EXHIBIT 10.70

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ASSET PURCHASE AGREEMENT

between

UNIFIED WESTERN GROCERS, INC.

and

ASSOCIATED GROCERS, INCORPORATED

and

ITS SUBSIDIARIES

Dated as of August 2, 2007

 

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          Page

ARTICLE 1

   DEFINITIONS AND INTERPRETATION   

Section 1.01

   Definitions   

Section 1.02

   Interpretation   

ARTICLE 2

   THE CONTRIBUTION   

Section 2.01

   The Contribution   

Section 2.02

   Contribution Closing   

Section 2.03

   Events of Contribution Closing   

ARTICLE 3

   PURCHASE AND SALE OF ASSETS   

Section 3.01

   Purchase and Sale   

Section 3.02

   Excluded Assets   

Section 3.03

   Assumption of liabilities   

Section 3.04

   Retained Liabilities   

Section 3.05

   Purchase Price; Adjustment   

Section 3.06

   Allocation of Purchase Price   

Section 3.07

   Further Assurances   

Section 3.08

   Washington State Taxes   

Section 3.09

   Closing   

Section 3.10

   Events of Closing   

ARTICLE 4

   REPRESENTATIONS AND WARRANTIES OF THE AG COMPANIES   

Section 4.01

   Organization   

Section 4.02

   Authority and Enforceability   

Section 4.03

   No Violation; Consents   

Section 4.04

   Financial Statements   

Section 4.05

   No Material Adverse Effect   

Section 4.06

   No Changes   

Section 4.07

   Conduct of the Company Business   

Section 4.08

   Real Property   

 

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Section 4.09

   Tangible Property   

Section 4.10

   Intellectual Property Rights   

Section 4.11

   Material Contracts   

Section 4.12

   Compliance with Law   

Section 4.13

   Material Permits   

Section 4.14

   Insurance   

Section 4.15

   Litigation   

Section 4.16

   Taxes   

Section 4.17

   Employee Benefits   

Section 4.18

   Employment Matters   

Section 4.19

   Labor Relations   

Section 4.20

   Environmental Matters   

Section 4.21

   Customers   

Section 4.22

   Suppliers   

Section 4.23

   Brokers and Finders Fees   

Section 4.24

   Inventory   

Section 4.25

   Acquired Receivable   

Section 4.26

   Product Warranties; Products Liability   

Section 4.27

   Solvency   

Section 4.28

   WARN Act   

Section 4.29

   No Other Representations   

ARTICLE 5

   REPRESENTATIONS AND WARRANTIES OF PURCHASER   

Section 5.01

   Organization   

Section 5.02

   Authority and Enforceability   

Section 5.03

   No Violation   

Section 5.04

   Brokers and Finders Fees   

Section 5.05

   Funding   

Section 5.06

   Litigation   

Section 5.07

   Due Diligence Investigation   

 

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ARTICLE 6

   CONDUCT PRIOR TO THE CLOSING   

Section 6.01

   Affirmative Covenants of the Company   

Section 6.02

   Negative Covenants of the Company   

Section 6.03

   Consents   

Section 6.04

   Company Shareholder Approval   

Section 6.05

   Access to Information   

Section 6.06

   Public Disclosure   

Section 6.07

   HSR Compliance   

Section 6.08

   Non-Solicitation   

Section 6.09

   Proposals   

ARTICLE 7

   ADDITIONAL COVENANTS   

Section 7.01

   Expenses   

Section 7.02

   Tax Matters   

Section 7.03

   Employees   

Section 7.04

   Real Estate Documents   

Section 7.05

   SAS 100 Review   

Section 7.06

   Collection of Accounts Receivable   

Section 7.07

   Membership in Purchaser   

Section 7.08

   Access to Information; Transition Services   

ARTICLE 8

   CONDITIONS TO THE ACQUISITION   

Section 8.01

   Conditions to Each Party’s Obligation to Effect the Acquisition   

Section 8.02

   Additional Conditions to the Obligations of Purchaser   

Section 8.03

   Additional Conditions to the Obligations of the AG Companies   

ARTICLE 9

   TERMINATION, AMENDMENT AND WAIVER   

Section 9.01

   Termination   

Section 9.02

   Effect of Termination   

Section 9.03

   Termination Fee   

Section 9.04

   Amendment   

 

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          Page

Section 9.05

   Extension; Waiver   

ARTICLE 10

   GENERAL PROVISIONS   

Section 10.01

   Survival and Survival Exclusive Remedies   

Section 10.02

   Notices   

Section 10.03

   Disclosure Schedules   

Section 10.04

   Entire Agreement; No Assignment; No Third Party Beneficiaries   

Section 10.05

   Severability   

Section 10.06

   Specific Performance   

Section 10.07

   Waiver of Jury Trial   

Section 10.08

   Governing Law; Venue   

Section 10.09

   No Personal Liability   

Section 10.10

   Counterparts   

Section 10.11

   Attorneys’ Fees   

Exhibit A

   Definitions   

Exhibit B

   Form of Bill of Transfer*   

Exhibit C

   Form of Assignment of LLC Interests*   

Exhibit D

   Form of Bill of Sale*   

Exhibit E

   Form of Assignment and Assumption Agreement*   

Exhibit F

   Form of Norfolk Lease Assignment and Assumption Agreement*   

Exhibit G

   Form of Intercreditor Agreement*   

Exhibit H

   Form of Escrow Agreement*   

Exhibit I

   Form of Estoppel Certificate*   

Exhibit J

   Form of Supply Agreement*   

Exhibit K

   Company Knowledge Group*   

 

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INDEX OF SCHEDULES

to

Asset Purchase Agreement between Unified Western Grocers, Inc.

and Associated Grocers, Incorporated and its Subsidiaries

 

     Page Schedule 2.01(a)—All tangible personal property.*    Schedule
3.01(a)—All real property.*    Schedule 3.01(b)—Leases of real property.*   
Schedule 3.01(c)—All contracts, agreements, indentures, mortgages, instruments,
guarantees, commitments, understandings, purchase orders, sales orders,
documents and instruments.*    Schedule 3.01(d)—All patents, trademarks, trade
names, copyrights and service marks; registrations therefore, applications
pending therefore; other proprietary rights and intangible property of the AG
Companies, including trade secrets, technology, software, internet mail sites,
internet domain names, operating systems, customer lists, customer
relationships, know–how, formulae, slogans, processes and operating rights.*   
Schedule 3.01(e)—All licenses and agreements relating to any items described in
Section 3.01(d) or to other proprietary rights transferred hereby.*    Schedule
3.01(f)—To the extent transferable and permitted by law, all approvals,
authorizations, certificates, consents, licenses, permits, franchises, tariffs,
variances, orders and other registrations of any federal, state or local court
or other governmental department, commission, board, bureau, agency or
instrumentality held by the Company or any of the Subsidiaries and required for
the conduct of the Business.*   

 

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     Page Schedule 3.01(g)—Notes and other receivables.*    Schedule 3.01(k)—All
assignable rights to all telephone lines and numbers used in the conduct of the
Business.*    Schedule 3.02(c)—Items to be included in Excluded Assets.*   
Schedule 3.03(a)—Items to be included in Purchaser’s Assumed Liabilities.*   
Schedule 3.03(d)—Assumed Plans.*    Schedule 3.05(b)(1)—Purchased Working
Capital.*    Schedule 3.05(b)(2)—Reserves.*    Schedule 3.06—Method for
Allocation of Purchase Price.*    Company Disclosure Schedule*   

4.04(a)—Financial Statements.*

  

4.05—No Material Adverse Effect.*

  

4.06—No Changes.*

  

 

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     Page

4.07—Conduct of the Business.*

  

4.08(a)(1)—Owned Real Property.*

  

4.08(b)—Leased Real Property.*

  

4.08(c)—Loans and Mortgages.*

  

4.09—Tangible Property. *

  

4.10—Material IP Rights.*

  

4.11—Material Contracts.*

  

4.12—Compliance with Law.*

  

4.13—Material Permits.*

  

4.14—Insurance policies.*

  

4.15—Litigation.*

  

4.16—Taxes.*

  

4.17—Employee Benefits.*

  

 

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     Page

4.18—Employment Matters.*

  

4.19—Labor Relations.*

  

4.20—Environmental Matters.*

  

4.21—Customers.*

  

4.22—Suppliers.*

  

4.23—Brokers and Finders Fees.*

  

4.24—Inventory. *

  

4.25—Acquired Accounts Receivable.*

  

4.26—Product warranties; Product Liability.*

  

4.27—Solvency.*

  

4.28—WARN Act.*

  

6.02—Negative Covenants of the Company.*

  

8.01(e)—Required Consents.*

  

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* Intentionally Omitted. Omitted exhibits and schedules will be furnished to the
SEC or SEC staff upon request.

 

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IS NOTED WITH “[REDACTED]”. AN UNREDACTED VERSION OF THIS DOCUMENT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

ASSET PURCHASE AGREEMENT

 

Dated:    August 2, 2007    Among:    Associated Grocers, Incorporated, a
Washington corporation    “Company”   

Supermarket Development Corporation
Market Finance Company
MFC Capital-I, Ltd.
MFC 2002, LLC
AGIC Insurance Agency, Inc.
Market Industrial Relations Services, Inc.
Market Sales, Inc.
Sea-Pac Freight Lines, Inc.
Supermarket Management Corporation
Red Apple Stores, Inc.
Thriftway Stores, Inc.

AU Dropdown LLC

  

Each a “Subsidiary”

and together with the

Company, the “AG

Companies”

And:    Unified Western Grocers, Inc., a California corporation    “Purchaser”

Recitals

A. The AG Companies (other than the LLC) desire to sell, and Purchaser desires
to purchase and assume, specified assets and specified liabilities of the AG
Companies, including the limited liability company interests of AU Dropdown LLC
(the “LLC”), which is wholly owned by the Company, on the terms and conditions
set forth in this Agreement (the “Acquisition”) and, in furtherance thereof, the
AG Companies and Purchaser have approved the execution, delivery, and
performance of this Agreement and the other agreements contemplated herein.

B. The parties desire to make certain representations, warranties, covenants,
and agreements in connection with the Acquisition and to prescribe various
conditions to the completion thereof, all as further set forth herein.

Agreement

Accordingly, the parties, intending legally to be bound, agree as follows:

 

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Article 1

Definitions And Interpretation

Section 1.01 Definitions. Capitalized terms used herein have the meanings set
forth in this Agreement or Exhibit A hereto.

Section 1.02 Interpretation. The following rules of interpretation apply
throughout this Agreement:

(a) The word “or” is used in the inclusive sense of “and/or”. The word
“including” (and “include” and variations thereof) means including without
limiting the generality of any description preceding such term. The words
“hereof,” “herein,” “hereby,” “hereunder,” and similar terms in this Agreement
refer to this Agreement as a whole and not to any particular provision of this
Agreement.

(b) The headings in this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement. Except as
otherwise indicated, all references in this Agreement to Articles, Sections, and
Exhibits are intended to refer to Articles or Sections of this Agreement and
Exhibits to this Agreement.

(c) The singular number shall include the plural, the plural shall include the
singular, and the use of any gender shall be applicable to both genders.

(d) Unless otherwise specified, all references to monetary amounts are to
currency of the United States of America.

(e) Unless otherwise specified, all terms of an accounting character used but
not defined in this Agreement shall be interpreted in accordance with GAAP,
applied on a basis consistent with the most recent audited consolidated
financial statements of the Company.

(f) When calculating the period of time before which, within which or following
which any act is to be done or step is to be taken under this Agreement, the
reference date in calculating such period shall be excluded. If the last day of
such period is a non-Business Day, the period in question shall end on the next
succeeding Business Day.

(g) The language used in this Agreement shall be deemed to be the language
chosen by the parties hereto to express their mutual agreement; any Law,
regulation, or rule of construction to the effect that ambiguities are to be
resolved against the drafting party shall not be applied in the construction or
interpretation of this Agreement.

 

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Article 2

The Contribution

Section 2.01 The Contribution. Subject to all the terms and conditions of this
Agreement, on the Closing Date and effective immediately prior to the purchase
of assets under Section 3.01, the Company shall contribute or cause to be
contributed to the LLC, as a contribution of capital and for no consideration
other than the limited liability company interests in the LLC (the “LLC
Interests”), and cause the LLC to accept and assume from the Company, all right,
title and interest of the Company (other than the Excluded Assets specified in
Section 3.02(a)-(m)) to the following assets (the “Contributed Assets”):

(a) All items of tangible personal property of the AG Companies, including
furniture, fixtures, equipment, materials, supplies, motor vehicles and spare
and replacement items therefore, including all such items listed on Schedule
2.01(a) and all such items acquired by the AG Companies after the date hereof
and on or before the Closing Date, other than to the extent such items are
disposed of by any of the AG Companies prior to the Closing Date without breach
of this Agreement; and

(b) All inventory (the “Inventory”) wherever located, provided that the term
“Inventory” excludes inventory associated exclusively with the Larry’s Market
store located in Redmond, Washington (the “Retail Store”).

Section 2.02 Contribution Closing. The closing of the Contribution will take
place immediately prior to the Closing.

Section 2.03 Events of Contribution Closing. Immediately prior to the Closing,
(a) the Company shall deliver to the LLC a bill of transfer in substantially the
form attached as Exhibit B, transferring the Contributed Assets to the LLC,
executed by the Company and (b) the LLC shall deliver to the Company a
Washington State Department of Revenue resale certificate.

Article 3

Purchase And Sale Of Assets

Section 3.01 Purchase and Sale. Subject to all the terms and conditions of this
Agreement and for the consideration herein stated, on the Closing Date, the AG
Companies agree to sell, convey, assign, transfer and deliver to Purchaser, and
Purchaser agrees to purchase and accept from the AG Companies, all of the right,
title and interest of the AG Companies in and to all of the assets, properties
and rights of the AG Companies (other than the Contributed Assets and the other
Excluded Assets specified in Section 3.02), tangible and intangible, wherever
located, including all such assets used in the wholesale distribution business
serving independent grocery retailers in Washington, Oregon, Alaska, Hawaii and
Micronesia (the

 

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“Business”) now owned and operated by the Company, which assets (the “Purchased
Assets”) shall include without limitation the following assets (other than the
Excluded Assets):

(a) All real property owned in fee by any of the AG Companies, including land,
improvements and fixtures thereon, easements, rights-of-way and other real
property rights, including all such real property listed on Schedule 3.01(a) and
all such real property acquired by the AG Companies after the date hereof and on
or before the Closing Date, other than to the extent such items are disposed of
by the AG Companies prior to the Closing Date without breach of this Agreement;

(b) The following leases of real property (collectively, the “Leases”): (i) the
Industrial Real Estate Lease dated April 19, 2007 (the “Norfolk Lease”) between
3301 South Norfolk LLC as landlord and the Company as tenant for the lease of
the real property commonly known as 3301 South Norfolk Street, Seattle,
Washington, and (ii) the leases of real property to which any of the AG
Companies is a party, whether the Company or a Subsidiary is lessor or lessee,
listed on Schedule 3.01(b).

(c) All rights, benefits and interests of any of the AG Companies under all
contracts, agreements, indentures, mortgages, instruments, guarantees,
commitments, understandings, purchase orders, sales orders, documents and
instruments (i) listed on Schedule 3.01(c) hereto, (ii) entered into in the
ordinary course of the Business and that are not Material Contracts or
(iii) expressly assumed by Purchaser in writing, other than (in each case) to
the extent such items have terminated, expired or been disposed of by any of the
AG Companies prior to the Closing Date without breach of this Agreement;
provided that, except as otherwise expressly agreed in writing by Purchaser, a
guarantee or other contingent obligation of the Company to support the credit of
a retail customer of the Company will be excluded if the retail customer does
not enter into a Supply Agreement with Purchaser at or before the Closing
(collectively, the “Contracts”);

(d) All patents, trademarks, trade names, copyrights and service marks of any of
the AG Companies, all registrations therefor, all applications pending therefor
and all other proprietary rights and intangible property of the AG Companies,
including trade secrets, technology, software, internet mail sites, internet
domain names, operating systems, customer lists, customer relationships,
know-how, formulae, slogans, processes and operating rights, including all such
items listed on Schedule 3.01(d), goodwill associated therewith, remedies
against infringement thereof and rights to protection of interests therein under
the laws of all jurisdictions and all such items acquired by the AG Companies or
coming into existence after the date hereof and on or before the Closing Date,
other than to the extent such items have terminated, expired or been disposed of
by the AG Companies prior to the Closing Date without breach of this Agreement
(the “Intellectual Property”);

(e) All licenses granted by or to any of the AG Companies and all other
agreements to which any of the AG Companies is a party which relate, in whole or
in part, to any items described in Section 3.01(d) or to other proprietary
rights transferred hereby,

 

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IS NOTED WITH “[REDACTED]”. AN UNREDACTED VERSION OF THIS DOCUMENT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

including all items listed on Schedule 3.01(e) and all such items granted to or
entered into by any of the AG Companies after the date hereof and on or before
the Closing Date, other than to the extent such items have terminated, expired
or been disposed of by any of the AG Companies prior to the Closing Date without
breach of this Agreement (the “Intellectual Property Rights”);

(f) To the extent transferable and permitted by law, all approvals,
authorizations, certificates, consents, licenses, permits, franchises, tariffs,
variances, orders and other registrations of any federal, state or local court
or other governmental department, commission, board, bureau, agency or
instrumentality held by the Company or any of the Subsidiaries and required for
the conduct of the Business, including all such items listed on Schedule 3.01(f)
and all such items granted or received after the date hereof and on or before
the Closing Date, other than to the extent such items have terminated, expired
or been disposed of by the Company or any of the Subsidiaries prior to the
Closing Date without breach of this Agreement (the “Permits”);

(g) The notes and other receivables of any of the AG Companies listed on
Schedule 3.01(g) and the other receivables of the AG Companies that are not
Excluded Accounts Receivable, in each case excluding amounts paid on or before
the Closing Date in the ordinary course according to the terms of the note or
other receivable without acceleration (“Acquired Receivables”);

(h) All claims, refunds, rights of recovery, rights of set-off, rights of
recoupment, choses in action, causes of action, property insurance proceeds,
condemnation awards, proceeds from any contests or contested payments and other
similar rights of any of the AG Companies to the extent related to the Purchased
Assets or the Contributed Assets;

(i) All prepaid and deferred items of the AG Companies (other than deferred tax
assets), including prepaid rent and unbilled charges and deposits relating to
the Business, the Purchased Assets or the Contributed Assets, including all such
items reflected on the Financial Statements;

(j) All operating data and records to the extent related to the Business,
including financial, accounting and credit records, original records relating to
the LLC (including its articles of formation, operating agreement and minutes of
its sole member and manager), correspondence, budgets, engineering and plant
records and other similar documents and records and all creative materials,
advertising and promotional materials, studies, reports and other similar
documents and materials;

(k) All assignable rights, if any, to all telephone lines and numbers used in
the conduct of the Business, including those listed on Schedule 3.01(k);

 

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CONFIDENTIAL TREATMENT REQUESTED:

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FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

(l) All assets, wherever located, used exclusively in the insurance agency
operations of any of the AG Companies (excluding Excluded Accounts Receivable as
defined below);

(m) All cash and cash equivalents of the AG Companies except as provided in
Section 3.02(m);

(n) All rights to recover amounts any of the AG Companies paid or expensed in
calendar years 2006 and 2007 to a vendor that is recoverable following an audit
of such amounts;

(o) All deposits and other collateral (i) of each retail customer of the Company
that enters into a Supply Agreement with Purchaser at or before the Closing or
whose supply agreement is assumed by Purchaser, which deposit or other
collateral secures open account balances with any AG Company and (ii) that
secures a Purchased Asset or an Assumed Liability, provided that such deposits
and other collateral shall be subject to the intercreditor agreement described
in Section 3.10(a)(5) and the applicable assignment and assumption agreement
described in Section 3.10(a)(3); and

(p) The LLC Interests and the limited liability company interests in AG/Fleming
Northwest, LLC.

