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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
(Amendment No. 2)
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): July 2, 1998
THE PANTRY, INC.
(Exact name of registrant as specified in its charter)
Delaware 33-72574 56-1574463
(State or other jurisdiction (Commission File No.) (I.R.S. Employer
of incorporation) Identification Number)
1801 Douglas Drive, P.O. Box 1410, Sanford, North Carolina 27330
(Address of principal executive offices)
(919) 774-6700
(Registrant's telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
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Item 7(c) is being amended to replace Exhibits 2.1 and 2.3 to reflect an order
of the Securities and Exchange Commission granting confidential treatment of
selected portions of exhibits 2.1 and 2.3. Items 7(a) and 7(b) remain the same.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) EXHIBITS.
Exhibit No. Description of Exhibit
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2.1 Asset Purchase Agreement dated June 5, 1998
between Quick Stop and the Company (asterisks
located within the exhibit denote information
which has been deleted pursuant to an order of
the Securities and Exchange Commission granting
confidential treatment)
2.2* List of Exhibits and Schedules omitted from the
Asset Purchase Agreement referenced in Exhibit 2.1
hereof
2.3 Asset Purchase Agreement dated July 6, 1998
between Stallings and the Company (asterisks
located within the exhibit denote information
which has been deleted pursuant to an order of
the Securities and Exchange Commission granting
confidential treatment)
2.4* List of Exhibits and Schedules omitted from the
Asset Purchase Agreement referenced in Exhibit 2.3
hereof
_________
* Previously filed.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: June 4, 1999
THE PANTRY, INC.
By: /s/ William T. Flyg
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William T. Flyg
Senior Vice President Finance and Secretary
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EXHIBIT INDEX
Exhibit No. Description of Exhibit
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2.1 Asset Purchase Agreement dated June 5, 1998 between Quick
Stop and the Company (asterisks located within the exhibit
denote information which has been deleted pursuant to an
order of the Securities and Exchange Commission granting
confidential treatment)
2.2* List of Exhibits and Schedules omitted from the Asset
Purchase Agreement referenced in Exhibit 2.1 hereof
2.3 Asset Purchase Agreement dated July 6, 1998 between
Stallings and the Company (asterisks located within the
exhibit denote information which has been deleted pursuant
to an order of the Securities and Exchange Commission
granting confidential treatment)
2.4* List of Exhibits and Schedules omitted from the Asset
Purchase Agreement referenced in Exhibit 2.3 hereof
__________
* Previously filed.
Exhibit 2.1
ASSET PURCHASE AGREEMENT
between
QUICK STOP FOOD MART, INC.
and
THE PANTRY, INC.
Dated as of June 5, 1998
*Selected portions have been deleted as confidential pursuant to Rule 24b-2.
Complete copies of the entire exhibit have been filed separately with the
Securities and Exchange Commission and marked "CONFIDENTIAL TREATMENT."
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Table of Contents
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Page
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ARTICLE I - DEFINITIONS...........................................................................................1
1.1 Defined Terms..............................................................................................1
1.2 Additional Definitions.....................................................................................7
ARTICLE II PURCHASE AND SALE OF ASSETS AND ASSUMPTION OF LIABILITIES; PURCHASE PRICE..............................7
2.1 Purchase and Sale of Assets................................................................................7
2.2 Excluded Assets............................................................................................8
2.3 Assumption of Liabilities..................................................................................9
2.4 Excluded Liabilities.......................................................................................9
2.5 Purchase Price.............................................................................................9
2.6 **.........................................................................................................9
2.7 **.........................................................................................................9
2.8 **........................................................................................................10
2.9 Employees.................................................................................................10
ARTICLE III THE CLOSING.........................................................................................10
3.1 Time and Place of Closing.................................................................................10
3.2 Instruments of Transfer...................................................................................10
3.3 Further Assurances........................................................................................11
3.4 Transfer Taxes............................................................................................11
ARTICLE IV TERMINATION...........................................................................................11
4.1 Termination...............................................................................................11
4.2 Effect of Termination.....................................................................................11
ARTICLE V - REPRESENTATIONS AND WARRANTIES OF THE SELLER.........................................................12
5.1 Organization and Good Standing............................................................................12
5.2 Power and Authority.......................................................................................12
5.3 No Violation..............................................................................................12
5.4 No Actions................................................................................................12
5.5 Approvals.................................................................................................13
5.6 Compliance with Laws and Orders...........................................................................13
5.7 Financial Statements......................................................................................13
5.8 Absence of Certain Changes or Events......................................................................13
5.9 Title to Transferred Assets...............................................................................14
5.10 Inventory................................................................................................14
5.11 Real Property............................................................................................14
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5.12 Third Party Leases, Leases of Seller Ground Lease Property
and Affiliate Ground Lease Property......................................................................15
5.13 Insurance................................................................................................16
5.14 Contracts................................................................................................16
5.15 Employment Law Matters...................................................................................16
5.16 Environmental Matters....................................................................................16
5.17 Property of Others.......................................................................................17
5.18 Equipment, Etc...........................................................................................17
5.19 Condition of Tangible Assets.............................................................................17
5.20 Sufficiency of Assets....................................................................................17
5.21 Tax Matters..............................................................................................17
5.22 Finders or Brokers.......................................................................................18
5.23 Disclosure of Material Facts.............................................................................18
5.24 Certain Interests; Affiliate Transactions................................................................18
5.25 Employee Benefit Plans...................................................................................18
ARTICLE VI - REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.....................................................18
6.1 Organization and Good Standing............................................................................19
6.2 Power and Authority.......................................................................................19
6.3 No Violation..............................................................................................19
6.4 No Actions................................................................................................19
6.5 Approvals.................................................................................................19
6.6 Disclosure of Material Facts..............................................................................19
6.7 Finders or Brokers........................................................................................20
ARTICLE VII - CERTAIN OBLIGATIONS OF THE SELLER PRIOR TO
THE CLOSING OR EARLIER TERMINATION OF THIS AGREEMENT.............................................................20
7.1 Conduct of Business.......................................................................................20
7.2 Restricted Activities and Transactions....................................................................20
7.3 Cooperation...............................................................................................21
7.4 Employee Benefit Plans....................................................................................21
7.5 No Negotiations...........................................................................................21
7.6 Access to the Business....................................................................................21
7.7 Disclosure Regarding the Seller...........................................................................22
7.8 Confidentiality...........................................................................................22
ARTICLE VIII - CERTAIN OBLIGATIONS OF THE PURCHASER PRIOR TO
THE CLOSING OR EARLIER TERMINATION OF THIS AGREEMENT.............................................................23
8.1 Cooperation...............................................................................................23
8.2 Disclosure Regarding the Purchaser........................................................................23
8.3 Confidentiality...........................................................................................23
8.4 Restricted Activities.....................................................................................23
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ARTICLE IX CONDITIONS PRECEDENT TO THE OBLIGATIONS
OF THE PURCHASER.................................................................................................23
9.1 Representations and Warranties True.......................................................................23
9.2 Performance...............................................................................................24
9.3 No Adverse Changes........................................................................................24
9.4 Approvals.................................................................................................24
9.5 Estoppel Certificates.....................................................................................24
9.6 Subordination, Non-Disturbance and Attornment Agreements..................................................25
9.7 Deliveries................................................................................................25
9.8 Proceedings...............................................................................................26
9.9 Absence of Litigation.....................................................................................26
9.10 [Intentionally Omitted]..................................................................................26
9.11 Environmental Matters....................................................................................26
ARTICLE X - CONDITIONS PRECEDENT TO THE OBLIGATIONS
OF THE SELLER....................................................................................................26
10.1 Representations and Warranties True......................................................................26
10.2 Performance..............................................................................................26
10.3 Approvals................................................................................................27
10.4 Deliveries...............................................................................................27
10.5 Proceedings..............................................................................................27
10.6 Absence of Litigation....................................................................................28
ARTICLE XI - CERTAIN POST-CLOSING COVENANTS......................................................................28
11.1 Confidentiality..........................................................................................28
11.2 Noncompetition...........................................................................................28
11.3 Responsibility for Environmental Matters.................................................................29
11.4 Specific Performance; Injunctive Relief..................................................................30
11.5 Change of Seller's Name..................................................................................30
11.6 Jacksonville Store..................................................................................... 31
ARTICLE XII - SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION........................................31
12.1 Survival of Representations and Warranties...............................................................31
12.2 Indemnification..........................................................................................31
12.3 Notice and Payment of Claims.............................................................................31
12.4 Limitation on Indemnity..................................................................................32
12.5 Mitigation of Damages....................................................................................33
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ARTICLE XIII - MISCELLANEOUS.....................................................................................33
13.1 Fees and Expenses........................................................................................33
13.2 Notices..................................................................................................33
13.3 Amendment; Waiver........................................................................................34
13.4 Assignment...............................................................................................35
13.5 Governing Law............................................................................................35
13.6 Severability.............................................................................................35
13.7 No Third Party Beneficiaries.............................................................................35
13.8 Public Announcements.....................................................................................35
13.9 Singular and Plural Forms................................................................................35
13.10 References..............................................................................................35
13.11 Headings................................................................................................35
13.12 Entire Agreement........................................................................................35
13.13 Counterparts............................................................................................36
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EXHIBITS
Exhibit A.........Form of Seller Leases and Affiliate Leases
Exhibit B.........Form of Third Party Lease Assignments
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SCHEDULES
1.1 Stores
2.1(e) Change Fund by Store
2.1(f) Contracts
2.1(j) Vehicles
2.7 Allocation of Purchase Price
2.8(c) Myrtle Beach Seasonal Bonus Plan
3.2 Terms for Seller and Affiliate Leases
5.4 Actions
5.5 Approvals
5.6 Compliance with Laws Generally
5.7 Financial Statements
5.8 Certain Changes
5.9 Exceptions to Title
5.11(a) Seller Fee Property
5.11(b) Affiliate Fee Property
5.11(c) Third Party Real Property
5.11(e) Options or Rights of First Refusal Relating to Real Property
5.11(g) Condemnation Proceedings
5.11(i) Flood Hazard Area
5.11(j) Tax Lots
5.12 Third Party Leases
5.14 Contract Assignments Requiring Approval
5.15 Employment Matters
5.16 Underground Storage Tanks
5.18(a) Seller Equipment
5.18(b) Third Party Equipment
5.20 Exceptions to Sufficiency of Assets
5.24 Affiliate Transactions
5.25 Employee Benefit Plans
9.4 Approval Exceptions
9.6 Mortgagees and Their Interests
11.3(a) Identified Preclosing Releases
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ASSET PURCHASE AGREEMENT
Asset Purchase Agreement (the "Agreement"), dated as of the 5th day of
June, 1998, by and among QUICK STOP FOOD MART, INC., a North Carolina
corporation ("Seller"), and THE PANTRY, INC., a Delaware corporation (the
"Purchaser").
WITNESSETH:
WHEREAS, the Seller operates seventy-five (75) convenience stores in
North Carolina and South Carolina and owns gasoline equipment and provides
gasoline products to three (3) subleased locations; and
WHEREAS, the Seller desires to transfer, sell, convey, assign and
deliver (collectively, "Transfer") to the Purchaser, and the Purchaser desires
to acquire and accept from the Seller, certain assets of Seller relating to
Seller's convenience store business, upon the terms and conditions hereinafter
set forth.
NOW, THEREFORE, for and in consideration of the premises, mutual
covenants and agreements contained herein, and intending to be legally bound
hereby, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 Defined Terms. The following terms, as used in this Agreement,
shall have the following meanings:
"Action" shall mean any action, claim, proceeding, suit or
investigation, or any appeal therefrom.
"Accrued Vacation Pay" shall mean all accrued vacation pay as
of the Closing Date of each of Seller's employees as provided in Seller's
related Employee Benefit Plan.
"Affiliate" shall mean, with respect to any Person, any Person
which, directly or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such Person. Without limiting
the foregoing definition, the term "Affiliate," as it relates to Seller, shall
include the following persons: Albert O. McCauley, Kenneth McDonald, Norwood
Poole, Johnny Wood, and McCauley and McDonald Investments, Inc.
"Affiliate Fee Property" shall mean the real property owned by
an Affiliate and more particularly described on Schedule 5.11(b) hereto.
"Affiliate Leases" shall mean leases for each of the Store
properties identified under the heading Affiliate Leases on Schedule 3.2.
"Agreement" shall mean this Asset Purchase Agreement and shall
include all of the Schedules and Exhibits attached hereto.
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"Approval" shall mean any approval, authorization, clearance,
expiration of waiting period, consent, license, franchise, order or permit of or
by, or filing with, any Governmental Authority or other Person.
"Assumed Liabilities" shall have the meaning ascribed to such
term in Section 2.3 hereof.
"Audit" shall mean a physical audit or count of all of the
Inventory to be conducted jointly by Seller and Purchaser at each Store on the
Closing Date and on the two (2) days prior thereto, commencing at 7:00 a.m..
"Business" shall mean the business of Seller's seventy-five
(75) convenience stores and the three (3) locations which are the subject of the
Subleases and to which Seller provides Petroleum Inventory, in North Carolina
and South Carolina, identified on Schedule 1.1.
"Business Day" or "business day" shall mean any day that is
not a Saturday, Sunday, or legal or banking holiday in North Carolina.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. ss. 9601 et seq., as amended,
including any rules and regulations promulgated thereunder or in connection
therewith.
"Change Fund" shall mean the normal change fund for each
Store, as set forth on Schedule 2.1(e).
"Closing" shall mean the consummation of the transactions
contemplated by this Agreement, effective as of 7:00 a.m. on Thursday, June 25,
1998.
"Closing Date" shall mean June 25, 1998 or as soon thereafter
as the conditions to Closing described in Articles IX and X hereof shall have
been fully satisfied or waived by the appropriate party or parties hereto, but
not later than July 31, 1998.
"Code" shall mean the Internal Revenue Code of 1986, as
amended, and shall include all of the rules and regulations promulgated
thereunder.
"Condition" shall mean, collectively, the business,
properties, assets, operations, results of operations and condition (financial
or otherwise).
"Contracts" shall mean the contracts and agreements of the
Seller relating to the Business and which will be assigned to and assumed by the
Purchaser, as identified on Schedule 2.1(f).
"Cost" shall mean Seller's laid-in cost of Petroleum
Inventory, **% of retail ********************, **% of retail **** and **% of
retail for all other Merchandise Inventory, all as determined from Seller's
books and records and the Audit, subject to confirmation upon completion of
Purchaser's review, as the parties may agree.
"Damages" shall mean any fine, penalty, claim, loss,
deficiency, Liability, cost or expense (including, without limitation,
reasonable attorneys' and accountants' fees, costs and
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*Selected portions have been deleted as confidential pursuant to Rule 24b-2.
Complete copies of the entire exhibit have been filed separately with the
Securities and Exchange Commission and marked "CONFIDENTIAL TREATMENT."
<PAGE>
expenses) or environmental assessment, monitoring or remediation expense,
diminution in property value, or damage of any kind or nature whatsoever.
"DHEC" shall have the meaning ascribed to such term in Section
2.2(g).
"Employee Benefit Plan" shall mean any employee benefit plan,
arrangement, policy or commitment (including any employee benefit plan within
the meaning ascribed to such term in Section 3(3) of ERISA) including, without
limitation, any employment, consulting or deferred compensation agreement,
executive compensation, bonus, incentive, pension, profit-sharing, savings,
retirement, stock option, stock purchase or severance pay plan, any life,
health, disability, accident or insurance plan or any holiday, vacation or other
employee practice, policy or benefit.
"Equipment" shall mean the Petroleum Equipment and the Store
Equipment.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
"Excluded Assets" shall have the meaning ascribed to such term
in Section 2.2 hereof.
"Excluded Liabilities" shall have the meaning ascribed to such
term in Section 2.4 hereof.
"Financial Statements" shall have the meaning ascribed to such
term in Section 5.7 hereof.
"GAAP" shall mean generally accepted accounting principles in
the United States consistently applied.
"Governmental Authority" shall mean any foreign, Federal,
state, local or other governmental, administrative or regulatory authority,
body, agency, court, tribunal or similar entity.
"Hired Employees" shall mean all employees of Seller employed
by Purchaser after Closing.
"Home Office Computer System" shall mean the computer hardware
and related software located in the home office and used to operate the software
of Professional Data Solutions, Inc.
"Improvement" shall mean any finding, discovery, invention,
addition, modification, change, formulation or development of any kind, whether
or not patented or patentable (and all proprietary information relating
thereto), including, without limitation, any new or improved device, delivery
system, design, composition of matter, method of administration or manufacturing
or other process.
"Indemnified Party" shall mean any party entitled to
indemnification pursuant to Article XII hereof and shall include such party's
Affiliates, successors and assigns and the Representatives of each of them.
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"Indemnifying Party" shall mean any party liable for
indemnification pursuant to Article XII hereof and shall include such party's
successors and assigns.
"Inventory" or "Inventories" shall mean collectively the
Merchandise Inventory and the Petroleum Inventory.
"IRS" shall mean the Internal Revenue Service.
"Knowledge" shall mean (i) the actual knowledge, after due
inquiry and investigation, of any of Seller's executive officers (Albert
McCauley, Kenneth McDonald, Johnny Wood, Norwood Poole, and Jerry Musselwhite)
or directors and (ii) the existence of facts, events, occurrences or matters
with respect to which any of the persons referred to above should reasonably be
expected to have knowledge in the ordinary conduct of his duties.
"Law" shall mean any Federal, state, local or foreign law,
statute, rule, regulation, ordinance, standard, requirement, administrative
ruling, order or process (including, without limitation, any zoning or land use
law or ordinance, building code or environmental law, any securities, blue sky,
civil rights or occupational health and safety law or regulation, and any law or
regulation relating to the distribution or sale of food products, beer, wine,
cigarettes, gasoline or other motor fuel) and any court or arbitrator's order or
process.
"Lease" and "Leases" shall mean the Affiliate Leases, the
Seller Leases and the Third Party Leases.
"Liability" shall mean any debt, liability, commitment or
obligation of any kind, character or nature whatsoever, whether known or
unknown, secured or unsecured, accrued, fixed, absolute, contingent or
otherwise, and whether due or to become due.
"Lien" shall mean any lien, statutory lien (including, without
limitation, any lien, restriction or right arising under the North Carolina or
South Carolina Uniform Commercial Code - Bulk Transfers), tax lien, pledge,
mortgage, security interest, charge, encumbrance, easement, right of way,
assessment (pending or confirmed), covenant, claim, restriction, right, option,
conditional sale or other title retention agreement, warrant or equity of any
kind or nature.
"Merchandise Inventory" shall mean all foodstuffs, beverages,
tobacco products, magazines, books, household products, automotive products or
accessories, and any other products of the Business of whatever nature held for
retail sale out of the Stores.
"OSHA" shall mean the Occupational Safety and Health Act of
1970, as amended.
"NCDENR" shall have the meaning ascribed to such term in
Section 2.2(g) hereof.
"Permitted Liens" shall mean (i) liens for Taxes that are not
yet delinquent or are being contested in good faith by appropriate proceedings
and for which there are adequate reserves on the books, (ii) workers or
unemployment compensation liens arising in the ordinary course of business;
(iii) mechanic's, materialman's, suppliers, vendor's or similar liens arising in
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the ordinary course of business securing amounts that are not delinquent, (iv)
laws, ordinances and governmental regulations regulating the use of occupancy of
the Real Property or the character, dimensions or locations of the improvements
thereon, provided that none of the same are or would be violated by the
continued use of any portion of the Real Property for the purposes for which it
has been customarily used by or in the Business; and (v) exceptions discovered
by an inspection or survey or other imperfections of title that do not make
title unmarketable; provided, however, that no Permitted Lien shall be so
substantial as to impair the value of or materially interfere with the continued
or contemplated use of any material portion of the Real Property or Transferred
Assets for the purposes for which they have been used by or in the Business.
"Person" shall mean any individual, partnership, corporation,
limited liability company, association, business trust, joint venture,
governmental entity, business entity or other entity of any kind or nature.
"Petroleum Equipment" shall mean all petroleum marketing
equipment, including, but not limited to, pumps, gasoline dispensers, gas
console, gasoline canopy, canopy structure, lights, registered underground
storage tanks and lines, environmental monitoring or upgrade equipment, and any
related equipment or apparatus located at the Real Property.
"Petroleum Inventory" shall mean all gasoline, diesel and
kerosene products of the Business measured in gallons.
"Petroleum Products" shall have the meaning ascribed to such
term in Section 5.16 hereof.
"Purchase Price" shall have the meaning ascribed to such term
in Section 2.5 hereof.
"Purchaser" shall mean The Pantry, Inc., a Delaware
corporation.
"Purchaser Group" shall have the meaning ascribed to such term
in Section 7.6 hereof.
"Real Property" shall mean, collectively, the Seller Fee
Property, the Affiliate Fee Property, and the Third Party Real Property.
"Representative" shall mean any employee, officer, director,
stockholder, partner, accountant, attorney, investment banker, broker, finder,
investor, subcontractor, consultant or other authorized agent or representative
of a Person.
"Seller" shall mean Quick Stop Food Mart, Inc., a North
Carolina corporation.
"Seller Leases" shall mean leases for each of the Store
properties identified under the heading Seller Leases on Schedule 3.2.
"Seller Fee Property" shall mean the real property more
particularly described on Schedule 5.11(a) hereto.
"Store Equipment" shall mean all convenience store fixtures,
machinery, equipment, including, but not limited to, walk-in coolers, store
fixtures, counters, shelving,
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refrigeration equipment, cash registers, safes, fountain dispensing equipment,
coffee equipment, ice machines, tables and any other fixtures or equipment
necessary for running a convenience store located at any of the Stores,
regardless of whether such items are permanently attached to the Real Property,
pole lights, pole signs or other personal property attached, appurtenant to or
located in or around the buildings or improvements located at the Real Property.
"Store Supplies" shall mean cups, napkins, paper towels,
toilet paper, janitorial supplies and similar non-Inventory items which are used
in the operation or maintenance of the Stores.
"Stores" shall mean the seventy-five (75) convenience stores
operated by the Seller and identified on Schedule 1.1, each being a "Store."
"Subleases" shall mean the three (3) subleases for former
stores 42, 72 and 205 at which Seller owns Petroleum Equipment and provides
Petroleum Inventory.
"Tanks" shall have the meaning ascribed to such term in
Section 5.16 hereof.
"Tax" shall mean any foreign, Federal, state or local income,
gross receipts, license, severance, occupation, premium, environmental
(including taxes under Code Section 59A), customs, duties, profits, disability,
registration, alternative or add-on minimum, estimated, withholding, payroll,
employment, unemployment insurance, social security (or similar), excise, sales,
use, value-added, occupancy, franchise, real property, personal property, gas,
petroleum marketing business and occupation, mercantile, windfall profits,
capital stock, stamp, transfer, workmen's compensation or other tax, fee or
imposition of any kind whatsoever, including any interest, penalties, addition,
assessments or deferred liability with respect thereto, whether disputed or not.
"Tax Return" shall mean any return, report, declaration, claim
for refund, estimate, election or information statement or return relating to
any Tax, including any schedules or attachments thereto and any amendments
thereof.
"Third Party Leases" shall mean the Subleases, and those
leases described on Schedule 5.12.
"Third Party Lease Assignments" shall have the meaning
ascribed to such term in Section 3.2 hereof.
"Third Party Real Property" shall mean the real property more
particularly described on Schedule 5.11(c).
"Transaction Documents" shall mean, collectively, this
Agreement, the Seller Leases, the Affiliate Leases and all agreements,
instruments, certificates and other documents executed and/or delivered in
connection herewith or therewith.
"Transfer" shall mean any sale, transfer, conveyance,
assignment, delivery or other disposition.
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"Transferred Assets" shall have the meaning ascribed to such
term in Section 2.1 hereof.
"Trust Fund" shall have the meaning ascribed to such term in
Section 2.1(h) hereof.
"Vehicles" shall mean the motor vehicles listed on Schedule
2.1(k).
1.2 Additional Definitions. In addition to the foregoing defined terms,
other capitalized terms appearing in this Agreement shall have the respective
meanings ascribed to such terms where they first appear in the text of this
Agreement.
ARTICLE II
PURCHASE AND SALE OF ASSETS AND
ASSUMPTION OF LIABILITIES; PURCHASE PRICE
2.1 Purchase and Sale of Assets. Subject to the terms and conditions of
this Agreement, at the Closing the Seller shall Transfer to the Purchaser, and
the Purchaser shall acquire and accept from the Seller, all of the Seller's
right, title and interest in, to and under all of the furniture, fixtures,
equipment, Inventory and other assets, used or located at the Stores (or the
locations subject to the Subleases) and relating to the Business, less and
except the Excluded Assets (after giving effect to the exclusion of the Excluded
Assets, such assets, together with all right, title and interest as tenant or
lessee pursuant to the Leases, being hereinafter collectively referred to as the
"Transferred Assets"), free and clear of any and all Liens (except Permitted
Liens), such Transferred Assets to include, without limitation:
(a) all of Seller's rights and interests under the Third Party
Leases;
(b) the Store Equipment;
(c) the Petroleum Equipment;
(d) the Inventory and the Store Supplies;
(e) the Change Fund as set forth on Schedule 2.1(e);
(f) all right and interest of the Seller in, to or under the
Contracts identified on Schedule 2.1(f);
(g) all computer hardware and computer software documentation
(subject to applicable license agreements) utilized in, or connected
with, the Stores, including source code and systems documentation and
telephone switches related to point-of-sale and petroleum dispensing
equipment, and the Home Office Computer System.
(h) all rights, interests and claims under the North Carolina
Commercial Leaking Petroleum Underground Storage Tank Cleanup Fund and
the South Carolina SUPERB Account and SUPERB Financial Responsibility
Fund (individually or collectively, as applicable, the "Trust Fund"),
or any other fund, program, or insurance
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policy relating to payment or reimbursement of costs, expenses or
damages related to releases from underground storage tanks;
(i) the names "Quick Stop," "Quick Stop Food Mart," all
variations thereof and the good will associated therewith and with the
Business;
(j) the motor vehicles identified on Schedule 2.1(j).
2.2 Excluded Assets. Notwithstanding anything in Section 2.1 to the
contrary, the Seller shall retain all of its right, title and interest in, to
and under all, and shall not Transfer to the Purchaser any, of the following
assets, rights or properties (the "Excluded Assets"):
(a) all bank accounts, cash and cash equivalents, except the
Change Fund;
(b) all accounts and notes receivable of the Business
(including miscellaneous receivables and rebates due from oil companies) arising
from products sold or services rendered by the Seller prior to the Closing;
(c) all Federal, state, local and foreign income tax deposits
(to the extent not refunded) paid by the Seller in connection with the income or
operations of the Business with respect to any period ending on or prior to the
Closing;
(d) any assets not relating to the Business;
(e) all minute books and stock books of the Seller and other
corporate information not necessary for the operation of the Stores;
(f) any assets relating to any Employee Benefit Plan;
(g) all underground storage tanks that are not properly
registered with the North Carolina Department of Environment and Natural
Resources ("NCDENR") or the South Carolina Department of Health and
Environmental Control ("DHEC") and all above-ground storage tanks, unless
Purchaser specifically elects in writing to acquire any of such tanks;
(h) all assets of the Seller located at its corporate offices
except the Home Office Computer System;
(i) all Hazardous Substances, hazardous wastes, PCBs and PCB
containing materials, asbestos containing materials, and waste oil;
(i) all life insurance policies;
(k) motor vehicles, other than the Vehicles listed on Schedule
2.1(k);
(l) real property owned by Seller, subject, however, to the
Seller Leases; and
(m) non-transferable licenses and permits.
