Spartan Stores Exhibit 2.1 (Asset Purchase Agreement) to Form 8-K

EX-2.1 2 sptnstex21_122205.htm SPARTAN STORES EXHIBIT 2.1 TO FORM 8-K Spartan Stores Exhibit 2.1 (Asset Purchase Agreement) to Form 8-K - 12/22/05

EXHIBIT 2.1

_________________________________________________________________

ASSET PURCHASE AGREEMENT

by and among

D&W FOOD CENTERS, INC.,

D&W ASSOCIATE RESOURCES, LLC,

ROBERT A. WOODRICK, ALEICIA D. WOODRICK, GEORGIA R. GIETZEN,
JEFFREY A. GIETZEN, DOUGLAS E. BLEASE, and GERALD E. MATTHEWS,

and

FAMILY FARE, LLC

and

PREVO'S FAMILY MARKETS, INC.

Dated as of December 17, 2005

_________________________________________________________________

TABLE OF CONTENTS

			Page

ARTICLE I - PURCHASE AND SALE OF PURCHASED ASSETS			1
	1.1	Basic Transaction	1
	1.2	Assumption of Liabilities	5
	1.3	Consideration	6
	1.4	Proration	7
	1.5	Closing Transactions	9

ARTICLE II - CONDITIONS TO CLOSING			10
	2.1	Conditions to Purchaser's Obligations	10
	2.2	Conditions to Seller's Obligations	13

ARTICLE III - REPRESENTATIONS AND WARRANTIES OF SELLER			14
	3.1	Organization and Corporate Power	14
	3.2	Authorization; No Breach; Approvals	14
	3.3	No Material Adverse Change	15
	3.4	Financial Statements	15
	3.5	Books and Records	15
	3.6	Financial Documents	15
	3.7	Absence of Certain Developments	16
	3.8	Leased Real Property	16
	3.9	Assets	19
	3.10	Taxes	19
	3.11	Contracts and Commitments	20
	3.12	Proprietary Rights	20
	3.13	Litigation	21
	3.14	Brokerage	21
	3.15	Employees	21
	3.16	Employee Benefit Plans	22
	3.17	Compliance with Laws; Permits; Certain Operations	23
	3.18	Environmental Matters	23
	3.19	Commissary	24
	3.20	Insurance	24
	3.21	Solvency	25

ARTICLE IV - REPRESENTATIONS AND WARRANTIES OR PURCHASER			25
	4.1	Corporate Organization and Power	25
	4.2	Authorization	25
	4.3	Brokerage	26

ARTICLE V - COVENANTS; OTHER AGREEMENTS			26
	5.1	Conduct of Business	26
	5.2	Access to Information and Premises	28
	5.3	Notification of Certain Matters; Schedules	29
	5.4	Further Assurances	29

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5.5

Exclusivity; No Solicitation of Transactions

31

5.6

Further Transfers; Transition Assistance

32

5.7

Confidentiality

32

5.8

Sales and Transfer Taxes

32

5.9

Non-Competition

33

5.10

Coupons and Gift Certificates

33

5.11

Press Release

33

5.12

Condemnation; Damage to Property

34

5.13

Defects

34

5.14

Use of D&W Trademark

34

5.15

[Reserved]

35

5.16

Audited Financial Statements

35

5.17

Confidentiality Agreements

35

5.18

Schedules & Exhibits

35

5.19

Employees

36

5.20

Caledonia Location

36

5.21

Liquor License Agreement

36

ARTICLE VI - TERMINATION

37

6.1

Events of Termination

37

ARTICLE VII - INDEMNIFICATION

38

7.1

Survival of Representations and Warranties

38

7.2

General Indemnification

39

ARTICLE VIII - CERTAIN DEFINITIONS

42

ARTICLE IX - MISCELLANEOUS

49

9.1

Amendment and Waiver

49

9.2

Tax Matters

49

9.3

Notices

51

9.4

Assignment

52

9.5

Severability

52

9.6

Interpretation

52

9.7

Entire Agreement

53

9.8

Counterparts

53

9.9

Governing Law

53

9.10

No Strict Construction

53

9.11

Specific Performance

53

9.12

No Third-Party Beneficiaries

53

9.13

Schedules

53

9.14

Expenses

54

9.15

Guaranty

54

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Schedules
Schedule 1.1(a)(iii) - Proprietary Rights Schedule
Schedule 1.1(a)(iv) - Assumed Contracts Schedule
Schedule 1.1(a)(v) - Vehicle Schedule
Schedule 1.1(a)(x) - Permits Schedule
Schedule 1.1(b) - Excluded Assets Schedule
Schedule 1.3(b) - Merchandise Value Schedule
Schedule 2.1(e) - Third Party Approvals Schedule
Schedule 2.1(f) - Government Approvals Schedule
Schedule 3.2 - Restrictions Schedule
Schedule 3.5 - Books and Records Schedule
Schedule 3.7 - Developments Schedule
Schedule 3.8(a) - Wind-Up Stores Schedule
Schedule 3.8(b) - Leased Real Property Schedule
Schedule 3.8(c) - Subleased Real Property Schedule
Schedule 3.8(e) - Leasehold Improvements Schedule
Schedule 3.11 - Contracts Schedule
Schedule 3.13 - Litigation Schedule
Schedule 3.15 - Employee Disclosure Schedule
Schedule 3.16 - Employee Benefits Schedule
Schedule 3.17 - Compliance Schedule
Schedule 3.18 - Environmental Schedule
Schedule 5.1 - Conduct of Business Schedule
Schedule 8 - Non-Acquired Merchandise Schedule

Exhibits

Exhibit A	Process and Procedures (Taking Inventory)
Exhibit B-1	Assignment and Assumption Agreement (Lease)
Exhibit B-2	Assignment and Assumption Agreement (Sublease)
Exhibit B-3	Assumption Agreement (General)
Exhibit C	Transition Services Agreement
Exhibit D-1	Liquor License Transfer Agreement
Exhibit D-2	Liquor License Purchase Agreement (Clearance Location)
Exhibit E-1	Estoppel Certificate (Landlord/Seller)
Exhibit E-2	Agreement Regarding Closing Store
Exhibit F	Estoppel Certificate (Subtenant)
Exhibit G-1	Noncompetition Agreement (Shareholder)
Exhibit G-2	Noncompetition Agreement (Officer)
Exhibit G-3	Noncompetition Agreement (Seller)
Exhibit H	Wind-Up Store License
Exhibit I	Escrow Agreement
Exhibit J	Opinion of Counsel

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ASSET PURCHASE AGREEMENT

THIS IS AN ASSET PURCHASE AGREEMENT (this "Agreement") made as of December 17, 2005 (the "Signing Date"), by and among (i) D&W Food Centers, Inc., a Michigan corporation ("D&W"); (ii) D&W Associate Resources, LLC, a Michigan limited liability company ("DWAR"); (iii) Family Fare, LLC, a Michigan limited liability company ("Family Fare"); and (iv) Prevo's Family Markets, Inc., a Michigan corporation ("Prevo's"). D&W and DWAR, individually or collectively (as the context requires) are referred to herein as "Seller." Family Fare and Prevo's, individually or collectively (as the context requires) are referred to herein as "Purchaser." Seller and Purchaser are sometimes individually referred to in this Agreement as a "Party" and collectively as the "Parties." The shareholders of D&W (together, the "Guarantors") listed on the signature page hereof join in this Agreement solely to provide certain indemnification guarantees pursuant to Section 7.2(a) and 9.15 below. Definitions for certain capitalized terms may be found in Article VIII.

ARTICLE I
PURCHASE AND SALE OF PURCHASED ASSETS

1.1 Basic Transaction.

(a) Purchased Assets. On the terms and subject to the conditions set forth in this Agreement, Purchaser shall purchase from Seller, and Seller shall sell, convey, assign, transfer and deliver to Purchaser on the Closing Date, all of Seller's right, title and interest in and to the business, assets, properties, rights, titles and interests of every kind and nature owned, licensed or leased by Seller as of the Closing Date (except for the Excluded Assets), which are used or located at the Leased Real Property (Leased Real Property is collectively referred to as the "Premises" and individually referred to as an "Individual Premises"), whether tangible or intangible, real or personal and by whomever possessed (collectively, the "Purchased Assets"), free and clear of all Liens (other than Permitted Liens), including, but not limited to, the following:

(i) "register cash" on the Closing Date in an amount that shall not be less than Twenty Thousand Dollars ($20,000) in each of the Remaining Retail Stores ("Register Cash");

(ii) all inventory of foods, beverages and other products sold in the Premises, and all goods, wares and merchandise located in the Premises on the Closing Date, including warehoused and consignment inventory and inventory on order for or in transit to or from the Premises (collectively, the "Merchandise"); provided that "Merchandise" shall not include Non-Acquired Merchandise;

(iii) all of Seller's interest in the following that are owned by or licensed to Seller and used in connection with the operations at the Premises: (1) the D&W trademark, trade name, service mark and trade dress and the www.dwfoods.com internet domain name, together with all goodwill associated

therewith, and all translations, adaptations, derivations and combinations of the foregoing (and all logos related to the foregoing); (2) D&W copyrights and copyrightable works; (3) all registrations, applications and renewals for any of the foregoing; (4) subject to obtaining required consents, if applicable, D&W trade secrets and other confidential information; (5) subject to obtaining required consents, if applicable, all other D&W intangible properties and rights relating to the Premises; and (6) all tangible embodiments of the foregoing; in each case including the items set forth on the attached Proprietary Rights Schedule (unless indicated otherwise therein) (collectively, the "Proprietary Rights");

(iv) all agreements, contracts, or other binding arrangements of Seller identified on the attached Assumed Contracts Schedule (collectively, the "Assumed Contracts"), including the Leases and the Subleases;

(v) all Leasehold Improvements and all owned machinery, equipment, vehicles, trucks, trailers, furniture, testing equipment and office equipment, fixtures, trade fixtures, store models and displays, computers (and, subject to obtaining required consents, if applicable, related software), furniture and all other tangible personal property located in the Premises and all such property customarily located or based in the Premises but temporarily located elsewhere (including all vehicles, trucks and trailers listed on the Vehicle Schedule attached hereto);

(vi) all warranties, claims, refunds, credits, causes of action, choses in action, rights of recovery and rights of set off of any kind relating to the Purchased Assets;

(vii) the right to all telephone numbers associated with the Premises, but not such telephone numbers owned by BRZ Michigan, LLC ("BRZ") or any other subtenants;

(viii) all lists, records and other information pertaining to accounts and referral sources; all lists, records and other information pertaining to suppliers and customers; all Retail Store accounting records (including without limitation item sales histories); profit and loss records for each Retail Store; all stock ledger reports and records for each Retail Store; all drawings, reports, studies and plans, (including all financial, business, sales and marketing plans and information); all environmental reports; and all architectural / engineering and similar plans, drawings and reports in each case whether evidenced in writing, electronic data, computer software or otherwise; provided that, in the event the assets described in this clause (viii) are not held in a form which relates solely to the Premises and the operation of the business thereon, such assets will not be Purchased Assets hereunder but Seller agrees to provide Purchaser with access to and copies of the foregoing assets upon reasonable notice from Purchaser;

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(ix) all D&W advertising, marketing and promotional rights and materials;

(x) subject to Exhibit D-1, to the extent transferable, all permits, licenses, certifications, authorizations, approvals and similar rights from all permitting, licensing, accrediting and certifying agencies relating to the Leased Real Property (including all of the foregoing listed or described on the attached Permits Schedule and including, without limitation, all licenses, certifications, authorizations, approvals and similar rights relating to the Leased Real Property, whether held in escrow or in a similar manner), and the rights to all data and records held by such agencies;

(xi) all rights to security deposits previously paid by D&W arising under or in connection with the Assumed Contracts and cash in the amount of the unapplied balance of security deposits previously paid to D&W under or in connection with the Assumed Contracts ("Security Deposits Owed");

(xii) all D&W goodwill and other intangible property; and

(xiii) to the extent transferable and subject to the rights of Starbucks Corporation ("Starbucks"), all right, title, and interest in and to the Starbucks-specific equipment, supplies, and Improvements located at the Premises.

(b) Excluded Assets. Notwithstanding the foregoing, the following properties, assets and rights (the "Excluded Assets") are expressly excluded from the purchase and sale contemplated by this Agreement and are not included in the Purchased Assets:

(i) all Non-Acquired Merchandise;

(ii) cash and cash equivalents (other than the Register Cash, security deposits, and amounts payable to Purchaser hereunder);

(iii) accounts and notes receivable;

(iv) all of Seller's corporate record books, minute books, accounting records and Tax records, except as provided in Section 1.1(a);

(v) any ownership or equity interest of Seller in and to any Persons;

(vi) investments;

(vii) cash surrender value of life insurance policies;

(viii) any and all contract rights arising under agreements, contracts, or other binding arrangements that are not Assumed Contracts;

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(ix) all inventory, supplies, leased vehicles, equipment, furniture, permits, customer lists and the intellectual property rights associated with the "Fresh Thyme" catering business, as located at 3960 - 44^th Street, S.W., Grandville, Michigan 49418;

(x) all inventory located in the Wind-Up Stores at the Closing and the Clearance Location Liquor License;

(xi) all personnel files and records; and

(xii) the assets set forth in the Excluded Assets Schedule.

Seller agrees that, except for inventory located at each Wind-Up Store Individual Premises, all of the Excluded Assets shall be removed at Seller's expense from the Premises (to the extent applicable) not later than the Closing Date.

(c) BRZ Services Agreement. The BRZ Services Agreement shall become an Assumed Contract if, and only if, prior to Closing:

(i) the BRZ Services Agreement is amended to terminate (A) BRZ's rights with respect to all non-pharmacy-related services, including termination of the "HBC Management Services" (as defined in Section 2(d) of the BRZ Services Agreement), and (B) any obligation of Seller to purchase "Products" (as defined in the BRZ Services Agreement) from BRZ, including purchase obligations described in Schedule 2(d) to the BRZ Services Agreement;

(ii) Section 4 of the BRZ Services Agreement is amended to (A) provide that the BRZ's exclusive operation rights apply only (x) during the term of the BRZ Services Agreement to (y) operation of pharmacies at stores listed on Schedule 1 to the BRZ Services Agreement and that are being acquired by Purchaser; and (B) delete BRZ's right of first refusal for newly opened or purchased stores;

(iii) the BRZ Services Agreement is amended to clarify that Seller, and not Purchaser, shall be responsible for any "Losses" (as defined in the BRZ Services Agreement) or other indemnification obligations relating to acts, omissions, events or obligations prior to Closing or that result from Seller's conduct; and

(iv) BRZ consents to the assignment of the BRZ Services Agreement (as amended as described above) to Purchaser.

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1.2 Assumption of Liabilities.

(a) Assumed Liabilities. Subject to the conditions set forth in this Agreement, as of the Closing Date, Purchaser shall assume only the following debts, liabilities and obligations of Seller to the extent relating to the Purchased Assets (collectively, the "Assumed Liabilities"): Seller's obligations under the Assumed Contracts first arising after the Closing Date (but only to the extent such Assumed Contracts are assigned to Purchaser, and specifically excluding any liability or obligation relating to or arising out of such Assumed Contracts by Seller as a result of (A) any breach of, default under or event which, with the passage of time, would become a default under, such Assumed Contract occurring on or prior to the Closing Date (whether or not any claim has been brought), (B) any violation of law, breach of warranty, tort or infringement occurring on or prior to the Closing Date (whether or not any claim has been brought); or (C) any charge, complaint, action, suit, proceeding, hearing, investigation, claim or demand for acts or omissions occurring on or prior to the Closing Date).

(b) Liabilities Not Assumed. Notwithstanding anything to the contrary in this Agreement, Purchaser shall not assume or in any way become liable for any of Seller's debts, liabilities or obligations of any nature whatsoever (other than the Assumed Liabilities), whether accrued, absolute, contingent or otherwise, whether known or unknown, whether due or to become due, whether related to the Premises or the Purchased Assets and whether disclosed on the Schedules attached hereto, and regardless of when or by whom asserted (collectively referred to herein as the "Excluded Liabilities"), including, without limitation, any and all liabilities or obligations (whether imposed on Purchaser as a successor or otherwise):

(i) relating to or arising under or in connection with any "employee benefit plan" (as defined in Section 2(3) of ERISA) or any other benefit plan, program or arrangement of any kind at any time maintained, sponsored or contributed or required to be contributed to by Seller or any ERISA Affiliate, or with respect to which Seller or any ERISA Affiliate has any liability or potential liability, including the responsibility for satisfying the continuation coverage requirements of COBRA for all employees or former employees or other service providers (and any dependents or beneficiaries thereof) of Seller or any ERISA Affiliate who are receiving COBRA continuation coverage as of the Closing Date or who are or become entitled to elect such coverage on account of a qualifying event occurring on or before the Closing;

(ii) pertaining to the employment or service with, or termination from employment or service with, Seller or any ERISA Affiliate, of any individual, including but not limited to:

(A) any workers' compensation claim or other deferred claim;

(B) bonus obligations, accrued vacation or other paid time off; and

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(iii) to a landlord under any Lease for a Wind-Up Store Individual Premises (a "Wind-Up Store Lease") relating to discontinuing operations at that location and/or vacating the Premises (including, for purposes of greater clarity and without limitation, any liability or obligation arising as a result of the closing of such locations at or immediately following the expiration or termination of the applicable licenses described in Section 5.1(c) hereof, regardless of the effect of the prior assignment of the applicable Leases); and

(iv) arising out of or in connection with any contract or agreement not included among the Assumed Contracts.

