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EXHIBIT 10.9
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STOCK PURCHASE AGREEMENT
DATED AS OF
MARCH 29, 2004
BY AND AMONG
JOHN R. WILLIAMSON
MAPCO FAMILY CENTERS, INC.
A DELAWARE CORPORATION
AND
DELEK US HOLDINGS, INC.
A DELAWARE CORPORATION
REGARDING
WILLIAMSON OIL CO., INC.
AN ALABAMA CORPORATION
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TABLE OF CONTENTS
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1.
DEFINITIONS...............................................................
1
2. SALE AND TRANSFER OF SHARES; ADDITIONAL AMOUNTS PAYABLE;
CLOSING.......... 12
2.1
SHARES............................................................
12
2.2 PURCHASE
PRICE....................................................
12
2.3 EARNEST
MONEY.....................................................
14
2.4
CLOSING...........................................................
15
2.5 CLOSING
OBLIGATIONS...............................................
16
3. REPRESENTATIONS AND WARRANTIES OF
SELLER.................................. 19
3.1 ORGANIZATION AND
GOOD STANDING.................................... 19
3.2 AUTHORITY; NO
CONFLICT............................................ 19
3.3
CAPITALIZATION....................................................
21
3.4 FINANCIAL
STATEMENTS..............................................
21
3.5 BOOKS AND
RECORDS.................................................
21
3.6 TITLE TO
PROPERTIES; ENCUMBRANCES.................................
22
3.7 CONDITION AND
SUFFICIENCY OF ASSETS............................... 22
3.8 ACCOUNTS
RECEIVABLE...............................................
23
3.9 BROKERS OR
FINDERS................................................
23
3.10
NO
UNDISCLOSED LIABILITIES........................................
23
3.11
TAXES.............................................................
23
3.12
NO
MATERIAL ADVERSE CHANGE........................................
26
3.13
EMPLOYEE
BENEFITS.................................................
26
3.14
COMPLIANCE
WITH LEGAL REQUIREMENTS; GOVERNMENTAL AUTHORIZATIONS...
26
3.15
LEGAL
PROCEEDINGS; ORDERS.........................................
27
3.16
ABSENCE OF
CERTAIN CHANGES AND EVENTS.............................
28
3.17
CONTRACTS;
NO DEFAULTS............................................
30
3.18
INSURANCE.........................................................
33
3.19
ENVIRONMENTAL MATTERS.............................................
34
3.20
EMPLOYEES.........................................................
36
3.21
EMPLOYMENT
COMPLIANCE.............................................
37
3.22
CERTAIN
PAYMENTS..................................................
37
3.23
DISCLOSURE........................................................
38
3.24
INTELLECTUAL PROPERTY.............................................
38
3.25
RELATIONSHIPS WITH RELATED PERSONS................................
38
3.26
CONDEMNATION......................................................
39
4. REPRESENTATIONS AND WARRANTIES OF
BUYER................................... 39
4.1
CAPACITY..........................................................
39
4.2 INVESTMENT
INTENT.................................................
39
4.3 CERTAIN
PROCEEDINGS...............................................
40
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4.4 BROKERS OR
FINDERS................................................
40
4.5
NON-CONTRAVENTION.................................................
40
4.6 FINANCIAL
ABILITY.................................................
40
5. COVENANTS OF SELLER PRIOR TO CLOSING
DATE................................. 40
5.1 ACCESS AND
INVESTIGATION..........................................
40
5.2 OPERATION OF THE
BUSINESSES OF THE ACQUIRED COMPANIES............. 40
5.3 NEGATIVE
COVENANTS................................................
41
5.4 REQUIRED
APPROVALS................................................
41
5.5
NOTIFICATION......................................................
42
5.6 NO
NEGOTIATION....................................................
42
5.7 RELEASE OF
SELLER LIABILITIES: SELLER EFFORTS.....................
42
5.8 FINANCIALS:
SELLER'S OBLIGATIONS.................................. 42
5.9
AIRPLANE..........................................................
43
5.10
SELLER
INDEBTEDNESS TO ACQUIRED COMPANIES.........................
43
5.11
ENVIRONMENTAL DUE DILIGENCE.......................................
43
5.12
ENVIRONMENTAL REMEDIATION.........................................
44
5.13
SATISFACTION OF CLOSING CONDITIONS................................
45
5.14
EMPLOYEE
BENEFITS ACCRUAL.........................................
45
6. COVENANTS OF BUYER PRIOR AND SUBSEQUENT TO CLOSING
DATE................... 45
6.1 APPROVALS OF
GOVERNMENTAL BODIES.................................. 45
6.2 SATISFACTION OF
CLOSING CONDITIONS................................ 46
6.3 RELEASE OF
SELLER LIABILITIES: BUYER EFFORTS......................
46
6.4 FINANCIALS:
BUYER'S OBLIGATIONS................................... 46
6.5 ENVIRONMENTAL
DUE DILIGENCE....................................... 46
6.6
NOTIFICATION......................................................
47
6.7 REMEDIATION OF
KNOWN BUYER REMEDIATION FACILITIES................. 47
7. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO
CLOSE....................... 48
7.1 ACCURACY OF
REPRESENTATIONS....................................... 48
7.2 SELLER'S
PERFORMANCE..............................................
49
7.3 ADDITIONAL
DOCUMENTS..............................................
49
7.4 NO
PROCEEDINGS....................................................
49
7.5 NO CLAIM
REGARDING STOCK OWNERSHIP OR SALE PROCEEDS...............
49
7.6 NO
PROHIBITION....................................................
49
7.7 REQUIRED
CONSENTS.................................................
50
7.8 ACQUIRED COMPANY
LOANS............................................ 50
7.9 ACQUIRED COMPANY
LIABILITIES...................................... 50
7.10
[INTENTIONALLY OMITTED]...........................................
50
7.11
AUDIT OF
NOVEMBER 30 FINANCIALS...................................
50
7.13
ENVIRONMENTAL INSURANCE POLICY....................................
50
8. CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO
CLOSE...................... 51
8.1 ACCURACY OF
REPRESENTATIONS....................................... 51
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8.2 BUYER'S
PERFORMANCE...............................................
51
8.3 ADDITIONAL
DOCUMENTS..............................................
51
8.4 NO
INJUNCTION.....................................................
51
8.5 RELEASE OF OTHER
PERSONAL LIABILITIES............................. 52
9.
TERMINATION...............................................................
52
9.1 TERMINATION
EVENTS................................................ 52
9.2 EFFECT OF
TERMINATION.............................................
53
10. INDEMNIFICATION;
REMEDIES................................................
53
10.1
SURVIVAL..........................................................
53
10.2
INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLER..................
53
10.3
INDEMNIFICATION AND PAYMENT OF DAMAGES BY BUYER...................
54
10.4
TIME
LIMITATIONS..................................................
54
10.5
PROCEDURE
FOR INDEMNIFICATION--THIRD PARTY CLAIMS.................
55
10.6
INDEMNIFICATION AND PROCEDURE FOR INDEMNIFICATION--TAX MATTERS....
56
10.7
PROCEDURE
FOR INDEMNIFICATION--OTHER CLAIMS.......................
57
10.8
LIMITATIONS.......................................................
57
10.9
SOLE
REMEDY.......................................................
59
10.10
TAX TREATMENT OF
INDEMNIFICATION PAYMENTS......................... 59
11. TAX
MATTERS..............................................................
59
11.1
RESPONSIBILITY FOR FILING INCOME TAX RETURNS......................
60
11.2
STRADDLE
PERIODS..................................................
60
11.3
REFUND AND
TAX BENEFITS...........................................
61
11.4
CARRYBACKS........................................................
61
11.5
COOPERATION ON TAX MATTERS........................................
61
11.6
TAX-SHARING AGREEMENTS............................................
62
11.7
CERTAIN
TAXES AND FEES............................................
62
12. GENERAL
PROVISIONS.......................................................
62
12.1
EXPENSES..........................................................
62
12.2
NOTICES...........................................................
63
12.3
CHOICE OF
LAW.....................................................
64
12.4
FURTHER
ASSURANCES................................................
64
12.5
AGREEMENT
OF SELLER NOT TO COMPETE................................
64
12.6
WAIVER............................................................
66
12.7
ENTIRE
AGREEMENT AND MODIFICATION.................................
66
12.8
DISCLOSURE
LETTER.................................................
66
12.9
ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS................
66
12.10
SEVERABILITY......................................................
67
12.11
SECTION
HEADINGS, CONSTRUCTION....................................
67
12.12
TIME OF
ESSENCE...................................................
67
12.13
CONFIDENTIALITY;
NO PUBLIC DISCLOSURE............................. 67
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12.14
SUNTRUST
LITIGATION...............................................
68
12.15
DELEK
GUARANTEE...................................................
69
12.16
INCORPORATION OF
EXHIBITS AND DISCLOSURE LETTER................... 69
12.17
COUNTERPARTS......................................................
69
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STOCK PURCHASE AGREEMENT
This
Stock Purchase Agreement ("Agreement") is made as of March 29,
2004,
by and among DELEK US HOLDINGS, INC., a Delaware corporation
("Delek US
Holdings"), MAPCO FAMILY CENTERS, INC., a Delaware corporation
("Buyer") and
JOHN R. WILLIAMSON, an individual residing in the State of Alabama
("Seller").
