AMENDMENT NO. 1 AND SUPPLEMENT
TO
ASSET PURCHASE AGREEMENT
THIS AMENDMENT NO. 1 AND SUPPLEMENT TO ASSET PURCHASE
AGREEMENT (this "AMENDMENT") is made and entered into as of this 24th day of
March, 1998, by and among SONIC AUTOMOTIVE, INC., a Delaware corporation (the
"BUYER"), M&S AUTO RESOURCES, INC. D/B/A CLEARWATER TOYOTA, a Florida
corporation, CLEARWATER AUTO RESOURCES, INC. D/B/A CLEARWATER MITSUBISHI, a
Florida corporation, CLEARWATER COLLISION CENTER, INC., a Florida corporation
(collectively, the "SELLERS"), SCOTT FINK, MICHAEL COHEN, JEFFREY SCHUMAN and
TIMOTHY MCCABE (collectively, the "SHAREHOLDERS").
WHEREAS, the Buyer, the Sellers and the Shareholders entered into an
Asset Purchase Agreement (the "PURCHASE AGREEMENT") dated as of December 30,
1997; and
WHEREAS, capitalized terms used herein and not otherwise deemed herein
shall have the meanings given to them in the Purchase Agreement; and
WHEREAS, the Buyer and the Sellers desire to amend and supplement the
Purchase Agreement as hereinafter provided.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. AMENDMENTS TO PURCHASE AGREEMENT.
(a) Amendment of Purchase Price. Section 1.3(a) of the Purchase
Agreement is hereby amended by deleting existing Section 1.3(a) in its entirety
and inserting in lieu thereof the following:
"(a) PURCHASE PRICE. In addition to the assumption by
the Buyer of the Assumed Liabilities, as the full consideration to be
paid by the Buyer for the Purchased Assets, the Buyer shall pay to the
Sellers the aggregate purchase price of $16,754,000, consisting of
$3,025,000 as the purchase price for the Sellers' Net Current Assets
(as hereinafter defined) and $13,729,000 as the purchase price for all
of the other Purchased Assets, subject to adjustment as provided in
Section 1.3(c) below (collectively, the "PURCHASE PRICE"). As used in
this Agreement, the term "NET CURRENT ASSETS" shall mean (i) all of the
Purchased Assets as of the close of business on December 31, 1997 (the
"EFFECTIVE CLOSING DATE") which would, in conformity with generally
accepted accounting principles applied in a manner consistent with
those used in the preparation of the Financial Statements referred to
in Section 3.4 below ("GAAP"), be included under current assets on a
balance sheet as at such date, MINUS (ii) all of the Assumed
Liabilities as of the close of business
on the Effective Closing Date which would, in conformity with GAAP, be
included under current liabilities on a balance sheet as at such date.
The Sellers, jointly and severally, hereby represent and warrant to the
Buyer that the aggregate net income of the Sellers for the period
beginning January 1, 1998 through February 28, 1998, determined in
conformity with GAAP, is not less than $785,000, which net income is
reflected in the Purchased Assets being acquired by the Buyer, and that
none of the Sellers has declared or made payment of any dividends or
distributions of cash or other property except to the extent permitted
by Section 5.3 as amended by this Amendment. The parties hereby agree
that any breach of this representation and warranty of the Sellers is
not subject to the $50,000 "basket" provided for in Section 10.2(a) of
the Purchase Agreement."
(b) Amendment of Closing Payment. Section 1.3(b)(1) of the Purchase
Agreement is hereby amended by deleting the first sentence of said Section
1.3(b)(1) and inserting in lieu thereof the following:
"(1) (A) $10,544,000 of the Purchase Price,
plus (B) interest on such amount from and including the first day of the
calendar month in which the Closing actually occurs to the date of payment at
the Prime Rate (as defined in Section 1.3(c) below) (the "CLOSING PAYMENT")
shall be payable to the Sellers at Closing by wire transfer of immediately
available funds to the account or accounts of the Sellers, which shall be
designated by the Sellers in writing at least one full Business Day prior to the
Closing Date, in the respective amounts specified in Part I of Schedule 1.3(d)."
