STOCK PURCHASE AGREEMENT
DATED APRIL 12, 1997
AMONG
UNITED AUTO GROUP, INC.
AND
XXXX XXXX CHEVROLET, INC., A SOUTH CAROLINA CORPORATION,
XXXXXXX CHEVROLET-OLDSMOBILE, INC., A SOUTH CAROLINA CORPORATION,
XXXX-XXXXXXX CHEVROLET, INC., A NORTH CAROLINA CORPORATION,
AND
XXXX XXXX, XX.
XXXXXXX X. XXXX
XXXXXXX X. XXXXXXX
XXXXXXX X. XXXXXXX
XXXX X. XXXXX
XXXXXXX X. XXXXXXXX
XXXXXXX X. XXXXXXXX, XX.
XXXXX X. XXXXXXXX
XXXXXXX X. XXXXXXXX
TABLE OF CONTENTS
Page
ARTICLE 1. PURCHASE AND SALE OF SHARES...................................1
1.1. Certain Definitions...........................................1
1.2. Purchase and Sale of the Shares...............................6
1.3. New Facility..................................................8
1.4. Earnings Adjustment..........................................10
1.5. Net Worth Adjustment.........................................10
1.6. Stock Price Adjustment.......................................12
1.7. Effective Date...............................................12
1.8. Post-Closing Note Adjustment.................................12
ARTICLE 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANIES
AND THE STOCKHOLDERS.........................................13
2.1. Organization and Good Standing...............................13
2.2. Subsidiaries.................................................13
2.3. Capitalization...............................................13
2.4. Authority; Approvals and Consents............................14
2.5. Financial Statements.........................................15
2.6. Absence of Undisclosed Liabilities...........................16
2.7. Absence of Material Adverse Effect; Conduct
of Business..................................................16
2.8. Taxes........................................................18
2.9. Legal Matters................................................19
2.10. Property.....................................................20
2.11. Environmental Matters........................................20
2.12. Inventories..................................................23
2.13. Accounts Receivable..........................................23
2.14. Insurance....................................................23
2.15. Contracts; etc...............................................24
2.16. Labor Relations..............................................24
2.17. Employee Benefit Plans.......................................25
2.18. Other Benefit and Compensation Plans or Arrangements.........28
2.19. Transactions with Insiders...................................29
2.20. Propriety of Past Payments...................................29
2.21. Interest in Competitors......................................30
2.22. Brokers......................................................30
2.23. Accounts.....................................................30
2.24. Disclosure...................................................30
2.25. Net Worth....................................................31
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF THE
STOCKHOLDERS.................................................31
3.1. Ownership of Shares; Title...................................31
3.2. Authority....................................................31
3.3. Real Property and Improvements...............................32
3.4. Investment Intent............................................32
3.5. Qualification of Stockholders................................32
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF UAG........................33
4.1. Organization and Good Standing...............................33
4.2. Capitalization...............................................34
4.3. SEC Filings..................................................34
4.4. Authority; Approvals and Consents............................34
4.5. Financial Statements.........................................35
4.6. Taxes........................................................37
4.7. Absence of Undisclosed Liabilities...........................37
4.8. Disclosure...................................................37
4.9. Absence of Material Adverse Effect; Conduct of Business......38
4.10. Insurance....................................................38
4.11. Brokers......................................................39
4.12. Propriety of Past Payments...................................39
4.13. Environmental Matters........................................39
4.14. Employee Benefit Plans.......................................39
ARTICLE 5. COVENANTS AND ADDITIONAL AGREEMENTS..........................39
5.1. Access; Confidentiality......................................40
5.2. Furnishing Information; Announcements........................41
5.3. Antitrust Improvements Act Compliance........................41
5.4. Certain Changes and Conduct of Business of the Companies.....42
5.5. No Intercompany Payables or Receivables......................45
5.6. Negotiations.................................................45
5.7. Consents; Cooperation........................................46
5.8. Additional Agreements........................................46
5.9. Interim Financial Statements.................................46
5.10. Notification of Certain Matters..............................47
5.11. Assurance by the Stockholders................................47
5.12. Section 338(h)(10) Election..................................48
5.13. Non-Interference.............................................48
5.14. Environmental Audits.........................................48
5.15. Access to Records............................................49
5.16. Certain Changes and Conduct of Business of UAG...............49
5.17. Loan for Tax Obligation......................................50
ARTICLE 6. CONDITIONS TO THE OBLIGATIONS OF UAG TO
EFFECT THE CLOSING...........................................51
6.1. Representations and Warranties; Agreements; Covenants........51
6.2. Authorization; Consents......................................51
6.3. Opinions of the Companies' and the Stockholders's Counsel....52
6.4. Absence of Litigation........................................53
6.5. No Material Adverse Effect...................................53
6.6. Net Worth....................................................53
6.7. Completion of Due Diligence..................................53
6.8. Net Income...................................................53
6.9. Leases.......................................................54
6.10. Board Approval...............................................54
6.11. Certificates.................................................54
6.12. Legal Matters................................................54
6.13. Approval of Manufacturers and Distributors...................54
6.14. Nondisturbance Agreements/Estoppel Certificates..............54
6.15. Title Insurance..............................................54
6.16. Schedules....................................................55
6.17. Lease Termination Agreements/Memoranda of Lease..............55
6.18. Resignation of the Companies' Directors......................55
6.19. Employment Agreements........................................55
6.20. Consulting Agreement.........................................55
ARTICLE 7. CONDITIONS TO THE OBLIGATIONS OF THE
STOCKHOLDERS TO EFFECT THE CLOSING...........................55
7.1. Representations and Warranties; Agreements...................55
7.2. Authorization of the Agreement, Consents.....................56
7.3. Opinions of UAG's Counsel....................................56
7.4. Absence of Litigation........................................56
7.5. Certificates.................................................57
7.6. Legal Matters................................................57
7.7. Schedules....................................................57
7.8. Leases.......................................................57
7.9. No Material Adverse Effect...................................57
7.10. Employment Agreements........................................58
7.11. Registration Rights Agreement................................58
7.12. Consulting Agreement.........................................58
ARTICLE 8. TERMINATION.................................................58
8.1. Termination..................................................58
8.2. Effect of Termination........................................59
ARTICLE 9. INDEMNIFICATION.............................................59
9.1. Indemnification by the Stockholders..........................59
9.2. Indemnification by UAG.......................................60
9.3. Procedures...................................................60
9.4. Offset.......................................................62
9.5. Remedies.....................................................62
9.6. Definitions..................................................62
9.7. Limitation on Indemnification................................62
ARTICLE 10. MISCELLANEOUS...............................................63
10.1. Survival of Provisions.......................................64
10.2. Fees and Expenses............................................64
10.3. Headings.....................................................64
10.4. Notices......................................................64
10.5. Assignment...................................................67
10.6. Entire Agreement.............................................67
10.7. Waiver and Amendments........................................67
10.8. Counterparts.................................................67
10.9. Accounting Terms.............................................68
10.10. Schedules....................................................68
10.11. Severability.................................................68
10.12. Remedies.....................................................68
10.13. Governing Law................................................68
10.14. Time is of the Essence.......................................68
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (the "Agreement"), dated April 12, 1997,
is by and among United Auto Group, Inc., a Delaware corporation ("UAG"), Xxxx
Xxxx Chevrolet, Inc., a South Carolina corporation ("Xxxx Xxxx Chevrolet"),
Xxxxxxx Chevrolet-Oldsmobile, Inc., a South Carolina corporation, ("Xxxxxxx
Chevrolet"), and Xxxx-Xxxxxxx Chevrolet, Inc., a North Carolina corporation,
("Xxxx-Xxxxxxx Chevrolet" and, together with Xxxx Xxxx Chevrolet and Xxxxxxx
Chevrolet-Old the "Companies") and Xx. Xxxx Xxxx, Xx. ("Xx. Xxxx"), Xxxxxxx X.
Xxxx, Xxxxxxx X. Xxxxxxx, Xxxxxxx X. Xxxxxxx, Xxxx X. Xxxxx, Xxxxxxx X.
Xxxxxxxx, Xxxxxxx X. Xxxxxxxx, Xx., Xxxxx X. Xxxxxxxx, Xxxxxxx X. Xxxxxxxx (Xx.
Xxxx and, together with such other persons, the "Stockholders").
W I T N E S E T H:
WHEREAS, the Companies operate franchise automobile dealerships and
related businesses in North Charleston and Summerville, South Carolina and
Fayetteville, North Carolina;
WHEREAS, the Stockholders own all of the issued and outstanding shares
of the capital stock of the Companies (the "Shares"); and
WHEREAS, UAG desires to purchase the Shares from the Stockholders, and
the Stockholders desire to sell the Shares to UAG (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 will own one
hundred percent (100%) of the issued and outstanding shares of the capital
stock of the Companies, 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:
ARTICLE 1.
PURCHASE AND SALE OF SHARES
1.1. CERTAIN DEFINITIONS.
As used in this Agreement, the following terms shall have the
following meanings:
(a) "ADJUSTMENT AMOUNT" shall have the meaning ascribed to it in
Section 1.6.
(b) "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 spouse, his issue,
his parents, his estate and any trust for the benefit of his spouse and/or
issue.
(c) "ASSOCIATE" when 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.
(d) "BUSINESS DAY" shall mean any day excluding Saturday, Sunday and
any day which is a legal holiday under Federal law.
(e) "CLAIMS" shall have the meaning ascribed to it in Section 2.9(a).
(f) "CLOSING" shall have the meaning ascribed to it in Section 1.2(b).
(g) "CLOSING DATE" shall have the meaning ascribed to it in Section
1.2(b).
(h) "CLOSING DATE BALANCE SHEETS" shall have the meaning ascribed to
it in Section 1.5(a).
(i) "CODE" shall mean the Internal Revenue Code of 1986, as amended.
(j) "COMPANY AGREEMENTS" shall have the meaning ascribed to it in
Section 2.15.
(k) "COMPANY BALANCE SHEETS" shall have the meaning ascribed to it in
Section 2.5(i).
(l) "COMPANY FACTORY STATEMENTS" shall have the meaning ascribed to it
in Section 2.5(ii).
(m) "COMPANY FINANCIAL STATEMENTS" shall have the meaning ascribed to
it in Section 2.5.
(n) "CONFIDENTIAL INFORMATION" shall have the meaning ascribed to it
in Section 5.1.
(o) "COSTS" shall have the meaning ascribed to it in Section 9.6.
(p) "DOCUMENTS" shall have the meaning ascribed to it in Section 2.4.
2
(q) "EFFECTIVE DATE" shall have the meaning ascribed to it in Section
1.7 hereof.
(r) "EMPLOYMENT AND LABOR AGREEMENTS" shall have the meaning ascribed
to it in Section 2.16(b).
(s) "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.
(t) "ENVIRONMENTAL PERMITS" shall mean all permits, licenses,
approvals, authorizations, consents or registrations required under applicable
Environmental Laws in connection with the ownership, use and/or operation of
the Companies' businesses or the Real Property or Improvements.
(u) "ERISA PLAN" shall have the meaning ascribed to it in Section
2.17(a).
(v) "EVENT OF BREACH" shall have the meaning ascribed to it in Section
9.1.
(w) "FINAL NET WORTH" shall have the meaning ascribed to it in Section
1.5(g)(i).
(x) "GAAP" shall mean generally accepted accounting principles which
are in effect in the United States on the Closing Date.
(y) "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
3
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.
(z) "H-S-R ACT" shall have the meaning ascribed to it in Section 5.3.
(a) "IMPROVEMENTS" shall have the meaning ascribed to it in Section
2.10.
(ab) "INSIDER" shall mean the Stockholders, any director or officer of
the Companies, and any Affiliate, Associate or Relative of any of the foregoing
persons
(ac) "JUDGMENTS" shall have the meaning ascribed to it in Section
2.9(a).
(ad) "KNOWLEDGE" shall mean, with respect to the Stockholders, that
the Stockholders know of the particular matter referred to; with respect to the
Companies, that any person responsible for overseeing the day to day operations
of any of the Companies or any general manager, executive manager, new or used
car sales manager, service manager, office manager (or any person with similar
such responsibilities regardless of title) know of the particular matter
referred to; and, with respect to UAG, that the President or any Vice-President
of UAG knows of the particular matter referred to.
(ae) "LEASES" shall have the meaning ascribed to it in Section
1.2(c)(iii).
(af) "LEGAL REQUIREMENTS" shall have the meaning ascribed to it in
Section 2.9(b).
