Exhibit 10.02

 

ASSET PURCHASE AGREEMENT

 

dated as of

 

January 22, 2006

 

among

 

CVS CORPORATION

 

CVS PHARMACY, INC.

 

ALBERTSON’S, INC.

 

SUPERVALU INC.

 

NEW ALOHA CORPORATION

 

and

 

THE SELLERS LISTED ON ANNEX A ATTACHED HERETO

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TABLE OF CONTENTS

 

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ARTICLE 1       Purchase and Sale

   1

Section 1.01.

  Purchase and Sale    1

Section 1.02.

  Excluded Assets    3

Section 1.03.

  Assumed Liabilities    5

Section 1.04.

  Excluded Liabilities    6

Section 1.05.

  Consents; Assignment of Contracts and Rights    7

Section 1.06.

  Purchase Price    8

Section 1.07.

  Closing    9

Section 1.08.

  Prorations    10

Section 1.09.

  Removal of Equipment and Signage    11

Section 1.10

  La Habra Inventory Adjustment    11

ARTICLE 2       Representations and Warranties of Albertson’s

   11

Section 2.01.

  Organization    11

Section 2.02.

  Authority; Enforceability    12

Section 2.03.

  Non-Contravention; Assigned Contracts    12

Section 2.04.

  Governmental Consents    13

Section 2.05.

  Litigation;    13

Section 2.06.

  Compliance with Law    13

Section 2.07.

  Real Property    14

Section 2.08.

  Title to the Purchased Assets    14

Section 2.09.

  IT Systems    14

Section 2.10.

  Sufficiency of Assets    15

Section 2.11.

  Labor Relations    15

Section 2.12.

  Environmental Compliance    15

Section 2.13.

  Financial Schedules    16

Section 2.14.

  No Undisclosed Liabilities    17

Section 2.15.

  Absence of Certain Changes or Events    17

Section 2.16.

  Finders’ Fees    17

Section 2.17.

  Healthcare Regulatory    18

ARTICLE 3       Representations and Warranties of Parent and Buyer

   19

Section 3.01.

  Organization    19

Section 3.02.

  Authority; Enforceability    19

Section 3.03.

  Non-Contravention    19

 

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Section 3.04.

  Governmental Consents    20

Section 3.05.

  Financing    20

Section 3.06.

  Brokers    20

ARTICLE 4       Representations and Warranties of SUPERVALU

   20

Section 4.01.

  Organization    20

Section 4.02.

  Authority; Enforceability    20

Section 4.03.

  Non-Contravention    21

Section 4.04.

  Governmental Consents    21

Section 4.05.

  Brokers    21

ARTICLE 5       Covenants of The Sellers

   21

Section 5.01.

  Conduct of the Standalone Drug Business    21

Section 5.02.

  Access to Information; Confidentiality    23

Section 5.03.

  Notices of Certain Events    25

Section 5.04.

  Noncompetition; Cooperation    25

Section 5.05.

  Prescription Files    26

Section 5.06.

  Casualty and Condemnation    26

Section 5.07.

  Assistance in Transfer of Licenses, Permits and Registrations    27

Section 5.08.

  Controlled Substances Inventory    28

Section 5.09.

  Updated Store List    28

Section 5.10.

  Financial Reports; Audited Financials    28

Section 5.11.

  Intercompany Leases    29

Section 5.12.

  Merger Agreement; Separation Agreement    29

ARTICLE 6       Covenants of Buyer

   29

Section 6.01.

  Confidentiality    29

Section 6.02.

  Access    30

Section 6.03.

  Guarantee Releases under Certain Contracts    30

Section 6.04.

  Contractual Overpayments    30

Section 6.05.

  Medicare And Medicaid Provider Numbers    31

ARTICLE 7       Covenants of Buyer and the Sellers

   31

Section 7.01.

  Reasonable Best Efforts; Further Assurances    31

Section 7.02.

  HSR Clearance    31

Section 7.03.

  Certain Filings    32

Section 7.04.

  Public Announcements    32

 

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Section 7.05.

  Trademarks; Tradenames    33

Section 7.06.

  Accounts Receivables; Gift Cards and Gift Certificates; Prepaid Expenses    34

Section 7.07.

  Transition Services Agreement    34

Section 7.08.

  HIPAA Privacy Standards    34

Section 7.09.

  Solicitation of Employees    34

Section 7.10.

  Kodak and Qualex Photo Processing Equipment    34

Section 7.11.

  “As Is” Condition; Waiver and Release    35

Section 7.12.

  Payments for Pharmacy Services    35

Section 7.13.

  Confidentiality Agreement    35

ARTICLE 8       Tax Matters

   36

Section 8.01.

  Tax Matters    36

Section 8.02.

  Tax Cooperation    36

ARTICLE 9       Employee Benefits

   37

Section 9.01.

  ERISA Representations    37

Section 9.02.

  Employees and Offers of Employment    38

Section 9.03.

  The Sellers’ Employee Benefit Plans    38

Section 9.04.

  Buyer Benefit Plans    39

Section 9.05.

  Labor Agreements    39

Section 9.06.

  Employee Compensation    41

Section 9.07.

  Employee Indemnity    42

Section 9.08.

  No Third Party Beneficiaries    42

ARTICLE 10     Conditions to Closing

   42

Section 10.01.

  Conditions to Each Party’s Obligations    42

Section 10.02.

  Conditions to Obligation of Buyer    43

Section 10.03.

  Conditions to Obligation of the Sellers    43

ARTICLE 11     Survival; Indemnification

   43

Section 11.01.

  Survival    43

Section 11.02.

  Indemnification    44

Section 11.03.

  Procedures    45

ARTICLE 12     Termination

   47

Section 12.01.

  Grounds for Termination    47

Section 12.02.

  Effect of Termination    48

 

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ARTICLE 13     Miscellaneous

   48

Section 13.01.

  Definitions    48

Section 13.02.

  Notices    54

Section 13.03.

  Amendments and Waivers    55

Section 13.04.

  Expenses    55

Section 13.05.

  Successors and Assigns    56

Section 13.06.

  Governing Law    56

Section 13.07.

  Specific Performance; Jurisdiction    56

Section 13.08.

  WAIVER OF JURY TRIAL    56

Section 13.09.

  Counterparts; Effectiveness; Third Party Beneficiaries    57

Section 13.10.

  Other Definitional and Interpretative Provisions    57

Section 13.11.

  Entire Agreement    57

Section 13.12.

  Severability    57

Section 13.13.

  Bulk Transfer Laws    57

Section 13.14.

  Guaranty    58

 

Annex A

   Sellers

Exhibit A

  

List of Owned Stores

Exhibit B

  

List of Ground Lease Stores

Exhibit C

  

List of Leased Stores

Exhibit D

  

Form of Assignment and Assumption Agreement

Exhibit E

  

Forms of Lease Assignment and Assumption Agreement

Exhibit F

  

Form of Standalone Drug Business Transition Services Agreement

Exhibit G

  

Distribution Center Transition Services Agreement Term Sheet

 

Schedule 1.01(f)

   Assumed Labor Agreements

Schedule 1.01(g)

  

Assigned Contracts

Schedule 1.02(a)

  

Excluded Equipment

Schedule 5.01(b)(i)

  

Lease Optional Extensions to be Exercised

Schedule 5.01(b)(ii)

  

Stores to be Closed

Schedule 5.02(a)

  

Transition Planning Related Activities

Schedule 7.09

  

Employees Buyer May Solicit

Schedule 9.02(a)

  

Offers of Employment

Schedule 9.02(b)

  

Divisional Pharmacy Managers

 

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ASSET PURCHASE AGREEMENT

 

AGREEMENT dated as of January 22, 2006, among CVS Pharmacy, Inc., a Rhode Island
corporation (“Buyer”), CVS Corporation, a Delaware corporation (“Parent”),
Albertson’s, Inc., a Delaware corporation (“Albertson’s”), New Aloha
Corporation, a Delaware corporation and wholly owned subsidiary of Albertson’s
(“New Diamond”), SUPERVALU INC., a Delaware corporation (“SUPERVALU”), and the
entities listed on Annex A, each of which is directly or indirectly wholly owned
by Albertson’s as of the date hereof (such entities listed on Annex A together
with Albertson’s, the “Sellers”).

 

W I T N E S S E T H :

 

WHEREAS, the Sellers conduct retail drug store and pharmacy businesses in
freestanding Stores (as defined below) through the operation of the Owned
Stores, the Ground Lease Stores, the Leased Stores and the Distribution Center
(as each term is defined below) (such business, the “Standalone Drug Business”;
for the avoidance of doubt, the parties acknowledge and agree that the
Standalone Drug Business excludes Seller’s retail drug store and pharmacy
businesses located in the same building as, and with common entrances to,
grocery stores (the “Retained Combo Drug Stores”);

 

WHEREAS, Buyer desires to purchase the Purchased Assets (as defined below)
relating to the Standalone Drug Business from the Sellers and to assume certain
related liabilities, and the Sellers desire to sell such Purchased Assets to
Buyer, upon the terms and subject to the conditions set forth herein; and

 

WHEREAS, the Sellers (i) own the drug stores and the real property associated
with the drug stores listed on Exhibit A hereto (the “Owned Stores”); (ii) own
the drug stores and lease the real property associated with the drug stores
listed on Exhibit B hereto (the “Ground Lease Stores”); (iii) lease the drug
stores listed on Exhibit C hereto (the “Leased Stores” and collectively with the
Owned Stores and the Ground Lease Stores, the “Stores” and each individually, a
“Store”); and (iv) own the Distribution Center (collectively with the Stores,
the “Facilities”).

 

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and
agreements herein contained, and intending to be legally bound hereby, the
parties hereto agree as follows:

 

ARTICLE 1

PURCHASE AND SALE

 

Section 1.01. Purchase and Sale. Except as otherwise provided below, upon the
terms and subject to the conditions of this Agreement, Buyer agrees to purchase
from the Sellers and the Sellers agree to sell, convey, transfer, assign and
deliver, or cause to be sold, conveyed, transferred, assigned and delivered, to
Buyer at the Effective Time, all of the Sellers’ right, title and interest in,
to and under the assets primarily related to the Standalone Drug Business
including the following assets and properties, wherever located, real, personal
or mixed, tangible or intangible, as the same shall exist at the Effective Time,
including all such assets acquired by

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the Sellers between the date hereof and the Effective Time (the “Purchased
Assets”), but excluding the Excluded Assets:

 

(a) the real property owned by the Sellers and associated with the Owned Stores
or the Distribution Center (the “Owned Real Property”) and the tenants’
interests in the ground leases associated with the Ground Lease Stores (the real
property associated with the Ground Lease Stores being referred to as the
“Ground Leased Real Property”), together with all buildings, structures,
installations, fixtures, trade fixtures, building equipment and other
improvements owned by the Sellers located on or attached to the Owned Real
Property or Ground Leased Real Property (and all title documents, surveys,
related construction plans and documents and related real estate files with
respect to the Owned Real Property and Ground Leased Real Property);

 

(b) the Store Leases (the real property leased pursuant to the Store Leases is
referred to collectively as the “Leased Real Property” and together with the
Owned Real Property and the Ground Leased Real Property, the “Real Property”),
and all Store Lease documents, related construction plans and documents and
related real estate files;

 

(c) all fixed assets and tangible personal property (other than the Inventory)
at the Facilities and owned by the Sellers, including fixtures, trade fixtures,
building equipment, fittings, furniture, computer hardware, office equipment,
and other tangible property, but excluding the Excluded Equipment;

 

(d) all pharmaceutical and non-pharmaceutical inventories at the Facilities and
owned by the Sellers (including private label inventory) and supplies (including
containers, labels and packaging items) (collectively, the “Inventory”);

 

(e) except to the extent prohibited by Law, all prescription files owned and
used by the Sellers that are associated with the Stores (it being understood
that Sellers will retain the prescription files that are associated with the
Retained Combo Drug Stores) (the “Prescription Files”) and all customer data and
information derived from branded customer loyalty promotions, co-branded credit
card programs and other similar programs related to customer purchases at the
Stores;

 

(f) the Labor Agreements set forth on Schedule 1.01(f) (such Labor Agreements,
the “Assumed Labor Agreements”);

 

(g) all Real Property Documents, Construction Contracts, and all contracts,
agreements, leases, licenses, commitments, sales and purchase orders and other
instruments listed on Schedule 1.01(g) (collectively with the Assumed Labor
Agreements, the “Assigned Contracts”);

 

(h) to the extent assignable or transferable, all guarantees and warranties of
third parties to the extent that they relate to the ownership or operation of
the Standalone Drug Business or the Purchased Assets;

 

(i) subject to Section 7.06(c), all of the Sellers’ security deposits, prepaid
rent and prepaid expenses previously paid by the Sellers to fulfill the Sellers’
obligations

 

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under the Store Leases and the Ground Leases where (if and to the extent such
consent is expressly required by the applicable Store Lease or Ground Lease) the
landlord thereunder has consented in writing to the transfer of the deposits to
Buyer and, to the extent transferable, all vendor, utility and other deposits
relating to the Facilities (“Prepaid Expenses”);

 

(j) all transferable or assignable telephone and facsimile numbers associated
with phone lines terminating at the Facilities;

 

(k) all transferable or assignable licenses, permits or other governmental
authorizations that are exclusively related to the Facilities or the Purchased
Assets, including pharmacy, liquor, tobacco and similar licenses (“Licenses”;
for the avoidance of doubt the parties acknowledge and agree that “Licenses”
shall not include any licenses, permits or other governmental authorizations
that relate to operation of Retained Combo Drug Stores);

 

(l) cash in cash registers at each Store in an amount equal to $2,000 for each
Store (“Petty Cash”);

 

(m) all forklifts and motor vehicles (trucks, vans, and autos) primarily related
to the Distribution Center and all motor vehicles exclusively used by field
management transferred to Buyer immediately following the Closing (the
“Transferred Vehicles”);

 

(n) all trailers and tractors relating to the Distribution Center and the
distribution centers located at Brea, California and Irvine, California
(approximately 845 trailers, 117 tractors) will be equitably assigned to these
three facilities based on mutually agreed upon operating metrics;

 

(o) all reimbursements on account of Prorated Charges (as defined herein) due
and owing to Buyer pursuant to Section 1.08; and

 

(p) all books, records, files and papers, whether in hard copy or computer
format, located at the Facilities or relating primarily to the Purchased Assets
(and copies of any other relevant books, records, files and papers to the extent
relating to the Purchased Assets).

 

Section 1.02. Excluded Assets. Buyer and the Sellers expressly understand and
agree that, notwithstanding anything to the contrary contained herein, the
following assets and properties of the Sellers prior to the Closing (the
“Excluded Assets”) shall be excluded from the Purchased Assets and, except as
otherwise provided in the Separation Agreement, shall be assets and properties
of New Diamond following the Closing:

 

(a) all (i) motor vehicles (trucks, vans, and autos) and rail, truck and sea
containers other than the Transferred Vehicles or as otherwise allocated
pursuant to Section 1.01(m) and (ii) all other fixed assets and tangible
personal property set forth on Schedule 1.02(a) (collectively, the “Excluded
Equipment”);

 

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(b) all of the cash and cash equivalents of the Sellers on hand (including all
cash, cash equivalents and working funds in cash registers at each Store) and in
banks other than Petty Cash;

 

(c) all accounts receivable relating to the Standalone Drug Business owed to the
Sellers or any of their Affiliates prior to the Effective Time, including
delinquent rent payments, tenant reimbursements and refunds of insurance
premiums accruing to, or held for, the benefit of the Sellers (the “Accounts
Receivable”);

 

(d) except as provided under Section 5.06, all insurance policies relating to
the Standalone Drug Business or the Purchased Assets;

 

(e) any refund or credit of Taxes to the extent attributable to any Pre-Closing
Tax Period or to any Taxes for which Sellers, New Diamond or SUPERVALU are
responsible;

 

(f) all equipment owned by third parties who are not affiliated with Sellers and
all leased equipment located at or used in the Facilities, in each case in such
categories of excluded equipment as are set forth in Schedule 1.02(a);

 

(g) all computer software owned or used by the Sellers or their Affiliates;

 

(h) all contracts, agreement, leases, licenses, commitments, sales and purchase
orders and other instruments (which may include tax indemnity agreements) other
than the Assigned Contracts;

 

(i) all trademarks, service marks, trade names, logos, patents and similar
intangibles owned by the Sellers or used in connection with the operation of the
Facilities;

 

(j) all rebates and refunds arising from the operation of the Facilities prior
to the Effective Time;

 

(k) all undeposited or uncollected checks and food stamps held by the Sellers
prior to the Effective Time;

 

(l) all signs or personal property that contain the name (or trade derivative
thereof), trademarks, servicemarks, trade names or logo of the Sellers or any of
their Affiliates, including all uniforms supplied to the Sellers’ employees;

 

(m) any Purchased Assets sold or otherwise disposed of without violating any
provisions of this Agreement during the period from the date hereof until the
Effective Time;

 

(n) all world wide web or other internet addresses, sites and domain names and
internet protocol address spaces;

 

(o) the Sellers’ phone networks, internet mail and computer networks;

 

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(p) all customer data and information derived from branded customer loyalty
promotions, co-branded credit card programs and other similar programs other
than such customer data and information relating to customer purchases at the
Stores;

 

(q) all provider agreements for the Medicare and Medicaid programs, including
all applicable provider numbers;

 

(r) any lease, sublease, license, sublicense or other contract relating to the
installation, use or operation of ATM’s or similar banking machines, in-store
banking facilities, or slot machines or other gaming devices located at the
Stores (and any interest of the Sellers in such equipment), except to the extent
assignment to Buyer is required by the applicable agreement; provided, however,
that Buyer shall allow each bank operating ATM’s or other in-store banking
facilities and licensees of any kind to continue to operate in the relevant
Store for up to 180 days (or such greater time as required by Law) after receipt
of notice from the Sellers informing each such bank or licensee of the transfer
of the relevant Store to Buyer;

 

(s) all assets primarily related to the sale of inventory conducted through any
website operated by or on behalf of Albertson’s or any of its Affiliates;

 

(t) all reimbursements on account of Prorated Charges (as defined herein) due
and owing to Sellers pursuant to Section 1.08;

 

(u) all books and records to the extent relating to any Excluded Asset;
provided, however, that Buyer will be entitled to copies of any other relevant
books, records, files and papers to the extent relating to the Purchased Assets
or to the extent relevant for normal course accounting after the Closing;

 

(v) all firearms or any merchandise related to firearms, ammunition or similar
items, in each case to the extent non-transferable under applicable Law; and

 

(w) all audiotapes, videotapes or DVDs available for rental and not owned by
Sellers.

 

Section 1.03. Assumed Liabilities. Upon the terms and subject to the conditions
of this Agreement, Buyer hereby assumes, effective at the Effective Time, and
shall thereafter pay, perform or otherwise discharge when due, the following
liabilities and obligations (the “Assumed Liabilities”):

 

(a) all liabilities and obligations of the Sellers under each Store Lease,
Ground Lease and Assigned Contract;

 

(b) all amounts allocated to Buyer under Section 1.08 and all Apportioned
Obligations and Transfer Taxes allocated to Buyer pursuant to Section 8.02;

 

(c) all liabilities or obligations for Taxes with respect to the Standalone Drug
Business or the Purchased Assets related to a Post-Closing Tax Period (except
for Taxes set forth in Section 1.04(iv)(B) below);

 

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(d) all liabilities and obligations expressly assumed by Buyer under Article 9;

 

(e) liabilities and obligations directly arising from, or in connection with,
the validity of the real estate interest in any Owned Real Property or from or
in connection with the right to occupy any Owned Real Property (excluding for
avoidance of doubt any personal injury tort liability, any liability arising
from operation of the Standalone Drug Business, or any liability or amount
prorated under Section 1.08); and

 

(f) all Environmental Liabilities.

