STOCK PURCHASE AGREEMENT
DATED FEBRUARY 19, 1997
AMONG
UNITED AUTO GROUP, INC.
UAG EAST, INC.
AND
AMITY AUTO PLAZA LTD., D/B/A AMITY TOYOTA SUPERSTORE
MASSAPEQUA IMPORTS LTD., D/B/A LEXUS OF MASSAPEQUA
WESTBURY NISSAN LTD., D/B/A WESTBURY NISSAN SUPERSTORE
WESTBURY SUPERSTORE LTD., D/B/A WESTBURY TOYOTA
J&S AUTO REFINISHING LTD., D/B/A PREMIER AUTO BODY
FLORIDA CHRYSLER PLYMOUTH JEEP EAGLE INC.
PALM AUTO PLAZA INC., D/B/A PALM BEACH TOYOTA
WEST PALM INFINITI INC.
WEST PALM NISSAN INC.
NORTHLAKE AUTO FINISH INC., D/B/A TRAIL AUTO BODY
AND
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
TABLE OF CONTENTS
Page
----
ARTICLE 1. PURCHASE AND SALE OF SHARES....................................2
1.1 Certain Definitions.......................................2
1.2 Purchase and Sale of the Shares...........................4
1.3 Net Worth Adjustment......................................7
1.4 New Facility..............................................9
1.5 Stock Price Adjustment....................................11
1.6 Escrow Deposit............................................11
1.7 Additional Purchase Price.................................12
1.8 Contingent Payment........................................12
1.9 Effective Date............................................12
ARTICLE 2. REPRESENTATIONS AND WARRANTIES OF THE
COMPANIES AND THE STOCKHOLDERS..........................13
2.1 Organization and Good Standing............................13
2.2 Subsidiaries..............................................13
2.3 Capitalization............................................13
2.4 Authority; Approvals and Consents.........................14
2.5 Financial Statements......................................15
2.6 Absence of Undisclosed Liabilities........................16
2.7 Absence of Material Adverse Effect; Conduct of Business...16
2.8 Taxes.....................................................18
2.9 Legal Matters.............................................19
2.10
Property..................................................20
2.11 Environmental Matters.....................................20
2.12
Inventories...............................................23
2.13 Accounts Receivable.......................................23
2.14
Insurance.................................................23
2.15 Contracts; etc............................................23
2.16 Labor Relations...........................................24
2.17 Employee Benefit Plans....................................25
2.18 Other Benefit and Compensation Plans or Arrangements......28
2.19 Transactions with Insiders................................29
2.20 Propriety of Past Payments................................30
2.21 Interest in Competitors...................................30
2.22 Brokers...................................................30
2.23 Accounts..................................................31
2.24 Disclosure................................................31
2.25 Net Worth.................................................31
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS.............31
3.1 Ownership of Shares; Title................................31
3.2 Authority.................................................31
3.3 Real Property and Improvements............................32
3.4 Investment Intent.........................................33
3.5 Qualification of Stockholders.............................33
(i)
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF UAG..........................33
4.1 Organization and Good Standing............................34
4.2 Subsidiaries..............................................34
4.3 Capitalization............................................34
4.4 SEC Filings...............................................35
4.5 Authority; Approvals and Consents.........................35
4.6 Financial Statements......................................36
4.7 Taxes.....................................................37
4.8 Absence of Undisclosed Liabilities........................37
4.9 Legal Matters.............................................37
4.10 Disclosure................................................38
4.11 Absence of Material Adverse Effect; Conduct of Business...38
4.12
Insurance.................................................39
4.13 Labor Relations...........................................40
4.14 Contracts; Etc............................................41
4.15 Brokers...................................................41
4.16 Propriety of Past Payments................................41
4.17 Environmental Matters.....................................42
4.18 Employee Benefit Plans....................................42
ARTICLE 5. COVENANTS AND ADDITIONAL AGREEMENTS............................42
5.1 Access; Confidentiality...................................42
5.2 Furnishing Information; Announcements.....................43
5.3 Antitrust Improvements Act Compliance.....................43
5.4 Certain Changes and Conduct of Business of the Companies..44
5.5 No Intercompany Payables or Receivables...................48
5.6 Negotiations..............................................48
5.7 Consents; Cooperation.....................................48
5.8 Additional Agreements.....................................49
5.9 Interim Financial Statements..............................49
5.10 Notification of Certain Matters...........................49
5.11 Assurance by the Stockholders.............................50
5.12 Personal Guarantees.......................................50
5.13 Non-Interference..........................................50
5.14 Environmental Audits......................................51
5.15 Access to Records.........................................51
5.16 Nissan, Primus and World Omni Mortgages...................51
5.17 Certain Changes and Conduct of Business of UAG............52
5.18 1996 Financial Statements.................................53
ARTICLE 6. CONDITIONS TO THE OBLIGATIONS OF UAG AND SUB TO EFFECT THE
CLOSING.................................................53
6.1 Representations and Warranties; Agreements; Covenants.....53
6.2 Authorization; Consents...................................54
6.3 Opinions of the Companies' and the Stockholders' Counsel..54
6.4 Absence of Litigation.....................................54
6.5 No Material Adverse Effect................................55
6.6 Net Worth.................................................55
(ii)
6.7 Completion of Due Diligence...............................55
6.8 Net Income................................................55
