Exhibit 99.1
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AMENDED AND RESTATED ASSET PURCHASE AGREEMENT
THIS AMENDED AND RESTATED ASSET PURCHASE AGREEMENT is made as of October
28, 1999 by and among SONIC AUTOMOTIVE, INC., a Delaware corporation (the
"BUYER"), ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, INC., a Florida corporation ("F&S"), SOUTH GATE
MOTORS, INC, a Florida corporation ("SOUTH GATE"and sometimes referred to herein
as the "SELLER"), ▇▇▇▇▇▇▇▇ HOLDINGS, INC., a Florida corporation ("HOLDINGS"),
and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, AND ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
(individually, a "STOCKHOLDER" and, collectively, the "STOCKHOLDERS").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the parties hereto have entered into that certain Asset Purchase
Agreement dated July 20, 1999 (the "ORIGINAL ASSET PURCHASE AGREEMENT"); and
WHEREAS, the Original Asset Purchase Agreement, as the same is amended and
restated hereby, is hereafter referred to as this "AGREEMENT"; and
WHEREAS, F&S is engaged in a Nissan automobile dealership business located
at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "F&S BUSINESS"); and
WHEREAS, South Gate is engaged in Mercedes-Benz, BMW, Honda, Volkswagen,
and Nissan automobile dealership businesses located at ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇. ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (Mercedes-Benz); ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇, ▇▇
▇▇▇▇▇ (Nissan); ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇. ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (BMW); ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇. ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (Honda); ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇,
▇▇ ▇▇▇▇▇ (Volkswagen) (the "BUSINESSES" and each, individually, a "BUSINESS");
and
WHEREAS, the parties hereto have agreed that (a) the Buyer shall not
purchase the assets with respect to the F&S Business and, accordingly, that F&S
shall no longer be a seller under this Agreement, and (b) the Purchase Price
shall be paid to the Seller entirely in cash; and
WHEREAS, the parties have reached agreement on certain of the Schedules to
the Original Asset Purchase Agreement and such Schedules are appended to this
Agreement; and
WHEREAS, the parties hereto wish to amend and restate the Original Asset
Purchase Agreement to reflect, among other things, the agreements referred to in
the foregoing "Whereas" clauses; and
WHEREAS, the Seller desires to sell and the Buyer desires to buy, or to
cause one or more subsidiaries or affiliates of the Buyer to buy, substantially
all of the assets pertaining to the Businesses, subject to the terms and
conditions of this Agreement;
WHEREAS, contemporaneously with the execution and delivery of the Original
Asset Purchase Agreement, the Buyer and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, F&S and South Gate
entered into Contracts to Purchase and Sell Property whereby the Buyer agreed to
purchase the real property, buildings and improvements where the F&S Business
and the Businesses are conducted; and
WHEREAS, the parties hereto have further agreed that the Buyer shall not
purchase the real property, buildings and improvements where the F&S Business is
conducted, which property is owned by F&S, and that, therefore, the following
terms shall have the following meanings in this Agreement: the term "REAL
PROPERTY OWNERS" shall mean ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and South Gate; the term "REAL
PROPERTY PURCHASE AGREEMENTS" shall mean the two Contracts to Purchase and Sell
Real Property, each dated July 20, 1999, and as each may be amended on or prior
to the Closing hereunder, one of which is between ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and the
Buyer and the other of which is between South Gate and the Buyer; and the term
"REAL PROPERTY" shall mean the real property, buildings and improvements to be
sold pursuant to the Real Property Purchase Agreement, and where the Businesses
are conducted;
WHEREAS, concurrently with the execution and delivery of the original
Asset Purchase Agreement, the Seller notified the Manufacturers (as defined in
Article I below) of the transactions contemplated by this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter contained, the receipt and legal sufficiency of which are hereby
acknowledged, and intending to be legally bound, the parties hereby agree as
follows:
ARTICLE I
CERTAIN DEFINITIONS
1.1 "ASSETS" shall mean: the New Vehicles (as defined in Section 3.1); the
Demonstrators (as defined in Section 3.2); the Used Vehicles (as defined in
Section 3.5); the Parts (as defined in Section 4.3); the Miscellaneous
Inventories (as defined in Section 5.1); the Work in Progress (as defined in
Section 5.3); the Fixtures and Equipment (as defined in Section 5.4); the
MiscellaneousAssets (as defined in Section 5.5); the goodwill of the Businesses;
and any other assets and properties of the Seller to be transferred to the Buyer
hereunder.
1.2 "CLOSING DATE" shall mean the date, not later than the Closing Date
Deadline (as hereinafter defined), of the closing of the purchase and sale of
the Assets (the "CLOSING"), which shall be a date designated by the Buyer not
later than fifteen (15) days after receipt by the Buyer of the approvals, and
the satisfaction of the other conditions, set forth in Sections 8.8, 8.13, 8.17,
and 8.19, or such other date as is mutually agreed upon by the parties hereto.
The Closing shall be held
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at the offices of Parker, Poe, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, L.L.P., ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, or such other location as mutually agreed by the
parties at 9:00 a.m. on the Closing Date. The Closing shall be deemed to be
effective as of the opening of business on the Closing Date.
1.3 "CLOSING DATE DEADLINE" shall mean October 31, 1999; provided,
however, if, as of such date, the approvals set forth in Sections 8.13, 8.17 or
8.19 of this Agreement shall not have been obtained, the Buyer or the Seller may
elect to extend the Closing Date Deadline for up to an additional thirty (30)
days.
1.4 "INVENTORY DATE" shall mean the close of business on the date of
completion of the Inventory (as defined in Section 4.1), which date shall not be
more than three (3) days prior to the Closing Date, or such other date prior to
the Closing as is mutually agreed by the Seller and the Buyer.
1.5 "LIABILITIES" shall mean: (a) all obligations of the Seller arising in
the ordinary course of business after the Closing Date, and not as a result of
any breach or default, under (i) all contracts and leases of the Seller that are
set forth on Annex A of Part I of Schedule 2.4 attached hereto, and (ii) all
other contracts and leases of the Seller that are entered into in connection
with the Businesses in the ordinary course of business at any time after the
date hereof and on or prior to the Closing Date, but only if, in the case of
both clauses (i) and (ii) above, the Buyer has agreed to assume such contracts
and leases pursuant to the Assumption Agreements (as defined in Section 2.4
below); and (b) the Inducement Fee as provided in Section 2.6 below.
1.6 "MANUFACTURERS" shall mean Mercedes-Benz of North America, Inc.,
Nissan Motor Corporation, BMW of North America, Inc., American Honda Motor Co.,
Inc., and Volkswagen of America, Inc.
ARTICLE II
SALE AND PURCHASE OF THE ASSETS; OTHER AGREEMENTS
2.1 SALE AND PURCHASE. Upon the terms and subject to the conditions
hereinafter set forth, at the Closing, the Seller will sell, transfer and convey
the Assets to the Buyer and the Buyer will purchase the Assets from the Seller
for the consideration set forth in this Agreement. The sale, transfer and
conveyance of the Assets shall be made by the execution and delivery at the
Closing of one or more bills of sale from the Seller in a form reasonably
satisfactory to the Buyer's counsel (the "BILLS OF SALE") and such other
instruments of assignment, transfer and conveyance as the Buyer shall reasonably
request. Except to the extent specifically included within the Assets, the
Seller will not sell, and the Buyer will not purchase, any other tangible or
intangible assets of the Seller including, but not limited to, the assets of the
Seller listed on Schedule 2.1 attached hereto.
2.2 PURCHASE PRICE. The aggregate purchase price (the "PURCHASE PRICE") to
be paid for the Assets shall consist of:
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(a) the sum of: (i) Twenty-Three Million Two Hundred Fifty Thousand
Dollars ($23,250,000), as the purchase price for the Businesses and the
intangible assets included in the Assets (the "BUSINESS AND INTANGIBLE ASSETS
PURCHASE PRICE"); (ii) the New Vehicle Purchase Price (as defined in Section
3.1); (iii) the Demonstrator Purchase Price (as defined in Section 3.2); (iv)
the Used Vehicle Purchase Price (as defined in Section 3.5); (v) the Parts
Purchase Price (as defined in Section 4.4); (vi) the Miscellaneous Inventories
Purchase Price (as defined in Section 5.1); (vii) the Work in Progress Purchase
Price (as defined in Section 5.3); (viii) the Fixtures and Equipment Purchase
Price (as defined in Section 5.4);
LESS
(b) an amount equal to fifty percent (50%) of the "blue sky" portion of
the selling price received by Holdings from the sale of Harbor Nissan in Port
Charlotte, Florida ("HARBOR NISSAN"), such "blue sky" portion (the "HARBOR
NISSAN BLUE SKY") being (i) the total selling price for the assets or stock of
Harbor Nissan less (ii) the sum of (A) the depreciated book value of the
tangible assets of Harbor Nissan sold or transferred in such sale, (B) the MAI
appraised value of the Harbor Nissan real property sold or transferred in such
sale, and (C) the reasonable out-of-pocket fees and expenses of Holdings
incurred and paid in such sale.
(c) The parties acknowledge that the New Vehicle Purchase Price, the Parts
Purchase Price and the Miscellaneous Inventories Purchase Price will be based
upon information contained in Schedule 3.1 and the Inventory, both of which are
to be delivered prior to the Closing Date. The parties also acknowledge that
adjustments to those categories of Assets will have to be made to reflect
ordinary course increases or decreases in those assets between the time of
delivery of such Schedules and the Inventory and the Closing Date, and that the
related components of the Purchase Price will have to be adjusted to reflect any
such adjustments to those Assets. All of the foregoing adjustments (with
appropriate payments by the parties) will be made as promptly as possible after
the Closing, the parties hereby agreeing to cooperate with each other in making
such adjustments. Each party will use the Purchase Price and Liabilities
allocation described in Schedule 2.2 hereto in all reporting to, and all tax
returns filed with, the Internal Revenue Service and other state and local
taxing authorities.
2.3 PAYMENT OF PURCHASE PRICE. At the Closing, the Buyer shall deliver to
the Seller, by a certified check or a wire transfer to an account designated by
the Seller one day prior to the Closing, the entire amount of the Purchase Price
less an amount to be held in escrow to cover certain environmental liabilities
pursuant to that certain Escrow Agreement dated the date hereof between the
Buyer and the Seller.
2.4 ASSIGNMENT AND ASSUMPTION. At the Closing, the Seller will assign to
the Buyer the Liabilities, and the Buyer will assume and agree to perform and
discharge the Liabilities, pursuant to separate assignment and assumption
agreements with the Seller in a form reasonably acceptable to the Seller's
counsel (the "ASSUMPTION AGREEMENTS"). Notwithstanding anything herein to the
contrary, except as expressly provided in this Section 2.4 and in the Assumption
Agreements, the Buyer does not and will not assume or become liable, or
otherwise be responsible,
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for any obligations or liabilities of the Seller of any kind whatsoever, fixed
or contingent, known or unknown, and whether or not any of such liabilities or
obligations are the subject matter of any of the representations and warranties
of the Seller in this Agreement (collectively, the "RETAINED LIABILITIES"), as a
result of the transactions contemplated in this Agreement. The Seller shall
retain, and hereby agrees to satisfy and discharge, or otherwise be responsible
for, all of the Retained Liabilities, including without limitation the Retained
Liabilities set forth on Part II of Schedule 2.4.