 

Section 1.04. Excluded Liabilities. Notwithstanding any provision in this
Agreement or any other writing to the contrary, Buyer is assuming only the
Assumed Liabilities and is not assuming any other liability or obligation of any
Seller of whatever nature (fixed or contingent, known or unknown), whether
presently in existence or arising hereafter. All such other liabilities and
obligations shall be retained by and remain obligations and liabilities of the
Sellers (all such liabilities and obligations not being assumed being herein
referred to as the “Excluded Liabilities”). For the avoidance of doubt (but
without overriding the Assumed Liabilities in Section 1.03), Excluded
Liabilities include the following:

 

(i) any liability or obligation resulting from or arising out of the conduct of
the supermarket business of the Sellers (including the operation of pharmacy
counters in supermarkets), any other business of the Sellers other than the
Standalone Drug Business, or any Excluded Asset;

 

(ii) all amounts allocated to Sellers under Section 1.08 and all Apportioned
Obligations and Transfer Taxes allocated to Sellers pursuant to Section 8.02;

 

(iii) all accounts payable arising prior to Closing with respect to the
Standalone Drug Business or the Purchased Assets;

 

(iv) (A) any liability or obligation for Taxes with respect to the Standalone
Drug Business or the Purchased Assets related to a Pre-Closing Tax Period, and
(B) any liability or obligation for Taxes of any Seller, or any member of any
consolidated, affiliated, combined or unitary group of which any Seller is or
has been a member, for Taxes (if any) attributable to the transactions,
occurring on or prior to the Closing Date, pursuant to this Agreement, the
Merger Agreement or the Purchase and Separation Agreement (including the
Reorganization as defined therein); provided that Transfer Taxes incurred in
connection with the transfer of the Purchased Assets pursuant to this Agreement
and Apportioned Obligations shall be allocated and paid in the manner set forth
in Section 8.02 hereof;

 

(v) all liabilities and obligations relating to or arising with respect to
(A) any Employee, that arise, exist, accrue or are attributable to the period as
of or prior to Closing, other than any liability or obligation expressly assumed
by Buyer pursuant to Article 9, or (B) any employee of any Seller or any of its
Affiliates who is not an Employee; and

 

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(vi) all other liabilities and obligations (other than any Assumed Liabilities)
of any kind, fixed or contingent, known or unknown, resulting from or arising
out of the conduct of the Standalone Drug Business, the use, non-use or
ownership (whether by leasehold or fee) of the Purchased Assets, or the
operation of the Facilities, in each case under this clause (vi), only to the
extent such other liabilities and obligations arise during, accrue during, or
are attributable to the period prior to Closing or as of the Closing.

 

Section 1.05. Consents; Assignment of Contracts and Rights.

 

(a) Sellers shall use: (i) commercially reasonable efforts to obtain all
material consents of third parties that are identified in writing by Buyer to
the transfer of the Purchased Assets; and (ii) reasonable best efforts to obtain
consents from landlords under those Leases that require a landlord’s consent to
an assignment that are identified in writing by Buyer; provided, however,
neither Sellers nor Buyer shall be required to pay any consideration or incur
any additional liability in order to obtain such consents, subject to the
provisions of Section 1.05(d).

 

(b) Subject to Section 1.05(a), Sellers agree, in connection with requests for
consents to landlords for assignments of Leases requiring the same, to make
requests as soon as practicable after the date hereof and to pursue such
requests in a good faith and diligent manner. Sellers further agree to provide
Buyer with detailed progress reports on such requested consents on at least a
weekly basis. Buyer agrees to cooperate with Sellers’ efforts and to use
reasonable best efforts to obtain such consents, by supplying any commercially
reasonable information requested by the landlords who are considering such
requests. In addition, in connection with those Leases that merely require that
the tenant provide notices before or after an assignment, Sellers agree to send
such notices to those landlords identified in writing by Buyer in the form
prepared by Buyer and within the timeframes identified by Buyer.

 

(c) Notwithstanding anything in this Agreement to the contrary, this Agreement
shall not constitute an agreement to assign any Assigned Contract or any claim
or right or any benefit arising thereunder or resulting therefrom if and for so
long as such assignment, without the consent of a third party thereto, would
constitute a breach or other contravention of such Assigned Contract or in any
way adversely affect the rights of Buyer or the Sellers thereunder. If such
consent is not obtained, or if an attempted assignment thereof would be
ineffective or would adversely affect the rights of any Seller thereunder so
that Buyer would not in fact receive all such rights, Buyer and each Seller will
cooperate in a mutually agreeable arrangement under which Buyer would obtain the
benefits and perform and discharge the obligations thereunder in accordance with
this Agreement, or under which such Seller would enforce for the benefit of
Buyer at Buyer’s sole cost and expense, with Buyer being responsible for the
performance and discharge of such Seller’s obligations, any and all rights of
the Sellers against a third party.

 

(d) If any landlord that has the right to consent to an assignment of a Lease
refuses or fails to give its consent to the assignment of such Lease, or if any
right of sublease, recapture or termination by any landlord would be triggered
by the request for

 

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consent to assignment (collectively, “Landlord Rights”) and Sellers or any of
its Affiliates are permitted to sublease, license or otherwise arrange for Buyer
to occupy the premises demised by the Lease for the permitted use under such
Lease (an “Occupancy Agreement”), then in all such cases upon the written
request of Buyer, Seller shall enter into a sublease, license or Occupancy
Agreement with Buyer for such Store on a fully net basis and on such terms as
will generally confer and impose on Buyer all of Sellers’ rights and obligations
under the Lease for such Store until such landlord consents to the assignment of
the Lease to Buyer and Buyer will indemnify Sellers for any and all liabilities,
costs and expenses of Sellers arising out of the respective Lease and any
related Occupancy Agreement, any reasonable out-of-pocket expenses associated
with any attempt to transfer or failure to transfer such Lease or any other
liabilities, costs and expenses arising out of or resulting from the Sellers’
actions taken in accordance with any reasonable directions of Buyer in
connection with such Lease. If and when any such consent shall be obtained or
such Lease shall otherwise become assignable, the respective Occupancy Agreement
shall be terminated with no further obligations of the Sellers, Sellers shall
promptly assign all their rights and obligations under the respective Lease to
the Buyer without payment of further consideration (subject to the foregoing
indemnity by Buyer of Sellers) and the Buyer shall, without the payment of any
further consideration therefor, assume such all rights and obligations.
Notwithstanding the foregoing, if the arrangement described in the immediately
preceding clauses of this Section 1.05(d) is impracticable or will cause (or is
likely to cause) a default under any Lease or the triggering of any Landlord
Rights (whether due to the change or intended change of the store brand under
which such property will be operated or for other reasons), then the parties
will work in good faith to establish a mutually satisfactory arrangement for the
operation by Buyer of such leased real property during the period subsequent to
the Closing and pending receipt of the required consent, including a fair and
equitable arrangement (under the applicable circumstances) to ensure that
Sellers are fully reimbursed for all costs and expenses with respect to such
Lease during such period. Sellers shall not be obligated to take or refrain from
taking any actions which could reasonably be expected to trigger or cause the
exercise of any Landlord Rights, subject to the further provisions of this
Section 1.05(d). In the event a landlord wrongfully refuses or fails to consent
to an assignment or a request for an assignment would trigger any Landlord
Rights, and a sublease, license or Occupancy Agreement is not permitted under
the terms of the applicable Lease, Seller agrees, upon written request from
Buyer and at Buyer’s sole cost and expense, to institute litigation against such
landlord with counsel selected by Buyer (and reasonably acceptable to Seller) to
enforce Sellers’ rights under such Lease and Buyer agrees to indemnify and hold
harmless Seller with respect to all such litigation and all costs, expenses,
losses and damages resulting therefrom under or in connection with any affected
Lease. The Standalone Drug Transition Services Agreement shall provide that in
the event that Sellers’ rights under any Leases have been transferred to New
Diamond or any Affiliate through the Merger Agreement or otherwise, that the
obligations of Sellers under this paragraph shall be assumed by New Diamond or
its relevant Affiliate.

 

Section 1.06. Purchase Price. The purchase price for the Purchased Assets is
$3,930,000,000 in cash (the “Purchase Price”). The Purchase Price shall be
subject to adjustment as provided in Section 1.08.

 

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Section 1.07. Closing.

 

(a) Closing. The closing (the “Closing”) of the purchase and sale of the
Purchased Assets and the assumption of the Assumed Liabilities hereunder shall
take place at the offices of Jones Day, at 222 East 41st Street, New York, New
York 10017, at 9:00 a.m. local time, as soon as practicable, but in no event
later than the second Business Day after the satisfaction or waiver of the
conditions set forth in Article 10 (excluding conditions that, by their terms,
cannot be satisfied until the Closing, but the Closing shall be subject to the
satisfaction of those conditions), or at such other time or place as Buyer and
Albertson’s may agree (the “Closing Date”). On the Closing Date:

 

(i) Buyer shall pay, in immediately available funds by wire transfer, an amount
equal to the Purchase Price.

 

(ii) Buyer and the Sellers, as applicable (and Parent, SUPERVALU and their
Affiliates where applicable in the relevant agreements or instruments) shall
execute and deliver to the other the following documents:

 

(A) Quitclaim deeds (or equivalent deeds without covenants or warranties)
necessary to convey fee simple title to the Owned Real Property to Buyer;

 

(B) one or more deeds, bills of sale, endorsements, assignments and other
instruments of conveyance and assignment (without covenant or warranty except as
provided hereunder) as the parties and their respective counsel shall deem
reasonably necessary or appropriate to vest in Buyer all right, title and
interest in, to and under the Purchased Assets in form and substance reasonably
satisfactory to Albertson’s and Buyer;

 

(C) one or more Assignment and Assumption Agreement substantially in the form
attached hereto as Exhibit D (the “Assignment and Assumption Agreements”);

 

(D) instruments of assignment and assumption (the “Lease Assignment and
Assumption Agreements”) substantially in the forms attached hereto as Exhibit E,
pursuant to which the Sellers shall assign the Leases to Buyer and Buyer shall
assume all obligations thereunder and Parent will guarantee to New Diamond,
Albertson’s and their respective Affiliates all obligations of Buyer thereunder
in a separate agreement with SUPERVALU; provided that there shall be no
liability of or to Sellers under the Assignment and Assumption Agreements except
as provided hereunder;

 

(E) subject to Section 7.07, a Transition Services Agreement substantially in
the form attached hereto as Exhibit F (the “Standalone Drug Business Transition
Services Agreement”), providing for the provision by SUPERVALU or its Affiliates
to Buyer of transition services relating to the Standalone Drug Business after
Closing;

 

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(F) subject to Section 7.07, a Transition Services Agreement substantially on
the terms set forth on Exhibit G (the “Distribution Center Transition Services
Agreement”), providing for the provision by Buyer to New Diamond, SUPERVALU or
their respective Affiliates of transition services relating to the Distribution
Center after Closing; and

 

(G) a certificate from each Seller (or, if such Seller is a “disregarded entity”
within the meaning of Section 1.1445-2(b)(2)(iii) of the Treasury Regulations
promulgated under the Code, the Seller that is treated as the transferor of
property for U.S. tax purposes) stating that such Seller is not a “foreign
person” as defined in Section 1445 of the Code.

 

(b) Risk of Loss; Title. Risk of loss to the Purchased Assets will transfer to
Buyer at the Effective Time. Transfer of title to the Purchased Assets will be
deemed to have occurred at the Effective Time. All sales at a Store after the
Effective Time shall be for the account of Buyer.

 

(c) Purchased Assets Are Indivisible. Subject to Section 1.05, the rights to
purchase and sell the Purchased Assets are indivisible. Such Purchased Assets
may not be individually purchased or sold without all of the others, unless
expressly permitted or required pursuant to the provisions of this Agreement.

 

Section 1.08. Prorations. (a) On the Closing Date all rent, common area charges,
utility charges, real estate taxes, sales taxes on rent and other obligations
under the Leases transferred at the Closing shall be prorated as of the
Effective Time (collectively, the “Prorated Charges”). Whenever possible, such
prorations shall be based on actual, current payments by the Sellers or their
Affiliates and to the extent such actual amounts are not available, such
prorations shall be estimated as of the Effective Time based on actual amounts
for the most recent comparable billing period. When the actual amounts become
known, such prorations shall be recalculated by Buyer and the Sellers, and Buyer
or the Sellers, as the case may be, promptly (but not later than 10 Business
Days after notice of payment due and delivery of reasonable supporting
documentation with respect to such amounts) shall make any additional payment or
refund so that the correct prorated amount is paid by each of Buyer and the
Sellers.

 

(b) Percentage rent payable under each Lease shall be prorated at the end of the
current lease year for each Lease, and the percentage rent payable, if any,
shall be paid by Buyer when due and the Sellers shall promptly reimburse Buyer a
portion thereof determined by multiplying (A) a fraction, the numerator of which
is the amount of the Sellers’ or their Affiliates’ gross annual sales at such
Store from the first day of such lease year to (and excluding) the Closing Date,
and the denominator of which is the sum of Buyer’s and its Affiliates’ and the
Sellers’ and their Affiliates’ gross annual sales at such Store for the entire
lease year, times (B) the amount of percentage rent actually due under the Lease
for such Store. The Sellers, upon the request of Buyer, shall promptly provide
Buyer with such information as Buyer shall be required to submit to landlords
under the Leases in connection with the payment of percentage rent with respect
to the Stores.

 

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(c) Buyer and the Sellers shall cooperate in good faith to resolve any dispute
with respect to prorations. In the event Buyer and the Sellers are unable to
resolve such dispute within 20 Business Days after the date such dispute arose,
Buyer and the Sellers shall submit the items remaining for resolution in
writing, together with such written evidence as Buyer or the Sellers may elect
to include, to an Independent Accounting Firm. The Independent Accounting Firm
shall, within 20 Business Days of such submission, resolve any differences
between Buyer and the Sellers and such resolution shall, in the absence of
manifest error, be final, binding and conclusive upon each of the parties. The
costs, fees and expenses of the Independent Accounting Firm shall be borne
equally by Buyer and New Diamond. For purposes of this Agreement the
“Independent Accounting Firm” means a nationally recognized accounting firm
agreed upon by Buyer and the Sellers.

 

Section 1.09. Removal of Equipment and Signage. Within the applicable time
periods specified in Section 7.05, Buyer shall remove at its expense all of the
Sellers’ signage and equipment that are not Purchased Assets and are located at
the Facilities; provided, however, if requested by the Sellers, Buyer shall
arrange transportation of such signage and equipment to a location designated by
the Sellers at the Sellers’ expense.

 

Section 1.10. La Habra Inventory Adjustment. Buyer (through RGIS Inventory
Specialists (“RGIS”)) will conduct a physical count of the inventory at the La
Habra warehouse as of a time as close as possible to the Closing.
Representatives of Buyer and SUPERVALU will be permitted to be present during
the count. Sellers will cooperate and give access to representatives of Buyer
and SUPERVALU for this purpose. For purposes of this count, the inventory will
be valued at cost using Albertson’s cost method then in effect. SUPERVALU will
be entitled to receive a copy of the electronic UPC item-level physical
inventory file for the inventory taken by RGIS. Buyer, Parent and SUPERVALU
agree that, absent manifest error, the physical inventory counts of RGIS shall
be final and binding on each of the parties. SUPERVALU will be entitled to an
economic credit equal to 30% of such inventory value so counted, and Buyer and
SUPERVALU will in good faith mutually determine the manner in which such credit
will be transferred to SUPERVALU.

 

ARTICLE 2

REPRESENTATIONS AND WARRANTIES OF ALBERTSON’S

 

Subject to the exceptions set forth in the corresponding sections of the letter
from Albertson’s, dated as of the date of this Agreement, addressed to Buyer
(the “Disclosure Letter”), to the extent such exceptions are reasonably
apparent, Albertson’s represents and warrants to Buyer that:

 

Section 2.01. Organization. Each Seller is duly organized, validly existing and
in good standing under the laws of its respective jurisdiction of organization,
and has the requisite corporate power and authority to own its properties and to
carry on its business as presently conducted and is duly qualified to do
business and is in good standing (where such concept exists) as a foreign
corporation in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification necessary,
except where the failure to be so qualified or in good standing as a foreign
corporation or have such power or

 

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authority would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect. Complete and correct copies of the
certificate of incorporation and by-laws of each Seller as currently in effect
have been made available to Parent and, as so made available, are in full force
and effect, and no other organizational documents are applicable to or binding
upon any Seller.

 

Section 2.02. Authority; Enforceability. Each Seller has all necessary corporate
power and authority to execute and deliver this Agreement and the Ancillary
Agreements to which it is a party, to perform its obligations hereunder and
thereunder and to consummate the transactions contemplated hereby and thereby.
The execution, delivery and performance by each Seller of this Agreement and the
Ancillary Agreements to which it is a party and the consummation by each Seller
of the transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate action on the part of each Seller and no
other corporate proceedings on the part of any Seller are necessary pursuant to
its governing documents or the laws of its jurisdiction of incorporation to
authorize this Agreement or the Ancillary Agreements to which it is a party or
to consummate the transactions contemplated hereby or thereby. Each Seller’s
Board of Directors has (i) approved this Agreement and the transactions
contemplated hereby, (ii) determined that the terms of this Agreement are fair
to and in the best interests of such Seller and its stockholders, and
(iii) declared the advisability of this Agreement. This Agreement has been duly
executed and delivered by the Sellers, and each Ancillary Agreement will be duly
executed and delivered by each Seller party thereto, and, assuming due
authorization, execution and delivery by the other parties hereto and thereto,
constitutes or will constitute a legal, valid and binding agreement of each
Seller enforceable against each Seller in accordance with its terms, subject to
the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar Laws relating to or affecting creditors’ rights
generally and general equitable principles (whether considered in a proceeding
in equity or at law).

 

Section 2.03. Non-Contravention; Assigned Contracts. (a) The execution, delivery
and performance by each Seller of this Agreement and the Ancillary Agreements to
which it is a party does not and will not (i) conflict with or violate such
Seller’s governing documents, (ii) assuming that all consents, approvals and
authorizations contemplated by Section 2.04 have been obtained and all filings
described therein have been made, conflict with or violate any Law applicable to
any Seller or by which any Seller or any of their respective properties are
bound, or (iii) result in any breach or violation of or constitute a default (or
an event which with notice or lapse of time or both would become a default) or
result in the loss of a benefit under, or give rise to any right of termination,
cancellation, recapture, amendment or acceleration of, or performance under, any
note, bond, mortgage, indenture, contract, agreement, lease, license, permit or
other instrument or obligation (which, in any case, is not a contract, agreement
or other arrangement pursuant to which Sellers or any Subsidiary leases real
property, including the Leases) to which such Seller is a party or by which such
Seller or any of its properties are bound, except, in the case of clauses
(ii) and (iii) of this Section 2.03(a), for any such conflict, violation,
breach, default, loss, right or other occurrence which would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.

 

(b) (i) The Sellers are not (and, to the Sellers’ Knowledge, no other party is)
in default under any Assigned Contract, (ii) each of the Assigned Contracts is
in full force and

 

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effect, and is the valid, binding and enforceable obligation of the Sellers, and
to the Seller’s Knowledge, of the other parties thereto, and (iii) the Sellers
have performed all respective obligations required to be performed by them to
date under the Assigned Contracts and are not (with or without the lapse of time
or the giving of notice, or both) in breach thereunder, except, in the case of
clauses (i), (ii) and (iii) of this Section 2.03(b), for any such default,
failure, invalidity, unenforceability, non-performance, breach or other
occurrence which would not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect.

 

Section 2.04. Governmental Consents. The execution, delivery and performance by
each Seller of this Agreement and the Ancillary Agreements to which it is a
party and the consummation by each Seller of the transactions contemplated
hereby and thereby does not and will not require any consent, approval,
authorization or permit of, action by, filing with or notification to, any
Governmental Authority, except as required under or pursuant to (a) the HSR Act,
(b) consents or approvals in connection with the transfer of Licenses, and
(c) any other consent, approval, authorization, permit, action, filing or
notification the failure of which to be made or obtained would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.

 

Section 2.05. Litigation. There are no Actions pending or, to the Knowledge of
Albertson’s, threatened against the Sellers or, to the Knowledge of Albertson’s,
any officer, director or employee of any Seller in such capacity, which would
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect. No Seller is a party or subject to or in default under any
Governmental Order which would reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect.

