MOTION TO (1) SELL PROPERTY AND ASSUME AND ASSIGN

Case 2:09-bk-50259 Doc 635 Filed 08/25/09 Entered 08/25/09 17:16:25 Document Page 1 of 17 Desc Main UNITED STATES BANKRUPTCY COURT EASTERN DISTRICT OF TENNESSEE IN RE: APPALACHIAN OIL COMPANY, INC. Debtor * * * * * CASE NO. 2:09-bk-50259 Chapter 11 MOTION TO: (1) SELL PROPERTY AND ASSUME AND ASSIGN EXECUTORY CONTRACTS AND UNEXPIRED LEASES FREE AND CLEAR OF LIENS AND ENCUMBRANCES; (2) AMEND SALE PROCEDURES; AND (3) AUTHORIZE DEBTOR TO ENTER INTO MANAGEMENT AGREEMENT The Debtor, Appalachian Oil Company, Inc. (the "Debtor" or "APPCO"), pursuant to 11 U.S.C. § 105, § 363(b)(1), § 363(f), § 365(a) and Fed. R. Bankr. P. 6004(a) and 6006, moves for: (a) authority to sell to Florida Sunshine Investments I, Inc. ("Sunshine") substantially all the assets of the Debtor under the terms of the purchase agreement filed herewith outside the ordinary course of business and free and clear of liens and encumbrances; (b) assume certain executory contracts and unexpired leases and assign same to Sunshine outside the ordinary course of business and free and clear of liens and encumbrances; (c) amend sale procedures; and (d) authorize Debtor to enter into management agreement. In support of this motion, APPCO states as follows. 1. On February 9, 2009, APPCO filed a voluntary petition for reorganization under Chapter 11 of the Bankruptcy Code and is continuing to manage its properties and to operate its business as debtor-in-possession pursuant to Section 1107 and 1108 of the Bankruptcy Code. No trustee or examiner has been appointed herein. Case 2:09-bk-50259 Doc 635 Filed 08/25/09 Entered 08/25/09 17:16:25 Document Page 2 of 17 Desc Main 2. The Debtor currently operates approximately forty seven (47) convenience stores in the States of Tennessee, Kentucky and Virginia. DIP FINANCING 3. On September 17, 2007, the Debtor entered into a Loan and Security Agreement (the "Loan Agreement") with Greystone Credit II, L.L.C. ("Greystone"), as agent and lender, providing for a revolving line of credit in the maximum amount of $20,000,000, less certain amounts advanced under a Loan and Security Agreement dated December 29, 2006, among Greystone and certain affiliates of the Debtor. Under the Loan Agreement, Greystone was granted certain liens and security interests in substantially all the assets of the Debtor. The outstanding principal balance under the Loan and Security Agreement was approximately $11,001,828.00 as of the petition date. 4. On April 14, 2009, the Court signed the Final Order Authorizing Debtor in Possession Financing and Use of Cash Collateral (the "Order") [Document No. 242] under which, inter alia, the Court authorized and approved the Debtor to obtain post-petition credit from Greystone under a DIP Facility up to the amount of $2,000,000.00, the proceeds of such loan to be used by Debtor in accordance with the budget attached thereto and pursuant to the terms and conditions of the Final Order; the obtaining of post-petition credit from LP Shanks Company, or another grocery supplier and fuel suppliers on credit in exchange for a first priority security in the products supplied by such vendor and the proceeds thereof; and the use of cash collateral for the purposes set forth in the Budget subject to the rights including the superpriority claim of Greystone under the Order. On June 1, 2009, the Court signed Amendment to Final Order Authorizing Debtor in Possession Financing and Use of Cash Collateral (the "Amended Order") [Document No. 418] increasing the availability under the DIP Facility to $2,400,000 and 2 Case 2:09-bk-50259 Doc 635 Filed 08/25/09 Entered 08/25/09 17:16:25 Document Page 3 of 17 Desc Main adopting and incorporating all other provisions of the Order. On June 11, 2009, the Court signed the Second Amendment to Final Order Authorizing Debtor in Possession Financing and Use of Cash Collateral (the "Second Amended Order") increasing the availability under the DIP Facility to $3,150,000.00 and adopting and incorporating all other provisions of the Order, as amended. On July 20, 2009, the Court signed the Third Amendment to Final Order Authorizing Debtor in Possession Financing and Use of Cash Collateral and Amendment to Settlement Order (the "Third Amended Order") [Document No. 553] increasing the availability under the DIP Order to $3,350,000.00 and adopting all other provisions of the