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EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
BY AND BETWEEN
XXXXXXXXXXX AUTOMOTIVE GROUP, INC.,
SUNBELT AUTOMOTIVE GROUP, INC.,
B.A.G. GEORGIA III, INC., AND
XXX AUTOMOTIVE GROUP, INC., AND
XXXXX X. XXXXXXXXXXXXX, III
DATED JANUARY 5, 1998
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TABLE OF CONTENTS
1.1 CLOSING CONTINGENCY ........................................................ 2
1.2 PURCHASE AND SALE OF THE SHARES ............................................ 3
1.3 SUBMISSION OF DISCLOSURE STATEMENT AND RELATED DOCUMENTS.................... 4
1.4 SATURN...................................................................... 7
1.5 SPIN OFFS .................................................................. 7
2.1 AUTHORIZATION OF TRANSACTION ............................................... 8
2.2 NONCONTRAVENTION ........................................................... 8
2.3 BROKERS' FEES .............................................................. 8
2.4 INVESTMENT.................................................................. 8
2.5 JAG SHARES ................................................................. 8
3.1 ORGANIZATION OF BAG, SUNBELT AND SUB ....................................... 9
3.2 AUTHORIZATION OF TRANSACTION ............................................... 9
3.3 NONCONTRAVENTION ........................................................... 9
3.4 BROKERS' FEES .............................................................. 9
3.5 INVESTMENT ................................................................ 10
3.6 REVIEW OF BOND DOCUMENTS.................................................... 10
4.1 ORGANIZATION, QUALIFICATION, AND CORPORATE POWER............................ 10
4.2 CAPITALIZATION ............................................................. 10
4.3 NONCONTRAVENTION .......................................................... 11
4.4 BROKERS' FEES............................................................... 11
4.5 TITLE TO ASSETS ............................................................ 11
4.6 SUBSIDIARIES................................................................ 11
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4.7 FINANCIAL STATEMENTS ................................................. 12
4.8 EVENTS SUBSEQUENT TO MOST RECENT FISCAL YEAR END ..................... 12
4.9 UNDISCLOSED LIABILITIES .............................................. 12
4.10 LEGAL COMPLIANCE ..................................................... 13
4.11 TAX MATTERS .......................................................... 13
4.12 REAL PROPERTY ........................................................ 14
4.13 INTELLECTUAL PROPERTY ................................................ 14
4.14 TANGIBLE ASSETS ...................................................... 14
4.15 INVENTORY............................................................. 14
4.16 CONTRACTS ............................................................ 14
4.17 NOTES AND ACCOUNTS RECEIVABLE ........................................ 14
4.18 POWERS OF ATTORNEY ................................................... 15
4.19 INSURANCE ............................................................ 15
4.20 LITIGATION ........................................................... 15
4.21 EMPLOYEES ............................................................ 15
4.22 EMPLOYEE BENEFITS .................................................... 15
4.23 GUARANTIES ........................................................... 16
4.24 ENVIRONMENT, HEALTH, AND SAFETY MATTERS .............................. 16
4.25 CERTAIN BUSINESS RELATIONSHIPS ....................................... 17
4.26 MINIMUM FLOOR PLAN REQUIREMENT ....................................... 17
5.1 BEST EFFORTS ......................................................... 17
5.2 CONFIDENTIALITY ...................................................... 17
5.3 ANNOUNCEMENTS ........................................................ 18
5.4 CERTAIN CHANGES AND CONDUCT OF BUSINESS .............................. 19
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5.5 NO INTERCOMPANY PAYABLES OR RECEIVABLES ............................... 19
5.6 NO NEGOTIATION ........................................................ 19
5.7 CONSENTS............................................................... 19
5.8 DEALER FINANCIAL STATEMENTS ........................................... 20
5.9 NOTIFICATION OF CERTAIN MATTERS ....................................... 20
5.10 ASSURANCE BY THE PARTIES .............................................. 20
5.11 ANTITRUST IMPROVEMENTS ACT COMPLIANCE ................................. 21
5.12 USE OF "XXX AUTOMOTIVE" NAME .......................................... 21
5.13 RELATED PARTY/STOCKHOLDER LOAN ........................................ 21
5.14 STOCK RESTRICTION AGREEMENT ........................................... 22
5.15 PERSONAL ITEMS ........................................................ 22
5.16 COOPERATION IN PREPARATION OF REGISTRATION STATEMENT .................. 22
6.1 REPRESENTATIONS AND WARRANTIES; AGREEMENTS; COVENANTS ................. 22
6.2 AUTHORIZATION; CONSENT ................................................ 23
6.3 OPINION OF SELLER'S COUNSEL ........................................... 23
6.4 ABSENCE OF LITIGATION ................................................. 23
6.5 NO MATERIAL ADVERSE EFFECT ............................................ 24
6.6 NET WORTH ............................................................. 24
6.7 COMPLETION OF DUE DILIGENCE ........................................... 24
6.8 REAL ESTATE LEASES .................................................... 24
6.9 BOARD APPROVAL ........................................................ 24
6.10 CERTIFICATES .......................................................... 24
6.11 LEGAL MATTERS ......................................................... 24
6.12 APPROVAL OF MANUFACTURER AND DISTRIBUTOR .............................. 25
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6.13 NON-COMPETITION AGREEMENT ............................................. 25
6.14 ENVIRONMENTAL LAWS .................................................... 25
6.15 NONDISTURBANCE AGREEMENT .............................................. 25
6.16 TITLE INSURANCE ....................................................... 25
6.17 LEASE TERMINATION AGREEMENT/MEMORANDUM OF LEASE ....................... 25
6.18 RESIGNATION OF DIRECTORS .............................................. 25
6.19 DISCLOSURE STATEMENT .................................................. 25
6.20 BOND APPROVAL ......................................................... 25
6.21 BUYER PUBLIC OFFERING ................................................. 26
7.1 REPRESENTATIONS AND WARRANTIES; AGREEMENTS ............................ 26
7.2 AUTHORIZATION OF THE AGREEMENT; CONSENTS .............................. 26
7.3 OPINION OF BUYER'S COUNSEL ............................................ 27
7.4 ABSENCE OF LITIGATION ................................................. 27
7.5 REAL ESTATE LEASES .................................................... 27
7.6 CERTIFICATES........................................................... 27
7.7 LEGAL MATTERS ......................................................... 27
7.8 RELEASES .............................................................. 27
7.9 BOND APPROVAL ......................................................... 27
8.1 TERMINATION ........................................................... 28
8.2 METHOD OF TERMINATION ................................................. 29
8.3 EFFECT OF TERMINATION ................................................. 29
9.1 SURVIVAL OF CLAIMS .................................................... 30
9.2 SELLER'S INDEMNIFICATION OF THE BUYER ................................. 31
9.3 BUYER'S INDEMNIFICATION OF THE SELLER ................................. 31
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9.4 DETERMINATION OF ADVERSE CONSEQUENCES ................................. 31
9.5 PROCEDURES FOR INDEMNIFICATION ........................................ 31
9.6 REMEDIES .............................................................. 33
9.7 LIMITATION ON INDEMNIFICATION ......................................... 33
9.8 INSURANCE ............................................................. 33
9.9 NOTICE ................................................................ 33
10.1 FEES AND EXPENSES ..................................................... 33
10.2 HEADINGS .............................................................. 34
10.3 NOTICES ............................................................... 34
10.4 ASSIGNMENT ............................................................ 35
10.5 ENTIRE AGREEMENT ...................................................... 36
10.6 WAIVER AND AMENDMENTS ................................................. 36
10.7 COUNTERPARTS .......................................................... 36
10.8 GOVERNING LAW ......................................................... 37
10.9 ACCOUNTING TERMS ...................................................... 37
10.10 DEFINITIONS ........................................................... 37
10.11 SCHEDULES ............................................................. 42
10.12 SEVERABILITY .......................................................... 42
10.13 REMEDIES .............................................................. 42
10.14 TIME IS OF THE ESSENCE ................................................ 42
11 1998 OPERATIONS AND NET INCOME ........................................ 42
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STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (the "Agreement"), is entered into as of
January 5, 1998 by and between XXXXXXXXXXX AUTOMOTIVE GROUP, INC., a Georgia
corporation ("BAG"), SUNBELT AUTOMOTIVE GROUP, INC. ("Sunbelt"), BAG GEORGIA
III, Inc., a Georgia corporation ("Sub"), XXX AUTOMOTIVE GROUP, INC., a Georgia
corporation (the "Company" or "JAG") and XXXXX X. XXXXXXXXXXXXX, III (the
"Stockholder"). BAG, Sunbelt, Sub, the Company and the Stockholder are sometimes
referred to collectively as the "Parties" and individually as a "Party".
For purposes of convenience, JAG, the JAG Subsidiaries, and the
Stockholder are sometimes referred to collectively as "Seller", and BAG,
Sunbelt and Sub are sometimes referred to collectively as "Buyer".
W I T N E S S E T H:
WHEREAS, the Company, through its wholly-owned subsidiaries which are
listed on the Disclosure Statement to this Agreement (collectively, the "JAG
Subsidiaries" and each individually, a "JAG Subsidiary"), operates Toyota,
Saturn, Mazda, Pontiac, Buick, GMC, Suzuki and Mitsubishi automobile
dealerships in Columbus, Georgia;
WHEREAS, the Stockholder owns all of the issued and outstanding shares
of Common Stock of the Company (the "JAG Shares");
WHEREAS, the Company owns all the issued and outstanding shares of the
JAG Subsidiaries;
WHEREAS, Sunbelt and BAG intent to merge and to form a publicly owned
corporation whose stock is to be traded on a national exchange;
WHEREAS, Sub is a wholly-owned subsidiary of BAG;
WHEREAS, Sub desires to purchase all of the JAG Shares, and the
Stockholder desires to sell the JAG Shares to Sub (upon the terms and subject
to the conditions set forth in this Agreement), so that immediately after the
purchase and sale, Sub will own one hundred percent (100%) of all of the issued
and outstanding JAG shares.
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NOW, THEREFORE, in consideration of the mutual terms, conditions and
other agreements set forth herein, and other good and valuable consideration,
receipt whereof is hereby acknowledged, the parties hereto hereby agree as
follows:
ARTICLE 1
PURCHASE AND SALE OF SHARES
1.1 CLOSING CONTINGENCY. The parties acknowledge and agree that,
notwithstanding anything to the contrary contained in this Agreement:
a. Buyer shall have until March 1, 1998 (the "Due Diligence
Deadline") to conduct their financial and legal due diligence of the Company
and the JAG Subsidiaries, which financial due diligence shall be conducted at
the sole cost and expense of BAG and Sub. From the date hereof until the Due
Diligence Deadline (the "Due Diligence Period"), the Stockholder, the Company,
each JAG Subsidiary, and the officers, employees, agents and representatives of
each, as applicable, shall make their best good faith effort to cooperate with
BAG, Sub, and BAG and Sub's officers, employees, agents and representatives to
enable BAG and Sub to conduct said due diligence, such cooperation to include,
without limitation, the access described in Section 5.2 hereof.
b. Buyer shall have the option to terminate this Agreement at
any time on or before the Due Diligence Deadline if BAG's and/or Sub's due
diligence reveals any matter or matters which, in the sole and absolute
discretion of BAG and/or Sub, materially and adversely affect the valuation of
the Company and the JAG Subsidiaries for purposes of the transactions
contemplated hereby.
c. In the event Buyer elects to terminate this Agreement
pursuant to this Section 1.1, BAG and/or Sub shall provide notice of such
election to the Stockholder on or prior to the Due Diligence Deadline, BAG and
Sub shall pay to the Stockholder the Termination Fee in accordance with Section
8.3(c) hereof, and this Agreement shall terminate with the effect set forth in
Section 8.3 hereof as of the date of such election notice.
d. In the event Buyer does not elect to terminate this Agreement
pursuant to this Section 1.1, or if BAG and/or Sub do not provide the election
notice described in Section l.l(c) above to the Stockholder, then this
Agreement shall remain in full force and effect (unless otherwise terminated in
accordance with Article 8 hereof).
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1.2 PURCHASE AND SALE OF THE SHARES.
a. PURCHASE AND SALE. The Stockholder shall sell to Sub, and Sub
shall purchase from Stockholder, the JAG Shares for a purchase price of Sixteen
Million Dollars (the "Purchase Price") according to the terms and conditions
set forth herein.
b. CLOSING PROCEDURES. At the consummation of the transactions
contemplated hereby (the "Closing"):
i. the Stockholder shall sell, convey, assign, and
transfer to Buyer the JAG Shares, the Excess Commission Plan and the Excess
Parts Inventory free and clear of all liens;
ii. Sub shall purchase and accept the JAG Shares; and
iii. Included among the assets to be sold to Sub for the
Purchase Price herein will be the Excess Commission Plan with Fidelity Warranty
Services and the Excess Parts Inventory of the Company and Jag Subsidiaries.
c. CLOSING DATE AND LOCATION.
i. The Closing shall occur at a location to be
reasonably agreed upon by the parties, contemporaneously with the BAG Public
Offering, on or before the Closing Date Deadline.
ii. If the BAG Public Offering does not occur on or
before the Closing Date Deadline, then the parties shall have the option (but
not the duty or obligation), at the sole discretion of each party, to
consummate the transactions contemplated hereby upon such terms and conditions
as they mutually agree upon.
d. DELIVERIES AT THE CLOSING. At the Closing:
i. Subject to Article 7, the Stockholder shall deliver
to Sub:
A. Certificates representing the JAG Shares
bearing the restrictive legend customarily placed on securities that have not
been registered under applicable federal and state securities laws, stock
powers executed in blank, and any other documents that are reasonably necessary
to transfer to Sub good and marketable title to all the JAG Shares;
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B. All opinions, certificates and other
instruments and documents required to be delivered by the Stockholder by this
Agreement at or prior to the Closing;
C. Leases to the extent that such exist for
the continued operation of the automotive dealerships or acceptable assignments
of the existing leases as set forth on the Disclosure Schedule in Section
1.3(a) attached hereto and incorporated herein, executed by the Company, Sub,
BAG, the applicable JAG Subsidiary and the lessor of the subject properties on
which the automobile dealerships of the Company and the JAG Subsidiaries are
operated;
D. A Non-Compete Agreement as set forth in
Section 1.3(b); and
E. All other documents required to be provided
by Stockholder, the Company or the JAG Subsidiaries or on behalf of them
pursuant to Article 6, and as disclosed in the Disclosure Schedules and the due
diligence materials.
ii. The Sub shall deliver to the Stockholder:
A. Cash in the amount of Twelve Million
Dollars ($12,000,000.00) (the "Cash Consideration");
B. A Ninety (90) day, interest-only,
Promissory Note (the "Note"), as set forth in Section 1.3(b), in the amount of
Four Million Dollars ($4,000,000.00), bearing interest at the rate of eight
percent (8%) per annum; and,
C. All other certificates or documents
required to be provided by BAG or Sub or Sunbelt pursuant to Article 6, as set
forth pursuant to Sections 1.3(a) and (b) and Article 6.
iii. The parties shall execute all documents including
leases, subleases and related documents that are required by this Agreement to
be executed prior to or at Closing, in form and content as approved pursuant to
Section 1.3(b).