6.9 Leases....................................................55
6.10 Board Approval............................................55
6.11 Certificates..............................................55
6.12 Legal Matters.............................................56
6.13 Approval of Manufacturers and Distributors................56
6.14 Nondisturbance Agreements/Estoppel Certificates...........56
6.15 Title Insurance...........................................56
6.16 Schedules.................................................56
6.17 Lease Termination Agreements/Memoranda of Lease...........56
6.18 Resignation of the Companies' Directors...................57
6.19 Employment Agreement......................................57
ARTICLE 7. CONDITIONS TO THE OBLIGATIONS OF THE STOCKHOLDERS TO
EFFECT THE CLOSING......................................57
7.1 Representations and Warranties; Agreements................57
7.2 Authorization of the Agreement, Consents..................57
7.3 Opinions of UAG's and Sub's Counsel.......................58
7.4 Absence of Litigation.....................................58
7.5 Certificates..............................................58
7.6 Legal Matters.............................................58
7.7 Registration Rights Agreement.............................59
7.8 Schedules.................................................59
7.9 Leases....................................................59
7.10 No Material Adverse Effect................................59
7.11 Employment Agreement......................................59
ARTICLE 8. TERMINATION....................................................59
8.1 Termination...............................................59
8.2 Effect of Termination.....................................60
ARTICLE 9. INDEMNIFICATION................................................60
9.1 Indemnification by the Stockholders.......................60
9.2 Indemnification by UAG....................................61
9.3 Procedures................................................62
9.4 Remedies..................................................63
9.5 Definitions...............................................63
9.6 Limitation on Indemnification.............................63
ARTICLE 10. MISCELLANEOUS.................................................65
10.1 Survival of Provisions....................................65
10.2 Fees and Expenses.........................................66
10.3 Headings..................................................66
10.4 Notices...................................................66
10.5 Assignment................................................68
10.6 Entire Agreement..........................................68
10.7 Waiver and Amendments.....................................68
10.8 Counterparts..............................................68
10.9 Accounting Terms..........................................69
10.10 Schedules.................................................69
10.11 Severability..............................................69
(iii)
10.12 Remedies..................................................69
10.13 Governing Law.............................................69
10.14 Time is of the Essence....................................69
(iv)
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT, dated February 19, 1997, is by and
among United Auto Group, Inc., a Delaware corporation ("UAG"), UAG East, Inc.,
a Delaware corporation ("UAG East" or "Sub"), Amity Auto Plaza Ltd., d/b/a
Amity Toyota Superstore, a New York corporation ("Amity Toyota"), Massapequa
Imports Ltd., d/b/a Lexus of Massapequa, a New York corporation ("Massapequa
Lexus"), Westbury Nissan Ltd., d/b/a Westbury Nissan Superstore, a New York
corporation ("Westbury Nissan"), Westbury Superstore Ltd., d/b/a Westbury
Toyota, a New York corporation ("Westbury Toyota"), J&S Auto Refinishing Ltd.,
d/b/a Premier Auto Body, a New York corporation ("Premier"), Florida Chrysler
Plymouth Jeep Eagle Inc., a Florida corporation ("Florida CP"), Palm Auto Plaza
Inc., d/b/a Palm Beach Toyota, a Florida corporation ("West Palm Toyota"), West
Palm Infiniti Inc., a Florida corporation ("West Palm Infiniti"), West Palm
Nissan Inc., a Florida corporation ("West Palm Nissan"), Northlake Auto Finish
Inc., d/b/a Trail Auto Body, a Florida corporation ("Trail," and, together with
Amity Toyota, Massapequa Lexus, Westbury Nissan, Westbury Toyota, Premier,
Florida CP, West Palm Toyota, West Palm Infiniti and West Palm Nissan, the
"Companies"), ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ("▇▇. ▇▇▇▇▇▇▇▇") and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
(together with ▇▇. ▇▇▇▇▇▇▇▇, the "Stockholders").
W I T N E S S E T H:
WHEREAS, UAG East is a wholly-owned subsidiary of UAG;
WHEREAS, the Companies operate franchise automobile dealerships and
related businesses in ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇;
WHEREAS, the Stockholders own all of the issued and outstanding shares
of the capital stock of the Companies (the "Shares");
WHEREAS, UAG East desires to purchase the Shares from the
Stockholders, and the Stockholders desire to sell the Shares to UAG East (in
each case upon the terms and subject to the conditions set forth in this
Agreement), such that immediately after giving effect to such purchase and
sale, UAG East will own one hundred percent (100%) of the issued and
outstanding shares of the capital stock of the Companies, on a fully diluted
basis;
NOW, THEREFORE, in consideration of the mutual terms, conditions and
other agreements set forth herein, the parties hereto hereby agree as follows:
ARTICLE 1.
ARTICLE 2. PURCHASE AND SALE OF SHARES
1.1. CERTAIN DEFINITIONS.
As used in this Agreement, the following terms shall have the
following meanings:
(a) "Affiliate" of a specified Person shall mean a Person that
directly or indirectly, through one or more intermediaries, controls, or is
controlled by, or is under common control with, the Person specified, and in
the case of a specified Person who is a natural person, his spouse, his issue,
his parents, his estate and any trust entirely for the benefit of his spouse
and/or issue.
(b) "Business Day" shall mean any day excluding Saturday, Sunday and
any day which is a legal holiday under Federal law.
(c) "Closing Date" shall have the meaning ascribed to it in Section
1.2(b).
(d) "Documents" shall mean the Post-Closing Escrow Agreement, the
Escrow Agreement, the Piggyback Registration Rights Agreement and the Leases.
(e) "Effective Date" shall have the meaning ascribed to it in Section
1.9 hereof.