Order. On July 28, 2009, the Court signed the Fourth Amendment to Final Order Authorizing Debtor in Possession Financing and Use of Cash Collateral (the "Fourth Amended Order") [Document No. 566] increasing the availability under the DIP Facility to $3,900,000.00 and adopting all other provisions of the Order, as amended. (The Order, the Amended Order, the Second Amended Order, the Third Amended Order and the Fourth Amended Order sometimes collectively hereinafter the "Final Order"). UNEXPIRED LEASES 5. As of the petition date, the Debtor's convenience stores were located on properties in which the Debtor was the lessee or sub-lessee or, in some instances, the sublessor. As of the petition date, the lease agreements to which the Debtor was a party were unexpired leases of non-residential real property and thereby covered by the provisions of 11 U.S.C. § 365 with respect to any assumption or rejection thereof. 6. After its bankruptcy filing, the Debtor has filed motions and obtained authority from the Court to reject eight (8) unexpired leases. Following the granting of the motions, the 3 Case 2:09-bk-50259 Doc 635 Filed 08/25/09 Entered 08/25/09 17:16:25 Document Page 4 of 17 Desc Main Debtor remains parties to lease agreements governing its remaining forty-seven (47) convenience store locations. 7. On April 28, 2009, the Debtor filed a motion pursuant to 11 U.S.C. § 365(d)(4)(B)(i) seeking an extension for additional ninety (90) days to assume or reject the unexpired leases to which the Debtor was a party and not then or thereafter rejected. [Document No. 268]. The Debtor's motion was granted and the time period extended until September 7, 2009 for the Debtor to assume or reject the unexpired leases [Document No. 375], except with respect to the Debtor's lease agreement with Frank Haws (the "Haws Lease") and the Ground Lease and Operating Agreement between the Debtor and McDonald's Corporation (the "McDonald's Lease"). On June 10, 2009, an order was entered granting the Debtor until September 7, 2009 to assume or reject the Haws Lease. [Document No. 464]. On July 28, 2009, an order was entered granting the Debtor until September 8, 2009 to assume or reject the McDonald's Lease. [Document No. 563]. Thus, the Debtor has received an extension until September 7, 20091 to assume or reject the remaining unexpired leases to which it is a party. SETTLEMENT AGREEMENT WITH MANAGEMENT PROPERTIES, INC., MACLEAN, INC. AND AFFILIATED ENTITIES 8. At the time of its bankruptcy filing, the Debtor, as tenant or lessee, was a party to certain master leases with Management Properties, Inc. ("MPI") (the "MPI Lease"); MacLean, Inc. ("MacLean") (the "MacLean Lease"); the Jack W. Cummins, Sr. Irrevocable Trust for the Children of Jack W. Cummins, Jr., Sara G. MacLean; and the Linda R. MacLean 1 September 7, 2009 is Labor Day, thereby extending the time one (1) extra day until September 8, 2009. See Fed. R. Civ. P. 6(a)(3), (4). 4 Case 2:09-bk-50259 Doc 635 Filed 08/25/09 Entered 08/25/09 17:16:25 Document Page 5 of 17 Desc Main Irrevocable Trust (collectively "Cummins") (the "Cummins Lease"). The MPI Lease covered in excess of sixty (60) properties that included direct leases, subleases and lease pass-through arrangements. The MacLean Lease covered six (6) properties including the Debtor's corporate headquarters. The Cummins Lease covered two properties. 9. On March 25, 2009, MPI, MacLean and Cummins filed motions for relief from the automatic stay seeking to terminate the MPI Lease, the MacLean Lease and the Cummins Lease [Document Nos. 129, 131 and 133]. On April 30, 2009, the Debtor filed motions seeking to reject certain of the properties covered by the MPI Lease, the MacLean Lease and the Cummins Lease and to restructure the leases by eliminating certain properties covered thereby and revising the Debtor's rental obligations to the respective landlords. Following the filing of the stay relief motion by MPI, MacLean and Cummins and the rejection motions by the Debtor, the parties entered into negotiations which led to a settlement agreement in principal. 10. On May 8, 2009, the Debtor filed a motion for approval of compromise and settlement with MPI, MacLean and Cummins which included, among other things, the restructuring of the MPI Lease, the MacLean Lease and the Cummins Lease. After a series of objections, negotiations and court hearings, the Court, on June 10, 2009, entered an Order Approving Compromise and Settlement By and Among Debtor, Official Committee of Unsecured Creditors, Greystone Business Credit II, L.L.C., Former Shareholders, and Landlords. [Document No. 461] (the "Settlement Order"). 