RECITALS:
Seller desires to sell, and Buyer desires to purchase, all of the
issued
and outstanding shares (the "Shares") of capital stock of
Williamson Oil Co.,
Inc., an Alabama corporation (the "Company"), for the consideration
and on the
terms set forth in this Agreement and for other good and valuable
consideration,
the receipt and sufficiency of which is hereby acknowledged. In
furtherance
thereof, and to induce Seller to proceed with the Contemplated
Transactions (as
herein defined), Delek US Holdings has heretofore deposited One
Million Dollars
($1,000,000) and will within twenty-four (24) hours hereof deposit
an additional
One Million Dollars ($1,000,000) (as herein defined) as more fully
described in
Section 2.3.
AGREEMENT:
The
parties, intending to be legally bound, agree as follows:
1.
DEFINITIONS
For
purposes of this Agreement, the following terms have the
meanings
specified or referred to in this Section 1:
"ACQUIRED COMPANIES" means the Company, Gasoline Associated
Services, Inc., an
Alabama corporation, and Liberty Wholesale Co., Inc., an Alabama
corporation.
"ADJUSTMENT AMOUNT" is defined in Section 2.2(b).
"AIRPLANE" - means 1984 Citation III, Serial Number: 650-0058,
Registration:
N70DJ, which is currently owned by the Company.
"AIRPLANE DEBT" means that certain portion of the loan incurred by
the Company
in connection with the acquisition of the Airplane which is
designated by Seller
(in a writing to Buyer no later than five (5) days prior to
Closing) to be paid
by Buyer at Closing, which amount shall not exceed One Million,
Nine Hundred
Thousand Dollars ($1,900,000).
"APPLICABLE CONTRACT" means any Contract (a) under which any
Acquired Company
has or may acquire any rights, (b) under which any Acquired Company
has or may
become subject to any obligation or liability, or (c) by which any
Acquired
Company or any of the
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assets owned or used by it is or may become bound.
"ASSESSMENTS" is defined in Section 6.5.
"ASSETS" means all property owned by any of the Acquired Companies,
leased by
any of the Acquired Companies or used in their operations.
"BASE PURCHASE PRICE" is defined in Section 2.2(a).
"BEST EFFORTS" means the efforts that a prudent Person desirous of
achieving a
result would use in similar circumstances to ensure that such
result is achieved
as expeditiously as possible; provided, however, that an obligation
to use Best
Efforts under this Agreement shall not require a change in the
business of such
Person, the expenditure of money, or the incurrence of any other
financial
burden.
"BOOKS AND RECORDS" is defined in Section 3.5.
"BREACH" means (a) any inaccuracy in or breach of, or any failure
to perform or
comply with, a representation, warranty, covenant, obligation, or
other
provision of this Agreement or any instrument delivered pursuant to
this
Agreement, or (b) any claim (by any Person) or other occurrence or
circumstance
that is or was inconsistent with such representation, warranty,
covenant,
obligation, or other provision.
"BUYER" is defined in the first paragraph of this Agreement.
"CLOSING" is defined in Section 2.4.
"CLOSING DATE" means the date and time as of which the Closing
actually takes
place.
"CLOSING DATE INVENTORY" is defined in Section 2.2(c).
"CLOSING PURCHASE PRICE" is defined in Section 2.2(a).
"COMPANY" is defined in the Recitals of this Agreement.
"CONSENT" means any approval, consent, ratification, waiver, or
other
authorization (including any Governmental Authorization).
"CONSULTANTS" is defined in Section 5.11.
"CONTEMPLATED TRANSACTIONS" means all of the transactions
contemplated by this
Agreement, including:
(a)
the sale of the Shares by Seller to Buyer;
(b)
the performance by Buyer and Seller of their respective covenants
and
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obligations under this Agreement; and
(c)
Buyer's acquisition and ownership of the Shares and exercise of
control
over the Acquired Companies.
"CONTRACT" means any agreement, contract, obligation, promise, or
undertaking
(whether written or oral and whether express or implied) that is
legally
binding.
"COVERED UST" is defined in Section 3.19(k).
"DAMAGES" is defined in Section 10.2.
"DEBT PORTION" is defined in Section 2.5(f).
"DELEK US HOLDINGS" is defined in the first paragraph of this
Agreement.
"DISCLOSURE LETTER" means the disclosure letter delivered by Seller
to Buyer in
connection with this Agreement and made a part hereof by this
reference.
"EARNEST MONEY" is defined in Section 2.3.
"EARNEST MONEY ESCROW AGENT" is defined in Section 2.3.
"EMPLOYEE KNOWLEDGE GROUP" shall mean those certain individuals who
are listed
on EXHIBIT A hereto, which is incorporated by reference herein.
"ENCUMBRANCE" means any charge, claim, community property interest,
condition,
encumbrance, lease, license, sublease, right, equitable interest,
easement,
mortgage, deed of trust, lien, option, pledge, security interest,
right of first
refusal, or restriction of any kind, including any restriction on
use, voting,
transfer, receipt of income, or exercise of any other attribute of
ownership.
"ENVIRONMENT" means soil, land surface or subsurface strata,
surface waters
(including navigable waters, ocean waters, streams, ponds, drainage
basins, and
wetlands), groundwaters, drinking water supply, stream sediments,
ambient air
(including indoor air), plant and animal life, and any other
environmental
medium or natural resource.
"ENVIRONMENTAL CONDITION" or "ENVIRONMENTAL CONDITIONS" means any
pollution,
contamination, degradation, damage or injury caused by, related to,
arising
from, or in connection with the generation, handling, use,
treatment, storage,
transportation, disposal, discharge, Release, or emission of any
Hazardous
Materials.
"ENVIRONMENTAL, HEALTH, AND SAFETY LIABILITIES" shall mean any and
all
liabilities, responsibilities, claims, suits, losses, costs
(including
remediation, removal, response, abatement, clean-up, investigative,
and/or
monitoring costs and any other related costs and expenses), other
causes of
action recognized now or at any later time, damages,
3
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settlements, expenses, charges, assessments, liens, penalties,
fines,
pre-judgment and post-judgment interest, attorney fees and other
legal fees (a)
pursuant to any agreement, order, notice, requirement,
responsibility, or
directive (including directives embodied in Environmental Law or
Occupational
Safety and Health Law), injunction, judgment or similar documents
(including
settlements) arising out of or in connection with any Environmental
Law or
Occupational Safety and Health Law, or (b) pursuant to any claim by
a
Governmental Body or other Person for personal injury, property
damage, damage
to natural resources, remediation, or similar costs or expenses
incurred or
asserted by such Person pursuant to common law or statute.
"ENVIRONMENTAL INSURANCE POLICY" is defined in Section 2.5(g).
"ENVIRONMENTAL LAW" or "ENVIRONMENTAL LAWS" means any Legal
Requirement relating
to (i) the control of any potential pollutant or protection of the
air, water or
land, (ii) solid, gaseous or liquid waste generation, handling,
treatment,
storage, disposal or transportation, and (iii) exposure to
hazardous, toxic or
other substances alleged to be harmful, and includes without
limitation, (1) the
terms and conditions of any license, permit, approval, or other
authorization by
any Governmental Body, and (2) judicial, administrative, or other
regulatory
decrees, judgments, and orders of any Governmental Body. The term
"Environmental
Laws" shall include, but not be limited to the following statutes
and the
regulations promulgated thereunder: the Clean Air Act, 42 U.S.C.
Section 7401 et
seq., the Clean Water Act, 33 U.S.C. Section 1251 et seq., the
Resource
Conservation and Recovery Act ("RCRA"), 42 U.S.C. Section 6901 et
seq., the
Superfund Amendments and Reauthorization Act, 42 U.S.C. Section
11011 et seq.,
the Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq.,
the Water
Pollution Control Act, 33 U.S.C. Section 1251 et seq., the Safe
Drinking Water
Act, 42 U.S.C. Section 300f et seq., the Comprehensive
Environmental Response,
Compensation, and Liability Act ("CERCLA"), 42 U.S.C. Section 9601
et seq., and
any state, county, or local regulations similar thereto.
"EQUITY PORTION" is defined in Section 2.5(f).
"ERISA" means the Employee Retirement Income Security Act of 1974
or any
successor law, and regulations and rules issued pursuant to that
Act or any
successor law.
"FACILITIES" mean any real property, leaseholds, or other interests
currently or
formerly owned or operated by any Acquired Company and any
buildings, plants,
structures, or equipment (including motor vehicles, trailers and
rolling stock)
currently or formerly owned or operated by any Acquired
Company.
"FINANCIAL STATEMENTS" is defined in Section 3.4.
"FIVE STAR MEMBERSHIP PAYMENT" shall be Fifty-Five Thousand Dollars
($55,000).
"GAAP" means generally accepted United States accounting
principles, applied on
a basis consistent with the basis on which the Financial Statements
and the
other financial statements referred to in Section 3.4 were
prepared.
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"GOVERNMENTAL AUTHORIZATION" means any approval, consent, license,
permit,
waiver, or other authorization issued, granted, given, or otherwise
made
available by or under the authority of any Governmental Body or
pursuant to any
Legal Requirement.
