EXCHANGE AGREEMENT
AGREEMENT, dated as of the 1st day of July, 1997, by and among HOMETOWN
AUTO RETAILERS, INC. ("Hometown"), a Delaware corporation having an address at
000 Xxxxxxx Xxxxxxxx, Xxxxxxxxx, XX 00000, on the one hand; and, respectively:
the shareholders of E R R Enterprises, Inc. ("ERR Corp."), a Connecticut
corporation, whose names and addresses are set forth on Exhibit A-1 hereto (the
"Shaker Stockholders"); the shareholders of Xxxxxxx Chevrolet, Inc. ("OldChev"),
a Pennsylvania corporation, and Xxxxxx Chevrolet, Oldsmobile, Isuzu, Inc.
("MullerChev") and Xxxxxx Automotive Group Inc. ("MullerToy"), each a New Jersey
corporation, whose names and addresses are set forth on Exhibit A-2 hereto (the
"Xxxxxx Stockholders"); and the shareholders of Westwood Lincoln-Mercury Sales,
Inc. ("Westwood") and Limousine Sales of Westwood, Inc. ("LimWest"), each a New
Jersey corporation, whose names and addresses are set forth on Exhibit A-3
hereto (the "Westwood Stockholders"), on the other hand, relating to an exchange
of Hometown shares for all the issued and outstanding shares of ERR Corp.,
MullerChev, MullerToy and Westwood pursuant to Section 351 of the Internal
Revenue Code of 1986, as amended.
W I T N E S S E T H
WHEREAS, the Shaker Stockholders own all of the issued and outstanding
stock of ERR Corp.; and
WHEREAS, the Xxxxxx Stockholders own all of the issued and outstanding
stock of each of OldChev, MullerChev and MullerToy; and
WHEREAS, the Westwood Stockholders own all the issued and outstanding
stock of Westwood and LimWest; and
WHEREAS, Hometown was formed for the purpose of acquiring, owning and
operating automobile dealerships and automobile service centers to be initially
located primarily in New Jersey and New England; and
WHEREAS, the Shaker Subsidiaries (as hereinafter defined), MullerChev,
MullerToy and Westwood own and operate automobile dealerships, automobile rental
or factory approved service facilities holding factory agreements from the
manufacturer of the respective automobiles sold and serviced by them (the
"Factory Agreements"); and
WHEREAS, immediately after the Exchange ERR Corp., OldChev, MullerChev,
MullerToy, Westwood and LimWest will survive as wholly-owned subsidiaries of
Hometown; and
WHEREAS, as a result of the transactions described herein, the Shaker
Stockholders, the Xxxxxx Stockholders and the Westwood Stockholders will own, in
the aggregate, in excess of 80%
of: (a) the total combined voting power of all classes of voting stock of
Hometown; and (b) the total number of outstanding shares of all classes of stock
of Hometown.
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
representations, warranties and covenants set forth below and other good and
valuable consideration, the sufficiency of which is hereby acknowledged, the
parties hereto hereby agree as follows:
1. Basic Transactions.
(a) Each of the Shaker Stockholders shall transfer all of their respective
right, title and interest in and to ERR Corp., representing, in the aggregate,
all of the issued and outstanding shares of ERR Corp., in exchange for One
Million Eight Hundred Eighty Thousand (1,880,000) shares of Class B Common
Stock, par value $0.001 per share of Hometown (the "Hometown Shares"), which
said Hometown Shares shall be registered in the individual names of the Shaker
Stockholders in proportion to their respective ownership of ERR Corp., and ERR
Corp. shall thereupon automatically become a wholly-owned subsidiary of Hometown
and, shall, itself, continue to be the direct parent corporation of Shaker's,
Inc., Family Ford, Inc., Family Rental, Inc. and Shaker's Lincoln-Mercury
Autocare, Inc., each of the four said subsidiaries of ERR Corp. (the "Shaker
Subsidiaries"), a Connecticut corporation (ERR Corp. and the Shaker Subsidiaries
sometimes hereinafter referred to as the "Shaker Companies" and, individually,
as a "Shaker Company");
(b) Each of the Xxxxxx Stockholders shall transfer all of their right,
title and interest in and to MullerToy, representing, in the aggregate, all of
the issued and outstanding shares of MullerToy, in exchange, in the aggregate,
for Nine Hundred Thirty-Three Thousand Two Hundred and Thirty-Two (933,232)
Shares, which said Hometown Shares shall be registered in the individual names
of the Xxxxxx Stockholders in proportion to their respective ownership of
MullerToy, and MullerToy shall thereupon automatically become a wholly-owned
subsidiary of Hometown;
(c) Each of the Xxxxxx Stockholders shall transfer all of their right,
title and interest in and to MullerChev, representing, in the aggregate, all of
the issued and outstanding shares of MullerChev, in exchange, in the aggregate,
for Six Thousand Seven Hundred (6,700) Shares, which said Hometown Shares shall
be registered in the individual names of the Xxxxxx Stockholders in proportion
to their respective ownership of MullerChev, and MullerChev shall thereupon
automatically become a wholly-owned subsidiary of Hometown;
(d) Each of the Xxxxxx Stockholders shall transfer all of their right,
title and interest in and to OldChev, representing, in the aggregate, all of the
issued and outstanding shares of OldChev, in exchange, in the aggregate, for
Sixty-Eight (68) Shares, which said Hometown Shares shall be registered in the
individual names of the Xxxxxx Stockholders in proportion to their respective
ownership of OldChev, and OldChev shall thereupon automatically become a
wholly-owned subsidiary of Hometown;
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(e) Each of the Westwood Stockholders shall transfer all of their
respective right, title and interest in and to Westwood and LimWest,
representing, in the aggregate, all of the issued and outstanding shares of
Westwood and LimWest, respectively, in exchange for Nine Hundred Forty Thousand
(940,000) Shares, which said Hometown Shares shall be registered in the
individual names of the Westwood Stockholders in proportion to their respective
ownership of Westwood, and Westwood and LimWest shall each thereupon
automatically become a wholly-owned subsidiary of Hometown.
2. Tax Considerations.
It is the intent of the parties hereto that the transactions described in
Section 1 of this Agreement constitute and qualify as a tax free exchange
pursuant to Section 351 of the Internal Revenue Code of 1986, as amended (the
"Code"). In such connection, the respective parties hereto shall report the
transactions described in Section 1 hereof applicable to each such party for
federal, state and local income tax purposes in a manner wholly consistent with
the provisions of this Section 2 and shall timely file all such returns, forms,
statements and agreements as may be required by the Internal Revenue Service on
such basis. The provisions of this Section 2 shall survive the closing of the
transactions described herein, including the initial public offering referred to
in Section 5(a)(iii)(B) hereof.
3. Representations and Warranties.
(a) Each of the Shaker Stockholders named on Exhibit A-1 hereto,
jointly and severally (except with respect to matters set forth in (a)(i),
(a)(ii) and (a)(x) below as to which each of the Shaker Stockholders on his, her
or its own behalf and not on behalf of any other Shaker Stockholder), represents
and warrants to Hometown, each of which representations and warranties shall be
deemed material and the basis for reliance by Hometown and each of which shall
be true, correct and complete both as of the date hereof and, unless Hometown
shall otherwise expressly agree in writing or unless otherwise expressly
contemplated by this Agreement, as of the date of consummation of the
transactions contemplated in this Agreement, as follows:
(i) Each of the Shaker Stockholders is the legal and equitable owner
of his, her or its respective shares of stock in ERR Corp. and such
shares of stock, on the date the transactions described in Section 1
hereof are consummated, will be owned free and clear of all
mortgages, liens, pledges, other security interests and any other
rights of any other person or entity to make claim upon the same for
any reason whatsoever.