For purposes of this Section 1.2(b), "Seller" shall be deemed to include all Affiliates and Subsidiaries of Seller and any predecessors to Seller and any Person with respect to which Seller is a successor-in-interest (including by operation of law, merger, liquidation, consolidation, assignment, assumption or otherwise). Seller acknowledges that it is retaining the Excluded Liabilities, and Seller shall pay, discharge and perform all such liabilities and obligations as and when due.

1.3 Consideration. In exchange for the Purchased Assets, Purchaser shall pay to Seller the Purchase Price and assume the Assumed Liabilities.

(a) Purchase Price. The aggregate purchase price (the "Purchase Price") for the Purchased Assets shall be (i) Forty-five Million Dollars ($45,000,000), plus (ii) the amount of the Merchandise Value as determined pursuant to Section 1.3(b).

(b) Merchandise Value. The Merchandise Value shall be the lesser of (i) Seven Million Five Hundred Thousand Dollars ($7,500,000) (or such other amount the Parties may in good faith agree to in writing) or (ii) the Inventory Value determined by count as provided in this Section 1.3 (the "Merchandise Value"). On or immediately preceding the Closing Date, an inventory taking firm or firms mutually acceptable to Purchaser and Seller (the "Inventory Service") shall count the inventory of Merchandise at each of the Premises listed on the Leased Real Property Schedule where any Merchandise is located. The value of such Merchandise shall be determined in accordance with the attached Merchandise Value Schedule. (The sum of the value of the Merchandise shall be the "Inventory Value"). Representatives of Seller and Purchaser shall be present at the taking of the physical inventories to settle all disputes as to the classification of inventory as Non-Acquired Merchandise. The process and procedures for taking of inventory at the Premises is set forth on Exhibit A hereto. Purchaser and Seller agree that the terms set forth on Exhibit A shall govern for all purposes the determination of Inventory Value and the rights and obligations of the Parties with respect to the procedures for the inventory counts. Purchaser and Seller shall each pay fifty percent (50%) of the fees and expenses of the Inventory Service. Purchaser and

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Seller agree to promptly pay the other Party by wire transfer the net amount calculated pursuant to the reconciliation process described in Paragraph D of Exhibit A.

(i) On Closing Date, Purchaser shall pay Seller Forty-Three Million Dollars ($43,000,000), plus (A) the Merchandise Value and (B) the Proration Amount (if any) to be added pursuant to Section 1.4, less (V) Thirty Thousand Dollars ($30,000) for the Clearance Location Liquor License, (W) Security Deposits Owed, (X) the Estimated Coupon Amount, (Y) the Estimated Gift Certificates Amount, and (Z) the Proration Amount (if any) to be deducted pursuant to Section 1.4 (after all such adjustments, the "Closing Date Cash Payment") in immediately available United States funds by wire transfer pursuant to instructions provided by Seller prior to the Closing.

(ii) At Closing, Purchaser and Seller agree that a portion of the Purchase Price equal to Two Million Dollars ($2,000,000) (the "Escrow Funds") shall be placed in escrow with a mutually agreed upon escrow agent ("Escrow Agent") to be held in accordance with the escrow agreement attached as Exhibit I (the "Escrow Agreement"). The Escrow Agreement shall provide for the distribution of Escrow Funds in connection with the amounts that Seller may owe to Purchaser following the Closing arising pursuant to Section 5.10 (Coupons and Gift Certificates) and Section 7.2 (General Indemnification). On the Closing Date, Purchaser shall deposit with Escrow Agent the Escrow Funds in immediately available United States funds by wire transfer pursuant to instructions provided by Escrow Agent. The Escrow Agreement shall also provide the then-total amount of Escrow Funds exceeding the sum of (i) One Million Dollars ($1,000,000) and (ii) any amounts associated with pending claims (for which notice has been delivered) against the Escrow Funds reasonably estimated by Purchaser, shall be disbursed to Seller on the date that is fifteen (15) months after the Closing Date (for greater clarity, if the Closing Date is February 15, 2006, the date on which such distribution shall take place shall be May 15, 2007). All remaining Escrow Funds (less any amounts associated with pending claims (for which notice has been delivered) against the Escrow Funds reasonably estimated by Purchaser) shall be disbursed to Seller on the second (2^nd) anniversary of the Closing Date.

1.4 Proration. Two (2) days prior to Closing, Purchaser and Seller shall agree on an estimated net proration amount (the "Proration Amount"), which shall be determined by totaling the estimated amounts owed by one Party to the other pursuant to this Section 1.4.

(a) Common area maintenance charges and assessments ("CAM"), insurance, utilities, property taxes, rent, and other amounts payable by Seller under the Leases, to the extent paid for by Seller or required to be paid for by Seller for a period after the Closing Date, shall be prorated as of the Closing Date. Taxes directly payable to

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governmental entities shall be prorated on a calendar-year basis (applicable to July 1 and December 1, 2006 tax bills estimated based on 2005 taxes adjusted for increases in consumer price index and millage rates). CAM, insurance, utilities, property taxes, rent and any amounts billed (before or after the Closing) by landlords for other items under the Leases for the period prior to the Closing Date, and which (i) Seller has not paid prior to the Closing or (ii) have not been taken into account in the computation of the Proration Amount, shall be a continuing obligation of Seller which shall survive the Closing. Seller's continuing obligations shall include, without limitation, Seller's pro rata share of all post-Closing reconciliations and determinations of CAM, insurance, utilities, property taxes, rent, and other amounts paid in estimated monthly installments at each Individual Premises as each landlord makes such reconciliation. If, under the terms of any Lease, Purchaser is required to pay rent based on percentage of sales for any period prior to Closing or that includes the Closing Date, then Seller shall pay its pro rata share of such percentage rent based on the sales made by Seller from the applicable Leased Real Property prior to the Closing Date. For purposes of such proration, the minimum sales base specified in the applicable Lease shall be prorated between Seller and Purchaser based on the number of days in such period before and after the Closing Date.

(b) Utilities and other customarily prorated expenses, including, but not limited to, water, sewer, gas, electricity, trash removal, snow removal and fire protection service, if such utilities cannot be transferred as of the Closing Date, and amounts payable by Seller under the Assumed Contracts, to be paid for by Seller or required to be paid for by Seller for a period after the Closing Date, shall be prorated as of the Closing Date. Purchaser shall arrange with all utility companies to have accounts placed in Purchaser's name beginning on the Closing Date; provided, however, that Seller shall use prompt and reasonable efforts to cooperate with Purchaser in the transfer of such utilities to Purchaser, including but not limited to, reasonable efforts to obtain final meter readings and executing any documents required to assign the existing telephone numbers for the Retail Stores to Purchaser. Seller shall remain responsible for any payments due to third-parties attributable to the period prior to the Closing Date for such utilities.

(c) Security deposits previously paid by subtenants under the Subleases shall be transferred by Seller to Purchaser at the Closing. Rents due from subtenants under the Subleases, and CAM, insurance, utilities, property taxes, and other amounts payable by subtenants under the Subleases shall be prorated as of the Closing Date on the basis of the period for which such amounts are payable (if, as and when collected). Purchaser shall apply rent and other income received from subtenants under the Subleases after the Closing Date in the following order of priority: (i) first, to base rent first coming due after the Closing Date and applicable to the period of time after the Closing Date, which amount shall be retained by Purchaser, (ii) second, to payment of the current base rent then due in the month in which the Closing Date occurs, which amount shall be prorated between Seller and Purchaser as of the Closing Date, (iii) third, to other amounts payable by subtenants under the Subleases before or after the Closing Date, and (iv) thereafter, to delinquent base rent which was due and payable as of the Closing Date but not collected by Seller prior to the Closing Date.

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(d) Purchaser may, but is not required to, offset any amount owed it by Seller under this Section 1.4 against the Escrow Funds pursuant to the terms of the Escrow Agreement.

1.5 Closing Transactions.

(a) Unless this Agreement is terminated earlier in accordance with Article VI, the closing of the transactions contemplated by this Agreement (the "Closing") shall take place at the offices of Warner Norcross & Judd LLP, 111 Lyon Street, NW, Suite 900, Grand Rapids, Michigan, on (i) the date that is two (2) business days following the date on which all of the conditions to Closing set forth under Article II of this Agreement have been satisfied or waived except those conditions (such as delivery of certain documents) which are customarily satisfied at a closing or (ii) such other time and place as the parties may agree. The day on which the Closing is effective shall be referred to herein as the "Closing Date." The Closing shall be deemed effective as of 11:59 p.m. Eastern Time on the Closing Date. At the Closing, the parties shall execute and deliver the documents, agreements and instruments provided for under this Agreement.

(b) Deliveries. Subject to the conditions set forth in this Agreement, at the Closing:

(i) Purchaser shall deliver to Seller the Closing Date Cash Payment as provided under Section 1.3(c)(i) and shall deliver to Escrow Agent the Escrow Funds as provided under Section 1.3(c)(ii);

(ii) Seller shall convey all of the Purchased Assets to Purchaser pursuant to executed instruments of sale, transfer, assignment, conveyance and delivery, assignments and assumption of leases, bills of sale, intellectual property assignments, certificates of title, vehicle titles, and all other instruments of conveyance necessary to effect transfer to Purchaser of title to the Purchased Assets in accordance with the terms of this Agreement (free and clear of all Liens, other than Permitted Liens);

(iii) Purchaser shall assume the Assumed Liabilities by delivery to Seller of Assignment and Assumption Agreements in the form of Exhibits B-1, B-2 and B-3 attached hereto;

(iv) Seller shall deliver to Purchaser: (A) a certificate signed by an officer of Seller, dated as of the Closing Date, stating that the conditions specified in Section 2.1(a) through (f), inclusive, have been fully satisfied or waived in writing by Purchaser as of the Closing; (B) copies of all Third-Party Approvals and Governmental Approvals obtained by Seller; (C) certified copies of resolutions of Seller's board of directors and shareholders authorizing and approving the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby; (D) an opinion of counsel to Seller, dated as of the Closing Date, in the form attached as Exhibit J, (E) a

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non-foreign Person affidavit dated as of the Closing Date, sworn under penalties of perjury and in form and substance required under the Treasury Regulations issued pursuant to Section 1445 of the Code stating that Seller is not a "foreign person" as defined in Code Section 1445, and (F) such other documents or instruments as are required to be delivered at the Closing pursuant to the terms hereof or that Purchaser reasonably requests prior to the Closing Date to effect the transactions contemplated hereby; and

(v) Purchaser shall deliver to Seller (A) a certificate signed by an officer of Purchaser, dated the date of the Closing, stating that the conditions specified in Section 2.2(a) through (d), inclusive, have been fully satisfied, (B) certified copies of resolutions of Purchaser's board of directors authorizing and approving the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby and (C) such other documents or instruments as are required to be delivered at the Closing pursuant to the terms hereof or that Seller reasonably requests prior to the Closing Date to effect the transactions contemplated hereby.

ARTICLE II
CONDITIONS TO CLOSING

2.1 Conditions to Purchaser's Obligations. The obligations of Purchaser to consummate the transactions contemplated by this Agreement are subject to the satisfaction or express written waiver (unless otherwise specified herein) of the following conditions:

(a) The representations and warranties made by Seller in this Agreement and in any certificate delivered by Seller pursuant hereto which are not qualified as to materiality shall have been true and correct in all material respects and the representations and warranties which are qualified as to materiality shall be true and correct in all respects, in each case at and as of the Closing Date as though then made and as though the Closing Date were substituted for the date of this Agreement throughout such representations and warranties;

(b) Seller shall have performed and complied in all material respects with the obligations and covenants required by this Agreement to be performed or complied with by Seller on or prior to the Closing Date;

(c) Since December 31, 2004, there shall have been no material adverse change or development in the financial condition, operating results, assets, operations, prospects, or employee relations relating to the Premises and the businesses operated thereon taken as a whole (a "Material Adverse Effect" or "Material Adverse Change") nor shall there have been any change or development that could reasonably be expected to result in a Material Adverse Effect;

(d) No suit, action or other proceeding, or injunction, order, decree or judgment relating thereto, shall be threatened or pending before any court or

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governmental or regulatory official, body or authority in which it is sought to restrain or prohibit or to obtain damages or other relief in connection with the transactions contemplated hereby, or that could have a Material Adverse Effect or otherwise adversely affect in any material respect the right of Purchaser or its Affiliates to own, operate or control all or any portion of the Purchased Assets;

(e) Seller shall have received and obtained all third-party consents and approvals necessary to effect the transactions contemplated hereby as set forth on Schedule 2.1(e), in each case on terms reasonably satisfactory to Purchaser and Seller (collectively, the "Third-Party Approvals");

(f) Purchaser shall have received and obtained all governmental and regulatory consents and approvals necessary to effect the transactions contemplated hereby as set forth on Schedule 2.1(f), in each case on terms reasonably satisfactory to Purchaser and Seller ("Governmental Approvals");

(g) Seller and Purchaser shall have entered into a mutually agreeable transition services agreement (the "Transition Services Agreement"), if any, in the form and substance of Exhibit C and the Liquor License Agreements, in form and substance of Exhibit D-1 and Exhibit D-2 attached hereto;

(h) Seller shall have obtained releases of all Liens of whatever nature relating to the Purchased Assets (other than the Permitted Liens);

(i) All applicable waiting periods (or any extensions thereof) under the HSR Act, if any, shall have expired or otherwise been terminated;

(j) [Reserved];

(k) [Reserved];

(l) Purchaser shall be satisfied with the results of its due diligence investigation in its sole discretion (including without limitation Leases, Leasehold Improvements, Premises, title and survey due diligence, potential tax liabilities described in Section 9.2(c), and physical and environmental inspections) of Seller on or before the Due Diligence Deadline. For purposes of greater clarity, Purchaser's ability to terminate this Agreement due to its failure to be satisfied with its due diligence investigation shall not be limited in any way by, and may be based upon, information provided by Seller to Purchaser in draft Schedules delivered prior to the Signing Date. Failure of Purchaser to issue written notice to Seller to exercise its right to terminate this Agreement due to its failure to be satisfied with the results of its due diligence investigation on or before the Due Diligence Deadline, shall constitute a waiver of the condition set forth under this Section 2.1 (l);

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(m) Seller shall have delivered to Purchaser all other documents, agreements, instruments, certificates, affidavits and other items required under clauses (ii) and (iv) of Section 1.5(b);

(n) Purchaser must have received acquisition and working capital financing in amount and on terms satisfactory to Purchaser, in its sole discretion, to consummate the transactions contemplated by this Agreement;

(o) Purchaser must have received all required consents, waivers and approvals of Purchaser's Affiliates' lenders and Purchaser's and its Affiliates' landlords required to comply with existing agreements and to avoid default upon completion of the transactions contemplated by this Agreement, including any landlord agreements that may be required by Purchaser's Affiliates' lenders;

(p) Seller shall have obtained landlord estoppel certificates, dated no earlier than twenty-five (25) days prior to the Closing Date, from all landlords under the Leases in the form of Exhibit E-1, attached hereto, subject to such changes as may be approved by Purchaser in its reasonable discretion;

(q) Seller shall have obtained subtenant estoppel certificates from all subtenants under the Subleases in the form of Exhibit F attached hereto, subject to such changes as may be approved by Purchaser in its reasonable discretion;

(r) Purchaser must have entered into binding noncompetition agreements with the individuals and entities identified in Section 5.9 hereof;

(s) Purchaser shall have obtained from each Landlord of a Wind-Up Store Individual Premises a written agreement in the form of Exhibit E-2, subject to such changes as may be approved by Purchaser in its reasonable discretion;

(t) Seller must have entered into a binding agreement with HWA Properties, Inc. (the Portage landlord) documenting the rebates currently being provided;

(u) Seller, Purchaser, and Escrow Agent shall have entered into the Escrow Agreement;

(v) Purchaser must have received authorization from the board of directors of Spartan Stores, Inc., to consummate the transactions contemplated by this Agreement; and

(w) Purchaser must have received all amendments, waivers and approvals of the Cascade Store (#225) and Kentwood Store (#223) landlords, respectively, required to avoid default upon completion of the transactions contemplated by this Agreement, as specifically and solely relating to radius restriction provisions in the applicable Lease.

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All proceedings to be taken by Seller in connection with the consummation of the transactions contemplated hereby and all certificates, instruments and other documents required to effect the transactions contemplated hereby reasonably requested by Purchaser shall be reasonably satisfactory in form and substance to Purchaser. Any conditions specified in this Section 2.1 may be waived only in writing by Purchaser and specifying in reasonable detail the provision being waived.

2.2 Conditions to Seller's Obligations. The obligation of Seller to consummate the transactions contemplated by this Agreement is subject to the satisfaction or express written waiver of the following conditions as of the Closing:

(a) The representations and warranties made by Purchaser in this Agreement and in any certificate delivered by Purchaser pursuant hereto which are not qualified as to materiality shall have been true and correct in all material respects and the representations and warranties which are qualified as to materiality shall be true and correct in all respects, in each case at and as of the Closing Date as though then made and as though the Closing Date were substituted for the date of this Agreement throughout such representations and warranties;

(b) Purchaser shall have performed and complied in all material respects with the obligations and covenants required by this Agreement to be performed or complied with by Purchaser on or prior to the Closing Date;

(c) Purchaser and Seller shall have received or obtained all Governmental Approvals and Third-Party Approvals that are necessary for the consummation of the transactions contemplated hereby;

(d) No suit, action or other proceeding, or injunction, order, decree or judgment relating thereto, shall be threatened or pending before any court or governmental or regulatory official, body or authority in which it is sought to restrain or prohibit or to obtain damages or other relief in connection with the transactions contemplated hereby;

(e) All applicable waiting periods (or any extensions thereof) under the HSR Act shall have expired or otherwise been terminated;

(f) The BRZ Services Agreement is amended as described in Sections 1.1(c)(i) through (iii); and

(g) Purchaser shall have delivered to Seller all other documents, agreements, instruments, certificates, affidavits and other items required under clause (v) of Section 1.5(b).