"GOVERNMENTAL BODY" means any:
(a)
nation, state, county, city, town, village, district, or other
jurisdiction of any nature;
(b)
federal, state, local, municipal, foreign, or other government;
(c)
governmental or quasi-governmental authority of any nature
(including
any governmental agency, branch, department, official, or entity
and any court
or other tribunal);
(d) multinational
organization or body; or
(e)
body exercising, or entitled to exercise, any administrative,
executive, judicial, legislative, police, regulatory, or taxing
authority or
power of any nature.
"HAZARDOUS ACTIVITY" means the distribution, generation, handling,
importing,
management, manufacturing, processing, production, refinement,
Release, storage,
transfer, transportation, treatment, or use (including any
withdrawal or other
use of groundwater) of Hazardous Materials in, on, under, about, or
from the
Facilities or any part thereof into the Environment, and any other
act,
business, operation, or thing that materially increases the danger,
or risk of
danger, or poses an unreasonable risk of harm to persons or
property on or off
the Facilities, or that may have a Material Adverse Effect on the
value of the
Facilities or any Acquired Company.
"HAZARDOUS MATERIALS" means any waste or other substance that is
listed,
defined, designated, or classified as, or otherwise has been
determined to be,
hazardous, radioactive, or toxic or a pollutant or a contaminant
under or
pursuant to any Environmental Law, or that is regulated by any
Governmental Body
under any Environmental Law, including any mixture or solution
thereof, and
specifically including petroleum and all derivatives thereof or
synthetic
substitutes therefore, asbestos or asbestos-containing
materials,
polychlorinated biphenyls, mercury, buried contaminants, chemicals,
and
flammable or explosive materials.
"INCOME TAX" means any Federal, state, local, or foreign income
tax, including
any interest, penalty, or addition thereto, whether disputed or
not.
"INCOME TAX RETURN" means any return, declaration, report, claim
for refund, or
information return or statement relating to Income Taxes, including
any schedule
or attachment thereto, and including any amendment thereof.
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"INTERIM FINANCIAL STATEMENTS" is defined in Section 3.4.
"IRC" means the Internal Revenue Code of 1986, as amended, or any
successor law,
and regulations issued by the IRS pursuant to the Internal Revenue
Code or any
successor law.
"IRS" means the United States Internal Revenue Service or any
successor agency,
and, to the extent relevant, the United States Department of the
Treasury.
"KNOWLEDGE": an individual will be deemed to have "Knowledge" of a
particular
fact or other matter if such individual is actually aware of such
fact or other
matter; A Person (other than an individual) will be deemed to have
"Knowledge"
of a particular fact or other matter if, and only if, any
individual who is
serving as a director, officer, partner, shareholder, member,
executor, or
trustee of such Person (or in any similar capacity) has Knowledge
of such fact
or other matter. For purposes of this Agreement, the Knowledge of
the Acquired
Companies shall be limited to the Knowledge of the Employee
Knowledge Group.
"KNOWN BUYER REMEDIATION FACILITIES" is defined in Section
6.7(a).
"KNOWN NON-TRUST FUND CONTAMINATION FACILITIES" is defined in
Section 5.12(a).
"LEASE LIABILITIES" is defined in Section 6.3(a).
"LEASEHOLD STORES" is defined in Section 2.5(a)(ix).
"LEGAL REQUIREMENT" means any federal, state, local, municipal,
foreign,
international, multinational, or other administrative order,
constitution, law,
ordinance, principle of common law, regulation, statute, or
treaty.
"MANAGEMENT KNOWLEDGE GROUP" shall have the meaning set forth in
EXHIBIT C
hereto which is incorporated by reference herein.
"MATERIAL ADVERSE CHANGE" OR "MATERIAL ADVERSE EFFECT" means any
change or
effect that by itself or in combination with other changes or
effects would
cause an adverse change or effect of Five Hundred Thousand Dollars
($500,000) or
more to the business, properties, financial condition, results of
operations or
prospects of one or more of the Acquired Companies; provided,
however, that none
of the following shall, by itself, be deemed to constitute a
Material Adverse
Change or to have a Materially Adverse Effect, unless it affects
the Acquired
Companies disproportionately to others in the industry: (a) any
adverse change
or effect arising from or relating to (1) general business or
economic
conditions, (2) national or international political or social
conditions,
including the engagement by the United States in hostilities
whether or not
pursuant to the declaration of a national emergency or war, or the
occurrence of
any military or terrorist attack upon the United States, or any of
its
territories, possessions, or diplomatic or consular offices or upon
any military
installation, equipment or personnel of the United States, (3)
financial,
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banking, or security markets (including, but not limited to, any
disruption
thereof and any decline in the price of any security or any market
index), (4)
changes in the United States generally accepted accounting
principles, or (5)
changes in laws, rules, regulations, orders, or other binding
directives issued
by any governmental entity, and (b) any adverse change in or effect
on the
business of the Acquired Companies that is fully cured by Seller to
the
reasonable satisfaction of Buyer before the earlier of (1) the
Closing Date and
(2) the date on which this Agreement is terminated pursuant to
Article 9 hereof.
"MATRIX" is defined in Section 3.9.
"MISCELLANEOUS PROPERTY" shall mean the following parcels of
property: (i) that
certain parcel of property located at 728 Memorial Blvd.,
Murfreesboro,
Tennessee 37130, (ii) that certain parcel of property located at
1000 US Hwy.
431 North, Anniston, Alabama 36206, (iii) that certain vacant
parcel of property
located at West 10th Street, Anniston, Alabama 36206, and (iv) that
certain
parcel of property located at 6108 McClellan Blvd. Anniston,
Alabama 36206.
"MISCELLANEOUS PROPERTY PAYMENT" is defined in Section 2.2(d).
"MONTHLY FINANCIALS" is defined in Section 5.8.
"NOL" is defined in Section 10.8(f).
"NOVEMBER 30 FINANCIALS" is defined in Section 5.8.
"OCCUPATIONAL SAFETY AND HEALTH LAW" means any Legal Requirement
designed to
provide safe and healthful working conditions and to reduce
occupational safety
and health hazards, and any program, whether governmental or
private (including
those promulgated or sponsored by industry associations and
insurance
companies), designed to provide safe and healthful working
conditions.
"ORDER" means any award, decision, injunction, judgment, order,
ruling,
subpoena, or verdict entered, issued, made, or rendered by any
court,
administrative agency, or other Governmental Body or by any
arbitrator.
"ORDINARY COURSE OF BUSINESS" means an action taken by a Person
will be deemed
to have been taken in the "Ordinary Course of Business" if:
(a)
such action is consistent with the past practices of such Person
and is
taken in the ordinary course of the normal day-to-day operations of
such Person;
(b)
such action is either (i) in the case of a Person who is not a
Related
Party, on an arm's length basis, or (ii) in the case of a Related
Party, upon
terms no less favorable to such Person than those that would be
obtained in an
arm's-length transaction with a Person who is not a Related
Party;
7
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(c)
such action is not required to be formally authorized by the board
of
directors of such Person (or by any Person or group of Persons
exercising
similar authority); or
(d)
such action is similar in nature and magnitude to actions
customarily
taken, without any authorization by the board of directors (or by
any Person or
group of Persons exercising similar authority), in the ordinary
course of the
normal day-to-day operations of other Persons that are in the same
line of
business as such Person.
"ORGANIZATIONAL DOCUMENTS" mean (a) the articles or certificate of
incorporation
and the bylaws of a corporation; (b) the partnership agreement and
any statement
of partnership of a general partnership; (c) the limited
partnership agreement
and the certificate of limited partnership of a limited
partnership; (d) the
articles of organization and operating agreement of any limited
liability
company; (e) any charter or similar document adopted or filed in
connection with
the creation, formation, or organization of a Person; and (f) any
amendment to
any of the foregoing.
"OTHER PERSONAL LIABILITIES" is defined in Section 5.7.
"PERMITTED EXCEPTIONS" means (a) mortgages or security interests
shown on the
Financial Statements or the Interim Financial Statements as
securing specified
liabilities or obligations, with respect to which no default (or
event that,
with notice or lapse of time or both, would constitute a default)
exists, (b)
mortgages or security interests incurred in connection with the
purchase of
property or assets after the date of the Interim Financial
Statements (such
mortgages and security interests being limited to the property or
assets so
acquired), with respect to which no default (or event that, with
notice or lapse
of time or both, would constitute a default) exists, (c) liens for
current taxes
not yet due, and (d) easements, rights of way, servitudes,
restrictions and
other matters of record which, individually or in the aggregate, do
not
adversely affect the current use or value of the Real Property
except to a de
minimis extent.
"PERSON" means any individual, corporation (including any
non-profit
corporation), general or limited partnership, limited liability
company, joint
venture, estate, trust, association, organization, labor union, or
other entity
or Governmental Body.
"PROCEEDING" means any action, arbitration, audit, hearing,
investigation,
litigation, or suit (whether civil, criminal, administrative,
investigative, or
informal) commenced, brought, conducted, or heard by or before, or
otherwise
involving, any Governmental Body or arbitrator.
