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EXHIBIT 2.5
▇▇▇▇▇▇▇▇▇▇ CHEVROLET, INC.
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "Agreement"), is entered into as of
December 27, 1997 by and between SUNBELT AUTOMOTIVE GROUP, INC., a Georgia
corporation ("SUNBELT"), BAG TENNESSEE II, INC., a Georgia corporation ("Sub")
(SUNBELT and Sub are sometimes referred to as "Buyers"), ▇▇▇▇▇▇▇▇▇▇, INC.,
d/b/a ▇▇▇▇▇▇▇▇▇▇ Chevrolet, Chrysler, Plymouth, Dodge, a Tennessee corporation
(the "Company" or "GCI") and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ (90%) AND ▇▇▇ ▇▇▇▇▇▇▇▇ (10%) (the
"Stockholder"). SUNBELT, Sub, the Company and the Stockholder are sometimes
referred to collectively as the "Parties" and individually as a "Party."
WITNESSETH:
WHEREAS, the Company and its wholly-owned subsidiary, EMPIRE KIA, INC.
("GCI SUBSIDIARY") operates Chevrolet, Jeep-Eagle, Chrysler, Plymouth, Dodge
and Kia automobile dealership businesses in Elizabethton, Tennessee;
WHEREAS, the Stockholder owns all of the issued and outstanding shares of
Common Stock $1,000, par value, of the Company (the "GCI Shares");
WHEREAS, Sub is a wholly-owned subsidiary of SUNBELT; and
WHEREAS, Sub desires to purchase all of the GCI Shares, and the
Stockholder desires to sell the GCI Shares to Sub upon the terms and subject to
the conditions set forth in this Agreement, such that immediately after giving
effect to such purchase and sale, Sub will own one hundred percent (100%) of
all of the issued and outstanding shares of Common Stock of the Company, on a
fully diluted basis.
NOW, THEREFORE, in consideration of the mutual terms, conditions and other
agreements set forth herein, the parties hereto hereby agree as follows:
ARTICLE 1
PURCHASE AND SALE OF SHARES
1.1 PURCHASE AND SALE OF THE SHARES.
(a) PURCHASE AND SALE. Upon the terms and subject to the conditions set
forth in this Agreement, the Stockholder shall sell to Sub, and Sub shall
purchase from the Stockholder, the GCI Shares for an aggregate purchase price
equal to NINE MILLION DOLLARS ($9,000,000) (the "Base Price"), which Base Price
is subject to adjustment after Closing as provided in SECTIONS 1.3 AND 1.4
hereof. The Base Price herein is predicated upon the "FIFO Net Worth" of the
Company which the Company and the Stockholder represent will be no less than to
be determined by ▇▇▇▇▇ ▇▇▇▇▇▇, CPA on 12/30/97, not counting any operating loss
for January and February, 1998 ("Adjusted Net Worth") as of the Closing Date. At
the Closing referred to in SECTION 1.1(b) hereof:
(i) the Stockholder shall sell, assign, transfer and deliver to Sub the
GCI Shares representing 100% of the outstanding Common Stock, free and clear of
all Liens (as defined in SECTION 10.11), and shall deliver the certificates
representing such Shares accompanied by stock powers duly executed in blank; and
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(ii) Sub shall accept and purchase the GCI Shares from the
Stockholder and in payment therefor shall deliver to the Stockholder
immediately available funds in an aggregate amount equal to the cash portion of
the Base Price, less the Escrow Amount (as defined in Section 1.6) by certified
funds; and
(iii) As set forth in Section 1.6, Sub will deliver the
Escrow Amount to the Escrow Agent pursuant the terms of the Escrow Agreement.
(b) CLOSING. (i) Subject to the conditions set forth in this
Agreement, the purchase and sale of the GCI Shares pursuant to this Agreement
(the "Closing") shall take place at a location to be agreed upon by the
parties. The Closing of the transactions contemplated hereby shall take place
within five (5) business days after the later of (a) the last manufacturer's
approval of the Buyer or its designee as Dealer Sales and Service
representatives of the Company's dealership, or (b) after the consummation of
the purchase, sale and transfer of title of the subject real property
contemplated to be sold herein to SUNBELT or its assignee; but in no event
later than March 31, 1998. The date on which the Closing occurs is herein
referred to as the "Closing Date".
(c) DELIVERIES AT THE CLOSING. Subject to the conditions set forth in
this Agreement, at the Closing:
(i) the Stockholder shall deliver to Sub (A) certificates
representing the GCI Shares bearing the restrictive legend customarily placed
on securities that have not been registered under applicable federal and state
securities laws and accompanied by stock powers as required by SECTION
1.1(a)(i) hereof, and any other documents that are necessary to transfer to Sub
good and marketable title to all the GCI Shares, and (B) all opinions,
certificates and other instruments and documents required to be delivered by
the Stockholder at or prior to the Closing or otherwise required in connection
herewith;
(ii) Sub shall pay and deliver to the Stockholder funds as
required by SECTION 1.1(a) (ii) herein and all certificates and other
instruments and documents required to be delivered by Sub at or prior to the
Closing or otherwise required in connection herewith;
(iii) The Company, Sub, SUNBELT and the Owners of each of the
subject real properties wherein the automotive dealerships of the Company and
the GCI Sub are operated at the present time shall have entered into acceptable
agreements for the purchase and sale of the real estate properties; and
(iv) Sub and the Company shall enter into an consulting
agreement with Stockholder in a form mutually acceptable to SUNBELT, Sub and
Stockholder (the "Consulting Agreement") and a Non-Compete Agreement which is
acceptable to Stockholder, Sub and SUNBELT.
1.2 PAYMENT OF BASE PRICE CONSIDERATION. The sum of NINE MILLION DOLLARS
($9,000,000.00) *(the Escrow Amount, as set forth in Section 1.6 below) shall be
paid to Stockholder at Closing in cash or other immediately available funds
("Cash Consideration"); and
1.3 COMPUTATION OF FIFO NET WORTH
(a) Base price adjusted only if net worth @ closing is not at least
adjusted net worth.
* Plus an amount equal to forty percent (40%) of the taxable net income that
must be reported by the selling shareholders for 1997.
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(b) In determining the FIFO Net Worth of the Company for purposes of
the Closing Date Balance Sheet, Generally Accepted Accounting Principles
("GAAP"), consistently applied shall be utilized by the Parties.
1.4 NET WORTH ADJUSTMENT
(a) As soon as practicable after the Closing Date, the Stockholder
shall deliver to Sub a balance sheet of the Company dated as the Closing Date
(such balance sheet so delivered is referred to herein as the "Closing Date
Balance Sheet"). SUNBELT shall reimburse the Company for reasonable fees or
expenses incurred by the Company's certified public accountant in connection
with the preparation of the Closing Date Balance Sheet or the Estimated Closing
Date Balance Sheet referred to in SECTION 6.6. The Closing Date Balance Sheet
shall be prepared in good faith on the same basis and in accordance with the
accounting principles, methods and practices used in preparing the Financial
Statements (as defined in SECTION 4.7 hereof), subject to the modifications,
adjustments and exceptions to such accounting principles, methods and practices
set forth on SCHEDULE 1.4(a) hereto (such accounting principles, methods and
practices as so modified and adjusted, and such procedures, are referred to
herein as the "Accounting Principles"). In connection with the preparation of
the Closing Date Balance Sheet, the Stockholder and the Company and the
Reviewer (as defined below) and other representatives of Sub will conduct a
physical inventory at each location where inventory is held by the Company.
From the results of such inventory and prior to the Closing Date, Sub and the
Stockholder (or the respective representatives thereof) will prepare a
schedule, which shall be signed by each of Sub and the Stockholder, setting
forth the nature and quality of such inventory and such other items as shall be
agreed upon by Sub and the Stockholder to be included in the Closing Date
Balance Sheet.
(b) Within thirty (30) days after delivery of the Closing Date Balance
Sheet, (i) Ernst & Young, LLC or such other national accounting firm (the
"Reviewer") selected by Sub, shall audit or otherwise review the Closing Date
Balance Sheet in such manner as Sub and the Reviewer deem appropriate, and (ii)
Sub shall deliver such reviewed balance sheet (the "Reviewed Balance Sheet"),
together with the Reviewer's report thereon, to the Stockholder. The Reviewed
Balance Sheet (i) shall be prepared on the same basis and in accordance with
the Accounting Principles and (ii) shall include a schedule showing the
computation of the final FIFO Net Worth, computed in accordance with the
definition of FIFO Net Worth set forth in SECTION 1.4 (i)-hereof. Sub and the
Reviewer shall have the opportunity to consult with the Stockholder, the
Company and each of the accountants and other representatives of the
Stockholder and the Company and examining the work papers, schedules and other
documents prepared by the Stockholder, the Company and each of such accountants
and other representatives during the preparation of the Closing Date Balance
Sheet. The Stockholder and the Stockholder's independent public accountants
shall have the opportunity to consult with the Reviewer and examine the work
papers, schedules and other documents prepared by Sub and the Reviewer during
the preparation of the Reviewed Balance Sheet.
(c) The Stockholder shall have a period of fifteen (15) days after
delivery to the Stockholder of the Reviewed Balance Sheet to present in writing
to Sub all objections the Stockholder may have to any of the matters set forth
or reflected therein, which objections shall be set forth in reasonable detail.
