AMENDMENT NO. 2 AND SUPPLEMENT TO ASSET PURCHASE AGREEMENT
THIS AMENDMENT NO. 2 AND SUPPLEMENT TO ASSET PURCHASE AGREEMENT(this
"Amendment No 2"), dated as of July 8, 1998, is made and entered into by and
among SONIC AUTOMOTIVE, INC., a Delaware corporation ("Buyer"), XXXXXXXX JEEP
EAGLE, INC., an Ohio corporation; XXXXXXXX LINCOLN MERCURY, INC., an Ohio
corporation; WESTSIDE DODGE, INC., an Ohio corporation, TOYOTA WEST, INC., an
Ohio corporation; and XXXXXXXX HYUNDAI, INC., an Ohio corporation (collectively,
the "Sellers" and each, individually, a "Seller"); and XXX X. XXXXXXXX, XXX X.
XXXXXXXX, and XXX X. XXXXXXXX, AS TRUSTEE OF THE XXX X. XXXXXXXX, XX. SPECIAL
IRREVOCABLE TRUST (collectively, the Shareholders").
W I T N E S S E T H:
WHEREAS, Buyer, Sellers and Shareholders have entered into that certain
Asset Purchase Agreement dated as of February 4, 1998, as amended by an
Amendment No. 1 and Supplement thereto dated as of May 28, 1998 (as so amended
the "Purchase Agreement"); and
WHEREAS, capitalized terms not otherwise defined herein shall have the
meaning assigned to such term in the Purchase Agreement.
WHEREAS, Buyer, Seller and Shareholders desire to further amend and
supplement the Purchase Agreement as hereinafter provided.
NOW, THEREFORE, the parties agree as follows:
1. GENERAL. The parties acknowledge that the Buyer has not received
approval from Toyota Motor Distributors, Inc. to be an authorized Toyota dealer
to operate the Purchased Assets to be purchased from Toyota West, Inc. ("TWI")
as set forth in the Purchase Agreement (the "Toyota Approval"). Accordingly, the
parties agree that the Closing shall occur July 8, 1998 and that all of the
Purchased Assets, other than the Assets of TWI required to be transferred under
the Purchase Agreement (the "TWI Assets"), shall be transferred to Buyer at the
Closing. The parties also agree that the Assumed Liabilities related to Toyota
(the "TWI Liabilities") will not be assumed at the closing on this date and that
the Dealership Lease related to the location where TWI conducts its business
(the "TWI Lease") will not be entered into at the closing on this date. The
parties further agree that:
a. TWI shall hold and operate the TWI Assets and pay and
perform the TWI Liabilities, and otherwise operate the TWI business, with the
advice and assistance of the Buyer in accordance with terms of a Consulting
Agreement between Buyer, as the consultant, and TWI dated of even date herewith
(the "Consulting Agreement").
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b. During the period beginning with the Closing and ending on
the date which is sixty (60) days from the date of the Closing (the "Toyota
Approval Deadline"), $7,300,000 of the Purchase Price (the "Escrowed Funds")
shall be deposited by the Buyer in cash with The Fifth Third Bank of Columbus
(the "Escrow Bank") in Columbus, Ohio, and held in escrow subject to withdrawal
only by joint instruction in writing from the Sellers' Agent and the President
of the Buyer, except as otherwise specifically contemplated by this Amendment
No. 2. All earnings on the Escrowed Funds shall be paid to TWI on a monthly
basis.
c. If, at any time prior to the Toyota Approval Deadline,
Buyer shall receive the Toyota Approval on terms satisfactory to the Buyer in
its sole discretion, the parties shall promptly complete the closing under the
Purchase Agreement, insofar as it relates to the TWI Assets, the TWI
Liabilities, and the TWI Lease. In such event the Sellers' Agent and the
President of the Buyer shall instruct the Escrow Bank to pay all amounts held by
it to TWI, and Buyer shall assume the TWI Liabilities and the parties shall
execute the TWI Lease, whereupon the Consulting Agreement shall terminate.
d. If Buyer does not receive the Toyota Approval on terms
satisfactory to the Buyer in its sole discretion on or before the Toyota
Approval Deadline, the following shall occur:
(i) The Escrow Agent shall automatically pay from the
Escrowed Funds: (A) to TWI, the sum of $3,000,000, plus all interest on the
Escrowed Funds; and (B) to the Buyer, the sum of $4,300,000.
(ii) The Consulting Agreement shall terminate.