(f) "Environmental Laws" shall mean all applicable requirements of
environmental, public or employee health and safety, public or community
right-to-know, ecological or natural resource laws or regulations or controls,
including all applicable requirements imposed by any law (including, without
limitation, common law), rule, order, or regulations of any federal, state, or
local executive, legislative, judicial, regulatory, or administrative agency,
board, or authority, or any applicable private agreement (such as covenants,
conditions and restrictions), which relate to, (i) noise, (ii) pollution or
protection of the air, surface water, groundwater, or soil, (iii) solid,
gaseous, or liquid waste generation, treatment, storage, disposal or
transportation, (iv) exposure to Hazardous Materials (as defined below), or (v)
regulation of the manufacture, processing, distribution and commerce, use, or
storage of Hazardous Materials.
(g) "Environmental Permits" shall mean all permits, licenses,
approvals, authorizations, consents or registrations required under applicable
Environmental Laws in connection with the ownership, use and/or operation of
the Companies' businesses or the Real Property or Improvements.
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(h) "Escrow Agent" shall mean ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Syracuse &
Hirschtritt LLP.
(i) "Escrow Deposit" shall have the meaning ascribed to it in Section
1.6.
(j) "GAAP" shall mean generally accepted accounting principles which
are in effect in the United States on the Closing Date.
(k) "Hazardous Materials" shall mean, collectively, (i) those
substances included within the definitions of or identified as "hazardous
chemicals," "hazardous waste," "hazardous substances," "hazardous materials,"
"toxic substances" or similar terms in or pursuant to, without limitation, the
Comprehensive Environmental Response Compensation and Liability Act of 1980 (42
U.S.C. 9601 et seq.) ("CERCLA"), as amended by Superfund Amendments and
Reauthorization Act of 1986 (Pub. L. 99-499, 100 State, 1613), the Resource
Conservation and Recovery Act of 1976 (42 U.S.C. ss. 6901 et seq.) ("RCRA"),
the Occupational Safety and Health Act of 1970 (29 U.S.C. ss. 651 et seq.)
("OSHA"), and the Hazardous Materials Transportation Act, 49 U.S.C. ss. 1801 et
seq. ("HMTA"), and in the regulations promulgated pursuant to such laws, all as
amended, (ii) those substances listed in the United States Department of
Transportation Table (49 CFR 172.101 and amendments thereto) or by the
Environmental Protection Agency (or any successor agency) as hazardous
substances (40 CFR part 302 and amendments thereto), (iii) any material, waste
or substance which is or contains (A) petroleum, including crude oil or any
fraction thereof, natural gas, or synthetic gas usable for fuel or any mixture
thereof, (B) asbestos, (C) polychlorinated biphenyls, (D) designated as a
"hazardous substance" pursuant to Section 311 of the Clean Water Act, 33 U.S.C.
ss. 1251 et seq. (33 U.S.C. ss. 1321) or listed pursuant to Section 307 of the
Clean Water Act (33 U.S.C. ss. 1317), (E) flammable explosives, (F) radioactive
materials, and (iv) such other substances, materials and wastes which are or
become regulated or classified as hazardous, toxic or as "special wastes" under
any Environmental Laws.
(l) "Knowledge" shall mean, with respect to the Stockholders, that
either of the Stockholders knows of the particular matter referred to; with
respect to the Companies, that any person responsible for overseeing the day to
day operations of any of the Companies or any general manager, executive
manager, service manager, office manager (or any person with similar such
responsibilities regardless of title) knows of the particular matter referred
to; and, with respect to UAG, that the President or any Vice-President of UAG
knows of the particular matter referred to.
(m) "Leases" shall have the meaning ascribed to it in Section
1.2(c)(v).
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(n) "Liens" shall mean any mortgages, pledges, title defects or
objections, liens, claims, security interests, conditional and installment sale
agreements, encumbrances or similar charges.
(o) "Material Adverse Effect" shall mean any change in, or effect on,
any of the Companies (including the businesses thereof) which is, or might be,
materially adverse to the business, operations, assets, condition (financial or
otherwise) or prospects of such Company when taken as a whole.
(p) "November 30 Balance Sheets" shall have the meaning ascribed to it
in Section 2.5.
(q) "Person" shall mean and include an individual, corporation,
partnership, limited liability company, joint venture, association, trust, any
other incorporated or unincorporated organization or entity and a governmental
entity or any department or agency thereto.
(r) "Remedial Action" shall mean any action required to (i) clean up,
remove or treat Hazardous Materials, (ii) prevent a release or threat of
release of any Hazardous Material, (iii) perform pre-remedial studies,
investigations or post-remedial monitoring and care, (iv) cure a violation of
Environmental Law or (v) take corrective action under sections 3004(u), 3004(v)
or 3008(h) of RCRA or analogous state law.
(s) "Piggyback Registration Rights Agreement" shall have the meaning
ascribed to it in Section 1.2(c)(vi).
(t) "Pre-Tax Earnings" shall mean net earnings (or losses), before
taxes, computed in accordance with GAAP.
(u) "UAG Common Stock" shall mean the shares of common stock, par
value $.0001 per share of UAG.
(v) "UAG Market Value" shall mean the arithmetic average of the daily
closing price per share of UAG Common Stock, rounded to four decimal places, as
reported on the New York Stock Exchange Composite Tape for each of the twenty
(20) consecutive trading days ending (and including) the trading day that
occurs one trading day prior to the date on which the UAG Market Value is to be
determined.
