STOCK PURCHASE AGREEMENT
BETWEEN
SONIC AUTO WORLD, INC.
AND
XXX XXXXX, JR., O.K. MARKS, SR. and XXXXXXX X. XXXXX
DATED AS OF JULY 29, 1997
TABLE OF CONTENTS
Page
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ARTICLE 1 - Purchase and Sale.............................................. 1
1.1 Agreement of Purchase and Sale .................................. 1
1.2 Purchase Price .................................................. 1
1.3 Delivery of the Shares .......................................... 3
1.4 Dealership Lease; Guaranty; Employment Agreement;
Non-Competition Agreement ....................................... 3
ARTICLE 2 - Closing........................................................ 4
ARTICLE 3 - Representations and Warranties of the Sellers.................. 4
3.1 Ownership of Shares............................................. 4
3.2 Sellers' Power and Authority; Consents and Approvals............ 4
3.3 Execution and Enforceability.................................... 4
3.4 Litigation Regarding Sellers.................................... 5
3.5 Interest in Competitors and Related Entities; Certain
Transactions.................................................... 5
3.6 Sellers Not Foreign Persons..................................... 5
3.7 Organization; Good Standing; Qualifications; and Power.......... 5
3.8 Capitalization.................................................. 6
3.9 Subsidiaries and Investments.................................... 6
3.10 No Violation; Conflicts......................................... 6
3.11 Title to Assets; Related Matters................................ 6
3.12 Possession...................................................... 7
3.13 Financial Statements............................................ 7
3.14 Accounts Receivable............................................. 7
3.15 Inventories..................................................... 7
3.16 Real Property; Machinery and Equipment.......................... 8
3.17 Patents; Trademarks; Trade Names; Copyrights; Licenses, Etc..... 9
3.18 Certain Liabilities............................................. 9
3.19 No Undisclosed Liabilities...................................... 9
3.20 Absence of Changes.............................................. 9
3.21 Tax Matters..................................................... 10
3.22 Compliance with Laws, Etc....................................... 11
3.23 Litigation Regarding the Corporation............................ 11
3.24 Permits, Etc.................................................... 11
3.25 Employees; Labor Relations...................................... 12
3.26 Compensation.................................................... 12
3.27 Employee Benefits............................................... 12
3.28 Powers of Attorney.............................................. 13
3.29 Material Agreements............................................. 13
3.30 Brokers' or Finders' Fees, Etc.................................. 14
3.31 Bank Accounts, Credit Cards, Safe Deposit Boxes
and Cellular Telephones......................................... 14
3.32 Insurance....................................................... 14
3.33 Warranties...................................................... 14
3.34 Directors and Officers.......................................... 14
3.35 Suppliers and Customers......................................... 14
3.36 Environmental Matters........................................... 15
3.37 Business Generally.............................................. 16
3.38 Misstatements and Omissions..................................... 17
ARTICLE 4 - Representations and Warranties of the Buyer.................... 17
4.1 Organization and Good Standing.................................. 17
4.2 Buyer's Power and Authority; Consents and Approvals............. 17
4.3 Execution and Enforceability.................................... 17
4.4 Litigation Regarding Buyer...................................... 17
4.5 No Violation; Conflicts......................................... 18
4.6 Financing....................................................... 18
4.7 Brokers' or Finders' Fees, Etc.................................. 18
4.8 Misstatements and Omissions..................................... 18
ARTICLE 5 - Pre-Closing Covenants of the Sellers........................... 18
5.1 Provide Access to Information; Cooperation with Buyer........... 18
5.2 Operation of Business of the Corporation........................ 19
5.3 Books of Account................................................ 19
5.4 Employees....................................................... 19
5.5 Issuance of Securities.......................................... 19
5.6 Other Changes................................................... 20
5.7 Additional Information.......................................... 20
5.8 Publicity....................................................... 20
5.9 Other Negotiations.............................................. 20
5.10 Closing Conditions.............................................. 20
5.11 Environmental Audit............................................. 20
5.12 Audited Financial Statements.................................... 21
5.13 Xxxx-Xxxxx-Xxxxxx............................................... 21
ARTICLE 6 - Pre-Closing Covenants of Buyer................................. 21
6.1 Publicity....................................................... 21
6.2 Closing Conditions.............................................. 21
6.3 Application to Automobile Manufacturers and Distributors........ 21
6.4 Xxxx-Xxxxx-Xxxxxx............................................... 22
ARTICLE 7 - Conditions to Obligations of the Buyer at the Closing.......... 22
7.1 Representations and Warranties.................................. 22
7.2 Performance of Obligations of the Sellers....................... 22
7.3 Closing Documentation........................................... 22
7.4 Approval of Legal Matters....................................... 23
7.5 No Litigation................................................... 23
7.6 No Material Adverse Change or Undisclosed Liability............. 24
7.7 No Adverse Laws................................................. 24
7.8 Affiliate Transactions.......................................... 24
7.9 Escrow Agreement................................................ 24
7.10 Execution of Dealership Lease................................... 24
7.11 Employment Agreement............................................ 24
7.12 Non-Competition Agreement....................................... 24
7.13 Cancellation of Stock Options................................... 24
7.14 Return of Letter of Credit. ................................... 24
7.15 Xxxx-Xxxxx-Xxxxxx Waiting Period................................ 24
ARTICLE 8 - Conditions to Obligations of the Sellers at the Closing........ 25
8.1 Representations and Warranties.................................. 25
8.2 Performance of Obligations of the Buyer......................... 25
8.3 Closing Documentation........................................... 25
8.4 Approval of Legal Matters....................................... 26
8.5 No Litigation................................................... 26
8.6 Dealership Lease; Guaranty...................................... 26
8.7 Escrow Agreement................................................ 26
8.8 Employment Agreement............................................ 26
8.9 Xxxx-Xxxxx-Xxxxxx Waiting Period................................ 26
ARTICLE 9 - Survival of Representations and Warranties, Indemnification,
Etc............................................................. 26
9.1 Survival........................................................ 26
9.2 Agreement to Indemnify by Sellers............................... 27
9.3 Agreement to Indemnify by Buyer................................. 28
9.4 Claims for Indemnification...................................... 28
9.5 Procedures Regarding Third Party Claims......................... 28
9.6 Effectiveness................................................... 29
ARTICLE 10 - Termination................................................... 30
10.1 Termination..................................................... 30
10.2 Procedure and Effect of Termination............................. 30
10.3 Payment of Buyer's Termination Fee; Sellers' Exclusive Remedy... 30
10.4 Payment of Sellers' Termination Fee; Buyer's Election of
Remedies........................................................ 31
ARTICLE 11 - Certain Taxes and Expenses.................................... 31
11.1 Certain Taxes and Expenses...................................... 31
ARTICLE 12 - Certain Post-Closing Covenants................................ 31
12.1 Change of Corporation's Name.................................... 31
12.2 Stay-on Bonuses to Employees of Corporation..................... 31
ARTICLE 13 - Miscellaneous................................................. 32
13.1 Certain Tax Returns............................................. 32
13.2 Parties in Interest; No Third-Party Beneficiaries............... 32
13.3 Entire Agreement; Amendments.................................... 32
13.4 Assignment...................................................... 32
13.5 Remedies........................................................ 32
13.6 Headings........................................................ 32
13.7 Notices......................................................... 33
13.8 Counterparts.................................................... 34
13.9 Governing Law................................................... 34
13.10 Waivers......................................................... 34
13.11 Severability.................................................... 34
13.12 Knowledge....................................................... 34
13.13 Jurisdiction; Arbitration....................................... 34
13.14 Power of Attorney of Xxx Xxxxx, Jr.............................. 35
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT dated as of July 29, 1997 (this "Agreement")
between SONIC AUTO WORLD, INC., a Delaware corporation (the "Buyer"), and XXX
XXXXX, JR., O.K. MARKS, SR. and XXXXXXX X. XXXXX (the "Sellers").
W I T N E S S E T H:
WHEREAS, the Sellers own in the aggregate 500 shares of common stock, par
value $1.00 per share (the "Shares"), of Xxx Xxxxx Ford, Inc., a Florida
corporation (the "Corporation"), which shares represent all of the issued and
outstanding shares of capital stock of the Corporation 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, the Buyer desires to purchase the Shares from the Sellers, and the
Sellers are willing to sell the Shares to the Buyer, upon the terms and
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and representations hereinafter stated, and intending to be legally bound
hereby, the parties agree as follows:
ARTICLE 1
Purchase and Sale
1.1 Agreement of Purchase and Sale. On the terms and subject to the
conditions of this Agreement and in reliance upon the representations and
warranties of the parties herein, at the closing referred to in Article 2 hereof
(the "Closing"), the Sellers shall sell, transfer, convey and deliver to the
Buyer, and the Buyer shall purchase from the Sellers, the Shares.
1.2 Purchase Price.
(a) As the full purchase price to be paid by the Buyer for the Shares, the
Buyer shall pay to the Sellers the aggregate sum of $24,982,500, subject to
adjustment as provided in Section 1.2 (d) below (the "Purchase Price").
(b) The Purchase Price, less the sum of $500,000 (the "Escrow Amount"),
which shall be paid into escrow to First Union National Bank or another bank
reasonably acceptable to the parties, as escrow agent (the "Escrow Agent"),
pursuant to the terms of the escrow agreement substantially in the form of
Exhibit B attached hereto, with such other changes thereto as the Escrow Agent
shall reasonably request (the "Escrow Agreement"), shall be payable to the
Sellers at the
Closing in the amounts set forth opposite their respective names on Exhibit A
hereto in cash in immediately available funds by wire transfer to an account or
accounts designated by such Sellers in writing at least one (1) full Business
Day prior to the Closing. For purposes of this Agreement, the term "Business
Day" shall mean any day other than a Saturday, a Sunday or a day on which banks
are authorized or required to be closed in the State of North Carolina.
(c) Concurrently with the signing of this Agreement, the Buyer is
delivering to Xxx Xxxxx, Jr., as agent for the Sellers (the "Sellers' Agent"), a
Letter of Credit in the face amount of $2,000,000 and otherwise in the form of
Exhibit C attached hereto (the "Letter of Credit"). In the event that the
Closing does not occur by the Closing Date Deadline (as defined in Article 2
below), then the provisions of Article 10 hereof shall apply with respect to the
Letter of Credit.
(d) Purchase Price Adjustment Procedures.
(i) Not later than 60 days after the Closing Date (as defined in
Article 2), the Buyer will prepare and deliver to the Sellers' Agent a
balance sheet (the "Closing Balance Sheet") of the Corporation as of the
Closing Date, consisting of a computation of the tangible book value of the
assets of the Corporation as of the Closing Date, less the book value of
the liabilities of the Corporation as of the Closing Date, all as
determined in accordance with generally accepted accounting principles
applied consistently with the Financial Statements (as defined in Section
3.13(a)); provided, however, that (A) based upon a physical inventory, the
cost of which will be borne equally by the Buyer and the Sellers, parts
inventories shall be based on the value of returnable parts and new car
inventories shall be valued on a first-in, first-out (FIFO) basis without
taking into account the tax effect of such FIFO basis, (B) the value of the
used vehicles inventory of the Corporation shall be as mutually agreed to
by the Buyer and the Sellers based upon a physical inventory to be
conducted jointly by the Sellers and the Buyer on the Closing Date or the
Business Day immediately preceding the Closing Date, which inventory shall
be conducted for the Sellers by the Seller's Agent and for the Buyer by
Xxxxx Xxxxx Xxxxx, and (C) there shall be included such reserves and/or
write-offs for doubtful accounts receivable and bad debts and for damaged,
spoiled, obsolete or slow-moving inventory as shall be consistent with the
Corporation's past year-end practices. The tangible net book value
reflected on the Closing Balance Sheet is hereinafter called the "Net Book
Value". If within 30 days following delivery of the Closing Balance Sheet
(or the next Business Day if such 30th day is not a Business Day), 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
Six" 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, (1) each party will furnish to
the Accountants such workpapers 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; (2) the Accountants will be instructed
to determine the Net Book Value based upon their resolution of the issues
in dispute; (3) 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;
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and (4) the Buyer and the Sellers shall each bear 50% of the fees and
expenses of the Accountants for such determination.
