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EXHIBIT 99.1
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (the "Agreement") is made and entered into on
and effective as of May 23, 2000, by and among A&B CAPITAL CORPORATION, a Nevada
corporation ("Purchaser") and CHARLES B. BREWER, an individual ("Brewer").
WITNESSETH:
WHEREAS, pursuant to Findings of Fact and Conclusions of Law and Order
Confirming Southmark Corporation's Fourth Amended and Restated Plan of
Reorganization, as modified, entered July 23, 1990 (the "Order") in the case
styled In Re: Southmark Corporation, Debtor, Case No. 389-36324-SAF-11, in the
United States Bankruptcy Court for the Northern District of Texas, Dallas
Division (the "Proceeding"), Southmark Corporation ("Southmark") canceled "all
existing Equity Securities" and issued certain additional securities, including
shares of its Redeemable Series A Preferred Stock, par value $0.01 per share
(the "Preferred Stock") and new Common Stock, par value $0.01 per share (the
"Common Stock");
WHEREAS, the Preferred Stock is subject to the obligations under and is the
benefit of the rights granted pursuant to that certain Certificate of
Designation, Preferences and Rights of Redeemable Series A Cumulative
Liquidation Preference Preferred Stock dated August 10, 1990, as filed with and
accepted by the Secretary of State of Georgia (the "Certificate");
WHEREAS, Brewer acquired and presently holds 178,270.25 shares of Preferred
Stock (which constitutes approximately 6.3% of the 2,831,997 shares of Preferred
Stock of Southmark presently outstanding) and 2,358 shares of Common Stock
(which constitutes less than 0.01% of the 36,761,096 shares of Southmark Common
Stock outstanding) and Brewer has no options, warrants, calls or rights to
acquire any shares of Preferred Stock or Common Stock of Southmark;
WHEREAS, Purchaser desires to acquire from Brewer, and Brewer desires to
sell all of the shares of Preferred Stock and Common Stock of Southmark
presently held by Brewer, all under and subject to the terms and conditions
hereinafter set forth.
ACCORDINGLY, in consideration of the foregoing premises, the mutual
promises, covenants, representations and warranties contained herein, and on the
terms and subject to the conditions set forth herein, and for other good and
valuable consideration, the receipt, sufficiency and adequacy of which is hereby
acknowledged by all of the parties hereto, Purchaser and Brewer hereby agree as
follows:
1. Adoption of Recitals. The parties hereto do hereby adopt and confirm the
foregoing recitals in the same manner as if fully re-copied herein.
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2. Purchase and Sale of Stock. Subject to the terms and conditions of this
Agreement, including the approval by the Board of Directors of Southmark
pursuant to Article Tenth of the Articles of Incorporation, Brewer hereby agrees
to sell, convey, transfer and assign to Purchaser, and the Purchaser hereby
agrees to purchase and acquire at the "Closing" (as that term is defined below)
for the "Consideration" set forth or determined as provided in paragraph 3 of
this Agreement, all of the shares of Preferred Stock and Common Stock of
Southmark owned by Brewer, same to be at least 178,270.25 shares of Preferred
Stock, and at least 2,358 shares of Common Stock of Southmark, all free and
clear of any liens or encumbrances of any kind or character. At Closing, Brewer
will deliver or cause to be delivered to Purchaser, free and clear of all liens
and encumbrances(other than any restrictions imposed by applicable federal and
state securities laws) of any kind or character, certificates representing the
number of shares of Preferred Stock and Common Stock to be sold as set forth
below, together with appropriate Stock Powers separate from certificates
executed in blank sufficient for transfer into the name of Purchaser or, in the
alternative, appropriate irrevocable instructions to make book-entry transfers
under the Depository Trust Company ("DTC") system to transfer all of such shares
to Purchaser, same to constitute at Closing, in the aggregate, all of the shares
of Preferred Stock and Common Stock of Southmark held at the Closing by Brewer.