All proceedings to be taken by Purchaser in connection with the consummation of the transactions contemplated hereby and all documents required to be delivered by Purchaser to effect the transactions contemplated hereby reasonably requested by Seller shall be reasonably

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satisfactory in form and substance to Seller. Any condition specified in this Section 2.2 may be waived only in writing by Seller and specifying in reasonable detail the provision being waived.

ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER

As an inducement to Purchaser to enter into this Agreement and consummate the transactions contemplated hereby, Seller hereby represents and warrants to Purchaser that:

3.1 Organization and Corporate Power. D&W is a corporation duly organized, validly existing and in good standing under the laws of the State of Michigan. DWAR is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Michigan. Seller has all requisite power and authority and all material qualifications necessary to own and operate the Purchased Assets as now conducted.

3.2 Authorization; No Breach; Approvals.

(a) The execution, delivery and performance of this Agreement, the other agreements contemplated hereby, and the consummation of the transactions contemplated hereby and thereby have been duly and validly authorized by all requisite corporate action on the part of Seller, and no other corporate proceedings on the part of the Seller are necessary to authorize the execution, delivery or performance of this Agreement or the other agreements contemplated hereby. This Agreement and the other agreements contemplated hereby to be executed and delivered by Seller constitute the valid and binding obligations of Seller, enforceable in accordance with its terms, except as may be limited by bankruptcy, insolvency or other laws affecting generally the enforceability of creditors' rights and by limitation on the availability of equitable remedies.

(b) Except as set forth on Schedule 3.2, the execution, delivery and performance of this Agreement and the other agreements contemplated hereby to be executed and delivered by Seller and the consummation of the transactions contemplated hereby and thereby does not and will not (i) conflict with or result in any breach, default or violation of any of the provisions of, (ii) give any third party the right to terminate or to accelerate any obligation under, (iii) result in the creation of any Lien of any kind upon any of the Purchased Assets, or (iv) require any authorization, consent, approval, exemption or other action by or notice to or filing with any court or other governmental or regulatory body or authority, under the provisions of Seller's articles of incorporation, operating agreement, or bylaws or any indenture, mortgage, lease, loan agreement, license, contract, commitment, or other agreement (including, without limitation, any supplier agreement) or instrument to which Seller or the Purchased Assets are bound or affected, or any law, statute, rule or regulation to which Seller or the Purchased Assets are subject.

(c) Without limiting the generality of the foregoing, except for this Agreement, there are no agreements, options, commitments or rights with, of or to any

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Person to purchase or otherwise acquire any of the Purchased Assets or any interests therein, except those entered into in the Ordinary Course of Business.

3.3 No Material Adverse Change. Since December 31, 2004, there has been no Material Adverse Change or any event that could reasonably be expected to result in a Material Adverse Change.

3.4 Financial Statements. Seller has delivered to Purchaser audited financial statements for Seller's fiscal years 2002, 2003, and 2004, and unaudited financial statements for the three and nine fiscal periods ended September 4, 2005 (collectively, the "Consolidated Financial Statements"). Before Closing Seller shall deliver copies of (i) all consolidated financial statements Seller has prepared for each full period before the Closing (the "Interim Financial Statements") and (ii) all Audited Financial Statements required under Section 5.16 of this Agreement. Collectively, the Consolidated Financial Statements, Interim Financial Statements, and Audited Financial Statements are referred to as the "Financial Statements." The Financial Statements have been and will be prepared in accordance with GAAP (except, as to the unaudited financial statements, for the omission of notes thereto and normal year-end audit adjustments, which will not be material, individually or in the aggregate), do and will fairly and accurately present Seller's financial position as of the dates indicated and the results of its operations as of the dates indicated and for the periods covered thereby, are not misleading, and are and will be true and correct.

3.5 Books and Records. Except as otherwise disclosed on Schedule 3.5, Seller's books of account, records, and work papers (including without limitation all documents delivered to Purchaser) are complete and correct; have been maintained in accordance with sound business practices, including the maintenance of an adequate system of internal controls; have been maintained on an accrual basis in accordance with GAAP; and accurately reflect, and will accurately reflect, the basis for the financial condition and the results of Seller's operations that are (and, as applicable, will be) set forth in the Financial Statements.

3.6 Financial Documents. All periodic financial statements and store level financial reports including without limitation sales reports, inventory reports, and financial statements (including without limitation the report given in connection with the computation of the Estimated Gift Certificates Amount) containing financial information which has been provided to Purchaser by Seller (or provided to the Auditors by Seller pursuant to Section 5.16) fairly and accurately, in all material respects, present the financial information contained therein, as of the dates indicated, accurately, in all material respects, reflect the information on Seller's books of accounts and records, and have been prepared in a manner consistent with and have been and can be reconciled to the financial data presented in Seller's audited financial statements. Seller has provided Purchaser with a full accounting of all corporate overhead charges and expenses (including the underlying data) and a description of all expense items whose allocation has been changed since December 31, 2004 from corporate overhead to a Retail Store(s) (or from a Retail Store(s) to corporate overhead), including the approximate date(s) during which such changes in allocation were made, which accounting and description are complete and accurate in all material respects.

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3.7 Absence of Certain Developments. Except as set forth on Schedule 3.7, since December 31, 2004, Seller has not with respect to the Premises, the Purchased Assets, or the Assumed Liabilities:

(a) sold, assigned, licensed, sublicensed, transferred, encumbered or permitted a Lien to attach to any Proprietary Rights (including the United States federal trademark registrations for D&W and the D&W logo) or other D&W intangible assets, disclosed any confidential information to any Person (other than Purchaser and Purchaser's representatives, agents, attorneys and accountants and Persons who are subject to an agreement to keep such information confidential), or abandoned or permitted to lapse any of the Proprietary Rights (including the United States federal trademark registrations for D&W and the D&W logo)

(b) suffered any extraordinary Losses in excess of One Hundred Thousand Dollars ($100,000) or waived any rights of material value, whether or not in the Ordinary Course of Business;

(c) suffered any damage, destruction or casualty loss to its tangible assets (including the Purchased Assets) in excess of One Hundred Thousand Dollars ($100,000), whether or not covered by insurance;

(d) made any change in any method of accounting or accounting policies, other than those required by generally accepted accounting principles which have been disclosed in writing to Purchaser; or

(e) entered into, amended or terminated any material contract or any government license or permit or taken any other action or entered into any other transaction other than in the Ordinary Course of Business.

3.8 Leased Real Property.

(a) The Leased Real Property Schedule and Wind-Up Stores Schedule set forth the address of each Leased Real Property and a complete and accurate list of each lease for each Individual Premises, in each case identifying the location, date, parties, and amendments to such agreements (the "Leases"). Seller has delivered to Purchaser complete and accurate copies of all the leases and subleases (including all assignments, amendments, extensions, renewals of such leases and subleases) comprising the Lease of such Leased Real Property and all guaranties of, and agreements providing for subordination, non-disturbance or attornment with respect to, each such Lease (collectively, the "Lease Documents").

(b) Leases. Except as specified on the Leased Real Property Schedule, (A) each Lease is in full force and effect in all material respects; (B) the assignment of each Lease to Purchaser in accordance with this Agreement does not require the consent of any other Person, will not result in a breach of, or default under, such Lease, or otherwise cause such Lease to cease to be in full force and effect on identical terms

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following the Closing; (C) Seller has no material disputes with any Landlords with respect to any Lease or any Leased Real Property and to Seller's Knowledge, no Landlord under any Lease has a dispute with Seller with respect to any Lease or any Leased Property; (D) neither Seller nor to Seller's Knowledge any other party to any Lease is in material breach or default under any Lease, and no event has occurred or circumstance exists which, with the delivery of notice, the passage of time or both, would constitute a breach or default under any Lease, or permit the termination or modification of any Lease or acceleration of rent under any Lease; (E) no portion of any security deposit tendered in accordance with any Lease has been applied with respect to a breach or default under such Lease which has not been restored in full; (F) Seller does not owe, and will not owe in the future, any brokerage commissions or finder's fees with respect to any Lease; (G) no party to any Lease (other than Seller) is an affiliate of Seller or otherwise has any economic interest in Seller; (H) Seller has not collaterally assigned or granted any other security interest in any Lease; (I) there are no Liens or encumbrances on the estate or interest created by any Lease; (J) none of the Leases obligates the tenant to operate a business on the Leased Real Property or prohibits the tenant from closing the business currently operated on the Leased Real Property or entitles the landlord to exercise any rights or remedies against the tenant if the tenant closes the business currently conducted on the Leased Real Property; (K) none of the Leases contains restrictions on the tenant's ability to operate or lease a pharmacy on the Leased Real Property; (L) none of the Leases obligates the tenant to maintain, repair, or replace the roof or the parking area of the Improvements on the Leased Real Property (except that the tenant may be obligated to reimburse the landlord under the Leases for the tenant's proportionate share of costs incurred by Landlord to maintain, repair, or replace the roof of the Improvements or any parking area located on the Leased Real Property); (M) to Seller's Knowledge, the landlord under the Leases has good and marketable title to the Leased Real Property and Seller has good and marketable title to all leasehold interests under the Leases; and (N) no person or firm possesses or occupies, or has the right to possess or occupy, any portion of any Leased Real Property, except for (i) that portion of any Leased Real Property that is a "common area" under the applicable Lease and (ii) those portions of any Leased Real Property occupied by subtenants pursuant to valid Subleases more particularly identified on Schedule 3.8(c). Notwithstanding the materiality qualifiers in (C) and (D) above, Seller shall use all commercially reasonable efforts to provide Purchaser with written information regarding each dispute, breach and default arising in, under, or in connection with a Lease.

(c) Sublease Documents. Schedule 3.8(c) sets forth the address of each Subleased Real Property and a complete and accurate list in all material respects of all subleases, licenses and other agreements (including all assignments, amendments, extensions, renewals of such subleases, licenses and other agreements) in each case identifying the location, date and parties to such agreements. Seller has delivered to Purchaser complete and accurate copies of each lease and sublease comprising the Sublease of such Subleased Real Property and all guaranties of, and agreements providing for subordination, non-disturbance or attornment with respect to, each such Sublease (collectively, the "Sublease Documents").

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(d) Subleases. Except as specified on Schedule 3.8(c), (A) Seller has not subleased, licensed or otherwise granted any Person the right to use or occupy any portion of any Leased Real Property; (B) each Sublease is in full force and effect in all material respects; (C) there are no material disputes with respect to any Sublease or any Subleased Real Property; (D) neither Seller or any other party to any Sublease is in material breach or default under any Sublease, and no event has occurred or circumstance exists which, with the delivery of notice, the passage of time or both, would constitute a breach or default under any Sublease; (E) no portion of any security deposit tendered in accordance with any Sublease has been applied with respect to a breach or default under such Sublease which has not been restored in full; (F) the subtenant, licensee or occupant of each Subleased Real Property has not assigned any rights or interests under any Sublease and has not subleased, licensed or otherwise granted the right to use or occupy any portion of the Subleased Real Property to any Person; (G) Seller does not owe, and will not owe in the future, any brokerage commissions or finder's fees with respect to any Sublease; (H) no party to any Sublease (other than Seller) is an affiliate of Seller or otherwise has any economic interest in Seller; and (I) Seller has not collaterally assigned or granted any other security interest in any Sublease; (J) to Seller's Knowledge, there are no Liens or encumbrances on the estate or interest created by any Sublease; (K) Seller has paid all inducements owing with respect to each Sublease and has constructed all improvements required to be constructed in accordance with each Sublease; and (L) no person or firm possesses or occupies, or has the right to possess or occupy, any portion of the Subleased Real Property, except the subtenant under the applicable Sublease.

(e) Improvements. Except as set forth in the Leasehold Improvements Schedule, Seller has good and marketable title to its respective Leasehold Improvements, free and clear of all Liens except Permitted Liens or any other lien that will be discharged or otherwise satisfied on or before the Closing Date. Other than the rights of Purchaser under this Agreement, there are no outstanding and presently existing options, rights of first offer or rights of first refusal to purchase any Leasehold Improvements. The Improvements are in a condition and repair that is sufficient for the operation of the Purchased Assets on the Leased Real Properties. To Seller's Knowledge, none of the Improvements encroach on any land that is not included in the Leased Real Properties or on any easement, and there are no encroachments on any portion of the Leased Real Properties by any buildings or improvements from adjoining real property, which encroachment would materially interfere with the use or occupancy of such Leased Real Property or the continued operation of the Purchased Assets.

(f) Access. To Seller's Knowledge, each Leased Real Property has legal access to an adjoining public street, and such access is not dependent on any land or interest in real property that is not included in such Leased Real Property.

(g) Utility Services. To Seller's Knowledge, all water, sewer, storm water, gas, electrical, telecommunications and other utility services for each Leased Real Property have been installed and are operational and sufficient for the operation of the Premises in a manner conducted by Seller prior to Closing. To Seller's Knowledge, all fees to connect and begin provision of such systems and services have been paid in full.

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To Seller's Knowledge, each such service enters each Leased Real Property from an adjoining public street or valid private easement in favor of the supplier of such service or appurtenant to such Leased Real Property.

(h) Condemnation and Litigation. There is no condemnation, expropriation or other proceedings in the nature of eminent domain pending or, to Seller's Knowledge, threatened, affecting any interest in any Leased Real Property.

(i) Compliance with Recorded Documents. To Seller's Knowledge, the current use and occupancy of the Leased Real Properties do not violate any easement, restriction, covenant, condition, restriction or similar provision in any recorded instrument or any zoning code or ordinance, building code or other law, regulation, ordinance, decree, or order regulating the use or occupancy of the Leased Real Property.

(j) Flood Hazard Area. To Seller's Knowledge, no portion of any Leased Real Property is located in a flood hazard area (as defined by the Federal Emergency Management Agency) that requires federal flood hazard insurance or any permits, licenses, variances, approvals and authorizations for the occupancy or use of such Real Property for the operation of the Purchased Assets.

(k) Insurability of the Real Property. Seller has not received any notice from any insurance company or any board of fire underwriters (or any entity exercising similar functions) (A) requesting that Seller performs any repairs, alterations, improvements to any Leased Real Property which Seller or a Subsidiary of Seller has not completed in full or (B) notifying such Seller of any defects or inadequacies in any Leased Real Property which would adversely affect the insurability of such Leased Real Property or the premiums for insurance.

3.9 Assets. Seller owns good and valid title to, or holds a valid leasehold interest in, all of the Purchased Assets, free and clear of all Liens, except for Permitted Liens and liens to be discharged or otherwise satisfied on or before the Closing Date. Except for the Excluded Assets and the rights and services to be provided under the Transition Services Agreement, the Purchased Assets include all of the assets, properties, rights (including intellectual property rights), services or interests, whether tangible or intangible, real or personal, that are necessary to conduct the businesses and operations historically conducted at the Premises. The buildings, Improvements, fixtures, machinery, equipment and other tangible assets (whether owned or leased) included in the Purchased Assets are, except for ordinary wear and tear, in good condition and repair, sufficient for the operation of the Purchased Assets on the Premises and usable in the Ordinary Course of Business.

3.10 Taxes. D&W's employer identification number is 38-1612832. DWAR's employer identification number is 36-4408071. Seller has duly and timely filed all Tax Returns it is required to file, including without limitation Tax Returns with respect to the Purchased Assets, except for those returns for which the time for filing thereof has been validly extended, and all such Tax Returns are true, correct and complete in all material respects. All Taxes due and payable by Seller, including without limitation that with respect to the Purchased Assets and

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the Premises, have been timely paid. There are no Liens for Taxes (other than Taxes not yet due and payable) upon any of the Purchased Assets or on the Premises.

3.11 Contracts and Commitments.

(a) Schedule 3.11 contains a true and complete list of any and all contracts and agreements entered into by Seller with any Person, and which are necessary to, are used in connection with, or relate to the operation and use of the Premises and the Purchased Assets (except any contract or agreement that involves performance of services or delivery of goods or materials of an annualized amount or value less than Twenty-five Thousand Dollars ($25,000)).

(b) Except as disclosed on Schedule 3.11 attached hereto, (i) Seller has performed all material obligations required to be performed by it and is not in default, or in breach of, any Assumed Contract, (ii) to Seller's Knowledge, no Assumed Contract has been breached or cancelled by the other party, and there is no anticipated breach by any other party to any Assumed Contract, (iii) no event or circumstance has occurred that, with notice or lapse of time or both, would constitute a default or breach under any Assumed Contract, (iv) except for Subleases, Seller has not assigned, delegated or otherwise transferred to any Person any of its rights, title or interest under any Assumed Contract, and (v) the Assumed Contracts are in full force and effect, and constitute legal, valid and binding agreements of D&W, enforceable in accordance with their respective terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws and principles of equity generally affecting the enforcement of creditors' rights.