During said fifteen (15) day period, the Stockholder, his accountants and other
representatives of the stockholder may examine reviewer's work papers,
schedules, research notes and all correspondence between Reviewer and Sub or
sunbelt or any representative of Sub or SUNBELT, which relate to the Closing
Date Balance Sheet or Reviewed
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Balance Sheet and any entry thereto made or considered by Reviewer. If no
objections are raised within such 15-day period, the Reviewed Balance Sheet
shall be deemed accepted and approved by the Stockholder and a supplemental
closing (the "Supplemental Closing") shall take place within ten (10) Business
Days following the expiration of such 15-day period, or on such other date as
may be mutually agreed upon in writing by Sub and the Stockholder.
(d) If the Stockholder shall raise any objection within the 15-day
period, Sub and the Stockholder shall attempt to resolve the matter or matters
in dispute and, if resolved, the Supplemental Closing shall take place within
ten (10) Business Days following such resolution.
(e) If such dispute cannot be resolved by Sub and the Stockholder
within thirty (30) days after the delivery of the Reviewed Balance Sheet, then
the specific matters in dispute shall be submitted to a firm of independent
certified public accountants having a reputation for special expertise in
automobile dealership accounting and mutually acceptable to Sub and the
Stockholder, which firm shall make a final and binding determination as to such
matter or matters. Such accounting firm shall send its written determination to
Sub and the Stockholder and the Supplemental Closing, if any, shall take place
five (5) Business Days following the receipt of such determination by Sub and
the Stockholder. The fees and expenses of the accounting firm referred to in
this SECTION 1.4(e) shall be paid one half by Sub and one half by the
Stockholder.
(f) Sub and the Stockholder agree to cooperate with each other and
each other's authorized representatives and with any accounting firm selected
by Sub and the Stockholder pursuant to SECTION 1.4(e) hereof in order that any
and all matters in dispute shall be resolved as soon as possible.
(g) If the FIFO Net Worth as shown on the Reviewed Balance Sheet
as finally determined through the operation of SECTIONS 1.4 (a) THROUGH (e) and
Section 1.5 hereof shall be less than the Adjusted Net Worth (the amount of any
such deficiency being referred to herein as the "Net Worth Deficiency"), the
Stockholder shall pay to Sub, by wire transfer of immediately available funds to
an account designated in writing by Sub within thirty (30) Business Days of the
date of the Supplemental Closing, an amount equal to the Net Worth Deficiency,
together with interest on such amount from the Closing Date to the date of the
Supplemental Closing at the prime rate or its equivalent (as announced from time
to time by Citibank, N.A.).
(h) If the FIFO Net Worth as shown on the Closing Date Balance Sheet
is equal to or greater than the Adjusted Net Worth as shown on the Reviewed
Balance Sheet as finally determined through the operation of SECTIONS 1.4(a)
THROUGH (e) and Section 1.5 hereof shall be greater than the Net Worth as shown
on the Closing Date Balance Sheet (the amount of any such excess being referred
to herein as the "Net Worth Excess"), Sub shall pay to the Stockholder, by wire
transfer of immediately available funds to an account designated in writing by
Sub, within ten (10) Business Days of the Supplemental Closing, an amount equal
to the Net Worth Excess, together with interest on such amount from the Closing
Date to the date of the Supplemental Closing at the prime rate or its
equivalent (as announced from time to time by Citibank, N.A.).
(i) "FIFO Net Worth" computed in connection with the Closing Date
Balance Sheet and the Reviewed Balance Sheet shall mean the amount by which the
total assets (plus the amount of any First In First Out ("FIFO") inventory
reserves) exceed the total liabilities reflected, in each case, on the balance
sheets of Company comprising the Closing Date Balance Sheet or the Reviewed
Balance Sheet, as the case may be.
1.5 FIFO COMPUTATION & TAX ADJUSTMENT. In determining the "FIFO Net Worth" of
the Company, the Company's new and used motor vehicle inventories were adjusted
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from LIFO based accounting principles to FIFO based accounting principles. In
using LIFO based accounting for the new and used motor vehicle inventories,
certain tax liabilities of the Company were deferred. In determining adjusted
FIFO Net Worth, the Company and GCI SUBSIDIARY agree to book the tax deferral
as a current liability against the adjustment to obtain the Net Adjusted FIFO
Worth of the Company's new and used motor vehicle inventories.
1.6 ESCROW. Notwithstanding the payment of the Cash Consideration described in
Section 1.2(a) herein and the payment by the Note described in Section 1.2(b),
Sub shall at Closing deposit into escrow funds in the amount of $500,000.00
(the "Escrow Amount") by delivering such funds to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ as the "Escrow
Agent" which Escrow Amount shall be held and disbursed by the Escrow Agent
pursuant to the terms of an escrow agreement to be agreed upon by the parties.
1.7 KIA DEALERSHIP. If Kia refuses to consent to this Agreement and
approve SUNBELT and Sub as its authorized dealer for Elizabethton, Tennessee,
then SUNBELT may elect not to purchase the Kia franchises, and the Base Price
for this transaction shall be proportionately adjusted.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
OF THE STOCKHOLDER
The Stockholder represents and warrants to SUNBELT and Sub 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 (as
though made then and as though the Closing Date were substituted for the date
of this Agreement throughout this Article 2) with respect to himself, except as
set forth in Annex I attached hereto.
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 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 SUNBELT 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
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experience in business and financial matters, (d) has received certain
information concerning SUNBELT and Sub and has had the opportunity to obtain
additional information as desired in order to 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 for
the reasons set forth on Annex I.
2.5 GCI SHARES. The Stockholder holds of record and owns beneficially all of
the issued and outstanding GCI 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). The
Stockholder is not a party to any voting trust, proxy, or other agreement or
understanding with respect to the voting of any capital stock of the Company.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SUNBELT AND SUB
SUNBELT and Sub represent and warrant to the Stockholder 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 (as
though made then and as though the Closing Date were substituted for the date
of this Agreement throughout this Article 3), except as set forth in Annex II
attached hereto.
3.1 ORGANIZATION OF SUNBELT AND SUB. SUNBELT and Sub are corporations duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of each of their incorporation.
3.2 AUTHORIZATION OF TRANSACTION. SUNBELT 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 SUNBELT and Sub,
enforceable in accordance with its terms and conditions. SUNBELT 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 SUNBELT or Sub is subject or any provision of the
charter or bylaws of either SUNBELT 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 SUNBELT or Sub is a party or by which it is bound or to
which any of its assets is subject.
3.4 BROKERS' FEES. SUNBELT and Sub 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. SUNBELT and Sub are not acquiring the GCI Shares with a view to
or for sale in connection with any distribution thereof within the meaning of
the Securities Act.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES CONCERNING THE
COMPANY AND THE GCI SUBSIDIARY
The Stockholder represents, and warrants to SUNBELT and Sub 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 (as
though made then and as though the Closing Date were substituted for the date
of this Agreement throughout this Article 4), except as set forth in the
disclosure schedule delivered by the Stockholder to SUNBELT and Sub NO LATER
THAN THIRTY (30) DAYS AFTER THE EXECUTION OF THIS AGREEMENT and initialed by
the Parties (the "Disclosure Schedule"). The Disclosure Schedule will be
arranged in paragraphs corresponding to the lettered and numbered paragraphs
contained in this Article 4.
4.1 ORGANIZATION, QUALIFICATION, AND CORPORATE POWER. Each of the Company and
the GCI SUBSIDIARY 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 GCI SUBSIDIARY 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
GCI SUBSIDIARY. Each of the Company and the GCI SUBSIDIARY 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 2000 GCI Shares, of which 100 GCI Shares are issued and outstanding and 8 GCI
Shares are held in treasury. All of the issued and outstanding GCI 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 no outstanding or authorized stock appreciation,
phantom stock, profit participation, or similar rights with respect to the
Company. There are no voting trusts, proxies, or other agreements or
understandings with respect to the voting of the capital stock of the Company.
4.3 NONCONTRAVENTION. To the Knowledge of Stockholder, 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 GCI SUBSIDIARY is subject or any provision of the charter or bylaws of
any of the Company and the GCI SUBSIDIARY 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 GCI SUBSIDIARY 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 GCI
SUBSIDIARY or on the ability of the Parties to consummate the transactions
contemplated by this Agreement. To the Knowledge of
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Stockholder, neither the Company nor the GCI SUBSIDIARY 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 GCI SUBSIDIARY or on the ability of the Parties to consummate
the transactions contemplated by this Agreement.
4.4 BROKERS' FEES. Neither the Company nor the GCI SUBSIDIARY has 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 GCI SUBSIDIARY 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
Balance Sheet or acquired after the date thereof, free and clear of all
Security Interests, except for properties and assets disposed of in the
Ordinary Course of Business since the date of the Most Recent Balance Sheet.
4.6 SUBSIDIARIES. Section 4.6 of the Disclosure Schedule sets forth for each
GCI SUBSIDIARY (a) its name and jurisdiction of incorporation, (b) the number
of shares of authorized capital stock of each class of its capital stock, (c)
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 (d) the number of shares of its capital stock held in treasury. All
of the issued and outstanding shares of capital stock of each GCI 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 GCI 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. 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 GCI Sub to sell, transfer, or
otherwise dispose of any capital stock of any of the GCI Sub or that could
require Subsidiary to issue, sell, or otherwise cause to become outstanding any
of its own capital stock. There are no outstanding stock appreciation, phantom
stock, profit participation, or similar rights with respect to any GCI
Subsidiary. There are no voting trusts, proxies, or other agreements or
understandings with respect to the voting of any capital stock of Subsidiary.
Neither the Company nor the GCI Sub controls directly or indirectly or has any
direct or indirect equity participation in any corporation, partnership, trust,
or other business association which is not a GCI Subsidiary.
