ASSET PURCHASE AGREEMENT
BY AND BETWEEN
XXXXX SYSTEMS, INC.
DIAMOND MINI MART, INC.
XXXXX OIL CO.
EDCO, INC.
AND
WAY ENERGY SYSTEMS, INC.
("SELLERS")
AND
TSC SERVICES, INC.
("PURCHASER")
December 3, 1999
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (the "Agreement") dated this 3rd of
December, 1999 is made and entered into by and between TSC SERVICES, INC., a
Texas Corporation and/or assigns, (the "PURCHASER"), and XXXXX SYSTEMS, INC.
(hereinafter "PARENT"), DIAMOND MINI MART, INC., XXXXX OIL CO., EDCO, INC. and
WAY ENERGY SYSTEMS INC., (collectively, the "SELLERS"), as their interests
appear.
RECITALS
The Sellers are engaged in, among other things, the sale of motor
fuels, lubricants specialty petroleum products, tires and certain automotive
accessories, the distribution of petroleum products, and the operation of
convenience stores, which sell a variety of food and non-food items (excluding
the Remaining Businesses (as defined in Exhibit "L" hereto), the "Business").
Purchaser wishes to purchase and acquire from Sellers certain assets used in the
Business (but specifically excluding certain assets and the other businesses
conducted by Sellers). The Sellers will sell, transfer and assign to Purchaser,
and Purchaser will purchase and acquire from the Sellers, the assets and assume
the certain liabilities of the Business for the consideration and on the terms
and conditions hereinafter set forth; and
WHEREAS, SELLERS are the owners of 42 parcels of real property, various
items and personal property, including equipment, furniture, fixtures, etc., all
of which are utilized on the 42 parcels set forth in Exhibit "A" attached
hereto; and
WHEREAS, PARENT owns, out of the 42 parcels of real property set forth
in Exhibit "A", 18 parcels together with improvements located thereon which is
set forth in Exhibit "B", attached hereto as well as the 7 additional sub-leases
held by PARENT, as more particularly shown on Exhibit "Z"; and
WHEREAS, DIAMOND MINI MART, INC. owns, out of the 42 parcels of real
property set forth in Exhibit "A", 11 parcels together with improvements located
thereon which is set forth in Exhibit "E" attached hereto as well as the 8
additional sites leased by DIAMOND MINI MART, as more particularly shown on
Exhibit "Y", and
WHEREAS, XXXXX OIL CO. owns, out of the 42 parcels of real property set
forth in Exhibit "A", 3 parcels together with improvements located thereon which
is set forth in Exhibit "D" attached hereto; and
WHEREAS, EDCO, INC., owns, out of the 42 parcels of real property set
forth in Exhibit "A", 10 parcels together with improvements located thereon
which is set forth in Exhibit "C" attached hereto; and
WHEREAS, WAY ENERGY SYSTEMS, INC. owns one lease on the property more
particularly set forth in Exhibit "F attached hereto, and the sub-lease portion
of said property which has been sub-leased to CHEMWAY SYSTEMS, INC.
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NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. AGREEMENT TO PURCHASE.
---------------------
A. ASSETS TRANSFERRED.
------------------
On the Closing Date, as hereinafter defined, and subject to the terms
and conditions of this Agreement, Sellers, as their interest may appear, shall
sell, convey, grant, assign, transfer and deliver to Purchaser, and Purchaser
shall buy, accept and receive from Sellers, all of the Sellers' right, title and
interest in and to the following assets and properties of the Sellers (the
"Business Assets"):
(i) REAL PROPERTY. The real property described in Exhibit "A" attached
hereto, together with all buildings, fixtures and other improvements located
thereon and all rights, easements, hereditaments and appurtenances related
thereto (collectively the "Real Property"), set forth in Exhibits "B", "C", "D"
and "E".
(ii) LEASEHOLD INTEREST. The leases of real property set forth in
Exhibit "F" as to which WAY ENERGY SYSTEMS, INC. is the lessee (the "Lease"),
together with all of SELLER'S right, title and interest in and possession of all
improvements, buildings and fixtures covered by the Lease, a copy of which are
attached hereto as Exhibit "U", and the leases on the sites set forth in Exhibit
"Q", "V" and "W".
(iii) MACHINERY AND EQUIPMENT. The machinery, equipment, furniture and
fixtures, and transportation equipment and other personal property listed in
Exhibit "T" attached hereto (the "Machinery and Equipment"), together with all
machinery, equipment, tanks, pumps, furniture and fixtures and other personal
property at the Petroleum terminal facility which is located at the Port of Bay
City, Texas, as set forth in Exhibit "F".
(iv) CONTRACTS. The contracts identified in Exhibit "G" attached hereto
(the "Contracts").
(v) TRADE NAME AND TRADEMARKS. Trade names and trademarks, attached
hereto as Exhibit "H".
(vi) LICENSES AND PERMITS. SELLERS agree to enter into a Concession
Agreement in the format attached as Exhibit "I" which shall allow PURCHASER to
operate SELLERS' businesses until PURCHASER obtains all permit/license for such
purposes. PURCHASER agrees to make application with proper agencies for, and use
its reasonable best efforts to obtain all permits and licenses and further
agrees to indemnify SELLERS for any and all claims, damages, fines, penalties or
causes of action which may arise as a result of PURCHASER operating under
SELLERS' permits/licenses.
(vii) RETAIL INVENTORY. All salable or usable inventory owned by
SELLERS for use in or in connection with the Business which is to be identified
prior to closing and added to this Agreement prior to closing as Exhibit "J"
(the "Inventory"). All wholesale inventory, specifically the inventory at the
Petroleum Terminal Facility which is located on the premises described in
Exhibit "F". Inventory shall include all merchandise including gasoline located
on the Real Property, but shall include Sellers' inventory at the locations set
forth in Exhibit "J" and "0", save and except for the Open Dealers locations set
forth in Exhibit "0".
(viii) MANUFACTURER WARRANTIES. To the extent transferable by SELLERS,
all warranties of any manufacturer, supplier or vendor with respect to any of
the Business Assets to be sold to PURCHASER hereunder.
(ix) FRANCHISE RIGHTS. To the extent their transfer is permitted, all
franchise rights held by Sellers, as described in Exhibit "K" (the "Franchise
Rights"), including food franchises.
(x) MISCELLANEOUS. To the extent otherwise not specifically included
above or expressly excluded below, all machinery, equipment, franchise
agreements, consignment agreements, contract rights, permits, licenses and
leases held or owned by SELLERS and used in connection with the operation of the
businesses currently being operated on any location described in (i) or (ii)
above.
B. EXCLUDED ASSETS.
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Notwithstanding anything in this Agreement to the contrary, there shall
be excluded from the assets, properties, rights (contractual and otherwise) and
business of Sellers to be conveyed, sold, transferred, assigned and delivered to
Purchasers under this Agreement all items set forth in Exhibit "L" attached
hereto, (collectively, the "Excluded Assets").
C. ASSUMED LIABILITIES.
-------------------
The Purchaser shall assume only those liabilities and obligations of
the Sellers set forth on Exhibit "M" hereof and liabilities arising under the
Leases, the Franchise Rights and the Contracts, but in each case only to the
extent that such liabilities and obligations relate to periods commencing on or
after the Closing Date. The liabilities of the Sellers being assumed by the
Purchaser are hereinafter referred to as the "Assumed Liabilities".
D. RETAINED LIABILITIES.
--------------------
With the exception of the Assumed Liabilities, the Purchaser shall not
by execution and performance of this Agreement or otherwise, assume or otherwise
be responsible for any liability or obligation of any kind or nature of the
Sellers, whether relating to any of the Sellers' other assets, operations,
businesses or activities, or claims or such liability or obligation, matured or
unmatured, liquidated or unliquidated, fixed or contingent, or known or unknown,
whether arising out of occurrences prior to, at or after the Closing Date.
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In addition, to the extent that the assignment hereunder of any of the
Business Assets shall require the consent of any other party (or in the event
that any of the Business Assets shall be non-assignable), neither this
Agreement, nor any action taken pursuant to its provisions shall constitute an
assignment or an agreement to assign if such assignment or attempted assignment
would constitute a breach thereof or result in the loss or diminution thereof;
provided, however, that in each such case, Sellers shall use their reasonable
best efforts to obtain prior to the Initial Closing (as defined in Section 2
below) the consents of such other party to an assignment of any such Business
Assets to Purchasers. If such consent is not obtained, Sellers shall cooperate
with Purchaser in any reasonable arrangement designed to provide for Purchaser
the full benefits of any such Business Assets intended to be assigned to
Purchaser, including, without limitation, enforcement, for the account and
benefit of any such Purchaser of any and all rights of any Sellers against any
other person with respect to any such Business Assets; provided, however, that
all expenses related thereto shall be borne by Sellers.
2. CLOSING. Subject to the fulfillment of the closing conditions
contained in this Agreement, the closing (the "Initial Closing") shall take
place no later than February 28, 2000, or another mutually agreeable date (the
"Closing Date"), at the offices of Bay City Abstract Title Company ("Escrow
Agent"), 0000 Xxxxxx X, Xxx Xxxx, Xxxxx 00000; (000) 000-0000; Fax (409)
000-0000, or such other place as the parties may agree.