(ii) Each of the Shaker Stockholders has the full power and
authority to execute and deliver this Agreement and to perform his,
her or its obligations hereunder and has duly executed and delivered
this Agreement. This Agreement constitutes a valid and legally
binding obligation as to each such Shaker Stockholder, enforceable
in accordance with its terms.
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(iii) The Shaker Stockholders named and/or described on Exhibit A-1
hereto constitute all the holders of the issued and outstanding
stock of all classes of ERR Corp. and, accordingly, the shares of
stock of ERR Corp. owned, in the aggregate, by the Shaker
Stockholders constitute all of the issued and outstanding stock of
every class and series. There are no options, warrants, calls,
subscriptions, convertible securities or other rights or other
agreements or commitments of any character whatsoever obligating ERR
Corp. to issue, transfer or sell any of its shares of stock or any
securities convertible into or exchangeable or exercisable for, or
otherwise evidencing a right to acquire any shares of stock or other
securities of any kind of ERR Corp. The capitalization of ERR Corp.
is as set forth on Exhibit A-1 hereto.
(iv) ERR Corp. is the legal and equitable owner of all the
outstanding shares of stock of every class in each Shaker Subsidiary
(which constitute the only subsidiaries of ERR Corp.) and such
shares of stock, on the date the transactions described in Section 1
hereof are consummated, will be owned free and clear of all
mortgages, liens, pledges, other security interests and any other
rights of any other person or entity to make claim upon the same for
any reason whatsoever. There are no options, warrants, calls,
subscriptions, convertible securities or other rights or other
agreements or commitments of any character whatsoever obligating any
Shaker Subsidiary to issue, transfer or sell any of its shares of
stock or any securities convertible into or exchangeable or
exercisable for, or otherwise evidencing a right to acquire any
shares of stock or other securities of any kind of such corporation.
Except as set forth on Exhibit A-1, none of the Shaker Subsidiaries
have any subsidiaries. The name of each Shaker Subsidiary is as set
forth on Exhibit A-1 hereto.
(v) Each Shaker Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Connecticut and each such corporation has the requisite corporate
power to carry on its business as it is now being conducted. Copies
of the Certificate of Incorporation and By-Laws of each Shaker
Company heretofore delivered to Hometown are accurate and complete
as of the date hereof.
(vi) Each Shaker Company has obtained all licenses, permits and
agreements necessary for the operation of its business as currently
conducted and all of such licenses, permits and agreements,
including without limitation by similarity or otherwise, all
franchise agreements with manufacturers whose new car vehicles such
Company sells (the "Shaker Factory Agreements") and all of such
agreements, including the Shaker Factory Agreements are in full
force and effect with no violation which could result in forfeiture
thereof and all of the same will remain in full force and effect
following the consummation of all the transactions contemplated by
this Agreement.
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(vii) Each Shaker Company either owns or has a valid lease for all
premises currently occupied by it for the conduct of its business.
All of such properties are zoned for the businesses now being
conducted thereon.
(viii) All material equipment used in the conduct of the business of
each Shaker Company is either owned by or under a valid lease with a
Shaker Company and is in good working condition.
(ix) Each Shaker Company operates its business, uses its assets and
occupies its properties in compliance with all applicable laws,
ordinances, rules and regulations and none of the Shaker
Stockholders has received any notice of violation of any of the
foregoing.
(x) Neither the execution and the delivery of this Agreement by any
of the Shaker Stockholders, nor the consummation of the transactions
contemplated hereby by any of the Shaker Stockholders, will: (A)
violate any statute, regulation, rule, judgment, order, decree,
stipulation, injunction, charge, or other restriction of any
government, governmental agency or court to which such Shaker
Stockholder is subject; or (B) conflict with, result in a breach of
or constitute a default under, result in the acceleration of, create
in any party the right to accelerate, terminate, modify, cancel, or
require any notice under any contract, agreement, instrument of
indebtedness, security interest or other arrangement to which such
Shaker Stockholder may be a party or by which such Shaker
Stockholder is bound or to which any of the assets of such Shaker
Stockholder is subject.
(xi) Neither the execution and the delivery of this Agreement by the
Shaker Stockholders, nor the consummation of the transactions
contemplated hereby, will (A) cause any Shaker Company to violate,
or result in the violation by any Shaker Company of, any statute,
regulation, rule, judgment, order, decree, stipulation, injunction,
charge, or other restriction of any government, governmental agency
or court to which any Shaker Company is subject or any provision of
its charter or By-Laws or (B) conflict with, result in a breach of
or constitute a default under, result in the acceleration of, create
in any party the right to accelerate, terminate, modify or cancel,
or require any notice under any contract, lease, sublease, license,
sublicense, franchise, permit, indenture or agreement or mortgage
for borrowed money, instrument of indebtedness, security interest or
other arrangement to which any Shaker Company may be a party or by
which any Shaker Company or any of its assets may be bound or to
which any of the assets of any Shaker Company is subject (including
without limitation by similarity or otherwise any "change of
control" provisions in any agreement to which any Shaker Company is
a party or by which it may be bound).
(xii) Each Shaker Company has filed all required federal, state and
local income tax returns and there is no liability for past income
taxes.
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(xiii) The Shaker Stockholders have delivered to Business Services,
Inc. ("BSI") on behalf of Hometown unaudited financial statements
for the years ended December 31, 1994, 1995 and 1996 and for the six
months ended June 30, 1977 (the "Shaker Financial Statements"), each
of which fairly presents the results of operations and the financial
position of the Shaker Companies as at and for the periods therein
presented in accordance with generally accepted accounting
principles, consistently applied. Since the date of the Shaker
Financial Statements, each Shaker Company has conducted its business
only in the ordinary course and there has not been any material
adverse change in its business, assets, properties, results of
operations, financial condition or prospects.
(xiv) As of the year-end and interim period dates set forth in the
Shaker Financial Statements, none of the Shaker Companies had any
liabilities or obligations, absolute or contingent, not reflected or
disclosed in the Shaker Financial Statements which were required to
be reflected or disclosed therein in accordance with generally
accepted accounting principles and no liabilities or obligations,
absolute or contingent, have been incurred since such dates which
are either out of the ordinary course of business or, in the
aggregate for each such Shaker Company, material in amount.
(xv) There are no hazardous environmental conditions which could
adversely affect the normal day-to-day business operations of any
Shaker Company, including after the consummation of all the
transactions contemplated by this Agreement, or require any
environmental clean-up of any of the premises on which any business
of any Shaker Company is conducted or result in any expense after
the consummation of the transactions contemplated by this Agreement.
(xvi) There is no action or proceeding or investigation pending or,
to the best knowledge of each of the Shaker Stockholders, threatened
against or involving any Shaker Company or any of its properties or
rights, which if adversely determined would, individually or in the
aggregate, have a material adverse effect on the business, assets,
properties, results of operations, financial condition or prospects
of any Shaker Company, nor is any Shaker Company subject to any
order, writ, injunction or decree which would have such effect.
(xvii) A summary of each bonus, incentive, deferred compensation,
profit sharing, pension, retirement, disability, hospitalization,
life insurance, health benefit, medical reimbursement, vacation,
sick pay, severance pay or other plan, program, arrangement or
Agreement (whether written or oral) (the "Employee Plans") providing
benefits to any of the employees of any Shaker Company (the "Shaker
Employee Plans") is set forth on Exhibit A-1 hereto. All amounts
required by the provisions of any Shaker Employee Plan and
applicable law to be contributed to any Shaker Employee Plan have
been, or will be, contributed to
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such Shaker Employee Plan through the date of closing of the
transactions contemplated by this Agreement, no contribution being
disproportionately large compared to any prior contribution.
