EXHIBIT 2.1
_________________________________________________________________
ASSET PURCHASE
AGREEMENT
by and among
G&R FELPAUSCH
COMPANY
HASTINGS CATALOG
SALES, INC.
FELPAUSCH FOOD
CENTERS, LLC
FELPAUSCH KALAMAZOO,
LLC
and
FAMILY FARE,
LLC
MSFC, LLC
PREVO'S FAMILY
MARKETS, INC.
SPARTAN STORES FUEL,
LLC
Dated as of March
19, 2007
_________________________________________________________________
TABLE OF
CONTENTS
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Page
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ARTICLE I - PURCHASE AND SALE OF PURCHASED ASSETS
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1
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1.1
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Basic Transaction
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1
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1.2
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Assumption of Liabilities
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4
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1.3
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Consideration
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5
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1.4
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Proration
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7
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1.5
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Closing Transations
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8
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ARTICLE II - CONDITIONS TO CLOSING
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10
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2.1
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Conditions to Purchaser's Obligations
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10
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2.2
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Conditions to Seller's Obligations
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13
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ARTICLE III - REPRESENTATIONS AND WARRANTIES OF
SELLER
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14
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3.1
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Organization and Corporate Power
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14
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3.2
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Authorization; No Breach; Approvals
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14
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3.3
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No Material Adverse Change
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15
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3.4
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Financial Statements
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15
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3.5
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Books and Records
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15
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3.6
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Financial Documents
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15
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3.7
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Absence of Certain Developments
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15
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3.8
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Leased Real Property
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16
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3.9
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Assets
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19
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3.10
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Taxes
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19
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3.11
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Contracts and Commitments
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20
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3.12
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Proprietary Rights
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21
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3.13
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Litigation
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21
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3.14
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Brokerage
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21
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3.15
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Employees
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22
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3.16
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Employee Benefit Plans; ESOP
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23
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3.17
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Compliance with Laws; Permits; Certain Operations
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24
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3.18
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Environmental Matters
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24
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3.19
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Pharmacy Operations
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25
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3.20
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Insurance
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26
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3.21
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Solvency
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26
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3.22
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True and Complete Information
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26
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ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF
PURCHASER
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27
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4.1
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Corporate Organization and Power
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27
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4.2
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Authorization
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27
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4.3
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Brokerage
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27
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ARTICLE V - COVENANTS; OTHER AGREEMENTS
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28
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5.1
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Conduct of Business
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28
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5.2
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Access to Information and Premises
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29
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5.3
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Notification of Certain Matters; Schedules
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30
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-i-
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5.4
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Further Assurances
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31
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5.5
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Exclusivity; No Solicitation of Transactions
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31
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5.6
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Further Transfers; Transition Assistance
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32
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5.7
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Confidentiality
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32
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5.8
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Sales and Transfer Taxes
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32
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5.9
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Non-Competition
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32
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5.10
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Coupons and Gift Certificates
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34
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5.11
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Press Release
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35
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5.12
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Condemnation; Damage to Property
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35
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5.13
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Defects
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36
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5.14
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Use of Seller Trademark
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37
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5.15
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Reviewed Financial Statements
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37
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5.16
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Confidentiality Agreements
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37
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5.17
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Schedules & Exhibits
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37
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5.18
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Employees
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37
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5.19
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Pharmacy Licenses
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37
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5.20
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HIPAA Compliance
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38
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5.21
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Fuel Stations - Felpausch-Kelly, LLC
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38
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5.22
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Register Cash
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38
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5.23
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Post Closing Use of FC Support Office
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38
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5.24
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Williamston Store Agreement
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39
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5.25
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Shareholder Communications; Meeting
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39
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ARTICLE VI - TERMINATION
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39
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6.1
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Events of Termination
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39
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6.2
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Termination Fee
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41
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ARTICLE VII - INDEMNIFICATION
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41
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7.1
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Survival of Representations and Warranties
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41
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7.2
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General Indemnification
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42
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ARTICLE VIII - CERTAIN DEFINITIONS
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46
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ARTICLE IX - MISCELLANEOUS
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53
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9.1
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Amendment and Waiver
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53
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9.2
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Tax Matters
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54
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9.3
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Notices
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55
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9.4
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Assignment
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56
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9.5
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Severability
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56
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9.6
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Interpretation
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56
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9.7
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Entire Agreement
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57
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9.8
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Counterparts
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57
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9.9
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Governing Law
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57
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9.10
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No Strict Construction
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9.11
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Specific Performance
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57
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9.12
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No Third-Party Beneficiaries
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57
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9.13
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Schedules
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58
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9.14
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Expenses
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58
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9.15
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Indemnity Account
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58
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-ii-
Schedules
Schedule 1.1(a)(iii) - Proprietary Rights Schedule
Schedule 1.1(a)(iv) - Assumed Contracts Schedule
Schedule 1.1(a)(v) - Vehicle Schedule
Schedule 1.1(a)(x) - Permits Schedule
Schedule 1.1(b) - Excluded Assets Schedule
Schedule 1.3(b) - Merchandise Value Schedule
Schedule 2.1(e) - Third-party Approvals Schedule
Schedule 2.1(f) - Government Approvals Schedule
Schedule 2.1(q) - Non-Competition Agreement Parties Schedule
Schedule 3.2 - Restrictions Schedule
Schedule 3.4 - Financial Statements GAAP Exceptions
Schedule 3.5 - Books and Records Schedule
Schedule 3.7 - Developments Schedule
Schedule 3.8(a) - Leased Real Property Schedule
Schedule 3.8(b) - Leased Exceptions Schedule
Schedule 3.8(c) - Subleased Real Property Schedule
Schedule 3.8(e) - Leasehold Improvements Schedule
Schedule 3.11 - Contracts Schedule
Schedule 3.12 - Proprietary Rights Schedule
Schedule 3.13 - Litigation Schedule
Schedule 3.14 - Brokerage
Schedule 3.15 - Employee Disclosure Schedule
Schedule 3.16 - Employee Benefits Schedule
Schedule 3.17 - Compliance Schedule
Schedule 3.17(b) - Permits Schedule
Schedule 3.18 - Environmental Schedule
Schedule 5.1 - Conduct of Business Schedule
Schedule 5.14 - Use of Seller Trademark Schedule
Schedule 5.21 - Felpausch-Kelly Contracts Schedule
Schedule 5.26 - Required Shareholders (Voting Agreements)
Schedule
Exhibits
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Exhibit A
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Process and Procedures (Taking Inventory)
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Exhibit B-1
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Assignment and Assumption Agreement (Lease)
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Exhibit B-2
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Assignment and Assumption Agreement (Sublease)
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Exhibit B-3
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Assumption Agreement (General)
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Exhibit C
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Transition Services Agreement
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Exhibit D
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Estoppel Certificate (Landlord/Seller)
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Exhibit E
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Estoppel Certificate (Subtenant)
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Exhibit F
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Opinion of Counsel
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Exhibit G
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Non-Competition Agreement
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Exhibit H
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Shareholder Voting Agreement
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Exhibit I
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Account Control Agreement
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-iii-
ASSET PURCHASE
AGREEMENT
THIS IS AN ASSET PURCHASE AGREEMENT (this
"Agreement") made as of March 19, 2007 (the "Signing Date"),
by and among (i) G&R Felpausch Company , a Michigan
corporation ("FC"); (ii) Felpausch Food Centers, LLC ,
a Michigan limited liability company ("FLLC"); (iii)
Hastings Catalog Sales, Inc. , a Michigan corporation
("HCSI"), (iv) Felpausch Kalamazoo, LLC , a Michigan limited
liability company ("FK"); (v) Family Fare, LLC , a Michigan
limited liability company ("Family Fare"); (vi) Prevo's Family
Markets, Inc. , a Michigan corporation ("Prevo's"); (vii)
MSFC, LLC , a Michigan limited liability company ("MSFC");
and (viii) Spartan Stores Fuel, LLC , a Michigan limited
liability company ("Spartan Fuel"). FC, FLLC, FK and HCSI,
individually or collectively (as the context requires), are
referred to herein as "Seller." Family Fare, Prevo's, MSFC, and
Spartan Fuel individually or collectively (as the context requires)
are referred to herein as "Purchaser." Seller and Purchaser are
sometimes individually referred to in this Agreement as a "Party"
and collectively as the "Parties." Definitions for certain
capitalized terms may be found in Article VIII .