(c) Purchaser has received a true and correct copy of all written contracts (and an accurate written description of all oral contracts) which are listed on the attached Assumed Contracts Schedule, together with all amendments, exhibits, attachments, waivers or other changes thereto.

(d) Other than the transactions contemplated by this Agreement, Seller is not a party to or bound by any agreement with respect to a possible merger, sale, restructuring, refinancing or other disposition of all or any material part of the Premises or the Purchased Assets.

3.12 Proprietary Rights.

(a) The Proprietary Rights Schedule lists all of the following Proprietary Rights used in the operation of the Premises: (i) Proprietary Rights registered or pending with the U.S. Patent and Trademark Office or the U.S. Copyright Office or any other similar domestic or foreign office, department or agency; (ii) material unregistered trademarks, service marks and trade names, (iii) internet domain names; (iv) material unregistered copyrights; (v) Proprietary Rights licenses; and (vi) any other material Proprietary Rights.

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(b) Except as disclosed in the Proprietary Rights Schedule:

(i) Neither Seller's conduct of the business associated with the operation of the Premises nor Seller's use of the Purchased Assets has infringed, misappropriated or otherwise conflicted with an intellectual property right of any Person. Seller is not aware of any facts that indicate a reasonable possibility of any of the foregoing and Seller has not received any notices regarding any of the foregoing, including, without limitation, any demands or offers to license any intellectual property from any Person.

(ii) To Seller's Knowledge, no Person has infringed, misappropriated or otherwise conflicted with any of the Proprietary Rights and Seller does not have Knowledge of any facts that indicate a reasonable possibility of any of the foregoing.

(c) The United States federal trademark registrations for D&W and the D&W logo are valid and enforceable and, to Seller's Knowledge, all other Proprietary Rights are valid and enforceable.

(d) Except for the Excluded Assets, immediately subsequent to Closing, the Proprietary Rights will be owned by or available for use by the Purchaser on terms and conditions identical to those under which the Seller owned or used the Proprietary Rights immediately prior to Closing.

3.13 Litigation. Except as set forth on Schedule 3.13, there are no actions, suits, proceedings, orders, charges, complaints, grievances, or investigations pending or, to Seller's Knowledge, threatened against or affecting the Purchased Assets (including, without limitation, the Leased Real Property) at law or in equity, by or before (or that could come before) any federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign. Seller is not subject to or bound by any outstanding orders, judgments or decrees of any court or governmental entity with respect to the Purchased Assets or the Assumed Liabilities.

3.14 Brokerage. There are no claims for brokerage commissions, finders' fees or similar compensation in connection with the transactions contemplated by this Agreement based on any arrangement or agreement made by or on behalf of Seller. Seller has not entered into an agreement with any broker, finder or investment bank pursuant to which such party would be entitled to any payment relating to or in connection with this Agreement and the transactions contemplated by this Agreement.

3.15 Employees.

(a) Except as disclosed on Schedule 3.15, with respect to the Purchased Assets: (i) there is no collective bargaining agreement or relationship with any labor organization; (ii) no manager (including store managers) at any Individual Premises has delivered notice to Seller indicating he or she has any present intention to terminate his or

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her employment; (iii) no manager is a party to any confidentiality, non-competition, proprietary rights or other such agreement between such employee and any other Person with respect to the Premises that would be material to the performance of such employee's employment duties, or the ability of Purchaser to operate the Premises; (iv) no labor organization or group of employees has filed any representation petition or made any written or oral demand for recognition; (v) to Seller's Knowledge, no union organizing or decertification efforts are underway or threatened and no other question concerning representation exists; (vi) within the past three (3) years, no labor strike, work stoppage, slowdown, or other material labor dispute has occurred, and none is underway or threatened; (vii) there is no material worker's compensation liability, experience or matter; (viii) there is no employment-related charge, complaint, claim, grievance, investigation, inquiry or obligation of any kind, pending or, to Seller's Knowledge, threatened in any forum, relating to an alleged violation or breach of any law, regulation or contract; and, (ix) to Seller's Knowledge, no employee or agent has committed any act or omission giving rise to liability for any violation or breach identified in subsection (viii) above.

(b) Schedule 3.15 sets forth (i) a list of all written employment agreements or severance agreements with any employees working at the Premises, and (ii) a list of all employees working at the Premises including the Individual Premises at which each employee works, each employee's status as an hourly or salaried employee, and each employee's status as full or part-time. Except as set forth in Schedule 3.15, there are no Employee Handbooks or other written personnel policies, rules or procedures applicable to employees working at the Premises and Seller has provided Purchaser with true and complete copies of all such documents.

(c) With respect to this transaction, any notice required under any law or agreement has been or shall be given, and all bargaining obligations with any employee representative have been, or prior to the Closing will be, satisfied. Within the past one (1) year, except as disclosed on Schedule 3.15, Seller has not implemented any plant closing or layoff of employees relating to the Premises that could implicate the Worker Adjustment and Retraining Notification Act of 1988, as amended, or any similar foreign, state or local law, regulation or ordinance (collectively, the "WARN Act"), and no such action will be implemented without advance notification to Purchaser. Set forth on Schedule 3.15 is a list of employees terminated by Seller at each Individual Premises during the ninety (90) day period immediately preceding the Signing Date, including the date of such termination. Seller shall update this Schedule to provide such information for the employees terminated at each Individual Premises for the ninety (90) day period immediately preceding the Closing Date.

3.16 Employee Benefit Plans.

(a) Schedule 3.16 contains a complete and correct list of each Employee Benefit Plan.

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(b) Each Employee Benefit Plan that is intended to meet the requirements of a "qualified plan" under Section 401(a) of the Code is so qualified, and there are no facts or circumstances that could adversely affect the qualified status of any such Employee Benefit Plan.

(c) To Seller's Knowledge, each Employee Benefit Plan has been maintained, funded and administered in accordance with its terms, the requirements of any applicable collective bargaining agreements, and the requirements of ERISA, the Code, and all other applicable laws. For each Employee Benefit Plan, all contributions and premium payments that are due have been made within the time periods prescribed by ERISA and the Code, and all contributions and premium payments for any period ending on or before the Closing Date that are not yet due have been made or properly accrued.

(d) Seller and each ERISA Affiliate are in material compliance with the requirements of COBRA.

(e) Neither Seller nor any ERISA Affiliate has participated in any Multiemployer Plan.

3.17 Compliance with Laws; Permits; Certain Operations. Except as set forth on Schedule 3.17, and to Seller's Knowledge, with respect to the Premises and the Purchased Assets:

(a) Seller has complied and is, in all material respects, in compliance with all applicable laws, ordinances, codes, rules, requirements and regulations of federal, state and local governments and all agencies thereof relating to the operation of the Premises (including, without limitation, The Americans with Disabilities Act of 1990, as amended, and all laws regulating zoning, buildings, and health and safety) and no notices have been received by and there are no claims filed and currently maintained against Seller alleging a violation of any such laws, ordinances, codes, rules, requirements or regulations. Seller is in compliance with any orders issued by governmental bodies relating to compliance with such laws, ordinances, codes, rules, requirements and regulations; and

(b) Seller holds all permits, licenses, certificates, registrations, accreditations or other authorizations (collectively, "Permits") of federal, state and local governmental agencies required for the operation of the Premises (including without limitation any board of fire underwriters), and the attached Permits Schedule sets forth a list of all of such Permits, including the expiration date for each. All such Permits have been issued and are in full force and effect. Seller has not received any notice from any governmental authority threatening a suspension, revocation, modification or cancellation of any such Permits. Seller is in compliance with all terms and conditions of the Permits.

3.18 Environmental Matters.

(a) Except as disclosed in the Environmental Schedule, with respect to the operations of Seller in connection with the Purchased Assets, Seller has complied with

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and is in compliance with all Environmental and Safety Requirements in all material respects.

(b) With respect to the operations of Seller in connection with the Purchased Assets, except in the Ordinary Course of Business and as permitted by all Environmental and Safety Requirements, Seller has not treated, stored, disposed of, arranged for or permitted the disposal of, transported or released, or exposed any person to, any hazardous or toxic substance or waste, pollutant, contaminant, asbestos, noise or odor so as to give rise to any liability for fines or penalties, obligations for investigation or cleanup, or damages for injuries to persons, property or the environment under Environmental and Safety Requirements; and, to Seller's Knowledge, there are no hazardous or toxic substances or wastes, pollutants, contaminants or asbestos present in or around any of the Premises in quantities or under circumstances that may give rise to liabilities for fines or penalties, obligations for investigation or cleanup, or damages for injuries to persons, property or the environment under Environmental and Safety Requirements.

(c) Seller has delivered to Purchaser complete copies of all environmental assessments, environmental compliance audits, environmental investigation reports, asbestos surveys, radon surveys, lead-based paint surveys, Baseline Environmental Assessments (within the meaning of Part 201 of the Michigan Natural Resources and Environmental Protection Act, MCL 324.20101 et seq. (hereinafter "BEAs"), and all material correspondence and documents relating to the environmental condition or compliance status of any of the Purchased Assets or Premises which are in Seller's possession or under its control.

(d) Except as disclosed in the Environmental Schedule, and to Seller's Knowledge there is not now and there has never been, an underground storage tank (UST), UST system, or component part thereof, present at any of the Premises, and Seller has provided to Purchaser copies of all documentation in Seller's possession or under its control regarding or referring to any such current or previous UST, system, or component.

(e) Except as set forth on the Environmental Schedule, to Seller's Knowledge no gas station or fueling center has ever been located within the Premises.

3.19 Commissary Each product produced at the Commissary and distributed for human consumption (the "Commissary Products") (i) has been produced, labeled, packaged, shipped and delivered in accordance with all applicable federal, state and local laws, including without limitation the Federal Food, Drug and Cosmetic Act and (ii) is fit for human consumption.

3.20 Insurance. All of the policies of Insurance covering the Purchased Assets are outstanding and in full force and will remain in full force until the Closing Date. All premiums with respect to such policies are currently paid and all duties of the insureds under the policies have been fully discharged.

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3.21 Solvency. Seller is not now insolvent and will not be rendered insolvent by any of the transactions contemplated by or arising in connection with this Agreement.

ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER

As an inducement to Seller to enter into this Agreement, Purchaser hereby represents and warrants to Seller as follows:

4.1 Corporate Organization and Power. Family Fare is a limited liability company duly organized and validly existing under the laws of the State of Michigan, with full power and authority to enter into this Agreement and to perform its obligations hereunder. Prevo's is a corporation duly organized, validly existing and in good standing under the laws of the State of Michigan, with full power and authority to enter into this Agreement and to perform its obligations hereunder.

4.2 Authorization.

(a) The execution, delivery and performance of this Agreement and the other agreements contemplated hereby to be executed and delivered by Purchaser and the consummation of the transactions contemplated hereby and thereby will have been duly and validly authorized by all requisite corporate action on the part of Purchaser, and no other corporate proceedings on the part of Purchaser are necessary to authorize the execution, delivery or performance of this Agreement or the other agreements contemplated hereby. This Agreement and the other agreements contemplated hereby to be executed and delivered by Purchaser constitute valid and binding obligations of Purchaser, enforceable against Purchaser in accordance with their respective terms, except as may be limited by bankruptcy, insolvency or other laws affecting generally the enforceability of creditors' rights and by limitation on the availability of equitable remedies.

(b) Except for consent required under Purchaser's Affiliates' existing credit agreements, the execution, delivery and performance of this Agreement and the other agreements contemplated hereby to be executed and delivered by Purchaser and the consummation of the transactions contemplated hereby and thereby does not and shall not (i) conflict with or result in any breach of any of the provisions of, (ii) constitute a default under, (iii) result in a violation of, (iv) give any third party the right to terminate or to accelerate any obligation under, or (v) require any authorization, consent, approval, exemption or other action by or notice to or filing with any court or other governmental or regulatory body or authority, under the provisions of Purchaser's certificate of incorporation or bylaws or any indenture, mortgage, lease, license, contract, understanding, commitment or other agreement or instrument to which Purchaser is bound or affected. Except for antitrust laws prohibiting certain mergers and acquisitions, the execution, delivery and performance of this Agreement and the other agreements

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contemplated hereby and thereby does not and shall not violate any law, statute, rule or regulation to which Purchaser is subject.

4.3 Brokerage. Except for arrangements for which Purchaser shall be solely responsible, there are no claims for brokerage commissions, finders' fees or similar compensation in connection with the transactions contemplated by this Agreement based on any arrangement or agreement made by or on behalf of Purchaser.

ARTICLE V
COVENANTS; OTHER AGREEMENTS

5.1 Conduct of Business.

(a) Except as otherwise expressly contemplated in this Agreement, in the Inventory Reduction Plan, or with the written consent of Purchaser, from the Signing Date until the earlier of the Closing or the termination of this Agreement pursuant to Article VI, Seller shall: (i) conduct the operations and affairs related to the Premises and the Purchased Assets only in the Ordinary Course of Business (including with respect to the payment of accounts payable of Seller related to the Purchased Assets) and in a manner that is consistent with Seller's current operating standards (including with respect to stocking, inventory, employee headcounts, repairs, and promotions) for the Premises; (ii) use commercially reasonable efforts to maintain and preserve intact the businesses operated in the Premises; (iii) maintain appropriate levels of Merchandise consistent with past practice; (iv) maintain capital expenditures in the Ordinary Course of Business and make all presently scheduled capital expenditures; and (v) maintain the Purchased Assets in good operating condition and repair (including without limitation the completion of all customary and regularly scheduled maintenance), subject to ordinary wear and tear. Without limiting the generality of the foregoing, except as disclosed on the Conduct of Business Schedule or otherwise expressly provided in this Agreement, in the Inventory Reduction Plan, or with the prior written consent of Purchaser, from the Signing Date until the Closing Date, Seller shall not:

(i) change the name of, or any signage at, any Retail Store (except that BRZ shall be permitted to change signage from time to time);

(ii) sell, assign, convey, pledge, mortgage, lease, dispose, license, transfer or otherwise dispose of, or impose any Liens upon, the Purchased Assets or any interest therein, other than in the Ordinary Course of Business;

(iii) except as agreed to by Purchaser pursuant to Section 5.1(b) hereof, make any material changes in the methods of operation and management of the Premises, including practices and policies relating to the purchasing of Merchandise, marketing, selling, pricing or accounting other than sale or consumption of inventory in the Ordinary Course of Business;

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(iv) except as agreed to by Purchaser pursuant to Section 5.1(b) hereof, alter its methods of allocating Merchandise and other assets and employees between the Retail Stores or, other than in the Ordinary Course of Business, otherwise move or transfer its Merchandise and other assets between the Retail Stores;

(v) take any action which is inconsistent with its obligations under this Agreement or with the consummation of the Closing;

(vi) disclose any proprietary confidential information to any Person (other than Purchaser and its Affiliates and other than in the Ordinary Course of Business in circumstances in which it has imposed reasonable confidentiality restrictions), or abandon or permit to lapse any Proprietary Rights;

(vii) voluntarily incur any material damage, destruction or loss (whether or not covered by insurance) with respect to the Purchased Assets (including, without limitation, demolish or remove existing Improvements in the Leased Real Property);

(viii) voluntarily fail to maintain in full force and effect any of the Assumed Contracts through their expiration dates, or take or permit any action constituting a material breach or default under any Assumed Contract, or modify, amend or terminate any of the Assumed Contracts other than (i) with respect to the Wind-Up Stores, (ii) in the Ordinary Course of Business or (iii) as contemplated by Section 1.1(c) and Sections 2.1 (t) and (w) hereof;

(ix) make or grant any bonus or any wage or salary increase to any employee or group of employees (except as required by pre-existing contracts or, in the case of non-officer employees, consistent with past practice or as the result of an employee promotion in the Ordinary Course of Business), or make or grant any increase in any employee benefit plan or arrangement, or amend or terminate any existing employee benefit plan or arrangement or adopt any new employee benefit plan or arrangement, except as may be consistent with past practice;

(x) enter into any contract or agreement that involves the performance of services or delivery of goods or materials of an amount or value greater than Twenty-Five Thousand Dollars ($25,000), unless approved by Purchaser, which approval shall not be unreasonably withheld or delayed; or

(xi) agree or commit to do any of the foregoing (other than negotiations with Purchaser and its representatives regarding the transactions contemplated by this Agreement).

(b) In order to reduce the inventory levels at the Retail Stores, and in further anticipation of potential differences in merchandising, product offerings, general obsolescence and other potential changes in operations arising as a result of transactions contemplated by this Agreement, Seller and Purchaser agree to cooperate in the

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development of a plan for the reduction of such inventory (the "Inventory Reduction Plan"). When negotiating and agreeing upon the Inventory Reduction Plan, the Parties agree to negotiate in good faith with respect to a possible increase in the Merchandise Value referenced in Section 1.3(b) of this Agreement if feasible and in the best interests of all Parties.

(c) Following the Closing Date, Purchaser shall license to Seller the Clearance Location for a sixty (60) day period, and shall license each Wind-Up Store Individual Premises (other than the Clearance Location) to Seller for up to a twenty-eight (28) day period. At the end of each applicable license period Seller shall cease all operations at the Wind-Up Store Individual Premises, terminate all employees at the Wind-Up Store Individual Premises, and promptly remove all Excluded Assets from such Wind-Up Store Individual Premises. While Seller is licensing such Wind-Up Store Individual Premises, Seller shall be permitted to sell Non-Acquired Merchandise from such locations; provided, however, that Seller shall not sell any alcoholic beverage inventory from the Wind-Up Store Individual Premises (other than the Clearance Location) after the Closing Date. Prior to the Closing Date Seller may transfer inventory from Remaining Retail Stores to the Wind-Up Stores consistent with the Inventory Reduction Plan. Prior to the expiration of the licenses for Wind-Up Store Individual Premises other than the Clearance Location, Seller may transfer inventory from such locations to the Clearance Location. The licenses described herein shall be in the form attached as Exhibit H.

