SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): February 25, 1999
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)
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On February 25, 1999, The Pantry, Inc. (the "Company") acquired 60
convenience stores and related assets from Taylor Oil Company ("Taylor"). The
real property on which the stores are located has been leased or subleased from
Taylor or affiliated parties. Of the 60 leases, 51 are for terms of 15 years
with four five-year renewal options. The remaining nine subleases are for terms
ranging from three to 18 years, exclusive of renewal options. The acquired
convenience stores are located in North Carolina and Virginia. The purchase
price was approximately $23,000,000 in cash plus certain adjustments. The
Company intends to continue to operate the assets of Taylor as they have
historically been operated. The source of funds for the acquisition was the
Company's Amended and Restated Credit Facility and cash on hand.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED
The audited financial statements of Taylor as of December 31, 1997 and
1998 and for each of the three years in the period ended December 31, 1998,
and the Notes thereto, will be provided by amendment within 60 days from
the date of this report.
(b) PRO FORMA FINANCIAL INFORMATION
Unaudited pro forma financial statements of the Company and Taylor for
the year ended September 24, 1998, and as of and for the three-month period
ended December 24, 1998, will be provided by amendment within 60 days from the
date of this report. The unaudited pro forma statement of operations for the
year ended September 24, 1998 will include the Company's statement of operations
for the year ended September 24, 1998 and Taylor's statements of income for the
year ended December 31, 1998. The unaudited pro forma financial statements for
the latest interim period will include the financial statements of the Company
as of and for the three-month period ended December 24, 1998 and Taylor as of
and for the three-month period ended December 31, 1998.
(c) EXHIBITS
Exhibit No. Description of Exhibit
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2.1 Asset Purchase Agreement between Taylor Oil
Company and The Pantry, Inc., dated as of
January 14, 1999 (asterisks located within the
exhibit denote information which has been
deleted pursuant to a request for confidential
treatment filed with the Securities and Exchange
Commission)
2.2 List of Exhibits and Schedules Omitted from the Asset
Purchase Agreement referenced in Exhibit 2.1 hereof
23.1* Consent of Edwards, Falls & Renegar, PLLC
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* To be filed by amendment.
<PAGE>
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: March 12, 1999
THE PANTRY, INC.
By: /s/ William T. Flyg
--------------------------------------------
William T. Flyg
Senior Vice President Finance and Secretary
<PAGE>
EXHIBIT INDEX
Exhibit No. Description of Exhibit
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2.1 Asset Purchase Agreement between Taylor Oil
Company and The Pantry, Inc., dated as of
January 14, 1999 (asterisks located within the
exhibit denote information which has been
deleted pursuant to a request for confidential
treatment filed with the Securities and Exchange
Commission)
2.2 List of Exhibits and Schedules Omitted from the Asset
Purchase Agreement referenced in Exhibit 2.1 hereof
23.1* Consent of Edwards, Falls & Renegar, PLLC
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* To be filed by amendment.
ASSET PURCHASE AGREEMENT
BETWEEN
TAYLOR OIL COMPANY
AND
THE PANTRY, INC.
DATED AS OF JANUARY 14, 1999
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TABLE OF CONTENTS
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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.........................................................................10
2.6 PAYMENT OF PURCHASE PRICE..............................................................10
2.7 ALLOCATION OF PURCHASE PRICE...........................................................10
2.8 PRORATIONS.............................................................................10
2.9 EMPLOYEES..............................................................................10
ARTICLE III - THE CLOSING.....................................................................11
3.1 TIME AND PLACE OF CLOSING..............................................................11
3.2 INSTRUMENTS OF TRANSFER................................................................11
3.3 FURTHER ASSURANCES.....................................................................11
3.4 TRANSFER TAXES.........................................................................12
ARTICLE IV - TERMINATION......................................................................12
4.1 TERMINATION............................................................................12
4.2 EFFECT OF TERMINATION..................................................................12
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...........................................................................13
5.4 NO ACTIONS.............................................................................13
5.5 APPROVALS..............................................................................14
5.6 COMPLIANCE WITH LAWS AND ORDERS........................................................14
5.7 FINANCIAL STATEMENTS...................................................................14
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5.8 ABSENCE OF CERTAIN CHANGES OR EVENTS...................................................14
5.9 TITLE TO TRANSFERRED ASSETS............................................................15
5.10 INVENTORY.............................................................................15
5.11 REAL PROPERTY.........................................................................16
5.12 THIRD PARTY LEASES....................................................................17
5.13 INSURANCE.............................................................................17
5.14 CONTRACTS.............................................................................17
5.15 EMPLOYMENT LAW MATTERS................................................................17
5.16 ENVIRONMENTAL MATTERS.................................................................18