(ag) "LIENS" shall mean any mortgages, pledges, title defects or
objections, liens, claims, security interests, conditional and installment sale
agreements, encumbrances or similar charges.
4
(ah) "MATERIAL ADVERSE EFFECT" shall mean, with respect to the
Companies, any change in, or effect on, any of the Companies (including the
respective businesses thereof) which is, or might be, materially adverse to the
business, operations, assets, condition (financial or otherwise) or prospects
of such Company when taken as a whole; and, with respect to UAG, any change in,
or effect on, UAG (including the businesses thereof) which is, or might be,
materially adverse to the business, operations, assets, condition (financial or
otherwise) or prospects of UAG when taken as a whole.
(ai) "NET WORTH" shall have the meaning ascribed to it in Section
1.5(g)(ii).
(aj) "NET WORTH DEFICIENCY" shall have the meaning ascribed to it in
Section 1.5(g)(i).
(ak) "PERMITS" shall have the meaning ascribed to it in Section 2.9(b).
(al) "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.
(am) "PRE-TAX EARNINGS" shall mean net earnings (or losses), before
taxes, computed in accordance with GAAP.
(an) "REAL PROPERTY" shall have the meaning ascribed to it in Section
2.10.
(ao) "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.
(ap) "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.
(aq) "REVIEWED BALANCE SHEETS" shall have the meaning ascribed to it
in Section 1.5(b).
(ar) "REVIEWER" shall have the meaning ascribed to it in Section
1.5(b).
(as) "STOCKHOLDERS INDEMNIFIED PARTY" shall have the meaning ascribed
to it in Section 9.2.
5
(at) "STOCKHOLDERS THIRD PARTY CLAIM" shall have the meaning ascribed
to it in Section 9.1.
(au) "STOCK PRICE DEFICIENCY" shall have the meaning ascribed to it in
Section 1.6.
(av) "SUPPLEMENTAL CLOSING" shall have the meaning ascribed to it in
Section 1.5(c).
(aw) "TAXES" shall have the meaning ascribed to it in Section 2.8.
(ax) "UAG AGREEMENTS" shall have the meaning ascribed to it in Section
4.14.
(ay) "UAG COMMON STOCK" shall mean the shares of common stock, par
value $.0001 per share of UAG.
(az) "UAG CONFIDENTIAL INFORMATION" shall have the meaning ascribed to
it in Section 5.1.
(ba) "UAG EVENT OF BREACH" shall have the meaning ascribed to it in
Section 9.2.
(bb) "UAG INDEMNIFIED PARTY" shall have the meaning ascribed to it in
Section 9.1.
(bc) "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 ten (10)
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.
(bd) "UAG THIRD PARTY CLAIM" shall have the meaning ascribed to it in
Section 9.2.
1.2. PURCHASE AND SALE OF THE SHARES.
(a) Purchase and Sale. Upon the terms and subject to the
conditions set forth in this Agreement, the Stockholders shall sell to UAG,
and UAG shall purchase from the Stockholders, the Shares for an aggregate
purchase price (the "Purchase Price") equal to (i) Seventeen Million Dollars
($17,000,000) in cash (the "Base Price"), which Base Price is subject to
adjustment at the Closing as provided in Section 1.4 below and after the
Closing as provided in Section 1.5 below; (ii) UAG Common Stock, having an
aggregate UAG Market Value on the date hereof equal to Thirteen Million
Dollars ($13,000,000) (the "Aggregate Value") bearing the restrictive legend
customarily placed on securities of UAG that have not been registered under
applicable federal and state securities laws (the shares of UAG Common Stock
issued to the Stockholders in connection herewith are referred to hereinafter
6
as the "UAG Shares"); and (iii) a promissory note (the "Note") in a form
mutually acceptable to the parties for the principal amount of Four Million
Dollars ($4,000,000) with interest payable quarterly at 6.5% per annum, with
the principal maturing on the thirty-eighth (38th) month anniversary of the
Closing Date; provided, however, that the principal amount of the Note is
subject to adjustment after Closing pursuant to the provisions of Section 1.8
hereof. At the Closing referred to in Section 1.2(b) hereof:
(i) the Stockholders shall sell, assign, transfer and deliver to
UAG the Shares representing 100% of the issued and outstanding capital
stock of the Companies and deliver the certificates representing such
Shares accompanied by stock powers duly executed in blank; and
(ii) UAG shall accept and purchase the Shares from the
Stockholders and in payment therefor shall (A) deliver to the
Stockholders immediately available funds in an aggregate amount equal to
the Base Price by wire transfer to an account designated in writing by
the Stockholders or by certified funds; (B) deliver to UAG's transfer
agent instructions directing the transfer agent to deliver to the
Stockholders the certificates representing the UAG Shares bearing the
restrictive legend customarily placed on securities of UAG that have not
been registered under applicable federal or state securities laws; and
(C) deliver to the Stockholders the Note.
(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 June 15, 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:
(i) the Stockholders shall deliver to UAG certificates
representing the Shares accompanied by stock powers as required by
Section 1.2(a)(i) hereof, and any other documents that are necessary to
transfer to UAG good title to all the Shares, and (B) all opinions,
certificates and other instruments and documents required to be
delivered by the Stockholders or the Companies at or prior to the
Closing or otherwise required in connection herewith;
(ii) UAG shall (A) pay to the Stockholders funds as required by
Section 1.2(a)(ii) hereof; (B) instruct the transfer agent to deliver to
the Stockholders the Shares;
7
(C) deliver to the Stockholders the Note; and (D) deliver to the
Stockholders all opinions, certificates and other instruments and
documents required to be delivered by UAG at or prior to the Closing or
otherwise required in connection herewith;
(iii) Each of the Companies and Xx. Xxxx (each a "Landlord" and
collectively the "Landlords") shall enter into a lease for the real
property on which such Company operates in a form mutually acceptable to
the parties (each a "Lease" and collectively the "Leases"), such form to
be agreed to by the parties within twenty (20) Business Days of the date
of this Agreement. Each Lease shall be for a twenty (20) year term
commencing on the Closing Date and the lessee shall have the option to
renew the Lease for two additional five year terms (with the lease rate
adjusted to fair market value at the time each such period commences).
Each Lease shall be a triple net lease and the initial monthly lease
rate for each Lease shall be an amount equal to the current lease rate
being paid by each Company. On the second anniversary of the Closing
Date and every two years thereafter, the lease rate for each Lease shall
increase to an amount equal to the lease rate then in effect plus an
amount equal to a percentage of the lease rate then in effect, which
percentage shall be equal to the percentage increase in the Consumer
Price Index published from time to time by the United States Department
of Labor ("CPI") for the metropolitan area in which such Company
operates from the time of the last adjustment. Xx. Xxxx represents and
warrants that the initial lease rates do not exceed the fair market
lease rate for such property as determined by taking into account the
property's fair market value.
1.3. NEW FACILITY
The parties acknowledge that Xx. Xxxx is in the process of developing a
New Facility for the operation of Xxxxxxx Chevrolet. The lease relating to
Xxxxxxx Chevrolet (the "Xxxxxxx Chevrolet Lease") shall include the parcel of
land on which the New Facility is being developed. The New Facility is to be
developed pursuant to plans and specifications that have been delivered to UAG
(the "Plans) provided, however, that such Plans are subject to UAG's approval.
Xx. Xxxx agrees that the New Facility construction will not disrupt the
operations of Xxxxxxx Chevrolet. Upon completion of the New Facility and
satisfaction of the New Facility Closing Conditions (as hereinafter defined)
the lease rate for the Xxxxxxx Chevrolet Lease shall increase to an amount
equal to the fair market lease rate as determined by an independent appraiser
mutually acceptable to the parties (which appraisal shall take into account
the New Facility). After such adjustment, the Xxxxxxx Chevrolet Lease shall
adjust every two years in the manner set forth in Schedule 1.2(c)(iii).
8
For purposes of this Agreement, "New Facility Closing Conditions" shall mean
(i) the completion of the New Facility substantially in accordance with the
Plans including but not limited to substantially all material punch list items
as certified by the architect for such New Facility; provided, however, that
if UAG disputes such certificate it may retain its own architect to determine
such New Facility has been completed substantially in accordance with such
Plans; (ii) the issuance of a permanent Certificate of Occupancy by the local
governmental authorities with respect to such New Facility without condition;
(iii) Xxxxxxx Chevrolet having received any necessary consents or approvals
from General Motors or Chevrolet to relocate its operations to the New
Facility; (iv) delivery of an ALTA "as-built" survey of the New Facility and
the property upon which it is located reflecting no encroachments on adjoining
land or into set-back areas and that all utilities serve the New Facility
through publicly dedicated rights-of-way and tie into public utilities, such
survey to be certified to UAG, Xxxxxxx Chevrolet and a title insurance company
chosen by UAG; (v) UAG's obtaining a leasehold title insurance policy, without
standard exceptions insuring Xxxxxxx Chevrolet's leasehold estate in the New
Facility subject to no prior ground lease, mortgage, deed of trust or other
security instrument or if so encumbered, Xx. Xxxx'x obtaining a
non-disturbance agreement from the holder thereof in favor of Xxxxxxx
Chevrolet in form and substance reasonably satisfactory to UAG in recordable
form and insured by such title company and otherwise subject to only those
exceptions to title as are reasonably acceptable to UAG and providing such
endorsements as UAG shall require including, but not limited to coverage over
mechanics and materialman's liens; (vi) UAG confirming that the New Facility
complies with all zoning requirements and the title company is prepared to
issue a zoning endorsement; and (vii) UAG obtaining an updated Phase I
environmental report reflecting that (x) there are no Hazardous Materials on
or in the New Facility or the land upon which it is located other than any
that may be disclosed in the initial Phase I conducted by UAG, (y) there are
no violations of Environmental Laws at the New Facility or the land upon which
it is located; and (z) there is no recommendation for further investigation or
action with respect to the New Facility or such land, which report shall be
for the benefit of UAG and Xxxxxxx Chevrolet. In addition, Xx. Xxxx shall
complete all remaining punch list items within sixty (60) days after the New
Facility Closing Conditions have been satisfied and shall use his best efforts
to obtain standard warranties for construction and equipment (including roofs)
and to assign such warranties to UAG or Xxxxxxx Chevrolet. Xx. Xxxx also
agrees that all equipment and fixtures necessary for a "turn-key" car
dealership similar to the existing Xxxxxxx Chevrolet dealership shall be
relocated from the existing Xxxxxxx Chevrolet dealership to the New Facility.
9
1.4. EARNINGS ADJUSTMENT.
If the Companies, on a combined basis, have Pre-Tax Earnings as
further adjusted (in accordance with Schedule 1.4 hereto) to reflect the pro
forma results of operations for the year ending December 31, 1996 ("1996
Earnings") of less than Six Million Two Hundred Thousand Dollars ($6,200,000),
then the Purchase Price shall be reduced by an amount equal to [($6,200,000 -
1996 Earnings) x 4.84]. If the 1996 Earnings are greater than $6,200,000, then
the Purchase Price shall be increased by an amount equal to [(1996 Earnings -
6,200,000) x 4.84] (such increase or reduction, as applicable, the "Earnings
Adjustment"). The Earnings Adjustment, if any, shall be made at the Closing
and shall be divided proportionately between the Base Price and the Aggregate
Value (such that 17/30ths of any such adjustment shall be made to the Base
Price and 13/30ths of any such adjustment shall be made to the Aggregate
Value).
1.5. NET WORTH ADJUSTMENT.
(a) On the Closing Date, or as soon as practicable after the
Closing Date, the Stockholders shall deliver to UAG balance sheets of the
Companies dated as of the Closing Date (such balance sheets so delivered are
referred to herein as the "Closing Date Balance Sheets"). The Closing Date
Balance Sheets shall be prepared in good faith in accordance with GAAP. In
connection with the preparation of the Closing Date Balance Sheets, the
Stockholders and the Companies 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 Companies.