(iii) During the period ending one year after the
Toyota Approval Deadline, TWI shall continue to operate its Toyota dealership
business in the ordinary course and consistent with past practices and will not
sell or otherwise dispose of any of the TWI Assets or the stock of TWI without
the prior written consent of the Buyer. If requested by the Buyer, TWI shall use
reasonable efforts to sell the TWI Assets to a third party. If TWI shall receive
an offer and executed purchase documents from a third party buyer within such
time period, upon the sale of such TWI Assets, TWI shall pay the excess of the
net sales proceeds (gross sales proceeds less all closing costs, including
brokerage, legal, accounting, appraisal and other professional fees incurred in
connection with the sale of the TWI business) in excess of $4,300,000 to Buyer.
(iv) If Buyer shall receive the Toyota Approval after
the Toyota Approval Deadline, but before the end of the period ending one year
after the Toyota Approval Deadline, and provided TWI has received the payment
described in subsection 1 (d)(i) above, TWI shall, upon the request of the
Buyer, transfer the TWI Assets to Buyer for a purchase price of $7,300,000, less
a credit to the Buyer of $3,000,000, in satisfaction of Sellers' obligations to
Buyer under the Purchase Agreement. In such event the Buyer shall assume the TWI
Liabilities and the parties shall enter into the TWI Lease.
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(v) If Buyer has not received the Toyota
Approval on or before the date which is one year following the Toyota Approval
Deadline, and TWI shall not have sold the TWI Assets to the Buyer or a third
party as set forth above, TWI shall be free to operate the TWI Assets in any
manner it desires free of any restrictions from Buyer of the Purchase agreement.
2. AMENDMENTS TO PURCHASE AGREEMENT. Notwithstanding any provisions of
the Purchase Agreement, the Buyer, Sellers and Shareholders hereby agree as
follows:
a. The purchase price allocation set forth in Part I of
Schedule 1.3 (d) to the Purchase Agreement shall be modified as set forth in the
revised Part I of Schedule 1.3(d) attached hereto.
b. At the Closing, the Buyer shall pay the Closing Payment,
together with interest on the entire Purchase Price at the Interest Rate from
and including July 1, 1998 through the Closing Date (the "Interest Amount"), as
follows:
(i) $27,225,000, plus the Interest Amount, shall be
paid to the Sellers (other than TWI) in the manner contemplated in the Purchase
Agreement; and
(ii) $7,300,000 shall be delivered to the Escrow
Bank.
c. Notwithstanding anything contained herein, in the Purchase
Agreement or and agreement contemplated by the Purchase Agreement (the
Transaction Documents") to the contrary, the operation of the TWI Assets by TWI
shall not be deemed to be a violation by the Sellers or Shareholders of any of
the Transaction Documents, provided, such that Sellers and Shareholders shall
not act in bad faith .
3. PURCHASE AGREEMENT CONFIRMED. Except as set forth in this Amendment
No. 2, the Purchase Agreement is hereby confirmed and shall remain in full force
and effect.
4. MISCELLANEOUS.
a. This Amendment No. 2 shall be construed and enforced
according to the laws of the State of Ohio and shall inure to the benefit of,
and be binding upon, the parties, their respective successors and assigns.
b.This Amendment No. 2 may be modified only by a writing
signed by all of the parties hereto, and no waiver hereunder shall be effective
unless in a writing signed by the party to be charged.
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c. This Amendment No. 2 may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment No.
2 on the date first above written.
BUYER:
SONIC AUTOMOTIVE, INC., Delaware corporation
By:/s/ B. Xxxxx Xxxxx
__________________________________________
Its: President
________________________________________
SELLERS:
XXXXXXXX JEEP EAGLE, INC.,
an Ohio corporation
By: /s/ Xxx X. Xxxxxxxx
_________________________________________
Its: President
________________________________________
XXXXXXXX LINCOLN MERCURY, INC.,
an Ohio corporation
By: /s/ Xxx X. Xxxxxxxx
_________________________________________
Its: President
________________________________________
WESTSIDE DODGE, INC.,
an Ohio corporation
By: /s/ Xxx X. Xxxxxxxx
_________________________________________
Its: President
________________________________________
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XXXXXXXX HYUNDAI, INC.,
an Ohio corporation
By: /s/ Xxx X. Xxxxxxxx
_________________________________________
Its: President
________________________________________
TOYOTA WEST, INC.,
an Ohio corporation
By: /s/ Xxx X. Xxxxxxxx
_________________________________________
Its: President
________________________________________
SHAREHOLDERS:
/s/ Xxx X. Xxxxxxxx
____________________________________________
XXX X. XXXXXXXX, XX.
/s/ Xxx X. Xxxxxxxx
____________________________________________
XXX X. XXXXXXXX
XXX X. XXXXXXXX, XX. SPECIAL
IRREVOCABLE TRUST
By: /s/ Xxx X. Xxxxxxxx
_________________________________________
Xxx X. Xxxxxxxx, as Trustee
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