STOCK PURCHASE AGREEMENT
DATED: FEBRUARY 7, 1997
AMONG
UNITED AUTO GROUP, INC.
UAG NEVADA, INC.,
XXXX XXXXX NISSAN, INC.,
THE XXXX X. XXXXX FAMILY TRUST
RESTATED DECEMBER 18, 1990
AND
XXXX X. XXXXX
TABLE OF CONTENTS
Page
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PURCHASE AND SALE OF SHARES................................................. 2
CERTAIN DEFINITIONS......................................................... 2
PURCHASE AND SALE OF THE SHARES............................................. 3
NET WORTH ADJUSTMENT........................................................ 5
STOCK PRICE ADJUSTMENT...................................................... 7
REPRESENTATIONS AND WARRANTIES.............................................. 8
ORGANIZATION AND GOOD STANDING.............................................. 8
SUBSIDIARIES................................................................ 8
CAPITALIZATION.............................................................. 8
AUTHORITY; APPROVALS AND CONSENTS........................................... 9
FINANCIAL STATEMENTS........................................................10
ABSENCE OF UNDISCLOSED LIABILITIES..........................................11
ABSENCE OF MATERIAL ADVERSE EFFECT; CONDUCT OF BUSINESS.....................11
TAXES.......................................................................13
LEGAL MATTERS...............................................................14
PROPERTY....................................................................14
ENVIRONMENTAL MATTERS.......................................................15
INVENTORIES.................................................................18
ACCOUNTS RECEIVABLE.........................................................18
INSURANCE...................................................................19
CONTRACTS; ETC..............................................................19
LABOR RELATIONS.............................................................20
EMPLOYEE BENEFIT PLANS......................................................21
OTHER BENEFIT AND COMPENSATION PLANS OR ARRANGEMENTS........................23
TRANSACTIONS WITH INSIDERS..................................................24
PROPRIETY OF PAST PAYMENTS..................................................25
INTEREST IN COMPETITORS.....................................................25
BROKERS.....................................................................26
ACCOUNTS....................................................................26
DISCLOSURE..................................................................26
NET WORTH...................................................................26
REPRESENTATIONS AND WARRANTIES..............................................26
OWNERSHIP OF SHARES; TITLE..................................................26
AUTHORITY...................................................................27
REAL PROPERTY AND IMPROVEMENTS..............................................27
INVESTMENT INTENT...........................................................28
QUALIFICATION OF STOCKHOLDER................................................28
REPRESENTATIONS AND WARRANTIES OF UAG.......................................29
ORGANIZATION AND GOOD STANDING..............................................29
SUBSIDIARIES................................................................29
CAPITALIZATION..............................................................29
SEC Filings.................................................................30
AUTHORITY; APPROVALS AND CONSENTS...........................................30
FINANCIAL STATEMENTS........................................................31
TAXES.......................................................................32
DISCLOSURE..................................................................32
COVENANTS AND ADDITIONAL AGREEMENTS.........................................33
ACCESS; CONFIDENTIALITY.....................................................33
FURNISHING INFORMATION; ANNOUNCEMENTS.......................................34
ANTITRUST IMPROVEMENTS ACT COMPLIANCE.......................................34
CERTAIN CHANGES AND CONDUCT OF BUSINESS.....................................35
NO INTERCOMPANY PAYABLES OR RECEIVABLES.....................................38
NEGOTIATIONS................................................................38
CONSENTS; COOPERATION.......................................................38
ADDITIONAL AGREEMENTS.......................................................39
INTERIM FINANCIAL STATEMENTS................................................39
NOTIFICATION OF CERTAIN MATTERS.............................................39
ASSURANCE BY THE STOCKHOLDER AND XX. XXXXX..................................40
SECTION 338(H)(10) ELECTION.................................................40
CONDITIONS TO THE OBLIGATIONS...............................................42
REPRESENTATIONS AND WARRANTIES; AGREEMENTS; COVENANTS.......................42
AUTHORIZATION; CONSENTS.....................................................43
OPINIONS OF THE COMPANY'S AND THE STOCKHOLDER'S COUNSEL.....................43
ABSENCE OF LITIGATION.......................................................43
NO MATERIAL ADVERSE EFFECT..................................................44
NET WORTH...................................................................44
COMPLETION OF DUE DILIGENCE.................................................44
NET INCOME..................................................................45
LEASE.......................................................................45
BOARD APPROVAL..............................................................45
CERTIFICATES................................................................45
LEGAL MATTERS...............................................................45
APPROVAL OF MANUFACTURERS AND DISTRIBUTORS..................................45
ENVIRONMENTAL LAWS..........................................................45
NONDISTURBANCE AGREEMENT....................................................45
TITLE INSURANCE.............................................................46
SCHEDULES...................................................................46
LEASE TERMINATION AGREEMENT/MEMORANDUM OF LEASE.............................46
CONDITIONS TO THE OBLIGATIONS OF............................................46
REPRESENTATIONS AND WARRANTIES; AGREEMENTS..................................46
AUTHORIZATION OF THE AGREEMENT, CONSENTS....................................47
OPINIONS OF UAG'S AND SUB'S COUNSEL.........................................48
ABSENCE OF LITIGATION.......................................................48
CERTIFICATES................................................................48
LEGAL MATTERS...............................................................48
SCHEDULES...................................................................49
TERMINATION.................................................................49
TERMINATION.................................................................49
EFFECT OF TERMINATION.......................................................50
INDEMNIFICATION.............................................................50
INDEMNIFICATION BY THE STOCKHOLDER..........................................50
INDEMNIFICATION BY UAG AND SUB..............................................51
PROCEDURES..................................................................51
OFFSET......................................................................52
REMEDIES....................................................................53
DEFINITIONS.................................................................53
MISCELLANEOUS...............................................................53
SURVIVAL OF PROVISIONS......................................................53
FEES AND EXPENSES...........................................................53
HEADINGS....................................................................54
NOTICES.....................................................................54
ASSIGNMENT..................................................................55
ENTIRE AGREEMENT............................................................55
WAIVER AND AMENDMENTS.......................................................56
COUNTERPARTS................................................................56
ACCOUNTING TERMS............................................................56
SCHEDULES...................................................................56
SEVERABILITY................................................................56
REMEDIES....................................................................57
GOVERNING LAW...............................................................57
TIME IS OF THE ESSENCE......................................................57
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT, dated February __, 1997, is by and
among United Auto Group, Inc., a Delaware corporation ("UAG"), UAG Nevada,
Inc., a Delaware corporation ("UAG Nevada" or "Sub"), Xxxx Xxxxx Nissan, Inc.,
a Nevada corporation (the "Company"), The Xxxx X. Xxxxx Family Trust Restated
December 18, 1990 (the "Stockholder") and Xxxx X. Xxxxx, an individual resident
of the state of Nevada ("Xx. Xxxxx").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, UAG Nevada is a wholly-owned subsidiary of UAG;
WHEREAS, the Company operates a franchise automobile dealership and
related businesses in Las Vegas, Nevada;
WHEREAS, the Stockholder owns all of the issued and outstanding shares
of the capital stock of the Company (the "Shares");
WHEREAS, UAG Nevada desires to purchase all of the Shares from the
Stockholder, and the Stockholder desires to sell the Shares to UAG Nevada (in
each case upon the terms and subject to the conditions set forth in this
Agreement), such that immediately after giving effect to such purchase and
sale, UAG Nevada will own one hundred percent (100%) of the issued and
outstanding shares of the capital stock of the Company, on a fully diluted
basis;
NOW, THEREFORE, in consideration of the mutual terms, conditions and
other agreements set forth herein, the parties hereto hereby agree as follows:
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PURCHASE AND SALE OF SHARES
.1 CERTAIN DEFINITIONS.
As used in this Agreement, the following terms shall have the
following meanings:
(a) "Affiliate" of a specified Person shall mean a Person that
directly or indirectly, through one or more intermediaries, controls, or is
controlled by, or is under common control with, the Person specified, and in
the case of a specified Person who is a natural person, his or her spouse,
issue, parents, estate and any trust entirely for the benefit of his or her
spouse and/or issue.
(b) "Business Day" shall mean any day excluding Saturday, Sunday and
any day which is a legal holiday under Federal law.
(c) "Closing Date" shall have the meaning ascribed to it in Section
1.2(b).
(d) "GAAP" shall mean generally accepted accounting principles which
are in effect in the United States on the Closing Date.
(e) "Knowledge" shall mean, with respect to the Stockholders, that the
Stockholder knows, or in the exercise of reasonable diligence, would or should
have known of the particular matter referred to and, with respect to UAG, that
the President of UAG knows or, in the exercise of reasonable diligence, would
or should have known of the particular matter referred to.
(f) "Lease" shall have the meaning ascribed to it in Section
1.2(c)(iii).
(g) "Liens" shall mean any mortgages, pledges, title defects or
objections, liens, claims, security interests, prior assignments, conditional
and installment sale agreements, encumbrances or charges of any kind.
(h) "Material Adverse Effect" shall mean any change in, or effect on,
the Company (including the business thereof) which is, or might be, materially
adverse to the business, operations, assets, condition (financial or otherwise)
or prospects of the Company.
(i) "Person" shall mean and include an individual, corporation,
partnership, limited liability company, joint venture, association, trust, any
other incorporated or unincorporated organization or entity and a governmental
entity or any department or agency thereto.
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(j) "Pre-Tax Earnings" shall mean net earnings (or losses), before
taxes, computed in accordance with GAAP.
(k) "UAG Common Stock" shall mean the shares of common stock, par
value $.0001 per share of UAG.
(l) "UAG Market Value" shall mean the arithmetic average of the daily
closing price per share of UAG Common Stock, rounded to four decimal places, as
reported on the New York Stock Exchange Composite Tape for each of the twenty
(20) consecutive trading days ending (and including) the trading day that
occurs one trading day prior to the date on which the UAG Market Value is to be
determined.
.2 PURCHASE AND SALE OF THE SHARES.
(a) Purchase and Sale. Upon the terms and subject to the conditions
set forth in this Agreement, the Stockholder shall sell to Sub, and Sub shall
purchase from the Stockholder, the Shares for an aggregate purchase price (the
"Purchase Price") equal to (i) Seven Million Dollars ($7,000,000) (the "Base
Price"), which Base Price is subject to adjustment after Closing as provided in
Sections 1.3 below; and (ii) shares of UAG Common Stock (the "UAG Shares")
having an aggregate UAG Market Value on the Closing Date equal to Five Million
Five Hundred Thousand Dollars ($5,500,000). At the Closing referred to in
Section 1.2(b) hereof:
(i) the Stockholder shall sell, assign, transfer and deliver to Sub
the Shares representing 100% of the issued and outstanding capital stock of
the Company and deliver the certificates representing such Shares
accompanied by stock powers duly executed in blank; and
(ii) Sub shall accept and purchase the Shares from the Stockholder and
in payment therefor shall (A) deliver to the Stockholder immediately
available funds in an aggregate amount equal to the Base Price by wire
transfer to an account designated in writing by the Stockholder or by
certified funds; and (B) deliver to the Stockholder the certificates
representing the UAG Shares.
(b) Closing. Subject to the conditions set forth in this Agreement,
the purchase and sale of the Shares pursuant to this Agreement (the "Closing")
shall take place as soon as practicable following the date on which all
conditions to the obligations of the parties hereunder (other than those
requiring an exchange of certificates, opinions or other documents, or the
taking of other action, at the Closing) have been satisfied or waived, but no
later than April 30, 1997. The date on which the Closing occurs is herein
referred to as the "Closing Date".
(c) Deliveries at the Closing. Subject to the conditions set forth in
this Agreement, at the Closing:
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(i) the Stockholder shall deliver to Sub certificates representing the
Shares bearing the restrictive legend customarily placed on securities that
have not been registered under applicable federal and state securities laws
and accompanied by stock powers as required by Section 1.2(a)(i) hereof,
and any other documents that are necessary to transfer to Sub good title to
all the Shares, and (B) all opinions, certificates and other instruments
and documents required to be delivered by the Company, the Stockholder or
Xx. Xxxxx at or prior to the Closing or otherwise required in connection
herewith;
(ii) the Sub shall (A) pay to the Stockholder funds and deliver the
certificates representing the UAG Shares as required by Section 1.2(a)(ii)
hereof; and (B) deliver to the Stockholder all opinions, certificates and
other instruments and documents required to be delivered by UAG or Sub at
or prior to the Closing or otherwise required in connection herewith; and
(iii) the Company and the Stockholder shall enter into a lease for the
real property used in the business of the Company in a form mutually
acceptable to the parties (the "Lease"). The Lease shall be for a twenty
(20) year term commencing on the Closing Date. The initial annual lease
rate shall be the lease rate paid by the Company for the year ending
December 31, 1996 (unless such lease rate exceeds the fair market rate in
which case the initial lease rate shall be the fair market rate for the
year ending December 31, 1996)("Base Rate"), payable monthly, and (x) on
the fifth anniversary of the Closing Date (the "Fifth Anniversary") shall
increase to an amount equal to the Base Rate plus an amount equal to a
percentage of the Base Rate, which percentage shall be the percentage
increase in the Consumer Price Index published from time to time by the
United States Department of Labor ("CPI") between the Closing Date and the
Fifth Anniversary (such increased lease rate hereinafter the "Increased
Rate"), and (y) on the tenth anniversary of the Closing Date (the "Tenth
Anniversary") shall increase to an amount equal to the Increased Rate plus
an amount equal to a percentage of the Increased Rate, which percentage
shall be the percentage increase in the CPI between the Fifth Anniversary
and the Tenth Anniversary (such increased lease rate being referred to as
the "Second Increased Rate"), and (z) on the fifteenth anniversary of the
Closing Date (the "Fifteenth Anniversary") shall increase to an amount
equal to the Second Increased Rate plus an amount equal to a percentage of
the Second Increased Rate, which percentage shall be the percentage
increase in the CPI between the Tenth Anniversary and the Fifteenth
Anniversary (such increased lease rate being referred to as the "Third
Increased Rate"). The lease shall provide the Company with the option to
extend the lease term for an additional five-year period (the "First
Option") commencing on the twentieth
4
anniversary of the Closing Date ("Twentieth Anniversary") at a rate equal
to the Third Increased Rate plus a percentage of the Third Increased Rate,
which percentage shall be the percentage increase in the CPI between the
Fifteenth Anniversary and the Twentieth Anniversary (such increased lease
rate being referred to as the "Fourth Increased Rate"). The lease shall
further provide that, in the event the Company exercises the First Option,
the Company shall have the option to extend the lease term for an
additional five-year period commencing with the twenty-fifth anniversary of
the Closing Date ("Twenty-Fifth Anniversary") at a rate equal to the Fourth
Increased Rate plus a percentage of the Fourth Increased Rate, which
percentage shall be the percentage increase in the CPI between the
Twentieth Anniversary and the Twenty-Fifth Anniversary.
3. NET WORTH ADJUSTMENT.
(a) On the Closing Date, or as soon as practicable after the Closing
Date, the Stockholder shall deliver to UAG a balance sheet of the Company dated
as of the Closing Date (such balance sheet so delivered is referred to herein
as the "Closing Date Balance Sheet"). The Closing Date Balance Sheet shall be
prepared in good faith on the same basis and in accordance with the accounting
principles, methods and practices used in preparing the Company Financial
Statements (as defined in Section 2.5 hereof) (such accounting principles,
methods and practices and such procedures, are referred to herein as the
"Accounting Principles"). In connection with the preparation of the Closing
Date Balance Sheet, the Stockholder and the Company shall permit the Reviewer
(as defined below) and other representatives of UAG to conduct a physical
inventory at each location where inventory is held by the Company.