1.3 SUBMISSION OF DISCLOSURE STATEMENT AND RELATED DOCUMENTS.
A. DISCLOSURE STATEMENT. No later than forty (40) days after the
execution of this Agreement, Stockholder and Company shall deliver to BAG and
Sub a Disclosure Statement setting forth the following information (for
purposes of this Section 1.3, the term "material" shall mean any contract or
agreement which exceeds $100,000.00 in value per annum or in the aggregate):
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i. Copies of all material real property leases of the
Company and the JAG Subsidiaries;
ii. A description of all material suits, causes of
action, or claims asserted against the Company and the JAG Subsidiaries, and all
potential claims that are known to Stockholder;
iii. Copies of all material insurance contracts of Seller;
iv. A description of all transactions outside the
Ordinary Course of Business that may adversely affect the net worth of the
Company that are not otherwise disclosed;
v. A description of all adverse or potentially adverse
actions, claims or complaints that have been made or asserted by any
governmental agency;
vi. A description of all facts, matters, or issues that
are contrary to the Stockholder's representations and warranties hereunder and
the representations and warranties made on behalf of the Company and the JAG
Subsidiaries;
vii. The names of any employees of the Company and the JAG
Subsidiaries who have expressed an intention to terminate employment within the
next twelve (12) months;
viii. A description of all material contracts of the
Company and the JAG Subsidiaries, and a description of all other matters
required to be disclosed or listed by the provisions of this Agreement;
ix. Any other fact, matter, or issue that Stockholder
reasonably believes the Buyer should be made aware of; and.
x. All other disclosure schedules pursuant to Articles
2, 3, 4 & 5 of this Agreement.
In lieu of a description of the information, the Company and the
Stockholder may attach copies of documents to which the information relates. The
Company and the Stockholder shall provide copies of such documents upon the
request of the Buyer.
The Disclosure Statement shall be in reasonable form, shall provide
sufficient information to appraise Buyer of the item disclosed, and shall be
certified by the
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Shareholder to be true and correct to the best of his Knowledge. The Disclosure
Statement shall be divided into Schedules and/or Exhibits which refer to the
specific Section of this Agreement to which they apply. However, disclosure of
information anywhere therein shall be considered disclosure for all purposes
hereunder. Stockholder shall have the right to supplement and to amend the
Disclosure Statement during the due diligence period. Buyer shall have a
reasonable period of time to review any amended Disclosure Statement or
supplements thereto.
Prior to the Due Diligence Deadline, Buyer shall notify Seller of any
exceptions to the Disclosure Statement. Unless such notice is given, Buyer shall
be deemed to have accepted the Disclosure Statement. Upon acceptance of the
Disclosure Statement, Stockholder shall have no further or additional liability
relating to material set forth on the Disclosure Statement except for any fraud,
misrepresentation or willful or intentional misconduct in preparing the
Disclosure Statement or the items thereon.
B. SUBMISSION AND APPROVAL OF RELATED DOCUMENTS. Within forty (40) days
of the date of execution hereof, each party shall submit to the other parties
the following documents for approval:
i. Stockholder. Stockholder shall submit to BAG and Sub:
(A) The Xxx Leasing, Inc. Sublease for the Auto
Mall;
(B) Certificates, opinions and/or other
documents that BAG, Sub, and/or their counsel must execute and deliver at
closing;
(C) Consents, assignments, and/or documents that
may be required by third parties to facilitate the Closing; and
(D) The Promissory Note for the Deferred Portion
of the Purchase Price.
(ii) Sunbelt, BAG and Sub. Sunbelt BAG and Sub shall
submit to the Stockholder:
(A) A Non-competition Agreement;
(B) Certificates, opinions and/or other
documents that Stockholder and/or its counsel must execute and deliver at
closing; and
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(C) Consents, assignments, and/or documents that
may be required by third parties to facilitate the Closing.
The forty (40) day deadline for submission of documents that must be
prepared and/or approved by governmental authorities or third parties shall be
extended until a time that may be reasonable required to obtain said documents,
consents or approvals, as the case may be, taking into account the nature of the
document and the activity which must be completed by third parties. Each party
receiving documents shall have an additional twenty (20) days after receipt to
object to the form and/or content of same, and a failure to object shall
constitute approval. If the parties cannot agree as to the form and/or content
of any document to which an objection is made, or the Disclosure Schedules, then
the objecting party shall have the right to terminate the contract pursuant to
the provisions of Section 8.1 without any liability to the other party for the
same.
1.4 SATURN. If the Saturn Corporation or the Saturn Distribution
Corporation does not provide its consent to this Agreement and approve BAG or
Sub as its authorized dealer for Columbus, Georgia, then BAG shall have the
right, without obtaining the prior approval of any other party hereto, to sell
or cause the Company to sell the capital stock of Xxx Automotive Group IV, Inc.
d/b/a Saturn of Columbus any person, assignee or designee of its choice
concurrently or simultaneously with the purchase of the Xxx shares.
1.5 SPIN OFFS. Xxx Leasing, Inc., J & J Financial, Inc., Xxx Automotive
Group III, Inc., Columbus Insurance Associates, Xxx Casualty Insurance Company
Limited, and all other non-JAG Subsidiaries shall be spun off or dissolved by
the Company prior to closing. If any Subsidiary is dissolved prior to Closing,
an appropriate adjustment in the Purchase Price will be made to reflect the
value of the additional assets that the Company will retain at Closing. If
Suzuki Motor Company does not consent to the sale, then the Suzuki franchise
shall be surrendered concurrently with the Closing. Buyer acknowledges that
Suzuki will not be part of the new Auto Mall, and its consent is not a condition
to the closing of this transaction. The common stock of Peach State Life
Insurance Company is not involved in this sale.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
OF THE STOCKHOLDER
Except for any matter contained in the Disclosure Statement, the
Stockholder represents and warrants to the best of his Knowledge and Belief to
the Buyer that the statements contained in this Article 2 are correct and
complete as of the date of this Agreement and will be correct and complete as of
the Closing Date.
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2.1 AUTHORIZATION OF TRANSACTION. The Stockholder has full power and
authority to execute and deliver this Agreement and to perform his obligations
hereunder. This Agreement constitutes the valid and legally binding obligation
of the Stockholder, enforceable in accordance with its terms and conditions. The
Stockholder, for his own part, need not give any notice to, make any filing
with, or obtain any authorization, consent, or approval of any government or
governmental agency in order to consummate the transactions contemplated by this
Agreement.
2.2 NONCONTRAVENTION. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(a) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which the Stockholder is subject, or (b)
conflict with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify,
or cancel, or require any notice under any agreement, contract, lease, license,
instrument, or other arrangement to which the Stockholder is a party or by which
he is bound or to which any of his assets is subject.
2.3 BROKERS' FEES. The Stockholder has no liability or obligation to pay
any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which BAG and Sub could become
liable or obligated.
2.4 INVESTMENT. The Stockholder (a) understands that the Note has not been,
and will not be, registered under the Securities Act, or under any state
securities laws, and is being offered and sold in reliance upon federal and
state exemptions for transactions not involving any public offering, (b) is
acquiring the Note solely for his own account for investment purposes, and not
with a view to the distribution thereof, (c) is a sophisticated investor with
knowledge and experience in business and financial matters, (d) has received
certain information concerning BAG and Sub and has had the opportunity to obtain
additional information as desired in order it evaluate the merits and the risks
inherent in holding the Note, (e) is able to bear the economic risk and lack of
liquidity inherent in holding the Note, and (f) is an accredited investor, as
defined in the Securities Act.
2.5 JAG SHARES. The Stockholder holds of record and owns beneficially all
of the issued and outstanding JAG Shares free and clear of any restrictions on
transfer (other than any restrictions under the Securities Act and state
securities laws), taxes, Security Interests, options, warrants, purchase rights,
contracts, commitments, equities, claims, and demands. The Stockholder is not a
party to any option, warrant, purchase right or other contract or commitment
that could require the Stockholder to sell, transfer, or otherwise dispose of
any capital stock of the Company (other than this Agreement), or to any voting
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trust, proxy, or other agreement or understanding with respect to the voting of
any capital stock of the Company. Buyer acknowledges that the Bond Documents
place certain restrictions on the transfer of the stock of the Company, and
limits the rights of the Stockholder to transfer the same without the approval
of the Development Authority and Regions Bank.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to the Seller to the best of their
Knowledge and Belief and belief that the statements contained in this Article 3
are correct and complete as of the date of this Agreement and will be correct
and complete as of the Closing Date.
3.1 ORGANIZATION OF BAG, SUNBELT AND SUB. BAG, Sunbelt and Sub are
corporations duly organized, validly existing, and in good standing under the
laws of the jurisdiction of each of their State of incorporation.
3.2 AUTHORIZATION OF TRANSACTION. BAG and Sub have full power and authority
(including full corporate power and authority) to execute and deliver this
Agreement and to perform their obligations hereunder. This Agreement constitutes
the valid and legally binding obligation of BAG and Sub, enforceable in
accordance with its terms and conditions. BAG and Sub need not give any notice
to, make any filing with, or obtain any authorization, consent, or approval of
any government or governmental agency in order to consummate the transactions
contemplated by this Agreement.
3.3 NONCONTRAVENTION. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(a) violate any constitution, statute, regulation, rule, injunction judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which BAG or Sub is subject or any provision of
the charter or bylaws of either BAG or Sub, or (b) conflict with, result in a
breach of, constitute a default under, result in the acceleration of, create in
any party the right to accelerate, terminate, modify, or cancel, or require any
notice under any agreement, contract, lease, license, instrument, or other
arrangement to which BAG or Sub is a party or by which it is bound or to which
any of its assets is subject.
3.4 BROKERS' FEES. Buyer have no liability or obligation to pay any fees or
commissions to any broker, finder, or agent with respect to the transactions
contemplated by this Agreement for which the Stockholder could become liable or
obligated.
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3.5 INVESTMENT. Sub is not acquiring the JAG Shares with a view to or for
sale in connection with any distribution thereof within the meaning of the
Securities Act.
3.6 REVIEW OF BOND DOCUMENTS. The Bond Documents and the Authority Lease
will have made available to the Buyer by Closing and by the Closing will have
been reviewed by them to determine the effect they have, if any, on the closing
of this agreement.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES CONCERNING THE
COMPANY AND THE JAG SUBSIDIARIES
Except for any matter contained in the Disclosure Statement, the
Stockholder represents and warrants to Buyer to the best of his Knowledge and
Belief that the statements contained in this Article 4 are correct and complete
as of the date of this Agreement and will be correct and complete as of the
Closing Date.
4.1 ORGANIZATION, QUALIFICATION, AND CORPORATE POWER. Each of the Company
and the JAG Subsidiaries is a corporation duly organized, validly existing, and
in good standing under the laws of the jurisdiction of its incorporation. Each
of the Company and the JAG Subsidiaries is duly authorized to conduct business
and is in good standing under the laws of each jurisdiction where such
qualification is required, except where the lack of such qualification would not
have a Material Adverse Effect on the business, financial condition, operations,
results of operations, or future prospects of the Company and the JAG
Subsidiaries. Each of the Company and the JAG Subsidiaries has full corporate
power and authority to carry on the businesses in which it is engaged and to own
and use the properties owned and used by it.
4.2 CAPITALIZATION. The entire authorized capital stock of the Company
consists of 500,000 JAG Shares, of which 21,955 JAG Shares are issued and
outstanding, and zero JAG Shares are held in treasury. All of the issued and
outstanding JAG Shares have been duly authorized, are validly issued, fully
paid, and nonassessable, and are held of record by the Stockholder. There are no
outstanding or authorized options, warrants, purchase rights, subscription
rights, conversion rights, exchange rights or other contracts or commitments
that could require the Company to issue, sell or otherwise cause to become
outstanding any of its capital stock. There are not outstanding or authorized
appreciation, phantom stock, profit participation or similar rights with respect
to the Company. There are not voting trusts, proxies, or other agreements or
understandings with respect to the voting of the capital stock of the Company.
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4.3 NONCONTRAVENTION. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(a) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which any of the Company and the JAG
Subsidiaries is subject or any provision of the charter or bylaws of any of the
Company and the JAG Subsidiaries or (b) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify, or cancel, or require any notice
under any agreement, contract, lease, license, instrument or other arrangement
to which any of the Company and the JAG Subsidiaries is a party or by which it
is bound or to which any of its assets is subject (or result in the imposition
of any Security Interest upon any of its assets), except where the violation,
conflict, breach, default, acceleration, termination, modification,
cancellation, failure to give notice, or Security Interest would not have a
Material Adverse Effect on the business, financial condition, operations,
results of operations, or future prospects of the Company and the JAG
Subsidiaries or on the ability of the Parties to consummate the transactions
contemplated by this Agreement. None of the Company and the JAG Subsidiaries
needs to give any notice to, make any filing with, or obtain any authorization,
consent, or approval of any government or governmental agency in order for the
Parties to consummate the transactions contemplated by this Agreement, except
where the failure to give notice, to file, or to obtain any authorization,
consent, or approval would not have a Material Adverse Effect on the business,
financial condition, operations, results of operations, or future prospects of
the Company and the JAG Subsidiaries or on the ability of the Parties to
consummate the transactions contemplated by this Agreement.
4.4 BROKERS' FEES. None of the Company and the JAG Subsidiaries have any
liability or obligation to pay any fees or commissions to any broker, finder, or
agent with respect to the transactions contemplated by this Agreement.
4.5 TITLE TO ASSETS. The Company and the JAG Subsidiaries have good and
marketable title to, or a valid leasehold interest in, the properties and assets
used by them, located on their premises, or shown on the Most Recent Dealer
Financial Statement or acquired after the date thereof, free and clear of all
Security Interests.
4.6 SUBSIDIARIES.
a. Section 4.6 of the Disclosure Statement sets forth for each
JAG Subsidiary (i) its name and jurisdiction of incorporation; (ii) the number
of shares of authorized capital stock of each class of its capital stock; (iii)
the number of issued and outstanding shares of each class of its capital stock,
the names of the holders thereof, and the number of shares held by each such
holder; and (iv) the number of shares of its capital stock held in treasury.
