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EXHIBIT 10.6
CONSIGNMENT AGREEMENT
THIS CONSIGNMENT AGREEMENT (this "Agreement"), is entered into as of
the 3 day of November , 1999, by and between FS Management, LLC, Florida limited
liability company ("Consignor"), and United Petroleum Group, Inc. ("UPET").
PRELIMINARY STATEMENT
This Agreement is executed in connection with the consummation of a
Merger Agreement dated September 29, 1999 (the "Merger Agreement"), pursuant to
which F.S. Convenience Stores, Inc.("Farm Stores") , and UPET are merging. As
part of that Merger, management employees of Farm Stores are becoming employed
by UPET and its affiliates. However, the property, plant and equipment used by
Farm Stores management to operate Farm Stores is not involved in the merger
being conducted pursuant to the Merger Agreement, since it is owned by
Consignor, which is not a party to the Merger Agreement. Nevertheless, Consignor
has agreed to allow UPET to possess and use certain furniture, fixtures,
equipment and other property, but only on the terms of this Agreement.
Now therefore, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged and agreed, the parties intending
to be legally bound hereby covenant and agree as follows:
1. Consignment and Consigned Property. Consignor hereby consigns to
UPET, and UPET hereby accepts such consignment from Consignor, the furniture,
fixtures, equipment consisting of the following property, all of which is
presently located at the Consignor's headquarters facility in Miami, Florida
(collectively, the "Consigned Property"): (a) the AS 400 computer server, and
all other computer, communications, and office equipment, and (b) the furniture,
fixtures, and improvements; an inventory of all such Consigned Property to be
prepared by UPET and acknowledged by Consignor within thirty (30) days of the
"Commencement Date" (as defined below). UPET agrees to receive delivery of,
hold, protect, maintain, insure and use the Consigned Property as a consignee of
Consignor for all purposes and in accordance with the terms and provisions of
this Agreement. The agreed insurable value for each item of the Consigned
Property (each value for each item, the "Agreed Value") will also be set forth
in the inventory to be agreed within 30 days from date of this Agreement with
respect to each item of the Consigned Property.
2. Term of Agreement. The Term of this Agreement shall commence on the
date hereof (the "Commencement Date") and shall end on the date that the term of
the Management Agreement (hereinafter defined) expires or is validly terminated,
for any reason or for no reason (such date, the "Expiration Date"), unless
terminated sooner in accordance with the terms and provisions of this Agreement.
As used herein, the term "Management Agreement" shall mean that certain
Management Agreement, of even date herewith, by and between UPET and Farm Stores
Grocery, Inc.
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3. Location of Consigned Property/Change of Location/UCC Financing
Statements.
a. The Consigned Property shall remain and be kept at the
following address 5800 NW 74th Ave, Miami-Dade, County, Florida (such address,
the "Consigned Property Address") and such Consigned Property shall not be
removed from the Consigned Property Address without (i) at least 30 days' prior
notice to Consignor, (ii) the filing by UPET of UCC financing statements
covering the new address for the Consigned Property.
b. Upon execution of this Agreement, UPET shall also execute and
deliver two original UCC financing statements, acceptable to Consignor,
evidencing the consignment relationship set forth in this Agreement for
recordation with the Secretary of State of Florida and in the County Public
Records in which such Consigned Property will be located.
4. Ownership of Consigned Property. Consignor owns the Consigned
Property. Consignor shall continue to be the owner of the Consigned Property
during the Term of this Agreement and after the Expiration Date. UPET shall have
absolutely no right or interest in the Consigned Property, except in UPET's
capacity as "consignee" of the Consigned Property in accordance with the terms
and provisions of this Agreement and Applicable Laws (hereinafter defined),
provided however that in no event shall UPET have any right or power (express or
implied) to offer for sale, market, sell, pledge, mortgage or hypothecate any of
the Consigned Property.
5. Identification Marks on Consigned Property. The Consigned Property
has been identified or marked by Consignor with appropriate labels, plates, or
other markings stating that the Consigned Property is owned by Consignor and
identifying the Consigned Property with specific numbers. Under no circumstances
shall UPET, without Consignor's prior consent which consent may be withheld in
Consignor's sole and absolute discretion, remove, cover and/or obscure any such
identifying markings set forth on such Consigned Property.