11. The Settlement Order provided for, inter alia, the division of a $1,000,000 escrow fund held by Branch Banking & Trust Company between the former shareholders of APPCO and the Official Committee of Unsecured Creditors (the "Committee"); approved the 5 Case 2:09-bk-50259 Doc 635 Filed 08/25/09 Entered 08/25/09 17:16:25 Document Page 6 of 17 Desc Main settlement between the Debtor, MPI, MacLean and Cummins which included the proposed restructuring of the three (3) master leases; granted Greystone a first priority, unavoidable lien on the assets of the Debtor, with the exception of the Debtor's avoidance claims and the proceeds thereof; and for a division of the sale proceeds from the sale of the assets of the Debtor's estates between Greystone and the Committee for the benefit of general unsecured creditors. 12. The Settlement Order was amended by the Third Amended Order [Document No. 605] wherein the division of the proceeds from the sale of the Debtor's assets were revised as follows based on an outstanding DIP obligations of the Debtor of $3,350,000 under the Debtor's DIP Facility: (a) (b) Greystone would receive the first $4,200,000 of the net sale proceeds. The Committee would receive the first $250,000 of the net sale proceeds in excess of $4,200,000. The Committee will receive five percent (5%) of the net sale proceeds in excess of $4,450,000 up to $8,200,000. The Committee will receive ten percent (10%) of the net sale proceeds in excess of $8,200,000 up to $10,200,000. The Committee will receive five percent (5%) of all net proceeds in excess. (c) (d) (e) The Third Amended Order also provides for the modification of the above formula if the DIP obligations exceed $3,350,000 provided that the amount in Paragraph (b) above would not exceed $4,500,000, absent written consent of the Committee and the amount in Paragraph (c) above would not exceed $4,750,000, absent written consent of the Committee. 6 Case 2:09-bk-50259 Doc 635 Filed 08/25/09 Entered 08/25/09 17:16:25 Document Page 7 of 17 Desc Main 13. After the entry of the Third Amended Order, the DIP Facility was increased from $3,350,000 to $3,900,000. Given the current amount outstanding under the DIP Facility, the Debtor believes the revised formula will apply with respect to the division of net sale proceeds upon completion of the sale transaction to Sunshine as contemplated hereby. 14. Following entry of the Settlement Order, the Debtor entered twelve (12) new lease agreements dated May 1, 2009 with either MPI, MacLean or Cummins covering the remaining properties covered by the terms of the parties' settlement agreement (the "Restructured Leases"). Six (6) of the twelve (12) Restructured Leases were master leases covering multiple properties and were titled Master Lease 1, Master Lease 2, Master Lease 3, Master Lease 4, Master Lease 5 and Master Lease 6. The remaining six (6) leases were individual leases covering individual properties. SALES PROCEDURE AND RETENTION OF NRC REALTY ADVISORS, LLC AS SALES AGENT 15. On May 8, 2009, the Debtor filed a motion for approval to implement sales procedures seeking approval of sales procedures in the form attached as Exhibit No. 1 to the motion (the "Sale Procedures') for the sale of substantially all the assets of the Debtor pursuant to such procedures [Document No. 302]. On May 20, 2009, the Court entered an Order approving the Debtor to immediately implement to Sales Procedures. 16. On May 11, 2009, the Debtor filed an application to employ NRC Realty Advisors, LLC ("NRC") to serve as the Debtor's real estate sales agent and financial advisor in accordance with the engagement letter attached as Exhibit No. 1 to the motion. 7 Case 2:09-bk-50259 Doc 635 Filed 08/25/09 Entered 08/25/09 17:16:25 Document Page 8 of 17 Desc Main [Document No. 308]. The Court approved the retention of NRC by Order entered May 20, 2009. [Document No. 365]. NRC, thereafter, assumed the obligation to market and sell the assets of the Debtor pursuant to the Sale Procedures. 