Exhibit 10.36a
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 18th day of
February, 1999, by and among SONIC AUTOMOTIVE, INC., a Delaware corporation
("BUYER"), GLOBAL IMPORTS, INC., a Georgia corporation ("SELLER"), and WILLIAM
MORRIS WHITMIRE (the "STOCKHOLDER").
W I T N E S S E T H:
WHEREAS, the parties hereto have entered into that certain Asset
Purchase Agreement dated as of November 25, 1998 (the "ASSET PURCHASE
AGREEMENT") (capitalized terms used herein and not otherwise defined herein
shall have the meanings assigned to them in the Asset Purchase Agreement); and
WHEREAS, the parties hereto wish to amend and supplement the Asset
Purchase Agreement as hereinafter provided;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter contained, and intending to be legally bound, the parties hereto
hereby agree as follows:
1. SCHEDULES. The following Schedules to the Asset Purchase
Agreement have been agreed to by the parties and are attached to this Amendment:
Schedule Description
-------- ------------
2.4, Part I,
Annex A Contracts and Leases
7.2 Compliance re: Seller and Stockholder
7.3 Pending or Threatened Actions, Suits or Proceedings
7.4 Encumbrances on the Assets
7.5 Permits and Approvals
7.6(a) Financial Statements
7.6(b) Exceptions to GAAP
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7.8(a) Compliance with Laws
7.8(b) Environmental Matters
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7.9 Fixtures & Equipment
7.12 Taxes
7.13 Employee Matters
11.15 Office Furniture
2. AMENDMENTS.
(a) Section 1.3 of the Asset Purchase Agreement is hereby amended
by deleting the existing Section 1.3 in its entirety and inserting in lieu
thereof the following:
"1.3 "CLOSING DATE DEADLINE" shall mean March 1, 1999."
(b) The Business and Intangible Assets Purchase Price, as the
same appears in the first sentence of Section 2.2(a) of the Asset Purchase
Agreement, is hereby amended to read "Eleven Million Three Hundred Thousand
Dollars ($11,300,000)".
(c) The term "Four Million One Hundred Fifty Thousand Dollars
($4,150,000)", as the same appears in Section 2.2(b) of the Asset Purchase
Agreement, is hereby amended to read "Three Million One Hundred Fifty Thousand
Dollars ($3,150,000)".
(d) Subsection 2.2(c) of the Asset Purchase Agreement is hereby
deleted in its entirety and a new Subsection 2.2(c), as well as new Subsections
2.2(d), (e), (f), (g), (h), (i) and (j) are hereby inserted as follows:
"(c) In payment of the balance of the Initial Purchase
Price (the "STOCK COMPONENT"), Buyer shall issue and deliver to Seller
that number of whole shares of Buyer's Class A Convertible Preferred
Stock, Series III (the "PREFERRED STOCK"), obtained by (A) multiplying
(I) 452,778, as proportionately increased for any increase after
November 25, 1998 and prior to the Closing in the number of outstanding
shares of Buyer's Class A Common Stock, $.01 par value per share (the
"COMMON STOCK"), by way of stock dividend, stock distribution or
subdivision or as proportionately decreased for any decrease after
November 25, 1998 and prior to the Closing in the number of outstanding
shares of Common Stock by way of combination, consolidation,
reclassification or otherwise, by (II) the Market Price (as defined in
the Statement of Rights and Preferences of Preferred Stock attached
hereto as Exhibit A (the "STATEMENT OF RIGHTS AND PREFERENCES")) as of
the Closing Date, and (B) dividing the product obtained from such
multiplication by $1,000. No fractional shares of Preferred Stock shall
be issued; any such fraction of a share of Preferred Stock shall be paid
in cash at the rate of $1,000 per whole share of Preferred Stock. The
Preferred Stock shall have such rights and preferences as are set forth
in the Certificate of Designation, Preferences and Rights of Class A
Convertible Preferred Stock (the "CERTIFICATE OF DESIGNATION") referred
to in the Statement of Rights and Preferences.