At the time of such transfer at the Closing, Brewer shall have obtained any and
all necessary and appropriate releases of any liens or encumbrances (other than
any restrictions imposed by applicable federal and state securities laws) prior
to (or simultaneously with) the Closing relating to the shares of Preferred
Stock and Common Stock to be sold to Purchaser hereunder which shall be in a
form and substance satisfactory to Purchaser and its counsel.
3. Consideration. The Purchase Price to be paid by Purchaser to Brewer for
all of the shares of Preferred Stock and Common Stock shall be calculated on a
basis equal to $1.50 per share of Preferred Stock, in cash, up to a maximum of
$267,405.37, it being intended that the total Purchase Price for all shares of
Preferred Stock and Common Stock transferred shall be for such total, but if
less than 178,270.25 shares of Preferred Stock are sold, such amount may be
proportionately reduced on the basis of $1.50 per share. Purchaser intends that
Brewer may allocate at he deems appropriate between the Common Stock and
Preferred Stock, recognizing that Purchaser is not paying a premium to Brewer
for the number of shares of Preferred Stock of Southmark held by Brewer.
4. Closing of this Agreement. The closing of the transaction contemplated
by this Agreement (herein called the "Closing") shall take place at a location
mutually acceptable to Purchaser and Brewer at 2:00 p.m., local Dallas, Texas
time on a mutually acceptable date prior to the earlier of May 31, 2000, or five
"Business Days" (as that term is defined below) following the date that the
Board of Directors of Southmark has approved in writing such transaction
pursuant to Article Tenth of the Articles of Incorporation, as
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amended, of Southmark, or at such other place, time and date as shall be fixed
by mutual agreement among the parties hereto. The date on which the Closing
shall take place shall be hereinafter referred to as the "Closing Date." The
term "Business Day" shall mean a day on which business is regularly transacted
by national banks in Dallas, Dallas County, Texas, and shall not be a Saturday,
Sunday or national holiday.
5. Representations, Warranties and Covenants of Brewer. Brewer hereby
represents and warrants to Purchaser and covenants and agrees with the
Purchaser, that the following representations and warranties are true, complete
and correct on the date of this Agreement (except for those representations and
warranties which expressly speak to the Closing Date) and shall be true,
complete and correct on the Closing Date (except for those representations and
warranties which expressly speak to the date of this Agreement only) and shall
survive the Closing to the extent provided in paragraph 7 hereof.
(a) Capacity and Binding Obligations. Brewer has all requisite
capacity, power and authority to execute, deliver and perform his
obligations under this Agreement and each of the other documents
contemplated hereby to be executed by Brewer. This Agreement has been duly
executed and delivered on behalf of Brewer and constitutes a legal, valid
and binding obligation, enforceable in accordance with its terms. The
execution, delivery and performance of this Agreement by Brewer in the
consummation of the transactions contemplated hereby, do not require the
consent, waiver, approval, license or authorization of any "Person" (as
defined below) or any regulatory authority and will not, with or without
the giving of notice, or lapse of time, conflict with, violate, result in a
breach or acceleration of any obligation under or constitute a default
under any provision of any mortgage, lien, lease, agreement, contract,
instrument, order, judgment, decree, law, ordinance or regulation or any
restriction by which Brewer for the shares of Preferred Stock or Common
Stock of Southmark is bound or affected, except, in each instance for any
required approval of the Board of Directors of Southmark pursuant to
Article Tenth of its Articles of Incorporation as amended. The term
"Person" shall mean an individual, corporation, general partnership,
limited partnership, limited liability company, trust or incorporated
organization or a government or any agency or political subdivision
thereof.
(b) Ownership of and Title to Stock. Brewer has and at Closing, will
have indefeasible title and full beneficial and record ownership of at
least 178,270.25 shares of Preferred Stock of Southmark and 2,358 shares of
Common Stock of Southmark, in each instance, free and clear of any liens,
claims, charges, options or
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encumbrances, with full power and authority to transfer (subject only to
applicable federal and state securities laws and approval by the Board of
Directors of Southmark) all of such shares of Preferred Stock and Common
Stock which will be sold and delivered to Purchaser pursuant to this
Agreement, and Purchaser will receive good and marketable title thereto,
free and clear of any liens, charges, options or other encumbrances created
by or attributable to Brewer, except to the extent that applicable federal
and state securities laws and any required approval by the Board of
Directors of Southmark constitute an encumbrance.
