STOCK PURCHASE AGREEMENT
DATED FEBRUARY 19, 1997
AMONG
UNITED AUTO GROUP, INC.
UAG EAST, INC.
AND
AMITY AUTO PLAZA LTD., D/B/A AMITY TOYOTA SUPERSTORE
MASSAPEQUA IMPORTS LTD., D/B/A LEXUS OF MASSAPEQUA
WESTBURY NISSAN LTD., D/B/A WESTBURY NISSAN SUPERSTORE
WESTBURY SUPERSTORE LTD., D/B/A WESTBURY TOYOTA
J&S AUTO REFINISHING LTD., D/B/A PREMIER AUTO BODY
FLORIDA CHRYSLER PLYMOUTH JEEP EAGLE INC.
PALM AUTO PLAZA INC., D/B/A PALM BEACH TOYOTA
WEST PALM INFINITI INC.
WEST PALM NISSAN INC.
NORTHLAKE AUTO FINISH INC., D/B/A TRAIL AUTO BODY
AND
XXXX X. XXXXXXXX
XXXX X. XXXXXXXX, XX.
TABLE OF CONTENTS
Page
ARTICLE 1. PURCHASE AND SALE OF SHARES.......................................2
1.1. Certain Definitions.................................................2
1.2. Purchase and Sale of the Shares.....................................4
1.3. Net Worth Adjustment................................................7
1.4. New Facility........................................................9
1.5. Stock Price Adjustment.............................................11
1.6. Escrow Deposit.....................................................11
1.7. Additional Purchase Price..........................................11
1.8. Contingent Payment.................................................12
1.9. Effective Date.....................................................12
ARTICLE 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANIES
AND THE STOCKHOLDERS.........................................12
2.1. Organization and Good Standing....................................12
2.2. Subsidiaries......................................................13
2.3. Capitalization....................................................13
2.4. Authority; Approvals and Consents.................................13
2.5. Financial Statements..............................................14
2.6. Absence of Undisclosed Liabilities................................15
2.7. Absence of Material Adverse Effect; Conduct of Business...........16
2.8. Taxes.............................................................17
2.9. Legal Matters.....................................................18
2.10. Property..........................................................19
2.11. Environmental Matters.............................................20
2.12. Inventories.......................................................22
2.13. Accounts Receivable...............................................22
2.14. Insurance.........................................................22
2.15. Contracts; etc....................................................23
2.16. Labor Relations...................................................24
2.17. Employee Benefit Plans............................................25
2.18. Other Benefit and Compensation Plans or Arrangements..............27
2.19. Transactions with Insiders........................................28
2.20. Propriety of Past Payments........................................29
2.21. Interest in Competitors...........................................29
2.22. Brokers...........................................................30
2.23. Accounts..........................................................30
2.24. Disclosure........................................................30
2.25. Net Worth.........................................................30
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS...............30
3.1. Ownership of Shares; Title.........................................30
3.2. Authority..........................................................31
3.3. Real Property and Improvements.....................................31
3.4. Investment Intent..................................................32
3.5. Qualification of Stockholders......................................32
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ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF UAG............................33
4.1. Organization and Good Standing....................................33
4.2. Subsidiaries......................................................33
4.3. Capitalization....................................................34
4.4. SEC Filings.......................................................34
4.5. Authority; Approvals and Consents.................................34
4.6. Financial Statements..............................................35
4.7. Taxes.............................................................36
4.8. Absence of Undisclosed Liabilities................................36
4.9. Legal Matters.....................................................37
4.10. Disclosure........................................................37
4.11. Absence of Material Adverse Effect; Conduct of Business...........38
4.12. Insurance.........................................................39
4.13. Labor Relations...................................................39
4.14. Contracts; Etc....................................................40
4.15. Brokers...........................................................40
4.16. Propriety of Past Payments........................................40
4.17. Environmental Matters.............................................41
4.18. Employee Benefit Plans............................................41
ARTICLE 5. COVENANTS AND ADDITIONAL AGREEMENTS..............................41
5.1. Access; Confidentiality...........................................41
5.2. Furnishing Information; Announcements.............................42
5.3. Antitrust Improvements Act Compliance.............................43
5.4. Certain Changes and Conduct of Business of the Companies..........43
5.5. No Intercompany Payables or Receivables...........................46
5.6. Negotiations......................................................47
5.7. Consents; Cooperation.............................................47
5.8. Additional Agreements.............................................48
5.9. Interim Financial Statements......................................48
5.10. Notification of Certain Matters...................................48
5.11. Assurance by the Stockholders.....................................49
5.12. Personal Guarantees...............................................49
5.13. Non-Interference..................................................49
5.14. Environmental Audits..............................................49
5.15. Access to Records.................................................50
5.16. Nissan, Primus and World Omni Mortgages...........................50
5.17. Certain Changes and Conduct of Business of UAG....................51
5.18. 1996 Financial Statements.........................................52
ARTICLE 6. CONDITIONS TO THE OBLIGATIONS OF UAG AND SUB TO EFFECT
THE CLOSING .....................................................52
6.1. Representations and Warranties; Agreements; Covenants.............52
6.2. Authorization; Consents...........................................52
6.3. Opinions of the Companies' and the Stockholders' Counsel..........53
6.4. Absence of Litigation.............................................53
6.5. No Material Adverse Effect........................................53
6.6. Net Worth.........................................................54
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6.7. Completion of Due Diligence.......................................54
6.8. Net Income........................................................54
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........................55
6.14. Nondisturbance Agreements/Estoppel Certificates...................55
6.15. Title Insurance...................................................55
6.16. Schedules.........................................................55
6.17. Lease Termination Agreements/Memoranda of Lease...................55
6.18. Resignation of the Companies' Directors...........................55
6.19. Employment Agreement..............................................55
ARTICLE 7. CONDITIONS TO THE OBLIGATIONS OF THE STOCKHOLDERS TO EFFECT THE
CLOSING......................................................56
7.1. Representations and Warranties; Agreements........................56
7.2. Authorization of the Agreement, Consents..........................56
7.3. Opinions of UAG's and Sub's Counsel...............................56
7.4. Absence of Litigation.............................................57
7.5. Certificates......................................................57
7.6. Legal Matters.....................................................57
7.7. Registration Rights Agreement.....................................57
7.8. Schedules.........................................................57
7.9. Leases............................................................58
7.10. No Material Adverse Effect........................................58
7.11. Employment 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. Remedies...........................................................62
9.5. Definitions........................................................62
9.6. Limitation on Indemnification......................................62
ARTICLE 10. MISCELLANEOUS...................................................64
10.1. Survival of Provisions...........................................64
10.2. Fees and Expenses................................................64
10.3. Headings.........................................................64
10.4. Notices..........................................................65
10.5. Assignment.......................................................66
10.6. Entire Agreement.................................................66
10.7. Waiver and Amendments............................................67
10.8. Counterparts.....................................................67
10.9. Accounting Terms.................................................67
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10.10. Schedules........................................................67
10.11. Severability.....................................................67
10.12. Remedies.........................................................68
10.13. Governing Law....................................................68
10.14. Time is of the Essence...........................................68
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STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT, dated February 19, 1997, is by and
among United Auto Group, Inc., a Delaware corporation ("UAG"), UAG East, Inc.,
a Delaware corporation ("UAG East" or "Sub"), Amity Auto Plaza Ltd., d/b/a
Amity Toyota Superstore, a New York corporation ("Amity Toyota"), Massapequa
Imports Ltd., d/b/a Lexus of Massapequa, a New York corporation ("Massapequa
Lexus"), Westbury Nissan Ltd., d/b/a Westbury Nissan Superstore, a New York
corporation ("Westbury Nissan"), Westbury Superstore Ltd., d/b/a Westbury
Toyota, a New York corporation ("Westbury Toyota"), J&S Auto Refinishing Ltd.,
d/b/a Premier Auto Body, a New York corporation ("Premier"), Florida Chrysler
Plymouth Jeep Eagle Inc., a Florida corporation ("Florida CP"), Palm Auto
Plaza Inc., d/b/a Palm Beach Toyota, a Florida corporation ("West Palm
Toyota"), West Palm Infiniti Inc., a Florida corporation ("West Palm
Infiniti"), West Palm Nissan Inc., a Florida corporation ("West Palm Nissan"),
Northlake Auto Finish Inc., d/b/a Trail Auto Body, a Florida corporation
("Trail," and, together with Amity Toyota, Massapequa Lexus, Westbury Nissan,
Westbury Toyota, Premier, Florida CP, West Palm Toyota, West Palm Infiniti and
West Palm Nissan, the "Companies"), Xxxx X. Xxxxxxxx ("Xx. Xxxxxxxx") and Xxxx
X. Xxxxxxxx, Xx. (together with Xx. Xxxxxxxx, the "Stockholders").
W I T N E S S E T H:
WHEREAS, UAG East is a wholly-owned subsidiary of UAG;
WHEREAS, the Companies operate franchise automobile dealerships
and related businesses in Xxxx Xxxx Xxxxx, Xxxxxxx xxx Xxxx Xxxxxx, Xxx Xxxx;
WHEREAS, the Stockholders own all of the issued and outstanding
shares of the capital stock of the Companies (the "Shares");
WHEREAS, UAG East desires to purchase the Shares from the
Stockholders, and the Stockholders desire to sell the Shares to UAG East (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 East 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) "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 entirely for the benefit of his spouse
and/or issue.
(b) "Business Day" shall mean any day excluding Saturday, Sunday
and any day which is a legal holiday under Federal law.
(c) "Closing Date" shall have the meaning ascribed to it in
Section 1.2(b).
(d) "Documents" shall mean the Post-Closing Escrow Agreement, the
Escrow Agreement, the Piggyback Registration Rights Agreement and the Leases.
(e) "Effective Date" shall have the meaning ascribed to it in
Section 1.9 hereof.
(f) "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.
(g) "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.
(h) "Escrow Agent" shall mean Xxxxxx Xxxxxxxxxx Xxxxxxx Syracuse &
Hirschtritt LLP.
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(i) "Escrow Deposit" shall have the meaning ascribed to it in
Section 1.6.
(j) "GAAP" shall mean generally accepted accounting principles
which are in effect in the United States on the Closing Date.
(k) "Hazardous Materials" shall mean, collectively, (i) those
substances included within the definitions of or identified as "hazardous
chemicals," "hazardous waste," "hazardous substances," "hazardous materials,"
"toxic substances" or similar terms in or pursuant to, without limitation, the
Comprehensive Environmental Response Compensation and Liability Act of 1980
(42 U.S.C. 9601 et seq.) ("CERCLA"), as amended by Superfund Amendments and
Reauthorization Act of 1986 (Pub. L. 99-499, 100 State, 1613), the Resource
Conservation and Recovery Act of 1976 (42 U.S.C. ss. 6901 et seq.) ("RCRA"),
the Occupational Safety and Health Act of 1970 (29 U.S.C. ss. 651 et seq.)
("OSHA"), and the Hazardous Materials Transportation Act, 49 U.S.C. ss. 1801
et seq. ("HMTA"), and in the regulations promulgated pursuant to such laws,
all as amended, (ii) those substances listed in the United States Department
of Transportation Table (49 CFR 172.101 and amendments thereto) or by the
Environmental Protection Agency (or any successor agency) as hazardous
substances (40 CFR part 302 and amendments thereto), (iii) any material, waste
or substance which is or contains (A) petroleum, including crude oil or any
fraction thereof, natural gas, or synthetic gas usable for fuel or any mixture
thereof, (B) asbestos, (C) polychlorinated biphenyls, (D) designated as a
"hazardous substance" pursuant to Section 311 of the Clean Water Act, 33
U.S.C. ss. 1251 et seq. (33 U.S.C. ss. 1321) or listed pursuant to Section 307
of the Clean Water Act (33 U.S.C. ss. 1317), (E) flammable explosives, (F)
radioactive materials, and (iv) such other substances, materials and wastes
which are or become regulated or classified as hazardous, toxic or as "special
wastes" under any Environmental Laws.
