ASSET PURCHASE AGREEMENT dated as of January 22, 2006 among CVS CORPORATION CVS PHARMACY, INC. ALBERTSON’S, INC. SUPERVALU INC. NEW ALOHA CORPORATION and THE SELLERS LISTED ON ANNEX A ATTACHED HERETO
Exhibit 2.03
dated as of
January 22, 2006
among
CVS CORPORATION
CVS PHARMACY, INC.
XXXXXXXXX’X, INC.
SUPERVALU INC.
NEW ALOHA CORPORATION
and
THE SELLERS LISTED ON ANNEX A ATTACHED HERETO
TABLE OF CONTENTS
Page | ||||
ARTICLE 1 Purchase and Sale |
1 | |||
Section 1.01. Purchase and Sale |
1 | |||
Section 1.02. Excluded Assets |
3 | |||
Section 1.03. Assumed Liabilities |
5 | |||
Section 1.04. Excluded Liabilities |
6 | |||
Section 1.05. Consents; Assignment of Contracts and Rights |
7 | |||
Section 1.06. Purchase Price |
8 | |||
Section 1.07. Closing |
9 | |||
Section 1.08. Prorations |
10 | |||
Section 1.09. Removal of Equipment and Signage |
11 | |||
Section 1.10 La Habra Inventory Adjustment |
11 | |||
ARTICLE 2 Representations and Warranties of Albertson’s |
11 | |||
Section 2.01. Organization |
11 | |||
Section 2.02. Authority; Enforceability |
12 | |||
Section 2.03. Non-Contravention; Assigned Contracts |
12 | |||
Section 2.04. Governmental Consents |
13 | |||
Section 2.05. Litigation; |
13 | |||
Section 2.06. Compliance with Law |
13 | |||
Section 2.07. Real Property |
14 | |||
Section 2.08. Title to the Purchased Assets |
14 | |||
Section 2.09. IT Systems |
14 | |||
Section 2.10. Sufficiency of Assets |
15 | |||
Section 2.11. Labor Relations |
15 | |||
Section 2.12. Environmental Compliance |
15 | |||
Section 2.13. Financial Schedules |
16 | |||
Section 2.14. No Undisclosed Liabilities |
17 | |||
Section 2.15. Absence of Certain Changes or Events |
17 | |||
Section 2.16. Finders’ Fees |
17 | |||
Section 2.17. Healthcare Regulatory |
18 | |||
ARTICLE 3 Representations and Warranties of Parent and Buyer |
19 | |||
Section 3.01. Organization |
19 | |||
Section 3.02. Authority; Enforceability |
19 | |||
Section 3.03. Non-Contravention |
19 |
ii
Page | ||||
Section 3.04. Governmental Consents |
20 | |||
Section 3.05. Financing |
20 | |||
Section 3.06. Brokers |
20 | |||
ARTICLE 4 Representations and Warranties of SUPERVALU |
20 | |||
Section 4.01. Organization |
20 | |||
Section 4.02. Authority; Enforceability |
20 | |||
Section 4.03. Non-Contravention |
21 | |||
Section 4.04. Governmental Consents |
21 | |||
Section 4.05. Brokers |
21 | |||
ARTICLE 5 Covenants of The Sellers |
21 | |||
Section 5.01. Conduct of the Standalone Drug Business |
21 | |||
Section 5.02. Access to Information; Confidentiality |
23 | |||
Section 5.03. Notices of Certain Events |
25 | |||
Section 5.04. Noncompetition; Cooperation |
25 | |||
Section 5.05. Prescription Files |
26 | |||
Section 5.06. Casualty and Condemnation |
26 | |||
Section 5.07. Assistance in Transfer of Licenses, Permits and Registrations |
27 | |||
Section 5.08. Controlled Substances Inventory |
28 | |||
Section 5.09. Updated Store List |
28 | |||
Section 5.10. Financial Reports; Audited Financials |
28 | |||
Section 5.11. Intercompany Leases |
29 | |||
Section 5.12. Merger Agreement; Separation Agreement |
29 | |||
ARTICLE 6 Covenants of Buyer |
29 | |||
Section 6.01. Confidentiality |
29 | |||
Section 6.02. Access |
30 | |||
Section 6.03. Guarantee Releases under Certain Contracts |
30 | |||
Section 6.04. Contractual Overpayments |
30 | |||
Section 6.05. Medicare And Medicaid Provider Numbers |
31 | |||
ARTICLE 7 Covenants of Buyer and the Sellers |
31 | |||
Section 7.01. Reasonable Best Efforts; Further Assurances |
31 | |||
Section 7.02. HSR Clearance |
31 | |||
Section 7.03. Certain Filings |
32 | |||
Section 7.04. Public Announcements |
32 |
iii
Page | ||||
Section 7.05. Trademarks; Tradenames |
33 | |||
Section 7.06. Accounts Receivables; Gift Cards and Gift Certificates; Prepaid
Expenses |
34 | |||
Section 7.07. Transition Services Agreement |
34 | |||
Section 7.08. HIPAA Privacy Standards |
34 | |||
Section 7.09. Solicitation of Employees |
34 | |||
Section 7.10. Kodak and Qualex Photo Processing Equipment |
34 | |||
Section 7.11. “As Is” Condition; Waiver and Release |
35 | |||
Section 7.12. Payments for Pharmacy Services |
35 | |||
Section 7.13. Confidentiality Agreement |
35 | |||
ARTICLE 8 Tax Matters |
36 | |||
Section 8.01. Tax Matters |
36 | |||
Section 8.02. Tax Cooperation |
36 | |||
ARTICLE 9 Employee Benefits |
37 | |||
Section 9.01. ERISA Representations |
37 | |||
Section 9.02. Employees and Offers of Employment |
38 | |||
Section 9.03. The Sellers’ Employee Benefit Plans |
38 | |||
Section 9.04. Buyer Benefit Plans |
39 | |||
Section 9.05. Labor Agreements |
39 | |||
Section 9.06. Employee Compensation |
41 | |||
Section 9.07. Employee Indemnity |
42 | |||
Section 9.08. No Third Party Beneficiaries |
42 | |||
ARTICLE 10 Conditions to Closing |
42 | |||
Section 10.01. Conditions to Each Party’s Obligations |
42 | |||
Section 10.02. Conditions to Obligation of Buyer |
43 | |||
Section 10.03. Conditions to Obligation of the Sellers |
43 | |||
ARTICLE 11 Survival; Indemnification |
43 | |||
Section 11.01. Survival |
43 | |||
Section 11.02. Indemnification |
44 | |||
Section 11.03. Procedures |
45 | |||
ARTICLE 12 Termination |
47 | |||
Section 12.01. Grounds for Termination |
47 | |||
Section 12.02. Effect of Termination |
48 |
iv
Page | ||||
ARTICLE 13 Miscellaneous |
48 | |||
Section 13.01. Definitions |
48 | |||
Section 13.02. Notices |
54 | |||
Section 13.03. Amendments and Waivers |
55 | |||
Section 13.04. Expenses |
55 | |||
Section 13.05. Successors and Assigns |
56 | |||
Section 13.06. Governing Law |
56 | |||
Section 13.07. Specific Performance; Jurisdiction |
56 | |||
Section 13.08. WAIVER OF JURY TRIAL |
56 | |||
Section 13.09. Counterparts; Effectiveness; Third Party Beneficiaries |
57 | |||
Section 13.10. Other Definitional and Interpretative Provisions |
57 | |||
Section 13.11. Entire Agreement |
57 | |||
Section 13.12. Severability |
57 | |||
Section 13.13. Bulk Transfer Laws |
57 | |||
Section 13.14. Guaranty |
58 |
Annex A
|
Sellers | |
Exhibit A
|
List of Owned Stores | |
Exhibit B
|
List of Ground Lease Stores | |
Exhibit C
|
List of Leased Stores | |
Exhibit D
|
Form of Assignment and Assumption Agreement | |
Exhibit E
|
Forms of Lease Assignment and Assumption Agreement | |
Exhibit F
|
Form of Standalone Drug Business Transition Services Agreement | |
Exhibit G
|
Distribution Center Transition Services Agreement Term Sheet |
Schedule 1.01(f) |
Assumed Labor Agreements | |
Schedule 1.01(g) |
Assigned Contracts | |
Schedule 1.02(a) |
Excluded Equipment | |
Schedule 5.01(b)(i) |
Lease Optional Extensions to be Exercised | |
Schedule 5.01(b)(ii) |
Stores to be Closed | |
Schedule 5.02(a) |
Transition Planning Related Activities | |
Schedule 7.09 |
Employees Buyer May Solicit | |
Schedule 9.02(a) |
Offers of Employment | |
Schedule 9.02(b) |
Divisional Pharmacy Managers |
v
AGREEMENT dated as of January 22, 2006, among CVS Pharmacy, Inc., a Rhode Island corporation
(“Buyer”), CVS Corporation, a Delaware corporation (“Parent”), Xxxxxxxxx’x, Inc., a Delaware
corporation (“Albertson’s”), New Aloha Corporation, a Delaware corporation and wholly owned
subsidiary of Albertson’s (“New Diamond”), SUPERVALU INC., a Delaware corporation (“SUPERVALU”),
and the entities listed on Annex A, each of which is directly or indirectly wholly owned by
Albertson’s as of the date hereof (such entities listed on Annex A together with Albertson’s, the
“Sellers”).
W I T N E S S E T H :
WHEREAS, the Sellers conduct retail drug store and pharmacy businesses in freestanding Stores
(as defined below) through the operation of the Owned Stores, the Ground Lease Stores, the Leased
Stores and the Distribution Center (as each term is defined below) (such business, the “Standalone
Drug Business”; for the avoidance of doubt, the parties acknowledge and agree that the Standalone
Drug Business excludes Seller’s retail drug store and pharmacy businesses located in the same
building as, and with common entrances to, grocery stores (the “Retained Combo Drug Stores”);
WHEREAS, Buyer desires to purchase the Purchased Assets (as defined below) relating to the
Standalone Drug Business from the Sellers and to assume certain related liabilities, and the
Sellers desire to sell such Purchased Assets to Buyer, upon the terms and subject to the conditions
set forth herein; and
WHEREAS, the Sellers (i) own the drug stores and the real property associated with the drug
stores listed on Exhibit A hereto (the “Owned Stores”); (ii) own the drug stores and lease the real
property associated with the drug stores listed on Exhibit B hereto (the “Ground Lease Stores”);
(iii) lease the drug stores listed on Exhibit C hereto (the “Leased Stores” and collectively with
the Owned Stores and the Ground Lease Stores, the “Stores” and each individually, a “Store”); and
(iv) own the Distribution Center (collectively with the Stores, the “Facilities”).
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements
herein contained, and intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE 1
Purchase and Sale
Purchase and Sale
Section 1.01. Purchase and Sale. Except as otherwise provided below, upon the terms and
subject to the conditions of this Agreement, Buyer agrees to purchase from the Sellers and the
Sellers agree to sell, convey, transfer, assign and deliver, or cause to be sold, conveyed,
transferred, assigned and delivered, to Buyer at the Effective Time, all of the Sellers’ right,
title and interest in, to and under the assets primarily related to the Standalone Drug Business
including the following assets and properties, wherever located, real, personal or mixed, tangible
or intangible, as the same shall exist at the Effective Time, including all such assets acquired by
the Sellers between the date hereof and the Effective Time (the “Purchased Assets”), but
excluding the Excluded Assets:
(a) the real property owned by the Sellers and associated with the Owned Stores or the
Distribution Center (the “Owned Real Property”) and the tenants’ interests in the ground
leases associated with the Ground Lease Stores (the real property associated with the Ground
Lease Stores being referred to as the “Ground Leased Real Property”), together with all
buildings, structures, installations, fixtures, trade fixtures, building equipment and other
improvements owned by the Sellers located on or attached to the Owned Real Property or
Ground Leased Real Property (and all title documents, surveys, related construction plans
and documents and related real estate files with respect to the Owned Real Property and
Ground Leased Real Property);
(b) the Store Leases (the real property leased pursuant to the Store Leases is referred
to collectively as the “Leased Real Property” and together with the Owned Real Property and
the Ground Leased Real Property, the “Real Property”), and all Store Lease documents,
related construction plans and documents and related real estate files;
(c) all fixed assets and tangible personal property (other than the Inventory) at the
Facilities and owned by the Sellers, including fixtures, trade fixtures, building equipment,
fittings, furniture, computer hardware, office equipment, and other tangible property, but
excluding the Excluded Equipment;
(d) all pharmaceutical and non-pharmaceutical inventories at the Facilities and owned
by the Sellers (including private label inventory) and supplies (including containers,
labels and packaging items) (collectively, the “Inventory”);
(e) except to the extent prohibited by Law, all prescription files owned and used by
the Sellers that are associated with the Stores (it being understood that Sellers will
retain the prescription files that are associated with the Retained Combo Drug Stores) (the
“Prescription Files”) and all customer data and information derived from branded customer
loyalty promotions, co-branded credit card programs and other similar programs related to
customer purchases at the Stores;
(f) the Labor Agreements set forth on Schedule 1.01(f) (such Labor Agreements, the
“Assumed Labor Agreements”);
(g) all Real Property Documents, Construction Contracts, and all contracts, agreements,
leases, licenses, commitments, sales and purchase orders and other instruments listed on
Schedule 1.01(g) (collectively with the Assumed Labor Agreements, the “Assigned Contracts”);
(h) to the extent assignable or transferable, all guarantees and warranties of third
parties to the extent that they relate to the ownership or operation of the Standalone Drug
Business or the Purchased Assets;
(i) subject to Section 7.06(c), all of the Sellers’ security deposits, prepaid rent and
prepaid expenses previously paid by the Sellers to fulfill the Sellers’ obligations
2
under the Store Leases and the Ground Leases where (if and to the extent such consent
is expressly required by the applicable Store Lease or Ground Lease) the landlord thereunder
has consented in writing to the transfer of the deposits to Buyer and, to the extent
transferable, all vendor, utility and other deposits relating to the Facilities (“Prepaid
Expenses”);
(j) all transferable or assignable telephone and facsimile numbers associated with
phone lines terminating at the Facilities;
(k) all transferable or assignable licenses, permits or other governmental
authorizations that are exclusively related to the Facilities or the Purchased Assets,
including pharmacy, liquor, tobacco and similar licenses (“Licenses”; for the avoidance of
doubt the parties acknowledge and agree that “Licenses” shall not include any licenses,
permits or other governmental authorizations that relate to operation of Retained Combo Drug
Stores);
(l) cash in cash registers at each Store in an amount equal to $2,000 for each Store
(“Xxxxx Cash”);
(m) all forklifts and motor vehicles (trucks, vans, and autos) primarily related to the
Distribution Center and all motor vehicles exclusively used by field management transferred
to Buyer immediately following the Closing (the “Transferred Vehicles”);
(n) all trailers and tractors relating to the Distribution Center and the distribution
centers located at Brea, California and Irvine, California (approximately 845 trailers, 117
tractors) will be equitably assigned to these three facilities based on mutually agreed upon
operating metrics;
(o) all reimbursements on account of Prorated Charges (as defined herein) due and owing
to Buyer pursuant to Section 1.08; and
(p) all books, records, files and papers, whether in hard copy or computer format,
located at the Facilities or relating primarily to the Purchased Assets (and copies of any
other relevant books, records, files and papers to the extent relating to the Purchased
Assets).
Section 1.02. Excluded Assets. Buyer and the Sellers expressly understand and agree that,
notwithstanding anything to the contrary contained herein, the following assets and properties of
the Sellers prior to the Closing (the “Excluded Assets”) shall be excluded from the Purchased
Assets and, except as otherwise provided in the Separation Agreement, shall be assets and
properties of New Diamond following the Closing:
(a) all (i) motor vehicles (trucks, vans, and autos) and rail, truck and sea containers
other than the Transferred Vehicles or as otherwise allocated pursuant to Section 1.01(m)
and (ii) all other fixed assets and tangible personal property set forth on Schedule 1.02(a)
(collectively, the “Excluded Equipment”);
3
(b) all of the cash and cash equivalents of the Sellers on hand (including all cash,
cash equivalents and working funds in cash registers at each Store) and in banks other than
Xxxxx Cash;
(c) all accounts receivable relating to the Standalone Drug Business owed to the
Sellers or any of their Affiliates prior to the Effective Time, including delinquent rent
payments, tenant reimbursements and refunds of insurance premiums accruing to, or held for,
the benefit of the Sellers (the “Accounts Receivable”);
(d) except as provided under Section 5.06, all insurance policies relating to the
Standalone Drug Business or the Purchased Assets;
(e) any refund or credit of Taxes to the extent attributable to any Pre-Closing Tax
Period or to any Taxes for which Sellers, New Diamond or SUPERVALU are responsible;
(f) all equipment owned by third parties who are not affiliated with Sellers and all
leased equipment located at or used in the Facilities, in each case in such categories of
excluded equipment as are set forth in Schedule 1.02(a);
(g) all computer software owned or used by the Sellers or their Affiliates;
(h) all contracts, agreement, leases, licenses, commitments, sales and purchase orders
and other instruments (which may include tax indemnity agreements) other than the Assigned
Contracts;
(i) all trademarks, service marks, trade names, logos, patents and similar intangibles
owned by the Sellers or used in connection with the operation of the Facilities;
(j) all rebates and refunds arising from the operation of the Facilities prior to the
Effective Time;
(k) all undeposited or uncollected checks and food stamps held by the Sellers prior to
the Effective Time;
(l) all signs or personal property that contain the name (or trade derivative thereof),
trademarks, servicemarks, trade names or logo of the Sellers or any of their Affiliates,
including all uniforms supplied to the Sellers’ employees;
(m) any Purchased Assets sold or otherwise disposed of without violating any provisions
of this Agreement during the period from the date hereof until the Effective Time;
(n) all world wide web or other internet addresses, sites and domain names and internet
protocol address spaces;
(o) the Sellers’ phone networks, internet mail and computer networks;
4
(p) all customer data and information derived from branded customer loyalty promotions,
co-branded credit card programs and other similar programs other than such customer data and
information relating to customer purchases at the Stores;
(q) all provider agreements for the Medicare and Medicaid programs, including all
applicable provider numbers;
(r) any lease, sublease, license, sublicense or other contract relating to the
installation, use or operation of ATM’s or similar banking machines, in-store banking
facilities, or slot machines or other gaming devices located at the Stores (and any interest
of the Sellers in such equipment), except to the extent assignment to Buyer is required by
the applicable agreement; provided, however, that Buyer shall allow each bank operating
ATM’s or other in-store banking facilities and licensees of any kind to continue to operate
in the relevant Store for up to 180 days (or such greater time as required by Law) after
receipt of notice from the Sellers informing each such bank or licensee of the transfer of
the relevant Store to Buyer;
(s) all assets primarily related to the sale of inventory conducted through any website
operated by or on behalf of Albertson’s or any of its Affiliates;
(t) all reimbursements on account of Prorated Charges (as defined herein) due and owing
to Sellers pursuant to Section 1.08;
(u) all books and records to the extent relating to any Excluded Asset; provided,
however, that Buyer will be entitled to copies of any other relevant books, records, files
and papers to the extent relating to the Purchased Assets or to the extent relevant for
normal course accounting after the Closing;
(v) all firearms or any merchandise related to firearms, ammunition or similar items,
in each case to the extent non-transferable under applicable Law; and
(w) all audiotapes, videotapes or DVDs available for rental and not owned by Sellers.
Section 1.03. Assumed Liabilities. Upon the terms and subject to the conditions of this
Agreement, Buyer hereby assumes, effective at the Effective Time, and shall thereafter pay, perform
or otherwise discharge when due, the following liabilities and obligations (the “Assumed
Liabilities”):
(a) all liabilities and obligations of the Sellers under each Store Lease, Ground Lease
and Assigned Contract;
(b) all amounts allocated to Buyer under Section 1.08 and all Apportioned Obligations
and Transfer Taxes allocated to Buyer pursuant to Section 8.02;
(c) all liabilities or obligations for Taxes with respect to the Standalone Drug
Business or the Purchased Assets related to a Post-Closing Tax Period (except for Taxes set
forth in Section 1.04(iv)(B) below);
5
(d) all liabilities and obligations expressly assumed by Buyer under Article 9;
(e) liabilities and obligations directly arising from, or in connection with, the
validity of the real estate interest in any Owned Real Property or from or in connection
with the right to occupy any Owned Real Property (excluding for avoidance of doubt any
personal injury tort liability, any liability arising from operation of the Standalone Drug
Business, or any liability or amount prorated under Section 1.08); and
(f) all Environmental Liabilities.