(c) Compliance with Applicable Law. Including his reliance upon the
Purchaser's representations in paragraph 6 below, Brewer will use his best
lawful efforts to comply with all applicable legal requirements in
connection with this Agreement and the Closing hereunder, including all
provisions of the Securities and Exchange Act of 1934, the Securities Act
of 1933, as same has been amended, and all rules and regulations
promulgated thereunder and any and all other federal and state laws and
regulations that may be applicable to the transactions referred to herein.
(d) No Brokers or Finders. Brewer represents and warrants that he has
not incurred nor is he liable for any finders, brokers, or similar fees or
commissions to any third Person whatsoever as the result of the execution
and delivery of this Agreement or the consummation of the transaction
contemplated hereby. Brewer shall indemnify and hold Purchaser harmless
from and against any and all claims for fees based on any alleged retention
of any such Person by or on behalf of or with respect to Brewer.
(e) Covenants of Access. Brewer will permit representatives of the
Purchaser to have the opportunity to review information relating to and
involving the litigation, other assets and opportunities and obligations of
Southmark and will coordinate with representatives of the Purchaser the
timing of various matters, record retention and replacement and all of the
matters involving Southmark from and after the date of this Agreement.
Brewer shall not cause Southmark to terminate any employee or discard any
records without the prior consent of the authorized representative of the
Purchaser unless this Agreement has been terminated pursuant to paragraph 9
below.
(f) Covenant to Remain in Position and Appoint Other Designees. Brewer
intends to remain in his present capacities as the Chairman of the Board,
President and Chief Executive Officer of Southmark until at least the later
of May 22, 2000, or five days after the distribution
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to be made to the "Other Preferred Shareholders" (as defined below)
described in paragraph 6(d) below is effective in accordance with this
Agreement and applicable law, provided, however, that Brewer may resign or
otherwise depart the employ at such time as he deems appropriate at any
time but not before appointing at least two designees of the Purchaser as
members of the Board of Directors of Southmark following the approval of
the transaction represented by this Agreement by Board of Directors (or
Transfer Review Committee or Transfer Review Officer) of Southmark. Brewer
further covenants that in his capacity as the sole member of the Board of
Directors he will approve the transaction reflected by this Agreement and
the "GBL Transaction" (as that phrase is defined in paragraph 8(b)(iv)
below). Brewer will make the appointment to the Board of Directors of at
least the two individuals designated by the Purchaser at the Closing.
6. Representations, Warranties and Covenants of Purchaser. Purchaser hereby
represents and warrants to Brewer covenants and agrees with Brewer that the
following representations and warranties are true, correct and complete on the
date of this Agreement (except for those representations and warranties which
expressly speak to the Closing Date) and shall be true, correct and complete on
the Closing Date (except for those representations and warranties which
expressly speak to the date of this Agreement only) and shall survive the
Closing to the extent provided in paragraph 7 hereof.
(a) Organization. Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of its state of incorporation
with the corporate power and authority to acquire and own the shares of
Preferred Stock and Common Stock of Southmark. This Agreement is a valid
and binding obligation of Purchaser enforceable in accordance with its
terms and Purchaser has the full power and authority (corporate and other)
to perform its obligations under this Agreement.
(b) Compliance with Applicable Law. Purchaser will use its best lawful
efforts to comply with all applicable legal requirements in connection with
this Agreement and the ownership of shares of Preferred Stock and Common
Stock, including all provisions of the Securities and Exchange Act of 1934,
the Securities Act of 1933, as same have been amended, and all rules and
regulations promulgated thereunder and any and all federal and state laws
and regulations that may be applicable to the transactions referred to
herein.
