EXHIBIT 1.1
FIRSTAMERICA AUTOMOTIVE, INC.
(a Delaware corporation)
,000,000 Shares of Common Stock
--------
PURCHASE AGREEMENT
Dated: , 1999
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Table of Contents
SECTION 1. Representations and Warranties.....................................................................3
(a) Representations and Warranties by the Company...................................................3
(i) Compliance with Registration Requirements...............................................3
(ii) Independent Accountants................................................................4
(iii) Financial Statements..................................................................4
(iv) No Material Adverse Change in Business.................................................4
(v) Good Standing of the Company............................................................5
(vi) Good Standing of Subsidiaries..........................................................5
(vii) Capitalization........................................................................5
(viii) Authorization of Agreement...........................................................6
(ix) Authorization and Description of Securities............................................6
(x) Absence of Defaults and Conflicts.......................................................6
(xi) Absence of Labor Dispute...............................................................7
(xii) Absence of Proceedings................................................................7
(xiii) Accuracy of Exhibits.................................................................7
(xiv) Possession of Intellectual Property...................................................7
(xv) Absence of Further Requirements........................................................7
(xvi) Possession of Licenses and Permits....................................................8
(xvii) Title to Property....................................................................8
(xviii) Investment Company Act..............................................................8
(xix) Environmental Laws....................................................................8
(xx) Registration Rights....................................................................9
(xxi) Stabilization or Manipulation.........................................................9
(xxii) Income Taxes.........................................................................9
(xxiii) Internal Controls...................................................................10
(xxiv) Insurance............................................................................10
(xxv) Offering Material.....................................................................10
(xxvi) Suppliers............................................................................10
(xxvii) Related Party Transactions..........................................................10
(xxviii) Pending Acquisitions...............................................................10
(xxix) Franchise Agreements.................................................................11
(xxx) Year 2000 and Euro Disclosures........................................................11
(xxxi) Absence of Third Party Compensation Arrangements.....................................11
(xxxii) Restrictions on Securities..........................................................11
(xxxiii) New Credit Agreement..............................................................12
(xxxiv) Real Estate Holding Company........................................................12
(b) Representations and Warranties by the Selling Shareholders......................................12
(i) Accurate Disclosure.....................................................................12
(ii) Authorization of Agreements............................................................12
(iii) Good and Marketable Title.............................................................13
(iv) Due Execution of Power of Attorney and Custody Agreement...............................13
(v) Absence of Manipulation.................................................................13
(vi) Absence of Further Requirements........................................................13
(vii) Restriction on Sale of Securities.....................................................14
(viii) Certificates Suitable for Transfer...................................................14
(ix) No Association with NASD...............................................................14
(c) Officer's Certificates..........................................................................14
SECTION 2. Sale and Delivery to Underwriters; Closing.........................................................15
(a) Initial Securities...............................................................................15
(b) Option Securities................................................................................15
(c) Payment..........................................................................................15
(d)Denominations; Registration.......................................................................16
SECTION 3. Covenants of the Company...........................................................................16
(a) Compliance with Securities Regulations and Commission Requests...................................17
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(b) Filing of Amendments.............................................................................17
(c) Delivery of Registration Statements..............................................................17
(d) Delivery of Prospectuses.........................................................................17
(e) Continued Compliance with Securities Laws........................................................18
(f) Blue Sky Qualifications..........................................................................18
(g) Rule 158.........................................................................................18
(h) Use of Proceeds..................................................................................18
(i) Listing..........................................................................................19
(j) Restriction on Sale of Securities................................................................19
(k) Reporting Requirements...........................................................................19
SECTION 4. Payment of Expenses................................................................................20
(a) Expenses........................................................................................20
(b) Expenses of the Selling Shareholders.............................................................20
(c) Termination of Agreement.........................................................................20
(d) Allocation of Expenses...........................................................................21
SECTION 5. Conditions of Underwriters' Obligations............................................................21
(a) Effectiveness of Registration Statement..........................................................21
(b) Opinion of Counsel for Company...................................................................21
(c) Opinion of Counsel for the Selling Shareholders..................................................21
(d) Opinion of Counsel for Underwriters..............................................................22
(e) Officers' Certificate............................................................................22
(f) Certificate of Selling Shareholders..............................................................22
(g) Accountant's Comfort Letter......................................................................22
(h) Bring-down Comfort Letter........................................................................23
(i) Approval of Listing..............................................................................23
(j) No Objection.....................................................................................23
(k) Lock-up Agreements...............................................................................23
(l) Manufacturers' Consents..........................................................................24
(m) Acquisition Agreements...........................................................................24
(n) Legal Opinions...................................................................................24
(o) Credit Agreement.................................................................................24
(p) Conditions to Purchase of Options Securities.....................................................24
(ii) Opinion of Counsel for Company.........................................................24
(iii) Opinion of Special Counsel for Company................................................24
(iv) Opinion of Counsel for Underwriters....................................................24
(v) Bring-down Comfort Letter...............................................................24
(q)Additional Documents..............................................................................25
(r) Termination of Agreement.........................................................................25
SECTION 6. Indemnification....................................................................................25
(a) Indemnification of Underwriters by the Company...................................................25
(b) Indemnification of Underwriters by the Selling Shareholders......................................26
(c) Indemnification of Company, Directors and Officers and Selling Shareholders......................27
(d) Actions against Parties; Notification............................................................28
(e) Settlement without Consent if Failure to Reimburse...............................................28
(f) Indemnification for Reserved Securities..........................................................28
(g) Other Agreements with Respect to Indemnification.................................................29
SECTION 7. Contribution.......................................................................................29
SECTION 8. Representations, Warranties and Agreements to Survive Delivery.....................................30
SECTION 9. Termination of Agreement...........................................................................31
(a) Termination; General.............................................................................31
(b) Liabilities......................................................................................31
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SECTION 10. Default by One or More of the Underwriters........................................................31
SECTION 11. Default by One or More of the Selling Shareholders or the Company................................32
SECTION 12. Notices...........................................................................................32
SECTION 13. Parties...........................................................................................33
SECTION 14. Governing Law and Time............................................................................33
SECTION 15. Effect of Headings................................................................................33
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SCHEDULES
Schedule A - List of Underwriters.................................................................Sch A-1
Schedule B - List of Selling Shareholders.........................................................Sch B-1
Schedule C - Pricing Information..................................................................Sch C-1
Schedule D - List of Subsidiaries.................................................................Sch D-1
Schedule E - List of Persons subject to Lock-up...................................................Sch E-1
EXHIBITS
Exhibit A-1 - Form of Opinion of Company's Counsel...................................................A-1-1
Exhibit A-2 - Form of Opinion of Company's Special Counsel...........................................A-2-1
Exhibit B - Form of Opinion for the Selling Shareholders...............................................B-1
Exhibit C - Form of Lock-up Letter.....................................................................C-1
ANNEXES
Annex A-1 - Form of Comfort Letter for KPMG LLP........................................................A-1
Annex A-2 - Form of Comfort Letter for Deloitte & Touche LLP...........................................A-2
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FIRSTAMERICA AUTOMOTIVE, INC.
(a Delaware corporation)
,000,000 Shares of Common Stock
-----
(Par Value $0.00001 Per Share)
PURCHASE AGREEMENT
------------------
[ ], 1999
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
▇▇▇▇▇▇▇▇▇, Lufkin & ▇▇▇▇▇▇▇▇ Securities Corporation
BancBoston ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Inc.
▇/▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Ladies and Gentlemen:
FirstAmerica Automotive, Inc., a Delaware corporation (the "Company"), and
the persons listed in Schedule B hereto (the "Selling Shareholders"), confirm
their respective agreements with ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ Lynch, Pierce,
▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated ("▇▇▇▇▇▇▇ ▇▇▇▇▇") and each of the other Underwriters
named in Schedule A hereto (collectively, the "Underwriters," which term shall
also include any underwriter substituted as hereinafter provided in Section 10
hereof), for whom ▇▇▇▇▇▇▇ Lynch, Donaldson, Lufkin & ▇▇▇▇▇▇▇▇ Securities
Corporation and BancBoston ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Inc. are acting as
representatives (in such capacity, the "Representatives"), with respect to (i)
the issuance and sale by the Company and the sale by the Selling Shareholders,
acting severally and not jointly, and the purchase by the Underwriters, acting
severally and not jointly, of the respective numbers of shares of Common Stock,
par value $0.00001 per share, of the Company ("Common Stock") set forth in
Schedules A and B hereto and (ii) the grant by the Company to the Underwriters,
acting severally and not jointly, of the option described in Section 2(b) hereof
to purchase all or any part of [ ] additional shares of Common Stock to cover
over-allotments, if any. The aforesaid __,000,000 shares of Common Stock (the
"Initial Securities") to be purchased by the Underwriters and all or any part of
the [ ] shares of Common Stock subject to the option described in Section 2(b)
hereof (the "Option Securities") are hereinafter called, collectively, the
"Securities."
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The Company and the Selling Shareholders understand that the Underwriters
propose to make a public offering of the Securities as soon as the
Representatives deem advisable after this Agreement has been executed and
delivered.
The Company and the Underwriters agree that up to _______ shares of the
Initial Securities to be purchased by the Underwriters (the "Reserved
Securities") shall be reserved for sale by the Underwriters to certain eligible
Company directors, officers, employees, distributors, dealers, business
associates and related persons, as part of the distribution of the Securities by
the Underwriters, subject to the terms of this Agreement, the applicable rules,
regulations and interpretations of the National Association of Securities
Dealers, Inc. and all other applicable laws, rules and regulations. To the
extent that such Reserved Securities are not orally confirmed for purchase by
such eligible Company directors, officers, employees, distributors, dealers,
business associates and related persons, by the end of the first business day
after the date of this Agreement, such Reserved Securities may be offered to the
public as part of the public offering contemplated hereby.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (No. 333-75907), as amended
by [list amendments] thereto, covering the registration of the Securities under
the Securities Act of 1933, as amended (the "1933 Act"), including the related
preliminary prospectus or prospectuses. Promptly after execution and delivery of
this Agreement, the Company will either (i) prepare and file a prospectus in
accordance with the provisions of Rule 430A ("Rule 430A") of the rules and
regulations of the Commission under the 1933 Act (the "1933 Act Regulations")
and paragraph (b) of Rule 424 ("Rule 424(b)") of the 1933 Act Regulations or
(ii) if the Company has elected to rely upon Rule 434 ("Rule 434") of the 1933
Act Regulations, prepare and file a term sheet (a "Term Sheet") in accordance
with the provisions of Rule 434 and Rule 424(b). The information included in
such prospectus or in such Term Sheet, as the case may be, that was omitted from
such registration statement at the time it became effective but that is deemed
to be part of such registration statement at the time it became effective (i)
pursuant to paragraph (b) of Rule 430A is referred to as "Rule 430A Information"
or (ii) pursuant to paragraph (d) of Rule 434 is referred to as "Rule 434
Information." Each prospectus used before such registration statement became
effective, and any prospectus that omitted, as applicable, the Rule 430A
Information or the Rule 434 Information, that was used after such effectiveness
and prior to the execution and delivery of this Agreement, is herein called a
"preliminary prospectus." Such registration statement, including the exhibits
thereto and schedules thereto at the time it became effective and including the
Rule 430A Information and the Rule 434 Information, as applicable, is herein
called the "Registration Statement." Any registration statement filed pursuant
to Rule 462(b) of the 1933 Act Regulations is herein referred to as the "Rule
462(b) Registration Statement," and after such filing the term "Registration
Statement" shall include the Rule 462(b) Registration Statement. The final
prospectus in the form first furnished to the Underwriters for use in connection
with the offering of the Securities is herein called the "Prospectus." If Rule
434 is relied on, the term "Prospectus" shall refer to the preliminary
prospectus dated _______ __, 1999 together with the Term Sheet and all
references in this Agreement to the date of the Prospectus shall mean the date
of the Term Sheet. For purposes of this Agreement, all references to the
Registration Statement,
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any preliminary prospectus, the Prospectus or any Term Sheet or any amendment or
supplement to any of the foregoing shall be deemed to include the copy filed
with the Commission pursuant to its Electronic Data Gathering, Analysis and
Retrieval system ("▇▇▇▇▇").