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2.3 Assumption of Liabilities. Subject to the terms and conditions of
this Agreement, at the Closing the Purchaser shall assume and agree to pay,
perform and discharge when due only the following Liabilities (collectively, the
"Assumed Liabilities"):
(a) all Liabilities incurred or accruing from and after the
Closing under the Third Party Leases;
(b) all Liabilities incurred or accruing from and after the
Closing under the Contracts; and
(c) all Liabilities in connection with the remaining
unamortized capital costs (not to exceed $38,600) pursuant to the Car Wash
Facilities Operating Agreement, dated August 1, 1994 by and between Seller and
William Martin and Phyllis Martin, as amended on February 27, 1997.
2.4 Excluded Liabilities. Except for the Assumed Liabilities specified
in Section 2.3 hereof, the Purchaser shall neither assume nor have any liability
for any, and the Seller shall remain fully liable for, and shall pay, perform
and discharge, (a) all Liabilities of the Seller or the Business arising out of
any act or omission occurring or state of facts existing prior to the Closing,
(b) all Liabilities of Seller arising out of any act or omission occurring after
the Closing to the extent that such Liabilities described in this clause (b) do
not arise out of and are not related to the operation of the Business by
Purchaser, its successors or assigns, and (c) all Liabilities arising from or
pursuant to Permitted Liens incurred or accruing for the period prior to Closing
(collectively, the "Excluded Liabilities").
2.5 Purchase Price. The aggregate purchase price (the "Purchase Price")
to be paid by the Purchaser to the Seller for the Transferred Assets and the
non-competition agreement described in Section 11.2 hereof shall be Fifty
Million Dollars ($50,000,000) plus Inventory at Cost.
2.6 Payment of Purchase Price. At Closing, the Purchaser shall pay to
Seller the $50,000,000 portion of the Purchase Price and an amount equal to
98.5% of Seller's book cost of current Inventory ("Inventory Estimate") by wire
transfer of immediately available funds to an account designated by Seller. Upon
completion of the Audit and determination of Cost, if the Cost exceeds the
Inventory Estimate, Purchaser shall promptly pay the difference to Seller and if
the Cost is less than the Inventory Estimate, Seller shall promptly pay the
difference to Purchaser, in either case by wire transfer of immediately
available funds to an account designated in writing by Seller or Purchaser, as
the case may be.
2.7 Allocation of Purchase Price. The Purchase Price shall be allocated
as set forth on Schedule 2.7. The allocation of the Purchase Price is intended
to comply with the requirements of Section 1060 of the Code. Purchaser and
Seller shall file Form 8594, Asset Acquisition Statement Under Section 1060 of
the Code, with their respective income tax returns for the taxable year that
includes the Closing Date, in a manner consistent with the allocation of the
Purchase Price set forth herein. Purchaser and Seller agree to satisfy all of
the reporting requirements of Section 1060 of the Code. If, in a subsequent
taxable year, it is necessary to make any allocation of an increase or decrease
in the Purchase Price, Purchaser and Seller agree to file a supplemental Form
8594 as required.
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2.8 Prorations. All (a) real estate, property and ad valorem taxes, (b)
payments due or arising under the Third Party Leases or Contracts, (c) payments
due under the Myrtle Beach Seasonal Bonus Plan as described on Schedule 2.8(c)
("Myrtle Beach Seasonal Bonus Plan"), and (d) other customarily proratable items
relating to the Transferred Assets payable on or after the Closing and relating
to a period of time both prior to and on or after the Closing shall be prorated
as of the Closing between Purchaser and Seller. If the actual amount of any such
item is not known as of the Closing, the aforesaid proration shall be based on
the previous year's assessment of such item, or in the case of the Myrtle Beach
Seasonal Bonus Plan, upon payment of such bonuses, and the parties agree to
adjust said proration and pay any underpayment or reimburse for any overpayment
within thirty (30) days after the actual amount becomes known.
2.9 Employees. If the Closing occurs, the Purchaser shall be free to
hire such persons, whether or not employees of the Seller or the Business, on
such terms and conditions of employment as the Purchaser shall determine in the
exercise of its sole discretion, and nothing in this Agreement shall establish
any enforceable rights, legal or equitable, in any Person other than the parties
hereto, including, without limitation, any employee of the Seller or the
Business or any beneficiary of such employee. Any claim, including any claim for
benefits, asserted by or on behalf of any Person with respect to such Person's
employment by the Purchaser shall be governed solely by applicable employment
policies and employee benefit plans, if any, which the Purchaser may adopt after
the Closing, as construed in accordance with applicable Federal and state law.
The Seller has delivered to the Purchaser a true and complete list (including
names, titles, job descriptions, compensation, date of hire, and full vs.
part-time status) of all employees of the Business on the date of such notice.
At least seven (7) days prior to the Closing Date, the Purchaser shall notify
Seller in writing which of such employees (if any) the Purchaser does not intend
to hire after the Closing. The Seller shall be fully liable for the employment
(or termination or severance thereof) of any persons listed in such Purchaser's
notice. In addition, the Seller shall be liable for, and shall pay, all wages,
salaries, payroll taxes and employee benefits, including without limitation,
vacation, due, owing or accrued for all employees of the Business through the
Closing. In particular, Seller shall provide and continue to provide all
continuation coverage under its group health plans required by ERISA, the Code
and applicable Law for (i) Seller's employees who terminate employment with
Seller before the Closing Date and (ii) Seller's employees who terminate
employment with Seller as of the Closing Date and whom Purchaser does not
immediately employ. All claims incurred or liabilities asserted under Seller's
Employee Benefit Plans shall be the responsibility of Seller and Purchaser shall
not have any liability with respect to such claims or liabilities.
ARTICLE III
THE CLOSING
3.1 Time and Place of Closing. The Closing shall take place at 10:00
a.m. on the Closing Date at the offices of Smith, Anderson, Blount, Dorsett,
Mitchell & Jernigan, L.L.P., 2500 First Union Capitol Center , Raleigh, North
Carolina, or at such other time or place as may be mutually agreed upon by the
parties hereto.
3.2 Instruments of Transfer. At the Closing, the Seller shall deliver
to the Purchaser such bills of sale, assignments, limited powers of attorney,
motor vehicle titles, and other good and sufficient instruments of Transfer, in
form and substance reasonably
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satisfactory to the Purchaser and its counsel, as shall be effective to vest in
the Purchaser all of the Seller's right, title and interest in, to and under the
Transferred Assets. In addition, (a) the Seller and the Purchaser shall execute
and deliver the Seller Leases; (b) the appropriate Affiliate and the Purchaser
shall execute and deliver the Affiliate Leases; and (c) the Seller and the
Purchaser shall execute and deliver assignment and assumption agreements (the
"Third Party Lease Assignments") of the rights granted and obligations imposed
in the Third Party Leases (including the Subleases) identified in Schedule 5.12
as those to be assigned. The Seller Leases and the Affiliate Leases shall be
substantially in the form of Exhibit A hereto upon the terms (including annual
rent) identified in Schedule 3.2 hereto. The Third Party Lease Assignments shall
be substantially in the form of Exhibit B.
3.3 Further Assurances. In addition to the actions, documents and
instruments specifically required to be taken or delivered by this Agreement, at
the Closing or from time to time thereafter, and without further consideration,
the parties hereto shall take such other actions, and execute and deliver such
other documents and instruments, including, without limitation, resale
certificates for Inventory, as the other party or parties hereto or their
respective counsel may reasonably request in order to effectuate and perfect the
transactions contemplated by this Agreement.
3.4 Transfer Taxes. Except for all transfer taxes and fees, if any,
which shall be borne and paid solely by the Seller, each party hereto shall pay
any and all taxes incurred by such party in connection with the transactions
contemplated by this Agreement.
ARTICLE IV
TERMINATION
4.1 Termination. This Agreement may be terminated at any time prior to
the Closing:
(a) by the mutual written consent of the Seller and the
Purchaser;
(b) by the Seller or the Purchaser, upon written notice
describing the breach in reasonable detail, if there shall have been a material
breach by the other party or parties of any of the terms or provisions of this
Agreement or any of the Transaction Documents, and such breach shall not have
been cured by July 31, 1998, so long as the breaching party or parties
diligently pursue a cure after having received notice of the breach;
(c) by the Seller or the Purchaser if any court of competent
jurisdiction or other Governmental Authority shall have issued an order, decree
or ruling or taken any other action restraining, enjoining or otherwise
prohibiting the transaction contemplated by this Agreement, and such order,
decree, ruling or other action shall have become final and non-appealable; or
(d) by the Seller or the Purchaser if Closing shall not have
occurred by July 31, 1998, so long as the delay in Closing shall not have
resulted from the intentional act of the party seeking to terminate.
4.2 Effect of Termination. In the event of the termination of this
Agreement pursuant to Section 4.1(a), (c) or (d) hereof, such termination shall
be the sole remedy, this
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Agreement shall forthwith become void (except for Sections 7.8, 8.3 and 11.1
(Confidentiality) and 13.1 (Fees and Expenses)) and there shall be no liability
on the part of any of the parties hereto, any of their respective Affiliates or
any of the Representatives of any of them; provided, however, that if such
termination shall result from the breach by a party hereto of its obligations
under this Agreement, such party shall be fully liable for any and all Damages
sustained or incurred by the other party or parties as a result of such breach
and such other party or parties shall be entitled to pursue any remedies
available at law or in equity.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller hereby represents and warrants to the Purchaser as follows:
5.1 Organization and Good Standing. The Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
North Carolina, is qualified to do business in each state in which any Store is
located, and has all requisite power and authority, corporate and otherwise, to
own, operate and lease its properties and assets and to conduct the Business.
5.2 Power and Authority. The Seller has all requisite power and
authority to enter into and deliver this Agreement and the other Transaction
Documents, perform its obligations hereunder and consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the other
Transaction Documents, the performance by it of its obligations hereunder and
thereunder and the consummation of the transactions contemplated hereby have
been duly and validly authorized by all corporate and other actions on its part
required by applicable Law, its Articles of Incorporation, its by-laws or
otherwise. This Agreement and the other Transaction Documents constitute the
legal, valid and binding obligation of the Seller, enforceable against Seller in
accordance with their terms, except as the same may be limited by (a)
bankruptcy, insolvency, reorganization, moratorium or similar laws now or
hereafter in effect relating to creditors' rights generally and (b) general
equitable principles.
5.3 No Violation. Subject to Approvals required by Schedule 5.5,
neither the execution and delivery by the Seller of this Agreement and the other
Transaction Documents, the performance by it of its obligations hereunder and
thereunder, nor the consummation of the transactions contemplated hereby and
thereby, will (a) contravene any provision of Seller's articles of
incorporation; (b) violate any material agreement or instrument to which the
Seller is a party or by which it or any of its assets or properties may be
bound; or (c) violate any material Law or any judgment, decree or order of any
court or other Governmental Authority or any arbitration award to which it is
subject or by which any of its assets or properties may be bound.
5.4 No Actions. To the Knowledge of Seller and except as set forth on
Schedule 5.4, there is no Action pending or threatened, against it, any
Affiliate of the Seller or any of their respective assets, properties or rights
(including, without limitation, any relating to any of the Transferred Assets or
the Real Property) before any court or other Governmental Authority which (a)
questions or challenges the validity of this Agreement or the other Transaction
Documents or any action taken or proposed to be taken by the Seller or any
Affiliate pursuant hereto or in connection with the transactions contemplated
hereby or (b) could, if adversely determined, have a material adverse effect on
any of the Transferred Assets, the Real
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Property, the Condition of the Business or the transactions contemplated hereby
and thereby. To the Knowledge of Seller, Schedule 5.4 hereto sets forth a true
and complete list and description of all Actions pending or threatened against
any Affiliate of the Seller or against the Seller with respect to the Business
by any court or other Governmental Authority.
5.5 Approvals. Except as set forth in this Agreement and Schedule 5.5,
neither any declaration, filing or registration with, notice to, nor Approval
of, any Governmental Authority or other Person is required to be made, obtained
or given by or with respect to any Affiliate of the Seller or the Seller or the
Business in connection with the execution, delivery or performance of this
Agreement or the consummation of the transactions contemplated hereby. The
Seller has all Approvals of any Governmental Authority required for the lawful
operation of the Business and the use and ownership or leasing of its properties
and assets as it is currently operated, except where the loss, expiration or
failure to obtain any such Approval would not have a material adverse effect on
the Condition of Seller or the Business. All such Approvals are valid, in full
force and effect and in good standing, except to the extent that any lack of
such force and effect does not, in the aggregate, have a material adverse effect
on the Condition of Seller or the Business. To the Knowledge of Seller, there is
no proceeding pending or threatened that disputes the validity of any such
Approval or that may result in the revocation, cancellation or suspension, or
any adverse modification of, any such Approval. The Seller will make available
to the Purchaser true and complete copies of all such Approvals.
5.6 Compliance with Laws and Orders. To the Seller's Knowledge and
except as described on Schedule 5.6, (a) the Seller has complied in all material
respects with all Laws applicable to it and to the operation of the Business,
(b) the Seller has not been charged with or, to the Knowledge of the Seller,
threatened with any charge concerning or under any investigation with respect
to, any violation of any provision of any Law applicable to or affecting Seller,
the Business or the Real Property, and (c) the Seller is not in violation of or
in default under, and no event has occurred which, with the lapse of time or the
giving of notice or both, could result in the violation of or default under, the
terms of any judgment, decree, order, injunction or writ of any court or other
Governmental Authority applicable to Seller, any of its assets, properties or
Stores, or the Business.
5.7 Financial Statements. Seller has delivered to Purchaser audited
financial statements for the twelve (12) months ended December 31, 1995, 1996
and 1997 and unaudited interim financial statements for the three (3) months
ended March 31, 1998, copies of which are attached as Schedule 5.7. Said
financial statements fairly present the financial condition of Seller for the
periods indicated and the results of the operations of Seller for said periods,
in conformity with generally accepted accounting principles applied on a basis
consistent with prior periods.
5.8 Absence of Certain Changes or Events. Except as described on
Schedule 5.8 hereto, since December 31, 1997 the Seller has conducted the
Business in the ordinary course and consistent with past practice and:
(a) to the Seller's Knowledge, there has not occurred (i) any
material adverse change in the Condition of the Business or any of the Stores or
(ii) any event, circumstance or combination thereof, whether arising prior to or
after December 31, 1997, which might reasonably be expected to result in any
material adverse change in the Condition of the Business or any of the Stores
before, on or after the Closing Date; and
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(b) the Seller has not (i) suffered any damage, destruction or
loss, whether covered by insurance or not, materially and adversely affecting
the Condition of the Business or any Store, (ii) entered into any material
commitment or transaction (including, without limitation, any borrowing or
capital expenditure) affecting or relating to the Business not in the ordinary
course of business in accordance with past practice, (iii) Transferred any of
the assets of the Business except in the ordinary course of business in
accordance with past practice, (iv) granted or agreed to grant any increase in
the compensation of any employee of the Business (including any such increase
pursuant to any bonus, pension, profit-sharing or other plan or commitment) or
any increase in the compensation payable or to become payable to any employee of
the Business, except for those granted in the ordinary course of business in
accordance with past practice, or (v) entered into or agreed (whether in writing
or otherwise) to enter into any agreement or other arrangement to take any
action referred to in this Section 5.8, including, without limitation, any
agreement or arrangement granting any preferential right to purchase any of the
assets of the Business (including, without limitation, the Transferred Assets)
or requiring the consent of any party to the Transfer of any such assets.
5.9 Title to Transferred Assets. (a) Except as set forth on Schedule
5.9, (i) the Seller has good legal title to all of the Transferred Assets and
the Seller Fee Property, free and clear of any pledge, mortgage or security
interest of any kind whatsoever; (ii) each Affiliate identified on Schedule
5.11(b) has good legal title to the Affiliate Fee Property identified as owned
by such Affiliate, free and clear of any pledge, mortgage or security interest
of any kind whatsoever; and (iii) with respect to the Third Party Real Property
identified on Schedule 5.11(e), Seller has no Knowledge of any adverse claim
against the title to such Third Party Real Property.
(b) Upon the delivery of the instruments of Transfer described
in Section 3.2 hereof to the Purchaser at the Closing, the Transferred Assets
shall have been Transferred to the Purchaser, free and clear of any Liens of any
kind whatsoever, other than Permitted Liens.
5.10 Inventory. The Inventories are in good and merchantable condition
and constitute a customary and normal supply and product mix, consistent with
Seller's past practice, of saleable Merchandise Inventory and Petroleum
Inventory currently sold at normal prices in the ordinary course of business of
the Business. The Seller agrees that the parties shall conduct an Audit of all
Inventories on the two days immediately prior to and on the day of the Closing.
The cost of the Audit shall be borne equally by Seller and Purchaser.
5.11 Real Property.
(a) Schedule 5.11(a) hereto contains a true and complete list
and description of all of the Seller Fee Property.
(b) Schedule 5.11(b) hereto contains a true and complete list
and description of all of the Affiliate Fee Property.
(c) Schedule 5.11(c) hereto contains a true and complete list
and description of all of the Third Party Real Property.
(d) The Real Property includes all land, easements, rights of
way, buildings, structures and other improvements used by the Seller in the
conduct of the related Stores and the Business as it is currently being
conducted.
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(e) Except as set forth on Schedule 5.11(e), neither the
Seller, any Affiliate of Seller nor, to the Seller's Knowledge, any owner of
Third Party Real Property owns, holds or is obligated under or a party to any
option, right of first refusal or other contractual right to acquire or sell any
of the Real Property or any interest therein.
(f) Except as set forth on Schedule 5.11(f), to Seller's
Knowledge, no portion of the Real Property encroaches in any material respect
upon any property belonging to any other Person, and no portion of any other
Person's property encroaches in any material respect upon any of the Real
Property.
(g) Except as set forth on Schedule 5.11(g), to the Seller's
Knowledge, with respect to the Real Property, there have not occurred (i) any
pending or threatened condemnation proceedings, (ii) any pending or threatened
Actions or (iii) any other matter materially and adversely affecting the value
thereof.
(h) To the Seller's Knowledge, all maps and surveys heretofore
delivered by the Seller to the Purchaser are true and complete copies of such
documents.
(i) Except as set forth on Schedule 5.11(i), no parcel of the
Real Property is located in a special flood hazard area designated by a
Governmental Authority.
(j) Each of the Seller, the Affiliates of Seller and, to
Seller's Knowledge, the owners of Seller Ground Lease Property, Affiliate Ground
Lease Property, and Third Party Real Property, has paid, and will continue to
pay through Closing, all taxes, assessments, charges, fees, levies and
impositions owing by each or any of them with respect to the Real Property.
Except as set forth on Schedule 5.11(j), each of the parcels of Real Property is
assessed for real estate tax purposes as a wholly independent tax lot, separate
from any adjoining land or improvements not owned by Seller, an Affiliate of
Seller or owner of Seller Ground Lease Property, Affiliate Ground Lease
Property, and Third Party Real Property, as the case may be, and constituting a
part of such parcel. Except as set forth on Schedule 5.11(j), to the Seller's
Knowledge, there is no actual or pending imposition of any assessments or public
betterments, and no improvements have been constructed or planned which would be
paid for by means of assessments upon the Real Property.
5.12 Third Party Leases .
(a) Schedule 5.12 hereto contains a true and complete list,
including annual rent, of each of the Third Party Leases. Except as specifically
identified on Schedule 5.12, the Seller's interest in each of the Third Party
Leases is free and clear of any pledge, mortgage or security interest of any
kind whatsoever. The Seller has delivered to the Purchaser true and complete
copies of all of the Third Party Leases and of all related options, if any, to
purchase the Third Party Real Property.
(b) Each Third Party Lease and each related option to purchase
is valid and binding on Seller or Seller's Affiliate, as the case may be, and to
Seller's Knowledge, on the landlord, and is in full force and effect, subject
only to exceptions based on bankruptcy, insolvency or similar Laws of general
application, and there are no existing material defaults by the Seller or
Seller's Affiliate under, or, to the Knowledge of the Seller, by any other party
to, any Lease or any related option to purchase the Third Party Real Property,
or any condition,
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event or act known to the Seller that, with notice or lapse of time or both,
would constitute a material default. Without limiting the foregoing, the Seller
has not received any notice from any Person asserting that the Seller or
Seller's Affiliate is in default under any Third Party Lease, or under any
related option to purchase, nor does the Seller have any Knowledge of a default
by it or Seller's Affiliate under any Third Party Lease, or under any related
option to purchase. The Seller or Seller's Affiliate currently enjoys peaceful
and undisturbed possession of the Third Party Real Property under each of the
Third Party Leases.
5.13 Insurance. The Seller currently has in effect policies of fire,
liability, worker's compensation and other forms of insurance which provide
coverage for the Stores and the Business (collectively, the "Insurance
Policies"). All presently effective Insurance Policies are and will remain in
full force and effect through the Closing Date. There is no notice of or basis
for any modification, suspension, termination or cancellation of any Insurance
Policy or of any claim thereunder.
5.14 Contracts. Each of the Contracts specified on Schedule 2.1(f) is,
to the Knowledge of Seller, valid and in full force and effect and has been
entered into in the ordinary course of business and, to the Knowledge of the
Seller, none of them is in default in any material respect. The Seller has
delivered to the Purchaser true and complete copies of each of the Contracts.
Except as set forth on Schedule 5.14 hereto, each Contract that is being
assigned by the Seller to the Purchaser hereunder may be so assigned without the
Approval of any Person.
5.15 Employment Law Matters.
(a) With respect to the Business, to Seller's Knowledge (i)
the Seller is in compliance with all applicable Laws respecting employment,
employment practices, terms and conditions of employment, wages and hours and
the employment of aliens or similar immigration matters except where such
non-compliance would not have a material adverse effect on the Business or the
transactions contemplated by this Agreement or the other Transaction Documents;
and (ii) the Seller is not engaged in any unfair labor practice.
(b) To the Seller's Knowledge, there is no strike, labor
dispute, slowdown or work stoppage pending or, to the Knowledge of the Seller,
threatened, against or affecting the Business.
(c) To the Seller's Knowledge, except as set forth on Schedule
5.15 hereto, none of the current employees of the Business is represented by a
labor union, and no petition has been filed or proceedings instituted by any
employee or group of employees of the Business with any labor relations board
seeking recognition of a bargaining representative at any time. There are no
controversies or disputes (including any union grievances or arbitration
proceedings) pending or, to the knowledge of the Seller, threatened, between the
Seller and any of the employees of the Business (or any union or other
representative of such employees), except for such controversies and disputes
which do not and will not, individually or in the aggregate, have a material
adverse effect on the Condition of the Business.
5.16 Environmental Matters. Schedule 5.16 hereto contains a true and
complete list and description of every underground storage tank on the Real
Property (each, a "Tank") for the storage of gasoline and other petroleum
products, by-products and constituents ("Petroleum Products"). Each Tank is
registered with NCDENR or DHEC and Seller has satisfied all
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applicable requirements for coverage under the Trust Fund for all of the Tanks
and each of them. Except as set forth on Schedule 5.16, the Tanks and related
equipment and apparatus meet the requirements of 40 C.F.R. ss. 280.21 that
underground storage tank systems must meet not later than December 22, 1998.
5.17 Property of Others. To the Seller's Knowledge no shortage exists
in (a) any inventory or finished goods owned by suppliers of the Business and
stored upon its premises or otherwise or (b) any other item of personal property
owned by another for which the Business is accountable to another. Without
limiting the foregoing, all items of personal property for which the Business is
accountable under any consignment contract, or otherwise are fully accounted for
with no shortages or missing or lost items, are in workable, usable and saleable
condition and have suffered no damage or deterioration, normal wear and tear
excepted. Should shortages exist at Closing, the Seller shall be responsible for
any required compensation or replenishment.
5.18 Equipment, Etc.
(a) Subject to the valuation threshold noted thereon, Schedule
5.18(a) hereto contains a true and complete list of all machinery, Petroleum
Equipment, Store Equipment, furniture and other tangible personal property and
assets owned by the Seller and included in the definition of Transferred Assets.
(b) Subject to the valuation threshold noted thereon, Schedule
5.18(b) contains a true and complete list of all Petroleum Equipment and Store
Equipment owned by third parties and used in the Business.
5.19 Condition of Tangible Assets. To the Seller's Knowledge, the
facilities, machinery, Store Equipment, Petroleum Equipment, furniture,
fixtures, buildings and other tangible assets which are included in the
Transferred Assets or are a part of the Real Property are in good operating
condition and repair (subject to Section 7.1 hereof), except for ordinary wear
and tear and parts or repairs of an immaterial nature in the aggregate. The
Seller has not received any notice of any violation of any Law in respect of the
Transferred Assets that has not been cured. To the Seller's Knowledge, all of
the equipment necessary for the sustained uninterrupted operation of the
Business complies, and during Seller's operation of the Business such equipment
has complied, in all material respects with all applicable Laws.
5.20 Sufficiency of Assets. Except for the Excluded Assets and as set
forth on Schedule 5.20, the Transferred Assets constitute all of the property,
assets and contractual rights presently used by the Seller with respect to the
Business and such Transferred Assets are adequate for the conduct of the
Business as presently conducted. The Business has a normal operating supply
(consistent with past practices) of Inventories, Equipment and Store Supplies.
5.21 Tax Matters. Purchaser shall not have any liability for payment or
otherwise with respect to any Taxes arising out of, attributable to or affecting
the Transferred Assets or the conduct of the Business through the Closing. There
does not exist and will not exist any liability for Taxes that may be asserted
by any taxing authority against the Transferred Assets or the conduct of the
Business through the Closing for which Purchaser will have any liability for
payment or otherwise, and no lien or other encumbrance for such Taxes has or
will attach to the Transferred Assets through the Closing.
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5.22 Finders or Brokers. The Seller has not employed any investment
banker, broker, finder or intermediary in connection with the transactions
contemplated hereby who is entitled to any fee or commission in connection with
the execution or delivery of this Agreement or any of the other Transaction
Documents or the consummation of the transactions contemplated hereby or
thereby.
5.23 Disclosure of Material Facts. To the Knowledge of the Seller, no
provision of this Agreement contains or will contain at Closing any untrue
statement of a material fact with respect to the Seller, the Business, the
Stores or the Transferred Assets or omits or will omit at Closing to state a
material fact with respect to the Seller, the Business, the Stores or the
Transferred Assets necessary in order to make the statements herein or therein
not misleading.
5.24 Certain Interests; Affiliate Transactions. Schedule 5.24 hereto
sets forth a true and complete list of all written and material unwritten
agreements, commitments, obligations and understandings binding upon or relating
to the Business which provide for or reflect the sale by Seller or the Business
to, or the purchase by Seller or the Business from, any Affiliate of Seller of
any products, goods, supplies, equipment or services which will survive the
Closing. Except as described in detail on Schedule 5.24 hereto, the Termination
of any such agreement, commitment or understanding would not have a material
adverse effect on the Condition of the Business.