(l) "Knowledge" shall mean, with respect to the Stockholders, that
either of the Stockholders knows 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, service manager, office manager (or any person with similar such
responsibilities regardless of title) knows 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.
(m) "Leases" shall have the meaning ascribed to it in Section
1.2(c)(v).
(n) "Liens" shall mean any mortgages, pledges, title defects or
objections, liens, claims, security interests, conditional and installment
sale agreements, encumbrances or similar charges.
3
(o) "Material Adverse Effect" shall mean any change in, or effect
on, any of the Companies (including the 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.
(p) "November 30 Balance Sheets" shall have the meaning ascribed
to it in Section 2.5.
(q) "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.
(r) "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.
(s) "Piggyback Registration Rights Agreement" shall have the
meaning ascribed to it in Section 1.2(c)(vi).
(t) "Pre-Tax Earnings" shall mean net earnings (or losses), before
taxes, computed in accordance with GAAP.
(u) "UAG Common Stock" shall mean the shares of common stock, par
value $.0001 per share of UAG.
(v) "UAG Market Value" shall mean the arithmetic average of the
daily closing price per share of UAG Common Stock, rounded to four decimal
places, as reported on the New York Stock Exchange Composite Tape for each of
the twenty (20) consecutive trading days ending (and including) the trading
day that occurs one trading day prior to the date on which the UAG Market
Value is to be determined.
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
East, and UAG East shall purchase from the Stockholders, the Shares for an
aggregate purchase price (the "Purchase Price") equal to (i) Twenty-Five
Million Dollars ($25,000,000) in cash less the amount of any distributions
(the "Distributions") made by the Companies to the Stockholders from November
30, 1996 until the Closing Date (other than distributions of net income
attributable to periods after November 30, 1996 or distributions attributable
to periods prior to November 30, 1996 which are reflected on the November 30
Balance Sheets) (the "Base Price"), which Base Price is subject to adjustment
after Closing as provided
4
in Sections 1.3, 1.7 and 1.8 below; (ii) promissory notes in substantially the
form attached hereto as Exhibit A (the "Three Year Notes") issued by UAG in
the aggregate principal amount of Twelve Million Five Hundred Thousand Dollars
($12,500,000) with interest only payable quarterly at the rate of six and
one-half percent (6.5%) per annum, maturing on the third anniversary of the
Closing Date; (iii) promissory notes in substantially the form attached hereto
as Exhibit B (together with the Three Year Notes, the "Notes") issued by UAG
in the aggregate principal amount of Twelve Million Five Hundred Thousand
Dollars ($12,500,000) with interest only payable quarterly at the rate of six
and one-half percent (6.5%) per annum, maturing on the sixth anniversary of
the Closing Date; and (iv) One Hundred Twenty-Seven Thousand Six Hundred Sixty
(127,660) shares of UAG Common Stock (the "UAG Shares") bearing the
restrictive legend customarily placed on securities that have not been
registered under applicable federal and state securities laws, which shares
shall be deposited in escrow pursuant to Section 1.2(c) below. At the Closing
referred to in Section 1.2(b) hereof:
(i) the Stockholders shall sell, assign, transfer and deliver
to Sub 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) Sub 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 (less the Escrow Deposit) by wire transfer to an account
designated in writing by the Stockholders or by certified funds; (B)
deliver to the Stockholders the Notes; and (C) deliver to the Escrow
Agent certificates representing the UAG Shares bearing the restrictive
legend customarily placed on securities that have not been registered
under applicable federal or state securities laws.
(b) Closing. Subject to the conditions set forth in this
Agreement, the purchase and sale of the Shares pursuant to this Agreement (the
"Closing") shall take place as soon as practicable following the date on which
all conditions to the obligations of the parties hereunder (other than those
requiring an exchange of certificates, opinions or other documents, or the
taking of other action, at the Closing) have been satisfied or waived but no
later than April 30, 1997. The date on which the Closing occurs is herein
referred to as the "Closing Date".
(c) Deliveries at the Closing. Subject to the conditions set forth
in this Agreement, at the Closing:
(i) the Stockholders shall deliver to Sub certificates
representing the Shares accompanied by stock powers as required by
Section 1.2(a)(i) hereof, and any other
5
documents that are necessary to transfer to Sub good title to all the
Shares, and (B) all opinions, certificates and other instruments and
documents required to be delivered by the Stockholders or the Companies
at or prior to the Closing or otherwise required in connection herewith;
(ii) the Sub shall (A) pay to the Stockholders funds as required
by Section 1.2(a)(ii) hereof; (B) deliver to the Stockholders the Notes;
and (C) deliver to the Stockholders all opinions, certificates and other
instruments and documents required to be delivered by UAG or Sub at or
prior to the Closing or otherwise required in connection herewith;
(iii) UAG and Xx. Xxxxxxxx shall enter into the Post-Closing
Escrow Agreement substantially in the form attached hereto as Exhibit C
(the "Post Closing Escrow Agreement"), and UAG shall deliver to the
Escrow Agent certificates representing the UAG Shares issued in the name
of Xx. Xxxxxxxx which shares shall be held and distributed pursuant to
the terms of the Post-Closing Escrow Agreement;
(iv) The Companies (other than Westbury Toyota) and the owner of
the property on which each such Company conducts its business (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)
days of the date of this Agreement. Each Lease shall be for a twenty
(20) year term and the lessee shall have the option to renew the lease
for two additional five year terms. Each Lease shall be a triple net
lease and the initial base monthly rent for each Lease shall be as set
forth on Schedule 1.2. Each lease with Xx. Xxxxxxxx or any entity in
which he has an ownership or control position shall contain a provision
whereby at the applicable Company's option, exercisable within six (6)
months after the Closing Date, the Company may have an appraisal of the
real property conducted and if the appraisal reflects that the initial
base monthly rent is greater than one-twelfth (1/12) of the appraised
fair market value of the property multiplied by a 10.75% capitalization
rate ("Cap Rate") then no adjustments shall be made to the lease rate
for the CPI Increase (as hereinafter defined) until from and after the
initial lease rate is equal to or exceeds the fair market value lease
rate (but in no event until three (3) years after the Closing Date);
provided, however, the Landlord under the affected lease shall have the
right to then obtain its own appraisal within two (2) months thereafter
and if the parties cannot agree on the fair market value lease rate, the
two appraisers shall select a third appraiser to determine the fair
market lease rate within two (2) months after Landlord's appraisal. All
appraisers must be independent and MAI certified with a minimum of ten
(10) years' experience. Mr.
6
Xxxxxxxx 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 and a lease rate of
return not to exceed the Cap Rate. Subject to the foregoing, on the
third anniversary of the Closing Date and every three years thereafter,
the lease rate for each Lease shall increase to an amount equal to the
rate then in effect plus an amount equal to a percentage of the rate
then in effect, which percentage shall be equal to two hundred percent
(200%) of 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; provided, however, that such increase shall not
exceed eight and one-half percent (8.5%) for each three (3) year period
("CPI Increase"). UAG shall guarantee the payment under and performance
of the lessees under the Leases; and
(v) UAG and Xx. Xxxxxxxx shall enter into a registration rights
agreement in the form attached hereto as Exhibit D (the "Piggyback
Registration Rights Agreement").
1.3. 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 on the same basis and in
accordance with the accounting principles, methods and practices used in
preparing the November 30 Balance Sheets (as defined in Section 2.5 hereof)
(such accounting principles, methods and practices and such procedures, are
referred to herein as the "Accounting Principles"). In connection with the
preparation of the Closing Date Balance 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 on the
same basis and in accordance with the Accounting Principles and (ii) shall
include a schedule showing the computation of the Final Net Worth (as defined
in Section 1.3(g)(i) hereof), computed in accordance with the definition of
Net Worth set forth in Section 1.3(g)(ii) hereof. UAG and the Reviewer shall
have the opportunity to consult with the Stockholders, the Companies and each
of the
7
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,
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 sixty (60) 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 1.3(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 1.3(e) hereof in
order that any and all matters in dispute shall be resolved as soon as
practicable.
(g) (i) If the aggregate Net Worth as shown on the Reviewed
Balance Sheets as finally determined through the operation of Sections 1.3 (a)
through (e) hereof plus the amount of the Distributions (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 November 30 Balance Sheets (which balance
sheets are attached hereto as Schedule 2.5) (the amount of any such
8
deficiency being referred to herein as the "Net Worth Deficiency"), 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 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.
1.4. NEW FACILITY
(a) Xx. Xxxxxxxx or an Affiliate is the owner of a parcel of land
located on Military Trail, West Palm Beach (the "West Palm Parcel") and is in
the process of developing a new facility on such land for use by West Palm
Toyota (the "New Facility"). The New Facility is to be developed pursuant to
plans and specifications to be agreed upon by the parties, which plans and
specifications shall include a breakdown of all hard and soft costs together
with the maximum total cost (the "Plans"). The construction contractor shall
be chosen from among no less than three (3) bidders (one of whom UAG may
designate) and the lowest bidder that is qualified to Toyota standards
(including an ability to post a performance bond) shall be selected. The
parties acknowledge that the New Facility will not be completed on the Closing
Date. Within nine (9) months after the Closing Date, Xx. Xxxxxxxx shall, at
his sole cost and expense, complete the New Facility as set forth in the
Plans. No change shall be made to the Plans without the prior written consent
of UAG which shall not be unreasonably withheld. Upon completion of the New
Facility and satisfaction of the New Facility Closing Conditions (as
hereinafter defined) West Palm Toyota and Xx. Xxxxxxxx shall enter into a
lease for the New Facility in a form mutually acceptable to the parties (the
"New Facility Lease") (the date on which the New Facility Lease becomes
effective is referred to herein as the "New Facility Lease Date"), such form
to be agreed to by the parties within twenty (20) days after the date of this
Agreement. The New Facility Lease shall be for a twenty (20) year term and the
lessee shall have the option to renew the lease for two additional five year
terms. The initial lease rate under the New Facility Lease shall be fixed at a
dollar amount equal to 100% of all hard and soft costs provided for in the
Plans and actually incurred by Xx. Xxxxxxxx for acquisition and construction
of the facility multiplied by the Cap Rate. Xx. Xxxxxxxx represents and
warrants that the acquisition cost of the property is no greater than fair
market value. The initial lease rate shall be
9
increased every third anniversary after the commencement of the lease as set
forth in Section 1.2(c)(iv).
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
if 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) West Palm Toyota having received any necessary consents or approvals
from Toyota 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, UAG East, West Palm Toyota and a title insurance company chosen by UAG;
(v) UAG's obtaining a leasehold title insurance policy, without standard
exceptions insuring West Palm Toyota'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. Xxxxxxxx'x obtaining a non-disturbance
agreement from the holder thereof in favor of West Palm Toyota 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, UAG East and West Palm Toyota. In addition, Xx. Xxxxxxxx shall
complete all remaining punch list items within sixty (60) days after the New
Facility Lease Date and shall use his best efforts to obtain standard
warranties for construction and equipment (including roofs) and to assign such
warranties to UAG or West Palm Toyota. Xx. Xxxxxxxx also agrees that all
equipment and fixtures necessary for a "turn-key" car dealership similar to
the existing West Palm Toyota dealership shall be relocated from the existing
West Palm Toyota Facility to the New Facility. In addition, from and after the
Closing Date until the earlier of (i) the New Facility Lease Date, and (ii)
nine (9) months after the Closing Date, West Palm Toyota shall pay to Xx.
Xxxxxxxx his out of
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pocket costs attributable to (x) real property taxes, (y) ground lease
payments and (z) interest on borrowed funds utilized to acquire and construct
the New Facility land and improvements.