SECTION 1. Representations and Warranties.
------------------------------
(a) Representations and Warranties by the Company. The Company represents
and warrants to each Underwriter as of the date hereof, as of the Closing Time
referred to in Section 2(c) hereof, and as of each Date of Delivery (if any)
referred to in Section 2(b) hereof, and agrees with each Underwriter, as
follows:
(i) Compliance with Registration Requirements. Each of the Registration
-----------------------------------------
Statement and any Rule 462(b) Registration Statement has become effective
under the 1933 Act and no stop order suspending the effectiveness of the
Registration Statement or any Rule 462(b) Registration Statement has been
issued under the 1933 Act and no proceedings for that purpose have been
instituted or are pending or, to the knowledge of the Company, are
contemplated by the Commission, and any request on the part of the Commission
for additional information has been complied with.
At the respective times the Registration Statement, any Rule 462(b)
Registration Statement and any post-effective amendments thereto became
effective and at the Closing Time (and, if any Option Securities are
purchased, at the Date of Delivery), the Registration Statement, the Rule
462(b) Registration Statement and any amendments and supplements thereto
complied and will comply in all material respects with the requirements of the
1933 Act and the 1933 Act Regulations and did not and will not contain an
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading, and the Prospectus, any preliminary prospectus and any supplement
thereto or prospectus wrapper prepared in connection therewith, at their
respective times of issuance and at the Closing Time, complied and will comply
in all material respects with any applicable laws or regulations of foreign
jurisdictions in which the Prospectus and such preliminary prospectus, as
amended or supplemented, if applicable, are distributed in connection with the
offer and sale of Reserved Securities. Neither the Prospectus nor any
amendments or supplements thereto (including any prospectus wrapper), at the
time the Prospectus or any such amendment or supplement was issued and at the
Closing Time (and, if any Option Securities are purchased, at the Date of
Delivery), included or will include an untrue statement of a material fact or
omitted or will omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. If Rule 434 is used, the Company will comply with the
requirements of Rule 434, and the Prospectus shall not be "materially
different," as such term is used in Rule 434, from the prospectus included in
the Registration Statement at the time it became effective. The
representations and warranties in this subsection shall not apply to
statements in or omissions from the Registration Statement or Prospectus made
in reliance upon and in conformity with information furnished to the Company
in
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writing by any Underwriter through ▇▇▇▇▇▇▇ ▇▇▇▇▇ expressly for use in the
Registration Statement or Prospectus.
Each preliminary prospectus and the prospectus filed as part of the
Registration Statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the 1933 Act, complied when so
filed in all material respects with the 1933 Act Regulations and each
preliminary prospectus and the Prospectus delivered to the Underwriters for
use in connection with this offering was identical to the electronically
transmitted copies thereof filed with the Commission pursuant to ▇▇▇▇▇, except
to the extent permitted by Regulation S-T.
(ii) Independent Accountants. The accountants who certified the financial
-----------------------
statements and supporting schedules included in the Registration Statement are
independent public accountants as required by the 1933 Act and the 1933 Act
Regulations.
(iii) Financial Statements. The financial statements included
--------------------
in the Registration Statement and the Prospectus, together with the related
schedules and notes, present fairly the financial position of the Company and
its consolidated subsidiaries at the dates indicated and the statement of
operations, stockholders' equity and cash flows of the Company and its
consolidated subsidiaries for the periods specified; said financial statements
have been prepared in conformity with generally accepted accounting principles
("GAAP") applied on a consistent basis throughout the periods involved. The
supporting schedules, if any, included in the Registration Statement present
fairly in accordance with GAAP the information required to be stated therein.
The selected financial data and the summary financial information included in
the Prospectus present fairly the information shown therein and have been
compiled on a basis consistent with that of the audited financial statements
included in the Registration Statement. The pro forma financial statements and
the pro forma financial information of the Company or its Subsidiaries and the
related notes thereto included in the Registration Statement and the
Prospectus present fairly the information shown therein, have been prepared in
accordance with the Commission's rules and guidelines with respect to pro
forma financial statements and have been properly compiled on the bases
described therein, and the assumptions used in the preparation thereof are
reasonable and the adjustments used therein are appropriate to give effect to
the transactions and circumstances referred to therein. All financial
statements required to be included in the Registration Statement and the
Prospectus pursuant to the 1933 Act, the 1933 Act Regulations and Regulation
S-X have been included in the Registration Statement and the Prospectus.
(iv) No Material Adverse Change in Business. Since the respective dates as
--------------------------------------
of which information is given in the Registration Statement and the
Prospectus, except as otherwise stated therein, (A) there has been no material
adverse change in the condition, financial or otherwise, earnings, business
affairs or business prospects of the Company and its subsidiaries considered
as one enterprise, whether or not arising in the ordinary course of business
(a "Material Adverse Effect"), (B) there have been no transactions
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entered into by the Company or any of its subsidiaries, other than those in
the ordinary course of business, which are material with respect to the
Company and its subsidiaries considered as one enterprise, and (C) there has
been no dividend or distribution of any kind declared, paid or made by the
Company on any class of its capital stock.
(v) Good Standing of the Company. The Company has been duly organized and
----------------------------
is validly existing as a corporation in good standing under the laws of the
State of Delaware and has corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectus and to enter into and perform its obligations under this Agreement
and to enter into and consummate all the transactions in connection therewith
as contemplated in the Prospectus; and the Company is duly qualified as a
foreign corporation to transact business and is in good standing in each other
jurisdiction in which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business, except where the
failure so to qualify or to be in good standing would not result in a Material
Adverse Effect.
(vi) Good Standing of Subsidiaries. Each of the subsidiaries of the
-----------------------------
Company (each a "Subsidiary") has been duly organized and is validly existing
as a corporation in good standing under the laws of the jurisdiction of its
incorporation, has corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the Prospectus and is
duly qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction in which such qualification is required, whether
by reason of the ownership or leasing of property or the conduct of business,
except where the failure so to qualify or to be in good standing would not
result in a Material Adverse Effect; except as otherwise disclosed in the
Registration Statement, all of the issued and outstanding capital stock of
each such Subsidiary has been duly authorized and validly issued, is fully
paid and non-assessable and is owned by the Company, directly or through
subsidiaries, free and clear of any security interest, mortgage, pledge, lien,
encumbrance, claim or equity; none of the outstanding shares of capital stock
of any Subsidiary was issued in violation of the preemptive or similar rights
of any securityholder of such Subsidiary or under any agreement to which the
Company or any Subsidiary is a party. The only subsidiaries of the Company are
the subsidiaries listed on Schedule D hereto.
(vii) Capitalization. The authorized, issued and outstanding capital stock
--------------
of the Company is as set forth in the Prospectus in the column entitled
"Actual" under the caption "Capitalization" (except for subsequent issuances,
if any, pursuant to this Agreement, pursuant to reservations, agreements or
employee benefit plans referred to in the Prospectus or pursuant to the
exercise of convertible securities or options referred to in the Prospectus).
The shares of issued and outstanding capital stock, including the Securities
to be purchased by the Underwriters from the Selling Shareholders, have been
duly authorized and validly issued and are fully paid and non-assessable; none
of the outstanding shares of capital stock, including the Securities to be
purchased by the Underwriters from the Selling Shareholders, was issued in
violation of the preemptive or
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other similar rights of any securityholder of the Company or under any
agreement to which the Company or any Subsidiary is a party.
(viii) Authorization of Agreement. This Agreement has been duly
--------------------------
authorized, executed and delivered by the Company.
(ix) Authorization and Description of Securities. The Securities to be
-------------------------------------------
purchased by the Underwriters from the Company have been duly authorized for
issuance and sale to the Underwriters pursuant to this Agreement and, when
issued and delivered by the Company pursuant to this Agreement against payment
of the consideration set forth herein, will be validly issued and fully paid
and non-assessable; the Common Stock conforms to all statements relating
thereto contained in the Prospectus and such description conforms to the
rights set forth in the instruments defining the same; no holder of the
Securities will be subject to personal liability by reason of being such a
holder; and the issuance of the Securities is not subject to the preemptive or
other similar rights of any securityholder of the Company.
(x) Absence of Defaults and Conflicts. Neither the Company nor any of its
---------------------------------
subsidiaries is in violation of its charter or by-laws or in default in the
performance or observance of any obligation, agreement, covenant or condition
contained in any contract, franchise or dealer agreement, indenture, mortgage,
deed of trust, loan or credit agreement, note, lease or other agreement or
instrument to which the Company or any of its subsidiaries is a party or by
which it or any of them may be bound, or to which any of the property or
assets of the Company or any subsidiary is subject (collectively, "Agreements
and Instruments") except for such defaults that would not result in a Material
Adverse Effect; and the execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated herein and in the
Registration Statement (including the issuance and sale of the Securities and
the use of the proceeds from the sale of the Securities as described in the
Prospectus under the caption "Use of Proceeds," the execution, delivery and
performance of the credit agreement (including floor plan financing), between
the Company and ________, dated ______, 1999 (the "New Credit Agreement") and
the consummation of any the pending acquisitions as described in the
Prospectus under the caption "Recent Acquisitions," hereinafter referred to as
the "Acquisitions") and compliance by the Company with its obligations
hereunder and thereunder have been duly authorized by all necessary corporate
action and do not and will not, whether with or without the giving of notice
or passage of time or both, conflict with or constitute a breach of, or
default or Repayment Event (as defined below) under, or result in the creation
or imposition of any lien, charge or encumbrance upon any property or assets
of the Company or any subsidiary pursuant to, the Agreements and Instruments,
nor will such action result in any violation of the provisions of the charter
or by-laws of the Company or any subsidiary or any applicable law, statute,
rule, regulation, judgment, order, writ or decree of any government,
government instrumentality or court, domestic or foreign, having jurisdiction
over the Company or any subsidiary or any of their assets, properties or
operations. As used herein, a "Repayment Event" means any event or condition
which gives the holder of any note, debenture or other evidence of
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indebtedness (or any person acting on such holder's behalf) the right to
require the repurchase, redemption or repayment of all or a portion of such
indebtedness by the Company or any subsidiary.