1.2. PURCHASE AND SALE OF THE SHARES.
(a) Purchase and Sale. Upon the terms and subject to the conditions
set forth in this Agreement, the Stockholders shall sell to UAG East, and UAG
East shall purchase from the Stockholders, the Shares for an aggregate purchase
price (the "Purchase Price") equal to (i) Twenty-Five Million Dollars
($25,000,000) in cash less the amount of any distributions (the
"Distributions") made by the Companies to the Stockholders from
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November 30, 1996 until the Closing Date (other than distributions of net
income attributable to periods after November 30, 1996 or distributions
attributable to periods prior to November 30, 1996 which are reflected on the
November 30 Balance Sheets) (the "Base Price"), which Base Price is subject to
adjustment after Closing as provided in Sections 1.3, 1.7 and 1.8 below; (ii)
promissory notes in substantially the form attached hereto as Exhibit A (the
"Three Year Notes") issued by UAG in the aggregate principal amount of Twelve
Million Five Hundred Thousand Dollars ($12,500,000) with interest only payable
quarterly at the rate of six and one-half percent (6.5%) per annum, maturing on
the third anniversary of the Closing Date; (iii) promissory notes in
substantially the form attached hereto as Exhibit B (together with the Three
Year Notes, the "Notes") issued by UAG in the aggregate principal amount of
Twelve Million Five Hundred Thousand Dollars ($12,500,000) with interest only
payable quarterly at the rate of six and one-half percent (6.5%) per annum,
maturing on the sixth anniversary of the Closing Date; and (iv) One Hundred
Twenty-Seven Thousand Six Hundred Sixty (127,660) shares of UAG Common Stock
(the "UAG Shares") bearing the restrictive legend customarily placed on
securities that have not been registered under applicable federal and state
securities laws, which shares shall be deposited in escrow pursuant to Section
1.2(c) below. At the Closing referred to in Section 1.2(b) hereof:
(i) the Stockholders shall sell, assign, transfer and deliver to
Sub the Shares representing 100% of the issued and outstanding capital
stock of the Companies and deliver the certificates representing such
Shares accompanied by stock powers duly executed in blank; and
(ii) Sub shall accept and purchase the Shares from the
Stockholders and in payment therefor shall (A) deliver to the
Stockholders immediately available funds in an aggregate amount equal
to the Base Price (less the Escrow Deposit) by wire transfer to an
account designated in writing by the Stockholders or by certified
funds; (B) deliver to the Stockholders the Notes; and (C) deliver to
the Escrow Agent certificates representing the UAG Shares bearing the
restrictive legend customarily placed on securities that have not been
registered under applicable federal or state securities laws.
(b) Closing. Subject to the conditions set forth in this Agreement,
the purchase and sale of the Shares pursuant to this Agreement (the "Closing")
shall take place as soon as practicable following the date on which all
conditions to the obligations of the parties hereunder (other than those
requiring an exchange of certificates, opinions or other documents, or the
taking of other action, at the Closing) have been satisfied or
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waived but no later than April 30, 1997. The date on which the Closing occurs
is herein referred to as the "Closing Date".
(c) Deliveries at the Closing. Subject to the conditions set forth in
this Agreement, at the Closing:
(i) the Stockholders shall deliver to Sub certificates
representing the Shares accompanied by stock powers as required by
Section 1.2(a)(i) hereof, and any other documents that are necessary
to transfer to Sub good title to all the Shares, and (B) all opinions,
certificates and other instruments and documents required to be
delivered by the Stockholders or the Companies at or prior to the
Closing or otherwise required in connection herewith;
(ii) the Sub shall (A) pay to the Stockholders funds as required
by Section 1.2(a)(ii) hereof; (B) deliver to the Stockholders the
Notes; and (C) deliver to the Stockholders all opinions, certificates
and other instruments and documents required to be delivered by UAG or
Sub at or prior to the Closing or otherwise required in connection
herewith;
(iii) UAG and ▇▇. ▇▇▇▇▇▇▇▇ shall enter into the Post-Closing
Escrow Agreement substantially in the form attached hereto as Exhibit
C (the "Post Closing Escrow Agreement"), and UAG shall deliver to the
Escrow Agent certificates representing the UAG Shares issued in the
name of ▇▇. ▇▇▇▇▇▇▇▇ which shares shall be held and distributed
pursuant to the terms of the Post-Closing Escrow Agreement;
(iv) The Companies (other than Westbury Toyota) and the owner of
the property on which each such Company conducts its business (each a
"Landlord" and collectively the "Landlords") shall enter into a lease
for the real property on which such Company operates in a form
mutually acceptable to the parties (each a "Lease" and collectively
the "Leases"), such form to be agreed to by the parties within twenty
(20) days of the date of this Agreement. Each Lease shall be for a
twenty (20) year term and the lessee shall have the option to renew
the lease for two additional five year terms. Each Lease shall be a
triple net lease and the initial base monthly rent for each Lease
shall be as set forth on Schedule 1.2. Each lease with ▇▇. ▇▇▇▇▇▇▇▇ or
any entity in which he has an ownership or control position shall
contain a provision whereby at the applicable Company's option,
exercisable within six (6) months after the Closing Date, the Company
may have an appraisal of the real property conducted and if the
appraisal reflects that the initial base monthly rent is greater than
one-twelfth (1/12) of the
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appraised fair market value of the property multiplied by a 10.75%
capitalization rate ("Cap Rate") then no adjustments shall be made to
the lease rate for the CPI Increase (as hereinafter defined) until
from and after the initial lease rate is equal to or exceeds the fair
market value lease rate (but in no event until three (3) years after
the Closing Date); provided, however, the Landlord under the affected
lease shall have the right to then obtain its own appraisal within two
(2) months thereafter and if the parties cannot agree on the fair
market value lease rate, the two appraisers shall select a third
appraiser to determine the fair market lease rate within two (2)
months after Landlord's appraisal. All appraisers must be independent
and MAI certified with a minimum of ten (10) years' experience. ▇▇.