2.5 NON-COMPETITION AGREEMENT. At the Closing, the Seller, Holdings and
the Stockholders shall enter into a non-competition agreement with the Buyer
substantially in the form of Exhibit A attached hereto (the "NON-COMPETITION
AGREEMENT").
2.6 INDUCEMENT FEE. As an inducement to the Buyer to negotiate and enter
into this Agreement and to undertake the further cost and expense of conducting
its due diligence investigation and preparing to satisfy its obligations at the
Closing, the Seller, hereby agrees to pay to the Buyer not later than December
31, 1999, the sum of $500,000 (the "INDUCEMENT FEE"). The Inducement Fee will be
included in the Liabilities and will become an obligation of the Buyer or any
other person (including any holder of a right of first refusal, preemptive right
or other similar right, with respect to any of the Assets) who acquires,
directly or indirectly, the Assets, or any portion thereof, as a result of the
execution and delivery by the Seller of this Agreement. The Inducement Fee will
be canceled if this Agreement is terminated for any reason other than the
exercise of a right of first refusal, preemptive right or other similar right,
by any of the Manufacturers an or any person claiming by, through or under any
Manufacturer. Subject to the foregoing, the obligation to pay the Inducement Fee
shall survive the termination of this Agreement.
ARTICLE III
NEW VEHICLES; DEMONSTRATORS AND USED VEHICLES
3.1 NEW VEHICLES. At the Closing, the Buyer shall purchase all of the
Seller's untitled new motor vehicles (meaning current model year vehicles as of
the Closing Date, but in any event including all 1999 model year vehicles) in
the Seller's stock and unsold by the Seller as of the Closing Date and which are
listed on Schedule 3.1 hereto, which schedule the Seller shall deliver to the
Buyer not more than three (3) days prior to the Closing (the "NEW VEHICLES").
The purchase price to be paid by the Buyer for each New Vehicle shall be the
price at which the New Vehicle was invoiced to the Seller by the respective
Manufacturer, as adjusted pursuant to this Article III (the sum of all such
amounts to be paid for New Vehicles as determined by this Article III is herein
referred to as the "NEW VEHICLE PURCHASE PRICE"). Schedule 3.1 shall set forth
the model, invoice cost, and all other information necessary to calculate the
New Vehicle Purchase Price with respect to each New Vehicle listed in such
Schedule 3.1. At the Closing, the Seller shall assign to the Buyer, without any
additional consideration therefor, by appropriate documents reasonably
satisfactory to the Buyer, all unfilled retail orders and deposits made thereon.
Any profits or proceeds derived from such unfilled retail orders shall belong to
the Buyer.
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3.2 DEMONSTRATORS. At the Closing, the Buyer shall purchase all of the
Seller's untitled new motor vehicles (meaning current model year vehicles as of
the Closing Date, but in any event including all 1999 model year vehicles) in
the Seller's stock and unsold by the Seller as of the Closing Date which are
used in the ordinary course of business for the purpose of demonstration, and
that are listed on Schedule 3.2, which schedule the Seller shall deliver to the
Buyer no more than three (3) days prior to the Closing (the "DEMONSTRATORS").
For purposes of this Agreement, any such vehicle with more than 500 miles, but
fewer than 6,000 miles, on its odometer shall be deemed a "Demonstrator." Any
motor vehicle with more than 6,000 miles on its odometer and any 1998 or prior
model year (as of the Closing Date) new motor vehicle shall be deemed to be
"used" rather than a "Demonstrator" or "New Vehicle". The purchase price to be
paid by the Buyer for each Demonstrator shall be the price at which the
Demonstrator was invoiced to the Seller by the respective Manufacturer, as
adjusted pursuant to this Article III, and as reduced by an amount equal to ten
cents ($.10) multiplied by the total mileage on the odometer (the sum of all
such amounts to be paid for Demonstrators hereunder is herein referred to as the
"DEMONSTRATOR PURCHASE PRICE"). Schedule 3.2 shall set forth each Demonstrator's
model, invoice cost, odometer reading and all other information necessary to
calculate the Demonstrator Purchase Price with respect to such Demonstrator.
3.3 ADJUSTMENT OF NEW VEHICLE AND DEMONSTRATOR PURCHASE PRICE. The
purchase price paid for each New Vehicle and each Demonstrator purchased under
this Article III shall be: (a) increased by the dealer cost of any equipment and
accessories which have been installed in such vehicles; and (b) decreased by the
sum of (i) the dealer cost of any equipment and accessories which have been
removed from such vehicles, (ii) all paid or unpaid rebates, discounts, holdback
for dealer account and other factory incentives (including without limitation
rebates applied for and paid but not earned, incentive monies claimed on
pre-reported units and carryover allowances on 1998 models which inure to the
Seller's benefit), and (iii) refundable advertising allowances, if any.
3.4 DAMAGED OR REPAIRED NEW VEHICLES AND DEMONSTRATORS. If any New
Vehicles or Demonstrators shall have suffered any damage prior to the Closing
Date in excess of $300 and which is not reflected on Schedule 3.1 or Schedule
3.2, the Seller shall notify the Buyer in writing on or prior to the Closing
Date. In such case, the Seller and the Buyer will attempt in good faith to agree
on the amount of the reduction in the purchase price of such vehicle to reflect
such condition, which mutually agreed amount in excess of $300 shall be deducted
from the price to be paid for such New Vehicle or Demonstrator. In the event
such damage exceeds $300 and the Buyer and the Seller cannot agree on the amount
of the reduction, the Buyer shall have no obligation to purchase any such
damaged New Vehicle or Demonstrator and the Seller shall have no obligation to
sell such damaged New Vehicle or Demonstrator. With respect to any New Vehicle
or Demonstrator which shall have been damaged and repaired prior to the Closing
Date, the Seller and the Buyer will attempt in good faith to agree on an
adjustment to the price to reflect the decrease, if any, in the wholesale value
of such New Vehicle or Demonstrator resulting from such damage and repair, which
mutually agreed amount in excess of $300 shall be deducted from the price to be
paid for such New Vehicle or Demonstrator. In the event any such decrease
exceeds the amount of $300 and that the Buyer and the Seller cannot agree on
such adjustment, the Buyer shall have no obligation to
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purchase such New Vehicle or Demonstrator and the Seller shall have no
obligation to sell such New Vehicle or Demonstrator.
3.5 USED VEHICLES. The Buyer shall have no obligation to purchase any
vehicle from the Seller other than its obligation hereunder to purchase the New
Vehicles and the Demonstrators. The Seller and the Buyer shall perform an
inventory of the Seller's motor vehicles that are not New Vehicles or
Demonstrators as of the Inventory Date (including prior model year new vehicles
as of the Closing Date) and, in connection with such inventory, the Seller and
the Buyer shall attempt to assign a mutually agreed price to each such vehicle
owned by the Seller as of the Closing Date. Any such vehicles as to which the
Seller and the Buyer are unable to agree upon a price shall not be purchased by
the Buyer, or sold by the Seller, in connection herewith. Any such vehicles as
to which the Seller and the Buyer shall agree upon a price are collectively
referred to herein as the "USED VEHICLES," and shall be purchased by the Buyer,
and sold by the Seller, at the Closing. The aggregate sum of all prices assigned
to such Used Vehicles to be purchased by the Buyer pursuant to the terms of this
Section 3.5 shall be referred to herein as the "USED VEHICLE PURCHASE PRICE."
ARTICLE IV
PARTS/ACCESSORIES
4.1 THE INVENTORY. The Buyer and the Seller shall engage a mutually
acceptable third party engaged in the business of appraising, valuing and
preparing inventories for automobile dealerships (hereinafter referred to as the
"INVENTORY SERVICE") to prepare an inventory list (the "INVENTORY") of the parts
and accessories, as well as of the Miscellaneous Inventories (as defined in
Section 5.1), owned by and either used or held for use by the Seller in the
Businesses. The Inventory (insofar as it relates to parts and accessories) shall
be posted to the respective Manufacturers' approved system of inventory control.
The cost of the Inventory shall be borne 50% by the Buyer and 50% by the Seller.
The Buyer shall have the right to deduct the Seller's portion of such expense
from the consideration to be paid to the Seller under the terms of this
Agreement and to remit such sums directly to the Inventory Service. The
Inventory shall be completed by the Inventory Date. The Inventory shall identify
each part and accessory and its purchase price.
4.2 RETURNABLE AND NON-RETURNABLE PARTS AND ACCESSORIES. The Inventory
shall classify parts and accessories as "returnable" or "nonreturnable." For
purposes of this Agreement, the terms "returnable parts" and "returnable
accessories" shall describe and include only those new parts and new accessories
for vehicles which are listed (coded) in the latest current Master Parts Price
List Suggested List Prices and Dealer Prices, or other applicable similar price
lists, of the respective Manufacturer, with supplements or the equivalent in
effect as of the Inventory Date (the "MASTER PRICE LIST"), as returnable to the
respective Manufacturer at not less than the purchase price reflected in the
Master Price List or in the most recent applicable price list. The purchase
price for each "returnable part" and "returnable accessory" will be the price
listed in the Master Price List. All parts and accessories listed (coded) in the
Master Price List as non-returnable to the respective Manufacturer shall be
classified as "nonreturnable." The purchase price for each "nonreturnable"
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part and accessory, of which type the Seller has made no sales during the ninety
(90) day period prior to the Inventory Date, shall be sixty percent (60%) of the
price listed therefor in the Master Price List. The purchase price for each
"nonreturnable" part and accessory, of which type the Seller has made retail
sales to one or more customers during the ninety (90) day period prior to the
Inventory Date, shall be one hundred percent (100%) of the price therefor listed
in the Master Price List. Notwithstanding the foregoing, as to any current
non-returnable part carried on the Seller's books at less than $5.00, not to
exceed an aggregate total of $ 100,000 for all such parts carried on the
Seller's books, the purchase price therefor shall be one hundred percent (100%)
of the price therefor listed on the Master Price List. The purchase price for
all "Jobber" and/or "NPN" parts shall be equal to the Seller's original cost of
such parts. The purchase price for all nuts, bolts and any other parts not
addressed in this Section 4.2 shall equal the value thereof as determined by the
Inventory Service.
4.3 PARTS. At the Closing, the Buyer shall purchase all parts and
accessories owned by the Seller at the Closing Date and listed on the Inventory
(the "PARTS") provided, however, that the Buyer shall not be obligated to
purchase any damaged parts or accessories, parts and accessories with component
parts missing, superseded or obsolete parts or accessories, or used parts or
accessories. The Seller agrees that if parts and accessories that the Buyer is
not obligated to purchase hereunder are not removed from the Real Property
within thirty (30) days after the Closing Date, they shall become the property
of the Buyer without the payment of any consideration in addition to the
consideration otherwise provided herein. The Buyer agrees to provide access to
the Seller for the purpose of removing such property during such thirty (30) day
period.