"PROPRIETARY RIGHTS" means all patents, patent applications,
copyrights,
trademarks, service marks, trade names, service marks, corporate
names, and
domain names; computer software and related documentation;
confidential
information, trade secrets and know-how; financial, business and
marketing plans
and related information; and all other intellectual property
rights.
"REAL PROPERTY" means all real property owned or leased by, or used
in the
operations of,
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any of the Acquired Companies on the date of this Agreement, and
all real
property owned or leased by, or used in the operations of, any of
the Acquired
Companies acquired after the date of this Agreement, including all
buildings,
fixtures, structures and improvements situated thereon and all
rights and
appurtenances thereto.
"RELATED PERSON" means, with respect to a particular
individual:
(a)
each other member of such individual's Family;
(b)
any Person that is directly or indirectly controlled by such
individual
or one or more members of such individual's Family;
(c)
any Person in which such individual or members of such
individual's
Family hold (individually or in the aggregate) a Material Interest;
and
(d)
any Person with respect to which such individual or one or more
members
of such individual's Family serves as a director, officer,
shareholder, partner,
member, executor, or trustee (or in a similar capacity).
With respect to a specified Person other than an individual:
(a)
any Person that directly or indirectly controls, is directly or
indirectly controlled by, or is directly or indirectly under common
control with
such specified Person;
(b)
any Person that holds a Material Interest in such specified
Person;
(c)
each Person that serves as a director, officer, shareholder,
partner,
member, executor, or trustee of such specified Person (or in a
similar
capacity);
(d)
any Person in which such specified Person holds a Material
Interest;
(e)
any Person with respect to which such specified Person serves as
a
general partner or a trustee (or in a similar capacity); and
(f)
any Related Person of any individual described in clause (b) or
(c).
For
purposes of this definition, (a) the "Family" of an individual
includes
(i) the individual, (ii) the individual's spouse (and former
spouses), (iii) any
other natural person who is related to the individual or the
individual's spouse
within the second degree, and (iv) any other natural person who
resides with
such individual, and (b) "Material Interest" means direct or
indirect beneficial
ownership (as defined under the Securities Exchange Act of 1934) of
voting
securities or other voting interests representing at least 50% of
the
outstanding voting power of a Person or equity securities or other
equity
interests representing at least 50% of the outstanding equity
securities or
equity interests in a Person.
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<PAGE>
"RELEASE" means any spilling, leaking, pumping, pouring, emitting,
emptying,
discharging, depositing, injecting, escaping, leaching, dumping, or
disposing
into the Environment, whether intentional or unintentional, of any
Hazardous
Materials.
"REMEDIATE", "REMEDIATION", or "REMEDIAL ACTION" shall mean the
removal,
abatement, response, investigative, cleanup, and/or monitoring
activities
undertaken to address any Environmental Conditions, or Release of
Hazardous
Materials, including without limitation excavation, transportation
and disposal
of Hazardous Materials, any investigation, study, assessment,
testing,
monitoring, containment, removal, disposal, closure, corrective
action, passive
remediation, natural attenuation, or bioremediation, and the
installation and
operation of remediation systems.
"REPRESENTATIVE" means, with respect to a particular Person, any
director,
officer, shareholder, employee, agent, consultant, advisor, or
other
representative of such Person, including legal counsel,
accountants, and
financial advisors.
"SECURITIES ACT" means the Securities Act of 1933 or any successor
law, and
regulations and rules issued pursuant to that Act or any successor
law.
"SELLER" is defined in the first paragraph of this Agreement.
"SHARES" are defined in the Recitals of this Agreement.
"SMLLC" is defined in Section 5.9.
"STOCK PURCHASE ESCROW AGREEMENT" is defined in Section 2.5(c).
"STOCK PURCHASE ESCROW AMOUNT" is One Million, Five Hundred
Thousand Dollars
($1,500,000) during the period from the date hereof through and
including the
first anniversary of the Closing Date, One Million Dollars
($1,000,000) during
the period from the first anniversary of the Closing Date through
and including
the second anniversary of the Closing Date, and Five Hundred
Thousand Dollars
($500,000) during the period from the second anniversary of the
Closing Date
through and including the third anniversary of the Closing Date;
provided,
however, that if a claim for indemnification shall have been made
but not
resolved prior to the date on which a reduction otherwise would
have occurred,
the amount of such claim shall be added to the Stock Purchase
Escrow Amount
otherwise in effect until the claim is resolved.
"STORE 102/182 SELLER CONTRIBUTION" is defined in Section
2.5(f).
"STORE 184 PERSONAL DEBT" means that certain portion of the loan
incurred in
connection with Store 184 which is designated by Seller (in a
writing to Buyer
no later than five (5) days prior to Closing) to be paid by Buyer
at Closing,
which amount shall not exceed Six Hundred Fifty Thousand Dollars
($650,000).
"SUBSIDIARY" is, with respect to any Person (the "Owner"), any
corporation or
other Person
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of which securities or other interests having the power to elect a
majority of
the corporation's or other Person's board of directors or similar
governing
body, or otherwise having the power to direct the business and
policies of that
corporation or other Person (other than securities or other
interests having
such power only upon the happening of a contingency that has not
occurred) are
held by the Owner or one or more of its Subsidiaries; when used
without
reference to a particular Person, "Subsidiary" means a Subsidiary
or the
Company.
"SUNTRUST ESCROW AGREEMENT" is defined in Section 2.5(d).
"SUNTRUST ESCROW AMOUNT" is One Million, Three Hundred Seventy-Five
Thousand
Dollars ($1,375,000).
"SUNTRUST LITIGATION" is defined in Section 12.14.
"SUPERVISOR KNOWLEDGE GROUP" is defined in EXHIBIT B hereto which
is
incorporated by reference herein.
"SURVEYS" is defined in Section 2.5(e).
"TALBERT PAYMENT" means that certain payment to James Talbert, in
the amount
designated by Seller (in a writing to Buyer no later than five (5)
days prior to
Closing) to be paid by Buyer at Closing, which amount shall not
exceed One
Million Dollars ($1,000,000).
"TAX" OR "TAXES" means (a) any federal, state, local or foreign
income, gross
receipts, capital, franchise, business privilege, import, goods and
services,
value added, sales and use, estimated, alternative minimum, add-on
minimum,
sales, use, transfer, registration, excise, natural resources,
severance, stamp,
occupation, premium, windfall profit, environmental, customs,
duties, real
property, personal property, capital stock, social security,
unemployment,
disability, payroll, license, employee withholding, unclaimed
property, escheat
or other tax or business license fee of any kind whatsoever,
including any
interest, penalties or additions to tax or additional amounts in
respect of the
foregoing, (b) any liability for the payment of any amounts of the
type
described in clause (a) as a result of being a member of a
consolidated,
combined, unitary or aggregate group for any Taxable period, and
(c) any
liability for the payment of any amounts of the type described in
clause (a) or
(b) as a result of being a transferee or successor to any person or
as a result
of any express or implied obligation to indemnify any other
Person.
"TAX BENEFIT" is defined in Section 10.8(e).
"TAX CLAIM" is defined in Section 10.6(a).
"TAX RETURN" means any return (including any information return),
report,
statement, schedule, notice, form, or other document or information
filed with
or submitted to, or required to be filed with or submitted to, any
Governmental
Body in connection with the determination, assessment, collection,
or payment of
any Tax or in connection with the
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administration, implementation, or enforcement of or compliance
with any Legal
Requirement relating to any Tax.
"THIRD PARTY CONSENT" is defined in Section 2.5(a)(xii).
"THREAT OF RELEASE" means a substantial likelihood of a Release
that may require
action in order to prevent or mitigate damage to the Environment
that may result
from such Release.
"THREATENED" means a claim, Proceeding, dispute, action, or other
matter will be
deemed to have been "Threatened" if any demand or statement has
been made
(orally or in writing) or any notice has been given (orally or in
writing).
"TITLE COMMITMENTS" is defined in Section 2.5(e).
"TRUCKING CONTRACT ADJUSTMENT AMOUNT" shall be equal to Seven
Hundred Thousand
Dollars ($700,000).
"UST PROGRAM" is defined in Section 3.19(k).
"WORKING CAPITAL ADJUSTMENT" is defined in Section 7.1.
2. SALE AND
TRANSFER OF SHARES; ADDITIONAL AMOUNTS PAYABLE; CLOSING
2.1
SHARES
Subject to the terms and conditions of this Agreement, at the
Closing,
Seller will sell and transfer the Shares to Buyer, and Buyer will
purchase the
Shares from Seller.