6. UPET's Inspection and Acceptance. UPET acknowledges that UPET has or
will inspect every item comprising the Consigned Property and agrees that the
Consigned Property is presently in good repair and working condition.
7. Return of Consigned Property. On the Expiration Date or upon the
earlier termination of this Agreement, UPET must immediately surrender
possession of the Consigned Property to Consignor in good condition, reasonable
wear and tear excepted. UPET shall also deliver to Consignor all keys to the
Consigned Property, if any. If possession is not immediately surrendered,
Consignor may enter and take control of the Consigned Property and remove such
Consigned Property from the Consigned Property Address. If UPET continues to
hold the Consigned Property after the Expiration Date or other termination of
this Agreement without the written consent of Consignor, UPET must continue to
perform every other obligation required of UPET hereunder. Nonetheless, holding
over by UPET after the Expiration Date or other termination of the Term will not
be construed to extend the Term. UPET shall indemnify Consignor against all
claims for damages resulting from any delay by Consignor in delivering
possession of the Consigned Property to Consignor or Consignor's designee.
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8. NO WARRANTIES BY CONSIGNOR. EXCEPT AS EXPRESSLY SET FORTH IN THIS
AGREEMENT WITH RESPECT TO TITLE, CONSIGNOR DOES NOT MAKE ANY WARRANTIES, EXPRESS
OR IMPLIED, NOR SHALL ANY WARRANTIES ARISE BY OPERATION OF LAW, AS TO THE
CONSIGNED PROPERTY, INCLUDING WITHOUT LIMITATION ANY REPRESENTATION OR WARRANTY
REGARDING QUALITY OF CONSTRUCTION, WORKMANSHIP, MERCHANTABILITY OR FITNESS FOR
ANY PARTICULAR PURPOSE OR PARTICULAR USE, MERCHANTABILITY, DESIGN, CAPACITY, OR
PERFORMANCE. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS
AGREEMENT, IT IS UNDERSTOOD AND AGREED THAT THE CONSIGNED PROPERTY IS BEING
CONSIGNED TO UPET "AS IS - WHERE IS- WITH ALL FAULTS" WITHOUT ANY REPRESENTATION
OR WARRANTY BY CONSIGNOR. CONSIGNOR HAS NOT MADE AND DOES NOT HEREBY MAKE ANY
EXPRESS OR IMPLIED REPRESENTATIONS OR WARRANTIES WHATSOEVER WITH RESPECT TO THE
CONDITION OF THE CONSIGNED PROPERTY AND UPET ACKNOWLEDGES THAT UPET IS ENTERING
INTO THIS AGREEMENT WITHOUT RELYING UPON ANY SUCH STATEMENT OR REPRESENTATION
MADE BY CONSIGNOR OR BY ANY OTHER PERSON.
9. Consigned Property as Personalty. The Consigned Property is, and
will at all times remain, personal property, notwithstanding that such property
or any part may now be, or may become, attached to, or permanently rest on, real
property.
10. Use, Care and Operation of Property. UPET shall use the Consigned
Property in a proper manner, and shall comply with all Applicable Laws and
comply with the seller's or manufacturer's instructions relating to the
possession, use, maintenance, repair, and operation of the Consigned Property.
Without limiting the generality of the foregoing, UPET shall maintain all of the
Consigned Property that is subject to a maintenance agreement in accordance
therewith, and make all payments under such maintenance agreement as they come
due. UPET shall also keep in good standing and shall not default under, all
other agreements and arrangements affecting the Consigned Property. UPET shall
provide for the registration and licensing of any Consigned Property whenever
required. UPET shall permit the Consigned Property to be used only by competent
and qualified personnel. The term "Applicable Laws" shall mean the collective
reference to all applicable laws, ordinances, orders, rules and regulations of
all governmental entities and regulatory agencies, including without limitation,
Applicable Laws relating to human health and the environment.
