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EXHIBIT 2.2
AGREEMENT AND PLAN
OF MERGER AND REORGANIZATION
AMONG
BOOMERSHINE AUTOMOTIVE GROUP, INC.
B.A.G. GEORGIA I, INC.
B.A.G. GEORGIA II, INC.
AND
WADE FORD, INC.
WADE FORD BUFORD, INC.
AND
ALAN K. ARNOLD,
GARY R. BILLINGS,
MILDRED S. ARNOLD CUSTODIAN FOR KELLY R. ARNOLD
UNDER THE UNIFORM TRANSFER TO MINORS ACT OF GEORGIA,
MILDRED S. ARNOLD CUSTODIAN FOR BRETT D. ARNOLD
UNDER THE UNIFORM TRANSFER TO MINORS ACT OF GEORGIA,
MILDRED S. ARNOLD CUSTODIAN FOR KRISTIE A. ARNOLD
UNDER THE UNIFORM TRANSFER TO MINORS ACT OF GEORGIA, AND
MILDRED S. ARNOLD CUSTODIAN FOR ALAN CHAD ARNOLD
UNDER THE UNIFORM TRANSFER TO MINORS ACT OF GEORGIA
NOVEMBER 21, 1997
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TABLE OF CONTENTS
Page
----
Certain Definitions............................................................................. 2
ARTICLE 1 GENERAL TRANSACTION............................................................... 7
1.1 Description of Transaction........................................................ 7
1.2 Tax Consequences................................................................. 11
1.3 Further Action................................................................... 11
ARTICLE 2 MINIMUM REQUIREMENTS............................................................. 11
2.1 1997 Year End Minimum Net Worth Requirement...................................... 11
2.2 Determination of 1998 Profit/Loss................................................ 12
2.3 Minimum Cash Requirement......................................................... 14
2.4 Minimum Floor Plan Requirement................................................... 14
ARTICLE 3 REPRESENTATIONS AND WARRANTIES
OF THE COMPANIES AND THE STOCKHOLDERS............................................ 14
3.1 Organization and Good Standing................................................... 14
3.2 Subsidiaries..................................................................... 15
3.3 Capitalization................................................................... 15
3.4 Authority, Approvals and Consents................................................ 15
3.5 Financial Statements............................................................. 16
3.6 Absence of Undisclosed Liabilities............................................... 16
3.7 Absence of Material Adverse Effect; Conduct of Business.......................... 17
3.8 Taxes............................................................................ 19
3.9 Legal Matters.................................................................... 21
3.10 Property......................................................................... 22
3.11 Environmental Matters............................................................ 24
3.12 Inventories...................................................................... 26
3.13 Notes and Accounts Receivable.................................................... 26
3.14 Insurance........................................................................ 26
3.15 Contracts........................................................................ 26
3.16 Labor Relations.................................................................. 28
3.17 Employee Benefit Plans........................................................... 29
3.18 Other Benefit and Compensation Plans or Arrangements............................. 31
3.19 Transactions with Insiders....................................................... 32
3.20 Propriety of Past Payments....................................................... 32
3.21 Interest in Competitors.......................................................... 32
3.22 Brokers.......................................................................... 32
3.23 Territorial Restrictions......................................................... 32
3.24 Intellectual Property............................................................ 32
3.25 Deposit Accounts; Powers of Attorney............................................. 33
3.26 Disclosure....................................................................... 34
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS............................... 34
4.1 Ownership of Shares; Title...................................................... 34
4.2 Authority........................................................................ 34
4.3 Broker's Fees.................................................................... 35
4.4 Investment....................................................................... 35
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ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF BAG AND THE SUBS............................... 35
5.1 Organization and Good Standing................................................... 35
5.2 Authority; Approvals and Consents................................................ 36
5.3 Brokers.......................................................................... 36
5.4 Disclosure....................................................................... 36
ARTICLE 6 COVENANTS AND ADDITIONAL AGREEMENTS.............................................. 36
6.1 Access; Confidentiality......................................................... 36
6.2 Furnishing Information; Announcements........................................... 37
6.3 Certain Changes and Conduct of Business.......................................... 37
6.4 No Intercompany Payables or Receivables.......................................... 40
6.5 Negotiations..................................................................... 40
6.6 Consents; Cooperation........................................................... 40
6.7 Additional Agreements............................................................ 41
6.8 Interim Financial Statements..................................................... 41
6.9 Notification of Certain Matters.................................................. 41
6.10 Assurance by the Stockholders.................................................... 42
6.11 Antitrust Improvements Act Compliance............................................ 42
6.12 Use of Business Name............................................................. 42
6.13 Related Party / Stockholders Loan................................................ 42
6.14 Stock Restriction Agreement...................................................... 42
6.15 Personal Items................................................................... 43
6.16 Liability for Transfer Taxes..................................................... 43
6.17 Certificates of Tax Authorities.................................................. 43
6.18 Release by Stockholders.......................................................... 43
6.20 Cooperation in Preparation of Registration Statement............................. 43
6.21 Audits........................................................................... 43
ARTICLE 7 CONDITIONS TO THE OBLIGATIONS OF BAG AND THE SUBS TO
EFFECT THE CLOSING............................................................... 44
7.1 Representations and Warranties; Agreements; Covenants............................ 44
7.2 Authorization; Consent........................................................... 44
7.3 Opinions of Each Company's and the Stockholder's Counsel......................... 44
7.4 Absence of Litigation............................................................ 44
7.5 No Material Adverse Effect....................................................... 45
7.6 Registration Statement........................................................... 45
7.7 Completion of Due Diligence...................................................... 45
7.8 Real Estate Purchase Agreements; Leases.......................................... 45
7.9 Certificates..................................................................... 46
7.10 Legal Matters.................................................................... 46
7.11 Approval of Manufacturer and Distributor......................................... 46
7.13 Employment Agreements; Non Competition Agreements................................ 46
7.14 Environmental Laws............................................................... 46
7.15 Lease Termination Agreement / Memorandum of Lease / Consents and Estoppels....... 46
7.16 Resignation of each Company's Directors and Officers............................. 47
7.17 Schedules........................................................................ 47
7.18 Share Certificates............................................................... 47
7.19 Non Foreign Status............................................................... 47
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ARTICLE 8 CONDITIONS TO THE OBLIGATIONS OF THE STOCKHOLDERSTO
EFFECT THE CLOSING............................................................... 47
8.1 Representations and Warranties; Agreements....................................... 47
8.2 Authorization of the Agreement; Consents......................................... 47
8.3 Opinions of BAG's and Sub's Counsel.............................................. 48
8.4 Absence of Litigation............................................................ 48
8.5 Real Estate Purchase Agreements; Leases. ....................................... 48
8.6 Certificates..................................................................... 48
8.7 Legal Matters.................................................................... 48
ARTICLE 9 TERMINATION...................................................................... 48
9.1 Termination...................................................................... 48
9.2 Procedure and Effect of Termination.............................................. 49
ARTICLE 10 INDEMNIFICATION AND SURVIVAL..................................................... 50
10.1 Survival of Representations and Warranties....................................... 50
10.2 Indemnification Provisions for Benefit of BAG and the Subs....................... 50
10.3 Indemnification Provisions for Benefit of the Stockholders....................... 51
10.4 Matters Involving Third Parties.................................................. 51
10.5 Other Indemnification Provisions................................................. 52
10.6 Tax Savings...................................................................... 53
ARTICLE 11 TAX MATTERS...................................................................... 53
11.1 Tax Matters...................................................................... 53
11.2 Section 338(h)(10) Election...................................................... 53
11.3 Tax Periods Ending on or Before the Closing Date................................. 53
11.4 Tax Periods Beginning Before and Ending After the Closing Date................... 53
11.5 Cooperation on Tax Matters....................................................... 54
11.6 Certain Taxes.................................................................... 54
ARTICLE 12 MISCELLANEOUS.................................................................... 54
12.1 Fees and Expenses................................................................ 54
12.2 Headings......................................................................... 54
12.3 Notices.......................................................................... 55
12.4 Assignment....................................................................... 56
12.5 Entire Agreement................................................................. 56
12.6 Waiver and Amendments............................................................ 56
12.7 Counterparts..................................................................... 57
12.8 Governing Law.................................................................... 57
12.9 Accounting Terms................................................................. 57
12.10 Schedules........................................................................ 57
12.11 Severability..................................................................... 57
12.12 Remedies......................................................................... 57
12.13 Time Is Of the Essence........................................................... 57
12.14 Authority........................................................................ 57
ADDENDUM 1..................................................................................... 60
ADDENDUM 2..................................................................................... 61
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AGREEMENT AND PLAN OF MERGER
AND REORGANIZATION
This AGREEMENT AND PLAN OF MERGER AND REORGANIZATION (this
"Agreement"), is entered into as of November 21, 1997 among BOOMERSHINE
AUTOMOTIVE GROUP, INC., a Georgia corporation ("BAG"), B.A.G. GEORGIA I, INC., a
Georgia corporation ("Sub I"), B.A.G. GEORGIA II, INC., a Georgia corporation
("Sub II") (Sub I and Sub II are hereinafter individually referred to as a "Sub"
and collectively referred to as the "Subs"), and WADE FORD, INC., a Georgia
corporation, and WADE FORD BUFORD, INC., a Georgia corporation (individually, a
"Company" and collectively, the "Companies"), and the stockholder(s) listed on
the signature pages hereof (each, a "Stockholder" and, if more than one,
collectively, the "Stockholders"). BAG, the Subs, the Companies and the
Stockholders are referred to individually as a "Party" and collectively as the
"Parties."
W I T N E S S E T H:
WHEREAS, the Companies operate Ford automobile dealership businesses in
Smyrna, Georgia and Buford, Georgia;
WHEREAS, BAG is engaged in the automobile dealership business in
Georgia and in other states of the United States of America;
WHEREAS, the Stockholders own all of the issued and outstanding shares
of common stock, $1.00 par value, of the Companies (the "Wade Shares") in the
following amounts:
(a) WADE FORD, INC.: 10,000 shares authorized; 1,000
shares issued and outstanding:
900 shares owned by Alan K. Arnold
25 shares owned by Mildred S. Arnold Custodian for Kelly L. Arnold under
the Uniform Transfer to Minor Act of Georgia
25 shares owned by Mildred S. Arnold Custodian for Brett D. Arnold under
the Uniform Transfer to Minor Act of Georgia
25 shares owned by Mildred S. Arnold Custodian for Kristie A. Arnold
under the Uniform Transfer to Minor Act of Georgia
25 shares owned by Mildred S. Arnold Custodian for Alan Chad Arnold
under the Uniform Transfer to Minor Act of Georgia
(b) WADE FORD BUFORD, INC.: 500,000 shares authorized;
12,800 shares issued and outstanding:
10,240 shares owned by Alan K. Arnold
2,560 shares owned by Gary R. Billings
WHEREAS, each Sub is a wholly-owned subsidiary of BAG; and
WHEREAS, BAG, the Subs and the Companies intend to effect mergers such
that Wade Ford, Inc. will merge into Sub I, with Sub I being the survivor
entity, and Wade Ford Buford, Inc. will merge into Sub II, with Sub II being the
survivor entity, all in accordance with this Agreement and the Georgia Business
Corporations Code (each, a "Merger," and collectively, the "Mergers"). Upon the
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consummation of the Mergers, the Companies will cease to exist, and each Sub
will continue to exist as the surviving corporation of each Merger.
WHEREAS, it is intended that each Merger qualify as a tax-free
reorganization within the meaning of Section 368(a) of the Code.
NOW, THEREFORE, in consideration of the mutual terms, conditions and
other agreements set forth herein, the Parties hereto hereby agree as follows:
CERTAIN DEFINITIONS.
"Accountants" has the meaning set forth in Section 2.1(c) below.
"Accredited Investor" has the meaning set forth in Regulation D
promulgated under the Securities Act.
"Adverse Consequences" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid
in settlement, Liabilities, obligations, Taxes, liens, losses, expenses, and
fees, including court costs and attorneys' fees and expenses.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"Affiliated Group" means any affiliated group within the meaning of
Code Section 1504(a) or any similar group defined under a similar provision of
state, local or foreign law.
"Associate" used to indicate a relationship with any Person means: (i)
any corporation, partnership, joint venture or other entity of which such Person
is an officer or partner or is, directly or indirectly, through one or more
intermediaries, the beneficial owner of thirty percent (30%) or more of: (1) any
class or type of equity securities or other profits interest; or (2) the
combined voting power of interests ordinarily entitled to vote for management or
otherwise; and (ii) any trust or other estate in which such person has a
substantial beneficial interest or as to which such person serves as trustee or
in a similar fiduciary capacity.
"BAG" has the meaning set forth in the preface above.
"BAG IPO" shall mean the consummation of an underwritten public
offering pursuant to an effective registration statement under the Securities
Act of 1933.
"BAG IPO Share Price" shall mean the price per share of each share of
common stock offered pursuant to the BAG IPO.
"BAG IPO Stock" shall mean shares of common stock offered pursuant to
the BAG IPO.
"BAG Common Stock" shall mean the unregistered, 0.001 par value,
authorized common stock of BAG.
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"Balance Sheet" means the unaudited balance sheet as of October 31,
1997 with respect to each Company, and the unaudited statements of income and
stockholders' equity for the 10-month period ended on such date with respect to
each Company, together with notes thereto.
"Basis" means any past or present fact, situation, circumstance,
condition, activity, practice, plan, occurrence, event, incident, action,
failure to act, or transaction that forms or could form the basis for any
specified consequence.
"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 conjunction with such obligation or the transactions contemplated
hereby.
"Business Day" shall mean any day excluding Saturday, Sunday and any
day which is a legal holiday under federal law.
"Claims" shall mean any and all claims, demands, suits, proceedings,
actions or causes of action of any kind or character whatsoever, known or
unknown, fixed or contingent, suspected or unsuspected, direct or indirect,
however arising, whether arising at law or in equity, or pursuant to
administrative rule or regulation or otherwise.
"Closing" has the meaning set forth in Section 1.1(d) below.
"Closing Date" has the meaning set forth in Section 1.1(d) below.
"Closing Date Deadline" shall mean April 30, 1998.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" and "Companies" have the meanings set forth in the preface
above.
"Company Agreement" has the meaning set forth in Section 3.15 below.
"Compensation Commitment" has the meaning set forth in Section 3.18(a)
below.
"Confidential Information" means any and all data or information of a
Party which relates directly and primarily to the business of such Party and
which is not generally known to or by Persons whose businesses are competitive
with the business of such Party, 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, business and marketing plans and
proposals, information relating to sales records, profit and performance
reports, sales and training manuals, selling and pricing procedures, financing
methods, the special demands of particular customers, the current and
anticipated demands of particular customers, specifications of any new products
or services under development, and any other such information treated by a Party
as being confidential or labeled "Confidential," as well as all physical
embodiments of any of the foregoing, except information: (i) ascertainable or
obtained from public information; (ii) received from a third
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party not employed by or otherwise affiliated with the disclosing Party; or
(iii) which is or becomes known to the public other than through a breach of
this Agreement by another Party to it.
"Consent" means any consent, approval, authorization, waiver, permit,
grant, franchise, concession, agreement, license, exemption or order of,
registration, certificate, declaration or filing with, or report or notice to,
any Person, including but not limited to any Governmental Authority.
"Deferred Intercompany Transaction" has the meaning set forth in Reg.
Section 1.1502-13.
"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.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA
Section 3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA
Section 3(1).
"Employment Agreements" has the meaning set forth in Section 7.14
below.
"Employment and Labor Agreement" has the meaning set forth in Section
3.16 below.
"Environmental, Health and Safety Requirements" shall mean all federal,
state, and local statutes, regulations, ordinances and other provisions having
the force or effect of law, all judicial and administrative orders and
determinations, all contractual obligations and all common law concerning public
health and safety, worker health and safety, and pollution or protection of the
environment, including without limitation all those relating to the presence,
use, production, generation, handling, transportation, treatment, storage,
disposal, distribution, labeling, testing, processing, discharge, release,
threatened release, control, or cleanup of any hazardous materials, substances
or wastes, chemical substances or mixtures, pesticides, pollutants,
contaminants, toxic chemicals, petroleum products or byproducts, asbestos,
polychlorinated biphenyls, noise or radiation, each as amended and as now or
hereafter in effect.
"Environmental Laws" has the meaning set forth in Section 3.11 below.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Plans" means all Employee Pension Benefit Plans and Employee
Welfare Benefit Plans of a Company.
"Escrow Agent" has the meaning set forth in Section 1.1(e)(iii) below.
"Escrow Amount" has the meaning set forth in Section 1.1(e)(iii) below.
"Excess Loss Account" has the meaning set forth in Reg. Section
1.1502-19.
"Factory Statements" has the meaning set forth in Section 3.5(c) below.
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"Fiduciary" has the meaning set forth in ERISA Section 3(21).
"Financial Statement" has the meaning set forth in Section 3.5 below.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative function of or pertaining to
government, including without limitation, any government authority, agency,
department, board, commission or instrumentality of the United States, any State
of the United States or any political subdivision thereof, and any tribunal or
arbitrator of competent jurisdiction and any self-regulatory organization.
"Governmental Approval" means any Consent of, with or to any
Governmental Authority.
"Hart-Scott-Rodino Act" means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
"Hazardous Materials" has the meaning set forth in Section 3.11 below.
"Improvements" has the meaning set forth in Section 3.10 below.
"Indemnified Party" has the meaning set forth in Section 10.4 below.
"Indemnifying Party" has the meaning set forth in Section 10.4 below.
"Insider" shall mean the Stockholders, any director or officer of the
Company, and any Affiliate, Associate or Relative of any of the foregoing
persons.
"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 translations,
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; (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).
"IRS" shall mean the Internal Revenue Service.
"Judgment" has the meaning set forth in Section 3.9 below.
"Knowledge" means actual knowledge after reasonable investigation and,
with respect to any corporation, partnership, company or other entity, shall
include the knowledge of such entity's officers, directors and managers with
responsibility over the relevant subject matter.
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"Leased Real Property" has the meaning set forth in Section 3.10(b)
below.
"Legal Requirements" means laws, ordinances, codes, rules, regulations,
standards, judgments and other requirements of all governmental, administrative
or judicial entities.
"Liability" means any liability (whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including any liability for Taxes.
"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.
"Material Adverse Effect" shall mean any change in, or effect on, the
applicable Person (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 said applicable Person.
"Multiemployer Plan" has the meaning set forth in ERISA Section 3(37).
"Net Worth" has the meaning set forth in Section 1.2(g)(iii) below.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"Owned Real Property" has the meaning set forth in Section 3.10(a)
below.
"Party" has the meaning set forth in the preface above.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Permits" means franchises, licenses, permits, registrations,
certificates, consents, approvals or authorizations.
"Permitted Liens" means: (a) Liens reserved against in the Company's
Balance Sheet, to the extent so reserved; (b) Liens for Taxes not yet due and
payable or which are being contested in good faith and by appropriate
proceedings if adequate reserves with respect thereto are maintained on the
Company's books in accordance with GAAP; or (c) Liens that, individually and in
the aggregate, do not and would not materially detract from the value of any of
the property or assets of the Company or materially interfere with the use
thereof as currently used or contemplated to be used.
"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.
"Prohibited Transaction" has the meaning set forth in ERISA Section 406
and Code Section 4975.
"Real Estate Purchase Agreements" has the meaning set forth in Section
7.8 below.
"Relative" of a Person shall mean such Person's spouse, parents,
sisters, brothers, children and the spouses of the foregoing, and any member of
the immediate household of such Person.
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"Reportable Event" has the meaning set forth in ERISA Section 4043.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Stock Restriction Agreements" has the meaning set forth in Section
6.14 below.
"Subsidiary" means any corporation with respect to which a specified
Person (or a Subsidiary thereof) owns a majority of the common stock or has the
power to vote or direct the voting of sufficient securities to elect a majority
of the directors.
"Tax" means any federal, state, local or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code Section
59A), customs duties, capital stock, franchise, profits, withholding, social
security (or similar), unemployment, disability, real property (including
property taxes paid by the Company pursuant to any lease), personal property,
sales, use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest, penalty,
or addition thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Third Party Claim" has the meaning set forth in Section 9.4 below.
"Wade Share" has the meaning set forth in the preface above.
ARTICLE 1
GENERAL TRANSACTION
1.1 DESCRIPTION OF TRANSACTION.
(a) MERGER OF WADE FORD, INC. INTO SUB I. Upon the terms and
conditions set forth in this Agreement, at the Effective Time, Wade Ford, Inc.
shall be merged with and into Sub I, and the separate existence of Wade Ford,
Inc. shall cease. Sub I shall continue as the surviving corporation of said
Merger ("Surviving Corporation I").
(b) MERGER OF WADE FORD BUFORD, INC. INTO SUB II. Upon the terms
and conditions set forth in this Agreement, at the Effective Time, Wade Ford
Buford, Inc. shall be merged with and into Sub II, and the separate existence of
Wade Ford Buford, Inc. shall cease. Sub II shall continue as the surviving
corporation of said Merger ("Surviving Corporation II") (Surviving Corporation I
and Surviving Corporation II shall individually be hereinafter referred to as a
"Surviving Corporation" and collectively as the "Surviving Corporations").
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(c) EFFECT OF MERGERS. The Mergers shall have the effects set
forth in this Agreement and in the applicable provisions of the Georgia Business
Corporations Code.
(d) CLOSING; EFFECTIVE TIME.
(i) Subject to the conditions set forth in this
Agreement, the consummation of the Mergers and the
other transactions contemplated by this Agreement
(the "Closing") shall take place at the offices of
SCHNADER HARRISON SEGAL & LEWIS, LLP in Atlanta,
Georgia, or any other location agreed upon by the
Parties, contemporaneously with the BAG IPO described
in the Registration Statement referred to in Section
7.6 hereof.
(ii) If the BAG IPO fails to close on or before the
Closing Date Deadline, then the Subs shall have the
option to consummate the Mergers and the other
transactions contemplated by this Agreement upon such
terms and conditions that are mutually acceptable to
the Parties (in which event said alternate
consummation shall for purposes herein be referred to
as the "Closing"), and said Closing shall take place
at the offices of SCHNADER HARRISON SEGAL & LEWIS,
LLP in Atlanta, Georgia, or any other location agreed
upon by the Parties
(iii) The date on which the Closing actually occurs is
herein referred to as the "Closing Date." On or
before the Closing Date, a properly executed
certificate of merger for each Merger, conforming
with the requirements of the Georgia Business
Corporations Code (each, a "Certificate of Merger")
shall be filed with the Secretary of State of the
State of Georgia. Each Merger shall take effect on
the Closing Date (with respect to each Merger, the
"Effective Time").
(e) MERGER CONSIDERATION. The aggregate consideration for the
Mergers (the "Merger Consideration") shall be (in aggregate) the amount of
Fifteen Million and No/100 Dollars ($15,000,000.00). The Merger Consideration
shall be paid by the Subs as follows:
(i) The sum of ELEVEN MILLION Dollars ($11,000,000.00)
shall be paid to the Stockholders by the Subs at the
Closing in cash or other immediately available funds
("Cash Consideration Amount"), to be divided amongst
the Stockholders in accordance with ADDENDUM 1
attached hereto and incorporated herein.
(ii) The balance of the Merger Consideration, which equals
to a value of FOUR MILLION Dollars ($4,000,000.00),
shall be paid to the Stockholders at the Closing in
the form of BAG Common Stock in accordance with
Section 1.1(g) hereof (the "Stock Consideration Value
Amount"), to be divided amongst the Stockholders in
accordance with ADDENDUM 1 attached hereto and
incorporated herein..
(iii) Notwithstanding the payment of the Cash Consideration
Amount described in Section 1.1(e)(i) hereof and the
payment of the Stock Consideration Value Amount
described in Section 1.1(e)(ii) hereof, at the
Closing, the Subs shall place $366,666.67 of the Cash
Consideration Amount (the "Escrow Funds") in an
interest bearing escrow account with Joyce E.
Kitchens, Esq., or another escrow agent reasonably
satisfactory to BAG and Stockholders (the "Escrow
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Agent"), and the Subs shall also place the number of
shares representing $133,333.33 of the Stock
Consideration Value Amount in escrow with the Escrow
Agent (the "Escrow Stock") (the Escrow Funds and the
Escrow Stock shall hereinafter be collectively
referred to as the "Escrow Consideration"), all in
accordance with an escrow agreement substantially in
the form attached hereto as EXHIBIT A, with such
other changes as the Escrow Agent may reasonably
request (the "Escrow Agreement"). The release of the
Escrow Consideration shall be governed by the terms
and conditions of the Escrow Agreement.
(f) ARTICLES OF INCORPORATION AND BYLAWS; DIRECTORS AND OFFICERS.
Upon the Effective Time:
(i) the Articles of Incorporation of Sub I and Sub II
shall continue as the Articles of Incorporation of
Surviving Corporation I and Surviving Corporation II,
respectively;
(ii) the Bylaws of Sub I and Sub II shall continue as the
Bylaws of Surviving Corporation I and Surviving
Corporation II, respectively;
(iii) The directors and officers of each Surviving
Corporation immediately after the Effective Time
shall be the individuals identified on EXHIBIT B.