3. CONVEYANCE OF REAL PROPERTY.
A. OWNED PROPERTY. Conveyance of the Real Property owned by the SELLERS
shall be by the SELLERS' warranty deed, free and clear of all liens and
encumbrances whatsoever, except as to current year's taxes not yet due and
payable, easements or rights of way, apparent or as of record, zoning and
ordinances, and except as to such other encumbrances which may be reasonably
acceptable to PURCHASER, collectively, ("Permitted Exceptions"). Any taxes on
the Real Property being transferred hereunder, for the calendar year 2000, shall
be paid by the SELLERS by giving PURCHASER a credit at the time of Closing,
unless the SELLERS shall present acceptable proof that such 2000 taxes have been
paid. All Real Property taxes for the calendar year 2000 shall be prorated to
the date of Closing and a credit shall be given PURCHASER in such prorated
amount, and PURCHASER agrees to pay such taxes when they become due and owing
and saving the SELLERS harmless therefrom.
B. LEASE PROPERTY. Conveyance of the real property currently being
leased by the SELLERS shall be by the SELLERS' properly executed assignments and
assumptions by the PURCHASER in accordance with and subject to the terms and
conditions of the underlying leases, sub-leases and third-party leases, together
with a fully executed Estoppel in the format attached and marked Exhibit "N" or
in the landlord's or fee owner's form provided such form is substantially
similar to Exhibit "N". SELLERS will provide at closing fully assignable leases
relating to the properties set forth in Exhibit "V" which shall have a remaining
term (including extension rights) of no less than fifteen (15) years. SELLERS
further will provide fully assignable leases relating to
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the properties set forth in Exhibits Q and W and fully assignable special
purpose leases relating to the consignment accounts set forth in Exhibit O.
C. SURVEY. SELLERS shall provide a current survey to the Real Property
and Leases set forth in Exhibit AA in compliance with ALTA specifications, being
transferred pursuant to this Agreement within thirty (30) business days
following the execution of this Agreement.
4. CONVEYANCE OF MACHINERY, EQUIPMENT AND CONTRACT RIGHTS. Subject to
the conditions set forth in this Agreement, the SELLERS will assign and transfer
to PURCHASER all of their right, title and interest in and to all leases,
contract, franchise agreements and all personal property owned by the SELLERS
which relate to the Business Assets and which are not specifically excluded
herein, by properly executed assignments, transfer documents, bills of sale and
other documents of title.
5. PURCHASE PRICE. The purchase price (the "Purchase Price") for the
Business Assets and Inventory (as defined below) shall be $16,175,000.00, as may
be adjusted pursuant to paragraph 8.
6. PAYMENT OF PURCHASE PRICE. Payment of the Purchase Price, pursuant
to Paragraph 5 above, shall be made to SELLERS at Closing (allocated among the
SELLERS in proportion to their respective holdings) by the PURCHASER. For
purposes of this Section 6 only, the Purchase Price, as adjusted pursuant to
Section 8, is allocated as follows:
A. CASH/CERTIFIED FUNDS.
---------------------
(i) The sum of $12,475,000.00 cash or certified funds as adjusted
pursuant to Section 8B (the "Principal Payment") payable to SELLERS for all the
Business Assets related to and used in the operation of the sites set forth in
Exhibit "AA" attached hereto, and the Non-competition Agreement referenced in
Section 10 below; and
(ii) the sum of $200,000.00 cash or certified funds payable to SELLERS
for the Business Assets not heretofore set out in (i) above; and
B. PAYMENT FOR INVENTORY. The sum of $3,500,000.00 in cash or certified
U.S. funds (the "Inventory Payment"), payable to SELLERS in an amount to be
determined prior to closing as adjusted pursuant to paragraph 8A below.
7. XXXXXXX MONEY. Simultaneously with the execution and delivery of
this Agreement by the parties, PURCHASER agrees to deposit in escrow with the
Escrow Agent the sum of $200,000.00 to be held as xxxxxxx money pursuant to the
terms of the Escrow Agreement attached hereto as Exhibit "R". PURCHASER and
SELLERS each agree to enter into the Escrow Agreement simultaneously with the
execution and delivery of this Agreement. PURCHASER further agrees to notify
SELLERS of PURCHASER intent to complete the Acquisition as soon as practical.
Notwithstanding any other provisions in this Agreement to the contrary, should
PURCHASER fail
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to perform its obligations in accordance with the terms of this Agreement, for
any reason other than the failure of a condition to Closing or SELLERS' default
or failure to perform their obligations hereunder, SELLER shall be entitled, as
its sole remedy, all other remedies being expressly waived, to terminate this
Agreement and recover the xxxxxxx money, and additional xxxxxxx money if any,
held by Escrow Agent pursuant to the Escrow Agreement, as liquidated damages and
not as penalty, in full satisfaction of claims against PURCHASER. SELLERS and
PURCHASER agree that SELLERS' damages resulting from PURCHASER'S default are
difficult, if not impossible, to determine and the said xxxxxxx money is a fair
estimate of those damages.
8. PURCHASE PRICE ADJUSTMENT. The aggregate Purchase Price is subject
to adjustment as follows:
A. The Inventory Payment shall be adjusted upon the completion of a
joint inventory count of the Inventory by the Purchaser and the Sellers (the
"Joint Inventory") on or before the Closing Date. The Joint Inventory shall be
conducted using the Sellers' current inventory count procedures and/or a
physical count procedure and said Inventory shall be valued at cost. The parties
agree that this Joint Inventory shall include all salable Inventory on the
premises being transferred, all Inventory purchased or contracted for under
valid and binding agreements, but not delivered to the properties being
transferred, and all other valid and binding contracts for the purchase or sale
of Inventory products on the properties being transferred. In the event that the
cost of total Inventory (the "Inventory Cost") as determined by the Joint
Inventory is greater than $3,500,000, the Inventory Cost will be increased by
the amount by which the Inventory Cost exceeds $3,500,000. In the event that the
Inventory Cost as determined by the Joint Inventory is less than $3,500,000.00,
the Inventory Cost will be decreased by the amount by which the Inventory Cost
falls below $3,500,000.00.
B. Regardless of any allocation of the Purchase Price set forth in
Section 6, the Principal Payment set forth in 6 A (i), shall be adjusted in the
event that (i) the real property located at 0000 Xxxxxx X, Xxx Xxxx, Xxxxx and
0000 0xx Xxxxxx, Xxx Xxxx (the "Bay City Properties") and/or (ii) the real
property located at 0000 Xxxxxxxxxx Xxxx., Xxxxxxxx, Xxxxx (the "Freeport
Property") is sold to a third party presently under Contract (other than the
Purchaser). In the event that the Bay City Properties are sold to a third party
(other than the Purchaser), the Principal Payment will be decreased by $145,000.
In the event that the Freeport Property is sold to a third party (other than the
Purchaser), the Principal Payment will be decreased by $105,000. In the event
that both the Bay City Properties and the Freeport Properties are sold to a
third party (other than the Purchaser), the Principal Payment will be decreased
by $250,000. Upon the sale of any of the Bay City Properties or the Freeport
Property, any such property sold shall be deemed to be an Excluded Asset for
purposes of this Agreement.
9. PRORATION OF INCOME AND EXPENSES. Income and expenses (including
rents, utilities, employee compensation, accrued vacation pay, insurance
premiums, licenses, operating permits, and other similar items) with respect to
the Business Assets, shall be prorated and allocated between the parties as of
the Closing Date. To the extent practical a reconciliation and payment of
prorated items shall take place at the Closing, and to the extent not practical
reconciliation and payment shall be
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made within thirty (30) days following the Closing Date. Taxes on the Real
Property shall be allocated in accordance with Section 3A.
10. NON-COMPETITION AGREEMENT. At the Closing, SELLERS and X. X. Xxxxx,
individually, agree to execute and deliver a Non-competition Agreement in the
format attached hereto as Exhibit "S", the terms of which shall provide, among
other things, that SELLERS and X. X. Xxxxx, jointly and severally, agree not to
sell gasoline, diesel or food products to any convenience store and/or own,
build, or have any investment in any convenience store within a ten (10) mile
radius of each location being transferred to the PURCHASER for a period of five
(5) years from the Closing Date, save and except such distance shall be a radius
of 25 miles from any location being sold to Purchaser which is located on
Interstate Xxxxxxx 00 xxx/xx X.X. Xxxxxxx 00.
