1
EXHIBIT 1.1
5,500,000 Shares
SUNBELT AUTOMOTIVE GROUP
Common Stock
($0.001 Par Value)
UNDERWRITING AGREEMENT
XXXXXXX XXXXX & ASSOCIATES, INC.
As Representative of the
Several Underwriters
c/o Raymond Xxxxx & Associates, Inc.
000 Xxxxxxxx Xxxxxxx
Xx. Xxxxxxxxxx, Xxxxxxx 00000
Ladies and Gentlemen:
August [ ], 1998
Sunbelt Automotive Group, Inc., a Georgia corporation (the "Company"),
subject to the terms and conditions stated herein, proposes to issue and sell to
the several underwriters (the "Underwriters") named in Schedule I hereto for
whom you are acting as representative (the "Representative") an aggregate of
5,500,000 shares of the Company's Common Stock, $0.001 par value per share (the
"Firm Shares"). The respective amounts of the Firm Shares to be so purchased by
the several Underwriters are set forth opposite their names in Schedule I
hereto. In addition, the Company has agreed to sell, at the Underwriters' option
and subject to the terms and conditions stated herein, an aggregate of 825,000
additional shares of the Company's Common Stock (the "Additional Shares") to
cover over-allotments by the Underwriters, if any. The Firm Shares and the
Additional Shares (to the extent the aforementioned option is exercised) are
herein collectively referred to as the "Shares."
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As the Representative, you have advised the Company (i) that you are
authorized to enter into this Underwriting Agreement (the "Agreement") on behalf
of the several Underwriters; and (ii) that the several Underwriters are willing,
acting severally and not jointly, to purchase the number of Firm Shares set
forth opposite their respective names in Schedule I, plus their pro rata portion
of the Additional Shares if you elect to exercise the over-allotment option in
whole or in part for the accounts of the several Underwriters.
In consideration of the mutual agreements contained herein and of the
interests of the parties in the transactions contemplated hereby, the parties
hereto agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
(a) The Company represents and warrants to each of the Underwriters as
follows:
(i) A registration statement on Form S-1 (File No. 333-51451)
with respect to the Shares has been prepared by the Company in
conformity with the requirements of the Securities Act of 1933 (the
"Act"), and the Rules and Regulations (the "Rules and Regulations") of
the Securities and Exchange Commission (the "Commission") thereunder
and has been filed with the Commission under the Act. Copies of such
registration statement, including any amendments thereto, the
preliminary prospectuses (meeting the requirements of Rule 430A under
the Act) contained therein and the exhibits, financial statements and
schedules, as finally amended and revised, have heretofore been
delivered by the Company to you. Such registration statement, together
with any registration statement filed by the Company pursuant to Rule
462(b) the Act, herein referred to as the "Registration Statement,"
which shall be deemed to include all information omitted therefrom in
reliance upon Rule 430A and contained in the Prospectus referred to
below, has become effective under the Act and no post-effective
amendment to the Registration Statement has been filed as of the date
of this Agreement. "Prospectus" means (A) the form of prospectus first
filed with the Commission pursuant to Rule 424(b) or (B) if the Company
elects to rely on Rule 434 under the Act, the last preliminary
prospectus included in the Registration Statement filed prior to the
time it becomes effective or filed pursuant to Rule 424(a) under the
Act that is delivered by the Company to the Underwriters for delivery
to purchasers of the Shares, together with the term sheet or
abbreviated term sheet filed with the Commission pursuant to Rule
424(b)(7) under the Act (the "Rule 434 Prospectus"). Each preliminary
prospectus included in the Registration Statement prior to the time it
becomes effective is herein
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referred to as a "Preliminary Prospectus."
(ii) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Georgia, with full power and authority (corporate and other) to own
or lease its properties and conduct its business (including, upon
closing of the Merger and the Acquisitions (each as defined in the
Registration Statement), the properties and businesses to be acquired
pursuant to the Merger and the Acquisitions) as described in the
Registration Statement. Each of the subsidiaries of the Company as
listed in Exhibit 21.1 to Item 16(a) of the Registration Statement,
including, but not limited to, the entities to be acquired by the
Company pursuant to the Merger and the Acquisitions (collectively, the
"Subsidiaries") has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, with full power and authority (corporate and other) to
own or lease its properties and conduct its business as described in
the Registration Statement. The Subsidiaries are the only subsidiaries,
direct or indirect, of the Company. The Company and each of the
Subsidiaries are duly qualified to transact business and are in good
standing in all jurisdictions in which each conducts any business or
owns or leases properties so as to require such qualification, except
as would not result in any material adverse event or any development
involving a prospective material adverse change in or affecting the
capital stock, earnings, business, management, properties, assets,
rights, operations, condition (financial or otherwise), or prospects of
the Company and its Subsidiaries, individually or taken as a whole,
whether or not occurring in the ordinary course of business (a
"Material Adverse Event"). The Company and each of its Subsidiaries has
good and marketable title in fee simple to all the properties and
assets owned by them, in each case free and clear of all liens,
mortgages, pledges, charges, encumbrances and defects of any kind
except such as are described or referred to in the Registration
Statement, and any real properties and buildings held under lease by
the Company or any of its Subsidiaries are held by them under valid,
existing and enforceable leases, except as would not result in a
Material Adverse Event.
(iii) All of the outstanding shares of capital stock of each
of the Subsidiaries have been duly authorized and validly issued, are
fully paid and non-assessable and are owned by the Company or another
Subsidiary free and clear of all liens, encumbrances and equities and
claims; provided, however, that with respect to the entities to be
acquired pursuant to the Xxx Automotive Group Acquisition, the Xxxx
Xxxx Acquisition, the Day's Chevrolet Acquisition, the Xxxxxxxxxx
Acquisition and the Xxxxxxxxx Acquisition (each as
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defined in the Registration Statement and hereinafter collectively
referred to as the "Closing Date Subsidiaries"), the representation of
ownership is made only as of the Closing Date and any Additional
Closing Date under this Agreement. No options, warrants, preemptive
rights or other rights to purchase, agreements or other obligations to
issue or other rights to convert any obligations into shares of capital
stock or ownership interests in the Subsidiaries are outstanding,
except pursuant to the Acquisition Agreements (as hereinafter defined)
with respect to the Closing Date Subsidiaries.
(iv) Each of the agreements (the "Acquisition Agreements")
governing the Acquisitions and the agreement governing the Merger (the
"Merger Agreement") has been duly authorized, executed and delivered by
the Company, and, assuming due authorization, execution and delivery by
the other parties thereto, constitutes a legally valid and binding
obligation of each such party and is enforceable against each such
party in accordance with its terms; to the best of the Company's
knowledge, each of the representations and warranties of the
Subsidiaries and of each of the other parties set forth in the
Acquisition Agreements and the Merger Agreement, was true and correct
at the time such representations and warranties were made and will be
true and correct at and as of the Closing Date (as defined herein) or
the Effective Date (as defined herein) as may be the case, as if made
at and as of such date (other than to the extent any such
representation and warranty is expressly made as to only a certain
other date). The term "Effective Date" shall mean the date upon which
the Registration Statement is declared effective under the Act.
(v) This Agreement has been duly authorized, executed and
delivered by the Company.
(vi) The statistical and market related data included in the
Registration Statement are based on or derived from sources that the
Company reasonably believes to be reliable and accurate.
(vii) The outstanding shares of Common Stock of the Company
have been duly authorized and validly issued and are fully paid and
non-assessable; the Shares to be issued and sold by the Company have
been duly authorized and when issued and paid for as contemplated
herein will be validly issued, fully paid and non-assessable; and no
preemptive rights of shareholders exist with respect to any of the
Shares or the issuance and sale thereof; and all corporate action
required to be taken for the authorization,
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issuance and sale of such Shares has been validly taken. Neither the
filing of the Registration Statement nor the offering or sale of the
Shares as contemplated by this Agreement gives rise to any rights,
other than those which have been waived or satisfied, for or relating
to the registration of any shares of Common Stock, except as described
in the Registration Statement.
(viii) The information set forth under the caption
"Capitalization" in the Prospectus is true and correct. All of the
Shares conform in all material respects to the description thereof
contained in the Registration Statement. The form of certificates for
the Shares conforms to the corporate law of the jurisdiction of the
Company's incorporation.
(ix) The Commission has not issued or, to the best of the
Company's knowledge, threatened to issue an order preventing or
suspending the use of any Prospectus relating to the proposed offering
of the Shares nor instituted proceedings for that purpose. The
Registration Statement contains, and the Prospectus and any amendments
or supplements thereto will contain, all material information which is
required to be included therein by, and will conform in all material
respects to the requirements of the Act and the Rules and Regulations.
