Exhibit 10.6

EXECUTION VERSION

PURCHASE AGREEMENT

June 25, 2012

MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED

    As Representative of the Initial Purchasers

One Bryant Park

New York, New York 10036

Ladies and Gentlemen:

Introductory. Sonic Automotive, Inc., a Delaware corporation (the “Company”),
proposes to issue and sell to the several Initial Purchasers named in Schedule A
(the “Initial Purchasers”), acting severally and not jointly, the respective
amounts set forth in such Schedule A of an $200,000,000 aggregate principal
amount of the Company’s 7.00% Senior Subordinated Notes due 2022 (the “Notes”).
Merrill Lynch, Pierce, Fenner & Smith Incorporated has agreed to act as the
representative of the several Initial Purchasers (the “Representative”) in
connection with the offering and sale of the Notes.

The Securities (as defined below) will be issued pursuant to an indenture, to be
dated as of July 2, 2012 (the “Indenture”), among the Company, the Guarantors
(as defined below) and U.S. Bank National Association, as trustee (the
“Trustee”). Notes will be issued only in book-entry form in the name of Cede &
Co., as nominee of The Depository Trust Company (the “Depositary”) pursuant to a
blanket issuer letter of representations, dated November 19, 2003 (the “DTC
Agreement”), between the Company and the Depositary.

The holders of the Notes will be entitled to the benefits of a registration
rights agreement, to be dated as of the Closing Date (as defined below) (the
“Registration Rights Agreement”), among the Company, the Guarantors and the
Initial Purchasers, pursuant to which the Company and the Guarantors may be
required to file with the Commission (as defined below), under the circumstances
set forth therein, (i) a registration statement under the Securities Act (as
defined below) relating to another series of debt securities of the Company with
terms substantially identical to the Notes (the “Exchange Notes”) to be offered
in exchange for the Notes (the “Exchange Offer”) and (ii) a shelf registration
statement pursuant to Rule 415 of the Securities Act relating to the resale by
certain holders of the Notes, and in each case, to use its commercially
reasonable efforts to cause such registration statements to be declared
effective. All references herein to the Exchange Notes and the Exchange Offer
are only applicable if the Company and the Guarantors are in fact required to
consummate the Exchange Offer pursuant to the terms of the Registration Rights
Agreement.

The payment of principal of, premium, if any, and interest on the Notes will be
fully and unconditionally guaranteed on a senior subordinated unsecured basis,
jointly and severally by (i) the entities listed on the signature pages hereof
as “Guarantors” and (ii) any subsidiary of the Company formed or acquired after
the Closing Date that executes an additional guarantee in ac-

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cordance with the terms of the Indenture, and their respective successors and
assigns (collectively, the “Guarantors”), pursuant to their guarantees (the
“Guarantees”). The Notes and the Guarantees attached thereto are herein
collectively referred to as the “Securities”; and the Exchange Notes and the
Guarantees attached thereto are herein collectively referred to as the “Exchange
Securities.”

Concurrently with the Closing Date, the Company will enter into an escrow
agreement (the “Escrow Agreement”) with the Trustee and Wilmington Trust,
National Association, as escrow agent (the “Escrow Agent”), pursuant to which
the net proceeds of the offering of the Securities will be deposited with the
Escrow Agent on the Closing Date, and the Company shall deposit with the Escrow
Agent on the Closing Date an additional amount of cash (collectively, the
“Escrow Proceeds”) sufficient to redeem the Securities in cash at a redemption
price in the amount and manner and at the time set forth in the Indenture (the
“Escrow Redemption Amount”). The Escrow Proceeds shall be held by the Escrow
Agent in an escrow account (the “Escrow Account”) in accordance with the terms
and provisions set forth in the Escrow Agreement, and released in accordance
with the conditions set forth therein, as described in the Pricing Disclosure
Package and the Final Offering Memorandum (each term as defined below) (such
date of release, the “Release Date”). If the Release Date does not occur by
October 23, 2012 (120 days following the date hereof) or on such earlier date
determined by the Company, the Securities will be redeemed at the Escrow
Redemption Amount in accordance with the terms of the Indenture.

The Company understands that the Initial Purchasers propose to make an offering
of the Securities on the terms and in the manner set forth herein and in the
Pricing Disclosure Package (as defined below) and agrees that the Initial
Purchasers may resell, subject to the conditions set forth herein, all or a
portion of the Securities to purchasers (the “Subsequent Purchasers”) on the
terms set forth in the Pricing Disclosure Package (the first time when sales of
the Securities are made is referred to as the “Time of Sale”). The Securities
are to be offered and sold to or through the Initial Purchasers without being
registered with the Securities and Exchange Commission (the “Commission”) under
the Securities Act of 1933 (as amended, the “Securities Act,” which term, as
used herein, includes the rules and regulations of the Commission promulgated
thereunder), in reliance upon exemptions therefrom. Pursuant to the terms of the
Securities and the Indenture, investors who acquire Securities shall be deemed
to have agreed that Securities may only be resold or otherwise transferred,
after the date hereof, if such Securities are registered for sale under the
Securities Act or if an exemption from the registration requirements of the
Securities Act is available (including the exemptions afforded by Rule 144A
under the Securities Act (“Rule 144A”) or Regulation S under the Securities Act
(“Regulation S”)).

The Company has prepared and delivered to each Initial Purchaser copies of a
Preliminary Offering Memorandum, dated June 25, 2012 (the “Preliminary Offering
Memorandum”), and has prepared and delivered to each Initial Purchaser copies of
a Pricing Supplement, dated June 25, 2012 (the “Pricing Supplement”), describing
the terms of the Securities, each for use by such Initial Purchaser in
connection with its solicitation of offers to purchase the Securities. The
Preliminary Offering Memorandum and the Pricing Supplement are herein referred
to as the “Pricing Disclosure Package.” Promptly after this Agreement is
executed and delivered, the

 

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Company will prepare and deliver to each Initial Purchaser a final offering
memorandum dated the date hereof (the “Final Offering Memorandum”).

All references herein to the terms “Pricing Disclosure Package” and “Final
Offering Memorandum” shall be deemed to mean and include all information filed
under the Securities Exchange Act of 1934 (as amended, the “Exchange Act,” which
term, as used herein, includes the rules and regulations of the Commission
promulgated thereunder) prior to the Time of Sale and incorporated by reference
in the Pricing Disclosure Package (including the Preliminary Offering
Memorandum) or the Final Offering Memorandum (as the case may be), and all
references herein to the terms “amend,” “amendment” or “supplement” with respect
to the Final Offering Memorandum shall be deemed to mean and include all
information filed under the Exchange Act after the Time of Sale and incorporated
by reference in the Final Offering Memorandum.

The Company hereby confirms its agreements with the Initial Purchasers as
follows:

SECTION 1. Representations and Warranties. Each of the Company and the
Guarantors, jointly and severally, hereby represents, warrants and covenants to
each Initial Purchaser that, as of the date hereof and as of the Closing Date
(references in this Section 1 to the “Offering Memorandum” are to (x) the
Pricing Disclosure Package in the case of representations and warranties made as
of the date hereof and (y) the Pricing Disclosure Package and the Final Offering
Memorandum in the case of representations and warranties made as of the Closing
Date):

(a) No Registration Required. Subject to compliance by the Initial Purchasers
with the representations and warranties set forth in Section 2 hereof and with
the procedures set forth in Section 7 hereof, it is not necessary in connection
with the offer, sale and delivery of the Securities to the Initial Purchasers
and to each Subsequent Purchaser in the manner contemplated by this Agreement
and the Offering Memorandum to register the Securities under the Securities Act
or, until such time as the Exchange Securities are issued pursuant to an
effective registration statement, to qualify the Indenture under the Trust
Indenture Act of 1939 (as amended, the “Trust Indenture Act,” which term, as
used herein, includes the rules and regulations of the Commission promulgated
thereunder).

(b) No Integration of Offerings or General Solicitation. None of the Company,
its directors, officers or any entities controlled by or under common control
with or that control the Company (each, an “Affiliate”), or any person acting on
its or any of their behalf (other than the Initial Purchasers and their
Affiliates, as to whom the Company and the Guarantors make no representation or
warranty) has, directly or indirectly, solicited any offer to buy or offered to
sell, or will, directly or indirectly, solicit any offer to buy or offer to
sell, in the United States or to any United States citizen or resident, any
security which is or would be integrated with the sale of the Securities in a
manner that would require the Securities to be registered under the Securities
Act. None of the Company, its Affiliates, or any person acting on its or any of
their behalf (other than the Initial Purchasers and their Affiliates, as to whom
the Company and the Guarantors make no representation or warranty) has engaged
or will engage, in connection with the offering of the Securities, in any form
of general solicitation or general advertising within the mean-

 

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ing of Rule 502 under the Securities Act. With respect to those Securities sold
in reliance upon Regulation S, (i) none of the Company, its Affiliates or any
person acting on its or their behalf (other than the Initial Purchasers and
their Affiliates, as to whom the Company and the Guarantors make no
representation or warranty) has engaged or will engage in any directed selling
efforts within the meaning of Regulation S and (ii) each of the Company and its
Affiliates and any person acting on its or their behalf (other than the Initial
Purchasers and their Affiliates, as to whom the Company and the Guarantors make
no representation or warranty) has complied and will comply with the offering
restrictions set forth in Regulation S.

(c) Eligibility for Resale under Rule 144A. The Securities are eligible for
resale pursuant to Rule 144A and will not be, at the Closing Date, of the same
class as securities listed on a national securities exchange registered under
Section 6 of the Exchange Act or quoted in a U.S. automated interdealer
quotation system.

(d) The Pricing Disclosure Package and Offering Memorandum. Neither the Pricing
Disclosure Package, as of the Time of Sale, nor the Final Offering Memorandum,
as of its date or (as amended or supplemented in accordance with Section 3(a),
as applicable) as of the Closing Date, contains an untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided that this representation, warranty and agreement
shall not apply to statements in or omissions from the Pricing Disclosure
Package, the Final Offering Memorandum or any amendment or supplement thereto
made in reliance upon and in conformity with information furnished to the
Company in writing by or on behalf of any Initial Purchaser through the
Representative expressly for use in the Pricing Disclosure Package, the Final
Offering Memorandum or amendment or supplement thereto, as the case may be. The
Pricing Disclosure Package contains, and the Final Offering Memorandum will
contain as of its date and as of the Closing Date, all the information specified
in, and meeting the requirements of, Rule 144A. The Company has not distributed
and will not distribute, prior to the later of the Closing Date and the
completion of the Initial Purchasers’ distribution of the Securities, any
offering material in connection with the offering and sale of the Securities
other than the Pricing Disclosure Package and the Final Offering Memorandum.

(e) Company Additional Written Communications. The Company has not prepared,
made, used, authorized, approved or distributed and will not prepare, make, use,
authorize, approve or distribute any written communication that constitutes an
offer to sell or solicitation of an offer to buy the Securities other than
(i) the Pricing Disclosure Package, (ii) the Final Offering Memorandum and
(iii) any electronic road show or other written communications, in each case
used in accordance with Section 3(a). Each such communication by the Company or
its agents and representatives pursuant to clause (iii) of the preceding
sentence (each, a “Company Additional Written Communication”), when taken
together with the Pricing Disclosure Package, did not as of the Time of Sale,
and at the Closing Date will not, contain any untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; provided that this represen-

 

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tation, warranty and agreement shall not apply to statements in or omissions
from each such Company Additional Written Communication made in reliance upon
and in conformity with information furnished to the Company in writing by or on
behalf of any Initial Purchaser through the Representative expressly for use in
any Company Additional Written Communication.

(f) Incorporated Documents. The documents incorporated by reference in the
Offering Memorandum, when they were filed with the Commission, complied in all
material respects with the requirements of the Exchange Act, and, when taken
together with the Offering Memorandum, did not contain any 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, in the light of the circumstances
under which they were made, not misleading; and any further documents so filed
and incorporated by reference in the Offering Memorandum, when such documents
are filed with the Commission, will comply in all material respects to the
requirements of the Exchange Act and, when taken together with the Offering
Memorandum, will not contain any 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, in the light of the circumstances under which they were
made, not misleading; provided that the Company makes no representation and
warranty with respect to any statements or omissions made in reliance upon and
in conformity with information relating to any Initial Purchaser furnished to
the Company in writing by or on behalf of such Initial Purchaser through the
Representative expressly for use in the Offering Memorandum, it being understood
and agreed that the only such information furnished by any Initial Purchaser
consists of the information described as such in Section 8(b) hereof.

(g) Financial Statements. The financial statements (including the related notes
thereto) of the Company and its consolidated subsidiaries included or
incorporated by reference in the Offering Memorandum comply in all material
respects with the applicable requirements of the Securities Act and the Exchange
Act, as applicable, and present fairly in all material respects the financial
position of the Company and its consolidated subsidiaries as of the dates
indicated and the results of their operations and the changes in their cash
flows for the periods specified; such financial statements have been prepared in
conformity with generally accepted accounting principles in the United States
applied on a consistent basis throughout the periods covered thereby except as
otherwise noted therein, and any supporting schedules included or incorporated
by reference in the Offering Memorandum present fairly in all material respects
the information required to be stated therein; and the other financial
information of the Company and its consolidated subsidiaries included or
incorporated by reference in the Offering Memorandum has been derived from the
accounting records of the Company and its consolidated subsidiaries and presents
fairly in all material respects the information shown thereby. The interactive
data in eXtensible Business Reporting Language included or incorporated by
reference in the Offering Memorandum and the Pricing Disclosure Package fairly
present the information called for in all material respects and have been
prepared in accordance with the Commission’s rules and guidelines applicable
thereto.

 

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(h) No Material Adverse Change. Since the date of the most recent financial
statements of the Company included or incorporated by reference in the Offering
Memorandum, (i) there has not been any change in the capital stock (other than
the issuance of shares of Common Stock upon exercise of stock options and
warrants described as outstanding in, and the grant or vesting of options and
awards under existing equity incentive plans described in, the Offering
Memorandum and documents incorporated by reference therein), material change in
the short-term or long-term debt of the Company or any of its subsidiaries, or
any dividend or distribution of any kind declared, set aside for payment, paid
or made by the Company on any class of capital stock; (ii) there has not been
any material adverse change, or any development involving a prospective material
adverse change, in or affecting, individually or in the aggregate, the business,
properties, management, financial position, stockholders’ equity, results of
operations or prospects of the Company and its subsidiaries taken as a whole
(any such change or development is called a “Material Adverse Change”);
(iii) neither the Company nor any of its subsidiaries has entered into any
transaction or agreement (other than those in the ordinary course of business)
that is material to the Company and its subsidiaries taken as a whole or
incurred any liability or obligation, direct or contingent, that is material to
the Company and its subsidiaries taken as a whole (other than those in the
ordinary course of business); and (iv) neither the Company nor any of its
subsidiaries has sustained any loss or interference with its business that is
material to the Company and its subsidiaries taken as a whole and that is either
from fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor disturbance or dispute or any action, order or
decree of any court or governmental or regulatory authority, except in the case
of clauses (i) through (iv) as otherwise disclosed in or incorporated by
reference into the Offering Memorandum.