Section 3.02 Excluded Assets. The Purchased Assets shall not include the
following (the “Excluded Assets”):

(a) The corporate seal, minute books, charter documents and corporate stock
record books of each of the AG Companies (except for the LLC) and copies of all
other records of any kind;

(b) Any contract, agreement, indenture, mortgage, instrument, guaranty,
commitment, understanding, purchase order, sales order, document or instrument
that is not described in Section 3.01(c);

(c) The assets identified on Schedule 3.02(c);

(d) Any deferred tax assets;

(e) All leases or subleases that are not described in Section 3.01(b); all
rights, benefits and interests of any of the AG Companies under or relating to
any of the foregoing; any deposit relating exclusively to any of the foregoing;
any guaranties to secure any of the foregoing; and all records, databases and
software programs relating exclusively to or used exclusively in connection with
any of the foregoing, including the Access and Timberline databases and software
programs;

 

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FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

(f) All accounts receivable or other receivables of any of the AG Companies that
are due within 60 days of the Closing Date (the “Excluded Accounts Receivable”);

(g) All rebates, promotions, warehouse directed funds, discounts, vendor
programs, patronage dividends and similar items which are in existence as of
Closing or are attributable to conduct of the Business before Closing and which
the AG Companies treat as discretionary funds consistent with their historical
practices (the “Discretionary Funds”);

(h) All inventories that do not constitute Inventory;

(i) All assets, wherever located, used primarily in the Retail Store;

(j) All rights and claims associated with all litigation ongoing as of the
Closing, including SuperValu Inc. v. Associated Grocers, Inc. (Civil File
No. 04-2936), in the United States District Court for the District of Minnesota
(the “SUPERVALU Litigation”), and In re Brown and Cole Stores, LLC, Case
No. 06-13950, pending in the United States Bankruptcy Court for the Western
District of Washington (the “Brown and Cole Litigation”);

(k) (A) All claims, refunds, rights of recovery, rights of set-off, rights of
recoupment, choses in action, causes of action, property insurance proceeds,
condemnation awards, proceeds from any contests or contested payments and other
similar rights of any of the AG Companies (except the LLC) to the extent related
to any of the following: (1) an Excluded Asset or Retained Liability, (2) a
Governing Document of an AG Company (except the LLC), (3) all Taxes for which an
AG Company is responsible, and (4) all defenses, counter-claims, subordination
rights, claims, choses in action, causes of action, and other rights of any of
the AG Companies associated with any claim or demand against any of the AG
Companies now existing (other than the LLC); (B) all insurance policies and
rights thereunder; and (C) all refunds, recoveries, awards and proceeds arising
from the litigation involving the Focus on Foods store in Longview, Washington;

(l) All assets, properties and rights that have been sold to [REDACTED] or its
affiliates and all rights, benefits and interests of any of the AG Companies or
their Affiliates with respect to such sale, including with respect to that
certain Real Property Purchase and Sale Agreement dated as of [REDACTED] between
[REDACTED] as buyer and [REDACTED] as seller and that certain Escrow Agreement
among [REDACTED] as buyer, [REDACTED] as seller and [REDACTED] as escrow agent
(other than the deposit paid under the Norfolk Lease, which is a Purchased
Asset);

(m) The amount of cash [REDACTED] received from the sale described in
Section 3.02(l) (which was [REDACTED] plus [REDACTED] in cash;

(n) All of the stock or other ownership interests of whatever type in any of the
AG Companies, except for the LLC Interests;

 

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CONFIDENTIAL TREATMENT REQUESTED:

INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED IS OMITTED AND
IS NOTED WITH “[REDACTED]”. AN UNREDACTED VERSION OF THIS DOCUMENT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

(o) All collateral held by any AG Company that secures an Excluded Asset, all
collateral that secures an obligation by a subtenant under a sublease that is an
Excluded Asset, and all guaranties that secure an Excluded Asset; provided that
the following are Purchased Assets: (i) deposits identified as Purchased Assets
in Schedule 3.05(b)(1), (ii) each security agreement by a retail customer as
debtor or grantor that is listed in Schedule 3.01(c) if the retail customer
signs a Supply Agreement on or before Closing or whose supply agreement is
assumed by Purchaser and (iii) each security agreement by a debtor that is
listed in Schedule 3.01(c) and that secures an Acquired Receivable; further
provided that (A) any assignment of a security agreement described in clause
(ii) or (iii) is only for the purpose of securing obligations of the customer
incurred after Closing and, if the customer is an obligor of an Acquired
Receivable, for the purpose of securing obligations of the customer under such
Acquired Receivable and (B) the following are Excluded Assets: (1) all rights,
title and interest in any stock or securities of the Company and the proceeds
thereof and (2) all of the AG Companies’ respective rights, title, interest,
duties, liabilities and obligations in, to and under the security agreements and
related documents for the purpose of securing Excluded Accounts Receivable; and

(p) The Contributed Assets.

Section 3.03 Assumption of liabilities. Subject to the terms and conditions of
this Agreement, on the Closing Date, Purchaser shall assume and discharge, pay,
and honor when due, and from and after the Closing Date Purchaser shall
indemnify the AG Companies against all Losses with respect to, the following
liabilities and obligations of the AG Companies (the “Assumed Liabilities”):

(a) The liabilities and obligations of the AG Companies described on Schedule
3.03(a) to the extent and in the amounts recorded on the Company’s consolidated
balance sheet (not including any notes thereto) as of the Closing Date (the
“Closing Balance Sheet”);

(b) All liabilities and obligations under all of the Intellectual Property
Rights, Leases and Contracts incurred after the Closing Date;

(c) Any additional liabilities and obligations expressly assumed by Purchaser in
writing, including in Section 7.03(d); and

(d) Subject to Sections 7.03(c) and (d), the liabilities and obligations of the
AG Companies under the Seller Benefit Plans listed on Schedule 3.03(d) (the
“Assumed Plans”).

Section 3.04 Retained Liabilities. Except for the liabilities and obligations to
be assumed by Purchaser pursuant to Section 3.03, Purchaser will not assume and
will not be liable for any liabilities of any of the AG Companies, known or
unknown, contingent or absolute, accrued or other (the “Retained Liabilities”),
which Retained Liabilities include, without

 

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CONFIDENTIAL TREATMENT REQUESTED:

INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED IS OMITTED AND
IS NOTED WITH “[REDACTED]”. AN UNREDACTED VERSION OF THIS DOCUMENT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

limitation, the following (provided, however, that the following items do not
limit the scope or extent of the Assumed Liabilities):

(a) Liabilities, obligations or debts of any of the AG Companies, whether fixed,
contingent or mixed and whether based on events occurring before or after the
Closing, including those based on tort, contract, statutory or other claims or
involving fines or penalties payable to any governmental authority, that are not
recorded, or exceed the amounts recorded, on the Closing Balance Sheet;

(b) Liabilities, obligations or debts, if any, of any of the AG Companies to
General Electric Capital Corporation, including under the Credit Agreement dated
as of October 6, 2005 among Associated Grocers, Incorporated, as Borrower, the
other credit parties signatory thereto, as credit parties, and General Electric
Capital Corporation, as Lender, as amended;

(c) Liabilities or obligations with respect to leases, subleases, guarantees or
other financial commitments of the AG Companies that are not Purchased Assets;

(d) Except as otherwise provided in this Agreement, liabilities, obligations or
debts of any of the AG Companies for any federal, state, local or foreign tax,
including federal income taxes, state income and excise taxes, state and local
real and personal property taxes, customs duties, value added tax, and federal,
state, local and foreign withholding and payroll taxes;

(e) Except for the Assumed Plans and except as provided in Section 7.03(c),
(d) and (e), liabilities or obligations of any of the AG Companies or any of
their ERISA Affiliates with respect to a Seller Benefit Plan or for salaries,
bonuses, health and welfare benefits, workers compensation or for any other
benefits or compensation (including accrued vacation), including those pursuant
to employment agreements and industrial insurance obligations;

(f) Liabilities or obligations of any of the AG Companies or any of their ERISA
Affiliates for employee severance payments or arrangements resulting from
termination of the employees of any of the AG Companies or their ERISA
Affiliates;

(g) Liabilities or obligations of any of the AG Companies relating to issuances
of the stock or other ownership interests of whatever type in any of the AG
Companies;

(h) Liabilities or obligations of any of the AG Companies incurred in connection
with distributions to shareholders or members or in connection with any
corporate or other dissolution;

 

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CONFIDENTIAL TREATMENT REQUESTED:

INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED IS OMITTED AND
IS NOTED WITH “[REDACTED]”. AN UNREDACTED VERSION OF THIS DOCUMENT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

(i) Liabilities or obligations of any of the AG Companies incurred with respect
to any litigation, including the SUPERVALU Litigation and the Brown and Cole
Litigation;

(j) Any obligations or liabilities primarily related to the Retail Store or any
other retail stores of any of the AG Companies; and

(k) Liabilities or obligations of any of the AG Companies for Washington and
Seattle business and occupation tax relating to Western Family Foods, Inc.

Section 3.05 Purchase Price; Adjustment.

(a) Purchase Price; Payment. The purchase price for the Purchased Assets (the
“Purchase Price”) shall be [REDACTED] as adjusted

(1) at the Closing, by (i) the Estimated Closing Purchased Working Capital
Adjustment, (ii) the Estimated Closing Reserves; (iii) Supply Agreement
Adjustment, (iv) the Tax Adjustment; and (iv) the Long Term Asset Adjustment,
and

(2) after the Closing, by the Post-Closing Adjustment.

At the Closing, Purchaser shall pay to the Company, in immediately available
funds, an amount (the “Closing Payment”) equal to (i) [REDACTED] as adjusted by
(A) the Estimated Closing Purchased Working Capital Adjustment, (B) the
Estimated Closing Reserves; (C) the Supply Agreement Adjustment, (D) the Tax
Adjustment and (E) the Long Term Asset Adjustment, less (ii) [REDACTED] (the
“Holdback Amount”), which Purchaser shall retain to secure payment of the
Post-Closing Adjustment, less (iii) the Withdrawal Liability Amount calculated
under Section 7.03(d), which Purchaser shall deposit in an interest-bearing
escrow account to secure payment of the Withdrawal Liability.

(b) Closing Adjustments. The Purchase Price shall be adjusted as follows:

(1) Purchased Working Capital. A detailed schedule of the assets and liabilities
and accounting principles and methods used to calculate the Purchased Working
Capital is attached to this Agreement as Schedule 3.05(b)(1). At the Closing,
the Company shall deliver to Purchaser a statement of Estimated Closing
Purchased Working Capital as of the Closing Date (the “Statement of Estimated
Closing Purchased Working Capital”) and work papers setting forth the basis for
calculating the Estimated Closing Purchased Working Capital, which shall be
prepared in accordance with Section 3.05(d). The Statement of Estimated Closing
Purchased Working Capital shall specify the amount by which the Estimated
Closing Purchased Working Capital is greater than the Target Purchased Working
Capital, which amount shall be added to the Closing Payment, or less than the
Target Purchased Working Capital, which amount shall be deducted from the
Closing Payment (the “Estimated Closing Purchased Working Capital Adjustment”).

 

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CONFIDENTIAL TREATMENT REQUESTED:

INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED IS OMITTED AND
IS NOTED WITH “[REDACTED]”. AN UNREDACTED VERSION OF THIS DOCUMENT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

(2) Reserves. A detailed schedule of the items, and accounting principles and
methods, used to calculate Reserves is attached to this Agreement as Schedule
3.05(b)(2). At the Closing, the Company shall deliver to Purchaser a statement
of Estimated Closing Reserves as of the Closing Date (the “Statement of
Estimated Closing Reserves”) and work papers setting forth the basis for
calculating the Estimated Closing Reserves, which shall be prepared in
accordance with Section 3.05(d). The Statement of Estimated Closing Reserves
shall specify the amount by which the Estimated Closing Reserves is less than
the Target Reserves, which amount shall be added to the Closing Payment, or
greater than the Target Reserves, which amount shall be deducted from the
Closing Payment (the “Estimated Closing Reserves Adjustment”).

(3) Supply Agreements. The Closing Payment will be adjusted (the “Supply
Agreement Adjustment”)

(i) upward by an amount equal to [REDACTED] x ((AU – [REDACTED]) ÷ [REDACTED]),
where “AU” is the aggregate amount of committed annual purchases reflected in
Supply Agreements executed on or before the Closing Date, provided that AU shall
not exceed [REDACTED] and that there shall be no adjustment under this clause
(i) if AU is less than [REDACTED]

(ii) downward by an amount equal to [REDACTED] x (([REDACTED] – AD) ÷
[REDACTED]), where “AD” is the aggregate amount of committed annual purchases
reflected in Supply Agreements executed on or before the Closing Date, provided
that AD shall not exceed [REDACTED] and that there shall be no adjustment under
this clause (ii) if AD is greater than [REDACTED]; and

(iii) downward by [REDACTED] if [REDACTED].

For purposes of negotiating the amount of annual committed purchases in a Supply
Agreement with a Qualified Retailer, the parties shall use commercially
reasonable efforts to cause the amount of the annual committed purchase
reflected in the Supply Agreement to be no less than the Qualified Retailer’s
total purchases from the AG Companies in the 12-month period ended June 8, 2007,
as reflected in the books and records of the AG Companies. Within 5 days prior
to the scheduled Closing Date, Purchaser and the Company shall deliver to each
other any Supply Agreement that has been signed by Qualified Retailers and
[REDACTED], together with Purchaser and the Company’s calculation of the Supply
Agreement Adjustment (the agreed upon calculation of the Supply Agreement
Adjustment is referred to as the “Statement of Supply Agreement Adjustment”). At
Closing, the Company and Purchaser shall each deliver to the other any Supply
Agreements that it received and did not deliver to the other before Closing and
shall agree upon the final Statement of Supply Agreement Adjustment. The parties
agree that committed annual purchases contained in any agreement assumed by
Purchaser, and not in a Supply Agreement, shall not be considered committed
annual purchases for purposes of this Section 3.05(b)(3).

 

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CONFIDENTIAL TREATMENT REQUESTED:

INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED IS OMITTED AND
IS NOTED WITH “[REDACTED]”. AN UNREDACTED VERSION OF THIS DOCUMENT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

At Closing, the applicable AG Companies will waive, for itself and for its
successors and assigns and providing in that waiver that Purchaser is an
intended third party beneficiary thereof, each of their retail customers’
obligations under any supply agreement between an AG Company and the retail
customer that are Excluded Assets, whether such supply agreement is part of a
lease, sublease, stand-alone arrangement or otherwise, to allow each such retail
customer to enter into a Supply Agreement with Purchaser or otherwise to
purchase goods from Purchaser, in each case subject to either (x) the retail
customer having executed and delivered to the Company a written waiver of any
supply obligation of any of the AG Companies reasonably acceptable to the
Company in a Supply Agreement or otherwise, or (y) Purchaser having assumed any
supply obligation of the AG Companies with respect to the existing supply
agreement.

(4) Long Term Assets. The Closing Payment shall be adjusted (the “Long Term
Asset Adjustment”) (i) [REDACTED], as of the Closing Date, of any non-current
Purchased Asset that was not reflected on the January Balance Sheet and (ii)
[REDACTED] at the time of sale of any non-current asset reflected on the January
Balance Sheet that would have been a Purchased Asset but that was sold,
collected (other than in the ordinary course as provided in Section 3.01(g)) or
otherwise disposed of before the Closing Date. Notwithstanding the foregoing,
there will be no Long Term Asset Adjustment (and no Purchase Price reduction) on
account of (i) any asset that had a book value of zero on the January Balance
Sheet; (ii) any asset that any of the AG Companies sold to Sabey Corporation or
its affiliates in connection with and contemporaneously with execution by the
Company of the Norfolk Lease; and (iii) any reduction in the book value of
non-current assets between the date of the January Balance Sheet and the Closing
Date solely due to depreciation or amortization of non-current assets owned by
any of the AG Companies as of the Closing Date. The parties agree that, as of
the date of this Agreement, the Long Term Asset Adjustment will include an
[REDACTED].

(c) Post-Closing Adjustment.

(1) Purchased Working Capital and Reserves. As soon as practicable, but in any
event within 45 calendar days following the Closing Date, Purchaser will prepare
and deliver to the Company the Closing Balance Sheet and a statement, including
work papers setting forth the basis for calculating, of the Closing Purchased
Working Capital (the “Statement of Closing Purchased Working Capital”) and a
statement, including work papers setting forth the basis for calculating, of the
Closing Reserves (the “Statement of Closing Reserves” and, together with the
Statement of Closing Purchased Working Capital, the “Statement of Post-Closing
Adjustment”). The Statement of Post-Closing Adjustment shall be prepared in
accordance with Section 3.05(d). Subject to the resolution of any disputes
pursuant to Section 3.05(c)(2), the Holdback Amount shall be adjusted (the
“Post-Closing Adjustment”) (i) downward by the amount, if any, by which the
Estimated Closing Purchased Working Capital exceeds the Closing Purchased
Working Capital and by the amount, if any, by which Estimated Closing Reserves
is less than the Closing Reserves and (ii) upward by the amount, if any, by
which the Estimated Closing Purchased Working Capital is less than the Closing
Purchased Working Capital and by the amount, if any, by which the Estimated
Closing Reserves exceeds the Closing Reserves. Purchaser shall pay to the
Company the Holdback Amount as adjusted by

 

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CONFIDENTIAL TREATMENT REQUESTED:

INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED IS OMITTED AND
IS NOTED WITH “[REDACTED]”. AN UNREDACTED VERSION OF THIS DOCUMENT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

the Post-Closing Adjustment, if positive, by the 60 days following the Closing
Date unless the Company, in good faith, disputes the calculation of the
Post-Closing Adjustment, in which case the Purchaser shall pay to the Company
the undisputed portion of the Holdback Amount derived from the Dispute Notice
(as defined in Section 3.05(c)(2)(i)) by such time and the balance of the
Holdback Amount, if any, on the date specified in Section 3.05(c)(2)(iii).

(2) Dispute Resolution.

(i) If the Company, in good faith, disputes the calculation of the Post-Closing
Adjustment, the Company shall notify Purchaser in writing (the “Dispute Notice”)
setting forth in reasonable detail the items, amount, nature and basis of such
dispute, within 15 calendar days after receipt of the Statement of Post-Closing
Adjustment. In the event of such a dispute, the Company and Purchaser shall
first use their diligent good faith efforts to resolve the dispute between
themselves. If the parties are unable to resolve any items in dispute within 15
calendar days after delivery of the Dispute Notice, the unresolved items in
dispute shall be submitted to an independent accounting firm other than
[REDACTED] and with no material relationship to either the Company or Purchaser.
The firm shall be mutually agreed upon by the Company and Purchaser or, if the
Company and Purchaser fail to agree upon or refuse to select such a firm within
10 calendar days after written request therefor by either of them, an
independent accounting firm shall be selected by the Company and Purchaser in
accordance with the rules of the American Arbitration Association then in effect
(the selected accounting firm shall be referred to as the “Arbitrator”). The
Company and Purchaser shall instruct the Arbitrator to resolve the remaining
disputed items, applying the principles in Section 3.05(d), and deliver within
45 calendar days a written report to the Company and Purchaser with respect to
the items. The Arbitrator shall, in connection with the resolution of any
dispute, have access to all books and records, documents, work papers,
facilities and personnel necessary to perform its functions as arbitrator. The
Arbitrator’s decision shall be final, conclusive and binding on all parties. A
judgment on the determination made by the Arbitrator pursuant to this
Section 3.05(c)(2)(i) may be entered into and enforced by any court of
appropriate jurisdiction.

(ii) The fees and expenses of the Arbitrator in connection with the resolution
of disputes pursuant to Section 3.05(c)(2)(i) shall be (i) borne equally by the
Company and Purchaser if and to the extent that the Arbitrator determines the
Company and Purchaser should each be awarded one-half of the total amount of the
items in dispute, or (ii) borne by the Company and/or Purchaser in inverse
proportion to the amount that the Arbitrator’s award in favor of the Company
and/or Purchaser bears to the total amount of the items in dispute. (For
illustration purposes for this Section 3.05(c)(2) only, (x) if the total amount
of items in dispute by the Company is $1,000,000.00, and the Company is awarded
$500,000.00 by the Arbitrator, the Company and Purchaser shall bear the
Arbitrator’s fees and expenses equally, or (y) if the total amount of items in
dispute by the Company is $1,000,000.00, and the Company is awarded $250,000.00
by the Arbitrator, the Company shall bear 75% and Purchaser shall bear 25% of
the Arbitrator’s fees and expenses.)