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b. All of the issued and outstanding shares of capital stock of
each JAG Subsidiary have been duly authorized and are validly issued, fully
paid, and nonassessable. The Company holds of record and owns beneficially all
of the outstanding shares of each JAG Subsidiary, free and clear of any
restrictions on transfer (other than restrictions under the Securities Act and
state securities laws), taxes, Security Interests, options, warrants, purchase
rights, contracts, commitments, equities, claims, and demands.
c. There are no outstanding or authorized options, warrants,
purchase rights, subscription rights, conversion rights, exchange rights, or
other contracts or commitments that could require any of the Company and the JAG
Subsidiaries to sell, transfer, or otherwise dispose of any capital stock of any
of the JAG Subsidiaries or that could require any JAG Subsidiary to issue, sell,
or otherwise cause to become outstanding any of its own capital stock.
d. There are no outstanding stock appreciation, phantom stock,
profit participation, or similar rights with respect to any JAG Subsidiary.
There are no voting trusts, proxies, or other agreements or understandings with
respect to the voting of any capital stock of any JAG Subsidiary.
4.7 FINANCIAL STATEMENTS. The following financial statements (collectively
"the Financial Statements") will be included with the Disclosure Statement:
a. Unaudited consolidated balance sheets as of December 31, 1994,
December 31, 1995, and December 31, 1996 ("Most Recent Fiscal Year End") and the
related statements of income, and retained earnings and cash flows for the years
then ended for JAG and Subsidiaries; and
b. Dealer Financial Statements for each JAG Subsidiary for the
months of January through October 31, 1997 (the "Dealer Financial Statements,"
and the October 31, 1997 Dealer Financial Statement shall be referred to as the
"Most Recent Dealer Financial Statement").
4.8 EVENTS SUBSEQUENT TO MOST RECENT FISCAL YEAR END. Since the Most Recent
Fiscal Year End, the Company and the JAG Subsidiaries have been operated in the
Ordinary Course of Business, and there has not been any material adverse change
in the financial condition of the Company and the JAG Subsidiaries taken as a
whole.
4.9 UNDISCLOSED LIABILITIES. Except as set forth on Schedule 4.9 of the
Disclosure Statement, the Company and the JAG Subsidiaries have no material
undisclosed liabilities that would have a Material Adverse Effect on the
financial condition
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of the Company and the JAG Subsidiaries, in the aggregate.
4.10 LEGAL COMPLIANCE. The actions required hereby of the Seller will not
violate any applicable laws including rules, regulations, codes, plans,
injunctions, judgments, orders, decrees, rulings, and charges thereunder. No
action, suit, proceeding, hearing, investigation, charge, complaint, claim,
demand, or notice has been filed or commenced against Seller alleging any
failure so to comply with any applicable law, except where the failure to comply
would not have a Material Adverse Effect on the business, financial condition,
operations, results of operations, or future prospects of the Company and the
JAG Subsidiaries. All exceptions to the representations contained in this
section shall be set forth on Section 4.10 of the Disclosure Statement.
4.11 TAX MATTERS.
a. Each of the Company and the JAG Subsidiaries have filed all
Income Tax Returns that each were required to file. All such Income Tax Returns
were correct and complete in all material respects. All Income Taxes of the
Company and the JAG Subsidiaries owed and currently due (whether or not shown on
any Income Tax Return) have been paid. None of the Company and the JAG
Subsidiaries are currently the beneficiary of any extension of time within which
to file any Income Tax Return. All exceptions to the representations contained
in this section shall be set forth on Section 4.11(a) of the Disclosure
Statement.
b. There is no current material dispute or material claim
concerning any Income Tax liability of the Company or the JAG Subsidiaries
either (i) asserted by any authority in writing or (ii) asserted personally by
any agent of such authority to the Stockholder. All exceptions to the
representations contained in this section shall be set forth on Section 4.11(b)
of the Disclosure Statement.
c. Section 4.11(c) of the Disclosure Statement lists all federal,
state, local, and foreign Income Tax Returns filed with respect to any of the
Company and the JAG Subsidiaries for taxable periods ended on or after December
31, 1996, identifies those Income Tax Returns that have been audited, and
identifies those Income Tax Returns that currently are the subject of audit. The
Stockholder has delivered to BAG and Sub correct and complete copies of all
federal and State Income Tax Returns, examination reports and statements of
deficiencies assessed against, or agreed to by any of the Company and the JAG
Subsidiaries since December 31, 1996. None of the Company and the JAG
Subsidiaries have currently waived any statute of limitations in respect of
Income Taxes or agreed to any extension of time with respect to an Income Tax
assessment or deficiency. All exceptions to the representations contained in
this section shall be set forth on Section 4.11(c) of the Disclosure Statement.
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d. None of the Company and the JAG Subsidiaries have filed a
consent under Code Section 341(f) concerning collapsible corporations. None of
the Company and the JAG Subsidiaries (i) have been a member of an Affiliated
Group filing a consolidated federal Income Tax Return (other than a group the
common parent of which was the Company), or (ii) have any liability for the
taxes of any Person (other than any of the Company and the JAG Subsidiaries)
under Reg. Section-6 issued pursuant to the Code (or any similar provision of
state, local, or foreign law), as a transferee or successor, by contract, or
otherwise.
4.12 REAL PROPERTY.
a. The Company and the JAG Subsidiaries do not own any real
property.
b. Section 4.12(b) of the Disclosure Statement lists all real
property leased or subleased to any of the Company or the JAG Subsidiaries, and
Seller has delivered to Buyer true and correct copies of such leases or
subleases. Each such lease or sublease is legal, valid, binding, enforceable and
in full force and effect.
c. Except as set forth on Section 4.12(c) of the Disclosure
Schedule, the Company and the JAG subsidiaries have no leases or other interest
in any real property that would have a Material Adverse Effect on the financial
condition of the company and JAG subsidiaries taken as a whole.
4.13 INTELLECTUAL PROPERTY. The Company and the JAG Subsidiaries do not own
any patents, copyrights, or proprietary software.
4.14 TANGIBLE ASSETS. The tangible assets owned and leased by the Company
have been or will be subject to review and/or inspection by the Buyer and are
accepted as is.
4.15 INVENTORY. The inventory of JAG consists of new, demo, and used cars,
and supplies, manufactured and processed parts, all of which have been or will
be subject to review and/or inspection by an independent auditor and by the
Buyer and are accepted by the Buyer "As Is".
4.16 CONTRACTS. Intentionally Deleted.
4.17 NOTES AND ACCOUNTS RECEIVABLE. All notes and accounts receivable of the
Company and the JAG Subsidiaries are reflected properly on their books and
records, and are valid receivables except as set forth on Section 4.17 of the
Disclosure Schedule.
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4.18 POWERS OF ATTORNEY. There are no material outstanding powers of
attorney executed on behalf of the Company or the JAG Subsidiaries except as set
forth on Section 4.18 of the Disclosure Schedule.
4.19 INSURANCE. Schedule 4.19 of the Disclosure Statement sets forth each
material insurance policy of the Company and the JAG Subsidiaries, and each
material self-insured arrangement. With respect to each such insurance policy:
(i) the policy is legal, valid, binding, enforceable, and in full force and
effect in all material respects as of the date listed; (ii) neither the Company
nor the JAG Subsidiaries is in material breach or default, and no event has
occurred which, with notice or the lapse of time, would constitute such a
material breach or default; and (iii) no party to the policy has repudiated any
material provision thereof.
4.20 LITIGATION. Schedule 4.20 of the Disclosure Statement sets forth each
instance in which the Company or a JAG Subsidiary (a) is subject to any
outstanding injunction, judgment, order, decree, ruling, or charge or (b) is a
party or, is threatened to be made a party to any action, suit, proceeding,
hearing, or investigation of, in, or before any court, arbitrator or
quasi-judicial or administrative agency.
4.21 EMPLOYEES. None of the Company and the JAG Subsidiaries have committed
any material unfair labor practice.
4.22 EMPLOYEE BENEFITS.
a. Schedule 4.22 of the Disclosure Statement lists each Employee
Benefit Plan that any of the Company and the JAG Subsidiaries maintains or to
which any of the Company and the JAG Subsidiaries contributes.
i. Each such Employee Benefit Plan (and each related
trust, insurance contract, or fund) complies in form and in operation in all
respects with the applicable requirements of ERISA and the Code, except where
the failure to comply would not have a Material Adverse Effect on the financial
condition of the Company and the JAG Subsidiaries taken as a whole.
ii. All contributions (including all employer
contributions and employee salary reduction contributions) which are due have
been paid to each such Employee Benefit Plan which is an Employee Pension
Benefit Plan.
iii. Each such Employee Benefit Plan which is an Employee
Pension Benefit Plan has received a determination letter from the Internal
Service to the effect that it meets the requirements of Code Section 401(a).
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iv. As of the last day of the most recent prior plan
year, the market value of assets under each such Employee Benefit Plan which is
an Employee Pension Benefit Plan (other than any Multi-employer Plan) equaled or
exceeded the present value of liabilities thereunder (determined in accordance
with then current funding assumptions).
v. The Stockholder has delivered to BAG and Sub correct
and complete copies of the plan documents and summary plan descriptions, the
most recent determination letter received from the Internal Revenue Service, the
most recent Form 5500 Annual Report, and all related trust agreements, insurance
contracts, and other funding agreements which implement each such Employee
Benefit Plan.
b. With respect to each Employee Benefit Plan that any of the
Company and the JAG Subsidiaries maintains or ever has maintained or to which
any of them contributes, ever has contributed, or ever has been required to
contribute:
i. No such Employee Benefit Plan which is an Employee
Pension Benefit Plan (other than any Multi-employer Plan) has been completely or
partially terminated or been the subject of a Reportable Event as to which
notices would be required to be filed with the PBGC. No proceeding by the PBGC
to terminate any such Employee Pension Benefit Plan (other than any
Multi-employer Plan) has been instituted.
ii. No action, suit, proceeding, hearing, or
investigation with respect to the administration or the investment of the assets
of any such Employee Benefit Plan (other than routine claims for benefits) is
pending, except where the action, suit, proceeding, hearing, or investigation
would not have a Material Adverse Effect on the financial condition of the
Company and the JAG Subsidiaries taken as a whole.
iii. None of the Company and the JAG Subsidiaries has
incurred any liability to the PBGC (other than PBGC premium payments) or
otherwise under Title IV of ERISA (including any withdrawal liability) with
respect to any such Employee Benefit Plan which is an Employee Pension Benefit
Plan.
4.23 GUARANTIES. Neither the Company nor any JAG Subsidiary is a guarantor
or surety for any liability or obligation of any other Person except as set
forth on Section 4.23 of the Disclosure Schedule.
4.24 ENVIRONMENT, HEALTH, AND SAFETY MATTERS.
a. The Company and the JAG Subsidiaries are in compliance with
Environmental, Health, and Safety Requirements, except for such noncompliance as
would not have a Material Adverse Effect on the financial condition of the
Company and the
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JAG Subsidiaries taken as a whole.
b. The Company and the JAG Subsidiaries have not received any
written notice, report or other information regarding any actual or alleged
material violation of Environmental, Health, and Safety Requirements, or any
material liabilities or potential material liabilities (whether accrued,
absolute, contingent, unliquidated or otherwise), including any investigatory,
remedial or corrective obligations, relating to the Company or the JAG
Subsidiaries or their facilities arising under Environmental, Health, and Safety
Requirements, the subject of which would If eve a Material Adverse Effect on the
financial condition of the Company and the JAG Subsidiaries taken as a whole.
4.2S CERTAIN BUSINESS RELATIONSHIPS. Section 4.25 of the Disclosure
Statement lists all material business arrangements or relationships between (a)
the Stockholder and any of his Affiliates and (b) the Company and the JAG
Subsidiaries within the past twelve (12) months, as well as all material assets
used in the business of the Company and the JAG Subsidiaries which are owned by
Stockholder or his Affiliates.
4.26 MINIMUM FLOOR PLAN REQUIREMENT. As of the Closing Date, each JAG
Subsidiary separately, and all JAG Subsidiaries in the aggregate, shall not be
"Out of Trust" as such term is used in the automotive business.
ARTICLE 5
COVENANTS AND ADDITIONAL AGREEMENTS
5.1 BEST EFFORTS. Each party hereto shall utilize its respective Best
Efforts to perform its obligations hereunder to satisfy all pre-closing
conditions, and to furnish each other such reasonable information and assistance
as may reasonably be required in connection therewith. If additional action is
reasonably necessary after Closing to complete a party's obligations hereunder,
then such party shall reasonably take such additional action.
5.2 CONFIDENTIALITY.
a. Between the date hereof and the Closing Date, the Stockholder
and the Company will provide reasonable access to, furnish, and/or make
available for inspection and copying, as the case may be, to the officers and
other authorized representatives of BAG, Sunbelt and Sub (a) full access, during
normal business hours, to any and all premises, properties, files, books,
records, documents, and other information of the Company and the JAG
Subsidiaries, (b) any and all financial, technical and operating data and other
information pertaining to the businesses and properties of the Company and the
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JAG Subsidiaries, and (c) true and complete copies of any documents relating to
the foregoing.
b. Between the date hereof and the Closing Date, BAG, Sunbelt,
and Sub will provide reasonable access to, furnish, and/or make available for
inspection and copying, as the case may be, to the officers and other authorized
representatives of JAG (a) full access, during normal business hours, to any and
all reasonable information concerning BAG'S IPO and its IPO process and other
reasonable information concerning BAG, Sunbelt, and Sub, (b) any and all
reasonable other information pertaining to the businesses and properties of the
BAG, Sunbelt and Sub, and (c) true and complete copies of any documents relating
to the foregoing.
c. During the term of this Agreement and for a period of two (2)
years after the Closing or the termination of this Agreement, Buyer and Seller
will hold, and will cause their representatives to hold, in confidence (unless
and to the extent compelled to disclose by judicial or administrative process
or, in the reasonable opinion of its counsel, by other requirements of law) all
Confidential Information and will not disclose the same to any third party
except as may reasonably be necessary to perform this Agreement and the
transactions contemplated hereby. If this Agreement is terminated, each Party
will, and will cause their representatives to, promptly return to the other
Party all Confidential Information furnished by the other Parties, and all
copies and summaries of same.
d. Stockholder shall have the right to make disclosures to
employees, agents and/or others as may reasonably be required to fulfill the
terms of this Agreement and to adequately respond to inquiries that others may
initiate.
e. Buyer has and will continue to actively and vigorously pursue
consummation of the BAG IPO, has and will continue to take any and all actions
necessary or beneficial for the consummation thereof as and when required, has
no knowledge of any fact or circumstance that will or may prevent the
consummation of the BAG IPO by the Closing Deadline, and will notify Seller
immediately upon hearing of any such fact or circumstance.