(b) Within sixty (60) days after delivery of the Closing Date
Balance Sheets, (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 Sheets in such manner as UAG and the Reviewer deem
appropriate, and (ii) UAG shall deliver such reviewed balance sheet (the
"Reviewed Balance Sheets"), together with the Reviewer's report thereon, to
the Stockholders. The Reviewed Balance Sheets (i) shall be prepared in
accordance with GAAP and (ii) shall include a schedule showing the computation
of the Final Net Worth (as defined in Section 1.5(g)(i) hereof), computed in
accordance with the definition of Net Worth set forth in Section 1.5(g)(ii)
hereof. UAG and the Reviewer shall have the opportunity to consult with the
Stockholders, the Companies and each of the accountants and other
representatives of the Stockholders and the Companies and to examine the work
papers, schedules and other documents prepared by the Stockholders, the
Companies and each of such accountants and other representatives during the
preparation of the Closing Date Balance Sheets. The Stockholders and the
Stockholders' independent public accountants shall have the opportunity to
consult with the Reviewer and to examine the work papers,
10
schedules and other documents prepared by the Reviewer during the preparation
of the Reviewed Balance Sheets.
(c) The Stockholders shall have a period of forty-five (45) days
after delivery of the Reviewed Balance Sheets to present in writing to UAG all
objections the Stockholders 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
Sheets shall be deemed accepted and approved by the Stockholders 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
Stockholders.
(d) If the Stockholders shall raise any objection within such
45-day period, UAG and the Stockholders 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 Stockholders
within seventy-five (75) days after the delivery of the Reviewed Balance
Sheets, then the specific matters in dispute shall be submitted to a firm of
independent public accountants mutually acceptable to UAG and the
Stockholders, 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 Stockholders and the Supplemental Closing, if
any, shall take place five (5) Business Days following the receipt of such
determination by UAG and the Stockholders. The fees and expenses of the
accounting firm referred to in this Section 1.5(e) shall be paid one-half by
UAG and one-half by the Stockholders.
(f) UAG and the Stockholders agree to cooperate with each other
and each other's authorized representatives and with any accounting firm
selected by UAG and the Stockholders pursuant to Section 1.5(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 Sheets as finally determined through the operation of Sections 1.5 (a)
through (e) hereof (such amount being referred to herein as the "Final Net
Worth") shall be less than the Net Worth of the Companies as set forth on the
Company Balance Sheets (which balance sheets are attached hereto as Schedule
2.5) (the amount of any such deficiency being referred to herein as the "Net
Worth Deficiency") less Four Hundred Eighty Three Thousand Ninety ($483,096)
Dollars, the Stockholders shall pay to UAG at the 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
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Supplemental Closing, an amount equal to the Net Worth Deficiency.
(ii) "Net Worth", computed in connection with the Closing Date Balance
Sheets, the Company Balance Sheets and the Reviewed Balance Sheets, 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
Companies comprising the Closing Date Balance Sheets, the Company Balance
Sheets or the Reviewed Balance Sheets, as the case may be.
1.6. STOCK PRICE ADJUSTMENT
If, on the Adjustment Date (as defined below), the UAG Shares have
an aggregate UAG Market Value of less than Thirteen Million Dollars
($13,000,000) (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 Stockholders cash in an amount (the
"Adjustment Amount") equal to the Stock Price Deficiency. For purposes of this
Agreement, the Adjustment Date shall mean the earlier of (i) the date on which
the Stockholders 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") or (ii) the date on which the
Stockholders may sell the UAG Shares pursuant to the Registration Rights
Agreement (as defined in Section 7.11).
1.7. EFFECTIVE DATE.
The obligations of the parties hereunder shall not take effect
until the parties have notified the Chevrolet division of General Motors (the
"Effective Date").
1.8. POST-CLOSING NOTE ADJUSTMENT.
If the Companies, on a combined basis, have Pre-Tax Earnings (as
adjusted in accordance with Schedule 1.8) of less than (1.5 x 4,890,523) for
the eighteen month period beginning on the first day of the calendar month
immediately following the Closing Date, then Two Million Dollars ($2,000,000)
of the principal amount of the Note shall be accelerated and shall be due on
the twentieth month anniversary of the Closing Date. If the Companies, on a
combined basis, have Pre-Tax Earnings (as adjusted in accordance with Schedule
1.8) of less than (3 x 4,890,523) for the three year period beginning on the
first day of the calendar month immediately following the Closing Date, then
the principal amount of the Note shall be reduced by the remaining principal
and no principal payment shall be due on the thirty-eighth month of the
anniversary of the Closing Date. UAG shall deliver to Xx. Xxxx monthly factory
statements with respect to the Companies within 5 days after delivery of such
statements to the manufacturer during the term of the Note. Xx. Xxxx agrees to
keep such statements confidential.
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ARTICLE 2.
REPRESENTATIONS AND WARRANTIES
OF THE COMPANIES AND THE STOCKHOLDERS
Subject to the parties' agreement and acknowledgment that the
Schedules referred to in this Article 2 are to be delivered by the Companies
and the Stockholders no later than twenty (20) Business Days after the
Effective Date hereof, the Companies and the Stockholders hereby jointly and
severally represent and warrant to UAG as follows:
2.1. ORGANIZATION AND GOOD STANDING.
Each of the Companies 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 businesses and to carry on their businesses
as now being conducted. The Companies are duly qualified to do business and
are 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 Companies would not, or could not
reasonably be expected to, in the aggregate have a Material Adverse Effect.
Schedule 2.1 hereto lists (i) the states and other jurisdictions where the
Companies are so qualified and (ii) the assumed names under which the
Companies conduct business. Attached to Schedule 2.1(b) hereto are complete
and correct copies of the Companies' Articles of Incorporation and Bylaws
(including comparable governing instruments with different names), as amended
and presently in effect.
2.2. SUBSIDIARIES.
The Companies do not have any interest or investment in any
Person.
2.3. CAPITALIZATION.
The authorized stock of each of the Companies 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 Companies 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 Companies or any securities
convertible
13
into, or other rights to acquire, any shares of capital stock of the Companies,
or (ii) obligates the Companies 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 Companies
have not agreed to register any securities under the Securities Act of 1933, as
amended (the "Securities Act").
2.4. AUTHORITY; APPROVALS AND CONSENTS.
The Companies have the corporate power and authority to enter into
this Agreement and the documents referred to herein (the "Documents") to which
they are a party and to perform their obligations hereunder and thereunder.
The execution, delivery and performance of this Agreement and the Documents to
which they are a party and the consummation of the transactions contemplated
hereby and thereby have been duly authorized and approved by the Board of
Directors of each of the Companies and no other corporate proceedings on the
part of the Companies are 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,
each of the Companies, enforceable against the Companies in accordance with
their respective terms. The execution, delivery and performance by each of the
Companies and the Stockholders of this Agreement and the Documents to which it
or he is 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 any of the Companies;
(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 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 Companies (other than the rights of UAG 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 Companies or any of their
respective businesses or properties; or
14
(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.
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 Companies to enable the Companies to continue to
conduct their respective businesses and operations and use their respective
properties after the Closing in a manner which is in all material respects
consistent with that in which they are presently conducted.
2.5. FINANCIAL STATEMENTS.
Except as otherwise indicated below, attached as Schedule 2.5 are
true and complete copies of:
(i) (A) the reviewed balance sheets of Xxxxxxx Chevrolet and Xxxx
Xxxxxxx Chevrolet the Companies as of December 31, 1995 and December 31,
1996 and the related consolidated statements of income, stockholders'
equity and cash flow for the fiscal years ended December 31, 1995 and
December 31, 1996, together with the notes thereto in each case reviewed
by and accompanied by the report of independent certified public
accountants;
(B) the reviewed balance sheet of Xxxx Xxxx Chevrolet as of
July 31, 1995 and July 31, 1996 and the related consolidated statements
of income, stockholders' equity and cash flow for the fiscal years ended
July 31, 1995 and July 31, 1996, together with the notes thereto in each
case reviewed by and accompanied by the report independent certified
public accountants; and
(C) The combined balance sheet of the Companies as of
December 31, 1996 (the "Company Balance Sheets"); and
(ii) the most recent monthly and year-to-date financial statements
provided to each franchiser of the Companies (each, a "Company Factory
Statement" and, collectively, the "Company Factory
Statements")
(all the foregoing financial statements, including the notes thereto, being
referred to herein collectively as the "Company Financial Statements"). The
Company Financial Statements are in accordance with the books and records of
the Companies, fairly present the financial position, results of operations,
stockholders' equity and changes in financial position of the Companies as of
the dates and for the periods indicated, in the case of the financial
statements referred to in clause (i) above
15
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 the Companies for 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 Companies 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 Companies.
2.6. ABSENCE OF UNDISCLOSED LIABILITIES.
The Companies do 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, 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 Company Balance Sheets 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 Companies are not parties 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.
2.7. ABSENCE OF MATERIAL ADVERSE EFFECT; CONDUCT OF BUSINESS.
(a) Since December 31, 1996 (and with respect to Xxxx Xxxx
Chevrolet, since July 31, 1996), the Companies have 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 Companies, and no factor, event, condition, circumstance or
prospective development exists which threatens or may threaten to have a
Material Adverse Effect;
16
(ii) any material loss, damage, destruction or other casualty to
the property or other assets of the Companies, whether or not covered by
insurance;
(iii) any change in any method of accounting or accounting
practice of the Companies; or
(iv) any loss of the employment, services or benefits of any
general manager, new car sales manager, used car sales manager, service
manager or any equivalent employee of any of the Companies.
(b) Since December 31, 1996 (and with respect to Xxxx Xxxx
Chevrolet, July 31, 1996), except as set forth in Schedule 2.7(b) hereto, the
Companies have 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 canceled 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 except in the ordinary course of business
consistent with past practice;
17
(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
(xii) entered into any agreement or made any commitment to do
any of the foregoing.
2.8. TAXES.
The Companies have each made a valid election pursuant to Section
1362(a) of the Internal Revenue Code, as amended (the "Code"), to be an "S
Corporation" within the meaning of Section 1361(a)(1) of the Code and have
continued to qualify as such for all taxable years since their formation and
will continue to so qualify through the Closing Date. The Companies 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
Companies, 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 (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 Companies 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, 1992 have been furnished or made available to UAG or its
representatives to the extent available and in the possession of the Companies
and such copies are accurate and complete as of the date hereof. The Companies
have also furnished to UAG correct and complete copies of all notices and
correspondence sent or received since December 31, 1992 by the Companies to or
from any federal, state or local tax authorities. The Companies have
adequately reserved for the payment of all Taxes with respect to periods ended
on or prior to the Closing Date for which tax returns have not yet been filed.
In the ordinary course, the Companies make adequate provision on their books
for the payment of all Taxes (including for the current fiscal period) owed by
the Companies. Except to the
18
extent reserves therefor are reflected on the Company Balance Sheets, the
Companies are not liable, or will not become liable, for any Taxes for any
period ending on or prior to the Closing Date. Except as set forth on Schedule
2.8 hereto, the Companies have not been subject to a federal or state tax audit
of any kind since December 31, 1992, 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 and except
as indicated thereon, no such audit has resulted in an adjustment in excess of
$50,000. Neither the Companies nor the Stockholders know of any basis for an
assertion of a deficiency for Taxes against the Companies. The Stockholders
will cooperate, and will cause his Affiliates to cooperate, with the Companies
in the filing of any returns and in any audit or refund claim proceedings
involving Taxes for which the Companies may be liable or with respect to which
the Companies may be entitled to a refund.
2.9. 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, and, to the knowledge of the
Companies or the Stockholders, there is no material claim threatened against
or affecting, the Companies, any ERISA Plan (as defined in Section 2.17(a)
hereof) or any of their respective 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
Stockholders or the Companies for any such Claims, and (ii) the Companies are
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 businesses of the Companies are 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
Companies or any of their respective businesses or properties except where the
failure to be in such compliance could not reasonably be expected to have a
Material Adverse Effect. The Companies hold, and are 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 Companies own or hold all Permits material to the conduct
of their businesses. No event has occurred and is
19
continuing which permits, or after notice or lapse of time or both would
permit, any modification or termination of any Permit.
2.10. PROPERTY.
Set forth on Schedule 2.10(a) hereto is a list of all interests in
real property owned by or leased to the Companies, including all real property
owned or leased by the Stockholders (directly or indirectly) and used in the
businesses of the Companies 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 party 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 leases. True and correct copies of
all leases relating to the Real Property, together with any amendments and
modifications thereto, 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 Companies are fit for the
particular purposes for which they are used by the Companies. Such tangible
properties and all Improvements owned or leased by the Companies conform in
all material respects with all applicable laws, ordinances, rules and
regulations and other Legal Requirements and, to the knowledge of the
Stockholders and the Companies, such Improvements do not encroach in any
respect on property of others. To the knowledge of the Stockholders and the
Companies, there are no latent defects with respect to the Improvements. The
Real Property is currently zoned to permit the conduct of the respective
businesses of the Companies 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
written notice (and, to the knowledge of the Stockholders and the Companies,
no oral 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 Companies or the Stockholders with respect to the Real Property.