5.25 Employee Benefit Plans.
(a) Schedule 5.25 lists all Employee Benefit Plans
participated in or maintained by Seller or with respect to which Seller has made
contributions or has or in the future could have any liability. For purposes of
this Section 5.25, Seller includes any other entity or business that is treated
as a single employer with Seller pursuant to Section 414(b), (c), (m) or (o) of
the Code. Seller has made available to Buyer true, correct and complete copies
of all such written Employee Benefit Plans and descriptions of any such
unwritten Employee Benefit Plans.
(b) The consummation of the transactions contemplated by this
Agreement will not (i) entitle any current or former employee of Seller to
severance pay, unemployment compensation or any similar payment for which
Purchaser could be liable, (ii) accelerate the time of payment or vesting or
increase the amount of any compensation to or in respect of any current or
former employee of Seller for which Purchaser could be liable or (iii) result in
or satisfy any condition to the payment of compensation to any current or former
employee of Seller for which Purchaser could be liable that would, in
combination with any other payment, result in an "excess parachute payment"
within the meaning of Section 280G of the Code.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Seller as follows:
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6.1 Organization and Good Standing. The Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and is authorized to transact business in the States of North Carolina
and South Carolina.
6.2 Power and Authority. The Purchaser has all requisite power and
authority to enter into and deliver this Agreement and the other Transaction
Documents, perform its obligations hereunder and consummate the transactions
contemplated hereby and thereby. The execution and delivery of this Agreement
and the other Transaction Documents by it, the performance by it of its
obligations hereunder and the consummation of the transactions contemplated
hereby and thereby have been duly and validly authorized by all corporate,
stockholder and other actions on its part required by applicable Law, its
certificate of incorporation or by-laws, or otherwise.
This Agreement and the other Transaction Documents constitute
the legal, valid and binding obligations of the Purchaser, enforceable against
it in accordance with their terms, except (i) as the same may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws now or
hereafter in effect relating to creditors' rights generally and (ii) general
equitable principles.
6.3 No Violation. Neither the execution and delivery by the Purchaser
of this Agreement or the other Transaction Documents, the performance by it of
its obligations hereunder and thereunder, nor the consummation of the
transactions contemplated hereby and thereby, will (i) contravene any provision
of its certificate of incorporation or by-laws; (ii) violate any material
agreement or instrument to which it is a party or by which it or any of its
assets or properties may be bound; (iii) violate any material Law or any
judgment, decree or order of any court or other Governmental Authority or any
arbitration award to which it is subject or by which it or any of its assets or
properties may be bound; or (iv) have a material adverse effect on the
Purchaser's business or operations.
6.4 No Actions. There is no Action pending or, to the knowledge of the
Purchaser, threatened, against it or any of its assets, properties or rights
before any court or other Governmental Authority which (i) questions or
challenges the validity of this Agreement or any action taken or proposed to be
taken by it pursuant hereto or in connection with the transactions contemplated
hereby or (ii) could, if adversely determined, have a material adverse effect on
the transactions contemplated hereby.
6.5 Approvals. To the knowledge of the Purchaser, neither any
declaration, filing or registration with, nor any Approval of, any Governmental
Authority is required to be made or obtained by or with respect to it in
connection with the execution, delivery or performance of this Agreement or the
consummation of the transactions contemplated hereby, except such Approval as
may be required under the Hart-Scott-Rodino Antitrust Improvements Act, as
amended.
6.6 Disclosure of Material Facts. To the knowledge of the Purchaser, no
provision of this Agreement or any of the other Transaction Documents contains
or will contain at Closing any untrue statement of a material fact with respect
to it or omits or will omit at Closing to state a material fact with respect to
it necessary in order to make the statements herein or therein not misleading.
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6.7 Finders or Brokers. The Purchaser has not employed any investment
banker, broker, finder or intermediary in connection with the transactions
contemplated hereby who is entitled to any fee or commission in connection with
the execution or delivery of this Agreement or the consummation of the
transactions contemplated hereby.
ARTICLE VII
CERTAIN OBLIGATIONS OF THE SELLER PRIOR TO THE CLOSING
OR EARLIER TERMINATION OF THIS AGREEMENT
The Seller hereby covenants that, except as otherwise consented to in
writing by the Purchaser, from and after the date hereof until the Closing or
the earlier termination of this Agreement:
7.1 Conduct of Business. The Seller shall carry on the Business and
operations of the Business only in the ordinary course and in the same manner as
heretofore conducted, including, without limitation: (a) performing in all
material respects all of its material obligations under the Contracts; (b) using
its reasonable efforts to maintain and preserve (i) all of the properties,
equipment, and other assets of the Business in good repair, working order and
condition (except for ordinary wear and tear), (ii) the present workforce of the
Business (including, without limitation, those key employees who have been and
through the Closing Date will be responsible for operating, administering and
managing the Business), (iii) all of the Approvals relating to or affecting the
Business in good standing and (iv) its present relationships with, and the good
will of, the agents, suppliers, and customers of the Business and others with
which it has business relations which relate to or affect the Business; and (c)
keeping in full force and effect insurance with respect to the Business
comparable in amount and scope of coverage to that currently maintained by it
with respect to the Business. The Seller shall consult with the Purchaser from
time to time, upon the reasonable request of the Purchaser, with respect to the
conduct of the Business.
7.2 Restricted Activities and Transactions. Without the prior written
consent of the Purchaser, the Seller shall not engage in any one or more of the
following activities or transactions with respect to the Business: (a) directly
or indirectly create, incur or assume any Lien, other than Permitted Liens, on
or with respect to any property or asset (including any document or instrument
in respect of goods) of the Business, whether now owned or hereafter acquired,
or any income or profits therefrom; (b) Transfer, or agree to Transfer, any part
of the Business's assets, properties or rights, other than in the ordinary
course of the business of the Business in accordance with past practice; (c)
enter or agree to enter, into any agreement or arrangement granting any
preferential rights to purchase any of the Business's assets, properties or
rights (including, without limitation, the Transferred Assets) or requiring the
consent of any party to the Transfer of any such assets, properties or rights;
(d) make or permit to be made any amendment to or termination of any Contract or
any Approval relating to the Business other than in the ordinary course of
business in accordance with past practice; (e) make any change in any
profit-sharing, pension, retirement, long-term disability, hospitalization,
insurance or other Employee Benefit Plan, payment or arrangement, except in the
ordinary course consistent with past practice or as required by Law; (f) enter
into any collective bargaining agreement; (g) enter into any contract or
agreement except in the ordinary course of business in accordance with past
practice; or (h) except in the ordinary course of business,
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enter into any compromise or settlement of any Action affecting or relating to
the Business or any of its properties, assets or businesses.
7.3 Cooperation. The Seller shall use its best efforts to cause the
transactions contemplated by this Agreement to be consummated. Without limiting
the generality of the foregoing, the Seller shall (a) use commercially
reasonable efforts to obtain all Approvals of, make all filings with and give
all notices to, all such Governmental Authorities and other Persons as may be
necessary or reasonably requested by the Purchaser in order to consummate the
transactions contemplated by this Agreement (including, without limitation, all
of the Approvals referred to on Schedules 5.5, 5.12(c) and 5.14 hereof) and (b)
give prompt notice to the Purchaser of (i) any notice of, or other communication
relating to, any default, or any event which, with the giving of notice or the
lapse of time or both, would become a default, under, any material Contract to
which the Seller is a party or by which it or its assets or properties are bound
and which affects or relates to the Business and (ii) any notice or other
communication from any third party alleging that the consent of such third party
is or may be required in connection with the execution and delivery of this
Agreement or the transactions contemplated hereby. In addition, Seller shall
take such action as is reasonably requested by Purchaser to enable Purchaser to
obtain alcoholic beverage licenses and Tank registrations for the Stores as of
the Closing Date.
7.4 Employee Benefit Plans. The Seller shall take any and all actions
necessary or desirable to cause all Employee Benefit Plans and any other plans
or programs relating to employee benefits maintained by the Seller for the
benefit of employees of the Business to be continued in full force and effect,
except as required pursuant to the terms and provisions of such plans or
programs in the ordinary course of business in accordance with past practice.
7.5 No Negotiations. Until July 31, 1998 or earlier termination,
neither the Seller, any of its Affiliates, nor any of the Representatives of any
of them, shall, directly or indirectly, in any way contact, initiate, enter into
or conduct any discussions or negotiations, or enter into any agreements,
whether written or oral, with any Person with respect to the sale of the
Business or all or any significant portion of the assets of Seller. The Seller
shall, immediately upon receipt thereof by it or any of its respective
Affiliates or Representatives, notify the Purchaser of any offer by any Person
to make any such purchase or enter into any such agreement.
7.6 Access to the Business. The Seller hereby acknowledges that the
Purchaser, its Affiliates, and their respective Representatives (collectively,
the "Purchaser Group") may continue their due diligence investigation of the
business, operations and affairs of the Business through and until the Closing.
The Seller and its Affiliates and Representatives shall cooperate fully with
such investigation and, upon reasonable prior notice, shall afford the Purchaser
Group reasonable access, during normal business hours and at other reasonable
times, to the sales records (for 1995, 1996, 1997 and 1998 year-to-date) and
current personnel records, Stores and other facilities of the Business in order
that the Purchaser Group may have the opportunity to make such investigations
thereof as it shall deem necessary or desirable. The Seller shall furnish the
Purchaser Group with any applications or statements to be made to any
Governmental Authority in connection with the transactions contemplated by this
Agreement. Further, the Seller shall assist the Purchaser Group in contacting
and communicating with their independent accountants, suppliers and other
Persons having dealings relating to the Business. None of the information
furnished hereunder or obtained by the Purchaser Group during its due diligence
investigation of the Business shall in any way release the Seller from the
representations and warranties made by it in this Agreement.
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Commencing on the day following the date of this Agreement,
Purchaser and its Representatives shall be allowed to make environmental and
other engineering investigations, including Phase I and Phase II analysis and
testing, as Purchaser shall, in its sole discretion, deem appropriate. Purchaser
shall bear any cost of such investigation, analysis and testing. The Seller has
delivered to the Purchaser copies of all environmental reports, copies of all
environmental related claims, inquiries or requests for information by third
parties, and copies of all correspondence with environmental regulatory agencies
regarding each Store.
Notwithstanding the foregoing, Purchaser's right to enter upon
and conduct tests upon the Real Property is expressly made subject to the
following terms and conditions. Any entry upon the Third Party Real Property, or
any other property owned or leased by a party other than Seller or an Affiliate
of Seller, is conditioned upon Seller's ability to obtain consents from the
owner and lessee. Seller shall not be obligated to obtain any such consent, but
shall exercise reasonable efforts to do so. Any samples and testing will be
undertaken only at locations and in a manner that will not damage any
improvements, equipment or utilities, and Purchaser shall first verify the
location of all utilities, equipment and improvements to insure that no damage
will occur. Purchaser shall undertake all such work through SPATCO
Environmental, Inc., Charlotte, North Carolina, or through another licensed
engineering firm, in accordance with applicable legal requirements and in a
manner that minimizes any disruption to the Real Property and operations
thereon. Purchaser shall notify Seller of the date on which any entry upon the
Real Property shall occur hereunder. Promptly upon completion of any entry upon
the Real Property hereunder, Purchaser shall repair any damage caused by such
entry. Purchaser shall remove from the Real Property and properly dispose of, in
accordance with all applicable legal requirements, any waste materials generated
in connection with sampling work. Purchaser shall indemnify, defend and hold
harmless Seller and the Seller Indemnified Parties from and against any and all
liabilities, damages, claims, demands, costs and expenses of every kind
(including, without limitation, reasonable attorneys' fees) arising out of entry
upon the Real Property or any other property pursuant to this Section 7.6.
7.7 Disclosure Regarding the Seller. The Seller shall, upon reasonable
request, provide the Purchaser Group with such information and documentation
concerning the Seller as may be reasonably necessary for the Purchaser Group to
verify performance of and compliance with the representations, warranties,
covenants and conditions of the Seller contained herein.
7.8 Confidentiality. The Seller shall, and shall cause its Affiliates
and the Representatives to, keep confidential, and not disclose to others, any
proprietary information used or usable by or relating to, and obtained from, the
Purchaser, any of its Affiliates or any of the Representatives of any of them,
to the extent that such information is not or does not become readily available
to the public or is not required to be disclosed by applicable Law or court
order.
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ARTICLE VIII
CERTAIN OBLIGATIONS OF THE PURCHASER PRIOR
TO THE CLOSING OR EARLIER TERMINATION OF THIS AGREEMENT
The Purchaser hereby covenants that, except as otherwise consented to
in writing by the Seller, from and after the date hereof until the Closing or
the earlier termination of this Agreement:
8.1 Cooperation. The Purchaser shall use its best efforts to cause the
transactions contemplated by this Agreement to be consummated and, without
limiting the generality of the foregoing, to obtain all Approvals (except the
Approvals referred to on Schedules 5.5, 5.12(c) and 5.14 hereto) of, make all
filings with and give all notices to, all such Governmental Authorities and
other Persons as may be necessary or reasonably requested by the Seller in order
to consummate the transactions contemplated by this Agreement.
8.2 Disclosure Regarding the Purchaser. The Purchaser shall, upon
reasonable request, provide the Seller with such information and documentation
concerning the Purchaser as may be reasonably necessary for the Seller to verify
performance of and compliance with the representations, warranties, covenants
and conditions of the Purchaser contained herein.
8.3 Confidentiality. The Purchaser shall, and shall cause each of its
Affiliates and the Representatives of each of them to, keep confidential, and
not disclose to others, any information used or usable by or relating to, and
obtained from, the Seller, any of its Affiliates or any of the Representatives
of any of them, to the extent that such Information is not or does not become
readily available to the public or is not required to be disclosed by applicable
Law or court order.
8.4 Restricted Activities. Without the prior written consent of the
Seller, which consent will not be unreasonably withheld, the Purchaser will not
take any action or permit any event to occur which would result in a breach of
any of the representations or warranties set forth in Article VI hereof.
ARTICLE IX
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PURCHASER
Each and every obligation of the Purchaser under this Agreement to be
performed at or before the Closing shall be subject to the satisfaction, at the
Closing, of each of the following conditions:
9.1 Representations and Warranties True. The representations and
warranties of the Seller contained in this Agreement or in any of the other
Transaction Documents shall be true and correct in all material respects as of
the Closing Date with the same effect as if made on and as of the Closing Date;
provided, however, that the materiality limitation set forth in this Section 9.1
shall apply only with respect to the condition precedent to Purchaser's
obligation to close and shall not limit or qualify Seller's representations and
warranties or Seller's indemnification obligations.
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9.2 Performance. The Seller shall have performed and complied in all
material respects with all agreements, covenants, obligations and conditions
required by this Agreement or any of the other Transaction Documents to be
performed or complied with by it at or prior to the Closing.
9.3 No Adverse Changes.
(a) None of the Stores or other assets or properties material
to the operation or business of the Business shall have been damaged, destroyed
or taken by condemnation to such an extent that substantial operation of the
Business cannot continue or under circumstances where the loss thereof will not
be substantially reimbursed through the proceeds of insurance (including,
without limitation, business interruption insurance) or condemnation awards.
(b) No material adverse change (excluding national or regional
economic downturns) shall have occurred in the Condition of the Business since
the date of this Agreement.
(c) Notwithstanding any provision of Sections 5.8(b)(i), 9.3
or 9.4 hereof, in the event that (i) one or more of the Stores is damaged,
destroyed or taken by condemnation prior to Closing or (ii) Seller is unable to
obtain any Approval required for Purchaser to take possession of a Store at
Closing, in either case, such that Purchaser cannot operate such Store in the
ordinary course of business on the Closing Date, or (iii) one or more Stores is
excluded from the Transferred Assets pursuant to Section 9.11 hereof, Purchaser
shall nevertheless be obligated to close and the Purchase Price shall be reduced
by $667,000 for each such Store; provided, however, that Purchaser may terminate
this Agreement in the event the total number of such excluded Stores exceeds
five (5), and such termination shall be considered to be in accordance with
Section 4.1(a) hereof. If, during the six (6) month period after the Closing
Date, Seller is able to deliver any such Store to Purchaser, fully operational
and otherwise in accordance with the terms of this Agreement, Purchaser shall be
obligated to close on such Store for a purchase price of $667,000.
9.4 Approvals. Except as set forth on Schedule 9.4, all filings,
declarations and registrations with and Approvals from all Governmental
Authorities and other Persons required by applicable Law or otherwise required
to permit consummation of the transactions contemplated hereby (including,
without limitation, all of the Approvals referred to on Schedules 5.5, 5.12(c)
or 5.14 hereto) shall have been made or obtained and shall be in full force and
effect, except to the extent that making any such filing, declaration or
registration or obtaining any such Approval shall have been waived in writing by
the Purchaser.
9.5 Estoppel Certificates. The Seller shall have delivered to the
Purchaser executed estoppel certificates from the lessor named in each of the
Third Party Leases, dated not more than twenty (20) days prior to the Closing
Date, stating, with respect to each such lease the following (or in such other
form as may be reasonably acceptable to Purchaser and its counsel): (a) whether
there have been any amendments, modifications or supplements of any kind to such
lease; (b) that such lease is in full force and effect; (c) the commencement and
expiration dates of such lease; (d) that the Seller or the Affiliate is not in
violation of or in default under such lease and that the lessor thereunder has
no claims against the Seller or the Affiliate; (e) the amount of and the date
through which all fixed rent and any additional rent have been paid under such
lease; (f) that no fixed rent or additional rent has been prepaid for more than
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one month in advance; (g) that such lessor consents to the assignment of such
lease to the Purchaser (if such consent is required) and consents to the
assignment of an option to purchase (if such consent is required); and (h) such
other matters as the Purchaser may reasonably request.
9.6 Subordination, Non-Disturbance and Attornment Agreements. The
Seller shall have delivered to the Purchaser Subordination, Non-Disturbance and
Attornment Agreements ("SNDAs") executed by each mortgagee holding a beneficial
interest in any of the Real Property, each as more particularly described on
Schedule 9.6, and the owner of such Real Property, in form and substance
reasonably acceptable to Purchaser and its counsel.
9.7 Deliveries. The Seller shall have delivered to the Purchaser, at or
prior to the Closing, the following:
(a) the instruments of Transfer referred to in Section 3.2
hereof;
(b) all of the books and records (except corporate books)
relating to the Business, including, without limitation, sales records (for
1995, 1996, 1997 and 1998 year-to-date), current personnel records, and all
underground storage tank and environmental records;
(c) a certificate of existence or good standing, as
applicable, for the Seller, dated not earlier than twenty (20) days prior to the
Closing Date, of each of (i) the Secretary of State of North Carolina; (ii) the
North Carolina Department of Revenue; (iii) the Secretary of State of South
Carolina; and (iv) the South Carolina Department of Revenue.
(d) resolutions, certified as of the Closing Date by the
Secretary or Assistant Secretary of the Seller, adopted by the Board of
Directors and the shareholders of the Seller, respectively, and authorizing the
execution and delivery by the Seller of this Agreement and the other Transaction
Documents, the performance by it of its obligations hereunder and thereunder and
the consummation by it of the transactions contemplated hereby and thereby;
(e) such certificates of the President of the Seller to
evidence compliance with the conditions set forth in Sections 9.1 (without
regard to the materiality limitation stated in Section 9.1) through 9.4, and 9.8
and 9.9 hereof, and any other certificates to evidence compliance with the
conditions set forth in this Article IX as may be reasonably requested by the
Purchaser or its counsel;
(f) the opinion of Robinson, Bradshaw & Hinson, P.A., counsel
to the Seller and Seller's Affiliates, dated the Closing Date and addressed to
the Purchaser in form and substance reasonably satisfactory to the Purchaser and
its counsel;
(g) executed Seller Leases, Affiliate Leases and Third Party
Lease Assignments;
(h) powers of attorney, in form and substance reasonably
satisfactory to Purchaser and its counsel, assigning all rights, interests and
claims referred to in Section 2.1(h); flood certificates with respect to the
Stores identified on Schedule 5.11(i); and
(i) such other documents or certificates as shall be
reasonably requested by the Purchaser or its counsel.
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9.8 Proceedings. All corporate and other proceedings in connection with
the transaction contemplated by this Agreement and the other Transaction
Documents shall be in form and substance reasonably satisfactory to the
Purchaser and its counsel, and the Purchaser shall have received all such
originals or certified or other copies of such documents as it shall have
reasonably requested.
9.9 Absence of Litigation. There shall be no Action pending or
threatened before any court or other Governmental Authority which seeks to (a)
invalidate or set aside, in whole or in part, this Agreement or any of the other
Transaction Documents, (b) restrain, prohibit, invalidate or set aside, in whole
or in part, the consummation of the transactions contemplated hereby or thereby
or (c) obtain substantial Damages in connection therewith.
9.10 [Intentionally Omitted].
9.11 Environmental Matters. Purchaser shall promptly complete its
environmental analysis described in Section 7.6 hereof. If Purchaser is not
satisfied in its sole discretion with the environmental condition of one or more
Stores or if Seller is unable to obtain access to a Store site to conduct
environmental investigation, Purchaser shall give written notice thereof to
Seller no later than June 22, 1998, detailing the reasons for its
dissatisfaction, which may include inability to obtain access. If the reason for
Purchaser's dissatisfaction relates to petroleum releases, at Purchaser's
election: (i) the Store or Stores shall be added to Schedule 11.3(a) and Seller
shall be responsible with respect thereto as provided in Section 11.3(a) hereof;
or (ii) the Store or Stores shall be excluded from the Transferred Assets and
the Purchase Price shall be reduced as provided in Section 9.3(c) hereof. If the
reason for Purchaser's dissatisfaction relates to any other environmental
condition or inability to obtain access, Purchaser may either: (i) exclude the
Store or Stores from the Transferred Assets and the Purchase Price shall be
reduced as provided in Section 9.3(c) hereof; or (ii) give the Seller written
notice of its dissatisfaction, detailing the reasons therefor, in which event
the Seller may either promptly effect a cure to Purchaser's satisfaction, to be
determined in its sole discretion, or exclude the affected store from the
Transferred Assets and reduce the Purchase Price as provided in Section 9.3(c)
hereof.
ARTICLE X
CONDITIONS PRECEDENT TO
THE OBLIGATIONS OF THE SELLER
Each and every obligation of the Seller under this Agreement to be
performed at or before the Closing shall be subject to the satisfaction, at the
Closing, of each of the following conditions:
10.1 Representations and Warranties True. The representations and
warranties of the Purchaser contained in this Agreement or in any of the other
Transaction Documents shall be true and correct as of the date of this Agreement
and as of the Closing Date with the same effect as if made on and as of the
Closing Date.
10.2 Performance. The Purchaser shall have performed and complied in
all material respects with all agreements, covenants, obligations and conditions
required by this Agreement
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or any of the other Transaction Documents to be performed or complied with by it
at or prior to the Closing.
10.3 Approvals. All filings, declarations and registrations with and
Approvals from all Governmental Authorities and other Persons required by
applicable Law or otherwise required or desirable for the consummation of the
transactions contemplated hereby (except the Approvals referred to on Schedules
5.5, 5.12(c) and 5.14 hereto, which the Seller shall be solely responsible for
obtaining) shall have been made or obtained and shall be in full force and
effect, except to the extent that making any such filing, declaration or
registration or obtaining any such Approval shall have been waived in writing by
the Seller.
10.4 Deliveries. The Purchaser shall have delivered to the Seller, at
or prior to the Closing, the following:
(a) an amount equal to the Purchase Price described in Section
2.6 hereof;
(b) an instrument of assignment and assumption relating to the
Contracts;
(c) a good standing certificate, dated not earlier than twenty
(20) days prior to the Closing Date, of the Secretary of State of Delaware, as
to the good standing of the Purchaser in Delaware, and a certificate of
authorization, dated not earlier than ten (10) days prior to the Closing Date,
of the Secretary of State of North Carolina and the Secretary of State of South
Carolina, as to the Purchaser's authorization to transact business in North
Carolina and South Carolina, respectively;
(d) resolutions, certified as of the Closing Date by the
Secretary or Assistant Secretary of the Purchaser, adopted by the Board of
Directors of the Purchaser and authorizing the execution and delivery by the
Purchaser of this Agreement and the other Transaction Documents, the performance
by it of its obligations hereunder and thereunder and the consummation by it of
the transactions contemplated hereby and thereby;
(e) such certificates of the President or Vice President of
the Purchaser to evidence compliance with the conditions set forth in Sections
10.1, 10.2, and 10.3 hereof and any other certificates to evidence compliance
with the conditions set forth in this Article X as may be reasonably requested
by the Seller or their counsel;
(f) the opinion of Smith, Anderson, Blount, Dorsett, Mitchell
& Jernigan, L.L.P., counsel to the Purchaser, dated the Closing Date and
addressed to the Seller, in form and substance reasonably satisfactory to the
Seller and its counsel;
(g) the executed Seller Leases, Affiliate Leases and Third
Party Lease Assignments;
(h) the executed SNDAs; and
(i) such other documents or certificates as shall be
reasonably requested by the Seller or their counsel.
10.5 Proceedings. All corporate and other proceedings in connection
with the transactions contemplated by this Agreement and the other Transaction
Documents shall be in
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form and substance reasonably satisfactory to the Seller and its counsel, and
the Seller shall have received all such originals or certified or other copies
of such documents as they shall have reasonably requested.
10.6 Absence of Litigation. There shall be no Action pending or
threatened before any court or other Governmental Authority which seeks to (a)
invalidate or set aside, in whole or in part, this Agreement or any of the other
Transaction Documents, (b) restrain, prohibit, invalidate or set aside, in whole
or in part, the consummation of the transactions contemplated hereby or thereby
or (c) obtain substantial Damages in connection therewith.
ARTICLE XI
CERTAIN POST-CLOSING COVENANTS
11.1 Confidentiality.
(a) From and after the Closing, the Purchaser shall, and shall
cause its Representatives to, hold in strict confidence and, except as required
by applicable Law, not disclose to others (except its Representatives) or use
for any reason whatsoever without the prior written consent of the Seller, any
information (unless previously known to the Purchaser or any of its Affiliates
from sources other than the Seller or any of their respective Affiliates or
ascertainable from public or published information or trade sources) received by
the Purchaser or any of its Affiliates from the Seller concerning the Seller and
not relating to the Transferred Assets or the Business.
(b) From and after the Closing, the Seller shall, and shall
cause its Representatives to, hold in strict confidence and, except as required
by applicable Law, not disclose to others (except their Representatives) or use
for any reason whatsoever without the prior written consent of the Purchaser,
(i) any information (unless previously known to the Seller or any of their
Affiliates from sources other than the Purchaser or any of its Affiliates or
ascertainable from public or published information or trade sources) received by
the Seller or any of their respective Affiliates from the Purchaser or any of
its Affiliates concerning the Purchaser or its Affiliates, or (ii) any
information (unless ascertainable from public or published information or trade
sources) concerning the Transferred Assets or the Business.
11.2 Noncompetition. For a period of *************** from and after the
Closing, neither Seller nor any of its Affiliates (including, without
limitation, *******************************************************************
*************************************), will engage, directly or indirectly, in
the operation of, or own or have any interest of any kind, in any convenience
store or gasoline retail business in the Restricted Area, as defined below.
"Restricted Area" shall mean:
(a) any county located in the State of North Carolina or the
State of South Carolina in which Purchaser or any Affiliate owns or operates a
convenience store;
(b) the area within a ************ radius of any convenience
store operated by Purchaser or any Affiliate in North Carolina or South
Carolina;
(c) any county in which any of the Stores are located; and
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*Selected portions have been deleted as confidential pursuant to Rule 24b-2.