▇▇▇▇▇▇▇▇ represents and warrants that the initial lease rates do not
exceed the fair market lease rate for such property as determined by
taking into account the property's fair market value and a lease rate
of return not to exceed the Cap Rate. Subject to the foregoing, on the
third anniversary of the Closing Date and every three years
thereafter, the lease rate for each Lease shall increase to an amount
equal to the rate then in effect plus an amount equal to a percentage
of the rate then in effect, which percentage shall be equal to two
hundred percent (200%) of the percentage increase in the Consumer
Price Index published from time to time by the United States
Department of Labor ("CPI") for the metropolitan area in which such
Company operates from the time of the last adjustment; provided,
however, that such increase shall not exceed eight and one-half
percent (8.5%) for each three (3) year period ("CPI Increase"). UAG
shall guarantee the payment under and performance of the lessees under
the Leases; and
(v) UAG and ▇▇. ▇▇▇▇▇▇▇▇ shall enter into a registration rights
agreement in the form attached hereto as Exhibit D (the "Piggyback
Registration Rights Agreement").
1.3. NET WORTH ADJUSTMENT.
(a) On the Closing Date, or as soon as practicable after the Closing
Date, the Stockholders shall deliver to UAG balance sheets of the Companies
dated as of the Closing Date (such balance sheets so delivered are referred to
herein as the "Closing Date Balance Sheets"). The Closing Date Balance Sheets
shall be prepared in good faith on the same basis and in accordance with the
accounting principles, methods and practices used in preparing the November 30
Balance Sheets (as defined in Section 2.5 hereof) (such accounting principles,
methods and practices and such procedures, are referred to herein as the
"Accounting Principles"). In connection with the preparation of
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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") as
may be selected by UAG shall audit or otherwise review the Closing Date Balance
Sheets in such manner as UAG and the Reviewer deem appropriate, and (ii) UAG
shall deliver such reviewed balance sheet (the "Reviewed Balance Sheets"),
together with the Reviewer's report thereon, to the Stockholders. The Reviewed
Balance Sheets (i) shall be prepared on the same basis and in accordance with
the Accounting Principles and (ii) shall include a schedule showing the
computation of the Final Net Worth (as defined in Section 1.3(g)(i) hereof),
computed in accordance with the definition of Net Worth set forth in Section
1.3(g)(ii) hereof. UAG and the Reviewer shall have the opportunity to consult
with the Stockholders, the Companies and each of the accountants and other
representatives of the Stockholders and the Companies and to examine the work
papers, schedules and other documents prepared by the Stockholders, the
Companies and each of such accountants and other representatives during the
preparation of the Closing Date Balance Sheets. The Stockholders and the
Stockholders' independent public accountants shall have the opportunity to
consult with the Reviewer and to examine the work papers, schedules and other
documents prepared by the Reviewer during the preparation of the Reviewed
Balance Sheets.
(c) The Stockholders shall have a period of forty-five (45) days after
delivery of the Reviewed Balance Sheets to present in writing to UAG all
objections the Stockholders may have to any of the matters set forth or
reflected therein, which objections shall be set forth in reasonable detail. If
no objections are raised within such 45-day period, the Reviewed Balance Sheets
shall be deemed accepted and approved by the Stockholders and a supplemental
closing (the "Supplemental Closing") shall take place within five (5) Business
Days following the expiration of such 45-day period, or on such other date as
may be mutually agreed upon in writing by UAG and the Stockholders.
(d) If the Stockholders shall raise any objection within such 45-day
period, UAG and the Stockholders shall attempt to resolve the matter or matters
in dispute and, if resolved, the Supplemental Closing shall take place within
five (5) Business Days following such resolution.
(e) If such dispute cannot be resolved by UAG and the Stockholders
within sixty (60) days after the delivery of the Reviewed Balance Sheets, then
the specific matters in dispute shall be submitted to a firm of independent
public accountants mutually acceptable to UAG and the Stockholders, which firm
shall
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make a final and binding determination as to such matter or matters. Such
accounting firm shall send its written determination to UAG and the
Stockholders and the Supplemental Closing, if any, shall take place five (5)
Business Days following the receipt of such determination by UAG and the
Stockholders. The fees and expenses of the accounting firm referred to in this
Section 1.3(e) shall be paid one-half by UAG and one-half by the Stockholders.
(f) UAG and the Stockholders agree to cooperate with each other and
each other's authorized representatives and with any accounting firm selected
by UAG and the Stockholders pursuant to Section 1.3(e) hereof in order that any
and all matters in dispute shall be resolved as soon as practicable.
(g) (i) If the aggregate Net Worth as shown on the Reviewed Balance
Sheets as finally determined through the operation of Sections 1.3 (a) through
(e) hereof plus the amount of the Distributions (such amount being referred to
herein as the "Final Net Worth") shall be less than the Net Worth of the
Companies as set forth on the November 30 Balance Sheets (which balance sheets
are attached hereto as Schedule 2.5) (the amount of any such deficiency being
referred to herein as the "Net Worth Deficiency"), the Stockholders shall pay
to UAG at the Supplemental Closing, by wire transfer of immediately available
funds to an account designated in writing by UAG at least two (2) Business Days
prior to the date of the Supplemental Closing, an amount equal to the Net Worth
Deficiency.
(ii) "Net Worth", computed in connection with the Closing Date
Balance Sheets, the Company Balance Sheets and the Reviewed Balance
Sheets, shall mean the amount by which the total assets (not including
intangible assets) exceed the total liabilities reflected, in each
case, on the balance sheets of Companies comprising the Closing Date
Balance Sheets, the Company Balance Sheets or the Reviewed Balance
Sheets, as the case may be.