Section 1.04. Excluded Liabilities. Notwithstanding any provision in this Agreement or any
other writing to the contrary, Buyer is assuming only the Assumed Liabilities and is not assuming
any other liability or obligation of any Seller of whatever nature (fixed or contingent, known or
unknown), whether presently in existence or arising hereafter. All such other liabilities and
obligations shall be retained by and remain obligations and liabilities of the Sellers (all such
liabilities and obligations not being assumed being herein referred to as the “Excluded
Liabilities”). For the avoidance of doubt (but without overriding the Assumed Liabilities in
Section 1.03), Excluded Liabilities include the following:
(i) any liability or obligation resulting from or arising out of the conduct of
the supermarket business of the Sellers (including the operation of pharmacy
counters in supermarkets), any other business of the Sellers other than the
Standalone Drug Business, or any Excluded Asset;
(ii) all amounts allocated to Sellers under Section 1.08 and all Apportioned
Obligations and Transfer Taxes allocated to Sellers pursuant to Section 8.02;
(iii) all accounts payable arising prior to Closing with respect to the
Standalone Drug Business or the Purchased Assets;
(iv) (A) any liability or obligation for Taxes with respect to the Standalone
Drug Business or the Purchased Assets related to a Pre-Closing Tax Period, and (B)
any liability or obligation for Taxes of any Seller, or any member of any
consolidated, affiliated, combined or unitary group of which any Seller is or has
been a member, for Taxes (if any) attributable to the transactions, occurring on or
prior to the Closing Date, pursuant to this Agreement, the Merger Agreement or the
Purchase and Separation Agreement (including the Reorganization as defined therein);
provided that Transfer Taxes incurred in connection with the transfer of the
Purchased Assets pursuant to this Agreement and Apportioned Obligations shall be
allocated and paid in the manner set forth in Section 8.02 hereof;
(v) all liabilities and obligations relating to or arising with respect to (A)
any Employee, that arise, exist, accrue or are attributable to the period as of or
prior to Closing, other than any liability or obligation expressly assumed by Buyer
pursuant to Article 9, or (B) any employee of any Seller or any of its Affiliates
who is not an Employee; and
6
(vi) all other liabilities and obligations (other than any Assumed Liabilities)
of any kind, fixed or contingent, known or unknown, resulting from or arising out of
the conduct of the Standalone Drug Business, the use, non-use or ownership (whether
by leasehold or fee) of the Purchased Assets, or the operation of the Facilities, in
each case under this clause (vi), only to the extent such other liabilities and
obligations arise during, accrue during, or are attributable to the period prior to
Closing or as of the Closing.
Section 1.05. Consents; Assignment of Contracts and Rights.
(a) Sellers shall use: (i) commercially reasonable efforts to obtain all material
consents of third parties that are identified in writing by Buyer to the transfer of the
Purchased Assets; and (ii) reasonable best efforts to obtain consents from landlords under
those Leases that require a landlord’s consent to an assignment that are identified in
writing by Buyer; provided, however, neither Sellers nor Buyer shall be required to pay any
consideration or incur any additional liability in order to obtain such consents, subject to
the provisions of Section 1.05(d).
(b) Subject to Section 1.05(a), Sellers agree, in connection with requests for consents
to landlords for assignments of Leases requiring the same, to make requests as soon as
practicable after the date hereof and to pursue such requests in a good faith and diligent
manner. Sellers further agree to provide Buyer with detailed progress reports on such
requested consents on at least a weekly basis. Buyer agrees to cooperate with Sellers’
efforts and to use reasonable best efforts to obtain such consents, by supplying any
commercially reasonable information requested by the landlords who are considering such
requests. In addition, in connection with those Leases that merely require that the tenant
provide notices before or after an assignment, Sellers agree to send such notices to those
landlords identified in writing by Buyer in the form prepared by Buyer and within the
timeframes identified by Buyer.
(c) Notwithstanding anything in this Agreement to the contrary, this Agreement shall
not constitute an agreement to assign any Assigned Contract or any claim or right or any
benefit arising thereunder or resulting therefrom if and for so long as such assignment,
without the consent of a third party thereto, would constitute a breach or other
contravention of such Assigned Contract or in any way adversely affect the rights of Buyer
or the Sellers thereunder. If such consent is not obtained, or if an attempted assignment
thereof would be ineffective or would adversely affect the rights of any Seller thereunder
so that Buyer would not in fact receive all such rights, Buyer and each Seller will
cooperate in a mutually agreeable arrangement under which Buyer would obtain the benefits
and perform and discharge the obligations thereunder in accordance with this Agreement, or
under which such Seller would enforce for the benefit of Buyer at Buyer’s sole cost and
expense, with Buyer being responsible for the performance and discharge of such Seller’s
obligations, any and all rights of the Sellers against a third party.
(d) If any landlord that has the right to consent to an assignment of a Lease refuses
or fails to give its consent to the assignment of such Lease, or if any right of sublease,
recapture or termination by any landlord would be triggered by the request for
7
consent to assignment (collectively, “Landlord Rights”) and Sellers or any of its
Affiliates are permitted to sublease, license or otherwise arrange for Buyer to occupy the
premises demised by the Lease for the permitted use under such Lease (an “Occupancy
Agreement”), then in all such cases upon the written request of Buyer, Seller shall enter
into a sublease, license or Occupancy Agreement with Buyer for such Store on a fully net
basis and on such terms as will generally confer and impose on Buyer all of Sellers’ rights
and obligations under the Lease for such Store until such landlord consents to the
assignment of the Lease to Buyer and Buyer will indemnify Sellers for any and all
liabilities, costs and expenses of Sellers arising out of the respective Lease and any
related Occupancy Agreement, any reasonable out-of-pocket expenses associated with any
attempt to transfer or failure to transfer such Lease or any other liabilities, costs and
expenses arising out of or resulting from the Sellers’ actions taken in accordance with any
reasonable directions of Buyer in connection with such Lease. If and when any such consent
shall be obtained or such Lease shall otherwise become assignable, the respective Occupancy
Agreement shall be terminated with no further obligations of the Sellers, Sellers shall
promptly assign all their rights and obligations under the respective Lease to the Buyer
without payment of further consideration (subject to the foregoing indemnity by Buyer of
Sellers) and the Buyer shall, without the payment of any further consideration therefor,
assume such all rights and obligations. Notwithstanding the foregoing, if the arrangement
described in the immediately preceding clauses of this Section 1.05(d) is impracticable or
will cause (or is likely to cause) a default under any Lease or the triggering of any
Landlord Rights (whether due to the change or intended change of the store brand under which
such property will be operated or for other reasons), then the parties will work in good
faith to establish a mutually satisfactory arrangement for the operation by Buyer of such
leased real property during the period subsequent to the Closing and pending receipt of the
required consent, including a fair and equitable arrangement (under the applicable
circumstances) to ensure that Sellers are fully reimbursed for all costs and expenses with
respect to such Lease during such period. Sellers shall not be obligated to take or refrain
from taking any actions which could reasonably be expected to trigger or cause the exercise
of any Landlord Rights, subject to the further provisions of this Section 1.05(d). In the
event a landlord wrongfully refuses or fails to consent to an assignment or a request for an
assignment would trigger any Landlord Rights, and a sublease, license or Occupancy Agreement
is not permitted under the terms of the applicable Lease, Seller agrees, upon written
request from Buyer and at Buyer’s sole cost and expense, to institute litigation against
such landlord with counsel selected by Buyer (and reasonably acceptable to Seller) to
enforce Sellers’ rights under such Lease and Buyer agrees to indemnify and hold harmless
Seller with respect to all such litigation and all costs, expenses, losses and damages
resulting therefrom under or in connection with any affected Lease. The Standalone Drug
Transition Services Agreement shall provide that in the event that Sellers’ rights under any
Leases have been transferred to New Diamond or any Affiliate through the Merger Agreement or
otherwise, that the obligations of Sellers under this paragraph shall be assumed by New
Diamond or its relevant Affiliate.
Section 1.06. Purchase Price. The purchase price for the Purchased Assets is $3,930,000,000
in cash (the “Purchase Price”). The Purchase Price shall be subject to adjustment as provided in
Section 1.08.
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Section 1.07. Closing.
(a) Closing. The closing (the “Closing”) of the purchase and sale of the Purchased
Assets and the assumption of the Assumed Liabilities hereunder shall take place at the
offices of Xxxxx Day, at 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, at 9:00
a.m. local time, as soon as practicable, but in no event later than the second Business Day
after the satisfaction or waiver of the conditions set forth in Article 10 (excluding
conditions that, by their terms, cannot be satisfied until the Closing, but the Closing
shall be subject to the satisfaction of those conditions), or at such other time or place as
Buyer and Albertson’s may agree (the “Closing Date”). On the Closing Date:
(i) Buyer shall pay, in immediately available funds by wire transfer, an amount
equal to the Purchase Price.
(ii) Buyer and the Sellers, as applicable (and Parent, SUPERVALU and their
Affiliates where applicable in the relevant agreements or instruments) shall execute
and deliver to the other the following documents:
(A) Quitclaim deeds (or equivalent deeds without covenants or
warranties) necessary to convey fee simple title to the Owned Real Property
to Buyer;
(B) one or more deeds, bills of sale, endorsements, assignments and
other instruments of conveyance and assignment (without covenant or warranty
except as provided hereunder) as the parties and their respective counsel
shall deem reasonably necessary or appropriate to vest in Buyer all right,
title and interest in, to and under the Purchased Assets in form and
substance reasonably satisfactory to Albertson’s and Buyer;
(C) one or more Assignment and Assumption Agreement substantially in
the form attached hereto as Exhibit D (the “Assignment and Assumption
Agreements”);
(D) instruments of assignment and assumption (the “Lease Assignment and
Assumption Agreements”) substantially in the forms attached hereto as
Exhibit E, pursuant to which the Sellers shall assign the Leases to Buyer
and Buyer shall assume all obligations thereunder and Parent will guarantee
to New Diamond, Albertson’s and their respective Affiliates all obligations
of Buyer thereunder in a separate agreement with SUPERVALU; provided that
there shall be no liability of or to Sellers under the Assignment and
Assumption Agreements except as provided hereunder;
(E) subject to Section 7.07, a Transition Services Agreement
substantially in the form attached hereto as Exhibit F (the “Standalone Drug
Business Transition Services Agreement”), providing for the provision by
SUPERVALU or its Affiliates to Buyer of transition services relating to the
Standalone Drug Business after Closing;
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(F) subject to Section 7.07, a Transition Services Agreement
substantially on the terms set forth on Exhibit G (the “Distribution Center
Transition Services Agreement”), providing for the provision by Buyer to New
Diamond, SUPERVALU or their respective Affiliates of transition services
relating to the Distribution Center after Closing; and
(G) a certificate from each Seller (or, if such Seller is a
“disregarded entity” within the meaning of Section 1.1445-2(b)(2)(iii) of
the Treasury Regulations promulgated under the Code, the Seller that is
treated as the transferor of property for U.S. tax purposes) stating that
such Seller is not a “foreign person” as defined in Section 1445 of the
Code.
(b) Risk of Loss; Title. Risk of loss to the Purchased Assets will transfer to Buyer
at the Effective Time. Transfer of title to the Purchased Assets will be deemed to have
occurred at the Effective Time. All sales at a Store after the Effective Time shall be for
the account of Buyer.
(c) Purchased Assets Are Indivisible. Subject to Section 1.05, the rights to purchase
and sell the Purchased Assets are indivisible. Such Purchased Assets may not be
individually purchased or sold without all of the others, unless expressly permitted or
required pursuant to the provisions of this Agreement.
Section 1.08. Prorations. (a) On the Closing Date all rent, common area charges, utility
charges, real estate taxes, sales taxes on rent and other obligations under the Leases transferred
at the Closing shall be prorated as of the Effective Time (collectively, the “Prorated Charges”).
Whenever possible, such prorations shall be based on actual, current payments by the Sellers or
their Affiliates and to the extent such actual amounts are not available, such prorations shall be
estimated as of the Effective Time based on actual amounts for the most recent comparable billing
period. When the actual amounts become known, such prorations shall be recalculated by Buyer and
the Sellers, and Buyer or the Sellers, as the case may be, promptly (but not later than 10 Business
Days after notice of payment due and delivery of reasonable supporting documentation with respect
to such amounts) shall make any additional payment or refund so that the correct prorated amount is
paid by each of Buyer and the Sellers.
(b) Percentage rent payable under each Lease shall be prorated at the end of the
current lease year for each Lease, and the percentage rent payable, if any, shall be paid by
Buyer when due and the Sellers shall promptly reimburse Buyer a portion thereof determined
by multiplying (A) a fraction, the numerator of which is the amount of the Sellers’ or their
Affiliates’ gross annual sales at such Store from the first day of such lease year to (and
excluding) the Closing Date, and the denominator of which is the sum of Buyer’s and its
Affiliates’ and the Sellers’ and their Affiliates’ gross annual sales at such Store for the
entire lease year, times (B) the amount of percentage rent actually due under the Lease for
such Store. The Sellers, upon the request of Buyer, shall promptly provide Buyer with such
information as Buyer shall be required to submit to landlords under the Leases in connection
with the payment of percentage rent with respect to the Stores.
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(c) Buyer and the Sellers shall cooperate in good faith to resolve any dispute with respect
to prorations. In the event Buyer and the Sellers are unable to resolve such
dispute within 20 Business Days after the date such dispute arose, Buyer and the Sellers
shall submit the items remaining for resolution in writing, together with such written
evidence as Buyer or the Sellers may elect to include, to an Independent Accounting Firm.
The Independent Accounting Firm shall, within 20 Business Days of such submission, resolve
any differences between Buyer and the Sellers and such resolution shall, in the absence of
manifest error, be final, binding and conclusive upon each of the parties. The costs, fees
and expenses of the Independent Accounting Firm shall be borne equally by Buyer and New
Diamond. For purposes of this Agreement the “Independent Accounting Firm” means a
nationally recognized accounting firm agreed upon by Buyer and the Sellers.
Section 1.09. Removal of Equipment and Signage. Within the applicable time periods specified
in Section 7.05, Buyer shall remove at its expense all of the Sellers’ signage and equipment that
are not Purchased Assets and are located at the Facilities; provided, however, if requested by the
Sellers, Buyer shall arrange transportation of such signage and equipment to a location designated
by the Sellers at the Sellers’ expense.
Section 1.10. La Habra Inventory Adjustment. Buyer (through RGIS Inventory Specialists
(“RGIS”)) will conduct a physical count of the inventory at the La Habra warehouse as of a time as
close as possible to the Closing. Representatives of Buyer and SUPERVALU will be permitted to be
present during the count. Sellers will cooperate and give access to representatives of Buyer and
SUPERVALU for this purpose. For purposes of this count, the inventory will be valued at cost using
Albertson’s cost method then in effect. SUPERVALU will be entitled to receive a copy of the
electronic UPC item-level physical inventory file for the inventory taken by RGIS. Buyer, Parent
and SUPERVALU agree that, absent manifest error, the physical inventory counts of RGIS shall be
final and binding on each of the parties. SUPERVALU will be entitled to an economic credit equal
to 30% of such inventory value so counted, and Buyer and SUPERVALU will in good faith mutually
determine the manner in which such credit will be transferred to SUPERVALU.
ARTICLE 2
Representations and Warranties of Albertson’s
Representations and Warranties of Albertson’s
Subject to the exceptions set forth in the corresponding sections of the letter from
Albertson’s, dated as of the date of this Agreement, addressed to Buyer (the “Disclosure Letter”),
to the extent such exceptions are reasonably apparent, Albertson’s represents and warrants to Buyer
that:
Section 2.01. Organization. Each Seller is duly organized, validly existing and in good
standing under the laws of its respective jurisdiction of organization, and has the requisite
corporate power and authority to own its properties and to carry on its business as presently
conducted and is duly qualified to do business and is in good standing (where such concept exists)
as a foreign corporation in each jurisdiction in which the nature of its business or the ownership
or leasing of its properties makes such qualification necessary, except where the failure to be so
qualified or in good standing as a foreign corporation or have such power or
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authority would not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect. Complete and correct copies of the certificate of incorporation and
by-laws of each Seller as currently in effect have been made available to Parent and, as so made
available, are in full force and effect, and no other organizational documents are applicable to or
binding upon any Seller.
Section 2.02. Authority; Enforceability. Each Seller has all necessary corporate power and
authority to execute and deliver this Agreement and the Ancillary Agreements to which it is a
party, to perform its obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. The execution, delivery and performance by each Seller of this
Agreement and the Ancillary Agreements to which it is a party and the consummation by each Seller
of the transactions contemplated hereby and thereby have been duly and validly authorized by all
necessary corporate action on the part of each Seller and no other corporate proceedings on the
part of any Seller are necessary pursuant to its governing documents or the laws of its
jurisdiction of incorporation to authorize this Agreement or the Ancillary Agreements to which it
is a party or to consummate the transactions contemplated hereby or thereby. Each Seller’s Board
of Directors has (i) approved this Agreement and the transactions contemplated hereby, (ii)
determined that the terms of this Agreement are fair to and in the best interests of such Seller
and its stockholders, and (iii) declared the advisability of this Agreement. This Agreement has
been duly executed and delivered by the Sellers, and each Ancillary Agreement will be duly executed
and delivered by each Seller party thereto, and, assuming due authorization, execution and delivery
by the other parties hereto and thereto, constitutes or will constitute a legal, valid and binding
agreement of each Seller enforceable against each Seller in accordance with its terms, subject to
the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other
similar Laws relating to or affecting creditors’ rights generally and general equitable principles
(whether considered in a proceeding in equity or at law).
Section 2.03. Non-Contravention; Assigned Contracts. (a) The execution, delivery and
performance by each Seller of this Agreement and the Ancillary Agreements to which it is a party
does not and will not (i) conflict with or violate such Seller’s governing documents, (ii) assuming
that all consents, approvals and authorizations contemplated by Section 2.04 have been obtained and
all filings described therein have been made, conflict with or violate any Law applicable to any
Seller or by which any Seller or any of their respective properties are bound, or (iii) result in
any breach or violation of or constitute a default (or an event which with notice or lapse of time
or both would become a default) or result in the loss of a benefit under, or give rise to any right
of termination, cancellation, recapture, amendment or acceleration of, or performance under, any
note, bond, mortgage, indenture, contract, agreement, lease, license, permit or other instrument or
obligation (which, in any case, is not a contract, agreement or other arrangement pursuant to which
Sellers or any Subsidiary leases real property, including the Leases) to which such Seller is a
party or by which such Seller or any of its properties are bound, except, in the case of clauses
(ii) and (iii) of this Section 2.03(a), for any such conflict, violation, breach, default, loss,
right or other occurrence which would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.
(b) (i) The Sellers are not (and, to the Sellers’ Knowledge, no other party is) in default
under any Assigned Contract, (ii) each of the Assigned Contracts is in full force and
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effect, and is the valid, binding and enforceable obligation of the Sellers, and to the
Seller’s Knowledge, of the other parties thereto, and (iii) the Sellers have performed all
respective obligations required to be performed by them to date under the Assigned Contracts and
are not (with or without the lapse of time or the giving of notice, or both) in breach thereunder,
except, in the case of clauses (i), (ii) and (iii) of this Section 2.03(b), for any such default,
failure, invalidity, unenforceability, non-performance, breach or other occurrence which would not
reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
Section 2.04. Governmental Consents. The execution, delivery and performance by each Seller
of this Agreement and the Ancillary Agreements to which it is a party and the consummation by each
Seller of the transactions contemplated hereby and thereby does not and will not require any
consent, approval, authorization or permit of, action by, filing with or notification to, any
Governmental Authority, except as required under or pursuant to (a) the HSR Act, (b) consents or
approvals in connection with the transfer of Licenses, and (c) any other consent, approval,
authorization, permit, action, filing or notification the failure of which to be made or obtained
would not reasonably be expected to have, individually or in the aggregate, a Material Adverse
Effect.
Section 2.05. Litigation. There are no Actions pending or, to the Knowledge of Albertson’s,
threatened against the Sellers or, to the Knowledge of Albertson’s, any officer, director or
employee of any Seller in such capacity, which would reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect. No Seller is a party or subject to or in default
under any Governmental Order which would reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.
Section 2.06. Compliance with Law. (a) The Sellers and their Affiliates are not (and have
not been since February 3, 2005) in violation of any Law, and have not received any written notice
of any violation of Law, in each case except for any violation or possible violation that would not
reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. The
Sellers and their Affiliates are (and have been since February 3, 2005) in compliance with, all
permits, licenses, authorizations, exemptions, orders, consents, approvals and franchises from
Governmental Authorities required to conduct their respective businesses as now being conducted,
except for any such permit, license, authorization, exemption, order, consent, approval or
franchise the absence of, or the non-compliance, with which would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect.