Complete copies of the entire exhibit have been filed separately with the
Securities and Exchange Commission and marked "CONFIDENTIAL TREATMENT."
<PAGE>
(d) the area within a ******** radius of any of the Stores.
Notwithstanding the foregoing, the restrictions imposed by this Section
11.2 shall not apply (i) to any Store as to which Seller or its assignee retakes
possession as a result of Purchaser's breach or default under the Lease for such
Store, or (ii) to ownership by individuals of up to 2% of the stock of a public
company engaged in the convenience store business.
11.3 Responsibility for Environmental Matters.
(a) With regard to any assessment or remediation required by
Law or third party claims as to any Tanks, tanks, or Store sites arising from
leaks, releases, spills or discharges of Petroleum Products which occurred and
were identified, as set forth on Schedule 11.3(a), prior to Closing, the Seller
shall be responsible for such assessment, remediation or claim, which
responsibility may be satisfied by qualification of such assessment, remediation
or claim for coverage (including, without limitation, payment or waiver of
applicable deductibles) under the Trust Fund or by performance of all
remediation required by applicable law and performance of all other obligations
required herein at no cost to the Purchaser. Through Closing, the Seller shall
be responsible for registration of all Tanks, paying or obtaining waivers of
deductibles, and for taking all other necessary action to qualify all Tanks for
coverage by the Trust Fund. Seller shall have no responsibility for lack of
coverage due to a shortage of funds in, or insolvency of, the Trust Fund.
Schedule 11.3(a) may be updated prior to Closing by Purchaser to list any leaks,
releases, spills or discharges of Petroleum Products which are identified up to
the date of Closing. With respect to any matters identified on Schedule 11.3(a),
Seller shall have the right to undertake any investigation, negotiation (with
governmental authorities or third parties), remediation, or other work.
Purchaser shall grant Seller such access to the Store Sites as Seller shall
reasonably require to effect any such investigation, remediation, or other work,
provided that Seller will provide Purchaser with reasonable advance notice of
such access (except in an emergency) and shall use all reasonable efforts to
avoid interference with Purchaser's operations and provide Purchaser with such
access and indemnity agreement as Purchaser may reasonably request. When any
such site has qualified for Trust Fund reimbursement, Purchaser shall assume
administrative oversight thereof.
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*Selected portions have been deleted as confidential pursuant to Rule 24b-2.
Complete copies of the entire exhibit have been filed separately with the
Securities and Exchange Commission and marked "CONFIDENTIAL TREATMENT."
<PAGE>
(b) The Purchaser shall be solely responsible for maintaining
registration of registered Tanks and Store sites subsequent to Closing. The
Purchaser shall be solely responsible for any assessment or remediation required
by Governmental Authority, by Law and any third party claims to the extent
arising from leaks, releases, spills or discharges of Petroleum Products which
are not identified on Schedule 11.3(a) or occur subsequent to Closing at any of
the Store sites, and Seller hereby assigns its rights and claims against third
parties relating to such assessments and remediation for which Purchaser is
responsible.
(c) Except as specifically provided in Section 5.16, Seller
makes no representations or warranties whatsoever with respect to the
environmental condition of the Real Property, or with respect to the presence or
disposal of any Hazardous Substances hazardous wastes, PCB's, PCB-containing
materials, asbestos-containing materials, or waste oil.
(d) The provisions of Section 11.3 shall neither supersede nor
obviate the representations and warranties of the Seller contained in Section
5.16(g).
(e) Notwithstanding any other provision of this Agreement,
Seller's total responsibility and Liability under this Agreement arising out of
or with respect to the Identified Conditions as of the date hereof respecting
Store Number 77, Store Number 28, and Store Number 43 shall be satisfied and
discharged as set forth in this Paragraph (e).
(i) Seller shall, at or prior to Closing, obtain and
deliver to Purchaser three letters of credit (the "Letters of Credit") in the
amounts of $******* with respect to Store No. 77, $****** with respect to Store
Number 28, and $****** to Store Number 43.
(ii) The Letters of Credit shall be issued by Branch
Banking & Trust Company (or another bank acceptable to Purchaser), shall be in
form and substance reasonably satisfactory to Purchaser and its counsel, shall
name Purchaser as the beneficiary thereof, and shall provide that Purchaser may
draw thereon by certifying in writing to the issuer thereof that Purchaser has
incurred costs in connection with the assessment or remediation required by law
or any third-party claims with respect to the Identified Condition for the
respective Store.
(iii) The Letters of Credit shall be issued for a
term of one year, and Seller shall provide renewal Letters of Credit annually in
the amount of the original Letters of Credit less the amount of any draws
theretofore paid with respect to the respective Letters of Credit. Seller shall
continue to provide the Letters of Credit until the earliest of (a) the drawing
by Purchaser of the full amount of any Letter of Credit, (b) the date upon
which, in Purchaser's reasonable opinion, no further assessment or remediation
shall be required by Law or a third-party claim with respect to the Identified
Condition with respect to the respective Store, or (c) Purchaser's agreement
that Seller shall no longer be required to furnish a Letter of Credit.
(f) Purchaser and Seller shall cooperate with each other to
enable the other to obtain any rights or benefits to which Purchaser or Seller
may be entitled.
11.4 Specific Performance; Injunctive Relief. Each of the parties
hereto acknowledges and understands that any breach or threatened breach by it
of Section 11.1 hereof or (with respect to the Seller, Albert O. McCauley,
Kenneth McDonald, and Johnny Wood) Section 11.2 hereof will cause irreparable
injury to the non-breaching party or parties and their respective Affiliates and
that money damages will not provide an adequate remedy therefor. Accordingly, in
the event of any such breach or threatened breach, the non-breaching party or
parties shall have the right and remedy (in addition to any others available at
law or in equity) to have the provisions of Sections 11.1 and 11.2 hereof
specifically enforced by, and to seek injunctive relief and other equitable
remedies in, any court having competent jurisdiction.
11.5 Change of Seller's Name. Within three (3) business days after the
Closing Date, Seller shall amend its articles of incorporation to provide for
the change of its corporate name to a name other than, and one not similar to,
"Quick Stop Food Mart, Inc." and shall effect such name change in each other
jurisdiction in which it is authorized to transact business. Seller shall
promptly thereafter deliver to the Purchaser true and complete copies of
Seller's articles of incorporation, as so amended, certified by the Secretary of
State of North Carolina, and certificates of the Secretary of State of each
other jurisdiction in which it is authorized to transact business, evidencing
the good standing of Seller in each such other jurisdiction under its new name.
Notwithstanding the foregoing, Seller may, for a reasonable period of time, use
its current supply of printed checks and stationery.
*Selected portions have been deleted as confidential pursuant to Rule 24b-2.
Complete copies of the entire exhibit have been filed separately with the
Securities and Exchange Commission and marked "CONFIDENTIAL TREATMENT."
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<PAGE>
11.6 Jacksonville Store. Seller shall be responsible for completing the
construction of, and upfitting and equipping, the Store in Jacksonville, North
Carolina, consistent with Seller's customary standards, the cost of which is
included in the Purchase Price.
ARTICLE XII
SURVIVAL OF REPRESENTATIONS AND
WARRANTIES; INDEMNIFICATION
12.1 Survival of Representations and Warranties. Notwithstanding (a)
the making of this Agreement, (b) any examination or investigation made by or on
behalf of the parties hereto and (c) the Closing hereunder, (i) the
representations and warranties of the parties hereto contained in this Agreement
shall survive the execution and delivery of this Agreement and the Closing for a
period of eighteen (18) months from and after the date hereof, except for the
representations and warranties contained in Sections 5.16 (Environmental
Matters), 5.21 (Tax Matters) and 5.25 (Employee Benefit Plans), which shall
survive until the expiration of the applicable statute of limitations for the
underlying cause of action, and (ii) the covenants and agreements of the parties
hereto contained in this Agreement shall survive until fully performed or
fulfilled (unless non-compliance with such covenants or agreements is waived in
writing by the party or parties hereto entitled to such performance). No claim
for indemnification pursuant to Section 12.2 hereof may be brought with respect
thereto after the applicable expiration date; provided, however, that if prior
to such date a party hereto has notified the other party or parties hereto in
writing of a claim for indemnification under this Article XII (whether or not
formal legal action shall have been commenced based upon such claim), such claim
shall continue to be subject to indemnification in accordance with this Article
XII.
12.2 Indemnification. Subject to Sections 12.1, 12.4 and 12.5 hereof,
from and after the Closing, each of the parties hereto and their respective
successors and assigns (each being an "Indemnifying Party") shall indemnify and
hold harmless the other party or parties hereto, their respective Affiliates,
successors and assigns, and the Representatives of each of them (each being an
"Indemnified Party"), from and against any and all Damages incurred thereby or
caused thereto arising out of or relating to (a) any breach or violation of, or
failure to properly perform, any covenant or agreement made by such Indemnifying
Party in this Agreement or any of the other Transaction Documents, unless waived
in writing by the Indemnified Party; (b) any breach of any of the
representations or warranties made by such Indemnifying Party in this Agreement
or any of the other Transaction Documents and not waived in writing by the
Indemnified Party; (c) with respect to the Seller, its failure to pay, perform
or satisfy when due any of the Excluded Liabilities; (d) with respect to the
Purchaser, its failure to pay, perform or satisfy when due any of the Assumed
Liabilities or any Liability or Damages arising out of or in connection with its
ownership and operation of the Business after Closing; and (e) with respect to
the Seller, Seller's failure to comply with applicable provisions of the North
Carolina or South Carolina Uniform Commercial Code - Bulk Transfers. Except as
otherwise expressly provided in Section 11.2 hereof, no Indemnified Party shall
have any recourse of any kind or nature whatsoever against any of the
Representatives of any Indemnifying Party.
12.3 Notice and Payment of Claims
(a) Promptly after receipt by any Indemnified Party of notice
of the commencement of any action, the assertion by any third party of any
claim, or otherwise giving
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<PAGE>
rise to indemnification as provided in this Article (collectively, a "Claim"),
the Indemnified Party receiving such notice (the "Claim Notice") shall notify
the Indemnifying Party in writing of the assertion of such Claim; provided,
however, that failure to give such notice shall not affect the right to
indemnification hereunder except to the extent of actual prejudice. The
Indemnifying Party shall have the option, and shall notify the Indemnified Party
in writing within ten (10) business days after the date of the Claim Notice of
its election either (i) to participate (at its own expense) in the defense of
such Claim (in which case the defense of such Claim shall be controlled by the
Indemnified Party) or (ii) to take charge of and control the defense of such
Claim. The Indemnifying Party's failure to respond shall not relieve the
Indemnifying Party of, or its indemnification obligations under, this Section.
Each Indemnified Party shall have the right to employ separate counsel and
participate in the defense of such Claim, but the fees and expenses of such
counsel shall be at the expense of the Indemnified Party unless: (1) the
employment of such counsel shall have been specifically authorized in writing by
the Indemnifying Party or (2) the named parties in such Claim (including any
impleaded parties) include both the Indemnified Party and the Indemnifying Party
and representation of both parties would be inappropriate due to actual or
potential conflicts of interest between them, it being understood, however, that
the Indemnified Party shall not, in connection with such Claim, be liable for
the fees and expenses of more than one separate firm of attorneys (in addition
to any local counsel) and that all such fees and expenses shall be reimbursed as
they are incurred.
(b) If the Indemnifying Party elects (or is deemed to have
elected) not to assume the defense of a Claim in accordance with the preceding
Section, then the Indemnified Party may settle such Claim without the written
consent of the Indemnifying Party and the Indemnifying Party agrees to indemnify
and hold the Indemnified Party harmless from and against any such Claim settled
without its written consent. As to any claim settled with the Indemnifying
Party's written consent, the Indemnifying Party agrees to indemnify and hold the
Indemnified Party harmless from and against any such Claim by reason of such
settlement, according to the obligations of the Indemnifying Party hereunder.
(c) The Indemnified Party shall provide to the Indemnifying
Party, as soon as practicable after the date of the Claim Notice, all
information and documentation necessary to support and verify any Damages that
the Indemnified Party shall have determined have given or could give rise to a
Claim hereunder, and the Indemnifying Party shall be given access to all books
and records in the possession or under the control of the Indemnified Party
which the Indemnifying Party reasonably determines to be related to such Action.
(d) All Claims under this Articles shall be paid by the
Indemnifying Party on demand in immediately available funds in U.S. dollars
after the liability for Damages thereunder have been finally determined. The
liability for Damages under any such Claim shall be deemed to be "finally
determined" for purposes of this Article when the parties to an Action have so
determined by mutual agreement or, if disputed, when a final non-appealable
order of a court having competent jurisdiction has been entered.
12.4 Limitation on Indemnity.
(a) Maximum Liability. The maximum aggregate amount of Damages
for which (i) Seller or (ii) Purchaser shall be liable pursuant to this Article
shall be $**********.
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*Selected portions have been deleted as confidential pursuant to Rule 24b-2.
Complete copies of the entire exhibit have been filed separately with the
Securities and Exchange Commission and marked "CONFIDENTIAL TREATMENT."
<PAGE>
(b) Threshold. No Indemnified Party shall seek, or be entitled
to, indemnification from any Indemnifying Party for Damages arising under
Section 12.2(b) until the aggregate amount of such Damages incurred by such
Indemnified Party (but for the operation of this Section 12.4(b)) exceeds
$*******. If Damages incurred by any Indemnified Party in connection with Claims
made pursuant to Section 12.2(b) exceed $*******, the Indemnified Party shall be
entitled to payment from the Indemnifying Party of an amount equal to all of
such Damages.
(c) Characterization of Payment. Any indemnity payment made
pursuant to this Article shall be treated by Purchaser and Seller as an
adjustment to the Purchase Price.
12.5 Mitigation of Damages. If any event shall occur which would
otherwise entitle a party hereto to indemnification hereunder, no Damages shall
be deemed to have been sustained by it to the extent of (a) any tax savings
realized by it with respect thereto or (b) any proceeds received by it from any
insurance policy with respect thereto.
ARTICLE XIII
MISCELLANEOUS
13.1 Fees and Expenses. Except as otherwise expressly provided in this
Agreement, each of the parties hereto shall bear and pay all fees, costs and
expenses incurred by it in connection with the origin, preparation, negotiation,
execution and delivery of this Agreement, the other Transaction Documents and
the transactions contemplated hereby or thereby (whether or not such
transactions are consummated), including, without limitation, any fees, expenses
or commissions of its attorneys, accountants and other representatives.
13.2 Notices.
(a) All notices, requests, demands and other communications
required or permitted under this Agreement shall be in writing (including
facsimile, telegraphic, telex or cable communication) and mailed, faxed,
telegraphed, telexed, cabled or delivered:
(i) If to the Seller, to:
Quick Stop Food Mart, Inc.
Post Office Box 2427
Fayetteville, North Carolina 28302
Facsimile No.: 910/483-2634
Attention: Albert McCauley
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*Selected portions have been deleted as confidential pursuant to Rule 24b-2.
Complete copies of the entire exhibit have been filed separately with the
Securities and Exchange Commission and marked "CONFIDENTIAL TREATMENT."
<PAGE>
with a copy to:
Peter C. Buck
Robinson, Bradshaw & Hinson, P.A.
101 North Tryon Street
Suite 1900
Charlotte, North Carolina 28246
Facsimile No.: (704) 378-4000
(ii) If to Purchaser, to:
The Pantry, Inc.
1801 Douglas Drive
Sanford, North Carolina 27330
Facsimile No.: 919-774-3329
Attention: Chief Financial Officer
with a copy to:
Smith, Anderson, Blount, Dorsett, Mitchell &
Jernigan, L.L.P.
2500 First Union Capitol Center
P.O. Box 2611
Raleigh, NC 27602-2611
Facsimile No.: 919-821-6800
Attention: R. Marks Arnold
(b) All notices and other communications required or permitted
under this Agreement which are addressed as provided in this Section 13.2 (i) if
delivered personally against proper receipt or by confirmed facsimile or telex,
shall be effective upon delivery and (ii) if delivered (A) by certified or
registered mail with postage prepaid, (B) by Federal Express or similar courier
service with courier fees paid by the sender or (c) by telegraph or cable, shall
be effective two (2) business days following the date when mailed, couriered,
telegraphed or cabled, as the case may be. The parties hereto may from time to
time change their respective addresses for the purpose of notices to that party
by a similar notice specifying a new address, but no such change shall be deemed
to have been given until it is actually received by the party sought to be
charged with its contents.
13.3 Amendment; Waiver Neither this Agreement, nor any of the terms or
provisions hereof, may be amended, modified, supplemented or waived except by a
written instrument signed by all of the parties hereto (or, in the case of a
waiver, by the party or parties granting such waiver). No waiver of any of the
provisions of this Agreement shall be deemed to be or shall constitute a waiver
of any other provision hereof (whether or not similar), nor shall such waiver
constitute a continuing waiver. No failure of a party hereto to insist upon
strict compliance by another party hereto with any obligation, covenant,
agreement or condition contained in this Agreement shall operate as a waiver of,
or estoppel with respect to, any subsequent or other failure. Whenever this
Agreement requires or permits consent by or on behalf of a party hereto, such
consent shall be given in a manner consistent with the requirements for a waiver
of compliance as set forth in this Section 13.3.
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<PAGE>
13.4 Assignment. This Agreement and all of the terms and provisions
hereof shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns, but neither this Agreement
nor any of the rights, interests or obligations of the parties hereunder may be
assigned by any of the parties hereto without the prior written consent of the
other parties; provided, however, that the Purchaser may assign this Agreement
and its rights and obligations hereunder to any of its Affiliates which has
assumed such obligations without the prior written consent of the Seller, but
such assignment shall not release Purchaser from its obligations hereunder or
under the Leases. Any assignment which contravenes this Section 13.4 shall be
void ab initio.
13.5 Governing Law. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of North Carolina, without
giving effect to the conflicts of laws principles thereof.
13.6 Severability. Each term and provision of this Agreement
constitutes a separate and distinct undertaking, covenant, term and/or provision
hereof. In the event that any term or provision hereof shall be determined to be
unenforceable, invalid or illegal in any respect, such unenforceability,
invalidity or illegality shall not affect any other term or provision hereof,
but this Agreement shall be construed as if such unenforceable, invalid or
illegal term or provision had never been contained herein. Moreover, if any term
or provision hereof shall for any reason be held to be excessively broad as to
time, duration, activity, scope or subject, it shall be construed, by limiting
and reducing it, so as to be enforceable to the extent permitted under
applicable Law as it shall then exist.
13.7 No Third Party Beneficiaries. Except as and to the extent provided
in Article XII hereof, nothing in this Agreement is intended, nor shall anything
herein be construed, to confer any rights, legal or equitable, in any person or
entity other than the parties hereto and their respective successors and
permitted assigns.
13.8 Public Announcements. Except as required by applicable Law or
judicial order, none of the parties hereto, nor any of their respective
Affiliates, successors or assigns, shall issue any press release or make any
public announcement or disclosure with respect to this Agreement or the
transactions contemplated hereby without the prior consent of the other party or
parties hereto, which consent shall not be unreasonably withheld.
13.9 Singular and Plural Forms. The use herein of the singular form
shall also denote the plural form, and the use of the plural form shall denote
the singular form, as in each case the context may require.
13.10 References. All references herein to Articles, Sections and
Exhibits shall be to Articles and Sections of and Exhibits to this Agreement.
13.11 Headings. The headings contained in this Agreement are for
convenience of reference only and shall not constitute a part hereof or define,
limit or otherwise affect the meaning of any of the terms or provisions hereof.
13.12 Entire Agreement. This Agreement, together with the schedules and
exhibits hereto, constitutes the entire agreement between the parties with
respect to the subject matter
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<PAGE>
hereof and supersedes all prior understandings, agreements and arrangements,
both oral and written, between the parties with respect to the subject matter
hereof.
13.13 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which, when
taken together, shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and Albert O. McCauley, Kenneth McDonald, and Johnny Wood have
executed this Agreement for the limited purposes of acknowledging their
obligations pursuant to Sections 11.2 and 11.4 hereof, as of the day and year
first above written.
QUICK STOP FOOD MART, INC.
Attest:
/s/ (illegible) /s/ John Wood
_________________________ By:_____________________________________
Secretary Name: John Wood
Title: Vice President
(Corporate Seal)
THE PANTRY, INC.
/s/ William T. Flyg
By: _____________________________________
Name: William T. Flyg
Title: Vice President
/s/ Albert O. McCauley
----------------------------------------
Albert O. McCauley
----------------------------------------
Kenneth McDonald
/s/ Johnny Wood
----------------------------------------
Johnny Wood
Exhibit 2.3
ASSET PURCHASE AGREEMENT
between
STALLINGS OIL COMPANY
and
THE PANTRY, INC.
Dated as of July 6, 1998
*Selected portions have been deleted as confidential pursuant to Rule
24b-2. Complete copies of the entire exhibit have been filed separately
with the Securities and Exchange Commission and marked "CONFIDENTIAL
TREATMENT."
<PAGE>
Table of Contents
<TABLE>
<CAPTION>
<S> <C>
Page
----
ARTICLE I - DEFINITIONS...........................................................................................1
1.1 Defined Terms..............................................................................................1
1.2 Additional Definitions.....................................................................................8
ARTICLE II PURCHASE AND SALE OF ASSETS AND ASSUMPTION OF LIABILITIES; PURCHASE PRICE..............................8
2.1 Purchase and Sale of Assets................................................................................8
2.2 Excluded Assets............................................................................................9
2.3 Assumption of Liabilities.................................................................................10
2.4 Excluded Liabilities......................................................................................10
2.5 Purchase Price............................................................................................10
2.6 Payment of Purchase Price.................................................................................10
2.7 Allocation of Purchase Price..............................................................................10
2.8 Prorations................................................................................................11
2.9 Employees.................................................................................................11
ARTICLE III THE CLOSING.........................................................................................11
3.1 Time and Place of Closing.................................................................................11
3.2 Instruments of Transfer...................................................................................12
3.3 Further Assurances........................................................................................12
3.4 Transfer Taxes............................................................................................12
ARTICLE IV TERMINATION...........................................................................................12
4.1 Termination...............................................................................................12
4.2 Effect of Termination.....................................................................................13
ARTICLE V - REPRESENTATIONS AND WARRANTIES OF THE SELLER.........................................................13
5.1 Organization and Good Standing............................................................................13
5.2 Power and Authority.......................................................................................13
5.3 No Violation..............................................................................................14
5.4 No Actions................................................................................................14
5.5 Approvals.................................................................................................14
5.6 Compliance with Laws and Orders...........................................................................14
5.7 Financial Statements......................................................................................15
5.8 Absence of Certain Changes or Events......................................................................15
5.9 Title to Transferred Assets...............................................................................15
5.10 Inventory................................................................................................16
5.11 Real Property............................................................................................16
5.12 Third Party Leases.......................................................................................17
5.13 Insurance................................................................................................17
5.14 Contracts................................................................................................17
<PAGE>
5.15 Employment Law Matters...................................................................................18
5.16 Environmental Matters....................................................................................18
5.17 Property of Others.......................................................................................20
5.18 Equipment, Etc...........................................................................................20
5.19 Condition of Tangible Assets.............................................................................20
5.20 Sufficiency of Assets....................................................................................20
5.21 Tax Matters..............................................................................................21
5.22 Finders or Brokers.......................................................................................21
5.23 Disclosure of Material Facts.............................................................................21
5.24 Certain Interests; Affiliate Transactions................................................................21
5.25 Employee Benefit Plans...................................................................................21
5.26 The New Warehouse Equipment..............................................................................22
5.27 Seller's Unamortized Liabilities.........................................................................22
5.28 Highway Service Ventures, Inc. and Hardees Food Mart.....................................................22
ARTICLE VI - REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.....................................................22
6.1 Organization and Good Standing............................................................................22
6.2 Power and Authority.......................................................................................23
6.3 No Violation..............................................................................................23
6.4 No Actions................................................................................................23
6.5 Approvals.................................................................................................23
6.6 Disclosure of Material Facts..............................................................................23
6.7 Finders or Brokers........................................................................................23
6.8 Financial Statements......................................................................................24
6.9 Compliance With Laws and Orders...........................................................................24
6.10 Tax Matters..............................................................................................24
ARTICLE VII - CERTAIN OBLIGATIONS OF THE SELLER PRIOR TO THE CLOSING OR EARLIER TERMINATION OF THIS AGREEMENT....24
7.1 Conduct of Business.......................................................................................24
7.2 Restricted Activities and Transactions....................................................................25
7.3 Cooperation...............................................................................................25
7.4 Employee Benefit Plans....................................................................................25
7.5 No Negotiations...........................................................................................26
7.6 Access to the Business....................................................................................26
7.7 Disclosure Regarding the Seller...........................................................................27
7.8 Confidentiality...........................................................................................27
ARTICLE VIII - CERTAIN OBLIGATIONS OF THE PURCHASER PRIOR TO THE CLOSING OR EARLIER TERMINATION OF THIS
AGREEMENT.....................................................................................................27
8.1 Cooperation...............................................................................................27
8.2 Disclosure Regarding the Purchaser........................................................................27
8.3 Confidentiality...........................................................................................27
8.4 Restricted Activities.....................................................................................27
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<PAGE>
ARTICLE IX CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PURCHASER.............................................28
9.1 Representations and Warranties True.......................................................................28
9.2 Performance...............................................................................................28
9.3 No Adverse Changes........................................................................................28
9.4 Approvals.................................................................................................28
9.5 Estoppel Certificates.....................................................................................29
9.6 Subordination, Non-Disturbance and Attornment Agreements..................................................29
9.7 Deliveries................................................................................................29
9.8 Proceedings...............................................................................................30
9.9 Absence of Litigation.....................................................................................30
9.10 Insurance................................................................................................30
9.11 Environmental Matters....................................................................................30
9.12 Additional Diligence.....................................................................................31
ARTICLE X - CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE SELLER................................................31
10.1 Representations and Warranties True......................................................................31
10.2 Performance..............................................................................................31
10.3 Approvals...............................................................................................31
10.4 Deliveries...............................................................................................31
10.5 Proceedings..............................................................................................32
10.6 Absence of Litigation...................................................................................32
ARTICLE XI - CERTAIN POST-CLOSING COVENANTS......................................................................32
11.1 Confidentiality..........................................................................................32
11.2 Noncompetition...........................................................................................33
11.3 Responsibility for Environmental Matters.................................................................33
11.4 Specific Performance; Injunctive Relief..................................................................34
11.5 Invoiceable Texaco Global Imaging........................................................................34
11.6 Third Party Imaging......................................................................................34
11.7 Requirement for Providing Employee Information...........................................................35
11.8 Acceptance of 401(k) Plan Accounts.......................................................................35
11.9 Payroll Deductions for 401(k) Plan Loan Payments.........................................................35
11.10 Wake Forest Store.......................................................................................35
11.11 Seller's Claims for Trust Fund Reimbursement............................................................35
ARTICLE XII - SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION........................................36
12.1 Survival of Representations and Warranties...............................................................36
12.2 Indemnification..........................................................................................36
12.3 Notice and Payment of Claims.............................................................................36
12.4 Limitation on Indemnity..................................................................................38
12.5 Mitigation of Damages....................................................................................38
12.6 Losses...................................................................................................38
-iii-
<PAGE>
ARTICLE XIII - MISCELLANEOUS.....................................................................................38
13.1 Fees and Expenses........................................................................................38
13.2 Notices..................................................................................................38
13.3 Amendment; Waiver........................................................................................39
13.4 Assignment...............................................................................................40
13.5 Governing Law............................................................................................40
13.6 Severability.............................................................................................40
13.7 No Third Party Beneficiaries.............................................................................40
13.8 Public Announcements.....................................................................................40
13.9 Singular and Plural Forms................................................................................40
13.10 References..............................................................................................40
13.11 Headings................................................................................................41
13.12 Entire Agreement........................................................................................41
13.13 Counterparts............................................................................................41
</TABLE>
-iv-
<PAGE>
EXHIBITS
Exhibit A Form of Seller Leases
Exhibit B Form of Affiliate Subleases
Exhibit C Form of Third Party Subleases
Exhibit D Form of Consignment Lease
Exhibit E Form of General Booth Lease Assignment
Exhibit F Form of "Zip Mart" License Agreement
-v-
<PAGE>
SCHEDULES
1.1 The Business Locations
2.1(f) Contracts
2.3 Seller's Unamortized Liabilities
2.5 New Warehoused Equipment
2.7 Price Allocation
3.2 Terms for Seller Leases and Affiliate and Third Party Subleases and
Consignment Leases
5.4 Actions
5.5 Approvals
5.6 Compliance with Laws Generally
5.7 Seller's Financial Statements
5.8 Certain Changes
5.9 Exceptions to Title
5.11(a) Seller Real Property and Consignment Leased Stores
5.11(b) Affiliate Real Property
5.11(c) Third Party Real Property
5.11(e) Options or Rights of First Refusal Relating to Real Property
5.11(g) Condemnation Proceedings
5.11(i) Flood Hazard Area
5.11(j) Tax Lots
5.12(a) Third Party Leases
5.12(c) Third Party Lease Assignments and Subleases Requiring Approval
5.14 Contract Assignments Requiring Approval
5.15 Employment Matters
5.16(b) Compliance with Environmental Laws
5.16(g) Commercial Underground Storage Tanks
5.18 Seller Equipment and Third Party Equipment
5.21 Tax Audits
5.24 Affiliate Transactions
5.25(a) Employee Benefit Plans
5.25(b) Other Plans
6.8 Purchaser's Financial Statements
6.9 Purchaser's Compliance With Laws
6.10 Purchaser's Tax Matters
9.4 Approval Exceptions
9.5 Purchase Price Adjustments
9.6 Mortgagees and Their Interests
11.2 Exceptions to Non-Compete
11.3(a) Identified Pre-Closing Releases
-vi-
<PAGE>
ASSET PURCHASE AGREEMENT
Asset Purchase Agreement (the "Agreement"), dated as of the ____ day of
July, 1998, by and between STALLINGS OIL COMPANY, a North Carolina corporation
("Seller"), and THE PANTRY, INC., a Delaware corporation (the "Purchaser").