11. COMPLIANCE WITH PETROLEUM MARKETING PRACTICES ACT. As to each
contract transferred to PURCHASER pursuant to this Agreement, which constitutes
a "franchise" or evidences a "franchise relationship" as those terms are defined
in the federal Petroleum Marketing Practices Act (the "PMPA") or any applicable
state law, PURCHASER agrees that upon expiration of the current term of any such
contract, PURCHASER shall offer, in good faith, to each franchisee a new
"franchise" on terms and conditions which are not discriminatory to the
franchisee as compared to franchises then currently being offered by PURCHASER
or franchises then in effect with respect to which PURCHASER are the franchiser;
provided that PURCHASER shall have no obligation to offer a new "franchise" to
such franchisee if PURCHASER has a valid ground for termination of the existing
"franchise" or nonrenewal of the existing "franchise relationship" under the
PMPA or applicable state law, and PURCHASER gives such notice of termination or
nonrenewal to the franchisee as may be required by the PMPA or any applicable
state law.
12. REPRESENTATIONS AND WARRANTIES OF THE SELLERS. The SELLERS
represent and warrant to PURCHASER that the representations and warranties
contained In this Agreement are true and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date.
A. ORGANIZATION. SELLERS are corporations duly incorporated, validly
existing and in good standing under the laws of their respective States of
Incorporation, except where failure to so exist or be in good standing would not
result in a material adverse change to the Business Assets or the Business,
taken as a whole, or to the ability of the Sellers to consummate the
transactions contemplated by this Agreement (a "Material Adverse Change"). The
SELLERS have full corporate power and authority to make, execute and deliver
this Agreement and to perform their obligations hereunder. The execution,
delivery and performance of this Agreement have been duly authorized and
approved by all necessary and proper corporate proceedings, including but not
limited to, approval by the Board of Directors and Stockholders of the Sellers
(other than the approval of the Parent Stockholders as set forth in Section
19C).
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B. TITLE. The SELLERS have good and marketable title to the Business
Assets and Real Property, free and clear of all claims, liens, security
interests and other encumbrances, except for the Permitted Exceptions (as
defined in Section 3A) and as otherwise specified herein.
C. LITIGATION. Subject only to the conditions set forth in Paragraph
15, and except as set forth in Exhibit BB, there is no litigation, proceeding,
unpaid judgment or investigation, pending or to the Seller's knowledge,
threatened, against the Business Assets that would be reasonably expected to
result in Material Adverse Change. There is no litigation, proceeding or
investigation, pending or threatened, against the SELLERS that would, if
adversely determined, affect the validity of this Agreement or the ability of
the SELLERS to complete the transactions contemplated hereby.
D. AUTHORIZATION. The execution, delivery and performance of this
Agreement in accordance with its terms, and the completion of the transactions
contemplated hereby will not violate or conflict with the articles of
incorporation or by-laws of any Seller or any law to which SELLERS are subject
to or any agreement by which the SELLERS or the Business Assets are bound.
Except for (i) those consents required for lease assignments and franchise
assignments (ii) the approval and adoption of this Agreement and the
transactions contemplated hereby by the Parent's shareholders at a special or
annual meeting of shareholders of Parent, and (iii) filing, permits,
authorizations, consents and approvals as may be required under, and other
applicable requirements of, the Xxxx-Xxxxx-Xxxxxx Act. No consent of any third
parties or governmental authorities (except as provided herein) is required to
complete the transactions contemplated by this Agreement.
E. TAX MATTERS. All tax returns and reports of any nature relating to
the Business or the Business Assets have been timely filed when due in
accordance with all applicable laws, with the appropriate governmental agency
and all taxes required by law to be paid by SELLERS have been paid prior to
delinquency. SELLERS have no knowledge of any pending or threatened proposed tax
adjustments or deficiencies with respect to any previously filed tax return or
report which related to the Business or to the Business Assets.
F. CONTRACT. The SELLERS have delivered or will make available to
PURCHASER true and complete copies of each Contract which Sellers have entered
into and is still in effect, which relate to the Business Assets as described in
Exhibits "G" and "K". With respect to each such Contract: (i) the contract is
legal, valid, binding, enforceable and in full force and effect; (ii) to the
SELLERS' knowledge, no party is in breach or default, and no event has occurred
which with notice or lapse of time would constitute a breach or default of
permit termination, modification, or acceleration under the Contract that would
be reasonably expected to cause a Material Adverse Change; and (iii) no party
has repudiated any provision of the Contract.
G. COMPLIANCE WITH LAWS. Except as disclosed in the environmental
assessments described in Paragraph 15, SELLERS are not, to their knowledge, in
violation of, and have not heretofore violated, any statute, rule, regulation,
ordinance, order or other law applicable to the SELLERS or the Business Assets.
To the knowledge of SELLERS and subject to the provisions of Paragraph 15, the
ownership and use of the Business Assets by SELLERS in the Business complies
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with all applicable building, zoning, fire and occupational health and safety
statutes, rules, regulations, ordinances, orders and other laws, and no notice
of any violation with respect thereto has been received by SELLERS, or to
SELLERS' knowledge, is threatened.
H. FINANCIAL MATTERS. SELLERS have delivered or will make available to
the PURCHASER copies of certain financial information of the SELLERS for the
periods of October 1, 1998 to September 30, 1999, relating to the Business
Assets being transferred pursuant to this Agreement as requested (the Financial
Information). The Financial Information is true and correct and complete and
presents fairly the financial information set forth therein relating to the
Business in all material respects as of the dates and for the periods covered
thereby.
I. NO UNDISCLOSED LIABILITIES. Except as otherwise expressly disclosed
in this Agreement or reflected or reserved against in the Financial Statements
and subject to the conditions set forth in Paragraph 15, the SELLERS have no
debts, liabilities or obligations of any nature (whether accrued or unaccrued,
fixed, contingent or otherwise) with respect to the Business Assets, except
accounts payable to trade creditors incurred in the ordinary course of business
since the date of the Financial Statements and those that would not reasonably
be expected to cause a Material Adverse Change.
J. INSURANCE. SELLERS have in force general liability, product
liability, fire, casualty and motor vehicle insurance with respect to the
Business and the Business Assets. All of such insurance is in full force and
effect, and SELLERS are in compliance with the terms and provisions thereof.
SELLERS will continue to maintain all of such insurance in force through the
Closing Date. SELLERS shall make available to PURCHASER true and correct copies
of SELLERS' insurance policies.
K. CONDITION OF THE BUSINESS ASSETS. SELLERS WARRANT THAT ALL BUSINESS
ASSETS BEING SOLD WILL BE IN GOOD AND WORKMANLIKE ORDER ON THE DATE OF CLOSING,
provided additionally, the inventory items included in this sale are, in all
material respects, in good and saleable condition. In the reasonable business
judgment of SELLERS, the Business Assets comprise all material assets necessary
to conduct the Business (excluding the Excluded Assets) as presently conducted
by SELLERS.
L. INVENTORY. The inventory items to be sold to PURCHASER pursuant to
the terms of this Agreement are of good and reliable quality, free from known
damage or defects and to the actual knowledge of the SELLERS are fit for resale
in the ordinary course of business at normal prices. SELLERS have conducted
their inventory management (i.e., its purchasing, housing, maintenance and sale
of inventory items) consistent with good and conservative business practices in
the manner to which SELLERS have historically managed their inventory operation
in the ordinary course of their business. SELLERS have agreed to exclude from
the inventory purchased any inventory that is deemed to be damaged at the time
inventory is taken.
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M. RIGHT OF POSSESSION. SELLERS have the exclusive right to access and
possession of the Real Property without interference from any third party.
SELLERS have the unencumbered right to use all accesses to and from the Real
Property to public thoroughfares as such assesses are presently configured and
utilized. Sellers' rights with respect to the property subject to the leases are
as set forth in the lease agreements, copies of which have been made available
to the Purchaser.
N. EMPLOYEE BENEFIT PLANS.
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(1) None of the SELLERS nor any member of a controlled group with
SELLERS sponsor, maintain or contribute to, nor have they ever sponsored,
maintained or contributed, to any multi-employer plans defined in Sec 3(37) of
the Employee Retirement Income Security Act of 1974, as amended ('ERISA") or any
pension plan subject to Title IV of ERISA.
(2) SELLERS shall retain full, complete and exclusive responsibility,
control and obligation for the funding and administration of any and all current
or prior ERISA-related pension or welfare plans or programs in any way related
to the Business Assets and warrants the PURCHASER shall at no time, whether now
or in the future, be in any way responsible or obligated under such plans or
programs.
O. DISCLOSURE. Subject to the conditions set forth in Paragraph 15, all
facts material to the Business Assets and the Business have been disclosed
herein. No representation or warranty made by SELLERS in this Agreement, and no
statement made by SELLERS to PURCHASER in connection with the transactions
contemplated hereby, contains any untrue statement of a material fact, or omits
to state any material facts necessary to make the statements herein or therein
not misleading.
P. BINDING EFFECT. This Agreement has been duly executed and delivered
by the SELLERS and is a valid and binding agreement of SELLERS, enforceable
against SELLERS in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and other similar laws of general
application affecting the enforcement of creditors' rights and general
principles of equity (whether applied in a proceeding at law or in equity).
13. REPRESENTATIONS AND WARRANTIES OF PURCHASER. PURCHASER represents
and warrants to the SELLERS that the representations and warranties contained in
this Section are correct and complete as of the date of this Agreement and will
be correct and complete as of the Closing.