(xviii) No consent, authorization or approval of, exemption by, or
filing with, any domestic governmental or administrative authority,
or any court, or any party to any agreement to which any of the
Shaker Stockholders or any Shaker Company is a party is required to
be obtained or made by any of the Shaker Stockholders or by any
Shaker Company in connection with the execution, delivery and
performance of this Agreement by the Shaker Stockholders or the
consummation of the transactions contemplated hereby by the Shaker
Stockholders except: (a) the approvals required to be obtained from
manufacturer of new car vehicles who are parties to any of the
Shaker Factory Agreements; and (b) such other consents, approvals,
orders, authorizations, registrations, declarations and filings the
failure of which to be obtained or made would not, individually or
in the aggregate (i) impair in any material respect the ability of
any of the Shaker Stockholders to perform its obligations under this
Agreement or (ii) prevent or impede the consummation of the
transactions contemplated by this Agreement or (iii) prevent or
impede the right of any Shaker Company to continue the conduct of
its business following the consummation of the transactions
contemplated by this Agreement in the same manner as the same is
being conducted to day.
(xix) At the closing of the transactions described in Section 1
hereof, the cash and cash equivalents, working capital and net worth
of each of the Shaker Companies as of such date shall, after giving
effect to: (A) all dividends declared prior thereto, including
dividends payable by such Companies subsequent to such closing and
(B) to all borrowings by such Companies between the date hereof and
such closing date, be not less than the amounts set forth on Exhibit
A-1 hereto.
(xx) No broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with
any of the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of any of the Shaker Stockholders
or by any Shaker Company.
(b) Each of the Xxxxxx Stockholders named on Exhibit A-2 hereto,
jointly and severally (except with respect to matters set forth in (b)(i),
(b)(ii) and (b)(ix) below as to which each of the Xxxxxx Stockholders on his,
her or its own behalf and not on behalf of any other of the Xxxxxx
Stockholders), represents and warrants to Hometown, each of which
representations and warranties shall be deemed material and the basis for
reliance by Hometown and each of which shall be true, correct and complete both
as of the date hereof and, unless Hometown shall otherwise expressly agree in
writing or unless otherwise expressly contemplated by this Agreement, as of the
date of consummation of the transactions contemplated in this Agreement, as
follows:
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(i) Each of the Xxxxxx Stockholders is the legal and equitable owner
of his, her or its respective shares of stock in OldChev, MullerChev
and MullerToy (the "Xxxxxx Companies" and, individually, a "Xxxxxx
Company") and such shares of stock, on the date the transactions
described in Section 1 hereof are consummated, will be owned free
and clear of all mortgages, liens, pledges, other security interests
and any other rights of any other person or entity to make claim
upon the same for any reason whatsoever.
(ii) Each of the Xxxxxx Stockholders has the full power and
authority to execute and deliver this Agreement and to perform his,
her or its obligations hereunder and has duly executed and delivered
this Agreement. This Agreement constitutes a valid and legally
binding obligation as to each such Xxxxxx Stockholder, enforceable
in accordance with its terms.
(iii) The Xxxxxx Stockholders named and/or described on Exhibit A-2
hereto constitute all the holders of the issued and outstanding
stock of all classes of the Xxxxxx Companies and, accordingly, the
shares of stock of each Xxxxxx Company owned, in the aggregate, by
the Xxxxxx Stockholders constitute all of the issued and outstanding
stock of every class and series. There are no options, warrants,
calls, subscriptions, convertible securities or other rights or
other agreements or commitments of any character whatsoever
obligating either Xxxxxx Company to issue, transfer or sell any of
its shares of stock or any securities convertible into or
exchangeable or exercisable for, or otherwise evidencing a right to
acquire any shares of stock or other securities of any kind of a
Xxxxxx Company. The capitalization of each Xxxxxx Company is as set
forth on Exhibit A-2 hereto.
(iv) Each Xxxxxx Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of New
Jersey and each such corporation has the requisite corporate power
to carry on its business as it is now being conducted. None of the
Xxxxxx Companies have any subsidiaries. Copies of the Certificate of
Incorporation and By-Laws of each Xxxxxx Company heretofore
delivered to Hometown are accurate and complete as of the date
hereof.
(v) Each Xxxxxx Company (other than OldChev which is not an
operating company) has obtained all licenses, permits and agreements
necessary for the operation of its business as currently conducted
and all of such licenses, permits and agreements, including without
limitation by similarity or otherwise, all franchise agreements with
manufacturers whose new car vehicles such Company sells (the "Xxxxxx
Factory Agreements") and all of such agreements, including the
Xxxxxx Factory Agreements are in full force and effect with no
violation which could result in forfeiture thereof and all of the
same will remain in full force and effect following the consummation
of all the transactions contemplated by this Agreement.
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(vi) Each Xxxxxx Company (other than OldChev which is not an
operating company) either owns or has a valid lease for all premises
currently occupied by it for the conduct of its business. All of
such properties are zoned for the businesses now being conducted
thereon.
(vii) All material equipment used in the conduct of the business of
each Xxxxxx Company (other than OldChev which is not an operating
company) is either owned by or under a valid lease with a Xxxxxx
Company and is in good working condition.
(viii) Each Xxxxxx Company (other than OldChev which is not an
operating company) operates its business, uses its assets and
occupies its properties in compliance with all applicable laws,
ordinances, rules and regulations and none of the Xxxxxx
Stockholders has received any notice of violation of any of the
foregoing.
(ix) Neither the execution and the delivery of this Agreement by any
of the Xxxxxx Stockholders, nor the consummation of the transactions
contemplated hereby by any of the Xxxxxx Stockholders, will: (A)
violate any statute, regulation, rule, judgment, order, decree,
stipulation, injunction, charge, or other restriction of any
government, governmental agency or court to which such Xxxxxx
Stockholder is subject; or (B) conflict with, result in a breach of
or constitute a default under, result in the acceleration of, create
in any party the right to accelerate, terminate, modify, cancel, or
require any notice under any contract, agreement, instrument of
indebtedness, security interest or other arrangement to which such
Xxxxxx Stockholder may be a party or by which such Xxxxxx
Stockholder is bound or to which any of the assets of such Xxxxxx
Stockholder is subject.
(x) Neither the execution and the delivery of this Agreement by the
Xxxxxx Stockholders, nor the consummation of the transactions
contemplated hereby, will (A) cause either Xxxxxx Company to
violate, or result in the violation by either Xxxxxx Company of, any
statute, regulation, rule, judgment, order, decree, stipulation,
injunction, charge, or other restriction of any government,
governmental agency or court to which either Xxxxxx Company is
subject or any provision of its charter or By-Laws or (B) conflict
with, result in a breach of or constitute a default under, result in
the acceleration of, create in any party the right to accelerate,
terminate, modify or cancel, or require any notice under any
contract, lease, sublease, license, sublicense, franchise, permit,
indenture or agreement or mortgage for borrowed money, instrument of
indebtedness, security interest or other arrangement to which either
Xxxxxx Company may be a party or by which either Xxxxxx Company or
any of its assets may be bound or to which any of the assets of
either Xxxxxx Company is subject (including without limitation by
similarity or otherwise any "change of control" provisions in any
agreement to which either Xxxxxx Company is a party or by which it
may be bound).
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(xi) Each Xxxxxx Company has filed all required federal, state and
local income tax returns and there is no liability for past income
taxes.
(xii) The Xxxxxx Stockholders have delivered to BSI unaudited
financial statements for the years ended December 31, 1994, 1995 and
1996 and for the six months ended June 30, 1977 (the "Xxxxxx
Financial Statements"), each of which fairly presents the results of
operations and the financial position of the Xxxxxx Companies as at
and for the periods therein presented in accordance with generally
accepted accounting principles, consistently applied. Since the date
of the Xxxxxx Financial Statements, each Xxxxxx Company has
conducted its business only in the ordinary course and there has not
been any material adverse change in its business, assets,
properties, results of operations, financial condition or prospects.
