SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
- --------------------------------------------------------------------------------
SCHEDULE 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO
RULE 13d-2(a)
UNITED PETROLEUM CORPORATION
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, par value $.01 per share
- --------------------------------------------------------------------------------
(Title of Class of Securities)
911327 50 0
- --------------------------------------------------------------------------------
(CUSIP Number)
Mr. Jose P. Bared
- --------------------------------------------------------------------------------
5800 N.W. 74th Avenue
Miami, Florida 33166
(305) 592-3100
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
November 12, 1999
- --------------------------------------------------------------------------------
(Date of Event Which Requires Filing
of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-l(b)(3) or (4), check the following box | |
(Continued on following pages)
<PAGE>
- -- -------------------------------------- --------------------------------------
CUSIP No. 911327 50 0 13D
- -- -------------------------------------- --------------------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON JOSE P. BARED AND MIRIAM BARED,
HIS WIFE, AS TENANTS BY THE
ENTIRETY
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)| |
(b)| |
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS* BK
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(D) OR 2(E) | |
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION U.S.
- --------------------------------------------------------------------------------
NUMBER OF SHARES 7 SOLE VOTING POWER 2,400,000
BENEFICIALLY OWNED BY
EACH REPORTING PERSON
WITH: 8 SHARED VOTING POWER 0
9 SOLE DISPOSITIVE POWER 2,400,000
10 SHARED DISPOSITIVE POWER 0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED
BY EACH REPORTING PERSON 2,400,000
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* | |
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 48%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON* IN
- ---------- ---------------------------------------------------------------------
* SEE INSTRUCTIONS
<PAGE>
1. SECURITY AND ISSUER.
This statement on Schedule 13D (this "Statement") relates to the
common stock, par value $.01 per share (the "Common Stock"), of United Petroleum
Corporation, a Delaware corporation, which has its principal executive offices
at 5800 N.W. 74th Avenue, Miami, Florida 33166 (the "Issuer" or the "Company").
2. IDENTITY AND BACKGROUND.
(a)
Pursuant to Rule 13d-1(a) of Regulation 13D-G of the General
Rules and Regulations under the Securities Exchange Act of 1934,
as amended (the "Act"), this Schedule 13D Statement is hereby
filed by Jose P. Bared and Miriam Bared, his wife (each a
"Reporting Person" and together the "Reporting Persons").
(b) The residence address of the Reporting Persons is 9025 Arvida
Drive, Coral Gables, Florida 33156.
(c) The present principal employment of Jose P. Bared is Chairman of
the Board of Directors, Chief Executive Officer and President of
the Issuer and of Farm Stores Grocery, Inc., a Delaware
corporation, both having an address at 5800 N.W. 74th Avenue,
Miami, Florida 33166. The principal business of the Issuer is the
operation of walk-in convenience stores and gasoline stations in
Florida and car wash, lube centers, convenience stores and
gasoline stations in Tennessee and Georgia. The principal
business of Farm Stores Grocery, Inc. is the operation of
drive-thru specialty grocery stores in Florida. Miriam Bared is
unemployed.
(d) &(e) During the last five (5) years, no Reporting Person has been
convicted in any criminal proceeding (excluding traffic
violations or similar misdemeanors) and no Reporting Person is a
party to a civil proceeding of a judicial or administrative body
of competent jurisdiction such that, as a result of such
proceeding, any Reporting Person was or is subject to a judgment,
decree or final order enjoining future violations of, or
prohibiting or mandating activity subject to, federal or state
securities laws or finding any violation with respect to such
laws.
(f) The Reporting Persons are U.S. citizens.
3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
The following disclosure is qualified in its entirety by reference to (i)
the Second Amended Plan of Reorganization of United Petroleum Corporation
(the "Plan") dated July 23, 1999, (ii) the Order dated October 7, 1999 of
the United States Bankruptcy Court for the District of Delaware confirming
the Plan (the "Confirmation Order"), and (iii) the Agreement and Plan of
Merger, dated September 29, 1999 among the Issuer, United Petroleum Group,
Inc. ("UPG") and F.S. Convenience Stores, Inc. ("FSCI"), filed as Exhibits
99.1, 99.2, and 99.3 to this Schedule 13D.
The Reporting Persons received 2,400,000 shares of Common Stock of the
Issuer in connection with the merger (the "Merger") of FSCI with and into
UPG, a wholly owned subsidiary of the Issuer. The Reporting Persons also
received 70,000 shares of Class A 9% preferred stock of the Issuer in
connection with the Merger. The Reporting Persons owned all of the issued
and outstanding stock of FSCI immediately prior to the Merger. Prior to the
Merger, the Issuer, UPG, FSCI, and related entities borrowed an aggregate
of $23 million from Hamilton Bank, N.A., secured by their respective
assets. FSCI borrowed $17 million of this loan amount and used these
proceeds to purchase the interest of its former partner in the walk-in
convenience store and gasoline station operations which they conducted in
Florida, and to purchase from an affiliate of the same former partner its
interest in the walk-in convenience stores without gasoline station
operations and a 10% interest in the drive-thru specialty grocery business,
both conducted in Florida with an affiliate of FSCI. As a result of the
Merger, UPG and its wholly-owned subsidiaries acquired and operate FSCI's
walk-in convenience store business, consisting of 90 walk-in convenience
stores, 69 of which sell gasoline, and own a 10% interest in Farm Stores
Grocery, Inc., which operates 109 drive-thru specialty grocery stores.
4. PURPOSE OF TRANSACTION.
The Reporting Persons acquired the Common Stock for investment purposes
only. The Reporting Persons intend to hold the Common Stock for investment
purposes only.
In connection with the Merger described in Item 3, the following occurred:
(i) the Issuer reconstituted its Board of Directors to consist
of Mr. Jose P. Bared, Mr. Carlos E. Bared (Mr. Jose P. Bared's
son), Mr. Clark K. Hunt, Mr. Stuart J. Chasanoff, and Mr. L.
Grant Peeples;
(ii) All of the issued and outstanding securities of the Company,
including all pre-Merger common stock, preferred stock,
debentures, options, warrants, and other rights to acquire
securities, were canceled. The Issuer issued a total of 5 million
shares of Common Stock and a total of 140,000 shares of Class A
9% preferred stock to (i) existing holders of debt and equity
securities of the Issuer, and (ii) the Reporting Persons; and
(iii) The Issuer amended its Certificate of Incorporation to (i)
authorize 10 million shares of Common Stock, and 300,000 shares
of Class A 9% preferred stock; (ii) prohibit the issuance of
non-voting equity securities by the Issuer (as required by the
Bankruptcy Code); (iii) opt out of Section 203 of the Delaware
General Corporation Law, and (iv) restrict, for a period of two
years, purchases and sales of its stock by beneficial owners of
5% or more of the total fair market value of the Issuer's stock.
Except as set forth in this Item 4, the Reporting Persons have no present
plans or proposals that relate to or that would result in any of the
actions specified in clauses (a) through (j) of Item 4 of Schedule 13D of
the Act.
5. INTEREST IN SECURITIES OF THE ISSUER.
(a) The aggregate number and percentage of shares of Common Stock
beneficially owned by the Reporting Persons is 2,400,000 and 48.0%.
(b) The Reporting Persons have the sole power to vote or to direct the
vote and to dispose of or to direct the disposition of all 2,400,000
shares of Common Stock.
(c) Not applicable
(d) Not applicable
(e) Not applicable
6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
SECURITIES OF THE ISSUER.
In addition to the contracts and arrangements described above, the
Reporting Persons, the Issuer, and Infinity Investors Limited, Fairway
Capital Limited and Seacrest Capital Limited, all Nevis, West Indies
corporations (the "Infinity Investors"), entered into a Stockholders
Agreement dated as of November 12, 1999 (the "Stockholders Agreement"),
pursuant to which the Reporting Persons, on the one hand, and the Infinity
Investors, on the other hand, agreed to vote their shares in the Issuer so
that the Board of Directors consists of two representatives selected by the
Reporting Persons, two representatives selected by the Infinity Investors,
and an independent director initially designated as L. Grant Peeples. The
Stockholders Agreement also provides that the Board can be expanded, and
the independent Director changed, by majority vote of the Issuer's
stockholders at a duly called meeting of stockholders. The Stockeholders
Agreement also contains certain provisions restricting disposition of the
Issuer's common stock by the parties to the agreement for a period of two
years, and providing for certain registration rights.
7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit No. Exhibit
99.1 Second Amended Plan of Reorganization of
United Petroleum Corporation dated July
23, 1999
99.2 Findings of Fact, Conclusions of Law and
Order Confirming Amended Plan of
Reorganization dated October 7, 1999
99.3 Agreement and Plan of Merger dated
September 29, 1999
99.4 Loan Agreement dated November 9, 1999
among United Petroleum Corporation,
United Petroleum Group, Inc., F.S.
Convenience Stores, Inc., et al., as
Borrowers, and Hamilton Bank, N.A., as
Lender
99.5 Stockholders Agreement dated as of
November 12, 1999
<PAGE>
SIGNATURE
After reasonable inquiry, I certify that to the best of my knowledge and
belief the information set forth in this Statement is true, complete and
correct.
Date: November 23, 1999
/s/ Jose P. Bared
-------------------------------
/s/ Miriam Bared
-------------------------------
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
In re: )
) Chapter 11
)
UNITED PETROLEUM CORPORATION, )
)
) Case No. 99-88 (PJW)
)
Debtor. )
)
- -----------------------------------------------------
SECOND AMENDED PLAN OF REORGANIZATION UNDER CHAPTER 11 OF
THE BANKRUPTCY CODE FOR UNITED PETROLEUM CORPORATION
Dated: July 23, 1999
<PAGE>
Pursuant to section 1121(c) of the Bankruptcy Code, United Petroleum
Corporation proposes this chapter 11 plan:
ARTICLE I.
DEFINITIONS AND INTERPRETATION
1.1. Definitions.
The capitalized terms used herein shall have the respective meanings
set forth below:
(a) "Administrative Expense Claim" means a Claim incurred by
the Debtor (or its Estate) on or after the Petition Date and before the
Effective Date for a cost or expense of administration in the Chapter
11 Case entitled to priority under sections 503(b) and 507(a)(1) of the
Bankruptcy Code.
(b) "ADR" means the Alternative Dispute Resolution Procedure
for Treatment of Securities Claims pursuant to the Plan as attached to
the Plan as Appendix II.
(c) "Affiliate" means, with respect to any Person, all Persons
that would fall within the definition assigned to such term in section
101(2) of the Bankruptcy Code, if such Person was a debtor in a case
under the Bankruptcy Code.
(d) "Allowed," when used
(i) with respect to any Claim, except for a Claim
that is an Administrative Expense Claim or a Securities Claim,
means such Claim (A) to the extent it is not a Contested Claim
as of the Effective Date; (B) to the extent it may be set
forth pursuant to any stipulation or agreement that has been
approved by Final Order of the Bankruptcy Court; (C) to the
extent it is a Contested Claim as of the Effective Date, proof
of which was filed timely with the Bankruptcy Court, and (I)
as to which no objection was filed by the Objection Deadline
(as specified in Section 10.1 of the Plan), unless such Claim
is to be determined in a forum other than the Bankruptcy
Court, in which case such Claim shall not become Allowed until
determined by Final Order of such other forum and allowed by
Final Order of the Bankruptcy Court; or (II) as to which an
objection was filed by the Objection Deadline, to the extent
allowed by a Final Order; or (D) which otherwise becomes an
Allowed Claim as provided in the Plan;
(ii) with respect to any Securities Claim, means a
Securities Claim to the extent (A) it has become "Allowed"
pursuant to the ADR or (B) it may be set forth pursuant to any
stipulation or agreement that has been approved by Final Order
of the Bankruptcy Court; or
(iii) with respect to an Administrative Expense
Claim, means an Administrative Expense Claim, that has become
"Allowed" pursuant to the procedures set forth in Article V of
the Plan; or
(iv) with respect to any Equity Interest, means an
Equity Interest, proof of which was timely and properly filed
or, if no proof of interest was filed, which has been or
hereafter is listed by the Debtor on its Schedules as fixed in
amount and not disputed or contingent, and, in either case, as
to which no objection to the allowance thereof has been
interposed on or before the Effective Date, or as to which any
objection has been determined by a Final Order to the extent
such objection is determined in favor of the holder of such
Equity Interest.
(e) "Ballot" means the form or forms that will be distributed
along with the Disclosure Statement to holders of Allowed Claims and
Equity Interests in classes that are Impaired under the Plan and
entitled to vote, which the holders of Impaired Claims and Equity
Interests may use to vote to accept or reject the Plan.
(f) "Bankruptcy Code" means the Bankruptcy Reform Act of 1978,
as amended, and codified at title 11 of the United States Code and as
applicable to the Chapter 11 Case.
(g) "Bankruptcy Court" means the Bankruptcy Court unit of the
United States District Court for the District of Delaware, or such
other court having jurisdiction over the Chapter 11 Case.
(h) "Bankruptcy Rules" means the Federal Rules of Bankruptcy
Procedure, as prescribed by the United States Supreme Court pursuant to
section 2075 of title 28 of the United States Code and as applicable to
the Chapter 11 Case.
(i) "Bar Date" means March 30, 1999, the date set by the
Bankruptcy Court as the last day for the filing of proofs of claim
against the Debtor.
(j) "Business Day" means any day on which commercial banks are
open for business in both New York, New York and Knoxville, Tennessee.
(k) "Calibur" means Calibur Systems, Inc., a Tennessee
corporation, which is a wholly-owned subsidiary of UPC.
(l) "Cash" means legal tender of the United States of America
or cash equivalents.
(m) "Calibur A Note" means that certain promissory note, dated
August 5, 1998, made payable by Calibur, UPC and Jackson to Infinity in
the original principal amount of $4,200,000, the payment of which is
(i) guaranteed by UPC's President, Michael Thomas, and (ii) secured by
a lien in and to assets of UPC, Calibur and Jackson that is pari passu
with the liens that secure payment of the Calibur B Note.
(n) "Calibur B Note" means that certain promissory note dated
August 5, 1998, made payable by Calibur, UPC and Jackson to Infinity in
the original principal amount of $2,800,000, the payment of which is
secured by a lien in and to assets of UPC, Calibur and Jackson that is
pari passu with the liens that secure payment of the Calibur A Note.
(o) "Causes of Action" means all claims, rights, actions,
causes of action, liabilities, obligations, suits, debts, remedies,
dues, sums of money, accounts, reckonings, bonds, bills, specialties,
covenants, contracts, controversies, agreements, promises, variances,
trespasses, damages or judgments, whether known or unknown and whether
asserted or unasserted.
(p) "Chapter 11 Case" means the Debtor's case under chapter 11
of the Bankruptcy Code pending before the Bankruptcy Court and styled
In re United Petroleum Corporation, Case No. 99-88(PJW).
(q) "Claim" means (i) any right to payment from the Debtor,
whether or not such right is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed,
undisputed, legal, equitable, secured, or unsecured; (ii) any right to
an equitable remedy for breach of performance if such breach gives rise
to a right of payment from the Debtor, whether or not such right to an
equitable remedy is reduced to judgment, fixed, contingent, matured,
unmatured, disputed, undisputed, secured, or unsecured or (iii) any
right under section 502(h) of the Bankruptcy Code.
(r) "Collateral" means any Estate Asset subject to a Lien.
(s) "Common Equity Interest" means any share or other
instrument (including, without limitation, the Old UPC Common Stock)
evidencing a common stock ownership interest in the Debtor, whether or
not transferable or denominated "stock", or similar security, and any
warrant or right, other than a right to convert, to purchase, sell, or
subscribe to a common stock ownership interest in the Debtor.
(t) "Confirmation Date" means the date on which the Clerk of
the Bankruptcy Court enters the Confirmation Order on the docket with
respect to the Chapter 11 Case.
(u) "Confirmation Hearing" means the hearing held by the
Bankruptcy Court, as it may be continued from time to time, on
confirmation of the Plan.
(v) "Confirmation Order" means the order of the Bankruptcy
Court confirming the Plan.
(w) "Contested," when used
(i) with respect to a Claim, other than a Securities
Claim, means a Claim (A) that is listed in the Schedules as
disputed, contingent, or unliquidated, in whole or in part;
(B) that is listed in the Schedules as undisputed, liquidated,
and not contingent and as to which a proof of claim has been
filed with the Bankruptcy Court, to the extent the proof of
claim amount exceeds the scheduled amount; (C) that is not
listed in the Schedules, but as to which a proof of claim has
been filed with the Bankruptcy Court; or (D) as to which an
objection has been filed before the Effective Date, provided,
that a Claim that is Allowed by Final Order or pursuant to the
Plan on or before the Effective Date shall not be a Contested
Claim; and
(ii) with respect to a Securities Claim, means such
Claim to the extent it has not become an Allowed Claim
pursuant to the ADR; provided, that a Claim that is Allowed by
Final Order or pursuant to the Plan on or before the Effective
Date shall not be a Contested Claim.
(x) "Debentures" means, collectively, the following
debentures, together with all amendments thereto, and all documents,
instruments, and agreements executed and delivered in connection
therewith:
(i) The Debtor's six percent (6%) convertible
debentures that matured on August 1, 1998;
(ii) The Debtor's seven percent (7%) convertible
debentures that mature on September 1, 1999; and
(iii) The Debtors eighteen percent (18%) convertible
debentures that matured on February 28, 1998.
(y) "Debenture Claim" means a Claim arising under or relating
in any way to the Debentures, including any Claim for accrued and
unpaid interest.
(z) "Debtor" or "UPC" means United Petroleum Corporation, a
Delaware corporation, the debtor and debtor in possession in this
Chapter 11 Case.
(aa) "Deficiency Amount" means, with respect to a Secured
Claim, the amount by which the Claim exceeds the sum of (i) any set-off
rights of the holder of such Claim against the Debtor under Bankruptcy
Code sections 506 and 553, plus (ii) the net proceeds realized by the
holder of such Claim from the disposition of the Collateral securing
such Claim or, if such Collateral is not liquidated to Cash, the value
of the interest of the holder of the Claim in the Debtor's interest in
such Collateral, as determined by the Bankruptcy Court under Bankruptcy
Code section 506; provided, that if the holder of a Claim that is
secured by a Lien on Collateral makes the election provided in
Bankruptcy Code section 1111(b), there shall be no Deficiency Amount in
respect of such Claim.
(bb) "Disallowed," when used with respect to a Claim, means a
Claim that has been disallowed by a Final Order of the Bankruptcy
Court.
(cc) "Disbursing Agent" means any Person designated by the
Proponent to make distributions required under the Plan which may
include, without limitation, UPC, any financial institution of
recognized standing, or such other disbursing agent as may be approved
by the Proponent.
(dd) "Disbursing Agreement" means, with respect to any
Disbursing Agent (other than UPC), the agreement referenced in Article
XI of the Plan which shall govern the rights and obligations of the
Disbursing Agent. The Disbursing Agreement will be in substantially the
form thereof filed as a Plan Document, unless UPC serves as the
Disbursing Agent, in which case, the Plan shall be the Disbursing
Agreement.
(ee) "Disclosure Statement" means the disclosure statement
respecting the Plan, as approved by the Bankruptcy Court as containing
adequate information in accordance with Section 1125 of the Bankruptcy
Code, all exhibits and annexes thereto and any amendments or
modifications thereof.
(ff) "Distribution Date" means, (i) for any Claim that is an
Allowed Claim on the Effective Date, as soon as practicable after the
occurrence of the Effective Date; (ii) for any Claim that is neither a
Disallowed Claim nor an Allowed Claim on the Effective Date, the first
Business Day after such Claim becomes an Allowed Claim, or as soon as
practicable thereafter; provided, that with respect to Securities
Claims, the Distribution Date shall be determined by the UPC Trustee,
consistent with the ADR and UPC Trust.
(gg) "Distribution Record Date" means the record date fixed
for voting on the Plan.
(hh) "Effective Date" means (i) the first Business Day after
the Confirmation Date upon which the transactions consummated by the
Merger Agreement are consummated, or (ii) a Business Day selected by
the Debtor after the first Business Day which is ten (10) days after
the Confirmation Date on which (y) the Confirmation Order is not stayed
and (z) all conditions to the entry of the Confirmation Order and the
occurrence of the Effective Date have been satisfied or waived as
provided in Article XIII of the Plan.
(ii) "Equity Interest" means (a) the legal, equitable,
contractual and other rights of any Person with respect to Old UPC
Common Stock, Old UPC Preferred Stock, or any other equity security of
the company and (b) the legal, equitable, contractual or other rights
of any Person to acquire or receive any of the foregoing.
(jj) "Estate" means the estate of the Debtor created by
section 541 of the Bankruptcy Code upon the commencement of the Chapter
11 Case.
(kk) "Estate Asset" means any property, right, or interest in
property that is included in the Estate of the Debtor.
(ll) "Estimated Claims Order" means any order of the
Bankruptcy Court estimating any Claim or the aggregate amount of all
Claims in any class created under the Plan to aid in the confirmation
of the Plan, or the calculation of distributions under the Plan.
(mm) "Fairway" means Fairway Capital Limited, a Nevis, West
Indies corporation.
(nn) "Farm Stores" means all of the ninety-two (92) walk-in
convenience stores owned or leased by various entities in which the
FSCI Shareholder has a partnership interest, and all inventory,
fixtures, equipment, merchandise, accounts and general intangibles
associated therewith, except as otherwise provided in the Merger
Agreement.
(oo) "Farm Stores Assets" shall mean all of the assets held by
FSCI, as more fully described in the Merger Agreement, immediately
preceding consummation of the Merger, including, but not limited to,
partnership and other interests in the Farm Stores, the Farm Stores
Real Estate, and the Farm Stores License.
(pp) "Farm Stores License" means the royalty-free license to
use the "Farm Stores" name and all related trademarks in connection
with the operation of the Farm Stores Assets. The Farm Stores License
shall be in substantially the form attached as an Exhibit to the Merger
Agreement.
(qq) "Farm Stores Real Estate" means the real property owned
by various entities in which the FSCI Shareholder has a partnership
interest and used in connection with nine (9) of the Farm Stores.
(rr) "FSCI" means F.S. Convenience Stores, Inc., a Florida
corporation.
(ss) "FSCI Shareholder" means the holder or holders of 100%
of the equity interest of FSCI.
(tt) "FSG" means Farm Stores Grocery, Inc., a Florida
corporation.
(uu) "FSG Equity Interest" means a ten percent (10%) ownership
interest in FSG.
(vv) "Fee Application" means an application of a Professional
Person under section 330 or 503 of the Bankruptcy Code for allowance of
compensation and reimbursement of expenses in the Chapter 11 Case.
(ww) "Fee Claim" means a Claim under section 330 or 503 of the
Bankruptcy Code for allowance of compensation and reimbursement of
expenses in the Chapter 11 Case.
(xx) "Final Order" means (i) an order or judgment of the
Bankruptcy Court or any other court or adjudicative body as to which
the time to appeal, petition for certiorari, or move for reargument or
rehearing has expired and as to which no appeal, petition for
certiorari, or other proceedings for reargument or rehearing shall then
be pending or, (ii) in the event that an appeal, writ of certiorari,
reargument, or rehearing thereof has been sought, such order of the
Bankruptcy Court or any other court or adjudicative body shall have
been affirmed by the highest court to which such order was appealed, or
certiorari has been denied, or from which reargument or rehearing was
sought, and the time to take any further appeal, petition for
certiorari or move for reargument or rehearing shall have expired;
provided, that no order shall fail to be a Final Order solely because
of the possibility that a motion pursuant to Rule 60 of the Federal
Rules of Civil Procedure or Rule 7024 of the Bankruptcy Rules may be
filed with respect to such order.
(yy) "General Unsecured Claim" means any Claim that is not an
Administrative Expense Claim, a Priority Tax Claim, a Priority Non-Tax
Claim, the Infinity Secured Claim, a Secured Claim, a Debenture Claim
or a UPC Securities Claim.
(zz) "Infinity" means Infinity Investors Limited, a Nevis,
West Indies corporation.
(aaa) "Infinity Party" means Infinity, Fairway, and Seacrest,
and each of their respective Affiliates, officers, directors, managers,
stockholders, investors, agents, attorneys and representatives,
including, without limitation, Clark K. Hunt.
(bbb) "Infinity Secured Claim" means the Secured Claims of
Infinity under the Calibur A Note and the Calibur B Note (and all
related security agreements, instruments and documents).
(ccc) "Infinity Securities Claim" means any Cause of Action
against the Infinity Parties arising from or in connection with the
sale, offer, exchange, conversion, or issuance of, or any transaction
involving, the Common Equity Interests, including without limitation,
the Causes of Action asserted in the Pisacreta/Tucci Action, but
excluding derivative Causes of Action that are property of the Estate.
(ddd) "Infinity Settlement Agreement" means the agreement
dated as of the Effective Date among the Debtor, the Infinity Parties
and The UPC Trust, providing for the settlement of all Causes of Action
that have been, are, or may be asserted by or on behalf of any of the
parties thereto against any of the parties thereto as set forth in
Section 14.1 of the Plan. The Infinity Settlement Agreement shall be
substantially in the form thereof filed as a Plan Document.
(eee) "Jackson" means Jackson-United Petroleum Corporation, a
Kentucky corporation, which is a wholly-owned subsidiary of UPC.
(fff) "Lien" shall have the meaning assigned to it in section
101(37) of the Bankruptcy Code.
(ggg) "Management Agreement" means the agreements to be
entered into as of the Effective Date between the management of UPC and
UPC Merger Sub and FSG regarding the management of FSG from and after
the Effective Date. The Management Agreement shall be in substantially
the form thereof filed as a Plan Document.
(hhh) "Merger" means the combination of FSCI with and into UPC
Merger Sub, with UPC Merger Sub being the surviving corporation, upon
the terms and conditions set forth in the Merger Agreement.
(iii) "Merger Agreement" means the agreement and plan of
merger to be entered into by and among UPC, UPC Merger Sub and FSCI.
The Merger Agreement shall be in substantially the form attached hereto
as Appendix I.
(jjj) "Merger Consideration" consideration means the
consideration to be received by the FSCI Shareholders under the Merger
Agreement, to wit, (i) $3 million Cash Payment delivered to the FSCI
Shareholder; (ii) 2,400,000 shares of New UPC Common Stock delivered to
the FSCI Shareholder, and, (iii) 70,000 shares New UPC Preferred Stock
delivered to the FSCI Shareholder.
(kkk) "Merger Financing" means the financing, as contemplated
in the Merger Agreement, in the original principal amount of up to
$23.0 million, secured by a Lien on the Farm Stores Assets, the
proceeds of which shall be used, inter alia, to pay the Merger
Consideration and to execute and perform the $17 million obligation
under the Toni Option. Upon consummation of the Merger, the Merger
Financing shall be an obligation of UPC Merger Sub.
(lll) "New UPC Bylaws" means the Bylaws of United Petroleum
Corporation, as amended and restated pursuant to the Plan. The New UPC
Bylaws shall be in substantially the form thereof filed as a Plan
Document.
(mmm) "New UPC Charter" means the Certificate of Incorporation
for United Petroleum Corporation, as amended and restated pursuant to
the Plan. The New UPC Charter shall be in substantially the form
thereof filed as a Plan Document.
(nnn) "New UPC Common Stock" means the 10,000,000 shares of
UPC common stock which shall be authorized for issuance under the New
UPC Charter; 5,000,000 of which shares shall be issued and outstanding
on the Effective Date pursuant the transactions to occur thereon under
the Plan and the Merger Agreement.
(ooo) "New UPC Preferred Stock" means the 300,000 shares of
UPC Class A Preferred Stock which shall be authorized for issuance
under the New UPC Charter; 70,000 of which shares shall be issued to
Infinity on the Effective Date in full satisfaction of the obligations
under the Calibur A Note and the Calibur B Note, and 70,000 of which
shares shall be issued to the FSCI Shareholder in conjunction with the
transactions contemplated in the Merger Agreement.
(ppp) "Old UPC Common Stock" means the issued and outstanding
shares of common stock of UPC immediately before the occurrence of the
Effective Date; to wit 30,565,352 shares.
(qqq) "Old UPC Preferred Stock" means the issued and
outstanding shares of preferred stock of UPC immediately before the
occurrence of the Effective Date; to wit 9,912 shares of Class A
Preferred Stock of UPC and 1,833 shares of Class B Preferred Stock of
UPC.
(rrr) "Penalty Claims" means Claims and Causes of Action for
noncompensatory, statutory, exemplary, or punitive damages, or
penalties.
(sss) "Person" means an individual, corporation, partnership,
joint venture, trust, estate, unincorporated association,
unincorporated organization, governmental entity, or political
subdivision thereof, or any other entity.
(ttt) "Petition Date" means January 14, 1999.
(uuu) "Pisacreta/Tucci Action" means that certain lawsuit
entitled Pisacreta v. Infinity Investors Limited et al., Civil
Action No. 3:97-CV-226 in the United States District Court for
the Eastern District of Tennessee, as amended to include the
allegations originally asserted in the Tucci Action.
(vvv) "Plan" means this chapter 11 plan, as it may be
modified from time to time in compliance with the Bankruptcy Code
and the Bankruptcy Rules.
(www) "Plan Documents" means the documents that aid in
effectuating the Plan as specifically identified as such herein,
including but not limited to, the Merger Agreement, the
Management Agreement and the Farm Stores License.
(xxx) "Preferred Equity Interest" means any (1) shares or
other instruments (including, without limitation, the Old UPC
Preferred Stock) evidencing a preferred stock ownership interest
in the Debtor, whether or not transferable or denominated
"stock,"; (2) Cause of Action arising under or in any way
relating to a share or shares of Old UPC Preferred Stock; or (3)
unpaid dividends with respect to a share or shares of Old UPC
Preferred Stock.
(yyy) "Post-Confirmation Interest" means simple interest at
the rate of 6.00% per annum or such other rate as the Bankruptcy
Court may determine at the Confirmation Hearing is appropriate;
such interest to accrue from the date of the entry of an order
allowing a Claim until such Claim is paid.
(zzz) "Priority Non-Tax Claim" means any Claim accorded
priority in right of payment under section 507(a)(3), (4), (5),
(6), or (7) of the Bankruptcy Code.
(aaaa) "Priority Tax Claim" means a Claim of a governmental
unit of the kind specified in section 507(a)(8) of the Bankruptcy
Code.
(bbbb) "Professional Person" means a Person retained or to
be compensated pursuant to section 327, 328, 330, 503(b), or 1103
of the Bankruptcy Code.
(cccc) "Proponent" means the Debtor.
(dddd) "Pro Rata Share" means the proportion that the amount
of an Allowed Claim or Equity Interest in a particular class of
Claims or Equity Interests bears to the aggregate amount of all
Claims or Equity Interests in such class, including Contested
Claims and Equity Interests, but not including Disallowed Claims
and Equity Interests, (i) as calculated by the Disbursing Agent,
or the UPC Trustee, as applicable, on or before any Distribution
Date; or (ii) as determined by the Bankruptcy Court in an
Estimated Claims Order, if such an order is sought and obtained.
(eeee) "Schedules" means the schedules of assets and
liabilities and the statements of financial affairs filed by the
Debtor as required by section 521 of the Bankruptcy Code and
Bankruptcy Rule 1007, as such schedules and statements have been
or may be supplemented or amended.
(ffff) "Seacrest" means Seacrest Capital Limited, a Nevis,
West Indies corporation.
(gggg) "Secured Claim" means (i) a Claim secured by a Lien
on any Estate Asset, which Lien is valid, perfected, and
enforceable under applicable law and is not subject to avoidance
under the Bankruptcy Code or other applicable non-bankruptcy law,
and which is duly established in the Chapter 11 Case, but only to
the extent of the value of the Collateral that secures payment of
the Claim; (ii) a Claim that is subject to a valid right of
setoff under section 553 of the Bankruptcy Code; and (iii) a
Claim allowed under the Plan as a Secured Claim.
(hhhh) "Securities Claim" means either a UPC Securities Claim
or an Infinity Securities Claim.
(iiii) "Securities Claims Resolution Facility" means the
facility to be established or designated by the UPC Trustee for
the purpose of liquidating Securities Claims as specified in the
ADR.
(jjjj) "Toni" means Toni Gas & Food Stores, Inc.
(kkkk) "Toni Option" means that certain agreement between,
among others, Toni and FSCI, under which, FSCI has the option of
purchasing from Toni, for $17 million, all partnership and other
interests which relate to the Farm Stores, and which are not
already owned by FSCI or the FSCI Shareholder.
(llll) "Thomas Guarantee" means the guarantee of the Calibur
A Note by UPC's president, Michael Thomas.
(mmmm) "UPC Merger Sub" means United Petroleum Subsidiary,
Inc., a Delaware corporation and the wholly-owned subsidiary of
UPC created for the purpose of consummating the Merger.
(nnnn) "UPC Securities Claim" means any Cause of Action
against the Debtor arising from or in connection with the sale,
offer, exchange, conversion or issuance of, or any transaction
involving, the Common Equity Interests, including without
limitation, any Causes of Action asserted against the Debtor in
the Pisacreta/Tucci Action.
(oooo) "UPC Trust" means the trust to be established pursuant
to Section 7.1 of the Plan and the UPC Trust Agreement.
(pppp) "UPC Trust Agreement" means the trust agreement
between the Debtor, Infinity and the UPC Trustee, dated as of the
Effective Date. The UPC Trust Agreement shall be in substantially
the form thereof filed as a Plan Document.
(qqqq) "UPC Trustee" means the Person that is duly appointed
and qualified to serve as the trustee of the UPC Trust pursuant
to the terms and conditions of the Plan and the UPC Trust
Agreement and as approved by the Bankruptcy Court.
1.2. Interpretation.
Unless otherwise specified, all section, article, and exhibit
references in the Plan are to the respective section in, article of, or exhibit
to, the Plan, as the same may be amended, waived, or modified from time to time.
The headings in the Plan are for convenience of reference only and shall not
limit or otherwise affect the provisions of the Plan. Words denoting the
singular number shall include the plural number and vice versa, and words
denoting one gender shall include the other gender. The Disclosure Statement may
be referred to for purposes of interpretation to the extent any term or
provision of the Plan is determined by the Bankruptcy Court to be ambiguous.
1.3. Application of Definitions and Rules of
Construction Contained in the Bankruptcy Code.
Words and terms defined in section 101 of the Bankruptcy Code shall
have the same meaning when used in the Plan, unless a different definition is
given in the Plan. The rules of construction contained in section 102 of the
Bankruptcy Code shall apply to the construction of the Plan.
1.4. Other Terms.
The words "herein," "hereof," "hereto," "hereunder," and others of
similar import refer to the Plan as a whole and not to any particular section,
subsection, or clause contained in the Plan. A term used herein that is not
defined herein shall have the meaning ascribed to that term, if any, in the
Bankruptcy Code.
1.5. Appendices and Plan Documents.
All Appendices to the Plan and the Plan Documents are incorporated into
the Plan by this reference and are a part of the Plan as if set forth in full
herein.
ARTICLE II.
CLASSIFICATION OF CLAIMS AND EQUITY INTERESTS
2.1. Claims and Equity Interests Classified.
For purposes of organization, voting, and all confirmation matters,
except as otherwise provided herein, all Claims (except for Administrative
Expense Claims, and Priority Tax Claims) and all Equity Interests shall be
classified as set forth in this Article II of the Plan.
2.2. Administrative Expense Claims and Priority Tax Claims.
As provided in section 1123(a)(1) of the Bankruptcy Code,
Administrative Expense Claims and Priority Tax Claims shall not be classified
for purposes of voting or receiving distributions under the Plan. Rather, all
such Claims shall be treated separately as unclassified Claims on the terms set
forth in Article V of the Plan.
2.3. Claims and Equity Interests.
The Plan classifies the Claims against and Equity Interests in the
Debtor as follows:
(a) Class 1: Priority Non-Tax Claims
(b) Class 2: Infinity Secured Claim
(c) Class 3: Secured Claims (other than the Infinity
Secured Claim)
(d) Class 4: General Unsecured Claims
(e) Class 5: Debenture Claims
(f) Class 6: Preferred Equity Interests
(g) Class 7: Common Equity Interests
(h) Class 8: UPC Securities Claims
2.4. Separate Classification of Secured Claims.
Although placed in one category for purposes of convenience, each Claim
that is determined to be a Secured Claim shall be treated as though in a
separate class (to be designated as Class 3A, Class 3B, Class 3C, etc.) for
purposes of voting and receiving distributions under the Plan.
ARTICLE III.
IDENTIFICATION OF IMPAIRED
CLASSES OF CLAIMS AND EQUITY INTERESTS
3.1. Unimpaired Classes of Claims and Equity Interests.
Class 1 -- Priority Non-Tax Claims, Class 3 -- Secured Claims (if any),
and Class 4 -- General Unsecured Claims, are not impaired under the Plan.
3.2. Impaired Classes of Claims and Equity Interests.
With the exception of the unimpaired classes specified in Section 3.1
of the Plan, all classes of Claims and Equity Interests are impaired under the
Plan.
3.3. Impairment Controversies.
If a controversy arises as to whether any Claim or Equity Interest, or
any class of Claims or class of Equity Interests, is impaired under the Plan,
the Bankruptcy Court shall, after notice and a hearing, determine such
controversy.
ARTICLE IV.
PROVISIONS FOR TREATMENT OF CLAIMS
AND EQUITY INTERESTS UNDER THE PLAN
4.1. Treatment of Claims and Equity Interests.
The classes of Claims against and Equity Interests in the Debtor shall
be treated under the Plan as follows:
(a) Class 1 -- Priority Non-Tax Claims. Each holder of an
Allowed Priority Non-Tax Claim shall be unimpaired under the Plan and,
pursuant to section 1124 of the Bankruptcy Code, all of the legal,
equitable and contractual rights of each holder of an Allowed Priority
Non-Tax Claim in respect of such Claim shall be fully reinstated and
retained as though the Chapter 11 Case had not been filed.
(b) Class 2 -- Infinity Secured Claim. The Infinity Secured
Claim shall be Allowed pursuant to the Plan and on the Effective Date
the holder of the Infinity Secured Claim shall receive 70,000 shares of
New UPC Preferred Stock in full satisfaction and release of the
Infinity Secured Claim.
(c) Class 3 -- Secured Claims (Other than the Infinity Secured
Claim). Each holder of an Allowed Secured Claim shall be unimpaired
under the Plan and, pursuant to section 1124 of the Bankruptcy Code,
all of the legal, equitable, and contractual rights of each holder of a
Secured Claim in respect of such Claim shall be fully reinstated and
retained as though the Chapter 11 Case had not been filed.
Notwithstanding the foregoing, the Debtor and any holder of an Allowed
Secured Claim may agree to any alternate treatment of such Secured
Claim which treatment may include preservation of such holder's Lien;
provided, that such treatment shall not provide a return to such holder
having a present value as of the Effective Date in excess of the amount
of such holder's Allowed Secured Claim.
(d) Class 4 -- General Unsecured Claims. Each holder of an
Allowed General Unsecured Claim shall be unimpaired under the Plan and,
pursuant to section 1124 of the Bankruptcy Code, all of the legal,
equitable and contractual rights of each holder of an Allowed General
Unsecured Claim in respect of such Claim shall be fully reinstated and
retained as though the Chapter 11 Case had not been filed.
(e) Class 5 -- Debenture Claims. The Debenture Claims shall be
Allowed pursuant to the Plan and on the Effective Date each holder of
an Allowed Debenture Claim shall receive a Pro Rata Share of 1,750,000
shares (35%) of New UPC Common Stock in full satisfaction and release
of the Debenture Claims.
(f) Class 6 -- Preferred Equity Interests. The Preferred
Equity Interests shall be Allowed pursuant to the Plan and on the
Effective Date each holder of an Allowed Preferred Equity Interest
shall receive a Pro Rata Share of 650,000 shares (13%) of New UPC
Common Stock in full satisfaction and release of the Preferred Equity
Interests.
(g) Class 7 -- Common Equity Interests. All Common Equity
Interests will be canceled, annulled and extinguished as of the
Effective Date. In full satisfaction and release of the Common Equity
Interests, each holder of an Allowed Common Equity Interests evidenced
by Old UPC Common Stock as of the Distribution Record Date shall
receive (i) a Pro Rata Share of 200,000 shares (4%) of New UPC Common
Stock, and (ii) the right to receive a Pro Rata Share of one-half (1/2)
of any of the assets initially contributed to the UPC Trust pursuant to
Sections 7.2 and 7.3 of the Plan, which remain after all distributions
have been made by the UPC Trust under the Plan in respect of Allowed
Securities Claims.