(b) Albertson’s has designed and maintains a system of internal control over financial
reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) sufficient to provide
reasonable assurances regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with GAAP. Albertson’s (i) has designed
and maintains disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of
the Exchange Act) that provides reasonable assurance that material information required to be
disclosed by Albertson’s in the reports that it files or submits under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified in the Securities
and Exchange Commission’s rules and forms, and (ii) has disclosed and reported, based on its most
recent evaluation of its internal controls over financial reporting prior to the date hereof, to
Albertson’s auditors and the audit committee of the Albertson’s Board of
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Directors (A) any significant deficiencies and material weaknesses in the design or operation
of its internal control over financial reporting that are reasonably likely to adversely affect in
any material respect Albertson’s ability to record, process, summarize and report financial
information and (B) any fraud, whether or not material, that involves management or other employees
who have a significant role in Albertson’s internal control over financial reporting. Albertson’s
has heretofore furnished to Buyer complete and correct copies of Albertson’s final report to the
audit committee of Albertson’s Board of Directors for fiscal 2004 and all subsequent quarterly
updates, in each case in respect of the matters in clause (ii) of the immediately preceding
sentence.
Section 2.07. Real Property. The Real Property is all of the real property which the Sellers
own, lease, operate or sublease in connection with the Standalone Drug Business. Except as would
not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect:
(a) The Sellers have good and marketable fee simple title to all Owned Real Property
and valid leasehold estates in all Leased Real Property free and clear of all Liens, except
Permitted Liens. The Sellers or one of their respective Subsidiaries has exclusive use and
possession of each Leased Real Property and Owned Real Property, other than any use or
occupancy rights granted to third-party owners, tenants or licensees pursuant to agreements
with respect to such real property entered in the ordinary course of business (each
agreement, including all amendments thereto, a “Third Party Use and Occupancy Agreement”),
none of which would reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.
(b) Except as would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect, each Ground Lease and Store Lease and each Third Party
Use and Occupancy Agreement is in full force and effect and is valid and enforceable in
accordance with its terms, and there is no material default under any Ground Lease or Store
Lease or any Third Party Use and Occupancy Agreement either by the Sellers party thereto or,
to the Sellers’ Knowledge, by any other party thereto, and no event has occurred that, with
the lapse of time or the giving of notice or both, would constitute a default by any Seller
thereunder.
(c) Except as would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect, there are no pending or, to any Seller’s Knowledge,
threatened condemnation or eminent domain proceedings that affect any Owned Real Property or
Leased Real Property, and no Seller has received any written notice of the intention of any
Governmental Authority or other Person to take any Owned Real Property or Leased Real
Property.
Section 2.08. Title to the Purchased Assets. Sellers have valid title to all of the Purchased
Assets that are owned by Sellers free and clear of all Liens except for Permitted Liens. Sellers
have a valid leasehold interest or valid rights to use all of the other Purchased Assets, except
where the failure to have a valid leasehold interest or valid rights have not had and would not
reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
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Section 2.09. IT Systems. (a) Except as would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect, (i) the IT Systems of the Sellers are
adequate for the operation of the Standalone Drug Business as presently conducted and (ii) there
has not been any material malfunction with respect to any of the material IT Systems of the Sellers
since January 31, 2002 that has not been remedied or replaced in all material respects.
(b) Except as would not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect, (i) the use of the information and data that is used or held for use in
the operation of the Standalone Drug Business or that is otherwise material to or necessary for the
operation of the Standalone Drug Business (the “Data”) by the Sellers does not infringe or violate
the privacy rights of any Person or otherwise violate any Law or regulation, (ii) the Sellers have
taken reasonable and customary measures consistent with generally accepted industry practices to
protect the privacy of the Data of their respective customers, and (iii) to the Sellers’ Knowledge,
since January 31, 2002 there have been no security breaches with respect to the privacy of such
Data.
Section 2.10. Sufficiency of Assets. Assuming the due execution of and performance under the
Standalone Drug Transition Services Agreement, the continued employment of all Employees
immediately after the Effective Time and other than with respect to the Excluded Assets, and
subject to the provisions of Section 1.05(d), the Purchased Assets immediately after the Effective
Time shall constitute assets sufficient in all material respects to conduct the Standalone Drug
Business as conducted immediately prior to the Effective Time.
Section 2.11. Labor Relations. Except as would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect, no Seller has received notice during
the past two years of the intent of any Governmental Authority responsible for the enforcement of
labor, employment, occupational health and safety or workplace safety and insurance/workers
compensation laws to conduct an investigation of or affecting any Seller with respect to any
Facility and, to the Knowledge of any Seller, no such investigation is in progress. Except as
would not reasonably be expected to have, individually or in the aggregate, a Material Adverse
Effect, there are no (and have not since March 30, 2004 been any) labor disputes, strikes,
organizing activities or work stoppages against any Seller pending, or to the Knowledge of any
Seller, threatened with respect to any Facility. No labor organization or group of 50 or more
employees of any Seller has made a pending formal demand for recognition or certification, and
there are no representation or certification proceedings or petitions seeking a representation
proceeding presently pending or, to the knowledge of any Seller, threatened to be brought with
respect to any Facility.
Section 2.12. Environmental Compliance. (a) (i) In connection with or relating to the
Facilities or Purchased Assets, except as would not reasonably be expected individually or in the
aggregate to have a Material Adverse Effect, to the Sellers’ Knowledge, the Sellers and their
Affiliates comply and have complied with all applicable Environmental Laws (as defined below), and
possess and comply, and have complied, with all applicable Environmental Permits (as defined below)
required under such laws to operate as it currently operates, in each case in connection with or
relating to the Facilities or Purchased Assets; (ii) except as would not reasonably be expected
individually or in the aggregate to have a Material Adverse Effect, to the Sellers’ Knowledge,
there are no, and there have not been any, Materials of Environmental
15
Concern (as defined below) at any of the Facilities or Purchased Assets under circumstances
that have resulted in or are reasonably likely to result in liability of the Sellers or any of
their Affiliates under any applicable Environmental Laws; (iii) in connection with or relating to
the Facilities or Purchased Assets, except as would not reasonably be expected to have a Material
Adverse Effect, none of the Sellers or their Affiliates has received any written notification
alleging that it is liable for, or request for information pursuant to section 104(e) of the
Comprehensive Environmental Response, Compensation and Liability Act or similar foreign, state or
local Law concerning, any release or threatened release of Materials of Environmental Concern at
any location except, with respect to any such notification or request for information concerning
any such release or threatened release, to the extent such matter has been fully resolved such that
no further action is required with the appropriate foreign, federal, state or local regulatory
authority or otherwise; and (iv) the reports of environmental assessments, audits and similar
investigations previously made available to Parent are all material such reports in the possession
of the Sellers and conducted since January 30, 2003 in connection with or relating to the
Facilities or Purchased Assets. There are no Actions arising under Environmental Laws pending or,
to the Knowledge of the Sellers, threatened against the Sellers or any of their Affiliates which
would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
In connection with or relating to the Facilities or Purchased Assets, except as would not
reasonably be expected to have a Material Adverse Effect, at each property where
Asbestos-Containing Material (“ACM”) has been identified, all ACM is non-friable, encapsulated or
abated and no ACM is present in any property where the Sellers have not implemented an Asbestos
Operation and Management Plan.
(b) Notwithstanding any other representations and warranties in this Agreement, the
representations and warranties in this Section 2.12 are the only representations and warranties in
this Agreement with respect to Environmental Laws, Environmental Permits or Materials of
Environmental Concern.
“Materials of Environmental Concern” means: any hazardous, acutely hazardous, or toxic material,
substance or waste defined or regulated as such under Environmental Laws, including the federal
Comprehensive Environmental Response, Compensation and Liability Act and the federal Resource
Conservation and Recovery Act.
Section 2.13. Financial Schedules. Set forth in Section 2.13(a) of the Disclosure Letter are
(i) unaudited selected results of operations data for each of the New Diamond Business (as defined
in the Separation Agreement), the Standalone Drug Business and the Retained Business (as defined in
the Separation Agreement) for the 52 weeks ended January 29, 2004, the 53 weeks ended February 3,
2005 and the 39 weeks ended November 3, 2005 (collectively, the “Separate Operations Data”) and
(ii) unaudited selected balance sheet data for Albertson’s and each of Albertson’s operating
regions as of February 3, 2005 ( the “Separate Balance Sheet Data”). The Separate Operations Data
and the Separate Balance Sheet Data have been compiled from source books, records and financial
reports of Albertson’s and its Subsidiaries. Such source books, records and financial reports were
prepared by Albertson’s in the ordinary course of its business, are accurate in all material
respects and were subject to Albertson’s internal controls. The allocations of the Separate
Operations Data among the New Diamond Business, the Standalone Drug Business and the Retained
Business are consistent with Section 2.13(a)(i) of the Disclosure Letter and the allocations of the
Separate Balance Sheet Data are allocated in the
16
manner described in Section 2.13(a)(ii) of the Disclosure Letter. The Separate Balance Sheet
Data and the Separate Operations Data reconcile to Albertson’s historical financial statements
filed with the SEC and, in Albertson’s opinion, present fairly, in all material respects, the
information presented in the Separate Balance Sheet Data and the Separate Operations Data,
respectively. Subject to the changes in accounting principles and methodologies effected by
Albertson’s as described in the Company SEC Reports (as defined in the Merger Agreement), the
accounting principles and methodologies used in the preparation of the Separate Operations Data
were applied on a consistent basis, in all material respects, for each of the periods presented
therein. Set forth in Section 2.13(a)(iii) of the Disclosure Letter are selected assets and
liabilities included in the Purchased Assets and Assumed Liabilities, which schedule was prepared
by Sellers and was compiled from source books, records and financial reports of Albertson’s and its
Subsidiaries. Such source books, records and financial reports were prepared by Albertson’s in the
ordinary course of its business, are accurate in all material respects and were subject to
Albertson’s internal controls.
Section 2.14. No Undisclosed Liabilities. No Seller has any liabilities, claims or
indebtedness related to the Standalone Drug Business of any kind whatsoever, whether accrued,
contingent, absolute, determined, determinable or otherwise, whether due or to become due, in each
case, that are required by GAAP to be set forth, reserved against, disclosed or otherwise reflected
in a consolidated balance sheet or the notes thereto, except liabilities that (i) are set forth in
the financial schedules set forth in Section 2.13 of the Disclosure Letter or disclosed in the
notes thereto, (ii) were incurred in the ordinary course of business and consistent with past
practice since the date of the financial schedules set forth in Section 2.13 of the Disclosure
Letter and would not reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect, (iii) are incurred pursuant to the transactions contemplated by this Agreement,
(iv) have been discharged or paid in full prior to the date of this Agreement in the ordinary
course of business consistent with past practice or (v) were incurred outside the ordinary course
of business since the date of the financial schedules set forth in Section 2.13 of the Disclosure
Letter, but which are, and would reasonably be expected to be, individually or in the aggregate,
immaterial in amount or nature.
Section 2.15. Absence of Certain Changes or Events. Since November 3, 2005, except as
expressly contemplated by this Agreement, the Sellers have conducted their businesses in the
ordinary course in all material respects consistent with past practice, and, since such date, there
has not been any change, event or occurrence which has had or would reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect. Except as set forth in Section 2.15
of the Seller Disclosure Letter, since November 3, 2005, the Sellers have not taken any action
that, if taken after the date of this Agreement, would constitute a breach of Sections 5.01(a),
(b), (d), (g) or (j) hereof, other than with respect to Real Property.
Section 2.16. Finders’ Fees. Except for Xxxxxxx, Xxxxx & Co., Xxxxxxxx Xxxxx Xxxxxx & Xxxxx
and The Blackstone Group, L.P., there is no investment banker, broker, finder or other intermediary
which has been retained by or is authorized to act on behalf of the Sellers who is entitled to any
fee or commission in connection with the transactions contemplated by this Agreement.
17
Section 2.17. Healthcare Regulatory. (a) Sellers are qualified for participation in the
Medicare and Medicaid programs. No Seller has received any notice indicating that such
qualification may be terminated or withdrawn nor has any reason to believe that such qualification
may be terminated or withdrawn. Sellers have timely filed all claims or other reports required to
be filed with respect to the purchase of products or services by third-party payors (including,
without limitation, Medicare and Medicaid), except where the failure to file such claims and
reports would not, individually or in the aggregate, be reasonably likely to have a Material
Adverse Effect, and all such claims or reports are complete and accurate in all material respects.
Sellers have no material liability to any payor with respect thereto, except for liabilities
incurred in the ordinary course of business consistent with past practice.
(b) Sellers have complied in all material respects with all applicable
“Healthcare Laws”, i.e., The Social Security Act, as amended, Sections 1128, 1128A and
1128B, 42 U.S.C. Sections 1320a-7, 7(a) and 7(b), including, without limitation, Criminal
Penalties Involving Medicare or State Health Care Programs, commonly referred to as the
“Federal Anti-Kickback Statute” and The Social Security Act, as amended, Section 1877, 42
U.S.C. Section 1395nn (Prohibition Against Certain Referrals), commonly referred to as the
“Xxxxx Statute,” the statute commonly referred to as the “Federal False Claims Act,” the
Health Insurance Portability and Accountability Act of 1996, and the regulations issued
pursuant thereto and all statutes and regulations relating to the possession, distribution,
maintenance and documentation of controlled substances.
(c) No personnel of the Sellers during such person’s employment with Sellers
have been convicted of, charged with or investigated for a Medicare, Medicaid or other
Federal Health Care Program (as defined in 42 U.S.C. § 1320a-7b(f)) related offense, or
convicted of, charged with or investigated for a violation of federal or state law relating
to fraud, theft, embezzlement, breach of fiduciary responsibility, financial misconduct,
obstruction of an investigation or controlled substances. No personnel of the Sellers
during such person’s employment with Sellers have been excluded or suspended from
participation in Medicare, Medicaid or any other Federal Health Care Program, or have been
debarred, suspended or are otherwise ineligible to participate in federal programs. No
personnel of the Sellers during such person’s employment with Sellers has, to Sellers’
Knowledge, committed any offense which may reasonably serve as the basis for any such
exclusion, suspension, debarment or other ineligibility. The Sellers, to their Knowledge,
have not arranged or contracted with any individual or entity that is suspended, excluded or
debarred from participation in, or otherwise ineligible to participate in, a Federal Health
Care Program or other federal program.
(d) Except as specifically excluded hereunder or not legally permitted to be
transferred to Buyer, the Purchased Assets include all permits, licenses, provider numbers,
authorizations, exemptions, orders, consents, approvals, registrations, franchises or the
like held by the Sellers and necessary for the lawful conduct of the Standalone Drug
Business under and pursuant to all applicable statutes, laws, ordinances, rules and
regulations of all Governmental Authorities having, asserting or claiming jurisdiction over
it or any part of the Standalone Drug Business (“Permits”). All Permits have been legally
obtained and maintained and are valid and in full force and effect. The
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Sellers are in compliance in all material respects with all of the terms and conditions of
the Permits. No outstanding material violations are or have been recorded in respect of any
of the Permits. No proceeding is pending or, to the Sellers’ knowledge, threatened, to
suspend, revoke, withdraw, modify or limit any of the Permits, and, to the Sellers’
knowledge, there is no fact, error or admission relevant to any Permit that would permit the
suspension, revocation, withdrawal, modification or limitation or result in the threatened
suspension, revocation, withdrawal, modification or limitation, or any loss of any Permit.
ARTICLE 3
Representations and Warranties of Parent and Buyer
Representations and Warranties of Parent and Buyer
Parent and Buyer hereby jointly and severally represent and warrant to the Sellers that:
Section 3.01. Organization. Each of Parent and Buyer is duly organized, validly existing and
in good standing under the laws of the state of its organization, and has the requisite corporate
or similar power and authority to own its properties and to carry on its business as presently
conducted and is duly qualified to do business and is in good standing (where such concept exists)
as a foreign corporation in each jurisdiction in which the nature of its business or the ownership
or leasing of its properties makes such qualification necessary. Complete and correct copies of
the certificate of incorporation and by-laws (or equivalent organizational documents) of Parent and
Buyer as currently in effect, have been made available to Albertson’s, and as so made available,
are in full force and effect and no other organizational documents are applicable to or binding
upon Parent and Buyer. Buyer is a direct or indirect wholly owned subsidiary of Parent.
Section 3.02. Authority; Enforceability. Each of Parent and Buyer has the corporate or other
power and authority to execute and deliver this Agreement and the Ancillary Agreements to which it
is a party and to perform its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby. The execution and delivery by each of Parent and
Buyer of this Agreement and the Ancillary Agreements to which it is a party and the consummation by
each of Parent and Buyer of the transactions contemplated hereunder and thereunder have been duly
authorized by all necessary action on the part of each of Parent and Buyer and the holders of any
equity interests thereof. This Agreement and each Ancillary Agreement to which each is a party has
been or will be duly executed and delivered by each of Parent and Buyer and, assuming due
authorization, execution and delivery by the other parties hereto and thereto, constitutes or will
constitute a legal, valid and binding agreement of each of Parent and Buyer, enforceable against
each of them in accordance with its terms, subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar Laws relating to or affecting
creditors’ rights generally and general equitable principles (whether considered in a proceeding in
equity or at law).
Section 3.03. Non-Contravention. The execution, delivery and performance by each of Parent
and Buyer of this Agreement and the Ancillary Agreements to which each is a party does not and will
not (a) conflict with or violate its certificate of incorporation or by-laws or comparable
governing documents, (b) assuming that all consents, approvals and authorizations
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contemplated by Section 3.04 have been obtained and all filings described therein have been
made, conflict with or violate any Law applicable to Parent or Buyer or by which Parent or Buyer or
any of their respective properties are bound or (c) result in any breach or violation of or
constitute a default (or an event which with notice or lapse of time or both would become a
default) or result in the loss of a benefit under, or give rise to any right of termination,
cancellation, recapture, amendment or acceleration of, or performance under, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit or other instrument or obligation
to which Parent or Buyer is a party or by which Parent or Buyer or any of their respective
properties are bound, except, in the case of clauses (b) and (c), for any such conflict, violation,
breach, default, loss, right or other occurrence which would not, individually or in the aggregate,
prevent or materially delay the consummation of the transactions contemplated hereby.
Section 3.04. Governmental Consents. The execution, delivery and performance by Parent and
Buyer of this Agreement and the Ancillary Agreements to which each is a party and the consummation
by each of Parent and Buyer of the transactions contemplated hereby and thereby do not and will not
require any consent, approval, authorization or permit of, action by, filing with or notification
to, any Governmental Authority, except (a) as required under or pursuant to the HSR Act and (b) any
other consent, approval, authorization, permit, action, filing or notification the failure of which
to be made or obtained would not, individually or in the aggregate, prevent or materially delay the
consummation of the transactions contemplated hereby.
Section 3.05. Financing. As of Closing, Buyer will have sufficient cash, available lines of
credit or other sources of immediately available funds to enable it to make payment of the Purchase
Price and any other amounts to be paid by it hereunder. At and after the Closing, Buyer will have
cash in an aggregate amount sufficient for Buyer to perform all of its obligations hereunder and
with respect to the transactions contemplated hereby.
Section 3.06. Brokers. No agent, broker, finder or investment banker is entitled to any
brokerage, finder’s or other fee or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of Parent or Buyer for which any Seller
could have any liability.
ARTICLE 4
Representations and Warranties of Supervalu
Representations and Warranties of Supervalu
SUPERVALU hereby represents and warrants to the Buyer that:
Section 4.01. Organization. SUPERVALU is duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization, and has the requisite corporate or
similar power and authority to own its properties and to carry on its business as presently
conducted and is duly qualified to do business and is in good standing (where such concept exists)
as a foreign corporation in each jurisdiction in which the nature of its business or the ownership
or leasing of its properties makes such qualification necessary.
Section 4.02. Authority; Enforceability. SUPERVALU has the corporate or other power and
authority to execute and deliver this Agreement and to perform its obligations hereunder.
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The execution and delivery by SUPERVALU of this Agreement have been duly authorized by all
necessary action on the part of SUPERVALU. This Agreement has been duly executed and delivered by
SUPERVALU and, assuming due authorization, execution and delivery by the other parties hereto,
constitutes or will constitute a legal, valid and binding agreement of SUPERVALU, enforceable
against it in accordance with its terms, subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar Laws relating to or affecting
creditors’ rights generally and general equitable principles (whether considered in a proceeding in
equity or at law).
Section 4.03. Non-Contravention. The execution, delivery and performance by SUPERVALU of this
Agreement does not and will not (a) conflict with or violate its organizational documents, (b)
assuming that all consents, approvals and authorizations contemplated by Section 4.04 have been
obtained and all filings described therein have been made, conflict with or violate any Law
applicable to SUPERVALU or by which SUPERVALU or its respective properties are bound, or (c) result
in any breach or violation of or constitute a default (or an event which with notice or lapse of
time or both would become a default) or result in the loss of a benefit under, or give rise to any
right of termination, cancellation, recapture, amendment or acceleration of, or performance under,
any note, bond, mortgage, indenture, contract, agreement, lease, license, permit or other
instrument or obligation to which SUPERVALU is a party, except in the case of clauses (b) and (c),
for any such conflict, violation, breach, default, loss, right or other occurrence which would not,
individually or in the aggregate, prevent or materially delay the consummation of the transactions
contemplated hereby.