(ii) 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 $5,050,000 (the "Net Book Value Shortfall"), the Sellers shall be
obligated, jointly and severally, to pay the amount of the Net Book Value
Shortfall promptly to the Buyer, together with interest on such amount at
the prime rate of NationsBank, N.A. from time to time in effect from the
Closing Date to the date of payment. In furtherance of such obligation of
the Sellers, the Buyer and the Sellers' Agent shall execute and deliver to
the Escrow Agent a joint instruction to pay up to the entire amount of the
Escrow Amount to the Buyer. To the extent that the amount of such Net Book
Value Shortfall, plus interest as aforesaid, shall exceed the Escrow
Amount, the Sellers shall be obligated, jointly and severally, to pay such
excess amount of Net Book Value Shortfall, plus interest as aforesaid,
promptly to the Buyer. Any interest earned on the Escrow Amount shall be
paid as provided in the Escrow Agreement.
1.3 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.
(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").
1.4 Dealership Lease; Guaranty; Employment Agreement; Non-Competition
Agreement.
(a) Dealership Lease; Guaranty. At the Closing, the Sellers will cause
Marks Holding Company, Inc., as lessor, to enter into a lease agreement with the
Corporation, as lessee, regarding the Leased Premises (as defined in Section
3.16(b) below) owned by such lessor, such lease agreement to be substantially in
the form of Exhibit D-1 hereto (the "Dealership Lease"). The obligations of the
Corporation, as lessee under the Dealership Lease, shall be guaranteed by the
Buyer and Sonic Financial Corporation pursuant to a Guaranty in the form of
Exhibit D-2 (the "Guaranty").
(b) Employment Agreement. At the Closing, Xxx Xxxxx, Jr. will enter into an
employment agreement with the Corporation, such employment agreement to be
substantially in the form of Exhibit E hereto (the "Employment Agreement").
(c) Non-Competition Agreement. At the Closing, Xxx Xxxxx, Jr. will enter
into a non-competition agreement with the Buyer and the Corporation, such
non-competition agreement to be substantially in the form of Exhibit F hereto
(the "Non-Competition Agreement"). The parties hereto agree that the amount of
the Purchase Price allocated to the Non-Competition Agreement is $10,000.
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ARTICLE 2
Closing
The Closing shall take place at the offices of Johnson, Blakely, Pope,
Bokor, Xxxxxx & Xxxxx, P.A., 000 Xxxxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxx, at 9:30
a.m., local time, on the Closing Date. The Closing Date shall be the fifth (5th)
Business Day, or such shorter period as the Buyer may choose, following the date
the Buyer gives notice of the Closing to the Sellers, but in no event later than
October 15, 1997 (the "Closing Date Deadline"), unless another date or place is
agreed to in writing by the Sellers and the Buyer. The date upon which the
Closing shall take place is hereinafter called the "Closing Date".
ARTICLE 3
Representations and Warranties of the Sellers
Each of the Sellers hereby represents and warrants to the Buyer, severally
with respect to the matters set forth in Sections 3.1 through 3.6, inclusive,
and jointly and severally with respect to all other matters set forth in this
Article 3, as follows:
3.1 Ownership of Shares. Each Seller owns of record and beneficially the
number of Shares set forth opposite such Seller's name on Exhibit B 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.
3.2 Sellers' Power and Authority; Consents and Approvals.
(a) Each Seller has full capacity, right, power and authority to execute
and deliver this Agreement and the other agreements, documents and instruments
to be executed and delivered by such Seller in connection herewith, to
consummate the transactions contemplated hereby and thereby and to perform its
obligations hereunder and thereunder.
(b) Except as set forth on Schedule 3.2(b) hereto, no authorization,
approval or consent of, or notice to or filing or registration with, any
governmental agency or body, or any other third party, is required in connection
with the execution and delivery by each Seller of this Agreement and the other
agreements, documents and instruments to be executed and delivered by each
Seller in connection herewith, the consummation of the transactions contemplated
hereby and thereby and the performance by each Seller of his obligations
hereunder and thereunder.
3.3 Execution and Enforceability. This Agreement and the other agreements,
documents and instruments to be executed by the Sellers in connection herewith,
and the consummation by each Seller of the transactions contemplated hereby and
thereby, have been duly authorized, executed and delivered by each Seller and
constitute, and the other agreements, documents and instruments contemplated
hereby, when executed and delivered by each Seller, shall constitute, the legal,
valid and binding obligations of each Seller, enforceable against each such
Seller in accordance with their
4
respective terms, except to the extent that enforceability may be limited by
bankruptcy, insolvency and other similar laws affecting the enforcement of
creditors' rights generally.
3.4 Litigation Regarding Sellers. There are no actions, suits, claims,
investigations or legal, administrative or arbitration proceedings pending or,
to each Sellers' knowledge, threatened or probable of assertion, against any
Seller relating to the Shares, this Agreement or the transactions contemplated
hereby before any court, governmental or administrative agency or other body.
None of the Sellers knows of any basis for the institution of any such suit or
proceeding. No judgment, order, writ, injunction, decree or other similar
command of any court or governmental or administrative agency or other body has
been entered against or served upon any Seller relating to the Shares, this
Agreement or the transactions contemplated hereby.
3.5 Interest in Competitors and Related Entities; Certain Transactions.
(a) Except as set forth on Schedule 3.5 hereto, no Seller and no Affiliate
(as hereinafter defined) of any Seller (i) has any direct or indirect interest
in any person or entity engaged or involved in any business which is competitive
with the business of the Corporation, (ii) has any direct or indirect interest
in any person or entity which is a lessor of assets or properties to, material
supplier of, or provider of services to, the Corporation, or (iii) has a
beneficial interest in any contract or agreement to which the Corporation is a
party; provided, however, that the foregoing representation and warranty shall
not apply to any person or entity, or any interest or agreement with any person
or entity, which is a publicly held corporation in which such Seller
individually owns less than 3% of the issued and outstanding voting stock. 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 or sibling of such specified person and the concept of "control"
means 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.
(b) Except as set forth in Schedule 3.5 hereto, there are no transactions
between the Corporation and any of the Sellers (including the Sellers'
Affiliates), or any of the directors, officers or salaried employees of the
Corporation, or the family members or Affiliates of any of the above (other than
for services as employees, officers and directors), 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 officer, director or salaried employee, family member, or
Affiliate or any corporation, partnership, trust or other entity in which such
family member, Affiliate, officer, director or employee has a substantial
interest or is a shareholder, officer, director, trustee or partner.
3.6 Sellers Not Foreign Persons. Each Seller is a "United States person" as
that term is defined in Section 7701(a)(30) of the Internal Revenue Code of
1986, as amended (the "Code"), and the regulations promulgated thereunder.
3.7 Organization; Good Standing; Qualifications; and Power. The Corporation
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Florida and has all requisite power and authority to own,
lease and operate its properties and to carry
5
on its business as now being conducted. The Corporation is qualified to do
business as a foreign corporation and is in good standing in each of the
jurisdictions listed on Schedule 3.7 hereto, which are the only jurisdictions
where the nature of its business and assets requires such qualification.
3.8 Capitalization. The authorized capital stock of the Corporation
consists of 500 shares of common stock, par value $1.00 per share, all of which
are issued and outstanding and constitute the Shares. 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. Except as set forth on
Schedule 3.8 hereto, there are no preemptive rights, whether at law or
otherwise, to purchase any of the securities of the Corporation and there are no
outstanding options, warrants, "phantom" stock plans, subscriptions, agreements,
plans or other commitments pursuant to which the Corporation 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.
3.9 Subsidiaries and Investments. The Corporation 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.
3.10 No Violation; Conflicts. Except as set forth on Schedule 3.10 hereto,
the execution and delivery by the Sellers of this Agreement and the other
agreements, documents and instruments to be executed and delivered by the
Sellers in connection herewith, the consummation by the Sellers of the
transactions contemplated hereby and thereby and the performance by the Sellers
of their respective obligations hereunder and thereunder do not and will not (a)
conflict with or violate any of the terms of the Articles of Incorporation or
By-Laws of the Corporation, (b) violate or conflict with any law, ordinance,
rule or regulation, or any judgment, order, writ, injunction, decree or similar
command of any court, administrative or governmental agency or other body,
applicable to the Corporation, (c) violate or conflict with the terms of, or
result in the acceleration of, any indebtedness or obligation of the Corporation
under, or violate or conflict with or result in a breach of, or constitute a
default under, any indenture, mortgage, deed of trust, agreement or instrument
to which the Corporation is a party or by which the Corporation or any of its
assets or properties is bound or affected, (d) result in the creation or
imposition of any Encumbrance of any nature upon any of the assets or properties
of the Corporation, (e) constitute an event permitting termination of any
agreement, license or other right of the Corporation, or (f) require any
authorization, approval or consent of, or any notice to or filing or
registration with, any governmental agency or body, or any other third party,
applicable to the Corporation or any of its properties or assets.
3.11 Title to Assets; Related Matters. The Corporation has good and valid
title to all assets, rights, interests and other properties, real, personal and
mixed, tangible and intangible, owned by it (collectively, the "Assets"), free
and clear of all Encumbrances, except those specified on Schedule 3.11 and liens
for taxes not yet due and payable. The Assets (a) include all properties and
assets (real, personal and mixed, tangible and intangible) owned by the
Corporation; (b) do not include (i) any contracts for future services, prepaid
items or deferred charges the full value or benefit of which will not be usable
by or transferable to the Buyer, or (ii) any goodwill, organizational expense or
other similar intangible asset.
6
3.12 Possession. The tangible assets included within the Assets are in the
possession or control of the Corporation and no other person or entity has a
right to possession or claims possession of all or any part of such Assets,
except the rights of lessors of Leased Equipment and Leased Premises (each as
defined in Section 3.16 hereof) under their respective contracts and leases.
3.13 Financial Statements.
(a) The Sellers have delivered to the Buyer prior to the date hereof:
(i) the reviewed balance sheets of the Corporation as of April 30,
1994, April 30, 1995, April 30, 1996 and April 30, 1997 and the related
reviewed statements of income, stockholders' equity and changes in cash
flows for the fiscal years then ended (including the notes thereto and any
other information included therein), accompanied, in each case, by the
review opinion of Spence, Marston, Bunch & Xxxxxx CPAs, independent
certified public accountants of the Corporation (collectively, the "Annual
Financial Statements"), together with the consent of Spence, Marston, Bunch
& Xxxxxx CPAs to the use of their reports contained in the Annual Financial
Statements by the Buyer (or any Affiliate of the Buyer) in any filing of
such Annual Financial Statements with any governmental entity; and
(ii) the unaudited balance sheet of the Corporation as of May 31, 1997
and the related unaudited statements of income, stockholders' equity and
changes in cash flow for the one month period then ended (collectively, the
"Interim Financial Statements"), as certified by the Corporation's
President (the Annual Financial Statements and the Interim Financial
Statements are hereinafter collectively referred to as the "Financial
Statements").
(b) The Financial Statements (i) are in accordance with the books and
records of the Corporation, which books and records are true, correct and
complete, (ii) fully and fairly present the financial position of the
Corporation as of the dates indicated and the results of operation,
stockholders' equity and changes in cash flows of the Corporation for the
periods indicated, and (iii) except as set forth in Schedule 3.13, have been
prepared in accordance with generally accepted accounting principles
consistently applied ("GAAP").