5.2 Access to Information and Premises.

(a) Seller agrees that, between the Signing Date and the earlier of the Closing Date or the termination of this Agreement pursuant to Article VI, Purchaser, Purchaser's Affiliates' lenders, and their respective representatives shall, upon reasonable notice and so long as such access does not unreasonably interfere with the business operations of Seller (and subject to the rights of any landlord), have reasonable access during normal business hours, or other times reasonably agreed, to all Premises and shall be entitled to make such reasonable investigation of the properties, businesses and operations of Seller (including without limitation engineering studies, surveys, inspections relating to title work and physical inspections of Premises and/or Improvements and any environmental assessments, audits and investigations (including without limitation, the procurement and analysis of soil, water, air, and building samples at any of the Premises and the preparation and disclosure of BEAs) or to conduct a physical inspection of the Merchandise and physical inspection of the equipment and Improvements) located at the Premises and shall be entitled to examine the books and records and financial condition of Seller related to the operation of the Premises whether evidenced in writing, electronic data, computer software or otherwise, as they reasonably request, and to make extracts and copies (at Purchaser's sole expense) to the extent necessary of such items. Purchaser shall provide Seller with copies of its environmental assessments, audits, investigations and BEAs as soon as reasonably practicable after they become available. Purchaser shall not disclose any BEA conducted pursuant to this Section 5.2(a) to the Michigan Department of Environmental Quality ("DEQ") or any other agency of the State of

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Michigan (i) until after the Closing Date and (ii) only after first providing Seller with a copy of such BEA not less than five (5) business days prior to submittal to the DEQ and giving reasonable consideration to any comments on such BEA received from Seller within that time period. To the extent received by Purchaser after the Due Diligence Deadline, no information obtained from the investigation conducted pursuant to this Section 5.2(a) or otherwise received from Seller shall in any way affect any representations or warranties made herein, the conditions to the obligations of the respective Parties to consummate the transactions contemplated by this Agreement, or Purchaser's indemnification rights pursuant to Article VII. To the extent reasonably available to Seller, Seller shall provide Purchaser with access to daily operating results and other information concerning the performance of Seller's business.

(b) From the Signing Date through the Closing Date, Seller shall deliver to Purchaser, to the extent such reports are available to Seller, copies of (i) Seller's routine periodic financial statements for each Retail Store (by store and on a consolidated basis), in each case as soon as reasonably practicable (and in any event within fifteen (15) business days) following the end of each accounting period, (ii) routine weekly sales, margin, labor and other operational reports for each of the Retail Stores as soon as reasonably practicable following the end of each week, and (iii) such other routine available information regarding the operation of the Premises as Purchaser may reasonably request. Upon the execution of this Agreement, Seller shall provide Purchaser with copies of all historical data relating to Retail Store sales, profits and losses (including all underlying data and documents, in electronic format whenever possible).

5.3 Notification of Certain Matters; Schedules. Seller shall give written notice to Purchaser of (i) the occurrence or nonoccurrence of any event that has caused or could reasonably be expected to cause (A) any representation or warranty of Seller contained in this Agreement to be untrue or inaccurate at any time from the Signing Date to the Closing Date or (B) directly or indirectly, any Material Adverse Effect, or (ii) any material failure of Seller to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it hereunder. The delivery of any such notice on or before the date that is ten (10) days prior to the Due Diligence Deadline shall be deemed to create a new Schedule or to amend or supplement the pertinent Schedule for all purposes hereunder. Notwithstanding the foregoing, and for purposes of greater clarity, the delivery of any notice pursuant to this Section 5.3 following the date that is ten (10) days prior to the Due Diligence Deadline shall not (x) be deemed to amend or supplement any of the Schedules contemplated hereby, (y) be deemed to cure any breach of any representation, warranty, covenant or agreement or to satisfy any condition or (z) limit or otherwise affect the remedies available hereunder to the party receiving such notice.

5.4 Further Assurances.

(a) Subject to the terms and conditions of this Agreement, and except as may be limited by Section 5.4(b), the Parties shall use their commercially reasonable efforts to take, or cause to be taken, all action, and to do, or cause to be done, all things necessary, proper or advisable under applicable rule, law, statute, regulation, ordinance, order, statutory instrument or other binding action, including all common law, of or by a

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governmental or regulatory official, body or authority to consummate and make effective the transactions contemplated by this Agreement, including without limitation using their commercially reasonable efforts to obtain all licenses, permits, consents, approvals, authorizations, qualifications and orders of any governmental or regulatory official, body or authority and parties to the Assumed Contracts with Seller as are necessary for the consummation of the transactions contemplated hereby. Except as may be limited by Section 5.4(b), the Parties shall make on a prompt and timely basis all governmental or regulatory notifications and filings required to be made by them for the consummation of the transactions contemplated hereby.

(b) The Parties agree to (i) file all forms and related materials that they may be required to file with the Federal Trade Commission and the Antitrust Division of the United States Department of Justice under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (as amended) ("HSR Act"), (ii) in the event that Parties, under the advice of legal counsel, are required by the HSR Act to submit an initial HSR Act filing, use commercially reasonable efforts to obtain an early termination of the applicable waiting period, and (iii) make any further filings pursuant the HSR Act that may be necessary, proper, or advisable in connection therewith. The Purchaser and Seller shall each pay (in an amount not to exceed Twenty-Five Thousand Dollars ($25,000) each) one-half of the initial HSR Act filing fees. Each Party shall bear all costs it incurs in connection with the preparation of its own submission and its compliance with the HSR Act, including, without limitation, fees and costs of experts and counsel engaged for this purpose. In the event that either of the following occur: (i) the Parties, or either one of them, although under advice of legal counsel are not required by the HSR Act to submit an initial HSR Act notification/filing, nevertheless receive or are made aware of the issuance of a civil investigative demand (CID) (or its equivalent), from the FTC, the Antitrust Division or the Michigan State Attorney General; (ii) the FTC, the Antitrust Division or the Michigan State Attorney General institute formal proceedings as against the Parties (or any one of them) or the transactions contemplated by this Agreement; or (iii) the Parties, or either one of them, after having submitted an initial HSR Act filing, receive a request for second filing or for additional materials from the FTC, the Antitrust Division or the Michigan State Attorney General, then, any Party (the "Terminating Party") shall be entitled to terminate this Agreement upon prompt written notice to the other Party (the "Non-Terminating Party"). Within ten (10) business days of receipt of such notice of termination, the Non-Terminating Party may, upon written notice to the other Party, indicate its intention to proceed with the transactions contemplated by this Agreement, in which case this Agreement shall not terminate by reason of this Section 5.4(b) and the Non-Terminating Party shall thereafter be responsible and liable for all of the fees and other costs (incurred after the date of the termination notice) of both Parties of complying with the HSR Act, including, without limitation, filing fees, copying costs, fees and costs of experts and counsel engaged for this purpose, and the costs associated with any divestitures or dispositions of assets of either Party; provided, however, that the Terminating Party shall remain responsible and liable for up to Twenty-Five Thousand Dollars ($25,000) of the fees and other costs associated with making any initial HSR filing, and all other fees, costs and expenses incurred by such Terminating Party up to the date of the termination notice.

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The Non-Terminating Party shall thereafter respond as promptly as practicable under the circumstances to any inquiries and requests received from the FTC or the Antitrust Division for additional information or documentation and to all inquiries and requests received from the Michigan State Attorney General or other governmental authority in connection with antitrust matters. The Non-Terminating Party shall have the sole and exclusive right to determine, at its option, whether to negotiate, contest through litigation, or take other action in response to any position or claim advanced by a governmental agency. The Terminating Party shall, at its sole expense, use all commercially reasonable efforts to cooperate with the Non-Terminating Party. The Non-Terminating Party may not, without the written consent of the Terminating Party, enter into any agreement or commitment binding on the Terminating Party, including without limitation any agreement or commitment for the sale, divestiture or disposition of assets or business of either Purchaser or Seller. The Non-Terminating Party shall have the sole and exclusive right to direct and control any such litigation, negotiation or other action, with legal counsel of its own choosing. Notwithstanding anything to the contrary contained in this Agreement, the Non-Terminating Party may terminate this Agreement at any time following the delivery of its written notice to proceed delivered under Section 5.4(b) if all antitrust issues have not been resolved.

Each Party shall, subject to applicable law, promptly notify the other Parties of any written communication received from any governmental agency (including the Federal Trade Commission, the Antitrust Division or the Michigan State Attorney General) concerning antitrust issues, and shall permit the other Parties to review and approve in advance any proposed written communication to any such governmental agency. Subject to applicable law, the Non-Terminating Party shall not agree to participate in any substantive meeting or discussion with any governmental authority with respect to any filings, investigation or inquiry concerning this Agreement unless it consults with the other Parties in advance and, to the extent permitted by that governmental authority, gives the other Parties the opportunity to attend and participate in that meeting. The Non-Terminating Party shall, subject to applicable law, furnish the other Parties with copies of all correspondence, filings, written communications and memoranda setting forth the substance of oral communications between the Non-Terminating Party and its representatives on one hand, and any governmental authority or members of their respective staffs on the other hand, with respect to this Agreement.

(c) Seller shall, at its sole cost and expense, request and use commercially reasonable efforts to obtain the documents described in Sections 2.1(p) and (q).

(d) Purchaser shall, at its sole cost and expense, request and use commercially reasonable efforts to obtain the documents, approvals, consents, waivers, and/or commitments described in Sections 2.1(n) and (o).

5.5 Exclusivity; No Solicitation of Transactions. From and after the Signing Date and until the earlier of the Closing Date or the termination of this Agreement pursuant to Article VI, Seller shall not, directly or indirectly, (i) solicit, initiate, encourage or participate in negotiations

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or discussions regarding any Acquisition Proposal, regardless of whether such offer was unsolicited, or furnish any information with respect to, assist or participate in or facilitate in any other manner any effort or attempt by any Person (other than Purchaser and its Affiliates) to do or seek to do any of the foregoing or (ii) execute an agreement with respect to an Acquisition Proposal. From the Signing Date until the Closing Date (i) neither Seller nor any of its Affiliates shall discuss, negotiate or consummate any transaction involving the sale, exchange, liquidation, reorganization, or other disposition of all or any part of the Purchased Assets, except for the sale of inventory in the Ordinary Course of Business, and (ii) Seller will not file a voluntary petition for bankruptcy.

5.6 Further Transfers; Transition Assistance. Seller shall execute and deliver such further instruments of conveyance and transfer and take such additional action as Purchaser may reasonably request to effect, consummate, confirm or evidence the transfer to Purchaser of the Purchased Assets, the assumption by Purchaser of the Assumed Liabilities and the conduct by Purchaser of the businesses operated in the Premises (including with respect to obtaining and maintaining all licenses, permits, authorizations, accreditations and consents necessary or desirable in connection therewith), and Seller shall execute such documents as may be necessary to assist Purchaser in preserving or perfecting its rights in the Purchased Assets and its ability to operate the Premises. Following the Closing, Seller and Purchaser agree to cooperate with each other and to provide each other with all information and documentation reasonably necessary to permit the preparation and filing of all federal, state, local and other Tax Returns with respect to operation of the Premises; provided that each Party shall reimburse the other party for such other Party's reasonable out-of-pocket expenses in connection therewith.

5.7 Confidentiality. After the Closing, Seller shall maintain as confidential and shall not use or disclose (except to Seller's attorneys, accountants and other consultants or as required by law or as authorized in writing by Purchaser) any confidential information related to the Purchased Assets or the Premises. Seller further agrees to take all appropriate steps (and to cause each of its Affiliates to take all appropriate steps) to safeguard such confidential information and to protect it against disclosure, misuse, espionage, loss and theft. In the event Seller is required by law to disclose any confidential information related to the Purchased Asserts or the Premises, Seller shall promptly notify Purchaser in writing, which notification shall include the nature of the legal requirement and the extent of the required disclosure, and shall cooperate with Purchaser to preserve the confidentiality of such information consistent with applicable law.

5.8 Sales and Transfer Taxes. Seller shall pay all sales, transfer, deed, stamp, excise and other Taxes, fees and charges imposed as a result of the assignment of the Leases and the transfer of any other interests in real or personal property under this Agreement (collectively, the "Transfer Taxes"), together with any interest, penalties or additions to such Transfer Taxes. Seller and Purchaser shall cooperate in making, in a timely manner, all filings, returns, reports and forms as are necessary or appropriate to comply with all applicable laws in connection with the payment of Transfer Taxes and shall cooperate in good faith to minimize, to the fullest extent possible under such laws, the amount of any such Transfer Taxes.

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5.9 Non-Competition. On the Closing Date, Seller, Jeffrey A. Gietzen, Georgia R. Gietzen, Robert A. Woodrick, Aleicia D. Woodrick, Douglas E. Blease, Gerald E. Matthews, Betsy Raymond, Robert McDougall, Todd Buzzell, Ron Cox, and Doug Scholma and Purchaser shall enter into the applicable noncompetition agreement in the form attached as Exhibits G-1, G-2 and G-3.

5.10 Coupons and Gift Certificates. For two years following the Closing (or, if earlier, until the depletion of the Estimated Gift Certificate Amount and Estimated Coupon Amount), Purchaser shall honor all gift certificates, gift cards, coupons, rain checks, store scrip, key cards, club cards and similar promotional devices issued by Seller prior to Closing. The amounts of sales paid, discounts honored, and merchandise provided by honoring such items will be deducted from the Estimated Gift Certificate Amount or Estimated Coupon Amount as appropriate. At any time during which there is no remaining Estimated Coupon Amount, Purchaser may, at its option, either present Seller-issued and Purchaser-honored coupons, rain checks, key cards, club cards and/or similar promotional devices (or evidence thereof) to Seller for reimbursement (which reimbursement shall be paid promptly), or submit to Escrow Agent such honored items for reimbursement from the Escrow Funds in accordance with the Escrow Agreement. At any time during which there is no remaining Estimated Gift Certificates Amount, Purchaser may, at its option, either present Seller-issued and Purchaser-honored gift certificates, gift cards and/or store scrip to Seller for reimbursement (which reimbursement shall be paid promptly), or submit it to Escrow Agent such honored items for reimbursement from the Escrow Funds in accordance with the Escrow Agreement. At any time during which there are no Escrow Funds, if (i) Purchaser elects to honor Seller-issued coupons, rain checks, key cards, club cards and/or similar promotional devices (and there is no Estimated Coupon Amount), Seller shall promptly reimburse Purchaser for the amounts honored after delivery to Seller of Seller-issued and Purchaser-honored coupons, rain checks, key cards, club cards and/or similar devices (or evidence thereof) or (ii) Purchaser elects to honor Seller-issued gift certificates, gift cards and/or store scrip (and there is no Estimated Gift Certificates Amount), Seller shall promptly reimburse Purchaser for the amounts honored after delivery to Seller of Seller-issued and Purchaser-honored gift certificates, gift cards, and/or store scrip.

5.11 Press Release. No Party, or its directors, officers, employees, accountants, counsel or other representatives, will make any public or other disclosure or public or other release of information concerning the existence or the subject matter of this Agreement without the consent of the other Parties; notwithstanding the foregoing, Purchaser shall be entitled to: (i) file or furnish to the Securities Exchange Commission any documents or disclosures (including Form 8-K) it reasonably believes to be required by law; or (ii) make any HSR Act filing; provided, that prior to taking any of the actions described in (i)-(ii), Purchaser shall have delivered notice of such action (and an opportunity to review the proposed disclosure) at least twenty-four (24) hours prior to taking such action, unless in Purchaser's reasonable judgment earlier disclosure is required by applicable law or regulation, in which case Purchaser shall provide as much advance notice to Seller as is reasonably practical.

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5.12 Condemnation; Damage to Property.

(a) If, between the Signing Date and the Closing Date, any condemnation or eminent domain proceedings occur which result in the taking of all or any portion of any of the Individual Premises, Purchaser may, in its sole discretion, (i) take all condemnation or eminent domain proceeds payable to Seller that would make Purchaser whole, proceed with the Closing and Seller shall assign to Purchaser all of Seller's right, title and interest in and to any award made in connection with such condemnation or eminent domain proceedings and Purchaser shall pay the full Purchase Price without any credit or reduction thereto or (ii) terminate this Agreement.

(b) Risk of loss, destruction or damage to any of the Purchased Assets or the Premises shall be borne by Seller until the Closing. If any loss, destruction or damage to any of the Purchased Assets or the Premises occurs prior to the Closing (each a "Loss Event"), Seller shall repair, replace and restore the lost, destroyed or damaged property to its former condition; provided that if Seller is not able to repair, replace or restore such lost, destroyed or damaged property prior to the Closing Date, as determined by Purchaser (after good faith negotiations with Seller) in its reasonable discretion, Purchaser may, in its sole discretion, (i) purchase the Individual Premise at the Closing without reduction in the Purchase Price, whereupon Seller shall assign any casualty award under any applicable insurance policy to Purchaser and shall pay Purchaser an amount equal to any deductible under such insurance policy or (ii) terminate this Agreement.