(g) CONVERSION OF SHARES. Subject to Section 1.1(i)(iii), the
manner of converting the Wade Shares into shares of BAG Common Stock shall be as
is set forth in this Section 1.1(g). As of the Effective Time of the Merger, all
of the Wade Shares, by virtue of the Mergers without any action on the part of
the holder thereof, automatically shall be deemed to represent that number of
shares of BAG Common Stock that is equal to the number obtained by dividing the
Stock Consideration Value Amount by the BAG IPO Share Price (the "BAG Stock
Consideration Shares"). The BAG Stock Consideration Shares shall be divided
amongst the Stockholders on a pro-rata basis based on their stock ownership
interest in each of the Companies.
(h) CLOSING OF THE COMPANIES' TRANSFER BOOKS. At the Effective
Time, the holders of the Wade Share Certificates (as hereinafter defined) shall
cease to have any rights as stockholders of the Companies, and the stock
transfer books of the Companies shall be closed with respect to all such Wade
Shares. No further transfer of any such Wade Shares shall be made on such stock
transfer books after the Effective Time. If, after the Effective Time, a valid
certificate previously representing any Wade Shares is presented to any Sub or
BAG, such certificate shall be canceled and shall be exchanged as provided in
Section 1.1(e)(i) and 1.1(e)(ii), as applicable.
(i) EXCHANGE OF CERTIFICATES.
(i) At the Closing, the Wade Ford, Inc. Stockholders
shall surrender their certificates representing all
of the common stock of Wade Ford Inc. owned by said
Stockholders (the "Wade Ford Share Certificates") to
Surviving Corporation I, together with such
transmittal documents as BAG or Surviving Corporation
I may reasonably require.
(ii) At the Closing, the Wade Ford Buford, Inc.
Stockholders shall surrender their certificates
representing all of the common stock of Wade Ford
Buford, Inc.
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owned by said Stockholders (the "Wade Ford Buford
Share Certificates") to Surviving Corporation II,
together with such transmittal documents as BAG or
Surviving Corporation II may reasonably require. (The
Wade Ford Share Certificates and the Wade Ford Buford
Share Certificates shall hereinafter be referred to
as the "Wade Share Certificates").
(iii) No fractional shares of BAG Common Stock shall be
issued in connection with the Mergers, and no
certificates for any such fractional shares shall be
issued. Any fractional shares shall be rounded up to
the next whole share and any Stockholder who would
otherwise be entitled to receive a fraction of a
share of BAG Common Stock (after aggregating all
fractional shares of BAG Common Stock issuable to
such holder) shall, in lieu of such fractional share,
receive said additional whole share.
(iv) Until surrendered as contemplated by this Section
1.1(i), each Wade Share Certificate shall be deemed
from and after the Effective Time, to represent only
the right to receive a pro-rata share of the Merger
Consideration. If any Wade Share Certificate shall
have been lost, stolen or destroyed, each applicable
Sub may, at its discretion and as a condition
precedent to the delivery of any Merger Consideration
to the Stockholder who owns such lost, stolen or
destroyed Wade Share Certificate, require said owner
to provide an appropriate affidavit and to deliver a
bond (in such sum as BAG or the applicable Sub may
reasonably direct) as indemnity against any Claim
that may be made against BAG or any Sub with respect
to such Wade Share Certificate.
(v) The BAG Stock Consideration Shares to be issued in
the Merger shall be characterized as "restricted
securities" for purposes of Rule 144 under the
Securities Act, and each certificate representing any
of such shares shall bear a legend identical or
similar in effect to the following legend (together
with any other legend or legends required by
applicable state securities laws or otherwise):
THE SECURITIES REPRESENTED HEREBY HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 (THE "ACT") AND MAY NOT BE OFFERED,
SOLD OR OTHERWISE TRANSFERRED, ASSIGNED,
PLEDGED OR HYPOTHECATED UNLESS AND UNTIL
REGISTERED UNDER THE ACT OR UNLESS THE
COMPANY HAS RECEIVED AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY AND ITS COUNSEL
THAT SUCH REGISTRATION IS NOT REQUIRED.
(vi) The Subs shall be entitled to deduct and withhold
from any consideration payable or otherwise
deliverable to any holder or former holder of the
Wade Shares pursuant to this Agreement such amounts
as the Subs may be required to deduct or withhold
therefrom under the Code or under any provision of
state, local or foreign tax law. To the extent such
amounts are so deducted or withheld, such amounts
shall be treated for all purposes under this
Agreement as having been paid to the Person to whom
such amounts would otherwise have been paid.
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(vii) The Stockholders agree and acknowledge that the Subs
shall not be liable to any holder or former holder of
the Wade Shares for any shares of BAG Common Stock
(or dividends or distributions with respect thereto),
or for any cash amounts, delivered to any public
official pursuant to any applicable abandoned
property, escheat or similar law.
1.2 TAX CONSEQUENCES. For federal income tax purposes, the Mergers are
intended to constitute reorganizations within the meaning of Section 368 of the
Code. The Parties hereby adopt this Agreement as a "plan of reorganization" with
respect to each Company and Sub within the meaning of Sections 1.368-2(g) and
1.368-3(a) of the United States Treasury Regulations.
1.3 FURTHER ACTION. If, at any time after the Effective Time, any further
action is determined by BAG or the Subs to be necessary or desirable to carry
out the purposes of this Agreement or to vest the Subs with full title, right
and possession of and to all rights and property of the applicable Company, the
officers and directors of each Sub shall be fully authorized (in the name of the
applicable Company and otherwise) to take such action.
ARTICLE 2
MINIMUM REQUIREMENTS
The Parties hereby agree that Seller and the Companies shall deliver
the Companies in financial conditions which adhere to the minimum requirements
set forth in this Article 2:
2.1 1997 YEAR END MINIMUM NET WORTH REQUIREMENT.
(a) UPWARD NET WORTH ADJUSTMENT. If the 1997 Aggregate Net Worth
(as hereinafter defined) exceeds the 1997 Minimum Net Worth (as hereinafter
defined), BAG will pay to the Stockholders, on a dollar for dollar basis, the
entire amount of such excess by wire transfer or delivery of other immediately
available funds within three (3) business days after the later of (i) the
Closing Date or (ii) the date on which the Actual 1997 Adjusted EBIT is finally
determined pursuant to SECTION 2.1(e) hereof. This additional amount shall be
allocated to the Stockholders on the same ratio basis as the Merger
Consideration is allocated amongst the Stockholders in accordance with ADDENDUM
1.
(b) DOWNWARD NET WORTH ADJUSTMENT. If the 1997 Aggregate Net Worth
is less than the 1997 Minimum Net Worth, Stockholders will pay to BAG, on a
dollar for dollar basis, the entire amount of such deficiency by wire transfer
or delivery of other immediately available funds within three (3) business days
after the later of (i) the Closing Date or (ii) the date on which the Actual
1997 Adjusted EBIT is finally determined pursuant to SECTION 2.1(e) hereof. If
Stockholders do not pay such deficiency amount to BAG within said three (3) day
period, BAG shall have the right to offset and deduct such deficiency amount, on
a dollar for dollar basis, from the Escrow Funds, and if no Escrow Funds remain
available, then from the Escrow Stock (based on the BAG IPO Share Price). BAG
shall have the option to offset and deduct such deficiency amount from the
Stockholders on the same ratio basis as the Merger Consideration is allocated
amongst the Stockholders in accordance with ADDENDUM 1. Furthermore, if no
Escrow Consideration remains available for payment of all or any portion such
deficiency amount, then each Stockholder shall pay, reimburse and disburse to
BAG all amounts of such deficiency amount that is in excess of any remaining
Escrow Consideration on the same ratio basis as the Merger Consideration is
allocated amongst the Stockholders in accordance with ADDENDUM 1.
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(c) 1997 AGGREGATE NET WORTH. For purposes herein, the "1997
Aggregate Net Worth" of the Companies shall be defined as the following: (i)
Total Stockholders' Equity of the Companies, on a consolidated basis, as of the
December 31, 1996 audited financial statements for Wade Ford, Inc. and Wade Ford
Buford, Inc., which amount equals Two Million Four Hundred Forty-Four Thousand
Four Hundred Ninety-Three and No/100 Dollars ($2,444,493.00) ("1996
Stockholders' Equity"), plus (ii) the Actual 1997 Adjusted EBIT (as hereinafter
defined) of the consolidated Companies as of December 31, 1997, as determined
pursuant to the calculation of the Accountants (hereinafter defined) in
accordance with SECTION 2.1(e) hereof, minus (iii) Seven-Hundred Eighty Seven
Thousand Four Hundred Eight and No/100 Dollars ($787,408.00), which number
represents the aggregate 1997 distributions for taxes as of the date hereof from
the Companies to the Stockholders, minus (iv) Four Hundred Fifty Thousand and
No/100 Dollars ($450,000.00), which number represents the additional 1997
distributions that will be made by the Companies to the Stockholders for income
tax purposes.
(d) 1997 MINIMUM NET WORTH. For purposes herein, "1997 Minimum Net
Worth" shall be an amount equal to Four Million Seven Hundred Seven Thousand
Eighty-Five and No/100 Dollars ($4,707,085.00). This 1997 Minimum Net Worth
amount is based on the sum of (i) the 1996 Stockholders' Equity, plus (ii) a
projected adjusted earnings before interest and taxes for the year 1997 equal to
Three Million Five Hundred Thousand and No/100 Dollars ($3,500,000.00) (the
"Target 1997 Adjusted EBIT"), minus (iii) Seven-Hundred Eighty Seven Thousand
Four Hundred Eight and No/100 Dollars ($787,408.00), which number represents the
aggregate 1997 distributions as of the date hereof from the Companies to the
Stockholders, minus (iv) Four Hundred Fifty Thousand and No/100 Dollars
($450,000.00), which number represents the additional 1997 distributions that
will be made by the Companies to Stockholders for income tax purposes.
(e) EBIT. Within the later of sixty (60) days after the Closing
Date or sixty (60) days after December 31, 1997 (the "Audit Deadline"), BAG's
accountant, Ernst & Young (the "Accountants"), will compute the combined net
income of the Target Companies as of close of business on December 31, 1997
using GAAP (the "1997 Net Income"). Once the 1997 Net Income has been
determined, but in any event prior to the Audit Deadline, the Accountants shall
make the adjustments set forth on ADDENDUM 2 attached hereto and incorporated
herein to the 1997 Net Income in order to determine the combined adjusted
earnings before interest and taxes for the Companies as of the close of business
on December 31, 1997 (the "Actual 1997 Adjusted EBIT"). Additional adjustments
may be made to the 1997 Net Income in order to determine the Actual 1997
Adjusted EBIT, and the determination of the Accountants with respect to whether
or not there are such additional adjustments shall be conclusive and binding
upon the Parties. Furthermore, the determination of the Accountants with respect
to the 1997 Net Income and Actual 1997 Adjusted EBIT shall be conclusive and
binding upon the Parties.
(f) INVENTORY. If required by the Accountants in connection with
the audit described in Section 2.1(c) above, the Stockholders, the applicable
Company, the Accountants and other representatives of BAG or the Subs shall
conduct a physical inventory at each location where inventory is held by the
applicable Company in order to determine the physical inventory of each
applicable Company as of December 31, 1997.
2.2 DETERMINATION OF 1998 PROFIT/LOSS. The Parties intend and understand
that the Companies shall be delivered to Sub I and Sub II on the Closing Date in
substantially the same financial condition as the financial condition of the
Companies as of December 31, 1997. To that end, the Companies and the
Stockholders represent and warrant to BAG, Sub I and Sub II that the net worth
of the Companies, as delivered on the Closing Date, shall not be materially less
than the 1997 Minimum Net Worth. The Parties hereby additionally agree that if
the Closing does not occur on or before December 31, 1997, then the Stockholders
shall retain any profits earned by the Companies during the interim period
beginning
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on January 1, 1998 and ending on the Closing Date (the "Interim Period"), or,
alternatively, that the Stockholders shall reimburse BAG and the Subs for any
losses incurred by the Companies during the Interim Period. The determination of
such profits or losses shall be achieved solely by combining the amounts of the
profits or losses as listed on line 28 of each Company's monthly Factory
Statements during the Interim Period to determine a final amount of either
profit or loss. More specifically:
(a) If the Companies earn a profit for the Interim Period, then
BAG shall pay to the Stockholders, on a dollar for dollar basis, the following
amount by wire transfer or delivery of other immediately available funds on or
before the Interim Due Date (as hereinafter defined): The entire amount of the
1998 Interim Profits (as hereinafter defined) of the Companies less any
distributions made by the Companies to the Stockholders during the Interim
Period (the "1998 Interim Profit Reimbursement"). This 1998 Interim Profit
Reimbursement amount shall be allocated to the Stockholders on the same ratio
basis as the Merger Consideration is allocated amongst the Stockholders in
accordance with ADDENDUM 1; or
(b) If the Companies incur a loss for the Interim Period, then the
Stockholders shall pay to BAG, on a dollar for dollar basis, the entire amount
of the 1998 Interim Loss (as hereinafter defined) of the Companies by wire
transfer or delivery of other immediately available funds on or before the
Interim Due Date. If Stockholders do not pay such 1998 Interim Loss amount to
BAG on or before the Interim Due Date, BAG shall have the right to offset and
deduct such 1998 Interim Loss amount, on a dollar for dollar basis, from the
Escrow Funds, and if no Escrow Funds remain available, then from the Escrow
Stock (based on the BAG IPO Share Price). BAG shall have the option to offset
and deduct such 1998 Interim Loss amount from the Stockholders on the same ratio
basis as the Merger Consideration is allocated amongst the Stockholders in
accordance with ADDENDUM 1. Furthermore, if no Escrow Consideration remains
available for payment of all or any portion such 1998 Interim Loss amount, then
Alan K. Arnold shall pay, reimburse and disburse to BAG all of such 1998 Interim
Loss amount that is in excess of any remaining Escrow Consideration, and BAG
shall not be required to demand the payment of such 1998 Interim Loss amount
from any of the Stockholders other than Alan K. Arnold.
(c) The 1998 Interim Profit or the 1998 Interim Loss shall be
determined by combining the amounts listed on Line 28 (entitled "Profit/Loss")
of each monthly Factory Statement of each Company for each month during the
Interim Period (including the Closing Month, as hereinafter defined); if the
resulting amount is a positive number, it shall be called the "1998 Interim
Profit" for purposes hereunder, and if the resulting amount is a negative
number, then the positive value of such number it shall be called the "1998
Interim Loss."
(d) The Companies shall provide copies of all monthly Factory
Statements for the Interim Period to BAG and the Subs on the Closing Date and
shall provide the Factory Statement of each Company for the month (the "Closing
Month") in which the Closing occurs (the "Closing Month Factory Statement") to
BAG and the Subs within fifteen (15) days after the last day of the Closing
Month, and BAG and the Subs shall have an opportunity to review said monthly
Factory Statements for accuracy. The calculation of the 1998 Interim Profit or
1998 Interim Loss, as the case may be, shall be made no later than thirty-five
(35) days following the last day of the Closing Month, and any payment of the
1998 Interim Profit or 1998 Interim Loss by the paying Party, as the case may
be, shall be made no later than forty (40) days after said last day of the
Closing Month, as set forth in SECTIONS 2.2(a) and (b) hereof (the "Interim Due
Date"). If any disputes arise between the Parties with regard to the calculation
of the 1997 Interim Profit or the 1998 Interim Loss, and the Parties are unable
to resolve such dispute on or before the Interim Due Date, the disputed matter
shall be submitted to binding arbitration for resolution.
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(e) In the event the Closing does not occur on the last day of a
month, then the profit or loss for the Closing Month, as the case may be, shall
be determined by pro-rating the actual profit or loss shown on Line 28
(Profit/Loss) of the Closing Month Factory Statement as of the Closing Date and
including in the calculation of the 1998 Interim Profit or the 1998 Interim
Loss, as the case may be, only that pro-rated portion of the Closing Month
profit/loss which is allocable to the period prior to the Closing Date
(inclusive).
2.3 MINIMUM CASH REQUIREMENT. Notwithstanding anything to the contrary
contained in this Agreement, immediately upon the consummation of the Closing,
the cash account of the Companies must contain a balance equal to an amount that
is no less than Eight Hundred Thousand and No/100 Dollars ($800,000.00), on an
aggregate basis (the "Minimum Cash Balance"). If the Companies' cash accounts
contain a balance, as of the time that is immediately after the consummation of
the Closing, that is less than the Minimum Cash Balance, BAG shall have the
right to offset and deduct any amount of such deficiency, on a dollar for dollar
basis, from the Escrow Funds, and if no Escrow Funds remain available, then from
the Escrow Stock (based on the BAG IPO Share Price).
2.4 MINIMUM FLOOR PLAN REQUIREMENT. As of the Date of the Closing Date, the
Companies shall not be "Out of Trust," as such term is commonly used in the
automotive business and, with respect to Wade Ford, Inc., relates to the floor
plan of its new and used cars. As of the Closing Date, Wade Ford Inc.'s floor
plan liability must not exceed Wade Ford Inc.'s Floor Plan Assets by more than
three percent (3%), where "Floor Plan Assets" shall mean Wade Ford Inc.'s actual
inventory of financed automobiles, plus its contracts in transits, plus its
current (not over ninety (90) days) fleet car receivables. If, as of the date of
Closing Date, the floor plan liability exceeds Wade Ford Inc.'s Floor Plan
Assets by more than three percent (3%), then Stockholders shall pay such excess
to BAG in cash or other immediately available funds at the Closing. If
Stockholders do not pay such excess amount to BAG at the Closing, BAG shall have
the right to offset and deduct such excess amount, on a dollar for dollar basis,
from the Escrow Funds, and if no Escrow Funds remain available, then from the
Escrow Stock (based on the BAG IPO Share Price).
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
OF THE COMPANIES AND THE STOCKHOLDERS
Subject to the Parties' agreement and acknowledgment that all of the
Schedules referred to in this Article 3 are to be delivered by the Companies and
the Stockholders no later than ten (10) business days after the execution of
this Agreement to BAG and the Subs, the Companies and the Stockholders hereby
jointly and severally represent and warrant to BAG and the Subs 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) as to each Company:
3.1 ORGANIZATION AND GOOD STANDING. Each Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
its incorporation and has the corporate power and authority to own, lease and
operate the properties used in its business and to carry on its business as now
being conducted. Each Company is duly qualified to do business and is in good
standing as a foreign corporation in each state and jurisdiction where
qualification as a foreign corporation is required except where the lack of such
qualification would not have a Material Adverse Effect on each Company. SCHEDULE
3.1(a) hereto lists: (i) the states and other jurisdictions where each Company
is so qualified;
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and (ii) the assumed names under which each Company conducts business and
contains complete and correct copies of each Company's Articles of Incorporation
and Bylaws, each as amended and presently in effect.
3.2 SUBSIDIARIES. Except as set forth in SCHEDULE 3.2 hereof, no Company
has any subsidiaries or any other interest or investment in any Person.
3.3 CAPITALIZATION. The authorized stock of each Company and the number of
shares of capital stock that are issued and outstanding are set forth on
SCHEDULE 3.3(a) hereto. The shares listed on SCHEDULE 3.3(a) hereto constitute
all the issued and outstanding shares of capital stock of each Company, have
been validly authorized and issued, are fully paid and non-assessable, have not
been issued in violation of any pre-emptive rights or of any federal or state
securities law and no personal liability attaches to the ownership thereof.
Except for as set forth on SCHEDULE 3.3(b) hereto, there is no security, option,
warrant, right, call, subscription, agreement, commitment or understanding of
any nature whatsoever, fixed or contingent, that directly or indirectly: (i)
calls for issuance, sale, pledge or other disposition of any shares of capital
stock of any Company or any securities convertible into, or other rights to
acquire, any shares of capital stock of each Company; (ii) obligates each
Company to grant, offer or enter into any of the foregoing; or (iii) relates to
the voting or control of such capital stock, securities or rights, except as
provided in this Agreement. Neither Company has agreed to register any
securities under the Securities Act.
3.4 AUTHORITY, APPROVALS AND CONSENTS. Each Company has the corporate power
and authority to enter into this Agreement and the other documents referenced
herein or related hereto (collectively, the "Transaction Documents") and to
perform its obligations hereunder and thereunder. The execution, delivery and
performance of this Agreement and the Transaction Documents and the consummation
of the transactions contemplated hereby and thereby have been duly authorized
and approved by the Board of Directors of each Company and no other corporate
proceedings on the part of each Company are necessary to authorize and approve
this Agreement and the Transaction Documents and the transactions contemplated
hereby and thereby. This Agreement has been duly executed and delivered by, and
constitutes a valid and binding obligation of, each Company, enforceable against
each Company in accordance with its terms. The execution, delivery and
performance by each Company and the Stockholders of this Agreement and the
consummation of the transactions contemplated hereby and thereby do not and will
not:
(a) contravene any provisions of the Charter or Bylaws of any
Company;
(b) except as set forth on SCHEDULE 3.4(b), conflict with, result
in a breach of any provision of, constitute a default under, result in the
modification or cancellation of, or give rise to any right of termination or
acceleration in respect of, any Company Agreement, require any consent of waiver
of any party to any Company Agreement, except where such conflict or default
would not have a Material Adverse Effect on any Company or on the ability of the
Parties to consummate the transactions contemplated by this Agreement;
(c) result in the creation of any Lien upon, or any Person
obtaining any right to acquire, any properties, assets or rights of any Company
(other than the rights of each Sub to acquire the Wade Shares pursuant to this
Agreement);
(d) violate or conflict with any Legal Requirements applicable to
each Company or any of its businesses or properties, except where such conflict
or default would not have a Material Adverse
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Effect on each Company or on the ability of the Parties to consummate the
transactions contemplated by this Agreement; or
(e) require any authorization, consent, order, permit or approval
of, or notice to, or filing, registration or qualification with, any
Governmental Authority, other than in connection with or in compliance with the
provisions of the Hart-Scott-Rodino Act, except where such conflict or default
would not have a Material Adverse Effect on each Company or on the ability of
the Parties to consummate the transactions contemplated by this Agreement.
Except as referred to above, no permit or approval of, or notice to any
Governmental Authority is necessary to be obtained or made by each Company to
enable each Company to continue to conduct its business and operations and use
its properties after the Closing in a manner which is in all material respects
consistent with that in which they are presently conducted and used.
3.5 FINANCIAL STATEMENTS. Attached as SCHEDULE 3.5 are true and complete
copies of:
(a) the unaudited balance sheets of each Company as of December
31, 1994, December 31, 1995 and the audited balance sheets of each Company as of
December 31, 1996, and the related statements of income, stockholders' equity
and cash flow for the fiscal year ended December 31, 1994, December 31, 1995 and
December 31, 1996, together with the notes thereto;
(b) the unaudited balance sheet of each Company as of October 31,
1997 (with respect to each Company, the "Balance Sheet") and the unaudited
statements of income and stockholders' equity for the 10 month period ended on
such date, together with notes thereto; and
(c) the most recent monthly and year-to-date financial statements
provided to Ford Motor Company (with respect to each Company, the "Factory
Statements");
(the financial statements referred to in clauses (a) and (b) above, including
the notes thereto, being referred to herein collectively as the "Financial
Statements"). The Financial Statements of each Company are in accordance with
books and records of each Company, fairly present the financial position,
results of operations, stockholders' equity and changes in the financial
position of each Company as of the dates and for the periods indicated, are in
conformity with GAAP consistently applied (except as otherwise indicated in such
statements or on SCHEDULE 3.5 hereof) during such periods, and can be
legitimately reconciled with the financial statements and the financial records
maintained and the accounting methods applied by each Company for federal income
tax purposes. The Financial Statements of each Company include all adjustments,
which consist of only normal recurring accruals, necessary for such fair
presentations. The statements of income included in the Financial Statements of
each Company do not contain any items of special or non-recurring income except
as expressly identified therein, and the balance sheets included in the
Financial Statements of each Company do not reflect any write up or revaluation
increasing the book value of any assets except as expressly identified therein.
The books and accounts of each Company are complete and current in all material
respects and fairly reflect all of the transactions, items of income and expense
and all assets and liabilities of the businesses of each Company consistent with
prior practices of each Company. Each Factory Statement is accurate and complete
and was prepared in compliance with the requirements of the appropriate
automobile manufacturer, including, but not limited to, all requirements set
forth in the contract with such automobile manufacturer.