(xiii) As of the year-end and interim period dates set forth in the
Xxxxxx Financial Statements, none of the Xxxxxx Companies had any
liabilities or obligations, absolute or contingent, not reflected or
disclosed in the Xxxxxx Financial Statements which were required to
be reflected or disclosed therein in accordance with generally
accepted accounting principles and no liabilities or obligations,
absolute or contingent, have been incurred since such dates which
are either out of the ordinary course of business or, in the
aggregate for each such Xxxxxx Company, material in amount.
(xiv) There are no hazardous environmental conditions which could
adversely affect the normal day-to-day business operations of either
Xxxxxx Company, including after the consummation of all the
transactions contemplated by this Agreement, or require any
environmental clean-up of any of the premises on which any business
of any Xxxxxx Company is conducted or result in any expense after
the consummation of the transactions contemplated by this Agreement.
(xv) There is no action or proceeding or investigation pending or,
to the best knowledge of each Xxxxxx Stockholder, threatened against
or involving either Xxxxxx Company or any of its properties or
rights, which if adversely determined would, individually or in the
aggregate, have a material adverse effect on the business, assets,
properties, results of operations, financial condition or prospects
of either Xxxxxx Company, nor is any Xxxxxx Company subject to any
order, writ, injunction or decree which would have such effect.
(xvi) A summary of each Employee Plan providing benefits to any of
the employees of either Xxxxxx Company (the "Xxxxxx Employee Plans")
is set forth on Exhibit A-2 hereto. All amounts required by the
provisions of any Xxxxxx Employee Plan and applicable law to be
contributed to any Xxxxxx Employee Plan have been, or will be,
contributed to such Xxxxxx Employee Plan through the date
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of closing of the transactions contemplated by this Agreement, no
contribution being disproportionately large compared to any prior
contribution.
(xvii) No consent, authorization or approval of, exemption by, or
filing with, any domestic governmental or administrative authority,
or any court, or any party to any agreement to which any Xxxxxx
Stockholder or any Xxxxxx Company is a party is required to be
obtained or made by any Xxxxxx Stockholder or by any Xxxxxx Company
in connection with the execution, delivery and performance of this
Agreement by the Xxxxxx Stockholders or the consummation of the
transactions contemplated hereby by the Xxxxxx Stockholders except:
(a) the approvals required to be obtained from manufacturer of new
car vehicles who are parties to any of the Xxxxxx Company Factory
Agreements; and (b) such other consents, approvals, orders,
authorizations, registrations, declarations and filings the failure
of which to be obtained or made would not, individually or in the
aggregate (i) impair in any material respect the ability of any
Xxxxxx Stockholder to perform its obligations under this Agreement
or (ii) prevent or impede the consummation of the transactions
contemplated by this Agreement or (iii) prevent or impede the right
of any Xxxxxx Company to continue the conduct of its business
following the consummation of the transactions contemplated by this
Agreement in the same manner as the same is being conducted to day.
(xviii) At the closing of the transactions described in Section 1
hereof, the cash and cash equivalents, working capital and net worth
of each of the Xxxxxx Companies as of such date shall, after giving
effect to: (A) all dividends declared prior thereto, including
dividends payable by such Companies subsequent to such closing and
(B) to all borrowings by such Companies between the date hereof and
such closing date, be not less than the amounts set forth on Exhibit
A-2 hereto.
(xix) No broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with
any of the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of any Xxxxxx Stockholder or by
either Xxxxxx Company.
(c) Each of the Westwood Stockholders named on Exhibit A-3 hereto,
jointly and severally (except with respect to matters set forth in (c)(i),
(c)(ii) and (c)(ix) below as to which each of the Westwood Stockholders on his,
her or its own behalf and not on behalf of any other Westwood Stockholders),
represents and warrants to Hometown, each of which representations and
warranties shall be deemed material and the basis for reliance by Hometown and
each of which shall be true, correct and complete both as of the date hereof
and, unless Hometown shall otherwise expressly agree in writing or unless
otherwise expressly contemplated by this Agreement, as of the date of
consummation of the transactions contemplated in this Agreement, as follows:
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(i) Each of the Westwood Stockholders is the legal and equitable
owner of his, her or its respective shares of stock in Westwood and
LimWest and such shares of stock, on the date the transactions
described in Section 1 hereof are consummated, will be owned free
and clear of all mortgages, liens, pledges, other security interests
and any other rights of any other person or entity to make claim
upon the same for any reason whatsoever.
(ii) Each of the Westwood Stockholders has the full power and
authority to execute and deliver this Agreement and to perform his,
her or its obligations hereunder and has duly executed and delivered
this Agreement. This Agreement constitutes a valid and legally
binding obligation as to such Westwood Stockholder, enforceable in
accordance with its terms.
(iii) The Westwood Stockholders named and/or described on Exhibit
A-3 hereto constitute all the holders of the issued and outstanding
stock of all classes of Westwood and LimWest and, accordingly, the
shares of stock of Westwood and of LimWest owned, in the aggregate,
by the Westwood Stockholders constitute all of the issued and
outstanding stock of every class and series of each such
corporation. There are no options, warrants, calls, subscriptions,
convertible securities or other rights or other agreements or
commitments of any character whatsoever obligating Westwood or
LimWest to issue, transfer or sell any of its shares of stock or any
securities convertible into or exchangeable or exercisable for, or
otherwise evidencing a right to acquire any shares of stock or other
securities of any kind of Westwood or LimWest, as the case may be.
The capitalization of Westwood and of LimWest is as set forth on
Exhibit A-3 hereto.
(iv) Westwood and LimWest is each a corporation duly organized,
validly existing and in good standing under the laws of the State of
New Jersey. Westwood has the requisite corporate power to carry on
its business as it is now being conducted; LimWest is not an
operating company. Westwood does not have any subsidiaries. Copies
of the Certificate of Incorporation and By-Laws of Westwood and of
LimWest heretofore delivered to Hometown are accurate and complete
as of the date hereof.
(v) Westwood has obtained all licenses, permits and agreements
necessary for the operation of its business as currently conducted
and all of such licenses, permits and agreements, including without
limitation by similarity or otherwise, all franchise agreements with
manufacturers whose new car vehicles are sold by Westwood (the
"Westwood Factory Agreements") and all of such agreements, including
the Westwood Factory Agreements are in full force and effect with no
violation which could result in forfeiture thereof and all of the
same will remain in full force and effect following the consummation
of all the transactions contemplated by this Agreement.
12
(vi) Westwood either owns or has a valid lease for all premises
currently occupied by it for the conduct of its business. All of
such properties are zoned for the businesses now being conducted
thereon.
(vii) All material equipment used in the conduct of the business of
Westwood is either owned by or under a valid lease with Westwood and
is in good working condition.
(viii) Westwood operates its business, uses its assets and occupies
its properties in compliance with all applicable laws, ordinances,
rules and regulations and none of the Westwood Stockholders has
received any notice of violation of any of the foregoing.
(ix) Neither the execution and the delivery of this Agreement by any
of the Westwood Stockholders, nor the consummation of the
transactions contemplated hereby by any of the Westwood
Stockholders, will: (A) violate any statute, regulation, rule,
judgment, order, decree, stipulation, injunction, charge, or other
restriction of any government, governmental agency or court to which
such Westwood Stockholder is subject; or (B) conflict with, result
in a breach of or constitute a default under, result in the
acceleration of, create in any party the right to accelerate,
terminate, modify, cancel, or require any notice under any contract,
agreement, instrument of indebtedness, security interest or other
arrangement to which such Westwood Stockholder may be a party or by
which such Westwood Stockholder is bound or to which any of the
assets of such Westwood Stockholder is subject.