ARTICLE I
PURCHASE AND SALE OF PURCHASED ASSETS
1.1
Basic Transaction .
(a) Purchased Assets . On
the terms and subject to the conditions set forth in this
Agreement, Purchaser shall purchase from Seller, and Seller shall
sell, convey, assign, transfer and deliver to Purchaser on the
Closing Date, all of Seller's right, title and interest in and to
the business, assets, properties, rights, titles and interests of
every kind and nature owned, licensed or leased by Seller as of the
Closing Date (except for the Excluded Assets), which are used or
located at the Leased Real Property (Leased Real Property is
collectively referred to as the " Premises " and
individually referred to as an " Individual Premises "),
whether tangible or intangible, real or personal and by whomever
possessed (collectively, the " Purchased Assets "), free and
clear of all Liens (other than Permitted Liens), including, but not
limited to, the following:
(i) all inventory of foods,
beverages other products sold in the Premises, all pharmaceutical
inventory, including, Controlled Substances and compounding
supplies, packaging and other supplies, and all goods, wares and
merchandise located in the Premises on the Closing Date, including
warehoused and consignment inventory and inventory on order for or
in transit to or from the Premises (collectively, the "
Merchandise "); except that "Merchandise" shall not
include Non-Acquired Merchandise;
(ii) all customer prescription
files, patient history and prescription records, including all
refill status reports and records of insurance coverage, all hard
copy prescriptions and all electronic data Seller maintained in any
format, with respect to all pharmacy customers at each of the
Pharmacies, utilized and/or
generated by Seller
in the course of operating such Pharmacies ("Pharmacy Records").
Subject to Legal Requirements, Seller additionally agrees to make
the Pharmacy Records and related information available to Purchaser
for a period of six (6) months after the Closing Date if Purchaser
is unable to reasonably access it though other means;
(iii) all of Seller's interest in
the following that are owned by or licensed to Seller and used in
connection with the operations at the Premises: (1) the Seller
trademark, trade name, service mark and trade dress and the
www.felpausch.com internet domain name, together with all
goodwill associated therewith, and all translations, adaptations,
derivations and combinations of the foregoing (and all logos
related to the foregoing); (2) Seller copyrights and
copyrightable works; (3) all registrations, applications and
renewals for any of the foregoing; (4) subject to obtaining
required consents, if applicable, Seller trade secrets and other
confidential information, including but not limited to the recipe
for the Felpausch cookies; (5) subject to obtaining required
consents, if applicable, all other Seller intangible properties and
rights relating to the Premises; and (6) all tangible
embodiments of the foregoing; in each case including the items set
forth on the attached Proprietary Rights Schedule (unless
indicated otherwise therein) (collectively, the " Proprietary
Rights ");
(iv) all agreements, contracts,
or other binding arrangements of Seller identified on the attached
Assumed Contracts Schedule (collectively, the " Assumed
Contracts "), including the Leases, the Subleases and the
leases for the Distribution Center Leased Tractors;
(v) all Leasehold Improvements
and all owned machinery, equipment, vehicles, trucks, trailers,
furniture, testing equipment and office equipment (including the
Support Office Equipment), fixtures, trade fixtures, store models
and displays, computers (and, subject to obtaining required
consents, if applicable, related software), furniture and all other
tangible personal property located in the Premises and all such
property customarily located or based in the Premises but
temporarily located elsewhere (including all vehicles, trucks and
trailers listed on the Vehicle Schedule attached
hereto);
(vi) all warranties, claims,
refunds, credits, causes of action, choses in action, rights of
recovery and rights of set off of any kind relating to the
Purchased Assets;
(vii) the right to all telephone
numbers associated with the Premises, but not such telephone
numbers owned by any subtenants;
(viii) all lists, records and
other information pertaining to accounts and referral sources; all
lists, records and other information pertaining to suppliers and
customers; all Individual Premises accounting records (including
without limitation item sales histories); profit and loss records
for each Individual
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Premises; all stock
ledger reports and records for each Individual Premises; all
drawings, reports, studies and plans, (including all financial,
business, sales and marketing plans and information); to the extent
legally transferable, all personnel files and records; all
environmental reports; and all architectural / engineering and
similar plans, drawings and reports in each case whether evidenced
in writing, electronic data, computer software or otherwise;
provided that, in the event the assets described in this clause
(viii) are not held in a form which relates solely to the Premises
and the operation of the business thereon, such assets will not be
Purchased Assets hereunder but Seller agrees to provide Purchaser
with access to and copies of the foregoing assets upon reasonable
notice from Purchaser;
(ix) all Seller advertising,
marketing and promotional rights and materials;
(x) to the extent transferable,
all permits, licenses, certifications, authorizations, approvals
and similar rights from all permitting, licensing, accrediting and
certifying agencies relating to the Leased Real Property (including
all of the foregoing listed or described on the attached Permits
Schedule and including, without limitation, all licenses,
certifications, authorizations, approvals and similar rights
relating to the Leased Real Property, whether held in escrow or in
a similar manner), and the rights to all data and records held by
such agencies;
(xi) all rights to security
deposits previously paid by Seller arising under or in connection
with the Assumed Contracts and cash in the amount of the unapplied
balance of security deposits previously paid to Seller under or in
connection with the Assumed Contracts ("Security Deposits
Owed");
(xii) the Fuel Station Assets in
accordance with Section 5.21 ; and
(xiii) all Seller goodwill and
other intangible property.
(b) Excluded Assets .
Notwithstanding the foregoing, the following properties, assets and
rights (the " Excluded Assets ") are expressly excluded from
the purchase and sale contemplated by this Agreement and are not
included in the Purchased Assets:
(i) all Non-Acquired
Merchandise;
(ii) cash and cash equivalents
(other than the Register Cash which is added to the Purchase Price
in accordance with Section 1.3(c)(i) and Section 5.22
, security deposits, and amounts payable to Purchaser
hereunder);
(iii) accounts and notes
receivable;
(iv) all of Seller's corporate
record books, minute books, accounting records and Tax records,
except as provided in Section 1.1(a) ;
-3-
(v) any ownership or equity
interest of Seller in and to any Persons;
(vi) investments;
(vii) cash surrender value of
life insurance policies;
(viii) any and all contract
rights arising under agreements, contracts, or other binding
arrangements that are not Assumed Contracts;
(ix) the Save-A-Lot Stores;
(x) the Distribution Center;
and
(xi) the assets set forth in the
Excluded Assets Schedule .
Seller agrees that all of the Excluded Assets shall be removed at
Seller's expense from the Premises (to the extent applicable) not
later than the Closing Date.
1.2
Assumption of Liabilities .
(a) Assumed Liabilities .
Subject to the conditions set forth in this Agreement, as of the
Closing Date, Purchaser shall assume only the following debts,
liabilities and obligations of Seller to the extent relating to the
Purchased Assets (collectively, the " Assumed Liabilities
"): Seller's obligations under the Assumed Contracts first arising
after the Closing Date (but only to the extent such Assumed
Contracts are assigned to Purchaser, and specifically excluding any
liability or obligation relating to or arising out of such Assumed
Contracts by Seller as a result of (A) any breach of, default
under or event which, with the passage of time, would become a
default under, such Assumed Contract occurring on or prior to the
Closing Date (whether or not any claim has been brought),
(B) any violation of law, breach of warranty, tort or
infringement occurring on or prior to the Closing Date (whether or
not any claim has been brought); or (C) any charge, complaint,
action, suit, proceeding, hearing, investigation, claim or demand
for acts or omissions occurring on or prior to the Closing
Date).