 

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CONFIDENTIAL TREATMENT REQUESTED:

INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED IS OMITTED AND
IS NOTED WITH “[REDACTED]”. AN UNREDACTED VERSION OF THIS DOCUMENT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

(iii) Within five calendar days following the final determination of the
Post-Closing Adjustment whether by (A) the expiration of the 10 calendar day
period for giving the Dispute Notice if no Dispute Notice is given or (B) the
resolution of any disputes pursuant to Section 3.05(c)(2), Purchaser shall pay
the Holdback Amount as adjusted by the Post-Closing Adjustment, if positive, to
the Company.

(d) Closing Balance Sheets and Statements. Any balance sheet or statement
prepared for purposes of this Section 3.05 shall (i) reflect the same categories
and basis of assets, liabilities and reserves set forth in the January Balance
Sheet, Schedule 3.05(b)(1) or Schedule 3.05(b)(2) and (ii) be prepared (A) in
accordance with the accounting principles (including accounting methods,
practices, and procedures) set forth on Schedule 3.05(b)(1) or Schedule
3.05(b)(2), even if such accounting principles are not in accordance with GAAP,
(B) if not covered by Schedule 3.05(b)(1) or Schedule 3.05(b)(2), in accordance
with the accounting principles used in the preparation of the most recent
audited year-end balance sheet of the AG Companies, and (C) to the extent such
accounting principles do not address a matter necessary for the preparation of
the balance sheets or statements prepared under this Agreement, in accordance
with GAAP. All balance sheets and statements referenced in this Section 3.05
shall present the assets and liabilities of the AG Companies prior to and
without giving effect to the contribution of the Contributed Assets, the
Acquisition or any of the Contemplated Transactions.

(e) No Double-Counting. If an adjustment is made, or should have been made, to
the Purchase Price under this Section 3.05, Purchaser may not bring a claim
under any other provision of this Agreement seeking recovery for Losses based on
facts or circumstances that resulted or should have resulted in the adjustment.
If an adjustment is made to the Purchase Price under one provision of this
Section 3.05 (“first adjustment”), Purchaser may not make an adjustment under
any other provision of this Section 3.05 to account for any amount included in
the first adjustment.

(f) Wire Transfers. All payments to or for the benefit of the Company under this
Agreement shall be in immediately available funds by wire transfer to the
account or accounts designated by the Company.

Section 3.06 Allocation of Purchase Price. The Purchase Price and the Assumed
Liabilities shall be allocated among the Purchased Assets and the Contributed
Assets in accordance with Schedule 3.06. Such allocation shall be binding on
Purchaser and the Company for all purposes, including for federal income Tax
purposes and for state and local Tax purposes; provided, however, that the
parties acknowledge that the allocation to the Contributed Assets is required by
federal law but does not, and is not intended to, imply a direct purchase of the
Contributed Assets by Purchaser. Purchaser and the Company and their respective
Affiliates shall report, act upon and file Tax Returns (including, but not
limited to, Internal Revenue Service Form 8594) in all respects and for all
purposes consistent with such allocation. Neither Purchaser nor the Company nor
any of their Affiliates shall take any position (whether in audits, Tax Returns
or otherwise) that is inconsistent with such allocation unless expressly
required to do so by applicable law.

 

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CONFIDENTIAL TREATMENT REQUESTED:

INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED IS OMITTED AND
IS NOTED WITH “[REDACTED]”. AN UNREDACTED VERSION OF THIS DOCUMENT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

Section 3.07 Further Assurances. Each of the AG Companies agrees that, at any
time and from time to time on and after the Closing Date, it will, upon the
reasonable request of Purchaser and without further consideration, take all
steps reasonably necessary to place Purchaser in possession of the Purchased
Assets and the LLC in possession of the Contributed Assets, and each of the AG
Companies will do, execute, acknowledge and deliver, or will cause to be done,
executed, acknowledged and delivered, all further acts, deeds, assignments,
conveyances, transfers, powers of attorney or assurances as reasonably required
to sell, assign, convey, transfer, grant, assure and confirm to Purchaser, or to
aid and assist in the collection of or reducing to possession by Purchaser of,
all of the Purchased Assets, or to vest in Purchaser good, valid and marketable
title to the Purchased Assets. Purchaser agrees that, at any time and from time
to time on and after the Closing Date, upon the reasonable request of the
Company and without further consideration, Purchaser will take all steps
reasonably necessary for Purchaser to assume all of the Assumed Liabilities, and
execute, acknowledge and deliver all further acts, deeds, assignments,
conveyances or transfers reasonably required to assume such Assumed Liabilities.
Purchaser agrees that, at any time and from time to time on and after the
Closing Date, it will, upon the reasonable request of the Company and without
further consideration, take all steps reasonably necessary to place the Company
in possession of the Excluded Assets (including Discretionary Promotions), and
Purchaser will do, execute, acknowledge and deliver, or will cause to be done,
executed, acknowledged and delivered, all further acts, deeds, assignments,
conveyances, transfers, powers of attorney or assurances as reasonably required
to sell, assign, convey, transfer, grant, assure and confirm to the Company, or
to aid and assist in the collection of or reducing to possession by the Company
of, all of the Excluded Assets, or to vest in the Company good, valid and
marketable title to the Excluded Assets.

Section 3.08 Washington State Taxes. Purchaser and the Company have jointly
submitted to the Washington Department of Revenue a request for an advance
ruling that neither Business and Occupation Tax (“B&O Tax”) nor sales or use tax
will apply to any of the following transactions: (a) the Contribution, (b) the
sale of all of the interests in the LLC to Purchaser, and (c) the merger of the
LLC into Purchaser or the dissolution of the LLC or distribution of the LLC’s
assets to Purchaser. Purchaser and the Company shall promptly apprise each other
of the status and inquiries relating to such ruling. Purchaser and the Company
each shall use commercially reasonable efforts to obtain a ruling that is
favorable to both of them. Following completion of the Acquisition, the AG
Companies and Purchaser will file any and all tax reports and other returns
consistent with such ruling. If as a result of such ruling request,
(x) [REDACTED] or (y) [REDACTED]. The net amount of the adjustments described in
clauses (x) and (y) above is the “Tax Adjustment.”

Section 3.09 Closing. The closing of the Acquisition (the “Closing”) will take
place at 10 a.m., Seattle time, on the date (the “Closing Date”) that is as
promptly as practical (but in no event later than the second Business Day) after
satisfaction or waiver of all of the conditions set forth in Article 8 hereof,
at the offices of Davis Wright Tremaine LLP, 1201 Third Avenue, Suite

 

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CONFIDENTIAL TREATMENT REQUESTED:

INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED IS OMITTED AND
IS NOTED WITH “[REDACTED]”. AN UNREDACTED VERSION OF THIS DOCUMENT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

2200, Seattle, Washington, 98101 unless another date, time or place is agreed to
in writing by Purchaser and the Company.

Section 3.10 Events of Closing.

(a) Closing Deliveries by the Company. At the Closing, the Company shall deliver
or cause to be delivered to Purchaser:

(1) An assignment of the LLC Interests in substantially the form attached as
Exhibit C, executed by the Company and the LLC;

(2) A bill of sale in substantially the form attached as Exhibit D, transferring
the Purchased Assets to Purchaser, executed by the Company;

(3) One or more assignment and assumption agreements in substantially the form
attached as Exhibit E, executed by the Company;

(4) An assignment and assumption of the Norfolk Lease, in substantially the form
attached as Exhibit F, executed by the Company;

(5) An intercreditor agreement in substantially the form attached as Exhibit G,
executed by the Company, with respect to collateral securing repayment of
Excluded Accounts Receivable and Acquired Receivables;

(6) Such other quitclaim deeds, assignments and other instruments of transfer
and conveyance, in form and substance sufficient to vest in Purchaser all right,
title and interest of the AG Companies in and to the Purchased Assets, as
reasonably requested by Purchaser; and

(7) An escrow agreement in substantially the form attached as Exhibit H,
executed by the Company, pursuant to which the Withdrawal Liability Amount will
be deposited into escrow.

(b) Closing Deliveries by Purchaser. At the Closing, Purchaser shall deliver or
cause to be delivered to the Company:

(1) The documents described in Section 3.10(a)(1), (3), (4), (5), (6) and
(7) executed by Purchaser; and

(2) The Closing Payment.

 

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CONFIDENTIAL TREATMENT REQUESTED:

INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED IS OMITTED AND
IS NOTED WITH “[REDACTED]”. AN UNREDACTED VERSION OF THIS DOCUMENT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

Article 4

Representations And Warranties Of The AG Companies

The Company represents and warrants to Purchaser as follows, except as set forth
in the disclosure schedule attached hereto by the Company (the “Company
Disclosure Schedule”):

Section 4.01 Organization. Each of the AG Companies is a corporation or limited
liability company duly organized and validly existing under the Laws of its
jurisdiction of organization, has all requisite corporate or limited liability
company power and authority to own, lease, and operate its properties and to
carry on its business as now being conducted, and is duly qualified to do
business as a foreign corporation and in good standing to conduct business in
each jurisdiction in which the business it is conducting, or the operation,
ownership, or leasing of its properties, makes such qualification necessary,
other than such failures so to qualify as would not reasonably be expected to
have a Material Adverse Effect. Complete and accurate copies of all Governing
Documents of the AG Companies, as in effect as of the Agreement Date, have been
made available to Purchaser.

Section 4.02 Authority and Enforceability. Each of the AG Companies has all
requisite corporate power and authority to enter into this Agreement and to
complete the Contemplated Transactions to which it is a party. The execution,
delivery, and performance of this Agreement by each of the AG Companies have
been duly authorized by all necessary corporate or limited liability company
action on the part of each of the AG Companies, subject to the Company
Shareholder Approval described in Section 8.01(a) hereof. This Agreement has
been duly executed and delivered by each of the AG Companies and, subject to the
Company Shareholder Approval, and assuming that this Agreement constitutes the
valid and binding agreement of Purchaser, constitutes the valid and binding
obligation of the AG Companies, enforceable in accordance with its terms, except
as the enforcement hereof may be limited by the Equitable Remedy Exception.

Section 4.03 No Violation; Consents.

(a) The execution, delivery, and performance of this Agreement by the AG
Companies do not conflict with or result in any Violation of (i) any provision
of the Governing Documents of any of the AG Companies, (ii) any Contract to
which any of the AG Companies is a party, or (iii) any Laws applicable to any of
the AG Companies, except, in the case of clauses (ii) and (iii), for any
Violations that would not reasonably be expected have a Material Adverse Effect.

(b) No consent, waiver, approval, order or authorization of, or registration,
declaration or filing with, any Government Agency or other Person (so as not to
trigger any Violation) is required by the AG Companies as a result of the
execution, delivery, and performance of this Agreement by the AG Companies,
except for (i) the filing of a pre-transaction notification and report form by
the Company under the HSR Act, and the expiration

 

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CONFIDENTIAL TREATMENT REQUESTED:

INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED IS OMITTED AND
IS NOTED WITH “[REDACTED]”. AN UNREDACTED VERSION OF THIS DOCUMENT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

or termination of the applicable waiting period thereunder, (ii) such filings
and approvals as may be required by any applicable state takeover, securities or
blue sky Laws, (iii) such filings in connection with any state or local Tax
which is attributable to the transfer of legal or beneficial ownership of real
property, if any, by any of the AG Companies, (iv) such other filings and
consents as may be required under any environmental, health or safety Law
pertaining to any notification, disclosure or required approval necessitated by
the Acquisition or Contemplated Transactions, (v) the Company Shareholder
Approval, and (vi) such other consents, approvals, orders, authorizations,
registrations, declarations, filings, notices or permits that, if they were not
obtained or made, would not reasonably be expected have a Material Adverse
Effect.

Section 4.04 Financial Statements.

(a) Attached to Section 4.04 of the Company Disclosure Schedule are copies of
(i) the Company’s audited consolidated balance sheets at September 29, 2006,
September 30, 2005, and September 24, 2004 and the related consolidated
statements of operation, shareholder’s equity and cash flows for the fiscal
years ended as of such dates (collectively, the “Company Audited Financial
Statements”), and (ii) the June Balance Sheet and the related unaudited
consolidated statements of operations and cash flows for the year-to-date fiscal
period then ended (collectively, the “Company Interim Financial Statements” and
together with the Company Audited Financial Statements, the “Financial
Statements”).

(b) The Company Audited Financial Statements, as stated therein and as modified
in the notes thereto, and the Company Interim Financial Statements fairly
present, in all material respects, the consolidated financial position of the
Company and its consolidated Subsidiaries as of their respective dates and the
consolidated results of operations and the consolidated cash flows of the
Company and its consolidated Company Subsidiaries for the periods presented
therein, all in conformance with GAAP, applied on a consistent basis during the
periods involved (except that the Company Interim Financial Statements do not
contain all footnotes required by GAAP and are condensed and subject to year-end
adjustments).

(c) The Company has no liability or obligation (whether absolute, accrued,
contingent or other, and whether due or to become due) of a nature required by
GAAP to be reflected in a balance sheet or disclosed in the notes thereto,
except for (i) liabilities or obligations that are adequately accrued or
reserved against in the June Balance Sheet, (ii) liabilities or obligations that
were incurred after the date of the June Balance Sheet in the ordinary course of
business consistent with past practice, and (iii) matters that would not
reasonably be expected to have a Material Adverse Effect.

Section 4.05 No Material Adverse Effect. Since the date of the June Balance
Sheet through the Agreement Date, there has been no event, occurrence, or
condition that has had a Material Adverse Effect, nor has any event, occurrence
or condition occurred that would reasonably be expected, by itself or in
conjunction with other events, occurrences or conditions, to have a Material
Adverse Effect.

 

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CONFIDENTIAL TREATMENT REQUESTED:

INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED IS OMITTED AND
IS NOTED WITH “[REDACTED]”. AN UNREDACTED VERSION OF THIS DOCUMENT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

Section 4.06 No Changes. Since the date of the June Balance Sheet through the
Agreement Date, except as contemplated by this Agreement or the Contemplated
Transactions, the Company has not taken any of the actions described in
Section 6.02 (Negative Covenants of the Company).

Section 4.07 Conduct of the Company Business. Since the date of the June Balance
Sheet through the Agreement Date, except as contemplated by this Agreement or
the Contemplated Transactions, and except for such matters that would not
reasonably be expected to have a Material Adverse Effect, each of the AG
Companies has carried on its business in the ordinary course consistent with
past practice.

Section 4.08 Real Property.

(a) Owned Real Property.

(1) Section 4.08(a)(1) of the Company Disclosure Schedule lists all real
property included in the Purchased Assets that is owned in fee by any of the AG
Companies (together with all buildings and other structures, facilities or
improvements located thereon, owned by any of the AG Companies, and all rights
and interests appurtenant thereto, the “Owned Real Property”). Complete and
accurate copies of all leases of any portion of the Owned Real Property leased
to another party (“Fee Property Leases”) listed in Section 4.08(a)(1) of the
Company Disclosure Schedule, including all written amendments and supplements
thereof, have been made available to Purchaser. With respect to each such Fee
Property Lease, the Company makes each of the representations set forth in
subsections (1), (2), (3), and (4) of Section 4.11(c). Each of the AG Companies
owns and has good and marketable title (in each case as measured in the context
of their current uses) to the Owned Real Property owned by it, free and clear of
all Liens, except for Permitted Exceptions.

(2) To the Company’s Knowledge, except as disclosed as a special exception
listed in Schedule B of the Commitment, (i) all buildings, improvements and
structures that are owned by the AG Companies and that are on the Owned Real
Property lie within the boundaries of the Owned Real Property (or within the
areas of beneficial easements) and do not encroach upon the property of, or
otherwise conflict with the property rights of, any other Person, (ii) the
structural components, roofs, and mechanical, electrical, plumbing, and HVAC
systems of the improvements on the Owned Real Property are in good working order
and free from defects which would materially impair the use of such improvements
for their current uses, ordinary wear and tear excepted, and (iii) all
structures on the Owned Real Property are structurally sound with no known
material defects. Except for the Permitted Exceptions, none of the Owned Real
Property is subject to any rights of persons in possession or persons making use
thereof. Except as disclosed as a special exception listed in Schedule B of the
Commitment, the AG Companies have not received any notice or information that
the Owned Real Property or any portion thereof is subject to any claim of
adverse possession or prescriptive easement.

 

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CONFIDENTIAL TREATMENT REQUESTED:

INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED IS OMITTED AND
IS NOTED WITH “[REDACTED]”. AN UNREDACTED VERSION OF THIS DOCUMENT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

(b) Leased Real Property. Section 4.08(b) of the Company Disclosure Schedule
lists (i) all real property that is used in the Business and that is leased by
any of the AG Companies as tenant pursuant to a Lease included in the Purchased
Assets (together with all leasehold improvements thereon, subject to the terms
of the applicable lease agreement (but excluding, common areas, parking spaces
and other spaces that the tenant thereunder does not have the exclusive right to
use under the applicable lease or under applicable Law), the “Leased Real
Property” and together with the Owned Real Property, the “Real Property”) and
(ii) all written leases of Leased Real Property that are included in the
Purchased Assets and that are leased by any of the AG Companies as tenant
(“Material Leases”), including all written amendments and supplements thereof.
Complete and accurate copies of all Material Leases listed in Section 4.08(b) of
the Company Disclosure Schedule have been made available to Purchaser. With
respect to each such Material Lease, the Company makes each of the
representations set forth in subsections (1), (2), (3), and (4) of
Section 4.11(c). Notwithstanding anything herein to the contrary, the term
“Leased Real Property” excludes the Retail Store or other real property
(“Subleased Property”) that any of the AG Companies leases as tenant or
subtenant for purposes of subleasing such property to a customer of any of the
AG Companies or otherwise enhancing the credit of the customer or, in some
cases, to Persons who are not customers of any of the AG Companies (such
subleases being referred to as “Back-to-Back Leases”). The respective AG
Companies own and have good and marketable leasehold (or sub-leasehold)
interests (in each case as measured in the context of their current uses) in the
Leased Real Property pursuant to the Material Leases, free and clear of all
Liens arising by, through or under the AG Companies, except for the Permitted
Exceptions.

(c) Loans and Mortgages. Section 4.08(c) of the Company Disclosure Schedule sets
forth, with respect to each person (a “Lender”) holding any mortgage, deed of
trust and other lien encumbering the Owned Real Property and included in the
Permitted Exceptions (excluding liens for nondelinquent Taxes) (a “Mortgage”)
that secures a loan or obligation (a “Loan”), (i) the outstanding amount of the
Loan as of the date of this Agreement, (ii) the date the balance of the Loan
will be due and, assuming all interim payments are made when due, the
approximate amount of such balance, (iii) the address to which Purchaser is to
give any notices to the Lender, and (viii) the Purchaser’s address to which the
Lender shall send any notices related to the Loan after being notified in
writing that this transaction has closed. With respect to each such Mortgage and
Loan, (i) to the Company’s Knowledge, the Lender is the sole, current holder
thereof, (ii) the Loan and Mortgage have not been pledged or assigned by any of
the AG Companies, (iii) there are no defaults thereunder by the AG Companies,
and (iv) Purchaser’s acquisition of the encumbered property will not result in
an acceleration of the Loan or a modification of any Loan terms.