5.17 PROPERTY OF OTHERS....................................................................20
5.18 EQUIPMENT, ETC........................................................................20
5.19 CONDITION OF TANGIBLE ASSETS..........................................................21
5.20 SUFFICIENCY OF ASSETS.................................................................21
5.21 TAX MATTERS...........................................................................21
5.22 FINDERS OR BROKERS....................................................................21
5.23 DISCLOSURE OF MATERIAL FACTS..........................................................21
5.24 CERTAIN INTERESTS; AFFILIATE TRANSACTIONS.............................................22
5.25 EMPLOYEE BENEFIT PLANS................................................................22
ARTICLE VI - REPRESENTATIONS AND WARRANTIES OF THE PURCHASER..................................23
6.1 ORGANIZATION AND GOOD STANDING.........................................................23
6.2 POWER AND AUTHORITY....................................................................23
6.3 NO VIOLATION...........................................................................23
6.4 NO ACTIONS.............................................................................24
6.5 APPROVALS..............................................................................24
6.6 DISCLOSURE OF MATERIAL FACTS...........................................................24
6.7 FINDERS OR BROKERS.....................................................................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.................................................................26
7.5 NO NEGOTIATIONS........................................................................26
7.6 ACCESS TO THE BUSINESS.................................................................26
7.7 DISCLOSURE REGARDING THE SELLER........................................................26
7.8 CONFIDENTIALITY........................................................................27
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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
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..................................................................28
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 FINANCING.............................................................................30
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 UPGRADE FUND..........................................................................34
11.6 FLEET CARD PROGRAM ACCOUNTS RECEIVABLE................................................34
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ARTICLE XII - SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION.................................................................35
12.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES............................................35
12.2 INDEMNIFICATION.......................................................................36
12.3 NOTICE AND PAYMENT OF CLAIMS..........................................................36
12.4 LIMITATION ON INDEMNITY...............................................................37
12.5 MITIGATION OF DAMAGES.................................................................38
ARTICLE XIII - MISCELLANEOUS..................................................................38
13.1 FEES AND EXPENSES.....................................................................38
13.2 NOTICES...............................................................................38
13.3 AMENDMENT; WAIVER.....................................................................40
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.............................................................41
13.10 REFERENCES...........................................................................41
13.11 HEADINGS.............................................................................41
13.12 ENTIRE AGREEMENT.....................................................................41
13.13 COUNTERPARTS.........................................................................41
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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
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1.1 Stores
2.1(d) Change Fund
2.1(f) Contracts
2.2(h) Oil/Water Separators and Spill and Overfill Tanks
2.2(j) Warehouse Buildings
2.2(k) Excluded Equipment
2.3(c) Unamortized Oil Company Rebates
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 Real Property
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(f) Encroachments
5.11(i) Flood Hazard Area
5.11(j) Tax Lots
5.12(a) Third Party Leases
5.12(c) Third Party Lease Assignments Requiring Approval
5.14 Contract Assignments Requiring Approval
5.15 Employment Matters
5.16(b) Compliance with Environmental Laws
5.16(d) Environmental Approvals and Reports
5.16(g) Underground Storage Tanks
5.18(a) Seller Equipment
5.18(b) Third Party Equipment
5.21 Tax Audits
5.24 Affiliate Transactions
5.25 Employee Benefit Plans
9.4 Approval Exceptions
9.6 Mortgagees and Their Interests
9.11(b) Environmental Matters
11.2 Noncompetition Exceptions
11.3(a) Identified Petroleum Releases
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "Agreement"), dated as of the 14th
day of January, 1999, by and between TAYLOR OIL COMPANY, a North Carolina
corporation (the "Seller"), and THE PANTRY, INC., a Delaware corporation (the
"Purchaser").
WITNESSETH:
WHEREAS, the Seller operates sixty (60) convenience stores in North
Carolina and Virginia; 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" shall include the following
persons: John Taylor, Anderson Taylor, and Taylor Family Properties, LLC.
"Affiliate Leases" shall mean leases for each parcel of Affiliate
Real Property.
"Affiliate Real Property" shall mean the real property owned by
Affiliates and more particularly described on Schedule 5.11(b) hereto.
<PAGE>
"Agreement" shall mean this Asset Purchase Agreement and shall
include all of the Schedules and Exhibits attached hereto.
"Approval" shall mean any approval, authorization, 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 sixty (60)
convenience stores in North Carolina and Virginia, 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 each of the
Stores, including all funds normally maintained by Seller in each cash register
drawer used in the Business.