(b) Liabilities Not
Assumed . Notwithstanding anything to the contrary in this
Agreement, Purchaser shall not assume or in any way become liable
for any of Seller's debts, liabilities or obligations of any nature
whatsoever (other than the Assumed Liabilities), whether accrued,
absolute, contingent or otherwise, whether known or unknown,
whether due or to become due, whether related to the Premises or
the Purchased Assets and whether disclosed on the Schedules
attached hereto, and regardless of when or by whom asserted
(collectively referred to herein as the " Excluded
Liabilities "), including, without limitation, any and all
liabilities or obligations (whether imposed on Purchaser as a
successor or otherwise):
-4-
(i) relating to or arising under
or in connection with any "employee benefit plan" (as defined in
Section 2(3) of ERISA), the ESOP, or any other benefit plan,
program or arrangement of any kind at any time maintained,
sponsored or contributed or required to be contributed to by Seller
or any ERISA Affiliate, or with respect to which Seller or any
ERISA Affiliate has any liability or potential liability, including
the responsibility for satisfying the continuation coverage
requirements of COBRA for all employees or former employees or
other service providers (and any dependents or beneficiaries
thereof) of Seller or any ERISA Affiliate who are receiving COBRA
continuation coverage as of the Closing Date or who are or become
entitled to elect such coverage on account of a qualifying event
occurring on or before the Closing;
(ii) pertaining to the employment
or service with, or termination from employment or service with,
Seller or any ERISA Affiliate, of any individual, including but not
limited to:
(A) any workers' compensation
claim or other deferred claim;
(B) Reserved.
(C) bonus obligations, accrued
vacation or other paid time off; and
(D) any severance
obligations.
(iii) arising out of or in
connection with deferred maintenance obligations under the Leases,
including, without limitation, any liability for failure of Seller
to have maintained the Premises and/or Improvements (other than
those dealing with normal wear and tear) as required by the terms
of the Leases, in whole or in part, prior to the Closing Date;
and
(iv) arising out of or in
connection with any contract or agreement not included among the
Assumed Contracts.
For
purposes of this Section 1.2(b) , " Seller "
shall be deemed to include all Affiliates and Subsidiaries of
Seller and any predecessors to Seller and any Person with respect
to which Seller is a successor-in-interest (including by operation
of law, merger, liquidation, consolidation, assignment, assumption
or otherwise). Seller acknowledges that it is retaining the
Excluded Liabilities, and Seller shall pay, discharge and perform
all such liabilities and obligations as and when due.
1.3
Consideration . In exchange for the Purchased
Assets, Purchaser shall pay to Seller the Purchase Price and assume
the Assumed Liabilities.
(a) Purchase Price . The
aggregate purchase price (the " Purchase Price ") for the
Purchased Assets shall be (i) Thirty-Eight Million Five
Hundred Thousand Dollars
-5-
($38,500,000),
plus (ii) the amount of the Merchandise Value as
determined pursuant to Section 1.3(b) .
(b) Merchandise Value .
The Merchandise Value shall be the lesser of (i) Fourteen
Million Dollars ($14,000,000) or (ii) the Inventory Value
determined by count as provided in this Section 1.3 (the
"Merchandise Value"). On or immediately preceding the Closing Date,
Advanced Inventory Solutions (the " Inventory Service ")
shall count the inventory of Merchandise at each of the Premises
listed on the Leased Real Property Schedule where any Merchandise
is located utilizing counting and valuation methodologies and
protocols mutually agreed upon by Purchaser and Seller which shall
be attached hereto as the Merchandise Value Schedule (The
sum of the value of the Merchandise determined in accordance with
the Merchandise Value Schedule shall be the " Inventory
Value "). Representatives of Seller and Purchaser shall be
present at the taking of the physical inventories to settle all
disputes as to the classification of inventory as Non-Acquired
Merchandise. The process and procedures for taking of inventory at
the Premises is set forth on Exhibit A hereto.
Purchaser and Seller agree that the terms set forth on
Exhibit A shall govern for all purposes the
determination of Inventory Value and the rights and obligations of
the Parties with respect to the procedures for the inventory
counts. Purchaser and Seller shall each pay fifty percent (50%) of
the fees and expenses of the Inventory Service. Purchaser and
Seller agree to promptly pay the other Party by wire transfer the
net amount calculated pursuant to the reconciliation process
described in Paragraph D of Exhibit A .
(c) Payment . The Purchase
Price shall be paid by Purchaser to Seller as follows:
(i) On Closing Date, Purchaser
shall pay Seller Thirty-Six Million Five Hundred Thousand Dollars
($36,500,000), plus (A) the Merchandise Value,
(B) the Proration Amount (if any) to be added pursuant to
Section 1.4 , and (C) the amount of the Register Cash
pursuant to Section 5.22 , less (V) the Fuel Station
Assets Purchase Price, if applicable, in accordance with Section
1.3(c)(iii) , (W) Security Deposits Owed, (X) the
Estimated Coupon Amount, (Y) the Estimated Gift Certificates
Amount, and (Z) the Proration Amount (if any) to be deducted
pursuant to Section 1.4 (after all such adjustments,
the "Closing Date Cash Payment") in immediately available United
States funds by wire transfer pursuant to instructions provided by
Seller prior to the Closing.
(ii) At Closing, Purchaser shall
holdback a portion of the Purchase Price equal to Two Million
Dollars ($2,000,000) (the "Holdback Amount"). The Holdback Amount
shall be reduced in connection with the amounts that Seller may owe
to Purchaser following the Closing arising pursuant to Section
5.10 (Coupons and Gift Certificates) and Section 7.2
(General Indemnification). Any Holdback Amount remaining after
eighteen (18) months after the Closing Date (the "Holdback Period")
after taking into account the reductions specified above shall be
paid to Seller by wire transfer of immediately available funds.
Purchaser shall pay to Seller interest on the portion of the
Holdback Amount released after
-6-
the expiration of
the Holdback Period at the rate of 5% from the Signing Date to the
expiration of the Holdback Period.
(iii) If the Fuel Station Assets
are not sold to Purchaser at Closing as set forth in Section
5.21 , Purchaser shall holdback the Fuel Station Assets
Purchase Price to be dispersed as follows: (A) if the Fuel Station
Assets are subsequently sold to Purchaser in accordance with this
Agreement, Purchaser shall pay to Seller or Felpausch-Kelly, L.L.C.
(as applicable) the Fuel Station Assets Purchase Price at the
closing of such transactions by wire transfer of immediately
available funds; or (B) if the Fuel Station Assets are not sold to
Purchaser within the sixty (60) day period following the Closing
and Purchaser terminates the purchase of the Fuel Station Assets in
accordance with Section 2.1(s) , Purchaser shall retain the
Fuel Station Assets Purchase Price.
1.4
Proration . Two (2) days prior to Closing,
Purchaser and Seller shall agree on an estimated net proration
amount (the "Proration Amount"), which shall be determined by
totaling the estimated amounts owed by one Party to the other
pursuant to this Section 1.4 .
(a) Common area maintenance
charges and assessments ("CAM"), insurance, utilities, property
taxes, rent, and other amounts payable by Seller under the Leases,
to the extent paid for by Seller or required to be paid for by
Seller for a period after the Closing Date, shall be prorated as of
the Closing Date. Taxes directly payable to governmental entities
shall be prorated on a calendar-year basis (applicable to July 1
and December 1, 2007 tax bills estimated based on 2007 assessments,
if available, and if not on 2006 taxes adjusted for increases in
consumer price index and millage rates). CAM, insurance, utilities,
property taxes, rent and any amounts billed (before or after the
Closing) by landlords for other items under the Leases for the
period prior to the Closing Date, and which (i) Seller has not
paid prior to the Closing or (ii) have not been taken into
account in the computation of the Proration Amount, shall be a
continuing obligation of Seller which shall survive the Closing.
Seller's continuing obligations shall include, without limitation,
Seller's pro rata share of all post-Closing reconciliations and
determinations of CAM, insurance, utilities, property taxes, rent,
and other amounts paid in estimated monthly installments at each
Individual Premises as each landlord makes such reconciliation. If,
under the terms of any Lease, Purchaser is required to pay rent
based on percentage of sales for any period prior to Closing or
that includes the Closing Date, then Seller shall pay its pro rata
share of such percentage rent based on the sales made by Seller
from the applicable Leased Real Property prior to the Closing Date.
For purposes of such proration, the minimum sales base specified in
the applicable Lease shall be prorated between Seller and Purchaser
based on the number of days in such period before and after the
Closing Date.
