EXHIBIT 10.39
STOCKHOLDERS' AGREEMENT
AGREEMENT,
dated as of August 20, 1987, as amended on February 20, 1992,
by and among WAKEFERN FOOD CORP., a New Jersey corporation with
principal
offices located at York Street, Elizabeth, New Jersey 07207
("Wakefern"), and
each of the member stockholders of Wakefern listed on Schedule 1
hereto
(hereinafter individually called a "Stockholder" and collectively
the
"Stockholders").
W I T N E S S E T H:
Premises:
A.
Wakefern is a corporation operated on the cooperative plan and
the
Stockholders are retail merchants primarily dealing in consumer
products for
home use deriving mutual economic and merchandise assistance
Wakefern; and
B. Each of
the Stockholders of Class B or Class C Common Stock of Wakefern
and, in some instances, also of shares of Class A Common Stock of
Wakefern (the
Class A, B and C Common Stock being hereinafter collectively
referred to as the
"Common Stock"); and
C.
Wakefern's viability is based primarily on volume generated by
aggregating the purchasing power of all of the Stockholders; and
Shares and from
is the owner of
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D. The
Board of Directors of Wakefern and the Stockholders believe it
is
in Wakefern's and each of the Stockholder's best interest that the
Stockholders
continue to purchase their supplies and inventory from Wakefern;
and
E. The Board of
Directors and the Stockholders of Wakefern believe it is
in Wakefern's and each of the Stockholder's best interest to
undertake a major
capital expenditure program in order to increase the merchandise
handling
capacity of Wakefern and to promote retail growth; and
F. To
induce one or more lending institutions to provide the
necessary
financing for such capital expenditure program, the Stockholders
have agreed,
subject to the terms and conditions contained herein, to make
certain financial
commitments to Wakefern;
NOW, THEREFORE, for and in consideration of the premises and the
mutual promises
and covenants hereinafter contained, Wakefern and the Stockholders
hereby agree
as follows:
1.
COMMITMENT TO PARTICIPATE
1.1.
Minimum Patronization Requirement. Each Stockholder, during the
term
of this Agreement (the "Term"), shall purchase from Wakefern,
during each
quarter of each fiscal year of Wakefern, at least 85% of such
Stockholder's
purchases for each of such Stockholder's stores in each of
Wakefern's product
categories listed on Schedule 2(A) hereto (the "Product
Categories"), as the
same may be amended from time to time by the Board of Directors of
Wakefern (the
"Products") and all programs listed on Schedule 2(B) hereto as
mandated by the
Board of Directors of Wakefern, as the same may be amended from
time to time by
the Board of Directors of Wakefern (the "Programs"), upon such
terms and
conditions as to price and delivery as shall be established by
Wakefern from
time to time. Such purchase and participation
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commitments shall be called the "minimum patronization
requirement."
1.2.
Binding Effect. The minimum patronization requirement shall be
binding upon all the Stockholders with respect to all supermarkets,
food stores
and/or grocery stores now or hereafter operated by each such
Stockholder, or by
any entity or entities with which such Stockholder is affiliated,
and that are
serviced by Wakefern at site locations approved by Wakefern in the
manner
provided in the By-Laws of Wakefern as the same may be amended from
time to
time.
1.3
Reports. On or prior to 120 days after the close of each fiscal
year
of each Stockholder, such Stockholder shall furnish to Wakefern a
report showing
the dollar amount of such Stockholder's total purchases of the
Products in each
of Wakefern's product categories and the items included in
Wakefern's board
mandated Programs purchased from any source for such Stockholder's
most recent
fiscal year. Upon the written request of Wakefern, a Stockholder
shall furnish
to Wakefern within 45 days after the close of the fiscal quarter of
the
Stockholder for which such request is made a report showing the
dollar amount of
such Stockholder's total purchases of the Products in each of
Wakefern's product
categories and the items included in Wakefern's board mandated
Programs
purchased from any source for the Stockholder's fiscal quarter then
ended. Each
such report shall be subject to review, at the option of Wakefern,
by Wakefern's
regular independent public accountants.
2.