(i) Organization and Good Standing. The Company and each of its subsidiaries
have been duly organized and are validly existing and, if applicable, in good
standing under the laws of their respective jurisdictions of organization, are
duly qualified to do business and are in good standing in each jurisdiction in
which their respective ownership or lease of property or the conduct of their
respective businesses requires such qualification, and have all power and
authority necessary to own or hold their respective properties and to conduct
the businesses in which they are engaged, except where the failure to be so
qualified or in good standing or have such power or authority would not,
individually or in the aggregate, have a material adverse effect on the
business, properties, management, financial position, stockholders’ equity,
results of operations or prospects of the Company and its subsidiaries taken as
a whole or on the performance by the Company of its obligations under this
Agreement (a “Material Adverse Effect”). The Company does not own or control,
directly or indirectly, any Significant Subsidiary other than the subsidiaries
listed in Exhibit 21.1 to the Company’s Annual Report on Form 10-K for the year
ended December 31, 2011 (the “Form 10-K”). As used herein, “Significant
Subsidiary” shall mean a consolidated dealership subsidiary of the Company that
produced more than 2% of the Company’s total revenues for the year ended
December 31, 2011.

 

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(j) Capitalization. The Company has an authorized capital stock as set forth in
the Offering Memorandum under the heading “Capitalization”; all the outstanding
shares of capital stock of the Company have been duly authorized and validly
issued and are fully paid and non-assessable and are not subject to any
pre-emptive or similar rights; and all the outstanding shares of capital stock
or other equity interests of each Guarantor have been duly and validly
authorized and issued, are fully paid and non-assessable and are owned directly
or indirectly by the Company, free and clear of any lien, charge, encumbrance,
security interest, restriction on voting or transfer or any other claim of any
third party, except as disclosed in the Offering Memorandum.

(k) Due Authorization. The Company and the Guarantors have full right, power and
authority to execute and deliver this Agreement, the Indenture, the Registration
Rights Agreement, the Escrow Agreement, the Notes, the Guarantees and the
Exchange Notes, as applicable, and to perform their respective obligations
hereunder and thereunder; and all action required to be taken for the due and
proper authorization, execution and delivery by each of the Company and the
Guarantors of this Agreement and the consummation by it of the sale of the
Securities contemplated hereby has been duly and validly taken.

(l) The Indenture. The Indenture has been duly authorized by the Company and the
Guarantors and, when duly executed and delivered in accordance with its terms by
each of the parties thereto, will constitute a valid and legally binding
agreement of the Company and the Guarantors enforceable against the Company and
the Guarantors in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency or similar laws affecting
creditors’ rights generally or by equitable principles relating to
enforceability (collectively, the “Enforceability Exceptions”). On the Closing
Date, the Indenture will conform in all material respects to the requirements of
the Trust Indenture Act and the rules and regulations of the Commission
applicable to an indenture which is qualified thereunder.

(m) The Purchase Agreement. This Agreement has been duly authorized, executed
and delivered by the Company and the Guarantors.

(n) The Registration Rights Agreement. The Registration Rights Agreement has
been duly authorized by the Company and the Guarantors and, when duly executed
and delivered in accordance with its terms by each of the parties thereto, will
constitute a valid and legally binding agreement of the Company and the
Guarantors, enforceable against the Company and the Guarantors in accordance
with its terms, subject to the Enforceability Exceptions and except as rights to
indemnification may be limited by applicable law.

(o) The Escrow Agreement. The Escrow Agreement has been duly authorized by the
Company and, when duly executed and delivered in accordance with its terms by
each of the parties thereto, will constitute a valid and legally binding
agreement of the Company, enforceable against the Company in accordance with its
terms, subject to the Enforceability Exceptions and except as rights to
indemnification may be limited by applicable law.

 

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(p) Authorization of the Notes, the Guarantees and the Exchange Notes. The Notes
to be issued and sold by the Company hereunder have been duly authorized by the
Company for issuance and sale pursuant to this Agreement and the Indenture and,
when duly executed, authenticated, issued and delivered as provided for in the
Indenture and the Securities have been paid for as provided herein, will be duly
and validly issued and outstanding, will constitute valid and legally binding
obligations of the Company enforceable against the Company in accordance with
their terms, subject to the Enforceability Exceptions, and will be entitled to
the benefits of the Indenture. The Exchange Notes have been duly authorized by
the Company for issuance, and when duly executed, authenticated, issued and
delivered in accordance with the terms of the Indenture, the Registration Rights
Agreement and the Exchange Offer, will be duly and validly issued and
outstanding, will constitute valid and legally binding obligations of the
Company enforceable against the Company in accordance with their terms, subject
to the Enforceability Exceptions, and will be entitled to the benefits of the
Indenture. The Guarantees of the Notes and the Guarantees of the Exchange Notes
have been duly authorized by the Guarantors for issuance pursuant to this
Agreement and the Indenture; the Guarantees of the Notes, when duly executed,
authenticated, issued and delivered as provided for in the Indenture and the
Securities have been paid for as provided herein, will be duly and validly
issued and outstanding, will constitute valid and legally binding obligations of
the Guarantors enforceable against the Guarantors in accordance with their
terms, subject to the Enforceability Exceptions, and will be entitled to the
benefits of the Indenture; and, when the Exchange Notes have been duly executed,
authenticated, issued and delivered in accordance with the terms of the
Indenture, the Registration Rights Agreement and the Exchange Offer, the
Guarantees of the Exchange Notes will be duly and validly issued and
outstanding, will constitute valid and legally binding obligations of the
Guarantors enforceable against the Guarantors in accordance with their terms,
subject to the Enforceability Exceptions, and will be entitled to the benefits
of the Indenture.

(q) Description of the Securities and the Indenture. The Securities, the
Exchange Securities, the Indenture, the Registration Rights Agreement and the
Escrow Agreement will conform in all material respects to the description
thereof in the Offering Memorandum.

(r) No Violation or Default. Neither the Company nor any of its subsidiaries is
(i) in violation of its charter or by-laws or similar organizational documents;
(ii) in default, and no event has occurred that, with notice or lapse of time or
both, would constitute such a default, in the performance or observance of any
term, covenant or condition contained in 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; or (iii) in violation of any applicable law or statute
or any applicable judgment, order, rule or regulation of any court or
governmental or regulatory authority, except, in the case of clauses (ii) and
(iii) above, for any such default or violation that would not, individually or
in the aggregate, have a Material Adverse Effect.

 

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(s) No Conflicts. The execution and delivery by the Company and the Guarantors
of this Agreement, the Registration Rights Agreement, the Escrow Agreement and
the Indenture, and the issuance and delivery of the Securities and the Exchange
Securities by the Company and the Guarantors, and performance by the Company and
the Guarantors of their obligations hereunder and thereunder and consummation by
the Company and the Guarantors of the transactions contemplated hereby and
thereby and by the Offering Memorandum will not (i) conflict with or result in a
breach or violation of any of the terms or provisions of, or constitute a
default or a Debt Repayment Triggering Event (as defined below) under, or result
in the creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any of its subsidiaries pursuant to, 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,
(ii) result in any violation of the provisions of the charter or by-laws or
similar organizational documents of the Company or any of its subsidiaries or
(iii) result in the violation of any applicable law or statute or any applicable
judgment, order, rule or regulation of any court or governmental or regulatory
authority, except, in the case of clauses (i) and (iii) above, for any such
conflict, breach, violation, default, Debt Repayment Triggering Event, lien,
charge or encumbrance that would not, individually or in the aggregate, have a
Material Adverse Effect. As used herein, a “Debt Repayment Triggering Event”
means any event or condition which gives, or with the giving of notice or lapse
of time would give, the holder of any note, debenture or other evidence of
indebtedness (or any person acting on such holder’s behalf) the right to require
the repurchase, redemption or repayment of all or a portion of such indebtedness
by the Company or any of its subsidiaries.

(t) No Consents Required. No consent, approval, authorization, order, license,
registration or qualification of or with any court or governmental or regulatory
authority is required for the execution, delivery and performance by the Company
and the Guarantors of this Agreement, the Registration Rights Agreement, the
Escrow Agreement or the Indenture, or the issuance and delivery of the
Securities or the Exchange Securities, or consummation of the transactions
contemplated hereby and thereby and by the Offering Memorandum, except for those
which have been obtained, for the registration of the Securities or the Exchange
Securities under the Securities Act and the qualification of the Indenture under
the Trust Indenture Act in connection with the transactions contemplated by the
Registration Rights Agreement and such consents, approvals, authorizations,
orders and registrations or qualifications as may be required by the Financial
Industry Regulatory Authority, Inc. (“FINRA”) and under applicable securities
laws in connection with the purchase and distribution of the Securities by the
Initial Purchasers.

(u) Legal Proceedings. Except as described in the Offering Memorandum, there are
no legal, governmental or regulatory investigations (as to which the Company has
been given notice), actions, suits or proceedings pending to which the Company
or any of its subsidiaries is a party or to which any property of the Company or
any of its subsidiaries is subject that, individually or in the aggregate, if
determined adversely to the Company or any of its subsidiaries, would reasonably
be expected to have a Material Ad-

 

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verse Effect; no such investigations (without giving effect to the notice
qualifier set forth above), actions, suits or proceedings are, to the knowledge
of the Company, threatened or contemplated; and (i) there are no current or
pending legal, governmental or regulatory actions, suits or proceedings that are
required under the Securities Act or Exchange Act, as applicable, to be
described in a registration statement on Form S-1 that are not so described in
or incorporated by reference in the Offering Memorandum and (ii) there are no
statutes, regulations or contracts or other documents that are required under
the Securities Act to be filed as exhibits to the Form 10-K or described in the
Form 10-K or in a registration statement on Form S-1 that are not so filed as
exhibits to the Form 10-K or described in the Form 10-K or the Offering
Memorandum.

(v) Independent Accountants. Ernst and Young LLP, who has audited certain
financial statements of the Company and its subsidiaries, is an independent
registered public accounting firm with respect to the Company and its
subsidiaries within the applicable rules and regulations adopted by the
Commission and the Public Company Accounting Oversight Board (United States) and
as required by the Securities Act.

(w) Title to Real and Personal Property. The Company and its subsidiaries have
good and marketable title in fee simple (in the case of owned real property) to,
or have valid and marketable rights to lease or otherwise use, all items of real
and personal property and assets that are material to the business of the
Company and its subsidiaries, taken as a whole, in each case free and clear of
all liens, encumbrances, claims and defects and imperfections of title except
those that (i) do not materially interfere with the use made and proposed to be
made of such property by the Company and its subsidiaries, (ii) would not
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect or (iii) are described in the Offering Memorandum.

(x) Title to Intellectual Property. The Company and its subsidiaries own,
possess or license adequate rights to use all patents, patent applications,
trademarks, service marks, trade names, trademark registrations, service mark
registrations, copyrights, licenses and know-how (including trade secrets and
other unpatented and/or unpatentable proprietary or confidential information,
systems or procedures) necessary for the conduct of their respective businesses
as currently conducted and as currently proposed to be conducted except as would
not reasonably be expected to have a Material Adverse Effect. To the knowledge
of the Company, the conduct of the respective businesses of the Company and its
subsidiaries will not conflict with any of the foregoing valid rights of others
except as would not, individually or in the aggregate, have a Material Adverse
Effect. The Company and its subsidiaries have not received any written notice of
any claim of infringement, misappropriation or conflict with any such valid
rights of others in connection with its patents, patent rights, licenses,
inventions, trademarks, service marks, trade names, copyrights and know-how,
which would reasonably be expected, individually or in the aggregate, to result
in a Material Adverse Effect.

(y) No Undisclosed Relationships. No relationship, direct or indirect, exists
between or among the Company or any of its subsidiaries, on the one hand, and
the directors, officers, stockholders, customers or suppliers of the Company or
any of its subsidiaries, on the other, that is required by the Securities Act to
be described in a registration

 

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statement on Form S-1 and that is not so described in or incorporated by
reference in the Offering Memorandum.

(z) Investment Company Act. Neither the Company nor any Guarantor is and, after
giving effect to the offering and sale of the Securities and the application of
the proceeds thereof as described in the Offering Memorandum, will be required
to register as an “investment company” or an entity “controlled” by an
“investment company” within the meaning of the Investment Company Act of 1940,
as amended, and the rules and regulations of the Commission thereunder
(collectively, the “Investment Company Act”).

(aa) Taxes. The Company and its subsidiaries have paid all federal, state, local
and foreign taxes and filed (taking into account applicable extensions) all tax
returns required to be paid or filed through the date hereof (except those being
disputed in good faith and for which adequate reserve has been established and
maintained and those which the failure to pay or file would not reasonably be
expected to have a Material Adverse Effect); and except as otherwise disclosed
in the Offering Memorandum, there is no tax deficiency that has been, or would
reasonably be expected to be, asserted against the Company or any of its
subsidiaries or any of their respective properties or assets, except for such
tax deficiencies that would not reasonably be expected to have a Material
Adverse Effect.

(bb) Licenses and Permits. The Company and its subsidiaries possess all
licenses, certificates, permits and other authorizations issued by, and have
made all declarations and filings with, the appropriate federal, state, local or
foreign governmental or regulatory authorities that are necessary for the
ownership or lease of their respective properties or the conduct of their
respective businesses as described in the Offering Memorandum, except where the
failure to possess or make the same would not, individually or in the aggregate,
have a Material Adverse Effect; and except as described in the Offering
Memorandum, neither the Company nor any of its subsidiaries has received notice
of any revocation or modification of any such license, certificate, permit or
authorization or has any reason to believe that any such license, certificate,
permit or authorization will not be renewed in the ordinary course except where
any such revocation, modification or non-renewal would not, individually or in
the aggregate, have a Material Adverse Effect.

(cc) No Labor Disputes. No labor disturbance by or dispute with employees of the
Company or any of its subsidiaries exists or, to the knowledge of the Company,
is contemplated or threatened, and the Company is not aware of any existing or
imminent labor disturbance by, or dispute with, the employees of any of its or
its subsidiaries’ principal suppliers or contractors, except in each case as
would not, individually or in the aggregate, have a Material Adverse Effect.

(dd) Environmental Matters. Except as described in the Offering Memorandum and
except for matters that would not, individually or in the aggregate, have a
Material Adverse Effect, (i) the Company and its subsidiaries (a) are in
compliance with any and all applicable federal, state, local and foreign laws,
rules, regulations, requirements,

 

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decisions, judgments, decrees, orders and the common law relating to pollution
or the protection of the environment, natural resources or human health or
safety, including those relating to the generation, storage, treatment, use,
handling, transportation, Release or threat of Release of Hazardous Materials
(collectively, “Environmental Laws”), (b) have received and are in compliance
with all permits, licenses, certificates or other authorizations or approvals
required of them under applicable Environmental Laws to conduct their respective
businesses, (c) have not received notice of any actual or potential liability
under or relating to, or actual or potential violation of, any Environmental
Laws, including for the investigation or remediation of any Release or threat of
Release of Hazardous Materials, and have no knowledge of any event or condition
that would reasonably be expected to result in any such notice and (d) are not a
party to any order, decree or agreement that imposes any obligation or liability
under any Environmental Law; (ii) there are no costs or liabilities associated
with Environmental Laws of or relating to the Company or its subsidiaries;
(iii) there are no proceedings that are pending, or that are known to be
contemplated, against the Company or any of its subsidiaries under any
Environmental Laws in which a governmental entity is also a party; (iv) the
Company and its subsidiaries are not aware of any facts or issues regarding
compliance with Environmental Laws, or liabilities or other obligations under
Environmental Laws, including the Release or threat of Release of Hazardous
Materials; and (v) none of the Company and its subsidiaries anticipates capital
expenditures relating to any Environmental Laws; and (vi) there has been no
storage, generation, transportation, use, handling, treatment, Release or threat
of Release of Hazardous Materials by, relating to or caused by the Company or
any of its subsidiaries (or, to the knowledge of the Company and its
subsidiaries, any other entity (including any predecessor) for whose acts or
omissions the Company or any of its subsidiaries is or would reasonably be
expected to be liable) at, on, under or from (A) any property or facility now or
previously owned, operated or leased by the Company or any of its subsidiaries
or (B) any other property or facility, in each case in violation of any
Environmental Laws or in a manner or amount or to a location that would
reasonably be expected, individually or in the aggregate, to result in liability
under any Environmental Law. “Hazardous Materials” means any material, chemical,
substance, waste, pollutant, contaminant, compound, mixture, or constituent
thereof, in any form or amount, including petroleum (including crude oil or any
fraction thereof) and petroleum products, natural gas liquids, asbestos and
asbestos containing materials, naturally occurring radioactive materials, brine,
and drilling mud, regulated or which can give rise to liability under any
Environmental Law. “Release” means any spilling, leaking, seepage, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching,
dumping, disposing, depositing, dispersing, or migrating in, into or through the
environment, or in, into from or through any building or structure.

