Exhibit 4.11
August 3, 1999
Sonic Automotive, Inc.
0000 Xxxx Xxxxxxxxxxxx Xxxx.
Xxxxxxxxx, XX 00000
Attn: Xxxxxxxx X. Xxxxxx
RE: SONIC AUTOMOTIVE / MANHATTAN AUTO GROUP
Dear Xx. Xxxxxx:
The parties hereto hereby agree as follows:
1. Reference is hereby made to the Agreement and Plan of Merger dated as
of April 6, 1999, as amended (the "MERGER AGREEMENT"), among Sonic Automotive,
Inc. ("SONIC"), Manhattan Auto, Inc., and Xxxxxx Xxxxxx, Xxxxxx Xxxxx, Xxxx
Xxxxx and Xxxxxxx Xxxxx (collectively, the "SELLERS"). Each capitalized term
used herein and not defined herein shall have the meaning ascribed to such term
in the Merger Agreement.
2. ORIGINAL ISSUANCE SHARES.
(a) (i) As used herein, the term "ORIGINAL ISSUANCE SHARES" shall
mean all shares of Sonic's Class A Common Stock, par value $.01 per share, which
are originally issued on the date hereof to a Seller, individually, except for
those shares for which registration rights are expressly set forth in the Merger
Agreement. As used herein, the term "CLOSING DATE MARKET PRICE" shall mean the
Market Price as of the Closing Date. As used herein, the term "RESTRICTIVE
PERIOD MARKET PRICE" shall mean the Market Price, as determined as of the later
of (A) the first trading day after the date of the expiration of the Restrictive
Period and (B) the first trading day after the date on which Sellers are first
able to utilize a prospectus supplement to the S-3 Registration Statement (as
defined in Section 2(b)(i) hereof) for resales.
(ii) In the event that the Restrictive Period Market Price is
less than the Closing Date Market Price, then Sonic shall pay to the Sellers, in
their respective ownership percentages of Original Issuance Shares, no later
than the third Business Day after the date the Restrictive Period Market Price
may be determined, an amount equal to the number of Original Issuance Shares
then held by them multiplied by the difference between the Restrictive Period
Market Price and the Closing Date Market Price. Such payment shall be made in
immediately available funds by bank or cashier's check or wire transfer.
Notwithstanding anything contained in this Section 2(a)(ii) to the contrary, in
the event that Original Issuance Shares are redeemed pursuant to Section
2(a)(iv) hereof, no payment shall be made under this Section 2(a)(ii).
(iii) In the event that the Restrictive Period Market Price
exceeds the Closing Date Market Price, then the Sellers shall return to Sonic,
no later than the third Business Day after the date the Restrictive Period
Market Price may be determined, pro rata according to their respective ownership
amounts of the Original Issuance Shares, an aggregate amount of whole Original
Issuance Shares with an aggregate Restrictive Period Market Price equal to the
number of Original Issuance Shares then held by the Sellers, multiplied by the
difference between the Closing Date Market Price and the Restrictive Period
Market Price. Any fractional share amount shall be paid by bank or cashier"s
check or wire transfer. Notwithstanding anything contained in this Section
2(a)(iii) to the contrary, in the event that the Original Issuance Shares are
redeemed pursuant to Section 2(a)(iv) hereof, no payment shall be made under
this Section 2(a)(iii).
(iv) Notwithstanding any other provision of this letter
agreement, if on or prior to the ninetieth (90th) day after the Restrictive
Period Expiration Date all steps on the part of Sonic necessary to register the
resale of all Original Issuance Shares by Sellers shall not have been taken
(including, without limitation the filing of the S-3 Registration Statement
together with the S-3 Resale Prospectus (as hereinafter defined)), Sonic shall,
as and to the extent permitted by the Delaware General Corporation Law,
immediately redeem all of the Original Issuance Shares then held by the Sellers
and deliver to the Sellers therefor, in immediately available funds by bank or
cashier's check or wire transfer, an amount equal to the aggregate Market Price,
as of the Closing Date, of all such Original Issuance Shares, together with any
accrued and unpaid interest thereon required under Section 2(b)(i) hereof. Any
such payment shall be made to the Sellers in their respective ownership
percentages of Original Issuance Shares. In such an event, Sellers shall deliver
to Sonic certificates representing such Original Issuance Shares, duly endorsed
for transfer to Sonic or accompanied by appropriate stock powers and vesting
unto Sonic good and marketable title to all of such shares, free and clear of
any and all Encumbrances.
(b) (i) S-3 REGISTRATION STATEMENT. Sonic shall use its best
reasonable efforts to register the resale of the Original Issuance Shares
pursuant to a registration statement on Form S-3 (the "S-3 REGISTRATION
STATEMENT") effective as of the first Business Day after the expiration of the
Restrictive Period (the "RESTRICTIVE PERIOD EXPIRATION Date") or as soon
thereafter as reasonably practicable. Promptly after the S-3 Registration
Statement becomes effective, Sonic shall notify the Sellers thereof. In the
event that the S-3 Registration Statement shall not be effective as of the
Restrictive Period Expiration Date, Sonic shall be obligated to pay to the
Sellers, during the period commencing upon the Restrictive Period Expiration
Date and ending upon the date the S-3 Registration Statement becomes effective
and an S-3 Resale Prospectus (as hereinafter defined) is current and effective,
interest in the amount of the Interest Rate upon the aggregate Market Price, as
of the Closing Date, of the Original Issuance Shares then held by the Sellers.