(h) Class 8 -- UPC Securities Claims. In full satisfaction and
release of the UPC Securities Claims, the UPC Securities Claims shall
have the right to be liquidated and allowed pursuant to the ADR,
together with the Infinity Securities Claims, except that, under no
circumstance will any Person other than the UPC Trust be liable to the
holder of a UPC Securities Claim on account of such UPC Securities
Claim. On the Distribution Date, each holder of an Allowed UPC
Securities Claim shall receive a distribution from the UPC Trust as
provided for by Article VII of the Plan, the UPC Trust Agreement and
the ADR.
ARTICLE V.
PROVISIONS FOR TREATMENT
OF UNCLASSIFIED CLAIMS UNDER THE PLAN
5.1. Treatment of Administrative Expense Claims.
All Administrative Expense Claims shall be treated as follows:
(a) Time for Filing Administrative Expense Claims. The holder
of an Administrative Expense Claim, other than (i) a Fee Claim, (ii) a
liability incurred and paid in the ordinary course of business by the
Debtor, or (iii) an Administrative Expense Claim that has been allowed
on or before the Effective Date, must file with the Bankruptcy Court
and serve on the Debtor and its counsel, notice of such Administrative
Expense Claim within twenty (20) days after service of notice of entry
of the Confirmation Order. Such notice must include at a minimum (1)
the name of the holder of the Claim, (2) the amount of the Claim, and
(3) the basis of the Claim. Failure to file this notice timely and
properly shall result in the Administrative Expense Claim being forever
barred and discharged.
(b) Time for Filing Fee Claims. Each Professional Person or
other entity that holds or asserts an Administrative Expense Claim that
is a Fee Claim incurred before the Effective Date shall be required to
file with the Bankruptcy Court, and serve on all parties required to
receive notice, a Fee Application within forty-five (45) days after the
Effective Date. The failure to file timely the Fee Application shall
result in the Fee Claim being forever barred and discharged.
(c) Allowance of Administrative Expense Claims. An
Administrative Expense Claim with respect to which notice has been
properly filed pursuant to Section 5.1(a) of the Plan shall become an
Allowed Administrative Expense Claim if no objection is filed within
sixty (60) days after the deadline for filing and serving a notice of
such Administrative Expense Claim specified in Section 5.1(a) hereof,
or such later date as may be approved by the Bankruptcy Court on motion
of the Debtor, without notice or a hearing. If an objection is filed
within such sixty-day period (or any extension thereof), the
Administrative Expense Claim shall become an Allowed Administrative
Expense Claim only to the extent allowed by Final Order. An
Administrative Expense Claim that is a Fee Claim, and with respect to
which a Fee Application has been properly filed pursuant to Section
5.1(b) of the Plan, shall become an Allowed Administrative Expense
Claim only to the extent allowed by Final Order.
(d) Payment of Allowed Administrative Expense Claims. Each
holder of an Allowed Administrative Expense Claim shall receive (i) the
amount of such holder's Allowed Claim in one Cash payment on the
Distribution Date, or (ii) such other treatment as may be agreed upon
in writing by the Debtor and such holder; provided, that an
Administrative Expense Claim representing a liability incurred in the
ordinary course of business of the Debtor may be paid at the Debtor's
election in the ordinary course of business by the Debtor. All Allowed
Administrative Expense Claims shall be paid by, and shall be the sole
responsibility of, UPC.
5.2. Treatment of Priority Tax Claims.
Each holder of an Allowed Priority Tax Claim shall receive from UPC in
full satisfaction of such holder's Allowed Priority Tax Claim, (i) the amount of
such holder's Allowed Claim, with Post-Confirmation Interest thereon, in equal
annual Cash payments on each anniversary of the Distribution Date, until the
sixth anniversary of the date of assessment of such Claim (provided that the
Debtor may prepay the balance of any such Allowed Priority Tax Claim at any time
without penalty); (ii) a lesser amount in one Cash payment as may be agreed upon
in writing by such holder; or (iii) such other treatment as may be agreed upon
in writing by such holder. The Confirmation Order shall constitute and provide
for an injunction by the Bankruptcy Court as of the Effective Date against any
holder of a Priority Tax Claim from commencing or continuing any action or
proceeding against any responsible person or officer or director of the Debtor
that otherwise would be liable to such holder for payment of a Priority Tax
Claim so long as UPC is not in default of its obligations with respect to such
Claim under this Section 5.2 of the Plan.
ARTICLE VI.
ACCEPTANCE OR REJECTION OF THE PLAN;
EFFECT OF REJECTION BY ONE OR MORE
CLASSES OF CLAIMS OR EQUITY INTERESTS
6.1. Classes Entitled to Vote.
Each impaired class of Claims shall be entitled to vote separately to
accept or reject the Plan. All unimpaired classes of Claims shall be deemed to
have accepted the Plan.
6.2. Class Acceptance Requirement.
A class of Claims shall have accepted the Plan if it is accepted by at
least two-thirds (2/3) in amount and more than one-half (1/2) in number of the
Allowed Claims in such class that have voted on the Plan. A class of Equity
Interests shall have accepted the Plan if it is accepted by holders of at least
two-thirds (2/3) of the Allowed Equity Interests in such class that have voted
on the Plan.
6.3. Confirmation Without Acceptance by All Impaired Classes.
If any impaired class of Claims or Equity Interests shall fail to
accept the Plan in accordance with section 1129(a) of the Bankruptcy Code, the
Plan shall constitute a request that the Bankruptcy Court confirm the Plan over
such rejection in accordance with section 1129(b) of the Bankruptcy Code.
ARTICLE VII.
TRANSFERS OF PROPERTY TO AND
ASSUMPTION OF CERTAIN LIABILITIES BY THE UPC TRUST
7.1. Creation of UPC Trust and Appointment of Trustee.
(a) On the Effective Date, the UPC Trust will be created
pursuant to the UPC Trust Agreement for the benefit of all holders of
Securities Claims. The UPC Trust or the fund established for transfer
to the UPC Trust may be a "designated settlement fund" or "qualified
settlement fund" pursuant to section 468B of the Internal Revenue Code
and related regulations.
(b) The UPC Trust shall be administered by an independent
trustee who shall be an individual designated by the Debtor, subject to
approval of the Bankruptcy Court. The terms of the compensation to be
payable to the UPC Trustee shall also be subject to approval of the
Bankruptcy Court.
(c) No person shall be eligible to be appointed as the UPC
Trustee who, within the five (5) years preceding such appointment, had
any business or professional affiliation with the Debtor or any holder
of a Claim, or any attorney representing any of the foregoing. The
appointment of the UPC Trustee and the terms of his/her compensation
shall be subject to the approval of the Bankruptcy Court.
7.2. Transfers of Certain Property of the Debtor to the UPC Trust.
(a) As of the Effective Date, the Debtor shall transfer and
assign (or deliver, as applicable) to the UPC Trust in accordance with
the UPC Trust Agreement, all Causes of Action of the Debtor for
contribution and indemnity with respect to Securities Claims against
any Person, excluding the Infinity Parties.
(b) On or as soon as practicable after the Effective Date, the
Debtor shall transfer to the UPC Trust all of its documents and records
relating to the transactions and events that purportedly give rise to
Securities Claims, except those documents necessary for the Debtor's
continuing operations. As of the date of such transfer, the UPC Trust
shall assume any and all obligations related to the storage of such
documents and records. The Proponent shall retain a right of access to
all documents and records transferred to the UPC Trust.
7.3. Transfers of Certain Property of the
Infinity Parties to the UPC Claims Trust.
The Infinity Parties shall transfer and assign (or deliver, as
applicable) or cause to be transferred and assigned (or deliver, as applicable)
to the UPC Trust in accordance with the UPC Trust Agreement, effective as of the
Effective Date, the following:
(a) 200,000 shares of New UPC Common Stock;
(b) all Causes of Action of the Infinity Parties for
contribution and indemnity with respect to Securities Claims against
any Person, excluding the Debtor, its affiliates and their respective
officers, directors, attorneys and representatives.
7.4. Distribution of Assets by the UPC Trust.
The UPC Trustee shall make distributions from the assets in the UPC
Trust to the holders of Allowed Securities Claims, in the full amount of such
Allowed Securities Claims. Upon the termination of the channeling injunction in
favor of the Infinity Parties pursuant to Section 16.2(d) of the Plan, holders
of Securities Claims that have been timely asserted shall be permitted to assert
such claims directly against the Infinity Parties. After the satisfaction of all
Allowed Securities Claims, any assets remaining in the UPC Trust shall be
allocated and distributed in accordance with the Infinity Settlement Agreement
50% to the Infinity Parties and 50% to the holders of Allowed Common Equity
Interests.
7.5. Assumption of Certain Liabilities by the UPC Trust.
(a) In consideration for the property transferred and the
payments made to the UPC Trust pursuant to Sections 7.2 and 7.3 of the
Plan, the UPC Trust shall assume all Securities Claims against the
Debtor and the Infinity Parties.
(b) As of the Effective Date, the UPC Trust shall (i)
establish the Securities Claims Resolution Facility and assume
responsibility for the liquidation of all Securities Claims as
specified in the ADR, (ii) assume the defense of all Causes of Action
against the Debtor and the Infinity Parties that constitute or may give
rise to Securities Claims, (iii) assume the defense of all Causes of
Action against any Person that may give rise to an indemnification
liability against the Infinity Parties; and (iv) prosecute the Causes
of Action of the Debtor and the Infinity Parties that have been
transferred and assigned to the UPC Trust as the UPC Trustee shall
determine is appropriate under the circumstances. Except as otherwise
provided in the UPC Trust Agreement and the Infinity Settlement
Agreement, the UPC Trust shall have all defenses, cross claims, Causes
of Action, and rights to liens, offsets and recoupments that the Debtor
and the Infinity Parties would have had against any Person under
applicable non-bankruptcy law with respect to the Securities Claims.
7.6. Certain Property Held in Trust by the Debtor and the Infinity Parties.
If for any reason after the Effective Date the Debtor and the Infinity
Parties shall retain or receive any property that is owned by the Debtor or the
Infinity Parties and which is to be transferred to the UPC Trust, then the
Debtor and the Infinity Parties shall segregate and hold such property (and any
proceeds thereof) in trust for the benefit of the UPC Trust, and shall take such
actions with respect to such property at the expense and for the account of the
UPC Trust as the UPC Trustee shall direct in writing.
7.7. Obligations of the UPC Trust with Regard to Claims Over.
The rights and entitlement of the UPC Trust in respect of its
prosecution of Causes of Action, rights, and claims are subject to the
obligations and conditions set forth in subparagraphs (a) and (b) below.
(a) When the UPC Trust asserts a Cause of Action, that was
transferred or assigned to the UPC Trust by the Debtor or the Infinity
Parties, the UPC Trust shall as soon as practicable deliver to the
Person designated by each of the Debtor and Infinity to receive notice
(the "Notice Party"), a copy of the complaint asserting such Cause of
Action. Notwithstanding the injunctions provided pursuant to Section
16.12 of the Plan and the discharge provided pursuant to Section 16.11
and 16.13 of the Plan, if a party to such action asserts therein a
counterclaim or cross claim (a "Claim Over") against the Debtor,
Infinity or any other Person specified in the Infinity Settlement
Agreement (a "Named Party"), the UPC Trust shall as soon as practicable
deliver to the Notice Party a copy of the pleading asserting such Claim
Over.
(b) If the UPC Trust obtains a settlement with respect to or
judgment against a party who has made a Claim Over in respect of such
settlement or judgment, the UPC Trust shall:
(i) in the event of any settlement, obtain, as part
of such settlement, a release of each Named Party or a
withdrawal with prejudice of any Claim Over against each Named
Party; and
(ii) in the event of any judgment rendered other than
by reason of settlement:
(A) in the event that the Claim Over is
adjudicated, reduce, in satisfaction of such Claim
Over, any such judgment obtained against the party
asserting the Claim Over by the amount, if any,
necessary to eliminate and satisfy such Claim Over
without any further obligation of the relevant Named
Party or Parties with respect to such Claim Over;
provided, that (without limiting its obligations for
indemnification) in no event shall reduction in
respect of such Claim Over exceed the amount of the
judgment obtained by the UPC Trust against the party
asserting such Claim Over, or
(B) indemnify and hold the Named Parties
harmless in respect of such Claim Over if such Claim
Over has not been adjudicated.
(c) If a Claim Over has been asserted by any party against any
Named Party, the UPC Trust shall fully indemnify and hold harmless the
relevant Named Party from and against any and all liabilities, losses,
penalties, damages, and all other reasonable costs and expenses or
disbursements (including legal fees) incurred in connection with, or
related to, the defense of the Claim Over.
7.8. Powers and Duties of the UPC Trustee.
(a) Subject to the terms and provisions of the UPC Trust
Agreement, as approved by the Bankruptcy Court, the UPC Trustee shall
have the duty and authority to take all actions, including, but not
limited to, the retention of professionals, deemed by the UPC Trustee
to be necessary or appropriate (i) to implement the Plan, including
without limitation, executing, entering into and implementing (A) the
UPC Trust Agreement, (B) the Infinity Settlement Agreement, and (B) any
other document, instrument or agreement necessary, or appropriate to
implement the Plan, (ii) to assert, enforce, or settle the rights and
claims of the UPC Trust under the Plan, the UPC Trust Agreement, any
order of the Bankruptcy Court, any agreement, instrument, or document,
and applicable law, (iii) to protect, maintain, liquidate to Cash, and
maximize the value of the assets transferred to the UPC Trust, (iv) to
liquidate and resolve the Securities Claims pursuant to the ADR, (v) to
make distributions to the holders of Allowed Securities Claims pursuant
to the Plan, and (vi) to prepare and make available to the Debtor,
Infinity and holders of Claims and Equity Interests periodic reports
regarding the results of the UPC Trust's operations.
(b) Except as otherwise provided in this Section 7.8, the UPC
Trustee, together with his/her officers, directors, employees, agents,
and representatives, are hereby exculpated by all Persons, holders of
Claims and Equity Interests, and parties in interest, from any and all
Causes of Action, and other assertions of liability (including breach
of fiduciary duty) arising out of the discharge of the powers and
duties conferred upon the UPC Trustee by the UPC Trust Agreement, the
Plan, any Final Order of the Bankruptcy Court entered pursuant to or in
the furtherance of the Plan, or applicable law, except solely for
actions or omissions arising out of the UPC Trustee's willful
misconduct. No holder of a Claim or an Equity Interest, or
representative thereof, shall have or pursue any claim or cause of
action against the UPC Trustee or his/her officers, directors,
employees, agents, and representatives for making payments in
accordance with the Plan, or for liquidating assets to make payments
under the Plan.
ARTICLE VIII.
MEANS FOR IMPLEMENTATION OF THE PLAN
8.1. Continued Corporate Existence.
UPC shall continue to exist after the Effective Date as a separate
corporate entity, with all corporate powers, in accordance with the laws of the
State of Delaware and pursuant to the New UPC Charter and the New UPC Bylaws,
which shall become effective upon the occurrence of the Effective Date.
8.2. The Merger .
Pursuant to the terms and conditions set forth in the Merger Agreement,
(a) FSCI will receive and disburse $17 Million from the Merger Financing to
exercise and perform under the Toni Option, (b) UPC Merger Sub and FSCI shall
merge on the Effective Date, with UPC Merger Sub being the surviving
corporation, (c) the FSCI Shareholder shall receive the Merger Consideration
such that the UPC Merger Sub will own 100% of the Farm Stores Assets and 10% of
the equity in FSG.
8.3. Vesting of Assets.
(a) Upon the occurrence of the Effective Date, title to the
Estate Assets shall vest in UPC, free and clear of all Liens, Claims,
Causes of Action, and interests, except as expressly provided in the
Plan. On and after the occurrence of the Effective Date, UPC may
operate its business and may use, acquire and dispose of its assets
free of any restrictions of the Bankruptcy Code.
(b) Upon the occurrence of the Effective Date, and pursuant to
the Merger Agreement, title to the Farm Stores Assets shall vest in UPC
Merger Sub, subject to a lien securing payment of the Merger Financing.
On and after the occurrence of the Effective Date, UPC Merger Sub may
operate its business and may use, acquire and dispose of its assets
free of any restrictions of the Bankruptcy Code.
8.4. Management.
Upon the occurrence of the Effective Date, the management, control, and
operation of UPC shall become the general responsibility of the board of
directors of UPC, as reconstituted pursuant to the Plan and Merger Agreement.
Additionally, pursuant to the terms of the Management Agreement, UPC shall
provide the management for FSG. Entry of the Confirmation Order shall ratify and
approve all actions taken by the board of directors of UPC from the Petition
Date through and until the Confirmation Date.
8.5. Reconstitution of UPC Board of Directors.
The initial board of directors of UPC shall be composed of the
individuals identified in the Disclosure Statement or as otherwise identified at
or prior to the Confirmation Hearing, to hold such positions.
8.6. Officers.
The officers of UPC immediately following the Effective Date, shall be
those parties identified in the Disclosure Statement or otherwise identified
prior to the conclusion of the Confirmation Hearing.
8.7. The New UPC Charter and Bylaws.
Upon the occurrence of the Effective Date, UPC's charter and bylaws
shall be amended and restated as specified herein. In addition to containing
provisions that are currently contained in UPC's charter and bylaws, the New UPC
Charter and the New UPC Bylaws shall provide for, among other things, a
prohibition against the issuance of nonvoting equity securities as required by
section 1123(a)(6) of the Bankruptcy Code.
8.8. Issuance of New UPC Common Stock.
(a) All existing shares of Old UPC Common Stock and Old UPC
Preferred Stock shall be deemed canceled, annulled, and extinguished as
of the Effective Date.
(b) On the Effective Date, UPC shall issue and distribute
5,000,000 shares of New UPC Common Stock as follows:
(i) 2,400,000 shares will be issued to the FSCI
Shareholder;
(ii) 1,750,000 shall be issued to the holders of
Allowed Debenture Claims;
(iii) 650,000 shall be issued to the holders of Allowed
Preferred Equity Interests; and
(iv) 200,000 shall be issued to the holders of
Allowed Common Equity Interests.
(c) Each share of New UPC Common Stock shall have a par value
of $0.01. The New UPC Common Stock shall have one vote per share on all
matters.
8.9. Issuance of New UPC Preferred Stock.
(a) On the Effective Date, UPC shall issue and distribute
140,000 shares of New UPC Preferred Stock as follows:
(i) 70,000 shares shall be issued to the FSCI
Shareholder; and
(ii) 70,000 shares shall be issued to the holder of the
Infinity Secured Claim.
(b) The New UPC Preferred Stock shall be issued pursuant to a
certificate of designation in substantially the form to be filed with
the Bankruptcy Court as a Plan Document, pursuant to which each share
of New UPC Preferred Stock shall
(i) entitle the holder to receive cumulative quarterly
dividends at the annual rate of approximately nine percent
(9%), dividends payable in cash out of funds legally
available for the payment thereof, or, at the election of
the Board of Directors, New UPC Common Stock having an
equivalent market value;
(ii) have a preference of $100.00, plus accrued and
unpaid dividends upon any voluntary or involuntary
liquidation, dissolution, or winding up of the affairs of
the Debtor; and
(iii) provide that at any time or times dividends shall
be in arrears and unpaid on an amount equal to eight (8)
consecutive full quarterly dividend periods, then the number
of directors constituting the board of directors, without
further action, shall be increased by two (2) and the
holders of shares of New UPC Preferred Stock shall have the
exclusive right, voting separately as a class, to elect the
directors to fill such newly-created directorships.
8.10. Cancellation of Instruments and Agreements.
Upon the occurrence of the Effective Date, except as otherwise provided
herein, all promissory notes, share certificates, instruments, indentures, or
agreements evidencing, giving rise to, or governing any Claim or Equity Interest
shall be deemed canceled and annulled without further act or action under any
applicable agreement, law, regulation, order, or rule, and the obligations of
the Debtor under such promissory notes, share certificates, instruments,
indentures, or agreements shall be discharged.
8.11. Effectuating Documents.
On or before ten (10) business days prior to the deadline for parties
to vote to accept or reject the Plan, the Proponent shall file with the
Bankruptcy Court substantially final forms of the agreements and other documents
that have been identified herein as Plan Documents, which documents and
agreements shall implement and be controlled by the Plan. Entry of the
Confirmation Order shall authorize the officers of UPC to execute, enter into,
and deliver all documents, instruments and agreements, including, but not
limited to, the Plan Documents, and to take all actions necessary or appropriate
to implement the Plan. To the extent the terms of any of the Plan Documents
conflict with the terms of the Plan, the Plan shall control.
8.12. Treatment of Affiliate Claims.
Except for valid intercompany payables and receivables between and
among the Debtor, Jackson and Calibur, which shall be unaffected by the Chapter
11 Case, all rights, claims, Causes of Action, obligations, and liabilities
between and among the Debtor and its Affiliates shall be waived, released, and
discharged upon the occurrence of the Effective Date.
8.13. Retention of Causes of Action.
Except as otherwise provided in the Plan, all Causes of Action
assertable by the Debtor including, without limitation, those Causes of Action
assertable pursuant to sections 542, 543, 544, 545, 547, 548, 549, 550, or 553
of the Bankruptcy Code, shall be retained by the Debtor and shall be vested in
the Debtor upon the occurrence of the Effective Date. Any net recovery realized
by the Debtor on account of such Causes of Action shall be property of the
Debtor.
8.14. Indemnification.
The entry of the Confirmation Order shall constitute a permanent
injunction against the prosecution of all claims and Causes of Action of any
Person against the officers, directors, employees and attorneys of the Debtor as
of the Confirmation Date to the extent such claims or Causes of Action (a) are
based in whole or in part on events occurring on or before the Confirmation
Date, and (b) have been indemnified by the Debtor under its charter, its bylaws,
applicable state law or any other agreement between the Debtor and such other
parties, or any combination of the foregoing.
8.15. Employee Benefits.
Except as may be otherwise provided in a motion filed with the
Bankruptcy Court prior to entry of the Confirmation Order, all employment and
severance practices, policies, and agreements, and all compensation and benefit
agreements, plans, policies, and programs of the Debtor applicable to its
directors, officers, or employees, including, without limitation, all savings
plans, health care plans, severance benefit plans, incentive plans, employment
agreements, workers' compensation programs, and life, disability, and other
insurance plans, to the extent in full force and effect on the date of the
commencement of the Confirmation Hearing, and excluding all Retiree Benefit
Plans, are treated as executory contracts under the Plan, and the Plan
constitutes and incorporates a motion to assume all such practices, policies,
agreements, plans, and programs pursuant to section 365(a) of the Bankruptcy
Code. The Confirmation Order shall represent and reflect an order of the
Bankruptcy Court approving such assumptions as of the Effective Date; provided,
that the confirmation and consummation of the Plan shall not constitute a change
of control or triggering event under any employment agreement.
8.16. Appointment of the Disbursing Agent.
Unless prior to the conclusion of the Confirmation Hearing the Debtor
specifically identifies a Person to serve as the Disbursing Agent under the
Plan, the Debtor shall serve as the Disbursing Agent.
8.17. Transactions on the Effective Date.
On the Effective Date, unless otherwise provided by the Confirmation
Order of the Bankruptcy Court, the following shall occur, shall be deemed to
have occurred simultaneously, and shall constitute substantial consummation of
the Plan:
(a) the New UPC Charter and Bylaws shall become effective;
(b) The Merger Agreement shall become effective and the
transactions contemplated by the Merger Agreement shall be
consummated;
(c) all payments and other distributions to be made on, or as
soon as practicable after, the Effective Date by the Debtor or the UPC
Trust pursuant to Articles IV and V of the Plan shall be made or duly
provided for;
(d) the UPC Trustee shall be duly appointed and qualified to
serve;
(e) the Debtor, the UPC Trustee and Infinity shall enter into the
Infinity Settlement Agreement and the transactions contemplated
thereby shall be consummated;
(f) the Debtor shall issue the shares of New UPC Common Stock and
New UPC Preferred Stock to be issued under the Plan; and
(g) the UPC Trustee, the Debtor, and Infinity shall enter into
and execute the UPC Trust Agreement, the UPC Trust shall be
established, and the property to be transferred to the UPC Trust
pursuant to Sections 7.2 and 7.3 of the Plan shall automatically vest
in the UPC Trust without further action on the part of the Debtor,
Infinity or the UPC Trustee, with the execution, delivery and filing
or recording as necessary of appropriate documents of conveyance and
physical delivery of such property occurring as soon thereafter as
practicable.
8.18. Sources of Cash for Plan Distributions.
All Cash necessary for the Debtor to make payments and distributions to
pursuant to the Plan shall be obtained from existing Cash balances, from funds
made available pursuant to Merger Financing, and the operations of the Debtor
and its subsidiaries, including UPC Merger Sub. All Cash necessary for the UPC
Trust to make payments to the holders of Allowed Securities Claims shall be
obtained from the assets contributed to the UPC Trust pursuant to the Plan, or
the proceeds thereof.
ARTICLE IX.
PROVISIONS GOVERNING DISTRIBUTIONS
9.1. Date of Distributions.
Any distributions and deliveries to be made under the Plan on account
of an Allowed Claim shall be made on the Distribution Date with respect to such
Allowed Claim, as otherwise provided for herein, or as may be ordered by the
Bankruptcy Court.
9.2. Disbursing Agent/UPC Trustee.
The Disbursing Agent shall make or direct all distributions required
under this Plan, except for distributions to the holders of Allowed Securities
Claims, which shall be made by the UPC Trustee.
9.3. Means of Cash Payment.
Cash payments made pursuant to the Plan shall be in US funds, by check
drawn on a domestic bank, or by wire transfer from a domestic bank, except that
payments made to foreign trade creditors holding Allowed Claims or to foreign
governmental units holding Allowed Priority Tax Claims shall be in such funds
and by such means as are customary or as may be necessary in a particular
foreign jurisdiction.
9.4. Delivery of Distributions.
Subject to Bankruptcy Rule 9010, distributions and deliveries to
holders of Allowed Claims shall be made at the address of each such holder (a)
as set forth on the proofs of Claim filed by such holders, (b) as set forth in
the Verification Form (as defined in the ADR), with respect to holders of
Allowed Securities Claims, or (c) at the last known address of such holders if
the Disbursing Agent, or the UPC Trustee (as applicable) have been notified of a
change of address, except as otherwise provided in this Article IX of the Plan.
If any holder's distribution is returned as undeliverable, no further
distributions to such holder shall be made unless and until the Disbursing Agent
(or the UPC Trustee, as applicable) receives notification of such holder's then
current address, at which time any missed distributions shall be made to such
holder without interest. Amounts in respect of undeliverable distributions shall
be returned to the Disbursing Agent (or the UPC Trustee, as applicable) until
such distributions are claimed. All claims for undeliverable distributions shall
be made on or before the second anniversary of the Distribution Date. After such
date all unclaimed property shall (a) in the case of distributions to holders of
Administrative Expense Claims, Priority Tax Claims, Class 1 -- Priority Non-Tax
Claims, the Class 2 -- Infinity Secured Claim, Class 3 -- Secured Claims, and
Class 4 -- General Unsecured Claims, Class 5 -- Debenture Claims, Class 6 --
Preferred Equity Interests and Class 7 -- Common Equity Interests revert to UPC,
and (b) in the case of Securities Claims, revert to the UPC Trust; and, in any
case, the Claim or Equity Interest of any holder with respect to such property
shall be discharged and forever barred.
9.5. Surrender of Notes, Instruments, and Securities.
As a condition to receiving distributions provided for by the Plan,
each holder of a promissory note, share certificate, or other instrument
evidencing a Claim or Equity Interest shall surrender such promissory note,
share certificate, or instrument to the Disbursing Agent (or, in the case of the
holders of Securities Claims, to the UPC Trustee) within sixty (60) days of the
Effective Date. All promissory notes, share certificates, and other instruments
surrendered pursuant to the preceding sentence shall be marked "Compromised and
Settled only as provided in Debtor's Plan of Reorganization." Unless waived by
the Disbursing Agent (or the UPC Trustee in the case of the holders of
Securities Claims), any person seeking the benefits of being a holder of an
Allowed Claim or Equity Interest evidenced by a promissory note, share
certificate, or other instrument, who fails to surrender such promissory note,
share certificates, or other instrument must (a) establish the unavailability of
such promissory note, share certificate, or other instrument to the reasonable
satisfaction of the Disbursing Agent (or the UPC Trustee, in the case of the
holders of Securities Claims), and (b) provide an indemnity bond in form and
amount acceptable to the Disbursing Agent (or the UPC Trustee, in the case of
the holders of Securities Claims) holding harmless the Debtor and the Disbursing
Agent (or the UPC Trustee, in the case of the holders of Securities Claims) from
any damages, liabilities, or costs incurred a result of treating such Person as
a holder of an Allowed Claim or Equity Interest, as applicable. Thereafter, such
Person shall be treated as the holder of an Allowed Claim or Equity Interest for
all purpose under the Plan. Notwithstanding the foregoing, any holder of a
promissory note, share certificate, or other instrument evidencing a Claim or
Equity Interest that fails within one year of the Effective Date to surrender to
the Debtor (or the UPC Trustee, as applicable) such note or other instrument, or
alternatively, to satisfy the requirements of the second sentence of this
Section 9.5 shall be deemed to have forfeited all rights, Claims against, and
Equity Interests in, the Debtor and shall not be entitled to receive any
distribution under the Plan.
9.6. Expenses Incurred On or After the Effective Date
and Claims of the Disbursing Agent and the UPC Trustee.
Except as otherwise ordered by the Bankruptcy Court, the amount of any
expenses incurred by the Disbursing Agent or the UPC Trustee on or after the
Effective Date (including, but not limited to, taxes) and any compensation and
expenses (including any post-confirmation fees, costs, expenses, or taxes) to be
paid to or by the Disbursing Agent or the UPC Trustee shall be borne by the
Debtor and the UPC Trust, respectively. Professional fees and expenses incurred
by the Disbursing Agent and the UPC Trustee after the Effective Date in
connection with the effectuation of the Plan shall be paid by each in the
ordinary course of business.
9.7. Time Bar to Cash Payments.
Checks issued by the Disbursing Agent or the UPC Trustee in respect of
Allowed Claims shall be null and void if not negotiated within ninety (90) days
after the date of issuance thereof. Requests for reissuance of any check shall
be made directly to the Disbursing Agent or the UPC Trustee, as applicable, by
the holder of the Allowed Claim with respect to which such check originally was
issued. Any claim in respect of such a voided check shall be made on or before
the later of (a) the second anniversary of the Distribution Date or (b) ninety
(90) days after the date of issuance of such check. After such date, all Claims
in respect of void checks shall be discharged and forever barred.
9.8. Initial and Interim Distributions.
Initial distributions and interim distributions, if any, under the Plan
to the holders of Allowed Securities Claims shall be made on the Distribution
Dates and be based on the UPC Trustee' calculation or estimate of the amount of
Allowed Securities Claims, unless upon the timely request of a party in
interest, the Bankruptcy Court determines that a different estimate is
appropriate. Final distributions shall be based on the actual amount of Allowed
Securities Claims.
9.9. Effect of Distributions on Account of Securities Claims.
The making of a final distribution under the Plan on account of an
Allowed Securities Claim shall effect, without the need to take any further
action, the assignment of all right, title, claim, and interest in and to such
Allowed Securities Claim to the UPC Trust.
ARTICLE X.
PROCEDURES FOR RESOLVING AND TREATING
CONTESTED CLAIMS AND EQUITY INTERESTS
10.1. Objection Deadline.
As soon as practicable, but in no event later than sixty (60) days
after the Effective Date (subject to being extended by the Bankruptcy Court upon
motion of the Debtor without notice or a hearing), objections to Claims (except
Securities Claims) shall be filed with the Bankruptcy Court and served upon the
holders of each of the Claims to which objections are made; provided, that no
objection may be filed with respect to any Claim that is Allowed on or before
the Effective Date pursuant to Section 1.1(d)(i)(A), (B) or (D) of the Plan.
10.2. Prosecution of Objections.
After the date of entry of the Confirmation Order, only the Disbursing
Agent shall have authority to file, litigate, settle, or withdraw objections to
Claims (except for Securities Claims). All disputes regarding the existence
amount and treatment of Securities Claims shall be resolved pursuant to ADR,
except as otherwise provided in the Plan.
10.3. No Distributions Pending Allowance.
Notwithstanding any other provision of the Plan, no payment or
distribution shall be made with respect to any Claim or Equity Interest to the
extent it is Contested unless and until such Contested Claim becomes an Allowed
Claim or Equity Interest.
10.4. Distributions After Allowance.
Payments and distributions to each holder of a Contested Claim or
Equity Interest, to the extent that such Claim or Equity Interest ultimately
becomes Allowed, shall be made in accordance with the provision of the Plan
governing the class of Claims or Equity Interests to which the respective holder
belongs.
10.5. Estimation of Claims.
The Disbursing Agent (or the UPC Trustee, as applicable) may, at any
time, request that the Bankruptcy Court estimate any Contested Claim or Equity
Interest pursuant to section 502(c) of the Bankruptcy Code regardless of whether
the Disbursing Agent (or the UPC Trustee, as applicable) has previously objected
to such Claim or Equity Interest or whether the Bankruptcy Court has ruled on
any such objection, and the Bankruptcy Court will retain jurisdiction to
estimate any Claim or Equity Interest at any time during litigation concerning
any objection to any Claim, including during the pendency of any appeal relating
to any such objection. In the event that the Bankruptcy Court estimates any
Contested Claim or Equity Interest, that estimated amount will constitute either
the allowed amount of such Claim or Equity Interest or a maximum limitation on
such Claim or Equity Interest, as determined by the Bankruptcy Court. If the
estimated amount constitutes a maximum limitation on such Claim or Equity
Interest, the Disbursing Agent (or the UPC Trustee, as applicable) may elect to
pursue any supplemental proceedings to object to any ultimate payment on such
Claim or Equity Interest. All of the objection, estimation, settlement, and
resolution procedures set forth in the Plan are cumulative and not necessarily
exclusive of one another. Claims or Equity Interests may be estimated and
subsequently compromised, settled, withdrawn or resolved by any mechanism
approved by the Bankruptcy Court.
ARTICLE XI.
POWERS AND DUTIES OF THE DISBURSING AGENT
11.1. Exculpation.
Except as otherwise provided in this Section 11.1, the Disbursing
Agent, together with its officers, directors, employees, agents, and
representatives, are hereby exculpated by all Persons, holders of Claims and
Equity Interests, and parties in interest, from any and all Causes of Action,
and other assertions of liability (including breach of fiduciary duty) arising
out of the discharge of the powers and duties conferred upon the Disbursing
Agent by the Disbursement Agreement, the Plan, any Final Order of the Bankruptcy
Court entered pursuant to or in the furtherance of the Plan, or applicable law,
except solely for actions or omissions arising out of the Disbursing Agent's
willful misconduct. No holder of a Claim or an Equity Interest, or
representative thereof, shall have or pursue any claim or cause of action (i)
against the Disbursing Agent or its officers, directors, employees, agents, and
representatives for making payments in accordance with the Plan, or for
liquidating assets to make payments under the Plan, or (ii) against any holder
of a Claim or an Equity Interest for receiving or retaining payments or
transfers of assets as provided for by the Plan. Nothing contained in this
Section 11.1 shall preclude or impair any holder of an Allowed Claim or Equity
Interest from bringing an action in the Bankruptcy Court against the Debtor to
compel the making of distributions contemplated by the Plan on account of such
Claim or Equity Interest.
11.2. Powers and Duties of the Disbursing Agent.
Pursuant to the terms and provisions of the Disbursement Agreement and
the Plan, the Disbursing Agent shall be empowered and directed to (a) take all
steps and execute all instruments and documents necessary to make distributions
to holders of Allowed Claims (except Securities Claims); (b) make distributions
contemplated by the Plan; (c) comply with the Plan and the obligations
thereunder; (d) employ, retain, or replace professionals to represent it with
respect to its responsibilities; (e) object to Claims (except Securities Claims)
as specified in Article X hereof, and prosecute such objections; (f) compromise
and settle any issue or dispute regarding the amount, validity, priority,
treatment, or Allowance of any Claim (except Securities Claims) without further
notice or hearing, and without the need for an order of the Bankruptcy Court
approving such compromise or settlement; (g) make annual and other periodic
reports regarding the status of distributions under the Plan to the holders of
Allowed Claims that are outstanding against the Debtor at this time; such
reports to be made available upon request to the holders of any Contested Claim;
and (h) exercise such other powers as may be vested in the Disbursing Agent
pursuant to the Disbursement Agreement, order of the Bankruptcy Court, or the
Plan.
ARTICLE XII.
TREATMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES
12.1. Assumed If Not Rejected.
The Plan constitutes and incorporates a motion to reject all
prepetition executory contracts, and all prepetition unexpired leases to which
the Debtor is a party, except for an executory contract or lease that (a) has
been assumed or rejected by Final Order of the Bankruptcy Court; or (b) is the
subject of a motion to assume or reject that is pending before the Bankruptcy
Court on the Effective Date. The Confirmation Order shall represent and reflect
an order of the Bankruptcy Court approving such rejections and assumptions of
executory contracts and leases as of the Effective Date.
12.2. Cure Payments.
Any monetary amounts by which the contracts and leases to be assumed
under the Plan are in default shall be satisfied (a) by delivery of one Cash
payment on the Distribution Date in the amount of such default, or (b) as
otherwise agreed by the parties or ordered by the Bankruptcy Court.
12.3. Bar to Rejection Damages.
If the rejection of an executory contract or unexpired lease by the
Debtor results in damages to the other party or parties to such contract or
lease, a Claim for such damages, if not heretofore evidenced by a filed proof of
Claim, shall be forever barred and shall not be enforceable against the Debtor,
or its properties or agents, successors, or assigns, unless a proof of Claim is
filed with the Bankruptcy Court and served upon counsel for the Debtor on or
before thirty (30) days after service of notice of entry of the Confirmation
Order.
ARTICLE XIII.
CONDITIONS PRECEDENT TO CONFIRMATION
OF THE PLAN AND THE OCCURRENCE OF THE EFFECTIVE DATE
13.1. Conditions Precedent to Confirmation.
(a) It is a condition to confirmation of the Plan that the
Clerk of the Bankruptcy Court shall have entered an order or orders on
the docket in the Chapter 11 Case, which may be the Confirmation Order,
approving the Plan Documents, authorizing the Debtor to execute, enter
into, and deliver the Plan Documents and to execute, implement, and
give effect to, the transactions contemplated thereby.
(b) It is a condition to confirmation of the Plan that the
Clerk of the Bankruptcy Court shall have entered an order or orders on
the docket in the Chapter 11 Case, which may be the Confirmation Order,
approving the Merger Agreement and authorizing the Debtor, UPC Merger
Sub and FSCI to consummate the Merger.
(c) It is a condition to confirmation of the Plan that the
Clerk of the Bankruptcy Court shall have entered an order or orders on
the docket in the Chapter 11 Case, which may be the Confirmation Order,
approving the compromises and settlements described in Section 14.1 of
the Plan.
(d) It is a condition to confirmation of the Plan that the
Clerk of the Bankruptcy Court shall have entered an order or orders on
the docket in the Chapter 11 Case, which may be the Confirmation Order,
issuing the injunctions described in Section 16.12 of the Plan.
13.2. Conditions Precedent to the Occurrence of the Effective Date.
(a) It is a condition to the occurrence of the Effective Date
that the Confirmation Order shall have been entered by the Clerk of the
Bankruptcy Court on the docket in the Chapter 11 Case, be in full force
and effect and be in form and substance satisfactory to Infinity and
FSCI.
(b) It is a condition to the occurrence of the Effective Date
that (i) the Merger Financing shall have been obtained and (ii) FSCI
shall have acquired and hold 100% ownership interest in and to the Farm
Stores Assets.
(c) It is a condition to the occurrence of the Effective Date
that all necessary and material consents, authorizations and approvals
shall have been given or waived for the transfers and transactions
described in the Merger Agreement.
(d) It is a condition to the occurrence of the Effective Date
that all necessary and material consents, authorizations and approvals
shall have been given or waived for the transfers of property and the
payments described in Sections 7.2 and 7.3 of the Plan, as applicable.
13.3. Waiver of Conditions.
The Proponent (with the consent of Infinity and FSCI) may waive any of
the conditions set forth in Sections 13.1 and 13.2 of the Plan in a writing
executed by each of them.
ARTICLE XIV.
COMPROMISE AND SETTLEMENT
OF CERTAIN CAUSES OF ACTION
14.1. Compromise and Settlement Between and Among the Debtor, the UPC Trust
and the Infinity Parties.
