STOCK PURCHASE AGREEMENT
DATED AS OF MARCH 5, 1997
AMONG
UNITED AUTO GROUP, INC.
▇▇▇▇▇▇▇ ▇▇▇▇ FORD, INC.,
▇▇▇▇ ▇▇▇▇, INC.,
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, INC.
D/B/A ▇▇▇▇ ▇▇▇▇ MERCURY,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇,
▇▇▇▇ ▇. ▇▇▇▇▇▇,
▇▇▇▇▇ ▇. ▇▇▇▇ AND
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
TABLE OF CONTENTS
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Page
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT, dated March 5, 1997, is by and among
United Auto Group, Inc., a Delaware corporation ("UAG"), ▇▇▇▇▇▇▇ ▇▇▇▇ Ford,
Inc., a Delaware corporation ("Mize Ford"), ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, Inc. d/b/a ▇▇▇▇
▇▇▇▇ Mercury, a Georgia Corporation ("▇▇▇▇▇▇ ▇▇▇▇"), ▇▇▇▇ ▇▇▇▇, Inc., a Georgia
corporation ("▇▇▇▇ ▇▇▇▇" and, together with Mize Ford and ▇▇▇▇▇▇ ▇▇▇▇, the
"Companies"), ▇▇▇▇ ▇. ▇▇▇▇▇▇, an individual resident of the State of Georgia
("▇▇▇▇▇▇"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, an individual resident of the State of Tennessee
("▇▇▇▇"), ▇▇▇▇▇ ▇. ▇▇▇▇, an individual resident of the State of Tennessee
("▇▇▇▇"), and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, an individual resident of the State of Georgia
("▇▇▇▇▇▇▇▇" and, together with ▇▇▇▇▇▇, ▇▇▇▇ and ▇▇▇▇, the "Stockholders").
W I T N E S S E T H:
WHEREAS, Mize Ford operates a franchise automobile dealership and
related businesses in Chattanooga, Tennessee;
WHEREAS, ▇▇▇▇ ▇▇▇▇ operates a franchise automobile dealership and
related businesses in the metropolitan Atlanta, Georgia area;
WHEREAS, ▇▇▇▇▇▇ ▇▇▇▇ operates a franchise automobile dealership and
related businesses in the metropolitan Atlanta, Georgia area;
WHEREAS, ▇▇▇▇▇▇ owns eighty percent (80%) and ▇▇▇▇▇▇▇▇ owns twenty
percent (20%) of all of the issued and outstanding shares of the capital stock
of ▇▇▇▇▇▇ ▇▇▇▇ (the "▇▇▇▇▇▇ ▇▇▇▇ Shares");
WHEREAS, ▇▇▇▇ owns eighty percent (80%) and ▇▇▇▇ owns twenty percent
(20%) of all of the issued and outstanding shares of the capital stock of Mize
Ford (the "Mize Ford Shares");
WHEREAS, ▇▇▇▇▇▇ and his Affiliates own all of the issued and
outstanding shares of the capital stock of ▇▇▇▇ ▇▇▇▇ (the "▇▇▇▇ ▇▇▇▇ Shares"
and, together with the Mize Ford Shares and the ▇▇▇▇▇▇ ▇▇▇▇ Shares, the
"Shares");
WHEREAS, UAG desires to purchase all of the Shares from the
Stockholders, and the Stockholders desire to sell the Shares to UAG (in each
case upon the terms and subject to the conditions set forth in this Agreement),
such that immediately after giving effect to such purchase and sale, UAG will
own one hundred percent (100%) of the issued and outstanding shares of the
capital stock of the Companies, on a fully diluted basis;
NOW, THEREFORE, in consideration of the mutual terms, conditions and
other agreements set forth herein, the parties hereto hereby agree as follows:
ARTICLE 1.
PURCHASE AND SALE OF SHARES
1.1. CERTAIN DEFINITIONS
As used in this Agreement, the following terms shall have the
following meanings:
(a) "Affiliate" of a specified Person shall mean a Person that
directly or indirectly, through one or more intermediaries, controls, or is
controlled by, or is under common control with, the Person specified, and in
the case of a specified Person who is a natural person, his or her spouse,
issue, parents, estate and any trust for the benefit of his or her spouse
and/or issue.
(b) "Business Day" shall mean any day excluding Saturday, Sunday and
any day which is a legal holiday under Federal law.
(c) "Closing Date" shall have the meaning ascribed to it in Section
1.2(b).
(d) "Company Accounting Principles" shall mean (i) with respect to
Mize Ford, income tax basis of accounting principles and (ii) with respect to
▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇, GAAP (except with respect to depreciation which is
computed on the income tax basis of accounting), and, in each case, shall
include such significant accounting principles as are set forth on Schedule 1.1
hereof.
(e) "GAAP" shall mean generally accepted accounting principles which
are in effect in the United States on the Closing Date.
(f) "Knowledge" means, with respect to the Stockholders, that the
Stockholders knew, or in the exercise of reasonable diligence, would or should
have known of the particular matter referred to; with respect to the Companies,
that the general manager knew, or in the exercise of reasonable diligence,
would or should have known, of the particular matter referred to; and, with
respect to UAG, that the President of UAG knew or, in the exercise of
reasonable diligence, would or should have known, of the particular matter
referred to.
(g) "Leases" shall have the meaning ascribed to it in Section
1.2(c)(iii).
(h) "Liens" shall mean any mortgages, pledges, title defects or
objections, liens, claims, security interests, prior
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assignments, conditional and installment sale agreements, encumbrances or
charges of any kind.
(i) "Material Adverse Effect" shall mean any change in, or effect on,
either of the Companies (including the business thereof) which is, or might be,
materially adverse to the business, operations, assets or condition (financial
or otherwise) of such Company.
(j) "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.
(k) "Pre-Tax Earnings" shall mean net earnings (or losses), before
taxes, computed in accordance with the Company Accounting Principles together
with such adjustments as have been agreed upon by the parties.
(l) "UAG Common Stock" shall mean the shares of common stock, par
value $.0001 per share of UAG.
(m) "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 thirty
(30) 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, and UAG shall
purchase from the Stockholders, the Shares for an aggregate purchase price (the
"Purchase Price") equal to (i) Eighteen Million Seven Hundred Fifty Thousand
Dollars ($18,750,000) in cash (the "Base Price"), which Base Price is subject
to adjustment at the Closing as provided in Section 1.3 below and after Closing
as provided in Section 1.4 below; (ii) shares of UAG Common Stock (the "UAG
Shares") having an aggregate UAG Market Value on the Closing Date equal to Four
Million Dollars ($4,000,000); and (iii) the Additional Payments (if any) made
pursuant to Section 1.6 below. The aggregate consideration shall be allocated
among the Stockholders as set forth on Schedule 1.2(a) hereof. At the Closing
referred to in Section 1.2(b) hereof:
(i) the Stockholders shall sell, assign, transfer and deliver to UAG
the Shares representing 100% of the issued and outstanding capital stock of
the Companies and deliver the certificates representing such Shares
accompanied by stock powers duly executed in blank; and
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(ii) UAG shall accept and purchase the Shares from the Stockholders
and in payment therefor shall (A) deliver to the Stockholders immediately
available funds in an aggregate amount equal to the Base Price by wire
transfer to an account designated in writing by the Stockholders or by
certified funds; and (B) deliver to the Stockholders the certificates
representing the UAG Shares.
(b) Closing. Subject to the conditions set forth in this Agreement,
the purchase and sale of the Shares pursuant to this Agreement (the "Closing")
shall take place as soon as practicable following the date on which all
conditions to the obligations of the parties hereunder (other than those
requiring an exchange of certificates, opinions or other documents, or the
taking of other action, at the Closing) have been satisfied or waived, but no
later than May 15, 1997. The date on which the Closing occurs is herein
referred to as the "Closing Date".
(c) Deliveries at the Closing. Subject to the conditions set forth in
this Agreement, at the Closing:
(i) the Stockholders shall deliver to UAG certificates representing
the Shares bearing the restrictive legend customarily placed on securities
that have not been registered under applicable federal and state securities
laws and accompanied by stock powers as required by Section 1.2(a)(i)
hereof, and any other documents that are necessary to transfer to UAG good
title to all the Shares, and (B) all opinions, certificates and other
instruments and documents required to be delivered by the Companies or the
Stockholders at or prior to the Closing or otherwise required in connection
herewith;
(ii) UAG shall (A) pay to the Stockholders funds and deliver the
certificates representing the UAG Shares as required by Section 1.2(a)(ii)
hereof; and (B) deliver to the Stockholders all opinions, certificates and
other instruments and documents required to be delivered by UAG at or prior
to the Closing or otherwise required in connection herewith; and
(iii) (a) ▇▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇▇ shall enter into a lease for the real
property on which ▇▇▇▇▇▇ ▇▇▇▇ operates in a form mutually acceptable to the
parties (the "Buford Lease"). The Buford 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 monthly lease rate shall be an
amount agreed to by the parties not to exceed the fair market lease rate
and shall be subject to periodic adjustments to be agreed to by the
parties.
(b) ▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇▇ shall enter into a lease for the parcel of
land owned by ▇▇▇▇▇▇ on which ▇▇▇▇ ▇▇▇▇ operates a portion of its business in a
form to be mutually
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acceptable to the parties (the "▇▇▇▇/▇▇▇▇▇▇ Lease"). The initial lease rate
shall be $10,000 per month and shall be subject to periodic adjustments to be
agreed to by the parties. The terms of the ▇▇▇▇/▇▇▇▇▇▇ Lease and the Buford
Lease shall be agreed to within twenty (20) Business Days.
(c) Except as set forth in Sections 1.2(c)(iii)(a) and 1.2(c)(iii)(b),
the Companies' leases on Real Property shall continue in full force and effect
after the Closing Date.
1.3. EARNINGS ADJUSTMENT.TMENT
If the Companies, on a combined basis, have Pre-Tax Earnings of more
or less than $4,450,000 for the year ending December 31, 1996 ("1996
Earnings"), then the Purchase Price shall be increased or decreased (as
appropriate) by an amount equal to $[(4,450,000 - 1996 Earnings) x 5].