1.4. NEW FACILITY.
(a) ▇▇. ▇▇▇▇▇▇▇▇ or an Affiliate is the owner of a parcel of land
located on Military Trail, West Palm Beach (the "West Palm Parcel") and is in
the process of developing a new facility on such land for use by West Palm
Toyota (the "New Facility"). The New Facility is to be developed pursuant to
plans and specifications to be agreed upon by the parties, which plans and
specifications shall include a breakdown of all hard and soft costs together
with the maximum total cost (the "Plans"). The construction contractor shall be
chosen from among no less than three (3) bidders (one of whom UAG may
designate) and the lowest bidder that is qualified to Toyota standards
(including an ability to post a performance bond) shall be selected. The
parties acknowledge that the New Facility will not
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be completed on the Closing Date. Within nine (9) months after the Closing
Date, ▇▇. ▇▇▇▇▇▇▇▇ shall, at his sole cost and expense, complete the New
Facility as set forth in the Plans. No change shall be made to the Plans
without the prior written consent of UAG which shall not be unreasonably
withheld. Upon completion of the New Facility and satisfaction of the New
Facility Closing Conditions (as hereinafter defined) West Palm Toyota and ▇▇.
▇▇▇▇▇▇▇▇ shall enter into a lease for the New Facility in a form mutually
acceptable to the parties (the "New Facility Lease") (the date on which the New
Facility Lease becomes effective is referred to herein as the "New Facility
Lease Date"), such form to be agreed to by the parties within twenty (20) days
after the date of this Agreement. The New Facility Lease shall be for a twenty
(20) year term and the lessee shall have the option to renew the lease for two
additional five year terms. The initial lease rate under the New Facility Lease
shall be fixed at a dollar amount equal to 100% of all hard and soft costs
provided for in the Plans and actually incurred by ▇▇. ▇▇▇▇▇▇▇▇ for acquisition
and construction of the facility multiplied by the Cap Rate. ▇▇. ▇▇▇▇▇▇▇▇
represents and warrants that the acquisition cost of the property is no greater
than fair market value. The initial lease rate shall be increased every third
anniversary after the commencement of the lease as set forth in Section
1.2(c)(iv).
For purposes of this Agreement, "New Facility Closing Conditions" shall mean
(i) the completion of the New Facility substantially in accordance with the
Plans including but not limited to substantially all material punch list items
as certified by the architect for such New Facility; provided, however, that if
UAG disputes such certificate it may retain its own architect to determine if
such New Facility has been completed substantially in accordance with such
Plans; (ii) the issuance of a permanent Certificate of Occupancy by the local
governmental authorities with respect to such New Facility without condition;
(iii) West Palm Toyota having received any necessary consents or approvals from
Toyota to relocate its operations to the New Facility; (iv) delivery of an ALTA
"as-built" survey of the New Facility and the property upon which it is located
reflecting no encroachments on adjoining land or into set-back areas and that
all utilities serve the New Facility through publicly dedicated rights-of-way
and tie into public utilities, such survey to be certified to UAG, UAG East,
West Palm Toyota and a title insurance company chosen by UAG; (v) UAG's
obtaining a leasehold title insurance policy, without standard exceptions
insuring West Palm Toyota's leasehold estate in the New Facility subject to no
prior ground lease, mortgage, deed of trust or other security instrument or if
so encumbered, ▇▇. ▇▇▇▇▇▇▇▇'▇ obtaining a non-disturbance agreement from the
holder thereof in favor of West Palm Toyota in form and substance reasonably
satisfactory to UAG in recordable form and insured by such title company and
otherwise subject to only those exceptions to title as are reasonably
acceptable to UAG and providing such endorsements as UAG shall require
including, but not limited to, coverage over mechanics and materialman's liens;
(vi) UAG
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confirming that the New Facility complies with all zoning requirements and the
title company is prepared to issue a zoning endorsement; and (vii) UAG
obtaining an updated Phase I environmental report reflecting that (x) there are
no Hazardous Materials on or in the New Facility or the land upon which it is
located other than any that may be disclosed in the initial Phase I conducted
by UAG, (y) there are no violations of Environmental Laws at the New Facility
or the land upon which it is located; and (z) there is no recommendation for
further investigation or action with respect to the New Facility or such land,
which report shall be for the benefit of UAG, UAG East and West Palm Toyota. In
addition, ▇▇. ▇▇▇▇▇▇▇▇ shall complete all remaining punch list items within
sixty (60) days after the New Facility Lease Date and shall use his best
efforts to obtain standard warranties for construction and equipment (including
roofs) and to assign such warranties to UAG or West Palm Toyota. ▇▇. ▇▇▇▇▇▇▇▇
also agrees that all equipment and fixtures necessary for a "turn-key" car
dealership similar to the existing West Palm Toyota dealership shall be
relocated from the existing West Palm Toyota Facility to the New Facility. In
addition, from and after the Closing Date until the earlier of (i) the New
Facility Lease Date, and (ii) nine (9) months after the Closing Date, West Palm
Toyota shall pay to ▇▇. ▇▇▇▇▇▇▇▇ his out of pocket costs attributable to (x)
real property taxes, (y) ground lease payments and (z) interest on borrowed
funds utilized to acquire and construct the New Facility land and improvements.