"Closing" shall mean the consummation of the transactions
contemplated by this Agreement, effective as of 7:00 a.m. on the Closing Date.
"Closing Date" shall mean February 18, 1999 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 March 18, 1999.
"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 as
of the day prior to Closing, Seller's cost of QSR inventory, seventy-nine
percent (79%) of retail for beer inventory, seventy-five percent (75%) of retail
for cigarette inventory, and sixty-two and one-half percent (62 1/2%) of retail
for all other Merchandise Inventory, all as determined from Seller's
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books and records and the Audit, subject to confirmation by the parties upon
completion of Purchaser's review.
"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.
"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) or 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.
"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.
"Fleet Card Program" shall mean the proprietary fleet sales program
of Seller and the equipment (including the software, subject to vendor approval,
and related hardware) and accounts receivable related thereto.
"Fleet Card Receivables" shall have the meaning ascribed to such
term in Section 11.6 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.
"Hazardous Substance" shall have the meaning ascribed to such term
in section 5.16(a) hereof.
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"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.
"IRS" shall mean the Internal Revenue Service.
"Knowledge" shall mean (i) the actual knowledge of any of Seller's
officers 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, 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 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
Virginia Uniform Commercial Code - Bulk Transfers and any lien arising under
N.C.G.S. ss.105-366(d)), 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, cups, automotive
products or accessories, and any other products of the Business of whatever
nature (other than Petroleum Inventory) held for retail sale out of the Stores.
"OSHA" shall mean the Occupational Safety and Health Act of 1970,
as amended.
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"NCDENR" shall have the meaning ascribed to such term in Section
2.2(h) hereof.
"Permitted Liens" shall mean (i) 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 (ii) 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 is 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 Store or 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 on 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(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.
"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 Taylor Oil Company, a North Carolina
corporation.
"Seller Leases" shall mean leases for each parcel of Seller Real
Property.
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"Seller Real Property" shall mean the real property more
particularly described on Schedule 5.11(a) hereto.
"Store Equipment" shall mean all convenience store fixtures,
machinery, and equipment, including, but not limited to, walk-in coolers, store
fixtures, counters, shelving, refrigeration equipment, cash registers, safes,
fountain dispensing equipment, QSR and food service equipment, ice machines,
tables and any other fixtures or equipment necessary for running a convenience
store that may be 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 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 sixty (60) convenience stores operated by
the Seller and identified on Schedule 1.1, 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, notice, 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 leases for each parcel of Third
Party Real Property as more particularly described on Schedule 5.12(a).
"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) hereto.
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"Transaction Documents" shall mean, collectively, this Agreement,
the 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(h) hereof.
"Wholesale Business" shall mean Seller's wholesale petroleum
business wherein the Seller sells, consigns and delivers petroleum to
convenience stores, gas stations and other similar retailers and certain end
users as wholesale supplier and not as retailer or operator of such retailers.
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 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
Seller's rights and interest in 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) the Store Equipment;
(b) the Petroleum Equipment;
(c) the Inventory;
(d) the Change Fund as set forth on Schedule 2.1(d);
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(e) the Store Supplies;
(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 source code and systems documentation and telephone switches
related to point-of-sale and petroleum dispensing equipment;
(h) all rights, interests and claims 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) all claims, rights, choses-in-action of the Seller with respect
to or against any third-party who is or may be liable in whole or in
part for any damages arising out of petroleum product or hazardous
substances contamination occurring prior to closing, for which
Purchaser may be legally or contractually liable or which in any way
may result in or cause or contribute to a claim for damages against
Purchaser;
(j) the name "ETNA," all variations thereof and the goodwill
associated therewith and with the Business;
(k) all books and records described in Section 9.7(b); and
(l) the Fleet Card Program.
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 and earned rebates due from oil companies)
arising from products sold or services rendered by the Seller prior to
the Closing Date except for accounts receivable of the Fleet Card
Program;
(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) all assets of Seller located at its corporate offices;
(e) any assets not relating to the Business;
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(f) all minute books and stock books of the Seller;
(g) any assets relating to any Employee Benefit Plan;
(h) except for the oil/water separators and spill and overfill
tanks at the Stores set forth on Schedule 2.2(h), 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"), heating oil
tanks and all aboveground storage tanks, unless Purchaser specifically
elects in writing to acquire any of such tanks;
(i) all Hazardous Substances, hazardous wastes, PCBs and PCB
containing materials, asbestos containing materials, and waste oil;
(j) the Real Property and improvements, including all district
maintenance warehouse buildings (and equipment therein) identified on
Schedule 2.2(j);
(k) the equipment located in Seller's district maintenance
warehouse buildings identified on Schedule 2.2(k);
(l) Seller's Wholesale Business;
(m) nontransferable licenses and permits; and
(n) motor vehicles.