1.4. NET WORTH ADJUSTMENT.TMENT
(a) On the Closing Date, or as soon as practicable (but no later than
thirty (30) days) 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 Company Accounting Principles, as
applicable (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 & ▇▇▇▇▇▇▇ or such other accounting firm (the "Reviewer")
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 1.4(g)(i) hereof), computed in
accordance with the definition of Net Worth set forth in Section 1.4(g)(iii)
hereof. UAG and the Reviewer shall have the opportunity to consult with the
Stockholders, the Companies and each of the accountants and other
representatives of the Stockholders and the Companies and examine the work
papers, schedules and other documents prepared by the Stockholders, the
Companies and each of such accountants and
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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 examine the work
papers and schedules 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 the 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 ninety (90) 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 1.4(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 1.4(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 1.4 (a) through
(e) hereof (such amount being referred to herein as the "Final Net Worth")
shall be less than Five Million Dollars ($5,000,000) (the amount of any such
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
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funds to an account designated in writing by UAG within two (2) Business Days
of the date of the Supplemental Closing, an amount equal to the Net Worth
Deficiency, together with interest on such amount from the Closing Date to the
date of the Supplemental Closing at the prime rate or its equivalent (as
announced from time to time by Citibank, N.A.).
(ii) If the Net Worth as shown on the Closing Date Balance Sheets is
equal to or greater than Five Million Dollars ($5,000,000) and the Net
Worth as shown on the Reviewed Balance Sheets as finally determined through
the operation of Sections 1.4(a) through (e) hereof shall be greater than
the Net Worth as shown on the Closing Date Balance Sheets (the amount of
any such excess being referred to as the "Net Worth Excess"), UAG shall pay
to the Stockholders, by wire transfer of immediately available funds to an
account designated in writing within two (2) Business Days of the
Supplemental Closing, an amount equal to the Net Worth Excess, together
with interest on such amount from the Closing Date to the date of the
Supplemental Closing at the prime rate or its equivalent (as announced from
time to time by Citibank, N.A.).
(iii) "Net Worth" shall mean the amount by which the total assets plus
LIFO reserves (in each case using the Company Accounting Principles)
(excluding good will) exceed the total liabilities reflected, in each case,
on the balance sheets of Companies comprising the Closing Date Balance
Sheets or the Reviewed Balance Sheets, as the case may be.
1.5. STOCK PRICE ADJUSTMENT
If the UAG Market Value on the Adjustment Date (as defined below), is
less than the UAG Market Value on the Closing Date (the amount of any such
deficiency being referred to herein as the "Stock Price Deficiency") then, no
later than thirty (30) days after the Adjustment Date, UAG shall pay to each
Stockholder cash in an amount (the "Adjustment Amount") equal to the Stock
Price Deficiency multiplied by the number of UAG Shares that such Stockholder
is permitted to sell on the Adjustment Date.
For purposes of this Agreement, the Adjustment Date shall mean the
earlier of (i) the date on which the Stockholders may sell the UAG Shares in
reliance on Rule 144 promulgated by the Securities and Exchange Commission
("SEC") pursuant to the Securities Act of 1933, as amended ("Rule 144") and
(ii) the date on which the UAG Shares are registered pursuant to the provisions
of a piggyback registration rights agreement or otherwise. If any Stockholder
is not permitted to sell all of his UAG Shares on the Adjustment Date as a
result of any volume restrictions set forth in Rule 144 or market cutbacks in
connection with a piggyback registration and the UAG Market Value ninety days
after the Adjustment Date is less than the UAG Market Value on the
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Closing Date (the amount of any such deficiency being referred to herein as the
("Remaining Stock Price Deficiency") then, no later than one hundred and fifty
(150) days after the Adjustment Date, UAG shall pay to such Stockholder cash in
an amount equal to the Remaining Stock Price Deficiency multiplied by the
number of UAG Shares that such Stockholder was not permitted to sell on the
Adjustment Date.
1.6. ADDITIONAL PURCHASE PRICE.PRICE
If the Companies (except for ▇▇▇▇▇▇ ▇▇▇▇), on a combined basis,
achieve annual Pre-Tax Earnings of at least Three Million Eight Hundred
Thousand Dollars ($3,800,000) in either of the two (2) successive twelve (12)
month periods beginning on the first day of the calendar month immediately
following the Closing then, in consideration for the sale of the Shares by the
Stockholders to UAG, UAG will make an additional one-time cash payment to the
Stockholders (or their designees) in the aggregate amount of Eight Hundred
Fifty Thousand Dollars ($850,000) (the "Additional Payment"). In the event that
UAG is required to make the Additional Payment, then UAG 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 12-month period for which such Additional
Payment is to be paid (but in no event shall such Additional Payment be paid
later than 120 days after the end of such 12-month period).
1.7. EFFECTIVE DATE
The obligations of the parties hereunder shall not take effect until
the date on which any of the parties notify Ford Motor Company of the execution
of the Agreement (the "Effective Date").
1.8. SCHEDULES
The parties acknowledge and agree that the Schedules referred to in
this Article 1 shall be delivered no later than twenty (20) Business Days after
the Effective Date.
ARTICLE 2.
REPRESENTATIONS AND WARRANTIES
OF THE COMPANIES AND THE STOCKHOLDERS
Subject to the parties acknowledgement and agreement that the
Schedules referred to in this Article 2 are to be delivered by the Companies
and the Stockholders no later than twenty (20) Business Days after the
Effective Date hereof, the Companies and the Stockholders hereby represent and
warrant to UAG as follows, each such representation and warranty referring (a)
in the case of ▇▇▇▇ and Mize Ford only to ▇▇▇▇ and Mize Ford; (b) in the case
of ▇▇▇▇, only to ▇▇▇▇ and Mize Ford; (c) in the case of ▇▇▇▇▇▇, ▇▇▇▇ Ford and
▇▇▇▇▇▇ ▇▇▇▇ only to ▇▇▇▇▇▇, ▇▇▇▇
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Ford and ▇▇▇▇▇▇ ▇▇▇▇; (d) in the case of ▇▇▇▇▇▇ ▇▇▇▇ to ▇▇▇▇▇▇ ▇▇▇▇; and (e) in
the case of ▇▇▇▇▇▇▇▇ only to ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇.
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 its 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. 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
Except as set forth on Schedule 2.2 hereof, 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").
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2.4. AUTHORITY; APPROVALS AND CONSENTS
(a) 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.
(b) The execution, delivery and performance by 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 either 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 UAG to acquire the Shares pursuant
to this Agreement);
(iv) violate or conflict with any Legal Requirements (as defined in
Section 2.9 hereof) applicable to the Companies or any of their respective
businesses or properties; or
(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 comp-
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liance 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 audited balance sheets of ▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇ as of
December 31, 1996 (the "▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇ Company Balance Sheets"),
and the related consolidated statements of income, stockholders' equity and
cash flow for the fiscal year ended December 31, 1996, together with the
notes thereto and (B) the reviewed balance sheets of ▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇▇
▇▇▇▇ as of December 31, 1995, and the related consolidated statements of
income, stockholders' equity and cash flow for the fiscal year ended
December 31, 1995, together with the notes thereto, in each case examined
or reviewed by (as the case may be) and accompanied by the report of
independent certified public accountants; and
(ii) (A) the reviewed balance sheets of Mize Ford as of December 31,
1996 (the "Mize Ford Company Balance Sheet" and, together with the ▇▇▇▇
▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇ Company Balance Sheets, the "Company Balance Sheets"),
and the related consolidated statements of income and stockholders' equity
for the fiscal year ended December 31, 1995, together with the notes
thereto, in each case reviewed by and accompanied by the report of
independent certified public accountants; and
(iii) the most recent monthly and year-to-date financial statements
provided to Ford Motor Company by each of the Companies (each, a "Company
Factory Statement" and, collectively, the "Company Factory Statements");
(all the foregoing financial statements, including the notes thereto, being
referred to herein collectively as the "Company Financial Statements"). The
Company Financial Statements are in accordance with the books and records of
the Companies, fairly present the financial position, results of operations,
stockholders' equity as of the dates and for the periods indicated, in the case
of the financial statements referred to in
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clause (i) and (ii) above in conformity with the Company Accounting Principles
consistently applied during such periods (except as expressly stated otherwise
therein), and can be legitimately reconciled with the financial statements and
the financial records maintained and the accounting methods applied by the
Companies for federal income tax purposes, and the unaudited financial
statements included in the Company Financial Statements indicate all
adjustments, which consist of only normal recurring accruals, necessary for
such fair presentations. The statements of income included in the Company
Financial Statements do not contain any items of special or nonrecurring income
except as expressly specified therein, and the balance sheets included in the
Company Financial Statements do not reflect any write-up or revaluation
increasing the book value of any assets. The books and accounts of the
Companies are complete and correct in all material respects and fairly reflect
all of the transactions, items of income and expense and all assets and
liabilities of the businesses of the Companies.
2.6. ABSENCE OF UNDISCLOSED LIABILITIES
The Companies do not have any liability of any nature whatsoever
(whether known or unknown, due or to become due, accrued, absolute, contingent
or otherwise), including, without limitation, any unfunded obligation under
employee benefit plans or arrangements as described in Section 2.17 and 2.18
hereof or liabilities for Taxes (as defined in Section 2.8 hereof), except for
(i) liabilities reflected or reserved against on the most recent Company
Financial Statements, (ii) current liabilities incurred in the ordinary course
of business and consistent with past practice after the date of the Company
Balance Sheets which, individually and in the aggregate, do not have, and
cannot reasonably be expected to have, a Material Adverse Effect, (iii)
liabilities disclosed on Schedule 2.6 hereto, and (iv) liabilities that do not,
in the aggregate, exceed $10,000. 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 December 31, 1996, the Companies have operated in the
ordinary course of business consistent with past practice, except as set forth
on Schedule 2.7(a) hereto, and there has not been:
(i) any material adverse change in the assets, properties, business,
operations, net income or financial condition of the Companies, and no
factor, event, condition or circumstance exists which threatens or may
threaten to have a Material Adverse Effect;
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(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 manager
of either of the Companies.