3.6 ABSENCE OF UNDISCLOSED LIABILITIES. Each Company does not have any
material liability of any nature whatsoever (whether known or unknown, due or to
become due, accrued, absolute, contingent or
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otherwise), including, without limitation, any unfunded obligation under
employee benefit plans or arrangements as described in Sections 3.17 and 3.18
hereof or liabilities for Taxes, except for: (a) liabilities reflected or
reserved against in the most recent Financial Statements of each Company; (b)
current liabilities incurred in the ordinary course of business and consistent
with past practice after the date of each Company's Balance Sheet which,
individually and in the aggregate, do not have, and cannot reasonably be
expected to have, a Material Adverse Effect on each Company; and (c) liabilities
disclosed or SCHEDULE 3.6 hereto. Except as set forth in SCHEDULE 3.6 hereto,
each Company is not a party to any Company Agreement, or subject to any Charter
or Bylaw provision, any other corporate limitation or any Legal Requirement
which has, or can reasonably be expected to have, a Material Adverse Effect on
each Company. Except as set forth in SCHEDULE 3.6 hereto, none of the employees
of each Company is now or will with the passage of time become entitled to
receive any vacation time, vacation pay or severance pay attributable to
services rendered prior to the Closing Date.
3.7 ABSENCE OF MATERIAL ADVERSE EFFECT; CONDUCT OF BUSINESS.
(a) Since December 31, 1996, except as set forth on SCHEDULE
3.7(a) hereto, each Company has operated in the ordinary course of business
consistent with past practice and there has not been:
(i) any material adverse change in the assets,
properties, business, contractual relations,
operations, prospects, net income or financial
condition of each Company and no factor, event,
condition, circumstance or prospective development
exists which threatens or may threaten to have a
Material Adverse Effect on each Company;
(ii) any material loss, damage, destruction or other
casualty to the property or other assets of each
Company, whether or not covered by insurance;
(iii) any material change in any method of accounting or
accounting practice of each Company; or
(iv) any material loss of the employment, services or
benefits of any key employee of each Company.
(b) Since December 31, 1996, except as set forth in SCHEDULE
3.7(b) hereto, each Company has not:
(i) incurred any material obligation or liability
(whether absolute, accrued, contingent or otherwise),
except in the ordinary course of business consistent
with past practice;
(ii) failed to disclose or satisfy any lien or pay or
satisfy any obligation or liability (whether
absolute, accrued, contingent or otherwise), other
than liabilities being contested in good faith and
for which adequate reserves have been provided;
(iii) mortgaged, pledged or subjected to any Lien any of
its property or other assets except for mechanics'
liens and liens for taxes not yet due and payable;
(iv) sold or transferred any asset or canceled any debts
or claims or waived any rights, except in the
ordinary course of business consistent with past
practices;
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(v) defaulted on any material obligation;
(vi) entered into any material transaction, except in the
ordinary course of business consistent with past
practice;
(vii) written down the value of any inventory or written
off as uncollectible any accounts receivable or any
portion thereof not reflected in each Company's
Financial Statements;
(viii) received any notice of termination of any contract,
lease or other agreement or suffered any damage,
destruction or loss (whether or not covered by
insurance) which, in any case or in the aggregate,
has had a Material Adverse Effect on any Company;
(ix) transferred or granted any rights under, or entered
into any settlement regarding the breach or
infringement of, any Intellectual Property, or
modified any existing rights with respect thereto;
(x) made any change in the rate of compensation,
commission, bonus or other direct or indirect
remuneration payable, or paid or agreed or orally
promised to pay, conditionally or otherwise, any
bonus, incentive, retention or other compensation,
retirement, welfare, fringe or severance benefit or
vacation pay, to or in respect of any shareholder,
director, officer, employee, salesman, distributor or
agent of each Company other than increases in
accordance with past practices not exceeding ten
percent (10%) in the aggregate;
(xi) encountered any labor union organizing activity, had
any actual or threatened employee strikes, work
stoppages, slowdowns or lockouts, or had any material
change in its relations with its employees, agents,
customers or suppliers;
(xii) failed to replenish inventories and supplies in a
normal and customary manner consistent with its prior
practice, or made any purchase commitment in excess
of the normal, ordinary and usual requirements of its
business or at any price in excess of then-current
market price or upon terms and conditions more
onerous than those usual and customary in the
industry, or made any change in its selling, pricing,
advertising or personnel practices inconsistent with
its prior practice;
(xiii) instituted, settled or agreed to settle any, or had
any material involvement in, litigation, action or
proceeding before any court or governmental body
relating to each Company other than in the ordinary
course of business consistent with past practices but
not in any case involving amounts in excess of
$100,000;
(xiv) entered into any transaction, contract or commitment
other than in the ordinary course of business or paid
or agreed to pay any legal, accounting, brokerage,
finder's fee, Taxes or other expenses in connection
with, or incurred any severance pay obligations by
reason of, this Agreement or the transactions
contemplated hereby;
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(xv) declared, set aside or paid any dividend or other
distribution in respect of any shares of capital
stock of each Company or any repurchase, redemption
or other acquisition by any Stockholder or each
Company of any outstanding shares of capital stock or
other securities of, or other ownership interest in,
each Company;
(xvi) made any individual capital expenditure in excess of
$25,000 (excluding automobiles, vans and other
vehicles that are part of inventory), or aggregate
capital expenditures in excess of $100,000 (excluding
automobiles, vans and other vehicles that are part of
inventory), or additions to property, plant and
equipment other than ordinary repairs and
maintenance;
(xvii) discontinued any franchise or the sale of any
products or product line;
(xviii) incurred any obligation or liability to any employee
for the payment of severance benefits; or
(xix) entered into any agreement or made any commitment to
do any of the foregoing.
3.8 TAXES. Except as set forth on SCHEDULE 3.8, (i) all Tax Returns
required to be filed by or on behalf of each Company have been properly prepared
and duly and timely filed with the appropriate taxing authorities in all
jurisdictions in which such Tax Returns are required to be filed (after giving
effect to any valid extensions of time in which to make such filings), and all
such Tax Returns were true, complete and correct in all material respects, (ii)
all Taxes required to be paid by or on behalf of each Company or in respect of
each Company's income, assets or operations have been fully and timely paid,
(iii) each Company has not executed or filed with the IRS or any other taxing
authority any agreement, waiver or other document or arrangement extending or
having the effect of extending the period for assessment or collection of Taxes
(including, but not limited to, any applicable statute of limitation, and no
power of attorney with respect to any Tax matter is currently in force, and (iv)
all Taxes required to be withheld by each Company have been duly and timely
withheld and have been paid over to the appropriate taxing authorities for all
periods under all applicable Legal Requirements. Copies of all Tax Returns for
each fiscal year since the date of incorporation of each Company have been
furnished or made available to the Subs , as applicable, and to BAG or its
representatives and such copies are accurate and complete as of the date hereof.
Each Company has also furnished or made available to the Subs and BAG correct
and complete copies of all material notices and correspondence sent or received
since December 31, 1992 by each Company to or from any federal, state or local
tax authorities.
(a) The unpaid Taxes of each Company with respect to periods ended
on, prior to or through the date of each Company's Balance Sheet will not exceed
by any material amount the reserve for Taxes reflected on such financial
statements. Each Company has made adequate provision on its books (on an annual
basis) for the payment of all Taxes (including for the current fiscal period)
owed by each Company. Except to the extent reserves therefor are reflected on
each Company's Balance Sheet, each Company is not liable, or will not become
liable, for any Taxes for any period ending on, prior to or through the date of
each Company's Balance Sheet.
(b) Except as set forth on SCHEDULE 3.8 hereto, each Company has
not been subject to a federal or state tax audit of any kind and no adjustment
has been proposed by the IRS or any other taxing authority with respect to any
return for any year. With respect to the audits referred to on SCHEDULE 3.8
hereto, no such audit has resulted in an adjustment in excess of $50,000.
Neither each Company nor any of the Stockholders knows of any basis for any
assertion of a deficiency for Taxes against each Company.
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The Stockholders will cooperate with each Company in the filing of any returns
and in any audit or refund claim proceedings involving Taxes for which each
Company may be liable or with respect to which each Company may be entitled to a
refund.
(c) Except as set forth on SCHEDULE 3.8 hereto, each Company has
not executed or filed with the IRS or any other taxing authority any agreement,
waiver or other document or arrangement extending or having the effect of
extending the period for assessment or collection of Taxes (including, but not
limited to, any applicable statute of limitation), and no power of attorney with
respect to any Tax matter is currently in force;
(d) Except as set forth on SCHEDULE 3.8 hereto, all Taxes required
to be withheld by each Company have been duly and timely withheld and have been
paid over to the appropriate taxing authorities for all periods under all
applicable laws;
(e) SCHEDULE 3.8 lists all material types of Taxes paid and
material types of tax returns filed by or on behalf of each Company. Except as
set forth on SCHEDULE 3.8, no claim has been made by a taxing authority in a
jurisdiction where each Company does not file tax returns such that it is or may
be subject to taxation by that jurisdiction;
(f) Except as set forth on SCHEDULE 3.8, all deficiencies asserted
or assessments made as a result of any examinations by the IRS or any other
taxing authority of the tax returns of or covering or including each Company
have been fully paid, and there are no other audits or investigations by any
taxing authority in progress, nor have Stockholders or each Company received any
notice from any taxing authority that it intends to conduct such an audit or
investigation. No issue has been raised by a federal, state, local or foreign
taxing authority in any current or prior examination which, by application of
the same or similar principles, could reasonably be expected to result in
proposed deficiency for any subsequent Tax period.
(g) Except as set forth on SCHEDULE 3.8, neither each Company nor
any other Person (including the Stockholders) on behalf of each Company has: (i)
agreed to or is required to make any adjustments pursuant to Section 481(a) of
the Code or any similar provision of state, local or foreign law by reason of a
change in accounting method initiated by each Company or has Knowledge that the
IRS has proposed any such adjustment or change in accounting method, or has any
application pending with any taxing authority requesting permission for any
changes in accounting methods that relate to the business or operations of each
Company; (ii) executed or entered into a closing agreement pursuant to Section
7121 of the Code or any predecessor provision thereof or any similar provision
of state, local or foreign law with respect to each Company; or (iii) requested
any extension of time within which to file any tax return, which tax return has
not since been filed;
(h) Except as set forth on SCHEDULE 3.8 hereto, no property owned
by each Company is: (i) property required to be treated as being owned by
another Person pursuant to the provisions of Section 168(f)(8) of the Internal
Revenue Code of 1954, as amended and in effect immediately prior to the
enactment of the Tax Reform Act of 1986; (ii) constitutes "tax-exempt use
property" within the meaning of Section 168(h)(1) of the Code; or (iii) is
"tax-exempt bond financed property" within the meaning of Section 168(g) of the
Code;
(i) Except as set forth on SCHEDULE 3.8 hereto, none of the
Stockholders is a foreign Person within the meaning of Section 1445 of the Code;
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(j) Except as set forth on SCHEDULE 3.8 hereto, each Company is
not a party to any tax-sharing or similar agreement or arrangement (whether or
not written) pursuant to which it will have any obligation to make any payments
after the Closing;
(k) Except as set forth on SCHEDULE 3.8 hereto, there is no
contract, agreement, plan or arrangement covering any Person that, individually
or collectively, could give rise to the payment of any amount that would not be
deductible by the Subs or their Affiliates by reason of Section 280G of the
Code, or would constitute compensation in excess of the limitation set forth in
Section 162(m) of the Code;
(l) Except as set forth on SCHEDULE 3.8 hereto, each Company is
not subject to any private letter ruling of the IRS or comparable rulings of
other taxing authorities;
(m) Except as set forth on SCHEDULE 3.8 hereto, there are no Liens
as a result of any unpaid Taxes upon any of the assets of each Company;
(n) Except as set forth on SCHEDULE 3.8 hereto, each Company has
properly and timely elected under Section 1362 of the Code, and under each
analogous or similar provision of state or local law in each jurisdiction where
each Company is required to file a tax return, to be treated as an "S"
corporation for all taxable periods since the date of incorporation of each
Company. Sub I and Sub II, as applicable, have received a copy of any such
elections and there has not been any voluntary or involuntary termination or
revocation of any such election;
(o) Except as set forth in SCHEDULE 3.8, each Company has never
owned any subsidiaries and has never been a member of any consolidated, combined
or affiliated group of corporations for any Tax purposes;
(p) Except as set forth in SCHEDULE 3.8, each Company does not
have any undistributed earnings and profits and has not had for any taxable
years gross receipts more than twenty-five percent (25%) of which are "passive
investment income" (as defined in Section 1375 of the Code).
3.9 LEGAL MATTERS.
(a) Except as set forth on SCHEDULE 3.9(a) hereto: (i) to the
Knowledge of Seller and each Company, there is no Claim pending against, or
threatened against or affecting, each Company, any ERISA Plan) or any of their
respective assets, properties or rights before any court, arbitrator, panel,
agency or other governmental, administrative or judicial entity, domestic or
foreign, nor is any basis known to the Stockholders or each Company for any such
Claims; and (ii) neither each Company nor any of its assets are subject to any
judgment, decree, writ, injunction, ruling or order (collectively, "Judgments")
of any Governmental Authority, domestic or foreign. SCHEDULE 3.9(a) hereto
identifies each Claim and Judgment disclosed thereon.
(b) The businesses of each Company are being conducted in
compliance with all Legal Requirements applicable to each Company or any of its
respective businesses or properties. Each Company holds, and is in compliance
with, all Permits required by all applicable Legal Requirements. A list of all
Permits is set forth on SCHEDULE 3.9(b) hereof. No event has occurred and is
continuing which permits, or after notice or lapse of time or both would permit,
any modification or termination of any Permit.
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(c) To the Knowledge of Seller and each Company, there are no
proposed laws, rules, regulations, ordinances, orders, judgments, decrees,
governmental takings, condemnations or other proceedings which would be
applicable to the business, operations or properties of each Company and which
might materially adversely affect the properties, assets, liabilities,
operations or prospects of each Company, either before or after the Closing
Date.
(d) SCHEDULE 3.9(d) sets forth all Governmental Approvals and
other Consents necessary for, or otherwise material to, the conduct of each
Company's business. Except as set forth in SCHEDULE 3.9(d), all such
Governmental Approvals and Consents have been duly obtained and are in full
force and effect, and each Company is in compliance with each of such
Governmental Approvals and Consents held by it.
(e) There have been no citations, notices or complaints issued to
or received by each Company by the Occupational Health and Safety Administration
or any similar state or local agency.
3.10 PROPERTY. The properties and assets owned by or leased to each Company
(including improvements to the Real Property (the "Improvements") and all
machinery, equipment and other tangible property) are in all material respects
adequate for the purposes of which such assets are currently used or are held
for use, and are in good repair and operating condition (subject to normal wear
and tear) and there are no facts or conditions affecting such assets which
could, individually or in the aggregate, interfere in any material respect with
the use, occupancy or operation thereof as currently used, occupied or operated,
or their adequacy for such use.
(a) OWNED REAL PROPERTY. SCHEDULE 3.10 contains a complete list of
all real property owned by each Company (the "Owned Real Property") setting
forth the address and owner of each parcel and describing all improvements
thereon, including without limitation, the properties reflected as being so
owned on each Company's Financial Statements. Each Company has, or on the
Closing Date will have, good, valid and marketable fee simple title to the Owned
Real Property indicated on SCHEDULE 3.10 as being owned by it, free and clear of
all Liens other than Permitted Liens. There are no outstanding leases, options
or rights of first refusal to purchase the Owned Real Property, or any portion
thereof or interest therein.
(b) LEASES. SCHEDULE 3.10 contains a complete list of all leases
of real property setting forth the address, landlord and tenant for each Lease.
Stockholders have delivered to BAG and the Subs complete copies of the Leases.
Each Lease is legal, valid, binding, enforceable, and in full force and effect,
except as may be limited by bankruptcy, insolvency, reorganization and similar
applicable laws affecting creditors generally and by the availability of
equitable remedies. Each Company is not in default, violation or breach in any
respect under any Lease, and no event has occurred and is continuing that
constitutes or, with notice or the passage of time or both, would constitute a
default, violation or breach in any respect under any Lease. Each Lease grants
the tenant under the Lease the exclusive right to use and occupy the demised
premises thereunder (the "Leased Real Property"). Each Company has good and
valid title to the leasehold estate under each Lease free and clear of all Liens
other than Permitted Liens. Each Company enjoys peaceful and undisturbed
possession under its respective Leases for the Leased Real Property.
(c) FEE AND LEASEHOLD INTERESTS. The Real Property constitutes all
the fee and leasehold interests in real property held for use in connection
with, necessary for the conduct of, or otherwise material to, the business of
each Company as it is currently conducted.
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(d) NO PROCEEDINGS. There are no eminent domain or other similar
proceedings pending or threatened affecting any portion of the Real Property.
There is no writ, injunction, decree, order or judgment outstanding, nor any
action, claim, suit or proceeding, pending or threatened, relating to the
ownership, lease, use, occupancy or operation by any Person of any Real
Property.
(e) CURRENT USE. The use and operation of the Real Property by
each Company does not violate in any material respect any instrument of record
or agreement affecting the Real Property. There is no violation of any covenant,
condition, restriction, easement or order of any Governmental Authority having
jurisdiction over such property or of any other Person entitled to enforce the
same affecting the Real Property or the use or occupancy thereof. No damage or
destruction has occurred with respect to any of the Real Property that would,
individually or in the aggregate, have a Material Adverse Effect on any Company.
(f) COMPLIANCE WITH REAL PROPERTY LAWS. The Real Property is in
full compliance with all applicable building, zoning, subdivision and other land
use and similar applicable laws affecting the Real Property (collectively, the
"Real Property Laws"), and each Company and the Stockholders have not received
any notice of violation or claimed violation of any Real Property Law. There is
no pending or anticipated change in any Real Property Law that will have or
result in a Material Adverse Effect upon the ownership, alteration, use,
occupancy or operation of the Real Property or any portion thereof. No current
use by each Company of the Real Property is dependent on a nonconforming use or
other Governmental Approval, the absence of which would materially limit the use
of such properties or assets held for use in connection with, necessary for the
conduct of, or otherwise material to, each Company.
(g) REAL PROPERTY TAXES. Each parcel included in the Real Property
is assessed for real property tax purposes as a wholly independent tax lot,
separate from adjoining land or improvements not constituting a part of that
parcel.
(h) LEASED PREMISES. With respect to Leased Real Property, each
Company has complied with and caused such premises to comply with: (i) all
federal, state, county, municipal and other governmental statutes, laws, rules,
orders, regulations, ordinances or recommendations affecting such premises or
any part thereof, or the use thereof, including without limitation, the
Americans with Disabilities Act, whether or not such statutes, laws, rules,
orders, regulations, ordinances or recommendations which may hereafter be
enacted involve a change of policy on the part of the governmental body enacting
the same; (ii) all rules, orders and regulations of the National Board of Fire
Underwriters or other bodies exercising similar functions and responsibilities
in connection with the prevention of fire or other correction of hazardous
conditions which apply to such premises; and (iii) the requirements of all
policies of public liability, fire and other insurance which at any time may be
in force with respect to such premises. Each Company is the owner of the
furniture and other personal property utilized in the business and located at
such premises.
(i) CERTIFICATE OF OCCUPANCY; UTILITIES; EMINENT DOMAIN. No
certificate of occupancy is required with respect to the Improvements. All
utilities servicing the Real Property and the Improvements are provided by
publicly dedicated utility lines and are located within public rights-of-way and
do not cross or encumber any private land. No notice of any pending, threatened
or contemplated action by any governmental authority or agency having the power
of eminent domain has been given to each Company or the Stockholders with
respect to the Real Property.
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3.11 ENVIRONMENTAL MATTERS.
(a) Except as set forth on SCHEDULE 3.11(A) hereto: (i) each
Company, the Real Property, the Improvements and any property formerly owned,
occupied or leased by each Company are in compliance with all Environmental Laws
(as defined below); (ii) each Company has obtained all Environmental Permits (as
defined below); (iii) such Environmental Permits are in full force and effect;
and (iv) each Company is in compliance with all terms and conditions of such
Environmental Permits. As used herein, "Environmental Laws" shall mean all
applicable requirements of environ-mental, public or employee health and safety,
public or community right to know, ecological or natural resource laws or
regulations or controls, including all applicable requirements imposed by any
law (including, without limitation, common law), rule, order, or regulations of
any federal, state or local executive, legislative, judicial, regulatory or
administrative agency, board or authority, or any applicable private agreement
(such as covenants, conditions and restrictions), which relate to: (A) noise;
(B) pollution or protection of the air, surface water, groundwater or soil; (C)
solid, gaseous or liquid waste generation, treatment, storage, disposal or
transportation; (D) exposure to Hazardous Materials (as defined below); or (E)
regulation of the manufacture, processing, distribution and commerce, use or
storage of Hazardous Materials. As used herein, "Environmental Permits" shall
mean all permits, licenses, approvals, authorizations, consents or registrations
required under applicable Environmental Law in connection with ownership, use
and/or operation of each Company's business or the Real Property or
Improvements.
As used in this Section 3.11, "Hazardous Materials" shall mean,
collectively: (i) those substances included within the definitions of or
identified as "hazardous chemicals," "hazardous waste," "hazardous substances,"
"hazardous materials," "toxic substances" or similar terms in or pursuant to,
without limitation: the Comprehensive Environmental Response Compensation and
Liability Act of 1980 (42 U.S.C. Section 9601 et seq. ("CERCLA"), as amended by
Superfund Amendments and Reauthorization Act of 1986 (Pub. L. 99-499, 100 State,
1613); the Resource Conservation and Recovery Act of 1976 (42 U.S.C. Section
6901 et seq.) ("RCRA"); the Occupational Safety and Health Act of 1970 (29
U.S.C. Section 651 et seq.) ("OSHA"); and the Hazardous Materials Transportation
Act (49 U.S.C. Section 1801 et seq. ("HWA"), and in the regulations promulgated
pursuant to such laws, all as amended; (ii) those substances listed in the
United States Department of Transportation Table (49 CFR 172.101 and amendments
thereto) or by the Environmental Protection Agency (or any successor agency) as
hazardous substances (40 CFR Part 302 and amendments thereto); (iii) any
material, waste or substance which is or contains: (A) petroleum, including
crude oil or any fraction thereof, natural gas or synthetic gas usable for fuel
or any mixture thereof; (B) asbestos; (C) polychlorinated biphenyls; (D)
designated as a "hazardous substance" pursuant to Section 311 of the Clean Water
Act, 33 U.S.C. Section 1251 et seq. (33 U.S.C. Section 1317) or listed pursuant
to Section 307 of the Clean Water Act (33 U.S.C. Section 1317); (E) flammable
explosives; (F) radioactive materials; and (iv) such other substances, materials
and wastes which are or become regulated or classified as hazardous, toxic or as
"special wastes" under any Environmental Laws.
(b) Each Company and the Stockholders have not violated, done or
suffered any act which could give rise to liability under, and are not otherwise
exposed to liability under, any Environmental Law. No event has occurred with
respect to the Real Property, the Improvements or an any property formerly
owned, occupied or leased by each Company, which, with the passage of time or
the giving of notice, or both, would constitute a violation of or noncompliance
with any applicable Environmental Law. Each Company has no contingent liability
under any Environmental Law. There are no liens under any Environmental Law on
the Real Property.
(c) Except as set forth on SCHEDULE 3.11(C) hereto: (i) neither
each Company, the Real Property or any portion thereof, the Improvements or any
property formerly owned, occupied or leased by each Company, nor any property
adjacent to the Real Property is being used or has been used for the treatment,
generation, transportation, processing, handling, production or disposal of any
Hazardous
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Materials or as a landfill or the waste disposal site, and there has been no
spill, release or migration of any Hazardous Materials on or under the Real
Property and no Hazardous Material is present on or under the Real Property
(provided, however, that certain petroleum products are stored and handled on
the Real Property in the ordinary course of each Company's business in
compliance with all Environmental Laws including the existing regulations of the
United States Environmental Protection Agency and the State of Georgia requiring
spill protection, overfill protection and corrosion protection by December 22,
1998); (ii) none of the Real Property or portion thereof, the Improvements or
any property formerly owned, occupied or leased by each Company has been subject
to investigation by any Governmental Authority evaluating the need to
investigate or undertake Remedial Action (as defined below) at such property;
and (iii) none of the Real Property, the Improvements or any property formerly
owned, occupied or leased by each Company or any site or location where each
Company sent waste of any kind, is identified on the current or proposed: (A)
National Priorities List under 40 C.F.R. 300 Appendix B; (B) CERCLA Inventory
System list; or (C) any use arising from any statute analogous to CERCLA. As
used herein, "Remedial Action" shall mean any action required to: (i) clean up,
remove or treat Hazardous Materials; (ii) prevent a release or threat of release
of any Hazardous Material; (iii) perform pre-remedial studies, investigations or
post-remedial monitoring and care; (iv) cure a violation of Environmental Law;
or (v) take corrective action under sections 3004(u), 3004(v) or 3008(h) of RCRA
or analogous state law.
(d) Except as set forth in SCHEDULE 3.11(d) hereto, there have
been and are no: (i) above ground or underground storage tanks, subsurface
disposal systems, or wastes, drums or containers disposed of or buried on, in or
under the ground or any surface waters; (ii) asbestos or asbestos containing
materials or radon gas; (iii) polychlorinated biphenyls ("PCB") or
PCB-containing equipment, including transformers; or (iv) wetlands (as defined
under any Environmental Law) located within any portion of the Real Property,
nor have any liens been placed upon any portion of the Real Property, the
Improvements or any property formerly owned, occupied or leased by each Company
in connection with any actual or alleged liability under any Environmental Law.