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
Date under the Third Party Leases;
(b) all Liabilities incurred or accruing from and after the Closing
Date under the Contracts; and
(c) Liability incurred by Seller, and resulting from Purchaser's
debranding, for repayment of unamortized oil company rebates and
allowances with respect to CITGO, as more particularly identified and
described on Schedule 2.3(c) [not to exceed $103,000].
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, 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").
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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 Nineteen
Million Dollars ($19,000,000), plus (i) an amount equal to Inventory at Cost,
(ii) the value of the Change Fund, and (iii) an amount equal to the face value
of the Fleet Card Receivables.
2.6 PAYMENT OF PURCHASE PRICE. At Closing, the Purchaser shall pay to
Seller (i) $19,000,000 of the Purchase Price, (ii) an amount equal to
ninety-eight percent (98%) of Seller's book cost of current Inventory
("Inventory Estimate"), (iii) an amount equal to the Change Fund, and (iv) an
amount equal to the face value of the Fleet Card Receivables. Such payments
shall be made by wire transfer of immediately available funds to an account
designated in writing by Seller. Upon completion of the Audit and the
determination of Cost, if Cost exceeds the Inventory Estimate, Purchaser shall
pay the difference to Seller, and if Cost is less than the Inventory Estimate,
Seller shall pay the difference to Purchaser, in either case by wire transfer of
immediately available funds to an account designated in writing by Seller.
2.7 ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be allocated
(i) first to the Change Fund and the Fleet Card Receivables on a
dollar-for-dollar basis, (ii) then to the Inventory at Cost and (iii) then, with
respect to the remaining portion, (A) twenty-five percent (25%) to Store
Equipment and Petroleum Equipment (B) seventy percent (70%) to goodwill and (C)
five percent (5%) for the noncompetition covenants in Section 11.2. 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 taxable
year, make any allocation of an increase or decrease in the Purchase Price for
any asset, Purchaser or Seller, as applicable, agrees 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 Third Party Leases or Contracts, (c) Tank
registration fees (not to exceed $60,000), and (d) 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 other applicable
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,
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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
Date. 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 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 appropriate Affiliate and the Purchaser shall execute and
deliver an Affiliate Lease with respect to each parcel of the Affiliate Real
Property; and (c) the Seller and the Purchaser shall execute and deliver
assignment and assumption agreements or subleases (the "Third Party Lease
Assignments") of the rights granted and obligations imposed in the Third Party
Leases with respect to the Third Party Real Property. 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. As of the
closing Date, Purchaser's annual aggregate obligation for rent payments under
the Leases shall not exceed $3,930,000.
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
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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 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 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, describing the breach in reasonable detail, 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; or
(d) by the Seller or the Purchaser after March 18, 1999 if Closing
shall not have occurred by March 18, 1999, so long as the delay in
Closing shall not have resulted from the intentional act or default 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 Agreement shall forthwith become void (except for
Sections 7.8 and 8.3 (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. If such
termination shall result from any other reason, including 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.
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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, stockholder, 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. 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.
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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 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(a) the Seller has complied in all
material respects with all Laws applicable to it, to its ownership of the
Seller's Real Property, and to the operation of the Business, (b) the Seller 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 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. As soon as available, and in any event prior
to Closing, Seller shall deliver to Purchaser audited financial statements for
the twelve (12) months ended December 31, 1996 and 1997 and unaudited interim
financial statements for the ten (10) months ended October 31, 1998, copies of
which will be 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. In addition, Seller will
provide to Purchaser audited financial statements for the twelve (12) months
ended December 31, 1998 on or before February 26, 1999, and at Purchaser's
request and expense, unaudited financial statements for such period as may be
specified by Purchaser to satisfy certain securities reporting requirements.
5.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as described in detail
on Schedule 5.8 hereto, since October 31, 1998 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, 1998,
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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 and except for Permitted
Liens, (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 each Third Party identified on
Schedule 5.11(c), Seller has no Knowledge of any adverse claim against
the title to the Third Party Real Property identified as owned by such
Third Party.
(b) Except as set forth on Scheduled 5.18(b), all material
properties and assets (real, personal, mixed, tangible or intangible)
used in the operation of the Business are included in the Transferred
Assets.
(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, except for 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.
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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.