(b) Utilities and other
customarily prorated expenses, including, but not limited to,
water, sewer, gas, electricity, trash removal, snow removal and
fire protection service, if such utilities cannot be transferred as
of the Closing Date, and amounts payable by Seller under the
Assumed Contracts, to be paid for by Seller or required to be paid
for by Seller for a period after the Closing Date, shall be
prorated as of the Closing
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Date. Purchaser shall
arrange with all utility companies to have accounts placed in
Purchaser's name beginning on the Closing Date; provided, however,
that Seller shall use prompt and reasonable efforts to cooperate
with Purchaser in the transfer of such utilities to Purchaser,
including but not limited to, reasonable efforts to obtain final
meter readings and executing any documents required to assign the
existing telephone numbers for the Premises to Purchaser. Seller
shall remain responsible for any payments due to third-parties
attributable to the period prior to the Closing Date for such
utilities.
(c) Security deposits previously
paid by subtenants under the Subleases shall be transferred by
Seller to Purchaser at the Closing. Rents due from subtenants under
the Subleases, and CAM, insurance, utilities, property taxes, and
other amounts payable by subtenants under the Subleases shall be
prorated as of the Closing Date on the basis of the period for
which such amounts are payable (if, as and when collected).
Purchaser shall apply rent and other income received from
subtenants under the Subleases after the Closing Date in the
following order of priority: (i) first, to base rent first
coming due after the Closing Date and applicable to the period of
time after the Closing Date, which amount shall be retained by
Purchaser, (ii) second, to payment of the current base rent
then due in the month in which the Closing Date occurs, which
amount shall be prorated between Seller and Purchaser as of the
Closing Date, (iii) third, to other amounts payable by
subtenants under the Subleases before or after the Closing Date
("Other Subtenant Receivables"), and (iv) thereafter, to
delinquent base rent which was due and payable as of the Closing
Date but not collected by Seller prior to the Closing Date. Seller
shall not have the right to pursue the collection of Other
Subtenant Receivables after the Closing Date. If Seller receives
any amounts from the subtenants under the Subleases after the
Closing Date, which are attributable, in whole or in part, to any
period after the Closing Date, Seller shall remit to Purchaser that
portion of the amounts received by Seller to which Purchaser is
entitled within ten (10) business days after Seller's receipt
thereof.
(d) Purchaser may, but is not
required to, offset any amount owed it by Seller under this
Section 1.4 against the Holdback Amount; provided, however,
Purchaser shall first give written notice of such offset to Seller,
and if Seller does not respond within five (5) days, Purchaser
shall have the right to execute such offset.
1.5
Closing Transactions .
(a) Unless this Agreement is
terminated earlier in accordance with Article VI , the
closing of the transactions contemplated by this Agreement (the
"Closing") shall take place at the offices of Warner Norcross &
Judd LLP, 111 Lyon Street, NW, Suite 900, Grand Rapids, Michigan,
on (i) the date that is two (2) business days following the
date on which all of the conditions to Closing set forth under
Article II of this Agreement have been satisfied or
waived except those conditions (such as delivery of certain
documents) which are customarily satisfied at a closing or
(ii) such other time and place as the parties may agree. The
day on which the Closing is effective shall be referred to herein
as the "Closing Date." The Closing shall be deemed effective as of
11:59 p.m. Eastern Time on the Closing Date. At the Closing, the
parties shall execute and deliver the documents, agreements and
instruments provided for under this Agreement.
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(b) Deliveries . Subject
to the conditions set forth in this Agreement, at the Closing:
(i) Purchaser shall deliver to
Seller the Closing Date Cash Payment as provided under
Section 1.3(c)(i) ;
(ii) Seller shall convey all of
the Purchased Assets to Purchaser pursuant to executed instruments
of sale, transfer, assignment, conveyance and delivery, assignments
and assumption of Leases, bills of sale, intellectual property
assignments, certificates of title, vehicle titles, and all other
instruments of conveyance necessary to effect transfer to Purchaser
of title to the Purchased Assets in accordance with the terms of
this Agreement (free and clear of all Liens, other than Permitted
Liens);
(iii) Purchaser shall assume the
Assumed Liabilities by delivery to Seller of Assignment and
Assumption Agreements in the form of Exhibits B-1, B-2 and
B-3 attached hereto;
(iv) Seller shall deliver to
Purchaser: (A) a certificate signed by an officer of Seller,
dated as of the Closing Date, stating that the conditions specified
in Section 2.1(a) through (f) , inclusive, have
been fully satisfied or waived in writing by Purchaser as of the
Closing; (B) copies of all Third-Party Approvals and
Governmental Approvals obtained by Seller; (C) certified
copies of resolutions of Seller's board of directors and
shareholders authorizing and approving the execution, delivery and
performance of this Agreement and the consummation of the
transactions contemplated hereby; (D) an opinion of counsel to
Seller, dated as of the Closing Date, in the form attached as
Exhibit F, (E) a non-foreign Person affidavit dated as of the
Closing Date, sworn under penalties of perjury and in form and
substance required under the Treasury Regulations issued pursuant
to Section 1445 of the Code stating that Seller is not a "foreign
person" as defined in Code Section 1445, and (F) such other
documents or instruments as are required to be delivered at the
Closing pursuant to the terms hereof or that Purchaser reasonably
requests prior to the Closing Date to effect the transactions
contemplated hereby; and
(v) Purchaser shall deliver to
Seller (A) a certificate signed by an officer of Purchaser,
dated the date of the Closing, stating that the conditions
specified in Section 2.2(a) through (d) ,
inclusive, have been fully satisfied, (B) certified copies of
resolutions of Purchaser's board of directors authorizing and
approving the execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby and
(C) such other documents or instruments as are required to be
delivered at the Closing pursuant to the terms hereof or that
Seller reasonably requests prior to the Closing Date to effect the
transactions contemplated hereby.
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ARTICLE II
CONDITIONS TO CLOSING
2.1
Conditions to Purchaser's Obligations . The
obligations of Purchaser to consummate the transactions
contemplated by this Agreement are subject to the satisfaction or
express written waiver (unless otherwise specified herein) of the
following conditions:
(a) The representations and
warranties made by Seller in this Agreement and in any certificate
delivered by Seller pursuant hereto which are not qualified as to
materiality shall have been true and correct in all material
respects and the representations and warranties which are qualified
as to materiality shall be true and correct in all respects, in
each case at and as of the Closing Date as though then made and as
though the Closing Date were substituted for the date of this
Agreement throughout such representations and warranties;
(b) Seller shall have performed
and complied in all material respects with the obligations and
covenants required by this Agreement to be performed or complied
with by Seller on or prior to the Closing Date;
(c) Since September 30, 2006,
there shall have been no material adverse change or development in
the financial condition, operating results, assets, operations,
prospects, or employee relations relating to the Premises and the
businesses operated thereon taken as a whole (a "Material Adverse
Effect" or "Material Adverse Change") nor shall there have been any
change or development that could reasonably be expected to result
in a Material Adverse Effect;
(d) No suit, action or other
proceeding, or injunction, order, decree or judgment relating
thereto, shall be threatened or pending before any court or
governmental or regulatory official, body or authority in which it
is sought to restrain or prohibit or to obtain damages or other
relief in connection with the transactions contemplated hereby, or
that could have a Material Adverse Effect or otherwise adversely
affect in any material respect the right of Purchaser or its
Affiliates to own, operate or control all or any portion of the
Purchased Assets;
(e) Seller shall have received
and obtained all necessary third-party consents and approvals,
including but not limited to those set forth on Schedule 2.1(e)
(collectively, the "Third-Party Approvals"), in each case on terms
reasonably satisfactory to Purchaser;
(f) Purchaser shall have received
and obtained all necessary governmental and regulatory consents and
approvals, including but not limited to those set forth on Schedule
2.1(f) ("Governmental Approvals"), in each case on terms reasonably
satisfactory to Purchaser;
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(g) Seller and Purchaser shall
have entered into a mutually agreeable transition services
agreement (the "Transition Services Agreement"), if any, in the
form and substance of Exhibit C ;
(h) Seller shall have obtained
releases of all Liens of whatever nature relating to the Purchased
Assets (other than the Permitted Liens);
(i) Purchaser shall be satisfied
with the results of its due diligence investigation on or before:
(i) the date that is twenty-one (21) days following the Signing
Date with respect to financial due diligence ("Financial Due
Diligence Deadline"); and (ii) the Due Diligence Deadline with
respect to all other diligence (including without limitation
Leases, Leasehold Improvements, Premises, title and survey due
diligence, potential tax liabilities described in Section 9.2(c),
and physical and environmental inspections). For purposes of
greater clarity, Purchaser's ability to terminate this Agreement
due to its failure to be satisfied with its due diligence
investigation shall not be limited in any way by, and may be based
upon, information provided by Seller to Purchaser in draft
Schedules delivered prior to the Signing Date, if any. Failure of
Purchaser to issue written notice to Seller to exercise its right
to terminate this Agreement due to its failure to be satisfied with
the results of its due diligence investigation on or before the
Financial Due Diligence Deadline or the Due Diligence Deadline, as
applicable, shall constitute a waiver of the condition set forth
under this Section 2.1 (i) .