The Registration Statement and any amendment thereto do not contain,
and will not contain, any untrue statement of a material fact and do
not omit, and will not omit, to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading. The Prospectus and any amendments and supplements thereto
do not contain, and will not contain, any untrue statement of material
fact, and do not omit, and will not omit, to state any material fact
required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading; provided, however, that the Company makes no
representations or warranties as to information contained in or omitted
from the Registration Statement or the Prospectus, or any such
amendment or supplement, in reliance upon, and in conformity with,
written information furnished to the Company by or on behalf of any
Underwriter through the Representative, specifically for use in the
preparation thereof. There are no statutes, regulations, contracts or
other documents that are required to be described in the Registration
Statement or the Prospectus or to be filed as exhibits to the
Registration Statement that are not described or filed as required.
(x) The consolidated financial statements of the Company and
the Subsidiaries,
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together with related notes and schedules as set forth in the
Registration Statement, present fairly the financial position and the
results of operations and cash flows of the Company and the
Subsidiaries, at the indicated dates and for the indicated periods.
Such financial statements and related schedules have been prepared in
accordance with generally accepted principles of accounting,
consistently applied throughout the periods involved, except as
disclosed therein, and all adjustments necessary for a fair
presentation of results for such periods have been made. The summary
and selected financial data included in the Registration Statement
presents fairly the information shown therein and such data has been
compiled on a basis consistent with the financial statements presented
therein and the books and records of the Company. The pro forma
financial information included in the Registration Statement and the
Prospectus presents fairly the information shown therein, has been
prepared in accordance with the Commission's rules and guidelines with
respect to pro forma financial information, has been properly compiled
on the pro forma bases described therein, and, in the opinion of the
Company, the assumptions used in the preparation thereof are reasonable
and the adjustments used therein are appropriate to give effect to the
transactions or circumstances referred to therein.
(xi) Ernst & Young LLP, Pyke & Xxxxxx, CPAs and Xxxxx, Monk &
Company, who have certified certain of the financial statements filed
with the Commission as part of the Registration Statement, are
independent public accountants as required by the Act and the Rules and
Regulations.
(xii) There is no action, suit, claim, investigation or
proceeding pending or, to the best of the Company's knowledge,
threatened against or affecting the Company or any of the Subsidiaries
or any of their respective properties or to which the Company or any of
the Subsidiaries or any of their respective properties is or may be a
party or to which any property of the Company or the Subsidiaries is or
may be the subject, before any court or administrative agency or
otherwise which, singly or in the aggregate, if determined adversely to
the Company or any of its Subsidiaries could reasonably be expected to
result in a Material Adverse Event or might prevent the consummation of
the transactions contemplated hereby, except as set forth in the
Registration Statement; the disclosure in the Registration Statement
regarding legal proceedings complies in all material respects with Item
103 of Regulation S-K under the Act.
(xiii) The Company and the Subsidiaries have good and marketable
title in fee
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simple to all of the properties and assets reflected in the financial
statements (or as described in the Registration Statement) hereinabove
described, in each case free and clear of all liens, mortgages,
pledges, charges, encumbrances or defects of any kind except those
reflected in such financial statements (or as described in the
Registration Statement) or except as would not result in a Material
Adverse Event. The Company and the Subsidiaries occupy their leased
properties under valid and binding leases conforming in all material
respects to the descriptions thereof set forth in the Registration
Statement. Any such property utilized by the Company or its
Subsidiaries as an automotive dealership or repair center is currently
zoned in a classification such as will permit the operation of such
property as an automotive dealership or repair center with related
parking and the conditions, if any, to the granting of zoning of such
property have been satisfied and the Company has no knowledge of any
pending or threatened application for changes in such zoning applicable
to such property or any portions thereof.
(xiv) Since the respective dates as of which information is
given in the Registration Statement, there has not been any Material
Adverse Event. There has not been any material transaction entered into
or any material transaction that is probable of being entered into by
the Company or the Subsidiaries, other than transactions entered into
in the ordinary course of business and changes and transactions
described in the Registration Statement. The Company and the
Subsidiaries have no material contingent obligations which are not
disclosed in the Company's financial statements which are included in
the Registration Statement.
(xv) The Company and the Subsidiaries have filed all federal,
state, local and foreign income tax returns which have been required to
be filed and have paid all taxes indicated by said returns and all
assessments received by them or any of them to the extent that such
taxes have become due and are not being contested in good faith. All
tax liabilities have been adequately provided for in the financial
statements of the Company.
(xvi) Neither the Company nor any of the Subsidiaries is or with
the giving of notice or lapse of time or both, will be, in violation of
or in default under its Articles or Certificate of Incorporation or
Bylaws, or under any agreement, lease, contract, indenture, mortgage,
deed of trust or other instrument or obligation, including (except as
disclosed in the Registration Statement) all Franchise Agreements (as
defined in the Registration Statement) with any automobile manufacturer
(a "Manufacturer"), or any other agreement with Manufacturers, to which
it is a party or by which it, or any of its properties, is
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bound, other than any such violation or default the occurrence of which
would not result in a Material Adverse Event. Except as disclosed in
the Registration Statement, the execution and delivery of this
Agreement and each of the Merger Agreement and the Acquisition
Agreements and the consummation of the transactions contemplated herein
and therein and the fulfillment of the terms hereof and thereof will
not conflict with or result in a breach of any of the terms or
provisions of, or constitute a default under, any agreement, lease,
contract, indenture, mortgage, deed of trust or other instrument or
obligation, including all agreements with Manufacturers, to which the
Company or any Subsidiary is a party, or of the Articles or Certificate
of Incorporation or Bylaws of the Company or any of its Subsidiaries,
or any Order, rule or regulation applicable to the Company or any of
its Subsidiaries of any United States federal, state, local or
municipal court or of any United States regulatory body or
administrative agency or other governmental body having jurisdiction
over the Company or its Subsidiaries.
(xvii) Each of the Company and the Subsidiaries owns, possesses
or has obtained all licenses, approvals, consents, orders, permits,
designations, declarations or other filings or authorizations by or
with any United States federal, state, local or municipal, regulatory,
administrative or other governmental body necessary in connection with
the execution and delivery by the Company of this Agreement and the
consummation of the transactions herein contemplated (except such
additional steps as may be required by the Commission, the National
Association of Securities Dealers, Inc. (the "NASD") or such additional
steps as may be necessary to qualify the Shares for public offering by
the Underwriters under state securities or Blue Sky laws) has been
obtained or made and such licenses, approvals, consents, orders,
permits, designations, declarations, or other filings or authorizations
are in full force and effect.
(xviii) Each of the Company and the Subsidiaries owns, possesses
or has obtained all licenses, approvals, consents, orders, permits,
designations, declarations or other filings or authorizations
(collectively, "Permits") by or with any United States federal, state,
local or municipal, regulatory, administrative or other governmental
body, which are necessary to own or lease, as the case may be, and to
operate its properties and to conduct its businesses as conducted as of
the date hereof and as proposed to be conducted, except where the
failure to own, possess or obtain such Permits would not result in a
Material Adverse Event, and neither has the Company or any of its
Subsidiaries received any notice of any proceeding relating to any
revocation or modification of any such Permit.
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(xix) No consent, approval or other authorization of any
automobile Manufacturer is required for the issuance and sale of the
Shares to be sold by the Company or the consummation of the transactions
contemplated herein or in the Acquisition Agreements or the Merger
Agreement, except (i) the consent of each of the automobile
Manufacturers named in Schedule II hereto and (ii) as described in the
Prospectus.
(xx) Each agreement to which the Company or any of its
Subsidiaries is a party and pursuant to which the Company or any of its
Subsidiaries acts as a franchisee or dealer, whereby it sells products,
including, without limitation, the Franchise Agreements listed on
Schedule III hereto, each such Franchise Agreement or other agreement
being listed as an exhibit to the Registration Statement, assuming due
authorization, execution and delivery by the other party or parties
thereto, is a valid and binding agreement and, except as disclosed in
the Registration Statement or on Schedule III hereto, no default has
occurred or is continuing thereunder, except such a default which would
not result in a Material Adverse Event.
(xxi) Neither the Company, nor to the best of the Company's
knowledge, any of its affiliates, has taken or may take, directly or
indirectly, any action designed to cause or result in, or which has
constituted or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of the shares of Common
Stock to facilitate the sale or resale of the Shares. The Company
acknowledges that the Underwriters may engage in passive market making
transactions in the Shares on the Nasdaq National Market in accordance
with Regulation M under the Securities Exchange Act of 0000 (xxx
"Xxxxxxxx Xxx").
(xxii) Neither the Company nor any Subsidiary is an "investment
company" within the meaning of such term under the Investment Company
Act of 1940, as amended (the "1940 Act"), and the rules and regulations
of the Commission thereunder.