5.13 Defects. In the event that during Purchaser's inspection of the Premises, in Purchaser's good faith judgment, Purchaser discovers a material defect in the roof of any of the Improvements on or before the date that is fourteen (14) days prior to the Closing Date, and Seller (as tenant) is responsible for roof repairs under the pertinent Lease, Purchaser shall give Seller notice thereof. Seller may correct the roof defect(s) in accordance with applicable law and consistent with generally accepted commercial practices, on or before Closing. In the event Seller does not correct the defect(s) on or before the Closing Date, Seller may proceed with the Closing but direct Purchaser to escrow an amount of the Closing Date Cash Payment equal to one hundred percent (100%) of the estimated cost to correct the defect(s) (any proceeds remaining in escrow following correction of the defect(s) shall be released to Seller). If Seller neither corrects the defect(s) nor directs Purchaser to escrow such funds, Purchaser may terminate this Agreement. To the extent the funds escrowed pursuant to this Section 5.13 are insufficient, the funds beyond such escrowed amount needed to correct the roof defect shall be deemed an Excluded Liability. In the event Seller (as tenant) is not responsible for roof repairs under the pertinent Lease and Purchaser has delivered notice of a roof defect pursuant to this Section 5.13, Seller shall notify the pertinent landlord of such roof defect and, together with Purchaser, request from such landlord that remediation or repair efforts be commenced.

5.14 Use of D&W Trademark. Seller agrees (on behalf of itself and its Affiliates and Subsidiaries) that from and after the Closing it (and each of its Affiliates and Subsidiaries) will not use the name "D&W," a combination of the name "D&W" with "Food Center" (so as to read

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"D&W Food Center"), or any confusingly similar name or any name deceptively similar to such name.

5.15 [Reserved]

5.16 Audited Financial Statements. With assistance and guidance from Purchaser, Seller shall prepare and deliver to Purchaser, at or prior to the Closing, financial statements in a form and content which comply with Regulation S-X ("Regulation S-X") promulgated under the Securities Exchange Act of 1934, as amended, as requested by (and for periods reasonably requested by) Purchaser in connection with its Securities and Exchange Commission filings relating to the transactions contemplated by this Agreement (collectively, the "Audited Financial Statements"). The Audited Financial Statements shall be prepared pursuant to Regulation S-X except that supporting schedules are not required. Seller shall also provide a manually signed accountant's report pursuant to Rule 2-02 of Regulation S-X. Seller shall bear its expenses and costs associated with the preparation of the Audited Financial Statements. Purchaser shall bear all expenses and fees charged by the auditors (the "Auditors") for auditing the Audited Financial Statements and providing their signed accountant's report. Upon request, Purchaser shall reimburse Seller for Seller's reasonable costs (excluding benefit costs) associated with (a) employing one (1) additional employee through the Closing Date to assist Seller in the preparation of the Audited Financial Statements and other matters related to this Agreement; and (b) provided Seller works diligently prior to the Closing Date to fulfill its obligations under this Section 5.16, employing any and all personnel after the Closing Date as may be required for Seller to comply with this Section 5.16.

5.17 Confidentiality Agreements. At the Closing, Seller shall assign to Purchaser all of its rights under any and all confidentiality agreements with any other parties with whom Purchaser discussed possible sale of all or any of the Premises and which remain in effect at the date of Closing. As of the Closing, the Confidentiality Agreement shall terminate.

5.18 Schedules & Exhibits. Each Party acknowledges that, except for (i) the identification of Individual Premises on the Leased Real Property Schedule and the Wind-Up Stores Schedule; (ii) Schedules 1.3(b) (Merchandise Value Schedule) and 8 (Non-Acquired Merchandise Schedule); and (iii) Exhibits B-1 (Assignment and Assumption Agreement (Lease)), B-2 (Assignment and Assumption Agreement (Sublease)), B-3 (Assumption Agreement (General)), D-1 (Liquor License Transfer Agreement), D-2 (Liquor License Purchase Agreement (Clearance Location)), E-1 (Estoppel Certificate (Landlord/Seller)), E-2 (Agreement Regarding Closing Store), F (Estoppel Certificate (Subtenant)), G-1 (Noncompetition Agreement (Shareholder)), G-2 (Noncompetition Agreement (Officer)), G-3 (Noncompetition Agreement (Seller)), H (Wind-Up Store License), and I (Escrow Agreement), the schedules and form of exhibits to this Agreement are not final as of the Signing Date. Such preliminary schedules may be revised or finalized by Seller no later than the date that is on or before ten (10) days prior to the Due Diligence Deadline (except for Schedule 1.1(a)(iv) (Assumed Contracts Schedule), which shall be completed by Purchaser and Seller no later than the date that is on or before ten (10) days prior to the Due Diligence Deadline). Exhibits A (Process and Procedures (Taking Inventory)), C (Transition Services Agreement) (if necessary), and J (Opinion of Counsel) shall be revised and finalized by mutual agreement of the Parties no later than the date that is ten (10) days prior to the Due Diligence Deadline. All schedules in this Agreement, regardless of when

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finalized, are referred to herein as "Schedules", collectively. All exhibits in this Agreement, regardless of when finalized, are referred to herein as "Exhibits", collectively.

5.19 Employees. Immediately before the Closing Date, Seller shall terminate all individuals primarily employed at the Premises, except that Seller shall continue to be the employer of all of Seller's employees at the Wind-Up Store Individual Premises until, and shall terminate all such employees immediately before, the date of termination or expiration of the applicable license. Purchaser shall have no obligation to rehire or otherwise retain any of Seller's employees. Purchaser shall consider the application of each Seller employee who submits an application and whose job location as of the Closing Date is at the Premises. Purchaser shall consider such employees for positions with Purchaser's operations following the Closing Date. Seller agrees to cooperate with Purchaser in the delivery by Seller of any WARN or similar notice to such employees. Seller shall obtain insurance coverage through a third-party carrier to satisfy the continuation coverage requirements of COBRA for all employees of Seller who are not hired by Purchaser.

5.20 Caledonia Location. Prior to the Closing Date, Seller shall, at its sole expense, have (i) completed and opened for business the expansion of the Retail Store located in Caledonia, (ii) ensured that all contractors and subcontractors have been fully paid in connection with the expansion, and (iii) obtained the discharge of any Liens attaching or arising as a result of or in connection with the expansion. For purposes of greater clarification, equipment ordered by Seller in connection with such expansion shall be considered part of the Purchased Assets and shall be delivered free and clear of all Liens (except for Permitted Liens), regardless of the location of such equipment as of the Closing Date.

5.21 Liquor License Agreements. Simultaneously with the execution and delivery of this Agreement, Seller and Purchaser shall enter into a Liquor License Transfer Agreement (in the form and substance of Exhibit D-1) for the transfer of the liquor licenses pertaining to the Leased Real Property (other than the Clearance Location Liquor License) and the alcoholic beverage inventory located at the Remaining Retail Stores and a Liquor License Purchase Agreement (in the form and substance of Exhibit D-2) for the purchase of the Clearance Location Liquor License (collectively, the "Liquor License Agreements"). Upon the execution of the Liquor License Agreements, Purchaser shall promptly make applications to the applicable governmental authorities to transfer such liquor licenses from Seller to Purchaser. Said applications shall be diligently pursued by Purchaser, at Purchaser's expense. Seller shall cooperate with Purchaser and provide any documents and/or information reasonably necessary to assist in effectuating said transfers and execute such consents or other papers as may reasonably be required, at Seller's expense. The transfer of the liquor licenses and the alcoholic beverage inventory at the Premises shall proceed and be governed according to the provisions of the Liquor License Agreements and the rules and regulations of the Michigan Liquor Control Commission. Should the transaction anticipated by and described in this Agreement not proceed to Closing, then the Liquor License Agreements shall automatically be deemed null and void and of no further force or effect and Purchaser shall take all appropriate steps reasonably required by Seller to terminate all liquor license transfer applications.

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ARTICLE VI
TERMINATION

6.1 Events of Termination. This Agreement may be terminated and abandoned at any time prior to the Closing:

(a) By mutual written consent of Purchaser and Seller;

(b) By Purchaser:

(i) pursuant to and in accordance with Sections 5.4(b), 5.12, or 5.13;

(ii) notwithstanding any other provision hereof, if the Closing shall not have occurred before the Termination Date;

(iii) if any of the conditions to the obligations of Purchaser set forth in Section 2.1 shall have become incapable of fulfillment other than as a result of a breach by Purchaser of any covenant or agreement contained in this Agreement, and such condition is not waived by Purchaser;

(iv) if there shall be a breach by Seller of any representation or warranty, or any covenant or agreement contained in this Agreement which would result in a failure of an unwaived condition set forth in Section 2.1 and which breach cannot be cured or has not been cured by the earlier of (i) twenty (20) days after the giving of written notice by Purchaser to Seller of such breach and (ii) the Termination Date;

(v) if Purchaser, in its sole discretion, is not satisfied with the results of its due diligence investigation of Seller on or before the Due Diligence Deadline;

(vi) if Purchaser, in its sole discretion, does not accept each of the revised final Schedules or the form of the Exhibits on or before the Due Diligence Deadline; or

(vii) if there has been a Material Adverse Change (other than a Material Adverse Change arising from the actions contemplated in Section 5.1(b)).

(i) notwithstanding any other provision hereof, if the Closing shall not have occurred before the Termination Date;

(ii) if any condition to the obligations of Seller set forth in Section 2.2 shall have become incapable of fulfillment other than as a result of a breach by

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Seller of any covenant or agreement contained in this Agreement, and such condition is not waived by Seller;

(iii) if there shall be a breach by Purchaser of any representation or warranty, or any covenant or agreement contained in this Agreement which would result in a failure of a condition set forth in Section 2.2 and which breach cannot be cured or has not been cured by the earlier of (i) twenty (20) days after the giving of written notice by Seller to Purchaser of such breach and (ii) the Termination Date; or

(iv) pursuant to and in accordance with Section 5.4(b).

In the event of termination of this Agreement by either Seller or Purchaser as provided in this Section 6.1, this Agreement shall forthwith become void and there shall be no liability on the part of any Party to any other Party under this Agreement, except for the provisions of Article IX which shall continue in full force and effect following any termination and except that nothing herein shall relieve any Party from liability for any knowing or willful breach of this Agreement prior to such termination.

ARTICLE VII
INDEMNIFICATION

7.1 Survival of Representations and Warranties. The representations and warranties in this Agreement and the Schedules attached hereto shall survive the Closing as follows:

(a) the representations and warranties in Section 3.1 (Organization and Power), Section 3.2(a) (Authorization), Section 3.10 (Taxes), and Section 3.14 (Brokerage) and in the certificate required to be delivered by Seller pursuant to Section 1.5(b)(iv)(A) with respect to Section 3.1, Section 3.2(a), Section 3.10 and Section 3.14 (collectively, the "Fundamental Representations"), and the representations and warranties in Section 4.1 (Organization and Power), Section 4.2(a) (Authorization) and Section 4.3 (Brokerage), and in the certificate required to be delivered by Purchaser pursuant to Section 1.5(b)(v)(A) with respect to Section 4.1, Section 4.2(a) and Section 4.3, and any representation and warranty fraudulently given, shall not terminate;

(b) the representations and warranties in Section 3.18 (Environmental Matters) and in the certificate required to be delivered by Seller pursuant to Section 1.5(b)(iv)(A) with respect to Section 3.18, shall terminate on the fifth (5^th) anniversary of the Closing Date;

(c) all other representations and warranties in this Agreement and the Schedules attached hereto (including the certificate required to be delivered by Seller pursuant to Section 1.5(b)(iv)(A) and the certificate required to be delivered by Purchaser pursuant to Section 1.5(b)(v)(A)) shall terminate on the second (2^nd) anniversary of the Closing Date;

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provided that any representation or warranty in respect of which indemnity may be sought under Section 7.2, and the indemnity with respect thereto, shall survive the time at which it would otherwise terminate pursuant to this Section 7.1 if written notice of the inaccuracy or breach thereof giving rise to such right of indemnity shall have been given to the party against whom such indemnity may be sought prior to such time. The representations and warranties in this Agreement and the Schedules attached hereto shall survive for the periods set forth in this Section 7.1 and shall in no event be affected by any investigation, inquiry or examination made following the Due Diligence Deadline for or on behalf of Purchaser or Seller, or the knowledge of any of Purchaser's or Seller's officers, directors, shareholders, employees or agents acquired after the Due Diligence Deadline or the acceptance by Purchaser or Seller of any certificate or opinion hereunder.

7.2 General Indemnification.

(a) Indemnification for Benefit of Purchaser. Except as set forth below, Seller (jointly and severally among each Seller) shall indemnify Purchaser Parties and save and hold each of them harmless against and pay on behalf of or reimburse such Purchaser Parties as and when incurred for any Losses which any such Purchaser Party may suffer, sustain or become subject to, as a result of, in connection with, relating or incidental to or by virtue of (i) any breach of any representation or warranty of Seller under this Agreement or any of the Schedules attached hereto (as they may be supplemented pursuant to Section 5.3 on or before the date that is ten (10) days prior to the Due Diligence Deadline), or in any of the certificates furnished to Purchaser by Seller pursuant to this Agreement, (ii) any nonfulfillment or breach of any covenant or agreement by Seller under this Agreement or any of the Schedules attached hereto (as may be supplemented pursuant to Section 5.3 on or before the date that is ten (10) days prior to the Due Diligence Deadline), (iii) any Excluded Liability, (iv) Seller's termination of any employee or employees of Seller, and (v) any operations or assets of Seller or its Affiliates that do not constitute Purchased Assets. Seller shall not have any liability for indemnification pursuant to Section 7.2(a)(i) until and then only to the extent the aggregate amount of all Losses arising through Section 7.2(a)(i) and incurred by Purchaser for which indemnification may be sought exceeds Five Hundred Thousand Dollars ($500,000) (the "Basket Amount"). With respect to any breach by Seller of any representation or warranty, any qualifications or exceptions relating to materiality and Material Adverse Effect shall be disregarded (i.e., Material Adverse Effect shall be replaced with adverse effect) for purposes of determining whether, and the extent and the amount to which, Purchaser shall be entitled to indemnification hereunder with respect to such representations and warranties. In furtherance of the foregoing, and for the avoidance of doubt, the calculation of the Basket set forth in this Section 7.2(a) shall include any Losses incurred by Purchaser for which Purchaser would have been entitled to claim indemnification under this Article VII with respect to a breach of a representation or warranty but for such claim being excluded as a result of such representation or warranty being qualified by materiality or Material Adverse Effect.

(b) Indemnification for Benefit of Seller. Except as set forth below, Purchaser shall indemnify Seller, its Affiliates, shareholders, directors and employees (collectively,

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"Seller Parties") and hold them harmless against any Losses which any such Seller Party may suffer, sustain or become subject to, as the result of, in connection with, relating or incidental to or by virtue of (i) any breach of any representation or warranty of Purchaser under this Agreement or any of the Schedules attached hereto, or in any of the certificates furnished pursuant to this Agreement, (ii) any nonfulfillment or breach of any term, covenant, condition or agreement by Purchaser under this Agreement or any of the Schedules attached hereto, (iii) post-closing liquor license violations by Purchaser, or (iv) the nonpayment or breach by Purchaser of any Assumed Liability. Purchaser shall not have any liability for indemnification pursuant to Section 7.2(b)(i) until and then only to the extent the aggregate amount of all Losses arising through Section 7.2(b)(i) and incurred by Seller for which indemnification may be sought exceeds Five Hundred Thousand Dollars ($500,000) (the "Purchaser Basket Amount"). With respect to any breach by Purchaser of any representation or warranty, any qualifications or exceptions relating to materiality shall be disregarded (i.e., Material Adverse Effect shall be replaced with adverse effect) for purposes of determining whether, and the extent and the amount to which, Seller shall be entitled to indemnification hereunder with respect to such representations and warranties. In furtherance of the foregoing, and for the avoidance of doubt, the calculation of the Purchaser Basket set forth in this Section 7.2(b) shall include any Losses incurred by Seller for which Seller would have been entitled to claim indemnification under this Article VII with respect to a breach of a representation or warranty but for such claim being excluded as a result of such representation or warranty being qualified by materiality or Material Adverse Effect.

(c) Manner of Payment; Limitation. Notwithstanding any other provision hereof, any indemnification of Purchaser Parties pursuant to this Section 7.2 shall be paid first out of the Escrow Funds after Purchaser's presentation of a claim to Escrow Agent as provided in the Escrow Agreement. When the Escrow Funds are exhausted, such indemnification obligations shall be the joint and several liability of D&W and DWAR. Any indemnification of Purchaser Parties (following the disbursement of all Escrow Funds) or Seller pursuant to this Section 7.2 shall be effected by wire transfer of immediately available funds from Seller or Purchaser, as the case may be, to an account designated by Purchaser or Seller, as the case may be, within ten (10) days after the determination thereof. Any such indemnification payments shall include interest at a rate per annum equal to the prime rate of interest announced from time to time in The Wall Street Journal calculated on the basis of the actual number of days elapsed over 360, from the date any such Loss is suffered or sustained to the date of payment. All indemnification payments under this Section 7.2 shall be deemed adjustments to the Purchase Price set forth in Section 1.3(a) above. No Party shall be liable for indemnification payments to the extent Losses are offset by either (i) a Tax deduction, credit, refund or other reduction in Tax that actually has been or actually and incontrovertibly will be realized by an Indemnitee due to the applicable Losses or (ii) insurance proceeds actually received or contractually owing, in either case, to the extent such benefit or proceeds arise as a result of the act, omission, breach, or event that gave rise to the indemnification obligation. Seller's total liability for indemnification under Section 7.2(a)(i) shall not exceed Nine Million Dollars ($9,000,000) (the "Cap"); provided however, that this limit shall not apply to indemnification obligations arising as

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a result of any representation and warranty fraudulently given. For purposes of greater clarity, the Basket Amount and Cap shall not be applicable to indemnification claims arising pursuant to Section 7.2(a)(ii), (iii), (iv), or (v). The indemnification provisions of this Section 7.2, together with any equitable relief a party may be entitled to, constitute the sole and exclusive remedies with respect to any and all claims relating to the subject matter of this Agreement.