3.14 Accounts Receivable. All accounts receivable of the Corporation are
collectible at the aggregate recorded amounts thereof, subject to the reserve
for doubtful accounts maintained by the Corporation in the ordinary course of
business, and are not subject to any known counterclaims or setoffs. An adequate
reserve for doubtful accounts for the Corporation has been established and such
reserve is consistent with both the operation of the Corporation in the ordinary
course of business and past practice.
3.15 Inventories. All inventories of the Corporation consist of items of a
quality and quantity usable and saleable in the ordinary course of business of
the Corporation, and the levels of inventories are consistent with the levels
maintained by the Corporation in the ordinary course consistent with past
practice and the Corporation's obligations under its agreements with all
applicable vehicle manufacturers and distributors. The values at which such
inventories are carried are based on the last-in, first-out method and are
stated in accordance with generally accepted accounting principles consistently
applied by the Sellers at the lower of historic cost or market. An adequate
reserve has been established by the Corporation for damaged, spoiled, obsolete,
defective,
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or slow-moving goods and such reserve is consistent with both the operation of
the Corporation in the ordinary course of business and past practice.
3.16 Real Property; Machinery and Equipment.
(a) Owned Real Property. The Corporation does not own any real property.
(b) Leased Premises. Schedule 3.16(b) hereto contains a complete list and
description (including buildings and other structures thereon and the name of
the owner thereof) of all real property which is used by the Corporation in its
business and operations (herein referred to either as the "Leased Premises" or
the "Real Property"). True, correct and complete copies of all leases of all
Leased Premises (the "Leases") have been delivered to the Buyer. The Leased
Premises are in good physical condition and, with respect to each Lease, no
event or condition currently exists which would give rise to a material repair
or restoration obligation if such Lease were to terminate. The Sellers have no
knowledge of any event or condition which currently exists which would create a
legal or other impediment to the use of the Leased Premises as currently used,
or would increase the additional charges or other sums payable by the tenant
under any of the Leases (including, without limitation, any pending tax
reassessment or other special assessment affecting the Leased Premises). The
improvements and building systems which comprise a part of the Leased Premises
as to which the Corporation is responsible for the maintenance and repair
thereof are in good condition, maintenance and repair. There is no person or
entity other than the Corporation in or entitled to possession of the Leased
Premises.
(c) Condemnation, Etc. The Sellers have delivered to the Buyer a recent
survey of the Real Property. No portion of the Real Property has been condemned
or otherwise taken by any public authority, and the Sellers have no knowledge of
any pending or threatened condemnation or taking thereof. The Sellers have no
knowledge of any event or condition which currently exists which would create a
legal or other impediment to the use of the Real Property as currently used, or
would increase the additional charges or other sums payable by the Corporation
under any leases of the Leased Premises (including, without limitation, any
pending extraordinary tax reassessment or other special assessment affecting the
Real Property). The buildings and improvements (including building systems)
which comprise a part of the Real Property are in good condition, maintenance
and repair, ordinary wear and tear excepted.
(d) Owned Equipment. Schedule 3.16(d) hereto sets forth a list of all
material machinery, equipment, tools, motor vehicles, furniture and fixtures
owned by the Corporation (collectively, the "Owned Equipment").
(e) Leased Equipment. Schedule 3.16(e) hereto contains a list of all leases
or other agreements, whether written or oral, under which the Corporation is
lessee of or holds or operates any items of machinery, equipment, tools, motor
vehicles, furniture and fixtures or other property (other than real property)
owned by any third party (collectively, the "Leased Equipment").
(f) Maintenance of Equipment. The Owned Equipment and the Leased Equipment
are in good operating condition, maintenance and repair in accordance with
industry standards taking into account the age thereof and ordinary wear and
tear excepted.
8
3.17 Patents; Trademarks; Trade Names; Copyrights; Licenses, Etc.
(a) Except as set forth on Schedule 3.17 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 and all
other proprietary information, know-how and intellectual property rights,
whether patentable or unpatentable, that are owned or leased by the Corporation
or used in the conduct of the Corporation's business. The Corporation is not a
party to, nor pays a 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 Corporation that any of its operations, activities or
products infringe the patents, trademarks, trade names, copyrights or other
property rights of others or that the Corporation is wrongfully or otherwise
using the property rights of others.
(b) The Corporation has the right to use the names "Xxx Xxxxx Ford" and
"Xxx Xxxxx - Oldsmar" in the State of Florida 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.
3.18 Certain Liabilities.
(a) All accounts payable by the Corporation to third parties as of the date
hereof arose in the ordinary course of business and none are delinquent or
past-due.
(b) Schedule 3.18 hereto sets forth a list of all indebtedness of the
Corporation, 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 Corporation 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.
3.19 No Undisclosed Liabilities. The Corporation does not have any material
liabilities or obligations of any nature, known or unknown, fixed or contingent,
matured or unmatured, other than those (a) reflected in the Financial
Statements, (b) incurred in the ordinary course of business since the date of
the Financial Statements and of the type and kind reflected in the Financial
Statements, or (c) disclosed specifically on Schedule 3.19 hereto.
3.20 Absence of Changes. Since April 30, 1997, the business of the
Corporation has been operated in the ordinary course, consistent with past
practices and, except as set forth on Schedule 3.20 hereto, there has not been
incurred, nor has there occurred:
(a) Any damage, destruction or loss (whether or not covered by insurance),
adversely affecting the business or assets of the Corporation in excess of
$100,000; (b) Any strikes, work stoppages or other labor disputes involving the
employees of the Corporation; (c) Any sale, transfer, pledge or other
disposition of any of the Assets of the Corporation having an aggregate
9
book value of $100,000 or more (except sales of vehicles and parts inventory in
the ordinary course of business); (d) Any amendment, termination, waiver or
cancellation of any Material Agreement (as defined in Section 3.29 hereof) or
any termination, amendment, waiver or cancellation of any material right or
claim of the Corporation under any Material Agreement (except in each case in
the ordinary course of business and consistent with past practice); (e) Any (1)
general uniform increase in the compensation of the employees of the Corporation
(including, without limitation, any increase pursuant to any bonus, pension,
profit-sharing, deferred compensation or other plan or commitment), (2) increase
in any such compensation payable to any individual officer, director, consultant
or agent thereof, or (3) loan or commitment therefor made by the Corporation to
any officer, director, stockholder, employee, consultant or agent of the
Corporation; (f) Any change in the accounting methods, procedures or practices
followed by the Corporation or any change in depreciation or amortization
policies or rates theretofore adopted by the Corporation; (g) Any material
change in policies, operations or practices of the Corporation with respect to
business operations followed by the Corporation, including, without limitation,
with respect to selling methods, returns, discounts or other terms of sale, or
with respect to the policies, operations or practices of the Corporation
concerning the employees of the Corporation; (h) Any capital appropriation or
expenditure or commitment therefor on behalf of the Corporation in excess of
$100,000 individually or $200,000 in the aggregate; (i) Any write-down or
write-up of the value of any inventory or equipment of the Corporation or any
increase in inventory levels in excess of historical levels for comparable
periods; (j) Any account receivable in excess of $100,000 or note receivable in
excess of $100,000 owing to the Corporation which (1) has been written off as
uncollectible, in whole or in part, (2) has had asserted against it any claim,
refusal or right of setoff, or (3) the account or note debtor has refused to, or
threatened not to, pay for any reason, or such account or note debtor has become
insolvent or bankrupt; (k) Any other change in the condition (financial or
otherwise), business operations, assets, earnings, business or prospects of the
Corporation which, in the judgment of the Sellers, has, or could reasonably be
expected to have, a material adverse effect on the assets, business or
operations of the Corporation; or (l) Any agreement, whether in writing or
otherwise, for the Corporation to take any of the actions enumerated in this
Section 3.20.
3.21 Tax Matters.
(a) All federal, state and local tax returns and tax reports required as of
the date hereof to be filed by the Corporation for taxable periods ending prior
to the date hereof have been duly and timely filed prior to the due date thereof
(as such due date may have been lawfully extended) by the Corporation with the
appropriate governmental agencies, and all such returns and reports are true,
correct and complete.
(b) All federal, state and local income, profits, franchise, sales, use,
occupation, property, excise, payroll, withholding, employment, estimated and
other taxes of any nature, including interest, penalties and other additions to
such taxes ("Taxes"), payable by, or due from, the Corporation for all periods
prior to the date hereof have been fully paid or adequately reserved for by the
Corporation or, with respect to Taxes required to be accrued, the Corporation
has properly accrued or will properly accrue such Taxes in the ordinary course
of business consistent with past practice of the Corporation.
(c) The federal income tax returns of the Corporation have not been
examined by the Internal Revenue Service ("IRS") for the fiscal years ended
April 30, 1995, April 30, 1996 and April
10
30, 1997. Except as set forth on Schedule 3.21 hereto, the Corporation 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 3.21 hereto, no
examination or audit of any tax return or report of the Corporation 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 Corporation. Copies of all
federal, state and local tax returns and reports required to be filed by the
Corporation for the years ended 1996, 1995, 1994, 1993 and 1992, together with
all schedules and attachments thereto, have been delivered by the Sellers to the
Buyer.
(d) The Corporation is not now, and has never 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 Code Section 341 has
been made affecting the Corporation. The Corporation 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 Corporation 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 Corporation.
3.22 Compliance with Laws, Etc. The Corporation has conducted its
operations and business in compliance in all material respects with, and all of
the Assets (including all of the Real Property) comply in all material respects
with, (i) all applicable laws, rules, regulations and codes (including, without
limitation, any laws, rules, regulations and codes relating to anticompetitive
practices, contracts, discrimination, employee benefits, employment, health,
safety, fire, building and zoning, but excluding Environmental Laws which are
the subject of Section 3.36 hereof) and (ii) all applicable orders, rules,
writs, judgments, injunctions, decrees and ordinances. The Corporation has not
received any notification of any asserted present or past failure by it to
comply in all material respects with such laws, rules or regulations, or such
orders, writs, judgments, injunctions, decrees or ordinances. Set forth on
Schedule 3.22 hereto are all orders, writs, judgments, injunctions, decrees and
other awards of any court or governmental agency applicable to the Corporation
or its business or operations. The Sellers have delivered to the Buyer copies of
all reports, if any, of the Corporation required to be submitted under the
Federal Occupational Safety and Health Act of 1970, as amended, and under all
other applicable health and safety laws and regulations. The deficiencies, if
any, noted on such reports have been corrected by the Corporation and any
deficiencies noted by inspection through the Closing Date will have been
corrected by the Corporation by the Closing Date.
3.23 Litigation Regarding the Corporation. Except as set forth on Schedule
3.23 hereto, there are no actions, suits, claims, investigations or legal,
administrative or arbitration proceedings pending, or, to the Sellers'
knowledge, threatened or probable of assertion, against the Corporation or
relating to its assets, business or operations or the transactions contemplated
by this Agreement, and the Sellers do not know of any basis for the institution
of any such suit or proceeding. No order, writ, judgment, injunction, decree or
similar command of any court or any governmental or administrative agency or
other body has been entered against or served upon the Corporation relating to
the Corporation or its assets, business or operations.
3.24 Permits, Etc. Set forth on Schedule 3.24 hereto is a list of all
governmental licenses, permits, approvals, certificates of inspection and other
authorizations, filings and registrations that
11
are necessary for the Corporation to own and operate its business as presently
conducted in all material respects (collectively, the "Permits"). All such
Permits have been duly and lawfully secured or made by the Corporation and are
in full force and effect. There is no proceeding pending, or, to the Sellers'
knowledge, threatened or probable of assertion, to revoke or limit any such
Permit. None of the transactions contemplated by this Agreement will terminate,
violate or limit the effectiveness of any such Permit.