17. After entry of the Settlement Order and the execution of the Restructuring Leases, NRC commenced its formal efforts to market and sale the assets of the Debtor pursuant to the Sales Procedures. These marketing efforts consisted of utilization of NRC's existing data base of parties which had previously purchased or expressed interest in the purchase of convenience stores; advertisements in publications such as the Wall Street Journal and trade magazines; e-mail blasts; the establishment of an electronic book or memorandum describing the properties and other relevant financial information; and the establishment of a virtual "deal room" available for viewing and inspection by interested bidders which contained applicable documents regarding the properties and the financial performance of the store locations. NRC made direct contract with over one hundred thirty (130) regional buyers of groups of convenience stores as well as companies with a national presence in the ownership of convenience stores. NRC also established a procedure for bids to be submitted in accordance with the Sales Procedures. The NRC bid deadline expired on July 8, 2009. 18. NRC, thereafter, received a series of bids from prospective purchasers of individual stores and certain groups of stores. NRC only received two "bulk bids," that is, bids for all locations, but one (1) bulk bid had numerous conditions attached to it including the requirement of further break up of the Restructured Leases and transfer of the ownership of the underground storage tanks to the respective landlords. The particular bid was not feasible to attempt to close. The only viable "bulk bid" received by NRC was from Empire Petroleum Holdings, LLC ("Empire"). 8 Case 2:09-bk-50259 Doc 635 Filed 08/25/09 Entered 08/25/09 17:16:25 Document Page 9 of 17 Desc Main BULK BIDS FOR DEBTOR'S ASSETS Empire Petroleum Holdings, LLC ("Empire") 19. Empire submitted the high "bulk bid" of $9.1 million to purchase substantially all the assets of APPCO and the assumption of the unexpired leases (sometimes collectively hereinafter the "Purchased Assets") plus the value of APPCO's inventory [fuel and groceries] (the "Inventory") as of the closing date. The parties, thereafter, negotiated the terms of and entered into a Purchase and Sale Agreement dated as of July 24, 2009 (the "Empire Purchase Agreement"). The Empire Purchase Agreement contained a due diligence period of fifteen (15) business days (the "Due Diligence Period") for Empire to review the financial information previously provided by NRC and review financial information of the Debtor through July 9, 2009. Subject to certain conditions, including Empire's acknowledgment that APPCO was operating with severely limited operating capital; was operating as a debtor in possession in bankruptcy; and that APPCO's locations were dark for a period of 2009, Empire had the right to terminate the Empire Purchase Agreement prior to the expiration of the Due Diligence Period if the "2009 financial information was unacceptable to [Empire]." 20. Under the Empire Purchase Agreement, the excluded assets include (i) all prepaid expenses, refunds including, without limitation, any deposits held by vendors or utility companies, relating to the Purchased Assets [as defined in the Empire Purchase Agreement] of Business [as defined in the Empire Purchase Agreement] of the Debtor; (ii) funds on deposit in any bank or other account owned by or held for the benefit of the Debtor; (iii) accounts receivable, or the proceeds thereof; (iv) any retainers or similar funds on deposit with any professional retained by the Debtor; (v) all claims or causes of action that Seller may assert against any person or entity including, but not limited to, any "Bankruptcy Causes of Action"; 9 Case 2:09-bk-50259 Doc 635 Filed 08/25/09 Entered 08/25/09 17:16:25 Document Page 10 of 17 Desc Main (vi) the Debtor's retained books and records; (vii) any rights of the Debtor in pre-petition dealer supply agreements; (viii) equipment at such dealer locations; (ix) miscellaneous equipment, parts and inventory at Seller's corporate offices including the items of personal property currently scheduled for auction by the Debtor; and (x) all other property of the Debtor that is not associated with the Purchased Assets (as defined in the Empire Purchase Agreement). 21. After conducting further due diligence, Empire issued a termination letter dated August 13, 2009 giving notice of its termination of the Empire Purchase Agreement on the grounds that the 2009 financial information was unacceptable to Empire. 