EXHIBIT 10.7
AGREEMENT
This Agreement is made as of April 19, 2001 (the "Agreement"), by and
between TRANSIT GROUP, INC., a Florida corporation (the "Company"), T. XXXXX
XXXXX ("Xxxxx") and the ECD Trust (the "Trust") (Xxxxx and the Trust are herein
collectively referred to as the "Lead Investor").
WITNESSETH:
WHEREAS, Company desires to issue and sell to the Trust, and the Trust
desires to purchase and accept from the Company, upon the terms and conditions
hereinafter provided, 700,000 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 "Preferred Stock");
WHEREAS, Company desires to issue to the Trust and the Trust desires to
accept from Company, 400,000 shares of the Preferred Stock as a placement fee;
and
WHEREAS, the Company and Xxxxx intend to enter into that certain Stock
Purchase Agreement, dated as of April 19, 2001 (the "2001 Stock Purchase
Agreement"), with Xxxxxxx X. Xxxxxx, Xxxxxx X. Xxxxxx, Xxxxxxx X. Xxxxxx,
Xxxxxxx X. Xxxxxx and Xxxxxxx X. Xxxxxx (collectively, the "Sellers").
NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter set forth and in order to induce the Lead Investor to
accept the Preferred Stock and enter into the 2001 Stock Purchase Agreement, the
parties hereto do hereby agree as follows.
1. Preferred Stock.
(a) Subject to the terms and conditions set forth in this Agreement,
the Trust herewith purchases from Company, and Company herewith issues and sells
to the Trust a total of 700,000 shares of Preferred Stock, for an aggregate
purchase price of $3,500,000, payable in full simultaneously herewith. The
Company has herewith delivered to the Trust a certificate representing the
Preferred Stock purchased by the Trust registered in such names and in such
denominations as the Trust has requested against delivery by the Trust of the
purchase price therefor by wire transfer of funds to the account of Company.
(b) Subject to the terms and conditions set forth in this Agreement,
the Company herewith issues to the Trust 400,000 shares of Preferred Stock as a
placement fee for no additional cash consideration. The Company has herewith
delivered to the Trust a certificate representing the Preferred Stock issued to
the Trust by the Company registered in such names and in such denominations as
the Trust has requested.
(c) In connection with the transactions contemplated hereby, the
Company shall deliver or cause to be delivered herewith such certificates or
documents reasonably requested by the Lead Investor.
2. Use of Proceeds. Company shall use the proceeds of the sale of the
Preferred Stock to provide for its working capital, including repayment of
revolving credit indebtedness.
3. Company's Representations and Warranties.
(a) Except as set forth in the disclosure schedules as set forth on
Exhibit "C" hereto, the Company hereby represents and warrants to the Lead
Investor that the representations and warranties set forth in Exhibit "B" hereto
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 and
such representations and warranties are hereby incorporated by reference herein.
Solely for purposes hereof, the term "Convertible Preferred Stock" as used in
such representations and warranties shall mean the Preferred Stock and the term
"Closing Date" shall mean the date hereof.
(b) The Company represents and warrants to the undersigned that the
Private Placement Memorandum of the Company dated April 6, 2001, as supplemented
April 12, 2001, including all attachments, schedules and appendices thereto,
relating to the offering by the Company of up to 4,000,000 shares of its Series
B Convertible Preferred Stock (collectively, the "Confidential Offering
Memorandum"), or any statement, representation or warranty by the Company in any
document entered into by the Company in connection with the issuance of the
Preferred Stock to the Trust, does not contain any untrue statement of a
material fact or omits to state a material fact necessary to make the statements
made therein, in light of the circumstances under which they were made, taken as
a whole, not misleading.
4. Company's Covenants. The Company covenants and agrees as follows:
(a) The covenants set forth in Section 5.1 (other than 5.1(b)(i)) of
the GE Agreement, as defined in Exhibit "B" hereto, are made a part hereof and
are hereby incorporated by reference herein as if made on the date hereof.
Solely for purposes hereof, all terms defined therein shall have the meanings
defined in the GE Agreement, except the term "Purchaser" shall mean the Lead
Investor and, for purposes other than the introductory paragraph of Section 5.1
thereof, the term "Convertible Preferred Stock" shall mean the Preferred Stock.
