Exhibit 10.35a
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER dated as of March 16, 1999 (this
"AGREEMENT") by and among SONIC AUTOMOTIVE, INC., a Delaware corporation (the
"BUYER"), ▇▇▇▇▇▇▇▇ CADILLAC COMPANY, INC., an Alabama corporation (the
"COMPANY"), and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇., ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, ▇▇., and ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇ (being collectively, the "SELLERS").
W I T N E S S E T H:
WHEREAS, the Sellers own in the aggregate 5,000 shares of common stock
of the Company, par value $100 per share (the "SHARES"), which shares represent
all of the issued and outstanding shares of capital stock of the Company and are
owned of record and beneficially by the Sellers in the amounts set forth
opposite their respective names on Exhibit A hereto; and
WHEREAS, pursuant to that certain Asset Purchase Agreement dated as of
November 3, 1998, by and between the Buyer, the Company, and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
▇▇., ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇. (the "ORIGINAL SELLERS"),
and the other parties named therein (the "ORIGINAL ASSET PURCHASE AGREEMENT"),
the Buyer agreed to purchase, and the Original Sellers agreed to sell, certain
assets used in connection with the Original Sellers' four automobile dealership
businesses, including the Cadillac dealership business of the Company (the
"CADILLAC DEALERSHIP BUSINESS"); and
WHEREAS, pursuant to the terms and in accordance with the conditions of
Section 2.2(c) of the Original Asset Purchase Agreement, the Original Sellers
have elected to structure the acquisition by Buyer of the Cadillac Dealership
Business as an acquisition of the Shares pursuant to a merger (the "MERGER") of
the Company with and into a wholly-owned Alabama subsidiary of the Buyer (the
"SUB"), to be formed by the Buyer prior to the consummation of the transactions
contemplated hereby, on the terms and subject to the conditions set forth
herein; and
WHEREAS, contemporaneously herewith, the Buyer, the Original Sellers,
and the other parties to the Original Asset Purchase Agreement are executing an
Amended and Restated Asset Purchase Agreement (the "AMENDMENT") to reflect,
among other things, certain changes to the terms of the Original Asset Purchase
Agreement as a result of the Original Sellers' election under Section 2.2(c) of
the Original Asset Purchase Agreement to structure the sale of the Cadillac
Dealership Business as a stock acquisition pursuant to the Merger (the Original
Asset Purchase Agreement, as amended and restated pursuant to the Amendment,
being the "AMENDED ASSET PURCHASE AGREEMENT"); and
WHEREAS, the Buyer has entered into those certain Contracts to Purchase
and Sell Property (the "REAL PROPERTY PURCHASE AGREEMENTS") with (i) ▇▇▇-▇▇,
L.L.C. and (ii) ▇▇▇▇▇▇▇▇ Realty Ventures, L.L.C. (collectively, the "OWNERS"),
whereby the Buyer has agreed to buy, and the Owners have agreed to sell, the
land, buildings and improvements located at the Real Property (as defined
therein); and
WHEREAS, the consummation of the transactions contemplated by this
Agreement is subject to the consummation of the transactions contemplated by
each of the Real Property Purchase Agreements and the Amended Asset Purchase
Agreement (collectively, the "OTHER BASIC AGREEMENTS"); and
WHEREAS, the Buyer desires to acquire the Shares from the Sellers
pursuant to the Merger, and the Sellers are willing to transfer the Shares to
the Buyer pursuant to the Merger, upon the terms and conditions hereinafter set
forth;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter contained, the receipt and legal sufficiency of which are hereby
acknowledged, and intending to be legally bound, the parties hereby agree as
follows:
ARTICLE I.
CERTAIN DEFINITIONS
"ASSETS" shall mean: the New Vehicles (as defined in Section 3.1
hereof); the Demonstrators (as defined in Section 3.2 hereof); the Used Vehicles
(as defined in Section 3.5 hereof); the Parts (as defined in Section 4.3
hereof); the Miscellaneous Inventories (as defined in Section 5.1 hereof); the
Work in Progress (as defined in Section 5.3 hereof); and the Fixtures and
Equipment.
"CLOSING DATE" shall mean the date, not later than the Closing Date
Deadline (as hereinafter defined), of the closing of the transactions
contemplated by this Agreement (the "CLOSING"). The Closing shall be held at the
offices of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
at 9:00 a.m. on the Closing Date.
"CLOSING DATE DEADLINE" shall mean the "Closing Date Deadline" under the
Amended Asset Purchase Agreement.
"INVENTORY DATE" shall mean December 31, 1998.
"MANUFACTURER" shall mean General Motors Corporation.
"REAL PROPERTY" shall mean the land, buildings and improvements where
the Cadillac Dealership Business is currently operated.
"SELLERS' AGENT" shall mean ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇., as agent for the
Sellers hereunder.
ARTICLE II.
THE MERGER & THE MERGER CONSIDERATION
2.1 THE MERGER.
(a) Subject to the provisions of this Agreement and the Articles of Merger
substantially in the form of Exhibit B attached hereto (the "Certificate of
Merger""ARTICLES OF MERGER"), the Company shall be merged with and into the Sub
in accordance with the provisions of the Alabama Business Corporation Act (the
"Georgia Law""MERGER LAW"), whereupon the existence of the Company shall cease
and the Sub shall be the surviving corporation (the Sub and the Company are
sometimes herein referred to as the "Constituent Corporations""MERGING
COMPANIES" and the Sub after the Merger is sometimes herein referred to as the
"Surviving Corporation""SURVIVING COMPANY").
(b) As soon as practicable after satisfaction of, or, to the extent permitted
hereunder, waiver of all conditions to the Merger, the Merging Companies shall
execute and file the Articles of Merger with the Secretary of State of the State
of Alabama in accordance with the Merger Law, and shall otherwise make all other
filings or recordings required by the Merger Law in connection with the Merger.
The Merger shall become effective at such date and time as the Articles of
Merger are duly filed with, and accepted by, the Secretary of State of the State
of Alabama (the "Effective Time""EFFECTIVE TIME").
(c) At the Effective Time, the separate existence of the Company shall cease and
the Company shall be merged with and into the Sub and the Sub shall be the
Surviving Company, whose name thereafter shall be "SONIC - ▇▇▇▇▇▇▇▇ CADILLAC,
INC.."
(d) From and after the Effective Time: (i) the Articles of Incorporation and the
Bylaws of the Sub, both as in effect immediately prior to the Effective Time,
shall be the Articles of Incorporation and the Bylaws of the Surviving Company,
until thereafter amended in accordance with applicable law; (ii) the directors
of the Sub at the Effective Time shall become the directors of the Surviving
Company, until their successors are duly elected or appointed and qualified in
accordance with
applicable law; and (iii) the officers of the Sub at the Effective Time shall
become the initial officers of the Surviving Company, to serve at the pleasure
of the board of directors of the Surviving Company.
(e) At the Effective Time, by virtue of the Merger and the applicable
provisions of the Merger Law and without any further action on the part of the
Merging Companies or on the part of the Company's shareholders:
(i) each share of common stock of the Sub outstanding immediately prior to the
Effective Time shall, automatically and without any action on the part of the
holder thereof, be converted into one share of common stock of the Surviving
Company; and
(ii) all of the Shares shall, automatically and without any action on the part
of the Sellers, cease to be outstanding and shall be converted into the right to
receive the Merger Consideration (as defined in Section 2.2 below) in accordance
with the provisions of said Section 2.2. All Shares, when so converted, shall no
longer be outstanding and shall automatically be canceled and retired and shall
cease to exist, and the Sellers holding Shares shall cease to have any rights
with respect thereto, except the right to receive the Merger Consideration in
accordance with provisions of said Section 2.2.
2.2 THE MERGER CONSIDERATION.
(a) The consideration to be paid by the Buyer for the Shares pursuant to the
Merger (the "MERGER CONSIDERATION") shall consist of the Basic Merger
Consideration (as defined in Section 2.2(b) below) and the Contingent Merger
Considerations (as defined in Section 2.3(a) below).
(b) For the purposes of this Agreement, the term "BASIC MERGER CONSIDERATION"
shall consist of the sum of (i) Three Million Two Hundred Thirty-Four Thousand
One Hundred Fifty-Six Dollars ($3,234,156), plus the Net Book Value (as defined
in Section 2.2(g) below).
(c) (i) At the Closing, the Sellers' Agent shall deliver to the Buyer a
certificate setting forth the Sellers' estimate of the Net Book Value (the
"ESTIMATED NET BOOK VALUE"). Subject to the provisions of Section 2.2(g) below,
at the Closing, provided that such estimate of the Net Book Value shall be
acceptable to the Buyer (such estimate and the Buyer's acceptance thereof to be
without prejudice to the rights of the parties under Section 2.2(g) below), the
Buyer shall issue and deliver to the Sellers, pro rata according to the
respective numbers of the Shares set forth opposite their names on Exhibit A
hereto, that number of whole shares of the Buyer's Class A Convertible Preferred
Stock, Series III (the "PREFERRED STOCK"), obtained by dividing
the Basic Merger Consideration (for this purpose only, calculated with reference
to the Estimated Net Book Value) by $1,000. No fractional shares of Preferred
Stock shall be issued; any such fraction of a share of Preferred Stock shall be
paid in cash at the rate of $1,000 per whole share of Preferred Stock. The
Preferred Stock shall have such rights and preferences as are set forth in the
Statement of Rights and Preferences of Preferred Stock attached as Exhibit B to
the Amended Asset Purchase Agreement (the "STATEMENT OF RIGHTS AND
PREFERENCES"). No portion of the Basic Merger Consideration shall be paid in
cash, except for any fractional shares of Preferred Stock and any adjustments
based upon the Net Book Value pursuant to Subsection 2.2(g) below.
(ii) (A) The Buyer will use its best reasonable efforts to
include all of the shares of the Buyer's Class A Common Stock, $.01 par value
per share (the "COMMON STOCK") which are issuable upon conversion of the shares
of Preferred Stock held by certain of the Sellers (the "PIGGYBACK SELLERS"), as
set forth in subparagraphs (I) - (III) below (the "PIGGYBACK COMMON SHARES"), in
an underwritten public offering of the Buyer's Common Stock (the "PUBLIC
OFFERING"), in accordance with the Securities Act of 1933, as amended (the
"SECURITIES ACT"), on a "piggyback" registration basis on or prior to April 30,
1999. Each of the Piggyback Sellers shall sell in the Public Offering all of
his/her Piggyback Common Shares which the Buyer is able to register in the
Public Offering (unless the managing or lead managing underwriter in the Public
Offering requires that the Piggyback Sellers, individually or in the aggregate,
sell fewer than all of the shares they have elected to sell (as set forth in
subparagraphs (I) - (III) below) or unless the Buyer and the Piggyback Sellers
mutually agree that a fewer number of such shares of Common Stock will be
registered and sold). The Piggyback Common shares shall be determined as
follows:
(I) ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇. -- all shares of Common
Stock issuable upon conversion of all shares of Preferred Stock held by him in
excess of Three Hundred and Fifty (350) shares of Preferred Stock;
(II) ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ -- all shares of Common
Stock issuable upon conversion of all shares of Preferred Stock held by him in
excess of Three Hundred and Fifty (350) shares of Preferred Stock; and
(III) ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇ -- all shares of Common
Stock issuable upon conversion of all shares of Preferred Stock held by her in
excess of One Hundred (100) shares of Preferred Stock.
(B) If requested by the managing or lead managing
underwriter in the Public Offering, each of the Piggyback Sellers shall execute
and deliver such customary documentation as is utilized by such underwriter for
selling stockholders in underwritten public offerings including, without
limitation, an underwriting agreement
and a "lock-up" agreement with the managing or lead managing underwriter in such
forms as are customarily used by such underwriter. In connection with any such
registration, each of the Piggyback Sellers shall supply to the Buyer such
information as may be reasonably requested by the Buyer in connection with the
preparation and filing of a registration statement with the Securities and
Exchange Commission (the "SEC"). The Piggyback Sellers shall not supply any
information to the Buyer for inclusion in such registration statement that will,
taken as a whole, at the time the registration statement becomes effective under
the Securities Act, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
(C) Any Piggyback Common Shares which have not been
registered and sold pursuant to the Public Offering by April 30, 1999 for
whatever reason (other than as a result of any Piggyback Seller's failure to
participate in the Public Offering), will be registered by the Buyer in the
"shelf" registration statement referred to in Subsection (iii) immediately
below.