2.2
PURCHASE PRICE
(a)
Buyer agrees to pay to Seller at the Closing, in immediately
available
funds, Twenty-Four Million, Five Hundred Fifty Thousand Dollars
($24,550,000)
(the "Base Purchase Price"),
(i) LESS the Stock Purchase Escrow Amount;
(ii) LESS the SunTrust Escrow Amount;
(iii) LESS the Earnest Money in the amount of Two Million
Dollars
($2,000,000), plus any accrued interest thereon, which will be paid
to Seller
directly by the Earnest Money Escrow Agent in accordance with
Section 2.3(d);
(iv) LESS the Trucking Contract Adjustment Amount;
(v) LESS the Airplane Debt, which amount shall be paid by Buyer
at
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<PAGE>
Closing in immediately available funds directly to Fleet Capital
Leasing in
partial satisfaction of such debt;
(vi) LESS One Hundred Thousand Dollars ($100,000) or one-half (1/2)
of
the estimated cost of the Surveys, whichever amount is smaller;
(vii) LESS the Store 102/Store 182 Seller Contribution, which
amount
shall be paid by Buyer at Closing in immediately available funds
directly to the
lending institutions and individuals more fully described in
Section 2.5(f);
(viii) LESS One Hundred Fifty Thousand Dollars ($150,000) or
one
quarter (1/4) of the cost of the Environmental Insurance Policy,
whichever
amount is smaller, which amount shall be paid by Buyer at Closing
in immediately
available funds to the insurer providing the Environmental
Insurance Policy, as
more fully described in Section 2.5(g), but only if such policy
names Seller as
an insured thereunder;
(ix) LESS the Talbert Payment, which amount shall be paid by Buyer
at
Closing in immediately available funds directly to James L.
Talbert;
(x) LESS the Store 184 Personal Debt, which amount shall be paid
by
Buyer at Closing in immediately available funds directly to the
lending
institution to satisfy in full such debt;
(xi) LESS an amount equal to the Five Star Membership Payment;
and
(xii) PLUS an amount equal to any principal payments made by
the
Company subsequent to April 1, 2004, on the term loans and
capitalized leases of
the Company.
(the Base Purchase Price, as adjusted by the items above, is herein
referred to
as the "Closing Purchase Price"). Buyer agrees at the Closing to
pay the amounts
listed above to the parties listed above or otherwise identified by
Seller, by
wire transfer or delivery of other immediately available funds. The
parties
further understand and agree that, following the Closing, the
Closing Purchase
Price may be further adjusted by a payment, either by Buyer to
Seller or by
Seller to Buyer, in accordance with the working capital adjustment
more fully
described in Section 2.2(b) hereof and by the Miscellaneous
Property Payment
more fully described in Section 2.2(d) hereof.
(b)
For purposes of this Section 2.2(b), the Closing Working Capital
(as
herein defined) of the Acquired Companies will be determined in
accordance with
the procedures set forth in EXHIBIT 2.2(B) hereto. For purposes of
this Section
2.2(b), the definition of "Target Working Capital" is Two Million,
Six Hundred
Eleven Thousand Dollars ($2,611,000). Within thirty (30) days after
the Closing,
Seller and Buyer will calculate the actual working capital of the
Acquired
Companies as of the Closing (the "Closing Working Capital"), and
either (1) if
the Closing Working Capital exceeds the Target Working Capital by
more than One
Hundred Thousand Dollars ($100,000), Buyer will pay to Seller
the
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<PAGE>
amount by which the Closing Working Capital exceeds the Target
Working Capital,
or (2) if the Target Working Capital exceeds the Closing Working
Capital by more
than One Hundred Thousand Dollars ($100,000), Seller will refund to
Buyer the
amount by which Target Working Capital exceeds the Closing Working
Capital. No
additional payments will be made by either party if the Closing
Working Capital
is within One Hundred Thousand Dollars ($100,000) of Target Working
Capital. If
the parties are unable to agree upon the amount of the Closing
Working Capital
within thirty (30) days after Closing, they shall select an
accounting firm
mutually acceptable to them to resolve the disagreement. If the
parties are
unable to agree on the choice of an accounting firm, they will
select a
nationally-recognized accounting firm by lot (after excluding their
respective
regular outside accounting firms). In the event that the parties
submit any
unresolved objections to an accounting firm, they will each bear
and be
responsible for one-half (1/2) of the costs of such services. Upon
final
determination of the amount to be paid hereunder, the party to pay
such amount
shall promptly make such payment, in immediately available funds,
to the other
party.
(c) As part of the process
of determining the Closing Working Capital,
Buyer and Seller will engage the services of a third party mutually
agreeable to
Buyer and Seller to undertake an inventory (the "Closing Date
Inventory") audit
of the Acquired Companies as of the Closing Date. The Closing Date
Inventory
shall exclude items which (i) such third party determines are
damaged, spoiled,
or out of date, and (ii) are not guaranteed by a vendor of an
Acquired Company.
The Closing Date Inventory shall be conducted in accordance with
the procedures
described on EXHIBIT 2.2(C) hereto.
(d)
At or before Closing, Buyer shall retain the services of an
appraiser
reasonably acceptable to Seller to undertake an appraisal of the
Miscellaneous
Property. Within thirty (30) days after Closing, such appraiser
shall provide to
Buyer and Seller an appraisal of the Miscellaneous Property setting
forth the
fair market value of the Miscellaneous Property. If either Buyer or
Seller
disagree with the findings in such appraisal, such party shall have
ten (10)
days from receipt of such appraisal to formally object to the
findings contained
therein. If neither party so objects, they shall be deemed to have
agreed to the
findings contained therein. In the event of an objection to
appraised value of
the Miscellaneous Property which the parties are unable to resolve
through good
faith negotiation within five (5) days of such objection, the
parties shall
select an appraisal firm mutually acceptable to conduct a second
appraisal. If
the parties are unable to agree on the choice of a second
appraiser, they will
each select an appraiser, which appraisers shall select a third
appraiser who
will undertake a second appraisal of the fair market value of the
Miscellaneous
Property. The appraised amount of the Miscellaneous Property in
such second
appraisal shall be binding on the parties hereto. In the event of
such second
appraisal, the parties hereto will each bear and be responsible for
one-half
(1/2) of the costs of such services. Within five (5) days after
final
determination of the appraised amount of the Miscellaneous
Property, Buyer shall
pay to Seller in immediately available funds an amount equal to
twenty five
percent (25%) of such appraised value (the "Miscellaneous Property
Payment").
2.3
EARNEST MONEY
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<PAGE>
Delek US Holdings has heretofore deposited One Million Dollars
($1,000,000)
and Delek US Holdings shall, within twenty-four (24) hours of
execution of this
Agreement, deposit an additional One Million Dollars ($1,000,000)
(such Two
Million Dollars ($2,000,000) is herein collectively referred to as
the "Earnest
Money") with AmSouth Bank, as escrow agent (the "Earnest Money
Escrow Agent")
pursuant to an amended and restated agreement among Delek US
Holdings, Seller
and the Earnest Money Escrow Agent, which agreement shall be dated
as of the
date hereof. Buyer's right to a return of all, a portion, or none
of the Earnest
Money will be governed by the following provisions:
(a)
If Buyer elects not to consummate the Contemplated Transactions due
to
(i) failure to satisfy the conditions to Buyer's obligation to
close the
Contemplated Transactions (other than a failure to satisfy the
condition to
Closing described in Section 7.8 hereof or failure to receive any
of the items
identified in Section 2.5(a)(xii)) or (ii) a Breach or default by
Seller or an
Acquired Company with respect to his or its obligations under this
Agreement,
Buyer shall be entitled to return of all of the Earnest Money.
(b)
(i) If Buyer elects not to consummate the Contemplated Transactions
due
to any of the following: (A) failure to satisfy the condition to
Closing
described in Section 7.8 hereof, (B) failure of Buyer to receive
any of the
items identified in Section 2.5(a)(xii), (C) failure of Buyer to
obtain
financing to replace the Acquired Companies' existing financing
with Textron
Financial, or (ii) if the Agreement is terminated as provided in
Section 9.1 (f)
hereof, Seller shall be entitled to Two Hundred Fifty Thousand
Dollars
($250,000) of the Earnest Money and Buyer shall be entitled to the
remainder
thereof, subject to the increase of such amount to Five Hundred
Thousand Dollars
($500,000) as more fully described in Section 2.4 hereof.
(c)
If Buyer fails to consummate the Contemplated Transactions for
any
reason other than those listed above in Sections 2.3(a) and 2.3(b),
Seller shall
be entitled to all of the Earnest Money.
(d)
If the Contemplated Transactions are consummated, the Earnest
Money
will be distributed by the Letter of Intent Escrow Agent to Seller
and credited
against Buyer's obligation to pay the Base Purchase Price as more
fully
described in Section 2.2(a) hereof.
(e)
Buyer and Seller agree that payment of all or part of the Earnest
Money
to Seller under this Section 2.3 shall be deemed liquidated damages
for the
failure of Buyer to consummate the Contemplated Transactions and
will not
constitute a penalty. This Section 2.3 shall be the sole remedy of
Seller if
Buyer fails to consummate the Contemplated Transactions, and
notwithstanding
anything in this Agreement to the contrary, total amount of Buyer's
liability to
Seller for such failure shall not exceed the amount provided in
this Section
2.3.
2.4
CLOSING
The
purchase and sale (the "Closing") provided for in this Agreement
will
take place
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<PAGE>
at the offices of Bradley Arant Rose & White LLP, in
Birmingham, Alabama, on or
before April 30, 2004, at 10:00 a.m. (Birmingham time) or at such
other time and
place as the parties may agree, provided that if the parties are
unable to
consummate the Contemplated Transactions on or before April 30,
2004, and the
Agreement has not been terminated pursuant to Sections 9.1 (a),
9.1(b), 9.1(c),
9.1(e), or 9.1 (f), then the Closing Date shall be extended to May
14, 2004, and
the Two Hundred Fifty Thousand Dollars ($250,000) referenced in
Section 2.3(b)
hereof will be increased, without further action on the part of any
of the
parties to this Agreement, to Five Hundred Thousand Dollars
($500,000). The
Closing shall be effective as of 11:59 p.m. (Birmingham Time) on
the Closing
Date.