(b) Since December 31, 1996, except as set forth in Schedule 2.7(b)
hereto, the Companies have not:
(i) incurred any material obligation or liability (whether absolute,
accrued, contingent or otherwise), except in the ordinary course of
business consistent with past practice;
(ii) failed to discharge or satisfy any lien or pay or satisfy any
obligation or liability (whether absolute, accrued, contingent or
otherwise), other than liabilities being contested in good faith and for
which adequate reserves have been provided;
(iii) mortgaged, pledged or subjected to any lien any of its property
or other assets, except for mechanics liens and liens for taxes not yet due
and payable;
(iv) sold or transferred any assets or cancelled any debts or claims
or waived any rights, except in the ordinary course of business consistent
with past practice;
(v) defaulted on any material obligation;
(vi) entered into any material transaction, except in the ordinary
course of business consistent with past practice;
(vii) written down the value of any inventory or written off as
uncollectible any accounts receivable or any portion thereof not reflected in
the Company Financial Statements;
(viii) granted any increase in the compensation or benefits of
employees other than increases in accordance with past practice not exceeding
10% or entered into any employment or severance agreement or arrangement with
any of them;
(ix) made any individual capital expenditure in excess of $75,000, or
aggregate capital expenditures in excess of $200,000, or additions to property,
plant and equipment other than ordinary repairs and maintenance;
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(x) discontinued any franchise or the sale of any products or product
line or program;
(xi) incurred any obligation or liability for the payment of severance
benefits; or
(xii) entered into any agreement or made any commitment to do any of
the foregoing.
2.8. TAXES
The Companies have each made a valid election pursuant to Section
1362(a) of the Internal Revenue Code, as amended (the "Code"), to be an "S
Corporation" within the meaning of Section 1361(a)(1) of the Code and have
continued to qualify as such for all taxable years since at least 1986 and will
continue to so qualify through the Closing Date. The Companies and, for any
period during all or part of which the tax liability of any other corporation
was determined on a combined or consolidated basis with the Companies, any such
other corporation have filed timely all federal, state, local and foreign tax
returns, reports and declarations required to be filed (or have obtained or
timely applied for an extension with respect to such filing) correctly
reflecting the Taxes (as defined below) and all other information required to
be reported thereon and have paid, or made adequate provision for the payment
of, all Taxes which are due pursuant to such returns or pursuant to any
assessment received by the Companies or any such other corporation. As used
herein, "Taxes" shall mean all taxes, fees, levies or other assessments,
including but not limited to income, excise, property, sales, franchise,
withholding, social security and unemployment taxes imposed by the United
States, any state, county, local or foreign government, or any subdivision or
agency thereof or taxing authority therein, and any interest, penalties or
additions to tax relating to such taxes, charges, fees, levies or other
assessments. Copies of all tax returns for the fiscal years ended since
December 31, 1992 have been furnished to UAG or its representatives 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, prior to or
through 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 on an annual basis. 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, prior to or through
the Closing Date. Except as set forth on Schedule 2.8 hereto, since January 1,
1990 the Companies have not been subject to a federal or state tax audit of any
kind, and no adjustment has been
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proposed by the Internal Revenue Service ("IRS") with respect to any return for
any subsequent year. With respect to the audits referred to on Schedule 2.8
hereto, no such audit has resulted in an adjustment in excess of $50,000.
Neither the 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, or, to the knowledge of the Companies
or the Stockholders, 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 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. 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
The properties and assets, real and personal, owned by or leased to
the Companies are adequate for the conduct of the respective businesses of the
Companies as presently conducted. Set forth on Schedule 2.10(a) hereto is a
list of all interests
-15-
in real property owned by or leased to the Companies (including all real
property owned or leased by the Stockholders (directly or indirectly) and used
in the businesses of the Companies and of all options or other contracts to
acquire any such interest (collectively, the "Real Property"). With respect to
any leased Real Property there are no defaults by either party under and no
state of facts exist which with the giving of notice or the passage of time, or
both, would constitute a default under such leases and true and correct copies
of such leases are attached as Schedule 2.10(b). All properties leased by the
Companies are leased at rates which do not exceed the fair market lease rate
for such property. 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 in good operating condition and in good repair, subject
only to ordinary wear and tear. 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 such Improvements do not encroach in any respect on property of others. To
the knowledge of the Stockholders, there are no latent defects with respect to
the Improvements. The Real Property is currently zoned to permit the conduct of
the respective businesses of the Companies as presently conducted. To the
extent required by law, Certificates of Occupancy have been issued with respect
to the Improvements without special conditions or restrictions. No notice of
any pending, threatened or contemplated action by any governmental authority or
agency having the power of eminent domain has been given to the 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 full compliance with all Environmental Laws
(as defined below), (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 herein, "Environmental Laws"
shall mean all applicable requirements of environmental, public or employee
health and safety, public or community right-to-know, ecological or natural
resource laws or regulations or controls, including all applicable requirements
imposed by any law (including without limitation common law), rule, order, or
regulations of any federal, state, or local executive, legislative, judicial,
regulatory, or administrative agency, board, or authority, or any applicable
private agreement (such as covenants, conditions and restrictions), which
relate to, (i) noise, (ii) pollution or protection of the air, surface water,
groundwater, or soil, (iii) solid, gaseous, or liquid waste generation,
treatment, storage, disposal or transportation, (iv) exposure to Hazardous
Materials
-16-
(as defined below), or (v) regulation of the manufacture, processing,
distribution and commerce, use, or storage of Hazardous Materials. As used
herein, "Environmental Permits" shall mean all permits, licenses, approvals,
authorizations, consents or registrations required under applicable
Environmental Law in connection with the ownership, use and/or operation of the
Companies' businesses or the Real Property or Improvements.
As used in this Section 2.11, "Hazardous Materials" shall mean, collectively,
(i) those substances included within the definitions of or identified as
"hazardous chemicals," "hazardous waste," "hazardous substances," "hazardous
materials," "toxic substances" or similar terms in or pursuant to, without
limitation, the Comprehensive Environmental Response Compensation and
Liability Act of 1980 (42 U.S.C. 9601 et seq.) ("CERCLA"), as amended by
Superfund Amendments and Reauthorization Act of 1986 (Pub. L. 99-499, 100
State, 1613), the Resource Conservation and Recovery Act of 1976 (42 U.S.C. ss.
6901 et seq.) ("RCRA"), the Occupational Safety and Health Act of 1970 (29
U.S.C. ss. 651 et seq.) ("OSHA"), and the Hazardous Materials Transportation
Act, 49 U.S.C. ss. 1801 et seq. ("HMTA"), and in the regulations promulgated
pursuant to such laws, all as amended, (ii) those substances listed in the
United States Department of Transportation Table (49 CFR 172.101 and
amendments thereto) or by the Environmental Protection Agency (or any
successor agency) as hazardous substances (40 CFR part 302 and amendments
thereto), (iii) any material, waste or substance which is or contains (A)
petroleum, including crude oil or any fraction thereof, natural gas, or
synthetic gas usable for fuel or any mixture thereof, (B) asbestos, (C)
polychlorinated biphenyls, (D) designated as a "hazardous substance" pursuant
to Section 311 of the Clean Water Act, 33 U.S.C. ss. 1251 et seq. (33 U.S.C.
ss. 1321) or listed pursuant to Section 307 of the Clean Water Act (33 U.S.C.
ss. 1317), (E) flammable explosives, (F) radioactive materials, and (iv) such
other substances, materials and wastes which are or become regulated or
classified as hazardous, toxic or as "special wastes" under any Environmental
Laws.
(b) The Companies and the Stockholders have not violated, done or
suffered any act which could give rise to liability under, and are not
otherwise exposed to liability under, any Environmental Law. 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. 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) neither the
Companies, the Real Property or any portion thereof, the Improvements or any
property formerly owned, occupied or leased by the Companies, nor, to the
knowledge of the
-17-
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) none of the Real Property or 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 (as defined
below) at such property, and (iii) none of the Real Property, the Improvements
or any property formerly owned, occupied or leased by the Companies, or, to the
knowledge of the Companies or the Stockholders, any site or location where the
Companies sent waste of any kind, is identified on the current or proposed (A)
National Priorities List under ▇▇ ▇.▇.▇. ▇▇▇ ▇▇▇▇▇▇▇▇ ▇, (▇) Comprehensive
Environmental Response Compensation and Liability Inventory System list, or (C)
any list arising from any statute analogous to CERCLA. As used herein,
"Remedial Action" shall mean any action required to (i) clean up, remove or
treat Hazardous Materials, (ii) prevent a release or threat of release of any
Hazardous Material, (iii) perform pre-remedial studies, investigations or
post-remedial monitoring and care, (iv) cure a violation of Environmental Law
or (v) take corrective action under sections 3004(u), 3004(v) or 3008(h) of
RCRA or analogous state law.
(d) Except as set forth on Schedule 2.11(d) hereto, there have been
and are no (i) aboveground or underground storage tanks, subsurface disposal
systems, or wastes, drums or containers disposed of or buried on, in or under
the ground or any surface waters, (ii) asbestos or asbestos containing
materials or radon gas, (iii) polychlorinated biphenyls ("PCB") or
PCB-containing equipment, including transformers, or (iv) wetlands (as defined
under any Environmental Law) located within any portion of the Real Property,
nor have any liens been placed upon any portion of the Real Property, the
Improvements or any property formerly owned, occupied or leased by the
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 either of the Companies, the Real Property, the
Improvements, any property formerly owned, leased or occupied by
-18-
the Companies, any offsite contamination affecting the business of the
Companies or any operations conducted at the Real Property, (ii) there are no
ongoing negotiations with or agreements with any governmental authority
relating to any Remedial Action or other environmentally related claim, (iii)
the Companies have not submitted notice pursuant to Section 103 of CERCLA or
analogous statute or notice under any other applicable Environmental Law
reporting a release of a Hazardous Material into the environment, and (iv) the
Companies have not received any notice, claim, demand, suit or request for
information from any governmental or private entity with respect to any
liability or alleged liability under any Environmental Law, nor to the
knowledge of the Stockholders and the Companies, has any other entity whose
liability therefor, in whole or in part, may be attributed to the Companies,
received such notice, claim, demand, suit or request for information.