(c) Exempt Transaction. The shares of Preferred Stock and Common Stock
of Southmark are being acquired hereunder by Purchaser in a transaction
exempt from
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registration under applicable federal and state securities laws and in
accordance therewith, Purchaser advises that its acquisition of the shares
of Common Stock and Preferred Stock is for investment purposes only and not
with a view toward the distribution thereof to any other Person except in
compliance with the provisions of applicable federal and state securities
laws. Purchaser acknowledges that the shares of Preferred and Common Stock
of Southmark Purchaser acquires under this Agreement may be "restricted
securities" (as that term is defined in Rule 144 under the Securities Act
of 1933) and may not be sold or transferred except in compliance with
applicable federal and state securities laws.
(d) Covenant of Distribution. The Purchaser hereby commits to cause
Southmark following the Closing under this Agreement, but in no event later
than July 31, 2000, to have an amount of funds or other value calculated on
the basis of $1.50 per share of Preferred Stock (other than shares
purchased from Brewer and Grace Brothers, Ltd.) sufficient to enable
Southmark to make a cash distribution to all "Other Preferred Shareholders"
(defined to be all holders of Southmark Preferred Stock except Brewer,
Grace Brothers, Ltd. and/or the Purchaser) in an amount equal to $1.50 per
share of Preferred Stock held by the Other Preferred Shareholders. Any
funds required for such advance may be in the form of a loan or other
advance from or on behalf of the Purchaser to Southmark secured by a pledge
of the first recovery, if any, from the items of litigation currently in
process for Southmark, such that if collected dollars result from such
litigation, such funds would first be utilized to repay any loan or advance
with any excess remaining as an asset of Southmark.
7. Survival of Representations, Warranties and Covenants. All
representations, warranties and covenants and agreements of Brewer and Purchaser
hereunder shall, except as otherwise expressly stated in such item, survive the
date of this Agreement and the Closing Date until the applicable expiration of
the statute of limitations and all other documents delivered hereunder or to be
delivered by one party to the other party are true or will be true when
delivered and will survive the date of this Agreement and the Closing Date until
the applicable expiration of the statute of limitations except as otherwise
expressly stated in each such item or waived in writing. Each of Brewer and
Purchaser agree to indemnify, save and hold the other harmless from and against
any loss, claim, expense, damage or liability arising from or related to a
breach of any one or more of the representations, warranties, covenants and
agreements set forth in this Agreement.
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8. Conditions of Closing.
(a) Conditions Precedent to the Obligations of All Parties. The
respective obligations of each and all parties to consummate the
transactions contemplated by this Agreement at the Closing are subject to
the fulfillment prior to or at the Closing of each of the following
conditions, except as such parties may legally waive such conditions in
writing, and at Closing the duly authorized representatives of each of
Brewer and Purchaser shall each execute and deliver to the other a
certificate or certificates certifying as to such satisfaction or specific
waiver of same:
(i) On the Closing Date, there shall not be pending or threatened
any claim, action, suit or proceeding against any of the parties
hereto which, if adversely determined, might prevent or materially
hinder the consummation of the transactions contemplated by this
Agreement or any of them or result in the payment of substantial
damages as a result of any of the transactions contemplated by this
Agreement, or cause any party to violate any order or judgment or
otherwise materially impair the benefits of any party or parties
contemplated hereby, and no investigation by any governmental agency
shall be pending or threatened which might eventually result in any
such suit, action or proceeding.
(ii) The Board of Directors of Southmark shall have approved
unconditionally in writing the transactions contemplated by this
Agreement pursuant to Article Tenth of the Articles of Incorporation,
as amended, of Southmark.
(iii) The Board of Directors of Southmark shall have approved
unconditionally in writing the "GBL Transaction" (as that phrase is
defined below) pursuant to Article Tenth of the Articles of
Incorporation, as amended, of Southmark.
(b) Conditions Precedent to the Obligations of the Purchaser. All
obligations of the Purchaser to consummate the transactions contemplated by
this Agreement are subject to the fulfillment, prior to or at the Closing
of each of the following conditions, except as the Purchaser may legally
waive such conditions in writing:
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(i) Other than any representation or warranty made as of the
specified date (each of which needs to be true and correct only as of
such specified date) and except as otherwise contemplated or permitted
by this Agreement, all representations and warranties of Brewer
contained in this Agreement shall be true and correct in all respects
on and as of the Closing Date as if made on and as of the Closing Date
and Brewer shall deliver to Purchaser a certificate or certificates
dated at the Closing Date and executed on behalf of Brewer to such
effect.