 

Section 2.06. Compliance with Law. (a) The Sellers and their Affiliates are not
(and have not been since February 3, 2005) in violation of any Law, and have not
received any written notice of any violation of Law, in each case except for any
violation or possible violation that would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect. The Sellers and
their Affiliates are (and have been since February 3, 2005) in compliance with,
all permits, licenses, authorizations, exemptions, orders, consents, approvals
and franchises from Governmental Authorities required to conduct their
respective businesses as now being conducted, except for any such permit,
license, authorization, exemption, order, consent, approval or franchise the
absence of, or the non-compliance, with which would not reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect.

 

(b) Albertson’s has designed and maintains a system of internal control over
financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange
Act) sufficient to provide reasonable assurances regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with GAAP. Albertson’s (i) has designed and maintains
disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)
of the Exchange Act) that provides reasonable assurance that material
information required to be disclosed by Albertson’s in the reports that it files
or submits under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in the Securities and Exchange
Commission’s rules and forms, and (ii) has disclosed and reported, based on its
most recent evaluation of its internal controls over financial reporting prior
to the date hereof, to Albertson’s auditors and the audit committee of the
Albertson’s Board of

 

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Directors (A) any significant deficiencies and material weaknesses in the design
or operation of its internal control over financial reporting that are
reasonably likely to adversely affect in any material respect Albertson’s
ability to record, process, summarize and report financial information and
(B) any fraud, whether or not material, that involves management or other
employees who have a significant role in Albertson’s internal control over
financial reporting. Albertson’s has heretofore furnished to Buyer complete and
correct copies of Albertson’s final report to the audit committee of Albertson’s
Board of Directors for fiscal 2004 and all subsequent quarterly updates, in each
case in respect of the matters in clause (ii) of the immediately preceding
sentence.

 

Section 2.07. Real Property. The Real Property is all of the real property which
the Sellers own, lease, operate or sublease in connection with the Standalone
Drug Business. Except as would not reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect:

 

(a) The Sellers have good and marketable fee simple title to all Owned Real
Property and valid leasehold estates in all Leased Real Property free and clear
of all Liens, except Permitted Liens. The Sellers or one of their respective
Subsidiaries has exclusive use and possession of each Leased Real Property and
Owned Real Property, other than any use or occupancy rights granted to
third-party owners, tenants or licensees pursuant to agreements with respect to
such real property entered in the ordinary course of business (each agreement,
including all amendments thereto, a “Third Party Use and Occupancy Agreement”),
none of which would reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.

 

(b) Except as would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect, each Ground Lease and Store Lease and each
Third Party Use and Occupancy Agreement is in full force and effect and is valid
and enforceable in accordance with its terms, and there is no material default
under any Ground Lease or Store Lease or any Third Party Use and Occupancy
Agreement either by the Sellers party thereto or, to the Sellers’ Knowledge, by
any other party thereto, and no event has occurred that, with the lapse of time
or the giving of notice or both, would constitute a default by any Seller
thereunder.

 

(c) Except as would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect, there are no pending or, to any Seller’s
Knowledge, threatened condemnation or eminent domain proceedings that affect any
Owned Real Property or Leased Real Property, and no Seller has received any
written notice of the intention of any Governmental Authority or other Person to
take any Owned Real Property or Leased Real Property.

 

Section 2.08. Title to the Purchased Assets. Sellers have valid title to all of
the Purchased Assets that are owned by Sellers free and clear of all Liens
except for Permitted Liens. Sellers have a valid leasehold interest or valid
rights to use all of the other Purchased Assets, except where the failure to
have a valid leasehold interest or valid rights have not had and would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.

 

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Section 2.09. IT Systems. (a) Except as would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect, (i) the IT
Systems of the Sellers are adequate for the operation of the Standalone Drug
Business as presently conducted and (ii) there has not been any material
malfunction with respect to any of the material IT Systems of the Sellers since
January 31, 2002 that has not been remedied or replaced in all material
respects.

 

(b) Except as would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect, (i) the use of the information and data
that is used or held for use in the operation of the Standalone Drug Business or
that is otherwise material to or necessary for the operation of the Standalone
Drug Business (the “Data”) by the Sellers does not infringe or violate the
privacy rights of any Person or otherwise violate any Law or regulation,
(ii) the Sellers have taken reasonable and customary measures consistent with
generally accepted industry practices to protect the privacy of the Data of
their respective customers, and (iii) to the Sellers’ Knowledge, since
January 31, 2002 there have been no security breaches with respect to the
privacy of such Data.

 

Section 2.10. Sufficiency of Assets. Assuming the due execution of and
performance under the Standalone Drug Transition Services Agreement, the
continued employment of all Employees immediately after the Effective Time and
other than with respect to the Excluded Assets, and subject to the provisions of
Section 1.05(d), the Purchased Assets immediately after the Effective Time shall
constitute assets sufficient in all material respects to conduct the Standalone
Drug Business as conducted immediately prior to the Effective Time.

 

Section 2.11. Labor Relations. Except as would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect, no Seller has
received notice during the past two years of the intent of any Governmental
Authority responsible for the enforcement of labor, employment, occupational
health and safety or workplace safety and insurance/workers compensation laws to
conduct an investigation of or affecting any Seller with respect to any Facility
and, to the Knowledge of any Seller, no such investigation is in progress.
Except as would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect, there are no (and have not since March 30,
2004 been any) labor disputes, strikes, organizing activities or work stoppages
against any Seller pending, or to the Knowledge of any Seller, threatened with
respect to any Facility. No labor organization or group of 50 or more employees
of any Seller has made a pending formal demand for recognition or certification,
and there are no representation or certification proceedings or petitions
seeking a representation proceeding presently pending or, to the knowledge of
any Seller, threatened to be brought with respect to any Facility.

 

Section 2.12. Environmental Compliance. (a) (i) In connection with or relating
to the Facilities or Purchased Assets, except as would not reasonably be
expected individually or in the aggregate to have a Material Adverse Effect, to
the Sellers’ Knowledge, the Sellers and their Affiliates comply and have
complied with all applicable Environmental Laws (as defined below), and possess
and comply, and have complied, with all applicable Environmental Permits (as
defined below) required under such laws to operate as it currently operates, in
each case in connection with or relating to the Facilities or Purchased Assets;
(ii) except as would not reasonably be expected individually or in the aggregate
to have a Material Adverse Effect, to the Sellers’ Knowledge, there are no, and
there have not been any, Materials of Environmental

 

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Concern (as defined below) at any of the Facilities or Purchased Assets under
circumstances that have resulted in or are reasonably likely to result in
liability of the Sellers or any of their Affiliates under any applicable
Environmental Laws; (iii) in connection with or relating to the Facilities or
Purchased Assets, except as would not reasonably be expected to have a Material
Adverse Effect, none of the Sellers or their Affiliates has received any written
notification alleging that it is liable for, or request for information pursuant
to section 104(e) of the Comprehensive Environmental Response, Compensation and
Liability Act or similar foreign, state or local Law concerning, any release or
threatened release of Materials of Environmental Concern at any location except,
with respect to any such notification or request for information concerning any
such release or threatened release, to the extent such matter has been fully
resolved such that no further action is required with the appropriate foreign,
federal, state or local regulatory authority or otherwise; and (iv) the reports
of environmental assessments, audits and similar investigations previously made
available to Parent are all material such reports in the possession of the
Sellers and conducted since January 30, 2003 in connection with or relating to
the Facilities or Purchased Assets. There are no Actions arising under
Environmental Laws pending or, to the Knowledge of the Sellers, threatened
against the Sellers or any of their Affiliates which would reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.
In connection with or relating to the Facilities or Purchased Assets, except as
would not reasonably be expected to have a Material Adverse Effect, at each
property where Asbestos-Containing Material (“ACM”) has been identified, all ACM
is non-friable, encapsulated or abated and no ACM is present in any property
where the Sellers have not implemented an Asbestos Operation and Management
Plan.

 

(b) Notwithstanding any other representations and warranties in this Agreement,
the representations and warranties in this Section 2.12 are the only
representations and warranties in this Agreement with respect to Environmental
Laws, Environmental Permits or Materials of Environmental Concern.

 

“Materials of Environmental Concern” means: any hazardous, acutely hazardous, or
toxic material, substance or waste defined or regulated as such under
Environmental Laws, including the federal Comprehensive Environmental Response,
Compensation and Liability Act and the federal Resource Conservation and
Recovery Act.

 

Section 2.13. Financial Schedules. Set forth in Section 2.13(a) of the
Disclosure Letter are (i) unaudited selected results of operations data for each
of the New Diamond Business (as defined in the Separation Agreement), the
Standalone Drug Business and the Retained Business (as defined in the Separation
Agreement) for the 52 weeks ended January 29, 2004, the 53 weeks ended
February 3, 2005 and the 39 weeks ended November 3, 2005 (collectively, the
“Separate Operations Data”) and (ii) unaudited selected balance sheet data for
Albertson’s and each of Albertson’s operating regions as of February 3, 2005 (
the “Separate Balance Sheet Data”). The Separate Operations Data and the
Separate Balance Sheet Data have been compiled from source books, records and
financial reports of Albertson’s and its Subsidiaries. Such source books,
records and financial reports were prepared by Albertson’s in the ordinary
course of its business, are accurate in all material respects and were subject
to Albertson’s internal controls. The allocations of the Separate Operations
Data among the New Diamond Business, the Standalone Drug Business and the
Retained Business are consistent with Section 2.13(a)(i) of the Disclosure
Letter and the allocations of the Separate Balance Sheet Data are allocated in
the

 

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manner described in Section 2.13(a)(ii) of the Disclosure Letter. The Separate
Balance Sheet Data and the Separate Operations Data reconcile to Albertson’s
historical financial statements filed with the SEC and, in Albertson’s opinion,
present fairly, in all material respects, the information presented in the
Separate Balance Sheet Data and the Separate Operations Data, respectively.
Subject to the changes in accounting principles and methodologies effected by
Albertson’s as described in the Company SEC Reports (as defined in the Merger
Agreement), the accounting principles and methodologies used in the preparation
of the Separate Operations Data were applied on a consistent basis, in all
material respects, for each of the periods presented therein. Set forth in
Section 2.13(a)(iii) of the Disclosure Letter are selected assets and
liabilities included in the Purchased Assets and Assumed Liabilities, which
schedule was prepared by Sellers and was compiled from source books, records and
financial reports of Albertson’s and its Subsidiaries. Such source books,
records and financial reports were prepared by Albertson’s in the ordinary
course of its business, are accurate in all material respects and were subject
to Albertson’s internal controls.

 

Section 2.14. No Undisclosed Liabilities. No Seller has any liabilities, claims
or indebtedness related to the Standalone Drug Business of any kind whatsoever,
whether accrued, contingent, absolute, determined, determinable or otherwise,
whether due or to become due, in each case, that are required by GAAP to be set
forth, reserved against, disclosed or otherwise reflected in a consolidated
balance sheet or the notes thereto, except liabilities that (i) are set forth in
the financial schedules set forth in Section 2.13 of the Disclosure Letter or
disclosed in the notes thereto, (ii) were incurred in the ordinary course of
business and consistent with past practice since the date of the financial
schedules set forth in Section 2.13 of the Disclosure Letter and would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect, (iii) are incurred pursuant to the transactions contemplated by
this Agreement, (iv) have been discharged or paid in full prior to the date of
this Agreement in the ordinary course of business consistent with past practice
or (v) were incurred outside the ordinary course of business since the date of
the financial schedules set forth in Section 2.13 of the Disclosure Letter, but
which are, and would reasonably be expected to be, individually or in the
aggregate, immaterial in amount or nature.

 

Section 2.15. Absence of Certain Changes or Events. Since November 3, 2005,
except as expressly contemplated by this Agreement, the Sellers have conducted
their businesses in the ordinary course in all material respects consistent with
past practice, and, since such date, there has not been any change, event or
occurrence which has had or would reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect. Except as set forth in
Section 2.15 of the Seller Disclosure Letter, since November 3, 2005, the
Sellers have not taken any action that, if taken after the date of this
Agreement, would constitute a breach of Sections 5.01(a), (b), (d), (g) or
(j) hereof, other than with respect to Real Property.

 

Section 2.16. Finders’ Fees. Except for Goldman, Sachs & Co., Houlihan Lokey
Howard & Zukin and The Blackstone Group, L.P., there is no investment banker,
broker, finder or other intermediary which has been retained by or is authorized
to act on behalf of the Sellers who is entitled to any fee or commission in
connection with the transactions contemplated by this Agreement.

 

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Section 2.17. Healthcare Regulatory. (a) Sellers are qualified for participation
in the Medicare and Medicaid programs. No Seller has received any notice
indicating that such qualification may be terminated or withdrawn nor has any
reason to believe that such qualification may be terminated or withdrawn.
Sellers have timely filed all claims or other reports required to be filed with
respect to the purchase of products or services by third-party payors
(including, without limitation, Medicare and Medicaid), except where the failure
to file such claims and reports would not, individually or in the aggregate, be
reasonably likely to have a Material Adverse Effect, and all such claims or
reports are complete and accurate in all material respects. Sellers have no
material liability to any payor with respect thereto, except for liabilities
incurred in the ordinary course of business consistent with past practice.

 

(b) Sellers have complied in all material respects with all applicable
“Healthcare Laws”, i.e., The Social Security Act, as amended, Sections 1128,
1128A and 1128B, 42 U.S.C. Sections 1320a-7, 7(a) and 7(b), including, without
limitation, Criminal Penalties Involving Medicare or State Health Care Programs,
commonly referred to as the “Federal Anti-Kickback Statute” and The Social
Security Act, as amended, Section 1877, 42 U.S.C. Section 1395nn (Prohibition
Against Certain Referrals), commonly referred to as the “Stark Statute,” the
statute commonly referred to as the “Federal False Claims Act,” the Health
Insurance Portability and Accountability Act of 1996, and the regulations issued
pursuant thereto and all statutes and regulations relating to the possession,
distribution, maintenance and documentation of controlled substances.

 

(c) No personnel of the Sellers during such person’s employment with Sellers
have been convicted of, charged with or investigated for a Medicare, Medicaid or
other Federal Health Care Program (as defined in 42 U.S.C. § 1320a-7b(f))
related offense, or convicted of, charged with or investigated for a violation
of federal or state law relating to fraud, theft, embezzlement, breach of
fiduciary responsibility, financial misconduct, obstruction of an investigation
or controlled substances. No personnel of the Sellers during such person’s
employment with Sellers have been excluded or suspended from participation in
Medicare, Medicaid or any other Federal Health Care Program, or have been
debarred, suspended or are otherwise ineligible to participate in federal
programs. No personnel of the Sellers during such person’s employment with
Sellers has, to Sellers’ Knowledge, committed any offense which may reasonably
serve as the basis for any such exclusion, suspension, debarment or other
ineligibility. The Sellers, to their Knowledge, have not arranged or contracted
with any individual or entity that is suspended, excluded or debarred from
participation in, or otherwise ineligible to participate in, a Federal Health
Care Program or other federal program.

 

(d) Except as specifically excluded hereunder or not legally permitted to be
transferred to Buyer, the Purchased Assets include all permits, licenses,
provider numbers, authorizations, exemptions, orders, consents, approvals,
registrations, franchises or the like held by the Sellers and necessary for the
lawful conduct of the Standalone Drug Business under and pursuant to all
applicable statutes, laws, ordinances, rules and regulations of all Governmental
Authorities having, asserting or claiming jurisdiction over it or any part of
the Standalone Drug Business (“Permits”). All Permits have been legally obtained
and maintained and are valid and in full force and effect. The

 

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Sellers are in compliance in all material respects with all of the terms and
conditions of the Permits. No outstanding material violations are or have been
recorded in respect of any of the Permits. No proceeding is pending or, to the
Sellers’ knowledge, threatened, to suspend, revoke, withdraw, modify or limit
any of the Permits, and, to the Sellers’ knowledge, there is no fact, error or
admission relevant to any Permit that would permit the suspension, revocation,
withdrawal, modification or limitation or result in the threatened suspension,
revocation, withdrawal, modification or limitation, or any loss of any Permit.

 

ARTICLE 3

REPRESENTATIONS AND WARRANTIES OF PARENT AND BUYER

 

Parent and Buyer hereby jointly and severally represent and warrant to the
Sellers that:

 

Section 3.01. Organization. Each of Parent and Buyer is duly organized, validly
existing and in good standing under the laws of the state of its organization,
and has the requisite corporate or similar power and authority to own its
properties and to carry on its business as presently conducted and is duly
qualified to do business and is in good standing (where such concept exists) as
a foreign corporation in each jurisdiction in which the nature of its business
or the ownership or leasing of its properties makes such qualification
necessary. Complete and correct copies of the certificate of incorporation and
by-laws (or equivalent organizational documents) of Parent and Buyer as
currently in effect, have been made available to Albertson’s, and as so made
available, are in full force and effect and no other organizational documents
are applicable to or binding upon Parent and Buyer. Buyer is a direct or
indirect wholly owned subsidiary of Parent.

 

Section 3.02. Authority; Enforceability. Each of Parent and Buyer has the
corporate or other power and authority to execute and deliver this Agreement and
the Ancillary Agreements to which it is a party and to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby. The execution and delivery by each of Parent and Buyer of this
Agreement and the Ancillary Agreements to which it is a party and the
consummation by each of Parent and Buyer of the transactions contemplated
hereunder and thereunder have been duly authorized by all necessary action on
the part of each of Parent and Buyer and the holders of any equity interests
thereof. This Agreement and each Ancillary Agreement to which each is a party
has been or will be duly executed and delivered by each of Parent and Buyer and,
assuming due authorization, execution and delivery by the other parties hereto
and thereto, constitutes or will constitute a legal, valid and binding agreement
of each of Parent and Buyer, enforceable against each of them in accordance with
its terms, subject to the effects of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar Laws relating to or
affecting creditors’ rights generally and general equitable principles (whether
considered in a proceeding in equity or at law).

 

Section 3.03. Non-Contravention. The execution, delivery and performance by each
of Parent and Buyer of this Agreement and the Ancillary Agreements to which each
is a party does not and will not (a) conflict with or violate its certificate of
incorporation or by-laws or comparable governing documents, (b) assuming that
all consents, approvals and authorizations

 

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contemplated by Section 3.04 have been obtained and all filings described
therein have been made, conflict with or violate any Law applicable to Parent or
Buyer or by which Parent or Buyer or any of their respective properties are
bound or (c) result in any breach or violation of or constitute a default (or an
event which with notice or lapse of time or both would become a default) or
result in the loss of a benefit under, or give rise to any right of termination,
cancellation, recapture, amendment or acceleration of, or performance under, any
note, bond, mortgage, indenture, contract, agreement, lease, license, permit or
other instrument or obligation to which Parent or Buyer is a party or by which
Parent or Buyer or any of their respective properties are bound, except, in the
case of clauses (b) and (c), for any such conflict, violation, breach, default,
loss, right or other occurrence which would not, individually or in the
aggregate, prevent or materially delay the consummation of the transactions
contemplated hereby.

 

Section 3.04. Governmental Consents. The execution, delivery and performance by
Parent and Buyer of this Agreement and the Ancillary Agreements to which each is
a party and the consummation by each of Parent and Buyer of the transactions
contemplated hereby and thereby do not and will not require any consent,
approval, authorization or permit of, action by, filing with or notification to,
any Governmental Authority, except (a) as required under or pursuant to the HSR
Act and (b) any other consent, approval, authorization, permit, action, filing
or notification the failure of which to be made or obtained would not,
individually or in the aggregate, prevent or materially delay the consummation
of the transactions contemplated hereby.

 

Section 3.05. Financing. As of Closing, Buyer will have sufficient cash,
available lines of credit or other sources of immediately available funds to
enable it to make payment of the Purchase Price and any other amounts to be paid
by it hereunder. At and after the Closing, Buyer will have cash in an aggregate
amount sufficient for Buyer to perform all of its obligations hereunder and with
respect to the transactions contemplated hereby.