(x) Neither the execution and the delivery of this Agreement by the
Westwood Stockholders, nor the consummation of the transactions
contemplated hereby, will (A) cause Westwood or LimWest to violate,
or result in the violation by Westwood of, any statute, regulation,
rule, judgment, order, decree, stipulation, injunction, charge, or
other restriction of any government, governmental agency or court to
which Westwood or LimWest, as the case may be, is subject or any
provision of its charter or By-Laws or (B) conflict with, result in
a breach of or constitute a default under, result in the
acceleration of, create in any party the right to accelerate,
terminate, modify or cancel, or require any notice under any
contract, lease, sublease, license, sublicense, franchise, permit,
indenture or agreement or mortgage for borrowed money, instrument of
indebtedness, security interest or other arrangement to which either
such corporation may be a party or by which either such corporation
or any of its assets may be bound or to which any of the assets of
either such corporation is subject (including without limitation by
similarity or otherwise any "change of control" provisions in any
agreement to which either such corporation is a party or by which it
may be bound).
(xi) Westwood and LimWest has each filed all required federal, state
and local income tax returns and there is no liability for past
income taxes.
13
(xii) The Westwood Stockholders have delivered to BSI unaudited
financial statements for the years ended December 31, 1994, 1995 and
1996 and for the six months ended June 30, 1977 (the "Westwood
Financial Statements"), each of which fairly presents the results of
operations and the financial position of Westwood as at and for the
periods therein presented in accordance with generally accepted
accounting principles, consistently applied. Since the date of the
Westwood Financial Statements: (A) Westwood has conducted its
business only in the ordinary course and there has not been any
material adverse change in its business, assets, properties, results
of operations, financial condition or prospects; and (B) LimWest has
not conducted any operations or engaged in any transactions.
(xiii) As of the year-end and interim period dates set forth in the
Westwood Financial Statements of Westwood delivered to BSI, neither
Westwood nor LimWest had any liabilities or obligations, absolute or
contingent, not reflected or disclosed in the Westwood Financial
Statements which were required to be reflected or disclosed therein
in accordance with generally accepted accounting principles and no
liabilities or obligations, absolute or contingent, have been
incurred since such dates which are either out of the ordinary
course of business or, in the aggregate, material in amount.
(xiv) There are no hazardous environmental conditions which could
adversely affect the normal day-to-day business operations of
Westwood, including after the consummation of all the transactions
contemplated by this Agreement, or require any environmental
clean-up of any of the premises on which any business of Westwood is
conducted or result in any expense after the consummation of the
transactions contemplated by this Agreement.
(xv) There is no action or proceeding or investigation pending or,
to the best knowledge of each of the Westwood Stockholders,
threatened against or involving Westwood or LimWest or any of their
properties or rights, which if adversely determined would,
individually or in the aggregate, have a material adverse effect on
the business, assets, properties, results of operations, financial
condition or prospects of Westwood, nor is Westwood subject to any
order, writ, injunction or decree which would have such effect.
(xvi) A summary of each Employee Plan providing benefits to any of
the employees of Westwood (the "Westwood Employee Plans") is set
forth on Exhibit A-3 hereto. All amounts required by the provisions
of any Westwood Employee Plan and applicable law to be contributed
to any Westwood Employee Plan have been, or will be, contributed to
such Westwood Employee Plan through the date of closing of the
transactions contemplated by this Agreement, no contribution being
disproportionately large compared to any prior contribution.
14
(xvii) No consent, authorization or approval of, exemption by, or
filing with, any domestic governmental or administrative authority,
or any court, or any party to any agreement to which any of the
Westwood Stockholders or to which Westwood or LimWest is a party is
required to be obtained or made by any of the Westwood Stockholders
or by Westwood or LimWest in connection with the execution, delivery
and performance of this Agreement by the Westwood Stockholders or
the consummation of the transactions contemplated hereby by the
Westwood Stockholders except: (a) the approvals required to be
obtained from manufacturer of new car vehicles who are parties to
any of the Westwood Factory Agreements; and (b) such other consents,
approvals, orders, authorizations, registrations, declarations and
filings the failure of which to be obtained or made would not,
individually or in the aggregate (i) impair in any material respect
the ability of any of the Westwood Stockholders to perform its
obligations under this Agreement or (ii) prevent or impede the
consummation of the transactions contemplated by this Agreement or
(iii) prevent or impede the right of Westwood to continue the
conduct of its business following the consummation of the
transactions contemplated by this Agreement in the same manner as
the same is being conducted to day.
(xviii) At the closing of the transactions described in Section 1
hereof, the cash and cash equivalents, working capital and net worth
of Westwood as of such date shall, after giving effect to: (A) all
dividends declared prior thereto, including dividends payable by
such Companies subsequent to such closing and (B) to all borrowings
by such Companies between the date hereof and such closing date, be
not less than the amounts set forth on Exhibit A-3 hereto.
(xix) No broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with
any of the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of any of the Westwood
Stockholders or by Westwood.
4. Conduct of Business Pending the Closing of Transactions. Each of the Shaker
Stockholders jointly and severally covenants with respect to the Shaker
Companies, each of the Xxxxxx Stockholders jointly and severally covenants with
respect to the Xxxxxx Companies and each of the Westwood Stockholders jointly
and severally covenants with respect to Westwood (for purposes of this Section
4, each of the Shaker Companies, Xxxxxx Companies and Westwood shall each be
referred to as a "Corporation") that, unless Hometown shall expressly agree in
writing:
(a) To the extent commercially reasonable, the business of the Corporation
(other than OldChev and LimWest which are not operating companies) shall be
conducted only in the ordinary course of business and consistent with past
practices, and each of the Stockholders shall cause every Corporation owned,
directly or indirectly, by such Stockholder to use its best efforts
15
to maintain and preserve its business organization, assets, prospects, employees
and advantageous business relationships;
(b) Each such Corporation shall not directly or indirectly do any of the
following: (i) whether or not in the ordinary course of business, sell or
dispose of any asset which is material to the Corporation; (ii) amend its
charter or by-laws or similar organizational documents; (iii) split, combine or
reclassify any of its shares of stock; (iv) declare, set aside or pay any
dividend or distribution, payable in cash, stock, property or otherwise, with
respect to its shares of stock except as set forth on Exhibit B hereto; (v)
redeem, purchase or otherwise acquire or offer to redeem, purchase or otherwise
acquire any of its shares of stock; (vi) enter into any new compensation
arrangements or pay any out-of-the-ordinary bonuses or other forms of
compensation; or (vii) authorize or propose any of the foregoing, or enter into
any contract, agreement, commitment, or arrangement to do any of the foregoing;
(c) The Corporation shall not, directly or indirectly: (i) issue, sell,
pledge or dispose of, or authorize, propose or agree to the issuance, sale,
pledge or disposition of, any of its shares of stock, or any options, warrants
or rights of any kind to acquire any of its shares of stock; (ii) acquire (by
merger, consolidation, or acquisition of stock or assets) any corporation,
partnership or other business organization or division thereof, or make any
material investment either by purchase of stock or securities, contribution to
capital, property transfer, or, except in the ordinary course, purchase of any
property or assets of any other individual or entity;
(d) The Corporation (other than OldChev and LimWest which are not
operating companies) shall use its best efforts to obtain, as soon as possible
following the execution of this Agreement, unconditional approvals from every
manufacturer of new car vehicles with whom it has any Factory Agreement to the
consummation of all transactions contemplated by this Agreement, including the
consolidation of all of the Corporations in a single group owned, operated and
controlled by Hometown, as well as any public offerings of Hometown Common Stock
or other equity securities at any time following the consummation of the
transactions described in Section 1 of this Agreement and shall promptly advise
Hometown of the receipt of each such approval and of any other communication.
