Exhibit 1(a)
FIRST AMENDMENT TO PURCHASE AGREEMENT
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This FIRST AMENDMENT TO PURCHASE AGREEMENT (this
"Amendment"), dated as of April 19, 2001, by and between Transit Group, Inc., a
Florida corporation having an office at 0000 Xxxxx Xxxxx Xxxx, Xxxxx 0000,
Xxxxxxx, Xxxxxxx 00000 (the "Company"), and GE Capital Equity Investments, Inc.,
a Delaware corporation having an office at 000 Xxxx Xxxxx Xxxx, Xxxxxxxx,
Xxxxxxxxxxx 00000 (the "Purchaser").
W I T N E S S E T H :
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WHEREAS, Company and Purchaser have previously entered into
that certain Purchase Agreement dated May 13, 1999 (the "Purchase Agreement")
whereby Purchaser acquired 5,000,000 shares of the Company's Series A
Convertible Preferred Stock, no par value per share;
WHEREAS, Company desires to issue and sell to Purchaser,
and Purchaser desires to purchase from Company, upon the terms and conditions
hereinafter provided, 400,000 shares of Company's Series B Convertible Preferred
Stock, no par value per share, the terms, preferences and limitations of which
are set forth in the Certificate of Designations attached as Exhibit "A" hereto
(the "Series B Convertible Preferred Stock"); and
WHEREAS, the parties hereto desire to amend the Purchase
Agreement to provide for the purchase of Series B Convertible Preferred Stock as
set forth herein.
NOW, THEREFORE, in consideration of the premises and the
covenants hereinafter contained, it is agreed as follows:
I. The Purchase Agreement is hereby amended to add a new Article
II.B. as follows:
II.B. The Purchase of Series B Convertible Preferred Stock
2.B.1. Purchase of Series B Convertible Preferred Stock.
Subject to the terms and conditions set forth in this Agreement,
Purchaser herewith purchases from Company, and Company herewith
issues and sells to Purchaser a total of 400,000 shares of its Series
B Convertible Preferred Stock (the "Series B Preferred Stock")
containing the terms, preferences and limitations set forth in
Exhibit "A" to this Agreement, for an aggregate purchase price of
$2,000,000, payable in full simultaneously herewith.
The Company has herewith delivered to Purchaser a
certificate representing the Series B Convertible Preferred Stock
purchased by Purchaser registered in such names and in such
denominations as Purchaser has requested against delivery by
Purchaser of the purchase price therefor by wire transfer of funds to
the account of Company.
2.B.2. Use of Proceeds. Company shall use the proceeds of
the sale of the Series B Convertible Preferred Stock to provide for
its working capital, including repayment of revolving credit
indebtedness.
II. COVENANTS
Section 5.1 of the Purchase Agreement is hereby amended by
adding the following subsections to the end of such Section:
(l) The Company will not replace or remove its current
Chief Financial Officer without Purchaser's consent and with the concurrence of
T. Xxxxx Xxxxx, Chairman of the Board of Directors of the Company.
(m) The Company will deliver to Purchaser within twenty
(20) days of the end of each calendar month (i) a profit and loss statement,
(ii) a balance sheet, (iii) a cash flow statement and (iv) a report on the aging
of receivables with respect to each such month. The senior management of the
Company shall be available to meet with Purchaser at least once each month at a
time and place reasonably acceptable to Purchaser to discuss such reports and
statements.
(n) The Board of Directors shall have regularly scheduled
board meetings no less frequently than monthly. At least one of such scheduled
meetings in every fiscal quarter shall be held in person rather than by
telephone.
(o) The Company shall cause its auditors to complete the
audit of the Company's fiscal year ended December 31, 2000 financial statements
by no later than June 15, 2001.
(p) The Company will deliver to Purchaser, by April 30 of
each year, audited financial statements for the fiscal year ending immediately
prior to such date, certified by a nationally recognized accounting firm
reasonably acceptable to Purchaser.
(q) The Company shall use its best efforts to obtain the
resignation of any member of the Company's Board of Directors who does not
attend any two consecutive board meetings or any three board meetings in a
calendar year.
