (or descriptions of the transactions
contemplated hereby) to any Governmental Authority the consent of which is
required to consummate the transactions contemplated by this Agreement; and (ii)
within thirty (30) days prior to the Closing, the Parties may file notices of
settlement in the real estate records of Middlesex County, New Jersey with
respect to the contemplated transfer of each of the Acquired Facilities to
Purchasers.
Section 13.4 Exclusive Jurisdiction. The Parties agree that the
federal and state courts located
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within the State of New Jersey shall have the exclusive jurisdiction to resolve
all disputes arising under or out of the interpretation or performance of this
Agreement and the Related Agreements. Each Party hereto hereby consents to
personal jurisdiction in all federal and state courts located in the State of
New Jersey and waives any claim that such courts are inconvenient forums for the
resolution of any disputes regarding the interpretation of this Agreement or the
performance of the terms hereof.
Section 13.5 Knowledge. Whenever in this Agreement the phrase
"knowledge" or "best knowledge" or "known to" or words of similar import are
used with respect to (x) Purchasers, such phrase is deemed to mean the actual
knowledge, without independent investigation or inquiry, of the President, the
Chief Financial Officer, in-house General Counsel, Treasurer and Secretary of
Purchasers, and (y) Pathmark or Plainbridge, such phrase is deemed to mean the
actual knowledge, without independent investigation or inquiry, of the following
specified present officers of each of Pathmark and Plainbridge: President, Chief
Financial Officer, General Counsel, General Counsel-Real Estate, Corporate
Counsel, Litigation Counsel, Real Estate Counsel, Executive Vice
President-Retail Services, Controller, Vice President-Retail Development,
Treasurer, Vice President-Maintenance, Construction, Purchasing, and Vice
President-Distribution and Vice President-Labor Relations.
Section 13.6 Risk of Loss - Woodbridge Facility. Notwithstanding
anything to the contrary in this Agreement, (i) should any casualty or damage
other than ordinary wear and tear occur to the Woodbridge Facility between the
time of execution of this Agreement and the Closing, or (ii) should any
condemnation proceeding be instituted prior to the Closing against the
Woodbridge Facility (each of the foregoing contingencies being referred to
herein as a "Loss"), then Pathmark or Plainbridge shall reconstruct or repair
the affected portion of the Woodbridge Facility to substantially the same
condition of such Facility prior to the occurrence of such Loss, to the extent
possible. At Closing Plainbridge or Pathmark shall assign to CSWG all insur-
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ance proceeds or condemnation awards received by it as a result of such
Loss (except to the extent of any funds expended by Pathmark or Plainbridge to
reconstruct or repair the Facility), and all rights to receive such insurance
proceeds or condemnation awards by it (except to the extent of any funds
expended by Pathmark or Plainbridge to reconstruct or repair the Facility), in
order that Purchasers shall continue such repair and reconstruction of the
Woodbridge Facility, provided that Pathmark and Plainbridge shall make a claim
under their business interruption insurance covering the Woodbridge Facility as
a result of such Loss and shall assign to Purchasers at Closing any and all
proceeds received from Pathmark's or Plainbridge's business interruption
insurance coverage (with respect to the period after Closing) and any and all
rights Pathmark or Plainbridge may have to receive such proceeds (with respect
to the period after Closing), in the event the Woodbridge Facility is damaged to
the extent to give rise to such a claim.
Section 13.7 Risk of Loss - Assigned Leases. In the event a Loss is
suffered at the Dayton Facility, the Brunswick Facility, or the Banana Ripening
Facility, Pathmark hereby agrees to allow C&S to direct which rights or remedies
Pathmark shall exercise, if any, under its lease for such facility as a result
of such Loss. In such case, Pathmark shall make a claim under its business
interruption insurance covering the affected facility and shall assign to C&S at
Closing any and all proceeds received from Pathmark's business interruption
insurance coverage (with respect to the period after Closing) and any and all
rights Pathmark may have to receive such proceeds (with respect to the period
after Closing), in the event such facility is damaged to the extent to give rise
to such a claim. If C&S has directed Pathmark to exercise any rights under the
lease for such affected facility to rebuild or reconstruct the facility and not
to terminate the lease, then Pathmark shall, at Closing, assign to Purchasers
all insurance proceeds it has received (except to the extent of any funds
expended by Pathmark or Plainbridge to reconstruct or repair the
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Facility), and all rights to receive any future insurance proceeds (except to
the extent of any funds expended by Pathmark or Plainbridge to reconstruct or
repair the Facility), as a result of such Loss so that C&S may continue to
repair and reconstruct such affected facility.