4.4 PARTS PURCHASE PRICE. The purchase price for the Parts will equal the
value of such items shown on the Inventory, subject to the provisions of Section
4.2 above (the "PARTS PURCHASE PRICE").
4.5 PARTS RETURN PRIVILEGES. The Seller shall assign to the Buyer at
Closing any net parts return privileges under the respective Manufacturers'
Parts Return Plans that may have accrued to the Seller prior to the Closing (and
any other special parts return authorizations which may have been granted to the
Seller by respective Manufacturers).
ARTICLE V
MISCELLANEOUS INVENTORIES; WORK IN PROGRESS; FIXTURES
AND EQUIPMENT
5.1 MISCELLANEOUS INVENTORIES. At the Closing, the Buyer shall purchase
all useable gas, oil and grease, all undercoat material and body materials in
unopened cans and such other miscellaneous useable and saleable articles in
unbroken lots (including office supplies) which (i) are on the Seller's
dealership premises, (ii) are owned by the Seller on the Closing Date, (iii) do
not represent more than a sixty (60) day supply of any particular item(s), and
(iv) are identified in the Inventory taken by the Inventory Service on the
Inventory Date the ("MISCELLANEOUS INVENTORIES").
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The purchase price for the Miscellaneous Inventories shall be equal to the
replacement cost of the Miscellaneous Inventories as determined by the Inventory
Service and set forth on the Inventory (the sum of all prices of the
Miscellaneous Inventories pursuant to the terms of this Section 5.1 shall be
referred to herein as the "MISCELLANEOUS INVENTORIES PURCHASE PRICE").
5.2 MISCELLANEOUS ITEMS NOT INCLUDED IN THE INVENTORY. The Buyer shall
have no obligation to purchase any miscellaneous items that are not included in
the Miscellaneous Inventories. The Seller agrees that any miscellaneous items
that are not included in the Miscellaneous Inventories and are not removed from
the Real Property within thirty (30) days after the Closing Date shall become
the property of the Buyer without the payment of any consideration in addition
to the consideration otherwise provided herein. The Buyer agrees to provide
access to the Seller for the purpose of removing such property during such
thirty (30) day period.
5.3 WORK IN PROGRESS. At the Closing, the Buyer shall buy at the Seller's
actual cost for parts and labor such shop labor and sublet repairs as the Seller
shall have caused to be performed on any repair orders which are in process at
the close of business on the Closing Date for which there are adequate credit
arrangements (the "WORK IN PROGRESS") (the aggregate sum of all costs of the
Seller for the Work in Progress pursuant to the terms of this Section 5.3 shall
be referred to herein as the "WORK IN PROGRESS PURCHASE PRICE"). The Buyer shall
complete such repair work and shall be entitled to the entire proceeds to be
collected for such services.
5.4 FIXTURES AND EQUIPMENT.
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(a) Subject to the provisions contained in subsection (b) immediately
below, at the Closing, the Buyer shall purchase all fixtures, machinery,
equipment (including special tools and shop equipment, but excluding leasehold
improvements), furniture and all signs and office equipment owned by the Seller
and used or held by the Seller use in connection with the Businesses, including
the items listed on Schedule 5.4 hereto, which the Seller shall deliver to the
Buyer not later than five (5) days prior to the Closing (collectively referred
to herein as the "FIXTURES AND EQUIPMENT"). The purchase price for the Fixtures
and Equipment shall be the Seller's depreciated book value thereof as of the
Closing Date as reflected in said Schedule 5.4 attached hereto (the "FIXTURES
AND EQUIPMENT PURCHASE PRICE"); provided, however, the Fixtures and Equipment
Purchase Price shall not include the value of any items of Fixtures and
Equipment which are leased pursuant to contracts or leases included in the
Assumed Liabilities.
(b) Following receipt of Schedule 5.4, the Buyer shall review the items
listed thereon and give notice to the Seller of any dispute regarding the
depreciated book value of any particular item in relation to its current
condition, as evaluated by the Buyer. The Buyer will describe in reasonable
detail the damage or required repairs noted, as well as a proposed corresponding
decrease in value for such item. The Seller shall then have the option of
either: (i) repairing the item to the reasonable satisfaction of the Buyer; (ii)
agreeing to the Buyer's proposed reduction in depreciated book value for the
item; or (iii) withdrawing the item from the sale of the Assets contemplated
hereby. The parties acknowledge and agree that, except where the Seller has
repaired the item to the reasonable
9
satisfaction of the Buyer as contemplated by clause (i) immediately above, the
Fixtures and Equipment Purchase Price will be adjusted accordingly.
5.5 MISCELLANEOUS ASSETS. At the Closing, and without payment of any
additional consideration, the Buyer shall purchase all of the Seller's (i)
unused shop repair orders, parts sales tickets, accounting forms, binders,
office and shop supplies (not in unbroken lots) and such shop reference manuals,
parts reference catalogs, non-accounting file copies for all sales of the Seller
for the three (3) years preceding the Closing Date, (ii) copies of new and used
car sales records and specifically wholesale parts sales records, new and used
parts sales records, and service sales records for the three (3) years preceding
the Closing Date, (iii) product sales training material and reference books on
hand as of the Closing Date, (iv) customer and registration lists pertaining to
the sale of motor vehicles, service files, repair orders, owner follow-up lists
and similar records relating to the operation of the Businesses, (v) telephone
numbers and listings used by the Seller in connection with the Businesses, (vi)
names and addresses of the Seller's service customers and prospective
purchasers, (vii) all lawfully transferrable licenses and permits of the
Businesses, (viii) all rights and claims under or arising out of the contracts
and leases included in the Liabilities, and (ix) the Seller's rights to the
tradenames used by the Seller, which are listed on Schedule 5.5 hereto (the
"TRADENAMES"), and any similar variations thereof (all the foregoing items
collectively referred to herein as the "MISCELLANEOUS ASSETS"). To the extent
requested by the Seller or the Stockholders in writing at any time after the
fourth (4th) anniversary of the Closing Date, the Buyer shall, not later than
one (1) year after receipt of such request, cease using the respective
Tradenames and reconvey to the Seller or the Stockholders, without
representation or warranty, all rights of the Buyer to the respective
Tradenames.
5.6 CERTAIN RECORDS OF THE SELLER; ACCESS BY THE SELLER. The Seller may
retain all corporate records, financial records and correspondence which are not
necessary for the continued operation of the Businesses by the Buyer. For a
period of three (3) years following the Closing Date, the Buyer will allow the
Seller, and its authorized agents and representatives access, upon reasonable
notice during normal business hours, to the books and records regarding
post-Closing adjustments arising during the three day period prior to Closing.
5.7 WARRANTY OBLIGATIONS OF THE SELLER. To the extent that the Seller may
have issued warranties on the vehicles sold by the Seller on or prior to the
Closing Date and to the extent such warranties are not included in the Work in
Progress, the Buyer shall have no responsibility to perform any services
required under such warranties, unless authorized in writing by the Seller
accompanied by arrangements in writing satisfactory to the Buyer to assure the
Buyer of payment for all work performed by the Buyer, and, if so authorized by
the Seller, the Seller shall reimburse the Buyer for all of the Buyer's costs
for parts and labor in connection therewith at established internal rates for
parts and labor. At the Closing Date, the Seller shall supply the Buyer with a
list to which such warranties and guaranties, if any, are applicable, which list
shall include the names of the purchasers, the make and year model of the
vehicles purchased and the date of purchase. The Seller shall also supply to the
Buyer at or prior to the Closing Date an address for and a designation of the
person who will be responsible for authorizing the Buyer to perform any services
under such warranties, if any, issued by the Seller on vehicles sold by it on or
prior to the Closing Date. The
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Seller shall reimburse the Buyer promptly upon demand for all sums due or
payable by the Seller to the Buyer hereunder.
5.8 ACCOUNTS RECEIVABLE. The Seller shall retain all accounts receivable
arising out of the operation of the Businesses prior to the Closing Date and the
Buyer shall retain all accounts receivable arising out of sales and/or services
of the Businesses after the Closing Date. After the Closing Date, the Buyer
shall cooperate with the Seller and shall use reasonable and ordinary efforts,
including providing the Seller access to the Buyer's books, records and
employees (at the Seller's expense) to assist the Seller in its efforts to
collect its accounts receivable for a period of six (6) months after the
Closing. The Buyer shall accept payment of the Seller's accounts receivable at
no charge to the Seller for a period of six (6) months after the Closing, and
shall forward to the Seller, promptly upon receipt, all the money so received on
said accounts. Notwithstanding anything to the contrary stated herein, the Buyer
shall have no responsibility to collect any of the Seller's accounts receivable.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the Seller, Holdings and the
Stockholders as follows:
6.1 ORGANIZATION; POWER AND AUTHORITY; AUTHORIZATION. The Buyer is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware, is duly qualified to do business and is in good
standing in every jurisdiction in which the nature of its business makes such
qualification necessary and has full corporate power and authority to own or use
the properties it purports to own and use and to carry on its business as now
being conducted. The Board of Directors of the Buyer has, or prior to the
Closing will have, duly approved this Agreement, all other agreements,
certificates and documents executed or to be executed by the Buyer in connection
herewith, and the transactions contemplated hereby and thereby. The Buyer has
full corporate power and authority to execute and deliver this Agreement and all
other agreements, certificates and documents executed or to be executed by the
Buyer in connection herewith, to consummate the transactions contemplated hereby
and thereby and to perform its obligations hereunder and thereunder. This
Agreement, and all other agreements, certificates and documents executed or to
be executed by the Buyer in connection herewith, constitute or, when executed
and delivered, will constitute legal, valid and binding agreements of the Buyer
enforceable against the Buyer in accordance with their respective terms.
6.2 NON-VIOLATION; CONSENTS. Except as set forth on Schedule 6.2 attached
hereto, the execution and delivery of this Agreement, the consummation of the
transactions contemplated by this Agreement and compliance with the provisions
hereof do not and will not: (a) conflict with or violate any of the provisions
of the Buyer's Restated Certificate of Incorporation or Bylaws, each as amended,
or any resolution of the Board of Directors or the stockholders of the Buyer;
(b) violate any law, ordinance, rule or regulation or any judgment, order, writ,
injunction or decree or similar
11
command of any court, administrative or governmental agency or other body
applicable to the Buyer; (c) violate or conflict with or result in a breach of,
or constitute a default under, any material instrument, agreement or indenture
or any mortgage, deed of trust or similar contract to which the Buyer is a party
or by which the Buyer is bound or affected; or (d) require the consent,
authorization or approval of, or notice to, or filing or registration with, any
governmental body or authority, or any other third party.
6.3 LITIGATION. There are no actions, suits or proceedings pending, or, to
the knowledge of the Buyer, threatened against or affecting the Buyer which
might adversely affect the power or authority of the Buyer to carry out the
transactions to be performed by it hereunder.