2.11. ENVIRONMENTAL MATTERS.
(a) Except as set forth on Schedule 2.11(a) hereto, (i) the
Companies, the Real Property, the Improvements and any property formerly
owned, occupied or leased by the Companies are in compliance with all
Environmental Laws (provided, however, that as to the Real Property or
Improvements, such representation is limited to the knowledge of the
Stockholders and the Companies as it may relate to compliance for any period
prior to the Initial Date), (ii) the Companies have obtained all Environmental
Permits, (iii) such Environmental Permits are in full force and effect, and
(iv) the Companies are in full compliance with all
20
terms and conditions of such Environmental Permits. As used in this Agreement,
Initial Date shall mean with respect to any portion of the Real Property or the
Improvements, the earlier of (i) date the Stockholders or the Companies first
acquired any ownership or leasehold interest in such property and (ii) the date
on which the Companies first began conducting operations on such property.
(b) The Companies and the Stockholders have not violated, done or
suffered any act which could give rise to liability under, and, to the
knowledge of the Stockholders and the Companies, are not otherwise exposed to
liability under, any Environmental Law. After the Initial Date (and, to the
knowledge of the Stockholders and the Companies, with respect to events prior
to the Initial Date), no event has occurred with respect to the Real Property,
the Improvements or any property formerly owned, occupied or leased by the
Companies, 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. To the knowledge of the Stockholders and the Companies, the
Companies have 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) after the
Initial Date (and, to the knowledge of the Stockholders and the Companies,
with respect to any use prior to the Initial Date) neither the Companies, the
Real Property or any portion thereof, the Improvements or any property
formerly owned, occupied or leased by the Companies, nor, to the knowledge of
the Companies or the Stockholders, any property adjacent to the Real Property
is being used or has been used 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
Companies' businesses 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) after the Initial Date (and, to the
knowledge of the Stockholders and the Companies, with respect to
investigations prior to the Initial Date), none of the Real Property or any
portion thereof, the Improvements or any property formerly owned, occupied or
leased by the Companies has been subject to investigation by any governmental
authority evaluating the need to investigate or undertake Remedial Action at
such property, and (iii) to the knowledge of the Companies and the
Stockholders, none of the Real Property, the Improvements or any property
formerly owned, occupied or leased by the Companies, or any site or location
where the Companies sent waste of any kind, is identified on the current or
21
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.
(d) Except as set forth on Schedule 2.11(d) hereto, after the
Initial Date (and, to the knowledge of the Stockholders and the Companies,
prior to the Initial Date), 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 Companies 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 any of the Companies, the Real Property, the
Improvements, any property formerly owned, leased or occupied by the
Companies, any offsite contamination affecting the business of the Companies
or 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
Companies have 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
Companies have 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 Stockholders and the Companies, has any other entity whose
liability therefor, in whole or in part, may be attributed to the Companies,
received such notice, claim, demand, suit or request for information.
(f) The Stockholders and the Companies have provided to UAG all
environmental studies and reports obtained by them or known to them pertaining
to the Real Property, the Improvements, the Companies and any property
formerly owned, occupied or leased by the Companies, 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 Companies, 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. Any
22
testing shall not be construed as a waiver of any rights which UAG has arising
out of the representations and warranties contained herein.
2.12. INVENTORIES.
The values at which inventories are carried on the Company
Financial Statements reflect the normal inventory valuation policies of the
Companies, and, in the case of the Company Balance Sheets, such values are in
conformity with GAAP consistently applied. All inventories reflected on the
Company Balance Sheets and Company Factory Statements or arising since the
date thereof are currently marketable and can reasonably be anticipated to be
sold at normal xxxx-ups within 90 days after the date hereof in the ordinary
course of business, except for spare parts inventory which inventory is
carried at the lower of cost or market (with market being equal to the amount
of any refund that would be paid by manufacturer if the parts are returned).
2.13. ACCOUNTS RECEIVABLE.
All accounts receivable reflected on the Company Balance Sheets
(net of reserves) are, and all accounts receivable that will be or will have
been reflected on the Closing Date Balance Sheets 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.
2.14. INSURANCE.
All material properties and assets of the Companies which are of
an insurable character are insured against loss or damage by fire and other
risks to the extent and in the manner 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 Companies 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 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
Companies.
23
2.15. 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 any of the Companies is a party or by which any of the
Companies or any of their respective 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 any of the Companies. 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
Companies have 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 Companies are not, nor, to the knowledge of the Companies
and the Stockholders is, any other party thereto, in material 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 material 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
Companies 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 any of the Companies under
any Company Agreement.
2.16. LABOR RELATIONS.
(a) The Companies have paid or made provision for the payment of
all salaries and accrued wages and have 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, none of the
Companies is 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
24
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 Companies, nor do
the Stockholders or the Companies know of any activities or proceedings of any
labor union to organize any such employees. The Companies have furnished to UAG
complete and correct copies of all such agreements ("Employment and Labor
Agreements"). The Companies have 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 Stockholders' or
the Companies' knowledge, threatened, against or affecting the Companies, and
the Companies have 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 Companies, (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 Companies,
(iv) there are no charges with respect to or relating to the Companies pending
before the Equal Employment Opportunity Commission or any state, local or
foreign agency responsible for the prevention of unlawful employment
practices, (v) the Companies have 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 Companies
and, to the knowledge of the Companies, no such investigation is in progress
and (vi) the consents of the unions that are parties to any Employment and
Labor Agreements are not required to complete the transactions contemplated by
this Agreement and the Documents.
(d) The Companies have 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.
2.17. 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 Companies or to which the Companies are required to
make contributions ("Pension Benefit Plan"); and
25
(ii) each employee welfare benefit plan, as defined in Section
3(i) of ERISA, maintained by the Companies or to which the Companies are
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 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 Companies
or the Stockholders) 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
(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 Companies and the Stockholders) 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
26
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
Companies 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 Companies 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 Companies or the Stockholders)
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 Companies and (B) all benefits accrued to the day prior
to the Closing Date (whether or not vested) would be fully funded in
accordance 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 Companies 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 Company Balance Sheets reflect in the aggregate an accrual of
all amounts of employer contributions accrued but unpaid by the Companies
under the ERISA Plans as of the date of the Company Balance Sheet.
27
(g) With respect to any Multiemployer Plan (1) the Companies have
not, since their 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 Companies under
any Multiemployer Plan, computed as if a "complete withdrawal" by the
Companies had occurred under each such Plan as of December 31, 1996; and (3)
the Companies have 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 Companies 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.
2.18. 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 Companies maintain or are required to
make contributions to;
(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 Companies 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 Companies whose aggregate compensation
for the fiscal year ended December 31, 1996 exceeded $75,000. 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 Companies,
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.
28
(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
Companies or the Stockholders) 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.
2.19. TRANSACTIONS WITH INSIDERS.
Set forth on Schedule 2.19 hereto is a complete and accurate
description of all material transactions between the Companies or any ERISA
Plan, on the one hand, and any Insider, on the other hand, that have occurred
since December 31, 1996 (or July 31, 1996 with respect to Xxxx Xxxx
Chevrolet).
2.20. PROPRIETY OF PAST PAYMENTS.
No funds or assets of the Companies have been used for illegal
purposes; no unrecorded funds or assets of the Companies have been established
for any purpose; no accumulation or use of the Companies' corporate funds or
assets has been made without being properly accounted for in the respective
books and records of the Companies; all payments by or on behalf of the
Companies 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 Companies for any reason; no payment has been
made by or on behalf of the Companies 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 Companies have 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 Companies of, or alleged to be of,
the type described in this Section 2.20.
29
2.21. INTEREST IN COMPETITORS.
Except as set forth on Schedule 2.21, neither the Companies nor
the Stockholders, 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 Companies that
is engaged in the retail sale of automobiles or light duty trucks.
2.22. BROKERS.
Neither the Companies, nor any director, officer or employee
thereof, nor the Stockholders or any representative of the Stockholders, 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.
2.23. ACCOUNTS.
Schedule 2.23 hereof correctly identifies each bank account
maintained by or on behalf or for the benefit of the Companies and the name of
each person with any power or authority to act with respect thereto.
2.24. DISCLOSURE.
Neither the Companies nor the Stockholders have made any material
misrepresentation to UAG relating to the Companies or the Shares or the Real
Property or Improvements and neither the Companies nor the Stockholders have
omitted to state to UAG any material fact relating to the Companies 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 Companies or the
Stockholders to UAG not misleading. To the knowledge of the Companies and the
Stockholders, 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.
2.25. NET WORTH.
On the Closing Date, the Net Worth of the Companies will be equal
to or greater than the Net Worth set forth on the Company Balance Sheets less
Four Hundred Eighty Three Thousand Ninety-Six Dollars ($483,096).
30
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES
OF THE STOCKHOLDERS
Subject to the parties' agreement and acknowledgment that the
Schedules referred to in this Article 3 are to be delivered by the
Stockholders no later than twenty (20) Business Days after the Effective Date
hereof, the Stockholders hereby represents and warrants to UAG as follows:
3.1. OWNERSHIP OF SHARES; TITLE.
The Stockholders are the owner of record and beneficially of the
Shares as set forth on Schedule 3.1 hereof and has, and shall transfer to UAG
at the Closing, good and marketable title to the Shares owned by him, free and
clear of any and all security interests, pledge agreements, Liens,
encumbrances, proxies and voting or other agreements except restrictions on
transfer imposed by applicable federal and state securities laws.
3.2. AUTHORITY.
The Stockholders has full legal capacity and is competent to
execute, deliver and perform this Agreement and the Documents to which he is a
party and to consummate the transactions contemplated hereby and thereby
(including the disposition of the Shares to UAG as contemplated by this
Agreement). This Agreement has been duly executed and delivered by the
Stockholders and constitutes, and the Documents to which the Stockholders are
parties when executed and delivered by the Stockholders will constitute, valid
and binding obligations of the Stockholders, enforceable against them in
accordance with their terms. Except as set forth on Schedule 3.2, the
execution, delivery and performance of this Agreement and the Documents by the
Stockholders 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 Stockholders are a party or to which the Stockholders or any
of their property is subject;
(ii) violate or conflict with any Legal Requirements applicable
to the Stockholders or any of the Stockholders' 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
31
judicial authority, except in connection with or in compliance with the
provisions of the H-S-R Act.
3.3. REAL PROPERTY AND IMPROVEMENTS.
The Real Property and Improvements owned by Xx. Xxxx or his
Affiliates are owned in fee simple, free and clear of all Liens, claims and
encumbrances, except those disclosed in Schedule 3.3(a), none of which
currently or, to the knowledge of Xx. Xxxx or his Affiliates, in the future
will materially affect the use of such Real Property or such Improvements for
the conduct of the respective businesses of the Companies as presently
conducted. No assessments have been made against any portion of the Real
Property which are unpaid (except 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 such Real
Property or Improvements other than the existing leases in favor of the
Companies, which are to be terminated at the Closing by agreement between the
parties and pursuant to which the owners shall acknowledge that there are no
defaults under any such leases and that the Companies have no liability
arising out of or relating to such leases. Attached as Schedule 3.3(b) are all
surveys, title binders, title policies and copies of any exceptions to title
relating to such Real Property or Improvements.
3.4. INVESTMENT INTENT.
The Stockholders have no present plan, intention or arrangement to
dispose of any of the UAG Common Stock received by them pursuant to the terms
of this Agreement.
3.5. QUALIFICATION OF STOCKHOLDERS.
Each Stockholder (i) is an "accredited investor" within the
meaning of Regulation D of the Securities Act of 1933, as amended (the
"Securities Act"), and is acquiring the UAG Common Stock to be issued pursuant
to the terms of this Agreement for his own account and not with a view to, or
for resale in connection with, any distribution thereof; (ii) understands and
acknowledges 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 Xx. Xxxx'x investment intent as expressed
herein; (iii) is able to bear the economic risk of investment in such UAG
Common Stock and has such knowledge and experience in financial and business
matters that he is capable of evaluating the risks and merits of such UAG
Common Stock; (iv) acknowledges that the UAG shares were not offered to him by
means of publicly disseminated advertisements or sales literature, or as part
of a general solicitation; (v) acknowledges that in deciding to proceed with
32
the transaction set forth herein he has relied solely on his own independent
investigation of UAG and upon the representations of UAG set forth herein; and
(vi) understands and acknowledges 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.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF UAG
Subject to the parties' agreement and acknowledgment that the
Schedules referred to in this Article 4 are to be delivered by UAG no later
than twenty (20) Business Days after the Effective Date hereof, UAG hereby
represents and warrants to the Companies and the Stockholders as follows:
4.1. 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 would not, or could not
reasonably be expected to, in the aggregate have a Material Adverse Effect on
UAG, taken as a whole. UAG has made available to the Stockholders complete and
correct copies of its charter and by-laws, as amended and presently in effect.