(iii) As promptly as possible after the earlier of (A) the
closing of the Public Offering, or (B) April 30, 1999, the Buyer shall cause all
shares of Common Stock issuable upon conversion of the Preferred Stock
(including any Piggyback Common Shares which were not sold in the Public
Offering other than as a result of any Piggyback Seller's failure to participate
in the Public Offering) to be registered under a "shelf" registration statement
filed with the SEC under the Securities Act; provided, however, the Buyer may
either (C) delay the effectiveness of any such shelf registration statement
until the expiration of any "lock-up" period (not to exceed 90 days) required by
the underwriters in the Public Offering, or (D) not delay such effectiveness, in
which case the Sellers hereby agree to be bound by any such "lock-up" as fully
as if the Sellers had signed the applicable lock-up agreement required by such
underwriters. All shares of Common Stock registered pursuant to this Subsection
(iii) are hereinafter called the "REGISTERED COMMON SHARES." Upon the
effectiveness of such "shelf" registration statement, the Sellers will promptly
convert all shares of the Preferred Stock held by them into Registered Common
Shares.
(d) The Buyer shall deliver to the Sellers, at least thirty (30) days prior to
the payment of the Contingent Stock Component (as defined in Section 2.3(b)
below) a prospectus with respect to the Buyer's offer and sale to the Sellers of
the shares of Common Stock contemplated by this Subsection (d). The Sellers'
Agent may, by notice (the "FURTHER REGISTRATION NOTICE") to the Buyer at least
seven (7) days prior to the payment of the Contingent Stock Component, elect to
receive up to fifty percent (50%) of the Contingent Stock Component in shares of
registered Common Stock, in which case the term "Registered Common Shares" shall
also include the applicable number of registered shares of Common Stock issued
as part of the Contingent Stock
Component. Provided that the Sellers' Agent shall have timely delivered the
Further Registration Notice, at the time of payment of the Contingent Purchase
Price the Buyer shall issue and deliver to the Sellers, pro rata according to
the numbers of shares of Preferred Stock issued to the respective Sellers as the
Basic Merger Consideration that number of whole shares of Common Stock obtained
by dividing the portion of the Contingent Stock Component specified in the
Further Registration Notice (not to exceed 50% thereof) by the Market Price (as
defined in the Statement of Rights and Preferences) as of the date of such
payment of the Contingent Purchase Price. No fractional shares of Common Stock
shall be issued in connection with the foregoing payments of a portion of the
Contingent Stock Component. To the extent that such fractional shares would
otherwise be issued, the Buyer shall pay cash in lieu of such fractional shares
based upon the applicable Market Price. The Sellers and the Stockholders hereby
agree that they will not offer, sell, contract to sell, or otherwise dispose of
any of the Registered Common Shares included in the Contingent Stock Component
for a period of one hundred eighty (180) days from the date of delivery thereof
by the Buyer.
(e) The obligations of the parties with respect to the Registered Common Shares
will be subject to the additional provisions relating thereto set forth in
Section 2.8 below.
(f) To the extent that the Sellers' Agent does not timely deliver a Further
Registration Notice, the Buyer shall have no obligation to the Sellers or the
Stockholders to deliver any registered shares of Common Stock. Thereafter, the
Buyer's sole obligation with respect to the Preferred Stock and the shares of
Common Stock issuable upon conversion of the Preferred Stock (the "COMMON
SHARES") shall be (i) to use its best reasonable efforts to make available
current public information with respect to the Buyer within the meaning of
Subsection (c)(1) of SEC Rule 144 ("RULE 144") to the extent necessary to
facilitate public resales by the Sellers of the Common Shares, pursuant to Rule
144.
(g) (i) Not later than 60 days after the Closing Date, the Buyer will prepare
and deliver to the Sellers' Agent an unaudited balance sheet (the "CLOSING
BALANCE SHEET") of the Company as of the close of business on December 31, 1998
(the "EFFECTIVE CLOSING DATE"), consisting of a computation of the consolidated
net book value of the tangible assets of the Company as of the Effective Closing
Date less the consolidated book value of the liabilities of the Company as of
the Effective Closing Date, all in accordance with GAAP (as defined in Section
11.3 below), except as provided below. The tangible net book value reflected on
the Closing Balance Sheet is hereinafter called the "NET BOOK VALUE." The
Closing Balance Sheet will be prepared in accordance with the following
principles: (A) it will utilize the first in-first out (FIFO) method of
inventory accounting; (B) the liabilities of the Company shall include a
$540,312 tax liability associated with the conversion from the last in-first out
(LIFO) method of accounting to the FIFO method of accounting; (C) there shall be
included
appropriate write-offs for doubtful accounts receivable and bad debts and for
damaged, spoiled, obsolete or slow-moving inventory; (D) any receivables due the
Company from any of the Sellers or any of the directors, officers, employees or
Affiliates (as hereinafter defined) of the Company shall be excluded as assets;
(E) the liabilities of the Company shall include appropriate accruals for all
tax liabilities of the Company; and (F) the values of the respective Assets
shall be: the New Vehicle Value (as defined in Section 3.1 hereof); the
Demonstrator Value (as defined in Section 3.2 hereof); the Used Vehicle Value
(as defined in Section 3.5 hereof); the Parts Value (as defined in Section 4.3
hereof); the Miscellaneous Inventories Value (as defined in Section 5.1 hereof);
the Work in Progress Value (as defined in Section 5.3 hereof); and the F&E Value
(as defined in Section 5.4 hereof). For purposes of this Agreement, the term
"AFFILIATE" shall mean any entity directly or indirectly controlling, controlled
by or under common control with the specified person, whether by stock
ownership, agreement or otherwise, or any parent, child, spouse or sibling of
such person and the concept of "CONTROL" shall mean the possession, direct or
indirect, of the power to direct or cause the direction of the management and
policies of such person or entity, whether through the ownership of voting
securities, by contract or otherwise.
(ii) If within 30 days following delivery of the Closing Balance
Sheet, the Sellers' Agent has not given the Buyer notice of the Sellers'
objection to the computation of the Net Book Value as set forth in the Closing
Balance Sheet (such notice to contain a statement in reasonable detail of the
nature of the Sellers' objection), then the Net Book Value reflected in the
Closing Balance Sheet will be deemed mutually agreed by the Buyer and the
Sellers. If the Sellers' Agent shall have given such notice of objection in a
timely manner, then the issues in dispute will be submitted to a "Big Five"
accounting firm mutually acceptable to the Buyer and the Sellers' Agent (the
"ACCOUNTANTS") for resolution. If issues in dispute are submitted to the
Accountants for resolution: (A) each party will furnish to the Accountants such
work papers and other documents and information relating to the disputed issues
as the Accountants may request and are available to the party or its
subsidiaries (or its independent public accountants), and will be afforded the
opportunity to present to the Accountants any material relating to the
determination and to discuss the determination with the Accountants; (B) the
Accountants will be instructed to determine the Net Book Value based upon their
resolution of the issues in dispute; (C) such determination by the Accountants
of the Net Book Value, as set forth in a notice delivered to both parties by the
Accountants, will be binding and conclusive on the parties; and (D) the Buyer
and the Sellers shall each bear 50% of the fees and expenses for the Accountants
for such determination.
(iii) To the extent that the Net Book Value, as deemed mutually
agreed by the parties or as determined by the Accountants, as aforesaid, is
greater than the Estimated Net Book Value, the Buyer shall be obligated to pay
the amount of such excess (the "NET BOOK VALUE EXCESS"), together with interest
on the amount of the Net Book Value Excess at the Buyer's floor plan financing
rate from time to time in effect (the
"INTEREST RATE") from the Closing Date to the date of such payment, promptly to
the Sellers. The payment of the Net Book Value Excess, plus interest as
aforesaid, shall be made, in cash, to the Sellers, pro rata according to the
number of shares of Preferred Stock issued to the respective Sellers as the
Basic Merger Consideration. To the extent that the Net Book Value, as deemed
mutually agreed by the parties or as determined by the Accountants, as
aforesaid, is less than the Estimated Net Book Value, the Sellers shall be
obligated, jointly and severally, to pay the amount of such shortfall (the "NET
BOOK VALUE SHORTFALL"), together with interest on the amount of the Net Book
Value Shortfall at the Interest Rate from the Closing Date to the date of such
payment, in cash, promptly to the Buyer.
2.3 CONTINGENT MERGER CONSIDERATION.
(a) As used in this Agreement, (i) the term "CONTINGENT MERGER CONSIDERATION"
shall mean the amount payable pursuant to Section 2.3(b) below; (ii) the term
"CALCULATION PERIOD" shall mean the twelve (12) month period commencing with the
first full month after the Closing Date; (iii) the term "EARNINGS BEFORE TAXES"
shall mean the earnings before taxes of the Cadillac Dealership Business for the
Calculation Period, calculated as provided in Section 2.3(c) below; (iv) the
term "CADILLAC DEALERSHIP BUSINESS" shall mean the automobile dealership
business of Cadillac acquired by the Buyer pursuant to this Agreement; and (v)
the term "AGGREGATE EARNINGS BEFORE TAXES" shall mean the sum total of the
Earnings Before Taxes of the Cadillac Dealership Business and Dealership
Businesses (as defined in the Amended Asset Purchase Agreement).
(b) Subject to the provisions of Section 2.3(c) below, not later than 90 days
after the end of the Calculation Period the Buyer shall pay to the Sellers, pro
rata according to the number of shares of Preferred Stock issued to the
respective Sellers as the Basic Merger Consideration, the Contingent Merger
Consideration in an amount equal to (i) three (3) times the Earnings Before
Taxes of the Cadillac Dealership Business in excess of $988,000, LESS (ii)
$270,156; provided, however, that the Buyer shall be under no obligation to pay
any of the Contingent Merger Consideration unless the Aggregate Earnings Before
Taxes exceed $7,564,000. The Contingent Merger Consideration shall be paid to
the respective Sellers 65% in cash and 35% (the "CONTINGENT STOCK COMPONENT") by
the issuance and delivery to the respective Sellers of shares of Preferred Stock
at the rate of one share of Preferred Stock for every $1,000 of such Contingent
Stock Component, subject, however, to any rights of the Sellers to receive a
percentage of the Contingent Stock Component in registered shares of Common
Stock pursuant to Section 2.2(d) above. Fractional shares of Preferred Stock may
be issued in connection with the payment of the Contingent Purchase Price;
however, no fractional shares of Common Stock shall be issued upon conversion of
the Preferred Stock. At the request of Sellers' Agent, the Buyer shall furnish
the Sellers' Agent with copies of the Buyer's factory financial statements for
each month during the Calculation Period.
(c) Earnings Before Taxes shall be calculated by the Buyer in accordance with
GAAP (as defined in Section 11.3) and subject to the following special rules:
(i) No deduction shall be taken for federal and state income taxes, or for
state franchise taxes based on corporate income, owed by the Cadillac Dealership
Business;
(ii) No deduction shall be taken for any interest expenses (including
acquisition debt) of the Cadillac Dealership Business other than floor plan
financing interest attributable to such Business and other interest expenses
directly attributable to the operations of the Cadillac Dealership Business;
(iii) Earnings Before Taxes shall be determined before (A) any expense
chargeable with respect to the Non-Competition Agreement (as hereinafter
defined), or (B) any management fee expense allocation from the Buyer in respect
of management fees payable to the Buyer;
(iv) No deduction shall be taken for any amortization of goodwill included in
the Merger Consideration; and b. Overhead expenses or other expenses which have
been incurred by the Cadillac Dealership Business which are allocated to the
Cadillac Dealership Business but do not directly relate to the operation of the
Cadillac Dealership Business, or that portion so allocated which is not
reasonably related to the operation of the Cadillac Dealership Business, shall
not be deducted in determining Earnings Before Taxes.
At the time of the payment of the Contingent Merger Consideration, the
Buyer shall deliver to the Sellers' Agent a statement in writing setting forth
in reasonable detail the manner in which the Contingent Merger Consideration was
determined. The Sellers' Agent shall have a period of thirty (30) days from the
date of delivery of the Buyer's statement of the Contingent Merger Consideration
to object in writing to the calculation of the Contingent Merger Consideration
set forth therein; failing such objection within such period by the Sellers'
Agent, the Sellers shall be deemed to have accepted the Buyer's calculation of
the Contingent Merger Consideration. If the Sellers' Agent shall have timely
objected to the Buyer's calculation of the Contingent Merger Consideration, the
parties shall negotiate in good faith in an effort to resolve any dispute
regarding the Contingent Merger Consideration. If the parties are unable to
resolve such dispute within a period of thirty (30) days after the Buyer's
receipt of the Sellers' objection, the matter shall be submitted to a "big six"
accounting firm mutually acceptable to the parties, which shall be instructed to
resolve such dispute as promptly as possible. The costs and expenses of such
accounting firm shall be shared equally between the Buyer and the
Sellers. Upon the final determination of the Contingent Merger Consideration,
the Buyer or the Sellers, as the case may be, shall make appropriate payment to
the other, as the case may be, in the amount of the Contingent Merger
Consideration as finally determined. The party making the payment shall also pay
interest on the amount of such payment at an amount of such payment at an annual
rate of interest equal to the Buyer's floor plan financing rate from time to
time in effect from the original date of payment of the Contingent Merger
Consideration by the Buyer to the date of such payment.