(e) Except as set forth on SCHEDULE 3.11(e) hereto: (i) there is
no pending or threatened claim, litigation or administrative proceeding, or
known prior claim, litigation or administrative proceeding, arising under any
Environmental Law involving each Company, the Real Property, the Improvements,
any property formerly owned, leased or occupied by each Company, any off site
contamination affecting the business of each Company or any operations conducted
at the Real Property; (ii) there are no ongoing negotiations with or agreements
with any Governmental Authority relating to any Remedial Action or other
environmental related claim; (iii) each Company has not submitted notice
pursuant to Section 103 of CERCLA or analogous statute or notice under any other
applicable Environmental Law reporting a release of a Hazardous Material into
the environment; and (iv) each Company has not received any notice, claim,
demand, suit or request for information from any governmental or private entity
with respect to any liability or alleged liability under any Environmental Law,
nor has any other entity whose liability therefor, in whole or in part, may be
attributed to each Company, received such notice claim, demand, suit or request
for information.
(f) The Stockholders and each Company have provided to BAG all
environmental studies and reports obtained by them or known to them pertaining
to the Real Property, the Improvements, each Company and any property formerly
owned, occupied or leased by each Company, and have permitted (or will have
permitted as of the Closing Date), the testing of the soil, groundwater,
building components, tanks, containers and equipment on the Real Property, the
Improvements, and any property formerly owned, occupied or leased by each
Company, by BAG or BAG's agents or experts as they have or shall have deemed
necessary or appropriate to confirm the condition of such properties.
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3.12 INVENTORIES. The values at which inventories are carried on each
Company's Balance Sheet reflect the normal inventory valuation policies of each
Company, and such values are in conformity with GAAP consistently applied,
except that no adjustment to the LIFO reserves will be recorded on such
financial statement. All inventories reflected on each Company's Balance Sheet
and Company's Factory Statement or arising since the date thereof are currently
marketable, are of good, usable and merchantable quality in all material
respects, and can reasonably be anticipated to be sold at normal mark-ups within
120 days after the date hereof in the ordinary course of business (subject to
the reserve for obsolete, off-grade or slow-moving items that is reflected in
each Company Balance Sheet), except for spare parts inventory which inventory is
good and usable.
3.13 NOTES AND ACCOUNTS RECEIVABLE. All notes and accounts receivable
reflected on each Company's Balance Sheet are good and have been or will have
been collected or are collectible in accordance with their terms at their
recorded amounts, and are subject to no material defenses, setoffs or
counterclaims other than normal cash discounts accrued in the ordinary course of
business, subject to the reserve for bad debts set forth on each Company's
Balance Sheet, as adjusted for operations and transactions through the Closing
Date in the ordinary course of business and consistent with past practices.
3.14 INSURANCE. All material properties and assets of each Company which are
of an insurable character are insured against loss or damage by fire and other
risks to the extent and in the manner reasonable in light of the risks attendant
to the businesses and activities in which each Company is engaged and customary
for companies engaged in similar businesses or owning similar assets. Set forth
on SCHEDULE 3.14 hereto is a list and brief description (including the name of
the insurer, the type of coverage provided, the amount of the annual premium for
the current policy period, the amount of remaining coverage and deductibles and
the coverage period) of all policies for such insurance and each Company has
made or will make available to BAG true and complete copies of all such
policies. All such policies are in full force and effect sufficient for all
applicable requirements of law and will not in any way be effected by or
terminated or lapsed by reason of the consummation of the transactions
contemplated by this Agreement. No notice of cancellation or non-renewal with
respect to, or disallowance of any claim under, any such policy has been
received by each Company.
3.15 CONTRACTS.
(a) SCHEDULE 3.15 contains a complete list of all agreements,
contracts, commitments and other instruments and arrangements (whether written
or oral) of the types described below which exceed $10,000 in value or exceed
one year in duration (excluding any agreements, contracts, commitments and other
instruments and arrangements pertaining to automobiles, vans and other vehicles
that are part of inventory) to which each Company is a party or by which it is
bound ("Company Agreements"):
(i) leases, master rental agreements, service agreements,
insurance policies, Governmental Approvals and other
contracts concerning or relating to the Real Property
(including those referred to on SCHEDULE 3.10);
(ii) employment, consulting, agency, collective bargaining
or other similar contracts, agreements and other
instruments and arrangements relating to or for the
benefit of current, future or former employees,
officers, directors or consultants;
(iii) loan agreements, indentures, letters of credit,
mortgages, security agreements, pledge agreements,
deeds of trust, bonds, notes, guarantees and other
agreements
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and instruments relating to the borrowing of money or
obtaining of or extension of credit;
(iv) licenses, licensing arrangements and other contracts
providing in whole or in part for the use of, or
limiting the use of, any Intellectual Property;
(v) brokerage or finder's agreements;
(vi) joint venture, partnership and similar contracts
involving a sharing of profits or expenses (including
but not limited to joint research and development and
joint marketing contracts);
(vii) asset purchase agreements and other acquisition or
divestiture agreements, including but not limited to
any agreements relating to the sale, lease or
disposal of any assets (other than sales of inventory
in the ordinary course of business) or involving
continuing indemnity or other obligations;
(viii) orders and other contracts for the purchase or sale
of materials, supplies, products or services;
(ix) contracts with respect to which the aggregate amount
that could reasonably be expected to be paid or
received thereunder in the future exceeds $10,000 per
annum or $50,000 in the aggregate;
(x) sales agency, manufacturer's representative, dealer,
marketing or distributorship agreements;
(xi) master lease agreements providing for the leasing of
personal property used in, or held for use in
connection with, each Company's business;
(xii) contracts, agreements or commitments with any
employee, director, officer, stockholder or affiliate
of each Company;
(xiii) powers of attorney;
(xiv) any guaranty, warranty or indemnity, other than
standard warranties from any automobile manufacturers
with whom each Company has a franchise agreement (or
comparable agreement), given by each Company to its
customers; and
(xv) any other contracts, agreements or commitments that
are material to each Company's business.
(b) Each Company and the Stockholders have delivered to BAG and
the Subs complete copies of all written Company Agreements together with all
amendments thereto, and accurate descriptions of all material terms of all oral
Company Agreements set forth or required to be set forth on SCHEDULE 3.15.
(c) All Company Agreements are in full force and effect and
enforceable against each party thereto, except as such enforceability may be
limited by the effect of bankruptcy, insolvency or similar laws affected
creditors' rights generally or by general principles of equity. There does not
exist under
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any Company Agreement any event of default or event or condition that, after
notice or lapse of time or both, would constitute a violation, breach or event
of default thereunder on the part of each Company, or any other party thereto,
except as set forth in SCHEDULE 3.15 and except for such events or conditions
that, individually and in the aggregate: (i) have not had or result in, and will
not have or result in, a Material Adverse Effect on any Company; and (ii) have
not and will not materially impair the ability of each Company or the
Stockholders to perform their obligations under this Agreement. Except as set
forth in SCHEDULE 3.15, no consent of any third party is required under any
Company Agreement as a result of or in connection with, and the enforceability
of any Company Agreement will not be affected in any manner by, the execution,
delivery and performance of this Agreement or the consummation of the
transactions contemplated hereby.
(d) There are no material unresolved disputes involving any
Stockholder, each Company or its employees under any Company Agreement.
3.16 LABOR RELATIONS.
(a) Each Company has paid or made provision for the payment of all
salaries and accrued wages and has complied in all material respects with all
applicable laws, rules and regulations relating to the employment of labor,
including those relating to wages, hours, collective bargaining and the payment
and withholding of taxes, and has withheld and paid to the appropriate
Governmental Authority, or is holding for payment not yet due, to such
authority, an amounts required by law or agreement to be withheld from the wages
or salaries of its employees.
(b) Except as Set forth on SCHEDULE 3.16(b) hereto, each Company
is not a party to any: (i) outstanding employment agreements or contracts with
officers or employees that are not terminable at will, or that provide for
payment of any bonus or commission; (ii) agreement, policy or practice that
requires it to pay termination or severance pay to non-exempt or hourly
employees (other than as required by law); (iii) collective bargaining agreement
or other labor union contract applicable to persons employed by each Company,
nor are there any activities or proceedings of any labor union to organize any
such employees. Each Company has furnished to BAG complete and correct copies of
all such agreements ("Employment and Labor Agreements"). Each Company has not
breached or otherwise failed to comply with any material provisions of any
Employment or Labor Agreement.
(c) Except as set forth in SCHEDULE 3.16(c) hereto: (i) there is
no unfair labor practice charge or complaint pending before the National Labor
Relations Board ("NLRB"); (ii) there is no labor strike, material slowdown or
material work stoppage or lockout actually pending or threatened, against or
affecting each Company, and each Company has not experienced any such material
slow down or material work stoppage, lockout or other collective labor action by
or with respect to employees of each Company; (iii) there is no representation
claim or petition pending before the NLRB or any similar foreign agency and no
question concerning representation exists relating to the employees of each
Company; (iv) the are no charges with respect to or relating to each Company
pending before the Equal Employment Opportunity Commission or any state, local
or foreign agency responsible for the prevention of unlawful employment
practices; (v) each Company has not received formal notice from any federal,
state, local or foreign agency responsible for the enforcement of labor or
employment laws of an intention to conduct an investigation of each Company and
no such investigation is in progress; and (vi) the consents of the unions that
are parties to any Employment and Labor Agreements are not required to complete
the transactions contemplated by this Agreement.
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(d) Each Company has never caused any "plant closing" or "mass
layoff" as such actions are defined in the Worker Adjustment and Retraining
Notification Act, as codified at 29 U.S.C. Sections 2101-2109, and the
regulations promulgated therein.
3.17 EMPLOYEE BENEFIT PLANS.
(a) Set forth on SCHEDULE 3.17(A) hereto is a true and complete
list of:
(i) each Employee Pension Benefit Plan maintained by each
Company or to which each Company is required to make
contributions;
(ii) each Employee Welfare Benefit Plan maintained by each
Company or to which each Company is required to make
contributions; and
(iii) True and complete copies of all ERISA Plans have been
delivered to or made available to BAG together with,
as applicable with respect to each such ERISA Plan,
trust agreements, summary plan descriptions, all IRS
determination letters or applications therefor with
respect to any Pension Benefit Plan intended to be
qualified pursuant to Section 401(c) of the Code, and
valuation or actuarial reports, accountant's
opinions, financial statements, IRS Form 5500s (or
5500-C or 5500-R) and summary annual reports for the
last three years.
(b) With respect to the ERISA Plans, except as set forth on
SCHEDULE 3.17(b):
(i) there is no ERISA Plan which is a Multiemployer Plan;
(ii) no event has occurred or is threatened or about to
occur which would constitute a prohibited transaction
under Section 406 of ERISA or under Section 4975 of
the Code;
(iii) each ERISA Plan has operated since its inception in
accordance in all material respects with the
reporting and disclosure requirements imposed under
ERISA and the Code and has timely filed Form 5500e
(or 5500-C or 5500-R) and predecessors thereof; and
(iv) no ERISA Plan is liable for any federal, state, local
or foreign Taxes.
(c) Each Pension Benefit Plan intended to be qualified under
Section 401(a) of the Code:
(i) has been qualified, from its inception, under Section
401(a) of the Code, and the trust established
thereunder has been exempt from taxation under
Section 501(a) of the Code and is currently in
compliance with applicable federal laws;
(ii) has been operated, since its inception, in all
material respects in accordance with its terms and
there exists no fact which would adversely affect its
qualified status; and
(iii) is not currently under investigation, audit or review
by the IRS and no such action is contemplated or
under consideration and the IRS has not asserted that
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any Pension Benefit Plan is not qualified under
Section 401(a) of the Code or that any trust
established under a Pension Benefit Plan is not
exempt under Section 501(a) of the Code.
(d) With respect to each Employee Pension Benefit Plan which is a
defined benefit plan under Section 414(j) and, for the purpose solely of Section
3.17(d)(iv) hereof, each defined contribution plan under Section 414(i) of the
Code:
(i) no liability to the PBGC under Sections 4062-4064 of
ERISA has been incurred by each Company since the
effective date of ERISA and all premiums due and
owing to the PBGC have been timely paid;
(ii) no PBGC has notified each Company or any Employee
Pension Benefit Plan of the commencement of any
proceedings under Section 4042 of ERISA to terminate
any such plan;
(iii) no event has occurred since the inception of any
Employee Pension Benefit Plan or is threatened or
about to occur which would constitute a reportable
event within the meaning of Section 4043(b) of ERISA;
(iv) no Employee Pension Benefit Plan ever has incurred an
"accumulated funding deficiency" (as defined in
Section 302 of ERISA and Section 412 of the Code; and
(v) if any of such Employee Pension Benefit Plans were to
be terminated on the Closing Date: (A) no liability
under Title IV of ERISA would be incurred by each
Company; and (B) all benefits accrued to the day
prior to the Closing Date (whether or not vested)
would be fully funded in accordance with the
actuarial assumptions and method utilized by such
plan for valuation purposes.
(e) With respect to each Employee Pension Benefit Plan, SCHEDULE
3.17(a) contains a list of all Employee Pension Benefit Plans to which ERISA has
applied which have been or are being terminated, or for which a termination is
contemplated, and a description of the actions taken by the PBGC and the IRS
with respect thereto.
(f) The aggregate of the amounts of contributions by each Company
to be paid or accrued under ERISA Plans for the current fiscal year is not
expected to exceed approximately one hundred and ten percent (110%) of the
amounts of such contributions for the past fiscal year. To the extent required
in accordance with GAAP, each Company's Balance Sheet reflects in the aggregate
an accrual of all amounts of employer contributions accrued by and unpaid by
each Company under the ERISA Plans as of the date of each Company's Balance
Sheet.
(g) With respect to any Multiemployer Plan: (i) each Company has
not, since its formation, made or suffered any "complete withdrawal" or "partial
withdrawal" as such terms are respectively defined in Sections 4203 and 4205 of
ERISA; (ii) there is no withdrawal liability of each Company under any
Multiemployer Plan, computed as if a "complete withdrawal" by each Company had
occurred under each such Plan as of the Closing Date; and (iii) each Company has
not received notice to the effect that any Multiemployer Plan is either in
reorganization (as defined in Section 4241 of ERISA) or insolvent (as defined in
Section 4245 of ERISA).
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(h) With respect to the Employee Welfare Benefit Plan:
(i) There are no liabilities of each Company under
Employee Welfare Benefit Plans with respect to any
condition which relates to a claim filed on or before
the Closing Date; and
(ii) No claims for benefits are in dispute or litigation.
3.18 OTHER BENEFIT AND COMPENSATION PLANS OR ARRANGEMENTS.
(a) Set forth on SCHEDULE 3.18(a) hereto is a true and complete
list of:
(i) each employee stock purchase, employee stock option,
employee stock ownership, deferred compensation,
performance, bonus, incentive, vacation pay, holiday
pay, insurance, severance, retirement, excess benefit
or other plan, trust or arrangement which is not an
ERISA Plan whether written or oral, which each
Company maintains or is required to make
contributions to;
(ii) each other agreement, arrangement, commitment and
understanding of any kind, whether written or oral,
with any current or former officer, director or
consultant of each Company pursuant to which payments
may be required to be made at any time following the
date hereof (including, without limitation, any
employment, deferred compensation, severance,
supplemental pension, termination or consulting
agreement or arrangement); and
(iii) each employee of each Company whose aggregate
compensation for the fiscal year ended December 31,
1996 exceeded, and whose aggregate compensation for
the fiscal year ending December 31, 1997 is likely to
exceed, $50,000. True and complete copies of all of
the written plans, arrangements and agreements
referred to on SCHEDULE 3.18(A) ("Compensation
Commitments") have been provided to BAG together
with, where prepared by or for each Company, any
valuation, actuarial or accountant's opinion or other
financial reports with respect to each Compensation
Commitment for the last three years. An accurate and
complete written summary has been provided to BAG
with respect to any Compensation Commitment which is
unwritten.
(b) Each Compensation Commitment:
(i) since its inception, has been operated in all
material respects in accordance with its terms;
(ii) is not currently under investigation, audit or review
by the IRS or any other federal or state agency and
no such action is contemplated or under
consideration;
(iii) has no liability for any federal, state, local or
foreign Taxes;
(iv) has no claim subject to dispute or litigation;
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(v) has met all applicable requirements, if any, of the
Code; and
(vi) has operated, since its inception, in material
compliance with the reporting and disclosure
requirements imposed under ERISA and the Code.
3.19 TRANSACTIONS WITH INSIDERS. Set forth on SCHEDULE 3.19 hereto is a
complete and accurate description of all material transactions between each
Company or any ERISA Plan, on the one hand, and any Insider, on the other hand,
that have occurred since January 1, 1994.
3.20 PROPRIETY OF PAST PAYMENTS. Except as set forth on SCHEDULE 3.20
hereto, no funds or assets of each Company have been used for illegal purposes;
no unrecorded funds or assets of each Company have been established for any
purpose; no accumulation or use of each Company's corporate funds or assets has
been made without being properly accounted for in the respective books and
records of each Company; all payments by or on behalf of each Company have been
duly and properly recorded and accounted for in their respective books and
records; no false or artificial entry has been made in the books and records of
each Company for any reason; no payment has been made by or on behalf of each
Company with the understanding that any part of such payment is to be used for
any purpose other than that described in the documents supporting such payment;
and each Company has not made, directly or indirectly, any illegal contributions
to any political party or candidate, either domestic or foreign. Neither the IRS
nor any other federal, state, local or foreign government agency or entity has
initiated or threatened any investigation of any payment made by each Company
of, or alleged to be, the type described in this Section 3.20.
3.21 INTEREST IN COMPETITORS. Except as set forth on SCHEDULE 3.21, neither
each Company nor the Stockholders, nor any of their Affiliates, have any
interest, either by way of contract or by way of investment (other than as
holder of not more than two percent (2%) of the outstanding capital stock of a
publicly traded Person, so long as such holder has no other connection or
relationship with such Person) or otherwise, directly or indirectly, in any
Person other than each Company that is engaged in the retail sale of automobiles
in the United States of America.
3.22 BROKERS. Except as set forth on SCHEDULE 3.22, neither Company, nor any
director, officer or employee thereof, nor the Stockholders or any
representative of the Stockholders, has employed any broker or finder or has
incurred or will incur any broker's, finder's or similar fees, commissions or
expenses, in each case in connection with the transactions contemplated by this
Agreement.
3.23 TERRITORIAL RESTRICTIONS. Except as set forth on SCHEDULE 3.23, each
Company is not restricted by any written agreement or under-standing with any
Person from carrying on its business anywhere in the world. Sub I and Sub II,
solely as a result of the transactions contemplated hereby, will not thereby
become restricted in carrying on any business anywhere in the world.
3.24 INTELLECTUAL PROPERTY.
(a) TITLE. SCHEDULE 3.24(a) contains a complete list of all
Intellectual Property that is owned by each Company and primarily related to,
used in, held for use in connection with, or necessary for the conduct of, or
otherwise material to each Company (the "Owned Intellectual Property") other
than: (i) inventions, trade secrets, processes, formulae, compositions, designs
and confidential business and technical information; and (ii) Intellectual
Property that is both not registered or subject to application for registration
and not material to each Company. Each Company owns or has the exclusive right
to
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use pursuant to license, sublicense, agreement or permission all Intellectual
Property, free from any Liens (other than Permitted Liens) and free from any
requirement of any past, present or future royalty payments, license fees,
charges or other payments, or conditions or restrictions whatsoever. The
Intellectual Property comprises all of the Intellectual Property necessary for
the Subs to conduct and operate the Companies as now being conducted by the
Stockholders. Each Company does not infringe on or otherwise conflict with any
rights of any Person in respect of any Intellectual Property.
(b) LICENSING ARRANGEMENTS. SCHEDULE 3.24(b) sets for all
agreements, arrangements or laws: (i) pursuant to which each Company has
licensed Intellectual Property to, or the use of Intellectual Property is
otherwise permitted (through non-assertion, settlement or similar agreements or
otherwise) by, any other Person; and (ii) pursuant to which each Company has had
Intellectual Property licensed to it, or has otherwise been permitted to use
Intellectual Property. Except as set forth on SCHEDULE 3.24(b), all of the
agreements or arrangements set forth on SCHEDULE 3.24(b): (A) are in full force
and effect in accordance with their terms and no default exists thereunder by
each Company or by any other party thereto; (B) are free and clear of all Liens;
and (C) do not contain any change in control or other terms or conditions that
will become applicable or inapplicable as a result of the consummation of the
transactions contemplated by this Agreement. Stockholders have delivered to BAG
and the Subs complete copies of all licenses and arrangements (including
amendments) set forth on SCHEDULE 3.24(b). All royalties, license fees, charges
and other amounts payable by, on behalf of, to, or for the account of, each
Company in respect of any Intellectual Property are disclosed in each Company's
Financial Statements to the extent material to each Company's Financial
Statements.
(c) LITIGATION. No claim or demand of any Person has been made,
nor is there any proceeding that is pending or threatened, which: (i) challenges
the rights of each Company in respect of any Intellectual Property; (ii) asserts
that each Company is infringing or otherwise in conflict with, or is, except as
set forth in SCHEDULE 3.24(b), required to pay any royalty, license fee, charge
or other amount with regard to, any Intellectual Property; or (iii) claims that
any default exists under any agreement or arrangement listed on SCHEDULE
3.24(b). None of the Intellectual Property is subject to any outstanding order,
ruling, decree, judgment or stipulation by or with any court, arbitrator or
administrative agency.
(d) DUE REGISTRATION. The Owned Intellectual Property has been
duly registered with, filed in or issued by, as the case may be, the United
States Patent and Trademark Office, United States Copyright Office, or such
other filing offices, and each Company has taken such other actions to ensure
full protection under any applicable laws or regulations, and such
registrations, filings, issuances and other actions remain in full force and
effect.
(e) USE OF NAME AND MARK. Except as set forth in SCHEDULE 3.24(e),
there are, and immediately after the Closing will be, no contractual restriction
or limitation pursuant to any orders, decisions, injunctions, judgments, awards
or decrees of any Governmental Authority on the Subs' right to use the names and
marks "Wade Ford" or "Wade Ford Buford" in the conduct of the businesses as
presently carried on by the Companies or as such businesses may be extended by
the Subs.
3.25 DEPOSIT ACCOUNTS; POWERS OF ATTORNEY. SCHEDULE 3.25 contains an
accurate list, as of the date of this Agreement, of:
(a) the name of each financial institution in which each Company
has accounts or safe deposit boxes;
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(b) the names in which the accounts or boxes are held;
(c) the type of account; and
(d) the name of each Person authorized to draw thereon or have
access thereto.
3.26 DISCLOSURE. Neither each Company nor any Stockholder has made any
material misrepresentation to BAG relating to each Company or the Wade Shares,
and neither each Company nor any Stockholder has omitted to state to BAG any
material fact relating to each Company or the Wade Shares which is necessary in
order to make the information given by or on behalf of each Company or the
Stockholders to BAG not misleading or which if disclosed would reasonably affect
the decision of a Person considering an acquisition of the Wade Shares. No fact,
event, condition or contingency exists or has occurred which has, or in the
future can reasonably be expected to have, a Material Adverse Effect on any
Company, which has not been disclosed in each Company's Financial Statements or
the schedules to this Agreement.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
Subject to the Parties' agreement and acknowledgment that certain of
the Schedules referred to in this Article 4 are to be delivered by each Company
and the Stockholders no later than ten (10) business days from the date this
Agreement is executed, the Stockholders and the Companies hereby jointly and
severally represents and warrant to BAG and the Subs 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) as to each Stockholder:
4.1 OWNERSHIP OF SHARES; TITLE. Each Stockholder is the owner of record and
beneficiary of the Wade Shares set forth on SCHEDULE 4.1 hereof and has, and
shall transfer to the Subs at the Closing, good and marketable title to the Wade
Shares owned by him, free and clear of any and all Liens, claims and
encumbrances and free and clear of any restrictions on transfer (other than
restrictions on transfer imposed by applicable federal and state securities
laws), proxies and voting, or other agreements. Each Stockholder is not a party
to any option, warrant, purchase right or other contract or commitment that
could require any Stockholder to sell, transfer or otherwise dispose of the Wade
Shares (other than this Agreement). Each 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 a Company.
4.2 AUTHORITY. Each Stockholder has all requisite power and authority and
has full legal capacity and is competent to execute, deliver and perform this
Agreement and to consummate the transactions contemplated hereby (including the
disposition of the Wade Shares to the Subs as contemplated by Agreement). This
Agreement has been duly executed and delivered by each Stockholder and
constitutes a valid and binding obligation of each Stockholder, enforceable
against each Stockholder in accordance with its terms. Except as set forth on
SCHEDULE 4.2, the execution, delivery and performance of this Agreement by each
Stockholder and the consummation of the transactions contemplated hereby, do not
and will not:
(a) (after notice or lapse of time or both) conflict with, result
in a breach of any provision of, constitute a default under, result in the
modification or cancellation of, or give rise to any right of termination or
acceleration in respect of, any material contract, agreement, commitment,
understanding,
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arrangement or restriction to which any Stockholder is a party or to which any
Stockholder or any of Stockholders' property is subject;
(b) violate or conflict with any Legal Requirements applicable to
any Stockholder or any of such Stockholder's businesses properties; or
(c) require any authorization, consent, order, permit or approval
of, or notice to, or filing, registration or qualification with, any
Governmental Authority, except in connection with or in compliance with the
provisions of the Hart-Scott-Rodino Act.