5.3 ANNOUNCEMENTS. No Party or its representatives shall issue any press
releases or otherwise make any public statement with respect to the transactions
contemplated hereby without the prior consent of each of the other Parties,
except as may be required by law. BAG shall reimburse the Company and the
Stockholder for any reasonable expenses incurred by the Company and the
Stockholder to fulfill its obligations under this Section 5.3.
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5.4 CERTAIN CHANGES AND CONDUCT OF BUSINESS.
Except for actions contemplated by this Agreement or disclosed on or
before the Due Diligence Deadline, until the Closing, Seller:
a. will not cause or permit the Company or the JAG Subsidiaries
to engage in any practice, take any action, or enter into any transaction
outside the Ordinary Course of Business. Without limiting the generality of the
foregoing, the Seller will not cause or permit the Company or the JAG
Subsidiaries to declare, set aside, or pay any dividend or make any distribution
with respect to its capital stock or redeem, purchase, or otherwise acquire any
of its capital stock; and
b. shall not take any action or fail to take any action which
would cause or result in any Material Adverse Effect upon the business or assets
of the Company and the JAG Subsidiaries, either individually or in the
aggregate.
5.5 NO INTERCOMPANY PAYABLES OR RECEIVABLES. At the Closing there will be
no outstanding indebtedness between the Stockholder or any of his Affiliates, on
the one hand, and the Company, or any of the JAG Subsidiaries, on the other
hand.
5.6 NO NEGOTIATION. Until Closing or termination of this Agreement, Seller
will not, and Seller will cause each of its representatives and Affiliates not
to, directly or indirectly solicit, initiate, or encourage any inquiries or
proposals from, discuss or negotiate with, provide any non-public information
to, or consider the merits of any inquiries or proposals from, any Person (other
than Buyer) relating to any transaction involving the sale of the business or
assets (other than in the Ordinary Course of Business) of any JAG Subsidiary or
the Company, or any capital stock of any JAG Subsidiary or the Company, or any
merger, consolidation, business combination, or similar transaction involving
any JAG Subsidiary or the Company.
5.7 CONSENTS. Prior to Closing, Buyer will, at its own expense:
a. obtain all waivers, permits, licenses, approvals,
authorizations, qualifications, orders and consents of all third parties and
governmental authorities;
b. complete all filings and registrations with governmental
authorities for (i) the consummation of the transactions contemplated by this
Agreement; (ii) the ownership or leasing and operating after the Closing by the
Company of all its material properties; and (iii) the conduct after the Closing
by the Company and the JAG Subsidiaries of their businesses as conducted by them
on the date hereof;
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c. obtain the approvals of the Automobile Manufacturers which are
required by Section 6.12 below; and,
d. defend, consistent with applicable principles and requirements
of law, any lawsuit or other legal proceedings, whether judicial or
administrative, whether brought derivatively or on behalf of third persons
(including governmental authorities) challenging this Agreement or the
transactions contemplated hereby.
5.8 DEALER FINANCIAL STATEMENTS. The Company will deliver to Buyer copies
of the Dealer Financial Statements provided by the Company or the JAG
Subsidiaries after the date hereof within five (5) days of their delivery to the
Automobile Manufacturers. All such Statements shall reasonably be prepared in
accordance with factory guidelines.
5.9 NOTIFICATION OF CERTAIN MATTERS. Between the date hereof and the
Closing, each Party to this Agreement will give prompt notice in writing to the
other party hereto of:
a. any information that indicates that any representation and
warranty of such party contained herein was not true and correct as of the date
made or will not be true and correct as of the Closing;
b. the occurrence of any event which could result in the failure
to satisfy a condition specified in ARTICLE 6 or ARTICLE 7 hereof, as
applicable;
c. any notice or other communication from any third person
alleging that the consent of such third person is or may be required in
connection with the transactions contemplated by this Agreement; and
d. in the case of the Stockholder and the Company, any notice of,
or other communication relating to, any default or event which, with notice or
lapse of time or both, would become a default under any contract or agreement
set forth on the Disclosure Statement.
5.10 ASSURANCE BY THE PARTIES. The Stockholder shall use its Best Efforts to
cause the Company to comply with its respective obligations set forth in this
Agreement. BAG and Sub will use their Best Efforts to cause the other to comply
with their respective obligations set forth in this Agreement. Sunbelt, BAG and
Sub shall be jointly and severally liable for the obligations and duties of each
other hereunder and under all documents executed pursuant hereto and for any
damages to the Stockholder, the Company and/or the JAG subsidiaries that result
from any breach of this Agreement and
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from any breach of all documents executed pursuant hereto by any of them.
Stockholder and Company shall be jointly and severally liable for the duties and
obligations of each other hereunder and for any damages to the Buyer or any of
them that result from any breach of this Agreement by Stockholder or Company.
5.11 ANTITRUST IMPROVEMENTS ACT COMPLIANCE. Buyer, as applicable, shall each
file or cause to be filed with the Federal Trade Commission and the United
States Department of Justice any notifications required to be filed by the
respective Ultimate parent" entities under the Xxxx-Xxxxx-Xxxxxx Antitrust
improvements Act of 1976, as amended (the "H.S.R. Act"). and the rules and
regulations promulgated thereunder, with respect to the transactions
contemplated herein. Buyer shall pay the H.S.R. filing fee relating to such
filings. Buyer (with Company and each JAG Subsidiary's help as may be needed)
shall use its Best Efforts to make such filings promptly, to respond to any
requests for additional information made by either of such agencies, to cause
the waiting periods under the H.S.R. Act to terminate or expire at the earliest
possible date and to resist vigorously, at Buyer's expense (including, without
limitation, the institution or defense of legal proceedings), any assertion that
the transactions contemplated herein constitute a violation of the antitrust
laws, all to the end of expediting consummation of the transactions contemplated
herein; PROVIDED, HOWEVER, that if Buyer shall determine in Buyer's sole
discretion that continuing such resistance is not in the best interest of Buyer,
Buyer may, by written notice to the other Parties, terminate this Agreement with
the effect set forth in Article 8.3(c) hereof.
5.12 USE OF "XXX AUTOMOTIVE" NAME. After the Closing Date, Buyer and the
Company may use the names "XXX Automotive" and "XXX" in connection with business
of the Company and the JAG Subsidiaries in Columbus, Georgia and the surrounding
market area. After the Closing, neither the Stockholder nor any of his
Affiliates shall ever use, without the prior written permission of Buyer, which
permission Buyer may withhold or deny in its sole discretion for any reason
whatsoever, the names "XXX Automotive" and "XXX" in connection with the sale or
servicing of new or used automobiles, light-duty trucks or any other motorized
vehicles. Buyer will not use the name "XXX" or "XXX Automotive" in any
disparaging manner.
5.13 RELATED PARTY/STOCKHOLDER LOAN. On or before the Closing Date, the
Stockholder shall cause the Company to pay, and the Company shall pay, the
outstanding principal and all accrued but unpaid interest on any loans between
the Stockholder, his Affiliates or any parties related to the Company and the
JAG Subsidiaries, on the one hand, and the Company or the JAG Subsidiaries on
the other hand.
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5.14 STOCK RESTRICTION AGREEMENT. On or before the Closing Date, any stock
restriction agreement and any buy/sell agreement involving or affecting the
capital stock of the Company or any JAG Subsidiary (excepting any such provision
in the Bond Documents) shall be terminated in accordance with its terms and the
parties thereto shall have released any and all claims arising under or related
to such agreements and their termination.
5.15 PERSONAL ITEMS. The parties acknowledge and agree that the Stockholder
may retain certain personal items (which items are not reflected as assets on
the Most Recent Dealer Financial Statement and will not be reflected as assets
on the December 31, 1997 financial statements). These items may include personal
pictures, awards and mementos. Stockholder reserves the right to transfer other
similar Company or JAG Subsidiary assets to Stockholder for cash at closing and
to pay the book value for same.
5.16 COOPERATION IN PREPARATION OF REGISTRATION STATEMENT. The Company and
the Stockholder shall furnish or cause to be furnished to Buyer all of the
information concerning the Company and the Stockholders reasonably required for
inclusion in, and will cooperate fully and completely with Buyer, Buyer's legal
counsel, Buyer's accountants and the Underwriters in the preparation of, the
registration statement for such Buyer Public Offering (the "Registration
Statement") and the prospectus included therein (including any and all audited
financial statements, as required by the applicable securities laws and
regulations, prepared in accordance with generally accepted accounting
principles, in form suitable for inclusion in the Registration Statement), all
at Buyer's expense. The Stockholder shall not be required to be a signatory to
such Registration Statement, shall have no obligation to certify or verify any
information, and shall have no liability of any kind arising out of or related
to this agreement to anyone not a party hereto.
ARTICLE 6
CONDITIONS TO THE OBLIGATIONS
OF BUYER TO EFFECT THE CLOSING
The obligations of Buyer to Close shall be subject to the satisfaction,
at or prior to the Closing, of each of the following conditions, unless waived
by the Buyer as provided herein.
6.1 REPRESENTATIONS AND WARRANTIES; AGREEMENTS; COVENANTS. Each of the
representations and warranties of the Seller contained in this Agreement shall
be true and correct on the date made and shall be true and correct in all
material respects as of the Closing. Each of the obligations of the Company,
each JAG Subsidiary and the Stockholder required by this Agreement to be
performed by them at or prior to the
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Closing shall have been duly performed prior to Closing. At the Closing, Buyer
shall have received a certificate, dated as of the Closing Date and duly
executed by the Stockholder to the effect that the conditions set forth in the
two preceding sentences have been satisfied.
6.2 AUTHORIZATION; CONSENT.
a. All corporate action necessary to authorize the execution,
delivery and performance of this Agreement and all collateral agreements, and
the consummation of the transactions contemplated hereby shall have been duly
and validly taken by the Company and the JAG Subsidiaries.
b. All notices to, and declarations, filings and registrations
with, and consents, authorizations, approvals and waivers from, governmental and
regulatory bodies and third persons, including, but not limited to, all
Automobile Manufacturers with whom the Company has a franchise agreement or
comparable instrument, required to consummate the transactions contemplated
hereby and all consents or waivers shall have been made or obtained.
6.3 OPINION OF SELLER'S COUNSEL. Buyer shall have been furnished prior to
or at Closing with the opinion of the Seller's counsel, dated the Closing Date,
in the form and substance acceptable to BAG and Sub and their counsel in the
form attached as Exhibit 6.3.
6.4 ABSENCE OF LITIGATION.
a. No order, stay, injunction or decree of any court of competent
jurisdiction in the United States, except as disclosed at or prior to the Due
Diligence Deadline, shall be in effect that (i) prevents or delays the
consummation of any of the transactions contemplated hereby or (ii) would impose
any limitation on the ability of Buyer effectively to exercise full rights of
ownership of the JAG Shares.
b. No action suit or proceeding before any court or any
governmental or regulatory entity except as disclosed at or prior to the Due
Diligence Deadline, shall be pending (or threatened by any governmental or
regulatory entity), and no investigation by any governmental or regulatory
entity shall have been commenced (and be pending) seeking to restrain or
prohibit (or questioning the validity or legality of) the consummation of the
transactions contemplated by this Agreement or seeking damages in connection
therewith.
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6.5 NO MATERIAL ADVERSE EFFECT. From the date of the Most Recent Dealer
Financial Statement to the Closing Date, there shall not have been any change in
the assets, properties, business, operations, prospects, net income or financial
condition of the Company or the JAG Subsidiaries, either individually or in the
aggregate that has had a material adverse effect on the Company or the JAG
Subsidiaries that has not been disclosed to the Buyer.
6.6 NET WORTH. From the date of the signing of this Agreement to the date of
Closing, the Company and each JAG Subsidiary shall have been operated in an
ordinary and normal manner and shall not have entered into any transaction that
is outside the Ordinary Course of Business, except with respect to the Auto Mall
and the spin-offs anticipated by this Agreement, unless Buyer has approved of
same in writing. The Net Worth of the Company will be the Net Worth as of the
signing date plus or minus the results of the operations that are in the
Ordinary Course of Business and any extraordinary transactions described herein
or permitted in writing by Buyer. This paragraph shall not be interpreted as a
guarantee of Net Worth at any date.
6.7 COMPLETION OF DUE DILIGENCE. Intentionally Deleted.
6.8 REAL ESTATE LEASES. Xxx Leasing, Inc. shall have executed the Authority
Sublease and the Company and/or the JAG Subsidiaries shall have entered into or
renewed other leases necessary to permit the continued operation by Buyer at
each of the current locations for the franchised automotive dealerships operated
by the Company and the JAG Subsidiaries.
6.9 BOARD APPROVAL. Intentionally Deleted.
6.10 CERTIFICATES. The Stockholder and the Company shall have furnished BAG and
Sub with such certificates of the Stockholder and the Company's officers and
others to evidence compliance with the conditions set forth in this ARTICLE 6 in
such form and substance as required pursuant to the provisions of Section
1.3(d).
6.11 LEGAL MATTERS. All certificates, instruments, opinions and other documents
required to be executed or delivered by or on behalf of the Stockholder, the
Company and the JAG Subsidiaries under the provisions of this Agreement, and all
other actions and proceedings required to be taken by or on behalf of the
Stockholder, the Company and the JAG Subsidiaries in furtherance of the
transactions contemplated hereby, shall be reasonably satisfactory in form and
substance to counsel for BAG and/or Sub as submitted on the Disclosure Schedules
and with the Related Documents as set forth in Section 1.3(b).
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6.12 APPROVAL OF MANUFACTURER AND DISTRIBUTOR. Each Automobile Manufacturer
having an agreement with the Company, the Stockholder or any of the JAG
Subsidiaries, except Saturn and Suzuki, shall have approved Buyer as its
authorized dealer, on terms and conditions which are comparable with or
substantially similar in form to the terms and conditions of said Automobile
Manufacturer's consent or approvals in other similar transactions that occurred
during the twelve (12) month period immediately preceding the date hereof.
6.13 NON-COMPETITION AGREEMENT. Stockholder shall have executed the
Non-Competition Agreement.
6.14 ENVIRONMENTAL LAWS. The Company shall be in material compliance with all
applicable Environmental, Health and Safety Requirements.
6.15 NONDISTURBANCE AGREEMENT. Xxx Leasing, Inc. and all other appropriate
parties shall have executed a Nondisturbance and Estoppel Agreement in the form
set forth on Schedule 6.15 which schedule shall have been prepared and presented
to BAG, Sunbelt and Sub in such form and substance as required pursuant to the
provisions of Section 1.3(d).
6.16 TITLE INSURANCE. The Company shall have obtained title insurance with
respect to the Auto Mall real property in form and substance reasonably
satisfactory to BAG. BAG shall be responsible for the cost of such title
insurance.