1.5. STOCK PRICE ADJUSTMENT
If the UAG Market Value on the Adjustment Date (as defined below)
is less than Twenty-three and 50/100 Dollars ($23.50) (the amount of any such
deficiency being referred to herein as the ("Stock Price Deficiency") then, no
later than ten (10) Business Days after the Adjustment Date, UAG shall pay to
Xx. Xxxxxxxx cash in an amount (the "Adjustment Amount") equal to the Stock
Price Deficiency multiplied by the number of UAG Shares Xx. Xxxxxxxx received
at the Closing.
For purposes of this Agreement, the Adjustment Date shall mean the earlier of
(i) the date on which the UAG Shares are registered pursuant to the Piggyback
Registration Rights Agreement or (ii) the date on which Xx. Xxxxxxxx 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").
1.6. ESCROW DEPOSIT.
Within three (3) business days of the Effective Date of this
Agreement, UAG will deposit into escrow funds in the amount of Two Hundred
Fifty Thousand Dollars ($250,000) (the "Escrow Deposit") by delivering such
funds to the Escrow Agent which Escrow Deposit shall be held and disbursed by
the Escrow Agent pursuant to the terms of an escrow agreement in substantially
the form attached hereto as Exhibit E.
1.7. ADDITIONAL PURCHASE PRICE.
If the Companies, on a combined basis, achieve annual Pre-Tax
Earnings of at least Eleven Million Five Hundred Thousand Dollars
($11,500,000) in any of the three (3) successive twelve (12) month periods
beginning on the first day of the calendar month immediately following the New
Facility Lease Date (such twelve (12) month periods being referred to herein
as "Year One," "Year Two," and "Year Three," respectively), then, in
consideration for the sale of the Shares by the Stockholders to Sub, Sub will
make an additional payment to the Stockholders with respect to each such year
that such Pre-Tax Earnings shall be achieved in the aggregate amount of One
Million Dollars ($1,000,000) (each such payment being referred to herein as an
"Additional Payment"), which Additional Payments, if any, shall be allocated
among the Stockholders as they so determine in their sole discretion. In the
event that Sub is required to make an Additional Payment in either Year One,
Year Two or Year Three, then Sub shall make the Additional Payment within
sixty (60) days after the completion of the review by the Companies' certified
public accountant of the Companies' financial statements covering the entire
Year for which such Additional
11
Payment is to be paid. For purposes of this Agreement, Pre-Tax Earnings shall
not include any general overhead charges, management fees or other similar
payments to UAG or its Affiliates. During Years One, Two and Three each
Company shall deliver to Xx. Xxxxxxxx a copy of its monthly factory statement
within five (5) days of its delivery to the factory which statement shall be
treated as confidential by Xx. Xxxxxxxx.
1.8. CONTINGENT PAYMENT.
If the total of the annual Pre-Tax Earnings for Year One, Year Two
and Year Three (the "Total Pre-Tax Earnings") exceeds Thirty Four Million Five
Hundred Thousand Dollars ($34,500,000), then, in consideration for the sale of
the Shares by the Stockholders to Sub, Sub will make an additional payment to
the Stockholders in the aggregate amount of One Million Dollars ($1,000,000)
(such payment being referred to herein as the "Contingent Payment"), which
Contingent Payment shall be allocated among the Stockholders as they so
determine in their sole discretion. In the event that Sub is required to make
a Contingent Payment, then Sub shall make the Contingent Payment within sixty
(60) days after completion of the review by the Companies' certified public
accounts of the Companies' financial statements covering Year Three.
1.9. EFFECTIVE DATE.
The obligations of the parties hereunder shall not take effect
until the parties have notified all of the manufacturer's whose consent is
required (the "Effective Date").
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 ten (10) Business Days after the Effective
Date hereof, the Companies and the Stockholders hereby jointly and severally
represent and warrant to UAG and Sub 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
12
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 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
13
each of the Companies and the Stockholders of this Agreement and the Documents
to which it or they are a party and the consummation of the transactions
contemplated hereby and thereby do not and will not:
(i) contravene any provisions of the Articles of Incorporation or
By-Laws (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 (as
defined in Section 2.15 hereof) or, except as set forth on Schedule 2.4
hereto, require any consent or waiver of any party to any Company
Agreement;
(iii) result in the creation of any security interest upon, or
any person obtaining any right to acquire, any properties, assets or
rights of the Companies (other than the rights of Sub to acquire the
Shares pursuant to this Agreement);
(iv) violate or conflict with any Legal Requirements (as defined
in Section 2.9 hereof) applicable to the Companies or any of their
respective businesses or properties; or
(v) require any authorization, consent, order, permit or
approval of, or notice to, or filing, registration or qualification
with, any governmental, administrative or judicial authority, except in
connection with or in compliance with the provisions of the H-S-R Act
(as defined in Section 5.3 hereof).
Except as set forth or referred to above, no authorization,
consent, order, permit or approval of, or notice to, or filing, registration
or qualification with, any governmental administrative or judicial authority
is necessary to be obtained or made by the 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 balance sheets of the Companies as of December 31,
1995, and the related consolidated statements of income, stockholders'
equity and cash flow for
14
the fiscal year ended December 31, 1995, together with the notes thereto
and (B) the balance sheets of the Companies as of December 31, 1994, and
the related consolidated statements of income, stockholders' equity and
cash flow for the fiscal year ended December 31, 1994, together with the
notes thereto, in each case examined by and accompanied by the report of
independent certified public accountants (except where such examination
and report are not available);
(ii) the balance sheets of the Companies as of November 30, 1996
(the "November 30 Balance Sheets"); and
(iii) the most recent monthly and year-to-date financial
statements provided to each franchisor 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 consistent with and 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 in conformity with
GAAP consistently applied (except as otherwise indicated in such statements)
during such periods, 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 Company
Financial Statements are consistent with the financial records maintained and
the accounting methods applied by the Companies for tax purposes. 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 material 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 2.18 and 2.19 hereof or liabilities for Taxes (as defined in Section
2.8 hereof), except for (i) liabilities reflected or reserved against on the
most recent Company Financial Statements, (ii) current liabilities incurred in
the ordinary course of business and consistent with
15
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 by-law 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 November 30, 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;
(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, or any
equivalent employee of any of the Companies.
(b) Since November 30, 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;
16
(iv) sold or transferred any assets or cancelled any debts or
claims or waived any rights, except in the ordinary course of business
consistent with past practice;
(v) defaulted on any material obligation;
(vi) entered into any material transaction, except in the
ordinary course of business consistent with past practice;
(vii) written down the value of any inventory or written off as
uncollectible any accounts receivable or any portion thereof not
reflected in the Company Financial Statements except in the ordinary
course of business consistent with past practices;
(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 practices;
(ix) made any individual capital expenditure in excess of
$100,000, or aggregate capital expenditures in excess of $300,000, 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 (with
the exception of West Palm Nissan) 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
17
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 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 any Stockholder knows of any basis for an
assertion of a deficiency for Taxes against the Companies. The Stockholders
will cooperate, and will cause their 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 2.18(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
18
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 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, and together with the New Facility, the "Real
Property"). With respect to any leased Real Property owned by Xx. Xxxxxxxx or
any of his Affiliates, 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. With respect to any
leased Real Property not owned by Xx. Xxxxxxxx or any of his Affiliates,
neither the Companies nor the Stockholders have (i) received notice of any
defaults by any parties under such leases (the "Third Party Leases") or (ii)
any knowledge of any state of facts 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 leased 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
19
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 (as defined below), (iii) such Environmental Permits are in full force
and effect, and (iv) the Companies are in full compliance with all 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
20
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
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
21
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 testing shall not be construed as a waiver of any rights which
UAG or Sub have arising out of the representations and warranties contained
herein.
2.12. INVENTORIES
The values at which inventories are carried on the Company Balance
Sheets and Company Factory 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 120 days after the date
hereof in the ordinary course of business, except for spare parts inventory
which inventory is good and usable.
2.13. ACCOUNTS RECEIVABLE
All accounts receivable reflected on the Company Balance Sheets
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 120 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
22
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.
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 material 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.
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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 described in Section 6.13 and 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 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.
24
(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
(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 Internal Revenue Code of 1986, as
amended (the "Code"), and valuation or actuarial reports, accountant's
opinions, financial statements, IRS Form 5500s (or 5500-C or 5500-R) and
summary annual reports for the last three years.
(b) With respect to the ERISA Plans, except as set forth on
Schedule 2.17(b):
(i) there is no ERISA Plan which is a " multiemployer"
plan as that term is defined in Section 3(37) of ERISA ("Multiemployer
Plan");
(ii) no event has occurred or (to the knowledge of the 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.
25
(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 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.
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(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.
(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, 1995; 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
27
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.
(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, 1995. For purposes of this Agreement:
(i) the term "Insider" shall mean the Stockholders, any
director or officer of the Companies, and any Affiliate, Associate or
Relative of any of the foregoing persons;
28
(ii) the term "Associate" used to indicate a relationship with
any person means (A) any corporation, partnership, joint venture or
other entity of which such person is an officer or partner or is,
directly or indirectly, through one or more intermediaries, the
beneficial owner of 30% or more of (1) any class or type of equity
securities or other profits interest or (2) the combined voting power of
interests ordinarily entitled to vote for management or otherwise, and
(B) any trust or other estate in which such person has a substantial
beneficial interest or as to which such person serves as trustee or in a
similar fiduciary capacity; and
(iii) a "Relative" of a person shall mean such person's spouse,
such person's parents, sisters, brothers, children and the spouses of
the foregoing, and any member of the immediate household of such person.
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.
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.
29
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 or the Sub relating to the Companies or the Shares or
the Real Property or Improvements and neither the Companies nor the
Stockholders to their knowledge 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 November 30, 1996 Net Worth less the amount of any
Distributions.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES
OF THE STOCKHOLDERS
Subject to the parties' agreement and acknowledgement that the
Schedules referred to in this Article 3 are to be delivered by the
Stockholders no later than ten (10) Business Days after the Effective Date
hereof, the Stockholders hereby represent and warrant to UAG as follows:
3.1. OWNERSHIP OF SHARES; TITLE
Each Stockholder is the owner of record and beneficially of the
Shares as set forth on Schedule 3.1 hereof and has, and shall transfer to Sub
at the Closing, good and marketable title to the Shares owned by him, free and
clear of any and all security
30
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 have all requisite power and authority and have
full legal capacity and are competent to execute, deliver and perform this
Agreement and the Documents to which they are a party and to consummate the
transactions contemplated hereby and thereby (including the disposition of the
Shares to Sub as contemplated by this Agreement). This Agreement has been duly
executed and delivered by the Stockholders and constitutes, and the Documents
to which each Stockholder is a party when executed and delivered by such
Stockholder will constitute, a valid and binding obligation of such
Stockholder, enforceable against him in accordance with its terms. Except as
set forth on Schedule 3.2, the execution, delivery and performance of this
Agreement and the Documents by the 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 any of the Stockholders is a party or to which any of the
Stockholders or any of their property is subject;
(ii) violate or conflict with any Legal Requirements
applicable to the Stockholders or any of 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 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. Xxxxxxxx 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. Xxxxxxxx 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 or, as to the New Facility, as proposed to be 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
31
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
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.
Xx. Xxxxxxxx has no present plan, intention or arrangement to
dispose of any of the UAG Common Stock received by him pursuant to the terms
of this Agreement.
3.5. QUALIFICATION OF STOCKHOLDERS.
Xx. Xxxxxxxx (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. Xxxxxxxx'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 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.
32
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF UAG
Subject to the parties' agreement and acknowledgement that the
Schedules referred to in this Article 4 are to be delivered by the
Stockholders no later than ten (10) Business Days after the Effective Date
hereof, UAG and UAG East hereby represent and warrant 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 and the UAG Subsidiaries
(as defined below) would not, or could not reasonably be expected to, in the
aggregate have a Material Adverse Effect on UAG and the UAG Subsidiaries,
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. SUBSIDIARIES.