Section 13.8 Environmental Remediation.
(a) The Parties acknowledge the existence of an Environmental
Condition relating to asbestos at the Woodbridge Facility and Pathmark agrees,
at its sole cost and expense, to remediate such Environmental Condition (the
"Woodbridge Remediation") subject to and in accordance with the terms of this
Section 13.8(a). Pathmark will, at its sole cost and expense, and at the
earliest possible time after the date hereof, contract for and employ an
environmental consultant (and, if necessary, an engineer and environmental
contractor) reasonably acceptable to Purchasers who will develop and implement a
remediation plan reasonably acceptable to Purchasers. Pathmark will commence
the Woodbridge Remediation as soon as practicable hereafter (taking into account
Pathmark's and Plainbridge's business operations at the Woodbridge Facility) and
will use commercially reasonable efforts to complete such remediation prior to
the Closing, or as shortly thereafter as reasonably possible. In the event the
Woodbridge Remediation is not commenced prior to Closing, Purchasers will select
to the extent not previously retained by Pathmark or Plainbridge, an
environmental consultant (and, if necessary, an engineer and environmental
contractor) reasonably acceptable to Pathmark, who will develop and implement a
remediation plan for the Woodbridge Remediation which is reasonably acceptable
to Pathmark (including the costs and methods thereof); Pathmark agrees to pay
all costs and expenses of the Woodbridge Remediation. Following the Closing,
the Parties will jointly supervise the Woodbridge Remediation and will work
together to complete the Woodbridge Remediation in a cost efficient and timely
manner. In the event the Woodbridge Remediation is not completed by the
Closing, Pathmark agrees to pay Purchasers for all Incremental Facility Use
Expenses incurred by Purchasers as a result of the Woodbridge Facility not being
fully and completely available for use. Notwithstanding anything in this
Agreement to the contrary, in the event the reasonably estimated cost of the
Woodbridge Remediation exceeds $15,000,000, then Pathmark shall be under no
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obligation hereunder to convey the Woodbridge Facility and may instead, on the
Closing Date, lease the Woodbridge Facility to CSWG for a 25 year term (with an
option in favor of CSWG to purchase the Woodbridge Facility) on such terms and
conditions as will effectuate as nearly as practicable the same economic result
to Pathmark and Plainbridge as if Plainbridge had sold the Woodbridge Facility
to CSWG on the Closing Date, which terms shall be negotiated in good faith by
the Parties.
(b) In the event any Environmental Condition (other than the
Environmental Condition referred to in Section 13.8(a) above) is discovered
during Purchasers' due diligence investigation, Purchasers shall send written
notice of such Environmental Condition to Pathmark within a reasonable period of
time after discovery thereof (but, in any event, prior to Closing) and Pathmark
at its sole cost and expense shall undertake remediation efforts thereafter in
accordance with Section 10.2(b). At Purchasers' option, Purchasers may elect
instead to assume Pathmark's duty to remediate such Environmental Condition, in
which case Purchasers shall be entitled to and shall receive a credit at Closing
to the Purchase Price to be paid hereunder in an amount to be mutually agreed
between the Parties prior to the Closing to cover the costs and expenses
incurred by Purchasers in performing such remediation efforts.
Section 13.9 No Brokers. Each Party represents and warrants to the
other Party that it has not dealt with any person (including any real estate
broker) in a way that would entitle such person to any broker's fee, finder's
fee, commission or similar payment in connection with the execution and delivery
of this Agreement or any Related Agreement or the consummation of the
transactions contemplated by this Agreement or any Related Agreement. Each
Party hereby agrees to defend, indemnify and hold the other Parties harmless
from any liabilities for brokerage commissions or similar payments that are
determined to be due as a result of the dealings of the indemnifying Party with
such other persons.
Section 13.10 Amendments. This Agreement may not be amended or
modified except by an instrument in
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writing signed by, or on behalf of, each of Pathmark, Plainbridge and C&S,
Woodbridge and CSWG.
Section 13.11 Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given or made
(and shall be deemed to have been duly given or made upon receipt) by delivery
in person, by courier service, by telecopy or telex or by registered or
certified mail (postage prepaid, return receipt requested) to the respective
parties at the following addresses (or at such other address for a party as
shall be specified in a notice given in accordance with this Section 13.9)
(i) If to Pathmark or Plainbridge:
James Donald
Chairman, Chief Executive Officer and President
Pathmark Stores, Inc.