2.4 DELIVERY OF THE SHARES.
(a) At the Closing, each Seller shall deliver to the Buyer a certificate or
certificates representing the number of Shares set forth opposite such Seller's
name on Exhibit A hereto, duly endorsed in blank or with a fully executed stock
power attached, all in proper form for transfer with all transfer taxes, if any,
paid by such Seller. If such certificate or certificates cannot, after a
diligent search, be located, in lieu of such certificate or certificates, such
Seller shall provide an affidavit of lost certificate and indemnity in a form
reasonably satisfactory to the Buyer. Upon such surrender by all the Sellers,
the Sellers shall be entitled to the Merger Consideration, as more fully
provided in Section 2.2 above. Until surrendered in accordance with this Section
2.4, each such certificate for the Shares shall be deemed for all purposes to
evidence only the right to receive the Merger Consideration payable pursuant to
Section 2.2.
(b) The Shares shall be delivered to the Buyer free and clear of all liens,
pledges, encumbrances, claims, security interests, charges, voting trusts,
voting agreements, other agreements, rights, options, warrants or restrictions
or claims of any kind, nature or description (collectively, "ENCUMBRANCES").
2.5 THE SELLERS' COVENANT TO CLOSE. The Sellers further covenant and agree to
vote all of the Shares held by them in favor of the Merger, and otherwise to
take all officer, director, or shareholder actions necessary to cause the
Company to adopt, approve and consummate, the Merger.
2.6 NON-COMPETITION AGREEMENT. At the Closing, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇. shall
enter into a non-competition agreement with the Buyer in substantially the form
of Exhibit C to the Amended Asset Purchase Agreement (the "NON- COMPETITION
AGREEMENT").
2.7 EMPLOYMENT AGREEMENTS. At the Closing, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇., ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, ▇▇. and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ will enter into Employment Agreements with the
Buyer in substantially the forms of ▇▇▇▇▇▇▇▇ ▇-▇, ▇-▇ and D-3, respectively, to
the Amended Asset Purchase Agreement (the "EMPLOYMENT AGREEMENTS").
2.8 ADDITIONAL TERMS RELATING TO THE REGISTERED COMMON SHARES.
(a) The Buyer shall have no obligation to maintain the currency of any
prospectus, permit the use of any prospectus or maintain the effectiveness of
any registration statement for the resale of the Registered Common Shares once
all of the Registered Common Shares that remain unsold may be sold without
restriction pursuant to Rule 144.
(b) The Sellers agree that they shall effect each resale of Registered Common
Shares only pursuant to a current prospectus or supplements thereto that is a
part of the applicable registration statement of the Buyer (the "RESALE
PROSPECTUS").
(c) Any offering of any of the Registered Common Shares under the Resale
Prospectus will be effected in an orderly manner through a securities dealer,
acting as broker or dealer, reasonably acceptable to the Buyer (the "DESIGNATED
BROKER").
(d) The Sellers will make resales of Registered Common Shares only by one or
more methods described in the Resale Prospectus, as appropriately supplemented
or amended when required.
(e) Since the Registered Common Shares are "restricted securities" within the
meaning of Rule 145 promulgated by the SEC under the Securities Act, the
certificates representing the Registered Common Shares will be issued by the
Buyer with such legends as the Buyer may reasonably require until such shares
are offered pursuant to the foregoing terms under the Resale Prospectus, at
which time such certificates shall be tendered to the Buyer and a new
certificate or certificates without legends shall be issued by the Buyer to the
Designated Broker in order to settle any resales by the Sellers.
(f) The Sellers shall provide the Buyer, in writing, with all information
concerning the Sellers and their resale of the Registered Common Shares as may
reasonably be requested by the Buyer in order to comply with the Securities Act,
and the Sellers shall indemnify the Buyer for any liabilities (the "SELLERS'
LIABILITIES") arising under the Securities Act, the Securities Exchange Act of
1934 or any state securities or blue sky laws resulting from any material
misstatements in, or omissions of material information from, such information
provided by the Sellers to the Buyer.
(g) The Sellers shall pay any and all expenses directly related to the resale of
the Registered Common Shares, including, but not limited to, the commissions or
fees of the Designated Broker.
(h) The Buyer shall use its best reasonable efforts to list the Registered
Common Shares for trading on the New York Stock Exchange.
(i) The Buyer shall pay all expenses, including legal and accounting fees, in
connection with the preparation, filing and maintenance of the applicable
registration statement, including amendments thereto and the Resale Prospectus,
including supplements thereto, and the issuance of certificates representing the
Registered Common Shares.
(j) The Buyer shall indemnify the Sellers for any liabilities arising under the
Securities Act, the Securities Exchange Act of 1934 or any state securities or
blue sky laws resulting from any material misstatements in, or omissions of
material information from, the Resale Prospectus or the applicable registration
statement, including the information incorporated by reference therein, except
for the Sellers' Liabilities.
(k) Notwithstanding any provision of this Agreement to the contrary, the Sellers
shall not have any right to take any action (and the Sellers hereby agree that
none of them shall take any action) to restrain, enjoin or otherwise delay any
registration as a result of any controversy that might arise with respect to the
interpretation or implementation of this Agreement. Nothing contained in this
Section 2.8 shall prevent the making of a claim for monetary relief.
ARTICLE III.
NEW VEHICLES; DEMONSTRATORS AND USED VEHICLES
3.1 NEW VEHICLES. For purposes of the Closing Balance Sheet, the Assets shall
include all of the Company's untitled new 1999 and 1998 motor vehicles in the
Company's inventory as of the Effective Closing Date and which are listed on
Schedule 3.1 hereto, which the Sellers' Agent shall deliver to the Buyer not
more than three (3) days prior to the Closing (all such vehicles are
collectively referred to hereinafter as the "NEW VEHICLES"). For purposes of
calculating the Net Book Value, the value of each New Vehicle shall be the price
at which the New Vehicle was invoiced to the Company by the Manufacturer, as
adjusted pursuant to this Article III (the sum of all such values for New
Vehicles as determined by this Article III is herein referred to as the "NEW
VEHICLE VALUE"). Schedule 3.1 shall set forth each New Vehicle's model, invoice
cost, odometer reading and all other information necessary to calculate the New
Vehicle Value with respect to such New Vehicle.
3.2 DEMONSTRATORS. For purposes of the Closing Balance Sheet, the Assets shall
include all of the Company's untitled new 1999 and 1998 motor vehicles in
the Company's inventory as of the Effective Closing Date which are used in the
ordinary course of business for the purpose of demonstration and which are
listed on Schedule 3.2 hereto, which the Sellers' Agent shall deliver to the
Buyer not more than three (3) days prior to the Closing (all such vehicles are
collectively referred to herein as the "DEMONSTRATORS"). For purposes of
calculating the Basic Merger Consideration, the value of each Demonstrator shall
be the price at which the Demonstrator was invoiced to the Company by the
Manufacturer, as adjusted pursuant to this Article III and as reduced by an
amount equal to ten cents ($.10) multiplied by the total mileage on such
Demonstrator's odometer up to 6,000 miles and thirty-two cents ($.32) multiplied
by the total mileage on such Demonstrator's odometer in excess of 6,000 miles
(the sum of all such values for Demonstrators hereunder is herein referred to as
the "DEMONSTRATOR VALUE"). Schedule 3.2 shall set forth each Demonstrator's
model, invoice cost, odometer reading and all other information necessary to
calculate the Demonstrator Value with respect to such Demonstrator.
3.3 ADJUSTMENT OF NEW VEHICLE AND DEMONSTRATOR VALUES. The value of each New
Vehicle and each Demonstrator shall be: (a) increased by the dealer cost of any
equipment and accessories which have been installed by the Company; and (b)
decreased by (i) the dealer cost of any equipment and accessories which have
been removed from such vehicles.
3.4 DAMAGED OR REPAIRED NEW VEHICLES AND DEMONSTRATORS. In the event any New
Vehicle or Demonstrator shall have been damaged prior to the Closing Date, or is
otherwise in a condition such that it cannot reasonably be presented as being in
a first-class saleable condition, the Sellers' Agent and the Buyer will attempt
to agree on the cost to cover such repairs or some other equitable reduction in
value to reflect such condition, which amount shall be deducted from the value
of such New Vehicle or Demonstrator. In the event that the Buyer and the
Sellers' Agent cannot agree on the cost of repairs or the amount of reduction,
such dispute shall be submitted to the Inventory Service (as defined in Section
4.1) for resolution. With respect to any New Vehicle or Demonstrator which has
been damaged and repaired prior to the Closing Date, the Sellers' Agent and the
Buyer will attempt to agree on an adjustment to the value to reflect any
decrease in the wholesale value of such New Vehicle or Demonstrator resulting
from such damage and repair. In the event that the Buyer and the Sellers' Agent
cannot agree on such adjustment, such dispute shall be submitted to the
Inventory Service (as defined in Section 4.1) for resolution. The Sellers' Agent
shall notify the Buyer on or prior to the Closing Date if any New Vehicles or
Demonstrators shall have suffered any damage which is not reflected on Schedule
3.1 or Schedule 3.2.
3.5 USED VEHICLES. The Sellers' Agent and the Buyer shall perform an inventory
of the Company's used vehicles as of the Inventory Date and, in connection with
such inventory, the Sellers' Agent and the Buyer shall attempt to assign a
mutually agreed price to each used vehicle owned by the Sellers as of the
Inventory Date. The
value of any such vehicles as to which the Sellers' Agent and the Buyer are
unable to agree upon a price shall be submitted to the Inventory Service (as
defined in Section 4.1) for resolution. All used vehicles acquired by the
Sellers after the Inventory Date with respect to used vehicles shall be valued
at the Company's book value thereof; provided, however, the acquisition and
valuation thereof shall be subject to prior approval by the Buyer so long as the
Buyer shall have a representative present at the Company's dealership at the
time such used vehicles are proposed to be accepted. All used vehicles included
in the Company's inventory as of the Closing Date are collectively referred to
herein as the "USED VEHICLES." For purposes of calculating the Net Book Value,
the sum of all prices assigned to the Used Vehicles pursuant to the terms of
this Section 3.5 shall be referred to herein as the "USED VEHICLE VALUE".
ARTICLE IV.
PARTS/ACCESSORIES
4.1 THE INVENTORY. The Buyer and the Sellers' Agent shall engage a mutually
acceptable third party engaged in the business of appraising, valuing and
preparing inventories for automobile dealerships (hereinafter referred to as the
"INVENTORY SERVICE") to prepare an inventory list (the "INVENTORY") of the parts
and accessories, as well as the Miscellaneous Inventories, used by the Company
in the Cadillac Dealership Business. The Inventory (insofar as it relates to
parts and accessories) shall be posted to the Manufacturer's approved systems of
inventory control. The cost of the Inventory shall be borne one-half by the
Buyer and one-half by the Sellers. The Buyer shall have the right to deduct the
Sellers' portion of such expense from the cash consideration to be paid to the
Sellers under the terms of this Agreement and to remit such sum directly to the
Inventory Service. The Inventory shall be completed by the Inventory Date.
4.2 RETURNABLE AND NONRETURNABLE PARTS AND ACCESSORIES. The Inventory shall
classify parts and accessories as "returnable" or "nonreturnable". For purposes
of this Agreement, the terms "returnable parts" and "returnable accessories"
shall describe and include only those new parts and new accessories for vehicles
which are listed (coded) in the latest current Master Parts Price List Suggested
List Prices and Dealer Prices, or other applicable similar price lists, of the
Manufacturer, with any applicable supplements, in effect as of the Inventory
Date (the "MASTER PRICE LIST") as returnable to the Manufacturer at not less
than the purchase price reflected in the Master Price List. The value for each
"returnable part" and "returnable accessory" will be the price listed in the
Master Price List. All parts and accessories listed (coded) in the Master Price
List as nonreturnable to the Manufacturer shall be classified as
"nonreturnable". The value for each "nonreturnable" part and accessory, of which
type the Company has made no sales during the ninety (90) day period prior to
the Inventory
Date (or such longer period of time as is commercially reasonable in the case of
"big ticket" parts such as engine blocks and transmissions), shall be sixty
percent (60%) of the price listed therefor in the Master Price List. The value
for each "nonreturnable" part and accessory, of which type the Company has made
retail sales to one or more customers during the ninety (90) day period prior to
the Inventory Date, shall be one hundred percent (100%) of the price therefor
listed in the Master Price List. The value for all "Jobber" and/or "NPN" parts
shall be equal to the Company's original cost of such parts. The value for all
nuts, bolts and any other parts not addressed in this Section 4.2 shall equal
the fair market value thereof as determined by the Inventory Service.
