<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported): March 5, 1999
GROUP 1 AUTOMOTIVE, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 1-13461 76-0506313
(State of Incorporation) (Commission File Number) (I.R.S. Employer
Identification Number)
950 ECHO LANE, SUITE 350
HOUSTON, TEXAS 77024
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713) 467-6268
<PAGE> 2
ITEM 5. OTHER EVENTS
On March 5, 1999, Group 1 Automotive, Inc. (the "Company") sold
2,000,000 shares of its common stock, par value $.01 per share, and $100,000,000
of its 10 7/8% Senior Subordinated Notes due March 1, 2009 in underwritten
public offerings pursuant to its Registration Statement on Form S-3 (File No.
333-69693). Filed as exhibit 99.l to this report is the press release issued by
the Company relating to the closing of such offerings.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Description of Exhibit
- ----------- ----------------------
<S> <C>
1.1 Common Stock Underwriting Agreement by Group 1 Automotive,
Inc. dated as of March 1, 1999.
1.2 Debt Securities Underwriting Agreement by Group 1 Automotive,
Inc. and the Subsidiary Guarantors named therein dated as of
March 2, 1999.
1.3 Common Stock Pricing Agreement dated as of March 1, 1999 among
Group 1 Automotive, Inc. and the Underwriters named therein.
1.4 Debt Securities Pricing Agreement dated as of March 2, 1999
among Group 1 Automotive, Inc., the Subsidiary Guarantors
named therein and the Underwriters named therein.
4.1 First Supplemental Indenture dated as of March 5, 1999 among
Group 1 Automotive, Inc., the Subsidiary Guarantors named
therein and IBJ Whitehall Bank & Trust Company.
4.2 Form of 10 7/8% Senior Subordinated Note due March 1, 2009
(included in Exhibit 4.1).
99.1 Press Release dated March 5, 1999
</TABLE>
2
<PAGE> 3
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
Dated: March 5, 1999
GROUP 1 AUTOMOTIVE, INC.
By: /s/ Scott L. Thompson
-----------------------------------------------
Name: Scott L. Thompson
Title: Senior Vice President -- Chief Financial
Officer and Treasurer
3
<PAGE> 4
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
1.1 Common Stock Underwriting Agreement by Group 1 Automotive,
Inc. dated as of March 1, 1999.
1.2 Debt Securities Underwriting Agreement by Group 1 Automotive,
Inc. and the Subsidiary Guarantors named therein dated as of
March 2, 1999.
1.3 Common Stock Pricing Agreement dated as of March 1, 1999 among
Group 1 Automotive, Inc. and the Underwriters named therein.
1.4 Debt Securities Pricing Agreement dated as of March 2, 1999
among Group 1 Automotive, Inc., the Subsidiary Guarantors
named therein and the Underwriters named therein.
4.1 First Supplemental Indenture dated as of March 5, 1999 among
Group 1 Automotive, Inc., the Subsidiary Guarantors named
therein and IBJ Whitehall Bank & Trust Company.
4.2 Form of 10 7/8% Senior Subordinated Note due March 1, 2009
(included in Exhibit 4.1).
99.1 Press Release dated March 5, 1999.
</TABLE>
<PAGE> 1
EXHIBIT 1.1
GROUP 1 AUTOMOTIVE, INC.
COMMON STOCK
Par Value $.01 per Share
-----------------------------
Underwriting Agreement
March 1, 1999
To the Representatives of the
several Underwriters named in the
respective Pricing Agreements
hereinafter described.
Ladies and Gentlemen:
From time to time, Group 1 Automotive, Inc., a Delaware corporation
(the "Company") proposes to enter into one or more Pricing Agreements (each a
"Pricing Agreement") in the form of Annex I hereto, with such additions and
deletions as the parties thereto may determine, and, subject to the terms and
conditions stated herein and therein, the Company proposes to issue and sell to
the firms named in Schedule I to the applicable Pricing Agreement (such firms
constituting the "Underwriters" with respect to such Pricing Agreement and the
securities specified therein) certain of shares of the Company's Common Stock,
par value $.01 per share (the "Shares") specified in Schedule II to such Pricing
Agreement (with respect to such Pricing Agreement, the "Firm Shares"). If
specified in such Pricing Agreement, the Company may grant to the Underwriters
the right to purchase at their election an additional number of shares,
specified in such Pricing Agreement as provided in Section 3 hereof (the
"Optional Shares"). The Firm Shares and the Optional Shares, if any, which the
Underwriters elect to purchase pursuant to Section 3 hereof are herein
collectively called the "Designated Shares".
The terms and rights of any particular issuance of Designated Shares shall be as
specified in the Pricing Agreement relating thereto.
1. Particular sales of Designated Shares may be made from time to time
to the Underwriters of such Shares, for whom the firms designated as
representatives of the Underwriters of such Shares in the Pricing Agreement
relating thereto will act as representatives (the "Representatives"). The term
"Representatives" also refers to a single firm acting as sole representative of
the Underwriters and to Underwriters who act without any firm being designated
as their representative. This Underwriting Agreement shall not be construed as
an obligation of the Company to sell any of the Shares or as an obligation of
any of the Underwriters to purchase any of the Shares. The obligation of the
Company to issue and sell any of the Shares and the obligation of any of the
Underwriters to purchase any of the Shares shall be evidenced by the Pricing
Agreement with respect to the Designated Shares specified therein. Each Pricing
Agreement shall specify the aggregate number of the Firm Shares, the maximum
<PAGE> 2
number of Optional Shares, if any, the initial public offering price of such
Firm and Optional Shares or the manner of determining such price, the purchase
price to the Underwriters of such Designated Shares, the names of the
Underwriters of such Designated Shares, the names of the Representatives of such
Underwriters, the number of such Designated Shares to be purchased by each
Underwriter and the commission, if any, payable to the Underwriters with respect
thereto and shall set forth the date, time and manner of delivery of such Firm
and Optional Shares, if any, and payment therefor. The Pricing Agreement shall
also specify (to the extent not set forth in the registration statement and
prospectus with respect thereto) the terms of such Designated Shares. A Pricing
Agreement shall be in the form of an executed writing (which may be in
counterparts), and may be evidenced by an exchange of telegraphic communications
or any other rapid transmission device designed to produce a written record of
communications transmitted. The obligations of the Underwriters under this
Agreement and each Pricing Agreement shall be several and not joint.
2. The Company represents and warrants to, and agrees with, each of the
Underwriters that:
(a) A registration statement on Form S-3 (File No. 333-69693)
(the "Initial Registration Statement") in respect of the Shares has
been filed with the Securities and Exchange Commission (the
"Commission"); the Initial Registration Statement and any
post-effective amendment thereto, each in the form heretofore delivered
or to be delivered to the Representatives and, excluding exhibits to
the Initial Registration Statement, but including all documents
incorporated by reference in the prospectus contained therein, to the
Representatives for each of the other Underwriters, have been declared
effective by the Commission in such form; other than a registration
statement, if any, increasing the size of the offering (a "Rule 462(b)
Registration Statement"), filed pursuant to Rule 462(b) under the
Securities Act of 1933, as amended (the "Act"), which became effective
upon filing, no other document with respect to the Initial Registration
Statement or document incorporated by reference therein has heretofore
been filed or transmitted for filing with the Commission (other than
prospectuses filed pursuant to Rule 424(b) of the rules and regulations
of the Commission under the Act, each in the form heretofore delivered
to the Representatives); and no stop order suspending the effectiveness
of the Initial Registration Statement, any post-effective amendment
thereto or the Rule 462(b) Registration Statement, if any, has been
issued and no proceeding for that purpose has been initiated or
threatened by the Commission (any preliminary prospectus included in
the Initial Registration Statement or filed with the Commission
pursuant to Rule 424(a) under the Act, is hereinafter called a
"Preliminary Prospectus"; the various parts of the Initial Registration
Statement, any post-effective amendment thereto and the Rule 462(b)
Registration Statement, if any, including all exhibits thereto and the
documents incorporated by reference in the prospectus contained in the
Initial Registration Statement at the time such part of the Initial
Registration Statement became effective, each as amended at the time
such part of the Initial Registration Statement became effective or
such part of the Rule 462(b) Registration Statement, if any, became or
hereafter becomes effective, are hereinafter collectively called the
"Registration Statement"; the prospectus relating to the Shares, in the
form in which it has most recently been filed, or transmitted for
filing, with the Commission on or prior to the date of this Agreement,
being hereinafter called the "Prospectus"; any reference herein to any
Preliminary Prospectus or the Prospectus shall be deemed to refer to
and include the documents incorporated by reference therein pursuant to
the applicable form under the Act, as of the date of such Preliminary
Prospectus or Prospectus, as the case may be; any reference to any
amendment or supplement to any Preliminary Prospectus or the Prospectus
shall be deemed to refer to and include any documents filed after the
date of such Preliminary Prospectus or Prospectus, as the case may be,
under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and
2
<PAGE> 3
incorporated by reference in such Preliminary Prospectus or Prospectus,
as the case may be; any reference to any amendment to the Initial
Registration Statement shall be deemed to refer to and include any
annual report of the Company filed pursuant to Section 13(a) or 15(d)
of the Exchange Act after the effective date of the Initial
Registration Statement that is incorporated by reference in the
Registration Statement; and any reference to the Prospectus as amended
or supplemented shall be deemed to refer to the Prospectus as amended
or supplemented in relation to the applicable Designated Shares in the
form in which it is filed with the Commission pursuant to Rule 424(b)
under the Act in accordance with Section 5(a) hereof, including any
documents incorporated by reference therein as of the date of such
filing);
(b) The documents incorporated by reference in the Prospectus,
when they became effective or were filed with the Commission, as the
case may be, conformed in all material respects to the requirements of
the Act or the Exchange Act, as applicable, and the rules and
regulations of the Commission thereunder, and none of such documents
contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading; and any further documents so filed
and incorporated by reference in the Prospectus or any further
amendment or supplement thereto, when such documents become effective
or are filed with the Commission, as the case may be, will conform in
all material respects to the requirements of the Act or the Exchange
Act, as applicable, and the rules and regulations of the Commission
thereunder and will not contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided,
however, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by an Underwriter of
Designated Shares through the Representatives expressly for use in the
Prospectus as amended or supplemented relating to such Shares;
(c) The Registration Statement and the Prospectus conform, and
any further amendments or supplements to the Registration Statement or
the Prospectus will conform, in all material respects to the
requirements of the Act and the rules and regulations of the Commission
thereunder and do not and will not, as of the applicable effective date
as to the Registration Statement and any amendment thereto and as of
the applicable filing date as to the Prospectus and any amendment or
supplement thereto, contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided,
however, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by an Underwriter of
Designated Shares through the Representatives expressly for use in the
Prospectus as amended or supplemented relating to such Shares;
(d) The Company and its subsidiaries, taken as a whole, have not
sustained since the date of the latest audited financial statements
included or incorporated by reference in the Prospectus any material
loss or interference with their business from fire, explosion, flood or
other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, otherwise
than as set forth or contemplated in the Prospectus; and, since the
respective dates as of which information is given in the Registration
Statement and the Prospectus, there has not been any change in the
capital stock (other than the exercise of certain employee stock
options and awards and the issuance of common stock of the Company in
3
<PAGE> 4
connection with acquisitions by the Company that are described in the
Prospectus) or increase in short-term debt or long-term debt of the
Company and its subsidiaries, taken as a whole (other than floor plan
borrowings in the ordinary course of business or in connection with the
consummation of acquisitions described in the Prospectus), or any
material adverse change, or any development involving a prospective
material adverse change, in or affecting the general affairs,
management, financial position, stockholders' equity or results of
operations of the Company and its subsidiaries, taken as a whole,
otherwise than as set forth or contemplated in the Prospectus;
(e) The Company and its subsidiaries have good and indefeasible
title to all real property and good and marketable title to all
personal property owned by them, in each case free and clear of all
liens, encumbrances and defects except such as are described in the
Prospectus or would not have a Material Adverse Effect (as hereinafter
defined); and any real property and buildings held under lease by the
Company and its subsidiaries are held by them under valid, subsisting
and enforceable leases except as would not have a Material Adverse
Effect, subject, as to enforcement, to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and to
general equity principles;
(f) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware, with power and authority (corporate and other) to own its
properties and conduct its business as described in the Prospectus, and
has been duly qualified as a foreign corporation for the transaction of
business and is in good standing under the laws of each other
jurisdiction in which it owns or leases properties or conducts any
business so as to require such qualification, except where the failure
to be so qualified in any such jurisdiction would not, individually or
in the aggregate, have a material adverse effect on the ability of the
Company and its subsidiaries, taken as a whole, to own or lease their
properties or conduct their businesses as described in the Prospectus;
and each subsidiary of the Company has been duly incorporated or
organized, as the case may be, and is validly existing as a corporation
or partnership, as the case may be, in good standing under the laws of
its jurisdiction of incorporation or organization;
(g) The Company has an authorized capitalization as set forth in
the Prospectus, and all of the issued shares of capital stock of the
Company have been duly and validly authorized and issued and are fully
paid and non-assessable; and all of the issued shares of capital stock
of each subsidiary of the Company have been duly and validly authorized
and issued, are fully paid and non-assessable, are owned directly or
indirectly by the Company and, except as described in the Prospectus,
are owned free and clear of all liens, encumbrances, equities or
claims;
(h) The Shares have been duly and validly authorized, and, when
the Firm Shares are issued and delivered pursuant to this Agreement and
the Pricing Agreement with respect to such Designated Shares and, in
the case of any Optional Shares, pursuant to Over-allotment Options (as
defined in Section 3 hereof) with respect to such Shares, such
Designated Shares will be duly and validly issued and fully paid and
non-assessable; the Shares conform in all material respects to the
description thereof contained in the Registration Statement and the
Designated Shares will conform in all material respects to the
description thereof contained in the Prospectus as amended or
supplemented with respect to such Designated Shares;
4
<PAGE> 5
(i) None of the transactions contemplated by this Agreement
(including, without limitation, the use of the proceeds from the sale
of the Shares) will violate or result in a violation of Section 7 of
the Exchange Act, or any regulation promulgated thereunder, including,
without limitation, Regulations G, T, U, and X of the Board of
Governors of the Federal Reserve System;
(j) Except as disclosed in the Prospectus, the issue and sale of
the Shares and the compliance by the Company with all of the provisions
of this Agreement, any Pricing Agreement and each Over-allotment
Option, if any, and the consummation of the transactions herein and
therein contemplated will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a default
under, any Dealer Agreement (as hereinafter defined) or any indenture,
mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Company or any of its subsidiaries is a party
or by which the Company or any of its subsidiaries is bound or to which
any of the property or assets of the Company or any of its subsidiaries
is subject, except, in each case, for such conflicts, breaches,
violations or defaults as would not individually or in the aggregate
have a material adverse effect on the current or future consolidated
financial position, stockholders' equity or results of operations of
the Company and its subsidiaries taken as a whole (a "Material Adverse
Effect"), nor will such action result in any violation of the
provisions of the Certificate of Incorporation or By-laws of the
Company or any of its subsidiaries or any statute or any order, rule or
regulation of any court or governmental agency or body having
jurisdiction over the Company or any of its subsidiaries or any of
their properties; and except as disclosed in the Prospectus no consent,
approval, authorization, order, registration or qualification of or
with either (i) any such court or governmental agency or body or (ii)
any automobile manufacturer is required for the issue and sale of the
Shares or the consummation by the Company of the transactions
contemplated by this Agreement or any Pricing Agreement, except such as
have been, or will have been prior to each Time of Delivery (as defined
in Section 4 hereof), obtained under the Act and such consents,
approvals, authorizations, registrations or qualifications as may be
required under state securities or Blue Sky laws in connection with the
purchase and distribution of the Shares by the Underwriters and except
for such consents the failure to obtain would not have a Material
Adverse Effect;
(k) Except as disclosed in the Prospectus, neither the Company
nor any of its subsidiaries is (i) in violation of its Certificate of
Incorporation or By-laws or (ii) in default in the performance or
observance of any material obligation, agreement, covenant or condition
contained in any indenture, mortgage, deed of trust, loan agreement,
lease or other agreement or instrument to which it is a party or by
which it or any of its properties may be bound, except where such
default would not have a Material Adverse Effect;
(l) The statements set forth in the Prospectus under the caption
"Description of Capital Stock" and the description of the Company's
common stock incorporated by reference in the Prospectus, insofar as
they purport to constitute a summary of the terms of the Shares, and
the statements set forth in the Prospectus under the caption "Plan of
Distribution", insofar as they purport to describe the provisions of
the laws and documents referred to therein, are accurate in all
material respects;
(m) Other than as set forth in the Prospectus, there are no
legal or governmental proceedings pending to which the Company or any
of its subsidiaries is a party or of which any property of the Company
or any of its subsidiaries is the subject which, if determined
adversely to the Company or any of its subsidiaries, would individually
or in the aggregate have a Material
5
<PAGE> 6
Adverse Effect; and, to the best of the Company's knowledge, no such
proceedings are threatened or contemplated by governmental authorities
or threatened by others;
(n) The Company is not, and after giving effect to the offering
and sale of the Shares will not be, an "investment company", or an
entity "controlled" by an "investment company", as such terms are
defined in the United States Investment Company Act of 1940, as amended
(the "Investment Company Act");
(o) Arthur Andersen LLP, who have certified certain financial
statements of the Company and certain of its subsidiaries, and Crowe,
Chizek and Company LLP, who have certified certain financial statements
of certain of the Company's subsidiaries, are each independent public
accountants as required by the Act and the rules and regulations of the
Commission thereunder;
(p) The pro forma balance sheets and pro forma statements of
operations and the related notes thereto included in the Prospectus
(collectively, the "pro forma financial statements") have been prepared
in accordance with the applicable requirements of Rule 11-02 of
Regulation S-X promulgated by the Commission; the assumptions used and
described in the pro forma financial statements provide a reasonable
basis for presenting the significant effects attributable to the
transactions described therein; the pro forma adjustments contained in
the pro forma financial statements give appropriate effect to such
assumptions and include all adjustments necessary to present fairly the
effects of such transactions; and the pro forma columns contained in
the pro forma financial statements reflect the proper application of
such adjustments to the historical financial amounts contained in the
pro forma financial statements;
(q) The Company and its subsidiaries have obtained all
environmental permits, licenses and other authorizations required by
federal, state and local law in order to conduct their businesses as
described in the Prospectus, except where failure to do so would not
have a Material Adverse Effect; except as described in the Prospectus,
the Company and its subsidiaries are conducting their businesses in
compliance with such permits, licenses and authorizations and with
applicable environmental laws, except where the failure to be in
compliance would not, individually or in the aggregate, have a Material
Adverse Effect; and, except as described in the Prospectus, neither the
Company nor any of its subsidiaries is in violation of any Federal or
state law or regulation relating to the storage, handling, disposal,
release or transportation of hazardous or toxic materials, which
violation would have a Material Adverse Effect;
(r) The Company and its subsidiaries have all licenses,
franchises, permits, authorizations, approvals and orders and other
concessions of and from all governmental or regulatory authorities that
are necessary to own or lease their properties and conduct their
businesses as described in the Prospectus, except for such licenses,
franchises, permits authorizations, approvals and orders the failure to
obtain which would not, individually or in the aggregate, have a
Material Adverse Effect;
(s) The Company and each of its subsidiaries is conducting its
business in compliance with all applicable statutes, rules,
regulations, standards, guides and orders administered or issued by any
governmental or regulatory authority in the jurisdictions in which it
is conducting business, except as described in the Prospectus and
except where the failure to be so in compliance would not, individually
or in the aggregate, have a Material Adverse Effect; and
6
<PAGE> 7
(t) Except as described in the Prospectus, the Company or, if
applicable, a subsidiary of the Company, has entered into a dealer
agreement with each of the manufacturers listed on Schedule A hereto
(collectively, the "Dealer Agreements"), each of which has been duly
authorized, executed and delivered by the Company or the applicable
subsidiary, is in full force and effect and constitutes the valid and
binding agreement between the parties thereto, enforceable in
accordance with its terms, subject to applicable Federal and state
franchise laws except as would not have a Material Adverse Effect; the
Company or the applicable subsidiaries are in compliance with all terms
and conditions of the Dealer Agreements, and, to the best knowledge of
the Company, there has not occurred any default under any of the Dealer
Agreements or any event that with the giving of notice or the lapse of
time would constitute a default thereunder except as would not have a
Material Adverse Effect.
(u) Except as disclosed in the Prospectus, the Company has
reviewed its operations and that of its subsidiaries and any third
parties with which the Company or any of its subsidiaries has a
material relationship to evaluate the extent to which the business or
operations of the Company or any of its subsidiaries will be affected
by the Year 2000 Problem. Except as disclosed in the Prospectus, as a
result of such review, the Company has no reason to believe, and does
not believe, that the Year 2000 Problem will have a Material Adverse
Effect or result in any material loss or interference with the
Company's business or operations. The "Year 2000 Problem" as used
herein means any significant risk that computer hardware or software
used in the receipt, transmission, processing, manipulation, storage,
retrieval, retransmission or other utilization of data or in the
operation of mechanical or electrical systems of any kind will not, in
the case of dates or time periods occurring after December 31, 1999,
function at least as effectively as in the case of dates or time
periods occurring prior to January 1, 2000.
3. Upon the execution of the Pricing Agreement applicable to any
Designated Shares and authorization by the Representatives of the release of the
Firm Shares, the several Underwriters propose to offer the Firm Shares for sale
upon the terms and conditions set forth in the Prospectus as amended or
supplemented.
The Company may specify in the Pricing Agreement applicable to any
Designated Shares that the Company thereby grants to the Underwriters the right
(an "Overallotment Option") to purchase at their election up to the number of
Optional Shares set forth in such Pricing Agreement, on the terms set forth in
the paragraph above, for the sole purpose of covering over-allotments in the
sale of the Firm Shares. Any such election to purchase Optional Shares may be
exercised by written notice from the Representatives to the Company given within
a period specified in the Pricing Agreement, setting forth the aggregate number
of Optional Shares to be purchased and the date on which such Optional Shares
are to be delivered, as determined by the Representatives but in no event
earlier than the First Time of Delivery (as defined in Section 4 hereof) or,
unless the Representatives and the Company otherwise agree in writing, earlier
than or later than the respective number of business days after the date of such
notice set forth in such Pricing Agreement.
The number of Optional Shares to be added to the number of Firm Shares
to be purchased by each Underwriter as set forth in Schedule I to the Pricing
Agreement applicable to such Designated Shares shall be, in each case, the
number of Optional Shares which the Company has been advised by the
Representatives have been attributed to such Underwriter; provided that, if the
Company has not been so advised, the number of Optional Shares to be so added
shall be, in each case, that proportion of Optional Shares which the number of
Firm Shares to be purchased by such Underwriter under such
7
<PAGE> 8
Pricing Agreement bears to the aggregate number of Firm Shares (rounded as the
Representatives may determine to the nearest 100 shares). The total number of
Designated Shares to be purchased by all the Underwriters pursuant to such
Pricing Agreement shall be the aggregate number of Firm Shares set forth in
Schedule I to such Pricing Agreement plus the aggregate number of Optional
Shares which the Underwriters elect to purchase.
4. Certificates for the Firm Shares and the Optional Shares to be
purchased by each Underwriter pursuant to the Pricing Agreement relating
thereto, in the form specified in such Pricing Agreement and in such authorized
denominations and registered in such names as the Representatives may request
upon at least forty-eight hours' prior notice, shall be delivered by or on
behalf of the Company to the Representatives for the account of such
Underwriter, against payment by such Underwriter or on its behalf of the
purchase price therefor by wire transfer of Federal (same-day) funds to the
account specified by the Company to Goldman, Sachs & Co. at least forty-eight
hours in advance as specified in such Pricing Agreement, (i) with respect to the
Firm Shares, all in the manner and at the place and time and date specified in
such Pricing Agreement or at such other place and time and date as the
Representatives and the Company may agree upon in writing, such time and date
being herein called the "First Time of Delivery" and (ii) with respect to the
Optional Shares, if any, in the manner and at the time and date specified by the
Representatives in the written notice given by the Representatives of the
Underwriters' election to purchase such Optional Shares, or at such other time
and date as the Representatives and the Company may agree upon in writing, such
time and date, if not the First Time of Delivery, herein called the "Second Time
of Delivery". Each such time and date for delivery is herein called a "Time of
Delivery".
5. The Company agrees with each of the Underwriters of any Designated
Shares:
(a) To prepare the Prospectus as amended or supplemented in
relation to the applicable Designated Shares in a form approved by the
Representatives and to file such Prospectus pursuant to Rule 424(b)
under the Act not later than the Commission's close of business on the
second business day following the execution and delivery of the Pricing
Agreement relating to the applicable Designated Shares or, if
applicable, such earlier time as may be required by Rule 424(b); to
make no further amendment or any supplement to the Registration
Statement or Prospectus as amended or supplemented after the date of
the Pricing Agreement relating to such Shares and prior to any Time of
Delivery for such Shares which shall be disapproved by the
Representatives for such Shares promptly after reasonable notice
thereof; to advise the Representatives promptly of any such amendment
or supplement after any Time of Delivery for such Shares and furnish
the Representatives with copies thereof; to file promptly all reports
and any definitive proxy or information statements required to be filed
by the Company with the Commission pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act for so long as the delivery of a
prospectus is required in connection with the offering or sale of such
Shares, and during such same period to advise the Representatives,
promptly after it receives notice thereof, of the time when any
amendment to the Registration Statement has been filed or becomes
effective or any supplement to the Prospectus or any amended Prospectus
has been filed with the Commission, of the issuance by the Commission
of any stop order or of any order preventing or suspending the use of
any prospectus relating to the Shares, of the suspension of the
qualification of such Shares for offering or sale in any jurisdiction,
of the initiation or threatening of any proceeding for any such
purpose, or of any request by the Commission for the amending or
supplementing of the Registration Statement or Prospectus or for
additional information; and, in the event of the issuance of any such
stop order or of any such order preventing or suspending
8
<PAGE> 9
the use of any prospectus relating to the Shares or suspending any such
qualification, to promptly use its best efforts to obtain the
withdrawal of such order;
(b) Promptly from time to time to take such action as the
Representatives may reasonably request to qualify such Shares for
offering and sale under the securities laws of such jurisdictions as
the Representatives may request and to comply with such laws so as to
permit the continuance of sales and dealings therein in such
jurisdictions for as long as may be necessary to complete the
distribution of such Shares, provided that in connection therewith the
Company shall not be required to qualify as a foreign corporation or to
file a general consent to service of process in any jurisdiction;
(c) Prior to 10:00 a.m., New York City time, on the New York
Business Day next succeeding the date of this Agreement and from time
to time, to furnish the Underwriters with copies of the Prospectus in
New York City as amended or supplemented in such quantities as the
Representatives may reasonably request, and, if the delivery of a
prospectus is required at any time in connection with the offering or
sale of the Shares and if at such time any event shall have occurred as
a result of which the Prospectus as then amended or supplemented would
include an untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made when such
Prospectus is delivered, not misleading, or, if for any other reason it
shall be necessary during such same period to amend or supplement the
Prospectus or to file under the Exchange Act any document incorporated
by reference in the Prospectus in order to comply with the Act or the
Exchange Act, to notify the Representatives and upon their request to
file such document and to prepare and furnish without charge to each
Underwriter and to any dealer in securities as many copies as the
Representatives may from time to time reasonably request of an amended
Prospectus or a supplement to the Prospectus which will correct such
statement or omission or effect such compliance;
(d) To make generally available to its securityholders as soon as
practicable, but in any event not later than eighteen months after the
effective date of the Registration Statement (as defined in Rule 158(c)
under the Act), an earnings statement of the Company and its
subsidiaries (which need not be audited) complying with Section 11(a)
of the Act and the rules and regulations of the Commission thereunder
(including, at the option of the Company, Rule 158);
(e) During the period beginning from the date of the Pricing
Agreement for such Designated Shares and continuing to and including
the date 90 days after the date of the Pricing Agreement not to offer,
sell, contract to sell or otherwise dispose of, except as provided
hereunder, any common stock or any securities of the Company that are
substantially similar to such Designated Shares, including but not
limited to any securities that are convertible into or exchangeable
for, or that represent the right to receive, common stock or any such
substantially similar securities (other than (i) pursuant to employee
stock option plans existing on, or upon the conversion or exchange of
convertible or exchangeable securities outstanding as of, the date of
the Pricing Agreement for such Designated Shares or (ii) in connection
with and as consideration for acquisitions of automobile dealerships;
provided that the proposed transferee agrees in writing for the benefit
of the Underwriters to be bound by the foregoing provisions) without
the prior written consent of the Representatives; and
9
<PAGE> 10
(f) If the Company elects to rely upon Rule 462(b), the Company
shall file a Rule 462(b) Registration Statement with the Commission in
compliance with Rule 462(b) by 10:00 P.M., Washington, D.C. time, on
the date of this Agreement, and the Company shall at the time of filing
either pay to the Commission the filing fee for the Rule 462(b)
Registration Statement or give irrevocable instructions for the payment
of such fee pursuant to Rule 111(b) under the Act.
(g) During a period of five years from the date hereof, to furnish
(unless otherwise publicly available on Edgar) to the Representatives
copies of all reports or other communications (financial or other)
furnished to stockholders of the Company, and to deliver to the
Representatives (i) as soon as practicable after they are available,
copies of any reports and financial statements furnished to or filed
with the Commission or any securities exchange (other than filings made
on a confidential basis) on which the Shares or any class of securities
of the Company is listed; and (ii) such additional information
concerning the business and financial condition of the Company as the
Representatives may from time to time reasonably request (such
financial statements to be on a consolidated basis to the extent the
accounts of the Company and its subsidiaries are consolidated in
reports furnished to its stockholders generally or to the Commission);
and
(h) To use the net proceeds received by it from the sale of the
Shares pursuant to this Agreement and any Pricing Agreement in the
manner specified in the Prospectus under the caption "Use of Proceeds".
6. The Company covenants and agrees with the several Underwriters that
the Company will pay or cause to be paid the following: (i) the fees,
disbursements and expenses of the Company's counsel and accountants in
connection with the registration of the Shares under the Act and all other
expenses in connection with the preparation, printing and filing of the
Registration Statement, any Preliminary Prospectus and the Prospectus and
amendments and supplements thereto and the mailing and delivering of copies
thereof to the Underwriters and dealers; (ii) the cost of printing or producing
any Agreement among Underwriters, this Agreement, any Pricing Agreement, any
Blue Sky Memorandum, closing documents (including compilations thereof) and any
other documents in connection with the offering, purchase, sale and delivery of
the Shares; (iii) all expenses in connection with the qualification of the
Shares for offering and sale under state securities laws as provided in Section
5(b) hereof, including the fees and disbursements of counsel for the
Underwriters in connection with such qualification and in connection with the
Blue Sky survey(s); (iv) any filing fees incident to, and the fees and
disbursements of counsel for the Underwriters in connection with, any required
reviews by the National Association of Securities Dealers, Inc. of the terms of
the sale of the Shares; (v) the cost of preparing certificates for the Shares;
(vi) the cost and charges of any transfer agent or registrar or dividend
disbursing agent; and (vii) all other costs and expenses incident to the
performance of its obligations hereunder and under any Over-allotment Options
which are not otherwise specifically provided for in this Section. It is
understood, however, that, except as provided in this Section, and Sections 8
and 11 hereof, the Underwriters will pay all of their own costs and expenses,
including the fees of their counsel, transfer taxes on resale of any of the
Shares by them, and any advertising expenses connected with any offers they may
make.