4.2. CAPITALIZATION.
The authorized stock of UAG and the number of shares of capital
stock which are issued and outstanding are set forth on Schedule 4.2 hereto.
The shares listed on Schedule 4.2 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 preemptive rights or of any federal or state securities law
and no personal liability attaches to the ownership thereof.
33
4.3. SEC FILINGS.
UAG has heretofore made available to Xx. Xxxx UAG's Registration
Statement on Form S-1 as declared effective by the SEC on October 23, 1996,
and UAG's Annual Report on Form 10-K for the period ending December 31, 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.
4.4. AUTHORITY; APPROVALS AND CONSENTS.
UAG has the corporate power and authority to enter into this
Agreement and the Documents to which it is 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 no other corporate proceedings on the part of UAG 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, enforceable against UAG in
accordance with their respective terms. Except as set forth on Schedule 4.4
hereto, the execution, delivery and performance by UAG of this Agreement and
the Documents to which it is 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;
(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 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 could
reasonably be expected to have a Material Adverse Effect on UAG, taken
as a whole; or
(v) require any authorization, consent, order, permit or approval
of, or notice to, or filing, registration or
34
qualification with, any governmental, administrative or judicial
authority, except in connection with or in compliance with the provisions
of the H-S-R Act.
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.
4.5. FINANCIAL STATEMENTS.
Attached as Schedule 4.5 are true and complete copies of:
(a) the consolidated balance sheet of UAG as of December 31, 1996,
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.
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,
fairly present the consolidated financial position, results of operations,
stockholders' equity and changes in financial position of UAG 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
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 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 consistent with prior practices of UAG.
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4.6. TAXES.
UAG 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, 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 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.
UAG has not 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.
4.7. ABSENCE OF UNDISCLOSED LIABILITIES.
UAG does not have any material liability of any nature whatsoever
(whether known or unknown, due or to become due, accrued, absolute, contingent
or otherwise), including, without limitation, liabilities for Taxes (as
defined in Section 4.6), except for (i) liabilities reflected or reserved
against the most recent UAG Financial Statement, (ii) liabilities disclosed in
the SEC filings, (iii) current liabilities incurred in the ordinary course of
business and consistent with past practice after the date of the UAG Balance
Sheet which, individually and in the aggregate, do not have, and cannot
reasonably be expected to have a Material Adverse Effect on UAG, taken as a
whole, and (iv) liabilities disclosed on Schedule 4.7 hereto.
4.8. DISCLOSURE.
UAG has not made any material misrepresentation to the Companies
or the Stockholders relating to this Agreement and UAG has not omitted to
state to the Companies or the Stockholders any material fact relating to this
Agreement which is necessary in order to make the information given by or on
behalf of UAG to the Companies or the Stockholders or their representatives at
or prior to Closing not misleading. To the Knowledge of UAG, 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, taken as
a whole, which has not been disclosed in the SEC Filings or the Schedules to
this Agreement.
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4.9. ABSENCE OF MATERIAL ADVERSE EFFECT; CONDUCT OF BUSINESS.
(a) Since December 31, 1996, UAG has operated in the ordinary
course of business consistent with past practice, except as set forth on
Schedule 4.9(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
UAG , taken as a whole, and no factor, event, condition, circumstance or
prospective development exists which threatens or may threaten to have a
Material Adverse Effect on UAG, taken as a whole.
(ii) any material loss, damage, destruction or other casualty to
the property or other assets of UAG , whether or not covered by
insurance;
(iii) any change in any method of accounting or accounting
practice of UAG ; or
(b) Since December 31, 1996, except as set forth in Schedule
4.9(b) hereto, UAG 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 and except in
connection with the acquisition of additional dealerships;
(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) sold or transferred any assets or canceled any debts or
claims or waived any rights, except in the ordinary course of business
consistent with past practice;
(iv) defaulted on any material obligation;
(v) written down the value of any inventory or written off as
uncollectible any accounts receivable or any portion thereof not
reflected in the UAG Financial Statements; or
(vi) entered into any agreement or made any commitment to do any
of the foregoing that has not been terminated.
4.10. INSURANCE.
All properties and assets of UAG 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
37
which UAG is or has been engaged and customary for companies engaged in similar
businesses or owning similar assets.
4.11. BROKERS.
Neither UAG nor any director, officer or employee thereof, 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.
4.12. PROPRIETY OF PAST PAYMENTS.
No funds or assets of UAG have been used for illegal purposes; no
unrecorded funds or assets of UAG have been established for any purpose; no
accumulation or use of UAG's corporate funds or assets has been made without
being properly accounted for in the respective books and records of UAG; all
payments by or on behalf of UAG 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 UAG for any reason; no payment
has been made by or on behalf of UAG 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 UAG 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 UAG of, or alleged to be of, the type
described in this Section 4.12.
4.13. ENVIRONMENTAL MATTERS.
UAG and the UAG Subsidiaries have not violated, done or suffered
any act which could give rise to liability under and, to the knowledge of UAG,
are not otherwise exposed to liability under, any Environmental Law which
could reasonably be expected to have a material adverse effect on the
financing condition of UAG and the UAG Subsidiaries taken as a whole.
4.14. EMPLOYEE BENEFIT PLANS.
UAG and the UAG Subsidiaries are not subject to any liability
under any employee pension benefit plans or employee welfare benefit plans (as
defined in ERISA) maintained by UAG or any UAG Subsidiary which could
reasonably be expected to have a material adverse effect on the financial
condition of UAG and the UAG Subsidiaries, taken as a whole.
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ARTICLE 5.
COVENANTS AND ADDITIONAL AGREEMENTS
5.1. ACCESS; CONFIDENTIALITY.
Between the date hereof and the Closing Date, the Stockholders
and the Companies will (i) provide to the officers and other authorized
representatives of UAG full access, during normal business hours, to any and
all premises, properties, files, books, records, documents, and other
information of the Companies and will cause their officers to furnish to UAG
and their authorized representatives any and all financial, technical and
operating data and other information pertaining to the businesses and
properties of the Companies, and (ii) make available for inspection and
copying by UAG true and complete copies of any documents relating to the
foregoing. UAG 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. If this
Agreement is terminated, UAG will promptly return to the Companies, upon the
reasonable request of the Companies, all Confidential Information furnished by
the Companies and held by UAG, including all copies and summaries thereof. As
used herein, "Confidential Information" shall mean all information concerning
the Companies obtained by UAG from the Companies 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 Companies unless such
information is received from a third party in violation of a duty such third
party owes to the Companies not to disclose such information, or (z) which is
or becomes known to the public, other than through a breach by UAG of this
Agreement. The Stockholders will hold in confidence (unless and to the extent
compelled to disclose by judicial or administrative process, or, in the
opinion of his 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 hereby, including any due diligence review by or
on behalf of the Stockholders. If this Agreement is terminated, the
Stockholders will promptly return to UAG, upon the reasonable request of UAG,
all UAG Confidential Information furnished by UAG and held by the
Stockholders, including all copies and summaries thereof. As used herein, "UAG
Confidential Information" shall mean all information concerning UAG obtained
by the Stockholders 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
39
unless such information is received from a third party in violation of a duty
such third party owes to UAG not to disclose such information, or (z) which is
or becomes known to the public, other than through a breach by the Stockholders
of this Agreement.
5.2. FURNISHING INFORMATION; ANNOUNCEMENTS.
The Stockholders and the Companies, on the one hand, and UAG, on
the other hand, will, as soon as practicable after reasonable request
therefor, furnish to the other all the information concerning the Stockholders
and the Companies or UAG, respectively, required for inclusion in any
statement or application made by UAG or the Companies 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
Stockholders nor the Companies, on the one hand, nor UAG, 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.
5.3. ANTITRUST IMPROVEMENTS ACT COMPLIANCE.
UAG, the Stockholders and the Companies, 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 Stockholders shall determine
after issuance of any preliminary injunction that continuing such resistance
is not in its or his best interests, UAG or the Stockholders, as the case may
be, may, by written notice to the other party, terminate this Agreement with
the effect set forth in Section 8.2 hereof.
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5.4. CERTAIN CHANGES AND CONDUCT OF BUSINESS OF THE COMPANIES.
(a) From and after the date of this Agreement and until the
Closing Date, the Companies shall, and the Stockholders shall cause the
Companies to, conduct their respective businesses solely in the ordinary
course consistent with past practice and, without the prior written consent of
UAG, neither the Stockholders nor the Companies will, except as required or
permitted pursuant to the terms hereof, permit the Companies to:
(i) make any material change in the conduct of their respective
businesses and operations or enter into any transaction other than in
the ordinary course of business consistent with past practice;
(ii) make any change in their 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 their capital stock or alter any term of any of their outstanding
securities or make any change in their outstanding shares of capital
stock or other ownership interests or their 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 practice, (B) issue any securities convertible or exchangeable
for debt securities of the Companies, or (C) issue any options or other
rights to acquire from the Companies, directly or indirectly, debt
securities of the Companies or any security convertible into or
exchangeable for such debt securities;
(iv) make any sale, assignment, transfer, abandonment or other
conveyance of any of their 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 their 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 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;
41
(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 their capital stock (other than
distributions of net income attributable to periods after December 31,
1996 as long as such distributions could not reasonably be expected to
adversely effect the business or operation of the Companies) or redeem,
retire, purchase or otherwise acquire, directly or indirectly, any
shares of their 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 $200,000;
(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 Companies (or on
behalf of the Companies) 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 the ordinary course of business consistent with
past practices;
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(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 Companies 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 of this Agreement and until the
Closing Date, the Companies shall, and the Stockholders shall cause the
Companies to, use their reasonable best efforts to:
(i) continue to maintain, in all material respects, their
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 Companies shall receive notice that there exists a violation
of any Environmental Law with respect to their 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 except where the
noticed violation is contested in good faith and by appropriate
proceedings diligently conducted; 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 Companies 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 their respective businesses in the
ordinary course consistent with past practices.
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(c) From and after the date of this Agreement and until the
Closing Date, the Stockholders 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 other than
non-material Liens in the ordinary course of business consistent with
past practice;
(iii) take any other action that would cause any of the
representations or warranties made by the Stockholders in this Agreement
not to remain true and correct in all material respects; or
(iv) commit himself to do any of the foregoing.
5.5. 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 Stockholders and his Affiliates (other than the Companies) on the
one hand, and the Companies, on the other hand, other than those incurred in
the ordinary course of business and disclosed in the Notes to the Company
Financial Statements.
5.6. NEGOTIATIONS.
Until the earlier of 180 days from the date hereof and the
termination of this Agreement pursuant to clause (ii) of Section 8.1 hereof,
neither the Stockholders, nor the Companies, nor their officers, directors,
employees, advisors, agents, representatives, Affiliates or anyone acting on
behalf of the Stockholders, the Companies 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 Companies or purchase or sale of any of
the Real Property or Improvements. The Stockholders 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 Stockholders may receive or of which the Stockholders may become
aware.
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5.7. CONSENTS; COOPERATION.
Subject to the terms and conditions hereof, the Stockholders and the Companies
and UAG will use their respective best efforts at their own expense:
(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 Companies of all their material
properties and (C) the conduct after the Closing by the Companies of
their respective businesses as conducted by them 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.
5.8. 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.
Each of the parties agrees to execute and deliver any and all documents that
the respective manufacturers typically require a selling dealer or an
acquiring 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, each of the parties and
the proper officers of the Companies shall take all such necessary action.
5.9. INTERIM FINANCIAL STATEMENTS.
Within thirty (30) days after the end of each calendar month after
the date of this Agreement, the Companies will deliver to UAG the most recent
monthly and year-to-date financial statements provided to each franchiser of
the Companies. All
45
such statements shall fairly present the financial position, results of
operations and cash flow of the Companies as at the date or for the periods
indicated and shall be prepared on a basis consistent with the Company Factory
Statements attached hereto as Schedule 2.5.