 

Section 3.06. Brokers. No agent, broker, finder or investment banker is entitled
to any brokerage, finder’s or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Parent or Buyer for which any Seller could have any liability.

 

ARTICLE 4

REPRESENTATIONS AND WARRANTIES OF SUPERVALU

 

SUPERVALU hereby represents and warrants to the Buyer that:

 

Section 4.01. Organization. SUPERVALU is duly organized, validly existing and in
good standing under the laws of its jurisdiction of organization, and has the
requisite corporate or similar power and authority to own its properties and to
carry on its business as presently conducted and is duly qualified to do
business and is in good standing (where such concept exists) as a foreign
corporation in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification necessary.

 

Section 4.02. Authority; Enforceability. SUPERVALU has the corporate or other
power and authority to execute and deliver this Agreement and to perform its
obligations hereunder.

 

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The execution and delivery by SUPERVALU of this Agreement have been duly
authorized by all necessary action on the part of SUPERVALU. This Agreement has
been duly executed and delivered by SUPERVALU and, assuming due authorization,
execution and delivery by the other parties hereto, constitutes or will
constitute a legal, valid and binding agreement of SUPERVALU, enforceable
against it in accordance with its terms, subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
Laws relating to or affecting creditors’ rights generally and general equitable
principles (whether considered in a proceeding in equity or at law).

 

Section 4.03. Non-Contravention. The execution, delivery and performance by
SUPERVALU of this Agreement does not and will not (a) conflict with or violate
its organizational documents, (b) assuming that all consents, approvals and
authorizations contemplated by Section 4.04 have been obtained and all filings
described therein have been made, conflict with or violate any Law applicable to
SUPERVALU or by which SUPERVALU or its respective properties are bound, or
(c) result in any breach or violation of or constitute a default (or an event
which with notice or lapse of time or both would become a default) or result in
the loss of a benefit under, or give rise to any right of termination,
cancellation, recapture, amendment or acceleration of, or performance under, any
note, bond, mortgage, indenture, contract, agreement, lease, license, permit or
other instrument or obligation to which SUPERVALU is a party, except in the case
of clauses (b) and (c), for any such conflict, violation, breach, default, loss,
right or other occurrence which would not, individually or in the aggregate,
prevent or materially delay the consummation of the transactions contemplated
hereby.

 

Section 4.04. Governmental Consents. The execution, delivery and performance by
SUPERVALU of this Agreement and the Ancillary Agreements to which it is a party
and the consummation by SUPERVALU of the transactions contemplated hereby and
thereby do not and will not require any consent, approval, authorization or
permit of, action by, filing with or notification to, any Governmental
Authority, except (a) as required under or pursuant to the HSR Act and (b) any
other consent, approval, authorization, permit, action, filing or notification
the failure of which to be made or obtained would not, individually or in the
aggregate, prevent or materially delay the consummation of the transactions
contemplated hereby.

 

Section 4.05. Brokers. No agent, broker, finder or investment banker is entitled
to any brokerage, finder’s or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of SUPERVALU for which Buyer could have any liability.

 

ARTICLE 5

COVENANTS OF THE SELLERS

 

The Sellers agree that:

 

Section 5.01. Conduct of the Standalone Drug Business. From the date hereof
until the Effective Time, the Sellers shall conduct the Standalone Drug Business
in the ordinary course consistent with past practice, including using
commercially reasonable efforts to (i) maintain Inventory of a quantity
(including seasonal variations), quality and mix consistent with past

 

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practices, (ii) maintain employment of employees (including pharmacists and
store managers) at levels consistent with the needs of the business of each
Store consistent with past practices at the posted hours of the Store and its
pharmacy as of the date of this Agreement, (iii) maintain the Real Property in a
physical condition consistent with past practice, (iv) maintain the validity of
existing pharmacy and other federal, state or local licenses, permits or
registrations, certifications and Medicare and Medicaid provider status,
including any renewals or extensions thereof, consistent with past practices and
(v) preserve intact the business organizations and relationships with third
parties. Without limiting the generality of the foregoing, subject to applicable
Law and Section 5.01 of the Disclosure Letter, from the date hereof until the
Effective Time, the Sellers will not (in each case, to the extent it relates to
the Standalone Drug Business), without the prior written consent of Buyer, which
consent shall not be unreasonably withheld, conditioned or delayed (in each
case, to the extent it relates to the Standalone Drug Business):

 

(a) sell, lease, license, purchase or enter into a contract to sell, remove or
otherwise dispose of any Purchased Assets except (i) pursuant to existing
contracts or commitments disclosed to Buyer in writing prior to the date hereof,
(ii) sales of inventory in the ordinary course consistent with past practice or
(iii) purchases, lease-related expenditures and equipment leases in the ordinary
course of business consistent with the levels contemplated in the capital
expenditure budget set forth in Section 5.01(a) of the Disclosure Letter (the
“Capex Budget”);

 

(b) unless required by the terms of the applicable Store Lease or Ground Lease,
modify materially, renew, extend or terminate any of the Store Leases or Ground
Leases; provided that optional extensions of lease terms provided for in Store
Leases or Ground Leases may be exercised by Sellers in the ordinary course of
business consistent with past practices and provided further that,
notwithstanding anything to the contrary herein, the Sellers (i) shall exercise
any existing optional extensions for and/or renew (in accordance with the
applicable time periods) (or, in the case of Stores subject to month-to-month
lease arrangements, use reasonable best efforts to continue those arrangements
for) those Store Leases or Ground Leases listed in Schedule 5.01(b)(i) and
(ii) have advised Buyer that they are to close or sell the Stores listed in
Schedule 5.01(b)(ii);

 

(c) terminate or permit termination or expiration of, any existing pharmacy or
other federal, state or local licenses, permits, registrations, certifications
and Medicare and Medicaid provider numbers, except in the ordinary course of
business, consistent with past practices;

 

(d) incur, assume or guarantee any indebtedness for borrowed money with respect
to the Purchased Assets, or mortgage or pledge any Purchased Asset or create or
suffer to exist any Lien other than Permitted Liens on any Purchased Assets,
other than in the ordinary course of business consistent with past practices;
provided, however, no Lien on Real Property securing indebtedness will be
created;

 

(e) enter into any (i) employment, deferred compensation, severance, retirement
or other similar agreement with any officer or employee of the Standalone Drug
Business (or amend any such existing agreement), (ii) grant any severance or
termination pay to any officer or employee of the Standalone Drug Business
(other than

 

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any severance or termination pay that is required to be paid under any of
Albertson’s or its Affiliates’ severance plans as in effect on the date hereof)
or (iii) increase any compensation or other benefits payable to any officer or
employee of the Standalone Drug Business, other than any compensation increases
that are in the ordinary course of business consistent with past practice;

 

(f) make or commit to any capital expenditure for additions or improvements to
any plant, property or equipment relating primarily to the Standalone Drug
Business in excess of the Capex Budget, except to the extent that such excess
does not exceed $1,000,000 in the aggregate;

 

(g) enter into, modify, extend or cancel any third-party payor contracts (which
contracts are for amounts in excess of $250,000 per annum), except in the
ordinary course of business consistent with past practices;

 

(h) make any material changes in accounting policies or procedures other than as
required by GAAP or a Governmental Authority;

 

(i) enter into any real estate lease or lease commitment (or change the status
of any commitment), enter into or materially modify any Construction Contract,
or purchase or acquire or enter into any agreement to purchase or acquire any
real estate, in each case relating primarily to the Standalone Drug Business,
other than as expressly contemplated hereby or in the ordinary course of
business consistent with past practice as determined in accordance with
Section 5.01 of the Disclosure Letter;

 

(j) in any material respect, amend, waive, modify, supplement, extend,
terminate, allow to lapse, assign, encumber or otherwise transfer, in whole or
in part, its rights and interests in or under any Assigned Contracts, other than
as expressly contemplated hereby or in the ordinary course of business
consistent with past practice as determined in accordance with Section 5.01 of
the Disclosure Letter; or

 

(k) agree or commit to do any of the foregoing.

 

Section 5.02. Access to Information; Confidentiality. (a) From the date hereof
until the Effective Time, Albertson’s will (i) give Buyer, its counsel,
financial advisors, auditors and other authorized representatives reasonable
access during normal business hours and upon reasonable notice to the offices,
properties, books, records and personnel of the Sellers relating to the
Facilities and the Purchased Assets, (ii) furnish to Buyer, its counsel,
financial advisors, auditors and other authorized representatives such financial
and operating data and other information relating to the Facilities and the
Purchased Assets as Buyer may reasonably request (including affording Buyer and
its representatives access to the Stores and the Distribution Center during the
pre-Closing period to enable Buyer, at Buyer’s expense, to conduct a physical
count of all inventory at such locations, (iii) co-operate and prioritize and
allocate its resources as reasonably necessary to construct a data bridge and
the data file transfers to ensure that Sellers will commence providing,
immediately as of Closing, the information technology services to Buyer as
specified in the Standalone Drug Transition Services Agreement, (iv) deliver to
Buyer (in electronic form where available) commencing promptly after the date
hereof the data reasonably

 

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requested by Buyer in order to commence and progress item match and other
transition related planning activities as specified in Schedule 5.02(a) and
(v) instruct the employees, counsel, financial advisors and auditors of the
Sellers to cooperate with Buyer in connection with the foregoing; provided that
(x) Buyer and its representatives shall not have the right, without the prior
approval of Albertson’s (which shall not be unreasonably withheld, delayed or
conditioned, so long as Buyer provides Sellers with an appropriate indemnity),
to perform any investigative procedures that involve physical disturbance or
damage to the Facilities, the real property upon which the Facilities are
situated or any of the Purchased Assets or Excluded Assets and (y) it is
understood and agreed that Buyer has informed Sellers that the access and
conduct that is required by this Section 5.02(a) is critical to its ability to
operate the Stores, and to conduct business and service customers at the Stores,
at Closing, but that such access and conduct must be provided or performed in a
form or manner or pursuant to a process that complies with applicable Law and
any medical privacy policy of Albertson’s maintained for the benefit of third
parties that imposes a legally binding obligation on Albertson’s or is required
to be complied with order to be in accordance with applicable Law. Accordingly,
to the extent that providing access to certain information or personnel or
taking certain action under this Section 5.02(a) would not so comply in a given
form or manner or pursuant to a given process, the parties shall agree on a form
or manner of access or conduct that will both enable Buyer to operate the
Stores, and conduct business and service customers at the Stores, at Closing and
will comply with applicable Law and any such policy (e.g., pricing information
may be redacted from the item files and pharmacy reimbursement rates may be
redacted from third party plan information). To the extent that any Seller
incurs any incremental out-of-pocket costs in processing, retrieving or
transmitting any such information pursuant to this Section 5.02(a), the Buyer
shall reimburse the appropriate Seller for the reasonable out-of-pocket costs
thereof promptly upon the submission to the Buyer of an invoice therefor
accompanied by supporting documentation in reasonable detail.

 

(b) During the period preceding the Closing Date, the Sellers shall permit Buyer
access to each Facility after normal business hours (unless other times are
permitted by the Sellers) in order to (i) prepare as-built surveys, and
(ii) install wiring for communication devices and other store systems (including
computers and other systems) and take other similar action at such Facility, all
at Buyer’s cost and without causing damage to such Facility; provided that Buyer
shall not be permitted to install any equipment in the Facilities until
immediately following the Effective Time. Buyer agrees to repair any damage
which may be caused due to the exercise of its rights pursuant to this
Section 5.02(b) and to indemnify, defend and hold harmless the Seller
Indemnitees from any and all Damages arising out of or in any way connected with
Buyer’s exercise of its rights pursuant to this Section 5.02(b). The Sellers’
obligation to provide the foregoing access shall be conditioned on the
requirement that Buyer shall not unreasonably interfere with the Sellers’
Standalone Drug Business.

 

(c) After the Effective Time, the Sellers and their Affiliates will hold, and
will use their commercially reasonable efforts to cause their respective
officers, directors, employees, accountants, counsel, consultants, advisors and
agents to hold, in confidence, unless required to disclose by judicial or
administrative process or by other requirements of Law or by the rules,
regulations or policies of any United States or foreign securities exchange, all
documents and information concerning the Purchased Assets and Assumed
Liabilities, except to the extent that such information can be shown to have
been (i) in the

 

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public domain prior to the Effective Time, (ii) in the public domain at or after
the Effective Time through no fault of the Sellers or their Affiliates or
(iii) later lawfully acquired by the Sellers from sources other than those
related to its prior ownership of the Standalone Drug Business; provided that
the Sellers may disclose such information to their officers, directors,
employees, successors, accountants, counsel, consultants, advisors and agents in
connection with the transactions contemplated by this Agreement so long as such
Persons are informed by the Sellers of the confidential nature of such
information and are directed by the Sellers to treat such information
confidentially. The obligation of the Sellers and their Affiliates to hold any
such information in confidence shall be satisfied if Sellers exercise the same
care with respect to such information as they would take to preserve the
confidentiality of their own similar information. For so long as such
information remains subject to the foregoing confidentiality obligations, the
Sellers shall not use the same for any purpose other than tax, accounting and
regulatory and other compliance purposes and evaluating, enforcing and
performing their rights and obligations under this Agreement and the Ancillary
Agreements or otherwise in connection with the transactions contemplated hereby
and thereby.

 

(d) Subject to Section 8.02(a), after the Effective Time, the Sellers will
afford promptly to Buyer and its agents reasonable access (with an opportunity
to make copies) (subject, however, to confidentiality and similar non-disclosure
obligations) during normal business hours and upon reasonable notice, to the
Sellers’ properties, books, records (whether in hard copy or computer format),
workpapers, contracts, commitments, Tax Returns, personnel and records relating
to the Facilities or the Purchased Assets as Buyer shall reasonably request for
any reasonable business purpose relating to the Facilities or the Purchased
Assets; provided that any such access by Buyer shall not unreasonably interfere
with the conduct of the business of the Sellers. Buyer shall bear all of the
out-of-pocket costs and expenses (including attorneys’ fees, but excluding
reimbursement for general overhead, salaries and employee benefits) reasonably
incurred in connection with the foregoing.

 

Section 5.03. Notices of Certain Events. From the date hereof until the Closing
Date, each party shall promptly notify the other party of:

 

(a) any written notice or other written communication from any Person alleging
that the consent of such Person is or may be required in connection with the
transactions contemplated by this Agreement;

 

(b) any written notice or other written communication from any Governmental
Authority in connection with the transactions contemplated by this Agreement;
and

 

(c) any change or fact of which it is aware that will or is reasonably likely to
result in any of the conditions set forth in Article 10 becoming incapable of
being satisfied.

 

Section 5.04. Noncompetition; Cooperation. (a) SUPERVALU agrees that neither it
nor any of its controlled Affiliates shall:

 

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(i) until eighteen months after the Closing Date, either directly or indirectly,
for its own account or jointly with others, open any freestanding drug store
within a 2.5-mile radius of any of the Stores;

 

(ii) (X) until six months after the Closing Date, open any new pharmacy counter
in any supermarket owned or operated either directly or indirectly for its own
account or jointly with others by any Seller or any of its Affiliates within a
.25-mile radius of any of the Stores or (Y) for the following twelve months
after such initial six month period, open more than five new pharmacy counters
in a supermarket within a .25-mile radius of any of the Stores.

 

(iii) Notwithstanding anything to the contrary contained in this Section 5.04,
neither SUPERVALU nor any of its controlled Affiliates shall be prohibited from
(X) entering into or consummating any agreement or transaction providing for the
acquisition or disposition of any assets, securities or businesses so long and
to the extent that such acquisitions or dispositions are not specifically
intended to circumvent the restrictions set forth in this Section 5.04 or
(Y) the purchase, acquisition or possession of 5% or less of any class of
securities of any Person in the ordinary course of SUPERVALU’s or any of its
Affiliates’ passive investment activities.

 

(b) SUPERVALU agrees that, until 18 months after the Closing Date, neither it
nor any of its controlled Affiliates, on the one hand, and Parent agrees that
neither it nor any of its controlled Affiliates, on the other hand, shall
solicit any prescription drug customer of the other party to the extent that
such customer’s prescription file is associated with a store of the other party;
provided that the foregoing shall not be deemed to prohibit generalized
solicitations through media advertisements that are not targeted at such
customers. For the avoidance of doubt, nothing in this Section 5.04(b) shall
limit any party’s ability to solicit any customer whose name independently
appears on such party’s prescription files.

 

(c) For a period of 180 days from the Closing Date, SUPERVALU and Parent agree
not to disparage each other or to communicate that a prescription file has been
“transferred” or “transferred away” (or a message using similar language) from
the other’s branded store in communications with prescription drug customers.

 

Section 5.05. Prescription Files. Commencing on the Closing Date and in
accordance with a schedule to be provided by Buyer, the Sellers will deliver the
Prescription Files to Buyer in an electronic format mutually agreeable to Buyer
and the Sellers in accordance with all applicable state board of pharmacy
regulations; provided that Sellers shall preserve and maintain original hard
copies of the Prescription Files at the applicable Stores in accordance with all
applicable state board of pharmacy regulations; provided further, the cost of
any conversion into such mutually agreed upon electronic format shall be at
Buyer’s sole cost and expense.

 

Section 5.06. Casualty and Condemnation. (a) In the event that, after the
execution of this Agreement, but prior to the Effective Time, any Facility is
subject to loss, destruction or

 

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damage to the building or other improvements thereon (a “Casualty”) or the
exercise of eminent domain by a Governmental Authority (a “Condemnation”):

 

(i) Subject to Section 5.06(a)(ii), at the Closing the Sellers shall assign to
Buyer all proceeds the Sellers have received from any third party insurance
claims, condemnation awards, compensation or other reimbursements relating to
such Casualty or Condemnation (except as to business interruption insurance to
the extent that such proceeds are used or intended to be used to reimburse
Seller for any out-of-pocket costs, expenses, damages or losses suffered or
incurred by Seller up to and including the Effective Time) to the extent such
proceeds have not already been used by a Seller to repair any such loss,
destruction or damage (or are required to reimburse any Seller for any such
repair), and shall assign to Buyer the right to receive any future proceeds of
such Casualty or Condemnation receivable after the Effective Time, including as
to business interruption insurance.

 

(ii) If any such Casualty is not covered under the Sellers’ insurance policies
and in the event of a Leased Store that has suffered a Casualty where the
landlord is responsible for such repairs, loss or destruction pursuant to the
terms of the relevant Lease, the applicable Seller shall assign the applicable
Lease to Buyer at the Closing and, without any additional payment from the
Sellers, the Sellers shall assign to Buyer any claim they have under such Lease
with respect thereto.

 

(b) Any party receiving a notice of Casualty or Condemnation shall notify all
other parties in accordance with Section 12.02. Notwithstanding anything to the
contrary contained in this Agreement, in no event will any Casualty or
Condemnation constitute the breach of any representation, warranty or covenant
of the Sellers contained in this Agreement if the Sellers comply with this
Section 5.06.

 

(c) Notwithstanding anything to the contrary in this Agreement, under no
circumstances shall (i) SUPERVALU, New Diamond, Sellers or any of their
respective Affiliates be responsible for any retention or deductible payable
with respect to any Casualty or Condemnation and (ii) any payments on account of
a Casualty or Condemnation or any other loss be required from Beryl American
Corporation, or any other Subsidiary or Affiliate of SUPERVALU or the Sellers
that has underwritten an insurance policy with respect to any Purchased Asset.

 

Section 5.07. Assistance in Transfer of Licenses, Permits and Registrations.
(a) The Sellers will use commercially reasonable efforts to assist Buyer in
obtaining the transfer of the Licenses, including directing its employees to
cooperate with such transfer and making any notifications required to be sent by
the Sellers to the U.S. Drug Enforcement Administration (“DEA”) and applicable
state pharmacy boards prior to the Effective Time. It is understood that Buyer
is responsible for any expenses associated with any of the foregoing transfers
or assignments.