(e) The Corporation shall not declare or pay any dividend which would
reduce its cash and cash equivalents, working capital and net worth as of the
closing date to less than the amounts set forth, as applicable, on Exhibits X-0,
X-0 and A-3 hereto and without the prior approval by Hometown, it being
understood that such approval shall not in any way derogate from the
responsibility of the respective shareholders to comply with the obligations
herein set forth.
(f) Each of the Shaker Stockholders with respect to the Shaker Companies,
each of the Xxxxxx Stockholders with respect to the Xxxxxx Companies and the
each of the Westwood Stockholders with respect to Westwood shall afford to
Hometown and its representatives free and full access during regular business
hours to all of the books, records, contracts, documents, key personnel and
properties of such Corporations and will cause the key employees, accountants,
attorneys and other representatives of each such Corporation to cooperate fully
with Hometown
16
and to make full disclosure to Hometown of all material facts affecting the
business properties and operations of such Corporations.
(g) The Corporation shall not take any action or agree, in writing or
otherwise, to take any of the actions prohibited by this Section 4 or any action
which would make any representations or warranty in Section 3 hereof untrue or
incorrect in any material respect.
5. Conditions and Obligations to Closing.
(a) The obligation of Hometown to consummate the transactions to be
performed by it under this Agreement is subject to the following conditions:
(i) The representations and warranties set forth in Section 3 above
made by the parties hereto other than Hometown shall be true,
correct and complete in all material respects at and as of the date
the transactions described in Section 1 hereof are consummated; and
(ii) No action, suit or proceeding shall be pending or threatened
before any court or quasi-judicial or administrative agency of any
federal, state, local or foreign jurisdiction wherein an unfavorable
judgment, order, decree, stipulation, injunction or charge would:
(A) prevent consummation of any of the transactions contemplated by
this Agreement, (B) cause any of the transactions contemplated by
this Agreement to be rescinded following consummation or (C) have an
adverse effect on the right of Hometown to own, operate and control
every Shaker Company, every Xxxxxx Company and Westwood.
(iii) Each Shaker Company, each Xxxxxx Company (other than OldChev
which is not an operating company) and Westwood shall have received
factory consents from all automobile manufacturers whose franchises
they hold: (A) to the transactions contemplated by this Agreement,
including the consolidation of all of such companies in a single
group owned, operated and controlled by Hometown, as described in
Section 1 of this Agreement; and (B) to any public offerings of
Hometown Common Stock or other equity securities at any time
following the consummation of the transactions described in Section
1 of this Agreement.
(iv) Employment agreements shall have been entered into on the terms
set forth on Exhibit C hereto, including appropriate non-competition
covenants, between Hometown and each of Xxxxx Xxxxxx, Xxxxxx Xxxxxx,
Xxxxxx Xxxxxx, Xxxxxxxxx Xxxxxxxx, Xxxxxx Xxxxxxxx, Xxxxxxx Xxxxxx
and Xxxxx Xxxxxx.
(v) The leases between any of: (A) the Shaker Stockholders and any
Shaker Company, (B) the Xxxxxx Stockholders and any Xxxxxx Company,
and (C) the Westwood Stockholders and Westwood applicable to the
premises occupied by
17
each Shaker Company, Xxxxxx Company and Westwood Company shall, in
each instance, be amended to provide for the lease terms set forth
on Exhibit D hereto.
(vi) All the transactions contemplated by this Agreement, as well as
an initial public offering of not less than 4,000,000 shares of
Hometown Class A Common Stock at a price of not less than $10 per
share, shall be consummated at the same closing.
Hometown may waive any condition specified in this Section 5(a) if it executes a
writing so stating at or prior to the closing of the transactions described in
Section 1 hereof.
(b) The respective obligations of the Shaker Stockholders, the Xxxxxx
Stockholders and the Westwood Stockholders to consummate the transactions to be
performed by such Stockholders under this Agreement is subject to the following
conditions:
(i) The representations and warranties set forth in Section 3 above
made by the parties hereto other than by such Stockholders shall be
true and correct in all material respects at and as of the date the
transactions described in Section 1 hereof are consummated; and
(ii) No action, suit or proceeding shall be pending or threatened
before any court or quasi-judicial or administrative agency of any
federal, state, local or foreign jurisdiction wherein an unfavorable
judgment, order, decree, stipulation, injunction or charge would (A)
prevent consummation of any of the transactions contemplated by this
Agreement, (B) cause any of the transactions contemplated by this
Agreement to be rescinded following consummation or (C) have an
adverse effect on the right of any such Stockholders to own or
control the shares of Hometown Common Stock issued pursuant to this
Agreement.
(iii) Each Shaker Company, each Xxxxxx Company (other than OldChev
which is not an operating company) and Westwood shall have received
factory consents from all automobile manufacturers whose franchises
they hold: (A) to the transactions contemplated by this Agreement,
including the consolidation of all of such companies in a single
group owned, operated and controlled by Hometown, as described in
Section 1 of this Agreement; and (B) to any public offerings of
Hometown Common Stock or other equity securities at any time
following the consummation of the transactions described in Section
1 of this Agreement.
(iv) Hometown shall have offered to enter into employment agreements
on the terms set forth on Exhibit C hereto, including appropriate
non-competition covenants, between Hometown and each of Xxxxx
Xxxxxx, Xxxxxx Xxxxxx, Xxxxxx Xxxxxx, Xxxxxxxxx Xxxxxxxx, Xxxxxx
Xxxxxxxx, Xxxxxxx Xxxxxx and Xxxxx Xxxxxx.
18
The Shaker Stockholders, Xxxxxx Stockholders and/or Westwood Stockholders,
respectively, may waive any condition specified in this Section 5(b) if all
stockholders in such group execute a writing so stating at or prior to the
closing of the transactions described in Section 1 hereof.
6. Closing. The closing of all the transactions described in Section 1 hereof
shall be held at the offices of Xxxxx Xxxxxxx Xxxx & Xxxxxx, LLP, 000 Xxxx
Xxxxxx, Xxx Xxxx, XX 00000 on a mutually convenient date as soon as practicable
following receipt of all factory consents described in Section 5(a)(iii) hereof
or, failing such mutual agreement, on the third business day following such
receipt.
7. No Competing Discussions. None of the Shaker Stockholders, Xxxxxx
Stockholders or Westwood Stockholders shall, or shall permit, respectively, any
Shaker Company, Xxxxxx Company or Westwood to, directly or indirectly, solicit,
initiate or engage in any discussions with any person (other than Hometown)
relating to the sale of the stock or substantially all the assets or all or any
part of the business of any such Corporation.
8. Miscellaneous
(a) This Agreement shall not confer any rights or remedies upon any person
other than the parties and their respective successors and permitted assigns.
(b) This Agreement (including the documents referred to herein)
constitutes the entire agreement among the parties with respect to the matters
set forth herein, and supersedes any prior understandings, agreements, or
representations by or among the parties, written or oral, that may have related
in any way to the subject matter hereof.
(c) This Agreement shall be binding upon and inure to the benefit of the
parties named herein and their respective successors and permitted assigns. No
party may assign either this Agreement or any of his, her or its rights,
interests, or obligations hereunder without the prior written approval of the
other parties hereto.
(d) This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original but all of which together will constitute one
and the same instrument.
(e) A facsimile, telecopy or other reproduction of this Agreement may be
executed by one or more parties hereto, and an executed copy of this Agreement
may be delivered by one or more parties hereto by facsimile or similar
instantaneous electronic transmission device pursuant to which the signature of
or on behalf of such party can be seen, and such execution and delivery shall be
considered valid, binding and effective for all purposes. At the request of any
party hereto, all parties hereto agree to execute an original of this Agreement
as well as any facsimile, telecopy or other reproduction hereof.