5.10. NOTIFICATION OF CERTAIN MATTERS.
Between the date hereof and the Closing, each party to this Agreement will
give prompt notice in writing to the other party 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 Stockholders and the Companies, 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. The
Stockholders 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 Companies and of any governmental
complaints, investigations or hearings (or communications indicating that the
same may be contemplated) or adjudicatory proceedings involving the Companies
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 Stockholders 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 Stockholders (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 Stockholders have knowledge which
could result in any failure to consummate the sale of the Shares as
contemplated hereby.
5.11. ASSURANCE BY THE STOCKHOLDERS.
The Stockholders shall cause each of the Companies to comply with
their respective covenants set forth in this Agreement.
46
5.12. SECTION 338(H)(10) ELECTION.
The Stockholders agrees to join with UAG, if UAG so requests, in
making a timely election with respect to any of the Companies to treat the
purchase and sale of the Shares relating to such Company pursuant to this
Agreement as a sale of all of such Companies' assets under Section 338(h)(10)
of the Internal Revenue Code of 1986, as amended (the "Code"), as permitted
pursuant to Section 1.338(h)(10)-1(a) of the Treasury Regulations promulgated
thereunder. In the event of such an election, UAG agrees to promptly pay to
the Stockholders the amount of any additional federal, state or other tax
(including any penalties and interest thereon) that is imposed on the
Stockholders by reason of making such an election. Thus, in the event that the
federal, state and/or other tax imposed on the Stockholders by reason of the
stock sale exceeds the tax that would have been imposed if no such election
had been made, UAG will be responsible for such excess. UAG further agrees to
"gross up" any payment to the Stockholder pursuant to this paragraph to take
into account that any such payment would itself be subject to income tax.
Stockholders agree to cooperate with UAG to cause the Company to timely file
for federal and/or state income tax purposes, with respect to the Company's
final short period as an S corporation under the Code through the Closing
Date, any return or extension of the due date thereof as required under the
Code to effect or reflect any such election under Section 338(h) (10) of the
Code.
5.13. NON-INTERFERENCE.
After the Closing Date and for a period of five (5) years
thereafter, the Stockholders and their Affiliates shall not knowingly
interfere with or disrupt, or attempt to interfere with or disrupt, the
relationship, contractual or otherwise, between the Companies or any customer,
supplier, manufacturer, distributor, consultant, independent contractor or
employee of the Companies and agrees not to solicit or hire any employee of
the Companies unless such employee has already terminated his or her
employment with the Companies.
5.14. ENVIRONMENTAL AUDITS.
Prior to the Closing, 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 Stockholders; provided,
however, that the Stockholders may elect not to pay any costs of the Phase II
audit but, if the Stockholders elect 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 required, the Stockholders shall pay the entire costs of the Phase II
audit. If the Phase II audit indicates that any remedial action is required
under any
47
Environmental Laws and UAG reasonably determines that such remedial action is
required in order for (i) the applicable company to continue to operate its
business as conducted at the time of discovery of the need for remedial
action; or (ii) the applicable company not to incur any liability to any
Person as a result of the presence of the material which prompts the
recommendation for such remedial action, then the Stockholders shall pay the
costs of such remedial action; provided, however, that the Stockholders shall
only be required to pay the costs of the minimum remedial action required to
comply with applicable Environmental Laws to the extent provided above and
provided, further, that the Stockholders shall not be required to pay any
remedial costs that exceed $500,000 in the aggregate. If the Phase II report
concludes that remedial action is required in an amount that exceeds $500,000
in the aggregate and the Stockholders decide not to pay the costs of such
remediation then UAG may, at its option, terminate this Agreement pursuant to
Section 8.1 (iv). The Stockholders shall have the right to obtain a second
opinion with respect to the necessity of such remedial action within twenty
(20) days after the Phase II audit and if the two (2) environmental firms
cannot agree, they shall chose a third environmental company to make such
determination within thirty (30) days after the first Phase II audit. Such
third environmental company shall be independent of the parties and generally
accepted by major institutional lenders.
5.15. ACCESS TO RECORDS.
After Closing, UAG shall provide the Stockholders with reasonable
access to the books and records of the Companies to the extent necessary for
the Stockholders to comply with applicable tax laws. UAG will cooperate, and
will cause its Affiliates to cooperate, with the Stockholders in the filing of
any returns and in any audit or refund claims proceeding involving Taxes for
which the Stockholders may be liable or with respect to which the Stockholders
may be entitled to a refund.
5.16. CERTAIN CHANGES AND CONDUCT OF BUSINESS OF UAG.
(a) From and after the date hereof and until the Closing Date,
UAG will 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 its current use except where to do so would not be economically
beneficial to UAG;
(ii) comply with all applicable Environmental Laws, and, in the
event UAG receive notices 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, except
48
where the notice of violation is contested in good faith and by
appropriate proceedings diligently conducted;
(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 UAG 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) not take any other action that would cause any of the
representations or warranties made by UAG in this Agreement not to
remain true and correct in all material respects.
5.17. LOAN FOR TAX OBLIGATION.
On April 15, 1998, UAG shall loan to the Stockholders cash in an
aggregate amount equal to the amount of Stockholders obligation to pay federal
and state income taxes as a result of the receipt of the UAG Shares. The
Stockholders shall tender a non-interest bearing note for the amount of such
loan, which note shall be due and payable on the day after the Adjustment
Date. The Stockholders shall provide reasonable security for the loan to be
agreed upon by the parties prior to UAG making the loan.
49
ARTICLE 6.
CONDITIONS TO THE OBLIGATIONS
OF UAG TO EFFECT THE CLOSING
The obligations of UAG required to be performed by it 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 as
provided herein except as otherwise required by applicable law:
6.1. REPRESENTATIONS AND WARRANTIES; AGREEMENTS; COVENANTS.
Each of the representations and warranties of the Companies and
the Stockholders 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 Companies and the Stockholders
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, UAG shall have received a certificate, dated
the Closing Date and duly executed by the Stockholders, to the effect that the
conditions set forth in the two preceding sentences have been satisfied.
6.2. 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 Companies. 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, all
automobile manufacturers with whom the Companies have entered into a franchise
agreement (or comparable instrument, mortgages, floor plan lenders and other
lenders)) required to consummate the transactions contemplated hereby and all
consents or waivers shall have been made or obtained.
6.3. OPINIONS OF THE COMPANIES' AND THE STOCKHOLDERS'S COUNSEL.
UAG shall have been furnished with the opinion of counsel for the
Companies and the Stockholders, dated the Closing
50
Date, in form and substance reasonably satisfactory to UAG and its counsel,
which opinion shall have been rendered with respect to those matters contained
in Sections 2.1, 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 Companies 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 North Carolina, South Carolina and
federal laws.
51
6.4. ABSENCE OF LITIGATION.
No order, stay, injunction or decree of any court of competent
jurisdiction in the Untied 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 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, in good faith and with the advice
of counsel, believes makes it undesirable to proceed with the consummation of
the transactions contemplated hereby.
6.5. NO MATERIAL ADVERSE EFFECT.
During the period from December 31, 1996 (and with respect to Xxxx
Xxxx Chevrolet from July 31, 1996) 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 Companies,
taken as a whole, and no factor, event, condition, circumstance or prospective
development exists which threatens or may threaten to have a Material Adverse
Effect on the Companies.
6.6. NET WORTH.
On the Closing Date, the Stockholders shall deliver to UAG a
balance sheet of the Companies in accordance with Section 1.4.
6.7. COMPLETION OF DUE DILIGENCE.
UAG shall have completed its due diligence examination of the
Companies, the Real Property and the Improvements and the results of such
examination, including any Phase I or Phase II environmental audits of the
Companies, shall be satisfactory to UAG.
6.8. NET INCOME.
Coopers & Xxxxxxx or such other accounting firm as UAG may select
shall have confirmed to UAG that the 1996 Earnings (as defined in Section 1.4)
of the Companies are no less than Six Million Two Hundred Thousand Dollars
($6,200,000).
52
6.9. LEASES.
The Companies and the Stockholders shall have entered into the
Leases.
6.10. BOARD APPROVAL.
The Board of Directors of UAG shall have approved the consummation
of all of the transactions contemplated by this Agreement.
6.11. CERTIFICATES.
The Stockholders and the Companies shall have furnished UAG with
such other certificates of its officers and others as UAG may reasonably
request to evidence compliance with the conditions set forth in this Article
6.
6.12. LEGAL MATTERS.
All certificates, instruments, opinions and other documents
required to be executed or delivered by or on behalf of the Stockholders and
the Companies under the provisions of this Agreement, and all other actions
and proceedings required to be taken by or on behalf of the Stockholders and
the Companies in furtherance of the transactions contemplated hereby, shall be
reasonably satisfactory in form and substance to counsel for UAG.
6.13. APPROVAL OF MANUFACTURERS AND DISTRIBUTORS.
The Stockholders and the Companies shall have obtained the
consent, authorization and approval of each of the Companies' respective
manufacturers for the transfer of the Companies to UAG on terms no less
favorable to those granted to the Stockholders and the Companies immediately
prior to the execution of this Agreement.
6.14. NONDISTURBANCE AGREEMENTS/ESTOPPEL CERTIFICATES.
UAG shall have been provided with nondisturbance agreements and
estoppel certificates in form and substance satisfactory to UAG with respect
to the properties that are the subject of the Leases.
6.15. TITLE INSURANCE.
UAG shall have obtained title insurance on behalf of the Companies
with respect to the leasehold estates arising out of the Leases in form and
substance satisfactory to UAG.
53
6.16. SCHEDULES.
The Companies and the Stockholders shall have delivered to UAG all
Schedules referred to herein and such Schedules shall be acceptable in form
and substance to UAG.
6.17. LEASE TERMINATION AGREEMENTS/MEMORANDA OF LEASE.
The appropriate parties shall have executed lease termination
agreements and memoranda of lease in form and substance satisfactory to UAG.
6.18. RESIGNATION OF THE COMPANIES' DIRECTORS.
Each of the persons who is a director of the Companies on the
Closing Date shall have tendered to UAG in writing his or her resignation as
such in form and substance satisfactory to UAG.
6.19. EMPLOYMENT AGREEMENTS.
UAG and Xxxxxxx X. Xxxxxxx, Xxxxxxx X. Xxxx and Xxxx X. Xxxxx
shall have entered into an employment agreement in a form mutually agreeable
to such persons (the "Employment Agreements").
6.20. CONSULTING AGREEMENT.
UAG and Xx. Xxxx shall have entered into a Consulting Agreement
in a form mutually agreeable to UAG and Xx. Xxxx (the "Consulting Agreement").
ARTICLE 7.
CONDITIONS TO THE OBLIGATIONS OF
THE STOCKHOLDERS TO EFFECT THE CLOSING
The obligations of the Stockholders and the Companies 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 Companies and the Stockholders as provided herein except
as otherwise required by applicable law:
7.1. REPRESENTATIONS AND WARRANTIES; AGREEMENTS.
Each of the representations and warranties of UAG 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 required by this Agreement to be performed by it 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 Stockholders shall
have received a certificate, dated the Closing Date and
54
duly executed by UAG to the effect that the conditions set forth in the
preceding two sentences have been satisfied.
7.2. 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. 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, all
automobile manufacturers with whom the Companies have entered into a franchise
agreement (or comparable instrument, mortgages, floor plan lenders and other
lenders)) required to consummate the transactions contemplated hereby and all
consents or waivers shall have been made or obtained.
7.3. OPINIONS OF UAG'S COUNSEL.
The Stockholders shall have been furnished with the opinion of
Xxxxxx & Xxxxxx, counsel to UAG, dated the Closing Date, in form and substance
reasonably satisfactory to the Stockholders and their counsel, which opinions,
when taken together, shall have been rendered with respect to those matters
contained in Section 4.1 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 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.
7.4. ABSENCE OF LITIGATION.
No order, stay, injunction or decree of any court of competent
jurisdiction in the Untied 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 Stockholders to transfer 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 Stockholders, in good faith and
55
with the advice of counsel, believes makes it undesirable to proceed with the
consummation of the transactions contemplated hereby.
7.5. CERTIFICATES.
UAG shall have furnished the Stockholders 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 Stockholders.
7.6. LEGAL MATTERS.
All certificates, instruments, opinions and other documents
required to be executed or delivered by or on behalf of UAG under the
provisions of this Agreement, and all other actions and proceedings required
to be taken by or on behalf of UAG in furtherance of the transactions
contemplated hereby, shall be reasonably satisfactory in form and substance to
counsel for the Stockholders.