A. ORGANIZATION. PURCHASER is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Texas and qualified
to do business and in good standing in the State of Texas at time of closing.
PURCHASER has full corporate power and authority to make, execute and deliver
this Agreement, and to perform its obligations hereunder. The execution,
delivery and performance of this Agreement have been duly authorized and
approved by
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all necessary and proper corporate proceedings, including but not limited to
approval by the Board of Directors and Stockholders of PURCHASER.
B. LITIGATION. There is no litigation, proceeding or investigation,
pending or threatened, against PURCHASER that would, if adversely determine,
affect the validity of this Agreement or the ability of PURCHASER to complete
the transactions contemplated hereby.
C. AUTHORIZATION. The execution and delivery of this Agreement, and the
completion of the transactions contemplated hereby, do not violate or conflict
with the articles of incorporation or by-laws of PURCHASER, or any law to which
PURCHASER is bound. No consent of any third parties or governmental authorities
is required to complete the transactions contemplated by this Agreement.
D. BINDING EFFECT. This Agreement has been duly executed and delivered
by the PURCHASER and is a valid and binding agreement of PURCHASER, enforceable
against PURCHASER in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and other similar laws of
general application affecting the enforcement of creditors' rights and general
principles of equity (whether applied in a proceeding at law or in equity).
E. PROXY STATEMENT. None of the information supplied or to be supplied
by or on behalf of Purchaser for inclusion or incorporation by reference in the
proxy statement will, at the date mailed to the Parent's stockholders, and at
the time of the meeting of the Parent's stockholders to be held in connection
with this Agreement, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading.
F. FINANCING. Purchaser has obtained a commitment letter from
Convenience Store Financing Company, LLC, a copy of which has been delivered to
the Sellers, pursuant to which, subject to certain customary conditions, such
lender has agreed to provide the Purchaser with financing in an amount equal to
or exceeding $16,200,000.00 prior to the Closing Date for purposes of
consummating the transactions contemplated hereby (the "Financing").
X. XXXX-XXXXX. The Purchaser is not required to file any reports under
the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended
("Xxxx-Xxxxx") in connection with this Agreement or the transactions
contemplated hereby and has received advise of counsel to such effect.
14. THE SELLERS' ACCOUNTS. PURCHASER is not acquiring any interest in
the SELLERS' accounts receivable and/or bank accounts, and PURCHASER shall have
no responsibility for collection of any of the SELLERS' accounts receivable.
11
15. ENVIRONMENTAL.
A. DEFINITIONS. For purposes of this Agreement, the terms specified
below shall have the following definitions:
(1) "ENVIRONMENTAL LAW(S)" means any and all federal, state or local
environmental, health and/or safety-related laws, standards, court decisions,
ordinances, rules, codes, judicial or administrative orders or degrees,
directives, guidelines, and permits or permit conditions, which are or become
applicable to the Business Assets, including, without limitation, (1) the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended (42 U.S.C. Sec. 9601 et seq.), (ii) the Hazardous Materials
Transportation Act, as amended (49 U.S.C. Sec. 1801 et seq.), (iii) the Resource
Conservation and Recovery Act, as amended (42 U.S.C. Sec. 6901 et seq.), (iv)
the Federal Water Pollution Control Act, as amended (33 U.S.C. Sec. 1251 et seq.
and Sec. 1321, et. seq.) and the regulations adopted and promulgated pursuant
thereto, as such laws or regulations now exist or may be amended, enacted,
issued or adopted in the future, either by the Federal or State governments.
(2) "HAZARDOUS MATERIAL(S)" means any chemical, substances, materials,
controlled substances, object, condition, waste, living organism or combination
thereof which is or may be hazardous to human health or safety or to the
environment due to its radioactivity, ignitability, corrosivity, reactivity,
explosivity, toxicity, carcinogenicity, mutagenicity, phytotoxicity,
infectiousness or other harmful or potentially harmful properties or effects,
including, without limitation, petroleum and petroleum products, asbestos and
asbestos-containing materials, radon, underground storage tanks and the contents
thereof, polychlorinated biphenyls (PCBs), and all of those chemicals,
substances, materials, controlled substances, objects, conditions, wastes,
living organisms or combinations thereof, which are now or become in the future
listed, defined or regulated in any manner, based directly or indirectly upon
such properties or effects, pursuant to any Environmental Law.
(3) "RELEASE" means any spilling, leaking, emitting, discharging,
escaping, leaching, disposing or as otherwise provided by Environmental Law(s).
(4) "STORAGE TANK(S)" include but are not limited to underground
storage tanks, above ground storage tanks, and associated ----------------
lines, pumps and other equipment.
B. CONDITION.
---------
(1) REAL PROPERTY. PURCHASER acknowledges that SELLERS have made
representation, warranty, statement or promise to PURCHASER concerning the real
property, fixtures or other assets, the quality, physical aspects or conditions
(including but not limited to the presence or absence of Hazardous Materials on
or originating from the real property) thereof, or the feasibility, desirability
or convertibility of the real property, fixtures or other assets for or into any
particular purpose or use, or any other matter with respect to the real
property, fixtures or other
12
assets. SELLERS acknowledge and agree that PURCHASER has relied upon
representation, statement or warranty by SELLERS or anyone acting for or on
behalf of SELLERS, that all matters concerning certain real property, fixtures
or other assets have been independently verified by SELLERS through an
environmental assessment described elsewhere. The terms and provisions of this
Paragraph will survive for one year after closing and conveyance of the real
property, fixtures and other assets.
(2) EQUIPMENT (INCLUDING STORAGE TANKS). PURCHASER acknowledges and
agrees that SELLERS or anyone acting for or on behalf of the SELLERS have made
representation, warranty, statement or promise to PURCHASER concerning the
equipment (including storage tanks), its quality, value, physical aspects or
conditions thereof, or any other matter with respect to the equipment (including
storage tanks), its quality, value, physical aspects or conditions thereof, or
any other matter with respect to the equipment (including storage tanks)
including but not limited to current or past release(s), spill(s) or leak(s) (as
those terms are defined by Environmental Laws) from the storage tanks. SELLERS
acknowledge that PURCHASER has relied upon such representation, statement or
warranty of SELLERS or by anyone acting for or on behalf of SELLERS with regard
to the equipment (including storage tanks), that all matters concerning the
equipment (including storage tanks) have been independently verified by SELLERS,
and that PURCHASER is taking the equipment (including storage tanks) based upon
Sellers' representation that same are free of all faults.
(3) SELLERS agree to deliver to PURCHASER true copies of any and all
environmental assessments and other records filed with the Texas Natural
Resources Conservation Commission that have been previously prepared by or on
behalf of the Sellers with respect to (x) any underground storage tanks owned by
the Sellers or (y) the Real Property. Each of the assessments to be delivered to
the Purchaser pursuant to this Section reflect the environmental condition of
such properties to the extent and as of the dates specified in such assessments.
(4) ENVIRONMENTAL SITE ASSESSMENT. With respect to each parcel of the
real property and all fixtures or equipment (including storage tanks), PURCHASER
may perform, but is not obligated to, at its cost and expense an environmental
assessment (also known as a "Phase I") which may include:
(a) inspection of each parcel of real property, fixtures and equipment
(including storage tanks);
(b) inspection, review and/or acquisition of records related to
SELLERS' properties, facilities, fixtures and equipment
(including storage tanks);
(c) a review of public records concerning the real properties
(including those in the vicinity of those properties) fixtures and equipment
(including storage tanks);
(d) evidence of historic land uses; and
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(e) other tasks or information typically required or constituting a
component of a Phase I environmental assessment.
PURCHASER, at its expense, may retain an environmental consultant to complete
any and all Phase I environmental assessments that may be desired by PURCHASER,
and PURCHASER shall require the environmental consultant to complete said
environmental assessments within thirty (30) days of the execution of this
Agreement. However, if the environmental consultant recommends, and the
PURCHASER agrees, that a fifteen (15) day extension of the evaluation period for
any property or properties being evaluated is warranted, said fifteen (15) day
extension shall be granted upon the PURCHASER giving written notice to SELLERS
of such extension and of the property or properties to which it applies. In any
event, all environmental assessments undertaken pursuant to this Paragraph must
be completed within forty-five (45) days of the execution of this Agreement,
unless the PURCHASER and SELLERS agree otherwise in writing.
PURCHASER will provide SELLERS the opportunity to review both the
retention agreement with its environmental consultant and the draft scope of
work for the environmental assessment prior to their finalization. PURCHASER
will provide SELLERS with both draft and final copies of the environmental
assessment as soon as possible after completion.
PURCHASER and/or its Consultant shall immediately notify SELLERS if,
while it conducts the environmental assessment, either PURCHASER or Consultant
believes a release(s) that must be reported to governmental authorities (as
required by Environmental Law(s) is discovered at any of the real properties.
SELLERS agree that they will investigate and/or remediate any motor
fuels or other petroleum products which are discovered in, on, or under the
properties(s) [including motorfuels or other petroleum products that migrated
from or unto the properties(s)] during the Environmental Site Assessment
permitted by 15(B)(4) only if required to do so by Environmental Laws.