(xxiii) Each of the Company and its Subsidiaries maintains a
system of internal accounting controls sufficient to provide reasonable
assurances that (A) transactions are executed in accordance with
management's general or specific authorization, (B) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to
maintain accountability for assets, (C) access to assets is permitted
only in accordance with management's general or specific authorization,
and (D) the recorded accountability for assets is
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compared with existing assets at reasonable intervals and appropriate
action is taken with respect to any differences.
(xxiv) The Company and each of its Subsidiaries carry, or are
covered by, insurance in such amounts and covering such risks as the
Company believes are adequate for the conduct of their respective
businesses and the value of their respective properties.
(xxv) The Company and its Subsidiaries are in compliance in all
material respects with all presently applicable provisions of the
Employee Retirement Income Security Act of 1974, as amended, including
the regulations and published interpretations thereunder ("ERISA"), no
"reportable event" (as defined in ERISA) has occurred with respect to
any "pension plan" (as defined in ERISA) for which the Company or any
of its Subsidiaries would have any liability; the Company and its
Subsidiaries have not incurred and do not expect to incur liability
under (A) Title IV of ERISA with respect to termination of, or
withdrawal from, any "pension plan" or (B) Sections 412 or 4971 of the
Internal Revenue Code of 1986, as amended, including the regulations
and published interpretations thereunder (the "Code"); and each
"pension plan" for which the Company or any of its Subsidiaries would
have any liability that is intended to be qualified under Section
401(a) of the Code is so qualified in all material respects and nothing
has occurred, whether by action or by failure to act, which would cause
the loss of such qualification.
(xxvi) The Company's application to list the Shares on the
Nasdaq National Market has been approved, subject to the notice of
issuance.
(xxvii) To the best of the Company's knowledge, there are no
affiliations or associations between any member of the NASD and any of
the Company's officers, directors or 5% or greater security holders,
except as otherwise disclosed in writing to the Representative.
(xxviii) To the best of the Company's knowledge, any Year 2000
problem relating to the Company's or any of its Subsidiaries'
management information systems, computer hardware or software or the
management information systems, computer hardware or software of any of
the Manufacturers, distributors or other vendors to the Company or any
of its Subsidiaries will not result in a material liability to the
Company and will not otherwise result in a Material Adverse Event.
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(xix) To the best of the Company's knowledge, no labor problem
exists with its employees or with employees of any of the Subsidiaries
that could adversely affect the Company and its Subsidiaries,
individually or in the aggregate, and the Company is not aware of any
existing or imminent labor disturbance by the employees of the
Company's or its Subsidiaries' principal suppliers (other than General
Motors Corporation), contractors or customers that could be expected to
result in a Material Adverse Event.
(xxxi) Except as disclosed in the Registration Statement and
except as would not individually or in the aggregate, if the subject of
an unfavorable decision, ruling or finding, result in a Material
Adverse Event, (A) the Company and each of its Subsidiaries are each in
compliance with all applicable Environmental Laws, (B) the Company and
each of its Subsidiaries have all permits, authorizations and approvals
required under any applicable Environmental Laws and are each in
compliance with their requirements, (C) there are no pending or, to the
Company's knowledge, threatened Environmental Claims against the
Company or its Subsidiaries, and (D) there are no circumstances known
to the Company with respect to any property or operations of the
Company or its Subsidiaries that could reasonably be anticipated to
form the basis of an Environmental Claim against the Company or its
Subsidiaries.
For purposes of this Agreement, the following terms shall have
the following meanings: "Environmental Law" means any United States
federal state, local or municipal law, rule, regulation, ordinance,
code, policy or rule of common law and any judicial or administrative
interpretation thereof, including any judicial or administrative order,
consent decree or judgment applicable to the business of the Company
and the Subsidiaries, relating to the environment, health, safety or
any chemical, material or substance, exposure to which is prohibited,
limited or regulated by any governmental authority. "Environmental
Claims" means any and all administrative, regulatory or judicial
actions, suits, demands, demand letters, claims, liens, notice of
noncompliance or violation, investigations or proceedings relating to
any Environmental Law.
(xxxii) No relationship, direct or indirect, exists between or
among the Company or any of the Subsidiaries on the one hand, and the
directors, officers, stockholders, customers or suppliers of the
Company or any of the Subsidiaries on the other hand, which is required
by the Securities Act to be described in the Registration Statement
which is not so described.
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(xxxiii) No Subsidiary of the Company is currently prohibited,
directly or indirectly, from paying any dividends to the Company, from
making any other distribution on such Subsidiary's capital stock, from
repaying to the Company any loans or advances to such Subsidiary from
the Company or from transferring of any of such Subsidiary's property
or assets to the Company or any other Subsidiary of the Company, except
as described in or contemplated by the Prospectus.
2. PURCHASE, SALE AND DELIVERY OF THE FIRM SHARES
(a) On the basis of the representations, warranties and covenants
herein contained, and subject to the conditions herein set forth, the Company
agrees to sell to the Underwriters and each Underwriter agrees, severally and
not jointly, to purchase, at a price of [$ ] per share, the number of Firm
Shares set forth opposite the name of each Underwriter in Schedule I hereof,
subject to adjustments in accordance with Section 9 hereof.
(b) Payment for the Firm Shares to be sold hereunder is to be made by
official bank check or checks to the order of, or by wire transfer to the
account of, the Company, in immediately available funds against delivery of
certificates therefor to the Representative for the several accounts of the
Underwriters. Such payment and delivery are to be made at the offices of Xxxxxxx
Xxxxx & Associates, Inc., 000 Xxxxxxxx Xxxxxxx, Xx. Xxxxxxxxxx, Xxxxxxx 00000,
at 10.00 a.m., eastern daylight time, on the third (or if the Shares are priced,
as contemplated by Rule 15c6-1(c) under the Exchange Act, after 4:30 p.m.,
Washington, D.C. time, the fourth) full business day after the date of this
Agreement or at such other time and date as you and the Company shall agree upon
in writing, such time and date being herein referred to as the "Closing Date."
(As used herein, "business day" means a day on which the New York Stock Exchange
is open for trading and on which banks in New York are open for business and not
permitted by law or executive order to be closed.) The certificates for the Firm
Shares will be delivered in such denominations and in such registrations as the
Representative requests in writing not later than the second full business day
prior to the Closing Date, and will be made available for inspection by the
Representative at least one business day prior to the Closing Date.
(c) In addition, on the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Company hereby grants an option to the several Underwriters to
purchase the Additional Shares at the price per share as set forth in paragraph
(a) of this Section 2. The option granted hereby may be exercised in whole or
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in part by giving written notice (i) at any time on or before the Closing Date
and (ii) only once thereafter within 30 days after the date of this Agreement,
by you, as Representative of the several Underwriters, to the Company, setting
forth the number of Additional Shares as to which the several Underwriters are
exercising the option, the names and denominations in which the Additional
Shares are to be registered and the time and date at which such certificates are
to be delivered. The time and date at which certificates for Additional Shares
are to be delivered shall be determined by the Representative but shall not be
earlier than three nor later than 10 full business days after the exercise of
such option, nor in any event prior to the Closing Date (such time and date
being herein referred to as the "Additional Shares Closing Date"). If the date
of exercise of the option is three or more days before the Closing Date, the
notice of exercise shall set the Closing Date as the Additional Shares Closing
Date. The number of Additional Shares to be purchased by each Underwriter shall
be in the same proportion to the total number of Additional Shares being
purchased as the number of Firm Shares being purchased by such Underwriter bears
to the total number of Firm Shares, adjusted by you in such manner as to avoid
fractional shares, and subject to adjustments in accordance with Section 9
hereof. The option with respect to the Additional Shares granted hereunder may
be exercised only to cover over-allotments in the sale of the Firm Shares by the
Underwriters. So long as such option to purchase Additional Shares has not been
exercised in whole, you, as Representative of the several Underwriters, may
cancel such option at any time prior to its expiration by giving written notice
of such cancellation to the Company. To the extent, if any, that the option is
exercised, payment for any Additional Shares to be purchased shall be made by
official bank check or checks to the order of, or by wire transfer to the
account of, the Company, in immediately available funds against delivery of
certificates therefor to the Representative for the several accounts of the
Underwriters on the Additional Shares Closing Date at the offices of Xxxxxxx
Xxxxx & Associates, Inc., 000 Xxxxxxxx Xxxxxxx, Xx. Xxxxxxxxxx, Xxxxxxx 00000.
The certificates for any Additional Shares will be delivered in such
denominations and in such registrations as the Representative requests in
writing not later than the second full business day prior to the Additional
Shares Closing Date, and will be made available for inspection by the
Representative at least one business day prior to the Additional Shares Closing
Date.
3. OFFERING BY THE UNDERWRITERS.
Upon the authorization by you of the release of the Shares, the several
Underwriters propose to offer the Shares for sale upon the terms and conditions
disclosed in the Prospectus.