200 Milik Street
Carteret, NJ 07008
Telephone: (732) 499-3535
Facsimile: (732) 499-3100
with a copy under separate cover to:
Marc Strassler, Esq.
Vice President and General Counsel
Pathmark Stores, Inc.
200 Milik Street
Carteret, NJ 07008
Telephone: (732) 499-3930
Facsimile: (732) 499-3460
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(ii) If to Purchasers:
Richard B. Cohen
President and Chief Executive Officer
C&S Wholesale Grocers, Inc.
Old Ferry Road
Brattleboro, VT 05301
Telephone: (802) 257-6700
Facsimile: (802) 257-6620
with a copy under separate cover to:
Mark Gross, Esq.
Senior Vice President and General Counsel
C&S Wholesale Grocers, Inc.
Old Ferry Road
Brattleboro, VT 05301
Telephone: (802) 257-6025
Facsimile: (802) 257-6857
Section 13.12 Binding Effect; Assignment.
(a) This Agreement shall be binding upon and inure to the benefit of
Pathmark, Plainbridge and Purchasers and their respective successors and
assigns, but no rights, interest or obligation of either party herein may be
assigned without the prior written consent of the other
(b) Each Purchaser hereby guarantees the obligations of each other
Purchaser hereunder and under the Related Agreements and any documents delivered
pursuant to any of the foregoing (collectively, the "Purchasers' Obligations").
This guaranty by each Purchaser is a primary obligation of each Purchaser and
shall be a continuing, irrevocable guaranty and shall remain in full force and
effect until all of the Purchasers' Obligations have been fully and indefeasibly
paid and performed except as provided for in Section 13.12(d) below. This is a
guaranty of performance of the Purchasers' Obligations and not merely of the
collectibility thereof. Purchasers hereby agree that the guaranties hereunder
shall continue in full force and shall not be released or
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affected by reason of any of the following actions, whether taken with or
without the knowledge of Purchasers: (i) the release of, or failure to proceed
against, any collateral that may at any time secure any of the Purchasers'
Obligations; (ii) any delay in exercising any rights, or taking any action to
collect or enforce the payment or performance of any of the Purchasers'
Obligations, either as against a Purchaser or any other person primarily or
secondarily liable with such Purchaser; (iii) the release of any Purchaser, any
other guarantor or other party, settlement with such guarantor or other party or
the revocation or impairment of any guaranty with respect to any Purchaser,
other guarantor or other party; and (iv) the illegality, invalidity or
unenforceability of all or any part of the Purchasers' Obligations or of any
security therefor or guaranty thereof.
(c) Each of Pathmark and Plainbridge hereby guarantees the
obligations of each other hereunder and under the Related Agreements and any
documents delivered pursuant to any of the foregoing (collectively, the
"Sellers' Obligations"). This guaranty by each of Pathmark and Plainbridge is a
primary obligation of each of Pathmark and Plainbridge and shall be a
continuing, irrevocable guaranty and shall remain in full force and effect until
all of the Sellers' Obligations have been fully and indefeasibly paid and
performed. This is a guaranty of performance of the Sellers' Obligations and
not merely of the collectibility thereof. Pathmark and Plainbridge hereby agree
that the guaranties hereunder shall continue in full force and shall not be
released or affected by reason of any of the following actions, whether taken
with or without the knowledge of either Pathmark or Plainbridge: (i) the release
of, or failure to proceed against, any collateral that may at any time secure
any of the Sellers' Obligations; (ii) any delay in exercising any rights, or
taking any action to collect or enforce the payment or performance of any of the
Sellers' Obligations, either as against either Pathmark or Plainbridge or any
other person primarily or secondarily liable with either Pathmark or
Plainbridge; (iii) the release of Pathmark, Plainbridge, any other guarantor or
other
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party, settlement with such guarantor or other party or the revocation or
impairment of any guaranty with respect to Pathmark, Plainbridge, any other
guarantor or other party; and (iv) the illegality, invalidity or
unenforceability of all or any part of the Sellers' Obligations or of any
security therefor or guaranty thereof.
(d) Pathmark and Plainbridge agree that upon the sale of all of the
limited liability company interests of Woodbridge to a non-affiliate of
Purchasers, any guaranty provided by Woodbridge hereunder shall terminate and
shall be null and void and of no further force and effect. Pathmark and
Plainbridge further agree that upon the sale of all of the limited liability
company interests of CSWG to a non-affiliate of Purchasers, any guaranty
provided by CSWG hereunder shall terminate and shall be null and void and of no
further force and effect.