The Plan constitutes a motion pursuant to Bankruptcy Rule 9019 for the
entry of an order authorizing and approving the following compromise and
settlement between and among the Debtor, the UPC Trust and the Infinity Parties:
(a) For and in consideration of the undertakings and other
agreements of the Infinity Parties under and in connection with the
Plan and the Infinity Settlement Agreement, as of the Effective Date,
the Debtor shall: (i) issue 70,000 shares of New UPC Preferred Stock to
Infinity, or its designee, and (ii) release the Infinity Parties from
any and all Causes of Action arising in whole or in part from conduct
or events that occurred prior to the Effective Date (including, without
limitation, derivative claims which the Debtor otherwise has legal
power to assert, compromise or settle in connection with the Chapter 11
Case), except as otherwise provided in the Plan and the Infinity
Settlement Agreement.
(b) For and in consideration of the undertakings and
agreements of UPC under and in connection with the Plan and the
Infinity Settlement Agreement, as of the Effective Date, the Infinity
Parties shall (i) waive and release all of their rights, interests and
claims (including, without limitation, as to UPC, Calibur, Jackson and
under the Thomas Guarantee) in and under the Calibur A Note and the
Calibur B Note, (ii) contribute 200,000 shares of New UPC Common Stock
to the UPC Trust as provided in Section 7.3 of the Plan, and (iii)
release the Debtor, and its Affiliates, and their respective past and
present directors, officers, employees, agents, sales representatives,
and attorneys from any and all Causes of Action and Claims Over arising
in whole or in part from conduct or events that occurred prior to the
Effective Date, except as otherwise provided in the Plan and the
Infinity Settlement Agreement.
(c) As of the Effective Date, the Infinity Parties and the
Debtor shall release the UPC Trust and the UPC Trustee from any and all
Causes of Action arising in whole or in part from conduct or events
that occurred prior to the Effective Date, except as otherwise provided
in the Plan and the Infinity Settlement Agreement.
ARTICLE XV.
RETENTION OF JURISDICTION
15.1. Scope of Jurisdiction.
Notwithstanding the entry of the Confirmation Order and the occurrence
of the Effective Date, the Bankruptcy Court shall retain such jurisdiction over
the Chapter 11 Case after the Effective Date as legally permissible, including,
but not limited to, jurisdiction to:
(a) Allow, disallow, determine, liquidate, classify, estimate
or establish the priority or secured or unsecured status of any Claim,
including the resolution of any request for payment of any
Administrative Expense Claim and the resolution of any and all
objections to the allowance or priority of Claims;
(b) Grant or deny any applications for allowance and payment
of any Fee Claim for periods ending on or before the Effective Date;
(c) Resolve any matters related to the assumption, assumption
and assignment or rejection of any executory contract or unexpired
lease to which the Debtor is a party or with respect to which the
Debtor may be liable and to hear, determine and, if necessary,
liquidate, any Claims arising therefrom, including those matters
related to the amendment after the Effective Date pursuant to Article
XVI of the Plan to add any executory contracts or unexpired leases to
Appendix II hereto;
(d) Ensure that distributions to holders of Allowed Claims are
accomplished pursuant to the provisions of the Plan, including ruling
on any motion filed pursuant to Article XII;
(e) Decide or resolve any motions, adversary proceedings,
contested or litigated matters and any other matters and grant or deny
any applications involving the Debtor that may be pending on or
commenced after the Effective Date;
(f) Enter such orders as may be necessary or appropriate to
implement or consummate the provisions of the Plan, the Merger
Agreement and all contracts, instruments, releases, indentures and
other agreements or documents created in connection with the Plan or
the Disclosure Statement, including without limitation the UPC Trust
Agreement and the Infinity Settlement Agreement, including to correct
any defect, cure any omission or reconcile any inconsistency, except as
provided in Section 15.1(g) or elsewhere herein;
(g) Resolve any cases, controversies, suits, or disputes that
may arise in connection with the consummation, interpretation or
enforcement of the Plan or the UPC Trust Agreement or any entity's
obligations incurred in connection with the Plan or the UPC Trust
Agreement, or any other agreements governing, instruments evidencing or
documents relating to any of the foregoing, including the
interpretation or enforcement of any rights, remedies or obligations
under any of the foregoing;
(h) Issue injunctions, enter and implement other orders or
take such other actions as may be necessary or appropriate to restrain
interference by any entity with Consummation or enforcement of the
Plan, except as otherwise provided herein;
(i) Enter and implement such orders as are necessary or
appropriate if the Confirmation Order is for any reason modified,
stayed, reversed, revoked or vacated;
(j) Determine any other matters that may arise in connection
with or relate to the Plan, the Disclosure Statement, the Confirmation
Order or any contract, instrument, release, indenture or other
agreement or document created in connection with the Plan or the
Disclosure Statement, including without limitation the UPC Trust
Agreement, except as provided in Section 15.1(g) or elsewhere herein;
and
(k) Enter a Final Decree as contemplated by Bankruptcy Rule
3022.
ARTICLE XVI.
MISCELLANEOUS PROVISIONS
16.1. Notice of Entry of Confirmation Order and Relevant Dates.
Promptly upon entry of the Confirmation Order, the Debtor shall publish
as directed by the Bankruptcy Court and serve on all known parties in interest,
holders of Claims, and holders of Equity Interests, notice of the entry of the
Confirmation Order and all relevant deadlines and dates under the Plan,
including, but not limited to, the deadline for filing notice of Administrative
Expense Claims (Section 5.1 hereof), and the deadline for filing rejection
damage claims (Section 12.3 hereof).
16.2. Payment of Statutory Fees.
All fees payable pursuant to section 1930 of title 28 of the United
States Code, as determined if necessary by the Bankruptcy Court at the hearing
pursuant to section 1128 of the Bankruptcy Code, shall be paid on or before the
Effective Date.
16.3. No Interest or Attorneys' Fees.
Except as expressly stated in the Plan, or as allowed by the Bankruptcy
Court, no interest, penalty or late charge arising after the Petition Date, and
no award or reimbursement of attorneys fees or related expenses or
disbursements, shall be allowed on, or in connection with, any Claim.
16.4. Modification of the Plan.
Modification of the Plan may be proposed in writing by the Proponent at
any time before confirmation, provided that the Plan, as modified, meets the
requirements of section 1122 and 1123 of the Bankruptcy Code, and the Debtor
shall have complied with section 1125 of the Bankruptcy Code. The Proponent may
modify the Plan (with the consent of Infinity and FSCI) at any time after
confirmation and before substantial consummation, provided that the Plan, as
modified, meets the requirements of sections 1122 and 1123 of the Bankruptcy
Code and the Bankruptcy Court, after notice and a hearing, confirms the Plan as
modified, under section 1129 of the Bankruptcy Code, and the circumstances
warrant such modifications. A holder of a Claim that has accepted or rejected
the Plan shall be deemed to have accepted or rejected, as the case may be, such
plan as modified, unless, within the time fixed by the Bankruptcy Court, such
holder changes its previous acceptance or rejection.
16.5. Revocation of Plan.
The Proponent reserves the right to revoke and withdraw the Plan after
the Confirmation Date and prior to the occurrence of the Effective Date (with
the consent of Infinity and FSCI). If the Proponent revokes or withdraws the
Plan, or if the Effective Date does not occur, then, the Plan and all
settlements set forth in Article XIV of the Plan shall be deemed null and void
and nothing contained herein shall be deemed to constitute a waiver or release
of any Claims by or against the Proponent or any other person or to prejudice in
any manner the rights of the Proponent or any person in any other further
proceedings involving the Debtor.
16.6. Exemption From Transfer Taxes.
Pursuant to section 1146(c) of the Bankruptcy Code, the issuance,
transfer, or exchange of notes or equity securities under the Plan, the creation
of any mortgage, deed of trust, or other security interest, the making or
assignment of any lease or sublease, or the making or delivery of any deed or
other instrument of transfer under, in furtherance of, or in connection with,
the Plan, including, without limitation, the Merger Agreements or any agreements
of consolidation, deeds, bills of sale, or assignments executed in connection
with any of the transactions contemplated under the Plan shall not be subject to
any stamp, real estate, transfer, mortgage recording, or other similar tax.
16.7. Setoff Rights.
In the event that the Debtor has a claim of any nature whatsoever
against the holder of a Claim, the Debtor may, but is not required to, setoff
against the Claim (and any payments or other distributions to be made in respect
of such Claim hereunder) the Debtor's claim against the holder, unless any such
claim is or will be released under the Plan, subject to the provisions of
section 553 of the Bankruptcy Code. Neither the failure to set off nor the
allowance of any Claim under the Plan shall constitute a waiver or release by
the Debtor of any claim that the Debtor has against the holder of a Claim.
16.8. Subordination Rights.
All Claims against and Equity Interests in the Debtor, based upon any
claimed subordination rights against the Debtor or rights to avoid payments or
transfers of property by the Debtor pursuant to any provision of the Bankruptcy
Code or other applicable law, shall be deemed satisfied as to the Debtor by the
distributions under the Plan to holders of Allowed Claims and Allowed Equity
Interests having such subordination rights and any rights to avoid payments or
transfers of property. As proposed in the Plan, the distributions to the various
classes of Claims hereunder shall not be subject to levy, garnishment,
attachment, or like legal process by any holder of a Claim or Equity Interest by
reason of any claimed subordination rights or otherwise of the holder of a Claim
or Equity Interest against the holder of another Claim or Equity Interest,
except as otherwise provided herein. Distributions under the Plan shall be
subject to and modified by any order pursuant to which a party in interest
obtains a Final Order directing distributions other than as provided in the
Plan, which distributions take into account the subordination rights of holders
of Claims and Equity Interests between and among themselves.
16.9. Compliance with Tax Requirements.
In connection with the Plan, the Debtor, and the Disbursing Agent, and
the UPC Trustee shall comply with all withholding and reporting requirements
imposed by federal, state, local, and foreign taxing authorities and all
distributions hereunder shall be subject to such withholding and reporting
requirements. Pursuant to section 1146(c) of the Bankruptcy Code, the issuance,
transfer, or exchange of promissory notes, equity securities, or other
instruments under the Plan, the creation of any mortgage, deed of trust, or
other security interest, the making or assignment of any lease or sublease or
the making or delivery of any deed or other instrument of transfer under, in
furtherance of, or in connection with the Plan, including, without limitation,
any merger agreements or agreements of consolidation, deeds, bills of sale, or
assignments executed in connection with any of the transactions contemplated
under the Plan shall not be subject to any stamp, real estate transfer, mortgage
recording, or other similar tax.
16.10. Recognition of Guaranty Rights.
The classification of and manner of satisfying all Claims under the
Plan take into consideration (a) the existence of guaranties by the Debtor of
obligations of other Persons, and (b) the fact that the Debtor may be a joint
obligor with other Persons with respect to an obligation. All Claims against the
Debtor based upon any such guaranties or joint obligations shall be discharged
in the manner provided in the Plan; provided, that no creditor shall be entitled
to receive more than one recovery with respect to any of its Allowed Claims.
16.11. Compliance With All Applicable Laws.
If notified by any governmental authority that it is in violation of
any applicable law, rule, regulation, or order of such governmental authority
relating to its businesses, the Debtor, shall take whatever action as may be
required to comply with such law, rule, regulation, or order; provided, that
nothing contained herein shall require such compliance if the legality or
applicability of any such requirement is being contested in good faith, and, if
appropriate, an adequate reserve for such requirement has been set aside.
16.12. Discharge of Claims.
Except as otherwise provided herein or in the Confirmation Order, the
rights afforded in the Plan and the payments and distributions to be made
hereunder shall discharge all existing debts and Claims of any kind, nature, or
description whatsoever against the Debtor or the Estate Assets to the extent
permitted by section 1141 of the Bankruptcy Code; upon the Effective Date, all
existing Claims shall be, and shall be deemed to be discharged; and all holders
of Claims shall be precluded from asserting against the Debtor, or any of the
Estate Assets, any other or further Claim based upon any act or omission,
transaction, or other activity of any kind or nature that occurred prior to the
Effective Date, whether or not such holder filed a proof of Claim.
16.13. Injunctions.
(a) On the Effective Date, all Persons who have been, are, or
may be holders of Claims against or Equity Interests in the Debtor
shall be enjoined from taking any of the following actions against or
affecting the Debtor, its Estate, or its assets and property with
respect to such Claims or Equity Interests (other than actions brought
to enforce any rights or obligations under the Plan and appeals, if
any, from the Confirmation Order):
(i) commencing, conducting or continuing in any
manner, directly or indirectly, any suit, action or other
proceeding of any kind against the Debtor, its Estate, or its
assets or property, or any direct or indirect successor in
interest to the Debtor, or any assets or property of such
transferee or successor (including, without limitation, all
suits, actions, and proceedings that are pending as of the
Effective Date, which must be withdrawn or dismissed with
prejudice);
(ii) enforcing, levying, attaching, collecting or
otherwise recovering by any manner or means whether directly
or indirectly any judgment, award, decree or order against the
Debtor, its Estate, or its assets or property, or any direct
or indirect successor in interest to the Debtor, or any assets
or property of such transferee or successor;
(iii) creating, perfecting or otherwise enforcing in
any manner, directly or indirectly, any Lien against the
Debtor, its Estate, or its respective assets or property, or
any direct or indirect successor in interest to any of the
Debtor, or any assets or property of such transferee or
successor other than as contemplated by the Plan;
(iv) asserting any setoff, right of subrogation or
recoupment of any kind, directly or indirectly against any
obligation due the Debtor, its Estate, or its respective
assets or property, or any direct or indirect successor in
interest to any of the Debtor, or any assets or property of
such transferee or successor; and
(v) proceeding in any manner in any place whatsoever
that does not conform to or comply with the provisions of the
Plan or the settlement set forth in Article XIV of the Plan to
the extent such settlements have been approved by the
Bankruptcy Court in connection with confirmation of the Plan.
(b) Except as provided herein, as of the Effective Date, all
Persons are permanently enjoined from commencing or continuing in any
manner, any action or proceeding (including, without limitation, the
Causes of Action asserted in the Pisacreta/Tucci Action), whether
directly, derivatively, on account of or respecting any Claim, debt,
right, Cause of Action or liability released or to be released pursuant
to the Plan.
(c) From and after the Effective Date, any Infinity Securities
Claim shall channel and transfer to the UPC Trust, and all Persons who
have been, are, or may be holders of any such Infinity Securities Claim
shall be enjoined from taking any of the following actions against or
affecting Infinity or its assets and property with respect to such
Infinity Securities Claim (other than actions brought to enforce any
rights or obligations under the Plan, the UPC Trust Agreement and the
Infinity Settlement Agreement):
(i) commencing, conducting or continuing in any
manner, directly or indirectly, any suit, action or other
proceeding of any kind against any Infinity party or its
assets or property, or its direct or indirect successors in
interest, or any assets or property of such transferee or
successor (including, without limitation, all suits, actions,
and proceedings that are pending as of the Effective Date,
which must be withdrawn or dismissed with prejudice);
(ii) enforcing, levying, attaching, collecting or
otherwise recovering by any manner or means whether directly
or indirectly any judgment, award, decree or order against any
Infinity Party or its assets or property, or its direct or
indirect successors in interest, or any assets or property of
such transferee or successor;
(iii) creating, perfecting or otherwise enforcing in
any manner, directly or indirectly, any Lien against any
Infinity Party or its assets or property, or its direct or
indirect successors in interest, or any assets or property of
such transferee or successor;
(iv) asserting any set-off, right of subrogation or
recoupment of any kind, directly or indirectly against any
obligation due any Infinity Party, or its assets or property,
or its direct or indirect successors in interest, or any
assets or property of such transferee or successor; and
(v) proceeding in any manner in any place whatsoever
that does not conform to or comply with the provisions of the
Plan, or the settlements set forth in Article XIV of the Plan,
the UPC Trust Agreement or the Infinity Settlement Agreement.
(d) The injunction provided by Section 16.12(c) shall
terminate and be of no further force or effect if at any time or from
time to time the UPC Trustee file with the Bankruptcy Court and serve
upon the Infinity Parties a notice that the UPC Trust assets have been
fully expended and that additional Allowed Securities Claims exists or
that all Securities Claims have not yet been resolved and the Infinity
Parties, within thirty (30) days after the filing of such notice, fail
to make an additional contribution to the UPC Trust in an aggregate
amount equivalent to (A) not less than $100,000 (provided that such
amount must be at least enough to satisfy all outstanding Allowed
Securities Claims in full and provide at least $25,000 to fund the
expenses of the UPC Trust in liquidating any remaining Securities
Claims) or (B) such lesser amount as may be agreed to by the UPC
Trustee.
16.14. Discharge of the Debtor.
Any consideration distributed under the Plan shall be in exchange for
and in complete satisfaction, discharge, and release of all Claims of any nature
whatsoever against the Debtor and any of its assets or properties; and, except
as otherwise provided herein, upon the Effective Date, the Debtor shall be
deemed discharged and released to the extent permitted by section 1141 of the
Bankruptcy Code from any and all Claims, including but not limited to demands
and liabilities that arose before the Effective Date, and all debts of the kind
specified in section 502(g), 502(h), or 502(i) of the Bankruptcy Code, whether
or not (a) a proof of Claim based upon such debt is filed or deemed filed under
section 501 of the Bankruptcy Code; (b) a Claim based upon such debt is allowed
under section 502 of the Bankruptcy Code; or (c) the holder of a Claim based
upon such debt has accepted the Plan. Except as provided herein, the
Confirmation Order shall be a judicial determination of discharge of all
liabilities of the Debtor. As provided in section 524 of the Bankruptcy Code,
such discharge shall void any judgment against the Debtor at any time obtained
to the extent it relates to a Claim discharged, and operates as an injunction
against the prosecution of any action against the Debtor, or its property, to
the extent it relates to a Claim discharged.
16.15. Exculpation.
Neither the Proponent, Infinity, FSCI, any of their respective
Affiliates, nor any of their respective members, officers, directors, managers,
employees, agents, or professionals shall have or incur any liability to any
holder of a Claim or Equity Interest for any act, event, or omission in
connection with, or arising out of, the preparation and dissemination of the
Disclosure Statement, the solicitation of votes with respect to the Plan, the
Chapter 11 Case, the confirmation of the Plan, the consummation of the Plan, or
the administration of the Plan or the property to be distributed under the Plan,
except for willful misconduct.
16.16. Binding Effect.
The Plan shall be binding upon and inure to the benefit of the Debtor,
Infinity, the holders of all Claims and Equity Interests, and their respective
successors and assigns.
16.17. Notices.
Whenever service is required in the Plan, such service shall be made
upon the following parties so as to be received by 5:00 p.m. eastern time on or
before the date required:
The Debtor:
Attn: President
United Petroleum Corporation
2620 Mineral Springs Road, Suite A
Knoxville, Tennessee 37917
Facsimile: (423) 688-3463
with a copy to:
Laura Davis Jones, Esquire
Young Conaway Stargatt & Taylor, LLP
Rodney Square North, 11th Floor
P.O. Box 391
Wilmington, Delaware 19899-0391
Facsimile: (305) 571-1254
David A. Wood, Esquire
Wood, Exall & Bonnet, L.L.P.
12222 Merit Drive, Suite 880
Dallas, Texas 75251
Facsimile: (972) 991-9261
Infinity:
Infinity Investors Limited
38 Hertford Street
London, England WIY-7T6
Facsimile:
with a copy to:
Stuart J. Chasanoff, Esquire
HW Finance LLC
1601 Elm Street, Suite 4000
Dallas, Texas 75201
Facsimile: (214)720-1667
Thomas E Lauria, Esquire
White & Case
First Union Financial Center
200 South Biscayne Boulevard
Miami, FL 33131
Facsimile: (305) 358-5744
16.18. Governing Law.
Unless a rule of law or procedure is supplied by federal law (including
the Bankruptcy Code and Bankruptcy Rules) or the Delaware General Corporation
Law, the laws of the State of Delaware shall govern the construction and
implementation of the Plan and any agreements, documents, and instruments
executed in connection with the Plan or the Chapter 11 Case, including the Plan
Documents, except as may otherwise be provided in such agreements, documents,
instruments, and Plan Documents.
<PAGE>
16.19. Severability.
SHOULD THE BANKRUPTCY COURT DETERMINE THAT ANY PROVISION OF THE PLAN IS
UNENFORCEABLE EITHER ON ITS FACE OR AS APPLIED TO ANY CLAIM OR EQUITY INTEREST
OR TRANSACTION, THE PROPONENT (WITH THE CONSENT OF INFINITY) MAY MODIFY THE PLAN
IN ACCORDANCE WITH SECTION 16.5 OF THE PLAN SO THAT SUCH PROVISION SHALL NOT BE
APPLICABLE TO THE HOLDER OF ANY CLAIM OR EQUITY INTEREST. SUCH A DETERMINATION
OF UNENFORCEABILITY SHALL NOT (A) LIMIT OR AFFECT THE ENFORCEABILITY AND
OPERATIVE EFFECT OF ANY OTHER PROVISION OF THE PLAN OR (B) REQUIRE THE
RESOLICITATION OF ANY ACCEPTANCE OR REJECTION OF THE PLAN.
Dated: July ___, 1999
Respectfully submitted,
UNITED PETROLEUM CORPORATION
By:
Its:
<PAGE>
APPENDICES
Appendix I -- The Merger Agreement.
Appendix II -- Alternative Dispute Resolution Procedures For Treatment of
Securities Claims Pursuant to The Plan of Reorganization Under
Chapter 11 of the United States Bankruptcy Code For United
Petroleum Corporation.
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I.
DEFINITIONS AND INTERPRETATION.................................................1
1.1. Definitions..............................................................1
1.2. Interpretation..........................................................12
1.3. Application of Definitions and Rules of
Construction Contained in the Bankruptcy Code...........................12
1.4. Other Terms.............................................................12
1.5. Appendices and Plan Documents...........................................12
ARTICLE II
CLASSIFICATION OF CLAIMS AND EQUITY INTERESTS.................................12
2.1. Claims and Equity Interests Classified..................................12
2.2. Administrative Expense Claims and Priority Tax Claims...................13
2.3. Claims and Equity Interests.............................................13
2.4. Separate Classification of Secured Claims...............................13
ARTICLE III
IDENTIFICATION OF IMPAIRED
CLASSES OF CLAIMS AND EQUITY INTERESTS........................................13
3.1. Unimpaired Classes of Claims and Equity Interests.......................13
3.2. Impaired Classes of Claims and Equity Interests.........................14
3.3. Impairment Controversies................................................14
ARTICLE IV.
PROVISIONS FOR TREATMENT OF CLAIMS
AND EQUITY INTERESTS UNDER THE PLAN...........................................14
4.1. Treatment of Claims and Equity Interests................................14
ARTICLE V.
PROVISIONS FOR TREATMENT
OF UNCLASSIFIED CLAIMS UNDER THE PLAN.........................................15
5.1. Treatment of Administrative Expense Claims..............................15
5.2. Treatment of Priority Tax Claims........................................16
ARTICLE VI.
ACCEPTANCE OR REJECTION OF THE PLAN;
EFFECT OF REJECTION BY ONE OR MORE
CLASSES OF CLAIMS OR EQUITY INTERESTS.........................................17
6.1. Classes Entitled to Vote................................................17
6.2. Class Acceptance Requirement............................................17
6.3. Confirmation Without Acceptance by All Impaired Classes.................17
ARTICLE VII.
TRANSFERS OF PROPERTY TO AND
ASSUMPTION OF CERTAIN LIABILITIES BY THE UPC TRUST............................18
7.1. Creation of UPC Trust and Appointment of Trustee........................18
7.2. Transfers of Certain Property of the Debtor to the UPC Trust............18
7.3. Transfers of Certain Property of the
Infinity Parties to the UPC Claims Trust................................18
7.4. Distribution of Assets by the UPC Trust.................................19
7.5. Assumption of Certain Liabilities by the UPC Trust......................19
7.6. Certain Property Held in Trust by the Debtor and the Infinity Parties...19
7.7. Obligations of the UPC Trust with Regard to Claims Over.................20
7.8. Powers and Duties of the UPC Trustee....................................21
ARTICLE VIII.
MEANS FOR IMPLEMENTATION OF THE PLAN..........................................22
8.1. Continued Corporate Existence...........................................22
8.2. The Merger..............................................................22
8.3. Vesting of Assets.......................................................22
8.4. Management..............................................................22
8.5. Reconstitution of UPC Board of Directors................................23
8.6. Officers ...............................................................23
8.7. The New UPC Charter and Bylaws..........................................23
8.8. Issuance of New UPC Common Stock........................................23
8.9. Issuance of New UPC Preferred Stock.....................................24
8.10. Cancellation of Instruments and Agreements..............................24
8.11. Effectuating Documents..................................................24
8.12. Treatment of Affiliate Claims...........................................25
8.13. Retention of Causes of Action...........................................25
8.14. Indemnification.........................................................25
8.15. Employee Benefits.......................................................25
8.16. Appointment of the Disbursing Agent.....................................26
8.17. Transactions on the Effective Date......................................26
8.18. Sources of Cash for Plan Distributions..................................26
ARTICLE IX.
PROVISIONS GOVERNING DISTRIBUTIONS............................................27
9.1. Date of Distributions...................................................27
9.2. Disbursing Agent/UPC Trustee............................................27
9.3. Means of Cash Payment...................................................27
9.4. Delivery of Distributions...............................................27
9.5. Surrender of Notes, Instruments, and Securities.........................28
9.6. Expenses Incurred On or After the Effective Date
and Claims of the Disbursing Agent and the UPC Trustee..................28
9.7. Time Bar to Cash Payments...............................................29
9.8. Initial and Interim Distributions.......................................29
9.9. Effect of Distributions on Account of Securities Claims.................29
ARTICLE X.
PROCEDURES FOR RESOLVING AND TREATING
CONTESTED CLAIMS AND EQUITY INTERESTS.........................................29
10.1. Objection Deadline......................................................29
10.2. Prosecution of Objections...............................................29
10.3. No Distributions Pending Allowance......................................30
10.4. Distributions After Allowance...........................................30
10.5. Estimation of Claims....................................................30
ARTICLE XI.
POWERS AND DUTIES OF THE DISBURSING AGENT.....................................30
11.1. Exculpation.............................................................30
11.2. Powers and Duties of the Disbursing Agent...............................31
ARTICLE XII.
TREATMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES.........................31
12.1. Assumed If Not Rejected.................................................31
12.2. Cure Payments...........................................................32
12.3. Bar to Rejection Damages................................................32
ARTICLE XIII.
CONDITIONS PRECEDENT TO CONFIRMATION
OF THE PLAN AND THE OCCURRENCE OF THE EFFECTIVE DATE..........................32
13.1. Conditions Precedent to Confirmation....................................32
13.2. Conditions Precedent to the Occurrence of the Effective Date............33
13.3. Waiver of Conditions....................................................33
ARTICLE XIV.
COMPROMISE AND SETTLEMENT
OF CERTAIN CAUSES OF ACTION...................................................33
14.1. Compromise and Settlement Between and Among
the Debtor, the UPC Trust and the Infinity Parties......................33
ARTICLE XV.
RETENTION OF JURISDICTION.....................................................34
15.1. Scope of Jurisdiction...................................................34
ARTICLE XVI.
MISCELLANEOUS PROVISIONS......................................................36
16.1. Notice of Entry of Confirmation Order and Relevant Dates................36
16.2. Payment of Statutory Fees...............................................36
16.3. No Interest or Attorneys'Fees...........................................36
16.4. Modification of the Plan................................................36
16.5. Revocation of Plan......................................................36
16.6. Exemption From Transfer Taxes...........................................37
16.7. Setoff Rights...........................................................37
16.8. Subordination Rights....................................................37
16.9. Compliance with Tax Requirements........................................37
16.10. Recognition of Guaranty Rights.........................................38
16.11. Compliance With All Applicable Laws....................................38
16.12. Discharge of Claims....................................................38
16.13. Injunctions............................................................38
16.14. Discharge of the Debtor................................................39
16.15. Exculpation............................................................41
16.16. Binding Effect.........................................................41
16.17. Notices42
16.18. Governing Law..........................................................43
16.19. Severability...........................................................44
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
In re: ) Chapter 11
)
UNITED PETROLEUM CORPORATION, ) Case No. 99-88 (PJW)
)
Debtor. )
FINDINGS OF FACT, CONCLUSIONS OF LAW AND ORDER
AND ORDER CONFIRMING AMENDED PLAN OF REORGANIZATION
United Petroleum Corporation ("UPC" or "Debtor"), as
Debtor-In-Possession, having on July 23, 1999 filed the Second Amended Plan of
Reorganization Under Chapter 11 of The Bankruptcy Code for United Petroleum
Corporation (the "Plan"); and the Debtors having on July 23, 1999 filed the
Second Amended Disclosure Statement With Respect to Second Amended Plan of
Reorganization of United Petroleum Corporation (the "Disclosure Statement"); and
the Court, by Order dated July 23, 1999 (the "Disclosure Approval Order") having
approved the Disclosure Statement after notice and a hearing held on July 22,
1999 and July 23, 1999; and upon the affidavits of service filed herein
reflecting compliance with the notice and solicitation requirements of the
Disclosure Approval Order; and upon the Declaration of Kathleen Logan Certifying
the Ballots Accepting and Rejecting the Plan filed with the Court on August 23,
1999; and objections to confirmation of the Plan having been filed by (i) John
Rankin, (ii) Dan Dotan and Mantel Investments, (iii) The Internal Revenue
Service, (iv) John Pisacreta and James Lynn (the "Securities Claim Objectors")
and (v) the Securities and Exchange Commission (collectively, the "Objections');
and upon the submission of Plan Documents filed on August 13, 1999 (the "Plan
Documents"); and upon the submission of the revised form of Merger Agreement on
September 29, 1999 (the "Merger Agreement"), and after a hearing having been
held on September 29, 1999 (the "Hearing"); and upon the evidence adduced and
proffered and the arguments of counsel made at the Hearing; and the Court having
reviewed all documents in connection with confirmation and having heard all
parties desiring to be heard; and the Debtor, Infinity and the Securities Claim
Objectors having reached an agreement as set forth herein regarding the terms on
which the objections of the Securities Claim Objectors shall be resolved; and
upon the record compiled in the case; and after due deliberation and
consideration of all of the foregoing; and sufficient cause appearing therefor;
the Court hereby makes the following:
FINDINGS OF FACT AND CONCLUSIONS OF LAW:
A. Capitalized terms used herein, but not defined herein, shall have
the respective meanings attributed to such terms in the Plan and the Disclosure
Statement.
B. This Court has jurisdiction over the Debtor's chapter 11 case
pursuant to 28 U.S.C. Section 1334(a) and 157(l). Venue of these proceedings and
the chapter 11 case in this district is proper pursuant to 28 U.S.C. Section
1408 and 1409. This is a core proceeding pursuant to 28 U.S.C. Section
157(b)(2).
C. The Plan complies with all of the applicable provisions of the
Bankruptcy Code.
D. The classification of claims and interests under the Plan is proper
under Section 1122 of the Bankruptcy Code.
E. The Plan provides equal treatment for each Claim or Interest of a
particular class.
F. The Debtor, as proponent of the Plan has complied with the
applicable provisions of the Bankruptcy Code.
G. The Plan has been proposed in good faith and not by any means
forbidden by law.
H. Any payments made or promised by the Debtor, or a person issuing
securities or acquiring property under the Plan, for services or for costs and
expenses in, or in connection with, the case, or in connection with the Plan and
incident to the case, have been approved by, or is subject to approval of the
Court as reasonable.
I. In the Disclosure Statement, the identity, qualifications, and
affiliation of the persons who are to serve as officers and directors of the
reorganized debtor after confirmation of the Plan was fully disclosed and the
appointment of such persons is consistent with the interests of the Debtor's
creditors and equity security holders and with public policy.
J. In the Disclosure Statement, the identity of any insider that will
be employed or retained by the Debtor and his compensation has been fully
disclosed.
K. The provisions of Section 1129(a)(6) of the Bankruptcy Code are
inapplicable to this case.
L. The procedures by which the ballots for acceptance or rejection of
the Plan were distributed and tabulated were fair, properly conducted, and
complied with the Bankruptcy Code, the Bankruptcy Rules and the Disclosure
Approval Order.
M. As evidenced by the Disclosure Statement and at the Hearing, each
holder of a Claim or Interest in each impaired class has either accepted the
Plan or will receive or retain under the Plan property of a value, as of the
Effective Date of the Plan, that is not less than the amount that such holder
would receive or retain if the Debtor liquidated under Chapter 7 of the
Bankruptcy Code on such date.
N. With respect to each class of Claims or Interests, such class has
accepted the Plan or such class is not impaired under the Plan and is,
therefore, deemed to have accepted the Plan under Section 1126(f) of the
Bankruptcy Code, except for Class 8.
O. With respect to Class 8, the requirements of 11 U.S.C. Section
1129(b)(2)(c) have been satisfied.
P. At least one impaired class of claims has accepted the Plan,
determined without including any acceptances of the Plan by any insider.
Q. Except to the extent that the holder of a particular claim has
agreed to a different treatment of such Claim, the treatment of Claims under the
Plan of the type specified in Sections 507(a)(1) and 507(a)(3) - 507(a)(8) of
the Bankruptcy Code, if any, complies with the provisions of Section 1129(a)(9)
of the Bankruptcy Code.
R. No other chapter 11 plan has been moved for confirmation.
S. The primary purpose of the Plan is not the avoidance of taxes or
the requirements of Section 5 of the Securities Act of 1933.
T. Confirmation of the Plan is not likely to be followed by the need
for further financial reorganization of the Debtor.
U. All fees payable under section 1930 of title 28 of the United
States Code, have either been paid or will be paid under the Plan.
V. The Plan and the Infinity Settlement Agreement are hereby modified
as follows: (a) Infinity Securities Claims asserted in the Pisacreta/Tucci
Action shall (including, without limitation, the Claims of the named plaintiffs
therein, the members of the putative class sought to be certified therein
whether or not the class is certified, and any opt-outs from such class) shall
be excluded from the injunctive provisions of Section 16.13(c) of the Plan; (b)
any assets in the UPC Trust after the satisfaction of all Allowed Securities
Claims shall be distributed 100% to the Infinity Parties; and (c) the Infinity
Parties shall retain all of their Causes of Action for contribution and
indemnity against any Person with respect to the Infinity Securities Claims,
except the Debtor, its affiliates and their respective officers, directors and
employees.
W. The settlements and compromises incorporated into the Plan
(including, the settlement and compromise set forth in Section 14.1 of the Plan
and the Infinity Settlement Agreement, as modified pursuant to paragraph V,
above) meet the requirements for approval under section 1123(6)(3) of the Code
and Bankruptcy Rule 9019 because, among other things, the settlements:
i. reflect a reasonable balance of the risks and expenses of both
future litigation and the continuation of this Chapter 11 Case, on the one
hand, and early resolution of the disputes, on the other hand;
ii. fall within the range of reasonableness for the resolution of
complex litigation or litigable issues and claims;
iii. are fair and equitable and in the best interest of the Debtor,
the Debtor's estate and all holders of Claims and Equity Interests; and
iv. Are essential to the Debtor's reorganization and the confirmation
of the Plan.
X. The Proponent, Infinity and FSCI have consented to the approval of
the compromises and settlements described in Section 14.1 of the Plan, as
modified hereby, and the exclusion of Infinity Securities Claims asserted in the
Pisacreta/Tucci Action from the injunctive provisions set forth in Section
16.13(c) of the Plan.
Y. The Plan, as modified hereby, does not materially adversely affect
the treatment of any class of Claims or Equity Interests under the Plan.
Consequently, all votes accepting the Plan shall constitute votes accepting the
Plan, as modified hereby.
Z. By operation of section 1145 of the Bankruptcy Code, the
distribution of new UPC Common Stock to be issued under the Plan shall be exempt
from registration under section 5 of the Securities Act of 1933, as amended, and
any state or local law requiring registration for offer or sale of a security or
registration or licensing of an issuer of, or broker or dealer in, a security.
All such securities so issued shall be freely transferable by the initial
recipients thereof (i) except for any such securities received by an underwriter
within the meaning of section 1145(b) of the Bankruptcy Code and (ii) subject to
any restriction contained in the terms of such securities themselves, in the
Plan or any documents relating to the Plan.
NOW, it is hereby,
ORDERED, ADJUDGED, and DECREED, that:
1. All Objections, to the extent not settled or withdrawn, are hereby
expressly overruled.
2. The Plan, as modified hereby (the "Modified Plan") and as
supplemented by the Merger Agreement, is confirmed pursuant to section 1129 of
the Bankruptcy Code; provided, however, that if there is any conflict between
the terms of the Modified Plan and the terms of the Merger Agreement, the terms
of the Modified Plan shall control and if there is any conflict between the
terms of either the Modified Plan or Merger Agreement and the terms of this
Confirmation Order, this Confirmation Order shall control.
3. The Merger Agreement and Plan Documents substantially in the forms
previously filed with the Court, are approved and the Debtor is authorized and
directed to execute, enter into and deliver such documents and to execute,
implement and consummate the transactions contemplated thereby.
4. The Debtor is hereby authorized, empowered, and ordered to issue,
execute, deliver, file and record any documents or court papers or pleadings,
and to take any and all actions, that are necessary or desirable to implement,
effectuate, and consummate the transactions contemplated by the Plan, whether or
not specifically referred to therein and without further application or order of
this Court, in each case with like effect as if exercised and taken by unanimous
action of the directors and stockholders of the Debtor as may be necessary to
cause the same to become effective under the Delaware General Corporation Law.
5. The Debtor shall remain a Debtor-in-Possession under the Bankruptcy
Code until the Effective Date. The Debtor may consummate the transactions
contemplated by the Plan and make distributions to creditors after the Effective
Date in accordance with the Plan, and free of any restrictions imposed by the
Bankruptcy Code.
6. Any and all pre-petition unexpired leases and executory contracts
not previously rejected by the Debtor, unless specifically assumed pursuant to
the Bankruptcy Code prior to the date hereof or the subject of a motion to
assume or assume and assign pending on the date hereof, shall be deemed rejected
by the Debtor effective as of the Effective Date of the Plan.
7. All proofs of claim with respect to claims arising from the
rejection of executory contracts and unexpired leases shall, unless another
order of the Bankruptcy Court provides for an earlier date, be filed with the
Bankruptcy Court within thirty (30) days after the mailing of notice of the
entry of this order. Any proof of claim that is not timely filed shall be
released, discharged and forever barred from assertion against the Debtor, its
estate or property or the Post-Confirmation Debtor.
8. The exculpation and injunction provisions set forth in the Modified
Plan, including without limitation, those set forth in Sections 5.2, 8.14, 11.1,
16.12, 16.13, 16.14 and 16.15 of the Modified Plan, are approved; provided,
however, that the injunction provided by section 5.2 of the Plan shall not
result in the release by the United States Internal Revenue Service (the "IRS")
of any claim against any responsible officer or director of the Debtor that
otherwise would be liable to the IRS on any priority tax claim owed by the
Debtor to the IRS and further provided that notwithstanding section 16.13(iv) of
the Modified Plan, the IRS shall be permitted to offset against any claim of the
Debtor or Reorganized Debtor against the IRS any claim of the IRS against the
Debtor that was timely filed in the Debtor's Chapter 11 case, to the extent
ultimately allowed.
9. Subject to paragraph 8 herein, on the Effective Date, all Persons
who have been, are, or may be holders of Claims against or Equity Interests in
the Debtor shall be enjoined from taking any of the following actions against or
affecting the Debtor, its Estate, or its assets and property with respect to
such Claims or Equity Interests (other than actions brought to enforce any
rights or obligations under the Plan and appeals, if any, from this Confirmation
Order):
(i) commencing, conducting or continuing in any manner, directly or
indirectly, any suit, action or other proceeding of any kind against the
Debtor, its Estate, or its assets or property, or any direct or indirect
successor in interest to the Debtor, or any assets or property of such
transferee or successor (including, without limitation, all suits, actions,
and proceedings that are pending as of the Effective Date, which must be
withdrawn or dismissed with prejudice);
(ii) enforcing, levying, attaching, collecting or otherwise recovering
by any manner or means whether directly or indirectly any judgment, award,
decree or order against the Debtor, its Estate, or its assets or property,
or any direct or indirect successor in interest to the Debtor, or any
assets or property of such transferee or successor;
(iii) creating, perfecting or otherwise enforcing in any manner,
directly or indirectly, any Lien against the Debtor, its Estate, or its
respective assets or property, or any direct or indirect successor in
interest to any of the Debtor, or any assets or property of such transferee
or successor other than as contemplated by the Plan;
(iv) asserting any setoff, right of subrogation or recoupment of any
kind, directly or indirectly against any obligation due the Debtor, its
Estate, or its respective assets or property, or any direct or indirect
successor in interest to any of the Debtor, or any assets or property of
such transferee or successor; and
(v) proceeding in any manner in any place whatsoever that does not
conform to or comply with the provisions of the Plan or the settlement set
forth in Article XIV of the Plan to the extent such settlements have been
approved by the Bankruptcy Court in connection with confirmation of the
Plan.