(f) The Stockholders and the Companies have provided to UAG all
environmental studies and reports obtained by them or known to them pertaining
to the Real Property, the Improvements, the Companies and any property formerly
owned, occupied or leased by the Companies, and have permitted (or will have
permitted as of the Closing Date), the testing of the soil, groundwater,
building components, tanks, containers and equipment on the Real Property, the
Improvements, and any property formerly owned, occupied or leased by the
Companies, by UAG or UAG's agents or experts as they have or shall have deemed
necessary or appropriate to confirm the condition of such properties. Any
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 such values are in conformity with the Company
Accounting Principles. All inventories (other than new car 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 ▇▇▇▇-ups within 90 days after the date hereof
in the ordinary course of business, except for spare parts inventory which
inventory is good and usable. All new car inventories reflected on the Company
Balance Sheets and Company Factory Statements or arising since the date thereof
and prior to Closing are currently marketable and can reasonably be anticipated
to be sold in the ordinary course of business within 90 days.
2.13. ACCOUNTS RECEIVABLE
All accounts receivable reflected on the Company Balance Sheets are,
and all accounts receivable that will be or
-19-
will have been reflected on the Closing Date Balance Sheets will have arisen
from bona fide transactions in the ordinary course of business 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 reasonable in light of the risks attendant to
the businesses and activities in which the Companies are engaged and customary
for companies engaged in similar businesses or owning similar assets. Set forth
on Schedule 2.14 hereto is a list and brief description (including the name of
the insurer, the type of coverage provided, the amount of the annual premium
for the current policy period, the amount of remaining coverage and deductibles
and the coverage period) of all policies for such insurance and the 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 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 either of the Companies is a party or by which either 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 either 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 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 breach of or default under any Company Agreement, and no event
-20-
has occurred which (after notice or lapse of time or both) would become a
breach or default under, or would permit modification, cancellation,
acceleration or termination of, any Company Agreement or result in the creation
of any Lien upon, or any Person obtaining any right to acquire, any properties,
assets or rights of the Companies. There are no material unresolved disputes
involving either of the Companies under any Company Agreement. For purposes of
this Section 2.15, material shall mean any Company Agreement that requires
payments or expenditures in excess of $100,000 in any 12-month period.
2.16. LABOR RELATIONS
(a) The Companies have paid or made provision for the payment of all
salaries and accrued wages and have complied in all material respects with all
applicable laws, rules and regulations relating to the employment of labor,
including those relating to wages, hours, collective bargaining and the payment
and withholding of taxes, and have withheld and paid to the appropriate
governmental authority, or are holding for payment not yet due to such
authority, all amounts required by law or agreement to be withheld from the
wages or salaries of their employees.
(b) Except as set forth on Schedule 2.16(b) hereto, none of the
Companies is a party to any (i) outstanding employment agreements or contracts
with officers or employees that are not terminable at will, or that provide for
payment of 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
-21-
Employment Opportunity Commission or any state, local or foreign agency
responsible for the prevention of unlawful employment practices, (v) the
Companies have not received formal notice from any federal, state, local or
foreign agency responsible for the enforcement of labor or employment laws of
an intention to conduct an investigation of the Companies and, to the knowledge
of the Companies, no such investigation is in progress and (vi) the consents of
the unions that are parties to any Employment and Labor Agreements are not
required to complete the transactions contemplated by this Agreement and the
Documents.
(d) The Companies have never caused any "plant closing" or "mass
layoff" as such actions are defined in the Worker Adjustment and Retraining
Notification Act, as codified at 29 U.S.C. ▇▇.▇▇. 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
-22-
occur which would constitute a prohibited transaction under Section 406 of
ERISA or under Section 4975 of the Code;
(iii) each ERISA Plan has operated since its inception in accordance
with the reporting and disclosure requirements imposed under ERISA and the
Code and has timely filed Form 5500e (or 5500-C or 5500-R) and predecessors
thereof; and
(iv) no ERISA Plan is liable for any federal, state, local or foreign
Taxes.
(c) Each Pension Benefit Plan intended to be qualified under
Section 401(a) of the Code:
(i) has been qualified, from its inception, under Section 401(a) of
the Code, and the trust established thereunder has been exempt from
taxation under Section 501(a) of the Code and is currently in compliance
with applicable federal laws;
(ii) has been operated, since its inception, in accordance with its
terms and there exists no fact which would adversely affect its qualified
status; and
(iii) is not currently under investigation, audit or review by the IRS
or (to the knowledge of the Companies and the Stockholders) no such action
is contemplated or under consideration and the IRS has not asserted that
any Pension Benefit Plan is not qualified under Section 401(a) of the 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;
-23-
(iv) no Pension Benefit Plan ever has incurred any "accumulated
funding deficiency" (as defined in Section 302 of ERISA and Section 412 of
the Code); and
(v) if any of such Pension Benefit Plans were to be terminated on the
Closing Date (A) no liability under Title IV of ERISA would be incurred by
the Companies and (B) all benefits accrued to the day prior to the Closing
Date (whether or not vested) would be fully funded in accordance with the
actuarial assumptions and method utilized by such plan for valuation
purposes.
(e) With respect to each Pension Benefit Plan, Schedule 2.17(e)
contains a list of all Pension Benefit Plans to which ERISA has applied which
have been or are being terminated, or for which a termination is contemplated,
and a description of the actions taken by the PBGC and the IRS with respect
thereto.
(f) The approximate aggregate of the amounts of contributions by the
Companies to be paid or accrued under ERISA Plans for the current fiscal year
is set forth on Schedule 2.17(f) (the "Aggregate ERISA Contributions"), and the
Aggregate ERISA Contributions are not expected to exceed the total amount set
forth on Schedule 2.17(f). To the extent required in accordance with Company
Accounting Principles, 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.
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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 which require payments that exceed $50,000 in any 12-month
period, whether written or oral, with any current or former officer,
director or consultant of the Companies pursuant to which payments may be
required to be made at any time following the date hereof (including,
without limitation, any employment, deferred compensation, severance,
supplemental pension, termination or consulting agreement or arrangement);
and
(iii) each employee of the Companies whose aggregate compensation for
the fiscal year ended December 31, 1996 exceeded $50,000. True and complete
copies of all of the written plans, arrangements and agreements referred to
on Schedule 2.18(a) ("Compensation Commitments") have been provided to UAG
together with, where prepared by or for the 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
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(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 January 1, 1996. For purposes of this Agreement:
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;
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
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.
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2.21. INTEREST IN COMPETITORS
Except as set forth on Schedule 2.21, neither the Companies nor the
Stockholders, nor any of their Affiliates, have any interest, either by way of
contract or by way of investment (other than as holder of not more than 2% of
the outstanding capital stock of a publicly traded Person, so long as such
holder has no other connection or relationship with such Person) or otherwise,
directly or indirectly, in any Person (other than the Companies) that is
engaged in the retail sale of automobiles or light duty trucks.
2.22. BROKERS
Neither the Companies, nor any director, officer or employee thereof,
nor the Stockholders or any representative of the Stockholders, has employed
any broker or finder or has incurred or will incur any broker's, finder's or
similar fees, commissions or expenses, in each case in connection with the
transactions contemplated by this Agreement or the Documents.
2.23. ACCOUNTS
Schedule 2.23 hereof correctly identifies each bank account maintained
by or on behalf or for the benefit of the Companies and the name of each person
with any power or authority to act with respect thereto.
2.24. DISCLOSURE
Neither the Companies nor the Stockholders have made any material
misrepresentation to UAG relating to the Companies or the Shares or the Real
Property or Improvements and neither the Companies nor the Stockholders have
omitted to state to UAG any material fact relating to the Companies or the
Shares or the Real Property or Improvements which is necessary in order to make
the information given by or on behalf of the Companies or the Stockholders to
UAG not misleading or which if disclosed would reasonably affect the decision
of a person considering an acquisition of the Shares. To the knowledge of 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. WORKING CAPITAL
On the Closing Date, the Net Worth of the Companies shall include
adequate working capital for each of the Companies sufficient to continue
operating in the normal course of business.
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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 twenty (20) Business Days after the Effective Date hereof, each
Stockholder (with respect only to himself) hereby represents and warrants 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 UAG at the
Closing, good and marketable title to the Shares owned by him, free and clear
of any and all security interests, pledge agreements, Liens, encumbrances,
proxies and voting or other agreements except restrictions on transfer imposed
by applicable federal and state securities laws.
3.2. AUTHORITY
The Stockholders 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 UAG
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. 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
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(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 the Stockholders are owned
in fee simple, free and clear of all Liens, claims and encumbrances, except
those disclosed in Schedule 3.3, none of which currently or, to their
knowledge, in the future will affect the use of the Real Property or the
Improvements for the conduct of the respective businesses of the Companies as
presently conducted. No assessments have been made against any portion of the
Real Property which are unpaid (except ad valorem taxes for the current year
that are not yet due and payable), whether or not they have become Liens. There
are no disputes concerning the location of the lines and corners of the Real
Property. No one has been granted any right to purchase or lease the Real
Property or Improvements other than the existing leases in favor of the
Companies, and pursuant to which the Stockholders shall acknowledge there are
no defaults under any such leases and no liability of either of the Companies
results from such leases. The Stockholders shall make available to UAG all
surveys, title binders, title policies and copies of any exceptions to title in
their possession or control.