Each of the UAG Subsidiaries is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of
its incorporation, has the corporate power and authority to own, lease and
operate the properties and assets used in its business and to carry on its
business as now being conducted, and is duly qualified to do business and in
good standing as a foreign corporation in each jurisdiction where
qualification as a foreign corporation is required, except for such failures
to be qualified and in good standing, if any, which when taken together with
all other such failures of UAG and the UAG Subsidiaries would not, or could
not reasonably be expected to, in the aggregate have a Material Adverse Effect
on UAG and the UAG Subsidiaries, taken as a whole. All of the outstanding
shares of capital stock of the UAG Subsidiaries have been validly authorized
and issued, are fully paid and non-assessable, have not been issued in
violation of any preemptive rights or of any federal or state securities law.
"UAG Subsidiary" shall mean any corporation or other entity in which UAG,
directly or indirectly, owns beneficially securities representing 50% or more
of (i) the aggregate equity or profit interests or (ii) the combined voting
power of voting interests ordinarily entitled to vote for management or
otherwise.
33
4.3. CAPITALIZATION.
The authorized stock of UAG and the number of shares of capital
stock which are issued and outstanding are set forth on Schedule 4.3 hereto.
The shares listed on Schedule 4.3 hereto constitute all the issued and
outstanding shares of capital stock of UAG and have been validly authorized
and issued, are fully paid and nonassessable, have not been issued in
violation of any preemptive rights or of any federal or state securities law
and no personal liability attaches to the ownership thereof.
4.4. SEC FILINGS.
UAG has heretofore made available to Xx. Xxxxxxxx UAG's
Registration Statement on Form S-1 as declared effective by the SEC on October
23, 1996 and UAG's Quarterly Report on Form 10-Q for the period ending
September 30, 1996 (the "SEC Filings"). As of their respective dates, the SEC
filings did not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
4.5. 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 4.5
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 By-Laws 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 (as
defined below) or require any consent or waiver of any party to any UAG
Agreement;
34
(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 and the
UAG Subsidiaries, taken as a whole; or
(v) require any authorization, consent, order, permit or
approval of, or notice to, or filing, registration or qualification
with, any governmental, administrative or judicial authority, except in
connection with or in compliance with the provisions of the H-S-R Act.
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.
4.6. FINANCIAL STATEMENTS.
Attached as Schedule 4.6 are true and complete copies of:
(a) the consolidated balance sheet of UAG and its consolidated UAG
Subsidiaries as of December 31 in each of the years 1994 and 1995, and the
related consolidated statements of income, stockholders' equity and cash flows
for the fiscal years ended on such dates, together with the notes thereto, in
each case examined by and accompanied by the report of Coopers & Xxxxxxx,
independent certified public accountants; and
(b) the unaudited consolidated balance sheet of UAG and its
consolidated UAG Subsidiaries as of September 30, 1996 (the "UAG Balance
Sheet"), and the unaudited consolidated statements of income, stockholders'
equity and cash flows for the month periods ended on such dates, together with
the notes thereto;
(all the foregoing financial statements, including the notes thereto, being
referred to herein collectively as the "UAG Financial Statements"). The UAG
Financial Statements are in accordance with the books and records of UAG and
the UAG Subsidiaries, fairly present the consolidated financial position,
results of operations, stockholders' equity and changes in financial position
of UAG and the UAG Subsidiaries as of the dates and for the periods indicated,
in each case in conformity with GAAP consistently applied (except as otherwise
indicated in such statements) during such periods, and can be legitimately
reconciled
35
with the financial statements and the financial records maintained and the
accounting methods applied by UAG and the UAG Subsidiaries for federal income
tax purposes, and the unaudited financial statements included in the UAG
Financial Statements indicate all adjustments, which consist of only normal
recurring accruals, necessary for such fair presentations. The statements of
income included in the UAG Financial Statements do not contain any items of
special or nonrecurring income except as expressly specified therein, and the
balance sheets included in the UAG Financial Statements do not reflect any
write-up or revaluation increasing the book value of any assets. The books and
accounts of UAG and the UAG Subsidiaries are complete and correct in all
material respects and fairly reflect all of the transactions, items of income
and expense and all assets and liabilities of the businesses of UAG and the
UAG Subsidiaries consistent with prior practices of UAG and the UAG
Subsidiaries.
4.7. TAXES.
UAG, each UAG Subsidiary and, for any period during all or part of
which the tax liability of any other corporation was determined on a combined
or consolidated basis with UAG or any UAG Subsidiary, any such other
corporation, have filed timely all federal, state, local and foreign tax
returns, reports and declarations required to be filed (or have obtained or
timely applied for an extension with respect to such filing) correctly
reflecting the Taxes and all other information required to be reported thereon
and have paid, or made adequate provision for the payment of, all Taxes which
are due pursuant to such returns or pursuant to any assessment received by UAG
or any UAG Subsidiary or any such other corporation. In the ordinary course,
UAG makes adequate provision on its books for the payment of all Taxes
(including for the current fiscal period) owed by UAG and the UAG
Subsidiaries. Neither UAG nor any UAG Subsidiary has been subject to a federal
or state tax audit of any kind, and no adjustment has been proposed by the IRS
with respect to any return for any subsequent year. UAG knows of no basis for
an assertion of a deficiency for Taxes against UAG or any UAG Subsidiary.
4.8. ABSENCE OF UNDISCLOSED LIABILITIES.
Neither UAG nor any UAG Subsidiary has 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 4.8), 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 and the UAG Subsidiaries, taken as a whole, and (iv) liabilities disclosed
on Schedule 4.8 hereto.
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4.9. LEGAL MATTERS.
(a) Except as set forth on Schedule 4.9(a) hereto, (i) there are
no material Claims pending against, or, to the knowledge of UAG or any UAG
Subsidiary, threatened against or affecting, UAG, any UAG Subsidiary, any of
their respective officers, directors, employees, agents or Affiliates
involving, affecting or relating to any assets, properties or operations of
UAG or any UAG Subsidiary, 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 UAG, any UAG Subsidiary or any of their directors, officers, employees or
agents for any such Claims, and (ii) neither UAG nor any UAG Subsidiary is
subject to any material Judgments of any governmental, administrative or
judicial authority, domestic or foreign.
(b) The businesses of UAG and the UAG Subsidiaries are being
conducted in compliance with all Legal Requirements applicable to UAG or any
UAG Subsidiary 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 on UAG and the UAG Subsidiaries, taken as a
whole. Except as set forth on Schedule 4.9(b) hereto, UAG and the UAG
Subsidiaries hold, and are in compliance with, all Permits required by all
applicable Legal Requirements except where the failure to hold or be in
compliance with such Permits could not reasonably be expected to have a
material adverse effect on UAG and the UAG Subsidiaries, taken as a whole.
(c) UAG and each UAG Subsidiary owns or holds all Permits material
to the conduct of its business. No event has occurred and is continuing which
permits, or after notice or lapse of time or both would permit, any
modification or termination of any Permit.
4.10. DISCLOSURE.
Neither UAG nor any UAG Subsidiary has made any material
misrepresentation to the Companies or the Stockholders relating to this
Agreement and neither UAG nor any UAG Subsidiary has 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 or any UAG Subsidiary to the Companies or the Stockholders or their
representatives at or prior to Closing not misleading. No fact, event,
condition or contingency exists or has occurred which has, or in the future
can reasonably be expected to have, a material adverse effect on UAG and the
UAG Subsidiaries, taken as a whole, which has not been disclosed in the SEC
Filings or the Schedules to this Agreement.
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4.11. ABSENCE OF MATERIAL ADVERSE EFFECT; CONDUCT OF BUSINESS.
(a) Since October 28, 1996, UAG and the UAG Subsidiaries have
operated in the ordinary course of business consistent with past practice,
except as set forth on Schedule 4.11(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 and the UAG Subsidiaries, 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 and
the UAG Subsidiaries, taken as a whole.
(ii) any material loss, damage, destruction or other
casualty to the property or other assets of UAG or any UAG Subsidiary,
whether or not covered by insurance;
(iii) any change in any method of accounting or accounting
practice of UAG or any UAG Subsidiary; or
(b) Since October 28, 1996, except as set forth in Schedule
4.11(b) hereto, neither UAG nor the UAG Subsidiaries have:
(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 cancelled 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.
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4.12. INSURANCE.
All properties and assets of UAG and the UAG Subsidiaries which
are of an insurable character are insured against loss or damage by fire and
other risks to the extent and in the manner reasonable in light of the risks
attendant to the businesses and activities in which UAG and the UAG
Subsidiaries are or have been engaged and customary for companies engaged in
similar businesses or owning similar assets.
4.13. LABOR RELATIONS.
(a) UAG and each of the UAG Subsidiaries has paid or made
provision for the payment of all salaries and accrued wages and has complied
in all material respects with all applicable laws, rules and regulations
relating to the employment of labor, including those relating to wages, hours,
collective bargaining and the payment and withholding of taxes, and has
withheld and paid to the appropriate governmental authority, or is 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 its employees.
(b) Except as set forth in Schedule 4.13(b) hereto, (i) there is
no unfair labor practice charge or complaint pending before the NLRB, (ii)
there is no labor strike, material slowdown or material work stoppage or
lockout actually pending or, to UAG's or any of the UAG Subsidiaries'
knowledge, threatened, against or affecting UAG or any UAG Subsidiary, and
neither UAG nor any UAG Subsidiary has experienced any strike, material slow
down or material work stoppage, lockout or other collective labor action by or
with respect to employees of UAG or any UAG Subsidiary, (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 UAG or any UAG Subsidiary, (iv) there are no charges with
respect to or relating to UAG or any UAG Subsidiary pending before the Equal
Employment Opportunity Commission or any state, local or foreign agency
responsible for the prevention of unlawful employment practices, (v) neither
UAG nor any UAG Subsidiary has 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 UAG or any UAG Subsidiary
and no such investigation is in progress and (vi) the consents of the unions
that are parties to any UAG Employment and Labor Agreements (as defined below)
are not required to complete the transactions contemplated by this Agreement
and the Documents. As used in this agreement, the term "UAG Employment and
Labor Agreements" shall mean all (i) outstanding employment agreements or
contracts with officers or employees that are not terminable at will, or that
provide for the payment of any bonus or commission, (ii) agreements, policies
or practices that require UAG or any UAG Subsidiary to pay termination or
severance pay to salaried, non-exempt or hourly employees (other than as
required by law),
39
(iii) collective bargaining agreements or other labor union contracts
applicable to persons employed by UAG or any UAG Subsidiary.
(c) Neither UAG nor any UAG Subsidiary has ever 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.
4.14. CONTRACTS; ETC
As used in this Agreement, the term "UAG 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,
to which UAG or any UAG Subsidiary is a party or by which UAG or any UAG
Subsidiary or any of their respective properties may be bound or affected,
including all amendments, modifications, extensions or renewals of any of the
foregoing which are material to the businesses, operations, assets, condition
(financial or otherwise) or prospects of UAG and the UAG Subsidiaries. Neither
UAG nor any UAG Subsidiary nor, to the knowledge of UAG and each UAG
Subsidiary, any other party thereto, is in breach of or default under any UAG
Agreement, and no event has occurred which (after notice or lapse of time or
both) would become a breach or default under, or would permit modification,
cancellation, acceleration or termination of, any UAG Agreement or result in
the creation of any security interest upon, or any person obtaining any right
to acquire, any properties, assets or rights of UAG or any UAG Subsidiary in
any such case where such breach, default or other event would have, or could
reasonably be expected to have, a material adverse effect on UAG and the UAG
Subsidiaries, taken as a whole.
4.15. BROKERS.
Neither UAG nor any UAG Subsidiary, 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.