Section 4.04. Governmental Consents. The execution, delivery and performance by SUPERVALU of
this Agreement and the Ancillary Agreements to which it is a party and the consummation by
SUPERVALU of the transactions contemplated hereby and thereby do not and will not require any
consent, approval, authorization or permit of, action by, filing with or notification to, any
Governmental Authority, except (a) as required under or pursuant to the HSR Act and (b) any other
consent, approval, authorization, permit, action, filing or notification the failure of which to be
made or obtained would not, individually or in the aggregate, prevent or materially delay the
consummation of the transactions contemplated hereby.
Section 4.05. Brokers. No agent, broker, finder or investment banker is entitled to any
brokerage, finder’s or other fee or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of SUPERVALU for which Buyer could have
any liability.
ARTICLE 5
Covenants of The Sellers
Covenants of The Sellers
The Sellers agree that:
Section 5.01. Conduct of the Standalone Drug Business. From the date hereof until the
Effective Time, the Sellers shall conduct the Standalone Drug Business in the ordinary course
consistent with past practice, including using commercially reasonable efforts to (i) maintain
Inventory of a quantity (including seasonal variations), quality and mix consistent with past
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practices, (ii) maintain employment of employees (including pharmacists and store managers) at
levels consistent with the needs of the business of each Store consistent with past practices at
the posted hours of the Store and its pharmacy as of the date of this Agreement, (iii) maintain the
Real Property in a physical condition consistent with past practice, (iv) maintain the validity of
existing pharmacy and other federal, state or local licenses, permits or registrations,
certifications and Medicare and Medicaid provider status, including any renewals or extensions
thereof, consistent with past practices and (v) preserve intact the business organizations and
relationships with third parties. Without limiting the generality of the foregoing, subject to
applicable Law and Section 5.01 of the Disclosure Letter, from the date hereof until the Effective
Time, the Sellers will not (in each case, to the extent it relates to the Standalone Drug
Business), without the prior written consent of Buyer, which consent shall not be unreasonably
withheld, conditioned or delayed (in each case, to the extent it relates to the Standalone Drug
Business):
(a) sell, lease, license, purchase or enter into a contract to sell, remove or
otherwise dispose of any Purchased Assets except (i) pursuant to existing contracts or
commitments disclosed to Buyer in writing prior to the date hereof, (ii) sales of inventory
in the ordinary course consistent with past practice or (iii) purchases, lease-related
expenditures and equipment leases in the ordinary course of business consistent with the
levels contemplated in the capital expenditure budget set forth in Section 5.01(a) of the
Disclosure Letter (the “Capex Budget”);
(b) unless required by the terms of the applicable Store Lease or Ground Lease, modify
materially, renew, extend or terminate any of the Store Leases or Ground Leases; provided
that optional extensions of lease terms provided for in Store Leases or Ground Leases may be
exercised by Sellers in the ordinary course of business consistent with past practices and
provided further that, notwithstanding anything to the contrary herein, the Sellers (i)
shall exercise any existing optional extensions for and/or renew (in accordance with the
applicable time periods) (or, in the case of Stores subject to month-to-month lease
arrangements, use reasonable best efforts to continue those arrangements for) those Store
Leases or Ground Leases listed in Schedule 5.01(b)(i) and (ii) have advised Buyer that they
are to close or sell the Stores listed in Schedule 5.01(b)(ii);
(c) terminate or permit termination or expiration of, any existing pharmacy or other
federal, state or local licenses, permits, registrations, certifications and Medicare and
Medicaid provider numbers, except in the ordinary course of business, consistent with past
practices;
(d) incur, assume or guarantee any indebtedness for borrowed money with respect to the
Purchased Assets, or mortgage or pledge any Purchased Asset or create or suffer to exist any
Lien other than Permitted Liens on any Purchased Assets, other than in the ordinary course
of business consistent with past practices; provided, however, no Lien on Real Property
securing indebtedness will be created;
(e) enter into any (i) employment, deferred compensation, severance, retirement or
other similar agreement with any officer or employee of the Standalone Drug Business (or
amend any such existing agreement), (ii) grant any severance or termination pay to any
officer or employee of the Standalone Drug Business (other than
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any severance or termination pay that is required to be paid under any of Albertson’s
or its Affiliates’ severance plans as in effect on the date hereof) or (iii) increase any
compensation or other benefits payable to any officer or employee of the Standalone Drug
Business, other than any compensation increases that are in the ordinary course of business
consistent with past practice;
(f) make or commit to any capital expenditure for additions or improvements to any
plant, property or equipment relating primarily to the Standalone Drug Business in excess of
the Capex Budget, except to the extent that such excess does not exceed $1,000,000 in the
aggregate;
(g) enter into, modify, extend or cancel any third-party payor contracts (which
contracts are for amounts in excess of $250,000 per annum), except in the ordinary course of
business consistent with past practices;
(h) make any material changes in accounting policies or procedures other than as
required by GAAP or a Governmental Authority;
(i) enter into any real estate lease or lease commitment (or change the status of any
commitment), enter into or materially modify any Construction Contract, or purchase or
acquire or enter into any agreement to purchase or acquire any real estate, in each case
relating primarily to the Standalone Drug Business, other than as expressly contemplated
hereby or in the ordinary course of business consistent with past practice as determined in
accordance with Section 5.01 of the Disclosure Letter;
(j) in any material respect, amend, waive, modify, supplement, extend, terminate, allow
to lapse, assign, encumber or otherwise transfer, in whole or in part, its rights and
interests in or under any Assigned Contracts, other than as expressly contemplated hereby or
in the ordinary course of business consistent with past practice as determined in accordance
with Section 5.01 of the Disclosure Letter; or
(k) agree or commit to do any of the foregoing.
Section 5.02. Access to Information; Confidentiality. (a) From the date hereof until the
Effective Time, Albertson’s will (i) give Buyer, its counsel, financial advisors, auditors and
other authorized representatives reasonable access during normal business hours and upon reasonable
notice to the offices, properties, books, records and personnel of the Sellers relating to the
Facilities and the Purchased Assets, (ii) furnish to Buyer, its counsel, financial advisors,
auditors and other authorized representatives such financial and operating data and other
information relating to the Facilities and the Purchased Assets as Buyer may reasonably request
(including affording Buyer and its representatives access to the Stores and the Distribution Center
during the pre-Closing period to enable Buyer, at Buyer’s expense, to conduct a physical count of
all inventory at such locations, (iii) co-operate and prioritize and allocate its resources as
reasonably necessary to construct a data bridge and the data file transfers to ensure that Sellers
will commence providing, immediately as of Closing, the information technology services to Buyer as
specified in the Standalone Drug Transition Services Agreement, (iv) deliver to Buyer (in
electronic form where available) commencing promptly after the date hereof the data reasonably
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requested by Buyer in order to commence and progress item match and other transition related
planning activities as specified in Schedule 5.02(a) and (v) instruct the employees, counsel,
financial advisors and auditors of the Sellers to cooperate with Buyer in connection with the
foregoing; provided that (x) Buyer and its representatives shall not have the right, without the
prior approval of Albertson’s (which shall not be unreasonably withheld, delayed or conditioned, so
long as Buyer provides Sellers with an appropriate indemnity), to perform any investigative
procedures that involve physical disturbance or damage to the Facilities, the real property upon
which the Facilities are situated or any of the Purchased Assets or Excluded Assets and (y) it is
understood and agreed that Buyer has informed Sellers that the access and conduct that is required
by this Section 5.02(a) is critical to its ability to operate the Stores, and to conduct business
and service customers at the Stores, at Closing, but that such access and conduct must be provided
or performed in a form or manner or pursuant to a process that complies with applicable Law and any
medical privacy policy of Albertson’s maintained for the benefit of third parties that imposes a
legally binding obligation on Albertson’s or is required to be complied with order to be in
accordance with applicable Law. Accordingly, to the extent that providing access to certain
information or personnel or taking certain action under this Section 5.02(a) would not so comply in
a given form or manner or pursuant to a given process, the parties shall agree on a form or manner
of access or conduct that will both enable Buyer to operate the Stores, and conduct business and
service customers at the Stores, at Closing and will comply with applicable Law and any such policy
(e.g., pricing information may be redacted from the item files and pharmacy reimbursement rates may
be redacted from third party plan information). To the extent that any Seller incurs any
incremental out-of-pocket costs in processing, retrieving or transmitting any such information
pursuant to this Section 5.02(a), the Buyer shall reimburse the appropriate Seller for the
reasonable out-of-pocket costs thereof promptly upon the submission to the Buyer of an invoice
therefor accompanied by supporting documentation in reasonable detail.
(b) During the period preceding the Closing Date, the Sellers shall permit Buyer access
to each Facility after normal business hours (unless other times are permitted by the
Sellers) in order to (i) prepare as-built surveys, and (ii) install wiring for communication
devices and other store systems (including computers and other systems) and take other
similar action at such Facility, all at Buyer’s cost and without causing damage to such
Facility; provided that Buyer shall not be permitted to install any equipment in the
Facilities until immediately following the Effective Time. Buyer agrees to repair any
damage which may be caused due to the exercise of its rights pursuant to this Section
5.02(b) and to indemnify, defend and hold harmless the Seller Indemnitees from any and all
Damages arising out of or in any way connected with Buyer’s exercise of its rights pursuant
to this Section 5.02(b). The Sellers’ obligation to provide the foregoing access shall be
conditioned on the requirement that Buyer shall not unreasonably interfere with the Sellers’
Standalone Drug Business.
(c) After the Effective Time, the Sellers and their Affiliates will hold, and will use
their commercially reasonable efforts to cause their respective officers, directors,
employees, accountants, counsel, consultants, advisors and agents to hold, in confidence,
unless required to disclose by judicial or administrative process or by other requirements
of Law or by the rules, regulations or policies of any United States or foreign securities
exchange, all documents and information concerning the Purchased Assets and Assumed
Liabilities, except to the extent that such information can be shown to have been (i) in the
24
public domain prior to the Effective Time, (ii) in the public domain at or after the
Effective Time through no fault of the Sellers or their Affiliates or (iii) later lawfully
acquired by the Sellers from sources other than those related to its prior ownership of the
Standalone Drug Business; provided that the Sellers may disclose such information to their
officers, directors, employees, successors, accountants, counsel, consultants, advisors and
agents in connection with the transactions contemplated by this Agreement so long as such
Persons are informed by the Sellers of the confidential nature of such information and are
directed by the Sellers to treat such information confidentially. The obligation of the
Sellers and their Affiliates to hold any such information in confidence shall be satisfied
if Sellers exercise the same care with respect to such information as they would take to
preserve the confidentiality of their own similar information. For so long as such
information remains subject to the foregoing confidentiality obligations, the Sellers shall
not use the same for any purpose other than tax, accounting and regulatory and other
compliance purposes and evaluating, enforcing and performing their rights and obligations
under this Agreement and the Ancillary Agreements or otherwise in connection with the
transactions contemplated hereby and thereby.
(d) Subject to Section 8.02(a), after the Effective Time, the Sellers will afford
promptly to Buyer and its agents reasonable access (with an opportunity to make copies)
(subject, however, to confidentiality and similar non-disclosure obligations) during normal
business hours and upon reasonable notice, to the Sellers’ properties, books, records
(whether in hard copy or computer format), workpapers, contracts, commitments, Tax Returns,
personnel and records relating to the Facilities or the Purchased Assets as Buyer shall
reasonably request for any reasonable business purpose relating to the Facilities or the
Purchased Assets; provided that any such access by Buyer shall not unreasonably interfere
with the conduct of the business of the Sellers. Buyer shall bear all of the out-of-pocket
costs and expenses (including attorneys’ fees, but excluding reimbursement for general
overhead, salaries and employee benefits) reasonably incurred in connection with the
foregoing.
Section 5.03. Notices of Certain Events. From the date hereof until the Closing Date, each
party shall promptly notify the other party of:
(a) any written notice or other written communication from any Person alleging that the
consent of such Person is or may be required in connection with the transactions
contemplated by this Agreement;
(b) any written notice or other written communication from any Governmental Authority
in connection with the transactions contemplated by this Agreement; and
(c) any change or fact of which it is aware that will or is reasonably likely to result
in any of the conditions set forth in Article 10 becoming incapable of being satisfied.
Section 5.04. Noncompetition; Cooperation. (a) SUPERVALU agrees that neither it nor any of
its controlled Affiliates shall:
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(i) until eighteen months after the Closing Date, either directly or
indirectly, for its own account or jointly with others, open any freestanding drug
store within a 2.5-mile radius of any of the Stores;
(ii) (X) until six months after the Closing Date, open any new pharmacy counter
in any supermarket owned or operated either directly or indirectly for its own
account or jointly with others by any Seller or any of its Affiliates within a
.25-mile radius of any of the Stores or (Y) for the following twelve months after
such initial six month period, open more than five new pharmacy counters in a
supermarket within a .25-mile radius of any of the Stores.
(iii) Notwithstanding anything to the contrary contained in this Section 5.04,
neither SUPERVALU nor any of its controlled Affiliates shall be prohibited from (X)
entering into or consummating any agreement or transaction providing for the
acquisition or disposition of any assets, securities or businesses so long and to
the extent that such acquisitions or dispositions are not specifically intended to
circumvent the restrictions set forth in this Section 5.04 or (Y) the purchase,
acquisition or possession of 5% or less of any class of securities of any Person in
the ordinary course of SUPERVALU’s or any of its Affiliates’ passive investment
activities.
(b) SUPERVALU agrees that, until 18 months after the Closing Date, neither it nor any
of its controlled Affiliates, on the one hand, and Parent agrees that neither it nor any of
its controlled Affiliates, on the other hand, shall solicit any prescription drug customer
of the other party to the extent that such customer’s prescription file is associated with a
store of the other party; provided that the foregoing shall not be deemed to prohibit
generalized solicitations through media advertisements that are not targeted at such
customers. For the avoidance of doubt, nothing in this Section 5.04(b) shall limit any
party’s ability to solicit any customer whose name independently appears on such party’s
prescription files.
(c) For a period of 180 days from the Closing Date, SUPERVALU and Parent agree not to
disparage each other or to communicate that a prescription file has been “transferred” or
“transferred away” (or a message using similar language) from the other’s branded store in
communications with prescription drug customers.
Section 5.05. Prescription Files. Commencing on the Closing Date and in accordance with a
schedule to be provided by Buyer, the Sellers will deliver the Prescription Files to Buyer in an
electronic format mutually agreeable to Buyer and the Sellers in accordance with all applicable
state board of pharmacy regulations; provided that Sellers shall preserve and maintain original
hard copies of the Prescription Files at the applicable Stores in accordance with all applicable
state board of pharmacy regulations; provided further, the cost of any conversion into such
mutually agreed upon electronic format shall be at Buyer’s sole cost and expense.
Section 5.06. Casualty and Condemnation. (a) In the event that, after the execution of this
Agreement, but prior to the Effective Time, any Facility is subject to loss, destruction or
26
damage to the building or other improvements thereon (a “Casualty”) or the exercise of eminent
domain by a Governmental Authority (a “Condemnation”):
(i) Subject to Section 5.06(a)(ii), at the Closing the Sellers shall assign to Buyer
all proceeds the Sellers have received from any third party insurance claims, condemnation
awards, compensation or other reimbursements relating to such Casualty or Condemnation
(except as to business interruption insurance to the extent that such proceeds are used or
intended to be used to reimburse Seller for any out-of-pocket costs, expenses, damages or
losses suffered or incurred by Seller up to and including the Effective Time) to the extent
such proceeds have not already been used by a Seller to repair any such loss, destruction or
damage (or are required to reimburse any Seller for any such repair), and shall assign to
Buyer the right to receive any future proceeds of such Casualty or Condemnation receivable
after the Effective Time, including as to business interruption insurance.
(ii) If any such Casualty is not covered under the Sellers’ insurance policies and in
the event of a Leased Store that has suffered a Casualty where the landlord is responsible
for such repairs, loss or destruction pursuant to the terms of the relevant Lease, the
applicable Seller shall assign the applicable Lease to Buyer at the Closing and, without any
additional payment from the Sellers, the Sellers shall assign to Buyer any claim they have
under such Lease with respect thereto.
(b) Any party receiving a notice of Casualty or Condemnation shall notify all other parties in
accordance with Section 12.02. Notwithstanding anything to the contrary contained in this
Agreement, in no event will any Casualty or Condemnation constitute the breach of any
representation, warranty or covenant of the Sellers contained in this Agreement if the Sellers
comply with this Section 5.06.
(c) Notwithstanding anything to the contrary in this Agreement, under no circumstances shall
(i) SUPERVALU, New Diamond, Sellers or any of their respective Affiliates be responsible for any
retention or deductible payable with respect to any Casualty or Condemnation and (ii) any payments
on account of a Casualty or Condemnation or any other loss be required from Xxxxx American
Corporation, or any other Subsidiary or Affiliate of SUPERVALU or the Sellers that has underwritten
an insurance policy with respect to any Purchased Asset.
Section 5.07. Assistance in Transfer of Licenses, Permits and Registrations. (a) The Sellers
will use commercially reasonable efforts to assist Buyer in obtaining the transfer of the Licenses,
including directing its employees to cooperate with such transfer and making any notifications
required to be sent by the Sellers to the U.S. Drug Enforcement Administration (“DEA”) and
applicable state pharmacy boards prior to the Effective Time. It is understood that Buyer is
responsible for any expenses associated with any of the foregoing transfers or assignments.
(b) With respect to any liquor license or liquor or other alcoholic beverage inventory
conveyed hereunder, the parties shall comply with applicable Law, including the creation of
any necessary escrow and the disbursement or release of any funds held in
27
such escrow, with the related escrow fees being paid by Buyer; provided, however, if a
state liquor control authority refuses to consent to the transfer or issuance of a liquor
license with respect to any Store to Buyer, the liquor inventory at such Store shall be
deemed Excluded Inventory. The parties shall cooperate in executing and delivering any
documentation necessary to effect the foregoing. Buyer or a designee of Buyer will file, or
cause to be filed, all necessary pharmacy and liquor permit applications with the
appropriate governmental authorities and will use its commercially reasonable efforts to
obtain such permits as soon as practicable (including any controlled substance licenses
required under state law and DEA numbers). In the event that any liquor, alcoholic
beverage, pharmacy, controlled substances, DEA, Medicare, Medicaid or other permit, license,
registration, provider number, approval, consent, certification or the like issued by any
Governmental Authority necessary for the Buyer’s ownership and/or operation of the Purchased
Assets, Standalone Drug Business or any Store shall not have been issued or transferred to
Buyer as of the Closing, at the request of Buyer and without any additional consideration,
the Sellers shall execute such powers of attorney, instruments and agreements as are
reasonably necessary to allow Buyer to utilize the Sellers’ liquor, alcoholic beverage,
pharmacy, controlled substances, DEA, Medicare, Medicaid or other permits, licenses,
registrations, provider numbers, approvals, consents, certifications or the like, to the
extent permitted under applicable Law, in Buyer’s ownership and/or operation of the
Purchased Assets, Standalone Drug Business or any Store, until the issuance of such liquor,
alcoholic beverage, pharmacy, controlled substances, DEA, Medicare, Medicaid or other
permits, licenses, registrations, provider numbers, approvals, consents, certifications or
the like to Buyer; provided that as a condition precedent to the Sellers’ execution of any
such power of attorney, instrument or agreement, Buyer shall also agree that (i) during the
period of Buyer’s use of the Sellers’ liquor, alcoholic beverage, pharmacy, controlled
substances, DEA, Medicare, Medicaid or other permits, licenses, registrations, provider
numbers, approvals, consents, certifications or the like thereunder, Buyer shall own and/or
operate the Purchased Assets, Standalone Drug Business or any Store in accordance with
applicable Law and (ii) Buyer shall indemnify the Sellers against all losses arising out of
Buyer’s use of such power of attorney, instrument or agreement.
Section 5.08. Controlled Substances Inventory. To the extent required by applicable Law or
DEA regulations in context of the transactions contemplated by this Agreement, the Sellers will
undertake and deliver to Buyer at each Store an inventory of “controlled substances” located at
such Store, as close as practicable prior to the Effective Time.
Section 5.09. Updated Store List. No later than thirty Business Days prior to the Closing,
Sellers shall provide to Buyer updated copies of Exhibits A, B and C to this Agreement (the
“Updated Store List”), which shall set forth the final and definitive list of the Stores, and which
shall be identical to the Exhibits A, B and C attached to this Agreement except for, in accordance
with Section 5.01 (i) the addition of new or replacement retail drug stores associated with the
Standalone Drug Business which are opened by Sellers between the date of this Agreement and the
date of Sellers’ delivery of the Updated Store List to Buyer, and (ii) the removal of any Stores
due to operational closings consistent with past practice or expirations of Store Leases or Ground
Leases in accordance with their terms. The Updated Store List shall be
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deemed to be Exhibits A, B and C to this Agreement for all purposes under this Agreement as of
the Effective Time.