10. From and after the Effective Date, except (a) for Infinity
Securities Claims asserted in the Pisacreta/Tucci Action, including, without
limitation, the Claims of the named plaintiffs therein, the members of the
putative class sought to be certified therein, whether or not such class is
certified, and any opt-outs from such putative class (which claims shall not be
affected or impaired in any way by this Order), and (b) as provided by paragraph
11 below, all Infinity Securities Claims shall channel and transfer to the UPC
Trust, and all Persons who have been, are, or may be holders of any such
Infinity Securities Claim shall be enjoined from taking any of the following
actions against or affecting the Infinity Parties or their assets and property
with respect to such Infinity Securities Claim (other than actions brought to
enforce any rights or obligations under the Plan, the UPC Trust Agreement and
the Infinity Settlement Agreement):
(vi) commencing, conducting or continuing in any manner, directly or
indirectly, any suit, action or other proceeding of any kind against any
Infinity Party or its assets or property, or its direct or indirect
successors in interest, or any assets or property of such transferee or
successor (including, without limitation, all suits, actions, and
proceedings that are pending as of the Effective Date, which must be
withdrawn or dismissed with prejudice);
(vii) enforcing, levying, attaching, collecting or otherwise
recovering by any manner or means whether directly or indirectly any
judgment, award, decree or order against any Infinity Party or its assets
or property, or its direct or indirect successors in interest, or any
assets or property of such transferee or successor;
(viii) creating, perfecting or otherwise enforcing in any manner,
directly or indirectly, any Lien against any Infinity Party or its assets
or property, or its direct or indirect successors in interest, or any
assets or property of such transferee or successor;
(ix) asserting any set-off, right of subrogation or recoupment of any
kind, directly or indirectly against any obligation due any Infinity Party,
or its assets or property, or its direct or indirect successors in
interest, or any assets or property of such transferee or successor; and
(x) proceeding in any manner in any place whatsoever that does not
conform to or comply with the provisions of the Plan, or the settlements
set forth in Article XIV of the Plan, the UPC Trust Agreement or the
Infinity Settlement Agreement.
11. The injunction provided by paragraph 10 of this Confirmation Order
shall terminate and be of no further force or effect if at any time or from time
to time the UPC Trustee files with the Bankruptcy Court and serves upon the
Infinity Parties a notice that the UPC Trust assets have been fully expended and
that additional Allowed Securities Claims exist or that all Securities Claims
have not yet been resolved and the Infinity Parties, within thirty (30) days
after the filing of such notice, fail to make an additional contribution to the
UPC Trust in an aggregate amount equivalent to (A) not less than $100,000
(provided that such amount must be at least enough to satisfy all outstanding
Allowed Securities Claims in full and provide at least $25,000 to fund the
expenses of the UPC Trust in liquidating any remaining Securities Claims) or (B)
such lesser amount as may be agreed to by the UPC Trustee.
12. Nothing contained herein or in the Modified Plan shall impair the
rights or claims asserted in the Pisacreta/Tucci Action by or on behalf of the
named plaintiffs therein, the members of the class sought to be certified
therein (whether or not such class is certified) or any opt-outs from such
class.
13. Unless required to be filed by an earlier date by another order of
this Court, all requests for payment of Administrative Claims, including all
applications for final allowance of compensation and reimbursement of expenses
of Professionals, must be filed and served on the Debtor, no later than
forty-five (45) days after the Effective Date. Any person that is required to
file and serve such a request for payment of an Administrative Claim and fails
to timely file and serve such request, shall be forever barred, estopped and
enjoined from asserting such Claim or participating in distributions under the
Plan on account thereof.
14. The Debtor shall file objections to Claims with this Court no
later than 60 days after the Effective Date, provided, however, that this
deadline may be extended by the Court upon motion of the Post-Confirmation
Debtor, without notice or a hearing. After the date hereof, no party, other than
the Debtor or Post-Confirmation Debtor, may file objections to the allowance of
claims.
15. This Order shall constitute all approvals and consents required,
if any, by the laws, rules or regulations of any State or any other governmental
authority with respect to the implementation or consummation of the Plan and any
other acts that may be necessary or appropriate for the implementation or
consummation of the Plan.
16. Pursuant to Section 1146(c) of the Bankruptcy Code, neither the
making nor delivery of an instrument of transfer, nor the revesting, transfer
and sale of any real property or personal property of the Debtor in accordance
with the Plan, shall subject the Debtor to any state or local law imposing a
stamp tax, transfer tax or similar tax or fee.
17. The provisions of the Plan and this Order shall be, and hereby are
now, and forever afterwards, binding on the Debtor, all holders of Claims and
Interests (whether or not impaired under the Plan and whether or not, if
impaired, they accepted the Plan), any other party in interest, any other party
making an appearance in this Chapter 11 Case, and any other person or entity
affected thereby, as well as their respective heirs, successors, assigns,
trustees, subsidiaries, affiliates, officers, directors, agents, employees,
representatives, attorneys, beneficiaries, guardians, and similar officers, or
any person claiming through or in the right of any such person or entity.
18. The Court hereby retains jurisdiction of this case (i) as provided
for in the Plan, (ii) as provided for in this Order, and (iii) for the purposes
set forth in Sections 1127 and 1142 of the Bankruptcy Code.
19. The compromises and settlements set forth in Section 14.1 of the
Plan and in the Infinity Settlement Agreement, in substantially the form
attached hereto as Exhibit A, are approved.
20. The UPC Trust Agreement and the ADR are hereby approved and the
Debtor and the UPC Trustee once appointed may take such actions as are necessary
to implement the terms thereof.
21. The failure to reference or discuss any particular provision of
the Plan in this Order shall have no effect on the validity, binding effect and
enforceability or such provision and such provision shall have the same
validity, binding effect and enforceability as every other provision of the
Plan.
22. Pursuant to Bankruptcy Rule 2002(f)(7) and 3020(c), the Debtor is
hereby directed to serve a notice of the entry of this Order on all holders of
record of Claims and Interests as of the date hereof, all parties who have
entered their appearance in this case and requested notice pursuant to
Bankruptcy Rule 2002 and the Office of the United States Trustee no later than
ten (10) days after the Effective Date of the Plan. Dated: Wilmington, Delaware
October 7, 1999
s/Peter J. Walsh
------------------------------------
Peter J. Walsh
Chief Judge, United States Bankruptcy Court
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of September 29, 1999
(this "Agreement"), by and among F.S. Convenience Stores, Inc., a Florida
corporation ("FSCI"), United Petroleum Corporation, a Delaware corporation (the
"Company") and Chapter 11 debtor-in-possession, in case No. 99-88 (PJW) (the
"Chapter 11 Case"), pending in the United States Bankruptcy Court for the
District of Delaware (the "Bankruptcy Court"), and United Petroleum Subsidiary,
Inc., a Delaware corporation ("UPC Merger Sub").
WHEREAS, on July 23, 1999, the Company filed with the Bankruptcy
Court its second amended chapter 11 reorganization plan (the "Chapter 11 Plan");
WHEREAS, pursuant to this Agreement and the Chapter 11 Plan, UPC
Merger Sub shall acquire FSCI;
WHEREAS, to complete such acquisition, the Company, UPC Merger
Sub, and FSCI propose the merger of FSCI with and into UPC Merger Sub (the
"Merger") in a forward triangular merger, such that the holders (collectively,
the "FSCI Shareholder") of FSCI's capital stock (the "FSCI Common Stock") will
receive certain common and preferred stock of the reorganized Company, and $3
Million in cash, pursuant to and subject to the terms and conditions of this
Agreement and the Chapter 11 Plan;
WHEREAS, on the Effective Date of the Chapter 11 Plan, each share
of the Company's common stock then issued and outstanding shall be canceled,
annulled and extinguished; and
WHEREAS, on the Effective Date, the Company shall be authorized
to issue 10,000,000 shares of New UPC Common Stock and 300,000 shares of New UPC
Preferred Stock,
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants, representations, warranties and agreements herein contained,
and other good and valuable considerations, the receipt and adequacy of which
are hereby conclusively acknowledged, the parties hereto, intending to be
legally bound, agree as follows:
ARTICLE I
THE MERGER AND RELATED MATTERS
Section 1.1 The Merger.
(a) Subject to the terms and conditions of this Agreement,
at the time of the Closing, a certificate of merger (the "Certificate of
Merger") shall be duly prepared, executed and acknowledged by FSCI and UPC
Merger Sub in accordance with the Delaware General Corporation Law, 8 Del. C.
Section 101 et seq. (the "DGCL"). The Certificate of Merger and any certificate
required to effect the Merger under the applicable provisions of Florida law
shall be filed on the Closing Date with the Secretary of State of the State of
Delaware and the Secretary of State of the State of Florida, respectively. The
Merger shall become effective upon the filing of the Certificate of Merger with
the Secretary of State of the State of Delaware in accordance with the
provisions and requirements of the DGCL. The date and time when the Merger shall
become effective is hereinafter referred to as the "Effective Date" or
"Effective Time."
(b) At the Effective Time, FSCI shall be merged with and
into UPC Merger Sub, the separate corporate existence of FSCI shall cease, and
UPC Merger Sub shall continue as the surviving corporation under the laws of the
State of Delaware (the "Surviving Corporation").
(c) From and after the Effective Time, the Merger shall have
the effects set forth in section 259 of the DGCL.
Section 1.2 Consideration. At the Effective Time, the FSCI
Shareholder shall, by virtue of the Merger and without any action on the part of
the FSCI Shareholder, in exchange for the surrender to the Company of all
outstanding shares of FSCI Common Stock, receive (i) 2,400,000 fully paid and
nonassessable shares of New UPC Common Stock (as defined in Section 2.2(c)
hereof), (ii) 70,000 shares of New UPC Preferred Stock (as defined in Section
2.2(c) hereof), and (iii) cash in the amount of three million dollars
($3,000,000.00)(collectively, the "Merger Consideration").
Section 1.3 Certificate of Incorporation of the Surviving
Corporation. The certificate of incorporation of UPC Merger Sub, in
substantially the form attached as Exhibit A, shall be the certificate of
incorporation of the Surviving Corporation (the "Certificate of Incorporation").
Section 1.4 Bylaws of the Surviving Corporation. The bylaws of
UPC Merger Sub, in substantially the form attached as Exhibit B, shall be the
bylaws of the Surviving Corporation ("Bylaws").
Section 1.5 Directors and Officers of the Surviving Corporation.
At the Effective Time, the directors set forth in Schedule 1.5 shall be the
directors of the Company and the Surviving Corporation, each of such directors
to hold office, subject to the applicable provisions of the Certificate of
Incorporation and Bylaws of the Company or the Surviving Corporation, as
applicable, until the next annual stockholders' meeting of the Company or the
Surviving Corporation, as applicable, and until their respective successors
shall be duly elected or appointed and qualified. At the Effective Time, the
officers described in Schedule 1.5 , subject to the applicable provisions of the
Certificate of Incorporation and Bylaws of the Company or the Surviving
Corporation, as appropriate, shall be the officers of the Company and the
Surviving Corporation, as applicable until their respective successors shall be
duly elected or appointed and qualified.
Section 1.6 Closing. The Closing of the Merger shall take place
at the offices of White & Case LLP, 200 South Biscayne Boulevard, Suite 4900,
Miami, Florida, or, at the option of the lender providing the Merger Financing
at the offices of the lender or counsel to such lender, as soon as practicable
after the last of the conditions set forth in Article V hereof is fulfilled or
waived but in no event later than 5:00 p.m., prevailing Eastern Time, on October
15, 1999, or at such other time and place and on such other date as FSCI, UPC
Merger Sub and the Company shall mutually agree (the "Closing Date").
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.1 Representations and Warranties of the Company and UPC
Merger Sub. Except as may be otherwise disclosed in the Company Disclosure
Schedule, attached or to be attached and initialed by all parties hereto, the
Company and UPC Merger Sub hereby represent and warrant to FSCI as follows:
(a) Due Organization, Good Standing and Corporate Power.
Except as disclosed in Schedule 2.1(a) hereto, each of the Company and its
subsidiaries is a corporation duly incorporated, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and each such
corporation has all requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as now being conducted. Each
of the Company and its subsidiaries is duly qualified or licensed to do business
and is in good standing in each jurisdiction in which the property owned, leased
or operated by it or the nature of the business conducted by it makes such
qualification necessary, except in such jurisdictions where the failure to be so
qualified or licensed and in good standing would not have a material adverse
effect on the business, properties, assets, liabilities, operations, results of
operations, condition (financial or otherwise) (collectively, the "Condition")
of the Company and its subsidiaries taken as a whole. The certificate of
incorporation and bylaws of the Company, as amended and to be in effect as of
the Effective Time, shall be substantially in the form attached hereto as
Exhibit C.
(b) Authorization and Validity of Agreement. Subject to the
entry of the Confirmation Order and the occurrence of the Effective Date of the
Chapter 11 Plan, the Company and UPC Merger Sub have full corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions and enter into the agreements contemplated hereby. The execution,
delivery and performance of this Agreement by the Company and UPC Merger Sub,
and the consummation by them of the transactions contemplated hereby, have been
duly authorized and approved by their respective Boards of Directors and,
subject to the entry of the Confirmation Order and the occurrence of the
Effective Date of the Chapter 11 Plan, (i) no other corporate action on the part
of the Company or UPC Merger Sub is necessary to authorize the execution,
delivery and performance of this Agreement by the Company and UPC Merger Sub and
the consummation of the transactions contemplated hereby, and (ii) this
Agreement will constitute a valid and binding obligation of the Company and UPC
Merger Sub enforceable against the Company and UPC Merger Sub in accordance with
its terms. Subject to the entry of the Confirmation Order and the occurrence of
the Effective Date of the Chapter 11 Plan, this Agreement has been duly executed
and delivered by the Company and UPC Merger Sub.
(c) Capitalization.
(i) Upon the Effective Date of the Chapter 11 Plan, the
authorized capital stock of the Company will consist of 10,000,000 shares of
common stock ("New UPC Common Stock"), 5,000,000 of which shall be issued and
outstanding, and 300,000 shares of preferred stock, par value $100 per share
("New UPC Preferred Stock"), 140,000 shares of which shall be issued and
outstanding. The authorized capital stock of UPC Merger Sub will consist of
three thousand (3,000) shares of common stock, all of which shall be issued to
and owned by the Company. New UPC Common Stock and New UPC Preferred Stock, when
issued in accordance with the Chapter 11 Plan and this Agreement, (A) will be
duly authorized, validly issued, fully paid and nonassessable, (B) will not be
subject to, nor issued in violation of, any preemptive rights, and (C) will be
free and clear of all liens, proxies, voting trusts, encumbrances, options or
claims whatsoever. The holders of the New UPC Preferred Stock will have all of
the powers, preferences and rights as set forth in the preference certificate.
(ii) Schedule 2.1(c)(ii) lists all of the Company's
subsidiaries. All of the outstanding shares of capital stock of each of the
Company's subsidiaries have been duly authorized and validly issued, are fully
paid and nonassessable, are not subject to, nor were they issued in violation
of, any preemptive rights, and are owned, of record and beneficially, by the
Company, free and clear of all liens, encumbrances, options or claims
whatsoever. Except as contemplated by this Agreement, no shares of capital stock
of the Company or any of the Company's subsidiaries are reserved for issuance
and there are no outstanding or authorized options, warrants, rights,
subscriptions, claims of any character, agreements, obligations, convertible or
exchangeable securities, or other commitments, contingent or otherwise, relating
to the capital stock of the Company or any subsidiary of the Company, pursuant
to which the Company or such subsidiary is or may become obligated to issue any
shares of capital stock of the Company or such subsidiary or any securities
convertible into, exchangeable for, or evidencing the right to subscribe for,
any shares of the Company or such subsidiary. There are no restrictions of any
kind that prevent the payment of dividends by any of the Company's subsidiaries.
Except for the subsidiaries listed on Schedule 2.1(c)(ii), the Company does not
own, directly or indirectly, any capital stock or other equity interest in any
Person or have any direct or indirect equity or ownership interest in any Person
and neither the Company nor any of its subsidiaries is subject to any obligation
or requirement to provide funds for or to make any investment (in the form of a
loan, capital contribution or otherwise) to or in any Person.
(d) Consents and Approvals; No Violations. Assuming that
filings required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended (the "HSR Act"), are made and the waiting period thereunder has been
terminated or has expired, the filing of the Certificate of Merger and other
appropriate merger documents, if any, as required by the DGCL or under the
applicable provisions of Florida law, are made, the Bankruptcy Court enters an
order, that may be the Confirmation Order, approving the Merger and this
Agreement, and subject to the receipt of those consents and approvals identified
in Schedule 2.1(d), the execution and delivery of this Agreement by the Company
and UPC Merger Sub and the consummation by the Company and UPC Merger Sub of the
transactions contemplated hereby will not: (i) violate any provision of the
certificate of incorporation of the Company or UPC Merger Sub or the bylaws of
the Company or UPC Merger Sub, each as in effect as of the Effective Time; (ii)
violate any statute, ordinance, rule, regulation, order or decree of any court
or of any governmental or regulatory body, agency or authority applicable to the
Company or UPC Merger Sub or by which any of their respective properties or
assets may be bound; (iii) require any filing with, or permit, consent or
approval of, or the giving of any notice to, any governmental or regulatory
body, agency or authority; or (iv) result in a violation or breach of, conflict
with, constitute (with or without due notice or lapse of time or both) a default
(or give rise to any right of termination, cancellation, payment or
acceleration) under, or result in the creation of any lien, security interest,
charge or encumbrance upon any of the properties or assets of the Company or any
of its subsidiaries under, any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, license, franchise, permit, agreement, lease,
franchise agreement or other instrument or obligation to which the Company or
any of its subsidiaries is a party, or by which it or any of their respective
properties or assets may be bound, excluding from the foregoing clauses (iii)
and (iv) filings, notices, permits, consents and approvals the absence of which,
and violations, breaches, defaults, conflicts and liens that, in the aggregate,
would not have a material adverse effect on the Condition of the Company and its
subsidiaries taken as a whole; or (v) trigger any consent or approval
requirements with respect to those leases, licenses, permits, or approvals held
by the Company.
(e) Company Reports and Financial Statements. Except as set
forth in Schedule 2.1(e), since December 31, 1996, the Company has filed all
forms, reports and documents, together with all exhibits and amendments thereto
with the Securities and Exchange Commission (the "Commission") required to be
filed by it pursuant to the federal securities laws and the Commission rules and
regulations thereunder, and all such forms, reports and documents filed by the
Company with the Commission (collectively, the "Commission Filings") have
complied in all material respects with all applicable requirements of the
federal securities laws and the Commission rules and regulations promulgated
thereunder. The Company has heretofore delivered to FSCI true and complete
copies of all Commission Filings since December 31, 1996. As of their respective
filing dates, the Commission Filings did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. Each of the consolidated balance sheets as
of the end of the fiscal years ended December 31, 1997 and 1998 and the
consolidated statements of operations, consolidated statements of stockholders'
equity and consolidated statements of changes in financial position for the
fiscal years ended December 31, 1997 and 1998 included in the Commission
Filings, were prepared in accordance with generally accepted accounting
principles (as in effect from time to time) applied on a consistent basis
(except as may be indicated therein or in the notes or schedules thereto) and
fairly present in all material respects the consolidated financial position of
the Company and its consolidated subsidiaries as of the dates thereof and the
results of their operations and changes in financial position for the periods
then ended.
(f) Minute Books. The minute books of the Company and its
material subsidiaries, as previously made available to FSCI and its
representatives, contain accurate records of all meetings of and corporate
actions or written consents by the stockholders and Boards of Directors of the
Company and its material subsidiaries since January 1, 1996.
(g) Title to Properties; Encumbrances; Facilities.
(i) The Company and each of its subsidiaries has good,
valid and marketable title to (A) all its material tangible properties and
assets (real and personal), including, without limitation, all the properties
and assets reflected in the consolidated balance sheet as of December 31, 1998
included in the Disclosure Statement (the "Balance Sheet") except as indicated
in the notes thereto and except for properties and assets reflected in the
Balance Sheet that have been sold or otherwise disposed of in the ordinary
course of business, and (B) all the tangible properties and assets purchased by
the Company and any of its subsidiaries since December 31, 1998 except for such
properties and assets that have been sold or otherwise disposed of in the
ordinary course of business; in each case subject to no encumbrance, lien,
charge or other restriction of any kind or character, except for (I) liens
pertaining to indebtedness reflected in the Balance Sheet and described on
Schedule 2.1(g), (II) liens consisting of zoning or planning restrictions,
easements, permits and other restrictions or limitations on the use of real
property or irregularities in title thereto that do not materially detract from
the value of, or impair the use of, such property by the Company or any of its
subsidiaries in the operation of its respective business, (III) liens for
current taxes, assessments or governmental charges or levies on property not yet
due and delinquent, and (IV) statutory landlord's liens, liens granted to
landlords under leases for the Company Facilities, and fee mortgages made by
such landlords.
(ii) Schedule 2.1(g) sets forth a list of all Company
Facilities now being occupied by the Company or any of its subsidiaries or used
in connection with their respective operations. The Company Facilities are all
premises leased or owned by the Company or any of its subsidiaries. Neither the
Company nor any of its subsidiaries has received notice of any building or
health code violations with respect to any of the Company Facilities. Each of
the Company and its subsidiaries has complied with all federal, state and local
laws, ordinances, rules and regulations applicable to each Company Facility,
except where the failure to so comply would not have a material adverse effect
on the Condition of the Company and its subsidiaries. There is no pending,
proposed, or, to the Company's knowledge, threatened condemnation, eminent
domain, or similar proceeding affecting any of the Company Facilities.
(h) Compliance with Laws. The Company and its subsidiaries
are in compliance with all applicable laws, regulations, orders, judgments and
decrees except where the failure to so comply would not have a material adverse
effect on the Condition of the Company and its subsidiaries taken as a whole.
(i) Litigation. Except for the Chapter 11 Case and except as
specifically disclosed in Schedule 2.1(i), there is no action, suit, proceeding
at law or in equity, or any arbitration or any administrative or other
proceeding by or before (or, to the best knowledge, information and belief of
the Company, any investigation by) any governmental or other instrumentality or
agency, pending, or, to the best knowledge, information and belief of the
Company, threatened, against or affecting the Company or any of its
subsidiaries, or any of their properties or rights. There are no such suits,
actions, claims, proceedings or investigations pending or, to the best
knowledge, information and belief of the Company, threatened, seeking to prevent
or challenging the transactions contemplated by this Agreement. Except as
disclosed in the Disclosure Statement, neither the Company nor any of its
subsidiaries is subject to any judgment, order or decree entered in any lawsuit
or proceeding that could have a material adverse effect on the Condition of the
Company and its subsidiaries taken as a whole or on the ability of the Company
or any subsidiary to conduct its business as presently conducted. Schedule
2.1(i) sets forth all litigation involving the Company or its subsidiaries that
is pending or, to the Company's knowledge, threatened.
(j) Employee Benefit Plans.
(i) List of Plans. Set forth in Schedule 2.1(j)
attached hereto is an accurate and complete list of all employee benefit plans
("Employee Benefit Plans") within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), whether or not any
such Employee Benefit Plans are otherwise exempt from the provisions of ERISA,
established, maintained or contributed to by the Company or any of its
subsidiaries (including, for this purpose and for the purpose of all of the
representations in this Section 2.1(j)), all employers (whether or not
incorporated) that by reason of common control are treated together with the
Company as a single employer within the meaning of Section 414 of the Internal
Revenue Code of 1986, as amended (the "Code")).
(ii) Status of Plans. Neither the Company nor any of
its subsidiaries maintains any Employee Benefit Plans subject to ERISA.
(iii) Contributions. Full payment has been made of all
amounts that the Company or any of its subsidiaries is required, under
applicable law or under any Employee Benefit Plan or any agreement relating to
any Employee Benefit Plan to which the Company or any of its subsidiaries is a
party, to have paid as contributions thereto as of the last day of the most
recent fiscal year of such Employee Benefit Plan ended prior to the date hereof.
The Company has made adequate provision for reserves to meet contributions that
have not been made because they are not yet due under the terms of any Employee
Benefit Plan or related agreements. Benefits under all Employee Benefit Plans
are as represented and have not been increased subsequent to the date as of
which documents have been provided to FSCI.
(iv) [Intentionally Omitted]
(v) Tax Qualification. Each Employee Benefit Plan
intended to be qualified under Section 401(a) of the Code has been determined to
be so qualified by the Internal Revenue Service and nothing has occurred since
the date of the last such determination that resulted or is likely to result in
the revocation of such determination.
(vi) Transactions. No Reportable Event (as defined in
Section 4043 of ERISA) has occurred with respect to any Employee Benefit Plan
for which the 30-day notice requirement has not been waived by the Pension
Benefit Guaranty Corporation ("PBGC") and neither the Company nor any of its
subsidiaries has engaged in any transaction with respect to the Employee Benefit
Plans that would subject it to a tax, penalty or liability for prohibited
transactions under ERISA or the Code nor has any of their respective directors,
officers, or employees, to the extent they or any of them are fiduciaries with
respect to such Employee Benefit Plans, breached any of their responsibilities
or obligations imposed upon fiduciaries under Title I of ERISA or would result
in any claim being made under or by or on behalf of any such Employee Benefit
Plans by any party with standing to make such claim.
(vii) Other Plans. The Company currently does not
maintain any employee or non-employee benefit plans or any other foreign
pension, welfare or retirement benefit plans other than those listed in Schedule
2.1(k).
(viii) Documents. The Company has made available to
FSCI and its counsel true and complete copies of (A) all Employee Benefit Plans
as in effect, together with all amendments thereto that will become effective at
a later date, as well as the latest Internal Revenue Service determination
letter obtained with respect to any such Employee Benefit Plan qualified under
Section 401 or 501 of the Code and (B) Form 5500 for the most recent completed
fiscal year for each Employee Benefit Plan required to file such form.
(k) Employment Relations and Agreements. (i) Each of the
Company and its subsidiaries is in substantial compliance with all federal,
state or other applicable laws respecting employment and employment practices,
terms and conditions of employment and wages and hours, and has not and is not
engaged in any unfair labor practice; (ii) to the Company's knowledge, no unfair
labor practice complaint against the Company or any of its subsidiaries is
pending before the National Labor Relations Board; (iii) there is no labor
strike, dispute, slowdown or stoppage actually pending or, to the Company's
knowledge, threatened against or involving the Company or any of its
subsidiaries; (iv) no representation question exists respecting the employees of
the Company or any of its subsidiaries; (v) to the Company's knowledge, no
grievance that might have a material adverse effect on the Condition of the
Company and its subsidiaries as a whole or the conduct of their respective
businesses exists, no arbitration proceeding arising out of or under any
collective bargaining agreement is pending and no claim therefor has been
asserted; (vi) no collective bargaining agreement is currently in effect or
being negotiated by the Company or any of its subsidiaries; and (vii) neither
the Company nor any of its subsidiaries has experienced any material labor
difficulty during the last three years. There has not been, and to the best
knowledge of the Company, there will not be, any change in relations with
employees of the Company or any of its subsidiaries as a result of the
transactions contemplated by this Agreement that could have a material adverse
effect on the Condition of the Company and its subsidiaries or the Surviving
Corporation taken as a whole. Except as disclosed in Schedule 2.1(k) attached
hereto (which schedule lists the maximum payment that could be owed), there
exist no employment, consulting, severance or indemnification agreements between
the Company and any director, officer or employee of the Company or any
agreement that would give any Person the right to receive any payment from the
Company as a result of the Merger.
(l) Taxes. Except as provided in Schedule 2.1(l), the
Company has filed or caused to be filed, within the times and in the manner
prescribed by law (including permitted extensions of time to file), all federal,
state, local and foreign tax returns and tax reports that are required to be
filed by, or with respect to, the Company or any of its subsidiaries. All
federal, state, local and foreign income, profits, franchise, sales, use,
occupancy, excise and other taxes and assessments (including interest and
penalties) payable by, or due from, the Company or any of its subsidiaries (i)
have either been fully paid or will be fully paid under the Chapter 11 Plan to
the extent allowed as a Claim under the Chapter 11 Plan, and (ii) adequately
disclosed and fully provided for in the books and financial statements of the
Company and its subsidiaries. Except as provided in Schedule 2.1(l), the federal
income tax liability of the Company and its subsidiaries has been finally
determined for all fiscal years to and including the fiscal year ended December
31, 1996. No examination of any tax return of the Company or any of its
subsidiaries is currently in progress. There are no outstanding agreements or
waivers extending the statutory period of limitation applicable to any tax
return of the Company or any of its subsidiaries.
(m) Intellectual Properties. In the operation of its
business the Company and its subsidiaries have used, and currently use, domestic
and foreign patents, patent applications, patent licenses, software licenses,
know-how licenses, trade names, trademarks, copyrights, unpatented inventions,
service marks, trademark registrations and applications, service mark
registrations and applications, copyright registrations and applications, trade
secrets and other confidential proprietary information (collectively the
"Company Intellectual Property"). Schedule 2.1(m) attached hereto contains an
accurate and complete list of all Company Intellectual Property that is of
material importance to the operation of the business of the Company or any of
its subsidiaries. Unless otherwise indicated in Schedule 2.1(m) the Company (or
the subsidiary indicated) owns the entire right, title and interest in and to
the Company Intellectual Property listed on Schedule 2.1(m) used in the
operation of its business (including, without limitation, the exclusive right to
use and license the same) and each item constituting part of the Company
Intellectual Property that is owned by the Company or a subsidiary and listed on
Schedule 2.1(m) has been, to the extent indicated in Schedule 2.1(m), duly
registered with, filed in or issued by, as the case may be, the United States
Patent and Trademark Office or such other governmental entities, domestic or
foreign, as are indicated in Schedule 2.1(m) and such registrations, filings and
issuances remain in full force and effect. To the best knowledge of the Company,
except as stated in such Schedule 2.1(m), there are no pending or threatened
proceedings or litigation or other adverse claims affecting or with respect to
the Company Intellectual Property. Schedule 2.1(m) lists all notices or claims
currently pending or received by the Company or any of its subsidiaries during
the past two years that claim infringement, contributory infringement,
inducement to infringe, misappropriation or breach by the Company or any of its
subsidiaries of any domestic or foreign patents, patent applications, patent
licenses and know-how licenses, trade names, trademark registrations and
applications, service marks, copyrights, copyright registrations or
applications, trade secrets or other confidential proprietary information. To
the best knowledge of the Company, except as indicated on Schedule 2.1(m), no
Person is materially infringing the Company Intellectual Property.
(n) Broker's or Finder's Fee. No agent, broker, Person or
firm acting on behalf of the Company is, or will be, entitled to any fee,
commission or broker's or finder's fees from any of the parties hereto, or from
any Person controlling, controlled by, or under common control with any of the
parties hereto, in connection with this Agreement or any of the transactions
contemplated hereby.
(o) Accounts Receivable. The accounts receivable of the
Company and its subsidiaries as reflected in the Balance Sheet, to the extent
uncollected on the date of this Agreement, and the accounts receivable reflected
on the books of the Company are, on the basis of existing facts, valid and
existing, represent monies due for goods sold and delivered or services
rendered, and (subject to the aforesaid reserve) are subject to no refunds or
other adjustments (except for returns or discounts for prompt payment given in
the ordinary course of business) and to no defenses, rights of setoff,
assignments, restrictions, encumbrances or conditions enforceable by third
parties on or affecting any thereof.
(p) Inventories. The inventories reflected in the Balance
Sheet were, and those reflected on the books of the Company and its subsidiaries
since such date have been, determined and valued in accordance with generally
accepted accounting principles applied on a consistent basis as reflected in the
consolidated balance sheet, and existed on the respective dates. Except for
normal spoilage or obsolescence, the inventories of the Company and its
subsidiaries consist of items that are good and merchantable and are of a
quality and quantity presently usable or salable in the ordinary course of
business.
(q) Environmental Matters.
(i) The Company and each subsidiary is, and at all
times has been, in substantial compliance with, and has not been and is not in
violation of or liable under, any Environmental Law with respect to any of their
real properties, leaseholds or other real property interests owned or leased by
the Company or any of its subsidiaries, and any buildings, plants, structures,
or equipment (including motor vehicles), that are owned or leased both as of the
date hereof and as of the Closing Date ("Company Facilities"). Except for
matters covered by applicable state remediation programs, the Company and its
subsidiaries have not received any actual or threatened order, notice, or other
communication from (A) any governmental body or private citizen acting in the
public interest, or (B) the current or prior owner or operator of any Company
Facilities, of any actual or potential violation or failure to comply with any
Environmental Law, or of any actual or threatened obligation to undertake or
bear the cost of any Environmental, Health, and Safety Liabilities with respect
to any of the Company Facilities or any other properties or assets (whether
real, personal, or mixed) in which the Company or any of its subsidiaries has an
interest, or with respect to any Company Facility at or to which Hazardous
Materials were generated, manufactured, refined, transferred, imported, used, or
processed by the Company, any of its subsidiaries or any other Person for whose
conduct they are or may be held responsible, or from which Hazardous Materials
have been transported, treated, stored, handled, transferred, disposed,
recycled, or received.
(ii) There are no pending or, to the knowledge of the
Company, threatened claims, liens, or other restrictions of any nature,
resulting from any Environmental, Health, and Safety Liabilities or arising
under or pursuant to any Environmental Law, with respect to or affecting any of
the Company Facilities or any other properties and assets (whether real,
personal, or mixed) in which the Company and of its subsidiaries has an
interest.
(iii) Except for matters covered by any applicable
state remediation programs or applicable insurance policies, the Company and its
subsidiaries have not received any citation, directive, inquiry, notice, order,
summons, warning, or other communication that relates to Hazardous Activity,
Hazardous Materials, or any alleged, actual, or potential violation or failure
to comply with any Environmental Law, or of any alleged, actual, or potential
obligation to undertake or bear the cost of any Environmental, Health, and
Safety Liabilities with respect to any of the Company Facilities.
(iv) Except for matters covered by any applicable state
remediation programs or by applicable insurance policies, the Company and its
subsidiaries have no Environmental, Health, and Safety Liabilities with respect
to the Company Facilities or with respect to any other properties and assets
(whether real, personal, or mixed) in which the Company or any of its
subsidiaries (or any predecessor), has an interest, or at any property
geologically or hydrologically adjoining the Company Facilities or any such
other property or assets.
(v) Except for matters covered by any applicable state
remediation programs or by applicable insurance policies, there has been no
Release or, to the knowledge of the Company, threat of Release, of any Hazardous
Materials at or from the Company Facilities or, to the knowledge of the Company,
at any other locations where any Hazardous Materials were generated,
manufactured, refined, transferred, produced, imported, used, or processed from
or by the Company Facilities, or from or by any other properties and assets
(whether real, personal, or mixed) in which the Company or any of its
subsidiaries has an interest, or to the knowledge of the Company any
geologically or hydrologically adjoining property, whether by the Company, any
of its subsidiaries or any other Person.
(vi) The Company has made available to FSCI true and
complete copies and results of any reports, studies, analyses, tests, or
monitoring possessed or initiated by the Company or any of its subsidiaries
pertaining to Hazardous Materials or Hazardous Activities in, on, or under the
Company Facilities, or concerning compliance by the Company, any of its
subsidiaries, or any other Person for whose conduct they are or may be held
responsible, with Environmental Laws.
(r) Chapter 11 Proceedings. The Company has complied in all
material respects with the Bankruptcy Code, and with all other laws, rules,
regulations, decrees or orders applicable to or arising out of the Chapter 11
Case, except to the extent that any such non-compliance would not have a
material adverse affect on Condition of the Company. To the best of the
Company's knowledge, all lists of creditors and stockholders, schedules,
statements of affairs, and financial reports filed by the Company with the
Bankruptcy Court were complete and accurate in all material respects as of the
date filed or made. Such notice of the Chapter 11 Case as is required by the
Bankruptcy Code has been or will be given to all known holders of Claims (as
such term is defined in the Bankruptcy Code), and the Company shall serve notice
of the transactions contemplated by this Agreement on parties entitled to such
notice under the Bankruptcy Code, as modified by orders in respect of notice
that may be issued at any time and from time to time by the Bankruptcy Court.
(s) Absence of Certain Changes. Except as disclosed in
Schedule 2.1(s) hereto, since December 31, 1998: (i) there has not been any
material adverse change in the Condition of the Company and its subsidiaries,
taken as a whole; (ii) the businesses of the Company and its subsidiaries have
been conducted only in the ordinary course; (iii) the Company and its
subsidiaries have not incurred any material liabilities (direct, contingent or
otherwise) or engaged in any material transaction or entered into any material
agreement outside the ordinary course of business; (iv) the Company and its
subsidiaries have not increased the compensation of any officer or granted any
general salary or benefits increase to their employees other than in the
ordinary course of business; and (v) the Company and its subsidiaries have not
taken any action referred to in Section 3.4 hereof except as permitted or
required thereby.
(t) Material Contracts. Schedule 2.1(t) identifies all
material contracts, agreements and other written or oral arrangements to which
the Company or any of its subsidiaries is party and all arrangements that are
filed with the Commission as part of the Commission Filings. True, correct and
complete copies (with all amendments thereto) thereof have been made available
to FSCI. "Material" contracts, agreements and arrangements are those that
obligate the parties, in the aggregate, to in excess of $50,000 of obligations.
With respect to each written arrangement so listed: (i) the written arrangement
is legal, valid, binding, enforceable, and in full force and effect, and has not
been materially amended or altered; (ii) the Company and its subsidiaries are
not in breach or default, and no event has occurred that, with notice or lapse
of time, or both, would constitute a breach or default by the Company or its
subsidiaries or permit a party other than the Company or its subsidiaries to
terminate, modify, or accelerate performance under any such written arrangement;
and (iii) to the Company's knowledge, no party other than the Company or its
subsidiaries is in breach or default, and no event has occurred that, with
notice or lapse of time, or both, would constitute a breach or default or permit
termination, modification, or acceleration, under any such written arrangement.
(u) Liabilities. The Company and its subsidiaries have no
material outstanding claims, liabilities or indebtedness, contingent or
otherwise, required to be reflected in a financial statement prepared in
accordance with GAAP, except as set forth in the financial statements delivered
to FSCI, or referred to in the footnotes thereto, other than liabilities
incurred subsequent to December 31, 1998 in the ordinary course of business not
involving borrowings by the Company and its subsidiaries. Except for that
indebtedness and those obligations identified in the Disclosure Statement, the
Company and its subsidiaries are not in default in respect of the material terms
and conditions of any material indebtedness or other agreements. The Company
currently estimates that the allowed amount of such Claims will not exceed
$250,000. However, the Company has scheduled as disputed approximately $900,000
of unsecured claims and proofs of unsecured claims, which the Company likewise
disputes, have been filed totaling approximately $2,000,000. Although the
Company believes that all of the disputed scheduled and filed claims will
ultimately be disallowed by the Bankruptcy Court, there can be no assurance that
some or all of the disputed scheduled and filed claims will not be allowed by
the Bankruptcy Court.
Section 2.2 Representations and Warranties of FSCI. Except as may
be otherwise disclosed in the FSCI Disclosure Schedule, attached or to be
attached and initialed by the parties, FSCI represents and warrants to the
Company and UPC Merger Sub, as of the Effective Time, as follows:
(a) Due Organization; Good Standing and Corporate Power.
(i) FSCI and, as of the Effective Time, a subsidiary of
FSCI ("FSCI Sub") formed solely to serve as a partner in the REWJB Gas
Investments, a Florida general partnership (the "Gas Partnership"), Farm Stores
Grocery, Inc., a Delaware corporation in which FSCI will own as of the Effective
Time ten percent (10%) of the issued and outstanding stock ("FSG"), a subsidiary
of FSG ("FSG Sub") formed solely to serve as a partner in REWJB Investments, a
Florida general partnership (the "Drive-Thru Partnership" and, together with the
Gas Partnership, the "Partnerships"), are each corporations duly incorporated,
validly existing, and in good standing under the laws of their respective
jurisdictions of incorporation and have all requisite corporate power and
authority to own, lease and operate their respective properties and to carry on
their respective businesses as now being conducted. FSCI, FSCI Sub, FSG, and FSG
Sub are duly qualified or licensed to do business and are in good standing in
each jurisdiction in which the property owned, leased or operated by it or the
nature of the business conducted by it makes such qualification necessary,
except in such jurisdictions where the failure to be so qualified or licensed
and in good standing would not have a material adverse effect on the Condition
of FSCI, FSCI Sub, FSG, FSG Sub, as appropriate.