3.25 Employees; Labor Relations. As of May 31, 1997, the Corporation
employed a total of approximately 250 employees. As of the date hereof, (a) the
Corporation is not delinquent in the payment (i) to or on behalf of its past or
present employees of any wages, salaries, commissions, bonuses, benefit plan
contributions or other compensation for all periods prior to the date hereof, or
(ii) of any amount which is due and payable to any state or state fund pursuant
to any workers' compensation statute, rule or regulation or any amount which is
due and payable to any workers' compensation claimant; (b) there are no
collective bargaining agreements currently in effect between the Corporation and
labor unions or organizations representing any employees of the Corporation; (c)
no collective bargaining agreement is currently being negotiated by the
Corporation; (d) to the knowledge of the Sellers, there are no union
organizational drives in progress and there has been no formal or informal
request to the Corporation for collective bargaining or for an employee election
from any union or from the National Labor Relations Board; and (e) no dispute
exists between the Corporation and any of its sales representatives or, to the
knowledge of the Sellers, between any such sales representatives with respect to
territory, commissions, products or any other terms of their representation.
3.26 Compensation. Schedule 3.26 contains a schedule of all employees
(including sales representatives) and consultants of the Corporation whose
individual cash compensation for the year ended April 30, 1997, or projected for
the year ended April 30, 1998, is in excess of $100,000, together with the
amount of total compensation paid to each such person for the twelve month
period ended April 30, 1997 and the current aggregate base salary or hourly rate
(including any bonus or commission) for each such person.
3.27 Employee Benefits.
(a) The Sellers have listed on Schedule 3.27 and has delivered to the Buyer
true and complete copies of all Employee Plans (as defined below) and related
documents, established, maintained or contributed to by the Corporation (which
shall include for this purpose and for the purpose of all of the representations
in this Section 3.27, the Sellers and all employers, whether or not
incorporated, that are treated together with the Corporation as a single
employer with the meaning of Section 414 of the Code). The term "Employee Plan"
shall include all plans described in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA") and also shall include,
without limitation, any deferred compensation, stock, employee or retiree
pension benefit, welfare benefit or other similar fringe or employee benefit
plan, program, policy, contract or arrangement, written or oral, qualified or
nonqualified, funded or unfunded, foreign or domestic, covering employees or
former employees of the Corporation and maintained or contributed to by the
Corporation.
(b) Where applicable, each Employee Plan (i) has been administered in
material compliance with the terms of such Employee Plan and the requirements of
ERISA and the Code; and
12
(ii) is in material compliance with the reporting and disclosure requirements of
ERISA and the Code. The Corporation does not maintain or contribute to, and has
never maintained or contributed to, an Employee Plan subject to Title IV of
ERISA or a "multiemployer plan." There are no facts relating to any Employee
Plan that (i) have resulted in a "prohibited transaction" of a material nature
or have resulted or is reasonably likely to result in the imposition of a
material excise tax, penalty or liability pursuant to Section 4975 of the Code,
(ii) have resulted in a material breach of fiduciary duty or violation of Part 4
of Title I of ERISA, or (iii) have resulted or could result in any material
liability (whether or not asserted as of the date hereof) of the Corporation or
any ERISA affiliate pursuant to Section 412 of the Code arising under or related
to any event, act or omission occurring on or prior to the date hereof. Each
Employee Plan that is intended to qualify under Section 401(a) or to be exempt
under Section 501(c)(g) of the Code is so qualified or exempt as of the date
hereof in each case as such Employee Plan has received favorable determination
letters from the Internal Revenue Service with respect thereto. To the knowledge
of the Sellers, the amendments to and operation of any Employee Plan subsequent
to the issuance of such determination letters do not adversely affect the
qualified status of any such Employee Plan. No Employee Plan has an "accumulated
funding deficiency" as of the date hereof, whether or not waived, and no waiver
has been applied for. The Corporation has made no promises or incurred any
liability under any Employee Plan or otherwise to provide health or other
welfare benefits to former employees of the Corporation, except as specifically
required by law. There are no pending or, to the best knowledge of the Sellers,
threatened claims (other than routine claims for benefit) or lawsuits with
respect to any of Corporation's Employee Plans. As used in this Section 3.27,
all technical terms enclosed in quotation marks shall have the meaning set forth
in ERISA.
3.28 Powers of Attorney. There are no persons, firms, associations,
corporations or business organizations or entities holding general or special
powers of attorney from the Corporation.
3.29 Material Agreements.
(a) List of Material Agreements. Set forth on Schedule 3.29(a) hereto is a
list or, where indicated, a brief description of all contracts, agreements,
documents, instruments, guarantees, plans, understandings or arrangements,
written or oral, which require the payment of $50,000 in any 12 month period or
which otherwise are material to the Corporation or its business or assets
(collectively, the "Material Agreements"). True copies of all written Material
Agreements and written summaries of all oral Material Agreements described or
required to be described on Schedule 3.29(a) have been furnished to the Buyer.
(b) Performance, Defaults, Enforceability. The Corporation 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 Material Agreement, and there exists no event,
condition or occurrence which, after notice or lapse of time or both, would
constitute such a default. To the knowledge of the Sellers, no other party to
any Material Agreement is in default in any respect of any of its obligations
thereunder. Each of the Material Agreements is valid and in full force and
effect and enforceable against the parties thereto in accordance with their
respective terms, and, except as set forth in Schedule 3.29(b) hereto, the
consummation of the transactions contemplated by this Agreement will not (i)
require the consent of any party thereto or (ii) constitute an event permitting
termination thereof.
13
3.30 Brokers' or Finders' Fees, Etc. Except for NCM & Associates, Inc.,
whose fees will be paid by the Sellers, no agent, broker, investment banker,
person or firm acting on behalf of the Corporation or any of the Sellers or any
person, firm or corporation affiliated with any of the Sellers or under their
authority is or will be entitled to any brokers' or finders' fee or any other
commission or similar fee directly or indirectly from any of the parties hereto
in connection with the sale of the Shares contemplated hereby, other than any
such fee or commission the entire cost of which will be borne by the Sellers.
3.31 Bank Accounts, Credit Cards, Safe Deposit Boxes and Cellular
Telephones. Schedule 3.31 hereto lists all bank accounts, credit cards and safe
deposit boxes in the name of, or controlled by, the Corporation, and all
cellular telephones provided and/or paid for by the Corporation, and details
about the persons having access to or authority over such accounts, credit
cards, safe deposit boxes and cellular telephones.
3.32 Insurance.
(a) Schedule 3.32(a) 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
Corporation on its 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 Corporation 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 Corporation 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 3.32(b) hereto is a summary of information
pertaining to material property damage and personal injury claims in excess of
$10,000 against the Corporation during the past three (3) years, all of which
are fully satisfied or are being defended by the insurance carrier and involve
no exposure to the Corporation.
3.33 Warranties. Set forth on Schedule 3.33 hereto are descriptions or
copies of the forms of all express warranties and disclaimers of warranty made
by the Corporation (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 Corporation. There have been no breach of warranty
or breach of representation claims against the Corporation during the past five
(5) years which have resulted in any cost, expenditure or exposure to the
Corporation of more than $100,000 individually or in the aggregate.
3.34 Directors and Officers. Set forth on Schedule 3.34 hereto is a true
and correct list of the names and titles of each director and officer of the
Corporation.
3.35 Suppliers and Customers. The Corporation 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
14
threatened, or reasonably could be expected, to terminate or modify any of its
relationships with the Corporation.
3.36 Environmental Matters.
(a) For purposes of this Section 3.36, the following terms shall have the
following meaning: (i) "Environmental Law" means all present and future federal,
state and local laws, statutes, regulations, rules, ordinances and common law,
and all judgments, decrees, orders, agreements, or permits, issued, promulgated,
approved or entered thereunder by any government authority relating to
pollution, Hazardous Materials, worker safety or protection of human health or
the environment. (ii) "Hazardous Materials" means any waste, pollutant,
chemical, hazardous material, hazardous substance, toxic substance, hazardous
waste, special waste, solid waste, petroleum or petroleum-derived substance or
waste (regardless of specific gravity), or any constituent or decomposition
product of any such pollutant, material, substance or waste, including, but not
limited to, any hazardous substance or constituent contained within any waste
and any other pollutant, material, substance or waste regulated under or as
defined by any Environmental Law.
(b) The Corporation has obtained all permits, licenses and other
authorizations or approvals required under Environmental Laws for the conduct
and operation of the Assets and the business of the Corporation in all material
respects ("Environmental Permits"). All such Environmental Permits are in good
standing, the Corporation is and has been in compliance with the terms and
conditions of all such Environmental Permits, and no appeal or any other action
is pending or threatened to revoke any such Environmental Permit.
(c) The Corporation and its business, operations and assets are and have
been in compliance in all material respects with all Environmental Laws.
(d) Neither the Corporation nor any of the Sellers has received any written
or oral order, notice, complaint, request for information, claim, demand or
other communication from any government authority or other person, whether based
in contract, tort, implied or express warranty, strict liability, or any other
common law theory, or any criminal or civil statute, arising from or with
respect to (i) the presence, release or threatened release of any Hazardous
Material or any other environmental condition on, in or under the Real Property
or any other property formerly owned, used or leased by the Corporation, (ii)
any other circumstances forming the basis of any actual or alleged violation by
the Corporation or the Sellers of any Environmental Law or any liability of the
Corporation or the Sellers under any Environmental Law, (iii) any remedial or
removal action required to be taken by the Corporation or the Sellers under any
Environmental Law, or (iv) any harm, injury or damage to real or personal
property, natural resources, the environment or any person alleged to have
resulted from the foregoing, nor are the Sellers aware of any facts which might
reasonably give rise to such notice or communication. Neither the Corporation
nor the Sellers has entered into any agreements concerning any removal or
remediation of Hazardous Materials.
(e) No lawsuits, claims, civil actions, criminal actions, administrative
proceedings, investigations or enforcement or other actions are pending or, to
the knowledge of the Sellers, threatened under any Environmental Law with
respect to the Corporation, the Sellers or the Real Property.
15
(f) To the knowledge of the Sellers, no Hazardous Materials are or have
been released, discharged, spilled or disposed of onto, or migrated onto, the
Real Property or any other property previously owned, operated or leased by the
Corporation, and, to the knowledge of the Sellers, no environmental condition
exists (including, without limitation, the presence, release, threatened release
or disposal of Hazardous Materials) related to the Real Property, to any
property previously owned, operated or leased by the Corporation, or to the
Corporation's past or present operations, which would constitute a violation of
any Environmental Law or otherwise give rise to costs, liabilities or
obligations under any Environmental Law.
(g) Neither the Corporation nor the Sellers, nor, to the knowledge of the
Sellers, any of their respective predecessors in interest, has transported or
disposed of, or arranged for the transportation or disposal of, any Hazardous
Materials to any location (i) which is listed on the National Priorities List,
the CERCLIS list under the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended, or any similar federal, state or local
list, (ii) which is the subject of any federal, state or local enforcement
action or other investigation, or (iii) about which either the Corporation or
the Sellers has received or has reason to expect to receive a potentially
responsible party notice or other notice under any Environmental Law.
(h) To the knowledge of the Sellers, no environmental lien has attached or
is threatened to be attached to the Real Property.
(i) To the knowledge of the Sellers, no employee of the Corporation in the
course of his or her employment with the Corporation has been exposed to any
Hazardous Materials or other substance, generated, produced or used by the
Corporation which could give rise to any claim (whether or not such claim has
been asserted) against the Corporation.
(j) Except as set forth on Schedule 3.36 hereto, none of the Sellers or
their Affiliates has installed or operated on the Real Property and, to the
knowledge of the Sellers, the Real Property does not contain, any: (i) septic
tanks into which process wastewater or any Hazardous Materials have been
disposed; (ii) asbestos; (iii) polychlorinated biphenyls (PCBs); (iv)
underground injection or monitoring xxxxx; or (v) underground storage tanks.
(k) Except as set forth on Schedule 3.36, there have been no environmental
studies or reports made relating to the Real Property or any other property or
facility previously owned, operated or leased by the Corporation.