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(d) Buyer will use its best reasonable efforts to include
all of the shares of Common Stock issuable upon conversion of the
Preferred Stock, plus any
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Special Additional Shares (as defined and as provided in Subsection
2.2(g) below (collectively, the "PIGGYBACK COMMON SHARES")), in an
underwritten public offering of Buyer's Common Stock (the "PUBLIC
OFFERING") in accordance with the Securities Act of 1933, as amended
(the "SECURITIES ACT"), on a "piggyback" registration basis on or prior
to April 30, 1999. Seller shall sell in the Public Offering all
Piggyback Common Shares which Buyer is able to register in the Public
Offering, unless the managing or lead managing underwriter in the Public
Offering requires that Seller sell fewer than all of the Piggyback
Common Shares or Buyer and Seller mutually agree that a fewer number of
Piggyback Common Shares will be registered and sold.
(e) If requested by the managing or lead managing
underwriter in the Public Offering, Seller and the Stockholder shall
execute and deliver such customary documentation as is utilized by such
underwriter for selling stockholders in underwritten public offerings
including, without limitation, an underwriting agreement and a "lock-up"
agreement with the managing or lead managing underwriter in such forms
as are customarily used by such underwriter. In connection with any such
registration, Seller and the Stockholder shall supply to Buyer such
information as may be reasonably requested by Buyer in connection with
the preparation and filing of a registration statement with the
Securities and Exchange Commission (the "SEC"). Seller and the
Stockholder shall not supply any information to Buyer for inclusion in
such registration statement that will, taken as a whole, at the time the
registration statement becomes effective under the Securities Act,
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which
they were made, not misleading. Buyer shall pay all expenses of
registration of the Piggyback Common Shares except for the fees and
expenses of separate counsel, if any, engaged by Seller, underwriter
discounts and allowances for the sale of such Shares, and blue sky fees
to the extent the applicable state laws require payment by Seller.
(f) Any of the Piggyback Common Shares which have not been
registered and sold pursuant to the Public Offering by April 30, 1999
(other than as a result of a failure by Seller to participate in the
Public Offering) will be registered by Buyer in a "shelf" registration
statement (including any required post-effective amendment) under the
Securities Act as promptly as possible after April 30, 1999 but in no
event later than May 31, 1999; provided, however, Buyer may either (i)
delay the effectiveness of any such shelf registration statement until
the expiration of any "lock-up" period required by the underwriters in
the Public Offering or (ii) not delay such effectiveness, in which case
Seller hereby agrees to be bound by any such "lock-up" as fully as if
Seller had signed the applicable lock-up agreement required by such
underwriters. Upon notice by Buyer to Seller that such shelf
registration statement is effective (including any required
post-effective amendment) and that any such "lock-up" has expired,
Seller shall have a period of ten (10) days from the
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date of such notice (the "SHELF REGISTRATION CONVERSION PERIOD") to
surrender to Buyer for conversion into shares of Common Stock up to all
shares of Preferred Stock held by Seller, and such shares of Common
Stock issued upon such conversion shall be included in such shelf
registration. Any shares of Common Stock issued upon conversion of
shares of Preferred Stock which are surrendered for conversion after the
expiration of the Shelf Registration Conversion Period shall not be
included in such shelf registration. All shares of Common Stock which
are included in such "shelf" registration in accordance with the
foregoing provisions, as well as any Special Additional Shares issued
pursuant to Subsection 2.2(g) below are hereinafter collectively called
the "REGISTERED COMMON SHARES".
(g) (i) Seller shall not be obligated to convert any
shares of the Preferred Stock until either (A) in the case of the Public
Offering, Seller is notified by Buyer that such conversion is necessary
in order for Seller to participate in the Public Offering (which notice
Buyer agrees to give to Seller in a timely fashion to enable Seller to
convert the applicable number of shares of Preferred Stock), or (B) in
the case of a "shelf" registration statement under Subsection 2.2(f)
above, the time required by said Subsection 2.2(f). If Seller elects to
convert any shares of Preferred Stock prior to the time(s) required in
clauses (A) or (B) of the immediately preceding sentence or after the
expiration of the Shelf Registration Conversion Period, the provisions
of this Subsection 2.2(g) shall not apply with respect to such shares of
Preferred Stock so elected to be converted.