4.3 PARTS; PARTS VALUE. For purposes of the Closing Balance Sheet, the Assets
shall include all parts and accessories owned by the Company at the Effective
Closing Date and listed on the Inventory, including, without limitation, the
Vogue tire line and rims sold by the Company (the "PARTS"); provided, however,
that no value shall be given to any damaged parts or accessories, parts and
accessories with component parts missing, superseded or obsolete parts or
accessories, or used parts or accessories. Any dispute with respect to such
parts or accessories shall be submitted to the Inventory Service for resolution.
For purposes of calculating the Net Book Value, the value for the Parts will
equal the value of such items shown on the Inventory (the "PARTS VALUE").
ARTICLE V.
MISCELLANEOUS INVENTORIES; WORK IN PROGRESS; FIXTURES
AND EQUIPMENT
5.1 MISCELLANEOUS INVENTORIES. For purposes of the Closing Balance Sheet, the
Assets shall include all useable gas, oil and grease, all undercoat material and
body materials in unopened cans and such miscellaneous useable and saleable
articles in unbroken lots (including boutique accessories and pro shop items)
which (i) are on the Company's dealership premises, (ii) are owned by the
Company on the Effective Closing Date, and (iii) are identified in the Inventory
taken by the Inventory Service on the Inventory Date (the foregoing being,
collectively, "MISCELLANEOUS INVENTORIES"). For purposes of calculating the Net
Book Value, the value of the Miscellaneous Inventories shall be equal to the
replacement cost of the Miscellaneous Inventories as determined by the Inventory
Service and set forth on the Inventory (the sum of all values of the
Miscellaneous Inventories pursuant to the terms of this Section 5.1 shall be
referred to herein as the "MISCELLANEOUS INVENTORIES VALUE").
5.2 [INTENTIONALLY LEFT BLANK].
5.3 WORK IN PROGRESS. For purposes of the Closing Balance Sheet, the Assets
shall include the Company's cost for parts and labor for such shop labor and
sublet repairs as the Company shall have caused to be performed on any repair
orders which are in process at the close of business on the Effective Closing
Date for which there are adequate credit arrangements (the "WORK IN PROGRESS")
(the sum of all costs of the Company for the Work in Progress pursuant to the
terms of this Section 5.3 shall be referred to herein as the "WORK IN PROGRESS
VALUE").
5.4 FIXTURES AND EQUIPMENT. For purposes of the Closing Balance Sheet, the
Assets shall include all fixtures, machinery, equipment (including company owned
vehicles, wreckers, service loaners and vans and special tools and shop
equipment), furniture, signs and office equipment, and leasehold improvements
owned by the Company as of the Effective Closing Date and used or held for use
in connection with the Cadillac Dealership Business, including the items listed
on the Book Depreciation Schedule included as Schedule 5.4 attached hereto,
which the Sellers' Agent shall deliver to the Buyer not later than five (5) days
prior to the Closing (collectively referred to herein as the "FIXTURES AND
EQUIPMENT"). For purposes of calculating the Net Book Value, the value of each
item of Fixtures and Equipment shall equal the depreciated book value of such
item, determined in accordance with GAAP (as defined in Section 11.3 hereof),
and based upon Schedule 5.4 (the sum of all values assigned to the Fixtures and
Equipment pursuant to the terms of this Section 5.4 shall be referred to herein
as the "F&E VALUE").
ARTICLE VI.
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the Sellers as follows:
6.1 ORGANIZATION; POWER AND AUTHORITY; AUTHORIZATION. The Buyer is a corporation
duly organized and existing and in good standing under the laws of the State of
Delaware, is duly qualified to do business and is in good standing in every
jurisdiction in which the nature of its business makes such qualification
necessary and has the corporate power to own its properties and to carry on its
business as now being conducted. The Board of Directors of the Buyer has duly
approved this Agreement, all other agreements, certificates and documents
executed or to be executed by the Buyer in connection herewith, and the
transactions contemplated hereby and thereby. The Buyer has full corporate power
and authority to execute and deliver this Agreement and all other agreements,
certificates and documents executed or to be executed by the Buyer in connection
herewith, to consummate the transactions contemplated hereby and thereby and to
perform its obligations hereunder and thereunder. This Agreement, and all other
agreements, certificates and documents executed or to be executed by the Buyer
in connection herewith, constitute or, when executed and delivered, will
constitute legal, valid and binding agreements of the Buyer enforceable against
the Buyer in accordance with their respective terms.
6.2 NON-VIOLATION; CONSENTS. Except as set forth on Schedule 6.2 attached
hereto, the execution and delivery of this Agreement, the consummation of the
transactions contemplated by this Agreement and compliance with the provisions
hereof do not and will not: (a) conflict with or violate any of the provisions
of the Buyer's restated certificate of incorporation or by-laws, each as
amended, or any resolution of the Board of Directors or the stockholders of the
Buyer; (b) violate any law, ordinance, rule or regulation or any judgment,
order, writ, injunction or decree or similar command of any court,
administrative or governmental agency or other body applicable to the Buyer; (c)
violate or conflict with or result in a breach of, or constitute a default
under, any material instrument, agreement or indenture or any mortgage, deed of
trust or similar contract to which the Buyer is a party or by which the Buyer is
bound or affected; or (d) require the consent, authorization or approval of, or
notice to, or filing or registration with, any governmental body or authority,
or any other third party.
6.3 LITIGATION. There are no actions, suits or proceedings pending, or, to the
knowledge of the Buyer, threatened against or affecting the Buyer which might
adversely affect the power or authority of the Buyer to carry out the
transactions to be performed by it hereunder.
6.4 AUTHORIZATION OF PREFERRED STOCK. The issuance of the Preferred Stock, as
well as the shares of Common Stock issuable upon conversion of the Preferred
Stock, has been duly authorized by all necessary corporate action of the Buyer.
Upon the issuance of the Preferred Stock pursuant to this Agreement, and upon
the issuance of shares of Common Stock upon conversion of any of the Preferred
Stock, such Preferred Stock and/or Common Stock, as the case may be, shall be
validly issued, fully paid and non-assessable.
6.5 CAPITALIZATION. The authorized capital stock of the Buyer consists of:
(a) 3,000,000 shares of Preferred Stock, par value $0.10 per share, of which
300,000 shares are designated Class A Convertible Preferred Stock and are, in
turn, divided into 100,000 shares of Series I (the "SERIES I PREFERRED STOCK"),
100,000 shares of Series II (the "SERIES II PREFERRED STOCK") and 100,000 shares
of Series III (the "SERIES III PREFERRED STOCK"); as of October 15, 1998,
approximately 19,500 shares of Series I Preferred Stock are issued and
outstanding and/or are committed to be issued by the Buyer, approximately 13,910
shares of Series II Preferred Stock are issued and outstanding and/or are
committed to be issued by the Buyer, and approximately 31,248 shares of Series
III Preferred Stock are issued and outstanding and/or are committed to be issued
by the Buyer;
(b) 50,000,000 shares of Class A Common Stock, par
value $0.01 per share, of which 5,588,888 shares are issued and outstanding; and
(c) 15,000,000 shares of Class B Common Stock, par value $0.01 per share, of
which 6,200,000 shares are issued and outstanding.
All outstanding capital stock of the Buyer is duly authorized, validly issued,
fully paid and non-assessable and has been issued in conformity with all
applicable federal and state securities laws.
6.6 DISCLOSURE MATERIALS. The Buyer has delivered to the Sellers' Agent copies
of (i) the Prospectus dated November 10, 1997 (the "PROSPECTUS"), (ii) the
Buyer's Annual Report on Form 10-K for the Fiscal Year ended December 31, 1997,
(iii) the Buyer's Quarterly Reports on Form 10-Q for the three-month periods
ended March 31, 1998, June 30, 1998 and September 30, 1998, and (iv) any Current
Reports on Form 8-K, filed in 1998, each in the form (excluding exhibits) filed
with the SEC (collectively, such Forms 10-K, 10-Q and 8-K being hereinafter
referred to as its "REPORTS"). Neither the Prospectus nor any of the Reports
contained, at the time of filing thereof with the SEC, any untrue statement of
any material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements made therein, in light of the
circumstances in which they were made, not misleading.
6.7 MISSTATEMENTS AND OMISSIONS. No representation or warranty made by the Buyer
in this Agreement, and no statement contained in any agreement, instrument,
certificate or schedule furnished or to be furnished by the Buyer pursuant
hereto, contains or will contain any untrue statement of a material fact or
omits or will omit to state a material fact necessary in order to make such
representation or warranty or such statement not misleading. The representations
and warranties of Buyer contained in the Real Property Purchase Agreement are
true and correct.
ARTICLE VII.
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
The Sellers, jointly and severally, represent and warrant to the Buyer as
follows:
7.1 ORGANIZATION; POWER AND AUTHORITY; AUTHORIZATION. The Company (a) is a
corporation duly organized and existing and in good standing under the laws of
the State of Alabama, (b) is duly qualified to do business and is in good
standing in every jurisdiction in which the nature of its business makes such
qualification necessary, and (c) has the corporate power to own its properties
and to carry on its business as now being conducted. Except as set forth on
Schedule 7.1 attached hereto, the Sellers are the only persons or entities
owning shares of the Company. The Board of Directors and the shareholders of the
Company have duly approved this Agreement, all other agreements, certificates
and documents executed or to be executed by the Company in connection herewith,
and the transactions contemplated hereby and thereby. The Company has full
corporate power and authority to execute and deliver this Agreement and all
other agreements, certificates and documents executed or to be executed by the
Company in connection herewith, to consummate the transactions contemplated
hereby and thereby and to perform its obligations hereunder and thereunder. This
Agreement, and all other agreements, certificates and documents executed or to
be executed by the Company in connection herewith, constitute or, when executed
and delivered, will constitute legal, valid and binding agreements of the
Company enforceable against the Company in accordance with their respective
terms. This Agreement, and all other agreements, certificates and documents
executed or to be executed by each Seller in connection herewith, constitute or,
when executed and delivered, will constitute legal, valid and binding agreements
of such Seller enforceable against such Seller in accordance with their
respective terms.
7.2 NO VIOLATION; CONSENTS. Except as set forth in Schedule 7.2 attached hereto,
the execution and delivery of this Agreement, the consummation of the
transactions contemplated by this Agreement and compliance with the provisions
hereof do not and will not: (a) conflict with or violate any of the provisions
of the Company's articles of incorporation or by-laws, each as amended, or any
resolution of the Board of Directors or the shareholders of the Company; (b)
violate any law, ordinance, rule or regulation or any judgment, order, writ,
injunction or decree or similar command of any court, administrative or
governmental agency or other body applicable to the Company, the Assets or the
Cadillac Dealership Business; (c) violate or conflict with or result in a breach
of, or constitute a default under, or an event giving rise to a right of
termination of, any Contract (as defined in Section 7.12), any material
instrument, agreement or indenture or any mortgage, deed of trust or similar
contract to which the Company or
any Seller is a party or by which the Company, any Seller or any of the Assets
are bound or affected; (d) result in the creation or imposition of any
Encumbrance upon any of the Assets; or (e) require the consent, authorization or
approval of, or notice to, or filing or registration with, any governmental body
or authority, or any other third party.
7.3 LITIGATION. There are no actions, suits or proceedings pending or, to the
knowledge of the Sellers threatened against the Company or any Seller which
might adversely affect the power or authority of any of them to carry out the
transactions to be performed by such party hereunder. There are no actions,
suits or proceedings pending, or, to the knowledge of the Sellers, threatened,
against or affecting the Company, other than those disclosed on Schedule 7.3
attached hereto, and none of the actions, suits or proceedings described on
Schedule 7.3, if determined adversely to any Seller, would have a material
adverse effect on the business, assets or financial condition of the Company.