(xi) Absence of Labor Dispute. No labor dispute with the employees of the
------------------------
Company or any subsidiary exists or, to the knowledge of the Company, is
imminent, and the Company is not aware of any existing or imminent labor
disturbance by the employees of any of its or any subsidiary's principal
suppliers, manufacturers, customers or contractors, which, in either case, may
reasonably be expected to result in a Material Adverse Effect.
(xii) Absence of Proceedings. There is no action, suit, proceeding,
----------------------
inquiry or investigation before or brought by any court or governmental agency
or body, domestic or foreign, now pending, or, to the knowledge of the
Company, threatened, against or affecting the Company or any subsidiary, which
is required to be disclosed in the Registration Statement (other than as
disclosed therein), or which might reasonably be expected to result in a
Material Adverse Effect, or which might reasonably be expected to materially
and adversely affect the properties or assets thereof or the consummation of
the transactions contemplated in this Agreement or the performance by the
Company of its obligations hereunder; the aggregate of all pending legal or
governmental proceedings to which the Company or any subsidiary is a party or
of which any of their respective property or assets is the subject which are
not described in the Registration Statement, including ordinary routine
litigation incidental to the business, could not reasonably be expected to
result in a Material Adverse Effect.
(xiii) Accuracy of Exhibits. There are no contracts or documents which are
--------------------
required to be described in the Registration Statement, the Prospectus or to
be filed as exhibits thereto which have not been so described and filed as
required.
(xiv) Possession of Intellectual Property. The Company and its
-----------------------------------
subsidiaries own or possess, or can acquire on reasonable terms, adequate
patents, patent rights, licenses, inventions, copyrights, know-how (including
trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), trademarks, service marks,
trade names or other intellectual property (collectively, "Intellectual
Property") necessary to carry on the business now operated by them, and
neither the Company nor any of its subsidiaries has received any notice or is
otherwise aware of any infringement of or conflict with asserted rights of
others with respect to any Intellectual Property or of any facts or
circumstances which would render any Intellectual Property invalid or
inadequate to protect the interest of the Company or any of its subsidiaries
therein, and which infringement or conflict (if the subject of any unfavorable
decision, ruling or finding) or invalidity or inadequacy, singly or in the
aggregate, would result in a Material Adverse Effect.
(xv) Absence of Further Requirements. No filing with, or authorization,
-------------------------------
approval, consent, license, order, registration, qualification or decree of,
any court or
- 7 -
governmental authority or agency is necessary or required for the performance
by the Company of its obligations hereunder, in connection with the offering,
issuance or sale of the Securities hereunder or the consummation of the
transactions contemplated by this Agreement except (i) such as have been
already obtained and (ii) such as have been obtained under the laws and
regulations of jurisdictions outside the United States in which Reserved
Securities are offered.
(xvi) Possession of Licenses and Permits. The Company and its subsidiaries
----------------------------------
possess such permits, licenses, approvals, consents and other authorizations
(collectively, "Governmental Licenses") issued by the appropriate federal,
state, local or foreign regulatory agencies or bodies necessary to conduct the
business now operated by them; the Company and its subsidiaries are in
compliance with the terms and conditions of all such Governmental Licenses,
except where the failure so to comply would not, singly or in the aggregate,
have a Material Adverse Effect; all of the Governmental Licenses are valid and
in full force and effect, except when the invalidity of such Governmental
Licenses or the failure of such Governmental Licenses to be in full force and
effect would not have a Material Adverse Effect; and neither the Company nor
any of its subsidiaries has received any notice of proceedings relating to the
revocation or modification of any such Governmental Licenses which, singly or
in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would result in a Material Adverse Effect.
(xvii) Title to Property. The Company and its subsidiaries have good and
-----------------
marketable title to all real property owned by the Company and its
subsidiaries and good title to all other properties owned by them, in each
case, free and clear of all mortgages, pledges, liens, security interests,
claims, restrictions or encumbrances of any kind except such as (a) are
described in the Prospectus or (b) do not, singly or in the aggregate,
materially affect the value of such property and do not interfere with the use
made and proposed to be made of such property by the Company or any of its
subsidiaries; and all of the leases and subleases material to the business of
the Company and its subsidiaries, considered as one enterprise, and under
which the Company or any of its subsidiaries holds properties described in the
Prospectus, are in full force and effect, and neither the Company nor any
subsidiary has any notice of any material claim of any sort that has been
asserted by anyone adverse to the rights of the Company or any subsidiary
under any of the leases or subleases mentioned above, or affecting or
questioning the rights of the Company or such subsidiary to the continued
possession of the leased or subleased premises under any such lease or
sublease.
(xviii) Investment Company Act. The Company is not, and upon the issuance
----------------------
and sale of the Securities as herein contemplated and the application of the
net proceeds therefrom as described in the Prospectus will not be, an
"investment company" or an entity "controlled" by an "investment company" as
such terms are defined in the Investment Company Act of 1940, as amended (the
"1940 Act").
(xix) Environmental Laws. Except as described in the Registration
------------------
Statement and except as would not, singly or in the aggregate, result in a
Material Adverse Effect,
- 8 -
(A) neither the Company nor any of its subsidiaries is in violation of any
federal, state, local or foreign statute, law, rule, regulation, ordinance,
code, policy or rule of common law or any judicial or administrative
interpretation thereof, including any judicial or administrative order,
consent, decree or judgment, relating to pollution or protection of human
health, the environment (including, without limitation, ambient air, surface
water, groundwater, land surface or subsurface strata) or wildlife, including,
without limitation, laws and regulations relating to the release or threatened
release of chemicals, pollutants, contaminants, wastes, toxic substances,
hazardous substances, petroleum or petroleum products (collectively,
"Hazardous Materials") or to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous Materials
(collectively, "Environmental Laws"), (B) the Company and its subsidiaries
have all permits, authorizations and approvals required under any applicable
Environmental Laws and are each in compliance with their requirements, (C)
there are no pending or threatened administrative, regulatory or judicial
actions, suits, demands, demand letters, claims, liens, notices of
noncompliance or violation, investigation or proceedings relating to any
Environmental Law against the Company or any of its subsidiaries and (D) there
are no events or circumstances that might reasonably be expected to form the
basis of an order for clean-up or remediation, or an action, suit or
proceeding by any private party or governmental body or agency, against or
affecting the Company or any of its subsidiaries relating to Hazardous
Materials or any Environmental Laws.
(xx) Registration Rights. Except as described in the Registration
-------------------
Statement and except for those persons (i) set forth on Schedule B hereto or
(ii) who have waived any such rights, there are no persons with registration
rights or other similar rights to have any securities registered pursuant to
the Registration Statement under the 1933 Act.
(xxi) Stabilization or Manipulation. Neither the Company nor any of its
-----------------------------
officers, directors or controlling persons has taken, directly or indirectly,
any action designed to cause or to result in, or that has constituted or which
might reasonably be expected to constitute, the stabilization or manipulation
of the price of any security of the Company to facilitate the sale of the
Securities.
(xxii) Income Taxes. All United States federal income tax returns of the
------------
Company and its subsidiaries required by law to be filed have been filed
(taking into account extensions granted by the applicable federal governmental
agency) and all taxes shown by such returns or otherwise assessed, which are
due and payable, have been paid, except for such taxes, if any, as are being
contested in good faith and as to which adequate reserves have been provided.
All other corporate franchise and income tax returns of the Company and its
subsidiaries required to be filed pursuant to applicable foreign, state or
local law have been filed, except insofar as the failure to file such returns
would not individually or in the aggregate have in a material adverse effect
on the condition (financial or otherwise), earnings, business affairs or
business prospects of the Company and its subsidiaries, considered together as
one enterprise, and all taxes shown on such returns or otherwise assessed
which are due and payable have been paid, except
- 9 -
for such taxes, if any, as are being contested in good faith and as to which
adequate reserves have been provided. The charges, accruals and reserves on
the books of the Company in respect of any income and corporation tax
liability for any years not finally determined are adequate to meet any
assessments or re-assessments for additional income tax for any years not
finally determined, except to the extent of any inadequacy that would not have
a material adverse effect on the condition (financial or otherwise), earnings,
business affairs or business prospects of the Company and its subsidiaries,
considered together as one enterprise.
(xxiii) Internal Controls. The Company and its subsidiaries maintain (and
-----------------
in the future will maintain) a system of internal accounting controls
sufficient to provide reasonable assurances that (A) transactions are executed
in accordance with management's general or specific authorization; (B)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain accountability for assets;
(C) access to assets is permitted only in accordance with management's general
or specific authorization; and (D) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate
action is taken with respect to any differences.
(xxiv) Insurance. The Company and its subsidiaries carry or are entitled
---------
to the benefits of insurance, with financially sound and reputable insurers,
in such amounts and covering such risks as is generally maintained by
companies of established repute engaged in the same or similar business, and
all such insurance is in full force and effect.
(xxv) Offering Material. The Company has not distributed and, prior to the
-----------------
later to occur of (i) the Closing Time and (ii) completion of the distribution
of the Securities, will not distribute any offering material in connection
with the offering and sale of the Securities other than the Registration
Statement, any preliminary prospectus, the Prospectus or other materials, if
any, permitted by the 1933 Act and approved by the Representatives.
(xxvi) Suppliers. No supplier of merchandise to the Company or any of its
---------
subsidiaries has ceased shipments of merchandise to the Company, other than in
the normal and ordinary course of business consistent with past practices,
which cessation would not result in a Material Adverse Effect.
(xxvii) Related Party Transactions. There are no business relationships or
--------------------------
related party transactions of the nature described in Item 404 of Regulation
S-K involving the Company or any of businesses being acquired pursuant to the
Acquisitions and any person described in such Item that are required to be
disclosed in the Registration Statement and which have not been so disclosed.