(ii) Each of the Partnerships has been duly formed and
is validly existing under the laws of the jurisdiction of its organization and
has all requisite power and authority to own, lease and operate its properties
and carry on its business as now being conducted. Each of the Partnerships is
duly qualified or licensed to do business and is in good standing in each
jurisdiction in which the property owned, leased or operated by each of the
Partnerships or the nature of the business conducted by the Partnerships makes
such qualification necessary, except in such jurisdictions where the failure to
be so qualified or licensed and in good standing would not have a material
adverse effect on the Condition of the Partnerships.
(b) Authorization and Validity of Agreement. FSCI has full
corporate power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the transactions and enter into the
agreements contemplated hereby. The execution, delivery and performance of this
Agreement by FSCI, and the consummation of the transactions contemplated hereby,
has been duly authorized by the Board of Directors of FSCI. No other corporate
action on the part of FSCI is necessary to authorize the execution, delivery and
performance of this Agreement by FSCI and the consummation of the transactions
contemplated hereby (other than the approval of this Agreement by the FSCI
Shareholder). This Agreement has been duly executed and delivered by FSCI and is
a valid and binding obligation of FSCI, enforceable against FSCI in accordance
with its terms.
(c) Capitalization.
(i) The FSCI Common Stock is all of the authorized
capital stock of FSCI and consists of 10,000 shares of common stock. As of the
date hereof, (A) 10,000 shares of FSCI Common Stock are issued and outstanding,
(B) no shares of FSCI Common Stock are reserved for issuance pursuant to
outstanding options or stock incentive plans, (C) all issued and outstanding
FSCI Common Stock is owned by the FSCI Shareholder, and (D) no shares of FSCI
Common Stock are held in FSCI's treasury. All issued and outstanding shares of
FSCI Common Stock have been validly issued and are fully paid and nonassessable,
and are not subject to, nor were they issued in violation of, any preemptive
rights. Except as set forth in this Section 2.2(c), at the Effective Time, and
as contemplated by this Agreement, there will not be any outstanding or
authorized options, warrants, rights, subscriptions, claims of any character,
agreements, obligations, convertible or exchangeable securities, or other
commitments, contingent or otherwise, relating to FSCI Common Stock or any other
shares of capital stock of FSCI, pursuant to which FSCI is or may become
obligated to issue shares of FSCI Common Stock, any other shares of its capital
stock or any securities convertible into, exchangeable for, or evidencing the
right to subscribe for, any shares of the capital stock of FSCI.
(ii) The authorized capital stock of FSG consists of
10,000,000 shares of common stock ("FSG Common Stock"),of which, as of the
Effective Time, 1,000,000 will be issued (including 100,000 shares issued to
FSCI) and outstanding or reserved for issuance under options or warrants. Except
as set forth in the preceding sentence, (A) no shares of FSG Common Stock are
reserved for issuance pursuant to outstanding options or stock incentive plans,
(B) all issued and outstanding FSG Common Stock is owned beneficially by FSCI
and FSCI Shareholder, and (C) no shares of FSG Common Stock are held in FSG's
treasury. All issued and outstanding shares of FSG Common Stock have been
validly issued and are fully paid and nonassessable, and are not subject to, nor
were they issued in violation of, any preemptive rights. Except as set forth in
this Section 2.2(c), at the Effective Time, and as contemplated by this
Agreement, there will not be any outstanding or authorized options, warrants,
rights, subscriptions, claims of any character, agreements, obligations,
convertible or exchangeable securities, or other commitments, contingent or
otherwise, relating to FSG Common Stock or any other shares of capital stock of
FSG, pursuant to which FSG is or may become obligated to issue shares of FSG
Common Stock, any other shares of its capital stock or any securities
convertible into, exchangeable for, or evidencing the right to subscribe for,
any shares of the capital stock of FSG.
(iii) The interests in the Gas Partnership owned by
FSCI are fully paid and nonassessable, were issued by the Gas Partnership in
accordance with the Gas Partnership's partnership agreement dated September 9,
1992 ("Gas Partnership Agreement"), and are owned, of record and beneficially,
by FSCI free and clear of all liens and encumbrances. The partnership interests
owned by FSCI in the Gas Partnership constitute a forty percent (40%) interest
in the Gas Partnership. Except for those interests in the Gas Partnership owned
by Toni Gas & Food Stores, Inc., a Florida corporation, that are subject to
being and that will be purchased by FSCI immediately prior to the Effective
Time, there are no other outstanding interests in the Gas Partnership nor are
there any options, warrants, rights, subscriptions, claims of any character,
agreements, obligations, convertible or exchangeable securities, or other
commitments, contingent or otherwise, relating to interests in the Gas
Partnership pursuant to which the Gas Partnership is or may become obligated or
any Person is entitled to acquire any interest in the Gas Partnership or any
securities convertible into, exchangeable for, or evidencing the right to
subscribe for, any interest in the Gas Partnership. As of the Effective Time,
there will be no restrictions of any kind in the Gas Partnership Agreement that
prevent the payment of distributions by the Gas Partnership.
(iv) At the Effective time, the interests in the
Drive-Thru Partnership owned by FSG and FSG Sub will be fully paid and
nonassessable, will be issued by the Drive-Thru Partnership in accordance with
the Drive-Thru Partnership's partnership agreement dated September 9, 1992
("Drive-Thru Partnership Agreement"), and will be owned, of record and
beneficially, by FSG and FSG Sub free and clear of all liens and encumbrances.
The partnership interests owned by FSG in the Drive-Thru Partnership constitute
a forty percent (99%) interest in the Drive-Thru Partnership. Except for those
interests in the Drive-Thru Partnership owned by FSG Sub immediately prior to
the Effective Time, there are no other outstanding interests in the Drive-Thru
Partnership nor are there any options, warrants, rights, subscriptions, claims
of any character, agreements, obligations, convertible or exchangeable
securities, or other commitments, contingent or otherwise, relating to interests
in the Drive-Thru Partnership pursuant to which the Drive-Thru Partnership is or
may become obligated or any Person is entitled to acquire any interest in the
Drive-Thru Partnership or any securities convertible into, exchangeable for, or
evidencing the right to subscribe for, any interest in the Drive-Thru
Partnership. As of the Effective Time, there will be no restrictions of any kind
in the Drive-Thru Partnership Agreement that prevent the payment of
distributions by the Drive-Thru Partnership.
(v) Except for its interests in the Gas Partnership and
stock of FSG and FSCI Sub that FSCI will acquire pursuant to or in furtherance
of the Toni Agreement immediately prior to the Effective Time, at the Effective
Time FSCI will not own, directly or indirectly, any capital stock or other
equity interest in any Person or have any direct or indirect equity or ownership
interest in any Person. Except as contemplated by this Agreement, each of FSCI,
FSCI Sub, FSG, FSG Sub, and the Partnerships are not subject to any obligation
or requirement to provide funds for or to make any investments (in the form of a
loan, capital contribution or otherwise) to or in any Person.
(d) Consents and Approvals; No Violations. Assuming that
filings required under the HSR Act are made and the waiting period thereunder
has been terminated or has expired, the filing of the Certificate of Merger and
other appropriate merger documents, if any, as required by the DGCL or under the
applicable provisions of Florida law, are made, and the Bankruptcy Court enters
an order, that may be the Confirmation Order, approving the Merger and this
Agreement, and subject to the receipt of those consents and approvals identified
in Schedule 2.2(d), the execution and delivery of this Agreement by FSCI and the
consummation by FSCI of the transactions contemplated hereby will not: (i)
violate any provision of the Certificate of Incorporation or Bylaws of FSCI,
FSCI Sub, FSG, or FSG Sub, respectively, or the Gas Partnership Agreement or
Drive-Thru Partnership Agreement, each as in effect as of the Effective Time;
(ii) violate any statute, ordinance, rule, regulation, order or decree of any
court or of any governmental or regulatory body, agency or authority applicable
to FSCI, FSCI Sub, FSG, FSG Sub, the Partnerships, or by which their respective
properties or assets may be bound; (iii) require any filing with, or permit,
consent or approval of, or the giving of any notice to any governmental or
regulatory body, agency or authority; (iv) result in a violation or breach of,
conflict with, constitute (with or without due notice or lapse of time or both)
a default (or give rise to any right of termination, cancellation or
acceleration) under, or result in the creation of any lien, security interest,
charge or encumbrance upon any of the properties or assets of FSCI, FSCI Sub,
FSG, FSG Sub, or the Partnerships under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, license, franchise, permit,
agreement, lease or other instrument or obligation to which FSCI, FSCI Sub, FSG,
FSG Sub, or the Partnerships are a party, or by which they or their respective
properties or assets may be bound, excluding from the foregoing clauses (iii)
and (iv) filings, notices, permits, consents and approvals the absence of which,
and violations, breaches, defaults, conflicts and liens that, in the aggregate,
would not have a material adverse effect on the Condition of FSCI, FSCI Sub,
FSG, FSG Sub, or the Partnerships taken as a whole; or (v) trigger any consent
or approval requirements with respect to those leases, licenses, permits, or
approvals held by the Partnerships (excluding those leases, licenses, permits,
or approvals with respect to the Walk-In Convenience Stores Partnerships to
another entity in accordance with this Agreement).
(e) FSCI Reports and Financial Statements. FSCI has
delivered to the Company combined balance sheets for the Partnerships and each
of their combined affiliates as of the end of the fiscal years ended September
1, 1996, August 31, 1997 and August 30, 1998 and the combined statements of
operations, combined statement of equity and consolidated statements of changes
in financial position for the Partnerships and each of their combined affiliates
for the fiscal years ended September 1, 1996, August 31, 1997 and August 30,
1998. Such financial statements were prepared in accordance with generally
accepted accounting principles (as in effect at the time such financial
statements were prepared) applied on a consistent basis (except as may be
indicated therein or in the notes or schedules thereto) and fairly present in
all material respects the combined financial position of the Partnerships and
their combined affiliates as of the dates thereof and the results of their
operations and changes in financial position for the periods then ended.
(f) Absence of Certain Changes. Except as disclosed in
Schedule 2.2(f) hereto, since December 31, 1998: (i) there has not been any
material adverse change in the Condition of FSCI, FSCI Sub, FSG, FSG Sub, or the
Partnerships, taken as a whole; (ii) the businesses of FSCI, FSCI Sub, FSG, FSG
Sub, and the Partnerships have been conducted only in the ordinary course; (iii)
FSCI, FSCI Sub, FSG, FSG Sub, and the Partnerships have not incurred any
material liabilities (direct, contingent or otherwise) or engaged in any
material transaction or entered into any material agreement outside the ordinary
course of business; (iv) FSCI, FSCI Sub, FSG, FSG Sub, and the Partnerships have
not increased the compensation of any officer or granted any general salary or
benefits increase to their employees other than in the ordinary course of
business; and (v) FSCI, FSCI Sub, FSG, FSG Sub, and the Partnerships have not
taken any action referred to in Section 3.4 hereof except as permitted or
required thereby.
(g) Minute Books. The minute books of FSCI, FSG, and the
managing general partner of the Partnership, as previously made available to the
Company and its representatives, contain accurate records of all meetings of the
stockholders or partners, as appropriate, all corporate actions or written
consents by the stockholders and Boards of Directors of FSCI and FSG, and all
actions on behalf of the Partnership by the managing general partner of the
Partnership since January 1, 1996.
(h) Title to Properties; Encumbrances.
(i) FSCI, FSCI Sub, FSG, FSG Sub and the Partnerships
have, or will acquire contemporaneously with the Merger, good, valid and
marketable title to all of their respective material tangible properties and
assets (real and personal), including, without limitation, all the properties
and assets reflected in Schedule 2.2(h), subject to no encumbrance, lien, charge
or other restriction of any kind or character, except for (A) liens pertaining
to indebtedness reflected in the balance sheets of the Partnerships and
described on Schedule 2.2(h), (B) liens consisting of zoning or planning
restrictions, easements, permits and other restrictions or limitations on the
use of real property or irregularities in title thereto that do not materially
detract from the value of, or impair the use of, such property by FSCI, FSCI
Sub, FSG, FSG Sub, or the Partnerships in the operation of their respective
businesses, (C) liens for current taxes, assessments or governmental charges or
levies on property not yet due and delinquent, and (D) statutory landlord's
liens, liens granted to landlords under leases for the FSCI Facilities, and fee
mortgages made by such landlords.
(ii) Schedule 2.2(h) sets forth a list of all FSCI
Facilities now being occupied, or to be occupied on the Closing Date, by FSCI,
FSCI Sub, FSG, FSG Sub, or the Partnerships or used in connection with their
respective operations. The FSCI Facilities are all, or will be on the Closing
Date, premises leased or owned by FSCI, FSCI Sub, FSG, FSG Sub, or the
Partnerships. Schedule 2.2(h) describes those leases of FSCI Facilities that
require the landlord's consent to assignment of such leases. No notices of any
building or health code violations with respect to any of the FSCI Facilities
have been received and are pending or uncured which would be material to any
FSCI Facility. Each of FSCI, FSCI Sub, FSG, FSG Sub, and the Partnerships have
complied with all federal, state and local laws, ordinances, rules and
regulations applicable to each FSCI Facility, except where the failure to so
comply would not have a material adverse effect on the Condition of FSCI, FSCI
Sub, FSG, FSG Sub, or the Partnerships. Except as disclosed in Schedule 2.2(h),
there is no pending, proposed, or, to FSCI's, knowledge, threatened
condemnation, eminent domain, or similar proceeding affecting any of the FSCI
Facilities.
(i) Compliance with Laws. FSCI, FSCI Sub, FSG, FSG Sub and
the Partnerships are in compliance with all applicable laws, regulations,
orders, judgments and decrees except where the failure to so comply with the
same would not have a material adverse effect on the Condition of FSCI, FSCI
Sub, FSG, FSG Sub, or the Partnerships taken as a whole.
(j) Litigation. Except as set forth in Schedule 2.2(j)
hereto, there is no action, suit, proceeding at law or in equity, or any
arbitration or any administrative or other proceeding by or before (or to the
best knowledge, information and belief of the Company any investigation by) any
governmental or other instrumentality or agency, pending, or, to the best
knowledge, information and belief of FSCI, threatened, against or affecting
FSCI, FSG, the Partnership, or any of their respective properties or rights that
could have a material adverse effect on the Condition of FSCI, FSCI Sub, FSG,
FSG Sub, or the Partnerships. There are no such suits, actions, claims,
proceedings or investigations pending or, to the best knowledge, information and
belief of FSCI, threatened, seeking to prevent or challenging the transactions
contemplated by this Agreement. FSCI, FSCI Sub, FSG, FSG Sub, and the
Partnerships are not subject to any judgment, order or decree entered in any
lawsuit or proceeding that could have a material adverse effect on the Condition
of FSCI, FSCI Sub, FSG, FSG Sub, or the Partnerships, taken as a whole or on the
ability of FSCI, FSCI Sub, FSG, FSG Sub, or the Partnerships to conduct their
respective businesses as presently conducted. Schedule 2.2(j) sets forth all
litigation involving FSCI, FSCI Sub, FSG, FSG Sub, or the Partnerships that is
pending or, to FSCI's knowledge, threatened against FSCI, FSCI Sub, FSG, FSG
Sub, or the Partnerships.
(k) Employee Benefit Plans.
(i) List of Plans. Set forth in Schedule 2.2(k) is an
accurate and complete list of all Employee Benefit Plans within the meaning of
Section 3(3) of ERISA, whether or not any such Employee Benefit Plans are
otherwise exempt from the provisions of ERISA, established, maintained or
contributed to by FSCI, FSCI Sub, FSG, FSG Sub, or the Partnerships (including,
for this purpose and for the purpose of all of the representations in this
Section 2.2(k)), all employers (whether or not incorporated) that by reason of
common control are treated together with the Company as a single employer within
the meaning of Section 414 of the Code).
(ii) Status of Plans. Except as set forth in Schedule
22(k) FSCI, FSCI Sub, FSG, FSG Sub, and the Partnerships do not maintain any
Employee Benefit Plans subject to ERISA.
(iii) Contributions. Full payment has been made of all
amounts that FSCI, FSCI Sub, FSG, FSG Sub, or the Partnerships are required,
under applicable law or under any Employee Benefit Plan or any agreement
relating to any Employee Benefit Plan to which FSCI, or FSG or the Partnership
is or was a party, to have paid as contributions thereto as of the last day of
the most recent fiscal year of such Employee Benefit Plan ended prior to the
date hereof. FSCI has made adequate provision for reserves to meet contributions
that have not been made because they are not yet due under the terms of any
Employee Benefit Plan or related agreements. Benefits under all Employee Benefit
Plans are as represented and have not been increased subsequent to the date as
of which documents have been provided to the Company.
(iv) [Intentionally Omitted]
(v) Tax Qualification. Each Employee Benefit Plan of
FSCI, FSCI Sub, FSG, FSG Sub, and the Partnerships intended to be qualified
under Section 401(a) of the Code has been determined to be so qualified by the
Internal Revenue Service and nothing has occurred since the date of the last
such determination that resulted or is likely to result in the revocation of
such determination.
(vi) Transactions. No Reportable Event (as defined in
Section 4043 of ERISA) for which the 30-day notice requirement has not been
waived by the PBGC has occurred with respect to any Employee Benefit Plan
maintained by FSCI, FSCI Sub, FSG, FSG Sub, or the Partnerships and FSCI, FSCI
Sub, FSG, FSG Sub, and the Partnerships have not engaged in any transaction with
respect to the Employee Benefit Plans maintained by them that would subject any
of them to a tax, penalty or liability for prohibited transactions under ERISA
or the Code nor have any of their respective directors, officers, partners, or
employees to the extent they or any of them are fiduciaries with respect to such
Employee Benefit Plans, breached any of their responsibilities or obligations
imposed upon fiduciaries under Title I of ERISA or would result in any claim
being made under or by or on behalf of any such Employee Benefit Plans by any
party with standing to make such claim.
(vii) Other Plans. The Company currently does not
maintain any employee or non-employee benefit plans or any other foreign
pension, welfare or retirement benefit plans other than those listed in Schedule
2.1(k).
(viii) Documents. FSCI has made available to the
Company and its counsel true and complete copies of (A) all Employee Benefit
Plans maintained by FSCI, FSCI Sub, FSG, FSG Sub, and the Partnerships as in
effect, together with all amendments thereto that will become effective at a
later date, as well as the latest Internal Revenue Service determination letter
obtained with respect to any such Employee Benefit Plan qualified under Section
401 or 501 of the Code and (B) Form 5500 for the most recent completed fiscal
year for each such Employee Benefit Plan required to file such form.
(l) Employment Relations and Agreements. (i) FSCI, FSCI Sub,
FSG, FSG Sub, and the Partnerships are in substantial compliance with all
federal, state or other applicable laws respecting employment and employment
practices, terms and conditions of employment and wages and hours, and have not
and are not engaged in any unfair labor practice; (ii) to the knowledge of FSCI,
no unfair labor practice complaint against FSCI, FSCI Sub, FSG, FSG Sub, or the
Partnerships is pending before the National Labor Relations Board; (iii) there
is no labor strike, dispute, slowdown or stoppage actually pending or, to the
knowledge of FSCI, threatened against or involving FSCI, FSCI Sub, FSG, FSG Sub,
or the Partnerships; (iv) no representation question exists respecting the
employees of FSCI , FSG, or the Partnership; (v) to the knowledge of FSCI, no
grievance that might have a material adverse effect on the Condition of FSCI,
FSCI Sub, FSG, FSG Sub, or the Partnerships or the conduct of their respective
businesses exists, no arbitration proceeding arising out of or under any
collective bargaining agreement is pending and no claim therefor has been
asserted; (vi) no collective bargaining agreement is currently in effect or
being negotiated by FSCI, FSCI Sub, FSG, FSG Sub, or the Partnerships; and (vii)
none of FSCI, FSCI Sub, FSG, FSG Sub, or the Partnerships has experienced any
material labor difficulty during the last three years. There has not been, and,
to the best knowledge of FSCI, there will not be, any change in relations with
employees of FSCI, FSCI Sub, FSG, FSG Sub, or the Partnerships as a result of
the transactions contemplated by this Agreement that could have a material
adverse effect on the Condition of FSCI, FSG, the Partnership, or the Surviving
Corporation, taken as a whole. Except as disclosed in Schedule 2.2(l) attached
hereto (which schedule lists the maximum payment that could be owed), there
exist no employment, consulting, severance or indemnification agreements (x)
between FSCI and any director, officer or employee of FSCI or any agreement that
would give any Person the right to receive any payment from FSCI as a result of
the Merger, (y) between FSG and any director, officer or employee of FSG or any
agreement that would give any Person the right to receive any payment from FSG
as a result of the Merger, and (z) between the Partnership and any partner or
employee of the Partnership or any agreement that would give any Person the
right to receive any payment from the Partnership as a result of the Merger.
(m) [Intentionally Omitted]
(n) Taxes. FSCI, FSCI Sub, FSG, FSG Sub, and the
Partnerships have filed or caused to be filed, within the times and in the
manner prescribed by law (including permitted extensions of time to file), all
federal, state, local and foreign tax returns and tax reports that are required
to be filed by, or with respect to, FSCI, FSCI Sub, FSG, FSG Sub, or the
Partnerships. All federal, state, local and foreign income, profits, franchise,
sales, use, occupancy, excise and other taxes and assessments (including
interest and penalties) payable by, or due from, FSCI, FSCI Sub, FSG, FSG Sub,
or the Partnerships have been fully paid or adequately disclosed and fully
provided for in the books and financial statements of FSCI, FSCI Sub, FSG, FSG
Sub, and the Partnerships. No examination of any tax return of FSCI, FSCI Sub,
FSG, FSG Sub, or the Partnerships is currently in progress. There are no
outstanding agreements or waivers extending the statutory period of limitation
applicable to any tax return of FSCI, FSCI Sub, FSG, FSG Sub, or the
Partnerships.
(o) Liabilities. FSCI, FSCI Sub, FSG, FSG Sub, and the
Partnerships have no material outstanding claims, liabilities or indebtedness,
contingent or otherwise, required to be reflected in a financial statement
prepared in accordance with GAAP, except as set forth in the financial
statements delivered to the Company, or referred to in the footnotes thereto,
other than liabilities incurred subsequent to December 31, 1998 in the ordinary
course of business not involving borrowings by FSCI, FSCI Sub, FSG, FSG Sub, or
the Partnerships. FSCI, FSCI Sub, FSG, FSG Sub, and the Partnerships are not in
default in respect of the material terms and conditions of any material
indebtedness or other agreement.
(p) Intellectual Properties. In the operation of its
business, FSCI, FSCI Sub, FSG, FSG Sub, and the Partnerships have used, and
currently use, domestic and foreign patents, patent applications, patent
licenses, software licenses, know-how licenses, trade names, trademarks,
copyrights, unpatented inventions, service marks, trademark registrations and
applications, service mark registrations and applications, copyright
registrations and applications, trade secrets and other confidential proprietary
information, other than commercially available computer software programs
(collectively the "Farm Store Intellectual Property"). Schedule 2.2(p) attached
hereto contains an accurate and complete list of all Farm Store Intellectual
Property that is of material importance to the operation of the business of
FSCI, FSCI Sub, FSG, FSG Sub, and the Partnerships. Unless otherwise indicated
in Schedule 2.2(p), FSCI, FSCI Sub, FSG, FSG Sub, or the Partnerships owns the
entire right, title and interest in and to the Farm Store Intellectual Property
listed on Schedule 2.2(p) used in the operation of the businesses of FSCI, FSCI
Sub, FSG, FSG Sub, and the Partnerships (including, without limitation, the
exclusive right to use and license the same) and each item constituting part of
the Farm Store Intellectual Property that is owned by FSCI, FSCI Sub, FSG, FSG
Sub, or the Partnerships and listed on Schedule 2.2(p) has been, to the extent
indicated in Schedule 2.2(p), duly registered with, filed in or issued by, as
the case may be, the United States Patent and Trademark Office or such other
government entities, domestic or foreign, as are indicated in Schedule 2.2(p)
and such registrations, filings and issuances remain in full force and effect.
To the best knowledge of FSCI, except as stated in such Schedule 2.2(p), there
are no pending or threatened proceedings or litigation or other adverse claims
affecting or with respect to the Farm Store Intellectual Property. Schedule
2.2(p) lists all material notices or claims currently pending or received by
FSCI, FSCI Sub, FSG, FSG Sub, or the Partnerships during the past two years that
claim infringement, contributory infringement, inducement to infringe,
misappropriation or breach by FSCI, FSCI Sub, FSG, FSG Sub, or the Partnerships
of any domestic or foreign patents, patent applications, patent licenses and
know-how licenses, trade names, trademark registrations and applications,
service marks, copyrights, copyright registrations or applications, trade
secrets or other confidential proprietary information. To the best knowledge of
FSCI, except as indicated on Schedule 2.2(p), no Person is materially infringing
the Farm Store Intellectual Property.
(q) Broker's or Finder's Fee. No agent, broker, Person or
firm acting on behalf of FSCI, FSG, the Partnership, or FSCI Shareholder is, or
will be, entitled to any fee, commission or broker's or finder's fees from any
of the parties hereto, or from any Person controlling, controlled by, or under
common control with any of the parties hereto, in connection with this Agreement
or any of the transactions contemplated hereby.
(r) Environmental Matters. Except as disclosed on Schedule
2.2(r) attached hereto:
(i) FSCI, FSCI Sub, FSG, FSG Sub, and the Partnerships
are, and at all times have been, in substantial compliance with, and have not
been and are not in violation of or liable under, any Environmental Law with
respect to any of their respective real property, leaseholds or other real
property interests owned or leased by the FSCI, FSCI Sub, FSG, FSG Sub, or the
Partnerships, and any buildings, plants, structures, or equipment (including
motor vehicles), that are owned or leased both as of the date hereof and as of
the Closing Date (collectively, "FSCI Facilities"). Except for matters covered
by the applicable state remediation programs, FSCI, FSCI Sub, FSG, FSG Sub, and
the Partnerships have not received any actual or threatened order, notice, or
other communication from (A) any governmental body or private citizen acting in
the public interest, or (B) the current or prior owner or operator of any FSCI
Facilities, of any actual or potential violation or failure to comply with any
Environmental Law, or of any actual or threatened obligation to undertake or
bear the cost of any Environmental, Health, and Safety Liabilities with respect
to any of the FSCI Facilities or any other properties or assets (whether real,
personal, or mixed) in which FSCI, FSCI Sub, FSG, FSG Sub, or the Partnerships
has an interest, or with respect to any FSCI Facility at or to which Hazardous
Materials were generated, manufactured, refined, transferred, imported, used, or
processed by FSCI, FSG, the Partnership, or any other Person for whose conduct
they are or may be held responsible, or from which Hazardous Materials have been
transported, treated, stored, handled, transferred, disposed, recycled, or
received.
(ii) There are no pending or, to the knowledge of FSCI,
threatened claims, liens, or other restrictions of any nature, resulting from
any Environmental, Health, and Safety Liabilities or arising under or pursuant
to any Environmental Law, with respect to or affecting any of the FSCI
Facilities or any other properties and assets (whether real, personal, or mixed)
in which FSCI, FSCI Sub, FSG, FSG Sub, or the Partnerships or its subsidiaries
has an interest.
(iii) Except for matters covered by the applicable
state remediation programs and/or by applicable insurance policies, FSCI, FSCI
Sub, FSG, FSG Sub, and the Partnerships have not received any citation,
directive, inquiry, notice, order, summons, warning, or other communication that
relates to Hazardous Activity, Hazardous Materials, or any alleged, actual, or
potential violation or failure to comply with any Environmental Law, or of any
alleged, actual, or potential obligation to undertake or bear the cost of any
Environmental, Health, and Safety Liabilities with respect to any of the FSCI
Facilities.
(iv) Except for matters covered by the applicable state
remediation programs and/or by applicable insurance policies, FSCI, FSCI Sub,
FSG, FSG Sub, and the Partnerships have no Environmental, Health, and Safety
Liabilities with respect to the FSCI Facilities or with respect to any other
properties and assets (whether real, personal, or mixed) in which FSCI, FSCI
Sub, FSG, FSG Sub, or the Partnerships (or any predecessor), has an interest, or
at any property geologically or hydrologically adjoining the FSCI Facilities or
any such other property or assets.
(v) Except for matters covered by the applicable state
remediation programs and/or by applicable insurance policies, there has been no
Release or, to the knowledge of FSCI, threat of Release, of any Hazardous
Materials at or from the FSCI Facilities or, to the knowledge of FSCI, at any
other locations where any Hazardous Materials were generated, manufactured,
refined, transferred, produced, imported, used, or processed from or by the FSCI
Facilities, or from or by any other properties and assets (whether real,
personal, or mixed) in which FSCI, FSCI Sub, FSG, FSG Sub, or the Partnerships
has an interest, or, to the knowledge of the FSCI and FSCI Shareholder, any
geologically or hydrologically adjoining property, whether by FSCI, FSG, the
Partnership, or any other Person.
(vi) FSCI, FSCI Sub, FSG, FSG Sub, and the Partnerships
have made available to the Company true and complete copies and results of any
reports, studies, analyses, tests, or monitoring possessed or initiated by FSCI,
FSCI Sub, FSG, FSG Sub, or the Partnerships pertaining to Hazardous Materials or
Hazardous Activities in, on, or under the FSCI Facilities, or concerning
compliance by FSCI, FSG, the Partnership, or any other Person for whose conduct
they are or may be held responsible, with Environmental Laws.
(s) Toni Agreement. Except as provided in Schedule 2.2(s),
that certain letter agreement, by and between Jose P. Barad, as President of
F.S. Dairy Plan, Inc., FSCI, and F.S. Stores, Inc., and Roberto Isaias, as
President of Robi Dairy Plant, Inc., REW Dairy Investments, Inc., and Toni Gas &
Food Stores, Inc., dated April 23, 1999 (the "Toni Agreement") a copy of which
has been provided to the Company:
(i) has been duly executed and delivered by the parties
thereto;
(ii) has been approved by all requisite corporate
action of the parties thereto;
(iii) constitutes a valid and binding obligation of
each of the parties thereto, enforceable against each such party in accordance
with its terms; and
(iv) constitutes the entire agreement among the parties
with respect to the transactions contemplated by the Toni Agreement and there
have been no oral or written modifications to the Toni Agreement.
(t) Material Contracts. Schedule 2.2(t) identifies all
material contracts, agreements and other written or oral arrangements to which
FSCI, FSG or the Partnership is a party and true, correct and complete copies
(with all amendments thereto) thereof have been made available to the Company.
"Material" contracts, agreements and arrangements are those that obligate the
parties, in the aggregate, to in excess of $50,000 of obligations. With respect
to each written arrangement so listed: (i) the written arrangement is legal,
valid, binding, enforceable, and in full force and effect, and has not been
materially amended or altered; and (ii) FSCI, any subsidiary of FSCI, FSCI Sub,
FSG, FSG Sub, and the Partnerships are not in breach or default, and no event
has occurred that, with notice or lapse of time, or both, would constitute a
breach or default by the FSCI, any subsidiary of FSCI, FSG or the Partnership or
permit a party other than the Company or its subsidiaries to terminate, modify,
or accelerate performance under any such written arrangement; and (iii) to
FSCI's knowledge, no party other than FSCI, any subsidiary of FSCI, FSCI Sub,
FSG, FSG Sub, or the Partnerships is in breach or default, and no event has
occurred that, with notice or lapse of time, or both, would constitute a breach
or default or permit termination, modification, or acceleration, under any such
written arrangement.
ARTICLE III
TRANSACTIONS PRIOR TO CLOSING DATE; COVENANTS
Section 3.1 Access to Information Concerning Properties and
Records.
(a) During the period commencing on the date hereof and
ending on the Closing Date, the Company shall, and shall cause each of its
subsidiaries to, upon reasonable notice, afford FSCI, and its counsel,
accountants and other authorized representatives, full access during normal
business hours to the properties, books and records of the Company and its
subsidiaries in order that they may have the opportunity to make such
investigations as they shall desire of the affairs of the Company and its
subsidiaries; such investigation shall not, however, affect the representations
and warranties made by the Company in this Agreement. The Company agrees to
cause its officers and employees to furnish such additional financial and
operating data and other information and respond to such inquiries as FSCI shall
from time to time request.
(b) During the period commencing on the date hereof and
ending on the Closing Date, FSCI, FSCI Sub, FSG, FSG Sub, and the Partnerships
shall, upon reasonable notice, afford the Company, and its counsel, accountants
and other authorized representatives, full access during normal business hours
to the properties, books and records of FSCI, FSCI Sub, FSG, FSG Sub, and the
Partnerships in order that it may have the opportunity to make such
investigations as it shall desire of the affairs of FSCI, FSCI Sub, FSG, FSG
Sub, and the Partnerships; such investigation shall not, however, affect the
representations and warranties made by FSCI in this Agreement. FSCI, FSCI Sub,
FSG, FSG Sub, and the Partnerships agree to cause their respective officers and
employees to furnish such additional financial and operating data and other
information and respond to such inquiries as the Company shall from time to time
request.
Section 3.2 Confidentiality. Information obtained by FSCI and the
Company pursuant to Section 3.1 hereof shall be subject to the provisions of the
Confidentiality Agreements between the Company and FSCI, each executed during
June, 1999.
Section 3.3 Conduct of the Business of the Company Pending the
Closing Date. The Company agrees that, except as permitted, required or
specifically contemplated by, or otherwise described in, this Agreement, as may
be required by the Bankruptcy Court in connection with the Chapter 11 Case or
Chapter 11 Plan, or otherwise consented to or approved in writing by FSCI,
during the period commencing on the date hereof and ending on the Closing Date:
(a) The Company and each of its subsidiaries will conduct
their respective operations only according to their ordinary and usual course of
business and will use their best efforts to preserve intact their respective
business organization, keep available the services of their officers and
employees and maintain satisfactory relationships with licensors, suppliers,
distributors, clients and others having business relationships with them;
(b) Neither the Company nor any of its subsidiaries shall
(i) make any change in or amendment to its Certificate of Incorporation or
By-Laws (or comparable governing documents); (ii) issue or sell any shares of
its capital stock or any of its other securities, or issue any securities
convertible into, or options, warrants or rights to purchase or subscribe to, or
enter into any arrangement or contract with respect to the issuance or sale of,
any shares of its capital stock or any of its other securities, or make any
other changes in its capital structure; (iii) declare, pay or make any dividend
or other distribution or payment with respect to, or split, redeem or
reclassify, any shares of its capital stock; (iv) enter into any contract or
commitment except contracts in the ordinary course of business, including
without limitation, any acquisition of a material amount of assets or
securities, any disposition of a material amount of assets or securities or
release or relinquish any material contract rights; (v) amend any employee or
non-employee benefit plan or program, employment agreement, license agreement or
retirement agreement, or pay any bonus or contingent compensation, except in
each case in the ordinary course of business consistent with past practice prior
to the date of this Agreement; (vi) agree, in writing or otherwise, to take any
of the foregoing actions;
(c) Without limiting the generality of subsection (a),
above, the Company shall continue to pay its accounts payable in the ordinary
course and in accordance with its regular and usual practices pertaining to
timing of payment of such payables; and
(d) The Company shall not, and shall not permit any of its
subsidiaries to, (i) take any action, engage in any transaction or enter into
any agreement that would cause any of the representations or warranties set
forth in Section 2.1 hereof to be materially untrue as of the Closing Date, or
(ii) purchase or acquire, or offer to purchase or acquire, any shares of capital
stock of the Company.
Section 3.4 Conduct of the Business of FSCI, FSCI Sub, FSG, FSG
Sub, and the Partnerships Pending the Closing Date. FSCI agrees that, except as
permitted, required or specifically contemplated by, or otherwise described in,
this Agreement, or pursuant to alternative means to perform under the Toni
Agreement, or otherwise consented to or approved in writing by the Company,
during the period commencing on the date hereof and ending on the Closing Date:
(a) FSCI will conduct its operations, will not close any
stores (except as set forth on schedule 3.4(a)), and will cause FSCI Sub, FSG,
FSG Sub, and the Partnerships to conduct their operation, only according to
their ordinary and usual course of business and will use its commercially
reasonable best efforts to preserve intact their respective business
organization, keep available the services of their officers and employees and
maintain satisfactory relationships with licensors, suppliers, distributors,
clients and others having business relationships with FSCI, FSCI Sub, FSG, FSG
Sub, and the Partnerships;
(b) FSCI shall not and shall ensure that FSCI Sub, FSG, FSG
Sub and the Partnerships do not (i) make any change in or amendment to its
Certificate of Incorporation or By-Laws or partnership agreement (or comparable
governing documents); (ii) issue or sell any shares of its capital stock or any
of its other securities, or issue any securities convertible into, or options,
warrants or rights to purchase or subscribe to, or enter into any arrangement or
contract with respect to the issuance or sale of, any shares of its capital
stock or any of its other securities, or make any other changes in its capital
structure; (iii) declare, pay or make any dividend or other distribution or
payment with respect to, or split, redeem or reclassify, any shares of its
capital stock, except that, immediately prior to the Effective Time, the
Partnerships may distribute its cash balances (other than funds in the cash
registers of the "Walk-In Convenience Stores" (as defined below) as of the close
of business on the business day immediately preceding the Effective Time) to the
FSCI Shareholder; (iv) enter into any contract or commitment except contracts in
the ordinary course of business, including without limitation, any acquisition
of a material amount of assets or securities, any disposition of a material
amount of assets or securities or release or relinquish any material contract
rights; (v) amend any employee or non-employee benefit plan or program,
employment agreement, license agreement or retirement agreement, or pay any
bonus or contingent compensation, except in each case in the ordinary course of
business consistent with past practice prior to the date of this Agreement; or
(vi) agree, in writing or otherwise, to take any of the foregoing actions;
(c) Without limiting the generality of subsection (a),
above, FSCI, FSCI Sub, FSG, FSG Sub, and the Partnerships shall continue to pay
their respective accounts payable in the ordinary course and in accordance with
its regular and usual practices pertaining to timing of payment of such
payables; and
(d) FSCI shall not, and shall cause FSCI Sub, FSG, FSG Sub,
and the Partnerships not to, take any action, engage in any transaction or enter
into any agreement that would cause any of the representations or warranties set
forth in Section 2.2 hereof to be materially untrue as of the Closing Date.
Section 3.5 Best Efforts. Each of the Company and FSCI shall, and
the Company shall cause each of its subsidiaries to and FSCI shall cause each of
FSCI Sub, FSG, FSG Sub, and the Partnerships to, cooperate and use their
respective commercially reasonable best efforts to take, or cause to be taken,
all appropriate action, and to make, or cause to be made, all filings necessary,
proper or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement, including, without
limitation, their respective best efforts to obtain, prior to the Closing Date,
all licenses, permits, consents, approvals, authorizations, qualifications and
orders of governmental authorities and parties to contracts with the Company and
its subsidiaries as are necessary for consummation of the transactions
contemplated by this Agreement and to fulfill the conditions to the Merger.
Section 3.6 HSR Act. The Company and FSCI shall, as soon as
practicable, file Notification and Report Forms under the HSR Act with the
Federal Trade Commission (the "FTC") and the Antitrust Division of the
Department of Justice (the "Antitrust Division") and shall use their respective
best efforts to respond as promptly as practicable to all inquiries received
from the FTC or the Antitrust Division for additional information or
documentation.
Section 3.7 Merger Financing. FSCI shall use its best efforts
together with HW Partners, L.P. to obtain, prior to the Effective Time, the
Merger Financing. The Company and FSCI shall irrevocably commit the proceeds of
the Merger Financing, as follows: (a) $17,000,000.00 for payment under the Toni
Agreement by FSCI, (b) $3,000,000.00 for payment to the FSCI Shareholder as part
of the Merger Consideration, (c) that amount required to make the payments due
upon confirmation of the Chapter 11 Plan, and (d) the balance thereof for
working capital or other corporate uses of the Surviving Corporation.
Section 3.8 Plan Covenants. Unless and until this Agreement is
terminated by FSCI or the Company or the Bankruptcy Court fails to confirm the
Chapter 11 Plan (after giving effect to whatever amendments thereto FSCI may
agree), the Company will not actively solicit any Person (other than FSCI) for
the purpose of pursuing a sale or merger transaction with the Company or its
subsidiaries or the assets of any of them. Further, the Company agrees to
provide FSCI with prompt written notice of any offer or expression of interest
(written or otherwise) it receives from any third party for any such
transaction, and to include in such notice the identity of the Person expressing
such interest and a description of the transaction proposed by such Person.