SELLER'S obligation shall be limited to the actions necessary to
achieve compliance with applicable Environmental Laws. SELLERS shall have no
obligation beyond that which the applicable Environmental Laws place on it.
SELLERS reserve the exclusive right to negotiate with and resolve with the
relevant governmental agencies enforcing such Environmental Laws issues relevant
to the investigation and remediation of such motor fuels or other petroleum
products. SELLERS reserve the right of access to the relevant properties and/or
equipment, at no cost to SELLERS, as SELLERS and/or SELLERS' employees, agents
and contractors may require for any activities deemed necessary or appropriate
by SELLERS to carry out any investigation and/or remediation or related
activities which SELLERS may choose to undertake, or which may be required by
any governmental agency having jurisdiction over such investigation and/or
remediation or related activities. In undertaking such investigation and/or
remediation or related activities SELLERS shall have no liability to anyone
whomsoever, including PURCHASER, its successors, assigns, tenants or users for
business disruption or any other damage, injury or loss whatsoever
14
related to the activities required by this paragraph. The investigation and/or
remediation or related activities shall be undertaken by a contractor of
SELLERS' choosing. SELLERS will require such contractor to estimate by the end
of the forty-five day time period described in 15(b)(4) (the "Environmental Site
Assessment") the cost of any mandated investigation and/or remediation or
related activities necessary to obtain compliance with relevant Environmental
Laws. Such estimate will be provided to SELLERS and PURCHASER. SELLERS shall pay
the amount attributable to Sellers to the DEO and/or any remedial contractor,
prior to Purchaser taking ownership of tanks, with all such remediation
activities to be in compliance with the Texas Department of Pollution Control
and Ecology ("ADPC&E").
(5) FULL ACCESS. The SELLERS will permit representatives of the
PURCHASER to have full access at all reasonable times, but in a manner so as not
to interfere with the normal business operation of the SELLERS, to the real
properties, including access to perform the environmental site assessment
PURCHASER may perform as provided by this Paragraph.
(6) CONFIDENTIALITY. All documents, reports, data, plans, and other
information of any nature and description which SELLERS supply or which
PURCHASER or Consultant discover or develop in performance of the environmental
assessment, shall be deemed confidential, and neither PURCHASER nor Consultant
shall disclose any of the same without SELLERS' written authorization to any
third party, except to the extent that such information is in the public domain
or is required by law.
C. ENVIRONMENTAL RELEASE. Subject to the provisions of paragraph
15(B)(3), PURCHASER, their employees, directors, officers, agents, heirs,
personal representatives, successors and assigns, and any other person acting on
behalf of PURCHASER hereby waive, release, acquit, and forever discharges
SELLERS, their employees, directors, officers, agents, heirs, personal
representatives, affiliates, successors and assigns, and any other person acting
on behalf of SELLERS, of and from any other person acting on behalf of SELLERS,
of and from any and all claims, actions, causes of action, including statutory
rights to contribution or reimbursement including but not limited to the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended (42 U.S.C. Sec. 9601, et seq.) or the Resource Conservation and
Recovery Act, (42 U.S.C. Sec. 6901 et seq), demands, requests for investigation,
remediation or corrective action, damages, costs, expenses, or compensation
whatsoever, direct or indirect, known or unknown, foreseen or unforeseen, which
PURCHASER may arise in the future on account of or in any way growing out of or
in connection with the presence of any Hazardous Materials on, in or under the
Business Assets including, without limitation, the improvements thereon and the
soils and ground water thereof, or the migration of Hazardous Materials onto any
other property from the Business Assets, or the application of any Environmental
Law to the Business Assets following SELLERS' compliance with B-3 above.
D. ENVIRONMENTAL INDEMNIFICATION AND HOLD HARMLESS. PURCHASER, and
their respective successors and assigns (collectively, "Indemnitor"), shall each
protect, exonerate, indemnify, defend and hold harmless, for a period of one
year from the Closing Date SELLERS,
15
their employees, directors, officers, agents, heirs, personal representatives,
successors and assigns (each individually and all collectively, an
"Indemnitee"), from and against any and all liabilities, losses, claims,
demands, requests for investigation, remediation or corrective action,
penalties, fines, settlements, damages (including foreseeable and unforeseeable
consequential damages and punitive damages), response. remedial, or inspection
costs, and any expenses (including, without limitation, attorney and consultant
fees, laboratory costs, and litigation costs) of whatever kind or nature, known
or unknown, contingent or otherwise, which are incurred by or asserted against
Indemnitee after the date of closing this Agreement and which arise after the
Closing Date, from or are alleged to arise from (1) the further presence of any
Hazardous Materials in, on or under the Business Assets including, without
limitation, the improvements thereon and the soils and ground water thereof, (2)
the migration of any Hazardous Materials onto the Business Assets from any other
property or onto any other property from the Business Assets, (3) the disposal
or release of Hazardous Materials on, in or under the Business Assets by any
person or entity, whether known or unknown, suspected or unsuspected, or
foreseen or unforeseen as of the date hereof, (4) the removal, treatment,
remediation, or disposal of any Hazardous Materials on or from the Business
Assets, and (5) any personal injuries or property damages, real or personal, any
violations of any Environmental Law, and any lawsuit brought or threatened,
settlement reached, or governmental order arising out of or alleged to arise out
of the presence of any Hazardous Materials on, in, or under the Business Assets
or the migration of any Hazardous Materials onto any other property from the
Business Assets which arise after the final closing of this transaction.
E. ENVIRONMENTAL INDEMNIFICATION AND HOLD HARMLESS. SELLERS, and their
respective successors and assigns (collectively, "Indemnitor"), shall each
protect, exonerate, indemnify, defend and hold harmless, for a period of one
year from the Closing Date PURCHASER, its employees, directors, officers,
agents, heirs, personal representatives, successors and assigns (each
individually and all collectively, an "Indemnitee"), from and against any and
all liabilities, losses, claims, demands, requests for investigation,
remediation or corrective action, penalties, fines, settlements, damages
(including foreseeable and unforeseeable consequential damages and punitive
damages), response, remedial, or inspection costs, and any expenses (including,
without limitation, attorney and consultant fees, laboratory costs, and
litigation costs) of whatever kind or nature, known or unknown, contingent or
otherwise, which are incurred by or asserted against Indemnitee after the date
of Closing this Agreement and which arise prior to Closing from or are alleged
to arise from (1) the presence of any Hazardous Materials in, on or under the
Business Assets including, without limitation, the improvements thereon and the
soils and ground water thereof, (2) the migration of any Hazardous Materials
onto the Business Assets from any other property or onto any other property from
the Business Assets (3) the disposal or release of Hazardous Materials on, in or
under the Business Assets by any person or entity, whether known or unknown,
suspected or unsuspected, or foreseen or unforeseen as of the date hereof, (4)
the removal, treatment, remediation, or disposal of any Hazardous Materials on
or from the Business Assets, and (5) any personal injuries or property damages,
real or personal, any violations of any Environmental Law, and any lawsuit
brought or threatened, settlement reached, or governmental order arising out of
or alleged to arise out of the presence of any Hazardous Materials on, in, or
under the Business Assets or the migration of any
16
Hazardous Materials onto any other property from the Business Assets which arise
prior to the final Closing of this transaction.
16. COVENANTS OF THE PURCHASER. PURCHASER covenants and agrees with the
SELLERS as follows:
A. CONTACT WITH CUSTOMERS AND VENDORS. Between the date hereof and the
Closing Date, PURCHASER agrees that it will not make any inquiries or discussion
of this transaction to SELLERS' suppliers, vendors, customers or employees
without SELLERS' prior consent which consent shall not be unreasonably withheld;
provided, however, SELLERS agree to cooperate with PURCHASER in this regard in
connection with PURCHASER'S due diligence for purposes of fully disclosing
material facts concerning the Business Assets and the Business.
B. DUTY TO INFORM. PURCHASER will inform the SELLERS promptly of any
matter which comes to its attention that would make any of the PURCHASER'S
representations or warranties made herein untrue in any material respect.
C. FINANCING. Purchaser shall use its reasonable best efforts to
consummate the closing of and to obtain the Financing prior to the Closing Date.
The obligations contained herein are not intended, nor shall they be construed,
to benefit or confer any rights upon any person, firm or entity other than the
Sellers.
16.5 COVENANTS OF THE PURCHASER AND THE SELLERS. Each of the
Purchaser and the Sellers agree as follows:
A. BROKERS. Sellers and Purchaser acknowledges that Xxxx Xxx and
Associates is the broker involved in this transaction and Sellers agree at
closing to pay to Xxxx Xxx and Associates a commission agreed upon by Sellers
and broker by separate agreement.
B. AGREEMENT TO COOPERATE. Subject to the terms and conditions herein
provided, each of the parties hereto shall use all reasonable efforts to take,
or cause to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement,
including using its reasonable efforts to obtain all necessary or appropriate
waivers, consents and approvals and to effect all necessary filings and
submissions.