Section 5.10. Financial Reports; Audited Financials. (a) Between the date of this Agreement
and the Closing Date, subject to applicable Law, Sellers shall deliver to Buyer on a monthly basis
interim, unaudited financial reports for the Standalone Drug Business, prepared by Sellers in the
ordinary course of business consistent with past practices and in accordance with Sellers’
customary reporting format for Sellers’ internal use in overseeing and managing the operations of
the Standalone Drug Business and the Stores.
(b) Sellers will cooperate and use commercially reasonable efforts to prepare for
Parent (and in the event required to be obtained by Parent under Regulation S-X under the
Exchange Act, shall prepare for Parent), commencing promptly after the date hereof, audited
financial statements for the Standalone Drug Business, the Purchased Assets and the Assumed
Liabilities for Albertson’s then most recently completed and reported fiscal year (and
unaudited reviewed financial statements for any historical or subsequent fiscal quarter
required to be obtained by Parent under such Regulation S-X) in each case fairly presented
in accordance with GAAP on a basis consistent with Albertson’s historical financial
statements. Sellers shall deliver all such financial statements to Parent at least 30 days
prior to the latest time such financial statements are required to be filed by Parent with
the Securities and Exchange Commission under the Exchange Act.
Section 5.11. Intercompany Leases. On or prior to the Closing Date, the Sellers shall deliver
the Purchased Assets free and clear of any lease or sublease agreements between any Seller or any
Affiliate of a Seller, on the one hand, and Albertson’s or any Affiliate of Albertson’s, on the
other hand.
Section 5.12. Merger Agreement; Separation Agreement. Neither Albertson’s nor SUPERVALU
shall, without the prior written consent of Buyer agree to any modification of any of the terms or
conditions of, or give any consent or waiver under, any provision of the Merger Agreement or
Separation Agreement if such modification, consent or waiver would reasonably be expected to have a
material and adverse effect on the Standalone Drug Business, Purchased Assets or Assumed
Liabilities.
ARTICLE 6
Covenants of Buyer
Covenants of Buyer
Buyer agrees that:
Section 6.01. Confidentiality. Prior to the Effective Time and after any termination of this
Agreement, Buyer and its Affiliates will hold, and will use their commercially reasonable efforts
to cause their respective officers, directors, employees, accountants, counsel, consultants,
advisors and agents to hold, in confidence, unless compelled to disclose by judicial or
administrative process or by other requirements of Law or by the rules, regulations or policies of
any United States or foreign securities exchange, all documents and information concerning the
Standalone Drug Business that the Sellers have furnished to Buyer or any of its Affiliates in
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connection with the transactions contemplated by this Agreement, except to the extent that
such information can be shown to have been (i) in the public domain through no fault of Buyer or
any of its Affiliates or (ii) later lawfully acquired by Buyer or any of its Affiliates from
sources other than the Sellers; provided that Buyer may disclose such information to its officers,
directors, employees, accountants, counsel, consultants, advisors and agents in connection with the
transactions contemplated by this Agreement so long as such Persons are informed by Buyer of the
confidential nature of such information and are directed by Buyer to treat such information
confidentially. The obligation of Buyer and its Affiliates to hold any such information in
confidence shall be satisfied if they exercise the same care with respect to such information as
they would take to preserve the confidentiality of their own similar information. If this
Agreement is terminated, Buyer and its Affiliates will, and will use their commercially reasonable
efforts to cause their respective officers, directors, employees, accountants, counsel,
consultants, advisors and agents to, destroy or deliver to the Sellers, upon request, all documents
and other materials, and all copies thereof, obtained by Buyer or any of its Affiliates or on their
behalf from the Sellers in connection with this Agreement that are subject to such confidence.
Section 6.02. Access. After the Effective Time, Buyer will afford promptly to each of the
Sellers and New Diamond and their agents reasonable access (with an opportunity to make copies)
(subject, however, to confidentiality and similar non-disclosure obligations) during normal
business hours and upon reasonable notice, to Buyer’s properties, books, records (whether in hard
copy or computer format), workpapers, contracts, commitments, Tax Returns, personnel and records
relating to the Facilities or the Purchased Assets as the Sellers and/or New Diamond shall
reasonably request for any reasonable business purpose relating to the Facilities or the Purchased
Assets; provided that any such access by the Sellers and/or New Diamond, as applicable, shall not
unreasonably interfere with the conduct of the business of Buyer. Each of the Sellers and New
Diamond shall bear all of the out-of-pocket costs and expenses (including attorneys’ fees, but
excluding reimbursement for general overhead, salaries and employee benefits) reasonably incurred
in connection with the foregoing.
Section 6.03. Guarantee Releases under Certain Contracts. Following the Effective Time, the
Buyer will use its reasonable best efforts to procure the release by the applicable counterparty of
any guarantee of Albertson’s or their respective Affiliates in place with respect to any Store
Lease, Ground Lease or Assigned Contract by offering a replacement guarantee of Buyer or its
Affiliates, but Buyer shall have no further obligation to procure such release. If and to the
extent that Buyer shall be unable to procure any such release, Buyer and its Affiliates shall
jointly and severally indemnify and hold harmless the Sellers, New Diamond or their respective
Affiliates, as applicable, against any damages, losses, liabilities and expenses (including
reasonable attorneys’ fees) suffered or incurred by any of them with respect to any such Store
Lease, Ground Lease or Assigned Contract.
Section 6.04. Contractual Overpayments. If at any time in the one-year period following the
Effective Time, the Buyer or any of its Affiliates receives a refund amount or a reduction in an
amount payable from a vendor that relates to a contractual overpayment under any of the Assigned
Contracts, Store Leases or Ground Leases by the Sellers or their Affiliates prior to the Effective
Time, the Buyer shall promptly pay to New Diamond an amount equal to the amount of such refund or
reduction.
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Section 6.05. Medicare And Medicaid Provider Numbers. The Buyer shall promptly make (and
thereafter diligently pursue) all filings, notifications and applications required for
participating as a provider in Medicare and Medicaid reimbursement programs with respect to the
Stores.
ARTICLE 7
Covenants of Buyer and the Sellers
Section 7.01. Reasonable Best Efforts; Further Assurances. (a) Subject to the terms and
conditions of this Agreement (including, but not limited to, Section 7.2), Buyer and the Sellers
will use their reasonable best efforts to take, or cause to be taken, all actions and to do, or
cause to be done, and assist and cooperate with the other parties in doing, all things necessary or
desirable under applicable Laws and regulations to consummate, in the most expeditious manner
practicable, the transactions contemplated by this Agreement.
(b) Buyer and the Sellers will use reasonable best efforts to: (i) prepare, as soon as
practicable, all filings and other presentations in connection with seeking any regulatory
approval, exemption or other authorization from any Governmental Authority necessary to
consummate the transactions contemplated hereby; (ii) prosecute such filings and other
presentations with diligence; and (iii) oppose any objections to, appeals from or petitions
to reconsider or reopen any such approval by Persons not party to this Agreement. Buyer and
the Sellers will use reasonable best efforts to facilitate obtaining any final order or
orders approving such transactions, consistent with this Agreement and/or to remove any
impediment to the consummation of the transactions contemplated hereby. Buyer and the
Sellers will use reasonable best efforts to furnish all information in connection with the
approvals of or filings with any Governmental Authority and will promptly cooperate with and
furnish information in connection with any such requirements imposed upon Buyer or any of
its Affiliates in connection with this Agreement and the transactions contemplated hereby.
Subject to Section 6.02, Buyer will use reasonable best efforts to obtain any consent,
authorization, order or approval of, or any exemption by, and to remove any impediment
imposed by any Governmental Authority to allow the consummation of the transactions
contemplated hereby. Buyer and the Sellers will each advise the other party promptly of any
material communication received by such party or any of its Affiliates from the Federal
Trade Commission, Department of Justice, any state attorney general or any other
Governmental Authority regarding any of the transactions contemplated hereby, and of any
understandings, undertakings or agreements (oral or written) such party proposes to make or
enter into with the Federal Trade Commission, Department of Justice, any state attorney
general or any other Governmental Authority in connection with the transactions contemplated
hereby. Buyer and Sellers will each consult with the other in advance of any material
meetings with the Federal Trade Commission.
Section 7.02. HSR Clearance. (a) In furtherance and not in limitation of Section 7.01, each
of Buyer and Albertson’s shall make an appropriate filing of a Notification and Report Form
pursuant to the HSR Act with respect to the transactions contemplated hereby as promptly as
practicable and thereafter make any other required submissions with respect to the transactions
contemplated hereby under the HSR Act and to take all other appropriate actions
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reasonably necessary, proper or advisable to cause the expiration or termination of the
applicable waiting periods under the HSR Act as soon as practicable.
(b) Notwithstanding the foregoing, Buyer shall promptly take, in order to consummate
the transactions contemplated hereby, all actions necessary to (A) secure the expiration or
termination of any applicable waiting period under the HSR Act (the “HSR Clearance”) and (B)
to resolve any objections asserted with respect to the transactions contemplated under this
Agreement under any antitrust Law or the Federal Trade Commission Act, raised by any
Governmental Authority, and to prevent the entry of any court order and to have vacated,
lifted, reversed or overturned any decree, judgment, injunction or other order that would
prevent, prohibit, restrict or delay Closing, including (i) executing settlements,
undertakings, consent decrees, stipulations or other agreements with any Governmental
Authority (or with any private party, but only in this latter case, in order to vacate,
lift, reverse, overturn, settle or otherwise resolve any decree, judgment, injunction or
other order that prevents, prohibits, restricts or delays Closing that may be issued by any
court or other Governmental Authority in favor of that third party), (ii) selling, divesting
or otherwise conveying particular assets or categories of assets or businesses of Parent and
its Affiliates, (iii) agreeing to sell, divest or otherwise convey any particular assets or
categories of assets or businesses of the Purchased Assets contemporaneously with or
subsequent to the Closing, and (iv) permitting the Sellers to sell, divest or otherwise
convey any particular assets or categories of assets or businesses of the Purchased Assets
prior to the Closing. All such efforts shall be unconditional and shall not be qualified by
best efforts and no actions taken pursuant to this Section 7.02 shall be considered for
purposes of determining whether a Material Adverse Effect has occurred. Buyer shall respond
to and seek to resolve as promptly as reasonably practicable any objections asserted by any
Governmental Authority with respect to the transactions contemplated under this Agreement.
In the event in connection with such efforts Buyer or Seller sell or otherwise dispose of
any of the Purchased Assets and the Closing occurs, the Buyer will be entitled to retain all
net proceeds received from the applicable sale or disposition to a third party.
Section 7.03. Certain Filings. Buyer and the Sellers shall cooperate with one another (a) in
determining whether any action by or in respect of, or filing with, any Governmental Authority is
required, or any actions, consents, approvals or waivers are required to be obtained from parties
to any material contracts, in connection with the consummation of the transactions contemplated by
this Agreement, and (b) in taking such actions or making any such filings, furnishing information
required in connection therewith and seeking timely to obtain any such actions, consents, approvals
or waivers. Each of Buyer and the Sellers shall use their respective reasonable best efforts to
obtain Tax clearance certificates (pursuant to Laws with respect to bulk transfers) from any state
in which failure to obtain such certificate may result in Buyer or any of its Affiliates being
liable for Taxes as transferee in connection with the consummations of the transactions
contemplated hereby.
Section 7.04. Public Announcements. From the date hereof through the Closing Date, no public
release or announcement concerning the transactions contemplated hereby shall be issued by Parent,
SUPERVALU or Albertson’s (or their respective Affiliates or representatives) without the prior
consent of each of the other such parties (which consent shall not be
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unreasonably withheld or delayed), except, in each case, as such release or announcement may
be required by Law or the rules, regulations or policies of any United States or foreign securities
exchange, in which case the party required to make the release or announcement shall use its
commercially reasonable efforts to allow the other parties reasonable time to comment on such
release or announcement in advance of such issuance; provided that SUPERVALU, Parent and Sellers
may make internal announcements to their respective employees after reasonable prior notice to, and
consultation with, the other; provided, however, that no prior notice or consultation will be
required for communications concerning status or other factual matters concerning the transaction.
Section 7.05. Trademarks; Tradenames. Except as otherwise set forth in this Section 7.05,
after the Effective Time, Buyer and its Affiliates shall not use the Tradenames and Trademarks.
(a) Buyer agrees to use commercially reasonable efforts to re-brand (including changing
signage), and Sellers agree, at Buyer’s expense, to use commercially reasonable efforts to
assist Buyer in re-branding, each Store in the greater Chicago metropolitan area and
Southern California (San Diego and Orange County) markets within 90 days after the Closing
Date (and each other Store within 180 days after the Closing Date), and Buyer and its
Affiliates shall have the right to use the “Albertson’s” (to the extent used for private
label product), “Osco” or “Sav-on” names (the “Tradenames and Trademarks”) in connection
with each Store until such Store has been re-branded; provided that such time periods shall
be extended to the extent necessary if such re-branding is not permitted by Law before the
expiration of such period.
(b) After the Effective Time, Buyer and its Affiliates and its resellers shall have the
right to sell existing inventory and to use existing packaging, labeling, containers,
supplies, advertising materials and any similar materials bearing the Tradenames and
Trademarks for 180 days following the Closing Date. Buyer and its Affiliates and resellers
shall have the right to use the Tradenames and Trademarks in advertising that cannot be
changed by Buyer or its Affiliates or resellers using commercially reasonable efforts for a
period not to exceed 180 days after the applicable Effective Time. Buyer and its Affiliates
and resellers shall comply with all applicable Laws or regulations in any use of packaging
or labeling containing the Tradenames and Trademarks. Buyer and its Affiliates and resellers
shall not be obligated to change the Tradenames and Trademarks on goods in the hands of
dealers, distributors and customers at the time of the expiration of the time period set
forth herein.
Section 7.06. Accounts Receivables; Gift Cards and Gift Certificates; Prepaid Expenses. (a)
Buyer shall promptly deposit in one or more accounts designated by New Diamond within 10 days of
receipt any monies paid to Buyer with respect to Accounts Receivable and shall furnish the
information that New Diamond may reasonably request from time to time with respect to such Accounts
Receivable.
(b) Following the Closing Date for a period of four months thereafter, with respect to
each Store, Buyer shall (i) accept in full any original proprietary gift cards
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issued by Sellers for use at their retail locations from customers who present gift
cards at such Store and (ii) Buyer shall redeem at full face value any original proprietary
gift certificates issued by Sellers for use at their retail locations to customers who
present such gift certificates at such Store.
(c) Buyer shall reimburse New Diamond at the Closing for the full amount of all
documented Prepaid Expenses.
Section 7.07. Transition Services Agreement. Buyer and SUPERVALU and its Affiliates shall
cooperate and use their respective best efforts to enter into at Closing the Standalone Drug
Business Transition Services Agreement and the Distribution Center Transition Services Agreement;
provided, however, in no event shall the execution and delivery of the Standalone Drug Business
Transition Services Agreement or the Distribution Center Transition Services Agreement pursuant to
Section 1.07 be a condition to Closing.
Section 7.08. HIPAA Privacy Standards. (a) After the Effective Time, Buyer shall make the
Prescription Files available for access and amendment to individuals in accordance with the Health
Insurance Portability and Accountability Act of 1996 privacy standards (the “HIPAA Privacy
Standards”) and other applicable Laws. Buyer shall respond to individuals’ requests for
accountings of disclosures of protected health information for periods prior to the Effective Time
in accordance with the HIPAA Privacy Standards.
(b) In addition, Buyer shall maintain the Prescription Files and all protected health
information transferred by the Sellers in accordance with the Health Insurance Portability
and Accountability Act of 1996 security standards governing electronic protected health
information.
(c) All inquiries and responses by Buyer relating to patient rights under HIPAA Privacy
Standards relating to uses or disclosures of health information made prior to the Effective
Time shall be forwarded to the Sellers and New Diamond pursuant to Section 12.02.
Section 7.09. Solicitation of Employees. Each of Parent and SUPERVALU mutually agree that (i)
neither it nor any of its Affiliates shall, until the end of the 18 month period immediately
following the Closing Date, except as contemplated in Article 9 and except with respect to any
employees listed on Schedule 7.09, solicit the services of any personnel at the level of field
management or above (i.e., not including any pharmacist or store managers) that is employed by the
other party or its Affiliates pertaining to a drug store (including a pharmacy counter in a
supermarket) and (ii) until six months after the Closing Date, solicit any pharmacist that is
employed in a drug store (including a pharmacy counter in a supermarket) by the other party, in
each case, in any market which the Sellers operate a Store immediately prior to the Effective Time.
Section 7.10. Kodak and Qualex Photo Processing Equipment. The Sellers and Buyer shall each
use commercially reasonable efforts, and shall reasonably cooperate with each other in such
efforts, to obtain the consent of each of Kodak and Qualex to the (a) (i) transfer of the photo
processing equipment leased by the Sellers or their Affiliates from Kodak and Qualex and
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located at the Stores (the “Photo Equipment”) to Buyer and (ii) the assumption by Buyer of the
obligations of the Sellers with respect to such Photo Equipment, or (b) buyout by Buyer of the
Photo Equipment.
Section 7.11. “As Is” Condition; Waiver and Release. Except for the express representations
and warranties contained in this Agreement (and without limiting the conditions to Closing in
Article 10), the Purchased Assets to be transferred hereunder will be transferred “as is, where
is,” in their present condition and state of repair, with all faults, limitations and defects
(hidden and apparent). Without limitation, each of Buyer and Parent, on the one hand, and the
Sellers and New Diamond, on the other hand, acknowledge that, except as specifically set forth to
the contrary in this Agreement, no warranties or representations, expressed or implied, of any kind
whatsoever (including any implied warranty of merchantability or fitness for a particular purpose)
have been made by the other party, any of its Affiliates or any other Person, or will be relied
upon.
Section 7.12. Payments for Pharmacy Services. Buyer agrees to forward to New Diamond any sums
of money received by Buyer for pharmacy services rendered by the Sellers prior to the Effective
Time. New Diamond and the Sellers agree to forward to Buyer any sums of money received by New
Diamond or the Sellers, as applicable, for pharmacy services rendered by Buyer following the
Effective Time. Further, upon reasonable notice from New Diamond and/or the Sellers, Buyer agrees
to afford reasonable access to allow New Diamond and the Sellers access to the Prescription Files
for the sole purpose of third party rebilling and reconciliation with respect to periods prior to
the Effective Time.
Section 7.13. Confidentiality Agreement. Parent and Albertson’s agree that the terms and
provisions of the Confidentiality Agreement (as amended by this Section 7.13) shall continue to
bind the parties; provided, however, that, in the event the Closing occurs, the Confidentiality
Agreement (as amended by this Section 7.13) will terminate on the Closing Date except that the
confidentiality obligations therein will continue in effect in accordance with the terms thereof
with respect to information of Albertson’s not related to the Standalone Drug Business, the
Purchased Assets or the Assumed Liabilities. Parent and Albertson’s further agree that, until the
earlier of the Closing and the termination of Section 6(c) of the Confidentiality Agreement in
accordance with its terms, the scope of Section 6(c) of the Confidentiality Agreement (No
Solicitation) shall be expanded to apply reciprocally to each of Parent and its Affiliates, on the
one hand, and Albertson’s and its Affiliates, on the other hand, and the terms in that Section 6(c)
shall be expanded to apply to their respective directors, officers, management level employees,
in-store managers and in-store pharmacists (and will not be limited by any reference to the
evaluation or discussions described in that Section 6(c)); provided that in no event shall anything
in the foregoing or the Confidentiality Agreement prohibit or limit in any way the ability of
Parent and its affiliates to solicit, or make offers of employment to, Xxxxx Xxxxx, the Employees
and/or the individuals who are described in Section 9.02, but only in relation to post-Closing
employment with Parent or its affiliates (which solicitations and offers shall, for the sake of
clarity, be conditioned on the Closing occurring).
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ARTICLE 8
Tax Matters
Tax Matters
Section 8.01. Tax Matters. Except as specified in Section 8.01 of the Disclosure Letter, or
as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse
Effect, Albertson’s hereby represents and warrants to Buyer that the Sellers have timely paid, or
made provision to pay, all Taxes that include or relate to the Standalone Drug Business and the
Purchased Assets that will have been required to be paid on or prior to the date hereof, the
non-payment of which would (a) result in a Lien on any Purchased Asset, (b) otherwise adversely
affect the Standalone Drug Business or (c) result in Buyer becoming liable or responsible therefor.
Section 8.02. Tax Cooperation. (a) Notwithstanding any other provision in this Agreement,
this Section 8.02 shall govern cooperation with respect to Tax matters. Buyer, the Sellers, New
Diamond and SUPERVALU agree to furnish or cause to be furnished to each other, upon request, as
promptly as practicable, such information and assistance relating to the Standalone Drug Business
and the Purchased Assets (including access to books and records) as is reasonably necessary for the
filing of all Tax Returns, the making of any election relating to Taxes, the preparation for any
audit by any Taxing Authority, and the prosecution or defense of any Action relating to any Tax.