6.17 LEASE TERMINATION AGREEMENT/MEMORANDUM OF LEASE. Any existing real
property leases which the Company and the JAG Subsidiaries will not utilize in
their business operations after Closing shall have been terminated.
6.18 RESIGNATION OF DIRECTORS. Each of the persons who is a director of the
Company or any JAG Subsidiary on the Closing Date shall have tendered to Sub in
writing his or her resignation as such in form and substance satisfactory to
BAG.
6.19 DISCLOSURE STATEMENT. Intentionally Deleted.
6.20 BOND APPROVAL. The Company, the JAG Subsidiaries, and all other
appropriate and necessary entities shall have obtained the approval of Regions
Bank of Columbus, Georgia, and all other appropriate and necessary persons and
entities, of Sub as a buyer of the Company and as a subtenant of the Auto Mall
Property. If requested by BAG or Sub, such approvals shall include confirmation
that neither the Company, any JAG Subsidiary, BAG or Sub will have any liability
with respect to the bonds or letter of credit issued in conjunction with the
Auto Mall except for the Authority Sublease and
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the obligations arising thereunder.
6.21 BUYER PUBLIC OFFERING. The Buyer's Registration Statement shall have been
declared effective by the SEC, the Underwriters named therein shall have agreed
to acquire shares of the Sunbelt stock being offered pursuant to said
Registration Statement (the "Sunbelt IPO Stock), and the closing of the sale of
the Sunbelt IPO Stock to the Underwriters shall have occurred simultaneously
with the Closing hereunder.
ARTICLE 7
CONDITIONS TO THE OBLIGATIONS OF
THE SELLER TO EFFECT THE CLOSING
The obligations of the Seller to Close shall be subject to the
satisfaction, at or prior to the Closing, of each of the following conditions,
unless waived by Seller as provided herein:
7.1 REPRESENTATIONS AND WARRANTIES; AGREEMENTS. Each of the representations
and warranties of Buyer contained in this Agreement shall be true and correct on
the date made and shall be true and correct in all material respects as of the
Closing. Each of the obligations of BAG and Sub required by this Agreement to be
performed by them at or prior to the Closing shall have been duly performed
prior to Closing. At the Closing, the Stockholder shall have received a
certificate, dated the Closing Date and duly executed by an officer of BAG and
of Sub to the effect that the conditions set forth in the preceding two
sentences have been satisfied.
7.2 AUTHORIZATION OF THE AGREEMENT; CONSENTS.
a. All corporate action necessary to authorize the execution, delivery
and performance of this Agreement and all collateral agreements, and the
consummation of the transactions contemplated hereby shall have been duly and
validly taken by BAG and Sub. All filings required to be made under the H.S.R.
Act in connection with transactions contemplated hereby shall have been made and
all applicable waiting periods with respect to each such filing, including
extensions thereof, shall have expired or been terminated.
b. All notices to, and declarations, filings and registrations with, and
consents, authorizations, approvals and waivers from, governmental and
regulatory bodies and third persons, including, but not limited to, all
automobile manufacturers with whom the Company has a franchise agreement or
comparable instrument, required to consummate the transactions contemplated
hereby and all consents or waivers shall have been made or obtained.
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7.3 OPINION OF BUYER'S COUNSEL. Seller shall have been furnished prior to or
at Closing with the opinion of the Buyer's counsel, dated the Closing Date, in
the form and substance as approved pursuant to the provisions of Section 1.3.
7.4 ABSENCE OF LITIGATION.
a. No order, stay, injunction or decree of any court of competent
jurisdiction in the United States shall be in effect that prevents or delays the
consummation of any of the transactions contemplated hereby or would impose any
limitation on the ability of Seller effectively to exercise full rights of
ownership of the Shares, that was not disclosed.
b. No action, suit or proceeding before any court or any governmental or
regulatory entity shall be pending (or threatened by any governmental or
regulatory entity), and no investigation by any governmental or regulatory
entity shall have been commenced (and be pending) seeking to restrain or
prohibit (or questioning the validity or legality of) the consummation of the
transactions contemplated by this Agreement that was not disclosed.
7.5 REAL ESTATE LEASES. Buyer shall have executed the Authority Sublease and
the Company and/or the JAG Subsidiaries shall have entered into or renewed other
leases necessary to permit the continued operation by Buyer at each of the
current locations for the franchised automotive dealerships operated by the
Company and the JAG Subsidiaries.
7.6 CERTIFICATES. BAG and Sub shall have furnished the Stockholder with such
certificates of its officers and others to evidence compliance with the
conditions set forth in this ARTICLE 7 as may be reasonably requested by the
Stockholder.
7.7 LEGAL MATTERS. All certificates, instruments, opinions and other documents
required to be executed or delivered by or on behalf of BAG or Sub under the
provisions of this Agreement, and all other actions and proceedings required to
be taken by or on behalf of BAG or Sub in furtherance of the transactions
contemplated hereby, shall have been executed, delivered or taken as the case
may be.
7.8 RELEASES. The Stockholder, the Company and the applicable JAG Subsidiary
shall have been released from any guaranties which they may have signed relative
to the floor plan financing, leasing obligations, or any other such obligations
which Buyer has assumed. All parties agree to use their best efforts to obtain
this result.
7.9 BOND APPROVAL. The Company, the JAG Subsidiaries, and all other
appropriate and necessary entities shall have obtained the approval of Regions
Bank of Columbus, Georgia, and all other appropriate and necessary persons and
entities, of Sub
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as a buyer of the Company and as a subtenant of the Auto Mall Property. If
requested by BAG or Sub, such approvals shall include confirmation that neither
the Company, any JAG Subsidiary, BAG or Sub will have any liability with respect
to the bonds or letter of credit issued in conjunction with the Auto Mall except
for the Authority Sublease and the obligations arising thereunder.
ARTICLE 8
TERMINATION
8.1 TERMINATION. This Agreement may be terminated at any time prior to
Closing:
a. By mutual written consent of the Parties;
b. By Seller or Buyer if the Closing shall not have taken place on or
prior to Closing Date Deadline, or such later date as shall have been approved
by Buyer and Seller (provided that the terminating Party is not otherwise in
material breach of its representations, warranties, covenants or agreements
under this Agreement);
c. By Buyer or Seller if any court of competent jurisdiction in the
United States or other United States governmental body shall have issued an
order, decree or ruling or taken any other action restraining, enjoining or
otherwise prohibiting the transactions contemplated by this Agreement, and any
such order, decree, ruling or other action shall have become final and
non-appealable;
d. By the Stockholder if any of the conditions specified in ARTICLE 7
hereof have not been met or waived by the Stockholder by the Closing Date or any
extension thereof (provided that neither the Stockholder nor the Company is
otherwise in material breach of his or its representations, warranties,
covenants or agreements under this Agreement);
e. By Buyer if any of the conditions specified in ARTICLE 6 hereof have
not been met or waived by Buyer by the Closing Date or any extension thereof
(provided that Buyer is not otherwise in material breach of its representations,
warranties, covenants or agreements under this Agreement);
f. By either Buyer or the Stockholder if there has been a material
breach on the part of the other of any representation, warranty, covenant or
agreement set forth in this Agreement, which breach has not been cured within
ten (10) Business Days following receipt by the breaching party of written
notice of such breach;
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g. By either Buyer or Seller if the other party has not accepted,
waived, or approved the form or content of the Related Documents specified in
Section 1.3 (b) hereof;
h. By either Buyer or Seller if Buyer has not accepted, approved or
waived the contents of and the attachments thereto of the Disclosure Schedules
prepared by Stockholder pursuant to Section 1.3(a), and Articles 2 and 4 herein
by the Disclosure Deadline;
i. By either party, due to, any war, natural disaster, or other acts of
God; or
j. By Buyer pursuant to Section 1.1(b).
8.2 METHOD OF TERMINATION. If BAG, Sub, Sunbelt or the Stockholder shall
terminate this Agreement pursuant to the provisions hereof, such termination
shall be effectuated by written notice to the other parties specifying the
provision hereof pursuant to which such termination is made.
8.3 EFFECT OF TERMINATION.
a. Except (i) for any breach of this Agreement prior to its
termination, and (ii) except for the obligations in Section 5.2, 5.6 and 10.1
hereof, and (iii) except for termination pursuant to Sections 8.3(c), 8.3(d) and
8.3(e) below, upon the termination of Agreement pursuant to Section 8.1, this
Agreement shall become null and void and none of the Parties or any of their
respective officers, directors, employees, agents, affiliates, consultants,
stockholders or principals shall have any liability or obligation hereunder with
respect hereto.
b. If this Agreement is terminated pursuant to 8.1(g) or 8.1(h), then
neither party shall have any liability or obligation to the other.
c. If this Agreement is terminated pursuant to the provisions of
Sections 8.1 (b), 8.1(e) or 8.1(f), Buyer shall immediately pay to Seller in
cash a termination fee of One Hundred Thousand and no/1OOths Dollars
($100,000.00) ("Termination Fee").
d. If this Agreement is terminated after due diligence, then Buyer
shall pay to the Seller in cash the Termination Fee of One Hundred Thousand and
No/lOOths ($100,000.00).
e. If this Agreement does not Close as specified herein, as a result
of the failure to obtain governmental approvals, manufacturers' approvals or any
other third party
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approvals, or consents after good faith efforts of all parties, to obtain the
same, then, in that event, the Buyer shall pay to the Seller in cash the
Termination Fee of One Hundred Thousand and No/100ths Dollars ($100,000.00).
f. The Termination Fee shall be the sole and exclusive remedy of the
Stockholder, the Company and the JAG Subsidiaries for damages as a result of a
pre-closing breach of this Agreement by Buyer except for the Buyer's willful and
intentional breach of this agreement. Because the actual damages that the
Stockholder, the Company and the JAG Subsidiaries would sustain if Buyer
breaches its pre-closing obligations under this Agreement are uncertain and
would be impossible or very difficult to ascertain accurately, the Parties agree
in good faith that the Termination Fee would be reasonable and just compensation
for the harm caused by such breach. Therefore, the Stockholder, the Company and
the JAG Subsidiaries acknowledge and agree to accept said Termination Fee, if
due and paid hereunder, as liquidated damages, and not as a penalty, in the
event of a pre-closing breach by Buyer.
ARTICLE 9
INDEMNIFICATION
9.1 SURVIVAL OF CLAIMS. Seller's representations, warranties, covenants and
other obligations contained herein shall survive the Closing to the extent
specified below:
a. All representations, warranties, covenants and other obligations
contained in this Agreement (except as otherwise set forth in Section 9.1(b) and
9.1(c) below) shall survive for a period of two (2) years following the Closing
Date.
b. The representations and warranties contained in Section 4.11 shall
survive as to any Tax covered by such representations and warranties for so long
as any statute of limitations for such Tax remains open, in whole or in part,
including without limitation by reason of waiver of such statute of limitations.
However, Buyer shall have no claim against Seller for any tax liability which
may result from Buyer's reclassification of Seller's inventory or other such
items from Seller's prior tax years (i.e., LIFO adjustments) and Stockholders
shall have no liability to Buyer for any taxes owed by the Company for the year
1998 except as set forth in Article 11 herein.
c. All claims that may be brought by Buyer for Seller's fraud,
misrepresentation or any intentional misconduct against or to the Buyer shall
survive for a period of four (4) years following the Closing Date.
d. Buyer's representations, warranties and covenants shall survive the
Closing.
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9.2 SELLER'S INDEMNIFICATION OF THE BUYER. In the event the Seller breaches
any of its representations, warranties, and covenants contained herein; and if
there is an applicable survival period pursuant to Section 9.1 above; and if the
Buyer gives written notice of the claim for indemnification or brings its claim
for indemnification against any of the Seller pursuant to Section 9.5 below
within such survival period, then the Seller agrees to indemnify the Buyer from
and against all Adverse Consequences caused by the breach that the Buyer shall
suffer through and after the date of the claim for indemnification.
9.3 BUYER'S INDEMNIFICATION OF THE SELLER.
a. In the event the Buyer breaches any of its representations,
warranties, obligations and covenants contained herein; and if, the Seller gives
written notice of the claim or brings the claims for indemnification against the
Buyer as provided for in Section 9.5 below, then the Buyer agrees to indemnify
the Seller from and against the entirety of any Adverse Consequences caused by
the breach that the Seller shall suffer through and after the date of the claim
for indemnification.
b. In addition to Section 9.3(a) above, after the Closing of this
Agreement, the Buyer shall indemnify and hold the Seller harmless from all costs
arising out of the following:
(i) Any claim arising out of or related to the Sunbelt IPO;
(ii) Any claim arising out of or related to Buyer's operation of
the business of the Company, the JAG subsidiaries, or any successor after
Closing;
(iii) Any claim arising out of any Disclosure Schedules not
objected to by Buyer by the Due Diligence Deadline or any Related Documents
produced pursuant to Section 1.3(b) which have not been objected to by the
Buyer.
9.4 DETERMINATION OF ADVERSE CONSEQUENCES. The Parties shall make appropriate
adjustments for tax benefits and insurance coverage in determining Adverse
Consequences for purposes of this Article 9.
9.5 PROCEDURES FOR INDEMNIFICATION.
a. THIRD PARTY CLAIMS.
(i) Promptly after receipt by an indemnified party under
Sections 9.2 or 9.3 of the notice of or the commencement of any proceeding
against the indemnified party
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for which indemnification herein may lie (whichever is first received by the
indemnifying party), or which may form part of the basket when the Stockholder
is the indemnifying party, such indemnified party will, if a claim is to be made
against an indemnifying party, give written notice within the applicable
survival period to the indemnifying party of the notice of the commencement of
such claim. If such notice is not timely given, the right to indemnification is
waived.
(ii) If any proceeding referred to in Section 9.5(a) is brought
against an indemnified party and the indemnified party gives written notice to
the indemnifying party of the notice of or commencement of such a proceeding,
the indemnifying party will, unless the claim involves taxes, be entitled to
participate in such proceeding, and, to the extent that it wishes (unless the
indemnifying party is also party to such proceeding and the indemnified party
determines in good faith that joint representation would be inappropriate) to
assume the defense of such proceeding with counsel satisfactory to the
indemnified party, and, after notice from the indemnifying party to the
indemnified party of its election to assume the defense of such proceeding with
counsel satisfactory to the indemnify party, and, after notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such proceeding, the indemnifying party will not, as long as it
diligently conducts the defense of the claim, be liable to the indemnified party
herein for its legal fees or any other expenses with respect to the defense of
the proceeding, in each case subsequently incurred by the indemnified party in
connection with the defense of such proceeding, other than reasonable costs of
investigation. If the indemnifying party assumes the defense of a proceeding,
(i) it will be conclusively established for purposes of this indemnification;
(ii) no compromise or settlement of such claims may be effected by the
indemnifying party without the indemnified party's consent unless (A) there is
no finding or admission of any violation of Legal Requirements or any violation
of the rights of any Person and no effect on any other claims that may be made
against the indemnified party, and (B) the sole relief provided is monetary
damages that are paid in full by the indemnifying party; and (iii) the
indemnified party will have no liability with respect to any compromise or
settlement of such claims effected without its consent. If notice is given to an
indemnifying party of the commencement of any proceeding and the indemnifying
party does not, within ten (10) days after the indemnified party's notice is
given, give notice to the indemnified party of its election to assume the
defense of such proceeding, the indemnifying party will be bound by any
determination made in such proceeding or any compromise or settlement effected
by the indemnified party.