2.5
CLOSING OBLIGATIONS
At
the Closing:
(a)
Seller will deliver to Buyer:
(i) certificates representing the Shares, duly endorsed (or
accompanied by duly executed stock powers) for transfer to
Buyer;
(ii) a certificate executed by Seller representing and warranting
to
Buyer that all of Seller's representations and warranties in this
Agreement
(considered collectively), and each of such representations and
warranties
(considered individually) were accurate as of the date of this
Agreement (except
for any representation or warranty made as of a specified date,
which shall be
true and correct as of such specified date) and are accurate in all
material
respects (except for such representations and warranties that by
their terms are
qualified by reference to materiality, which representations and
warranties
shall be accurate in all respects) as of the Closing Date as if
made on the
Closing Date (giving full effect to any supplements to the
Disclosure Letter
that were delivered by Seller to Buyer prior to the Closing Date in
accordance
with Section 5.5);
(iii) a certificate with respect to each of the Acquired
Companies
executed by an officer of such Acquired Company attesting to (A)
its
Organizational Documents, (B) the completeness and accuracy of
attached
resolutions of the board of directors and stockholders and (C)
incumbency of
officers;
(iv) certificates of the Probate Court of DeKalb County, Alabama
or
other appropriate authority (in each case dated within five (5)
days of Closing)
attaching copies of the Articles of Incorporation of each Acquired
Company and
all amendments thereto;
(v) certificates of existence and good standing certificates (in
each
case dated within five (5) days of Closing), including tax
clearances (dated
within thirty (30) days of Closing), for each Acquired Company
from,
respectively, the Alabama Department of Revenue and the Alabama
Secretary of
State;
(vi) certificates of existence and good standing certificates
(dated
within
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<PAGE>
thirty (30) days of Closing) for every other state jurisdiction
where each
Acquired Company does business;
(vii) a duly executed certificate of Seller in the form specified
by
Treasury Regulation Section 1.1445-2(b)(2);
(viii) resignations of all of the directors and officers of the
Acquired Companies effective as of the Closing Date;
(ix) landlord estoppels in the form attached hereto as EXHIBIT
2.5(A)(IX) from the landlord of discount food marts
111,116,125,192, 204 and 205
(the "Leasehold Stores");
(x) an opinion of counsel to Seller and the Acquired Companies
substantially in the form set forth as EXHIBIT 2.5(A)(X);
(xi) a schedule indicating the amount of borrowings by the
Acquired
Companies as of the Closing Date in a form reasonably acceptable to
Buyer;
(xii) Consents of (A) Compass Bank, (B) ExxonMobil Oil
Corporation,
(C) Chevron Products Company, (D) Motiva Enterprises, LLC, (E)
Commonwealth
Brands, Inc., (F) Brown & Williamson, (G) Phillip Morris USA,
and (H) R.J.
Reynolds Tobacco Company to the change of control of the Acquired
Companies
(collectively, the "Third Party Consents");
(xiii) [INTENTIONALLY OMITTED];
(xiv) all books of account, minute books, stock record books,
and
other records of each of the Acquired Companies;
(xv) evidence satisfactory to Buyer that the Acquired Companies
have
good and marketable fee simple title to discount food mart 102 and
discount food
mart 182, free and clear of all Encumbrances other than Permitted
Exceptions;
and
(xvi) such other affidavits, documents, instruments and
certificates
as Buyer reasonably may request, including without limitation those
required by
Buyer's title insurance company, consistent with Seller's
obligations under this
Agreement.
(b)
Buyer will deliver to Seller:
(i) the Closing Purchase Price;
(ii) a letter, signed by Buyer, authorizing and instructing the
Earnest Money Escrow Agent to disburse all of the Earnest Money to
Seller;
(iii) a certificate executed by Buyer representing and warranting
to
Seller
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<PAGE>
that all of Buyer's representations and warranties in this
Agreement (considered
collectively), and each of such representations and warranties
(considered
individually) were accurate as of the date of this Agreement and
are accurate in
all material respects (except for such representations and
warranties that by
their terms are qualified by reference to materiality, which
representations and
warranties shall be accurate in all respects) as of the Closing
Date as if made
on the Closing Date;
(iv) the Lease Liability insurance policy or other security more
fully
described in Section 6.3(a) hereof, unless such personal
liabilities of Seller
have all been released at or prior to Closing; and
(v) an opinion of counsel to Buyer in substantially the form set
forth
as EXHIBIT 2.5(B)(V).
(c)
Buyer and Seller will enter into an escrow agreement in a form
reasonably acceptable to Buyer and Seller (the "Stock Purchase
Escrow
Agreement"). The Stock Purchase Escrow Agreement shall provide (i)
that Seller
is entitled to, and may at any time withdraw, all interest and
other earnings
that accrue on the Stock Purchase Escrow Amount; and (ii) that
Buyer will be
solely responsible for the payment of all fees and costs charged by
the escrow
agent named in the Stock Purchase Escrow Agreement.
(d)
Buyer and Seller will enter into an escrow agreement in a form
reasonably acceptable to Buyer and Seller (the "SunTrust Escrow
Agreement"). The
SunTrust Escrow Agreement shall provide (i) that Seller is entitled
to, and may
at any time withdraw, all interest and other earnings that accrue
on the
SunTrust Escrow Amount; and (ii) that Seller will be solely
responsible for the
payment of all fees and costs charged by the escrow agent named in
the SunTrust
Escrow Agreement.
(e)
Buyer has ordered binding commitments (the "Title Commitments") for
the
issuance of current extended coverage ALTA Owner's Policies (1992)
of title
insurance with respect to all owned Real Property and current
extended coverage
ALTA Leasehold Policies (1992) of insurance for the Leasehold
Stores, and
surveys of the owned Real Property and certain of the Leasehold
Stores
(collectively, "Surveys"). Notwithstanding anything to the contrary
contained in
this Agreement, Buyer shall not be obligated to close unless (i)
such Title
Commitments shall in all cases insure fee title in the name of the
Company to
each parcel of owned Real Property, including but not limited to
discount food
mart 102 and discount food mart 182, and leasehold title in the
name of the
Company to each parcel of the Leasehold Stores, in all cases free
and clear of
all Encumbrances other than the Permitted Exceptions, and (ii) such
Surveys, if
any, as have been received prior to Closing, shall show no
Encumbrances other
than the Permitted Exceptions.
(f)
At Closing, the Company shall exercise (i) its right to purchase
from
Shannon Stringer discount food mart 182 in accordance with that
certain
Commercial Lease Agreement by and between Shannon Stringer and the
Company dated
August 27, 1999, and (ii) its right to purchase discount food mart
102 in
accordance with that certain Commercial Lease Agreement by and
between James L.
Talbert and the Company dated
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February 20, 2001. A portion of such purchase price shall be paid
to the lending
institutions which have provided financing in connection with the
acquisition of
such stores (such portion is herein referred to as the "Debt
Portion"). The
remaining portion of such purchase price shall be paid directly to
Shannon
Stringer and James L. Talbert (such portion is herein referred to
as the "Equity
Portion"). Buyer shall pay to said financial institutions the Debt
Portion and
shall pay to Shannon L. Stringer and James L. Talbert the Equity
Portion, a
portion of which payments shall reduce the Purchase Price as
described in
Section 2.2(a)(vii) hereof. Each such financial institution and
each of James L.
Talbert and Shannon L. Stringer shall deliver releases to Buyer at
Closing,
including without limitation a release by each such financial
institution of any
Encumbrances relating to such Real Property. For purposes of this
Agreement, (i)
the Equity Portion, (ii) Fifty Percent (50%) of all costs and
expenses arising
out of or in connection with the acquisition of discount food mart
102 and
discount food mart 182 (including but not limited to all deed,
transfer,
mortgage recording, income and other Taxes and fees, and costs
associated with
the release of Encumbrances), and (iii) Fifty Percent (50%) of the
Debt Portion,
which is the amount set forth in Section 2.2(a)(vii), shall be
referred to,
collectively, as the "Store 102/Store 182 Seller Contribution."
(g)
Buyer shall use its reasonable best efforts to obtain, at or
before
Closing, an environmental insurance policy covering the Acquired
Companies (the
"Environmental Insurance Policy"). In connection with the purchase
of the
Environmental Insurance Policy, Seller has agreed that it will be
responsible
for the payment of the amount specified in Section 2.2(a)(viii)
hereof in
connection with such policy, which amount shall be paid by Buyer
and deducted
from the Base Purchase Price.
3.
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
3.1
ORGANIZATION AND GOOD STANDING
Each
Acquired Company is a corporation duly organized, validly
existing,
and in good standing under the laws of the State of Alabama, with
full corporate
power and authority to conduct its business as it is now being
conducted, to own
or use the properties and assets that it purports to own or use,
and to perform
all its obligations under Applicable Contracts. Each Acquired
Company is duly
qualified to do business as a foreign corporation and is in good
standing under
the laws of each state or other jurisdiction in which either the
ownership or
use of the properties owned or used by it, or the nature of the
activities
conducted by it, requires such qualification.