Section 13.13 Counterparts. This Agreement may be executed in one or
more counterparts, all by the Parties hereto in separate counterparts, each of
which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
Section 13.14 No Third-Party Beneficiaries. This Agreement shall be
binding upon and inure solely to the benefit of the Parties and their permitted
assigns, and nothing herein, express or implied, is intended to or shall confer
upon an other person any legal or equitable right, benefit or remedy of any
nature whatsoever.
Section 13.15 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any law or
public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transaction contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any herein 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
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the original intent of the parties as closely as possible in an acceptable
manner in order that the transactions contemplated hereby are consummated as
originally contemplated to the greatest extent possible.
Section 13.16 Headings. The descriptive headings contained in this
Agreement are for convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement.
Section 13.17 Governing Law. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of New Jersey, without
regard to the principles of conflicts of laws thereof.
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed by their duly authorized officers as of the date and year first set
forth above.
PATHMARK STORES, INC.
By: /s/ RON MARSHALL
-------------------------------
Name: Ron Marshall
Title: Executive Vice-President
PLAINBRIDGE, INC.
By: /s/ RON MARSHALL
-------------------------------
Name: Ron Marshall
Title: Executive Vice-President
C & S WHOLESALE GROCERS, INC.
By: /s/ RICHARD B. COHEN
-------------------------------
Name: Richard B. Cohen
Title: President
CSWG LLC
By: /s/ RICHARD B. COHEN
-------------------------------
Name: Richard B. Cohen
Title: President
WOODBRIDGE LOGISTICS LLC
By: /s/ RICHARD B. COHEN
-------------------------------
Name: Richard B. Cohen
Title: President
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Exhibit A-1
and A-2 Assumed Contracts with corresponding amount of fixed Assumed
Liabilities
Exhibit B List of Equipment to be Purchased at the Grocery Facilities
List of Leasehold Improvements at the Grocery Facilities
List of Equipment to be Purchased at the Dayton Facility
List of Leasehold Improvements to be Purchased at the Dayton
Facility
Exhibit C [Intentionally Omitted]
Exhibit D Legal Description of Woodbridge Facility
Exhibit E Legal Description of Retained Acreage
Exhibit F Tax Bills and Statements for the Woodbridge Facility
Exhibit G-1 Brunswick Facility Lease
Exhibit G-2 Dayton Facility Lease
Exhibit G-3 Banana Ripening Facility Lease
Exhibit H [Intentionally Omitted]
Exhibit I Form of Assignment of Lease
Schedule 1.1(g) Assumed Collective Bargaining Agreements
Schedule 2.1 Excluded Assets
Schedule 3.1(b) Woodbridge Remediation
Schedule 3.1(c) Allocation of Purchase Price
Schedule 5.1-1 Affected Employees (with department, hiring date and salary)
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Schedule 5.1-2 Employment agreements, severance agreements and severance
plans with respect to Affected Employees
Schedule 5.1-3 Multiemployer Pension Plan List
Schedule 5.1-4 Contributions made to each Multiemployer Pension Plan for
the most recent 5 plan years
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EXHIBIT 99
PATHMARK STORES, INC.
200 MILIK STREET, CARTERET, NEW JERSEY 07008
FOR IMMEDIATE RELEASE CONTACT: RON MARSHALL
732-499-3205
PATHMARK CONSUMMATES SUPPLY AGREEMENT
WITH C&S WHOLESALE GROCERS
- ------------------------------------------------------------------------------
Carteret, New Jersey January 30, 1998. Pathmark Stores, Inc. announced today
that it has completed the sale of its Woodbridge, New Jersey warehouse complex
and transfer of two other distribution center facilities in North Brunswick and
Dayton, New Jersey to C&S Wholesale Grocers, Inc., including the fixtures,
equipment and inventory in each facility and that the previously announced
supply agreement with C&S pursuant to which C&S will satisfy substantially all
of Pathmark's grocery and perishable merchandise requirements has gone into
effect.
The purchase price for the Woodbridge complex and other distribution assets
(exclusive of inventory) is $60 million. A portion of the net proceeds will be
used to reduce the Company's existing term loan.
C&S, a privately held company based in Brattleboro, Vermont, is the fourth
largest wholesaler and distributor of food and grocery products in the United
States.
Pathmark is a regional supermarket company currently operating 135 supermarkets
primarily in the New York, New Jersey and Philadelphia metropolitan areas.
*****