11. Loss or Damage to Consigned Property. UPET assumes all risks of
loss of or damage to the Consigned Property from any cause. No loss of or damage
to the Consigned Property shall impair any obligation of UPET under this
Agreement and all such obligations shall continue in full force and effect until
otherwise discharged. In the event of loss of or damage to the Consigned
Property, the following shall apply:
a. If, in Consignor's judgment, an item of the Consigned Property
becomes permanently lost or damaged beyond repair so as to be unusable for the
purpose for which the Consigned Property is intended, the Agreement shall
terminate with respect to such Consigned Property, UPET shall deliver the
damaged Consigned Property (and any applicable insurance
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proceeds) to the Consignor. UPET, however, shall have no liability if the
Consigned Property is not insured, or the insurance is not collectible, or the
Consigned Property is lost or destroyed by a peril not insured against.
b. In the event the loss or damage to any of the Consigned
Property is capable of being replaced or repaired, UPET shall have the option of
repairing or replacing the Consigned Property at UPET's cost, and the proceeds
of any insurance recovered, including the portion applicable to Consignor's
interest, shall be applied in paying for the costs of repair or replacement. In
all events in which an item of Consigned Property is repaired, improved, or
replaced with proceeds from insurance and/or at the Consignor's cost, then such
repaired, improved or replaced item shall remain the property of the Consignor
and subject to this Agreement. Replacement property that is not purchased with
insurance proceeds or at the Consignor's cost shall be owned by UPET, free and
clear of the rights and claims of Consignor.
c. UPET shall notify Consignor within five days of the occurrence
of any loss or damage of the Consigned Property, and shall cooperate fully with
Consignor and the insurance company in the investigation and processing of all
claims, and in the recovery of damages from third persons who are or might be
liable. UPET shall assign to Consignor all rights and claims to insurance
proceeds in respect of lost or damaged Consigned Property that is replaced by
property that is no longer consigned hereunder.
12. Indemnification/ Personal Injuries and Damages. Any and all
liability and responsibility for personal injuries or death of any person in
connection with the use, operation, or transportation of the Consigned Property
shall be born by UPET. UPET shall indemnify and hold harmless Consignor (for
purposes of this paragraph, the term "Consignor" shall include the directors,
officers, members, employees and agents of Consignor) from and against, and
reimburse them for, all claims, demands, liabilities, losses, damages, causes of
action, judgments, penalties, costs and expenses (including, without limitation,
reasonable attorneys' fees) which may be imposed upon, asserted against or
incurred or paid by them by reason of, on account of or in connection with the
Consigned Property or asserted against Consignor on account of any act performed
or omitted to be performed by UPET hereunder or on account of any transaction
arising out of or in any way connected with the Consigned Property. Without
limitation, it is the intention of UPET and UPET agrees that the foregoing
indemnities shall apply to Consignor with respect to claims, demands,
liabilities, losses, damages, causes of action, judgments, penalties, costs and
expenses (including without limitation, reasonable attorneys' fees) which in
whole or in part are caused by or arise out of the negligence of Consignor or
any other party. Any amount to be paid hereunder shall be a demand obligation of
UPET and shall bear interest from the date of demand until paid at the highest
lawful rate under Applicable Laws (such rate, the "Default Rate").
13. Insurance. UPET shall obtain and maintain at all times during the
term of this Agreement, at UPET's sole expense, the following insurance
coverages:
a. Fire, flood, vandalism, malicious mischief, burglary, and
theft insurance in an amount not less than the Agreed Value for each item of the
Consigned Property.
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b. Bodily injuries insurance of not less than Five Hundred
Thousand Dollars ($500,000.00) per person and One Million Dollars
($1,000,000.00) per accident.
c. Third party property damage insurance in an amount of not less
than Five Hundred Thousand Dollars ($500,000.00).
UPET shall cause Consignor to be named as the loss payee with respect to the
Consigned Property and an additional insured, to the extent of Consignor's
interest in the Consigned Property. Such insurance shall be endorsed to
constitute primary insurance with respect to any other insurance that Consignor
may have covering such Consigned Property. UPET further agrees that UPET will
deliver to Consignor original certificates of insurance evidencing such
insurance and any additional insurance which shall be taken out upon any part of
the Consigned Property and receipts evidencing the payment of all premiums, and
will deliver certificates evidencing renewals of all such policies of insurance
to Consignor at least fifteen (15) days before any such insurance shall expire.