17. COVENANTS OF THE SELLERS. SELLERS covenant and agree with the
PURCHASER as follows
A. CONDUCT OF BUSINESS. Beginning on the date of this Agreement and
continuing through the Closing Date, SELLERS covenant and agree (1) that the
Business shall be carried on only in the ordinary course, consistent in all
material respects with past practices; (2) except as
17
permitted by this Agreement, that none of the Business Assets shall be sold,
transferred or otherwise disposed of or encumbered or otherwise have any lien to
be placed thereon, other than dispositions of inventory made in the ordinary
course of business; (3) that it will keep the PURCHASER advised of any material
change in the Business Assets or the Business; and (4) that it will not take any
action which would (i) constitute a default under the Leases, or the contracts
being conveyed by SELLERS and identified on Exhibits "K", "V" and "W" (ii)
impair any Licenses or Permits; or otherwise be inconsistent with the provisions
of this Agreement.
B. INFORMATION. SELLERS will give to PURCHASER and to PURCHASER'S
officers, accountants, counsel and other representatives or advisors reasonable
access, during normal business hours throughout the period prior to the Closing
Date, to the Business Assets. SELLERS will furnish to PURCHASER during such
period all relevant information concerning the Business and the Business Assets
as the PURCHASER may reasonably request.
C. CONSENTS. SELLERS shall use their reasonable best efforts to obtain
all necessary consents and approvals from lessors and other third parties
required for consummation of the transactions contemplated by this agreement.
D. DISCLOSURE. SELLERS will inform the PURCHASER promptly of any matter
which comes to its attention that would make any of the SELLERS' representations
or warranties made herein untrue in any material respect.
X. XXXX-XXXXX COMPLIANCE. If necessary, Sellers and Purchaser shall
promptly prepare and file all reports and provide all additional information
required under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended ("Xxxx-Xxxxx"), and use their respective best efforts to obtain all
approvals required thereunder.
F. EVIDENCE OF COMPLIANCE. SELLERS shall use their reasonable best
efforts to obtain evidence of compliance (such as certificates or letters issued
by applicable city and county jurisdictions) of each parcel of land and its
improvements included in the Business Assets (whether owned or leased) with
applicable zoning laws, building occupancy regulations, safety and health
regulations as may be required by PURCHASER.
18. CONDITIONS TO PURCHASER'S OBLIGATIONS. Unless waived by PURCHASER
in writing, the obligation of the PURCHASER to complete the Closing of
transactions provided in this Agreement is subject to the fulfillment, prior to
or at the Closing, of each of the following conditions:
A. REPRESENTATIONS, WARRANTIES AND COVENANTS. The representation and
warranties of the SELLERS contained in this Agreement shall have been true and
correct in all material respects when made and shall be true and correct in all
material respects at and as of the Closing Date as if made on such date, and the
SELLERS shall have performed all obligations and complied with all
18
covenants required by this agreement to be performed or complied with by SELLERS
on or prior to the Closing Date.
B. NO ADVERSE PROCEEDINGS. No suit, action or other proceeding by a
third party against the PURCHASER or its officers, directors or affiliates, or
against the SELLERS, shall be pending or threatened in which it will be, or it
is, sought to restrain or prohibit any of the transactions contemplated by this
Agreement or to obtain damages or other relief in connection with this Agreement
or the transactions contemplated hereby.
C. CONSENTS. All required consents of the lessors, franchisers and all
other material third party consents, necessary in connection with the conveyance
and assignment of the Business Assets and operation of the Business by Purchaser
following consummation of the transaction contemplated herein ("Consents") shall
have been received. If any Consents relating to the properties set forth on
Exhibit "AA" are not obtained prior to the Initial Closing, then PURCHASER may
terminate this Agreement in its entirety. In addition, as to Business Assets not
related to those properties set forth on Exhibit "AA" (the "Other Properties"),
should any Consents relating to more than five (5) of the Other Properties not
be obtained prior to the Initial Closing, then Purchaser may terminate this
Agreement in its entirety. A termination by Purchaser under this Section 18.C.
shall be without any liability to Purchaser and upon such termination SELLERS
will immediately notify the Escrow Agent of SELLERS' consent and approval of the
Notice of Claim for release of all xxxxxxx money to PURCHASER.
D. TITLE INSURANCE AND SURVEY. PURCHASER shall have received a title
insurance commitment, reflecting good, marketable and insurable title (fee
simple or leasehold estate, as applicable) in the name of PURCHASER, or its
assigns, as proposed insured, to the Real Property, and each Lease to be
conveyed to Purchaser at Closing free and clear of all liens, claims,
encumbrances and adverse rights or interests except those specifically provided
for herein. In the event the title commitments disclose any matters which render
title unmarketable or which do (or could in the future) materially interfere
with the current use or operation of any of the Real Property or such Leases,
Purchaser shall notify Sellers promptly of any such items. Sellers then shall
have the right for a period of thirty (30) days to take all steps to cure or
remove such matters of record that have been reasonably objected to by Purchaser
or Purchaser's lender. The failure to record the leasehold documentation for a
leasehold because of an express provision in the lease prohibiting recordation
or landlord's refusal to execute the leasehold documentation in recordable form
shall not be a defect.
If, at the expiration of said thirty (30) day period, Sellers shall
then be unable to convey good or marketable title free and clear of all such
encumbrances and defects or obtain affirmative insurance Purchaser shall not be
deemed to suffer any loss or damage because of the encumbrance or defect, the
following remedies shall apply: (i) Purchaser may elect to accept such title as
Sellers may be able to convey, with a credit against the monies payable at the
Closing equal to the reasonably estimated costs to cure the same up to $10,000
per property or $50,000 in the aggregate made in good faith, but without any
other credit or liability on the part of Sellers, (ii) if Sellers are
19
unable to convey good and marketable title (fee simple or leasehold estate, as
applicable) free and clear of all encumbrances and defects except those
permitted by this Agreement to any of the properties set forth on Exhibit AA in
accordance with the terms hereof, then Purchaser may terminate this Agreement in
its entirety without any liability and Sellers will notify the Escrow Agent of
their consent and approval of the Notice of Claim for release to Purchaser, or
(iii) if Sellers are unable to convey good and marketable title (fee simple or
leasehold estate, as applicable) free and clear of all encumbrances and defects
except those permitted by this Agreement to any more than five (5) of the Other
Properties, then Purchaser may terminate this Agreement in its entirety without
any liability and Sellers will notify the Escrow Agent of their consent and
approval of the Notice of Claim for release to Purchaser. If Purchaser does not
exercise its remedies to terminate this Agreement and does not elect to accept
title with uncured title matters, for each such property not conveyed at the
Initial Closing Sellers shall execute and deliver to Purchaser a lease or
management agreement for a period of six (6) months for a total consideration to
SELLERS in the sum of ONE DOLLAR ($1.00) to allow Sellers additional time to
cure the objectionable title matters.
E. BUSINESS ASSETS IN GOOD CONDITION. Subject to the conditions set
forth in Paragraph 15, (which shall be the controlling authority for purposes of
the subject matter addressed in Paragraph 15) as of the Closing all of the
remaining Business Assets shall be in good condition and repair, free from
material defects, and shall be fit for the purposes for which such property is
being used, ordinary wear and tear excepted, and in Buyer's opinion the
inventory items are in good condition and fit for resale in the ordinary course
of business at normal prices.
F. NO MATERIAL ADVERSE CHANGE. There shall have occurred no Material
Adverse Change since November 15, 1999, in the Business Assets and no material
part of the Business Assets shall have been damaged or destroyed by any fire,
storm, vandalism or other casualty.
G. COMPLIANCE WITH LAWS. The consummation of the transactions
contemplated by this Agreement shall not have been enjoined by any court or
federal, state or foreign governmental agency, including, without limitation,
the Federal Trade Commission or the SEC.
X. XXXX-XXXXX. If necessary, Sellers shall have filed all reports and
satisfied all requests for additional information pursuant to Xxxx-Xxxxx, and
all applicable waiting periods shall have expired.
19. CONDITIONS TO SELLERS' OBLIGATIONS. Unless waived by SELLERS in
writing, the obligation of SELLERS to complete the Closing of the transaction
provided in this Agreement is subject to the fulfillment, prior to or at the
Closing, of each of the following conditions:
A. REPRESENTATIONS, WARRANTIES AND COVENANTS. The representations and
warranties of the PURCHASER contained in this Agreement shall have been true and
correct in all material respects when made and shall be true and correct in all
material respects and as of the Closing Date as if made on such date, and
PURCHASER shall have performed all obligations and complied with
20
all covenants required by this Agreement to be performed or complied with by
PURCHASER on or prior to the Closing Date.
B. NO ADVERSE PROCEEDINGS. No suit, action or other proceeding by a
third party against the SELLERS or its officers, directors or affiliates, or the
PURCHASER shall have pending or threatened in which it will be, or it is, sought
to restrain or prohibit any of the transactions contemplated by this Agreement
or to obtain damages or other relief in connection with this Agreement or the
transactions contemplated hereby.