7.4 TITLE TO ASSETS; ENCUMBRANCES. Except as disclosed on Schedule 7.4 attached
hereto, the Sellers have good title to the Assets, free and clear of all
Encumbrances, except Encumbrances for ad valorem personal property taxes not yet
due and payable. All of the Assets conform, as to condition and character, to
the descriptions of such Assets contained herein and, at the Closing, will be
free and clear of all Encumbrances, except Encumbrances for ad valorem personal
property taxes not yet due and payable. To the knowledge of the Sellers, the
ownership and use of the Assets, and the operation of the Cadillac Dealership
Business, do not infringe upon the intellectual property rights of any other
person or entity.
7.5 PERMITS AND APPROVALS. Except as disclosed on Schedule 7.5 attached hereto,
there are no licenses, permits or approvals or other authorizations
(collectively, the "PERMITS") used or obtained for use by the Company which are
required under applicable law in connection with the ownership or operation of
the Cadillac Dealership Business. All Permits have been duly and lawfully
secured or made by the Company and are in full force and effect. There is no
proceeding pending, or, to the Seller's knowledge, threatened or probable of
assertion, to revoke or limit any Permit. None of the transactions contemplated
by this Agreement will terminate, violate or limit the effectiveness of any
Permit.
7.6 TAXES.
(a) The Company has filed all federal, state and local governmental tax returns
required to be filed by it in accordance with the provisions of law pertaining
thereto and has paid all taxes and assessments (including, without limitation of
the foregoing, income, excise, unemployment, social security, occupation,
franchise, property and import taxes, duties or charges and all penalties and
interest in respect thereof) (collectively "TAXES")required by it to have been
paid to date.
(b) Except as set forth on Schedule 7.6 hereto, the federal and state income tax
returns of the Company have been audited by the Internal Revenue Service ("IRS")
or are closed by the applicable statutes of limitations. Except as set forth on
Schedule 7.6 hereto, the Company has not received any notice of any assessed or
proposed claim or deficiency against it in respect of, or of any present dispute
between it and any governmental agency concerning, any Taxes. Except as set
forth on Schedule 7.6 hereto, no examination or audit of any tax return or
report of the Company by any applicable taxing authority is currently in
progress and there are no outstanding agreements or waivers extending the
statutory period of limitation applicable to any tax return or report of the
Company. Copies of all federal, state and local tax returns and reports required
to be filed by the Company for the years ended 1997, 1996, 1995, 1994 and 1993,
together with all schedules and attachments thereto, have been delivered by the
Sellers to the Buyer.
(c) The Company is not now, nor has it ever been, a member of a consolidated
group for federal income tax purposes or a consolidated, combined or similar
group for state tax purposes. No consent under Section 341 of the Internal
Revenue Code of 1986, as amended (the "CODE") has been made affecting the
Company. The Company is not a party to any agreement or arrangement that would
result in the payment of any "excess parachute payments" under Code Section
280G. The Company is not required to make any adjustment under Code Section
481(a). No power of attorney relating to Taxes is currently in effect affecting
the Company.
7.7 EMPLOYEES. Schedule 7.7 attached hereto discloses, as of the date hereof,
all of the Company's employees, as well as each employee's compensation
(including, separately, base pay and any incentive or commission pay), title,
length of employment, employment contract, if any, and accrued vacation time.
Except as disclosed on Schedule 7.7, the Company does not have any "employee
benefit plan" ("EMPLOYEE BENEFIT PLAN") (as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")),
including without limitation, any bonus, deferred compensation, pension,
profit-sharing, stock option, employee stock purchase, secrecy agreement or
covenant not to compete with any employee. The Company is not a party to any
collective bargaining agreement or other labor contract, and there has not been
nor is there pending or, to the knowledge of the Sellers, threatened any union
organizational drive or application for certification of a collective bargaining
agent. The Company has been and is now in material compliance with the "COBRA"
health care continuation coverage requirements of Section 4980B of the Code and
Sections 601-608 of ERISA and any applicable state health care continuation
coverage requirements. The Company has not made any promises or incurred any
liability, pursuant to an Employee Benefit Plan or otherwise, to provide medical
or other welfare benefits to retired or former employees of the Company (other
than COBRA or state mandated continuation coverage, where applicable). Except as
disclosed on
Schedule 7.7, none of the Company's employees or former employees has elected
COBRA continuation coverage or has incurred a COBRA qualifying event since June
1, 1996.
7.8 FINANCIAL STATEMENTS. The Sellers have delivered to the Buyer the financial
statements of the Company described in Schedule 7.8 hereto (the "FINANCIAL
STATEMENTS"). The Financial Statements have been prepared in accordance with
GAAP consistently applied, except as specified in Schedule 7.8 hereto. The
Financial Statements are in accordance with the books and records of the
Company, which books and records are true, correct and complete in all material
respects. The balance sheet of the Company included in the Financial Statements
fairly presents the financial condition of the Company as of the date thereof,
and the related statement of income of the Company included in the Financial
Statements fairly presents the results of the operations of the Company and the
changes in its financial position for the period indicated, all in accordance
with GAAP consistently applied. The Company has no material claims, liabilities,
obligations or indebtedness of any nature, fixed or contingent, known or
unknown, except as set forth in the Financial Statements or in the Schedules to
this Agreement, and except for liabilities incurred in the ordinary course of
business and of the kind and type reflected in the Financial Statements. To the
knowledge of the Sellers, the Financial Statements contain adequate reserves for
all reasonably anticipated claims relating to matters with respect to which the
Sellers are self-insured.
7.9 BROKERS AND FINDERS. Neither the Company nor any Seller has engaged any
broker or any other person or entity who would be entitled to any brokerage
commission or finder's fee in respect of the execution of this Agreement and/or
the consummation of the transactions contemplated hereby.
7.10 COMPLIANCE WITH LAWS.
(a) Except as set forth on Schedule 7.10(a) attached hereto, the Assets comply
with, and the Cadillac Dealership Business has been conducted in all material
respects in compliance with, all laws, rules and regulations (including all
worker safety and all Environmental Laws (as defined in the Real Property
Purchase Agreements), rules and regulations), applicable zoning and other laws,
ordinances, regulations and building codes, neither the Company nor any Seller
has received any notice of any violation thereof which has not been adequately
remedied. All Demonstrators have been operated in the ordinary course of
business with dealer tags and have not had certificates of title issued with
respect to them.
(b) Except as set forth on Schedule 7.10(b) attached hereto, (i) the Company has
not at any time generated, used, treated or stored Hazardous Materials on, or
transported Hazardous Materials to or from, the Real Property or any property
adjoining or adjacent to the Real Property and, to the knowledge of the Sellers,
no party
other than the Company has taken such actions on or with respect to the Real
Property, (ii) the Company has not at any time released or disposed of Hazardous
Materials on the Real Property or any property adjoining or adjacent to the Real
Property, and, to the knowledge of the Sellers, no party other than the Company
has taken any such actions on the Real Property, (iii) the Company has at all
times been in compliance with all Environmental Laws and the requirements of any
permits issued under such Environmental Laws with respect to the Real Property,
the Assets and the operation of the Cadillac Dealership Business, except where
failure to comply has not had and will not have, and could not reasonably be
expected to have, a material adverse effect on the Assets or the prospects,
properties, earnings, results of operations or condition (financial or
otherwise) of the Cadillac Dealership Business, (iv) there are no past, pending
or, to the knowledge of the Sellers, threatened environmental claims against the
Company, the Real Property, the Assets or the Cadillac Dealership Business, (v)
to the knowledge of the Sellers, there are no facts or circumstances, conditions
or occurrences regarding the Company, the Real Property, the Assets or the
Cadillac Dealership Business that could reasonably be anticipated to form the
basis of an environmental claim against the Company, the Real Property, the
Assets or the Cadillac Dealership Business or to cause the Real Property, the
Assets or the Cadillac Dealership Business to be subject to any restrictions on
its ownership, occupancy, use or transferability under any Environmental Law,
(vi) there are not now and, to the knowledge of the Sellers, never have been any
underground storage tanks located on the Real Property, (vii) the Company has
not transported or arranged for the transportation of any Hazardous Materials to
any site other than the Real Property, and (viii) neither the Company nor any of
the Sellers has operated the Cadillac Dealership Business at any location other
than the Real Property. As used herein, the term "HAZARDOUS MATERIALS" means any
waste, pollutant, chemical, hazardous substance, toxic substance, hazardous
waste, special waste, solid waste petroleum or petroleum-derived substance or
waste, or any constituent or decomposition product of any such pollutant,
material, substance or waste, regulated under or as defined by any Environmental
Law.
(c) Neither the Company or the Sellers, nor any stockholder, director, officer,
agent or employee of the Company or, to the knowledge of the Sellers, any other
person or entity associated with or acting for or on behalf of the Company, has,
directly or indirectly: made any contribution, gift, bribe, rebate, payoff,
influence payment, kickback, or other payment to any person or entity,
regardless of form, whether in money, property or services: (i) to obtain
favorable treatment in securing business, (ii) to pay for favorable treatment
for business secured or (iii) to obtain special concessions or for special
concessions already obtained, for or in respect of the Company.
7.11 FIXTURES AND EQUIPMENT. The Fixtures and Equipment are in good condition,
ordinary wear and tear excepted, and constitute all of the fixtures,
machinery, equipment, furniture, signs and office equipment used or intended for
use by the Company in the Cadillac Dealership Business.
7.12 CONTRACTS.
(a) Set forth on Schedule 7.12 hereto is a list or, where indicated, a brief
description of all leases and all other contracts, agreements, documents,
instruments, guarantees, plans, understandings or arrangements, written or oral,
which are material to the Company or its business or assets (collectively, the
"CONTRACTS"). True copies of all Contracts have been furnished to the Buyer.
(b) The Company has in all material respects performed all of its obligations
required to be performed by it to the date hereof, and is not in default or
alleged to be in default in any material respect, under any of the Contracts.
There exists no event, condition or occurrence which, after notice or lapse of
time or both, would constitute a default under any of the Contracts. To the
knowledge of the Sellers, no other party to any Contract is in default in any
respect of any of its obligations thereunder. Each of the Contracts is valid and
in full force and effect and enforceable against the Company in accordance with
its terms, and, to the knowledge of the Sellers, enforceable against the other
parties thereto in accordance with their respective terms. Except as set forth
in Schedule 7.12 or Schedule 7.2 hereto, the consummation of the Merger will not
require the consent of any party to any of the Contracts.
7.13 ADEQUACY OF ASSETS. The Assets, together with the Real Property, the
Contracts, and the Company's cash and accounts receivable comprise all of the
assets, properties and rights necessary for the Buyer to operate the Cadillac
Dealership Business substantially in the manner operated by the Company prior to
the Closing.
7.14 YEAR 2000. The Company has (i) initiated a review and assessment of all
areas within its businesses and operations (including those affected by the
Manufacturer, suppliers, vendors and customers) that could be adversely affected
by the "Year 2000 Problem" (that is, the risk that computer applications used by
the Company may be unable to recognize and perform properly date-sensitive
functions involving certain dates prior to and any date after December 31,
1999), (ii) developed a plan and timeline as described on Schedule 7.14 for
addressing the Year 2000 Problem on a timely basis, and (iii) to date,
implemented that plan and timetable, except as set forth in said Schedule 7.14.
7.15 OWNERSHIP OF SHARES. Each Seller owns of record and beneficially the number
of Shares set forth opposite such Seller's name on Exhibit A hereto. Each Seller
has, and will have at the time of the Closing, good and valid title to the
Shares to be sold by such Seller hereunder, free and clear of all Encumbrances.
7.16 RELATED PARTY TRANSACTIONS. There are no transactions between the Company
and any of the Sellers or any entities directly or indirectly controlled by any
of the Sellers including, without limitation, any contract, agreement or other
arrangement providing for the furnishing of services to or by, providing for
rental of real or personal property to or from, or otherwise requiring payments
to or from, any of the Sellers, or any such entity.
7.17 CAPITALIZATION. All of the Shares are duly authorized, validly issued,
fully paid and non-assessable and are held by the Sellers in the amounts
indicated on Exhibit A hereto. There are no preemptive rights, whether at law or
otherwise, to purchase any of the securities of the Company, and there are no
outstanding options, warrants, "phantom" stock plans, subscriptions, agreements,
plans or other commitments pursuant to which the Company is or may become
obligated to sell or issue any shares of its capital stock or any other debt or
equity security, and there are no outstanding securities convertible into shares
of such capital stock or any other debt or equity security.