(b) OTHER CLAIMS.
A claim for indemnification by Buyer for any matter not involving a
third-party claim shall be asserted by giving notice to the Stockholder of the
claim within the survival
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period specified in Section 9.1. If such claim has not been satisfied by the
Stockholder after notice, then the Buyer shall actually file suit in the
appropriate civil court on such claim within the applicable survival period
specified in Section 9.1. If such claim is not filed within the applicable
survival period, such claim is waived.
9.6 REMEDIES. The parties acknowledge and agree that after Closing, the rights
and remedies set forth in this Article 9 shall be the exclusive remedy of the
parties hereto with respect to the transactions contemplated by this Agreement.
9.7 LIMITATION ON INDEMNIFICATION. Stockholder has no obligation to indemnify
the Buyer hereunder (i) until the Buyer has suffered Adverse Consequences by
reason of all such breaches in excess of a $100,000.00 aggregate deductible (the
"Basket"), or (ii) to the extent any Adverse Consequences suffered by the Buyer
by reason of all such breaches exceeds $2,000,000.00 an aggregate ceiling (the
"Cap"), (after which point the Stockholder will have no obligation to indemnify
the Buyer from and against further such Adverse Consequences), except for any
breach or claim arising out of any tax indemnification hereunder, the Seller's
fraud, misrepresentation or any intentional misconduct to or against the Buyer.
Notwithstanding anything to the contrary contained herein, the Stockholder shall
be obligated to fully indemnify the Buyer from and against, any Adverse
Consequences resulting from, arising out of, relating to, in the nature of or
caused by any tax indemnification herein, the Seller's fraud, misrepresentation
or willful or intentional misconduct to or against the Buyer.
9.8 INSURANCE. Buyer shall cause the Company and the JAG Subsidiaries to
maintain liability and truth-in-lending, and efforts and omissions coverages
comparable to those currently maintained by the JAG Subsidiaries and the
company. Seller shall have no obligation to indemnify Buyer for any costs
covered by such policies.
9.9 NOTICE. Any notice required herein of a claim or a proceeding for which
indemnification is sought shall be sent by as provided in Section 10.3.
ARTICLE 10
MISCELLANEOUS
10.1 FEES AND EXPENSES.
a. Except as otherwise expressly provided herein, each Party hereto
shall be responsible for its respective costs incurred in the execution and
performance of this Agreement except that Buyer shall be responsible for, and
shall in any event reimburse Seller for, all of Seller's costs arising out of or
related to the following:
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i. Copies of Seller's business records of every kind;
ii. Filing notices, or obtaining permissions from all
governmental agencies;
iii. Obtaining permissions and consents required or
contemplated hereunder from any Automobile Manufacturer;
iv. Providing information for or with respect to the Sunbelt
IPO; and
v. Fees incurred by Seller's counsel and accountant not to
exceed a total of Fifty Thousand Dollars ($50,000.00). Said fees may be paid by
Company prior to Closing without adjustment to the Purchase Price.
b. Notwithstanding Section 10.1 (a) above, if the Closing does not
occur and Section 5.5 hereof ('No Shop' provision) is breached, the Stockholder
or the Company shall reimburse Buyer, within twenty (20) days after receipt of a
request therefor, for all of the fees, costs and expenses Buyer has paid to
Seller pursuant to Section 10.1 (a) above.
10.2 HEADINGS. The section headings herein are for convenience of reference
only, do not constitute part of this Agreement and shall not be deemed to limit
or otherwise affect any of the provisions hereof.
10.3 NOTICES. All notices, consents, waivers, or other communications required
or permitted hereunder shall be given in writing (and shall be ineffective
otherwise) and shall be deemed given (a) if delivered by hand or recognized
overnight delivery service, upon the earlier of delivery or rejection of
delivery by recipient, (b) if given by facsimile transmission, upon confirmation
of transmission by facsimile, or (c) if delivered by registered or certified
mail, postage prepaid (return receipt requested), upon the earlier of actual
delivery, rejection of delivery by recipient, or three days after being
deposited in the mail, and addressed as follows:
If to the Company before the Closing date: with a copy to:
Xxxxx X. Xxxxxxxxxxxxx, III Xxxxxxx X. Childs
Post Office Box 1978 Attorney at Law
Xxxxxxxx, XX 00000 Post Office Xxx 0000
Fax: 000-000-0000 Xxxxxxxx, XX 00000
Fax: 000-000-0000
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If to the Company after the Closing date: with a copy to:
Xxxxx X. Xxxxxxxxxxxxx, III Xxxxxxx X. Childs
0000 Xxxxxxx Xxxxx Xxxxxxxx at Law
Xxxxxxxx, XX 00000 Xxxx Xxxxxx Xxx 0000
Xxxxxxxx, XX 00000
Fax: 000-000-0000
If to the Stockholder: with a copy to:
Xxxxx X. Xxxxxxxxxxxxx, III Xxxxxxx X. Childs
0000 Xxxxxxx Xxxxx Xxxxxxxx at Law
Xxxxxxxx, XX 00000 Xxxx Xxxxxx Xxx 0000
Xxxxxxxx, XX 00000
Fax: 000-000-0000
If to Sunbelt, BAG or Sub: with a copy to:
Xxxxxxx X. Xxxxxx Xxxxxxx X. Xxxxxxx, Esq.
c/x Xxxxxxxxxxx Automotive Group c/o The Xxxxxxx Law Firm
0000 Xxxx Xxxxxxx 0000 Xxxxxxxxx Xxxxxxxx Xxxx, XX
Xxxxxx, Xxxxxxx 00000 Suite 102-D
Fax: 000-000-0000 Xxxxxxx, Xxxxxxx 00000
Fax: 000-000-0000
and another copy to:
Xxxxx X. Xxxxxx, Esq.
Xxxxxxxx Xxxxxxxx Xxxxx & Xxxxx, LLP
Suite 2800, SunTrust Plaza
000 Xxxxxxxxx Xxxxxx, XX
Xxxxxxx, Xxxxxxx
Fax: (000) 000-0000
or such other address as shall be furnished in writing by such party.
Notwithstanding the foregoing, any notice or communication changing any of the
addresses set forth above shall be effective and deemed given only upon its
receipt.
10.4 ASSIGNMENT. This Agreement and all of the provisions hereof shall be
binding upon and inure the benefit of the parties hereto (and with respect to
the Stockholder, the
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personal representatives and heirs of the Stockholder) and their respective
successors and permitted assigns, and the provisions of ARTICLE 9 hereof shall
inure to the benefit of the Indemnified Parties referred to therein; PROVIDED,
HOWEVER, that neither this Agreement nor any of the rights, interests, duties,
benefits, or obligations hereunder may be assigned by any of the parties hereto
without the prior written consent of the other Parties. Notwithstanding the
foregoing, Stockholder shall cause Xxx Leasing, Inc. to consent to any
assignment of this Agreement to any affiliate of Sunbelt or BAG upon reasonable
notice to Stockholder; provided, however, that Sunbelt, BAG and Sub, in addition
to the assignee, shall remain fully, jointly, and severally liable for all
obligations hereunder and all obligations that are contained in, arise out of,
or relate to any document contemplated by this Agreement. Any such consent of
Xxx Leasing, Inc. shall in no way negate, limit or restrict any right of the
Stockholder or Xxx Leasing, Inc. set forth herein, or any document contemplated
hereunder. No consent required herein shall unreasonably be withheld.
10.5 ENTIRE AGREEMENT. This Agreement (including the Schedules and Exhibits
hereto) embody the entire agreement and understanding of the parties with
respect to the transactions contemplated hereby and supersede all prior written
or oral commitments, arrangements or understandings between the Parties with
respect thereto and all prior drafts of this Agreement. There are no
restrictions, agreements, promises, warranties, covenants or undertakings with
respect to the transactions contemplated hereby other than those expressly set
forth herein or in the documents expressly referenced herein. Prior drafts of
this Agreement shall not be used as a basis for interpreting this Agreement.
10.6 WAIVER AND AMENDMENTS. Except as otherwise specifically set forth herein,
the Stockholder, the Company, each JAG Subsidiary, BAG and Sub may by mutual
agreement in writing (i) extend the time for the performance of any of the
obligations or other actions of the other parties, (ii) waive any inaccuracies
in the representations or warranties of the other parties contained in this
Agreement, (iii) waive compliance with any of the covenants of the other parties
contained in this Agreement, (iv) waive performance of any of the obligations of
the other parties created under this Agreement, or (v) waive fulfillment of any
of the conditions to its own obligations under this Agreement. The waiver by any
Party hereto of a breach of any provision of this Agreement shall not operate or
be construed as a waiver of any subsequent breach, whether or not similar. This
Agreement may be amended, modified or supplemented only by a written instrument
executed by the Parties hereto.
10.7 COUNTERPARTS. This Agreement may be executed in any number of counterparts,
all of which shall be considered one and the same agreement and each of which
shall be deemed an original.
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10.8 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Georgia without giving effect to any
choice or conflict of law provision or rule that would cause the laws of any
other jurisdiction to apply. Any action relating to or arising out of the
Agreement shall be filed in the Superior Court of Muscogee County, Georgia, and
the parties hereto consent to exercise of subject matter and personal
jurisdiction in said court.
10.9 ACCOUNTING TERMS. All accounting terms used herein which are not expressly
defined in this Agreement shall have the respective meanings given to them in
accordance with GAAP or the Dealer Financial Statements as they may apply.
10.10 DEFINITIONS. For purposes of this Agreement, the terms defined below shall
have the following meaning:
a. "Adverse Consequences" means all actions, suits, proceedings,
hearings, investigations, charges, complaints, claims, demands,
injunctions, judgments, orders, decrees, rulings, damages, dues,
penalties, fines, costs, liabilities, obligations, taxes, liens,
losses, expenses, and fees, including court costs and reasonable
attorneys' fees and expenses.
b. "Affiliate" of a specified Person shall mean a Person that directly
or indirectly, through one or more intermediaries, controls, or is
controlled by, or is under common control with, the Person
specified, and in the case of a specified Person who is a natural
person, his spouse, his issue, his parents, his estate and any trust
entirely for the benefit of his spouse and/or Issue.
c. "Authority Sublease" means the Sublease between Xxx Leasing, Inc.
and Sub for the Auto Mall property.
d. "Auto Mall" shall mean the real and personal property in Columbus,
Georgia, that is eased by Xxx Leasing, Inc. from the Development
Authority of Columbus, Georgia, and will be subleased to BAG.
e. "Automobile Manufacturers" shall mean the manufacturers of Toyota,
Saturn, Mazda, Pontiac, GMC, Buick, and Mitsubishi vehicles, as
applicable.
f. "Best Efforts" shall be deemed to not include any obligation on the
part of any Person to undertake any liabilities, expend any funds or
perform acts (except liabilities, expenditures or performance, other
than any Best Efforts obligations, expressly required to be
undertaken by the terms of this Agreement) which are materially
burdensome to such Person; PROVIDED,
37
44
HOWEVER, that notwithstanding the foregoing, the term "Best
Efforts" shall include an obligation to take such actions which are
normally incident to or reasonably foreseeable in connection with
such obligation or the transactions contemplated hereby.
g. "Business Day" shall mean any day excluding Saturday, Sunday and any
day which is a legal holiday under Federal law.
h. "Buyer" shall mean BAG, Sunbelt, and Sub, collectively.
i. "Closing Date Deadline" is June 30, 1998.
j. "Code" means the Internal Revenue Code, as amended.
k. "Confidential Information" shall mean all information concerning the
Company and the JAG Subsidiaries obtained by BAG, Sub and their
representatives from the Company and all information concerning BAG
and the Sub obtained by the Company and the JAG Subsidiaries from
BAG and Sub in connection with the transactions contemplated by this
Agreement, except information (x) ascertainable or obtained from
public information, (y) received from a third party not employed by
or otherwise affiliated with the parties or (z) which is or becomes
known to the public, other than through a breach by a Party or any
of its representatives of this Agreement.
1. "Costs" shall mean all liabilities, losses costs and actual damages
(not including consequential damages) and reasonable expenses,
reasonable attorneys' fees, reasonable experts' fees, reasonable
consultants' feast and reasonable disbursements of any kind or of
any nature whatsoever, net of tax savings required in future years.
m. "Dealer Financial Statements" means the financial statements
prepared by each JAG Subsidiary (for the months January through
October 31, 1997) for submission to the Automotive Manufacturer
which reflects the monthly operation of its business.
n. "Disclosure Statement" means the Statement that is to be prepared by
the Stockholder pursuant to the provisions of Section 1.3.
o. "Due Diligence" means the audit, examination, inspection, review,
and investigation of business records, transactions, information
disclosed hereunder, and all relevant information of the Company and
the JAG
38
45
Subsidiaries, and third party records and/or the copying of
same, and queries of the Stockholder, officers and agents of the
Company and third parties relating to the same, to the extent that
is reasonably necessary in order and BAG and Sub to make an informed
decision as to whether to accept the Disclosure Statement,
determine the purchase price, verify the accuracy a the
representations and warranties of the parties hereto, ascertain
that the requirements of this Agreement are met, and for other
reasonable business purposes relating to same.
p. "Employee Benefit Plan" means any (a) nonqualified deferred
compensation or retirement plan or arrangement which is an Employee
Pension Benefit Plan, (b) qualified defined contribution retirement
plan or arrangement which is an employee Pension Benefit Plan, (c)
qualified defined benefit retirement plan or arrangement which is an
Employee Pension Benefit Plan (including any Multi-employer Plan),
or (d) Employee Welfare Benefit Plan or material fringe benefit plan
or program.
q. "Employee Pension Benefit Plan" has the meaning set forth in ERISA
Section 3(2).
r. "Employee Welfare Benefit Plan" has the meaning set forth in ERISA
Section 3(1).
s. Environmental, Heath and Safety Requirements" shall mean all
federal, state, local and foreign statutes, regulations,
ordinances and similar provisions having the force or effect of
law, all judicial and administrative orders and determinations, and
all common law concerning public health and safety worker health
and safety, and pollution or protection of the environment,
including without limitation all those relating to the presence,
use, production, generation, handling' transportation, treatment,
storage, disposal, distribution, labeling, testing, processing,
discharge, release, threatened release, control, or cleanup of any
hazardous materials, substances or wastes, chemical substances or
mixtures, pesticides, pollutants, contaminants, toxic chemicals,
petroleum products or byproducts, asbestos, polychlorinated
biphenyls, noise or radiation.
t. "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
u. Intentionally Deleted.