C. CONSENT OF PARENT SHAREHOLDERS. The transactions contemplated by
this Agreement shall have been approved by the affirmative vote of the holders
of at least a majority of the outstanding Parent Common Stock, voted at a
special or annual meeting of shareholders of Parent.
D. FAIRNESS OPINION. Parent shall have received a fairness opinion from
such investment bank as the Seller's shall determine in their sole discretion,
to the effect that as of such date the financial terms of this Agreement are
fair from a financial point of view to Parent and its shareholders and such
opinion shall not have been withdrawn prior to the Closing Date.
E. COMPLIANCE WITH LAWS. The consummation of the transactions
contemplated hereby shall not have been enjoined by any court or federal, state
or foreign governmental agency, including, without limitation, the Federal Trade
Commission or the SEC.
X. XXXX-XXXXX. If necessary, PURCHASER shall have filed all reports and
satisfied all requests for additional information pursuant to Xxxx-Xxxxx, and
all applicable waiting periods shall have expired.
20. DOCUMENTS TO BE PROVIDED AT CLOSING.
-----------------------------------
A. SELLERS' DOCUMENTS. At the Closing, subject to Sections 18(C),
18(F), and 24, the SELLERS shall deliver to PURCHASER the following:
(1) A prepaid Owner's Title Policy or Policies in the amount of
$12,475,000.00 for both the real property being purchased and the lease being
assigned and assumed and/or purchased set forth in Exhibit "AA".
A pre-paid owners title policy in the amount of $200,000 for the real
property set forth in Exhibit "P".
(2) WARRANTY DEED(s). A warranty deed conveying good and marketable
title to the Real Property owned by the SELLERS.
(3) XXXX OF SALE(s). A xxxx of sale conveying title to PURCHASER to
the Machinery, Equipment and Inventory.
21
(4) RESOLUTIONS. A certified copy of resolutions by SELLERS' Board
of Directors and stockholders authorizing the execution and performance of this
Agreement.
(5) OTHER CONVEYANCE INSTRUMENTS. All further conveyances, assignments,
confirmations, satisfactions, releases, powers of attorney, instruments of
further assurance, approvals, consents and any and all such further instruments
and documents as may be reasonably necessary, expedient or proper in the opinion
of PURCHASER in order to complete any and all conveyances, transfers, sales and
assignments herein provided.
(6) AGREEMENT NOT TO COMPETE. The non-competition agreement executed by
SELLERS and X. X. Xxxxx, Xx., Individually.
(7) ASSIGNMENT(S) AND ASSUMPTION(S) OF CONTRACT RIGHTS. An Assignment
and Assumption of Contract Rights.
(8) ASSIGNMENT(S) AND ASSUMPTION(S) OF LEASES. An assignment and
assumption of the lessee's interest under the leaseholds, in the form attached
as Exhibit "CC".
(9) RELEASE(S) OF LIENS. Releases of all liens, security interests and
other encumbrances on the Business Assets, save and except for Permitted
Exceptions and the items set forth in Exhibit "M", which are to be assumed by
Purchaser.
B. PURCHASER'S DOCUMENTS. At the Closing, the PURCHASER shall deliver
to SELLERS the following:
(1) PURCHASE PRICE. The sum of money described in Paragraph 6 as the
Purchase Price, with any adjustments thereto under the terms of this Agreement.
(2) ASSUMPTION(S) OF ASSUMED LIABILITIES. An assumption of the
liabilities as set forth in Exhibit "M" and an assumption of the lessee's
interest under the leaseholds by Purchaser to Seller.
(3) RESOLUTIONS. A certified copy of the resolutions by Purchaser's
Board of Directors and stockholders authorizing the execution and performance of
this Agreement.
(4) OTHER INSTRUMENTS. Such other documents and instruments as are
contemplated hereunder or as may reasonably be required by Sellers or the title
company and necessary to consummate this transaction and to otherwise effect the
agreements of the parties hereto.
21. DELIVERIES SUBSEQUENT TO CLOSING. The SELLERS, upon the request of
PURCHASER, shall deliver such additional documents, instruments and materials as
may be necessary or advisable in order to carry out the provisions and purposes
of this Agreement or to
22
report the transaction to appropriate governmental authorities, including
additional specific bills of sale and instruments of assignment.
22. INDEMNIFICATION.
---------------
A. INDEMNIFICATION BY SELLERS. SELLERS shall indemnify and hold
PURCHASER and its successors and assigns harmless from, against and with respect
to any and all losses, liabilities, claims, obligations, costs, damages and
expenses incurred by or asserted against PURCHASER or the Business Assets:
(i) which relate to or arise out of any breach by SELLERS, of any
covenant, warranty or representation contained in Sections 12 or 17 of this
Agreement, or in any closing document or agreement delivered by SELLERS to
PURCHASER pursuant to the terms of this Agreement; or
(ii) which relate to the ownership or use of the Business Assets or the
operation of the Business prior to the Closing.
B. INDEMNIFICATION BY PURCHASER. PURCHASER shall indemnify and hold
SELLERS and its successors and assigns harmless from, against and with respect
to any and all losses, liabilities, claims, obligations, costs, damages and
expenses incurred by or asserted against SELLERS:
(i) which relate to or arise out of any breach by PURCHASER of any
covenant, warranty or representation contained in Sections 13 or 16 of this
Agreement, or in any closing document or agreement delivered by PURCHASER to
SELLERS pursuant to the terms of this Agreement; or
(ii) which (a) relate to the ownership of the Business Assets or the
operation of the Business and (B) arise out of events occurring after the
Closing.
C. LIMITS ON INDEMNIFICATIONS. Except with respect to matters
constituting fraud or intentional or willful breach or misrepresentation,
neither party shall be required to provide indemnification until the claim,
together with all other claims previously made, if any, exceeds $100,000.00.
D. NOTICE AND DEFENSE. The obligations and liabilities of the SELLERS
and the PURCHASER hereunder with respect to their respective indemnities
pursuant to this Paragraph 22 resulting from any claim or other assertion of
liability by third parties (hereinafter collectively, "Claims"), shall be
subject to the following terms and conditions:
(i) The party seeking indemnification under this Paragraph (the
"Indemnified Party") must give written notice ("Notice") of any such Claim to
the party from whom indemnification is sought hereunder (the "Indemnifying
Party" within a reasonable time after the Indemnified Party receives notice
thereof.
23
(ii) The Indemnifying Party shall have the right to undertake, by
counsel or other representatives of its own choosing and reasonably acceptable
to the Indemnified Party, the defense or settlement of any such Claim.
(iii) In the event that the Indemnifying Party shall have the right to
undertake the defense of any Claim, but shall fail to notify the Indemnified
Party within ten (10) days of receipt of the Notice that it has elected to
undertake such defense or settlement, or if at any time the Indemnifying Party
shall otherwise fail to diligently defend or pursue settlement of such Claim,
then the Indemnified Party shall have the right to undertake the defense,
compromise or settlement of such Claim, with counsel reasonably acceptable to
the Indemnifying Party.
(iv) In no event, shall either party, without the other party's written
consent, settle or compromise any Claim or consent to entry of any judgment
which does not include as an unconditional term thereof the giving by the
claimant or the plaintiff to all parties hereto a release from all liability in
respect of such Claim. Regardless of which party is conducting the defense of
any such Claim, the other party, by counsel or other representatives of its own
choosing and at its sole cost and expense, shall have the right to consult with
the party conducting the defense of such Claim and its counsel or other
representatives concerning such Claim and the Indemnifying Party and the
Indemnified Party and their respective counsel or other representatives shall
cooperate with respect to such Claim, and the party conducting the defense of
any such Claim and its counsel shall in any case keep the other party and its
counsel (if any) fully informed as to the status of any Claim and any matters
relating thereto. Each party shall provide to the other party such records,
books, documents and other materials as shall reasonably be necessary for such
party to conduct or evaluate the defense of such claim and will generally
cooperate with respect to any matters relating thereto.
23. SURVIVAL. The representations and warranties of the parties
contained in this Agreement and in any other certificate or document delivered
in connection herewith, shall survive the Closing for a period of one (1) year,
except with respect to matters constituting fraud or intentional or willful
breach of such representations and warranties. If notification of a breach of
representation or warranty is given within said one (1) year period, such claim
shall survive until finally resolved by agreement of the parties or final
nonappealable court order.
24. EXPENSES. Except as otherwise expressly provided for herein,
SELLERS and PURCHASER will pay all of their own expenses (including attorneys'
and accountants' fees) in connection with the negotiation of this Agreement, the
performance of their respective obligations hereunder and the consummation of
the transactions contemplated by this Agreement. Sellers and Purchaser agree to
each pay 1/2 of the cost of Owners Title Policies, Surveys and title company
closing costs, provided however, that the amount the Sellers must pay in
relation thereto shall not exceed $40,000.00 in the aggregate. Notwithstanding
the foregoing, in the event that this Agreement shall be terminated by the
Sellers pursuant to provision (a) of Section 27, the Sellers shall instruct the
escrow agent to release the Xxxxxxx Money to the Purchaser and shall reimburse
the Purchaser, as Purchaser's sole remedy in connection with such termination,
all other remedies being waived,
24
for any and all reasonable fees and expenses relating to or arising out of the
transactions contemplated by this Agreement in an amount not to exceed
$100,000.00, in the aggregate.