(b) Schedule 5.11(b) hereto contains a true and complete list and
description of all of the Affiliate Real 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. To 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.
(e) Except as set forth on Schedule 5.11(e), neither the Seller,
any Affiliate or, to the Seller's Knowledge, any Third Party 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) 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 and, to Seller's Knowledge,
the Third Parties, 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 or Third Party, 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
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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 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, 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. 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, and worker's compensation 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
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
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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.
(a) 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
3011, 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 generation,
transportation, treatment, storage, release, or disposal of which is
regulated under or by applicable Laws, but the definition "Hazardous
Substance" specifically excludes petroleum products, by-products and
constituents, other than waste oil.
(b) Except as set forth in Schedule 5.16(b), 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 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 generation, storage, processing,
utilization, labeling,
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transportation, treatment, disposal, release, discharge, 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 generation, storage, processing, utilization, labeling,
transportation, disposal, treatment, emission, release, discharge, 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 assessment, removal, remediation, closure or other
action under applicable Laws relating to Hazardous Substances,
Petroleum Products, leaking underground storage tanks or tank systems
or leaking aboveground storage tanks on any of the Real Property,
including, with respect to any such assessment, 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 Trust Fund
or assessment insurance coverage for such operation exists or has been
denied or excluded; and whether any Trust Fund or insurance deductible
has been met.
(c) With respect to the Business, to the Knowledge of the Seller,
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, to the Knowledge of the Seller,
except as set forth on Schedule 5.16(d) hereto, 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, 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 or Petroleum
Products 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 or Petroleum
Products.
(f) Except as set forth on Schedule 5.16(b), 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, with which Seller has not complied, 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
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promulgated thereunder, "CWA"), the Clean Air Act, as amended (42
U.S.C. Section 7401, ET SEQ.) (together with the regulations
promulgated thereunder, "CAA"), the Toxic Substances Control Act, as
amended (15 U.S.C. Section 2601, 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.
(g) Schedule 5.16(g) hereto contains a true and complete list and
description of every underground storage tank system, including pumps
and lines, 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 VDEQ and
Seller has satisfied all applicable requirements for coverage under the
Trust Fund for each of the Tanks. Seller has not taken or allowed any
action or failed to take any action which could result in revocation of
such coverage under the Trust Fund. Each of the Tanks and related
equipment and apparatus has been upgraded to meet all applicable legal
and regulatory requirements, including, without limitation, the
requirements of 40 C.F.R.ss. 280.21 that underground storage tank
systems must meet by December 22, 1998. None of such Tanks has been or
is being used for the storage of waste oil.
(h) Except as set forth on Schedule 5.16(b), there has been no
release of Hazardous Materials or Petroleum Products at or from the
Tanks, Petroleum Equipment, Stores or Real Property, in amounts or in a
manner that, individually or in the aggregate, could reasonably be
expected to require investigation, notification, or remediation under
any environmental Law.
(i) There are no unregistered underground storage tanks, including
pumps and lines, or aboveground storage tanks on the Real Property.
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) 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) 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.
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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 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, or as set
forth on Schedule 5.18(b), the Transferred Assets constitute all of the
property, assets and contractual rights (a) adequate for the conduct of the
Business as presently conducted and (b) presently used by the Seller with
respect to the Business. The Business has, and on the Closing Date will have, a
normal operating supply (consistent with past practices) of Inventories and
Store Supplies.
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 the Transfer contemplated by
this Agreement, or 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 arising out of
the Transfer contemplated by this Agreement, 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.
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
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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 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 Purchaser true, correct and complete copies of all such written
Employee Benefit Plans and descriptions of any such unwritten Employee
Benefit Plans.
(b) With respect to each Employee Benefit Plan, to Seller's
Knowledge, no event has occurred, and there exists no condition or set
of circumstances in connection therewith, for which Seller could be
subject to any liability under ERISA, the Code or any other applicable
Law, except liability for benefit claims and funding obligations
payable in the ordinary course. Each Employee Benefit Plan is in
compliance with, and has been administered in all respect consistent
with, its terms, ERISA, the Code, and other applicable Law, including,
but not limited to, all applicable reporting and disclosure
requirements. To Seller's Knowledge, no prohibited transaction within
the meaning of Section 406 of ERISA or Section 4975 of the Code, or
breach of any fiduciary duty under Title I of ERISA, has occurred with
respect to any Employee Benefit Plan and no civil or criminal action is
pending or, to Seller's Knowledge, threatened against any Employee
Benefit Plan. Seller has timely filed or caused to be timely filed with
the Internal Revenue Service all applicable annual reports for each
Employee Benefit Plan for all years and periods for which such annual
reports were required through the Closing Date.