WITNESSETH:
WHEREAS, the Seller operates forty-one (41) convenience stores in North
Carolina and Virginia; and
WHEREAS, the Seller desires to transfer, sell, convey, assign and
deliver to the Purchaser, and the Purchaser desires to acquire and accept from
the Seller, certain assets of Seller relating to Seller's convenience store
business, upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, for and in consideration of the premises, mutual
covenants and agreements contained herein, and intending to be legally bound
hereby, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 Defined Terms. The following terms, as used in this Agreement,
shall have the following meanings:
"Action" shall mean any action, claim, proceeding, suit or
investigation, or any appeal therefrom.
"Accrued Vacation Pay" shall mean all accrued vacation pay as
of the Closing Date of each of Seller's employees as provided in Seller's
related Employee Benefit Plan.
"Affiliate" shall mean, with respect to any Person, any Person
which, directly or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such Person. Without limiting
the foregoing definition, with respect to Seller the term "Affiliate" shall
include the following persons: A. Donald Stallings and June S. Shearin.
"Affiliate Leases" shall mean Seller's leases with Affiliates
for the Affiliate Real Property.
"Affiliate Real Property" shall mean the real property owned
by Affiliates and currently leased to Seller and more particularly described on
Schedule 5.11(b) hereto.
"Affiliate Subleases" shall mean subleases for each parcel of
Affiliate Real Property.
"Agreement" shall mean this Asset Purchase Agreement and shall
include all of the Schedules and Exhibits attached hereto.
<PAGE>
"Approval" shall mean any approval, authorization, clearance,
expiration of waiting period, consent, license, franchise, order or permit of or
by, or filing with, any Governmental Authority or other Person.
"Assumed Liabilities" shall have the meaning ascribed to such
term in Section 2.3 hereof.
"Audit" shall mean a physical audit or count of all of the
Inventory to be conducted jointly by Seller and Purchaser at each Store
commencing at 7:00 a.m. on the Closing Date.
"Business" shall mean the business of Seller's forty-one (41)
convenience stores in North Carolina and Virginia, fourteen (14) fuel supply
Dealer Accounts, five (5) Consignment Leased Stores, and three (3) fuel
Consignment Accounts, and the Wake Forest Store, all identified on Schedule 1.1,
but shall not include the Seller's other business activities.
"Business Day" or "business day" shall mean any day that is
not a Saturday, Sunday, or legal or banking holiday in North Carolina.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. ss. 9601 et seq., as amended,
including any rules and regulations promulgated thereunder or in connection
therewith.
"Change Fund" shall mean the normal change fund for the
Business, including all funds normally maintained by Seller in each cash
register drawer used in the Business, not to exceed $** per Store.
"Closing" shall mean the consummation of the transactions
contemplated by this Agreement, effective as of 7:00 a.m. on Thursday, July 16,
1998.
"Closing Date" shall mean July 16, 1998 or as soon thereafter
as the conditions to Closing described in Articles IX and X hereof shall have
been fully satisfied or waived by the appropriate party or parties hereto, but
not later than July 31, 1998.
"Code" shall mean the Internal Revenue Code of 1986, as
amended, and shall include all of the rules and regulations promulgated
thereunder.
"Condition" shall mean, collectively, the business,
properties, assets, operations, results of operations and condition (financial
or otherwise).
"Consignment Accounts" shall mean those three (3) Consignment
Locations so identified on Schedule 1.1.
"Consignment Leased Stores" shall mean those five (5)
Consignment Locations so identified on Schedule 1.1.
"Consignment Leases" shall mean the four (4) Seller's Leases
and one (1) Affiliate Sublease at the Consignment Leased Stores.
-2-
*Selected portions have been deleted as confidential pursuant to Rule
24b-2. Complete copies of the entire exhibit have been filed separately
with the Securities and Exchange Commission and marked "CONFIDENTIAL
TREATMENT."
<PAGE>
"Consignment Locations" shall mean those eight (8) locations
so identified on Schedule 1.1.
"Contracts" shall mean the contracts and agreements of the
Seller relating to the Business and which will be assigned to and assumed by the
Purchaser, as identified on Schedule 2.1(f).
"Cost of Inventory" shall mean Seller's laid in cost of
Petroleum Inventory as of the day prior to Closing, **% of retail for ***% of
retail ****% of retail for all other Merchandise Inventory, all as determined by
Seller's books and records and the Audit, subject to confirmation by Purchaser.
"Damages" shall mean any fine, penalty, claim, loss,
deficiency, Liability, cost or expense (including, without limitation,
reasonable attorneys' and accountants' fees, costs and expenses) or
environmental assessment, monitoring or remediation expense, diminution in
property value, or damage of any kind or nature whatsoever.
"Dealer Accounts" shall mean the fuel supply accounts so
identified on Schedule 1.1.
"Employee Benefit Plan" shall mean any employee benefit plan,
arrangement, policy or commitment (including an employee benefit plan within the
meaning ascribed to such term in Section 3(3) of ERISA) including, without
limitation, any employment, consulting or deferred compensation agreement,
executive compensation, bonus, incentive, pension, profit-sharing, savings,
retirement, stock option, stock purchase or severance pay plan, any life,
health, disability, accident or insurance plan or any holiday, vacation or other
employee practice, policy or benefit.
"Equipment" shall mean the Petroleum Equipment and the Store
Equipment.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
"Excluded Assets" shall have the meaning ascribed to such term
in Section 2.2 hereof.
"Excluded Liabilities" shall have the meaning ascribed to such
term in Section 2.4 hereof.
"Financial Statements" shall mean the financial statements
described in Section 5.7 hereof.
"GAAP" shall mean generally accepted accounting principles in
the United States consistently applied.
"General Booth Location" shall mean the Store located on
General Booth Boulevard in Virginia Beach, Virginia, described on Schedule 1.1.
-3-
*Selected portions have been deleted as confidential pursuant to Rule
24b-2. Complete copies of the entire exhibit have been filed separately
with the Securities and Exchange Commission and marked "CONFIDENTIAL
TREATMENT."
<PAGE>
"Governmental Authority" shall mean any foreign, Federal,
state, local or other governmental, administrative or regulatory authority,
body, agency, court, tribunal or similar entity.
"Hazardous Substance" shall have the meaning ascribed to such
term in Section 5.16(a) hereof.
"Hired Employees" shall mean all employees of Seller employed
by Purchaser after Closing.
"Improvement" shall mean any finding, discovery, invention,
addition, modification, change, formulation or development of any kind, whether
or not patented or patentable (and all proprietary information relating
thereto), including, without limitation, any new or improved device, delivery
system, design, composition of matter, method of administration or manufacturing
or other process.
"Indemnified Party" shall mean any party entitled to
indemnification pursuant to Article XII hereof and shall include such party's
Affiliates, successors and assigns and the Representatives of each of them.
"Indemnifying Party" shall mean any party liable for
indemnification pursuant to Article XII hereof and shall include such party's
successors and assigns.
"Inventory" or "Inventories" shall mean collectively the
Merchandise Inventory and the Petroleum Inventory.
"Invoiceable Global Imaging Cost" shall mean those store
upgrade costs which it is anticipated will be reimbursed by Seller's Suppliers
in the approximate amount of $***.
"IRS" shall mean the Internal Revenue Service.
"Knowledge" shall mean (i) the actual knowledge, after due
inquiry and investigation, of any of Seller's officers or directors (including
A. Donald Stallings, Robert L. Beaman and Boyd M. Tolman) and (ii) the existence
of facts, events, occurrences or matters with respect to which any of the
persons referred to above should reasonably be expected to have knowledge in the
ordinary conduct of his duties.
"Law" shall mean any Federal, state, local or foreign law,
statute, rule, regulation, ordinance, standard, requirement, administrative
ruling, order or process (including, without limitation, any zoning or land use
law or ordinance, building code or environmental law, any securities, blue sky,
civil rights or occupational health and safety law or regulation, and any law or
regulation relating to the distribution or sale of food products, beer, wine,
cigarettes, gasoline or other motor fuel) and any court or arbitrator's order or
process.
"Lease" and "Leases" shall mean the Affiliate Subleases, the
Seller Leases and the Third Party Subleases.
-4-
*Selected portions have been deleted as confidential pursuant to Rule
24b-2. Complete copies of the entire exhibit have been filed separately
with the Securities and Exchange Commission and marked "CONFIDENTIAL
TREATMENT."
<PAGE>
"Liability" shall mean any debt, liability, commitment or
obligation of any kind, character or nature whatsoever, whether known or
unknown, secured or unsecured, accrued, fixed, absolute, contingent or
otherwise, and whether due or to become due.
"Lien" shall mean any lien, statutory lien (including, without
limitation, any lien, restriction or right arising under the North Carolina or
Virginia Uniform Commercial Code - Bulk Transfers), tax lien, pledge, mortgage,
security interest, charge, encumbrance, easement, right of way, assessment
(pending or confirmed), covenant, claim, restriction, right, option, conditional
sale or other title retention agreement of any kind or nature.
"Merchandise Inventory" shall mean all foodstuffs, beverages,
tobacco products, magazines, books, household products, automotive products or
accessories, and any other products of the Business of whatever nature held for
retail sale out of the Stores, other than Petroleum Inventory.
"OSHA" shall mean the Occupational Safety and Health Act of
1970, as amended.
"NCDENR" shall have the meaning ascribed to such term in
Section 2.2(g) hereof.
"New Warehoused Equipment" shall mean the equipment listed on
Schedule 2.5.
"Permitted Liens" shall mean (i) liens for Taxes that are not
yet delinquent or are being contested in good faith by appropriate proceedings
and for which there are adequate reserves on the books, (ii) workers or
unemployment compensation liens arising in the ordinary course of business;
(iii) mechanic's, materialman's, supplier's, vendor's or similar liens arising
in the ordinary course of business securing amounts that are not delinquent,
(iv) laws, ordinances and governmental regulations regulating the use or
occupancy of the Real Property or the character, dimensions or locations of the
improvements thereon; and (v) lease conditions, easements, rights of way,
restrictions, and other exceptions discovered by an inspection or survey or
title examination or other imperfections of title that do not make title
unmarketable; provided, however, that none of the same are or would be violated
by the continued use of any portion of the Real Property for the purposes for
which it has been customarily used by or in the Business and that no Permitted
Lien shall be so substantial as to impair the value of or materially interfere
with the continued or contemplated use of any material portion of the Real
Property or Transferred Assets for the purposes for which they have been used by
or in the Business.
"Person" shall mean any individual, partnership, corporation,
limited liability company, association, business trust, joint venture,
governmental entity, business entity or other entity of any kind or nature.
"Petroleum Equipment" shall mean all petroleum marketing
equipment, including, but not limited to, pumps, gasoline dispensers, gas
consoles, gasoline canopies, canopy structures, lights, registered underground
storage tanks and lines, environmental monitoring or upgrade equipment, and any
related equipment or apparatus located at the Stores and the Consignment
Locations.
-5-
<PAGE>
"Petroleum Inventory" shall mean all gasoline, diesel and
kerosene products of the Business measured in gallons, except petroleum products
previously sold to the Dealer Accounts.
"Petroleum Products" shall have the meaning ascribed to such
term in Section 5.16(g) hereof.
"Purchase Price" shall have the meaning ascribed to such term
in Section 2.5 hereof.
"Purchaser" shall mean The Pantry, Inc., a Delaware
corporation.
"Purchaser Group" shall have the meaning ascribed to such term
in Section 7.6 hereof.
"Real Property" shall mean, collectively, the Seller Real
Property, the Affiliate Real Property and the Third Party Real Property,
including the five (5) Consignment Leased Stores designated on Schedule 1.1.
"Representative" shall mean any employee, officer, director,
stockholder, partner, accountant, attorney, investment banker, broker, finder,
investor, subcontractor, consultant or other authorized agent or representative
of a Person.
"Seller" shall mean Stallings Oil Company, a North Carolina
corporation.
"Seller Leases" shall mean leases for each parcel of Seller
Real Property.
"Seller Real Property" shall mean the real property more
particularly described on Schedule 5.11(a) hereto.
"Seller's Suppliers" shall mean Star Enterprise, Amoco Oil
Company, and BP Oil Company.
"Seller's Unamortized Liabilities" shall mean those
liabilities of Seller set forth on Schedule 2.3.
"Store Equipment" shall mean all convenience store fixtures,
machinery, furniture, equipment, including, but not limited to, walk-in coolers,
store fixtures, counters, shelving, refrigeration equipment, cash registers,
safes, fountain dispensing equipment, coffee equipment, ice machines, tables and
any other fixtures or equipment necessary for running a convenience store that
may be at each of the Stores, regardless of whether such items are permanently
attached to the Real Property, pole lights, pole signs or other personal
property attached, appurtenant to or located in or around the buildings or
improvements located at the Real Property, but excluding Petroleum Equipment.
"Store Supplies" shall mean cups, napkins, paper towels,
toilet paper, janitorial supplies and similar non-Inventory items which are used
in the operation or maintenance of the Stores.
-6-
<PAGE>
"Stores" shall mean the forty-one (41) convenience stores
operated by the Seller and identified on Schedule 1.1, and the Wake Forest
Store, each being a "Store."
"Tanks" shall have the meaning ascribed to such term in
Section 5.16(g) hereof.
"Tax" shall mean any foreign, Federal, state or local income,
gross receipts, license, severance, occupation, premium, environmental
(including taxes under Code Section 59A), customs, duties, profits, disability,
registration, alternative or add-on minimum, estimated, withholding, payroll,
employment, unemployment insurance, social security (or similar), excise, sales,
use, value-added, occupancy, franchise, real property, personal property, gas,
petroleum marketing, business and occupation, mercantile, windfall profits,
capital stock, stamp, transfer, workmen's compensation or other tax, fee or
imposition of any kind whatsoever, including any interest, penalties, addition,
assessments or deferred liability with respect thereto, whether disputed or not.
"Tax Return" shall mean any return, report, declaration, claim
for refund, estimate, election or information statement or return relating to
any Tax, including any schedules or attachments thereto and any amendments
thereof.
"Third Party Leases" shall mean Seller's leases and/or ground
leases, as the case may be, for each parcel of Third Party Real Property, as
more particularly described on Schedule 5.12(a).
"Third Party Real Property" shall mean the real property more
particularly described on Schedule 5.11(c) hereto.
"Third Party Subleases" shall mean the subleases to be entered
into between Purchaser and Seller with respect to the Third Party Real Property.
"Transaction Documents" shall mean, collectively, this
Agreement, the Seller Leases, the Affiliate Subleases, the Third Party
Subleases, the General Booth Location lease assignment, the Consignment Leases,
and all agreements, instruments, certificates and other documents executed
and/or delivered in connection herewith or therewith.
"Transfer" shall mean any sale, transfer, conveyance,
assignment, delivery or other disposition.
"Transferred Assets" shall have the meaning ascribed to such
term in Section 2.1 hereof.
"Trust Fund" shall have the meaning ascribed to such term in
Section 2.1(h) hereof.
"VDEQ" shall have the meaning ascribed to such term in Section
2.2(g) hereof.
"Wake Forest Store" shall mean the Store to be constructed by
Seller in Wake Forest, North Carolina.
-7-
<PAGE>
1.2 Additional Definitions. In addition to the foregoing
defined terms, other capitalized terms appearing in this Agreement shall have
the respective meanings ascribed to such terms where they first appear in the
text of this Agreement.
ARTICLE II
PURCHASE AND SALE OF ASSETS AND
ASSUMPTION OF LIABILITIES; PURCHASE PRICE
2.1 Purchase and Sale of Assets. Subject to the terms and conditions of
this Agreement, at the Closing the Seller shall Transfer to the Purchaser, and
the Purchaser shall acquire and accept from the Seller, all of the Seller's
right, title and interest in, to and under all of the furniture, fixtures,
Equipment, Inventory, Store Supplies and other personal property assets, used or
located at the Stores and relating to the Business, less and except the Excluded
Assets (after giving effect to the exclusion of the Excluded Assets, such
assets, together with Purchaser's right, title and interest in the Leases, being
hereinafter collectively referred to as the "Transferred Assets"), free and
clear of any and all Liens, such Transferred Assets to include, without
limitation:
(a) all of Seller's rights and interests under its Third Party
Lease for the General Booth Location;
(b) the Store Equipment;
(c) the Petroleum Equipment;
(d) the Inventory and Store Supplies;
(e) the Change Fund;
(f) all right and interest of the Seller in, to or under the
Contracts identified on Schedule 2.1(f);
(g) all computer hardware and computer software documentation
(subject to applicable license agreements) utilized in the Stores,
including, to the extent owned or assignable by Seller, source code and
systems documentation and telephone switches related to point-of-sale
and petroleum dispensing equipment;
(h) all rights, interests and claims (other than claims for
amounts owed to or already expended by Seller) under the North Carolina
Commercial Leaking Petroleum Underground Storage Tank Cleanup Fund and
the Virginia Petroleum Storage Tank Fund (individually or collectively,
as applicable, the "Trust Fund"), or any other fund, program, or
insurance policy relating to payment or reimbursement of costs,
expenses or damages related to releases from underground storage tanks;
(i) the exclusive rights and license, in the form of Exhibit F
attached hereto, to use the name "Zip Mart," all variations thereof and
the good will associated therewith and with the Business;
-8-
<PAGE>
(j) all rights to reimbursement of the Invoiceable Global
Imaging Costs;
(k) all deposits under the leases to operators of the five
Consignment Leased Stores; and
(l) the New Warehoused Equipment listed on Schedule 2.5.
2.2 Excluded Assets. Notwithstanding anything in Section 2.1 to the
contrary, the Seller shall retain all of its right, title and interest in, to
and under all, and shall not Transfer to the Purchaser any, of the following
assets, rights or properties (the "Excluded Assets"):
(a) all cash and cash equivalents, except the Change Fund;
(b) all accounts and notes receivable of the Business
(including miscellaneous receivables) arising from products sold or services
rendered by the Seller prior to the Closing Date;
(c) all Federal, state, local and foreign income tax deposits
(to the extent not refunded) paid by the Seller in connection with the income or
operations of the Business with respect to any period ending on or prior to the
Closing Date;
(d) any assets not relating to the Business;
(e) all minute books and stock books of the Seller;
(f) any assets relating to any Employee Benefit Plan;
(g) all underground storage tanks that are not properly
registered with the North Carolina Department of Environment and Natural
Resources ("NCDENR") or the Virginia Department of Environmental Quality
("VDEQ") and all above-ground storage tanks, including those more particularly
described by type and location on Schedule 5.16(g) hereto, unless Purchaser
specifically elects in writing to acquire any of such tanks;
(h) all assets of the Seller located at its corporate offices
including, without limitation, its corporate headquarters at 300 South Wesleyan
Boulevard in Rocky Mount, North Carolina, its terminal and office facility on
Ridge Street in Rocky Mount, North Carolina, and any other office, terminal or
storage facility;
(i) all Hazardous Substances, hazardous wastes, PCBs and PCB
containing materials, asbestos containing materials, and waste oil;
(j) the Real Property;
(k) Seller's fuel supply contracts with Seller's Suppliers;
and
(l) the condemnation awards and damages to be paid with
respect to the proceedings identified on Schedule 5.11(g).
-9-
<PAGE>
2.3 Assumption of Liabilities. Subject to the terms and conditions of
this Agreement, at the Closing the Purchaser shall assume and agree to pay,
perform and discharge when due only the following Liabilities (collectively, the
"Assumed Liabilities"):
(a) all Liabilities incurred after the Closing under the Third
Party Lease for the General Booth Location.
(b) all Liabilities incurred after the Closing under the
Contracts; and
(c) Subject to Section 5.27, Seller's Unamortized Liabilities
to Seller's Suppliers in the amounts set forth in Schedule 2.3.
2.4 Excluded Liabilities. Except for the Assumed Liabilities specified
in Section 2.3 hereof, the Purchaser shall neither assume nor have any liability
for any, and the Seller shall remain fully liable for, and shall pay, perform
and discharge when due, all Liabilities of the Seller or the Business arising
out of any act or omission occurring or state of facts existing prior to and, to
the extent not related to the Business, at or after the Closing (collectively,
the "Excluded Liabilities"). This Section 2.4 does not affect Purchaser's
obligations under this Agreement or the Transaction Documents, when executed.
2.5 Purchase Price. The aggregate purchase price (the "Purchase Price")
to be paid by the Purchaser to the Seller for the Transferred Assets, and the
non-competition agreement described in Section 11.2 hereof shall be (i)
TWENTY-THREE MILLION NINE HUNDRED THIRTY-NINE THOUSAND TWO HUNDRED EIGHTY-SEVEN
DOLLARS ($23,939,287), plus (ii) Cost of Inventory, plus (iii) the cost of Store
Equipment and Petroleum Equipment at the Wake Forest Store, upon completion
thereof, plus (iv) $*** on account of invoiceable Global Imaging Costs ("Image
Upgrade Payment"), plus (v) the cost of New Warehoused Equipment listed on
Schedule 2.5, in the amount of $210,668.60, plus (vi) the amount by which the
Change Fund exceeds, in the aggregate, $** per Store.
2.6 Payment of Purchase Price. At Closing, the Purchaser shall pay to
Seller TWENTY-THREE MILLION NINE HUNDRED THIRTY-NINE THOUSAND TWO HUNDRED
EIGHTY-SEVEN DOLLARS ($23,939,287) and the Image Upgrade Payment by wire
transfer of immediately available funds to an account designated by Seller. Upon
completion of the Audit of Inventories referred to in Section 5.10, the parties
shall determine the value of such inventories, and Purchaser shall pay to
Seller, the Cost of Inventory, by wire transfer of immediately available funds
to an account designated by Seller. Upon completion and delivery of occupancy to
Purchaser of the Wake Forest Store, Purchaser shall pay to Seller, by wire
transfer of immediately available funds to an account designated by Seller, an
amount equal to the cost of the Store Equipment and Petroleum Equipment at the
Wake Forest Store. Upon delivery of the New Warehoused Equipment, Purchaser
shall pay Seller the cost thereof by wire transfer.
2.7 Allocation of Purchase Price. The Purchase Price shall be allocated
as set forth on Schedule 2.7. The allocation of the Purchase Price is intended
to comply with the requirements of Section 1060 of the Code. Purchaser and
Seller shall file Form 8594, Asset Acquisition Statement Under Section 1060 of
the Code, with their respective income tax returns for the taxable year that
includes the Closing Date, in a manner consistent with the allocation of the
Purchase Price set forth herein. Purchaser and Seller agree to satisfy all of
the reporting requirements of Section 1060 of the Code. If either Purchaser or
Seller, in a subsequent
-10-
*Selected portions have been deleted as confidential pursuant to Rule
24b-2. Complete copies of the entire exhibit have been filed separately
with the Securities and Exchange Commission and marked "CONFIDENTIAL
TREATMENT."
<PAGE>
taxable year, make any allocation of an increase or decrease in the Purchase
Price for any asset, Purchaser or Seller, as applicable, agree to file a
supplemental Form 8594 as required.
2.8 Prorations. All (a) real estate, property and ad valorem taxes, (b)
payments due or arising under the Contracts and (c) other customarily proratable
items relating to the Transferred Assets payable on or after the Closing Date
and relating to a period of time both prior to and on or after the Closing Date
shall be prorated as of the Closing Date between Purchaser and Seller. If the
actual amount of any such item is not known as of the Closing Date, the
aforesaid proration shall be based on the previous year's (or such shorter
period's) assessment of such item and the parties agree to adjust said proration
and pay any underpayment or reimburse for any overpayment within thirty (30)
days after the actual amount becomes known.
2.9 Employees. If the closing occurs, the Purchaser shall be free to
hire such persons, whether or not employees of the Seller or the Business, on
such terms and conditions of employment as the Purchaser shall determine in the
exercise of its sole discretion, and nothing in this Agreement shall establish
any enforceable rights, legal or equitable, in any Person other than the parties
hereto, including, without limitation, any employee of the Seller or the
Business or any beneficiary of such employee. Any claim, including any claim for
benefits, asserted by or on behalf of any Person with respect to such Person's
employment by the Purchaser shall be governed solely by applicable employment
policies and employee benefit plans, if any, which the Purchaser may adopt after
the Closing, as construed in accordance with applicable Federal and state law.