22. On August 14, 2009, Empire revoked its termination letter and made a counter- offer under the Empire Purchase Agreement of $5.5 million. Empire and the Debtor, thereafter, entered into further negotiations. 23. On August 21, 2009, Empire and APPCO signed an Amendment to Purchase and Sale Agreement dated as of April 18, 2009 amending the Empire Purchase Agreement such that the purchase price was reduced to $5.5 million plus the costs of the Inventory; the closing date was pushed back to August 31, 2009 and no later than September 4, 2009 and, if the later date, Empire would pay the Debtor's September 2009 rents and its operating expenses for such gap period; all contingencies to closing were waived except court approval and execution of conveyance documents; the deposit was increased to $486,000; and APPCO was permitted to secure a competing offer that was at least five percent (5%) greater than the Empire $5.5 million offer with Empire having the opportunity to submit another bid that was $100,000.00 better than the competing offer; and providing to Empire, if it was the unsuccessful 10 Case 2:09-bk-50259 Doc 635 Filed 08/25/09 Entered 08/25/09 17:16:25 Document Page 11 of 17 Desc Main bidder, a break-up fee of five percent (5%) of its $5.5 million purchase price subject to court approval. 24. On or about August 18, 2009, APPCO was contacted by Sunshine, as a potential bulk bidder that had not previously participated in the bidding process through the Sale Procedures. On August 21, 2009, APPCO and Sunshine signed a term sheet which contained an outline of proposed terms of purchase of assets subject to a definitive purchase agreement. 25. On August 25, 2009, APPCO and Sunshine entered into a Purchase and Sale Agreement (the "Sunshine Purchase Agreement") providing for Sunshine's purchase and sale of the assets of APPCO described therein for a purchase price of $6,250,000.00 plus the value of the Inventory. A true and exact copy of the Sunshine Purchase Agreement is attached hereto as Exhibit No. 1 and incorporated herein by reference. In addition to the assets described in the Empire Purchase Agreement, the assets to be purchased under the Sunshine Purchase Agreement include (a) APPCO's rights, if any, under dealer supply agreements at the certain dealer locations including the equipment at those locations;2 (b) certain claims of APPCO against Bryan Chance3 and Kurt Jensen4 arising in this bankruptcy case; (c) any dealer supply agreement not previously sold by the Debtor and equipment at those dealer sites; and 2 On August 18, 2009, the Debtor filed a motion to sell and assign property free and clear of liens and encumbrances and for approval of bidding procedures seeking to sell the same dealer supply contracts and equipment to Rogers Petroleum for a total purchase price, subject to certain contingencies, of $521,784.00. [Document No. 626]. This equipment and dealer supply contracts were excluded from the Empire Purchase Agreement. Bryan Chance is a former officer and director of APPCO and an officer and director of Titan Global Holdings, LLC, APPCO's parent company. He is a named defendant in a pending adversary proceeding in this bankruptcy case styled: Appalachian Oil Company, Inc. and the Official Committee of Unsecured Creditors v. Titan Global Holdings, Inc., et al, Adversary Proceeding No. 2:09-ap-05049. Kurt Jensen is an officer or former officer of Titan Global Holdings, Inc. 3 4 11 Case 2:09-bk-50259 Doc 635 Filed 08/25/09 Entered 08/25/09 17:16:25 Document Page 12 of 17 Desc Main (d) certain miscellaneous equipment that APPCO previously intended to auction and which was not included in the Empire Purchase Agreement. The Sunshine Purchase Agreement allocates the $6,250,000.00 purchase price as follows: • • $6,000,000 to leased property and equipment; and $250,000 to equipment at dealer locations. 26. The Closing Date of the September Purchase Agreement can be extended from August 31, 2009 to September 4, 2009. However, the Debtor must deliver a Sale Order on or before September 4, 2009. 27. Both the Empire Purchase Agreement and the Sunshine Purchase Agreement permit the prospective buyers to make competing offers. 28. The Debtor contends that the Sunshine Purchase Agreement represents the highest and best bid for the assets of the Debtor. AMENDMENT TO SALE PROCEDURES 29. Sunshine entered into the bidding process subsequent to the bid deadline imposed by NRC and outside of the Sales Procedures. 