1.5. STOCK PRICE ADJUSTMENT.
If the UAG Market Value on the Adjustment Date (as defined below) is
less than Twenty-three and 50/100 Dollars ($23.50) (the amount of any such
deficiency being referred to herein as the ("Stock Price Deficiency") then, no
later than ten (10) Business Days after the Adjustment Date, UAG shall pay to
▇▇. ▇▇▇▇▇▇▇▇ cash in an amount (the "Adjustment Amount") equal to the Stock
Price Deficiency multiplied by the number of UAG Shares ▇▇. ▇▇▇▇▇▇▇▇ received
at the Closing.
For purposes of this Agreement, the Adjustment Date shall mean the earlier of
(i) the date on which the UAG Shares are registered pursuant to the Piggyback
Registration Rights Agreement or (ii) the date on which ▇▇. ▇▇▇▇▇▇▇▇ may sell
the UAG Shares in reliance on Rule 144 promulgated by the Securities and
Exchange Commission ("SEC") pursuant to the Securities Act of 1933, as amended
("Rule 144").
1.6. ESCROW DEPOSIT.
Within three (3) business days of the Effective Date of this
Agreement, UAG will deposit into escrow funds in the amount of Two Hundred
Fifty Thousand Dollars ($250,000) (the "Escrow Deposit") by delivering such
funds to the Escrow Agent which Escrow Deposit shall be held and disbursed by
the Escrow Agent pursuant to the terms of an escrow agreement in substantially
the form attached hereto as Exhibit E.
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1.7. ADDITIONAL PURCHASE PRICE.
If the Companies, on a combined basis, achieve annual Pre-Tax Earnings
of at least Eleven Million Five Hundred Thousand Dollars ($11,500,000) in any
of the three (3) successive twelve (12) month periods beginning on the first
day of the calendar month immediately following the New Facility Lease Date
(such twelve (12) month periods being referred to herein as "Year One," "Year
Two," and "Year Three," respectively), then, in consideration for the sale of
the Shares by the Stockholders to Sub, Sub will make an additional payment to
the Stockholders with respect to each such year that such Pre-Tax Earnings
shall be achieved in the aggregate amount of One Million Dollars ($1,000,000)
(each such payment being referred to herein as an "Additional Payment"), which
Additional Payments, if any, shall be allocated among the Stockholders as they
so determine in their sole discretion. In the event that Sub is required to
make an Additional Payment in either Year One, Year Two or Year Three, then Sub
shall make the Additional Payment within sixty (60) days after the completion
of the review by the Companies' certified public accountant of the Companies'
financial statements covering the entire Year for which such Additional Payment
is to be paid. For purposes of this Agreement, Pre-Tax Earnings shall not
include any general overhead charges, management fees or other similar payments
to UAG or its Affiliates. During Years One, Two and Three each Company shall
deliver to ▇▇. ▇▇▇▇▇▇▇▇ a copy of its monthly factory statement within five (5)
days of its delivery to the factory which statement shall be treated as
confidential by ▇▇. ▇▇▇▇▇▇▇▇.
1.8. CONTINGENT PAYMENT.
If the total of the annual Pre-Tax Earnings for Year One, Year Two and
Year Three (the "Total Pre-Tax Earnings") exceeds Thirty Four Million Five
Hundred Thousand Dollars ($34,500,000), then, in consideration for the sale of
the Shares by the Stockholders to Sub, Sub will make an additional payment to
the Stockholders in the aggregate amount of One Million Dollars ($1,000,000)
(such payment being referred to herein as the "Contingent Payment"), which
Contingent Payment shall be allocated among the Stockholders as they so
determine in their sole discretion. In the event that Sub is required to make a
Contingent Payment, then Sub shall make the Contingent Payment within sixty
(60) days after completion of the review by the Companies' certified public
accounts of the Companies' financial statements covering Year Three.
1.9. EFFECTIVE DATE.
The obligations of the parties hereunder shall not take effect until
the parties have notified all of the manufacturer's whose consent is required
(the "Effective Date").
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ARTICLE 2. REPRESENTATIONS AND WARRANTIES
OF THE COMPANIES AND THE STOCKHOLDERS
Subject to the parties' agreement and acknowledgement that the
Schedules referred to in this Article 2 are to be delivered by the Companies
and the Stockholders no later than ten (10) Business Days after the Effective
Date hereof, the Companies and the Stockholders hereby jointly and severally
represent and warrant to UAG and Sub as follows:
2.1. ORGANIZATION AND GOOD STANDING.
Each of the Companies is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has the corporate power and authority to own, lease and
operate the properties used in its businesses and to carry on their businesses
as now being conducted. The Companies are duly qualified to do business and are
in good standing as a foreign corporation in each state and jurisdiction where
qualification as a foreign corporation is required, except for such failures to
be qualified and in good standing, if any, which when taken together with all
other such failures of the Companies would not, or could not reasonably be
expected to, in the aggregate have a Material Adverse Effect. Schedule 2.1
hereto lists (i) the states and other jurisdictions where the Companies are so
qualified and (ii) the assumed names under which the Companies conduct
business. Attached to Schedule 2.1(b) hereto are complete and correct copies of
the Companies' Articles of Incorporation and Bylaws (including comparable
governing instruments with different names), as amended and presently in
effect.
2.2. SUBSIDIARIES.
The Companies do not have any interest or investment in any Person.