FAILURE TO
OBSERVE MINIMUM PATRONIZATION REQUIREMENT; WITHDRAWALS;
SALE OF A STORE; SALE OF STOCKHOLDER TO WAKEFERN; RIGHT OF
FIRST
REFUSAL
The Stockholders and Wakefern acknowledge and agree that (a)
the
failure of one or more Stockholders to observe the minimum
Patronization requirement; (b) the
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Withdrawal (as hereinafter defined) of one or more Stockholders
from
Wakefern; or (c) the Sale of a Store (as hereinafter defined),
will
have the effect of increasing the financial burden of all the
Stockholders with respect to meeting the financial obligations
Wakefern is to assume under its capital expenditure program.
Accordingly, each Stockholder agrees as follows:
2.1.
Failure to Observe Minimum Patronization Requirement. If a
Stockholder fails to meet or refuses to comply with the minimum
patronization
requirement set forth in Section 1.1 hereof, such defaulting
Stockholder shall
be required to pay to Wakefern in cash within 10 days after demand
therefore, an
amount calculated pursuant to the provisions of Schedule 3 hereto;
provided,
however, that such payment may be waived, in whole or in part, by
an affirmative
vote of at least 12 members of the Board of Directors of Wakefern.
Such payment
obligation may be imposed on a defaulting Stockholder irrespective
of the reason
that such Stockholder ceases to meet the minimum patronization
requirement
(other than by, and to the extent of, "force majeure" as
hereinafter defined or
if an exemption therefrom exists under this Agreement), including,
without
limitation, by reason of change in control or other disposition of
all or a part
of such Stockholder's business. The imposition of such payment:
obligation on
such Stockholder shall be binding and conclusive on such
Stockholder unless
waived pursuant to the provisions contained in Section 2.1. As used
herein,
"force majeure" shall mean the inability of a Stockholder to
purchase Products
from Wakefern by reason of events or contingencies beyond such
Stockholder's
reasonable control including, but not limited to, fire, flood,
explosion,
sabotage, other natural or made disaster, act of any government,
labor dispute,
lack of shipping facilities or, without limiting the foregoing, any
other
circumstance that could not have been avoided with reasonable care.
The
determination of what constitutes force majeure" shall be made by
the Board of
Directors of Wakefern, in its sole discretion.
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2.2.
Notice of Withdrawals; Withdrawal Payment. Each Stockholder agrees
to
give Wakefern at least thirty 30) days' prior written notice of the
happening of
any of the following events each a "Withdrawal"):
(i) a sale or other disposition for value of all or
substantially
all
ShopRite supermarket business of such Stockholder in a single
transaction or series of related transactions; or
(ii) the merger or consolidation of such Stockholder with or
into
another
entity (irrespective of whether such Stockholder is the
surviving
or
disappearing entity); or
(iii) the transfer of, or any transaction or series of
transactions
that have
the effect of transferring, a "controlling interest" in such
Stockholder (for purposes hereof, a "controlling interest" in
such
Stockholder shall mean such interest as confers on the holder
thereof the
power to
direct or cause the direction of the management and policies of
such
Stockholder).
Except as provided in Section 2.4 hereof, upon the occurrence of a
Withdrawal
prior to the expiration of the Term, such Stockholder shall pay to
Wakefern an
amount calculated pursuant to the provisions of Schedule 4 hereto
the
"Withdrawal Payment" Upon payment of the Withdrawal Payment and the
payment and
discharge of all obligations of such Stockholder incurred hereunder
prior to the
date of such Withdrawal Payment, such Stockholder shall thereafter
have no
further obligation under this Agreement. However, such discharge
shall in no way
affect the obligations of such Stockholder to Wakefern or any
affiliate of
Wakefern arising under any other agreement or in connection with
any transaction
or relationship of such Stockholder with Wakefern or such
affiliate.
2.3 Notice
of Sale off Store; Sale of a Store Payment. (a) Each
Stockholder agrees to give Wakefern at least thirty 30) days' prior
written
notice of the happening of the following event (a "Sale of a
Store"):
a sale or
other disposition (including, without limitation, the closing
of
a store)
other than a Withdrawal, whether by merger, consolidation, sale
of capital
stock, sale of assets or otherwise, of a supermarket, food or
grocery
store (a "Store") owned, operated or controlled by such
Stockholder, which Store is being serviced by Wakefern.
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Except as provided in Sections 2.3(b) and (c) or Section 2.4
hereof, upon the
occurrence of a Sale of a Store prior to the expiration of the
Term, such
Stockholder shall to Wakefern at the end of each fiscal year
thereafter until
the earlier to occur of (i) the tenth anniversary of