(b) Within sixty (60) days after delivery of the Closing Date Balance
Sheet, (i) Coopers & Xxxxxxx or such other accounting firm (the "Reviewer") as
may be selected by UAG shall audit or otherwise review the Closing Date Balance
Sheet in such manner as UAG and the Reviewer deem appropriate, and (ii) UAG
shall deliver such reviewed balance sheet (the "Reviewed Balance Sheet"),
together with the Reviewer's report thereon, to the Stockholder. The Reviewed
Balance Sheet (i) shall be prepared on the same basis and in accordance with
the Accounting Principles and (ii) shall include a schedule showing the
computation of the Final Net Worth (as defined in Section 1.3(g)(i) hereof),
computed in accordance with the definition of Net Worth set forth in Section
1.3(g)(ii) hereof. UAG and the Reviewer shall have the opportunity to consult
with the Stockholder, the Company and each of the accountants and other
representatives of the Stockholder and the Company and to examine the work
papers, schedules and other documents prepared by the Stockholder, the Company
and each of such accountants and other representatives during the preparation
of the Closing Date Balance Sheet. The Stockholder and the Stockholder's
independent public accountants
5
shall have the opportunity to consult with the Reviewer and to examine the work
papers, schedules and other documents prepared by the Reviewer during the
preparation of the Reviewed Balance Sheet.
(c) The Stockholder shall have a period of forty-five (45) days after
delivery of the Reviewed Balance Sheet to present in writing to UAG all
objections the Stockholder may have to any of the matters set forth or
reflected therein, which objections shall be set forth in reasonable detail. If
no objections are raised within such 45-day period, the Reviewed Balance Sheet
shall be deemed accepted and approved by the Stockholder and a supplemental
closing (the "Supplemental Closing") shall take place within five (5) Business
Days following the expiration of such 45-day period, or on such other date as
may be mutually agreed upon in writing by UAG and the Stockholder.
(d) If the Stockholder shall raise any objection within such 45-day
period, UAG and the Stockholder shall attempt to resolve the matter or matters
in dispute and, if resolved, the Supplemental Closing shall take place within
five (5) Business Days following such resolution.
(e) If such dispute cannot be resolved by UAG and the Stockholder
within sixty (60) days after the delivery of the Reviewed Balance Sheet, then
the specific matters in dispute shall be submitted to a firm of independent
public accountants mutually acceptable to UAG and the Stockholder, which firm
shall make a final and binding determination as to such matter or matters. Such
accounting firm shall send its written determination to UAG and the Stockholder
and the Supplemental Closing, if any, shall take place five (5) Business Days
following the receipt of such determination by UAG and the Stockholder. The
fees and expenses of the accounting firm referred to in this Section 1.3(e)
shall be paid one-half by UAG and one-half by the Stockholder.
(f) UAG and the Stockholder agree to cooperate with each other and
each other's authorized representatives and with any accounting firm selected
by UAG and the Stockholder pursuant to Section 1.3(e) hereof in order that any
and all matters in dispute shall be resolved as soon as practicable.
(g) (i) If the aggregate Net Worth as shown on the Reviewed Balance
Sheet as finally determined through the operation of Sections 1.3 (a) through
(e) hereof (such amount being referred to herein as the "Final Net Worth")
shall be less than the Net Worth of the Company as set forth on the November 30
Balance Sheet (as defined in Section 2.5) (the "November 30 Net Worth") (the
amount of any such deficiency being referred to herein as the "Net Worth
Deficiency"), the Stockholder shall pay to UAG at the
6
Supplemental Closing, by wire transfer of immediately available funds to an
account designated in writing by UAG at least two (2) Business Days prior to
the date of the Supplemental Closing, an amount equal to the Net Worth
Deficiency, together with interest on such amount from the Closing Date to the
date of the Supplemental Closing at the prime rate or its equivalent (as
announced from time to time by Citibank, N.A.).
(i) "Net Worth" computed in connection with the Closing Date Balance
Sheet, the November 30 Balance Sheet and the Reviewed Balance Sheet shall mean
the amount by which the total assets (not including intangible assets) exceed
the total liabilities reflected, in each case, on the balance sheets of Company
comprising the Closing Date Balance Sheet, the November 30 Balance Sheet or the
Reviewed Balance Sheet, as the case may be.
.4 STOCK PRICE ADJUSTMENT.
If, on the Adjustment Date (as defined below), the UAG Shares have an
aggregate UAG Market Value of less than Six Million Dollars ($6,000,000) (the
amount of any such deficiency being referred to herein as the "Stock Price
Deficiency") then, no later than thirty (30) days after the Adjustment Date,
UAG shall pay the Stockholder cash in an amount (the "Adjustment Amount") equal
to the Stock Price Deficiency. For purposes of this Agreement, the Adjustment
Date shall mean the date on which the Stockholder may sell the UAG Shares in
reliance on Rule 144 promulgated by the Securities and Exchange Commission
("SEC") pursuant to the Securities Act of 1933, as amended ("Rule 144").
(Remainder of page intentionally left blank)
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2
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY, THE STOCKHOLDER AND XX. XXXXX
Subject to the parties' agreement and acknowledgement that certain of
the Schedules referred to in this Article 2 are to be delivered by the Company
and the Stockholder no later than thirty (30) days from the date hereof, the
Company, the Stockholder and Xx. Xxxxx hereby jointly and severally represent
and warrant to UAG and Sub as follows:
.1 ORGANIZATION AND GOOD STANDING.
The Company is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation and has
the corporate power and authority to own, lease and operate the properties used
in its business and to carry on its business as now being conducted. The
Company is duly qualified to do business and is in good standing as a foreign
corporation in each state and jurisdiction where qualification as a foreign
corporation is required, except for such failures to be qualified and in good
standing, if any, which when taken together with all other such failures of the
Company would not, or could not reasonably be expected to, in the aggregate
have a Material Adverse Effect. Schedule 2.1(a) hereto lists (i) the states and
other jurisdictions where the Company is so qualified and (ii) the assumed
names under which the Company conducts business. Attached to Schedule 2.1(b)
hereto are complete and correct copies of the Company's Articles of
Incorporation and Bylaws (including comparable governing instruments with
different names), as amended and presently in effect.
.2 SUBSIDIARIES.
The Company does not have any interest or investment in any Person.
.3 CAPITALIZATION.
The authorized stock of the Company and the number of shares of
capital stock which are issued and outstanding are set forth on Schedule 2.3
hereto. The shares listed on Schedule 2.3 hereto constitute all the issued and
outstanding shares of capital stock of the Company and have been validly
authorized and issued, are fully paid and nonassessable, have not been issued
in violation of any preemptive rights or of any federal or state securities law
and no personal liability attaches to the ownership thereof. There is no
security, option, warrant, right, call, subscription, agreement, commitment or
understanding of any nature whatsoever, fixed or contingent, that directly or
indirectly (i) calls for the issuance, sale, pledge or other disposition of any
shares of capital stock of the Company or any securities convertible into, or
other rights to acquire, any shares of capital stock of the Company, or (ii)
obligates the
8
Company to grant, offer or enter into any of the foregoing, or (iii) relates to
the voting or control of such capital stock, securities or rights, except as
set forth on Schedule 2.3 hereto. The Company has not agreed to register any
securities under the Securities Act of 1933, as amended (the "Securities Act").
.4 AUTHORITY; APPROVALS AND CONSENTS. D CONSENTS
The Company has the corporate power and authority to enter into this
Agreement and the documents referred to herein (the "Documents") to which it is
a party and to perform its obligations hereunder and thereunder. The execution,
delivery and performance of this Agreement and the Documents to which it is a
party and the consummation of the transactions contemplated hereby and thereby
have been duly authorized and approved by the Board of Directors of the Company
and no other corporate proceedings on the part of the Company is necessary to
authorize and approve this Agreement and the Documents and the transactions
contemplated hereby and thereby. This Agreement has been, and on the Closing
Date the Documents will be, duly executed and delivered by, and constitute
valid and binding obligations of, the Company, enforceable against the Company
in accordance with its terms. The execution, delivery and performance by the
Company, the Stockholder and Xx. Xxxxx of this Agreement and the Documents to
which it or they are a party and the consummation of the transactions
contemplated hereby and thereby do not and will not:
(i) contravene any provisions of the Articles of Incorporation or
Bylaws (including any comparable governing instrument with a different
name) of the Company;
(ii) (after notice or lapse of time or both) conflict with, result in
a breach of any provision of, constitute a default under, result in the
modification or cancellation of, or give rise to any right of termination
or acceleration in respect of, any Company Agreement (as defined in Section
2.15 hereof) or, except as set forth on Schedule 2.4 hereto, require any
consent or waiver of any party to any Company Agreement;
(iii) result in the creation of any security interest upon, or any
Person obtaining any right to acquire, any properties, assets or rights of
the Company (other than the rights of Sub to acquire the Shares pursuant to
this Agreement);
(iv) violate or conflict with any Legal Requirements (as defined in
Section 2.9 hereof) applicable to the Company or its business or
properties; or
(v) require any authorization, consent, order, permit or approval of,
or notice to, or filing, registration or qualification with, any
governmental, administrative or
9
judicial authority, except in connection with or in compliance with the
provisions of the H-S-R Act (as defined in Section 5.3 hereof).
Except as set forth or referred to above, no authorization, consent,
order, permit or approval of, or notice to, or filing, registration or
qualification with, any governmental administrative or judicial authority is
necessary to be obtained or made by the Company to enable the Company to
continue to conduct its business and operations and use its properties after
the Closing in a manner which is in all material respects consistent with that
in which it is presently conducted.
.5 FINANCIAL STATEMENTS.
Except as otherwise indicated below, attached as Schedule 2.5 are true
and complete copies of:
(i) (A) the balance sheet of the Company as of December 31, 1995, and
the related consolidated statement of income, stockholders' equity and cash
flow for the fiscal year ended December 31, 1995, together with the notes
thereto and (B) the balance sheet of the Company as of December 31, 1994,
and the related consolidated statement of income, stockholders' equity and
cash flow for the fiscal year ended December 31, 1994, together with the
notes thereto;
(ii) the balance sheet of the Company as of December 31, 1996 (the
"December 31 Balance Sheet") and the statement of income, stockholders'
equity and cash flow for the month periods ended on such date, together
with the notes thereto;
(iii) the balance sheet of the Company as of November 30, 1996 (the
"November 30 Balance Sheet"); and
(iv) the most recent monthly and year-to-date financial statements
provided to Nissan (the "Company Factory Statement");
(all the foregoing financial statements, including the notes thereto, being
referred to herein collectively as the "Company Financial Statements"). The
Company Financial Statements are consistent with and in accordance with the
books and records of the Company, fairly present the financial position,
results of operations, stockholders' equity and changes in financial position
of the Company as of the dates and for the periods indicated, in the case of
the financial statements referred to in clauses (i), (ii) and (iii) above in
conformity with GAAP consistently applied (except as set forth on Schedule
2.5(b) hereto) during such periods, and can be legitimately reconciled with the
financial statements and the financial records maintained and the accounting
methods applied by the Company for
10
federal income tax purposes, and the unaudited financial statements included in
the Company Financial Statements indicate all adjustments, which consist of
only normal recurring accruals, necessary for such fair presentations. The
statements of income included in the Company Financial Statements do not
contain any items of special or nonrecurring income except as expressly
specified therein, and the balance sheets included in the Company Financial
Statements do not reflect any write-up or revaluation increasing the book value
of any assets. The books and accounts of the Company are complete and correct
in all material respects and fairly reflect all of the transactions, items of
income and expense and all assets and liabilities of the businesses of the
Company.
.6 ABSENCE OF UNDISCLOSED LIABILITIES.
The Company does not have any liability of any nature whatsoever
(whether known or unknown, due or to become due, accrued, absolute, contingent
or otherwise), including, without limitation, any unfunded obligation under
employee benefit plans or arrangements as described in Section 2.17 and 2.18
hereof or liabilities for Taxes (as defined in Section 2.8 hereof), except for
(i) liabilities reflected or reserved against on the most recent Company
Financial Statements, (ii) current liabilities incurred in the ordinary course
of business and consistent with past practice after the date of the November 30
Balance Sheet which, individually and in the aggregate, do not have, and cannot
reasonably be expected to have, a Material Adverse Effect, and (iii)
liabilities disclosed on Schedule 2.6 hereto. The Company is not a party to any
Company Agreement, or subject to any charter or bylaw provision, any other
corporate limitation or any Legal Requirement, which has, or can reasonably be
expected to have, a Material Adverse Effect.
.7 ABSENCE OF MATERIAL ADVERSE EFFECT; CONDUCT OF BUSINESS.
(a) Since December 31, 1995, the Company has operated in the ordinary
course of business consistent with past practice, except as set forth on
Schedule 2.7(a) hereto, and there has not been:
(i) any material adverse change in the assets, properties, business,
operations, prospects, net income or financial condition of the Company,
and no factor, event, condition, circumstance or prospective development
exists which threatens or may threaten to have a Material Adverse Effect;
(ii) any material loss, damage, destruction or other casualty to the
property or other assets of the Company, whether or not covered by
insurance;
(iii) any change in any method of accounting or accounting practice of
the Company; or
11
(iv) any loss of the employment, services or benefits of any key
employee of the Company.
(b) Since December 31, 1995, except as set forth in Schedule 2.7(b)
hereto, the Company has not:
(i) incurred any material obligation or liability (whether absolute,
accrued, contingent or otherwise), except in the ordinary course of
business consistent with past practice;
(ii) failed to discharge or satisfy any lien or pay or satisfy any
obligation or liability (whether absolute, accrued, contingent or
otherwise), other than liabilities being contested in good faith and for
which adequate reserves have been provided;
(iii) mortgaged, pledged or subjected to any lien any of its property
or other assets, except for mechanics liens and liens for taxes not yet due
and payable;
(iv) sold or transferred any assets or cancelled any debts or claims
or waived any rights, except in the ordinary course of business consistent
with past practice;
(v) defaulted on any material obligation;
(vi) entered into any material transaction, except in the ordinary
course of business consistent with past practice;
(vii) written down the value of any inventory or written off as
uncollectible any accounts receivable or any portion thereof not reflected
in the Company Financial Statements;
(viii) granted any increase in the compensation or benefits of
employees other than increases in accordance with past practice not
exceeding 10% or entered into any employment or severance agreement or
arrangement with any of them;
(ix) made any individual capital expenditure in excess of $75,000, or
aggregate capital expenditures in excess of $200,000, or additions to
property, plant and equipment other than ordinary repairs and maintenance;
(x) discontinued any franchise or the sale of any products or product
line or program;
(xi) incurred any obligation or liability for the payment of severance
benefits; or
12
(xii) entered into any agreement or made any commitment to do any of
the foregoing.
.8 TAXES.
The Company has made a valid election pursuant to Section 1362(a) of
the Internal Revenue Code of 1986, as amended (the "Code"), to be an "S
corporation" within the meaning of Section 1361(a)(1) of the Code and has
continued to qualify as such for all taxable years since December 31, 1986 and
will continue to so qualify through the Closing Date.