Except with respect to information that is generally available to the public, the party requesting
such information shall treat such information so obtained in a manner consistent with the way in
which it treats its own records. Buyer, the Sellers, New Diamond and SUPERVALU shall retain all
books and records with respect to Taxes pertaining to the Purchased Assets for a period of at least
seven years following the Effective Time. Buyer, the Sellers, New Diamond and SUPERVALU shall
cooperate with each other in the conduct of any audit or other proceeding relating to Taxes
involving the Purchased Assets or the Standalone Drug Business.
(b) All real property taxes (other than real estate Taxes referred to in Section 1.08),
personal property taxes and similar ad valorem obligations (other than Transfer Taxes, which
shall be governed by Section 8.02(c)) levied with respect to the Purchased Assets for a
Straddle Tax Period (collectively, the “Apportioned Obligations”) shall be apportioned
between the Sellers and Buyer based on the number of days of such taxable period included in
the Pre-Closing Tax Period and the number of days of such taxable period included in the
Post-Closing Tax Period. The Sellers shall be liable for the proportionate amount of such
taxes that is attributable to the Pre-Closing Tax Period, and Buyer shall be liable for the
proportionate amount of such taxes that is attributable to the Post-Closing Tax Period.
(c) All excise, sales, use, value added, registration stamp, recording, documentary,
conveyancing, franchise, property, transfer, gains, transaction privilege tax and similar
Taxes, levies, charges and fees (collectively, “Transfer Taxes”) incurred in connection with
the transfer of the Purchased Assets pursuant to this Agreement shall be borne equally by
Buyer on the one hand, and Sellers, on the other hand. Buyer and the Sellers shall
cooperate in providing each other with any appropriate resale exemption certifications and
other similar documentation.
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(d) Apportioned Obligations and Transfer Taxes described in this Section 8.02 shall be
timely paid, and all applicable Tax Returns shall be filed, as provided by applicable Law.
The paying party shall provide to the non-paying party drafts of all Tax Returns described
in the preceding sentence and a statement setting forth the amount of reimbursement to which
the paying party is entitled under Section 8.02(b) and Section 8.02(c), as the case may be,
together with appropriate supporting information and schedules at least 30 calendar days
prior to the due date for the filing of such Tax Return (including extensions), or such
shorter period as is necessary to allow for the timely filing of such Tax Return. The
non-paying party shall have the right, at its expense, to review all work papers and
procedures used to prepare any such Tax Return. If the non-paying party, within 10 Business
Days after delivery of any such Tax Return, notifies the paying party in writing that it
objects to any items in such Tax Return, the parties will use their reasonable best efforts,
acting in good faith, to resolve such disputed items between themselves. If the parties
fail to resolve such disputed items within 5 Business Days, such disputed items shall be
resolved (within a reasonable time, taking into account the deadline for filing such Tax
Return) by the Independent Accounting Firm. Upon resolution of all such items, the relevant
Tax Return shall be adjusted, if necessary, to reflect such resolution and shall be binding
upon the parties without further adjustment. The costs, fees and expenses of the
Independent Accounting Firm shall be borne equally by the parties. The non-paying party
shall make reimbursement promptly pursuant to this Section 8.02(d) but in no event later
than 10 days after the resolution of the relevant Tax Return. Any payment not made within
such time shall bear interest at the Applicable Rate until paid.
ARTICLE 9
Employee Benefits
Employee Benefits
Section 9.01. ERISA Representations. Albertson’s hereby represents and warrants to Buyer that
Section 9.01 of the Disclosure Letter contains a correct and complete list identifying each
material “employee benefit plan,” as defined in Section 3(3) of ERISA, each material employment,
severance or similar contract, plan, arrangement or policy and each other material plan or
arrangement (written or oral) providing for compensation, bonuses, profit-sharing, stock option or
other stock-related rights or other forms of incentive or deferred compensation, vacation benefits,
insurance (including any self-insured arrangements), health or medical benefits, employee
assistance program, disability or sick leave benefits, workers’ compensation, supplemental
unemployment benefits, severance benefits and post-employment or retirement benefits (including
compensation, pension, health, medical or life insurance benefits) which is maintained,
administered or contributed to by the Sellers or any of their ERISA Affiliates and covers any
Employee as of the date hereof. Copies of such plans (and, if applicable, related trust or funding
agreements or insurance policies) and all amendments thereto (other than the Xxxx Xxxxxxx Plan
Documents) have been made available to Buyer together with, if applicable, the most recently filed
annual report (Form 5500 including, if applicable, Schedule B thereto) and tax return (Form 990)
prepared in connection with any such plan or trust. Such plans are referred to collectively herein
as the “Employee Plans.” Albertson’s agrees to use its commercially reasonable efforts to furnish
Buyer with a copy of each Xxxx Xxxxxxx Plan Document prior to the Closing Date. Except as would
not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect,
each Employee Plan which is intended to be qualified
37
under Section 401(a) of the Code is so qualified and has received a determination letter to
that effect from the IRS and, to the Knowledge of any Seller, no circumstances exist which would
reasonably be expected to materially adversely affect such qualification or exemption. With
respect to any Surviving Plan (as defined below) (i) Sellers have not incurred any withdrawal
liability under Subtitle E of Title IV of ERISA (“Withdrawal Liability”) that remains unsatisfied,
as would reasonably be expected to have, individually or in the aggregate, a Material Adverse
Effect, and (ii) Sellers have not received any notification, that any such Surviving Plan is in
reorganization or has been terminated.
Section 9.02. Employees and Offers of Employment. Effective as of the Effective Time, Buyer
shall (i) offer employment to each Employee, at a base salary or wage that is at least equal to
that provided the applicable Employee immediately prior to the Effective Time; (ii) have the right
to offer employment to each Albertson’s corporate employee, field manager, field-based marketing
manager and divisional pharmacy manager, in each case to the extent dedicated solely to the
Standalone Drug Business, including, without limitation, those employees specified in Schedule
9.02(a) (so long as they are so dedicated) at a base salary or wage that is at least equal to that
provided to such Albertson’s corporate employee, field manager, field-based marketing manager or
divisional pharmacy manager immediately prior to the Effective Time and (iii) have a right to hire
certain of the category managers, real estate personnel, field-based marketing managers and
divisional pharmacy managers in each case who have shared responsibilities between the Standalone
Drug Business and the New Diamond Business (as defined in the Separation Agreement) (collectively,
the “Shared Personnel”) to the extent specified in Schedule 9.02(b) as determined in cooperation
between Sellers and Buyer by allocating a proportionate number of Shared Personnel to Buyer based
on the ratio of (x) the total number of pharmacy counters in Stores covered by such Shared
Personnel to (y) the total number of pharmacy counters in Stores and grocery stores operated by
Sellers collectively covered by such Shared Personnel as set forth on such Schedule 9.02(b).
Sellers may update, and deliver to Buyer, Schedule 9.02(a) and Schedule 9.02(b) within fourteen
days following the date of this Agreement. SUPERVALU and Buyer shall cooperate in good faith to
determine the accuracy of Schedule 9.02(a) and Schedule 9.02(b) and agree to update each such
Schedule as appropriate. The term “Employee” includes any Person who, immediately prior to the
Effective Time, is actively employed by any Seller at a Facility or who is on short-term disability
leave, authorized leave of absence, military service or lay-off with recall rights as of the
Effective Time (such inactive employees shall be offered employment by Buyer as of the date they
return to active employment but only if such employee returns to active service within 180 days
after the Effective Time or such later time as their reemployment rights are protected by
applicable Laws), but shall exclude any other inactive or former employee including any Person who
is on long-term disability leave or unauthorized leave of absence as of the Effective Time. The
employees who accept and commence employment with Buyer (including the employees described in this
Section 9.02 and the employees set forth on Schedule 7.09) are hereinafter collectively referred to
as the “Transferred Employees.”
Section 9.03. The Sellers’ Employee Benefit Plans. Except as expressly set forth herein, no
assets or liabilities of any Employee Plan shall be transferred to Buyer or any of its Affiliates
or to any plan of Buyer or any of its Affiliates. Buyer shall agree to assume the obligations
under any agreement providing for the grant of any restricted stock units or any cash awards to the
Transferred Employees or Employees (but only to the extent they remain eligible for such
38
awards) which are granted to such Transferred Employees or Employees following the date hereof
but prior to the Effective Time, but solely with respect to the Employees, only to the extent such
awards are set forth and described in Section 9.03 of the Disclosure Letter.
Section 9.04. Buyer Benefit Plans. Buyer will cause all plans and programs of Buyer and its
Affiliates to recognize all service of the Transferred Employees with the Sellers or any of their
Affiliates prior to the Closing Date for purposes of vesting and eligibility and for purposes of
determining the amount of benefits under Buyer’s applicable sick leave, vacation, severance or
other welfare plan. Buyer will assume, and be solely responsible for, all sick leave, vacation or
other paid time off accrued by Employees prior to the Effective Time; provided, however, that Buyer
will not assume any accrued sick leave, vacation or other paid time off to the extent Sellers are
required by Law to pay any Transferred Employee the appropriate accrued amounts of sick leave,
vacation or other paid time off, but will instead reimburse and hold harmless Sellers and their
Affiliates in respect of any such payments. Buyer shall or shall cause its Affiliates to offer
enrollment in, effective as of the Effective Time, all health and welfare and 401(k) plans of the
Buyer and its Affiliates to each Transferred Employee who participates in an equivalent type of
plan of Sellers or their Affiliates immediately prior to the Effective Time, and, so long as such
Transferred Employees remain employed by Buyer shall continue such enrollment for no less than 12
months following the Effective Time (so long as the applicable employee remains eligible under the
terms of the program, except that solely for purposes of Buyer’s health care plans such eligibility
will be determined without regard to minimum number of hour requirements during the first 90 days
following the Closing Date). Buyer shall (i) cause to be waived all limitations as to preexisting
condition limitations, exclusions and waiting periods with respect to participation and coverage
requirements applicable to the Transferred Employees under any plan of Buyer or its Affiliates that
is a healthcare plan, to the extent such limitation or exclusion was waived or such waiting period
was satisfied as of the Effective Time under any healthcare plan maintained for such employees
immediately prior to the Effective Time and (ii) cause applicable healthcare plans of Buyer or its
Affiliates to provide each Transferred Employee with credit for any co-payments, deductibles and
any other out-of-pocket expenses paid during the plan year or other appropriate period commencing
immediately prior to the Effective Time in satisfying any applicable deductible or out-of-pocket
requirements under any healthcare plan(s) of Buyer or its Affiliates for such plan year (so long as
Buyer is provided the applicable information). If within 12 months following the Closing Date
Buyer terminates the employment of any Transferred Employee without cause, Buyer shall provide the
Transferred Employee severance benefits in an amount no less than the severance benefits the
Transferred Employee would have been entitled to under Albertson’s applicable severance plans (but
excluding any individual employment or change in control agreements).
Section 9.05. Labor Agreements. (a) Buyer shall (i) assume the Assumed Labor Agreements, (ii)
recognize and comply with any legal duty to bargain or negotiate with any labor organization
lawfully entitled to represent any Transferred Employees, (iii) fully comply with Sections 9.02 and
9.04 of this Agreement with respect to such Transferred Employees and credit such Transferred
Employees with full seniority gained while employed by Sellers and their Affiliates, and (iv)
indemnify the Seller Indemnitees against and hold each of them harmless from any and all damages,
losses, liabilities and expenses (including reasonable attorneys’ fees and expenses, indirect,
consequential, incidental, exemplary or special damages, punitive damages, lost profits, lost
revenues and diminution in value or benefits) arising out of or in any
39
way connected with Buyer’s failure to assume and comply with the terms of the Labor Agreements
(or Seller’s failure to require Buyer to assume the Labor Agreements) or recognize and comply with
any legal duty to bargain or negotiate with any labor organizations lawfully entitled to represent
any Transferred Employees, including any such damages arising from any claims, including but not
limited to grievances, unfair labor practice charges, lawsuits, injunction actions or contractual,
administrative or legal actions of any kind, alleging a breach of a Labor Agreement or the
violation of any labor law, or any action by a labor organization at any location as a result
thereof. Buyer may seek before Closing to modify the terms of the Labor Agreements; provided,
however, that such modification shall not be a condition to Closing under this Agreement.
(b) It is expressly agreed and understood that neither Buyer nor any Seller has any
right, power or authority to control, direct or regulate the labor relations and human
resources policies and procedures of the other, that neither is deemed to constitute the
agent or representative of the other, and that neither is liable in any manner whatsoever
for the acts or omissions of the other, its agents, representatives or employees.
(c) At all times prior to the Effective Time, the Sellers shall have sole and exclusive
responsibility for the operation and management of the Facilities and the Purchased Assets
related thereto, for the employment and control of the Employees, for compliance with all
Laws governing the employment relationship, and for compliance with the terms of any Labor
Agreement, employment contract or employee benefit plan covering the Employees or any of
Sellers’ former employees. At all times subsequent to the Effective Time, Buyer shall have
sole and exclusive responsibility for the operation and management of the Facilities and the
Purchased Assets related thereto, for the employment and control of its employees, for
compliance with all Laws governing the employment relationship, and for compliance with the
terms of any collecting bargaining agreement, employment contract or employee benefit plan
covering its employees.
(d) With respect to any Multiemployer Plan for which contributions were required to be
made pursuant to a Labor Agreement (the “Surviving Plans”), Buyer and Sellers shall take all
steps necessary under Section 4204 of ERISA so that the transaction contemplated by this
Agreement will not constitute a partial or complete withdrawal under Section 4201 of ERISA.
The parties hereto acknowledge and agree that the sale of assets under this Agreement
constitutes a bona fide, arm’s length sale of assets between unrelated parties, and the
parties intend that this Agreement be covered by and satisfy all of the requirements of
Section 4204 of ERISA. With respect to the Surviving Plans, Buyer and Sellers agree to the
following:
(i) Contributions. Buyer agrees to contribute to the Surviving Plans, with
respect to the covered operations, for substantially the same number of contribution
base units for which Seller had an obligation to contribute to the Surviving Plans.
(ii) Security. Buyer agrees that, if it does not qualify for an exemption
pursuant to PBGC Regulation Section 4204.11(a), it will provide a bond or place an
amount in escrow in accordance with Section 4204(a)(1)(B) of ERISA.
40
(iii) Seller’s Secondary Liability. In the event Buyer withdraws from the
Surviving Plans in a complete withdrawal, or a partial withdrawal with respect to
the covered operations, during the five plan years commencing with the first plan
year beginning after the Closing Date, Seller shall be secondarily liable, but only
to the extent required by Section 4204 of ERISA with respect to the covered
operations if Buyer’s primary liability to the Surviving Plans is not paid. If
Buyer withdraws from the Surviving Plans before the last day of the fifth plan year
beginning after the Closing Date, and fails to make any withdrawal liability payment
when due, then Seller shall pay to the Surviving Plans an amount determined in
accordance with the requirements of Section 4204 of ERISA and the law, reduced, as
permitted under the law, by the amounts paid by the Buyer.
(iv) Reduction of Liability. The liability of a party furnishing a bond or
escrow shall be reduced, upon payment of any bond or escrow to the Surviving Plans,
by the amount thereof in accordance with Section 4204(a)(4) of ERISA.
(v) Buyer’s Indemnification. Buyer agrees that, to the extent Buyer is
required to contribute to the Surviving Plans pursuant to this Agreement and, with
respect to the Surviving Plans, for the five plan years beginning after the Closing
Date, Buyer will make such contributions on a timely basis. Buyer further agrees
that it shall be liable to Seller and shall defend, indemnify, and hold Seller and
its shareholders, officers, directors, employees and agents harmless from any
withdrawal liability, claims, costs, damages, expenses, taxes, penalties or fines
arising solely out of any failure by the Buyer to satisfy the requirements of this
Section and with respect to any actions Buyer may take after the Closing Date which
results in any Withdrawal Liability under any Multiemployer Plan for which Buyer has
a contribution obligation. Seller agrees to provide Buyer with reasonable advance
notice of any action or event which could result in the imposition of withdrawal
liability by the Surviving Plans against Seller and for which Seller asserts Buyer
may be liable. In any event Seller shall immediately furnish Buyer with a copy of
any notice of withdrawal liability it may receive with respect to the Surviving
Plans, together with all the pertinent details. If any such withdrawal liability
shall be assessed against Seller, Seller further agrees to provide Buyer with
reasonable advance notice of any intention on the part of Seller not to make full
payment of any withdrawal liability when the same shall become due. For purposes of
this Section 9.05(d)(v), the term Seller shall include Seller Indemnitees.
Section 9.06. Employee Compensation. No later than 15 days after the date hereof, Albertson’s
shall provide Buyer with, or cause to be provided to Buyer, a true and complete list, organized by
Facility, of the name, title, position pay rate, position effective date, full-time/part-time
status, continuous service date, all paid time off eligibility and balances, status under the Fair
Labor Standards Act, benefit eligibility and enrollment status (including defined contribution plan
information) of each Employee as of the date hereof. Such list shall be updated as necessary to
reflect new hires or other personnel changes occurring between the date delivered to Buyer and the
Effective Time.
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Section 9.07. Employee Indemnity. In addition to and not in limitation of any of the
foregoing provision of this Article 9, from and after the Effective Time, Buyer shall indemnify the
Seller Indemnitees against and hold each of them harmless from any and all damages, losses,
liabilities and expenses (including reasonable attorneys’ fees and expenses), incurred or suffered
by the Sellers or any of their Affiliates arising from the failure to hire or the employment or
termination of any Employee or Transferred Employee by Buyer or any of its Affiliates (or as a
result of non-acceptance of an offer, to the extent any such non-acceptance results in severance
payments under the applicable Sellers’ severance plan) on or after the Effective Time pursuant to
the applicable Albertson’s xxxxxxxxx plans (but excluding any individual employment or change in
control agreements) or pursuant to the Worker Adjustment and Retraining Notification Act or any
similar state Laws.
Section 9.08. No Third Party Beneficiaries. No provision of this Article 9 shall create any
third party beneficiary or other rights in any employee or former employee (including any
beneficiary or dependent thereof) of the Sellers, New Diamond or of any of their respective
Subsidiaries in respect of continued employment (or resumed employment) with either Buyer or any of
its Affiliates or the Standalone Drug Business and no provision of this Article 9 shall create any
such rights in any such Persons in respect of any benefits that may be provided, directly or
indirectly, under any Employee Plan or any plan or arrangement which may be established by Buyer or
any of its Affiliates. No provision of this Agreement shall constitute a limitation on rights to
amend, modify or terminate after the Effective Time any such plans or arrangements of Buyer or any
of its Affiliates.
ARTICLE 10
Conditions to Closing
Conditions to Closing
Section 10.01. Conditions to Each Party’s Obligations. The obligations of each party hereto
to consummate the transactions contemplated hereby are subject to the satisfaction or waiver of the
following conditions:
(a) Any applicable waiting period under the HSR Act relating to the transactions
contemplated hereby shall have expired or been terminated.
(b) No provision of any applicable Law or regulation and no judgment, injunction, order
or decree shall prohibit the consummation of the transactions contemplated hereby.
(c) (i) The satisfaction or waiver at or prior to the Closing of the conditions to the
Merger (as defined in that certain Agreement and Plan of Merger, dated as of the date hereof
(the “Merger Agreement”), by and among Albertson’s, New Aloha Corporation, SUPERVALU, New
Diamond Sub, Inc. and Emerald Acquisition Sub, Inc.), shall have occurred as set forth in
Article VII of the Merger Agreement (other than the condition that the Standalone Drug Sale
and Retained Business Purchase (each as defined in the Merger Agreement) shall have
occurred); and (ii) the satisfaction or waiver at or prior to the Closing of the conditions
to closing to the Retained Business Purchase shall have occurred.
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Section 10.02. Conditions to Obligation of Buyer. The obligation of Buyer to consummate the
transactions contemplated hereby are subject to the satisfaction or waiver of the following further
conditions:
(a) (i) The Sellers shall have performed in all material respects all of their
obligations hereunder required to be performed by them on or prior to the Closing Date, (ii)
the representations and warranties of Albertsons’ or SUPERVALU contained in this Agreement
(disregarding any Material Adverse Effect, materiality or similar qualifiers therein) shall
be true and correct as of the date hereof and Closing Date as though made on and as of such
date (unless any such representation or warranty is made only as of a specific date, in
which event such representation and warranty shall be true and correct as of such specified
date), except where any failure of such representations or warranties to be so true and
correct, individually or in the aggregate, has not had and would not reasonably be expected
to have a Material Adverse Effect, and (iii) Buyer shall have received a certificate signed
by an officer of Albertson’s or SUPERVALU, as applicable, to the foregoing effect.
(b) The applicable Sellers shall have duly executed and delivered each of the Ancillary
Agreements.