3.4. INVESTMENT INTENT
No Stockholder has a 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
Each Stockholder (i) is an "accredited investor" within the meaning of
Regulation D of 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 his 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; and (iv) 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)
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the transfer is exempt from the registration requirements under the Securities
Act and any applicable state securities law and an opinion of counsel
reasonably satisfactory to UAG that such transfer is exempt therefrom is
delivered to UAG or (B) the transfer is made pursuant to an effective
registration statement under the Securities Act and any applicable state
securities law.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF UAG
Subject to the parties' agreement and acknowledgement that the
Schedules referred to in this Article 4 are to be delivered by UAG no later
than twenty (20) Business Days after the Effective Date hereof, UAG hereby
represents and warrants to the Companies and the Stockholders as follows:
4.1. ORGANIZATION AND GOOD STANDING
UAG is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has the corporate power
and authority to own, lease and operate the properties used in its business and
to carry on its business as now being conducted. UAG is duly qualified to do
business and is in good standing as a foreign corporation in each state and
jurisdiction where qualification as a foreign corporation is required, except
for such failures to be qualified and in good standing, if any, which when
taken together with all other such failures of UAG 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 bylaws, 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,
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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.
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 the Stockholders 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. UAG shall provide to ▇▇▇▇ and ▇▇▇▇▇▇ any Quarterly Reports or
Annual Reports filed with the SEC between the date hereof and Closing, promptly
after such reports are filed.
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
ByLaws of UAG;
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(ii) (after notice or lapse of time or both) conflict with, result in
a breach of any provision of, constitute a default under, result in the
modification or cancellation of, or give rise to any right of termination
or acceleration in respect of, any UAG Agreement (as defined below) or
require any consent or waiver of any party to any UAG Agreement;
(iii) result in the creation of any security interest upon, or any
person obtaining any right to acquire, any properties, assets or rights of
UAG;
(iv) violate or conflict with any Legal Requirements applicable to UAG
or its respective businesses or properties that would or 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 & ▇▇▇▇▇▇▇,
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;
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(all the foregoing financial statements, including the notes thereto, being
referred to herein collectively as the "UAG Financial Statements"). The UAG
Financial Statements are in accordance with the books and records of UAG and
the UAG Subsidiaries, fairly present the consolidated financial position,
results of operations, stockholders' equity and changes in financial position
of UAG and the UAG Subsidiaries as of the dates and for the periods indicated,
in each case in conformity with GAAP consistently applied (except as otherwise
indicated in such statements) during such periods, and can be legitimately
reconciled with the financial statements and the financial records maintained
and the accounting methods applied by UAG and the UAG Subsidiaries for federal
income tax purposes, and the unaudited financial statements included in the UAG
Financial Statements indicate all adjustments, which consist of only normal
recurring accruals, necessary for such fair presentations. The statements of
income included in the UAG Financial Statements do not contain any items of
special or nonrecurring income except as expressly specified therein, and the
balance sheets included in the UAG Financial Statements do not reflect any
write-up or revaluation increasing the book value of any assets. The books and
accounts of UAG and the UAG Subsidiaries are complete and correct in all
material respects and fairly reflect all of the transactions, items of income
and expense and all assets and liabilities of the businesses of UAG and the UAG
Subsidiaries consistent with prior practices of UAG and the UAG Subsidiaries.
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. DISCLOSURE
Neither UAG nor any UAG Subsidiary has made any material
misrepresentation to the Companies or the Stockholders
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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. To the knowledge
of UAG, no fact, event, condition or contingency exists or has occurred which
has, or in the future can reasonably be expected to have, a material adverse
effect on UAG and the UAG Subsidiaries, taken as a whole, which has not been
disclosed in the SEC Filings or the Schedules to this Agreement.
4.9. BROKERS
Neither UAG nor any of their directors, officers or employees 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.
ARTICLE 5.
COVENANTS AND ADDITIONAL AGREEMENTS
5.1. ACCESS; CONFIDENTIALITY
Between the date that is two (2) Business Days after the Effective
Date and the Closing Date, the Stockholders and the Companies will (i) provide
to the officers and other authorized representatives of UAG full access, during
normal business hours, to any and all premises, properties, files, books,
records, documents, and other information of the Companies and will cause their
officers to furnish to UAG and their authorized representatives any and all
financial, technical and operating data and other information pertaining to the
businesses and properties of the Companies, and (ii) make available for
inspection and copying by UAG true and complete copies of any documents
relating to the foregoing. UAG will hold in confidence (unless and to the
extent compelled to disclose by judicial or administrative process or, in the
opinion of its counsel, by other requirements of law) all Confidential
Information (as defined below) and will not use the same to the detriment of
the Companies or the Stockholders 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. If this Agreement is terminated, UAG will promptly return
to the Companies, all information furnished by the Companies and held by UAG,
including all copies and summaries thereof. In connection with the foregoing,
UAG shall coordinate with the Stockholders or their designees and, without the
consent of the Stockholders, shall not have more than three (3) representatives
at any of the Companies at any one time. As used herein, "Confidential
Information" shall mean all information concerning the Companies obtained by
UAG from the Companies in connection with the transactions
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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 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 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, on the
other hand, will, as soon as practicable after reasonable request therefor,
furnish to the other all the information concerning the Stockholders and the
Companies or UAG, respectively, required for inclusion in any statement or
application made by UAG or the Companies to any governmental or regulatory body
or in connection with obtaining any third party consent in connection with the
transactions contemplated by this Agreement. Neither the Stockholders nor the
Companies, on the one hand, nor UAG, on the other hand, or any representative
thereof, shall issue any press releases or otherwise make any public statement
with respect to the transactions contemplated hereby without the prior consent
of the other, except as may be required by law (including Federal or state
securities laws) as determined by such parties' counsel. UAG shall not file
this agreement as an Exhibit to any SEC filing unless such filing is required
to be filed by applicable law, as determined by UAG's counsel in its sole
discretion.
5.3. ANTITRUST IMPROVEMENTS ACT COMPLIANCE
UAG 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 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended (the "H-S-R Act"), and the rules
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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
(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 Bylaws,
issue any additional shares of capital stock or equity securities or grant
any option, warrant or right to acquire any capital stock or equity
securities or issue any security convertible into or exchangeable for their
capital stock or alter any term of any of their outstanding securities or
make any change in their outstanding shares of capital stock or other
ownership interests or its capitalization, whether by reason of a
reclassification, recapitalization, stock split or combination, exchange or
readjustment of shares, stock dividend or otherwise;
(iii) (A) incur, assume or guarantee any indebtedness for borrowed
money, issue any notes, bonds, debentures or other corporate securities or
grant any option, warrant or right to purchase any thereof, except pursuant
to transactions in the ordinary course of business consistent with past
practices, (B) issue any securities convertible or exchangeable for debt
securities of the Companies, or (C) issue any options or other rights to
acquire from the
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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 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 or other
payments that do not reduce the Net Worth of the Companies below
$5,000,000) or redeem, retire, purchase or otherwise acquire, directly or
indirectly, any shares of its capital stock;
(vii) acquire any assets, raw materials or properties, or enter into
any other transaction, other than in the ordinary course of business
consistent with past practices;
(viii) enter into any new (or amend any existing) employee benefit
plan, program or arrangement or any new (or amend any existing) employment,
severance or consulting agreement, grant any general increase in the
compensation of officers or employees (including any such increase pursuant
to any bonus, pension, profit-sharing or other plan or commitment) or grant
any increase in the compensation payable or to become payable to any
employee, except in accordance with pre-existing contractual provisions or
consistent with past practices;
(ix) make or commit to make any individual material capital
expenditure in excess of $60,000, or aggregate capital expenditures in
excess of $150,000 (excepting rental vehicles);
(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 except for transactions pursuant to contracts set
forth on Schedule 2.15;
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(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 claim or litigation or waive any
material right above $25,000;
(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 governmental authority) remove or remedy such violation in
accordance with all applicable Environmental Laws; provided, however, that
any remediation or removal shall be subject to the prior approval of UAG;
(iii) file, when due or required, federal, state, foreign and other
tax returns and other reports required to
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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.
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 ordinary course of business and disclosed in the Notes to the Company
Financial Statements.
5.6. NEGOTIATIONS
From the date hereof and until the termination of this Agreement
pursuant to the provisions 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.
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
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with governmental authorities which are required on their respective parts
for (A) the consummation of the transactions contemplated by this
Agreement, (B) the ownership or leasing and operating after the Closing by
the Companies of all their material properties and (C) the conduct after
the Closing by the Companies of their respective businesses as conducted by
them on the date hereof;
(ii) to defend, consistent with applicable principles and requirements
of law, any lawsuit or other legal proceedings, whether judicial or
administrative, whether brought derivatively or on behalf of third persons
(including governmental authorities) challenging this Agreement or the
transactions contemplated hereby and thereby; and
(iii) to furnish each other such information and assistance as may
reasonably be requested in connection with the foregoing.
5.8. ADDITIONAL AGREEMENTS
Subject to the terms and conditions of this Agreement, each of the
parties hereto agrees to use its best efforts at its own expense to take, or
cause to be taken, all action and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement.
The Stockholders agree to execute and deliver any and all documents that Ford
Motor Company typically requires a selling dealer to execute in connection with
the transfer of a dealership. In case at any time after the Closing any further
action is necessary or desirable to carry out the purposes of this Agreement,
the Stockholders and the proper officers of the Companies and UAG and its
proper officers, as the case may be, 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 delivered to Ford Motor Company.
All such financial statements shall fairly present the financial position,
results of operations of the Companies as of the date or for the periods
indicated. All financial statements delivered pursuant to this Section 5.9
shall be prepared on a basis consistent with the Company Factory Statements.