7. The obligations of the Underwriters of any Designated Shares under
the Pricing Agreement relating to such Designated Shares shall be subject, in
the discretion of the Representatives, to the condition that all representations
and warranties and other statements of the Company in or incorporated by
reference in the Pricing Agreement relating to such Designated Shares are, at
and as of each Time of Delivery for such Designated Shares, true and correct,
the condition that the Company shall have
10
<PAGE> 11
performed all of its obligations hereunder theretofore to be performed, and the
following additional conditions:
(a) The Prospectus as amended or supplemented in relation to such
Designated Shares shall have been filed with the Commission pursuant to
Rule 424(b) within the applicable time period prescribed for such
filing by the rules and regulations under the Act and in accordance
with Section 5(a) hereof; if the Company has elected to rely upon Rule
462(b), the Rule 462(b) Registration Statement shall have become
effective by 10:00 P.M., Washington, D.C. time, on the date of this
Agreement; no stop order suspending the effectiveness of the
Registration Statement or any part thereof shall have been issued and
no proceeding for that purpose shall have been initiated or threatened
by the Commission; and all requests for additional information on the
part of the Commission shall have been complied with to the
Representatives' reasonable satisfaction;
(b) Sullivan & Cromwell, counsel for the Underwriters, shall have
furnished to the Representatives such opinion or opinions, dated the
Time of Delivery for such Designated Shares, with respect to the
Designated Shares, this Agreement, the Pricing Agreement, the
Registration Statement and the Prospectus as well as such other related
matters as the Representatives may reasonably request, and such counsel
shall have received such papers and information as they may reasonably
request to enable them to pass upon such matters;
(c) Vinson & Elkins L.L.P., counsel for the Company, shall have
furnished to the Representatives their written opinion (a draft of
which is attached hereto as Annex III), dated the Time of Delivery for
such Designated Shares, in form and substance satisfactory to the
Representatives, to the effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of
the State of Delaware, with corporate power and authority to
own its properties and conduct its business as described in
the Prospectus as amended or supplemented;
(ii) The Company's authorized capital stock is as set
forth in the Prospectus as amended or supplemented, and all of
the issued shares of capital stock of the Company (including
the Designated Shares being delivered at such Time of
Delivery) have been duly and validly authorized and issued and
are fully paid and non-assessable; and the Designated Shares
conform in all material respects to the description thereof in
the Prospectus as amended or supplemented;
(iii) This Agreement and the Pricing Agreement with
respect to the Designated Shares have been duly authorized,
executed and delivered by the Company;
(iv) The issue and sale of the Designated Shares being
delivered at such Time of Delivery and the compliance by the
Company with all of the provisions of this Agreement and the
Pricing Agreement with respect to the Designated Shares and
the consummation of the transactions herein and therein
contemplated will not (i) conflict with or result in a breach
or violation of any of the terms or provisions of, or
constitute a default under, any Dealer Agreement, indenture,
mortgage, deed of trust, loan agreement or other agreement or
instrument known to such counsel to which the Company or any
of its subsidiaries is a
11
<PAGE> 12
party or by which the Company or any of its subsidiaries is
bound or to which any of the property or assets of the Company
or any of its subsidiaries is subject and which is material to
the Company and its subsidiaries taken as a whole, (ii) result
in any violation of the provisions of the Certificate of
Incorporation or By-laws of the Company or any of its
subsidiaries or (iii) result in a violation of any statute or
any order, rule or regulation known to such counsel of any
court or governmental agency or body having jurisdiction over
the Company or any of its subsidiaries or any of their
properties (except that such counsel need express no opinion
with respect to state securities laws or Blue Sky laws with
respect to this paragraph, except in the case of clauses (i)
and (iii) for such breaches or violations that could not
reasonably be expected to have a Material Adverse Effect);
(v) No consent, approval, authorization, order,
registration or qualification of or with any such court or
governmental agency or body is required for the issue and sale
of the Designated Shares being delivered at such Time of
Delivery, or the consummation by the Company of the
transactions contemplated by this Agreement or such Pricing
Agreement, except such as have been obtained under the Act and
such consents, approvals, authorizations, registrations or
qualifications as may be required under state securities or
blue sky laws in connection with the purchase and distribution
of the Designated Shares by the Underwriters;
(vi) The statements set forth in the Prospectus as amended
or supplemented under the caption "Description of Capital
Stock" and the description of the Company's common stock
incorporated by reference in the Prospectus, insofar as they
purport to constitute a summary of the terms of the Shares,
and under the captions "Plan of Distribution" and
"Underwriting", insofar as they purport to describe the
provisions of the laws and documents referred to therein, are
accurate in all material respects;
(vii) The Company is not an "investment company" or an
entity "controlled" by an "investment company", as such terms
are defined in the Investment Company Act;
(viii) The documents incorporated by reference in the
Prospectus as amended or supplemented (other than the
financial statements, including the notes thereto, and
financial statement schedules and other financial and
accounting information included therein, as to which such
counsel need express no opinion), when they were filed with
the Commission appeared on their face to comply as to form in
all material respects with the requirements of the Exchange
Act and the rules and regulations of the Commission thereunder
(such counsel may state that, in passing upon such form, they
have necessarily assumed the correctness and completeness of
the statements made there).
(ix) The Registration Statement and the Prospectus as
amended or supplemented and any further amendments and
supplements thereto made by the Company prior to the Time of
Delivery for such Designated Shares (other than the financial
statements, including the notes thereto, and financial
statement schedules and other financial and accounting
information included therein, as to which such counsel need
express no opinion) comply as to form in all material respects
with the requirements of the Act and the rules and regulations
thereunder;
12
<PAGE> 13
Such counsel shall also state that, although they are not passing upon,
do not assume any responsibility for, and have not independently
verified, the accuracy, completeness or fairness of the statements
contained in the Registration Statement, the Prospectus and any further
amendments or supplements to the Prospectus made by the Company prior
to such Time of Delivery, except for those referred to in the opinion
in subsection (xi) of this Section 7(c), and assume no responsibility
for and have not independently verified the accuracy, completeness or
fairness of the financial statements, including the notes thereto and
the financial statement schedules and other financial and accounting
information included in the Registration Statement, the Prospectus and
any further amendments or supplements to the Prospectus made by the
Company prior to such Time of Delivery (and have not examined the
financial records from which such statements and data were derived), no
information has come to their attention that causes them to believe
that:
as of its effective date, the Registration Statement
or any further amendment thereto made by the Company
prior to the Time of Delivery (other than the
financial statements, including the notes thereto,
and financial statement schedules and other financial
and accounting information included therein, as to
which such counsel need express no opinion) contained
an untrue statement of a material fact or omitted to
state a material fact required to be stated therein
or necessary to make the statements therein not
misleading or that, as of its date, the Prospectus as
amended or supplemented or any further amendment or
supplement thereto made by the Company prior to the
Time of Delivery (other than the financial
statements, including the notes thereto, and
financial statement schedules and other financial and
accounting information included therein, as to which
such counsel need express no opinion) contained an
untrue statement of a material fact or omitted to
state a material fact necessary to make the
statements therein, in the light of the circumstances
under which they were made, not misleading or that,
as of such Time of Delivery, the Prospectus as
amended or supplemented or any further amendment or
supplement thereto made by the Company prior to such
Time of Delivery (other than the financial
statements, including the notes thereto, and
financial statement schedules and other financial and
accounting information included therein, as to which
such counsel need express no opinion) contains an
untrue statement of a material fact or omits to state
a material fact necessary to make the statements
therein, in the light of the circumstances under
which they were made, not misleading; and they do not
know of any amendment to the Registration Statement
required to be filed or any contracts or other
documents of a character required to be filed as an
exhibit to the Registration Statement or required to
be incorporated by reference into the Prospectus as
amended or supplemented or required to be described
in the Registration Statement or the Prospectus as
amended or supplemented which are not filed or
incorporated by reference or described as required.
(d) (i) On the date of the Pricing Agreement for such Designated
Shares at a time prior to the execution of the Pricing Agreement with
respect to such Designated Shares and at the Time of Delivery for such
Designated Shares, Arthur Andersen LLP shall have furnished to the
Representatives a letter or letters, dated the respective dates of
delivery thereof, in form and substance satisfactory to the
Representatives, to the effect set forth in Annex II-A hereto, and (ii)
on the date of the Pricing Agreement for such Designated Shares at a
time prior to the execution
13
<PAGE> 14
of the Pricing Agreement with respect to such Designated Shares, Crowe,
Chizek and Company LLP shall have furnished to the Representatives a
letter or letters, dated the date of delivery thereof, in form and
substance satisfactory to the Representatives, to the effect set forth
in Annex II-B hereto;
(e) (i) The Company and its subsidiaries, taken as a whole, shall
not have sustained since the date of the latest audited financial
statements included or incorporated by reference in the Prospectus as
amended prior to the date of the Pricing Agreement relating to the
Designated Shares any loss or interference with their business from
fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action,
order or decree, otherwise than as set forth or contemplated in the
Prospectus as amended prior to the date of the Pricing Agreement
relating to the Designated Shares, and (ii) since the respective dates
as of which information is given in the Prospectus as amended prior to
the date of the Pricing Agreement relating to the Designated Shares
there shall not have been any change in the capital stock (other than
the exercise of certain employee stock options and awards and the
issuance of common stock of the Company in connection with acquisitions
by the Company that are described in the Prospectus) or increase in
short-term debt or long-term debt of the Company and its subsidiaries,
taken as a whole (other than floor plan borrowings in the ordinary
course of business or in connection with the consummation of
acquisitions described in the Prospectus), or any change, or any
development involving a prospective change, in or affecting the general
affairs, management, financial position, stockholders' equity or
results of operations of the Company and its subsidiaries, taken as a
whole, otherwise than as set forth or contemplated in the Prospectus as
amended prior to the date of the Pricing Agreement relating to the
Designated Shares, the effect of which, in any such case described in
Clause (i) or (ii), is in the judgment of the Representatives so
material and adverse as to make it impracticable or inadvisable to
proceed with the offering or the delivery of the Designated Shares on
the terms and in the manner contemplated in the Prospectus as first
amended or supplemented relating to the Designated Shares;
(f) On or after the date of the Pricing Agreement relating to the
Designated Shares (i) no downgrading shall have occurred in the rating
accorded the Company's debt securities by any "nationally recognized
statistical rating organization", as that term is defined by the
Commission for purposes of Rule 436(g)(2) under the Act, and (ii) no
such organization shall have publicly announced that it has under
surveillance or review, with possible negative implications, its rating
of any of the Company's debt securities;
(g) On or after the date of the Pricing Agreement relating to the
Designated Shares there shall not have occurred any of the following:
(i) a suspension or material limitation in trading in securities
generally on the New York Stock Exchange; (ii) a suspension or material
limitation in trading in the Company's securities on the New York Stock
Exchange; (iii) a general moratorium on commercial banking activities
declared by either Federal or New York State authorities; or (iv) the
outbreak or escalation of hostilities involving the United States or
the declaration by the United States of a national emergency or war, if
the effect of any such event specified in this Clause (iv) in the
judgment of the Representatives makes it impracticable or inadvisable
to proceed with the public offering or the delivery of the Designated
Shares on the terms and in the manner contemplated in the Prospectus as
first amended or supplemented relating to the Designated Shares;
14
<PAGE> 15
(h) The Shares at each Time of Delivery shall have been duly listed,
subject to notice of issuance, on the New York Stock Exchange.
(i) The Company shall have complied with the provisions of Section
5(c) hereof with respect to the furnishing of prospectuses on the New
York Business Day next succeeding the date of the Pricing Agreement
relating to such Designated Shares; and
(j) The Company shall have furnished or caused to be furnished to
the Representatives at the Time of Delivery for such Designated Shares
a certificate or certificates of officers of the Company satisfactory
to the Representatives as to the accuracy of the representations and
warranties of the Company herein at and as of such Time of Delivery, as
to the performance by the Company of all of its obligations hereunder
to be performed at or prior to such Time of Delivery, as to the matters
set forth in subsections (a) and (e) of this Section and as to such
other matters as the Representatives may reasonably request.
8. (a) The Company will indemnify and hold harmless each Underwriter
against any losses, claims, damages or liabilities, joint or several, to which
such Underwriter may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus, any preliminary
prospectus supplement, the Registration Statement, the Prospectus as amended or
supplemented or any other prospectus relating to the Shares, or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse each
Underwriter for any legal or other expenses reasonably incurred by such
Underwriter in connection with investigating or defending any such action or
claim as such expenses are incurred; provided, however, that the Company shall
not be liable in any such case to the extent that any such loss, claim, damage
or liability arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in any Preliminary
Prospectus, any preliminary prospectus supplement, the Registration Statement,
the Prospectus as amended or supplemented or any other prospectus relating to
the Shares, or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by any Underwriter
of Designated Shares through the Representatives expressly for use in the
Prospectus as amended or supplemented relating to such Shares.
(b) Each Underwriter will indemnify and hold harmless the Company against
any losses, claims, damages or liabilities to which the Company may become
subject, under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, any preliminary prospectus supplement, the Registration
Statement, the Prospectus as amended or supplemented or any other prospectus
relating to the Shares, or any amendment or supplement thereto, or arise out of
or are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged omission was
made in any Preliminary Prospectus, any preliminary prospectus supplement, the
Registration Statement, the Prospectus as amended or supplemented or any other
prospectus relating to the Shares, or any such amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company by such Underwriter through the Representatives expressly for use
therein; and will reimburse the Company for any legal or other
15
<PAGE> 16
expenses reasonably incurred by the Company in connection with investigating or
defending any such action or claim as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under subsection (a) or
(b) above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party shall
not relieve it from any liability which it may have to any indemnified party
otherwise than under such subsection. In case any such action shall be brought
against any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party), and,
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party under such subsection for any legal expenses of
other counsel or any other expenses, in each case subsequently incurred by such
indemnified party, in connection with the defense thereof other than reasonable
costs of investigation. No indemnifying party shall, without the written consent
of the indemnified party, effect the settlement or compromise of, or consent to
the entry of any judgment with respect to, any pending or threatened action or
claim in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified party is an actual or potential party
to such action or claim) unless such settlement, compromise or judgment (i)
includes an unconditional release of the indemnified party from all liability
arising out of such action or claim and (ii) does not include a statement as to,
or an admission of, fault, culpability or a failure to act, by or on behalf of
any indemnified party.
(d) If the indemnification provided for in this Section 8 is unavailable to
or insufficient to hold harmless an indemnified party under subsection (a) or
(b) above in respect of any losses, claims, damages or liabilities (or actions
in respect thereof) referred to therein, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (or actions in respect thereof)
in such proportion as is appropriate to reflect the relative benefits received
by the Company on the one hand and the Underwriters of the Designated Shares on
the other from the offering of the Designated Shares to which such loss, claim,
damage or liability (or action in respect thereof) relates. If, however, the
allocation provided by the immediately preceding sentence is not permitted by
applicable law or if the indemnified party failed to give the notice required
under subsection (c) above, then each indemnifying party shall contribute to
such amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Company on the one hand and the Underwriters of the Designated
Shares on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations. The relative
benefits received by the Company on the one hand and such Underwriters on the
other shall be deemed to be in the same proportion as the total net proceeds
from such offering (before deducting expenses) received by the Company bear to
the total underwriting discounts and commissions received by such Underwriters.
The relative fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company on the one hand or such Underwriters on the other and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission. The Company and the
Underwriters agree that it would not be just and equitable if contribution
pursuant to this subsection (d) were determined
16
<PAGE> 17
by pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to above in this subsection (d). The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to above
in this subsection (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
subsection (d), no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the applicable Designated
Shares underwritten by it and distributed to the public were offered to the
public exceeds the amount of any damages which such Underwriter has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The obligations of the Underwriters of Designated Shares in
this subsection (d) to contribute are several in proportion to their respective
underwriting obligations with respect to such Shares and not joint.
(e) The obligations of the Company under this Section 8 shall be in
addition to any liability which the Company may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls any
Underwriter within the meaning of the Act; and the obligations of the
Underwriters under this Section 8 shall be in addition to any liability which
the respective Underwriters may otherwise have and shall extend, upon the same
terms and conditions, to each officer and director of the Company and to each
person, if any, who controls the Company within the meaning of the Act.
9. (a) If any Underwriter shall default in its obligation to purchase the
Firm Shares or Optional Shares which it has agreed to purchase under the Pricing
Agreement relating to such Designated Shares, the Representatives may in their
discretion arrange for themselves or another party or other parties to purchase
such Designated Shares on the terms contained herein. If within thirty-six hours
after such default by any Underwriter the Representatives do not arrange for the
purchase of such Firm Shares or Optional Shares, as the case may be, then the
Company shall be entitled to a further period of thirty-six hours within which
to procure another party or other parties satisfactory to the Representatives to
purchase such Designated Shares on such terms. In the event that, within the
respective prescribed period, the Representatives notify the Company that they
have so arranged for the purchase of such Designated Shares, or the Company
notifies the Representatives that it has so arranged for the purchase of such
Designated Shares, the Representatives or the Company shall have the right to
postpone a Time of Delivery for such Designated Shares for a period of not more
than seven days, in order to effect whatever changes may thereby be made
necessary in the Registration Statement or the Prospectus as amended or
supplemented, or in any other documents or arrangements, and the Company agrees
to file promptly any amendments or supplements to the Registration Statement or
the Prospectus which in the opinion of the Representatives may thereby be made
necessary. The term "Underwriter" as used in this Agreement shall include any
person substituted under this Section with like effect as if such person had
originally been a party to the Pricing Agreement with respect to such Designated
Shares.
(b) If, after giving effect to any arrangements for the purchase of the
Firm Shares or Optional Shares, as the case may be, of a defaulting Underwriter
or Underwriters by the Representatives and the Company as provided in subsection
(a) above, the aggregate number of such Shares which remains unpurchased does
not exceed one-eleventh of the aggregate number of the Firm Shares or Optional
Shares,
17
<PAGE> 18
as the case may be, to be purchased at the respective Time of Delivery, then the
Company shall have the right to require each non-defaulting Underwriter to
purchase the number of Firm Shares or Optional Shares, as the case may be, which
such Underwriter agreed to purchase under the Pricing Agreement relating to such
Designated Shares and, in addition, to require each non-defaulting Underwriter
to purchase its pro rata share (based on the number of Firm Shares or Optional
Shares, as the case may be, which such Underwriter agreed to purchase under such
Pricing Agreement) of the Firm Shares or Optional Shares, as the case may be, of
such defaulting Underwriter or Underwriters for which such arrangements have not
been made; but nothing herein shall relieve a defaulting Underwriter from
liability for its default.
(c) If, after giving effect to any arrangements for the purchase of the
Firm Shares or Optional Shares, as the case may be, of a defaulting Underwriter
or Underwriters by the Representatives and the Company as provided in subsection
(a) above, the aggregate number of Firm Shares or Optional Shares, as the case
may be, which remains unpurchased exceeds one-eleventh of the aggregate number
of the Firm Shares or Optional Shares, as the case may be, to be purchased at
the respective Time of Delivery, or if the Company shall not exercise the right
described in subsection (b) above to require non-defaulting Underwriters to
purchase Firm Shares or Optional Shares, as the case may be, of a defaulting
Underwriter or Underwriters, then the Pricing Agreement relating to such Firm
Shares or the Over-Allotment Option relating to such Optional Shares, as the
case may be, shall thereupon terminate, without liability on the part of any
non-defaulting Underwriter or the Company except for the expenses to be borne by
the Company and the Underwriters as provided in Section 6 hereof and the
indemnity and contribution agreements in Section 8 hereof; but nothing herein
shall relieve a defaulting Underwriter from liability for its default.
10. The respective indemnities, agreements, representations, warranties and
other statements of the Company and the several Underwriters, as set forth in
this Agreement or made by or on behalf of them, respectively, pursuant to this
Agreement, shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of any Underwriter or any controlling person of any Underwriter or the Company,
or any officer or director or controlling person of the Company and shall
survive delivery of and payment for the Shares.
11. If any Pricing Agreement or Over-Allotment Option shall be terminated
pursuant to Section 9 hereof, the Company shall not then be under any liability
to any Underwriter with respect to the Firm Shares or Optional Shares with
respect to which such Pricing Agreement shall have been terminated except as
provided in Sections 6 and 8 hereof; but, if for any other reason, the
Designated Shares are not delivered by or on behalf of the Company as provided
herein, the Company will reimburse the Underwriters through the Representatives
for all out-of-pocket expenses approved in writing by the Representatives,
including fees and disbursements of counsel, reasonably incurred by the
Underwriters in making preparations for the purchase, sale and delivery of such
Designated Shares, but the Company shall then be under no further liability to
any Underwriter with respect to such Designated Shares except as provided in
Sections 6 and 8 hereof.
12. In all dealings hereunder, the Representatives of the Underwriters of
Designated Shares shall act on behalf of each of such Underwriters, and the
parties hereto shall be entitled to act and rely upon any statement, request,
notice or agreement on behalf of any Underwriter made or given by such
Representatives jointly or by such of the Representatives, if any, as may be
designated for such purpose in the Pricing Agreement.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex or
facsimile transmission to the address of the Representatives as set forth in the
Pricing Agreement; and if to the Company shall be delivered or sent
18
<PAGE> 19
by mail, telex or facsimile transmission to the address of the Company set forth
in the Registration Statement, Attention: Secretary; provided, however, that any
notice to an Underwriter pursuant to Section 8(c) hereof shall be delivered or
sent by mail, telex or facsimile transmission to such Underwriter at its address
set forth in its Underwriters' Questionnaire, or telex constituting such
Questionnaire, which address will be supplied to the Company by the
Representatives upon request. Any such statements, requests, notices or
agreements shall take effect upon receipt thereof.
13. This Agreement and each Pricing Agreement shall be binding upon, and
inure solely to the benefit of, the Underwriters, the Company and, to the extent
provided in Sections 8 and 10 hereof, the officers and directors of the Company
and each person who controls the Company or any Underwriter, and their
respective heirs, executors, administrators, successors and assigns, and no
other person shall acquire or have any right under or by virtue of this
Agreement or any such Pricing Agreement. No purchaser of any of the Shares from
any Underwriter shall be deemed a successor or assign by reason merely of such
purchase.
14. Time shall be of the essence of each Pricing Agreement. As used herein,
"business day" shall mean any day when the Commission's office in Washington,
D.C. is open for business.
15. THIS AGREEMENT AND EACH PRICING AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
19
<PAGE> 20
16. This Agreement and each Pricing Agreement may be executed by any one or
more of the parties hereto and thereto in any number of counterparts, each of
which shall be deemed to be an original, but all such respective counterparts
shall together constitute one and the same instrument.
Very truly yours,
Group 1 Automotive, Inc.
By: /s/ B.B. Hollingsworth, Jr.
---------------------------------
B.B. Hollingsworth, Jr.
Chairman, President and
Chief Executive Officer
20
<PAGE> 21
SCHEDULE A
Ford Motor Company
General Motors Corporation
DaimlerChrysler
Toyota Motor Corp. and Toyota Motor Sales, U.S.A., Inc.
Honda Motor Co., Ltd. and American Honda Motor Co., Inc.
Nissan Motor Co., Ltd. and Nissan Motor North America, Inc.
Mitsubishi Motor Sales of America, Inc.
American Isuzu Motors, Inc.
American Suzuki Motor Corporation
Volvo Cars of North America, Inc.
<PAGE> 22
ANNEX I
PRICING AGREEMENT
[Names and addresses
of Representatives]
Ladies and Gentlemen:
Group 1 Automotive, Inc., a Delaware corporation (the "Company"),
proposes, subject to the terms and conditions stated herein and in the
Underwriting Agreement, dated ________, _____ (the "Underwriting Agreement"), to
issue and sell to the Underwriters named in Schedule I hereto (the
"Underwriters") the Shares specified in Schedule II hereto (the "Designated
Shares") consisting of Firm Shares and any Optional Shares the Underwriters may
elect to purchase. Each of the provisions of the Underwriting Agreement is
incorporated herein by reference in its entirety, and shall be deemed to be a
part of this Agreement to the same extent as if such provisions had been set
forth in full herein; and each of the representations and warranties set forth
therein shall be deemed to have been made at and as of the date of this Pricing
Agreement, except that each representation and warranty which refers to the
Prospectus in Section 2 of the Underwriting Agreement shall be deemed to be a
representation or warranty as of the date of the Underwriting Agreement in
relation to the Prospectus (as therein defined), and also a representation and
warranty as of the date of this Pricing Agreement in relation to the Prospectus
as amended or supplemented relating to the Designated Shares which are the
subject of this Pricing Agreement. Each reference to the Representatives herein
and in the provisions of the Underwriting Agreement so incorporated by reference
shall be deemed to refer to you. Unless otherwise defined herein, terms defined
in the Underwriting Agreement are used herein as therein defined. The
Representatives designated to act on behalf of the Representatives and on behalf
of each of the Underwriters of the Designated Shares pursuant to Section 12 of
the Underwriting Agreement and the address of the Representatives referred to in
such Section 12 are set forth in Schedule II hereto.
An amendment to the Registration Statement, or a supplement to the
Prospectus, as the case may be, relating to the Designated Shares, in the form
heretofore delivered to you is now proposed to be filed with the Commission.
Subject to the terms and conditions set forth herein and in the
Underwriting Agreement incorporated herein by reference, (a) the Company agrees
to issue and sell to each of the Underwriters, and each of the Underwriters
agrees, severally and not jointly, to purchase from the Company at the time and
place and at the purchase price to the Underwriters set forth in Schedule II
hereto, the number of Firm Shares set forth opposite the name of such
Underwriter in Schedule I hereto and, (b) in the event and to the extent that
the Underwriters shall exercise the election to purchase Optional Shares, as
provided below, the Company agrees to issue and sell to each of the
Underwriters, and each of the Underwriters agrees, severally and not jointly, to
purchase from the Company at the purchase price to the Underwriters set forth in
Schedule II hereto that portion of the number of Optional Shares as to which
such election shall have been exercised.
The Company hereby grants to each of the Underwriters the right to
purchase at their election up to the number of Optional Shares set forth
opposite the name of such Underwriter in Schedule I hereto on the terms referred
to in the paragraph above for the sole purpose of covering over-allotments in
the
1
<PAGE> 23
sale of the Firm Shares. Any such election to purchase Optional Shares may be
exercised by written notice from the Representatives to the Company given within
a period of 30 calendar days after the date of this Pricing Agreement, setting
forth the aggregate number of Optional Shares to be purchased and the date on
which such Optional Shares are to be delivered, as determined by the
Representatives, but in no event earlier than the First Time of Delivery or,
unless the Representatives and the Company otherwise agree in writing, no
earlier than two or later than ten business days after the date of such notice.
If the foregoing is in accordance with your understanding, please sign
and return to us _____ counterparts hereof, and upon acceptance hereof by you,
on behalf of each of the Underwriters, this letter and such acceptance hereof,
including the provisions of the Underwriting Agreement incorporated herein by
reference, shall constitute a binding agreement between each of the Underwriters
and the Company. It is understood that your acceptance of this letter on behalf
of each of the Underwriters is or will be pursuant to the authority set forth in
a form of Agreement among Underwriters, the form of which shall be submitted to
the Company for examination upon request, but without warranty on the part of
the Representatives as to the authority of the signers thereof.
Very truly yours,
Group 1 Automotive, Inc.
By:
-------------------------------
Name:
Title:
Accepted as of the date hereof:
[Names of Representatives]
By:
On behalf of each of the Underwriters
2
<PAGE> 24
SCHEDULE I
<TABLE>
<CAPTION>
MAXIMUM
NUMBER
OF OPTIONAL
NUMBER OF SHARES WHICH
FIRM SHARES MAY BE
UNDERWRITER TO BE PURCHASED PURCHASED
- ----------- --------------- ---------
<S> <C> <C>
------------ ------------
Total
============ ============
</TABLE>
3
<PAGE> 25
SCHEDULE II
TITLE OF DESIGNATED SHARES:
NUMBER OF DESIGNATED SHARES:
Number of Firm Shares:
Maximum Number of Optional Shares:
INITIAL OFFERING PRICE TO PUBLIC:
[$........ per Share]
PURCHASE PRICE BY UNDERWRITERS:
[$........ per Share]
FORM OF DESIGNATED SHARES:
Definitive form, to be made available for checking [and packaging] at least
twenty-four hours prior to the Time of Delivery at the office of The Depository
Trust Company or its designated custodian
TIME OF DELIVERY:
9:30 a.m. (New York City time), ____________, ______
CLOSING LOCATION:
NAMES AND ADDRESSES OF REPRESENTATIVES:
Designated Representatives:
Address for Notices, etc.:
4
<PAGE> 26
ANNEX II-A
Pursuant to Section 7(e) of the Underwriting Agreement, Arthur Andersen LLP
shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with
respect to the Company and its subsidiaries within the meaning of the
Act and the applicable published rules and regulations thereunder;
(ii) In their opinion, the financial statements and any
supplementary financial information and schedules audited (and, if
applicable, financial forecasts and/or pro forma financial information)
examined by them and included or incorporated by reference in the
Registration Statement or the Prospectus comply as to form in all
material respects with the applicable accounting requirements of the
Act or the Exchange Act, as applicable, and the related published rules
and regulations thereunder; and, if applicable, they have made a review
in accordance with standards established by the American Institute of
Certified Public Accountants of the consolidated interim financial
statements, selected financial data, pro forma financial information,
financial forecasts and/or condensed financial statements derived from
audited financial statements of the Company for the periods specified
in such letter, as indicated in their reports thereon, copies of which
have been furnished to the representative or representatives of the
Underwriters (the "Representatives") such term to include an
Underwriter or Underwriters who act without any firm being designated
as its or their representatives and are attached hereto;
(iii) They have made a review in accordance with standards
established by the American Institute of Certified Public Accountants
of the unaudited condensed consolidated statements of income,
consolidated balance sheets and consolidated statements of cash flows
included in the Prospectus and/or included in the Company's quarterly
report on Form 10-Q incorporated by reference into the Prospectus as
indicated in their reports thereon copies of which are attached hereto;
and on the basis of specified procedures including inquiries of
officials of the Company who have responsibility for financial and
accounting matters regarding whether the unaudited condensed
consolidated financial statements referred to in paragraph (vi)(A)(i)
below comply as to form in all material respects with the applicable
accounting requirements of the Act and the Exchange Act and the related
published rules and regulations, nothing came to their attention that
caused them to believe that the unaudited condensed consolidated
financial statements do not comply as to form in all material respects
with the applicable accounting requirements of the Act and the Exchange
Act and the related published rules and regulations;
(iv) The unaudited selected financial information with respect
to the consolidated results of operations and financial position of the
Company for the five most recent fiscal years included in the
Prospectus and included or incorporated by reference in Item 6 of the
Company's Annual Report on Form 10-K for the most recent fiscal year
agrees with the corresponding amounts (after restatement where
applicable) in the audited consolidated financial statements for five
such fiscal years which were included or incorporated by reference in
the Company's Annual Reports on Form 10-K for such fiscal years;
(v) They have compared the information in the Prospectus under
selected captions with the disclosure requirements of Regulation S-K
and on the basis of limited procedures specified
A-1
<PAGE> 27
in such letter nothing came to their attention as a result of the
foregoing procedures that caused them to believe that this information
does not conform in all material respects with the disclosure
requirements of Items 301, 302, 402 and 503(d), respectively, of
Regulation S-K;
(vi) On the basis of limited procedures, not constituting an
examination in accordance with generally accepted auditing standards,
consisting of a reading of the unaudited financial statements and other
information referred to below, a reading of the latest available
interim financial statements of the Company and its subsidiaries,
inspection of the minute books of the Company and its subsidiaries
since the date of the latest audited financial statements included or
incorporated by reference in the Prospectus, inquiries of officials of
the Company and its subsidiaries responsible for financial and
accounting matters and such other inquiries and procedures as may be
specified in such letter, nothing came to their attention that caused
them to believe that:
(A) (i) the unaudited condensed consolidated
statements of income, consolidated balance sheets and
consolidated statements of cash flows included in the
Prospectus and/or included or incorporated by reference in the
Company's Quarterly Reports on Form 10-Q incorporated by
reference in the Prospectus do not comply as to form in all
material respects with the applicable accounting requirements
of the Exchange Act and the related published rules and
regulations, or (ii) any material modifications should be made
to the unaudited condensed consolidated statements of income,
consolidated balance sheets and consolidated statements of
cash flows included in the Prospectus or included in the
Company's Quarterly Reports on Form 10-Q incorporated by
reference in the Prospectus for them to be in conformity with
generally accepted accounting principles;
(B) any other unaudited income statement data and
balance sheet items included in the Prospectus do not agree
with the corresponding items in the unaudited consolidated
financial statements from which such data and items were
derived, and any such unaudited data and items were not
determined on a basis substantially consistent with the basis
for the corresponding amounts in the audited consolidated
financial statements included or incorporated by reference in
the Company's Annual Report on Form 10-K for the most recent
fiscal year;
(C) the unaudited financial statements which were not
included in the Prospectus but from which were derived the
unaudited condensed financial statements referred to in clause
(A) and any unaudited income statement data and balance sheet
items included in the Prospectus and referred to in Clause (B)
were not determined on a basis substantially consistent with
the basis for the audited financial statements included or
incorporated by reference in the Company's Annual Report on
Form 10-K for the most recent fiscal year;
(D) any unaudited pro forma consolidated condensed
financial statements included or incorporated by reference in
the Prospectus do not comply as to form in all material
respects with the applicable accounting requirements of the
Act and the published rules and regulations thereunder or the
pro forma adjustments have not been properly applied to the
historical amounts in the compilation of those statements;
A-2
<PAGE> 28
(E) as of a specified date not more than five days
prior to the date of such letter, there have been any changes
in the consolidated capital stock (other than issuances of
capital stock upon exercise of options and stock appreciation
rights, upon earn-outs of performance shares and upon
conversions of convertible securities, in each case which were
outstanding on the date of the latest balance sheet included
or incorporated by reference in the Prospectus) or any
increase in the consolidated long-term debt of the Company and
its subsidiaries, or any decreases in consolidated net current
assets or stockholders' equity or other items specified by the
Representatives, or any increases in any items specified by
the Representatives, in each case as compared with amounts
shown in the latest balance sheet included or incorporated by
reference in the Prospectus, except in each case for changes,
increases or decreases which the Prospectus discloses have
occurred or may occur or which are described in such letter;
and
(F) for the period from the date of the latest
financial statements included or incorporated by reference in
the Prospectus to the specified date referred to in Clause (E)
there were any decreases in consolidated net revenues or
operating profit or the total or per share amounts of
consolidated net income or other items specified by the
Representatives, or any increases in any items specified by
the Representatives, in each case as compared with the
comparable period of the preceding year and with any other
period of corresponding length specified by the
Representatives, except in each case for increases or
decreases which the Prospectus discloses have occurred or may
occur or which are described in such letter; and
(vii) In addition to the audit referred to in their report(s)
included or incorporated by reference in the Prospectus and the limited
procedures, inspection of minute books, inquiries and other procedures
referred to in paragraphs (iii) and (vi) above, they have carried out
certain specified procedures, not constituting an audit in accordance
with generally accepted auditing standards, with respect to certain
amounts, percentages and financial information specified by the
Representatives which are derived from the general accounting records
of the Company and its subsidiaries, which appear in the Prospectus
(excluding documents incorporated by reference), or in Part II of, or
in exhibits and schedules to, the Registration Statement specified by
the Representatives or in documents incorporated by reference in the
Prospectus specified by the Representatives, and have compared certain
of such amounts, percentages and financial information with the
accounting records of the Company and its subsidiaries and have found
them to be in agreement.
All references in this Annex II-A to the Prospectus shall be deemed to
refer to the Prospectus (including the documents incorporated by reference
therein) as defined in the Underwriting Agreement as of the date of the letter
delivered on the date of the Pricing Agreement for purposes of such letter and
to the Prospectus as amended or supplemented (including the documents
incorporated by reference therein) in relation to the applicable Designated
Shares for purposes of the letter delivered at the Time of Delivery for such
Designated Shares.