(b) The Company will not replace or remove its current Chief Financial
Officer without the concurrence of Xxxxx.
(c) The Company will deliver to Lead Investor 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.
(d) The Company shall cause its auditors to complete the audit of the
financial statements for the Company's fiscal year ended December 31, 2000 no
later than June 15, 2001.
(e) The Company will deliver to Lead Investor, 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.
(f) Xxxxx shall have the exclusive right to appoint three (3) members
of the Board of Directors of the Company (the "Board"). From and after the date
of original issuance of the
Preferred Stock, the total number of directors on the Board shall be no more
than six (6), unless holders of the Series A Preferred Stock, no par value, of
the Company, elect to exercise their right to appoint up to two (2) directors,
in which case the total number of directors on the Board shall be six (6) plus
such number of directors so appointed by such holders of Series A Preferred
Stock.
(g) If requested by Lead Investor, Company will deliver to Lead
Investor such other information respecting the business, financial condition or
prospects of the Company or any of its Subsidiaries (as such term is defined in
the GE Agreement) as Lead Investor may from time to time reasonably request.
(h) At the closing of the issuance of the Preferred Stock, the Company
shall pay the amount of the Lead Investor's reasonable out-of-pocket expenses
and reasonable fees and expenses of Lead Investor's counsel relating to this
Agreement, the Amendment and Joinder to Amended and Restated Registration Rights
Agreement between the Company and certain shareholders of the Company dated as
of the date hereof, the Amendment to Stockholders' Agreement between the Company
and certain shareholders of the Company dated as of the date hereof, and the
2001 Stock Purchase Agreement (the "Transaction Documents"). In addition,
Company shall pay all reasonable out-of-pocket expenses of Lead Investor,
including all legal expenses, in connection with (i) any amendment, modification
or waiver, or consent with respect to, any of the Transaction Documents and (ii)
any attempt to enforce any rights of Lead Investor against Company, any
Subsidiary (as such term is defined in the GE Agreement) of Company or any other
Person (as such term is defined in the GE Agreement), that may be obligated to
the Lead Investor by virtue of any of the Transaction Documents (excluding the
2001 Stock Purchase Agreement, except as provided by Section 8(c) below)
(including the reasonable fees and expenses of all of its counsel and
consultants retained in connection with such Transaction Documents and the
transactions contemplated thereby).
(i) The Company shall be responsible for and pay the amount of any
stamp, excise, documentation or similar tax on the stock certificates
representing the Preferred Stock to be issued to the Lead Investor and any
related documents.
5. Restrictions on Transfer. The Lead Investor hereby acknowledges that
the shares of Preferred Stock being sold hereby are "restricted securities"
within the meaning of Rule 144 of the Securities Act and will be eligible for
resale only if registered under the Securities Act or if all the requirements of
Rule 144 are complied with fully at the time of the resale.
6. Legends. Each certificate representing the 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 EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT OR AN EXEMPTION THEREFROM."
7. Representations of the Trust. The Trust certifies that the information
contained in the following is true and correct:
(a) The undersigned is a trust, with total assets in excess of
$5,000,000, not formed for the specific purpose of acquiring the Preferred
Stock, whose purchase is directed by a sophisticated person who is either alone
or with a purchaser representative has such knowledge and experience in
financial and business matters that he is capable of evaluating the merits and
risks of the prospective investment.
(b) The Trust hereby acknowledges receipt of the Confidential Offering
Memorandum setting forth the relevant terms and conditions of this offering.
(c) The Trust is aware that the Preferred Stock has not been
registered, nor has the Company contemplated registration of the Preferred
Stock, under the Securities Act of 1933, as amended (the "Securities Act"), or
under the securities laws of any state, but are being offered pursuant to
exemptions from the registration requirements of federal and state securities
laws.
(d) The Trust understands that no federal or state agency has
recommended or endorsed the purchase of the Preferred Stock or passed upon the
adequacy or accuracy of the information set forth in the Confidential Offering
Memorandum or any other offering materials.
(e) The Trust acknowledges that neither the Company nor any person
acting on its behalf offered to sell the undersigned securities to the Trust by
means of any form of general solicitation or advertising.