(c) Each Employee Benefit Plan that is intended to qualify under
Section 401(a) of the Code so qualifies and its related trust is exempt
from taxation under Section 501(a) of the Code. Seller has never
maintained, sponsored, contributed to, participated in or had any
liability with respect to (i) any Employee Benefit Plan subject to
Title IV of ERISA or Section 412 of the Code, (ii) any multiemployer
plan as defined under Sections 3(37) or 4001(a)(31) of ERISA or Section
414(f) of the Code, (iii) any Employee Benefit Plan that promises or
provides retiree medical or other welfare benefits to any person,
except as required by ERISA, the Code or other applicable Law,
including, but not limited
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to, the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended, (iv) any multiemployer plan within the meaning of Section
413(c) of the Code or Sections 4063, 4064 or 4066 of ERISA or (v) 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.
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 States of North Carolina
and Virginia.
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
actions on its part required by applicable Law, its Certificate of Incorporation
and By-Laws.
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
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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 filings as may
be required by 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.
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), (iii) all of the Approvals relating to or affecting the
Business in good standing and
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(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 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 and in no event for a term in excess of one year;
(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 permit
to occur any of the things referred to in Section 5.8(b) hereof; or (j)
otherwise take any other action or 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 or cause to be
obtained 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.
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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 March 18, 1999 or earlier termination of
this Agreement, 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 1996, 1997 and 1998 year-to-date), current
personnel records, and 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.
Commencing on the day following the date of this Agreement, the
Purchaser and its Representatives shall be allowed to make such environmental
and other engineering investigations, including Phase I and Phase II analysis
and testing, as Purchaser shall, in its sole discretion, deem appropriate. Prior
to conducting any soil or groundwater testing, the Purchaser shall provide the
Seller with the proposed scope of such testing. Purchaser shall bear the expense
of such analysis and testing, and shall indemnify Seller from any damages caused
by such analysis and testing. The Seller will immediately deliver 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.
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.
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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 a Store or
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,
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, except for unusual and
extraordinary market conditions beyond the control of Seller.
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 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.
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: (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
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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 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 (g) 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, in form and substance reasonably acceptable to Purchaser and its
counsel.
9.7 DELIVERIES. The Seller shall have also 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
1996, 1997 and 1998 year-to-date), current personnel records, and all
underground storage tank and environmental reports and records,
including reports in the custody or control of environmental consulting
firms and counsel engaged by the Seller;
(c) a certificate of good standing 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 Corporation
Commission of Virginia and (iv) the Virginia 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 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 Womble, Carlyle, Sandridge & Rice, PLLC, 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 Leases and Third Party Lease
Assignments;
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(h) powers of attorney, assignment agreements, or other similar
documents, in form and substance reasonably satisfactory to Purchaser
and its counsel, assigning all rights, interests and claims referred to
in Section 2.1(h);
(i) flood certificates with respect to the Stores identified on
Schedule 5.11(i);
(j) a current aging of the Fleet Card Receivables; and
(k) 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.
(a) 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 shall take such steps necessary to satisfy
Purchaser or may terminate this Agreement by written notice to the
Purchaser and the effect of such 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.
(b) Seller shall have completed, or caused to be completed, to
Purchaser's reasonable satisfaction, all of the items listed in
Schedule 9.11(b) relating to environmental matters, which may be
updated by Purchaser up to Closing.
9.12 FINANCING. The Purchaser shall have obtained a satisfactory
commitment for financing to fund the Purchase Price by January 21, 1999 and will
advise Seller upon receipt thereof.
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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 portion of the Purchase Price described
in Section 2.6 as payable at Closing;
(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 twenty (20) days prior to the
Closing Date, of the Secretary of State of each of North Carolina and
Virginia, as to the Purchaser's authorization to transact business in
North Carolina and Virginia;
(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
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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 its counsel, including, without limitation,
certificates of resale or comparable certificates exempting the sale of
Inventory and Equipment from the state sales tax.
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 it 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 its Affiliates or ascertainable from public or
published information or trade sources) received
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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 its 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 its 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 three (3) years from and after the
Closing, neither Seller nor any of its Affiliates (including, without
limitation, John Taylor, Anderson Taylor and Taylor Family Properties, LLC) will
engage, directly or indirectly, in the operation of, or own or have any interest
of any kind, in any convenience store or retail gas station business in the area
within a three (3) mile radius of any of the Stores; provided that the foregoing
shall not be deemed to restrict Seller or any of its Affiliates from conducting
any of the businesses described on Schedule 11.2.