The Seller has delivered to the Purchaser a true and complete list (including
names, titles, job descriptions, compensation, date of hire, and full vs.
part-time status) of all employees of the Business on the effective date
specified in such notice. At least seven (7) days prior to the Closing Date, the
Purchaser shall notify Seller in writing which of such employees (if any) the
Purchaser does not intend to hire after the Closing. The Seller shall be fully
liable for the employment (or termination or severance thereof) of any persons
listed in such Purchaser's notice. In addition, the Seller shall be liable for,
and shall pay, all wages, salaries, payroll taxes and employee benefits,
including without limitation, vacation, due, owing or accrued for all employees
of the Business through the Closing. In particular, Seller shall provide and
continue to provide all continuation coverage under its group health plans
required by ERISA, the Code and applicable Law for (i) Seller's employees who
terminate employment with Seller before the Closing Date and (ii) Seller's
employees who terminate employment with Seller as of the Closing Date and whom
Purchaser does not immediately employ. All claims incurred or liabilities
asserted under Seller's Employee Benefit Plans shall be the responsibility of
Seller and Purchaser shall not have any liability with respect to such claims or
liabilities.
ARTICLE III
THE CLOSING
3.1 Time and Place of Closing. The Closing shall take place at 10:00
a.m. on the Closing Date at the offices of Smith, Anderson, Blount, Dorsett,
Mitchell & Jernigan, L.L.P., 2500 First Union Capitol Center , Raleigh, North
Carolina, or at such other time or place as may be mutually agreed upon by the
parties hereto.
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3.2 Instruments of Transfer. At the Closing, the Seller shall deliver
to the Purchaser such bills of sale, assignments, limited powers of attorney and
other good and sufficient instruments of Transfer, in form and substance
reasonably satisfactory to the Purchaser and its counsel, as shall be effective
to vest in the Purchaser all of the Seller's right, title and interest in, to
and under the Transferred Assets. In addition, (a) the Seller and the Purchaser
shall execute and deliver the Seller Leases with respect to Seller Real
Property; (b) the Seller and the Purchaser shall execute and deliver an
Affiliate Sublease with respect to each parcel of the Affiliate Real Property;
(c) the Seller and the Purchaser shall execute and deliver an assignment and
assumption agreement of the rights granted and obligations imposed in the
General Booth Location lease; (d) the Seller and Purchaser shall execute and
deliver a Third Party Sublease with respect to each parcel of Third Party Real
Property other than the General Booth Location; and (e) the Seller and Purchaser
shall execute and deliver Consignment Leases. The Seller Leases, Affiliate
Subleases, Third Party Subleases and the Consignment Leases shall be
substantially in the forms of Exhibits A, B, C, and D respectively hereto upon
the terms (including annual rent) identified in Schedule 3.2 hereto. The General
Booth Location lease assignment shall be substantially in the form of Exhibit E.
3.3 Further Assurances. In addition to the actions, documents and
instruments specifically required to be taken or delivered by this Agreement, at
the Closing or from time to time thereafter, and without further consideration,
the parties hereto shall take such other actions, and execute and deliver such
other documents and instruments, as the other party or parties hereto or their
respective counsel may reasonably request in order to effectuate and perfect the
transactions contemplated by this Agreement.
3.4 Transfer Taxes. Except for all sales and transfer taxes and
transfer fees, if any, which shall be borne and paid solely by the Seller, each
party hereto shall pay any and all taxes incurred by such party in connection
with the transactions contemplated by this Agreement.
ARTICLE IV
TERMINATION
4.1 Termination. This Agreement may be terminated at any time prior to
the Closing:
(a) by the mutual written consent of the Seller and the
Purchaser;
(b) by the Seller or the Purchaser, upon written notice, if
there shall have been a material breach by the other party or parties of any of
the terms or provisions of this Agreement or any of the Transaction Documents,
and such breach shall not have been cured within five (5) business days after
such breaching party or parties shall have received notice of the non-breaching
party's or parties' intent to terminate this Agreement pursuant to this
subsection (b);
(c) by the Seller or the Purchaser if any court of competent
jurisdiction or other Governmental Authority shall have issued an order, decree
or ruling or taken any other action restraining, enjoining or otherwise
prohibiting the transaction contemplated by this Agreement, and such order,
decree, ruling or other action shall have become final and non-appealable;
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(d) by the Seller or Purchaser if Seller's Suppliers, other
than B.P. Oil Company, refuse to consent to the termination of Seller's
agreements with them and the assumption by Purchaser of Seller's Unamortized
Liabilities, or, in the case of Amoco Oil Company or B. P. Oil Company, refuses
to waive its right of first refusal; ; or
(e) by the Seller or Purchaser if Seller is unable to deliver
Approvals or estoppel certificates, as provided in Section 9.5 hereof, for five
(5) or more Stores and Consignment Leased Stores, combined.
4.2 Effect of Termination. In the event of the termination of this
Agreement pursuant to Section 4.1(a), (c), or (d) hereof, such termination shall
be the sole remedy, this Agreement shall forthwith become void (except for
Sections 7.8 and 8.3 (Confidentiality), 7.6 (Purchaser's investigation), and
13.1 (Fees and Expenses)) and there shall be no liability on the part of any of
the parties hereto, any of their respective Affiliates or any of the
Representatives of any of them; provided, however, that if such termination
shall result from the breach by a party hereto of its obligations under this
Agreement, such party shall be fully liable for any and all Damages sustained or
incurred by the other party or parties as a result of such breach and such other
party or parties shall be entitled to pursue any remedies available at law or in
equity.
In the event of the termination of this Agreement by Seller
pursuant to Section 4.1(e), Seller shall pay to Purchaser $200,000 as a break-up
fee. In the event of the termination of this Agreement by Purchaser pursuant to
Section 4.1(e), Purchaser shall pay to Seller $100,000 as a break-up fee.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller hereby represents and warrants to the Purchaser as follows:
5.1 Organization and Good Standing. The Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
North Carolina, is qualified to do business in each state in which any Store is
located, and has all requisite power and authority, corporate and otherwise, to
own, operate and lease its properties and assets and to conduct the Business.
5.2 Power and Authority. The Seller has all requisite power and
authority to enter into and deliver this Agreement and the other Transaction
Documents, perform its obligations hereunder and consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the other
Transaction Documents, the performance by it of its obligations hereunder and
thereunder and the consummation of the transactions contemplated hereby have
been duly and validly authorized by all corporate and other actions on its part
required by applicable Law, its Articles of Incorporation, its by-laws or
otherwise. This Agreement and the other Transaction Documents constitute the
legal, valid and binding obligation of the Seller, enforceable against Seller in
accordance with their terms, except as the same may be limited by (a)
bankruptcy, insolvency, reorganization, moratorium or similar laws now or
hereafter in effect relating to creditors' rights generally and (b) general
equitable principles.
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5.3 No Violation. Upon obtaining the Approvals contemplated by this
Agreement, neither the execution and delivery by the Seller of this Agreement
and the other Transaction Documents, the performance by it of its obligations
hereunder and thereunder, nor the consummation of the transactions contemplated
hereby and thereby, will (a) contravene any provision of Seller's articles of
incorporation; (b) violate any material agreement or instrument to which the
Seller is a party or by which it or any of its assets or properties may be
bound; or (c) violate any material Law or any judgment, decree or order of any
court or other Governmental Authority or any arbitration award to which it is
subject or by which any of its assets or properties may be bound.
5.4 No Actions. To the Knowledge of Seller, there is no Action pending
or threatened, against it, any Affiliate or any of their respective assets,
properties or rights (including, without limitation, any relating to any of the
Transferred Assets or the Real Property) before any court or other Governmental
Authority which (a) questions or challenges the validity of this Agreement or
the other Transaction Documents or any action taken or proposed to be taken by
the Seller or any Affiliate pursuant hereto or in connection with the
transactions contemplated hereby or (b) could, if adversely determined, have a
material adverse effect on any of the Transferred Assets, the Real Property, the
Condition of the Business or the transactions contemplated hereby and thereby.
To the Knowledge of Seller, Schedule 5.4 hereto sets forth a true and complete
list and description of all Actions pending or threatened, against any Affiliate
or against the Seller with respect to the Business by any court or other
Governmental Authority.
5.5 Approvals. Except as set forth in this Agreement and Schedule 5.5,
neither any declaration, filing or registration with, notice to, nor Approval
of, any Governmental Authority or other Person is required to be made, obtained
or given by or with respect to any Affiliate or the Seller or the Business in
connection with the execution, delivery or performance of this Agreement or the
consummation of the transactions contemplated hereby. The Seller has all
Approvals of any Governmental Authority required for the lawful operation of the
Business and the use and ownership or leasing of its properties and assets as it
is currently operated, except where the loss, expiration or failure to obtain
any such Approval would not have a material adverse effect on the Condition of
Seller or the Business. All such Approvals are valid, in full force and effect
and in good standing, except to the extent that any lack of such force and
effect does not, in the aggregate, have a material adverse effect on the
Condition of Seller or the Business. To the Knowledge of Seller, there is no
proceeding pending or threatened that disputes the validity of any such Approval
or that may result in the revocation, cancellation or suspension, or any adverse
modification of, any such Approval. The Seller will, upon request, make
available to the Purchaser true and complete copies of all such Approvals.
5.6 Compliance with Laws and Orders. To the Seller's Knowledge and
except as described in detail on Schedule 5.6, 5.16(b) and 11.3(a), (a) the
Seller has complied in all material respects with all Laws applicable to it and
to the operation of the Business, (b) the Seller has not been charged with or,
to the Knowledge of the Seller, threatened with any charge concerning or under
any investigation with respect to, any violation of any provision of any Law
applicable to or affecting Seller, the Business or the Real Property, and (c)
the Seller is not in violation of or in default under, and no event has occurred
which, with the lapse of time or the giving of notice or both, could result in
the violation of or default under, the terms of any judgment, decree, order,
injunction or writ of any court or other Governmental Authority applicable to
Seller, any of its assets, properties or Stores, or the Business.
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5.7 Financial Statements. Seller has delivered to Purchaser audited
financial statements for the twelve (12) months ended October 31, 1995, 1996 and
1997 and unaudited interim financial statements for the five (5) months ended
March 31, 1998, copies of which are attached as Schedule 5.7. Said financial
statements are true and correct in all material respects and fairly present the
financial condition of Seller for the periods indicated and the results of the
operations of Seller for said periods, in conformity with generally accepted
accounting principles applied on a basis consistent with prior periods.
5.8 Absence of Certain Changes or Events. Except as described in detail
on Schedule 5.8 hereto, since October 31, 1997 the Seller has conducted the
Business in the ordinary course and consistent with past practice and:
(a) to the Seller's Knowledge, there has not occurred (i) any
material adverse change in the Condition of the Business or any of the Stores or
(ii) any event, circumstance or combination thereof, whether arising prior to or
after October 31, 1997, which might reasonably be expected to result in any
material adverse change in the Condition of the Business or any of the Stores
before, on or after the Closing Date; and
(b) the Seller has not (i) suffered any damage, destruction or
loss, whether covered by insurance or not, materially and adversely affecting
the Condition of the Business or any Store, (ii) entered into any material
commitment or transaction (including, without limitation, any borrowing or
capital expenditure) affecting or relating to the Business not in the ordinary
course of business in accordance with past practice, (iii) Transferred any of
the assets of the Business except in the ordinary course of business in
accordance with past practice, (iv) granted or agreed to grant any increase in
the compensation of any employee of the Business (including any such increase
pursuant to any bonus, pension, profit-sharing or other plan or commitment) or
any increase in the compensation payable or to become payable to any employee of
the Business, except for those granted in the ordinary course of business in
accordance with past practice, or (v) entered into or agreed (whether in writing
or otherwise) to enter into any agreement or other arrangement to take any
action referred to in this Section 5.8, including, without limitation, any
agreement or arrangement granting any preferential right to purchase any of the
assets of the Business (including, without limitation, the Transferred Assets)
or requiring the consent of any party to the Transfer of any such assets.
5.9 Title to Transferred Assets.
(a) Except as set forth on Schedule 5.9, (i) the Seller has
good legal title to all of the Transferred Assets and the Seller Real Property,
free and clear of any pledge, mortgage or security interest of any kind
whatsoever; (ii) each Affiliate identified on Schedule 5.11(b) has good legal
title to the Affiliate Real Property identified as owned by such Affiliate, free
and clear of any pledge, mortgage or security interest of any kind whatsoever;
and (iii) with respect to the Third Party Real Property identified on Schedule
5.11(c), Seller has no Knowledge of any adverse claim against the title to such
Third Party Real Property.
(b) Except as identified on Schedule 5.18 as Third Party
Equipment, all material properties and assets (real, personal, mixed, tangible
or intangible) used in the operation of the Business are included in the
Transferred Assets.
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(c) Upon the delivery of the instruments of Transfer described
in Section 3.2 hereof to the Purchaser at the Closing, the Transferred Assets
shall have been Transferred to the Purchaser, free and clear of any Liens of any
kind whatsoever, other than Permitted Liens.
5.10 Inventory. The Inventories are in good and merchantable condition
and constitute a customary and normal supply and product mix, consistent with
Seller's past practice, of saleable Merchandise Inventory and Petroleum
Inventory currently sold at normal prices in the ordinary course of business of
the Business. The Seller agrees that the parties shall conduct an Audit of all
Inventories on the day of the Closing. The cost of the Audit shall be borne
equally by Seller and Purchaser.
5.11 Real Property.
(a) Schedule 5.11(a) hereto contains a true and complete list
and description of all of the Seller Real Property including four (4) of the
Consignment Leased Stores.
(b) Schedule 5.11(b) hereto contains a true and complete list
and description of all of the Affiliate Real Property including one (1)
Consignment Leased Store.
(c) Schedule 5.11(c) hereto contains a true and complete list
and description of all of the Third Party Real Property.
(d) The Real Property includes all land, easements, rights of
way, buildings, structures and other improvements used by the Seller in the
conduct of the related Stores and the Consignment Leased Stores and the
Business, as it is currently being conducted. To the Seller's Knowledge, all
components of all buildings, structures and other improvements included within
the Real Property are currently in good working order and repair and adequate
for the Seller to operate the Business at those locations, ordinary wear and
tear excepted.
(e) Except as set forth on Schedule 5.11(e), neither the
Seller, any Affiliate nor, to the Seller's Knowledge, any owner of Third Party
Real Property owns, holds or is obligated under or a party to any option, right
of first refusal or other contractual right to acquire or sell any of the Real
Property or any interest therein.
(f) To Seller's Knowledge, no portion of the Real Property
encroaches in any material respect upon any property belonging to any other
Person, and no portion of any other Person's property encroaches in any material
respect upon any of the Real Property.
(g) Except as set forth on Schedule 5.11(g), to the Seller's
Knowledge, with respect to the Real Property, there have not occurred (i) any
pending or threatened condemnation proceedings, (ii) any pending or threatened
Actions or (iii) any other matter materially and adversely affecting the value
thereof.
(h) To the Seller's Knowledge, all maps and surveys heretofore
delivered by the Seller to the Purchaser are true and complete copies of such
documents.
(i) Except as set forth on Schedule 5.11(i), no parcel of the
Real Property is located in a special flood hazard area designated by a
Governmental Authority.
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(j) Each of the Seller, the Affiliates and, to Seller's
Knowledge, the owners of Third Party Real Property, has paid, and will continue
to pay through Closing, all taxes, assessments, charges, fees, levies and
impositions owing by each or any of them and not yet past due with respect to
the Real Property. Except as set forth on Schedule 5.11(j), each of the parcels
of Real Property is assessed for real estate tax purposes as a wholly
independent tax lot, separate from any adjoining land or improvements not owned
by Seller, an Affiliate or owner of Third Party Real Property, as the case may
be, and constituting a part of such parcel. Except as set forth on Schedule
5.11(j), to the Seller's Knowledge, there is no actual or pending imposition of
any assessments or public betterments, and, no improvements have been
constructed or planned which would be paid for by means of assessments upon the
Real Property.
5.12 Third Party Leases.
(a) Schedule 5.12(a) hereto contains a true and complete list
and description, including annual rent, of each of the Third Party Leases.
Except as specifically identified on Schedule 5.12(a), the Seller's interest in
each of the Third Party Leases is free and clear of any pledge, mortgage or
security interest of any kind whatsoever. The Seller has delivered to the
Purchaser true and complete copies of all of the Third Party Leases and of all
related options, if any, to purchase the Third Party Real Property.
(b) Each Third Party Lease and each such option to purchase is
valid and binding and is in full force and effect, subject only to exceptions
based on bankruptcy, insolvency or similar Laws of general application, and
there are no existing material defaults by the Seller or an Affiliate under, or,
to the Knowledge of the Seller, by any other party to, any Third Party Lease or
any option to purchase the Third Party Real Property, or any condition, event or
act known to the Seller that, with notice or lapse of time or both, would
constitute a material default. Without limiting the foregoing, the Seller has
not received any notice from any Person asserting that the Seller or an
Affiliate is in default under any Third Party Lease or under any option to
purchase any of the Real Property, nor does the Seller have any Knowledge of a
default by it or an Affiliate under any Third Party Lease or under any option to
purchase any of the Real Property. The Seller or an Affiliate currently enjoys
peaceful and undisturbed possession of the Third Party Real Property under each
of the Third Party Leases.
(c) Except as described in detail on Schedule 5.12(c) hereto,
all of the Seller's or an Affiliate's rights under the Third Party Leases, as
the case may be, may be assigned or subleased to the Purchaser without the
Approval of any Person.
5.13 Insurance. The Seller currently has in effect policies of fire,
liability, worker's compensation and other forms of insurance which provide
adequate coverage for the Stores and the Business (collectively, the "Insurance
Policies"). All presently effective Insurance Policies are and will remain in
full force and effect through the Closing Date. There is no notice of or basis
for any modification, suspension, termination or cancellation of any Insurance
Policy or of any claim thereunder.
5.14 Contracts. Each of the Contracts specified on Schedule 2.1(f) is
valid and in full force and effect and has been entered into in the ordinary
course of business and, to the Knowledge of the Seller, none of them is in
default in any material respect. The Seller has delivered to the Purchaser true
and complete copies of each of the Contracts. Except as set
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forth on Schedule 5.14 hereto, each Contract that is being assigned by the
Seller to the Purchaser hereunder may be so assigned without the Approval of any
Person.
5.15 Employment Law Matters.
(a) With respect to the Business, to Seller's Knowledge (i)
the Seller is in compliance with all applicable Laws respecting employment,
employment practices, terms and conditions of employment, wages and hours and
the employment of aliens or similar immigration matters except where such
non-compliance would not have a material adverse effect on the Business or the
transactions contemplated by this Agreement or the other Transaction Documents;
and (ii) the Seller is not engaged in any unfair labor practice.
(b) To the Seller's Knowledge, there is no strike, labor
dispute, slowdown or work stoppage pending or, to the Knowledge of the Seller,
threatened, against or affecting the Business.
(c) To the Seller's Knowledge, except as set forth on Schedule
5.15 hereto, none of the current employees of the Business is represented by a
labor union, and no petition has been filed or proceedings instituted by any
employee or group of employees of the Business with any labor relations board
seeking recognition of a bargaining representative at any time. There are no
controversies or disputes (including any union grievances or arbitration
proceedings) pending or, to the Knowledge of the Seller, threatened, between the
Seller and any of the employees of the Business (or any union or other
representative of such employees), except for controversies and disputes in the
ordinary course of business which do not and will not, individually or in the
aggregate, have a material adverse effect on the Condition of the Business.
5.16 Environmental Matters.
(a) For purposes of this Section 5.16, the property of the
Seller shall mean the Real Property, whether owned or leased by the Seller or an
Affiliate. Additionally, for purposes of this Section 5.16, "Hazardous
Substance" means any of the following: (i) a "hazardous substance" as defined in
42 U.S.C. Section 9601(14), as amended from time to time, and all rules,
regulations and orders promulgated thereunder as in effect from time to time,
(ii) a "hazardous waste", as defined in 42 U.S.C. Section 6903(5), as amended
from time to time, and all rules, regulations and orders promulgated thereunder
as in effect from time to time, (iii) if not included in (i) or (ii) above,
"hazardous waste constituents" as defined in 40 C.F.R. Section 260.10,
specifically including Appendix VII and VIII of Subpart D of 40 C.F.R. Section
261, as amended from time to time, and all rules, regulations and orders
promulgated thereunder as in effect from time to time, (iv) "source," "special
nuclear" or "by-product" material, as defined in 42 U.S.C. Sections 2014, et
seq., as amended from time to time, and all rules, regulations and orders
promulgated thereunder as in effect from time to time, and (v) any other waste,
substance or material, the treatment, storage or disposal of which is regulated
under or by applicable Laws, but the definition "Hazardous Substance"
specifically excludes petroleum products, by-products and constituents.
(b) Except as set forth in Schedule 5.16(b), to the Seller's
Knowledge, the Seller, the Affiliates and the Real Property are in compliance,
and since the Seller's or an Affiliate's acquisition of an interest in the Real
Property have been in compliance, in all material respects and, to the Knowledge
of the Seller, prior to such acquisition were in compliance, with
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all applicable Laws relating to Hazardous Substances in respect of the Business.
Without limiting the foregoing, except as set forth in Schedule 5.16(b) hereto
(i) the operations of the Business do not violate, and since commencement of
operations of each Store have not violated, any Law relating to the production,
storage, processing, utilization, labeling, transportation, disposal, emission
or other disposition of Hazardous Substances, and (ii) the Seller or, to the
Knowledge of the Seller, any current or former owner, occupant or operator of
any property at any time owned, leased or operated by the Seller, insofar as the
same relates to any of the Stores, the Business, the Real Property or any
portion thereof, has not ever utilized any such property or any portion thereof
in violation of any Law relating to the production, storage, processing,
utilization, labeling, transportation, disposal, emission or other disposition
of Hazardous Substances. With respect to the Business, Schedule 5.16(b) hereto
contains a true list and description of the status of any removal, remediation,
closure or other action under applicable Laws relating to Hazardous Substances,
leaking underground storage tanks or leaking above ground storage tanks on any
of the Real Property, including, with respect to any such removal, remediation,
closure or other type of such operation, the date of commencement; the date of
completion or closure or anticipated date of completion or closure; the
estimated cost of any such operation; whether insurance coverage for such
operation exists or has been denied or excluded; and whether any insurance
deductible has been met.
(c) With respect to the Business and Real Property, the Seller
does not utilize, store, dispose of, treat, generate, process, transport,
release or own any Hazardous Substance in violation of any environmental Law.
(d) With respect to the Business and Real Property, to the
Knowledge of the Seller, the Seller has, in a timely manner, obtained all
Approvals and filed all reports required to be filed under or pursuant to any
applicable environmental law related to any Hazardous Substance.
(e) With respect to the Business and Real Property, except as
set forth on Schedule 5.16(b), the Seller has not received any notice of any
writ, injunction, decree, order or judgment outstanding or of any Action
instituted or threatened under or pursuant to, or of any violation of, any
environmental Law relating to any Hazardous Substances applicable to any of the
Real Property, including, without limitation, any notice from any Governmental
Authority or other Person advising the Seller that it is or is potentially
responsible for response costs under CERCLA or any other Law with respect to a
release or threatened release of any Hazardous Substances.
(f) Except as set forth on Schedule 5.16(b) and except notices
relating to Petroleum Products, the Seller has not received any notice of any
violation of any environmental, zoning, worker safety or land use Law relating
to the operation of the Business, including, without limitation, under CERCLA,
the Resource Conservation and Recovery Act, as amended (42 U.S.C. Section 6901,
et seq.) (together with the regulations promulgated thereunder, "RCRA"), the Oil
Pollution Act of 1990 (33 U.S.C. 2701, et seq.) (together with the regulations
promulgated thereunder, "OPA"), the Emergency Planning and Community
Right-to-Know Act, as amended (42 U.S.C. Section 11001, et seq.) (together with
the regulations promulgated thereunder, "Title III"), the Clean Water Act, as
amended (33 U.S.C. Section 3121, et seq.) (together with the regulations
promulgated thereunder, "CWA"), the Clean Air Act, as amended (42 U.S.C. Section
7401, et seq.) (together with the regulations promulgated thereunder, "TSCA"),
and any state or local similar laws and regulations and any so-called local,
state or federal "superfund" or "superlien" law.
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(g) Schedule 5.16(g) hereto contains a true and complete list
and description of every underground storage tank presently located on the Real
Property and at the three (3) Consignment Accounts (each, a "Tank") for the
storage of gasoline and other petroleum products, by-products and constituents
("Petroleum Products"). Except as set forth on Schedule 5.16(g), each Tank is
registered with NCDENR or VDEQ, and Seller has satisfied all applicable
requirements for coverage under the Trust Fund for each of the Tanks. Except as
set forth on Schedule 5.16(g), the Tanks and related equipment and apparatus
meet the requirements of 40 C.F.R. ss. 280.21 that underground storage tank
systems must meet not later than December 22, 1998.
5.17 Property of Others. To the Seller's Knowledge no shortage exists
in (a) any inventory or finished goods owned by suppliers of the Business and
stored upon its premises or otherwise or (b) any other item of personal property
owned by another for which the Business is accountable to another. Without
limiting the foregoing, all items of personal property for which the Business is
accountable under any consignment contract, or otherwise are fully accounted for
with no shortages or missing or lost items, are in workable, usable and saleable
condition and have suffered no damage or deterioration, normal wear and tear
excepted. Should shortages exist at Closing, the Seller shall be responsible for
any required compensation or replenishment.
5.18 Equipment, Etc. Schedule 5.18 hereto contains a true and complete
list of (i) all machinery, Petroleum Equipment, Store Equipment, furniture and
fixtures owned by the Seller and included in the definition of Transferred
Assets and, (ii) separately identified as Third Party Equipment, all Petroleum
Equipment and Store Equipment owned by third parties and used in the Business.
Such Third Party Equipment is available for use in the Business by Purchaser
only on Purchaser's assumption of the contract related thereto, if any.
5.19 Condition of Tangible Assets. To the Seller's Knowledge, the
facilities, machinery, Store Equipment, Petroleum Equipment, furniture,
fixtures, buildings and other tangible assets which are included in the
Transferred Assets or are a part of the Real Property are in good operating
condition and repair (subject to Section 7.1 hereof) and are adequate for the
uses to which they have been put by the Seller in the ordinary course of the
business of the Business, except for ordinary wear and tear and parts or repairs
of an immaterial nature in the aggregate. The Seller has not received any notice
of any violation of any Law in respect of the Transferred Assets that has not
been cured. To the Seller's Knowledge, all of the Equipment necessary for the
sustained uninterrupted operation of the Business at the Stores and the
Consignment Locations complies in all material respects with all applicable
Laws. Seller makes no representations or warranties with respect to the year
2000 capabilities or compliance of any computer software included among the
Transferred Assets.
5.20 Sufficiency of Assets. Except for the Excluded Assets, or as
identified on Schedule 5.18 as Third Party Equipment, the Transferred Assets
constitute all of the property, assets and contractual rights presently used by
the Seller with respect to the Business and such Transferred Assets are adequate
for the conduct of the Business as presently conducted. The Business has, and on
the Closing Date will have, a normal operating supply (consistent with past
practices) of Inventories, Equipment and Store Supplies.
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5.21 Tax Matters.
(a) Seller has filed or, in case of Tax Returns not yet due,
will timely file all Tax Returns that are required to be filed on or before the
Closing Date. All such Tax Returns are and will be true, correct and complete in
all material respects. Seller has paid or shall pay or make adequate provision
for all taxes due with respect to such Tax Returns. Except as disclosed on
Schedule 5.21, there is no pending or, to the Seller's Knowledge, threatened
action, audit, proceeding or investigation for the assessment or collection of
any Taxes.
(b) Purchaser shall not have any liability for payment or
otherwise with respect to any Taxes arising out of, attributable to or affecting
the Transferred Assets or the conduct of the Business through the Closing Date.