A-3
<PAGE> 29
ANNEX II-B
Pursuant to Section 7(e) of the Underwriting Agreement, Crowe, Chizek and
Company LLP shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with
respect to Carroll Automotive Group and its subsidiaries within the
meaning of the Act and the applicable published rules and regulations
thereunder; and
(ii) In their opinion, the financial statements and any
supplementary financial information and schedules audited (and, if
applicable, financial forecasts and/or pro forma financial information)
examined by them and included or incorporated by reference in the
Registration Statement or the Prospectus comply as to form in all
material respects with the applicable accounting requirements of the
Act or the Exchange Act, as applicable, and the related published rules
and regulations thereunder.
All references in this Annex II-B to the Prospectus shall be deemed to
refer to the Prospectus (including the documents incorporated by reference
therein) as defined in the Underwriting Agreement as of the date of the letter
delivered on the date of the Pricing Agreement for purposes of such letter.
A-4
<PAGE> 1
EXHIBIT 1.2
GROUP 1 AUTOMOTIVE, INC.
DEBT SECURITIES
--------------------------------
Underwriting Agreement
March 2, 1999
To the Representatives of the
several Underwriters named in the
respective Pricing Agreements
hereinafter described.
Ladies and Gentlemen:
From time to time, Group 1 Automotive, Inc., a Delaware corporation (the
"Company"), proposes to enter into one or more Pricing Agreements (each a
"Pricing Agreement") in the form of Annex I hereto, with such additions and
deletions as the parties thereto may determine, and, subject to the terms and
conditions stated herein and therein, to issue and sell to the firms named in
Schedule I to the applicable Pricing Agreement (such firms constituting the
"Underwriters" with respect to such Pricing Agreement and the securities
specified therein) certain of its debt securities (the "Securities") specified
in Schedule II to such Pricing Agreement (with respect to such Pricing
Agreement, the "Designated Securities"). The Designated Securities will be
unconditionally guaranteed by each of the subsidiaries of the Company named in
Schedule I hereto (such guarantors, the "Subsidiary Guarantors", and such
guarantees, the "Subsidiary Guarantees").
The terms and rights of any particular issuance of Designated Securities shall
be as specified in the Pricing Agreement relating thereto and in or pursuant to
the indenture (the "Indenture") identified in such Pricing Agreement.
1. Particular sales of Designated Securities may be made from time to time
to the Underwriters of such Securities, for whom the firms designated as
representatives of the Underwriters of such Securities in the Pricing Agreement
relating thereto will act as representatives (the "Representatives"). The term
"Representatives" also refers to a single firm acting as sole representative of
the Underwriters and to an Underwriter or Underwriters who act without any firm
being designated as its or their representatives. This Underwriting Agreement
shall not be construed as an obligation of the Company to sell any of the
Securities or as an obligation of any of the Underwriters to purchase the
Securities. The obligation of the Company to issue and sell any of the
Securities and the obligation of any of the Underwriters to purchase any of the
Securities shall be evidenced by the Pricing Agreement with respect to the
Designated Securities specified therein. Each Pricing Agreement shall specify
the aggregate principal amount of such Designated Securities, the initial public
offering price of such Designated Securities, the purchase
<PAGE> 2
price to the Underwriters of such Designated Securities, the names of the
Underwriters of such Designated Securities, the names of the Representatives of
such Underwriters and the principal amount of such Designated Securities to be
purchased by each Underwriter and shall set forth the date, time and manner of
delivery of such Designated Securities and payment therefor. The Pricing
Agreement shall also specify (to the extent not set forth in the Indenture and
the registration statement and prospectus with respect thereto) the terms of
such Designated Securities. A Pricing Agreement shall be in the form of an
executed writing (which may be in counterparts), and may be evidenced by an
exchange of telegraphic communications or any other rapid transmission device
designed to produce a written record of communications transmitted. The
obligations of the Underwriters under this Agreement and each Pricing Agreement
shall be several and not joint.
2. Each of the Company and the Subsidiary Guarantors, jointly and
severally, represents and warrants to, and agrees with, each of the Underwriters
that:
(a) A registration statement on Form S-3 (File No. 333-69693) (the
"Initial Registration Statement") in respect of the Securities has been
filed with the Securities and Exchange Commission (the "Commission"); the
Initial Registration Statement and any post-effective amendment thereto,
each in the form heretofore delivered or to be delivered to the
Representatives and, excluding exhibits to the Initial Registration
Statement, but including all documents incorporated by reference in the
prospectus contained therein, to the Representatives for each of the other
Underwriters, have been declared effective by the Commission in such form;
other than a registration statement, if any, increasing the size of the
offering (a "Rule 462(b) Registration Statement"), filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended (the "Act"), which
became effective upon filing, no other document with respect to the Initial
Registration Statement or document incorporated by reference therein has
heretofore been filed or transmitted for filing with the Commission (other
than prospectuses filed pursuant to Rule 424(b) of the rules and
regulations of the Commission under the Act, each in the form heretofore
delivered to the Representatives); and no stop order suspending the
effectiveness of the Initial Registration Statement, any post-effective
amendment thereto or the Rule 462(b) Registration Statement, if any, has
been issued and no proceeding for that purpose has been initiated or
threatened by the Commission (any preliminary prospectus included in the
Initial Registration Statement or filed with the Commission pursuant to
Rule 424(a) under the Act, is hereinafter called a "Preliminary
Prospectus"; the various parts of the Initial Registration Statement, any
post-effective amendment thereto and the Rule 462(b) Registration
Statement, if any, including all exhibits thereto and the documents
incorporated by reference in the prospectus contained in the Initial
Registration Statement at the time such part of the Initial Registration
Statement became effective but excluding Form T-1, each as amended at the
time such part of the Initial Registration Statement became effective or
such part of the Rule 462(b) Registration Statement, if any, became or
hereafter becomes effective, are hereinafter collectively called the
"Registration Statement"; the prospectus relating to the Securities, in the
form in which it has most recently been filed, or transmitted for filing,
with the Commission on or prior to the date of this Agreement, being
hereinafter called the "Prospectus"; any reference herein to any
Preliminary Prospectus or the Prospectus shall be deemed to refer to and
include the documents incorporated by reference therein pursuant to the
applicable form under the Act, as of the date of such Preliminary
Prospectus or Prospectus, as the case may be; any reference to any
amendment or supplement
2
<PAGE> 3
to any Preliminary Prospectus or the Prospectus shall be deemed to refer to
and include any documents filed after the date of such Preliminary
Prospectus or Prospectus, as the case may be, under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and incorporated by reference
in such Preliminary Prospectus or Prospectus, as the case may be; any
reference to any amendment to the Initial Registration Statement shall be
deemed to refer to and include any annual report of the Company filed
pursuant to Sections 13(a) or 15(d) of the Exchange Act after the effective
date of the Initial Registration Statement that is incorporated by
reference in the Registration Statement; and any reference to the
Prospectus as amended or supplemented shall be deemed to refer to the
Prospectus as amended or supplemented in relation to the applicable
Designated Securities in the form in which it is filed with the Commission
pursuant to Rule 424(b) under the Act in accordance with Section 5(a)
hereof, including any documents incorporated by reference therein as of the
date of such filing);
(b) The documents incorporated by reference in the Prospectus, when
they became effective or were filed with the Commission, as the case may
be, conformed in all material respects to the requirements of the Act or
the Exchange Act, as applicable, and the rules and regulations of the
Commission thereunder, and none of such documents contained an untrue
statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading; and any further documents so filed and incorporated by
reference in the Prospectus or any further amendment or supplement thereto,
when such documents become effective or are filed with the Commission, as
the case may be, will conform in all material respects to the requirements
of the Act or the Exchange Act, as applicable, and the rules and
regulations of the Commission thereunder and will not contain an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading; provided, however, that this representation and warranty shall
not apply to any statements or omissions made in reliance upon and in
conformity with information furnished in writing to the Company by an
Underwriter of Designated Securities through the Representatives expressly
for use in the Prospectus as amended or supplemented relating to such
Securities;
(c) The Registration Statement and the Prospectus conform, and any
further amendments or supplements to the Registration Statement or the
Prospectus will conform, in all material respects to the requirements of
the Act and the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act") and the rules and regulations of the Commission thereunder
and do not and will not, as of the applicable effective date as to the
Registration Statement and any amendment thereto and as of the applicable
filing date as to the Prospectus and any amendment or supplement thereto,
contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that this representation and
warranty shall not apply to any statements or omissions made in reliance
upon and in conformity with information furnished in writing to the Company
by an Underwriter of Designated Securities through the Representatives
expressly for use in the Prospectus as amended or supplemented relating to
such Securities;
(d) The Company and its subsidiaries, taken as a whole, have not
sustained since the date of the latest audited financial statements
included or incorporated by reference in the
3
<PAGE> 4
Prospectus any material loss or interference with their business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or
from any labor dispute or court or governmental action, order or decree,
otherwise than as set forth or contemplated in the Prospectus; and, since
the respective dates as of which information is given in the Registration
Statement and the Prospectus, there has not been any change in the capital
stock (other than the exercise of certain employee stock options and awards
and the issuance of common stock of the Company in connection with
acquisitions by the Company that are described in the Prospectus) or
increase in short-term debt or long-term debt of the Company and its
subsidiaries, taken as a whole (other than floor plan borrowings in the
ordinary course of business or in connection with the consummation of
acquisitions described in the Prospectus), or any material adverse change,
or any development involving a prospective material adverse change, in or
affecting the general affairs, management, financial position,
stockholders' equity or results of operations of the Company and its
subsidiaries, taken as a whole, otherwise than as set forth or contemplated
in the Prospectus;
(e) The Company and its subsidiaries have good and indefeasible title
to all real property and good and marketable title to all personal property
owned by them, in each case free and clear of all liens, encumbrances and
defects except such as are described in the Prospectus or would not have a
Material Adverse Effect (as hereinafter defined); and any real property and
buildings held under lease by the Company and its subsidiaries are held by
them under valid, subsisting and enforceable leases with such exceptions as
would not have a Material Adverse Effect, subject, as to enforcement, to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors'
rights and to general equity principles;
(f) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Delaware,
with power and authority (corporate and other) to own its properties and
conduct its business as described in the Prospectus, and has been duly
qualified as a foreign corporation for the transaction of business and is
in good standing under the laws of each other jurisdiction in which it owns
or leases properties or conducts any business so as to require such
qualification, except where the failure to be so qualified in any such
jurisdiction would not, individually or in the aggregate, have a material
adverse effect on the ability of the Company and its subsidiaries, taken as
a whole, to own or lease their properties or conduct their businesses as
described in the Prospectus; and each subsidiary of the Company has been
duly incorporated or organized, as the case may be, and is validly existing
as a corporation or partnership, as the case may be, in good standing under
the laws of its jurisdiction of incorporation or organization;
(g) The Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued shares of capital stock of the Company
have been duly and validly authorized and issued and are fully paid and
non-assessable; and all of the issued shares of capital stock of each
subsidiary of the Company have been duly and validly authorized and issued,
are fully paid and non-assessable, are owned directly or indirectly by the
Company and, except as described in the Prospectus, are owned free and
clear of all liens, encumbrances, equities or claims;
4
<PAGE> 5
(h) The Securities have been duly authorized and, when Designated
Securities are issued and delivered pursuant to this Agreement and the
Pricing Agreement with respect to such Designated Securities, such
Designated Securities will have been duly executed, authenticated, issued
and delivered and will constitute valid and legally binding obligations of
the Company entitled to the benefits provided by the Indenture, which will
be substantially in the form filed as an exhibit to the Registration
Statement; the Indenture has been duly authorized by the Company and each
of the Subsidiary Guarantors and duly qualified under the Trust Indenture
Act and, at the Time of Delivery for such Designated Securities (as defined
in Section 4 hereof), the Indenture will constitute a valid and legally
binding instrument of the Company and each of the Subsidiary Guarantors,
enforceable in accordance with its terms, subject, as to enforcement, to
bankruptcy, insolvency, reorganization and other laws of general
applicability relating to or affecting creditors' rights and to general
equity principles; and the Indenture conforms, and the Designated
Securities will conform, in all material respects, to the descriptions
thereof contained in the Prospectus as amended or supplemented with respect
to such Designated Securities;
(i) Each Subsidiary Guarantor has duly authorized its Subsidiary
Guarantee and, when the Designated Securities are issued and delivered
pursuant to this Agreement and the Pricing Agreement with respect to such
Designated Securities, each Subsidiary Guarantee will have been duly
executed, issued and delivered and will constitute a valid and binding
obligation of the related Subsidiary Guarantor, enforceable in accordance
with its terms, subject, as to enforcement, to bankruptcy, insolvency,
reorganization and other laws of general applicability relating to or
affecting creditors' rights and to general equity principles; and the
Subsidiary Guarantees will conform, in all material respects, to the
description thereof in the Prospectus as amended or supplemented with
respect to such Designated Securities;
(j) None of the transactions contemplated by this Agreement
(including, without limitation, the use of the proceeds from the sale of
the Securities) will violate or result in a violation of Section 7 of the
Exchange Act, or any regulation promulgated thereunder, including, without
limitation, Regulations G, T, U, and X of the Board of Governors of the
Federal Reserve System;
(k) Except as disclosed in the Prospectus, the issue and sale of the
Securities, the issue of the Subsidiary Guarantees, the compliance by the
Company and the Subsidiary Guarantors with all of the provisions of the
Designated Securities, the Subsidiary Guarantees, the Indenture, this
Agreement and any Pricing Agreement, and the consummation of the
transactions herein and therein contemplated will not conflict with or
result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any Dealer Agreement (as hereinafter defined)
or any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Company or any of its subsidiaries is
a party or by which the Company or any of its subsidiaries is bound or to
which any of the property or assets of the Company or any of its
subsidiaries is subject, except, in each case, for such conflicts,
breaches, violations or defaults as would not individually or in the
aggregate have a material adverse effect on the current or future
consolidated financial position, stockholders' equity or results of
operations of the Company and its subsidiaries taken as a whole (a
"Material Adverse Effect"), nor will such action result in any violation of
the provisions of the Certificate of Incorporation or By-laws of the
Company or any of its subsidiaries or any statute or any order, rule or
regulation of any court or governmental
5
<PAGE> 6
agency or body having jurisdiction over the Company or any of its
subsidiaries or any of their properties; and except as disclosed in the
Prospectus no consent, approval, authorization, order, registration or
qualification of or with either (i) any such court or governmental agency
or body or (ii) any automobile manufacturer is required for the issue and
sale of the Securities, the issue of any of the Subsidiary Guarantees or
the consummation by the Company or any Subsidiary Guarantor of the
transactions contemplated by this Agreement or any Pricing Agreement, or
the Indenture, except such as have been, or will have been prior to the
Time of Delivery, obtained under the Act and the Trust Indenture Act and
such consents, approvals, authorizations, registrations or qualifications
as may be required under state securities or Blue Sky laws in connection
with the purchase and distribution of the Securities by the Underwriters
and except for such consents the failure to obtain would not have a
Material Adverse Effect;
(l) Except as disclosed in the Prospectus, neither the Company nor any
of its subsidiaries is (i) in violation of its Certificate of Incorporation
or By-laws or (ii) in default in the performance or observance of any
material obligation, agreement, covenant or condition contained in any
indenture, mortgage, deed of trust, loan agreement, lease or other
agreement or instrument to which it is a party or by which it or any of its
properties may be bound, except where such default would not have a
Material Adverse Effect;
(m) The statements set forth in the Prospectus under the caption
"Description of Debt Securities", insofar as they purport to constitute a
summary of the terms of the Securities, and under the caption "Plan of
Distribution", insofar as they purport to describe the provisions of the
laws and documents referred to therein, are accurate in all material
respects;
(n) Other than as set forth in the Prospectus, there are no legal or
governmental proceedings pending to which the Company or any of its
subsidiaries is a party or of which any property of the Company or any of
its subsidiaries is the subject which, if determined adversely to the
Company or any of its subsidiaries, would individually or in the aggregate
have a Material Adverse Effect; and, to the best of the Company's
knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others;
(o) Each of the Company and the Subsidiary Guarantors is not, and
after giving effect to the offering and sale of the Securities will not be,
an "investment company", or an entity "controlled" by an "investment
company", as such terms are defined in the United States Investment Company
Act of 1940, as amended (the "Investment Company Act");
(p) Arthur Andersen LLP, who have certified certain financial
statements of the Company and certain of its subsidiaries, and Crowe,
Chizek and Company LLP, who have certified certain financial statements of
certain of the Company's subsidiaries, are each independent public
accountants as required by the Act and the rules and regulations of the
Commission thereunder;
(q) The pro forma balance sheets and pro forma statements of
operations and the related notes thereto included in the Prospectus
(collectively, the "pro forma financial statements") have been prepared in
accordance with the applicable requirements of Rule 11-02 of Regulation S-X
promulgated by the Commission; the assumptions used and described in the
pro forma financial statements provide a reasonable basis for presenting
the significant effects attributable to the
6
<PAGE> 7
transactions described therein; the pro forma adjustments contained in the
pro forma financial statements give appropriate effect to such assumptions
and include all adjustments necessary to present fairly the effects of such
transactions; and the pro forma columns contained in the pro forma
financial statements reflect the proper application of such adjustments to
the historical financial amounts contained in the pro forma financial
statements;
(r) The Company and its subsidiaries have obtained all environmental
permits, licenses and other authorizations required by federal, state and
local law in order to conduct their businesses as described in the
Prospectus, except where failure to do so would not have a Material Adverse
Effect; except as described in the Prospectus, the Company and its
subsidiaries are conducting their businesses in compliance with such
permits, licenses and authorizations and with applicable environmental
laws, except where the failure to be in compliance would not, individually
or in the aggregate, have a Material Adverse Effect; and, except as
described in the Prospectus, neither the Company nor any of its
subsidiaries is in violation of any Federal or state law or regulation
relating to the storage, handling, disposal, release or transportation of
hazardous or toxic materials, which violation would have a Material Adverse
Effect;
(s) The Company and its subsidiaries have all licenses, franchises,
permits, authorizations, approvals and orders and other concessions of and
from all governmental or regulatory authorities that are necessary to own
or lease their properties and conduct their businesses as described in the
Prospectus, except for such licenses, franchises, permits authorizations,
approvals and orders the failure to obtain which would not, individually or
in the aggregate, have a Material Adverse Effect;
(t) The Company and each of its subsidiaries is conducting its
business in compliance with all applicable statutes, rules, regulations,
standards, guides and orders administered or issued by any governmental or
regulatory authority in the jurisdictions in which it is conducting
business, except as described in the Prospectus and except where the
failure to be so in compliance would not, individually or in the aggregate,
have a Material Adverse Effect; and
(u) Except as described in the Prospectus, the Company or, if
applicable, a subsidiary of the Company, has entered into a dealer
agreement with each of the manufacturers listed on Schedule A hereto
(collectively, the "Dealer Agreements"), each of which has been duly
authorized, executed and delivered by the Company or the applicable
subsidiary, is in full force and effect and constitutes the valid and
binding agreement between the parties thereto, enforceable in accordance
with its terms, subject to applicable Federal and state franchise laws
except as would not have a Material Adverse Effect; the Company or the
applicable subsidiaries are in compliance with all terms and conditions of
the Dealer Agreements, and, to the best knowledge of the Company, there has
not occurred any default under any of the Dealer Agreements or any event
that with the giving of notice or the lapse of time would constitute a
default thereunder except as would not have a Material Adverse Effect.
(v) Except as disclosed in the Prospectus, the Company has reviewed
its operations and that of its subsidiaries and any third parties with
which the Company or any of its subsidiaries has a material relationship to
evaluate the extent to which the business or operations of the Company or
any of its subsidiaries will be affected by the Year 2000 Problem. Except
as disclosed in the
7
<PAGE> 8
Prospectus, as a result of such review, the Company has no reason to
believe, and does not believe, that the Year 2000 Problem will have a
Material Adverse Effect or result in any material loss or interference with
the Company's business or operations. The "Year 2000 Problem" as used
herein means any significant risk that computer hardware or software used
in the receipt, transmission, processing, manipulation, storage, retrieval,
retransmission or other utilization of data or in the operation of
mechanical or electrical systems of any kind will not, in the case of dates
or time periods occurring after December 31, 1999, function at least as
effectively as in the case of dates or time periods occurring prior to
January 1, 2000.
3. Upon the execution of the Pricing Agreement applicable to any Designated
Securities and authorization by the Representatives of the release of such
Designated Securities, the several Underwriters propose to offer such Designated
Securities for sale upon the terms and conditions set forth in the Prospectus as
amended or supplemented each of which Securities will have duly endorsed thereon
the Subsidiary Guarantee of each Subsidiary Guarantor, and the Subsidiary
Guarantors agree to issue their Subsidiary Guarantees accordingly.
4. Designated Securities to be purchased by each Underwriter pursuant to
the Pricing Agreement relating thereto, in the form specified in such Pricing
Agreement, and in such authorized denominations and registered in such names as
the Representatives may request upon at least forty-eight hours' prior notice to
the Company, shall be delivered by or on behalf of the Company to the
Representatives for the account of such Underwriter, against payment by such
Underwriter or on its behalf of the purchase price therefor by wire transfer of
Federal (same-day) funds to the account specified by the Company to the
Representatives at least forty-eight hours in advance or at such other place and
time and date as the Representatives and the Company may agree upon in writing,
such time and date being herein called the "Time of Delivery" for such
Securities.
5. Each of the Company and the Subsidiary Guarantors, jointly and
severally, agrees with each of the Underwriters of any Designated Securities:
(a) To prepare the Prospectus as amended or supplemented in relation
to the applicable Designated Securities in a form approved by the
Representatives and to file such Prospectus pursuant to Rule 424(b) under
the Act not later than the Commission's close of business on the second
business day following the execution and delivery of the Pricing Agreement
relating to the applicable Designated Securities or, if applicable, such
earlier time as may be required by Rule 424(b); to make no further
amendment or any supplement to the Registration Statement or Prospectus as
amended or supplemented after the date of the Pricing Agreement relating to
such Securities and prior to the Time of Delivery for such Securities which
shall be disapproved by the Representatives for such Securities promptly
after reasonable notice thereof; to advise the Representatives promptly of
any such amendment or supplement after such Time of Delivery and furnish
the Representatives with copies thereof; to file promptly all reports and
any definitive proxy or information statements required to be filed by the
Company with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d)
of the Exchange Act for so long as the delivery of a prospectus is required
in connection with the offering or sale of such Securities, and during such
same period to advise the Representatives, promptly after it receives
notice thereof, of the time when any amendment to the Registration
Statement has been filed or becomes effective or any supplement
8
<PAGE> 9
to the Prospectus or any amended Prospectus has been filed with the
Commission, of the issuance by the Commission of any stop order or of any
order preventing or suspending the use of any prospectus relating to the
Securities, of the suspension of the qualification of such Securities for
offering or sale in any jurisdiction, of the initiation or threatening of
any proceeding for any such purpose, or of any request by the Commission
for the amending or supplementing of the Registration Statement or
Prospectus or for additional information; and, in the event of the issuance
of any such stop order or of any such order preventing or suspending the
use of any prospectus relating to the Securities or suspending any such
qualification, to promptly use its best efforts to obtain the withdrawal of
such order;
(b) Promptly from time to time to take such action as the
Representatives may reasonably request to qualify such Securities for
offering and sale under the securities laws of such jurisdictions as the
Representatives may request and to comply with such laws so as to permit
the continuance of sales and dealings therein in such jurisdictions for as
long as may be necessary to complete the distribution of such Securities,
provided that in connection therewith the Company shall not be required to
qualify as a foreign corporation or to file a general consent to service of
process in any jurisdiction;
(c) Prior to 10:00 a.m., New York City time, on the New York Business
Day next succeeding the date of this Agreement and from time to time, to
furnish the Underwriters with copies of the Prospectus in New York City as
amended or supplemented in such quantities as the Representatives may
reasonably request, and, if the delivery of a prospectus is required at any
time in connection with the offering or sale of the Securities and if at
such time any event shall have occurred as a result of which the Prospectus
as then amended or supplemented would include an untrue statement of a
material fact or omit to state any material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made when such Prospectus is delivered, not misleading, or, if for any
other reason it shall be necessary during such same period to amend or
supplement the Prospectus or to file under the Exchange Act any document
incorporated by reference in the Prospectus in order to comply with the
Act, the Exchange Act or the Trust Indenture Act, to notify the
Representatives and upon their request to file such document and to prepare
and furnish without charge to each Underwriter and to any dealer in
securities as many copies as the Representatives may from time to time
reasonably request of an amended Prospectus or a supplement to the
Prospectus which will correct such statement or omission or effect such
compliance;
(d) To make generally available to its securityholders as soon as
practicable, but in any event not later than eighteen months after the
effective date of the Registration Statement (as defined in Rule 158(c)
under the Act), an earnings statement of the Company and its subsidiaries
(which need not be audited) complying with Section 11(a) of the Act and the
rules and regulations of the Commission thereunder (including, at the
option of the Company, Rule 158);
(e) During the period beginning from the date of the Pricing Agreement
for such Designated Securities and continuing until the date 90 days after
the Time of Delivery for such Designated Securities, neither the Company
nor any of its subsidiaries, or other affiliates over which it exercises
management or voting control, nor any person acting on its behalf will
without the prior
9
<PAGE> 10
written consent of the Representatives, offer, sell, contract to sell or
otherwise dispose of any debt securities of the Company pursuant to a
public offering or a private placement with registration rights or any
securities that are convertible into or exchangeable for, or otherwise
represent a right to acquire any such debt securities;
(f) If the Company elects to rely upon Rule 462(b), the Company shall
file a Rule 462(b) Registration Statement with the Commission in compliance
with Rule 462(b) by 10:00 P.M., Washington, D.C. time, on the date of this
Agreement, and the Company shall at the time of filing either pay to the
Commission the filing fee for the Rule 462(b) Registration Statement or
give irrevocable instructions for the payment of such fee pursuant to Rule
111(b) under the Act;
(g) During a period of five years from the date hereof, to furnish
(unless otherwise publicly available on Edgar) to the Representatives
copies of all reports or other communications (financial or other)
furnished to stockholders of the Company, and to deliver to the
Representatives (i) as soon as practicable after they are available, copies
of any reports and financial statements furnished to or filed with the
Commission or any securities exchange (other than filings made on a
confidential basis) on which the Securities or any class of securities of
the Company is listed; and (ii) such additional information concerning the
business and financial condition of the Company as the Representatives may
from time to time reasonably request (such financial statements to be on a
consolidated basis to the extent the accounts of the Company and its
subsidiaries are consolidated in reports furnished to its stockholders
generally or to the Commission); and
(h)To use the net proceeds received by it from the sale of the
Securities pursuant to this Agreement and any Pricing Agreement in the
manner specified in the Prospectus under the caption "Use of Proceeds".
6. Each of the Company and the Subsidiary Guarantors, jointly and
severally, covenants and agrees with the several Underwriters that the Company
will pay or cause to be paid the following: (i) the fees, disbursements and
expenses of the Company's and the Subsidiary Guarantors' counsel and accountants
in connection with the registration of the Securities and all other expenses in
connection with the preparation, printing and filing of the Registration
Statement, any Preliminary Prospectus and the Prospectus and any amendments and
supplements thereto and the mailing and delivering of copies thereof to the
Underwriters and dealers; (ii) the cost of printing or producing any Agreement
among Underwriters, this Agreement, any Pricing Agreement, any Indenture, any
Blue Sky and Legal Investment Memoranda, closing documents (including any
compilations thereof) and any other documents in connection with the offering,
purchase, sale and delivery of the Securities; (iii) all expenses in connection
with the qualification of the Securities for offering and sale under state
securities laws as provided in Section 5(b) hereof, including the fees and
disbursements of counsel for the Underwriters in connection with such
qualification and in connection with the Blue Sky and any legal investment
surveys; (iv) any fees charged by securities rating services for rating the
Securities; (v) any filing fees incident to, and the fees and disbursements of
counsel for the Underwriters in connection with, any required review by the
National Association of Securities Dealers, Inc. of the terms of the sale of the
Securities; (vi) the cost of preparing the Securities; (vii) the fees and
expenses of any Trustee and any agent of any Trustee and the fees and
disbursements of counsel for any Trustee in connection with any Indenture and
the
10
<PAGE> 11
Securities; and (viii) all other costs and expenses incident to the performance
of its obligations hereunder which are not otherwise specifically provided for
in this Section. It is understood, however, that, except as provided in this
Section, and Sections 8 and 11 hereof, the Underwriters will pay all of their
own costs and expenses, including the fees of their counsel, transfer taxes on
resale of any of the Securities by them, and any advertising expenses connected
with any offers they may make.
