Purchase Agreement (2003)Full Document 

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SONIC AUTOMOTIVE, INC. (a Delaware corporation)

The Guarantors Listed on Schedule A

 

$200,000,000

 

8 5/8% Senior Subordinated Notes due 2013

 

PURCHASE AGREEMENT

 

Dated: August 7, 2003

 



PURCHASE AGREEMENT

   2

SECTION 1.

 

Representations and Warranties.

   3

(a)

  Representations and Warranties by the Company and the Guarantors.    3
   

(i)

  Similar Offerings.    3
   

(ii)

  Offering Memorandum and Preliminary Offering Memorandum.    4
   

(iii)

  Incorporated Documents.    4
   

(iv)

  Independent Accountants.    4
   

(v)

  Financial Statements.    4
   

(vi)

  No Material Adverse Change in Business.    5
   

(vii)

  Good Standing of the Company.    5
   

(viii)

  Subsidiaries.    5
   

(ix)

  Capitalization.    6
   

(x)

  Authorization of Agreements.    6
   

(xi)

  Authorization of the Indenture.    6
   

(xii)

  Authorization of the Securities, the Guarantees and the Exchange Securities.    6
   

(xiii)

  Description of the Securities, the Guarantees, the Indenture, the Registration Rights Agreement and the Exchange Securities.    7
   

(xiv)

  Absence of Defaults and Conflicts.    7
   

(xv)

  Absence of Labor Disputes.    8
   

(xvi)

  Absence of Proceedings.    8
   

(xvii)

  Possession of Intellectual Property.    8
   

(xviii)

  Absence of Further Requirements.    9
   

(xix)

  Possession of Licenses and Permits.    9
   

(xx)

  Title to Property.    10
   

(xxi)

  Tax Returns.    10


    (xxiv)   Stabilization or Manipulation.    11
    (xxv)   Related Party Transactions.    11
    (xxvi)   Suppliers.    11
    (xxvii)   Environmental Laws.    11
    (xxviii)   Registration Rights.    12
    (xxix)   Accounting Controls.    12
    (xxx)   Investment Company Act.    12
    (xxxi)   Rule 144A Eligibility.    12
    (xxxii)   No General Solicitation.    12
    (xxxiii)   No Registration Required.    13
    (xxxiv)   PORTAL.    13
    (xxxv)   Franchise Agreements.    13
    (xxxvi)   Liquidity and Off Balance Sheet Arrangements.    13
    (xxxvii)   Disclosure Controls.    13

(b)

  Officer's Certificates.    13

SECTION 2.

  Sale and Delivery to Initial Purchasers; Closing.    14

(a)

  Securities and Guarantees.    14

(b)

  Payment.    14

(c)

  Qualified Institutional Buyer.    14

(d)

  Denominations; Registration.    14

SECTION 3.

  Covenants of the Company and the Guarantors.    15

(a)

  Offering Memorandum.    15

(b)

  Notice and Effect of Material Events.    15

(c)

  Amendment to Offering Memorandum and Supplements.    15


(d)

  Qualification of Securities and Guarantees for Offer and Sale.    15

(e)

  Exchange Offer.    16

(f)

  Integration.    16

(g)

  No Directed Selling Effort or General Solicitation.    16

(h)

  Rating of Securities.    16

(i)

  Rule 144A Information.    16

(j)

  Restriction on Resales.    17

(k)

  Use of Proceeds.    17

(l)

  Restriction on Sale of Securities.    17

(m)

  DTC Clearance.    17

(n)

  Legends.    17

(o)

  Interim Financial Statements.    17

(p)

  Periodic Reports.    17

SECTION 4.

  Payment of Expenses.    18

(a)

  Expenses.    18

(b)

  Termination of Agreement.    18

SECTION 5.

  Conditions of Initial Purchasers’ Obligations.    18

(a)

  Opinion of Counsel for the Company and the Guarantors.    18

(b)

  Opinion of Counsel for the Initial Purchasers.    19

(c)

  Officers’ Certificate.    19

(d)

  Accountants’ Letters and Consents.    19

(e)

  Maintenance of Rating.    20

(f)

  PORTAL.    20


(g)

  Chief Financial Officer’s Certificate.    20

(h)

  Registration Rights Agreement and Indenture.    20

(i)

  Manufacturers’ Consents.    20

(j)

  Lenders’ Consents.    20

(k)

  Additional Documents.    20

(l)

  Termination of Agreement.    21

SECTION 6.