Unless and until this Agreement is terminated by FSCI or the Company, the
Company agrees: (a) to actively and with best efforts support and not directly
or indirectly oppose the confirmation of the Chapter 11 Plan; (b) not to amend
or modify the Chapter 11 Plan without the written consent of FSCI; (c) not to
file, sponsor, or promote any plan or reorganization or liquidation other than
the Chapter 11 Plan; and (d) not to seek dismissal of the Chapter 11 Case or
conversion of the Chapter 11 Case to a case under Chapter 7 of the Bankruptcy
Code.
Section 3.9 Casualty Stores. There are two (2) convenience stores
that have been affected by casualty (each a "Casualty Store" and, collectively,
"Casualty Stores"). The Gas Partnership shall have the right to either (a)
rebuild the Casualty Stores as it sees fit, or (b) transfer the Casualty Stores
to the Drive-Thru Partnership. The Surviving Corporation shall make this
election by written notice to FSG within three (3) months after the Effective
Time.
ARTICLE IV
CONDITIONS PRECEDENT TO MERGER
Section 4.1 Conditions Precedent to Obligations of UPC, UPC
Merger Sub and FSCI. The respective obligations of FSCI, on the one hand, and
the Company and UPC Merger Sub, on the other hand, to effect the Merger are
subject to the satisfaction or waiver (subject to applicable law) at or prior to
the Effective Time of each of the following conditions:
(a) Effectiveness of the Chapter 11 Plan. All conditions
precedent to the effectiveness of the Chapter 11 Plan shall have been satisfied
or waived.
(b) The Confirmation Order. The Confirmation Order shall
have been entered in a form and content acceptable to FSCI and the Company,
shall not have been modified, amended, dissolved, revoked or rescinded, shall be
in full force and effect on the Closing Date, and, without the necessity of any
further action or proceedings by the Company, any of its subsidiaries or the
Bankruptcy Court, shall have, to the extent specified in the Plan, (i) on or
prior to the Closing Date, effected a full and complete discharge and release
of, and thereby extinguished, all debts of the Company and each of its
subsidiaries (to the fullest extent possible under Section 1141(d)(1) of the
Bankruptcy Code) (ii) extinguished all Existing Shares and Existing Equity
Rights, and (iii) at and as of the Closing Date, authorized the issuance of New
UPC Common Stock and New UPC Preferred Stock in accordance with the Plan.
(c) Government Consents. All government consents necessary
for the consummation of the Merger shall have been received (except for
government consents, the absence of which will, alone and in the aggregate, not
have a material adverse effect on the Condition of the Surviving Corporation
either on or after the Closing) and any waiting period (and any extension
thereof) with respect to the HSR Act shall have expired or been terminated.
(d) Material Adverse Effect. Since the date hereof, there
shall not have been any material adverse change with respect to the Company and
its subsidiaries, FSCI, FSCI Sub, FSG, FSG Sub, or the Partnerships or their
respective assets.
(e) Due Diligence. FSCI and the Company shall be reasonably
satisfied with the results of their due diligence investigations;
(f) Injunction. No preliminary or permanent injunction or
other order shall have been issued by any court or by any governmental or
regulatory agency, body or authority that prohibits the consummation of the
Merger and the transactions contemplated by this Agreement and that is in effect
at the Effective Time;
(g) Statutes. No statute, rule, regulation, executive order,
decree or order of any kind shall have been enacted, entered, promulgated or
enforced by any court or governmental authority that prohibits the consummation
of the Merger or has the effect of making the issuance or the purchase of the
Merger Stock illegal.
(h) Merger Financing. The Merger Financing shall have been
obtained, all conditions to the full funding of the Merger Financing shall have
been satisfied or waived, and the proceeds of the Merger Financing shall have
been irrevocably committed as provided in Section 3.7 of this Agreement.
(i) Employment Agreements. The Company shall have entered
into Employment Agreements with Jose Bared and Carlos Bared.
Section 4.2 Conditions Precedent to Obligations of FSCI. The
obligations of FSCI and FSCI Shareholder to effect the Merger are also subject
to the satisfaction or waiver, at or prior to the Effective Time, of each of the
following conditions:
(a) Accuracy of Representations and Warranties. All
representations and warranties of the Company and UPC Merger Sub contained
herein shall be true and correct in all material respects as of the date hereof
and at and as of the Closing, with the same force and effect as though made on
and as of the Closing Date, except for representations and warranties made
expressly as of a prior date, that shall continue to be true and correct in all
material respects as of such prior date.
(b) Performance by Company. The Company and UPC Merger Sub
shall have performed in all material respects all obligations and agreements,
and complied in all material respects with all covenants and conditions,
contained in this Agreement to be performed or complied with by it prior to the
Closing Date;
(c) License Agreement. Both the Company and FSCI shall have
executed and delivered a License Agreement, substantially in the form attached
hereto as Exhibit E, with respect to the Company's management of FSG from and
after the Effective Time; and
(d) Management Agreement. Both the Company and FSCI shall
have executed and delivered a Management Agreement, substantially in the form
attached hereto as Exhibit D, with respect to the Company's management of FSG
from and after the Effective Time; and
(e) Resignations of Officers and Directors. On the Closing
Date, all existing officers and directors of the Company and its subsidiaries
shall have tendered their respective resignations.
(f) Other Transactions. The transactions contemplated by the
Toni Agreement shall have been performed in their entirety and all consideration
due there under shall have been paid.
(g) Employment Agreements; UPET Related Party Transactions.
Those contracts or other arrangements identified in Schedule 4.2(f) shall have
been terminated (or other arrangements reasonably satisfactory to FSCI shall
have been concluded with respect thereto) and those releases identified in
Schedule 4.2(f) shall have been executed and delivered by the appropriate
parties identified in Schedule 4.2(f).
(h) Required Approvals. The Company shall have secured or
properly applied for all necessary consents, approvals, permits, or licenses
necessary to allow the Surviving Corporation to continue, both on and after the
Closing Date, the sale of all merchandise sold by the Company's stores on the
date of this Agreement, including, without limitation, gasoline and petroleum
products (both as branded and unbranded products), any products offered for sale
under or pursuant to any franchise agreement or license, tobacco products,
alcoholic beverages, money orders, and state lottery tickets.
(i) Distributor Agreement. The Company or FSCI and TCS
Systems, Inc. shall have negotiated an agreement for the assignment to the
Company of the Exxon Distributorship Agreement currently held by TCS Systems,
Inc.
(j) Good Standing. All companies identified in Schedule
2.1(a) shall be in good standing in the jurisdiction in which such company was
formed.
Section 4.3 Conditions Precedent to Obligation of the Company and
UPC Merger Sub. The obligations of the Company and UPC Merger Sub to effect the
Merger is also subject to the satisfaction or waiver, at or prior to the
Effective Time, of each of the following conditions:
(a) Accuracy of Representations and Warranties. All
representations and warranties of FSCI contained herein shall be true and
correct in all material respects as of the date hereof and at and as of the
Closing, with the same force and effect as though made on and as of the Closing
Date, except for representations and warranties made expressly as of a prior
date, that shall continue to be true and correct in all material respects as of
such prior date.
(b) Performance by FSCI. FSCI shall have performed in all
material respects all obligations and agreements, and complied in all material
respects with all covenants and conditions, contained in this Agreement to be
performed or complied with by it prior to the Closing Date;
(c) License Agreement . The Company shall have received an
executed original copy of a license agreement, substantially in the form of
Exhibit E hereto, with respect to use of the "Farm Store" name;
(d) Required Approvals. FSCI shall have used its best effort
to secure all necessary consents, approvals, permits, or licenses necessary to
allow the Surviving Corporation and the Partnerships, as appropriate, to
continue, both on and after the Closing Date, the sale of all merchandise sold
by the Walk-In Convenience Stores and the Drive-Thrus on the date of this
Agreement, including, without limitation, gasoline and petroleum products (both
as branded and unbranded products), any products offered for sale under or
pursuant to any franchise agreement or license, tobacco products, alcoholic
beverages, money orders, and state lottery tickets; provided, however, that FSCI
shall on or before the Effective Date, secure all landlord consents necessary
with respect to that certain Convenience Store number 2651 located in Osceola
County, Florida (the "Required Consent Store") or deliver to the Company
$450,000. In the event of a failure to secure, on or before the Effective Time,
any necessary consents, approvals, permits, or licenses with respect to the
transfer of any Convenience Store other than the Required Consent Store (each a
"Non-Compliant Store"), then, as of the Effective Time, the Surviving
Corporation shall assume all beneficial interests in and to such Non-Compliant
Store, including all benefits and burdens related to ownership of such
Non-Compliant Store, but legal title to such Non-Compliant Store shall be
retained by the Drive-Thru Partnership and not be conveyed to the Surviving
Corporation until such time, not to exceed sixty (60) days from and after the
Effective Date, as the Drive-Thru Partnership, at the Drive-Thru Partnership's
expense, shall have obtained such necessary consents, approvals, permits, or
licenses with respect to such Non-Compliant Store. During such time, the
Drive-Thru Partnership shall operate any Non-Compliant Store solely for the
benefit of and without any management fee to the Surviving Corporation. If, upon
the expiration of the sixty-day period after the Effective Date, the Drive-Thru
Partnership has not obtained the required consents with respect to a
Non-Compliant Store, then FSE shall initiate litigation and bear all costs
related to obtaining such consents.
(e) Ownership of Assets. Subject to the provisions of
Section 4.3(d) and as described on schedule 3.4(a), on the Effective Date and
immediately prior to the Effective Time:
(i) FSCI shall own (A) ten percent (10%) of the issued
and outstanding common stock of FSG, (B) an agreement, subject to approval by
the Board of Directors of the Company, to purchase up to an additional fifteen
percent (15%) of the issued and outstanding common stock of FSG, under a
Purchase Agreement in substantially the form attached as Exhibit F, (C) eleven
(11) retail convenience stores that do not sell gasoline and petroleum products
("Convenience Stores"), and (D) all issued and outstanding stock of FSCI Sub;
(ii) FSCI and FSCI Sub will own all outstanding
interests in the Gas Partnership;
(iii) The Gas Partnership shall own or lease, (A)
sixty-seven (67) retail convenience stores that also sell gasoline and petroleum
products ("Gas Stores"), (B) nine (9) parcels of real estate on which Walk-In
Convenience Stores are situated, (C) two (2) Casualty Stores, and (D) inventory
(at customary levels used in the operation of the Walk-In Convenience Stores),
store fixtures and equipment, merchandise, accounts and general intangibles used
in the operation of the Walk-In Convenience Stores at that time;
(iv) FSG and FSG Sub shall own all outstanding
interests in the Drive-Thru Partnership; and
(v) The Drive-Thru Partnership shall own or lease (A)
all one hundred eight (108) "drive-thru" retail convenience stores operated by
the Drive-Thru Partnership on the date of this Agreement ("Drive-Thrus"), (B)
eleven (11) retail convenience stores that do not sell gasoline or petroleum
products (together with the Convenience Stores and the Gas Stores, the "Walk-In
Convenience Stores"), and (C) all right, title, and interest in and to the trade
names, trademarks, service marks, trade dress, logos, emblems relating to the
name "Farm Stores."
(f) Closing Under Toni Agreement. The closing on the
purchase of interests in the Partnerships under the Toni Agreement shall have
occurred immediately prior to the Effective Time.
ARTICLE V
TERMINATION AND ABANDONMENT
Section 5.1 Termination. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned, at any time prior to the
Effective Time:
(a) by mutual written consent of the Company and UPC Merger
Sub, on the one hand, and of FSCI and FSCI Shareholder, on the other hand; or
(b) by FSCI and FSCI Shareholder, on the one hand, or the
Company and UPC Merger Sub, on the other hand, if the Effective Time shall not
have occurred by October 15, 1999 or there has been a material breach of any
representation, warranty, obligation, covenant, agreement or condition set forth
in this Agreement on the part of the other party; or
(c) by FSCI if the Chapter 11 Case is dismissed or converted
to a case under Chapter 7 of the Bankruptcy Code.
Section 5.2 Effect of Termination. In the event of the
termination of this Agreement pursuant to Section 5.1 hereof by FSCI and FSCI
Shareholder, on the one hand, or the Company and UPC Merger Sub, on the other
hand, written notice thereof shall forthwith be given to the other party or
parties specifying the provision hereof pursuant to which such termination is
made, and this Agreement shall become void and have no effect, and there shall
be no liability hereunder on the part of FSCI, FSCI Shareholder, the Company, or
UPC Merger Sub, except that Sections 3.2 and 6.1 hereof shall survive any
termination of this Agreement. Nothing in this Section 5.2 shall relieve any
party to this Agreement of liability for breach of this Agreement.
ARTICLE VI
MISCELLANEOUS
Section 6.1 Fees and Expenses. All costs and expenses incurred in
connection with this Agreement and the consummation of the transactions
contemplated hereby shall be paid by the party incurring such costs and
expenses, except for HSR fees payable by the Company as an acquiring person and
the commitment fee payable to Hamilton Bancorp, Inc.
Section 6.2 Representations and Warranties. The respective
representations and warranties of the Company and UPC Merger Sub, on the one
hand, and FSCI, on the other hand, contained herein or in any certificates or
other documents delivered prior to or at the Closing shall not be deemed waived
or otherwise affected by any investigation made by any party. However, this
Agreement sets forth exclusively all of the parties' representations,
warranties, covenants and agreements regarding the subject matter hereof, and no
representations or statements of any party that is not included in this
Agreement has been relied upon or shall have any legal effect. Except for the
representations and warranties of the parties in this Agreement, each party has
determined to enter into and consummate this Agreement based on its own
independent investigation. Each and every such representation and warranty in
this Agreement shall terminate as of, and not survive the Closing hereunder.
This Section 6.2 shall have no effect upon any other obligation of the parties
hereto, whether to be performed before or after the Effective Time.
Section 6.3 Extension; Waiver. At any time prior to the Effective
Time, the parties hereto, by action taken by or on behalf of the respective
Boards of Directors of the Company, UPC Merger Sub or FSCI, may (i) extend the
time for the performance of any of the obligations or other acts of the other
parties hereto, (ii) waive any inaccuracies in the representations and
warranties contained herein by any other applicable party or in any document,
certificate or writing delivered pursuant hereto by any other applicable party,
or (iii) waive compliance with any of the agreements or conditions contained
herein. Any agreement on the part of any party to any such extension or waiver
shall be valid only if set forth in an instrument in writing signed by such
party.
Section 6.4 Notices. All notices, requests, demands, waivers and
other communications required or permitted to be given under this Agreement
shall be in writing and shall be deemed to have been duly given if delivered in
person or mailed, certified or registered mail with postage prepaid, or Federal
Express or other recognized overnight courier delivery service or sent by telex,
telegram or telecopier, as follows:
(a) if to the Company, to:
United Petroleum Corporation
2620 Mineral Springs Road
Suite A
Knoxville, TN 37917
Attention: President
Fax No.: (423)688-3463
with a copy (that will not constitute notice) to:
Young Conaway Stargatt & Taylor, LLP
Rodney Square North, 11th Floor
1100 North Market Street
P.O. Box 391
Wilmington, DE 19899-0391
Attention: Joel A. Waite, Esquire
Fax No.: (302)571-1253
(b) if to the UPC Merger Sub, to:
c/o United Petroleum Corporation
2620 Mineral Springs Road
Suite A
Knoxville, TN 37917
Attention: President
Fax No.: (423)688-3463
with a copy (that will not constitute notice) to:
Young Conaway Stargatt & Taylor, LLP
Rodney Square North, 11th Floor
1100 North Market Street
P.O. Box 391
Wilmington, DE 19899-0391
Attention: Joel A. Waite, Esquire
Fax No.: (302)571-1253
(c) if to FSCI, to:
F.S. Convenience Stores, Inc.
5800 N.W. 74th Ave.
Miami, FL 33166
Attention: President
Fax No.: (305) 592-2582
with a copy (that will not constitute notice) to:
Berger Davis & Singerman, P.A.
Suite 2950
200 South Biscayne Boulevard
Miami, Florida 33131
Attention: Daniel Lampert, Esquire
Fax No.: (305) 714-4340
or to such other Person or address as any party shall specify by notice in
writing to each of the other parties. All such notices, requests, demands,
waivers and communications shall be deemed to have been received on the date of
delivery, or in the case of overnight courier service, the next business day,
and unless if mailed, in which case on the third business day after the mailing
thereof except for a notice of a change of address, that shall be effective only
upon receipt thereof.
Section 6.5 Entire Agreement. This Agreement and the schedules
and other documents referred to herein or delivered pursuant hereto,
collectively contain the entire understanding of the parties hereto with respect
to the subject matter contained herein and supersede all prior representations,
warranties, agreements and understandings, oral and written, with respect
thereto. The information disclosed in any one schedule to this Agreement shall
be deemed to be disclosed for purposes of each and every other schedule attached
to, or representation made in, this Agreement, provided that proper
cross-reference is made to the appropriate schedule setting forth such
disclosure information.
Section 6.6 Binding Effect; Benefit; Assignment. This Agreement
shall inure to the benefit of and be binding upon the parties hereto and their
respective successors and permitted assigns, but neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned by any of
the parties hereto without the prior written consent of the other parties.
Nothing in this Agreement, expressed or implied, is intended to confer on any
Person other than the parties hereto or their respective successors and
permitted assigns, any rights, remedies, obligations or liabilities under or by
reason of this Agreement. This Agreement is executed and delivered by each party
solely in a corporate capacity.
Section 6.7 Amendment and Modification. Subject to applicable
law, including but not limited to the requirements of the Bankruptcy Code and
the orders of the Bankruptcy Court, this Agreement may be amended, modified and
supplemented in writing by the parties hereto in any and all respects before the
Effective Time, by action taken by the respective Boards of Directors of FSCI,
UPC Merger Sub and the Company (or by the respective officers authorized by such
Boards of Directors).
Section 6.8 Further Actions. Each of the parties hereto agrees
that, subject to its legal obligations, it will use its best efforts to fulfill
all conditions precedent specified herein, to the extent that such conditions
are within its control, and to do all things reasonably necessary to consummate
the transactions contemplated hereby.
Section 6.9 Headings. The descriptive headings of the several
Articles and Sections of this Agreement are inserted for convenience only, do
not constitute a part of this Agreement and shall not affect in any way the
meaning or interpretation of this Agreement.
Section 6.10 Counterparts. This Agreement may be executed in
several counterparts, each of which shall be deemed to be an original, and all
of which together shall be deemed to be one and the same instrument.
Section 6.11 Applicable Law. This Agreement and the legal
relations between the parties hereto shall be governed by and construed in
accordance with the laws of the State of Delaware, without regard to the
conflict of laws rules thereof.
Section 6.12 Severability. If any term, provision, covenant or
restriction contained in this Agreement is held by a court of competent
jurisdiction or other authority to be invalid, void, unenforceable or against
its regulatory policy, the remainder of the terms, provisions, covenants and
restrictions contained in this Agreement shall remain in full force and effect
and shall in no way be affected, impaired or invalidated.
Section 6.13 Definitions. Capitalized terms used throughout this
Agreement shall have the meanings ascribed to them in this Agreement.
(a) Unless otherwise defined in the text of this Agreement,
capitalized terms used in this Agreement shall have the following meanings:
"Closing" means the consummation of the transactions contemplated by this
Agreement on the Closing Date.
"Company Disclosure Schedule" means the disclosure schedule
prepared by the Company that is attached to this Agreement and incorporated by
reference herein.
"Confirmation Order" means a final order entered by the
Bankruptcy Court confirming the Chapter 11 Plan.
"Disclosure Statement" means the disclosure statement dated
July 23, 1999 filed with the Bankruptcy Court on behalf of the Company and in
support of the Chapter 11 Plan.
"Environmental Law" means any federal, state, local or
foreign law (including common law), statute, code, ordinance, rule, regulation
or other requirement relating in any way to the environment, natural resources,
or public or employee health and safety and includes, without limitation, the
Comprehensive Environmental Response, Compensation, and Liability Act
("CERCLA"), 42 U.S.C. ss. 9601 et seq., the Hazardous Materials Transportation
Act, 49 U.S.C. ss. 1801 et seq., the Federal Insecticide, Fungicide, and
Rodenticide Act, 7 U.S.C. ss. 136 et seq.., the Resource Conservation and
Recovery Act ("RCRA"), 42 U.S.C. ss. 6901 et seq.., the Toxic Substances Control
Act, 15 U.S.C. ss. 2601 et seq., the Clean Air Act, 42 U.S.C. ss. 7401 et seq.,
the Clean Water Act, 33 U.S.C. ss. 1251 et seq., the Occupational Safety and
Health Act, 29 U.S.C. ss. 651 et seq.., and the Oil Pollution Act of 1990, 33
U.S.C. ss. 2701 et seq., as such laws have been amended or supplemented, and the
regulations promulgated pursuant thereto, and all analogous state and local
statutes.
"Environmental, Health, and Safety Liabilities" means any
liability arising out of violation of an Environmental Law.
"Existing Equity Rights" means options, warrants, or rights
of any nature to receive any form of capital stock of the Company other than New
UPC Common Stock or New UPC Preferred Stock.
"Existing Shares" means all shares of capital stock of the
Company other than New UPC Common Stock or New UPC Preferred Stock.
"FSCI Disclosure Schedule" means the disclosure schedule
prepared by FSCI that is attached to this Agreement and incorporated by
reference herein.
"Hazardous Activity" means any activity in which Hazardous
Materials are used.
"Hazardous Material" means any substance, material or waste
which is regulated by any Governmental Authority of the United States, the
Applicable Foreign Jurisdiction or other national government, including, without
limitation, any material, substance or waste which is defined as a "hazardous
waste," "hazardous material," "hazardous substance," "extremely hazardous
waste," "restricted hazardous waste," "contaminant," "toxic waste" or "toxic
substance" under any provision of Environmental Law, which includes, but is not
limited to, petroleum, petroleum products, asbestos, urea formaldehyde and
polychlorinated biphenyls.
"Merger Financing" means a credit facility that will provide
proceeds of not less than $20,000,000 and not more than $23,000,000 that will be
(i) secured by the Walk-In Convenience Stores, (ii) not require any personal
guarantees of any shareholder of the Company, (iii) upon such other terms and
conditions as shall be acceptable by FSCI and the Company, and (iv) after the
Effective Time, will be an obligation of the Surviving Corporation.
"Person" means any natural person, corporation, general
partnership, limited partnership, limited liability company, business trust, or
other juridical entity.
"Release" means any release, spill, emission, leaking,
pumping, pouring, dumping, emptying, injection, deposit, disposal, discharge,
dispersal, leaching or migration on or into the indoor or outdoor environment or
into or out of any property.
(b) Where any provision contained in this Agreement is
expressly qualified by reference to "best knowledge," "knowledge," "known to" or
similar qualification, the same shall mean the knowledge of any officer,
director, or partner of a party.
(Signature Page Follows)
IN WITNESS WHEREOF, each of FSCI and the Company have caused
this Agreement to be executed by their respective officers thereunto duly
authorized, all as of the date first above-written.
Attest: F.S. CONVENIENCE STORES, INC.,
a Florida corporation
By:
Secretary Name:
Title:
Attest: UNITED PETROLEUM CORPORATION,
a Delaware corporation
By:
Secretary Name:
Title:
Attest: UNITED PETROLEUM SUBSIDIARY, INC.,
a Delaware corporation
By:
Witness Name:
Title:
LOAN AGREEMENT
LOAN AGREEMENT dated November 3, 1999 among UNITED PETROLEUM
CORPORATION, a corporation organized under the laws of the State of Delaware
("UPET"), UNITED PETROLEUM GROUP, INC., a corporation organized under the laws
of the State of Delaware and formerly known as United Petroleum Subsidiary, Inc.
("UPET Group"), F.S. CONVENIENCE STORES, INC., a corporation organized under the
laws of the State of Florida ("F.S. Stores"), F.S. GAS SUBSIDIARY, INC., a
corporation organized under the laws of the State of Florida ("F.S. Gas"), F.S.
NON-GAS SUBSIDIARY, INC., a corporation organized under the laws of the State of
Florida ("F.S. Non-Gas"), REWJB GAS INVESTMENTS, a Florida general partnership
("REWJB Gas"), JACKSON-UNITED PETROLEUM CORPORATION, a corporation organized
under the laws of the Commonwealth of Kentucky ("Jackson"), CALIBUR SYSTEMS,
INC., a corporation organized under the laws of the State of Tennessee
("Calibur"), (UPET, UPET Group, F.S. Stores, F.S. Gas, F.S. Non-Gas, REWJB Gas,
Jackson and Calibur, collectively, "Borrowers") and HAMILTON BANK, N.A., a
national banking association ("Bank").
WHEREAS, Borrowers have requested the Bank to make available to
Borrowers a US$4,233,000 Revolving Credit Facility, a US$8,300,000 Mortgage Loan
Facility and a US$10,467,000 Term Loan Facility, all upon and subject to the
terms and conditions of this Agreement;
ACCORDINGLY, the parties agree as follows:
ARTICLE I: DEFINITIONS
In this Agreement:
1.1 "Banking Day" means any day other than a Saturday, Sunday or legal
holiday on which banks are authorized or required to be closed in Miami,
Florida and New York, New York, and, with respect to LIBOR Loans, a day
on which banks also are open and dealing in Dollars in the London,
England interbank market.
1.2 "Borrowing Base" means the Dollar amount determined in accordance with
Section 2.1(c).
1.3 "Closing Date" means November 3, 1999 or such other date for closing the
Loans as agreed to by the Bank and UPET.
1.4 "Collateral" means the assets of Borrowers described in Article VIII
assigned to the Bank, mortgaged to the Bank or in which a security
interest is granted to the Bank to secure the Loans and other
Liabilities of Borrowers to the Bank.
1.5 "Collateral Agreements" means the Lease Assignments, the Mortgages, the
Security Agreements, the Pledge Agreement and the collateral assignments
of the Purchase Agreement and the Management Agreement.
1.6 "Commitments" means the obligations of the Bank to make the Revolving
Credit Loans, the Mortgage Loan and the Term Loan to Borrowers.
1.7 "Documents" means this Agreement, the Notes and the Collateral
Agreements.
1.8 "Dollars" and "US$" means lawful money of the United States of America.
Any reference in this Agreement to payment in "Dollars" or "US$" means
payment in immediately available Dollar funds.
1.9 "Drawing Date" means any date on which a Revolving Credit Loan is made
by the Bank to a Borrower hereunder.
1.10 "Eurocurrency Reserve Requirements" means, for any day, the aggregate
(without duplication) of the rates (expressed as a decimal fraction) of
any reserve requirements in effect on such day (including, without
limitation, basic, supplemental, marginal and emergency reserves under
any regulations of the Board of Governors of the Federal Reserve System
or other Governmental Authority having jurisdiction with respect
thereto) dealing with reserve requirements prescribed for Eurocurrency
funding (currently referred to as "Eurocurrency Liabilities" in
Regulation D of such Board) maintained by a member bank of such system.
1.11 "Event of Default" means any of the events mentioned in Article X of
this Agreement.
1.12 "GAAP" means generally accepted accounting principles applied on a basis
consistent with those used in Borrowers' financial statements.
1.13 "Governmental Authority" means any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government.
1.14 "Indebtedness" means any item which would properly be included as a
liability on the liability side of a balance sheet prepared in
accordance with GAAP as of any date as of which "Indebtedness" is to be
determined.
1.15 "Lease Assignments" means the instruments of assignment of the Leases to
the Bank.
1.16 "Leases" means the lease agreements by which Borrowers hold the
leasehold interests described in Schedule 1.16 attached hereto, and any
lease agreement by which any Borrower hereafter holds a leasehold
interest meeting the requirements of Section 6.10.
1.17 "Liabilities" means all obligations of borrowers under this Agreement
and the Notes and all other obligations of Borrowers to the Bank, its
successors and assigns, of every kind, nature and description, direct or
indirect, secured or unsecured, joint and several, absolute and
contingent, due or to become due, now existing or hereafter arising,
regardless of how they arose or by what instrument or whether evidenced
by any agreement or instrument. "Liabilities" includes obligations to
perform acts and to refrain from taking action as well as obligations to
pay money.
1.18 "LIBOR" means in respect of each LIBOR Interest Period, the rate per
annum (rounded upwards, if necessary, to the nearest 1/16th of 1%)
quoted on Reuters International System's "LIBO" page at approximately
11:00a.m. London time on the day two (2) Banking Days before the
beginning of the LIBOR Interest Period for the offering by leading banks
in the London interbank market of Dollar deposits for the term of such
LIBOR Interest Period and in amounts comparable to the principal amount
of the LIBOR Loan scheduled to be outstanding for the LIBOR Interest
Period.
1.19 "LIBOR Determination Date" means the last Banking Day of each LIBOR
Interest Period.
1.20 "LIBOR Interest Period" means each successive period of time used to
determine the rate of interest applicable to the principal of a LIBOR
Loan. The first LIBOR Interest Period of a LIBOR Loan shall commence on
the date specified by UPET for the commencement of the LIBOR Loan and
end on its first LIBOR Determination Date, and each subsequent LIBOR
Interest Period shall commence on the LIBOR Determination Date for the
preceding LIBOR Interest Period and end on the next succeeding LIBOR
Determination Date. Except as otherwise provided herein, LIBOR Interest
Periods shall be six (6) months for the LIBOR Mortgage Loan and one (1)
month for a LIBOR Revolving Credit Loan. If any LIBOR Determination Date
falls on a day which is not a Banking Day, it shall be adjusted and
determined in accordance with the practices of the offshore Dollar
interbank markets as from time to time in effect, provided, however,
that the last LIBOR Interest Period shall end no later than the date
specified by UPET for conversion of such LIBOR Loan into a Prime Rate
Loan, the fifth (5th) anniversary of the Closing Date or the date all
amounts outstanding hereunder become due whether by acceleration or
otherwise, as the case may be.
1.21 "LIBOR Revolving Credit Loan", "LIBOR Mortgage Loan" and "LIBOR Loans"
means a Revolving Credit Loan or the Mortgage Loan or both,
respectively, at any time during which interest thereon is calculated
with reference to LIBOR.
1.22 "Loans" means the Revolving Credit Loans, the Mortgage Loan and the Term
Loan.
1.23 "Management Agreement" means the Management Agreement to be entered into
between UPET Group and Farm Stores Grocery, Inc.
1.24 "Maturity Date" means the fifth anniversary (5th) of the Closing Date,
but in no event later than October 30, 2004.
1.25 "Merger Plan" means the Agreement and Plan of Merger dated September 29,
1999 among F.S. Stores, UPET and UPET Group and joined for certain
limited purposes by Farm Stores Grocery, Inc., as the same may be
amended from time to time.
1.26 "Mortgage Loan" means the term loan described in Section 2.2.
1.27 "Mortgages" means the first mortgages or deeds of trust in favor of or
for the benefit of the Bank on the Owned Real Properties.
1.28 "Notes" means the joint and several promissory notes of Borrowers
evidencing the Loans in substantially the form of Exhibit A attached
hereto.
1.29 "Owned Real Properties" means the real properties owned by Borrowers.
Owned Real Properties owned by Borrowers on the Closing Date are
described in Schedule 1.29 attached hereto.
1.30 "Person" means an individual, partnership, corporation, business trust,
joint stock company, trust, unincorporated association, joint venture,
Governmental Authority or other entity of whatever nature.
1.31 "Pledge Agreements" means the Pledge Agreements pledging the shares of
Farm Stores Grocery, Inc. owned by one or more Borrowers and described
in Section 8.3 to the Bank in substantially the form of Exhibit B
attached hereto.
1.32 "Prime Rate" means the Dollar prime commercial rate as publicly
announced from time to time by Citibank, N.A. as its "prime rate".
1.33 "Prime Rate Loans" means the Term Loan and a Revolving Credit Loan or
the Mortgage Loan (or any portion thereof) or both, respectively, at any
time during which interest thereon is calculated with reference to Prime
Rate.
1.34 "Purchase Agreement" means the Purchase Agreement to be entered into
between UPET Group and Farm Stores Grocery, Inc. granting UPET Group an
option to purchase shares of Farm Stores Grocery, Inc.
1.35 "Requirement of Law" means, as to any Person, the Certificate of
Incorporation and By-Laws or other organization or governing documents
of such Person and any law, treaty, rule or regulation or determination
of an arbitrator or a court or other Governmental Authority, in each
case applicable to or binding upon such Person or any of its property or
to which such Person or any of its property is subject.
1.36 "Revolving Credit Loans" means the revolving loans described in Section
2.1.
1.37 "Security Agreements" means the security agreements executed by each of
the Borrowers granting the Bank a first security interest in all of the
Borrower's personal property, each in substantially the form of Exhibit
C hereto.
1.38 "Term Loan" means the term loan described in Section 2.3.
1.39 "Year 2000 Compliant" means that the relevant party's computers,
computer systems and codes (i) will not fail to accurately and properly
read, process, perform mathematical calculations, store, sort,
distinguish, recognize, accept or interpret any data containing date
information prior to, during and after the year 2000, (ii) will not fail
to accurately and properly read and process the fact that the year 2000
is a leap year, (iii) will accurately and properly read and process
so-called "magic dates" such as the date "9/9/99" or any other date
field data used by the party to signify information other than the date
and (iv) will be compatible with any other party's computer system as to
Year 2000 Compliant matters with respect to circumstances described in
(i) - (iii) above.
ARTICLE II: THE LOANS
2.1 Revolving Credit Loans.
(a) Drawdowns. The Bank agrees, on the terms and conditions set
forth herein and upon at least two (2) Banking Days' prior
notice from UPET, to make Revolving Credit Loans jointly and
severally available to Borrowers in the aggregate principal
amount not at any time exceeding the lesser of the Borrowing
Base, as determined in subsection (c) below, or US$4,233,000.
The notice from UPET shall specify whether the Revolving Credit
Loan is to be a Prime Rate Loan or a LIBOR Loan, the Drawing
Date of the Loan and the account at the Bank of a Borrower to
which the Loan is to be credited and shall include or be
accompanied by a certificate setting forth the current
calculation of the Borrowing Base.
(b) Repayment. Borrowers shall have the right to repay in whole or
in part without penalty or premium Prime Rate Revolving Credit
Loans at any time and LIBOR Revolving Credit Loans on LIBOR
Determination Dates for the LIBOR Revolving Credit Loans being
repaid. Any such repayments of a LIBOR Revolving Credit Loan
also shall be upon at least two (2) Banking Days prior notice to
the Bank. Borrowers shall have the right prior to the Maturity
Date, or one (1) month prior to the Maturity Date in the case of
a LIBOR Revolving Credit Loan, to reborrow as provided in this
Section 2.1, provided, that, all outstanding Revolving Credit
Loans shall be due and payable jointly and severally by the
Borrowers on the Maturity Date. If at any time the aggregate
principal amount of outstanding Revolving Credit Loans shall be
greater than the Borrowing Base, Borrowers immediately shall
repay Revolving Credit Loans in an amount sufficient to reduce
the aggregate principal amount of outstanding Revolving Credit
Loans to less than the Borrowing Base. Repayments shall be
accompanied by payment of accrued interest on the amount repaid
to the date of repayment and, in the case of any repayment of a
LIBOR Revolving Credit Loan on a date other than its LIBOR
Determination Date, any amount required by Section 4.4 hereof.
(c) Borrowing Base. Until the first anniversary of the Closing Date,
the Borrowing Base for Revolving Credit Loans shall be at any
time an amount equal to the sum of eighty percent (80%) of
Borrowers' eligible accounts receivable plus eighty percent
(80%) of Borrowers' eligible inventory. Thereafter the Borrowing
Base for Revolving Credit Loans shall be at any time an amount
equal to the sum of eighty percent (80%) of Borrowers' eligible
accounts receivable plus seventy percent (70%) of Borrowers'
eligible inventory. Eligible accounts receivable are non-related
accounts of any borrower (i.e., accounts due from parties not a
Borrower or affiliated with any Borrower), for which there are
no contra accounts, that are outstanding for up to 60 days from
due date and otherwise complying with the representations and
warranties and other terms and conditions of the Security
Agreements. Any account with more than 50% of its balance past
due more than 60 days will be deemed ineligible in its entirety.
Eligible inventory is inventory of any Borrower complying with
the representations and warranties and other terms and
conditions of the Security Agreements and excludes the amount of
any reserve, for obsolescence or otherwise, placed against such
inventory on the financial statements of Borrowers. The Bank
retains the right from time to time to establish standards of
eligibility and reserves against availability in its sole but
reasonable discretion.
2.2 Mortgage Loan. The Bank agrees, on the terms and conditions set forth
herein, to make the Mortgage Loan to Borrowers in the principal amount
of US$8,300,000 on the Closing Date. The Mortgage Loan shall be
repayable jointly and severally by Borrowers in monthly level principal
and interest payments based upon a fifteen (15) year amortization
schedule (readjusted upon any change in interest rate to reflect such
change in interest rate) and a balloon payment on the Maturity Date of
all amounts then outstanding under the Mortgage Loan. Notwithstanding
the foregoing, in no event shall the principal amount of the Mortgage
Loan exceed eighty percent (80%) of the appraised value of the Owned
Real Properties as set forth in the appraisals described in Article IX.
2.3 Term Loan. The Bank agrees, on the terms and conditions set forth
herein, to make the Term Loan to Borrowers in the principal amount of
US$10,467,000 on the Closing Date. The Term Loan shall be repayable
jointly and severally by Borrowers beginning thirteen (13) months after
the Closing Date in equal monthly principal payments based upon a six
(6) year amortization schedule and a balloon payment on the Maturity
Date of all amounts then outstanding under the Term Loan.
Notwithstanding the foregoing or any other conflicting or inconsistent
provision herein, if the original principal amount of the Mortgage Loan
is less than US$8,300,000, the original principal amount of the Term
Loan, at the option of UPET, may be increased by up to US$750,000 of the
amount of such reduction in the Mortgage Loan, provided, however, that
the aggregate principal amounts of the Mortgage Loan and the Term Loan
shall not exceed US$18,767,000.
2.4 Interest. Borrowers jointly and severally shall pay interest on the
unpaid principal amount of the Loans from the date made available by the
Bank to a Borrower until maturity as follows:
(a) Revolving Credit Loans shall bear interest at the option of UPET
at rates per annum equal to (i) the sum of Prime Rate plus one
percent (1.0%) or (ii) the sum of three and seven-eighths
percent (3.875%) plus LIBOR. Any change in the Prime Rate shall
take effect immediately with respect to interest on Prime Rate
Revolving Credit Loans. Any Prime Rate Revolving Credit Loan may
be converted into a LIBOR Revolving Credit Loan upon two (2)
Banking Days prior notice by UPET to the Bank. Any LIBOR
Revolving Credit Loan may be converted on any LIBOR
Determination Date for such LIBOR Revolving Credit Loan into a
Prime Rate Revolving Credit Loan upon two (2) Banking Days prior
notice by UPET to the Bank.
(b) The Mortgage Loan shall bear interest at the option of UPET at
rates per annum equal to (i) the sum of Prime Rate plus one and
one-eighths percent (1.125%) or (ii) the sum of four percent
(4.0%) plus LIBOR. At least two (2) Banking Days prior to each
six (6) month anniversary of the Closing Date, UPET shall advise
the Bank whether the interest rate on the Mortgage Loan for the
following six (6) month period shall be computed with reference
to the Prime Rate in effect on the first day of such following
six (6) month period or LIBOR for such following six (6) month
period. If the Prime Rate option is selected, the interest rate
for the entire six (6) month period shall be based upon the
Prime Rate in effect on the first day of the six (6) month
period.
(c) The Term Loan shall bear interest at a rate per annum equal to
the sum of Prime Rate plus three percent (3.0%). Any change in
the Prime Rate shall take effect immediately.
(d) All interest shall be computed on the basis of the actual number
of days elapsed in a 360 day year and shall be payable monthly
in arrears and on payment in full of the Loans. Borrowers agree
that any amount of principal of any of the Loans, and to the
extent permitted by law interest, that is not paid on its due
date (whether at stated maturity, by acceleration or otherwise)
shall bear interest from such due date until paid in full at a
rate per annum equal to the rate provided in (a) - (c) above, as
the case may be, plus five percent (5.0%), provided that such
interest rate shall not at any time exceed the maximum rate
allowed by law. Default interest shall be payable on demand.
2.5 Prepayment of the Mortgage Loan and the Term Loan.
(a) Mandatory Prepayments.