(f) The section headings contained in this Agreement are inserted for
convenience only and shall not affect in any way the meaning or interpretation
of this Agreement.
19
(g) All notices, requests, demands, claims, and other communications
hereunder will be in writing. Any notice, request, demand, claim or other
communication hereunder shall be deemed duly given if (and then two business
days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient at the
address set forth following the name of such person in the preamble of this
Agreement. Any party may give any notice, request, demand, claim or other
communication hereunder using any other means (including personal delivery,
expedited courier, messenger service, telecopy, telex, ordinary mail, or
electronic mail), but no such notice, request, demand, claim, or other
communication shall be deemed to have been duly given unless and until it
actually is received by the individual and/or entity for whom it is intended.
Any party may change the address to which notices, requests, demands, claims,
and other communications hereunder are to be delivered by giving the other
parties notice in the manner herein set forth.
(h) This Agreement shall be governed by and construed in accordance with
the internal laws of the State of Connecticut.
(i) No Amendment of any provisions of this Agreement shall be valid unless
the same shall be in writing and signed by the parties hereto. No waiver by any
party of any default, misrepresentation, or breach of warranty or covenant
hereunder, whether intentional or not, shall be deemed to extend to any prior or
subsequent default, misrepresentation, or breach of warranty or covenant
hereunder or affect in any way any rights arising by virtue of any prior or
subsequent such occurrence.
[balance of this page intentionally left blank]
20
(j) Each party acknowledges and agrees that the other parties would be
damaged irreparably in the event any of the provisions of this Agreement are not
performed in accordance with their specific terms or otherwise are breached.
Accordingly, each party hereto hereby agrees that the other parties shall be
entitled to an injunction or injunctions to prevent breaches of the provisions
of this Agreement and to enforce specifically this Agreement and the terms and
provisions hereof in any action instituted in any court of the United States or
any state thereof having jurisdiction over the parties and the matter.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
HOMETOWN AUTO RETAILERS, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Vice President
Shaker Stockholders
/s/ Xxxxxx Xxxxxx
-------------------------------------------
Xxxxxx Xxxxxx
/s/ Xxxxxx Xxxxxx
-------------------------------------------
Xxxxxx Xxxxxx
/s/ Xxxxxx X. Shaker
-------------------------------------------
Xxxxxx X. Shaker
Xxxxxx Xxxxxx Voting Trust
By: /s/ Xxxxx Xxxxxx
----------------------------------------
Xxxxx Xxxxxx, Authorized Trustee
/s/ Xxxxxxx Xxxxxx
-------------------------------------------
Xxxxxxx Xxxxxx
----------------------------------------
Xxxxxxx Xxxxxx Voting Trust
By: /s/ Xxxxxx Xxxxxx
-------------------------------------
Xxxxxx Xxxxxx, Authorized Trustee
/s/ Xxxxx Xxxxxxx
-------------------------------------------
Xxxxx Xxxxxxx
21
/s/ Xxxxx Xxxxxx
-------------------------------------------
Xxxxx Xxxxxx
/s/ Xxxxx Xxxxxx
-------------------------------------------
Xxxxx Xxxxxx
/s/ Xxxxxx Xxxxxx
-------------------------------------------
Xxxxxx Xxxxxx
/s/ Xxxx Xxxxxx
-------------------------------------------
Xxxx Xxxxxx
/s/ Xxxx Xxxxxx
-------------------------------------------
Xxxx Xxxxxx
Xxxxxx Stockholders
-------------------------------------------
Xxxxxxx Xxxxxx Sr.
-------------------------------------------
Xxxxxxx Xxxxxx Jr.
-------------------------------------------
Xxxxx Xxxxxx
Westwood Stockholders
-------------------------------------------
Xxxxxxxxx X. Xxxxxxxx
-------------------------------------------
Xxxxxx X. Xxxxxxxx
-------------------------------------------
Xxxxx Xxxxxxxx
22
-------------------------------------------
Xxxxx Xxxxxx
-------------------------------------------
Xxxxx Xxxxxx
-------------------------------------------
Xxxxxx Xxxxxx
-------------------------------------------
Xxxx Xxxxxx
-------------------------------------------
Xxxx Xxxxxx
Xxxxxx Stockholders
/s/ Xxxxxxx Xxxxxx Sr.
-------------------------------------------
Xxxxxxx Xxxxxx Sr.
/s/ Xxxxxxx Xxxxxx Jr.
-------------------------------------------
Xxxxxxx Xxxxxx Jr.
/s/ Xxxxx Xxxxxx
-------------------------------------------
Xxxxx Xxxxxx
Westwood Stockholders
-------------------------------------------
Xxxxxxxxx X. Xxxxxxxx
-------------------------------------------
Xxxxxx X. Xxxxxxxx
-------------------------------------------
Xxxxx Xxxxxxxx
22
-------------------------------------------
Xxxxx Xxxxxx
-------------------------------------------
Xxxxx Xxxxxx
-------------------------------------------
Xxxxxx Xxxxxx
-------------------------------------------
Xxxx Xxxxxx
-------------------------------------------
Xxxx Xxxxxx
Xxxxxx Stockholders
-------------------------------------------
Xxxxxxx Xxxxxx Sr.
-------------------------------------------
Xxxxxxx Xxxxxx Jr.
-------------------------------------------
Xxxxx Xxxxxx
Westwood Stockholders
/s/ Xxxxxxxxx X. Xxxxxxxx
-------------------------------------------
Xxxxxxxxx X. Xxxxxxxx
/s/ Xxxxxx X. Xxxxxxxx
-------------------------------------------
Xxxxxx X. Xxxxxxxx
/s/ Xxxxx Xxxxxxxx
-------------------------------------------
Xxxxx Xxxxxxxx
22
EXHIBIT A-1
Disclosure Statement Relating to the Shaker Stockholders and the Shaker
Companies
o Name and address of every Shaker Stockholder (Introductory Paragraph; Section
3(a); Section 3(a)(iii)):
The following are all the stockholders in ERR Enterprises, Inc., the parent of
all Shaker Companies. There are two classes of Common Stock: Class A Voting and
Class B Non-Voting.
Xxxxxx Xxxxxx 600 shares Class A and 2,177 shares Class B
000 Xxxxx Xxxx
Xxxxxxxxxxx, XX 00000
Xxxxxx Xxxxxx 600 shares Class A and 2,175 shares Class B
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Xxxxxx X. Shaker 600 shares Class A and 2,176 shares Class B
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Xxxxxx Xxxxxx Voting Trust 214 shares Class A
000 Xxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Xxxxxxx Xxxxxx 2,356 shares Class A
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Xxxxxxx Xxxxxx Voting Trust 214 shares Class A
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Xxxxx Xxxxxx Xxxxxxx 200 shares Class A and 2,175 shares Class B
00 Xxxxxxxx Xxxx
Xxx, XX 00000
Xxxxx Xxxxxx 3,347 shares Class B
0000 Xxxx Xxxxxx Xxxxx
Xxxxxxxx, XX 00000
Xxxxx Xxxxxx 3,060 shares Class B
000 Xxxxxxx Xxxx
Xxxxxxxxx, XX 00000
00
XXXXXXX X-0
Xxxxxxxxxx Xxxxxxxxx Relating to the Shaker Stockholders and the Shaker
Companies
(Page 2)
o Name and address of every Shaker Stockholders (cont'd)
Xxxxxx Xxxxxx 2,356 shares Class A
000 Xxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Xxxx Xxxxxx 2,935 shares Class B
000 Xxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Xxxx Xxxxxx 78 shares Class A
000 Xxxxxxx Xxxx
Xxxxxxxxx, XX 00000
o Capitalization of ERR Corp. (Section 3(a)(iii))
Class A Common Stock: no par voting shares
- authorized: 10,000 shares
- outstanding: 7,218 shares
Class B Common Stock: no par non-voting shares
- authorized: 20,000 shares
- outstanding: 18,045 shares
o Name of Every Shaker Subsidiary (Section 3(a)(iv))
Shaker's Inc.