 

(b) With respect to any liquor license or liquor or other alcoholic beverage
inventory conveyed hereunder, the parties shall comply with applicable Law,
including the creation of any necessary escrow and the disbursement or release
of any funds held in

 

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such escrow, with the related escrow fees being paid by Buyer; provided,
however, if a state liquor control authority refuses to consent to the transfer
or issuance of a liquor license with respect to any Store to Buyer, the liquor
inventory at such Store shall be deemed Excluded Inventory. The parties shall
cooperate in executing and delivering any documentation necessary to effect the
foregoing. Buyer or a designee of Buyer will file, or cause to be filed, all
necessary pharmacy and liquor permit applications with the appropriate
governmental authorities and will use its commercially reasonable efforts to
obtain such permits as soon as practicable (including any controlled substance
licenses required under state law and DEA numbers). In the event that any
liquor, alcoholic beverage, pharmacy, controlled substances, DEA, Medicare,
Medicaid or other permit, license, registration, provider number, approval,
consent, certification or the like issued by any Governmental Authority
necessary for the Buyer’s ownership and/or operation of the Purchased Assets,
Standalone Drug Business or any Store shall not have been issued or transferred
to Buyer as of the Closing, at the request of Buyer and without any additional
consideration, the Sellers shall execute such powers of attorney, instruments
and agreements as are reasonably necessary to allow Buyer to utilize the
Sellers’ liquor, alcoholic beverage, pharmacy, controlled substances, DEA,
Medicare, Medicaid or other permits, licenses, registrations, provider numbers,
approvals, consents, certifications or the like, to the extent permitted under
applicable Law, in Buyer’s ownership and/or operation of the Purchased Assets,
Standalone Drug Business or any Store, until the issuance of such liquor,
alcoholic beverage, pharmacy, controlled substances, DEA, Medicare, Medicaid or
other permits, licenses, registrations, provider numbers, approvals, consents,
certifications or the like to Buyer; provided that as a condition precedent to
the Sellers’ execution of any such power of attorney, instrument or agreement,
Buyer shall also agree that (i) during the period of Buyer’s use of the Sellers’
liquor, alcoholic beverage, pharmacy, controlled substances, DEA, Medicare,
Medicaid or other permits, licenses, registrations, provider numbers, approvals,
consents, certifications or the like thereunder, Buyer shall own and/or operate
the Purchased Assets, Standalone Drug Business or any Store in accordance with
applicable Law and (ii) Buyer shall indemnify the Sellers against all losses
arising out of Buyer’s use of such power of attorney, instrument or agreement.

 

Section 5.08. Controlled Substances Inventory. To the extent required by
applicable Law or DEA regulations in context of the transactions contemplated by
this Agreement, the Sellers will undertake and deliver to Buyer at each Store an
inventory of “controlled substances” located at such Store, as close as
practicable prior to the Effective Time.

 

Section 5.09. Updated Store List. No later than thirty Business Days prior to
the Closing, Sellers shall provide to Buyer updated copies of Exhibits A, B and
C to this Agreement (the “Updated Store List”), which shall set forth the final
and definitive list of the Stores, and which shall be identical to the Exhibits
A, B and C attached to this Agreement except for, in accordance with
Section 5.01 (i) the addition of new or replacement retail drug stores
associated with the Standalone Drug Business which are opened by Sellers between
the date of this Agreement and the date of Sellers’ delivery of the Updated
Store List to Buyer, and (ii) the removal of any Stores due to operational
closings consistent with past practice or expirations of Store Leases or Ground
Leases in accordance with their terms. The Updated Store List shall be

 

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deemed to be Exhibits A, B and C to this Agreement for all purposes under this
Agreement as of the Effective Time.

 

Section 5.10. Financial Reports; Audited Financials. (a) Between the date of
this Agreement and the Closing Date, subject to applicable Law, Sellers shall
deliver to Buyer on a monthly basis interim, unaudited financial reports for the
Standalone Drug Business, prepared by Sellers in the ordinary course of business
consistent with past practices and in accordance with Sellers’ customary
reporting format for Sellers’ internal use in overseeing and managing the
operations of the Standalone Drug Business and the Stores.

 

(b) Sellers will cooperate and use commercially reasonable efforts to prepare
for Parent (and in the event required to be obtained by Parent under Regulation
S-X under the Exchange Act, shall prepare for Parent), commencing promptly after
the date hereof, audited financial statements for the Standalone Drug Business,
the Purchased Assets and the Assumed Liabilities for Albertson’s then most
recently completed and reported fiscal year (and unaudited reviewed financial
statements for any historical or subsequent fiscal quarter required to be
obtained by Parent under such Regulation S-X) in each case fairly presented in
accordance with GAAP on a basis consistent with Albertson’s historical financial
statements. Sellers shall deliver all such financial statements to Parent at
least 30 days prior to the latest time such financial statements are required to
be filed by Parent with the Securities and Exchange Commission under the
Exchange Act.

 

Section 5.11. Intercompany Leases. On or prior to the Closing Date, the Sellers
shall deliver the Purchased Assets free and clear of any lease or sublease
agreements between any Seller or any Affiliate of a Seller, on the one hand, and
Albertson’s or any Affiliate of Albertson’s, on the other hand.

 

Section 5.12. Merger Agreement; Separation Agreement. Neither Albertson’s nor
SUPERVALU shall, without the prior written consent of Buyer agree to any
modification of any of the terms or conditions of, or give any consent or waiver
under, any provision of the Merger Agreement or Separation Agreement if such
modification, consent or waiver would reasonably be expected to have a material
and adverse effect on the Standalone Drug Business, Purchased Assets or Assumed
Liabilities.

 

ARTICLE 6

COVENANTS OF BUYER

 

Buyer agrees that:

 

Section 6.01. Confidentiality. Prior to the Effective Time and after any
termination of this Agreement, Buyer and its Affiliates will hold, and will use
their commercially reasonable efforts to cause their respective officers,
directors, employees, accountants, counsel, consultants, advisors and agents to
hold, in confidence, unless compelled to disclose by judicial or administrative
process or by other requirements of Law or by the rules, regulations or policies
of any United States or foreign securities exchange, all documents and
information concerning the Standalone Drug Business that the Sellers have
furnished to Buyer or any of its Affiliates in

 

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connection with the transactions contemplated by this Agreement, except to the
extent that such information can be shown to have been (i) in the public domain
through no fault of Buyer or any of its Affiliates or (ii) later lawfully
acquired by Buyer or any of its Affiliates from sources other than the Sellers;
provided that Buyer may disclose such information to its officers, directors,
employees, accountants, counsel, consultants, advisors and agents in connection
with the transactions contemplated by this Agreement so long as such Persons are
informed by Buyer of the confidential nature of such information and are
directed by Buyer to treat such information confidentially. The obligation of
Buyer and its Affiliates to hold any such information in confidence shall be
satisfied if they exercise the same care with respect to such information as
they would take to preserve the confidentiality of their own similar
information. If this Agreement is terminated, Buyer and its Affiliates will, and
will use their commercially reasonable efforts to cause their respective
officers, directors, employees, accountants, counsel, consultants, advisors and
agents to, destroy or deliver to the Sellers, upon request, all documents and
other materials, and all copies thereof, obtained by Buyer or any of its
Affiliates or on their behalf from the Sellers in connection with this Agreement
that are subject to such confidence.

 

Section 6.02. Access. After the Effective Time, Buyer will afford promptly to
each of the Sellers and New Diamond and their agents reasonable access (with an
opportunity to make copies) (subject, however, to confidentiality and similar
non-disclosure obligations) during normal business hours and upon reasonable
notice, to Buyer’s properties, books, records (whether in hard copy or computer
format), workpapers, contracts, commitments, Tax Returns, personnel and records
relating to the Facilities or the Purchased Assets as the Sellers and/or New
Diamond shall reasonably request for any reasonable business purpose relating to
the Facilities or the Purchased Assets; provided that any such access by the
Sellers and/or New Diamond, as applicable, shall not unreasonably interfere with
the conduct of the business of Buyer. Each of the Sellers and New Diamond shall
bear all of the out-of-pocket costs and expenses (including attorneys’ fees, but
excluding reimbursement for general overhead, salaries and employee benefits)
reasonably incurred in connection with the foregoing.

 

Section 6.03. Guarantee Releases under Certain Contracts. Following the
Effective Time, the Buyer will use its reasonable best efforts to procure the
release by the applicable counterparty of any guarantee of Albertson’s or their
respective Affiliates in place with respect to any Store Lease, Ground Lease or
Assigned Contract by offering a replacement guarantee of Buyer or its
Affiliates, but Buyer shall have no further obligation to procure such release.
If and to the extent that Buyer shall be unable to procure any such release,
Buyer and its Affiliates shall jointly and severally indemnify and hold harmless
the Sellers, New Diamond or their respective Affiliates, as applicable, against
any damages, losses, liabilities and expenses (including reasonable attorneys’
fees) suffered or incurred by any of them with respect to any such Store Lease,
Ground Lease or Assigned Contract.

 

Section 6.04. Contractual Overpayments. If at any time in the one-year period
following the Effective Time, the Buyer or any of its Affiliates receives a
refund amount or a reduction in an amount payable from a vendor that relates to
a contractual overpayment under any of the Assigned Contracts, Store Leases or
Ground Leases by the Sellers or their Affiliates prior to the Effective Time,
the Buyer shall promptly pay to New Diamond an amount equal to the amount of
such refund or reduction.

 

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Section 6.05. Medicare And Medicaid Provider Numbers. The Buyer shall promptly
make (and thereafter diligently pursue) all filings, notifications and
applications required for participating as a provider in Medicare and Medicaid
reimbursement programs with respect to the Stores.

 

ARTICLE 7

COVENANTS OF BUYER AND THE SELLERS

 

Section 7.01. Reasonable Best Efforts; Further Assurances. (a) Subject to the
terms and conditions of this Agreement (including, but not limited to,
Section 7.2), Buyer and the Sellers will use their reasonable best efforts to
take, or cause to be taken, all actions and to do, or cause to be done, and
assist and cooperate with the other parties in doing, all things necessary or
desirable under applicable Laws and regulations to consummate, in the most
expeditious manner practicable, the transactions contemplated by this Agreement.

 

(b) Buyer and the Sellers will use reasonable best efforts to: (i) prepare, as
soon as practicable, all filings and other presentations in connection with
seeking any regulatory approval, exemption or other authorization from any
Governmental Authority necessary to consummate the transactions contemplated
hereby; (ii) prosecute such filings and other presentations with diligence; and
(iii) oppose any objections to, appeals from or petitions to reconsider or
reopen any such approval by Persons not party to this Agreement. Buyer and the
Sellers will use reasonable best efforts to facilitate obtaining any final order
or orders approving such transactions, consistent with this Agreement and/or to
remove any impediment to the consummation of the transactions contemplated
hereby. Buyer and the Sellers will use reasonable best efforts to furnish all
information in connection with the approvals of or filings with any Governmental
Authority and will promptly cooperate with and furnish information in connection
with any such requirements imposed upon Buyer or any of its Affiliates in
connection with this Agreement and the transactions contemplated hereby. Subject
to Section 6.02, Buyer will use reasonable best efforts to obtain any consent,
authorization, order or approval of, or any exemption by, and to remove any
impediment imposed by any Governmental Authority to allow the consummation of
the transactions contemplated hereby. Buyer and the Sellers will each advise the
other party promptly of any material communication received by such party or any
of its Affiliates from the Federal Trade Commission, Department of Justice, any
state attorney general or any other Governmental Authority regarding any of the
transactions contemplated hereby, and of any understandings, undertakings or
agreements (oral or written) such party proposes to make or enter into with the
Federal Trade Commission, Department of Justice, any state attorney general or
any other Governmental Authority in connection with the transactions
contemplated hereby. Buyer and Sellers will each consult with the other in
advance of any material meetings with the Federal Trade Commission.

 

Section 7.02. HSR Clearance. (a) In furtherance and not in limitation of
Section 7.01, each of Buyer and Albertson’s shall make an appropriate filing of
a Notification and Report Form pursuant to the HSR Act with respect to the
transactions contemplated hereby as promptly as practicable and thereafter make
any other required submissions with respect to the transactions contemplated
hereby under the HSR Act and to take all other appropriate actions

 

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reasonably necessary, proper or advisable to cause the expiration or termination
of the applicable waiting periods under the HSR Act as soon as practicable.

 

(b) Notwithstanding the foregoing, Buyer shall promptly take, in order to
consummate the transactions contemplated hereby, all actions necessary to
(A) secure the expiration or termination of any applicable waiting period under
the HSR Act (the “HSR Clearance”) and (B) to resolve any objections asserted
with respect to the transactions contemplated under this Agreement under any
antitrust Law or the Federal Trade Commission Act, raised by any Governmental
Authority, and to prevent the entry of any court order and to have vacated,
lifted, reversed or overturned any decree, judgment, injunction or other order
that would prevent, prohibit, restrict or delay Closing, including (i) executing
settlements, undertakings, consent decrees, stipulations or other agreements
with any Governmental Authority (or with any private party, but only in this
latter case, in order to vacate, lift, reverse, overturn, settle or otherwise
resolve any decree, judgment, injunction or other order that prevents,
prohibits, restricts or delays Closing that may be issued by any court or other
Governmental Authority in favor of that third party), (ii) selling, divesting or
otherwise conveying particular assets or categories of assets or businesses of
Parent and its Affiliates, (iii) agreeing to sell, divest or otherwise convey
any particular assets or categories of assets or businesses of the Purchased
Assets contemporaneously with or subsequent to the Closing, and (iv) permitting
the Sellers to sell, divest or otherwise convey any particular assets or
categories of assets or businesses of the Purchased Assets prior to the Closing.
All such efforts shall be unconditional and shall not be qualified by best
efforts and no actions taken pursuant to this Section 7.02 shall be considered
for purposes of determining whether a Material Adverse Effect has occurred.
Buyer shall respond to and seek to resolve as promptly as reasonably practicable
any objections asserted by any Governmental Authority with respect to the
transactions contemplated under this Agreement. In the event in connection with
such efforts Buyer or Seller sell or otherwise dispose of any of the Purchased
Assets and the Closing occurs, the Buyer will be entitled to retain all net
proceeds received from the applicable sale or disposition to a third party.

 

Section 7.03. Certain Filings. Buyer and the Sellers shall cooperate with one
another (a) in determining whether any action by or in respect of, or filing
with, any Governmental Authority is required, or any actions, consents,
approvals or waivers are required to be obtained from parties to any material
contracts, in connection with the consummation of the transactions contemplated
by this Agreement, and (b) in taking such actions or making any such filings,
furnishing information required in connection therewith and seeking timely to
obtain any such actions, consents, approvals or waivers. Each of Buyer and the
Sellers shall use their respective reasonable best efforts to obtain Tax
clearance certificates (pursuant to Laws with respect to bulk transfers) from
any state in which failure to obtain such certificate may result in Buyer or any
of its Affiliates being liable for Taxes as transferee in connection with the
consummations of the transactions contemplated hereby.

 

Section 7.04. Public Announcements. From the date hereof through the Closing
Date, no public release or announcement concerning the transactions contemplated
hereby shall be issued by Parent, SUPERVALU or Albertson’s (or their respective
Affiliates or representatives) without the prior consent of each of the other
such parties (which consent shall not be

 

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unreasonably withheld or delayed), except, in each case, as such release or
announcement may be required by Law or the rules, regulations or policies of any
United States or foreign securities exchange, in which case the party required
to make the release or announcement shall use its commercially reasonable
efforts to allow the other parties reasonable time to comment on such release or
announcement in advance of such issuance; provided that SUPERVALU, Parent and
Sellers may make internal announcements to their respective employees after
reasonable prior notice to, and consultation with, the other; provided, however,
that no prior notice or consultation will be required for communications
concerning status or other factual matters concerning the transaction.

 

Section 7.05. Trademarks; Tradenames. Except as otherwise set forth in this
Section 7.05, after the Effective Time, Buyer and its Affiliates shall not use
the Tradenames and Trademarks.

 

(a) Buyer agrees to use commercially reasonable efforts to re-brand (including
changing signage), and Sellers agree, at Buyer’s expense, to use commercially
reasonable efforts to assist Buyer in re-branding, each Store in the greater
Chicago metropolitan area and Southern California (San Diego and Orange County)
markets within 90 days after the Closing Date (and each other Store within 180
days after the Closing Date), and Buyer and its Affiliates shall have the right
to use the “Albertson’s” (to the extent used for private label product), “Osco”
or “Sav-on” names (the “Tradenames and Trademarks”) in connection with each
Store until such Store has been re-branded; provided that such time periods
shall be extended to the extent necessary if such re-branding is not permitted
by Law before the expiration of such period.

 

(b) After the Effective Time, Buyer and its Affiliates and its resellers shall
have the right to sell existing inventory and to use existing packaging,
labeling, containers, supplies, advertising materials and any similar materials
bearing the Tradenames and Trademarks for 180 days following the Closing Date.
Buyer and its Affiliates and resellers shall have the right to use the
Tradenames and Trademarks in advertising that cannot be changed by Buyer or its
Affiliates or resellers using commercially reasonable efforts for a period not
to exceed 180 days after the applicable Effective Time. Buyer and its Affiliates
and resellers shall comply with all applicable Laws or regulations in any use of
packaging or labeling containing the Tradenames and Trademarks. Buyer and its
Affiliates and resellers shall not be obligated to change the Tradenames and
Trademarks on goods in the hands of dealers, distributors and customers at the
time of the expiration of the time period set forth herein.

 

Section 7.06. Accounts Receivables; Gift Cards and Gift Certificates; Prepaid
Expenses. (a) Buyer shall promptly deposit in one or more accounts designated by
New Diamond within 10 days of receipt any monies paid to Buyer with respect to
Accounts Receivable and shall furnish the information that New Diamond may
reasonably request from time to time with respect to such Accounts Receivable.

 

(b) Following the Closing Date for a period of four months thereafter, with
respect to each Store, Buyer shall (i) accept in full any original proprietary
gift cards

 

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issued by Sellers for use at their retail locations from customers who present
gift cards at such Store and (ii) Buyer shall redeem at full face value any
original proprietary gift certificates issued by Sellers for use at their retail
locations to customers who present such gift certificates at such Store.

 

(c) Buyer shall reimburse New Diamond at the Closing for the full amount of all
documented Prepaid Expenses.

 

Section 7.07. Transition Services Agreement. Buyer and SUPERVALU and its
Affiliates shall cooperate and use their respective best efforts to enter into
at Closing the Standalone Drug Business Transition Services Agreement and the
Distribution Center Transition Services Agreement; provided, however, in no
event shall the execution and delivery of the Standalone Drug Business
Transition Services Agreement or the Distribution Center Transition Services
Agreement pursuant to Section 1.07 be a condition to Closing.

 

Section 7.08. HIPAA Privacy Standards. (a) After the Effective Time, Buyer shall
make the Prescription Files available for access and amendment to individuals in
accordance with the Health Insurance Portability and Accountability Act of 1996
privacy standards (the “HIPAA Privacy Standards”) and other applicable Laws.
Buyer shall respond to individuals’ requests for accountings of disclosures of
protected health information for periods prior to the Effective Time in
accordance with the HIPAA Privacy Standards.

 

(b) In addition, Buyer shall maintain the Prescription Files and all protected
health information transferred by the Sellers in accordance with the Health
Insurance Portability and Accountability Act of 1996 security standards
governing electronic protected health information.

 

(c) All inquiries and responses by Buyer relating to patient rights under HIPAA
Privacy Standards relating to uses or disclosures of health information made
prior to the Effective Time shall be forwarded to the Sellers and New Diamond
pursuant to Section 12.02.

 

Section 7.09. Solicitation of Employees. Each of Parent and SUPERVALU mutually
agree that (i) neither it nor any of its Affiliates shall, until the end of the
18 month period immediately following the Closing Date, except as contemplated
in Article 9 and except with respect to any employees listed on Schedule 7.09,
solicit the services of any personnel at the level of field management or above
(i.e., not including any pharmacist or store managers) that is employed by the
other party or its Affiliates pertaining to a drug store (including a pharmacy
counter in a supermarket) and (ii) until six months after the Closing Date,
solicit any pharmacist that is employed in a drug store (including a pharmacy
counter in a supermarket) by the other party, in each case, in any market which
the Sellers operate a Store immediately prior to the Effective Time.