7.18 SUBSIDIARIES AND INVESTMENTS. The Company does not own or maintain,
directly or indirectly, any capital stock of or other equity or ownership or
proprietary interest in any other corporation, partnership, association, trust,
joint venture or other entity and does not have any commitment to contribute to
the capital of, make loans to, or share in the losses of, any such entity.
7.19 REAL PROPERTY. Except for any Real Property which is being sold pursuant to
either of the Real Property Purchase Agreements, the Company does not own or
lease (as landlord or tenant) any real property including any land, buildings
and improvements.
7.20 PATENTS; TRADEMARKS; TRADE NAMES; COPYRIGHTS; LICENSES, ETC.
(a) Except as set forth on Schedule 7.20 hereto, there are no patents,
trademarks, trade names, service marks, service names and copyrights, and there
are no applications therefor or licenses thereof, inventions, trade secrets,
computer software, logos, slogans, proprietary processes and formulae or other
proprietary information, know-how and intellectual property rights, whether
patentable or unpatentable, that are owned or leased by the Company or used in
the conduct of the Company's business. The Company is not a party to, and the
Company pays no royalty to anyone under, any license or similar agreement. There
is no existing claim, or, to the knowledge of the Sellers, any basis for any
claim, against the Company that any of its operations, activities or products
infringe the patents, trademarks, trade names, copyrights or other property
rights of others or that the Company is wrongfully or otherwise using the
property rights of others.
(b) The Company has the right to use the names "▇▇▇▇▇▇▇▇ Cadillac" in the State
of Alabama and, to the knowledge of the Sellers, no person uses, or has the
right to use, such name or any derivation thereof in connection with the
manufacture, sale, marketing or distribution of products or services commonly
associated with an automobile dealership.
7.21 CERTAIN LIABILITIES.
1. All accounts payable by the Company to third parties as of the date hereof
arose in the ordinary course of business and none are delinquent or past- due.
(a) Schedule 7.21 hereto sets forth a list of all indebtedness of the Company,
other than accounts payable, as of the close of business on the day preceding
the date hereof, including, without limitation, money borrowed, indebtedness of
the Company owed to stockholders and former stockholders, the deferred purchase
price of assets, letters of credit and capitalized leases, indicating, in each
case, the name or names of the lender, the date of maturity, the rate of
interest, any prepayment penalties or premiums and the unpaid principal amount
of such indebtedness as of such date.
7.22 POWERS OF ATTORNEY. There are no persons, firms, associations, corporations
or business organizations or entities holding general or special powers of
attorney from the Company.
7.23 BANK ACCOUNTS, CREDIT CARDS, SAFE DEPOSIT BOXES AND CELLULAR TELEPHONES.
Schedule 7.23 hereto lists all bank accounts, credit cards and safe deposit
boxes in the name of, or controlled by, the Company, and all cellular telephones
provided and/or paid for by the Company, and details about the persons having
access to or authority over such accounts, credit cards, safe deposit boxes and
cellular telephones.
7.24 INSURANCE.
(a) Schedule 7.24 hereto contains a list of all policies of liability, theft,
fidelity, life, fire, product liability, workmen's compensation, health and any
other insurance and bonds maintained by, or on behalf of, the Company on their
respective properties, operations, inventories, assets, business or personnel
(specifying the insurer, amount of coverage, type of insurance, policy number
and any pending claims in excess of $5,000 thereunder). Each such insurance
policy identified therein is and shall remain in full force and effect on and as
of the Closing Date and the Company
is not in default with respect to any provision contained in any such insurance
policy and has not failed to give any notice or present any claim under any such
insurance policy in a due and timely fashion. The insurance maintained by, or on
behalf of, the Company is adequate in accordance with the standards of business
of comparable size in the industry in which the Company operates and no notice
of cancellation or termination has been received with respect to any such
policy. The Company has not, during the last three (3) fiscal years, been denied
or had revoked or rescinded any policy of insurance.
(b) Set forth on Schedule 7.24 hereto is a summary of information pertaining to
material property damage and personal injury claims in excess of $5,000 against
the Company during the past five (5) years, all of which are fully satisfied or
are being defended by the insurance carrier and involve no exposure to the
Company.
7.25 WARRANTIES. Set forth on Schedule 7.25 hereto are descriptions or copies of
the forms of all express warranties and disclaimers of warranty made by the
Company (separate and distinct from any applicable manufacturers', suppliers' or
other third-parties' warranties or disclaimers of warranties) during the past
five (5) years to customers or users of the vehicles, parts, products or
services of the Company. There have been no breach of warranty or breach of
representation claims against the Company during the past five (5) years which
have resulted in any cost, expenditure or exposure to the Company of more than
$50,000 individually or in the aggregate.
7.26 SUPPLIERS AND CUSTOMERS. The Company is not required to provide bonding or
any other security arrangements in connection with any transactions with any of
its respective customers and suppliers. To the knowledge of the Sellers, no such
supplier, customer or creditor intends or has threatened, or reasonably could be
expected, to terminate or modify any of its relationships with the Company.
7.27 MISSTATEMENTS AND OMISSIONS. No representation or warranty made by the
Sellers or the Stockholders in this Agreement, and no statement contained in any
agreement, instrument, certificate or schedule furnished or to be furnished by
any Seller pursuant hereto, contains or will contain any untrue statement of a
material fact or omits or will omit to state a material fact necessary in order
to make such representation or warranty or such statement not misleading.
ARTICLE VIII.
CONDITIONS PRECEDENT TO THE BUYER'S OBLIGATIONS
The obligations of the Buyer to perform this Agreement at the Closing are
subject to the following conditions precedent which shall be fully satisfied at
or before the Closing, unless waived in writing by the Buyer:
8.1 REPRESENTATIONS AND WARRANTIES. All of the representations and warranties of
the Sellers herein contained shall be true and correct in all material respects
on and as of the Closing Date as if made on and as of the Closing Date, and the
Buyer shall have received a certificate from of each of the Sellers, dated the
Closing Date, to such effect.
8.2 COMPLIANCE WITH AGREEMENTS. Each of the agreements or obligations required
by this Agreement to be performed or complied with by the Company or the Sellers
at or before the Closing shall have been duly performed or complied with, and
the Buyer shall have received a certificate from each of the Sellers, dated the
Closing Date, to such effect.
8.3 NO LITIGATION. No action, suit or proceeding shall have been instituted by a
governmental agency or any other third party (a) to prohibit or restrain the
transactions contemplated by this Agreement or otherwise challenge the power and
authority of the parties to enter into this Agreement or to carry out their
obligations hereunder or the legality or validity of the transactions
contemplated by this Agreement, or (b) which would have a materially adverse
effect on the conduct of an automobile dealership business by the Buyer at any
of the Real Property.
8.4 INVENTORY. The Inventory and Used Vehicle valuations shall have been
completed to the reasonable satisfaction of the Buyer.
8.5 CORPORATE ORGANIZATION; ENCUMBRANCES; ESTOPPEL LETTERS; ETC. The Sellers
shall have furnished to the Buyer:
(a) certificates dated as of a recent date from the Secretary of State of the
State of Alabama to the effect that the Company is duly incorporated and in good
standing in such state and stating that the Company owes no franchise taxes in
such state and listing all documents of the Company on file with said Secretary
of State;
(b) a copy of the Articles of Incorporation of the Company, including all
amendments thereto, certified as of a recent date by the Secretary of State of
the State of Alabama;
(c) evidence, reasonably satisfactory to the Buyer, of the authority and
incumbency of the persons acting on behalf of the Company in connection with the
execution of any document delivered in connection with this Agreement;
(d) Uniform Commercial Code Search Reports on Form UCC- 11 with respect to the
Company from the states and local jurisdictions where the principal place of
business of the Company and its assets are located;
(e) the corporate minute books and stock record books of the Company, and all
other books and records of, or pertaining to, the businesses and operations of
the Company;
(f) estoppel letters of lenders to the Company, in form and substance reasonably
satisfactory to the Buyer, with respect to amounts owing by the Company as of
the Closing; and
(g) such other instruments and documents as the Buyer shall reasonably request
not inconsistent with the provisions hereof.
8.6 BOARD RESOLUTIONS. The Company shall have furnished to the Buyer a copy of
the resolutions duly adopted by the Company's Board of Directors and
stockholders authorizing the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, certified by an authorized
officer of the Company as of the Closing Date.
8.7 NO DAMAGE. As of the Closing Date, there shall not have been any fire,
accident or other casualty or any labor disturbance, civil commotion, riot, act
of God or the public enemy, or any change in the Cadillac Dealership Business or
the Assets or which would have a material adverse effect on the conduct of an
automobile dealership business using the Assets at any of the Real Property or
which would interfere with the use by the Buyer of such Assets in connection
with the conduct of an automobile dealership business at any of the Real
Property.
8.8 MOTOR VEHICLE LICENSES. The Buyer shall have been licensed as a Motor
Vehicle Dealer under applicable Alabama motor vehicle dealer registration laws
and shall have obtained all other authorizations, consents, licenses and permits
from applicable governmental agencies having or asserting jurisdiction, which
the Buyer deems necessary or appropriate to conduct business as an automobile
dealer at the Real Property.
8.9 CONSENT AND APPROVALS. The Sellers shall have obtained all other
authorizations, consents and approvals from third persons and entities as are
(a) contemplated by Schedules 7.2 and 7.12 hereto, or (b) otherwise required to
consummate the transactions contemplated by this Agreement.
8.10 CERTIFICATES OF ORIGIN, ETC. The Company shall have transferred to the
Buyer certificates of title or origin for all New Vehicles, Demonstrators and
Used
Vehicles, and all of their respective registration lists, owner follow-up lists
and service files on hand as of the Closing Date with respect to the Cadillac
Dealership Business.
8.11 APPRAISAL/DISSENTERS' RIGHTS. No holder of capital stock of the Company
shall have any appraisal or dissenters' rights under applicable law.
8.12 [INTENTIONALLY LEFT BLANK]
8.13 MANUFACTURER APPROVAL. The Manufacturer shall have approved the transfer of
the Shares to the Buyer and shall have given any required approval of the Buyer
or the Buyer's affiliate as an authorized dealer at each parcel of the Real
Property and O. ▇▇▇▇▇▇ ▇▇▇▇▇ or O. ▇▇▇▇▇▇ ▇▇▇▇▇'▇ designee, as the authorized
Dealer Operator, and the Manufacturer shall have executed a Dealer Agreement on
terms reasonably satisfactory to the Buyer.
8.14 OTHER BASIC AGREEMENTS. All conditions to Buyer's obligations under
the Other Basic Agreements shall have been satisfied or fulfilled unless waived
in writing by the Buyer hereunder.
8.15 OPINION OF COUNSEL. The Buyer shall have received an opinion of
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ counsel to the Sellers and the Company, dated the Closing
Date, in form and substance reasonably satisfactory to the Buyer and its
counsel.
8.16 NON-COMPETITION AGREEMENT AND EMPLOYMENT AGREEMENTS. The Buyer shall
have received the Non-Competition Agreement and the Employment Agreements, duly
executed by the relevant parties thereto.
8.17 [INTENTIONALLY LEFT BLANK]
8.18 NO MATERIAL ADVERSE CHANGE. There shall have been no material adverse
change or development in the business, prospects, properties, earnings, results
of operations or financial condition of the Company or any of the Assets.
8.19 FORMS SATISFACTORY. The form of all instruments, certificates and
documents to be executed and delivered by the Sellers to the Buyer pursuant to
this Agreement and all legal matters in respect of the transactions as herein
contemplated shall be reasonably satisfactory to the Buyer and its counsel, none
of whose approval shall be unreasonably withheld or delayed.
8.20 HSR ACT. All applicable waiting periods under the HSR Act (as defined
in Section 10.13 hereof) shall have expired without any indication by the
Antitrust Division or the FTC (each as defined in Section 10.13 hereof) that
either of them intends to challenge the transactions contemplated hereby or, if
any such challenge or
investigation is made or commenced, the conclusion of such challenge or
investigation permits the transactions contemplated hereby in all material
respects.
8.21 AUDITED FINANCIAL STATEMENTS OF BUYER. The Buyer shall have completed
preparation of such audited financial statements of the Company as may be
required by applicable regulations of the Securities and Exchange Commission or
by the Buyer's lenders.