Section 4.09 Tangible Property. Except with respect to Real Property and
Subleased Property (as to which the exclusive representations and warranties are
set forth in Section 4.08 hereof) and Excluded Assets, and except for Permitted
Exceptions, the AG Companies have good and marketable title to, or, in the case
of leased or subleased assets, marketable leasehold interests in (in each case
as measured in the context of their current uses), or otherwise have the

 

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CONFIDENTIAL TREATMENT REQUESTED:

INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED IS OMITTED AND
IS NOTED WITH “[REDACTED]”. AN UNREDACTED VERSION OF THIS DOCUMENT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

right to use, all of the tangible assets and properties that are material to the
Business, all free and clear of Liens (except for assets sold or otherwise
disposed of, or with respect to which the lease or sublease of such asset has
expired or has been terminated, in each case after the Agreement Date to the
extent permitted under this Agreement). Each of the tangible assets and
properties that are material to the Business is in good operating condition,
subject to the effects of normal wear and tear and subject to the need for
normal periodic maintenance.

Section 4.10 Intellectual Property Rights. The AG Companies own or possess
adequate licenses or other rights to use all Intellectual Property Rights that
are material to the conduct of the Business (“Material IP Rights”). Section 4.10
of the Company Disclosure Schedule contains a list of Material IP Rights that
are registered or are pending registration by any of the AG Companies. To the
Company’s Knowledge, such Material IP Rights do not infringe upon the
Intellectual Property Rights of others and no other Person is infringing upon
the interest of the AG Companies with respect to their Material IP Rights.

Section 4.11 Material Contracts.

(a) Section 4.11 of the Company Disclosure Schedule sets forth a list, as of the
Agreement Date, of all Contracts to which any of the AG Companies is a party and
that are any of the following (any of the following, whether or not listed in
Section 4.11 of the Company Disclosure Schedules or existing as of the date of
this Agreement, a “Material Contract”) (provided that the term Material Contract
specifically excludes Material Leases and Fee Property Leases, as to which the
exclusive representations and warranties are set forth in Section 4.08 hereof):

(1) A Contract which has not been fully performed and which is for capital
expenditures or for the purchase of goods or services in excess of $250,000 per
year or for the lease or license of goods in excess of $250,000 per year, if the
Company cannot, at any time, terminate such Contract without penalty and after
90 (or fewer) days notice to the other party or parties.

(2) A Contract creating a Lien in excess of $500,000 on any of the AG Companies’
assets, other than Permitted Exceptions.

(3) A Contract for the purchase or sale of a material portion of any of the
AG Companies’ assets, excluding Contracts for the purchase or sale of inventory
in the ordinary course of business.

(4) A Contract with a Government Agency.

(5) A Contract which has not been fully performed and which is for the
discharge, storage, or removal of Hazardous Materials with fees in excess of
$100,000 per year, if the Company cannot terminate such Contract without penalty
and after 90 (or fewer) days notice to the other party or parties.

 

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CONFIDENTIAL TREATMENT REQUESTED:

INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED IS OMITTED AND
IS NOTED WITH “[REDACTED]”. AN UNREDACTED VERSION OF THIS DOCUMENT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

(6) A Contract containing covenants not to compete in any business or to provide
favored nations pricing to any Person.

(7) A Contract with a supplier where the products purchased under such Contract
were in excess of $1,000,000 during the last 13 consecutive four-week fiscal
periods of the Company or where such Contract obligates any of the AG Companies
to purchase its requirements from such supplier, in each case if the Company
cannot terminate such Contract without penalty and after 90 (or fewer) days
notice to the other party or parties.

(8) A Contract between any of the AG Companies and one of its customers where
the products purchased and sold under such Contract were in excess of $1,000,000
during the last 13 consecutive four-week fiscal periods of the Company, if the
Company cannot terminate such Contract without penalty and after 90 (or fewer)
days notice to the other party or parties.

(9) A Contract granting to any of the AG Companies rights to purchase and resell
private label goods.

References in this Section 4.11(a) to a year or fiscal period are to the year or
fiscal period ended on June 8, 2007 (Period 9, 2007).

(b) Complete and accurate copies of all written Material Contracts listed in
Section 4.11 of the Company Disclosure Schedule have been made available to
Purchaser.

(c) With respect to each Material Contract, as of the Agreement Date:

(1) It is the valid and binding obligation of the Company or the applicable
Subsidiary, enforceable against the Company or such Subsidiary in accordance
with its terms, subject to the Equitable Remedy Exception.

(2) None of the AG Companies is in breach thereof, and to the Company’s
Knowledge, no other party thereto is in material breach thereof.

(3) To the Company’s Knowledge, no event has occurred or condition exists that
constitutes, or with the passage of time would constitute, a breach by any of
the AG Companies.

(4) None of the AG Companies has received notice of termination, cancellation,
non-renewal, or material adverse price adjustment thereof.

Section 4.12 Compliance with Law. None of the AG Companies is in violation of,
or, to the Company’s Knowledge, is under investigation by any Government Agency
with respect to, or has been threatened by any Government Agency to be charged
with, or given notice of any violation of, any applicable Law, except for
violations, investigations and charges that would not, singly or in the
aggregate, reasonably be expected have a Material Adverse Effect.

 

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CONFIDENTIAL TREATMENT REQUESTED:

INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED IS OMITTED AND
IS NOTED WITH “[REDACTED]”. AN UNREDACTED VERSION OF THIS DOCUMENT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

Section 4.13 Material Permits. Except as would not reasonably be expected to
have a Material Adverse Effect, (a) the AG Companies own, hold or possess
adequate rights to use all licenses, franchises, permits, certificates,
approvals or other similar authorizations that are material to the Business
(other than local business licenses and other immaterial licenses, the “Material
Permits”) required in connection with the operation of the Business consistent
with past practice, (b) the Material Permits are valid and in full force and
effect, and (c) none of the AG Companies has received any citation, suspension,
revocation, limitation, warning or similar notice issued by any Government
Agency with respect to its operations or Permits which has not been resolved to
the Government Agency’s satisfaction. A list of such Material Permits is set
forth in Section 4.13 of the Company Disclosure Schedule.

Section 4.14 Insurance. Set forth in Section 4.14 of the Company Disclosure
Schedule is a list of all insurance policies (“Insurance Policies”) covering the
assets, business, equipment, properties, operations, professional liability, and
employees of the AG Companies, which list includes the type of coverage, limits
of liability, and deductibles. There is no claim by the AG Companies pending
under any of such Insurance Policies as to which any of the AG Companies has
received written notice that coverage has been denied or disputed by the
underwriters of such Insurance Policies. All premiums due and payable under all
such Insurance Policies have been paid. To the Company’s Knowledge, there is no
threatened termination of, or premium increase with respect to, any such
Insurance Policies.

Section 4.15 Litigation. There is no suit, action, or similar legal proceeding
pending against, or to the Company’s Knowledge, threatened against the AG
Companies before any court, arbitrator, or Government Agency, which would ,
singly or in the aggregate, reasonably be expected to have a Material Adverse
Effect.

Section 4.16 Taxes.

(a) All Tax returns required to be filed with any taxing authority on or before
the Closing with respect to any tax period (or portion thereof) ending on or
before the Closing (a “Pre-Closing Tax Period”) by or on behalf of the AG
Companies (collectively “Tax Returns”) have been duly and timely filed (taking
into account all applicable extension periods), and as of the time of filing,
such Tax Returns were true and complete in all material respects, in each case,
except for matters that would not reasonably be expected to have a Material
Adverse Effect.

(b) The AG Companies have timely paid or withheld and remitted (or there has
been paid or withheld and remitted on their behalf) all Taxes required to have
been paid or withheld on or prior to the Agreement Date (whether or not shown on
the Tax Returns), except for Taxes being contested in good faith by appropriate
proceedings and for which reserves have been established in the Company Audited
Financial Statements or Company Interim Financial Statements. The Company has
made available to Purchaser copies of such Tax Returns filed by the AG Companies
since December 31, 1999.

 

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CONFIDENTIAL TREATMENT REQUESTED:

INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED IS OMITTED AND
IS NOTED WITH “[REDACTED]”. AN UNREDACTED VERSION OF THIS DOCUMENT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

(c) There is no claim, audit, action, suit, proceeding, or investigation now
pending or, to the Company’s Knowledge, threatened against or in respect of
(i) any material Tax or (ii) any material items of net operating loss, net
capital loss, investment Tax credit, foreign Tax credit, charitable deduction,
or any other credit or Tax attribute which could be carried forward or back to
reduce Taxes.

(d) The Company has, at all times since the formation of the LLC, been its sole
member, and no person other than the Company has ever held any direct or
beneficial membership interest in the LLC. No election has been made for the LLC
to be classified as an association taxable as a corporation for federal or any
other Tax purposes.

Section 4.17 Employee Benefits.

(a) Section 4.17 of the Company Disclosure Schedule lists each of the following
plans (collectively, “Seller Benefit Plans”) that the AG Companies or any of
their ERISA Affiliates sponsor or contribute to or under which the AG Companies
or any of their ERISA Affiliates has any liability or contingent liability:
(i) any employee welfare benefit plan or employee pension benefit plan (as those
terms are respectively defined in Sections 3(1) and 3(2) of ERISA), including
any multi-employer plan (as defined in Section 3(37) of ERISA) and including any
plan which has been terminated; or (ii) any other retirement or deferred
compensation plan, incentive compensation plan, stock option plan, stock plan,
unemployment compensation plan, vacation pay, severance pay, bonus or benefit
arrangement, insurance or hospitalization program or any other fringe benefit
arrangements for any current or former employee, director, consultant or agent,
whether pursuant to contract, arrangement, custom or informal understanding.

(b) A true and correct copy of each Seller Benefit Plan listed in Section 4.17
of the Company Disclosure Schedule, and all Contracts relating thereto, or to
the funding thereof, including all trust agreements, insurance Contracts,
investment management agreements, subscription and participation agreements and
record keeping agreements, each as in effect on the Agreement Date, has been
made available to Purchaser. In the case of any Seller Benefit Plan which is not
in written form, the Company has provided Purchaser with an accurate description
of such plan, arrangement, or agreement as in effect on the Agreement Date. The
Company has made available to Purchaser a true and correct copy of the most
recent annual report, actuarial report, summary plan description and IRS
determination letter with respect to each such plan or arrangement, to the
extent applicable, and a current audit or schedule of assets (and the fair
market value thereof assuming liquidation of any asset which is not readily
tradable) held with respect to any funded plan arrangement or agreement.

(c) As to all Seller Benefit Plans listed in Section 4.17 of the Company
Disclosure Schedule, and except as set forth therein:

(1) All Seller Benefit Plans comply, and have been administered in form and in
operation, in all material respects, in compliance with their terms and all
requirements

 

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CONFIDENTIAL TREATMENT REQUESTED:

INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED IS OMITTED AND
IS NOTED WITH “[REDACTED]”. AN UNREDACTED VERSION OF THIS DOCUMENT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

of Law applicable thereto, and the Company has not received any notice from any
Government Agency questioning or challenging such compliance.

(2) Each Seller Benefit Plans which is intended to be a qualified plan under
Sections 401(a) and 501(a) of the Code complies in form and in operation with
all applicable requirements of ERISA and such Sections of the Code and has
received a determination letter from the IRS stating that it qualifies under
such Sections of the Code, and no event has occurred which will or could give
rise to disqualification of any such plan under such Sections or to any Tax
imposed by the IRS with respect to such plans.

(3) None of the assets of any employee benefit plan is invested in employer
securities or employer real property.

(4) There have been no prohibited transactions (as described in Section 406 of
ERISA or Section 4975 of the Code) with respect to any employee benefit plan
except those for which a statutory exemption is available.

(5) As to any employee pension benefit plan which is subject to Title IV of
ERISA, there have been no reportable events (as described in Section 4043 of
ERISA), and no steps have been taken to terminate any such plan, and none of the
AG Companies has withdrawn from any multi-employer plan.

(6) There have been no acts or omissions by which have given rise to or may give
rise to fines, penalties, taxes, or related charges under Sections 502(c),
502(i) or 4071 of ERISA or Section 4975 through 4980D of the Code.

(7) None of the payments contemplated by such plans, arrangements, and
agreements would, in the aggregate, constitute excess parachute payments as
defined in Section 280G of the Code.

(8) There are no IRS or U.S. Department of Labor audits and no actions, suits or
claims (other than routine claims for benefits) pending or threatened involving
such plans or the assets of such plans, and no facts exist which could give rise
to any such actions, suits or claims (other than routine claims for benefits).

(9) All group health plans have been operated in substantial compliance with the
group health plan continuation coverage requirements of Section 4980B of the
Code and Section 601 of ERISA to the extent such requirements are applicable,
and no group health plan provides benefit coverage subsequent to termination of
employment except as required by Section 4980B of the Code and Section 601 of
ERISA or applicable state insurance Laws.

 

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CONFIDENTIAL TREATMENT REQUESTED:

INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED IS OMITTED AND
IS NOTED WITH “[REDACTED]”. AN UNREDACTED VERSION OF THIS DOCUMENT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

(10) All required employer contributions and premiums have been timely made, and
all employee contributions and premiums withheld have been timely contributed to
the appropriate plan or trust.

Section 4.18 Employment Matters. Section 4.18 of the Company Disclosure Schedule
lists, as of the Agreement Date, all employees of the AG Companies (“Business
Employees”) and sets forth, with respect to each such employee, his or her
(i) job classification, (ii) salary or wage rate, (iii) employment status,
(iv) job location, and (v) union affiliation, if any.

Section 4.19 Labor Relations.

(a) The Company Disclosure Schedule contains a list of all collective bargaining
agreements to which any of the AG Companies is a party. Except for such
agreements, (i) no collective bargaining agreements relating to any of the
Business Employees are being negotiated and (ii) no union organizational
campaign or representation petition is currently pending or, to the Company’s
Knowledge, threatened with respect to any of the Business Employees.

(b) There is no pending or, to the Company’s Knowledge, threatened, strike,
slowdown, lock-out, work-stoppage, union organizing effort, or other labor
dispute, labor board proceeding, labor arbitration proceeding, or administrative
tribunal proceeding, involving any of the Business Employees.

(c) The Company has made available to Purchaser copies of all certifications,
collective agreements, letters of understanding, and any applicable orders of
the labor relations board pertaining to a labor organization and which relate to
the employment of any of the Business Employees.

(d) (i) To the Company’s Knowledge, there are no complaints filed with any
Government Agency by any Business Employee (including, for purposes hereof, any
person who has in the past been employed by any of the AG Companies), against
any of the AG Companies claiming that any of the AG Companies has violated any
applicable Law or governmental order relating to employee or civil rights;
(ii) there are no complaints or proceedings of any kind involving any of the AG
Companies or, to the Company’s Knowledge, by any of the Business Employees,
before any labor relations board, including the National Labor Relations Board;
(iii) there are no outstanding orders or charges in respect of any of the
Business Employees against any of the AG Companies under any applicable Law or
governmental order relating to health and safety; and (iv) all levies,
assessments, and penalties made against any of the AG Companies pursuant to any
Law or governmental order providing for workers compensation for any of the
Business Employees have been paid by the AG Companies and has been reassessed
under such governmental order during the past five years, except in the case of
clauses (i), (ii) and (iii) above, such as would not reasonably be expected to
result in a Material Adverse Effect.

 

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CONFIDENTIAL TREATMENT REQUESTED:

INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED IS OMITTED AND
IS NOTED WITH “[REDACTED]”. AN UNREDACTED VERSION OF THIS DOCUMENT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

(e) To the Company’s Knowledge, all Business Employees are authorized to work in
the jurisdictions in which they are working according to applicable immigration
Laws.

(f) There are no actions or legal proceedings which are pending against any of
the AG Companies before any Government Agency, or arbitrator, or, to the
Company’s Knowledge, which have been asserted or threatened against any of the
AG Companies, in connection with any of the Business Employees for any of the
following, except such actions or legal proceedings that would not reasonably be
expected to result in a Material Adverse Effect (i) wages, salaries,
commissions, bonuses, vacation pay, severance or termination pay, sick pay or
other compensation; (ii) employee benefits; (iii) alleged unlawful, unfair,
wrongful or discriminatory employment or labor practices; (iv) alleged breach of
contract or other claim arising under a collective bargaining agreement,
individual agreement, or any other employment covenant whether express or
implied; (v) alleged violation of occupational safety and health standards; or
(vi) alleged violation of immigration, workers compensation, disability,
unemployment compensation, whistleblower Laws, family and medical leave, or
other employment or labor relations Laws.

(g) No grievance, arbitration, or other proceeding arising, or asserted to
arise, out of or under a collective bargaining agreement, relating to any of the
Business Employees (including, for purposes hereof, any person who has in the
past been employed by any of the AG Companies) is pending, except as such
grievance, arbitration or other proceeding would not be reasonably expected to
result in a Material Adverse Effect.

(h) None of the AG Companies is subject to any unsatisfied or pending settlement
agreement, conciliation agreement, letter of commitment, deficiency letter, or
consent decree with any of the Business Employees or applicant for employment,
labor union or other representative, or any Government Agency or arbitrator
relating to claims of unfair labor practices, employment discrimination, or
other claims with respect to employment and labor practices and policies, and no
Government Agency, administrative tribunal, or arbitrator has issued a judgment,
order, decree, injunction, decision, award, or finding with respect to the
employment and labor practices or policies of any of the AG Companies which
would reasonably be expected to result in a Material Adverse Effect.

Section 4.20 Environmental Matters. Except for matters that would not, singly or
in the aggregate, reasonably be expected to have a Material Adverse Effect, and
solely with respect to the time any Real Property was owned or operated by any
of the AG Companies, and except as disclosed in the environmental assessment
reports made available to Purchaser:

(a) None of the AG Companies is now, and none have been, in violation of
applicable Environmental Laws and, to the Company’s Knowledge, there are no
extant conditions that are reasonably expected to constitute such violation in
the future. There are no requests for information pending or, to the Company’s
Knowledge, threatened investigations by any Government Agency with respect to
past violations of applicable Environmental Laws.

 

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CONFIDENTIAL TREATMENT REQUESTED:

INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED IS OMITTED AND
IS NOTED WITH “[REDACTED]”. AN UNREDACTED VERSION OF THIS DOCUMENT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

(b) None of the AG Companies has used, generated, treated, stored, handled,
located, processed, buried, released, spilled, discharged, emitted, leaked,
transported, or disposed of wastes arising from or otherwise relating to the
Business, including those wastes containing Hazardous Materials (other than
motor oil, antifreeze, propane, household products and other similar items
included in inventory sold by AG Companies, or de minimis quantities of such
materials used in the operation and maintenance of the Real Property and the
Business), in violation of applicable Environmental Laws (including the filing
of any required reports with respect thereto) or environmental Permits. None of
the AG Companies has transported or arranged for the transportation of any
wastes or Hazardous Materials to any location which is, as of the Agreement
Date, listed on the United States Environmental Protection Agency National
Priorities List of Hazardous Waste Sites or other similar list maintained by any
Government Agency (such list, together with any similar state lists, shall be
referred to collectively as “National Priorities List”) or listed for possible
inclusion on the National Priorities List.

(c) None of the AG Companies has received any notice at any time that it or its
business as historically conducted is or was claimed to be in violation of the
provisions of any Environmental Law or in violation of the conditions of any
environmental Permit, and there is no pending or, to the Company’s Knowledge,
threatened action to that effect.

(d) There has been no action, suit, claim, arbitration, grievance, or complaint,
or any charge, proceeding or investigation commenced by or pending before any
Government Agency against any of the AG Companies under any Environmental Law or
otherwise with respect to the handling of any Hazardous Materials.

Section 4.21 Customers. Section 4.21 of the Company Disclosure Schedule contains
a complete and accurate list of the names and addresses of all customers of the
AG Companies as of the Agreement Date. None of the top 20 customers based on
purchases from the AG Companies for the four-week fiscal period ended on the
date of the June Balance Sheet has (a) ceased or substantially reduced or
changed the terms of its purchases from any of the AG Companies since the end of
such fiscal period or (b) to the Company’s Knowledge, threatened to cease or
substantially reduce or change its business with any of the AG Companies, by
reason of the Contemplated Transactions or otherwise.