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
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representation and warranty of such party contained herein was not true and
correct as of the date hereof or will not be true and correct as of the
Closing, (ii) the occurrence of any event which could result in the failure to
satisfy a condition specified in Article 6 or Article 7 hereof, as applicable,
(iii) any notice or other communication from any third person alleging that the
consent of such third person is or may be required in connection with the
transactions contemplated by this Agreement, and (iv) in the case of the
Stockholders and the Companies, any notice of, or other communication relating
to, any default or event which, with notice or lapse of time or both, would
become a default under any Company Agreement. The Stockholders shall (x)
promptly advise UAG of any event that has, or could in the future have, a
Material Adverse Effect (y) confer on a regular basis with one or more
designated representatives of UAG to report operational matters and to report
the general status of ongoing operations, and (z) notify UAG of any emergency
or other change in the normal course of business or in the operation of the
properties of the Companies and of any governmental complaints, investigations
or hearings (or communications indicating that the same may be contemplated) or
adjudicatory proceedings involving the Companies or any of their assets or
operations, and will keep UAG fully informed of such events and permit UAG's
representatives access to all materials prepared in connection therewith. The
Stockholders shall give prompt notice to UAG of any notice or other
communication from any third person asserting any right, title or interest in
any of the Shares held by the Stockholders (including, without limitation, any
threat to commence, or notice of the commencement of any action or other
proceeding with respect to any of the Shares) or the occurrence of any other
event of which 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. SECTION 338(H)(10) ELECTION
The Stockholders agree to join with UAG, if UAG so requests, in making
a timely election to treat the purchase and sale of the Shares pursuant to this
Agreement as a sale of all of the Companies' assets under Section 338(h)(10) of
the Internal Revenue Code of 1986, as amended (the "Code"), as permitted
pursuant to Section 1.338(h)(10)-1(a) of the Treasury Regulations promulgated
thereunder. In the event of such an election, UAG agrees to promptly pay to the
Stockholders the amount of any additional federal or state income tax
(including any penalties and interest thereon) that is imposed on the
Stockholders solely by reason of the making of such election. Thus, in the
event that the federal and/or state income tax imposed on the
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Stockholders by reason of the stock sale exceeds the income tax that would have
been imposed if no such election had been made, UAG will be responsible for
such excess, along with any penalties and interest thereon. The parties agree
that, to the extent the payment required pursuant to this Section 5.12 relates
to LIFO reserves, the amount of any payment to the Stockholders pursuant to
this Section 5.12 shall be computed based on the LIFO reserve amounts as
currently reflected in the Companies' tax returns and records without taking
into account any adjustment to such LIFO reserve amounts upon audit of any
taxable year up through the date of the Closing. UAG further agrees to "gross
up" any payment to the Stockholder pursuant to this Section 5.12 to take into
account that any such payment would itself be subject to income tax.
5.13. NON-INTERFERENCE
After the Closing Date, the Stockholders and their Affiliates shall
not interfere with or disrupt, or attempt to interfere with or disrupt, the
relationship, contractual or otherwise, between the Company and any customer,
client, supplier, manufacturer, distributor, consultant, independent contractor
or employee of the 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. INSURANCE
UAG shall either keep in place existing insurance policies relating to
workers' compensation, property damage and personal injury or, if UAG chooses
to replace such policies, UAG shall indemnify the Stockholders for any Costs
suffered by the Stockholders in connection with any workers' compensation,
property damage or personal injury claims made after the Closing; provided,
however, that such indemnification shall be limited to Costs, if any, that
would have been covered by the Companies' insurance policies in effect (as of
the Closing Date) had such policies remained in full force and effect.
5.15. PIGGYBACK REGISTRATION RIGHTS AGREEMENT
UAG and the Stockholders shall enter into a piggyback registration
rights agreement on terms mutually agreeable to the parties, which agreement
shall include customary terms and which agreement shall be subject to any
existing contractual rights of UAG.
5.16. REIMBURSEMENT BY UAG FOR TAX BENEFITS
In the event that the parties do not make an election pursuant to
Section 338(h)(10) of the Code pursuant to Section 5.12 hereof and any taxing
authority (including, without limitation, the Internal Revenue Service or
similar state revenue department) shall increase the taxable income of any of
the
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Companies in any taxable year up to the date of Closing, UAG shall pay to the
Stockholder or Stockholders (including any prior stockholders of the Company)
who pay the tax relating to such increase the lesser of (i) the Net Tax Benefit
(as defined in the following sentence) and (ii) the additional tax (excluding
any interest of penalties) paid by such Stockholder or Stockholders with
respect to such additional taxable income as reduced (on a gross and not a
present value basis) by any subsequent tax savings to such Stockholder or
Stockholders caused by the recognition of such additional taxable income,
including (without limitation) any amount of tax saved upon the sale of the
Shares pursuant to this Agreement. For this purpose, "Net Tax Benefit" is
defined as the present value (using a discount rate equal to UAG's average cost
of capital at the time of calculation) of the tax savings to be realized, or
which reasonably can be expected to be realized by UAG, as a result of the
recognition by such Stockholder (determined on an individual
Stockholder-by-Stockholder basis) of such additional taxable income. By way of
example and not by way of limitation, if the 1992 taxable income of ▇▇▇▇ ▇▇▇▇,
Inc. were to be increased by $1,000,000 due to a change in its LIFO reserve
amount, the Net Tax Benefit, assuming UAG's average cost of capital is 7% and
the future tax benefit of the elimination of the LIFO reserve will be realized,
or reasonably can be expected to be realized, ratably (on an annual basis) over
approximately 7 years and assuming that UAG's combined federal and state income
tax rate is 40% during the 7-year period that the tax benefit is to be
realized, the Net Tax Benefit would be approximately $307,000. Any payment
pursuant to this Section 5.16 shall be made to the Stockholder or Stockholders
within sixty (60) days after written notice from such Stockholder certifying to
UAG that the Stockholder has paid the taxes relating to the increased taxable
income. The parties agree to cooperate in good faith to agree upon the
assumptions, if any, required in order to calculate the amount of any payment
to be made pursuant to this Section 5.16.
ARTICLE 6.
CONDITIONS TO THE OBLIGATIONS
OF UAG TO EFFECT THE CLOSING
The obligations of UAG 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 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 in all
material respects 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 Closings. Each of the obligations of the
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Companies and the Stockholders required by this Agreement to be performed by
them at or prior to the Closing shall have been duly performed and complied
with in all material respects as of the Closing. At the Closing, UAG shall have
received a certificate, dated the Closing Date and duly executed by the
Stockholders, to the effect that the conditions set forth in the two preceding
sentences have been satisfied.
6.2. AUTHORIZATION; CONSENTS
(a) All corporate action necessary to authorize the execution,
delivery and performance of this Agreement and the Documents, and the
consummation of the transactions contemplated hereby and thereby shall have
been duly and validly taken by the Companies. All filings required to be made
under the H-S-R Act in connection with the transactions contemplated hereby
shall have been made and all applicable waiting periods with respect to each
such filing, including any extensions thereof, shall have expired or been
terminated.
(b) All notices to, and declarations, filings and registrations with,
and consents, authorizations, approvals and waivers from, governmental and
regulatory bodies and third persons (including, but not limited to, Ford Motor
Company 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 STOCKHOLDER' COUNSEL
UAG shall have been furnished with the opinion of counsel for the
Companies and the Stockholders, dated the Closing Date, in form and substance
satisfactory to UAG and its counsel, which opinions shall have been rendered
with respect to those matters generally contained in Sections 2.1, 2.2, 2.3,
2.4, 2.9, 3.1 and 3.2 hereof and which opinions shall be appropriately
qualified. 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
Georgia, Tennessee and Federal laws, as the case may be.
6.4. ABSENCE OF LITIGATION
No order, stay, injunction or decree of any court of competent
jurisdiction in the Untied States shall be in effect (i) that prevents or
delays the consummation of any of the transactions contemplated hereby or (ii)
would impose any limitation on the ability of UAG effectively to exercise full
rights of ownership of the Shares. No action, suit or proceeding
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before any court or any governmental or regulatory entity shall be pending (or
threatened by any governmental or regulatory entity), and no investigation by
any governmental or regulatory entity shall have been commenced (and be
pending), seeking to restrain or prohibit (or questioning the validity or
legality of) the consummation of the transactions contemplated by this
Agreement or seeking damages in connection therewith which UAG, in good faith
and with the advice of counsel, believes makes it undesirable to proceed with
the consummation of the transactions contemplated hereby.
6.5. NO MATERIAL ADVERSE EFFECT
During the period from December 31, 1996 to the Closing Date, there
shall not have been any Material Adverse Effect.
6.6. NET WORTH
On the Closing Date, the Stockholders (at UAG's expense) shall deliver
to UAG a balance sheet of the Companies dated as of the most recent practicable
date preceding the Closing Date, prepared in accordance with the Accounting
Principles (the "Estimated Closing Date Balance Sheets"). The Estimated Closing
Date Balance Sheet shall show as of the date thereof, after taking into account
the payment of any of the fees, costs and expenses by the Companies incurred in
connection with this Agreement, a Net Worth not less than Five Million Dollars
($5,000,000).
6.7. COMPLETION OF DUE DILIGENCE
UAG 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. UAG will pay the costs for a Phase I
environmental audit. If, after obtaining the results of the Phase I
environmental audit, UAG determines that a Phase II environmental audit is
required, then the expenses of performing the Phase II environmental audit
shall be paid one-half by UAG and one-half by the Stockholders; provided,
however, that the Stockholders may elect not to pay any costs of the Phase II
audit but, if the Stockholders elect not to pay one-half of the costs of the
Phase II audit and the results of the Phase II audit conclude that remediation
is recommended, the Stockholders shall pay the entire costs of the Phase II
audit.
6.8. NET INCOME
Coopers & ▇▇▇▇▇▇▇ shall have confirmed to UAG that the Pre-Tax
Earnings of the Companies for the year ending December 31, 1996 is no less than
Four Million Five Hundred Fifty Thousand Dollars ($4,550,000).
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6.9. LEASES
The Companies and the Stockholders shall have entered into the Leases.
6.10. BOARD APPROVAL
The Board of Directors of UAG shall have approved the consummation of
all of the transactions contemplated by this Agreement provided, however, that
this condition shall be deemed waived after April 30, 1997.
6.11. CERTIFICATES
The Stockholders and the Companies shall have furnished UAG 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 with such other certificates of its
officers and others as UAG may reasonably request to evidence compliance with
the conditions set forth in this Article 6.