7.7. SCHEDULES.
UAG shall have delivered to the Stockholders all Schedules referred to in
Article 4 and such Schedules shall be acceptable in form and substance to the
Stockholders.
7.8. LEASES.
The Companies and the Stockholders shall have entered into the Leases.
7.9. NO MATERIAL ADVERSE EFFECT.
During the period from December 31, 1996 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 UAG, taken as a
whole, and no factor, event, condition, circumstance or prospective
development exists which threatens or may threaten to have a Material Adverse
Effect on UAG, taken as a whole.
7.10. EMPLOYMENT AGREEMENTS.
The appropriate persons and UAG shall have entered into the Employment
Agreements.
7.11. REGISTRATION RIGHTS AGREEMENT.
UAG shall have entered into a piggyback registration rights agreement in a
form to be agreed to by the parties which agreement shall be subject to any
existing contractual rights of third parties (the "Registration Rights
Agreement").
56
7.12. CONSULTING AGREEMENT.
Xx. Xxxx and UAG shall have entered into the Consulting Agreement.
ARTICLE 8.
TERMINATION
8.1. TERMINATION.
This Agreement may be terminated at any time prior to Closing:
(i) by mutual consent of UAG and the Stockholders;
(ii) by either UAG or the Stockholders if the Closing shall not
have taken place on or prior to June 15, 1997, or such later date as
shall have been approved by UAG and the Stockholders (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 Stockholders 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 if any of the conditions specified in Article 6 hereof
have not been met or waived by UAG at such time as such condition is no
longer capable of satisfaction (provided UAG is not otherwise in
material breach of its representations, warranties, covenants or
agreements under this Agreement);
(v) by the Stockholders if any of the conditions specified in
Article 7 hereof have not been met or waived by the Stockholders at such
time as such condition is no longer capable of satisfaction (provided
that neither the Stockholders nor the Companies is otherwise in material
breach of their or its representations, warranties covenants or
agreements under this Agreement); or
(vi) by either UAG or the Stockholders 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 (if capable of being cured) has not been cured within ten (10)
Business Days following receipt by the breaching party of written notice
of such breach.
57
If UAG or the Stockholders 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.
8.2. 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.
ARTICLE 9.
INDEMNIFICATION
9.1. INDEMNIFICATION BY THE STOCKHOLDERS.
Notwithstanding the Closing or the delivery of the Shares, the
Stockholders indemnify and agree to fully defend, save and hold harmless on an
after-tax basis UAG, the Companies (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 Companies after the Closing Date) 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 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 Companies or the
conduct of the business of the Companies prior to the Closing Date (a
"Stockholders 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 Stockholders or the Companies or the breach of any
warranty of the Stockholders or the Companies 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 Stockholders or the Companies (or any
representative of the Stockholders or the Companies) 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 Stockholders or the Companies duly to perform or observe any term,
provision, covenant, agreement or condition on the part of the Stockholders or
the Companies to be performed or observed.
58
9.2. INDEMNIFICATION BY UAG.
Notwithstanding the Closing, UAG indemnifies and agrees to fully
defend, save and hold harmless on an after-tax basis the Stockholders, the
Companies (prior to Closing), and any of their respective officers, directors,
employees, stockholders, advisors, representatives, agents and Affiliates
(each a "Stockholders Indemnified Party"), if a Stockholders 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 prior to 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 the
breach of any warranty of UAG 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 Stockholders (or
any representative of the Stockholders) and any misrepresentation in or
omission from any document furnished to the Stockholders in connection with
the Closing, and (ii) any failure of UAG duly to perform or observe any term,
provision, covenant, agreement or condition on the part of UAG to be performed
or observed.
9.3. PROCEDURES.
If (i) any Event of Breach occurs or is alleged and a UAG
Indemnified Party asserts that the Stockholders have become obligated to a UAG
Indemnified Party pursuant to Section 9.1, or if any Stockholders Third Party
Claim is begun, made or instituted as a result of which the Stockholders may
become obligated to a UAG Indemnified Party hereunder, or (ii) a UAG Event of
Breach occurs or is alleged and a Stockholders Indemnified Party asserts that
UAG has become obligated to a Stockholders 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 Stockholders Indemnified Party
hereunder (for purposes of this Article 9, any UAG Indemnified Party and any
Stockholders Indemnified Party is sometimes referred to as an "Indemnified
Party" and UAG and the Stockholders are sometimes referred to as an
"Indemnifying Party," and any UAG Third Party Claim and any Stockholders 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 or his obligation to provide indemnification
hereunder, provided that any failure to so notify the Indemnifying Party shall
not relieve them from any liability that it or he may have to the Indemnified
59
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
his or 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.
60
9.4. 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.
9.5. 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.
9.6. DEFINITIONS.
For purposes of this Article 9 "Costs" shall mean all liabilities,
losses, reasonable costs, damages (not including consequential damages),
expenses, claims, reasonable 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.
9.7. LIMITATION ON INDEMNIFICATION.
(a) Indemnification by the Stockholders.
(i) A UAG Indemnified Party shall be entitled to indemnification
in connection with an Event of Breach or a Stockholders Third Party
Claim only to the extent the aggregate Costs incurred or sustained by
all UAG Indemnified Parties exceed One Hundred Thousand Dollars
($100,000) with respect to a breach of any provision herein; provided,
however, that notwithstanding the preceding limitation, a UAG
Indemnified Party shall be entitled to indemnification for all Costs
incurred or sustained by such UAG Indemnified Party as a result of any
untruth or inaccuracy in, or breach of, a representation, warranty or
covenant (or failure to perform or observe any term, agreement or
condition) contained in Article 1 or Sections 2.3, 2.8, 3.1, 5.6 and
5.14 (to the extent specified therein) hereof.
(ii) The aggregate Costs for which the Stockholders shall be
obligated to indemnify the UAG Indemnified Parties
61
shall not exceed Seventeen Million Dollars ($17,000,000) in the case of
Costs incurred or sustained by all UAG Indemnified Parties in connection
with an Event of Breach; provided, however, that a UAG Indemnified Party
shall be entitled to indemnification for all Costs incurred or sustained
by such UAG Indemnified Party as a result of any untruth or inaccuracy
in, or breach of, a representation, warranty or covenant (or failure to
perform or observe any term, agreement or condition) contained in
Article 1 or Sections 2.3, 2.8, 2.20 and 3.1 hereof.
(b) Indemnification by UAG.
(i) A Stockholder Indemnified Party shall be entitled to
indemnification in connection with a UAG Event of Breach or a UAG Third
Party Claim only to the extent the aggregate Costs incurred or sustained
by all Stockholders Indemnified Parties exceed One Hundred Thousand
Dollars ($100,000); provided, however, that, notwithstanding the
preceding limitation, a Stockholder Indemnified Party shall be entitled
to indemnification for all Costs incurred or sustained by such
Stockholder Indemnified Party as a result of any untruth or inaccuracy
in, or breach of, a representation, warranty or covenant (or failure to
perform or observe any term, agreement or condition) contained in
Article 1 hereof.
(ii) The aggregate Costs for which UAG shall be obligated to
indemnify the Stockholder Indemnified Parties shall not exceed Seventeen
Million Dollars ($17,000,000) in the case of Costs incurred or sustained
by all Stockholders Indemnified Parties in connection with a UAG Event
of Breach; provided, however, that a Stockholder Indemnified Party shall
be entitled to indemnification for all Costs incurred or sustained by
such Stockholder Indemnified Party as a result of any untruth or
inaccuracy in, or breach of, a representation, warranty or covenant (or
failure to perform or observe any term, agreement or condition)
contained in Article 1 or Sections 4.6, and 4.2 hereof.
ARTICLE 10.
MISCELLANEOUS
10.1. SURVIVAL OF PROVISIONS.
(a) 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, subject to
Section 10.1(b) below. In the event of a breach of any such representations,
warranties or covenants, the party to whom such
62
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.
(b) Each of the representations and warranties set forth in
Article 2, Article 3 and Article 4 hereof and in any certificate delivered
pursuant to Article 6 or Article 7 hereof, shall survive, and not be affected
in any respect by, the Closing for a period terminating on the later of (i)
the date three years after the Closing Date, and (ii) with respect to any
claim asserted with respect to any breach of such representation or warranty
pursuant to Section 9.3 hereof before the expiration of such representation or
warranty, on the date such claim is finally liquidated or otherwise resolved;
provided, however, that the representations and warranties in Sections 2.3,
2.8, 2.11, 2.20, 3.1, 4.2, 4.6 and 4.12 hereof, shall survive and not be
affected in any respect by the Closing until any claim asserted with respect
to any breach of such representation or warranty is finally liquidated or
otherwise resolved.
10.2. FEES AND EXPENSES.
If the Closing does not occur and Section 5.6 hereof is breached,
then the Stockholders or the Companies shall pay to UAG, within five (5)
Business Days after receipt of a request therefor, an amount equal to all of
the reasonable legal and other fees, costs and expenses incurred by UAG in
connection with this Agreement and the transactions contemplated hereby.
10.3. 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.
10.4. 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 Companies before the Closing Date:
c/o Xx. Xxxx Xxxx
Xxxx Xxxx Enterprises
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0000 Xxxxxx Xxxxxx
Xxxxx Xxxxxxxxxx, X.X. 00000
with a copy to:
Xxxxxx Xxxxxxxxxx Xxxxxxx
Syracuse & Hirschtritt LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx Xxxxxx, Esq.
If to the Companies 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 Stockholders:
Xx. Xxxx Xxxx
Xxxx Xxxx Enterprises
0000 Xxxxxx Xxxxxx
Xxxxx Xxxxxxxxxx, X.X. 00000
with a copy to:
Xxxxxx Xxxxxxxxxx Xxxxxxx
64
Syracuse & Hirschtritt LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx Xxxxxx, Esq.
If to UAG:
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.
10.5. ASSIGNMENT.
This Agreement and all of the provisions hereof shall be binding
upon and inure to the benefit of the parties hereto (and with respect to the
Stockholders, the personal representatives and heirs of the Stockholders) 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 shall have the unrestricted right to assign
this Agreement and to delegate all or any part of its obligations
65
hereunder to any Affiliate of UAG, but in such event UAG shall remain fully
liable for the performance of all such obligations in the manner prescribed in
this Agreement.
10.6. 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.
10.7. WAIVER AND AMENDMENTS.
The Stockholders and the Companies as one party, and UAG 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.
10.8. 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.
10.9. 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.
10.10. 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
66
subsection of this Agreement or Schedule to this Agreement and shall not be
deemed to limit any representations or warranties made herein.
10.11. 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.
10.12. 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.
10.13. GOVERNING LAW.
This Agreement shall be governed by and construed in accordance
the laws of the State of New York without giving effect to any choice or
conflict of law provision or rule that would cause the laws of any other
jurisdiction to apply.
10.14. 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:______________________________
Its:
XXXX XXXX CHEVROLET, INC., A SOUTH
CAROLINA CORPORATION (D/B/A "XXXX
XXXX CHEVROLET"),
67
By:______________________________
Its:
XXXXXXX CHEVROLET-OLDSMOBILE, INC.,
A SOUTH CAROLINA CORPORATION
(D/B/A "XXXXXXX CHEVROLET-OLDS")
By:________________________________
Its:
XXXX-XXXXXXX CHEVROLET, INC., A NORTH
CAROLINA CORPORATION, (D/B/A
"XXXX-XXXXXXX CHEVROLET")
By:___________________________
Its:
/s/ Xxxx Xxxx, Xx.
---------------------------------
XXXX XXXX, XX.
/s/ Xxxxxxx X. Xxxx
---------------------------------
XXXXXXX X. XXXX
/s/ Xxxxxxx X. Xxxxxxx
---------------------------------
XXXXXXX X. XXXXXXX
/s/ Xxxxxxx X. Xxxxxxx
---------------------------------
XXXXXXX X. XXXXXXX
/s/ Xxxx X. Xxxxx
----------------------------------
XXXX X. XXXXX
/s/ Xxxxxxx X. Xxxxxxxx
----------------------------------
XXXXXXX X. XXXXXXXX
68
/s/ Xxxxxxx X. Xxxxxxxx, Xx.
--------------------------------
XXXXXXX X. XXXXXXXX, XX.