Section 4.22 Suppliers. Section 4.22 of the Company Disclosure Schedule contains
a complete and accurate list of all suppliers of the AG Companies as of the
Agreement Date from whom the AG Companies purchased at least $1,000,000 in
products and services in the four-week fiscal period ended on the date of the
June Balance Sheet. None of the top 20 suppliers based on volume of products
purchased by the AG Companies for the four-week fiscal period ended on the date
of the June Balance Sheet has (a) ceased or substantially reduced or changed the
terms of its sales to any of the AG Companies since the end of such fiscal
period or (b) to the Company’s Knowledge, threatened to cease or substantially
reduce or change its sales to any of the AG Companies, by reason of the
Contemplated Transactions or otherwise.

 

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CONFIDENTIAL TREATMENT REQUESTED:

INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED IS OMITTED AND
IS NOTED WITH “[REDACTED]”. AN UNREDACTED VERSION OF THIS DOCUMENT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

Section 4.23 Brokers and Finders Fees. Except as to Piper Jaffray & Co., none of
the AG Companies has incurred, directly or indirectly, any liability for
brokerage or finders fees or agents commissions or any similar charges in
connection with this Agreement or the Acquisition.

Section 4.24 Inventory. The values at which inventories are carried reflect an
inventory valuation policy in accordance with GAAP.

Section 4.25 Acquired Receivables. All Acquired Receivables represent bona fide
transactions of the AG Companies. Except to the extent paid prior to the Closing
Date, and except as enforcement may be limited by the Equitable Remedy
Exception, such Acquired Receivables are or will be as of the Closing Date
collectible net of the respective reserves shown on the Closing Balance Sheet
(which reserves are adequate and calculated consistent with past practice). To
the Company’s Knowledge, there is no contest, claim, defense or right of setoff,
other than returns in the ordinary course of business of the AG Companies, under
any contract with any account debtor of any Acquired Receivables relating to the
amount or validity of such Acquired Receivables.

Section 4.26 Product Warranties; Products Liability.

(a) Section 4.26(a) of the Company Disclosure Schedule sets forth the standard
terms and conditions of warranties for, and current policies with respect to
returns of, products of each of the AG Companies.

(b) There exists no material pending nor, to the Company’s Knowledge, threatened
action, suit, inquiry, proceeding or investigation by any person or entity or by
or before any governmental body relating to any product distributed or sold by
the AG Companies to third parties, and alleged to have been defective or in
breach of any express or implied product warranty. Each of the AG Companies is
insured against product liabilities in accordance with the insurance policies
identified in Section 4.14 of the Company Disclosure Schedule, subject to any
applicable deductible or retention.

Section 4.27 Solvency. None of the AG Companies is insolvent nor will any be
rendered insolvent by any of the Contemplated Transactions. As used in this
section, “insolvent” means that the sum of the debts and other probable
liabilities of any of the AG Companies exceeds the present fair saleable value
of its assets.

Section 4.28 WARN Act. Each of the AG Companies either (i) is not and has not
been an “employer” or has not engaged in any “plant closing” or “mass layoff” as
such terms are defined in the Worker Adjustment Retraining and Notification Act
of 1988, as amended (the “WARN Act”), each within the 90 days prior to the
Closing, or (ii) has provided any notification required by the WARN Act or
comparable state laws, or satisfied any severance liabilities, payroll sums and
benefit amounts owed due to failure to provide such notice. Section 4.28 of the
Company Disclosure Schedule lists all employees that have suffered such an
“employment loss” in the 90 days prior to Closing.

 

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CONFIDENTIAL TREATMENT REQUESTED:

INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED IS OMITTED AND
IS NOTED WITH “[REDACTED]”. AN UNREDACTED VERSION OF THIS DOCUMENT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

Section 4.29 No Other Representations. The only representations and warranties
of the Company, or with respect to any of the AG Companies, are contained in
this Article 4 and the Company Disclosure Schedule. No due diligence or other
information or documents given or made available to Purchaser by any of the AG
Companies or any other Person shall be deemed to constitute express or implied
representations or warranties.

Article 5

Representations And Warranties Of Purchaser

Purchaser hereby represents and warrants to the Company as follows, except as
set forth in the disclosure schedule attached hereto by Purchaser (the
“Purchaser Disclosure Schedule”):

Section 5.01 Organization. Purchaser is a corporation duly organized, validly
existing, and in good standing under the Laws of its jurisdiction of
incorporation, and has all requisite corporate power and authority to own, lease
and operate its properties and to carry on its business as now being conducted.

Section 5.02 Authority and Enforceability. Purchaser has all requisite corporate
power and authority to enter into this Agreement and to complete the
Contemplated Transactions. The execution and delivery of this Agreement and the
other agreements contemplated herein and the completion of the Contemplated
Transactions have been duly authorized by all necessary corporate action on the
part of Purchaser. This Agreement has been duly executed and delivered by
Purchaser, and assuming that this Agreement constitutes the valid and binding
agreement of the Company, constitutes the valid and binding obligation of
Purchaser, enforceable in accordance with its terms, except as the enforcement
hereof may be limited by the Equitable Remedy Exception.

Section 5.03 No Violation.

(a) The execution and delivery of this Agreement and the completion of the
Contemplated Transactions by Purchaser do not conflict with or result in any
Violation of (i) any provision of the Governing Documents of Purchaser,
(ii) except as to which requisite waivers or consents can be obtained by
Closing, any material contract to which Purchaser is a party, or (iii) any Laws
applicable to Purchaser, except, in the case of clauses (ii) and (iii), for any
Violations that would not reasonably be expected have a Purchaser Material
Adverse Effect.

(b) No consent, waiver, approval, order or authorization of, or registration,
declaration or filing with, any Government Agency or any other person, including
a party to any material contract with Purchaser (so as not to trigger any
Violation), is required by or with respect to Purchaser in connection with the
execution and delivery of this Agreement or the completion of the Contemplated
Transactions, except for (i) the filing of a pre-merger notification and report
form by Purchaser under the HSR Act, and the expiration or termination

 

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CONFIDENTIAL TREATMENT REQUESTED:

INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED IS OMITTED AND
IS NOTED WITH “[REDACTED]”. AN UNREDACTED VERSION OF THIS DOCUMENT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

of the applicable waiting period thereunder, (ii) such filings and approvals as
may be required by any applicable state takeover, securities or blue sky Laws,
and (iii) such other consents, approvals, orders, authorizations, registrations,
declarations, filings, notices or permits that, if they were not obtained or
made, would not reasonably be expected have a Purchaser Material Adverse Effect.

Section 5.04 Brokers and Finders Fees. Except as to Wells Fargo Securities, LLC
and The Food Partners, neither Purchaser nor any of its affiliates has incurred,
directly or indirectly, any liability for brokerage or finders fees or agents
commissions or any similar charges in connection with this Agreement or any of
the Contemplated Transactions.

Section 5.05 Funding. Purchaser has the financial resources to satisfy
Purchaser’s obligations to pay the Closing Payment. Purchaser is not aware of
any facts or circumstances that cause Purchaser to believe that it will not, on
the Closing Date, have the financial resources necessary to complete the
Contemplated Transactions.

Section 5.06 Litigation. There is no suit, action, or similar legal proceeding
pending against, or to Purchaser’s Knowledge, threatened against Purchaser
before any court or arbitrator or any Government Agency, which would reasonably
be expected to have a Purchaser Material Adverse Effect.

Section 5.07 Due Diligence Investigation. Purchaser and its representatives have
been permitted access to books and records, facilities, equipment, tax returns,
contracts and agreements, insurance policies (or summaries thereof), other
documents, and other properties and assets of the AG Companies, have been given
the opportunity to meet with the officers and employees of the Company and to
perform such due diligence investigation and inquiries of the AG Companies as
they have required, and have completed all of their due diligence investigation
necessary or desirable for Purchaser to enter into this Agreement. Subject only
to the Company’s express representations and warranties contained in Article 4
above, Purchaser assumes the responsibility and risk of all defects and
conditions pertaining to the Real Property, Subleased Property, and other assets
of the AG Companies, including such defects and conditions, if any, that cannot
be observed by casual inspection, accepts them in their present “AS IS”
condition, and waives and releases all claims against the AG Companies with
regard to any condition affecting such property.

Notwithstanding any such access, meetings, and discussions, and notwithstanding
anything to the contrary, (a) no due diligence materials or other information or
documents shall be deemed to constitute express or implied representations or
warranties, and (b) Purchaser acknowledges that it has not received and are not
relying upon any representation or warranty, expressed or implied, by operation
of law or otherwise, as to the accuracy or completeness of any information
regarding any of the AG Companies or their businesses, results of operations,
financial condition, assets, liabilities, or prospects made available to
Purchaser or its representatives except as expressly set forth in Article 4
hereof and in the certificate delivered pursuant to Section 8.02(c).

 

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CONFIDENTIAL TREATMENT REQUESTED:

INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED IS OMITTED AND
IS NOTED WITH “[REDACTED]”. AN UNREDACTED VERSION OF THIS DOCUMENT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

Article 6

Conduct Prior To The Closing

Section 6.01 Affirmative Covenants of the Company. During the period from the
Agreement Date until the Closing or earlier termination of this Agreement,
except as expressly contemplated or permitted by this Agreement or to the extent
that Purchaser shall otherwise consent in writing, which shall not be
unreasonably withheld, delayed or conditioned, (a) the Company shall, and shall
cause each Subsidiary to, carry on the Business in the ordinary course in
substantially the same manner as heretofore conducted, and (b) the Company
shall, and shall cause each Subsidiary to, use commercially reasonable efforts
to (i) preserve intact its present business organization and goodwill, maintain
its rights and franchises, retain the services of its current officers and key
employees, and preserve its relationships with customers, suppliers, and others
having business dealings with it, (ii) maintain supplies and inventories in
quantities consistent with its customary business practices, (iii) keep in
effect insurance comparable in amount and scope of coverage to the Insurance
Policies, and (iv) maintain in effect all existing material Permits.

Section 6.02 Negative Covenants of the Company. During the period from the
Agreement Date until the Closing or earlier termination of this Agreement,
except as expressly contemplated by this Agreement or Section 6.02 of the
Company Disclosure Schedule or to the extent that Purchaser shall otherwise
consent in writing, which shall not be unreasonably withheld, delayed or
conditioned, the Company shall not do any of the following and shall prohibit
any Subsidiary from doing any of the following:

(a) Amend or propose to amend its Governing Documents.

(b) (i) Merge, consolidate with, or acquire any equity interest in any
corporation, partnership, association or other business organization, or enter
into an agreement with respect thereto, (ii) acquire or agree to acquire any
material assets, except for the purchase of inventory and supplies in the
ordinary course of business and except for capital expenditures that are
regularly scheduled or that are less than $250,000 individually and $500,000 in
the aggregate, or (iii) make any loan or advance to, or otherwise make any
investment in, any Person, other than loans or advances to, or investments in, a
Subsidiary (other than in connection with transactions involving real property,
which shall require Purchaser’s consent), trade debt or employee advances in the
ordinary course of business consistent with past practice.

(c) Sell, lease, encumber or otherwise dispose of, or agree to sell, lease
(whether such lease is an operating or capital lease), encumber or otherwise
dispose of, any of the Purchased Assets or the Contributed Assets, other than
sales of inventory or sales or returns of obsolete or surplus equipment in the
ordinary course of business consistent with past practice.

 

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CONFIDENTIAL TREATMENT REQUESTED:

INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED IS OMITTED AND
IS NOTED WITH “[REDACTED]”. AN UNREDACTED VERSION OF THIS DOCUMENT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

(d) Authorize, recommend, propose, or announce an intention to adopt a plan of
complete or partial liquidation or dissolution other than as necessary to effect
the Contemplated Transactions.

(e) Amend any of the Assumed Plans.

(f) (i) Assume or incur any indebtedness for borrowed money (except for draw
downs under existing credit facilities made in the ordinary course of business
consistent with past practice), (ii) issue or sell any debt securities or
warrants or rights to acquire any debt securities, (iii) guarantee any debt
obligations of any other Person (except obligations of the Subsidiaries in the
ordinary course of business (other than in connection with transactions
involving real property, which shall require Purchaser’s consent)), or
(iv) create any Lien (other than Permitted Exceptions) on the Purchased Assets
or the Contributed Assets or any property of any of the AG Companies subject to
a Lease.

(g) (i) Enter into, renew or allow for automatic renewal (to the extent
automatic renewal could be prevented by giving timely notice) of any Material
Contract or (ii) modify, rescind, terminate, waive, release or otherwise amend
in any material respect any of the terms or provisions of any Material Contract.

(h) Except as required by GAAP or applicable Law, make any changes with respect
to accounting policies, procedures and practices.

(i) Enter into any legally binding commitment to take any actions prohibited by
this Section 6.02.

(j) Make or cause to be made any election for the LLC to be classified as an
association taxable as a corporation for federal or any other Tax purposes, or
otherwise take any action that would cause the LLC to be classified as a
partnership or other business entity for federal or any other Tax purposes
(including, without limitation, causing the LLC to have more than one actual or
beneficial member).

Section 6.03 Consents. The Company shall use commercially reasonable efforts to
obtain such consents, waivers, and approvals under any of the Contracts,
Intellectual Property Rights and Permits as are necessary to complete the
Acquisition, including those described in Section 8.01(e), and Purchaser shall
cooperate with the Company, including providing such information about Purchaser
as parties to Contracts, Intellectual Property Rights and Permits may request.

Section 6.04 Company Shareholder Approval. The Company shall promptly after the
Agreement Date give all required notices and take all action necessary in
accordance with the Washington Business Corporation Act, as codified in title
23B of the Revised Code of Washington (the “WBCA”), and its Governing Documents,
(i) to notify the shareholders of a meeting to seek the Company Shareholder
Approval and (ii) to mail to shareholders information

 

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CONFIDENTIAL TREATMENT REQUESTED:

INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED IS OMITTED AND
IS NOTED WITH “[REDACTED]”. AN UNREDACTED VERSION OF THIS DOCUMENT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

relevant to their vote and as required under the WBCA (as such information may
amended or supplemented, the “Company Information Statement”). The Company shall
provide Purchaser with the Company Information Statement a sufficient time in
advance of its mailing to allow Purchaser to review it and the Company shall
review and consider Purchaser’s comments, if any. The Board of Directors and
each of the AG Companies, as applicable, shall

(a) promptly and duly call, give notice of, convene and hold a meeting of its
shareholders for the purpose of obtaining the Company Shareholder Approval,

(b) recommend approval of the Acquisition and this Agreement and the dissolution
of the Company and the plan of dissolution adopted by the Board of Directors of
the Company by its shareholders and include in the Company Information Statement
such recommendations, and

(c) take all commercially reasonable and lawful action to solicit and obtain the
Company Shareholder Approval, subject to Section 6.09 hereof.

Section 6.05 Access to Information. The Company shall afford to Purchaser and
its accountants, counsel, and other representatives reasonable access during the
period prior to the Closing to all of the AG Companies’ properties, books,
Contracts, Leases, Permits, commitments and records, all other information
concerning the Business, properties and personnel (subject to restrictions
imposed by applicable Law) as Purchaser may reasonably request for the purpose
of determining actions necessary to complete the Acquisition and to determine
satisfaction of the conditions to Closing set forth in Article 8 hereof.
Purchaser shall afford to the Company and its representatives reasonable access
during the period prior to the Closing to such information (subject to
restrictions imposed by applicable Law) as the Company may reasonably request
for the purposes of determining actions necessary to complete the Acquisition
and Purchaser’s plans for supplying the Company’s customers, and to determine
satisfaction of the conditions to Closing set forth in Article 8 hereof. If
Purchaser or any of its representatives enters onto any of the Real Property or
Subleased Property prior to Closing, they shall do so in a prudent and
reasonable manner and so as to not interfere with the rights or operations of
any parties in possession or violate any Permitted Exceptions; Purchaser shall
defend, indemnify and hold the AG Companies harmless from any damages, injuries,
Liens, losses, expenses (including reasonable attorneys’ fees) or claims arising
from or related to such entry by Purchaser or any of its representatives, and
such indemnification and defense obligation shall survive the Closing or earlier
termination of this Agreement.

Section 6.06 Public Disclosure. No party hereto shall make any disclosure or
issue any statement or communication to any third party regarding the existence
or subject matter of this Agreement or the Contemplated Transactions, including,
if applicable, the termination of this Agreement and the reasons therefor,
without the consent of the Company and Purchaser, which consent shall not be
unreasonably withheld, conditioned, or delayed; provided, however, that
(a) Purchaser may make any public disclosure required by applicable securities
Law or any listing or trading agreement concerning its publicly traded
securities (in which case the Company

 

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CONFIDENTIAL TREATMENT REQUESTED:

INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED IS OMITTED AND
IS NOTED WITH “[REDACTED]”. AN UNREDACTED VERSION OF THIS DOCUMENT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

shall be entitled to advance review and approval prior to any such disclosure
and Purchaser, with respect to any required Government Agency filings, shall
make such confidential treatment requests as are reasonably requested by the
Company), (b) the Company may disclose information as necessary or desirable to
seek consents or provide notices contemplated hereunder, including in connection
with the Company Shareholder Approval and Section 6.03, Section 6.04, and
Section 6.07 hereof, (c) the Company may disclose the information contemplated
in Section 6.09 hereof, (d) the parties may disclose information to such of its
legal, accounting, financial, or other advisors or representatives as has a
reason to know such information, and (e) the parties will prepare a plan for
communications to Business Employees.

Section 6.07 HSR Compliance. As of the date of this Agreement, Purchaser has
concluded that it is not required to file with the Federal Trade Commission and
the Antitrust Division of the Department of Justice a notification under the HSR
Act with respect to the Contemplated Transactions. If, based upon changed
circumstances, new information and, in the reasonable judgment of Purchaser, the
likelihood that the Closing will occur later than 60 days after the date of this
Agreement, Purchaser determines that such a filing is required, Purchaser will
promptly so notify the Company. In the event of such notice, Purchaser and the
AG Companies each shall file or cause to be filed with the Federal Trade
Commission and the Antitrust Division of the Department of Justice any
notification required to be filed by their respective ultimate parent companies
under the HSR Act with respect to the Contemplated Transactions. Such parties
will use all reasonable efforts to make such filings promptly after such written
notice, and in any case within ten business days thereafter. Purchaser and the
AG Companies each agrees to furnish the other with such information and
assistance as the other may reasonably request in connection with its
preparation of any filing or submission necessary under the HSR Act. Purchaser
and the Company each shall keep the other apprised in a prompt manner of the
status and inquiries or request for additional information from the FTC and the
DOJ and shall comply promptly with any such inquiry request. Purchaser and the
Company each shall use commercially reasonable efforts to obtain the termination
or expiration of any applicable waiting period required under the HSR Act for
the completion of the Contemplated Transactions.

Section 6.08 Non-Solicitation. Subject to Section 6.09, after the Agreement Date
until the Closing or earlier termination of this Agreement, none of the AG
Companies will directly or indirectly solicit a Takeover Proposal; enter into,
continue, or participate in discussions or negotiations regarding a Takeover
Proposal; or, except as contemplated herein, furnish to any third party any
material nonpublic information to facilitate a Takeover Proposal. Each of the AG
Companies shall, and shall cause its directors, officers or employees or any
investment banker, financial advisor, attorney, accountant or other advisor,
agent or representative (collectively, “Representatives”) retained by it to,
immediately cease and cause to be terminated all existing discussions or
negotiations with any Person conducted heretofore with respect to any Takeover
Proposal. Each of the AG Companies agrees it will take the necessary steps to
inform promptly its Representatives of the obligations undertaken in this
Section 6.08. “Takeover Proposal” means a bona fide proposal or offer from a
Person (other than Purchaser or any of its Affiliates)

 

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CONFIDENTIAL TREATMENT REQUESTED:

INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED IS OMITTED AND
IS NOTED WITH “[REDACTED]”. AN UNREDACTED VERSION OF THIS DOCUMENT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

for a direct or indirect acquisition of all or substantially all of the
Purchased Assets and the Contributed Assets of the AG Companies or a majority of
the Class A Common Stock, whether by tender offer, exchange offer, merger,
consolidation, or similar transaction, that was not solicited in violation of
this Section 6.08. Announcements, publicity or other disclosures concerning any
aspect of this Agreement or the Acquisition, including the existence of this
Section 6.08 or the AG Companies’ obligations hereunder, shall not constitute a
solicitation in violation of this Section 6.08, provided that such disclosures
were not made in violation of Section 6.06.