6.12. LEGAL MATTERS
All certificates, instruments, opinions and other documents required
to be executed or delivered by or on behalf of the Stockholders and the
Companies under the provisions of this Agreement, and all other actions and
proceedings required to be taken by or on behalf of the Stockholders and the
Companies in furtherance of the transactions contemplated hereby, shall be
reasonably satisfactory in form and substance to counsel for UAG.
6.13. APPROVAL OF MANUFACTURERS AND DISTRIBUTORS
The Stockholders and the Companies shall have obtained the consent,
authorization and approval of Ford Motor Company for the transfer of the
Companies to UAG on customary terms no less favorable than those currently
granted by Ford Motor Company to other dealers.
6.14. NONDISTURBANCE AGREEMENTS/ESTOPPEL CERTIFICATES
UAG shall have been provided with nondisturbance agreements and
estoppel certificates in form and substance satisfactory to UAG with respect to
the properties that are the subject of the Leases.
6.15. TITLE INSURANCE
UAG shall have obtained title insurance (at its sole expense) on
behalf of the Companies with respect to the leasehold estates arising out of
the Leases in form and substance satisfactory to UAG.
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6.16. SCHEDULES
The Companies and the Stockholders shall have delivered to UAG all
Schedules referred to herein and such Schedules shall be acceptable in form and
substance to UAG. UAG shall have fifteen (15) Business Days from receipt of the
complete set of Schedules to reject the Schedules, or this condition shall be
deemed satisfied; provided, however, that nothing in this Section shall be
construed as limiting UAG's right to conduct due diligence pursuant to Section
6.7 hereof with respect to any and all matters disclosed on such Schedules.
6.17. LEASE TERMINATION AGREEMENTS/MEMORANDA OF LEASE
The appropriate parties shall have executed lease termination
agreements and memoranda of lease in form and substance satisfactory to UAG.
6.18. RESIGNATION OF THE COMPANIES DIRECTORS.
Each of the persons who is a director of the Companies on the Closing
Date shall have tendered to UAG in writing his or her resignation as such in
form and substance satisfactory to UAG.
6.19. EMPLOYMENT OR CONSULTING AGREEMENTS.
UAG and ▇▇▇▇ shall have entered into an employment or consulting
agreement on terms mutually agreeable to UAG and ▇▇▇▇. UAG and ▇▇▇▇▇▇ shall
have entered into an employment or consulting agreement on terms mutually
agreeable to UAG and ▇▇▇▇▇▇.
ARTICLE 7.
CONDITIONS TO THE OBLIGATIONS OF
THE STOCKHOLDERS TO EFFECT THE CLOSING
The obligations of the Stockholders and the Companies required to be
performed by them at the Closing shall be subject to the satisfaction, at or
prior to the Closing, of each of the following conditions, each of which may be
waived by the Companies and the Stockholders as provided herein except as
otherwise required by applicable law:
7.1. REPRESENTATIONS AND WARRANTIES; AGREEMENTS
Each of the representations and warranties of UAG contained in this
Agreement shall be true and correct on the date made and shall be true and
correct in all material respects as of the Closing. Each of the obligations of
UAG required by this Agreement to be performed by 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
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duly executed by UAG to the effect that the conditions set forth in the
preceding two sentences have been satisfied.
7.2. AUTHORIZATION OF THE AGREEMENT, CONSENTS
(a) All corporate action necessary to authorize the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby shall have been duly and validly taken by UAG.
All filings required to be made under the H-S-R Act in connection with the
transactions contemplated hereby shall have been made and all applicable
waiting periods with respect to each such filing, including extensions thereof,
shall have expired or been terminated.
(b) All notices to, and declarations, filings and registrations with,
and consents, authorizations, approvals and waivers from, governmental and
regulatory bodies and third persons (including, but not limited to, Ford Motor
Company) required to consummate the transactions contemplated hereby and all
consents or waivers shall have been made or obtained.
7.3. OPINIONS OF UAG'S COUNSEL
The Stockholders shall have been furnished with the opinion of ▇▇▇▇▇▇
& ▇▇▇▇▇▇, counsel to UAG, dated the Closing Date, in form and substance
reasonably satisfactory to the Stockholders and their counsel, which opinions,
when taken together, shall have been rendered with respect to those matters
generally contained in Sections 4.1, 4.2 and 4.3 hereof and which opinions
shall be appropriately qualified. In rendering the foregoing opinions, such
counsel may rely as to factual matters upon certificates or other documents
furnished by officers and directors of UAG and by government officials, and
upon such other documents and data as such counsel deems appropriate as a basis
for its opinion. Such opinions may be limited to federal laws and the General
Corporation Law of the State of Delaware.
7.4. ABSENCE OF LITIGATION
No order, stay, judgment or decree shall have been issued by any court
and be in effect restraining or prohibiting the consummation of the
transactions contemplated hereby.
7.5. CERTIFICATES
UAG shall have furnished the Stockholders with such certificates of
its officers and others to evidence compliance with the conditions set forth in
this Article 7 as may be reasonably requested by the Stockholders.
7.6. LEGAL MATTERS
All certificates, instruments, opinions and other documents required
to be executed or delivered by or on behalf of UAG
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under the provisions of this Agreement, and all other actions and proceedings
required to be taken by or on behalf of UAG in furtherance of the transactions
contemplated hereby, shall be reasonably satisfactory in form and substance to
counsel for the Stockholders.
7.7. EMPLOYMENT OR CONSULTING AGREEMENT.
UAG and ▇▇▇▇ shall have entered into an employment or consulting
agreement on terms mutually agreeable to UAG and ▇▇▇▇. UAG and ▇▇▇▇▇▇ shall
have entered into an employment or consulting agreement on terms mutually
agreeable to UAG and ▇▇▇▇▇▇.
7.8. SCHEDULES.
The Stockholders shall have ten (10) Business Days from receipt of the
complete set of Schedules to reject the Schedules, or this condition shall be
deemed satisfied; provided, however, that nothing in this Section shall be
construed as limiting the Stockholders' right to conduct due diligence pursuant
to Section 7.9 hereof.
7.9. DUE DILIGENCE.
The Stockholders shall have completed their financial due diligence of
UAG and the results of such examination shall be satisfactory to the
Stockholders.
7.10. APPROVAL OF MANUFACTURERS AND DISTRIBUTORS
The Stockholders and the Companies shall have obtained the consent,
authorization and approval of Ford Motor Company for the transfer of the
Companies to UAG on customary terms no less favorable than those currently
granted by Ford Motor Company to other dealers.
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 May 15, 1997, or such later date as shall have
been approved by UAG and the Stockholders (provided that the terminating
party is not otherwise in material breach of its representations,
warranties, covenants or agreements under this Agreement);
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(iii) by UAG or the Stockholders if any court of competent
jurisdiction in the United States or other United States governmental body
shall have issued an order, decree or ruling or taken any other action
restraining, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement, and such order, decree, ruling or other
action shall have become final and non-appealable;
(iv) by UAG if any of the conditions specified in Article 6 hereof
have not been met or waived by UAG at such time as such condition is no
longer capable of satisfaction (provided UAG is not otherwise in material
breach of its representations, warranties, covenants or agreements under
this Agreement);
(v) by the Stockholders if any of the conditions specified in Article
7 hereof have not been met or waived by the Stockholders at such time as
such condition is no longer capable of satisfaction (provided that neither
the Stockholders nor the Companies is otherwise in material breach of their
or its representations, warranties covenants or agreements under this
Agreement); or
(vi) by either UAG or the Stockholders if there has been a material
breach on the part of the other of any representation, warranty, covenant
or agreement set forth in this Agreement, which breach has not been cured
(if curable) 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 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. In the event that this Agreement is terminated prior to Closing, no
party shall be liable to any other party for any amount in excess of Fifty
Thousand Dollars ($50,000).
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ARTICLE 9.
INDEMNIFICATION
9.1. INDEMNIFICATION BY THE STOCKHOLDERS
(a) Notwithstanding the Closing or the delivery of the Shares, ▇▇▇▇
and ▇▇▇▇, jointly and severally, indemnify and agree to fully defend, save and
hold harmless on an after-tax basis UAG, the Companies (after Closing), and any
of their respective officers, directors, employees, stockholders, advisors,
representatives, agents and Affiliates (each a "UAG Indemnified Party"), if a
UAG Indemnified Party (including the Companies after the Closing Date) shall at
any time or from time to time suffer any Costs (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 Mize Ford or the conduct of the business of Mize Ford 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 ▇▇▇▇, ▇▇▇▇ or Mize Ford or the
breach of any warranty of ▇▇▇▇, ▇▇▇▇ or Mize Ford 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 ▇▇▇▇, ▇▇▇▇ or Mize Ford (or any of their
representatives) 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 ▇▇▇▇, ▇▇▇▇ or Mize Ford
duly to perform or observe any term, provision, covenant, agreement or
condition on the part of ▇▇▇▇, ▇▇▇▇ or Mize Ford to be performed or observed.