(ii) With respect to any shares of Preferred
Stock as to which the provisions of this Subsection 2.2(g) shall apply,
Seller shall receive the number of shares of Common Stock issuable upon
conversion of such shares of Preferred Stock in accordance with
Subsection 2(a)(iv) of the Certificate of Designation, subject to the
following:
(A) If, as a result of the provisions of
the third sentence of Subsection 2(a)(iv) of the Certificate of
Designation, the number of shares of Common Stock to be issued
upon conversion of each of such shares of Preferred Stock would
be less than the Series III Conversion Amount (as defined in said
Subsection 2(a)(iv)) as of the date of issuance of such shares of
Preferred Stock (the "ORIGINAL CONVERSION AMOUNT"), Buyer shall
issue to Seller, at no additional cost to Seller, such number of
additional shares of Common Stock, if any, which, when added to
the number of shares of Common Stock to be issued upon such
conversion, will result in Seller receiving, in connection with
such conversion, the number of shares of Common Stock Seller
would have received had the number of shares of Common Stock
issued upon such conversion been determined solely based upon the
Original Conversion Amount;
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(B) With respect to any shares of Preferred
Stock converted by Seller in order for Seller to participate in
the Public Offering (the "PUBLIC OFFERING PREFERRED STOCK"), if
the closing price for a share of Common Stock on the New York
Stock Exchange for the trading day immediately preceding the date
of the effectiveness of the registration statement in the Public
Offering (the "PUBLIC OFFERING REGISTRATION PRICE") is less than
the Market Price (as hereinafter defined) as of the date of the
issuance of the shares of Public Offering Preferred Stock, then
Buyer shall issue and deliver to Seller, at no additional cost to
Seller, that number of additional shares of Common Stock, if any,
which, when added to the number of shares of Common Stock issued
or to be issued upon the conversion of the Public Offering
Preferred Stock, would result in Seller receiving, in connection
with such conversion, the number of shares of Common Stock Seller
would have received had the number of shares of Common Stock
issued upon such conversion of each share of Public Offering
Preferred Stock converted been determined by dividing $1,000 by
the Public Offering Registration Price. Any such additional
shares of Common Stock which are not included in the Public
Offering (other than as a result of a failure by Seller to
participate in the Public Offering) will be "Special Additional
Shares" for purposes of the "shelf" registration statement under
Subsection 2.2 (f) above.
(C) With respect to any shares of Preferred
Stock converted by Seller in connection with a "shelf"
registration statement under Subsection 2.2(f) above (the "SHELF
REGISTRATION PREFERRED STOCK"), if the closing price for a share
of Common Stock on the New York Stock Exchange for the trading
day immediately preceding the later of (x) the date of the
effectiveness of such "shelf" registration statement (including
any required post-effective amendment) or (y) the date of any
"lock-up" referred to in Subsection 2.2(f) (the "SHELF
REGISTRATION PRICE") is less than the Market Price as of the date
of the issuance of the shares of Shelf Registration Preferred
Stock, then Buyer shall issue and deliver to Seller, at no
additional cost to Seller, that number of additional shares of
Common Stock, if any, which, when added to the number of shares
of Common Stock issued or to be issued upon the conversion of the
Shelf Registration Preferred Stock, would result in Seller
receiving, in connection with such conversion, the number of
shares of Common Stock Seller would have received had the number
of shares of Common Stock issued upon such conversion of each
share of the Shelf Registration Preferred Stock converted been
determined by dividing $1,000 by the Shelf Registration Price.
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(iii) Any additional shares of Common Stock to be issued
and delivered by Buyer to Seller pursuant to Subsection 2.2(g)(ii) above
are herein referred to as the "SPECIAL ADDITIONAL SHARES".