39
46
v. "Fiduciary" has the meaning set forth in ERISA Section 3(21).
w. "GAAP" shall mean generally accepted accounting principles which are
in effect in the United States on the Closing Date.
x. "Income Tax" means any federal, state, local or foreign income tax,
including any interest. penalty, or additional thereto, whether
disputed or not.
y. "Income Tax Return" means any return, declaration, report, claim for
refund, or information return or statement relating to income Taxes,
including any schedule or attachment statement thereto, and
including any amendment thereof.
z. "JAG Subsidiaries" shall mean the wholly owned subsidiaries of the
Company, listed on the Disclosure Statement, which are to remain in
the Company when the JAG Shares are sold to the Buyer pursuant to
this Agreement.
aa. "Knowledge and Belief" means actual knowledge without independent
investigation and, with respect to any corporation, partnership,
company or other entity, shall include the knowledge of such
entity's officers, directors and managers with responsibility over
the relevant subject matter.
bb. "Liens" shall mean any mortgages, pledges, title defects or
objections, liens claims, security interests, conditions and
installment sale agreements, encumbrances or charges of any kind.
cc. "Material Adverse Effect" shall mean any change in, or effect on,
the Company or any JAG Subsidiary (including the business thereof)
which is or could reasonably be expected to be, materially adverse
to the business, operations, assets, condition (financial or
otherwise) or prospects of the Company or any JAG Subsidiary.
dd. "Material Amount" is defined and calculated as provided for in The
AICPA Auto Dealership Engagement Manual, page 4-16, paragraph 4.338,
September, 1995.
ee. "Most Recent Fiscal Year End" means the unaudited consolidated
balance sheets of the Company and the JAG Subsidiaries as of
December 31, 1996 and the related statements of income, and retained
earnings and cash flows
40
47
for the year ended December 31, 1996 for the Company and JAG
Subsidiaries.
ff. "Most Recent Dealer Financial Statement" means the October 31, 1997
Dealer Financial Statements for each JAG Subsidiary.
gg. "Multi-employer Plan" has the meaning set forth in ERISA Section
3(37).
hh. "Net Income" ("EGT") shall mean earnings after all costs, expenses
and interest excepting for income taxes.
ii. "Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to
quantity and frequency).
jj. "Party" has the meaning set forth in the preface above.
kk. "PBGC" means the Pension Benefit Guaranty Corporation.
11. "Person" shall mean and include any individual, corporation, limited
liability company, partnership, joint venture, association, trust,
any other incorporated or unincorporated organization or entity and
any governmental or any department or agency thereto.
mm. "Reportable Event" has the meaning set forth in ERISA Section 4043.
nn. "Securities Act" means the Securities Act of 1933, as amended.
oo. "Securities Exchange Act" means the Securities Exchange Act of 1934
as amended.
pp. "Security interest" means any mortgage, pledge, lien, encumbrance,
charge or other security interest, other than (a) mechanic's,
materialman's and similar liens, (b) liens for taxes not yet due and
payable or for taxes that the taxpayer is contesting in good faith
through appropriate proceedings, (c) purchase money liens and liens
securing rental payments under capital lease arrangements, and (d)
other liens arising in the Ordinary Course of Business and not
incurred in connection with the borrowing of money.
qq. "Seller" shall mean the Stockholder, the Company and the JAG
Subsidiaries, collectively.
41
48
rr. "Sunbelt Public Offering" shall mean the consummation of an
underwritten public offering pursuant to an effective registration
statement under the Securities Act of 1933, as amended, covering the
offering and sale of shares of common stock of BAG on a firm
commitment basis.
ss. "Sunbelt Public Offering Date" shall mean the date on which the
Sunbelt Public Offering occurs.
10.11 SCHEDULES. Disclosure of any matter in any Schedule hereto or in the
Financial Statements shall be considered as disclosure pursuant to any other
provision, subprovision, section or subsection of this Agreement or Schedule to
this Agreement.
10.12 SEVERABILITY. If any one or more of the provisions of this Agreement shall
be held to be invalid, illegal or unenforceable, the validity, legality or
enforceability of the remaining provisions of this Agreement shall not be
affected thereby. To the extent permitted by applicable law, each Party waives
any provision of law which renders any provision of this Agreement invalid,
illegal or unenforceable in any respect.
10.13 REMEDIES. Prior to Closing, the parties hereto shall have all remedies
provided in law or equity for any claims arising under this Agreement. After
Closing, the remedies provided for any claims arising under this Agreement shall
be as set forth in Article 9.
10.14 TIME IS OF THE ESSENCE. Time is of the essence for purposes of this
Agreement.
ARTICLE 11
1998 OPERATIONS AND NET INCOME
At or prior to Closing, Stockholder shall be allowed to distribute to
himself as additional salary or other additional compensation 100% of the "Net
Income" before taxes ("EBT") of the Company for the period beginning November l,
1997 through Closing.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
[SIGNATURES BEGIN ON NEXT PAGE]
42
49
XXXXXXXXXXX AUTOMOTIVE GROUP, INC.
Attest: /s/ Xxxxxxx X. Xxxxxxx By: /s/ Xxxxxxx X. Xxxxxx
--------------------------- --------------------------------
Name: Xxxxxxx X. Xxxxxxx Name: Xxxxxxx X. Xxxxxx
--------------------------- ------------------------------
Title: Ass't Secretary Title: Sec. Treas.
--------------------------- ------------------------------
(Corporate Seal)
B.A.G. GEORGIA III, INC.
Attest: /s/ Xxxxxxx X. Xxxxxxx By: /s/ Xxxxxxx X. Xxxxxx
---------------------------- --------------------------------
Name: Xxxxxxx X . Xxxxxxx Name: Xxxxxxx X. Xxxxxx
--------------------------- ------------------------------
Title: Secretary Title: Sec. Treas CEO
--------------------------- ------------------------------
(Corporate Seal)
SUNBELT AUTOMOTIVE GROUP, INC.
Attest: /s/ Xxxxxxx X. Xxxxxxx By: /s/ Xxxxxxx X. Xxxxxx
----------------------------- -------------------------------
Name: Xxxxxxx X. Xxxxxxx Name: Xxxxxxx X. Xxxxxx
--------------------------- ------------------------------
Title: Secretary Title: CEO
--------------------------- ------------------------------
(Corporate Seal)
XXX AUTOMOTIVE GROUP, INC.
Attest: By: /s/ Xxxxx X. Xxxxxxxxxxxxx
----------------------------- ------------------------------
Name: Name: Xxxxx X. Xxxxxxxxxxxxx
--------------------------- ------------------------------
Title: Title: President
--------------------------- ------------------------------
(Corporate Seal)
/s/ Xxxxx X. Xxxxxxxxxxxxx III
------------------------------------- ----------------------------------
Witness for Stockholder Xxxxx X. Xxxxxxxxxxxxx III
43
50
XXX AUTOMOTIVE GROUP, INC. LETTERHEAD
A FULL SERVICE AUTOMOTIVE COMPANY
X.X. XXX 0000
XXXXXXXX, XXXXXXX 00000
TELEPHONE 000-000-0000
March 23, 1998
Via Hand Delivery
Xx. Xxxxxxx Xxxxxx
Xxxxxxxxxxx Automotive Group, Inc.,
Sunbelt Automotive Group, Inc.
Re: Stock Purchase Agreement by and between Xxxxxxxxxxx Automotive Group, Inc.,
Sunbelt Automotive Group, Inc., B.A.G. GEORGIA III, INC. and Xxx Automotive
Group, Inc. and Xxxxx X. Xxxxxxxxxxxxx, III dated January 5, 1998 (the
"Stock Purchase Agreement")
Dear Xxxxxxx:
This letter summarizes certain activities which must be completed in order for
the transactions contemplated in the Stock Purchase Agreement to be
consummated. Our mutual cooperation is necessary for the completion of each of
these activities. By signing this letter in the space provided below, we
indicate our agreement to use our best efforts in completing these activities
on a timely basis, and to cause our financial and legal advisers to do the same.
1. Financial Audits. We must complete our audits of the 1995, 1996 and 1997
consolidated financial statements for Xxx Automotive Group, Inc.
2. Audit Representation Letter. X. X. Xxxxxxxxxxxxx, III will sign a audit
representation letter upon completion of the audit so provided in the
attachments thereto accurately reflect the financial position of the
companies audited.
3. Spare Parts Inventory. Prior to Closing, Xxx Automotive Group will amend
its federal income tax returns for tax years 1994, 1995 and 1996, and will
prepare and file its federal income tax return for 1997, to reflect the
spare parts inventory adjustments, and the tax year allocations of those
adjustments, made by Ernst & Young. If the Closing does not occur for any
reason, Sunbelt Automotive Group and Xxxxxxxxxxx Automotive Group will
reimburse Xxx Automotive Group for the difference between (i) the interest
paid by Xxx Automotive Group as a result of the allocation of the spare
parts inventory adjustments to the 1994, 1995 and 1996 amended federal tax
returns and (ii) the interest which would have been paid by Xxx Automotive
Group if the spare parts inventory adjustments had all been allocated to
Xxx Automotive Group's 1997 federal tax return.
51
4. Xxxx-Xxxxx-Xxxxxx Filings. As we discussed, each party to our
transaction must file a separate Xxxx-Xxxxx-Xxxxxx Notification and
Report Form. We will assist you in completing the Form to be filed for
Xxx Automotive Group by providing whatever information you may need. In
addition, we will sign the Certification which appears at the end of
the Form, and an affidavit in substantially the form of the attached
affidavit. I understand that the Xxxx-Xxxxx-Xxxxxx Forms should be
filed by March 31, 1998.
Sunbelt Automotive Group and Xxxxxxxxxxx Automotive Group agree to
indemnify Xxx Automotive Group and me, pursuant to Article 9 of the
Stock Purchase Agreement, against any liability arising out of the
information contained in the Xxxx-Xxxxx-Xxxxxx Notification and Report
Form as well as all other matters involving the Sunbelt IPO, including
any actions performed by Xxx Automotive Group or me, on behalf of
B.A.G. or S.A.G. at their direction.
5. Automobile Manufacturer Consents. We will provide assistance in
obtaining the consent of the applicable automobile manufacturers, to
the transactions contemplated in the Stock Purchase Agreement. I have
written all manufacturers except Saturn Corporation and American Suzuki
on Tuesday, March 24, 1998. Copies of these letters are attached
hereto. We both recognize that a copy of the S-1 filing will likely
be required by all manufacturers before approvals will be obtained.
6. Auto Mall Issues. we need to agree upon a Sublease for the Auto Mall
which is satisfactory to you and to us. In addition, as we have
discussed, you would like to have Xxx Automotive Group removed as a
guarantor for Xxx Leasing's obligations with respect to the bonds and
the letter of credit which secures the bonds. We will need your
cooperation in obtaining all required approvals and consents with
respect to the Sublease, the removal of Xxx Automotive group as a
guarantor, and the transactions contemplated by the Stock Purchase
Agreement from the Development Authority, Regions Bank (as bond
trustee and as the issuer of the letter of credit which secures
the bonds) and any other necessary entities. You have agreed to
provide us a S-1 filing no later than April 20, 1998 to begin
this process.
7. Closing Documents. We need to finalize the terms of my post-closing
employment/consulting agreement and noncompetition/confidentiality
agreement. We need to agree upon the form of the promissory note to
be given to me for a portion of the purchase price. Finally, we need
to agree upon the forms for the other documents needed at closing,
including the legal opinions and various certificates to be delivered
by each party. These documents must be prepared by our attorneys who
should meet at their possible convenience.
8. Due Diligence. Xxxxx Xxxxxxxxxx spent two (2) additional days
completing a review of files and documents which she had requested. You
hereby confirm that my Disclosure Statement Number 1 is accepted as
presented and complies with the
52
requirements envisioned in the Stock Purchase Agreement. It is further
confirmed that the due diligence period as defined by the Stock Purchase
Agreement is now completed.
9. Leases. You will continue the following leases related to the
dealership operations of Xxx Automotive Group; I will terminate all
other leases prior to Closing:
a. Property located at 0000 Xxx Xxxx, Xxxxxxxx, Xxxxxxx - lease
agreement dated October 6, 1989 between Xxxxx Xxxxxx and
Southeast Toyota Distributors, with second assignment to Xxx
Automotive Group II, Inc. dated July 12, 1990: monthly rental
of $14,000; term expires September 30, 1999.
b. Property located at Veterans Parkway, Columbus, Georgia - leased
from Xxx Leasing, Inc. pursuant to an unwritten lease; monthly
rental of $4,000; at Closing, Xxx Automotive Group and Xxx
Leasing must execute a mutually satisfactory written lease
agreement for this property. You understand that Xxx Leasing,
Inc. may sell this property whereupon the used vehicle sales
facility thereon will relocate across the street at the larger
area. The rent will be prorated for the additional space
allowed should this occur.
c. Property located at Victory Drive, Columbus, Georgia - leased
from Stone Wall Xxxxxxx Investment Company pursuant to an
unwritten lease; monthly rental of $1500; after the Closing, I
will assist you in our efforts to obtain a mutually satisfactory
written lease agreement for this property.
d. Property located at Box Road, Columbus, Georgia - lease
agreement between Xxxxxxx Xxxxxx and Xxxxxx Motor Co., Inc.
dated August 1, 1991, subleased to Xxx Automotive Group II
d/b/a Xxx Toyota; yearly rental of $27,000; lease expires
July 31, 1998.
10. Assignment. We mutually desire to have Sunbelt acquire the stock of
Xxx Automotive Group directly, rather than having B.A.G. GEORGIA III,
Inc. acquire the stock. I understand you also plan to dissolve B.A.G.
GEORGIA III and to merge Xxxxxxxxxxx into Sunbelt prior to Closing
this transaction. We should mutually execute the enclosed Consent and
Assignment Instrument to reflect our consent to this.