6.4 NO MISSTATEMENTS OR OMISSIONS. No representation or warranty made by
the Buyer in this Agreement, and no statement contained in any agreement,
instrument, certificate or schedule furnished or to be furnished by the Buyer
pursuant hereto, contains or will contain any untrue statement of a material
fact or omits or will omit to state a material fact necessary in order to make
such representation or warranty or such statement not misleading.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF THE SELLER, HOLDINGS AND THE STOCKHOLDERS
The Seller, Holdings and the Stockholders, jointly and severally,
represent and warrant to the Buyer, as follows:
7.1 ORGANIZATION; POWER AND AUTHORITY; AUTHORIZATION. Each of the Seller
and Holdings is a corporation duly organized, validly existing and in good
standing under the laws of the State of Florida, is duly qualified to do
business and is in good standing in every jurisdiction in which the nature of
its business makes such qualification necessary and has full corporate power and
authority to own or use the properties it purports to own and use and to carry
on its business as now being conducted. Holdings owns all of the issued and
outstanding capital stock of the Seller and the Stockholders own all of the
issued and outstanding capital stock of Holdings. Schedule 7.1 sets forth each
person or entity which has an ownership interest in the Holdings and the extent
and nature of such ownership interest held by such owner. There are no
outstanding options or warrants with respect to the capital stock of the Seller
or Holdings, nor are there any outstanding securities which are convertible or
exchangeable into capital stock of the Seller or Holdings. There are no voting
trusts, shareholder agreements or other agreements, instrument or rights of any
kind or nature whatsoever outstanding with respect to shares of capital stock of
the Seller or Holdings. Each of the Seller and Holdings has full corporate power
and authority to execute and deliver this Agreement and all other agreements,
certificates and documents executed or to be executed by it in connection
herewith, to consummate the transactions contemplated hereby and thereby and to
perform its obligations hereunder and thereunder. The Stockholders have full
capacity, power and authority to execute and deliver this Agreement and all
other agreements, certificates and documents executed or to be executed by the
Stockholders in connection herewith, to consummate the transactions contemplated
hereby and thereby and to perform their obligations hereunder and thereunder.
This
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Agreement, and all other agreements, certificates and documents executed or to
be executed by the Seller and Holdings in connection herewith, have been duly
authorized by all necessary corporate action and constitute or, when executed
and delivered, will constitute legal, valid and binding agreements of the Seller
and Holdings enforceable against the Seller and Holdings in accordance with
their respective terms. This Agreement, and all other agreements, certificates
and documents executed or to be executed by the Stockholders in connection
herewith, constitute or, when executed and delivered, will constitute legal,
valid and binding agreements of the Stockholders enforceable against the
Stockholders in accordance with their respective terms. The Seller has never
operated any of the Businesses under any tradenames other than the tradenames
listed or referred to in Section 5.5.
7.2 NO VIOLATION; CONSENTS. Except as set forth in Schedule 7.2 attached
hereto, the execution and delivery of this Agreement, the consummation of the
transactions contemplated by this Agreement and compliance with the provisions
hereof do not and will not: (a) conflict with or violate any of the provisions
of the respective Articles of Incorporation or Bylaws, each as amended, of the
Seller and Holdings or any resolution of the Board of Directors of the Seller
and Holdings; (b) violate any law, ordinance, rule or regulation or any
judgment, order, writ, injunction or decree or similar command of any court,
administrative or governmental agency or other body applicable to the Seller or
Holdings, any of the Assets, the Businesses or any of the Liabilities; (c)
violate or conflict with or result in a breach of, or constitute a default
under, or an event giving rise to a right of termination of, any Contract (as
defined in Section 7.10), any material instrument, agreement or indenture or any
mortgage, deed of trust or similar contract to which the Seller, Holdings or any
of the Stockholders is a party or by which the Seller, Holdings or any of the
Stockholders or any of the Assets are bound or affected; (d) result in the
creation or imposition of any Encumbrance upon any of the Assets; or (e) require
the consent, authorization or approval of, or notice to, or filing or
registration with, any governmental body or authority, or any other third party.
7.3 LITIGATION. There are no actions, suits or proceedings pending or, to
the knowledge of the Seller, Holdings and the Stockholders, threatened against
the Seller, Holdings or any of the Stockholders which might adversely affect the
power or authority of any of them to carry out the transactions to be performed
by any of them hereunder. There are no actions, suits or proceedings pending,
or, to the knowledge of the Seller, Holdings and the Stockholders, threatened
against or affecting the Seller, other than those adequately covered by
insurance and those disclosed on Schedule 7.3 attached hereto, and none of the
actions, suits or proceedings described on Schedule 7.3, if determined adversely
to the Seller, will have, or could reasonably be expected to have, a material
adverse effect upon the Assets or the Liabilities of the Seller or the business,
prospects, properties, earnings, results of operations or condition (financial
or otherwise) of any Business of the Seller. Except as set forth on Schedule
7.3, all actions, suits or proceedings described on, or required to be described
on, Schedule 7.3 are adequately covered by insurance.
7.4 TITLE TO ASSETS; ENCUMBRANCES. Except as disclosed on Schedule 7.4
attached hereto, the Seller has good title to the Assets, free and clear of all
liens (including tax liens), security interests, encumbrances, actions, claims,
payments or demands of any kind and character (collectively, "ENCUMBRANCES"),
except Encumbrances disclosed on Schedule 7.4 hereto and
13
Encumbrances for ad valorem personal property taxes not yet due and payable. All
of the Assets to be transferred hereunder conform, as to condition and
character, to the descriptions of such Assets contained herein and will be
transferred at the Closing free and clear of all Encumbrances, except
Encumbrances for ad valorem personal property taxes not yet due and payable. To
the knowledge of the Seller, Holdings and the Stockholders, the ownership and
use of the Assets, and the operation of the Businesses, do not infringe upon the
intellectual property rights of any other person or entity.
7.5 PERMITS AND APPROVALS. Except as disclosed on Schedule 7.5 attached
hereto, there are no permits or approvals used or obtained for use by the Seller
which are required under applicable law in connection with the ownership or
operation of the Businesses.
7.6 FINANCIAL STATEMENTS.
---------------------
(a) The Seller has delivered to the Buyer the most recent annual and
monthly year-to-date financial statements of the Seller described in Schedule
7.6 attached hereto (the "FINANCIAL STATEMENTS"). Except as set forth on
Schedule 7.6, the Financial Statements have been prepared in accordance with
generally accepted accounting principles consistently applied. Each balance
sheet included in the Financial Statements fairly presents the financial
condition of the Seller as of the date thereof, and each related statement of
income included in the Financial Statements fairly presents the results of the
operations of the Seller and the changes in its financial position for the
period indicated, all in accordance with generally accepted accounting
principles consistently applied. To the knowledge of the Seller, Holdings and
the Stockholders, the Financial Statements contain adequate reserves for all
reasonably anticipated claims relating to matters with respect to which the
Seller is self-insured. The Financial Statements are in accord with the books
and records of the Seller, which books and records are true, correct and
complete.
(b) The Seller has no outstanding material claims, liabilities,
obligations or indebtedness of any nature, fixed or contingent, except as set
forth in its Financial Statements or as specified in the Schedules to this
Agreement, and except for liabilities incurred in the ordinary course of
business since the date of the Financial Statements and of the kind and type
reflected in the Financial Statements.
7.7 BROKERS AND FINDERS. None of the Seller, Holdings or any of the
Stockholders has engaged any broker or any other person or entity who would be
entitled to any brokerage commission or finder's fee in respect of the execution
of this Agreement and/or the consummation of the transactions contemplated
hereby, other than such fee or commission the entire cost of which will be borne
by the Seller.
7.8 COMPLIANCE WITH LAWS.
---------------------
(a) Except as set forth on Schedule 7.8 (a) attached hereto, to the
knowledge of the Seller and the Stockholders, the Assets and the Real Property
comply in all material respects with, and each of the Businesses has been
conducted in all material respects in compliance with, all laws, rules and
regulations (including all worker safety but excluding all Environmental Laws
(as
14
hereinafter defined)), applicable zoning and other laws, ordinances, regulations
and building codes, and none of the Seller, Holdings or any of the Stockholders
has received any notice of any violation thereof which has not been remedied.
(b) Except as set forth on Schedule 7.8(b) attached hereto, (i) the
Seller has not at any time generated, used, treated or stored Hazardous
Materials (as hereinafter defined) on, or transported Hazardous Materials to or
from, the Real Property or any property adjoining or adjacent to the Real
Property and, to the knowledge of the Seller, Holdings and the Stockholders, no
party has taken such actions on or with respect to the Real Property, provided,
however, certain petroleum products are stored and handled by the Seller in the
ordinary course of business in compliance in all material respects with all
Environmental Laws, (ii) the Seller has not at any time released or disposed of
Hazardous Materials on the Real Property or any property adjoining or adjacent
to the Real Property, and, to the knowledge of the Seller, Holdings and the
Stockholders, no party has taken any such actions on the Real Property, (iii) to
the knowledge of the Seller and the Stockholders, the Seller has at all times
been in compliance with all Environmental Laws and the requirements of any
permits issued under such Environmental Laws with respect to the Real Property,
the Assets and the operation of the Businesses, except where failure to comply
has not had, and could not reasonably be expected to have, a material adverse
effect on the Assets or Liabilities or the prospects, properties, earnings,
results of operations or condition (financial or otherwise) of any the
Businesses, (iv) there are no past, pending or, to the knowledge of the Seller,
Holdings and the Stockholders, threatened environmental claims against the
Seller, the Real Property, any of the Assets or the Businesses, (v) to the
knowledge of the Seller, Holdings and the Stockholders, there are no facts or
circumstances, conditions or occurrences regarding the Seller, the Real
Property, any of the Assets or the Businesses that could reasonably be
anticipated to form the basis of an environmental claim against the Seller, any
of the Assets or the Businesses or to cause the Real Property, any of the Assets
or any of the Businesses to be subject to any restrictions on its ownership,
occupancy, use or transferability under any Environmental Law, (vi) there are
not now and, to the knowledge of the Seller, Holdings and the Stockholders,
never have been any underground storage tanks located on the Real Property,
(vii) the Seller has never transported or arranged for the transportation of any
Hazardous Materials to any site other than the Real Property, and (viii) except
as set forth on Schedule 7.8(b), none of the Seller, Holdings or any Stockholder
has operated any of the Businesses at any location other than the Real Property.
As used herein, the term "ENVIRONMENTAL LAWS" shall mean all present and future
federal, state and local laws, statutes, regulations, rules, ordinances and
common law, and all judgments, decrees, orders, agreements or permits, issued,
promulgated, approved or entered thereunder by any governmental authority
relating to pollution or Hazardous Materials or protection of human health or
the environment, including, but not limited to, the Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA"), as amended. As used herein,
the term "HAZARDOUS MATERIALS" means any waste, pollutant, chemical, hazardous
substance, toxic substance, hazardous waste, special waste, solid waste
petroleum or petroleum-derived substance or waste, or any constituent or
decomposition product of any such pollutant, material, substance or waste,
regulated under or as defined by any Environmental Law.
15
(c) None of the Seller, Holdings or any of the Stockholders, or any
director, officer, agent or employee of the Seller or, to the knowledge of the
Seller, Holdings and the Stockholders, any other person or entity associated
with or acting for or on behalf of the Seller, has, directly or indirectly, made
any contribution, gift, bribe, rebate, payoff, influence payment, kickback, or
other payment to any person or entity, regardless of form, whether in money,
property or services: (i) to obtain favorable treatment in securing business,
(ii) to pay for favorable treatment for business secured, or (iii) to obtain
special concessions or for special concessions already obtained from the Seller.