(xxviii) Acquisitions. Each of the agreements, as amended to date
------------
(collectively, the "Acquisition Agreements"), governing the Acquisitions that
have been consummated in 1999 or are contemplated has been duly authorized,
executed and delivered by each of
- 10 -
the parties, and constitutes a legally valid and binding obligation of the
Company and to the Company's knowledge is enforceable against each such party
thereto in accordance with its terms; and except as described in the
Prospectus, each of the representations and warranties of the Company and its
subsidiaries and each of the other parties set forth in the Acquisition
Agreements was true and correct at the time such representations and
warranties were made and will be true and correct at and as of the Closing
Date and the Company has received manufacturers' consents to all of the
Acquisitions. The Company has delivered to the Underwriters true and complete
copies of each Acquisition Agreement and the Company has no reason to believe
that it will not be able to consummate the transactions contemplated by the
Acquisition Agreements which have not been previously consummated.
(xxix) Franchise Agreements. Each franchise agreement, in each case
--------------------
between a Subsidiary and the applicable manufacturer as described in the
Prospectus (the "Manufacturer") is a valid agreement, is in full force and
effect, has been duly authorized by the Company and such Subsidiaries and the
descriptions of such agreements in the Prospectus conforms with the rights and
obligations set forth in such agreements, and, as of the Closing Date, the
Company shall have obtained all consents, authorizations and approvals from
the Manufacturers required to consummate the public offering of Common Stock
as contemplated hereby. Neither the Company nor any of its Subsidiaries is in
violation of or in default under any franchise agreement to which the Company
or any of its subsidiaries is a party or by which it or any of them may be
bound.
(xxx) Year 2000 and Euro Disclosures. All disclosure regarding year 2000
------------------------------
compliance and the Euro conversion that is required to be described under the
1933 Act and the 1933 Act Regulations (including disclosures required by Staff
Legal Bulletin ▇▇. ▇, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇. ▇▇-▇▇▇▇ (July 29, 1998) and SEC Release
No. 33-7609 (November 9, 1998)) has been included in the Prospectus. Neither
the Company nor any of its Subsidiaries will incur significant operating
expenses or costs to ensure that its information systems will be year 2000
compliant or to adjust its operating and information systems to the conversion
to a single currency in Europe, other than as disclosed in the Prospectus.
(xxxi) Absence of Third Party Compensation Arrangements. Neither the
------------------------------------------------
Company nor any of its subsidiaries is party to an arrangement by virtue of
which a third party compensates an executive officer, director or significant
shareholder.
(xxxii) Restrictions on Securities. The Company has obtained agreements
--------------------------
substantially in the form of Exhibit C hereto signed by the persons listed on
Schedule E hereto, such persons representing, to the best knowledge of the
Company after due investigation, all of the identifiable shareholders of the
Company.
- 11 -
(xxxiii) New Credit Agreement. The Company has all necessary corporate
--------------------
power and authority to execute, deliver and perform its obligations under the
New Credit Agreement, between the Company and __________________ (the "New
Credit Agreement"); the New Credit Agreement has been duly authorized,
executed and delivered by the Company, is in the form heretofore delivered to
you, provides for a total of $_______ million in available funds generally,
including a $____ million facility specifically for future acquisitions,
constitutes a valid and binding obligation of the Company, enforceable against
the Company in accordance with its terms; and at the Closing Date, the Company
shall be able to make borrowings thereunder.
(xxxiv) Real Estate Holding Company. The Company is not as of the date
---------------------------
hereof, has not been at any time during the preceding year, and does not
anticipate becoming in the future, a "United States real property holding
corporation" within the meaning of Section 897(c)(2) of the Internal Revenue
Code of 1986, as amended, and the Treasury regulations promulgated thereunder.
(b) Representations and Warranties by the Selling Shareholders. Each
Selling Shareholder severally represents and warrants to each Underwriter as of
the date hereof, as of the Closing Time, and, if the Selling Shareholder is
selling Option Securities on a Date of Delivery, as of each such Date of
Delivery, and agrees with each Underwriter, as follows:
(i) Accurate Disclosure. To the best knowledge of such Selling
-------------------
Shareholder, the representations and warranties of the Company contained in
Section 1(a) hereof are true and correct; such Selling Shareholder has
reviewed and is familiar with the Registration Statement and the Prospectus
and neither the Prospectus nor any amendments or supplements thereto
(including any prospectus wrapper) includes any untrue statement of a material
fact or omits to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; such Selling Shareholder is not prompted to sell the
Securities to be sold by such Selling Shareholder hereunder by any information
concerning the Company or any Subsidiary which is not set forth in the
Prospectus.
(ii) Authorization of Agreements. Such Selling Shareholder has the full
---------------------------
right, power and authority to enter into this Agreement and a Power of
Attorney and Custody Agreement (the "Power of Attorney and Custody Agreement")
and to sell, transfer and deliver the Securities to be sold by such Selling
Shareholder hereunder. The execution and delivery of this Agreement and the
Power of Attorney and Custody Agreement and the sale and delivery of the
Securities to be sold by such Selling Shareholder and the consummation of the
transactions contemplated herein and compliance by such Selling Shareholder
with its obligations hereunder have been duly authorized by such Selling
Shareholder and do not and will not, whether with or without the giving of
notice or passage of time or both, conflict with or constitute a breach of, or
default under, or result in the creation or imposition of any tax, lien,
charge or encumbrance upon the Securities
- 12 -
to be sold by such Selling Shareholder or any property or assets of such
Selling Shareholder pursuant to any contract, indenture, mortgage, deed of
trust, loan or credit agreement, note, license, lease or other agreement or
instrument to which such Selling Shareholder is a party or by which such
Selling Shareholder may be bound, or to which any of the property or assets of
such Selling Shareholder is subject, nor will such action result in any
violation of the provisions of the charter or by-laws or other organizational
instrument of such Selling Shareholder, if applicable, or any applicable
treaty, law, statute, rule, regulation, judgment, order, writ or decree of any
government, government instrumentality or court, domestic or foreign, having
jurisdiction over such Selling Shareholder or any of its properties.
(iii) Good and Marketable Title. Such Selling Shareholder has and will at
-------------------------
the Closing Time good and marketable title to the Securities to be sold by
such Selling Shareholder hereunder, free and clear of any security interest,
mortgage, pledge, lien, charge, claim, equity or encumbrance of any kind,
other than pursuant to this Agreement; and upon delivery of such Securities
and payment of the purchase price therefor as herein contemplated, assuming
each such Underwriter has no notice of any adverse claim, each of the
Underwriters will receive good and marketable title to the Securities
purchased by it from such Selling Shareholder, free and clear of any security
interest, mortgage, pledge, lien, charge, claim, equity or encumbrance of any
kind.
(iv) Due Execution of Power of Attorney and Custody Agreement. Such
--------------------------------------------------------
Selling Shareholder has duly executed and delivered, in the form heretofore
furnished to the Representatives, the Power of Attorney and Custody Agreement
with __________, as attorney-in-fact (the "Attorney-in-Fact") and [ ], as
custodian (the "Custodian"); the Custodian is authorized to deliver the
Securities to be sold by such Selling Shareholder hereunder and to accept
payment therefor; and the Attorney-in-Fact is authorized to execute and
deliver this Agreement and the certificate referred to in Section 5(f) or that
may be required pursuant to Section 5(p) on behalf of such Selling
Shareholder, to sell, assign and transfer to the Underwriters the Securities
to be sold by such Selling Shareholder hereunder, to determine the purchase
price to be paid by the Underwriters to such Selling Shareholder, as provided
in Section 2(a) hereof, to authorize the delivery of the Securities to be sold
by such Selling Shareholder hereunder, to accept payment therefor, and
otherwise to act on behalf of such Selling Shareholder in connection with this
Agreement.
(v) Absence of Manipulation. Such Selling Shareholder has not taken, and
-----------------------
will not take, directly or indirectly, any action which is designed to or
which has constituted or which might reasonably be expected to cause or result
in stabilization or manipulation of the price of any security of the Company
to facilitate the sale or resale of the Securities.
(vi) Absence of Further Requirements. No filing with, or consent,
-------------------------------
approval, authorization, order, registration, qualification or decree of, any
court or governmental authority or agency, domestic or foreign, is necessary
or required for the performance by
- 13 -
each Selling Shareholder of its obligations hereunder or in the Power of
Attorney and Custody Agreement, or in connection with the sale and delivery of
the Securities hereunder or the consummation of the transactions contemplated
by this Agreement, except such as may have previously been made or obtained.
(vii) Restriction on Sale of Securities. Such Selling Shareholder shall
---------------------------------
have entered into and delivered an agreement in the form of Exhibit C.
(viii) Certificates Suitable for Transfer. Certificates for all of the
----------------------------------
Securities to be sold by such Selling Shareholder pursuant to this Agreement,
in suitable form for transfer by delivery or accompanied by duly executed
instruments of transfer or assignment in blank with signatures guaranteed,
have been placed in custody with the Custodian with irrevocable conditional
instructions to deliver such Securities to the Underwriters pursuant to this
Agreement.
(ix) No Association with NASD. Neither such Selling Shareholder nor any of
------------------------
his/her/its affiliates directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control
with, or has any other association with (within the meaning of Article I,
Section 2(e) of the By-laws of the National Association of Securities Dealers,
Inc.), any member firm of the National Association of Securities Dealers, Inc.
(x) Power and Authority. If the Selling Shareholder is a corporation,
-------------------
partnership or trust, such Selling Shareholder has been duly organized or
incorporated and is validly existing as a corporation or partnership or
limited partnership in good standing under the laws of its jurisdiction of
incorporation or organization and has the power and authority to own its
property and to conduct its business and is duly qualified to transact
business and is in good standing in each jurisdiction in which the conduct of
its business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified or be
in good standing would not have a material adverse change in the condition,
financial or otherwise, earnings, business affairs or business prospects of
such Selling Shareholder, whether or not arising in the ordinary course of
business, or materially impair its ability to consummate the transactions
contemplated hereby.
(c) Officer's Certificates. Any certificate signed by any officer of the
Company or any of its Subsidiaries delivered to the Representatives or to
counsel for the Underwriters shall be deemed a representation and warranty by
the Company to each Underwriter as to the matters covered thereby; and any
certificate signed by or on behalf of the Selling Shareholders as such and
delivered to the Representatives or to counsel for the Underwriters pursuant to
the terms of this Agreement shall be deemed a representation and warranty by
such Selling Shareholder to the Underwriters as to the matters covered thereby.
- 14 -
SECTION 2. Sale and Delivery to Underwriters; Closing.
------------------------------------------
(a) Initial Securities. On the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth, the
Company and each Selling Shareholder, severally and not jointly, agree to sell
to each Underwriter, severally and not jointly, and each Underwriter, severally
and not jointly, agrees to purchase from the Company and each Selling
Shareholder, at the price per share set forth in Schedule C, that proportion of
the number of Initial Securities set forth in Schedule B opposite the name of
the Company or such Selling Shareholder, as the case may be, which the number of
Initial Securities set forth in Schedule A opposite the name of such
Underwriter, plus any additional number of Initial Securities which such
Underwriter may become obligated to purchase pursuant to the provisions of
Section 10 hereof, bears to the total number of Initial Securities, subject, in
each case, to such adjustments among the Underwriters as the Representatives in
their sole discretion shall make to eliminate any sales or purchases of
fractional securities.