(l) Except as set forth on Schedule 3.36, the Corporation has not agreed to
assume, defend, undertake, guarantee, or provide indemnification for, any
liability, including, without limitation, any obligation for corrective or
remedial action, of any other person under any Environmental Law for
environmental matters or conditions.
3.37 Business Generally. None of the Sellers is selling the Shares based,
in whole or in part, on any actual knowledge of any information concerning the
Corporation which has, or which could reasonably be expected to have, a material
adverse effect on the business, operations or prospects of the Corporation and
which has not been disclosed in writing to the Buyer. The foregoing
representation and warranty shall not apply to general business and economic
conditions generally affecting the industry and markets in which the Corporation
participates.
16
3.38 Misstatements and Omissions. No representation and warranty by the
Sellers contained in this Agreement, and no statement contained in any
certificate or Schedule furnished or to be furnished by the Sellers to the Buyer
in connection with this Agreement, 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 and warranty or such statement not misleading.
ARTICLE 4
Representations and Warranties of the Buyer
The Buyer hereby represents and warrants to the Sellers as follows:
4.1 Organization and Good Standing. The Buyer is a corporation duly
organized and validly existing and in good standing under the laws of the State
of Delaware.
4.2 Buyer's Power and Authority; Consents and Approvals.
(a) The Buyer has all requisite corporate power and authority to execute
and deliver this Agreement and the other agreements, documents and instruments
to be executed and delivered by the Buyer in connection herewith, to consummate
the transactions contemplated hereby and thereby and to perform its obligations
hereunder and thereunder.
(b) Except as set forth in Schedule 4.2(b) hereto, no authorization,
approval or consent of, or notice to or filing or registration with, any
governmental agency or body, or any other third party, is required in connection
with the execution and delivery by the Buyer of this Agreement and the other
agreements, documents and instruments to be executed by the Buyer in connection
herewith, the consummation by the Buyer of the transactions contemplated hereby
or thereby or the performance by the Buyer of its obligations hereunder and
thereunder.
4.3 Execution and Enforceability. This Agreement and the other agreements,
documents and instruments to be executed and delivered by the Buyer in
connection herewith, and the consummation by the Buyer of the transactions
contemplated hereby and thereby, have been duly and validly authorized, executed
and delivered by all necessary corporate action on the part of the Buyer and
this Agreement constitutes, and the other agreements, documents and instruments
to be executed and delivered by the Buyer in connection herewith, when executed
and delivered by the Buyer, shall constitute the legal, valid and binding
obligations of the Buyer, enforceable against the Buyer in accordance with their
respective terms, except to the extent that enforceability may be limited by
bankruptcy, insolvency and other similar laws affecting the enforcement of
creditors' rights generally and general equity principles.
4.4 Litigation Regarding Buyer. There are no actions, suits, claims,
investigations or legal, administrative or arbitration proceedings pending or,
to the Buyer's knowledge, threatened or probable of assertion against the Buyer
relating to this Agreement or the transactions contemplated hereby before any
court, governmental or administrative agency or other body, and no judgment,
order, writ, injunction, decree or other similar command of any court or
governmental
17
or administrative agency or other body has been entered against or served upon
the Buyer relating to this Agreement or the transactions contemplated hereby.
4.5 No Violation; Conflicts. The execution and delivery by the Buyer of
this Agreement and the other agreements, documents and instruments to be
executed and delivered by the Buyer in connection herewith, the consummation by
the Buyer of the transactions contemplated hereby and thereby and the
performance by the Buyer of its obligations hereunder and thereunder do not and
will not (a) conflict with or violate any of the terms of the Certificate of
Incorporation or By-Laws of the Buyer, or (b) violate or conflict with any
domestic law, ordinance, rule or regulation, or any judgement, order, writ,
injunction or decree of any court, administrative or governmental agency or
other body, material to the Buyer.
4.6 Financing. As of the Closing Date, the Buyer will have sufficient funds
to enable it to perform its payment obligations at the Closing. The Buyer has no
actual knowledge of any adverse information which prevents, or which could
reasonably be expected to prevent, the Buyer from performing its obligations
under this Agreement at the Closing.
4.7 Brokers' or Finders' Fees, Etc. Except for Xxxxxxxx, Inc., whose fees
will be paid by the Buyer, no agent, broker, investment banker, person or firm
acting on behalf of the Buyer or any person, firm or corporation affiliated with
the Buyer or under its authority is or will be entitled to any brokers' or
finders' fee or any other commission or similar fee directly or indirectly from
any of the parties hereto in connection with the sale of the Shares contemplated
hereby.
4.8 Misstatements and Omissions. No representation and warranty by the
Buyer contained in this Agreement, and no statement contained in any certificate
or Schedule furnished or to be furnished by the Buyer to the Sellers in
connection with this Agreement, 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 and warranty or such statement not misleading.
ARTICLE 5
Pre-Closing Covenants of the Sellers
The Sellers hereby jointly and severally covenant and agree that, from and
after the date hereof until the Closing:
5.1 Provide Access to Information; Cooperation with Buyer.
(a) Access. The Sellers shall afford, and cause the Corporation to afford,
to the Buyer, its attorneys, accountants, and representatives, free and full
access at all reasonable times, and upon reasonable prior notice, to the
properties, books and records of the Corporation, and to interview personnel,
suppliers and customers of the Corporation, in order that the Buyer may have a
full opportunity to make such investigation as it shall reasonably desire of the
assets, business and operations of the Corporation (including, without
limitation, any appraisals or inspections thereof), and provide to the Buyer and
its representatives such additional financial and operating data and other
information as to the business and properties of the Corporation as the Buyer
shall from time
18
to time reasonably request. Notwithstanding the foregoing, the Buyer shall not
interview customers and suppliers of the Corporation outside the physical
presence of the Sellers' Agent or his designee, which physical presence shall
not be unreasonably denied by the Sellers' Agent or his designee.
(b) Cooperation in IPO Preparation. At the Buyer's expense, the Sellers
shall cooperate with the Buyer in the preparation of any description of the
transactions contemplated by this Agreement deemed by the Buyer, in its sole
discretion, as necessary for the completion of any registration statement,
prospectus or amendment or supplement thereto prepared in connection with the
closing of the Initial Public Offering ("IPO") of the Buyer's securities.
(c) Cooperation in Obtaining Consents. The Sellers shall use reasonable
best efforts in cooperating with the Buyer in the preparation of and delivery to
all applicable automobile manufacturers or distributors, as soon as practicable
after the date hereof, of an application and other information necessary to
obtain such automobile manufacturer's or distributor's consent to or the
approval of the transactions contemplated by this Agreement.
5.2 Operation of Business of the Corporation. The Sellers shall cause the
Corporation to (a) maintain its corporate existence in good standing, (b)
operate its business substantially as presently operated and only in the
ordinary course and consistent with past operations and its obligations under
any existing agreements with all applicable automobile manufacturers or
distributors, (c) use its best efforts to preserve intact its present business
organizations and employees and its relationships with persons having business
dealings with them, including, but not limited to, all applicable automobile
manufacturers or distributors and any floor plan financing creditors, (d) comply
in all respects with all applicable laws, rules and regulations, (e) maintain
its insurance coverages, (f) pay all Taxes, charges and assessments when due,
subject to any valid objection or contest of such amounts asserted in good faith
and adequately reserved against, and make all proper accruals for Taxes not yet
due and payable, (g) make all debt service payments when contractually due and
payable, (h) pay all accounts payable and other current liabilities when due,
(i) maintain the Employee Plans and each plan, agreement and arrangement listed
on Schedule 3.27, and (j) maintain its property, plant and equipment in good
operating condition in accordance with industry standards taking into account
the age thereof.
5.3 Books of Account. The Sellers shall cause the Corporation to maintain
its books and records of account in the usual, regular and ordinary manner.
5.4 Employees. The Sellers shall (i) use its reasonable best efforts to
encourage such personnel of the Corporation as the Buyer may designate in
writing to remain employees of the Corporation after the date of the Closing,
and (ii) except in the ordinary course of business, not take any action, or
permit the Corporation to take any action, to encourage any of the personnel of
the Corporation to leave their positions with the Corporation.
5.5 Issuance of Securities. The Sellers shall not permit the Corporation to
(i) issue any equity or debt security or any options or warrants, (ii) enter
into any subscriptions, agreements, plans or other commitments pursuant to which
the Corporation is or may become obligated to issue any shares of its capital
stock or any securities convertible into shares of its capital stock, (iii)
otherwise change or modify its capital structure, (iv) engage in any
reorganization or similar transaction, or (v) agree to take any of the foregoing
actions.
19
5.6 Other Changes. The Sellers shall not permit the Corporation to take,
cause, agree to take or cause to occur any of the actions or events set forth in
Section 3.20 of this Agreement; provided, that nothing herein contained shall
prohibit the Corporation from making cash distributions to the Sellers (whether
in the form of dividends or compensation) so long as such distributions do not
cause the Net Book Value to be materially less than $5,050,000.
5.7 Additional Information. The Sellers shall furnish and cause the
Corporation to furnish to the Buyer such additional information with respect to
any matters or events arising or discovered subsequent to the date hereof which,
if existing or known on the date hereof, would have rendered any representation
or warranty made by the Sellers or any information contained in any Schedule
hereto or in other information supplied in connection herewith then inaccurate
or incomplete. The receipt of such additional information by the Buyer shall not
operate as a waiver by the Buyer of the obligations of the Sellers to satisfy
the conditions to Closing set forth in Section 7.1 hereof.
5.8 Publicity. Except as may be required by law or the applicable rules or
regulations of any securities exchange, the Sellers shall not (i) make or permit
the Corporation to make any press release or other public announcement relating
to this Agreement or the transactions contemplated hereby, without the prior
written approval of the Buyer, and (ii) otherwise disclose the existence and
nature of their discussions or negotiations regarding the transactions
contemplated hereby to any person or entity other than their accountants,
attorneys and similar professionals, all of whom shall be subject to this
nondisclosure obligation as agents of the Sellers, as the case may be. The
Sellers shall cooperate with the Buyer in the preparation and dissemination of
any public announcements of the transactions contemplated by this Agreement.
5.9 Other Negotiations. The Sellers shall not pursue, initiate, encourage
or engage in, nor shall any of their respective Affiliates or agents pursue,
initiate, encourage or engage in, and the Sellers shall cause the Corporation
and its Affiliates, directors, officers and agents not to pursue, initiate,
encourage or engage in, any negotiations or discussions with, or provide any
information to, any other person or entity (other than the Buyer and its
representatives and Affiliates) regarding the sale of the assets or capital
stock of the Corporation or any merger or similar transaction involving the
Corporation.
5.10 Closing Conditions. The Sellers shall use all reasonable best efforts
to satisfy promptly the conditions to Closing set forth in Article 7 hereof
required herein to be satisfied by the Sellers prior to the Closing.
5.11 Environmental Audit. The Sellers shall cause the Corporation to 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
Sellers shall cause the Corporation to provide to the Environmental Auditor: (i)
reasonable access to all its existing records concerning the matters which are
the subject of the Environmental Audit; and (ii) reasonable access to the
employees of the Corporation and the last known addresses of former employees of
the Corporation who are most familiar with the matters which are the subject of
the Environmental Audit (the Sellers
20
agreeing to use reasonable efforts to have such former employees respond to any
reasonable requests or inquiries by the Environmental Auditor). The Sellers
shall otherwise cooperate and cause the Corporation to cooperate with the
Environmental Auditor in connection with the Environmental Audit. The Buyer and
the Sellers shall each bear 50% of the costs, fees and expenses incurred in
connection with the preparation of the Environmental Audit.
5.12 Audited Financial Statements. The Sellers shall allow, cooperate with
and assist Buyer's accountants, and shall instruct the Corporation's accountants
to cooperate, in the preparation of audited financial statements of the
Corporation as necessary for the IPO; provided that the expense of such audit
shall be borne by the Buyer.