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It is further understood that you will act as the Representative for
the Underwriters in the offering and sale of the Shares in accordance with a
Master Agreement Among Underwriters entered into by you and the several other
Underwriters.
4. COVENANTS OF THE COMPANY.
(a) The Company covenants and agrees with the several Underwriters
that:
(i) The Company will (A) use its best efforts to cause the
Registration Statement to become effective or, if the procedure in Rule
430A of the Rules and Regulations is followed, to prepare and timely
file with the Commission under Rule 424(b) of the Rules and Regulations
a Prospectus in a form approved by the Representative containing
information previously omitted at the time of effectiveness of the
Registration Statement in reliance on Rule 430A of the Rules and
Regulations, and (B) not file any amendment to the Registration
Statement or supplement to the Prospectus of which the Representative
shall not previously have been advised and furnished with a copy or to
which the Representative shall have reasonably objected in writing or
which is not in compliance in all material respects with the Rules and
Regulations. If the Company elects to rely on Rule 434 under the Act,
the Company will provide the Underwriters with copies of the form of
Rule 434 Prospectus (including copies of a term sheet that complies
with the requirements of Rule 434 under the Act), in such number as the
Underwriters may reasonably request, and file with the Commission in
accordance with Rule 424(b) of the Act the form of Prospectus complying
with Rule 434 (b)(2) of the Act before the close of business on the
second business day immediately following the date hereof. If the
Company elects not to rely on Rule 434 under the Act, the Company will
provide the Underwriters with copies of the form of Prospectus, in such
number as the Underwriters may reasonably request, and file with the
Commission such Prospectus in accordance with Rule 424(b) of the Act
before the close of business on the second business day immediately
following the date hereof.
(ii) The Company will advise the Representative promptly (A)
after it shall have received notice thereof of the time when the
Registration Statement or any post-effective amendment thereto shall
have become effective, (B) of receipt of any comments from the
Commission, (C) of any request of the Commission for amendment of the
Registration Statement or for supplement to the Prospectus or for any
additional information, (D) of the issuance by the Commission of any
stop order suspending the
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15
effectiveness of the Registration Statement or the use of the
Prospectus or of the institution of any proceedings for that purpose
and (E) of any change in the Company's condition (financial or
otherwise), business, prospects, properties, net worth or results of
operations, or of any other event that comes to the attention of the
Company, that results in the Registration Statement or the Prospectus
(as then amended or supplemented) containing an untrue statement of a
material fact or omitting to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading in any material respect, or of the necessity to amend or
supplement the Prospectus (as then amended or supplemented) to comply
with the Act or any other law. The Company will use its best efforts to
prevent the issuance of any stop order preventing or suspending the use
of the Prospectus and to obtain as soon as possible the lifting
thereof, if issued.
(iii) The Company will cooperate with the Representative in
endeavoring to qualify the Shares for offering and sale under the
securities laws of such jurisdictions as the Representative may
reasonably have designated in writing and will make such applications,
file such documents, and furnish such information as may be reasonably
required for that purpose, provided the Company shall not be required
to qualify as a foreign corporation or to file a general consent to
service of process in any jurisdiction where it is not now so qualified
or required to file such a consent. The Company will, from time to
time, prepare and file such statements, reports and other documents, as
are or may be required to continue such qualifications in effect for so
long a period as the Representative may reasonably request for
distribution of the Shares. In the event that the qualification of the
Shares in any jurisdiction is suspended, the Company shall so advise
the Representative promptly in writing.
(iv) The Company will deliver to, or upon the order of, the
Representative, from time to time, as many copies of any Preliminary
Prospectus as the Representative may reasonably request. The Company
will deliver to, or upon the order of, the Representative during the
period when delivery of a Prospectus is required under the Act, as many
copies of the Prospectus in final form, or as thereafter amended or
supplemented, as the Representative may reasonably request. The Company
will deliver to the Representative at or before the Closing Date, four
signed copies of the Registration Statement and all amendments thereto
including all exhibits filed therewith, and will deliver to the
Representative such number of copies of the Registration Statement
(including such number of copies of the exhibits filed therewith that
may be reasonably requested), and of all amendments thereto, as the
Representative may reasonably request.
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16
(v) The Company will comply with the Act and the Rules and
Regulations, and the Exchange Act and the rules and regulations of the
Commission thereunder, so as to permit the completion of the
distribution of the Shares as contemplated in this Agreement and the
Prospectus. If during the period in which a prospectus is required by
law to be delivered by an Underwriter or dealer, any event shall occur
as a result of which, in the judgment of the Company or in the
reasonable opinion of the Underwriters, it becomes necessary to amend
or supplement the Prospectus in order to make the statements therein,
in the light of the circumstances existing at the time the Prospectus
is delivered to a purchaser, not misleading, or, if it is necessary at
any time to amend or supplement the Prospectus to comply with any law,
the Company promptly will prepare and file with the Commission an
appropriate amendment to the Registration Statement or supplement to
the Prospectus so that the Prospectus as so amended or supplemented
will not, in the light of the circumstances when it is so delivered, be
misleading, or so that the Prospectus will comply with the law.
(vi) The Company will make generally available to its security
holders, as soon as it is practicable to do so, but in any event not
later than 15 months after the effective date of the Registration
Statement, an earnings statement (which need not be audited) in
reasonable detail, covering a period of at least 12 consecutive months
beginning after the effective date of the Registration Statement, which
earnings statement shall satisfy the requirements of Section 11(a) of
the Act and Rule 158 of the Rules and Regulations and will advise you in
writing when such statement has been so made available.
(vii) The Company will, for a period of five years from the
Closing Date, deliver to the Representative copies of annual reports
and copies of all other documents, reports and information furnished by
the Company to its shareholders or filed with the NASD or any
securities exchange pursuant to the requirements of such exchange or
with the Commission pursuant to the Act or the Exchange Act. The
Company will deliver to the Representative similar reports with respect
to significant subsidiaries, as that term is defined in the Rules and
Regulations, which are not consolidated in the Company's financial
statements.
(viii) No offering, sale, short sale or other disposition of any
shares of Common Stock of the Company, any Shares issuable upon
exercise of stock options and any other securities convertible,
exchangeable or exercisable for Common Stock or derivative of
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17
Common Stock (or agreement for such) will be made for a period of 180
days after the date of this Agreement, directly or indirectly, by the
Company otherwise than hereunder or with the prior written consent of
Xxxxxxx Xxxxx & Associates, Inc., except for (i) shares of Common Stock
issuable at the closing of each of the Merger and the Acquisitions,
(ii) shares of Common Stock issuable pursuant to option plans, warrants
and other rights to acquire shares that are described in the
Registration Statement and (iii) shares of Common Stock issuable in
connection with acquisitions to be made by the Company of automobile
dealerships, repair shops or collision centers or related automotive
businesses and assets, provided that each recipient of such shares in
any such acquisition agrees in writing to be subject to the transfer
restrictions imposed pursuant to this Section 4 (viii) to the extent
the 180-day period following the date of this Agreement has not expired
(ix) The Company will use its best efforts to list, subject to
notice of issuance, the Shares on the Nasdaq National Market.
(x) The Company has caused each officer and director and certain
shareholders of the Company to furnish to you, on or prior to the date
of this Agreement, a letter or letters, in form and substance
satisfactory to the Underwriters, pursuant to which each such person
shall agree not to offer, sell, sell short or otherwise dispose of any
shares of Common Stock of the Company, any shares issuable upon
exercise of stock options and any other securities convertible,
exchangeable or exercisable for Common Shares or derivative of Common
Stock owned by such person or request the registration for the offer or
sale of any of the foregoing (or as to which such person has the right
to direct the disposition of) for a period of 180 days after the date
of this Agreement, directly or indirectly, except with the prior
written consent of you and the Company.
(xi) The Company shall apply the net proceeds received by it
from the sale of the Shares in the manner specified in the Prospectus
and shall file such reports with the Commission with respect to the
sale of the Shares and the application of the proceeds therefrom as may
be required in accordance with Rule 463 under the Act.
(xii) The Company shall not invest, or otherwise use the
proceeds received by the Company from its sale of the Shares in such a
manner as would require the Company or any of the Subsidiaries to
register as an investment company under the 0000 Xxx.
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18
(xiii) The Company will maintain a transfer agent and, if
necessary under the jurisdiction of incorporation of the Company, a
registrar (which may be the same person or entity) for the Common Stock.
(xiv) The Company will not take, directly or indirectly, any
action designed to cause or result in, or that has constituted or might
reasonably be expected to constitute, the stabilization or manipulation
of the price of any securities of the Company.
(xv) The Company will use its best efforts to qualify or
register its Common Stock for sale in non-issuer transactions (or obtain
exemptions) from the application of the blue sky laws of each state
where necessary to permit market making transactions and secondary
trading, and will comply with such blue sky laws and will continue such
qualifications, registrations and exemptions in effect for a period of
five years after the date hereof.