(b) Option Securities. In addition, on the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Company hereby grants an option to the Underwriters, severally and
not jointly, to purchase up to an additional [ ] shares of Common Stock, as set
forth in Schedule B, at the price per share set forth in Schedule C, less an
amount per share equal to any dividends or distributions declared by the Company
and payable on the Initial Securities but not payable on the Option Securities.
The option hereby granted will expire 30 days after the date hereof and may be
exercised in whole or in part from time to time only for the purpose of covering
over-allotments which may be made in connection with the offering and
distribution of the Initial Securities upon notice by the Representatives to the
Company setting forth the number of Option Securities as to which the several
Underwriters are then exercising the option and the time and date of payment and
delivery for such Option Securities. Any such time and date of delivery (a "Date
of Delivery") shall be determined by the Representatives, but shall not be later
than seven full business days after the exercise of said option, nor in any
event prior to the Closing Time, as hereinafter defined. If the option is
exercised as to all or any portion of the Option Securities, each of the
Underwriters, acting severally and not jointly, will purchase that proportion of
the total number of Option Securities then being purchased which the number of
Initial Securities set forth in Schedule A opposite the name of such Underwriter
bears to the total number of Initial Securities, subject in each case to such
adjustments as the Representatives in their discretion shall make to eliminate
any sales or purchases of fractional shares.
(c) Payment. Payment of the purchase price for, and delivery of
certificates for, the Initial Securities shall be made at the offices of Fried,
Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
or at such other place as shall be agreed upon by the Representatives and the
Company and the Selling Shareholders, at 9:00 A.M. (Eastern time) on the third
(fourth, if the pricing occurs after 4:30 P.M. (Eastern time) on any given day)
business day after the date hereof (unless postponed in accordance with the
provisions of Section 10), or such other time not later than ten business days
after such date as shall be agreed upon by the Representatives and the Company
and the Selling Shareholders (such time and date of payment and delivery being
herein called "Closing Time").
- 15 -
In addition, in the event that any or all of the Option Securities are
purchased by the Underwriters, payment of the purchase price for, and delivery
of certificates for, such Option Securities shall be made at the above-mentioned
offices, or at such other place as shall be agreed upon by the Representatives
and the Company, on each Date of Delivery as specified in the notice from the
Representatives to the Company.
Payment shall be made to the Company and the Selling Shareholders by wire
transfer of immediately available funds to bank accounts designated by the
Company and the Custodian pursuant to each Selling Shareholder's Power of
Attorney and Custody Agreement, as the case may be, against delivery to the
Representatives for the respective accounts of the Underwriters of certificates
for the Securities to be purchased by them. It is understood that each
Underwriter has authorized the Representatives, for its account, to accept
delivery of, receipt for, and make payment of the purchase price for, the
Initial Securities and the Option Securities, if any, which it has agreed to
purchase. ▇▇▇▇▇▇▇ ▇▇▇▇▇, individually and not as representative of the
Underwriters, may (but shall not be obligated to) make payment of the purchase
price for the Initial Securities or the Option Securities, if any, to be
purchased by any Underwriter whose funds have not been received by the Closing
Time or the relevant Date of Delivery, as the case may be, but such payment
shall not relieve such Underwriter from its obligations hereunder.
(d) Denominations; Registration. Certificates for the Initial Securities
and the Option Securities, if any, shall be in such denominations and registered
in such names as the Representatives may request in writing at least one full
business day before the Closing Time or the relevant Date of Delivery, as the
case may be. The certificates for the Initial Securities and the Option
Securities, if any, will be made available for examination and packaging by the
Representatives in The City of New York not later than 10:00 A.M. (Eastern time)
on the business day prior to the Closing Time or the relevant Date of Delivery,
as the case may be.
SECTION 3. Covenants of the Company. The Company covenants with each
------------------------
Underwriter as follows:
- 16 -
(a) Compliance with Securities Regulations and Commission Requests. The
Company, subject to Section 3(b), will comply with the requirements of Rule 430A
or Rule 434, as applicable, and will notify the Representatives immediately, and
confirm the notice in writing, (i) when any post-effective amendment to the
Registration Statement shall become effective, or any supplement to the
Prospectus or any amended Prospectus shall have been filed, (ii) of the receipt
of any comments from the Commission, (iii) of any request by the Commission for
any amendment to the Registration Statement or any amendment or supplement to
the Prospectus or for additional information, and (iv) of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or of any order preventing or suspending the use of any preliminary
prospectus, or of the suspension of the qualification of the Securities for
offering or sale in any jurisdiction, or of the initiation or threatening of any
proceedings for any of such purposes. The Company will promptly effect the
filings necessary pursuant to Rule 424(b) and will take such steps as it deems
necessary to ascertain promptly whether the form of prospectus transmitted for
filing under Rule 424(b) was received for filing by the Commission and, in the
event that it was not, it will promptly file such prospectus. The Company will
make every reasonable effort to prevent the issuance of any stop order and, if
any stop order is issued, to obtain the lifting thereof at the earliest possible
moment.
(b) Filing of Amendments. The Company will give the Representatives notice
of its intention to file or prepare any amendment to the Registration Statement
(including any filing under Rule 462(b)), any Term Sheet or any amendment,
supplement or revision to either the prospectus included in the Registration
Statement at the time it became effective or to the Prospectus, whether pursuant
to the 1933 Act, the 1934 Act or otherwise, will furnish the Representatives
with copies of any such documents a reasonable amount of time prior to such
proposed filing or use, as the case may be, and will not file or use any such
document to which the Representatives or counsel for the Underwriters shall
object.
(c) Delivery of Registration Statements. The Company has furnished or will
deliver to the Representatives and counsel for the Underwriters, without charge,
signed copies of the Registration Statement as originally filed and of each
amendment thereto (including exhibits filed therewith or incorporated by
reference therein) and signed copies of all consents and certificates of
experts, and will also deliver to the Representatives, without charge, a
conformed copy of the Registration Statement as originally filed and of each
amendment thereto (without exhibits) for each of the Underwriters. The copies of
the Registration Statement and each amendment thereto furnished to the
Underwriters will be identical to the electronically transmitted copies thereof
filed with the Commission pursuant to ▇▇▇▇▇, except to the extent permitted by
Regulation S-T.
(d) Delivery of Prospectuses. The Company has delivered to each
Underwriter, without charge, as many copies of each preliminary prospectus as
such Underwriter reasonably requested, and the Company hereby consents to the
use of such copies for purposes permitted by the 1933 Act. The Company will
furnish to each Underwriter, without charge, during the period when the
Prospectus is required to be delivered under the 1933 Act or the Securities
Exchange Act of 1934 (the "1934 Act"), such number of copies of the Prospectus
(as amended or supplemented) as such Underwriter may reasonably request. The
Prospectus and
- 17 -
any amendments or supplements thereto furnished to the Underwriters will be
identical to the electronically transmitted copies thereof filed with the
Commission pursuant to ▇▇▇▇▇, except to the extent permitted by Regulation S-T.
(e) Continued Compliance with Securities Laws. The Company will comply with
the 1933 Act and the 1933 Act Regulations and the 1934 Act and the 1934 Act
Regulations so as to permit the completion of the distribution of the Securities
as contemplated in this Agreement and in the Prospectus. If at any time when a
prospectus is required by the 1933 Act to be delivered in connection with sales
of the Securities, any event shall occur or condition shall exist as a result of
which it is necessary, in the opinion of counsel for the Underwriters or for the
Company, to amend the Registration Statement or amend or supplement the
Prospectus in order that the Prospectus will not include any untrue statements
of a material fact or omit to state a material fact necessary in order to make
the statements therein not misleading in the light of the circumstances existing
at the time it is delivered to a purchaser, or if it shall be necessary, in the
opinion of such counsel, at any such time to amend the Registration Statement or
amend or supplement the Prospectus in order to comply with the requirements of
the 1933 Act or the 1933 Act Regulations, the Company will promptly prepare and
file with the Commission, subject to Section 3(b), such amendment or supplement
as may be necessary to correct such statement or omission or to make the
Registration Statement or the Prospectus comply with such requirements, and the
Company will furnish to the Underwriters such number of copies of such amendment
or supplement as the Underwriters may reasonably request.
(f) Blue Sky Qualifications. The Company will use its best efforts, in
cooperation with the Underwriters, to qualify the Securities for offering and
sale under the applicable securities laws of such states and other jurisdictions
(domestic or foreign) as the Representatives may designate and to maintain such
qualifications in effect for a period of not less than one year from the later
of the effective date of the Registration Statement and any Rule 462(b)
Registration Statement; provided, however, that the Company shall not be
obligated to file any general consent to service of process or to qualify as a
foreign corporation or as a dealer in securities in any jurisdiction in which it
is not so qualified or to subject itself to taxation in respect of doing
business in any jurisdiction in which it is not otherwise so subject. In each
jurisdiction in which the Securities have been so qualified, the Company will
file such statements and reports as may be required by the laws of such
jurisdiction to continue such qualification in effect for a period of not less
than one year from the effective date of the Registration Statement and any Rule
462(b) Registration Statement.
(g) Rule 158. The Company will timely file such reports pursuant to the
1934 Act as are necessary in order to make generally available to its
securityholders as soon as practicable an earnings statement for the purposes
of, and to provide the benefits contemplated by, the last paragraph of Section
11(a) of the 1933 Act.
(h) Use of Proceeds. The Company will use the net proceeds received by it
from the sale of the Securities in the manner specified in the Prospectus under
"Use of Proceeds".
- 18 -
(i) Listing. The Company will use its best efforts to effect and maintain
the listing of the Common Stock (including the Securities) on the New York Stock
Exchange (the "NYSE").
(j) Restriction on Sale of Securities. During a period of 180 days from the
date of the Prospectus, the Company will not, without the prior written consent
of ▇▇▇▇▇▇▇ ▇▇▇▇▇, (i) directly or indirectly, offer, pledge, sell, sell short
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase or otherwise
transfer or dispose of any share of Common Stock or any securities convertible
into or exercisable or exchangeable for Common Stock or file any registration
statement under the 1933 Act with respect to any of the foregoing or (ii) enter
into any swap or any other agreement or hedging arrangement or any transaction
that transfers, in whole or in part, directly or indirectly, the economic
consequence of ownership of the Common Stock, whether any such swap or
transaction described in clause (i) or (ii) above is to be settled by delivery
of Common Stock or such other securities, in cash or otherwise. The foregoing
sentence shall not apply to (A) the Securities to be sold hereunder; provided
that the Company may sell shares Common Stock (or securities convertible into
shares of Common Stock) to a third party as consideration for the Company's
acquisition from such third party of a car dealership, provided that such third
party executes a lock-up agreement on substantially the same terms described
above for a period expiring 180 days from the date of the Prospectus, (B) any
shares of Common Stock issued by the Company upon the exercise of an option or
warrant or the conversion of a security outstanding on the date hereof and
referred to in the Prospectus, (C) any shares of Common Stock issued or options
to purchase Common Stock granted pursuant to existing employee benefit plans of
the Company referred to in the Prospectus or (D) any shares of Common Stock
issued pursuant to any non-employee director stock plan or dividend reinvestment
plan referred to in the Prospectus.