4.3 BROKER'S FEES. Each Stockholder has no Liability or obligation to pay
any fees or commissions to any broker, finder or agent with respect to the
transactions contemplated by this Agreement for which BAG or the Subs could
become liable or obligated.
4.4 INVESTMENT. Each Stockholder: (a) understands that any BAG Stock
Consideration Shares have not been, and will not be, registered under the
Securities Act, or under any state securities laws, and are being offered and
sold in reliance upon federal and state exemptions for transactions not
involving any public offering; (b) is acquiring any BAG Stock Consideration
Shares solely for his own account for investment purposes, and not with a view
to the distribution thereof; (c) is a sophisticated investor with knowledge and
experience in business and financial matters; (d) has received certain
information concerning BAG and has had the opportunity to obtain additional
information as desired in order to evaluate the merits and risks inherent in
holding any BAG Stock Consideration Shares; (e) is able to bear the economic
risk and lack of liquidity inherent in holding any BAG Stock Consideration
Shares; and (f) is an Accredited Investor for the reasons set forth on ADDENDUM
3. Each Stockholder further acknowledges and understands that the
representations and warranties of the Stockholders and each Company set forth in
this Agreement will be used and relied on by BAG and the Subs to prepare and
file the Registration Statement with the Securities and Exchange Commission.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BAG AND THE SUBS
BAG and the Subs hereby jointly and severally represent and warrant to
each Company and the Stockholders that the statements contained in this Article
5 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 5) as to BAG, Sub I and Sub II:
5.1 ORGANIZATION AND GOOD STANDING. BAG and each of its subsidiaries is a
corporation duly organized, validly existing and in good standing under the laws
of the state of its incorporation and has the corporate power and authority to
own, lease and operate the properties used in its business and to carry on its
business as now being conducted. BAG and each of its subsidiaries is duly
qualified to do business and is in good standing as a foreign corporation in
each state and jurisdiction where qualification as a foreign corporation is
required, except for such failures to be qualified and in good standing, if any,
which when taken together with all other such failures of BAG and its
subsidiaries would not, or could not reasonably be expected to, in the aggregate
have a Material Adverse Effect on BAG and its subsidiaries, taken as a whole.
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5.2 AUTHORITY; APPROVALS AND CONSENTS. BAG and the Subs have the corporate
power and authority to enter into this Agreement and to perform their respective
obligations hereunder. This Agreement has been duly executed and delivered by,
and constitutes a valid and binding obligation of BAG and the Subs, enforceable
against BAG and the Subs in accordance with its terms. Except as set forth on
SCHEDULE 5.2 hereto, the execution, delivery and performance by BAG and the Subs
of this Agreement and the consummation of the transactions contemplated hereby
do not and will not:
(a) contravene any provisions of the certificate of incorporation
or bylaws of BAG or the Subs;
(b) (after notice or lapse of time or both) conflict with, result
in a breach of any provision, constitute a default under, result in the
modification or cancellation of, or give rise to any right of termination or
acceleration in respect of, any agreements to which BAG or the Subs are a party
(the "BAG Agreements") or require any consent or waiver of any party to any BAG
Agreement other than agreements the breach or violation of which could not
reasonably be expected to have a Material Adverse Effect on BAG and its
subsidiaries, taken as a whole;
(c) violate or conflict with any Legal Requirements applicable to
BAG or any of its subsidiaries or any of their respective businesses or
properties; or
(d) require any authorization, consent, order, permit or approval
of, or notice to, or filing, registration or qualification with, any
Governmental Authority, except in connection with or in compliance with the
provisions of the Hart-Scott-Rodino Act.
5.3 BROKERS. Neither BAG, the Subs nor any of their directors, officers or
employees has employed any broker or finder or has incurred or will incur any
broker's, finder's or similar fees, commissions or expenses, in each case in
connection with the transactions contemplated by this Agreement or the Real
Estate Agreement.
5.4 DISCLOSURE. Neither BAG nor the Subs has made any material
misrepresentations to the Stockholders and neither BAG nor the Subs has omitted
to state to the Stockholders any material fact relating to BAG or the Subs which
is necessary in order to make the information given by BAG or the Subs not
misleading or which if disclosed would reasonably affect the decision of a
Person considering the sale of the Wade Shares. No fact, event, condition or
contingency exists or has occurred which has, or in the future can reasonably be
expected to have, a Material Adverse Effect on BAG or Sub I or Sub II, which has
not been disclosed in the financial statements of BAG, Sub I or Sub II.
ARTICLE 6
COVENANTS AND ADDITIONAL AGREEMENTS
6.1 ACCESS; CONFIDENTIALITY. Between the date hereof and the Closing Date,
the Stockholders and each Company will: (a) provide to the officers and other
authorized representatives of BAG and the Subs full access, during normal
business hours and upon reasonable advanced notice, to any and all premises,
properties, files, books, records, documents and other information of each
Company, and will cause each Company's officers to furnish to BAG and its
authorized representatives any and all financial, technical and operating data
with other information pertaining to the businesses and properties of each
Company (including the Real Property and the Improvements); and (b) make
available for inspection and copying by BAG and the Subs true and complete
copies of any documents relating to the foregoing. BAG and
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the Subs will make their best efforts not to cause any material disruptions to
the business operations of each Company in conducting the due diligence
described in the previous sentence. BAG and the Subs will hold, and will cause
their representatives to hold, in confidence (unless and to the extent compiled
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 BAG and the Subs. If this Agreement is
terminated, BAG and the Subs will, and will cause their representatives to,
promptly return to each Company all Confidential Information furnished by such
Company, including all copies and summaries thereof. As used herein,
"Confidential Information" with respect to each Company shall mean all
information concerning such Company obtained by BAG, the Subs and their
representatives from such Company in connection with the transactions
contemplated by this Agreement, except information (i) ascertainable or obtained
from public information; (ii) received from a third party not employed by or
otherwise affiliated with such Company; or (iii) which is or becomes known to
the public other than through a breach by BAG or the Subs or any of their
representatives of this Agreement. The Stockholders and the Companies 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 regarding BAG, Subs or the Registration Statement and will not
disclose the same to any third party or use the same for any purpose except as
may be reasonably necessary to carry out this Agreement and the transactions
contemplated hereby. If this Agreement is terminated, the Stockholders and the
Companies will, and will cause their representatives to, promptly return to BAG,
upon the reasonable request of BAG, all Confidential Information furnished by
BAG or Subs or which relates to the Registration Statement, including all copies
and summaries thereof. If the Closing does occur, the Stockholders shall
continue to comply with and be bound by these nondisclosure and nonuse
obligations for a period of five (5) years following the Closing, except that,
with respect to any such Confidential Information which constitutes a trade
secret under the laws of the State of Georgia, the Stockholders shall continue
to comply with and be bound by these nondisclosure and nonuse obligations for so
long as such Confidential Information remains a trade secret.
6.2 FURNISHING INFORMATION; ANNOUNCEMENTS. The Stockholders and each
Company, on the one hand, and BAG and the Subs, on the other hand, will, as soon
as practical after reasonable request therefor, furnish to the other all
information concerning the Stockholders and each Company or BAG and the Subs,
respectively, required for inclusion in any statement or application made by BAG
or the Subs or a Company or the Stockholders 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. Neither the Stockholders nor any Company, on the one hand, nor BAG or
the Subs, on the other hand, nor any representative thereof, shall issue any
press release or otherwise make any public statement with respect to the
transactions contemplated hereby without the prior consent of the other, except
as may be required by law. BAG shall reimburse each Company and the Stockholders
for any reasonable expenses incurred by such Company and the Stockholders in
connection with this Section.
6.3 CERTAIN CHANGES AND CONDUCT OF BUSINESS.
(a) Except as set forth on SCHEDULE 6.3(a), from and after the
date of this Agreement and until the Closing Date, each Company shall, and the
Stockholders shall cause each Company to, conduct its businesses solely in the
ordinary course consistent with past practices and, without the prior written
consent of BAG, neither the Stockholders nor any Company will, except as
required or settled pursuant to the terms hereof, permit any Company to:
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(i) make any material change in the conduct of its
businesses and operations or enter into any
transaction other than in the ordinary course of
business consistent with past practices;
(ii) make any change in its Bylaws, issue any additional
shares of capital stock or equity securities or grant
any option, warrant or right to acquire any capital
stock or equity securities or issue any security
convertible into or exchangeable for its capital
stock or alter any material term of any if its
outstanding securities or make any change in its
outstanding shares of capital stock or other
ownership interests or its capitalization, whether by
reason of a reclassification, recapitalization, stock
split or combination, exchange or readjustment of
shares, stock dividend or otherwise;
(iii) (A) incur, assume or guarantee any indebtedness for
borrowed money, issue any notes, bonds, debentures or
other corporate securities or grant any option,
warrant or right to purchase any thereof, except
pursuant to transactions in the ordinary course of
business consistent with past practices; (B) issue
any securities convertible or exchangeable for debt
securities of any Company; or (C) issue any options
or other rights to acquire from any Company, directly
or indirectly, debt securities of any Company or any
security convertible into or exchangeable for such
debt securities;
(iv) make any sale, assignment, transfer, abandonment or
other conveyance of any of its assets or any part
thereof, except transactions pursuant to existing
contracts (which will be set forth in SCHEDULE 3.15
hereto) and dispositions in the ordinary course of
business consistent with past practices;
(v) subject any of its assets, or any part thereof, to
any Liens or suffer such to be imposed other than
such liens as may arise in are ordinary course of
business consistent with past practices;
(vi) acquire any assets, raw materials or properties, or
enter into any other transaction, other than in the
ordinary course of business, consistent with past
practices;
(vii) enter into any new (or amend any existing) employee
benefit plan, program or arrangement or any new (or
amend any existing) employment severance or
consulting agreement, grant any general increase in
the compensation of officers or employee (including
any such increase pursuit to any bonus, pension,
profit-sharing or other plan or commitment) or grant
any increase in compensation payable or to become
playable to any employee, except in accordance with
pre-existing contractual provisions or consistent
with past practices;
(viii) make or commit to make any individual material
capital expenditure in excess of $10,000, or
aggregate capital expenditures in excess of $50,000,
except in the ordinary course of business;
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(ix) pay, loan or advance any amount to, or sell, transfer
or lease any properties or assets to, or enter into
any agreement or arrangement with, any of its
Affiliates, except in the ordinary course of
business;
(x) guarantee any indebtedness for borrowed money or any
other obligation of any other Person, other than in
the ordinary course of business consistent with past
practice;
(xi) fail to keep in full force and effect insurance
comparable in amount and scope to coverage maintained
by it (or on behalf of it) on the date hereof;
(xii) make any loan, advance or capital contribution to
investment in any Person, except in the ordinary
course of business;
(xiii) make any change in any method of accounting or
accounting principle, method, estimate or practice
except for any such change required by reason of a
concurrent change in GAAP or write-down the value of
any inventory or write-off as uncollectible any
accounts receivable except in the ordinary course of
business consistent with past practices;
(xiv) settle, release or forgive any material claim or
litigation or waive any material right;
(xv) make, enter into, modify, amend in any material
respect or terminate any material commitment, bid or
expenditure, other than in the ordinary course of
business consistent with past practice; or
(xvi) commit itself to do any of the foregoing.
(b) Except as set for the on SCHEDULE 6.3(b), from and after the
date hereof and until the Closing Date, the Stockholders and each Company will
use their reasonable best efforts to cause each Company to:
(i) continue to maintain, in all material respects, each
Company's properties, all Real Property and all
Improvements in accordance with present practices in
a condition suitable for their current use;
(ii) comply with all applicable Environmental Laws, and,
in the event it shall receive notice that there
exists a violation of any Environmental Law with
respect to its operations, any Improvements or any
Real Property, promptly (and in any event within the
time period permitted by the applicable governmental
authority) remove or remedy such violation in
accordance with all applicable Environmental Laws;
(iii) file, when due or required, federal, state, foreign
and other tax returns and other reports required to
be filed and pay when due all Taxes, assessments,
fees and other charges lawfully levied or assessed
against it unless the validity thereof is contested
in good faith and by appropriate proceedings
diligently conducted;
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(iv) keep its books of account, records and files in the
ordinary course and in accordance with existing
practices;
(v) preserve its business organization intact and
continue to maintain existing business relationships
with suppliers, customers and others with whom
business relationships exist other than relationships
that are, at the same time, not economically
beneficial to it; and
(vi) continue to conduct its business in the ordinary
course consistent with past practices.
6.4 NO INTERCOMPANY PAYABLES OR RECEIVABLES. At the Closing there will be
no intercompany payables or intercompany receivables due and/or owing between
the Stockholders and any of their Affiliates, on the one hand, and any Company,
on the other hand, except for the Stockholders' loans as set forth in Section
6.13 hereof, which shall be paid in full on or before the Closing Date.
6.5 NEGOTIATIONS. Until the earlier of the Closing Date Deadline or the
termination of this Agreement pursuant to Section 8.1 hereof, no Stockholder,
nor any Company, nor any Company's officers, directors, employees, advisors,
agents, representatives, Affiliates or anyone acting on behalf of the
Stockholders, any 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 BAG 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 any Company. The Stockholders shall promptly communicate to BAG any
inquiries or communications concerning any such transaction (including the
identity of any Person making such inquiry or communication) which the
Stockholders may receive or of which the Stockholders may become aware.
6.6 CONSENTS; COOPERATION. Subject to the terms and conditions hereof, the
Stockholders and each Company and BAG and the Subs 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 Government Approvals, 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; (ii) the ownership or leasing and operating after the Closing by
each Company of all its material properties; and (iii) the conduct after the
Closing by each Company of its businesses as conducted by it on the date hereof;
(b) to obtain approval of Ford Motor Company of the proposed
Agreement herein and each Company and the Subs and the dealer Wade Ford, Inc. in
Smyrna, Georgia and Wade Ford Buford, Inc. in Buford, Georgia;
(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.
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6.7 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 actions and to do, or cause to be
done, all things necessary, proper or advisable under applicable Legal
Requirements 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 each Company shall take all such necessary action. Furthermore, each
Stockholder and the officers and directors of each Company expressly agree to
execute any and all additional documents, and to provide any and all additional
information, that are required by the Georgia Business Corporation Code, the
rules and regulations of the Securities Act, any other Governmental Authority,
or reasonably requested by counsel to BAG or the Subs, to effectuate the
transactions contemplated by this Agreement.
6.8 INTERIM FINANCIAL STATEMENTS. If requested by BAG and at BAG's expense,
within thirty (30) days after the end of each calendar month after October 31,
1997, each Company shall deliver to BAG unaudited balance sheets of such Company
at the end of such calendar month and at the end of the corresponding calendar
month of the previous fiscal year, together with the related unaudited
statements of income and cash flow for the first months then ended of each
Company. Each Company will also deliver to BAG copies of such Company's Factory
Statements provided to Ford Motor Company after the date hereof within five (5)
days of their delivery to Ford Motor Company. All such financial statements
shall fairly present the financial position and results of operations of each
such Company as of the date or for the periods indicated. All unaudited
financial statements delivered pursuant to this Section 6.8 shall be prepared on
a basis consistent with each Company's Financial Statements.
6.9 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 7 or Article 8 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 Stockholders and
each 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 Company Agreement set forth on SCHEDULE 3.15. Each Company and the
Stockholders will: (a) promptly advise BAG of any event that has, or could
reasonably be expected in the future to have, a Material Adverse Effect on any
Company; (b) confer on a regular and frequent basis with one or more designated
representatives of BAG to report operational matters and to report the general
status of ongoing operations; and (c) notify BAG of any emergency or other
change in the normal course of business or relating to the Real Property or
Improvements of each Company and the Stockholder Real Property and of any
complaints, investigations or hearings (or communications indicating that the
same may be contemplated) of any Governmental Authority or adjudicatory
proceedings involving any Company, the Real Property or the Improvements or the
Stockholder Real Property and will keep BAG fully informed of such events and
permit BAG's representatives access to all materials prepared in connection
therewith. Each Stockholder shall give prompt notice to BAG of any notice or
other communication from any third Person asserting any right, title or interest
in any of the Wade Shares held by such Stockholder, including, without
limitation, any threat to commerce, or notice of the commencement of any action
or other proceeding with respect to the Wade Shares, or the occurrence of any
other event of which such Stockholder has Knowledge which could result in any
failure to consummate the sale of the Wade Shares as contemplated hereby. The
delivery of any notice pursuant to this Section 6.9 shall not be deemed to: (i)
modify the representations and warranties hereunder of the Party
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delivering such notice, which modification may only be made pursuant to the last
part of this Section 6.9; (ii) modify the conditions set forth in Articles 7 and
8; or (iii) limit or otherwise affect the remedies available hereunder to the
Party receiving such notice. Each Party hereto agrees that with respect to the
representations and warranties of such Party contained in this Agreement, such
Party shall have the continuing obligation until the Closing to supplement or
amend promptly the Schedules hereto with respect to any matter hereafter arising
or discovered which, if existing or known at the date of this Agreement, would
have been required to be set forth or described in the Schedules. For all
purposes of this Agreement, including, without limitation, for purposes of
determining whether the conditions set forth in Section 7.1 and Section 8.1 have
been fulfilled, the Schedules hereto shall be deemed to be the Schedules as
amended or supplemented pursuant to this Section 6.9. No amendment or supplement
to a schedule shall be made later than forty-eight (48) hours prior to the
anticipated effectiveness of the Registration Statement.
6.10 ASSURANCE BY THE STOCKHOLDERS. Each Stockholder shall use its best
efforts to cause each Company to comply with its respective covenants set forth
in this Agreement.
6.11 ANTITRUST IMPROVEMENTS ACT COMPLIANCE. BAG, the Stockholders and each
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
Hart-Scott-Rodino Act and the rules and regulations promulgated thereunder with
respect to the transactions contemplated herein. BAG shall pay the
Hart-Scott-Rodino Act filing 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 Hart-Scott-Rodino Act to terminate or expire at the earliest
possible date, and to resist vigorously, at BAG'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 BAG shall determine that continuing such
resistance is not in its best interest, BAG may, by written notice to the other
Parties, terminate this Agreement with the effect set forth in Section 9.2
hereof.
6.12 USE OF BUSINESS NAME. After the Closing Date, BAG and each Company may
use the names "Wade Ford" and "Wade Ford Buford" in connection with business of
each Company, respectively. After the Closing, none of the Stockholders nor any
of their Affiliates shall ever use, without the prior written permission of BAG,
which permission BAG may withhold or deny in its sole discretion for any reason
whatsoever, the names "Wade Ford" and "Wade Ford Buford" in connection with the
sale or servicing of new or used automobiles, light-duty trucks or any other
motorized vehicles.
6.13 RELATED PARTY / STOCKHOLDERS LOAN. On or before the Closing Date, the
Stockholders shall cause each Company to pay, and each Company shall pay, all of
the outstanding principal and all accrued but unpaid interest on any related
Party/Stockholder loans (the "Stockholder Loans"). For purposes of this Section,
the Stockholder Loans shall mean the loans to each Company from Stockholders and
their Affiliates as set forth on such Company's Balance Sheet and listed on
SCHEDULE 6.13.
6.14 STOCK RESTRICTION AGREEMENT. Prior to the Closing Date, any and all
stock restriction agreements, buy/sell agreements, shareholder agreements or
other similar agreements of each Company (the "Stock Restriction Agreement")
shall be terminated in accordance with its terms and the parties thereto shall
have released any and all claims arising under or relating to the Stock
Restriction Agreement and its termination.
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6.15 PERSONAL ITEMS. The Parties acknowledge and agree that the Stockholders
may retain certain personal items (which items are not reflected as assets on
any Company's Balance Sheet). These items will include personal pictures, awards
and mementos.
6.16 LIABILITY FOR TRANSFER TAXES. Stockholders shall be responsible for the
timely payment of, and shall indemnify and hold harmless BAG and the Subs
against, all income, sales (including without limitation bulk sales), use, value
added, documentary, stamp, gross receipts, registration, transfer, conveyance,
excise, recording, license and other similar Taxes and fees ("Transfer Taxes")
arising out of or in connection with or attributable to the transactions
effected pursuant to this Agreement. Stockholders shall prepare and timely file
all tax returns required to be filed in respect of Transfer Taxes (including
without limitation all notices required to be given with respect to bulk sales
taxes), provided that the Subs shall be permitted to prepare any such tax
returns that are the primary responsibility of the Subs under applicable law.
6.17 CERTIFICATES OF TAX AUTHORITIES. On or before the Closing Date,
Stockholders shall provide to the Subs copies of certificates from the
appropriate taxing authority stating that no Taxes are due to any state or other
taxing authority for which the Subs could have liability to withhold or pay
Taxes with respect to the sale of any Company. If Stockholders fail to provide
such certificates, the Subs shall withhold or, where appropriate, escrow such
amount as necessary based upon Sub's reasonable estimate of the amount of such
potential liability, or as determined by the appropriate taxing authority, to
cover such Taxes until such time as certificates are provided.
6.18 RELEASE BY STOCKHOLDERS. The Stockholders hereby agree and confirm that
they hereby fully release, acquit and forever discharge each Company, together
with each Company's successors, assigns, affiliates, parent and related parties,
from any and all Claims, except for compensation payable to the Stockholders by
each applicable Company for the most recent standard payroll period (based upon
each Company's standard practices) which have not been paid plus the reasonable
reimbursable expenses based upon the past practices of each Company.
6.19 ELECTION OF DIRECTOR. At an appropriate time, to be determined by BAG
in its sole discretion, prior to the Closing, Mr. Alan Arnold, if he so desires,
shall be elected to become a member of the board of directors of BAG.
6.20 COOPERATION IN PREPARATION OF REGISTRATION STATEMENT. The Companies and
the Stockholders shall furnish or cause to be furnished to BAG and the
underwriters of the BAG IPO (the "Underwriters") all of the information
concerning the Companies and the Stockholders required for inclusion in, and
will cooperate fully and completely with BAG, BAG's legal counsel, BAG'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 in the Registration Statement).
6.21 AUDITS. For purposes of any audits that are to be conducted by the
Accountants as required by this Agreement, BAG shall instruct the Accountants to
conduct such audits in a manner that is consistent with the accounting practices
that are utilized by the Accountants in their audits of BAG.
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ARTICLE 7
CONDITIONS TO THE OBLIGATIONS OF BAG
AND THE SUBS TO EFFECT THE CLOSING
The Obligations of BAG and the Subs 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 BAG and the
Subs in writing as provided herein except as otherwise required by applicable
law:
7.1 REPRESENTATIONS AND WARRANTIES; AGREEMENTS; COVENANTS. Each of the
representations and warranties of each Company and the Stockholders 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
each Company and the Stockholders 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 Subs shall have
received a certificate, dated the Closing Date and duly executed by the
Stockholders and each Company, to the effect that the conditions set forth in
the two preceding sentences have been satisfied.
7.2 AUTHORIZATION; CONSENT.
(a) All corporate action necessary to authorize the execution,
delivery and performance of this Agreement and the Transaction Documents, and
the consummation of the transactions contemplated hereby shall have been duly
and validly taken by each Company. All filings required to be made under the
Hart-Scott-Rodino 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 Governmental Authorities, and all Government Approvals and all third
persons, including, but not limited to, all automobile manufacturers with whom
each Company has a franchise agreement (or comparable agreement), required to
consummate the transactions contemplated hereby and all other consents or
waivers shall have been made or obtained.
7.3 OPINIONS OF EACH COMPANY'S AND THE STOCKHOLDER'S COUNSEL. BAG and the
Subs shall have been furnished with the opinion of each Company's and the
Stockholders' counsel, dated the Closing Date, in a form as set forth on EXHIBIT
C-1 attached hereto and incorporated herein.
7.4 ABSENCE OF LITIGATION. No order, stay, injunction or decree of any
court of competent jurisdiction in the United States shall be in effect: (a)
that prevents or delays the consummation of any of the transactions contemplated
hereby; or (b) would impose any limitation on the ability of BAG or the Subs
effectively to exercise all rights of ownership of the Wade 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 the Transaction Documents or seeking damages in connection
therewith which BAG or the Subs, in good faith and with the advice of counsel,
believes it makes it undesirable to proceed with the consummation of the
transactions contemplated hereby.
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7.5 NO MATERIAL ADVERSE EFFECT. During the period from December 31, 1996 to
the Closing Date, there shall not have been any Material Adverse Effect on any
Company, other than payments to Stockholders in accordance with the terms of
this Agreement.