4.7 FINANCIAL STATEMENTS. Attached hereto as Schedule 4.7 are the following
financial statements (collectively the "Financial Statement"): (i) audited
consolidated balance sheets and statements of income, changes in stockholders'
equity, and cash flow as of and for the fiscal years ended December 31, 1995;
December 31, 1996 (the "Most Recent Fiscal Year End") for the Company and the
GCI Sub; (ii) Dealer Financial Statements for each Dealership Franchisee for
the months January through November 1997 (the "Dealer Statements"); and (iii)
unaudited consolidated balance sheets and statements of income, changes in
stockholders' equity, and cash flow (the "Most Recent Financial Statements") as
of and for the 11 months ended November 8, 1997 (the "Most Recent Fiscal Month
End") for the Company and the GCI Sub. The Financial Statements (including the
notes thereto) have been prepared in accordance with GAAP (except for the
Dealer Statements) applied on a consistent basis throughout the periods covered
thereby and present fairly the financial condition of the Company and the GCI
Sub as of such dates and the results of operations of the Company and the GCI
Sub for such periods; provided, however, that the Most Recent Financial
Statements are subject to normal year-end adjustments (which will not be
material individually or in the aggregate) and lack footnotes and other
presentation items.
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4.8 EVENTS SUBSEQUENT TO MOST RECENT FISCAL YEAR END. Since the Most Recent
Fiscal Year End, there has not been any material adverse change in the
financial condition of the Company and the GCI Sub taken as a whole. Without
limiting the generality of the foregoing, since that date neither the Company
nor the GCI Sub have engaged in any practice, taken any action, or entered into
any transaction outside the Ordinary Course of Business.
4.9 UNDISCLOSED LIABILITIES. To the Knowledge of Stockholder, neither the
Company nor the GCI Sub has any material liability (whether known or unknown,
whether asserted or unassorted, whether accrued or unaccrued, whether
liquidated or unliquidated, and whether due or to become due, including any
liability for taxes), except for (a) liabilities set forth on the face of the
Most Recent Balance Sheet (rather than in any notes thereto) and (b)
liabilities which have arisen after the Most Recent Fiscal Month End in the
Ordinary Course of Business except as otherwise set forth on Schedule 4.9.
4.10 LEGAL COMPLIANCE. To the Knowledge of Stockholder, each of the Company and
the GCI SUBSIDIARY has complied with all applicable laws (including rules,
regulations, codes, plans, injunctions, judgments, orders, decrees, rulings,
and charges thereunder) of federal, state, local, and foreign governments (and
all agencies thereof), and no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, demand, or notice has been filed or commenced against
any of them alleging any failure so to comply, 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 GCI SUBSIDIARY.
4.11 TAX MATTERS.
(a) Each of the Company and the GCI SUBSIDIARY has filed all Income
Tax Returns that it was required to file. All such Income Tax Returns were
correct and complete in all material respects. All Income Taxes owed by any of
the Company and the GCI SUBSIDIARY (whether or not shown on any Income Tax
Return) have been paid. Neither the Company nor the GCI SUBSIDIARY currently
is the beneficiary of any extension of time within which to file any Income Tax
Return.
(b) There is no material dispute or claim concerning any Income Tax
liability of any of the Company and the GCI SUBSIDIARY either (i) claimed or
raised by any authority in writing or (ii) as to which the Stockholder and the
directors and officers of the Company and the GCI SUBSIDIARY has Knowledge
based upon personal contact with any agent of such authority.
(c) Section 4.11(c) of the Disclosure Schedule lists all federal,
state, local, and foreign Income Tax Returns filed with respect to any of the
Company and the GCI SUBSIDIARY for taxable periods ended on or after December
31, 1996, indicates those Income Tax Returns that have been audited; and
indicates those Income Tax Returns that currently are the subject of audit. The
Stockholder has delivered to SUNBELT 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 GCI
SUBSIDIARY since December 31, 1996. Neither the Company nor the GCI SUBSIDIARY
has 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.
(d) Neither the Company nor the GCI SUBSIDIARY has filed a consent
under Code ss.341(f) concerning collapsible corporations. Neither the Company
nor the GCI SUBSIDIARY has made any material payments, is obligated to make any
material payments, or is a party to any agreement that under certain
circumstances could obligate it to make any material payments that will not be
deductible under Code ss.280G. Neither the Company nor the GCI SUBSIDIARY has
been a
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United States real property holding corporation within the meaning of Code
ss.897(c)(2) during the applicable period specified in Code ss.897(c)(1)(A)(ii).
Neither the Company nor the GCI SUBSIDIARY is a party to any tax allocation or
sharing agreement. Neither the Company nor the GCI SUBSIDIARY (i) has 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) has any
liability for the taxes of any Person (other than any of the Company and GCI
SUBSIDIARY) under Reg. ss.1.1502-6 issued pursuant to the Code (or any similar
provision of state, local, or foreign law), as a transferee or successor, by
contract, or otherwise.
(e) The unpaid Income Taxes of the Company and the GCI SUBSIDIARY
(i) did not, as of the Most Recent Fiscal Month End, exceed by any material
amount the reserve for Income Tax liability (rather than any reserve for
deferred taxes established to reflect timing differences between book and tax
income) set forth on the face of the Most Recent Balance Sheet (rather than in
any notes thereto) arid (ii) will not exceed by any material amount that reserve
as adjusted for operations and transactions through the Closing Date in
accordance with the past custom and practice of the Company and the GCI
SUBSIDIARY in filing their Income Tax Returns.
4.12 REAL PROPERTY.
(a) Section 4.12(a) of the Disclosure Schedule lists all real
property that any of the Company and the GCI SUBSIDIARY owns and all real
property that any of the Company and the GCI SUBSIDIARY leases from a third
party (including names and addresses for the owner of each parcel of leased
real property and a description of the applicable lease agreement). With
respect to each such parcel of owned or leased real property, and except for
matters which would not have a material adverse effect on the financial
condition of the Company and the GCI SUBSIDIARY taken as a whole:
(i) the identified owner has good and marketable title to
the parcel of real property, free and clear of any and all Security Interests
and other Liens, claims and encumbrances except those disclosed on Section
4.12(a) of the Disclosure Schedule, none of which currently, or to the
Knowledge of the Stockholder, in the future will affect the use of the owned or
leased real property or the improvements located thereon for the conduct of the
respective businesses of the Company and the GCI SU13S1DIARY as presently
conducted;
(ii) except for leases to the Company or a GCI SUBSIDIARY,
which are identified in Section 4.12(a) of the Disclosure Schedule, there are
no leases, subleases, licenses, concessions or other agreements granting to any
party or parties the right of use or occupancy of any portion of the parcel of
real property;
(iii) there are no outstanding options or rights of first
refusal to purchase any parcel of real property, or any portion thereof or
interest therein;
(iv) no assessments have been made against any parcel of the
real property which are unpaid (except ad Valorem taxes for the current year
that are not yet due and payable), whether or not they have become Liens; and
(v) there are no disputes concerning the location of the
lines or corners of any parcel of the real property.
(b) The Stockholder has delivered to SUNBELT and Sub correct and
complete copies of the leases and subleases listed in ss.4.12(a) of the
Disclosure Schedule (as amended to date). To the Knowledge of the Stockholder,
each lease and sublease listed in ss.4.12(a) of the Disclosure Schedule is
legal, valid, binding, enforceable, and in full force and effect, except where
the illegality, invalidity, non binding nature, unenforceability, or
ineffectiveness would not have a
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material adverse effect on the financial condition of the Company and the GCI
SUBSIDIARY taken as a whole. Attached to Section 4.12(a) of the Disclosure
Schedule are correct and complete copies of all surveys, title binders, title
insurance policies and any exceptions to title for any of the owned or leased
real property.
4.13 INTELLECTUAL PROPERTY.
(a) Section 4.13(a) of the Disclosure Schedule identifies each patent
or registration which has been issued to any of the Company and the GCI
SUBSIDIARY with respect to any of its Intellectual Property, identifies each
pending patent application or application for registration which any of the
Company and the GCI SUBSIDIARY has made with respect to any of its Intellectual
Property, and identifies each material license, agreement, or other permission
which any of the Company and the GCI SUBSIDIARY has granted to any third party
with respect to any of its Intellectual Property (together with any
exceptions). The Stockholder has delivered to SUNBELT and Sub correct and
complete copies of all such patents, registrations, applications, licenses,
agreements, and permissions (as amended to date). ss.4.13(a) of the Disclosure
Schedule also identifies each material trade name or unregistered trademark
used by any of the Company and the GCI SUBSIDIARY in connection with any of its
businesses.
(b) Section 4.13(b) of the Disclosure Schedule identifies each
material item of Intellectual Property that any third party owns and that any
of the Company and the GCI SUBSIDIARY uses pursuant to license, sublicense,
agreement, or permission. The Stockholder has delivered to SUNBELT and Sub
correct and complete copies of all such licenses, sublicenses, agreements, and
permissions (as amended to date).
4.14 TANGIBLE ASSETS. The buildings, machinery, equipment, and other tangible
assets that the Company and the GCI SUBSIDIARY own and lease are free from
material defects (patent and latent), have been maintained in accordance with
normal industry practice, and are in good operating condition and repair
(subject to normal wear and tear).