In the event UPET fails to pay the premiums of the insurance policies when due,
Consignor may, but is not under any obligation to, pay the premiums. UPET shall
within ten days from notice that Consignor has paid the premiums, reimburse
Consignor for such payment. If UPET fails to reimburse Consignor for such
premiums within the period provided, the amount of unreimbursed premiums shall
bear interest at the Default Rate.
14. Taxes and Fees. UPET shall pay all taxes, assessments, licenses,
and registration fees that may now or hereafter be imposed on the ownership,
leasing, possession, or use of the Consigned Property. UPET shall furnish
Consignor satisfactory proof that such payment has been made before such taxes,
assessments, license and registration fees become delinquent. If UPET fails to
pay the charges before the delinquency date, Consignor may, but is not obligated
to, pay them. UPET shall reimburse Consignor for any such payment within ten
days from written notice of payment from Consignor. Any such amounts that remain
unreimbursed shall bear interest at the Default Rate.
15. No Liens or Encumbrances. UPET shall keep the Consigned Property
free from any claim, levy, lien, encumbrance, or other legal process. UPET shall
notify Consignor of such process within two (2) business days from the receipt
of notice of the claim, levy, lien, or legal process. UPET shall pay the cost of
defending or removing the claim, levy, lien, or legal process, unless the cost
is attributable to the negligence or misconduct of Consignor.
16. Defaults by UPET. The occurrence of any one of the following events
shall constitute a default under this Agreement (any such event, a "default"):
a. UPET shall fail to pay Consignor any sum of money when due
under this Agreement or under any other agreement with Consignor concerning the
Consigned Property.
b. UPET shall fail to maintain any insurance that this Agreement
requires UPET to maintain or shall fail to deliver any certificate of such
insurance when required by this Agreement.
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c. UPET shall fail to perform or observe any term, covenant or
condition of this Agreement or any other agreement with Consignor concerning the
Consigned Property (other than a failure described in the preceding
subparagraphs a. and b.) and UPET shall not cure the failure within 10 days
after Consignor notifies UPET thereof; but if the failure is of a nature that it
cannot be cured within such 10 day period, UPET shall not have committed an
event of default if UPET commences the curing of the failure within such 10 day
period and thereafter diligently pursues the curing of same and completes the
cure within 60 days.
d. UPET shall become insolvent, or shall admit in writing its
inability to pay its debts when due, shall make a transfer in fraud of its
creditors, or shall make a general assignment or arrangement for the benefit of
creditors, or all or substantially all of UPET's assets or UPET's interest in
this Agreement are levied on by execution or other legal process.
e. A petition shall be filed by or to have UPET adjudged a
bankrupt, or a petition for reorganization or arrangement under any law relating
to bankruptcy shall be filed by UPET, or any such petitions shall be filed
against UPET or such guarantor and shall not be removed within 30 days.
f. A receiver or trustee shall be appointed for all or
substantially all the assets of UPET or for UPET's interest in this Agreement.
g. UPET shall abandon the Consigned Property or move the
Consigned Property from the Consigned Property Address without the prior consent
of Consignor.
17. Consignor's Right to Cure Failure to Perform. In the event UPET
fails to make any payment or do any act as provided in this Agreement, Consignor
shall have the right, but not the obligation, without notice to or demand on
UPET, and without releasing UPET from any obligation under this Agreement, to
pay, purchase, contest, or compromise an encumbrance, charge, or lien that, in
the sole judgment of Consignor, affects the Consigned Property and in exercising
such right, Consignor may incur any liability and expend whatever amounts it may
deem necessary. All such expenses incurred by Consignor shall be reimbursed by
UPET within ten days from written notice or their being incurred by Consignor.
The amount paid by Consignor on behalf of UPET shall bear interest at the
Default Rate from the date Consignor made the payment.