Section 6.09 Proposals.

(a) Notwithstanding anything to the contrary, including Section 6.04 and
Section 6.08, if (i) the Company receives a Takeover Proposal and the Company
discloses to Purchaser the material terms and conditions of the Takeover
Proposal and the identity of the Person making such Takeover Proposal and
(ii) the Board of Directors determines that such Takeover Proposal is or is
reasonably likely to lead to a Superior Proposal (after taking into account any
written binding offer by Purchaser to improve the terms of this Agreement or the
Contemplated Transactions in response to such Takeover Proposal), the Company
and its Representatives may

(1) furnish information with respect to any of the AG Companies to the Person
making the Takeover Proposal (and its Representatives) pursuant to a customary
confidentiality agreement, and

(2) participate in discussions or negotiations with the Person making the
Takeover Proposal (and its Representatives) regarding the Takeover Proposal.

(b) The Company agrees that neither the Board of Directors nor any committee
thereof shall (i)(A) withdraw (or modify in a manner adverse to Purchaser), or
propose to withdraw (or modify in a manner adverse to Purchaser), the
recommendation or declaration of advisability by the Board of Directors or any
committee thereof of this Agreement or the Acquisition or (B) recommend, adopt
or approve, or propose publicly to recommend, adopt or approve, any Takeover
Proposal or (ii) approve or recommend, or propose to approve or recommend, or
allow any of the AG Companies or any of their Representatives to execute or
enter into, any letter of intent, memorandum of understanding, agreement in
principle, merger agreement, acquisition agreement, option agreement, joint
venture agreement, partnership agreement or other similar agreement constituting
or related to any Takeover Proposal (other than a confidentiality agreement
pursuant to Section 6.09(a)(1)). Notwithstanding anything to the contrary,
including Section 6.04,

(1) the Board of Directors or any committee thereof may withdraw or modify its
recommendation of the Acquisition and this Agreement, withdraw or modify the
Company Information Statement, cancel or postpone any meeting of the
shareholders, and otherwise communicate with the shareholders of the Company as
the Board of Directors or any

 

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CONFIDENTIAL TREATMENT REQUESTED:

INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED IS OMITTED AND
IS NOTED WITH “[REDACTED]”. AN UNREDACTED VERSION OF THIS DOCUMENT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

committee thereof deems necessary or appropriate, if the Board of Directors or
any committee thereof determines in good faith (after consultation with outside
counsel) that it is advisable to do so in order to comply with its duties to the
shareholders of the Company under applicable Law; and

(2) in response to a Superior Proposal that did not result from a breach of
Section 6.08 or this Section 6.09, the Board of Directors may terminate this
Agreement pursuant to Section 9.01(i). Concurrently with or after such
termination, the Company may enter into any letter of intent, memorandum of
understanding, agreement in principle, merger agreement, acquisition agreement,
option agreement, joint venture agreement, partnership agreement or other
similar agreement with respect to such Superior Proposal;

provided, however, that the Company shall pay to Purchaser the Termination Fee
as provided in Section 9.03.

(c) “Superior Proposal” means a Takeover Proposal on terms and conditions which
the Board of Directors determines in good faith are (considering such factors as
the Board of Directors deems appropriate, including the likelihood of
completion) more favorable to the Company and its shareholders than those set
forth in this Agreement.

Article 7

Additional Covenants

Section 7.01 Expenses. Whether or not the Acquisition is completed, each party
hereto is solely responsible for all fees and expenses that such party incurs in
connection with the negotiation and effectuation of the terms and conditions of
this Agreement and the Contemplated Transactions, except with respect to claims
for damages incurred as a result of a material breach of this Agreement.
Purchaser shall be responsible for paying any escrow fees in connection with the
Contemplated Transactions.

Section 7.02 Tax Matters.

(a) Wage Reporting. Purchaser and the Company agree to utilize, or to cause
their respective Affiliates to utilize, the standard procedure set forth in
Revenue Procedure 2004-53 with respect to wage reporting.

(b) Payment of Taxes. To the fullest extent permitted by Law, the AG Companies
shall bear all transfer (including real estate transfer), documentary, sales,
use, stamp, registration, real estate excise, and other Taxes and fees incurred
in connection with the transfer of the Purchased Assets under this Agreement or
the Contemplated Transactions. The AG Companies shall timely pay the real estate
excise taxes arising with respect to the Contemplated Transactions at Closing
and shall hold Purchaser harmless from any liability arising from the AG
Companies’ failure to pay such amounts. Purchaser and the AG Companies shall
sign and

 

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CONFIDENTIAL TREATMENT REQUESTED:

INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED IS OMITTED AND
IS NOTED WITH “[REDACTED]”. AN UNREDACTED VERSION OF THIS DOCUMENT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

deliver for filing at Closing any real estate excise tax affidavit (including
Washington State Department of Revenue Form 84-00 1 B) required to be filed in
connection with the Contemplated Transactions.

(c) Cooperation on Tax Matters. The parties shall cooperate, as and to the
extent reasonably requested by the other party, in connection with any audit,
litigation or other proceeding with respect to Taxes. Such cooperation shall
include the retention and (upon the other party’s request) the provision of
records and information which are reasonably relevant to any such audit,
litigation or other proceeding and making employees available on a mutually
convenient basis to provide additional information and explanation of any
material provided hereunder. The parties further agree, upon request, that they
will use their best efforts to obtain any certificate or other document from any
Tax authority or any other person as may be necessary to mitigate, reduce, or
eliminate any Tax that could be imposed (including with respect to the
Contemplated Transactions).

Section 7.03 Employees.

(a) Purchaser shall make an offer of employment to a number of the Business
Employees (including all 25 Business Employees employed at the Sea-Tuk Warehouse
who are currently participants in the Washington Meat Industry Pension Trust) at
least equal to the minimum number that would be required to receive offers of
employment, and Purchaser shall commit to retain a sufficient number of those
Business Employees who accept such offers (other than those who Purchaser
terminates for cause) for a sufficient period of time after Closing, to avoid
application of the WARN Act to the termination of employees by the AG Companies
in connection with the Contemplated Transactions, and such offer shall be
conditioned only on (i) the occurrence of the Closing and (ii) satisfaction of
Purchaser’s standard hiring criteria, including drug testing standards. Any
liability or obligation resulting from any failure to comply with the WARN Act,
other than Purchaser’s failure to comply with the provisions of this
Section 7.03(a), shall be the sole responsibility of the AG Companies. Purchaser
shall provide the Company weekly with information as to the number of Business
Employees to whom it has made an offer of employment and the number of those
offerees who have satisfied Purchaser’s standard hiring criteria, including drug
testing standards. The Business Employees that Purchaser hires are referred to
as the “Hired Employees”. Each Hired Employee who satisfies the eligibility
criteria of Purchaser-sponsored group health plan (the “Health Plan”) shall be
immediately eligible to enroll in the Health Plan. Upon proper completion and
submission of any required enrollment forms, coverage for the Hired Employees
and their eligible dependents shall be effective on the Hired Employee’s first
day of employment. Any waiting period provisions in the Health Plan shall not
apply to Hired Employees and their eligible dependents.

(b) Each of the AG Companies shall terminate all of the Hired Employees
immediately prior to the Closing and shall satisfy all obligations with respect
to accrued salaries and benefits, including accrued sick, vacation and other
paid leave. The AG Companies shall pay such terminated employees all amounts due
to them within the time periods required, as the

 

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CONFIDENTIAL TREATMENT REQUESTED:

INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED IS OMITTED AND
IS NOTED WITH “[REDACTED]”. AN UNREDACTED VERSION OF THIS DOCUMENT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

case may be, by the terms of any of the items listed in Section 4.17 of the
Company Disclosure Schedule, agreement or applicable law, other than as provided
in (c) below.

(c) The Company shall assume responsibility for the provision of required COBRA
notices and coverage to all employees of the AG Companies and their ERISA
Affiliates who become “M&A qualified beneficiaries,” within the meaning of
Treas. Reg. § 1.4980B-9, Q&A-4(a), with respect to the Contemplated
Transactions, and the related COBRA beneficiaries of the M&A qualified
beneficiaries; and the Company shall continue to sponsor or maintain a “group
health plan” until the AG Companies cease to have any employees; provided,
however, that if the AG Companies and their ERISA Affiliates cease to sponsor or
maintain any “group health plan” following the Closing, Purchaser shall assume
responsibility for providing such notices and coverage to the extent required by
COBRA, and the Company shall indemnify Purchaser for any cost or liability
arising out of or in connection with Purchaser’s assumption of such COBRA
liability, including the cost to Purchaser under any self-insured plan of paid
claims not reimbursed by stop-loss insurance less the amount of any premiums
paid to Purchaser.

(d) With respect to the Washington Meat Industry Pension Trust (the
“Multiemployer Plan”), Purchaser agrees to negotiate with the United Food and
Commercial Workers Union Local 81 an obligation for Purchaser to contribute to
the Multiemployer Plan, with respect to Hired Employees who are participants in
the Multiemployer Plan, contribution base units for each Hired Employee at a
rate that is at least substantially the same as the rate at which the Company
was obligated to contribute to the Multiemployer Plan immediately before the
Closing Date. Accordingly, the parties intend that ERISA Section 4204 and this
paragraph will apply. Unless the Multiemployer Plan waives the obligation to
post bond pursuant to 29 CFR section 4204.11, the Company shall provide, or,
alternatively, pay the cost if Purchaser is required to purchase, any bond
required by regulations under ERISA Section 4204 by the time required by such
regulations. The Purchaser agrees to execute any request for waiver of the bond
that the Company may request. The AG Companies shall remain secondarily liable
if the Purchaser withdraws from the Multiemployer Plan in a complete withdrawal
or a partial withdrawal with respect to the operations on or before the end of
the fifth plan year beginning after the Closing Date. If Purchaser incurs
liability for withdrawing from the Multiemployer Plan in a complete withdrawal
or partial withdrawal on or before the end of the fifth plan year that begins
after the Closing Date (such liability, the “Withdrawal Liability”), the Company
shall indemnify the Purchaser for such Withdrawal Liability up to the following
amount: (a) the AG Companies’ Withdrawal Liability if a complete withdrawal had
occurred on the Closing Date, as estimated by the appropriate plan actuary or
administrator for the Multiemployer Plan (the “Withdrawal Liability Amount”),
multiplied by (b) a fraction, the denominator of which shall be the benefits
accrued under the Multiemployer Plan by Hired Employees during the five plan
years before the plan year in which withdrawal occurs (the “Withdrawal Liability
Measuring Period”), and the numerator of which shall be the benefits accrued
under the Multiemployer Plan by such employees while they were employees of the
AG Companies during the Withdrawal Liability Measuring Period, as all such
accruals are calculated by the

 

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CONFIDENTIAL TREATMENT REQUESTED:

INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED IS OMITTED AND
IS NOTED WITH “[REDACTED]”. AN UNREDACTED VERSION OF THIS DOCUMENT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

Multiemployer Plan, and (c) reduced proportionately if Purchaser incurs only
partial Withdrawal Liability. The Company agrees that the Withdrawal Liability
Amount shall be deducted from the Purchase Price and placed in escrow at the
Closing to secure the Company’s obligation to indemnify Purchaser for the
Withdrawal Liability. The balance of the funds remaining in escrow, if any,
including any interest accrued, will be released to the Company no later than
the first day after the end of the fifth plan year that begins after the Closing
Date or, if the Withdrawal Liability for withdrawals during that fifth plan year
is zero, as soon as the Multiemployer Plan certifies that Withdrawal Liability
in that plan year is zero. The balance of the funds remaining in escrow, if any,
including any interest accrued, shall also be released to the Company at such
time as and to the extent the Multiemployer Plan assesses withdrawal liability
against the AG Companies rather than the Purchaser for the operations sold to
Purchaser.

(e) The Company shall cooperate with respect to preparation and adoption of any
documentation that the Purchaser reasonably requests to transfer sponsorship of
any of the Assumed Plans.

Section 7.04 Real Estate Documents.

(a) The Company shall obtain and deliver to Purchaser environmental assessment
reports with respect to the Owned Real Property, which reports shall conform to
ASTM Standard E 1527-05 for Phase I Environmental Site Assessments (the “Phase I
Assessments”).

(b) The Company has obtained and delivered to Purchaser preliminary commitments
(collectively, the “Commitment”) for owner’s standard coverage ALTA form of
title insurance policies for the Owned Real Property that is included in the
Purchased Assets showing the record title to all such Owned Real Property. All
costs of the title examination fee, and all other premiums, costs, fees, charges
and expenses in connection with each such owner’s title insurance policy
(excluding any endorsements) shall be paid by the Company. In addition, the
Company has delivered to Purchaser true and complete copies of all other deeds,
leases, mortgages, deeds of trust, certificates of occupancy, surveys and
similar documents, and all amendments thereof, in any AG Companies’ possession
with respect to the Real Property.

(c) Except with respect to Excluded Assets or Retained Liabilities, the Company
shall use commercially reasonable efforts to obtain and deliver to Purchaser
estoppel certificates substantially in the form attached as Exhibit I executed
by each landlord from whom any of the AG Companies leases property under a
Lease.

Section 7.05 SAS 100 Review. No later than 15 days before the Closing Date, the
Company shall cause its outside independent auditor (a) to perform a review of
the Company balance sheet for the fiscal quarter ended July 6, 2007 pursuant to
Statement of Accounting Standard (SAS) 100 and (b) to deliver the SAS 100 review
report to Purchaser. Purchaser shall reimburse the Company at the Closing for
the out-of-pocket expenses incurred by the Company in connection with the SAS
100 review, not to exceed [REDACTED].

 

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CONFIDENTIAL TREATMENT REQUESTED:

INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED IS OMITTED AND
IS NOTED WITH “[REDACTED]”. AN UNREDACTED VERSION OF THIS DOCUMENT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

Section 7.06 Collection of Accounts Receivable. Purchaser will bill customers
for deliveries of inventory that occurred prior to Closing but were not billed
prior to Closing, and the amounts thereof shall be Excluded Accounts Receivable.
For a period of 90 days after Closing, Purchaser will use commercially
reasonable efforts to collect on behalf of the AG Companies all of the Excluded
Accounts Receivable and will remit the full proceeds of such collection efforts
to the Company, without set-off, withholding or delay of any kind, (i) daily,
with respect to trade accounts receivable that are Excluded Accounts Receivable
and (ii) no later than the end of the 90-day period for other Excluded Accounts
Receivable. Purchaser will use at least the same care and effort in collecting
the Excluded Accounts Receivable that Purchaser uses in the collecting its own
receivables. Monies that Purchaser receives with respect to an account debtor of
any of the AG Companies shall be applied to reduce oldest outstanding Excluded
Accounts Receivable with respect to such account debtor, before applying any
monies to any Acquired Receivable, any accounts receivable created after Closing
or any other amounts, unless such account debtor specifically designates a
particular receivable or the payment is identical in amount to a particular
receivable, in which case the monies received should be applied as directed by
the account debtor or to such particular receivable. The Company will reimburse
Purchaser for any reasonable out-of-pocket expenses incurred by Purchaser in its
collection efforts if such expenses were approved in advance by the Company.
Upon conclusion of the 90-day period, Purchaser will deliver to the Company all
information in the care, custody or control of Purchaser concerning its efforts
to collect any Excluded Accounts Receivable that remain unpaid at such time. If,
after the 90-day period, Purchaser receives payments for Excluded Accounts
Receivable or Discretionary Funds, Purchaser shall remit such amounts to the
Company no less frequently than every 90 days.

Section 7.07 Membership in Purchaser. No later than the first anniversary of the
Closing Date, Purchaser will offer shareholders of the Company the opportunity
to become members of Purchaser on the standard terms published by Purchaser from
time to time, except that the former Company shareholders will be given the
option to build their Class-B requirement by assignment of patronage dividends.

Section 7.08 Access to Information; Transition Services. From and after Closing,
Purchaser shall cooperate with the AG Companies and their accountants, counsel,
and other representatives and afford to them reasonable access to all
properties, books, Contracts, Leases, Permits, commitments and records, all
other information concerning the Business, properties and personnel (subject to
restrictions imposed by applicable Law) as they may reasonably request for the
purposes relating to this Agreement or the dissolution, winding down and
liquidation of the AG Companies. Purchaser and the Company shall, if necessary,
negotiate in good faith a mutually acceptable space and transition services
agreement under which Purchaser will provide office space at 3301 South Norfolk
Street, Seattle, Washington and specified services to the Company after the
Closing. The AG Companies shall have royalty-free licenses to use their names
and marks in connection with their activities in dissolution, winding down and
liquidation.

 

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CONFIDENTIAL TREATMENT REQUESTED:

INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED IS OMITTED AND
IS NOTED WITH “[REDACTED]”. AN UNREDACTED VERSION OF THIS DOCUMENT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

Article 8

Conditions To The Acquisition

Section 8.01 Conditions to Each Party’s Obligation to Effect the Acquisition.
The respective obligations of each party to effect the Acquisition shall be
subject to the satisfaction on or prior to the Closing Date of the following
conditions:

(a) Company Shareholder Approval. Both the Acquisition, including this
Agreement, and the dissolution of the Company, including the plan of dissolution
adopted by the Board of Directors of the Company, shall have been approved by
the shareholders of the Company at a meeting called for such purpose in
accordance with the Governing Documents of the Company and applicable Laws
(collectively, the “Company Shareholder Approval”).

(b) HSR Act. The waiting period (and any extension thereof) applicable to the
Acquisition under the HSR Act shall have been terminated or shall have expired,
and no order or other requirements that would be materially restrictive to the
ongoing operations of the business of Purchaser shall have been placed on the
parties in connection therewith.

(c) No Restraints. No temporary restraining order, preliminary or permanent
injunction, or other order issued by any court or other Government Agency of
competent jurisdiction preventing the completion of the Acquisition shall be in
effect.

(d) Statutes. No Law shall have been enacted, promulgated, or otherwise issued
by any Government Agency with authority to enforce such Law, which would make
completion of the Closing illegal.

(e) Required Consents. All consents listed in Section 8.01(e) of the Company
Disclosure Schedule shall have been obtained.

Section 8.02 Additional Conditions to the Obligations of Purchaser. In addition
to the conditions in Section 8.01, the obligations of Purchaser to effect the
Acquisition shall be subject to the satisfaction at or prior to the Closing of
each of the following conditions, any of which may be waived, solely in writing,
and exclusively by Purchaser:

(a) Representations and Warranties. The representations and warranties of the AG
Companies contained in Article 4 hereof shall be true and correct as of the
Closing Date as though made on that date, and the representations and warranties
made as of a specified date earlier than the Closing Date shall have been true
and correct in all respects on and as of such earlier date, except (i) for
changes contemplated by this Agreement and (ii) to the extent that such breaches
or inaccuracies, in the aggregate, would not reasonably be expected have a
Material Adverse Effect (provided, however, that any representation or warranty
that is subject to a materiality or Material Adverse Effect qualification shall
not be subject to such qualification for purposes of determining breaches or
inaccuracies of this clause (ii)).

 

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CONFIDENTIAL TREATMENT REQUESTED:

INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED IS OMITTED AND
IS NOTED WITH “[REDACTED]”. AN UNREDACTED VERSION OF THIS DOCUMENT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

(b) Covenants. All covenants to be complied with and performed by the Company on
or before the Closing Date shall have been complied with or performed in all
material respects.

(c) Closing Certificate of the Company. Purchaser shall have received a
certificate executed on behalf of the Company by a duly authorized officer of
the Company to the effect, as of the Closing, of Section 8.02(a) and
Section 8.02(b) (unless otherwise waived in accordance with the terms thereof).

(d) Certified Resolutions. Purchaser shall have received a certificate, validly
executed by the Secretary of the Company, certifying as to (i) the valid
adoption of resolutions of the Board of Directors and the AG Companies’
shareholders approving the Acquisition and this Agreement in accordance with the
Governing Documents and applicable Laws and (ii) the incumbency and signatures
of the officers of each of the AG Companies.