Family Ford, Inc.
Family Rental, Incorporated
Shaker's Lincoln-Mercury Autocare, Inc.
- wholly-owned subsidiary of Shaker's, Inc.
24
EXHIBIT A-1
Disclosure Statement Relating to the Shaker Stockholders and the Shaker
Companies
(Page 3)
o Summary of Shaker Employee Plans (Section 3(a)(xvii))
ERR Corp. -- 401(k) Profit Sharing Plan;
- Eligibility: age 21 and 12 months of service;
- Elective Salary Reduction Contribution: Up to 15%;
- Optional match by ERR Corp.;
- Vesting in Employer contributions: 20% per year starting with fourth
year.
ERR Corp. does not have any other non-health related Employee Plans and none of
the other Shaker Companies have any Employee Plans.
o Minimum cash and cash equivalents, working capital and net worth required to
be available to Hometown with respect to Shaker Companies (Section 3(a)(xix) and
4(e)):
- ERR Corp. (consolidated)
cash and cash equivalents: $ 950,000
working capital: $ 2,250,000
net worth: $ 2,750,000
25
EXHIBIT A-2
Disclosure Statement Relating to the Xxxxxx Stockholders and the Xxxxxx
Companies
o Name and address of every Xxxxxx Stockholder (Introductory Paragraph; Section
3(b); Section 3(b)(iii))
OldChev MullerToy MullerChev
--------- ----------
Xxxxxxx Xxxxxx Jr. 190 50 37.5
00 Xxxxxx Xxxx
Xxxxxxx, XX 00000
Xxxxxxx Xxxxxx Sr. --- 40 37.5
000 X. Xxxxxxxx
Xxxxxxx, XX 00000
Xxxxx Xxxxxx --- 10 ---
0 Xxxxxxx Xxxxx
Xxxxxxxxxx Xxxxxxxx,
XX 00000
o Capitalization of every Xxxxxx Company (Section 3(b)(iii))
OldChev
Common Stock: no par value
authorized: 1,000 shares
outstanding: 190 shares
Xxxxxx Chevrolet, Inc.
Common Stock: no par value
authorized: 75 shares
outstanding: 75 shares
Automotive Group Inc.
Common Stock: no par value
authorized: 100 shares
outstanding: 100 shares
26
Disclosure Statement Relating to the Xxxxxx Stockholders and the Xxxxxx
Companies
(Page 2)
o Summary of Xxxxxx Employee Plans (Section 3(b)(xvi))
- only "cafeteria" health plan offered
o Minimum cash and cash equivalents, working capital and net worth required to
be available to Hometown with respect to Xxxxxx Companies (Section 3(b)(xviii)
and 4(e)):
- Xxxxxx (consolidated)
cash and cash equivalents: $ 800,000
working capital: $1,900,000
net worth: $2,300,000
00
XXXXXXX X-0
Xxxxxxxxxx Xxxxxxxxx Relating to the Westwood Stockholders and Westwood
o Name and address of the Westwood Stockholders (Introductory Paragraph; Section
3(c); Section 3(c)(iii))
Westwood LimWest
-------- -------
Xxxxxxxxx X. Xxxxxxxx 51 shares 51 shares
00 Xxxxxxxx Xxxxx
Xxxxxx Xxxxx, XX 00000
Xxxxx Xxxxxxxx 24 shares 24 shares
00 Xxxxxxxx Xxxxx
Xxxxxx Xxxxx, XX 00000
Xxxxxx X. Xxxxxxxx 25 shares 25 shares
000 Xxxxxxx Xxxxx
Xxxxx Xxxxx
Xxxxxxxxx Xxxx, XX 00000
o Capitalization of Westwood Lincoln-Mercury Sales, Inc. (Section 3(c)(iii)):
Common Stock: no par value
authorized: 1,000 shares
issued: 100 shares
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EXHIBIT A-3
Disclosure Statement Relating to the Westwood Stockholders and Westwood
(Page 2)
o Summary of Westwood Employee Plans (Section 3(c)(xvi))
ss.401(k) Plan
-Created as of March 12, 1997
Trustee: Xxxxxx X. Xxxxxx
Investments: Xxxxxxx Funds
Eligibility: six months of service
Employer Contribution: discretionary; for Plan Year ending December 31, 1997,
matching contribution of 25% of the first 5% contributed by employee
Employee Contribution: percentage of compensation not exceeding, for 1997,
$9,500
Vesting: 20% per year, cumulatively, from years 3 through 7; except 100% vested
in contributed salary reductions and upon Normal Retirement Age (65)
Other than health benefit plans, the above described 401(k) plan is the only
Westwood Employee Plan.
o Minimum cash and cash equivalents, working capital and net worth of Westwood
required to be available to Hometown (Section 3(c)(xviii) and 4(e)):
cash and cash equivalents: $ 575,000
working capital: $1,750,000
net worth: $2,150,000
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EXHIBIT B
Permissible Pre-Closing Dividends
(Pursuant to Section 4(b))
None of the Shaker Companies, Xxxxxx Companies or Westwood shall declare or pay
a dividend which will reduce its cash and cash equivalents, working capital and
net worth below the limits specified in Exhibits X-0, X-0 and A-3, respectively.
30
EXHIBIT C
Individualized Terms of Respective Employment Agreements
(Pursuant to Section 5(a)(iv) and 5(b)(iv))
o Xxxxxxxxx X. Xxxxxxxx
- Title: Chairman and Chief Executive Officer and Director
- Salary: $200,000
o Xxxxxx Xxxxxx
- Title: President and Chief Operating Officer and Director
- Salary: $200,000
o Xxxxxxx X. Xxxxxx Xx.
- Title: Vice President - New Jersey Operations and Director
- Salary: $200,000
o Xxxxx Xxxxxx
- Title: Vice President - Connecticut Operations and Director
- Salary: $200,000
o Xxxxxx X. Xxxxxxxx
- Title: Vice President - Fleet Operations and Director
- Salary: $200,000
o Xxxxx Xxxxxx
- Title: Vice President - General Manager - Xxxxxx Toyota and
Director
- Salary: $150,000 and Bonus equal to 5% of pre-tax profits
of Xxxxxx Toyota
o Xxxxxx Xxxxxx
- Title: Vice President - Parts and Servicing
- Salary: $100,000
31
EXHIBIT D
Terms of Respective Lease Agreements
(Pursuant to Section 5(a)(v)
The leases between any of: (A) the Shaker Stockholders and any Shaker Company,
(B) the Xxxxxx Stockholders and any Xxxxxx Company, and (C) the Westwood
Stockholders and Westwood applicable to the premises occupied by each Shaker
Company, Xxxxxx Company and Westwood Company shall, in each instance, be amended
to provide for the following lease terms:
Term: 15 years
Rental: triple net (except Landlord responsible for environmental problems)
Annual Rent (subject, in each instance to CPI increases in 2003 and 2007)
Shaker Stockholder Leases:
- Shaker's Lincoln Mercury, Inc. $240,000
- Family Ford, Inc. $240,000
- Shaker's Jeep/Eagle $ 72,000
Xxxxxx Stockholder Leases:
- Xxxxxx Toyota $324,000
- Xxxxxx Chevrolet, Oldsmobile,
Isuzu, Inc. $360,000
Westwood Stockholder Leases:
- Westwood Lincoln Mercury $360,000
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