(ee) Compliance with ERISA. (i) Each employee benefit plan, within the meaning
of Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended (“ERISA”), for which the Company or any member of its “Controlled Group”
(defined as any organization which is a member of the Company’s controlled group
of corporations or is under common control with the Company within the meaning
of Sections 414(b) or (c) of the Internal Revenue Code of 1986, as amended (the
“Code”)) would have any liability (each, a “Plan”) has been maintained in
compliance with its

 

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terms and the requirements of any applicable statutes, orders, rules and
regulations, including but not limited to ERISA and the Code, except for
noncompliance that would not reasonably be expected to result in material
liability to the Company or its subsidiaries; (ii) no prohibited transaction,
within the meaning of Section 406 of ERISA or Section 4975 of the Code, has
occurred with respect to any Plan excluding transactions effected pursuant to a
statutory or administrative exemption that would reasonably be expected to
result in a material liability to the Company or its subsidiaries; (iii) for
each Plan that is subject to the funding rules of Section 412 of the Code or
Section 302 of ERISA, the minimum funding standard of Section 412 of the Code or
Section 302 of ERISA, as applicable, has been satisfied (without taking into
account any waiver thereof or extension of any amortization period) and is
reasonably expected to be satisfied in the future (without taking into account
any waiver thereof or extension of any amortization period); (iv) the fair
market value of the assets of each Plan that is subject to the funding rules of
Section 412 of the Code or Section 302 of ERISA exceeds the present value of all
benefits accrued under such Plan (determined based on those assumptions used to
fund such Plan); (v) no “reportable event” (within the meaning of
Section 4043(c) of ERISA) has occurred or is reasonably expected to occur that
either has resulted, or would reasonably be expected to result, in material
liability to the Company or its subsidiaries; (vi) neither the Company nor any
member of its Controlled Group has incurred, nor reasonably expects to incur,
any liability under Title IV of ERISA (other than contributions or premiums to
the PBGC, in the ordinary course and without default) in respect of a Plan
(including a “multiemployer plan”, within the meaning of Section 4001(a)(3) of
ERISA); and (vii) there is no pending audit or investigation by the Internal
Revenue Service, the U.S. Department of Labor, the Pension Benefit Guaranty
Corporation or any other governmental agency or any foreign regulatory agency
with respect to any Plan that would reasonably be expected to result in material
liability to the Company or its subsidiaries. None of the following events has
occurred or is reasonably likely to occur: (x) a material increase in the
aggregate amount of contributions required to be made to all Plans by the
Company or its subsidiaries in the current fiscal year of the Company and its
subsidiaries compared to the amount of such contributions made by the Company
and its subsidiaries’ most recently completed fiscal year; or (y) a material
increase in the “accumulated post-retirement benefit obligations” of the Company
and its subsidiaries (within the meaning of Statement of Financial Accounting
Standards No. 106, as amended) compared to the amount of such obligations as of
the Company’s most recently completed fiscal year.

(ff) Disclosure Controls. The Company maintains an effective system of
“disclosure controls and procedures” (as defined in Rule 13a-15(e) of the
Exchange Act) that relates to the Company and its subsidiaries and complies with
the requirements of the Exchange Act and that has been designed to ensure that
information required to be disclosed by the Company in reports that it files or
submits under the Exchange Act is recorded, processed, summarized and reported
within the time periods specified in the Commission’s rules and forms, including
controls and procedures designed to ensure that such information is accumulated
and communicated to the Company’s management as appropriate to allow timely
decisions regarding required disclosure. The evaluations of the effectiveness of
the Company’s disclosure controls and procedures have been carried out as of and
on the dates required by Rule 13a-15 of the Exchange Act.

 

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(gg) Accounting Controls. The Company maintains a system of “internal control
over financial reporting” (as defined in Rule 13a-15(f) of the Exchange Act)
that relates to the Company and its subsidiaries and complies with the
requirements of the Exchange Act and has been designed by, or under the
supervision of, the Company’s principal executive and principal financial
officers, or persons performing similar functions, to provide reasonable
assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with generally
accepted accounting principles, including, but not limited to, internal
accounting controls sufficient to provide reasonable assurance that
(i) transactions are executed in accordance with management’s general or
specific authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (iii) access to
assets is permitted only in accordance with management’s general or specific
authorization; (iv) the recorded accountability for assets is compared with the
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences; and (v) the interactive data in eXtensible Business
Reporting Language included or incorporated by reference in the Offering
Memorandum and the Pricing Disclosure Package fairly present the information
called for in all material respects and are prepared in accordance with the
Commission’s rules and guidelines applicable thereto. Based on the Company’s
most recent evaluation of internal control over financial reporting, there are
no “material weaknesses” (as defined in Rule 12b-2 of the Exchange Act) in the
Company’s internal control over financial reporting and the Company has
corrected the material weakness which is disclosed in the Offering Memorandum.
None of the “significant deficiencies” (as defined in Rule 12b-2 of the Exchange
Act) identified in connection with the Company’s prior audit should be deemed to
be material weaknesses. As of and when required by Section 302 of the Sarbanes
Oxley Act, the Company’s auditors and the Audit Committee of the Board of
Directors of the Company have been advised of: (i) all significant deficiencies
and material weaknesses in the design or operation of internal controls over
financial reporting which have adversely affected or are reasonably likely to
adversely affect the Company’s ability to record, process, summarize and report
financial information; and (ii) any fraud, whether or not material, that
involves management or other employees who have a significant role in the
Company’s internal control over financial reporting.

(hh) Insurance. The Company and its subsidiaries are insured by insurers of
nationally recognized financial responsibility against such losses and risks and
in such amounts as are prudent in the businesses in which they are engaged; and
neither the Company nor any of its subsidiaries has any reason to believe that
it will not be able to renew its existing insurance coverage as and when such
coverage expires or to obtain similar coverage at a cost that would not,
individually or in the aggregate, have a Material Adverse Effect. Neither of the
Company nor any subsidiary has been denied any insurance coverage which it has
sought or for which it has applied except, if such a denial has occurred, for
insurance coverage which the Company or the subsidiary, as applicable, was able
to obtain from other insurers at a cost that did not and is not reasonably
expected to have a Material Adverse Effect on the Company and its subsidiaries,
taken as a whole.

 

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(ii) No Unlawful Payments. Neither the Company nor any of its subsidiaries nor,
to the knowledge of the Company, any director, officer, agent, employee or other
person associated with or acting on behalf of the Company or any of its
subsidiaries has (i) used any corporate funds for any unlawful contribution,
gift, entertainment or other unlawful expense relating to political activity;
(ii) made any direct or indirect unlawful payment to any foreign or domestic
government official or employee from corporate funds; (iii) violated or is in
violation of any provision of the Foreign Corrupt Practices Act of 1977, as
amended, and the rules and regulations thereunder (the “FCPA”), including,
without limitation, making use of the mails or any means or instrumentality of
interstate commerce corruptly in furtherance of an offer, payment, promise to
pay or authorization of the payment of any money, or other property, gift,
promise to give, or authorization of the giving of anything of value to any
“foreign official” (as such term is defined in the FCPA) or any foreign
political party or official thereof or any candidate for foreign political
office, in contravention of the FCPA and the Company and its subsidiaries have
conducted their businesses in compliance with the FCPA and have instituted and
maintain policies and procedures designed to ensure, and which are reasonably
expected to continue to ensure, continued compliance therewith; or (iv) made any
bribe, rebate, payoff, influence payment, kickback or other unlawful payment.

(jj) Compliance with Money Laundering Laws. The operations of the Company and
its subsidiaries are and have been conducted at all times in compliance with
applicable financial recordkeeping and reporting requirements of the Currency
and Foreign Transactions Reporting Act of 1970, as amended, the money laundering
statutes of all applicable jurisdictions, the rules and regulations thereunder
and any related or similar rules, regulations or guidelines, issued,
administered or enforced by any governmental agency in such jurisdictions
(collectively, the “Money Laundering Laws”) and no action, suit or proceeding by
or before any court or governmental agency, authority or body or any arbitrator
involving the Company or any of its subsidiaries with respect to the Money
Laundering Laws is pending or, to the knowledge of the Company, threatened.

(kk) Compliance with Sanctions Laws. None of the Company, any of its
subsidiaries or, to the knowledge of the Company, any director, officer, agent,
employee or affiliate (other than an affiliate solely by reason that it is under
common control with the Company) of the Company or any of its subsidiaries is
currently subject to any U.S. sanctions administered by the Office of Foreign
Assets Control of the U.S. Department of the Treasury (“OFAC”), the U.S.
Department of Commerce or the U.S. Department of State (collectively,
“Sanctions”), nor is the Company or any of its subsidiaries located, organized
or resident in a country or territory that is the subject of Sanctions; and the
Company will not, directly or indirectly, use the proceeds of the offering of
the Securities hereunder, or lend, contribute or otherwise make available such
proceeds to any subsidiary, joint venture partner or other person or entity,
(i) to fund any activities of or business with any person that, at the time of
such funding, is the subject of Sanctions, or is in Burma/Myanmar, Cuba, Iran,
Libya, North Korea, Sudan or in any other country or territory, that, at the
time of such funding, is the subject of Sanctions, or (ii) in any other

 

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manner that will result in a violation by any person (including any person
participating in the offering, whether as underwriter, advisor, investor or
otherwise) of Sanctions.

(ll) No Restrictions on Subsidiaries. No Guarantor is currently prohibited,
directly or indirectly, under any agreement or other instrument to which it is a
party or is subject, from paying any dividends to the Company, from making any
other distribution on such subsidiary’s capital stock, from repaying to the
Company any loans or advances to such subsidiary from the Company or from
transferring any of such subsidiary’s properties or assets to the Company or any
other subsidiary of the Company, in each case in any manner that would
materially impair the Company and its subsidiaries’ ability to conduct its
operations and pay its obligations as they become due.

(mm) No Broker’s Fees. Other than as disclosed in the Offering Memorandum,
neither the Company nor any of its subsidiaries is a party to any contract,
agreement or understanding with any person (other than this Agreement) that
would give rise to a valid claim against the Company or any of its subsidiaries
or any Initial Purchaser for a brokerage commission, finder’s fee or like
payment in connection with the offering and sale of the Securities.

(nn) No Registration Rights. No person has the right (other than under the
Registration Rights Agreement) to require the Company or any of its subsidiaries
to register any securities for sale under the Securities Act by reason of
(i) the filing of a registration statement under the Securities Act relating to
the Exchange Notes, (ii) the filing of a shelf registration statement pursuant
to Rule 415 of the Securities Act relating to the resale by certain holders of
the Notes or (iii) the issuance and sale of the Securities.

(oo) No Stabilization. None of the Company or any of the Guarantors has taken or
will take, directly or indirectly, any action designed to or that would
reasonably be expected to cause or result in any stabilization or manipulation
of the price of any security of the Company to facilitate the sale or resale of
the Securities.

(pp) Margin Rules. The application of the proceeds received by the Company from
the issuance, sale and delivery of the Securities as described in the Offering
Memorandum will not violate Regulation T, U or X of the Board of Governors of
the Federal Reserve System or any other regulation of such Board of Governors.

(qq) Statistical and Market Data. Nothing has come to the attention of the
Company that has caused the Company to believe that the statistical and
market-related data included or incorporated by reference in the Offering
Memorandum is not based on or derived from sources that are reliable and
accurate in all material respects.

(rr) Sarbanes-Oxley Act. The Company is in material compliance with the
applicable provisions of the Sarbanes-Oxley Act of 2002 and the rules and
regulations promulgated thereunder (the “Sarbanes-Oxley Act”).

(ss) Solvency. Assuming the enforceability of any savings or similar clause with
respect to guarantees contained in any indenture, loan agreement or other
agreement

 

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or instrument evidencing indebtedness of the Company or any Guarantor or by
which the Company or any Guarantor is bound, each of the Company and the
Guarantors is, and immediately after the Closing will be, Solvent. As used
herein, the term “Solvent” means, with respect to any person, on a particular
date, that on such date (A) the fair market value of the assets of such person
is greater than the total amount of liabilities (including contingent
liabilities) of such person, (B) the present fair salable value of the assets of
such person is greater than the amount that will be required to pay the probable
liabilities of such person on its debts as they become absolute and mature,
(C) such person is able to realize upon its assets and pay its debts and other
liabilities, including contingent obligations, as they mature, and (D) such
person does not have an unreasonably small amount of capital and surplus.

(tt) Suppliers. Except as disclosed in the Offering Memorandum, no supplier of
merchandise to the Company or any of the Subsidiaries has ceased shipments of
merchandise to the Company or any of the subsidiaries, other than in the normal
and ordinary course of business consistent with past practices, which cessation
would result in a Material Adverse Effect.

(uu) Franchise Agreements. Except as disclosed in the Offering Memorandum, each
franchise agreement, in each case between a subsidiary and the applicable
manufacturer has been duly authorized by the Company and such subsidiaries, and,
as of the Closing Date, the Company shall have obtained all consents,
authorizations and approvals from the manufacturers required to consummate the
transactions contemplated hereby or by the Offering Memorandum.

(vv) Regulation S. In connection with the offering of the Securities outside the
United States, the Offering Memorandum will contain the disclosure required by
Rule 902. The Company is a “reporting issuer”, as defined in Rule 902 under the
Securities Act.

(ww) No Default in Senior Indebtedness. No event of default exists under any
contract, indenture, mortgage, loan agreement, note, lease or other agreement or
instrument constituting Senior Indebtedness (as defined in the Indenture).

Any certificate signed by an officer of the Company or any Guarantor and
delivered to the Initial Purchasers or to counsel for the Initial Purchasers
shall be deemed to be a representation and warranty by the Company or such
Guarantor to each Initial Purchaser as to the matters set forth therein.

SECTION 2. Purchase, Sale and Delivery of the Securities.

(a) The Securities. Each of the Company and the Guarantors agrees to issue and
sell to the Initial Purchasers, severally and not jointly, all of the
Securities, and the Initial Purchasers agree, severally and not jointly, to
purchase from the Company and the Guarantors the aggregate principal amount of
Securities set forth opposite their names on Schedule A, at a purchase price of
97.36% of the principal amount thereof. On the Closing Date the Initial
Purchasers shall pay to the Escrow Agent the purchase price of the Securities
set forth in the preceding sentence plus

 

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an amount equal to 50% of the Discount (as defined below). The “Discount” shall
mean 1.75% of the aggregate principal amount of the Securities. The portion of
the Discount paid to the Escrow Agent shall be released to the Representative
for the benefit of the several Initial Purchasers from the Escrow Account on the
Release Date at the same time when the Escrow Proceeds are released to the
Company upon satisfaction of the conditions precedent to such release as set
forth in the Escrow Agreement.