The Company and, for any period during all or part of which the tax
liability of any other corporation was determined on a combined or consolidated
basis with the Company any such other corporation, has filed timely all
federal, state, local and foreign tax returns, reports and declarations
required to be filed (or have obtained or timely applied for an extension with
respect to such filing) correctly reflecting the Taxes (as defined below) and
all other information required to be reported thereon and have paid, or made
adequate provision for the payment of, all Taxes which are due pursuant to such
returns or pursuant to any assessment received by the Company or any such other
corporation. As used herein, "Taxes" shall mean all taxes, fees, levies or
other assessments, including but not limited to income, excise, property,
sales, franchise, withholding, social security and unemployment taxes imposed
by the United States, any state, county, local or foreign government, or any
subdivision or agency thereof or taxing authority therein, and any interest,
penalties or additions to tax relating to such taxes, charges, fees, levies or
other assessments. Copies of all tax returns for the fiscal years ended since
December 31, 1991 have been furnished or made available to UAG or its
representatives and such copies are accurate and complete as of the date
hereof. The Company has also furnished to UAG correct and complete copies of
all notices and correspondence sent or received since December 31, 1991 by the
Company to or from any federal, state or local tax authorities. The Company has
adequately reserved for the payment of all Taxes with respect to periods ended
on, prior to or through the Closing Date for which tax returns have not yet
been filed. In the ordinary course, the Company makes adequate provision on its
books for the payment of all Taxes (including for the current fiscal period)
owed by the Company. Except to the extent reserves therefor are reflected on
the Closing Date Balance Sheet, the Company is not liable, or will not become
liable, for any Taxes for any period ending on, prior to or through the Closing
Date. Except as set forth on Schedule 2.8 hereto, the Company has not been
subject to a federal or state tax audit of any kind, and no adjustment has been
proposed by the Internal Revenue Service ("IRS") with respect to any return for
any subsequent year. With respect to the audits referred to on Schedule 2.8
hereto, no such audit has resulted in an adjustment in excess of $50,000.
Neither the Company nor the Stockholder knows of any basis for an assertion of
a deficiency for Taxes
13
against the Company. The Stockholder will cooperate, and will cause its
Affiliates to cooperate, with the Company in the filing of any returns and in
any audit or refund claim proceedings involving Taxes for which the Company may
be liable or with respect to which the Company may be entitled to a refund.
.9 LEGAL MATTERS.
(a) Except as set forth on Schedule 2.9(a) hereto, (i) there is no
claim, action, suit, litigation, investigation, inquiry, review or proceeding
(collectively, "Claims") pending against, or, to the knowledge of the Company
or the Stockholder, threatened against or affecting, the Company, any ERISA
Plan (as defined in Section 2.17(a) hereof) or any of its properties or rights
before or by any court, arbitrator, panel, agency or other governmental,
administrative or judicial entity, domestic or foreign, nor is any basis known
to the Stockholder or the Company for any such Claims, and (ii) the Company is
not subject to any judgment, decree, writ, injunction, ruling or order
(collectively, "Judgments") of any governmental, administrative or judicial
authority, domestic or foreign. Schedule 2.9(a) hereto identifies each Claim
and Judgment disclosed thereon which is fully covered by an insurance policy.
(b) The business of the Company is being conducted in compliance with
all laws, ordinances, codes, rules, regulations, standards, judgments and other
requirements of all governmental, administrative or judicial entities
(collectively, "Legal Requirements") applicable to the Company or its business
or properties. The Company holds, and is in compliance with, all franchises,
licenses, permits, registrations, certificates, consents, approvals or
authorizations (collectively, "Permits") required by all applicable Legal
Requirements. A list of all such permits is set forth on Schedule 2.9(b)
hereof.
(c) The Company owns or holds all Permits material to the conduct of
its business. No event has occurred and is continuing which permits, or after
notice or lapse of time or both would permit, any modification or termination
of any Permit.
.10 PROPERTY.
The properties and assets, real and personal, owned by or leased to
the Company are adequate for the conduct of the business of the Company as
presently conducted. Set forth on Schedule 2.10(a) hereto is a list of all
interests in real property owned by or leased to the Company (including all
real property owned or leased by the Stockholder, directly or indirectly) and
used in the business of the Company and of all options or other contracts to
acquire any such interest (collectively, the "Real Property"). With respect to
any leased Real Property there are no defaults by either parties under and no
state of facts exist which with the giving of notice or the passage of time, or
both, would constitute a default under such
14
leases and true and correct copies of such leases are attached as Schedule
2.10(b). All improvements to the Real Property ("Improvements") and all
machinery, equipment and other tangible property owned or used by or leased to
the Company are in good operating condition and in good repair and are fit for
the particular purposes for which they are used by the Company, subject only to
ordinary wear and tear. Such tangible properties and all Improvements owned or
leased by the Company conform in all material respects with all applicable
laws, ordinances, rules and regulations and other Legal Requirements and such
Improvements do not encroach in any respect on property of others. There are no
latent defects with respect to the Improvements. The Real Property is currently
zoned to permit the conduct of the business of the Company as presently
conducted. Certificates of Occupancy have been issued with respect to the
Improvements without special conditions or restrictions. All utilities
servicing the Real Property and the Improvements are provided by
publicly-dedicated utility lines and are located within public rights-of-way
and do not cross or encumber any private land. No notice of any pending,
threatened or contemplated action by any governmental authority or agency
having the power of eminent domain has been given to the Company or the
Stockholder with respect to the Real Property.
.11 ENVIRONMENTAL MATTERS.
(a) Except as set forth on Schedule 2.11(a) hereto, (i) to the
knowledge of the Stockholder and the Company, the Company, the Real Property,
the Improvements and any property formerly owned, occupied or leased by the
Company are in full compliance with all Environmental Laws (as defined below),
(ii) the Company has obtained all Environmental Permits (as defined below),
(iii) such Environmental Permits are in full force and effect, and (iv) the
Company is in compliance with all terms and conditions of such Environmental
Permits. The Stockholder and the Company did not engage in any activity or
conduct, or cause or permit any condition, that would not be in compliance with
the Environmental Laws or Environmental Permits. As used herein, "Environmental
Laws" shall mean all applicable requirements of environmental, public or
employee health and safety, public or community right-to-know, ecological or
natural resource laws or regulations or controls, including all applicable
requirements imposed by any law (including without limitation common law),
rule, order, or regulations of any federal, state, or local executive,
legislative, judicial, regulatory, or administrative agency, board, or
authority, or any applicable private agreement (such as covenants, conditions
and restrictions), which relate to, (i) noise, (ii) pollution or protection of
the air, surface water, groundwater, or soil, (iii) solid, gaseous, or liquid
waste generation, treatment, storage, disposal or transportation, (iv) exposure
to Hazardous Materials (as defined below), or (v) regulation of the
manufacture, processing, distribution and commerce, use, or storage of
Hazardous Materials. As used herein, "Environmental Permits" shall mean all
permits, licenses, appro-
15
vals, authorizations, consents or registrations required under applicable
Environmental Laws in connection with the ownership, use and/or operation of
the Company's business or the Real Property or Improvements.
As used in this Section 2.11, "Hazardous Materials" shall mean,
collectively, (i) those substances included within the definitions of or
identified as "hazardous chemicals," "hazardous waste," "hazardous substances,"
"hazardous materials," "toxic substances" or similar terms in or pursuant to,
without limitation, the Comprehensive Environmental Response Compensation and
Liability Act of 1980 (42 U.S.C. 9601 et seq.) ("CERCLA"), as amended by
Superfund Amendments and Reauthorization Act of 1986 (Pub. L. 99-499, 100
State, 1613), the Resource Conservation and Recovery Act of 1976 (42 U.S.C. ss.
6901 et seq.) ("RCRA"), the Occupational Safety and Health Act of 1970 (29
U.S.C. ss. 651 et seq.) ("OSHA"), and the Hazardous Materials Transportation
Act, 49 U.S.C. ss. 1801 et seq. ("HMTA"), and in the regulations promulgated
pursuant to such laws, all as amended, (ii) those substances listed in the
United States Department of Transportation Table (49 CFR 172.101 and amendments
thereto) or by the Environmental Protection Agency (or any successor agency) as
hazardous substances (40 CFR part 302 and amendments thereto), (iii) any
material, waste or substance which is or contains (A) petroleum, including
crude oil or any fraction thereof, natural gas, or synthetic gas usable for
fuel or any mixture thereof, (B) asbestos, (C) polychlorinated biphenyls, (D)
designated as a "hazardous substance" pursuant to Section 311 of the Clean
Water Act, 33 U.S.C. ss. 1251 et seq. (33 U.S.C. ss. 1321) or listed pursuant
to Section 307 of the Clean Water Act (33 U.S.C. ss. 1317), (E) flammable
explosives, (F) radioactive materials, and (iv) such other substances,
materials and wastes which are or become regulated or classified as hazardous,
toxic or as "special wastes" under any Environmental Laws.
(b) The Company and the Stockholder have not violated, done or
suffered any act which could give rise to liability under, and, to the
knowledge of the Stockholder and the Company, are not otherwise exposed to
liability under, any Environmental Law. To the knowledge of the Stockholder and
the Company, no event has occurred with respect to the Real Property, the
Improvements or any property formerly owned, occupied or leased by the Company,
which, with the passage of time or the giving of notice, or both, would
constitute a violation of or non-compliance with any applicable Environmental
Law. The Company has no contingent liability under any Environmental Law. There
are no liens under any Environmental Law on the Real Property.
(c) Except as set forth on Schedule 2.11(c) hereto, (i) neither the
Company, the Real Property or any portion thereof, the Improvements or any
property formerly owned, occupied or leased by the Company, nor, to the
knowledge of the Company or the Stockholder, any property adjacent to the Real
Property is being used or has been used (at such time as the
16
Stockholder owned or leased such property) for the treatment, generation,
transportation, processing, handling, production or disposal of any Hazardous
Materials or as a landfill or other waste disposal site and there has been no
spill or release of any Hazardous Materials (provided, however, that certain
petroleum products are stored and handled on the Real Property in the ordinary
course of the Company's business in full compliance with all Environmental Laws
including the existing regulations of the United States Environmental
Protection Agency requiring spill protection, overfill protection and corrosion
protection by December 22, 1998 and all secondary containment requirements with
respect to above ground storage tanks), (ii) to the knowledge of the
Stockholder and the Company none of the Real Property or portion thereof, the
Improvements or any property formerly owned, occupied or leased by the Company
has been subject to investigation by any governmental authority evaluating the
need to investigate or undertake Remedial Action (as defined below) at such
property, and (iii) to the knowledge of the Company and the Stockholder, none
of the Real Property, the Improvements or any property formerly owned, occupied
or leased by the Company or any site or location where the Company sent waste
of any kind, is identified on the current or proposed (A) National Priorities
List under 00 X.X.X. 000 Xxxxxxxx X, (X) Comprehensive Environmental Response
Compensation and Liability Inventory System list, or (C) any list arising from
any statute analogous to CERCLA. As used herein, "Remedial Action" shall mean
any action required to (i) clean up, remove or treat Hazardous Materials, (ii)
prevent a release or threat of release of any Hazardous Material, (iii) perform
pre-remedial studies, investigations or post-remedial monitoring and care, (iv)
cure a violation of Environmental Law or (v) take corrective action under
sections 3004(u), 3004(v) or 3008(h) of RCRA or analogous state law.
(d) Except as set forth on Schedule 2.11(d) hereto, there have been
and are no (i) aboveground or underground storage tanks, subsurface disposal
systems, or wastes, drums or containers disposed of or buried on, in or under
the ground or any surface waters, (ii) asbestos or asbestos containing
materials or radon gas, (iii) polychlorinated biphenyls ("PCB") or
PCB-containing equipment, including transformers, or (iv) wetlands (as defined
under any Environmental Law) located within any portion of the Real Property,
nor have any liens been placed upon any portion of the Real Property, the
Improvements or any property formerly owned, occupied or leased by the Company
in connection with any actual or alleged liability under any Environmental Law.
(e) Except as set forth on Schedule 2.11(e) hereto, (i) there is no
pending or threatened claim, litigation, or administrative proceeding, or known
prior claim, litigation or administrative proceeding, arising under any
Environmental Law involving the Company, the Real Property, the Improvements,
any property formerly owned, leased or occupied by the Company, any offsite
contamination affecting the business of the Company or
17
any operations conducted at the Real Property, (ii) there are no ongoing
negotiations with or agreements with any governmental authority relating to any
Remedial Action or other environmentally related claim, (iii) the Company has
not submitted notice pursuant to Section 103 of CERCLA or analogous statute or
notice under any other applicable Environmental Law reporting a release of a
Hazardous Material into the environment, and (iv) the Company has not received
any notice, claim, demand, suit or request for information from any
governmental or private entity with respect to any liability or alleged
liability under any Environmental Law, nor to the knowledge of the Stockholder
and the Company, has any other entity whose liability therefor, in whole or in
part, may be attributed to the Company, received such notice, claim, demand,
suit or request for information.
(f) The Stockholder and the Company have provided to UAG all
environmental studies and reports obtained by them or known to them pertaining
to the Real Property, the Improvements, the Company and any property formerly
owned, occupied or leased by the Company, and have permitted (or will have
permitted as of the Closing Date), the testing of the soil, groundwater,
building components, tanks, containers and equipment on the Real Property, the
Improvements, and any property formerly owned, occupied or leased by the
Company, by UAG or UAG's agents or experts as they have or shall have deemed
necessary or appropriate to confirm the condition of such properties.
.12 INVENTORIES.
The values at which inventories are carried on the Company Financial
Statements reflect the normal inventory valuation policies of the Company, and,
in the case of the December 31 Balance Sheet, such values are in conformity
with GAAP consistently applied. All inventories reflected on the Company
Financial Statements or arising since the date thereof are currently marketable
and can reasonably be anticipated to be sold at normal xxxx-ups within ninety
(90) days after the date hereof in the ordinary course of business, except for
spare parts inventory which inventory is good and usable.
.13 ACCOUNTS RECEIVABLE.
All accounts receivable reflected on the December 31 Balance Sheet
are, and all accounts receivable that will be or will have been reflected on
the Closing Date Balance Sheet will be, good, and have been or will have been
collected or are collectible, without resort to litigation, within 90 days of
the Closing Date, and are subject to no defenses, setoffs or counterclaims
other than normal cash discounts accrued in the ordinary course of business.
18
.14 INSURANCE.
All material properties and assets of the Company which are of an
insurable character are insured against loss or damage by fire and other risks
to the extent and in the manner reasonable in light of the risks attendant to
the businesses and activities in which the Company is engaged and customary for
companies engaged in similar businesses or owning similar assets. Set forth on
Schedule 2.14 hereto is a list and brief description (including the name of the
insurer, the type of coverage provided, the amount of the annual premium for
the current policy period, the amount of remaining coverage and deductibles and
the coverage period) of all policies for such insurance and the Company have
made or will make available to UAG true and complete copies of all such
policies. All such policies are in full force and effect, are underwritten by
financially secure insurers, are sufficient for all applicable requirements of
law and will not in any way be affected by or terminated or lapsed by reason of
the consummation of the transactions contemplated by this Agreement. No notice
of cancellation or non-renewal with respect to, or disallowance of any claim
under, any such policy has been received by the Company.