4.16. PROPRIETY OF PAST PAYMENTS.
No funds or assets of UAG or any UAG Subsidiary have been used for
illegal purposes; no unrecorded funds or assets of UAG or any UAG Subsidiary
have been established for any purpose; no accumulation or use of UAG's or any
UAG Subsidiary's corporate funds or assets has been made without being
properly accounted for in the respective books and records of UAG or any UAG
Subsidiary; all payments by or on behalf of UAG and the UAG Subsidiaries 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 or any UAG Subsidiary for any
40
reason; no payment has been made by or on behalf of UAG or any UAG Subsidiary
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 neither UAG nor any UAG Subsidiary has 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 or any UAG Subsidiary of, or alleged to be of, the
type described in this Section 4.16.
4.17. 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.
4.18. 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.
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 and Sub 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 Sub 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 and Sub true and complete copies of any documents relating to
the foregoing. UAG and Sub will hold in confidence (unless and to the extent
compelled to disclose by judicial or administrative process or, in the opinion
of its counsel, by other requirements of law) all Confidential Information (as
defined below) and will not disclose the same to any third party except in
connection with obtaining financing and otherwise as may reasonably be
necessary to carry out this Agreement and the transactions contemplated
hereby, including any due diligence review by or on behalf of UAG and Sub. If
this Agreement is terminated, UAG and Sub will promptly return to the
Companies, upon
41
the reasonable request of the Companies, all Confidential Information
furnished by the Companies and held by UAG and Sub, including all copies and
summaries thereof. As used herein, "Confidential Information" shall mean all
information concerning the Companies obtained by UAG or Sub 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 their counsel, by other
requirements of law) all UAG Confidential Information (as defined below) and
will not disclose the same to any third party except as may reasonably be
necessary to carry out this Agreement and the transactions contemplated
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 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 a breach by the Stockholders of this
Agreement.
5.2. FURNISHING INFORMATION; ANNOUNCEMENTS.
The Stockholders and the Companies, on the one hand, and UAG and
Sub, on the other hand, will, as soon as practicable after reasonable request
therefor, furnish to the other all the information concerning the Stockholders
and the Companies or UAG and Sub, 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 nor Sub, on the other
hand, or any representative thereof, shall issue any press releases or
otherwise make any public statement with respect to the transactions
contemplated hereby without the prior consent of the other, except as may be
required by law (including federal or state securities laws) as determined by
such parties' counsel.
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5.3. ANTITRUST IMPROVEMENTS ACT COMPLIANCE.
UAG and Sub and 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 their 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.
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 practices 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 practices;
(ii) make any change in their Articles of Incorporation or
By-laws, 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 its capitalization,
whether by reason of a reclassification, recapitalization, stock split
or combination, exchange or readjustment of shares, stock dividend or
otherwise;
43
(iii) (A) incur, assume or guarantee any indebtedness for
borrowed money, issue any notes, bonds, debentures or other corporate
securities or grant any option, warrant or right to purchase any
thereof, except pursuant to transactions in the ordinary course of
business consistent with past practices, (B) issue any securities
convertible or exchangeable for debt securities of the 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;
(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 November 30,
1996 or distributions of existing cash as of November 30, 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 its
capital stock;
(vii) acquire any assets, raw materials or properties, or enter
into any other transaction, other than in the ordinary course of
business consistent with past practices;
(viii) enter into any new (or amend any existing) employee benefit
plan, program or arrangement or any new (or amend any existing)
employment, severance or consulting agreement, grant any general
increase in the compensation of officers or employees (including any
such increase pursuant to any bonus, pension, profit-sharing or other
plan or commitment) or grant any increase in the compensation payable or
to become payable to any employee, except in accordance with
pre-existing contractual provisions or consistent with past practices;
44
(ix) make or commit to make any individual material
capital expenditure in excess of $100,000, or aggregate capital
expenditures in excess of $300,000;
(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;
(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 hereof and until the Closing Date, the
Stockholders and the Companies will 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
45
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 business in the ordinary
course consistent with past practices.
(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 themselves 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 their Affiliates (other than the Companies) on
the one hand, and the Companies, on the other hand, other than those incurred
in the
46
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,
no Stockholder, 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 any Stockholder may receive or of which any of the Stockholders may
become aware.
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.
47
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 franchisor of
the Companies. All such statements shall fairly present the financial
position, results of operations and cash flow of the Companies and UAG, as
applicable, 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
48
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 any Stockholder has 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.
5.12. PERSONAL GUARANTEES.
UAG will use reasonable efforts to cause the Stockholders to be
released from any and all personal guarantees of any loans, leases or other
indebtedness of the Companies set forth on the Company Financial Statements
(the "Personal Guarantees"). In the event that any of the Personal Guarantees
are not released by the Closing, UAG will indemnify and hold the Stockholders
harmless from any loss with respect to the Personal Guarantees which arises
after the Closing. Notwithstanding anything in this Section to the contrary,
UAG shall not be required to cause the Stockholders to be released from or
indemnify the Stockholders for any loss with respect to any Personal
Guarantees for any loans or other indebtedness relating to the Real Property
owned by the Stockholders or their Affiliates.
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 supplier,
manufacturer, distributor, consultant, independent contractor or employee of
the Companies and agree not to solicit or hire any employee of the Companies
unless such employee has already terminated his 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
49
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 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 Stockholder 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 thirty (30) 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 sixty (60) 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. NISSAN, PRIMUS AND WORLD OMNI MORTGAGES
(a) If UAG does not accept floor plan financing from Nissan,
Primus or World Omni for each of the Companies that currently have floor plan
financing through Nissan, Primus and World Omni (on terms comparable to such
existing terms) and the failure to accept such financing causes an event of
default under the Stockholders' existing mortgages with Nissan, Primus and
World Omni which default Nissan, Primus or World Omni (as the case may be)
refuses to waive, then UAG shall secure alternative financing for the amount
of such mortgages on commercially reasonable terms.
50
(b) If Primus, Nissan or World Omni do not offer floor plan
financing to UAG for each of the Companies that currently have floor plan
financing through Nissan, Primus and World Omni (on terms comparable to such
existing terms) and, as a result, there is an event of default under the
Stockholders' existing mortgages with Nissan, Primus or World Omni (as the
case may be) which default is not waived, then UAG and the Stockholders will
cooperate to secure alternative financing for the amount of such mortgages on
commercially reasonable terms. If alternative financing is not available,
either party may terminate this Agreement pursuant to Section 8.1 hereof.
5.17. CERTAIN CHANGES AND CONDUCT OF BUSINESS OF UAG.
(a) From and after the date hereof and until the Closing Date, UAG
and the UAG Subsidiaries will 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 except where to do so would not be economically
beneficial to UAG or the UAG Subsidiaries;
(ii) comply with all applicable Environmental Laws, and, in the
event UAG or the UAG Subsidiaries 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 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 or any UAG Subsidiaries unless the validity thereof
is contested in good faith and by appropriate proceedings diligently
conducted;
(iv) keep their books of account, records and files in the
ordinary course and in accordance with existing practices;
(v) preserve their 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
51
Agreement not to remain true and correct in all material respects.
5.18. 1996 FINANCIAL STATEMENTS.
Prior to the Closing, the Stockholders shall deliver to UAG
audited balance sheets of the Companies as of December 31, 1996 (the "Company
Balance Sheets") and the related consolidated statements of income,
stockholders' equity and cash flows for the fiscal year ended December 31,
1996, together with the notes thereto which statements shall be examined and
accompanied by the report of the Companies' independent certified public
accountants and, upon delivery, such statements shall be included within the
definition of Company Financial Statements. Notwithstanding the preceding
sentence, the income statement and cash flow statement for Westbury Nissan
will not be audited statements. UAG and the Stockholders shall each pay
one-half of the cost of such audit.
ARTICLE 6.
CONDITIONS TO THE OBLIGATIONS
OF UAG AND SUB TO EFFECT THE CLOSING
The obligations of UAG and Sub required to be performed by them at
the Closing shall be subject to the satisfaction, at or prior to the Closing,
of each of the following conditions, each of which may be waived by UAG or Sub
as provided herein except as otherwise required by applicable law:
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 Stockholder 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.
52
(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' COUNSEL.
UAG and Sub shall have been furnished with the opinion of counsel
for the Companies and the Stockholders, dated the Closing 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 New York, Florida and federal laws.
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 or Sub effectively to
exercise full rights of ownership of the Shares. No action, suit or proceeding
before any court or any governmental or regulatory entity shall be pending (or
threatened by any governmental or regulatory entity), and no investigation by
any governmental or regulatory entity shall have been commenced (and be
pending), seeking to restrain or prohibit (or questioning the validity or
legality of) the consummation of the transactions contemplated by this
Agreement or seeking damages in connection therewith which UAG or Sub, in good
faith and with the advice of counsel, believes makes it undesirable to proceed
with the consummation of the transactions contemplated hereby.
6.5. NO MATERIAL ADVERSE EFFECT.
During the period from December 31, 1995 to the Closing Date,
there shall not have been any material adverse change in the assets,
properties, business, operations, prospects, net income or financial condition
of the Companies.
53
6.6. NET WORTH.
On the Closing Date, the Stockholder shall deliver to UAG a
balance sheet of the Companies in accordance with Section 1.3.
6.7. COMPLETION OF DUE DILIGENCE.
UAG and Sub shall have completed their 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 and Sub.
6.8. NET INCOME.
Coopers & Xxxxxxx or such other accounting firm as UAG may select
shall have confirmed to UAG that the 1996 Earnings of the Companies for the
year ending December 31, 1996 are no less than Eleven Million Dollars
($11,000,000). For purposes of this Section 6.8, 1996 Earnings shall be
determined using the same methodology as the earnings set forth on Schedule
6.8 hereto.
6.9. LEASES.
The Companies and the Landlords shall have entered into the Leases
and shall have agreed to the form of the New Facility Lease.
6.10. BOARD APPROVAL.
The Board of Directors of UAG and Sub shall have approved the
consummation of all of the transactions contemplated by this Agreement.
6.11. CERTIFICATES.
The Stockholders and the Companies shall have furnished UAG and
Sub with a certificate, dated as of the Closing Date, executed by the
Stockholders certifying to the fulfillment of the conditions set forth in
Sections 6.5 and 6.6 hereof and shall have furnished UAG and Sub with such any
other certificates of its officers and others as UAG and Sub may reasonably
request to evidence compliance with the conditions set forth in this Article 6.
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
54
of the transactions contemplated hereby, shall be reasonably satisfactory in
form and substance to counsel for UAG and Sub.
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 or UAG East 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 and the Third Party
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 and the Third
Party Leases in form and substance satisfactory to UAG.
6.16. SCHEDULES.
The Companies and the Stockholders shall have delivered to UAG and
Sub all Schedules referred to herein and such Schedules shall be acceptable in
form and substance to UAG and Sub.
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 Sub in writing his or her resignation as
such in form and substance satisfactory to UAG.
6.19. EMPLOYMENT AGREEMENT
UAG and Xxxx X. Xxxxxxxx, Xx. shall have entered into an
employment agreement on terms mutually agreeable to such parties.
55
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 and Sub
contained in this Agreement shall be true and correct on the date made and
shall be true and correct in all material respects as of the Closing. Each of
the obligations of UAG and Sub required by this Agreement to be performed by
them at or prior to the Closing shall have been duly performed and complied
with in all material respects as of the Closing. At the Closing, the
Stockholders shall have received a certificate, dated the Closing Date and
duly executed by UAG and Sub to the effect that the conditions set forth in
the preceding two sentences have been satisfied.
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
and Sub. All filings required to be made under the H-S-R Act in connection
with the transactions contemplated hereby shall have been made and all
applicable waiting periods with respect to each such filing, including
extensions thereof, shall have expired or been terminated.
(b) All notices to, and declarations, filings and registrations
with, and consents, authorizations, approvals and waivers from, governmental
and regulatory bodies and third persons (including, but not limited to, 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 AND SUB'S COUNSEL.