(c) Amendment of Adjustment Procedures. Section 1.3(c)(2) of the
Purchase Agreement is hereby amended by deleting existing Section 1.3(c)(2) in
its entirety and inserting in lieu thereof the following:
"(2) To the extent that the Net Current
Assets, as deemed mutually agreed by the parties or as determined by the
Accountants, as aforesaid, is less than $3,025,000 (the "NET CURRENT ASSETS
SHORTFALL"), the Sellers shall be obligated, jointly and severally, to pay the
amount of the Net Current Assets Shortfall, together with interest on such
amount at the Prime Rate of NationsBank, N.A. from time to time in effect (the
"PRIME RATE") from and including the first day of the calendar month in which
the Closing actually occurs to the date of payment, promptly to the Buyer. In
furtherance of (but not by way of limitation of) the Sellers' obligation in the
immediately preceding sentence, the Sellers' Agent and the Buyer 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 Net Current
Assets, as deemed mutually agreed by the parties or as determined by the
Accountants, as aforesaid, is at least equal to $3,025,000, then the Buyer and
the Sellers' Agent shall execute and deliver to the Escrow Agent a joint
instruction to pay the entire amount of the Escrow Amount to the Sellers. To the
extent that the Net Current Assets, as deemed mutually agreed by the parties or
as determined by the Accountants, as aforesaid, is greater than $3,025,000 (the
"NET CURRENT ASSETS
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EXCESS"), the Buyer shall be obligated to pay the amount of the Net
Current Assets Excess promptly to the Sellers. The Buyer shall also pay
interest to the Sellers on Net Current Assets Excess at the Prime Rate
from and including the first day of the calendar month in which the
Closing actually occurs to the date of payment."
(d) Amendment of Non-Competition Agreement. Section 1.4(c) of the
Purchase Agreement is hereby amended by deleting existing Section 1.4(c) in its
entirety and inserting in lieu thereof the following:
"(c) NON-COMPETITION AGREEMENT. At the Closing, the
Sellers and Scott Fink will enter into a non-competition agreement with
the Buyer in substantially the form of Exhibit E-1, and Timothy McCabe
will enter into a non-competition agreement with the Buyer in
substantially the form of Exhibit E-2 (collectively, the
"NON-COMPETITION AGREEMENT"). For purposes of this Agreement, all
references to Exhibit B herein shall be read to refer to Exhibits E-1
and E-2, collectively. Neither Michael Cohen nor Jeffrey Schuman will
be required to enter into a non-competition agreement with the Buyer."
(e) Amendment of Closing Date Deadline. Article 2 of the Purchase
Agreement is hereby amended by inserting "March 31, 1998" in lieu of "March 2,
1998" in the definition of "Closing Date Deadline" contained in said Article 2.
(f) Amendment Regarding Sellers' Brokers and Finders. Section 3.18 of
the Purchase Agreement is hereby amended by deleting "Except as disclosed to the
Buyer" and inserting in lieu therof "Except as set forth in Schedule 3.18".
(g) Amendment Regarding Sellers' Suppliers and Customers. Section 3.28
of the Purchase Agreement is hereby amended by inserting at the beginning of the
first sentence thereof "Except as set forth in Schedule 3.28,".
(h) Amendment Regarding Certain Prohibitions of Sellers. Section 5.3 of
the Purchase Agreement is hereby amended by inserting "$3,025,000" in lieu of
"$4,200,000" in the last sentence of said Section 5.3.
(i) Amendment of Section 11.1(d). The date left blank in Section
11.1(d) is hereby filled in with "March 1, 1998".
2. AMENDMENTS AND SUPPLEMENTS TO SCHEDULES AND EXHIBITS.
(a) Amendment of Statement of Rights and Preferences of Preferred
Stock. Exhibit B to the Purchase Agreement is hereby amended by replacing
existing Exhibit B in its entirety with Exhibit B attached hereto.