25. TERMINATION BY ANY PARTY. Any party hereto shall have the right to
terminate and cancel this Agreement if (i) the Initial Closing Date shall not
have occurred on or before February 28, 2000, unless extended as may be agreed
upon by the parties, provided that such failure of occurrence shall not have
resulted from the default or breach of such party, (ii) Parent fails to receive
a fairness opinion from its financial advisor to the effect that, as of such
date and based upon the assumptions, limitations and qualifications contained
therein, the consideration to be paid by the Purchaser for the Assets and the
Business is fair from a financial point of view, unless such condition to the
consummation of the transaction is irrevocably waived by the Sellers, or (iii) a
court of competent jurisdiction shall have issued an order, decree or ruling
permanently restraining, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement, and such order, decree, ruling or other action
shall have become final and non-appealable.
26. TERMINATION BY MUTUAL CONSENT. This Agreement may be terminated and
canceled at any time prior to the Closing Date by mutual written consent of the
Purchaser and the Sellers.
27. TERMINATION BY SELLERS. The Sellers shall have the right to
terminate and cancel this Agreement if (a) the required approval of the Parent's
shareholders shall not have been obtained by reason of the failure to obtain the
required vote at meetings duly held prior to the Closing Date, or (b) if the
Parent receives an bona-fide offer to enter into an agreement providing for any
merger, consolidation, tender offer, exchange offer, or sale involving the
Business or the Business Assets, providing for terms better, in the good faith
determination of the Parent's Board of Directors, than those provided by the
transactions contemplated hereunder.
28. EFFECT OF TERMINATION. In the event of termination of this
Agreement by any party hereto as provided in Sections 25, 26, or 27, this
Agreement shall forthwith become void (except for Section 29 and 30 relating to
Confidentiality which shall survive termination) and there shall be no further
obligation on the part of any party or their respective officers or directors
(except as provided in Sections 24 or 29 or in the Escrow Agreement). Nothing in
this Section 28 shall relieve any party from liability for any breach or failure
of observance of the provisions of this Agreement.
29. TERMINATION FEE. In the event that Sellers terminate this Agreement
pursuant to provision (b) of Section 27, the Sellers shall promptly, as
Purchaser's sole remedy, all other remedies being waived, pay to Purchaser a
termination fee of $200,000.00, and reimburse Purchaser for any and all
reasonable fees and expenses relating to or arising out of the transactions
contemplated by this Agreement in an amount not to exceed $100,000.00 in the
aggregate.
30. CONFIDENTIALITY. Each of the parties of this Agreement covenants
and agrees to hold in strict confidence all data and information obtained from
the other party hereto or any subsidiary, division, associate, representative,
agent or affiliate of any such party, including but not limited to information
furnished prior to the date hereof (unless such information is or becomes
publicly
25
available without the fault of any representative of such party, or public
disclosure of such information is required by law in the opinion of counsel to
such party) and shall insure that such representatives do not disclose
information to other without the prior written consent of the other party
hereto, and in the event of the termination of this Agreement, to cause its
representatives to return promptly every document furnished by the other party
hereto or any subsidiary, division, associate, representative, agent or
affiliate of any such party in connection with the transactions contemplated
hereby and any copies thereof which may have been made, other than documents
which are publicly available.
31. SATISFACTION OF CONDITIONS. Each of the parties hereto shall use
its reasonable best efforts to fulfill or obtain the fulfillment of all of the
conditions to Closing.
32. NOTICE OF DEVELOPMENTS. The Sellers and the Purchaser agree to give
each other prompt written notice in the event its own representations and
warranties are discovered to be untrue as of the time made or in the event such
party determines that such representations and warranties shall be untrue as if
made at and as the Closing Date. No disclosure by the Sellers and the Purchaser
pursuant to this paragraph 32, however, shall be deemed to or shall supplement
the Exhibits hereto or to cure any misrepresentation or breach of warranty;
provided, however, that the delivery of or failure to deliver any notice
pursuant to this paragraph 32 shall not limit or otherwise affect the remedies
available hereunder to the party receiving such notice.
33. PRESS RELEASES. Any press releases or other public disclosures
which are made in connection with the transactions contemplated by this
Agreement shall, to the extent practicable, be mutually agreed upon the
PURCHASER and the SELLERS.
34. MISCELLANEOUS. No waiver and no modification or amendment of this
Agreement shall be valid unless the same is in writing and signed by the party
against which the enforcement of such modification or amendment is sought. This
Agreement, including all documents, agreements and instruments delivered
pursuant hereto, constitutes the entire agreement between the parties and
supersedes any prior understandings, agreements, or representations by or
between the parties, written or oral, that may have related in any way to the
subject matter hereof. This Agreement shall be binding upon and inure to the
benefit of the parties named herein and their respective successors and
permitted assigns.
35. NOTICES. All notices, demands, requests and other communications
under this Agreement shall be in writing and shall be deemed properly served if
delivered by hand to the party to whose attention it is directed or if sent by
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
26
A. If Intended for the SELLERS:
Xxxxx Systems, Inc.
X.X. Xxx 0000
Xxx Xxxx, Xxxxx 00000-0000
Attn: Xxxxxxx X. Xxxxx
Xxxxx Oil Co.
X.X. Xxx 0000
Xxx Xxxx, Xxxxx 00000-0000
Attn: Xxxxxxx X. Xxxxx
Diamond Mini Mart, Inc.
X.X. Xxx 0000
Xxx Xxxx, Xxxxx 00000-0000
Attn: Xxxxxxx X. Xxxxx
EDCO, Inc.
X.X. Xxx 0000
Xxx Xxxx, Xxxxx 00000-0000
Attn: Xxxxxxx X. Xxxxx
Way Energy Systems, Inc.
X.X. Xxx 0000
Xxx Xxxx, Xxxxx 00000-0000
Attn: Xxxxxxx X. Xxxxx
With an additional copy (which shall not constitute notice) to:
Xxxxxx Xxxxxxxx Frome Xxxxxxxxxx & Xxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxxxx, Esq.
B. If Intended for PURCHASER:
TSC Services, Inc.
Xxxxx Xxx Xxxxx, President
00000 Xxxxxxxxx
Xxxxxxx, Xxxxx 00000
27
With an additional copy to:
Xxxxxxx Xxxx
Xxxxx, Xxxx, Yale, Ryman & Xxx, P.C.
0000 Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Telephone: (000)000-0000
Fax: (000) 000-0000
Or such other address of which any party entitled to receive notice
hereunder designates to the other in writing.
29. GOVERNING LAW AND JURISDICTION. The validity, meaning and effect of
this Agreement shall be determined in accordance with the laws of the State of
Texas applicable to contracts made and to be performed in that state.
30. CAPTIONS. The captions in this Agreement are inserted for
convenience of reference only and in no way define, describe or limit the scope
or intent of this Agreement or any of the provisions hereof.
31. ASSIGNMENT. The rights, obligations and duties of the parties
hereto shall not be assignable or otherwise transferable without the prior
written consent of the other party.
32. RIGHTS AND REMEDIES CUMULATIVE. The rights and remedies expressed
herein are cumulative and not exclusive of any rights and remedies otherwise
available.
33. INCORPORATION BY REFERENCE. All exhibits and documents referred to
in this Agreement shall be deemed incorporated herein by any reference thereto
as if fully set out.
34. THIRD PARTY BENEFICIARIES. This agreement is not intended to create
any rights fro the benefit of any third party.
35. SEVERABILITY. Should any part or provision contained in this
Agreement be rendered or declared invalid by reason of any existing or
subsequently enacted legislation or by any decree of a court of competent
jurisdiction, the remaining provisions shall nevertheless remain in full force
and effect to the maximum extent permitted by law.
36. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year first above written.
"SELLERS"
XXXXX SYSTEMS, INC.
By: /S/ X.X. Xxxxx, Xx.
------------------------------------
X.X. Xxxxx, Xx., President
XXXXX OIL CO
By: /S/ X.X. Xxxxx, Xx.
-----------------------------------
X.X. Xxxxx, Xx., President
DIAMOND MINI MART, INC.
By: /S/ X.X. Xxxxx, Xx.
-----------------------------------
X.X. Xxxxx, Xx., President
EDCO, INC.
By: /S/ X.X. Xxxxx, Xx.
-----------------------------------
X.X. Xxxxx, Xx., President
WAY ENERGY SYSTEMS, INC.
By: /S/ X.X. Xxxxx, Xx.
-----------------------------------
X.X. Xxxxx, Xx., President
"PURCHASER"
TSC SERVICES, INC.
By: /s/ Xxxxx Xxx Xxxxx
-----------------------------------
Xxxxx Xxx Xxxxx, President