(b) The Closing Date. Delivery of one or more global notes (“Global Notes”) in
definitive form to be purchased by the Initial Purchasers and payment therefor
shall be made at the offices of Fried, Frank, Harris, Shriver & Jacobson LLP,
One New York Plaza, New York, New York (or such other place as may be agreed to
by the Company and the Representative) at 9:00 a.m. New York City time, on
July 2, 2012, or such other time and date as may be agreed by the Company and
the Representative (the time and date of such closing are called the “Closing
Date”). The Company hereby acknowledges that circumstances under which the
Representative may provide notice to postpone the Closing Date as originally
scheduled include, but are in no way limited to, any determination by the
Company or the Initial Purchasers to recirculate to investors copies of an
amended or supplemented Offering Memorandum or a delay as contemplated by the
provisions of Section 17 hereof.

(c) Delivery of the Securities. The Company shall deliver, or cause to be
delivered, to the Representative for the accounts of the several Initial
Purchasers Global Notes at the Closing Date against the irrevocable release of a
wire transfer of immediately available funds to the Escrow Account for the
amount of the purchase price therefor (it being understood that such payment
shall include an amount equal to 50% of the Discount). Pursuant to the terms of
the Escrow Agreement, such 50% of the Discount shall be released to the
Representative from the Escrow Account on the Release Date at the same time when
the Escrow Proceeds are released to the Company upon satisfaction of the
conditions precedent to such release as set forth in the Escrow Agreement. The
Global Notes shall be in such denominations and registered in the name of Cede &
Co., as nominee of the Depositary, pursuant to the DTC Agreement, and shall be
made available for inspection on the business day preceding the Closing Date at
a location in New York City, as the Representative may designate. Time shall be
of the essence, and delivery at the time and place specified in this Agreement
is a further condition to the obligations of the Initial Purchasers.

(d) Initial Purchasers as Qualified Institutional Buyers. Each Initial Purchaser
severally and not jointly represents and warrants to, and agrees with, the
Company that:

(i) it is a “qualified institutional buyer” within the meaning of Rule 144A
(“Qualified Institutional Buyer”) and will offer and sell Securities only to
persons who it reasonably believes are Qualified Institutional Buyers (a) in
transactions meeting the requirements of Rule 144A or (b) upon the terms and
conditions set forth in Annex I to this Agreement and, in the case of either
(a) or (b) only to persons who in purchasing the Securities are deemed to have
represented and agreed to the representations set forth in the Offering
Memorandum under the caption “Notice to Investors”; and

 

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(ii) it will not offer or sell Securities by, any form of general solicitation
or general advertising, including but not limited to the methods described in
Rule 502(c) under the Securities Act.

SECTION 3. Additional Covenants. Each of the Company and the Guarantors further
covenants and agrees with each Initial Purchaser as follows:

(a) Preparation of Final Offering Memorandum; Initial Purchasers’ Review of
Proposed Amendments and Supplements and Company Additional Written
Communications. As promptly as practicable following the Time of Sale and in any
event not later than the second business day following the date hereof, the
Company will prepare and deliver to the Initial Purchasers the Final Offering
Memorandum, which shall consist of the Preliminary Offering Memorandum as
modified only by the information contained in the Pricing Supplement except as
permitted by Section 3(b). The Company will not amend or supplement the
Preliminary Offering Memorandum or the Pricing Supplement except as permitted by
Section 3(b). The Company will not amend or supplement the Final Offering
Memorandum prior to the Closing Date unless the Representative shall previously
have been furnished a copy of the proposed amendment or supplement a reasonable
time prior to the proposed use or filing, and shall not have reasonably objected
to such amendment or supplement. Before making, preparing, using, authorizing,
approving or distributing any Company Additional Written Communication, the
Company will furnish to the Representative a copy of such written communication
for review and will not make, prepare, use, authorize, approve or distribute any
such written communication to which the Representative reasonably objects.

(b) Amendments and Supplements to the Final Offering Memorandum and Other
Securities Act Matters. If at any time prior to the Closing Date (i) any event
shall occur or condition shall exist as a result of which any of the Pricing
Disclosure Package as then amended or supplemented would include any 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, not misleading or (ii) it is necessary to amend or
supplement any of the Pricing Disclosure Package to comply with law, the Company
and the Guarantors will promptly notify the Initial Purchasers thereof and
promptly prepare and in accordance with Section 3(a) hereof furnish to the
Initial Purchasers such amendments or supplements to any of the Pricing
Disclosure Package as may be necessary so that the statements in any of the
Pricing Disclosure Package as so amended or supplemented will not, in the light
of the circumstances under which they were made, be misleading or so that any of
the Pricing Disclosure Package will comply with all applicable law. If, prior to
the completion of the placement of the Securities by the Initial Purchasers with
the Subsequent Purchasers, any event shall occur or condition exist as a result
of which it is necessary to amend or supplement the Final Offering Memorandum,
as then amended or supplemented, in order to make the statements therein, in the
light of the circumstances when the Final Offering Memorandum is delivered to a
Subsequent Purchaser, not misleading, or if in the judgment of the
Representative or counsel for the Initial Purchasers it is otherwise necessary
to amend or supplement the Final Offering Memorandum to comply with law, the
Company and the

 

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Guarantors agree to promptly prepare (subject to Section 3 hereof), file with
the Commission (with respect to documents incorporated by reference) and furnish
at its own expense to the Initial Purchasers, amendments or supplements to the
Final Offering Memorandum so that the statements in the Final Offering
Memorandum as so amended or supplemented will not, in the light of the
circumstances at the Closing Date and at the time of sale of Securities, be
misleading or so that the Final Offering Memorandum, as amended or supplemented,
will comply with all applicable law.

The Company hereby expressly acknowledges that the indemnification and
contribution provisions of Sections 8 and 9 hereof are specifically applicable
and relate to each offering memorandum, amendment or supplement referred to in
this Section 3.

(c) Copies of the Offering Memorandum. The Company agrees to furnish the Initial
Purchasers, without charge, as many copies of the Pricing Disclosure Package and
the Final Offering Memorandum and any amendments and supplements thereto as they
shall reasonably request.

(d) Blue Sky Compliance. Each of the Company and the Guarantors shall cooperate
with the Representative and counsel for the Initial Purchasers to qualify or
register (or to obtain exemptions from qualifying or registering) all or any
part of the Securities for offer and sale under the securities laws of the
several states of the United States, the provinces of Canada or any other
jurisdictions designated by the Representative, shall comply with such laws and
shall continue such qualifications, registrations and exemptions in effect for
so long as required for the distribution of the Securities. None of the Company
or any of the Guarantors shall be required to qualify as a foreign corporation
or to take any action that would subject it to general service of process in any
such jurisdiction where it is not presently qualified or where it would be
subject to taxation as a foreign corporation. The Company will advise the
Representative promptly of the suspension of the qualification or registration
of (or any such exemption relating to) the Securities for offering, sale or
trading in any jurisdiction or any initiation or threat of any proceeding for
any such purpose, and in the event of the issuance of any order suspending such
qualification, registration or exemption, each of the Company and the Guarantors
shall use its commercially reasonable efforts to obtain the withdrawal thereof
at the earliest possible moment.

(e) Use of Proceeds. The Company shall apply the net proceeds from the sale of
the Securities sold by it in the manner described under the caption “Use of
Proceeds” in the Pricing Disclosure Package.

(f) The Depositary. The Company will cooperate with the Initial Purchasers and
use its commercially reasonable efforts to permit the Securities to be eligible
for clearance and settlement through the facilities of the Depositary.

(g) Additional Issuer Information. Prior to the completion of the placement of
the Securities by the Initial Purchasers with the Subsequent Purchasers, the
Company shall file, on a timely basis, with the Commission and the New York
Stock Exchange (the “NYSE”) all reports and documents required to be filed under
Section 13 or 15 of the

 

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Exchange Act. Additionally, while any of the Securities are “restricted
securities” within the meaning of Rule 144 under the Securities Act, at any time
when the Company is not subject to Section 13 or 15 of the Exchange Act, for the
benefit of holders and beneficial owners from time to time of the Securities,
the Company shall furnish, at its expense, upon request, to holders and
beneficial owners of Securities and prospective purchasers of Securities
information (“Additional Issuer Information”) satisfying the requirements of
Rule 144A(d)(4).

(h) Agreement Not To Offer or Sell Additional Securities. During the period of
90 days following the date hereof, the Company will not, without the prior
written consent of Merrill Lynch, Pierce, Fenner & Smith Incorporated (which
consent may be withheld at the sole discretion of Merrill Lynch, Pierce,
Fenner & Smith Incorporated), directly or indirectly, sell, offer, contract or
grant any option to sell, pledge, transfer or establish an open “put equivalent
position” within the meaning of Rule 16a-1 under the Exchange Act, or otherwise
dispose of or transfer, or announce the offering of, or file any registration
statement under the Securities Act in respect of, any debt securities of the
Company or securities exchangeable for or convertible into debt securities of
the Company (other than as contemplated by this Agreement and to register the
Exchange Securities).

(i) Future Reports to the Initial Purchasers. At any time when the Company is
not subject to Section 13 or 15 of the Exchange Act and while any of the Notes
are “restricted securities” within the meaning of Rule 144 under the Securities
Act, the Company will furnish at its expense upon request by the Initial
Purchasers information satisfying the requirements of Rule 144A(d)(4) under the
Securities Act.

(j) No Integration. The Company agrees that it will not and will cause its
Affiliates not to make any offer or sale of securities of the Company of any
class if, as a result of the doctrine of “integration” referred to in Rule 502
under the Securities Act, such offer or sale would render invalid (for the
purpose of (i) the sale of the Securities by the Company to the Initial
Purchasers, (ii) the resale of the Securities by the Initial Purchasers to
Subsequent Purchasers or (iii) the resale of the Securities by such Subsequent
Purchasers to others) the exemption from the registration requirements of the
Securities Act provided by Section 4(2) thereof or by Rule 144A or by Regulation
S thereunder or otherwise.

(k) No General Solicitation or Directed Selling Efforts. The Company agrees that
it will not and will not permit any of its Affiliates or any other person acting
on its or their behalf (other than the Initial Purchasers and their Affiliates,
as to which no covenant is given) to (i) solicit offers for, or offer or sell,
the Securities by means of any form of general solicitation or general
advertising within the meaning of Rule 502(c) of Regulation D or in any manner
involving a public offering within the meaning of Section 4(2) of the Securities
Act or (ii) engage in any directed selling efforts with respect to the
Securities within the meaning of Regulation S, and the Company will and will
cause any of its Affiliates or any other person acting on its or their behalf
(other than the Initial Purchasers and their Affiliates, as to which no covenant
is given) to comply with the offering restrictions requirement of Regulation S
with respect to the Securities.

 

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(l) No Restricted Resales. For a period of one year after the Closing Date, the
Company will not, and will not permit, to the extent it has an ability to do so,
any of its “affiliates” (as defined in Rule 144 under the Securities Act) to
resell any of the Notes, which constitute “restricted securities” under Rule
144, that have been reacquired by any of them.

(m) Legended Securities. Each certificate for a Note will bear the legend
substantially in the form contained in “Notice to Investors” in the Preliminary
Offering Memorandum for the time period and upon the other terms stated in the
Preliminary Offering Memorandum.

The Representative on behalf of the several Initial Purchasers, may, in its sole
discretion, waive in writing the performance by the Company or any Guarantor of
any one or more of the foregoing covenants or extend the time for their
performance.

SECTION 4. Payment of Expenses. Each of the Company and the Guarantors agrees to
pay or cause to be paid all costs, fees and expenses incurred in connection with
the performance of its obligations hereunder and in connection with the
transactions contemplated hereby, including, without limitation, (i) all
expenses incident to the issuance and delivery of the Securities to the Initial
Purchasers (including all printing and engraving costs), (ii) all necessary
issue, transfer and other stamp taxes in connection with the issuance and sale
of the Securities to the Initial Purchasers, (iii) all fees and expenses of the
Company’s and the Guarantors’ counsel, independent public or certified public
accountants and other advisors, (iv) all costs and expenses incurred in
connection with the preparation, printing, filing, shipping and distribution of
the Pricing Disclosure Package and the Final Offering Memorandum (including
financial statements and exhibits), and all amendments and supplements thereto,
and the Notes and Guarantees, (v) all filing fees, reasonable attorneys’ fees
and expenses incurred by the Company, the Guarantors or the Initial Purchasers
in connection with qualifying or registering (or obtaining exemptions from the
qualification or registration of) all or any part of the Securities for offer
and sale under the securities laws of the several states of the United States,
the provinces of Canada or other jurisdictions designated by the Initial
Purchasers (including, without limitation, the cost of preparing, printing and
mailing preliminary and final blue sky or legal investment memoranda and any
related supplements to the Pricing Disclosure Package or the Final Offering
Memorandum, (vi) the fees and expenses of the Trustee, including the reasonable
fees and disbursements of counsel for the Trustee in connection with the
Indenture, the Securities and the Exchange Securities, (vii) any fees payable in
connection with the rating of the Securities or the Exchange Securities with the
ratings agencies, (viii) any filing fees incident to, and any reasonable fees
and disbursements of counsel to the Initial Purchasers in connection with the
review by FINRA, if any, of the terms of the sale of the Securities or the
Exchange Securities, (ix) all fees and expenses incurred with respect to the
negotiating and disclosing the interests contemplated by the Escrow Agreement
(including the fees and expenses of counsel to the Initial Purchasers with
respect thereto), (x) all fees and expenses (including reasonable fees and
expenses of counsel) of the Company and the Guarantors in connection with
approval of the Securities by the Depositary for “book-entry” transfer, and the
performance by the Company and the Guarantors of their respective other
obligations under this Agreement and (xi) all expenses incident to the “road
show” for the offering of the Securities by the Company. Except as provided in
this Section 4 and Sections 6, 8 and 9

 

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hereof, the Initial Purchasers shall pay their own expenses, including the fees
and disbursements of their counsel and transfer taxes payable on resales of any
of the Securities by them.

SECTION 5. Conditions of the Obligations of the Initial Purchasers. The
obligations of the several Initial Purchasers to purchase and pay for the
Securities as provided herein on the Closing Date shall be subject to the
accuracy of the representations and warranties on the part of the Company and
the Guarantors set forth in Section 1 hereof as of the date hereof and as of the
Closing Date as though then made and to the timely performance by the Company of
its covenants and other obligations hereunder, and to each of the following
additional conditions:

(a) Accountants’ Comfort Letter. On the date hereof, the Initial Purchasers
shall have received from Ernst and Young LLP a “comfort letter” dated the date
hereof addressed to the Initial Purchasers, in form and substance satisfactory
to the Representative, covering the financial information included or
incorporated by reference in the Pricing Disclosure Package and other customary
matters. In addition, on the Closing Date, the Initial Purchasers shall have
received from such accountant, a “bring-down comfort letter” dated the Closing
Date addressed to the Initial Purchasers, in form and substance satisfactory to
the Representative, in the form of the “comfort letter” delivered on the date
hereof, except that (i) it shall cover the financial information in the Final
Offering Memorandum and any amendment or supplement thereto and (ii) procedures
shall be brought down to a date no more than 5 days prior to the Closing Date.