(b) Notwithstanding the Closing or the delivery of the Shares, ▇▇▇▇▇▇
and ▇▇▇▇▇▇▇▇, jointly and severally, indemnify and agree to fully defend, save
and hold harmless on an after-tax basis, the UAG Indemnified Parties, if a UAG
Indemnified Party (including the Companies after the Closing) shall at any time
or from time to time suffer any Costs arising, directly or indirectly, out of
or resulting from, or shall pay or become obligated to pay any sum on account
of, (i) any and all ▇▇▇▇ Events of Breach (as defined below) or (ii) any Claim
before or by any court, arbitrator, panel, agency or other governmental,
administrative or judicial entity, which Claim involves, affects or relates to
any assets, properties or operations of ▇▇▇▇ ▇▇▇▇ or ▇▇▇▇▇▇ ▇▇▇▇ or the conduct
of the business of ▇▇▇▇ ▇▇▇▇ or ▇▇▇▇▇▇ ▇▇▇▇ 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 Arnold, Billings, ▇▇▇▇ ▇▇▇▇
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or ▇▇▇▇▇▇ ▇▇▇▇ or the breach of any warranty of Arnold, Billings, ▇▇▇▇ ▇▇▇▇ or
▇▇▇▇▇▇ ▇▇▇▇ 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
Arnold, Billings, ▇▇▇▇ ▇▇▇▇ or ▇▇▇▇▇▇ ▇▇▇▇ (or any of their representatives) 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 Arnold, Billings, ▇▇▇▇ ▇▇▇▇ or ▇▇▇▇▇▇ ▇▇▇▇ duly to perform or
observe any term, provision, covenant, agreement or condition on the part of
Arnold, Billings, ▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇ 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 the breach of any
warranty of UAG contained in this Agreement, including, without limitation, any
misrepresentation in, or omission from, any statement, certificate, schedule,
exhibit, annex or other document furnished pursuant to this Agreement by UAG
(or any representative of UAG) to the Stockholders (or any representative of
the 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 or ▇▇▇▇ Event of Breach occurs or is
alleged and a UAG Indemnified Party asserts that any of the Stockholders have
become obligated to a UAG Indemnified Party pursuant to Section 9.1, or if any
▇▇▇▇ Third Party Claim or ▇▇▇▇ 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
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UAG has become obligated to a Stockholder Indemnified Party pursuant to Section
9.2, or if any UAG Third Party Claim is begun, made or instituted as a result
of which UAG may become obligated to a Stockholder Indemnified Party hereunder
(for purposes of this Article 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 ▇▇▇▇ Third Party Claim and any ▇▇▇▇ 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
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Indemnified Party which, if successful, could materially interfere with the
business, operations, assets, condition (financial or otherwise) or prospects
of the Indemnified Party.
9.4. OFFSET
In addition to and not in limitation of all rights of offset that an
Indemnified Party may have under applicable law, the parties agree that, at any
Indemnified Party's option, any or all amounts owing to such Indemnified Party
under this Article 9 or any other provision of this Agreement (excluding any
employment or consulting agreements and the Leases), may be recovered by the
Indemnified Party by an offset against any or all amounts due to such other
parties pursuant to this Agreement.
9.5. REMEDIES
The rights of an Indemnified Party under this Article 9 are in
addition to such other equitable rights and remedies which such Indemnified
Party may have under this Agreement, applicable law or otherwise.
9.6. DEFINITIONS
For purposes of this Article 9 "Costs" shall mean all liabilities,
losses, costs, damages (not including consequential damages), expenses, claims,
attorneys' fees, experts' fees, consultants' fees, and disbursements of any
kind or of any nature whatsoever. For purposes of application of the indemnity
provisions of this Article 9, the amount of any Cost arising from the breach of
any representation, warranty, covenant or agreement shall be the entire amount
of any Cost suffered, paid or required to be paid by the respective Indemnified
Party as a result of such breach.
9.7. LIMITATION ON INDEMNIFICATION.
(a) Indemnification by the Stockholders.
(i) UAG Indemnified Party shall be entitled to indemnification in
connection with a ▇▇▇▇ Event of Breach only if the aggregate Costs incurred
or sustained by all UAG Indemnified Parties in connection with all ▇▇▇▇
Events of Breach exceed the applicable Basket; 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, 2.4(a), 2.4(b)(i), 3.1 and 10.2 hereof or arising out of an
act of fraud by Mize, Dyer, or Mize Ford.
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(ii) A UAG Indemnified Party shall be entitled to indemnification in
connection with a ▇▇▇▇ Event of Breach only if the aggregate Costs incurred
or sustained by all UAG Indemnified Parties in connection with all ▇▇▇▇
Events of Breach exceed the applicable Basket; 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, 2.4(a), 2.4(b)(i), 3.1 and 10.2 hereof or arising out of an
act of fraud by Arnold, Billings, ▇▇▇▇ ▇▇▇▇ or ▇▇▇▇▇▇ ▇▇▇▇.
(iii) The aggregate Costs for which the Stockholders shall be
obligated to indemnify the UAG Indemnified Parties shall not exceed the
applicable Cap in the case of Costs incurred or sustained by all UAG
Indemnified Parties in connection with a ▇▇▇▇ Event of Breach or a ▇▇▇▇
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, 2.4(a), 2.4(b)(i), 2.8, 2.11, and 3.1 hereof or arising out
of an act of fraud by the Stockholders.
(iv) The "Basket" shall mean in the aggregate Two Hundred Fifty
Thousand Dollars ($250,000) and the "Cap" shall mean in the aggregate Seven
Million Five Hundred Thousand Dollars ($7,500,000). In each instance where
either the Basket or the Cap is applied, the Basket or the Cap, as the case
may be, shall be allocated to each Stockholder in accordance with the
percentage interests set forth on Schedule 1.2(a).
(b) Indemnification by UAG.
(i) A Stockholder Indemnified Party shall be entitled to
indemnification in connection with a UAG Event of Breach only if 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 or Section 4.3 or arising out of any act
of fraud by UAG.
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(ii) The aggregate Costs for which UAG shall be obligated to indemnify
the Stockholder Indemnified Parties shall not exceed Seven Million Five
Hundred Thousand Dollars ($7,500,000) in the case of Costs incurred or
sustained by all Stockholder Indemnified Parties in connection with a UAG
Event of Breach; provided, however, that a Stockholder Indemnified Party
shall be entitled to indemnification for all Costs incurred or sustained by
such Stockholder Indemnified Party as a result of any untruth or inaccuracy
in, or breach of, a representation, warranty or covenant (or failure to
perform or observe any term, agreement or condition) contained in Article 1
or Sections 4.3 hereof or arising out of an act of fraud by UAG.
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.
(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 2.8 and 2.11 hereof,
which shall survive the Closing Date for a period terminating on the later of
(y) the date five years after the Closing Date and (z) with respect to any
claim asserted with respect to any breach of such representations or warranties
pursuant to Section 9.3 hereof before the expiration of such representations or
warranties, on the date such claim is finally liquidated or otherwise resolved.
Notwithstanding the above, the representations and warranties in Section 2.3
and 3.1 hereof and any breach of a representation or warranty arising out of an
act of fraud shall not be limited by the provisions hereof.
10.2. FEES AND EXPENSES
Except as otherwise expressly provided in this Agreement, all legal
and other fees, costs and expenses incurred in connection with this Agreement
and the transactions contemplated
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hereby through the Closing Date shall be paid by the party incurring such fees,
costs or expenses; provided, however, that if the Closing does not occur and
Section 5.6 hereof is breached, then the Stockholders or the Companies shall
pay to UAG, within five (5) Business Days after receipt of a request therefor,
an amount equal to all of the legal and other fees, costs and expenses incurred
by UAG in connection with this Agreement and the transactions contemplated
hereby. Notwithstanding the above, UAG agrees to pay $30,000 of the fees, costs
and expenses incurred by the Stockholders in connection with the transaction
contemplated herein.
10.3. HEADINGS
The section headings herein are for convenience of reference only, do
not constitute part of this Agreement and shall not be deemed to limit or
otherwise affect any of the provisions hereof.
10.4. NOTICES
All notices or other communications required or permitted hereunder
shall be given in writing and shall be deemed sufficient if delivered by hand,
recognized overnight delivery service for next business day delivery or
facsimile transmission (with original to follow by mail) or mailed by
registered or certified mail, postage prepaid (return receipt requested), as
follows:
If to the Companies before the Closing Date:
▇▇▇▇▇▇▇ ▇▇▇▇ Ford, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
with a copy to:
▇▇▇▇ ▇▇▇▇, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇
If to the Companies after the Closing Date (in addition to the
foregoing addresses):
United Auto Group, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Executive Vice President
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with a copy to:
▇▇▇▇▇▇ & Hardin
2700 International Tower
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Esq.
If to the Stockholders:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇
c/o ▇▇▇▇ ▇▇▇▇ Buford
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Lowndes, Drosdick, ▇▇▇▇▇▇
▇▇▇▇▇▇ & ▇▇▇▇, P.A.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
and a copy to:
▇▇▇▇ ▇. ▇▇▇▇▇
Spears, Moore, Rebman, & ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
If to UAG:
United Auto Group, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Executive Vice President
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with a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇
2700 International Tower
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, 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 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.
10.7. WAIVER AND AMENDMENTS
Each of the Stockholders and the Companies as one party, and UAG as
the other party may by written notice to the other parties (i) extend the time
for the performance of any of the obligations or other actions of the other
parties, (ii) waive any inaccuracies in the representations or warranties of
the other parties contained in this Agreement, (iii) waive compliance
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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 Company Accounting Principles.
10.10. SEVERABILITY
If any one or more of the provisions of this Agreement shall be held
to be invalid, illegal or unenforceable, the validity, legality or
enforceability of the remaining provisions of this Agreement shall not be
affected thereby. To the extent permitted by applicable law, each party waives
any provision of law which renders any provision of this Agreement invalid,
illegal or unenforceable in any respect.
10.11. GOVERNING LAW
This Agreement shall be governed by and construed in accordance the
laws of the State of Delaware without giving effect to any choice or conflict
of law provision or rule that would cause the laws of any other jurisdiction to
apply.
10.12. TIME IS OF THE ESSENCE
Time is of the essence for purposes of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
UNITED AUTO GROUP, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Executive Vice President
[Remainder of page left intentionally blank]
[Signatures continued on following]
▇▇▇▇▇▇▇ ▇▇▇▇ FORD, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
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Its: President
▇▇▇▇ ▇▇▇▇, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
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Its: President
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, INC. D/B/A
▇▇▇▇ ▇▇▇▇ MERCURY
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
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Its: President
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
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/s/ ▇▇▇▇▇ ▇. ▇▇▇▇
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/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇ FORD, INC.
By:
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Its:
▇▇▇▇ ▇▇▇▇, INC.
By:
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Its:
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, INC. D/B/A
▇▇▇▇ ▇▇▇▇ MERCURY
By:
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Its:
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇
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