4.15 INVENTORY. The inventory of the Company and the GCI SUBSIDIARY consists of
supplies, manufactured and processed parts, all of which is merchantable and
fit for the purpose for which it was procured, and none of which is
slow-moving, obsolete, damaged, or defective, subject only to the reserve for
inventory writedown set forth on the face of the Most Recent Balance Sheet
(rather than in any notes thereto) as adjusted for operations and transactions
through the Closing Date in accordance with the past custom and practice of the
Company and the GCI SUBSIDIARY
4.16 CONTRACTS. Section 4.16 of the Disclosure Schedule lists all written
contracts and other written agreements and describes all unwritten contracts
and other agreements to which any of the Company and the GCI SUBSIDIARY is a
party the performance of which will involve consideration in excess of
$100,000.00. The Stockholder has delivered to SUNBELT and Sub a correct and
complete copy of each written contract or other agreement listed in 4.16 of the
Disclosure Schedule (as amended to date).
4.17 NOTES AND ACCOUNTS RECEIVABLE. All notes and accounts receivable of the
Company and the GCI SUBSIDIARY are reflected properly on their books and
records, are valid receivables subject to no setoffs or counterclaims, are
current and collectible, and will be collected in accordance with their terms
at their recorded amounts, subject only to the reserve for bad debts set forth
on the face of the Most Recent Balance Sheet (rather than in any notes thereto)
as adjusted for operations and transactions through the Closing Date in
accordance with the past custom and practice of the Company and the GCI
subsidiary.
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4.18 POWERS OF ATTORNEY. There are no material outstanding powers of attorney
executed on behalf of any of the Company and the GCI SUBSIDIARY.
4.19 INSURANCE. Section 4.19 of the Disclosure Schedule sets forth the
following information with respect to each material insurance policy (including
policies providing property, casualty, liability, and workers' compensation
coverage and bond and surety arrangements) with respect to which any of the
Company and the GCI SUBSIDIARY is a party, a named insured, or otherwise the
beneficiary of coverage:
(a) the name, address, and telephone number of the agent;
(b) the name of the insurer, the name of the policyholder, and the
name of each covered insured;
(c) the policy number and the period of coverage;
(d) the scope (including an indication of whether the coverage is on
a claims made, occurrence, or other basis) and amount (including a description
of how deductibles and ceilings are calculated and operate) of coverage; and
(e) a description of any retroactive premium adjustments or other
material loss-sharing arrangements.
With respect to each such insurance policy: (i) to the Knowledge of Stockholder,
the policy is legal, valid, binding, enforceable, and in full force and effect
in all material respects; (ii) to the Knowledge of Stockholder, neither any of
the Company and the GCI SUBSIDIARY nor any other party to the policy is in
material breach or default (including with respect to the payment of premiums or
the giving of notices), and no event has occurred which, with notice or the
lapse of time, would constitute such a material breach or default, or permit
termination, modification, or acceleration, under the policy; and (iii) to the
Knowledge of Stockholder, no party to the policy has repudiated any material
provision thereof. Section 4.19 of the Disclosure Schedule describes any
material self-insurance arrangements affecting any of the Company and the GCI
SUBSIDIARY.
4.20 LITIGATION. Section 4.20 of the Disclosure Schedule sets forth each
instance in which any of the Company and the GCI SUBSIDIARY (a) is subject to
any outstanding injunction, judgment, order, decree, ruling, or charge or (b) is
a party or, to the Knowledge of Stockholder, is threatened to be made a party to
any action, suit, proceeding, hearing, or investigation of, in, or before any
court or quasi-judicial or administrative agency of any federal, state, local,
or foreign jurisdiction or before any arbitrator.
4.21 EMPLOYEES. To the Knowledge of Stockholder, no executive, key employee, or
significant group of employees plans to terminate employment with any of the
Company and the GCI SUBSIDIARY during the next 12 months. Neither the Company
nor the GCI SUBSIDIARY has committed any material unfair labor practice.
4.22 EMPLOYEE BENEFITS.
(a) Section 4.22 of the Disclosure Schedule lists each Employee
Benefit Plan that any of the Company and the GCI SUBSIDIARY maintains or to
which any of the Company and the GCI SUBSIDIARY contributes.
(i) To the Knowledge of Stockholder, 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
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would not have a material adverse effect on the financial condition of the
Company and the GCI SUBSIDIARY 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
Revenue Service to the effect that it meets the requirements of Code Section
401(a).
(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 Multiemployer Plan) equaled or
exceeded the present value of liabilities thereunder (determined in accordance
with then current funding assumptions).
(v) The Stockholder has delivered to SUNBELT 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 GCI SUBSIDIARY 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 Multiemployer 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
Multiemployer 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 GCI SUBSIDIARY taken as a whole.
(iii) Neither the Company nor the GCI SUBSIDIARY 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 the GCI SUBSIDIARY is a guarantor or
otherwise is responsible for any liability or obligation (including
indebtedness) of any other Person except as set forth on Schedule 4.23.
4.24 ENVIRONMENT, HEALTH, AND SAFETY MATTERS.
(a) To the Knowledge of Stockholder, the Company and the GCI
SUBSIDIARY 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 GCI SUBSIDIARY
taken as a whole.
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(b) To the Knowledge of Stockholder, the Company and the GCI
SUBSIDIARY 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 GCI SUBSIDIARY or their facilities arising under
Environmental, Health, and Safety Requirements, the subject of which would have
a Material Adverse Effect on the financial condition of the Company and the GCI
SUBSIDIARY taken as a whole.
4.25 CERTAIN BUSINESS RELATIONSHIPS. Neither the Stockholder nor any of his
Affiliates has been involved in any material business arrangement or
relationship with any of the Company or the GCI SUBSIDIARY within the past 12
months, and neither the Stockholder nor any of his Affiliates owns any material
asset, tangible or intangible, which is used in the business of any of the
Company and the GCI SUBSIDIARY.
4.26 DISCLOSURE. The representations and warranties contained in this Article 4
do not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements and information
contained in this Article 4 not misleading.
4.28 MINIMUM FLOOR PLAN REQUIREMENT. As of the Closing Date, each GCI
SUBSIDIARY separately, and all GCI SUBSIDIARY 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 ACCESS; CONFIDENTIALITY. Between the date hereof and the Closing Date, the
Stockholder and the Company will (i) provide to the officers and other
authorized representatives of SUNBELT and Sub full access, during normal
business hours, to any and all premises, properties, files, books, records,
documents, and other information of the Company and GCI SUBSIDIARY and will
cause the Company's officers to furnish to SUNBELT and its authorized
representatives any and all financial, technical and operating data and other
information pertaining to the businesses and properties of the Company and GCI
SUBSIDIARY (including the Real Property and the Improvements), and (ii) make
available for inspection and copying by SUNBELT and Sub true and complete
copies of any documents relating to the foregoing. SUNBELT and Sub 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
opinion of its counsel, by other requirements of law) all Confidential
Information (as defined below) and will not disclose the same to any third
party except in connection with obtaining financing and otherwise as may
reasonably be necessary to carry out this Agreement and the transactions
contemplated hereby, including any due diligence review by or on behalf of
SUNBELT and Sub. If this Agreement is terminated, SUNBELT and Sub will, and
will cause their representatives to, promptly return to the Company and GCI
SUBSIDIARY, upon the reasonable request of the Company, all Confidential
Information furnished by the Company and GCI SUBSIDIARY, including all copies
and
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summaries thereof. As used herein, "Confidential Information" shall mean all
information concerning the Company and its subsidiaries obtained by SUNBELT,
Sub and their representatives from the Company 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 Company or (z) which is
or becomes known to the public, other than through a breach by SUNBELT or Sub
or any of their representatives of this Agreement.
5.2 FURNISHING INFORMATION; ANNOUNCEMENTS. Each Party will, as soon as
practical after reasonable request therefor, furnish to the other Parties all
information concerning such Party or its Affiliates required for inclusion in
any statement or application made by any other Party or Parties to any
governmental or regulatory body or to any manufacturer or distributor or in
connection with obtaining any third party consent in connection with the
transactions contemplated by this Agreement. 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. SUNBELT shall
reimburse the Company and the Stockholder for any reasonable expenses incurred
by the Company and the Stockholder in connection with this Section.
5.3 CERTAIN CHANGES AND CONDUCT OF BUSINESS. From and after the date of this
Agreement, and until the Closing, the Company and GCI SUBSIDIARY: (a) shall
conduct its business solely in the Ordinary Course of Business; 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 GCI
SUBSIDIARY, either individually or in the aggregate. The Stockholder shall
cause the Company and GCI SUBSIDIARY to comply with the requirements of this
Section 5.3.
5.4 NO INTERCOMPANY PAYABLES OR RECEIVABLES. At the Closing there will be no
intercompany payables or intercompany receivables due and/or owing between the
Stockholder and any of his Affiliates, on the one hand, and the Company and GCI
SUBSIDIARY, on the other hand.
5.5 NEGOTIATIONS. Until the earlier of 180 days from the date hereof and the
termination of this Agreement pursuant to SECTION 8.1 hereof, no Stockholder,
nor the Company, nor the Company's officers, directory, employees, advisors,
agents, representatives, Affiliates or anyone acting on behalf of the
Stockholder, the Company or such persons, shall, directly or indirectly,
encourage, solicit, initiate or engage in discussions or negotiations with, or
provide any information to, any person (other than SUNBELT or its
representatives) concerning any merger, sale of assets (other than in the
ordinary course of business), purchase or sale of shares of capital stock or
similar transaction involving the Company. The Stockholder shall promptly
communicate to SUNBELT any inquiries or communications concerning any such
transaction (including the identity of any person making such inquiry or
communication) which the Stockholder may receive or of which the Stockholder
may become aware.