(b) No Material Adverse Change or Ratings Agency Change. For the period from and
after the date of this Agreement and prior to the Closing Date:

(i) no event or condition of a type described in Section 1(h) hereof shall have
occurred or shall exist, which event or condition is not described in or
incorporated by reference in the Offering Memorandum (excluding any amendment or
supplement thereto) and the effect of which in the judgment of the
Representative makes it impracticable or inadvisable to proceed with the
offering, sale or delivery of the Securities on the Closing Date on the terms
and in the manner contemplated by this Agreement and the Offering Memorandum;
and

(ii) there shall not have occurred any downgrading, nor shall any notice have
been given of any intended or potential downgrading or of any review for a
possible change that does not indicate the direction of the possible change, in
the rating accorded the Company or any of its subsidiaries or any of their
securities or indebtedness by any “nationally recognized statistical rating
organization” as such term is defined for purposes of Section 3(a)(62) under the
Exchange Act.

(c) Opinion of Counsel for the Company and the Guarantors. On the Closing Date
the Initial Purchasers shall have received the favorable opinion of Dykema
Gossett PLLC, counsel for the Company and the Guarantors, dated as of such
Closing Date, the form of which is attached as Exhibit A.

(d) Opinion of Counsel for the Initial Purchasers. On the Closing Date the
Initial Purchasers shall have received the favorable opinion of Fried, Frank,
Harris,

 

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Shriver & Jacobson LLP, counsel for the Initial Purchasers, dated as of such
Closing Date, with respect to such matters as may be reasonably requested by the
Initial Purchasers.

(e) Officers’ Certificate. On the Closing Date, the Initial Purchasers shall
have received a written certificate executed by the Vice Chairman and Chief
Financial Officer of the Company and the President, General Counsel or Vice
President - Finance of the Company and an authorized officer of each Guarantor,
dated as of the Closing Date, to the effect set forth in Section 5(b)(ii)
hereof, and further to the effect that:

(i) for the period from and after the date of this Agreement and prior to the
Closing Date there has not occurred any Material Adverse Change;

(ii) the representations, warranties and covenants of the Company and the
Guarantors set forth in Section 1 hereof were true and correct as of the date
hereof and are true and correct as of the Closing Date with the same force and
effect as though expressly made on and as of the Closing Date; and

(iii) each of the Company and the Guarantors has complied with all the
agreements and satisfied all the conditions on its part to be performed or
satisfied at or prior to the Closing Date.

(f) Chief Financial Officer’s Certificate. On the Closing Date the Initial
Purchasers shall have received a written certificate executed by the the Vice
Chairman and Chief Financial Officer of the Company, dated as of the Closing
Date, with respect to certain financial matters as may be reasonably requested
by the Initial Purchasers.

(g) Indenture; Registration Rights Agreement. The Company and the Guarantors
shall have executed and delivered the Indenture, in form and substance
reasonably satisfactory to the Initial Purchasers, and the Initial Purchasers
shall have received executed copies thereof. The Company and the Guarantors
shall have executed and delivered the Registration Rights Agreement, in form and
substance reasonably satisfactory to the Initial Purchasers, and the Initial
Purchasers shall have received such executed counterparts.

(h) Escrow Agreement. On the Closing Date, (i) the Company, the Trustee and the
Escrow Agent shall have executed and delivered the Escrow Agreement, in form and
substance reasonably satisfactory to the Initial Purchasers, and the Initial
Purchasers shall have received executed copies thereof and (ii) the Escrow
Proceeds equal to the Escrow Redemption Amount shall have been deposited with
the Escrow Agent in accordance with the Escrow Agreement.

(i) Additional Documents. On or before the Closing Date, the Initial Purchasers
and counsel for the Initial Purchasers shall have received such information,
documents and opinions as they may reasonably require for the purposes of
enabling them to pass upon the issuance and sale of the Securities as
contemplated herein, or in

 

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order to evidence the accuracy of any of the representations and warranties, or
the satisfaction of any of the conditions or agreements, herein contained.

If any condition specified in this Section 5 is not satisfied when and as
required to be satisfied, this Agreement may be terminated by the Representative
by written notice to the Company at any time on or prior to the Closing Date,
which termination shall be without liability on the part of any party to any
other party, except that Sections 4, 6, 8 and 9 hereof shall at all times be
effective and shall survive such termination.

SECTION 6. Reimbursement of Initial Purchasers’ Expenses. If this Agreement is
terminated by the Representative pursuant to Section 5 or 10(i)(a) or 10(iv)
hereof, including if the sale to the Initial Purchasers of the Securities on the
Closing Date is not consummated because of any refusal, inability or failure on
the part of the Company to perform any agreement herein or to comply with any
provision hereof, the Company agrees to reimburse the Initial Purchasers,
severally, upon demand for all out-of-pocket expenses that shall have been
reasonably incurred by the Initial Purchasers in connection with the proposed
purchase and the offering and sale of the Securities, including, without
limitation, reasonable fees and disbursements of counsel, printing expenses,
travel expenses, postage, facsimile and telephone charges.

SECTION 7. Offer, Sale and Resale Procedures. Each of the Initial Purchasers, on
the one hand, and the Company and each of the Guarantors, on the other hand,
hereby agree to observe the following procedures in connection with the offer
and sale of the Securities:

(a) Offers and sales of the Securities will be made only by the Initial
Purchasers or Affiliates thereof qualified to do so in the jurisdictions in
which such offers or sales are made. Each such offer or sale shall only be made
to persons whom the offeror or seller reasonably believes to be Qualified
Institutional Buyers and in accordance with Rule 144A under the Securities Act
or non-U.S. persons outside the United States to whom the offeror or seller
reasonably believes offers and sales of the Securities may be made in reliance
upon Regulation S and in accordance with applicable laws upon the terms and
conditions set forth in Annex I hereto, which Annex I is hereby expressly made a
part hereof.

(b) The Securities will be offered by approaching prospective Subsequent
Purchasers on an individual basis. No general solicitation or general
advertising (within the meaning of Rule 502 under the Securities Act) will be
used in the United States in connection with the offering of the Securities.

(c) Upon original issuance by the Company, and until such time as the same is no
longer required under the applicable requirements of the Securities Act, the
Notes (and all securities issued in exchange therefor or in substitution
thereof, other than the Exchange Notes) shall bear a legend substantially in the
form contained in “Notice to Investors” in the Preliminary Offering Memorandum
for the time period and upon the other terms stated in the Preliminary Offering
Memorandum.

Following the sale of the Securities by the Initial Purchasers to Subsequent
Purchasers pursuant to the terms hereof, the Initial Purchasers shall not be
liable or responsible to the Com-

 

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pany for any losses, damages or liabilities suffered or incurred by the Company,
including any losses, damages or liabilities under the Securities Act, arising
from or relating to any resale or transfer of any Security by such Subsequent
Purchaser.

SECTION 8. Indemnification.

(a) Indemnification of the Initial Purchasers. Each of the Company and the
Guarantors, jointly and severally, agrees to indemnify and hold harmless each
Initial Purchaser, its affiliates, directors, officers and employees, and each
person, if any, who controls any Initial Purchaser within the meaning of the
Securities Act and the Exchange Act against any loss, claim, damage, liability
or expense, as incurred, to which such Initial Purchaser, affiliate, director,
officer, employee or controlling person may become subject, under the Securities
Act, the Exchange Act or other federal or state statutory law or regulation, or
at common law or otherwise (including in settlement of any litigation, if such
settlement is effected with the written consent of the Company or does not
require the consent of the Company as contemplated in Section 8(d)), insofar as
such loss, claim, damage, liability or expense (or actions in respect thereof as
contemplated below) arises out of or is based upon any untrue statement or
alleged untrue statement of a material fact contained in the Preliminary
Offering Memorandum, the Pricing Supplement, any Company Additional Written
Communication or the Final Offering Memorandum (or any amendment or supplement
thereto), or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and to reimburse each
Initial Purchaser and each such director, officer, employee or controlling
person for any and all expenses (including the reasonable fees and disbursements
of counsel chosen by Merrill Lynch, Pierce, Fenner & Smith Incorporated) as such
expenses are reasonably incurred by such Initial Purchaser or such director,
officer, employee or controlling person in connection with investigating,
defending, settling, compromising or paying any such loss, claim, damage,
liability, expense or action; provided, however, that the foregoing indemnity
agreement shall not apply, with respect to an Initial Purchaser, to any loss,
claim, damage, liability or expense to the extent, but only to the extent,
arising out of or based upon any untrue statement or alleged untrue statement or
omission or alleged omission made in reliance upon and in conformity with
written information furnished to the Company by or on behalf of such Initial
Purchaser through the Representative expressly for use in the Preliminary
Offering Memorandum, the Pricing Supplement, any Company Additional Written
Communication or the Final Offering Memorandum (or any amendment or supplement
thereto). The indemnity agreement set forth in this Section 8(a) shall be in
addition to any liabilities that the Company may otherwise have.

(b) Indemnification of the Company and the Guarantors. Each Initial Purchaser
agrees, severally and not jointly, to indemnify and hold harmless the Company,
each Guarantor, each of their respective Affiliates, directors, officers and
employees and each person, if any, who controls the Company or any Guarantor
within the meaning of the Securities Act or the Exchange Act, against any loss,
claim, damage, liability or expense, as incurred, to which the Company, any
Guarantor or any such Affiliate, director, officer or employee or controlling
person may become subject, under the Securities Act, the Exchange Act, or other
federal or state statutory law or regulation, or at common law or otherwise
(including in settlement of any litigation, if such settlement is effected with
the written consent of such Initial Purchaser or does not re-

 

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quire the consent of such Initial Purchaser as contemplated in Section 8(d)),
insofar as such loss, claim, damage, liability or expense (or actions in respect
thereof as contemplated below) arises out of or is based upon any untrue
statement or alleged untrue statement of a material fact contained in the
Preliminary Offering Memorandum, the Pricing Supplement, any Company Additional
Written Communication or the Final Offering Memorandum (or any amendment or
supplement thereto), or the omission or alleged omission therefrom of a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, 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 the Preliminary Offering
Memorandum, the Pricing Supplement, any Company Additional Written Communication
or the Final Offering Memorandum (or any amendment or supplement thereto), in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of any Initial Purchaser through the Representative
expressly for use therein; and to reimburse the Company, any Guarantor and each
such director, officer or employee or controlling person for any and all
expenses (including the reasonable fees and disbursements of counsel) as such
expenses are reasonably incurred by the Company, any Guarantor or such director,
officer or employee or controlling person in connection with investigating,
defending, settling, compromising or paying any such loss, claim, damage,
liability, expense or action. Each of the Company and the Guarantors hereby
acknowledges that the only information that the Initial Purchasers through the
Representative have furnished to the Company expressly for use in the
Preliminary Offering Memorandum, the Pricing Supplement, any Company Additional
Written Communication or the Final Offering Memorandum (or any amendment or
supplement thereto) are the statements set forth in the sixth paragraph and the
third sentence in the seventh paragraph under the caption “Plan of Distribution”
in the Preliminary Offering Memorandum and the Final Offering Memorandum. The
indemnity agreement set forth in this Section 8(b) shall be in addition to any
liabilities that each Initial Purchaser may otherwise have.

(c) Notifications and Other Indemnification Procedures. Promptly after receipt
by an indemnified party under this Section 8 of notice of the commencement of
any action, such indemnified party will, if a claim in respect thereof is to be
made against an indemnifying party under this Section 8, notify the indemnifying
party in writing of the commencement thereof, but the omission so to notify the
indemnifying party will not relieve it from any liability which it may have to
any indemnified party hereunder for contribution or otherwise under the
indemnity agreement contained in this Section 8 or to the extent it is not
materially prejudiced (through the forfeiture of substantive rights and
defenses) as a result of such failure and shall not relieve the indemnifying
party from any liability that the indemnifying party may have to an indemnified
party otherwise than under the provisions of this Section 8 and Section 9. In
case any such action is brought against any indemnified party and such
indemnified party seeks or intends to seek indemnity from an indemnifying party,
the indemnifying party will be entitled to participate in and, to the extent
that it shall elect, jointly with all other indemnifying parties similarly
notified, by written notice delivered to the indemnified party promptly after
receiving the aforesaid notice from such indemnified party, to assume the
defense thereof with counsel reasonably satisfactory to such indemnified party;
provided, however, if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that a conflict may arise between the positions of the
indemnifying party and the indemnified party in conducting the defense of any
such action or that there may be legal de-

 

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fenses available to it and/or other indemnified parties which are different from
or additional to those available to the indemnifying party, the indemnified
party or parties shall have the right to select separate counsel to assume such
legal defenses and to otherwise participate in the defense of such action on
behalf of such indemnified party or parties. Upon receipt of notice from the
indemnifying party to such indemnified party of such indemnifying party’s
election so to assume the defense of such action and approval by the indemnified
party of counsel, the indemnifying party will not be liable to such indemnified
party under this Section 8 for any legal or other expenses subsequently incurred
by such indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed separate counsel in accordance with the
proviso to the immediately preceding sentence (it being understood, however,
that the indemnifying party shall not be liable for the expenses of more than
one separate counsel (in addition to any local counsel (in each jurisdiction)),
approved by the indemnifying party (Merrill Lynch, Pierce, Fenner & Smith
Incorporated in the case of Sections 8(b) and 9 hereof), representing the
indemnified parties who are parties to such action) or (ii) the indemnifying
party shall not have employed counsel reasonably satisfactory to the indemnified
party to represent the indemnified party within a reasonable time after notice
of commencement of the action, in each of which cases the fees and expenses of
counsel shall be at the expense of the indemnifying party.

(d) Settlements. The indemnifying party under this Section 8 shall not be liable
for any settlement of any proceeding effected without its written consent, which
will not be unreasonably withheld, but if settled with such consent or if there
be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party against any loss, claim, damage, liability or
expense by reason of such settlement or judgment. Notwithstanding the foregoing
sentence, if at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel as contemplated by this Section 8, the indemnifying party agrees that it
shall be liable for any settlement of any proceeding effected without its
written consent if (i) such settlement is entered into more than 30 days after
receipt by such indemnifying party of the aforesaid request and (ii) such
indemnifying party shall not have reimbursed the indemnified party in accordance
with such request prior to the date of such settlement. No indemnifying party
shall, without the prior written consent of the indemnified party, effect any
settlement, compromise or consent to the entry of judgment in any pending or
threatened action, suit or proceeding in respect of which any indemnified party
is or could have been a party and indemnity was or could have been sought
hereunder by such indemnified party, unless such settlement, compromise or
consent (i) includes an unconditional release of such indemnified party from all
liability on claims that are the subject matter of such action, suit or
proceeding and (ii) does not include any statements as to or any findings of
fault, culpability or failure to act by or on behalf of any indemnified party.

SECTION 9. Contribution. If the indemnification provided for in Section 8 hereof
is for any reason held to be unavailable to or otherwise insufficient to hold
harmless an indemnified party in respect of any losses, claims, damages,
liabilities or expenses referred to therein, then each indemnifying party shall
contribute to the aggregate amount paid or payable by such indemnified party, as
incurred, as a result of any losses, claims, damages, liabilities or expenses
referred to therein (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company and the Guarantors, on the one hand,
and the Initial Purchasers, on the other hand, from the offering of the
Securities pursuant to this Agreement or (ii) if the allocation pro-

 

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vided by clause (i) above is not permitted by applicable law, in such proportion
as is appropriate to reflect not only the relative benefits referred to in
clause (i) above but also the relative fault of the Company and the Guarantors,
on the one hand, and the Initial Purchasers, on the other hand, in connection
with the statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company and the Guarantors, on the one
hand, and the Initial Purchasers, on the other hand, in connection with the
offering of the Securities pursuant to this Agreement shall be deemed to be in
the same respective proportions as the total net proceeds from the offering of
the Securities pursuant to this Agreement (before deducting expenses but after
deducting discounts and commissions) received by the Company, and the total
discounts and commissions received by the Initial Purchasers bear to the
aggregate initial offering price of the Securities. The relative fault of the
Company and the Guarantors, on the one hand, and the Initial Purchasers, on the
other hand, shall be determined by reference to, among other things, whether any
such untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact relates to information supplied by the
Company and the Guarantors, on the one hand, or the Initial Purchasers, on the
other hand, and the parties’ relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.