The Stockholders shall have been furnished with the opinion of
Xxxxxx & Xxxxxx, counsel to UAG and Sub, dated the Closing Date, in form and
substance reasonably satisfactory to the Stockholders and their counsel, which
opinions, when taken together, shall have been rendered with respect to those
matters contained in Sections 4.1 and 4.2 hereof. In rendering the foregoing
opinions, such counsel may rely as to factual matters
56
upon certificates or other documents furnished by officers and directors of
UAG and the Subs 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 with the advice of
counsel, believes makes it undesirable to proceed with the consummation of the
transactions contemplated hereby.
7.5. CERTIFICATES.
UAG and Sub 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 or Sub under the
provisions of this Agreement, and all other actions and proceedings required
to be taken by or on behalf of UAG or Sub in furtherance of the transactions
contemplated hereby, shall be reasonably satisfactory in form and substance to
counsel for the Stockholders.
7.7. REGISTRATION RIGHTS AGREEMENT.
UAG shall have entered into the Piggyback Registration Rights
Agreement.
7.8. 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.
57
7.9. LEASES.
The Companies and the Landlords shall have entered into the Leases
and shall have agreed to the form of the New Facility Lease.
7.10. NO MATERIAL ADVERSE EFFECT.
During the period from October 28, 1996 to the Closing Date, there
shall not have been any material adverse change in the assets, properties,
business, prospects, net income or financial condition of UAG.
7.11. EMPLOYMENT AGREEMENT.
UAG and Xxxx X. Xxxxxxxx, Xx. shall have entered into an
employment agreement on terms mutually agreeable to such parties.
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 April 30, 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 or Sub if any of the conditions specified in Article
6 hereof have not been met or waived by UAG and Sub at such time as such
condition is no longer capable of satisfaction (provided UAG and Sub are
not otherwise in material breach of 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
58
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.
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 willful 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, jointly and severally, indemnify and agree to fully defend, save
and hold harmless on an after-tax basis UAG, Sub, 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 (as
defined in Section 9.6 below) arising, directly or indirectly, out of or
resulting from, or shall pay or become obligated to pay any sum on account of,
(i) any and all Events of Breach (as defined below) or (ii) any Claim before
or by any court, arbitrator, panel, agency or other governmental,
administrative or judicial entity, which Claim involves, affects or relates to
any assets, properties or operations of the Companies or the conduct of the
business of the Companies prior to the Closing Date (a "Stockholder Third
Party Claim"). As used herein, "Event of Breach" shall be and mean any one or
more of the following: (i) any untruth or inaccuracy in any representation of
the Stockholders or the Companies or the breach of any warranty of the
Stockholders or
59
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.
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 "Stockholder Indemnified Party"), if a Stockholder Indemnified Party
shall at any time or from time to time suffer any Costs arising, directly or
indirectly, out of or resulting from, or shall pay or become obligated to pay
any sum on account of, (i) any and all UAG Events of Breach (as defined below)
or (ii) any Claim before or by any court, arbitrator, panel, agency or other
governmental, administrative or judicial entity, which Claim involves, affects
or relates to any assets, properties or operations of UAG or the conduct of
the business of UAG 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 Sub
or the breach of any warranty of UAG or Sub contained in this Agreement,
including, without limitation, any misrepresentation in, or omission from, any
statement, certificate, schedule, exhibit, annex or other document furnished
pursuant to this Agreement by UAG (or any representative of UAG) to the
Stockholders (or any representative of the Stockholder) 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 Stockholder 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 Stockholder Indemnified Party asserts that
UAG has become obligated to a Stockholder Indemnified Party pursuant to
Section 9.2, or if any UAG Third Party Claim is begun, made or instituted as a
result of which UAG may become obligated to a
60
Stockholder Indemnified Party hereunder (for purposes of this Article 2, any
UAG Indemnified Party and any Stockholder 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 Stockholder Third Party Claim is sometimes referred to as a
"Third Party Claim," in each case as the context so requires), such
Indemnified Party shall give written notice to the Indemnifying Party of its
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 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.
61
9.4. 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.
9.5. 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.
9.6. 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 Stockholder
Third Party Claim only to the extent the aggregate Costs incurred or
sustained by all UAG Indemnified Parties exceed Two Hundred Fifty
Thousand Dollars ($250,000) with respect to a breach of any provision
herein other than Section 2.11 or exceed a separate $250,000 amount with
respect to a breach under Section 2.11; 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) A UAG Indemnified Party shall be entitled to
indemnification in connection with an Event of Breach arising out of a
breach of any of the representations or warranties set forth in Articles
2 or 3 hereof or in connection with a Stockholder Third Party Claim for
a period terminating on the later of (i) the date two years after the
Closing Date, or (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 two year period, on the date such
claim is finally liquidated or otherwise resolved; provided, however,
that a UAG Indemnified Party shall be entitled to indemnification in
connection with an Event of Breach arising out of the representations
and
62
warranties in Sections 2.3, 2.8, 2.11, 2.20, and 3.1 hereof until such
claim is otherwise barred by the applicable statute of limitations.
(iii) The aggregate Costs for which the Stockholders shall be
obligated to indemnify the UAG Indemnified Parties shall not exceed
Twenty-Five Million Dollars ($25,000,000) 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, 2.11, 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 Stockholder Indemnified Parties exceed Two Hundred Fifty Thousand
Dollars ($250,000); 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) A Stockholder Indemnified Party shall be entitled to
indemnification in connection with an UAG Event of Breach arising out of
a breach of any of the representations or warranties set forth in
Article 4 hereof or in connection with a UAG Third Party Claim for a
period terminating on the later of (i) the date two 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 a Stockholder Indemnified Party shall be entitled to
indemnification in connection with an UAG Event of Breach arising out of
the representations and warranties in Sections 4.7, 4.9(b) and 4.16
hereof until such claim is otherwise barred by the applicable statute of
limitations.
(iii) The aggregate Costs for which UAG shall be obligated to
indemnify the Stockholder Indemnified Parties shall not exceed
Twenty-Five Million Dollars ($25,000,000) in the case of Costs incurred
or sustained by all Stockholder Indemnified Parties in connection with a
UAG Event of Breach;
63
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 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 4.7, 4.9(b) and 4.16 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 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 two 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,
except with respect to the representations and warranties in Sections 2.3,
2.8, 2.11, 2.20, 3.1, 4.7, 4.9(b) and 4.16 hereof.
10.2. FEES AND EXPENSES.
If the Closing does not occur and Section 5.6 hereof is materially
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
64
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 X. Xxxxxxxx
000 Xxxxx Xxxxx Xxxx
Xxxx Xxxxx, Xxxxxxx 00000
with a copy to:
Xxxxxx Xxxxxxxxxx Xxxxxxx
Syracuse & Hirschtritt, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. 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 & Xxxxxx
2700 International Tower
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxxxx Xxxxxxxxxx, Esq.
If to the Stockholders:
c/o Xx. Xxxx X. Xxxxxxxx
000 Xxxxx Xxxxx Xxxx
Xxxx Xxxxx, Xxxxxxx 00000
65
with a copy to:
Xxxxxx Xxxxxxxxxx Xxxxxxx
Syracuse & Hirschtritt, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxx, Esq.
If to UAG or Sub:
United Auto Group, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxxxx
Executive Vice President
with a copy to:
Xxxxxx & Hardin
2700 International Tower
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxxxx Xxxxxxxxxx, Esq.
or such other address as shall be furnished in writing by such party, and any
such notice or communication shall be effective and be deemed to have been
given as of the date so delivered or three (3) days after the date so mailed;
provided, however, that any notice or communication changing any of the
addresses set forth above shall be effective and deemed given only upon its
receipt.
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 hereunder to
any Affiliate of UAG, but in such event UAG shall remain fully liable for the
performance of all of 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
66
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.
Each of the Stockholders and the Companies as one party, and UAG
and Sub as the other party may by written notice to the other parties (i)
extend the time for the performance of any of the obligations or other actions
of the other parties, (ii) waive any inaccuracies in the representations or
warranties of the other parties contained in this Agreement, (iii) waive
compliance with any of the covenants of the other parties contained in this
Agreement, (iv) waive performance of any of the obligations of the other
parties created under this Agreement, or (v) waive fulfillment of any of the
conditions to its own obligations under this Agreement. The waiver by any
party hereto of a breach of any provision of this Agreement shall not operate
or be construed as a waiver of any subsequent breach, whether or not similar.
This Agreement may be amended, modified or supplemented only by a written
instrument executed by the parties hereto.
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 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
67
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:
[Signatures continued on following pages]
68
UAG EAST, INC.
By:
----------------------------------------
Its:
AMITY AUTO PLAZA LTD., D/B/A AMITY TOYOTA
SUPERSTORE
By:
----------------------------------------
Its: President
MASSAPEQUA IMPORTS LTD., D/B/A LEXUS OF
MASSAPEQUA
By:
----------------------------------------
Its: President
WESTBURY NISSAN LTD., D/B/A WESTBURY
NISSAN SUPERSTORE
By:
----------------------------------------
Its: President
WESTBURY SUPERSTORE LTD., D/B/A WESTBURY
TOYOTA
By:
----------------------------------------
Its: President
J&S AUTO REFINISHING LTD., D/B/A PREMIER
AUTO BODY
By:
----------------------------------------
Its: President
[Signatures continued on following page]
69
FLORIDA CHRYSLER PLYMOUTH JEEP EAGLE INC.
By:
----------------------------------------
Its: President
PALM AUTO PLAZA INC., D/B/A PALM BEACH
TOYOTA
By:
----------------------------------------
Its: President
WEST PALM INFINITI INC.
By:
----------------------------------------
Its: President
WEST PALM NISSAN INC.
By:
----------------------------------------
Its: President
NORTHLAKE AUTO FINISH INC., D/B/A TRAIL
AUTO BODY
By:
----------------------------------------
Its: President
/s/ Xxxx X. Xxxxxxxx
---------------------------------
XXXX X. XXXXXXXX
/s/ Xxxx X. Xxxxxxxx, Xx.
---------------------------------
XXXX X. XXXXXXXX, XX.
70
AMENDMENT NO. 1 TO
STOCK PURCHASE AGREEMENT
This AMENDMENT NO. 1 TO STOCK PURCHASE AGREEMENT ("the Amendment")
is made and entered into this 7th day of April, 1997 between and among United
Auto Group, Inc., a Delaware corporation, UAG East, Inc., a Delaware
corporation, Amity Auto Plaza Ltd., d/b/a Amity Toyota Superstore, a New York
corporation, Massapequa Imports Ltd., d/b/a Lexus of Massapequa, a New York
corporation, Westbury Nissan Ltd., d/b/a Westbury Nissan Superstore, a New
York corporation, Westbury Superstore Ltd., d/b/a Westbury Toyota, a New York
corporation, J&S Auto Refinishing Ltd., d/b/a Premier Auto Body, a New York
corporation, Florida Chrysler Plymouth Jeep Eagle Inc., a Florida corporation,
Palm Auto Plaza Inc., d/b/a Palm Beach Toyota, a Florida corporation, West
Palm Infiniti Inc., a Florida corporation, West Palm Nissan Inc., a Florida
corporation, Northlake Auto Finish Inc., d/b/a Trail Auto Body, a Florida
corporation, Amity Nissan of Massapequa, Inc., d/b/a Amity Nissan, a New York
corporation ("Amity Nissan"), Xxxx X. Xxxxxxxx and Xxxx X. Xxxxxxxx, Xx.
W I T N E S S E T H
WHEREAS, the parties hereto (other than Amity Nissan) have entered
into that certain Stock Purchase Agreement dated February 19, 1997 (the "Stock
Purchase Agreement");
WHEREAS, the Stockholders own 100% of the issued and outstanding
capital stock of Amity Nissan;
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 herein and not otherwise defined
shall have the meanings ascribed to them in the Stock Purchase Agreement.
2. At the Closing, in consideration for the aggregate purchase
price as set forth in Section 1.2(a) of the Stock Purchase Agreement, the
Stockholders shall sell, assign, transfer and deliver to UAG East 100% of the
issued and outstanding capital stock of Amity Nissan and shall deliver the
certificates representing such shares to UAG East accompanied by stock powers
duly executed in blank.