(ii) The Purchaser shall have received appropriate documents
evidencing the transfer of all shares of Preferred Stock and Common
Stock of Southmark owned by Brewer which shall consist of at least
178,270.25 shares of Preferred Stock and 2,358 shares of Common Stock
of Southmark in accordance with the requirements of this Agreement.
(iii) There shall not have occurred a material adverse change
since the date of this Agreement in the condition, financial or
otherwise, of Southmark at Closing; provided that the ultimate
conclusion or outcome of any litigation pending on the date of this
Agreement to which Southmark is a party shall not be deemed a material
adverse change.
(iv) Any other consents, waivers, acknowledgments, etc., of all
third Persons, including those set forth on Exhibit "1" attached
hereto and incorporated herein, shall have been received on or prior
to the Closing Date and copies thereof delivered to the Purchaser.
(v) Grace Brothers, Ltd., an Illinois Partnership ("GBL") shall
have closed (or will simultaneously with the Closing hereunder, close)
the transaction between Purchaser and GBL resulting in Purchaser
acquiring from GBL at least 787,271 shares of Preferred Stock and
7,343,156 shares of Common Stock of Southmark (the "GBL Transaction").
(c) Conditions Precedent to Obligations of Brewer. All obligations of
Brewer to consummate the transactions contemplated by this Agreement are
subject to the fulfillment prior to or at the Closing of each of the
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following conditions, except as Brewer may legally waive such conditions in
writing:
(i) Other than a representation or warranty made as of a
specified date (each of which need to be true and correct only as of
such specified date) and except as otherwise contemplated or permitted
by this Agreement, all representations and warranties of the Purchaser
contained in this Agreement shall be true and correct in all respects
on and as of the Closing Date as if made on and as of the Closing
Date, and Purchaser shall deliver to Brewer a certificate or
certificates dated as of the Closing Date and executed by an
authorized representative of the Purchaser to such effect.
(ii) Purchaser shall have delivered to Brewer the cash
consideration required pursuant to paragraph 3 above in a form
satisfactory to the Purchaser and Brewer against delivery of
certificates for the shares of Preferred Stock and Common Stock or DTC
transfer on a "payment versus delivery" basis and all other documents
or instruments required to be so delivered to Brewer pursuant to the
terms of this Agreement shall have been delivered.
(iii) Purchaser shall have executed and delivered to Brewer the
"Springing Proxy" substantially in the form attached hereto as Exhibit
"2."
9. Termination. Notwithstanding any other provision of this Agreement, this
Agreement may be terminated by written notice of termination at any time before,
but not later than, the Closing hereunder as follows:
(a) By mutual consent of the Purchaser and Brewer acting through their
authorized representatives; or
(b) By the Purchaser upon notice in writing to Brewer if all other
conditions precedent set forth in paragraphs 8(a) and/or 8(b) have not been
fulfilled or waived; or
(c) By Brewer upon notice in writing to the Purchaser if all other
conditions precedent set forth in paragraphs 8(a) and/or 8(c) have not been
fulfilled or waived; or
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(d) By either Purchaser or Brewer if the Closing has not taken place
by the close of business on May 31, 2000.
In the event this Agreement is terminated, this Agreement shall forthwith become
void and of no further force or effect and there shall be no obligation on the
part of Brewer or the Purchaser except as specifically set forth in this
Agreement. The power of termination provided for in this paragraph when
exercised as herein provided, should only be effective upon delivery to the
other party of a notice in writing of such exercise signed on behalf of the
terminating party by its duly authorized representative. In the event this
Agreement is terminated in accordance with this paragraph by any of the parties
hereto, any such termination shall be without obligation or liability to any of
the other parties hereto except as expressly set forth in this Agreement.