7. The obligations of the Underwriters of any Designated Securities under
the Pricing Agreement relating to such Designated Securities shall be subject,
in the discretion of the Representatives, to the condition that all
representations and warranties and other statements of the Company and the
Subsidiary Guarantors in or incorporated by reference in the Pricing Agreement
relating to such Designated Securities are, at and as of the Time of Delivery
for such Designated Securities, true and correct, the condition that each of the
Company and the Subsidiary Guarantors shall have performed all of its
obligations hereunder theretofore to be performed, and the following additional
conditions:
(a) The Prospectus as amended or supplemented in relation to the
applicable Designated Securities shall have been filed with the Commission
pursuant to Rule 424(b) within the applicable time period prescribed for
such filing by the rules and regulations under the Act and in accordance
with Section 5(a) hereof; if the Company has elected to rely upon Rule
462(b), the Rule 462(b) Registration Statement shall have become effective
by 10:00 P.M., Washington, D.C. time, on the date of this Agreement; no
stop order suspending the effectiveness of the Registration Statement or
any part thereof shall have been issued and no proceeding for that purpose
shall have been initiated or threatened by the Commission; and all requests
for additional information on the part of the Commission shall have been
complied with to the Representatives' reasonable satisfaction;
(b) Sullivan & Cromwell, counsel for the Underwriters, shall have
furnished to the Representatives such opinion or opinions, dated the Time
of Delivery for such Designated Securities, with respect to the Securities,
the Subsidiary Guarantees, the Indenture, this Agreement, the Pricing
Agreement, the Registration Statement and the Prospectus, as well as such
other related matters as the Representatives may reasonably request, and
such counsel shall have received such papers and information as they may
reasonably request to enable them to pass upon such matters;
(c) Vinson & Elkins L.L.P., counsel for the Company and the Subsidiary
Guarantors, shall have furnished to the Representatives their written
opinion (a draft of which is attached hereto as Annex III), dated the Time
of Delivery, in form and substance satisfactory to the Representatives, to
the effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware, with corporate power and authority to own its properties
and conduct its business as described in the Prospectus as amended or
supplemented;
(ii) The Company's authorized capital stock is as set forth in
the Prospectus as amended or supplemented, and all of the issued
shares of capital stock of the Company have been duly and validly
authorized and issued and are fully paid and non-assessable;
11
<PAGE> 12
(iii)Each Significant Subsidiary (as defined in the Indenture) of
the Company has been duly incorporated or organized, as the case may
be, and is validly existing as a corporation or partnership, as the
case may be, in good standing under the laws of its jurisdiction of
incorporation or organization; and all of the issued shares of capital
stock or partnership interests, as the case may be, of each such
subsidiary have been duly and validly authorized and issued, are fully
paid and non-assessable, are owned directly or indirectly by the
Company and, except as described in the Prospectus, to the best of
such counsel's knowledge, are owned free and clear of all liens,
encumbrances, equities or claims (such counsel being entitled to rely
in respect of the opinion in this clause upon opinions of local
counsel and in respect of matters of fact upon certificates of
officers of the Company or its subsidiaries, provided that such
counsel shall state that they believe that both the Representatives
and such counsel are justified in relying upon such opinions and
certificates);
(iv) This Agreement and the Pricing Agreement with respect to the
Designated Securities have been duly authorized, executed and
delivered by the Company and each of the Subsidiary Guarantors;
(v) The Designated Securities have been duly authorized,
executed, authenticated, issued and delivered and constitute valid and
legally binding obligations of the Company entitled to the benefits
provided by the Indenture and enforceable in accordance with their
terms, subject, as to enforcement, to bankruptcy, insolvency,
reorganization, laws relating to fraudulent conveyance and other laws
of general applicability relating to or affecting creditors' rights
and to general equity principles; and the Securities and the Indenture
conform in all material respects to the descriptions thereof in the
Prospectus as amended or supplemented;
(vi) The Indenture has been duly authorized, executed and
delivered by the parties thereto and constitutes a valid and legally
binding instrument, enforceable in accordance with its terms, subject,
as to enforcement, to bankruptcy, insolvency, reorganization, laws
relating to fraudulent conveyance and other laws of general
applicability relating to or affecting creditors' rights and to
general equity principles; and the Indenture has been duly qualified
under the Trust Indenture Act;
(vii)The Subsidiary Guarantees have been duly authorized,
executed, issued and delivered and constitute valid and legally
binding obligations of the respective Subsidiary Guarantors entitled
to the benefits provided by the Indenture and enforceable in
accordance with their terms, subject, as to enforcement, to
bankruptcy, insolvency, reorganization, laws relating to fraudulent
conveyance and other laws of general applicability relating or to
affecting creditors' rights and to general equity principles; and the
Subsidiary Guarantees conform in all material respects to the
description thereof in the Prospectus as amended or supplemented;
(viii)The issue and sale of the Designated Securities, the issue
of the Subsidiary Guarantees, and the compliance by the Company and
the Subsidiary Guarantors with all of the provisions of the Designated
Securities, the Subsidiary Guarantees, the Indenture,
12
<PAGE> 13
this Agreement and the Pricing Agreement with respect to the
Designated Securities and the consummation of the transactions herein
and therein contemplated will not (i) conflict with or result in a
breach or violation of any of the terms or provisions of, or
constitute a default under, any Dealer Agreement, indenture, mortgage,
deed of trust, loan agreement or other agreement or instrument known
to such counsel to which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries is bound or
to which any of the property or assets of the Company or any of its
subsidiaries is subject, (ii) result in any violation of the
provisions of the Certificate of Incorporation or By-laws of the
Company or any of its subsidiaries or (iii) result in a violation of
any of its subsidiaries or any statute or any order, rule or
regulation known to such counsel of any court or governmental agency
or body having jurisdiction over the Company or any of its
subsidiaries or any of their properties (except that such counsel need
express no opinion with respect to state securities laws or Blue Sky
laws with respect to this paragraph, except in the case of clauses (i)
and (iii) for such breaches or violations that could not reasonably be
expected to have a Material Adverse Effect);
(ix) No consent, approval, authorization, order, registration or
qualification of or with any such court or governmental agency or body
is required for the issue and sale of the Designated Securities, the
issue of any of the Subsidiary Guarantees or the consummation by the
Company or any Subsidiary Guarantor of the transactions contemplated
by this Agreement or such Pricing Agreement or the Indenture, except
such as have been obtained under the Act and the Trust Indenture Act
and such consents, approvals, authorizations, registrations or
qualifications as may be required under state securities or blue sky
laws in connection with the purchase and distribution of the
Designated Securities by the Underwriters;
(x) The statements set forth in the Prospectus as amended or
supplemented under the captions "Description of Debt Securities" and
"Description of Notes", insofar as they purport to constitute a
summary of the terms of the Securities and the Subsidiary Guarantees
and under the captions "Plan of Distribution" and "Underwriting",
insofar as they purport to describe the provisions of the laws and
documents referred to therein, are accurate in all material respects;
(xi) Neither the Company nor any Subsidiary Guarantor is an
"investment company" or an entity "controlled" by an "investment
company", as such terms are defined in the Investment Company Act;
(xii) The documents incorporated by reference in the Prospectus
as amended or supplemented (other than the financial statements,
including the notes thereto, and financial statement schedules and
other financial and accounting information included therein, as to
which such counsel need express no opinion), when they were filed with
the Commission appeared on their face to comply as to form in all
material respects with the requirements of the Exchange Act and the
rules and regulations of the Commission thereunder (such counsel may
state that, in passing upon such form, they have necessarily assumed
the correctness and completeness of the statements made there);
13
<PAGE> 14
(xiii) The Registration Statement and the Prospectus as amended
or supplemented and any further amendments and supplements thereto
made by the Company prior to the Time of Delivery for the Designated
Securities (other than the financial statements, including the notes
thereto, and financial statement schedules and other financial and
accounting information included therein, as to which such counsel need
express no opinion) comply as to form in all material respects with
the requirements of the Act and the Trust Indenture Act and the rules
and regulations thereunder;
Such counsel shall also state that, although they are not passing upon, do
not assume any responsibility for, and have not independently verified, the
accuracy, completeness or fairness of the statements contained in the
Registration Statement, the Prospectus and any further amendments or
supplements to the Prospectus made by the Company prior to the Time of
Delivery, except for those referred to in the opinion in subsection (xi) of
this Section 7(c), and assume no responsibility for and have not
independently verified the accuracy, completeness or fairness of the
financial statements, including the notes thereto and the financial
statement schedules and other financial and accounting information included
in the Registration Statement, the Prospectus and any further amendments or
supplements to the Prospectus made by the Company prior to the Time of
Delivery (and have not examined the financial records from which such
statements and data were derived), no information has come to their
attention that causes them to believe that:
as of its effective date, the Registration Statement or any
further amendment thereto made by the Company prior to the Time
of Delivery (other than the financial statements, including the
notes thereto, and financial statement schedules and other
financial and accounting information included therein, as to
which such counsel need express no opinion) contained an untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading or that, as of its date, the Prospectus as
amended or supplemented or any further amendment or supplement
thereto made by the Company prior to the Time of Delivery (other
than the financial statements, including the notes thereto, and
financial statement schedules and other financial and accounting
information included therein, as to which such counsel need
express no opinion) contained an untrue statement of a material
fact or omitted to state a material fact necessary to make the
statements therein, in the light of the circumstances under which
they were made, not misleading or that, as of the Time of
Delivery, the Prospectus as amended or supplemented or any
further amendment or supplement thereto made by the Company prior
to the Time of Delivery (other than the financial statements,
including the notes thereto, and financial statement schedules
and other financial and accounting information included therein,
as to which such counsel need express no opinion) contains an
untrue statement of a material fact or omits to state a material
fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading; and
they do not know of any amendment to the Registration Statement
required to be filed or any contracts or other documents of a
character required to be filed as an exhibit to
14
<PAGE> 15
the Registration Statement or required to be incorporated by
reference into the Prospectus as amended or supplemented or
required to be described in the Registration Statement or the
Prospectus as amended or supplemented which are not filed or
incorporated by reference or described as required;
(d) (i) On the date of the Pricing Agreement for such Designated
Securities at a time prior to the execution of the Pricing Agreement with
respect to such Designated Securities and at the Time of Delivery for such
Designated Securities, Arthur Andersen LLP shall have furnished to the
Representatives a letter or letters, dated the respective dates of delivery
thereof, in form and substance satisfactory to the Representatives, to the
effect set forth in Annex II-A hereto, and (ii) on the date of the Pricing
Agreement for such Designated Securities at a time prior to the execution
of the Pricing Agreement with respect to such Designated Securities, Crowe,
Chizek and Company LLP shall have furnished to the Representatives a letter
or letters, dated the date of delivery thereof, in form and substance
satisfactory to the Representatives, to the effect set forth in Annex II-B
hereto;
(e) (i) The Company and its subsidiaries, taken as a whole, shall not
have sustained since the date of the latest audited financial statements
included or incorporated by reference in the Prospectus as amended prior to
the date of the Pricing Agreement relating to the Designated Securities any
loss or interference with their business from fire, explosion, flood or
other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, otherwise than as
set forth or contemplated in the Prospectus as amended prior to the date of
the Pricing Agreement relating to the Designated Securities, and (ii) since
the respective dates as of which information is given in the Prospectus as
amended prior to the date of the Pricing Agreement relating to the
Designated Securities there shall not have been any change in the capital
stock (other than the exercise of certain employee stock options and awards
and the issuance of common stock of the Company in connection with
acquisitions by the Company that are described in the Prospectus) or
increase in short-term debt or long-term debt of the Company and its
subsidiaries, taken as a whole (other than floor plan borrowings in the
ordinary course of business or in connection with the consummation of
acquisitions described in the Prospectus), or any change, or any
development involving a prospective change, in or affecting the general
affairs, management, financial position, stockholders' equity or results of
operations of the Company and its subsidiaries, taken as a whole, otherwise
than as set forth or contemplated in the Prospectus as amended prior to the
date of the Pricing Agreement relating to the Designated Securities, the
effect of which, in any such case described in Clause (i) or (ii), is in
the judgment of the Representatives so material and adverse as to make it
impracticable or inadvisable to proceed with the offering or the delivery
of the Designated Securities on the terms and in the manner contemplated in
the Prospectus as first amended or supplemented relating to the Designated
Securities;
(f) On or after the date of the Pricing Agreement relating to the
Designated Securities (i) no downgrading shall have occurred in the rating
accorded the Company's debt securities by any "nationally recognized
statistical rating organization", as that term is defined by the Commission
for purposes of Rule 436(g)(2) under the Act, and (ii) no such organization
shall have publicly
15
<PAGE> 16
announced that it has under surveillance or review, with possible negative
implications, its rating of any of the Company's debt securities;
(g) On or after the date of the Pricing Agreement relating to the
Designated Securities there shall not have occurred any of the following:
(i) a suspension or material limitation in trading in securities generally
on the New York Stock Exchange; (ii) a suspension or material limitation in
trading in the Company's securities on the New York Stock Exchange; (iii) a
general moratorium on commercial banking activities declared by either
Federal or New York State authorities; (iv) the outbreak or escalation of
hostilities involving the United States or the declaration by the United
States of a national emergency or war, if the effect of any such event
specified in this Clause (iv) in the judgment of the Representatives makes
it impracticable or inadvisable to proceed with the public offering or the
delivery of the Designated Securities on the terms and in the manner
contemplated in the Prospectus as first amended or supplemented relating to
the Designated Securities; or (v) the occurrence of any material adverse
change in the existing, financial political or economic conditions in the
United States or elsewhere which, in the judgment of the Representatives,
would materially and adversely affect the financial markets or the markets
for the Securities and other debt securities;
(h) The Company shall have complied with the provisions of Section
5(c) hereof with respect to the furnishing of prospectuses on the New York
Business Day next succeeding the date of the Pricing Agreement relating to
such Designated Securities; and
(i) The Company and the Subsidiary Guarantors shall have furnished or
caused to be furnished to the Representatives at the Time of Delivery for
the Designated Securities a certificate or certificates of officers of the
Company satisfactory to the Representatives as to the accuracy of the
representations and warranties of the Company and the Subsidiary Guarantors
herein at and as of such Time of Delivery, as to the performance by the
Company and the Subsidiary Guarantors of all of their obligations hereunder
to be performed at or prior to such Time of Delivery, as to the matters set
forth in subsections (a) and (e) of this Section and as to such other
matters as the Representatives may reasonably request.
8. (a) The Company and the Subsidiary Guarantors, jointly and severally,
will indemnify and hold harmless each Underwriter against any losses, claims,
damages or liabilities, joint or several, to which such Underwriter may become
subject, under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, any preliminary prospectus supplement, the Registration
Statement, the Prospectus as amended or supplemented or any other prospectus
relating to the Securities, or any amendment or supplement thereto, or arise out
of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse each Underwriter for any legal or
other expenses reasonably incurred by such Underwriter in connection with
investigating or defending any such action or claim as such expenses are
incurred; provided, however, that neither the Company nor any Subsidiary
Guarantor shall be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in any Preliminary
Prospectus, any preliminary
16
<PAGE> 17
prospectus supplement, the Registration Statement, the Prospectus as amended or
supplemented or any other prospectus relating to the Securities, or any such
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by any Underwriter of Designated Securities
through the Representatives expressly for use in the Prospectus as amended or
supplemented relating to such Securities.
(b) Each Underwriter will indemnify and hold harmless the Company and the
Subsidiary Guarantors against any losses, claims, damages or liabilities to
which the Company and the Subsidiary Guarantors may become subject, under the
Act or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon an untrue statement
or alleged untrue statement of a material fact contained in any Preliminary
Prospectus, any preliminary prospectus supplement, the Registration Statement,
the Prospectus as amended or supplemented or any other prospectus relating to
the Securities, or any amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in any Preliminary Prospectus, any preliminary prospectus supplement, the
Registration Statement, the Prospectus as amended or supplemented or any other
prospectus relating to the Securities, or any such amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company by such Underwriter through the Representatives expressly for use
therein; and will reimburse the Company for any legal or other expenses
reasonably incurred by the Company in connection with investigating or defending
any such action or claim as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under subsection (a) or
(b) above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party shall
not relieve it from any liability which it may have to any indemnified party
otherwise than under such subsection. In case any such action shall be brought
against any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party), and,
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party under such subsection for any legal expenses of
other counsel or any other expenses, in each case subsequently incurred by such
indemnified party, in connection with the defense thereof other than reasonable
costs of investigation. No indemnifying party shall, without the written consent
of the indemnified party, effect the settlement or compromise of, or consent to
the entry of any judgment with respect to, any pending or threatened action or
claim in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified party is an actual or potential party
to such action or claim) unless such settlement, compromise or judgment (i)
includes an unconditional release of the indemnified party from all liability
arising out of such action or claim and (ii) does not include a statement as to,
or an admission of, fault, culpability or a failure to act, by or on behalf of
any indemnified party.
17
<PAGE> 18
(d) If the indemnification provided for in this Section 8 is unavailable to
or insufficient to hold harmless an indemnified party under subsection (a) or
(b) above in respect of any losses, claims, damages or liabilities (or actions
in respect thereof) referred to therein, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (or actions in respect thereof)
in such proportion as is appropriate to reflect the relative benefits received
by the Company and the Subsidiary Guarantors on the one hand and the
Underwriters of the Designated Securities on the other from the offering of the
Designated Securities to which such loss, claim, damage or liability (or action
in respect thereof) relates. If, however, the allocation provided by the
immediately preceding sentence is not permitted by applicable law or if the
indemnified party failed to give the notice required under subsection (c) above,
then each indemnifying party shall contribute to such amount paid or payable by
such indemnified party in such proportion as is appropriate to reflect not only
such relative benefits but also the relative fault of the Company and the
Subsidiary Guarantors on the one hand and the Underwriters of the Designated
Securities on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations. The relative
benefits received by the Company and the Subsidiary Guarantors on the one hand
and such Underwriters on the other shall be deemed to be in the same proportion
as the total net proceeds from such offering (before deducting expenses)
received by the Company bear to the total underwriting discounts and commissions
received by such Underwriters. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or a Subsidiary Guarantor on the
one hand or such Underwriters on the other and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company, the Subsidiary Guarantors and the
Underwriters agree that it would not be just and equitable if contribution
pursuant to this subsection (d) were determined by pro rata allocation (even if
the Underwriters were treated as one entity for such purpose) or by any other
method of allocation which does not take account of the equitable considerations
referred to above in this subsection (d). The amount paid or payable by an
indemnified party as a result of the losses, claims, damages or liabilities (or
actions in respect thereof) referred to above in this subsection (d) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this subsection (d), no Underwriter
shall be required to contribute any amount in excess of the amount by which the
total price at which the applicable Designated Securities underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages which such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The obligations of the Underwriters
of Designated Securities in this subsection (d) to contribute are several in
proportion to their respective underwriting obligations with respect to such
Securities and not joint.
(e) The obligations of the Company and the Subsidiary Guarantors under this
Section 8 shall be in addition to any liability which the Company or any
Subsidiary Guarantor may otherwise have and shall extend, upon the same terms
and conditions, to each person, if any, who controls any Underwriter within the
meaning of the Act; and the obligations of the Underwriters under this Section 8
shall be in addition to any liability which the respective Underwriters may
otherwise have and shall extend, upon the same
18
<PAGE> 19
terms and conditions, to each officer and director of the Company or a
Subsidiary Guarantor and to each person, if any, who controls the Company or a
Subsidiary Guarantor within the meaning of the Act.
9. (a) If any Underwriter shall default in its obligation to purchase the
Designated Securities which it has agreed to purchase under the Pricing
Agreement relating to such Designated Securities, the Representatives may in
their discretion arrange for themselves or another party or other parties to
purchase such Designated Securities on the terms contained herein. If within
thirty-six hours after such default by any Underwriter the Representatives do
not arrange for the purchase of such Designated Securities, then the Company
shall be entitled to a further period of thirty-six hours within which to
procure another party or other parties satisfactory to the Representatives to
purchase such Designated Securities on such terms. In the event that, within the
respective prescribed period, the Representatives notify the Company that they
have so arranged for the purchase of such Designated Securities, or the Company
notifies the Representatives that it has so arranged for the purchase of such
Designated Securities, the Representatives or the Company shall have the right
to postpone the Time of Delivery for such Designated Securities for a period of
not more than seven days, in order to effect whatever changes may thereby be
made necessary in the Registration Statement or the Prospectus as amended or
supplemented, or in any other documents or arrangements, and the Company agrees
to file promptly any amendments or supplements to the Registration Statement or
the Prospectus which in the opinion of the Representatives may thereby be made
necessary. The term "Underwriter" as used in this Agreement shall include any
person substituted under this Section with like effect as if such person had
originally been a party to the Pricing Agreement with respect to such Designated
Securities.
(b) If, after giving effect to any arrangements for the purchase of the
Designated Securities of a defaulting Underwriter or Underwriters by the
Representatives and the Company as provided in subsection (a) above, the
aggregate principal amount of such Designated Securities which remains
unpurchased does not exceed one-eleventh of the aggregate principal amount of
the Designated Securities, then the Company shall have the right to require each
non-defaulting Underwriter to purchase the principal amount of Designated
Securities which such Underwriter agreed to purchase under the Pricing Agreement
relating to such Designated Securities and, in addition, to require each
non-defaulting Underwriter to purchase its pro rata share (based on the
principal amount of Designated Securities which such Underwriter agreed to
purchase under such Pricing Agreement) of the Designated Securities of such
defaulting Underwriter or Underwriters for which such arrangements have not been
made; but nothing herein shall relieve a defaulting Underwriter from liability
for its default.
(c) If, after giving effect to any arrangements for the purchase of the
Designated Securities of a defaulting Underwriter or Underwriters by the
Representatives and the Company as provided in subsection (a) above, the
aggregate principal amount of Designated Securities which remains unpurchased
exceeds one-eleventh of the aggregate principal amount of the Designated
Securities, as referred to in subsection (b) above, or if the Company shall not
exercise the right described in subsection (b) above to require non-defaulting
Underwriters to purchase Designated Securities of a defaulting Underwriter or
Underwriters, then the Pricing Agreement relating to such Designated Securities
shall thereupon terminate, without liability on the part of any non-defaulting
Underwriter, the Company or any Subsidiary Guarantor, except for the expenses to
be borne by the Company and the Underwriters as provided in Section 6 hereof and
the indemnity and contribution agreements in Section 8 hereof; but nothing
herein shall relieve a defaulting Underwriter from liability for its default.
19
<PAGE> 20
10. The respective indemnities, agreements, representations, warranties and
other statements of the Company, the Subsidiary Guarantors and the several
Underwriters, as set forth in this Agreement or made by or on behalf of them,
respectively, pursuant to this Agreement, shall remain in full force and effect,
regardless of any investigation (or any statement as to the results thereof)
made by or on behalf of any Underwriter or any controlling person of any
Underwriter, or the Company or any Subsidiary Guarantor, or any officer or
director or controlling person of the Company or any Subsidiary Guarantor, and
shall survive delivery of and payment for the Securities.
11. If any Pricing Agreement shall be terminated pursuant to Section 9
hereof, neither the Company nor any Subsidiary Guarantor shall then be under any
liability to any Underwriter with respect to the Designated Securities covered
by such Pricing Agreement except as provided in Sections 6 and 8 hereof; but, if
for any other reason, the Designated Securities are not delivered by or on
behalf of the Company as provided herein, the Company will reimburse the
Underwriters through the Representatives for all out-of-pocket expenses approved
in writing by the Representatives, including fees and disbursements of counsel,
reasonably incurred by the Underwriters in making preparations for the purchase,
sale and delivery of such Designated Securities, but the Company and the
Subsidiary Guarantors shall then be under no further liability to any
Underwriter with respect to such Designated Securities except as provided in
Sections 6 and 8 hereof.
12. In all dealings hereunder, the Representatives of the Underwriters of
Designated Securities shall act on behalf of each of such Underwriters, and the
parties hereto shall be entitled to act and rely upon any statement, request,
notice or agreement on behalf of any Underwriter made or given by such
Representatives jointly or by such of the Representatives, if any, as may be
designated for such purpose in the Pricing Agreement.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex or
facsimile transmission to the address of the Representatives as set forth in the
Pricing Agreement; and if to the Company or any Subsidiary Guarantor shall be
delivered or sent by mail, telex or facsimile transmission to the address of the
Company set forth in the Registration Statement, Attention: Secretary; provided,
however, that any notice to an Underwriter pursuant to Section 8(c) hereof shall
be delivered or sent by mail, telex or facsimile transmission to such
Underwriter at its address set forth in its Underwriters' Questionnaire, or
telex constituting such Questionnaire, which address will be supplied to the
Company by the Representatives upon request. Any such statements, requests,
notices or agreements shall take effect upon receipt thereof.
13. This Agreement and each Pricing Agreement shall be binding upon, and
inure solely to the benefit of, the Underwriters, the Company, the Subsidiary
Guarantors and, to the extent provided in Sections 8 and 10 hereof, the officers
and directors of the Company and the Subsidiary Guarantors and each person who
controls the Company, any Subsidiary Guarantor or any Underwriter, and their
respective heirs, executors, administrators, successors and assigns, and no
other person shall acquire or have any right under or by virtue of this
Agreement or any Pricing Agreement. No purchaser of any of the Securities from
any Underwriter shall be deemed a successor or assign by reason merely of such
purchase.
14. Time shall be of the essence of each Pricing Agreement. As used herein,
"business day" shall mean any day when the Commission's office in Washington,
D.C. is open for business.
20
<PAGE> 21
15. THIS AGREEMENT AND EACH PRICING AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
21
<PAGE> 22
16. This Agreement and each Pricing Agreement may be executed by any one or
more of the parties hereto and thereto in any number of counterparts, each of
which shall be deemed to be an original, but all such respective counterparts
shall together constitute one and the same instrument.
Very truly yours,
Group 1 Automotive, Inc.
By /s/ B.B. Hollingsworth, Jr.
---------------------------------------
B.B. Hollingsworth, Jr.
Chairman, President and
Chief Executive Officer
Southwest Toyota, Inc.
SMC Luxury Cars, Inc.
McCall Automotive Group, Inc.
Courtesy Nissan, Inc.
Group 1 Ford, Inc.
McKinney Dodge, Inc.
Smith Automotive Group, Inc.
Mike Smith Automotive-H, Inc.
Mike Smith Automotive-N, Inc.
Mike Smith Autoplaza, Inc.
Mike Smith Autoplex, Inc.
Mike Smith Autoplex Buick, Inc.
Mike Smith Autoplex Dodge, Inc.
Mike Smith Autoplex-German Imports, Inc.
Mike Smith Autoplex-V, Inc.
Mike Smith L/M, Inc.
Mike Smith GM, Inc.
Round Rock Nissan, Inc.
Smith, Liu & Corbin, Inc.
Smith, Liu & Kutz, Inc.
Town North Imports, Inc.
Town North Nissan, Inc.
Town North Suzuki, Inc.
Bob Howard Automotive-A, Inc.
Bob Howard Automotive-H, Inc.
Bob Howard Chevrolet, Inc.
Bob Howard Dodge, Inc.
Bob Howard Motors, Inc.
Bob Howard Nissan, Inc.
Howard Automotive Group, Inc.
22
<PAGE> 23
Howard Pontiac-GMC, Inc.
Foyt Motors, Inc.
Kingwood Motors-H, Inc.
Koons Ford, Inc.
Courtesy Ford, Inc.
Perimeter Ford, Inc.
Flamingo Ford, Inc.
J. Carroll Management Group, Inc.
MMK Interests, Inc.
Highland Autoplex, Inc.
Maxwell Texas Management, Inc.
Casa Chevrolet Inc.
Casa Chrysler Plymouth Jeep Inc.
Johns Automotive Group, Inc.
Luby Chevrolet Co.
Kutz Auto Group, Inc.
Bob Howard Automotive-East, Inc.
GPI Atlanta, Inc.
Mike Smith Autoplex-A, Inc.
Mike Smith Motors, Inc.
Mike Smith Imports, Inc.
Sunshine Buick Pontiac GMC Truck, Inc.
By /s/ Scott L. Thompson
---------------------------------------
Scott L. Thompson
Vice President
Lubbock Automotive-M, Inc.
Lubbock Motors, Inc.
Group 1 Realty, Inc.
By /s/ Scott L. Thompson
---------------------------------------
Scott L. Thompson
President
Prestige Chrysler Plymouth Northwest, Ltd.
Prestige Chrysler Plymouth South, Ltd.
Maxwell Chrysler Plymouth Jeep Eagle, Ltd.
23
<PAGE> 24
By: MMK Interests, Inc.
General Partner
By /s/ Scott L. Thompson
---------------------------------------
Scott L. Thompson
Vice President
Prestige Maxwell, Inc.
Maxwell Holdings, Inc.
Group 1 Holdings-T, Inc.
Group 1 Holdings-GM, Inc.
By /s/ Robert E. Howard II
---------------------------------------
Robert E. Howard II
President
Maxwell Ford, Ltd.
By: Maxwell Texas
Management, Inc..
By /s/ Scott L. Thompson
---------------------------------------
Scott L. Thompson
Vice President
Lubbock Motors-F, Ltd.
Lubbock Motors-T, Ltd.
Rockwall Automotive-F, Ltd.
Amarillo Motors-C, Ltd.
Amarillo Motors-J, Ltd.
Amarillo Motors-F, Ltd.
By: Lubbock Motors, Inc.
By /s/ Scott L. Thompson
---------------------------------------
Scott L. Thompson
President
24
<PAGE> 25
Chapparal Dodge, Ltd.
Colonial Chrysler-Plymouth, Ltd.
By: Kutz Auto Group, Inc.
By /s/ Scott L. Thompson
---------------------------------------
Scott L. Thompson
Vice President
Delaware Acquisition-CC, L.L.C.
Delaware Acquisition-F, L.L.C.
Delaware Acquisition-T, L.L.C.
Delaware Acquisition-GM, L.L.C.
By /s/ Robert E. Howard II
---------------------------------------
Robert E. Howard II
Manager
25
<PAGE> 26
SCHEDULE A
Ford Motor Company
General Motors Corporation
DaimlerChrysler
Toyota Motor Corp. and Toyota Motor Sales, U.S.A., Inc.
Honda Motor Co., Ltd. and American Honda Motor Co., Inc.
Nissan Motor Co., Ltd. and Nissan Motor North America, Inc.
Mitsubishi Motor Sales of America, Inc.
American Isuzu Motors, Inc.
American Suzuki Motor Corporation
Volvo Cars of North America, Inc.
<PAGE> 27
ANNEX I
PRICING AGREEMENT
[Names and addresses
of Representatives]
,
---------- ----
Ladies and Gentlemen:
Group 1 Automotive, Inc., a Delaware corporation (the "Company"),
proposes, subject to the terms and conditions stated herein and in the
Underwriting Agreement, dated ........., .... (the "Underwriting Agreement"), to
issue and sell to the Underwriters named in Schedule I hereto (the
"Underwriters") the Securities specified in Schedule II hereto (the "Designated
Securities"). The Designated Securities will be unconditionally guaranteed by
each of the subsidiaries of the Company named in Schedule II hereto (such
guarantors, the "Subsidiary Guarantors" and such guarantees, the "Subsidiary
Guarantees"). Each of the provisions of the Underwriting Agreement is
incorporated herein by reference in its entirety, and shall be deemed to be a
part of this Agreement to the same extent as if such provisions had been set
forth in full herein; and each of the representations and warranties set forth
therein shall be deemed to have been made at and as of the date of this Pricing
Agreement, except that each representation and warranty which refers to the
Prospectus in Section 2 of the Underwriting Agreement shall be deemed to be a
representation or warranty as of the date of the Underwriting Agreement in
relation to the Prospectus (as therein defined), and also a representation and
warranty as of the date of this Pricing Agreement in relation to the Prospectus
as amended or supplemented relating to the Designated Securities which are the
subject of this Pricing Agreement. Each reference to the Representatives herein
and in the provisions of the Underwriting Agreement so incorporated by reference
shall be deemed to refer to you. Unless otherwise defined herein, terms defined
in the Underwriting Agreement are used herein as therein defined. The
Representatives designated to act on behalf of the Representatives and on behalf
of each of the Underwriters of the Designated Securities pursuant to Section 12
of the Underwriting Agreement and the address of the Representatives referred to
in such Section 12 are set forth at the end of Schedule II hereto.
An amendment to the Registration Statement, or a supplement to the
Prospectus, as the case may be, relating to the Designated Securities, in the
form heretofore delivered to you is now proposed to be filed with the
Commission.
Subject to the terms and conditions set forth herein and in the
Underwriting Agreement incorporated herein by reference, the Company agrees to
issue and sell to each of the Underwriters, the Subsidiary Guarantors agree to
issue their Subsidiary Guarantees and each of the Underwriters agrees, severally
and not jointly, to purchase from the Company, at the time and place and at the
purchase price to the Underwriters set forth in Schedule II hereto, the
principal amount of Designated Securities set forth opposite the name of such
Underwriter in Schedule I hereto.
27
<PAGE> 28
If the foregoing is in accordance with your understanding, please sign
and return to us _____ counterparts hereof, and upon acceptance hereof by you,
on behalf of each of the Underwriters, this letter and such acceptance hereof,
including the provisions of the Underwriting Agreement incorporated herein by
reference, shall constitute a binding agreement between each of the Underwriters
and the Company. It is understood that your acceptance of this letter on behalf
of each of the Underwriters is or will be pursuant to the authority set forth in
a form of Agreement among Underwriters, the form of which shall be submitted to
the Company for examination upon request, but without warranty on the part of
the Representatives as to the authority of the signers thereof.
Very truly yours,
Group 1 Automotive, Inc.
By:
---------------------------------
Name:
Title:
[signature blocks for Subsidiary
Guarantors to be inserted]
Accepted as of the date hereof:
[Names of Representatives]
By:
On behalf of each of the Underwriters
28
<PAGE> 29
SCHEDULE I
<TABLE>
<CAPTION>
Principal
Amount of
Designated
Securities
to be
UNDERWRITER PURCHASED
----------- ---------
<S> <C>
$
----------
Total.............................................. $
==========
</TABLE>
29
<PAGE> 30
SCHEDULE II
TITLE OF DESIGNATED SECURITIES:
AGGREGATE PRINCIPAL AMOUNT:
PRICE TO PUBLIC:
% of the principal amount of the Designated Securities, plus accrued
interest[, if any,] from to [and accrued amortization[,
if any,] from to ]
PURCHASE PRICE BY UNDERWRITERS:
% of the principal amount of the Designated Securities, plus accrued
interest from to [and accrued amortization[, if any,] from
to ]
FORM OF DESIGNATED SECURITIES:
Book-entry only form represented by one or more global securities
deposited with The Depository Trust Company ("DTC") or its designated
custodian, to be made available for checking by the Representatives at
least twenty-four hours prior to the Time of Delivery at the office of
DTC.
TIME OF DELIVERY:
9:30 a.m. (New York City time), ,
INDENTURE:
Indenture dated , , among, the Company, the Subsidiary
Guarantors and , as Trustee [to be supplemented by a
supplemental indenture relating to the Designated Securities]
MATURITY:
INTEREST RATE:
INTEREST PAYMENT DATES:
[months and dates, commencing , ]
--------------------- ----
30
<PAGE> 31
REDEMPTION PROVISIONS:
[No provisions for redemption]
[The Designated Securities may be redeemed, otherwise than through the
sinking fund, in whole or in part at the option of the Company, in the
amount of [$ ] or an integral multiple thereof,
[on or after , at the following redemption prices (expressed in
percentages of principal amount). If [redeemed on or before , %,
and if] redeemed during the 12-month period beginning ,
REDEMPTION
YEAR PRICE
---- -----
and thereafter at 100% of their principal amount, together in each case
with accrued interest to the redemption date.]
[on any interest payment date falling on or after , , at the
election of the Company, at a redemption price equal to the principal
amount thereof, plus accrued interest to the date of redemption.]]