7.6 REGISTRATION STATEMENT. BAG shall have filed with the SEC a
registration statement on Form S-1 (the "Registration Statement") covering the
offer and sale of the BAG IPO Stock. The Registration Statement shall have been
declared effective by the SEC and the underwriters named therein shall have
agreed to acquire, subject to the conditions set forth in the underwriting
agreement, shares of BAG IPO Stock. The closing of the sale of the BAG IPO Stock
to the underwriters shall have occurred simultaneously with the Closing
hereunder.
7.7 COMPLETION OF DUE DILIGENCE. BAG and the Subs shall have completed
their due diligence examination of each Company, and the results of such
examination shall be reasonably satisfactory to BAG and the Subs; provided,
however, that the conditions contained in this SECTION 7.7 shall not be a
condition precedent to the Obligations of BAG and the Subs hereunder after the
date that is sixty (60) days after the date hereof.
7.8 REAL ESTATE PURCHASE AGREEMENTS; LEASES.
(a) REAL ESTATE PURCHASE OPTION. The Stockholders and the Subs or
their respective assignees shall have entered into an option to purchase
substantially in the form attached hereto as EXHIBIT D (the "Real Estate Option
Agreements") pursuant to which Subs or their assignee shall have the options to
purchase one or both of the real property parcels owned by Mr. Alan Arnold and
used in the business of Wade Ford, Inc. and Wade Ford Buford, Inc. (the "Arnold
Properties"). The Subs must exercise their respective options to purchase the
Arnold Properties pursuant to the Real Estate Option Agreements on or before the
date that is thirty (30) days after the Closing Date (the "Real Estate Option
Deadline"), and the real estate transactions underlying each such Real Estate
Option Agreement must be consummated on or before the date that is sixty (60)
days after the date on which each of the Sub's exercises its option.
(b) LEASES. In addition to the Real Estate Option Agreements, the
real estate leases affecting the Arnold Properties as of the date hereof (the
"Arnold Leases") shall have been modified and amended upon terms that are
mutually acceptable to the Parties and substantially as follows: (i) Each Arnold
Lease shall be for a term of ten (10) years and the lessees shall have options
to renew each Arnold Lease for two (2) additional terms of five (5) years each;
(ii) each Arnold Lease shall be a triple net lease; (iii) the base monthly
rental for each Arnold Lease for the period beginning on the Closing Date and
ending on the date that is twelve months after the Closing Date (the "Lease
Anniversary") shall equal the same base monthly rental in effect with respect to
the Arnold Leases as of the date hereof; (iv) the base monthly rental for each
Arnold Lease for the one year period following the Lease Anniversary shall equal
one percent (1%) of the Fair Market Value (as hereinafter defined) of each
respective Arnold Property (the "Initial FMV Rent"); (v) on the second
anniversary after the Closing Date, and on every second (2nd) anniversary
thereafter, the base monthly rental of each Arnold Lease shall increase to an
amount equal to the base monthly rental then in effect plus an amount equal to a
percentage increase in the Consumer Price Index published from time to time by
the United States Department of Labor ("CPI") for the Atlanta metropolitan area
from the time of the last adjustment to the base monthly rental, or, in the
event no CPI is published, a comparable index. BAG or another operating
Subsidiary of BAG reasonably acceptable to the lessors of the Arnold Leases
shall unconditionally guaranty the payments and performance of each lessee under
each Arnold Lease. For purposes herein, the term "Fair Market Value" shall be
the amount determined by the mutual agreement of the Parties subsequent to
valuations of each Arnold Property by an appraiser selected by the Subs and a
second appraiser selected by Mr.
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Alan K. Arnold. If the Parties do not reach an agreement with respect to the
Fair Market Value, a third appraiser shall be selected by the two initial
appraisers and the third appraiser shall determine the Fair Market Value, and
said third appraiser's determination shall be binding on the Parties. The costs
of such a third appraiser, if any, shall be shared equally by the Parties.
7.9 CERTIFICATES. The Stockholders and officers of each Company shall have
furnished BAG and the Subs with a certificate, dated as of the Closing Date and
substantially in the form attached hereto as EXHIBIT E-1 and E-2, executed by
the Stockholders and said officers certifying to the fulfillment of the
conditions set forth in Sections 7.5 and 7.14 hereof, and shall have furnished
BAG and the Subs with such any other certificates of its officers as BAG and the
Subs may reasonably request to evidence compliance with the conditions set forth
in this Article 7.
7.10 LEGAL MATTERS. All certificates, instruments, opinions and other
documents required to be executed or delivered by or on behalf of the
Stockholders and each Company under the provisions of this Agreement, and all
other actions and proceedings required to be taken by or on behalf of the
Stockholders and each Company in furtherance of the transactions contemplated
hereby, shall be reasonably satisfactory in form and substance to counsel for
BAG and the Subs.
7.11 APPROVAL OF MANUFACTURER AND DISTRIBUTOR. Ford Motor Company shall have
consented to, authorized and approved the transactions contemplated by this
Agreement on reasonable terms that are acceptable to BAG and Sub I and Sub II in
their sole discretion.
7.12 REGISTRATION RIGHT AGREEMENT. BAG and the Stockholders shall have
entered into a registration rights agreement with respect to the BAG Stock
Consideration Shares substantially in the form attached hereto as EXHIBIT F (the
"Registration Rights Agreement").
7.13 EMPLOYMENT AGREEMENTS; NON-COMPETITION AGREEMENTS. The Subs, the
Companies, Mr. Alan Arnold, Mr. Gary Billings and other key employees of the
Companies, as mutually selected by the Parties, shall have entered into
employment agreements in the forms attached hereto as EXHIBITS G-1 and G-2 (the
"Employment Agreements") and non-competition agreements in the forms attached
hereto as EXHIBITS H-1 and H-2.
7.14 ENVIRONMENTAL LAWS. Each Company shall be in material compliance with
all applicable Environmental laws.
7.15 LEASE TERMINATION AGREEMENT / MEMORANDUM OF LEASE / CONSENTS AND
ESTOPPELS. The appropriate parties shall have executed a lease termination
agreement and a memorandum of lease with respect to each lease listed in
SCHEDULE 3.10 in form and substance satisfactory to BAG and each Company.
Alternatively, if the transactions contemplated hereby would constitute an
"assignment" pursuant to said leases, Sub I or Sub II, as applicable, shall have
received consents from the lessor of each such lease to the "assignment" of such
lease to Sub I or Sub II, as applicable, to the extent such consent is required
by such applicable lease. Sub I and Sub II shall also have received estoppel
certificates addressed to Sub I or Sub II, as applicable, from the lessor of
each such Lease, dated within thirty (30) days prior to the Closing Date,
identifying the lease documents and any amendments thereto, stating that such
lease is in full force and effect and that the tenant is not in default under
such lease and no event has occurred that, with notice or lapse of time or both,
would constitute a default by the tenant under such lease and containing any
other information reasonably requested by Sub I or Sub II, as applicable.
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7.16 RESIGNATION OF EACH COMPANY'S DIRECTORS AND OFFICERS. Each of the
persons who is a director or officer of each Company on the Closing Date shall
have tendered to the Subs in writing his or her resignation as such director or
officer in a form and substance satisfactory to the Subs and BAG.
7.17 SCHEDULES. Each Company and the Stockholders shall have delivered to
BAG and the Subs all Schedules referred to in Articles 3 and 4 of this Agreement
and such Schedules shall be acceptable in form and substance satisfactory to BAG
and the Subs.
7.18 SHARE CERTIFICATES. Certificates representing one hundred percent
(100%) of the shares of common stock of Wade Ford, Inc. and Wade Ford Buford,
Inc. shall have been, or shall at the Closing be, validly delivered and
transferred to Sub I and Sub II, respectively, free and clear of any and all
Liens.
7.19 NON-FOREIGN STATUS. Each of the Stockholders shall have provided BAG
and the Subs with an affidavit of non-foreign status that complies with Section
1445 of the Code.
ARTICLE 8
CONDITIONS TO THE OBLIGATIONS OF THE STOCKHOLDERS
TO EFFECT THE CLOSING
The obligations of the Stockholders and each Company 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 Companies and the Stockholders in writing as provided herein
except as otherwise required by applicable law:
8.1 REPRESENTATIONS AND WARRANTIES; AGREEMENTS. Each of the representations
and warranties of BAG and the Subs contained in this Agreement shall be true and
correct on the date made and shall be true and correct in all material respects
as of the Closing. Each of the obligations of BAG and the Subs 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 Stockholders shall have received a certificate, dated the
Closing Date and duly executed by an officer of BAG and of the Subs to the
effect that the conditions set forth in the preceding two sentences have been
satisfied.
8.2 AUTHORIZATION OF THE AGREEMENT; CONSENTS.
(a) All corporate action necessary to authorize the execution,
delivery and performance of this Agreement, and the consummation of the
transactions contemplated hereby, shall have been duly and validly taken by BAG
and the Subs. All filings required to be made under the Hart-Scott-Rodino 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 Governmental Authorities, and all Government Approvals and all third
persons, including, but not limited to, all automobile manufacturers with whom
each Company has a franchise agreement (or comparable agreement), required to
consummate the transactions contemplated hereby and all consents or waivers
shall have been made or obtained.
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8.3 OPINIONS OF BAG'S AND SUB'S COUNSEL. The Stockholders shall have been
furnished with the opinion of The Whicker Law Firm, counsel to BAG and the Subs,
dated the Closing Date, in a form as set forth on EXHIBIT C-2 attached hereto
and incorporated herein.
8.4 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.
8.5 REAL ESTATE PURCHASE AGREEMENTS; LEASES. The conditions set forth in
SECTION 7.8 above shall have been satisfied.
8.6 CERTIFICATES. BAG and the Subs shall have furnished the Stockholders
with such certificates of its officers and others to evidence compliance with
the conditions set forth in this Article as may be reasonably requested by the
Stockholders.
8.7 LEGAL MATTERS. All certificates, instruments, opinions and other
documents required to be executed or delivered by or on behalf of BAG or the
Subs under the provisions of this Agreement, and all other actions and
proceedings required to be taken by or on behalf of BAG or the Subs in
furtherance of the transactions contemplated hereby, shall be reasonably
satisfactory in form and substance to counsel for the Stockholders.
8.8 REGISTRATION STATEMENT. BAG shall have filed with the SEC the
Registration Statement covering the offer and sale of the BAG IPO Stock. The
Registration Statement shall have been declared effective by the SEC and the
underwriters named therein shall have agreed to acquire, subject to the
conditions set forth in the underwriting agreement, shares of BAG IPO Stock. The
closing of the sale of the BAG IPO Stock to the underwriters shall have occurred
simultaneously with the Closing hereunder.
8.9 REGISTRATION RIGHT AGREEMENT. BAG and the Stockholders shall have
entered into the Registration Rights Agreement with respect to the BAG Common
Stock substantially in the form attached hereto as EXHIBIT F.
8.10 EMPLOYMENT AGREEMENTS. The Subs, the Companies, Mr. Alan Arnold and Mr.
Gary Billings and other key employees of the Companies, as mutually selected by
the Parties, shall have entered into the Employment Agreements.
8.11 STOCK PRICE PROTECTION AGREEMENT. BAG and the Stockholders shall have
entered into the Agreement substantially in the form attached hereto as EXHIBIT
I with respect to certain stock price protection in favor of the Stockholders.
8.12 CONSIDERATION. The Subs shall have tendered to the Stockholders the
Merger Consideration (less the Escrow Consideration) payable to the Stockholders
at the Closing and shall have placed into escrow the Escrow Consideration.
ARTICLE 9
TERMINATION
9.1 TERMINATION. This Agreement may be terminated at any time prior to
Closing:
(a) by written mutual consent of BAG, the Subs and the
Stockholders;
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(b) by either BAG, the Subs or the Stockholders by written notice
if the Closing shall not have taken place on or prior to the Closing Date
Deadline, or such other date as shall have been approved by BAG, the Subs and
the Stockholders in writing (provided that the terminating Party is not
otherwise in material breach of its representation, warranties, covenants or
agreements under this Agreement);
(c) by BAG, the Subs or the Stockholders if any court of competent
jurisdiction in 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 BAG or the Subs if any of the conditions specified in
Article 7 hereof have not been met or waived by BAG or the Subs at such time as
such condition is no longer capable of satisfaction (provided that neither BAG
nor the Subs is otherwise in material breach of its representations, warranties,
covenants or agreements under this Agreement);
(e) by the Stockholders if any of the conditions specified in
Article 8 hereof have not been met or waived by the Stockholders at such time as
such condition is no longer capable of satisfaction (provided that neither the
Stockholders nor any Company is otherwise in material breach of his or its
representations, warranties, covenants or agreements under this Agreement); or
(f) by either BAG, the Subs or the Stockholders if there has been
a material breach on the part of the other of any representation, warranty,
covenant or agreement set forth in this Agreement, which breach has not been
cured within ten (10) Business Days following receipt by the breaching Party of
written notice of such breach.
If BAG, the Subs or the Stockholders shall terminate this Agreement
pursuant to the provisions hereof, such termination shall be effectuated by
written notice to the other Parties specifying the provision hereof pursuant to
which such termination is made.
9.2 PROCEDURE AND EFFECT OF TERMINATION. If any Party terminates this
Agreement pursuant to Section 9.1 above, 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, stockholders or
principals shall have any liability or obligation hereunder or with respect
hereto, except for (a) any liability arising out of any breach of this Agreement
prior to its termination; (b) the obligations contained in Section 6.1 and
Section 6.2 hereof, and (d) as set forth below in this Section 9.2:
(i) If this Agreement is terminated by the Stockholders
or the Companies pursuant to the provisions of
Section 9.1(b) above, Sub I and Sub II shall, within
five (5) days of written demand therefore by the
Stockholders, pay to the Stockholders in immediately
available funds, as liquidated damages for the loss
of the transaction and not as a penalty, a
termination fee of Five Hundred Thousand Dollars
($500,000) ("Termination Fee").
(ii) Notwithstanding anything to the contrary contained in
Section 9.2(i) hereof or elsewhere in this Agreement,
no Termination Fee shall be due hereunder if the
Closing does not occur on or before the Closing Date
due to any of the following reasons: (A) all
Government Approvals required to consummate the
transactions contemplated hereby have not been
obtained by BAG or the Subs; (B) all consents or
approvals from automobile manufacturers with whom
each Company
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has a franchise agreement (or comparable agreement)
have not been obtained by BAG or the Subs on terms
and conditions which are comparable with or
substantially similar in form to the terms and
conditions of said manufacturer's consent or
approvals in other similar transactions that occurred
during the twelve (12) month period immediately
preceding the date hereof; (C) due to any war,
natural disaster or other acts of God; or (D) there
has been a material breach on the part of any Company
or any Stockholder of any of such Company's or
Stockholder's representation, warranty, covenant or
agreement set forth in this Agreement.
(iii) The Termination Fee shall be the sole and exclusive
remedy of Stockholders and the Companies for damages
as a result of a breach of this Agreement. Because
the actual damages that the Stockholders and the
Companies would sustain if any of BAG, Sub I or Sub
II breaches its obligations under this Agreement are
uncertain and would be impossible or very difficult
to ascertain accurately, the Parties agree in good
faith that the Termination Fee would be reasonable
and just compensation for the harm caused by such
breach. Therefore, the Stockholders and the Companies
acknowledge and agree to accept said Termination Fee,
if due and paid hereunder, as liquidated damages, and
not as a penalty, in the event of a breach by BAG or
Sub I or Sub II.
ARTICLE 10
INDEMNIFICATION AND SURVIVAL
10.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties contained in this Agreement shall survive the execution and delivery
of this Agreement, any examination by or on behalf of the Parties, and the
Closing contemplated herein, only to the extent specified below:
(a) the representations and warranties contained in Section 2.2,
Sections 3.5-3.7, Sections 3.9-3.10, Sections 3.12-3.25, Section 4.3, and
Section 5.3 shall survive for a period of two (2) years following the Closing
Date;
(b) the representations and warranties contained in Section 3.11
shall survive for a period of five (5) years following the Closing Date;
(c) the representations and warranties contained in Sections
3.1-3.4, Section 3.26, Section 4.1, Section 4.2, Section 4.4 Section 5.1,
Section 5.2, and Section 5.4 shall survive without limitation; and
(d) the representations and warranties contained in Section 3.8
shall survive as to any Tax covered by such representations and warranties for
so long as any statute of limitations for such Tax remains open, in whole or in
part, including without limitation by reason of waiver of such statute of
limitations.
10.2 INDEMNIFICATION PROVISIONS FOR BENEFIT OF BAG AND THE SUBS.
(a) In the event any Stockholder breaches (or in the event any
third party alleges facts that, if true, would mean the Stockholders had
breached) any of his representations, warranties and covenants contained herein
(other than the covenants in Article I above and the representations and
warranties in Sections 3.1-3.4, Section 3.8, 3.11, Section 3.26, Section 4.1,
Section 4.2, and Section 4.4 above), and, if there is an applicable survival
period pursuant to Section 10.1 above, provided that BAG or the Subs make a
written claim for indemnification against
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the Stockholders pursuant to Section 10.4 below within such survival period,
then the Stockholders shall jointly and severally indemnify BAG and the Subs
from and against the entirety of any Adverse Consequences BAG and the Subs may
suffer through and after the date of the claim for indemnification (including
any Adverse Consequences BAG and the Subs may suffer after the end of any
applicable survival period) resulting from, arising out of, relating to, in the
nature of, or caused by the breach (or the alleged breach); provided, however,
that the Stockholders shall not have any obligation to indemnify BAG and the
Subs from and against any Adverse Consequences resulting from, arising out of,
relating to, in the nature of, or caused by the breach (or alleged breach) of
any representation or warranty of the Stockholders contained in Section 2.2,
Sections 3.5-3.7, Sections 3.9-3.10, Sections 3.12-3.25, and Section 4.3 above
until BAG and the Subs have suffered Adverse Consequences by reason of all such
breaches (or alleged breaches) in excess of a Two Hundred Thousand Dollars
($200,000) aggregate threshold (at which point the Stockholders will be
obligated to indemnify BAG and the Subs from and against only those Adverse
Consequences which are in excess of said $200,000 amount) not to exceed a
maximum dollar amount of Six Million Two Hundred Fifty Thousand Dollars
($6,250,000).
(b) In the event the Stockholders breach their covenants in
Article I above or any of their representations and warranties in Sections
3.1-3.4, 3.11, Section 3.26, Section 4.1, Section 4.2, and Section 4.4 above,
and, if there is an applicable survival period pursuant to Section 10.1 above,
provided that BAG or the Subs make a written claim for indemnification against
the Stockholders pursuant to Section 10.4 below within such survival period,
then the Stockholders agree to indemnify BAG and the Subs from and against the
entirety of any Adverse Consequences BAG and the Subs may suffer through and
after the date of the claim for indemnification (including any Adverse
Consequences BAG and the Subs may suffer after the end of any applicable
survival period) resulting from, arising out of, relating to, in the nature of,
or caused by the breach (or the alleged breach).
(c) The Stockholders agree to indemnify BAG and the Subs from and
against the entirety of any Adverse Consequences BAG and the Subs may suffer
resulting from, arising out of, relating to, in the nature of, or caused by any
Liability of any Company for any Taxes of any Company with respect to any Tax
period or portion thereof ending on or before the Closing Date (or for any Tax
period beginning before and ending after the Closing Date to the extent
allocable determined in a manner consistent with Section 10.3 to the portion of
such period beginning before and ending on the Closing Date).
10.3 INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE STOCKHOLDERS. In the
event BAG or the Subs breach any of its representations, warranties and
covenants contained herein, and, if there is an applicable survival period
pursuant to Section 10.1 above, provided that the Stockholders make a written
claim for indemnification against BAG or the Subs pursuant to Section 10.4 below
within such survival period, then BAG and the Subs agree to indemnify the
Stockholders from and against the entirety of any Adverse Consequences the
Stockholders may suffer through and after the date of the claim for
indemnification (including any Adverse Consequences the Stockholders may suffer
after the end of any applicable survival period) resulting from, arising out of,
relating to, in the nature of, or caused by the breach (or the alleged breach).
10.4 MATTERS INVOLVING THIRD PARTIES.
(a) If any third party shall notify any Party (the "Indemnified
Party") with respect to any matter (a "Third Party Claim") which may give rise
to a claim for indemnification against any other Party (the "Indemnifying
Party") under this Section 10, then the Indemnified Party shall promptly notify
each Indemnifying Party thereof in writing; provided, however, that no delay on
the part of the Indemnified
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Party in notifying any Indemnifying Party shall relieve the Indemnifying Party
from any obligation hereunder unless (and then solely to the extent) the
Indemnifying Party thereby is prejudiced.
(b) Any Indemnifying Party will have the right to defend the
Indemnified Party against the Third Party Claim with counsel of its choice
reasonably satisfactory to the Indemnified Party so long as: (A) the
Indemnifying Party notifies the Indemnified Party in writing within fifteen (15)
days after the Indemnified Party has given notice of the Third Party Claim that
the Indemnifying Party will indemnify the Indemnified Party from and against the
entirety of any Adverse Consequences the Indemnified Party may suffer resulting
from, arising out of, relating to, in the nature of, or caused by the Third
Party Claim; (B) the Indemnifying Party provides the Indemnified Party with
evidence reasonably acceptable to the Indemnified Party that the Indemnifying
Party will have the financial resources to defend against the Third Party Claim
and fulfill its indemnification obligations hereunder; (C) the Third Party Claim
involves only money damages and does not seek an injunction or other equitable
relief; (D) settlement of, or an adverse judgment with respect to, the Third
Party Claim is not, in the good faith judgment of the Indemnified Party, likely
to establish a precedental custom or practice materially adverse to the
continuing business interests of the Indemnified Party; and (E) the Indemnifying
Party conducts the defense of the Third Party Claim actively and diligently.
(c) So long as the Indemnifying Party is conducting the defense of
the Third Party Claim in accordance with this Section 10.4: (A) the Indemnified
Party may retain separate co-counsel at its sole cost and expense and
participate in the defense of the Third Party Claim; (B) the Indemnified Party
will not consent to the entry of any judgment or enter into any settlement with
respect to the Third Party Claim without the prior written consent of the
Indemnifying Party (not to be withheld unreasonably); and (C) the Indemnifying
Party will not consent to the entry of any judgment or enter into any settlement
with respect to the Third Party Claim without the prior written consent of the
Indemnified Party (not to be withheld unreasonably).
(d) In the event any of the conditions in this Section 10.4 are or
become unsatisfied, however: (A) the Indemnified Party may defend against, and
consent to the entry of any judgment or enter into any settlement with respect
to, the Third Party Claim in any manner it reasonably may deem appropriate (and
the Indemnified Party need not consult with, or obtain any consent from, any
Indemnifying Party in connection therewith); (B) the Indemnifying Parties will
reimburse the Indemnified Party promptly and periodically for the costs of
defending against the Third Party Claim (including reasonable attorneys' fees
and expenses); and (C) the Indemnifying Parties will remain responsible for any
Adverse Consequences the Indemnified Party may suffer resulting from, arising
out of, relating to, in the nature of, or caused by the Third Party Claim to the
fullest extent provided in this Section 10.
10.5 OTHER INDEMNIFICATION PROVISIONS. The foregoing indemnification
provisions are in addition to, and not in derogation of, any statutory,
equitable or common law remedy (including without limitation any such remedy
arising under Environmental Laws) any Party may have with respect to any Company
or the transactions contemplated by this Agreement. The Stockholders hereby
agree that they will not make any claim for indemnification against any Company
by reason of the fact that any such Stockholder was a director, officer,
employee or agent of any such entity or was serving at the request of any such
entity as a partner, trustee, director, officer, employee or agent of another
entity (whether such claim is for judgments, damages, penalties, fines, costs,
amounts paid in settlement, losses, expenses or otherwise and whether such claim
is pursuant to any statute, charter document, bylaw, agreement or otherwise)
with respect to any action, suit, proceeding, complaint, claim or demand brought
by BAG or the Subs against the Stockholders (whether such action, suit,
proceeding, complaint, claim or demand is pursuant to this Agreement, applicable
Legal Requirements, or otherwise).
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10.6 TAX SAVINGS. Costs arising or resulting from any breaches of
Stockholders or BAG hereunder 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 11
TAX MATTERS
11.1 TAX MATTERS. The following provisions shall govern the allocation of
responsibility as between the Subs and Stockholders for certain tax matters
following the Closing Date:
11.2 SECTION 338(h)(10) ELECTION. The Stockholders agree, if so directed by
the Subs, to join with the Subs in making an election under Section 338(h)(10)
of the Code (and any corresponding elections under state, local or foreign tax
law) (collectively, a "Section 338(h)(10) Election") with respect to the
purchase and sale of the stock of each Company hereunder. The Subs agree with
the Stockholders that if the Subs direct the Stockholders to join in the Section
338(h)(10) Election, the Subs will indemnify the Stockholders against any
additional tax liability ascompared to the tax liability of the Stockholders
absent a Section 338(h)(10) Election directly resulting solely from the making
of the Section 338(h)(10) Election. The Subs will also indemnify the
Stockholders against any additional tax liability directly resulting solely from
an election under state, local or foreign law similar to the election available
under Section 338(g) of the Code (or which results from the making of an
election under Section 338(g) of the Code) with respect to the purchase and sale
of the stock of any Company hereunder.