 

Section 7.10. Kodak and Qualex Photo Processing Equipment. The Sellers and Buyer
shall each use commercially reasonable efforts, and shall reasonably cooperate
with each other in such efforts, to obtain the consent of each of Kodak and
Qualex to the (a) (i) transfer of the photo processing equipment leased by the
Sellers or their Affiliates from Kodak and Qualex and

 

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located at the Stores (the “Photo Equipment”) to Buyer and (ii) the assumption
by Buyer of the obligations of the Sellers with respect to such Photo Equipment,
or (b) buyout by Buyer of the Photo Equipment.

 

Section 7.11. “As Is” Condition; Waiver and Release. Except for the express
representations and warranties contained in this Agreement (and without limiting
the conditions to Closing in Article 10), the Purchased Assets to be transferred
hereunder will be transferred “as is, where is,” in their present condition and
state of repair, with all faults, limitations and defects (hidden and apparent).
Without limitation, each of Buyer and Parent, on the one hand, and the Sellers
and New Diamond, on the other hand, acknowledge that, except as specifically set
forth to the contrary in this Agreement, no warranties or representations,
expressed or implied, of any kind whatsoever (including any implied warranty of
merchantability or fitness for a particular purpose) have been made by the other
party, any of its Affiliates or any other Person, or will be relied upon.

 

Section 7.12. Payments for Pharmacy Services. Buyer agrees to forward to New
Diamond any sums of money received by Buyer for pharmacy services rendered by
the Sellers prior to the Effective Time. New Diamond and the Sellers agree to
forward to Buyer any sums of money received by New Diamond or the Sellers, as
applicable, for pharmacy services rendered by Buyer following the Effective
Time. Further, upon reasonable notice from New Diamond and/or the Sellers, Buyer
agrees to afford reasonable access to allow New Diamond and the Sellers access
to the Prescription Files for the sole purpose of third party rebilling and
reconciliation with respect to periods prior to the Effective Time.

 

Section 7.13. Confidentiality Agreement. Parent and Albertson’s agree that the
terms and provisions of the Confidentiality Agreement (as amended by this
Section 7.13) shall continue to bind the parties; provided, however, that, in
the event the Closing occurs, the Confidentiality Agreement (as amended by this
Section 7.13) will terminate on the Closing Date except that the confidentiality
obligations therein will continue in effect in accordance with the terms thereof
with respect to information of Albertson’s not related to the Standalone Drug
Business, the Purchased Assets or the Assumed Liabilities. Parent and
Albertson’s further agree that, until the earlier of the Closing and the
termination of Section 6(c) of the Confidentiality Agreement in accordance with
its terms, the scope of Section 6(c) of the Confidentiality Agreement (No
Solicitation) shall be expanded to apply reciprocally to each of Parent and its
Affiliates, on the one hand, and Albertson’s and its Affiliates, on the other
hand, and the terms in that Section 6(c) shall be expanded to apply to their
respective directors, officers, management level employees, in-store managers
and in-store pharmacists (and will not be limited by any reference to the
evaluation or discussions described in that Section 6(c)); provided that in no
event shall anything in the foregoing or the Confidentiality Agreement prohibit
or limit in any way the ability of Parent and its affiliates to solicit, or make
offers of employment to, Kevin Tripp, the Employees and/or the individuals who
are described in Section 9.02, but only in relation to post-Closing employment
with Parent or its affiliates (which solicitations and offers shall, for the
sake of clarity, be conditioned on the Closing occurring).

 

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ARTICLE 8

TAX MATTERS

 

Section 8.01. Tax Matters. Except as specified in Section 8.01 of the Disclosure
Letter, or as would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect, Albertson’s hereby represents and warrants
to Buyer that the Sellers have timely paid, or made provision to pay, all Taxes
that include or relate to the Standalone Drug Business and the Purchased Assets
that will have been required to be paid on or prior to the date hereof, the
non-payment of which would (a) result in a Lien on any Purchased Asset,
(b) otherwise adversely affect the Standalone Drug Business or (c) result in
Buyer becoming liable or responsible therefor.

 

Section 8.02. Tax Cooperation. (a) Notwithstanding any other provision in this
Agreement, this Section 8.02 shall govern cooperation with respect to Tax
matters. Buyer, the Sellers, New Diamond and SUPERVALU agree to furnish or cause
to be furnished to each other, upon request, as promptly as practicable, such
information and assistance relating to the Standalone Drug Business and the
Purchased Assets (including access to books and records) as is reasonably
necessary for the filing of all Tax Returns, the making of any election relating
to Taxes, the preparation for any audit by any Taxing Authority, and the
prosecution or defense of any Action relating to any Tax. Except with respect to
information that is generally available to the public, the party requesting such
information shall treat such information so obtained in a manner consistent with
the way in which it treats its own records. Buyer, the Sellers, New Diamond and
SUPERVALU shall retain all books and records with respect to Taxes pertaining to
the Purchased Assets for a period of at least seven years following the
Effective Time. Buyer, the Sellers, New Diamond and SUPERVALU shall cooperate
with each other in the conduct of any audit or other proceeding relating to
Taxes involving the Purchased Assets or the Standalone Drug Business.

 

(b) All real property taxes (other than real estate Taxes referred to in
Section 1.08), personal property taxes and similar ad valorem obligations (other
than Transfer Taxes, which shall be governed by Section 8.02(c)) levied with
respect to the Purchased Assets for a Straddle Tax Period (collectively, the
“Apportioned Obligations”) shall be apportioned between the Sellers and Buyer
based on the number of days of such taxable period included in the Pre-Closing
Tax Period and the number of days of such taxable period included in the
Post-Closing Tax Period. The Sellers shall be liable for the proportionate
amount of such taxes that is attributable to the Pre-Closing Tax Period, and
Buyer shall be liable for the proportionate amount of such taxes that is
attributable to the Post-Closing Tax Period.

 

(c) All excise, sales, use, value added, registration stamp, recording,
documentary, conveyancing, franchise, property, transfer, gains, transaction
privilege tax and similar Taxes, levies, charges and fees (collectively,
“Transfer Taxes”) incurred in connection with the transfer of the Purchased
Assets pursuant to this Agreement shall be borne equally by Buyer on the one
hand, and Sellers, on the other hand. Buyer and the Sellers shall cooperate in
providing each other with any appropriate resale exemption certifications and
other similar documentation.

 

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(d) Apportioned Obligations and Transfer Taxes described in this Section 8.02
shall be timely paid, and all applicable Tax Returns shall be filed, as provided
by applicable Law. The paying party shall provide to the non-paying party drafts
of all Tax Returns described in the preceding sentence and a statement setting
forth the amount of reimbursement to which the paying party is entitled under
Section 8.02(b) and Section 8.02(c), as the case may be, together with
appropriate supporting information and schedules at least 30 calendar days prior
to the due date for the filing of such Tax Return (including extensions), or
such shorter period as is necessary to allow for the timely filing of such Tax
Return. The non-paying party shall have the right, at its expense, to review all
work papers and procedures used to prepare any such Tax Return. If the
non-paying party, within 10 Business Days after delivery of any such Tax Return,
notifies the paying party in writing that it objects to any items in such Tax
Return, the parties will use their reasonable best efforts, acting in good
faith, to resolve such disputed items between themselves. If the parties fail to
resolve such disputed items within 5 Business Days, such disputed items shall be
resolved (within a reasonable time, taking into account the deadline for filing
such Tax Return) by the Independent Accounting Firm. Upon resolution of all such
items, the relevant Tax Return shall be adjusted, if necessary, to reflect such
resolution and shall be binding upon the parties without further adjustment. The
costs, fees and expenses of the Independent Accounting Firm shall be borne
equally by the parties. The non-paying party shall make reimbursement promptly
pursuant to this Section 8.02(d) but in no event later than 10 days after the
resolution of the relevant Tax Return. Any payment not made within such time
shall bear interest at the Applicable Rate until paid.

 

ARTICLE 9

EMPLOYEE BENEFITS

 

Section 9.01. ERISA Representations. Albertson’s hereby represents and warrants
to Buyer that Section 9.01 of the Disclosure Letter contains a correct and
complete list identifying each material “employee benefit plan,” as defined in
Section 3(3) of ERISA, each material employment, severance or similar contract,
plan, arrangement or policy and each other material plan or arrangement (written
or oral) providing for compensation, bonuses, profit-sharing, stock option or
other stock-related rights or other forms of incentive or deferred compensation,
vacation benefits, insurance (including any self-insured arrangements), health
or medical benefits, employee assistance program, disability or sick leave
benefits, workers’ compensation, supplemental unemployment benefits, severance
benefits and post-employment or retirement benefits (including compensation,
pension, health, medical or life insurance benefits) which is maintained,
administered or contributed to by the Sellers or any of their ERISA Affiliates
and covers any Employee as of the date hereof. Copies of such plans (and, if
applicable, related trust or funding agreements or insurance policies) and all
amendments thereto (other than the Taft Hartley Plan Documents) have been made
available to Buyer together with, if applicable, the most recently filed annual
report (Form 5500 including, if applicable, Schedule B thereto) and tax return
(Form 990) prepared in connection with any such plan or trust. Such plans are
referred to collectively herein as the “Employee Plans.” Albertson’s agrees to
use its commercially reasonable efforts to furnish Buyer with a copy of each
Taft Hartley Plan Document prior to the Closing Date. Except as would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect, each Employee Plan which is intended to be qualified

 

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under Section 401(a) of the Code is so qualified and has received a
determination letter to that effect from the IRS and, to the Knowledge of any
Seller, no circumstances exist which would reasonably be expected to materially
adversely affect such qualification or exemption. With respect to any Surviving
Plan (as defined below) (i) Sellers have not incurred any withdrawal liability
under Subtitle E of Title IV of ERISA (“Withdrawal Liability”) that remains
unsatisfied, as would reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect, and (ii) Sellers have not received any
notification, that any such Surviving Plan is in reorganization or has been
terminated.

 

Section 9.02. Employees and Offers of Employment. Effective as of the Effective
Time, Buyer shall (i) offer employment to each Employee, at a base salary or
wage that is at least equal to that provided the applicable Employee immediately
prior to the Effective Time; (ii) have the right to offer employment to each
Albertson’s corporate employee, field manager, field-based marketing manager and
divisional pharmacy manager, in each case to the extent dedicated solely to the
Standalone Drug Business, including, without limitation, those employees
specified in Schedule 9.02(a) (so long as they are so dedicated) at a base
salary or wage that is at least equal to that provided to such Albertson’s
corporate employee, field manager, field-based marketing manager or divisional
pharmacy manager immediately prior to the Effective Time and (iii) have a right
to hire certain of the category managers, real estate personnel, field-based
marketing managers and divisional pharmacy managers in each case who have shared
responsibilities between the Standalone Drug Business and the New Diamond
Business (as defined in the Separation Agreement) (collectively, the “Shared
Personnel”) to the extent specified in Schedule 9.02(b) as determined in
cooperation between Sellers and Buyer by allocating a proportionate number of
Shared Personnel to Buyer based on the ratio of (x) the total number of pharmacy
counters in Stores covered by such Shared Personnel to (y) the total number of
pharmacy counters in Stores and grocery stores operated by Sellers collectively
covered by such Shared Personnel as set forth on such Schedule 9.02(b). Sellers
may update, and deliver to Buyer, Schedule 9.02(a) and Schedule 9.02(b) within
fourteen days following the date of this Agreement. SUPERVALU and Buyer shall
cooperate in good faith to determine the accuracy of Schedule 9.02(a) and
Schedule 9.02(b) and agree to update each such Schedule as appropriate. The term
“Employee” includes any Person who, immediately prior to the Effective Time, is
actively employed by any Seller at a Facility or who is on short-term disability
leave, authorized leave of absence, military service or lay-off with recall
rights as of the Effective Time (such inactive employees shall be offered
employment by Buyer as of the date they return to active employment but only if
such employee returns to active service within 180 days after the Effective Time
or such later time as their reemployment rights are protected by applicable
Laws), but shall exclude any other inactive or former employee including any
Person who is on long-term disability leave or unauthorized leave of absence as
of the Effective Time. The employees who accept and commence employment with
Buyer (including the employees described in this Section 9.02 and the employees
set forth on Schedule 7.09) are hereinafter collectively referred to as the
“Transferred Employees.”

 

Section 9.03. The Sellers’ Employee Benefit Plans. Except as expressly set forth
herein, no assets or liabilities of any Employee Plan shall be transferred to
Buyer or any of its Affiliates or to any plan of Buyer or any of its Affiliates.
Buyer shall agree to assume the obligations under any agreement providing for
the grant of any restricted stock units or any cash awards to the Transferred
Employees or Employees (but only to the extent they remain eligible for such

 

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awards) which are granted to such Transferred Employees or Employees following
the date hereof but prior to the Effective Time, but solely with respect to the
Employees, only to the extent such awards are set forth and described in
Section 9.03 of the Disclosure Letter.

 

Section 9.04. Buyer Benefit Plans. Buyer will cause all plans and programs of
Buyer and its Affiliates to recognize all service of the Transferred Employees
with the Sellers or any of their Affiliates prior to the Closing Date for
purposes of vesting and eligibility and for purposes of determining the amount
of benefits under Buyer’s applicable sick leave, vacation, severance or other
welfare plan. Buyer will assume, and be solely responsible for, all sick leave,
vacation or other paid time off accrued by Employees prior to the Effective
Time; provided, however, that Buyer will not assume any accrued sick leave,
vacation or other paid time off to the extent Sellers are required by Law to pay
any Transferred Employee the appropriate accrued amounts of sick leave, vacation
or other paid time off, but will instead reimburse and hold harmless Sellers and
their Affiliates in respect of any such payments. Buyer shall or shall cause its
Affiliates to offer enrollment in, effective as of the Effective Time, all
health and welfare and 401(k) plans of the Buyer and its Affiliates to each
Transferred Employee who participates in an equivalent type of plan of Sellers
or their Affiliates immediately prior to the Effective Time, and, so long as
such Transferred Employees remain employed by Buyer shall continue such
enrollment for no less than 12 months following the Effective Time (so long as
the applicable employee remains eligible under the terms of the program, except
that solely for purposes of Buyer’s health care plans such eligibility will be
determined without regard to minimum number of hour requirements during the
first 90 days following the Closing Date). Buyer shall (i) cause to be waived
all limitations as to preexisting condition limitations, exclusions and waiting
periods with respect to participation and coverage requirements applicable to
the Transferred Employees under any plan of Buyer or its Affiliates that is a
healthcare plan, to the extent such limitation or exclusion was waived or such
waiting period was satisfied as of the Effective Time under any healthcare plan
maintained for such employees immediately prior to the Effective Time and
(ii) cause applicable healthcare plans of Buyer or its Affiliates to provide
each Transferred Employee with credit for any co-payments, deductibles and any
other out-of-pocket expenses paid during the plan year or other appropriate
period commencing immediately prior to the Effective Time in satisfying any
applicable deductible or out-of-pocket requirements under any healthcare plan(s)
of Buyer or its Affiliates for such plan year (so long as Buyer is provided the
applicable information). If within 12 months following the Closing Date Buyer
terminates the employment of any Transferred Employee without cause, Buyer shall
provide the Transferred Employee severance benefits in an amount no less than
the severance benefits the Transferred Employee would have been entitled to
under Albertson’s applicable severance plans (but excluding any individual
employment or change in control agreements).

 

Section 9.05. Labor Agreements. (a) Buyer shall (i) assume the Assumed Labor
Agreements, (ii) recognize and comply with any legal duty to bargain or
negotiate with any labor organization lawfully entitled to represent any
Transferred Employees, (iii) fully comply with Sections 9.02 and 9.04 of this
Agreement with respect to such Transferred Employees and credit such Transferred
Employees with full seniority gained while employed by Sellers and their
Affiliates, and (iv) indemnify the Seller Indemnitees against and hold each of
them harmless from any and all damages, losses, liabilities and expenses
(including reasonable attorneys’ fees and expenses, indirect, consequential,
incidental, exemplary or special damages, punitive damages, lost profits, lost
revenues and diminution in value or benefits) arising out of or in any

 

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way connected with Buyer’s failure to assume and comply with the terms of the
Labor Agreements (or Seller’s failure to require Buyer to assume the Labor
Agreements) or recognize and comply with any legal duty to bargain or negotiate
with any labor organizations lawfully entitled to represent any Transferred
Employees, including any such damages arising from any claims, including but not
limited to grievances, unfair labor practice charges, lawsuits, injunction
actions or contractual, administrative or legal actions of any kind, alleging a
breach of a Labor Agreement or the violation of any labor law, or any action by
a labor organization at any location as a result thereof. Buyer may seek before
Closing to modify the terms of the Labor Agreements; provided, however, that
such modification shall not be a condition to Closing under this Agreement.

 

(b) It is expressly agreed and understood that neither Buyer nor any Seller has
any right, power or authority to control, direct or regulate the labor relations
and human resources policies and procedures of the other, that neither is deemed
to constitute the agent or representative of the other, and that neither is
liable in any manner whatsoever for the acts or omissions of the other, its
agents, representatives or employees.

 

(c) At all times prior to the Effective Time, the Sellers shall have sole and
exclusive responsibility for the operation and management of the Facilities and
the Purchased Assets related thereto, for the employment and control of the
Employees, for compliance with all Laws governing the employment relationship,
and for compliance with the terms of any Labor Agreement, employment contract or
employee benefit plan covering the Employees or any of Sellers’ former
employees. At all times subsequent to the Effective Time, Buyer shall have sole
and exclusive responsibility for the operation and management of the Facilities
and the Purchased Assets related thereto, for the employment and control of its
employees, for compliance with all Laws governing the employment relationship,
and for compliance with the terms of any collecting bargaining agreement,
employment contract or employee benefit plan covering its employees.

 

(d) With respect to any Multiemployer Plan for which contributions were required
to be made pursuant to a Labor Agreement (the “Surviving Plans”), Buyer and
Sellers shall take all steps necessary under Section 4204 of ERISA so that the
transaction contemplated by this Agreement will not constitute a partial or
complete withdrawal under Section 4201 of ERISA. The parties hereto acknowledge
and agree that the sale of assets under this Agreement constitutes a bona fide,
arm’s length sale of assets between unrelated parties, and the parties intend
that this Agreement be covered by and satisfy all of the requirements of
Section 4204 of ERISA. With respect to the Surviving Plans, Buyer and Sellers
agree to the following:

 

(i) Contributions. Buyer agrees to contribute to the Surviving Plans, with
respect to the covered operations, for substantially the same number of
contribution base units for which Seller had an obligation to contribute to the
Surviving Plans.

 

(ii) Security. Buyer agrees that, if it does not qualify for an exemption
pursuant to PBGC Regulation Section

4204.11(a), it will provide a bond or place an amount in escrow in accordance
with Section 4204(a)(1)(B) of ERISA.

 

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(iii) Seller’s Secondary Liability. In the event Buyer withdraws from the
Surviving Plans in a complete withdrawal, or a partial withdrawal with respect
to the covered operations, during the five plan years commencing with the first
plan year beginning after the Closing Date, Seller shall be secondarily liable,
but only to the extent required by Section 4204 of ERISA with respect to the
covered operations if Buyer’s primary liability to the Surviving Plans is not
paid. If Buyer withdraws from the Surviving Plans before the last day of the
fifth plan year beginning after the Closing Date, and fails to make any
withdrawal liability payment when due, then Seller shall pay to the Surviving
Plans an amount determined in accordance with the requirements of Section 4204
of ERISA and the law, reduced, as permitted under the law, by the amounts paid
by the Buyer.

 

(iv) Reduction of Liability. The liability of a party furnishing a bond or
escrow shall be reduced, upon payment of any bond or escrow to the Surviving
Plans, by the amount thereof in accordance with Section 4204(a)(4) of ERISA.