  Indemnification.    21

(a)

  Indemnification of Initial Purchasers.    21

(b)

  Indemnification of Company, Guarantors, and Directors.    22

(c)

  Actions against Parties; Notification.    22

(d)

  Settlement without Consent if Failure to Reimburse.    22

SECTION 7.

  Contribution.    23

SECTION 8.

  Representations, Warranties and Agreements to Survive Delivery.    24

SECTION 9.

  Termination of Agreement.    24

(a)

  Termination; General.    24

(b)

  Liabilities.    25

SECTION 10.

  Default by One or More of the Initial Purchasers.    25

SECTION 11.

  Tax Disclosure.    26

SECTION 12.

  Notices.    26

SECTION 13.

  Parties.    26

SECTION 14.

  Governing Law and Time.    27

SECTION 15.

  General Provisions.    27

SECTION 16.

  Partial Unenforceability.    27


SECTION 17.    Effect of Headings.       27

 

Schedule A—Subsidiaries which are Guarantors

Schedule B—Initial Purchaser Amounts

Schedule C—2% Subsidiaries

Schedule D—Securities


$200,000,000

 

8 5/8% Senior Subordinated Notes due 2013

 

SONIC AUTOMOTIVE, INC. (a Delaware corporation)

The Guarantors Listed on Schedule A


PURCHASE AGREEMENT

August 7 2003

Banc of America Securities LLC

J.P. Morgan Securities Inc.

Merrill Lynch & Co.

Merrill Lynch, Pierce, Fenner & Smith

                    Incorporated

As Initial Purchasers

 

c/o Banc of America Securities LLC

9 West 57th Street

New York, NY 10019

 

Ladies and Gentlemen:

 

Sonic Automotive, Inc., a Delaware corporation (the “Company”), and each of the Guarantors listed on Schedule A hereto (the “Guarantors”) confirm their respective agreements with Banc of America Securities LLC (“Banc of America”), J.P. Morgan Securities Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated (collectively, the “Initial Purchasers”), (which term shall also include any initial purchaser substituted as hereinafter provided in Section 10 hereof), for whom Banc of America is acting as representative (in such capacity, the “Representative”), with respect to (i) the issue and sale by the Company and the purchase by the Initial Purchasers, acting severally and not jointly, of the respective principal amounts set forth in Schedule B of $200,000,000 aggregate principal amount of the Company’s 8 5/8% Senior Subordinated Notes due 2013 (the “Securities”) and (ii) the issue and sale by the Guarantors and the purchase by the Initial Purchasers, acting severally and not jointly of the guarantees (the “Guarantees”) of the Company’s obligations under the Securities. The Securities and the Guarantees are to be issued pursuant to an indenture dated as of August 12, 2003 (the “Indenture”) among the Company, the Guarantors and U.S. Bank National Association, as trustee (the “Trustee”). Securities issued in book-entry form will be issued to Cede & Co. as nominee of The Depository Trust Company (“DTC”) pursuant to a letter agreement, to be dated as of the Closing Time (as defined in Section 2(b)) (the “DTC Agreement”), among the Company, the Trustee and DTC.

 

The Company and the Guarantors understand that the Initial Purchasers propose to make an offering of the Securities (together with the related Guarantees) on the terms and in the manner set forth herein and agree that the Initial Purchasers may resell, subject to the conditions set forth herein, all or a portion of the Securities and the Guarantees to purchasers (“Subsequent Purchasers”) at any time after the date of this Agreement. The Securities and the Guarantees are to be offered and sold through the Initial Purchasers without being registered under the Securities Act of 1933, as amended (the “1933 Act”), in reliance upon exemptions therefrom. Pursuant to the terms of the Securities, the Guarantees and the Indenture, investors that acquire Securities and Guarantees may only resell or otherwise transfer such Securities and Guarantees if such Securities and Guarantees are hereafter registered under the 1933 Act or if an exemption from the registration requirements of the 1933 Act is available (including the exemption afforded by


Rule 144A (“Rule 144A”) pursuant to the rules and regulations promulgated under the 1933 Act by the Securities and Exchange Commission (the “Commission”)).

 

The Company and the Guarantors prepared and delivered to each Initial Purchaser on August 4, 2003 (by electronic mail), copies of a preliminary offering memorandum dated August 4, 2003 (the “Preliminary Offering Memorandum”) and have prepared and will deliver to each Initial Purchaser as promptly as practicable after the date hereof (by overnight courier), copies of a final offering memorandum dated August 7, 2003 (the “Final Offering Memorandum”), to be used by such Initial Purchaser in connection with its solicitation of purchases of, or offering of the Securities and the Guarantees. “Offering Memorandum” means, with respect to any date or time referred to in this Agreement, the Final Offering Memorandum, or any amendment or supplement to such document), including exhibits thereto and any documents incorporated therein by reference, which has been prepared and delivered by the Company and the Guarantors to the Initial Purchasers in connection with their solicitation of, purchases of, or offering of the Securities and the Guarantees.