5.13 Xxxx-Xxxxx-Xxxxxx. Subject to the determination by the Buyer that any
of the following actions is not required, the Sellers shall promptly prepare and
file Notification and Report Forms under the Xxxx-Xxxxx-Xxxxxx 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.
ARTICLE 6
Pre-Closing Covenants of Buyer
The Buyer hereby covenants and agrees that, from and after the date hereof
until the Closing:
6.1 Publicity. Except as may be required by law or as necessary in
connection with the transactions contemplated hereby or in connection with the
preparation and filing of any registration statement regarding the IPO, the
Buyer shall not (i) make any press release or other public announcement relating
to this Agreement or the transactions contemplated hereby, without the prior
written approval of the Sellers, or (ii) otherwise disclose the existence and
nature of its discussions or negotiations regarding the transactions
contemplated hereby to any person or entity other than its accountants,
attorneys and similar professionals, all of whom shall be subject to this
nondisclosure obligation as agents of the Buyer. The Buyer shall cooperate with
the Sellers in the preparation and dissemination of any public announcements of
the transactions contemplated by this Agreement. Subject to the Buyer's legal
obligations and the advice of its IPO underwriters, the Buyer shall submit to
the Sellers for their pre-approval (such approval shall not be unreasonably
withheld) of the content of any disclosures in the IPO context about the
transactions contemplated hereby.
6.2 Closing Conditions. The Buyer shall use all reasonable best efforts to
satisfy promptly the conditions to Closing set forth in Article 8 hereof
required herein to be satisfied by the Buyer prior to the Closing.
6.3 Application to Automobile Manufacturers and Distributors. Subject to
the reasonable cooperation of the Sellers, the Buyer shall provide to all
applicable automobile manufacturers and distributors promptly after the
execution and delivery of this Agreement any application or other information
with respect to such application necessary in connection with the seeking of the
21
consents of such manufacturers and distributors to the transactions contemplated
by this Agreement, and the Buyer shall otherwise use its reasonable best efforts
to obtain such consents.
6.4 Xxxx-Xxxxx-Xxxxxx. Subject to the determination by the Buyer that any
of the following actions is not required, the Buyer shall promptly prepare and
file Notification and Report Forms under the HSR Act with the FTC and the
Antitrust Division, respond as promptly as practicable to all inquiries received
from the FTC or the Antitrust Division for additional information or
documentation, and the Buyer shall pay all filing fees in connection therewith.
In addition, the Buyer shall pay the Sellers' reasonable out-of-pocket expenses
in connection with responding to any "second request" of the FTC so long as the
Buyer shall not have terminated this Agreement pursuant to Section 10.1(c)
below.
ARTICLE 7
Conditions to Obligations of the Buyer at the Closing
The obligations of the Buyer to perform this Agreement at the Closing are
subject to the satisfaction at or prior to the Closing of the following
conditions, unless waived in writing by the Buyer:
7.1 Representations and Warranties. The representations and warranties made
by the Sellers in this Agreement shall be true and correct in all material
respects at and as of the date of this Agreement and at and as of the Closing as
though made at and as of the Closing.
7.2 Performance of Obligations of the Sellers. The Sellers shall have
performed all obligations required to be performed by the Sellers under this
Agreement, and complied with all covenants for which compliance by the Sellers
is required under this Agreement, prior to or at the Closing.
7.3 Closing Documentation. The Buyer shall have received the following
documents, agreements and instruments from the Sellers:
(a) a certificate signed by the Sellers and dated the date of the Closing
certifying as to the satisfaction of the conditions set forth in Sections 7.1
and 7.2 hereof;
(b) the stock certificates and stock powers for the Shares described in
Section 1.3(a) hereof;
(c) such duly signed resignations of directors and officers of the
Corporation as the Buyer shall have previously requested;
(d) an opinion of Johnson, Blakely, Pope, Bokor, Xxxxxx & Xxxxx, P.A.,
counsel for the Sellers, dated the date of the Closing and addressed to the
Buyer, in the form of Exhibit G annexed hereto;
22
(e) copies of all authorizations, approvals, consents, notices,
registrations and filings referred to in Schedules 3.2(b), 3.10 and 3.29(b)
hereof;
(f) a certificate dated as of a recent date from (i) the Secretary of State
of the State of Florida to the effect that the Corporation is duly incorporated
and in good standing in such state and stating that the Corporation owes no
franchise taxes in such state and listing all documents of the Corporation on
file with said Secretary of State, and (ii) one or more certificates of
officials from the jurisdictions listed on Schedule 3.7 hereto to the effect
that the Corporation is duly qualified as a foreign corporation and is in good
standing in such jurisdictions;
(g) a copy of the Corporation's Articles of Incorporation, including all
amendments thereto, certified as of a recent date by the Secretary of State of
the State of Florida;
(h) evidence, reasonably satisfactory to the Buyer, of the authority and
incumbency of the persons acting on behalf of the Corporation in connection with
the execution of any document delivered in connection with this Agreement;
(i) Uniform Commercial Code Search Reports on Form UCC-11 with respect to
the Corporation from the states and local jurisdictions where the principal
places of business of the Corporation and its assets are located;
(j) a certificate of each of the Sellers as to such Seller's non-foreign
status in appropriate form;
(k) the corporate minute books and stock record books of the Corporation,
and all other books and records of, or pertaining to, the business and
operations of the Corporation;
(l) estoppel letter[s] of landlord[s] other than the Sellers or their
Affiliates under the Lease[s], in form and substance reasonably satisfactory to
the Buyer;
(m) estoppel letter[s] of lender[s] to the Corporation, in form and
substance reasonably satisfactory to the Buyer, with respect to amounts owing by
the Corporation as of the Closing; and
(n) such other instruments and documents as the Buyer shall reasonably
request not inconsistent with the provisions hereof.
7.4 Approval of Legal Matters. 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.
7.5 No Litigation. No action, suit or other proceeding shall be pending or
threatened before any court, tribunal or governmental authority seeking or
threatening to restrain or prohibit the consummation of the transactions
contemplated by this Agreement, or seeking to obtain damages in respect thereof,
or involving a claim that consummation thereof would result in the violation of
any law, decree or regulation of any governmental authority having appropriate
jurisdiction, and no
23
order, decree or ruling of any governmental authority or court shall have been
entered challenging the legality, validity or propriety of, or otherwise
relating to, this Agreement or the transactions contemplated hereby, or
prohibiting, restraining or otherwise preventing the consummation of the
transactions contemplated hereby.
7.6 No Material Adverse Change or Undisclosed Liability. There shall have
been no material adverse change or development in the business, prospects,
properties, earnings, results of operations or financial condition of the
Corporation, or any of its assets.
7.7 No Adverse Laws. There shall not have been enacted, adopted or
promulgated any statute, rule, regulation or order which materially adversely
affects the business or assets of the Corporation.
7.8 Affiliate Transactions. All amounts owing to the Corporation from the
Sellers or any Affiliate thereof shall have been paid in full and any
indebtedness of the Corporation to the Sellers or their Affiliates shall have
been canceled by the holder(s) thereof.
7.9 Escrow Agreement. The Sellers and the escrow agent thereunder shall
have duly executed and delivered to the Buyer the Escrow Agreement.
7.10 Execution of Dealership Lease. The Sellers shall have duly delivered
to the Corporation and the Buyer the Dealership Lease, duly executed by the
lessor thereunder, with a corresponding memorandum of lease in a form suitable
for recording.
7.11 Employment Agreement. Xxx Xxxxx, Jr. shall have duly executed and
delivered to the Buyer the Employment Agreement.
7.12 Non-Competition Agreement. Xxx Xxxxx, Jr. shall have duly executed and
delivered to the Buyer the Non-Competition Agreement.
7.13 Cancellation of Stock Options. All outstanding options, warrants,
"phantom" stock options and other plans, agreements or arrangements of the
Corporation with respect to the purchase, or the issuance of, any capital stock
or other securities of the Corporation shall have been canceled and terminated
prior to the Closing at no expense to the Buyer, and the Buyer shall have
received reasonably satisfactory evidence thereof.
7.14 Return of Letter of Credit. The Sellers' Agent shall have returned to
the Buyer the executed original of the Letter of Credit, undrawn upon by the
Sellers.
7.15 Xxxx-Xxxxx-Xxxxxx Waiting Period. All applicable waiting periods under
the HSR Act shall have expired without any indication by the Antitrust Division
or the Federal Trade Commission 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.
24
ARTICLE 8
Conditions to Obligations of the Sellers at the Closing
The obligations of the Sellers to perform this Agreement at the Closing are
subject to the satisfaction at or prior to the Closing of the following
conditions, unless waived in writing by the Sellers:
8.1 Representations and Warranties. The representations and warranties made
by the Buyer in this Agreement shall be true and correct in all material
respects at and as of the date of this Agreement and at and as of the Closing as
though made at and as of the Closing.
8.2 Performance of Obligations of the Buyer. The Buyer shall have performed
all obligations required to be performed by it under this Agreement, and
complied with all covenants for which compliance by it is required under this
Agreement, prior to or at the Closing.
8.3 Closing Documentation. The Sellers shall have received the following
documents, agreements and instruments from the Buyer:
(a) a certificate signed by a duly authorized signatory of the Buyer and
dated as of the Closing Date certifying as to the satisfaction of the conditions
set forth in Sections 8.1 and 8.2 hereof;
(b) payment of the Purchase Price pursuant to Section 1.2 hereof;
(c) an opinion of Parker, Poe, Xxxxx & Xxxxxxxxx L.L.P., counsel for the
Buyer, dated as of the Closing Date and addressed to the Sellers, in the form of
Exhibit H annexed hereto; and
(d) such resolutions of the Buyer, as sole shareholder of the Corporation,
and the directors of the Corporation electing directors and appointing officers,
respectively, of the Corporation, effective upon the Closing;
(e) 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;
(f) a copy of the Buyer's Certificate of Incorporation, including all
amendments thereto, certified by the Secretary of State of the State of
Delaware;
(g) 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
(h) such other instruments and documents as the Sellers shall reasonably
request not inconsistent with the provisions hereof.
25
8.4 Approval of Legal Matters. The form of all certificates, instruments
and documents to be executed 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 their counsel,
none of whose approval shall be unreasonably withheld or delayed.
8.5 No Litigation. No action, suit or other proceeding shall be pending or
threatened before any court, tribunal or governmental authority seeking or
threatening to restrain or prohibit the consummation of the transactions
contemplated by this Agreement, or seeking to obtain substantial damages in
respect thereof, or involving a claim that consummation thereof would result in
the violation of any law, decree or regulation of any governmental authority
having appropriate jurisdiction, and no order, decree or ruling of any
governmental authority or court shall have been entered challenging the
legality, validity or propriety of, or otherwise relating to, this Agreement or
the transactions contemplated hereby, or prohibiting, restraining or otherwise
preventing the consummation of the transactions contemplated hereby.
8.6 Dealership Lease; Guaranty. The Corporation shall have duly executed
and delivered to the Sellers' Agent the Dealership Lease, and the Sellers' Agent
shall have received the Guaranty, duly executed by the Buyer and Sonic Financial
Corporation.
8.7 Escrow Agreement. The Buyer and the escrow agent thereunder shall have
duly executed and delivered the Escrow Agreement.
8.8 Employment Agreement. The Buyer shall have caused the Corporation to
duly execute and deliver the Employment Agreement to Xxx Xxxxx, Jr.
8.9 Xxxx-Xxxxx-Xxxxxx Waiting Period. All applicable waiting periods under
the HSR Act shall have expired without any indication of the Antitrust Division
or the Federal Trade Commission 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 9
Survival of Representations and Warranties;
Indemnification, Etc.