ARTICLE IX
CONDITIONS PRECEDENT TO THE SELLERS' OBLIGATIONS
The obligations of the Sellers to perform this Agreement at the Closing are
subject to the following conditions precedent which shall be fully satisfied on
or before the Closing, unless waived in writing by the Sellers' Agent:
9.1 REPRESENTATIONS AND WARRANTIES. All of the representations and
warranties of the Buyer herein contained shall be true and correct in all
material respects on and as of the Closing Date as if made on and as of the
Closing Date, and the Sellers shall have received a certificate from the
President or a Vice President of the Buyer, dated the Closing Date, to such
effect.
9.2 COMPLIANCE WITH AGREEMENTS. Each of the agreements or obligations
required by this Agreement to be performed or complied with by the Buyer at or
before the Closing shall have been duly performed or complied with, and the
Sellers shall have received a certificate from the President or a Vice President
of the Buyer, dated the Closing Date, to such effect.
9.3 NO LITIGATION. No action, suit or proceeding shall have been instituted
by a governmental agency or any third party to prohibit or restrain the
transactions contemplated by this Agreement or otherwise challenge the power and
authority of the parties to enter into this Agreement or to carry out their
obligations hereunder or the legality or validity of the transactions
contemplated by this Agreement.
9.4 INVENTORY. The Inventory and Used Vehicle valuations shall have been
completed to the reasonable satisfaction of the Sellers' Agent.
9.5 CORPORATE ORGANIZATION; BOARD RESOLUTIONS. The Buyer shall have furnished
the Sellers:
(a) a copy of the resolutions duly adopted by the Board of Directors of
the Buyer authorizing the execution and delivery of this Agreement and the
consummation
of the transactions contemplated hereby, certified by an officer of the Buyer as
of the Closing Date;
(b) certificates dated as of a recent date from the Secretary of State
of the State of Delaware to the effect that the Buyer is duly incorporated and
in good standing in such State;
(c) certificates dated as of a recent date from the Secretary of State
of the State of Alabama to the effect that the Sub is duly incorporated and in
good standing in such State;
(d) a copy of the Buyer's Certificate of Incorporation, including all
amendments thereto, certified by the Secretary of State of the State of
Delaware;
(e) a copy of the Sub's Articles of Incorporation, including all
amendments thereto, certified by the Secretary of State of the State of Alabama;
(f) evidence, reasonably satisfactory to the Sellers, of the authority
and incumbency of the persons acting on behalf of the Buyer in connection with
the execution of any document delivered in connection with this Agreement; and
(g) such other instruments and documents as the Sellers shall reasonably
request not inconsistent with the provisions hereof.
9.6 BASIC MERGER CONSIDERATION. The Buyer shall have tendered to the Sellers
the Basic Merger Consideration.
9.7 OTHER BASIC AGREEMENTS. All conditions to the obligations of the
parties other than the Buyer or its assignee under the Other Basic Agreements
shall have been satisfied or fulfilled, unless waived in writing by the Sellers'
Agent.
9.8 OPINION OF COUNSEL. The Sellers shall have received an opinion of
Parker, Poe, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ L.L.P., counsel to the Buyer, dated the Closing
Date, in form and substance reasonably satisfactory to the Sellers and their
counsel.
9.9 FORMS SATISFACTORY. The form of all certificates, instruments and
documents to be executed and/or delivered by the Buyer to the Sellers pursuant
to this Agreement and all legal matters in respect of the transactions as herein
contemplated shall be reasonably satisfactory to the Sellers and its counsel,
none of whose approval shall be unreasonably withheld or delayed.
9.10 EMPLOYMENT AGREEMENTS. The Sellers' Agent shall have received the
Employment Agreement with ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇., duly executed by the Buyer,
and the Buyer shall have offered employment to each of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
and ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ pursuant to the Employment Agreements in the form of
Exhibits D-2 and D-3, respectively, to the Amended Asset Purchase Agreement.
9.11 HSR ACT. All applicable waiting periods under the HSR Act shall have
expired without any indication by the Antitrust Division or the FTC that either
of them intends to challenge the transactions contemplated hereby, or, if any
such challenge or investigation is made or commenced, the conclusion of such
challenge or investigation permits the transactions contemplated hereby in all
material respects.
ARTICLE X
COVENANTS AND AGREEMENTS
10.1 FURTHER ASSURANCES. Each of the Sellers agrees that it will, at any
time and from time to time, after the Closing, upon request of the Buyer, do,
execute, acknowledge and deliver all such further acts, deeds, assignments,
transfers, conveyances, powers of attorney and assurances as may be reasonably
required to convey and transfer to and vest in the Buyer and protect its rights,
title and interest in and enjoyment of all the Assets.
10.2 SATISFACTION OF CLOSING CONDITIONS. The parties hereto shall use their
reasonable best efforts to obtain, and to cooperate with each other in
obtaining, all authorizations, approvals, licenses, permits and other consents
contemplated by Articles VIII and IX.
10.3 OPERATION OF THE BUSINESSES. During the period from the date of this
Agreement through the Closing Date, the Company will conduct, and the Sellers
will use their best reasonable efforts to cause the Company to conduct, the
operation of the Cadillac Dealership Business in the ordinary course and in
accordance with past practices.
10.4 ACCESS. From the date hereof until the Closing, each of the Sellers
shall afford to the Buyer, its attorneys, accountants and such other
representatives of the Buyer as the Buyer shall designate to such Seller, free
and full access at all reasonable times, and upon reasonable prior notice, to
the Assets and the properties, books and records of the Company, and to
interview personnel, suppliers and customers of the Company, in order that the
Buyer may have full opportunity to make such due diligence investigation as it
shall reasonably desire of the Assets and the Cadillac Dealership Business.
10.5 ENVIRONMENTAL AUDIT. In connection with the Buyer's due diligence
investigation, the Company and the Sellers shall allow an environmental
consulting firm selected by the Buyer (the "ENVIRONMENTAL AUDITOR") to have
prompt access to the Real Property in order to conduct an environmental
investigation, satisfactory to the Buyer in scope (such scope being sufficient
to result in a Phase I environmental audit report and a Phase II environmental
audit report, if desired by the Buyer), of, and to prepare a report with respect
to, the Real Property (the "ENVIRONMENTAL AUDIT"). The Company and each of the
Sellers shall provide to the Environmental Auditor: (i) reasonable access to all
of the Company's existing records concerning the matters which are the subject
of the Environmental Audit; and (ii) reasonable access to the employees of the
Company and the last known addresses of former employees of the Company who are
most familiar with the matters which are the subject of the Environmental Audit
(each Seller agreeing to use reasonable efforts to have such former employees
respond to any reasonable requests or inquiries by the Environmental Auditor).
The Company and the Sellers shall otherwise cooperate with the Environmental
Auditor in connection with the Environmental Audit. The Buyer, on the one hand,
and the Sellers, on the other hand, shall each bear 50% of the costs, fees and
expenses in connection with the Environmental Audit. To the extent that the
Environmental Auditor shall conduct a Phase II environmental audit, the Buyer's
selection of the Environmental Auditor must be reasonably acceptable to the
Sellers.
10.6 INDEMNIFICATION BY SELLERS. All representations and warranties of the
Sellers contained herein, or in any agreement, certificate or document executed
by the respective Sellers in connection herewith, shall survive the Closing. All
information contained in any Schedule furnished hereunder by the Sellers or the
Sellers' Agent shall be deemed a representation and warranty by the Sellers made
in this Agreement as to the accuracy of such information. The Sellers, jointly
and severally, agree to indemnify and hold harmless the Buyer and its
stockholders, officers, directors, employees and agents, and their respective
successors and assignees, from and against any and all losses, liabilities,
obligations, assessments, suits, actions, proceedings, claims or demands,
including costs, expenses and fees (including reasonable attorneys' fees and
expert witness fees) incurred in connection therewith, suffered by any of them
or asserted against any of them or the Assets, arising out of or based upon (a)
the failure of any representation or warranty of the Sellers contained herein,
or in any agreement, certificate or document executed by any Seller in
connection herewith, to be true and correct, (b) the breach of any covenant or
agreement of any Seller contained in this Agreement or in any agreement,
instrument or document executed by any Seller in connection herewith, or (c) any
arrangements or agreements made or alleged to have been made by the Company or
the Sellers with any broker, finder or other agent in connection with the
transactions contemplated hereby.
10.7 INDEMNIFICATION BY BUYER. All representations and warranties of the
Buyer contained herein or in any agreement, certificate or document executed by
the
Buyer in connection herewith, shall survive the Closing. All information
contained in any Schedule furnished hereunder by the Buyer shall be deemed a
representation and warranty by the Buyer made in this Agreement as to the
accuracy of such information. The Buyer agrees to indemnify and hold harmless
each of the Sellers and their respective successors and assignees, from and
against any and all losses, liabilities, obligations, assessments, suits,
actions, proceedings, claims or demands, including costs, expenses and fees
(including reasonable attorneys' fees and expert witness fees) incurred in
connection therewith, suffered by any of them, or asserted against any of them,
arising out of or based upon (a) the failure of any representation or warranty
of the Buyer contained herein, or in any agreement, certificate or document
executed by the Buyer in connection herewith, to be true and correct, (b) the
breach of any covenant or agreement of the Buyer contained in this Agreement or
in any agreement, instrument or document executed by the Buyer in connection
herewith, or (c) any arrangements or agreements made or alleged to have been
made by the Buyer with any broker, finder or other agent in connection with the
transactions contemplated hereby.
10.8 CERTAIN TAXES. Personal property, use and intangible taxes and
assessments with respect to the Assets shall be prorated on a per diem basis and
apportioned between the Sellers and the Buyer as of the date of the Closing. The
Sellers shall be liable for that portion of such taxes and assessments relating
to, or arising in respect of, periods on or prior to the Closing Date, and the
Buyer shall be liable for that portion of such taxes and assessments relating
to, or arising in respect of, any period after the Closing Date. Any sales, use,
transfer, intangible, excise, stamp or other taxes attributable to the sale or
transfer of the Shares to the Buyer hereunder shall be paid by the Sellers.
10.9 NO PUBLICITY. Except as may be required by law or the rules of the New
York Stock Exchange or as necessary in connection with the transactions
contemplated hereby, no party hereto shall (a) make any press release or other
public announcement relating to this Agreement or the transactions contemplated
hereby, without the prior approval of the other parties hereto or (b) otherwise
disclose the existence and nature of negotiations regarding the transactions
contemplated hereby to any person or entity other than such party's accountants,
attorneys, agents and representatives, all of whom shall be subject to this
nondisclosure obligation as agents of such party. The parties shall cooperate
with each other in the preparation and dissemination of any public announcements
of the transactions contemplated by this Agreement.
10.10 NO NEGOTIATIONS OR DISCUSSIONS. Neither the Company nor any of the
Sellers shall pursue, initiate, encourage or engage in, any negotiations or
discussions with, or provide any information to, any person or entity (other
than the Buyer and its representatives and affiliates) regarding the sale or
possible sale to any such person or entity of any of the Assets or capital stock
of the Company or any merger or consolidation or similar transaction involving
the Company.
10.11 MANUFACTURER. The Sellers shall promptly notify the Manufacturer
regarding the transactions contemplated by this Agreement. The Buyer shall
promptly apply to the Manufacturer for, or cause an affiliate of the Buyer to
apply to the Manufacturer for, the issuance of franchises to operate the
respective automobile dealerships upon the Real Property. The Sellers shall
fully cooperate with the Buyer, and take all reasonable steps to assist the
Buyer, in the Buyer's efforts to obtain its own Dealer Sales and Service
Agreement with the Manufacturer.
10.12 [INTENTIONALLY LEFT BLANK].
10.13 HSR ACT COMPLIANCE. Subject to the determination by the Buyer that
any of the following actions is not required, the Sellers and the Buyer shall
promptly prepare and file Notification and Report Forms under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the "HSR ACT")
with the Federal Trade Commission (the "FTC") and the Antitrust Division of the
Department of Justice (the "ANTITRUST DIVISION") and respond as promptly as
practicable to all inquiries received from the FTC or the Antitrust Division for
additional information or documentation.
10.14 BUYER'S FINANCIAL STATEMENTS. The Sellers shall allow, cooperate with
and assist the Buyer's accountants, and shall instruct the Sellers' accountants
to cooperate, in the preparation of audited financial statements of the Sellers
as necessary for any required filings by the Buyer with the Securities and
Exchange Commission or with the Buyer's lenders; provided, however, that the
expense of such audit shall be borne by the Buyer.