 

All references in this Agreement to financial statements and schedules and other information which is “contained,” “included” or “stated” in the Offering Memorandum or the Preliminary Offering Memorandum (or other references of like import) shall be deemed to mean and include all such financial statements and schedules and other information which are incorporated by reference in the Offering Memorandum or the Preliminary Offering Memorandum; and all references in this Agreement to amendments or supplements to the Offering Memorandum or the Preliminary Offering Memorandum shall be deemed to mean and include the filing of any document under the Securities Exchange Act of 1934, as amended (the “1934 Act”), which is incorporated by reference in the Offering Memorandum or the Preliminary Offering Memorandum.

 

The holders of the Securities and the Guarantees will be entitled to the benefits of the registration rights agreement to be dated as of the Closing Time (the “Registration Rights Agreement”), among the Company, the Guarantors and the Initial Purchasers, pursuant to which the Company and the Guarantors will agree among other things, to file, as soon as practicable after the Closing Time but in any event within 90 days of the Closing Time, a registration statement with the Commission registering the Exchange Securities (as defined in the Registration Rights Agreement) under the 1933 Act.

 

SECTION 1. Representations and Warranties.

 

(a)    Representations and Warranties by the Company and the Guarantors.    The Company and each of the Guarantors, jointly and severally, represent and warrant to the Initial Purchasers as of the date hereof and as of the Closing Time referred to in Section 2(b) hereof, and agrees with each Initial Purchaser as follows:

 

(i)    Similar Offerings.    The Company and the Guarantors have not, directly or indirectly, solicited any offer to buy or offered to sell, and will not, directly or indirectly, solicit any offer to buy or offer to sell, in the United States or to any United States citizen or resident, any security which is or would be integrated with the sale of the Securities


and the Guarantees in a manner that would require the Securities or the Guarantees to be registered under the 1933 Act.

 

(ii)    Offering Memorandum and Preliminary Offering Memorandum.    Each of the Offering Memorandum and Preliminary Offering Memorandum does not, and at the Closing Time will not, include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, that this representation, warranty and agreement shall not apply to statements in or omissions from the Offering Memorandum or Preliminary Offering Memorandum made in reliance upon and in conformity with information furnished to the Company and the Guarantors in writing by any Initial Purchaser through Banc of America expressly for use in the Offering Memorandum.

 

(iii)    Incorporated Documents.    The documents incorporated or deemed to be incorporated by reference in the Preliminary Offering Memorandum and Offering Memorandum at the time they were or hereafter are filed with the Commission (collectively, the “Incorporated Documents”) complied and will comply in all material respects with the requirements of the 1934 Act and at the time filed or furnished with the Commission and did not and will not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.

 

(iv)    Independent Accountants.    Deloitte & Touche LLP who have certified the financial statements (which term as used in this Agreement includes the notes related thereto) and supporting schedules (of (i) the Company and (ii) its Subsidiaries (as defined below in Section (a)(vii)) included in the Offering Memorandum are independent certified public accountants within the meaning of Regulation S-X under the 1933 Act with respect to the Company, the Guarantors and their respective Subsidiaries.

 

(v)    Financial Statements.    The financial statements of the Company, together with the related schedules and notes, included in the Offering Memorandum present fairly the financial position of the Company and its consolidated Subsidiaries at the dates indicated and the consolidated balance sheets, and consolidated statements of income, stockholders’ equity and cash flows of the Company and its consolidated Subsidiaries for the periods specified; said financial statements have been prepared in conformity with United States generally accepted accounting principles (“GAAP”) applied on a consistent basis throughout the periods involved. The selected consolidated financial data and the summary consolidated financial data included in the Offering Memorandum presents fairly the information shown therein and have been compiled on a basis consistent with that of the audited financial statements included in the Offering Memorandum. There are no pro forma financial statements or other pro forma financial information of the Company, its Subsidiaries and entities acquired or to be acquired by the Company or its Subsidiaries and the related notes thereto which would be required to be included in or incorporated by reference into the Offering Memorandum if the Offering Memorandum were required to comply with the requirements of the 1933 Act for a Form S-1 registration statement and securities sold pursuant thereto.

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