7.9 FIXTURES AND EQUIPMENT; REAL PROPERTY. The Fixtures and Equipment
constitute in the aggregate all of the fixtures, machinery, equipment,
furniture, signs and office equipment used or intended for use by the Seller in
the Businesses. The Seller makes no representation or warranty regarding the
condition of the Fixtures and Equipment, it being understood that the Buyer is
purchasing the Fixtures and Equipment in an AS-IS condition. All Demonstrators
have been operated in the ordinary course of business, are operated with dealer
tags and have not had certificates of title issued with respect to them.
7.10 CONTRACTS. The Seller has in all material respects performed all of
its obligations required to be performed by it to the date hereof, and is not in
default or alleged to be in default in any material respect, under any contract
or lease to be assigned to the Buyer hereunder (collectively, the "CONTRACTS"),
and there exists no event, condition or occurrence which, after notice or lapse
of time or both, would constitute such a default. To the knowledge of the
Seller, Holdings and the Stockholders, no other party to any Contract is in
default in any respect of any of its obligations thereunder. Each of the
Contracts is valid and in full force and effect and enforceable against the
Seller in accordance with its terms, and, to the knowledge of the Seller,
Holdings and the Stockholders, enforceable against the other parties thereto in
accordance with its terms. Except as set forth in Schedule 7.2 hereto, each
Contract is assignable to the Buyer without the consent of the other party(ies)
thereto.
7.11 ADEQUACY OF ASSETS. Except for the Seller's cash and accounts
receivable and rights under its dealership agreements with the Manufacturers,
the Assets of the Seller, together with the Contracts (including all equipment
leased pursuant to the equipment leases included in the Contracts) of the
Seller, comprise all of the assets, properties, contracts, leases and rights
necessary for the Buyer to operate the Businesses substantially in the manner
operated by the Seller prior to the Closing. The failure by the Seller to
satisfy and discharge in full any of the Retained Liabilities will not have, and
could not reasonably be expected to have, a material adverse effect upon any of
the Assets or Liabilities or the prospects, properties, earnings, results of
operations or condition (financial or otherwise) of the Businesses.
7.12 TAXES. The Seller has filed all federal, state and local governmental
tax returns required to be filed by it in accordance with the provisions of law
pertaining thereto and has paid all taxes and assessments (including, without
limitation of the foregoing, income, excise, unemployment, social security,
occupation, franchise, property and import taxes, duties or charges
16
and all penalties and interest in respect thereof) required by such tax returns
or otherwise to have been paid to date.
7.13 EMPLOYEES.
----------
(a) Schedule 7.13(a) attached hereto discloses, as of the date
hereof, all of the Seller's employees, as well as each employee's compensation
(including, separately, base pay and any incentive or commission pay), title,
length of employment, employment contract, if any, and accrued vacation time.
The Seller is not currently, nor has it ever been, a party to any collective
bargaining agreement or other labor contract, and there has not been, nor is
there pending or, to the knowledge of the Seller, Holdings and the Stockholders,
threatened, any union organizational drive or application for certification of a
collective bargaining agent with respect to the Seller's employees.
(b) Except as disclosed on Schedule 7.13(b), the Seller has no
"employee benefit plan" ("EMPLOYEE BENEFIT PLAN") (as defined in Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA")),
including without limitation, any bonus, deferred compensation, pension,
profit-sharing, stock option, employee stock purchase, secrecy agreement or
covenant not to compete with any employee. The Seller has been and is now in
material compliance with the "COBRA" health care continuation coverage
requirements of Section 4980B of the Internal Revenue Code of 1986, as amended,
and Sections 601-608 of ERISA and any applicable state health care continuation
coverage requirements. The Seller has not made any promises or incurred any
liability, pursuant to an Employee Benefit Plan or otherwise, to provide medical
or other welfare benefits to retired or former employees of such Seller (other
than COBRA or state mandated continuation coverage, where applicable). Except as
disclosed on Schedule 7.13(b), none of the Seller's employees or former
employees has elected COBRA continuation coverage or has incurred a COBRA
qualifying event since January 1, 1997.
7.14 YEAR 2000. The Seller has (i) initiated a review and assessment of
all material areas within the Businesses and internal operations that could be
adversely affected by the "Year 2000 Problem" (that is, the risk that computer
applications used by the Seller may be unable to recognize and perform properly
date-sensitive functions involving certain dates prior to and any date after
December 31, 1999), (ii) developed a plan and time line as described on Schedule
7.14 for addressing the Year 2000 Problem on a timely basis, and (iii) to date,
implemented that plan and timetable, except as set forth in said Schedule 7.14.
7.156 NO MISSTATEMENTS OR OMISSIONS. No representation or warranty made by
the Seller, Holdings or the Stockholders in this Agreement, and no statement
contained in any agreement, instrument, certificate or schedule furnished or to
be furnished by the Seller, Holdings or the Stockholders pursuant hereto,
contains or will contain any untrue statement of a material fact or omits or
will omit to state a material fact necessary in order to make such
representation or warranty or such statement not misleading.
ARTICLE VIII
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CONDITIONS PRECEDENT TO THE BUYER'S OBLIGATIONS
The obligations of the Buyer to perform this Agreement at Closing are
subject to the following conditions precedent which shall be fully satisfied at
or before the Closing, unless waived in writing by the Buyer.
8.1 REPRESENTATIONS AND WARRANTIES. All of the representations and
warranties of the Seller, Holdings and the Stockholders herein contained shall
be true and correct in all material respects on and as of the Closing Date as if
made on and as of the Closing Date, and the Buyer shall have received a
certificate from each of the Stockholders and a certificate from a duly
authorized officer of each of the Seller and Holdings, dated the Closing Date,
to such effect.
8.2 COMPLIANCE WITH AGREEMENTS. Each of the agreements or obligations
required by this Agreement to be performed or complied with by the Seller,
Holdings and the Stockholders at or before the Closing shall have been duly
performed or complied with in all material respects, and the Buyer shall have
received a certificate from each of the Stockholders and a certificate from a
duly authorized officer of each of the Seller and Holdings, dated the Closing
Date, to such effect.
8.3 NO LITIGATION. No action, suit or proceeding shall have been
instituted by a governmental agency or any other third party to prohibit or
restrain the sale contemplated by this Agreement or otherwise challenge the
power and authority of the parties to enter into this Agreement or to carry out
their obligations hereunder or the legality or validity of the sale contemplated
by this Agreement.
8.4 INVENTORY. The Inventory shall have been completed to the reasonable
satisfaction of the Buyer.
8.5 CORPORATE ORGANIZATION; ENCUMBRANCES. Both the Seller and Holdings
shall have furnished to the Buyer: (a) a certificate of good standing of such
party issued by the Secretary of State of the State of Florida dated no earlier
than fifteen (15) business days prior to the Closing Date; (b) a copy of the
Articles of Incorporation of such party certified by the Secretary of State of
the State of Florida dated no earlier than fifteen (15) business days prior to
the Closing Date; (c) a certificate of the Secretary of such party, dated the
Closing Date, in form and substance reasonably satisfactory to the Buyer,
certifying as to (i) no amendments to the Articles of Incorporation of such
party since the date of the certificate delivered in accordance with Section
8.5(b); (ii) the Bylaws of such party attached to such certificate being true
and correct; and (iii) the incumbency and signatures of the officers of such
party executing this Agreement and any other agreements, instruments or
documents to be executed by such party in connection herewith; and (d) recent
UCC- 11 search reports for the Seller (including reports for each of the trade
names required to be listed under Section 5.5) or other evidence reasonably
satisfactory to the Buyer and its counsel that the Assets are free and clear of
all Encumbrances.
8.6 BOARD RESOLUTIONS. Each of the Seller and Holdings shall have
furnished to the Buyer a copy of the resolutions duly adopted by the directors
and the stockholders of such party
18
authorizing the execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby, certified by an authorized officer of such
party as of the Closing Date.
8.7 NO DAMAGE. There shall have been no material adverse change or
development in any of the Assets or the Liabilities of the Seller or in the
prospects, properties, earnings, results of operations or condition (financial
or otherwise) of the Businesses, and no event shall have occurred or
circumstance exist that may, or could reasonably be expected to, result in such
a material adverse change.
8.8 MOTOR VEHICLE LICENSES. The Buyer shall have been licensed as a Motor
Vehicle Dealer under applicable Florida motor vehicle dealer registration laws
and shall have obtained all other authorizations, consents, licenses and permits
from applicable governmental agencies having or asserting jurisdiction, which
the Buyer deems necessary or appropriate to conduct business as an automobile
dealer at the Real Property or such other location as the Buyer may determine.
8.9 CONSENTS AND APPROVALS. The Seller shall have obtained and delivered
to the Buyer all other authorizations, consents and approvals from third persons
and entities as are (a) required to assign those material contracts and leases
that the Buyer is to assume at Closing, or (b) otherwise required of the Seller
to consummate the transactions contemplated hereby.
8.10 CERTIFICATES OF ORIGIN; ETC. The Seller shall have transferred to the
Buyer certificates of title or origin for all New Vehicles, Demonstrators and,
if applicable, Used Vehicles and all of its registration lists, owner follow-up
lists and service files on hand as of the Closing Date with respect to the
Businesses.
8.11 TERMINATION OF THE SELLER'S AGREEMENTS WITH MANUFACTURERS. The Seller
shall have terminated in writing its dealer agreements and any other applicable
sales and service agreements with the respective Manufacturers.
8.12 BILLS OF SALE; ETC. The Seller shall have executed, as appropriate,
and delivered to the Buyer the Bills of Sale, other documents of transfer of
title contemplated hereby and any and all other documents necessary or desirable
in connection with the transfer of the Assets, which documents shall warrant
title to the Buyer consistent with this Agreement and shall in all respects be
in such form as may be reasonably required by the Buyer and its counsel.
8.13 MANUFACTURER APPROVAL. Each of the Manufacturers shall have approved
the Buyer or the Buyer's affiliate as an authorized dealer and O. ▇▇▇▇▇▇ ▇▇▇▇▇
or O. ▇▇▇▇▇▇ ▇▇▇▇▇'▇ designee as the authorized dealer operator, and each of the
Manufacturers shall have executed a dealer agreement, and any other applicable
sales and service agreements, on terms reasonably satisfactory to the Buyer.
8.14 CONSENTS; RELEASES OF ENCUMBRANCES. All consents, approvals, notices,
filings and/or registrations set forth on Schedule 7.2 hereto shall have been
obtained or made and the Seller shall have delivered to the Buyer evidence
thereof reasonably satisfactory to the Buyer. The Seller
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shall have obtained releases or discharges of, or shall otherwise have made
provision satisfactory to the Buyer for the release or discharge of, all
Encumbrances set forth on Schedule 7.4 hereto, except for Encumbrances which
secure only the Liabilities.
8.15 REAL PROPERTY PURCHASE AGREEMENTS. The closings under the Real
Property Purchase Agreements shall have occurred or shall be occurring
contemporaneously with the Closing.
