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EXHIBIT 10.21
SUPPLEMENTAL AGREEMENT TO
DEALER SALES AND SERVICE AGREEMENT
(PUBLICLY TRADED COMPANY)
THIS SUPPLEMENTAL AGREEMENT (this "Supplemental Agreement"), dated as
of September ___, 1997 is entered into among Foyt Motors, Inc. ("Dealer"),
Group 1 Automotive, Inc. ("Public Company") and American Isuzu Motors Inc.
("Distributor").
WHEREAS, Distributor and Dealer are parties to a Dealer Sales and
Service Agreement dated June 6, 1996 (the "Dealer Agreement") which authorizes
Dealer to conduct dealership operations from the Dealership Locations
identified in the Dealer Agreement;
WHEREAS, upon the consummation of an initial public offering by Public
Company, Dealer will become a wholly-owned subsidiary of Public Company (the
"Acquisition");
WHEREAS, in accordance with the Dealer Agreement, Dealer has requested
Distributor's consent to the Acquisition; and
WHEREAS, Distributor is willing to furnish its consent to the
Acquisition in consideration for, and in reliance upon, certain understandings,
assurances and representations which the parties wish to document.
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, the parties hereby agree as follows:
1. LIMITATIONS UPON CHANGE OF EXECUTIVE MANAGER
A. Designation of Executive Manager. As set forth in
Section 4 of the Dealer Agreement, Xxxxxx Xxxxxxxxxx shall be Executive Manager
of Dealer. Dealer agrees that Executive Manager shall have complete an
irrevocable authority to make all decisions, and enter into any and all
necessary business commitments, required in the normal course of conducting
dealership operations on behalf of Dealer. Dealer shall not revoke, modify or
otherwise impose limitations upon such authority without the prior written
consent of Distributor.
B. Change of Executive Manager. Without limiting the
restrictions set forth in the Dealer Agreement, the removal or withdrawal of
Executive Manager without Distributor's prior written consent shall constitute
grounds for termination of the Dealer Agreement, subject to applicable state
law.
2. LIMITATIONS UPON CHANGES IN OWNERSHIP
A. Change in Ownership. Dealer and Public Company
hereby represent and warrant that upon consummation of Public Company's initial
public offering, Dealer will be a wholly-owned subsidiary of Public Company.
Given the control of Public Company over Dealer,
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and Distributor's strong interest in assuring that those who own and control
Distributor's dealerships have interests consistent with those of Distributor,
Dealer and Public Company agree that (i) any change in the ownership of Dealer,
or (ii) the acquisition by any person, or any persons acting as a group, of
more than 20% of the issued and outstanding capital stock of Public Company,
shall be considered a change in ownership of Dealer under the terms of the
Dealer Agreement, and shall be subject to the provisions of the Dealer
Agreement and subparagraph B below.
B. Distributor's Rights Upon Change in Ownership.
Upon the occurrence of any event described in subparagraph A above, if
Distributor reasonably concludes that the transferee or acquiring person or
entity does not have interests compatible with those of Distributor or is
otherwise not qualified to have an ownership interest in the dealerships at the
Dealership Locations, then within 90 days of receipt of written notice from
Distributor, Dealer agrees to: (i) transfer the assets associated with Dealer
to a third party acceptable to the Distributor, (ii) voluntarily terminate the
Dealer Agreement, or (iii) provide evidence to Distributor that such person or
entity no longer has such an ownership interest in Dealer or Public Company.
In the event that Dealer enters into an agreement to transfer its assets to a
third party as set forth in (i) above, Distributor shall have a right of first
refusal to purchase such assets in accordance with the terms and procedures set
forth in subparagraph C below, and subject to the terms of applicable state
law. Dealer and Public Company agree that if an ownership interest is acquired
in Public Company by a person or entity which notifies Public Company via
Schedule 13D filed with the Securities and Exchange Commission, Dealer shall
advise Distributor in writing, and attach a copy of that Schedule.
C. Exercise of Right of First Refusal. Prior to
exercising its right of first refusal pursuant to subparagraph B above,
Distributor shall have a reasonable opportunity to inspect the assets,
including real estate, before making its decision. If Dealer has entered into
a bona fide written buy/sell agreement, the purchase price and other terms of
sale will be those set forth in such agreement and any related documents,
unless Dealer and Distributor agree to other terms. Upon Distributor's
request, Dealer agrees to provide all documents relating to the proposed
transfer. Dealer refuses to provide such documentation or states that such
documents do not exist, it will be presumed that the agreement is not bona
fide. In the absence of a bona fide written buy/sell agreement, the purchase
price of the dealership assets will be determined by good faith negotiations by
Dealer and Distributor. If agreement cannot be reached within a reasonable
time, the price and other terms of sale will be established by arbitration
according to the rules of the American Arbitration Association. Dealer agrees
to transfer the assets by Warranty Deed where possible, conveying marketable
title free and clear of liens and encumbrances. The Deed will be in proper
form for recording and Dealer will deliver complete possession of the assets
when the Deed is delivered. Dealer will also furnish copies of any easements,
licenses or other documents affecting the property and assign any permits or
licenses necessary for the conduct of Dealer's options. Distributor's rights
under this section may be assigned to any third party and in connection with
any such assignment, Distributor will guarantee full payment of the purchase
price by the assignee. Distributor's rights under this paragraph C shall be
subject to the terms of applicable state law.