III. PURCHASER'S REPRESENTATIONS
Purchaser hereby represents and warrants to the Company
that the representations and warranties made to the Company in Article III of
the Purchase Agreement are true and correct on the date hereof with the same
effect as though such representations and warranties had been made on and as of
the date hereof. Solely for purposes of this Section III, the term "Convertible
Preferred Stock" as used in such representations and warranties shall mean the
Series B Convertible Preferred Stock, the term "Closing Date" shall mean the
date hereof, and the term "Transaction Documents" shall mean this Amendment, the
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Certificate of Designations for the Series B Convertible Preferred Stock, the
Amendment and Joinder to Registration Rights Agreement between the parties
hereto and other holders of the Series B Convertible Preferred Stock of even
date herewith, and the Amendment to Stockholders Agreement between the parties
hereto of even date herewith.
IV. COMPANY'S REPRESENTATIONS AND WARRANTIES
Except as set forth in the disclosure schedules to the
Purchase Agreement and as set forth on Exhibit "B" hereto, the Company hereby
represents and warrants to the Purchaser that the representations and warranties
made to Purchaser in Article IV of the Purchase Agreement are true and correct
on the date hereof with the same effect as though such representations and
warranties had been made on and as of the date hereof. Solely for purposes of
this Section IV, the term "Convertible Preferred Stock" as used in such
representations and warranties shall mean the Series B Convertible Preferred
Stock, the term "Closing Date" shall mean the date hereof, and the term
"Transaction Documents" shall mean this Amendment, the Certificate of
Designations for the Series B Convertible Preferred Stock, the Amendment and
Joinder to Registration Rights Agreement between the parties hereto and other
holders of the Series B Convertible Preferred Stock of even date herewith, and
the Amendment to Stockholders Agreement between the parties hereto of even date
herewith.
V. CONVERSION OF SERIES A CONVERTIBLE PREFERRED STOCK DIVIDENDS/PLACEMENT
FEE.
Company and Purchaser hereby acknowledge that currently payable dividends
accrued through January 31, 2001 and due to Purchaser in an amount equal to
$1.875 million shall be converted into 375,000 shares of the Company's Series B
Convertible Preferred Stock. Company and Purchaser hereby acknowledge that
simultaneously with the closing of the purchase and sale of the 400,000 shares
of Series B Convertible Preferred Stock as contemplated by section 2.B.1 above,
the Company will issue to the Purchaser 228,571 shares of Series B Convertible
Preferred Stock as a placement fee for no additional cash consideration.
VI. SECURITIES LAW MATTERS
Purchaser acknowledges receipt of the Company's Confidential Offering Memorandum
dated April 6, 2001, as amended. Each certificate representing the Series B
Convertible Preferred Stock shall bear a legend substantially in the following
form:
"THE SERIES B CONVERTIBLE PREFERRED STOCK REPRESENTED BY
THIS CERTIFICATE HAS BEEN ACQUIRED BY THE HOLDER FOR ITS
OWN ACCOUNT, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO
THE DISTRIBUTION OF SUCH SERIES B CONVERTIBLE PREFERRED
STOCK. THE SHARES OF SERIES B CONVERTIBLE PREFERRED STOCK
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
(THE "ACT") AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED
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EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT OR AN EXEMPTION THEREFROM."
VII. SURVIVAL; INDEMNIFICATION
7.1. Survival. All of the representations and warranties
made by any party in this Amendment shall survive the purchase and sale of the
Series B Convertible Preferred Stock until the second anniversary of the date
hereof; provided, however, that (i) the representations and warranties of the
Company in Section IV hereof as it relates to Section 4.10 of the Purchase
Agreement shall survive until the fourth anniversary of the date hereof and (ii)
the representations and warranties of Company in Section IV hereof as it relates
to Sections 4.13 and 4.19 of the Purchase Agreement shall survive for their
respective statutes of limitations. This provision does not amend or modify the
survival periods stated in Section 8.1 of the Purchase Agreement with respect to
the representation and warranties of the parties made thereunder.