(i) The net cash proceeds from the sale of any non-real estate
assets (other than (1) sales of inventory in the ordinary course
of business, (2) sales of assets to the extent the proceeds are
applied to the repair or replacement of Collateral and (3)
immaterial sales not exceeding US$50,000 in any fiscal year of
Borrowers) of any of the Borrowers shall be used to repay the
Term Loan. Any remaining excess proceeds from the sale of any
non-real estate assets after payment in full of the Term Loan,
shall be applied first to the Mortgage Loan and then to the
Revolving Credit Facility. Prepayments under this subsection
shall be due within ten (10) days of receipt of any cash
proceeds.
(ii) The net cash proceeds from the sale of any real estate
assets of any of the Borrowers shall be used to repay the
Mortgage Loan. Any remaining excess proceeds for the sale of any
real estate, after application to the Mortgage Loan, shall be
applied first to the Term Loan and then the Revolving Credit
Facility. Prepayments under this subsection shall be due within
ten (10) days of receipt of any cash proceeds.
(iii) Fifty percent (50%) of the cash proceeds received by any
Borrower from the issuance of debt securities by any Borrower,
net of all costs and expenses associated with the issuance of
such debt securities, shall be used to reduce Borrowers'
obligations first under the Term Loan, second under the Mortgage
Loan and third under the Revolving Credit Facility. Prepayments
under this subsection shall be due within five (5) days of
receipt of any cash proceeds.
(iv) Twenty-five percent (25%) of the cash proceeds received by
any Borrower from the issuance of equity securities by any
Borrower net of all costs and expenses associated with the
issuance of such equity securities, shall be used to reduce
Borrowers' obligations first under the Term Loan, second under
the Mortgage Loan and third under the Revolving Credit Facility.
Prepayments under this subsection shall be due within five (5)
days of receipt of any cash proceeds.
(v) The Term Loan shall be prepaid by an amount equal to
twenty-five percent (25%) of UPET's consolidated net income plus
depreciation and amortization (during the period under review)
minus principal payments made and net cash capital expenditures
(during the period under review), all computed in accordance
with GAAP. The calculations and prepayments shall be effected
for the six months prior to each fiscal year and for each
intervening six month period and for any "short" fiscal year due
to a change in UPET's fiscal year, provided that the first
period to which this subsection is applicable shall be the six
month period ending June 30, 2000 or the end of the "short"
fiscal year if a change in UPET's fiscal year occurs prior to
June 30, 2000. Prepayments under this subsection shall be due
within ninety (90) days of the end of a fiscal year for a period
under review ending on a fiscal year end and within forty-five
(45) days of the end of any intervening period under review.
(vi) Any partial prepayments shall be applied to installments of
principal due in the inverse order of their maturity. Any
mandatory prepayment of a LIBOR Loan on a date other than its
LIBOR Determination Date may, at the Bank's sole option, (A) be
held as cash collateral until such LIBOR Loan's next LIBOR
Determination Date and applied as a prepayment on such LIBOR
Determination Date or (B) be applied immediately by the Bank as
a prepayment, but without Borrowers incurring any liability for
any indemnity payment of any amount otherwise required by
Section 4.4 hereof.
(b) Voluntary Prepayments. Borrowers shall have the right, on any
Banking Day, to prepay the Mortgage Loan or the Term Loan or
both in whole or in part, provided that any prepayment of a
LIBOR Loan on a day other than a LIBOR Determination Date with
respect thereto shall be subject to payment of any amount
required by Section 4.4 hereof. Any partial prepayments shall be
in the amount of US$100,000 or an integral multiple thereof and
shall be applied to installments of principal due in the inverse
order of their maturity.
(c) Exit Fee. Any prepayment shall be accompanied by prepayment of
accrued interest on the amount prepaid. Subsequent to 18 months
from the Closing Date, an Exit Fee shall be payable for
prepayments of the Mortgage Loan or the Term Loan or both, other
than pursuant to Subsection 2.5(a) (v), in amounts equal to
(i) the amount prepaid divided by (A) the total principal
amounts of the Mortgage Loan and the Term Loan outstanding 18
months after the Closing Date less (B) the principal
amortization amounts scheduled to be paid from 18 months after
the Closing Date to the Maturity Date
multiplied by
(ii) US$350,000,
provided, however, that if prepayments of the Mortgage Loan or
the Term Loan or both have occurred within 18 months from the
Closing Date, the US$350,000 amount set forth above shall be
reduced by the percentage that such prepayments within 18 months
of the Closing Date bear to the total original principal amounts
of the Mortgage Loan and the Term Loan.
2.6 Payments. All payments hereunder shall be made without setoff or
counterclaim and shall be made through demand deposit accounts
maintained by each Borrower at the Bank's Main Office, 3750 N.W. 87th
Avenue, Miami, Florida 33178, U.S.A., (or at such other branch or office
of the Bank as the Bank may from time to time specify by notice to
UPET).
2.7 Withholding and Taxes.
(a) All amounts payable under this Agreement or under any of the
other Documents shall be made without set-off or counterclaim
and clear of and without deduction for any and all present and
future taxes, levies, imposts, deductions, charges,
withholdings, contributions, services, surcharges, exchange
commissions, penalties and all liabilities with respect thereto
imposed by any governmental or taxing authority (other than
income or franchise taxes based on or measured by the overall
net income or capital of the Bank imposed by the United States
of America or the State of Florida), including any stamp or
other taxes, registration fees or other duties, levies, imposts,
notarial fees or other charges of any nature whatsoever by
whomsoever imposed with respect to the preparation, execution,
delivery, registration, performance and enforcement of this
Agreement and any of the other Documents (collectively,
"Taxes"). Borrowers agree to cause all Taxes to be paid on
behalf of the Bank directly to the appropriate Governmental
Authority. If for any reason Borrowers are prohibited from
paying any Taxes on behalf of the Bank, then all payments made
on or in respect of this Agreement including payments made
pursuant to this Section, shall be increased so that, after
provisions for such Taxes, including Taxes on such increase, the
amounts received by the Bank will equal the amounts the Bank
would have received if no Taxes were due on such payments. If
any of the amounts referred to in this Section are paid by or on
behalf of the Bank, the Bank shall promptly so notify Borrowers
and Borrowers shall, upon demand, promptly indemnify the Bank
for such payments, together with any interest, penalties and
expenses in connection therewith, plus interest thereon at the
rate specified in Section 2.4(c) hereof.
(b) If, at any time and for any reason there is a change in the
basis of taxation of payments in respect of this Agreement or a
Loan (except for changes in taxes based upon or measured by
income or capital of the Bank or the Bank's franchise taxes) and
the result thereof is to increase the cost to the Bank of
maintaining the Loans of to reduce any amount receivable under
this Agreement, then Borrowers shall promptly pay the Bank, upon
its demand, any additional amount necessary to compensate the
Bank for such increased cost or reduced amount receivable.
(c) Borrower shall provide the Bank with original tax receipts,
notarized copies of tax receipts, or such other documentation as
will prove payment of tax in a court of law applying the U.S.
Federal Rules of Evidence, for all Taxes paid by Borrowers
pursuant to this Section. Borrower shall deliver such receipts
or other documentation to the Bank within 30 days after the due
date for the related Tax.
(d) The Bank shall upon request provide reasonable assistance to
Borrowers for the purpose of establishing any reduction in or
exemption from deduction or withholding or any liability for any
Taxes or avoiding or mitigating such increased costs or reduced
amounts receivable, such assistance in the case of Taxes to be
limited to the timely provision of properly completed and
executed documentation sufficient to establish to the relevant
taxing authorities the entitlement to such reduction or
exemption.
(e) The obligations of Borrowers under this Section shall survive
the payment in full or principal and interest on the Loans and
the cancellation of the Notes and any of the other Documents.
ARTICLE III: EXPENSES AND FEES
3.1 Structuring Fees. Borrower shall pay to the Bank on the Closing Date
Structuring Fees equal to (a) 1.5% flat, or US$63,495, on the Revolving
Credit Loan Commitment, (b) 1.5% flat, or US$124,500, on the Mortgage
Loan Commitment and (c) 7.7577625% flat, or US$812,005, on the Term Loan
Commitment. The nonrefundable US$500,000 fee paid upon delivery of the
September 27, 1999 commitment letter for this Loan Agreement and the
US$50,000 paid upon acceptance of such commitment letter shall be
applied to the total amount of the Structuring Fees. The Bank shall
deduct such balance of the Structuring Fees from the proceeds of the
Revolving Credit Loans.
3.2 Expenses. Borrowers shall pay to the Bank all documentation costs,
filing and search fees, title insurance premiums and other expenses,
including reasonable legal fees of counsel to the Bank, incurred in
connection with the preparation of the Documents. The Bank shall deduct
such amounts from the proceeds of the Revolving Credit Loans.
3.3 Future Expenses. Borrowers shall pay on demand, whether any Event of
Default hereunder shall have occurred and regardless of whether any
proceeding to enforce the same shall have been commenced, the Bank's
standard loan fees as set from time to time by notice to the Bank's
customers generally, all costs and expenses of the Bank, including,
without limitation, all fees and disbursements of counsel to the Bank,
incurred in connection with the enforcement of the Documents, including
any appeals, any waivers or consents in connection herewith or the
preparation of any amendment to or modification of the Documents.
ARTICLE IV: YIELD PROTECTION AND ILLEGALITY
4.1 Inability to Determine Interest Rate. In the event that prior to the
first day of any LIBOR Interest Period:
(a) the Bank shall have determined (which determination shall be
conclusive and binding upon Borrowers) that, by reason of
circumstances affecting the relevant market, adequate and
reasonable means do not exist for ascertaining LIBOR for such
LIBOR Interest Period, or
(b) the Bank determines that the LIBOR rate for such LIBOR Interest
Period will not adequately and fairly reflect the cost to the
Bank (as conclusively certified by the Bank) of maintaining the
relevant LIBOR Loan during such LIBOR Interest Period,
the Bank shall give notice thereof to UPET as soon as practicable. If
such notice is given, the Loans shall remain or shall be converted to on
the first day of such LIBOR Interest Period, as the case may be, Prime
Rate Loans.
4.2 Illegality. Notwithstanding any other provision herein, if any change
after the date hereof in any Requirement of Law or in the interpretation
or application thereof shall make it unlawful for the Bank to make or
maintain the LIBOR Loans as contemplated by this Agreement, the LIBOR
Loans shall be converted automatically to Prime Rate Loans on the last
day of the then current LIBOR Interest Period or within such earlier
period as required by law. If any such conversion of the LIBOR Loans
occurs on a day which is not a LIBOR Determination Date with respect
thereto, Borrowers shall pay to the Bank such amounts, if any, as may be
required pursuant to Section 4.4 unless such illegality was due to the
fault of the Bank.
4.3 Requirements of Law.
(a) In the event that any change after the date hereof in any
Requirement of Law or in the interpretation or application
thereof or compliance by the Bank with any request or directive
(whether or not having the force of law) from any central bank
or other Governmental Authority made subsequent to the date
hereof:
(i) shall impose, modify or hold applicable any reserve,
special deposit, compulsory loans or similar requirement
against assets held by, deposits or other liabilities in
or for the account of LIBOR Loans, or any other
acquisition of funds by, any office of the Bank which is
not otherwise included in the determination of the LIBOR
hereunder; or
(ii) shall impose on the Bank any other condition;
and the result of any of the foregoing is to increase the cost
to the Bank, by an amount which the Bank deems in its reasonable
judgment to be material, of maintaining the LIBOR Loans or to
reduce any amount receivable hereunder in respect thereof then,
in any case, Borrowers shall promptly pay the Bank, upon its
demand, any additional amounts necessary to compensate the Bank
for such increased cost or reduced amount receivable. If the
Bank becomes entitled to claim any additional amounts pursuant
to this subsection, it shall promptly notify UPET of the event
by reason of which it has become so entitled. A certificate as
to any additional amounts payable pursuant to this subsection
setting forth the calculation thereof in reasonable detail (as
determined by the Bank in its reasonable discretion) submitted
by the Bank to UPET shall be conclusive in the absence of
manifest error. This covenant shall survive the termination of
the Loans and the payment of the Notes and all other amounts
payable hereunder.
(b) In the event that the Bank shall have determined that any change
in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by the Bank
or any corporation controlling the Bank with any request or
directive regarding capital adequacy (whether or not having the
force of law) from any Governmental Authority made subsequent to
the date hereof does or shall have the effect of reducing the
rate of return on the Bank's capital as a consequence of its
LIBOR obligations hereunder to a level below that which the Bank
or such corporation could have achieved but for such change or
compliance (taking into consideration the Bank's or such
corporation's policies with respect to capital adequacy) by an
amount deemed by the Bank, in its reasonable judgment, to be
material, then from time to time, after submission by the bank
to UPET of a written request therefor, Borrowers shall pay to
the Bank such additional amount or amounts as will compensate
the Bank for such reduction. A certificate as to any additional
amount payable pursuant to this subsection setting forth the
calculation thereof in reasonable detail (as determined by the
Bank in its reasonable discretion) to UPET shall be conclusive
in the absence of manifest error.
(c) Upon request by the Bank, from time to time, Borrowers shall pay
the cost of all Eurocurrency Reserve Requirements applicable to
the LIBOR Loans. If the Bank is or becomes entitled to receive
payments in respect of Eurocurrency Reserve Requirements
pursuant to this subsection, it shall promptly notify UPET
thereof. A certificate as to the amount of such Eurocurrency
Reserve Requirements setting forth the calculation thereof in
reasonable detail (as determined by the Bank in its reasonable
discretion) submitted by the Bank to UPET shall be conclusive in
the absence of manifest error. This covenant shall survive the
termination of this Agreement and the payment of the Loans and
all other amounts payable hereunder.
(d) If requested by UPET, payments required under this Section 4.3
may be made in equal monthly installments over the twelve months
following notice by the Bank to UPET pursuant to this Section
4.3.
(e) If payments are required under this Section 4.3, Borrowers may
convert the LIBOR Loans so affected into Prime Rate Loans
subject to Section 4.4.
4.4 Indemnity. Borrowers agree to indemnify the Bank and to hold the Bank
harmless from any loss or expense which the Bank may sustain or incur as
a consequence of (a) default by any Borrower in payment when due of the
principal amount of or interest on a LIBOR Loan, (b) default by
Borrowers in making any prepayment on a LIBOR Loan after Borrowers or
UPET have given a notice thereof in accordance with the provisions of
this Agreement or (c) the making of a payment, conversion to a Prime
Rate Loan or prepayment of a LIBOR Loan on a day which is not a LIBOR
Determination Date with respect thereto, including, without limitation,
in each case, any such loss or expense arising from the reemployment of
funds obtained by the Bank or from fees payable to terminate the
deposits from which such funds were obtained. Payments required under
this Section 4.4 shall be made within ten (10) days after notice thereof
by the Bank. A certificate as to any additional amount payable pursuant
to this Section 4.4 setting forth the calculation thereof in reasonable
detail (as determined by the Bank in its reasonable discretion) to UPET
shall be conclusive in the absence of manifest error. This covenant
shall survive the payment of the Loans or the Notes, and all other
amounts payable hereunder.
ARTICLE V: REPRESENTATIONS AND WARRANTIES
Borrowers represent and warrant to the Bank that:
5.1 Binding Obligations. Each Borrower is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction
of its incorporation, has the corporate power to own its property and to
carry on its business as now being conducted, is duly qualified to
engage in business and is in good standing as a foreign corporation in
each jurisdiction in which the character of the properties owned by it
or the transaction of its business makes such qualification necessary
(except where the failure to obtain such qualification does not have any
material adverse effect on the Borrowers) and has full power, authority
and legal right to incur the Indebtedness and other obligations provided
for in the Documents to which it is a party, to execute and deliver the
Documents to which it is a party and to perform and observe the terms
and provisions hereof and thereof. This Agreement constitutes, and the
Notes when executed and delivered for value will constitute, legal,
valid and binding obligations of Borrowers, enforceable against
Borrowers in accordance with their respective terms, except as the
foregoing may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting enforceability of
creditors' rights generally at the time in effect (regardless of whether
enforcement is sought in equity or law).
5.2 Corporate Authorizations. The execution, delivery and performance of the
Documents and the borrowing hereunder have been duly authorized by all
necessary action on the part of Borrowers including, without limitation,
the authorization of all partners or Boards of Directors of Borrowers,
and all necessary approvals of Governmental Authorities in connection
therewith have been received.
5.3 Absence of Restrictions. The execution, delivery and performance by
Borrowers of the Documents and the borrowings hereunder will not (i)
violate any provision of law or the charters or by-laws of Borrowers,
(ii) violate, be in conflict with, result in a breach of or constitute a
default under any order of any court, arbitrational tribunal or
Governmental Authority or under any material mortgage, indenture,
contract, undertaking or other agreement to which any Borrower is a
party or by which any Borrower or any of its properties, assets or
revenues is bound, (iii) violate any governmental or agency rule or
regulation (including, without limitation, Regulations U and X of the
Board of Governors of the Federal Reserve System of the United States of
America) or (iv) result in the creation or imposition of any security
interest, lien, charge or other encumbrance of any nature whatsoever
upon any of its properties, assets or revenues, other than as
contemplated herein.
5.4 Financial Position and Statements. The financial statements listed in
Schedule 5.4, together with supporting schedules and notes, of Borrowers
delivered to the Bank have been prepared in accordance with GAAP and
correctly set forth in all material respects Borrower's financial
position as at or for the periods shown therein and show all known
material liabilities, direct or contingent, as of such dates. Except for
the payment of the expenses of the transactions contemplated hereby and
by the Merger Plan, there have been no material adverse changes in
Borrowers' financial position since the date of the latest of such
financial statements.
5.5 Litigation. Except as provided in Schedule 5.5, there are no material
actions, suits, proceedings or claims pending against or materially
affecting any Borrower which, if adversely determined, would have a
material adverse effect on the financial condition or business of such
Borrower.
5.6 Bankruptcy Plan.
(a) Bankruptcy Approvals. Each of the Borrowers, to the extent
applicable, has obtained all necessary and requisite authority,
consents and approvals of the United States Bankruptcy Court for
the District of Delaware (the "Bankruptcy Court") in the Chapter
11 bankruptcy proceedings styled United Petroleum Corporation,
Case No. 99-88(PJW) (the "Bankruptcy Proceedings") to enter into
and consummate the transactions contemplated in this Loan
Agreement and in the Merger Plan, including, without limitation,
incurring of the indebtedness and granting of the liens provided
for herein.
(b) Effectiveness of Plan. The Second Amended Plan of Reorganization
for UPET (the "Plan") and the Order Confirming the Amended Plan
by the Bankruptcy Court (the "Confirmation Order") in the
Bankruptcy Proceedings (1) are in full force and effect, have
not been withdrawn, modified or amended as of the date hereof,
and are enforceable in accordance with their respective terms,
(2) are not the subject of any motion for reconsideration or
rehearing, whether under Rules 59 or 60 of the Federal Rules of
Civil Procedure or otherwise, and (3) are not the subject of any
appeal, extension of time for appeal, stay pending appeal or
similar pleading.
(c) Effective Date. All of the conditions precedent to the
occurrence of the Effective Date, as defined in the Plan,
including as set forth in Section 13.1 and 13.2 thereof or
otherwise, have been satisfied as of the date hereof. The
Effective Date, as defined in the Plan, and all of the
transactions or events described in Section 8.17 of the Plan,
including substantial consummation of the Plan, have occurred as
of the date hereof or will occur simultaneously with the
consummation of the transactions contemplated under this Loan
Agreement.
(d) Compliance With Plan. Each of the Borrowers, to the extent
applicable, has fully complied with all of the provisions of the
Plan, and the Order and the United States Bankruptcy Code in
connection with the transactions contemplated herein, including
the incurrence of the indebtedness herein or the granting of the
liens provided for herein. To the extent applicable, no Borrower
is in default of the Plan, the Order or the provisions of the
United States Bankruptcy Code or will be in default thereof as a
result of the transactions contemplated herein, including the
incurrence of the indebtedness herein or the granting of the
liens provided for herein.
(e) Reasonably Equivalent Value. Each of the Borrowers has received
reasonably equivalent value in exchange for the indebtedness
incurred under this Loan Agreement and in exchange for the liens
granted pursuant hereto. Each of the Borrowers is solvent as of
the date hereof and will not be made insolvent as a result of
the transactions contemplated hereunder, the term solvent
meaning that each Borrower's property, at a fair valuation, is
greater than the sum of its debts, including the indebtedness
being incurred hereunder. Each of the Borrowers does not and
will not, as a result of the transactions hereunder, have or be
left with an unreasonably small capital with which to conduct
its business. Each of the Borrowers do not intend to incur and
will not incur, including as a result of the transactions
contemplated hereunder, debts that would be beyond such
Borrower's ability to pay as they matured.
(f) Notice. Each of the Borrowers, to the extent applicable, has
provided, or caused to be provided, proper notice of the
Bankruptcy Proceedings and the related claims bar date therein
to all known and suspected creditors, whether secured or
unsecured, liquidated or unliquidated, contingent or fixed,
priority or non-priority or disputed or undisputed, and that
each Borrower, to the extent applicable, has fully complied with
the provisions of that certain Order of the Bankruptcy Court
Fixing Bar date for Filing Proofs of Claim and Approving Form
and Manner of Notice of Bar Date, dated February 17, 1999 (the
"Bar Date Order"). No Borrower is aware of, or has reason or
basis to be aware of, any claimant or creditor or UPET that has
not received proper notice of the Bar Date Order, or the claims
bar date contained therein.
5.7 Title to Properties; No Liens. Except as provided in Schedule 5.7(a),
Borrowers have good and marketable title to all of their respective
properties and assets and, except as provided in Schedule 5.7(b) or as
permitted or required by the provisions hereof, none of the properties,
assets and revenues of Borrowers are subject to any mortgage, lien,
security interest, pledge or other charge or encumbrance or any similar
arrangement of any kind.
5.8 Payment of Taxes. Except as provided in Schedule 5.8, Borrowers have
filed, or caused to be filed, all tax returns which are required to be
filed by any of them, and have paid or caused to be paid all taxes as
shown on such returns or on any assessment received by any of them, to
the extent that such taxes have become due.
5.9 Agreements. Except as provided in Schedule 5.9, none of Borrowers is in
default, in any manner which would materially and adversely affect any
of its business, properties, assets, operations or condition (financial
or otherwise), in the performance, observance or fulfillment of any of
the obligations, covenants or conditions contained in any agreement or
instrument to which it is a party or by which it or any of its
properties, assets or revenues is bound.
5.10 Correct Information. The information, exhibits and reports furnished by
Borrowers in connection with the negotiation and preparation of this
Agreement are correct and taken as a whole do not contain any omissions
or misstatements of fact which would make the statements contained
therein misleading or incomplete in any material respect.
5.11 Year 2000 Compliant. Each Borrower is in all material respects Year 2000
Compliant with respect to its computers, computer systems and codes.
5.12 Year 2000 Indemnity. Borrowers hereby indemnify the Bank and hold the
Bank harmless from any loss or expense which the Bank may sustain or
incur as a consequence of all or any part of the Year 2000 Compliant
representations and warranties made herein or otherwise in writing by
Borrowers in connection herewith being incorrect, false or misleading.
This covenant shall survive the payment of the Loans and cancellation of
the Notes, and all other amounts payable hereunder.
ARTICLE VI: AFFIRMATIVE COVENANTS
From the date hereof and until payment in full of all amount due
hereunder and the performance of all other obligations of Borrowers to
the Bank, Borrowers agree with the Bank that, unless the Bank shall
otherwise consent in writing, Borrowers shall:
6.1 Corporate Existence, Properties, Insurance. Except as provided in the
Merger Plan, do or cause to be done all things necessary to preserve and
keep in full force and effect each Borrower's corporate existence,
rights and franchises and comply with all laws applicable to it; at all
times maintain, preserve and protect all trade names and preserve all
the remainder of each Borrower's property used or useful in the conduct
of its business and keep the same in good repair, working order and
condition and from time to time make, or cause to be made, all needful
and proper repairs, renewals, replacements, betterments and improvements
thereto so that the business carried on in connection therewith may be
properly and advantageously conducted at all times; and maintain
insurance to such extent and against such risks as is customary and with
companies similarly situated and as specifically set forth in Schedule
6.1.
6.2 Payment of Indebtedness, Taxes. (a) Pay or cause to be paid all of each
Borrower's Indebtedness and obligations promptly and in accordance with
normal terms and trade practices and (b) pay and discharge or cause to
be paid and discharged promptly all taxes, assessments and governmental
charges or levies imposed upon any Borrower or upon its income and
profits, or upon any of its property, real, personal or mixed or upon
any part thereof, before the same shall become in default, as well as
all lawful claims for labor materials and supplies or otherwise which,
if unpaid, might become a lien or charge upon its properties or any part
thereof; provided, however, that Borrowers shall not be required to pay
and discharge or cause to be paid and discharged any such Indebtedness,
tax, assessment, charge, levy or claim so long as the amount,
applicability or validity thereof shall be contested in good faith by
appropriate proceedings and the relevant Borrower shall have set aside
on its books adequate reserves with respect to any such Indebtedness,
tax, assessment, charge, levy or claim, so contested.
6.3 Financial Statements, Reports. Furnish to the Bank:
(a) at each time UPET files its Form 10-K, but in no event later than
within one hundred twenty (120) days after the end of each of its fiscal
years, an audited consolidated and consolidating balance sheet and
statement of income and surplus of each of Borrowers and Farm Stores
Grocery, Inc., together with supporting schedules, all certified by an
independent certified public accountant of recognized standing selected
by Borrowers or Farm Stores Grocery, Inc., as the case may be, and with
regard to Borrowers only approved in writing by the Bank (the form of
such certification to include statements that the audit of the financial
statements has been conducted in accordance with generally accepted
accounting standards and that the financial statements present the
financial condition of Borrowers and Farm Stores Grocery, Inc., as the
case may be, in accordance with generally accepted accounting principles
consistently applied, all as existing at the end of the appropriate
period);
(b) within sixty (60) days after the end of each intervening fiscal
quarterly period, similar financial statements to those referred to in
subsection (a) above, unaudited but similarly certified to by the chief
financial officer of Borrowers or Farm Stores Grocery, Inc., as the case
may be;
(c) with each of the financial statements submitted under subsections
(a) or (b) above, a certificate executed by the chief financial officer
of UPET to the effect that to his knowledge no Event of Default or event
which, upon notice or lapse of time or both, would constitute an Event
of Default has occurred and is continuing;
(d) within fifteen (15) days after the end of each fiscal quarterly
period, accounts receivable and inventory reports of Borrowers setting
forth in detail acceptable to the Bank the determination of the
Borrowing Base at the end of such fiscal quarterly period; and
(e) promptly, from time to time, such other information regarding the
operations, business, affairs and financial condition of Borrowers,
including the Borrowing Base, as the Bank may reasonably request.
6.4 Branding Agreements. (a) Within 180 days from the Closing Date enter
into agreements with major oil companies acceptable to the Bank to have
not less than 40% of its stores' gasoline sales branded one (1) year
from the Closing Date and (b) within one (1) year from the Closing Date
enter into agreements with major oil companies acceptable to the Bank to
have an additional 40% of its stores' gasoline sales branded within
eighteen (18) months from the Closing Date.
6.5 Management Agreement. Cause UPET Group to enter into the Management
Agreement for the management by UPET Group of Farm Stores Grocery, Inc.
and providing for a management fee payable to UPET Group of not less
than US$2,500,000 annually so long as the Loans remain unpaid and cause
UPET Group to fulfill all of its obligations under the Management
Agreement.
6.6 Maintenance of Collateral. Ensure that all Collateral shall be and
remain free and clear of any liens, claims or encumbrances in favor of
any Person other than to the Bank, as provided in Schedule 5.7(b) or as
permitted by the provisions hereof.
6.7 Tangible Net Worth. Maintain a consolidated ratio, tested quarterly, of
debt to "Tangible Net Worth" not exceeding 3.5 x 1, adjusted to 3.0 x 1
at the conclusion of UPET's fiscal year 2000 and to 2.0 x 1 at the
conclusion of UPET's fiscal year 2001. As used herein, "Tangible Net
Worth" means net worth as defined in GAAP less goodwill and related
party receivables.
6.8 EBITDA. Maintain a consolidated ratio, tested quarterly and computed in
accordance with GAAP, of (a) earning before interest, taxes,
depreciation and amortization to (b) current maturities of long term
debt plus interest expense not less than 1.4 x 1 during UPET's fiscal
year 2000 and 1.2 x 1 thereafter, to be tested at the time of UPET's
filing of its Forms 10-Q and 10-K.
6.9 Additional Owned Real Properties. (a) Not later than thirty (30) days
prior to closing, (i) notify the Bank of any proposed acquisition of a
direct or indirect ownership interest in any additional Owned Real
Properties, and (ii) provide the Bank with a title commitment, hard
copies of all title exceptions, current survey, current environmental
audit and any other information reasonably requested by the Bank to
evaluate such property; and (b) if requested by the Bank, grant a
first-priority mortgage, deed of trust or security deed (as appropriate)
in favor of the bank encumbering such additional Owned Real Properties,
or spread the lien of the Mortgages (for any additional real property
located in a jurisdiction in which a Mortgage has been recorded or filed
and remains in effect) to such property, in each case pursuant to a form
of mortgage, deed of trust, security deed or spreader agreement approved
by the Bank. The mortgage instrument shall be in recordable form and
shall be recorded in the appropriate public or land records
simultaneously with the recording of the instrument of conveyance of
such Owned Real Properties.
6.10 Additional Leases. (a) Grant a first-priority collateral assignment in
favor of the Bank encumbering any additional Lease hereafter entered
into by any Borrower or spread the lien of the Lease Assignments (for
any additional Leases leasing property located in a jurisdiction in
which a Lease Assignment has been recorded or filed and remains in
effect) to such Lease, in each case pursuant to a form of Lease
Assignment or spreader agreement approved by the Bank. The Lease
Assignment or spreader shall be in recordable form and shall be recorded
in the appropriate public or land records simultaneously with the
recording of a short form or memorandum of such additional Lease; and
(b) either cause any such additional Lease to include the following
provisions or obtain the landlord's specific consent to the Bank
containing the following provisions:
(i) that the tenant's interest in the Lease is freely assignable and
that the landlord's consent is not required for the collateral
assignment or other pledge of the tenant's interest in the lease to
tenant's lender (the "Leasehold Mortgagee");
(ii) that the landlord agrees that any and all liens of the landlord
against the Collateral for the payment of rent, whether statutory or
otherwise, are automatically subject and subordinate to the security
interest in the Collateral granted by the tenant in favor of the
Leasehold Mortgagee;
(iii) that a short form or memorandum of the Lease in recordable form
shall be executed by the parties and promptly recorded in the
appropriate public or land records;
(iv) that the Lease shall not be subordinate to any mortgage placed on
the landlord's interest in the lease premises unless the landlord's
lender enters into a non-disturbance agreement with the tenant in form
satisfactory to the tenant;
(v) that the landlord agrees (A) not to amend or modify the Lease or
accept a surrender of the Lease without the Leasehold Mortgagee's
written consent, which shall not be unreasonably withheld; (B) to notify
the Leasehold Mortgagee in writing if the tenant fails to pay the
required rent when due or otherwise commits a default under the Lease
that would entitle the landlord to terminate the Lease; (C) to accept a
cure of the tenant's default of offered by the Leasehold Mortgage within
30 days after the landlord's written notice to the Leasehold Mortgagee;
and (D) to accept the Leasehold Mortgagee or its designee as the
landlord's new tenant under the Lease if the Leasehold Mortgagee
exercises its rights against the tenant under its collateral assignment
of the Lease, provided that the tenant's defaults under the Lease are
cured and the new tenant assumes the Lease; and
(vi) that the landlord consents and agrees that the Leasehold Mortgagee
shall have the right to enter the lease premises where the Collateral is
located for the purpose of removing, selling or otherwise dealing with
the Collateral; provided that the Leasehold Mortgagee shall be
responsible for any cost of repair of physical injury (but not
diminution of value) caused by any such removal. Even if the Leasehold
Mortgagee or its designee does not elect to cure the tenant's default
and assume the Lease as landlord's new tenant as described above, then
the Leasehold Mortgagee shall nevertheless have up to 30 days after the
landlord's notice of default in which to remove the Collateral from the
lease premises, provided that the Leasehold Mortgagee pays to the
landlord on demand all rent accruing under the Lease from the date such
notice is received until the Collateral is removed.
6.11 Inspection. Permit authorized representatives of the Bank to visit and
inspect the offices and properties of Borrowers from time to time upon
reasonable notice during normal business hours, to examine the books and
records of Borrowers and make copies or extracts therefrom and to
discuss the affairs and accounts of Borrowers with their officers.
6.12 Observance of Legal Requirements. Observe and comply in all material
respects with all statutes, rules, regulations, guidelines or other
requirements having the force of law which now or at any time hereafter
may be applicable to any of Borrowers, provided that a Borrower may
defer observation and compliance with requirements as to which it
contests the validity or application thereof in good faith and by
appropriate proceedings if such deferral does not materially hinder
Borrowers operations.
6.13 Obtain Approvals. Promptly obtain each consent, license, authorization
or approval and make each filing or registration which hereafter shall
be either necessary or desirable to enable each Borrower to comply with
its obligations hereunder, and promptly furnish evidence thereof to the
Bank.
6.14 Furnish Notice. Furnish to the Bank, as soon as possible and in any
event within fifteen (15) days after becoming aware of the occurrence of
any Event of Default, or any event which with the lapse of time or
notice or both would constitute an Event of Default, a statement of a
senior executive officer of UPET setting out the details of such Event
of Default or event and the action which Borrowers propose to take in
order to cure the effect thereof.
ARTICLE VII: NEGATIVE COVENANTS
From the date hereof and until payment in full of all amounts
due hereunder and the performance of all other obligations of Borrowers
to the Bank, Borrowers agree with the Bank that, unless the Bank shall
otherwise consent in writing, Borrowers shall not:
7.1 Indebtedness. Incur any Indebtedness other than (a) accrued expenses,
trade debt, wage obligations and similar Indebtedness in the ordinary
course of business, (b) the issuance of debt securities the principal of
which is repayable only after payment in full of the Loans, (c)
Indebtedness to fund capital expenditures of up to US$1,821,000 to be
incurred in 2000, US$1,121,000 to be incurred in 2001 and US$1,121,000
to be incurred in 2002 and each year thereafter which Indebtedness for
equipment purchases may be secured by a purchase money security interest
and (d) immaterial Indebtedness not exceeding US$50,000 in any fiscal
year of Borrowers. Any such Indebtedness for capital expenditures must
be at prevailing market rates and on terms acceptable to the Bank in its
reasonable discretion.
7.2 Dividends. Pay any dividend on any class of stock of any Borrower,
except for dividends paid exclusively in shares of stock of one or more
Borrowers or dividends paid exclusively to one or more Borrowers.
7.3 Nature of Business. Permit any material changes to be made in the
character of the business of Borrowers from that conducted by them on
the date hereof except as provided in the Merger Plan.
7.4 Mergers, Consolidations and Sale of Assets. (a) Enter into any merger,
amalgamation or consolidation, (b) except in the ordinary course of its
business, sell, lease or otherwise transfer or dispose of a substantial
part of its assets except as provided in the Merger Plan or otherwise
exclusively among Borrowers other than transfers to or from Calibur or
Jackson or (c) sell or dispose of any material assets for deferred
payment of all or part of the sales price unless (1) the Bank approves
the creditworthiness of the purchaser and any other obligor or (2) a
Borrower shall hold a first security interest in such sold assets to
secure the deferred portion of the sales price.
ARTICLE VIII: COLLATERAL
The loans and all other Liabilities of Borrowers to the Bank
shall be secured by the following Collateral:
8.1 Mortgages. The Bank shall be granted a first mortgage on the interests
of the Borrowers in the Owned Real Estate.
8.2 Leases. Borrowers shall collaterally assign to the Bank the Borrowers'
rights under the Leases.
8.3 Pledge. F.S. Non-Gas shall pledge to the Bank its ten percent (10%)
common stock interest in Farm Stores Grocery, Inc. together with any
additional purchase or acquisitions of Farm Stores Grocery, Inc. stock
by any of Borrowers.
8.4 Life Insurance. F.S. Stores shall assign to the Bank the Key Man Life
Insurance policy in the amount of US$5,000,000 on the life of Mr. Jose
Bared issued by an insurance company acceptable to the Bank.
8.5 Management Agreement. The rights of UPET Group under the Management
Agreement shall be collaterally assigned to the Bank.
8.6 Purchase Agreement. The rights of UPET Group under the Purchase
Agreement shall be collaterally assigned to the Bank.
8.7 Other Corporate Assets. The Bank shall be granted a first security
interest in all other corporate assets of the Borrowers.
8.8 Trademark. Borrowers shall cause Farm Stores Grocery, Inc. to agree for
the benefit of the Bank not to encumber the Farm Stores trademark
(except on terms that provide that default under any such encumbrance
shall not affect Borrowers' rights under the License Agreement relating
to the trademark and the usage thereof by Borrowers) and to allow use of
the mark by Borrowers at no cost to Borrowers at least so long as the
Loans are outstanding.
ARTICLE IX: CONDITIONS
9.1 Conditions Precedent. The obligation of the Bank to extend any credit
hereunder is subject to Borrowers taking the following action and the
Bank having received the following documents in form and substance
satisfactory to it and its counsel.
(a) This Agreement, the Notes and the Collateral Agreements duly
executed by Borrowers party to each such Document;
(b) The shares of Farm Stores Grocery, Inc. pledged under the Pledge
Agreement, duly endorsed in blank, or by separate stock power
executed in blank, to the order of the Bank;
(c) Evidence of the application for the Key Man Life Insurance
policy in the amount of US$5,000,000 on the life of Mr. Jose
Bared;
(d) Evidence of the agreement for the benefit of the Bank of Farm
Stores Grocery, Inc. not to encumber the Farm Stores trademark
and to allow use of the mark by Borrowers at no cost to
Borrowers at least so long as the Loans are outstanding;
(e) The assignment to the Bank of the rights of UPET Group under the
Management Agreement including specifically a collateral
assignment of the management fee payable to UPET Group
thereunder;
(f) The assignment to the Bank of the rights of UPET Group under the
Purchase Agreement including specifically a collateral
assignment of the option to UPET Group thereunder;
(g) Evidence of the filing of UCC-1 Financing Statements for the
security interests granted to the Bank;
(h) Appraisals of the Owned Real Estate by an appraiser acceptable
to and in form and substance acceptable to the Bank;
(i) Mortgagee Title Insurance for the Mortgages [and other real
estate documents including independent environmental assessment
for compliance with Federal and State regulations] in form
acceptable to and containing only such exceptions as are
acceptable to the Bank and its counsel, including specifically
Messrs. Paul, Hastings, Janofsky & Walker, special real estate
counsels to the Bank;
(j) The following documents related to the Chapter 11 bankruptcy
proceedings styled United Petroleum Corporation, Case No.
99-88(PJW), all in form acceptable to the Bank and its counsel,
including specifically Messrs. Genovese Lichtman Joblove &
Battista, special bankruptcy counsel to the Bank:
(i) Certified copy of the Motion for Entry of Order Establishing
Bar Date for Filing Proofs of Claims and Approving Form and
Manner of Notice Thereof.
(ii) Certified copy of the Order Fixing Bar Date For Filing
Proofs of Claim and Approving Form and Manner of Notice of Bar
Date.
(iii) Certified copy of the Second Amended Disclosure Statement.
(iv) Certified copy of the Order Approving Second Amended
Disclosure Statement.
(v) Certified copy of the Second Amended Plan of Reorganization.
(vi) Certified copy of the Findings of Fact, Conclusions of Law
and Order Confirming Amended Plan;
(k) Evidence of environmental, casualty, liability and business
interruption insurance acceptable to the Bank;
(l) Certificate of Mr. Jose Bared of the shares of UPET to be owned
by him at the completion of the Closing and as to any agreements
with respect to such shares;
(m) Copies of resolutions of the Boards of Directors of Borrowers,
certified as of a current date by the Secretary or an Assistant
Secretary of each Borrower, authorizing the execution and
delivery of the Documents to which it is a party and the
borrowings hereunder;
(n) Incumbency Certificates of the officers of each Borrower,
including specimen signatures of such officers empowered to
execute the Documents to which it is a party and any documents
other relating hereto, certified as of a current date by the
Secretary or an Assistant Secretary of each Borrower; and
(o) Copies of the Certificate or Articles of Incorporation or other
charter documents and all amendments thereto of each Borrower,
currently certified by the relevant Governmental Authority (such
certified charter documents shall include evidence of good
standing from the appropriate Governmental Authority).