.15 CONTRACTS; ETC.
As used in this Agreement, the term "Company Agreements" shall mean
all mortgages, indenture notes, agreements, contracts, leases, licenses,
franchises, obligations, instruments or other commitments, arrangements or
understandings of any kind, whether written or oral, binding or non-binding,
(including all leases and other agreements referred to on Schedule 2.10 hereto)
to which the Company is a party or by which the Company or any of its assets or
properties (including the Real Property and the Improvements) may be bound or
affected, including all amendments, modifications, extensions or renewals of
any of the foregoing. Set forth on Schedule 2.15 hereto is a complete and
accurate list of each Company Agreement which is material to the business,
operations, assets, condition (financial or otherwise) or prospects of the
Company. True and complete copies of all written Company Agreements referred to
on Schedule 2.15 and Schedule 2.10 hereto, exclusive of individual vehicle
titles and/or manufacturer's certificates of origin and floor plan liens
applicable to individual vehicles, have been delivered or made available to
UAG, and the Company has provided UAG with accurate and complete written
summaries of all such Company Agreements which are unwritten. Except as set
forth on Schedule 2.15, the Company is not, nor, to the knowledge of the
Company and the Stockholder is, any other party thereto, in breach of or
default under any Company Agreement, and no event has occurred which (after
notice or lapse of time or both) would become a breach or default under, or
would permit modification, cancellation, acceleration or termination of, any
Company Agreement or result in the creation of any Lien upon, or any Person
obtaining any right to acquire, any properties, assets or rights of the Company
19
in any such case where such breach, default or other event would have, or could
reasonably be expected to have, a Material Adverse Effect. There are no
material unresolved disputes involving the Company under any Company Agreement.
.16 LABOR RELATIONS.
(a) The Company has paid or made provision for the payment of all
salaries and accrued wages and has complied in all material respects with all
applicable laws, rules and regulations relating to the employment of labor,
including those relating to wages, hours, collective bargaining and the payment
and withholding of taxes, and have withheld and paid to the appropriate
governmental authority, or are holding for payment not yet due to such
authority, all amounts required by law or agreement to be withheld from the
wages or salaries of their employees.
(b) Except as set forth on Schedule 2.16(b) hereto, the Company is not
a party to any (i) outstanding employment agreements or contracts with officers
or employees that are not terminable at will, or that provide for payment of
any bonus or commission, (ii) agreement, policy or practice that requires it to
pay termination or severance pay to salaried, non-exempt or hourly employees
(other than as required by law), (iii) collective bargaining agreement or other
labor union contract applicable to persons employed by the Company, nor do the
Stockholder or the Company know of any activities or proceedings of any labor
union to organize any such employees. The Company has furnished to UAG complete
and correct copies of all such agreements ("Employment and Labor Agreements").
The Company has not breached or otherwise failed to comply with any provisions
of any Employment or Labor Agreement.
(c) Except as set forth in Schedule 2.16(c) hereto, (i) there is no
unfair labor practice charge or complaint pending before the National Labor
Relations Board ("NLRB"), (ii) there is no labor strike, material slowdown or
material work stoppage or lockout actually pending or, to the Stockholder's or
the Company's knowledge, threatened, against or affecting the Company, and the
Company has not experienced any strike, material slow down or material work
stoppage, lockout or other collective labor action by or with respect to
employees of the Company, (iii) there is no representation claim or petition
pending before the NLRB or any similar foreign agency and no question
concerning representation exists relating to the employees of the Company, (iv)
there are no charges with respect to or relating to the Company pending before
the Equal Employment Opportunity Commission or any state, local or foreign
agency responsible for the prevention of unlawful employment practices, (v) the
Company has not received formal notice from any federal, state, local or
foreign agency responsible for the enforcement of labor or employment laws of
an intention to conduct an investigation of the Company and, to the knowledge
of the Company, no such investigation is in progress and (vi) the consents of
the unions that are
20
parties to any Employment and Labor Agreements are not required to complete the
transactions contemplated by this Agreement and the Documents.
(d) The Company has never caused any "plant closing" or "mass layoff"
as such actions are defined in the Worker Adjustment and Retraining
Notification Act, as codified at 29 U.S.C. xx.xx. 2101-2109, and the
regulations promulgated therein.
.17 EMPLOYEE BENEFIT PLANS.
(a) Set forth on Schedule 2.17(a) hereto is a true and complete list
of:
(i) each employee pension benefit plan, as defined in Section 3(2) of
the Employee Retirement Income Security Act of 1974 ("ERISA"), maintained
by the Company or to which the Company is required to make contributions
("Pension Benefit Plan"); and
(ii) each employee welfare benefit plan, as defined in Section 3(i) of
ERISA, maintained by the Company or to which the Company is required to
make contributions ("Welfare Benefit Plan").
True and complete copies of all Pension Benefit Plans and Welfare
Benefit Plans (collectively, "ERISA Plans") have been delivered to or made
available to UAG together with, as applicable with respect to each such ERISA
Plan, trust agreements, summary plan descriptions, all IRS determination
letters or applications therefor with respect to any Pension Benefit Plan
intended to be qualified pursuant to Section 401(a) of the Internal Revenue
Code of 1986, as amended (the "Code"), and valuation or actuarial reports,
accountant's opinions, financial statements, IRS Form 5500s (or 5500-C or
5500-R) and summary annual reports for the last three years.
(b) With respect to the ERISA Plans, except as set forth on Schedule
2.17(b):
(i) there is no ERISA Plan which is a " multiemployer" plan as that
term is defined in Section 3(37) of ERISA ("Multiemployer Plan");
(ii) no event has occurred or (to the knowledge of the Company or the
Stockholder) is threatened or about to occur which would constitute a
prohibited transaction under Section 406 of ERISA or under Section 4975 of
the Code;
(iii) each ERISA Plan has operated since its inception in accordance
with the reporting and disclosure requirements imposed under ERISA and the
Code and has timely filed Form 5500e (or 5500-C or 5500-R) and predecessors
thereof; and
21
(iv) no ERISA Plan is liable for any federal, state, local or foreign
Taxes.
(c) Each Pension Benefit Plan intended to be qualified under Section
401(a) of the Code:
(i) has been qualified, from its inception, under Section 401(a) of
the Code, and the trust established thereunder has been exempt from
taxation under Section 501(a) of the Code and is currently in compliance
with applicable federal laws;
(ii) has been operated, since its inception, in accordance with its
terms and there exists no fact which would adversely affect its qualified
status; and
(iii) is not currently under investigation, audit or review by the IRS
or (to the knowledge of the Company and the Stockholder) no such action is
contemplated or under consideration and the IRS has not asserted that any
Pension Benefit Plan is not qualified under Section 401(a) of the Code or
that any trust established under a Pension Benefit Plan is not exempt under
Section 501(a) of the Code.
(d) With respect to each Pension Benefit Plan which is a defined
benefit plan under Section 414(j) and, for the purpose solely of Section
2.17(d)(iv) hereof, each defined contribution plan under Section 414(i) of the
Code:
(i) no liability to the Pension Benefit Guaranty Corporation ("PBGC")
under Sections 4062-4064 of ERISA has been incurred by the Company since
the effective date of ERISA and all premiums due and owing to the PBGC have
been timely paid;
(ii) the PBGC has not notified the Company or any Pension Benefit Plan
of the commencement of proceedings under Section 4042 of ERISA to terminate
any such plan;
(iii) no event has occurred since the inception of any Pension Benefit
Plan or (to the knowledge of the Company or the Stockholder) is threatened
or about to occur which would constitute a reportable event within the
meaning of Section 4043(b) of ERISA;
(iv) no Pension Benefit Plan ever has incurred any "accumulated
funding deficiency" (as defined in Section 302 of ERISA and Section 412 of
the Code); and
(v) if any of such Pension Benefit Plans were to be terminated on the
Closing Date (A) no liability under Title IV of ERISA would be incurred by
the Company and (B) all benefits accrued to the day prior to the Closing
Date (whether or not vested) would be fully funded in accordance
22
with the actuarial assumptions and method utilized by such plan for
valuation purposes.
(e) With respect to each Pension Benefit Plan, Schedule 2.17(e)
contains a list of all Pension Benefit Plans to which ERISA has applied which
have been or are being terminated, or for which a termination is contemplated,
and a description of the actions taken by the PBGC and the IRS with respect
thereto.
(f) The approximate aggregate of the amounts of contributions by the
Company to be paid or accrued under ERISA Plans for the current fiscal year is
set forth on Schedule 2.17(f) (the "Aggregate ERISA Contributions"), and the
Aggregate ERISA Contributions are not expected to exceed the total amount set
forth on Schedule 2.17(f). To the extent required in accordance with GAAP, the
December 31 Balance Sheet reflects in the aggregate an accrual of all amounts
of employer contributions accrued but unpaid by the Company under the ERISA
Plans as of the date of the December 31 Balance Sheet.
(g) With respect to any Multiemployer Plan (1) the Company has not,
since its formation, made or suffered a "complete withdrawal" or "partial
withdrawal" as such terms are respectively defined in Sections 4203 and 4205 of
ERISA; (2) there is no withdrawal liability of the Company under any
Multiemployer Plan, computed as if a "complete withdrawal" by the Company had
occurred under each such Plan as of December 31, 1995; and (3) the Company has
not received notice to the effect that any Multiemployer Plan is either in
reorganization (as defined in Section 4241 of ERISA) or insolvent (as defined
in Section 4245 of ERISA).
(h) With respect to the Welfare Benefit Plans:
(i) There are no liabilities of the Company under Welfare Benefit
Plans with respect to any condition which relates to a claim filed on or
before the Closing Date.
(ii) No claims for benefits are in dispute or litigation.
.18 OTHER BENEFIT AND COMPENSATION PLANS OR ARRANGEMENTS.
(a) Set forth on Schedule 2.18(a) hereto is a true and complete list
of:
(i) each employee stock purchase, employee stock option, employee
stock ownership, deferred compensation, performance, bonus, incentive,
vacation pay, holiday pay, insurance, severance, retirement, excess benefit
or other plan, trust or arrangement which is not an ERISA Plan whether
written or oral, which the Company maintains or is required to make
contributions to;
23
(ii) each other agreement, arrangement, commitment and understanding
of any kind, whether written or oral, with any current or former officer,
director or consultant of the Company pursuant to which payments may be
required to be made at any time following the date hereof (including,
without limitation, any employment, deferred compensation, severance,
supplemental pension, termination or consulting agreement or arrangement);
and
(iii) each employee of the Company whose aggregate compensation for
the fiscal year ended December 31, 1996 exceeded $50,000. True and complete
copies of all of the written plans, arrangements and agreements referred to
on Schedule 2.18(a) ("Compensation Commitments") have been provided to UAG
together with, where prepared by or for the Company, any valuation,
actuarial or accountant's opinion or other financial reports with respect
to each Compensation Commitment for the last three years. An accurate and
complete written summary has been provided to UAG with respect to any
Compensation Commitment which is unwritten.
(b) Each Compensation Commitment:
(i) since its inception, has been operated in all material respects in
accordance with its terms;
(ii) is not currently under investigation, audit or review by the IRS
or any other federal or state agency and (to the knowledge of the Company
or the Stockholder) no such action is contemplated or under consideration;
(iii) has no liability for any federal, state, local or foreign Taxes;
(iv) has no claims subject to dispute or litigation;
(v) has met all applicable requirements, if any, of the Code; and
(vi) has operated since its inception in material compliance with the
reporting and disclosure requirements imposed under ERISA and the Code.
.19 TRANSACTIONS WITH INSIDERS.
Set forth on Schedule 2.19 hereto is a complete and accurate
description of all material transactions between the Company or any ERISA Plan,
on the one hand, and any Insider, on the other hand, that have occurred since
January 1, 1995. For purposes of this Agreement:
(i) the term "Insider" shall mean the Stockholder, any director or
officer of the Company, and any
24
Affiliate, Associate or Relative of any of the foregoing persons;
(ii) the term "Associate" used to indicate a relationship with any
person means (A) any corporation, partnership, joint venture or other
entity of which such person is an officer or partner or is, directly or
indirectly, through one or more intermediaries, the beneficial owner of 30%
or more of (1) any class or type of equity securities or other profits
interest or (2) the combined voting power of interests ordinarily entitled
to vote for management or otherwise, and (B) any trust or other estate in
which such person has a substantial beneficial interest or as to which such
person serves as trustee or in a similar fiduciary capacity; and
(iii) a "Relative" of a person shall mean such person's spouse, such
person's parents, sisters, brothers, children and the spouses of the
foregoing, and any member of the immediate household of such person.
.20 PROPRIETY OF PAST PAYMENTS.
No funds or assets of the Company have been used for illegal purposes;
no unrecorded funds or assets of the Company have been established for any
purpose; no accumulation or use of the Company's corporate funds or assets have
been made without being properly accounted for in the respective books and
records of the Company; all payments by or on behalf of the Company have been
duly and properly recorded and accounted for in their respective books and
records; no false or artificial entry has been made in the books and records of
the Company for any reason; no payment has been made by or on behalf of the
Company with the understanding that any part of such payment is to be used for
any purpose other than that described in the documents supporting such payment;
and the Company has not made, directly or indirectly, any illegal contributions
to any political party or candidate, either domestic or foreign. Neither the
IRS nor any other federal, state, local or foreign government agency or entity
has initiated or threatened any investigation of any payment made by the
Company of, or alleged to be of, the type described in this Section 2.20.
.21 INTEREST IN COMPETITORS.
Except as set forth on Schedule 2.21, neither the Company nor the
Stockholder, nor any of their Affiliates, have any interest, either by way of
contract or by way of investment (other than as holder of not more than 2% of
the outstanding capital stock of a publicly traded Person, so long as such
holder has no other connection or relationship with such Person) or otherwise,
directly or indirectly, in any Person other than the Company that is engaged in
the retail sale of automobiles or light duty trucks.
25
.22 BROKERS.
Neither the Company, nor any director, officer or employee thereof,
nor the Stockholder or any representative of the Stockholder, has employed any
broker or finder or has incurred or will incur any broker's, finder's or
similar fees, commissions or expenses, in each case in connection with the
transactions contemplated by this Agreement or the Documents except that the
Stockholder has employed Xxx Xxxxx (the "Broker") in connection with this
transaction. The Stockholder will satisfy any obligations of UAG, Sub, the
Stockholder, Xx. Xxxxx and the Company relating to the employment of Broker,
and will hold UAG, Sub and the Company harmless therefrom.
.23 ACCOUNTS.
Schedule 2.23 hereof correctly identifies each bank account maintained
by or on behalf or for the benefit of the Company and the name of each Person
with any power or authority to act with respect thereto.
.24 DISCLOSURE.
Neither the Company nor the Stockholder have made any material
misrepresentation to UAG or the Sub relating to the Company or the Shares or
the Real Property or Improvements and neither the Company nor the Stockholder
have omitted to state to UAG any material fact relating to the Company or the
Shares or the Real Property or Improvements which is necessary in order to make
the information given by or on behalf of the Company or the Stockholder to UAG
not misleading or which if disclosed would reasonably affect the decision of a
person considering an acquisition of the Shares. No fact, event, condition or
contingency exists or has occurred which has, or in the future can reasonably
be expected to have, a Material Adverse Effect, which has not been disclosed in
the Company Financial Statements or the Schedules to this Agreement.