9.1 Survival. All statements contained in any Schedule or certificate
delivered hereunder or in connection herewith by or on behalf of any of the
parties pursuant to this Agreement shall be deemed representations and
warranties by the respective parties hereunder unless otherwise expressly
provided herein. The representations and warranties of the Sellers contained in
this Agreement, including those contained in any Schedule or certificate
delivered hereunder or in connection herewith, shall survive the Closing
_________ * __________ with the exception of (i) the representations and
warranties of the Sellers contained in Section 3.21, which shall survive the
Closing __________ * __________ , and (ii) the representations and
* Confidential portions omitted and filed separately with the Commission.
26
warranties of the Sellers contained in Sections 3.11, 3.19 and 3.36, which shall
survive the Closing ___________ * ____________ . As to each representation and
warranty of the parties hereto, the date to which such representation and
warranty shall survive is hereinafter referred to as the "Survival Date".
9.2 Agreement to Indemnify by Sellers. Subject to the terms and conditions
of Sections 9.4 and 9.5 hereof, the Sellers hereby, severally with respect to
the breach, inaccuracy or untruth of any of the matters set forth in Sections
3.1 through 3.6 hereof, and jointly and severally with respect to all other
matters set forth in this Agreement, agree to indemnify and save the Buyer, the
Corporation and their respective shareholders, officers, directors, employees,
successors and assigns (each, a "Buyer Indemnitee") harmless from and against,
for and in respect of, any and all damages, losses, obligations, liabilities,
demands, judgments, injuries, penalties, claims, actions or causes of action,
encumbrances, costs, and expenses (including, without limitation, reasonable
attorneys' fees and expert witness fees), suffered, sustained, incurred or
required to be paid by any Buyer Indemnitee (collectively, "Buyer's Damages")
arising out of, based upon, in connection with, or as a result of:
(a) the untruth, inaccuracy or breach of any representation and warranty of
the Sellers contained in or made pursuant to this Agreement, including in any
Schedule or certificate delivered hereunder or in connection herewith, excluding
any breach of representation and warranty contained in Section 3.19; provided,
however, that with respect to the foregoing indemnification obligation of the
Sellers contained in this paragraph (a), the Sellers shall not have any
indemnification obligation until (and only to the extent that) Buyer's Damages
in respect of all claims for indemnity pursuant to this paragraph (a) and
paragraph (c) below shall exceed a cumulative aggregate total of __________ *
__________ ;
(b) the untruth, inaccuracy or breach of any representation and warranty of
the Sellers contained in or made pursuant to Section 3.19, including in any
Schedule or certificate delivered hereunder in connection therewith;
(c) the breach or nonfulfillment of any covenant or agreement of any Seller
contained in this Agreement or in any other agreement, document or instrument
delivered hereunder or pursuant hereto;
(d) any loss of life, injury to persons or property, or damage to natural
resources caused by the actual, alleged, or threatened release, storage,
transportation, treatment or generation, of Hazardous Materials generated,
stored, used, disposed of, treated, handled or shipped by the Corporation on or
before the date of the Closing;
(e) any cleanup required by any governmental authority or as part of the
settlement or other disposition of a third party claim (including, without
limitation, claims by surrounding landowners and claims by potentially
responsible parties) of Hazardous Materials released, disposed of or discharged:
(i) on, beneath or adjacent to the Real Property prior to or on the date of the
Closing; or (ii) at any other location if such substances were generated, used,
stored, treated, transported or released by the Corporation prior to or on the
date of the Closing; or
* Confidential portions omitted and filed separately with the Commission.
27
(f) any and all costs of installing pollution control equipment or other
equipment required by any governmental authority or as part of the settlement or
other disposition of a third party claim (including, without limitation, claims
by surrounding landowners and claims by potentially responsible parties) to
bring any of the Real Property into compliance with any Environmental Law if
such equipment is installed because any of the Real Property was not in
compliance with any Environmental Laws as of the date of the Closing.
With respect to the Sellers' obligations to pay Buyer's Damages pursuant to
Section 9.2 of this Agreement: (1) the Buyer, on behalf of itself and any other
Buyer Indemnitee, shall be entitled (but shall not be obligated) to make demand
for payment under the Escrow Agreement; and (2) the aggregate amount required to
be paid by all Sellers shall not exceed * .
9.3 Agreement to Indemnify by Buyer. Subject to the terms and conditions of
Sections 9.4 and 9.5 hereof, the Buyer hereby agrees to indemnify and save the
Sellers and their successors and assigns (each, a "Seller Indemnitee") harmless
from or against, for and in respect of, any and all damages, losses,
obligations, liabilities, demands, judgments, injuries, penalties, claims,
actions or causes of action, encumbrances, costs, and expenses (including,
without limitation, reasonable attorneys' fees and expert witness fees)
suffered, sustained, incurred or required to be paid by any Seller Indemnitee
arising out of, based upon or in connection with or as a result of:
(a) the untruth, inaccuracy or breach of any representation and warranty of
the Buyer contained in or made pursuant to this Agreement, including in any
Schedule or certificate delivered hereunder or in connection herewith;
(b) the breach or nonfulfillment of any covenant or agreement of the Buyer
contained in this Agreement or in any other agreement, document or instrument
delivered hereunder or pursuant hereto; or
(c) the assertion against any Seller Indemnitee of any claims, liabilities
or obligations arising out of the operation of the business of the Corporation
after the Closing Date, except to the extent that such claims, liabilities or
obligations arise out of any matter as to which the Sellers are obligated to
indemnify the Buyer under Section 9.2 above.
9.4 Claims for Indemnification. No claim for indemnification with respect
to a breach of a representation and warranty shall be made under this Agreement
after the applicable Survival Date unless prior to such Survival Date the Buyer
Indemnitee or the Seller Indemnitee, as the case may be, shall have given the
Sellers or the Buyer, as the case may be, written notice of such claim for
indemnification based upon actual loss sustained, or potential loss anticipated,
as a result of the existence of any claim, demand, suit, or cause of action
against such Buyer Indemnitee or Seller Indemnitee, as the case may be.
9.5 Procedures Regarding Third Party Claims. The procedures to be followed
by the Buyer and the Sellers with respect to indemnification hereunder regarding
claims by third persons which could give rise to an indemnification obligation
hereunder shall be as follows:
(a) Promptly after receipt by any Buyer Indemnitee or Seller Indemnitee, as
the case may be, of notice of the commencement of any action or proceeding
(including, without
*Confidential portions omitted and filed separately with the Commission.
28
limitation, any notice relating to a tax audit) or the assertion of any claim by
a third person which the person receiving such notice has reason to believe may
result in a claim by it for indemnity pursuant to this Agreement, such person
(the "Indemnified Party") shall give a written notice of such action, proceeding
or claim to the party against whom indemnification pursuant hereto is sought
(the "Indemnifying Party"), setting forth in reasonable detail the nature of
such action, proceeding or claim, including copies of any documents and written
correspondence from such third person to such Indemnified Party.
(b) The Indemnifying Party shall be entitled, at its own expense, to
participate in the defense of such action, proceeding or claim, and, if (i) the
action, proceeding or claim involved seeks (and continues to seek) solely
monetary damages, (ii) the Indemnifying Party confirms, in writing, its
obligation hereunder to indemnify and hold harmless the Indemnified Party with
respect to such damages in their entirety pursuant to Sections 9.2 or 9.3
hereof, as the case may be, and (iii) the Indemnifying Party shall have made
provision which, in the reasonable judgment of the Indemnified Party, is
adequate to satisfy any adverse judgment as a result of its indemnification
obligation with respect to such action, proceeding or claim, then the
Indemnifying Party shall be entitled to assume and control such defense with
counsel chosen by the Indemnifying Party and approved by the Indemnified Party,
which approval shall not be unreasonably withheld or delayed. The Indemnified
Party shall be entitled to participate therein after such assumption, the costs
of such participation following such assumption to be at its own expense. Upon
assuming such defense, the Indemnifying Party shall have full rights to enter
into any monetary compromise or settlement which is dispositive of the matters
involved; provided, that such settlement is paid in full by the Indemnifying
Party and will not have any direct or indirect continuing material adverse
effect upon the Indemnified Party.
(c) With respect to any action, proceeding or claim as to which (i) the
Indemnifying Party does not have the right to assume the defense or (ii) the
Indemnifying Party shall not have exercised its right to assume the defense, the
Indemnified Party shall assume and control the defense of and contest such
action, proceeding or claim with counsel chosen by it and approved by the
Indemnifying Party, which approval shall not be unreasonably withheld. The
Indemnifying Party shall be entitled to participate in the defense of such
action, proceeding or claim, the cost of such participation to be at its own
expense. The Indemnifying Party shall be obligated to pay the reasonable
attorneys' fees and expenses of the Indemnified Party to the extent that such
fees and expenses relate to claims as to which indemnification is due under
Sections 9.2 or 9.3 hereof, as the case may be. The Indemnified Party shall have
full rights to dispose of such action, proceeding or claim and enter into any
monetary compromise or settlement; provided, however, in the event that the
Indemnified Party shall settle or compromise any action, proceeding or claim for
which indemnification is due under Sections 9.2 or 9.3 hereof, as the case may
be, it shall act reasonably and in good faith in doing so.
(d) Both the Indemnifying Party and the Indemnified Party shall cooperate
fully with one another in connection with the defense, compromise or settlement
of any such action, proceeding or claim, including, without limitation, by
making available to the other all pertinent information and witnesses within its
control.
9.6 Effectiveness. The provisions of this Article 9 shall be effective upon
consummation of the Closing, and prior to the Closing, shall have no force and
effect.
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ARTICLE 10
Termination
10.1 Termination. Notwithstanding any other provision herein contained to
the contrary, this Agreement may be terminated at any time prior to the Closing
Date:
(a) by the written mutual consent of the Buyer and the Sellers;
(b) At any time after the Closing Date Deadline, by written notice by the
Buyer or the Sellers to the other party(ies) hereto if the Closing shall not
have been completed on or before the Closing Date Deadline; provided, however,
no party(ies) may terminate this Agreement pursuant to this Section 10.1(b) if
such party(ies) is in breach of any material representation, warranty or
covenant of such party(ies) contained in this Agreement;
(c) 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
five (5) Business Days of the Buyer's receipt of such second request or of
notice of such challenge;
(d) By the Buyer, in the event that approval by the applicable automobile
manufacturer and/or floor plan financing provider of the transactions
contemplated by this Agreement is not received at least 10 Business Days prior
to the Closing Date Deadline; or
(e) By the Buyer within 30 days of the date hereof if, and only if, the
Buyer is not satisfied, in its discretion, with the results of the Buyer's due
diligence investigation contemplated by Section 5.1(a) hereof.
10.2 Procedure and Effect of Termination. In the event of termination
pursuant to Section 10.1, this Agreement shall be of no further force or effect;
provided, however, that, except as expressly set forth below, any termination
pursuant to Section 10.1 shall not (i) relieve the Buyer or the Sellers of any
liability under Sections 10.3 or 10.4 below, or (ii) relieve 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.
10.3 Payment of Buyer's Termination Fee; Sellers' Exclusive Remedy. If this
Agreement is terminated by the Sellers pursuant to Section 10.1(b) 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 obligations under this Agreement, then
the Sellers' Agent shall be entitled, pursuant to the terms of the Letter of
Credit, to make a draw on the Letter of Credit in the full face amount thereof
of $2,000,000 in immediately available funds, as liquidated damages for the loss
of the transaction (the "Buyer's Termination Fee").
30
Notwithstanding any other provision of this Agreement, termination of this
Agreement and collection of the Buyer's Termination Fee shall be the Sellers'
sole and exclusive remedy; the Sellers shall not be entitled to specific
performance of any provision of this Agreement.