30. APPCO seeks an amendment to the Sales Procedures to permit the Sunshine bid to be accepted and the Sunshine Purchase Agreement to be approved outside such Sale Procedures. If the interested bidders express an interest, then the Debtor requests that the 12 Case 2:09-bk-50259 Doc 635 Filed 08/25/09 Entered 08/25/09 17:16:25 Document Page 13 of 17 Desc Main Sale Procedures be further amended to permit further competitive bidding up until and during a hearing on this motion. 31. The Debtor also contends that the sale to Sunshine not only represents the highest and best bid for the assets of the Debtor, but also creates the greatest opportunity to sell the company as a going concern and to preserve the jobs of Debtor's non-management employees because Sunshine has indicated that it intends to operate all of the forty-seven (47) store locations and retain all non-management employees. 32. Inasmuch as Empire rescinded its original offer of $9.1 million, a definitive agreement was not reached with Empire until August 21, 2009, the ability of Empire to increase its bid and the availability of a break-up fee, the Debtor contends that Empire is not prejudiced by such amendments to the Sales Procedures. Further, Empire has the right to come to court and seek enforcement of its break-up fee. ATTACHMENT OF SALE PROCEEDS AND ASSIGNMENT OF LEASES 33. The liens and/or security interests of Greystone encumber the assets to be sold pursuant to the Sunshine Purchase Agreement. Greystone's security interest in these items of personal property is properly perfected by either properly filed pre-petition financing statements or the Final Order. The Debtor is not aware of any other creditor that holds or claims to hold a perfected lien or security interest in the Property, except for the rights of the Committee under the Settlement Order, as amended by the Third Amended Order. 13 Case 2:09-bk-50259 Doc 635 Filed 08/25/09 Entered 08/25/09 17:16:25 Document Page 14 of 17 Desc Main 34. 11 U.S.C. § 363(f) provides: The trustee may sell property under subsection (b) and (c) of this section free and clear of any interest in such property of an entity other than the estate, only if (1) (2) (3) applicable nonbankruptcy law permits sale of such property free and clear of such interest; such entity consents; such interest is a lien and the price at which such property is to be sold is greater than the aggregate value of all liens on such property; such interest is in bona fide dispute; or such entity could be compelled, in a legal or equitable proceeding, to accept a money satisfaction of such interest. (4) (5) APPCO avers that it anticipates that Greystone will consent to Sunshine Purchase Agreement, subject to the terms of the Final Order, thereby providing the statutory basis under 11 U.S.C. § 363(f)(2) for the Court to approve the proposed sale to Sunshine, free and clear of liens and encumbrances. Alternatively, the Debtor contends that, inasmuch as the Sunshine bid price of $6,250,000.00 represents the highest and best price for the Debtor's assets, applicable non-bankruptcy law would permit the sale of such assets free and clear of such interest of Greystone or that Greystone could be compelled in a legal or equitable proceeding to accept a money satisfaction of such interest, thereby providing alternate statutory basis under 11 U.S.C. §§ 363(f)(1) or (f)(4) for the sale of such assets to Sunshine and the assignment of the executory contracts and unexpired leases free and clear of liens and encumbrances. 35. Section 365(a) of the Bankruptcy Code provides "the trustee [or debtor in possession], subject to the court's approval, may assume or reject any executory contract or unexpired lease of the debtor." 