11.3 TAX PERIODS ENDING ON OR BEFORE THE CLOSING DATE. The Subs shall
prepare or cause to be prepared and file or cause to be filed all Tax Returns
for each Company for all periods ending on or prior to the Closing Date which
are filed after the Closing Date. The Stockholders shall reimburse the Subs for
Taxes and reasonable Tax Return preparation fees of each Company with respect to
such periods within fifteen (15) days after payment by any Sub or a Company of
such Taxes and fees.
11.4 TAX PERIODS BEGINNING BEFORE AND ENDING AFTER THE CLOSING DATE. The
Subs shall prepare or cause to be prepared and file or cause to be filed any Tax
Returns of each Company for Tax periods which begin before the Closing Date and
end on or after the Closing Date. Stockholders shall pay to the Subs within
fifteen (15) days after the date on which Taxes are paid with respect to such
periods an amount equal to the portion of such Taxes which relates to the
portion of such Taxable period ending on the Closing Date. For purposes of this
Section, in the case of any Taxes that are imposed on a periodic basis and are
payable for a Taxable period that includes (but does not end on) the Closing
Date, the portion of such Tax which relates to the portion of such Taxable
period ending on the Closing Date shall: (A) in the case of any Taxes other than
Taxes based upon or related to income or receipts, be deemed to be the amount of
such Tax for the entire Taxable period multiplied by a fraction the numerator of
which is the number of days in the Taxable period ending on the Closing Date and
the denominator of which is the number of days in the entire Taxable period; and
(B) in the case of any Tax based upon or related to income or receipts be deemed
equal to the amount which would be payable if the relevant Taxable period ended
on the Closing Date. Any credits relating to a Taxable period that begins before
and ends after the Closing Date shall be taken into account as though the
relevant Taxable period ended on the Closing Date. All determinations necessary
to give effect to the foregoing allocations shall be made in a manner consistent
with prior practice of each Company.
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11.5 COOPERATION ON TAX MATTERS.
(a) The Subs, each Company and Stockholders shall cooperate fully,
as and to the extent reasonably requested by the other Party, in connection with
the filing of Tax Returns pursuant to this Section and any audit, litigation or
other proceeding with respect to Taxes. Such cooperation shall include the
retention and (upon the other Party's request) the provision of records and
information which are reasonably relevant to any such audit, litigation or other
proceeding and making employees available on a mutually convenient basis to
provide additional information and explanation of any material provided
hereunder. Each Company and Stockholders agrees: (A) to retain all books and
records with respect to Tax matters pertinent to a Company relating to any
taxable period beginning before the Closing Date until the expiration of the
statute of limitations (and, to the extent notified by the Subs or Stockholders,
any extensions thereof) of the respective taxable periods, and to abide by all
record retention agreements entered into with any taxing authority; and (B) to
give the other Parties reasonable written notice prior to transferring,
destroying or discarding any such books and records and, if any other Party so
requests, each Company or Stockholders, as the case may be, shall allow the
other Party to take possession of such books and records.
(b) The Subs and Stockholders further agree, upon request, to use
their best efforts to obtain any certificate or other document from any
governmental authority or any other Person as may be necessary to mitigate,
reduce or eliminate any Tax that could be imposed (including, but not limited
to, with respect to the transactions contemplated hereby).
(c) The Subs and Stockholders further agree, upon request, to
provide the other Parties with all information that either Party may be required
to report pursuant to Section 6043 of the Code and all Treasury Department
Regulations promulgated thereunder.
11.6 CERTAIN TAXES. All transfer, documentary, sales, use, stamp,
registration and other such Taxes and fees (including any penalties and
interest) incurred in connection with this Agreement shall be paid by
Stockholders when due, and Stockholders will, at their own expense, file all
necessary Tax Returns and other documentation with respect to all such transfer,
documentary, sales, use, stamp, registration and other Taxes and fees, and, if
required by applicable law, the Subs will, and will cause its affiliates to,
join in the execution of any such Tax Returns and other documentation.
ARTICLE 12
MISCELLANEOUS
12.1 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 6.5 hereof is
breached, then the Stockholders of each Company shall pay to BAG, 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 BAG in conjunction with
this Agreement and the transactions contemplated hereby.
12.2 HEADINGS. The section headings herein are for convenience of reference
only, do not constitute part of this Agreement, and shall not be deemed to limit
or otherwise affect any of the provisions hereof.
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12.3 NOTICES. All notices or other communications required or permitted
hereunder shall be given in writing and shall be deemed sufficient if delivered
by hand, recognized overnight delivery service or facsimile transmission or
mailed by registered or certified mail, postage prepaid and return receipt
requested), as follows:
If to the Companies before the Closing Date:
___________________________________________
___________________________________________
___________________________________________
___________________________________________
with a copy to: with an additional copy to:
Mr. Steve Lovett Keith A. O'Daniel, Esq.
THE HARTSFIELD GROUP, INC. 625 Brisbane Manor
Six Concourse Parkway / Suite 1930 Alpharetta, Georgia 30202
Atlanta, Georgia 30328 Phone: 770-475-2365
Phone: 770-901-9000 Fax: 770-475-2456
Fax: 770-901-9100
If to the Companies after the Closing Date:
___________________________________________
___________________________________________
___________________________________________
with a copy to:
___________________________________________
___________________________________________
___________________________________________
___________________________________________
If to the Stockholders:
___________________________________________
___________________________________________
___________________________________________
___________________________________________
___________________________________________
with a copy to: with an additional copy to:
Mr. Steve Lovett Keith A. O'Daniel, Esq.
THE HARTSFIELD GROUP, INC. 625 Brisbane Manor
Six Concourse Parkway / Suite 1930 Alpharetta, Georgia 30202
Atlanta, Georgia 30328 Phone: 770-475-2365
Phone: 770-901-9000 Fax: 770-475-2456
Fax: 770-901-9100
If to BAG or the Subs:
BOOMERSHINE AUTOMOTIVE GROUP, INC.
2150 Cobb Parkway
Smyrna, GA 30080
-55-
60
with a copy to:
Stephen C. Whicker, Esq.
THE WHICKER LAW FIRM
6111 Peachtree Dunwoody Road / Suite 102-D
Atlanta, GA 30328
Phone: 770-394-7755
Fax: 770-934-8472
with an additional copy to:
David S. Cooper, Esq.
SCHNADER HARRISON SEGAL & LEWIS LLP
SunTrust Plaza / Suite 2800
303 Peachtree Street, N.E.
Atlanta, GA 30308-3252
Phone: 404-215-8100
Fax: 404-223-5164
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 (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.
12.4 ASSIGNMENT. This Agreement and all of the provisions hereof shall be
binding upon and inure the benefit of the Parties hereto (and with respect to
the Stockholders, the personal representatives and heirs of the Stockholders)
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, BAG and the Subs shall have the unrestricted
right to assign this Agreement and to delegate all or any part of their
obligations hereunder to any Affiliate of BAG, but in such event BAG shall
remain fully liable for the performance of all of such obligations in the manner
prescribed in this Agreement.
12.5 ENTIRE AGREEMENT. This Agreement (including the Exhibits, Addendums,
Annexes and Schedules attached hereto) and the Transaction Documents 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 and the Transaction Documents.
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 Transaction Documents. Prior drafts
of this Agreement and the Transaction Documents shall not be used as a basis for
interpreting this Agreement or the Transaction Documents.
12.6 WAIVER AND AMENDMENTS. Each of the Stockholders, each Company, BAG and
the Subs may by written notice to the other Parties: (a) extend the time for the
performance of any of the obligations or other actions of the other Parties; (b)
waive any inaccuracies in the representations or warranties of the other Parties
contained in this Agreement; (c) waive compliance with any of the covenants of
the other Parties contained in this Agreement; (d) waive performance of any of
the obligations of the other Parties created under this Agreement; or (e) waive
fulfillment of any of the conditions to its own
-56-
61
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.
12.7 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which shall be considered one and the same agreement and
each of which shall be deemed an original.
12.8 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Georgia without giving effect to any
choice or conflict of law provision or rule that would cause the laws of any
other jurisdiction to apply.
12.9 ACCOUNTING TERMS. All accounting terms used herein which are not
expressly defined in this Agreement shall have the respective meanings given to
them in accordance with GAAP.
12.10 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.
12.11 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.
12.12 REMEDIES. None of the remedies provided for in this Agreement,
including termination this Agreement as set forth in Article 8, the payment of
certain fees, costs and expenses as set forth in Section 12.1 or the specific
performance as set forth in this Section 12.13 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.
12.13 TIME IS OF THE ESSENCE. Time is of the essence for purposes of this
Agreement.
12.14 AUTHORITY. Any Person executing this Agreement on behalf of any
individual Stockholder hereby represents and warrants that said executing Person
has the right, authority and permission to so execute this Agreement on behalf
of said individual Stockholder.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
"BAG:"
ATTEST: BOOMERSHINE AUTOMOTIVE GROUP, INC.
BY: BY: /s/ WALTER M. BOOMERSHINE, JR.
------------------------------- -----------------------------------
Name: ________________________ Name: Walter M. Boomershine, Jr.
Title: ________________________ Title: President
[CORPORATE SEAL]
-57-
62
"SUB :"
ATTEST: B.A.G. GEORGIA I, INC.
BY: BY: /s/ WALTER M. BOOMERSHINE, JR.
------------------------------- -----------------------------------
Name: ________________________ Name: Walter M. Boomershine, Jr.
Title: ________________________ Title: President
[CORPORATE SEAL]
"SUB II:"
ATTEST: B.A.G. GEORGIA II, INC.
BY: BY: /s/ WALTER M. BOOMERSHINE, JR.
------------------------------- -----------------------------------
Name: ________________________ Name: Walter M. Boomershine, Jr.
Title: ________________________ Title: President
[CORPORATE SEAL]
THE "COMPANIES"
ATTEST: WADE FORD, INC.
BY: BY: /s/ ALAN K. ARNOLD
------------------------------- -----------------------------------
Name: ________________________ Name: Alan K. Arnold
Title: ________________________ Title: President
[CORPORATE SEAL]
ATTEST: WADE FORD BUFORD, INC.
BY: BY: /s/ ALAN K. ARNOLD
------------------------------- -----------------------------------
Name: ________________________ Name: Alan K. Arnold
Title: ________________________ Title: President
[CORPORATE SEAL]
-58-
63
THE "STOCKHOLDERS"
/s/ ALAN K. ARNOLD [SEAL]
---------------------------------
Alan K. Arnold
/s/ GARY R. BILLINGS [SEAL]
---------------------------------
Gary R. Billings
MILDRED S. ARNOLD CUSTODIAN FOR KELLY L.
ARNOLD UNDER THE UNIFORM TRANSFER TO
MINOR ACT OF GEORGIA:
/s/ ALAN K. ARNOLD / POA
----------------------------------------
[SEAL]
By: Mildred Arnold, Custodian
MILDRED S. ARNOLD CUSTODIAN FOR BRETT D.
ARNOLD UNDER THE UNIFORM TRANSFER TO
MINOR ACT OF GEORGIA:
/s/ ALAN K. ARNOLD / POA
----------------------------------------
[SEAL]
By: Mildred Arnold, Custodian
MILDRED S. ARNOLD CUSTODIAN FOR KRISTIE
A. ARNOLD UNDER THE UNIFORM TRANSFER TO
MINOR ACT OF GEORGIA:
/s/ ALAN K. ARNOLD / POA
----------------------------------------
[SEAL]
By: Mildred Arnold, Custodian
MILDRED S. ARNOLD CUSTODIAN FOR ALAN
CHAD ARNOLD UNDER THE UNIFORM TRANSFER
TO MINOR ACT OF GEORGIA:
/s/ ALAN K. ARNOLD / POA
----------------------------------------
[SEAL]
By: Mildred Arnold, Custodian
-59-
64
ADDENDUM 1
ALLOCATION OF MERGER CONSIDERATION
[TO BE PROVIDED BY SELLER]
% of Cash % of Stock
Consideration Consideration
------------- -------------
Alan K. Arnold:
Gary R. Billings:
Mildred S. Arnold Custodian
for Kelly L. Arnold under the
Uniform Transfer to Minor Act of Georgia:
Mildred S. Arnold Custodian
for Brett D. Arnold under the
Uniform Transfer to Minor Act of Georgia:
Mildred S. Arnold Custodian
for Kristie A. Arnold under the
Uniform Transfer to Minor Act of Georgia:
Mildred S. Arnold Custodian
for Alan Chad Arnold under the
Uniform Transfer to Minor Act of Georgia:
-60-
65
ADDENDUM 2
ADJUSTMENTS TO 1997 NET INCOME
(1) Plus 1996 owner's salaries paid
(2) Minus One-half (1/2) of the old owner's salaries post-acquisition
(3) Plus or Minus Additional rents (different from current lease)
(4) Plus or Minus LIFO - Current year increase (decrease)
(5) Minus LIFO tax liability for the current year
(6) Plus Family members' salaries and owner's benefits
(7) Plus Additional contributions (church)
(8) Plus Christmas bonus (only portion in excess of normal
average)
(9) Plus Management fees
(10) Plus Loss on sales of notes receivable (if determined to be out
of the normal course of business)
(11) Plus Related parties' salaries
(12) Minus Goodwill amortized expense (1 year)
Additionally, the approximately $160,000 amount due and payable to the
IRS pursuant to the agreement between the IRS and the Companies in connection
with certain LIFO adjustments shall not be deducted as 1997 expenses for
purposes of calculating the 1997 Adjusted EBIT hereunder.
-61-
66
AMENDMENT TO
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
This AMENDMENT TO AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
(this "Amendment") is entered into as of January 19, 1998 by and among
Boomershine Automotive Group, Inc., a Georgia corporation ("BAG"), B.A.G.
Georgia I, Inc., a Georgia corporation ("Sub I"), B.A.G. Georgia II, Inc., a
Georgia corporation ("Sub II") (Sub I and Sub II are hereinafter individually
referred to as a "Sub" and collectively referred to as the "Subs"), and Wade
Ford, Inc., a Georgia corporation, and Wade Ford Buford, Inc., a Georgia
corporation (individually, a "Company" and collectively, the "Companies"), and
the stockholder(s) listed on the signature pages hereof (each, a "Stockholder"
and, if more than one, collectively, the "Stockholders"). BAG, the Subs, the
Companies and the Stockholders are referred to individually as a "Party" and
collectively as the "Parties."
W I T N E S S E T H :
WHEREAS, the Parties are parties to that certain Agreement and Plan of
Merger and Reorganization entered into as of November 21, 1997 (the
"Agreement"); and
WHEREAS, the Parties desire to amend the Agreement, with such amendment
to be effective as set forth in this Amendment.
NOW, THEREFORE, in consideration of the mutual terms, conditions and
other agreements set forth herein, the Parties hereto hereby agree as follows:
1. EFFECTIVE DATE OF AMENDMENT. The Parties agree that this Amendment
shall be effective as of January 19, 1998.
2. DUE DILIGENCE DEADLINE.
(a) The Parties agree to amend the Agreement by replacing Section 7.7
of the Agreement with the following:
"7.7 COMPLETION OF DUE DILIGENCE. BAG and the Subs shall have completed
their due diligence examination of each Company, and the results of
such examination shall be reasonably satisfactory to Bag and the Subs;
provided, however, that the conditions contained in this Section 7.7
shall not be a condition precedent to the Obligations of BAG and the
Subs hereunder after January 30, 1998."
3. USE OF DEFINED TERMS; Entire Agreement. All capitalized terms that are
used but not expressly defined in this Amendment have the meanings ascribed to
them in the Agreement, and the definitions of those terms in the Agreement are
incorporated by reference in this Amendment. Each reference to the Agreement
shall be deemed to refer to the Agreement as amended by this Amendment. This
Amendment and the documents contemplated by it record the final, complete, and
exclusive understanding between the Parties regarding the modification of the
Agreement.
1
67
Except as amended and modified by this Amendment, the Agreement remains in full
force and effect in accordance with its respective terms.
4. GOVERNING LAW. This Amendment 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.
IN WITNESS WHEREOF, the Parties have caused this Amendment to be duly
executed, effective as of the date and year first above written.
"BAG:"
ATTEST: BOOMERSHINE AUTOMOTIVE GROUP, INC.
BY: /s/ STEPHEN C. WHICKER BY: /s/ CHARLES K. YANCEY
----------------------------- ------------------------------
Name: Stephen C. Whicker Name: Charles K. Yancey
Title: Assistant Secretary Title: Secretary & Treasurer
[CORPORATE SEAL]
"SUB :"
ATTEST: B.A.G. GEORGIA I, INC.
BY: /s/ STEPHEN C. WHICKER BY: /s/ CHARLES K. YANCEY
----------------------------- ------------------------------
Name: Stephen C. Whicker Name: Charles K. Yancey
Title: Secretary Title: Chief Executive Officer
[CORPORATE SEAL]
"SUB II:"
ATTEST: B.A.G. GEORGIA II, INC.
BY: /s/ STEPHEN C. WHICKER BY: /s/ CHARLES K. YANCEY.
----------------------------- ------------------------------
Name: Stephen C. Whicker Name: Charles K. Yancey
Title: Secretary Title: Chief Executive Officer
[CORPORATE SEAL]
THE "COMPANIES:"
ATTEST: WADE FORD, INC.
2
68
BY: /s/ K. LAMAR LESTER BY: /s/ ALAN K. ARNOLD
----------------------------- ------------------------------
Name: K. Lamar Lester Name: Alan K. Arnold
Title: Secretary & Treasurer Title: President
[CORPORATE SEAL]
ATTEST: WADE FORD BUFORD, INC.
BY: /s/ JOHN KENNEDY BY: /s/ ALAN K. ARNOLD
----------------------------- ------------------------------
Name: John Kennedy Name: Alan K. Arnold
Title: Secretary & Treasurer Title: President
[CORPORATE SEAL]
THE "STOCKHOLDERS"
/s/ ALAN K. ARNOLD [SEAL]
---------------------------------
Alan K. Arnold
/s/ GARY R. BILLINGS [SEAL]
---------------------------------
Gary R. Billings
MILDRED S. ARNOLD CUSTODIAN FOR KELLY
L. ARNOLD UNDER THE UNIFORM TRANSFER TO
MINOR ACT OF GEORGIA:
/s/ MILDRED ARNOLD [SEAL]
---------------------------------
By: Mildred Arnold, Custodian
MILDRED S. ARNOLD CUSTODIAN FOR BRETT
D. ARNOLD UNDER THE UNIFORM TRANSFER TO
MINOR ACT OF GEORGIA:
/s/ MILDRED ARNOLD [SEAL]
---------------------------------
By: Mildred Arnold, Custodian
MILDRED S. ARNOLD CUSTODIAN FOR KRISTIE
A. ARNOLD UNDER THE UNIFORM TRANSFER TO
MINOR ACT OF GEORGIA:
3
69
/s/ MILDRED ARNOLD [SEAL]
---------------------------------
By: Mildred Arnold, Custodian
MILDRED S. ARNOLD CUSTODIAN FOR ALAN
CHAD ARNOLD UNDER THE UNIFORM TRANSFER
TO MINOR ACT OF GEORGIA:
/s/ MILDRED ARNOLD [SEAL]
---------------------------------
By: Mildred Arnold, Custodian
-4-
70
SECOND AMENDMENT TO
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
This SECOND AMENDMENT TO AGREEMENT AND PLAN OF MERGER AND
REORGANIZATION (this "Amendment") is entered into as of March 31, 1998 by and
among Boomershine Automotive Group, Inc., a Georgia corporation ("BAG"), B.A.G.
Georgia I, Inc., a Georgia corporation ("Sub I"), B.A.G. Georgia II, Inc., a
Georgia corporation ("Sub II") (Sub I and Sub II are hereinafter individually
referred to as a "Sub" and collectively referred to as the "Subs"), Sunbelt
Automotive Group, Inc., a Georgia corporation ("Sunbelt") and Wade Ford, Inc., a
Georgia corporation, and Wade Ford Buford, Inc., a Georgia corporation
(individually, a "Company" and collectively, the "Companies"), and the
stockholder(s) listed on the signature pages hereof (each, a "Stockholder" and,
if more than one, collectively, the "Stockholders"). BAG, the Subs, Sunbelt, the
Companies and the Stockholders are referred to individually as a "Party" and
collectively as the "Parties."
W I T N E S S E T H :
WHEREAS, all Parties except Sunbelt are parties to that certain
Agreement and Plan of Merger and Reorganization entered into as of November 21,
1997, which was amended by an Amendment to Agreement and Plan of Merger and
Reorganization dated January 19, 1998 (the "Agreement"); and
WHEREAS, the Parties desire to further amend the Agreement, with such
amendment to be effective as set forth in this Amendment.
NOW, THEREFORE, in consideration of the mutual terms, conditions and
other agreements set forth herein, the Parties hereto hereby agree as follows:
1. EFFECTIVE DATE OF AMENDMENT. The Parties agree that this Amendment
shall be effective as of January 8, 1998.
2. REPLACEMENT OF ARTICLE I OF THE AGREEMENT. As a result of the
assignments contemplated by Section 3 of this Amendment, Sunbelt will acquire
the Wade Shares (as defined in the Agreement) directly from the Stockholders,
and the Parties agree that there is no need for the Companies to merge into
Sunbelt. Therefore, the Parties agree to amend the Agreement by replacing
Article I of the Agreement with the following:
-1-
71
"ARTICLE I"
"PURCHASE AND SALE OF THE SHARES"
"1.1 PURCHASE AND SALE OF THE SHARES."
"(a) Purchase and Sale of the Shares. Upon the terms and subject to the
conditions set forth in this Agreement, the Stockholders shall sell to BAG, and
BAG shall purchase from the Stockholders, the Wade Shares for an aggregate
purchase price equal to FIFTEEN MILLION AND NO/100 DOLLARS ($15,000,000.00) (the
"Base Price"), which Base Price is subject to adjustment after Closing as
provided in Article 2 of this Agreement. At the Closing referred to in Section
1.1(b) hereof:"
"(i) the Stockholders shall sell, assign, transfer and deliver
to BAG the Wade Shares representing 100% of the outstanding common
stock of the Companies, free and clear of all Liens, and shall deliver
the certificates representing the Wade Shares accompanied by stock
powers duly executed in blank; and"
"(ii) BAG shall accept and purchase the Wade Shares from the
Stockholders and in payment therefor shall pay the Base Price to the
Stockholders as follows:"
"(A) The sum of Eleven Million Dollars ($11,000,000.00)
shall be paid to the Stockholders by BAG at the
Closing in cash or other immediately available funds
("Cash Consideration Amount"), to be divided amongst
the Stockholders in accordance with ADDENDUM 1
attached hereto and incorporated herein."
"(B) The balance of the Base Price, which equals to a
value of Four Million Dollars ($4,000,000.00), shall
be paid to the Stockholders at the Closing in the
form of BAG Common Stock (the "Stock Consideration
Value Amount"), to be divided amongst the
Stockholders in accordance with ADDENDUM 1 attached
hereto and incorporated herein."
"(C) Notwithstanding the payment of the Cash Consideration
Amount described in Section 1.1(a)(ii)(A) hereof and
the payment of the Stock Consideration Value Amount
described in Section 1.1(a)(ii)(B) hereof, at the
Closing, BAG shall place $366,666.67 of the Cash
Consideration Amount (the "Escrow Funds") in an
interest bearing escrow account with Joyce E.
Kitchens, Esq., or another escrow agent reasonably
satisfactory to BAG and Stockholders (the "Escrow
Agent"), and BAG shall also place the number of
shares representing
-2-
72
$133,333.33 of the Stock Consideration Value Amount
in escrow with the Escrow Agent (the "Escrow Stock")
(the Escrow Funds and the Escrow Stock shall
hereinafter be collectively referred to as the
"Escrow Consideration"), all in accordance with an
escrow agreement substantially in the form attached
hereto as EXHIBIT A, with such other changes as the
Escrow Agent may reasonably request (the "Escrow
Agreement"). The release of the Escrow Consideration
shall be governed by the terms and conditions of the
Escrow Agreement."
"(B) CLOSING."
"(i) Subject to the conditions set forth in this
Agreement, the purchase and sale of the Wade Shares and the
other transactions contemplated by this Agreement (the
"Closing") shall take place at the offices of Schnader
Harrison Segal & Lewis, LLP in Atlanta, Georgia, or any other
location agreed upon by the Parties, contemporaneously with
the BAG IPO described in the Registration Statement referred
to in Section 7.6 hereof."
"(ii) If the BAG IPO fails to close on or before the
Closing Date Deadline, then the Subs shall have the option to
consummate the purchase and sale of the Wade Shares and the
other transactions contemplated by this Agreement upon such
terms and conditions that are mutually acceptable to the
Parties (in which event said alternate consummation shall for
purposes herein be referred to as the "Closing"), and said
Closing shall take place at the offices of Schnader Harrison
Segal & Lewis, LLP in Atlanta, Georgia, or any other location
agreed upon by the Parties."