Section 10.03. Conditions to Obligation of the Sellers. The obligation of the Sellers to
consummate the transactions contemplated hereby is subject to the satisfaction or waiver of the
following further conditions:
(a) (i) Buyer shall have performed in all material respects all of its obligations
hereunder required to be performed by it at or prior to the Closing Date, (ii) the
representations and warranties of Buyer contained in this Agreement and in any certificate
or other writing delivered by Buyer pursuant hereto shall be true in all material respects
at and as of the Closing Date, as if made at and as of such date (except to the extent that
any representation or warranty speaks as of an earlier date, in which case it must be true
and correct only as of that earlier date) and (iii) the Sellers shall have received a
certificate signed by an officer of each of Parent and Buyer to the foregoing effect.
(b) Buyer shall have duly executed and delivered each of the Ancillary Agreements.
ARTICLE 11
Survival; Indemnification
Survival; Indemnification
Section 11.01. Survival. All representations and warranties in this Agreement of any party or
in any instrument delivered pursuant to this Agreement shall terminate at the Effective Time. The
covenants and agreements of the parties hereto contained in this Agreement or in any certificate or
other writing delivered pursuant hereto or in connection herewith shall survive the Closing Date
indefinitely or for the shorter period explicitly specified therein, except that to the extent any
covenant provides for performance prior to Closing, such covenant to such extent shall not survive
Closing.
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Section 11.02. Indemnification. (a) From and after the Closing Date, SUPERVALU shall
indemnify Buyer and its Affiliates (each, a “Buyer Indemnitee” and collectively, the “Buyer
Indemnitees”) against and agrees to hold each of them harmless from any and all damage, loss,
liability and expense (including reasonable attorneys’ fees and expenses in connection with any
Action whether involving a third-party claim or a claim solely between the parties hereto)
(“Damages”) incurred or suffered by Buyer or any of its Affiliates arising out of:
(i) any breach after the Closing of any covenant or agreement of SUPERVALU or
its Affiliates contained in this Agreement or a breach by SUPERVALU or its
applicable Affiliates of Section 1.07(a)(ii)(E);
(ii) any Excluded Liability;
regardless of whether such Damages arise as a result of the negligence, strict liability or any
other liability under any theory of Law or equity.
(b) From and after the Closing Date, Parent shall indemnify the Sellers, New Diamond
and their respective Affiliates (each, a “Seller Indemnitee” and collectively, the “Seller
Indemnitees”) against and hold each of them harmless from any and all Damages incurred or
suffered by the Sellers, New Diamond or any of their respective Affiliates arising out of:
(i) any breach after the Closing of any covenant or agreement of Buyer or its
Affiliates contained in this Agreement or a breach by Buyer or its applicable
Affiliates of Section 1.07(a)(ii)(F);
(ii) the conduct of the Standalone Drug Business by Buyer after the Closing
Date or the ownership, operation, occupancy or use by Buyer after the Closing Date
of the Facilities or Purchased Assets; or
(iii) any Assumed Liabilities;
regardless of whether such Damages arise as a result of the negligence, strict liability or any
other liability under any theory of Law or equity.
(c) Following the Closing, except as to injunctive relief, the sole and exclusive
remedy for each of the Indemnified Parties with respect to any and all claims relating to a
breach of this Agreement shall be pursuant to the indemnification provisions set forth in
this Article 11. In furtherance of the foregoing, each of the Indemnified Parties hereby
waives, to the fullest extent permitted under applicable Law, any and all rights, claims and
causes of action it may have against the other parties hereto, arising under or based upon
any Federal, state, local or foreign Law, other than the right to seek indemnity pursuant to
this Article 11. Notwithstanding the foregoing, the provisions of this Article 11 shall in
no way limit any other express indemnification rights of any party set forth in this
Agreement.
(d) The amount of any Damages subject to indemnification hereunder shall be calculated
net of any insurance proceeds or other third-party payments received by the
44
Indemnitee on account of such Damages. In the event that the Indemnitor reimburses the
Indemnitee for any Damages prior to the receipt or realization of any proceeds, payments or
benefits referred to in the immediately preceding sentence, the Indemnitee shall remit to
the Indemnitor an amount equal to the amount of such proceeds, payments or benefits, as the
case may be. In the event any payment is made in respect of Damages pursuant to this
Article 11, the Indemnitor who made such payment shall be subrogated to the extent of such
payment to any related rights of recovery of the Indemnitee receiving such payment against
any third party.
(e) Without limitation of their respective rights and obligations as set forth
elsewhere in this Article 11, and subject to the procedures for indemnification claims set
forth in this Article 11, the Indemnitee shall act in good faith, shall use commercially
reasonable efforts to mitigate any Damages.
(f) All indemnity payments, except those in respect of Prorated Charges, shall be
treated as additional adjustments to the amount of the total consideration paid for the
Purchased Assets (or as amounts that are deductible by the payor, if in accordance with
applicable law) for all Tax purposes, except as otherwise required by applicable Tax law or
by a “determination” within the meaning of Section 1313 of the Code.
(g) Notwithstanding anything to the contrary contained herein, the indemnification
provided for in this Article 11 shall not cover, and in no event shall any party hereto be
liable for, any indirect, consequential, incidental, exemplary or special damages, punitive
damages, lost profits, lost revenues or diminution in value.
Section 11.03. Procedures.
(a) Third Party Claims.
(i) If any Indemnitee shall desire to assert any claim for indemnification
provided under this Article 11 in respect of, arising out of or involving a claim or
demand made by any Person (other than a Buyer Indemnitee or a Seller Indemnitee)
against the Indemnitee (a “Third Party Claim”), such Indemnitee shall notify the
Indemnitor in writing, and in reasonable detail (taking into account the information
then available to such Indemnitee), of the Third Party Claim; provided, however,
that the failure of an Indemnitee to notify the Indemnitor shall relieve the
Indemnitor from its obligation to indemnify only to the extent that the Indemnitor
is actually prejudiced as a result of such failure. The Indemnitee shall deliver to
the Indemnitor, 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; provided, however, that the failure to deliver such copies
shall relieve the Indemnitor from its obligation to indemnify only to the extent
that the Indemnitor is actually prejudiced as a result of such failure.
(ii) Upon receipt of notification of a Third Party Claim, the Indemnitor shall
be entitled to participate in the defense of the Third Party Claim and, if it so
45
chooses, to assume the defense thereof with counsel selected by the Indemnitor
and reasonably satisfactory to the Indemnitee. Should the Indemnitor so elect to
assume the defense of a Third Party Claim, the Indemnitor shall not be liable to the
Indemnitee for legal expenses subsequently incurred by the Indemnitee in connection
with the defense thereof, unless the Third Party Claim involves potential conflicts
of interest or substantially different defenses for the Indemnitee and the
Indemnitor. If the Indemnitor assumes such defense, the Indemnitee shall have the
right to participate in defense thereof and to employ counsel, at its own expense
(except as provided in the immediately preceding sentence), separate from the
counsel employed by the Indemnitor, it being understood that the Indemnitor shall
control such defense. The Indemnitor shall be liable for the fees and expenses of
counsel employed by the Indemnitee for any period during which the Indemnitor has
not assumed the defense thereof and as otherwise contemplated by the two immediately
preceding sentences. If the Indemnitor chooses to defend any Third Party Claim, all
the parties hereto shall cooperate in the defense or prosecution thereof. Such
cooperation shall include the retention and (upon the Indemnitor’s request) the
provision to the Indemnitor of records and information that are reasonably relevant
to such Third Party Claim, and the use of commercially reasonable efforts to make
employees available on a mutually convenient basis to provide additional information
and explanation of any material provided thereunder.
(iii) Whether or not the Indemnitor 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 Indemnitor’s
prior written consent, which shall not be unreasonably withheld or delayed. The
Indemnitor may settle, compromise or discharge such Third Party Claim with the
written consent of the Indemnitee, which shall not be unreasonably withheld or
delayed, or without such consent if such settlement, compromise or discharge (A)
includes an unconditional release of the Indemnitee from all liability in respect of
such Third Party Claim, (B) does not subject the Indemnitee to any injunctive relief
or other equitable remedy, and (C) does not include a statement or admission of
fault or culpability on the part of any Indemnitee.
(iv) Notwithstanding the foregoing, (A) if a Third Party Claim relates to
Apportioned Obligations, Buyer shall be entitled to control the defense of such
Third Party Claim and (B) if a Third Party Claim relates to Transfer Taxes, New
Diamond and SUPERVALU shall be entitled to control the defense of such Third Party
Claim (any Third Party Claim referred to above in this clause (iv), a “Tax Claim”).
In the case of any Tax Claim, the party not entitled to control such Tax Claim (the
“Non-Controlling Party”) shall be entitled to participate fully (at the
Non-Controlling Party’s sole expense) in the conduct of such Tax Claim and the party
controlling the defense of such Tax Claim shall not settle such Tax Claim without
the consent of the Non-Controlling Party (which consent shall not be unreasonably
withheld). The costs and expenses of conducting the defense of such Tax Claim shall
be reasonably apportioned in the same manner as the Apportioned Obligations or the
Transfer Taxes or other Taxes, as the case may
46
be, to which the Tax Claim relates. Notwithstanding any other provision, New
Diamond and SUPERVALU shall be entitled to control in all respects any proceedings
relating to Taxes based on or related to income (“Income Taxes”) of Sellers, New
Diamond, SUPERVALU, Albertsons or any of their Affiliates and, except as provided
above in this Section 11.03(a)(iv), all other proceedings relating to Taxes of
Sellers, New Diamond, SUPERVALU, Albertsons or any of their Affiliates, and Buyer
shall be entitled to control in all respects any proceedings relating to Income
Taxes of Buyer or any of its Affiliates and, except as provided above in this
Section 11.03(a)(iv), all other proceedings relating to Taxes of Buyer or any of its
Affiliates.
(b) Direct Claims. If any Indemnitee shall desire to assert any claim for
indemnification provided for under this Article 11 other than a claim in respect of, arising
out of or involving a Third Party Claim, such Indemnitee shall notify the Indemnitor in
writing, and in reasonable detail (taking into account the information then available to
such Indemnitee), of such claim promptly after becoming aware of the existence of such
claim; provided, however, that the failure of an Indemnitee to notify the Indemnitor shall
relieve the Indemnitor from its obligation to indemnify only to the extent that the
Indemnitor is actually prejudiced as a result of such failure.
ARTICLE 12
Termination
Termination
Section 12.01. Grounds for Termination. This Agreement may be terminated at any time prior to
the Closing Date:
(a) by mutual written agreement of Albertson’s and Buyer;
(b) by either Albertson’s or Buyer if the Closing shall not have been consummated on or
before September 22, 2006 (the “Termination Date”); provided that the right to terminate
this Agreement pursuant to this Section 12.01(b) shall not be available to the party seeking
to terminate if any action of such party or the failure of such party to perform any of its
obligations under this Agreement required to be performed at or prior to the Closing has
been the cause of, or resulted in, the failure of the Closing to occur on or before the
Termination Date and such action or failure to perform constitutes a breach of this
Agreement; provided, further, that the right to terminate this Agreement pursuant to this
Section 12.01(b) shall not be available to Albertson’s if neither Albertson’s nor SUPERVALU
shall have exercised its termination right under Section 8.1(c) of the Merger Agreement;
(c) by either Albertson’s or Buyer if there shall be any Law, regulation or
nonappealable final order, decree or judgment of any court or governmental body having
competent jurisdiction that would make the consummation of the transactions contemplated
hereby illegal or otherwise prohibited;
(d) by Albertson’s if there shall have been a material breach of any representation,
warranty, covenant or agreement on the part of Buyer contained in this
47
Agreement such that the condition set forth in Section 10.03(a) would not be satisfied
and which shall not have been cured prior to the earlier of (i) 20 Business Days following
notice of such breach and (ii) the Termination Date;
(e) by Buyer if there shall have been a material breach of any representation,
warranty, covenant or agreement on the part of any Seller contained in this Agreement such
that the condition set forth in Section 10.02(a) would not be satisfied and which shall not
have been cured prior to the earlier of (i) 20 Business Days following notice of such breach
and (ii) the Termination Date; or
(f) by Albertson’s or Buyer if the Merger Agreement is terminated.
The party desiring to terminate this Agreement pursuant to clauses 12.01(b), (c), (d), (e) or
(f) shall give notice of such termination to the other party.
Section 12.02. Effect of Termination. If this Agreement is terminated as permitted by Section
12.01, such termination shall be without liability of either party (or any stockholder, director,
officer, employee, agent, consultant or representative of such party) to the other party to this
Agreement; provided that nothing herein shall relieve any party from liability for any willful and
material breach hereof. The provisions of Section 6.01, 7.13, 12.01, 13.02, 13.03, 13.04, 13.05,
13.06, 13.07 and 13.08 shall survive any termination hereof pursuant to Section 11.01.
ARTICLE 13
Miscellaneous
Miscellaneous
Section 13.01. Definitions. (a) The following terms, as used herein, have the following
meanings:
“Action” means any claim, action, suit, proceeding or investigation by or before any
Governmental Authority.
“Affiliate” means, with respect to any Person, any other Person directly or indirectly
controlling, controlled by, or under common control with such other Person.
“Ancillary Agreements” means the Assignment and Assumption Agreements to be dated as of the
Closing Date.
“Applicable Rate” means a rate per annum equal to the “prime rate” as set forth on the Closing
Date in The Wall Street Journal “Money Rates” column.
“Business Day” means a day, other than Saturday, Sunday or other day on which commercial
banks in New York, New York are authorized or required by Law to close.
“Code” means the Internal Revenue Code of 1986, as amended.
“Confidentiality Agreement” means the Confidentiality Agreement, dated September 27, 2005,
between Albertson’s and Parent, as amended by Section 7.13 hereof.
48
“Construction Contracts” means all construction contracts, architectural contracts,
engineering contracts, and fixture purchase orders primarily related to the Standalone Drug
Business (a Schedule of all material contracts of such types will be provided to Buyer within 45
days after the date hereof) and any contracts and purchase orders approved under Section 5.01.
“Distribution Center” means the distribution center owned by Sellers and located at 000 Xxxxx
Xxxxxx Xxxxxxxxx, Xx Xxxxx, XX 00000, including building No. 1111 and all real estate and
improvements associated therewith.
“Effective Time” means 12:01 a.m., local time on the Closing Date.
“Environmental Laws” means any federal, state, local or foreign Law (including common law),
treaty, judicial decision, regulation, rule, judgment, order, decree, injunction, permit or
governmental restriction or any agreement with any Governmental Authority or other third party,
whether now or hereafter in effect, relating to the environment, human health and safety or to
pollutants, contaminants, wastes or chemicals or any toxic, radioactive, ignitable, corrosive,
reactive or otherwise hazardous substances, wastes or materials.
“Environmental Liabilities” means any and all liabilities arising in connection with or in any
way relating to the Facilities, the Purchased Assets or any activities or operations occurring or
conducted at the Real Properties (including offsite disposal), whether accrued, contingent,
absolute, determined, determinable or otherwise, which arise under or relate to any applicable
Environmental Law, including any matter disclosed or required to be disclosed in Section 2.12 of
the Disclosure Letter and any and all litigation arising out of or in any way related to any such
matter.
“Environmental Permits” means all permits, licenses, franchises, certificates, approvals and
other similar authorizations of Governmental Authorities relating to or required by applicable
Environmental Laws and affecting, or relating in any way to, the operation of the Facilities or the
Purchased Assets.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
“ERISA Affiliate” of any entity means any other entity which, together with such entity, would
be treated as a single employer under Section 414 of the Code.
“Exchange Act” means the Securities Exchange Act of 1934 and the rules and regulations
promulgated thereunder.
“GAAP” means United States generally accepted accounting principles.
“Governmental Authority” means any federal, state, local or foreign government (including any
political or other subdivision or judicial, legislative, executive or administrative branch,
agency, commission, authority or other body of any of the foregoing).
“Governmental Order” means any order, writ, judgment, injunction, decree or award entered by
or with any Governmental Authority.
49
“Ground Lease” means any lease or sublease of, or any other interest in, real property
occupied by a Ground Lease Store.
“HSR Act” means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended.
“Indemnitee” means a Seller Indemnitee or a Buyer Indemnitee, as the case may be.
“Indemnitor” means any Person required to provide indemnification under Article 11 of this
Agreement.
“IT Systems” means all electronic data processing, information, recordkeeping, communications,
telecommunications, account management, inventory management and other computer systems (including
all computer programs, software, databases, firmware, hardware and related documentation) and
Internet websites.
“Knowledge” means the actual knowledge, with respect to any Seller, of any person listed in
Section 13.01 of the Disclosure Letter, and with respect to Buyer, of any officer of Buyer or
Parent.
“Labor Agreements” mean any and all union contracts, collective bargaining agreements and
other labor agreements relating to persons employed at, or in connection with, the Facilities to
the extent they relate to the Facilities or the operation of the Standalone Drug Business.
“Law” means any statute, law, ordinance, regulation, rule, code or other requirement of law of
a Governmental Authority or any Governmental Order.
“Lease” means a Store Lease or a Ground Lease.
“Lien” means any security interest, pledge, mortgage, lien, charge, hypothecation, option to
purchase or lease or otherwise acquire any interest, conditional sales agreement, adverse claim of
ownership or use, title defect, easement, right of way, or other encumbrance of any kind, other
than any obligation to accept returns of inventory in the ordinary course of business and other
than those arising by reason of restrictions on transfers under federal, state and foreign
securities Laws.
“Material Adverse Effect” means any effect that (a) is materially adverse to the business,
financial condition or results of operations of the Standalone Drug Business, other than any effect
to the extent resulting proximately from (i) general economic conditions or developments or changes
therein, (ii) conditions in the industries in which the Standalone Drug Business operates or
developments or changes therein, except to the extent that such conditions, developments or changes
impact the Standalone Drug Business in a materially disproportionately adverse manner relative to
similarly situated competitors of the Standalone Drug Business, (iii) conditions in the stock
markets or other capital markets or developments or changes therein, (iv) the announcement of this
Agreement or the transactions contemplated hereby, (v) the performance by the Sellers of their
obligations pursuant to this Agreement (except the obligations of the Sellers to obtain the
consents contemplated by Section 2.04), (vi) the
50
announcement, consummation, termination or abandonment of the Merger Agreement, (vii) any
actions taken or omitted to be taken by or at the request or with the written consent of Parent or
Buyer, (viii) any changes in any Laws or any accounting regulations or principles, or (b) would
prevent or materially delay the consummation of the transactions contemplated by this Agreement. A
failure by Albertson’s to meet any projections, estimates or budgets for any period prior to, on or
after the date of this Agreement shall not in itself constitute a Material Adverse Effect.
“Multiemployer Plan” means any “multiemployer plan,” as defined in Section 3(37) of ERISA.
“Permitted Liens” means (i) Liens that relate to taxes, assessments and governmental charges
or levies imposed upon the Purchased Assets that are not yet due and payable or that are being
contested in good faith by appropriate proceedings, (ii) Liens imposed by Law that relate to
obligations that are not yet due and have arisen in the ordinary course of business and consistent
with past practice, (iii) pledges or deposits to secure obligations under workers’ compensation
laws or similar legislation or to secure public or statutory obligations, (iv) mechanics’,
carriers’, workers’, repairers’ and similar Liens imposed upon the Purchased Assets arising or
incurred in the ordinary course of business and consistent with past practice, (v) other Liens on
assets which, in the case of each of clause (iv) and (v) above are, either individually or in the
aggregate, not material in amount and would not reasonably be expected to materially impair the
continued use, utility or value of the property to which they relate in the conduct of the business
currently conducted thereon.
“Person” means an individual, corporation, partnership, limited liability company,
association, trust or other entity or organization, including a Governmental Authority.
“Pre-Closing Tax Period” means a taxable period or portion thereof that ends on or prior to
the Effective Time; if a taxable period begins on or prior to the Effective Time and ends after the
Effective Time, then the portion of the taxable period that ends on and includes the Effective Time
shall constitute a Pre-Closing Tax Period.
“Post-Closing Tax Period” means any taxable period that begins after the Effective Time; if a
taxable period begins on or prior to the Effective Time and ends after the Effective Time, then the
portion of the taxable period that begins immediately after the Effective Time shall constitute a
Post-Closing Tax Period.
“Real Property Documents” means easements, reciprocal easements, assignments, leases,
subleases, termination agreements, subordination agreements, nondisturbance agreements, estoppel
certificates, declarations of covenants, conditions and restrictions, municipal development
agreements, agreements with local planning or zoning authorities, and amendments or supplements to
any of the foregoing, and recorded memoranda of any of the foregoing, all with respect to the
Facilities.
“Sellers” has the meaning set forth in the Recitals; provided, however, that following the
Closing (i) any right of Sellers hereunder shall be deemed to be the right of New Diamond and (ii)
any obligation of Sellers hereunder shall be deemed to be the obligation of New Diamond or
51
the Sellers, as applicable, to the extent that such obligation is within the control of New
Diamond or the Sellers, respectively.
“Separation Agreement” means that certain Purchase and Separation Agreement, dated as of the
date hereof, by and between Albertson’s, New Aloha Corporation, SUPERVALU INC. and AB Acquisition
LLC.