5.6 CONSENTS; COOPERATION. Subject to the terms and conditions hereof, the
Stockholder and the Company and SUNBELT and Sub will use their respective best
efforts at their own expense:
(a) to obtain prior to the earlier of the date required (if so
required) or the Closing Date, all waivers, permits, licenses, approvals,
authorizations, qualifications, orders and consents of all third parties and
governmental authorities, and make all filings and registrations with
governmental authorities which are required on their respective parts for (i)
the consummation of the transactions contemplated by this Agreement, (b) the
ownership or leasing and operating after the Closing by
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the Company of all its material properties and (iii) the conduct after the
Closing by the Company of its businesses as conducted by it on the date hereof;
(b) to obtain the approvals of the automobile manufacturers which are
required by Section 6.12 below;
(c) to 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; and
(d) to furnish each other such information and assistance as may
reasonably be requested in connection with the foregoing.
5.7 ADDITIONAL AGREEMENTS. Subject to the terms and conditions of this
Agreement, each of the parties hereto agrees to use its best efforts at its own
expense to take, or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper or under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement.
In case at any time after the Closing any further action is necessary or
desirable to carry out the purposes of this Agreement, the proper officers of
the Company shall take all such necessary action.
5.8 FACTORY STATEMENTS. The Company will deliver to SUNBELT copies of the
Dealer Statements provided by the Company or the GCI SUBSIDIARY after the date
hereof within five days of their delivery to the Automobile Manufacturers. All
such Statements shall fairly present the financial position and results of
operations of the Company as of the date or for the periods indicated.
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: (i) 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, (ii) 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, (iii) 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 (iv) 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 in Section 4.16 of the Disclosure Schedule. The Company and
the Stockholder will (x) promptly advise SUNBELT of any event that has, or
could reasonably be expected in the future to have, a Material Adverse Effect
on the Company or GCI SUBSIDIARY, (y) confer on a regular and frequent basis
with one or more designated representatives of SUNBELT to report operational
matters and to report the general status of ongoing operations, and (z) notify
SUNBELT of any emergency or other change in the normal course of business or
relating to the owned or leased real property or improvements of the Company or
GCI SUBSIDIARY and of any governmental complaints, investigations or hearings,
(or communications indicating that the same may be contemplated) or
adjudicatory proceedings involving the Company or GCI SUBSIDIARY, the owned or
leased real property or the improvements and will keep SUNBELT fully informed
of such events and permit SUNBELT'S representatives access to all materials
prepared in connection therewith. The Stockholder shall give prompt notice to
SUNBELT of any notice or other communication from any third person asserting
any right, title or interest in any of the Shares held by such Stockholder,
including, without limitation, any threat to commence, or notice of the
commencement of any action or other proceeding with respect to the Shares, or
the occurrence of
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any other event of which such Stockholder has knowledge which could result in
any failure to consummate the sale of the Shares as contemplated hereby.
5.10 ASSURANCE BY THE STOCKHOLDER. The Stockholder shall use its best efforts
to cause the Company and GCI SUBSIDIARY to comply with its respective covenants
set forth in this Agreement.
5.11 ANTITRUST IMPROVEMENTS ACT COMPLIANCE. SUNBELT, the Stockholder and the
Company, 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
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ 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. SUNBELT shall pay the H.S.R. fling fee
relating to such filings. The parties shall use their 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
SUNBELT'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
SUNBELT shall determine that continuing such resistance is not in its best
interest, SUNBELT may, by written notice to the other Parties, terminate this
Agreement with the effect set for the in SECTION 8.2 hereof.
5.12 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 the related
Party/Stockholder Loans amounting to $* PER BOOKS (the "Stockholder Loans").
For purposes of this Section, the Stockholder Loans shall mean the loans to the
Company from Stockholder and his Affiliates as set forth on the Company Balance
Sheet in the approximate amount of $* PER BOOKS.
5.13 STOCK RESTRICTION AGREEMENT. Prior to the Closing Date, any Stock
Restriction Agreement and any Buy/Sell Agreement involving or affecting the
capital stock of the Company or GCI SUBSIDIARY shall be terminated in
accordance with its terms and the parties thereto shall have released any and
all claims arising under or relating to any Stock Restriction Agreement and any
Buy/Sell Agreement and its termination.
5.14 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 Balance Sheet and will not be reflected as assets at the Closing
Date Balance Sheet). These items will include personal pictures, awards and
mementos.
5.15 COOPERATION IN PREPARATION OF REGISTRATION STATEMENT. The Company and the
Stockholder shall furnish or cause to be furnished to SUNBELT and the
underwriters of the SUNBELT IPO (the "Underwriters") all of the information
concerning the Company and the Stockholder required for inclusion in, and will
cooperate fully and completely with SUNBELT, SUNBELT'S legal counsel, SUNBELT'S
accountants and the Underwriters in the preparation of, 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 the Registration Statement.
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ARTICLE 6
CONDITIONS TO THE OBLIGATIONS
OF SUNBELT AND SUB TO EFFECT THE CLOSING
The obligations of SUNBELT and Sub required to be performed by them at the
Closing shall be subject to the satisfaction, at or prior to the Closing, of
each of the following conditions, each of which may be waived by SUNBELT and
Sub as provided herein except as otherwise required by applicable law:
6.1 REPRESENTATION AND WARRANTIES; AGREEMENTS; COVENANTS. Each of the
representations and warranties of the Company, GCI SUBSIDIARY and the
Stockholder 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, GCI SUBSIDIARY and the Stockholder
required by this Agreement to be performed by them at or prior to the Closing
shall have been duly performed and complied with in all material respects as of
the Closing. At the Closing, Sub shall have received a certificate, dated 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. 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 franchise agreements (or
comparable agreements), required to consummate the transactions contemplated
hereby and all consents or waivers shall have been made or obtained.
6.3 OPINIONS OF THE COMPANY'S AND THE STOCKHOLDER'S COUNSEL. SUNBELT and Sub
shall have been furnished with the opinion of the Company's and the
Stockholder's counsel, dated the Closing Date, in the form and substance
satisfactory to SUNBELT and Sub and their counsel.
6.4 ABSENCE OF LITIGATION. No order, stay, injunction or decree of any court of
competent jurisdiction in the United States shall be in effect (i) that
prevents or delays the consummation of any of the transactions contemplated
hereby or (ii) would impose any limitation on the ability of SUNBELT or Sub
effectively to exercise full rights of ownership of the Shares. 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 or seeking damages in connection therewith which SUNBELT or Sub,
in good faith and with the advice of counsel, believes it makes it undesirable
to proceed with the consummation of the transactions contemplated hereby.
6.5 NO MATERIAL ADVERSE EFFECT. During the period from December 31, 1996 to the
Closing Date, there shall not have been any material adverse change in the
assets, properties,
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business, operations, prospects, net income or financial condition of the
Company or GCI SUBSIDIARY either individually or in the aggregate, other than
payments to Stockholder in accordance with the terms of this Agreement.
6.6 NET WORTH. On the Closing Date, the Stockholder shall deliver to Sub a
balance sheet of the Company (including GCI SUBSIDIARY) dated as of the most
recent practicable date preceding the Closing Date, prepared in accordance with
the Accounting Principles (the "Estimated Closing Date Balance Sheet"). The
Estimated Closing Date Balance Sheet shall show as of the date thereof, after
taking into account the payment of any of the fees, costs and expenses by the
Company incurred in connection with this Agreement, FIFO Net Worth no less
than. NET WORTH @ 11/30/97 EXCEPT ANY LOSSES IN JAN & FEB '98 SHALL NOT BE
COUNTED.
6.7 COMPLETION OF DUE DILIGENCE. SUNBELT and Sub shall have completed their
due diligence examination of the Company and GCI SUBSIDIARY and the results of
such examination shall be reasonably satisfactory to SUNBELT and the Sub;
provided, however, that the conditions contained in this Section 6.7 shall not
be a condition precedent to the Obligations of SUNBELT and the Sub hereunder
after the date that is sixty (60) days after the date hereof.
6.8 REAL ESTATE PURCHASE. Stockholder and all other owners of the real
property wherein the automotive dealerships are located shall have entered into
real estate purchase and sale contracts with SUNBELT or its assignee for the
purchase of the real estate property wherein the automotive dealerships are
located.
6.9 CERTIFICATES. The Stockholder and the Company shall have furnished SUNBELT
and Sub with any other certificates of the Stockholder and the Company's
officers as SUNBELT and Sub may reasonably request to evidence compliance with
the conditions set forth in this ARTICLE 6.
6.10 LEGAL MATTERS. All certificates, instruments, opinions and other documents
required to be executed or delivered by or on behalf of the Stockholder and the
Company and the GCI SUBSIDIARY under the provisions of this Agreement, and all
other actions and proceedings required to be taken by or on behalf of the
Stockholder and the Company and the GCI SUBSIDIARY in furtherance of the
transactions contemplated hereby, shall be reasonably satisfactory in form and
substance to counsel for SUNBELT and Sub.
6.11 APPROVAL OF MANUFACTURERS. Each Automobile Manufacturer having an
Agreement with the Company or GCI SUBSIDIARY shall have consented to,
authorized and approved, in writing, the transactions contemplated by this
Agreement and shall have approved SUNBELT and Sub as its authorized dealer, on
terms no less favorable than those granted to the Company and GCI SUBSIDIARY
immediately prior to execution of this Agreement.
6.12 NON-COMPETITION AGREEMENT. SUNBELT, Sub, the Company and Stockholder shall
have entered into a mutually satisfactory Non-Competition Agreement.)
6.13 ENVIRONMENTAL LAWS. The Company shall be in material compliance with all
applicable Environmental Laws.
6.14 NONDISTURBANCE AND ESTOPPEL AGREEMENTS. Stockholder shall have obtained a
nondisturbance and estoppel agreements from Lessors on all applicable real
property in the dealerships presently operate.