18. Remedies of Consignor. On the occurrence of a default, without
notice to or demand on UPET:
a. Without in any way terminating this Agreement, but terminating
UPET's right to possess the Consigned Property, Consignor may take possession of
the Consigned Property. No repossession of the Consigned Property, institution
of legal proceedings or similar action will be construed as an election by
Consignor to terminate or accept a forfeiture of this Agreement or to accept a
surrender of the Consigned Property after a default by UPET, unless a written
notice of such intention is given by Consignor to UPET; but notwithstanding any
such action without such notice, Consignor may at any time thereafter elect in
writing to terminate this Agreement by notifying UPET. Upon the termination of
this Agreement, Consignor will be
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entitled to recover the costs of performing any of UPET's obligations that
should have been but were not satisfied as of the date of such termination.
b. Consignor may, after a default by UPET, terminate this
Agreement, recover possession of the Consigned Property and recover from UPET
and UPET shall pay to Consignor upon demand, (i) such expenses as Consignor may
incur in recovering possession of the Consigned Property terminating this
Agreement, placing the Consigned Property in good order and condition and
altering or repairing the same for reletting; (ii) all other costs and expenses
(including legal fees) paid or incurred by Consignor in exercising any remedy or
as a result of the event of default by UPET; and (iii) any other amount
necessary to compensate Consignor for all the detriment proximately caused by
UPET's failure to perform UPET's obligations under this Agreement or which in
the ordinary course of things would be likely to result from such failure.
c. All remedies herein expressly provided for are cumulative of
any and all other remedies existing at law or in equity and are cumulative of
any and all other remedies available to Consignor at law, in equity or by
statute. Consignor shall be entitled to avail themselves of all such other
remedies as may now or hereafter exist at law or in equity for the enforcement
of the covenants herein and the resort to any remedy provided for hereunder or
under any such other instrument or provided for by law shall not prevent the
concurrent or subsequent employment of any other appropriate remedy or remedies.
19. Assignment or Subconsignment by UPET. UPET shall not assign,
subconsign, transfer, pledge, or mortgage any of its rights under this Agreement
or any of the property subject to this Agreement, without the prior consent of
Consignor which shall not be unreasonably withheld. UPET shall not lend or allow
the property consigned to be used by any person other than UPET's employees,
without the prior written consent of Consignor. Consignor may assign this
Agreement or any of its rights under this agreement without prior notice to UPET
and without obtaining UPET's consent. Any such assignee shall have all the
rights and obligations of Consignor under this Agreement. However, Consignor
shall not be relieved from performing any of its obligations and
responsibilities under this Agreement in the event its assignee is unable to do
so. The assignment of monies to be received by the UPET from any state, federal
or municipal entity for Agreement payments shall be assigned to Consignor or
Consignor's designated assignee herein and that such governmental entities shall
not assume responsibility for any obligations herein, except for payment of
monies.
20. No Waiver by Consignor. No waiver by Consignor of any provision of
this Agreement or of any breach of UPET hereunder shall be deemed to be a waiver
of any other provision of this Agreement, or of any subsequent breach by UPET of
the same or any other provision. Consignor's consent to or approval of any act
by UPET requiring Consignor's consent or approval shall not be deemed to render
unnecessary the obtaining of Consignor's consent to or approval of any
subsequent act of UPET.
21. Notice. Any notice, request, demand or other communication required
or permitted hereunder (unless otherwise expressly provided therein) shall be
given in writing by (a) personal delivery, or (b) expedited delivery service
with proof of delivery, or (c) United States
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Mail, postage prepaid, registered or certified mail, return receipt requested,
or (d) prepaid telegram, telex or telecopy sent to the intended addressee at the
address shown on the signature page of this Agreement or to such different
address as the addressee shall have designated by written notice sent in
accordance herewith, and shall be deemed to have been given and received either
at the time of personal delivery or, in the case of delivery service or mail, as
of the date of first attempted delivery at the address and in the manner
provided herein, or in the case of telegram, telex or telecopy, upon receipt.
22. Survival of UPET's Representations and Covenants. UPET's
representations and covenants under this Agreement shall survive the return of
the Consigned Property, whenever the context permits.
23. Default by Consignor. All covenants of UPET in this Agreement are
independent covenants, not conditioned upon Consignor's satisfaction of its
obligations hereunder, except to the extent otherwise specifically provided
herein. If Consignor defaults in the performance of any of its obligations under
this Agreement, it will have 10 days to cure after UPET notifies Consignor of
the default; or if the default is of a nature to require more than 10 days to
remedy, Consignor will have the time reasonably necessary to cure it. UPET
agrees to serve a notice of claimed default or breach by Consignor upon the
lender holding a first mortgage or deed of trust against the Consigned Property
if UPET has been made aware of the name and address of such lender. The
liability of Consignor to UPET for any default by Consignor under the terms of
this Agreement is limited to the interest of Consignor in the Consigned Property
and UPET agrees to look solely to Consignor's interest in the Consigned Property
for recovery of any judgment from Consignor, it being intended that Consignor
shall not be personally liable for any judgment or deficiency.