 

(v) Buyer’s Indemnification. Buyer agrees that, to the extent Buyer is required
to contribute to the Surviving Plans pursuant to this Agreement and, with
respect to the Surviving Plans, for the five plan years beginning after the
Closing Date, Buyer will make such contributions on a timely basis. Buyer
further agrees that it shall be liable to Seller and shall defend, indemnify,
and hold Seller and its shareholders, officers, directors, employees and agents
harmless from any withdrawal liability, claims, costs, damages, expenses, taxes,
penalties or fines arising solely out of any failure by the Buyer to satisfy the
requirements of this Section and with respect to any actions Buyer may take
after the Closing Date which results in any Withdrawal Liability under any
Multiemployer Plan for which Buyer has a contribution obligation. Seller agrees
to provide Buyer with reasonable advance notice of any action or event which
could result in the imposition of withdrawal liability by the Surviving Plans
against Seller and for which Seller asserts Buyer may be liable. In any event
Seller shall immediately furnish Buyer with a copy of any notice of withdrawal
liability it may receive with respect to the Surviving Plans, together with all
the pertinent details. If any such withdrawal liability shall be assessed
against Seller, Seller further agrees to provide Buyer with reasonable advance
notice of any intention on the part of Seller not to make full payment of any
withdrawal liability when the same shall become due. For purposes of this
Section 9.05(d)(v), the term Seller shall include Seller Indemnitees.

 

Section 9.06. Employee Compensation. No later than 15 days after the date
hereof, Albertson’s shall provide Buyer with, or cause to be provided to Buyer,
a true and complete list, organized by Facility, of the name, title, position
pay rate, position effective date, full-time/part-time status, continuous
service date, all paid time off eligibility and balances, status under the Fair
Labor Standards Act, benefit eligibility and enrollment status (including
defined contribution plan information) of each Employee as of the date hereof.
Such list shall be updated as necessary to reflect new hires or other personnel
changes occurring between the date delivered to Buyer and the Effective Time.

 

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Section 9.07. Employee Indemnity. In addition to and not in limitation of any of
the foregoing provision of this Article 9, from and after the Effective Time,
Buyer shall indemnify the Seller Indemnitees against and hold each of them
harmless from any and all damages, losses, liabilities and expenses (including
reasonable attorneys’ fees and expenses), incurred or suffered by the Sellers or
any of their Affiliates arising from the failure to hire or the employment or
termination of any Employee or Transferred Employee by Buyer or any of its
Affiliates (or as a result of non-acceptance of an offer, to the extent any such
non-acceptance results in severance payments under the applicable Sellers’
severance plan) on or after the Effective Time pursuant to the applicable
Albertson’s severance plans (but excluding any individual employment or change
in control agreements) or pursuant to the Worker Adjustment and Retraining
Notification Act or any similar state Laws.

 

Section 9.08. No Third Party Beneficiaries. No provision of this Article 9 shall
create any third party beneficiary or other rights in any employee or former
employee (including any beneficiary or dependent thereof) of the Sellers, New
Diamond or of any of their respective Subsidiaries in respect of continued
employment (or resumed employment) with either Buyer or any of its Affiliates or
the Standalone Drug Business and no provision of this Article 9 shall create any
such rights in any such Persons in respect of any benefits that may be provided,
directly or indirectly, under any Employee Plan or any plan or arrangement which
may be established by Buyer or any of its Affiliates. No provision of this
Agreement shall constitute a limitation on rights to amend, modify or terminate
after the Effective Time any such plans or arrangements of Buyer or any of its
Affiliates.

 

ARTICLE 10

CONDITIONS TO CLOSING

 

Section 10.01. Conditions to Each Party’s Obligations. The obligations of each
party hereto to consummate the transactions contemplated hereby are subject to
the satisfaction or waiver of the following conditions:

 

(a) Any applicable waiting period under the HSR Act relating to the transactions
contemplated hereby shall have expired or been terminated.

 

(b) No provision of any applicable Law or regulation and no judgment,
injunction, order or decree shall prohibit the consummation of the transactions
contemplated hereby.

 

(c) (i) The satisfaction or waiver at or prior to the Closing of the conditions
to the Merger (as defined in that certain Agreement and Plan of Merger, dated as
of the date hereof (the “Merger Agreement”), by and among Albertson’s, New Aloha
Corporation, SUPERVALU, New Diamond Sub, Inc. and Emerald Acquisition Sub,
Inc.), shall have occurred as set forth in Article VII of the Merger Agreement
(other than the condition that the Standalone Drug Sale and Retained Business
Purchase (each as defined in the Merger Agreement) shall have occurred); and
(ii) the satisfaction or waiver at or prior to the Closing of the conditions to
closing to the Retained Business Purchase shall have occurred.

 

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Section 10.02. Conditions to Obligation of Buyer. The obligation of Buyer to
consummate the transactions contemplated hereby are subject to the satisfaction
or waiver of the following further conditions:

 

(a) (i) The Sellers shall have performed in all material respects all of their
obligations hereunder required to be performed by them on or prior to the
Closing Date, (ii) the representations and warranties of Albertsons’ or
SUPERVALU contained in this Agreement (disregarding any Material Adverse Effect,
materiality or similar qualifiers therein) shall be true and correct as of the
date hereof and Closing Date as though made on and as of such date (unless any
such representation or warranty is made only as of a specific date, in which
event such representation and warranty shall be true and correct as of such
specified date), except where any failure of such representations or warranties
to be so true and correct, individually or in the aggregate, has not had and
would not reasonably be expected to have a Material Adverse Effect, and
(iii) Buyer shall have received a certificate signed by an officer of
Albertson’s or SUPERVALU, as applicable, to the foregoing effect.

 

(b) The applicable Sellers shall have duly executed and delivered each of the
Ancillary Agreements.

 

Section 10.03. Conditions to Obligation of the Sellers. The obligation of the
Sellers to consummate the transactions contemplated hereby is subject to the
satisfaction or waiver of the following further conditions:

 

(a) (i) Buyer shall have performed in all material respects all of its
obligations hereunder required to be performed by it at or prior to the Closing
Date, (ii) the representations and warranties of Buyer contained in this
Agreement and in any certificate or other writing delivered by Buyer pursuant
hereto shall be true in all material respects at and as of the Closing Date, as
if made at and as of such date (except to the extent that any representation or
warranty speaks as of an earlier date, in which case it must be true and correct
only as of that earlier date) and (iii) the Sellers shall have received a
certificate signed by an officer of each of Parent and Buyer to the foregoing
effect.

 

(b) Buyer shall have duly executed and delivered each of the Ancillary
Agreements.

 

ARTICLE 11

SURVIVAL; INDEMNIFICATION

 

Section 11.01. Survival. All representations and warranties in this Agreement of
any party or in any instrument delivered pursuant to this Agreement shall
terminate at the Effective Time. The covenants and agreements of the parties
hereto contained in this Agreement or in any certificate or other writing
delivered pursuant hereto or in connection herewith shall survive the Closing
Date indefinitely or for the shorter period explicitly specified therein, except
that to the extent any covenant provides for performance prior to Closing, such
covenant to such extent shall not survive Closing.

 

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Section 11.02. Indemnification. (a) From and after the Closing Date, SUPERVALU
shall indemnify Buyer and its Affiliates (each, a “Buyer Indemnitee” and
collectively, the “Buyer Indemnitees”) against and agrees to hold each of them
harmless from any and all damage, loss, liability and expense (including
reasonable attorneys’ fees and expenses in connection with any Action whether
involving a third-party claim or a claim solely between the parties hereto)
(“Damages”) incurred or suffered by Buyer or any of its Affiliates arising out
of:

 

(i) any breach after the Closing of any covenant or agreement of SUPERVALU or
its Affiliates contained in this Agreement or a breach by SUPERVALU or its
applicable Affiliates of Section 1.07(a)(ii)(E);

 

(ii) any Excluded Liability;

 

regardless of whether such Damages arise as a result of the negligence, strict
liability or any other liability under any theory of Law or equity.

 

(b) From and after the Closing Date, Parent shall indemnify the Sellers, New
Diamond and their respective Affiliates (each, a “Seller Indemnitee” and
collectively, the “Seller Indemnitees”) against and hold each of them harmless
from any and all Damages incurred or suffered by the Sellers, New Diamond or any
of their respective Affiliates arising out of:

 

(i) any breach after the Closing of any covenant or agreement of Buyer or its
Affiliates contained in this Agreement or a breach by Buyer or its applicable
Affiliates of Section 1.07(a)(ii)(F);

 

(ii) the conduct of the Standalone Drug Business by Buyer after the Closing Date
or the ownership, operation, occupancy or use by Buyer after the Closing Date of
the Facilities or Purchased Assets; or

 

(iii) any Assumed Liabilities;

 

regardless of whether such Damages arise as a result of the negligence, strict
liability or any other liability under any theory of Law or equity.

 

(c) Following the Closing, except as to injunctive relief, the sole and
exclusive remedy for each of the Indemnified Parties with respect to any and all
claims relating to a breach of this Agreement shall be pursuant to the
indemnification provisions set forth in this Article 11. In furtherance of the
foregoing, each of the Indemnified Parties hereby waives, to the fullest extent
permitted under applicable Law, any and all rights, claims and causes of action
it may have against the other parties hereto, arising under or based upon any
Federal, state, local or foreign Law, other than the right to seek indemnity
pursuant to this Article 11. Notwithstanding the foregoing, the provisions of
this Article 11 shall in no way limit any other express indemnification rights
of any party set forth in this Agreement.

 

(d) The amount of any Damages subject to indemnification hereunder shall be
calculated net of any insurance proceeds or other third-party payments received
by the

 

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Indemnitee on account of such Damages. In the event that the Indemnitor
reimburses the Indemnitee for any Damages prior to the receipt or realization of
any proceeds, payments or benefits referred to in the immediately preceding
sentence, the Indemnitee shall remit to the Indemnitor an amount equal to the
amount of such proceeds, payments or benefits, as the case may be. In the event
any payment is made in respect of Damages pursuant to this Article 11, the
Indemnitor who made such payment shall be subrogated to the extent of such
payment to any related rights of recovery of the Indemnitee receiving such
payment against any third party.

 

(e) Without limitation of their respective rights and obligations as set forth
elsewhere in this Article 11, and subject to the procedures for indemnification
claims set forth in this Article 11, the Indemnitee shall act in good faith,
shall use commercially reasonable efforts to mitigate any Damages.

 

(f) All indemnity payments, except those in respect of Prorated Charges, shall
be treated as additional adjustments to the amount of the total consideration
paid for the Purchased Assets (or as amounts that are deductible by the payor,
if in accordance with applicable law) for all Tax purposes, except as otherwise
required by applicable Tax law or by a “determination” within the meaning of
Section 1313 of the Code.

 

(g) Notwithstanding anything to the contrary contained herein, the
indemnification provided for in this Article 11 shall not cover, and in no event
shall any party hereto be liable for, any indirect, consequential, incidental,
exemplary or special damages, punitive damages, lost profits, lost revenues or
diminution in value.

 

Section 11.03. Procedures.

 

(a) Third Party Claims.

 

(i) If any Indemnitee shall desire to assert any claim for indemnification
provided under this Article 11 in respect of, arising out of or involving a
claim or demand made by any Person (other than a Buyer Indemnitee or a Seller
Indemnitee) against the Indemnitee (a “Third Party Claim”), such Indemnitee
shall notify the Indemnitor in writing, and in reasonable detail (taking into
account the information then available to such Indemnitee), of the Third Party
Claim; provided, however, that the failure of an Indemnitee to notify the
Indemnitor shall relieve the Indemnitor from its obligation to indemnify only to
the extent that the Indemnitor is actually prejudiced as a result of such
failure. The Indemnitee shall deliver to the Indemnitor, promptly after the
Indemnitee’s receipt thereof, copies of all notices and documents (including
court papers) received by the Indemnitee relating to the Third Party Claim;
provided, however, that the failure to deliver such copies shall relieve the
Indemnitor from its obligation to indemnify only to the extent that the
Indemnitor is actually prejudiced as a result of such failure.

 

(ii) Upon receipt of notification of a Third Party Claim, the Indemnitor shall
be entitled to participate in the defense of the Third Party Claim and, if it so

 

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chooses, to assume the defense thereof with counsel selected by the Indemnitor
and reasonably satisfactory to the Indemnitee. Should the Indemnitor so elect to
assume the defense of a Third Party Claim, the Indemnitor shall not be liable to
the Indemnitee for legal expenses subsequently incurred by the Indemnitee in
connection with the defense thereof, unless the Third Party Claim involves
potential conflicts of interest or substantially different defenses for the
Indemnitee and the Indemnitor. If the Indemnitor assumes such defense, the
Indemnitee shall have the right to participate in defense thereof and to employ
counsel, at its own expense (except as provided in the immediately preceding
sentence), separate from the counsel employed by the Indemnitor, it being
understood that the Indemnitor shall control such defense. The Indemnitor shall
be liable for the fees and expenses of counsel employed by the Indemnitee for
any period during which the Indemnitor has not assumed the defense thereof and
as otherwise contemplated by the two immediately preceding sentences. If the
Indemnitor chooses to defend any Third Party Claim, all the parties hereto shall
cooperate in the defense or prosecution thereof. Such cooperation shall include
the retention and (upon the Indemnitor’s request) the provision to the
Indemnitor of records and information that are reasonably relevant to such Third
Party Claim, and the use of commercially reasonable efforts to make employees
available on a mutually convenient basis to provide additional information and
explanation of any material provided thereunder.

 

(iii) Whether or not the Indemnitor shall have assumed the defense of a Third
Party Claim, the Indemnitee shall not admit any liability with respect to, or
settle, compromise or discharge, such Third Party Claim without the Indemnitor’s
prior written consent, which shall not be unreasonably withheld or delayed. The
Indemnitor may settle, compromise or discharge such Third Party Claim with the
written consent of the Indemnitee, which shall not be unreasonably withheld or
delayed, or without such consent if such settlement, compromise or discharge
(A) includes an unconditional release of the Indemnitee from all liability in
respect of such Third Party Claim, (B) does not subject the Indemnitee to any
injunctive relief or other equitable remedy, and (C) does not include a
statement or admission of fault or culpability on the part of any Indemnitee.

 

(iv) Notwithstanding the foregoing, (A) if a Third Party Claim relates to
Apportioned Obligations, Buyer shall be entitled to control the defense of such
Third Party Claim and (B) if a Third Party Claim relates to Transfer Taxes, New
Diamond and SUPERVALU shall be entitled to control the defense of such Third
Party Claim (any Third Party Claim referred to above in this clause (iv), a “Tax
Claim”). In the case of any Tax Claim, the party not entitled to control such
Tax Claim (the “Non-Controlling Party”) shall be entitled to participate fully
(at the Non-Controlling Party’s sole expense) in the conduct of such Tax Claim
and the party controlling the defense of such Tax Claim shall not settle such
Tax Claim without the consent of the Non-Controlling Party (which consent shall
not be unreasonably withheld). The costs and expenses of conducting the defense
of such Tax Claim shall be reasonably apportioned in the same manner as the
Apportioned Obligations or the Transfer Taxes or other Taxes, as the case may

 

46

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be, to which the Tax Claim relates. Notwithstanding any other provision, New
Diamond and SUPERVALU shall be entitled to control in all respects any
proceedings relating to Taxes based on or related to income (“Income Taxes”) of
Sellers, New Diamond, SUPERVALU, Albertsons or any of their Affiliates and,
except as provided above in this Section 11.03(a)(iv), all other proceedings
relating to Taxes of Sellers, New Diamond, SUPERVALU, Albertsons or any of their
Affiliates, and Buyer shall be entitled to control in all respects any
proceedings relating to Income Taxes of Buyer or any of its Affiliates and,
except as provided above in this Section 11.03(a)(iv), all other proceedings
relating to Taxes of Buyer or any of its Affiliates.

 

(b) Direct Claims. If any Indemnitee shall desire to assert any claim for
indemnification provided for under this Article 11 other than a claim in respect
of, arising out of or involving a Third Party Claim, such Indemnitee shall
notify the Indemnitor in writing, and in reasonable detail (taking into account
the information then available to such Indemnitee), of such claim promptly after
becoming aware of the existence of such claim; provided, however, that the
failure of an Indemnitee to notify the Indemnitor shall relieve the Indemnitor
from its obligation to indemnify only to the extent that the Indemnitor is
actually prejudiced as a result of such failure.

 

ARTICLE 12

TERMINATION

 

Section 12.01. Grounds for Termination. This Agreement may be terminated at any
time prior to the Closing Date:

 

(a) by mutual written agreement of Albertson’s and Buyer;

 

(b) by either Albertson’s or Buyer if the Closing shall not have been
consummated on or before September 22, 2006 (the “Termination Date”); provided
that the right to terminate this Agreement pursuant to this Section 12.01(b)
shall not be available to the party seeking to terminate if any action of such
party or the failure of such party to perform any of its obligations under this
Agreement required to be performed at or prior to the Closing has been the cause
of, or resulted in, the failure of the Closing to occur on or before the
Termination Date and such action or failure to perform constitutes a breach of
this Agreement; provided, further, that the right to terminate this Agreement
pursuant to this Section 12.01(b) shall not be available to Albertson’s if
neither Albertson’s nor SUPERVALU shall have exercised its termination right
under Section 8.1(c) of the Merger Agreement;

 

(c) by either Albertson’s or Buyer if there shall be any Law, regulation or
nonappealable final order, decree or judgment of any court or governmental body
having competent jurisdiction that would make the consummation of the
transactions contemplated hereby illegal or otherwise prohibited;

 

(d) by Albertson’s if there shall have been a material breach of any
representation, warranty, covenant or agreement on the part of Buyer contained
in this

 

47

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Agreement such that the condition set forth in Section 10.03(a) would not be
satisfied and which shall not have been cured prior to the earlier of (i) 20
Business Days following notice of such breach and (ii) the Termination Date;

 

(e) by Buyer if there shall have been a material breach of any representation,
warranty, covenant or agreement on the part of any Seller contained in this
Agreement such that the condition set forth in Section 10.02(a) would not be
satisfied and which shall not have been cured prior to the earlier of (i) 20
Business Days following notice of such breach and (ii) the Termination Date; or

 

(f) by Albertson’s or Buyer if the Merger Agreement is terminated.

 

The party desiring to terminate this Agreement pursuant to clauses 12.01(b),
(c), (d), (e) or (f) shall give notice of such termination to the other party.

 

Section 12.02. Effect of Termination. If this Agreement is terminated as
permitted by Section 12.01, such termination shall be without liability of
either party (or any stockholder, director, officer, employee, agent, consultant
or representative of such party) to the other party to this Agreement; provided
that nothing herein shall relieve any party from liability for any willful and
material breach hereof. The provisions of Section 6.01, 7.13, 12.01, 13.02,
13.03, 13.04, 13.05, 13.06, 13.07 and 13.08 shall survive any termination hereof
pursuant to Section 11.01.

 

ARTICLE 13

MISCELLANEOUS

 

Section 13.01. Definitions. (a) The following terms, as used herein, have the
following meanings:

 

“Action” means any claim, action, suit, proceeding or investigation by or before
any Governmental Authority.

 

“Affiliate” means, with respect to any Person, any other Person directly or
indirectly controlling, controlled by, or under common control with such other
Person.

 

“Ancillary Agreements” means the Assignment and Assumption Agreements to be
dated as of the Closing Date.

 

“Applicable Rate” means a rate per annum equal to the “prime rate” as set forth
on the Closing Date in The Wall Street Journal “Money Rates” column.

 

“Business Day” means a day, other than Saturday, Sunday or other day on which
commercial banks in New York, New York are authorized or required by Law to
close.

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

“Confidentiality Agreement” means the Confidentiality Agreement, dated
September 27, 2005, between Albertson’s and Parent, as amended by Section 7.13
hereof.

 

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“Construction Contracts” means all construction contracts, architectural
contracts, engineering contracts, and fixture purchase orders primarily related
to the Standalone Drug Business (a Schedule of all material contracts of such
types will be provided to Buyer within 45 days after the date hereof) and any
contracts and purchase orders approved under Section 5.01.