(e) FIRPTA Affidavit. The Company shall deliver to Purchaser a non-foreign
affidavit dated as of the Closing Date, sworn under penalty of perjury and in
form and substance required under Treasury Regulations promulgated under
Section 1445 of the Code stating that the Company is not a “foreign person” as
defined in Section 1445 of the Code.

(f) Aggregate Minimum Annual Committed Purchases of Qualified Retailers.
Qualified Retailers shall have entered into supply agreements, in substantially
the form attached as Exhibit J or as otherwise agreed by Purchaser (each, a
“Supply Agreement”), with Purchaser (or with the Company and assignable to
Purchaser, if approved in writing by Purchaser) that in the aggregate provide
for committed annual purchases from Purchaser of [REDACTED].

(g) Title Insurance Policies. Purchaser shall have received written confirmation
from the title insurance company issuing the Commitment that it is ready,
willing and able to issue its fully paid standard ALTA form of owner’s title
insurance policy or policies in which Purchaser is named as the sole holder of
fee simple title to all of the Owned Real Property in the aggregate amount
[REDACTED] and subject only to the Permitted Exceptions.

(h) Estoppel Certificates. Purchaser shall have received all of the original,
executed estoppel certificates from the landlords identified in Section 7.04(c).

(i) Phase I Assessments. Purchaser shall have received the Phase I Assessments.

(j) Company Member Distributions. Purchaser shall have received a schedule
setting forth, for each member of the Company, its name and the Company’s
estimate of the percentage of the Purchase Price the member would be entitled to
receive if the Company distributed the Purchase Price as a dividend to its
members, without deduction for any rights of set-off the Company may have with
respect to the member.

 

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CONFIDENTIAL TREATMENT REQUESTED:

INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED IS OMITTED AND
IS NOTED WITH “[REDACTED]”. AN UNREDACTED VERSION OF THIS DOCUMENT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

Section 8.03 Additional Conditions to the Obligations of the AG Companies. In
addition to the conditions in Section 8.01, the obligations of each of the AG
Companies to complete and effect the Acquisition shall be subject to the
satisfaction at or prior to the Closing of each of the following conditions, any
of which may be waived, solely in writing, and exclusively by the Company:

(a) Representations and Warranties. The representations and warranties of
Purchaser contained in Article 5 hereof shall be true and correct as of the
Closing Date as though made on that date, and the representations and warranties
made as of a specified date earlier than the Closing Date shall have been true
and correct in all respects on and as of such earlier date, except (i) for
changes contemplated by this Agreement and (ii) to the extent that such breaches
or inaccuracies, in the aggregate, would not reasonably be expected have a
Purchaser Material Adverse Effect (provided, however, that any representation or
warranty that is subject to a materiality or Material Adverse Effect
qualification shall not be subject to such qualification for purposes of
determining breaches or inaccuracies of this clause (ii)).

(b) Covenants. All covenants to be complied with and performed by Purchaser on
or before the Closing Date shall have been complied with or performed in all
material respects.

(c) Closing Certificate of Purchaser. The Company shall have received a
certificate executed on behalf of Purchaser, respectively, by a duly authorized
officer of Purchaser to the effect, as of the Closing, of Section 8.03(a) and
Section 8.03(b) (unless otherwise waived in accordance with the terms thereof).

(d) Certified Resolutions. The Company shall have received (i) a certificate,
validly executed by the Secretary of Purchaser, certifying as to the valid
adoption of resolutions of the board of directors of Purchaser approving the
Acquisition and this Agreement in accordance with applicable Laws and the
incumbency and (ii) signatures of the officers of Purchaser.

(e) Closing Payments. Purchaser shall have delivered the full amount of the
Closing Payment in accordance with Section 3.05 hereof.

(f) Aggregate Minimum Annual Committed Purchases of Qualified Retailers.
Qualified Retailers shall have entered into Supply Agreements with Purchaser (or
with the Company and assignable to Purchaser) that in the aggregate provide for
committed annual purchases from Purchaser of [REDACTED].

(g) WARN Compliance. The Company shall not be required to complete the Closing
until the earlier of: (i) the 61st day after the Agreement Date or (ii) the date
on which a sufficient number of Business Employees offered employment by
Purchaser have met Purchaser’s standard hiring criteria to avoid any liabilities
or obligations of the AG Companies under the WARN Act or comparable state Laws.

 

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CONFIDENTIAL TREATMENT REQUESTED:

INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED IS OMITTED AND
IS NOTED WITH “[REDACTED]”. AN UNREDACTED VERSION OF THIS DOCUMENT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

Article 9

Termination, Amendment And Waiver

Section 9.01 Termination. Subject to Section 9.02, this Agreement may be
terminated and the Acquisition abandoned at any time prior to the Closing only
by written notice in one of the following circumstances:

(a) By mutual written agreement of the Company and Purchaser.

(b) By Purchaser or the Company if the Closing shall not have occurred by
October 5, 2007; provided, however, that a party shall not be entitled to give
such notice if it is in material breach of any of its obligations under this
Agreement.

(c) By Purchaser or the Company if (i) there shall be a final non-appealable
order of a federal or state court in effect preventing completion of the
Acquisition or (ii) there shall be any Law enacted, promulgated or issued or
deemed applicable to the Acquisition by any Government Agency with authority to
enforce such Law, which would make completion of the Acquisition illegal.

(d) By Purchaser if (i) Purchaser is not in material breach of its obligations
under this Agreement, (ii) all other conditions to close set forth in
Section 8.01 and Section 8.03(a)-Section 8.03(d) have been satisfied or waived
as of the date of termination of this Agreement (or are to be satisfied or
waived at Closing), and (iii) there has been a material breach of any
representation, warranty, covenant or agreement of the Company contained in this
Agreement such that the conditions set forth in Section 8.02(a) or
Section 8.02(b) would not be satisfied and such breach has not been cured within
ten calendar days after written notice thereof to the Company; provided,
however, that no cure period shall be required for a breach which by its nature
cannot be cured.

(e) By the Company if (i) the Company is not in material breach of its
obligations under this Agreement, (ii) all other conditions to close set forth
in Section 8.01 and Section 8.02 have been satisfied or waived as of the date of
termination of this Agreement (or are to be satisfied or waived at Closing), and
(iii) there has been a material breach of any representation, warranty, covenant
or agreement of Purchaser contained in this Agreement such that the conditions
set forth in Section 8.03(a) or Section 8.03(b) would not be satisfied and such
breach has not been cured within ten calendar days after written notice thereof
to Purchaser; provided, however, that no cure period shall be required for a
breach which by its nature cannot be cured.

(f) By Purchaser if the Board of Directors has, in either case adversely to
Purchaser, withdrawn or modified its recommendation of the Acquisition and this
Agreement, withdrawn the Company Information Statement or cancelled the meeting
at which the Company Shareholder Approval was to have been sought.

 

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CONFIDENTIAL TREATMENT REQUESTED:

INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED IS OMITTED AND
IS NOTED WITH “[REDACTED]”. AN UNREDACTED VERSION OF THIS DOCUMENT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

(g) By Purchaser if a tender offer or exchange offer relating to the Class A
Common Stock shall have been commenced by a party other than Purchaser or any of
its Affiliates and the Company shall not have promptly thereafter sent its
shareholders a statement recommending rejection of the tender offer or exchange
offer.

(h) By the Company, to the extent permitted by Section 6.09(b)(2), if at any
time before the Closing all of the following conditions are met:

(1) the Board of Directors authorizes the Company to enter into a binding
written agreement concerning a transaction that constitutes a Superior Proposal
and the Company notifies Purchaser in writing that it intends to enter into such
an agreement, attaching a summary of the material terms thereof; and

(2) Purchaser does not make, within five business days after the receipt of the
Company’s written notification of its intention to enter into a binding
agreement for a Superior Proposal, a written offer that the Board of Directors
determines, in good faith consistent with its fiduciary obligations under
applicable Law after consultation with its legal counsel and financial advisor,
is at least as favorable (taking into account the terms and conditions of the
offer and this Agreement and the interests of the Company and its shareholders)
as the Superior Proposal.

Section 9.02 Effect of Termination. In the event of termination of this
Agreement as provided in Section 9.01 hereof, this Agreement shall forthwith
become void and there shall be no liability or obligation on the part of
Purchaser or the AG Companies, or their respective officers, directors or
shareholders; provided, however, that the provisions of Section 6.06,
Section 7.01, Section 9.03, Article 10 and this Section 9.02, shall survive any
termination of this Agreement.

Section 9.03 Termination Fee. The Company agrees to pay Purchaser (provided that
Purchaser is not then in material breach of any representation, warranty,
covenant or agreement contained in this Agreement) by wire transfer, in the case
of (a) below, on the date of entering into or execution of any agreement
relating to a Takeover Proposal and, in the case of (b) below, concurrently with
such termination, the sum of [REDACTED], in immediately available funds (the
“Termination Fee”) in the event that any of the following shall have occurred:

(a) this Agreement shall have been terminated by Purchaser pursuant to
Section 9.01(f) or (g) and, within 12 months after the termination, the Company
enters into or executes any agreement relating to a Takeover Proposal (other
than a confidentiality agreement pursuant to Section 6.09(a)(1)); or

(b) this Agreement shall have been terminated by the Company pursuant to
Section 9.01(h).

 

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CONFIDENTIAL TREATMENT REQUESTED:

INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED IS OMITTED AND
IS NOTED WITH “[REDACTED]”. AN UNREDACTED VERSION OF THIS DOCUMENT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

Section 9.04 Amendment. This Agreement may be amended by the parties hereto at
any time prior to the Closing by execution of an instrument in writing signed on
behalf of each of the parties hereto.

Section 9.05 Extension; Waiver. At any time prior to the Closing, Purchaser, on
the one hand, and the Company on the other hand, may, to the extent legally
allowed, (a) extend the time for the performance of any of the obligations of
the other party hereto, (b) waive any inaccuracies in the representations and
warranties made to such party contained herein or in any document delivered
pursuant hereto, and (c) waive compliance with any of the agreements or
conditions for the benefit of such party contained herein. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in an instrument in writing signed on behalf of such party.

Article 10

General Provisions

Section 10.01 Survival and Exclusive Remedies.

(a) All representations and warranties made by or on behalf of the AG Companies
in or in connection with this Agreement shall expire and be terminated and
extinguished, and shall not form the basis for any claim by Purchaser against
any AG Company, as of the Closing; the Withdrawal Liability shall expire and be
terminated and extinguished as provided in Section 10.01(e); and the COBRA
Liability shall expire and be terminated and extinguished upon expiration of
Purchaser’s statutory obligations for complying with COBRA for the Company’s M&A
qualified beneficiaries, except to the extent of Company’s indemnity as set
forth in Section 7.03(c). All other liabilities or obligations of the AG
Companies in or in connection with this Agreement shall continue for a period of
180 days after the Closing Date, at which time all such liabilities and
obligations shall expire and terminate and shall not form the basis for any
claim by Purchaser against any AG Company; provided, however, that if Purchaser
notifies the Company of a claim against any AG Company for a breach of such an
obligation before expiration of the 180-day period (a “Claim Notice”), the
obligations set forth in the Claim Notice shall survive solely for the purpose
of resolving the claim.

(b) At or before Closing, the exclusive remedy available to Purchaser with
respect to claims in connection with this Agreement or the Contemplated
Transactions will be one of the following, at the election of Purchaser:
(i) termination of this Agreement under Section 9.01 and if applicable, payment
of the Termination Fee or (ii) specific performance under Section 10.06 of the
Company’s obligation to close the Acquisition on the terms and conditions set
forth herein.

(c) Except with respect to the Withdrawal Liability, COBRA Liability, and
adjustment to the Purchase Price pursuant to Section 3.05 after Closing, the
exclusive remedy

 

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CONFIDENTIAL TREATMENT REQUESTED:

INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED IS OMITTED AND
IS NOTED WITH “[REDACTED]”. AN UNREDACTED VERSION OF THIS DOCUMENT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

available to Purchaser with respect to claims in connection with this Agreement
or the Contemplated Transactions will be one of the following, at the election
of Purchaser: (i) recovery for Losses resulting from the breach of this
Agreement by the AG Companies, subject to the limitations in Section 10.01(d) or
(ii) specific performance under Section 11.06, if applicable. Subject to the
limitations set forth in Section 10.01(e), the exclusive remedy for the
Withdrawal Liability is as set forth in Section 7.03(d). The exclusive remedy
for COBRA Liability is as set forth in Section 7.03(c).

(d) Purchaser shall have no claim for any Losses unless all Losses collectively
set forth in Claim Notices hereunder exceed $100,000 (the “Deductible”), and
then Purchaser’s only claims shall be for such damages that exceed the
Deductible; and the maximum amount that Purchaser may recover with respect to
Losses in connection with this Agreement or the Contemplated Transactions shall
be limited to $1,000,000 (the “Cap”); provided, however, that the Deductible and
Cap shall not apply to a breach by the AG Companies of their obligations to
deliver to the LLC the Contributed Assets or to deliver to Purchaser the
Purchased Assets, COBRA Liability (which is governed exclusively by
Section 7.03(c)), Withdrawal Liability (which is governed exclusively by
Section 7.03(d) and Section 10.01(e)), or claims for fraud or intentional
misrepresentation.

(e) The maximum amount Purchaser may recover with respect to the Withdrawal
Liability is the Withdrawal Liability Amount and no claim may be made with
respect to the Withdrawal Liability after the close of the fifth plan year of
the Multiemployer Plan that starts after the Closing Date, except as otherwise
provided in the escrow agreement delivered at the Closing.

Section 10.02 Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally or by commercial
messenger or courier service, or mailed by registered or certified mail (return
receipt requested) or sent via facsimile (with acknowledgment of complete
transmission) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice); provided, however,
that notices sent by mail will not be deemed given until received:

If to any of the AG Companies, to:    Associated Grocers, Incorporated

3301 S. Norfolk Street

Seattle, WA 98118

Attn: Vice President, Legal

Telephone No.: (206) 767-8813

Facsimile No.: (206) 767-8751

And with additional copies to:    Davis Wright Tremaine LLP

1201 Third Avenue, Suite 2200

Seattle, WA 98101

Attn: John A. Reed

Telephone No.: (206) 622-3150

 

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CONFIDENTIAL TREATMENT REQUESTED:

INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED IS OMITTED AND
IS NOTED WITH “[REDACTED]”. AN UNREDACTED VERSION OF THIS DOCUMENT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

Facsimile No.: (206) 757-7700

If to Purchaser, to:                        Unified Western Grocers, Inc.

5200 Sheila Street

Commerce, CA 90040

Attn: Robert M. Ling, Jr.

Telephone No.: (323) 264-5200

Facsimile No.: (323) 265-3716

With a copy to:                        Stoel Rives LLP

900 SW Fifth Avenue

Suite 2600

Portland, OR 97204-1268

Attn: Robert J. Moorman

Telephone No.: (503) 224-3380

Facsimile No.: (503) 220-2480

Section 10.03 Disclosure Schedules. The Company has arranged the Company
Disclosure Schedule in sections corresponding to the numbered and lettered
sections contained in Articles 4, 6, and 8 hereof. Purchaser has arranged the
Purchaser Disclosure Schedule in sections corresponding to the numbered and
lettered sections contained in Article 5 hereof. The Company shall have the
right, at Closing or at any time before Closing, to deliver to Purchaser one or
more certificates which supplement the Company Disclosure Schedule (the
“Additional Disclosures”), which Additional Disclosures shall be limited to
events or matters that arise or otherwise occur after the Agreement Date, but
not as a result of a material breach by the Company of any of its covenants or
agreements contained herein. With respect to any Additional Disclosure,
Purchaser may refuse to complete the Acquisition only if an event or matter
disclosed in such Additional Disclosure has had or would reasonably be expected
to have, singly or in the aggregate, a Material Adverse Effect that causes the
condition in Section 8.02(a) hereof (with respect to certain breaches of the
representations and warranties of the Company) not to be satisfied as of the
Closing Date. Disclosure of any fact or item in the Company Disclosure Schedule
or any Additional Disclosure shall not necessarily mean that such item or fact,
individually or in the aggregate, is material or adverse to the business,
results of operations, or financial condition of any of the AG Companies, or
that such item or fact has had or is expected to have a Material Adverse Effect.
Nothing in this Section shall be interpreted as an extension of the survival of
any representation or warranty beyond the Closing.

Section 10.04 Entire Agreement; No Assignment; No Third Party Beneficiaries.
This Agreement, the Exhibits hereto, the Company Disclosure Schedule, the
Purchaser Disclosure Schedule, and the documents and instruments and other
agreements among the parties hereto referenced herein (a) constitute the entire
agreement among the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings both written and oral, among
the parties with respect to the subject matter hereof, (b) shall not be assigned
by

 

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CONFIDENTIAL TREATMENT REQUESTED:

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IS NOTED WITH “[REDACTED]”. AN UNREDACTED VERSION OF THIS DOCUMENT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

operation of Law or otherwise, and (c) shall be binding upon and inure solely to
the benefit of each party hereto, and nothing in herein or therein, express or
implied, is intended to or shall confer upon any other person any other right,
benefit or remedy of any nature whatsoever under or by reason of this Agreement.

Section 10.05 Severability. In the event that any provision of this Agreement or
the application thereof, becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the application of such
provision to other persons or circumstances will be interpreted so as reasonably
to effect the intent of the parties hereto.

Section 10.06 Specific Performance. The parties recognize that, in the event
that a party should refuse to perform any provisions of this Agreement, monetary
damages alone will not be adequate. The parties shall therefore be entitled, in
addition to any other remedies that may be available, including money damages,
to obtain specific performance of the terms of this Agreement. In the event of
any action to enforce this Agreement specifically, all of the parties hereby
waive the defense that there is an adequate remedy at Law and any requirement
for bond or other security in connection therewith.

Section 10.07 Waiver of Jury Trial. The parties hereby waive any right to trial
by jury in any proceeding arising out of or relating to this agreement or any of
the contemplated transactions, whether now existing or hereafter arising, and
whether sounding in contract, tort or otherwise. The parties agree that any of
them may file a copy of this section with any court as written evidence of the
knowing, voluntary and bargained-for agreement among the parties irrevocably to
waive trial by jury and that any proceeding whatsoever between them relating to
this agreement or any of the contemplated transactions shall instead be tried in
a court of competent jurisdiction by a judge sitting without a jury.

Section 10.08 Governing Law; Venue. This Agreement shall be governed by and
construed in accordance with the Laws of the State of Washington, regardless of
the Laws that might otherwise govern under applicable principles of conflicts of
Laws thereof. Each of the parties hereto irrevocably consents to the exclusive
jurisdiction and venue of any court within Seattle, King County, Washington, in
connection with any matter based upon or arising out of this Agreement or the
matters contemplated herein, agrees that process may be served upon them in any
manner authorized by the Laws of the State of Washington for such persons and
waives and covenants not to assert or plead any objection which they might
otherwise have to such jurisdiction, venue and such process.

Section 10.09 No Personal Liability. Purchaser acknowledges that the AG
Companies and their respective shareholders, directors, officers, employees,
agents, attorneys and representatives (“AG Parties”) have performed, or may
perform, acts in connection with this Agreement on behalf of the AG Companies
and AG Parties, or on behalf of Purchaser, to facilitate the Acquisition and the
Contemplated Transactions. Notwithstanding anything to the contrary, no such AG
Party shall have, as a result of serving in such capacity, and Purchaser

 

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CONFIDENTIAL TREATMENT REQUESTED:

INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED IS OMITTED AND
IS NOTED WITH “[REDACTED]”. AN UNREDACTED VERSION OF THIS DOCUMENT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

hereby absolves all AG Parties from, any personal liability or obligation for
any matter relating to or arising out of this Agreement, the Acquisition, or the
Contemplated Transactions. Each of the AG Companies acknowledges that Purchaser
and its shareholders, directors, officers, employees, agents, attorneys and
representatives (“Purchaser Parties”) have performed, or may perform, acts in
connection with this Agreement on behalf of Purchaser and Purchaser Parties, or
on behalf of the AG Companies, to facilitate the Acquisition and the
Contemplated Transactions. Notwithstanding anything to the contrary, no such
Purchaser Party shall have, as a result of serving in such capacity, and each of
the AG Companies hereby absolves all Purchaser Parties from, any personal
liability or obligation for any matter relating to or arising out of this
Agreement, the Acquisition, or the Contemplated Transactions.