10. Brewer Opportunity to Rescind. Assuming the purchase and sale of stock
described in paragraph 2 of this Agreement has been completed at the Closing and
not otherwise terminated pursuant to paragraph 9, in the event that the
Purchaser for any reason does not satisfy the covenants set forth in paragraph
6(d) above, prior to the close of business on July 31, 2000, unless Brewer shall
have agreed to an extension of such time, Brewer shall have the option at his
sole discretion to rescind the transaction ab initio upon written notice to the
Purchaser at any time prior to 4:00 p.m., local Dallas, Texas time on August 10,
2000. Such notice of rescission shall be accompanied by a tender to the
Purchaser of all consideration paid by Purchaser to Brewer pursuant to paragraph
3 of this Agreement, and upon receipt thereof, the Purchaser shall deliver to
Brewer all shares of Preferred Stock and Common Stock Purchaser acquired from
Brewer pursuant to paragraphs 2 and 3 of this Agreement. In the event Brewer
exercises such right of rescission on the basis of the failure of the occurrence
of the event required in paragraph 6(d) above, Brewer shall also again become
the sole Director of Southmark in the event he has resigned, and the Purchaser
will use its best lawful efforts to cause Brewer to be reelected as the Chairman
of the Board, President and Chief Executive Officer of Southmark and any
deputies or designees of the Purchaser serving as directors of Southmark shall
be deemed to have resigned from the Board, and Purchaser shall use its best
lawful efforts to cause such persons to submit any necessary written
resignations confirming same to Southmark. In the event such rescission occurs,
the parties to this Agreement, following completion of such rescission shall
have no further liability to each other with respect to the subject of this
Agreement. In the event Brewer does not elect rescission within the requisite
time period (as same may be extended), such opportunity to rescind shall be null
and void and of no further force or effect.
11. Miscellaneous.
(a) Costs and Expenses. Except as otherwise expressly provided for
this Agreement, each party hereto
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shall bear its own costs and expenses and fees incurred or assumed by such
party in the preparation or execution of this Agreement and in compliance
with the covenants and conditions herein, whether or not the transactions
contemplated hereby shall be consummated.
(b) Further Cooperation. To the extent that either of the Purchaser's
or Brewer's further approval or other action is deemed necessary or
desirable by any of other parties in order to effectuate the terms,
conditions and purposes of this Agreement and the conveyance of the shares
of Common Stock and Preferred Stock to the Purchaser, each of the parties
hereto hereby agree to execute all reasonable documents and take all
actions reasonably requested by the other party.
(c) Notices. Any notice or other communication required or permitted
to be given by this Agreement or any other document or instrument referred
to herein which has been executed in connection herewith must be given in
writing (which may be by telecopy, followed by mail or personal delivery)
and must be personally delivered or mailed by pre-paid certified or
registered mail, to the party to whom such notice or communication is
directed, at the address of such party set forth opposite his or its name
on the signature page to this Agreement. Subject to the other provisions of
this Agreement, any party may change its address (or redesignate the person
to whom such notice shall be delivered) for purposes of this Agreement by
giving notice of such change to the other party pursuant to this provision.
In all instances, any notice or other communication required or permitted
to be given by this Agreement shall only be effective upon actual receipt
thereof by the person intended to receive same.
(d) Amendments. Neither this Agreement nor any term hereof may be
changed, waived, discharged or terminated orally, but only by written
agreement among the parties hereto.
(e) Headings. The headings of sections or paragraphs of this Agreement
are inserted for convenience of reference only, and shall not be deemed to
constitute a part of this Agreement.
(f) Binding Effect. All terms and provisions of this Agreement shall
be binding upon and enure to the benefit of and be enforceable by the
heirs, legal representatives, successors and assigns of the parties hereto,
wherever applicable to such party.