The amount paid or payable by a party as a result of the losses, claims,
damages, liabilities and expenses referred to above shall be deemed to include,
subject to the limitations set forth in Section 8 hereof, any legal or other
fees or expenses reasonably incurred by such party in connection with
investigating or defending any action or claim. The provisions set forth in
Section 8 hereof with respect to notice of commencement of any action shall
apply if a claim for contribution is to be made under this Section 9; provided,
however, that no additional notice shall be required with respect to any action
for which notice has been given under Section 8 hereof for purposes of
indemnification.

The Company, the Guarantors and the Initial Purchasers agree that it would not
be just and equitable if contribution pursuant to this Section 9 were determined
by pro rata allocation (even if the Initial Purchasers 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 in this Section 9.

Notwithstanding the provisions of this Section 9, no Initial Purchaser shall be
required to contribute any amount in excess of the discount and commission
received by such Initial Purchaser in connection with the Securities distributed
by it. No person guilty of fraudulent misrepresentation (within the meaning of
Section 11 of the Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. The Initial
Purchasers’ obligations to contribute pursuant to this Section 9 are several,
and not joint, in proportion to their respective commitments as set forth
opposite their names in Schedule A. For purposes of this Section 9, each
director, officer and employee of an Initial Purchaser and each person, if any,
who controls an Initial Purchaser within the meaning of the Securities Act and
the Exchange Act shall have the same rights to contribution as such Initial
Purchaser, and each director, officer and employee of the Company or any
Guarantor, and each person, if any, who controls the Company or any Guarantor
with the meaning of the Securities Act and the Exchange Act shall have the same
rights to contribution as the Company and the Guarantors.

 

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SECTION 10. Termination of this Agreement. From and after the date hereof and
prior to the Closing Date, this Agreement may be terminated by the
Representative by notice given to the Company if at any time: (i) (a) trading or
quotation in any of the Company’s securities shall have been suspended or
materially limited by the Commission or by the NYSE, or (b) trading in
securities generally on either the Nasdaq Stock Market or the NYSE shall have
been suspended or materially limited, or minimum or maximum prices shall have
been generally established on any of such quotation system or stock exchange by
the Commission or FINRA; (ii) a general banking moratorium shall have been
declared by any federal or New York authorities; (iii) there shall have occurred
any outbreak or escalation of national or international hostilities or any
crisis or calamity, or any change in the United States or international
financial markets, or any substantial change or development involving a
prospective substantial change in United States’ or international political,
financial or economic conditions, as in the judgment of the Representative is
material and adverse and makes it impracticable or inadvisable to proceed with
the offering, sale or delivery of the Securities on the Closing Date in the
manner and on the terms described in the Pricing Disclosure Package or (iv) in
the judgment of the Representative there shall have occurred any Material
Adverse Change. Any termination pursuant to this Section 10 shall be without
liability on the part of (i) the Company or any Guarantor to any Initial
Purchaser, except that the Company and the Guarantors shall be obligated to
reimburse the expenses of the Initial Purchasers pursuant to Sections 4 and 6
hereof, (ii) any Initial Purchaser to the Company, or (iii) any party hereto to
any other party except that the provisions of Sections 8 and 9 hereof shall at
all times be effective and shall survive such termination.

SECTION 11. Representations and Indemnities to Survive Delivery. The respective
indemnities, agreements, representations, warranties and other statements of the
Company, the Guarantors, their respective officers (set forth in a certificate
delivered pursuant hereto) and the several Initial Purchasers set forth in or
made pursuant to this Agreement will remain in full force and effect, regardless
of any investigation made by or on behalf of any Initial Purchaser, the Company,
any Guarantor or any of their respective partners, officers or directors or any
controlling person, or any Affiliate of an Initial Purchaser, the Company or any
Guarantor, as the case may be, and will survive delivery of and payment for the
Securities sold hereunder and any termination of this Agreement.

SECTION 12. Notices. All communications hereunder shall be in writing and shall
be mailed, hand delivered, couriered or facsimiled and confirmed to the parties
hereto as follows:

If to the Initial Purchasers:

Merrill Lynch, Pierce, Fenner & Smith Incorporated

50 Rockefeller Plaza

New York, New York 10020

Facsimile: (212) 901-7897

Attention: HY Legal Department

with a copy to:

Fried, Frank, Harris, Shriver & Jacobson LLP

One New York Plaza

 

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New York, New York 10004

Facsimile: (212) 859-4000

Attention: Stuart Gelfond

If to the Company or the Guarantors:

Sonic Automotive, Inc.

4401 Colwick Road

Charlotte, North Carolina 28211

Facsimile: (704) 536-4665

Attention: Stephen K. Coss, Esq. Senior Vice President and General Counsel

Any party hereto may change the address or facsimile number for receipt of
communications by giving written notice to the others.

SECTION 13. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto, and to the benefit of the indemnified parties
referred to in Sections 8 and 9 hereof, and in each case their respective
successors, and no other person will have any right or obligation hereunder. The
term “successors” shall not include any Subsequent Purchaser or other purchaser
of the Securities as such from any of the Initial Purchasers merely by reason of
such purchase.

SECTION 14. Authority of the Representative. Any action by the Initial
Purchasers hereunder may be taken by Merrill Lynch, Pierce, Fenner & Smith
Incorporated on behalf of the Initial Purchasers, and any such action taken by
Merrill Lynch, Pierce, Fenner & Smith Incorporated shall be binding upon the
Initial Purchasers.

SECTION 15. Partial Unenforceability. The invalidity or unenforceability of any
section, paragraph or provision of this Agreement shall not affect the validity
or enforceability of any other section, paragraph or provision hereof. If any
section, paragraph or provision of this Agreement is for any reason determined
to be invalid or unenforceable, there shall be deemed to be made such minor
changes (and only such minor changes) as are necessary to make it valid and
enforceable.

SECTION 16. Governing Law Provisions. THIS AGREEMENT AND ANY CLAIM, CONTROVERSY
OR DISPUTE ARISING UNDER OR RELATED TO THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK
APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN SUCH STATE WITHOUT REGARD
TO CONFLICTS OF LAW PRINCIPLES THEREOF.

(a) Consent to Jurisdiction. Any legal suit, action or proceeding arising out of
or based upon this Agreement or the transactions contemplated hereby (“Related
Proceedings”) may be instituted in the federal courts of the United States of
America located in the City and County of New York or the courts of the State of
New York in each case located in the City and County of New York (collectively,
the “Specified Courts”), and each party irrevocably submits to the exclusive
jurisdiction (except for suits, actions, or proceedings instituted in regard to
the

 

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enforcement of a judgment of any Specified Court in a Related Proceeding, as to
which such jurisdiction is non-exclusive) of the Specified Courts in any Related
Proceeding. Service of any process, summons, notice or document by mail to such
party’s address set forth above shall be effective service of process for any
Related Proceeding brought in any Specified Court. The parties irrevocably and
unconditionally waive any objection to the laying of venue of any Specified
Proceeding in the Specified Courts and irrevocably and unconditionally waive and
agree not to plead or claim in any Specified Court that any Related Proceeding
brought in any Specified Court has been brought in an inconvenient forum.

SECTION 17. Default of One or More of the Several Initial Purchasers. If any one
or more of the several Initial Purchasers shall fail or refuse to purchase
Securities that it or they have agreed to purchase hereunder on the Closing
Date, and the aggregate principal amount of Securities which such defaulting
Initial Purchaser or Initial Purchasers agreed but failed or refused to purchase
does not exceed 10% of the aggregate principal amount of the Securities to be
purchased on such date, the other Initial Purchasers shall be obligated,
severally, in the proportions that the aggregate principal amount of Securities
set forth opposite their respective names on Schedule A bears to the aggregate
principal amount of Securities set forth opposite the names of all such
non-defaulting Initial Purchasers, or in such other proportions as may be
specified by the Initial Purchasers with the consent of the non-defaulting
Initial Purchasers, to purchase the Securities which such defaulting Initial
Purchaser or Initial Purchasers agreed but failed or refused to purchase on the
Closing Date. If any one or more of the Initial Purchasers shall fail or refuse
to purchase Securities and the aggregate principal amount of Securities with
respect to which such default occurs exceeds 10% of the aggregate principal
amount of Securities to be purchased on the Closing Date, and arrangements
satisfactory to the Initial Purchasers and the Company for the purchase of such
Securities are not made within 48 hours after such default, this Agreement shall
terminate without liability of any party (other than any such defaulting Initial
Purchaser) to any other party except that the provisions of Sections 4, 6, 8 and
9 hereof shall at all times be effective and shall survive such termination. In
any such case either the Initial Purchasers or the Company shall have the right
to postpone the Closing Date, as the case may be, but in no event for longer
than seven days in order that the required changes, if any, to the Final
Offering Memorandum or any other documents or arrangements may be effected.

As used in this Agreement, the term “Initial Purchaser” shall be deemed to
include any person substituted for a defaulting Initial Purchaser under this
Section 17. Any action taken under this Section 17 shall not relieve any
defaulting Initial Purchaser from liability in respect of any default of such
Initial Purchaser under this Agreement.

SECTION 18. No Advisory or Fiduciary Responsibility. Each of the Company and the
Guarantors acknowledges and agrees that: (i) the purchase and sale of the
Securities pursuant to this Agreement, including the determination of the
offering price of the Securities and any related discounts and commissions, is
an arm’s-length commercial transaction between the Company and the Guarantors,
on the one hand, and the several Initial Purchasers, on the other hand, and the
Company and the Guarantors are capable of evaluating and understanding and
understand and accept the terms, risks and conditions of the transactions
contemplated by this Agreement; (ii) in connection with each transaction
contemplated hereby and the process leading to such transaction each Initial
Purchaser is and has been acting solely as a principal and is not the

 

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agent or fiduciary of the Company, and the Guarantors or their respective
affiliates, stockholders, creditors or employees or any other party; (iii) no
Initial Purchaser has assumed or will assume an advisory or fiduciary
responsibility in favor of the Company and the Guarantors with respect to any of
the transactions contemplated hereby or the process leading thereto
(irrespective of whether such Initial Purchaser has advised or is currently
advising the Company and the Guarantors on other matters) or any other
obligation to the Company and the Guarantors except the obligations expressly
set forth in this Agreement; (iv) the several Initial Purchasers and their
respective affiliates may be engaged in a broad range of transactions that
involve interests that differ from those of the Company and the Guarantors and
that the several Initial Purchasers have no obligation to disclose any of such
interests by virtue of any fiduciary or advisory relationship; and (v) the
Initial Purchasers have not provided any legal, accounting, regulatory or tax
advice with respect to the offering contemplated hereby and the Company and the
Guarantors have consulted their own legal, accounting, regulatory and tax
advisors to the extent they deemed appropriate.

This Agreement supersedes all prior agreements and understandings (whether
written or oral) between the Company, the Guarantors and the several Initial
Purchasers, or any of them, with respect to the subject matter hereof. The
Company and the Guarantors hereby waive and release, to the fullest extent
permitted by law, any claims that the Company and the Guarantors may have
against the several Initial Purchasers with respect to any breach or alleged
breach of fiduciary duty with respect to the subject matter hereof.

SECTION 19. General Provisions. This Agreement constitutes the entire agreement
of the parties to this Agreement and supersedes all prior written or oral and
all contemporaneous oral agreements, understandings and negotiations with
respect to the subject matter hereof. This Agreement may be executed in two or
more counterparts, each one of which shall be an original, with the same effect
as if the signatures thereto and hereto were upon the same instrument. Delivery
of an executed counterpart of a signature page to this Agreement by telecopier,
facsimile or other electronic transmission (i.e., a “pdf” or “tif”) shall be
effective as delivery of a manually executed counterpart thereof. This Agreement
may not be amended or modified unless in writing by all of the parties hereto,
and no condition herein (express or implied) may be waived unless waived in
writing by each party whom the condition is meant to benefit. The section
headings herein are for the convenience of the parties only and shall not affect
the construction or interpretation of this Agreement.

 

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If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return to the Company the enclosed copies hereof, whereupon this
instrument, along with all counterparts hereof, shall become a binding agreement
in accordance with its terms.

 

Very truly yours, SONIC AUTOMOTIVE, INC. By:  

/s/ David P. Cosper

  Name:   David P. Cosper   Title:   Vice Chairman and CFO The Guarantors: ADI
OF THE SOUTHEAST LLC (a South Carolina limited liability company) ANTREV, LLC (a
North Carolina limited liability company) ARNGAR, INC. (a North Carolina
corporation) AUTOBAHN, INC. (a California corporation) AVALON FORD, INC. (a
Delaware corporation) CASA FORD OF HOUSTON, INC. (a Texas corporation)
CORNERSTONE ACCEPTANCE CORPORATION (a Florida corporation) FAA AUTO FACTORY,
INC. (a California corporation) FAA BEVERLY HILLS, INC. (a California
corporation) FAA CAPITOL F, INC. (a California corporation)

FAA CAPITOL N, INC. (a California corporation)

FAA CONCORD H, INC. (a California corporation)

FAA CONCORD N, INC. (a California corporation) FAA CONCORD T, INC. (a California
corporation) FAA DUBLIN N, INC. (a California corporation) FAA DUBLIN VWD, INC.
(a California corporation) FAA HOLDING CORP. (a California corporation) FAA LAS
VEGAS H, INC. (a Nevada corporation) FAA MARIN F, INC. (a California
corporation) FAA MARIN LR, INC. (a California corporation) FAA POWAY G, INC. (a
California corporation) FAA POWAY H, INC. (a California corporation) FAA POWAY
T, INC. (a California corporation) FAA SAN BRUNO, INC. (a California
corporation) FAA SANTA MONICA V, INC. (a California corporation) FAA SERRAMONTE,
INC. (a California corporation) FAA SERRAMONTE H, INC. (a California
corporation) FAA SERRAMONTE L, INC. (a California corporation) FAA STEVENS
CREEK, INC. (a California corporation) FAA TORRANCE CPJ, INC. (a California
corporation) FIRSTAMERICA AUTOMOTIVE, INC. (a Delaware corporation)

 

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FORT MILL FORD, INC. (a South Carolina corporation) FORT MYERS COLLISION CENTER,
LLC (a Florida limited liability company) FRANCISCAN MOTORS, INC. (a California
corporation) FRANK PARRA AUTOPLEX, INC. (a Texas corporation) FRONTIER
OLDSMOBILE – CADILLAC, INC. (a North Carolina corporation) HMC FINANCE ALABAMA,
INC. (an Alabama corporation) KRAMER MOTORS INCORPORATED (a California
corporation) L DEALERSHIP GROUP, INC. (a Texas corporation) MARCUS DAVID
CORPORATION (a North Carolina corporation) MASSEY CADILLAC, INC. (a Tennessee
corporation) MASSEY CADILLAC, INC. (a Texas corporation) MOUNTAIN STATES MOTORS
CO., INC. (a Colorado corporation) ROYAL MOTOR COMPANY, INC. (an Alabama
corporation) SAI AL HC1, INC. (an Alabama corporation) SAI AL HC2, INC. (an
Alabama corporation), on behalf of itself and as sole member of:

SAI IRONDALE L, LLC (an Alabama limited liability company)