6.15 TITLE INSURANCE. Sunbelt and sub shall have obtained title insurance with
respect to the leasehold estates in form and substance satisfactory to them.
SUNBELT shall be responsible for the cost of such title insurance.
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6.16 TERMINATION AGREEMENT/MEMORANDUM OF LEASE. GI and Investors shall have
executed a Lease Termination Agreement and a Memorandum of Lease in form and
substance satisfactory to SUNBELT and Sub.
6.17 RESIGNATION OF DIRECTORS. Each of the persons who is a director of the
Company or GCI SUBSIDIARY on the Closing Date shall have tendered to Sub in
writing his or her resignation as such in form and substance satisfactory to
SUNBELT.
6.18 DISCLOSURE SCHEDULE. The Company and the Stockholder shall have delivered
to SUNBELT and Sub the Disclosure Schedule referred to in ARTICLE 4, and such
Disclosure Schedule shall be acceptable in form and substance to SUNBELT and
Sub.
ARTICLE 7
CONDITIONS TO THE OBLIGATIONS OF
THE STOCKHOLDER TO EFFECT THE CLOSING
The obligations of the Stockholder and the Company and GCI SUBSIDIARY
required to be performed by them at the Closing shall be subject to the
satisfaction, at or prior to the Closing, of each of the following conditions,
each of which may be waived by the Company, GCI SUBSIDIARY and the Stockholder
as provided herein except as otherwise required by applicable law:
7.1 REPRESENTATIONS AND WARRANTIES; AGREEMENTS. Each of the representations and
warranties of SUNBELT and Sub 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 SUNBELT and Sub required by this
Agreement to be performed by them at or prior to the Closing shall have been
duly performed and complied with in all material respects as of the Closing. At
the Closing, the Stockholder shall have received a certificate, dated the
Closing Date and duly executed by an officer of SUNBELT 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 the Lease, and the consummation
of the transactions contemplated hereby shall have been duly and validly taken
by SUNBELT 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 and GCI SUBSIDIARY have a
franchise agreement; dealer sales and services agreement, or
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comparable instrument, that are required to consummate the transactions
contemplated hereby shall have been executed and obtained.
7.4 ABSENCE OF LITIGATION. No order, stay, judgment or decree shall have been
issued by any court and be in effect restraining or prohibiting the
consummation of the transactions contemplated hereby.
7.5 REAL ESTATE PURCHASE Stockholder and all other owners of the real property
wherein the automotive dealerships are located shall have entered into contract
for the purchase and sale of the real property wherein automotive dealerships
are located with SUNBELT or Sub or its assignee.
7.6 CERTIFICATES. SUNBELT and Sub shall have 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 SUNBELT or Sub under
the provisions of this Agreement, and all other actions and proceedings
required to be taken by or on behalf of SUNBELT or Sub in furtherance of the
transactions contemplated hereby, shall be reasonably satisfactory in form and
substance to counsel for the Stockholder.
ARTICLE 8
TERMINATION
8.1 TERMINATION. This Agreement may be terminated at any time prior to Closing:
(a) by mutual consent of SUNBELT, Sub, and the Stockholder;
(b) by either SUNBELT, Sub or the Stockholder if the Closing shall not
have taken place on or prior to MARCH 1, 1998, or such later date as shall have
been approved by SUNBELT, Sub and the Stockholder, provided that the terminating
party is not otherwise in material breach of its representation, warranties,
covenants or agreements under this Agreement;
(c) by SUNBELT, Sub or the Stockholder 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, any such order, decree, ruling or other action shall have
become final and non-appealable;
(d) by SUNBELT and Sub if any of the conditions specified in ARTICLE 6
hereof have not been met or waived by SUNBELT and Sub at such time as such
condition is no longer capable of satisfaction, provided that neither SUNBELT
nor Sub is otherwise in material breach of its representations, warranties,
covenants or agreements under this Agreement;
(e) by the Stockholder if any of the conditions specified in ARTICLE 7
hereof have not been met or waived by the Stockholder at such time as such
condition is no longer capable of satisfaction, 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; or
(f) by either SUNBELT, Sub 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
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Agreement, breach has not been cured within ten (10) Business Days following
receipt by the breaching party of written notice of such breach.
If SUNBELT, Sub or the Stockholder shall terminate this Agreement pursuant
to the provisions hereof, such termination shall be effectuated by notice to
the other parties specifying the provision hereof pursuant to which such
termination is made.
8.2 EFFECT OF TERMINATION. EXCEPT (i) FOR ANY breach of this Agreement prior to
its termination, and (ii) for the obligations contained in SECTIONS 5.1 AND
10.2 hereof, and (iii) as set forth in SECTION 9.1 and SECTION 9.2 hereof, upon
the termination of this Agreement pursuant to SECTION 8.1 hereof, this
Agreement shall forthwith become null and void and none of the parties hereto
or any of their respective officers, directors, employees, agents, affiliates,
consultants, Stockholder or principals shall have any liability or obligation
hereunder or with respect hereto.
ARTICLE 9
INDEMNIFICATION
9.1 INDEMNIFICATION BY THE STOCKHOLDER. Notwithstanding the Closing or the
delivery of the Shares, the Stockholder indemnifies and agrees to fully defend,
save and hold harmless on an after-tax basis SUNBELT, Sub, the Company (after
the Closing), and any of their respective officers, directors, employees,
stockholders, advisors, representatives, agents and affiliates (other than the
Stockholder) (each a "SUNBELT Indemnified Party"), if a SUNBELT Indemnified
Parry (including the Company after the Closing Date) shall at any time or from
time to time suffer any Costs (as deemed in SECTION 9.7 below) arising,
directly or indirectly, out of or resulting from, or shall pay or become
obligated to pay any sum on account of, (i) any and all Stockholder Events of
Breach (as defined below); (ii) any Claim before or by any court, arbitrator,
panel, agency or other governmental, administrative or judicial entity, which
Claim involves, affects or relates to any assets, properties or operations of
the Company or GCI SUBSIDIARY or the conduct of the business of the Company or
the GCI SUBSIDIARY prior to the Closing Date (a "Stockholder Third Party
Claim"); or (iii) any tax liability of the Company or GCI SUBSIDIARY arising
out of the operation of the Company or GCI SUBSIDIARY by the Stockholder or
their employees or their representatives prior to Closing. As used herein,
"Stockholder Event of Breach" shall be and mean any one or more of the
following: (i) any untruth or inaccuracy in any representation of the
Stockholder or the Company or the breach of any warranty of the Stockholder or
the Company contained in this Agreement, including, without limitation, any
misrepresentation in, or omission from, any statement, certificate, schedule,
exhibit, annex or other document furnished pursuant to this Agreement by the
Stockholder or the Company (or any representative of SUNBELT or Sub) and any
misrepresentation in or omission from any document furnished to SUNBELT or Sub
in connection with the Closing, and (ii) any failure of the Stockholder or the
Company to duly perform or observe any term, provision, covenant, agreement or
condition on the part of such Stockholder or the Company to be performed or
observed.
9.2 INDEMNIFICATION BY SUNBELT. Notwithstanding the Closing, SUNBELT
indemnifies and agrees to fully defend, save and hold harmless on an after-tax
basis the Stockholder, the Company (prior to the Closing), and any of their
respective officers, directors, employees, stockholders, advisors,
representatives, agents and affiliates (each a "Stockholder Indemnified
Party"), if a Stockholder Indemnified Party (including the Company prior to
Closing) shall at any time or from time to time suffer any Costs arising,
directly or indirectly, out of or resulting from, or shall pay or become
obligated to pay any sum on account of, (i) any and all SUNBELT Events of
Breach (as defined below) or (ii) any Claim before or by any court, arbitrator,
panel, agency or other governmental, administrative or judicial entity, which
Claim
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involves, affects or relates to any assets, properties or operations of SUNBELT
or Sub or the conduct of the business of SUNBELT prior to the Closing Date (a
"SUNBELT Third Party Claim"). As used herein, "SUNBELT Event of Breach" shall
be and mean any one or more of the following: (i) any untruth or inaccuracy in
any representation of SUNBELT or Sub or the breach of any warranty of SUNBELT
or Sub contained in this Agreement, including, without limitation, any
misrepresentation in, or omission from, any statement, certificate, schedule,
exhibit, annex or other document furnished pursuant to this Agreement by
SUNBELT or Sub (or any representative of SUNBELT or Sub) to the Stockholder (or
any representative of the Stockholder) and any misrepresentation in or omission
from any document furnished to the Stockholder in connection with the Closing,
and (ii) any failure of SUNBELT or Sub duly to perform or observe any term,
provision, covenant, agreement or condition on the part of SUNBELT or Sub to be
performed or observed.
9.3 PROCEDURES. If (i) the Stockholder Event of Breach occurs or is alleged and
a SUNBELT Indemnified Party asserts that the Stockholder has become obligated
to a SUNBELT Indemnified Party pursuant to SECTION 9.1, or if the Stockholder's
Third Party Claim is begun, made or instituted as a result of which the
Stockholder may become obligated to a SUNBELT Indemnified Party hereunder, or
(ii) a SUNBELT Event of Breach occurs or is alleged and a Stockholder
Indemnified Party asserts that SUNBELT has become obligated to a Stockholder
Indemnified Party pursuant to SECTION 9.2, or if any SUNBELT Third party Claim
is begun, made or instituted as a result of which SUNBELT may become obligated
to a Stockholder Indemnified Party hereunder (for purposes of this ARTICLE 9,
any SUNBELT Indemnified Party and Stockholder Indemnified Party is sometimes
referred to as an "Indemnified Party" and SUNBELT and the Stockholder are
sometimes referred to as and "Indemnified Party" and SUNBELT and the
Stockholder are sometimes referred to as an "Indemnifying Party," and any
SUNBELT Third Parry Claim and the Stockholder Third Party Claim is sometimes
referred to as a "Third Party Claim," in each case as the context so requires),
such Indemnified Party shall give written notice to the Indemnifying Party of
its or his obligation lo provide indemnification hereunder, provided that any
failure to so notify the Indemnifying Party, shall not relieve them from any
liability that it or he may have to the Indemnified Party under this ARTICLE 9.