[Other possible redemption provisions, such as mandatory redemption
upon occurrence of certain events or redemption for changes in tax law]
[Restriction on refunding]
SUBSIDIARY GUARANTORS:
31
<PAGE> 32
DEFEASANCE PROVISIONS:
CLOSING LOCATION FOR DELIVERY OF DESIGNATED SECURITIES:
ADDITIONAL CLOSING CONDITIONS:
NAMES AND ADDRESSES OF REPRESENTATIVES:
Designated Representatives:
Address for Notices, etc.:
OTHER TERMS:
32
<PAGE> 33
ANNEX II-A
Pursuant to Section 7(d) of the Underwriting Agreement, Arthur Andersen LLP
shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with
respect to the Company and its subsidiaries within the meaning of the
Act and the applicable published rules and regulations thereunder;
(ii) In their opinion, the financial statements and any
supplementary financial information and schedules audited (and, if
applicable, financial forecasts and/or pro forma financial information)
examined by them and included or incorporated by reference in the
Registration Statement or the Prospectus comply as to form in all
material respects with the applicable accounting requirements of the
Act or the Exchange Act, as applicable, and the related published rules
and regulations thereunder; and, if applicable, they have made a review
in accordance with standards established by the American Institute of
Certified Public Accountants of the consolidated interim financial
statements, selected financial data, pro forma financial information,
financial forecasts and/or condensed financial statements derived from
audited financial statements of the Company for the periods specified
in such letter, as indicated in their reports thereon, copies of which
have been furnished to the representative or representatives of the
Underwriters (the "Representatives") such term to include an
Underwriter or Underwriters who act without any firm being designated
as its or their representatives and are attached hereto;
(iii) They have made a review in accordance with standards
established by the American Institute of Certified Public Accountants
of the unaudited condensed consolidated statements of income,
consolidated balance sheets and consolidated statements of cash flows
included in the Prospectus and/or included in the Company's quarterly
report on Form 10-Q incorporated by reference into the Prospectus as
indicated in their reports thereon copies of which are attached hereto;
and on the basis of specified procedures including inquiries of
officials of the Company who have responsibility for financial and
accounting matters regarding whether the unaudited condensed
consolidated financial statements referred to in paragraph (vi)(A)(i)
below comply as to form in all material respects with the applicable
accounting requirements of the Act and the Exchange Act and the related
published rules and regulations, nothing came to their attention that
caused them to believe that the unaudited condensed consolidated
financial statements do not comply as to form in all material respects
with the applicable accounting requirements of the Act and the Exchange
Act and the related published rules and regulations;
(iv) The unaudited selected financial information with respect
to the consolidated results of operations and financial position of the
Company for the five most recent fiscal years included in the
Prospectus and included or incorporated by reference in Item 6 of the
Company's Annual Report on Form 10-K for the most recent fiscal year
agrees with the corresponding amounts (after restatement where
applicable)
A-1
<PAGE> 34
in the audited consolidated financial statements for five such fiscal
years which were included or incorporated by reference in the Company's
Annual Reports on Form 10-K for such fiscal years;
(v) They have compared the information in the Prospectus under
selected captions with the disclosure requirements of Regulation S-K
and on the basis of limited procedures specified in such letter nothing
came to their attention as a result of the foregoing procedures that
caused them to believe that this information does not conform in all
material respects with the disclosure requirements of Items 301, 302,
402 and 503(d), respectively, of Regulation S-K;
(vi) On the basis of limited procedures, not constituting an
examination in accordance with generally accepted auditing standards,
consisting of a reading of the unaudited financial statements and other
information referred to below, a reading of the latest available
interim financial statements of the Company and its subsidiaries,
inspection of the minute books of the Company and its subsidiaries
since the date of the latest audited financial statements included or
incorporated by reference in the Prospectus, inquiries of officials of
the Company and its subsidiaries responsible for financial and
accounting matters and such other inquiries and procedures as may be
specified in such letter, nothing came to their attention that caused
them to believe that:
(A) (i) the unaudited condensed consolidated
statements of income, consolidated balance sheets and
consolidated statements of cash flows included in the
Prospectus and/or included or incorporated by reference in the
Company's Quarterly Reports on Form 10-Q incorporated by
reference in the Prospectus do not comply as to form in all
material respects with the applicable accounting requirements
of the Exchange Act and the related published rules and
regulations, or (ii) any material modifications should be made
to the unaudited condensed consolidated statements of income,
consolidated balance sheets and consolidated statements of
cash flows included in the Prospectus or included in the
Company's Quarterly Reports on Form 10-Q incorporated by
reference in the Prospectus for them to be in conformity with
generally accepted accounting principles;
(B) any other unaudited income statement data and
balance sheet items included in the Prospectus do not agree
with the corresponding items in the unaudited consolidated
financial statements from which such data and items were
derived, and any such unaudited data and items were not
determined on a basis substantially consistent with the basis
for the corresponding amounts in the audited consolidated
financial statements included or incorporated by reference in
the Company's Annual Report on Form 10-K for the most recent
fiscal year;
(C) the unaudited financial statements which were not
included in the Prospectus but from which were derived the
unaudited condensed financial
A-2
<PAGE> 35
statements referred to in clause (A) and any unaudited income
statement data and balance sheet items included in the
Prospectus and referred to in Clause (B) were not determined
on a basis substantially consistent with the basis for the
audited financial statements included or incorporated by
reference in the Company's Annual Report on Form 10-K for the
most recent fiscal year;
(D) any unaudited pro forma consolidated condensed
financial statements included or incorporated by reference in
the Prospectus do not comply as to form in all material
respects with the applicable accounting requirements of the
Act and the published rules and regulations thereunder or the
pro forma adjustments have not been properly applied to the
historical amounts in the compilation of those statements;
(E) as of a specified date not more than five days
prior to the date of such letter, there have been any changes
in the consolidated capital stock (other than issuances of
capital stock upon exercise of options and stock appreciation
rights, upon earn-outs of performance shares and upon
conversions of convertible securities, in each case which were
outstanding on the date of the latest balance sheet included
or incorporated by reference in the Prospectus) or any
increase in the consolidated long-term debt of the Company and
its subsidiaries, or any decreases in consolidated net current
assets or stockholders' equity or other items specified by the
Representatives, or any increases in any items specified by
the Representatives, in each case as compared with amounts
shown in the latest balance sheet included or incorporated by
reference in the Prospectus, except in each case for changes,
increases or decreases which the Prospectus discloses have
occurred or may occur or which are described in such letter;
and
(F) for the period from the date of the latest
financial statements included or incorporated by reference in
the Prospectus to the specified date referred to in Clause (E)
there were any decreases in consolidated net revenues or
operating profit or the total or per share amounts of
consolidated net income or other items specified by the
Representatives, or any increases in any items specified by
the Representatives, in each case as compared with the
comparable period of the preceding year and with any other
period of corresponding length specified by the
Representatives, except in each case for increases or
decreases which the Prospectus discloses have occurred or may
occur or which are described in such letter; and
(vii) In addition to the audit referred to in their report(s)
included or incorporated by reference in the Prospectus and the limited
procedures, inspection of minute books, inquiries and other procedures
referred to in paragraphs (iii) and (vi) above, they have carried out
certain specified procedures, not constituting an audit in accordance
with generally accepted auditing standards, with respect to certain
amounts, percentages and financial information specified by the
Representatives which are derived from the general accounting records
of the Company and its subsidiaries, which appear in the Prospectus
(excluding documents incorporated by reference), or
A-3
<PAGE> 36
in Part II of, or in exhibits and schedules to, the Registration
Statement specified by the Representatives or in documents incorporated
by reference in the Prospectus specified by the Representatives, and
have compared certain of such amounts, percentages and financial
information with the accounting records of the Company and its
subsidiaries and have found them to be in agreement.
All references in this Annex II-A to the Prospectus shall be deemed to
refer to the Prospectus (including the documents incorporated by reference
therein) as defined in the Underwriting Agreement as of the date of the letter
delivered on the date of the Pricing Agreement for purposes of such letter and
to the Prospectus as amended or supplemented (including the documents
incorporated by reference therein) in relation to the applicable Designated
Securities for purposes of the letter delivered at the Time of Delivery for such
Designated Securities.
A-4
<PAGE> 37
ANNEX II-B
Pursuant to Section 7(d) of the Underwriting Agreement, Crowe, Chizek and
Company LLC shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with
respect to Carroll Automotive Group and its subsidiaries within the
meaning of the Act and the applicable published rules and regulations
thereunder; and
(ii) In their opinion, the financial statements and any
supplementary financial information and schedules audited (and, if
applicable, financial forecasts and/or pro forma financial information)
examined by them and included or incorporated by reference in the
Registration Statement or the Prospectus comply as to form in all
material respects with the applicable accounting requirements of the
Act or the Exchange Act, as applicable, and the related published rules
and regulations thereunder.
All references in this Annex II-B to the Prospectus shall be deemed to
refer to the Prospectus (including the documents incorporated by reference
therein) as defined in the Underwriting Agreement as of the date of the letter
delivered on the date of the Pricing Agreement for purposes of such letter.
A-5
<PAGE> 1
EXHIBIT 1.3
PRICING AGREEMENT
Goldman, Sachs & Co.,
Merrill Lynch, Pierce,
Fenner & Smith Incorporated,
NationsBanc Montgomery Securities LLC.
c/o Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
March 1, 1999
Ladies and Gentlemen:
Group 1 Automotive, Inc., a Delaware corporation (the "Company"),
proposes, subject to the terms and conditions stated herein and in the
Underwriting Agreement, dated March 1, 1999 (the "Underwriting Agreement"), to
issue and sell to the Underwriters named in Schedule I hereto (the
"Underwriters") the Shares specified in Schedule II hereto (the "Designated
Shares") consisting of Firm Shares and any Optional Shares the Underwriters may
elect to purchase. Each of the provisions of the Underwriting Agreement is
incorporated herein by reference in its entirety, and shall be deemed to be a
part of this Agreement to the same extent as if such provisions had been set
forth in full herein; and each of the representations and warranties set forth
therein shall be deemed to have been made at and as of the date of this Pricing
Agreement, except that each representation and warranty which refers to the
Prospectus in Section 2 of the Underwriting Agreement shall be deemed to be a
representation or warranty as of the date of the Underwriting Agreement in
relation to the Prospectus (as therein defined), and also a representation and
warranty as of the date of this Pricing Agreement in relation to the Prospectus
as amended or supplemented relating to the Designated Shares which are the
subject of this Pricing Agreement. Each reference to the Representatives herein
and in the provisions of the Underwriting Agreement so incorporated by reference
shall be deemed to refer to you. Unless otherwise defined herein, terms defined
in the Underwriting Agreement are used herein as therein defined. The
Representatives designated to act on behalf of the Representatives and on behalf
of each of the Underwriters of the Designated Shares pursuant to Section 12 of
the Underwriting Agreement and the address of the Representatives referred to in
such Section 12 are set forth in Schedule II hereto.
An amendment to the Registration Statement, or a supplement to the
Prospectus, as the case may be, relating to the Designated Shares, in the form
heretofore delivered to you is now proposed to be filed with the Commission.
Subject to the terms and conditions set forth herein and in the
Underwriting Agreement incorporated herein by reference, (a) the Company agrees
to issue and sell to each of the Underwriters, and each of the Underwriters
agrees, severally and not jointly, to purchase from the Company at the time and
place and at the purchase price to the Underwriters set forth in Schedule II
hereto, the number of Firm Shares set forth opposite the name of such
Underwriter in Schedule I hereto and, (b) in the event and to the extent
<PAGE> 2
that the Underwriters shall exercise the election to purchase Optional Shares,
as provided below, the Company agrees to issue and sell to each of the
Underwriters, and each of the Underwriters agrees, severally and not jointly, to
purchase from the Company at the purchase price to the Underwriters set forth in
Schedule II hereto that portion of the number of Optional Shares as to which
such election shall have been exercised.
The Company hereby grants to each of the Underwriters the right to
purchase at their election up to the number of Optional Shares set forth
opposite the name of such Underwriter in Schedule I hereto on the terms referred
to in the paragraph above for the sole purpose of covering over-allotments in
the sale of the Firm Shares. Any such election to purchase Optional Shares may
be exercised by written notice from the Representatives to the Company given
within a period of 30 calendar days after the date of this Pricing Agreement,
setting forth the aggregate number of Optional Shares to be purchased and the
date on which such Optional Shares are to be delivered, as determined by the
Representatives, but in no event earlier than the First Time of Delivery or,
unless the Representatives and the Company otherwise agree in writing, no
earlier than two or later than ten business days after the date of such notice.
If the foregoing is in accordance with your understanding, please sign
and return to us seven counterparts hereof, and upon acceptance hereof by you,
on behalf of each of the Underwriters, this letter and such acceptance hereof,
including the provisions of the Underwriting Agreement incorporated herein by
reference, shall constitute a binding agreement between each of the Underwriters
and the Company. It is understood that your acceptance of this letter on behalf
of each of the Underwriters is or will be pursuant to the authority set forth in
a form of Agreement among Underwriters, the form of which shall be submitted to
the Company for examination upon request, but without warranty on the part of
the Representatives as to the authority of the signers thereof.
Very truly yours,
Group 1 Automotive, Inc.
By: /s/ B.B. Hollingsworth, Jr.
----------------------------
B.B. Hollingsworth, Jr.
Chairman, President and
Chief Executive Officer
<PAGE> 3
Accepted as of the date hereof:
Goldman, Sachs & Co.
Merrill Lynch, Pierce,
Fenner & Smith Incorporated
NationsBanc Montgomery Securities LLC
By: /s/ Goldman, Sachs & Co.
------------------------------------
(Goldman, Sachs & Co.)
On behalf of each of the Underwriters
<PAGE> 4
SCHEDULE I
<TABLE>
<CAPTION>
MAXIMUM
NUMBER
OF OPTIONAL
NUMBER OF SHARES WHICH
FIRM SHARES MAY BE
UNDERWRITER TO BE PURCHASED PURCHASED
- ----------- --------------- --------------
<S> <C> <C>
Goldman, Sachs & Co. .................................... 420,668 63,100
Merrill Lynch, Pierce,
Fenner & Smith Incorporated ........................... 420,666 63,100
NationsBanc Montgomery Securities LLC ................... 420,666 63,100
BancBoston Robertson Stephens Inc. ...................... 246,000 36,900
Bear, Stearns & Co. Inc. ................................ 246,000 36,900
Sanders Morris Mundy .................................... 246,000 36,900
Total ................................................... 2,000,000 300,000
=============== ==============
</TABLE>
4
<PAGE> 5
SCHEDULE II
TITLE OF DESIGNATED SHARES:
Common Stock
NUMBER OF DESIGNATED SHARES:
Number of Firm Shares:
2,000,000
Maximum Number of Optional Shares:
300,000
INITIAL OFFERING PRICE TO PUBLIC:
$ 23.375 per Share
PURCHASE PRICE BY UNDERWRITERS:
$ 22.035 per Share
FORM OF DESIGNATED SHARES:
Definitive form, to be made available for checking at least twenty-four hours
prior to the Time of Delivery at the office of The Depository Trust Company or
its designated custodian
TIME OF DELIVERY:
9:30 a.m. (New York City time), March 5, 1999
CLOSING LOCATION:
Vinson & Elkins
1001 Fannin Street, Suite 2300
Houston, TX 77002-6760
NAMES AND ADDRESSES OF REPRESENTATIVES:
Designated Representatives:
Goldman, Sachs & Co.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
NationsBanc Montgomery Securities LLC
Address for Notices, etc.:
Goldman, Sachs & Co.
9 Old Slip
New York, New York 10004
Attention: Registration Department
5
<PAGE> 1
EXHIBIT 1.4
PRICING AGREEMENT
Goldman, Sachs & Co.,
Chase Securities Inc.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated,
c/o Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
March 2, 1999
Ladies and Gentlemen:
Group 1 Automotive, Inc., a Delaware corporation (the "Company"),
proposes, subject to the terms and conditions stated herein and in the
Underwriting Agreement, dated March 2, 1999 (the "Underwriting Agreement"), to
issue and sell to the Underwriters named in Schedule I hereto (the
"Underwriters") the Securities specified in Schedule II hereto (the "Designated
Securities"). The Designated Securities will be unconditionally guaranteed by
each of the subsidiaries of the Company named in Schedule II hereto (such
guarantors, the "Subsidiary Guarantors" and such guarantees, the "Subsidiary
Guarantees"). Each of the provisions of the Underwriting Agreement is
incorporated herein by reference in its entirety, and shall be deemed to be a
part of this Agreement to the same extent as if such provisions had been set
forth in full herein; and each of the representations and warranties set forth
therein shall be deemed to have been made at and as of the date of this Pricing
Agreement, except that each representation and warranty which refers to the
Prospectus in Section 2 of the Underwriting Agreement shall be deemed to be a
representation or warranty as of the date of the Underwriting Agreement in
relation to the Prospectus (as therein defined), and also a representation and
warranty as of the date of this Pricing Agreement in relation to the Prospectus
as amended or supplemented relating to the Designated Securities which are the
subject of this Pricing Agreement. Each reference to the Representatives herein
and in the provisions of the Underwriting Agreement so incorporated by
reference shall be deemed to refer to you. Unless otherwise defined herein,
terms defined in the Underwriting Agreement are used herein as therein defined.
The Representatives designated to act on behalf of the Representatives and on
behalf of each of the Underwriters of the Designated Securities pursuant to
Section 12 of the Underwriting Agreement and the address of the Representatives
referred to in such Section 12 are set forth at the end of Schedule II hereto.
An amendment to the Registration Statement, or a supplement to the
Prospectus, as the case may be, relating to the Designated Securities, in the
form heretofore delivered to you is now proposed to be filed with the
Commission.
Subject to the terms and conditions set forth herein and in the
Underwriting Agreement incorporated herein by reference, the Company agrees to
issue and sell to each of the Underwriters, the Subsidiary Guarantors agree to
issue their Subsidiary Guarantees and each of the Underwriters agrees,
severally and not jointly, to purchase from the Company, at the time and place
and at the purchase price to the Underwriters set forth in
<PAGE> 2
Schedule II hereto, the principal amount of Designated Securities set forth
opposite the name of such Underwriter in Schedule I hereto.
If the foregoing is in accordance with your understanding, please sign
and return to us seven counterparts hereof, and upon acceptance hereof by you,
on behalf of each of the Underwriters, this letter and such acceptance hereof,
including the provisions of the Underwriting Agreement incorporated herein by
reference, shall constitute a binding agreement between each of the
Underwriters and the Company. It is understood that your acceptance of this
letter on behalf of each of the Underwriters is or will be pursuant to the
authority set forth in a form of Agreement among Underwriters, the form of
which shall be submitted to the Company for examination upon request, but
without warranty on the part of the Representatives as to the authority of the
signers thereof.
Very truly yours,
Group 1 Automotive, Inc.
By /s/ B.B. Hollingsworth, Jr.
-------------------------------------
B.B. Hollingsworth, Jr.
Chairman, President and
Chief Executive Officer
Southwest Toyota, Inc.
SMC Luxury Cars, Inc.
McCall Automotive Group, Inc.
Courtesy Nissan, Inc.
Group 1 Ford, Inc.
McKinney Dodge, Inc.
Smith Automotive Group, Inc.
Mike Smith Automotive-H, Inc.
Mike Smith Automotive-N, Inc.
Mike Smith Autoplaza, Inc.
Mike Smith Autoplex, Inc.
Mike Smith Autoplex Buick, Inc.
Mike Smith Autoplex Dodge, Inc.
Mike Smith Autoplex-German Imports, Inc.
Mike Smith Autoplex-V, Inc.
Mike Smith L/M, Inc.
Mike Smith GM, Inc.
Round Rock Nissan, Inc.
Smith, Liu & Corbin, Inc.
Smith, Liu & Kutz, Inc.
Town North Imports, Inc.
Town North Nissan, Inc.
Town North Suzuki, Inc.
Bob Howard Automotive-A, Inc.
Bob Howard Automotive-H, Inc.
-2-
<PAGE> 3
Bob Howard Chevrolet, Inc.
Bob Howard Dodge, Inc.
Bob Howard Motors, Inc.
Bob Howard Nissan, Inc.
Howard Automotive Group, Inc.
Howard Pontiac-GMC, Inc.
Foyt Motors, Inc.
Kingwood Motors-H, Inc.
Koons Ford, Inc.
Courtesy Ford, Inc.
Perimeter Ford, Inc.
Flamingo Ford, Inc.
J. Carroll Management Group, Inc.
MMK Interests, Inc.
Highland Autoplex, Inc.
Maxwell Texas Management, Inc.
Casa Chevrolet Inc.
Casa Chrysler Plymouth Jeep Inc.
Johns Automotive Group, Inc.
Luby Chevrolet Co.
Kutz Auto Group, Inc.
Bob Howard Automotive-East, Inc.
GPI Atlanta, Inc.
Mike Smith Autoplex-A, Inc.
Mike Smith Motors, Inc.
Mike Smith Imports, Inc.
Sunshine Buick Pontiac GMC Truck, Inc.
By /s/ Scott L. Thompson
----------------------------------------
Scott L. Thompson
Vice President
Lubbock Automotive-M, Inc.
Lubbock Auto Group, Inc.
Group 1 Realty, Inc.
By /s/ Scott L. Thompson
----------------------------------------
Scott L. Thompson
President
Prestige Chrysler Plymouth Northwest, Ltd.
Prestige Chrysler Plymouth South, Ltd.
Maxwell Chrysler Plymouth Jeep Eagle, Ltd.
-3-
<PAGE> 4
By: MMK Interests, Inc.
General Partner
By /s/ Scott L. Thompson
---------------------------------------
Scott L. Thompson
Vice President
Prestige Maxwell, Inc.
Maxwell Holdings, Inc.
Group 1 Holdings-T, Inc.
Group 1 Holdings-GM, Inc.
By /s/ Robert E. Howard II
---------------------------------------
Robert E. Howard II
President
Maxwell Ford, Ltd.
By: Maxwell Texas
Management, Inc.
By /s/ Scott L. Thompson
----------------------------------------
Scott L. Thompson
Vice President
Lubbock Motors-F, Ltd.
Lubbock Motors-T, Ltd.
Rockwall Automotive-F, Ltd.
Amarillo Motors-C, Ltd.
Amarillo Motors-J, Ltd.
Amarillo Motors-F, Ltd.
By: Lubbock Motors, Inc.
By /s/ Scott L. Thompson
----------------------------------------
Scott L. Thompson
President
Chapparal Dodge, Ltd.
Colonial Chrysler-Plymouth, Ltd.
-4-
<PAGE> 5
By: Kutz Auto Group, Inc.
By /s/ Scott L. Thompson
---------------------------------------
Scott L. Thompson
Vice President
Delaware Acquisition-CC, L.L.C.
Delaware Acquisition-F, L.L.C.
Delaware Acquisition-T, L.L.C.
Delaware Acquisition-GM, L.L.C.
By /s/ Robert E. Howard II
----------------------------------------
Robert E. Howard II
Manager
Accepted as of the date hereof:
Goldman, Sachs & Co.
Chase Securities Inc.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
By: /s/ Goldman, Sachs & Co.
------------------------------
(Goldman, Sachs & Co.)
On behalf of each of the Underwriters
-5-
<PAGE> 6
SCHEDULE I
<TABLE>
<CAPTION>
Principal
Amount of
Designated
Securities
to be
Purchased
----------
UNDERWRITER
-----------
<S> <C>
Goldman, Sachs & Co. ................................................... $ 60,000,000
Chase Securities Inc. .................................................. $ 20,000,000
Merrill Lynch, Pierce, Fenner & Smith Incorporated ..................... $ 20,000,000
Total................................................. $100,000,000
============
</TABLE>
-6-
<PAGE> 7
SCHEDULE II
TITLE OF DESIGNATED SECURITIES:
10 7/8% Senior Subordinated Notes due March 1, 2009
AGGREGATE PRINCIPAL AMOUNT:
$100,000,000
PRICE TO PUBLIC:
97.781% of the principal amount of the Designated Securities
PURCHASE PRICE BY UNDERWRITERS:
94.781% of the principal amount of the Designated Securities, plus
accrued interest, if any from March 5, 1999
FORM OF DESIGNATED SECURITIES:
Book-entry only form represented by one or more global securities
deposited with The Depository Trust Company ("DTC") or its designated
custodian, to be made available for checking by the Representatives at
least twenty-four hours prior to the Time of Delivery at the office of
DTC.
TIME OF DELIVERY:
9:30 a.m. (New York City time), March 5, 1999
INDENTURE:
Indenture to be dated as of March 5, 1999, among, the Company, the
Subsidiary Guarantors and IBJ Whitehall Bank & Trust Company, as
Trustee as supplemented by a supplemental indenture relating to the
Designated Securities
MATURITY:
March 1, 2009
INTEREST RATE:
10.875%
INTEREST PAYMENT DATES:
March 1 and September 1, commencing September 1, 1999
-7-
<PAGE> 8
REDEMPTION PROVISIONS:
The Designated Securities shall be subject to redemption as described
in the Prospectus as supplemented for the Designated Securities.
SUBSIDIARY GUARANTORS:
Southwest Toyota, Inc.
SMC Luxury Cars, Inc.
McCall Automotive Group, Inc.
Courtesy Nissan, Inc.
Group 1 Ford, Inc.
McKinney Dodge, Inc.
Smith Automotive Group, Inc.
Mike Smith Automotive-H, Inc.
Mike Smith Automotive-N, Inc.
Mike Smith Autoplaza, Inc.
Mike Smith Autoplex, Inc.
Mike Smith Autoplex Buick, Inc.
Mike Smith Autoplex Dodge, Inc.
Mike Smith Autoplex-German Imports, Inc.
Mike Smith Autoplex-V, Inc.
Mike Smith L/M, Inc.
Mike Smith GM, Inc.
Round Rock Nissan, Inc.
Smith, Liu & Corbin, Inc.
Smith, Liu & Kutz, Inc.
Town North Imports, Inc.
Town North Nissan, Inc.
Town North Suzuki, Inc.
Bob Howard Automotive-A, Inc.
Bob Howard Automotive-H, Inc.
Bob Howard Chevrolet, Inc.
Bob Howard Dodge, Inc.
Bob Howard Motors, Inc.
Bob Howard Nissan, Inc.
Howard Automotive Group, Inc.
Howard Pontiac-GMC, Inc.
Foyt Motors, Inc.
Kingwood Motors-H, Inc.
Koons Ford, Inc.
Courtesy Ford, Inc.
Perimeter Ford, Inc.
Flamingo Ford, Inc.
-8-
<PAGE> 9
J. Carroll Management Group, Inc.
MMK Interests, Inc.
Highland Autoplex, Inc.
Maxwell Texas Management, Inc.
Casa Chevrolet Inc.
Casa Chrysler Plymouth Jeep Inc.
Johns Automotive Group, Inc.
Luby Chevrolet Co.
Kutz Auto Group, Inc.
Bob Howard Automotive-East, Inc.
GPI Atlanta, Inc.
Mike Smith Autoplex-A, Inc.
Mike Smith Motors, Inc.
Mike Smith Imports, Inc.
Sunshine Buick Pontiac GMC Truck, Inc.
Lubbock Automotive-M, Inc.
Lubbock Auto Group, Inc.
Group 1 Realty, Inc.
Prestige Chrysler Plymouth Northwest, Ltd.
Prestige Chrysler Plymouth South, Ltd.
Maxwell Chrysler Plymouth Jeep Eagle, Ltd.
Prestige Maxwell, Inc.
Maxwell Holdings, Inc.
Group 1 Holdings-T, Inc.
Group 1 Holdings-GM, Inc.
Maxwell Ford, Ltd.
Lubbock Motors-F, Ltd.
Lubbock Motors-T, Ltd.
Rockwall Automotive-F, Ltd.
Amarillo Motors-C, Ltd.
Amarillo Motors-J, Ltd.
Amarillo Motors-F, Ltd.
Chapparal Dodge, Ltd.
Colonial Chrysler-Plymouth, Ltd.
Delaware Acquisition-CC, L.L.C.
Delaware Acquisition-F, L.L.C.
Delaware Acquisition-T, L.L.C.
Delaware Acquisition-GM, L.L.C.
DEFEASANCE PROVISIONS:
The Designated Securities shall be subject to defeasance and covenant
defeasance.
-9-
<PAGE> 10
CLOSING LOCATION FOR DELIVERY OF DESIGNATED SECURITIES:
Vinson & Elkins
1001 Fannin Street, Suite 2300
Houston, TX 77002-6760
ADDITIONAL CLOSING CONDITIONS:
None
NAMES AND ADDRESSES OF REPRESENTATIVES:
Designated Representatives:
Goldman, Sachs & Co.
Chase Securities Inc.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Address for Notices, etc.:
c/o Goldman, Sachs & Co.
9 Old Slip
New York, New York 10004
Attention: Registration Department
OTHER TERMS :
1. The Company hereby confirms its engagement of Goldman, Sachs & Co.
as, and Goldman, Sachs & Co. hereby confirms its agreement with the Company to
render services as, a "qualified independent underwriter" within the meaning of
Section 2(o) of Rule 2720 of the Rules of Conduct of the National Association
of Securities Dealers, Inc. with respect to the offering and sale of the
Designated Securities. Goldman, Sachs & Co., in its capacity as qualified
independent underwriter and not otherwise, is referred to herein as the "QIU".
As compensation for the services of the QIU hereunder, the Company agrees to
pay the QIU $10,000 at the Time of Delivery.
2. (a) The Company and the Subsidiary Guarantors, jointly and
severally, will indemnify and hold harmless Goldman, Sachs & Co., in its
capacity as QIU, against any losses, claims, damages or liabilities, joint or
several, to which the QIU may become subject, under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in any Preliminary Prospectus, the
Registration Statement or the Prospectus, or any amendment or supplement
thereto, or
-10-
<PAGE> 11
arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse the QIU for any legal or
other expenses reasonably incurred by the QIU in connection with investigating
or defending any such action or claim as such expenses are incurred; provided,
however, that neither the Company nor any Subsidiary Guarantor shall be liable
in any such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in any Preliminary Prospectus, the
Registration Statement or the Prospectus or any amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company by the QIU in its capacity as QIU expressly for use therein.
(b) Promptly after receipt by the QIU under subsection (a) above of
notice of the commencement of any action, the QIU shall, if a claim in respect
thereof is to be made against the Company and the Subsidiary Guarantors under
such subsection, notify the Company and the Subsidiary Guarantors in writing of
the commencement thereof; but the omission so to notify the Company and the
Subsidiary Guarantors shall not relieve them from any liability which they may
have to the QIU otherwise than under such subsection. In case any such action
shall be brought against the QIU and it shall notify the Company and the
Subsidiary Guarantors of the commencement thereof, the Company and the
Subsidiary Guarantors shall be entitled to participate therein and, to the
extent that they shall wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, with counsel satisfactory to
the QIU (who shall not, except with the consent of the QIU, be counsel to the
Company and the Subsidiary Guarantors), and, after notice from the indemnifying
party to the QIU of its election so to assume the defense thereof, the
indemnifying party shall not be liable to the QIU under such subsection for any
legal expenses of other counsel or any other expenses, in each case
subsequently incurred by the QIU, in connection with the defense thereof other
than reasonable costs of investigation. The Company and the Subsidiary
Guarantors shall not, without the written consent of the indemnified party,
effect the settlement or compromise of, or consent to the entry of any judgment
with respect to, any pending or threatened action or claim in respect of which
indemnification or contribution may be sought hereunder (whether or not the QIU
is an actual or potential party to such action or claim) unless such
settlement, compromise or judgment (i) includes an unconditional release of the
QIU from all liability arising out of such action or claim and (ii) does not
include a statement as to or an admission of fault, culpability or a failure to
act, by or on behalf of the QIU.
(c) If the indemnification provided for in this Section 2 is
unavailable to or insufficient to hold harmless Goldman, Sachs & Co., in its
capacity as QIU, under subsection (a) above in respect of any losses, claims,
damages or liabilities (or actions in respect thereof) referred to therein,
then the Company and the Subsidiary Guarantors, jointly and severally, shall
contribute to the amount paid or payable by the QIU as a result of such losses,
claims, damages or liabilities (or actions in respect thereof) in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the Subsidiary Guarantors on the one hand and the QIU on the other
from the offering of the Designated Securities. If, however, the allocation
provided by the immediately preceding sentence is not permitted by applicable
law or if the QIU failed to give the notice required under subsection (b)
above, then the Company and the Subsidiary Guarantors shall contribute to such
amount paid or payable by the QIU in such
-11-
<PAGE> 12
proportion as is appropriate to reflect not only such relative
benefits but also the relative fault of the Company and the Subsidiary
Guarantors on the one hand and the QIU on the other in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities (or actions in respect thereof), as well as any other relevant
equitable considerations. The relative benefits received by the Company and the
Subsidiary Guarantors on the one hand and the QIU on the other shall be deemed
to be in the same proportion as the total net proceeds from the offering
(before deducting expenses) received by the Company, as set forth in the table
on the cover page of the Prospectus as supplemented for the Designated
Securities, bear to the fee payable to the QIU pursuant to Section 1 hereof.
The relative fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement or a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company on the one hand or the QIU on the other and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company, the Subsidiary
Guarantors and the QIU agree that it would not be just and equitable if
contributions pursuant to this subsection (c) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to above in this subsection (c). The
amount paid or payable by the QIU as a result of the losses, claims, damages or
liabilities (or actions in respect thereof) referred to above in this
subsection (c) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation.
(d) The obligations of the Company and the Subsidiary Guarantors under
this Section 2 shall be in addition to any liability which the Company may
otherwise have and shall extend, upon the same terms and conditions, to each
person, if any, who controls the QIU within the meaning of the Act.
-12-
<PAGE> 1
EXHIBIT 4.1
================================================================================
Group 1 Automotive, Inc.,
as Issuer
and
The Subsidiary Guarantors named herein,
as Subsidiary Guarantors
TO
IBJ Whitehall Bank & Trust Company
Trustee
----------------------
FIRST SUPPLEMENTAL
INDENTURE
Dated as of March 5, 1999
----------------------
================================================================================
<PAGE> 2
THIS FIRST SUPPLEMENTAL INDENTURE, dated as of March 5, 1999, among
Group 1 Automotive, Inc., a corporation duly organized and existing under the
laws of the State of Delaware (the "Company"), each of the Subsidiary Guarantors
named herein and IBJ Whitehall Bank & Trust Company, a New York Banking
Corporation, as trustee (the "Trustee"), to the INDENTURE, dated as of March 5,
1999, among the Company, each of the Subsidiary Guarantors named therein and the
Trustee (the "Original Indenture", the Original Indenture, as supplemented
hereby, being referred to herein as the "Indenture"),
W I T N E S S E T H :
WHEREAS, the Company has duly authorized, as a series of Securities
under the Indenture, its 10 7/8% Senior Subordinated Notes due March 1, 2009
(the "Notes");
WHEREAS, the Company and the Subsidiary Guarantors have duly authorized
the execution and delivery of this Supplemental Indenture to establish the Notes
as a series of Securities under the Original Indenture and to provide for, among
other things, the issuance of and the form and terms of the Notes and additional
covenants and Events of Default for purposes of the Notes and the Holders
thereof;
WHEREAS, all things necessary to make this Supplemental Indenture a
valid agreement according to its terms have been done; and
WHEREAS, the foregoing recitals are made as statements of fact by the
Company and the Subsidiary Guarantors and not by the Trustee;
NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Notes
by the Holders thereof, it is mutually agreed, for the equal and proportionate
benefit of all Holders of the Notes, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 101. DEFINITIONS
For all purposes of this First Supplemental Indenture and the Notes,
except as otherwise expressly provided or unless the subject matter or context
otherwise requires:
"Affiliate" of any Person means any other Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
such Person. For the purposes of this definition, "control" when used with
respect to any Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to
<PAGE> 3
the foregoing; provided that direct or indirect beneficial ownership of 10% or
more of the Voting Stock of a Person shall be deemed to control.
"Asset Disposition" by any Person means any transfer, conveyance, sale,
lease or other disposition (but excluding the creation of any Lien) by such
Person or any of its Restricted Subsidiaries (including a consolidation or
merger or other sale of any such Restricted Subsidiary with, into or to another
Person in a transaction in which such Restricted Subsidiary ceases to be a
Restricted Subsidiary, but excluding a disposition by a Restricted Subsidiary of
such Person to such Person or a Wholly Owned Restricted Subsidiary of such
Person or by such Person to a Wholly Owned Restricted Subsidiary of such Person)
of:
(1) shares of Capital Stock (other than directors' qualifying
shares) or other ownership interests of a Restricted
Subsidiary of such Person,
(2) substantially all of the assets of such Person or any of its
Restricted Subsidiaries representing a division or line of
business or
(3) other assets or rights of such Person or any of its Restricted
Subsidiaries outside of the ordinary course of business,
provided in each case that the aggregate consideration for
such transfer, conveyance, sale, lease or other disposition is
equal to $1 million or more.
Notwithstanding the foregoing, the term "Asset Disposition" shall not
include:
(1) a Restricted Payment that is made in compliance with Section
302 hereof,
(2) the designation of any Restricted Subsidiary as an
Unrestricted Subsidiary or the contribution to the capital of
any Unrestricted Subsidiary, in either case in compliance with
the applicable provisions of the Indenture or
(3) any transaction subject to and consummated in compliance with
Section 312 hereof.