There does not exist and will not exist any liability for Taxes that may be
asserted by any taxing authority against the Transferred Assets or the conduct
of the Business through the Closing Date for which Purchaser will have any
liability for payment or otherwise, and no lien or other encumbrance for such
Taxes has or will attach to the Transferred Assets through the Closing Date,
except the lien of ad valorem taxes not yet due and payable.
5.22 Finders or Brokers. The Seller has not employed any investment
banker, broker, finder or intermediary in connection with the transactions
contemplated hereby who is entitled to any fee or commission in connection with
the execution or delivery of this Agreement or any of the other Transaction
Documents or the consummation of the transactions contemplated hereby or
thereby.
5.23 Disclosure of Material Facts. To the Knowledge of the Seller, no
provision of this Agreement, any of the other Transaction Documents, or any
document delivered to the Purchaser in connection with the transactions
contemplated hereby or thereby contains or will contain at Closing any untrue
statement of a material fact with respect to the Seller, the Business, the
Stores or the Transferred Assets or omits or will omit at Closing to state a
material fact with respect to the Seller, the Business, the Stores or the
Transferred Assets necessary in order to make the statements herein or therein
not misleading.
5.24 Certain Interests; Affiliate Transactions. Schedule 5.24 hereto
sets forth a true and complete list and detailed description of all written and
material unwritten agreements, commitments, obligations and understandings
binding upon or relating to the Business which provide for or reflect the sale
by Seller or the Business to, or the purchase by Seller or the Business from,
any Affiliate thereof of any products, goods, supplies, equipment or services
which will survive the Closing. Except as described in detail on Schedule 5.24
hereto, the Termination of any such agreement, commitment or understanding would
not have a material adverse effect on the Condition of the Business.
5.25 Employee Benefit Plans.
(a) Schedule 5.25(a) lists all Employee Benefit Plans,
covering employees of the Business, participated in or maintained by Seller or
with respect to which Seller has made contributions or has or in the future
could have any liability. For purposes of this Section 5.25, Seller includes any
other entity or business that is treated as a single employer with Seller
pursuant to Section 414(b), (c), (m) or (o) of the Code. Seller has made
available to Buyer true, correct and complete copies of all such written
Employee Benefit Plans and descriptions of any such unwritten Employee Benefit
Plans.
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(b) The Stallings Oil 401(k) Profit Sharing Plan is intended
to qualify under Section 401(a) of the Code and its related trust is intended to
be exempt from tax under Section 501(a) of the Code, and the Seller has intended
to operate such plan in compliance with Section 401(a) of the Code.
(c) Except as specifically and separately identified on
Schedule 5.25, Seller has never maintained, sponsored, contributed to,
participated in or had any liability with respect to (i) any multiemployer plan
as defined under Section 3(37) or 4001(a)(31) of ERISA or Section 414(f) of the
Code, (ii) any such Employee Benefit Plan that promises or provides retiree
medical or other retiree welfare benefits to any person, except as required by
ERISA, the Code or other applicable Law, including, but not limited to, the
Consolidated Omnibus Budget Reconciliation Action of 1985, as amended, (iii) any
multiemployer plan within the meaning of Section 413(c) of the Code or Sections
4063, 4064 or 4066 of ERISA, or (iv) any multiemployer welfare arrangement as
defined in Section 3(40) of ERISA.
(d) The consummation of the transactions contemplated by this
Agreement will not (i) entitle any current or former employee of Seller to
severance pay, unemployment compensation or any similar payment for which
Purchaser could be liable, (ii) accelerate the time of payment or vesting or
increase the amount of any compensation to or in respect of any current or
former employee of Seller for which Purchaser could be liable or (iii) result in
or satisfy any condition to the payment of compensation to any current or former
employee of Seller for which Purchaser could be liable that would, in
combination with any other payment, result in an "excess parachute payment"
within the meaning of Section 280G of the Code.
5.26 The New Warehoused Equipment. Schedule 2.5 accurately lists the
New Warehoused Equipment and the cost thereof. Each piece of such equipment was
purchased in the ordinary course of business from an independent seller, is in
good working order, and is suitable for use in the Business.
5.27 Seller's Unamortized Liabilities. Schedule 2.3 accurately lists
and describes Seller's Unamortized Liabilities, payable to Seller's Suppliers,
on a location-specific basis, in the event, post-closing, the Purchaser
de-brands a listed location before the date specified for each location on the
Schedule. Seller has no other Unamortized Liabilities being assumed by
Purchaser.
5.28 Highway Service Ventures, Inc. and Hardees Food Mart. Purchaser's
performance, post-closing, of its agreement described in Section 11.6 hereof
will not violate any agreement between Seller and Star Enterprises.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Seller as follows:
6.1 Organization and Good Standing. The Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and is authorized to transact business in the State of North Carolina
and the Commonwealth of Virginia.
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6.2 Power and Authority. The Purchaser has all requisite power and
authority to enter into and deliver this Agreement and the other Transaction
Documents, perform its obligations hereunder and consummate the transactions
contemplated hereby and thereby. The execution and delivery of this Agreement
and the other Transaction Documents by it, the performance by it of its
obligations hereunder and the consummation of the transactions contemplated
hereby and thereby have been duly and validly authorized by all corporate,
stockholder and other actions on its part required by applicable Law, its
certificate of incorporation or by-laws, or otherwise.
This Agreement and the other Transaction Documents constitute
the legal, valid and binding obligations of the Purchaser, enforceable against
it in accordance with their terms, except as the same may be limited by (i)
bankruptcy, insolvency, reorganization, moratorium or similar laws now or
hereafter in effect relating to creditors' rights generally and (ii) general
equitable principles.
6.3 No Violation. Neither the execution and delivery by the Purchaser
of this Agreement or the other Transaction Documents, the performance by it of
its obligations hereunder and thereunder, nor the consummation of the
transactions contemplated hereby and thereby, will (i) contravene any provision
of its certificate of incorporation or by-laws; (ii) violate any material
agreement or instrument to which it is a party or by which it or any of its
assets or properties may be bound; (iii) violate any material Law or any
judgment, decree or order of any court or other Governmental Authority or any
arbitration award to which it is subject or by which it or any of its assets or
properties may be bound; or (iv) have a material adverse effect on the
Purchaser's business or operations.
6.4 No Actions. There is no Action pending or, to the knowledge of the
Purchaser, threatened, against it or its Affiliates or any of their assets,
properties or rights before any court or other Governmental Authority which (i)
questions or challenges the validity of this Agreement or any action taken or
proposed to be taken by it pursuant hereto or in connection with the
transactions contemplated hereby or (ii) could, if adversely determined, have a
material adverse effect on the transactions contemplated hereby.
6.5 Approvals. To the knowledge of the Purchaser, neither any
declaration, filing or registration with, nor any Approval of, any Governmental
Authority is required to be made or obtained by or with respect to it in
connection with the execution, delivery or performance of this Agreement or the
consummation of the transactions contemplated hereby, except such Approval as
may be required under the Hart-Scott-Rodino Antitrust Improvements Act, as
amended.
6.6 Disclosure of Material Facts. To the knowledge of the Purchaser, no
provision of this Agreement or any of the other Transaction Documents contains
or will contain at Closing any untrue statement of a material fact with respect
to it or omits or will omit at Closing to state a material fact with respect to
it necessary in order to make the statements herein or therein not misleading.
6.7 Finders or Brokers. The Purchaser has not employed any investment
banker, broker, finder or intermediary in connection with the transactions
contemplated hereby who is entitled to any fee or commission in connection with
the execution or delivery of this Agreement or the consummation of the
transactions contemplated hereby.
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6.8 Financial Statements. Purchaser has delivered to Seller audited
financial statements for the twelve (12) months ended September, 1996 and 1997
and unaudited interim financial statements for the six (6) months ended March
31, 1998, copies of which are attached as Schedule 6.8 hereto. Said financial
statements are true and correct in all material respects and fairly present the
financial condition of Purchaser for the periods indicated and the results of
the operations of Purchaser for said periods, in conformity with generally
accepted accounting principles applied on a basis consistent with prior periods.
6.9 Compliance With Laws and Orders. To the Purchaser's knowledge and
except as described in detail on Schedule 6.9 (a) the Purchaser has complied in
all material respects with all Laws applicable to it and to the operation of its
business, (b) the Purchaser has not been charged with or threatened with any
charge concerning or under any investigation with respect to, any violation of
any provision of any Law applicable to or affecting Purchaser or its business,
and (c) the Purchaser is not in violation of or in default under, and no event
has occurred which, with the lapse of time or the giving of notice or both,
could result in the material violation of or material default under, the terms
of any judgment, decree, order, injunction or writ of any court or other
Governmental Authority applicable to Purchaser, any of its assets, properties or
business.
6.10 Tax Matters. Purchaser has filed or, in case of Tax Returns not
yet due, will timely file all Tax Returns that are required to be filed on or
before the Closing Date. All such Tax Returns are and will be true, correct and
complete in all material respects. Purchaser has paid or shall pay or make
adequate provision for all taxes due with respect to such Tax Returns. Except as
disclosed on Schedule 6.10, there is no pending or, to the Purchaser's
Knowledge, threatened action, audit, proceeding or investigation for the
assessment or collection of any taxes.
ARTICLE VII
CERTAIN OBLIGATIONS OF THE SELLER PRIOR TO THE CLOSING
OR EARLIER TERMINATION OF THIS AGREEMENT
The Seller hereby covenants that, except as otherwise consented to in
writing by the Purchaser, from and after the date hereof until the Closing or
the earlier termination of this Agreement:
7.1 Conduct of Business. The Seller shall carry on the business and
operations of the Business only in the ordinary course and in the same manner as
heretofore conducted, including, without limitation: (a) performing in all
material respects all of its material obligations under all contracts and
agreements to which it is a party or by which it or any of its assets or
properties are bound and which relate to or affect the Business; (b) using its
reasonable efforts to maintain and preserve (i) all of the properties,
equipment, and other assets of the Business in good repair, working order and
condition (except for ordinary wear and tear), (ii) the present workforce of the
Business (including, without limitation, those key employees who have been and
through the Closing Date will be responsible for operating, administering and
managing the Business) but subject to Seller's right to terminate and discharge
for good cause, (iii) all of the Approvals relating to or affecting the Business
in good standing and (iv) its present relationships with, and the good will of,
the agents, suppliers, and customers of the Business
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and others with which it has business relations which relate to or affect the
Business; and (c) keeping in full force and effect insurance with respect to the
Business comparable in amount and scope of coverage to that currently maintained
by it with respect to the Business. The Seller shall consult with the Purchaser
from time to time, upon the reasonable request of the Purchaser, with respect to
the conduct of the Business.
7.2 Restricted Activities and Transactions. Without the prior written
consent of the Purchaser, the Seller shall not engage in any one or more of the
following activities or transactions with respect to the Business: (a) directly
or indirectly create, incur or assume any Lien on or with respect to any
property or asset (including any document or instrument in respect of goods) of
the Business, whether now owned or hereafter acquired, or any income or profits
therefrom; (b) transfer, or agree to Transfer, any part of the Business's
assets, properties or rights, other than in the ordinary course of the business
of the Business in accordance with past practice; (c) enter or agree to enter,
into any agreement or arrangement granting any preferential rights to purchase
any of the Business's assets, properties or rights (including, without
limitation, the Transferred Assets) or requiring the consent of any party to the
Transfer of any such assets, properties or rights; (d) make or permit to be made
any amendment to or termination of any Contract or any Approval relating to the
Business other than in the ordinary course of business in accordance with past
practice; (e) make any change in any profit-sharing, pension, retirement,
long-term disability, hospitalization, insurance or other Employee Benefit Plan,
payment or arrangement, except as required by Law; (f) enter into any collective
bargaining agreement; (g) enter into any contract or agreement except in the
ordinary course of business in accordance with past practice; (h) enter into any
compromise or settlement of any Action affecting or relating to the Business or
any of its properties, assets or businesses; (i) do or (to the extent of
Seller's control) permit to occur any of the things referred to in Section
5.8(b)(ii)-(v) hereof; or (j) otherwise take any other action or (to the extent
within Seller's control) permit any other event to occur which would result in a
breach of any of the representations or warranties set forth in Article V
hereof.
7.3 Cooperation. The Seller shall use its best efforts to cause the
transactions contemplated by this Agreement to be consummated. Without limiting
the generality of the foregoing, the Seller shall (a) obtain all Approvals of,
make all filings with and give all notices to, all such Governmental Authorities
and other Persons as may be necessary or reasonably requested by the Purchaser
in order to consummate the transactions contemplated by this Agreement
(including, without limitation, all of the Approvals referred to on Schedules
5.5, 5.12(c) and 5.14 hereof, which the Seller shall be responsible for
obtaining) and (b) give prompt notice to the Purchaser of (i) any notice of, or
other communication relating to, any default, or any event which, with the
giving of notice or the lapse of time or both, would become a default, under,
any material Contract to which the Seller is a party or by which it or its
assets or properties are bound and which affects or relates to the Business and
(ii) any notice or other communication from any third party alleging that the
consent of such third party is or may be required in connection with the
execution and delivery of this Agreement or the transactions contemplated
hereby. In addition, Seller shall take such action as is reasonably requested by
Purchaser to enable Purchaser to obtain alcoholic beverage licenses for the
Stores as of the Closing Date.
7.4 Employee Benefit Plans. The Seller shall take any and all actions
necessary or desirable to cause all Employee Benefit Plans and any other plans
or programs relating to employee benefits maintained by the Seller for the
benefit of employees of the Business to be continued in full force and effect,
except as required pursuant to the terms and provisions of
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such plans or programs in the ordinary course of business in accordance with
past practice or by any applicable law, rule, regulation, or order pertaining to
such plan.
7.5 No Negotiations. Until July 31, 1998 or earlier termination,
neither the Seller, any of its Affiliates, nor any of the Representatives of any
of them, shall, directly or indirectly, in any way contact, initiate, enter into
or conduct any discussions or negotiations, or enter into any agreements,
whether written or oral, with any Person with respect to the sale of the
Business or all or any significant portion of the assets of Seller related to
the Business. The Seller shall, immediately upon receipt thereof by it or any of
its respective Affiliates or Representatives, notify the Purchaser of any offer
by any Person to make any such purchase or enter into any such agreement.
7.6 Access to the Business. The Seller hereby acknowledges that the
Purchaser, its Affiliates, and their respective Representatives (collectively,
the "Purchaser Group") may continue their due diligence investigation of the
business, operations and affairs of the Business through and until the Closing.
The Seller and its Affiliates and Representatives shall cooperate fully with
such investigation and, upon reasonable prior notice, shall afford the Purchaser
Group reasonable access, during normal business hours and at other reasonable
times, to the sales records (for 1995, 1996, 1997 and 1998 year-to-date) and
current personnel records relating to the Stores or the Business, and other
facilities of the Business in order that the Purchaser Group may have the
opportunity to make such investigations thereof as it shall deem necessary or
desirable. The Seller shall furnish the Purchaser Group with any applications or
statements to be made to any Governmental Authority in connection with the
transactions contemplated by this Agreement. Further, the Seller shall assist
the Purchaser Group in contacting and communicating with their independent
accountants, suppliers and other Persons having dealings relating to the
Business. None of the information furnished hereunder or obtained by the
Purchaser Group during its due diligence investigation of the Business shall in
any way release the Seller from the representations and warranties made by it in
this Agreement.
Commencing on the day following the date of this Agreement,
Purchaser and its Representatives shall be allowed at reasonable times on notice
to Seller, to make environmental and other engineering investigations, including
Phase I and Phase II analysis and testing, as Purchaser shall, in its sole
discretion, deem appropriate. Purchaser shall bear the cost and expense of such
testing. To the best of Seller's Knowledge, the Seller has delivered to the
Purchaser copies of all environmental reports, environmental related claims,
inquiries or requests for information by third parties, which is in its
possession. Seller also will, upon Purchaser's reasonable request, require a
Representative to make available to Purchaser to review and copy all
correspondence with environmental regulatory agencies regarding each Store,
which information is in the possession of the Representative. The Purchaser's
satisfaction, in its sole discretion, with environmental analysis and testing
and results thereof, will be a condition precedent to closing. Purchaser shall,
upon request, provide Seller with copies of environmental summaries or reports
prepared for Purchaser. Except as otherwise required by law or by prudent
business judgment, Purchaser will not disclose the results of such analysis and
testing without Seller's consent.
Purchaser shall conduct its investigations in such manner as
not to materially disrupt or interfere with the Business, and the Purchaser
shall indemnify and hold Seller harmless from and against all Damages caused by
the conduct of any such investigation and testing by Purchaser or its
Representatives.
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7.7 Disclosure Regarding the Seller. The Seller shall, upon reasonable
request, provide the Purchaser Group with such information and documentation
concerning the Seller as may be reasonably necessary for the Purchaser Group to
verify performance of and compliance with the representations, warranties,
covenants and conditions of the Seller contained herein.
7.8 Confidentiality. The Seller shall, and shall cause its Affiliates
and the Representatives to, keep confidential, and not disclose to others, any
Proprietary Information used or usable by or relating to, and obtained from, the
Purchaser, any of its Affiliates or any of the Representatives of any of them
and specifically identified as confidential, to the extent that such information
is not or does not become readily available to the public or is not required to
be disclosed by applicable Law or court order.
ARTICLE VIII
CERTAIN OBLIGATIONS OF THE PURCHASER PRIOR
TO THE CLOSING OR EARLIER TERMINATION OF THIS AGREEMENT
The Purchaser hereby covenants that, except as otherwise consented to
in writing by the Seller, from and after the date hereof until the Closing or
the earlier termination of this Agreement:
8.1 Cooperation. The Purchaser shall use its best efforts to cause the
transactions contemplated by this Agreement to be consummated and, without
limiting the generality of the foregoing, to obtain all Approvals (except the
Approvals referred to on Schedules 5.5, 5.12(c) and 5.14 hereto, which the
Seller shall be responsible for obtaining) of, make all filings with and give
all notices to, all such Governmental Authorities and other Persons as may be
necessary or reasonably requested by the Seller in order to consummate the
transactions contemplated by this Agreement.
8.2 Disclosure Regarding the Purchaser. The Purchaser shall, upon
reasonable request, provide the Seller with such information and documentation
concerning the Purchaser as may be reasonably necessary for the Seller to verify
performance of and compliance with the representations, warranties, covenants
and conditions of the Purchaser contained herein.
8.3 Confidentiality. The Purchaser shall, and shall cause each of its
Affiliates and the Representatives of each of them to, keep confidential, and
not disclose to others, any information used or usable by or relating to, and
obtained from, the Seller, any of its Affiliates or any of the Representatives
of any of them and specifically identified as confidential, to the extent that
such Information is not or does not become readily available to the public or is
not required to be disclosed by applicable Law or court order.
8.4 Restricted Activities. Without the prior written consent of the
Seller, which consent will not be unreasonably withheld, the Purchaser will not
take any action or permit any event to occur which would result in a breach of
any of the representations or warranties set forth in Article VI hereof.
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ARTICLE IX
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PURCHASER
Each and every obligation of the Purchaser under this Agreement to be
performed at or before the Closing shall be subject to the satisfaction, at the
Closing, of each of the following conditions:
9.1 Representations and Warranties True. The representations and
warranties of the Seller contained in this Agreement or in any of the other
Transaction Documents shall be true and correct as of the date of this Agreement
and as of the Closing Date with the same effect as if made on and as of the
Closing Date.
9.2 Performance. The Seller shall have performed and complied in all
material respects with all agreements, covenants, obligations and conditions
required by this Agreement or any of the other Transaction Documents to be
performed or complied with by it at or prior to the Closing.
9.3 No Adverse Changes.
(a) None of the Stores or other assets or properties material
to the operation or business of the Business shall have been damaged, destroyed
or taken by condemnation to such an extent that substantial operation of the
Business cannot continue or under circumstances where the loss thereof will not
be substantially reimbursed through the proceeds of insurance (including,
without limitation, business interruption insurance) or condemnation awards,
except as set forth in Schedule 5.11(g), which proceeds or awards shall be the
property of the Purchaser if this Agreement and the transactions contemplated
hereby are consummated.
(b) No material adverse change shall have occurred in the
Condition of the Business since the date of this Agreement.
(c) The Seller shall not have done or permitted to occur any
of the things referred to in Section 5.8 hereof.
9.4 Approvals. Except as set forth on Schedule 9.4, all filings,
declarations and registrations with and Approvals from all Governmental
Authorities and other Persons required by applicable Law or otherwise required
or desirable for the consummation of the transactions contemplated hereby or the
conduct of the business of the Business as it is currently being conducted
(including, without limitation, all of the Approvals referred to on Schedules
5.5, 5.12(c) or 5.14 hereto, which the Seller shall be solely responsible for
obtaining) shall have been made or obtained and shall be in full force and
effect, except to the extent that making any such filing, declaration or
registration or obtaining any such Approval shall have been waived in writing by
the Purchaser. Purchaser will cooperate with Seller to obtain such Approvals, at
no cost to Purchaser, and Purchaser shall not be required to accept any
additional risk or liability.
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9.5 Estoppel Certificates.
(a) The Seller shall have delivered to the Purchaser executed
estoppel certificates from the lessor named in each of the Third Party Leases,
Affiliate Leases, and the General Booth lease, dated not more than twenty (20)
days prior to the Closing Date, stating, with respect to each such lease: (a)
whether there have been any amendments, modifications or supplements of any kind
to such lease; (b) that such lease is in full force and effect; (c) the
commencement and expiration dates of such lease; (d) that the Seller or the
Affiliate is not in violation of or in default under such lease and that the
lessor thereunder has no claims against the Seller or the Affiliate; (e) the
amount of and the date through which all fixed rent and any additional rent have
been paid under such lease; (f) that no fixed rent or additional rent has been
prepaid for more than one month in advance; (g) that such lessor consents to the
assignment or sublease of such lease to the Purchaser (if such consent is
required) and consents to the assignment of an option to purchase (if such
consent is required); and (h) such other matters as the Purchaser may reasonably
request.
(b) Notwithstanding any provision of Sections 9.4 or 9.5
hereof, in the event that Seller is unable to obtain any Approval required for
Purchaser to take possession of a Store or Consignment Leased Store at Closing,
such that Purchaser cannot operate such Store or Consignment Leased Store in the
ordinary course of business on the Closing Date, the Parties shall nevertheless
be obligated to close and the Purchase Price shall be reduced by the amount of
Schedule 9.5 for each such Store or Consignment Leased Store. If, during the six
(6) month period after the Closing Date, Seller is able to deliver any such
Store to Purchaser, fully operational and otherwise in accordance with the terms
of this Agreement, Purchaser shall be obligated to close on such Store or
Consignment Leased Store for a purchase price equal to the amount the Purchase
Price was reduced with respect to such Store or Consignment Leased Store, and
shall enter into a Third Party Sublease for the rent specified on Schedule 3.2.
9.6 Subordination, Non-Disturbance and Attornment Agreements. The
Seller shall have delivered to the Purchaser Subordination, Non-Disturbance and
Attornment Agreements ("SNDAs") executed by each mortgagee holding a beneficial
interest in any of the Real Property, each as more particularly described on
Schedule 9.6, and the owner of such Real Property, in form and substance
reasonably acceptable to Purchaser and its counsel.
9.7 Deliveries. The Seller shall have delivered to the Purchaser, at or
prior to the Closing, the following:
(a) the instruments of Transfer referred to in Section 3.2
hereof;
(b) all of the sales records (for 1995, 1996, 1997 and 1998
year-to-date), current personnel records, and all underground storage tank and
environmental records relating to the Stores or the Business, but specifically
excluding corporate books and records and general financial records of the
Seller;
(c) a certificate of good standing for the Seller, dated not
earlier than ten days prior to the Closing Date, of each of (i) the Secretary of
State of North Carolina, (ii) the North Carolina Department of Revenue, (iii)
the Secretary of State Corporation Commission of Virginia and (iv) the Virginia
Department of Revenue;.
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(d) resolutions, certified as of the Closing Date by the
Secretary or Assistant Secretary of the Seller, adopted by the Board of
Directors and the shareholders of the Seller, respectively, and authorizing the
execution and delivery by the Seller of this Agreement and the other Transaction
Documents, the performance by it of its obligations hereunder and thereunder and
the consummation by it of the transactions contemplated hereby and thereby;
(e) such certificates of the Chairman or President of the
Seller to evidence compliance with the conditions set forth in Sections 9.1
through 9.4, and 9.8 and 9.9 hereof, and any other certificates to evidence
compliance with the conditions set forth in this Article IX as may be reasonably
requested by the Purchaser or its counsel;
(f) the opinion of Poyner & Spruill, L.L.P., counsel to the
Seller and the Affiliates, dated the Closing Date and addressed to the Purchaser
in form and substance reasonably satisfactory to the Purchaser and its counsel;
(g) executed Seller Leases, Affiliate Subleases, Third Party
Subleases and Consignment Leases, and assignment of the General Booth Location
lease;
(h) powers of attorney, or such other documents Purchaser may
reasonably request, in form and substance reasonably satisfactory to Purchaser
and its counsel, assigning all rights, interests, contracts and claims referred
to in Sections 2.1(f) and 2.1(h);
(i) flood certificates with respect to the Stores identified
on Schedule 5.11(i); and
(j) such other documents or certificates as shall be
reasonably requested by the Purchaser or its counsel.
9.8 Proceedings. All corporate and other proceedings in connection with
the transaction contemplated by this Agreement and the other Transaction
Documents shall be in form and substance reasonably satisfactory to the
Purchaser and its counsel, and the Purchaser shall have received all such
originals or certified or other copies of such documents as it shall have
reasonably requested.
9.9 Absence of Litigation. There shall be no Action pending or
threatened before any court or other Governmental Authority which seeks to (a)
invalidate or set aside, in whole or in part, this Agreement or any of the other
Transaction Documents, (b) restrain, prohibit, invalidate or set aside, in whole
or in part, the consummation of the transactions contemplated hereby or thereby
or (c) obtain substantial Damages in connection therewith.
9.10 Insurance. All policies and programs of insurance relating to the
assets, properties, business, operations or employees of the Business, including
the Insurance Policies, have been maintained by the Seller in full force and
effect to and including the Closing Date.
9.11 Environmental Matters. The Purchaser shall, in its sole
discretion, be satisfied with the results of any and all environmental analyses
referred to in Section 7.6 hereof. If the Seller receives written notice from
the Purchaser that Purchaser is not satisfied with such environmental analyses,
the Seller (i) shall take such steps necessary to satisfy Purchaser or (ii) may
terminate this Agreement by written notice to the Purchaser and the effect of
such
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<PAGE>
termination shall be the same as a termination pursuant to Section 4.1(a)
hereof. The absence of any notice from Purchaser pursuant to this Section shall
neither obviate, supersede nor waive any provisions of Sections 5.16 or 11.3
hereof.
9.12 Additional Diligence. The Purchaser shall, in its sole discretion,
be satisfied with the results of its investigation with respect to the
Invoiceable Global Imaging Costs, the New Warehoused Equipment, the Seller's
Unamortized Liabilities, and the Highway Service Ventures, Inc. and Hardees Food
Mart Re-Imaging amounts.