(g) Entire Agreement. This Agreement and the Commitment Agreement
constitute the entire agreement among
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the parties hereto, supercedes any and all prior understandings and
arrangements, and may not be modified or amended except on or after the
date hereof by a writing executed by the party against whom such
modification or amendment is sought to be enforced. The failure of any of
the parties of this Agreement to insist upon strict adherence to any term
of this Agreement on one or more occasions shall not be deemed to be a
waiver or deprive such person or entity of the right thereafter to insist
upon strict adherence to that term or any other term of this Agreement. No
waiver of this Agreement, the obligations or conditions herein, shall be
valid unless the writing is signed by the party against whom said waiver is
sought to be enforced.
(h) Governing Law and Enforcement. This Agreement shall be construed
and enforced in accordance with the laws of the State of Texas, the state
in which it was negotiated, executed and delivered; provided that matters
relating to the obligations and/or duties of the Board of Directors of
Southmark may be governed by Georgia law. Should any clause, sentence or
paragraph of this Agreement be judicially or administratively declared to
be invalid, unenforceable or void under the laws of the State of Texas or
the United States of America or any agency or subdivision thereof, such
decision shall not have the effect of invalidating or voiding the remainder
of this Agreement and the parties hereto agree that the part or parts of
this Agreement so held to be invalid, unenforceable or void shall be deemed
to have been deleted herefrom and the remainder shall have been included
herein. In the event any party hereto shall fail to perform any of its
obligations under this Agreement, such party hereby agrees to pay all
reasonable expenses, including reasonable attorneys' fees, which may be
incurred by any party hereto which is successful in enforcing this
Agreement, whether or not any suit or legal proceeding shall be brought.
(i) No Third-Party Beneficiaries. This Agreement does not create and
shall not be construed as creating any rights enforceable by any person
other than the undersigned parties and their respective lawful successors
and assigns and other persons named herein and does not comply or release
and shall not be construed as implying or releasing, that any rights are
enforceable against any person or entity other than the undersigned parties
and their respective successors and assigns and the persons named herein.
(j) Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original for all
purposes and all of which
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constitute one and the same instrument and it shall not be necessary for
the proof of this Agreement that any party produces or accounts for more
than one such counterpart.
(k) Facsimile. This Agreement or any notices hereunder may be
transmitted by facsimile and it is the intent of the parties for the
facsimile of any autograph reproduced by a receiving facsimile machine to
be an original signature, and for the facsimile and any complete photocopy
of this Agreement or notice to be deemed an original counterpart.
EXECUTED of the date first above written.
Address for Notices:
A&B CAPITAL CORPORATION, a
Nevada corporation
10670 N. Central Expressway
Suite 600
Dallas, Texas 75231 By: Ronald F. Akin
ATTN: PRESIDENT -------------------------------------
214-692-4865 Name: Ronald F. Akin
214-750-0779 (facsimile) Title: President
9027 Woodhurst
Dallas, Texas 75234
(972)406-6775 (telephone) Charles B. Brewer
(972) 406-6724 (facsimile) ----------------------------------------
(214) 341-2542 (facsimile) Charles B. Brewer, individually
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EXHIBIT "1"
CONSENTS OF THIRD PERSONS TO BE OBTAINED
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EXHIBIT "2"
SPRINGING PROXY
This is a Springing Proxy made by A&B Capital Corporation, a Nevada
corporation (the "Holder"), which is effective only as provided herein and at
the times specified herein.
1. Definitions. As used in this Springing Proxy, the following terms have
the following meanings:
(a) "Proxy" shall mean the proxy granted by the Holder under paragraph
2 hereof.
(b) "Stock Purchase Agreement" shall mean the Stock Purchase Agreement
dated as of May ___, 2000 between Holder and Charles B. Brewer ("Brewer")
pursuant to which Holder has purchased certain shares of Redeemable Series
A Preferred Stock (the "Preferred Stock") and shares of Common Stock issued
by Southmark Corporation ("Southmark") from Brewer.
(c) "Shares" shall be and mean all of the shares of Preferred Stock
and Common Stock acquired by Holder from Brewer or acquired by Holder from
Grace Brothers, Ltd., same constituting in the aggregate as of the date of
this Springing Proxy 965,541.25 shares of Preferred Stock and 7,346,114
shares of Common Stock of Southmark or any securities issued in replacement
thereof or therefor pursuant to any merger or consolidation of Southmark
into another entity.