(j) Seller shall have delivered
to Purchaser all other documents, agreements, instruments,
certificates, affidavits and other items required under
clauses (ii) and (iv) of Section 1.5(b) ;
(k) Reserved.
(l) Purchaser must have received
all required consents, waivers and approvals of Purchaser's
Affiliates' lenders and Purchaser's and its Affiliates' landlords
required to comply with existing agreements and to avoid default
upon completion of the transactions contemplated by this Agreement,
including any landlord agreements that may be required by
Purchaser's Affiliates' lenders, and any amendments, waivers or
approvals of landlords to avoid being in default upon completion of
the transactions due to radius restrictions or other restrictive
covenants;
(m) Seller shall have obtained
landlord estoppel certificates, dated no earlier than the Due
Diligence Deadline and reaffirmed by each landlord in writing, from
all landlords under the Leases in the form of Exhibit D ,
attached hereto, subject to such changes as may be approved by
Purchaser in its reasonable discretion;
(n) Seller shall have obtained
subtenant estoppel certificates, dated no earlier than the Due
Diligence Deadline and reaffirmed by each subtenant in writing,
from all subtenants under the Subleases in the form of Exhibit
E attached hereto, subject to such changes as may be approved
by Purchaser in its reasonable discretion;
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(o) Purchaser must have received
authorization from the board of directors of Spartan Stores, Inc.,
to consummate the transactions contemplated by this Agreement;
(p) Seller shall have obtained
non-disturbance agreements from the holders of all mortgages and
other liens on the title to the Leased Real Property that are
superior to the leasehold interest of Seller under the Leases, as
listed on the Leased Real Property Schedule ("Non-Disturbance
Agreements"). Such Non-Disturbance Agreements shall be in
commercially reasonable forms provided by such mortgagees and lien
holders; provided, however, that all Non-Disturbance agreements
shall provide that the Leases shall control the disposition of
insurance proceeds and condemnation awards;
(q) Purchaser shall have entered
into noncompetition agreements on terms that are satisfactory to
Purchaser (in the form of Exhibit G attached hereto) with the
following officers and directors of Seller listed on Schedule
2.1(q) ;
(r) Purchaser shall have entered
into (i) an Ace Hardware Brand Agreement, Membership Agreement
& Capital Stock Agreement with Ace Hardware Corporation and
(ii) a Catalogue Merchant Agreement with J.C. Penney Company, Inc.,
in each case on terms reasonably satisfactory to Purchaser;
(s) Seller shall have completed
the transfer of the Fuel Station Assets or the acquisition of 100%
of the ownership interests of Felpausch-Kelly, L.L.C. in accordance
with Section 5.21 of this Agreement; provided that if the
transfer of the Fuel Station Assets to Seller or the acquisition of
Felpausch-Kelly, L.L.C. (as the case may be) is delayed beyond the
Due Diligence Deadline, Seller and Purchaser agree to close: (i)
the transactions contemplated by this Agreement as to all of the
Purchased Assets other than the Fuel Station Assets on the Closing
Date (with an adjustment to the Purchase Price based upon the
allocation thereof to the Fuel Station Assets ("Fuel Station Assets
Purchase Price"); and (ii) the transaction contemplated by this
Agreement as to the Fuel Station Assets within ten (10) days of the
completion of either the transfer of the Fuel Station Assets from
Felpausch-Kelly, L.L.C. to Seller or the acquisition of the
ownership interests of Felpausch-Kelly, L.L.C. (as the case may be)
for the Fuel Station Assets Purchase Price; provided, however, if
the transfer of the Fuel Station Assets or acquisition of 100% of
the ownership interests of Felpausch-Kelly, L.L.C. has not been
completed by the date that is sixty (60) days following the Closing
Date, Purchaser shall have the right, in its sole discretion, to
terminate the purchase of the Fuel Station Assets and keep the Fuel
Station Assets Purchase Price; and
(t) Seller must have delivered
the Reviewed Financial Statements in accordance with Section
5.15 of this Agreement.
All proceedings to be taken by
Seller in connection with the consummation of the transactions
contemplated hereby and all certificates, instruments and other
documents required to effect the transactions contemplated hereby
reasonably requested by Purchaser shall be reasonably satisfactory
in form and substance to Purchaser. Any conditions specified in
this
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Section 2.1 may be
waived only in writing by Purchaser and specifying in reasonable
detail the provision being waived.
2.2
Conditions to Seller's Obligations . The
obligation of Seller to consummate the transactions contemplated by
this Agreement is subject to the satisfaction or express written
waiver of the following conditions as of the Closing:
(a) The representations and
warranties made by Purchaser in this Agreement and in any
certificate delivered by Purchaser pursuant hereto which are not
qualified as to materiality shall have been true and correct in all
material respects and the representations and warranties which are
qualified as to materiality shall be true and correct in all
respects, in each case at and as of the Closing Date as though then
made and as though the Closing Date were substituted for the date
of this Agreement throughout such representations and
warranties;
(b) Purchaser shall have
performed and complied in all material respects with the
obligations and covenants required by this Agreement to be
performed or complied with by Purchaser on or prior to the Closing
Date;
(c) Purchaser and Seller shall
have received or obtained all Governmental Approvals that are
necessary for the consummation of the transactions contemplated
hereby;
(d) No suit, action or other
proceeding, or injunction, order, decree or judgment relating
thereto, shall be threatened or pending before any court or
governmental or regulatory official, body or authority in which it
is sought to restrain or prohibit or to obtain damages or other
relief in connection with the transactions contemplated hereby;
(e) Purchaser shall have
delivered to Seller all other documents, agreements, instruments,
certificates, affidavits and other items required under
clause (v) of Section 1.5(b) ; and
(f) The shareholders of Seller
shall have approved pursuant to and in accordance with the
requirements of Seller's governing documents and any applicable
Legal Requirements, the transaction contemplated by this
Agreement.
All proceedings to be taken by Purchaser in connection with
the consummation of the transactions contemplated hereby and all
documents required to be delivered by Purchaser to effect the
transactions contemplated hereby reasonably requested by Seller
shall be reasonably satisfactory in form and substance to Seller.
Any condition specified in this Section 2.2 may be
waived only in writing by Seller and specifying in reasonable
detail the provision being waived.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
As an inducement to Purchaser to enter into this Agreement
and consummate the transactions contemplated hereby, Seller hereby
represents and warrants to Purchaser that:
3.1
Organization and Corporate Power . FC and HCSI
are corporations duly organized, validly existing and in good
standing under the laws of the State of Michigan. FLLC and FK are
limited liability companies duly organized, validly existing and in
good standing under the laws of the State of Michigan. Seller has
all requisite power and authority and all material qualifications
necessary to own and operate the Purchased Assets as now
conducted.
3.2
Authorization; No Breach; Approvals .
(a) The execution, delivery and
performance of this Agreement, the other agreements contemplated
hereby, and the consummation of the transactions contemplated
hereby and thereby have been, with the exception of the requisite
vote of the shareholders of Seller, duly and validly authorized by
all requisite corporate action on the part of Seller, and no other
corporate proceedings on the part of the Seller are necessary to
authorize the execution, delivery or performance of this Agreement
or the other agreements contemplated hereby. This Agreement and the
other agreements contemplated hereby to be executed and delivered
by Seller constitute the valid and binding obligations of Seller,
enforceable in accordance with its terms, except as may be limited
by bankruptcy, insolvency or other laws affecting generally the
enforceability of creditors' rights and by limitation on the
availability of equitable remedies.