8.16 [INTENTIONALLY LEFT BLANK]
8.17 HSR. All applicable waiting periods under the HSR Act (as defined in
Section 10.14 below) shall have expired without any indication by the Antitrust
Division (as defined in Section 10.14 below) or the FTC (as defined in Section
10.14 below) that either of them intends to challenge the transactions
contemplated hereby or, if any such challenge or investigation is made or
commenced, such challenge or investigation shall have been concluded in a way
which lawfully permits the transactions contemplated hereby in all material
respects.
8.18 NON-COMPETITION AGREEMENT. The Seller, Holdings and each Stockholder
shall have executed and delivered to the Buyer the Non-Competition Agreement.
8.19 AUDITED FINANCIAL STATEMENTS OF THE BUYER. The Buyer shall have
completed preparation of such audited financial statements of the Seller as may
be required by applicable regulations of the SEC or by the Buyer's lenders.
8.20 OPINION OF COUNSEL. The Buyer shall have received an opinion of
Robbins, Kelly, ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.A., counsel to the Seller, Holdings and
the Stockholders, in substantially the form of Exhibit C hereto.
ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SELLER, HOLDINGS AND THE
STOCKHOLDERS
The obligations of the Seller, Holdings and the Stockholders to perform
this Agreement at Closing are subject to the following conditions precedent
which shall be fully satisfied at or before the Closing, unless waived in
writing by the Seller:
9.1 REPRESENTATIONS AND WARRANTIES. All of the representations and
warranties of the Buyer herein contained shall be true and correct in all
material respects on and as of the Closing Date as if made on and as of the
Closing Date, and the Seller shall have received a certificate from a duly
authorized officer of the Buyer, dated the Closing Date, to such effect.
9.2 COMPLIANCE WITH AGREEMENTS. Each of the agreements or obligations
required by this Agreement to be performed or complied with by the Buyer at or
before the Closing shall have
20
been duly performed or complied with in all material respects, and the Seller
shall have received a certificate from a duly authorized officer of the Buyer,
dated the Closing Date, to such effect.
9.3 NO LITIGATION. No action, suit or proceeding shall have been
instituted by a governmental agency or any third party to prohibit or restrain
the sale contemplated by this Agreement or otherwise challenge the power and
authority of the parties to enter into this Agreement or to carry out their
obligations hereunder or the legality or validity of the sale contemplated by
this Agreement.
9.4 INVENTORY. The Inventory shall have been completed to the reasonable
satisfaction of the Seller.
9.5 CORPORATE ORGANIZATION; BOARD RESOLUTIONS. The Buyer shall have
furnished to the Seller: (a) a certificate of good standing of the Buyer issued
by the Secretary of State of the State of Delaware dated no earlier than fifteen
(15) business days prior to the Closing Date; and (b) a certificate of the
Secretary or an Assistant Secretary of the Buyer, dated the Closing Date, in
form and substance reasonably satisfactory to the Seller, certifying as to (i)
the Restated Certificate of Incorporation of the Buyer attached to such
certificate being true and correct; (ii) the Bylaws of the Buyer attached to
such certificate being true and correct; (iii) the incumbency and signatures of
the officers of the Buyer executing this Agreement and any other agreements,
instruments or documents to be executed by the Buyer in connection herewith; and
(iv) the resolutions of the Board of Directors of the Buyer authorizing the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby.
9.6 PAYMENT OF PURCHASE PRICE; ASSUMPTION AGREEMENTS. The Buyer shall have
tendered to the Seller the Purchase Price and shall have executed and delivered
the Assumption Agreements.
9.7 REAL PROPERTY PURCHASE AGREEMENTS. The closings under the Real
Property Purchase Agreements shall have occurred or shall be occurring
contemporaneously with the Closing.
9.8 HSR. All applicable waiting periods under the HSR Act shall have
expired without any indication of the Antitrust Division or the FTC that either
of them intends to challenge the transactions contemplated hereby, or, if any
such challenge or investigation is made or commenced, such challenge or
investigation shall have been concluded in a way which lawfully permits the
transactions contemplated hereby in all material respects.
9.9 OPINION OF COUNSEL. The Seller and the Stockholders shall have
received an opinion of Parker, Poe, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, L.L.P., counsel to the
Buyer, in substantially the form of Exhibit D hereto.
21
ARTICLE X
COVENANTS AND AGREEMENTS
10.1 BULK SALES. The Seller shall comply with the notification
requirements of the Florida Uniform Commercial Code--Bulk Transfer Law, if
applicable, with respect to the transactions contemplated hereby.
10.2 FURTHER ASSURANCES. The Seller, Holdings and the Stockholders agree
that they will, at any time and from time to time, after the Closing, upon
request of the Buyer, do, execute, acknowledge and deliver all such further
acts, deeds, assignments, transfers, conveyances, powers of attorney and
assurances, in a form reasonably satisfactory to the Buyer's counsel, as may be
reasonably required to convey and transfer to and vest in the Buyer, and protect
its rights, title and interest in and enjoyment of, all the Assets.
10.3 SATISFACTION OF CLOSING CONDITIONS. The parties hereto shall use
their reasonable best efforts to obtain, and to cooperate with each other in
obtaining, all authorizations, approvals, licenses, permits and other consents
contemplated by Articles VIII and IX.
10.4 NO MATERIAL ADVERSE CHANGES. During the period from the date of this
Agreement through the Closing Date, the Seller will operate the respective
Businesses only in the ordinary course of business and in accordance with past
practices. The Seller shall promptly notify the Buyer of any material adverse
change or development in any of the Assets or the Liabilities or in the
prospects, properties, earnings, results of operations or condition (financial
or otherwise) of the Businesses, and of the occurrence of any event or
circumstance that will, or could reasonably be expected to, result in such a
material adverse change.
10.5 ACCESS; ENVIRONMENTAL AUDIT. Until Closing, the Seller shall afford
to the Buyer, its attorneys, accountants and such other representatives of the
Buyer as the Buyer shall designate to the Seller, free and full access at all
reasonable times, and upon reasonable prior notice, to the Assets and the
properties, books and records of the Seller, and to interview personnel,
suppliers and customers of the Seller, in order that the Buyer may have full
opportunity to make such further investigation as it shall reasonably desire of
the Assets, the Liabilities and the Businesses. The Seller, shall furnish to the
Buyer the due diligence materials set forth in Schedule 10.5 hereto as soon as
practicable, and shall provide to the Buyer such additional information as the
Buyer may reasonably request. The Seller shall allow an environmental consulting
firm selected by the Buyer (the "ENVIRONMENTAL AUDITOR") to have prompt access
to the Real Property in order to conduct an environmental investigation
satisfactory to the Buyer in scope and reasonably acceptable to the Seller (such
scope being sufficient to result in a Phase I environmental audit report and a
Phase II environmental audit report, if desired by the Buyer) of, and to prepare
a report with respect to, the Real Property (the "ENVIRONMENTAL AUDIT"). The
Seller shall provide to the Environmental Auditor: (a) reasonable access to all
of its existing records concerning the matters which are the subject of the
Environmental Audit; and (b) reasonable access to the employees of the Seller
and the last known addresses of former employees of the Seller who are most
familiar with the matters
22
which are the subject of the Environmental Audit (the Seller agreeing to use
reasonable efforts to have such former employees respond to any reasonable
requests or inquiries by the Environmental Auditor). The Environmental Auditor
shall coordinate all visits to the Real Property and conversations with
employees of the Seller with the Stockholders or their designee and shall use
reasonable efforts to minimize any disruption of the Seller's business in
performing such investigations. The Seller shall otherwise cooperate with the
Environmental Auditor in connection with the Environmental Audit. The Buyer and
the Seller shall each pay 50% of the costs, fees and expenses in connection with
any Phase I of the Environmental Audit, and the Buyer shall pay 100% of the
costs, fees and expenses in connection with any Phase II of the Environmental
Audit. The Buyer shall bear the costs, fees and expenses in connection with any
financial audit.
10.6 INDEMNIFICATION BY THE SELLER, HOLDINGS AND THE STOCKHOLDERS.
-------------------------------------------------------------
(a) All representations and warranties of the Seller, Holdings and
the Stockholders contained herein, or in any agreement, certificate or document
executed by any of the Seller, Holdings or the Stockholders in connection
herewith, shall survive the Closing for a period of two (2) years with the
exception of (i) the representations and warranties contained in Section 7.12,
which shall survive the Closing until the expiration of the applicable tax
statutes of limitation plus a period of sixty (60) days; and (ii) the
representations and warranties contained in Section 7.8(b), which shall survive
the Closing for a period of seven (7) years. The foregoing limitations of
survival shall not in any way reduce the indemnification obligations of the
Seller, Holdings and the Stockholders with respect to the Retained Liabilities.
As to each representation and warranty of the parties to this Agreement, the
date to which such representation and warranty shall survive is hereinafter
referred to as the "SURVIVAL DATE." All information contained in any Schedule
furnished hereunder by either of the Seller, Holdings or the Stockholders shall
be deemed a representation and warranty by the Seller and the Stockholders made
in this Agreement as to the accuracy of such information.
(b) The Seller, Holdings and the Stockholders, jointly and
severally, agree to indemnify and hold harmless the Buyer and its stockholders,
officers, directors, employees and agents, and their respective successors and
assignees (collectively, the "BUYER INDEMNITEES"), from and against any and all
losses, damages, liabilities, obligations, assessments, suits, actions,
proceedings, claims or demands, including costs, expenses and fees (including
reasonable attorneys' fees and expert witness fees incurred in connection
therewith) ("LOSSES"), suffered by any of them or asserted against any of them
or any of the Assets, arising out of or based upon (i) the breach or failure of
any representation or warranty of the Seller, Holdings or any Stockholder
contained herein, or in any agreement, certificate or document executed by the
Seller, Holdings or any Stockholder in connection herewith, to be true and
correct (regardless of any investigation made by or on behalf of the Buyer and
regardless of any knowledge or information the Buyer may have), (ii) the breach
of any covenant or agreement of the Seller, Holdings or any Stockholder
contained in this Agreement, (iii) the Retained Liabilities or any liability or
obligation of the Seller, Holdings or any Stockholder, (iv) any arrangements or
agreements made or alleged to have been made by the Seller, Holdings or any
Stockholder with any broker, finder or other agent in connection with the
transactions contemplated hereby, or (v) any matter, item, circumstance or
condition listed,
23
contained or otherwise referred to on Schedule 7.8(a) or Schedule 7.8(b);
provided, however (A) the Seller, Holdings and the Stockholders shall have no
obligation to pay Losses pursuant to clause (i) of this subsection (b) unless
and until (and only to the extent that) all claims with respect to Losses
pursuant to said clause (i) exceed a cumulative aggregate total of $50,000, and
(B) the Buyer shall make no claim for indemnification under clause (iii) of this
subsection (b), insofar as such a claim relates to a Retained Liability
described in subparagraph (h) of Part II of Schedule 2.4 hereto, after the
seventh (7th) anniversary of the Closing Date.
(c) No claim for indemnification with respect to a breach of a
representation and warranty shall be made by a Buyer Indemnitee after the
applicable Survival Date unless prior to such Survival Date the Buyer Indemnitee
shall have given an indemnifying party written notice of such claim for
indemnification based upon actual loss sustained, or potential loss anticipated,
as a result of the existence of any claim, demand, suit, or cause of action
against such Buyer Indemnitee.