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
or in any way relating to leaks, releases, spills or discharges of
Petroleum Products which were discovered prior to Closing and which are
identified on Schedule 11.3(a), as between the parties, the Seller
shall be and remain solely responsible for such assessment, remediation
or claim. Seller's responsibility for any such assessment, remediation
or claim (other than third party claims) may be satisfied by
qualification for Trust Fund coverage and payment of any applicable
deductible, if applicable, at no cost or expense to Purchaser. The
Seller also shall be responsible for registration and proper upgrading
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. Schedule 11.3(a) may be revised by Purchaser up to the
date of Closing.
(b) The Purchaser shall be solely responsible for maintaining
registration of registered Tanks and Store sites subsequent to Closing.
As between the parties, the Purchaser shall be solely responsible for
any assessment or remediation required by Law and any third-party
claims arising from or in any way related to leaks, releases, spills or
discharges of Petroleum Products which were discovered subsequent to
Closing at any of the Store sites, or which were not identified on
Schedule 11.3(a) before Closing.
(c) The Seller will remove all aboveground storage tanks and any
unregistered underground storage tanks except those identified in
Schedule 2.2(h) (including pumps
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and lines) located at the Store sites before the Closing and complete
any assessment or remediation required by Law or a Governmental
Authority, and defend, indemnify and hold harmless Purchaser from any
and all costs (including reasonable attorneys' fees), expenses, damages
or third-party claims in connection therewith. The Purchaser and Seller
shall cooperate with each other post-closing to facilitate any
assessment or remediation for which Seller is responsible, and, at the
request of Purchaser, shall enter into an access agreement, in form
satisfactory to Purchaser's counsel, containing usual and customary
terms and conditions, including Seller's indemnification of Purchaser
for loss or damage caused by its performance hereunder.
(d) The provisions of Section 11.3 shall neither supersede nor
obviate the representations and warranties of the Seller contained in
Section 5.16, the obligations of the Seller set forth in Section
9.11(b), or the rights and claims of Purchaser relating thereto.
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, John Taylor, Anderson
Taylor or Taylor Family Properties, LLC) Section 11.2 hereof, will cause
irreparable injury to the non-breaching party and its 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 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 UPGRADE FUND. From and after the Closing, Seller shall provide to
Purchaser a Two Million Dollar ($2,000,000) upgrade fund upon which Purchaser
may draw, at its discretion, at any time and from time to time, during the two
(2) year period following the Closing Date, to upgrade any or all of the Stores
located on Seller Real Property. All withdrawals from the upgrade fund during
the first year following the Closing Date shall be applied to increase the rent
for the upgraded Store, using a cap rate of ten and one-half percent (10 1/2%)
of the amount of such withdrawal. All withdrawals during the second year
following the Closing Date shall be applied to increase the rent for the
upgraded Store, using a cap rate of twelve percent (12%). The parties agree to
execute amendments to the effected Leases at the time of such withdrawals to
reflect the rent increases. Notwithstanding the foregoing, availability of the
upgrade fund to Purchaser shall be limited to projects which involve
expenditures in excess of $100,000.
11.6 FLEET CARD PROGRAM ACCOUNTS RECEIVABLE. Purchaser agrees to use
commercially reasonable efforts to collect the Fleet Card Program accounts
receivable which are included in the Transferred Assets ("Fleet Card
Receivables") for a period of sixty (60) days from and after the Closing Date
("Collection Period"). Purchaser shall provide to Seller status reports on
collection of the Fleet Card Receivables fifteen (15) days, thirty (30) days,
forty-five (45) days and sixty (60) days after Closing. Purchaser shall assign
and transfer to Seller, without recourse, any Fleet Card Receivables not
collected during the Collection Period in exchange for a cash payment equal to
the face value thereof (such amount being the same as the face value of the
Fleet Card Receivables included in the Purchase Price pursuant to Section
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2.5(iii) less the collections of Fleet Card Receivables by Purchaser during the
Collection Period). Seller shall have the option at any time during the
Collection Period, upon written notice to Purchaser, to purchase any of the
uncollected Fleet Card Receivables. Any monies received by Purchaser within six
(6) months after the Closing Date in payment of Fleet Card Receivables assigned
and transferred to Seller after the Collection Period shall be remitted to
Seller.
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
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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 hereto, its 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 Uniform Commercial Code - Bulk Transfers, N.C.G.S. ss. 25-6-101, ET
SEq., (or the Virginia Uniform Commercial Code - Bulk Transfers) or N.C.G.S.