(k) Reporting Requirements. The Company, during the period when the
Prospectus is required to be delivered under the 1933 Act or the 1934 Act, will
file all documents required to be filed with the Commission pursuant to the 1934
Act within the time periods required by the 1934 Act and the 1934 Act
Regulations.
(l) Compliance with NASD Rules. The Company hereby agrees that it will
ensure that the Reserved Securities will be restricted as required by the
National Association of Securities Dealers, Inc. (the "NASD") or the NASD rules
from sale, transfer, assignment, pledge or hypothecation for a period of three
months following the date of this Agreement. The Underwriters will notify the
Company as to which persons will need to be so restricted. At the request of the
Underwriters, the Company will direct the transfer agent to place a stop
transfer restriction upon such securities for such period of time. Should the
Company release, or seek to release, from such restrictions any of the Reserved
Securities, the Company agrees to reimburse the Underwriters for any reasonable
expenses (including, without limitation, legal expenses) they incur in
connection with such release.
- 19 -
(m) Compliance with Rule 463. The Company will file with the Commission
such information as may be required pursuant to Rule 463 of the 1933 Act
Regulations.
SECTION 4. Payment of Expenses.
-------------------
(a) Expenses. The Company will pay or cause to be paid all expenses
incident to the performance of its obligations under this Agreement, including
(i) the preparation, printing and filing of the Registration Statement
(including financial statements and exhibits) as originally filed and of each
amendment thereto, (ii) the preparation, printing and delivery to the
Underwriters of this Agreement, any Agreement among Underwriters and such other
documents as may be required in connection with the offering, purchase, sale,
issuance or delivery of the Securities, (iii) the preparation, issuance and
delivery of the certificates for the Securities to the Underwriters, including
any stock or other transfer taxes and any stamp or other duties payable upon the
sale, issuance or delivery of the Securities to the Underwriters, (iv) the fees
and disbursements of the Company's counsel, accountants and other advisors, (v)
the qualification of the Securities under securities laws in accordance with the
provisions of Section 3(f) hereof, including filing fees and the reasonable fees
and disbursements of counsel for the Underwriters in connection therewith and in
connection with the preparation of the Blue Sky Survey and any supplement
thereto, (vi) the printing and delivery to the Underwriters of copies of each
preliminary prospectus, any Term Sheets and of the Prospectus and any amendments
or supplements thereto, (vii) the preparation, printing and delivery to the
Underwriters of copies of the Blue Sky Survey and any supplement thereto, (viii)
the fees and expenses of any transfer agent or registrar for the Securities,
(ix) the filing fees incident to, and the reasonable fees and disbursements of
counsel to the Underwriters in connection with, the review by the National
Association of Securities Dealers, Inc. (the "NASD") of the terms of the sale of
the Securities, (x) the fees and expenses incurred in connection with the
listing of the Common Stock (including the Securities) on the NYSE and (xi) all
costs and expenses of the Underwriters, including the fees and disbursements of
counsel for the Underwriters, in connection with matters related to the Reserved
Securities which are designated by the Company for sale to employees and others
having a business relationship with the Company.
(b) Expenses of the Selling Shareholders. The Selling Shareholders, jointly
and severally, will pay all expenses incident to the performance of their
respective obligations under, and the consummation of the transactions
contemplated by, this Agreement, including (i) any stamp duties, capital duties
and stock transfer taxes, if any, payable upon the sale of the Securities to the
Underwriters, and their transfer between the Underwriters pursuant to an
agreement between such Underwriters, and (ii) the fees and disbursements of
their respective counsel and accountants.
(c) Termination of Agreement. If this Agreement is terminated by the
Representatives in accordance with the provisions of Section 5, Section 9(a)(i)
or Section 11 hereof, the Company and the Selling Shareholders shall reimburse
the Underwriters for all of their out-of-pocket expenses, including the
reasonable fees and disbursements of counsel for the Underwriters.
- 20 -
(d) Allocation of Expenses. The provisions of this Section shall not affect
any agreement that the Company and the Selling Shareholders may make for the
sharing of such costs and expenses.
SECTION 5. Conditions of Underwriters' Obligations. The obligations of the
---------------------------------------
several Underwriters hereunder are subject to the accuracy of the
representations and warranties of the Company and the Selling Shareholders
contained in Section 1 hereof or in certificates of any officer of the Company
or any subsidiary of the Company or on behalf of any Selling Shareholder
delivered pursuant to the provisions hereof, to the performance by the Company
of its covenants and other obligations hereunder, and to the following further
conditions:
(a) Effectiveness of Registration Statement. The Registration Statement,
including any Rule 462(b) Registration Statement, has become effective and at
Closing Time no stop order suspending the effectiveness of the Registration
Statement shall have been issued under the 1933 Act or proceedings therefor
initiated or threatened by the Commission, and any request on the part of the
Commission for additional information shall have been complied with to the
reasonable satisfaction of counsel to the Underwriters. A prospectus containing
the Rule 430A Information shall have been filed with the Commission in
accordance with Rule 424(b) (or a post-effective amendment providing such
information shall have been filed and declared effective in accordance with the
requirements of Rule 430A) or, if the Company has elected to rely upon Rule 434,
a Term Sheet shall have been filed with the Commission in accordance with Rule
424(b).
(b) Opinion of Counsel for Company. (i) At Closing Time, the
Representatives shall have received the favorable opinion, dated as of Closing
Time, of ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ & Freidenrich llp, counsel for the Company, in form and
substance satisfactory to counsel for the Underwriters, together with signed or
reproduced copies of such letter for each of the other Underwriters to the
effect set forth in Exhibit A-1 hereto and to such further effect as counsel to
the Underwriters may reasonably request.
(ii) At Closing Time, the Representatives shall have received the
favorable opinion, dated as of Closing Time, of ▇▇▇ & ▇▇▇▇▇▇, special counsel
for the Company, in form and substance satisfactory to counsel for the
Underwriters, together with signed or reproduced copies of such letter for
each of the other Underwriters to the effect set forth in Exhibit A-2 hereto
and to such further effect as counsel to the Underwriters may reasonably
request
(c) Opinion of Counsel for the Selling Shareholders. At Closing Time, the
Representatives shall have received the favorable opinion, dated as of Closing
Time, of the respective lawyers for each of the Selling Shareholders, in form
and substance satisfactory to counsel for the Underwriters, together with signed
or reproduced copies of such letter for each of the other Underwriters to the
effect set forth in Exhibit B hereto and to such further effect as counsel to
the Underwriters may reasonably request.
- 21 -
(d) Opinion of Counsel for Underwriters. At Closing Time, the
Representatives shall have received the favorable opinion, dated as of Closing
Time, of Fried, Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel for the Underwriters,
together with signed or reproduced copies of such letter for each of the other
Underwriters with respect to the matters set forth in clauses (i), (ii), (v),
(vi) (solely as to preemptive or other similar rights arising by operation of
law or under the charter or by-laws of the Company), (viii) through (x),
inclusive, (xi), (xiii) (solely as to the information in the Prospectus under
"Description of Capital Stock") and the penultimate paragraph of Exhibit A
hereto. In giving such opinion such counsel may rely, as to all matters governed
by the laws of jurisdictions other than the law of the State of New York and the
federal law of the United States and the General Corporation Law of the State of
Delaware, upon the opinions of counsel satisfactory to the Representatives. Such
counsel may also state that, insofar as such opinion involves factual matters,
they have relied, to the extent they deem proper, upon certificates of officers
of the Company and its subsidiaries and certificates of public officials.
(e) Officers' Certificate. At Closing Time, there shall not have been,
since the date hereof or since the respective dates as of which information is
given in the Prospectus, any material adverse change in the condition, financial
or otherwise, or in the earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, and the Representatives shall have
received a certificate of the President or a Vice President of the Company and
of the chief financial or chief accounting officer of the Company, dated as of
Closing Time, to the effect that (i) there has been no such material adverse
change, (ii) the representations and warranties in Section 1(a) hereof are true
and correct with the same force and effect as though expressly made at and as of
Closing Time, (iii) the Company has complied with all agreements and satisfied
all conditions on its part to be performed or satisfied at or prior to Closing
Time, and (iv) no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted or are pending or are contemplated by the Commission.
(f) Certificate of Selling Shareholders. At Closing Time, the
Representatives shall have received a certificate of the Selling Shareholders or
the Attorney-in-Fact on behalf of each Selling Shareholder, dated as of Closing
Time, to the effect that (i) the representations and warranties of each Selling
Shareholder contained in Section 1(b) hereof are true and correct in all
respects with the same force and effect as though expressly made at and as of
Closing Time and (ii) each Selling Shareholder has complied with all agreements
and all conditions on its part to be performed under this Agreement at or prior
to Closing Time.
(g) Accountant's Comfort Letter. At the time of the execution of this
Agreement, the Representatives shall have received from KPMG LLP a letter in the
form of Annex A-1 hereto and from Deloitte & Touche LLP in the form of Annex A-2
hereto, in each case dated such date, together with signed or reproduced copies
of such letter for
- 22 -
each of the other Underwriters containing statements and information of the type
ordinarily included in accountants' "comfort letters" to underwriters with
respect to the financial statements and certain financial information contained
in the Registration Statement and the Prospectus.
(h) Bring-down Comfort Letter. At Closing Time, the Representatives shall
have received letters from KPMG LLP and Deloitte & Touche LLP, dated as of
Closing Time, to the effect that they reaffirm the statements made in the letter
furnished pursuant to subsection (g) of this Section, except that the specified
date referred to shall be a date not more than three business days prior to
Closing Time.
(i) Approval of Listing. At Closing Time, the Common Stock (including the
Securities) shall have been approved for listing on the NYSE, subject only to
official notice of issuance.
(j) No Objection. The NASD has confirmed that it has not raised any
objection with respect to the fairness and reasonableness of the underwriting
terms and arrangements.
(k) Lock-up Agreements. At the date of this Agreement, the Representatives
shall have received an agreement in the form of Exhibit C hereto signed by the
persons listed on Schedule E hereto and such agreement shall be in full force
and effect on the date hereof.