"Average Life" means, as of any date of determination, with respect to
any Debt, the quotient obtained by dividing (1) the sum of the products of the
number of years from such date of determination to the dates of each successive
scheduled principal payments of such Debt by (2) the sum of all such principal
payments.
"Capital Lease Obligation" of any Person means the obligation to pay
rent or other payment amounts under a lease of (or other Debt arrangements
conveying the right to use) real or personal property of such Person which is
required to be classified and accounted for as a capital lease or a liability on
the face of a balance sheet of such Person in accordance with generally accepted
accounting principles. The stated maturity of such obligation shall be the date
of the last payment of rent or any other amount due under such lease prior to
the first date upon which such lease may be terminated by the lessee without
payment of a penalty. The principal amount of such obligation shall be the
capitalized amount thereof that would appear on the face of a balance sheet of
such Person in accordance with generally accepted accounting principles.
-2-
<PAGE> 4
"Capital Stock" of any Person means any and all shares, interests,
participations or other equivalents (however designated) of corporate stock or
other equity participations, including partnership interests, whether general or
limited, of such Person.
"Cash Equivalents" means:
(1) securities issued or directly and fully guaranteed or insured
by the United States government or any agency or
instrumentality thereof having maturities of not more than six
months from the date of acquisition,
(2) certificates of deposit and Eurodollar time deposits with
maturities of six months or less from the date of acquisition,
bankers' acceptances with maturities not exceeding six months
and overnight bank deposits, in each case with any lender
party to the Senior Credit Facility or with any domestic
commercial bank having capital and surplus in excess of $500
million and a Thompson Bank Watch Rating of "B" or better,
(3) repurchase obligations with a term of not more than seven days
for underlying securities of the types described in clauses
(1) and (2) above entered into with any financial institution
meeting the qualifications specified in clause (2) above,
(4) commercial paper having a rating of at least P-1 from Moody's
Investors Service, Inc. (or its successors) and a rating of at
least A-1 from Standard & Poor's Ratings Group (or its
successors),
(5) deposits available for withdrawal on demand with any
commercial bank not meeting the qualifications specified in
clause (2) above, provided all such deposits do not exceed $5
million in the aggregate at any one time and
(6) investments in money market or other mutual funds
substantially all of whose assets comprise securities of the
types described in clauses (1) through (4) above.
A "Change of Control" will be deemed to have occurred at such time as
either:
(1) any Person (other than a Permitted Holder) or any Person
(other than Permitted Holders) acting together that would
constitute a "group" (a "Group") for purposes of Section 13(d)
of the Exchange Act, or any successor provision thereto, shall
beneficially own (within the meaning of Rule 13d-3 under the
Exchange Act, or any successor provision thereto) at least 50%
of the aggregate voting power of all classes of Voting Stock
of the Company; or
(2) any Person (other than a Permitted Holder) or Group (other
than Permitted Holders) shall succeed in having a sufficient
number of its nominees elected to the Board of Directors of
the Company such that such nominees, when added to any
existing director remaining on the Board of Directors of the
Company after such election who was a nominee of or is an
Affiliate of such Person or Group, will constitute a majority
of the Board of Directors of the Company;
-3-
<PAGE> 5
provided, that a transaction effected to create a holding company of the
Company, (i) pursuant to which the Company becomes a Wholly Owned Subsidiary of
such holding company, and (ii) as a result of which the holders of Capital Stock
of such holding company are substantially the same as the holders of Capital
Stock of the Company immediately prior to such transaction, shall not be deemed
to involve a "Change of Control"; provided further that following such a holding
company transaction, references in this definition of "Change of Control" shall
thereafter be treated as references to such holding company.
"Closing Date" means March 5, 1999.
"Common Stock" of any Person means Capital Stock of such Person that
does not rank prior, as to the payment of dividends or as to the distribution of
assets upon any voluntary or involuntary liquidation, dissolution or winding up
of such Person, to shares of Capital Stock of any other class of such Person.
"Consolidated Cash Flow Available for Fixed Charges" for any period
means the Consolidated Net Income for such period increased by the sum of:
(1) Consolidated Interest Expense for such period, plus
(2) Consolidated Income Tax Expense for such period, plus
(3) the consolidated depreciation and amortization expense
included in the income statement of the Company and its
Restricted Subsidiaries for such period, plus
(4) other non-cash expenses (excluding any such non-cash expense
to the extent that it represents an accrual of or reserve for
cash expenses in any future period or amortization of a
prepaid cash expense that was paid in a prior period) included
in the income statement of the Company and its Restricted
Subsidiaries for such period; minus
(5) non-cash items increasing Consolidated Net Income for such
period, other than items that were accrued in the ordinary
course of business, in each case, on a consolidated basis and
determined in accordance with generally accepted accounting
principles;
provided, however, that there shall be excluded therefrom the Consolidated Cash
Flow Available for Fixed Charges (if positive) of any Restricted Subsidiary that
is not a Subsidiary Guarantor (calculated separately for such Restricted
Subsidiary in the same manner as provided above for the Company) that is subject
to a restriction which prevents the payment of dividends or the making of
distributions to the Company or another Restricted Subsidiary to the extent of
such restriction.
"Consolidated Cash Flow Coverage Ratio" as of any date of determination
means the ratio of:
(1) Consolidated Cash Flow Available for Fixed Charges for the
period of the most recently completed four consecutive fiscal
quarters for which quarterly or annual financial statements
are available to
-4-
<PAGE> 6
(2) Consolidated Fixed Charges for such period;
provided, however, that Consolidated Fixed Charges shall be adjusted to give
effect on a pro forma basis to any Debt that has been Incurred by the Company or
any Restricted Subsidiary since the end of such period that remains outstanding
and to any Debt that is proposed to be Incurred by the Company or any Restricted
Subsidiary as if in each case such Debt had been Incurred on the first day of
such period and as if any Debt that is or will no longer be outstanding as the
result of the Incurrence of any such Debt had not been outstanding as of the
first day of such period; provided, however, that in making such computation,
the Consolidated Interest Expense attributable to interest on any proposed Debt
bearing a floating interest rate shall be computed on a pro forma basis as if
the rate in effect on the date of computation had been the applicable rate for
the entire period; and provided further that, in the event the Company or any of
its Restricted Subsidiaries has made Asset Dispositions or acquisitions of
assets not in the ordinary course of business (including acquisitions of other
Persons by merger, consolidation or purchase of Capital Stock) during or after
such period, such computation shall be made on a pro forma basis as if the Asset
Dispositions or acquisitions had taken place on the first day of such period.
"Consolidated Fixed Charges" for any period means the sum of:
(1) Consolidated Interest Expense and
(2) the consolidated amount of interest capitalized by the Company
and its Restricted Subsidiaries during such period calculated
in accordance with generally accepted accounting principles.
"Consolidated Income Tax Expense" for any period means the consolidated
provision for income taxes of the Company and its Restricted Subsidiaries for
such period calculated on a consolidated basis in accordance with generally
accepted accounting principles.
"Consolidated Interest Expense" means for any period the consolidated
interest expense, other than floor plan interest expense, included in a
consolidated income statement (without deduction of interest income) of the
Company and its Restricted Subsidiaries for such period calculated on a
consolidated basis in accordance with generally accepted accounting principles,
including without limitation or duplication (or, to the extent not so included,
with the addition of):
(1) the amortization of Debt discounts;
(2) any payments or fees with respect to letters of credit,
bankers' acceptances or similar facilities;
(3) net fees with respect to interest rate swap or similar
agreements or foreign currency hedge, exchange or similar
agreements;
(4) Preferred Stock dividends of the Company and its Restricted
Subsidiaries (other than with respect to Redeemable Stock)
declared and paid or payable;
-5-
<PAGE> 7
(5) accrued Redeemable Stock dividends of the Company and its
Restricted Subsidiaries, whether or not declared or paid;
(6) interest on Debt guaranteed by the Company and its Restricted
Subsidiaries; and
(7) the portion of any rental obligation allocable to interest
expense.
"Consolidated Net Income" for any period means the consolidated net
income (or loss) of the Company and its Restricted Subsidiaries for such period
determined on a consolidated basis in accordance with generally accepted
accounting principles; provided that there shall be excluded therefrom:
(1) the net income (or loss) of any Person acquired by the Company
or a Restricted Subsidiary in a pooling-of-interests
transaction for any period prior to the date of such
transaction,
(2) the net income (or loss) of any Person that is not a
Restricted Subsidiary except to the extent of the amount of
dividends or other distributions actually paid to the Company
or a Restricted Subsidiary by such Person during such period,
(3) gains or losses on Asset Dispositions by the Company or its
Subsidiaries,
(4) all extraordinary gains and extraordinary losses,
(5) the cumulative effect of changes in accounting principles,
(6) non-cash gains or losses resulting from fluctuations in
currency exchange rates and
(7) the tax effect of any of the items described in clauses (1)
through (6) above;
provided, further, that for purposes of any determination pursuant to the
provisions of Section 302 hereof, there shall further be excluded therefrom the
net income (but not net loss) of any Restricted Subsidiary that is not a
Subsidiary Guarantor that is subject to a restriction which prevents the payment
of dividends or the making of distributions to the Company or another Restricted
Subsidiary to the extent of such restriction.
"Consolidated Net Worth" of any Person means the consolidated
stockholders' equity of such Person, determined on a consolidated basis in
accordance with generally accepted accounting principles, less amounts
attributable to Redeemable Stock of such Person; provided that, with respect to
the Company, adjustments following the date of this Supplemental Indenture to
the accounting books and records of the Company in accordance with Accounting
Principles Board Opinions Nos. 16 and 17 (or successor opinions thereto) or
otherwise resulting from the acquisition of control of the Company by another
Person shall not be given effect to.
"Consolidated Net Tangible Assets" of any Person means the total amount
of assets (less applicable reserves and other properly deductible items) which
under generally accepted accounting
-6-
<PAGE> 8
principles would be included on a consolidated balance sheet of such Person and
its Restricted Subsidiaries after deducting therefrom:
(1) all goodwill, trade names, trademarks, patents, patent
applications, licenses, non-complete agreements, unamortized
debt discount and expense and other like intangibles, which in
each case under generally accepted accounting principles would
be included on such consolidated balance sheet and
(2) appropriate deductions for any minority interests.
"Debt" means (without duplication), with respect to any Person, whether
recourse is to all or a portion of the assets of such Person and whether or not
contingent:
(1) every obligation of such Person for money borrowed;
(2) every obligation of such Person evidenced by bonds,
debentures, notes or other similar instruments, including
obligations Incurred in connection with the acquisition of
property, assets or businesses;
(3) every reimbursement obligation of such Person with respect to
letters of credit, bankers' acceptances or similar facilities
issued for the account of such Person;
(4) every obligation of such Person issued or assumed as the
deferred purchase price of property or services (including
securities repurchase agreements but excluding trade accounts
payable or accrued liabilities arising in the ordinary course
of business);
(5) every Capital Lease Obligation of such Person;
(6) all Receivables Sales of such Person which are sold with
recourse to such Person;
(7) all Redeemable Stock issued by such Person;
(8) if such Person is a Restricted Subsidiary, all Preferred Stock
issued by such Person;
(9) every net obligation under Interest Rate, Currency or
Commodity Price Agreements of such Person; and
(10) every obligation of the type referred to in clauses (1)
through (9) of another Person and all dividends of another
Person the payment of which, in either case, (a) such Person
has Guaranteed or is responsible or liable, directly or
indirectly, as obligor, Guarantor or otherwise or (b) is
secured by (or for which the holder of such obligation has an
existing right, contingent or otherwise, to be secured by) any
Lien upon or with respect to property (including, without
limitation, accounts and contract rights) owned by such
Person, even though such Person has not assumed or become
liable for the payment of such Debt or dividends.
-7-
<PAGE> 9
Notwithstanding the foregoing, Debt shall not include any obligation arising
from any agreement entered into in connection with the acquisition of any
business or assets with any seller of such business or assets that (1) provides
for the payment of earn-outs to such seller or (2) guarantees to such seller a
minimum price to be realized by such seller upon the sale of any Common Stock of
the Company that was issued by the Company to such seller in connection with
such acquisition.
The "amount" or "principal amount" of Debt at any time of determination
as used herein represented by (a) any contingent Debt, shall be the maximum
principal amount thereof, (b) any Debt issued at a price that is less than the
principal amount at maturity thereof, shall be the amount of the liability in
respect thereof determined in accordance with generally accepted accounting
principles, (c) any Receivables Sale, shall be the amount for which there is
recourse to the Seller, (d) any Redeemable Stock, shall be the maximum fixed
redemption or repurchase price in respect thereof, and (e) any Preferred Stock,
shall be the maximum voluntary or involuntary liquidation preference plus
accrued and unpaid dividends in respect thereof, in each case as of such time of
determination.
"Designated Senior Debt" of the Company means:
(1) Debt of the Company under the Senior Credit Facility and
(2) any Senior Debt of the Company
(a) which at the time of determination exceeds $25
million in aggregate principal amount outstanding or
available under a committed facility,
(b) which is specifically designated in the instrument
evidencing such Senior Debt as "Designated Senior
Debt" by the Company and
(c) as to which the Trustee has received an Officers'
Certificate of the Company specifying such Senior
Debt as "Designated Senior Debt".
"Equity Offering" means an offering of Common Stock of the Company that
results in aggregate cash net proceeds to the Company of at least $25 million.
"Floor Plan Debt" means Debt in an aggregate principal amount at any
time not to exceed the value of the Inventory of the Company and its Restricted
Subsidiaries, which Debt is secured primarily by a Lien on Inventory of the
Company and/or its Restricted Subsidiaries.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person guaranteeing, or having the economic effect of
guaranteeing, any Debt of any other Person (the "primary obligor") in any
manner, whether directly or indirectly, and including, without limitation, any
obligation of such Person,
(1) to purchase or pay (or advance or supply funds for the
purchase or payment of) such Debt or to purchase (or to
advance or supply funds for the purchase of) any security for
the payment of such Debt,
-8-
<PAGE> 10
(2) to purchase property, securities or services for the purpose
of assuring the holder of such Debt of the payment of such
Debt, or
(3) to maintain working capital, equity capital or other financial
statement condition or liquidity of the primary obligor so as
to enable the primary obligor to pay such Debt (and
"Guaranteed", "Guaranteeing" and "Guarantor" shall have
meanings correlative to the foregoing);
provided, however, that the Guarantee by any Person shall not include
endorsements by such Person for collection or deposit, in either case, in the
ordinary course of business.
"Incur" means, with respect to any Debt or other obligation of any
Person, to create, issue, incur (by conversion, exchange or otherwise), assume,
Guarantee or otherwise become liable in respect of such Debt or other obligation
including by acquisition of Subsidiaries or the recording, as required pursuant
to generally accepted accounting principles or otherwise, of any such Debt or
other obligation on the balance sheet of such Person (and "Incurrence",
"Incurred", "Incurable" and "Incurring" shall have meanings correlative to the
foregoing); provided, however, that a change in generally accepted accounting
principles that results in an obligation of such Person that exists at such time
becoming Debt shall not be deemed an Incurrence of such Debt.
"Interest Rate, Currency or Commodity Price Agreement" of any Person
means any forward contract, futures contract, swap, option or other financial
agreement or arrangement (including, without limitation, caps, floors, collars
and similar agreements) relating to, or the value of which is dependent upon,
interest rates, currency exchange rates or commodity prices or indices
(excluding contracts for the purchase or sale of goods in the ordinary course of
business).
"Inventory" of any Person means the automobile and automobile parts and
supplies inventories of such Person that are held for sale or lease, or are to
be used or consumed by such Person, in the ordinary course of business. The
value of each particular item of inventory shall be the historical purchase
price thereof.
"Investment" by any Person means any direct or indirect loan, advance
or other extension of credit or capital contribution (by means of transfers of
cash or other property (other than Capital Stock that is neither Redeemable
Stock nor Preferred Stock of a Restricted Subsidiary) to others or payments for
property or services for the account or use of others, or otherwise) to, or
purchase or acquisition of Capital Stock, bonds, notes, debentures or other
securities or evidence of Debt issued by, any other Person, including any
payment on a Guarantee of any obligation of such other Person, but shall not
include
(1) trade accounts receivable in the ordinary course of business
on credit terms made generally available to the customers of
such Person,
(2) any Permitted Interest Rate, Currency or Commodity Price
Agreement and
(3) endorsements of negotiable instruments and documents in the
ordinary course of business.
-9-
<PAGE> 11
"Investment Grade" means Baa3 or above in the case of Moody's (or the
equivalent under any successor rating categories of Moody's) and BBB- or above
in the case of S&P (or the equivalent under any successor rating categories of
S&P).
"Lien" means, with respect to any property or assets, any mortgage or
deed of trust, pledge, hypothecation, assignment, deposit arrangement, security
interest, lien, charge, easement (other than any easement not materially
impairing usefulness or marketability), encumbrance, preference, priority or
other security agreement or preferential arrangement of any kind or nature
whatsoever on or with respect to such property or assets (including, without
limitation, any conditional sale or other title retention agreement having
substantially the same economic effect as any of the foregoing).
"Liquid Securities" means securities
(1) of an issuer that is not an Affiliate of the Company and
(2) that are publicly traded on the New York Stock Exchange, the
American Stock Exchange or the Nasdaq National Market.
"Moody's" means Moody's Investor Service, Inc. and its successors.
"Net Available Proceeds" from any Asset Disposition by any Person means
cash or Cash Equivalents received (including by way of sale or discounting of a
note, instalment receivable or other receivable, but excluding any other
consideration received in the form of assumption by the acquiree of Debt or
other obligations relating to such properties or assets) therefrom by such
Person, net of:
(1) all legal, title and recording tax expenses, commissions and
other fees and expenses Incurred and all federal, state,
foreign and local taxes required to be accrued as a liability
as a consequence of such Asset Disposition;
(2) all payments made by such Person or its Restricted
Subsidiaries on any Debt which is secured by such assets in
accordance with the terms of any Lien upon or with respect to
such assets or which must by the terms of such Lien, or in
order to obtain a necessary consent to such Asset Disposition
or by applicable law, be repaid out of the proceeds from such
Asset Disposition;
(3) all distributions and other payments made to minority interest
holders in Restricted Subsidiaries of such Person or joint
ventures as a result of such Asset Disposition; and
(4) appropriate amounts to be provided by such Person or any
Restricted Subsidiary thereof, as the case may be, as a
reserve in accordance with generally accepted accounting
principles against any liabilities associated with such assets
and retained by such Person or any Restricted Subsidiary
thereof, as the case may be, after such Asset Disposition,
including, without limitation, liabilities under any
indemnification obligations and severance and other employee
termination costs associated with such Asset Disposition, in
each case as determined by the Board of Directors, in its
reasonable good faith judgment evidenced by a resolution of
the Board of Directors
-10-
<PAGE> 12
filed with the Trustee; provided, however, that any reduction
in such reserve within twelve months following the
consummation of such Asset Disposition will be treated for all
purposes of the Indenture and the Notes as a new Asset
Disposition at the time of such reduction with Net Available
Proceeds equal to the amount of such reduction.
"Offer to Purchase" means a written offer (the "Offer") sent by the
Company by first class mail, postage prepaid, to each Holder at his address
appearing in the Security Register on the date of the Offer offering to purchase
up to the principal amount of Notes specified in such Offer at the purchase
price specified in such Offer (as determined pursuant to this Supplemental
Indenture). Unless otherwise required by applicable law, the Offer shall specify
an expiration date (the "Offer Expiration Date") of the Offer to Purchase which
shall be, subject to any contrary requirements of applicable law, not less than
30 days or more than 60 days after the date of such Offer and a settlement date
(the "Purchase Date") for purchase of Notes within five Business Days after the
Offer Expiration Date. The Company shall notify the Trustee at least 15 Business
Days (or such shorter period as is acceptable to the Trustee) prior to the
mailing of the Offer of the Company's obligation to make an Offer to Purchase,
and the Offer shall be mailed by the Company or, at the Company's request, by
the Trustee in the name and at the expense of the Company. The Offer shall
contain a description of the events requiring the Company to make the Offer to
Purchase and all instructions and materials necessary to enable such Holders to
tender Notes pursuant to the Offer to Purchase. The Offer shall also state:
(1) the Section of this Supplemental Indenture pursuant to which
the Offer to Purchase is being made;
(2) the Offer Expiration Date and the Purchase Date;
(3) the aggregate principal amount of the Outstanding Notes
offered to be purchased by the Company pursuant to the Offer
to Purchase (including, if less than 100%, the manner by which
such has been determined pursuant to the section of this
Supplemental Indenture requiring the Offer to Purchase) (the
"Purchase Amount");
(4) the purchase price to be paid by the Company for each $1,000
aggregate principal amount of Notes accepted for payment (as
specified pursuant to this Supplemental Indenture) (the
"Purchase Price");
(5) that the Holder may tender all or any portion of the Notes
registered in the name of such Holder and that any portion of
a Note tendered must be tendered in an integral multiple of
$1,000 principal amount;
(6) the place or places where Notes are to be surrendered for
tender pursuant to the Offer to Purchase;
(7) that interest on any Note not tendered or tendered but not
purchased by the Company pursuant to the Offer to Purchase
will continue to accrue;
(8) that on the Purchase Date the Purchase Price will become due
and payable upon each Note being accepted for payment pursuant
to the Offer to Purchase and that interest thereon shall cease
to accrue on and after the Purchase Date;
-11-
<PAGE> 13
(9) that each Holder electing to tender a Note pursuant to the
Offer to Purchase will be required to surrender such Note at
the place or places specified in the Offer prior to the close
of business on the Expiration Date (such Note being, if the
Company or the Trustee so requires, duly endorsed by, or
accompanied by a written instrument of transfer in form
satisfactory to the Company and the Trustee duly executed by,
the Holder thereof or his attorney duly authorized in
writing);
(10) that Holders will be entitled to withdraw all or any portion
of Notes tendered if the Company (or their Paying Agent)
receives, not later than the close of business on the
Expiration Date, a telegram, telex, facsimile transmission or
letter setting forth the name of the Holder, the principal
amount of the Note the Holder tendered, the certificate number
of the Note the Holder tendered and a statement that such
Holder is withdrawing all or a portion of his tender;
(11) that (a) if Notes in an aggregate principal amount less than
or equal to the Purchase Amount are duly tendered and not
withdrawn pursuant to the Offer to Purchase, the Company shall
purchase all such Notes and (b) if Notes in an aggregate
principal amount in excess of the Purchase Amount are tendered
and not withdrawn pursuant to the Offer to Purchase, the
Company shall purchase Notes having an aggregate principal
amount equal to the Purchase Amount on a pro rata basis (with
such adjustments as may be deemed appropriate so that only
Notes in denominations of $1,000 or integral multiples thereof
shall be purchased); and
(12) that in the case of any Holder whose Note is purchased only in
part, the Company shall execute, and the Trustee shall
authenticate and deliver to the Holder of such Note without
service charge, a new Note or Notes, of any authorized
denomination as requested by such Holder, in an aggregate
principal amount equal to and in exchange for the unpurchased
portion of the Note so tendered.
If any of the Notes subject to an Offer to Purchase is a Global Security, then
the Offer shall be modified by the Company to the extent necessary to comply
with the procedures of the Depositary applicable to repurchases. Any Offer to
Purchase shall be governed by and effected in accordance with the Offer for such
Offer to Purchase.
"Permitted Holder" means:
(1) each of B.B. Hollingsworth, Jr., John Turner and Scott
Thompson;
(2) the members of the immediate family of any of the persons
referred to in clause (1) above;
(3) any trust created for the benefit of the persons described in
clause (1) or (2) above or any of their estates; or
(4) any other Person that is wholly owned by any one or more of
the Persons described in clause (1), (2) or (3) above.
-12-
<PAGE> 14
"Permitted Interest Rate, Currency or Commodity Price Agreement" of any
Person means any Interest Rate, Currency or Commodity Price Agreement entered
into with one or more financial institutions in the ordinary course of business
that is designed to protect such Person against fluctuations in interest rates
or currency exchange rates with respect to Debt Incurred or proposed to be
Incurred and which shall have a notional amount no greater than the payments due
with respect to the Debt being hedged thereby, or in the case of currency or
commodity protection agreements, against currency exchange rate or commodity
price fluctuations in the ordinary course of business relating to then existing
financial obligations or then existing or sold production and not for purposes
of speculation.
"Permitted Investments" means:
(1) any Investment in the Company or a Restricted Subsidiary or a
Person that will become or be merged into or consolidated with
a Restricted Subsidiary as a result of such Investment,
(2) any Investment in a Permitted Joint Venture which, together
with any other outstanding Investment made pursuant to this
clause (2), does not exceed the greater of $10 million or 2.5%
of the Company's Consolidated Net Tangible Assets at the time
of such Investment and
(3) any non-cash consideration received in connection with an
Asset Disposition that was made in compliance with Section 306
hereof.
"Permitted Joint Venture" means any joint venture arrangement (which
may be structured as a corporation, partnership, trust, limited liability
company or any other Person):
(1) in which the Company and its Restricted Subsidiaries own an
equity interest of at least 25% of the equity interest of all
joint venturers thereof and
(2) which engages only in a business of the type conducted by the
Company and its Subsidiaries on the Closing Date or any
business ancillary thereto or supportive thereof.
"Preferred Stock" of any Person means Capital Stock of such Person of
any class or classes (however designated) that ranks prior, as to the payment of
dividends or as to the distribution of assets upon any voluntary or involuntary
liquidation, dissolution or winding up of such Person, to shares of Capital
Stock of any other class of such Person.
"Receivables" means receivables, chattel paper, instruments, documents
or intangibles evidencing or relating to the right to payment of money.
"Receivables Sale" of any Person means any sale of Receivables of such
Person (pursuant to a purchase facility or otherwise), other than in connection
with a disposition of the business operations of such Person relating thereto or
a disposition of defaulted Receivables for purpose of collection and not as a
financing arrangement.
-13-
<PAGE> 15
"Redeemable Stock" of any Person means any Capital Stock of such Person
that by its terms (or by the terms of any security into which it is convertible
or for which it is exchangeable) or otherwise (including upon the occurrence of
an event) matures or is required to be redeemed (pursuant to any sinking fund
obligation or otherwise) or is convertible into or exchangeable for Debt or is
redeemable at the option of the holder thereof, in whole or in part, at any time
prior to the final Stated Maturity of the Notes.
"Replacement Assets" means:
(1) properties and assets (other than cash or any Capital Stock or
other security) that will be used in the automotive retail
business, the business of the Company and its Restricted
Subsidiaries as conducted on the Closing Date or any business
ancillary thereto or supportive thereof; and
(2) Capital Stock of any Person that is engaged in the automotive
retail business, the business of the Company and its
Restricted Subsidiaries as conducted on the Closing Date or
any business ancillary thereto or supportive thereof and that
will be merged or consolidated with or into a Restricted
Subsidiary or that will become a Restricted Subsidiary.
"Restricted Subsidiary" means any Subsidiary of the Company, whether
existing on or after the Closing Date, unless such Subsidiary is an Unrestricted
Subsidiary.
"S&P" means Standard & Poor's Ratings Group, a division of McGraw Hill,
Inc., and its successors.
"Sale and Leaseback Transaction" of any Person means an agreement with
any lender or investor or to which such lender or investor is a party providing
for the leasing by such Person of any property or asset of such Person which has
been or is being sold or transferred by such Person more than 270 days after the
acquisition thereof or the completion of construction or commencement of
operation thereof to such lender or investor or to any person to whom funds have
been or are to be advanced by such lender or investor on the security of such
property or asset. The stated maturity of such arrangement shall be the date of
the last payment of rent or any other amount due under such arrangement prior to
the first date on which such arrangement may be terminated by the lessee without
payment of a penalty.
"Senior Credit Facility" means the Second Amended and Restated
Revolving Credit Agreement dated as of November 10, 1998 among the Company, its
subsidiaries, Chase Bank of Texas, National Association, as administrative
agent, Comerica Bank, as floorplan agent, NationsBank, N.A. as documentation
agent, U.S. Bank National Association, Bank of America, National Trust & Savings
Association, Bank One, N.A. and BankBoston, N.A., as co-agents, and other
lending institutions party thereto and any renewal, extension, refinancing or
refunding thereof.
"Senior Debt" means, with respect to any Person:
(1) the principal of (and premium, if any) and interest (including
interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to such
-14-
<PAGE> 16
Person whether or not such claim for post-petition interest is
allowed in such proceeding) on, and penalties and any
obligation of such Person for reimbursement, indemnities and
fees relating to, the Senior Credit Facility,
(2) the principal of (and premium, if any) and interest on Debt of
such Person for money borrowed, whether Incurred on or prior
to the date of original issuance of the Notes or thereafter,
and any amendments, renewals, extensions, modifications,
refinancings and refundings of any such Debt and
(3) Permitted Interest Rate Agreements and Permitted Currency
Agreements entered into with respect to Debt described in
clauses (1) and (2) above.
Notwithstanding the foregoing, the following shall not constitute Senior Debt:
(1) any Debt as to which the terms of the instrument creating or
evidencing the same provide that such Debt is on a parity
with, or is not superior in right of payment to, the Notes or,
in the case of a Subsidiary Guarantor, a Subsidiary Guarantee,
(2) any Debt which is subordinated in right of payment in any
respect to any other Debt of such Person, other than Debt
under the Senior Credit Facility that is subordinated to other
Debt under the Senior Credit Facility solely by reason of
priority being granted under the Senior Credit Facility to
"swingline", overdraft of similar tranches of Debt,
(3) Debt evidenced by the Notes or a Subsidiary Guarantee,
(4) any Debt owed to a Person when such Person is a Subsidiary of
such Person
(5) any obligation of such Person with respect to any Capital
Stock of such Person,
(6) that portion of any Debt which is Incurred in violation of the
Indenture,
(7) Debt which, when Incurred and without respect to any election
under Section 1111(b) of Title 11, United States Code, is
without recourse to such Person,
(8) any liability for federal, state, local or other taxes owed or
owing by such Person,
(9) any Debt for the purchase of goods, materials or services, or
consisting of operating lease rental payments, in the ordinary
course of business or Debt consisting of trade payables or
other current liabilities (other than current liabilities for
money borrowed and the current portion of long-term Senior
Debt),
(10) Debt of or amounts owed by such Person for compensation to
employees or for services rendered, and
(11) Debt issued as a dividend on, or in redemption of or exchange
for, Capital Stock of such Person.
-15-
<PAGE> 17
"Significant Subsidiary" means, at any date of determination, any
Restricted Subsidiary that together with its Restricted Subsidiaries, represents
10% or more of the Company's total consolidated assets at the end of the most
recent fiscal quarter for which financial information is available or 10% or
more of the Company's consolidated net revenues or consolidated operating income
for the most recent four quarters for which financial information is available.
"Subordinated Debt" means Debt of the Company as to which the payment
of principal of (and premium, if any) and interest and other payment obligations
in respect of such Debt shall be subordinate to the prior payment in full of the
Notes to at least the following extent:
(1) no payments of principal of (or premium, if any) or interest
on or otherwise due in respect of such Debt may be permitted
for so long as any default in the payment of principal (or
premium, if any) or interest on the Notes exists;
(2) in the event that any other default that with the passing of
time or the giving of notice, or both, would constitute an
event of default exists with respect to the Notes, upon notice
by 25% or more in principal amount of the Notes to the
Trustee, the Trustee shall have the right to give notice to
the Company and the holders of such Debt (or trustees or
agents therefor) of a payment blockage, and thereafter no
payments of principal of (or premium, if any) or interest on
or otherwise due in respect of such Debt may be made for a
period of 179 days from the date of such notice; and
(3) such Debt may not
(A) provide for payments of principal of such Debt at the
stated maturity thereof or by way of a sinking fund
applicable thereto or by way of any mandatory
redemption, defeasance, retirement or repurchase
thereof by the Company (including any redemption,
retirement or repurchase which is contingent upon
events or circumstances, but excluding any retirement
required by virtue of acceleration of such Debt upon
an event of default thereunder), in each case prior
to the final Stated Maturity of the Notes or
(B) permit redemption or other retirement (including
pursuant to an offer to purchase made by the Company)
of such other Debt at the option of the holder
thereof prior to the final Stated Maturity of the
Notes, other than a redemption or other retirement at
the option of the holder of such Debt (including
pursuant to an offer to purchase made by the Company)
which is conditioned upon a change of control of the
Company pursuant to provisions substantially similar
to those described under "Change of Control" (and
which shall provide that such Debt will not be
repurchased pursuant to such provisions prior to the
Company's repurchase of the Notes required to be
repurchased by the Company pursuant to the provisions
described under "Change of Control").
-16-
<PAGE> 18
"Subsidiary" of any Person means:
(1) a corporation more than 50% of the combined voting power of
the outstanding Voting Stock of which is owned, directly or
indirectly, by such Person or by one or more other
Subsidiaries of such Person or by such Person and one or more
Subsidiaries thereof or
(2) any other Person (other than a corporation) in which such
Person, or one or more other Subsidiaries of such Person or
such Person and one or more other Subsidiaries thereof,
directly or indirectly, has at least a majority ownership and
power to direct the policies, management and affairs thereof.
"Unrestricted Subsidiary" means:
(1) any Subsidiary designated as such by the Board of Directors of
the Company as set forth below where
(a) neither the Company nor any of its other Subsidiaries
(other than another Unrestricted Subsidiary) provides
credit support for, or Guarantee of, any Debt of such
Subsidiary or any Subsidiary of such Subsidiary
(including any undertaking, agreement or instrument
evidencing such Debt) or is directly or indirectly
liable for any Debt of such Subsidiary or any
Subsidiary of such Subsidiary, and
(b) no default with respect to any Debt of such
Subsidiary or any Subsidiary of such Subsidiary
(including any right which the holders thereof may
have to take enforcement action against such
Subsidiary) would permit (upon notice, lapse of time
or both) any holder of any other Debt of the Company
and its Subsidiaries (other than another Unrestricted
Subsidiary) to declare a default on such other Debt
or cause the payment thereof to be accelerated or
payable prior to its final scheduled maturity and
(2) any Subsidiary of an Unrestricted Subsidiary.