SAI ANN ARBOR IMPORTS, LLC (a Michigan limited liability company) SAI ATLANTA B,
LLC (a Georgia limited liability company) SAI BEVERLY HILLS INFINITI, INC. (a
California corporation) SAI BROKEN ARROW C, LLC (an Oklahoma limited liability
company) SAI CHARLOTTE M, LLC (a North Carolina limited liability company) SAI
COLUMBUS MOTORS, LLC (an Ohio limited liability company) SAI COLUMBUS VWK, LLC
(an Ohio limited liability company) SAI FL HC1, INC. (a Florida corporation) SAI
FL HC2, INC. (a Florida corporation), on behalf of itself and as sole member of:

SAI CLEARWATER T, LLC (a Florida limited liability company)

SAI FL HC3, INC. (a Florida corporation) SAI FL HC4, INC. (a Florida
corporation) SAI FL HC5, INC. (a Florida corporation) SAI FL HC6, INC. (a
Florida corporation) SAI FL HC7, INC. (a Florida corporation) SAI FORT MYERS B,
LLC (a Florida limited liability company) SAI FORT MYERS H, LLC (a Florida
limited liability company)

 

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SAI FORT MYERS M, LLC (a Florida limited liability company) SAI FORT MYERS VW,
LLC (a Florida limited liability company) SAI IRONDALE IMPORTS, LLC (an Alabama
limited liability company) SAI LANSING CH, LLC (a Michigan limited liability
company) SAI LONG BEACH B, INC. (a California corporation) SAI MD HC1, INC. (a
Maryland corporation), on behalf of itself and as sole member of:

SAI ROCKVILLE L, LLC (a Maryland limited liability company)

SAI MONROVIA B, INC. (a California corporation) SAI MONTGOMERY B, LLC (an
Alabama limited liability company) SAI MONTGOMERY BCH, LLC (an Alabama limited
liability company) SAI MONTGOMERY CH, LLC (an Alabama limited liability company)
SAI NASHVILLE CSH, LLC (a Tennessee limited liability company) SAI NASHVILLE H,
LLC (a Tennessee limited liability company) SAI NASHVILLE M, LLC (a Tennessee
limited liability company) SAI NASHVILLE MOTORS, LLC (a Tennessee limited
liability company) SAI NC HC2, INC. (a North Carolina corporation) SAI OH HC1,
INC. (an Ohio corporation) SAI OK HC1, INC. (an Oklahoma corporation), on behalf
of itself and as sole member of the following entities:

SAI OKLAHOMA CITY C, LLC (an Oklahoma limited liability company)

SAI OKLAHOMA CITY T, LLC (an Oklahoma limited liability company)

SAI TULSA T, LLC (an Oklahoma limited liability company)

SAI OKLAHOMA CITY H, LLC (an Oklahoma limited liability company) SAI ORLANDO CS,
LLC (a Florida limited liability company) SAI PEACHTREE, LLC (a Georgia limited
liability company) SAI PLYMOUTH C, LLC (a Michigan limited liability company)
SAI RIVERSIDE C, LLC (an Oklahoma limited liability company) SAI ROCKVILLE
IMPORTS, LLC (a Maryland limited liability company) SAI SANTA CLARA K, INC. (a
California corporation) SAI TN HC1, LLC (a Tennessee limited liability company)

 

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SAI TN HC2, LLC (a Tennessee limited liability company) SAI TN HC3, LLC (a
Tennessee limited liability company) SAI TULSA N, LLC (an Oklahoma limited
liability company) SAI VA HC1, INC. (a Virginia corporation) SANTA CLARA
IMPORTED CARS, INC. (a California corporation) SONIC AGENCY, INC. (a Michigan
corporation) SONIC AUTOMOTIVE F&I, LLC (a Nevada limited liability company)
SONIC AUTOMOTIVE OF CHATTANOOGA, LLC (a Tennessee limited liability company)
SONIC AUTOMOTIVE OF NASHVILLE, LLC (a Tennessee limited liability company) SONIC
AUTOMOTIVE OF NEVADA, INC. (a Nevada corporation), on behalf of itself and as
sole member of:

SAI GEORGIA, LLC (a Georgia limited liability company), on behalf of itself and
as general partner of the following entities:

SAI GA HC1, LP (a Georgia limited partnership), on behalf of itself and as sole
member of:

SAI STONE MOUNTAIN T, LLC (a Georgia limited liability company)

SONIC PEACHTREE INDUSTRIAL BLVD., L.P. (a Georgia limited partnership)

SONIC – STONE MOUNTAIN T, L.P. (a Georgia limited partnership)

SRE GEORGIA – 1, L.P. (a Georgia limited partnership)

SRE GEORGIA – 2, L.P. (a Georgia limited partnership)

SRE GEORGIA – 3, L.P. (a Georgia limited partnership)

SONIC AUTOMOTIVE SUPPORT, LLC (a Nevada limited liability company) SONIC
AUTOMOTIVE WEST, LLC (a Nevada limited liability company) SONIC AUTOMOTIVE –
1495 AUTOMALL DRIVE, COLUMBUS, INC. (an Ohio corporation) SONIC AUTOMOTIVE –
1720 MASON AVE., DB, INC. (a Florida corporation) SONIC AUTOMOTIVE – 1720 MASON
AVE., DB, LLC (a Florida limited liability company) SONIC AUTOMOTIVE 2424
LAURENS RD., GREENVILLE, INC. (a South Carolina corporation) SONIC AUTOMOTIVE –
2490 SOUTH LEE HIGHWAY, LLC (a Tennessee limited liability company) SONIC
AUTOMOTIVE 2752 LAURENS RD., GREENVILLE, INC. (a South Carolina corporation)
SONIC AUTOMOTIVE – 3700 WEST BROAD STREET, COLUMBUS, INC. (an Ohio corporation)

 

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SONIC AUTOMOTIVE – 4000 WEST BROAD STREET, COLUMBUS, INC. (an Ohio corporation)
SONIC AUTOMOTIVE 5260 PEACHTREE INDUSTRIAL BLVD., LLC (a Georgia limited
liability company) SONIC AUTOMOTIVE – 6008 N. DALE MABRY, FL, INC. (a Florida
corporation) SONIC AUTOMOTIVE – 9103 E. INDEPENDENCE, NC, LLC (a North Carolina
limited liability company) SONIC 2185 CHAPMAN RD., CHATTANOOGA, LLC (a Tennessee
limited liability company) SONIC – BUENA PARK H, INC. (a California corporation)
SONIC – CALABASAS A, INC. (a California corporation) SONIC CALABASAS M, INC. (a
California corporation) SONIC – CALABASAS V, INC. (a California corporation)
SONIC – CAPITOL CADILLAC, INC. (a Michigan corporation) SONIC – CAPITOL IMPORTS,
INC. (a South Carolina corporation) SONIC – CARSON F, INC. (a California
corporation) SONIC – CARSON LM, INC. (a California corporation) SONIC –
CHATTANOOGA D EAST, LLC (a Tennessee limited liability company) SONIC COAST
CADILLAC, INC. (a California corporation) SONIC – DENVER T, INC. (a Colorado
corporation) SONIC – DENVER VOLKSWAGEN, INC. (a Colorado corporation) SONIC
DEVELOPMENT, LLC (a North Carolina limited liability company) SONIC DIVISIONAL
OPERATIONS, LLC (a Nevada limited liability company) SONIC – DOWNEY CADILLAC,
INC. (a California corporation) SONIC – ENGLEWOOD M, INC. (a Colorado
corporation) SONIC ESTORE, INC. (a North Carolina corporation) SONIC – FORT MILL
CHRYSLER JEEP, INC. (a South Carolina corporation) SONIC – FORT MILL DODGE, INC.
(a South Carolina corporation) SONIC FREMONT, INC. (a California corporation)
SONIC – HARBOR CITY H, INC. (a California corporation) SONIC – INTEGRITY DODGE
LV, LLC (a Nevada limited liability company) SONIC – LS, LLC (a Delaware limited
liability company), on behalf of itself and as general partner of:

SONIC – LS CHEVROLET, L.P. (a Texas limited partnership)

SONIC – LAKE NORMAN CHRYSLER JEEP, LLC (a North Carolina limited liability
company) SONIC – LAS VEGAS C EAST, LLC (a Nevada limited liability company)

 

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SONIC – LAS VEGAS C WEST, LLC (a Nevada limited liability company) SONIC – LLOYD
NISSAN, INC. (a Florida corporation) SONIC – LLOYD PONTIAC – CADILLAC, INC. (a
Florida corporation) SONIC – LONE TREE CADILLAC, INC. (a Colorado corporation)
SONIC – MANHATTAN FAIRFAX, INC. (a Virginia corporation) SONIC – MASSEY
CHEVROLET, INC. (a California corporation) SONIC – MASSEY PONTIAC BUICK GMC,
INC. (a Colorado corporation) SONIC – NEWSOME CHEVROLET WORLD, INC. (a South
Carolina corporation) SONIC – NEWSOME OF FLORENCE, INC. (a South Carolina
corporation) SONIC – NORTH CHARLESTON, INC. (a South Carolina corporation) SONIC
– NORTH CHARLESTON DODGE, INC. (a South Carolina corporation) SONIC OF TEXAS,
INC. (a Texas corporation), on behalf of itself and as general partner of the
following entities:

PHILPOTT MOTORS, LTD. (a Texas limited partnership)

SONIC ADVANTAGE PA, LP (a Texas limited partnership)

SONIC AUTOMOTIVE OF TEXAS, L.P. (a Texas limited partnership)

SONIC AUTOMOTIVE – 3401 N. MAIN, TX, L.P. (a Texas limited partnership)

SONIC AUTOMOTIVE – 4701 I-10 EAST, TX, L.P. (a Texas limited partnership)

SONIC AUTOMOTIVE – 5221 I-10 EAST, TX, L.P. (a Texas limited partnership)

SONIC – CADILLAC D, L.P. (a Texas limited partnership)

SONIC – CAMP FORD, L.P. (a Texas limited partnership)

SONIC – CARROLLTON V, L.P. (a Texas limited partnership)

SONIC – CLEAR LAKE N, L.P. (a Texas limited partnership)

SONIC – CLEAR LAKE VOLKSWAGEN, L.P. (a Texas limited partnership)

SONIC – FORT WORTH T, L.P. (a Texas limited partnership)

SONIC – FRANK PARRA AUTOPLEX, L.P. (a Texas limited partnership)

SONIC HOUSTON JLR, LP (a Texas limited partnership)

 

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SONIC HOUSTON LR, LP (a Texas limited partnership)

SONIC – HOUSTON V, L.P. (a Texas limited partnership)

SONIC – JERSEY VILLAGE VOLKSWAGEN, L.P. (a Texas limited partnership)

SONIC – LUTE RILEY, L. P. (a Texas limited partnership)

SONIC – MASSEY CADILLAC, L.P. (a Texas limited partnership)

SONIC – MESQUITE HYUNDAI, L.P. (a Texas limited partnership)

SONIC MOMENTUM B, L.P. (a Texas limited partnership)

SONIC MOMENTUM JVP, L.P. (a Texas limited partnership)

SONIC MOMENTUM VWA, L.P. (a Texas limited partnership)

SONIC – READING, L.P. (a Texas limited partnership)

SONIC – RICHARDSON F, L.P. (a Texas limited partnership)

SONIC – SAM WHITE NISSAN, L.P. (a Texas limited partnership)

SONIC – UNIVERSITY PARK A, L.P. (a Texas limited partnership)

SRE TEXAS – 1, L.P. (a Texas limited partnership)

SRE TEXAS – 2, L.P. (a Texas limited partnership)

SRE TEXAS – 3, L.P. (a Texas limited partnership)

SRE TEXAS – 4, L.P. (a Texas limited partnership)

SRE TEXAS – 5, L.P. (a Texas limited partnership)

SRE TEXAS – 6, L.P. (a Texas limited partnership)

SRE TEXAS – 7, L.P. (a Texas limited partnership)

SRE TEXAS – 8, L.P. (a Texas limited partnership)

SONIC OKEMOS IMPORTS, INC. (a Michigan corporation) SONIC – PLYMOUTH CADILLAC,
INC. (a Michigan corporation) SONIC RESOURCES, INC. (a Nevada corporation) SONIC
– RIVERSIDE AUTO FACTORY, INC. (an Oklahoma corporation) SONIC – SANFORD
CADILLAC, INC. (a Florida corporation) SONIC SANTA MONICA M, INC. (a California
corporation) SONIC SANTA MONICA S, INC. (a California corporation) SONIC –
SATURN OF SILICON VALLEY, INC. (a California corporation) SONIC SERRAMONTE I,
INC. (a California corporation) SONIC – SHOTTENKIRK, INC. (a Florida
corporation) SONIC – SOUTH CADILLAC, INC. (a Florida corporation) SONIC –
STEVENS CREEK B, INC. (a California corporation) SONIC TYSONS CORNER H, INC. (a
Virginia corporation)

 

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SONIC TYSONS CORNER INFINITI, INC. (a Virginia corporation) SONIC – VOLVO LV,
LLC (a Nevada limited liability company) SONIC WALNUT CREEK M, INC. (a
California corporation) SONIC – WEST COVINA T, INC. (a California corporation)
SONIC – WILLIAMS CADILLAC, INC. (an Alabama corporation) SONIC WILSHIRE
CADILLAC, INC. (a California corporation) SRE ALABAMA – 2, LLC (an Alabama
limited liability company) SRE ALABAMA – 3, LLC (an Alabama limited liability
company) SRE ALABAMA – 4, LLC (an Alabama limited liability company) SRE ALABAMA
– 5, LLC (an Alabama limited liability company) SREALESTATE ARIZONA – 1, LLC (an
Arizona limited liability company) SREALESTATE ARIZONA – 2, LLC (an Arizona
limited liability company) SREALESTATE ARIZONA – 3, LLC (an Arizona limited
liability company) SREALESTATE ARIZONA – 4, LLC (an Arizona limited liability
company) SREALESTATE ARIZONA – 5, LLC (an Arizona limited liability company)
SREALESTATE ARIZONA – 6, LLC (an Arizona limited liability company) SREALESTATE
ARIZONA – 7, LLC (an Arizona limited liability company) SRE CALIFORNIA – 1, LLC
(a California limited liability company) SRE CALIFORNIA – 2, LLC (a California
limited liability company) SRE CALIFORNIA – 3, LLC (a California limited
liability company) SRE CALIFORNIA – 4, LLC (a California limited liability
company) SRE CALIFORNIA – 5, LLC (a California limited liability company) SRE
CALIFORNIA – 6, LLC (a California limited liability company) SRE CALIFORNIA – 7
SCB, LLC (a California limited liability company) SRE CALIFORNIA – 8 SCH, LLC (a
California limited liability company) SRE CALIFORNIA – 9 BHB, LLC (a California
limited liability company)