(l) Manufacturers' Consents. The Representatives shall have received on or
as of the Closing Date, as the case may be, a certificate, in a form and
substance satisfactory to the Representative, of two executive officers of the
Company certifying that each of the Company and its Subsidiaries owns, possesses
or has obtained all required consents and approvals from all Manufacturers with
respect to the Acquisitions and the public offering of Common Stock hereunder
and such consents and approvals shall be in a form satisfactory to the
Representatives.
(m) Acquisition Agreements. At or prior to the Closing Time, the
Acquisitions contemplated by the Acquisition Agreements will have been
consummated in accordance with the terms described therein and there have been
no amendments or modifications to the Acquisition Agreements since the date of
their execution without the consent of the Representatives and no conditions to
the Acquisitions shall have been waived without the consent of the
Representatives.
(n) At Closing Time, all legal opinions in connection with the closing of
the acquisitions described in the Prospectus which are being financed by the
proceeds of the offering shall have been addressed and delivered to the
Underwriters or shall state that the Underwriters are entitled to rely on such
opinions as if they were addressed and delivered to them.
- 23 -
(o) Credit Agreement. At or prior to the Closing Time, the New Credit
Agreement shall have been duly and validly consummated, all conditions to the
initial borrowing in the New Credit Agreement shall have been satisfied and you
shall have received a copy of the solvency certificate/opinion furnished to the
lenders under the New Credit Agreement pursuant to Section ___ thereof. The
Company has obtained or assumed floor plan financing for each of the dealerships
acquired in the Acquisitions in form and substance satisfactory to the
Representatives and in accordance with the pro forma presentation in the
Prospectus. At Closing Time, all legal opinions in connection with the
consummation of the New Credit Agreement shall have been addressed and delivered
to the Underwriters or shall state that the Underwriters are entitled to rely on
such opinions as if they were addressed and delivered to them.
(p) Conditions to Purchase of Options Securities. In the event that the
Underwriters exercise their option provided in Section 2(b) hereof to purchase
all or any portion of the Option Securities, the representations and warranties
of the Company contained herein and the statements in any certificates furnished
by the Company and any Subsidiary hereunder shall be true and correct as of each
Date of Delivery and, at the relevant Date of Delivery, the Representatives
shall have received:
(i) Officers' Certificate. A certificate, dated such Date of Delivery, of
---------------------
the President or a Vice President of the Company and of the chief financial or
chief accounting officer of the Company confirming that the certificate
delivered at the Closing Time pursuant to Section 5(e) hereof remains true and
correct as of such Date of Delivery.
(ii) Opinion of Counsel for Company. The favorable opinion of ▇▇▇▇ ▇▇▇▇
------------------------------
▇▇▇▇ & Freidenrich llp, counsel for the Company, in form and substance
satisfactory to counsel for the Underwriters, dated such Date of Delivery,
relating to the Option Securities to be purchased on such Date of Delivery and
otherwise to the same effect as the opinion required by Section 5(b)(i)
hereof.
(iii) Opinion of Special Counsel for Company. The favorable opinion of ▇▇▇
--------------------------------------
& ▇▇▇▇▇▇, special counsel for the Company, in form and substance satisfactory
to counsel for the Underwriters, dated such Date of Delivery, relating to the
Option Securities to be purchased on such Date of Delivery and otherwise to
the same effect as the opinion required by Section 5(b)(ii) hereof.
(iv) Opinion of Counsel for Underwriters. The favorable opinion of Fried,
-----------------------------------
Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel for the Underwriters, dated such
Date of Delivery, relating to the Option Securities to be purchased on such
Date of Delivery and otherwise to the same effect as the opinion required by
Section 5(d) hereof.
(v) Bring-down Comfort Letter. A letter from KPMG LLP and Deloitte &
-------------------------
Touche LLP, in form and substance satisfactory to the Representatives and
dated such Date of Delivery, substantially in the same form and substance as
the letter furnished
- 24 -
to the Representatives pursuant to Section 5(g) hereof, except that the
"specified date" in the letter furnished pursuant to this paragraph shall be a
date not more than five days prior to such Date of Delivery.
(q) Additional Documents. At Closing Time and at each Date of Delivery
counsel for the Underwriters shall have been furnished with such documents and
opinions as they may require for the purpose of enabling them to pass upon the
issuance and sale of the Securities as herein contemplated, or in order to
evidence the accuracy of any of the representations or warranties, or the
fulfillment of any of the conditions, herein contained; and all proceedings
taken by the Company and the Selling Shareholders in connection with the
issuance and sale of the Securities as herein contemplated shall be satisfactory
in form and substance to the Representatives and counsel for the Underwriters.
(r) Termination of Agreement. If any condition specified in this Section
shall not have been fulfilled when and as required to be fulfilled, this
Agreement, or, in the case of any condition to the purchase of Option Securities
on a Date of Delivery which is after the Closing Time, the obligations of the
several Underwriters to purchase the relevant Option Securities, may be
terminated by the Representatives by notice to the Company at any time at or
prior to Closing Time or such Date of Delivery, as the case may be, and such
termination shall be without liability of any party to any other party except as
provided in Section 4 and except that Sections 1, 6, 7 and 8 shall survive any
such termination and remain in full force and effect.
SECTION 6. Indemnification.
---------------
(a) Indemnification of Underwriters by the Company. The Company agrees to
indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act to the extent and in the manner set forth below as
follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement (or any
amendment thereto), including the Rule 430A Information and the Rule 434
Information, if applicable, or the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary to make the
statements therein not misleading or arising out of any untrue statement or
alleged untrue statement of a material fact included in any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto), or the
omission or alleged omission therefrom of a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of (A) the violation of any applicable
laws or regulations of
- 25 -
foreign jurisdictions where Reserved Securities have been offered and (B) any
untrue statement or alleged untrue statement of a material fact included in
the supplement or prospectus wrapper material distributed in connection with
the reservation and sale of the Reserved Securities to eligible Company
directors, officers, employees, distributors, dealers, business associates and
related persons, or the omission or alleged omission therefrom of a material
fact necessary to make the statements therein, when considered in conjunction
with the Prospectus or preliminary prospectus, not misleading;
(iii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission or in connection with any violation of
the nature referred to in Section 6(a)(ii)(A) hereof; provided that (subject
to Section 6(e) below) any such settlement is effected with the written
consent of the Company; and
(iv) against any and all expense whatsoever, as incurred (including the
fees and disbursements of counsel chosen by ▇▇▇▇▇▇▇ ▇▇▇▇▇), reasonably
incurred in investigating, preparing or defending against any litigation, or
any investigation or proceeding by any governmental agency or body, commenced
or threatened, or any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission or in connection
with any violation of the nature referred to in Section 6(a)(ii)(A) hereof, to
the extent that any such expense is not paid under (i), (ii) or (iii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
-----------------
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
Underwriter through ▇▇▇▇▇▇▇ ▇▇▇▇▇ expressly for use in the Registration
Statement (or any amendment thereto), including the Rule 430A Information and
the Rule 434 Information, if applicable, or any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto).
(b) Indemnification of Underwriters by the Selling Shareholders. Each
Selling Shareholder, severally and not jointly, agrees to indemnify and hold
harmless each Underwriter and each person, if any, who controls any Underwriter
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act
as follows to the extent set forth below:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement (or any
amendment thereto), including the Rule 430A Information and the Rule 434
Information, if applicable, or the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary to make the
statements therein not misleading or arising out of any untrue statement or
- 26 -
alleged untrue statement of a material fact included in any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto), or the
omission or alleged omission therefrom of a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission; provided that (subject to Section 6(e)
below) any such settlement is effected with the written consent of the
indemnifying party; and
(iii) against any and all expense whatsoever, as incurred (including the
fees and disbursements of counsel chosen by ▇▇▇▇▇▇▇ ▇▇▇▇▇), reasonably
incurred in investigating, preparing or defending against any litigation, or
any investigation or proceeding by any governmental agency or body, commenced
or threatened, or any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, to the extent that
any such expense is not paid under (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
-----------------
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
Underwriter through ▇▇▇▇▇▇▇ ▇▇▇▇▇ expressly for use in the Registration
Statement (or any amendment thereto), including the Rule 430A Information and
the Rule 434 Information, if applicable, or any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto).
(c) Indemnification of Company, Directors and Officers and Selling
Shareholders. Each Underwriter severally agrees to indemnify and hold harmless
the Company, its directors, each of its officers who signed the Registration
Statement, and each person, if any, who controls the Company within the meaning
of Section 15 of the 1933 Act or Section 20 of the 1934 Act, and each Selling
Shareholder and each person, if any, who controls any Selling Shareholder within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act against
any and all loss, liability, claim, damage and expense described in the
indemnity contained in Section 6(a) and Section 6(b) hereof, as incurred, but
only with respect to untrue statements or omissions, or alleged untrue
statements or omissions, made in the Registration Statement (or any amendment
thereto), including the Rule 430A Information and the Rule 434 Information, if
applicable, or any preliminary prospectus or the Prospectus (or any amendment or
supplement thereto) in reliance upon and in conformity with written information
furnished to the Company by such Underwriter through ▇▇▇▇▇▇▇ ▇▇▇▇▇ expressly for
use in the Registration Statement (or any amendment thereto) or such preliminary
prospectus or the Prospectus (or any amendment or supplement thereto).
- 27 -
(d) Actions against Parties; Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 6(a) and
Section 6(b) above, counsel to the indemnified parties shall be selected by
▇▇▇▇▇▇▇ ▇▇▇▇▇, and, in the case of parties indemnified pursuant to Section 6(c)
above, counsel to the indemnified parties shall be selected by the Company or
the indemnified Selling Shareholder, as appropriate. An indemnifying party may
participate at its own expense in the defense of any such action; provided,
however, that counsel to the indemnifying party shall not (except with the
consent of the indemnified party) also be counsel to the indemnified party. In
no event shall the indemnifying parties be liable for fees and expenses of more
than one counsel (in addition to any local counsel) separate from their own
counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances. No indemnifying party shall,
without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 6 or Section
7 hereof (whether or not the indemnified parties are actual or potential parties
thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and (ii) does not include
a statement as to or an admission of fault, culpability or a failure to act by
or on behalf of any indemnified party.
(e) Settlement without Consent if Failure to Reimburse. If at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 6(a)(ii), 6(a)(iii) or Section 6(b)(ii) effected without its written
consent if (i) such settlement is entered into more than 45 days after receipt
by such indemnifying party of the aforesaid request, (ii) such indemnifying
party shall have received notice of the terms of such settlement at least 30
days prior to such settlement being entered into and (iii) such indemnifying
party shall not have reimbursed such indemnified party in accordance with such
request prior to the date of such settlement.