(d) Defense of Third Party Claims. Any party making a claim for indemnification under this Section 7.2 (an "Indemnitee") shall notify the indemnifying party (an "Indemnitor") of the claim in writing promptly after receiving written notice of any action, lawsuit, proceeding, investigation or other claim against it (if by a third party), describing the claim, the amount thereof (if known and quantifiable), and the basis thereof; provided that the failure to so notify an Indemnitor shall not relieve the Indemnitor of its obligations hereunder except to the extent that (and only to the extent that) such failure shall have caused the damages for which the Indemnitor is obligated to be greater than such damages would have been had the Indemnitee given the Indemnitor prompt notice hereunder. Any Indemnitor shall be entitled to participate in the defense of such action, lawsuit, proceeding, investigation or other claim giving rise to an Indemnitee's claim for indemnification at such Indemnitor's expense, and at its option (subject to the limitations set forth below) shall be entitled to assume the defense thereof by appointing counsel reasonably acceptable to the Indemnitee to be the lead counsel in connection with such defense; provided further that, prior to the Indemnitor assuming control of such defense it shall first (i) verify to the Indemnitee in writing that such Indemnitor shall be fully responsible (with no reservation of any rights) for the entirety of all liabilities and obligations relating to such claim for indemnification and that it will provide full indemnification (whether or not otherwise required hereunder) to the Indemnitee with respect to such action, lawsuit, proceeding, investigation or other claim giving rise to such claim for indemnification hereunder and (ii) enter into an agreement with the Indemnitee in form and substance satisfactory to the Indemnitee which agreement unconditionally guarantees the payment and performance of any liability or obligation which may arise with respect to such action, lawsuit, proceeding or investigation; and provided further, that:

(i) the Indemnitee shall be entitled to participate in the defense of such claim and to employ counsel of its choice for such purpose; provided that the fees and expenses of such separate counsel shall be borne by the Indemnitee (other than any fees and expenses of such separate counsel that are incurred prior to the date the Indemnitor effectively assumes control of such defense which, notwithstanding the foregoing, shall be borne by the Indemnitor);

(ii) the Indemnitor shall not be entitled to assume control of such defense and shall pay the fees and expenses of counsel retained by the Indemnitee if (A) the claim for indemnification relates to or arises in connection with any criminal proceeding, action, indictment, allegation or investigation; (B) the claim seeks an injunction or equitable relief against the Indemnitee; (C) upon petition by the Indemnitee, the appropriate court rules that the Indemnitor failed or is failing

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to vigorously prosecute or defend such claim; or (D) the Indemnitee reasonably believes that the Loss relating to such claim for indemnification could exceed the Cap, if applicable to such indemnification claim;

(iii) if the Indemnitor shall control the defense of any such claim, the Indemnitor shall obtain the prior written consent of the Indemnitee before entering into any settlement of a claim or ceasing to defend such claim if, pursuant to or as a result of such settlement or cessation, injunctive or other equitable relief will be imposed against the Indemnitee or if such settlement does not expressly and unconditionally release the Indemnitee from all liabilities and obligations with respect to such claim, with prejudice; and

(iv) Seller shall not be permitted to assume any defense of Purchaser relating to Taxes or Tax Returns without Purchaser's express written consent.

(e) Expenses of Government Investigation. Except in connection with any failure to make payments as described in Section 5.4(b), no Party shall have any obligation to indemnify any other Party for any legal fees and costs, expert fees and costs, fines, penalties, damages or awards or costs of any kind incurred in connection with any governmental antitrust-related investigation or litigation concerning the transactions contemplated by this Agreement.

ARTICLE VIII
CERTAIN DEFINITIONS

For purposes of this Agreement, the following terms have the meanings set forth below:

"Acquisition Proposal" means (other than transactions contemplated by this Agreement) any contract, proposal, offer or other indication of interest relating to (i) a merger, consolidation, tender offer, exchange offer, or other business combination or other similar transaction involving the Seller, (ii) a sale, lease, exchange, mortgage, transfer or other disposition, in a single transaction or series of related transactions, of any of the Purchased Assets (except for sale and consumption of inventory in the ordinary course of business), or (iii) a purchase or sale of Seller's securities, in a single transaction or series of related transactions, representing twenty percent (20%) or more of the voting power of the capital stock of (or other ownership interest in) Seller.

"Affiliate" of any particular Person means any other Person controlling, controlled by or under common control with such Person. For purposes of this definition, "control" (including the terms "controlling," "controlled by" and "under common control with") means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise, and such "control" will be presumed if any Person owns 25% or more of the voting capital stock or other ownership interests, directly or indirectly, of any other Person.

"Assumed Contracts" has the meaning set forth in Section 1.1(a)(iv).

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"Assumed Liabilities" has the meaning set forth in Section 1.2(a).

"Audited Financial Statements" and "Auditors" have the meanings set forth in Section 5.16.

"Basket Amount" has the meaning set forth in Section 7.2(a).

"BEAs" has the meaning set forth in Section 3.18(c).

"BRZ" has the meaning set forth in Section 1.1(a)(vii).

"BRZ Services Agreement" means the Services Agreement made as of July 18, 2005, by and among Seller, BRZ Michigan, LLC and BRZ, LLC, relating to the operation of certain of Seller's pharmacies.

"CAM" has the meaning set forth in Section 1.4(a).

"Cap" has the meaning set forth in Section 7.2(c).

"Clearance Location" means the Wind-Up Store Individual Premises identified as the Clearance Location on the Wind-Up Stores Schedule.

"Clearance Location Liquor License" means all liquor licenses and related permits associated with the Clearance Location.

"Closing" and "Closing Date" have the meanings set forth in Section 1.5(a).

"COBRA" means Part 6 of Subtitle B of Title I of ERISA, Section 4980B of the Code and any similar state law.

"Code" means the Internal Revenue Code of 1986, as amended, and any reference to any particular Code section shall be interpreted to include any revision of or successor to that section regardless of how numbered or classified.

"Commissary" means the non-Retail Store Individual Premises located at 463 - 44^th Street SE, Grand Rapids, Michigan 49548.

"Commissary Products" has the meaning set forth in Section 3.19.

"Confidentiality Agreement" has the meaning set forth in Section 9.7.

"Consolidated Financial Statements" has the meaning set forth in Section 3.4.

"Due Diligence Deadline" means 5:00 p.m. EST on the date that is sixty (60) days after the Signing Date.

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"Employee Benefit Plan" means any employee benefit plan (as such term is defined in Section 3(3) of ERISA) and any other benefit plan, program or arrangement that is maintained, sponsored or contributed or required to be contributed to by Seller or any ERISA Affiliate in connection with the Premises.

"Environmental and Safety Requirements" shall mean, whenever in effect, all federal, state, local and foreign statutes, regulations, ordinances and similar provisions having the force or effect of law, all judicial and administrative orders and determinations, all contractual obligations, and all common law, concerning public health and safety, worker health and safety, pollution or protection of the environment, or establishing liability for environmental cleanup or recovery of the cost of cleanup, including without limitation, the Comprehensive Environmental Response, Compensation and Liability Act, 42 USC §9601 et seq. the Solid Waste Disposal Act, 42 USC §6901 et seq.; the Clean Air Act, 42 USC §7401 et seq.; all regulations promulgated thereunder; and all similar or analogous state laws and regulations.

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

"ERISA Affiliate" means any Person that together with Seller would be deemed a "single employer" within the meaning of Section 414 of the Code.

"Escrow Agent" and "Escrow Funds" have the meanings set forth in Section 1.3(c)(ii).

"Escrow Agreement" has the meaning set forth in Section 1.3(c)(ii).

"Estimated Coupon Amount" means the amount reasonably estimated by Seller and Purchaser that will be needed to fully reimburse Purchaser for amounts to be paid out or discounted from future sales pursuant to Section 5.10 in connection with the honoring of coupons, rain checks, key cards, club cards and similar promotional devices issued by Seller prior to the Closing Date.

"Estimated Gift Certificates Amount" means the total value of all outstanding gift certificates, gift cards, and store scrip issued by Seller prior to the Closing Date. Seller shall provide Purchaser with an itemized listing of all outstanding gift certificates, gift cards and store scrip as of two (2) days prior to the Closing Date.

"Excluded Assets" has the meaning set forth in Section 1.1(b).

"Excluded Liabilities" has the meaning set forth in Section 1.2(b).

"Financial Statements" has the meaning set forth in Section 3.4.

"Fundamental Representations" has the meaning set forth in Section 7.1(a).

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"GAAP" means United States generally accepted accounting principles, as in effect from time to time.

"Governmental Approvals" has the meaning set forth in Section 2.1(f).

"HIPAA" means the Health Insurance and Portability Act of 1996 and the regulations promulgated thereunder.

"HSR Act" has the meaning set forth in Section 5.4(b).

"Improvements" means all buildings, parking, driveway, sidewalk, and service areas, improvements and fixtures, including but not limited to, trade fixtures and all the systems and equipment serving any building or parking, driveway, sidewalks, or service areas.

"Indemnitee" and "Indemnitor" have the meanings set forth in Section 7.2(d).

"Individual Premises" has the meaning set forth in Section 1.1(a).

"Insurance" includes liability, crime, fidelity, life, fire, product liability, workers compensation, health, director and officer liability, and other forms of insurance owned or maintained by Seller.

"Interim Financial Statements" has the meaning set forth in Section 3.4.

"Inventory Reduction Plan" has the meaning set forth in Section 5.1(b).

"Inventory Service" and "Inventory Value" have the meanings set forth in Section 1.3(b)

"Knowledge" and terms of similar import mean with respect to Seller, the actual knowledge of all store managers, officers, key executives, shareholders and directors of Seller after making a reasonable inquiry.

"Lease Documents" has the meaning set forth in Section 3.8(a).

"Leased Real Property" means any land, Improvements or other interests in real property that Seller leases or subleases or otherwise has the right to use, occupy or enjoy under a Lease as identified in the Leased Real Property Schedule and the Wind-Up Stores Schedule.

"Leasehold Improvements" means any Improvements located on any Leased Real Property that are owned by Seller, including any Improvements that are subject to reversion to the landlord or any other Person upon the expiration or termination of the Lease of such Leased Real Property, recognizing that Seller's ownership is subject to any such reversion. The Leasehold Improvements are set forth on the Leasehold Improvements Schedule.

"Leases" has the meaning set forth in Section 3.8(a).

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"Lien" or "Liens" means any lien (statutory or otherwise), hypothecation, encumbrance, claim, liability, security interest, interest, mortgage, pledge, restriction, charge, instrument, license, preference, priority, security agreement, easement, covenant, encroachment, option, right of recovery, order of any governmental authority, of any kind or nature (including (i) any conditional sale or other title retention agreement and any lease having substantially the same effect as any of the foregoing, (ii) any assignment or deposit arrangement in the nature of a security device, and (iii) any leasehold interest, license or other right, in favor of a third party or Seller, to use any portion of the Purchased Assets), whether secured or unsecured, choate or inchoate, filed or unfiled, scheduled or unscheduled, noticed or unnoticed, recorded or unrecorded, contingent or non-contingent, material or non-material, known or unknown.

"Liquor License Agreements" has the meaning set forth in Section 5.21.

"Loss" means any loss, liability, demand, claim, action, cause of action, cost, damage, diminution in value, deficiency, Tax, penalty, fine or expense, whether or not arising out of third party claims (including interest, penalties, reasonable attorneys' fees and expenses and all amounts paid in investigation, defense or settlement of any of the foregoing and the enforcement of any rights hereunder). For purposes of this definition, "diminution in value" shall mean the extent to which the price paid by Purchaser for a Purchased Asset exceeds the price that would have been paid by Purchaser for such Purchased Asset if Seller had not breached its representations and warranties under this Agreement.

"Loss Event" has the meaning set forth in Section 5.12(b).

"Material Adverse Change" and "Material Adverse Effect" have the meanings set forth in Section 2.1(c).

"Merchandise" has the meaning set forth in Section 1.1(a)(ii).

"Merchandise Value" has the meaning set forth in Section 1.3(b).

"Multiemployer Plan" has the meaning set forth in Section 3(37) of ERISA.

"Non-Acquired Merchandise" shall have the meaning set forth on the attached Non-Acquired Merchandise Schedule.

"Ordinary Course of Business" means the ordinary course of business, consistent with past practice, including with regard to nature, frequency and magnitude.

"Permits" has the meaning set forth in Section 3.17(b).

"Permitted Liens" means (A) the Subleases; (B) Taxes levied or imposed on, or assessed with respect to, any real property all or any portion of which comprises the Leased Real Property, which Taxes, assessments, fees or charges are (1) not due and payable as of the Closing Date, or (2) are being contested in good faith and, in either case, for which Taxes,

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appropriate reserves have been established in accordance with GAAP; (C) zoning codes or ordinances, building codes and other laws, regulations, ordinances, decrees or orders regulating the use or occupancy of any Leased Real Property that are not violated by the current use or occupancy of such Leased Real Property; and (D) easements, restrictions, covenants and conditions affecting the title to any Leased Real Property that are of record.

"Person" means any individual, sole proprietorship, partnership, joint venture, trust, unincorporated association, corporation, limited liability company, entity or governmental entity (whether federal, state, county, city or otherwise and including any instrumentality, division, agency or department thereof).

"Premises" has the meaning set forth in Section 1.1(a).

"Proprietary Rights" has the meaning set forth in Section 1.1(a)(iii).

"Proration Amount" has the meaning set forth in Section 1.4(a).

"Purchased Assets" has the meaning set forth in Section 1.1(a).

"Purchase Price" has the meaning set forth in Section 1.3(a).

"Purchaser Basket Amount" has the meaning set forth in Section 7.2(b).

"Purchaser Parties" means Purchaser and its Affiliates and their respective members, shareholders, officers, directors, managers, employees, agents, representatives, successors and assigns.

"Register Cash" has the meaning set forth in Section 1.1(a)(i).

"Regulation S-X" has the meaning set forth in Section 5.16.

"Remaining Retail Stores" means the Retail Stores other than the Wind-Up Stores.

"Retail Stores" means the Premises other than the Commissary.

"Security Deposits Owed" has the meaning set forth in Section 1.1(a)(xi).

"Seller Parties" has the meaning set forth in Section 7.2(b).

"Starbucks" has the meaning set forth in Section 1.1(xiii).

"Sublease Documents" has the meaning set forth in Section 3.8(c).

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"Subleased Real Property" means the portion of a Leased Real Property that Seller leases or subleases to any Person, or otherwise grants any Person a right to use, occupy or enjoy, under a Sublease.

"Subleases" means all subleases, licenses and other agreements under which Seller grants to any Person a subleasehold estate in, or the right to use or occupy, any portion of the Leased Real Property and set forth on Schedule 3.8(c).

"Subsidiary" means, with respect to any Person, any corporation, partnership, limited liability company, association or other business entity of which (i) if a corporation, a majority of the total voting power of shares of stock entitled (irrespective of whether, at the time, stock of any other class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof, or (ii) if a partnership, limited liability company, association or other business entity, either (A) a majority of the partnership or other similar ownership interest thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more Subsidiaries of that Person or a combination thereof, or (B) such Person is a general partner, managing member or managing director of such partnership, limited liability company, association or other entity.

"Tax" or "Taxes" means any federal, state, local or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, property (including general and special real estate taxes and assessments, special service area charges, tax increment financing, charges, payments in lieu of taxes and similar charges and assessments), windfall profits, environmental (including tax under Code Section 59A), customs duties, capital stock, franchise, profits, withholding, foreign or domestic withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, capital gain, estimated or other tax, governmental fee, governmental assessment or governmental charge of any kind whatsoever, whether computed on a separate or consolidated, unitary or combined basis or in any other manner including any interest, penalties or additions to Tax or additional amounts with respect to the foregoing whether disputed or not, and including any liability of another Person for any of the foregoing (A) under Treasury Regulation § 1.1502-6 (or any similar provision of state, local or foreign Tax law), (B) as a transferee or successor, (C) or by pursuant to any contract or other arrangement.

"Tax Returns" means returns, declarations, reports, claims for refund, information returns or other documents (including any related or supporting schedules, statements or information) filed or required to be filed in connection with the determination, assessment or collection of Taxes of any party or the administration of any laws, regulations or administrative requirements relating to any Taxes.

"Terminating Party" has the meaning set forth in Section 5.4(b).

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"Termination Date" means, except as provided below, March 31, 2006. This date shall be extended to April 15, 2006 if (i) the Parties have failed to obtain Governmental Approvals related to the liquor licenses included in the Purchased Assets and (ii) the Party requesting the extension delivers to the other Party written notice requesting the extension and certifying that, to its knowledge, as of March 31, 2006, it is not aware of (A) a Material Adverse Effect, (B) any material breach of the other Party's representations and warranties, or (C) the non-fulfillment of any Closing condition contained in this Agreement, other than conditions that by their terms will be satisfied at Closing.