(xvi) The Company will comply with all provisions of any
undertakings contained in the Registration Statement.
5. COSTS AND EXPENSES.
The Company will pay all costs, expenses and fees incident to the
performance of its obligations under this Agreement, including, without limiting
the generality of the foregoing, the following: accounting fees of the Company;
the fees and disbursements of counsel for the Company; the cost of printing and
delivering to, or as requested by, the Underwriters copies of the Registration
Statement, Preliminary Prospectuses, the Prospectus, this Agreement, the Master
Agreement Among Underwriters, the Underwriters' Selling Memorandum, the
Underwriters' Questionnaire, the Underwriters' Invitation Letter, the Listing
Application, the Blue Sky Survey and any supplements or amendments thereto; the
filing fees of the Commission; the filing fees and expenses (including legal
fees and disbursements) incident to securing any required review by the NASD of
the terms of the sale of the Shares; the listing fee of the Nasdaq National
Market; the expenses for travel, lodging and meals incurred by the Company and
any of its officers, directors and employees in connection with meetings with
prospective investors in the Shares and the expenses, including the fees and
disbursements of counsel for the Underwriters, incurred in connection with the
qualification of the Shares under state securities or Blue Sky laws. Any
transfer taxes imposed on the sale of the Shares to the several Underwriters
will be paid by the Company. The Company shall not, however, be required to pay
for any of the
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19
Underwriters' other expenses (other than those related to qualification under
NASD regulation and state securities or Blue Sky laws) except that, if this
Agreement shall not be consummated because the conditions in Section 6 hereof
are not satisfied, or because this Agreement is terminated by the Representative
pursuant to Section 11(a)(i) hereof, or by reason of any failure, refusal or
inability on the part of the Company to perform any undertaking or satisfy any
condition of this Agreement or to comply with any of the terms hereof on their
part to be performed, unless such failure to satisfy said condition or to comply
with said terms be due to the default or omission of any Underwriter, then the
Company shall reimburse the several Underwriters for reasonable out-of-pocket
expenses, including fees and disbursements of counsel, reasonably incurred in
connection with investigating, marketing and proposing to market the Shares or
in contemplation of performing their obligations hereunder; but the Company
shall not in any event be liable to any of the several Underwriters for damages
on account of loss of anticipated profits from the sale by them of the Shares.
6. CONDITIONS OF OBLIGATIONS OF THE UNDERWRITERS.
The several obligations of the Underwriters to purchase the Firm Shares
on the Closing Date and the Additional Shares, if any, on the Additional Shares
Closing Date are subject to the accuracy, as of the Closing Date or the
Additional Shares Closing Date, as the case may be, of the representations and
warranties of the Company contained herein, and to the performance by the
Company of their covenants and obligations hereunder and to the following
additional conditions:
(a) The Registration Statement and all post-effective amendments
thereto shall have become effective and any and all filings required by Rule 424
and Rule 430A of the Rules and Regulations shall have been made, and any request
of the Commission for additional information (to be included in the Registration
Statement or otherwise) shall have been disclosed to the Representative and
complied with to their reasonable satisfaction. No stop order suspending the
effectiveness of the Registration Statement, as amended from time to time, shall
have been issued and no proceedings for that purpose shall have been taken or,
to the knowledge of the Company, shall be contemplated by the Commission and no
injunction, restraining order, or order of any nature by a federal or state
court of competent jurisdiction shall have been issued as of the Closing Date
which would prevent the issuance of the Shares.
(b) The Representative shall have received on the Closing Date or the
Additional Shares Closing Date, as the case may be, the opinions of Xxxxxxx X.
Xxxxxxx, P.C. and
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20
Schnader, Harrison, Xxxxx and Xxxxx LLP, counsel for the Company, dated the
Closing Date or the Additional Shares Closing Date, as the case may be,
addressed to the Underwriters (and stating that it may be relied upon by counsel
to the Underwriters) to the effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Georgia, with corporate power and authority to own or lease its
properties and conduct its business as described in the Registration
Statement; and the Company is duly qualified to transact business in
all jurisdictions in which the conduct of its business requires such
qualification, except jurisdictions in which the failure to qualify
would not result in a Material Adverse Event.
(ii) The Company has authorized and outstanding capital stock
as set forth under the caption "Capitalization" in the Prospectus; the
authorized shares of the Company's Common Stock have been duly
authorized; the outstanding shares of the Company's Common Stock have
been duly authorized and validly issued and are fully paid and
non-assessable; all of the Shares conform in all material respects to
the description thereof contained in the Prospectus; and the form of
certificate evidencing the Common Stock complies with Georgia law in
all material respects.
(iii) Each of the Subsidiaries has been duly incorporated and
is validly existing as a corporation in good standing under the laws of
the jurisdiction of its incorporation, with corporate power and
authority to own or lease its properties and conduct its business as
described in the Registration Statement; each of the Subsidiaries is
duly qualified to transact business in all jurisdictions in which the
conduct of their business requires such qualification and in which the
failure to qualify would result in a Material Adverse Event; and the
outstanding shares of capital stock of each of the Subsidiaries have
been duly authorized and validly issued and are fully paid and
non-assessable and are owned by the Company or a Subsidiary and, to the
best of such counsel's knowledge, the outstanding shares of capital
stock of each of the Subsidiaries are owned free and clear of all
liens, encumbrances and equities and claims, and no options, warrants,
preemptive rights or other rights to purchase, agreements or other
obligations to issue or other rights to convert any obligations into
any shares of capital stock or of ownership interests in the
Subsidiaries are outstanding.
(iv) The Shares of Common Stock, including the Additional
Shares, if any, to be sold by the Company pursuant to this Agreement
have been duly authorized and will
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21
be validly issued, fully paid and non-assessable when issued and paid
for as contemplated by this Agreement; and no preemptive rights of
shareholders exist with respect to any of the Shares or the issue or
sale thereof.
(v) The Shares have been approved for listing on the Nasdaq
National Market, subject to notice of issuance.
(vi) Except as described in or contemplated by the Prospectus,
to the best knowledge of such counsel, there are no outstanding
securities of the Company convertible or exchangeable into or
evidencing the right to purchase or subscribe for any shares of capital
stock of the Company and there are no outstanding or authorized
options, warrants or rights of any character obligating the Company to
issue any shares of its capital stock or any securities convertible or
exchangeable into or evidencing the right to purchase or subscribe for
any shares of such stock; and except as described in the Prospectus, to
the best of such counsel's knowledge, no holder of any securities of
the Company or any other person has the right, contractual or
otherwise, which has not been satisfied or effectively waived, to cause
the Company to sell or otherwise issue to them, or to permit them to
underwrite the sale of, any of the Shares or the right to have any
Common Stock or other securities of the Company included in the
Registration Statement or the right, as a result of the filing of the
Registration Statement, to require registration under the Act of any
shares of Common Stock or other securities of the Company.
(vii) All offers and sales of the Company's capital stock prior
to the date hereof and in connection with the Merger and the
Acquisitions, were or will be, as the case may be, at all relevant
times duly registered under the Act or exempt from the registration
requirements of the Act and were duly registered or exempt from the
registration requirements of applicable state securities or blue sky
laws.
(viii) Each of the Acquisition Agreements and the Merger
Agreement has been duly authorized, executed and delivered by the
Company and each of the parties thereto and constitutes a legally
binding obligation of each such party and is enforceable against each
such party in accordance with its terms, except as enforceability may
be limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws relating to or affecting creditors' rights generally, by
general principles of equity whether such enforceability is considered
in a proceeding in law or equity and by the discretion of the court
before which any proceeding therefor may be brought.
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22
(ix) Except as disclosed in the Registration Statement, each of
the Company and its Subsidiaries owns, possesses or has obtained all
required consents and approvals from all Manufacturers and any other
automobile distributors with respect to the Acquisitions and the Merger
and the issuance and sale of the Shares hereunder. To the best of such
counsel's knowledge, the list attached as Schedule II hereto is a
complete and accurate list of all Manufacturers from which the Company
is required to obtain consent or approval with respect to the
transactions contemplated by the Acquisition Agreements and the Merger
Agreement and the issuance and sale of the Shares hereunder.
(x) The Registration Statement has become effective under the
Act; any required filing of the Preliminary Prospectus pursuant to Rule
424(a) or of the Prospectus pursuant to Rule 424(b) has been made in
the manner and within the time period required by such Rule; and to the
best of the knowledge of such counsel, no stop order proceedings with
respect thereto have been instituted or are pending or threatened under
the Act.
(xi) The Registration Statement, the Prospectus and each
amendment or supplement thereto comply as to form in all material
respects with the requirements of the Act and the applicable Rules and
Regulations thereunder (except that such counsel need express no
opinion as to the financial statements and related schedules contained
therein).