.25 NET WORTH.
On the Closing Date, the Net Worth of the Company will be equal to or
greater than the November 30 Net Worth.
3
REPRESENTATIONS AND WARRANTIES
OF THE STOCKHOLDER
Subject to the parties' agreement and acknowledgement that certain of
the Schedules referred to in this Article 3 are to be delivered by the Company
and the Stockholder no later than thirty (30) days after the date hereof, the
Stockholder hereby represents and warrants to UAG as follows:
.1 OWNERSHIP OF SHARES; TITLE.
26
The Stockholder is the owner of record and beneficially of the Shares
as set forth on Schedule 3.1 hereof and has, and shall transfer to Sub at the
Closing, good and marketable title to the Shares owned by it, free and clear of
any and all security interests, pledge agreements, Liens, proxies and voting or
other agreements except restrictions on transfer imposed by applicable federal
and state securities laws.
.2 AUTHORITY.
The Stockholder has all requisite power and authority and has full
legal capacity and is competent to execute, deliver and perform this Agreement
and the Documents to which it is a party and to consummate the transactions
contemplated hereby and thereby (including the disposition of the Shares to Sub
as contemplated by this Agreement). This Agreement has been duly executed and
delivered by the Stockholder and constitutes, and the Documents to which the
Stockholder is a party when executed and delivered by the Stockholder will
constitute, a valid and binding obligation of the Stockholder, enforceable
against it in accordance with its terms. Except as set forth on Schedule 3.2,
the execution, delivery and performance of this Agreement and the Documents by
the Stockholder and the consummation of the transactions contemplated hereby
and thereby do not and will not:
(i) (after notice or lapse of time or both) conflict with, result in a
breach of any provision of, constitute a default under, result in the
modification or cancellation of, or give rise to any right of termination
or acceleration in respect of, any material contract, agreement,
commitment, understanding, arrangement or restriction to which the
Stockholder is a party or to which the Stockholder or any of its property
is subject;
(ii) violate or conflict with any Legal Requirements applicable to the
Stockholder or any of Stockholder's businesses or properties; or
(iii) require any authorization, consent, order, permit or approval
of, or notice to, or filing, registration or qualification with, any
governmental, administrative or judicial authority, except in connection
with or in compliance with the provisions of the H-S-R Act (as defined in
Section 5.3 hereof).
.3 REAL PROPERTY AND IMPROVEMENTS.
The Stockholder owns the Real Property and Improvements in fee simple,
free and clear of all Liens, except those disclosed in Schedule 3.3(a), none of
which currently or, to its knowledge, in the future will affect the use of the
Real Property or the Improvements for the conduct of the business of the
Company as presently conducted. No assessments have been made against any
portion of the Real Property which are unpaid (except
27
ad valorem taxes for the current year that are not yet due and payable),
whether or not they have become Liens. There are no disputes concerning the
location of the lines and corners of the Real Property. No one has been granted
any right to purchase or lease the Real Property or Improvements other than the
existing leases in favor of the Company, which are to be terminated at the
Closing by agreement between the parties and pursuant to which the Stockholder
shall acknowledge that there are no defaults under any such leases and that the
Company has no liability arising out of or relating to such leases.
.4 INVESTMENT INTENT.
The Stockholder has no present plan, intention or arrangement to
dispose of any of the UAG Common Stock received by it pursuant to the terms of
this Agreement.
.5 QUALIFICATION OF STOCKHOLDER.
The Stockholder and Xx. Xxxxx (i) are "accredited investors" within
the meaning of Regulation D of the Securities Act, and the Stockholder is
acquiring the UAG Common Stock to be issued pursuant to the terms of this
Agreement for its own account and not with a view to, or for resale in
connection with, any distribution thereof; (ii) the Stockholder was not formed
for the purpose of acquiring UAG Common Stock; (iii) the Stockholder and Xx.
Xxxxx understand and acknowledge that such UAG Common Stock has not been
registered under the Securities Act or any state securities laws by reason of
certain exemptions from the registration provisions thereof which depend upon,
among other things, the bona fide nature of the Stockholder's investment intent
as expressed herein; (iv) the Stockholder and Xx. Xxxxx are able to bear the
economic risk of investment in such UAG Common Stock and have such knowledge
and experience in financial and business matters that they are capable of
evaluating the risks and merits of such UAG Common Stock; (v) the Stockholder
and Xx. Xxxxx acknowledge that the UAG Shares were not offered to them by means
of publicly disseminated advertisements or sales literature, or as part of a
general solicitation; (vi) the Stockholder and Xx. Xxxxx acknowledge that in
deciding to proceed with the transaction set forth herein they have relied
solely on their own independent investigation of UAG; and (vii) the Stockholder
and Xx. Xxxxx understand and acknowledge that such UAG Common Stock will be
"restricted securities" as that term is defined in Rule 144 under the
Securities Act and that the certificates representing such UAG Common Stock
will bear a legend restricting transfer unless (A) the transfer is exempt from
the registration requirements under the Securities Act and any applicable state
securities law and an opinion of counsel reasonably satisfactory to UAG that
such transfer is exempt therefrom is delivered to UAG or (B) the transfer is
made pursuant to an effective registration statement under the Securities Act
and any applicable state securities law.
28
4
REPRESENTATIONS AND WARRANTIES OF UAG
Subject to the parties' agreement and acknowledgment that certain of
the Schedules referred to in this Article 4 are to be delivered by the UAG no
later than thirty (30) days after the date hereof, UAG and Sub hereby represent
and warrant to the Company and the Stockholder as follows:
.1 ORGANIZATION AND GOOD STANDING.
UAG is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has the corporate power
and authority to own, lease and operate the properties used in its business and
to carry on its business as now being conducted. UAG is duly qualified to do
business and is in good standing as a foreign corporation in each state and
jurisdiction where qualification as a foreign corporation is required, except
for such failures to be qualified and in good standing, if any, which when
taken together with all other such failures of UAG and the Sub would not, or
could not reasonably be expected to, in the aggregate have a Material Adverse
Effect on UAG and the Sub, taken as a whole. UAG has made available to the
Stockholder complete and correct copies of its charter and bylaws, as amended
and presently in effect.
.2 SUBSIDIARIES.
The Sub is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, has the
corporate power and authority to own, lease and operate the properties and
assets used in its business and to carry on its business as now being
conducted, and is duly qualified to do business and in good standing as a
foreign corporation in each jurisdiction where qualification as a foreign
corporation is required, except for such failures to be qualified and in good
standing, if any, which when taken together with all other such failures of UAG
and the Sub would not, or could not reasonably be expected to, in the aggregate
have a material adverse effect on UAG and the Sub, taken as a whole. All of the
outstanding shares of capital stock of the Sub have been validly authorized and
issued, are fully paid and non-assessable, have not been issued in violation of
any preemptive rights or of any federal or state securities law.
.3 CAPITALIZATION.
The authorized stock of UAG and the number of shares of capital stock
which are issued and outstanding are set forth on Schedule 4.3 hereto. The
shares listed on Schedule 4.3 hereto constitute all the issued and outstanding
shares of capital stock of UAG and have been validly authorized and issued, are
fully paid and nonassessable, have not been issued in violation of any
29
preemptive rights or of any federal or state securities law and no personal
liability attaches to the ownership thereof.
.4 SEC FILINGS.
UAG has heretofore made available to the Company, the Stockholder and
Xx. Xxxxx UAG's Registration Statement on Form S-1 as declared effective by the
SEC on October 23, 1996 and UAG's Quarterly Report on Form 10-Q for the period
ending September 30, 1996 (the "SEC Filings"). As of their respective dates,
the SEC filings did not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
.5 AUTHORITY; APPROVALS AND CONSENTS.
UAG and Sub have the corporate power and authority to enter into this
Agreement and the Documents to which they are a party and to perform its
obligations hereunder and thereunder. At the time of the Closing, the
execution, delivery and performance of this Agreement and the Documents to
which it is a party and the consummation of the transactions contemplated
hereby and thereby will have been duly authorized and approved by the Board of
Directors of UAG and Sub and no other corporate proceedings on the part of UAG
or Sub will be necessary to authorize and approve this Agreement and the
Documents and the transactions contemplated hereby and thereby. This Agreement
has been, and on the Closing Date the Documents will be, duly executed and
delivered by, and constitute a valid and binding obligation of, UAG and Sub,
enforceable against UAG and Sub in accordance with their respective terms.
Except as set forth on Schedule 4.5 hereto, the execution, delivery and
performance by UAG and Sub of this Agreement and the Documents to which they
are a party and the consummation of the transactions contemplated hereby and
thereby do not and will not:
(i) contravene any provisions of the Certificate of Incorporation or
Bylaws of UAG or Sub;
(ii) (after notice or lapse of time or both) conflict with, result in
a breach of any provision of, constitute a default under, result in the
modification or cancellation of, or give rise to any right of termination
or acceleration in respect of, any UAG Agreement (as defined below) or
require any consent or waiver of any party to any UAG Agreement;
(iii) result in the creation of any security interest upon, or any
person obtaining any right to acquire, any properties, assets or rights of
UAG;
(iv) violate or conflict with any Legal Requirements applicable to UAG
or its respective businesses or properties that would or
30
could reasonably be expected to have a Material Adverse Effect on UAG and
the UAG Subsidiaries, taken as a whole; or
(v) require any authorization, consent, order, permit or approval of,
or notice to, or filing, registration or qualification with, any
governmental, administrative or judicial authority, except in connection
with or in compliance with the provisions of the H-S-R Act (as defined in
Section 5.3 hereof).
Except as set forth or referred to above, no authorization, consent,
order, permit or approval of, or notice to, or filing, registration or
qualification with, any governmental administrative or judicial authority is
necessary to be obtained or made by UAG to enable UAG to continue to conduct
its business and operations and use its properties after the Closing in a
manner which is in all material respects consistent with that in which they are
presently conducted. As used in this Agreement, the term "UAG Agreement" shall
mean all mortgages, indenture notes, agreements, contracts, leases, licenses,
franchises, obligations, instruments or other commitments, arrangements or
understandings of any kind, whether written or oral, binding or non-binding, to
which UAG or the UAG Subsidiaries is a party or by which UAG or the UAG
Subsidiaries or any of its assets or properties may be bound or affected,
including all amendments, modifications, extensions or renewals of any of the
foregoing, and which involve receipts or payments by UAG or UAG Subsidiaries
which exceed $100,000 per year. "UAG Subsidiary" shall mean any corporation or
other entity in which UAG, directly or indirectly, owns beneficially securities
representing 50% or more of (i) the aggregate equity or profit interests or
(ii) the combined voting power of voting interests ordinarily entitled to vote
for management or otherwise.
.6 FINANCIAL STATEMENTS.
Attached as Schedule 4.6 are true and complete copies of:
(a) the consolidated balance sheet of UAG and its consolidated UAG
Subsidiaries as of December 31 in each of the years 1994 and 1995, and the
related consolidated statements of income, stockholders' equity and cash flows
for the fiscal years ended on such dates, together with the notes thereto, in
each case examined by and accompanied by the report of Coopers & Xxxxxxx,
independent certified public accountants; and
(b) the unaudited consolidated balance sheet of UAG and its
consolidated UAG Subsidiaries as of September 30, 1996 (the "UAG Balance
Sheet"), and the unaudited consolidated statements of income, stockholders'
equity and cash flows for the month periods ended on such dates, together with
the notes thereto;
31
(all the foregoing financial statements, including the notes thereto, being
referred to herein collectively as the "UAG Financial Statements"). The UAG
Financial Statements are in accordance with the books and records of UAG and
the UAG Subsidiaries, fairly present the consolidated financial position,
results of operations, stockholders' equity and changes in financial position
of UAG and the UAG Subsidiaries as of the dates and for the periods indicated,
in each case in conformity with GAAP consistently applied (except as otherwise
indicated in such statements) during such periods, and can be legitimately
reconciled with the financial statements and the financial records maintained
and the accounting methods applied by UAG and the UAG Subsidiaries for federal
income tax purposes, and the unaudited financial statements included in the UAG
Financial Statements indicate all adjustments, which consist of only normal
recurring accruals, necessary for such fair presentations. The statements of
income included in the UAG Financial Statements do not contain any items of
special or nonrecurring income except as expressly specified therein, and the
balance sheets included in the UAG Financial Statements do not reflect any
write-up or revaluation increasing the book value of any assets. The books and
accounts of UAG and the UAG Subsidiaries are complete and correct in all
material respects and fairly reflect all of the transactions, items of income
and expense and all assets and liabilities of the businesses of UAG and the UAG
Subsidiaries consistent with prior practices of UAG and the UAG Subsidiaries.
.7 TAXES.
UAG, each UAG Subsidiary and, for any period during all or part of
which the tax liability of any other corporation was determined on a combined
or consolidated basis with UAG or any UAG Subsidiary, any such other
corporation, have filed timely all federal, state, local and foreign tax
returns, reports and declarations required to be filed (or have obtained or
timely applied for an extension with respect to such filing) correctly
reflecting the Taxes and all other information required to be reported thereon
and have paid, or made adequate provision for the payment of, all Taxes which
are due pursuant to such returns or pursuant to any assessment received by UAG
or any UAG Subsidiary or any such other corporation. In the ordinary course,
UAG makes adequate provision on its books for the payment of all Taxes
(including for the current fiscal period) owed by UAG and the UAG Subsidiaries.
Neither UAG nor any UAG Subsidiary has been subject to a federal or state tax
audit of any kind, and no adjustment has been proposed by the IRS with respect
to any return for any subsequent year. UAG knows of no basis for an assertion
of a deficiency for Taxes against UAG or any UAG Subsidiary.
.8 DISCLOSURE.
Neither UAG nor any UAG Subsidiary has made any material
misrepresentation to the Company or the Stockholder
32
relating to this Agreement and neither UAG nor any UAG Subsidiary has omitted
to state to the Company or the Stockholder any material fact relating to this
Agreement which is necessary in order to make the information given by or on
behalf of UAG or any UAG Subsidiary to the Company or the Stockholder or their
representatives at or prior to Closing not misleading. No fact, event,
condition or contingency exists or has occurred which has, or in the future can
reasonably be expected to have, a material adverse effect on UAG and the UAG
Subsidiaries, taken as a whole, which has not been disclosed in the SEC Filings
or the Schedules to this Agreement.
5
COVENANTS AND ADDITIONAL AGREEMENTS
.1 ACCESS; CONFIDENTIALITY.