3. LIMITATIONS UPON NUMBER AND LOCATIONS OF DEALERSHIPS
Public Company acknowledges that Distributor's consent is
required for the acquisition of each new Isuzu point and the Distributor's
consent to the number and locations of
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dealerships which may be owned by Public Company or any subsidiary of Public
Company will be given on a case by case basis. Dealer shall provide such
documentation as is reasonably requested by Distributor regarding the ownership
interests of all such persons and entities in Distributor's dealerships. In
the event that Dealer or Public Company shall acquire ownership or control of
more than one of Distributor's dealerships, then Dealer and/or Public Company
shall obtain separate motor vehicle licenses, and shall maintain separate
financial statements, for each dealership.
4. WORKING CAPITAL REQUIREMENTS
Dealer shall maintain, at all times, sufficient working
capital to meet or exceed the minimum net working capital standards for Dealer
as determined from time to time by Distributor consistent with its standard
policies. Dealer shall provide such documentation as is reasonably requested
by Distributor to assure compliance with this requirement. Public Company
agrees to submit an annual consolidated balance sheet for the combined
dealership operations of Public Company. Public Company agrees, upon
Distributor's request, to provide Distributor with copies of the materials
filed by Public Company with the Securities and Exchange Commission.
5. INDEMNITY
Public Company further agrees to indemnify and hold
Distributor harmless from and against any and all claims of the shareholders of
Public Company under applicable federal and state securities laws arising out
of the initial public offering of capital stock of the Public Company, and all
liabilities, losses, damages, costs and expenses incurred in connection
therewith, unless a final determination is made that Distributor was in fact
liable for such claims, liabilities, losses, damages, costs or expenses.
6. MISCELLANEOUS
A. Effect of Supplemental Agreement. The parties agree
that this Supplemental Agreement is intended to supplement the terms of the
Dealer Agreement and not to limit the rights and obligations of the parties
contained therein. This Supplemental Agreement is hereby incorporated into the
Dealer Agreement and made a part thereof. In the event that any of the
provisions of this Supplemental Agreement are in actual conflict with other
provisions of the Dealer Agreement, the provisions contained in this
Supplemental Agreement shall govern. In the event that the policies of
Distributor with regard to the issues addressed herein are hereinafter
modified, the parties agree to review such modifications to determine whether
modifications of this Supplemental Agreement are appropriate.
B. Construction. This Supplemental Agreement shall be
governed by and construed in accordance with the laws of the State of
California. The failure of either party to enforce any of the provisions of
this Supplemental Agreement or the failure to exercise any election provided
for herein shall in no way be considered to be a waiver of such provisions or
elections. All capitalized terms used herein and not defined herein shall have
the meanings set forth in the Dealer Agreement.
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C. Alternative Dispute Resolution. In the event of any
dispute between the parties regarding the Dealer Agreement or this Supplemental
Agreement, Dealer and Public Company agree to participate in any alternative
dispute resolution procedures specified in the standard policies of
Distributor. Upon final determination through such dispute resolution, each
party shall have recourse to a review de novo by the appropriate state court or
administrative agency consistent with the provisions of state law. The parties
agree that should a party making such appeal lose the issues presented on
appeal, then that party shall pay the reasonable expenses, including reasonable
attorneys' fees, of the other party for the defense of such de novo review.
D. No Third Party Beneficiaries. Nothing in this
Supplemental Agreement or the Dealer Agreement shall be construed to confer any
rights upon any person not a party hereto or thereto, nor shall it create in
any party an interest as a third party beneficiary of this Supplemental
Agreement or the Dealer Agreement.
E. Condition Precedent. Notwithstanding anything to the
contrary contained herein, the parties acknowledge that the provisions of this
Supplemental Agreement shall not be applicable until such time as Public
Company completes a public offering of its stock.
IN WITNESS WHEREOF, the parties have executed this Supplemental
Agreement effective as of the date set forth in the introductory paragraph
hereof.
AMERICAN ISUZU MOTORS, INC. FOYT MOTORS, INC.
By: /s/ X. X. XXXXXXX By:
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Name: X. X. Xxxxxxx Name:
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Title: Sr. V. P. and General Title:
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Manager Light Vehicles
GROUP 1 AUTOMOTIVE, INC.
By: /s/ F. R. XXXXXX
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Name: F. R. Xxxxxx
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Title: VP Corporate Services
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