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SRE COLORADO – 1, LLC (a Colorado limited liability company) SRE COLORADO – 2,
LLC (a Colorado limited liability company) SRE COLORADO – 3, LLC (a Colorado
limited liability company) SRE FLORIDA – 1, LLC (a Florida limited liability
company) SRE FLORIDA – 2, LLC (a Florida limited liability company) SRE FLORIDA
– 3, LLC (a Florida limited liability company) SRE GEORGIA 4, LLC (a Georgia
limited liability company) SRE HOLDING, LLC (a North Carolina limited liability
company) SRE MARYLAND – 1, LLC (a Maryland limited liability company) SRE
MARYLAND – 2, LLC (a Maryland limited liability company) SRE MICHIGAN – 3, LLC
(a Michigan limited liability company) SRE NEVADA – 1, LLC (a Nevada limited
liability company) SRE NEVADA – 2, LLC (a Nevada limited liability company) SRE
NEVADA – 3, LLC (a Nevada limited liability company) SRE NEVADA – 4, LLC (a
Nevada limited liability company) SRE NEVADA – 5, LLC (a Nevada limited
liability company) SRE NORTH CAROLINA – 1, LLC (a North Carolina limited
liability company) SRE NORTH CAROLINA – 2, LLC (a North Carolina limited
liability company) SRE NORTH CAROLINA – 3, LLC (a North Carolina limited
liability company) SRE OKLAHOMA – 1, LLC (an Oklahoma limited liability company)
SRE OKLAHOMA – 2, LLC (an Oklahoma limited liability company) SRE OKLAHOMA – 3,
LLC (an Oklahoma limited liability company) SRE OKLAHOMA – 4, LLC (an Oklahoma
limited liability company) SRE OKLAHOMA – 5, LLC (an Oklahoma limited liability
company) SRE SOUTH CAROLINA – 2, LLC (a South Carolina limited liability
company) SRE SOUTH CAROLINA – 3, LLC (a South Carolina limited liability
company) SRE SOUTH CAROLINA – 4, LLC (a South Carolina limited liability
company) SRE TENNESSEE – 1, LLC (a Tennessee limited liability company) SRE
TENNESSEE – 2, LLC (a Tennessee limited liability company) SRE TENNESSEE – 3,
LLC (a Tennessee limited liability company)

[Signature Page to Purchase Agreement]

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SRE TENNESSEE – 4, LLC (a Tennessee limited liability company) SRE TENNESSEE –
5, LLC (a Tennessee limited liability company) SRE TENNESSEE – 6, LLC (a
Tennessee limited liability company) SRE TENNESSEE – 7, LLC (a Tennessee limited
liability company) SRE TENNESSEE – 8, LLC (a Tennessee limited liability
company) SRE TENNESSEE – 9, LLC (a Tennessee limited liability company) SRE
TEXAS 9, LLC (a Texas limited liability company) SRE VIRGINIA – 1, LLC (a
Virginia limited liability company) SRE VIRGINIA – 2, LLC (a Virginia limited
liability company) STEVENS CREEK CADILLAC, INC. (a California corporation) TOWN
AND COUNTRY FORD, INCORPORATED (a North Carolina corporation) VILLAGE IMPORTED
CARS, INC. (a Maryland corporation) WINDWARD, INC. (a Hawaii corporation) Z
MANAGEMENT, INC. (a Colorado corporation)

 

By:  

/s/ David P. Cosper

  Name:   David P. Cosper   Title:   Vice President Sonic Automotive, Inc., as
sole member of the following entities:  

ONTARIO L, LLC (a California limited liability company)

 

SAI COLUMBUS T, LLC (an Ohio limited liability company)

By:  

/s/ David P. Cosper

  Name:   David P. Cosper   Title:   Vice Chairman and Chief Financial Officer

[Signature Page to Purchase Agreement]

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The foregoing Purchase Agreement is hereby confirmed and accepted by the Initial
Purchasers as of the date first above written.

 

MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED

Acting on behalf of itself

and as the Representative of

the several Initial Purchasers

By:     Merrill Lynch, Pierce, Fenner & Smith Incorporated   By:  

/s/ Matt Holbrook

    Authorized Signatory

[Signature Page to Purchase Agreement]

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SCHEDULE A

 

Initial Purchasers

   Aggregate
Principal
Amount of
Securities to be
Purchased  

Merrill Lynch, Pierce, Fenner & Smith Incorporated

   $ 80,000,000   

J.P. Morgan Securities LLC.

     62,000,000   

Wells Fargo Securities, LLC.

     46,000,000   

U.S. Bancorp Investments, Inc.

     6,000,000   

Comerica Securities, Inc.

     6,000,000      

 

 

 

Total

   $ 200,000,000      

 

 

 

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EXHIBIT A

Opinion of counsel for the Company to be delivered pursuant to Section 5 of the
Purchase Agreement.

(i) The Company is a corporation validly existing and in good standing under the
laws of the State of Delaware.

(ii) The Company has the corporate power to own, lease and operate its
properties and conduct its business as described in the Pricing Disclosure
Package and the Final Offering Memorandum and to enter into and perform its
obligations under the Purchase Agreement, the Registration Rights Agreement, the
Escrow Agreement, the Indenture and the Notes.

(iii) The Company is qualified as a foreign corporation to transact business in
the State of North Carolina.

(iv) Each Significant Subsidiary is a corporation, limited liability company or
limited partnership validly existing and, if applicable, in good standing under
the laws of the jurisdiction of its formation, has the corporate, limited
liability company or limited partnership power to own, lease and operate its
properties and to conduct its business as described in the Pricing Disclosure
Package and the Final Offering Memorandum and to enter into and perform its
obligations under the Purchase Agreement, the Registration Rights Agreement, the
Escrow Agreement, the Indenture and the Guarantees.

(v) The Purchase Agreement has been duly authorized, executed and delivered by
the Company and each Guarantor and constitutes a valid and binding agreement of
the Company and each of the Guarantors, enforceable against the Company and each
of the Guarantors in accordance with its terms.

(vi) The Registration Rights Agreement has been duly authorized, executed and
delivered by the Company and each of the Guarantors and constitutes a valid and
binding agreement of the Company and each of the Guarantors, enforceable against
the Company and each of the Guarantors in accordance with its terms.

(vii) The Escrow Agreement has been duly authorized, executed and delivered by
the Company and constitutes a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms.

(viii) The Indenture has been duly authorized, executed and delivered by the
Company and each of the Guarantors and constitutes a valid and binding agreement
of the Company and each of the Guarantors, enforceable against the Company and
each of the Guarantors in accordance with its terms.

(ix) The Notes are in the form contemplated by the Indenture, have been duly
authorized by the Company for issuance and sale pursuant to the Purchase
Agreement and the Indenture and, when executed by the Company, authenticated by
the Trustee in the manner provided in

 

Exhibit A-1

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the Indenture and delivered against payment of the purchase price therefor, will
constitute valid and binding obligations of the Company, enforceable against the
Company in accordance with their terms and will be entitled to the benefits of
the Indenture.

(x) Issuance of the Exchange Securities has been duly authorized by the Company
and each of the Guarantors, respectively.

(xi) The Guarantees of the Notes are in the form contemplated by the Indenture,
have been duly authorized for issuance pursuant to the Purchase Agreement and
the Indenture and, when the Notes and the Guarantees have been executed by the
Company and each of the Guarantors, as applicable, authenticated in the manner
provided for in the Indenture and delivered against payment of the purchase
price therefor, will constitute valid and binding agreements of each of the
Guarantors, enforceable against each of the Guarantors in accordance with their
terms and will be entitled to the benefits of the Indenture.

(xii) The Securities, the Indenture, the Registration Rights Agreement and the
Escrow Agreement conform in all material respects to the descriptions thereof
contained in the Pricing Disclosure Package and the Final Offering Memorandum.

(xiii) The documents incorporated by reference in the Pricing Disclosure Package
and the Final Offering Memorandum (other than the financial statements and the
notes and schedules thereto and other financial or accounting data or
information included therein or omitted therefrom, as to which we express no
opinion), when they were filed with the Commission, complied as to form in all
material respects with the requirements of the Exchange Act and the rules and
regulations of the Commission.

(xiv) The descriptions in the Pricing Disclosure Package or the Final Offering
Memorandum (including the documents incorporated by reference therein) of
statutes, legal, governmental and regulatory proceedings and contracts and other
documents to which the Company is a party or subject to are accurate in all
material respects; the statements in the Pricing Disclosure Package and the
Final Offering Memorandum under the captions “Description of Other
Indebtedness,” “Description of the Notes,” “Material United States Federal Tax
Considerations” and “Notice to Investors,” insofar as such statements constitute
matters of law or regulation, summaries of legal matters, the Company’s charter
or by-law provisions, documents or legal proceedings, or legal conclusions,
fairly present and summarize, in all material respects, the matters described
therein.

(xv) No consent, approval, authorization or other order of, or registration or
filing with, any court or other governmental or regulatory authority or agency,
other than such as may be required under applicable securities laws of the
various jurisdictions in which the Securities will be offered or sold, as to
which we express no opinion, is required for the execution, delivery or
performance of the Purchase Agreement, the Registration Rights Agreement, the
Escrow Agreement or the Indenture by the Company and each of the Guarantors, or
the issuance and delivery of the Securities to the Initial Purchasers or the
resale of the Securities by the Initial Purchasers in accordance with the
Purchase Agreement.

 

Exhibit A-2

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(xvi) Except as disclosed in the Pricing Disclosure Package or the Final
Offering Memorandum, the execution and delivery of the Purchase Agreement, the
Registration Rights Agreement, the Escrow Agreement, the Securities and the
Indenture by the Company and the Guarantors and the performance by the Company
and the Guarantors of their obligations thereunder: (a) will not result in any
violation of the provisions of the articles or certificate of incorporation,
articles of organization, certificate of limited partnership, bylaws, operating
or limited liability company agreement or limited partnership agreement, as
applicable, of the Company or any Significant Subsidiary; (b) will not
constitute a breach of, or Default or a Debt Repayment Triggering Event under,
or result in the creation or imposition of any lien, charge or encumbrance upon
any property or assets of the Company or any Guarantor pursuant to, any
indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument identified on Schedule A to this opinion (the “Existing Instruments”)
(except with respect to matters which require the performance of a mathematical
calculation or the making of a financial or accounting determination, as to
which we express no opinion); or (c) will not result in any violation of any
judgment, order or regulation of any court or arbitrator or governmental or
regulatory authority identified to us in the officer’s certificate attached as
Exhibit A hereto (the “Officer’s Certificate”) or any law or statute, except, in
the case of clauses (b) and (c) above, for such breach, violation or default
that would not, individually or in the aggregate, have a Material Adverse Effect

(xvii) Based as to factual matters on the factual certifications in the
Officer’s Certificate, neither the Company nor any Guarantor is, or after
receipt of payment for the Securities and after giving effect to the application
of the proceeds received by the Company from the offer and sale of the
Securities (as described in the Pricing Disclosure Package or Final Offering
Memorandum), will be, required to register as an “investment company” within the
meaning of the Investment Company Act of 1940, as amended.

(xviii) Assuming (i) that the Company and each of the Guarantors has complied,
and will comply fully with each of its respective covenants contained in
Sections 2 and 3 of the Purchase Agreement, (ii) that each of the Initial
Purchasers has complied with the following: (A) none of the Initial Purchasers
or any person acting on their behalf has engaged or will engage, in connection
with the offering of the Securities, in any form of general solicitation or
general advertising within the meaning of Rule 502 under the 1933 Act, (B) with
respect to those Securities sold in reliance upon Regulation S, none of the
Initial Purchasers or any person acting on their behalf has engaged or will
engage in any directed selling efforts within the meaning of Regulation S, and
(C) the Initial Purchasers and any person acting on their behalf has complied
and will comply with the offering restrictions set forth in Regulation S, and
(iii) compliance with the offering provisions described in the Offering
Memorandum, the Company is not required to register the Securities under the
1933 Act or to qualify the Indenture under the Trust Indenture Act of 1939, as
amended, in connection with the sale and initial resale of the Securities in the
manner and under the circumstances contemplated by the Purchase Agreement.

We do not represent the Company or any Guarantor in any action, suit or
proceeding before any court, governmental agency or arbitrator, pending or
overtly threatened in writing against the Company or any Guarantor which,
individually or in the aggregate, if determined ad-

 

Exhibit A-3

--------------------------------------------------------------------------------

versely to the Company or such Guarantor, could reasonably be expected to have a
Material Adverse Effect.

In rendering such opinion, such counsel may rely as to matters involving the
application of laws of any jurisdiction other than the General Corporation Law
of the State of Delaware, the laws of the State of New York or the federal law
of the United States, to the extent they deem proper and specified in such
opinion, upon the opinion (which shall be dated the Closing Date shall be
satisfactory in form and substance to the Initial Purchasers, shall expressly
state that the Initial Purchasers may rely on such opinion as if it were
addressed to them and shall be furnished to the Initial Purchasers) of other
counsel of good standing whom they believe to be reliable and who are
satisfactory to counsel for the Initial Purchasers; provided, however, that such
counsel shall further state that they believe that they and the Initial
Purchasers are justified in relying upon such opinion of other counsel, and as
to matters of fact, to the extent they deem proper, on certificates of
responsible officers of the Company and public officials.

In addition, such counsel shall state that they have participated in conferences
with officers and other representatives of the Company, representatives of the
independent public or certified public accountants for the Company and with
representatives of the Initial Purchasers at which the contents of the Pricing
Disclosure Package and the Final Offering Memorandum and related matters were
discussed and, although such counsel is not passing upon and does not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Pricing Disclosure Package or the Final Offering Memorandum
(other than as specified above), on the basis of the foregoing, nothing has come
to their attention which would lead them to believe that the Pricing Disclosure
Package, as of the Time of Sale, or that the Final Offering Memorandum, as of
its date or at the Closing Date, contained or contains an untrue statement of a
material fact or omitted or omits to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading (it being understood that such counsel need express no
belief as to the financial statements or other financial data derived therefrom,
included in the Pricing Disclosure Package or the Final Offering Memorandum or
any amendments or supplements thereto).

 

Exhibit A-4

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ANNEX I

Resale Pursuant to Regulation S or Rule 144A. Each Initial Purchaser understands
that:

Such Initial Purchaser agrees that it has not offered or sold and will not offer
or sell the Securities in the United States or to, or for the benefit or account
of, a U.S. Person (other than a distributor), in each case, as defined in
Rule 902 of Regulation S (i) as part of its distribution at any time and
(ii) otherwise until 40 days after the later of the commencement of the offering
of the Securities pursuant hereto and the Closing Date, other than in accordance
with Regulation S or another exemption from the registration requirements of the
Securities Act. Such Initial Purchaser agrees that, during such 40-day
restricted period, it will not cause any advertisement with respect to the
Securities (including any “tombstone” advertisement) to be published in any
newspaper or periodical or posted in any public place and will not issue any
circular relating to the Securities, except such advertisements as are permitted
by and include the statements required by Regulation S.

Such Initial Purchaser agrees that, at or prior to confirmation of a sale of
Securities by it to any distributor, dealer or person receiving a selling
concession, fee or other remuneration during the 40-day restricted period
referred to in Rule 903 of Regulation S, it will send to such distributor,
dealer or person receiving a selling concession, fee or other remuneration a
confirmation or notice to substantially the following effect:

“The Securities covered hereby have not been registered under the U.S.
Securities Act of 1933, as amended (the “Securities Act”), and may not be
offered and sold within the United States or to, or for the account or benefit
of, U.S. persons (i) as part of your distribution at any time or (ii) otherwise
until 40 days after the later of the date the Securities were first offered to
persons other than distributors in reliance upon Regulation S and the Closing
Date, except in either case in accordance with Regulation S under the Securities
Act (or in accordance with Rule 144A under the Securities Act or to accredited
investors in transactions that are exempt from the registration requirements of
the Securities Act), and in connection with any subsequent sale by you of the
Securities covered hereby in reliance on Regulation S under the Securities Act
during the period referred to above to any distributor, dealer or person
receiving a selling concession, fee or other remuneration, you must deliver a
notice to substantially the foregoing effect. Terms used above have the meanings
assigned to them in Regulation S under the Securities Act.”

 

Annex I-1