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(b) Amendment of Dealership Lease. Notwithstanding the provisions of
Exhibit D to the Purchase Agreement, the "Initial Term" under the Dealership
Lease shall commence on the first day of the month in which the Closing actually
occurs.
(c) Amendment of Non-Competition Agreement. Exhibit E to the Purchase
Agreement is hereby amended by replacing existing Exhibit E in its entirety with
Exhibits E-1 and E-2 attached hereto.
(d) Amendment of Allocation of Purchase Price and Assumed Liabilities.
Schedule 1.3(d) to the Purchase Agreement is hereby amended by replacing
existing Schedule 1.3(d) in its entirety with Schedule 1.3(d) attached hereto.
(e) Amendment of Schedule 3.8(b). Schedule 3.8(b) to the Purchase
Agreement is hereby amended by replacing existing Schedule 3.8(b) in its
entirety with Schedule 3.8(b) attached hereto.
(f) Agreement on Form of Schedules. The parties hereto hereby agree on
the form of Schedules 3.1, 3.2, 3.3, 3.4, 3.5, 3.6(a), 3.6(b), 3.7, 3.8(a), 3.9,
3.12, 3.13, 3.14(a), 3.14(b), 3.16, 3.17, 3.18, 3.19, 3.20, 3.21, 3.22, 3.23,
3.24, 3.26, 3.28, 3.29, 3.30, 3.31, 3.32 and 4.2(a) attached hereto.
(g) Amendment of Lists of Schedules and Exhibits. The Lists of
Schedules and Exhibits attached to the Purchase Agreement are hereby replaced
with the List of Schedules and the List of Exhibits attached hereto.
3. COUNTERPARTS. This Amendment 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 one instrument.
4. PURCHASE AGREEMENT CONFIRMED. Except as set forth in this Amendment, the
Purchase Agreement is hereby confirmed and shall remain in full force and
effect.
5. EFFECT ON LETTER AGREEMENT RE: DELIVERY OF DISCLOSURE SCHEDULES. The Letter
Agreement among the Sellers, the Shareholders and the Buyer, dated as of
December 30, 1997 regarding delivery of the disclosure Schedules, is superseded
in its entirety by this Agreement.
6. EFFECT ON LETTER AGREEMENT RE: INDEMNITY. The Letter Agreement dated as of
December 30, 1997 by the Buyer for the benefit of the Sellers and the
Shareholders regarding certain indemnification obligations is hereby confirmed
and shall remain in full force and effect.
[signatures begin on the following page]
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed all as of the day, month and year first above written.
THE BUYER: SONIC AUTOMOTIVE, INC.
By: /s/ B. Scott Smith
Name: B. Scott Smith
Title: President
THE SELLERS: M&S AUTO RESOURCES, INC.
By: /s/ Scott Fink
Name: Scott Fink
Title: President
CLEARWATER AUTO RESOURCES, INC.
By: /s/ Scott Fink
Name: Scott Fink
Title: President
CLEARWATER COLLISION CENTER, INC.
By: /s/ Scott Fink
Name: Scott Fink
Title: President
THE SHAREHOLDERS: /s/ Scott Fink (SEAL)
SCOTT FINK
/s/ Michael Cohen (SEAL)
MICHAEL COHEN
/s/ Jeffrey Schuman (SEAL)
JEFFREY SCHUMAN
/s/ Timothy McCabe (SEAL)
TIMOTHY MCCABE
ATTACHMENTS TO THIS AMENDMENT NO. 1
Exhibit B - Statement of Rights and Preferences of Preferred Stock
Exhibit E-1 - Non-Competiton Agreement - Sellers and Fink
Exhibit E-2 - Non-Competition Agreement - McCabe
Schedule 1.3(d) - Allocation of Purchase Price and Assumed Liabilities
Schedule 3.8(b) - Condemnation Proceeding
Schedules 3.1-3.32 - Sellers' Disclosure Schedules
Schedule 4.2(a) - Buyer's Disclosure Schedule
List of Schedules
List of Exhibits