/s/ Xxxxx X. Xxxxxxxx
--------------------------------
XXXXX X. XXXXXXXX
/s/ Xxxxxxx X. Xxxxxxxx
--------------------------------
XXXXXXX X. XXXXXXXX
69
AMENDMENT NO. 1 TO
STOCK PURCHASE AGREEMENT
THIS AMENDMENT NO. 1 TO STOCK PURCHASE AGREEMENT (the "Amendment") is
made and entered into this 31st day of May, 1997, by and among United Auto
Group, Inc., a Delaware corporation ("UAG"), UAG Carolina, Inc., a Delaware
corporation ("UAG Carolina"), Xxxx Xxxx Chevrolet, Inc. ("Xxxx Xxxx
Chevrolet"), Xxxxxxx Chevrolet-Oldsmobile, Inc. ("Xxxxxxx Chevrolet") and
Xxxx-Xxxxxxx Chevrolet, Inc. ("Xxxx-Xxxxxxx Chevrolet" and, together with
Xxxx Xxxx Chevrolet and Xxxxxxx Chevrolet, the "Companies"), Xxxx Xxxx, Xx.
("Xx. Xxxx"), Xxxxxxx X. Xxxx, Xxxxxxx X. Xxxxxxx, Xxxxxxx X. Xxxxxxx, Xxxx
X. Xxxxx, Xxxxxxx X. Xxxxxxxx, Xxxxxxx X. Xxxxxxxx, Xx., Xxxxx X. Xxxxxxxx
and Xxxxxxx X. Xxxxxxxx (collectively with Xx. Xxxx, the "Stockholders").
W I T N E S S E T H:
WHEREAS, the parties hereto (other than UAG Carolina) have entered into
that certain Stock Purchase Agreement dated April 12, 1997 (the "Stock
Purchase Agreement");
WHEREAS, UAG has formed a wholly-owned subsidiary, UAG Carolina;
WHEREAS, the parties hereto desire to amend the terms of the Stock
Purchase Agreement as set forth herein;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. All capitalized terms used and not otherwise defined herein shall
have the meanings ascribed to them in the Stock Purchase Agreement.
2. At the Closing, in return for the consideration set forth in Article
1 of the Stock Purchase Agreement, the Stockholders shall sell to UAG Carolina
the Shares and shall deliver to UAG Carolina certificates representing the
Shares, accompanied by stock powers duly executed and blank, and all other
documents that are necessary to transfer to UAG Carolina good title to the
Shares.
3. The references to UAG in Articles 2, 3, 4, 5, 6, 7, 8 and 9 of the
Stock Purchase Agreement are amended to include UAG Carolina.
4. The first sentence of Section 1.8 of the Stock Purchase Agreement
shall be amended to delete the word "less" and replace it with the phrase
"equal to or greater".
5. The Stockholders represent and warrant that as of the Closing Date,
the Companies (and their respective assets) will not (directly or indirectly)
be liable for any loans or other indebtedness of any of the Stockholders or
any entity affiliated with the Stockholders (the "Stockholders Debt") and will
not guaranty or otherwise secure any Stockholders Debt. Notwithstanding this
representation and warranty, to the extent that the Companies (or any of their
respective assets) have any obligations with respect to any Stockholders Debt,
Stockholders shall use their best efforts to cause the Companies (or any of
their respective assets) to be released from such obligations. In the event
that any such obligations are not released, then the Stockholders shall fully
indemnify UAG, UAG Carolina and the Companies and hold them harmless from any
Costs arising out of or in any way relating to any Stockholders Debt.
6. The Closing Date shall be May 31, 1997. All closing transactions
contemplated by the Stock Purchase Agreement and all related closing documents
shall be deemed effective after the close of business on the Closing Date.
7. Xx. Xxxx agrees to fully indemnify and hold harmless UAG, UAG
Carolina and the Companies for any Costs incurred by UAG, UAG Carolina or the
Companies as a result of any breach of or default under (i) that certain
Environmental Indemnity Agreement between General Motors Acceptance
Corporation, Xxxx Xxxx, Xx. and Xxxx Xxxx Chevrolet, Inc. dated June 6, 1994,
together with any amendments or modifications thereto; (ii) that certain
Environmental Indemnity Agreement between General Motors Acceptance
Corporation, Xxxx Xxxx, Xx. and Xxxx-Xxxxxxx Chevrolet, Inc. dated August 22,
1994, together with any amendments or modifications thereto; or (iii) any
other indemnity agreement entered into prior to Closing between any of the
Companies and GMAC relating to the Real Property.
8. The Parties acknowledge that the employees of the Companies, through
Xxxx Xxxx Enterprises, Inc. ("Xxxx Xxxx Enterprises"), are currently eligible
to participate in group medical, group life and AD&D insurance, group long and
short-term disability and group dental plans with the Guardian Life Insurance
Company of America ("Guardian") (collectively the "Employee Benefit Plans").
The Stockholders acknowledge that Guardian has agreed to maintain the current
contract with Xxxx Xxxx Enterprises through December 31, 1997. Accordingly,
the Stockholders agree to cause Xxxx Xxxx Enterprises to continue to maintain
the Employee Benefit Plans on behalf of the employees of the Companies on the
same terms that such plans are currently offered to employees of the Companies
from the date hereof until December 31, 1997 and, thereafter, for such longer
time as is requested by the Companies and agreed to by Guardian (provided,
however, that notwithstanding the above, the Stockholders shall not be
required to cause Xxxx Xxxx Enterprises to maintain the Employee Benefit Plans
after December 31, 1998).
-2-
9. Xxxxxxx Chevrolet currently leases property from Xxxxx X. Xxxxxx (now
deceased) pursuant to a Lease dated August 27, 1991 (the "Lease"). UAG
Carolina requested, but Stockholders have not been able to obtain, an Estoppel
Certificate with respect to the Lease. The Stockholders agree to use their
best efforts to obtain an Estoppel Certificate in the form previously provided
by UAG within thirty (30) days after the date hereof. Regardless of whether
Stockholders are able to obtain such Estoppel Certificate, the Stockholders
hereby indemnify and agree to hold harmless UAG, UAG Carolina and Xxxxxxx
Chevrolet of and from all Costs arising in connection with any default under
the Lease prior to the date hereof. UAG, UAG Carolina and Xxxxxxx Chevrolet
acknowledge that Xx. Xxxx has personally guaranteed the obligations of Xxxxxxx
Chevrolet under the Lease. In the event that Xx. Xxxx is not released from
such guaranty, UAG, UAG Carolina and Xxxxxxx Chevrolet agree to indemnify and
hold harmless Xx. Xxxx from any Costs to Xx. Xxxx arising out of such guaranty
in connection with any default or other event first occurring after the date
hereof so long as such is not the result of an environmental matter covered by
the Indemnification Agreement of even date between Xx. Xxxx, UAG and others.
10. Xx. Xxxx hereby agrees that the real property more particularly
described on Exhibit "A" attached hereto and incorporated herein by reference
("Property") which is being leased to Xxxxxxx Chevrolet shall be properly
platted in accordance with the requirements of all local governing laws within
thirty (30) days after the date hereof and evidence thereof shall be provided
to Xxxxxxx Chevrolet within such time period. Xx. Xxxx shall indemnify and
hold harmless UAG, UAG Carolina, and Xxxxxxx Chevrolet from all Costs arising
as a result of the failure by Xx. Xxxx to properly subdivide and plat such
property; such property forming a portion of the property leased by Xx. Xxxx
to Xxxxxxx Chevrolet of even date herewith.
11. The parties acknowledge that Coopers & Xxxxxxx is in the process of
completing its audit of the Companies' financial statements for the year ended
December 31, 1996 and that the earnings adjustment set forth in Section 1.4 of
the Stock Purchase Agreement shall be deferred until the completion of such
audit which shall be completed no later than twenty-one (21) days after the
Closing Date. For purposes of Section 1.4 of the Stock Purchase Agreement, the
1996 Earnings shall be as determined by Coopers & Xxxxxxx after completion of
their audit; provided, however, that such results are subject to confirmation
by the Stockholders or, at the Stockholder's discretion, by the Stockholders'
independent certified public accountants. In the event that the parties do not
agree upon the amount of the 1996 Earnings, any dispute with respect thereto
shall be resolved by a third independent certified public accounting firm
agreed to by the parties. The earnings adjustment set forth in Section 1.4
shall take place no later than three (3) days after the amount of the 1996
Earnings is finally determined (in accordance herewith).
-3-
12. Except as expressly stated herein, the provisions of the Stock
Purchase Agreement shall remain in full force and effect.
13. This Amendment shall be governed by and construed in accordance with
the laws of the state of New York without giving effect any choice or conflict
of law provision or rule that would cause laws of any other jurisdiction to
apply.
14. This Amendment shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, executors, administrators, legal
representatives, successors, transferees and assigns.
15. This Amendment 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. If any one or more of
the provisions of this Amendment shall be held to be invalid, illegal or
unenforceable, the validity, legality or enforceability of the remaining
provisions of this Amendment shall not be affected thereby.
-4-
IN WITNESS WHEREOF, the parties hereto have caused this Amendment 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 CAROLINA, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
-------------------------------
Xxxxxx X. Xxxxxxxx
Vice President
XXXX XXXX CHEVROLET, INC.
By:
-------------------------------
Its:
------------------------------
XXXXXXX CHEVROLET-
OLDSMOBILE, INC.
By:
-------------------------------
Its:
------------------------------
XXXX-XXXXXXX CHEVROLET, INC.
By:
-------------------------------
Its:
------------------------------
/s/ Xxxx Xxxx, Xx.
----------------------------------
XXXX XXXX, XX.
-5-
/s/ Xxxxxxx X. Xxxx
----------------------------------
Xxxxxxx X. Xxxx
/s/ Xxxxxxx X. Xxxxxxx
----------------------------------
Xxxxxxx X. Xxxxxxx
/s/ Xxxxxxx X. Xxxxxxx
----------------------------------
Xxxxxxx X. Xxxxxxx
/s/ Xxxx X. Xxxxx
----------------------------------
Xxxx X. Xxxxx
/s/ Xxxxxxx X. Xxxxxxxx
----------------------------------
Xxxxxxx X. Xxxxxxxx
/s/ Xxxxxxx X. Xxxxxxxx
----------------------------------
Xxxxxxx X. Xxxxxxxx
/s/ Xxxxx X. Xxxxxxxx
----------------------------------
Xxxxx X. Xxxxxxxx
/s/ Xxxxxxx X. Xxxxxxxx
----------------------------------
Xxxxxxx X. Xxxxxxxx
-6-
EXHIBIT "A"
AN APPROXIMATELY .908 ACRE PORTION OF ALL that certain piece, parcel or tract
of land, situate, lying and being in Dorchester County, Town of Summerville,
State of South Carolina, know and designated as 6.77 acres, more or less, as
shown on a plat prepared by Xxxx Xxxxx Xxxx, P.L.S., dated April 6, 1994,
entitled "Plat Showing a 7.22 Acres Owned by Xxxxxx X. Xxxxxxxx, located in the
Town of Summerville, in Dorchester County, South Carolina and establishing 0.45
of an Acre about to be conveyed to The Presbyterian Home of South Carolina and
6.77 Acres about to be conveyed to The Xxxxxx Xxxxxxxx Charitable Trust
Agreement", said parcel having such size, shape, dimensions, buttings and
boundings as will be shown by reference to the aforesaid plat.
BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS: All that certain piece parcel
or lot of land, situate, lying and being in the County of Dorchester, Town
of Summerville, State of South Carolina containing 0.908 acres and being shown
on that certain plat dated May 26, 1997 prepared by Xxxxx X. Xxxxxxx as follows:
Beginning at an iron rod and running 395.36 Feet South 25 Degrees and 21 Minutes
16 Seconds East to iron rod, thence running for a distance of 443.07 Feet South
52 Degrees 03 Minutes 35 Seconds East to an iron rod thence, running 200 Feet
North 64 Degrees 38 Minutes 44 Seconds East to the point of beginning.
EXHIBIT A
---------
All that tract of land situate, lying and being Northeast of the Town of
Summerville, in the County of Dorchester and State of South Carolina, on US
Highway 17A, measuring and containing Eight (8) acres, more or less, and shown
and designated on "Plat of Several Parcels of Land near Summerville, Surveyed
for Xxxxxx Xxxxxxx" by X.X. Xxxxx, RLS, dated October 29, 1971 said plat being
recorded in the RMC Office for Dorchester County in Plat Book 19, Page 271;
SAVING AND EXCEPTING therefrom the area shaded in red. Said real estate having
a frontage on highway 17A of 236.80 feet.