3.2
AUTHORITY; NO CONFLICT
(a)
This Agreement constitutes the legal, valid, and binding obligation
of
Seller, enforceable against Seller in accordance with its terms,
except as such
enforceability may be limited by applicable bankruptcy, insolvency,
moratorium,
reorganization or similar laws
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which affect the enforcement of creditors rights generally and by
equitable
principles, including the availability of specific performance.
Upon the
execution and delivery by Seller of the Stock Purchase Escrow
Agreement, the
Stock Purchase Escrow Agreement will constitute the legal, valid,
and binding
obligation of Seller, enforceable against Seller in accordance with
its terms,
except as such enforceability may be limited by applicable
bankruptcy,
insolvency, moratorium, reorganization or similar laws which affect
the
enforcement of creditors rights generally and by equitable
principles, including
the availability of specific performance. Seller has the absolute
and
unrestricted right, power, authority, and capacity to execute and
deliver this
Agreement and the Stock Purchase Escrow Agreement, to perform his
obligations
under this Agreement and the Stock Purchase Escrow Agreement and to
consummate
the Contemplated Transactions.
(b)
Except as set forth in Part 3.2 of the Disclosure Letter, neither
the
execution and delivery of this Agreement nor the consummation or
performance of
any of the Contemplated Transactions by Seller will, directly or
indirectly
(with or without notice or lapse of time):
(i) contravene, conflict with, or result in a violation of (A)
any
provision of the Organizational Documents of the Acquired Companies
as currently
in effect, or (B) any resolution adopted by the board of directors
or the
shareholders of the Acquired Companies currently in effect;
(ii) contravene, conflict with, or result in a violation of, or
give
any Governmental Body or other Person the right to challenge any of
the
Contemplated Transactions or to exercise any remedy or obtain any
relief under,
any Legal Requirement or any Order to which the Acquired Companies
or Seller, or
any of the assets owned or used by the Acquired Companies, is
currently subject;
(iii) contravene, conflict with, or result in a violation of any
of
the terms or requirements of, or give any Governmental Body the
right to revoke,
withdraw, suspend, cancel, terminate, or modify, any Governmental
Authorization
that is held by the Acquired Companies or that otherwise relates to
the business
of, or any of the assets owned or used by, the Acquired
Companies;
(iv) cause Buyer or the Acquired Companies to become subject to,
or
liable for, the payment of any Tax arising prior to the date of
Closing;
(v) cause any of the Assets of the Acquired Companies to be
reassessed
or revalued by any taxing authority or other Governmental Body;
(vi) contravene, conflict with, or result in a violation or breach
of
any provision of, or give any Person the right to declare a default
or exercise
any remedy under, or to accelerate the maturity or performance of,
or to cancel,
terminate, or modify, any Applicable Contract; or
(vii) result in the imposition or creation of any Encumbrance upon
or
with
20
<PAGE>
respect to the Shares or any of the assets owned or used by the
Acquired
Companies.
Except as set forth in Part 3.2 of the Disclosure Letter, neither
Seller nor any
Acquired Company is or will be required to give any notice to or
obtain any
Consent from any Person in connection with the execution and
delivery of this
Agreement or the consummation or performance of any of the
Contemplated
Transactions.
3.3
CAPITALIZATION
The
authorized equity securities of the Company consist of One
Thousand
(1,000) shares of common stock, par value Ten Dollars ($10.00) per
share, of
which Three Hundred and One (301) shares are issued and outstanding
and
constitute the Shares. Seller is the record and beneficial owner
and holder of
the Shares, free and clear of all Encumbrances. With the exception
of the Shares
(which are owned by Seller), all of the outstanding equity
securities and other
stock or securities of each Acquired Company are owned of record
and
beneficially by the Company, free and clear of all Encumbrances.
Except as
disclosed in Part 3.3 of the Disclosure Letter, no legend or other
reference to
any purported Encumbrance appears upon any certificate representing
equity
securities or shares of any Acquired Company. All of the
outstanding equity
securities and stock of each Acquired Company have been duly
authorized and
validly issued and are fully paid and nonassessable. There are no
Contracts
relating to the issuance, sale, or transfer of any equity
securities, the Shares
or other securities of any Acquired Company. None of the
outstanding equity
securities, the Shares or other securities of any Acquired Company
have been
issued in violation of the Securities Act or any other Legal
Requirement. No
Acquired Company owns, or has any Contract to acquire, any equity
securities or
other securities of any Person (other than Acquired Companies) or
any direct or
indirect equity or ownership interest in any other business.
3.4
FINANCIAL STATEMENTS
Seller has delivered to Buyer (a) an interim consolidated balance
sheet of
the Acquired Companies as of November 30, 2003, and the related
unaudited
consolidated statement of income, changes in stockholders' equity,
and cash flow
for the twelve (12) months then ended (the "Interim Financial
Statements"); (b)
a consolidated balance sheet of the Acquired Companies as of April
30, 2003, and
the related consolidated statement of income, changes in
stockholders' equity,
and cash flow, together with the report thereon of the Acquired
Companies'
independent certified public accountants (including the notes
thereto, the
"Financial Statements"). The Financial Statements fairly present
the financial
condition and the results of operations of the Company as of the
respective
dates and for the respective periods referred to therein, all in
accordance with
GAAP.
3.5
BOOKS AND RECORDS
All
of the books of account, minute books, stock record books, and
other
records of each of the Acquired Companies (the "Books and Records")
have been
made available to Buyer. The Books and Records accurately reflect
the accounts
of each Acquired Company
21
<PAGE>
in conformity with GAAP, to the extent applicable, accurately
reflect all
corporate actions taken at all meetings of, or by written consents
of, directors
(including committees thereof) and stockholders, accurately reflect
all
transfers of stock of each Acquired Company and contain all
cancelled stock
certificates, if any. At the Closing, the Books and Records will be
in the
possession of the Acquired Companies.
3.6
TITLE TO PROPERTIES; ENCUMBRANCES
Part
3.6 of the Disclosure Letter contains a complete and accurate list
of
all Real Property, leaseholds, or other interests therein owned by
the Acquired
Companies. The Acquired Companies own all the properties and assets
(whether
real, personal, or mixed and whether tangible or intangible) that
they purport
to own located in the Facilities currently owned or operated by the
Acquired
Companies or reflected as owned in the Books and Records, including
all of the
properties and assets reflected in the Financial Statements and the
Interim
Financial Statements (except for assets held under capitalized
leases disclosed
or not required to be disclosed in Part 3.6 of the Disclosure
Letter and
personal property sold since the date of the Financial Statements
and the
Interim Financial Statements, as the case may be, in the Ordinary
Course of
Business), and all of the properties and assets purchased or
otherwise acquired
by the Acquired Companies since the date of the Financial
Statements (except for
personal property acquired and sold since the date of the Financial
Statements
in the Ordinary Course of Business and consistent with past
practice) which
subsequently purchased or acquired properties and assets (other
than inventory
and short-term investments) are listed in Part 3.6 of the
Disclosure Letter. All
properties and assets reflected in the Financial Statements and the
Interim
Financial Statements are free and clear of all Encumbrances, except
(a)
mortgages or security interests reflected on the Financial
Statements or the
Interim Financial Statements, with respect to which no default (or
event that,
with notice or lapse of time or both, would constitute a default)
exists, (b)
mortgages or security interests incurred in connection with the
purchase of
property or assets after the date of the Interim Financial
Statements (such
mortgages and security interests being limited to the property or
assets so
acquired) all of which are disclosed in Part 3.6 of the Disclosure
Letter, with
respect to which no default (or event that, with notice or lapse of
time or
both, would constitute a default) exists and (c) liens for current
taxes not yet
due. At the Closing, the Company shall, except as shown in Part 3.6
of the
Disclosure Letter, hold good and marketable fee title to the owned
Real Property
and good and marketable leasehold title to the leased Real
Property, free and
clear of all Encumbrances other than the Permitted Exceptions. No
person other
than Seller owns any Real Property, other than the leased Real
Property, and no
person other than Buyer has any right or option (including, without
limitation,
a right of first refusal) to purchase or lease all or any portion
of the Real
Property.
3.7
CONDITION AND SUFFICIENCY OF ASSETS
Except as described in Part 3.7 of the Disclosure Letter, the
buildings,
plants, structures, and equipment of the Acquired Companies are in
sufficient
condition and repair for the use and operation of the Real Property
for their
current use. Except as described in Part 3.7 of the Disclosure
Letter, (a) there
are no ongoing capital repairs to the Real
22
<PAGE>
Property, (b) no portion of the Real Property has suffered any
damage by fire or
other casualty which heretofore has not been repaired and restored,
(c) there
are no conditions that would, either individually or in the
aggregate, have a
Material Adverse Effect on the ownership, possession, use or
occupancy of any of
parcels of Real Property or upon Buyer's ability to use the Real
Property for
its current use, and (d) to the Knowledge of Seller and the
Acquired Companies,
no repairs or replacements are required to be made to the Real
Property that,
either individually or in the aggregate, would have a Material
Adverse Effect.