10.15 TERMINATION.
(a) Notwithstanding any other provision herein contained to the
contrary, this Agreement may be terminated at any time prior to the Closing
Date:
(i) By written consent of the Buyer and the Sellers' Agent;
(ii) By the Buyer prior to the Closing Date Deadline (as the same
may have been extended pursuant to Article I hereof) in the event of any breach
by the Sellers of any of their respective material representations, warranties,
covenants or agreements contained herein;
(iii) By the Seller's Agent prior to the Closing Date Deadline
(as the same may have been extended pursuant to Article I hereof) in the event
of any breach by the Buyer of any of its material representations, warranties,
covenants or agreements contained herein;
(iv) At any time after the Closing Date Deadline (as the same may
have been extended pursuant to Article I hereof), by written notice by the Buyer
or the Sellers' Agent to the other party(ies) hereto if the Closing shall not
have been completed on or before the Closing Date Deadline (as the same may have
been extended pursuant to Article I hereof);
(v) By the Buyer if, after any initial HSR Act filing, the FTC
makes a "second request" for information, or the FTC or the Antitrust Division
challenges the transactions contemplated hereby; provided that the Buyer
delivers a written notice to the Sellers of its termination hereunder within 30
days of the Buyer's receipt of such second request or of notice of such
challenge;
(vi) By the Buyer not later than thirty (30) days after all due
diligence materials described on Schedule 10.15 have been furnished to the Buyer
by the Sellers, if the Buyer is not satisfied, in its sole discretion, with the
results of the Buyer's due diligence investigation;
(vii) Subject to the last paragraph of this Section 10.15(a), by
the Buyer, by written notice to the Sellers' Agent, in the event that approval
by the Manufacturer of the transactions contemplated by this Agreement is not
received prior to the Closing Date Deadline (as the same may have been extended
pursuant to Article I hereof); or
(viii) Subject to the last paragraph of this Section 10.15(a), by
the Buyer, by written notice to the Sellers' Agent, in the event that the
Manufacturer shall exercise any right of first refusal, preemptive right or
other similar right, with respect to any of the Assets;
provided, however, no party may terminate this Agreement pursuant to clauses
(ii), (iii) or (iv) above if such party is in breach of any material
representation, warranty, covenant or agreement of such party contained in this
Agreement.
(b) In the event of termination of this Agreement pursuant to Section
10.15(a), this Agreement shall be of no further force or effect; provided,
however, that any termination pursuant to Section 10.15(a) shall not relieve (a)
the Buyer of any liability under Section 10.15(c) below, (b) the Sellers of any
liability under Section 2.5 above or Section 10.15(d) below, or (c) subject to
Section 10.15(e) below, any party hereto of any liability for breach of any
representation and warranty, covenant or agreement hereunder occurring prior to
such termination. In addition, in the event of any such termination, all
filings, applications and other submissions made pursuant to this Agreement or
prior to the execution of this Agreement in contemplation thereof shall, to the
extent practicable, be withdrawn from the agency or other entity to which made.
(c) If this Agreement is terminated by the Sellers' Agent pursuant to
Section 10.15(a)(iv) above and the failure to complete the Closing on or before
the Closing Date Deadline shall have been due to the Buyer's breach of its
material representations and warranties or its material covenants or agreements
under this Agreement, then the Buyer shall, within ten (10) days after receipt
of demand of the Sellers, promptly pay to the Sellers in immediately available
funds, as liquidated damages for the loss of the transaction, a termination fee
of $1,000,000 (the "BUYER'S TERMINATION FEE"); provided, however, the obligation
to pay such Termination Fee shall be reduced to the extent a similar Termination
Fee is paid under Section 10.15 of the Amended Asset Purchase Agreement.
(d) If this Agreement is terminated by the Buyer pursuant to Section
10.15(a)(iv) above and the failure to complete the Closing on or before the
Closing Date Deadline shall have been due to the Sellers' breach of any of their
material representations and warranties or any of their material covenants or
agreements under this Agreement, then the Sellers, jointly and severally, shall,
within ten (10) days after receipt of demand of the Buyer, promptly pay to the
Buyer in immediately available funds, as liquidated damages for the loss of the
transaction, a termination fee of $1,000,000 (the "SELLERS' TERMINATION FEE");
provided, however, the obligation to pay such Termination Fee shall be reduced
to the extent a similar Termination Fee is paid under Section 10.15 of the
Amended Asset Purchase Agreement.
(e) In the case of termination of this Agreement pursuant to Section
10.15(a)(iv) hereof, the rights of the terminating party to be paid the Sellers'
Termination Fee or the Buyer's Termination Fee, as the case may be, shall be the
respective parties' sole and exclusive remedies for damages; in the event of
such termination by either party, such party shall have no right to equitable
relief for any breach or alleged breach of this Agreement, other than for
specific performance for the payment of the Sellers' Termination Fee or the
Buyer's Termination Fee, as the case may be. Nothing contained in this Agreement
shall prevent any party from electing not to exercise any right it may have to
terminate this Agreement and, instead, seeking any equitable relief (including
specific performance) to which it would otherwise be entitled in the event of
breach by any other party hereto.
ARTICLE XI
MISCELLANEOUS
11.1 ASSIGNMENT. Except as provided in this Section, this Agreement shall
not be assignable by any party hereto without the prior written consent of the
other parties. The Buyer may assign this Agreement, without the consent of the
other parties hereto, to a corporation, partnership or limited liability company
controlled by the Buyer, including a corporation, partnership or limited
liability company to be formed at any time
prior to the Closing Date, and to any person or entity who shall acquire all or
substantially all of the assets of the Buyer or of such corporation, partnership
or limited liabilities company controlled by the Buyer (including any such
acquisition by merger or consolidation); provided said assignment shall be in
writing and the assignee shall assume all obligations of the Buyer hereunder,
whereupon the assignee shall be substituted in lieu of the Buyer named herein
for all purposes, provided, however, that the Buyer originally named herein
shall continue to be liable with respect to its obligations hereunder. The Buyer
may assign this Agreement, without the consent of the other parties hereto, as
collateral security, and the other parties hereto agree to execute and deliver
any acknowledgment of such assignment by the Buyer as may be required by any
lender to the Buyer.
11.2 GOVERNING LAW. The interpretation and construction of this Agreement,
and all matters relating hereto, shall be governed by the laws of the State of
North Carolina.
11.3 ACCOUNTING MATTERS. All accounting matters required or contemplated by
this Agreement shall be in accordance with generally accepted accounting
principles ("GAAP").
11.4 FEES AND EXPENSES. Except as otherwise specifically provided in this
Agreement, each of the parties hereto shall be responsible for the payment of
such party's fees, costs and expenses incurred in connection with the
negotiation and consummation of the transactions contemplated hereby.
11.5 AMENDMENT; MERGER CLAUSE. This Agreement, including the schedules and
other documents referred to herein which form a part hereof, contains the entire
understanding of the parties hereto with respect to the subject matter contained
herein and therein. This Agreement may not be amended except by a writing
executed by all of the parties hereto. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.
11.6 WAIVER. To the extent permitted by applicable law, no claim or right
arising out of this Agreement or the documents referred to in this Agreement can
be discharged by one party, in whole or in part, by a waiver or renunciation of
the claim or right unless in writing signed by the other party. Any waiver by a
party hereto of a breach of any provision of this Agreement shall not operate or
be construed as a waiver of any subsequent breach of such provision or any other
provision of this Agreement. Neither the failure nor any delay by any party
hereto in exercising any right or power under this Agreement or the documents
referred to in this Agreement will operate as a waiver of such right or power,
and no single or partial exercise of any such right or power will preclude any
other or further exercise of such right or power or the exercise of any other
right or power.
11.7 NOTICES. All notices, claims, certificates, requests, demands and
other communications hereunder shall be given in writing and shall be delivered
personally or sent by facsimile or by a nationally recognized overnight courier,
postage prepaid, and shall be deemed to have been duly given when so delivered
personally or by confirmed facsimile or one (1) business day after the date of
deposit with such nationally recognized overnight courier. All such notices,
claims, certificates, requests, demands and other communications shall be
addressed to the respective parties at the addresses set forth below or to such
other address as the person to whom notice is to be given may have furnished to
the others in writing in accordance herewith.
If to the Buyer, to:
Sonic Automotive, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief Financial Officer
With a copy to:
Parker, Poe, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ L.L.P.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
If to the Sellers, to:
▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
▇▇▇ ▇▇▇▇▇▇▇▇ Automotive Group
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇., Esq.
11.8 COUNTERPARTS. This Agreement may be executed in any number of
counterparts. Each such counterpart hereof shall be deemed to be an original
instrument, and all such counterparts together shall constitute but one
agreement.
11.9 SELLERS' KNOWLEDGE. Whenever any representation or warranty of the
Sellers contained herein or in any other document executed and delivered in
connection herewith is based upon the knowledge of the Sellers, (a) such
knowledge shall be deemed to include (i) the best actual knowledge, information
and belief of any of the Sellers, and (ii) any information which any Seller
would reasonably be expected to be aware of in the prudent discharge of his or
her duties in the ordinary course of business (including consultation with legal
counsel) on behalf of the Company, and (ii) the knowledge of any Seller shall be
deemed to be the knowledge of all of the Sellers.
11.10 ARBITRATION.
(a) Any dispute, claim or controversy arising out of or relating to this
Agreement or the interpretation or breach hereof shall be resolved by binding
arbitration under the commercial arbitration rules of the American Arbitration
Association (the "AAA RULES") to the extent such AAA Rules are not inconsistent
with this Agreement. Judgment upon the award of the arbitrators may be entered
in any court having jurisdiction thereof or such court may be asked to
judicially confirm the award and order its enforcement, as the case may be. The
demand for arbitration shall be made by any party hereto within a reasonable
time after the claim, dispute or other matter in question has arisen, and in any
event shall not be made after the date when institution of legal proceedings,
based on such claim, dispute or other matter in question, would be barred by the
applicable statute of limitations. The arbitration panel shall consist of three
(3) arbitrators, one of whom shall be appointed by each of the Buyer and the
Sellers within thirty (30) days after any request for arbitration hereunder. The
two arbitrators thus appointed shall choose the third arbitrator within thirty
(30) days after their appointment; provided, however, that if the two
arbitrators are unable to agree on the appointment of the third arbitrator
within 30 days after their appointment, either arbitrator may petition the
American Arbitration Association to make the appointment. The place of
arbitration shall be Atlanta, Georgia. The arbitrators shall be instructed to
render their decision within sixty (60) days after their selection and to
allocate all costs and expenses of such arbitration (including legal and
accounting fees and expenses of the respective parties) to the parties in the
proportions that reflect their relative success on the merits (including the
successful assertion of any defenses).
(b) Nothing contained in this Section 11.10 shall prevent any party
hereto from seeking any equitable relief to which it would otherwise be entitled
from a court of competent jurisdiction.
11.11 SUCCESSORS AND ASSIGNS; NO THIRD PARTY BENEFICIARIES. Subject to
Section 11.1 hereof, this Agreement shall be binding upon, inure to the benefit
of and
be enforceable by the respective successors and assigns of the parties hereto.
Nothing in this Agreement, expressed or implied, is intended or shall be
construed to confer upon or give to any employee of the Sellers, or any other
person, firm, corporation or legal entity, other than the parties hereto and
their successors and permitted assigns, any rights, remedies or other benefits
under or by reason of this Agreement.
11.12 HEADINGS. The article, section and paragraph headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.
11.13 SEVERABILITY. In the event that any provision, or part thereof, of
this Agreement shall be held to be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions, or parts
thereof, shall not in any way be affected or impaired thereby.
11.14 CERTAIN TAX RETURNS. The Sellers shall cooperate with and provide
assistance to the Buyer and the Surviving Company in connection with the
preparation and filing of all federal, state, local and foreign income tax
returns which relate to the Surviving Company and to periods prior to Closing
but which are not required to be filed until after the Closing.
11.15 REGARDING THE COMPANY'S NAME. Any references to the Company as
"▇▇▇▇▇▇▇▇ Cadillac, Inc." in the other agreements, certificates, documents and
instruments executed and delivered in connection with the transactions
contemplated by this Agreement and the Amended Asset Purchase Agreement shall be
deemed references to the Company under its current name, which is "▇▇▇▇▇▇▇▇
Cadillac Company, Inc."
[SIGNATURES ARE ON NEXT PAGE]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered on the date first above written.
THE BUYER: SONIC AUTOMOTIVE, INC.
By: /s/ B. ▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------
Name: B. ▇▇▇▇▇ ▇▇▇▇▇
Title: President
THE COMPANY: ▇▇▇▇▇▇▇▇ CADILLAC COMPANY, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Title: President
THE SELLERS: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ (SEAL)
-------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ (SEAL)
-------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ (SEAL)
-------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇ (SEAL)
-------------------------------------
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