(xii) The descriptions in the Registration Statement and the
Prospectus of statutes, legal and governmental proceedings or contracts
and other documents and statements of law or legal conclusions are
accurate in all material respects and fairly present the information
required to be shown; and such counsel does not know of any statutes or
legal or governmental proceedings required to be described in the
Registration Statement or Prospectus that are not described as
required.
(xiii) The statements under the captions "The Merger," "The
Acquisitions," "Management-Executive Officers, Directors; Key
Personnel," "Management-Incentive Stock Plan," "Management-Executive
Employment Agreements," "Certain Transactions," "Description of Capital
Stock" and "Shares Eligible for Future Sale" in the Prospectus, insofar
as such statements constitute a summary of documents referred to
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23
therein or matters of law, fairly summarize in all material respects
the information called for with respect to such documents and matters.
(xiv) Such counsel does not know of any contracts or documents
required to be filed as exhibits to the Registration Statement or
described in the Registration Statement or the Prospectus which are not
so filed or described as required, and such contracts and documents as
are summarized in the Registration Statement or the Prospectus are
fairly summarized in all material respects.
(xv) Such counsel knows of no material legal or governmental
proceedings pending or threatened against the Company or any of the
Subsidiaries except as set forth in the Prospectus; and, to such
counsel's knowledge, neither the Company nor any of its Subsidiaries is
in violation of, or in default with respect to, any statute,
regulation, rule, order, judgment or decree, except as described in the
Prospectus, nor is the Company or any Subsidiary required to take any
action in order to avoid any such violation or default.
(xvi) This Agreement has been duly authorized, executed and
delivered by the Company and, assuming due authorization, execution and
delivery by the Representative, constitutes the valid and binding
agreement of the Company enforceable against the Company in accordance
with its terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to or
affecting creditors' rights generally, by general principles of equity
whether such enforceability is considered in a proceeding in law or
equity and by the discretion of the court before which any proceeding
therefor may be brought, and except to the extent that rights to
indemnity and contribution hereunder may be limited by federal or state
securities laws or the public policy underlying such laws.
(xvii) The execution and delivery of this Agreement and the
agreements governing the Merger and the Acquisitions, and the
performance by the Company and each of the Subsidiaries of its
obligations hereunder and thereunder and the consummation of the
transactions contemplated herein and therein do not and will not
conflict with or result in a breach of any of the terms or provisions
of, or constitute a default under, the Articles or Certificate of
Incorporation or Bylaws of the Company or any of its Subsidiaries, or
any agreement or instrument, including (except as disclosed in the
Registration Statement) all agreements with Manufacturers filed as
exhibits to the Registration Statement.
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24
(xviii) No approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory, administrative or
other governmental body is necessary in connection with the execution
and delivery of this Agreement and the consummation of the transactions
herein contemplated (other than the registration under the Act of the
Shares and as may be required by the NASD or as required by state
securities and Blue Sky laws as to which such counsel need express no
opinion) except such as have been obtained or made under the Act or the
Exchange Act.
(xix) The Company is not, and will not become, as a result of
the consummation of the transactions contemplated by this Agreement,
and application of the net proceeds therefrom as described in the
Prospectus, required to register as an investment company under the
0000 Xxx.
(xx) The Underwriters (assuming that they are bona fide
purchasers within the meaning of the Uniform Commercial Code) will
acquire good and marketable title to the Shares being sold by the
Company on the Closing Date, and the Additional Shares Closing Date, as
the case may be, free and clear of all liens, encumbrances, equities
and claims.
In rendering such opinion, Xxxxxxx X. Xxxxxxx, P.C. and
Schnader, Harrison, Xxxxx and Xxxxx LLP may rely as to matters governed
by the laws of states other than Georgia or federal laws on local
counsel in such jurisdictions. In addition, in rendering their opinions
with respect to the Closing Date Subsidiaries, Xxxxxxx X. Xxxxxxx,
P.C., and Schnader, Harrison, Xxxxx and Xxxxx LLP may rely on opinions
of counsel to those entities and certificates of officers, directors
and shareholders of those entities. In addition to the matters set
forth above, such opinion shall also include a statement to the effect
that nothing has come to the attention of such counsel which leads them
to believe that (i) the Registration Statement, at the time it became
effective under the Act (but after giving effect to any modifications
incorporated therein pursuant to Rule 430A under the Act) and as of the
Closing Date or the Additional Shares Closing Date, as the case may be,
contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading, and (ii) the Prospectus, or any
supplement thereto, on the date it was filed pursuant to the Rules and
Regulations and as of the Closing Date or the Additional Shares Closing
Date, as the case may be, contained an untrue statement of a material
fact or omitted to state a
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25
material fact necessary in order to make the statements, in the light
of the circumstances under which they are made, not misleading (except
that such counsel need express no view as to financial statements,
schedules and statistical information therein).
(c) The Representative shall have received from Xxxxxxxx Xxxxxxx LLP,
counsel for the Underwriters, an opinion dated the Closing Date or the
Additional Shares Closing Date, as the case may be, substantially to the effect
specified in subparagraphs (i), (iv), (x) and (xi) of Paragraph (b) of this
Section 6. In rendering such opinion Xxxxxxxx Xxxxxxx LLP may rely as to all
matters governed other than by the laws of the State of Georgia or federal laws
on the opinion of counsel referred to in Paragraph (b) of this Section 6. In
addition to the matters set forth above, such opinion shall also include a
statement to the effect that nothing has come to the attention of such counsel
which leads them to believe that (i) the Registration Statement, or any
amendment thereto, as of the time it became effective under the Act (but after
giving effect to any modifications incorporated therein pursuant to Rule 430A
under the Act) as of the Closing Date or the Additional Shares Closing Date, as
the case may be, contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading, and (ii) the Prospectus, or any supplement
thereto, on the date it was filed pursuant to the Rules and Regulations and as
of the Closing Date or the Additional Shares Closing Date, as the case may be,
contained an untrue statement of a material fact or omitted to state a material
fact, necessary in order to make the statements, in the light of the
circumstances under which they are made, not misleading (except that such
counsel need express no view as to financial statements, schedules and
statistical information therein).
(d) The Representative shall have received at or prior to the Closing
Date from Xxxxxxxx Xxxxxxx LLP a memorandum or summary, in form and substance
satisfactory to the Representative, with respect to the qualification for
offering and sale by the Underwriters of the Shares under the state securities
or Blue Sky laws of such jurisdictions as the Representative may reasonably have
designated to the Company.
(e) You shall have received, on each of the dates hereof (or, if the
Registration Statement has been declared effective prior to the execution and
delivery of this Agreement, dated such effective date and the date of this
Agreement), the Closing Date and the Additional Shares Closing Date, as the case
may be, a letter dated the date hereof, the Closing Date or the Additional
Shares Closing Date, in form and substance satisfactory to you, of Ernst & Young
LLP, confirming that they are independent public accountants within the meaning
of the Act and the applicable published Rules and Regulations thereunder and
stating that in their opinion the
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26
financial statements and schedules examined by them and included in the
Registration Statement comply in form in all material respects with the
applicable accounting requirements of the Act and the related published Rules
and Regulations; and containing such other statements and information as is
ordinarily included in accountants' "comfort letters" to Underwriters with
respect to the financial statements and certain financial and statistical
information contained in the Registration Statement and Prospectus. In the event
that the letters referred to in this Section 6(e) set forth any changes,
decreases or increases in the items specified in said letters, it shall be a
further condition to the obligations of the Underwriters that (i) such letters
shall be accompanied by a written explanation by the Company as to the
significance thereof, unless the Representative deems such explanation
unnecessary, and (ii) such changes, decreases or increases do not, in your sole
judgment, make it impracticable or inadvisable to proceed with the purchase,
sale and delivery of the Shares being delivered at such Closing Date or
Additional Shares Closing Date, as the case may be, as contemplated by the
Registration Statement, as amended as of the date of such letter.
(f) The Representative shall have received on the Closing Date or the
Additional Shares Closing Date, as the case may be, a certificate or
certificates of the Chief Executive Officer and the Chief Financial Officer and
the Secretary of the Company to the effect that, as of the Closing Date or the
Additional Shares Closing Date, as the case may be, each of them severally
represents as follows:
(i) The Registration Statement has become effective under the
Act and no stop order suspending the effectiveness of the Registration
Statement has been issued, and no proceedings for such purpose have
been taken or are, to his knowledge, contemplated by the Commission;
(ii) He or she does not know of any litigation instituted or
threatened against the Company of a character required to be disclosed
in the Registration Statement which is not so disclosed; he or she does
not know of any material contract required to be filed as an exhibit to
the Registration Statement which is not so filed; and the
representations and warranties of the Company contained in Section 1
hereof are true and correct as of the Closing Date or the Additional
Shares Closing Date, as the case may be;
(iii) All filings required to have been made pursuant to Rules
424 or 430A under the Act have been made;
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27
(iv) He or she has carefully examined the Registration Statement
and the Prospectus and, in his or her opinion, as of the effective date
of the Registration Statement the Registration Statement does not
include any untrue statement of a material fact or omit to state any
material fact necessary to make statements contained therein not
misleading, and the Prospectus does not include any untrue statement of
material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading
and since the effective date of the Registration Statement, no event
has occurred which is required to have been set forth in a supplement
to or an amendment of the Prospectus which has not been so set forth in
such supplement or amendment; and
(v) Since the respective dates as of which information is given
in the Registration Statement and Prospectus and except as disclosed in
or contemplated by the Registration Statement, there has not been any
Material Adverse Event.