3. At the Closing, UAG East shall not purchase and the
Stockholders shall not sell, assign, transfer or deliver to UAG East any of
the issued and outstanding capital stock of Massapequa Lexus.
4. The principal amount of the promissory notes set forth in
Section 1.2(a)(iii) shall be reduced by Two Million One Hundred Thirty-Six
Thousand and Sixty Dollars ($2,136,060).
5. The definition of Companies in the Stock Purchase Agreement
shall be amended to include Amity Nissan and to delete Massapequa Lexus.
6. 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 unenforceability of the remaining
provisions of this Amendment shall not be affected thereby.
7. This Amendment shall be governed by and construed in accordance
with the laws of the state of New York without giving effect to any choice or
conflict of law provision or rule that would cause laws of any other
jurisdiction to apply.
8. Except as expressly stated herein, the provisions of the Stock
Purchase Agreement shall remain in full force and effect.
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:
----------------------------------------
Its:
[Signatures continued on following pages]
2
UAG EAST, INC.
By:
----------------------------------------
Its:
AMITY AUTO PLAZA LTD., D/B/A AMITY TOYOTA
SUPERSTORE
By:
----------------------------------------
Its: President
MASSAPEQUA IMPORTS LTD., D/B/A LEXUS OF
MASSAPEQUA
By:
----------------------------------------
Its: President
WESTBURY NISSAN LTD., D/B/A WESTBURY
NISSAN SUPERSTORE
By:
----------------------------------------
Its: President
WESTBURY SUPERSTORE LTD., D/B/A WESTBURY
TOYOTA
By:
----------------------------------------
Its: President
J&S AUTO REFINISHING LTD., D/B/A PREMIER
AUTO BODY
By:
----------------------------------------
Its: President
[Signatures continued on following page]
3
FLORIDA CHRYSLER PLYMOUTH JEEP EAGLE INC.
By:
----------------------------------------
Its: President
PALM AUTO PLAZA INC., D/B/A PALM BEACH
TOYOTA
By:
----------------------------------------
Its: President
WEST PALM INFINITI INC.
By:
----------------------------------------
Its: President
WEST PALM NISSAN INC.
By:
----------------------------------------
Its: President
NORTHLAKE AUTO FINISH INC., D/B/A TRAIL
AUTO BODY
By:
----------------------------------------
Its: President
/s/ Xxxx X. Xxxxxxxx
---------------------------------
XXXX X. XXXXXXXX
/s/ Xxxx X. Xxxxxxxx
---------------------------------
XXXX X. XXXXXXXX
4
AMENDMENT NO. 2 TO
STOCK PURCHASE AGREEMENT
This AMENDMENT NO. 2 TO STOCK PURCHASE AGREEMENT ("the Amendment")
is made and entered into this 30th day of April, 1997, between and among
United Auto Group, Inc., a Delaware corporation, UAG East, Inc., a Delaware
corporation, Amity Auto Plaza, Ltd., d/b/a Amity Toyota Superstore, a New York
corporation, Westbury Nissan Ltd., d/b/a Westbury Nissan Superstore, a New
York corporation, Westbury Superstore, Ltd., d/b/a Westbury Toyota, a New York
corporation, J&S Auto Refinishing, Ltd., d/b/a Premier Auto Refinishing, a New
York corporation, Florida Chrysler Plymouth, Inc., d/b/a Florida Chrysler
Plymouth Jeep/Eagle, a Florida corporation, Palm Auto Plaza, Inc., d/b/a Palm
Beach Toyota, a Florida corporation, West Palm Infiniti, Inc., d/b/a Palm
Infiniti, a Florida corporation, West Palm Nissan, Inc., d/b/a Palm Nissan, a
Florida corporation, Northlake Auto Finish, Inc., d/b/a Trail Auto Body, a
Florida corporation, Amity Nissan of Massapequa, Ltd, d/b/a Amity Nissan
Superstore, a New York corporation, Auto Mall Payroll Services, Inc., a
Florida corporation, West Palm Auto Mall, Inc., a Florida corporation, Auto
Mall Storage, Inc., a Florida corporation, JS Imports, Inc., a Florida
corporation, Xxxx X. Xxxxxxxx and Xxxx X. Xxxxxxxx, Xx.
W I T N E S S E T H
WHEREAS, certain of the parties hereto have entered into that
certain Stock Purchase Agreement dated February 19, 1997, as amended by that
certain Amendment No. 1 to Stock Purchase Agreement (collectively, the "Stock
Purchase Agreement");
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:
9. All capitalized terms used herein and not otherwise defined
shall have the meanings ascribed to them in the Stock Purchase Agreement.
10. At the Closing, in consideration for the Purchase Price as set
forth in Section 1.2(a) of the Stock Purchase Agreement, the Stockholders
shall sell, assign, transfer and deliver to UAG East 100% of the issued and
outstanding capital stock of Auto Mall Payroll Services, Inc., a Florida
corporation ("Auto Mall Payroll"), West Palm Auto Mall, Inc., a Florida
corporation ("Palm Auto Mall"), and Auto Mall Storage, Inc., a Florida
corporation ("Auto Mall Storage") and shall deliver the certificates
representing such shares to UAG East accompanied by stock powers duly executed
in blank.
11. The definition of Companies in the Stock Purchase Agreement
shall be amended to include Auto Mall Payroll, Palm Auto Mall, and Auto Mall
Storage.
12. Section 1.2(a) shall be amended to read as follows:
"(a) Purchase and Sale. Upon the terms and subject to the
conditions set forth in this Agreement, the Stockholders shall
sell to UAG East, and UAG East shall purchase from the
Stockholders, the Shares for an aggregate purchase price (the
"Purchase Price") equal to (i) a promissory note in substantially
the form attached hereto as Exhibit A (the "Six Year Note") in the
aggregate principal amount of Thirty-Eight Million Three Hundred
Sixty-Three Thousand Nine Hundred and Forty Dollars ($38,363,940)
less the amount of any distributions (the "Distributions") made by
the Companies to the Stockholders from November 30, 1996 until the
Closing Date (other than distributions of net income attributable
to periods after November 30, 1996 or distributions attributable
to periods prior to November 30, 1996 which are reflected on the
November 30 Balance Sheets), with interest only payable quarterly
at the rate of six and one-half percent (6.5%) and with
Twenty-Eight Million Dollars ($28,000,000) payable on demand at
any time after the Closing Date (of which Twenty-five Million
Dollars ($25,000,000) is payable in cash and the remainder is
payable in One Hundred Twenty-Seven Thousand Six Hundred Sixty
(127,660) shares of UAG Common Stock (the "UAG Shares") issued in
the name of Xx. Xxxxxxxx bearing the restrictive legend
customarily placed on securities that have not been registered
under applicable federal and state securities laws, which shares
shall be deposited in escrow pursuant to Section 1.2(c) below) and
Ten Million Three Hundred Sixty-Three Thousand Nine Hundred and
Forty Dollars ($10,363,940) maturing on the sixth anniversary of
the Closing Date; (ii) a promissory note in substantially the form
attached hereto as Exhibit B (the "Three Year Note" and, together
with the Six Year Note, the "Notes") issued by UAG in the
aggregate principal amount of Eleven Million Five Hundred Thousand
Dollars ($11,500,000) with interest only payable quarterly at the
rate of eight and one-half percent (8.5%) per annum or such other
rate as shall be agreed to by the parties, maturing on the third
anniversary of the Closing Date. The purchase price set forth
above is subject to adjustment after the Closing as provided in
Sections 1.3, 1.7 and 1.8 below. At the Closing referred to in
Section 1.2(b) hereof:
2
(i) the Stockholders shall sell, assign, transfer and
deliver to Sub 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) Sub shall accept and purchase the Shares from the
Stockholders and in payment therefor shall deliver to the
Stockholders the Notes.
13. The Stockholders agree that the Notes and the UAG Shares
shall be issued to Xx. Xxxxxxxx. Allocation and distribution between the
Stockholders of all consideration to be received by the Stockholders from UAG
shall be the sole responsibility of Xx. Xxxxxxxx.
14. Exhibit A to the Stock Purchase Agreement shall be replaced
with Exhibit A hereto.
15. Exhibit B to the Stock Purchase Agreement shall be replaced
with Exhibit B hereto.
16. The Stockholders agree 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 Company's 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 tax (including any penalties and
interest thereon) that is imposed on the Stockholders by reason of making such
an election (including any tax imposed on the Stockholders by reason of the
"pass-through" of income or other items recognized by the Companies). Thus, in
the event that the tax imposed on the Stockholders by reason of the stock sale
(including any tax imposed on the Stockholders by reason of the "pass-through"
of income or other items recognized by the Companies) 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 Stockholders pursuant to this paragraph to the extent that any such
payment would itself be subject to any tax. Stockholders agree to cooperate
with UAG to cause each of the Companies to timely file for federal and/or
state income tax purposes, with respect to such 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.
Notwithstanding the provision of this paragraph 8, the Stockholders shall not
be required to make any such election unless the amount and form of
indemnification is reasonably satisfactory to the Stockholders.
3
17. The first sentence of Section 5.12 is hereby amended to
include the following phrase at the end of the first sentence: "... as well as
such other personal guarantees of loans or other indebtedness of the Companies
incurred in the ordinary course of business which do not appear on the Company
Financial Statements, but which will appear on the Closing Date Balance Sheet.
18. UAG and/or the Sub agree to pay to the Stockholders their pro
rata portion of any incentive payments earned by UAG and/or the Sub through
the manufacturers' incentive programs of Nissan and Infiniti (the "Programs")
described on Exhibit C hereto, for the year ending December 31, 1997. The "pro
rata" period shall include January, February, March and April of 1997. Payment
of any amounts owed under this Section to the Stockholders shall be paid in
cash or its equivalent within five (5) Business Days after UAG and/or the Sub
receives such payment under the programs.
19. UAG agrees to enter into an Assignment and Assumption of Lease
with Westbury Imports, Ltd., in a form to be agreed upon by the parties (the
"Assignment Agreement"). The definition of Real Property shall be amended to
include the property located at 00-00 Xxxxxxxx Xxxxxx that is subject to the
Assignment Agreement (the "10-20 Property"). The Stockholders further agree to
indemnify and hold harmless any UAG Indemnified Party for any Costs incurred
by such party as the result of the 10-20 Property not being in compliance with
any applicable Environmental Laws or Environmental Permits.
20. Xx. Xxxxxxxx and West Palm Toyota agree that the New Facility
will be constructed and the New Facility Closing Conditions shall be as
provided in the lease entered into between West Palm Toyota and Gardenette
Royal Properties, Inc. of even date herewith. The last sentence of Section 1.4
shall be deleted and of no further force and effect. West Palm Toyota shall
lease the West Palm Parcel for $10,000 per month until such time as the New
Facility Closing Conditions are met as provided in such lease.
21. Within 15 days after the date hereof, the Stockholders agree
to pay in full and to satisfy (or to cause to be paid in full and satisfied)
(i) that certain mortgage held by the Bank of New York encumbering the
property located at 00 Xxxx Xxxxx, Xxxxxxxxxx, Xxx Xxxx and used in the
business of Amity Auto Plaza, Ltd., (ii) that certain mortgage held by the
Bank of New York encumbering the property located at 0000 Xxxxxxx Xxxxxxx,
Xxxxxxxxxx, Xxx Xxxx and used in the business of Amity Nissan of Massapequa,
Ltd., and (iii) that certain mortgage held by debis Financial Services, Inc.
encumbering the property located at 000 Xxx Xxxxxxx Xxxx, Xxxxxxxx, Xxx Xxxx
or as a result of any rights such lenders have in any leases relating to such
properties. The Stockholders further agree to indemnify UAG, UAG East and the
Companies from any and all costs incurred by UAG, UAG East or the Companies as
the result of such mortgages.