10.7 INDEMNIFICATION BY THE BUYER.
-----------------------------
(a) All representations and warranties of the Buyer contained
herein, or in any agreement, certificate or document executed by the Buyer in
connection herewith, shall survive the Closing for a period of three years. All
information contained in any Schedule furnished hereunder by the Buyer shall be
deemed a representation and warranty by the Buyer made in this Agreement as to
the accuracy of such information.
(b) The Buyer agrees to indemnify and hold harmless the Seller and
Holdings and their respective stockholders, officers, employees, agents,
successors and assigns (the "SELLER INDEMNITEES"), from and against any and all
Losses incurred in connection with, suffered by any of them, or asserted against
any of them, arising out of or based upon (i) the breach or failure of any
representation or warranty of the Buyer contained herein, or in any agreement,
certificate or document executed by the Buyer in connection herewith, to be true
and correct (regardless of any investigation made by or on behalf of the Seller,
Holdings or the Stockholders and regardless of any knowledge or information the
Seller, Holdings or the Stockholders may have), (ii) the breach of any covenant
or agreement of the Buyer contained in this Agreement, (iii) the Buyer's failure
to discharge the Liabilities, or (iv) any arrangements or agreements made or
alleged to have been made by the Buyer with any broker, finder or other agent in
connection with the transactions contemplated hereby.
(c) No claim for indemnification with respect to a breach of a
representation and warranty shall be made by any Seller Indemnitee under this
Agreement after the applicable Survival Date unless prior to such Survival Date
the Seller Indemnitee shall have given the Buyer written notice of such claim
for indemnification based upon actual loss sustained, or potential loss
anticipated, as a result of the existence of any claim, demand, suit, or cause
of action against such Seller Indemnitee.
10.8 CERTAIN TAXES. Personal property, use and intangible taxes and
assessments and utility charges with respect to the Assets shall be prorated on
a per diem basis and apportioned on
24
a calendar year basis between the Seller, on the one hand, and the Buyer, on the
other hand, as of the date of the Closing. The Seller shall be liable for that
portion of such taxes and assessments relating to, or arising in respect of,
periods on or prior to the Closing Date, and the Buyer shall be liable for that
portion of such taxes and assessments relating to, or arising in respect of, any
period after the Closing Date. Any taxes attributable to the sale or transfer of
the Assets to the Buyer hereunder shall be paid by the Seller.
10.9 NO PUBLICITY. Except as may be required by law or the rules of the
New York Stock Exchange or as necessary in connection with the transactions
contemplated hereby, no party hereto shall (a) make any press release or other
public announcement relating to this Agreement or the transactions contemplated
hereby, without the prior approval of the other parties hereto or (b) otherwise
disclose the existence and nature of the transactions contemplated hereby to any
person or entity other than such party's accountants, attorneys, agents and
representatives, all of whom shall be subject to this nondisclosure obligation
as agents of such party. The parties shall cooperate with each other in the
preparation and dissemination of any public announcements of the transactions
contemplated by this Agreement.
10.10 NO NEGOTIATIONS OR DISCUSSIONS. None of the Seller, Holdings or any
of the Stockholders shall, directly or indirectly, at any time on or prior to
the Closing Date, pursue, initiate, encourage or engage in any negotiations or
discussions with, or provide any information to, any person or entity (other
than the Buyer and its representatives and affiliates) regarding the sale or
possible sale to any such person or entity of any of the Assets or capital stock
of the Seller or any merger or consolidation or similar transaction involving
the Seller.
10.11 REGARDING THE MANUFACTURERS. Immediately upon the execution of this
Agreement, the Seller will notify the respective Manufacturers regarding the
transactions contemplated by this Agreement, utilizing a form of notification
acceptable to the Buyer. The Buyer shall promptly apply to the respective
Manufacturers for, or cause an affiliate of the Buyer to apply to the respective
Manufacturers for, the issuance of a franchise to operate an automobile
dealership upon the Real Property or at such other location the Buyer shall
determine in its sole discretion. Effective as of the Closing, the Seller shall
terminate its Dealer Sales and Service Agreements with the respective
Manufacturers. The Seller shall fully cooperate with the Buyer, and take all
reasonable steps to assist the Buyer, in the Buyer's efforts to obtain its own
similar Dealer Sales and Service Agreements with the Manufacturers. The parties
acknowledge that the Buyer's Dealer Agreements are subject to the approval of
the respective Manufacturers and that the Buyer would be unable to obtain its
own, similar Dealer Sales and Service Agreements absent the Seller's termination
of their agreements.
10.12 THE SELLER'S EMPLOYEES. The Buyer shall have the right, but not the
obligation, to employ any or all of the Seller's employees.
10.13 TERMINATION.
------------------
25
(a) Notwithstanding any other provision herein contained to the
contrary, this Agreement may be terminated at any time prior to the Closing:
(i) by the written mutual consent of the parties hereto prior
to the Closing Date Deadline;
(ii) by the Buyer prior to the Closing Date Deadline (as the
same may have been extended pursuant to Section 1.3 hereof) in the event of any
breach by the Seller, Holdings or any of the Stockholders of any of their
respective material representations, warranties, covenants or agreements
contained herein;
(iii) by the Seller prior to the Closing Date Deadline (as the
same may have been extended pursuant to Section 1.3 hereof) in the event of any
breach by the Buyer of any of the Buyer's material representations, warranties,
covenants or agreements contained herein;
(iv) at any time after the Closing Date Deadline, by written
notice by the Buyer or the Seller (subject to the other party's option to elect
to extend the Closing Date Deadline in accordance with Section 1.3) to the other
parties hereto if the Closing shall not have occurred on or before the Closing
Date Deadline (as the same may have been extended in accordance with Section
1.3);
(v) by the Seller at any time prior to the expiration of 45
days after the date of this Agreement or by the Buyer at any time between the
date of this Agreement and the date that is 45 days after both (i) the mutual
agreement of the Seller and the Buyer on the form and substance of the Schedules
delivered by the Seller pursuant to Article VII hereof and by the Buyer pursuant
to Article VIII hereof and (ii) the delivery by the Seller to the Buyer of the
due diligence materials listed on Schedule 10.5 attached hereto, if the Seller
or the Buyer, as the case may be, in their sole discretion, are not satisfied
with their due diligence investigation of the Buyer or the Seller, as the case
may be;
(vi) by the Buyer, by written notice to the Seller, in the
event that any Manufacturer, or any other person claiming by, through or under
any Manufacturer, shall exercise any right of first refusal, preemptive right or
other similar right, with respect to any of the Assets; or
(vii) by the Buyer, by written notice to the Seller if, after
any initial HSR Act filing, the FTC makes a "second request" for information, or
if the FTC or the Antitrust Division challenges the transactions contemplated
hereby;
provided, however, no party may terminate this Agreement pursuant to clauses
(ii), (iii), or (iv) above if such party is in breach of any of its material
representations, warranties, covenants or agreements contained herein.
26
(b) In the event of termination of this Agreement pursuant to
Section 10.13(a), this Agreement shall be of no further force or effect;
provided, however, that any termination pursuant to Section 10.13(a) shall not
relieve: (i) the Buyer of any liability under Section 10.13(c) below; (ii) the
Seller, Holdings and the Stockholders of any liability under Section 10.13(d)
below; (iii) subject to Section 10.13(e) below, any party hereto of any
liability for breach of any representation, warranty, covenant or agreement
hereunder occurring prior to such termination; or (iv) any party hereto of its
or his obligations hereunder to pay the fees and expenses of third parties;
provided, further, that all filings, applications and other submissions made
pursuant to this Agreement or prior to the execution of this Agreement in
contemplation hereof shall, to the extent practicable, be withdrawn from the
agency or other entity to which made.
(c) If this Agreement is terminated by the Seller pursuant to
Section 10.13(a)(iv) hereof and the failure to complete the Closing on or before
the Closing Date Deadline (as the same may have been extended pursuant to
Section 1.3) shall have been due to the Buyer's breach of its material
representations, warranties, covenants or agreements under this Agreement, then
the Buyer shall, upon demand of the Seller, promptly pay to the Seller in
immediately available funds, as liquidated damages for the loss of the
transaction, an aggregate termination fee of $750,000 ("the BUYER TERMINATION
FEE").
(d) If this Agreement is terminated by the Buyer pursuant to Section
10.13(a)(iv) hereof and the failure to complete the Closing on or before the
Closing Date Deadline (as the same may have been extended pursuant to Section
1.3) shall have been due to a breach by any of the Seller, Holdings or the
Stockholders of their material representations, warranties, covenants or
agreements under this Agreement, then the Seller, Holdings and the Stockholders,
jointly and severally, shall, upon demand of the Buyer, promptly pay to the
Buyer in immediately available funds, as liquidated damages for the loss of the
transaction, a termination fee of $750,000 (the "SELLER TERMINATION FEE").
(e) In the case of termination of this Agreement pursuant to Section
10.13(a)(iv) hereof, the rights of the terminating party to be paid the Seller
Termination Fee or the Buyer Termination Fee, as the case may be, shall be such
party's sole and exclusive remedy for damages; in the event of such termination
by either party, such party shall have no right to equitable relief for any
breach or alleged breach of this Agreement, other than for specific performance
for the payment of the Seller Termination Fee or the Buyer Termination Fee, as
the case may be. Nothing contained in this Agreement shall prevent any party
from electing not to exercise any right it may have to terminate this Agreement
and, instead, seeking any equitable relief (including specific performance) to
which it would otherwise be entitled in the event of breach of any other party
hereto.
(f) The Seller, Holdings and the Stockholders acknowledge and agree
that the Buyer's due diligence investigation of the Seller and the Businesses,
including, without limitation, its review of the Schedules attached hereto and
the information and documentation received from the Seller, shall not constitute
a waiver of, or otherwise modify, the Buyer's right to terminate this Agreement
under Section 10.13(a)(v) hereof.
27
10.14 HSR. Subject to the determination by the Buyer that compliance by
the Seller and the Buyer with the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act
of 1976, as amended (the "HSR ACT"), is not required, the Seller and the Buyer
shall each prepare and file with the Federal Trade Commission (the "FTC") and
the Antitrust Division of the Department of Justice (the "ANTITRUST DIVISION"),
and respond as promptly as practicable to all inquiries received from the FTC or
the Antitrust Division for additional information or documentation. The Buyer
shall pay 100% of any HSR Act filing fee.
10.15 THE BUYER'S FINANCIAL STATEMENTS. The Seller shall allow, cooperate
with and assist the Buyer's accountants, and shall instruct the Seller's
accountants to cooperate, in the preparation of audited financial statements of
the Seller as necessary for any required filings by the Buyer with the SEC or as
required by the Buyer's lenders; provided, however, that the expense of such
audit shall be borne by the Buyer.