(h) If Seller shall elect not to convert any shares of
Preferred Stock within the Shelf Registration Conversion Period, Buyer's sole
obligation with respect to such shares of Preferred Stock and the shares of
Common Stock issuable upon conversion of such shares of Preferred Stock (the
"UNREGISTERED COMMON SHARES") shall be (A) to use its best reasonable efforts to
make available current public information with respect to Buyer within the
meaning of Subsection (c)(1) of Rule 144 ("RULE 144") promulgated by the SEC to
the extent necessary to facilitate public resales by the Seller of the
Unregistered Common Shares, pursuant to Rule 144, and (B) to remove stop
transfer instructions and restrictive legends, as provided in subsection (j)
below.
(i) Buyer shall not exercise any rights of redemption it
has regarding the Preferred Stock, as such rights are more fully set forth in
the Certificate of Designation, until the later of (A) the closing of the Public
Offering, or (B) the expiration of the Shelf Registration Conversion Period.
(j) Buyer shall remove any and all stop transfer
instructions and shall remove any restrictive legend on the certificates with
respect to the Preferred Stock and any Unregistered Common Shares then owned by
Seller to the extent that either (A) such Preferred Stock or Unregistered Common
Shares may hereafter be registered under the Securities Act and under any
applicable state securities or blue sky laws, or (B) Buyer has received an
opinion of counsel, in form and substance reasonably satisfactory to the Buyer,
that such registration is not required. Upon receipt of reasonable evidence that
the requirements of Rule 144(k) have been complied with (including an opinion of
counsel reasonably satisfactory to Buyer to such effect), Buyer shall remove any
and all stop transfer instructions and shall remove any restrictive legend on
such certificates."
(e) The term "$1,000,000, equal to five (5)", as the same appears
in the first sentence, second line, of Section 2.3(a) of the Asset Purchase
Agreement, is hereby amended to read "$2,000,000, equal to ten (10)".
(f) The number "$1,000,000", as the same appears in the
"provided, however," clause at the end of Section 2.3(b) of the Asset Purchase
Agreement, is hereby amended to read "$2,000,000".
(g) The number "$1,000,000", as the same appears in Section
2.3(c) of the Asset Purchase Agreement, is hereby amended to read "$2,000,000".
(h) Section A of Exhibit A to the Asset Purchase Agreement is
hereby amended
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by deleting the existing Section A in its entirety and inserting in lieu thereof
the following:
"A. General
The Preferred Stock will consist of that number of whole shares
of the Buyer's Class A Convertible Preferred Stock, Series III, having a
par value of $.10 per share (the "Preferred Stock"), obtained by (a)
multiplying (I) 452,778, as proportionately increased for any increase
after November 25, 1998 and prior to the Closing in the number of
outstanding shares of Common Stock by way of stock dividend, stock
distribution or subdivision or as proportionately decreased for any
decrease after November 25, 1998 and prior to the Closing in the number
of outstanding shares of Common Stock by way of combination,
consolidation, reclassification or otherwise, by (II) the Market Price
(as defined below) as of the Closing Date, and (b) dividing the product
obtained from such multiplication by $1,000."
(i) The definition of "Market Price", as the same appears in the
sixth paragraph of Section C of Exhibit A to the Asset Purchase Agreement, is
hereby amended by deleting such paragraph in its entirety and inserting in lieu
thereof the following:
"The "Market Price" will be defined as the average closing price
per share of Common Stock on the New York Stock Exchange for the twenty
trading days immediately preceding the date of determination, adjusted
(as reported by the New York Stock Exchange) for any increase in the
number of outstanding shares of Common Stock by way of stock dividend,
stock distribution or subdivision or any decrease in the number of
outstanding shares of Common Stock by way of combination, consolidation,
reclassification or otherwise."
3. ADDITIONAL TERMS RELATING TO THE REGISTERED COMMON SHARES. The
parties agree, with respect to the issuance and delivery of the Registered
Common Shares to Seller, as follows:
(a) Buyer shall have no obligation to maintain the currency of
any prospectus, permit the use of any prospectus or maintain the effectiveness
of any registration statement for the resale of the Registered Common Shares
once all of the Registered Common Shares that remain unsold may be sold without
restriction pursuant to Rule 144.