If such notice relates to a Third Party Claim, each Indemnifying Party, jointly
and severally, agrees to defend, contest or otherwise protect such Indemnified
Party against any such Third Party Claim at his or its sole cost and expense.
Such Indemnified Party shall have the right, but not the obligation, to
participate at its own expense in the defense thereof by counsel of such
Indemnified Party's choice and shall in any event cooperate with and assist the
Indemnifying Party to the extent reasonably possible. If the Indemnifying Party
fails timely to defend, contest or otherwise protect against such Third Party
Claim, such Indemnified Party shall have the right to do so, including, without
limitation, the right to make any compromise of settlement thereof, and such
Indemnified Party shall be entitled to recover the entire Cost thereof from the
Indemnifying Party, including, without limitation, attorneys' fees,
disbursements and amounts paid (or of which such Indemnified Party has become
obligated to pay) as the result of such Third Party Claim. Failure by the
Indemnifying Party to notify such Indemnified Party of its or their election to
defend any such Third Party Claim within fifteen (15) days after notice thereof
shall have been given to the Indemnifying Party shall be deemed a waiver by the
Indemnifying Party of its or their right to defend such Third Party Claim. If
the Indemnifying Party assumes the defense of the particular Third Party Claim,
the Indemnifying Party shall not, in the defense of such Third Party Claim,
consent to entry of any judgment or enter into any settlement, except with the
written consent of such Indemnified Party. In addition, the Indemnifying Party
shall not enter into any settlement of any Third Party Claim (except with the
written consent of such Indemnified Party) which does not include as an
unconditional term thereof the giving by the claimant or the plaintiff to such
Indemnified Party a full release from all liability in respect of such Third
Party Claim. Notwithstanding the foregoing, the Indemnifying Party shall not be
entitled to control (but shall be entitled to participate at their own expense
in the defense of), and the Indemnified Party shall be entitled to have sole
control over, the defense or settlement of any Third Party Claim to the extent
the Third Party Claim seeks
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an order, injunction or other equitable relief against the Indemnified Party
which, if successful, could materially interfere with the business, operations,
assets, condition (financial or otherwise) or prospects of the Indemnified
Party.
9.4 OFFSET. In addition to and not in limitation of all rights of offset that
an Indemnified Party may have under applicable law, the parties agree that, at
any Indemnified Party's option, any or all amounts owing to such Indemnified
Party under this ARTICLE 9 or any other provision of this Agreement or any
other liability of the other parties (or any Affiliate of the other parties)-
to such Indemnified Party in connection with this Agreement or the transactions
contemplated hereby, may be recovered by the Indemnified Party by an offset
against any or all amounts due to such other parties pursuant to this Agreement
or the transactions contemplated hereby.
9.5 REMEDIES. The rights of an Indemnified Party under this ARTICLE 9 are in
addition to such other rights and remedies which such Indemnified Party may
have under this Agreement, applicable law or otherwise.
9.6 LIMITATION ON INDEMNIFICATION. No Indemnified Party shall be entitled to
indemnification for any Costs hereunder (A) until the Indemnified Party has
suffered Costs by reason of all such breaches in excess of a $100,000.00
aggregate deductible (after which point the Indemnifying Party will be
obligated to indemnify the Indemnified Party from and against all such Costs
relating back to the first dollar, or thereafter (B) to the extent the Costs
the Indemnified Party has suffered by reason of all such breaches exceeds a
$10,000,000.00 aggregate ceiling (after which point the Indemnifying Party will
have no obligation to indemnify the Indemnified Parties from and against such
Costs).
9.7 DEFINITIONS. For purposes of this ARTICLE 9, "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' fees, and reasonable disbursements of
any kind or of any nature whatsoever. For purposes of application of the
indemnity provisions of this ARTICLE 9, the amount of any Cost arising from the
breach of any representation, warranty, covenant or agreement shall be the
entire amount of any Cost suffered, paid or required to be paid by the
respective Indemnified Parry as a result of such breach.
9.8 TAX SAVINGS. Costs arising or resulting from Stockholder Events of Breach
or SUNBELT Events of Breach shall be reduced to the extent of the amount of any
tax savings resulting from the indemnified matter to which such Costs relate
which are actually realized (or can reasonably be expected to be realized in
future years) by the Indemnified Party.
ARTICLE 10
MISCELLANEOUS
10.1 SURVIVAL OF PROVISIONS.
(a) The respective representations, covenants and agreements of each
of the parties to this Agreement (except covenants and agreements which are
expressly required to be performed and are performed in full on or before the
Closing Date) shall survive the Closing Date and the consummation of the
transactions contemplated by this Agreement, subject to SECTION 10.1 (b) below.
In the event of a breach of any such representations, or covenants, the party
to whom such representations or covenants have been made shall have all rights
and remedies for such breach available to it under the provisions of this
Agreement, regardless of any disclosures to, or investigation made by or on
behalf of, such party on or before the Closing Date.
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(b) All representations and warranties contained in this Agreement shall
survive the execution and delivery of this Agreement, and examination by or on
behalf of the Parties, and the Closing contemplated herein, only to the extent
specified below:
(i) the representations and warranties contained in ss 2.3, 3.4,
4.4, 4.5, 4.7 through 4.10, 4.12 through 4.23, 4.25, 4.27 and 4.28 shall
survive for a period of two (2) years following the Closing Date;
(ii) the representations and warranties contained in Section 4.24
shall survive for a period of two (2) years following the Closing Date;
(iii) the representations and warranties contained in ss 2.1,
2.2, 2.4, 2.5, 3.1, 3.2, 3.3, 3.5, 4.1, 4.2, 4.3, 4.5, 4.6, and 4.26 shall
survive two (2) years and
(iv) 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 by waiver of such statute of
limitations.
(v) Notice of any claims or violations must be made within
thirty (30) days of discovery.
10.2 FEES AND EXPENSES. Except as otherwise expressly provided in this
Agreement, all legal and other fees, costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby through the
Closing Date shall be paid by the party incurring such fees, costs or expenses;
PROVIDED, HOWEVER, that if the Closing does not occur and SECTION 5.5 hereof is
breached, then the Stockholder of the Company shall pay to SUNBELT, within five
(5) Business Days after receipt of a request therefor, an amount equal to all
of the legal and other fees, costs and expenses incurred by SUNBELT and Sub in
connection with this Agreement and the transactions contemplated hereby.
10.3 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.
10.4 NOTICES. All notices or other communications required or permitted
hereunder shall be given in writing and shall be deemed sufficient if delivery
by hand, recognized overnight delivery service or facsimile transmission or
mailed by registered or certified mail, postage prepaid (return receipt
requested), as follows:
If to the Company before the Closing Date: ▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
with a ▇▇▇ to: ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇.
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
If to the Company after the Closing Date: ▇.▇ ▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
with a copy to: ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇.
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
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If to the Stockholder:
with a copy to: ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇.
If to SUNBELT or Sub:
SUNBELT AUTOMOTIVE GROUP, INC.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
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with a copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
c/o The ▇▇▇▇▇▇▇ Law Firm
6111 Peachtree ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇
▇▇▇▇▇ ▇▇▇-▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
or such other address as shall be furnished in writing by such party, and any
such notice or communication shall be effective and be deemed to have been given
as of the date so delivered or three (3) days after the date so mailed;
PROVIDED, HOWEVER, that any notice or communication changing any of the
addresses set forth above shall be effective and deemed given only upon its
receipt.
10.5 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 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, or obligations hereunder may be assigned by any of the parties hereto
without the prior written consent of the other parties. Notwithstanding the
foregoing, SUNBELT and Sub shall have the unrestricted right to assign this
Agreement and to delegate all or any part of their obligations hereunder to any
affiliate of SUNBELT, but in such event SUNBELT shall remain fully liable for
the performance of all of such obligations in the manner prescribed in this
Agreement.
10.6 ENTIRE AGREEMENT. This Agreement (including the Schedules hereto) and
the Real Estate Purchase Agreement 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 Lease. Prior drafts of this Agreement
shall not be used as a basis for interpreting this Agreement.
10.7 WAIVER AND AMENDMENTS. The Stockholder, the Company, SUNBELT and Sub
may by written notice to the other parties (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.
10.8 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.
10.9 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.
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10.10 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.
10.11 CERTAIN DEFINITIONS.
For purposes of this Agreement:
(a) "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) "Automobile Manufacturers" shall mean Chevrolet, Jeep, Eagle,
Chrysler, Plymouth, Dodge and Kia motor vehicle manufacturers.
(d) "SUNBELT Public Offering Date" shall mean the date of 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 SUNBELT common stock on a firm commitment
basis.
(e) "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, 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.
(f) "Business Day" shall mean any day excluding Saturday, Sunday and
any day which is a legal holiday under Federal law.
(g) "Code" means the Internal Revenue Code, as amended.
(h) "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 Multiemployer Plan), or (d) Employee Welfare Benefit Plan or
material fringe benefit plan or program.