11 U.S.C. § 365(a). Section 365(f) of the Bankruptcy Code provides: 14 Case 2:09-bk-50259 Doc 635 Filed 08/25/09 Entered 08/25/09 17:16:25 Document Page 15 of 17 Desc Main (1) Excerpts as provided in subsection (b) and (c) of this section, notwithstanding a provision in the executory contract or unexpired lease of the debtor, or in applicable law, that prohibits, restricts or conditions the assignment of such contract or lease under paragraph (2) of this subsection. The trustee may assign an executory contract or unexpired lease of the debtor only if (A) the trustee assumes such contract or lease in accordance with the provisions of this section; and adequate assurance of future performance by the assignee of such contract or lease is provided, whether or not there has been a default in such contract or lease. (2) (B) 36. The Debtor seeks authority of the Court to assume the unexpired leases (the "Assumed Leases") and other executory contracts described in Exhibit No. 2 attached hereto and assign same to Sunshine. The Debtor avers that no defaults exist under the Assumed Leases, except for the February 2009 rent or a portion thereof in most instances, rents for certain other months in 2008 under leases that YA Landholdings, LLC is the landlord and which have not been previously rejected by the Debtor, and 2008 property taxes under certain of the Restructured Leases, all of which will be paid by the Debtor at closing. The Debtor further avers that Sunshine has or will provide adequate assurance of future performance to the landlord of the properties encumbered by the Assumed Leases or such requirement has been or will be waived by the respective landlords. Under the Sunshine Purchase Agreement, the Debtor is responsible for all cure amounts under the Assumed Leases. 37. The Debtor further requests that any stay of any order authorizing the proposed sale of the Property and assumption and assignment of the Assumed Leases as required by Fed. R. Bankr. P. 6004(g) and Fed. R. Bankr. P. 6006(d) be waived. 15 Case 2:09-bk-50259 Doc 635 Filed 08/25/09 Entered 08/25/09 17:16:25 Document Page 16 of 17 Desc Main MANAGEMENT AGREEMENT 38. The Debtor is a party to numerous licenses and permits for its convenience store locations issued by various state and local agencies including, without limitation, business licenses, authority to conduct business in a particular state, off-premises beer permits, and other permits needed to dispense and store petroleum products. As part of the transaction with Sunshine, the Debtor, as set forth in the Sunshine Purchase Agreement, requests approval of the Court to enter into a form of management contract with Sunshine for it to utilize all permits, licenses, insurance and employees of the Debtor for a defined period of time until such items are reissued in the name of Sunshine or its designee and APPCO's employees become employees of Sunshine. The proposed management arrangement will also contain indemnity provisions flowing to APPCO for any liability or expenses that may arise from Sunshine's use and/or operation. WHEREFORE, the Debtor requests that the Court, after notice and hearing: (a) approve and authorize the sale of the assets to Sunshine under the terms and conditions of the Sunshine Purchase Agreement and authorize the assumption of the Assumed Leases and the assignment thereof to Sunshine, free and clear of liens and encumbrances; (b) amend the Sale Procedures as requested herein and, if necessary or requested by the parties, conduct a further auction of the Debtor's assets to either Empire or Sunshine; and (c) grant such further or additional relief as the Court deems proper. HUNTER, SMITH & DAVIS, LLP By: _/s/Mark S. Dessauer______________ Mark S. Dessauer, Esq. TN BPR NO. 010421 Attorney for Debtor Post Office Box 3740 Kingsport, Tennessee 37664 (423) 378-8840; Fax: (423) 378-8801 16 Case 2:09-bk-50259 Doc 635 Filed 08/25/09 Entered 08/25/09 17:16:25 Document Page 17 of 17 Desc Main CERTIFICATE OF SERVICE The undersigned hereby certifies that on August 25, 2009 the: [1] Motion To: (1)Sell Property and Assume and Assign Executory Contracts and Unexpired Leases Free and Clear of Liens and Encumbrances, (2) Amend Sale Procedures, and (3) Authorize Debtor to Enter Into Management Agreement; [2] Notice of Hearing; and [3] Proposed Order were filed electronically. All parties on the attached Service List and WR Hess Company, P. O. Drawer G, Chickasha, Oklahoma 73018, will receive copies of these documents. Notice of this filing will be sent by operation of the Court's electronic filing system to all parties indicated on the electronic filing receipt. All other parties, if any, have been served by hand delivery, overnight delivery, facsimile transmission, or by mailing a copy of same by United States Mail, postage prepaid. HUNTER, SMITH & DAVIS, LLP /s/ Mark S. Dessauer Mark S. Dessauer DESSAUER: A-B APPALACHIAN OIL APPCO.85049 17