The Board of Directors of the Company may designate any Subsidiary to
be an Unrestricted Subsidiary unless such Subsidiary owns any Capital Stock of,
or owns or holds any Lien on any property of, any other Restricted Subsidiary
which is not a Subsidiary of the Subsidiary to be so designated or otherwise an
Unrestricted Subsidiary, provided that the Company could make a Restricted
Payment in an amount equal to the greater of the fair market value and book
value of such Subsidiary pursuant to Section 302 hereof and such amount is
thereafter treated as a Restricted Payment for the purpose of calculating the
aggregate amount available for Restricted Payments thereunder.
"Voting Stock" of any Person means Capital Stock of such Person which
ordinarily has voting power for the election of directors (or persons performing
similar functions) of such Person, whether at all times or only so long as no
senior class of securities has such voting power by reason of any contingency.
-17-
<PAGE> 19
"Wholly Owned Restricted Subsidiary" of any Person means a Restricted
Subsidiary of such Person all of the outstanding Capital Stock or other
ownership interests of which (other than directors' qualifying shares) shall at
the time be owned by such Person or by one or more Wholly Owned Restricted
Subsidiaries of such Person or by such Person and one or more Wholly Owned
Restricted Subsidiaries of such Person.
SECTION 102. TO BE READ WITH ORIGINAL INDENTURE
The First Supplemental Indenture is a supplemental indenture within the
meaning of the Original Indenture and the Original Indenture and this First
Supplemental Indenture shall be read together and shall have effect, so far as
practicable, as though all the provisions of the Original Indenture and this
First Supplemental Indenture were contained in one instrument.
ARTICLE TWO
THE NOTES
SECTION 201. DESIGNATION
There is hereby authorized to be issued under the Original Indenture a
series of Securities designated as "10 7/8% Senior Subordinated Notes due March
1, 2009".
SECTION 202. LIMIT OF AGGREGATE PRINCIPAL AMOUNT
The aggregate principal amount of Notes that may be authenticated and
delivered (except for Notes authenticated and delivered upon registration of
transfer of, or in exchange for, or in lieu of, other Notes pursuant to Section
304, 305, 306, 906 or 1107 of the Original Indenture and except for any Notes
which, pursuant to Section 303 of the Original Indenture, are deemed never to
have been authenticated and delivered) shall be limited to $100,000,000.
SECTION 203. SUBSIDIARY GUARANTEES.
(a) Subject to the provisions of this Section 203, the Notes shall have
the benefit of the Subsidiary Guarantees.
(b) In addition to the conditions contained in Section 1304 of the
Original Indenture for release of Subsidiary Guarantors from their Subsidiary
Guarantees, in the event that (1) any Subsidiary Guarantor ceases to have
outstanding any Debt (including Guarantees) other than Debt consisting of Floor
Plan Debt, Guarantees of Floor Plan Debt of the Company or such Subsidiary
Guarantor's Subsidiary Guarantee and (2) the Company's corporate credit rating
from either Moody's or S&P is Investment Grade, the Company may, at its option,
obtain the release of such Subsidiary Guarantor's Subsidiary Guarantee by
delivering an Officers' Certificate to the Trustee certifying to such effect.
Upon delivery by the Company of such Officers' Certificate and an Opinion of
Counsel stating that all conditions precedent herein provided for relating to
the release of such Subsidiary Guarantor from its obligations under its
Subsidiary Guarantee and Article Thirteen of the Original Indenture have been
complied with, such Subsidiary Guarantor shall be released and discharged of
-18-
<PAGE> 20
its obligations under its Subsidiary Guarantee and under Article Thirteen of the
Original Indenture without any action on the part of the Trustee or any Holder,
and the Trustee shall execute any documents reasonably required in order to
acknowledge the release of such Subsidiary Guarantor from its obligations under
its Subsidiary Guarantee endorsed on the Securities and under Article Thirteen
of the Original Indenture.
(c) Notwithstanding the provisions of Article 1305 of the Original
Indenture, the Company shall not be required to cause any Subsidiary of the
Company that becomes a Restricted Subsidiary after the date of the Original
Indenture to become a Subsidiary Guarantor unless such Restricted Subsidiary has
outstanding any Debt (including Guarantees) other than Debt consisting of Floor
Plan Debt or Guarantees of Floor Plan Debt of the Company.
(d) In the event that any Restricted Subsidiary that is not a
Subsidiary Guarantor Incurs any Debt other than Debt consisting of Floor Plan
Debt or Guarantees of Floor Plan Debt of the Company, the Company will cause
such Restricted Subsidiary to become a Subsidiary Guarantor with respect to the
Notes as soon as practicable after such Restricted Subsidiary Incurs such Debt.
The Company shall cause any such Restricted Subsidiary to become a Subsidiary
Guarantor with respect to the Notes by executing and delivering to the Trustee
(a) a supplemental indenture, in form and substance satisfactory to the Trustee,
which subjects such Person to the provisions (including the representations and
warranties) of this Supplemental Indenture and the Original Indenture as a
Subsidiary Guarantor and (b) an Officers' Certificate and an Opinion of Counsel
stating that such supplemental indenture has been duly authorized and executed
by such Person and such supplemental indenture and such Person's obligations
under its Subsidiary Guarantee and this Supplemental Indenture and the Original
Indenture constitute the legal, valid, binding and enforceable obligations of
such Person (subject to such customary exceptions concerning creditors' rights
and equitable principles as may be acceptable to the Trustee in its discretion).
SECTION 204. SUBORDINATION
The definitions of Senior Debt and Designated Senior Debt which shall
apply to the Notes and the Subsidiary Guarantees of the Notes are set forth in
Section 101 hereof.
SECTION 205. DATE OF PAYMENT OF PRINCIPAL
The principal of the Notes shall be payable on March 1, 2009.
SECTION 206. INTEREST
(1) The Notes shall bear interest at the rate of 10.875% per annum;
provided, that any principal and premium and any installment of interest which
is overdue shall bear interest at the rate of 11.875% per annum (to the extent
that the payment of such interest shall be legally enforceable).
(2) Interest in respect of the Notes shall accrue from and including
March 5, 1999 or from and including the most recent Interest Payment Date to
which interest has been paid or duly provided for.
-19-
<PAGE> 21
(3) The Interest Payment Dates on which interest shall be payable in
respect of the Notes shall be March 1 and September 1 in each year, commencing
September 1, 1999.
(4) The Regular Record Dates for interest in respect of the Notes shall
be February 15 and August 15 (whether or not a Business Day) in respect of the
interest payable on March 1 and September 1, respectively.
SECTION 207. PLACE OF PAYMENT
Payments of the principal, premium, if any, and interest on the Notes
will be made at the office or agency of the Company maintained for that purpose
in the City of New York, New York, provided that at the option of the Company
payment of interest may be made by check mailed to the address of the Person
entitled thereto as such address shall appear in the Security Register for the
Notes.
SECTION 208. REDEMPTION
(a) The Notes may be redeemed at the election of the Company from time
to time in the event that on or before March 1, 2002 the Company receives net
proceeds from the sale of its Common Stock in one or more Equity Offerings, in
which case the Company may, at its option and from time to time, use all or a
portion of any such net proceeds to redeem Notes in an aggregate principal
amount of up to $35,000,000; provided, however, that Notes in an aggregate
principal amount equal to at least $65,000,000 remain outstanding after each
such redemption. Any such redemption must occur on a Redemption Date within 75
days of any such sale at a Redemption Price of 110.875% of the principal amount
of the Notes, together with accrued interest to but excluding the Redemption
Date (subject to the right of Holders of record on the relevant Regular Record
Date to receive interest due on an Interest Payment Date that is on or prior to
the Redemption Date).
In the case of any redemption pursuant to this Section 208(a), in
addition to the requirements of Section 1102 of the Original Indenture the
Company shall also furnish the Trustee an Officers' Certificate stating that the
Company is entitled to effect such redemption and setting forth a statement of
facts showing that the condition or conditions precedent to the right of the
Company so to redeem have occurred or been satisfied. In addition to the
information specified in Section 1104 of the Original Indenture, the notice of
redemption shall include a brief statement setting forth the Company's right to
effect such redemption and the Company's basis therefor.
(b) The Notes further may be redeemed at the election of the Company,
as a whole or from time to time in part, at any time on or after March 1, 2004,
at the Redemption Prices specified in the form of Note attached hereto as Annex
A together with accrued interest to the Redemption Date.
SECTION 209. DEFEASANCE
The Notes shall be defeasible pursuant to both of Section 1502 and
Section 1503 of the Original Indenture.
-20-
<PAGE> 22
SECTION 210. FORM
The Notes shall be issuable in whole initially in the form of one or
more Global Securities and shall be substantially in the form set forth in Annex
A hereto. The Depository for such Global Securities shall be The Depository
Trust Company, 55 Water Street, New York, New York 10004.
SECTION 211. ADDITIONAL EVENTS OF DEFAULT
In addition to the Events of Default contained in Section 501 of the
Original Indenture, the following will constitute an Event of Default with
respect to the Notes:
(1) Default in the performance, or breach, of any of Sections 306,
309 or 312 hereof.
SECTION 212. ADDITIONAL COVENANTS
The covenants contained in Article Three of this First Supplemental
Indenture shall apply to the Notes in addition to the covenants contained in
Article Ten of the Original Indenture.
ARTICLE THREE
ADDITIONAL COVENANTS APPLICABLE TO THE NOTES
SECTION 301. LIMITATION ON DEBT
The Company may not, and may not permit any Restricted Subsidiary to,
Incur any Debt except that the Company and any Subsidiary Guarantor (but not any
Restricted Subsidiary that is not a Subsidiary Guarantor) may Incur Debt if
after giving pro forma effect to the Incurrence of such Debt and the receipt and
application of the proceeds thereof the Consolidated Cash Flow Coverage Ratio of
the Company would be greater than 2.0 to 1.
Notwithstanding the foregoing limitation, the following Debt may be
Incurred.
(1) Debt of the Company or any Subsidiary Guarantor, other than
Floor Plan Debt, under the Senior Credit Facility in an
aggregate principal amount at any one time not to exceed the
greater of $110 million or 30% of the Company's Consolidated
Net Tangible Assets at the time of such Incurrence;
(2) Debt of the Company or any Restricted Subsidiary consisting of
Floor Plan Debt or Guarantees of Floor Plan Debt of the
Company;
(3) Debt owed by the Company to any Wholly Owned Restricted
Subsidiary for which fair value has been received or Debt owed
by a Restricted Subsidiary to the Company or a Wholly Owned
Restricted Subsidiary; provided, however, that:
-21-
<PAGE> 23
(a) any such Debt owing by the Company to a Wholly Owned
Restricted Subsidiary shall be Subordinated Debt
evidenced by an intercompany promissory note and
(b) upon either the transfer or other disposition by such
Wholly Owned Restricted Subsidiary or the Company of
any Debt so permitted to a Person other than the
Company or another Wholly Owned Restricted Subsidiary
or the issuance (other than directors' qualifying
shares), sale, transfer or other disposition of
shares of Capital Stock (including by consolidation
or merger) of such Wholly Owned Restricted Subsidiary
to a Person other than the Company or another such
Wholly Owned Restricted Subsidiary, the provisions of
this clause (3) shall no longer be applicable to such
Debt and such Debt shall be deemed to have been
Incurred at the time of such transfer or other
disposition;
(4) Debt consisting of the Notes, the Subsidiary Guarantees and
Guarantees by Restricted Subsidiaries of any Debt Incurred to
refinance or refund the Notes;
(5) Debt of the Company or any Restricted Subsidiary consisting of
Permitted Interest Rate, Currency or Commodity Price
Agreements;
(6) Debt which is exchanged for or the proceeds of which are used
to refinance or refund, or any extension or renewal of (each
of the foregoing, a "refinancing"),
(a) the Notes,
(b) outstanding Debt that is not described in any other
clause hereof that was outstanding as of the Closing
Date after giving effect to the application of the
proceeds from the sale of the Notes as described in
Schedule I hereto,
(c) outstanding Debt Incurred pursuant to the first
paragraph of this Section 301, and
(d) Debt previously Incurred pursuant to this clause (6),
in each case in an aggregate principal amount not to exceed the
principal amount of the Debt so refinanced plus the amount of any
premium required to be paid in connection with such refinancing
pursuant to the terms of the Debt so refinanced or the amount of any
premium reasonably determined by the Company as necessary to accomplish
such refinancing by means of a tender offer or privately negotiated
repurchase, plus the expenses of the Company or the Restricted
Subsidiary, as the case may be, incurred in connection with such
refinancing; provided, however, that:
(i) Debt the proceeds of which are used to refinance the
Notes or Debt which is pari passu with or subordinate
in right of payment to the Notes shall only be
permitted if (A) in the case of any refinancing of
the Notes or Debt which is pari passu to the Notes,
the refinancing Debt is Incurred by the Company
-22-
<PAGE> 24
and made pari passu to the Notes or subordinated to
the Notes, and (B) in the case of any refinancing of
Debt which is subordinated to the Notes, the
refinancing Debt is Incurred by the Company and
constitutes Debt that is subordinated to the Notes at
least to the same extent as the Debt being
refinanced;
(ii) the refinancing Debt by its terms, or by the terms of
any agreement or instrument pursuant to which such
Debt is issued, (A) does not have an Average Life
that is less than the remaining Average Life of the
Debt being refinanced and (B) does not permit
redemption or other retirement (including pursuant to
an offer to purchase) of such Debt at the option of
the holder thereof prior to the final stated maturity
of the Debt being refinanced, other than a redemption
or other retirement at the option of the holder of
such Debt (including pursuant to an offer to
purchase) which is conditioned upon provisions
substantially similar to those contained in Section
306 or Section 309 hereof;
(iii) in the case of any refinancing of Debt of the
Company, the refinancing Debt may be Incurred only by
the Company, and in the case of any refinancing of
Debt of a Restricted Subsidiary, the refinancing Debt
may be Incurred only by such Restricted Subsidiary or
the Company; and
(iv) in the case of any refinancing of Preferred Stock of
a Restricted Subsidiary, such Preferred Stock may be
refinanced only with Preferred Stock of such
Restricted Subsidiary; and
(7) Debt of the Company or any Subsidiary Guarantor not otherwise
permitted to be Incurred pursuant to clauses (1) through (6)
above, which, together with any other outstanding Debt
Incurred pursuant to this clause (7), and in both such cases
including any renewals, extensions, substitutions,
refinancings or replacements of such Debt has an aggregate
principal amount not in excess of $25 million at any time
outstanding.
For purposes of determining compliance with this Section 301, in the
event that an item of proposed Debt meets the criteria of more than one of the
categories of Debt described in clauses (1) through (7) above, or is entitled to
be Incurred pursuant to the first paragraph of this Section 301, the Company
will be permitted to classify such item of Debt on the date of its Incurrence in
any manner that complies with this covenant.
SECTION 302. LIMITATION ON RESTRICTED PAYMENTS
The Company:
(1) may not, and may not permit any Restricted Subsidiary to,
directly or indirectly, declare or pay any dividend or make
any distribution (including any payment in connection with any
merger or consolidation derived from assets of the Company or
-23-
<PAGE> 25
any Restricted Subsidiary) in respect of its Capital Stock or
to the holders thereof (in their capacity as holders of
Capital Stock), other than
(a) any dividends or distributions by the Company payable
solely in shares of its Capital Stock (other than
Redeemable Stock) or in options, warrants or other
rights to acquire its Capital Stock (other than
Redeemable Stock), and
(b) in the case of a Restricted Subsidiary, dividends or
distributions payable to the Company or a Wholly
Owned Restricted Subsidiary or pro rata dividends or
distributions,
(2) may not, and may not permit any Restricted Subsidiary to,
purchase, redeem, or otherwise acquire or retire for value
(a) any Capital Stock of the Company or any Restricted
Subsidiary or
(b) any options, warrants or other rights to acquire
shares of Capital Stock of the Company or any
Restricted Subsidiary or any securities convertible
or exchangeable into shares of Capital Stock of the
Company or any Restricted Subsidiary,
in each case except, in the case of Capital Stock of a
Restricted Subsidiary, from the Company or a Wholly Owned
Restricted Subsidiary;
(3) may not make, or permit any Restricted Subsidiary to make, any
Investment in any Unrestricted Subsidiary or any Affiliate or
any Person that would become an Affiliate after giving effect
thereto, other than a Permitted Investment; and
(4) may not, and may not permit any Restricted Subsidiary to,
redeem, repurchase, defease or otherwise acquire or retire for
value prior to any scheduled maturity, repayment or sinking
fund payment Debt of the Company which is subordinate in right
of payment to the Notes
(each of clauses (1) through (4) being a "Restricted Payment") unless:
(a) no Event of Default, or an event that with the passing of time
or the giving of notice, or both, would constitute an Event of
Default, has occurred and is continuing or would result from
such Restricted Payment,
(b) the Company could Incur at least $1.00 of additional Debt
pursuant to the terms of the first paragraph of Section 301
hereof, calculating the Consolidated Cash Flow Coverage Ratio
on a pro forma basis to give effect to such Restricted Payment
as if such Restricted Payment had been made at the beginning
of the applicable four-fiscal-quarter period if such pro
forma effect would affect the calculation of the Consolidated
Cash Flow Coverage Ratio, and
-24-
<PAGE> 26
(c) upon giving effect to such Restricted Payment, the aggregate
of all Restricted Payments from the Closing Date does not
exceed the sum of:
(i) 50% of cumulative Consolidated Net Income (or, in the
case Consolidated Net Income shall be negative, less
100% of such deficit) of the Company since January 1,
1999 through the last day of the last full fiscal
quarter ending immediately preceding the date of such
Restricted Payment for which quarterly or annual
financial statements are available (taken as a single
accounting period); plus
(ii) 100% of the aggregate net cash proceeds received by
the Company after the Closing Date from contributions
of capital or the issuance and sale (other than to a
Subsidiary of the Company) of Capital Stock (other
than Redeemable Stock) of the Company, options,
warrants or other rights to acquire Capital Stock
(other than Redeemable Stock) of the Company and Debt
of the Company that has been converted into or
exchanged for Capital Stock (other than Redeemable
Stock and other than by or from a Subsidiary of the
Company) of the Company after the Closing Date,
provided that any such net proceeds received by the
Company from an employee stock ownership plan
financed by loans from the Company or a Subsidiary of
the Company shall be included only to the extent such
loans have been repaid with cash on or prior to the
date of determination; plus
(iii) an amount equal to the net reduction in Investments
by the Company and its Restricted Subsidiaries,
subsequent to the Closing Date, in any Person subject
to clause (3) above upon the disposition, liquidation
or repayment (including by way of dividends) thereof
or from redesignations of Unrestricted Subsidiaries
as Restricted Subsidiaries, but only to the extent
such amounts are not included in Consolidated Net
Income and not to exceed in the case of any one
Person the amount of Investments previously made by
the Company and its Restricted Subsidiaries in such
Person; plus
(iv) $5 million.
Notwithstanding the foregoing, so long as no Event of Default, or event
that with the passing of time or the giving of notice, or both, would constitute
an Event of Default, shall have occurred and is continuing or would result
therefrom:
(1) the Company and any Restricted Subsidiary may pay any dividend
on Capital Stock of any class within 60 days after the
declaration thereof if, on the date when the dividend was
declared, the Company or such Restricted Subsidiary could have
paid such dividend in accordance with the foregoing
provisions;
(2) the Company may refinance any Debt otherwise permitted by
clause (6) of the second paragraph of Section 301 hereof or
redeem, acquire or retire any Debt solely in exchange for, by
conversion into or with the net proceeds of the substantially
concurrent sale (other than from or to a Subsidiary of the
Company
-25-
<PAGE> 27
or from or to an employee stock ownership plan financed by
loans from the Company or a Subsidiary of the Company) of
shares of Capital Stock (other than Redeemable Stock) of the
Company;
(3) the Company may purchase, redeem, acquire or retire any shares
of Capital Stock of the Company solely in exchange for, by
conversion into or with the net proceeds of the substantially
concurrent sale (other than from or to a Subsidiary of the
Company or from or to an employee stock ownership plan
financed by loans from the Company or a Subsidiary of the
Company) of shares of Capital Stock (other than Redeemable
Stock) of the Company; and
(4) the Company may purchase or redeem any Debt from Net Available
Proceeds to the extent permitted by Section 306 hereof.
Any payment made pursuant to clause (1) of this paragraph shall be a Restricted
Payment for purposes of calculating aggregate Restricted Payments pursuant to
the preceding paragraph and the amount of net proceeds from any exchange for,
conversion into or sale of Capital Stock of the Company pursuant to clause (2)
or (3) of this paragraph shall be excluded from the calculation of the amount
available for Restricted Payments pursuant to clause (c)(ii) above.
SECTION 303. LIMITATION ON DIVIDEND AND OTHER PAYMENT RESTRICTIONS
AFFECTING RESTRICTED SUBSIDIARIES
The Company may not, and may not permit any Restricted Subsidiary to,
directly or indirectly, create or otherwise cause or suffer to exist or become
effective any encumbrance or restriction on the ability of any Restricted
Subsidiary:
(1) to pay dividends (in cash or otherwise) or make any other
distributions in respect of its Capital Stock owned by the
Company or any other Restricted Subsidiary or pay any Debt or
other obligation owed to the Company or any other Restricted
Subsidiary;
(2) to make loans or advances to the Company or any other
Restricted Subsidiary; or
(3) to transfer any of its property or assets to the Company or
any other Restricted Subsidiary.
Notwithstanding the foregoing, the Company may, and may permit any
Restricted Subsidiary to, suffer to exist any such encumbrance or restriction:
(1) imposed pursuant to any agreement in effect on the Closing
Date (including the Senior Credit Facility);
(2) imposed pursuant to an agreement relating to any Debt Incurred
by a Person (other than a Restricted Subsidiary existing on
the Closing Date or any Restricted Subsidiary carrying on any
of the businesses of any such Restricted Subsidiary)
-26-
<PAGE> 28
prior to the date on which such Person became a Restricted
Subsidiary and outstanding on such date and not Incurred in
anticipation of becoming a Restricted Subsidiary, which
encumbrance or restriction is not applicable to any Person, or
the properties or assets of any Person, other than the Person
so acquired, provided that the Incurrence of such Debt is
permitted by Section 301 hereof;
(3) imposed pursuant to an agreement effecting a renewal,
refunding or extension of Debt Incurred pursuant to an
agreement referred to in clause (1) or (2) of this paragraph;
provided, however, that the provisions contained in such
renewal, refunding or extension agreement relating to such
encumbrance or restriction are no more restrictive in any
material respect than the provisions contained in the
agreement the subject thereof;
(4) in the case of a restriction described in clause (3) of the
preceding paragraph, contained in any security agreement
(including a capital lease) securing Debt of a Restricted
Subsidiary otherwise permitted under the Indenture, but only
to the extent such restrictions restrict the transfer of the
property subject to such security agreement;
(5) in the case of a restriction described in clause (3) of the
preceding paragraph, consisting of customary nonassignment
provisions entered into in the ordinary course of business in
leases and other contracts to the extent such provisions
restrict the transfer or subletting of any such lease or the
assignment of rights under any such contract;
(6) contained in a franchise or other agreement entered into in
the ordinary course of business with an automobile
manufacturer and which has terms reasonably customary for such
agreements between or among such automobile manufacturer, its
dealers and/or the owners of such dealers;
(7) with respect to a Restricted Subsidiary, imposed pursuant to
an agreement which has been entered into for the sale or
disposition of all or substantially all of the Capital Stock
or assets of such Restricted Subsidiary, provided that such
restriction terminates if such transaction is closed or
abandoned; or
(8) if such encumbrance or restriction is the result of applicable
laws or regulations relating to the payment of dividends or
distributions.
SECTION 304. LIMITATION ON RANKING OF CERTAIN DEBT
The Company:
(1) may not Incur any Debt which by its terms is both subordinate
in right of payment to any Senior Debt of the Company and
senior in right of payment to the Notes;
-27-
<PAGE> 29
(2) may not permit any Subsidiary Guarantor to Incur any Debt
which by its terms is both subordinate in right of payment to
any Senior Debt of such Subsidiary Guarantor and senior in
right of payment to the Subsidiary Guarantee of such
Subsidiary Guarantor; and
(3) may not permit any Restricted Subsidiary to Guarantee any Debt
of the Company that is subordinate in right of payment to the
Notes unless:
(a) the Guarantee by such Restricted Subsidiary of such
other Debt shall be subordinated to such Restricted
Subsidiary's Subsidiary Guarantee at least to the
same extent as such Debt of the Company is
subordinated to the Notes and
(b) such Restricted Subsidiary waives, and agrees that it
will not in any manner whatsoever claim or take the
benefit or advantage of, any rights of reimbursement,
indemnity or subrogation or any other rights against
the Company or any other Restricted Subsidiary as a
result of any payment by such Restricted Subsidiary
under its Guarantee of such other Debt of the Company
until the Notes have been paid in full.
For purposes of this Section 304, no Debt shall be deemed subordinate in right
of payment to any other Debt solely by reason of such other Debt having the
benefit of a security interest.
SECTION 305. LIMITATION ON LIENS SECURING SUBORDINATED DEBT
The Company may not, and may not permit any Restricted Subsidiary to,
Incur or suffer to exist any Lien on or with respect to any property or assets
now owned or hereafter acquired to secure any Debt that is expressly by its
terms subordinate or junior in right of payment to any other Debt of the Company
or such Restricted Subsidiary without making, or causing such Restricted
Subsidiary to make, effective provision for securing the Notes or such
Restricted Subsidiary's Subsidiary Guarantee (1) equally and ratably with such
Debt as to such property or assets for so long as such Debt will be so secured
or (2) in the event such Debt is subordinate in right of payment to the Notes or
such Subsidiary Guarantee, prior to such Debt as to such property or assets for
so long as such Debt will be so secured.
SECTION 306. LIMITATION ON ASSET DISPOSITIONS
(a) The Company may not, and may not permit any Restricted Subsidiary
to, make any Asset Disposition in one or more related transactions unless:
(1) the Company or the Restricted Subsidiary, as the case may be,
receives consideration for such disposition at least equal to
the fair market value for the assets sold or disposed of as
determined by the Board of Directors of the Company in good
faith and evidenced by a Board Resolution of the Company;
(2) at least 80% of the consideration for such disposition
consists of:
-28-
<PAGE> 30
(a) cash or Cash Equivalents;
(b) the assumption of Debt of the Company or such
Restricted Subsidiary (other than Debt that is
subordinated to the Notes or such Restricted
Subsidiary's Subsidiary Guarantee) relating to such
assets and release from all liability on the Debt
assumed;
(c) Replacement Assets; or
(d) a combination of the foregoing;
provided that the amount of any Liquid Securities received by the
Company or such Restricted Subsidiary received as consideration that
are converted into cash within 180 days of the closing of such Asset
Disposition shall be deemed to be cash for purposes of this provision
(to the extent of the cash received); and
(3) all Net Available Proceeds, less any amounts invested within
360 days of such disposition in Replacement Assets, are
applied within 360 days of such disposition:
(a) first, to the permanent repayment or reduction of
Senior Debt of the Company then outstanding under any
agreements or instruments which would require such
application or prohibit payments pursuant to clause
(b) following,
(b) second, to the extent of remaining Net Available
Proceeds, to make an Offer to Purchase outstanding
Notes at 100% of their principal amount plus accrued
interest to the date of purchase and, to the extent
required by the terms thereof, any other Debt of the
Company that is pari passu with the Notes at a price
no greater than 100% of the principal amount thereof
plus accrued interest to the date of purchase,
(c) third, to the extent of any remaining Net Available
Proceeds following the completion of the Offer to
Purchase, to the repayment of other Debt of the
Company or Debt of a Restricted Subsidiary, to the
extent permitted under the terms thereof and
(d) fourth, to the extent of any remaining Net Available
Proceeds, to any other use as determined by the
Company which is not otherwise prohibited by the
Indenture.
Notwithstanding the foregoing, the Company shall not be required to make an
Offer to Purchase pursuant to clause 3(b) above if the remaining Net Available
Proceeds after giving effect to the application required by clause 3(a) is less
than $10 million.
(b) The Company will mail the Offer for an Offer to Purchase required
pursuant to Section 306(a) not more than 360 days after consummation of the
Asset Disposition referred to in
-29-
<PAGE> 31
Section 306(a). The aggregate principal amount of the Securities to be offered
to be purchased pursuant to the Offer to Purchase shall equal the Net Available
Proceeds available therefor pursuant to Clause (3)(b) of Section 306(a) (rounded
down to the next lowest integral multiple of $1,000). Each Holder shall be
entitled to tender all or any portion of the Securities owned by such Holder
pursuant to the Offer to Purchase, subject to the requirement that any portion
of a Security tendered must be tendered in an integral multiple of $1,000
principal amount.
The Company shall not be entitled to any credit against its obligations
in connection with any Offer to Purchase made pursuant to this Section 306 for
the principal amount of any Securities acquired by the Company otherwise than
pursuant to such Offer to Purchase.
(c) Not later than the date of the Offer with respect to an Offer to
Purchase pursuant to this Section 306, the Company shall deliver to the Trustee
an Officers' Certificate as to (i) the Purchase Amount, (ii) the allocation of
the Net Available Proceeds from the Asset Disposition pursuant to which such
Offer is being made, including, if any consideration consists of Replacement
Assets or any amounts are invested in Replacement Assets, the actual assets
acquired and a statement indicating the relationship of such assets to the
business of the Company and (iii) the compliance of such allocation with the
provisions of Section 306(a).
The Company and the Trustee shall perform their respective obligations
specified in the Offer for the Offer to Purchase. On or prior to the Purchase
Date, the Company shall (i) accept for payment (on a pro rata basis, if
necessary) Securities or portions thereof tendered pursuant to the Offer, (ii)
deposit with the paying agent (or, if the Company is acting as its own paying
agent, segregate and hold in trust as provided in Section 1003) of the Original
Indenture money sufficient to pay the purchase price of all Securities or
portions thereof so accepted and (iii) deliver or cause to be delivered to the
Trustee all Securities so accepted together with an Officers' Certificate
stating the Securities or portions thereof accepted for payment by the Company.
The paying agent (or the Company, if so acting) shall promptly mail or deliver
to Holders of Securities so accepted payment in an amount equal to the purchase
price, and the Trustee shall promptly authenticate and mail or deliver to such
Holders a new Security equal in principal amount to any unpurchased portion of
the Security surrendered. Any Security not accepted for payment shall be
promptly mailed or delivered by the Company to the Holder thereof. The Company
shall publicly announce the results of the Offer on or as soon as practicable
after the Purchase Date.
(d) Notwithstanding the foregoing, this Section 306 shall not apply to
any Asset Disposition which constitutes a transfer, conveyance, sale, lease or
other disposition of all or substantially all of the Company's properties or
assets within the meaning of Section 312 hereof.
SECTION 307. LIMITATION ON OWNERSHIP OF CAPITAL STOCK OF RESTRICTED SUBSIDIARIES
The Company may not, and may not permit any Restricted Subsidiary to,
issue, transfer, convey, lease or otherwise dispose of any shares of Capital
Stock of a Restricted Subsidiary or securities convertible or exchangeable into,
or options, warrants, rights or any other interest with respect to, Capital
Stock (other than directors' qualifying shares) of a Restricted Subsidiary to
any Person other than the Company or a Wholly Owned Restricted Subsidiary except
in a transaction consisting of a sale of all of the Capital Stock of such
Restricted Subsidiary owned by the Company
-30-
<PAGE> 32
and any Restricted Subsidiary and that complies with the provisions of Section
306 hereof to the extent such provisions apply.
SECTION 308. TRANSACTIONS WITH AFFILIATES
The Company may not, and may not permit any Restricted Subsidiary to,
enter into any transaction (or series of related transactions) with an Affiliate
of the Company or a Restricted Subsidiary, including any Investment, either
directly or indirectly, unless such transaction is on terms no less favorable to
the Company or such Restricted Subsidiary than those that could be obtained in a
comparable arm's-length transaction with an entity that is not an Affiliate and
is in the best interests of such Company or such Restricted Subsidiary. For any
transaction that involves in excess of $1 million, a majority of the
disinterested members of the Board of Directors of the Company shall determine
that the transaction satisfies the above criteria and shall evidence such a
determination by a Board Resolution of the Company filed with the Trustee. For
any transaction that involves in excess of $10 million, the Company shall also
obtain an opinion from a nationally recognized expert with experience in
appraising the terms and conditions of the type of transaction (or series of
related transactions) for which the opinion is required stating that such
transaction (or series of related transactions) is on terms no less favorable to
the Company or such Restricted Subsidiary than those that could be obtained in a
comparable arm's-length transaction with an entity that is not an Affiliate of
the Company, which opinion shall be filed with the Trustee.
The foregoing requirements shall not apply to:
(1) any transaction pursuant to agreements in effect on the
Closing Date;
(2) any employment agreement or employee benefit arrangements with
any officer or director, including under any stock option or
stock incentive plans, entered into by the Company or any of
its Restricted Subsidiaries in the ordinary course of business
and consistent with the past practice of the Company or such
Restricted Subsidiary or approved by a majority of the
disinterested members of the Board of Directors;
(3) transactions between or among the Company and/or its
Restricted Subsidiaries;
(4) payment of reasonable directors fees to Persons who are not
otherwise employees of the Company;
(5) indemnities of officers, directors and employees of the
Company or any Subsidiary of the Company pursuant to bylaws,
or statutory provisions or indemnification agreements or the
purchase of indemnification insurance for any director or
officer;
(6) any Restricted Payment that is permitted to be made by Section
302 hereof; and
(7) written agreements entered into or assumed in connection with
acquisitions of other businesses with persons who were not
Affiliates prior to such transactions.