Between the date hereof and the Closing Date, the Stockholder, the
Company and Xx. Xxxxx will (i) provide to the officers and other authorized
representatives of UAG and Sub full access, during normal business hours, to
any and all premises, properties, files, books, records, documents, and other
information of the Company and will cause their officers to furnish to UAG and
Sub and their authorized representatives any and all financial, technical and
operating data and other information pertaining to the businesses and
properties of the Company, and (ii) make available for inspection and copying
by UAG and Sub true and complete copies of any documents relating to the
foregoing. UAG and Sub will hold in confidence (unless and to the extent
compelled to disclose by judicial or administrative process or, in the opinion
of its counsel, by other requirements of law) all Confidential Information (as
defined below) and will not disclose the same to any third party except in
connection with obtaining financing and otherwise as may reasonably be
necessary to carry out this Agreement and the transactions contemplated hereby,
including any due diligence review by or on behalf of UAG and Sub. If this
Agreement is terminated, UAG and Sub will promptly return to the Company, upon
the reasonable request of the Company, all Confidential Information furnished
by the Company and held by UAG and Sub, including all copies and summaries
thereof. As used herein, "Confidential Information" shall mean all information
concerning the Company obtained by UAG or Sub from the Company in connection
with the transactions contemplated by this Agreement, except information (x)
ascertainable or obtained from public information, (y) received from a third
party not employed by or otherwise affiliated with the Company or (z) which is
or becomes known to the public, other than through a breach by UAG of this
Agreement. The Stockholder will hold in confidence (unless and to the extent
compelled to disclose by judicial or administrative process, or, in the opinion
of their counsel, by other requirements of law) all UAG Confidential
Information (as defined below) and will not disclose the same to any third
party except as may reasonably be necessary to carry out this Agreement and the
transactions contemplated
33
hereby. If this Agreement is terminated, the Stockholder will promptly return
to UAG, upon the reasonable request of UAG, all UAG Confidential Information
furnished by UAG and held by the Stockholder, including all copies and
summaries thereof. As used herein, "UAG Confidential Information" shall mean
all information concerning UAG obtained by the Stockholder, the Company and Xx.
Xxxxx in connection with the transactions contemplated by this Agreement,
except information (x) ascertained or obtained from public information, (y)
received from a third party not employed or otherwise affiliated with UAG or
(z) which is or becomes known to the public, other than a breach by the
Stockholder, the Company and Xx. Xxxxx of this Agreement.
.2 FURNISHING INFORMATION; ANNOUNCEMENTS.
The Stockholder and the Company, on the one hand, and UAG and Sub, on
the other hand, will, as soon as practicable after reasonable request therefor,
furnish to the other all the information concerning the Stockholder and the
Company or UAG and Sub, respectively, required for inclusion in any statement
or application made by UAG or the Company to any governmental or regulatory
body or in connection with obtaining any third party consent in connection with
the transactions contemplated by this Agreement. Neither the Stockholder nor
the Company, on the one hand, nor UAG nor Sub, on the other hand, or any
representative thereof, shall issue any press releases or otherwise make any
public statement with respect to the transactions contemplated hereby without
the prior consent of the other, except as may be required by law (including
federal or state securities laws) as determined by such parties' counsel.
.3 ANTITRUST IMPROVEMENTS ACT COMPLIANCE.
UAG and Sub and the Stockholder, Xx. Xxxxx and the Company, as
applicable, shall each file or cause to be filed with the Federal Trade
Commission and the United States Department of Justice any notifications
required to be filed by the respective "ultimate parent" entities under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "H-S-R
Act"), and the rules and regulations promulgated thereunder, with respect to
the transactions contemplated herein. The parties shall use their best efforts
to make such filings promptly, to respond to any requests for additional
information made by either of such agencies, to cause the waiting periods under
the H-S-R Act to terminate or expire at the earliest possible date and to
resist vigorously, at their respective cost and expense (including, without
limitation, the institution or defense of legal proceedings), any assertion
that the transactions contemplated herein constitute a violation of the
antitrust laws, all to the end of expediting consummation of the transactions
contemplated herein; provided, however, that if UAG or the Stockholder shall
determine after issuance of any preliminary injunction that continuing such
resistance is not in its or their best interests, UAG or the Stockholder, as
the case may be, may, by written
34
notice to the other party, terminate this Agreement with the effect set forth
in Section 8.2 hereof.
.4 CERTAIN CHANGES AND CONDUCT OF BUSINESS.
(a) From and after the date of this Agreement and until the Closing
Date, the Company shall, and the Stockholder and Xx. Xxxxx shall cause the
Company to, conduct its business solely in the ordinary course consistent with
past practices and, without the prior written consent of UAG, neither the
Stockholder, Xx. Xxxxx, nor the Company will, except as required or permitted
pursuant to the terms hereof, permit the Company to:
(i) make any material change in the conduct of its business and
operations or enter into any transaction other than in the ordinary course
of business consistent with past practices;
(ii) make any change in its Articles of Incorporation or Bylaws, issue
any additional shares of capital stock or equity securities or grant any
option, warrant or right to acquire any capital stock or equity securities
or issue any security convertible into or exchangeable for its capital
stock or alter any term of any of its outstanding securities or make any
change in its outstanding shares of capital stock or other ownership
interests or its capitalization, whether by reason of a reclassification,
recapitalization, stock split or combination, exchange or readjustment of
shares, stock dividend or otherwise;
(iii) (A) incur, assume or guarantee any indebtedness for borrowed
money, issue any notes, bonds, debentures or other corporate securities or
grant any option, warrant or right to purchase any thereof, except pursuant
to transactions in the ordinary course of business consistent with past
practices, (B) issue any securities convertible or exchangeable for debt
securities of the Company, or (C) issue any options or other rights to
acquire from the Company, directly or indirectly, debt securities of the
Company or any security convertible into or exchangeable for such debt
securities;
(iv) make any sale, assignment, transfer, abandonment or other
conveyance of any of its assets or any part thereof, except transactions
pursuant to existing contracts set forth in Schedule 2.15 hereto and
dispositions of inventory or of worn-out or obsolete equipment for fair or
reasonable value in the ordinary course of business consistent with past
practices;
(v) subject any of its assets, or any part thereof, to any Lien or
suffer such to be imposed other than such Liens as may arise in the
ordinary course of business
35
consistent with past practices by operation of law which will not have, or
cannot reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect;
(vi) declare, set aside or pay any dividends or other distributions
(whether in cash, stock, property or any combination thereof) in respect of
any shares of its capital stock (other than distributions of net income
attributable to periods after November 30, 1996) or redeem, retire,
purchase or otherwise acquire, directly or indirectly, any shares of its
capital stock;
(vii) acquire any assets, raw materials or properties, or enter into
any other transaction, other than in the ordinary course of business
consistent with past practices;
(viii) enter into any new (or amend any existing) employee benefit
plan, program or arrangement or any new (or amend any existing) employment,
severance or consulting agreement, grant any general increase in the
compensation of officers or employees (including any such increase pursuant
to any bonus, pension, profit-sharing or other plan or commitment) or grant
any increase in the compensation payable or to become payable to any
employee, except in accordance with pre-existing contractual provisions or
consistent with past practices;
(ix) make or commit to make any individual material capital
expenditure in excess of $50,000, or aggregate capital expenditures in
excess of $150,000;
(x) pay, loan or advance any amount to, or sell, transfer or lease any
properties or assets to, or enter into any agreement or arrangement with,
any of their Affiliates;
(xi) guarantee any indebtedness for borrowed money or any other
obligation of any other Person, other than in the ordinary course of
business consistent with past practice;
(xii) fail to keep in full force and effect insurance comparable in
amount and scope to coverage maintained by the Company (or on behalf of the
Company) on the date hereof;
(xiii) make any loan, advance or capital contribution to or investment
in any Person;
(xiv) make any change in any method of accounting or accounting
principle, method, estimate or practice except for any such change required
by reason of a concurrent change in GAAP or write-down the value of any
inventory or write-off as uncollectible any accounts receivable except in
36
the ordinary course of business consistent with past practices;
(xv) settle, release or forgive any material claim or litigation or
waive any material right;
(xvi) make, enter into, modify, amend in any material respect or
terminate any material commitment, bid or expenditure, other than in the
ordinary course of business consistent with past practice;
(xvii) take any other action that would cause any of the
representations and warranties made by the Company in this Agreement not to
remain true and correct; or
(xviii) commit itself to do any of the foregoing.
(b) From and after the date hereof and until the Closing Date, the
Stockholder, Xx. Xxxxx and the Company will cause the Company to use its
reasonable best efforts to:
(i) continue to maintain, in all material respects, its properties in
accordance with present practices in a condition suitable for their current
use;
(ii) comply with all applicable Environmental Laws, and, in the event
the Company shall receive notice that there exists a violation of any
Environmental Law with respect to its operations or any Real Property,
promptly (and in any event within the time period permitted by the
applicable governmental authority) remove or remedy such violation in
accordance with all applicable Environmental Laws; provided, however, that
any remediation or removal shall be subject to the prior approval of UAG;
(iii) file, when due or required, federal, state, foreign and other
tax returns and other reports required to be filed and pay when due all
taxes, assessments, fees and other charges lawfully levied or assessed
against the Company unless the validity thereof is contested in good faith
and by appropriate proceedings diligently conducted;
(iv) keep its books of account, records and files in the ordinary
course and in accordance with existing practices;
(v) preserve its business organization intact and continue to maintain
existing business relationships with suppliers, customers and others with
whom business relationships exist other than relationships that are, at the
same time, not economically beneficial to it; and
(vi) continue to conduct its business in the ordinary course
consistent with past practices.
37
(c) From and after the date of this Agreement and until the Closing
Date, the Stockholder shall not, except with the prior written consent of UAG
and except as required or permitted pursuant to the terms hereof:
(i) make any material change to the Real Property or the Improvements;
(ii) subject the Real Property or the Improvements, or any part
thereof, to any new Lien or suffer such to be imposed;
(iii) take any other action that would cause any of the
representations or warranties made by the Stockholder in this Agreement not
to remain true and correct; or
(iv) commit themselves to do any of the foregoing.
.5 NO INTERCOMPANY PAYABLES OR RECEIVABLES.
Except as disclosed on Schedule 5.5 hereto, at the Closing there will
be no intercompany payables or intercompany receivables due and/or owing
between the Stockholder, Xx. Xxxxx and their Affiliates (other than the
Company) on the one hand, and the Company, on the other hand.
.6 NEGOTIATIONS.
Until the earlier of 180 days from the date hereof, the Closing and
the termination of this Agreement pursuant to clause (ii) of Section 8.1
hereof, neither the Stockholder, nor the Company, nor Xx. Xxxxx nor their
officers, directors, employees, advisors, agents, representatives, Affiliates
or anyone acting on behalf of the Stockholder, the Company, Xx. Xxxxx or such
Persons, shall, directly or indirectly, encourage, solicit, initiate or engage
in discussions or negotiations with, or provide any information to, any person
(other than UAG or its representatives) concerning any merger, sale of assets
(other than in the ordinary course of business), purchase or sale of shares of
capital stock or similar transaction involving the Company or purchase or sale
of any of the Real Property or Improvements. The Stockholder and Xx. Xxxxx
shall promptly communicate to UAG any inquiries or communications concerning
any such transaction (including the identity of any person making such inquiry
or communication) which the Company, the Stockholder or Xx. Xxxxx may receive
or of which any of such parties may become aware.
.7 CONSENTS; COOPERATION.
Subject to the terms and conditions hereof, the Stockholder, Xx. Xxxxx
and the Company and UAG will use their respective best efforts at their own
expense:
38
(i) to obtain prior to the earlier of the date required (if so
required) or the Closing Date, all waivers, permits, licenses, approvals,
authorizations, qualifications, orders and consents of all third parties
and governmental authorities, and make all filings and registrations with
governmental authorities which are required on their respective parts for
(A) the consummation of the transactions contemplated by this Agreement,
(B) the ownership or leasing and operating after the Closing by the Company
of all of its material properties and (C) the conduct after the Closing by
the Company of its business as conducted by it on the date hereof;
(ii) to defend, consistent with applicable principles and requirements
of law, any lawsuit or other legal proceedings, whether judicial or
administrative, whether brought derivatively or on behalf of third persons
(including governmental authorities) challenging this Agreement or the
transactions contemplated hereby and thereby; and
(iii) to furnish each other such information and assistance as may
reasonably be requested in connection with the foregoing.
.8 ADDITIONAL AGREEMENTS.
Subject to the terms and conditions of this Agreement, each of the
parties hereto agrees to use its best efforts at its own expense to take, or
cause to be taken, all action and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement.
The Stockholder agrees to execute and deliver any and all documents that the
manufacturer typically requires a selling dealer to execute in connection with
the transfer of a dealership. In case at any time after the Closing any further
action is necessary or desirable to carry out the purposes of this Agreement,
the Stockholder and the proper officers of the Company shall take all such
necessary action.
.9 INTERIM FINANCIAL STATEMENTS.
Within thirty (30) days after the end of each calendar month after the
date of this Agreement and continuing until the Closing Date, the Company will
deliver to UAG the most recent monthly and year-to-date financial statements
provided to Nissan. All such statements shall fairly present the financial
position, results of operations and cash flow of the Company as of the date or
for the periods indicated and shall be prepared on a basis consistent with the
Company Factory Statement attached hereto as part of Schedule 2.5.
.10 NOTIFICATION OF CERTAIN MATTERS.
39
Between the date hereof and the Closing, each party to this Agreement
will give prompt notice in writing to the other parties hereto of: (i) any
information that indicates that any representation and warranty of such party
contained herein was not true and correct as of the date hereof or will not be
true and correct as of the Closing, (ii) the occurrence of any event which
could result in the failure to satisfy a condition specified in Article 6 or
Article 7 hereof, as applicable, (iii) any notice or other communication from
any third person alleging that the consent of such third person is or may be
required in connection with the transactions contemplated by this Agreement,
and (iv) in the case of the Stockholder, Xx. Xxxxx and the Company, any notice
of, or other communication relating to, any default or event which, with notice
or lapse of time or both, would become a default under any Company Agreement.
Xx. Xxxxx shall (x) promptly advise UAG of any event that has, or could in the
future have, a Material Adverse Effect (y) confer on a regular basis with one
or more designated representatives of UAG to report operational matters and to
report the general status of ongoing operations, and (z) notify UAG of any
emergency or other change in the normal course of business or in the operation
of the properties of the Company and of any governmental complaints,
investigations or hearings (or communications indicating that the same may be
contemplated) or adjudicatory proceedings involving the Company or any of their
assets or operations, and will keep UAG fully informed of such events and
permit UAG's representatives access to all materials prepared in connection
therewith. The Stockholder and Xx. Xxxxx shall give prompt notice to UAG of any
notice or other communication from any third person asserting any right, title
or interest in any of the Shares held by the Stockholder (including, without
limitation, any threat to commence, or notice of the commencement of any action
or other proceeding with respect to any of the Shares) or the occurrence of any
other event of which the Stockholder or Xx. Xxxxx has knowledge which could
result in any failure to consummate the sale of the Shares as contemplated
hereby.
.11 ASSURANCE BY THE STOCKHOLDER AND XX. XXXXX.
The Stockholder and Xx. Xxxxx shall cause the Company to comply with
its covenants set forth in this Agreement and Xx. Xxxxx shall cause the
Stockholder to comply with its covenants set forth in this Agreement.
.12 SECTION 338(H)(10) ELECTION.
The Stockholder agrees to join with UAG or Sub, if UAG or Sub so
requests, in making a timely election to treat the purchase and sale of the
Shares pursuant to this Agreement as a sale of all of the Company's assets
under Section 338(h)(10) of the Internal Revenue Code of 1986, as amended, as
permitted pursuant to Section 1.338(h)(10)-1(a) of the Treasury Regulations
promulgated thereunder.
40
.13 NON-INTERFERENCE.