"Third Party Approvals" has the meaning set forth in Section 2.1(e).

"Transfer Taxes" has the meaning set forth in Section 5.8.

"Transition Services" has the meaning set forth in Section 2.1(g).

"Treasury Regulations" means the United States Treasury Regulations promulgated under the Code, and any reference to any particular Treasury Regulation section shall be interpreted to include any final or temporary revision of or successor to that section regardless of how numbered or classified.

"WARN Act" has the meaning set forth in Section 3.15(c).

"Wind-Up Store Individual Premises" means an Individual Premises identified on the Wind-Up Stores Schedule.

"Wind-Up Store Lease" has the meaning set forth in Section 1.2(b)(iii).

"Wind-Up Stores" means the stores listed on the Wind-Up Stores Schedule.

ARTICLE IX
MISCELLANEOUS

9.1 Amendment and Waiver. This Agreement may be amended, and any provision of this Agreement may be waived; provided that (i) any such amendment or waiver shall be binding upon Seller only if set forth in a writing executed by Seller and referring specifically to the provision alleged to have been amended or waived, and (ii) any such amendment or waiver shall be binding upon Purchaser if (a) set forth in a writing executed by Purchaser and referring specifically to the provision alleged to have been amended or waived or (b) as otherwise expressly provided in this Agreement, including, without limitation, by the passage of time and failure to deliver notice to Seller. No course of dealing between or among the Parties shall be deemed effective to modify, amend or discharge any part of this Agreement or any rights or obligations of any Party under or by reason of this Agreement and a waiver of any provision by any Party on one occasion shall not be deemed to be a waiver of the same or any other breach on a future occasion.

9.2 Tax Matters.

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(a) Allocation of Purchase Price. At or before Closing, Purchaser and Seller shall mutually prepare and agree upon an allocation of the Purchase Price and all other capitalized costs, including any Assumed Liabilities, to the extent properly taken into account under Section 1060 of the Internal Revenue Code ("Code") among the Purchased Assets in accordance with Code Section 1060 and the Treasury Regulations thereunder (and any similar provision of state or local law, as appropriate), which allocation shall be binding upon Purchaser and Seller. Each of Purchaser and Seller agrees to (i) be bound by such allocation and (ii) act in accordance with such allocation in the preparation, filing and audit of any Tax Return (including filing Form 8594 with its federal income Tax Return for the taxable year that includes the date of the Closing).

(b) Employment Tax Reporting. Seller and Purchaser agree to follow the Standard Procedure specified in Revenue Procedure 2004-53, 2004-34 I.R.B. 320, whereby, among other things, each will be responsible for the reporting duties with respect to its own payment of wages and compensation to the employees hired by Purchaser in connection with the operation or activities of the Purchased Assets.

(c) Non-assumption of Tax Liabilities. For avoidance of doubt, Purchaser is not assuming, and Seller shall remain obligated for, (i) any liabilities and/or obligations of any kind or nature relating to Taxes of Seller (including any related liabilities and/or obligations arising in connection with unclaimed property laws) and (ii) with respect to the Purchased Assets, any Tax liabilities and/or obligations accrued for, applicable to or arising from any period ending on or before the Closing Date (including, without limitation, any liabilities for property taxes, penalties and interest relating to any period or portion thereof ending on or before the Closing Date, regardless of whether such property taxes, penalties or interest are assessed or levied before or after the Closing Date).

For purposes of this Agreement, in the case of any Taxes that are imposed on a periodic basis and are payable for a taxable period that includes (but does not end on) the Closing Date, the portion of such Tax which relates to the portion of such taxable period ending on the Closing Date shall in the case of any Taxes other than Taxes based upon or related to income, receipts, capital or surplus, be deemed to be the amount of such Tax for the entire taxable period multiplied by a fraction the numerator of which is the number of days in the taxable period ending on the Closing Date and the denominator of which is the number of days in the entire taxable period, and in the case of any Tax based upon or related to income, receipts, capital or surplus be deemed equal to the amount which would be payable if the relevant taxable period ended on the Closing Date. Notwithstanding the foregoing sentence, property taxes payable pursuant to Leases shall be prorated between Seller and Purchaser in accordance with Section 1.4.

Purchaser is not assuming, and Seller shall remain obligated for any liabilities for property taxes relating to the period before the Closing Date and for penalties and interest relating to the period before and after the Closing Date (whether payable directly to the taxing authority or to any landlord under the Leases) as a result of, in connection with,

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relating or incidental to or by virtue of Seller's failure to give notice to the appropriate assessing office of any "transfer of ownership" as required by MCL 211.27a, including, without limitation, Seller's failure to give notice of a conveyance by lease with a "total duration" of more than thirty-five (35) years, or Seller's failure to give notice of a lease granting the tenant a "bargain purchase option," both as defined in MCL 211.27a. Seller's liabilities under the previous sentence shall include, without limitation, (i) any additional property taxes (attributable to the period of time before the Closing Date) that would have been levied if notice of the transfer of ownership had been properly given to the appropriate assessing office as required under MCL 211.27a, (ii) interest and penalties applicable to any additional property taxes (attributable to the period of time before and after the Closing Date) that would have been levied if notice of the transfer of ownership had been properly given to the appropriate assessing office as required under MCL 211.27a, from the date such taxes would have been originally levied through the date such taxes are paid, and (iii) any other penalties for failure to give notice of such transfer to the appropriate assessing office. Purchaser acknowledges that, notwithstanding any provision to the contrary herein, it shall be liable for any additional property taxes (but not any penalties or interest), attributable to any period of time after the Closing Date, that would have been or are levied if notice of the transfer of ownership had been properly given or is given to the appropriate assessing office.

(d) Treatment of Indemnification Payments. The Parties hereto agree, for Tax purposes only, to treat any payments made pursuant to Article VII of this Agreement as an adjustment to the Purchase Price.

(e) Cooperation on Tax Matters. The Parties shall cooperate fully, as and to the extent reasonably requested by any other party, in connection with the filing of Tax Returns, and any audit, litigation or other proceeding with respect to Taxes. Such cooperation shall include the retention and (upon the other party's request) the provision of records and information which are reasonably relevant to any such audit, litigation or other proceeding and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder.

9.3 Notices.

(a) All notices, requests, consents and other communications hereunder shall be in writing shall be deemed given (i) when delivered personally by hand (with written confirmation of receipt), or (ii) one business day following the day sent by overnight courier (with written confirmation of receipt), in each case at the following addresses (or to such other address as a Party may have specified by notice given to the other party pursuant to this provision).

(b) If to Seller, then in duplicate, sent simultaneously, with originals to (i) D&W Food Centers, Inc., 3001 Orchard Vista Drive, SE, Grand Rapids, Michigan 49546-7070, Attn: Douglas E. Blease; with copies sent simultaneously to Scott A. Huizenga, Varnum, Riddering, Schmidt & Howlett LLP, 333 Bridge Street, Suite 1700, Grand Rapids, Michigan 49501.

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(c) If to Purchaser, then to Family Fare, LLC, c/o Spartan Stores, Inc., 850 - 76th Street, SW, Grand Rapids, Michigan 49518, Attn: Dave Staples, with copies sent simultaneously to Gordon R. Lewis, Warner Norcross & Judd LLP, 111 Lyon Street, NW, Suite 900, Grand Rapids, Michigan 49503-2487.

9.4 Assignment.

(a) This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the Parties hereto and their respective successors and permitted assigns, except that neither this Agreement nor any of the rights, interests or obligations of the Parties may be assigned or delegated by such Party without the prior written consent of the other Parties hereto.

(b) Notwithstanding anything to the contrary in this Agreement, Purchaser may assign in whole or in part its rights and obligations pursuant to this Agreement (including the right to purchase the Purchased Assets and the obligation to assume the Assumed Liabilities) to one or more of its Affiliates, and Purchaser may, in its sole discretion, direct Seller to convey the Purchased Assets, in whole or in part, to one or more of its Affiliates; provided, however, no assignment by Purchaser hereunder shall relieve Purchaser of its obligations to Seller under this Agreement. Exhibit D-1 identifies the Individual Premises to be acquired by Family Fare and the Individual Premises to be acquired by Prevo's.

9.5 Severability. If any clause or provision of this Agreement is held to be illegal, invalid or unenforceable, or the application thereof to any person or circumstance shall to any extent be illegal, invalid or unenforceable, under present or future laws effective during the term of this Agreement or of any provisions hereof which survive the Closing, then and in any such event, it is the express intention of the parties hereto that the remainder of this Agreement, or the application of such clause or provision other than to those as to which it is held illegal, invalid or unenforceable, shall not be affected thereby, and each clause or provision of this Agreement and the application thereof shall be legal, valid and enforceable to the fullest extent permitted by law.

9.6 Interpretation. The headings and captions used in this Agreement and the table of contents to this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Any capitalized term used in any Schedule or Exhibit attached hereto and not otherwise defined therein shall have the meaning set forth in this Agreement. The use of the word "including" herein shall mean "including without limitation." The Parties hereto intend that each representation, warranty and covenant contained herein shall have independent significance. If any Party has breached any representation, warranty or covenant contained herein in any respect, the fact that there exists another representation, warranty or covenant relating to the same subject matter (regardless of the relative levels of specificity) which such Party has not breached shall not detract from or mitigate the fact that such Party is in breach of the first representation, warranty or covenant.

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9.7 Entire Agreement. This Agreement and a certain Confidentiality Agreement entered into between the Parties and dated September 7, 2005 (the "Confidentiality Agreement"), contain the final and entire agreement between the Parties hereto and each shall not be bound by any terms, conditions, statements, warranties or representations, oral or written, not contained herein and therein. All understandings and agreements heretofore made between the Parties are merged in this Agreement, which, together with the Confidentiality Agreement, fully and completely expresses the agreement of the Parties and which may not be changed, modified or terminated except by a written instrument signed by the Parties. Except as expressly provided in this Agreement, no Party has made any representation or warranties to the other with respect to Purchased Assets or any other matter or transaction contemplated herein.

9.8 Counterparts. This Agreement may be executed in any number of counterparts (including by means of faxed signature pages), each of which counterparts shall be deemed to be an original and all of which counterparts shall constitute the same Agreement, at such time as each Party shall have executed and delivered to the other at least one (1) copy of this Agreement.

9.9 Governing Law. This Agreement shall be interpreted in accordance with the laws of the State of Michigan. Both parties to this Agreement having competent counsel of their own choosing and having been fully informed of, and completely and fully understanding, their respective legal rights, hereby waive their right to a jury trial in all legal proceedings between them.

9.10 No Strict Construction. Purchaser and Seller agree and acknowledge that: (i) this Agreement has been freely negotiated by Purchaser and Seller; and (ii) in any event of any ambiguity, controversy, dispute, or disagreement over the interpretation, validity or enforceability of this Agreement or any of its covenants, terms or conditions, no inference, presumption or conclusion whatsoever shall be drawn against either Seller or Purchaser by virtue of both Seller and Purchaser having assisted in drafting or otherwise preparing this Agreement.

9.11 Specific Performance. Each of the Parties acknowledges and agrees that the other Party would be damaged irreparably in the event any of the provisions of this Agreement are not performed in accordance with their specific terms or otherwise are breached. Accordingly, each of the Parties agrees that the other Party shall be entitled to an injunction or injunctions to prevent breaches of the provisions of this Agreement and to enforce specifically this Agreement and the terms and provisions hereof in any action instituted in any court of the United States or any state thereof having jurisdiction over the Parties and the matter (subject to the provisions set forth in Section 9.9 above), in addition to any other remedy to which they may be entitled, at law or in equity.

9.12 No Third-Party Beneficiaries. This Agreement is for the sole benefit of the Parties hereto and their permitted assigns and nothing herein expressed or implied, shall give or be construed to give any Person, other than the Parties hereto and such permitted assigns, any legal or equitable rights hereunder.

9.13 Schedules. Nothing in any Schedule attached hereto shall be adequate to disclose an exception to a representation or warranty made in this Agreement unless such Schedule

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identifies the exception with reasonable particularity and describes the relevant facts in reasonable detail. Without limiting the generality of the foregoing, the mere listing (or inclusion of a copy) of a document or other item shall not be adequate to disclose an exception to a representation or warranty made in this Agreement, unless the representation or warranty has to do with the existence of the document or other item itself. No exceptions to any representations or warranties disclosed on one Schedule shall constitute an exception to any other representations or warranties made in this Agreement unless such exception is disclosed as provided herein on each such other applicable Schedule or the applicability of such disclosure is reasonably apparent on its face as an exception to such other representation or warranty. All Schedules (as may be supplemented pursuant to Section 5.3) attached hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth in full herein.

9.14 Expenses. Unless otherwise stated in this Agreement, each Party shall bear its own costs and expenses incurred in connection with the negotiation and preparation of this Agreement and the consummation of the transaction contemplated hereby, including, but not limited to, their respective lawyers, accountants, investment bankers and consultants.

9.15 Guaranty.

(a) By joining in this Agreement, Guarantors, jointly and severally, guaranty to Purchaser the full and prompt payment and performance by Seller of all of Seller's obligations under Section 7.2(a)(i) and (iii) of this Agreement (as limited, if applicable, by Section 7.2(c)). If Seller does not timely perform an obligation under such provisions of this Agreement, then Guarantors shall promptly perform that obligation. This guaranty is an absolute, irrevocable, primary, continuing, and unconditional guaranty of performance and payment. This guaranty shall remain in full force and effect (and shall remain in effect notwithstanding any amendment to this Agreement) until all of Seller's obligations under such provisions of this Agreement have been paid, observed, performed, or discharged in full.

(b) Guarantors have full capacity, power, and authority to enter into this Agreement and to carry out the covenants and agreements specifically made by Guarantors in this Agreement, and this Agreement is binding on Guarantors and enforceable against Guarantors in accordance with the terms of this Agreement. Guarantors' obligations under this Section shall survive termination of this Agreement. Each Guarantor waives any right to require Purchaser to sue the other Guarantor with respect to any liability under this Agreement.

(c) Guarantors' obligations with respect to Seller's indemnification obligations under Section 7.2(a)(i) of this Agreement shall be limited to an amount of Seven Million Dollars ($7,000,000), unless the basis for indemnification claims arising under Section 7.2(a)(i) is the fraudulent delivery of representations and warranties under this Agreement, in which case there shall be no limit on Guarantor's obligations with respect to Seller's indemnification obligations under Section 7.2(a)(i). For purposes of greater clarity, Guarantors' obligations with respect to Seller's indemnification obligations under Section 7.2(a)(iii) of this Agreement shall not be limited in any respect.

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* * * * *

[Remainder of page intentionally left blank.]

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IN WITNESS WHEREOF, the Parties hereto have caused this Asset Purchase Agreement to be duly executed as of the Signing Date.

D&W Food Centers, Inc.		Family Fare, LLC


By:	/s/ Douglas E. Blease	By:	/s/ Craig C. Sturken
Name:	Douglas E. Blease	Name:	Craig C. Sturken
Its:	President/CEO	Its:	President


D&W Associate Resources, LLC		Prevo's Family Markets, Inc.


By:	/s/ Betsy F. Raymond	By:	/s/ Craig C. Sturken
Name:	Betsy F. Raymond	Name:	Craig C. Sturken
Its:	EVP Chief Administrative Officer	Its:	President

	"SELLER"		"PURCHASER"


/s/ Robert A. Woodrick Robert A. Woodrick

/s/ Aleicia D. Woodrick Aleicia D. Woodrick

/s/ Georgia R. Gietzen Georgia R. Gietzen

/s/ Jeffrey A. Gietzen Jeffrey A. Gietzen

/s/ Douglas E. Blease Douglas E. Blease

/s/ Gerald E. Matthews Gerald E. Matthews

"GUARANTORS"

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Signature Page to the Asset Purchase Agreement

	5.5	Exclusivity; No Solicitation of Transactions	31
	5.6	Further Transfers; Transition Assistance	32
	5.7	Confidentiality	32
	5.8	Sales and Transfer Taxes	32
	5.9	Non-Competition	33
	5.10	Coupons and Gift Certificates	33
	5.11	Press Release	33
	5.12	Condemnation; Damage to Property	34
	5.13	Defects	34
	5.14	Use of D&W Trademark	34
	5.15	[Reserved]	35
	5.16	Audited Financial Statements	35
	5.17	Confidentiality Agreements	35
	5.18	Schedules & Exhibits	35
	5.19	Employees	36
	5.20	Caledonia Location	36
	5.21	Liquor License Agreement	36

ARTICLE VI - TERMINATION			37
	6.1	Events of Termination	37

ARTICLE VII - INDEMNIFICATION			38
	7.1	Survival of Representations and Warranties	38
	7.2	General Indemnification	39

ARTICLE VIII - CERTAIN DEFINITIONS			42

ARTICLE IX - MISCELLANEOUS			49
	9.1	Amendment and Waiver	49
	9.2	Tax Matters	49
	9.3	Notices	51
	9.4	Assignment	52
	9.5	Severability	52
	9.6	Interpretation	52
	9.7	Entire Agreement	53
	9.8	Counterparts	53
	9.9	Governing Law	53
	9.10	No Strict Construction	53
	9.11	Specific Performance	53
	9.12	No Third-Party Beneficiaries	53
	9.13	Schedules	53
	9.14	Expenses	54
	9.15	Guaranty	54