(b) Except as set forth on
Schedule 3.2, the execution, delivery and performance of this
Agreement and the other agreements contemplated hereby to be
executed and delivered by Seller and the consummation of the
transactions contemplated hereby and thereby does not and will not
(i) conflict with or result in any breach, default or
violation of any of the provisions of, (ii) give any third
party the right to terminate or to accelerate any obligation under,
(iii) result in the creation of any Lien of any kind upon any
of the Purchased Assets, or (iv) require any authorization,
consent, approval, exemption or other action by or notice to or
filing with any court or other governmental or regulatory body or
authority under the provisions of, Seller's articles of
incorporation, operating agreement, or bylaws, the ESOP, or any
indenture, mortgage, lease, loan agreement, license, contract,
commitment, or other agreement (including, without limitation, any
supplier agreement) or instrument to which Seller or the Purchased
Assets are bound or affected, or any Legal Requirement, rule or
regulation to which Seller or the Purchased Assets are subject. All
authorizations, consents, approvals, exemptions, notices or filings
will be obtained or made by Seller, as applicable, prior to the
Closing Date.
(c) Without limiting the
generality of the foregoing, except for this Agreement, there are
no agreements, options, commitments or rights with, of or to
any
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Person to purchase or
otherwise acquire any of the Purchased Assets or any interests
therein, except those entered into in the Ordinary Course of
Business.
3.3
No Material Adverse Change . Since September
30, 2006, there has been no Material Adverse Change or any event
that could reasonably be expected to result in a Material Adverse
Change.
3.4
Financial Statements . Seller has delivered to
Purchaser reviewed financial statements for Seller's fiscal years
2004, 2005 and 2006, and financial statements for each fiscal
period through the Closing Date (collectively, the "Consolidated
Financial Statements"). Before Closing Seller shall deliver copies
of all consolidated financial statements Seller has prepared for
each full period before the Closing (the "Interim Financial
Statements"). Collectively, the Consolidated Financial Statements
and Interim Financial Statements are referred to as the "Financial
Statements." Except as set forth on Schedule 3.4, the Financial
Statements have been and will be prepared in accordance with GAAP,
do and will fairly and accurately present Seller's financial
position as of the dates indicated and the results of its
operations as of the dates indicated and for the periods covered
thereby, are not misleading, and are and will be true and
correct.
3.5
Books and Records . Except as otherwise
disclosed on Schedule 3.5, Seller's books of account, records, and
work papers (including without limitation all documents delivered
to Purchaser) are complete and correct; have been maintained in
accordance with sound business practices, including the maintenance
of an adequate system of internal controls; have been maintained on
an accrual basis; and accurately reflect, and will accurately
reflect, the basis for the financial condition and the results of
Seller's operations that are (and, as applicable, will be) set
forth in the Financial Statements.
3.6
Financial Documents . All periodic financial
statements and store level financial reports including without
limitation sales reports, inventory reports, and financial
statements (including without limitation the report given in
connection with the computation of the Estimated Gift Certificates
Amount) containing financial information which has been provided to
Purchaser by Seller fairly and accurately, in all material
respects, present the financial information contained therein, as
of the dates indicated, accurately, in all material respects,
reflect the information on Seller's books of accounts and records,
and have been prepared in a manner consistent with and have been
and can be reconciled to the financial data presented in the
Financial Statements. Seller has provided Purchaser with a full
accounting of all corporate overhead charges and expenses
(including the underlying data) and a description of all expense
items allocated from corporate overhead to the Premises or an
Individual Premises (or from the Premises or an Individual Premises
to corporate overhead), which accounting and description are
complete and accurate in all material respects.
3.7
Absence of Certain Developments . Except as
set forth on Schedule 3.7, since September 30, 2006, Seller has not
with respect to the Premises, the Purchased Assets, or the Assumed
Liabilities:
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(a) sold, assigned, licensed,
sublicensed, transferred, encumbered or permitted a Lien to attach
to any Proprietary Rights (including the United States federal
trademark registrations for Seller and the Seller logo) or other
Seller intangible assets, disclosed any confidential information to
any Person (other than Purchaser and Purchaser's representatives,
agents, attorneys and accountants and Persons who are subject to an
agreement to keep such information confidential), or abandoned or
permitted to lapse any of the Proprietary Rights (including the
United States federal trademark registrations for Seller and the
Seller logo);
(b) suffered any extraordinary
Losses in excess of One Hundred Thousand Dollars ($100,000) or
waived any rights of material value, whether or not in the Ordinary
Course of Business;
(c) suffered any damage,
destruction or casualty loss to its tangible assets (including the
Purchased Assets) in excess of One Hundred Thousand Dollars
($100,000), whether or not covered by insurance;
(d) made any change in any method
of accounting or accounting policies, other than those required by
generally accepted accounting principles which have been disclosed
in writing to Purchaser; or
(e) entered into, amended or
terminated any material contract or any government license or
permit or taken any other action or entered into any other
transaction other than in the Ordinary Course of Business.
3.8
Leased Real Property .
(a) Leased Real Property .
Schedule 3.8(a) and Schedule 3.8(b) set forth the address of each
Leased Real Property and a complete and accurate list of each lease
for each Individual Premises, in each case identifying the
location, date, parties, and amendments to such agreements (the
"Leases"). Seller has delivered to Purchaser complete and accurate
copies of all the Leases and Subleases (including all assignments,
amendments, extensions, renewals of, or any document having the
effect of modifying, such Leases and Subleases) comprising the
lease of such Leased Real Property and all guaranties of, and
agreements providing for subordination, non-disturbance or
attornment with respect to, each such Lease (collectively, the
"Lease Documents").
(b) Leases . Except as
specified on Schedule 3.8(b), (A) each Lease is in full force
and effect in all material respects; (B) the assignment of
each Lease to Purchaser in accordance with this Agreement does not
require the consent of any other Person, will not result in a
breach of, or default under, such Lease, or otherwise cause such
Lease to cease to be in full force and effect on identical terms
following the Closing; (C) Seller has no material disputes
with any Landlords with respect to any Lease or any Leased Real
Property and to Seller's Knowledge, no Landlord under any Lease has
a dispute with Seller with respect to any Lease or any Leased
Property; (D) neither Seller nor to Seller's Knowledge any
other party to any Lease is in material breach or default under any
Lease,
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and no event has
occurred or circumstance exists which, with the delivery of notice,
the passage of time or both, would constitute a breach or default
under any Lease, or permit the termination or modification of any
Lease or acceleration of rent under any Lease; (E) no portion
of any security deposit tendered in accordance with any Lease has
been applied with respect to a breach or default under such Lease
which has not been restored in full; (F) Seller does not owe,
and will not owe in the future, any brokerage commissions or
finder's fees with respect to any Lease; (G) no party to any
Lease (other than Seller) is an affiliate of Seller or otherwise
has any economic interest in Seller; (H) Seller has not
collaterally assigned or granted any other security interest in any
Lease; (I) there are no Liens or encumbrances on the estate or
interest created by any Lease; (J) the holders of all
mortgages and other liens on the title to the Leased Real Property
that are superior to Seller's leasehold interest in the Leased Real
Property have executed Non-Disturbance Agreements, copies of which
are included in the Lease Documents; (K) none of the Leases
obligates the tenant to operate a business on the Leased Real
Property or prohibits the tenant from closing the business
currently operated on the Leased Real Property or entitles the
landlord to exercise any rights or remedies against the tenant if
the tenant closes the business currently conducted on the Leased
Real Property; (L) none of the Leases contains restrictions on
the tenant's ability to operate or lease a pharmacy on the Leased
Real Property; (M) none of the Leases obligates the tenant to
maintain, repair, or replace the roof or the parking area of the
Improvements on the Leased Real Property (except that the tenant
may be obligated to reimburse the landlord under the Leases for the
tenant's proportionate share of costs incurred by Landlord to
maintain, (N) repair the roof of the Improvements or any parking
area located on the Leased Real Property); (O) to Seller's
Knowledge, the landlord under the Leases has good and marketable
title to the Leased Real Property; (P) Seller has good and
marketable title to all leasehold interests under the Leases; (Q)
to Seller's Knowledge, Seller has taken all necessary actions
required under the Leases and/or applicable Legal Requirements to
enforce its rights against the applicable landlord with respect to
any known deferred maintenance obligation of a landlord at any
Premises; and (R) no person or firm possesses or occupies, or has
the right to possess or occupy, any portion of any Leased Real
Property, except for (i) that portion of any Leased Real Property
that is a "common area" under the applicable Lease and (ii) those
portions of any Leased Real Property occupied by subtenants
pursuant to valid Subleases more particularly identified on
Schedule 3.8(c). Notwithstanding the materiality qualifiers in (C)
and (D) above, Seller shall use all commercially reasonable efforts
to provide Purchaser with written information regarding each
dispute, breach and default arising in, under, or in connection
with a Lease.