From the Closing Date until the later of (i) five years or (ii) such
other period of time as may be the maximum permissible period of enforceability
of this covenant, the Stockholder, Xx. Xxxxx and their Affiliates shall not
interfere with or disrupt, or attempt to interfere with or disrupt, the
relationship, contractual or otherwise, between the Company and any customer,
client, supplier, manufacturer, distributor, consultant, independent contractor
or employee of the Company and agree not to solicit or hire any employee of the
Company unless such employee has already terminated his employment with the
Company.
(Remainder of page intentionally left blank)
41
.14 DISTRIBUTION OF EARNINGS TO STOCKHOLDER.
At the Supplemental Closing, the Company shall make a final
distribution to the Stockholder of any earnings attributable to the period from
December 1, 1996 to the Closing Date (to the extent such earnings have not
previously been distributed); provided, however, that such distribution shall
only be made to the extent that the Final Net Worth as determined in accordance
with Section 1.3 hereof exceeds the November 30 Net Worth.
.15 ACCOUNTANT'S FEES.
To the extent that Coopers & Xxxxxxx determines that it is necessary
to have the Company's accountant certify or audit any of the Company Financial
Statements, then the Stockholder and UAG shall each pay one-half (1/2) of the
Company's accountant's fees relating hereto.
.16 S SHORT YEAR.
The parties hereto acknowledge that upon the closing of the
transactions contemplated by this Agreement, the Company's status as an
S-corporation for federal income tax purposes shall cease, that the taxable
year of the Company in which such closing occur shall be divided into two (2)
short taxable years (an S Short Year and C Short Year). Each of the parties
hereto covenants and agrees to make all elections, consents, statements, and
filings that may be required by the Internal Revenue Code of 1986 to close the
Company's books on the last applicable day of the S Short Year.
6
CONDITIONS TO THE OBLIGATIONS
OF UAG AND SUB TO EFFECT THE CLOSING
The obligations of UAG and Sub required to be performed by them at the
Closing shall be subject to the satisfaction, at or prior to the Closing, of
each of the following conditions, each of which may be waived by UAG or Sub as
provided herein except as otherwise required by applicable law:
.1 REPRESENTATIONS AND WARRANTIES; AGREEMENTS; COVENANTS.
42
Each of the representations and warranties of the Company, the
Stockholder and Xx. Xxxxx contained in this Agreement shall be true and correct
as of the date hereof and (having been deemed to have been made again at and as
of the Closing) shall be true and correct in all material respects as of the
Closing. Each of the obligations of the Company, the Stockholder and Xx. Xxxxx
required by this Agreement to be performed by them at or prior to the Closing
shall have been duly performed and complied with in all respects as of the
Closing. At the Closing, UAG shall have received a certificate, dated the
Closing Date and duly executed by the Stockholder and Xx. Xxxxx, to the effect
that the conditions set forth in the two preceding sentences have been
satisfied.
.2 AUTHORIZATION; CONSENTS.
(a) All corporate action necessary to authorize the execution,
delivery and performance of this Agreement and the Documents, and the
consummation of the transactions contemplated hereby and thereby shall have
been duly and validly taken by the Company. All filings required to be made
under the H-S-R Act in connection with the transactions contemplated hereby
shall have been made and all applicable waiting periods with respect to each
such filing, including any extensions thereof, shall have expired or been
terminated.
(b) All notices to, and declarations, filings and registrations with,
and consents, authorizations, approvals and waivers from, governmental and
regulatory bodies and third persons (including, but not limited to, Nissan
required to consummate the transactions contemplated hereby and all consents or
waivers shall have been made or obtained.
.3 OPINIONS OF THE COMPANY'S AND THE STOCKHOLDER'S COUNSEL.
UAG and Sub shall have been furnished with the opinion of counsel for
the Company and the Stockholder, dated the Closing Date, in form and substance
satisfactory to UAG and its counsel, which opinion shall have been rendered
with respect to those matters contained in Sections 2.1, 2.2, 2.3, 2.4, 2.9,
3.1 and 3.2 hereof. In rendering the foregoing opinion, such counsel may rely
as to factual matters upon certificates or other documents furnished by
officers and directors of the Company and by government officials and upon such
other documents and data as such counsel deem appropriate as a basis for their
opinions. Such counsel may specify the state or states in which they are
admitted to practice, that they are not admitted to the Bar in any other state
or experts in the law of any other state and that such opinions are limited to
the State of Nevada and federal laws.
.4 ABSENCE OF LITIGATION.
43
No order, stay, injunction or decree of any court of competent
jurisdiction in the United States shall be in effect (i) that prevents or
delays the consummation of any of the transactions contemplated hereby or (ii)
would impose any limitation on the ability of UAG or Sub effectively to
exercise full rights of ownership of the Shares. No action, suit or proceeding
before any court or any governmental or regulatory entity shall be pending (or
threatened by any governmental or regulatory entity), and no investigation by
any governmental or regulatory entity shall have been commenced (and be
pending), seeking to restrain or prohibit (or questioning the validity or
legality of) the consummation of the transactions contemplated by this
Agreement or seeking damages in connection therewith which UAG or Sub, in good
faith and with the advice of counsel, believes makes it undesirable to proceed
with the consummation of the transactions contemplated hereby.
.5 NO MATERIAL ADVERSE EFFECT.
During the period from December 31, 1995 to the Closing Date, there
shall not have been any material adverse change in the assets, properties,
business, operations, prospects, net income or financial condition of the
Company.
.6 NET WORTH.
On the Closing Date, the Stockholder shall deliver to UAG a balance
sheet of the Company dated as of the most recent practicable date preceding the
Closing Date, prepared in accordance with the Accounting Principles (the
"Estimated Closing Date Balance Sheet"). The Estimated Closing Date Balance
Sheet shall show as of the date thereof, after taking into account the payment
of any of the fees, costs and expenses by the Company incurred in connection
with this Agreement, a Net Worth not more than $250,000 less than the November
30, 1996 Net Worth.
.7 COMPLETION OF DUE DILIGENCE.
UAG and Sub shall have completed their due diligence examination of
the Company, the Real Property and the Improvements and the results of such
examination, including any Phase I or Phase II environmental audits of the
Company, shall be satisfactory to UAG and Sub. UAG will pay the costs for a
Phase I environmental audit. If, after obtaining the results of the Phase I
environmental audit, UAG determines that a Phase II environmental audit is
required, then the expenses of performing the Phase II environmental audit
shall be paid one-half by UAG and one-half by the Stockholder; provided,
however, that the Stockholder may elect not to pay any costs of the Phase II
audit but, if the Stockholder elects not to pay one-half of the costs of the
Phase II audit and the results of the Phase II audit conclude that remediation
is recommended, the Stockholder shall pay the entire costs of the Phase II
audit.
44
.8 NET INCOME.
Coopers & Xxxxxxx shall have confirmed to UAG that the Pre-Tax
Earnings of the Company for the year ending December 31, 1996 are no less than
the pre-tax earnings set forth on the Company's December 31, 1996 income
statement.
.9 LEASE.
The Company and the Stockholder shall have entered into the Lease.
.10 BOARD APPROVAL.
The Board of Directors of UAG and Sub shall have approved the
consummation of all of the transactions contemplated by this Agreement.
.11 CERTIFICATES.
The Stockholder, the Company and Xx. Xxxxx shall have furnished UAG
and Sub with a certificate, dated as of the Closing Date, executed by the
Stockholder and Xx. Xxxxx certifying to the fulfillment of the conditions set
forth in Sections 6.4, 6.5, 6.6 and 6.14 hereof and shall have furnished UAG
and Sub with such any other certificates of its officers and others as UAG and
Sub may reasonably request to evidence compliance with the conditions set forth
in this Article 6.
.12 LEGAL MATTERS.
All certificates, instruments, opinions and other documents required
to be executed or delivered by or on behalf of the Stockholder and the Company
under the provisions of this Agreement, and all other actions and proceedings
required to be taken by or on behalf of the Stockholder and the Company in
furtherance of the transactions contemplated hereby, shall be reasonably
satisfactory in form and substance to counsel for UAG and Sub.
.13 APPROVAL OF MANUFACTURERS AND DISTRIBUTORS.
The Stockholder and the Company shall have obtained the consent,
authorization and approval of Nissan for the transfer of the Company to Sub on
terms no less favorable to those granted to the Stockholder and the Company
immediately prior to the execution of this Agreement.
.14 ENVIRONMENTAL LAWS.
The Company shall be in compliance with all applicable Environmental
Laws.
.15 NONDISTURBANCE AGREEMENT.
45
UAG shall have been provided with a nondisturbance agreement in form
and substance satisfactory to UAG with respect to the properties that are the
subject of the Lease.
.16 TITLE INSURANCE.
UAG shall have obtained title insurance on behalf of the Company with
respect to the leasehold estates arising out of the Lease in form and substance
satisfactory to UAG.
.17 SCHEDULES.
The Company and the Stockholder shall have delivered to UAG and Sub
all Schedules referred to in Articles 2 and 3 and such Schedules shall be
acceptable in form and substance to UAG and Sub.
.18 LEASE TERMINATION AGREEMENT/MEMORANDUM OF LEASE.
The appropriate parties shall have executed a lease termination
agreement and memorandum of lease in form and substance satisfactory to UAG.
7
CONDITIONS TO THE OBLIGATIONS OF
THE COMPANY, THE STOCKHOLDER AND XX. XXXXX
TO EFFECT THE CLOSING
The obligations of the Company, the Stockholder and Xx. Xxxxx required
to be performed by them at the Closing shall be subject to the satisfaction, at
or prior to the Closing, of each of the following conditions, each of which may
be waived by the Company, the Stockholder and Xx. Xxxxx as provided herein
except as otherwise required by applicable law:
.1 REPRESENTATIONS AND WARRANTIES; AGREEMENTS.
Each of the representations and warranties of UAG and Sub contained in
this Agreement shall be true and correct on the date made and shall be true and
correct in all material respects as of the Closing. Each of the obligations of
UAG and Sub required by this Agreement to be performed by them at or prior to
the Closing shall have been duly performed and complied with in all material
respects as of the Closing. At the Closing, the Stockholder shall have received
a certificate, dated the Closing Date and duly executed by UAG and Sub to the
effect that the conditions set forth in the preceding two sentences have been
satisfied.
46
.2 AUTHORIZATION OF THE AGREEMENT, CONSENTS.
(a) All corporate action necessary to authorize the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby shall have been duly and validly taken by UAG
and Sub. All filings required to be made under the H-S-R Act in connection with
the transactions contemplated hereby shall have been made and all applicable
waiting periods with respect to each such filing, including extensions thereof,
shall have expired or been terminated.
(b) All notices to, and declarations, filings and registrations with,
and consents, authorizations, approvals and waivers from, governmental and
regulatory bodies and third persons (including, but not limited to, [Nissan]
required to consummate the transactions contemplated hereby and all consents or
waivers shall have been made or obtained.
.3 OPINIONS OF UAG'S AND SUB'S COUNSEL.
The Stockholder shall have been furnished with the opinion of Xxxxxx &
Xxxxxx, counsel to UAG and Sub, dated the Closing Date, in form and substance
reasonably satisfactory to the Stockholder and its counsel, which opinion shall
have been rendered with respect to those matters contained in Sections 4.1, 4.2
and 4.5 hereof. In rendering the foregoing opinions, such counsel may rely as
to factual matters upon certificates or other documents furnished by officers
and directors of UAG and the Sub and by government officials, and upon such
other documents and data as such counsel deems appropriate as a basis for its
opinion. Such opinions may be limited to federal laws and the General
Corporation Law of the State of Delaware.
.4 ABSENCE OF LITIGATION.
No order, stay, injunction or decree of any court of competent
jurisdiction in the United States shall be in effect (i) that prevents or
delays the consummation of any of the transactions contemplated hereby or (ii)
would impose any limitation on the ability of the Stockholder effectively to
exercise full rights of ownership of the Shares. No action, suit or proceeding
before any court or any governmental or regulatory entity shall be pending (or
threatened by any governmental or regulatory entity), and no investigation by
any governmental or regulatory entity shall have been commenced (and be
pending), seeking to restrain or prohibit (or questioning the validity or
legality of) the consummation of the transactions contemplated by this
Agreement or seeking damages in connection therewith which the Stockholder, in
good faith and with the advice of counsel, believes makes it undesirable to
proceed with the consummation of the transactions contemplated hereby.
.5 CERTIFICATES.
UAG and Sub shall have furnished the Stockholder with such
certificates of its officers and others to evidence compliance with the
conditions set forth in this Article 7 as may be reasonably requested by the
Stockholder.
.6 LEGAL MATTERS.
All certificates, instruments, opinions and other documents required
to be executed or delivered by or on behalf of UAG or Sub under the provisions
of this Agreement, and all other actions and proceedings required to be taken
by or on behalf of UAG or Sub in furtherance of the transactions contemplated
hereby, shall be reasonably satisfactory in form and substance to counsel for
the Stockholder.
.7 SCHEDULES.
UAG shall have delivered to the Stockholder all Schedules referred to
in Article 4 and such Schedules shall be acceptable in form and substance to
the Stockholder.
8
TERMINATION
.1 TERMINATION.
This Agreement may be terminated at any time prior to Closing:
(i) by mutual consent of UAG and the Stockholder;
(ii) by either UAG or the Stockholder if the Closing shall not have
taken place on or prior to April 30, 1997, or such later date as shall have
been approved by UAG and the Stockholder (provided that the terminating
party is not otherwise in material breach of its representations,
warranties, covenants or agreements under this Agreement);
(iii) by UAG or the Stockholder if any court of competent jurisdiction
in the United States or other United States governmental body shall have
issued an order, decree or ruling or taken any other action restraining,
enjoining or otherwise prohibiting the transactions contemplated by this
Agreement, and such order, decree, ruling or other action shall have become
final and non-appealable;
(iv) by UAG or Sub if any of the conditions specified in Article 6
hereof have not been met or waived by UAG and Sub at such time as such
condition is no longer capable of satisfaction (provided UAG and Sub are
not otherwise in material breach of their or its representations,
warranties, covenants or agreements under this Agreement);
(v) by the Stockholder if any of the conditions specified in Article 7
hereof have not been met or waived by the Stockholder at such time as such
condition is no longer capable of satisfaction (provided that neither the
Stockholder nor the Company is otherwise in material breach of their or its
representations, warranties covenants or agreements under this Agreement);
or
(vi) by either UAG or the Stockholder if there has been a material
breach on the part of the other of any representation, warranty, covenant
or agreement set forth in this Agreement, which breach has not been cured
within ten (10) Business Days following receipt by the breaching party of
written notice of such breach.
If UAG or the Stockholder shall terminate this Agreement pursuant to
the provisions hereof, such termination shall be effected by notice to the
other party specifying the provision hereof pursuant to which such termination
is made.
.2 EFFECT OF TERMINATION.
Except (i) for any breach of this Agreement prior to its termination,
(ii) for the obligations contained in Sections 5.1 and 10.2 hereof and (iii) as
set forth in Sections 9.1 and 9.2 hereof, upon the termination of this
Agreement pursuant to Section 8.1 hereof, this Agreement shall forthwith become
null and void and none of the parties hereto or any of their respective
officers, directors, employees, agents, Affiliates, consultants, stockholders
or principals shall have any liability or obligation hereunder or with respect
hereto.
9
INDEMNIFICATION
.1 INDEMNIFICATION BY THE STOCKHOLDER.