“Store Lease” means any lease or sublease of, or any other interest in, real property occupied
by a Leased Store.
“Straddle Tax Period” means any taxable period that begins before the Effective Time and ends
after the Effective Time.
“Subsidiaries” of a Person means any and all corporations, partnerships, limited liability
companies, trusts and other entities, whether incorporated or unincorporated, with respect to which
such Person, directly or indirectly, legally or beneficially, owns (i) a right to a majority of the
profits of such entity or (ii) securities having the power to elect a majority of the board of
directors or similar body governing the affairs of such entity.
“Xxxx-Xxxxxxx Plan Documents” means each Employee Plan which is identified on Section 9.01(a)
of the Disclosure Letter as being formed under the Xxxx-Xxxxxxx Labor Act of 1947, and all
amendments and other documents related thereto.
“Tax” means all taxes, fees, levies or other assessments, imposed by any Governmental
Authority responsible for the administration or imposition of any Tax (a “Taxing Authority”),
including income, gross receipts, excise, real and personal property, municipal, capital, sales,
use, transfer, license, payroll and franchise taxes and including Taxes imposed on a consolidated,
combined, unitary or affiliated group, and such term shall include any interest, penalties, or
additions to tax attributable to such taxes, fees, levies or other assessments.
“Tax Returns” means any return, report or other information required to be supplied to any
Taxing Authority in connection with Taxes.
(b) Each of the following terms is defined in the Section set forth opposite such term:
Term | Section | |||
Accounts Receivable
|
1.02 | |||
Albertson’s
|
Introduction | |||
Apportioned Obligations
|
8.02 | |||
Assigned Contracts
|
1.01 | |||
Assignment and Assumption Agreement
|
1.07 | |||
Assumed Labor Agreements
|
1.01 | |||
Assumed Liabilities
|
1.03 | |||
Buyer
|
Introduction | |||
Buyer Indemnitee
|
11.02 | |||
Capex Budget
|
5.01 |
52
Term | Section | |||
Casualty
|
5.06 | |||
Closing
|
1.07 | |||
Closing Date
|
1.07 | |||
Condemnation
|
5.06 | |||
Damages
|
11.02 | |||
DEA
|
5.07 | |||
Data
|
2.09 | |||
Disclosure Letter
|
Article 2 | |||
Distribution Center
|
Recitals | |||
Distribution Center Transition Services Agreement
|
1.07 | |||
Employee
|
9.02 | |||
Employee Plans
|
9.01 | |||
Excluded Assets
|
1.02 | |||
Excluded Equipment
|
1.02 | |||
Excluded Liabilities
|
1.04 | |||
Facilities
|
Recitals | |||
Ground Lease Stores
|
Recitals | |||
Ground Leased Real Property
|
1.01 | |||
HIPAA Privacy Standards
|
7.08 | |||
HSR Clearance
|
7.02 | |||
Income Taxes
|
11.03 | |||
Independent Accounting Firm
|
1.08 | |||
Inventory
|
1.01 | |||
Landlord Rights
|
1.05 | |||
Lease Assignment and Assumption Agreement
|
1.07 | |||
Leased Real Property
|
1.01 | |||
Leased Stores
|
Recitals | |||
Licenses
|
1.01 | |||
Materials of Environmental Concern
|
2.12 | |||
Merger Agreement
|
10.03 | |||
Non-Controlling Party
|
11.03 | |||
Occupancy Agreement
|
1.05 | |||
Owned Real Property
|
1.01 | |||
Owned Stores
|
Recitals | |||
Parent
|
Introduction | |||
Permits
|
2.17 | |||
Xxxxx Cash
|
1.01 | |||
Photo Equipment
|
7.10 | |||
Prepaid Expenses
|
1.01 | |||
Prescription Files
|
1.01 | |||
Prorated Charges
|
1.08 | |||
Purchase Price
|
1.06 | |||
Purchased Assets
|
1.01 | |||
Real Property
|
1.01 | |||
Retained Combo Drug Stores
|
Recitals |
53
Term | Section | |||
RGIS
|
1.10 | |||
Seller Indemnitee
|
11.02 | |||
Sellers
|
Introduction | |||
Shared Personnel
|
9.02 | |||
Standalone Drug Business
|
Recitals | |||
Standalone Drug Business Transition Services Agreement
|
1.07 | |||
Stores
|
Recitals | |||
SUPERVALU
|
Recitals | |||
Surviving Plans
|
9.05 | |||
Tax Claims
|
11.03 | |||
Termination Date
|
12.01 | |||
Third Party Claim
|
11.03 | |||
Third Party Use and Occupancy Agreement
|
2.07 | |||
Tradenames and Trademarks
|
7.05 | |||
Transfer Taxes
|
8.02 | |||
Transferred Employees
|
9.02 | |||
Transferred Vehicles
|
1.01 | |||
Updated Store List
|
5.09 | |||
Withdrawal Liability
|
9.01 |
Section 13.02. Notices. All notices, requests and other communications to any party hereunder
shall be in writing (including facsimile transmission) and shall be given,
if to Buyer or Parent, to:
CVS Corporation |
Xxx XXX Xxxxx |
Xxxxxxxxxx, XX 00000 |
Attention: Xxxxxxx X. Xxxxxx |
Fax: 000-000-0000 |
with a copy to:
Xxxxx Xxxx & Xxxxxxxx |
000 Xxxxxxxxx Xxxxxx |
Xxx Xxxx, XX 00000 |
Attention: Xxxxx Xxxxxxxx |
Fax: 000-000-0000 |
54
if to the Sellers, to:
Albertson’s |
X.X. Xxx 00 |
000 Xxxxxxxxxx Xxxxxxxxx |
Xxxxx, Xxxxx 00000 (street zip – 83706) |
Attention: Corporate Secretary |
Facsimile No.: (000) 000-0000 |
with a copy to:
Xxxxx Day |
0000 Xxxxx Xxxxxxx Xxxxxx |
Xxxxxx, Xxxxx 00000 |
Attention: Xxxx X. Xxxxxx |
Phone: (000) 000-0000 |
Facsimile: (000) 000-0000 |
if to SUPERVALU, to:
SUPERVALU Inc. |
00000 Xxxxxx Xxxx Xxxx |
Xxxx Xxxxxxx, Xxxxxxxxx 00000 |
Attention: Corporate Secretary |
Facsimile No.: (000) 000-0000 |
or such other address or facsimile number as such party may hereafter specify for the purpose by
notice to the other parties hereto. All such notices, requests and other communications shall be
deemed received on the date of receipt by the recipient thereof if received prior to 5:00 p.m. in
the place of receipt and such day is a Business Day in the place of receipt. Otherwise, any such
notice, request or communication shall be deemed not to have been received until the next
succeeding Business Day in the place of receipt.
Section 13.03. Amendments and Waivers. (a) Any provision of this Agreement (including the
Exhibits and Schedules hereto) may be amended or waived if, but only if, such amendment or waiver
is in writing and is signed, in the case of an amendment, by each party to this Agreement, or in
the case of a waiver, by the party against whom the waiver is to be effective.
(b) No failure or delay by any party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided shall be cumulative and not exclusive of
any rights or remedies provided by Law.
Section 13.04. Expenses. (a) General. Except as otherwise provided herein, all costs and
expenses incurred in connection with this Agreement shall be paid by the party incurring such cost
or expense.
55
(b) Closing Costs. Costs incurred in connection with the Closing will be allocated as
follows:
(i) The Sellers shall pay the Sellers’ attorneys’ fees;
(ii) Buyer shall pay (A) Buyer’s attorneys’ fees and (B) the cost of updating
any existing survey or obtaining any new surveys of the Real Property or the
Facilities.
Section 13.05. Successors and Assigns. The provisions of this Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors and assigns;
provided that no party may assign, delegate or otherwise transfer any of its rights or obligations
under this Agreement without the consent of each other party hereto; except that Buyer may transfer
or assign, in whole or from time to time in part, to one or more of its Affiliates the right to
purchase all or a portion of the Purchased Assets, but no such transfer or assignment will relieve
Buyer or Parent of its obligations hereunder.
Section 13.06. Governing Law. This Agreement shall be governed by and construed in accordance
with the law of the State of Delaware, without regard to the conflicts of law rules of such state.
Section 13.07. Specific Performance; Jurisdiction. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and
to enforce specifically the terms and provisions of this Agreement in the Court of Chancery of the
State of Delaware, this being in addition to any other remedy to which such party is entitled at
law or in equity. In addition, each of the parties hereto (i) consents to submit itself to the
personal jurisdiction of the Court of Chancery of the State of Delaware (and, with respect to
claims in which the exclusive subject matter jurisdiction of such claims is federal, the federal
district court for the District of Delaware) in the event any dispute arises out of this Agreement
or any of the transactions contemplated by this Agreement, (ii) agrees that it will not attempt to
deny or defeat such personal jurisdiction by motion or other request for leave from such court,
(iii) agrees that it will not bring any action relating to this Agreement or any of the
transactions contemplated by this Agreement in any court other than the Court of Chancery of the
State of Delaware (or, with respect to claims in which the exclusive subject matter jurisdiction of
such claims is federal, the federal district court for the District of Delaware) and (iv) to the
fullest extent permitted by Law, consents to service being made through the notice procedures set
forth in Section 13.02. Each party hereto hereby agrees that, to the fullest extent permitted by
Law, service of any process, summons, notice or document by U.S. registered mail to the respective
addresses set forth in Section 13.02 shall be effective service of process for any suit or
proceeding in connection with this Agreement or the transactions contemplated hereby.
Section 13.08. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY
AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT
OR THE TRANSACTIONS CONTEMPLATED HEREBY.
56
Section 13.09. Counterparts; Effectiveness; Third Party Beneficiaries. This Agreement may be
signed in any number of counterparts, each of which shall be an original, with the same effect as
if the signatures thereto and hereto were upon the same instrument. The facsimile transmission of
any signed original counterpart of this Agreement shall be deemed to be the delivery of an original
counterpart of this Agreement. This Agreement shall become effective when each party hereto shall
have received a counterpart hereof signed by all of the other parties hereto. Until and unless
each party has received a counterpart hereof signed by the other party hereto, this Agreement shall
have no effect and no party shall have any right or obligation
hereunder (whether by virtue of any other oral or written agreement or other communication).
No provision of this Agreement is intended to confer any rights, benefits, remedies, obligations or
liabilities hereunder upon any Person other than the parties hereto, their respective successors
and assigns and the Indemnitees.
Section 13.10. Other Definitional and Interpretative Provisions. The words “hereof”, “herein”
and “hereunder” and words of like import used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement. The captions herein are included for
convenience of reference only and shall be ignored in the construction or interpretation hereof.
References to Articles, Sections, Exhibits, Annexes and Schedules are to Articles, Sections,
Exhibits, Annexes and Schedules of this Agreement unless otherwise specified. Any singular term in
this Agreement shall be deemed to include the plural, and any plural term the singular. Whenever
the words “include”, “includes” or “including” are used in this Agreement, they shall be deemed to
be followed by the words “without limitation”, whether or not they are in fact followed by those
words or words of like import. “Writing”, “written” and comparable terms refer to printing, typing
and other means of reproducing words (including electronic media) in a visible form.
Section 13.11. Entire Agreement. This Agreement and the Ancillary Agreements constitute the
entire agreement between the parties with respect to the subject matter of this Agreement and
supersede all prior agreements and understandings, both oral and written, between the parties with
respect to the subject matter of this Agreement, including, at the Closing (to the extent set forth
in Section 7.13), the Confidentiality Agreement.
Section 13.12. Severability. Whenever possible, each provision of this Agreement will be
interpreted so as to be effective and valid under applicable law, but if any provision or portion
of any provision of this Agreement is held invalid, illegal or unenforceable in any respect under
any applicable law in any jurisdiction, then such invalidity, illegality or unenforceability will
not affect the validity, legality or enforceability of any other provision or portion of any
provision of this Agreement, and this Agreement will be re-formed, construed and enforced in such
jurisdiction in such manner as will effect as nearly as lawfully possible the purposes and intent
of such invalid, illegal or unenforceable provision.
Section 13.13. Bulk Transfer Laws. The Sellers and Buyer waive the requirements of any Laws
(including Tax Laws, it being understood that Sellers and Buyer shall use their respective
reasonable best efforts to obtain Tax clearance certificates as provided in Section 8.03) with
respect to bulk transfers, and the Sellers agree to pay and discharge when due all claims of
creditors which could be asserted against Buyer by reason of such waiver. The Sellers jointly and
severally shall indemnify, defend and hold harmless Buyer from any and all Damages
57
resulting from
the claims of creditors of the Sellers arising out of or connected with their failure to comply
with the requirements of any Laws relating to bulk transfers or the failure of the Sellers to
discharge such claims.
Section 13.14. Guaranty. Parent hereby guarantees to each of the Sellers and New Diamond the
prompt and full discharge by Buyer of all of Buyer’s payment and performance obligations under this
Agreement in accordance with the terms hereof. SUPERVALU hereby guarantees to Parent the prompt
and full discharge by each Seller controlled by SUPERVALU
and by New Diamond of all their payment and performance obligations under this Agreement in
accordance with the terms hereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
58
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their
respective authorized officers as of the day and year first above written.
CVS PHARMACY, INC. |
||||
By: | /s/ Xxx Xxxx | |||
Name: | Xxx Xxxx | |||
Title: | President & CEO | |||
CVS CORPORATION |
||||
By: | /s/ Xxx Xxxx | |||
Name: | Xxx Xxxx | |||
Title: | President & CEO | |||
ALBERTSON’S, INC. |
||||
By: | /s/ Xxxx X. Xxxx | |||
Name: | Xxxx X. Xxxx | |||
Title: | Executive Vice President and General Counsel | |||
SUPERVALU, INC. |
||||
By: | /s/ Xxxx Noodle | |||
Name: | Xxxx Noodle | |||
Title: | Chairman & CEO | |||
NEW ALOHA CORPORATION |
||||
By: | /s/ Xxxx X. Xxxxx | |||
Name: | Xxxx X. Xxxxx | |||
Title: | President | |||
ABS FINANCE CO., INC. |
|||||
By: | /s/ Xxxx X. Xxxxx | ||||
Name: | Xxxx X. Xxxxx | ||||
Title: | President | ||||
ABS PROCUREMENT CO. |
|||||
By: | /s/ Xxxx X. Xxxxx | ||||
Name: | Xxxx X. Xxxxx | ||||
Title: | Vice President & Assistant Secretary | ||||
ACME MARKETS, INC. |
|||||
By: | /s/ Xxxx X. Xxxxx | ||||
Name: | Xxxx X. Xxxxx | ||||
Title: | Vice President | ||||
ADVANTAGE STORES, INC. |
|||||
By: | /s/ Xxxx X. Xxxxx | ||||
Name: | Xxxx X. Xxxxx | ||||
Title: | President | ||||
ALBERTSONS ASSIST, INC. |
|||||
By: | /s/ Xxxx X. Xxxx | ||||
Name: | Xxxx X. Xxxx | ||||
Title: | Vice President & Treasurer | ||||
ALBERTSONS STORES CHARITABLE FOUNDATION, INC. |
|||||
By: | /s/ Xxxx X. Xxxx | ||||
Name: | Xxxx X. Xxxx | ||||
Title: | Treasurer | ||||
AMERICAN DRUG STORES, INC. |
|||||
By: | /s/ Xxxx X. Xxxxx | ||||
Name: | Xxxx X. Xxxxx | ||||
Title: | Vice President | ||||
AMERICAN FOOD AND DRUG, INC. |
|||||
By: | /s/ Xxxx X. Xxxxx | ||||
Name: | Xxxx X. Xxxxx | ||||
Title: | President | ||||
AMERICAN PARTNERS, L.P. | |||||
By: | AMERICAN DRUG STORES, INC., its Managing General Partner | ||||
By: | /s/ Xxxx X. Xxxxx | ||||
Name: | Xxxx X. Xxxxx | ||||
Title: | Vice President | ||||
AMERICAN PROCUREMENT AND LOGISTICS COMPANY |
|||||
By: | /s/ Xxxx X. Xxxxx | ||||
Name: | Xxxx X. Xxxxx | ||||
Title: | President | ||||
AMERICAN STORES CHARITABLE FOUNDATION |
|||||
By: | /s/ Xxxx X. Xxxxx | ||||
Name: | Xxxx X. Xxxxx | ||||
Title: | President | ||||
AMERICAN STORES COMPANY, LLC | |||||
By: | ALBERTSON’S INC., its sole Member |
||||
By: | /s/ Xxxx X. Xxxx | ||||
Name: | Xxxx X. Xxxx | ||||
Title: | Executive Vice President & General Counsel |
||||
AMERICAN STORES PROPERTIES, INC. |
|||||
By: | /s/ Xxxx X. Xxxxx | ||||
Name: | Xxxx X. Xxxxx | ||||
Title: | President | ||||
AMERICAN STORES REALTY COMPANY, LLC | |||||
By: | AMERICAN STORES COMPANY, LLC, its sole Member | ||||
By: XXXXXXXXX’X INC., its sole Member, |
|||||
By: | /s/ Xxxx X. Xxxx | ||||
Name: | Xxxx X. Xxxx | ||||
Title: | Executive Vice President & Executive Vice President |
||||
APLC PROCUREMENT, INC. |
|||||
By: | /s/ Xxxx X. Xxxxx | ||||
Name: | Xxxx X. Xxxxx | ||||
Title: | President | ||||
ASC MEDIA SERVICES, INC. |
|||||
By: | /s/ Xxxx X. Xxxxx | ||||
Name: | Xxxx X. Xxxxx | ||||
Title: | President | ||||
XXXXX AMERICAN CORPORATION |
|||||
By: | /s/ Xxxx X. Xxxxx | ||||
Name: | Xxxx X. Xxxxx | ||||
Title: | Vice President & Secretary | ||||
HEALTH ‘n’ HOME CORPORATION |
|||||
By: | /s/ Xxxx X. Xxxxx | ||||
Name: | Xxxx X. Xxxxx | ||||
Title: | Vice President | ||||
JETCO PROPERTIES, INC. |
|||||
By: | /s/ Xxxx X. Xxxxx | ||||
Name: | Xxxx X. Xxxxx | ||||
Title: | President | ||||
JEWEL FOOD STORES, INC. |
|||||
By: | /s/ Xxxx X. Xxxxx | ||||
Name: | Xxxx X. Xxxxx | ||||
Title: | Vice President | ||||
JEWEL OSCO SOUTHWEST, INC. |
|||||
By: | /s/ Xxxx X. Xxxxx | ||||
Name: | Xxxx X. Xxxxx | ||||
Title: | President | ||||
KASCO AUTOMOTIVE PRODUCTS |
|||||
By: | /s/ Xxxx X. Xxxxx | ||||
Name: | Xxxx X. Xxxxx | ||||
Title: | President | ||||
LUCKY STORES PROPERTIES, INC. |
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By: | /s/ Xxxx X. Xxxxx | ||||
Name: | Xxxx X. Xxxxx | ||||
Title: | President | ||||
LUCKY STORES, INC. (DE) |
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By: | /s/ Xxxx X. Xxxxx | ||||
Name: | Xxxx X. Xxxxx | ||||
Title: | President | ||||
LUCKY STORES, INC. (FL) |
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By: | /s/ Xxxx X. Xxxxx | ||||
Name: | Xxxx X. Xxxxx | ||||
Title: | President | ||||
MFC-LIVONIA PROPERTIES, INC. |
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By: | /s/ Xxxx X. Xxxxx | ||||
Name: | Xxxx X. Xxxxx | ||||
Title: | President | ||||
OAKBROOK BEVERAGE CENTERS, INC. |
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By: | /s/ Xxxx X. Xxxxx | ||||
Name: | Xxxx X. Xxxxx | ||||
Title: | President | ||||
OSCO DRUG OF MASSACHUSETTS, INC. |
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By: | /s/ Xxxx X. Xxxxx | ||||
Name: | Xxxx X. Xxxxx | ||||
Title: | President | ||||
OSCO DRUG OF TEXAS, INC. |
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By: | /s/ Xxxx X. Xxxxx | ||||
Name: | Xxxx X. Xxxxx | ||||
Title: | President | ||||
SAV-ON REALTY, INC. |
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By: | /s/ Xxxx X. Xxxxx | ||||
Name: | Xxxx X. Xxxxx | ||||
Title: | President | ||||
SCOLARI’S STORES, INC. |
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By: | /s/ Xxxx X. Xxxxx | ||||
Name: | Xxxx X. Xxxxx | ||||
Title: | President | ||||
SUNRICH MERCANTILE CORP. |
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By: | /s/ Xxxx X. Xxxxx | ||||
Name: | Xxxx X. Xxxxx | ||||
Title: | President | ||||
U.S. SATELLITE CORPORATION |
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By: | /s/ Xxxx X. Xxxxx | ||||
Name: | Xxxx X. Xxxxx | ||||
Title: | President | ||||