Any such interest payments shall be made to the Sellers in their respective
ownership percentages of Original Issuance Shares. Any such interest payments
shall be made monthly in arrears and shall be paid, with respect to any calendar
month, no later than the fifth Business Day of the following calendar month.
(ii) LISTING. Sonic shall cause the Original Issuance Shares
to be listed for trading on the New York Stock Exchange prior to the termination
of the Restrictive Period.
(iii) CURRENCY OF THE S-3 REGISTRATION STATEMENT. Sonic shall
maintain the effectiveness of the S-3 Registration Statement for the resale of
the Original Issuance Shares and maintain a current resale prospectus to permit
the resale of the Original Issuance Shares until all of the Original Issuance
Shares that remain unsold may be sold by the Sellers without restriction
pursuant to clause (d) of Rule 145 or clause (k) of Rule 144, as applicable, or
any successor regulation thereto. So long as the S-3 Registration Statement is
effective, the Sellers agree that they shall effect each resale of Original
Issuance Shares only as permitted by Rule 144 or pursuant to a current
prospectus or supplements thereto that is a part of the S-3 Registration
Statement (the "S-3 RESALE PROSPECTUS") with respect to which Sonic, for each
such resale, has granted its prior consent to the use thereof.
(c) ADDITIONAL SELLERS' OBLIGATIONS. The Sellers agree and
acknowledge, with regard to the offer or resale by any of them of any Original
Issuance Shares, that:
(i) any offering of any of the Original Issuance Shares under
the S-3 Resale Prospectus by a Seller will be effected in an orderly manner
through one or more of the Designated Brokers;
(ii) if requested by Sonic, in connection with a resale of
Original Issuance Shares under the S-3 Registration Statement, the Sellers will
enter into one or more custody agreements with one or more banks with respect to
such Original Issuance Shares so that all such Original Issuance Shares are held
in the custody of such bank or banks provided however that any Original Issuance
Shares not sold pursuant to the S-3 Registration Statement shall be released
from custody on request of the Sellers;
(iii) each Seller will make resales of Original Issuance
Shares only by one or more methods described in the S-3 Resale Prospectus
(including resales pursuant to Rule 145 or 144, as applicable), as appropriately
supplemented or amended when required;
(iv) since the Original Issuance Shares may be subject to
restrictions on resale under Rules 144 or 145, as applicable, the certificates
representing the Original Issuance Shares will be issued by Sonic to the Sellers
with such legends as Sonic may reasonably require until such Original Issuance
Shares are offered pursuant to the foregoing terms under the S-3 Resale
Prospectus or pursuant to Rules 144 or 145, as applicable, at which time such
certificates shall be tendered to Sonic by the Sellers and a new certificate or
certificates without legends shall be issued by Sonic to the Designated Broker
in order to settle any resales by the Sellers;
(v) the Sellers shall provide Sonic, in writing, with all
information concerning the Sellers and their resale of the Original Issuance
Shares as may be reasonably requested by Sonic in order to comply with the
Securities Act, and the Sellers shall indemnify Sonic for any liabilities
arising under the Exchange Act, or any state securities or blue sky laws
resulting from any material misstatements in, or omissions of material
information from, such
information provided by the Sellers to Sonic pursuant to this clause (v); and
(vi) the Sellers shall pay the commissions or fees of the
Designated Brokers in connection with the resale of the Original Issuance
Shares, and Sonic shall pay all fees related to the registration, listing and
maintaining the registered status of the Original Issuance Shares and the fees
and expenses of the custodial bank or banks holding such Original Issuance
Shares, if applicable.
(d) ADDITIONAL SONIC OBLIGATIONS. Sonic agrees that:
(i) Sonic shall pay all expenses, including legal and
accounting fees, in connection with the preparation, filing and maintenance of,
as applicable, the S-3 Registration Statement (including any amendments
thereto), the S-3 Resale Prospectus (including any supplements thereto), the
issuance of certificates representing the Original Issuance Shares and other
expenses incurred by Sonic in meeting its obligations set forth herein; and
(ii) Sonic shall indemnify the Sellers for any liabilities
arising under the Securities Act, the Exchange Act, or any state securities or
blue sky laws resulting from any material misstatements in, or omissions of
material information from, the S-3 Resale Prospectus and the S-3 Registration
Statement, including the information incorporated by reference therein, except
for the liabilities referred to in Section 2(c)(v) hereof.
(e) RESTRICTIVE PERIOD. The Sellers shall not offer, sell or
otherwise dispose of, or contract to sell or dispose of, any of the Original
Issuance Shares during the Restrictive Period; provided, however, that each
Seller may transfer his or her Original Issuance Shares during the Restrictive
Period: (i) to his or her spouse or issue or to a trust for the benefit of his
or her spouse or issue or (ii) in connection with his or her death; provided,
further, that in the event of any such transfer contemplated by clause (i) or
(ii) above, such Original Issuance Shares shall remain subject to the
restrictions on transfer in this Section 2(e).
[SIGNATURES APPEAR ON THE FOLLOWING PAGE]
Please indicate our mutual agreement by signing a copy of this letter in
the space provided below and returning it to the undersigned.
Very truly yours,
/s/ Xxxxxx Xxxxxx
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Xxxxxx Xxxxxx
/s/ Xxxxxx Xxxxx
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Xxxxxx Xxxxx
/s/ Xxxxxxx Xxxxx
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Xxxxxxx Xxxxx
/s/ Xxxx Xxxxx
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Xxxx Xxxxx
Accepted and Agreed as of the
date first set forth above:
SONIC AUTOMOTIVE, INC.
By: /s/ Xxxxxxxx X. Xxxxxx
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Its: Vice President-Finance and Chief Financial Officer
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