Notwithstanding the Closing or the delivery of the Shares, the
Stockholder and Xx. Xxxxx indemnify and agree to fully defend, save and hold
harmless on an after-tax basis UAG, Sub, the Company (after Closing), and any
of their respective officers, directors, employees, stockholders, advisors,
representatives, agents and Affiliates (each a "UAG Indemnified Party"), if a
UAG Indemnified Party (including the Company after the Closing Date) shall at
any time or from time to time suffer any Costs (as defined in Section 9.6
below) arising, directly or indirectly, out of or resulting from, or shall pay
or become obligated to pay any sum on account of, (i) any and all Events of
Breach (as defined below) or (ii) any Claim before or by any court, arbitrator,
panel, agency or other governmental, administrative or judicial entity, which
Claim involves, affects or relates to any assets, properties or operations of
the Company or the conduct of the business of the Company prior to the Closing
Date (a "Stockholder Third Party Claim"). As used herein, "Event of Breach"
shall be and mean any one or more of the following: (i) any untruth or
inaccuracy in any representation of the Stockholder, the Company or Xx. Xxxxx
or the breach of any warranty of the Stockholder, the Company or Xx. Xxxxx
contained in this Agreement, including, without limitation, any
misrepresentation in, or omission from, any statement, certificate, schedule,
exhibit, annex or other document furnished pursuant to this Agreement by the
Stockholder, the Company or Xx. Xxxxx (or any representative of the
Stockholder, the Company or Xx. Xxxxx) to UAG (or any representative of UAG)
and any misrepresentation in or omission from any document furnished to UAG in
connection with the Closing, and (ii) any failure of the Stockholder, the
Company or Xx. Xxxxx duly to perform or observe any term, provision, covenant,
agreement or condition on the part
of the Stockholder, the Company or Xx. Xxxxx to be performed or observed.
.2 INDEMNIFICATION BY UAG AND SUB.
Notwithstanding the Closing, UAG and Sub indemnifies and agrees to
fully defend, save and hold harmless on an after-tax basis the Stockholder, the
Company (prior to Closing) and Xx. Xxxxx and any of their respective officers,
directors, employees, stockholders, advisors, representatives, agents and
Affiliates (each a "Stockholder Indemnified Party"), if a Stockholder
Indemnified Party shall at any time or from time to time suffer any Costs
arising, directly or indirectly, out of or resulting from, or shall pay or
become obligated to pay any sum on account of, (i) any and all UAG Events of
Breach (as defined below) or (ii) any Claim before or by any court, arbitrator,
panel, agency or other governmental, administrative or judicial entity, which
Claim involves, affects or relates to any assets, properties or operations of
UAG or the conduct of the business of UAG and Sub after the Closing Date (a
"UAG Third Party Claim"). As used herein, "UAG Event of Breach" shall be and
mean any one or more of the following: (i) any untruth or inaccuracy in any
representation of UAG or Sub or the breach of any warranty of UAG or Sub
contained in this Agreement, including, without limitation, any
misrepresentation in, or omission from, any statement, certificate, schedule,
exhibit, annex or other document furnished pursuant to this Agreement by UAG
(or any representative of UAG) to the Stockholder, the Company or Xx. Xxxxx (or
any representative of the Stockholder, the Company or Xx. Xxxxx) and any
misrepresentation in or omission from any document furnished to the
Stockholder, the Company or Xx. Xxxxx in connection with the Closing, and (ii)
any failure of UAG or Sub duly to perform or observe any term, provision,
covenant, agreement or condition on the part of UAG or Sub to be performed or
observed.
.3 PROCEDURES.
If (i) any Event of Breach occurs or is alleged and a UAG Indemnified
Party asserts that the Stockholder, the Company or Xx. Xxxxx have become
obligated to a UAG Indemnified Party pursuant to Section 9.1, or if any
Stockholder Third Party Claim is begun, made or instituted as a result of which
the Stockholder, the Company or Xx. Xxxxx may become obligated to a UAG
Indemnified Party hereunder, or (ii) a UAG Event of Breach occurs or is alleged
and a Stockholder Indemnified Party asserts that UAG has become obligated to a
Stockholder Indemnified Party pursuant to Section 9.2, or if any UAG Third
Party Claim is begun, made or instituted as a result of which UAG may become
obligated to a Stockholder Indemnified Party hereunder (for purposes of this
Article 9, any UAG Indemnified Party and any Stockholder Indemnified Party is
sometimes referred to as an "Indemnified Party" and UAG, Sub, the Stockholder
and Xx. Xxxxx are sometimes referred to as an "Indemnifying Party," and any UAG
Third Party Claim and any Stockholder Third Party Claim is sometimes referred
to as a "Third Party Claim," in each case as the context so requires), such
Indemnified Party shall give written notice to the Indemnifying Party of its
obligation to provide indemnification hereunder, provided that any failure to
so notify the Indemnifying Party shall not relieve them from any liability that
it may have to the Indemnified Party under this Article 9. If such notice
relates to a Third Party Claim, each Indemnifying Party, jointly and severally,
agrees to defend, contest or otherwise protect such Indemnified Party against
any such Third Party Claim at its sole cost and expense. Such Indemnified Party
shall have the right, but not the obligation, to participate at its own expense
in the defense thereof by counsel of such Indemnified Party's choice and shall
in any event cooperate with and assist the Indemnifying Party to the extent
reasonably possible. If the Indemnifying Party fails timely to defend, contest
or otherwise protect against such Third Party Claim, such Indemnified Party
shall have the right to do so, including, without limitation, the right to make
any compromise or settlement thereof, and such Indemnified Party shall be
entitled to recover the entire Cost thereof from the Indemnifying Party,
including, without limitation, attorneys' fees, disbursements and amounts paid
(or of which such Indemnified Party has become obligated to pay) as the result
of such Third Party Claim. Failure by the Indemnifying Party to notify such
Indemnified Party of its or their election to defend any such Third Party Claim
within fifteen (15) days after notice thereof shall have been given to the
Indemnifying Party shall be deemed a waiver by the Indemnifying Party of its or
their right to defend such Third Party Claim. If the Indemnifying Party assumes
the defense of the particular Third Party Claim, the Indemnifying Party shall
not, in the defense of such Third Party Claim, consent to entry of any judgment
or enter into any settlement, except with the written consent of such
Indemnified Party. In addition, the Indemnifying Party shall not enter into any
settlement of any Third Party Claim except with the written consent of such
Indemnified Party, which does not include as an unconditional term thereof the
giving by the claimant or the plaintiff to such Indemnified Party a full
release from all liability in respect of such Third Party Claim.
Notwithstanding the foregoing, the Indemnifying Party shall not be entitled to
control (but shall be entitled to participate at their own expense in the
defense of), and the Indemnified Party shall be entitled to have sole control
over, the defense or settlement of any Third Party Claim to the extent the
Third Party Claim seeks an order, injunction or other equitable relief against
the Indemnified Party which, if successful, could materially interfere with the
business, operations, assets, condition (financial or otherwise) or prospects
of the Indemnified Party.
.4 OFFSET.
In addition to and not in limitation of all rights of offset that an
Indemnified Party may have under applicable law,
the parties agree that, at any Indemnified Party's option, any or all amounts
owing to such Indemnified Party under this Article 9 or any other provision of
this Agreement or any other liability of the other parties (or any Affiliate of
the other parties) to such Indemnified Party in connection with any of the
Documents, may be recovered by the Indemnified Party by an offset against any
or all amounts due to such other parties pursuant to this Agreement or the
Documents.
.5 REMEDIES.
The rights of an Indemnified Party under this Article 9 are in
addition to such other rights and remedies which such Indemnified Party may
have under this Agreement, applicable law or otherwise.
.6 DEFINITIONS.
For purposes of this Article 9 "Costs" shall mean all liabilities,
losses, costs, damages (not including consequential damages), expenses, claims,
attorneys' fees, experts' fees, consultants' fees, and disbursements of any
kind or of any nature whatsoever. For purposes of application of the indemnity
provisions of this Article 9, the amount of any Cost arising from the breach of
any representation, warranty, covenant or agreement shall be the entire amount
of any Cost suffered, paid or required to be paid by the respective Indemnified
Party as a result of such breach.
10
MISCELLANEOUS
.1 SURVIVAL OF PROVISIONS.
The respective representations, warranties, covenants and agreements
of each of the parties to this Agreement (except covenants and agreements which
are expressly required to be performed and are performed in full on or before
the Closing Date) shall survive the Closing Date and the consummation of the
transactions contemplated by this Agreement. In the event of a breach of any
such representations, warranties or covenants, the party to whom such
representations, warranties or covenants have been made shall have all rights
and remedies for such breach available to it under the provisions of this
Agreement or otherwise, whether at law or in equity, regardless of any
disclosure to, or investigation made by or on behalf of, such party on or
before the Closing Date.
.2 FEES AND EXPENSES.
If the Closing does not occur and Section 5.6 hereof is breached, then
the Stockholder or the Company shall pay to UAG, within five (5) Business Days
after receipt of a request therefor, an amount equal to all of the legal and
other fees,
costs and expenses incurred by UAG in connection with this Agreement and the
transactions contemplated hereby.
.3 HEADINGS.
The section headings herein are for convenience of reference only, do
not constitute part of this Agreement and shall not be deemed to limit or
otherwise affect any of the provisions hereof.
.4 NOTICES.
All notices or other communications required or permitted hereunder
shall be given in writing and shall be deemed sufficient if delivered by hand,
recognized overnight delivery service for next business day delivery or
facsimile transmission (with original to follow by mail) or mailed by
registered or certified mail, postage prepaid (return receipt requested), as
follows:
If to the Company before the Closing Date:
Xxxx Xxxxx Nissan
0000 Xxxxxxx Xxxxx
Xxx Xxxxx, Xxxxxx 00000
with a copy to:
Xxxxx Xxxxxx & Associates, Ltd.
0000 Xxxxxx Xxxxxx Xxxxxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxx 00000-0000
Attn: A. Xxxx Xxxxxx, Esq.
If to the Company after the Closing Date (in addition to the
foregoing addresses):
United Auto Group, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxxxx
Executive Vice President
with a copy to:
Xxxxxx & Hardin
2700 International Tower
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxxxx Xxxxxxxxxx, Esq.
If to the Stockholder or Xx. Xxxxx:
0000 Xxxxxxx Xxxxx
Xxx Xxxxx, Xxxxxx 00000
with a copy to:
Xxxxx Xxxxxx & Associates, Ltd.
0000 Xxxxxx Xxxxxx Xxxxxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxx 00000-0000
Attn: A. Xxxx Xxxxxx, Esq.
If to UAG or Sub:
United Auto Group, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxxxx
Executive Vice President
with a copy to:
Xxxxxx & Hardin
2700 International Tower
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxxxx Xxxxxxxxxx, Esq.
or such other address as shall be furnished in writing by such party, and any
such notice or communication shall be effective and be deemed to have been
given as of the date so delivered or three (3) days after the date so mailed;
provided, however, that any notice or communication changing any of the
addresses set forth above shall be effective and deemed given only upon its
receipt.
.5 ASSIGNMENT.
This Agreement and all of the provisions hereof shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns, and the provisions of Article 9 hereof shall inure to
the benefit of the Indemnified Parties referred to therein; provided, however,
that neither this Agreement nor any of the rights, interests, or obligations
hereunder may be assigned by any of the parties hereto without the prior
written consent of the other parties. Notwithstanding the foregoing, UAG and
Sub shall have the unrestricted right to assign this Agreement and to delegate
all or any part of its obligations hereunder to any Affiliate of UAG or Sub,
but in such event UAG shall remain fully liable for the performance of all of
such obligations in the manner prescribed in this Agreement.
.6 ENTIRE AGREEMENT.
This Agreement (including the Schedules hereto) and the Documents
embody the entire agreement and understanding of the parties with respect to
the transactions contemplated hereby and supersede all prior written or oral
commitments, arrangements or
understandings between the parties with respect thereto and all prior drafts of
this Agreement. There are no restrictions, agreements, promises, warranties,
covenants or undertakings with respect to the transactions contemplated hereby
other than those expressly set forth herein or in the Documents. Prior drafts
of this Agreement shall not be used as a basis for interpreting this Agreement.
.7 WAIVER AND AMENDMENTS.
Each of the Stockholder, Xx. Xxxxx and the Company as one party, and
UAG and Sub as the other party may by written notice to the other parties (i)
extend the time for the performance of any of the obligations or other actions
of the other parties, (ii) waive any inaccuracies in the representations or
warranties of the other parties contained in this Agreement, (iii) waive
compliance with any of the covenants of the other parties contained in this
Agreement, (iv) waive performance of any of the obligations of the other
parties created under this Agreement, or (v) waive fulfillment of any of the
conditions to its own obligations under this Agreement. The waiver by any party
hereto of a breach of any provision of this Agreement shall not operate or be
construed as a waiver of any subsequent breach, whether or not similar. This
Agreement may be amended, modified or supplemented only by a written instrument
executed by the parties hereto.
.8 COUNTERPARTS.
This Agreement may be executed by facsimile signature(s) and in any
number of counterparts, all of which shall be considered one and the same
agreement and each of which shall be deemed an original.
.9 ACCOUNTING TERMS.
All accounting terms used herein which are not expressly defined or
modified in this Agreement shall have the respective meanings given to them in
accordance with GAAP.
.10 SCHEDULES.
Disclosure of any matter in any Schedule hereto or in the Financial
Statements shall not be considered as disclosure pursuant to any other
provision, subprovision, section or subsection of this Agreement or Schedule to
this Agreement and shall not be deemed to limit any representations or
warranties made herein.
.11 SEVERABILITY.
If any one or more of the provisions of this Agreement shall be held
to be invalid, illegal or unenforceable, the validity, legality or
enforceability of the remaining provisions
of this Agreement shall not be affected thereby. To the extent permitted by
applicable law, each party waives any provision of law which renders any
provision of this Agreement invalid, illegal or unenforceable in any respect.
.12 REMEDIES.
None of the remedies provided for in this Agreement, including
termination of this Agreement as set forth in Article 8, indemnification as set
forth in Article 9, or the payment of certain fees, costs and expenses as set
forth in Section 10.2, shall be the exclusive remedy of either party for a
breach of this Agreement. The parties hereto shall have the right to seek any
other remedy in law or equity in lieu of or in addition to any remedies
provided in this Agreement, including an action for damages for breach of
contract.
.13 GOVERNING LAW.
This Agreement shall be governed by and construed in accordance the
laws of the State of Nevada without giving effect to any choice or conflict of
law provision or rule that would cause the laws of any other jurisdiction to
apply.
.14 TIME IS OF THE ESSENCE.
Time is of the essence for purposes of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
UNITED AUTO GROUP, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
--------------------------------
Xxxxxx X. Xxxxxxxx
Executive Vice President
UAG NEVADA, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
--------------------------------
Its: Vice President
XXXX XXXXX NISSAN, INC.
By: /s/ Xxxx X. Xxxxx
--------------------------------
Xxxx X. Xxxxx
President
THE XXXX X. XXXXX FAMILY TRUST
By: /s/ Xxxx X. Xxxxx
--------------------------------
Trustee
/s/ Xxxx X. Xxxxx
-----------------------------------
XXXX X. XXXXX, INDIVIDUALLY