7.2 Indemnification. Company agrees to indemnify and hold
harmless Purchaser and its Affiliates and their respective officers, directors
and employees (collectively, the "Indemnified Parties") from and against any
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
claims, costs, attorneys' fees, expenses and disbursements of any kind, other
than any special or consequential damages ("Losses"), which may be imposed upon,
incurred by or asserted against such Purchaser or such other indemnified Persons
in any manner relating to or arising out of any untrue representation, breach of
warranty or failure to perform any covenants or agreement by Company contained
herein or in any certificate or document delivered pursuant hereto or arising
out of any Environmental Law applicable to Company or its Subsidiaries or in
connection with any third-party claim otherwise relating to or arising out of
the transactions contemplated hereby; provided that Company shall have no
obligation to an Indemnified Party hereunder with respect to liabilities arising
from the gross negligence or willful misconduct of that Indemnified Party as
determined by a court of competent jurisdiction. Each Indemnified Party shall,
as soon as practicable after receipt of notice of a claim or action against such
Indemnified Party in respect of which indemnity may be sought hereunder, notify
Company in writing of the claim or action (stating in reasonable detail the
facts giving rise to such action); provided that the failure to notify Company
shall not relieve Company from any liability which it may have to an Indemnified
Party except to the extent that Company was prejudiced by such failure, and in
no event shall such failure relieve Company from any other liability which it
may have to such Indemnified Party. If any such claim or action shall be brought
against an Indemnified Party, and it shall have notified Company, Company shall
be entitled to participate therein, and, to the extent that it wishes, to assume
the defense therein, with counsel reasonably satisfactory to the Indemnified
Party. After notice to the Indemnified Party from Company of its election to
assume the defense of any claim or action, Company shall not be liable to the
Indemnified Party for any legal or other expenses subsequently incurred by the
Indemnified Party in connection with the defense thereof. Company may not
without the prior written consent of the Indemnified Party, not to be
unreasonably withheld, agree to (i) any settlement of any claim or action
indemnifiable hereunder, other than a settlement solely for monetary damages for
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which Company shall be responsible hereunder or (ii) any remedy or relief which
will be applied against the Indemnified Party. In any action hereunder as to
which Company has assumed the defense thereof with counsel reasonably
satisfactory to the Indemnified Party, the Indemnified Party shall continue to
be entitled to participate in the defense thereof, with counsel of its own
choice, but Company shall not be obligated hereunder to reimburse the
Indemnified Party for the costs thereof. Company shall only be liable to the
Indemnified Parties for any Losses resulting from a breach of representation or
warranty (i) if the claim therefor is asserted in writing prior to the end of
the applicable survival period as set forth in Section 7.1 hereof; (ii) which
exceed an aggregate amount equal to $50,000 and only for such Losses in excess
thereof, and (iii) up to an aggregate amount of $1,200,000.
VIII. EXPENSES
The Company agrees to reimburse Purchaser for all
reasonable out-of-pocket expenses of Purchaser (including, without limitation,
the reasonable fees and expenses of its counsel) not exceeding $35,000 in
connection with the execution of this Amendment, the issuance of the Series B
Convertible Preferred Stock and the transactions contemplated hereby.
IX. MISCELLANEOUS.
The provisions of Article X of the Purchase Agreement shall
apply equally to this Amendment, and are incorporated herein by reference. This
Amendment and the exhibits hereto, and the Purchase Agreement amended hereby,
represent the entire understanding and agreement between the parties hereto with
respect to the subject matter hereof and supercede all prior and contemporaneous
agreements, understandings, negotiations and discussions, whether oral or
written, of the parties with respect to the subject matter hereof. Except as
specifically amended herein, the Purchase Agreement shall remain in full force
and effect. Following the date hereof, any references made hereafter to the
Purchase Agreement shall be deemed to mean the Purchase Agreement as amended
hereby.
IN WITNESS WHEREOF, Company and Purchaser have executed this
Amendment as of the day and year first above written.
TRANSIT GROUP, INC.
By: /s/ Xxxxxx X. Xxxxxx
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Name: Xxxxxx X. Xxxxxx
Title: Chief Executive Officer
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GE CAPITAL EQUITY INVESTMENTS, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
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Name: Xxxxxxx X. Xxxxxxx
Title: Managing Director
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