(i) "Employee Pension Benefit Plan" has the meaning set forth in ERISA
Section 3(2).
(j) "Employee Welfare Benefit Plan" has the meaning set forth in ERISA
Section 3(1).
(k) "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
28
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or wastes, chemical substances or mixtures, pesticides, pollutants,
contaminants, toxic chemicals, petroleum products or byproducts, asbestos,
polychlorinated biphenyls, noise or radiation.
(l) "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
(m) "Fiduciary" has the meaning set forth in ERISA Section 3(21).
(n) "GAAP" shall mean generally accepted accounting principles which
are in effect in the United States on the Closing Date.
(o) "Income Tax" means any federal, state, local, or foreign income
tax, including any interest, penalty, or additional thereto, whether disputed or
not.
(p) "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.
(q) "Intellectual Property" means (a) all inventions (whether
patentable or unpatentable and whether or not reduced to practice), all
improvements thereto, and all patents, patent applications, and patent
disclosures, together with all reissuances, continuations,
continuations-in-part, revisions, extensions, and reexaminations thereof, (b)
all trademarks, service marks, trade dress, logos, trade names, and corporate
names, together with all transactions, adaptations, derivations, and
combinations thereof and including all goodwill associated therewith, and all
applications, registrations, and renewals in connection therewith, (c) all
copyrightable works, all copyrights, and all applications, registrations, and
renewals in connection therewith, (d) all mask works and all applications,
registrations, and renewals in connection therewith, (e) all trade secrets and
confidential business information (including ideas, research and development,
know-how, formulas, compositions, manufacturing and production processes and
techniques, technical data, designs, drawings, specifications, customer and
supplier lists, pricing and cost information, and business and marketing plans
and proposals), (f) all computer software (including data and related
documentation), (g) all other proprietary rights, and (h) all copies and
tangible embodiments thereof (in whatever form or medium).
(r) "Knowledge" means, with respect to the Stockholder, that the
Stockholder knew, or in the exercise of reasonable diligence, would or should
have known of the particular matter referred to; with respect to the Company,
that the President or the Executive Manager knew, or in the exercise of
reasonable diligence, would or should have known of the particular matter
referred to; and, with respect to SUNBELT, that the President of SUNBELT knew
or, in the exercise of reasonable diligence, would or should have known of the
particular matter referred to.
(s) "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.
(t) "Material Adverse Effect" shall mean any change in, or effect on,
the Company or GCI 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 GCI SUBSIDIARY.
(u) "Most Recent Balance Sheet" means the balance sheet contained
within the Most RECENT Financial Statements.
(v) "Multiemployer Plan" has the meaning set forth in ERISA Section
3(37).
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30
(w) "Ordinary Course of Business" means the ordinary course of
business consistent with past custom and practice (including with respect to
quantity and frequency).
(x) "Party" has the meaning set forth in the preface above.
(y) "PBGC" means the Pension Benefit Guaranty Corporation.
(z) "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
entity or any department or agency thereto.
(aa) "Reportable Event" has the meaning set forth in ERISA Section
4043.
(bb) "Securities Act" means the Securities Act of 1933, as amended.
(cc) "Securities Exchange Act" means the Securities Exchange Act of
1934 as amended.
(dd) "Subject Property" ______________________________________________.
(ee) "Security Interest" means any mortgage, pledge, lien, encumbrance,
charge or other security interest, other than (a) mechanic's, materialmen'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.
10.12 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.
10.13 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.
10.14 REMEDIES. None of the remedies provided for in this Agreement,
including termination of this Agreement as set forth in ARTICLE 8,
indemnification as set forth in ARTICLE 9 or the payment of certain fees, costs
and expenses as set forth in SECTION 10.2 shall be the exclusive remedy of
either party for a breach of this Agreement, the parties hereto having the right
to seek any other remedy in law or equity in lieu of or in addition to any
remedies provided in this Agreement, including an action for damages for breach
of contract.
10.15 TIME IS OF THE ESSENCE. Time is of the essence for purposes of this
Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
SUNBELT AUTOMOTIVE GROUP, INC., A
GEORGIA CORPORATION
By: /s/ ▇▇▇▇▇▇▇ Killancey Sec. Treas.
---------------------------------------
Name:
Title:
ATTEST:
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Jr.
---------------------------------------
Name:
BAG TENNESSEE II, INC., A GEORGIA
CORPORATION
By: /s/ ▇▇▇▇▇▇▇ Killancey Sec. Treas.
---------------------------------------
Name:
Title:
ATTEST:
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Jr.
---------------------------------------
Name:
Title:
▇▇▇▇▇▇▇▇▇▇ CHEVROLET, INC., A TENNESSEE
CORPORATION
By: /s/ S.G. C.E.O.
---------------------------------------
Name:
Title:
ATTEST
By: /s/ ▇.▇. ▇▇▇▇▇▇▇, ▇▇.
---------------------------------------
Name:
Title:
(SIGNATURES CONTINUED ON NEXT PAGE)
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MOUNTAIN EMPIRE KIA, INC., A TENNESSEE
CORPORATION
By: /s/
---------------------------------------
Name:
Title:
ATTEST
By: /s/ ▇.▇. ▇▇▇▇▇▇▇, ▇▇.
---------------------------------------
Name:
Title:
STOCKHOLDER:
/s/ ▇▇▇ ▇▇▇▇▇▇▇▇ /s/ S.G.
------------------------------- --------------------------------------------
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, an individual
ATTEST
/s/ ▇.▇. ▇▇▇▇▇▇▇, ▇▇. By: /s/ ▇.▇. ▇▇▇▇▇▇▇, ▇▇.
------------------------------- ---------------------------------------
WITNESS Name:
Title:
Sword to and subscribed before
me this _____ day of _________, 1997.
___________________________________
Notary Public
My Commission Expires:
___________________________________
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33
SUNBELT AUTOMOTIVE GROUP, INC.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
================================================================================
February 24, 1998
VIA HAND DELIVERY
▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, Inc.
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Re: Stock Purchase Agreement dated December 27, 1997 (the
"Agreement") by and between Sunbelt Automotive Group, Inc.
("Sunbelt"), BAG TENNESSEE II, INC. (the "Sub"), ▇▇▇▇▇▇▇▇▇▇,
Inc. d/b/a ▇▇▇▇▇▇▇▇▇▇ Chevrolet, Chrysler, Plymouth, Dodge
(the "Company"), and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ and ▇▇▇ ▇▇▇▇▇▇▇▇
(collectively, the "Stockholder")
Dear ▇▇▇▇▇:
This letter will confirm our agreement to make the following changes
to the Agreement. For ease of reference, all capitalized terms that are used
not expressly defined in this letter have the meanings given to them in the
Agreement, and the definitions of those terms in the Agreement are incorporated
by reference in this letter.
1. We agree to amend the Agreement by replacing Section 1.1(b)(i) of
the Agreement with the following:
"(b) CLOSING. (i) Subject to the conditions set forth in this
Agreement, the purchase and sale of the GCI Shares pursuant to
this Agreement (the "Closing") shall take place at a location
to be agreed upon by the Parties. Subject to the other conditions
set forth in this Agreement, the Closing of the transactions
contemplated hereby shall take place within thirty (30) days after
receipt of the last approval of the transactions contemplated by
this Agreement by each of General Motors, Chrysler, Plymouth,
Dodge and Kia, provided, however, that the Closing shall take
place no later June 30, 1998 (the "Closing Date Deadline"). The
date on which the Closing occurs is herein referred to as the
"Closing Date."
2. We agree to amend the Agreement by replacing Section 8.1(b)
of the Agreement with the following:
"(b) by either SUNBELT, Sub or the Stockholder if the Closing
shall not have taken place on or prior to the Closing Date
Deadline, or such later date as shall have been approved in
34
▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
February 24, 1998
Page 2
writing by SUNBELT, Sub and the Stockholder, provided that the
terminating party is not otherwise in material breach of its
representations, warranties, covenants or agreements under this
Agreement;"
3. We agree to amend the Agreement by replacing Section 6.7 of the
Agreement with the following:
"6.7 COMPLETION OF DUE DILIGENCE. SUNBELT and Sub shall have
completed their due diligence examination of the Company and GCI
Subsidiary and the results of such examination shall be reasonably
satisfactory to SUNBELT and the Sub; provided, however, that the
conditions contained in this Section 6.7 shall not be a condition
precedent to the Obligations of SUNBELT and the Sub hereunder after the
date that is fourteen (14) days after the date on which SUNBELT and the
Sub receive the Disclosure Schedule described in Article 4 of the
Agreement from the Company and the Stockholder. The Company and the
Stockholder shall deliver said Disclosure Schedule to SUNBELT and the
Sub on or before February 27, 1998."
The Agreement, as modified by this written letter agreement,
constitutes the entire, final and exclusive agrement between the parties, and
supersedes any and all prior written or oral commitments, agreements, and
understandings or modifications. We agree that this letter agrement 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. We further agree that
this letter agreement shall be effective as of February 24, 1998.
Please have this letter agreement signed on behalf of the Company and
the Stockholder, to indicate your agreement with these changes to the Agreement,
and return it to me for my files. The enclosed duplicate original of this
letter agreement is for your files.
Sincerely,
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
--------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, on behalf of
SUNBELT AUTOMOTIVE GROUP, INC. and
BAG TENNESSEE II, INC.
2
35
▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
February 24, 1998
Page 3
ACCEPTED AND AGREED TO THIS 24TH DAY OF FEBRUARY, 1998.
▇▇▇▇▇▇▇▇▇▇, INC., a Tennessee corporation
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, an individual
3