24. No Consumer Contract. This Agreement is for commercial purposes,
and the parties agree that this Agreement is not, and shall not be construed as,
a consumer contract.
25. Successors and Assigns. Subject to Section 20 of this Agreement,
all of the covenants, conditions and provisions of this Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective heirs, personal representatives, successors and assigns.
26. No Brokers or Agents. UPET warrants that it has had no dealings
with any broker or agent in connection with the negotiation of this Agreement
and that it knows of no other brokers or agents who are or might be entitled to
a commission in connection with this Agreement. UPET agrees to indemnify and
hold harmless Consignor from and against any liability or claim, whether
meritorious or not, arising in respect to brokers and/or agents claiming by,
through or under UPET.
27. Time. Time is of the essence in this Agreement and in each and all
of the provisions hereof. Whenever a period of days is specified in this
Agreement, such period shall refer to calendar days unless otherwise stated in
this Agreement; except that whenever a period of time is prescribed in this
Agreement for action to be taken, neither party will be liable or responsible
for, and there shall be excluded from the computation for any such period of
time, any
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delays due to strikes, riots, acts of God, shortages of labor or materials, war,
Applicable Laws or any other causes of any kind whatsoever which are beyond the
control of Consignor.
28. Authority of UPET. UPET and each person signing this Agreement on
behalf of UPET represents to Consignor as follows: UPET is a duly authorized and
existing corporation under the laws of the State of UPET's formation, UPET has
and is qualified to do business in Florida; the corporation, has full right and
authority to enter into this Agreement; and each person signing on behalf of the
corporation or partnership, as the case may be, was and continues to be
authorized to do so.
29. Severability. A determination that any provision of this Agreement
is unenforceable or invalid shall not affect the enforceability or validity of
any other provision and any determination that the application of any provision
of this Agreement to any person or circumstance is illegal or unenforceable
shall not affect the enforceability or validity of such provision as it may
apply to any other persons or circumstances.
30. Counterparts. This Agreement may be executed in any number of
counterparts with the same effect as if all parties hereto had signed the same
document. All such counterparts shall be construed together and shall constitute
one instrument, but in making proof hereof it shall only be necessary to produce
one such counterpart.
31. Headings. The paragraph headings contained in this Agreement are
for convenience only and shall in no way enlarge or limit the scope or meaning
of the various and several paragraphs hereof.
32. Modification or Termination. This Agreement may only be modified or
terminated by a written instrument or instruments executed by the party against
which enforcement of the modification or termination is asserted. Any alleged
modification or termination which is not so documented shall not be effective as
to any party.
33. Negation of Partnership. Nothing contained in this Agreement is
intended to create any partnership, joint venture or association between the
parties hereto or in any way make the either party a co-principal with the other
party with reference to the property or the agreements referenced herein and any
inferences to the contrary are hereby expressly negated.
34. Governing Law. The terms and provisions of this Agreement shall be
governed by the laws of the State of Florida (without regard to the conflict of
laws rules of such State) and to applicable federal law.
35. Entire Agreement. This Agreement constitutes the entire
understanding and agreement between the parties hereto with respect to the
transactions referenced herein and arising in connection the Agreement of the
Consigned Property and supersede all prior written or oral understandings and
agreements between the parties hereto with respect thereto. Each party hereto
hereby acknowledges that, except as incorporated in writing in this Agreement,
there are not, and were not, and no persons are or were authorized by such party
to make, any representations, understandings, stipulations, agreements or
promises, oral or written, with respect to the transaction which is the subject
of this Agreement.
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EXECUTED AND AGREED as of the date first above written.
REWJB DAIRY PLANT ASSOCIATES
By: /s/ JOSE P. BARED
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Name: Jose P. Bared
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Title: President
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UNITED PETROLEUM GROUP, INC.
By: /s/ CARLOS BARED
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Name: Carlos Bared
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Title: Senior Vice President and C.F.O.
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