10.16 CURING BREACHES OF REPRESENTATIONS AND WARRANTIES. Upon written
notice by the Buyer of the discovery by the Buyer prior to the Closing of a
breach of any representation and warranty of the Seller contained in this
Agreement, the Seller will, if requested in writing by the Buyer, at its
expense, undertake to cure such breach prior to the Closing. In the event that
such breach cannot, despite reasonable efforts, be fully cured prior to the
Closing, the Seller shall continue its efforts to complete such cure after the
Closing. If the Buyer shall have requested the Seller to cure any such breach
pursuant to this Section 10.16, the Buyer shall not be entitled to claim such
breach as a failure of the Buyer's condition to close under Section 8.1 of the
Agreement.
10.17 RIGHT OF FIRST OFFER ON RESALE. If, at any time during the five (5)
year period commencing with the Closing Date, the Buyer shall propose to sell
any of the dealership businesses acquired from the Seller pursuant to this
Agreement, the Buyer shall first give notice in writing to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
as agent for the Seller and the Stockholders (the "SELLER'S AGENT"), of its
intention to do so, which notice (the "FIRST OFFER") shall constitute an offer
to the Seller and the Stockholders to purchase such dealership business from the
Buyer at the price and upon payment terms set forth in such notice. The Seller
and the Stockholders, acting through the Seller's Agent, shall have a period of
thirty (30) days after the giving of such notice by the Buyer to accept in
writing (the "FIRST OFFER ACCEPTANCE") the Buyer's offer set forth in the First
Offer. If the Seller and the Stockholders, acting through the Seller's Agent,
shall have delivered the First Offer Acceptance to the Buyer prior to the
expiration of such thirty (30) day period, the parties shall negotiate in good
faith in an effort to finalize, execute and deliver a definitive purchase
agreement containing customary terms with respect to such proposed sale. If the
parties are unable to execute and deliver such definitive purchase agreement
within a period of thirty (30) days after receipt by the Buyer of the First
Offer Acceptance (the last day of such thirty (30) day period at 5:00 p.m.,
Eastern Time, being the "FIRST OFFER AGREEMENT DEADLINE"), the Buyer shall be
free to sell the dealership business to any other person during the one year
period commencing with the expiration of the First Offer Agreement Deadline at a
price that is not less than 90% of the price proposed by the Buyer in the First
Offer, and on payment terms which, in the overall, are no less favorable than
such payment terms proposed by the Buyer in the First Offer. The parties
acknowledge that the
28
provisions of this Section 10.17 are subject to the rights of the Manufacturers,
as more fully set forth in that certain letter agreement dated August 26, 1999
among the parties hereto.
ARTICLE XI
MISCELLANEOUS
11.1 ASSIGNMENT. Except as provided in this Section, this Agreement shall
not be assignable by any party hereto without the prior written consent of the
other parties. The Buyer may assign this Agreement, without the consent of the
other parties hereto, to a corporation, partnership, limited liability company
or other entity controlled by the Buyer, including a corporation, partnership,
limited liability company or other entity to be formed at any time prior to the
Closing Date, and to any person or entity who shall acquire all or substantially
all of the assets of the Buyer or of such corporation, partnership, limited
liability company or other entity controlled by the Buyer (including any such
acquisition by merger or consolidation); provided said assignment shall be in
writing and the assignee shall assume all obligations of the Buyer hereunder,
whereupon the assignee shall be substituted in lieu of the Buyer named herein
for all purposes, and provided further, that the Buyer originally named herein
shall continue to be liable with respect to its obligations hereunder. The Buyer
may assign this Agreement, without the consent of the other parties hereto, as
collateral security, and the other parties hereto agree to execute and deliver
any acknowledgment of such assignment by the Buyer as may be required by any
lender to the Buyer.
11.2 GOVERNING LAW. The interpretation and construction of this Agreement,
and all matters relating hereto, shall be governed by the laws of the State of
Florida.
11.3 ACCOUNTING MATTERS. All accounting matters required or contemplated
by this Agreement shall be in accordance with generally accepted accounting
principles.
11.4 FEES AND EXPENSES. Except as otherwise specifically provided in this
Agreement, each of the parties hereto shall be responsible for the payment of
such party's fees, costs and expenses incurred in connection with the
negotiation and consummation of the transactions contemplated hereby.
11.5 AMENDMENTS; MERGER CLAUSE. This Agreement, including the schedules
and other documents referred to herein which form a part hereof, contains the
entire understanding of the parties hereto with respect to the subject matter
contained herein and therein. This Agreement may not be amended except by a
writing executed by all of the parties hereto. This Agreement supersedes all
prior agreements and understandings between the parties with respect to such
subject matter.
11.6 WAIVER. To the extent permitted by applicable law, no claim or right
arising out of this Agreement or the documents referred to in this Agreement can
be discharged by a party, in whole or in part, by a waiver or renunciation of
the claim or right unless in writing signed by all the
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parties hereto. Any waiver by a party hereto of a breach of any provision of
this Agreement shall not operate or be construed as a waiver of any subsequent
breach of such provision or any other provision of this Agreement. Neither the
failure nor any delay by any party hereto in exercising any right or power under
this Agreement or the documents referred to in this Agreement will operate as a
waiver of such right or power, and no single or partial exercise of any such
right or power will preclude any other or further exercise of such right or
power or the exercise of any other right or power.
11.7 NOTICES. All notices, claims, certificates, requests, demands and
other communications hereunder shall be given in writing and shall be delivered
personally or sent by facsimile or by a nationally recognized overnight courier,
postage prepaid, and shall be deemed to have been duly given when so delivered
personally or by confirmed facsimile or one (1) business day after the date of
deposit with such nationally recognized overnight courier. All such notices,
claims, certificates, requests, demands and other communications shall be
addressed to the respective parties at the addresses set forth below or to such
other address as the person to whom notice is to be given may have furnished to
the others in writing in accordance herewith.
If to the Buyer, to:
Sonic Automotive, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Chief Financial Officer
With a copy to:
Parker, Poe, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ L.L.P.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
If to the Seller, Holdings or the Stockholders, to:
c/▇ ▇▇▇▇▇▇▇▇ Holdings, Inc.
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: President
Telecopy No: (▇▇▇) ▇▇▇-▇▇▇▇
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With a copy to:
Robbins, Kelly, ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.A.
The Federated Building
Suite 1400
▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
11.8 COUNTERPARTS. This Agreement may be executed in any number of
counterparts. Each such counterpart hereof shall be deemed to be an original
instrument, and all such counterparts together shall constitute but one
agreement.
11.9 KNOWLEDGE. Whenever any representation or warranty of the Seller,
Holdings or any of the Stockholders contained herein or in any other document
executed and delivered in connection herewith is based upon the knowledge of the
Seller, Holdings or any of the Stockholders, (a) such knowledge shall be deemed
to include (i) the best actual knowledge, information and belief of the Seller,
Holdings and each Stockholder and (ii) any material information which any of the
Stockholders would reasonably be expected to be aware of in the prudent
discharge of his duties as an officer or director of the Seller and/or Holdings
in the ordinary course of business (including consultation with legal counsel)
on behalf of the Seller, and (b) the knowledge of any of the Seller, Holdings or
any of the Stockholders shall be deemed to be the knowledge of all of the
Seller, Holdings and all the Stockholders.
11.10 ARBITRATION.
------------
(a) Except as otherwise provided herein, any dispute, claim or
controversy arising out of or relating to this Agreement or the interpretation
or breach hereof shall be resolved by binding arbitration under the commercial
arbitration rules of the American Arbitration Association (the "AAA RULES") to
the extent such AAA Rules are not inconsistent with this Agreement. Judgment
upon the award of the arbitrators may be entered in any court having
jurisdiction thereof or such court may be asked to judicially confirm the award
and order its enforcement, as the case may be. The demand for arbitration shall
be made by any party hereto within a reasonable time after the claim, dispute or
other matter in question has arisen, and in any event shall not be made after
the date when institution of legal proceedings, based on such claim, dispute or
other matter in question, would be barred by the applicable statute of
limitations. The arbitration panel shall consist of three (3) arbitrators, one
of whom shall be appointed by the Buyer and one of whom shall be appointed by
the Seller within thirty (30) days after any request for arbitration hereunder.
The two arbitrators thus appointed shall choose the third arbitrator within
thirty (30) days after their appointment; provided, however, that if the two
arbitrators are unable to agree on the appointment of the third arbitrator
within thirty (30) days after their appointment, either arbitrator may petition
the American Arbitration Association to make the appointment. The place of
arbitration shall be either Charlotte, North Carolina or Fort ▇▇▇▇▇, Florida.
The arbitrators shall be instructed to render their decision
31
within sixty (60) days after their selection and to allocate all costs and
expenses of such arbitration (including legal and accounting fees and expenses
of the respective parties) to the parties in the proportions that reflect their
relative success on the merits (including the successful assertion of any
defenses).
(b) Notwithstanding the provisions of Section 11.10(a), any dispute
relating to accounting matters shall be resolved as provided in this Section
11.10(b). The parties first shall use reasonable efforts to resolve any such
accounting dispute. In the event the dispute has not been resolved within a
reasonable amount of time, either the Buyer, on the one hand, or the Seller, on
the other hand, may provide written notice to the other party that the matter
will be submitted to an accounting firm for resolution. The parties shall
mutually agree in writing on a "big five" accounting firm to be retained to
resolve the matter, and after joint retention of such firm the determination of
such firm shall be final and binding on the parties with respect to such
disputed accounting matter. The costs of the accounting firm shall be borne 50%
by the Buyer and 50% by the Seller.
(c) Nothing contained in this Section 11.10 shall prevent any party
hereto from seeking any equitable relief to which it would otherwise be entitled
from a court of competent jurisdiction.
11.11 PERMITTED SUCCESSORS; ASSIGNS; NO THIRD PARTY BENEFICIARIES. Subject
to Section 11.1, this Agreement shall be binding upon, inure to the benefit of
and be enforceable by the respective successors, heirs and assigns of the
parties hereto. Nothing in this Agreement, expressed or implied, is intended or
shall be construed to confer upon or give to any employee of the Seller, or any
other person, firm, corporation or legal entity, other than the parties hereto
and their successors and permitted assigns, any rights, remedies or other
benefits under or by reason of this Agreement.
11.12 HEADINGS. The article headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
11.13 SEVERABILITY; CONSTRUCTION.
---------------------------
(a) In the event that any provision, or part thereof, of this
Agreement shall be held to be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions, or parts thereof, shall
not in any way be affected or impaired thereby.
(b) This Agreement shall be construed equitably, in accordance with
its terms, without regard to the degree which the Seller or the Buyer, or their
respective legal counsel, have participated in the drafting of this Agreement.
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11.14 ORIGINAL ASSET PURCHASE AGREEMENT SUPERSEDED. Upon the execution and
delivery of this Agreement by the parties hereto, the Original Asset Purchase
Agreement shall be superseded by this Agreement.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the day and year first above written.
BUYER: SONIC AUTOMOTIVE, INC.
/s/ O. ▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------
By: O. ▇▇▇▇▇▇ ▇▇▇▇▇
Its: Chairman and CEO
F&S: ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, INC.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------
By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Its: CEO
SELLER: SOUTH GATE MOTORS, INC.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------
By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Its: CEO
HOLDINGS: ▇▇▇▇▇▇▇▇ HOLDINGS, INC.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------
By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Its: CEO
STOCKHOLDERS: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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