(f) The Trust acknowledges that it has been advised to consult with
its attorney regarding legal matters concerning the Company and to consult with
its tax advisor regarding the tax consequences of investing in the Company. The
Trust is aware that there can be no assurances regarding the federal, state,
local or other tax consequences of an investment in the Company.
8. Survival; Indemnification.
(a) Survival. All of the representations and warranties made by any
party in this Agreement shall survive the purchase and sales of the Preferred
Stock until the second anniversary of the date hereof; provided, however, that
(i) the representations and warranties of the Company under Section 4.10 of the
Exhibit "B" shall survive until the fourth anniversary of the date hereof and
(ii) the representations and warranties of Company under Sections 4.13 and 4.19
of Exhibit "B" shall survive for their respective statutes of limitations.
(b) Indemnification for Breach. The Company hereby agrees to indemnify
and hold harmless the Lead Investor, its affiliates and trustees from and
against all damages, costs (including without limitation attorneys' fees and
expenses) and claims (including third-party claims) for any breach or violation
by the Company of any representation, warranty, agreement or covenant set forth
herein or contained in any certificate or document delivered pursuant hereto
or arising out of any Environmental Law (as defined in the GE Agreement)
applicable to the Company or its subsidiaries. Notwithstanding anything to the
contrary herein, the Company shall only be liable to the Lead Investor for
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 8(a) hereof; (ii) which exceed an aggregate
amount equal to $70,000 and only for such losses in excess thereof, and (iii) up
to an aggregate amount of $2,100,000.
(c) Indemnification for payments to Sellers. In addition to the
indemnification set forth in Section 8(b) above, the Company covenants and
agrees to indemnify and hold the Lead Investor and affiliates and trustees
thereof harmless (including without limitation attorneys fees and expenses) from
and against, and to reimburse Lead Investor for, any and all amounts paid by
Lead Investor or affiliates or trustees thereof to the Sellers in the event that
the Company fails to perform its obligations (including all or any part of the
Purchase Price (as defined in the 2001 Stock Purchase Agreement) or interest
accrued thereon) to the Sellers as set forth in the 2001 Stock Purchase
Agreement. Such reimbursement shall be made by the Company within five (5) days
after Lead Investor or affiliates or trustees thereof has paid any such amount.
9. Payment. The Company has simultaneously with the execution hereof paid
to the Lead Investor $225,118, such amount representing all amounts previously
paid by Lead Investor to the Sellers or parties to the Reorganization Agreement
as interest for the deferral of the exercise of Sellers' or such parties'
redemption rights under the Reorganization Agreement (as such term is defined in
the 2001 Stock Purchase Agreement) and that certain Stock Purchase Agreement
dated as of August 29, 1997 among the Lead Investor and the other signatories
thereto, plus an additional amount of $121,217 representing the effect of Lead
Investor's marginal tax rate.
10. Sale of Shares to Satisfy Put Obligation. Following the initial
issuance of the Preferred Stock, the Company will, at its expense, engage the
services of an investment banker to undertake to sell such number of shares of
the Company in a private transaction to receive net cash consideration of an
amount equal to the Company's remaining put obligation under the 2001 Stock
Purchase Agreement and use such consideration to pay such remaining put
obligation. In the event that the Company does not do so or such net cash
consideration is less than such remaining put obligation, then the Company will,
at its expense, engage the services of an investment banker to undertake to sell
such number of shares of stock ownership in the Company of the Lead Investor or
any affiliate thereof in a private transaction so the net proceeds of such
transaction will be at least equal to the then amount that the Sellers have not
released the Lead Investor. Such net proceeds will be for the Lead Investor's
(or such affiliate's) account.
11. Notices. All notices, requests, demands or other communications which
are required or permitted to be given under this Agreement shall be in writing
and shall be deemed to have been duly given upon the delivery or mailing
thereof, as the case may be, if delivered personally or sent by registered or
certified mail, return receipt requested, postage prepaid:
(a) if to the Company, mail to the attention of:
Transit Group, Inc.
Overlook III
0000 Xxxxx Xxxxx Xxxx
Xxxxxxx, XX 00000
(b) if to Lead Investor, mail to the attention of:
T. Xxxxx Xxxxx
0000 Xxx Xxxxx Xxxxxxxxx
Xxxxxxxxxxxx, XX 00000
with a copy to:
LeBoeuf, Lamb, Xxxxxx & XxxXxx, L.L.P.