ARTICLE X
CONDITIONS PRECEDENT TO
THE OBLIGATIONS OF THE SELLER
Each and every obligation of the Seller under this Agreement to be
performed at or before the Closing shall be subject to the satisfaction, at the
Closing, of each of the following conditions:
10.1 Representations and Warranties True. The representations and
warranties of the Purchaser contained in this Agreement or in any of the other
Transaction Documents shall be true and correct as of the date of this Agreement
and as of the Closing Date with the same effect as if made on and as of the
Closing Date.
10.2 Performance. The Purchaser shall have performed and complied in
all material respects with all agreements, covenants, obligations and conditions
required by this Agreement or any of the other Transaction Documents to be
performed or complied with by it at or prior to the Closing.
10.3 Approvals. All filings, declarations and registrations with and
Approvals from all Governmental Authorities and other Persons required by
applicable Law or otherwise required or desirable for the consummation of the
transactions contemplated hereby (except the Approvals referred to on Schedules
5.5, 5.12(c) and 5.14 hereto, which the Seller shall be responsible for
obtaining) shall have been made or obtained and shall be in full force and
effect, except to the extent that making any such filing, declaration or
registration or obtaining any such Approval shall have been waived in writing by
the Seller.
10.4 Deliveries. The Purchaser shall have delivered to the Seller, at
or prior to the Closing, the following:
(a) an amount equal to the Purchase Price described in Section
2.6 hereof;
(b) an instrument of assignment and assumption relating to the
Contracts;
(c) a good standing certificate, dated not earlier than ten
(10) days prior to the Closing Date, of the Secretary of State of Delaware, as
to the good standing of the Purchaser in Delaware, and a certificate of
authorization, dated not earlier than ten (10) days prior to the Closing Date,
of the Secretary of State of North Carolina and Virginia Corporation Commission,
as to the Purchaser's authorization to transact business in North Carolina and
Virginia, respectively;
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<PAGE>
(d) resolutions, certified as of the Closing Date by the
Secretary or Assistant Secretary of the Purchaser, adopted by the Board of
Directors of the Purchaser and authorizing the execution and delivery by the
Purchaser of this Agreement and the other Transaction Documents, the performance
by it of its obligations hereunder and thereunder and the consummation by it of
the transactions contemplated hereby and thereby;
(e) such certificates of the President or Vice President of
the Purchaser to evidence compliance with the conditions set forth in Sections
10.1, 10.2, and 10.3 hereof and any other certificates to evidence compliance
with the conditions set forth in this Article X as may be reasonably requested
by the Seller or their counsel;
(f) the opinion of Smith, Anderson, Blount, Dorsett, Mitchell
& Jernigan, L.L.P., counsel to the Purchaser, dated the Closing Date and
addressed to the Seller, in form and substance reasonably satisfactory to the
Seller and its counsel;
(g) the Seller Leases, Affiliate Subleases, Third Party
Subleases, Consignment Leases and assignment of the General Booth Location
lease, executed by Purchaser;
(h) the SNDAs executed by Purchaser; and
(i) such other documents or certificates as shall be
reasonably requested by the Seller or their counsel.
10.5 Proceedings. All corporate and other proceedings in connection
with the transactions contemplated by this Agreement and the other Transaction
Documents shall be in form and substance reasonably satisfactory to the Seller
and its counsel, and the Seller shall have received all such originals or
certified or other copies of such documents as they shall have reasonably
requested.
10.6 Absence of Litigation. There shall be no Action pending or
threatened before any court or other Governmental Authority which seeks to (a)
invalidate or set aside, in whole or in part, this Agreement or any of the other
Transaction Documents, (b) restrain, prohibit, invalidate or set aside, in whole
or in part, the consummation of the transactions contemplated hereby or thereby
or (c) obtain substantial Damages in connection therewith, or which may have a
material adverse impact on the business of Purchaser.
ARTICLE XI
CERTAIN POST-CLOSING COVENANTS
11.1 Confidentiality.
(a) From and after the Closing, the Purchaser shall, and shall
cause its Representatives to, hold in strict confidence and, except as required
by applicable Law, not disclose to others (except its Representatives) or use
for any reason whatsoever without the prior written consent of the Seller, any
information (unless previously known to the Purchaser or any of its Affiliates
from sources other than the Seller or any of their respective Affiliates or
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<PAGE>
ascertainable from public or published information or trade sources) received by
the Purchaser or any of its Affiliates from the Seller concerning the Seller and
its Affiliates and not relating to the Transferred Assets or the Business.
(b) From and after the Closing, the Seller shall, and shall
cause its Representatives to, hold in strict confidence and, except as required
by applicable Law, not disclose to others (except their Representatives) or use
for any reason whatsoever without the prior written consent of the Purchaser,
(i) any information (unless previously known to the Seller or any of their
Affiliates from sources other than the Purchaser or any of its Affiliates or
ascertainable from public or published information or trade sources) received by
the Seller or any of their respective Affiliates from the Purchaser or any of
its Affiliates concerning the Purchaser or its Affiliates, or (ii) any
information (unless ascertainable from public or published information or trade
sources) concerning the Transferred Assets or the Business.
11.2 Noncompetition. For a period of *** from and after the Closing,
except as described on Schedule 11.2, neither Seller nor *** or *** will engage,
directly or indirectly, in the operation of, or own or have any interest of any
kind, in any convenience store or gasoline retail business in the Restricted
Area, as defined below. "Restricted Area" shall mean:
(a) any county located in the State of North Carolina or the
Commonwealth of Virginia in which Purchaser or any Affiliate owns or operates
a convenience store;
(b) the area within a *** radius of any convenience store
operated by Purchaser or any Affiliate in North Carolina or Virginia;
(c) any county in which any of the Stores are located; and
(d) the area within a *** radius of any of the Stores.
11.3 Responsibility for Environmental Matters.
(a) With regard to any assessment or remediation required by
Law or third party claims as to any Tanks, tanks, or Real Property or
Consignment Account Locations arising from leaks, releases, spills or
discharges of Petroleum Products which occurred prior to Closing and are
identified on Schedule 11.3(a), as between Seller and Purchaser, the Seller
shall be responsible for such assessment, remediation or claim, which
responsibility may be satisfied by qualification of such assessment, claim or
remediation for coverage (including, without limitation, payment or waiver
of applicable deductibles) under the Trust Fund at no cost to the Purchaser and
Seller shall be solely responsible for any disqualification or modification of
Trust Fund coverage based on pre-closing events. With respect to those matters
set forth on Schedule 11.3(a), the Seller shall be responsible for registration
of all Tanks, paying or obtaining waivers of deductibles, and for taking all
other necessary action to qualify all Tanks for coverage by the Trust Fund.
Upon complete qualification for Trust Fund coverage, which qualification is not
thereafter withdrawn, revoked or modified as a result of any pre-closing event
or omission, Purchaser shall assume responsibility for continuing with and
provide administrative assistance and oversight for such assessment and
remediation, and, except as herein provided, Seller shall have no further
responsibility with respect thereto. Notwithstanding the foregoing, Seller shall
have no responsibility for lack of Trust Fund coverage due to a shortage of
funds in or insolvency of the Trust Fund, or to the extent a properly qualified
claim
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*Selected portions have been deleted as confidential pursuant to Rule
24b-2. Complete copies of the entire exhibit have been filed separately
with the Securities and Exchange Commission and marked "CONFIDENTIAL
TREATMENT."
<PAGE>
???????, spills or discharges of Petroleum Products which are identified up to
the Closing.
(b) The Purchaser shall be solely responsible for maintaining
registration of and otherwise meeting applicable requirements arising
post-Closing for registered Tanks subsequent to Closing. As between Purchaser
and Seller, the Purchaser shall be solely responsible for any assessment or
remediation required by Governmental Authority, by Law and any third party
claims arising solely from leaks, releases, spills or discharges of Petroleum
Products which occur subsequent to Closing or were not identified by Purchaser
on Schedule 11.3(a) prior to Closing at any of the Real Property or Consignment
Account Locations. Seller hereby assigns its rights and claims to Purchaser
against third parties relating thereto for which Purchaser is responsible
hereunder.
(c) The Seller will remove all aboveground storage tanks, except those
located at Zip Mart No. 19, on Hope Valley Road, in Durham, North Carolina, and
any unregistered underground storage tank located at the Store sites and
Consignment Locations before the Closing and perform and complete any assessment
or remediation required by Law or third party claims in connection therewith.
(d) The provisions of Section 11.3 shall neither supersede nor obviate
the representations and warranties of the Seller contained in Section 5.16.
11.4 Specific Performance; Injunctive Relief. Each of the parties
hereto acknowledges and understands that any breach or threatened breach by it
of Section 11.1 hereof or (with respect to the Seller and A. Donald Stallings
and June S. Shearin) Section 11.2 hereof will cause irreparable injury to the
non-breaching party or parties and their respective Affiliates and that money
damages will not provide an adequate remedy therefor. Accordingly, in the event
of any such breach or threatened breach, the non-breaching party or parties
shall have the right and remedy (in addition to any others available at law or
in equity) to have the provisions of Sections 11.1 and 11.2 hereof specifically
enforced by, and to seek injunctive relief and other equitable remedies in, any
court having competent jurisdiction.
11.5 Invoiceable Global Imaging. Seller shall use its best efforts, to
cooperate with Purchaser to enable Purchaser to obtain reimbursement of the
Invoiceable Global Imaging Costs, up to the amount of the Image Upgrade Payment
($***).
11.6 Third Party Imaging. Among the Seller's Unamortized Liabilities on
Schedule 2.3 are liabilities incurred by Seller to Star Enterprise ("Star") and
Amoco Oil Company ("Amoco") as noted for imaging costs at convenience store/fuel
retail facilities owned by Highway Service Ventures, Inc. ("HSV"), Hardee's Food
Mart ("Hardees") and the Seller (for Seller's convenience store operation at the
TA Travel Center in Kenly, North Carolina). Purchaser will use its best efforts
to submit on behalf of HSV, Hardee's and the Seller valid requests for
reimbursement from Star or Amoco, as applicable, for re-imaging the designated
four locations of HSV, the one location of Hardee's and Seller's location at
Kenly. Purchaser will pay over to such parties such reimbursements ("Rebates")
as Purchaser receives from Star and Amoco for such locations, provided that each
of such parties, including the Seller, shall enter into an agreement
satisfactory to Purchaser and Seller, in their reasonable discretion, agreeing
(i) to repay any amounts due to Star or Amoco, as applicable, in connection with
such party's receipt of Rebates as a result of such party's cessation of sale of
the branded fuel of
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*Selected portions have been deleted as confidential pursuant to Rule
24b-2. Complete copies of the entire exhibit have been filed separately
with the Securities and Exchange Commission and marked "CONFIDENTIAL
TREATMENT."
<PAGE>
Star or Amoco, as applicable or the occurrence of any other action by such party
and (ii) to indemnify and hold the Seller and Purchaser harmless of and from any
and all liability for such amounts.
11.7 Requirement for Providing Employee Information. During the period
specified below, the Purchaser shall use its best efforts to provide information
to the Seller with respect to each of the Seller's employees who worked in the
Business as of the Closing Date and who the Purchaser hired (the "Acquired
Employees"), monthly as follows: (a) the name, social security number, and
address of all Acquired Employees who terminated employment with the Purchaser
during the preceding month; and (b) the address of record of all Acquired
Employees who provided the Purchaser with a new address during the preceding
month. The Purchaser's obligation to provide the information required by this
Section shall begin immediately following Closing and shall terminate as of the
earlier of (a) twenty-seven (27) months after Closing, or (b) the end of the
month following the month in which the last of the Acquired Employees terminates
from employment with the Purchaser.
11.8 Acceptance of 401(k) Plan Accounts. To the extent permitted by
applicable law, the Purchaser shall use its best efforts to cause its defined
contribution plan's trustee to accept rollovers of all of Stallings Oil 401(k)
Profit Sharing Plan (the "Stallings Plan") participant accounts belonging to
Acquired Employees.
11.9 Payroll Deductions for 401(k) Plan Loan Payments. The Purchaser
shall allow the Acquired Employees to elect to make regularly scheduled loan
payments on loans from the Stallings Plan by payroll deduction. The Purchaser
shall remit the loan payments to the Seller, along with a schedule reconciling
the amount transmitted, no later than ten (10) business days following the end
of the month in which the Purchaser withholds the payments from the employee's
paycheck. The reconciliation schedule shall include each employee's name, social
security number and the amount of the loan payments withheld from the employee's
paycheck for the month.
11.10 Wake Forest Store. The Seller shall exercise its best efforts to
complete the Wake Forest Store as soon as reasonably practicable following the
Closing. Immediately upon completion of the Wake Forest Store and issuance of a
certificate of occupancy, the Seller shall transfer and the Purchaser shall
purchase from the Seller the Equipment installed in the Store at Seller's cost
therefor and the Seller and Purchaser shall enter into a Seller's Lease for the
Store at an initial annual rent equal to ******* percent (**%) of the Seller's
total costs of acquiring and improving the Store, including, without limitation:
original land costs, financing, planning and engineering costs; construction
costs; licensing and permitting costs; but not including legal and other
professional costs.
11.11 Seller's Claims for Trust Fund Reimbursement. The Purchaser shall
cooperate reasonably with Seller to permit Seller to make application for
reimbursement from Trust Fund for covered reimbursable expenses Seller has
incurred or may incur post-Closing, provided such applications do not materially
impair Purchaser's rights to Trust Fund coverage.
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*Selected portions have been deleted as confidential pursuant to Rule
24b-2. Complete copies of the entire exhibit have been filed separately
with the Securities and Exchange Commission and marked "CONFIDENTIAL
TREATMENT."
<PAGE>
ARTICLE XII
SURVIVAL OF REPRESENTATIONS AND
WARRANTIES; INDEMNIFICATION
12.1 Survival of Representations and Warranties. Notwithstanding (a)
the making of this Agreement, (b) any examination or investigation made by or on
behalf of the parties hereto and (c) the Closing hereunder, (i) the
representations and warranties of the parties hereto contained in this Agreement
shall survive the execution and delivery of this Agreement and the Closing for a
period of eighteen (18) months from and after the date hereof, except for the
representations and warranties contained in Sections 5.16 (Environmental
Matters), 5.21 (Tax Matters) and 5.25 (Employee Benefit Plans), which shall
survive until the expiration of the applicable statute of limitations for the
underlying cause of action, and (ii) the covenants and agreements of the parties
hereto contained in this Agreement shall survive until fully performed or
fulfilled (unless non-compliance with such covenants or agreements is waived in
writing by the party or parties hereto entitled to such performance). No claim
for indemnification pursuant to Section 12.2(b) hereof may be brought with
respect thereto after the applicable expiration date; provided, however, that if
prior to such date a party hereto has notified the other party or parties hereto
in writing of a claim for indemnification under this Article XII (whether or not
formal legal action shall have been commenced based upon such claim), such claim
shall continue to be subject to indemnification in accordance with this Article
XII.
12.2 Indemnification. Subject to Sections 12.1, 12.4 and 12.5 hereof,
from and after the Closing, each of the parties hereto and their respective
successors and assigns (each being an "Indemnifying Party") shall indemnify and
hold harmless the other party or parties hereto, their respective Affiliates,
successors and assigns, and the Representatives of each of them (each being an
"Indemnified Party"), from and against any and all Damages incurred thereby or
caused thereto arising out of or relating to (a) any breach or violation of, or
failure to properly perform, any covenant or agreement made by such Indemnifying
Party in this Agreement or any of the other Transaction Documents, unless waived
in writing by the Indemnified Party; (b) any breach of any of the
representations or warranties made by such Indemnifying Party in this Agreement
or any of the other Transaction Documents and not waived in writing by the
Indemnified Party; (c) with respect to the Seller, its failure to pay, perform
or satisfy when due any of the Excluded Liabilities; (d) with respect to the
Purchaser, its failure to pay, perform or satisfy when due any of the Assumed
Liabilities or its ownership and operation of the Business after the Closing
Date; and (e) with respect to the Seller, Seller's failure to comply with
applicable provisions of the North Carolina or Virginia Uniform Commercial Code
- - Bulk Transfers. Except as otherwise expressly provided in Section 11.2 hereof,
no Indemnified Party shall have any recourse of any kind or nature whatsoever
against any of the Representatives of any Indemnifying Party.
12.3 Notice and Payment of Claims.
(a) Promptly after receipt by any Indemnified Party of notice
of the commencement of any action, the assertion by any third party of any
claim, or of any other circumstance likely to cause an Indemnified Party to
incur Damages which would give rise to indemnification as provided in this
Article (collectively, a "Claim"), the Indemnified Party receiving such notice
(the "Claim Notice") shall notify the Indemnifying Party in writing of the
assertion of such Claim; provided, however, that failure to give such notice
shall not affect the right to indemnification hereunder except to the extent of
actual prejudice. The Indemnifying
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<PAGE>
Party shall have the option, and shall notify the Indemnified Party in writing
within ten (10) business days after the date of the Claim Notice of its election
either (i) to participate (at its own expense) in the defense of such Claim (in
which case the defense of such Claim shall be controlled by the Indemnified
Party) or (ii) to take charge of and control the defense of such Claim at its
own expense. If the Indemnifying Party fails to notify the Indemnified Party of
its election within the applicable response period (set forth above), then the
Indemnifying Party shall be deemed to have elected not to assume the defense of
such Claim. The Indemnifying Party's failure to respond shall not relieve the
Indemnifying Party of its indemnification obligations under this Section. Each
Indemnified Party shall have the right to employ separate counsel and
participate in the defense of such Claim, but the fees and expenses of such
counsel shall be at the expense of the Indemnified Party unless: (1) the
employment of such counsel shall have been specifically authorized in writing by
the Indemnifying Party or (2) the named parties in such Claim (including any
impleaded parties) include both the Indemnified Party and the Indemnifying Party
and the Indemnified Party shall have been so advised by such counsel that there
may be one or more legal defenses available to it that are different from or
additional to those available to the Indemnifying Party (in which case the
Indemnifying Party shall not have the right to assume the defense of such Claim
on behalf of the Indemnified Party, it being understood, however, that the
Indemnifying Party shall not, in connection with such Claim, be liable for the
fees and expenses of more than one separate firm of attorneys (in addition to
any local counsel) and that all such fees and expenses shall be reimbursed as
they are incurred.
(b) If the Indemnifying Party elects (or is deemed to have
elected) not to assume the defense of a Claim in accordance with the preceding
Section, then the Indemnified Party may settle such Claim without the written
consent of the Indemnifying Party and the Indemnifying Party agrees to indemnify
and hold the Indemnified Party harmless from and against any such Claim settled
without his or its written consent. As to any claim settled with the
Indemnifying Party's written consent (which consent shall not be unreasonably
withheld or delayed), the Indemnifying Party agrees to indemnify and hold the
Indemnified Party harmless from and against any such Claim by reason of such
settlement, according to the obligations of the Indemnifying Party hereunder.
(c) The Indemnified Party shall provide to the Indemnifying
Party, as soon as practicable after the date of the Claim Notice, all
information and documentation necessary to support and verify any Damages that
the Indemnified Party shall have determined have given or could give rise to a
Claim hereunder, and the Indemnifying Party shall be given access to all books
and records in the possession or under the control of the Indemnified Party
which the Indemnifying Party reasonably determines to be related to such Action.
(d) All Claims under this Articles shall be paid by the
Indemnifying Party on demand in immediately available funds in U.S. dollars
after the liability for Damages thereunder have been finally determined. The
liability for Damages under any such Claim shall be deemed to be "finally
determined" for purposes of this Article when the parties to an Action have so
determined by mutual agreement or, if disputed, when a final non-appealable
order of a court having competent jurisdiction has been entered.
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<PAGE>
12.4 Limitation on Indemnity.
(a) Maximum Liability. The maximum aggregate amount of Damages for
which (i) Seller or (ii) Purchaser shall be liable for all claims pursuant to
this Article shall be $***.
(b) Threshold. No Indemnified Party shall seek, or be entitled to,
indemnification from any Indemnifying Party for Damages arising under Section
12.2(b) until the aggregate amount of such Damages incurred by such Indemnified
Party (but for the operation of this Section 12.4(b)) exceeds $***. If Damages
incurred by any Indemnified Party in connection with Claims made pursuant to
Section 12.2(b) exceed $***, the Indemnified Party shall be entitled to payment
from the Indemnifying Party of an amount equal to all of such Damages.
(c) Characterization of Payment. Any indemnity payment made pursuant to
this Article shall be treated by Purchaser and Seller as an adjustment to the
Purchase Price.
12.5 Mitigation of Damages. If any event shall occur which would
otherwise entitle a party hereto to indemnification hereunder, no Damages shall
be deemed to have been sustained by it to the extent of (a) any tax savings
realized by it with respect thereto or (b) any proceeds received by it from any
insurance policy with respect thereto.
12.6 Leases. The provisions of this Article XII shall not apply to the
Seller's Leases, and Affiliate Subleases and Third Party Subleases.
ARTICLE XIII
MISCELLANEOUS
13.1 Fees and Expenses. Except as otherwise expressly provided in this
Agreement, each of the parties hereto shall bear and pay all fees, costs and
expenses incurred by it in connection with the origin, preparation, negotiation,
execution and delivery of this Agreement, the other Transaction Documents and
the transactions contemplated hereby or thereby (whether or not such
transactions are consummated), including, without limitation, any fees, expenses
or commissions of its attorneys, accountants and other Representatives.
13.2 Notices.
(a) All notices, requests, demands and other communications
required or permitted under this Agreement shall be in writing (including
facsimile, telegraphic, telex or cable communication) and mailed, faxed,
telegraphed, telexed, cabled or delivered:
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*Selected portions have been deleted as confidential pursuant to Rule
24b-2. Complete copies of the entire exhibit have been filed separately
with the Securities and Exchange Commission and marked "CONFIDENTIAL
TREATMENT."
<PAGE>
(i) If to the Seller, to:
Stallings Oil Company
300 S. Wesleyan Boulevard
Rocky Mount, North Carolina 27803
Facsimile No.: (252) 443-7997
Attention: Don Stallings
with a copy to:
Samuel W. Johnson
Poyner & Spruill, L.L.P.
Post Office Box 353
Rocky Mount, North Carolina 27802-0353
Facsimile No.: (252) 972-7045
(ii) If to Purchaser, to:
The Pantry, Inc.
1801 Douglas Drive
Sanford, North Carolina 27330
Facsimile No.: 919-774-3329
Attention: Chief Financial Officer
with a copy to:
Smith, Anderson, Blount, Dorsett, Mitchell &
Jernigan, L.L.P.
2500 First Union Capitol Center
P.O. Box 2611
Raleigh, NC 27602-2611
Facsimile No.: 919-821-6800
Attention: R. Marks Arnold
(b) All notices and other communications required or permitted
under this Agreement which are addressed as provided in this Section 13.2 (i) if
delivered personally against proper receipt or by confirmed facsimile or telex,
shall be effective upon delivery and (ii) if delivered (A) by certified or
registered mail with postage prepaid, (B) by Federal Express or similar courier
service with courier fees paid by the sender or (c) by telegraph or cable, shall
be effective two (2) business days following the date when mailed, couriered,
telegraphed or cabled, as the case may be. The parties hereto may from time to
time change their respective addresses for the purpose of notices to that party
by a similar notice specifying a new address, but no such change shall be deemed
to have been given until it is actually received by the party sought to be
charged with its contents.
13.3 Amendment; Waiver Neither this Agreement, nor any of the terms or
provisions hereof, may be amended, modified, supplemented or waived except by a
written instrument signed by all of the parties hereto (or, in the case of a
waiver, by the party or parties granting
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<PAGE>
such waiver). No waiver of any of the provisions of this Agreement shall be
deemed to be or shall constitute a waiver of any other provision hereof (whether
or not similar), nor shall such waiver constitute a continuing waiver. No
failure of a party hereto to insist upon strict compliance by another party
hereto with any obligation, covenant, agreement or condition contained in this
Agreement shall operate as a waiver of, or estoppel with respect to, any
subsequent or other failure. Whenever this Agreement requires or permits consent
by or on behalf of a party hereto, such consent shall be given in a manner
consistent with the requirements for a waiver of compliance as set forth in this
Section 13.3.
13.4 Assignment. This Agreement and all of the terms and provisions
hereof shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns, but neither this Agreement
nor any of the rights, interests or obligations of the parties hereunder may be
assigned by any of the parties hereto without the prior written consent of the
other parties; provided, however, that the Purchaser may assign this Agreement
and its rights and obligations hereunder to any of its Affiliates which has
assumed such obligations without the prior written consent of the Seller
provided that, in the event or such assignment, Purchaser shall remain liable
for its obligations hereunder. Any assignment which contravenes this Section
13.4 shall be void ab initio.
13.5 Governing Law. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of North Carolina, without
giving effect to the conflicts of laws principles thereof.
13.6 Severability. Each term and provision of this Agreement
constitutes a separate and distinct undertaking, covenant, term and/or provision
hereof. In the event that any term or provision hereof shall be determined to be
unenforceable, invalid or illegal in any respect, such unenforceability,
invalidity or illegality shall not affect any other term or provision hereof,
but this Agreement shall be construed as if such unenforceable, invalid or
illegal term or provision had never been contained herein. Moreover, if any term
or provision hereof shall for any reason be held to be excessively broad as to
time, duration, activity, scope or subject, it shall be construed, by limiting
and reducing it, so as to be enforceable to the extent permitted under
applicable Law as it shall then exist.
13.7 No Third Party Beneficiaries. Except as and to the extent provided
in Article XII hereof, nothing in this Agreement is intended, nor shall anything
herein be construed, to confer any rights, legal or equitable, in any person or
entity other than the parties hereto and their respective successors and
permitted assigns.
13.8 Public Announcements. Except as required by applicable Law or
judicial order, none of the parties hereto, nor any of their respective
Affiliates, successors or assigns, shall issue any press release or make any
public announcement or disclosure with respect to this Agreement or the
transactions contemplated hereby without the prior consent of the other party or
parties hereto, which consent shall not be unreasonably withheld.
13.9 Singular and Plural Forms. The use herein of the singular form
shall also denote the plural form, and the use of the plural form shall denote
the singular form, as in each case the context may require.
13.10 References. All references herein to Articles, Sections and
Exhibits shall be to Articles and Sections of and Exhibits to this Agreement.
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<PAGE>
13.11 Headings. The headings contained in this Agreement are for
convenience of reference only and shall not constitute a part hereof or define,
limit or otherwise affect the meaning of any of the terms or provisions hereof.
13.12 Entire Agreement. This Agreement, together with the schedules and
exhibits hereto, constitutes the entire agreement between the parties with
respect to the subject matter hereof and supersedes all prior understandings,
agreements and arrangements, both oral and written, between the parties with
respect to the subject matter hereof.
13.13 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which, when
taken together, shall constitute one and the same instrument.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and A. Donald Stallings and June S. Shearin have executed this
Agreement for the limited purpose of acknowledging their obligations under
Sections 11.2 and 11.4 hereof, as of the day and year first above written.
STALLINGS OIL COMPANY
Attest:
/s/ June S. Shearin /s/ Donald Stallings
_________________________ By:_____________________________________
Secretary Name:
Title:
(Corporate Seal)
/s/ Donald Stallings
----------------------------------------
A. Donald Stallings, Individually
/s/ June S. Shearin
----------------------------------------
June S. Shearin, Individually
THE PANTRY, INC.
Attest:
/s/ W T. Flyg Dennis Crook
_________________________ By: _____________________________________
Secretary Dennis Crook
SVP Admin
(Corporate Seal)