(g) The Company shall have furnished to the Representative such further
certificates and documents confirming the representations and warranties,
covenants and conditions contained herein and related matters as the
Representative may reasonably have requested.
(h) Subsequent to the date hereof there shall not have occurred any of
the following: (i) any suspension or limitation in trading in securities
generally on the New York Stock Exchange, or any setting of minimum prices for
trading on such exchange, or in the Common Stock by the Commission or the Nasdaq
National Market; (ii) a moratorium on commercial banking activities in New York
declared by either federal or state authorities; or (iii) any outbreak or
escalation of hostilities involving the United States, declaration by the United
States of a national emergency or war or any other national or international
calamity or emergency if the effect of any such event specified in this clause
(iii) in your judgment makes it impracticable or inadvisable to proceed with the
purchase, sale and delivery of the Shares being delivered at such Closing Date
or Additional Shares Closing Date, as the case may be, as contemplated by the
Registration Statement, as amended as of the date hereof.
(i) The Firm Shares and Additional Shares, if any, have been approved
for listing upon notice of issuance on the Nasdaq National Market.
(k) The Lockup Agreements described in Section 4(a)(x) shall be in full
force and effect.
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The opinions and certificates mentioned in this Agreement shall be
deemed to be in compliance with the provisions hereof only if they are in all
material respects satisfactory to the Representative and to Xxxxxxxx Xxxxxxx
LLP, counsel for the Underwriters.
If any of the conditions hereinabove provided for in this Section 6
shall not have been fulfilled when and as required by this Agreement to be
fulfilled, the obligations of the Underwriters hereunder may be terminated by
the Representative by notifying the Company of such termination in writing or by
telegram at or prior to the Closing Date or the Additional Shares Closing Date,
as the case may be.
In such event, the Company and the Underwriters shall not be under any
obligation to each other (except to the extent provided in Sections 5 and 8
hereof).
7. CONDITIONS OF THE OBLIGATIONS OF THE COMPANY.
The obligations of the Company to sell and deliver the portion of the
Shares required to be delivered as and when specified in this Agreement are
subject to the conditions that at the Closing Date or the Additional Shares
Closing Date, as the case may be, no stop order suspending the effectiveness of
the Registration Statement shall have been issued and in effect or proceedings
therefor initiated or threatened.
8. INDEMNIFICATION
(a) The Company agrees to indemnify and hold harmless each Underwriter
and each person, if any, who controls any Underwriter within the meaning of the
Act, against any losses, claims, damages or liabilities to which such
Underwriter or any such controlling person may become subject under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of or are based upon (i) any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto, or (ii) the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading; and will reimburse each Underwriter and
each such controlling person upon demand for any legal or other expenses
reasonably incurred by such Underwriter or such controlling person in connection
with investigating or defending any such loss, claim, damage or liability,
action or proceeding or in
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29
responding to a subpoena or governmental inquiry related to the offering of the
Shares, whether or not such Underwriter or controlling person is a party to any
action or proceeding; provided, however, that the Company will not be liable in
any such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or alleged untrue statement,
or omission or alleged omission made in the Registration Statement, any
Preliminary Prospectus, the Prospectus, or such amendment or supplement, in
reliance upon and in conformity with written information furnished to the
Company by or through the Representative specifically for use in the preparation
thereof. This indemnity agreement will be in addition to any liability which the
Company may otherwise have.
(b) Each Underwriter severally and not jointly will indemnify and hold
harmless the Company, each of its directors, each of its officers who have
signed the Registration Statement, and each person, if any, who controls the
Company within the meaning of the Act, against any losses, claims, damages or
liabilities to which the Company or any such director, officer, or controlling
person may become subject under the Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions or proceedings in respect thereof)
arise out of or are based upon (i) any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement, any
Preliminary Prospectus, the Prospectus or any amendment or supplement thereto,
or (ii) the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances under which they were made; and
will reimburse any legal or other expenses reasonably incurred by the Company or
any such director, officer, or controlling person in connection with
investigating or defending any such loss, claim, damage, liability, action or
proceeding; provided, however, that each Underwriter will be liable in each case
to the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission has been made in the
Registration Statement, any Preliminary Prospectus, the Prospectus or such
amendment or supplement, in reliance upon and in conformity with written
information furnished to the Company by or through the Representative
specifically for use in the preparation thereof. This indemnity agreement will
be in addition to any liability which such Underwriter may otherwise have.
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to this Section 8, such person (the "indemnified party") shall
promptly notify the person against whom such indemnity may be sought (the
"indemnifying party") in writing. No indemnification provided for in Section
8(a) or (b) shall be available to any party who shall fail to give notice as
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30
provided in this Section 8(c) if the party to whom notice was not given was
unaware of the proceeding to which such notice would have related and was
materially prejudiced by the failure to give such notice, but the failure to
give such notice shall not relieve the indemnifying party or parties from any
liability which it or they may have to the indemnified party for contribution or
otherwise than on account of the provisions of Section 8(a) or (b). In case any
such proceeding shall be brought against any indemnified party and it shall
notify the indemnifying party of the commencement thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it shall
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof with counsel satisfactory to such indemnified party and
shall pay as incurred the fees and disbursements of such counsel related to such
proceeding. In any such proceeding, any indemnified party shall have the right
to retain its own counsel at its own expense. Notwithstanding the foregoing, the
indemnifying party shall pay as incurred (or within 30 days of presentation) the
fees and expenses of the counsel retained by the indemnified party in the event
(i) the indemnifying party and the indemnified party shall have mutually agreed
to the retention of such counsel, (ii) the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying party and the
indemnified party and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between them or
(iii) the indemnifying party shall have failed to assume the defense and employ
counsel acceptable to the indemnified party within a reasonable period of time
after notice of commencement of the action. It is understood that the
indemnifying party shall not, in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the reasonable fees and
expenses of more than one separate firm for all such indemnified parties. Such
firm shall be designated in writing by you in the case of parties indemnified
pursuant to Section 8(a) and by the Company in the case of parties indemnified
pursuant to Section 8(b). The indemnifying party shall not be liable for any
settlement of any proceeding effected without its written consent but if settled
with such consent or if there be a final judgment for the plaintiff, the
indemnifying party agrees to indemnify the indemnified party from and against
any loss or liability by reason of such settlement or judgment. In addition, the
indemnifying party will not, without the prior written consent of the
indemnified party, settle or compromise or consent to the entry of any judgment
in any pending or threatened claim, action or proceeding of which
indemnification may be sought hereunder (whether or not any indemnified party is
an actual or potential party to such claim, action or proceeding) unless such
settlement, compromise or consent includes an unconditional release of each
indemnified party from all liability arising out of such claim, action or
proceeding and does not include any admission or other statement of wrongdoing,
negligence or improper activity of any kind of such indemnified party as a part
of such settlement.
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31
(d) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
Section 8(a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to therein,
then each indemnifying party shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) in such proportion as
is appropriate to reflect the relative benefits received by the Company on the
one hand and the Underwriters on the other from the offering of the Shares. If,
however, the allocation provided by the immediately preceding sentence is not
permitted by applicable law then each indemnifying party shall contribute to
such amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Company and the on the one hand and the Underwriters on the other
in connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities, (or actions or proceedings in respect thereof),
as well as any other relevant equitable considerations. The relative benefits
received by the Company on the one hand and the Underwriters on the other shall
be deemed to be in the same proportion as the total net proceeds from the
offering (before deducting expenses) received by the Company bear to the total
underwriting discounts and commissions received by the Underwriters, in each
case as set forth in the table on the cover page of the Prospectus. The relative
fault shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
on the one hand or the Underwriters on the other and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Company and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this Section 8(d) were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section 8(d). The amount paid
or payable by an indemnified party as a result of the losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to above in
this Section 8(d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
subsection (d), (i) no Underwriter shall be required to contribute any amount in
excess of the underwriting discounts and commissions applicable to the Shares
purchased by such Underwriter and (ii) no person guilty of fraudulent
misrepresentation (within the meaning
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32
of Section 11(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Underwriters'
obligations in this Section 8(d) to contribute are several in proportion to
their respective underwriting obligations and not joint.