10.4 Payment of Sellers' Termination Fee; Buyer's Election of Remedies. If
this Agreement is terminated by the Buyer pursuant to Section 10.1(b) above and
the failure to complete the Closing on or before the Closing Date Deadline shall
have been due to the Sellers' breach of their material representations and
warranties or their material covenants or obligations under this Agreement, then
the Sellers, jointly and severally, shall, upon demand of the Buyer, promptly
pay to the Buyer in immediately available funds, as liquidated damages for the
loss of the transaction, a termination fee of $250,000 (the "Sellers'
Termination Fee"). Termination of this Agreement and collection of the Sellers'
Termination Fee shall be the Buyer's sole and exclusive remedy to collect
damages. Provided the Buyer shall have terminated this Agreement pursuant to
Section 10.1(b) above, the Buyer shall have no right to equitable relief other
than for specific performance to enforce payment of the Sellers' Termination
Fee. In the absence of termination of this Agreement by the Buyer pursuant to
Section 10.1(b) above, the Buyer shall be free to pursue all equitable remedies
against the Sellers including, without limitation, specific performance to
consummate the transactions contemplated by this Agreement.
ARTICLE 11
Certain Taxes and Expenses
11.1 Certain Taxes and Expenses.
(a) All sales, use, transfer, intangible, excise, documentary stamp,
recording, gross income, gross receipts and other similar taxes or fees which
may be due or payable in connection with the consummation of the transactions
contemplated hereby shall be paid by the Sellers.
(b) Except as otherwise herein provided, the Sellers and the Buyer shall be
responsible for the payment of their respective fees, costs and expenses
incurred in connection with the negotiation and consummation of the transactions
contemplated hereby and shall not be liable to the other party or parties for
the payment of any such fees, costs and expenses.
ARTICLE 12
Certain Post-Closing Covenants
12.1 Change of Corporation's Name. Promptly upon the effectiveness of the
Closing, the Buyer shall effect a change in the Corporation's corporate name to
a name which does not contain the name "Xxx Xxxxx" or any variation thereof. The
Buyer agrees not to use the name "Xxx Xxxxx" or any such variation except for
the purpose of identifying the Corporation as having been formerly named Xxx
Xxxxx Ford, Inc.
31
12.2 Stay-on Bonuses to Employees of Corporation. Within twenty (20)
Business Days following the Closing, the Buyer shall pay, or cause the
Corporation to pay, a total of $500,000 of "stay-on bonuses" to the employees of
the Corporation listed on Schedule 12.2 hereto in the amounts listed beside each
employee's name on such Schedule; provided, however, that each employee listed
on Schedule 12.2 shall receive such "stay-on bonus" designated for such employee
only if such employee continues to be employed by the Corporation as of the
Closing Date.
ARTICLE 13
Miscellaneous
13.1 Certain Tax Returns. The Sellers shall cooperate with and provide
assistance to the Buyer and the Corporation in connection with the preparation
and filing of all federal, state, local and foreign income tax returns which
relate to the Corporation and to periods prior to Closing but which are not
required to be filed until after the Closing.
13.2 Parties in Interest; No Third-Party Beneficiaries. Subject to Section
13.4 hereof, this Agreement will 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 (including, without limitation,
the provisions of Section 12.2 above), is intended or shall be construed to
confer upon or give to any employee of the Corporation or the Buyer, or any
other person, firm, corporation or legal entity, other than the parties hereto
and their successors and assigns, any rights, remedies or other benefits under
or by reason of this Agreement.
13.3 Entire Agreement; Amendments. This Agreement (including all Exhibits
and Schedules hereto) and the other writings referred to herein or delivered
pursuant hereto contain the entire understanding of the parties hereto with
respect to its subject matter. There are no representations, promises,
warranties, covenants or undertakings other than as expressly set forth herein
or therein. This Agreement supersedes all prior agreements and understandings
between the parties hereto with respect to its subject matter. This Agreement
may be amended or modified only by a written instrument duly executed by the
parties hereto.
13.4 Assignment. This Agreement shall not be assignable by any party hereto
without the prior written consent of the other parties; provided, however, the
Buyer may assign its rights and obligations hereunder to any Affiliate of the
Buyer presently existing or hereafter formed and to any person or entity that
shall acquire all or substantially all of the assets of the Buyer or the
Corporation; provided, further, that no such assignment shall release the Buyer
from its obligations hereunder without the consent of the Sellers.
13.5 Remedies. Except as expressly provided in this Agreement to the
contrary, each of the parties to this Agreement is entitled to all remedies in
the event of breach provided at law or in equity, specifically including, but
not limited to, specific performance.
13.6 Headings. The Article and Section headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
32
13.7 Notices. All notices, claims, certificates, requests, demands and
other communications hereunder shall be given in writing and shall be delivered
personally or sent by telecopier or by a nationally recognized overnight
courier, postage prepaid, and shall be deemed to have been duly given when so
delivered personally or sent by telecopier, with receipt confirmed, 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 Auto World, Inc.
0000 X. Xxxxxxxxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Telecopier No.: (000) 000-0000
Attention: Xxxxxxxx X. Xxxxxx, Chief Financial Officer
With a copy to:
Parker, Poe, Xxxxx & Xxxxxxxxx L.L.P.
0000 Xxxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Telecopier No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx, Xx.
If to the Sellers, to:
Xxx Xxxxx, Jr.
0000 Xxxxxxx Xxxx, Xxxx
Xxxxxx Xxxxxx, Xxxxxxx 00000
O.K. Marks, Sr.
000 Xxxxx Xxxxx
Xxxx Xxxxxx, Xxxxxxx 00000
Xxxxxxx X. Xxxxx
0000 Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
With a copy to:
Johnson, Blakely, Pope, Bokor, Xxxxxx & Xxxxx, P.A.
000 Xxxxxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxxxxx, Xxxxxxx 00000
Telecopier No.: (000) 000-0000
33
Attention: X.X. Xxxxxxxxx III
13.8 Counterparts. This Agreement may be executed in any number of
counterparts, and each such counterpart hereof shall be deemed to be an original
instrument, and all such counterparts together shall constitute but one
agreement.
13.9 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida, without giving effect to its
rules governing conflict of laws.
13.10 Waivers. Any party to this Agreement may, by written notice to the
other parties hereto, waive any provision of this Agreement from which such
party is entitled to receive a benefit. The waiver by any party hereto of a
breach by another party of any provision of this Agreement shall not operate or
be construed as a waiver of any subsequent breach by such other party of such
provision or any other provision of this Agreement.
13.11 Severability. In the event that any provision, or part thereof, in
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.
13.12 Knowledge. Whenever any representation or warranty of any Seller
contained herein (other than the representations and warranties set forth in
Sections 3.1 through 3.6 hereof) or in any other document executed and delivered
in connection herewith is based upon the knowledge of such Seller, (i) such
knowledge shall be deemed to include (A) the best actual knowledge, information
and belief of any of the Sellers, and (B) any information which any Seller would
reasonably be expected to be aware of in the prudent discharge of his duties in
the ordinary course of business (including consultation with legal counsel) on
behalf of the Corporation, and (ii) the knowledge of any Seller shall be deemed
to be the knowledge of all of the Sellers.
13.13 Jurisdiction; Arbitration.
(a) Subject to the other provisions of this Section 13.14, any judicial
proceeding brought with respect to this Agreement must be brought in any court
of competent jurisdiction in the State of North Carolina, and, by execution and
delivery of this Agreement, each party hereto (i) accepts, generally and
unconditionally, the jurisdiction of such courts and any related appellate
court, and irrevocably agrees to be bound by any judgment rendered thereby in
connection with this Agreement, and (ii) irrevocably waives any objection it may
now or hereafter have as to the venue of any such suit, action or proceeding
brought in such court or that such court is an inconvenient forum.
(b) Any dispute, claim or controversy arising out of or
relating to this Agreement (except for accounting matters provided for in
Section 1.2(d) hereto), or the interpretation or breach hereof (including,
without limitation, any of the foregoing based upon a claim to any termination
fee hereunder), 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
34
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 party hereto 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 Charlotte, North Carolina. 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).
(c) Nothing contained in this Section 13.13 shall (1) prevent the Buyer
from bringing any judicial proceeding against the Sellers in the State of
Florida, or (2) prevent any party hereto from seeking any equitable relief to
which it would otherwise be entitled from a court of competent jurisdiction.
Nothing contained in this Section 13.13 shall prevent the Buyer from enforcing
the Non-Competition Agreement in any court of competent jurisdiction.
13.14 Power of Attorney of Xxx Xxxxx, Jr. By execution hereof, each of the
Sellers irrevocably constitutes and appoints Xxx Xxxxx, Jr. with full power of
substitution, their true and lawful attorney-in-fact, in their name, place and
xxxxx and for such Seller's use and benefit: (i) to sign, execute, certify,
acknowledge or file any other certificates, amendments, instruments or documents
which may be required from the Sellers in connection with this transaction; (ii)
to resolve setoffs against the escrowed amount; (iii) to make payment of, or
establish adequate reserves for, the expenses of the Sellers in connection with
this Agreement and other post-closing items related thereto; (iv) to represent
and bind the Sellers under Article X hereof; (v) to receive all notices
hereunder to the Sellers; and (vi) to accept service of process on behalf of
each Seller. The foregoing grant of authority: (i) is a special power of
attorney coupled with an interest and is irrevocable; (ii) may be exercised by
Xxx Xxxxx, Jr. by listing the name of the Seller along with the names of all of
the other persons for whom he is so acting by a single signature as
attorney-in-fact; and (iii) shall survive the delivery of an assignment by a
Seller of any of such Seller's rights under this Agreement.
35
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered on the date first above written.
SONIC AUTO WORLD, INC.
By: /s/ Xxxxx Xxxxx Xxxxx
-----------------------------------
Xxxxx Xxxxx Xxxxx, Chief Executive
Officer
/s/ Xxx Xxxxx, Jr.
-----------------------------------
Xxx Xxxxx, Jr.
/s/ O.K. Marks, Sr.
-----------------------------------
O.K. Marks, Sr.
/s/ Xxxxxxx X. Xxxxx
-----------------------------------
Xxxxxxx X. Xxxxx
36
EXHIBITS
Exhibit A - List of Sellers
Exhibit B - Form of Escrow Agreement
Exhibit C - Form of Letter of Credit
Exhibit D-1 - Form of Dealership Lease
Exhibit D-2 - Form of Guaranty
Exhibit E - Form of Employment Agreement
Exhibit F - Form of Non-Competition Agreement
Exhibit G - Opinion of Sellers' Counsel
Exhibit H - Opinion of Buyer's Counsel
37
SCHEDULES
Schedule 3.2(b) Consents and Approvals for the Sellers
Schedule 3.5 Interest in other Entities
Schedule 3.7 Qualification
Schedule 3.8 Capitalization
Schedule 3.10 No Violation; Conflicts
Schedule 3.11 Encumbrances
Schedule 3.13 Financial Statements
Schedule 3.16(b) Leased Premises
Schedule 3.16(d) Owned Equipment
Schedule 3.16(e) Leased Equipment
Schedule 3.17 Intellectual Property
Schedule 3.18 Certain Liabilities
Schedule 3.19 No Undisclosed Liabilities
Schedule 3.20 Absence of Changes
Schedule 3.21 Tax Matters
Schedule 3.22 Compliance with Laws
Schedule 3.23 Litigation Regarding Corporation
Schedule 3.24 Permits, Etc.
Schedule 3.26 Compensation
Schedule 3.27 Employee Benefits
Schedule 3.29(a) Material Agreements
Schedule 3.29(b) Required Consents for Transfers of Material Agreements
Schedule 3.31 Bank Accounts, Credit Cards and Safe Deposit Boxes
Schedule 3.32(a) Insurance Policies
Schedule 3.32(b) Property Damage and Personal Injury Claims
Schedule 3.33 Warranties
Schedule 3.34 Directors and Officers
Schedule 3.36 Environmental Matters
Schedule 4.2(b) Consents and Approvals for the Buyer
Schedule 12.2 Stay-on Bonuses to Employees
38