(c) Sublease Documents .
Schedule 3.8(c) sets forth the address of each Subleased Real
Property and a complete and accurate list in all material respects
of all Subleases, licenses and other agreements (including all
assignments, amendments, extensions, renewals of such Subleases,
licenses and other agreements) in each case identifying the
location, date and parties to such agreements. Seller has delivered
to Purchaser complete and accurate copies of each Lease and
Sublease comprising the Sublease of such Subleased Real Property
and all guaranties of, and agreements
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providing for
subordination, non-disturbance or attornment with respect to, each
such Sublease (collectively, the " Sublease Documents
").
(d) Subleases . Except as
specified on Schedule 3.8(c), (A) Seller has not subleased,
licensed or otherwise granted any Person the right to use or occupy
any portion of any Leased Real Property; (B) each Sublease is
in full force and effect in all material respects; (C) there
are no material disputes with respect to any Sublease or any
Subleased Real Property; (D) neither Seller or any other party
to any Sublease is in material breach or default under any
Sublease, and no event has occurred or circumstance exists which,
with the delivery of notice, the passage of time or both, would
constitute a breach or default under any Sublease; (E) no
portion of any security deposit tendered in accordance with any
Sublease has been applied with respect to a breach or default under
such Sublease which has not been restored in full; (F) the
subtenant, licensee or occupant of each Subleased Real Property has
not assigned any rights or interests under any Sublease and has not
subleased, licensed or otherwise granted the right to use or occupy
any portion of the Subleased Real Property to any Person;
(G) Seller does not owe, and will not owe in the future, any
brokerage commissions or finder's fees with respect to any
Sublease; (H) no party to any Sublease (other than Seller) is
an affiliate of Seller or otherwise has any economic interest in
Seller; and (I) Seller has not collaterally assigned or
granted any other security interest in any Sublease; (J) to
Seller's Knowledge, there are no Liens or encumbrances on the
estate or interest created by any Sublease; (K) Seller has paid all
inducements owing with respect to each Sublease and has constructed
all improvements required to be constructed in accordance with each
Sublease; and (L) no person or firm possesses or occupies, or has
the right to possess or occupy, any portion of the Subleased Real
Property, except the subtenant under the applicable Sublease.
(e) Improvements . Except
as set forth in the Leasehold Improvements Schedule , Seller
has good and marketable title to its respective Leasehold
Improvements, free and clear of all Liens except Permitted Liens or
any other lien that will be discharged or otherwise satisfied on or
before the Closing Date. Other than the rights of Purchaser under
this Agreement, there are no outstanding and presently existing
options, rights of first offer or rights of first refusal to
purchase any Leasehold Improvements. The Improvements are in a
condition and repair that is sufficient for the operation of the
Purchased Assets on the Leased Real Properties. To Seller's
Knowledge, none of the Improvements encroach on any land that is
not included in the Leased Real Properties or on any easement.
There are no encroachments on any portion of the Leased Real
Properties by any buildings or improvements from adjoining real
property, which encroachment would materially interfere with the
use or occupancy of such Leased Real Property or the continued
operation of the Purchased Assets.
(f) Access . To Seller's
Knowledge, each Leased Real Property has legal access to an
adjoining public street, and such access is not dependent on any
land or interest in real property that is not included in such
Leased Real Property.
(g) Utility Services . To
Seller's Knowledge, all water, sewer, storm water, gas, electrical,
telecommunications and other utility services for each Leased
Real
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Property have been
installed and are operational and sufficient for the operation of
the Premises in a manner conducted by Seller prior to Closing. All
fees to connect and begin provision of such systems and services
have been paid in full. To Seller's Knowledge, each such service
enters each Leased Real Property from an adjoining public street or
valid private easement in favor of the supplier of such service or
appurtenant to such Leased Real Property.
(h) Condemnation and
Litigation . There is no condemnation, expropriation or other
proceedings in the nature of eminent domain pending or, to Seller's
Knowledge, threatened, affecting any interest in any Leased Real
Property.
(i) Compliance with Recorded
Documents . To Seller's Knowledge, the current use and
occupancy of the Leased Real Properties do not violate any
easement, restriction, covenant, condition, restriction or similar
provision in any recorded instrument or any zoning code or
ordinance, building code or other law, regulation, ordinance,
decree, or order regulating the use or occupancy of the Leased Real
Property.
(j) Flood Hazard Area . To
Seller's Knowledge, no portion of any Leased Real Property is
located in a flood hazard area (as defined by the Federal Emergency
Management Agency) that requires federal flood hazard insurance or
any permits, licenses, variances, approvals and authorizations for
the occupancy or use of such Real Property for the operation of the
Purchased Assets.
(k) Insurability of the Real
Property . Seller has not received any notice from any
insurance company or any board of fire underwriters (or any entity
exercising similar functions) (A) requesting that Seller performs
any repairs, alterations, improvements to any Leased Real Property
which Seller or a Subsidiary of Seller has not completed in full or
(B) notifying such Seller of any defects or inadequacies in
any Leased Real Property which would adversely affect the
insurability of such Leased Real Property or the premiums for
insurance.
3.9
Assets . Seller owns good and valid title to,
or holds a valid leasehold interest in, all of the Purchased Assets
(including the Fuel Station Assets as of the Closing Date), free
and clear of all Liens, except for Permitted Liens and liens to be
discharged or otherwise satisfied on or before the Closing Date.
Except for the Excluded Assets and the rights and services to be
provided under the Transition Services Agreement, the Purchased
Assets include all of the assets, properties, rights (including
intellectual property rights), services or interests, whether
tangible or intangible, real or personal, that are necessary to
conduct the businesses and operations historically conducted at the
Premises. The buildings, Improvements, fixtures, machinery,
equipment and other tangible assets (whether owned or leased)
included in the Purchased Assets are, except for ordinary wear and
tear, in good condition and repair, sufficient for the operation of
the Purchased Assets on the Premises and usable in the Ordinary
Course of Business.
3.10 Taxes . FC's employer
identification number is 38-0534560. FLLC's employer identification
number is 38-3504307.
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HCSI's employer identification
number is 38-3345369. FK's employer identification number is
13-4249875. Seller has duly and timely filed all Tax Returns it is
required to file, including without limitation Tax Returns with
respect to the Purchased Assets, except for those returns for which
the time for filing thereof has been validly extended, and all such
Tax Returns are true, correct and complete in all material
respects. All Taxes due and payable by Seller, including without
limitation with respect to the Purchased Assets, the Premises and
sales from the Premises, have been timely paid. There are no Liens
for Taxes (other than Taxes not yet due and payable) upon any of
the Purchased Assets or on the Premises.
3.11
Contracts and Commitments .
(a) Schedule 3.11 contains a true
and complete list of any and all contracts and agreements entered
into by Seller with any Person, and which are necessary to, are
used in connection with, or relate to the operation and use of the
Premises and the Purchased Assets (except any contract or agreement
that involves performance of services or delivery of goods or
materials of an annualized amount or value less than Twenty-Five
Thousand Dollars ($25,000)).
(b) Except as disclosed on
Schedule 3.11 attached hereto, (i) Seller has performed all
material obligations required to be performed by it and is not in
default, or in breach of, any Assumed Contract, (ii) to
Seller's Knowledge, no Assumed Contract has been breached or
cancelled by the other party, and there is no anticipated breach by
any other party to any Assumed Contract, (iii) no event or
circumstance has occurred that, with notice or lapse of time or
both, would constitute a default or breach under any Assumed
Contract, (iv) except for Subleases, Seller has not assigned,
delegated or otherwise transferred to any Person any of its rights,
title or interest under any Assumed Contract, and (v) the
Assumed Contracts are in full force and effect, and constitute
legal, valid and binding agreements of Seller, enforceable in
accordance with their respective terms and each Assumed Contract
will continue as such immediately following the consummation of the
transactions contemplated hereby, except as the enforceability may
be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws and principles of equity generally affecting the
enforcement of creditors' rights.