(e) In any proceeding relating to the Registration Statement, any
Preliminary Prospectus, the Prospectus or any supplement or amendment thereto,
each party against whom contribution may be sought under this Section 8 hereby
consents to the jurisdiction of any court having jurisdiction over any other
contributing party, agrees that process issuing from such court may be served
upon him or it by any other contributing party and consents to the service of
such process and agrees that any other contributing party may join him or it as
an additional defendant in any such proceeding in which such other contributing
party is a party.
(f) Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under this
Section 8 shall be paid by the indemnifying party to the indemnified party as
such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 8 and the
representations and warranties of the Company set forth in this Agreement shall
remain operative and in full force and effect, regardless of (i) any
investigation made by or on behalf of any Underwriter or any person controlling
any Underwriter, the Company, its directors or officers or any persons
controlling the Company, (ii) acceptance of any Shares and payment therefor
hereunder and (iii) any termination of this Agreement. A successor to any
Underwriter, or to the Company, its directors or officers, or any person
controlling the Company, shall be entitled to the benefits of the indemnity,
contribution and reimbursement agreements contained in this Section 8.
9. DEFAULT BY UNDERWRITERS.
If on the Closing Date or the Additional Shares Closing Date as the
case may be, any Underwriter shall fail to purchase and pay for the portion of
the Shares which such Underwriter has agreed to purchase and pay for on such
date (otherwise than by reason of any default on the part of the Company), you,
as Representative of the Underwriters, shall use your reasonable efforts to
procure within 48 hours thereafter one or more of the other Underwriters, or any
others, to purchase from the Company such amounts as may be agreed upon and upon
the terms set forth herein, the Firm Shares or Additional Shares, as the case
may be, which the defaulting Underwriter or Underwriters failed to purchase. If
during such 48 hours you, as such Representative, shall not have procured such
other Underwriters, or any others, to purchase the
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33
Firm Shares or Additional Shares, as the case may be, agreed to be purchased by
the defaulting Underwriter or Underwriters, then (i) if the aggregate number of
shares with respect to which such default shall occur does not exceed 10% of the
Firm Shares or Additional Shares, as the case may be, covered hereby, the other
Underwriters shall be obligated, severally, in proportion to the respective
numbers of Firm Shares or Additional Shares, as the case may be, which they are
obligated to purchase hereunder, to purchase the Firm Shares or Additional
Shares, as the case may be, which such defaulting Underwriter or Underwriters
failed to purchase, or (ii) if the aggregate number of shares of Firm Shares or
Additional Shares, as the case may be, with respect to which such default shall
occur exceeds 10% of the Firm Shares or Additional Shares, as the case may be,
covered hereby, the Company or you as the Representative of the Underwriters
will have the right, by written notice given within the next 48-hour period to
the parties to this Agreement, to terminate this Agreement without liability on
the part of the non-defaulting Underwriters or of the Company except to the
extent provided in Section 8 hereof. In the event of a default by any
Underwriter or Underwriters, as set forth in this Section 9, the Closing Date or
Additional Shares Closing Date, as the case may be, may be postponed for such
period, not exceeding seven days, as you, as Representative, may determine in
order that the required changes in the Registration Statement or in the
Prospectus or in any other documents or arrangements may be effected. The term
"Underwriter" includes any person substituted for a defaulting Underwriter. Any
action taken under this Section 9 shall not relieve any defaulting Underwriter
from liability in respect of any default of such Underwriter under this
Agreement.
10. NOTICES.
All communications hereunder shall be in writing and, except as
otherwise provided herein, will be mailed, delivered, telecopied or telegraphed
and confirmed as follows: if to the Underwriters, to Xxxxxxx Xxxxx & Associates,
Inc., 000 Xxxxxxxx Xxxxxxx, Xx. Xxxxxxxxxx, Xxxxxxx 00000, Attention: General
Counsel; if to the Company to
Sunbelt Automotive Group, Inc.
0000 Xxxxxxxxx-Xxxxxxxx Xxxx
Xxxxx 000X
Xxxxxxx, Xxxxxxx 00000
Attn.: Xxxxxxx X. Xxxxxxx,
General Counsel
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11. TERMINATION
This Agreement may be terminated by you by notice to the Company as
follows:
(a) at any time prior to the Closing Date if any of the following has
occurred: (i) since the respective dates as of which information is given in the
Registration Statement and the Prospectus, any Material Adverse Event has
occurred, (ii) any outbreak or escalation of hostilities or declaration of war
or national emergency or other national or international calamity or crisis or
change in economic or political conditions if the effect of such outbreak,
escalation, declaration, emergency, calamity, crisis or change on the financial
markets of the United States would, in your reasonable judgment, make it
impracticable to market the Shares or to enforce contracts for the sale of the
Shares, (iii) suspension of trading in securities generally on the New York
Stock Exchange or the American Stock Exchange or limitation on prices (other
than limitations on hours or numbers of days of trading) for securities on
either such Exchange, (iv) the enactment, publication, decree or other
promulgation of any statute, regulation, rule or order of any court or other
governmental authority which in your opinion materially and adversely affects or
may materially and adversely affects the business or operations of the Company,
(v) declaration of a banking moratorium by United States or New York State
authorities, or (vi) the taking of any action by any governmental body or agency
in respect of its monetary or fiscal affairs which in your reasonable opinion
has a material adverse effect on the securities markets in the United States;
(b) as provided in Sections 6 and 9 of this Agreement; or
(c) any termination pursuant to any of subparagraphs (ii) through (vi)
of Section 11(b) shall be without liability of any party to any other party
(except to the extent provided in Sections 5 and 8 hereof).
12. SUCCESSORS.
This Agreement has been and is made solely for the benefit of the
Underwriters and, the Company and their respective successors, executors,
administrators, heirs and assigns, and the officers, directors and controlling
persons referred to herein, and no other person will have any right or
obligation hereunder. No purchaser of any of the Shares from any Underwriter
shall be deemed a successor or assign merely because of such purchase.
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35
13. INFORMATION PROVIDED BY UNDERWRITERS.
The Company and the Underwriters acknowledge and agree that the only
information furnished or to be furnished by any Underwriter to the Company for
inclusion in any Prospectus or the Registration Statement consists of the
information set forth in the last paragraph on the front cover page of the
Prospectus (insofar as such information relates to the Underwriters); legends
required by Item 502(d) of Regulation S-K under the Act, Regulation M under the
Exchange Act; and the information in the first, third, sixth and ninth
paragraphs under the caption "Underwriting" in the Prospectus.
14. MISCELLANEOUS
Subject to the foregoing, the reimbursement, indemnification and
contribution agreements contained in this Agreement and the representations,
warranties and covenants in this Agreement shall remain in full force and effect
regardless of (a) any termination of this Agreement, (b) any investigation made
by or on behalf of any Underwriter or controlling person thereof, or by or on
behalf of the Company or its directors or officers and (c) delivery of and
payment for the Shares under this Agreement.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
This Agreement shall be governed by, and construed in accordance with,
the laws of the State of Florida.
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The Company and the Underwriters each hereby irrevocably waive
any right they may have to trial by jury in respect to any claim based upon or
arising out of this Agreement and the transactions contemplated hereby.
* * *
If the foregoing letter is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicates hereof,
whereupon it will become a binding agreement between the Company and the several
Underwriters in accordance with its terms.
Very truly yours,
SUNBELT AUTOMOTIVE GROUP, INC.
By:
Xxxxxx X. Xxxxxxx
Chief Executive Officer
The foregoing Underwriting Agreement
is hereby confirmed and accepted as
of the date first above written.
XXXXXXX XXXXX & ASSOCIATES, INC.
By:
Its:
As Representative of the several
Underwriters listed on Schedule I
By: Xxxxxxx Xxxxx & Associates, Inc.
By:
Its: Authorized Officer
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SCHEDULE I
SCHEDULE OF UNDERWRITERS
Number of Firm Shares
Underwriter to be Purchased
----------- ---------------------
Xxxxxxx Xxxxx & Associates, Inc.
Total
----------------------
----------------------
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SCHEDULE II - Manufacturers' Consents
Buick
Cadillac
Chevrolet
Chrysler
Dodge
Ford
GMC
Honda
Hummer
Isuzu
Jeep
Kia
Mazda
Mercury
Mitsubishi
Nissan
Oldsmobile
Plymouth
Pontiac
Saturn
Toyota
- 38 -
39
SCHEDULE III - Franchise Agreements
Buick
Cadillac
Chevrolet
Chrysler
Dodge
Ford
GMC
Honda
Hummer
Isuzu
Jeep
Kia
Mazda
Mercury
Mitsubishi
Nissan
Oldsmobile
Plymouth
Pontiac
Saturn
Toyota
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