Section 10.10 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart. Facsimile transmission (or other
electronic transmission including email of a PDF signature) of any signed
original document, and retransmission of any signed facsimile transmission,
shall be the same as delivery of an original. At the request of any party, the
parties will confirm facsimile transmitted (or other electronic transmission
including email of a PDF signature) signatures by signing an original document.

Section 10.11 Attorneys’ Fees. If suit or action is filed by any part to enforce
the provisions of the Agreement or otherwise with respect to the subject matter
of this Agreement, the prevailing party will be entitled to recover attorneys’
fees as fixed by final order of the trial court and, if any appeal is taken from
the decision of the trial court, attorneys’ fees as fixed by final order of the
trial or appellate court, as applicable.

[Remainder of page intentionally left blank.]

 

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CONFIDENTIAL TREATMENT REQUESTED:

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IS NOTED WITH “[REDACTED]”. AN UNREDACTED VERSION OF THIS DOCUMENT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

Each party has caused this Asset Purchase Agreement to be duly executed by its
duly authorized officer or representative on the date first above written.

 

PURCHASER:     UNIFIED WESTERN GROCERS, INC.       By   /S/    ALFRED A.
PLAMANN               Name   Alfred A. Plamann       Title   President and Chief
Executive Officer THE COMPANY:     ASSOCIATED GROCERS, INCORPORATED       By  
/S/    JOHN S. RUNYAN               Name   John S. Runyan       Title  
President and Chief Executive Officer AG SUBSIDIARIES:     SUPERMARKET
DEVELOPMENT CORPORATION       By   /S/    JOHN S. RUNYAN               Name  
John S. Runyan       Title   President    

MARKET FINANCE COMPANY

      By   /S/    JOHN S. RUNYAN               Name   John S. Runyan       Title
  President

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CONFIDENTIAL TREATMENT REQUESTED:

INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED IS OMITTED AND
IS NOTED WITH “[REDACTED]”. AN UNREDACTED VERSION OF THIS DOCUMENT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

    MFC CAPITAL-I, LTD.       By   /S/    JOHN S. RUNYAN               Name  
John S. Runyan       Title   President     MFC 2002, LLC       By   /S/    JOHN
S. RUNYAN               Name   John S. Runyan       Title   Manager     AGIC
INSURANCE AGENCY, INC.       By   /S/    JOHN S. RUNYAN               Name  
John S. Runyan       Title   President     MARKET INDUSTRIAL RELATIONS SERVICES,
INC.       By   /S/    JOHN S. RUNYAN               Name   John S. Runyan      
Title   President     MARKET SALES, INC.       By   /S/    JOHN S.
RUNYAN               Name   John S. Runyan       Title   President

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CONFIDENTIAL TREATMENT REQUESTED:

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IS NOTED WITH “[REDACTED]”. AN UNREDACTED VERSION OF THIS DOCUMENT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

    SEA-PAC FREIGHT LINES, INC.       By   /S/    JOHN S. RUNYAN              
Name   John S. Runyan       Title   President    

SUPERMARKET MANAGEMENT CORPORATION

      By   /S/    JOHN S. RUNYAN               Name   John S. Runyan       Title
  President     RED APPLE STORES, INC.       By   /S/    JOHN S. RUNYAN        
      Name   John S. Runyan       Title   President     THRIFTWAY STORES, INC.  
    By   /S/    JOHN S. RUNYAN               Name   John S. Runyan       Title  
President     AU DROPDOWN LLC       By:   Its sole member, ASSOCIATED GROCERS,
INCORPORATED       By   /S/    JOHN S. RUNYAN               Name   John S.
Runyan       Title   President and Chief Executive Officer

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CONFIDENTIAL TREATMENT REQUESTED:

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IS NOTED WITH “[REDACTED]”. AN UNREDACTED VERSION OF THIS DOCUMENT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

EXHIBIT A

Definitions

Acquired Receivables is defined in Section 3.01(g).

Acquisition is defined in the Recitals.

Additional Disclosures is defined in Section 10.03.

Affiliate means, with respect to any Person, any other Person that directly, or
through one or more intermediaries, controls or is controlled by or is under
common control with such first Person, and, if an individual, any member of the
immediate family (including parents, spouse and children) of such individual. As
used in this definition, control (including, with correlative meanings,
controlled by and under common control with) shall mean possession, directly or
indirectly, of power to direct or cause the direction of management or policies
(whether through ownership of securities or partnership or other ownership
interests, by Contract or otherwise).

AG Companies is defined in the introductory paragraph of this Agreement.

Agreement Date means the date of this Agreement, as set forth on the first page
of this Agreement.

Arbitrator is defined in Section 3.05(c)(2)(i).

Assumed Liabilities is defined in Section 3.03.

Assumed Plans is defined in Section 3.03(d).

Back-to-Back Leases is defined in Section 4.08(b).

Board of Directors means the board of directors of the each of the AG Companies.

[REDACTED]

Brown and Cole Litigation is defined in Section 3.02(i).

Business is defined in Section 3.01.

Business Day means any day, other than a Saturday or Sunday, on which commercial
banks and foreign exchange markets are open for business in Seattle, Washington.

 

A-1

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CONFIDENTIAL TREATMENT REQUESTED:

INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED IS OMITTED AND
IS NOTED WITH “[REDACTED]”. AN UNREDACTED VERSION OF THIS DOCUMENT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

Business Employees is defined in Section 4.18.

Claim Notice is defined in Section 10.1.

Class A Common Stock means the Class A Voting Common Stock, no stated par value,
of the Company.

Closing is defined in Section 3.09.

Closing Balance Sheet is defined in Section 3.03(a).

Closing Date is defined in Section 3.09.

Closing Payment is defined in Section 3.05(a).

Closing Purchased Working Capital means Purchased Working Capital as shown on
the Closing Balance Sheet.

Closing Reserves means the Reserves as of the Closing Date

COBRA means Section 4980B of the Code and Part 6 of Title I of ERISA, and the
regulations promulgated thereunder.

Code means the Internal Revenue Code of 1986, as amended, and the Treasury
regulations promulgated thereunder.

Commitment is defined in Section 7.04(b).

Company is defined in the introductory paragraph of this Agreement.

Company Audited Financial Statements is defined in Section 4.04(a).

Company Disclosure Schedule is defined in the introductory paragraph of Article
4.

Company Information Statement is defined in Section 6.04.

Company Interim Financial Statements is defined in Section 4.04(a).

Company Shareholder Approval is defined in Section 8.01(a).

Company’s Knowledge means the actual knowledge of the individuals listed on
attached Exhibit K in their capacity as employees of the AG Companies, and
without any duty of inquiry or investigation.

Contemplated Transactions means the Acquisition and the other transactions

 

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IS NOTED WITH “[REDACTED]”. AN UNREDACTED VERSION OF THIS DOCUMENT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

contemplated by this Agreement.

Contracts is defined in Section 3.01(c).

Contributed Assets is defined in Section 2.01.

Discretionary Funds is defined in Section 3.02(g).

Dispute Notice is defined in Section 3.05(c)(2)(i).

Environmental Law means any Law relating to the environment, health, safety or
Hazardous Materials, including the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended; the Resource Conservation
and Recovery Act of 1986 and Hazardous and Solid Waste Amendments of 1984, 42
U.S.C. §§ 6901 et seq.; the Hazardous Materials Transportation Act, 49 U.S.C. §§
6901 et seq.; the Clean Water Act, 33 U.S.C. §§ 1251 et seq.; the Toxic
Substances Control Act of 1976, 15 U.S.C. §§ 2601 et seq.; the Clean Air Act of
1966, as amended, 42 U.S.C. §§ 7401 et seq.; the Safe Drinking Water Act, 42
U.S.C. §§ 300f et seq.; the Atomic Energy Act, 42 U.S.C. §§ 2011 et seq.; the
Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. §§ 136 et seq.; the
Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. §§ 1101 et
seq.; and the Washington Model Toxics Control Act, RCW Ch. 70.105D.

Equitable Remedy Exception means applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other similar Laws now or
hereafter in effect relating to creditors rights generally and general
principles of equity (regardless of whether enforceability is considered in a
proceeding at Law or in equity).

ERISA means Employee Retirement Income Security Act of 1974, as amended.

ERISA Affiliate means any entity that would be deemed a “single employer” with
any of the AG Companies under Section 414(b), (c), (m) or (o) of the Code or
Section 4001 of ERISA.

Estimated Closing Purchased Working Capital means the Estimated Purchased
Working Capital as of the Closing Date, as estimated by the Company and shown on
the Statement of Estimated Closing Purchased Working Capital.

Estimated Closing Reserves means the Reserves established as of the Closing Date
as shown on the Statement of Estimated Closing Reserves.

Excluded Accounts Receivable is defined in Section 3.02(f).

Excluded Assets is defined in Section 3.02.

Fee Property Leases is defined in Section 4.08(a)(1).

 

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IS NOTED WITH “[REDACTED]”. AN UNREDACTED VERSION OF THIS DOCUMENT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

Financial Statements is defined in Section 4.04(a).

GAAP means U.S. generally accepted accounting principles consistently applied.

Governing Documents means articles of incorporation, bylaws, certificate of
formation, limited liability company or limited partnership agreement, or
similar governing documents of an entity.

Government Agency means any Federal, state or local government or any foreign,
national, provincial, or local government, or any governmental, regulatory,
legislative, executive, or administrative authority, agency or commission, or
any court, tribunal, or judicial body.

Hazardous Material means (i) any dangerous, toxic or hazardous pollutant,
contaminant, chemical, waste, material or substance as defined in or governed by
any Environmental Law, including any pollutant, contaminant, chemical, waste,
material or substance that might cause any injury to human health or safety or
to the environment or that might subject any of the AG Companies to any
imposition of costs or liability under any Environmental Law, (ii) petroleum,
petroleum hydrocarbons, benzene, toluene, lead, polynuclear aromatics and other
products based on or derived from petroleum, and (iii) lead paint, radon above
permissible background levels and PCBs.

Hired Employees is defined in Section 7.03(a).

Holdback Amount is defined in Section 3.05(a).

HSR Act means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the rules and regulations promulgated thereunder.

Insurance Policies is defined in Section 4.14.

Intellectual Property is defined in Section 3.01(d).

Intellectual Property Rights is defined in Section 3.01(e).

Inventory is defined in Section 2.01(b).

IRS means the Internal Revenue Service.

January Balance Sheet means the Company’s balance sheet as of January 19, 2007,
as restated.

Joint Venture means any entity in which any of the AG Companies has an equity,
voting or participation interest other than the Subsidiaries.

June Balance Sheet means the Company’s balance sheet as of June 8, 2007.

 

A-4

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CONFIDENTIAL TREATMENT REQUESTED:

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IS NOTED WITH “[REDACTED]”. AN UNREDACTED VERSION OF THIS DOCUMENT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

Law means any judgment, order, decree, statute, law, ordinance, rule,
regulation, writ, or injunction.

Leased Real Property is defined in Section 4.08(b).

Leases is defined in Section 3.01(b).

Liens means any and all pledges, liens, charges, security interests,
restrictions, or other encumbrances of any kind.

Lender is defined in Section 4.08(c).

LLC means AU Dropdown LLC.

LLC Interests means all of the membership interests of the LLC.

Loan is defined in Section 4.08(c).

Long Term Asset Adjustment is defined in Section 3.05(b)(3).

Losses means actual out-of-pocket losses, damages, debts, liabilities,
obligations, judgments, orders, awards, writs, injunctions, decrees, fines,
Taxes, costs or expenses (including reasonable attorney’s fees or expenses).

Material Adverse Effect means the result of an event, occurrence, or condition
that, individually or in the aggregate, either (i) is a material adverse effect
on the consolidated Business, results of operations or financial condition of
the AG Companies, taken as a whole, or (ii) prevents the completion of the
Acquisition; provided, however, that the term “Material Adverse Effect” excludes
any such result to the extent that it is attributable to or results from
(a) changes in general or regional economic conditions; (b) changes generally
affecting the industry or region in which any of the AG Companies operates;
(c) the identity of Purchaser, including perceived effects of the Contemplated
Transactions on current or prospective customers or revenues of any of the AG
Companies, and the cancellation of business commitments or a reduction in the
customary or anticipated business commitments are attributable to the identity
of Purchaser or its business practices; (d) actions taken by Purchaser,
including the effects of competition between Purchaser and the AG Companies or
the breach by Purchaser of its obligations under this Agreement; (e) any act of
terrorism or war (whether or not declared), wherever occurring, any subsequent
terrorist, military, diplomatic or political action (other than an act expressly
directed at any of the AG Companies); or (f) compliance by any of the AG
Companies with the WARN Act with respect to the Contemplated Transactions.

Material Contract is defined in Section 4.11(a).

Material IP Rights is defined in Section 4.10.

 

A-5

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CONFIDENTIAL TREATMENT REQUESTED:

INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED IS OMITTED AND
IS NOTED WITH “[REDACTED]”. AN UNREDACTED VERSION OF THIS DOCUMENT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

Material Leases is defined in Section 4.08(b).

Material Permits is defined in Section 4.13.

Mortgage is defined in Section 4.08(c).

National Priorities List is defined in Section 4.20(b).

Norfolk Lease is defined in Section 3.01(b).

Owned Real Property is defined in Section 4.08(a)(1).

Permits is defined in Section 3.01(f).

Permitted Exceptions means the following:

(a) Liens for Taxes, assessments or governmental charges or levies not yet due;

(b) Defects or encumbrances arising by, through or under Purchaser;

(c) Rights reserved in federal patents or state deeds;

(d) Reserved oil and mineral rights;

(e) Building, use, fire/safety, Americans with Disabilities Act, land use,
zoning, construction, environmental or protected species laws, regulations,
codes, requirements and restrictions;

(f) Standard printed exceptions that would be contained in an owners extended
coverage policy of title insurance of the Real Property;

(g) As to the Leased Real Property, the Material Leases, Ground Leases and
AG-As-Tenant Leases and associated subleases;

(h) As to the Owned Real Property, the Fee Property Leases and Owned Real
Property Leases and associated subleases;

(i) Security interests in favor of suppliers of goods for which payment has not
yet been made in the ordinary course of business consistent with past practice;

(j) As to the Leased Real Property, (i) Liens on the interests of lessors,
sublessors, lessees and sublessees (but not any of the AG Companies as tenant or
lessee or sublessee) and (ii) related subordination, non-disturbance, and
attornment agreements and estoppel certificates;

 

A-6

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CONFIDENTIAL TREATMENT REQUESTED:

INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED IS OMITTED AND
IS NOTED WITH “[REDACTED]”. AN UNREDACTED VERSION OF THIS DOCUMENT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

(k) As to the Owned Real Property, (i) Liens on the interests of lessees and
sublessees (but not any of the AG Companies as lessor) and (ii) related
subordination, non-disturbance, and attornment agreements and estoppel
certificates;

(l) All special exceptions shown in the Commitment; and

(m) Liens listed in the Company Disclosure Schedule.

Person means any general partnership, limited partnership, limited liability
company, corporation, joint venture, trust, business trust, Government Agency,
cooperative, association, other entity, or individual, and the heirs, executors,
administrators, legal representatives, successors, and assigns of such person as
the context may require.

Phase I Assessments is defined in Section 7.04(a).

Post-Closing Adjustment is defined in Section 3.05(c)(1).

Pre-Closing Tax Period is defined in Section 4.16(a).

Purchase Price is defined in Section 3.05(a).

Purchased Assets is defined in Section 3.01.

Purchased Working Capital means the difference, as of a specified date, between
(1) the Purchased Assets and Contributed Assets that are current assets
(measured in accordance with Section 3.05(d)) and (2) the Assumed Liabilities
that are current liabilities (measured in accordance with Section 3.05(d)) and
the liability associated with the Cash Balance Retirement Plan for Employees of
Associated Grocers, Inc. Without limiting the foregoing, in calculating
Purchased Working Capital, (A) current assets exclude Excluded Accounts
Receivable and (B) current liabilities exclude all Retained Liabilities and all
long-term debt (including the short term portion thereof).

Purchaser is defined in the introductory paragraph of this Agreement.

Purchaser Disclosure Schedule is defined in the introductory paragraph to
Article 5.

Purchaser Material Adverse Effect means the result of an event, occurrence, or
condition that, individually or in the aggregate, prevents the completion of the
Acquisition.

Qualified Retailers means all retail customers of the AG Companies, with the
exception of (a) those customers with a credit rating, using the Company’s
credit rating system, [REDACTED] (b) those customers with a credit rating, using
the Company’s credit rating system, [REDACTED] and (c) [REDACTED]

Real Property is defined in Section 4.08(b).

 

A-7

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CONFIDENTIAL TREATMENT REQUESTED:

INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED IS OMITTED AND
IS NOTED WITH “[REDACTED]”. AN UNREDACTED VERSION OF THIS DOCUMENT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

Representatives is defined in Section 6.08.

Reserves means reasonable reserves for estimated losses with respect to the
Acquired Receivables calculated in accordance with Section 3.05(d), but not
including any reserves or allowance with respect to items or amounts reflected
in the Purchased Working Capital.

Retail Store means the [REDACTED] store located in [REDACTED].

Retained Liabilities is defined in Section 3.04.

Seller Benefit Plans is defined in Section 4.17(a).

Statement of Closing Reserves is defined in Section 3.05(c)(1).

Statement of Closing Purchased Working Capital is defined in Section 3.05(c)(1).

Statement of Estimated Closing Purchased Working Capital is defined in
Section 3.05(b)(1).

Statement of Estimated Closing Reserves is defined in Section 3.05(b)(2).

Statement of Post-Closing Adjustment is defined in Section 3.05(c)(1).

Subleased Property is defined in Section 4.08(b).

Subsidiary is defined in the introductory paragraph of this Agreement.

SUPERVALU Litigation is defined in Section 3.02(i).

Superior Proposal is defined in Section 6.09(c).

Supply Agreement is defined in Section 8.02(f).

Supply Agreement Adjustment is defined in Section 3.05(b)(3).

Takeover Proposal is defined in Section 6.08.

Target Purchased Working Capital is [REDACTED].

Target Reserves means [REDACTED].

Tax means (i) any Federal, state, local and foreign taxes, assessments and other
governmental charges, duties, impositions and liabilities, including taxes based
upon or measured by gross receipts, income, profits, sales, use and occupation,
and value added, ad valorem, transfer, franchise, withholding, payroll,
recapture, employment, excise and property

 

A-8

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CONFIDENTIAL TREATMENT REQUESTED:

INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED IS OMITTED AND
IS NOTED WITH “[REDACTED]”. AN UNREDACTED VERSION OF THIS DOCUMENT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

taxes, together with all interest, penalties and additions imposed with respect
to such amounts, (ii) any liability for the payment of any amounts of the type
described in clause (i) as a result of being a member of an affiliated,
consolidated, combined or unitary group for any period, and (iii) any liability
for the payment of any amounts of the type described in clauses (i) or (ii) as a
result of any express or implied obligation to indemnify any other Person.

Tax Adjustment is defined in Section 3.08.

Tax Returns is defined in Section 4.16(a).

Termination Fee is defined in Section 9.03.

Violation means, with respect to Governing Documents, Contracts, or applicable
Law to which a Person is party or by which such Person is bound, a violation of
or default thereunder (with or without notice or lapse of time, or both) or
which gives rise to a right of termination, cancellation, modification or
acceleration of any obligation or loss of any benefit thereunder.

WARN Act is defined in Section 4.28.

WBCA is defined in Section 6.04.

Withdrawal Liability is defined in Section 7.03(d).

Withdrawal Liability Amount is defined in Section 7.03(d).

 

A-9