-31-
<PAGE> 33
Notwithstanding the foregoing, the requirements set forth in the third
sentence of the first paragraph of this Section 308 relating to an opinion from
a nationally recognized expert shall not apply to leases of property or
equipment entered into in the ordinary course of business.
SECTION 309. CHANGE OF CONTROL
(a) Upon the occurrence of a Change of Control each Holder of a Note
shall have the right to have such Note repurchased by the Company on the terms
and conditions precedent set forth in this Section 309 and the Indenture. The
Company shall, within 30 days following the occurrence of a transaction
resulting in a Change of Control, mail an Offer with respect to an Offer to
Purchase all Outstanding Notes at a purchase price equal to 101% of their
aggregate principal amount plus accrued interest to the Purchase Date (provided,
however, that installments of interest whose Stated Maturity is on or prior to
the Purchase Date shall be payable to the Holders of such Notes or one or more
Predecessor Securities registered as such at the close of business on the
relevant Record Dates according to their terms and the provisions of Section 307
of the Original Indenture). Each Holder shall be entitled to tender all or any
portion of the Notes owned by such Holder pursuant to the Offer to Purchase,
subject to the requirement that any portion of a Note tendered must be tendered
in an integral multiple of $1,000 principal amount.
(b) The Company and the Trustee shall perform their respective
obligations specified in the Offer for the Offer to Purchase. Prior to the
Purchase Date, the Company shall (i) accept for payment Notes or portions
thereof tendered pursuant to the Offer, (ii) deposit with the Paying Agent (or,
if the Company is acting as its own Paying Agent, segregate and hold in trust as
provided in Section 1003 of the Original Indenture) money sufficient to pay the
purchase price of all Notes or portions thereof so accepted and (iii) deliver or
cause to be delivered to the Trustee all Notes so accepted together with an
Officers' Certificate stating the Notes or portions thereof accepted for payment
by the Company. The Paying Agent (or the Company, if so acting) shall promptly
mail or deliver to Holders of Notes so accepted payment in an amount equal to
the Purchase Price, and the Trustee shall promptly authenticate and mail or
deliver to such Holders a new Note or Notes equal in principal amount to any
unpurchased portion of the Note surrendered as requested by the Holder. Any Note
not accepted for payment shall be promptly mailed or delivered by the Company to
the Holder thereof. The Company shall publicly announce the results of the Offer
on or as soon as practicable after the Purchase Date.
SECTION 310. PAYMENTS FOR CONSENT
The Company may not, and may not permit any of its Subsidiaries to,
directly or indirectly, pay or cause to be paid any consideration, whether by
way of interest, fee or otherwise, to any Holder for or as an inducement to any
consent, waiver or amendment of any of the terms or provisions of this
Supplemental Indenture, the Original Indenture, the Notes or any Subsidiary
Guarantee unless such consideration is offered to be paid or is paid to all
Holders of the Notes that consent, waive or agree to amend in the time frame set
forth in the solicitation documents relating to such consent, waiver or
agreement.
-32-
<PAGE> 34
SECTION 311. PROVISION OF FINANCIAL INFORMATION
Whether or not the Company is required to be subject to Section 13(a)
or 15(d) of the Exchange Act, or any successor provision thereto, the Company
shall file with the Commission the annual reports, quarterly reports and other
documents which the Company would have been required to file with the Commission
pursuant to such Section 13(a) or 15(d) or any successor provision thereto if
the Company were so required, such documents to be filed with the Commission on
or prior to the respective dates (the "Required Filing Dates") by which the
Company would have been required so to file such documents if the Company were
so required. The Company shall also in any event:
(1) within 15 days of each Required Filing Date transmit by mail
to all Holders, as their names and addresses appear in the
Security Register, without cost to such Holders, and file with
the Trustee, copies (without exhibits) of the annual reports,
quarterly reports and other documents which the Company files
with the Commission pursuant to such Section 13(a) or 15(d) or
any successor provision thereto or would have been required to
file with the Commission pursuant to such Section 13(a) or
15(d) or any successor provisions thereto if the Company were
required to be subject to such Sections and
(2) if filing such documents by the Company with the Commission is
not permitted under the Exchange Act, promptly upon written
request supply copies of such documents to any prospective
Holder and the Trustee.
SECTION 312. MERGERS, CONSOLIDATIONS AND CERTAIN SALES OF ASSETS
In addition to conditions set forth in Section 801 of the Original
Indenture, the Company shall not, in a single transaction or a series of related
transactions: (1) consolidate with or merge into any other Person or permit any
other Person to consolidate with or merge into the Company or (2) directly or
indirectly, transfer, sell, lease or otherwise dispose of all or substantially
all of its assets unless:
(1) immediately before and after giving pro forma effect to such
transaction and treating any Debt which becomes an obligation
of the Company or a Restricted Subsidiary as a result of such
transaction as having been Incurred by the Company or such
Restricted Subsidiary at the time of the transaction, no Event
of Default or event that with the passing of time or the
giving of notice, or both, would constitute an Event of
Default shall have occurred and be continuing;
(2) immediately after giving pro forma effect to such transaction,
the Consolidated Net Worth of the Company (or other successor
entity to the Company) is equal to or greater than that of the
Company immediately prior to the transaction;
(3) except in the case of any such consolidation or merger of the
Company with or into a Wholly Owned Restricted Subsidiary,
immediately after giving pro forma effect to such transaction
and treating any Debt which becomes an obligation of the
Company or a Restricted Subsidiary as a result of such
transaction as having been Incurred by the Company or such
Restricted Subsidiary at the time of the transaction, the
Company (including any successor entity to the Company) could
-33-
<PAGE> 35
Incur at least $1.00 of additional Debt pursuant to the
provisions of the first paragraph of Section 301 hereof; and
(4) if, as a result of any such transaction, property or assets of
the Company or a Restricted Subsidiary would become subject to
a Lien prohibited by the provisions of Section 305 hereof, the
Company and/or such Restricted Subsidiary or the successor
entity to the Company shall have secured the Notes or such
Restricted Subsidiary's Subsidiary Guarantee, as applicable,
as required by Section 305.
-------------------------------------------------
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
-34-
<PAGE> 36
IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental Indenture to be duly executed all as of the day and year first
above written.
Group 1 Automotive, Inc.
By /s/ B.B. Hollingsworth, Jr.
---------------------------------------
B.B. Hollingsworth, Jr.
Chairman, President and
Chief Executive Officer
Southwest Toyota, Inc.
SMC Luxury Cars, Inc.
McCall Automotive Group, Inc.
Courtesy Nissan, Inc.
Group 1 Ford, Inc.
McKinney Dodge, Inc.
Smith Automotive Group, Inc.
Mike Smith Automotive-H, Inc.
Mike Smith Automotive-N, Inc.
Mike Smith Autoplaza, Inc.
Mike Smith Autoplex, Inc.
Mike Smith Autoplex Buick, Inc.
Mike Smith Autoplex Dodge, Inc.
Mike Smith Autoplex-German Imports, Inc.
Mike Smith Autoplex-V, Inc.
Mike Smith L/M, Inc.
Mike Smith GM, Inc.
Round Rock Nissan, Inc.
Smith, Liu & Corbin, Inc.
Smith, Liu & Kutz, Inc.
Town North Imports, Inc.
Town North Nissan, Inc.
Town North Suzuki, Inc.
Bob Howard Automotive-A, Inc.
Bob Howard Automotive-H, Inc.
Bob Howard Chevrolet, Inc.
Bob Howard Dodge, Inc.
Bob Howard Motors, Inc.
Bob Howard Nissan, Inc.
Howard Automotive Group, Inc.
Howard Pontiac-GMC, Inc.
Foyt Motors, Inc.
Kingwood Motors-H, Inc.
-35-
<PAGE> 37
Koons Ford, Inc.
Courtesy Ford, Inc.
Perimeter Ford, Inc.
Flamingo Ford, Inc.
J. Carroll Management Group, Inc.
MMK Interests, Inc.
Highland Autoplex, Inc.
Maxwell Texas Management, Inc.
Casa Chevrolet Inc.
Casa Chrysler Plymouth Jeep Inc.
Johns Automotive Group, Inc.
Luby Chevrolet Co.
Kutz Auto Group, Inc.
Bob Howard Automotive-East, Inc.
GPI Atlanta, Inc.
Mike Smith Autoplex-A, Inc.
Mike Smith Motors, Inc.
Mike Smith Imports, Inc.
Sunshine Buick Pontiac GMC Truck, Inc.
By /s/ Scott L. Thompson
---------------------------------------
Scott L. Thompson
Vice President
Lubbock Automotive-M, Inc.
Lubbock Auto Group, Inc.
Group 1 Realty, Inc.
By /s/ Scott L. Thompson
---------------------------------------
Scott L. Thompson
President
Prestige Chrysler Plymouth Northwest, Ltd.
Prestige Chrysler Plymouth South, Ltd.
Maxwell Chrysler Plymouth Jeep Eagle, Ltd.
By: MMK Interests, Inc.
General Partner
By /s/ Scott L. Thompson
---------------------------------------
Scott L. Thompson
Vice President
-36-
<PAGE> 38
Prestige Maxwell, Inc.
Maxwell Holdings, Inc.
Group 1 Holdings-T, Inc.
Group 1 Holdings-GM, Inc.
By /s/ Robert E. Howard II
---------------------------------------
Robert E. Howard II
President
Maxwell Ford, Ltd.
By: Maxwell Texas
Management, Inc..
By /s/ Scott L. Thompson
---------------------------------------
Scott L. Thompson
Vice President
Lubbock Motors-F, Ltd.
Lubbock Motors-T, Ltd.
Rockwall Automotive-F, Ltd.
Amarillo Motors-C, Ltd.
Amarillo Motors-J, Ltd.
Amarillo Motors-F, Ltd.
By: Lubbock Motors, Inc.
By /s/ Scott L. Thompson
---------------------------------------
Scott L. Thompson
President
Chapparal Dodge, Ltd.
Colonial Chrysler-Plymouth, Ltd.
By: Kutz Auto Group, Inc.
By /s/ Scott L. Thompson
---------------------------------------
Scott L. Thompson
Vice President
-37-
<PAGE> 39
Delaware Acquisition-CC, L.L.C.
Delaware Acquisition-F, L.L.C.
Delaware Acquisition-T, L.L.C.
Delaware Acquisition-GM, L.L.C.
By /s/ Robert E. Howard II
---------------------------------------
Robert E. Howard II
Manager
IBJ Whitehall Bank & Trust Company
By /s/ Louis Perez
---------------------------------------
-38-
<PAGE> 40
ANNEX A
[Face of Note]
[Insert if the Security is a Global Security--THIS SECURITY IS A GLOBAL SECURITY
WITHIN THE MEANINg OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN
THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY MAY NOT BE
EXCHANGED IN WHOLE OR IN PART FOR A SECURITY REGISTERED, AND NO TRANSFER OF THIS
SECURITY IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON OTHER
THAN SUCH DEPOSITARY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES
DESCRIBED IN THE INDENTURE.
Unless this certificate is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New York, New
York) to the Company (as defined below) or its agent for registration of
transfer, exchange or payment, and any certificate issued is registered in the
name of Cede & Co. or such other name as requested by an authorized
representative of The Depository Trust Company and any payment is made to Cede &
Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL since the registered owner hereof, Cede & Co., has an
interest herein.]
Group 1 Automotive, Inc.
10 7/8% Senior Subordinated Notes due March 1, 2009
No. $
---------- ---------
Group 1 Automotive, Inc. a corporation duly organized and existing
under the laws of Delaware (herein called the "Company", which term includes any
successor Person under the Indenture hereinafter referred to), for value
received, hereby promises to pay to ______________________________, or
registered assigns, the principal sum of ___________________ Dollars on March 1,
2009, and to pay interest thereon from March 5, 1999 or from the most recent
Interest Payment Date to which interest has been paid or duly provided for,
semi-annually on March 1 and September 1 in each year, commencing September 1,
1999, at the rate of 10.875% per annum, until the principal hereof is paid or
made available for payment, provided that any principal and premium, and any
such instalment of interest, which is overdue shall bear interest at the rate of
11.875% per annum (to the extent that the payment of such interest shall be
legally enforceable), from the dates such amounts are due until they are paid or
made available for payment, and such interest shall be payable on demand. The
interest so payable, and punctually paid or duly provided for, on any Interest
Payment Date will, as provided in such Indenture, be paid to the Person in whose
name this Security (or one or more Predecessor Securities) is registered at the
close of business on the Regular Record Date for such interest, which shall be
the February 15 or August 15 (whether or not a Business Day), as the case may
be, next preceding such Interest Payment Date. Any such interest not so
punctually paid or duly provided for will forthwith cease to be payable to the
Holder on such Regular Record Date and may either be paid to the Person in whose
name this Security (or one or more Predecessor Securities) is registered at the
close of business on a Special Record Date for the payment
<PAGE> 41
of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be
given to Holders of Securities of this series not less than 10 days prior to
such Special Record Date, or be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange on which the
Securities of this series may be listed, and upon such notice as may be required
by such exchange, all as more fully provided in said Indenture.
Payment of the principal of (and premium, if any) and interest on this
Security will be made at the office or agency of the Company maintained for that
purpose in The City of New York, New York, in such coin or currency of the
United States of America as at the time of payment is legal tender for payment
of public and private debts; provided, however, that at the option of the
Company payment of interest may be made by check mailed to the address of the
Person entitled thereto as such address shall appear in the Security Register.
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated:
Group 1 Automotive, Inc.
By
---------------------------------------
Trustee's Certificate of Authentication
This is one of the Securities of the series designated therein referred
to in the within-mentioned Indenture.
IBJ Whitehall Bank & Trust Company,
as Trustee
By
---------------------------------------
Authorized Officer
-2-
<PAGE> 42
[Reverse of Note]
This Security is one of a duly authorized issue of securities of the
Company (herein called the "Securities"), issued and to be issued in one or more
series under an Indenture, dated as of March 5, 1999, as supplemented by the
First Supplemental Indenture, dated as of March 5, 1999 (collectively herein
called the "Indenture", which term shall have the meaning assigned to it in such
instrument), among the Company, the Subsidiary Guarantors named therein and IBJ
Whitehall Bank and Trust Company, as Trustee (herein called the "Trustee", which
term includes any successor trustee under the Indenture), and reference is
hereby made to the Indenture for a statement of the respective rights,
limitations of rights, duties and immunities thereunder of the Company, the
Subsidiary Guarantors, the Trustee, the holders of Senior Debt and the Holders
of the Securities and of the terms upon which the Securities are, and are to be,
authenticated and delivered. This Security is one of the series designated on
the face hereof, limited in aggregate principal amount to $100,000,000.
The Securities of this series are subject to redemption upon not less
than 30 nor more than 60 days' notice by mail in the event that on or before
March 1, 2002 the Company receives net proceeds from the sale of its Common
Stock in one or more Equity Offerings, in which case the Company may, at its
option, use all or a portion of any such net proceeds to redeem Securities in an
aggregate principal amount of up to $35,000,000, provided, however, that at
least $65,000,000 in an aggregate principal amount of Securities remain
outstanding after each such redemption. Any such redemption must occur on a
Redemption Date within 75 days of any such sale at a Redemption Price of
110.875% of the principal amount of the Securities, together in the case of any
such redemption with accrued interest to the Redemption Date, but interest
installments whose Stated Maturity is on or prior to such Redemption Date will
be payable to the Holders of such Securities, or one or more Predecessor
Securities, of record at the close of business on the relevant Record Dates
referred to on the face hereof, all as provided in the Indenture.
The Securities of this series are further subject to redemption upon
not less than 30 nor more than 60 days' notice by mail, at any time on or after
March 1, 2004, as a whole or in part, at the election of the Company, at the
following Redemption Prices (expressed as percentages of the principal amount):
If redeemed during the 12-month period beginning March 1 of the years indicated:
<TABLE>
<CAPTION>
Year Redemption Price
---- ----------------
<S> <C>
2004 105.438%
2005 103.625%
2006 101.813%
</TABLE>
and thereafter at a Redemption Price equal to 100% of the principal amount,
together in the case of any such redemption with accrued interest to the
Redemption Date, but interest instalments whose Stated Maturity is on or prior
to such Redemption Date will be payable to the Holders of such Securities, or
one or more Predecessor Securities, of record at the close of business on the
relevant Record Dates referred to on the face hereof, all as provided in the
Indenture.
-3-
<PAGE> 43
In the event of redemption or repurchase of this Security in part only,
a new Security or Securities of this series and of like tenor for the unredeemed
portion hereof will be issued in the name of the Holder hereof upon the
cancellation hereof.
The indebtedness evidenced by this Security is, to the extent provided
in the Indenture, subordinate and subject in right of payment to the prior
payment in full of all Senior Debt of the Company, and this Security is issued
subject to the provisions of the Indenture with respect thereto. Each Holder of
this Security, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee on his behalf to take such
action as may be necessary or appropriate to effectuate the subordination so
provided and (c) appoints the Trustee his attorney-in-fact for any and all such
purposes.
As provided in the Indenture and subject to certain limitations therein
set forth, the obligations of the Company under this Security are guaranteed on
a senior subordinated basis pursuant to the Subsidiary Guarantees endorsed
hereon. The Indenture provides that a Subsidiary Guarantor shall be released
from its Subsidiary Guarantee upon compliance with certain conditions.
The Indenture contains provisions for Defeasance at any time of the
entire indebtedness of this Security or certain restrictive covenants and Events
of Default with respect to this Security, in each case upon compliance with
certain conditions set forth in the Indenture.
If an Event of Default with respect to Securities of this series shall
occur and be continuing, the principal of the Securities of this series may be
declared due and payable in the manner and with the effect provided in the
Indenture.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with the
consent of the Holders of a majority in principal amount of the Securities at
the time Outstanding of each series to be affected. The Indenture also contains
provisions permitting the Holders of specified percentages in principal amount
of the Securities of each series at the time Outstanding, on behalf of the
Holders of all Securities of such series, to waive compliance by the Company
with certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Holder of
this Security shall be conclusive and binding upon such Holder and upon all
future Holders of this Security and of any Security issued upon the registration
of transfer hereof or in exchange herefor or in lieu hereof, whether or not
notation of such consent or waiver is made upon this Security.
As provided in and subject to the provisions of the Indenture, the
Holder of this Security shall not have the right to institute any proceeding
with respect to the Indenture or for the appointment of a receiver or trustee or
for any other remedy thereunder, unless such Holder shall have previously given
the Trustee written notice of a continuing Event of Default with respect to the
Securities of this series, the Holders of not less than 25% in principal amount
of the Securities of this series at the time Outstanding shall have made written
request to the Trustee to institute proceedings in respect of such Event of
Default as Trustee and offered the Trustee reasonable indemnity, and the Trustee
shall not have received from the Holders of a majority in principal amount of
Securities of this series at the time Outstanding a direction inconsistent with
such request, and shall have failed to institute any such
-4-
<PAGE> 44
proceeding, for 60 days after receipt of such notice, request and offer of
indemnity. The foregoing shall not apply to any suit instituted by the Holder of
this Security for the enforcement of any payment of principal hereof or any
premium or interest hereon on or after the respective due dates expressed
herein.
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of and any premium and
interest on this Security at the times, place and rate, and in the coin or
currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Security is registrable in the Security
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Company in any place where the principal of and any
premium and interest on this Security are payable, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by, the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Securities of
this series and of like tenor, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated transferee or
transferees.
The Securities of this series are issuable only in registered form
without coupons in denominations of $1,000 and any integral multiple thereof. As
provided in the Indenture and subject to certain limitations therein set forth,
Securities of this series are exchangeable for a like aggregate principal amount
of Securities of this series and of like tenor of a different authorized
denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name this Security is registered as the owner hereof for all
purposes, whether or not this Security be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
All terms used in this Security which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
-5-
<PAGE> 45
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased in its entirety
pursuant to Section 306 or 309 of the First Supplemental Indenture, check the
box:
[ ]
If you want to elect to have only a part of this Security purchased
pursuant to Section 306 or 309 of the First Supplemental Indenture, state the
amount: $
Dated: Your Signature:
-------------------------------------------------
(Sign exactly as name appears on the other side of this Security)
Signature Guarantee:
---------------------------------------------------------
(Signature must be guaranteed by an "eligible guarantor
institution" meeting the requirements of the Registrar,
which requirements include membership or participation in a
"signature guarantee program" as may be determined by the
Registrar, all in accordance with the Securities Exchange
Act of 1934, as amended)
-6-
<PAGE> 46
ASSIGNMENT FORM
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto
Please Insert Social Security or Employer
Identification Number of Assignee
- -----------------------------------------------------
- -----------------------------------------------------
- --------------------------------------------------------------------------------
Please Print or Typewrite Name and Address,
Including Postal Zip Code, of Assignee
- --------------------------------------------------------------------------------
the within Senior Subordinated Note and all rights thereunder, and hereby
irrevocably constituting and appointing
- ------------------------------------------------------------------------attorney
to Transfer said Senior Subordinated Note on the books of the Company, with full
power of substitution in the premises.
Dated: Signature:
----------------------- -----------------------------------
Notice: The Signature to this assignment must correspond with the name as it
appears upon the face of the within note in every particular, without
alteration or enlargement of any change whatever.
Signature Guarantee:
--------------------------------------------------------
(Signature must be guaranteed by an "eligible guarantor
institution" meeting the requirements of the Registrar,
which requirements include membership or participation in a
"signature guarantee program" as may be determined by the
Registrar, all in accordance with the Securities Exchange
Act of 1934, as amended)
-7-
<PAGE> 47
SUBSIDIARY GUARANTEE
For value received, each of the Subsidiary Guarantors named (or deemed
herein to be named) below hereby jointly and severally fully and unconditionally
guarantees to the Holder of the Security upon which this Subsidiary Guarantee is
endorsed, and to the Trustee on behalf of such Holder, the due and punctual
payment of the principal of (and premium, if any) and interest on such Security
when and as the same shall become due and payable, whether at the Stated
Maturity, by acceleration, call for redemption, offer to purchase or otherwise,
according to the terms thereof and of the Indenture referred to therein and to
cover all the rights of the Trustee under Section 607. In case of the failure of
the Company punctually to make any such payment, each of the Subsidiary
Guarantors hereby jointly and severally agrees to cause such payment to be made
punctually when and as the same shall become due and payable, whether at the
Stated Maturity or by acceleration, call for redemption, offer to purchase or
otherwise, and as if such payment were made by the Company.
Each of the Subsidiary Guarantors hereby jointly and severally agrees
that its obligations hereunder shall be absolute and unconditional, irrespective
of, and shall be unaffected by, the validity, regularity or enforceability of
such Security or the Indenture, the absence of any action to enforce the same or
any release, amendment, waiver or indulgence granted to the Company or any other
guarantor, or any consent to departure from any requirement of any other
guarantee of all or of any of the Securities of this series, or any other
circumstances which might otherwise constitute a legal or equitable discharge or
defense of a surety or guarantor; provided, however, that, notwithstanding the
foregoing, no such release, amendment, waiver or indulgence shall, without the
consent of such Subsidiary Guarantor, increase the principal amount of such
Security, or increase the interest rate thereon, or alter the Stated Maturity
thereof. Each of the Subsidiary Guarantors hereby waives the benefits of
diligence, presentment, demand of payment, any requirement that the Trustee or
any of the Holders protect, secure, perfect or insure any security interest in
or other lien on any property subject thereto or exhaust any right or take any
action against the Company or any other Person or any collateral, filing of
claims with a court in the event of insolvency or bankruptcy of the Company, any
right to require a proceeding first against the Company, protest or notice with
respect to such Security or the indebtedness evidenced thereby and all demands
whatsoever, and covenants that this Subsidiary Guarantee will not be discharged
except by complete performance of the obligations contained in such Security and
in this Subsidiary Guarantee. Each Subsidiary Guarantor agrees that if, after
the occurrence and during the continuance of an Event of Default with respect to
Securities of this series, the Trustee or any of the Holders are prevented by
applicable law from exercising their respective rights to accelerate the
maturity of the Securities of this series, to collect interest on the Securities
of this series, or to enforce or exercise any other right or remedy with respect
to the Securities of this series, such Subsidiary Guarantor agrees to pay to the
Trustee for the account of the Holders, upon demand therefor, the amount that
would otherwise have been due and payable had such rights and remedies been
permitted to be exercised by the Trustee or any of the Holders.
The indebtedness of each Subsidiary Guarantor evidenced by this
Subsidiary Guarantee is, to the extent provided in the Indenture, subordinate in
right of payment to the prior payment in full of all Senior Debt of such
Subsidiary Guarantor, and the Subsidiary Guarantee of each Subsidiary Guarantor
is issued subject to the provisions of the Indenture with respect thereto.
-8-
<PAGE> 48
No reference herein to the Indenture and no provision of this
Subsidiary Guarantee or of the Indenture shall alter or impair the Subsidiary
Guarantee of any Subsidiary Guarantor, which is absolute and unconditional, of
the due and punctual payment of the principal (and premium, if any) and interest
on the Security upon which this Subsidiary Guarantee is endorsed.
Each Subsidiary Guarantor shall be subrogated to all rights of the
Holder of this Security against the Company in respect of any amounts paid by
such Subsidiary Guarantor on account of this Security pursuant to the provisions
of its Subsidiary Guarantee or the Indenture; provided, however, that such
Subsidiary Guarantor shall not be entitled to enforce or to receive any payments
arising out of, or based upon, such right of subrogation until the principal of
(and premium, if any) and interest on this Security and all other Securities of
this series issued under the Indenture shall have been paid in full.
This Subsidiary Guarantee shall remain in full force and effect and
continue to be effective should any petition be filed by or against the Company
for liquidation or reorganization, should the Company become insolvent or make
an assignment for the benefit of creditors or should a receiver or trustee be
appointed for all or any part of the Company's assets, and shall, to the fullest
extent permitted by law, continue to be effective or be reinstated, as the case
may be, if at any time payment and performance of the Securities of this series
is, pursuant to applicable law, rescinded or reduced in amount, or must
otherwise be restored or returned by any Holder of the Securities of this
series, whether as a "voidable preference," "fraudulent transfer," or otherwise,
all as though such payment or performance had not been made. In the event that
any payment, or any part thereof, is rescinded, reduced, restored or returned,
the Securities of this series shall, to the fullest extent permitted by law, be
reinstated and deemed reduced only by such amount paid and not so rescinded,
reduced, restored or returned.
The Subsidiary Guarantors or any particular Subsidiary Guarantor shall
be released from this Subsidiary Guarantee upon the terms and subject to certain
conditions provided in the Indenture.
By delivery of a Supplemental Indenture to the Trustee in accordance
with the terms of the Indenture, each Person that becomes a Subsidiary Guarantor
after the date of first issuance of the Securities of this series will be deemed
to have executed and delivered this Subsidiary Guarantee for the benefit of the
Holder of the Security upon which this Subsidiary Guarantee is endorsed with the
same effect as if such Subsidiary Guarantor was named below and has executed and
delivered this Subsidiary Guarantee.
All terms used in this Subsidiary Guarantee which are defined in the
Indenture referred to in the Security upon which this Subsidiary Guarantee is
endorsed shall have the meanings assigned to them in such Indenture.
This Subsidiary Guarantee shall not be valid or obligatory for any
purpose until the certificate of authentication on the Security upon which this
Subsidiary Guarantee is endorsed shall have been executed by the Trustee under
the Indenture by manual signature.
Reference is made to the Indenture for further provisions with respect
to this Subsidiary Guarantee.
-9-
<PAGE> 49
This Subsidiary Guarantee shall be governed by and construed in
accordance with the laws of the State of New York.
IN WITNESS WHEREOF, each of the Subsidiary Guarantors has caused this
Subsidiary Guarantee to be duly executed.
Southwest Toyota, Inc.
SMC Luxury Cars, Inc.
McCall Automotive Group, Inc.
Courtesy Nissan, Inc.
Group 1 Ford, Inc.
McKinney Dodge, Inc.
Smith Automotive Group, Inc.
Mike Smith Automotive-H, Inc.
Mike Smith Automotive-N, Inc.
Mike Smith Autoplaza, Inc.
Mike Smith Autoplex, Inc.
Mike Smith Autoplex Buick, Inc.
Mike Smith Autoplex Dodge, Inc.
Mike Smith Autoplex-German Imports, Inc.
Mike Smith Autoplex-V, Inc.
Mike Smith L/M, Inc.
Mike Smith GM, Inc.
Round Rock Nissan, Inc.
Smith, Liu & Corbin, Inc.
Smith, Liu & Kutz, Inc.
Town North Imports, Inc.
Town North Nissan, Inc.
Town North Suzuki, Inc.
Bob Howard Automotive-A, Inc.
Bob Howard Automotive-H, Inc.
Bob Howard Chevrolet, Inc.
Bob Howard Dodge, Inc.
Bob Howard Motors, Inc.
Bob Howard Nissan, Inc.
Howard Automotive Group, Inc.
Howard Pontiac-GMC, Inc.
Foyt Motors, Inc.
Kingwood Motors-H, Inc.
Koons Ford, Inc.
Courtesy Ford, Inc.
Perimeter Ford, Inc.
Flamingo Ford, Inc.
-10-
<PAGE> 50
J. Carroll Management Group, Inc.
MMK Interests, Inc.
Highland Autoplex, Inc.
Maxwell Texas Management, Inc.
Casa Chevrolet Inc.
Casa Chrysler Plymouth Jeep Inc.
Johns Automotive Group, Inc.
Luby Chevrolet Co.
Kutz Auto Group, Inc.
Bob Howard Automotive-East, Inc.
GPI Atlanta, Inc.
Mike Smith Autoplex-A, Inc.
Mike Smith Motors, Inc.
Mike Smith Imports, Inc.
Sunshine Buick Pontiac GMC Truck, Inc.
Lubbock Automotive-M, Inc.
Lubbock Auto Group, Inc.
Group 1 Realty, Inc.
Prestige Chrysler Plymouth Northwest, Ltd.
Prestige Chrysler Plymouth South, Ltd.
Maxwell Chrysler Plymouth Jeep Eagle, Ltd.
Prestige Maxwell, Inc.
Maxwell Holdings, Inc.
Group 1 Holdings-T, Inc.
Group 1 Holdings-GM, Inc.
Maxwell Ford, Ltd.
Lubbock Motors-F, Ltd.
Lubbock Motors-T, Ltd.
Rockwall Automotive-F, Ltd.
Amarillo Motors-C, Ltd.
Amarillo Motors-J, Ltd.
Amarillo Motors-F, Ltd.
Chapparal Dodge, Ltd.
Colonial Chrysler-Plymouth, Ltd.
Delaware Acquisition-CC, L.L.C.
Delaware Acquisition-F, L.L.C.
Delaware Acquisition-T, L.L.C.
Delaware Acquisition-GM, L.L.C.
By
---------------------------------------
Title:
-11-
<PAGE> 1
EXHIBIT 99.1
FOR IMMEDIATE RELEASE
FRIDAY, MARCH 5, 1999
GROUP 1 COMPLETES DEBT AND STOCK OFFERING
UNDER SHELF
HOUSTON, MARCH 5, 1999--GROUP 1 AUTOMOTIVE, INC. (NYSE: GPI), a leading operator
and consolidator in the automotive retailing industry, today announced that it
completed its previously announced debt and stock offerings under its $250
million shelf registration.
The company sold 2 million shares of common stock at a price of $23.38 per
share, bringing the number of common shares outstanding to 20.3 million. Group 1
also sold $100 million in 10-year senior subordinated notes carrying an interest
rate of 10.875%. Net proceeds to the company totaled $140 million.
The common stock offering was managed by Goldman, Sachs & Co., Merrill Lynch &
Co. and NationsBanc Montgomery Securities LLC. The senior subordinated notes
offering was managed by Goldman, Sachs & Co., Merrill Lynch & Co.
and Chase Securities Inc.
According to the company, $59 million of the proceeds will fund the recently
announced acquisitions of 16 dealership franchises in seven markets. The
remainder of the proceeds will be used to repay borrowings under Group 1's
revolving credit facility.
"We are pleased with the success of this offering," stated B.B. Hollingsworth
Jr., Group 1's chairman, president and chief executive officer. "The proceeds
will give us the resources necessary to pursue our strategy of making select
acquisitions in the automotive retailing industry."
Group 1 is a leading operator and consolidator in the highly fragmented
automotive retailing industry. Upon completion of all announced acquisitions,
Group 1 will own 71 dealership franchises comprised of 23 different brands, and
16 collision service centers located in Texas, Oklahoma, New Mexico, Colorado,
Florida and Georgia. Through its dealerships the company sells new and used cars
and light trucks, provides maintenance and repair services, sells replacement
parts and arranges related financing, insurance and vehicle service contracts.
This announcement is neither an offer to sell nor a solicitation of an offer to
buy the securities described above. The offer is made only by a Prospectus,
relating to such securities. Copies of such Prospectus may be obtained in any
jurisdiction in which this announcement is circulated only from such of the
underwriters of the offering as may legally offer the securities in such
jurisdiction.
<PAGE> 2
This press release contains certain forward-looking statements
within the meaning of the Securities Act of 1933 and the Securities Exchange Act
of 1934, which are subject to known and unknown risks, uncertainties or other
factors not under Group 1's control that may cause the actual results,
performance or achievements of Group 1 to be materially different from the
results, performance or other expectations implied by these forward-looking
statements. Some of these risks, uncertainties and other factors include those
disclosed in Group 1's filings with the Securities and Exchange Commission.
FOR ADDITIONAL INFORMATION REGARDING GROUP 1 AUTOMOTIVE FREE OF CHARGE VIA
FAX, DIAL 1-800-PRO-INFO AND USE THE COMPANY'S STOCK SYMBOL, "GPI."
GROUP 1 AUTOMOTIVE, INC. CAN BE REACHED ON THE INTERNET AT WWW.GROUP1AUTO.COM