 

“Distribution Center” means the distribution center owned by Sellers and located
at 777 South Harbor Boulevard, La Habra, CA 90631, including building No. 1111
and all real estate and improvements associated therewith.

 

“Effective Time” means 12:01 a.m., local time on the Closing Date.

 

“Environmental Laws” means any federal, state, local or foreign Law (including
common law), treaty, judicial decision, regulation, rule, judgment, order,
decree, injunction, permit or governmental restriction or any agreement with any
Governmental Authority or other third party, whether now or hereafter in effect,
relating to the environment, human health and safety or to pollutants,
contaminants, wastes or chemicals or any toxic, radioactive, ignitable,
corrosive, reactive or otherwise hazardous substances, wastes or materials.

 

“Environmental Liabilities” means any and all liabilities arising in connection
with or in any way relating to the Facilities, the Purchased Assets or any
activities or operations occurring or conducted at the Real Properties
(including offsite disposal), whether accrued, contingent, absolute, determined,
determinable or otherwise, which arise under or relate to any applicable
Environmental Law, including any matter disclosed or required to be disclosed in
Section 2.12 of the Disclosure Letter and any and all litigation arising out of
or in any way related to any such matter.

 

“Environmental Permits” means all permits, licenses, franchises, certificates,
approvals and other similar authorizations of Governmental Authorities relating
to or required by applicable Environmental Laws and affecting, or relating in
any way to, the operation of the Facilities or the Purchased Assets.

 

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

 

“ERISA Affiliate” of any entity means any other entity which, together with such
entity, would be treated as a single employer under Section 414 of the Code.

 

“Exchange Act” means the Securities Exchange Act of 1934 and the rules and
regulations promulgated thereunder.

 

“GAAP” means United States generally accepted accounting principles.

 

“Governmental Authority” means any federal, state, local or foreign government
(including any political or other subdivision or judicial, legislative,
executive or administrative branch, agency, commission, authority or other body
of any of the foregoing).

 

“Governmental Order” means any order, writ, judgment, injunction, decree or
award entered by or with any Governmental Authority.

 

49

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“Ground Lease” means any lease or sublease of, or any other interest in, real
property occupied by a Ground Lease Store.

 

“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended.

 

“Indemnitee” means a Seller Indemnitee or a Buyer Indemnitee, as the case may
be.

 

“Indemnitor” means any Person required to provide indemnification under Article
11 of this Agreement.

 

“IT Systems” means all electronic data processing, information, recordkeeping,
communications, telecommunications, account management, inventory management and
other computer systems (including all computer programs, software, databases,
firmware, hardware and related documentation) and Internet websites.

 

“Knowledge” means the actual knowledge, with respect to any Seller, of any
person listed in Section 13.01 of the Disclosure Letter, and with respect to
Buyer, of any officer of Buyer or Parent.

 

“Labor Agreements” mean any and all union contracts, collective bargaining
agreements and other labor agreements relating to persons employed at, or in
connection with, the Facilities to the extent they relate to the Facilities or
the operation of the Standalone Drug Business.

 

“Law” means any statute, law, ordinance, regulation, rule, code or other
requirement of law of a Governmental Authority or any Governmental Order.

 

“Lease” means a Store Lease or a Ground Lease.

 

“Lien” means any security interest, pledge, mortgage, lien, charge,
hypothecation, option to purchase or lease or otherwise acquire any interest,
conditional sales agreement, adverse claim of ownership or use, title defect,
easement, right of way, or other encumbrance of any kind, other than any
obligation to accept returns of inventory in the ordinary course of business and
other than those arising by reason of restrictions on transfers under federal,
state and foreign securities Laws.

 

“Material Adverse Effect” means any effect that (a) is materially adverse to the
business, financial condition or results of operations of the Standalone Drug
Business, other than any effect to the extent resulting proximately from
(i) general economic conditions or developments or changes therein,
(ii) conditions in the industries in which the Standalone Drug Business operates
or developments or changes therein, except to the extent that such conditions,
developments or changes impact the Standalone Drug Business in a materially
disproportionately adverse manner relative to similarly situated competitors of
the Standalone Drug Business, (iii) conditions in the stock markets or other
capital markets or developments or changes therein, (iv) the announcement of
this Agreement or the transactions contemplated hereby, (v) the performance by
the Sellers of their obligations pursuant to this Agreement (except the
obligations of the Sellers to obtain the consents contemplated by Section 2.04),
(vi) the

 

50

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announcement, consummation, termination or abandonment of the Merger Agreement,
(vii) any actions taken or omitted to be taken by or at the request or with the
written consent of Parent or Buyer, (viii) any changes in any Laws or any
accounting regulations or principles, or (b) would prevent or materially delay
the consummation of the transactions contemplated by this Agreement. A failure
by Albertson’s to meet any projections, estimates or budgets for any period
prior to, on or after the date of this Agreement shall not in itself constitute
a Material Adverse Effect.

 

“Multiemployer Plan” means any “multiemployer plan,” as defined in Section 3(37)
of ERISA.

 

“Permitted Liens” means (i) Liens that relate to taxes, assessments and
governmental charges or levies imposed upon the Purchased Assets that are not
yet due and payable or that are being contested in good faith by appropriate
proceedings, (ii) Liens imposed by Law that relate to obligations that are not
yet due and have arisen in the ordinary course of business and consistent with
past practice, (iii) pledges or deposits to secure obligations under workers’
compensation laws or similar legislation or to secure public or statutory
obligations, (iv) mechanics’, carriers’, workers’, repairers’ and similar Liens
imposed upon the Purchased Assets arising or incurred in the ordinary course of
business and consistent with past practice, (v) other Liens on assets which, in
the case of each of clause (iv) and (v) above are, either individually or in the
aggregate, not material in amount and would not reasonably be expected to
materially impair the continued use, utility or value of the property to which
they relate in the conduct of the business currently conducted thereon.

 

“Person” means an individual, corporation, partnership, limited liability
company, association, trust or other entity or organization, including a
Governmental Authority.

 

“Pre-Closing Tax Period” means a taxable period or portion thereof that ends on
or prior to the Effective Time; if a taxable period begins on or prior to the
Effective Time and ends after the Effective Time, then the portion of the
taxable period that ends on and includes the Effective Time shall constitute a
Pre-Closing Tax Period.

 

“Post-Closing Tax Period” means any taxable period that begins after the
Effective Time; if a taxable period begins on or prior to the Effective Time and
ends after the Effective Time, then the portion of the taxable period that
begins immediately after the Effective Time shall constitute a Post-Closing Tax
Period.

 

“Real Property Documents” means easements, reciprocal easements, assignments,
leases, subleases, termination agreements, subordination agreements,
nondisturbance agreements, estoppel certificates, declarations of covenants,
conditions and restrictions, municipal development agreements, agreements with
local planning or zoning authorities, and amendments or supplements to any of
the foregoing, and recorded memoranda of any of the foregoing, all with respect
to the Facilities.

 

“Sellers” has the meaning set forth in the Recitals; provided, however, that
following the Closing (i) any right of Sellers hereunder shall be deemed to be
the right of New Diamond and (ii) any obligation of Sellers hereunder shall be
deemed to be the obligation of New Diamond or

 

51

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the Sellers, as applicable, to the extent that such obligation is within the
control of New Diamond or the Sellers, respectively.

 

“Separation Agreement” means that certain Purchase and Separation Agreement,
dated as of the date hereof, by and between Albertson’s, New Aloha Corporation,
SUPERVALU INC. and AB Acquisition LLC.

 

“Store Lease” means any lease or sublease of, or any other interest in, real
property occupied by a Leased Store.

 

“Straddle Tax Period” means any taxable period that begins before the Effective
Time and ends after the Effective Time.

 

“Subsidiaries” of a Person means any and all corporations, partnerships, limited
liability companies, trusts and other entities, whether incorporated or
unincorporated, with respect to which such Person, directly or indirectly,
legally or beneficially, owns (i) a right to a majority of the profits of such
entity or (ii) securities having the power to elect a majority of the board of
directors or similar body governing the affairs of such entity.

 

“Taft-Hartley Plan Documents” means each Employee Plan which is identified on
Section 9.01(a) of the Disclosure Letter as being formed under the Taft-Hartley
Labor Act of 1947, and all amendments and other documents related thereto.

 

“Tax” means all taxes, fees, levies or other assessments, imposed by any
Governmental Authority responsible for the administration or imposition of any
Tax (a “Taxing Authority”), including income, gross receipts, excise, real and
personal property, municipal, capital, sales, use, transfer, license, payroll
and franchise taxes and including Taxes imposed on a consolidated, combined,
unitary or affiliated group, and such term shall include any interest,
penalties, or additions to tax attributable to such taxes, fees, levies or other
assessments.

 

“Tax Returns” means any return, report or other information required to be
supplied to any Taxing Authority in connection with Taxes.

 

(b) Each of the following terms is defined in the Section set forth opposite
such term:

 

Term

--------------------------------------------------------------------------------

   Section

--------------------------------------------------------------------------------

Accounts Receivable

   1.02

Albertson’s

   Introduction

Apportioned Obligations

   8.02

Assigned Contracts

   1.01

Assignment and Assumption Agreement

   1.07

Assumed Labor Agreements

   1.01

Assumed Liabilities

   1.03

Buyer

   Introduction

Buyer Indemnitee

   11.02

Capex Budget

   5.01

 

52

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Term

--------------------------------------------------------------------------------

   Section

--------------------------------------------------------------------------------

Casualty

   5.06

Closing

   1.07

Closing Date

   1.07

Condemnation

   5.06

Damages

   11.02

DEA

   5.07

Data

   2.09

Disclosure Letter

   Article 2

Distribution Center

   Recitals

Distribution Center Transition Services Agreement

   1.07

Employee

   9.02

Employee Plans

   9.01

Excluded Assets

   1.02

Excluded Equipment

   1.02

Excluded Liabilities

   1.04

Facilities

   Recitals

Ground Lease Stores

   Recitals

Ground Leased Real Property

   1.01

HIPAA Privacy Standards

   7.08

HSR Clearance

   7.02

Income Taxes

   11.03

Independent Accounting Firm

   1.08

Inventory

   1.01

Landlord Rights

   1.05

Lease Assignment and Assumption Agreement

   1.07

Leased Real Property

   1.01

Leased Stores

   Recitals

Licenses

   1.01

Materials of Environmental Concern

   2.12

Merger Agreement

   10.03

Non-Controlling Party

   11.03

Occupancy Agreement

   1.05

Owned Real Property

   1.01

Owned Stores

   Recitals

Parent

   Introduction

Permits

   2.17

Petty Cash

   1.01

Photo Equipment

   7.10

Prepaid Expenses

   1.01

Prescription Files

   1.01

Prorated Charges

   1.08

Purchase Price

   1.06

Purchased Assets

   1.01

Real Property

   1.01

Retained Combo Drug Stores

   Recitals

 

53

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Term

--------------------------------------------------------------------------------

   Section

--------------------------------------------------------------------------------

RGIS

   1.10

Seller Indemnitee

   11.02

Sellers

   Introduction

Shared Personnel

   9.02

Standalone Drug Business

   Recitals

Standalone Drug Business Transition Services Agreement

   1.07

Stores

   Recitals

SUPERVALU

   Recitals

Surviving Plans

   9.05

Tax Claims

   11.03

Termination Date

   12.01

Third Party Claim

   11.03

Third Party Use and Occupancy Agreement

   2.07

Tradenames and Trademarks

   7.05

Transfer Taxes

   8.02

Transferred Employees

   9.02

Transferred Vehicles

   1.01

Updated Store List

   5.09

Withdrawal Liability

   9.01

 

Section 13.02. Notices. All notices, requests and other communications to any
party hereunder shall be in writing (including facsimile transmission) and shall
be given,

 

if to Buyer or Parent, to:

 

CVS Corporation

One CVS Drive

Woonsocket, RI 02895

Attention: Douglas A. Sgarro

Fax: 401-770-3663

 

with a copy to:

 

Davis Polk & Wardwell

450 Lexington Avenue

New York, NY 10017

Attention: Louis Goldberg

Fax: 212-450-3539

 

54

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if to the Sellers, to:

 

Albertson’s

P.O. Box 20

250 Parkcenter Boulevard

Boise, Idaho 83726 (street zip – 83706)

Attention: Corporate Secretary

Facsimile No.: (208) 395-6575

 

with a copy to:

 

Jones Day

2727 North Harwood Street

Dallas, Texas 75201

Attention: Mark V. Minton

Phone: (214) 969-3763

Facsimile: (214) 969-5100

 

if to SUPERVALU, to:

 

SUPERVALU Inc.

11840 Valley View Road

Eden Prairie, Minnesota 55344

Attention: Corporate Secretary

Facsimile No.: (952) 828-8900

 

or such other address or facsimile number as such party may hereafter specify
for the purpose by notice to the other parties hereto. All such notices,
requests and other communications shall be deemed received on the date of
receipt by the recipient thereof if received prior to 5:00 p.m. in the place of
receipt and such day is a Business Day in the place of receipt. Otherwise, any
such notice, request or communication shall be deemed not to have been received
until the next succeeding Business Day in the place of receipt.

 

Section 13.03. Amendments and Waivers. (a) Any provision of this Agreement
(including the Exhibits and Schedules hereto) may be amended or waived if, but
only if, such amendment or waiver is in writing and is signed, in the case of an
amendment, by each party to this Agreement, or in the case of a waiver, by the
party against whom the waiver is to be effective.

 

(b) No failure or delay by any party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies herein provided
shall be cumulative and not exclusive of any rights or remedies provided by Law.

 

Section 13.04. Expenses. (a) General. Except as otherwise provided herein, all
costs and expenses incurred in connection with this Agreement shall be paid by
the party incurring such cost or expense.

 

55

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(b) Closing Costs. Costs incurred in connection with the Closing will be
allocated as follows:

 

(i) The Sellers shall pay the Sellers’ attorneys’ fees;

 

(ii) Buyer shall pay (A) Buyer’s attorneys’ fees and (B) the cost of updating
any existing survey or obtaining any new surveys of the Real Property or the
Facilities.

 

Section 13.05. Successors and Assigns. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns; provided that no party may assign, delegate or otherwise
transfer any of its rights or obligations under this Agreement without the
consent of each other party hereto; except that Buyer may transfer or assign, in
whole or from time to time in part, to one or more of its Affiliates the right
to purchase all or a portion of the Purchased Assets, but no such transfer or
assignment will relieve Buyer or Parent of its obligations hereunder.

 

Section 13.06. Governing Law. This Agreement shall be governed by and construed
in accordance with the law of the State of Delaware, without regard to the
conflicts of law rules of such state.

 

Section 13.07. Specific Performance; Jurisdiction. The parties agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions of this Agreement in the Court of
Chancery of the State of Delaware, this being in addition to any other remedy to
which such party is entitled at law or in equity. In addition, each of the
parties hereto (i) consents to submit itself to the personal jurisdiction of the
Court of Chancery of the State of Delaware (and, with respect to claims in which
the exclusive subject matter jurisdiction of such claims is federal, the federal
district court for the District of Delaware) in the event any dispute arises out
of this Agreement or any of the transactions contemplated by this Agreement,
(ii) agrees that it will not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from such court, (iii) agrees
that it will not bring any action relating to this Agreement or any of the
transactions contemplated by this Agreement in any court other than the Court of
Chancery of the State of Delaware (or, with respect to claims in which the
exclusive subject matter jurisdiction of such claims is federal, the federal
district court for the District of Delaware) and (iv) to the fullest extent
permitted by Law, consents to service being made through the notice procedures
set forth in Section 13.02. Each party hereto hereby agrees that, to the fullest
extent permitted by Law, service of any process, summons, notice or document by
U.S. registered mail to the respective addresses set forth in Section 13.02
shall be effective service of process for any suit or proceeding in connection
with this Agreement or the transactions contemplated hereby.

 

Section 13.08. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.

 

56

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Section 13.09. Counterparts; Effectiveness; Third Party Beneficiaries. This
Agreement may be signed in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and hereto were upon
the same instrument. The facsimile transmission of any signed original
counterpart of this Agreement shall be deemed to be the delivery of an original
counterpart of this Agreement. This Agreement shall become effective when each
party hereto shall have received a counterpart hereof signed by all of the other
parties hereto. Until and unless each party has received a counterpart hereof
signed by the other party hereto, this Agreement shall have no effect and no
party shall have any right or obligation hereunder (whether by virtue of any
other oral or written agreement or other communication). No provision of this
Agreement is intended to confer any rights, benefits, remedies, obligations or
liabilities hereunder upon any Person other than the parties hereto, their
respective successors and assigns and the Indemnitees.

 

Section 13.10. Other Definitional and Interpretative Provisions. The words
“hereof”, “herein” and “hereunder” and words of like import used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement. The captions herein are included for convenience of
reference only and shall be ignored in the construction or interpretation
hereof. References to Articles, Sections, Exhibits, Annexes and Schedules are to
Articles, Sections, Exhibits, Annexes and Schedules of this Agreement unless
otherwise specified. Any singular term in this Agreement shall be deemed to
include the plural, and any plural term the singular. Whenever the words
“include”, “includes” or “including” are used in this Agreement, they shall be
deemed to be followed by the words “without limitation”, whether or not they are
in fact followed by those words or words of like import. “Writing”, “written”
and comparable terms refer to printing, typing and other means of reproducing
words (including electronic media) in a visible form.

 

Section 13.11. Entire Agreement. This Agreement and the Ancillary Agreements
constitute the entire agreement between the parties with respect to the subject
matter of this Agreement and supersede all prior agreements and understandings,
both oral and written, between the parties with respect to the subject matter of
this Agreement, including, at the Closing (to the extent set forth in
Section 7.13), the Confidentiality Agreement.

 

Section 13.12. Severability. Whenever possible, each provision of this Agreement
will be interpreted so as to be effective and valid under applicable law, but if
any provision or portion of any provision of this Agreement is held invalid,
illegal or unenforceable in any respect under any applicable law in any
jurisdiction, then such invalidity, illegality or unenforceability will not
affect the validity, legality or enforceability of any other provision or
portion of any provision of this Agreement, and this Agreement will be
re-formed, construed and enforced in such jurisdiction in such manner as will
effect as nearly as lawfully possible the purposes and intent of such invalid,
illegal or unenforceable provision.

 

Section 13.13. Bulk Transfer Laws. The Sellers and Buyer waive the requirements
of any Laws (including Tax Laws, it being understood that Sellers and Buyer
shall use their respective reasonable best efforts to obtain Tax clearance
certificates as provided in Section 8.03) with respect to bulk transfers, and
the Sellers agree to pay and discharge when due all claims of creditors which
could be asserted against Buyer by reason of such waiver. The Sellers jointly
and severally shall indemnify, defend and hold harmless Buyer from any and all
Damages

 

57

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resulting from the claims of creditors of the Sellers arising out of or
connected with their failure to comply with the requirements of any Laws
relating to bulk transfers or the failure of the Sellers to discharge such
claims.

 

Section 13.14. Guaranty. Parent hereby guarantees to each of the Sellers and New
Diamond the prompt and full discharge by Buyer of all of Buyer’s payment and
performance obligations under this Agreement in accordance with the terms
hereof. SUPERVALU hereby guarantees to Parent the prompt and full discharge by
each Seller controlled by SUPERVALU and by New Diamond of all their payment and
performance obligations under this Agreement in accordance with the terms
hereof.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.

 

CVS PHARMACY, INC. By:   /s/    TOM RYAN     Name: Tom Ryan     Title: President
and CEO CVS CORPORATION By:   /s/    TOM RYAN     Name: Tom Ryan     Title:
Chairman, President and Chief Executive Officer ALBERTSON’S, INC. By:  
/S/    JOHN R. SIMS     Name: John R. Sims     Title: Executive Vice President
and General Counsel SUPERVALU, INC. By:   /S/    JEFF NODDLE     Name: Jeff
Noddle     Title: Chairman & CEO NEW ALOHA CORPORATION By:   /S/    PAUL G.
ROWAN     Name: Paul G. Rowan     Title: President