(c) Purchaser has received a true
and correct copy of all written contracts (and an accurate written
description of all oral contracts) which are listed on the attached
Assumed Contracts Schedule , together with all amendments,
exhibits, attachments, waivers or other changes thereto.
(d) Other than the transactions
contemplated by this Agreement, Seller is not a party to or bound
by any agreement with respect to a possible merger, sale,
restructuring, refinancing or other disposition of all or any
material part of the Premises or the Purchased Assets.
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3.12
Proprietary Rights .
(a) The Proprietary Rights
Schedule lists all of the following Proprietary Rights used in
the operation of the Premises: (i) Proprietary Rights registered or
pending with the U.S. Patent and Trademark Office or the U.S.
Copyright Office or any other similar domestic or foreign office,
department or agency; (ii) material unregistered trademarks,
service marks and trade names, (iii) internet domain names; (iv)
material unregistered copyrights; (v) Proprietary Rights licenses;
and (vi) any other material Proprietary Rights (including the
recipe for Felpausch cookies).
(b) Except as disclosed in the
Proprietary Rights Schedule :
(i) Neither Seller's conduct of
the business associated with the operation of the Premises nor
Seller's use of the Purchased Assets has infringed, misappropriated
or otherwise conflicted with an intellectual property right of any
Person. Seller is not aware of any facts that indicate a reasonable
possibility of any of the foregoing and Seller has not received any
notices regarding any of the foregoing, including, without
limitation, any demands or offers to license any intellectual
property from any Person.
(ii) To Seller's Knowledge, no
Person has infringed, misappropriated or otherwise conflicted with
any of the Proprietary Rights and Seller does not have Knowledge of
any facts that indicate a reasonable possibility of any of the
foregoing.
(c) The United States federal
trademark registrations for Seller and the Seller logo are valid
and enforceable and, to Seller's Knowledge, all other Proprietary
Rights are valid and enforceable.
(d) Except for the Excluded
Assets, immediately subsequent to Closing, the Proprietary Rights
will be owned by or available for use by the Purchaser on terms and
conditions identical to those under which the Seller owned or used
the Proprietary Rights immediately prior to Closing.
3.13
Litigation . Except as set forth on Schedule
3.13, there are no actions, suits, proceedings, orders, charges,
complaints, grievances, or investigations pending or, to Seller's
Knowledge, threatened against or affecting the Purchased Assets
(including, without limitation, the Leased Real Property) at law or
in equity, by or before (or that could come before) any federal,
state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign.
Seller is not subject to or bound by any outstanding orders,
judgments or decrees of any court or governmental entity with
respect to the Purchased Assets or the Assumed Liabilities.
3.14 Brokerage . Except as
set forth on Schedule 3.14, there are no claims for brokerage
commissions, finders' fees or similar compensation in connection
with the transactions contemplated by this Agreement based on any
arrangement or agreement made by
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or on behalf of Seller. Except
as set forth on Schedule 3.14, Seller has not entered into an
agreement with any broker, finder or investment bank pursuant to
which such party would be entitled to any payment relating to or in
connection with this Agreement and the transactions contemplated by
this Agreement.
3.15
Employees .
(a) Except as disclosed on
Schedule 3.15, with respect to the Purchased Assets: (i) there
is no collective bargaining agreement or relationship with any
labor organization; (ii) no executive, manager (including
store managers) or pharmacist at any Individual Premises has
delivered notice to Seller indicating he or she has any present
intention to terminate his or her employment; (iii) no
executive, manager (including store managers) or pharmacist is a
party to any confidentiality, non-competition, proprietary rights
or other such agreement between such employee and any other Person
with respect to the Premises that would be material to the
performance of such employee's employment duties, or the ability of
Purchaser to operate the Premises; (iv) no labor organization
or group of employees has filed any representation petition or made
any written or oral demand for recognition; (v) to Seller's
Knowledge, no union organizing or decertification efforts are
underway or threatened and no other question concerning
representation exists; (vi) within the past three (3) years,
no labor strike, work stoppage, slowdown, or other material labor
dispute has occurred, and none is underway or threatened;
(vii) there is no material worker's compensation liability,
experience or matter; (viii) there is no employment-related
charge, complaint, claim, grievance, investigation, inquiry or
obligation of any kind, pending or, to Seller's Knowledge,
threatened in any forum, relating to an alleged violation or breach
of any law, regulation or contract; and, (ix) to Seller's
Knowledge, no employee or agent has committed any act or omission
giving rise to liability for any violation or breach identified in
subsection (viii) above.
(b) Schedule 3.15 sets forth
(i) a list of all written employment agreements or severance
agreements with any employees working at the Premises, and
(ii) a list of all employees working at the Premises including
the Individual Premises at which each employee works, each
employee's status as an hourly or salaried employee, and each
employee's status as full or part-time. Except as set forth in
Schedule 3.15, there are no Employee Handbooks or other written
personnel policies, rules or procedures applicable to employees
working at the Premises and Seller has provided Purchaser with true
and complete copies of all such documents.
(c) With respect to this
transaction, any notice required under any law or agreement has
been or shall be given, and all bargaining obligations with any
employee representative have been, or prior to the Closing will be,
satisfied. Within the past one (1) year, except as disclosed on
Schedule 3.15, Seller has not implemented any plant closing or
layoff of employees relating to the Premises that could implicate
the Worker Adjustment and Retraining Notification Act of 1988, as
amended, or any similar foreign, state or local law, regulation or
ordinance (collectively, the " WARN Act "), and no such
action will be implemented without advance notification to
Purchaser. Set forth on
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Schedule 3.15 is a
list of employees terminated by Seller at each Individual Premises
during the ninety (90) day period immediately preceding the Signing
Date, including the date of such termination. Seller shall update
this Schedule to provide such information for the employees
terminated at each Individual Premises for the ninety (90) day
period immediately preceding the Closing Date.
3.16
Employee Benefit Plans; ESOP .
(a) Schedule 3.16 contains a
complete and correct list of each Employee Benefit Plan.
(b) Each Employee Benefit Plan
that is intended to meet the requirements of a "qualified plan"
under Section 401(a) of the Code is so qualified, and there are no
facts or circumstances that could adversely affect the qualified
status of any such Employee Benefit Plan.
(c) To Seller's Knowledge, each
Employee Benefit Plan has been maintained, funded and administered
in accordance with its terms, the requirements of any applicable
collective bargaining agreements, and the requirements of ERISA,
the Code, and all other applicable laws. For each Employee Benefit
Plan, all contributions and premium payments that are due have been
made within the time periods prescribed by ERISA and the Code, and
all contributions and premium payments for any period ending on or
before the Closing Date that are not yet due have been made or
properly accrued.
(d) Seller and each ERISA
Affiliate are in material compliance with the requirements of
COBRA.
(e) Neither Seller nor any ERISA
Affiliate has participated in any Multiemployer Plan.
(f) ESOP . As of the
Closing Date, the execution and consummation of the transactions
contemplated by this Agreement by Seller will not:
(i) violate any provision of the
ESOP plan document, trust agreement or any other document related
to the ESOP;
(ii) result in a default or
create any right of termination, modification or acceleration under
the provisions of any agreement to which the ESOP is a party or by
which the ESOP is bound; or
(iii) violate any Legal
Requirement, including the Code and ERISA and the related
regulations, or any judgment, order or decree of any court,
governmental body or arbitrator applicable to the ESOP.
(g) ESOP Counsel's Opinion
. As of the Closing Date, the Trustee of the ESOP will have
received prior to the Closing Date a written opinion from the legal
counsel for the ESOP that the sale of Purchased Assets as
contemplated in this
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Agreement does not
violate the articles of incorporation or bylaws of Seller or
applicable Legal Requirements and is structured in a legal and
appropriate manner. Prior to Closing, Seller shall provide a copy
of that written opinion to Purchaser and the ESO