3.8
ACCOUNTS RECEIVABLE
(a)
All accounts receivable of the Acquired Companies that are
reflected on
the Financial Statements, the Interim Financial Statements, or on
the accounting
records of the Acquired Companies as of the Closing Date
(collectively, the
"Accounts Receivable"), as adjusted by the working capital
adjustment process
more fully described in Section 2.2(b) hereof, represent or will
represent valid
obligations arising from sales actually made or services actually
performed in
the Ordinary Course of Business.
(b) There are no
personal loans or loans or cash advances to employees
included in the accounts receivable of the Acquired Companies or
otherwise
payable to any Acquired Company, except for the loan to Seller more
fully
described in Section 5.10 hereof.
3.9
BROKERS OR FINDERS
Seller has not incurred any obligation or liability, contingent
or
otherwise, for brokerage or finders' fees or agents' commissions or
other
similar payment in connection with this Agreement or the sale of
the Shares to
Buyer or otherwise, except for any amounts that are or may be due
to Matrix
Capital Markets Group, Inc. ("Matrix"). Seller shall be responsible
for paying
any and all amounts that are or may become due to Matrix in
connection herewith.
3.10
NO UNDISCLOSED LIABILITIES
The
Acquired Companies have no liabilities or obligations of any
nature
(whether known or unknown and whether absolute, accrued,
contingent, or
otherwise) except (a) as set forth in Part 3.10 of the Disclosure
Letter or as
otherwise disclosed in the Disclosure Letter, (b) for liabilities
or obligations
reflected or reserved against in the Financial Statements or
Interim Financial
Statements, (c) for current liabilities incurred in the Ordinary
Course of
Business since the respective dates thereof, or (d) for obligations
under leases
for real and personal property, copies of which have been
heretofore provided to
Buyer.
3.11
TAXES
(a)
The Acquired Companies have filed or caused to be filed on a
timely
basis all
23
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Tax Returns that are or were required to be filed by or with
respect to the
Acquired Companies. The Acquired Companies have paid all Taxes that
have or may
have become due pursuant to those Tax Returns or otherwise, or
pursuant to any
assessment received by Seller or the Acquired Companies, except
such Taxes, if
any, as are listed in Part 3.11 of the Disclosure Letter and are
being contested
in good faith and as to which adequate reserves (determined in
accordance with
GAAP) have been provided in the Balance Sheet and the Interim
Balance Sheet.
(b)
Part 3.11 of the Disclosure Letter lists each category of
federal,
state, local and foreign Tax Returns filed with respect to the
Acquired
Companies for taxable periods ended on or after December 31, 1993
along with the
jurisdiction with which such Tax Returns have been filed and
frequency of
filing, and indicates those Tax Returns that currently are the
subject of audit.
Seller has made available to Buyer correct and complete copies of
all such
federal Income Tax Returns, examination reports, and statements of
deficiencies
assessed against, or agreed to by the Acquired Companies since
April 30, 2000.
(c)
Part 3.11 of the Disclosure Letter contains a complete and
accurate
list of all audits and examinations completed since April 30, 2000,
of the Tax
Returns (other than gasoline excise tax returns) by any
Governmental Body
described in Section 3.11 (a) hereof, including a reasonably
detailed
description of the nature and outcome of each audit. All
deficiencies proposed
as a result of such audits and examinations have been paid or, as
described in
Part 3.11 of the Disclosure Letter, are being contested in good
faith by
appropriate proceedings. Except as listed on Part 3.11 of the
Disclosure Letter,
there are no other audits or investigations by and Governmental
Body in
progress, nor have Seller nor any Acquired Company received any
notice from any
Governmental Body that it intends to conduct such an audit or
investigation.
Except as described in Part 3.11 of the Disclosure Letter, neither
Seller nor
any of the Acquired Companies have given or been requested to give
waivers or
extensions (or is or would be subject to a waiver or extension
given by any
other Person) of any statute of limitations relating to the
assessment,
collection, or payment of Taxes of any of the Acquired Companies or
for which
any of the Acquired Companies may be liable. None of the Acquired
Companies is
the beneficiary of any extension of time within which to file any
Tax Return. No
power of attorney on behalf of any of the Acquired Companies with
respect to any
Tax matter is currently in force. There are no liens for Taxes
(other than Taxes
not yet due and payable) upon any of the assets of any of the
Acquired
Companies.
(d)
All Taxes that any of the Acquired Companies is or was required
by
Legal Requirements to withhold or collect have been duly withheld
and collected
and, to the extent required, have been paid over to the proper
Governmental Body
or other Person.
(e)
There is no dispute or claim concerning any Tax liability of any of
the
Acquired Companies either (i) claimed or raised by any Governmental
Body in
writing or (B) as to which any of the Acquired Companies, Seller or
any director
or officer (or employee responsible for Tax matters) of any of the
Acquired
Companies has Knowledge based upon personal contact with any agent
of such
Governmental Body.
24
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(f)
All Tax Returns described in Section 3.11 (a) hereof are true,
correct,
and complete in all material respects.
(g)
None of the Acquired Companies is a party to any agreement,
contract,
arrangement, or plan that has resulted or would result, separately
or in the
aggregate, in the payment of any "excess parachute payment" within
the meaning
of IRC Section 280G (or any corresponding provision of state, local
or foreign
Tax law). None of the Acquired Companies is a party to or bound by
any tax
allocation or sharing agreement. None of the Acquired Companies (A)
has been a
member of an affiliated group filing a consolidated federal Income
Tax Return
(other than a group the common parent of which was the Company) or
(B) has any
liability for the Taxes of any Person (other than any of the
Acquired Companies)
under Treas. Reg. Section 1.1502-6 (or any similar provision of
state, local or
foreign law), as a transferee or successor, by contract, or
otherwise.
(h)
None of the Acquired Companies will be required to include any item
of
income in, or exclude any item of deduction from, taxable income
for any taxable
period (or portion thereof) ending after the Closing Date as a
result of any:
(i) change in method of accounting for a taxable period ending on
or
prior to the Closing Date;
(ii) "closing agreement" as described in Section 7121 of the IRC
(or
any
corresponding or similar provision of state, local or foreign Tax
law);
(iii) installment sale or open transaction disposition made on
or
prior to the Closing Date; or
(iv) prepaid amount received on or prior to the Closing Date.
(i)
None of the Acquired Companies has distributed stock of another
corporation, or has had its stock distributed by another
corporation, in a
transaction that was purported or intended to be governed in whole
or in part by
Section 355 or Section 361 of the IRC.
(j)
No claim has been made by any Governmental Body in a jurisdiction
where
any of the Acquired Companies do not file Tax Returns that it is or
may be
subject to taxation by that jurisdiction. No issue has been raised
by any
Governmental Body in any current or prior audit, examination or
similar
proceeding which, by application of the same or similar principles,
could
reasonably be expected to result in a proposed deficiency for any
subsequent
taxable period.
(k)
No property owned by any of the Acquired Companies is (i)
property
required to be treated as being owned by another person pursuant to
the
provisions of Section 168(f)(8) of the Internal Revenue Code of
1954, as amended
and in effect immediately prior to the enactment of the Tax Reform
Act of 1986,
(ii) constitutes "tax-exempt use property" within the meaning of
Section
168(h)(1) of the IRC or (iii) is "tax-exempt bond financed
property" within the
meaning of Section 168(g) of the IRC.
(l)
None of the Acquired Companies is subject to any private letter
ruling
of the
25
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IRS or comparable rulings of other Governmental Bodies.
(m)
None of the Acquired Companies has any elections in effect for
U.S.
federal income Tax purposes under Sections
108,168,441,463,472,1017, 1033 or
4977 of the IRC.
(n)
None of the Acquired Companies has taken any reporting position on
a
Tax Return, which reporting position (i) if not sustained would be
reasonably
likely, absent disclosure, to give rise to a penalty for
substantial
understatement of federal income Tax under Section 6662 of the IRC
(or any
predecessor statute or any corresponding provision of any such
predecessor
statute or state, local or foreign Tax law), and (ii) has not
adequately been
disclosed on such Tax Return in accordance with Section
6662(d)(2)(B) of the IRC
(or corresponding provision of any such predecessor statute or
state, local or
foreign Tax law).
3.12
NO MATERIAL ADVERSE CHANGE
Since the date of the Interim Financial Statements, other than
customary
seasonal fluctuations in the business of the Acquired Companies,
there has not
been any Material Adverse Change in the business, properties,
financial
condition, results of operations or properties of the Acquired
Companies, and no
event has occurred or circumstance exists that may result in such a
Material
Adverse Change.
3.13
EMPLOYEE BENEFITS
Except as set forth in Part 3.13 of the Disclosure Letter, the
Acquired
Companies do not have any employee benefit plans of any type,
including plans
governed by ERISA, or any non-ERISA plans or any type of deferred
compensation
plans which benefit employees. Except as set forth in Part 3.13 of
the
Disclosure Letter, no employee is under any contract of employment,
and no
bonuses, fringe benefits or other compensation arrangements or
contracts,
written or oral, have been entered into by any of the Acquired
Companies with
any employee of any of the Acquired Companies. No employee has
received any
assurances from Seller of continued employment with the any of the
Acquired
Companies and no employ