00 X. Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxxx, XX 00000
(000) 000-0000
Attn: Xxxxxx Xxxxxxxx, Esq.
12. Headings. Headings of the sections in this Agreement are for reference
only and shall not be deemed to have any substantive effect.
13. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall be deemed to be one and the same instrument.
14. Successors and Assigns; Assignability. Neither this Agreement nor any
right, remedy, obligation or liability arising hereunder or by reason hereof
shall be assignable by the Company.
15. Remedies. Lead Investor, in addition to being entitled to exercise all
rights granted by law, including recovery of damages, will be entitled to
specific performance of its rights under this Agreement. Company agrees that
monetary damages would not be adequate compensation for any loss incurred by
reason of a breach by it of the provisions of this Agreement and hereby agrees
to waive the defense in any action for specific performance that a remedy at law
would be adequate. In any action or proceeding brought to enforce any provision
of this Agreement or where any provision hereof is validly asserted as a
defense, the successful party shall be entitled to recover reasonable attorney's
fees in addition to any other available remedy.
16. Severability. In the event that any one or more of the provisions
contained in this Agreement shall be determined to be invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision or provisions in every other respect and
the remaining provisions of this Agreement shall not be in any way impaired.
17. Publicity. Neither Company nor Lead Investor shall issue any press
release or make any public disclosure regarding the transactions contemplated
hereby unless such press release or
public disclosure is approved by the other party in advance. Notwithstanding the
foregoing, each of the parties hereto may, in documents required to be filed by
it with the SEC or other regulatory bodies, make such statements with respect to
the transactions contemplated hereby as each may be advised by counsel is
legally necessary or advisable, and may make such disclosure as it is advised by
its counsel is required by law.
18. Entire Agreement. This Agreement, the exhibits and schedules hereto
and the Transaction Documents between Company and Lead Investor represent the
entire understanding and agreement between the parties hereto with respect to
the subject matter hereof and supercedes all prior and contemporaneous
agreements, understandings, negotiations and discussions, whether oral or
written.
19. Governing Law; Waiver of Jury Trial. This Agreement shall be governed
by, construed and enforced in accordance with the laws of the State of Florida
without regard to the principles thereof relating to conflict of laws. Each of
the parties hereby submits to personal jurisdiction and waives any objection as
to venue in the federal or state courts located in the County of Xxxxx, State of
Florida. Service of process on the parties in any action arising out of or
relating to this Agreement shall be effective if mailed to the parties in
accordance with Section 11 hereof. The parties hereto waive all right to trial
by jury in any action or proceeding to enforce or defend any rights under this
Agreement.
20. Binding Effect; Benefits. Except as otherwise provided herein, this
Agreement shall be binding upon and inure to the benefit of the parties to this
Agreement and their respective successors and permitted assigns. Nothing in this
Agreement, express or implied, is intended or shall be construed to give any
person other than the parties to this Agreement or their respective successors
or assigns any legal or equitable right, remedy or claim under or in respect of
any agreement or any provision contained herein.
21. Amendment. No amendment or waiver of any provision of this Agreement
or any other Transaction Document nor consent to any departure by Company
therefrom, shall in any event be effective unless the same shall be in writing
and signed by Company and the Lead Investor, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given. No action taken pursuant to this Agreement, including, without
limitation, any investigation by or on behalf of any party, shall be deemed to
constitute a waiver by the party taking such action, of compliance with any
representations, warranties, covenants or agreements contained herein. The
waiver by any party hereto of a breach of any provision of this Agreement shall
not operate or be construed as a waiver of any preceding or succeeding breach
and no failure by either party to exercise any right or privilege hereunder
shall be deemed a waiver of such party's rights or privileges hereunder or shall
be deemed a waiver of such party's rights to exercise the same at any subsequent
time or times hereunder.
IN WITNESS WHEREOF, the Company and Lead Investor have caused this Agreement to
be duly executed in their respective names, as of the date first written above.
TRANSIT GROUP, INC.
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------
Xxxxxx X. Xxxxxx, President and CEO
/s/ T. Xxxxx Xxxxx
-----------------------------------
T. Xxxxx Xxxxx
ECD TRUST
By: /s/ T. Xxxxx Xxxxx
-----------------------------------
T. Xxxxx Xxxxx, Trustee