4
22. The Closing Date shall be April 30, 1997. All closing
transactions contemplated by the Stock Purchase Agreement and the related
closing documents shall be deemed effective after the close of business on the
Closing Date.
23. All references to Florida Chrysler Plymouth Jeep Eagle Inc.
shall be changed to Florida Chrysler Plymouth, Inc., a Florida corporation
d/b/a Florida Chrysler Plymouth Jeep/Eagle. The Stockholders represent that
Florida Chrysler Plymouth, Inc. holds Chrysler, Plymouth, Jeep and Eagle
franchises.
24. The Stockholders agree that prior to the Closing Date, Amity
Nissan shall transfer to Xx. Xxxxxxxx or his designee the real property
located at 0000 Xxxxxxx Xxxxxxx, Xxxxxxxxxx, Xxx Xxxx and currently leased to
Massapequa Imports, Ltd. The Stockholders agree to use their best efforts to
cause Primus to release Amity Nissan from the mortage it currently holds
relating to such property. The Stockholders agree to promptly pay to UAG or
the Companies the amount of any tax (including penalties and interest thereon)
that is imposed on the Companies or UAG (or any of its affiliates) as a result
of the transfer of such property. The Stockholders further agree to fully
defend, save and hold harmless the UAG Identified Parties for any and all
Costs arising out of or relating to Amity Nissan's ownership of such property
(including, but not limited to, the mortgage on such property currently held
by Primus).
25. Section 1.3(a) of the Stock Purchase Agreement shall be
amended to provide that the Closing Date Balance Sheets or the Reviewed
Balance Sheets shall be prepared in a manner consistent with the November 30
Balance Sheets attached hereto as Exhibit D which the Stockholders represent
have been prepared in accordance with GAAP. Section 1.3(g)(i) of the Stock
Purchase Agreement shall be amended to provide that the November 30 Balance
Sheets shall be the balance sheets attached hereto as Exhibit D. The parties
acknowledge that the Net Worth of the Companies as set forth on the November
30 Balance Sheets is $2,907,994. The Net Worth as set forth on the Closing
Date Balance Sheets and the Reviewed Balance Sheets shall be adjusted to
reflect any receivables or payables from or due to Affiliates. For purposes of
the Closing Date Balance Sheets and the Reviewed Balance Sheets the cumulative
LIFO reserve shall be $5,141,135. If the Final Net Worth shall be greater than
the Net Worth of the Companies as set forth on the November 30 Balance Sheets
(the amount of any such excess being referred to herein as the "Net Worth
Surplus"), UAG shall pay the Stockholders at the Supplemental Closing an
amount equal to the Net Worth Surplus. The Final Net Worth shall reflect a
charge of $79,443 in fees relating to the 1996 audited financial statements.
26. The Stockholders, JS Imports and UAG shall enter into an asset
purchase agreement pursuant to which UAG or its designee shall agree, subject
to manufacturer approval, to acquire all of the assets of JS Imports relating
to sale or servicing of
5
KIA vehicles, parts and accessories pursuant to terms and conditions mutually
acceptable to such parties.
27. The Stockholders agree to indemnify and hold the Companies,
UAG and UAG East harmless for any Costs incurred by the Company or UAG as the
result of any default under the terms of those certain mortgages held by Xxxx
Xxxxxx and/or 00 Xxxxxx Xxxxxx Realty Corp. (collectively "Landau")
encumbering the property located at 000 Xxx Xxxxxxx Xxxx, Xxxxxxxx, Xxx Xxxx
or as a result of any rights that Landau has in any leases relating to the
property.
28. Within 15 days after the date hereof, the Stockholders agree
to obtain a Subordination, Non-disturbance and Attornment agreement in a form
reasonably satisfactory to UAG from Primus Automotive Financial Services, Inc.
("Primus") in connection with the mortgage held by Primus relating to the
property located at 00-00 Xxxxxxxx Xxxxxx, Xxxxxxxx, Xxx Xxxx and the
Stockholders agree to cause 00-00 Xxxxxxxx Xxx. Realty, Corp. to terminate all
existing leases with respect to the 10-20 Property. In the event that the
Stockholders do not obtain such agreement, the Stockholders agree to indemnify
and hold harmless UAG and the Companies from any Costs incurred by UAG, UAG
East or the Companies as the result of any default of the Primus mortgage. The
Stockholders agree to indemnify and hold harmless UAG and the Companies from
any costs incurred by UAG, UAG East or the Companies as the result of any
prior leases relating to the 10-20 Property.
29. The Stockholders agree to indemnify and hold the Companies,
UAG and UAG East harmless from any Costs incurred by the Companies as the
result of unpaid franchise taxes and judgment liens shown on the title
commitments obtained in connection with the transactions contemplated in the
Stock Purchase Agreement.
30. Within 30 days after the date hereof, the Stockholders agree
to perform all maintenance and repairs described in that certain letter from
Toyota Motor Sales, U.S.A., Inc. ("Toyota Motor Sales") to Westbury Toyota
dated July 17, 1995, in a manner acceptable to Toyota Motor Sales. If the
Stockholders do not complete such repairs and maintenance to the satisfaction
of Toyota Motor Sales within 30 days of the date hereof, UAG shall cause
Westbury Toyota to complete such repairs and maintenance and the Stockholders
shall reimburse Westbury Toyota for all reasonable costs and expenses relating
hereto.
31. 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 the Stockholders
or any entity affiliated with the Stockholders (the "Stockholder Debt") and
will not guaranty or otherwise secure any Stockholder 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 Stockholder
Debt, the Stockholders shall use their best
6
efforts to cause the Companies (of 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 indemnify the Companies or hold them
harmless from any Costs arising out of or in any way relating to any
Stockholder Debt.
32. The parties acknowledge that, pursuant to the terms of the
Stock Purchase Agreement, Law Engineering and Environmental Services, Inc.
("Law") conducted Phase I environmental audits ("Phase I Reports") with
respect to the Real Property and the Companies. The Phase I Reports recommend
certain additional testing and records investigation to determine whether the
Real Property and the Companies are in compliance with applicable
Environmental Laws. At the Stockholders' request, the parties agreed not to
conduct additional testing prior to Closing. Within 30 days of the Closing,
Law (after consulting with the Companies' environmental consultants) shall
prepare a recommendation with respect to the scope of additional testing and
investigation to be conducted (the "Phase II Audit"). The cost of the Phase II
Audit testing shall be paid one-half by UAG and one-half by the Stockholders.
If the Phase II Audit indicates that any governmental filings (including
closure reports), approvals or additional testing is required by applicable
Environmental Laws or Environmental Permits, then the Stockholders shall,
cause such filings to be made and such approvals to be obtained in a timely
manner. If the Phase II Audit indicates that any remediation action is
required under any Environmental Laws or Environmental Permits, then the
Stockholders shall at their sole cost and expense, cause such remediation to
be completed in a timely manner. Notwithstanding anything in the Stock
Purchase Agreement to the contrary, the Stockholders agree to indemnify and
hold harmless the UAG Indemnified Parties from any and all Costs arising out
of any violations of any Environmental Laws or Environmental Permits indicated
on the Phase II Audit and any and all Costs relating to any Hazardous
Materials reported in the Phase II Audit (whether or not remediation is
required at this time). If the Stockholders do not take the steps, if any, set
forth in the Phase II Audit to cause the Real Property and the Companies to be
in compliance with all applicable Environmental Laws and Environmental Permits
within the time periods set forth above, then the Companies shall have the
right to take such steps and the Stockholders shall reimburse the Companies
for all costs and expenses related thereto. To the extent the Stockholders do
not reimburse any Company for such costs and expenses, such Company shall have
the right to off-set such costs and expenses against monies due under such
Company's lease agreement of even date herewith. To the extent that there are
any existing violations of any zoning requirements relating to any of the
properties leased to the Companies and any third party requires that such
zoning violations be corrected in order for the Companies to continue to
operate in the ordinary course of business, then the Stockholders shall, at
their sole cost and expense, cause these violations to be corrected to the
satisfaction of such third party. To the extent the Stockholders do not remedy
such violations, then the Stockholders shall indemnify and hold harmless any
UAG
7
Indemnified Party to the extent such UAG Indemnified Party incurs any Costs
relating to such violations.
33. Except as expressly stated herein, the provisions of the Stock
Purchase Agreement shall remain in full force and effect.
34. 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.
35. This Amendment shall be governed by and construed in
accordance with the laws of the state of New York without giving effect to
any choice or conflict of law provision or rule
that would cause laws of any other jurisdiction to apply.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be duly executed as of the day and year first above written.
[Signatures begin on following page]
8
UNITED AUTO GROUP, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
----------------------------------------
Xxxxxx X. Xxxxxxxx
Executive Vice President
UAG EAST, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
----------------------------------------
Xxxxxx X. Xxxxxxxx
Vice President
AMITY AUTO PLAZA, LTD., D/B/A AMITY
TOYOTA SUPERSTORE
By: /s/ Xxxx X. Xxxxxxxx
----------------------------------------
Xxxx X. Xxxxxxxx, President
WESTBURY NISSAN LTD., D/B/A WESTBURY
NISSAN SUPERSTORE
By: /s/ Xxxx X. Xxxxxxxx
----------------------------------------
Xxxx X. Xxxxxxxx, President
WESTBURY SUPERSTORE, LTD., D/B/A WESTBURY
TOYOTA
By: /s/ Xxxx X. Xxxxxxxx
----------------------------------------
Xxxx X. Xxxxxxxx, President
J&S AUTO REFINISHING, LTD., D/B/A PREMIER
AUTO REFINISHING
By: /s/ Xxxx X. Stalupppi
----------------------------------------
Xxxx X. Xxxxxxxx, President
[Signatures continued on following pages]
9
FLORIDA CHRYSLER PLYMOUTH, INC., D/B/A
FLORIDA CHRYSLER PLYMOUTH JEEP/EAGLE
By: /s/ Xxxx X. Stalupppi
----------------------------------------
Xxxx X. Xxxxxxxx, President
PALM AUTO PLAZA, INC., D/B/A PALM BEACH
TOYOTA
By: /s/ Xxxx X. Stalupppi
----------------------------------------
Xxxx X. Xxxxxxxx, President
WEST PALM INFINITI INC.
By: /s/ Xxxx X. Stalupppi
----------------------------------------
Xxxx X. Xxxxxxxx, President
[Signatures continued on following pages]
WEST PALM NISSAN INC.
By: /s/ Xxxx X. Stalupppi
----------------------------------------
Xxxx X. Xxxxxxxx, President
NORTHLAKE AUTO FINISH, INC., D/B/A TRAIL
AUTO BODY
By: /s/ Xxxx X. Stalupppi
----------------------------------------
Xxxx X. Xxxxxxxx, President
JS IMPORTS, INC.
By: /s/ Xxxx X. Stalupppi
----------------------------------------
Xxxx X. Xxxxxxxx, President
[Signatures continued on following page]
10
AMITY NISSAN OF MASSAPEQUA, LTD. D/B/A
AMITY NISSAN SUPERSTORE
By: /s/ Xxxx X. Stalupppi
----------------------------------------
Xxxx X. Xxxxxxxx, President
AUTO MALL PAYROLL SERVICES, INC.
By: /s/ Xxxx X. Stalupppi
----------------------------------------
Xxxx X. Xxxxxxxx, President
WEST PALM AUTO MALL, INC.
By: /s/ Xxxx X. Stalupppi
----------------------------------------
Xxxx X. Xxxxxxxx, President
AUTO MALL STORAGE, INC.
By: /s/ Xxxx X. Stalupppi
----------------------------------------
Xxxx X. Xxxxxxxx, President
/s/ Xxxx X. Stalupppi
---------------------------------
XXXX X. XXXXXXXX, individually
/s/ Xxxx X. Stalupppi, Jr.
------------------------------------
XXXX X. XXXXXXXX, XX., individually
11