(b) Seller and the Stockholder agree and acknowledge, with regard
to the offer or resale by either of them of any of the Registered Common Shares,
that:
(i) Seller and the Stockholder agree that they shall
effect each resale of Registered Common Shares only pursuant to a current
prospectus or supplements thereto that is a part of the shelf registration
statement under Subsection 2.2(f) above (the "RESALE PROSPECTUS");
(ii) Any offering of any of the Registered Common Shares
under the
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Resale Prospectus by either of them will be effected in an orderly manner
through a securities dealer, acting as broker or dealer, selected by Seller or
the Stockholder and reasonably acceptable to Buyer (the "DESIGNATED BROKER");
(iii) Seller and the Stockholder will make resales of
Registered Common Shares only by one or more methods described in the Resale
Prospectus, as appropriately supplemented or amended when required;
(iv) Since the Registered Common Shares are "restricted
securities" within the meaning of Rule 145 promulgated by the SEC under the
Securities Act, the certificates representing the Registered Common Shares will
be issued by Buyer with such legends as Buyer may reasonably require until such
shares are offered pursuant to the foregoing terms under the Resale Prospectus,
at which time such certificates shall be tendered to Buyer and a new certificate
or certificates without legends shall be issued by Buyer to the Designated
Broker in order to settle any resales by Seller or the Stockholder;
(v) Seller and the Stockholder shall provide Buyer, in
writing, with all information concerning Seller and the Stockholder and their
resale of the Registered Common Shares as may reasonably be requested by Buyer
in order to comply with the Securities Act, and the Seller and the Stockholder
shall indemnify Buyer for any liabilities (the "SELLER'S LIABILITIES") arising
under the Securities Act, the Securities Exchange Act of 1934 or any state
securities or blue sky laws resulting from any material misstatements in, or
omissions of material information from, such information provided by Seller and
the Stockholder to Buyer pursuant to this clause (v); and
(vi) Seller and the Stockholder shall pay any and all
expenses directly related to the resale of the Registered Common Shares,
including, but not limited to, the commissions or fees of the Designated Broker.
(c) Buyer agrees that:
(i) Buyer shall use its best reasonable efforts to list
the Registered Common Shares for trading on the New York Stock Exchange;
(ii) Buyer shall pay all expenses, including legal and
accounting fees, in connection with the preparation, filing and maintenance of
the shelf registration statement under Subsection 2.2(f) above, including
amendments thereto, the Resale Prospectus, including supplements thereto, the
issuance of certificates representing the Registered Common Shares, and other
expenses incurred by Buyer in meeting its obligations set forth in Section
2.2(c) of the Asset Purchase Agreement, as amended hereby, and in this Section
3; and
(iii) Buyer shall indemnify Seller and the Stockholder for
any liabilities arising under the Securities Act, the Securities Exchange Act of
1934 or any state securities or blue sky laws resulting from any material
misstatements in, or omissions of material information from, the Resale
Prospectus or the shelf registration statement under Subsection 2.2(f) above,
including
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the information incorporated by reference therein, except for the Seller's
Liabilities.
(d) Notwithstanding any provision of the Asset Purchase
Agreement, as amended hereby, to the contrary, Seller and the Stockholder shall
not have any right to take any action (and Seller and the Stockholder hereby
agree that neither of them shall take any action) to restrain, enjoin or
otherwise delay any registration as a result of any controversy that might arise
with respect to the interpretation or implementation of the Asset Purchase
Agreement, as amended hereby. Nothing contained in this Section 3(d) shall
prevent the making of a claim for monetary relief.
4. ASSET PURCHASE AGREEMENT CONFIRMED. Except as provided in this
Amendment, the Asset Purchase Agreement is hereby confirmed, as amended hereby,
and shall continue in full force and effect.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the day, month and year first above written.
BUYER: SONIC AUTOMOTIVE, INC.
By: /s/ O. Bruton Smith
--------------------------------
Name: O. Bruton Smith
Title: Chief Executive Officer
SELLER: GLOBAL IMPORTS, INC.
By: /s/ William Morris Whitmire
--------------------------------
Name: William Morris Whitmire
Title: President
THE STOCKHOLDER: /s/ William Morris Whitmire (SEAL)
------------------------------------
Name: William Morris Whitmire
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