(f) Indemnification for Reserved Securities. In connection with the offer
and sale of the Reserved Securities, the Company agrees, promptly upon a
request, in writing to indemnify and hold harmless the Underwriters from and
against any and all losses, liabilities, claims, damages and expenses incurred
by them as a result of the failure of eligible [directors, employees, business
associates and related persons of the Company and its subsidiaries and other
persons] to pay for and accept delivery of Reserved Securities which, by the end
of the first business day following the date of this Agreement, were subject to
a properly confirmed agreement to purchase.
- 28 -
(g) Other Agreements with Respect to Indemnification. The provisions of
this Section shall not affect any agreement among the Company and the Selling
Shareholders with respect to indemnification.
SECTION 7. Contribution. If the indemnification provided for in Section 6
------------
hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company and the
Selling Shareholders on the one hand and the Underwriters on the other hand from
the offering of the Securities pursuant to this Agreement or (ii) if the
allocation provided by clause (i) is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company and the
Selling Shareholders on the one hand and of the Underwriters on the other hand
in connection with the statements or omissions, or in connection with any
violation of the nature referred to in Section 6(a)(ii)(A) hereof, which
resulted in such losses, liabilities, claims, damages or expenses, as well as
any other relevant equitable considerations.
The relative benefits received by the Company and the Selling Shareholders
on the one hand and the Underwriters on the other hand in connection with the
offering of the Securities pursuant to this Agreement shall be deemed to be in
the same respective proportions as the total net proceeds from the offering of
the Securities pursuant to this Agreement (before deducting expenses) received
by the Company and the Selling Shareholders and the total underwriting discount
received by the Underwriters, in each case as set forth on the cover of the
Prospectus, or, if Rule 434 is used, the corresponding location on the Term
Sheet bear to the aggregate initial public offering price of the Securities as
set forth on such cover.
The relative fault of the Company and the Selling Shareholders on the one
hand and the Underwriters on the other hand shall be determined by reference to,
among other things, whether any such untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by the Company or the Selling Shareholders or by the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission or any
violation of the nature referred to in Section 6(a)(ii)(A) hereof.
The Company, the Selling Shareholders and the Underwriters agree that it
would not be just and equitable if contribution pursuant to this Section 7 were
determined by pro rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above in this Section
7. The aggregate amount of losses, liabilities, claims, damages and expenses
incurred by an indemnified party and referred to above in this Section 7 shall
be deemed to include any legal or other expenses reasonably incurred by such
indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by
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any governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue or alleged untrue statement or omission or
alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the ▇▇▇▇ ▇▇▇) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such Underwriter, and
each director of the Company, each officer of the Company who signed the
Registration Statement, and each person, if any, who controls the Company or any
Selling Shareholder within the meaning of Section 15 of the 1933 Act or Section
20 of the 1934 Act shall have the same rights to contribution as the Company or
such Selling Shareholder, as the case may be. The Underwriters' respective
obligations to contribute pursuant to this Section 7 are several in proportion
to the number of Initial Securities set forth opposite their respective names in
Schedule A hereto and not joint.
The provisions of this Section shall not affect any agreement among the
Company and the Selling Shareholders with respect to contribution.
SECTION 8. Representations, Warranties and Agreements to Survive Delivery.
--------------------------------------------------------------
All representations, warranties and agreements contained in this Agreement or in
certificates of officers of the Company or any of its subsidiaries or the
Selling Shareholders submitted pursuant hereto, shall remain operative and in
full force and effect, regardless of any investigation made by or on behalf of
any Underwriter or controlling person, or by or on behalf of the Company or the
Selling Shareholders, and shall survive delivery of the Securities to the
Underwriters.
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SECTION 9. Termination of Agreement.
------------------------
(a) Termination; General. The Representatives may terminate this Agreement,
by notice to the Company and the Selling Shareholders, at any time at or prior
to Closing Time (i) if there has been, since the time of execution of this
Agreement or since the respective dates as of which information is given in the
Prospectus, any material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, or (ii) if there has occurred any
material adverse change in the financial markets in the United States or the
international financial markets, any outbreak of hostilities or escalation
thereof or other calamity or crisis or any change or development involving a
prospective change in national or international political, financial or economic
conditions, in each case the effect of which is such as to make it, in the
judgment of the Representatives, impracticable to market the Securities or to
enforce contracts for the sale of the Securities, or (iii) if trading in any
securities of the Company has been suspended or materially limited by the
Commission or the NYSE, or if trading generally on the American Stock Exchange
or the NYSE or in the Nasdaq National Market has been suspended or materially
limited, or minimum or maximum prices for trading have been fixed, or maximum
ranges for prices have been required, by any of said exchanges or by such system
or by order of the Commission, the National Association of Securities Dealers,
Inc. or any other governmental authority, or (iv) if a banking moratorium has
been declared by either Federal, New York or California authorities.
(b) Liabilities. If this Agreement is terminated pursuant to this Section,
such termination shall be without liability of any party to any other party
except as provided in Section 4 hereof, and provided further that Sections 1, 6,
7 and 8 shall survive such termination and remain in full force and effect.
SECTION 10. Default by One or More of the Underwriters. If one or more of
------------------------------------------
the Underwriters shall fail at Closing Time or a Date of Delivery to purchase
the Securities which it or they are obligated to purchase under this Agreement
(the "Defaulted Securities"), the Representatives shall have the right, within
24 hours thereafter, to make arrangements for one or more of the non-defaulting
Underwriters, or any other underwriters, to purchase all, but not less than all,
of the Defaulted Securities in such amounts as may be agreed upon and upon the
terms herein set forth; if, however, the Representatives shall not have
completed such arrangements within such 24-hour period, then:
(a) if the number of Defaulted Securities does not exceed 10% of the number
of Securities to be purchased on such date, each of the non-defaulting
Underwriters shall be obligated, severally and not jointly, to purchase the full
amount thereof in the proportions that their respective underwriting obligations
hereunder bear to the underwriting obligations of all non-defaulting
Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of the number of
Securities to be purchased on such date, this Agreement or, with respect to any
Date of
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Delivery which occurs after the Closing Time, the obligation of the Underwriters
to purchase and of the Company to sell the Option Securities to be purchased and
sold on such Date of Delivery shall terminate without liability on the part of
any non-defaulting Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination of
this Agreement or, in the case of a Date of Delivery which is after the Closing
Time, which does not result in a termination of the obligation of the
Underwriters to purchase and the Company to sell the relevant Option Securities,
as the case may be, either (i) the Representatives or (ii) the Company and any
Selling Shareholder shall have the right to postpone Closing Time or the
relevant Date of Delivery, as the case may be, for a period not exceeding seven
days in order to effect any required changes in the Registration Statement or
Prospectus or in any other documents or arrangements. As used herein, the term
"Underwriter" includes any person substituted for an Underwriter under this
Section 10.
SECTION 11. Default by One or More of the Selling Shareholders or the
---------------------------------------------------------
Company.
-------
(a) If a Selling Shareholder shall fail at Closing Time to sell and deliver
the number of Securities which such Selling Shareholder or Selling Shareholders
are obligated to sell hereunder, then the Underwriters may, at option of the
Representatives, by notice from the Representatives to the Company and the non-
defaulting Selling Shareholders, either (a) terminate this Agreement without any
liability on the fault of any non-defaulting party except that the provisions of
Sections 1, 4, 6, 7 and 8 shall remain in full force and effect or (b) elect to
purchase the Securities which the non-defaulting Selling Shareholders and the
Company have agreed to sell hereunder. No action taken pursuant to this Section
11 shall relieve any Selling Shareholder so defaulting from liability, if any,
in respect of such default.
(b) If the Company shall fail at Closing Time or at the Date of Delivery to
sell the number of Securities that it is obligated to sell hereunder, then this
Agreement shall terminate without any liability on the part of any non-
defaulting party; provided, however, that the provisions of Sections 1, 4, 6, 7
and 8 shall remain in full force and effect. No action taken pursuant to this
Section shall relieve the Company from liability, if any, in respect of such
default.
SECTION 12. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to the Representatives at ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, attention of ▇▇▇▇ ▇▇▇ ▇▇▇▇▇,
with a copy to ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Esq., Fried, Frank, Harris, ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇; notices to the Company shall
be directed to it at FirstAmerica Automotive, Inc., ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, attention of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇; with copies to ▇▇▇▇▇▇
▇. ▇▇▇▇, Esq., ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ & Freidenrich LLP, 400
- ▇▇ -
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ and notices to the Selling
Shareholders shall be directed to [ ], attention of [ ].
SECTION 13. Parties. This Agreement shall each inure to the benefit of and
-------
be binding upon the Underwriters, the Company and the Selling Shareholders and
their respective successors. Nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any person, firm or corporation, other
than the Underwriters, the Company and the Selling Shareholders and their
respective successors and the controlling persons and officers and directors
referred to in Sections 6 and 7 and their heirs and legal representatives, any
legal or equitable right, remedy or claim under or in respect of this Agreement
or any provision herein contained. This Agreement and all conditions and
provisions hereof are intended to be for the sole and exclusive benefit of the
Underwriters, the Company and the Selling Shareholders and their respective
successors, and said controlling persons and officers and directors and their
heirs and legal representatives, and for the benefit of no other person, firm or
corporation. No purchaser of Securities from any Underwriter shall be deemed to
be a successor by reason merely of such purchase.
SECTION 14. Governing Law and Time. THIS AGREEMENT SHALL BE GOVERNED BY AND
----------------------
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. SPECIFIED TIMES
OF DAY REFER TO NEW YORK CITY TIME.
SECTION 15. Effect of Headings. The Article and Section headings herein and
------------------
the Table of Contents are for convenience only and shall not affect the
construction hereof.
- 33 -
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Company and the Attorney-in-Fact for the Selling
Shareholders a counterpart hereof, whereupon this instrument, along with all
counterparts, will become a binding agreement among the Underwriters, the
Company and the Selling Shareholders in accordance with its terms.
Very truly yours,
FIRSTAMERICA AUTOMOTIVE, INC.
By
----------------------------------
Title:
Name of Attorney-in-Fact
By
----------------------------------
As Attorney-in-Fact acting on behalf
of the Selling Shareholders named
in Schedule B hereto
CONFIRMED AND ACCEPTED, as of the date first above written:
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
▇▇▇▇▇▇▇▇▇, LUFKIN & ▇▇▇▇▇▇▇▇ SECURITIES CORPORATION
BANCBOSTON ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, INC.
By: ▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
By
----------------------------------
Authorized Signatory
For themselves and as Representatives of the other Underwriters named in
Schedule A hereto.
- 34 -
SCHEDULE A
Number of
Initial
Name of Underwriter Securities
------------------- ----------
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
▇▇▇▇▇▇▇▇▇, Lufkin & ▇▇▇▇▇▇▇▇ Securities Corporation
BancBoston ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Inc.
Total................................................. ,000,000
==========
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