"(iii) The date on which the Closing actually 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 Stockholders shall deliver to BAG (A)
certificates representing the Wade 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 BAG good title for the Wade Shares,
and (B) all opinions, certificates and other instruments and
documents required to be delivered by the Stockholders and the
Company at or prior to Closing or otherwise required in
connection herewith;"
"(ii) BAG shall pay and deliver to the Stockholders
(A) the Cash Consideration Amount and the Stock Consideration
Amount, and shall deliver the
-3-
73
Escrow Funds to the Escrow Agent, as required by Section
1.1(a)(ii) hereof, and (B) all opinions, certificates and
other instruments and documents required to be delivered by
BAG at or prior to the Closing or otherwise required in
connection herewith."
"(D) INDEMNIFICATION FOR ADVERSE TAX CONSEQUENCES. BAG agrees to
indemnify the Stockholders against any additional tax liability of the
Stockholders which results solely from the restructuring of this transaction
from a merger to a stock purchase."
3. CONSENT TO ASSIGNMENT. BAG and the Subs wish to assign all of their
rights and obligations under the Agreement to Sunbelt. BAG also hereby informs
the Companies and the Stockholders that, prior to Closing, BAG is expected to
merge with and into Sunbelt, and the Subs will be merged into BAG or dissolved.
If the proposed merger of BAG into Sunbelt is completed, BAG will cease to exist
as a separate corporation. By their signatures below, as required by Section
12.4 of the Agreement, the Companies and the Stockholders hereby consent to (i)
the express assignment by BAG and the Subs of all of their rights and
obligations under the Agreement to Sunbelt and Sunbelt's express assumption of
such rights and obligations; (ii) the proposed merger of BAG into Sunbelt, as a
result of which BAG will cease to exist as a separate corporation and will have
no further rights or obligations under the Agreement, and Sunbelt, by operation
of law, will assume all rights and obligations of BAG under the Agreement; (iii)
the merger of the Subs into BAG, and/or the dissolution of the Subs; and (iv)
the future assignment by Sunbelt, whether done expressly or via merger, of all
of Sunbelt's rights and obligations under the Agreement to any Affiliate of
Sunbelt. At or prior to the Closing, if any such mergers or future assignments
are completed, Sunbelt shall deliver to the Companies and the Stockholders
copies of documents which confirm such actions.
In addition, the Parties agree that all references in the Agreement to
the "BAG IPO," the "BAG IPO Stock" and the "Registration Statement" shall be
deemed to refer to a public offering and sale of shares of the common stock of
Sunbelt, and that all references in the Agreement to the "BAG Common Stock"
shall be deemed to refer to common stock of Sunbelt.
4. ASSIGNMENT TO AND ASSUMPTION BY SUNBELT. BAG and the Subs hereby assign
all of their right, title and interest in and to and all of their obligations
under the Agreement to Sunbelt. Sunbelt hereby accepts said assignment of the
Agreement and hereby agrees to perform and carry out the obligations of BAG and
the Subs under the Agreement.
5. USE OF DEFINED TERMS; ENTIRE AGREEMENT. All capitalized terms that are
used but not expressly defined in this Amendment have the meanings ascribed to
them in the Agreement, and the definitions of those terms in the Agreement are
incorporated by reference in this Amendment. Each reference to the Agreement
shall be deemed to refer to the Agreement as amended by this Amendment and the
prior Amendment dated January 19, 1998. This Amendment and the documents
contemplated by it record the final, complete, and exclusive understanding
between the Parties regarding the modification of the Agreement described
herein. Except as amended and modified by this Amendment and the prior Amendment
dated January 19, 1998, the Agreement remains in full force and effect in
accordance with its respective terms.
-4-
74
6. GOVERNING LAW. This Amendment 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.
IN WITNESS WHEREOF, the Parties have caused this Amendment to be duly executed,
effective as of the date and year first above written.
"BAG:"
ATTEST: BOOMERSHINE AUTOMOTIVE GROUP, INC.
BY: /s/ STEPHEN C. WHICKER BY: /s/ CHARLES K. YANCEY
------------------------------ -----------------------------
Name: Stephen C. Whicker Name: Charles K. Yancey
Title: Assistant Secretary Title: Secretary & Treasurer
[CORPORATE SEAL]
"SUB :"
ATTEST: B.A.G. GEORGIA I, INC.
BY: /s/ STEPHEN C. WHICKER BY: /s/ CHARLES K. YANCEY
------------------------------ -----------------------------
Name: Stephen C. Whicker Name: Charles K. Yancey
Title: Secretary Title: Chief Executive Officer
[CORPORATE SEAL]
"SUB II:"
ATTEST: B.A.G. GEORGIA II, INC.
BY: /s/ STEPHEN C. WHICKER BY: /s/ CHARLES K. YANCEY.
------------------------------ -----------------------------
Name: Stephen C. Whicker Name: Charles K. Yancey
Title: Secretary Title: Chief Executive Officer
[CORPORATE SEAL]
"SUNBELT:"
ATTEST: SUNBELT AUTOMOTIVE GROUP, INC.
BY: /s/ STEPHEN C. WHICKER BY: /s/ CHARLES K. YANCEY.
------------------------------ -----------------------------
Name: Stephen C. Whicker Name: Charles K. Yancey
Title: Secretary & General Counsel Title: Chief Executive Officer
[CORPORATE SEAL]
-5-
75
THE "COMPANIES:"
ATTEST: WADE FORD, INC.
BY: /s/ K. LAMAR LESTER BY: /s/ ALAN K. ARNOLD
------------------------------ -----------------------------
Name: K. Lamar Lester Name: Alan K. Arnold
Title: Secretary & Treasurer Title: President
[CORPORATE SEAL]
ATTEST: WADE FORD BUFORD, INC.
BY: /s/ JOHN KENNEDY BY: /s/ ALAN K. ARNOLD
------------------------------ -----------------------------
Name: John Kennedy Name: Alan K. Arnold
Title: Secretary & Treasurer Title: President
[CORPORATE SEAL]
THE "STOCKHOLDERS"
/s/ ALAN K. ARNOLD [SEAL]
---------------------------
Alan K. Arnold
/s/ GARY R. BILLINGS [SEAL]
---------------------------
Gary R. Billings
Mildred S. Arnold Custodian for
Kelly L. Arnold under the Uniform
Transfer to Minor Act of Georgia:
/s/ MILDRED ARNOLD [SEAL]
---------------------------
By: Mildred Arnold, Custodian
Mildred S. Arnold Custodian for
Brett D. Arnold under the Uniform
Transfer to Minor Act of Georgia:
/s/ MILDRED ARNOLD [SEAL]
---------------------------
By: Mildred Arnold, Custodian
-6-
76
Mildred S. Arnold Custodian for
Kristie A. Arnold under the Uniform
Transfer to Minor Act of Georgia:
/s/ MILDRED ARNOLD [SEAL]
---------------------------
By: Mildred Arnold, Custodian
Mildred S. Arnold Custodian for
Alan Chad Arnold under the Uniform
Transfer to Minor Act of Georgia:
/s/ MILDRED ARNOLD [SEAL]
---------------------------
By: Mildred Arnold, Custodian
-7-
77
THIRD AMENDMENT TO
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
This THIRD AMENDMENT TO AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
(this "Amendment") is entered into as of April 28, 1998 by and among BOOMERSHINE
AUTOMOTIVE GROUP, INC., a Georgia corporation ("BAG"), B.A.G. GEORGIA I, INC., a
Georgia corporation ("Sub I"), B.A.G. GEORGIA II, INC., a Georgia corporation
("Sub II") (Sub I and Sub II are hereinafter individually referred to as a "Sub"
and collectively referred to as the "Subs"), SUNBELT AUTOMOTIVE GROUP, INC., a
Georgia corporation ("Sunbelt") and WADE FORD, INC., a Georgia corporation, and
WADE FORD BUFORD, INC., a Georgia corporation (individually, a "Company" and
collectively, the "Companies"), and the stockholder(s) listed on the signature
pages hereof (each, a "Stockholder" and, if more than one, collectively, the
"Stockholders"). BAG, the Subs, Sunbelt, the Companies and the Stockholders are
referred to individually as a "Party" and collectively as the "Parties."
W I T N E S S E T H :
WHEREAS, all Parties except Sunbelt are parties to that certain
Agreement and Plan of Merger and Reorganization entered into as of November 21,
1997, which was amended by an Amendment to Agreement and Plan of Merger and
Reorganization dated January 19, 1998 and the Second Amendment to Agreement and
Plan of Merger and Reorganization dated March 31 1998 (the "Agreement"); and
WHEREAS, pursuant to the Second Amendment to Agreement and Plan of
Merger and Reorganization dated March 31, 1998 and an Assignment Instrument
dated March 31, 1998, BAG and the Subs assigned to Sunbelt, and Sunbelt assumed
from BAG and the Subs, all of BAG's and the Subs' right, title and interest in
and to and all of their obligations under the Agreement; and
WHEREAS, the Parties desire to further amend the Agreement, with such
amendment to be effective as set forth in this Amendment.
NOW, THEREFORE, in consideration of the mutual terms, conditions and
other agreements set forth herein, the Parties hereto hereby agree as follows:
1. EFFECTIVE DATE OF AMENDMENT. The Parties agree that this Amendment
shall be effective as of April 28, 1998.
2. RE-DEFINING THE TERM "CLOSING DATE DEADLINE". As a result of the time
consuming nature of the various requirements for the consummation of the
transactions contemplated by this Agreement, the Parties agree that in the
section captioned "Certain Definitions" beginning on page 2 of the Agreement,
the following definition on page 3 thereof is deleted in its entirety:
"'Closing Date Deadline' shall mean April 30, 1998.'"
The Parties agree that the following definition is substituted
therefor:
-1-
78
"'Closing Date Deadline' shall mean June 30, 1998.'"
3. PURCHASE AND SALE OF THE SHARES. The Parties hereby agree that:
a. Article 1, Section 1.1(a) of the Agreement is amended by deleting
"FIFTEEN MILLION AND NO/100 DOLLARS ($15,000,000.00)" and substituting therefor
"FOURTEEN MILLION FIVE HUNDRED THOUSAND AND NO/100 DOLLARS ($14,500,000.00)";
and
b. Article 1, Section 1.1(a)(ii)(A) of the Agreement is amended by
deleting "ELEVEN MILLION Dollars ($11,000,000.00)" and substituting therefor
"TEN MILLION SIX HUNDRED AND FIFTY THOUSAND AND NO/100 DOLLARS
($10,650,000.00)"; and
c. Article 1, Section 1.1(a)(ii)(B) of the Agreement is amended by
deleting "FOUR MILLION Dollars ($4,000,000.00)" and substituting therefor "THREE
MILLION EIGHT HUNDRED AND FIFTY THOUSAND AND NO/100 DOLLARS ($3,850,000.00)".
4. MINIMUM REQUIREMENTS. The Parties hereby agree that:
a. Article 2, Section 2.1 of the Agreement is hereby deleted in
its entirety, and Sections 2.2, 2.3 and 2.4 are respectively re-captioned as
Sections 2.1, 2.2 and 2.3.
b. Article 2, Section 2.2 (which becomes Section 2.1 on the
effective date of this Amendment) is amended by the deletion of the first two
sentences of said section in their entirety and the substitution of the
following therefor:
"The Parties intend and understand that the Companies shall be
delivered to the Subs on the Closing Date in substantially the
same financial condition as reflected on the audited financial
statements of the Companies prepared as of December 31, 1997
by Pyke & Pierce, CPAs, reduced by FOUR HUNDRED AND FIFTY
THOUSAND DOLLARS ($450,000.00), which the Parties previously
agreed would be distributed by the Companies to the
Shareholders in 1997 but which the Parties now agree has been
or will be distributed in 1998 prior to the Closing. No other
distributions shall be made from the Companies other than
distributions attributable to 1998 interim earnings, if any,
as described below in this Section 2.1 (formerly captioned as
Section 2.2) of the Agreement."
c. Because of a change by Ford Motor Company in its monthly
Factory Statements reporting form, the references in the Agreement relative to
1998 interim earnings which refer to "line 28" of each Company's monthly Factory
Statements shall be changed to refer to "line 29, page 2, Net Profit After Tax"
of each Company's monthly Factory Statements.
d. The first sentence of Article 2, Section 2.2(a) (which becomes
Section 2.1(a) on the effective date of this Amendment) is hereby deleted in its
entirety and replaced with the following:
-2-
79
"If the Companies earn a profit for the Interim Period, then
BAG shall pay to the Stockholders, on a dollar for dollar
basis, the following amount by wire transfer or delivery of
other immediately available funds on or before the Interim Due
Date (as hereinafter defined): The entire amount of the 1998
Interim Profits (as hereinafter defined) of the Companies less
any distributions made by the Companies to the Stockholders
during the Interim Period (other than the $450,000.00
distribution described above in this Section 2.1 (formerly
captioned as Section 2.2) of the Agreement) (the "1998 Interim
Profit Reimbursement")."
5. USE OF DEFINED TERMS; ENTIRE AGREEMENT. All capitalized terms that are
used but not expressly defined in this Amendment have the meanings ascribed to
them in the Agreement, and the definitions of those terms in the Agreement are
incorporated by reference in this Amendment. Each reference to the Agreement
shall be deemed to refer to the Agreement as amended by this Amendment and the
prior Amendments dated January 19, 1998 and March 31, 1998. This Amendment and
the documents contemplated by it record the final, complete, and exclusive
understanding between the Parties regarding the modification of the Agreement
described herein. Except as amended and modified by this Amendment and the prior
Amendment dated January 19, 1998 and March 31, 1998, the Agreement remains in
full force and effect in accordance with its respective terms.
6. GOVERNING LAW. This Amendment 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.
IN WITNESS WHEREOF, the Parties have caused this Amendment to be duly executed,
effective as of the date and year first above written.
"BAG:"
ATTEST: BOOMERSHINE AUTOMOTIVE GROUP, INC.
BY: /s/ STEPHEN C. WHICKER BY: /s/ CHARLES K. YANCEY
------------------------------ -----------------------------
Name: Stephen C. Whicker Name: Charles K. Yancey
Title: Assistant Secretary Title: Secretary & Treasurer
[CORPORATE SEAL]
"SUB :"
ATTEST: B.A.G. GEORGIA I, INC.
BY: /s/ STEPHEN C. WHICKER BY: /s/ CHARLES K. YANCEY
------------------------------ -----------------------------
Name: Stephen C. Whicker Name: Charles K. Yancey
Title: Secretary Title: Chief Executive Officer
[CORPORATE SEAL]
-3-
80
"SUB II:"
ATTEST: B.A.G. GEORGIA II, INC.
BY: /s/ STEPHEN C. WHICKER BY: /s/ CHARLES K. YANCEY.
------------------------------ -----------------------------
Name: Stephen C. Whicker Name: Charles K. Yancey
Title: Secretary Title: Chief Executive Officer
[CORPORATE SEAL]
"SUNBELT:"
ATTEST: SUNBELT AUTOMOTIVE GROUP, INC.
BY: /s/ STEPHEN C. WHICKER BY: /s/ CHARLES K. YANCEY.
------------------------------ -----------------------------
Name: Stephen C. Whicker Name: Charles K. Yancey
Title: Secretary & General Counsel Title: Chief Executive Officer
[CORPORATE SEAL]
THE "COMPANIES:"
ATTEST: WADE FORD, INC.
BY: /s/ K. LAMAR LESTER BY: /s/ ALAN K. ARNOLD
------------------------------ -----------------------------
Name: K. Lamar Lester Name: Alan K. Arnold
Title: Secretary & Treasurer Title: President
[CORPORATE SEAL]
ATTEST: WADE FORD BUFORD, INC.
BY: /s/ JOHN KENNEDY BY: /s/ ALAN K. ARNOLD
------------------------------ -----------------------------
Name: John Kennedy Name: Alan K. Arnold
Title: Secretary & Treasurer Title: President
[CORPORATE SEAL]
THE "STOCKHOLDERS"
/s/ ALAN K. ARNOLD [SEAL]
---------------------------
Alan K. Arnold
/s/ GARY R. BILLINGS [SEAL]
---------------------------
Gary R. Billings
-4-
81
Mildred S. Arnold Custodian for Kelly L.
Arnold under the Uniform Transfer to Minor
Act of Georgia:
/s/ MILDRED ARNOLD [SEAL]
---------------------------
By: Mildred Arnold, Custodian
Mildred S. Arnold Custodian for Brett D.
Arnold under the Uniform Transfer to Minor
Act of Georgia:
/s/ MILDRED ARNOLD [SEAL]
---------------------------
By: Mildred Arnold, Custodian
Mildred S. Arnold Custodian for Kristie A.
Arnold under the Uniform Transfer to Minor
Act of Georgia:
/s/ MILDRED ARNOLD [SEAL]
---------------------------
By: Mildred Arnold, Custodian
Mildred S. Arnold Custodian for Alan Chad
Arnold under the Uniform Transfer to Minor
Act of Georgia:
/s/ MILDRED ARNOLD [SEAL]
---------------------------
By: Mildred Arnold, Custodian
-5-
82
FIFTH AMENDMENT TO
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
This FIFTH AMENDMENT TO AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
(this "Amendment") is entered into as of July 31, 1998 by and among BOOMERSHINE
AUTOMOTIVE GROUP, INC., a Georgia corporation ("BAG"), B.A.G. GEORGIA I, INC., a
Georgia corporation ("Sub I"), B.A.G. GEORGIA II, INC., a Georgia corporation
("Sub II") (Sub I and Sub II are hereinafter individually referred to as a "Sub"
and collectively referred to as the "Subs"), SUNBELT AUTOMOTIVE GROUP, INC., a
Georgia corporation ("Sunbelt") and WADE FORD, INC., a Georgia corporation, and
WADE FORD BUFORD, INC., a Georgia corporation (individually, a "Company" and
collectively, the "Companies"), and the stockholder(s) on the signature pages
hereof (each, a "Stockholder" and, if more than one, collectively, the
"Stockholders"). BAG, the Subs, Sunbelt, the Companies and the Stockholders are
referred to individually as a "Party" and collectively as the "Parties."
WITNESSETH:
WHEREAS, the Parties are parties to that certain Agreement and Plan of
Merger and Reorganization entered into as of November 21, 1997, which was
amended by an Amendment to Agreement and Plan of Merger and Reorganization dated
January 19, 1998, a Second Amendment to Agreement and Plan of Merger and
Reorganization dated March 31, 1998, a Third Amendment to Agreement and Plan of
Merger and Reorganization dated April 28, 1998, and a Fourth Amendment to the
Agreement and Plan of Merger and Reorganization dated June 24, 1998 (the
"Agreement"); and
WHEREAS, pursuant to the Second Amendment to Agreement and Plan of
Merger and Reorganization dated March 31, 1998 and an Assignment Instrument
dated March 31, 1998, BAG and the Subs assigned to Sunbelt, and Sunbelt assumed
from BAG and the Subs, all of BAG's and the Subs' right, title and interest in
and to and all of their obligations under the Agreement; and
WHEREAS, the Parties desire to further amend the Agreement, with such
amendment to be effective as set forth in this Amendment.
NOW, THEREFORE, in consideration of the mutual terms, conditions and
other agreements set forth herein; the Parties hereto hereby agree as follows:
1. EFFECTIVE DATE OF AMENDMENT. The Parties agree that this Amendment
shall be effective as of July 31, 1998.
2. RE-DEFINING THE TERM "CLOSING DATE DEADLINE". In order to accommodate
the consummation of the Sunbelt IPO contemplated as a Closing condition by
Sections 6.20 and 7.6 of the Agreement, the Parties agree that in the section
captioned "Certain Definitions" beginning on page 2 of the Agreement, the
following definition on page 3 thereof, as such definition was amended by the
Third Amendment to Agreement and Plan of Merger and Reorganization, is deleted
in its entirety:
83
"'Closing Date Deadline' shall mean July 31, 1998."
The Parties agree that the following definition is substituted
therefor:
"'Closing Date Deadline' shall mean August 26, 1998."
4. USE OF DEFINED TERMS; ENTIRE AGREEMENT. All capitalized terms that are
used but not expressly defined in this Amendment have the meanings ascribed to
them in the Agreement, and the definitions of those terms in the Agreement are
incorporated by reference in this Amendment. Each reference to the Agreement
shall be deemed to refer to the Agreement as amended by this Amendment and the
prior Amendments dated January 19, 1998, March 31, 1998, April 28, 1998, and
June 24, 1998. This Amendment and the documents contemplated by it record the
final, complete, and exclusive understanding between the Parties regarding the
modification of the Agreement described herein. Except as amended and modified
by this Amendment and the prior Amendment dated January 19, 1998, March 31,
1998, April 28, 1998, and June 24, 1998 the Agreement remains in full force and
effect in accordance with its respective terms.
5. GOVERNING LAW. This Amendment 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.
6. COUNTERPARTS. This Amendment may be signed in two or more counterparts,
each of which shall be deemed an original but all of which, when taken together,
shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Parties have caused this Amendment to be duly executed,
effective as of the date and year first above written.
"BAG:"
ATTEST: BOOMERSHINE AUTOMOTIVE GROUP, INC.
BY: BY:
------------------------------ ------------------------------
Name: Name:
----------------------- -----------------------
Title: Title:
----------------------- -----------------------
[CORPORATE SEAL]
(Signatures continued on following page)
84
(Signatures continued from previous page)
"SUB I:"
ATTEST: B.A.G. GEORGIA I, INC.
BY: BY:
------------------------------ ------------------------------
Name: Name:
----------------------- -----------------------
Title: Title:
----------------------- -----------------------
[CORPORATE SEAL]
"SUB II:"
ATTEST: B.A.G. GEORGIA II, INC.
BY: BY:
------------------------------ ------------------------------
Name: Name:
----------------------- -----------------------
Title: Title:
----------------------- -----------------------
[CORPORATE SEAL]
"SUNBELT:"
ATTEST: SUNBELT AUTOMOTIVE GROUP, INC.
BY: BY:
------------------------------ ------------------------------
Name: Name:
----------------------- -----------------------
Title: Title:
----------------------- -----------------------
[CORPORATE SEAL]
THE "COMPANIES:"
ATTEST: WADE FORD, INC.
BY: /s/ Joy Lyn Arnold BY: /s/ Alan K. Arnold
------------------------------ ------------------------------
Name: Joy Lyn Arnold Name: Alan K. Arnold
----------------------- -----------------------
Title: Title: President
----------------------- -----------------------
[CORPORATE SEAL]
(Signatures continued on following page)
85
(Signatures continued from previous page)
ATTEST: WADE FORD BUFORD, INC.
BY: /s/ John Kennedy BY: /s/ Gary R. Billings
------------------------------ ------------------------------
Name: John Kennedy Name: Gary R. Billings
----------------------- -----------------------
Title: Sec.-Treas. Title: Vice-Pres.
----------------------- -----------------------
[CORPORATE SEAL]
THE "STOCKHOLDERS:"
[SEAL]
-----------------------------
Alan K. Arnold
/s/ Gary R. Billings [SEAL]
-----------------------------
Gary R. Billings
Mildred S. Arnold Custodian for
Kelly L. Arnold under the Uniform
Transfer to Minor Act of Georgia:
[SEAL]
-----------------------------
By: Mildred Arnold, Custodian
Mildred S. Arnold Custodian for
Brett D. Arnold under the Uniform
Transfer to Minor Act of Georgia:
[SEAL]
-----------------------------
By: Mildred Arnold, Custodian
Mildred S. Arnold Custodian for
Kristie A. Arnold under the Uniform
Transfer to Minor Act of Georgia:
[SEAL]
-----------------------------
By: Mildred Arnold, Custodian
(Signatures continued on following page)
4
86
(Signatures continued from previous page)
ATTEST:
WADE FORD BUFORD, INC.
BY: BY:
------------------------------ ------------------------------
Name: Name:
----------------------- -----------------------
Title: Title:
----------------------- -----------------------
[CORPORATE SEAL]
THE "STOCKHOLDERS:"
/s/ Alan K. Arnold [SEAL]
-----------------------------
Alan K. Arnold
[SEAL]
-----------------------------
Gary R. Billings
Mildred S. Arnold Custodian for
Kelly L. Arnold under the Uniform
Transfer to Minor Act of Georgia:
/s/ Mildred Arnold POA [SEAL]
-----------------------------
By: Mildred Arnold, Custodian
Mildred S. Arnold Custodian for
Brett D. Arnold under the Uniform
Transfer to Minor Act of Georgia:
/s/ Mildred Arnold POA [SEAL]
-----------------------------
By: Mildred Arnold, Custodian
Mildred S. Arnold Custodian for
Kristie A. Arnold under the Uniform
Transfer to Minor Act of Georgia:
/s/ Mildred Arnold POA [SEAL]
-----------------------------
By: Mildred Arnold, Custodian
(Signatures continued on following page)
87
(Signatures continued from previous page)
Mildred S. Arnold Custodian for Alan
Chad Arnold under the Uniform
Transfer to Minor Act of Georgia:
/s/ Mildred Arnold POA [SEAL]
-----------------------------
By: Mildred Arnold, Custodian