105-366(d) as amended. 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 rise to indemnification as provided in this
Article XII (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 its
indemnification obligations under this Section. If the Indemnifying
Party assumes the defense, each
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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 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 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 Article XII 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 XII 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) 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(a))
exceeds $100,000. If Damages incurred by any Indemnified Party in
connection with Claims made pursuant to Section 12.2(b) exceed
$100,000, the Indemnified Party shall be entitled to payment from the
Indemnifying Party
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of an amount equal to the amount of Damages in excess of $100,000. This
Section 12.4(a) shall not apply to the representations and warranties
of Seller in Section 5.16.
(b) Characterization of Payment. Any indemnity payment made
pursuant to this Article XII shall be treated by Purchaser and Seller
as an adjustment to the Purchase Price.
(c) Maximum Liability. The maximum aggregate amount of Damages for
which Seller or Purchaser shall be liable pursuant to this Article XII
shall be the amount equal to one-half of 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;
provided, however, the Purchaser hereby agrees to reimburse the Seller for the
fees and expenses incurred in connection with the audit performed by Edwards
Falls & Renegar, PLLC and required to satisfy certain securities reporting
requirements imposed upon the Purchaser, such fees and expenses not to exceed
$100,000.
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:
Taylor Oil Company
110 Oakwood Street
Winston-Salem, North Carolina 27103
Attention: Anderson Taylor, President
Facsimile No.: 336-724-1844
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with a copy to:
Womble Carlyle Sandridge & Rice, PLLC
2505 Meridian Parkway, Suite 300
Durham, North Carolina 27713
Attention: Kenneth G. Carroll, Esq.
Facsimile No.: 919-484-2318
(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
Post Office Box 2611
Raleigh, North Carolina 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.
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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.
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
any 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, or of any other
jurisdictions.
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.
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<PAGE>
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 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 each of John Taylor, Anderson Taylor and Taylor Family
Properties, LLC has executed this Agreement for the limited purpose of
acknowledging his or its obligations under Sections 11.2 and 11.4 hereof, as of
the day and year first above written.
TAYLOR OIL COMPANY
Attest:
/s/ F. Charles Sweigart By: /s/ John A. Taylor
- ----------------------- ------------------------------------
Secretary Name: John A. Taylor
Title: CEO
(Corporate Seal)
/s/ John Taylor
----------------------------------------
John Taylor, Individually
/s/ Anderson Taylor
----------------------------------------
Anderson Taylor, Individually
TAYLOR FAMILY PROPERTIES, LLC
By: /s/ Anderson Taylor
-------------------------------------
Name: Anderson Taylor
Title: Managing Member
THE PANTRY, INC.
Attest:
/s/ W.T. Flyg By: /s/ Dennis R. Crook
- ----------------------- -------------------------------------
Secretary Dennis R. Crook
Senior Vice President
(Corporate Seal)
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List of Exhibits and Schedules Omitted from the
Asset Purchase Agreement referenced in Exhibit 2.1 hereof
Pursuant to Regulation 5-K, Item 601(b)(2), the Exhibits and Schedules to the
Asset Purchase Agreement, as listed below, have not been filed. The Registrant
agrees to furnish supplementally a copy of any omitted Exhibit or Schedule to
the Commission upon request; provided, however, that the Registrant may request
confidential treatment of omitted items.
Exhibits
- --------
Exhibit A Form of Seller Leases and Affiliate Leases
Exhibit B Form of Third Party Lease Assignments
Schedules
- ---------
1.1 Stores
2.1(d) Change Fund
2.1(f) Contracts
2.2(h) Oil/Water Separators and Spill and Overfill Tanks
2.2(j) Warehouse Buildings
2.2(k) Excluded Equipment
2.3(c) Unamortized Oil Company Rebates
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 Real Property
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(f) Encroachments
5.11(i) Flood Hazard Area
5.11(j) Tax Lots
5.12(a) Third Party Leases
5.12(c) Third Party Lease Assignments Requiring Approval
5.14 Contract Assignments Requiring Approval
5.15 Employment Matters
5.16(b) Compliance with Environmental Laws
5.16(d) Environmental Approvals and Reports
5.16(g) Underground Storage Tanks
5.18(a) Seller Equipment
5.18(b) Third Party Equipment
5.21 Tax Audits
5.24 Affiliate Transactions
5.25 Employee Benefit Plans
9.4 Approval Exceptions
9.6 Mortgagees and Their Interests
9.11(b) Environmental Matters
11.2 Noncompetition Exceptions
11.3(a) Identified Petroleum Releases