(d) "Event" shall be and mean (i) the failure by Holder to satisfy (to
the satisfaction of Brewer) the covenant set forth in paragraph 6(d) of the
Stock Purchase Agreement on or before July 31, 2000, or such later date as
may be agreed to in writing by Brewer, and (ii) the covenant set forth in
paragraph 6(d) remains unsatisfied for a period of 30 calendar days after
the date Brewer notifies Holder in writing of Brewer's decision to exercise
his right of recission under paragraph 10 of the Stock Purchase Agreement
and (iii) at the end of such 30 calendar day period, Brewer does in fact
exercise such right of recission.
2. Irrevocable Proxy. Immediately upon the occurrence of the Event, but not
otherwise, Holder hereby irrevocably appoints Brewer as its attorney and proxy
on its behalf and in its name to vote the Shares at any meeting of stockholders
of Southmark
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<PAGE> 16
and where any consent or action by stockholders is to be taken by written
consent or other action rather than at a meeting of stockholders, to execute on
Holder's behalf any such written consent or action by stockholders with respect
to any and all matters involving the election of directors or voting upon any
action required to be approved by stockholders of Southmark, except that such
proxy may not vote the Shares in favor of any action which, (m) if taken by such
stockholders would cause the loss to Southmark of any loss carry-forward or (n)
materially adversely affects the percentage interest of Holder represented by
such Shares or (o) would or could cause approval of a merger involving Southmark
or disposition of substantially all of Southmark's assets or a liquidation of
Southmark or (p) would or could cause an automatic conversion of the Preferred
Stock with or into Common Stock (each an "Excluded Item"); provided, however,
that if the Event continues for a period of one calendar year after the date
Brewer exercises his right of recission under paragraph 10 of the Stock Purchase
Agreement, the Excluded Items shall no longer be excluded from the Proxy, and
after such time, Brewer shall have the full power and authority to vote all of
the Shares at any meeting of stockholders of Southmark or if any consent or
action by stockholders is to be taken by written consent or action other than at
a meeting of stockholders, to execute on Holder's behalf any written consent or
action by stockholders without restriction.
3. Term. The Proxy, once effective, shall nevertheless terminate
immediately upon the first to occur of (x) the satisfaction of the covenant in
paragraph 6(d) to the satisfaction of Brewer or (y) the date which is one
calendar day following the date a distribution is actually made by Southmark to
the "Other Preferred Shareholders" (as that term is defined in the Stock
Purchase Agreement) of assets of a value of $1.50 per share of Preferred Stock
(such time is to be the "Expiration Time"). On the occurrence of the Expiration
Time, this Proxy shall be deemed to be null, void and of no further force or
effect.
4. Miscellaneous. This Proxy, once effective, is irrevocable until the
Expiration Time, is coupled with an interest in the Shares and has been granted
in connection with the Stock Purchase Agreement. This Proxy shall be binding
upon the heirs, successors and assigns of Holder (including any transferee of
the Shares). This Proxy shall not otherwise affect or restrict the sale,
transfer or other disposition by Holder of any or all of the Shares. If for any
reason of incapacity or death, Brewer ceases to be able to act as the attorney
and proxy, ________________________ shall replace Brewer as the attorney and
proxy of Holder, but neither Brewer nor his substitute may substitute any other
person to act under
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<PAGE> 17
this Proxy. This Proxy and any other matter relating to this Proxy may be filed
with Southmark with respect to the Shares.
IN WITNESS WHEREOF, the undersigned has executed this Springing Proxy on
May ______, 2000, effective only as provided herein.
A&B CAPITAL CORPORATION
By:
-------------------------------------
Name:
----------------------------------
Title:
----------------------------------
STATE OF TEXAS )
)
COUNTY OF DALLAS )
SUBSCRIBED AND SWORN TO BEFORE ME by ______________________,
______________________ of A&B Capital Corporation, on this ____ day of May,
2000, as the act and deed of such entity.
----------------------------------------
Notary Public, State of Texas
My Commission Expires:__________________
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