11. Spin-Offs. I am working with Xx. Xxxx Childs and Xx. Xxx Xxxxx,
in taking the necessary steps to spin off, or dissolve, the
subsidiaries of Xxx Automotive Group which will not be purchased by
you, and I agree that any taxes associated with any such spin offs or
liquidations will be my responsibility and not the responsibility of
Xxx Automotive Group after the 1997 year end close:
a. Xxx Leasing, Inc.
b. J & J Financial Corporation
53
c. Jay Automotive Group III, Inc.
d. Columbus Insurance Associates, Inc.
e. Jay Casualty Insurance Company, Limited
f. Peach State Life Insurance Company stock and Southeast Family Life
Insurance Company stock will be divided by their respective owner's to
Xxx Leasing, Inc.
12. Termination Letter. By signing this letter I agree that the termination
letter dated March 4, 1998, which was sent by Mr. Childs on my behalf,
is hereby rescinded and revoked.
We agree that this letter agreement constitutes the first amendment to the
Stock Purchase Agreement, and that, except as modified by this letter
agreement, the Stock Purchase Agreement remains in full force and effect.
Please sign this letter in the space provided below to indicate your agreement
with the foregoing, and return it to me for my files. The enclosed duplicate
original of this letter is for your files.
Sincerely,
XXX AUTOMOTIVE GROUP, INC.
By: /s/ Xxxxx X. Xxxxxxxxxxxxx, III
---------------------------------
Name: Xxxxx X. Xxxxxxxxxxxxx, III
Title: President
/s/ Xxxxx X. Xxxxxxxxxxxxx, III
------------------------------------
XXXXX X. XXXXXXXXXXXXX, III
ACCEPTED AND AGREED TO THIS 26TH DAY OF MARCH, 1998.
/s/ Xxxxxxx X. Xxxxxx
XXXXXXX X. XXXXXX, ON BEHALF OF
XXXXXXXXXXX AUTOMOTIVE GROUP, INC.
SUNBELT AUTOMOTIVE GROUP, INC. AND
B.A.G. GEORGIA III, INC.
54
CONSENT AND ASSIGNMENT INSTRUMENT
THIS IS A CONSENT AND ASSIGNMENT INSTRUMENT (this "Instrument") made on
March 3l , 1998, by and among XXXXXXXXXXX AUTOMOTIVE GROUP, INC., a Georgia
corporation ("BAG"), B.A.G. GEORGIA III, INC., a Georgia corporation ("Sub"),
SUNBELT AUTOMOTIVE GROUP, INC., a Georgia corporation ("Sunbelt") and XXX
AUTOMOTIVE GROUP, INC., a Georgia corporation (the "Company") and XXX X.
XXXXXXXXXXXXX, III (the "Stockholder"), with respect to that certain Stock
Purchase Agreement among the parties dated January 5, 1998 (the "Stock Purchase
Agreement"), by which the parties, for good and valuable consideration (the
receipt and sufficiency of which is hereby acknowledged), hereby agree as
follows:
1. CONSENT TO ASSIGNMENT. BAG and Sub wish to assign all of their
rights and obligations under the Stock Purchase Agreement to Sunbelt. BAG also
hereby informs the Company and the Stockholder that, prior to Closing, BAG is
expected to merge with and into Sunbelt, and Sub will be dissolved. If the
proposed merger of BAG into Sunbelt is completed, BAG will cease to exist as a
separate corporation. Subject to the completion of the transactions described in
this paragraph, by their signatures below, as required by Section 10.4 of the
Stock Purchase Agreement, the Company and the Stockholder hereby consent to (i)
the express assignment by BAG and Sub of all of their rights and obligations
under the Stock Purchase Agreement to Sunbelt and Sunbelt's express assumption
of such rights and obligations; (ii) the proposed merger of BAG into Sunbelt, as
a result of which BAG will cease to exist as a separate corporation and will
have no further rights or obligations under the Stock Purchase Agreement, and
Sunbelt, by operation of law, will assume all rights and obligations of BAG
under the Stock Purchase Agreement; and (iii) the dissolution of Sub. At or
prior to the Closing, if any such mergers or future assignments are completed,
Sunbelt shall deliver to the Company and the Stockholder copies of documents
which confirm such actions.
In addition, all parties agree that all references in the Stock
Purchase Agreement to the "Buyer Public Offering," the "Sunbelt Public
Offering," and the "Registration Statement" shall be deemed to refer to a public
offering and sale of shares of the common stock of Sunbelt.
2. ASSIGNMENT. BAG and Sub hereby assign all of their right, title and
interest in and to and all of their obligations under the Stock Purchase
Agreement to Sunbelt.
3. ASSUMPTION. SUNBELT hereby accepts said assignment of the Stock
Purchase Agreement and hereby agrees to perform and carry out the obligations of
BAG and Sub under the Stock Purchase Agreement.
4. EFFECTIVE DATE. This Instrument is effective at the close of
business on March 31, 1998.
5. MISCELLANEOUS PROVISIONS. All capitalized terms that are used but
not expressly defined in this Instrument have the meanings ascribed to them in
the Stock Purchase Agreement, and
1
55
the definitions of those terms in the Stock Purchase Agreement are incorporated
by reference in this Instrument. Each party to this Instrument hereby agrees to
perform, at the expense of the requesting party, all such further acts and
execute and deliver all such further agreements, instruments and other documents
as the other shall reasonably request to evidence more effectively the actions
taken pursuant to this Instrument. This Instrument and all of its provisions
shall be binding upon the successors and assigns of the parties to this
Instrument and shall inure to the benefit of the permitted successors and
assigns of the parties to this Instrument. The failure of any party at any time
or times to require performance of any provision of this Instrument shall in no
manner affect the right to enforce the same; and no waiver by any party of any
provision (or of a breach of any provision ) of this Instrument, whether by
conduct or otherwise, in any one or more instances shall be deemed or construed
either as a further or continuing waiver of any such provision or breach or as a
waiver of any other provision (or as a breach of any other provision) of this
Instrument. This Instrument shall be governed by and construed and enforced
according to the laws of the State of Georgia. Titles and captions of or in this
Instrument are inserted only as a matter of convenience and for reference and in
no way define, limit, extend or describe the scope of this Instrument or the
intent of any of its provisions. This Instrument may be executed in two or more
copies, each of which shall be deemed an original, and it shall not be necessary
in making proof of this Instrument or its terms to produce or account for more
than one of such copies.
6. The consent of the Company and the Stockholder is made pursuant to
the provisions of Section 10.4 of the Stock Purchase Agreement, which shall
apply here, as well as the specific limitations set forth herein.
IN WITNESS WHEREOF, the parties have caused this Instrument to be duly
executed, under seal, on March 31, 1998.
"BAG:"
ATTEST: XXXXXXXXXXX AUTOMOTIVE
GROUP, INC.
BY: /s/ S.C. xxxxxxx BY: /s/ X. X. Xxxxxx
-------------------------------- --------------------------
Name: S.C. Xxxxxxx Name: X. X. Xxxxxx
-------------------------- --------------------
Title: Ass't Secretary Title: Secretary Treasurer
------------------------- -------------------
[CORPORATE SEAL]
2
56
"Sub:"
ATTEST: B.A.G. GEORGIA III, INC.
BY: /s/ S.C. Xxxxxxx BY: /s/ X.X. Xxxxxx
---------------------- --------------------------
Name: S.C. Xxxxxxx Name: X. X. Xxxxxx
----------------- ---------------------
Title: Secretary Title: CEO
---------------- --------------------
[CORPORATE SEAL]
"Sunbelt:"
ATTEST: SUNBELT AUTOMOTIVE GROUP,
INC.
BY: /s/ S.C. Xxxxxxx BY: /s/ X.X. Xxxxxx
---------------------- --------------------------
Name: S.C. Xxxxxxx Name: X. X. Xxxxxx
----------------- ---------------------
Title: Secretary Title: CEO
---------------- --------------------
[CORPORATE SEAL]
The "Company:"
ATTEST: XXX AUTOMOTIVE GROUP, INC.
BY: /s/ Xxxxx X. Xxxxxxxxxxxxx BY: /s/ X.X. Xxxxxxxxxxxxx
----------------------------- -------------------------
Name: Xxxxx X. Xxxxxxxxxxxxx Name: X.X. Xxxxxxxxxxxxx
------------------------ --------------------
Title: Secretary Title: President
----------------------- -------------------
[CORPORATE SEAL]
The "Stockholder:"
/s/ Xxxxx X. Xxxxxxxxxxxxx III [SEAL]
-------------------------------
Xxxxx X. Xxxxxxxxxxxxx, III
3
57
As contemplated by Section 10.4 of the Stock Purchase Agreement, Xxx
Leasing, Inc. consents to the assignments described in this Instrument,
effective as set forth in Section 4 of this Instrument.
ATTEST: XXX LEASING, INC.
BY: /s/ Xxxxx X. Xxxxxxxxxxxxx BY: /s/ X.X. Xxxxxxxxxxxxx
------------------------------- -------------------------
Name: Xxxxx X. Xxxxxxxxxxxxx Name: X. X. Xxxxxxxxxxxxx
------------------------------ -----------------------
Title: Secretary Title: President
----------------------------- ----------------------
[CORPORATE SEAL]
4
58
EXTENSION OF CLOSING DATE DEADLINE,
APPROVAL OF PARTIAL REDEMPTION, AND
AMENDMENT TO STOCK PURCHASE AGREEMENT
THIS EXTENSION, APPROVAL AND AMENDMENT, made and entered into as of
July 30, 1998, by and between SUNBELT AUTOMOTIVE GROUP, INC., a Georgia
corporation ("Sunbelt"), XXX AUTOMOTIVE GROUP, INC., a Georgia corporation (the
"Company" or "JAG") and XXXXX X. XXXXXXXXXXXXX, III (the "Stockholder"),
WITNESSETH:
THAT WHEREAS, the parties hereto and other parties related to Sunbelt
entered into a Stock Purchase Agreement (the "SPA") dated as of January 5, 1998,
for the sale and purchase of JAG shares owned by the Stockholder to BAG;
WHEREAS, by letter agreement dated March 23, 1998, the parties hereto
agreed to certain revisions and amendments to the SPA as stated therein;
WHEREAS, by a Consent and Assignment instrument dated March 31, 1998,
the other parties to the SPA related to Sunbelt, who are not named herein, with
the consent of the other parties hereto, assigned to Sunbelt all of their rights
and interest in and to the SPA;
WHEREAS, by letter agreement dated June 12, 1998, the parties hereto
agreed to an extension of the Closing Date Deadline as defined in the SPA to and
including July 31, 1998;
WHEREAS, Sunbelt has indicated that the IPO described in the SPA will
not be closed by July 31, 1998, and for that and other reasons, including the
mutual covenants, conditions and considerations set forth herein, the parties
wish
Page 1
59
to further extend the Closing Date Deadline and agree to certain other
revisions, additions, amendments and modifications to the SPA as set forth
herein,
NOW, THEREFORE, for and in consideration of the mutual terms,
conditions and other agreements set forth herein, and other good and valuable
consideration, receipt whereof is hereby acknowledged, the parties hereto agree
as follows:
1. EXTENSION OF CLOSING DATE DEADLINE. The Closing Date Deadline in the
SPA shall be further extended to and including September 4, 1998,
subject to the conditions set forth herein.
2. PARTIAL REDEMPTION. To satisfy the provisions of Paragraphs 1.5 and
Article 11 of the SPA, JAG shall distribute the assets described on
Exhibit A, attached hereto and made a part hereof, to the Stockholder
prior to the IPO closing in partial redemption of JAG stock as
contemplated by the SPA. The parties agree that the amount of the cash
distribution described in Article 11 of the SPA shall be cash in the
amount of $1,339,102.00. All parties hereto agree that said
distribution shall be deemed to satisfy in full the rights of the
Stockholder to receive distribution under Article 11 of the SPA and
to resolve and settle all obligations of the Shareholder to reimburse
Sunbelt and/or JAG for any tax consequences that result from or arise
out of the spin-offs, partial redemption and/or the distributions to
Stockholder described herein, and no party hereto shall have any right
whatsoever to demand repayment, a reduction or an increase of said
amount after closing. The parties hereto further agree that any tax
consequences to Sunbelt, JAG or any subsidiary that may arise or result
from the said spin-offs, partial redemption and/or the distributions
described herein shall be the sole responsibility of such corporation,
and the Stockholder shall have no liability or responsibility
therefor. The parties hereto
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further acknowledge and affirm that they have had adequate and ample
opportunity to investigate and review the books and records of JAG, to
consult with accountants and attorneys and other parties of their
choosing, and to take any and all action necessary for each to approve
said spin-offs, partial redemption and/or the distributions to
Stockholder described herein pursuant to the provisions set forth
herein.
3. REAFFIRMATION. All other provisions of the SPA, amendments and
revisions thereto not in conflict herewith shall remain in full force
and effect and are hereby ratified by the parties.
4. GUARANTIES. If the debts of JAG to First Union National Bank, World
Omni Financial Corporation and/or Regions Bank are not satisfied in
full at closing, Sunbelt shall cause said creditors to release
Stockholder from any guaranties of such indebtedness.
5. CLOSING DOCUMENTS. The parties hereto acknowledge and affirm that they
approve and agree to the form of the following listed documents which
shall be executed at closing:
(a) Sublease;
(b) Employment Agreement;
(c) Non-Competition Agreement; and
(d) Promissory Note.
IN WITNESS WHEREOF, the parties hereto have caused this Extension and
Amendment to Stock Purchase Agreement to be duly executed as of the day and year
first above written.
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SUNBELT AUTOMOTIVE GROUP, INC.
Attest: By: /s/ Xxxxxxx X. Xxxxxx
---------------------------- ---------------------------------
Name: Name: Xxxxxxx X. Xxxxxx
------------------------------ -------------------------------
Title: Title: COO
----------------------------- ------------------------------
(Corporate Seal)
[SIGNATURES ON NEXT PAGE]
XXX AUTOMOTIVE GROUP, INC.
Attest: By: /s/ X. X. Xxxxxxxxxxxxx
---------------------------- ---------------------------------
Name: Name: X.X. Xxxxxxxxxxxxx
------------------------------ -------------------------------
Title: Title: President/Chairman
----------------------------- ------------------------------
(Corporate Seal)
/s/ illegible /s/ Xxxxx X. Xxxxxxxxxxxxx
--------------------------------- ------------------------------------
Witness for Stockholder XXXXX X. XXXXXXXXXXXXX, III
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EXHIBIT A
1. All of the outstanding shares of the following subsidiary corporations:
Xxx Automotive Group III, Inc.
Southeast Family Life Insurance Company
Xxx Leasing, Inc.
Columbus Insurance Company, Inc.
J & J Financial Corporation
Peach State Insurance Company, Inc.
Xxx Casualty Co., Ltd.
2. Cash in the amount of $ 1,339,102.00.
3. The following real property:
Mazda Property
(Description attached hereto as Exhibit A-1)
4th Avenue Property
(Description attached hereto as Exhibit A-2)
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