9.2 Conditions Subsequent. Borrowers covenant to provide, and the obligation
of the Bank to continue extending any credit hereunder is subject to
Borrowers taking the following action and the Bank having received the
following documents in form and substance satisfactory to it and its
counsel:
(a) Within sixty (60) days of the Closing Date, evidence of the
assignment to the Bank of the Key Man Life Insurance policy in
the amount of US$5,000,000 on the life of Mr. Jose Bared; and
(b) Within sixty (60) days of the Closing Date, evidence of the
release or subordination of the mortgages and security interests
of Pennzoil Products Company in assets of Calibur and evidence
of the correction of the legal description of the Dekalb County,
Georgia Owned Real Property.
ARTICLE X: EVENTS OF DEFAULT
10.1 Events of Default. If any of the following events shall have occurred
and shall be continuing:
(a) Failure of Payment. Borrowers fail to pay any principal,
interest or other amounts due under this Agreement or with
respect to the Documents on the due date and in the manner
provided hereunder or therein and, in the case of interest, such
default shall continue for more than five (5) days; or
(b) Misstatements. Any material representation, warranty or other
statement made herein or otherwise in writing by or on behalf of
a Borrower in connection herewith proves to be or have been
incorrect or misleading in any material respect as of the date
at which it is made or deemed to be made; or
(c) Other Obligations. A Borrower defaults in any payment of
principal of or interest on any other obligation for the payment
of borrowed money or under a financing lease, in excess of
US$100,000 in the aggregate, when such obligation becomes due
and payable, or is required to be prepaid prior to the stated
maturity thereof, and, in the case of interest, such default
shall continue for more than five (5) days; or a Borrower
defaults in the performance of any other agreement, term or
condition contained in any agreement or instrument pursuant to
which such Borrower has borrowed money or under a financing
lease, or by which any obligation for the payment of borrowed
money is created, if the effect of such default is to cause such
obligation in excess of US$100,000 in the aggregate to become
due and payable prior to its stated maturity; or
(d) Performance of Covenants. Borrowers default in the due
performance or observance of any covenant, condition or
provision on the part of Borrowers to be performed or observed
pursuant to the documents and such default, if capable of cure,
is not cured (i) within fifteen (15) days after Borrowers
becomes aware of such default or (ii) in the event the default
is incapable of cure within such fifteen (15) days, within sixty
(60) days if Borrowers provide the Bank with reasonable
assurance that such default is capable of cure within such 60
day period, promptly commence to cure the default and thereafter
continue diligently to cure the default; or
(e) Judgments. A Borrower shall permit any judgment for more than
US$100,000 against it to remain undischarged for a period of
more than thirty (30) days unless during such period such
judgment shall be effectively stayed, on appeal or otherwise; or
(f) Business Operations; Bankruptcy. A Borrower suspends the
operations (other than in the ordinary course of business and
not for reasons of insolvency and similar acts) of any of its
businesses (other than in connection with the sales or closures
of stores in the ordinary course of business), becomes
insolvent, is unable to pay its debts as they mature or admits
such inability in writing, calls a meeting of its creditors,
files for or suffers to be filed against it any petition under
any provision of any bankruptcy, insolvency, reorganization,
rearrangement, readjustment of debt or similar law or statute or
any application for the process of controlled administration, or
a Borrower applies for or permits to be appointed any receiver,
trustee or custodian for it or any substantial portion of its
property or any order for relief is entered with respect to a
Borrower under any bankruptcy code or any similar law of any
jurisdiction and the same shall remain undischarged for a period
of sixty (60) days; or
(g) Condemnation. All or a substantial part of a Borrower's property
is condemned, seized or otherwise appropriated, or custody of
such property is assumed by any Governmental Authority or court
or other Person purporting to act under the authority of
government of any jurisdiction, or a Borrower is prevented from
exercising normal control over all or a substantial part of its
property and such default is not remedied within 30 days after
it occurs; or
(h) Change of Control. Mr. Jose Bared disposes of shares of UPET
which the Bank, after consultation with UPET, determines to be
adverse to the best interest of Borrowers or Mr. Jose Bared
ceases to be the Chief Executive Officer of UPET and UPET Group,
and the Bank after consultation with UPET determines such action
to be adverse to the best interest of Borrowers; or
(i) Enforceability. This Agreement, or any provision hereof, at any
time after its execution and delivery and for any reason
whatsoever ceases to be in full force and effect, valid and
enforceable both in the jurisdictions in which the Borrowers
operate and in the State of Florida, or Borrowers at any time
fail to agree that this Agreement and all provisions hereof are
in full force and effect, valid, and enforceable both in the
jurisdictions in which the Borrowers operate and in the State of
Florida;
then the Bank by notice to UPET may declare the entire unpaid principal
amount of the Loans to be immediately due and payable without presentment,
demand, protest or other notice of any kind, all of which are hereby expressly
waived.
10.2 Exercise of Rights. Upon the occurrence of an Event of Default and at
any time thereafter, the Bank shall have the right in its sole
discretion to determine which rights, security, liens, guarantees,
security interests or remedies it shall retain, pursue, release,
subordinate, modify or take any other action with respect to, without in
any way modifying or affecting any of the other of them or any of its
rights hereunder. Notwithstanding any other rights which the Bank may
have under applicable law and hereunder, Borrowers agree that, should at
any time an Event of Default occur or be continuing, the Bank shall have
the right to apply (including, without limitation, by way of setoff) any
of Borrowers' property held by, or thereafter coming into possession of,
the Bank (including, without limitation, deposit account balances) to a
reduction of Indebtedness of Borrowers to the Bank.
ARTICLE XI: MISCELLANEOUS
11.1 Notices. Except as otherwise specified herein, all notices, requests,
demands or other communications to or upon the parties hereto under the
Documents shall be deemed to have been duly given or made when delivered
in writing (including telecommunications) to the party to which such
notice, request, demand or other communication is required or permitted
to be given or made under this Agreement, at the address or facsimile
number set forth opposite the name of such party on the signature lines
set forth below, or at such other address or facsimile number as the
parties hereto may hereafter specify to the other in writing. Written
notices shall be deemed delivered upon receipt if delivered by hand or
five Business Days after mailing. Notices provided by any of the other
means referred to above shall be deemed delivered upon receipt.
11.2 Waiver of Rights. No failure to exercise and no delay in exercising, on
the part of the Bank, any right, power or privilege under the Documents
shall operate as a waiver thereof, nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege.
11.3 Cumulative Remedies, Conflicts. Each of the Documents and the
obligations of Borrowers hereunder and thereunder are in addition to and
not in substitution for any other obligations or security interests now
or hereafter held by the Bank and shall not operate as a merger of any
contract or debt or suspend the fulfillment of or affect the rights,
remedies or powers of the Bank in respect of any obligation or other
security interest held by it for the fulfillment thereof. The rights and
remedies provided in the Documents are cumulative and not exclusive of
any other rights or remedies provided by law. If any conflict exists
between the terms of this Agreement and the terms of any of the other
Documents to which UPET, UPET Group, F.S. Stores, F.S. Gas, F.S. Non-Gas
or REWJB Gas are parties, the terms of this Agreement shall control.
11.4 Successors; Governing Law. This Agreement shall be binding upon and
inure to the benefit of Borrowers and the Bank, and their respective
successors and assigns, except that none of Borrowers may assign or
transfer its rights hereunder without the prior written consent of the
Bank. This Agreement shall be governed by and construed in accordance
with the laws of the State of Florida.
11.5 Consent to Jurisdiction; Process Agent.
(a) Borrowers hereby irrevocably submit to the nonexclusive jurisdiction
of any Florida State or Federal court sitting in Miami-Dade County,
Florida in any action or proceeding arising out of or relating to this
Agreement and the other Documents, and Borrowers hereby irrevocably
agrees that all claims in respect of such action or proceeding may be
heard and determined in such Florida State or Federal court. Each
Borrower hereby irrevocably appoints CT Corporation, 1200 South Pine
Island Road, Plantation, Florida 33324, its successors or any other
person acting on behalf of such person ("Process Agent"), as its agent
and attorney-in-fact to receive on its behalf of its property, service
of copies of the summons and complaint and any other process which may
be served in any such action or proceeding. Such service may be made by
mailing or delivering a copy of such process to a Borrower in care of
the Process Agent at the Process Agent's address set forth above or such
other address as the Process Agent shall designate in writing to the
Bank, and each Borrower hereby irrevocably authorizes and directs the
Process Agent to accept such service on its behalf.
(b) Borrowers hereby irrevocably waive any objection which any of them
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement brought in any
Florida State or Federal court sitting in Miami-Dade County, Florida,
and hereby further irrevocably waives any claim that any such suit,
action or proceeding brought in any such court has been brought in an
inconvenient forum.
(c) Nothing in this Section 11.5 shall affect the right of the Bank to
serve legal process in any other manner permitted by law or affect the
right of the Bank to bring any action or proceeding against Borrowers or
their property in the courts of other jurisdictions.
11.6 Currency Conversion. This is a credit transaction in which the
specification of Dollars is of the essence, and Dollars shall be the
currency of account in all events. The payment obligations of the
Borrowers under this Agreement and the other Documents shall not be
discharged by an amount paid in another currency or in another place,
whether pursuant to a judgment or otherwise, to the extent that the
amount so paid on conversion to Dollars in accordance with normal
banking procedures does not yield the amount of Dollars due hereunder.
Notwithstanding the foregoing, if for the purpose of obtaining or
enforcing judgment in any court it is necessary to convert a sum due
hereunder in Dollars into another currency (the "Second Currency"), the
rate of exchange which shall be applied shall be that at which in
accordance with normal banking procedures the Bank could purchase
Dollars with the Second currency on the Business Day preceding that on
which final judgment is given. If payment of any sum due hereunder is
made to or received by the Bank, whether by judicial judgment (and
notwithstanding the rate of exchange actually applied in giving such
judgment), or otherwise, in a Second Currency, the obligations hereunder
of Borrowers shall be discharged only in the net amount of Dollars that
on the Business Day following receipt by the Bank of any sum adjudicated
to be due in a Second Currency, the recipient in accordance with its
normal bank procedures is able to lawfully purchase with such amount of
Second Currency. To the extent that the Bank is not able to purchase
sufficient Dollars with such amount of Second Currency to discharge the
Dollar obligations to the Bank, the obligations of Borrowers to the Bank
shall not be discharged with respect to such difference, and Borrowers
agrees that any such undischarged amount will be due as a separate debt
and shall not be affected by payment of or judgment being obtained for
any other sums due under or in respect of this Agreement. To the extent
that the Bank is able to purchase an amount in Dollars in excess of the
amount necessary to discharge such Dollar obligations, the Bank shall
promptly remit such excess to Borrowers.
11.7 Amendments. The terms of this Agreement may not be amended, modified or
waived except by written agreement between Borrowers and the Bank.
11.8 Usury. Anything herein to the contrary notwithstanding, the obligations
of Borrowers to pay interest shall be subject to the limitation that
payment of interest shall not be required to the extent that receipt of
such payment by the Bank would be contrary to the provisions of any law
applicable to the Bank limiting the maximum rate of interest which may
be charged or collected by the Bank.
11.9 Survival of Agreements. All covenants, agreements, representations and
warranties made herein and in the certificates delivered pursuant hereto
shall survive the making by the Bank of the credit herein contemplated
and shall continue in full force and effect so long as such credit is
outstanding and unpaid.
11.10 Severability. Any provision hereof which is prohibited or unenforceable
shall be ineffective only to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof.
11.11 Descriptive Headings. The captions in this Agreement are for convenience
of reference only and shall not define or limit the provisions hereof.
11.12 Waiver of Trial by Jury. BORROWERS AND BANK EACH HEREBY WAIVES ITS RIGHT
TO TRIAL BY JURY IN ANY LITIGATION BASED HEREON OR ARISING OUT OF OR IN
CONNECTION WITH ANY AGREEMENT, DOCUMENT OR INSTRUMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY.
11.13 Confidentiality. The Bank agrees (on behalf of itself and each of its
Affiliates, directors, officers, employees, and representatives) to keep
confidential, in accordance with its customary procedures of handling
confidential information of the same nature and in accordance with safe
and sound banking practices, any non-public information supplied to it
by Borrowers or any of their Subsidiaries pursuant to this Agreement;
provided, however, that nothing herein shall limit the disclosure of any
such information (i) to the extent required by statute, rule, regulation
or judicial process, (ii) to counsel for the Bank so long as such
counsel confirms it shall keep the non-public information confidential
in accordance with these provisions, (iii) to bank examiners, auditors
or accountants or to any other regulatory agency or body with proper
authority (including non-governmental regulatory agencies or bodies),
(iv) in connection with any litigation to which the Bank is a party
where disclosure of such information is, in the opinion of counsel for
the Bank, necessary or advisable in connection with any action, claim,
suit or proceeding, directly or indirectly, involving or potentially
involving the Bank and arising out of, based upon, relating to or
involving this Agreement or any Note, or any transactions contemplated
hereby or arising hereunder, (v) to any assignee or participant of the
Bank's rights hereunder, so long as such assignee or participant first
acknowledges that it is bound by the provisions of this Section 10.13,
or (vi) to any credit agency that rates the financial condition of the
Bank or the claims paying ability of the Bank or the financial condition
of any Borrower. To the extent disclosure is required under clauses (i),
(iii) and (iv) above, the Bank agrees to use its best efforts to give
the Borrower prompt prior notice thereof if allowed by law.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the date first written above.
Address for Bank: HAMILTON BANK, N.A.
3750 N.W. 87th Avenue
Miami, Florida 33178 By:
Attn: Alina Cannon -------------------------------------
Name: Alina Cannon
Telephone: (305) 717-5500 Title: Vice President
Facsimile: (305) 717-6873
By:
-------------------------------------
Name: J. Reid Bingham
Title: General Counsel
Address for all Borrowers: UNITED PETROLEUM CORPORATION
5800 N.W. 74th Avenue
Miami, Florida 33166 By:
Attn: Mr. Jose Bared -------------------------------------
Name: Carlos Bared
Telephone: (305) Title: Vice President
Facsimile: (305)
UNITED PETROLEUM GROUP, INC.
By:
-------------------------------------
Name: Carlos Bared
Title: President
F.S. CONVENIENCE STORES, INC.
By:
-------------------------------------
Name: Carlos Bared
Title: Vice President
F.S. GAS SUBSIDIARY, INC.
By:
-------------------------------------
Name: Carlos Bared
Title: Vice President
F.S. NON-GAS SUBSIDIARY, INC.
By:
-------------------------------------
Name: Carlos Bared
Title: Vice President
REWJB GAS INVESTMENTS
By:
-------------------------------------
Name: Carlos Bared
Title: Vice President
JACKSON-UNITED PETROLEUM CORPORATION
By:
-------------------------------------
Name: Carlos Bared
Title: Vice President
CALIBUR SYSTEMS, INC.
By:
-------------------------------------
Name: Carlos Bared
Title: Vice President
STOCKHOLDERS AGREEMENT
This STOCKHOLDERS AGREEMENT is made as of November 3, 1999, by and
among United Petroleum Corporation, a Delaware corporation (the "Corporation"),
Infinity Investors Limited, a Nevis, West Indies corporation, Fairway Capital
Limited, a Nevis, West Indies corporation, Seacrest Capital Limited, a Nevis,
West Indies corporation (collectively, the "Investor") and Joe Bared and Miriam
Bared (collectively, "Bared"). The Investor and Bared are sometimes collectively
referred to as the "Stockholders" and individually as a "Stockholder.")
Capitalized terms used herein are defined in Section 12 hereof.
The Corporation and the Stockholders desire to enter into this
Agreement for the purposes, among others, of (i) assuring continuity in the
management and ownership of the Corporation, (ii) limiting the manner and terms
by which the Stockholders' stock may be transferred, and (iii) providing the
Stockholders with certain registration rights.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties to this Agreement hereby agree as
follows:
1. Restrictions on Transfer of Shareholder Shares. No Stockholder shall
sell, transfer, assign, pledge, hypothecate, encumber or otherwise dispose of
(collectively, a "Transfer") any interest in any Stockholder Shares for a period
of two (2) years from the date hereof (the "Termination Date").
2. Stockholder Preemptive Rights. Prior to the Termination Date, and
for so long as any Stockholder owns any Stockholder Shares, each time the
Corporation proposes to sell shares of its capital stock or options, warrants or
other rights to buy capital stock for cash (except any capital stock issued
pursuant to a stock option or warrant plan of the Corporation which does not
exceed ten percent (10%) of the issued and outstanding capital stock of the
Corporation at the time the warrant or option plan is adopted by the
Corporation), the Corporation shall also make an offering of such shares to the
Stockholders in accordance with the following provisions:
(a) The Corporation shall deliver a notice to each Stockholder
stating the number of shares to be offered and the price and the terms on which
it proposes to offer such shares. Such notice shall be sent to the addresses set
forth in the records of the Corporation.
(b) Within 15 days after delivery of the notice, each
Stockholder may elect to purchase, at the price and on the terms specified in
the notice, up to its Pro Rata Portion of such shares by delivering written
notice of such election to the Corporation within such 15 calendar days.
(c) Any shares referred to in the notice that are not elected
to be purchased as provided in subsection (b) above may, during the 180-day
period thereafter, be offered by the Corporation to any other person or persons
at a price not less than, and on terms no more favorable to the offeree than,
those specified in the notice.
3. Board of Directors.
(a) From and after the date hereof and until the Termination
Date, each Stockholder shall vote all of his Stockholder Shares and any other
voting securities of the Corporation over which such Stockholder has voting
control and shall take all other necessary or desirable actions within his
control (whether in his capacity as a stockholder, director, member of a Board
of Directors committee or officer of the Corporation or otherwise, and
including, without limitation, attendance at meetings in person or by proxy for
purposes of obtaining a quorum and execution of written consents in lieu of
meetings), and the Corporation shall take all necessary and desirable actions
within its control (including, without limitation, calling special board and
stockholder meetings), so that:
(i) the number of directors on the Board shall be five (5)
directors;
(ii) the following persons shall be elected to the Board:
(A) Two (2) representatives designated by the Investor
(the "Investor Directors");
(B) Two (2) representatives designated by Bared (the
"Bared Directors"); and
(C) L. Grant Peeples (the "Independent Director").
(iii) the removal from the Board (with or without cause) of
any representative designated hereunder by the Investor or Bared
shall be at only the Investor's, or Bared's written request,
respectively;
(iv) in the event that any representative designated
hereunder by the Investor or Bared for any reason ceases to serve
as a member of the Board during his term of office, the resulting
vacancy on the Board shall be filed by a representative
designated by the Investor or Bared, respectively, as provided
hereunder; provided that any representative removed for cause
shall not be designated again as a member of the Board; and
(v) Expansion of the Board and election of its additional
members will initially be subject to the mutual agreement of the
Investor Directors and Bared Directors and whenever they do not
agree on such a matter, may be submitted to the vote of all
stockholders of the Corporation at a duly called meeting.
(vi) Each member of the Board shall abstain acting in the
event of a direct or indirect financial interest (excluding
matters that relate to Farm Stores Grocery, Inc., so long as UPET
has a financial interest in it).
(b) The Board shall not appoint any committee with the
authority to act on behalf of the Board without the consent of the Investor
Directors and the Bared Investors.
(c) If any party fails to designate a representative to fill a
directorship pursuant to the terms of this Section 3, the election of a person
to such directorship shall be accomplished in accordance with the Corporation's
bylaws and applicable law.
4. Piggyback Registrations.
(a) Right to Piggyback. Subject to Section 1 hereof, whenever
the Corporation proposes to register any of its Common Stock under the
Securities Act (other than the initial public offering, pursuant to a
transaction described under Rule 145 of the Securities Act, a transaction
registering securities convertible into Common Stock or pursuant to Form S-8 or
its successor forms) and the registration form to be used may be used for the
registration of the Stockholder Shares of the Stockholders (a "Piggyback
Registration"), the Corporation shall give prompt written notice to the
Stockholders of its intention to effect such a registration and will include in
such registration the Stockholder Shares of the Stockholders with respect to
which the Corporation has received written requests for inclusion therein within
15 days after the receipt of the Corporation's notice.
(b) Right to Shelf Registration. Subject to Section 11 hereof,
in addition to the Piggyback Registration provided pursuant to paragraph 4(a),
the Stockholders shall be entitled to request an unlimited number of Form S-3
resale registrations (a "Short Form Registration") in which the Corporation will
pay all Registration Expenses; provided that the Corporation and the securities
meet the eligibility requirements for such form and provided further that the
Short Form Registration shall only be effective for 180 days and shall be
subject to no sale periods upon notice to the Stockholders participating therein
if in the reasonable judgment of the Corporation such Short Form Registration
conflicts with the Corporation's business plans or another existing or proposed
registration statement. The Corporation shall use its best efforts to make
Short-Form Registrations available for the resale of Stockholder Shares.
(c) Expenses. The Registration Expenses of the Stockholders
shall be paid by the Corporation in all Piggyback Registrations and Short-Form
Registrations.
(d) Priority on Primary Registrations. If a Piggyback
Registration is an underwritten primary registration on behalf of the
Corporation, and the managing underwriters advise the Corporation in writing
that in their opinion the number of securities requested to be included in such
registration exceeds the number which can be sold in such offering without
adversely affecting the marketability of the offering, the Corporation shall
include in such registration (i) first, the securities the Corporation proposes
to sell, (ii) second, the Stockholder Shares of the Investor and Bared requested
to be included in such registration (on a pro rata basis), together with any
securities underlying any warrants issued to the lenders or underwriters of the
Corporation on a pro rata basis, (iii) third, other securities requested by
other persons to be included in such registration.
(e) Priority on Secondary Registrations. If a Piggyback
Registration is an underwritten secondary registration on behalf of holders of
the Corporation's securities, and the managing underwriters advise the
Corporation in writing that in their opinion the number of securities requested
to be included in such registration exceeds the number which can be sold in such
offering without adversely affecting the marketability of the offering, the
Corporation shall include in such registration (i) first, the securities
requested to be included therein by the Investor and Bared on a pro rata basis,
together with any securities underlying any warrants issued to the lenders or
underwriters of the Corporation on a pro rata basis, (ii) second, other
securities requested by other persons to be included in such registration.
5. Registration Procedures. Whenever the Stockholders have requested
that any securities be registered pursuant to this Agreement, the Corporation
shall use its best efforts to effect the registration and the sale of such
securities in accordance with the intended method of disposition thereof, and
pursuant thereto the Corporation shall as expeditiously as possible:
(a) prepare and file with the Securities and Exchange
Commission a registration statement with respect to such securities and use its
best efforts to cause such registration statement to become effective (provided
that before filing a registration statement or prospectus or any amendments or
supplements thereto, the Corporation shall furnish to the counsel selected by
the Stockholders covered by such registration statement copies of all such
documents proposed to be filed, which documents will be subject to the review
and comment of such counsel);
(b) prepare and file with the Securities and Exchange
Commission such amendments and supplements to such registration statement and
the prospectus used in connection therewith as may be necessary to keep such
registration statement effective for a period of not less than 180 days and
comply with the provisions of the Securities Act with respect to the disposition
of all securities covered by such registration statement during such period in
accordance with the intended methods of disposition by the sellers thereof set
forth in such registration statement;
(c) furnish to each seller of securities such number of copies
of such registration statement, each amendment and supplement thereto, the
prospectus included in such registration statement (including each preliminary
prospectus) and such other documents as such seller may reasonably request in
order to facilitate the disposition of the securities owned by such seller;
(d) use its best efforts to register or qualify such
securities under such other securities or blue sky laws of such jurisdictions as
any seller reasonably requests and do any and all other acts and things which
may be reasonably necessary or advisable to enable such seller to consummate the
disposition in such jurisdictions of the securities owned by such seller
(provided that the Corporation shall not be required to (i) qualify generally to
do business in any jurisdiction where it would not otherwise be required to
qualify but for this subparagraph, (ii) subject itself to taxation in any such
jurisdiction, or (iii) consent to general service of process in any such
jurisdiction);
(e) notify each seller of Stockholder Shares, at any time when
a prospectus relating thereto is required to be delivered under the Securities
Act, of the happening of any event as a result of which the prospectus included
in such registration statement contains an untrue statement of a material fact
or omits any fact necessary to make the statements therein not misleading, and,
at the request of any such seller, the Corporation shall prepare a supplement or
amendment to such prospectus so that, as thereafter delivered to the purchasers
of such Stockholder Shares, such prospectus will not contain an untrue statement
of a material fact or omit to state any fact necessary to make the statements
therein not misleading;
(f) cause all such securities to be listed on each securities
exchange on which similar securities issued by the Corporation are then listed
and, if not so listed, to be listed on the NASD automated quotation system and,
if listed on the NASD automated quotation system, use its best efforts to secure
designation of all such securities covered by such registration statement as a
Nasdaq national market security within the meaning of Rule 11Aa2-1 of the
Securities and Exchange Commission or, failing that, to secure Nasdaq
authorization for such securities and, without limiting the generality of the
foregoing, to arrange for at least two market makers to register as such with
respect to such securities with the NASD;
(g) provide a transfer agent and registrar for all such
securities not later than the effective date of such registration statement;
(h) enter into such customary agreements (including
underwriting agreements in customary form) and take all such other actions as
the Selling Stockholder or the underwriters, if any, reasonably request in order
to expedite or facilitate the disposition of such securities (including, without
limitation, effecting a stock split or a combination of shares);
(i) make available for inspection by any seller of securities,
any underwriter participating in any disposition pursuant to such registration
statement and any attorney, accountant or other agent retained by any such
seller or underwriter, all financial and other records, pertinent corporate
documents and properties of the Corporation, and cause the Corporation's
officers, directors, employees and independent accountants to supply all
information reasonably requested by any such seller, underwriter, attorney,
accountant or agent in connection with such registration statement;
(j) otherwise use its best efforts to comply with all
applicable rules and regulations of the Securities and Exchange Commission, and
make available to its security holders, as soon as reasonably practicable, an
earnings statement covering the period of at least twelve months beginning with
the first day of the Corporation's first full calendar quarter after the
effective date of the registration statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the Securities Act and Rule 158
thereunder;
(k) permit the Selling Stockholder which, in its sole and
exclusive judgment, might be deemed to be an underwriter or a controlling person
of the Corporation, to participate in the preparation of such registration or
comparable statement and to require the insertion therein of material, furnished
to the Corporation in writing, which in the reasonable judgment of the Selling
Stockholder and its counsel should be included;
(l) in the event of the issuance of any stop order suspending
the effectiveness of a registration statement, or of any order suspending or
preventing the use of any related prospectus or suspending the qualification of
any Common Stock included in such registration statement for sale in any
jurisdiction, the Corporation shall use its best efforts promptly to obtain the
withdrawal of such order; and
(m) in the event of an underwritten offering obtain a cold
comfort letter from the Corporation's independent public accountants and an
opinion from the Corporation's counsel in customary form and covering such
matters of the type customarily covered by cold comfort letters or opinions,
respectively as any underwriter may reasonably request.
6. Registration Expenses.
(a) All expenses incident to the Corporation's performance of
or compliance with this Agreement, including without limitation all registration
and filing fees, fees and expenses of compliance with securities or blue sky
laws, printing expenses, messenger and delivery expenses, and fees and
disbursements of counsel for the Corporation and all independent certified
public accountants, underwriters (excluding discounts and commissions and
selling expenses (including brokers' fees and commissions)) and other persons
retained by the Corporation (all such expenses being herein called "Registration
Expenses"), shall be borne by the Corporation as provided in this Agreement,
except that the Corporation shall, in any event, pay its internal expenses
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), the expense of any annual
audit or quarterly review, the expense of any liability insurance and the
expenses and fees for listing the securities to be registered on each securities
exchange on which similar securities issued by the Corporation are then listed
or on the NASD automated quotation system.
(b) In connection with each Piggyback Registration or Short
Form Registration, the Corporation shall reimburse the Stockholders for the
reasonable fees and disbursements to the extent the Corporation's counsel has
not performed the work.
(c) To the extent Registration Expenses are not required to be
paid by the Corporation, each holder of securities included in any registration
hereunder shall pay those Registration Expenses allocable to the registration of
such holder's securities so included, and any Registration Expenses not so
allocable shall be borne by all sellers of securities included in such
registration in proportion to the aggregate selling price of the securities to
be so registered.
7. Indemnification.
(a) The Corporation agrees to indemnify, to the extent
permitted by law, the Selling Stockholder, its officers and directors and each
person who controls the Selling Stockholder (within the meaning of the
Securities Act) against all losses, claims, damages, liabilities and expenses
caused by any untrue or alleged untrue statement of material fact contained in
any registration statement, prospectus or preliminary prospectus or any
amendment thereof or supplement thereto or any omission or alleged omission of a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as the same are caused by or contained in
any information furnished in writing to the Corporation by the Selling
Stockholder expressly for use therein or by the Selling Stockholder's failure to
deliver a copy of the registration statement or prospectus or any amendments or
supplements thereto after the Corporation has furnished the Selling Stockholder
with a sufficient number of copies of the same. In connection with an
underwritten offering, the Corporation shall indemnify such underwriters, their
officers and directors and each person who controls such underwriters (within
the meaning of the Securities Act) to the same extent as provided above with
respect to the indemnification of the Selling Stockholder.
(b) In connection with any registration statement in which the
Selling Stockholder is participating, the Selling Stockholder shall furnish to
the Corporation in writing such powers of attorney, custody agreements and
letters of direction and other information and affidavits as the Corporation
reasonably requests for use in connection with any such registration statement
or prospectus and, to the extent permitted by law, shall only have to indemnify
the Corporation, its directors and officers and each person who controls the
Corporation (within the meaning of the Securities Act) against any losses,
claims, damages, liabilities and expenses resulting from any untrue or alleged
untrue statement of material fact contained in the registration statement,
prospectus or preliminary prospectus or any amendment thereof or supplement
thereto or any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein not misleading, but
only to the extent that such untrue statement or omission is contained in any
information or affidavit so furnished in writing by the Selling Stockholder to
the Corporation for specific use in such registration statement, prospectus or
amendment or supplement thereto and which remained in the final prospectus
delivered to the purchaser of such securities; provided that the obligation to
indemnify shall be limited to the net amount of proceeds received by the Selling
Stockholder from the sale of Stockholder Shares pursuant to such registration
statement.
(c) Any person entitled to indemnification hereunder shall (i)
give prompt written notice to the indemnifying party of any claim with respect
to which it seeks indemnification and (ii) unless in such indemnified party's
reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist with respect to such claim, permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party. If such defense is assumed, the
indemnifying party shall not be subject to any liability for any settlement made
by the indemnified party without its consent (but such consent shall not be
unreasonably withheld). An indemnifying party who is not entitled to, or elects
not to, assume the defense of a claim shall not be obligated to pay the fees and
expenses of more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim, unless in the reasonable judgment
of any indemnified party a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect to such
claim.
(d) The indemnification provided for under this Agreement
shall remain in full force and effect regardless of any investigation made by or
on behalf of the indemnified party or any officer, director or controlling
person of such indemnified party and shall survive the transfer of securities.
The Corporation also agrees to make such provisions, as are reasonably requested
by any indemnified party, for contribution to such party in the event the
Corporation's indemnification is unavailable for any reason.
(e) If the indemnification provided for in this Section 7 is
unavailable or insufficient to hold harmless an indemnified party, then each
indemnifying party, to the extent that it would have been or was obligated to
provide indemnification under this Section 7, shall contribute to the amount
paid or payable by such indemnified party as a result of the claims. losses,
changes or liabilities referred to in this Section 7 in such proportion as is
appropriate to reflect the relative benefits received by the Stockholders on the
one hand and the Corporation on the other. If, however, the allocation provided
by the immediately preceding sentence is not permitted by applicable law then
each indemnifying party shall contribute to such amount paid or payable by such
indemnified party shall contribute to such amount paid or payable by such
indemnified party in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Stockholders on the one
hand and the Corporation on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities (or
actions or proceedings in respect thereof), as well as any other relevant
equitable considerations. The relative fault shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Stockholders on the one hand or the
Corporation on the other and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
8. Participation in Underwritten Registrations. No person may
participate in any registration hereunder which is underwritten unless such
person (i) agrees to sell such person's securities on the basis provided in any
underwriting arrangements approved by the person or persons entitled hereunder
to approve such arrangements and (ii) completes and executes all questionnaires,
powers of attorney, indemnities, underwriting agreements and other documents
required under the terms of such underwriting arrangements; provided that no
holder of securities included in any underwritten registration shall be required
to make any representations or warranties to the Corporation or the underwriters
other than representations and warranties regarding such holder and such
holder's intended method of distribution.
9. Legend. Each certificate evidencing Stockholder Shares and each
certificate issued in exchange for or upon the Transfer of any Stockholder
Shares shall be stamped or otherwise imprinted with legends in substantially the
following form (in addition to any other applicable legends).
"The shares of New UPC Common Stock represented by this
certificate are issued pursuant to the Plan of Reorganization for
United Petroleum Corporation, as confirmed by the United States
Bankruptcy Court for the District of Delaware. The Corporation's
Certificate of Incorporation contains restrictions prohibiting the
sale, transfer, disposition, purchase or acquisition of any shares of
Common Stock without the prior written authorization of the
Corporation's Board of Directors (or its designee) by or to any person
(a) who beneficially owns, directly or through attribution (as
determined under Section 382 of the Internal Revenue Code of 1986 as
amended from time to time (the "Code")), 5% or more of the total fair
market value of the then issued and outstanding shares of Common Stock
of the corporation, or (b) who, upon the sale, transfer, disposition,
purchase or acquisition of any shares of Common Stock of the
Corporation would beneficially own, directly or through attribution (as
determined under Section 382 of the Code), or would cause another
person beneficially to own, directly or through attribution (as
determined under Section 382 of the Code), 5% or more of the total fair
market value of the then issued and outstanding shares of common stock,
if that sale, transfer, disposition, purchase or acquisition would
jeopardize UPC's preservation of its federal income tax attributes
pursuant to Sections 382 or 383 of the Code; provided however, that for
so long as the percentage point changes in ownership of the common
stock (as described in Section 382(g)(1) of the Code) since the
Effective Date do not total more than thirty (30) percentage points,
the above restrictions shall be applied by substituting "10%" for "5%".
UPC will furnish a copy of its Certificate of Incorporation to the
holder of record of this certificate without charge upon written
request addressed to UPC at its principal place of business."
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
ADDITIONAL RESTRICTIONS ON TRANSFER, REPURCHASE OPTIONS AND CERTAIN
OTHER AGREEMENTS SET FORTH IN A STOCKHOLDERS AGREEMENT DATED NOVEMBER
3, 1999. A COPY OF SUCH AGREEMENT MAY BE OBTAINED BY THE HOLDER HEREOF
AT THE CORPORATION'S PRINCIPAL PLACE OF BUSINESS WITHOUT CHARGE."
The Corporation shall imprint such legend on certificates evidencing
outstanding Stockholder Shares. The legend set forth above shall be removed from
the certificates evidencing any Stockholder Shares after the Termination Date.
10. Conflicting Agreements. Each Stockholder represents that it has not
granted and is not a party to any proxy, voting trust or other agreement which
is inconsistent with or conflicts with the provisions of this Agreement, and no
holder of Stockholder Shares shall grant any proxy or become party to any voting
trust or other agreement which is inconsistent with or conflicts with the
provisions of this Agreement. No Stockholder shall act, for any reason, as a
member of a group or in concert or enter into any agreement or arrangement with
any other person in connection with the acquisition, disposition or voting of
Stockholder Shares in any manner which is inconsistent with the provisions of
this Agreement.
11. Actions Consistent with Agreement. The Corporation shall not
circumvent this Agreement by taking any action through a subsidiary or affiliate
that would be prohibited under this Agreement. The certificate of incorporation
and bylaws of the Corporation may be amended in any manner permitted thereunder,
except that neither the certificate nor the bylaws shall be amended in any
manner that would conflict with, or be inconsistent with, the provisions of this
Agreement.
12. Definitions.
"Bared Directors" shall have the meaning set forth in Section
3(a)(ii) hereof.
"Corporation" shall have the meaning set forth in the preamble
and shall include all of the Corporation's subsidiaries.
"Independent Director" shall have the meaning set forth in
Section 3(a)(ii) hereof.
"Investor Directors" shall have the meaning set forth in
Section 3(a)(ii) hereof.
"Piggyback Registration" shall have the meaning set forth in
Section 4(a) hereof.
"Registration Expenses" shall mean all expenses related to
registration pursuant to Sections 4(a) and 4(b) of this Agreement.
"Securities Act" means the Securities Act of 1933, as amended
from time to time.
"Stockholder" shall have the meaning as set forth in the
preamble and shall include their permitted successors and assigns.
"Stockholder Shares" means (i) any common stock of the
Corporation purchased or otherwise acquired by any Stockholder (ii) any equity
securities issued or issuable directly or indirectly with respect to the Common
Stock referred to in clause (i) above by way of stock dividend or stock split or
in connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization, and (iii) any other shares of any class
or series of capital stock of the Corporation held by a Stockholder. As to any
particular shares constituting Stockholder Shares, such shares shall cease to be
Stockholder Shares when they have been sold to the public through a Public Sale
even if thereafter they are reacquired by a Stockholder.
"Transfer" shall have the meaning set forth in Section 1
hereof.
13. Transfers in Violation of Agreement. Any Transfer or attempted
Transfer of any Stockholder Shares in violation of any provision of this
Agreement shall be void, and the Corporation shall not record such Transfer on
its books or treat any purported transferee of such Stockholder Shares as the
owner of such shares for any purpose.
14. Amendment and Waiver. Except as otherwise provided herein, no
modification, amendment or waiver of any provision of this Agreement shall be
effective against the Corporation, the Investor or Bared unless such
modification, amendment, termination or waiver is approved unanimously in
writing by the Corporation, the Investor and Bared. The failure of any party to
enforce any of the provisions of this Agreement shall in no way be construed as
a waiver of such provisions and shall not affect the right of such party
thereafter to enforce each and every provision of this Agreement in accordance
with its terms.
15. Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
16. Entire Agreement. Except as set forth herein, this document
embodies the complete agreement and understanding among the parties hereto with
respect to the subject matter hereof and supersedes and preempts any prior
understandings, agreements or representations by or among the parties, written
or oral, which may have related to the subject matter hereof in any way.
17. Successors and Assigns. Except as otherwise provided herein, this
Agreement shall bind and inure to the benefit of and be enforceable by the
Corporation and its successors and assigns and the Stockholders and any
permitted subsequent holders of Stockholder Shares and the respective successors
and permitted assigns of each of them, so long as they hold Stockholder Shares.
18. Counterparts. This Agreement may be executed in separate
counterparts each of which shall be an original and all of which taken together
shall constitute one and the same agreement.
19. Remedies. The Corporation, the Investor and Bared shall be entitled
to enforce their rights under this Agreement specifically, to recover damages by
reason of any breach of any provision of this Agreement and to exercise all
other rights existing in their favor. The parties hereto agree and acknowledge
that money damages may not be an adequate remedy for any breach of the
provisions of this Agreement and that the Corporation, any Investor and Bared
may in its sole discretion apply to any court of law or equity of competent
jurisdiction for specific performance and/or injunctive relief (without posting
a bond or other security) in order to enforce or prevent any violation of the
provisions of this Agreement.
20. Notices. Any notice provided for in this Agreement shall be in
writing and shall be either personally delivered, or mailed first class mail
(postage prepaid) or sent by reputable overnight courier service (charges
prepaid) to the Corporation at the address set forth below and to any other
recipient at the address indicated on the schedules hereto and to any subsequent
holder of Stockholder Shares subject to this Agreement at such address as
indicated by the Corporation's records, or at such address or to the attention
of such other person as the recipient party has specified by prior written
notice to the sending party. Notices will be deemed to have been given hereunder
when delivered personally, three days after deposit in the U.S. mail and one day
after deposit with a reputable overnight courier service. The Corporation's
address is:
United Petroleum Corporation
2620 Mineral Springs Road, Suite A
Knoxville, Tennessee 37917
21. Governing Law. This Agreement will be construed and interpreted in
accordance with and governed by the laws of the State of Delaware.
22. Termination. This Agreement shall expire on the tenth anniversary
of the date of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Stockholders
Agreement on the day and year first above written.
UNITED PETROLEUM CORPORATION
By:
Its:
INFINITY INVESTORS LIMITED
By:
Its:
FAIRWAY CAPITAL LIMITED
By:
Its:
SEACREST CAPITAL LIMITED
By:
Its:
Joe Bared
Miriam Bared