2.3. CAPITALIZATION.
The authorized stock of each of the Companies and the number of shares
of capital stock which are issued and outstanding are set forth on Schedule 2.3
hereto. The shares listed on Schedule 2.3 hereto constitute all the issued and
outstanding shares of capital stock of the Companies and have been validly
authorized and issued, are fully paid and nonassessable, have not been issued
in violation of any preemptive rights or of any federal or state securities law
and no personal liability attaches to the ownership thereof. There is no
security, option, warrant, right, call, subscription, agreement, commitment or
understanding of any nature whatsoever, fixed or contingent, that directly or
indirectly (i) calls for the issuance, sale, pledge or other disposition of any
shares of capital stock of the Companies or any securities convertible into, or
other rights to acquire, any shares of capital stock of the Companies, or (ii)
obligates the Companies to grant,
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offer or enter into any of the foregoing, or (iii) relates to the voting or
control of such capital stock, securities or rights, except as set forth on
Schedule 2.3 hereto. The Companies have not agreed to register any securities
under the Securities Act of 1933, as amended (the "Securities Act").
2.4. AUTHORITY; APPROVALS AND CONSENTS.
The Companies have the corporate power and authority to enter into
this Agreement and the documents referred to herein (the "Documents") to which
they are a party and to perform their obligations hereunder and thereunder. The
execution, delivery and performance of this Agreement and the Documents to
which they are a party and the consummation of the transactions contemplated
hereby and thereby have been duly authorized and approved by the Board of
Directors of each of the Companies and no other corporate proceedings on the
part of the Companies are necessary to authorize and approve this Agreement and
the Documents and the transactions contemplated hereby and thereby. This
Agreement has been, and on the Closing Date the Documents will be, duly
executed and delivered by, and constitute valid and binding obligations of,
each of the Companies, enforceable against the Companies in accordance with
their respective terms. The execution, delivery and performance by each of the
Companies and the Stockholders of this Agreement and the Documents to which it
or they are a party and the consummation of the transactions contemplated
hereby and thereby do not and will not:
(i) contravene any provisions of the Articles of Incorporation or
By-Laws (including any comparable governing instrument with a
different name) of any of the Companies;
(ii) (after notice or lapse of time or both) conflict with,
result in a breach of any provision of, constitute a default under,
result in the modification or cancellation of, or give rise to any
right of termination or acceleration in respect of, any Company
Agreement (as defined in Section 2.15 hereof) or, except as set forth
on Schedule 2.4 hereto, require any consent or waiver of any party to
any Company Agreement;
(iii) result in the creation of any security interest upon, or
any person obtaining any right to acquire, any properties, assets or
rights of the Companies (other than the rights of Sub to acquire the
Shares pursuant to this Agreement);
(iv) violate or conflict with any Legal Requirements (as defined
in Section 2.9 hereof) applicable to the Companies or any of their
respective businesses or properties; or
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(v) require any authorization, consent, order, permit or approval
of, or notice to, or filing, registration or qualification with, any
governmental, administrative or judicial authority, except in
connection with or in compliance with the provisions of the H-S-R Act
(as defined in Section 5.3 hereof).
Except as set forth or referred to above, no authorization, consent,
order, permit or approval of, or notice to, or filing, registration or
qualification with, any governmental administrative or judicial authority is
necessary to be obtained or made by the Companies to enable the Companies to
continue to conduct their respective businesses and operations and use their
respective properties after the Closing in a manner which is in all material
respects consistent with that in which they are presently conducted.
2.5. FINANCIAL STATEMENTS.
Except as otherwise indicated below, attached as Schedule 2.5 are true
and complete copies of:
(i) (A) the balance sheets of the Companies as of December 31,
1995, and the related consolidated statements of income, stockholders'
equity and cash flow for the fiscal year ended December 31, 1995,
together with the notes thereto and (B) the balance sheets of the
Companies as of December 31, 1994, and the related consolidated
statements of income, stockholders' equity and cash flow for the
fiscal year ended December 31, 1994, together with the notes thereto,
in each case examined by and accompanied by the report of independent
certified public accountants (except where such examination and report
are not available);
(ii) the balance sheets of the Companies as of November 30, 1996
(the "November 30 Balance Sheets"); and
(iii) the most recent monthly and year-to-date financial
statements provided to each franchisor of the Companies (each, a
"Company Factory Statement" and, collectively, the "Company Factory
Statements");
(all the foregoing financial statements, including the notes thereto, being
referred to herein collectively as the "Company Financial Statements"). The
Company Financial Statements are consistent with and in accordance with the
books and records of the Companies, fairly present the financial position,
results of operations, stockholders' equity and changes in financial position
of the Companies as of the dates and for the periods indicated, in the case of
the financial statements referred to in clause (i) above in conformity with
GAAP consistently applied (except as
-15-
otherwise indicated in such statements) during such periods, and the unaudited
financial statements included in the Company Financial Statements indicate all
adjustments, which consist of only normal recurring accruals, necessary for
such fair presentations. The Company Financial Statements are consistent with
the financial records maintained and the accounting methods applied by the
Companies for tax purposes. The statements of income included in the Company
Financial Statements do not contain any items of special or nonrecurring income
except as expressly specified therein, and the balance sheets included in the
Company Financial Statements do not reflect any write-up or revaluation
increasing the book value of any assets. The books and accounts of the
Companies are complete and correct in all material respects and fairly reflect
all of the transactions, items of income and expense and all assets and
liabilities of the businesses of the Companies.
2.6. ABSENCE OF UNDISCLOSED LIABILITIES.
The Companies do not have any material liability of any nature
whatsoever (whether known or unknown, due or to become due, accrued, absolute,
contingent or otherwise), including, without limitation, any unfunded
obligation under employee benefit plans or arrangements as described in Section
2.18 and 2.19 hereof or liabilities for Taxes (as defined in Section 2.8
hereof), except for (i) liabilities reflected or reserved against on the most
recent Company Financial Statements, (ii) current liabilities incurred in the
ordinary course of business and consistent with past practice after the date of
the Company Balance Sheets which, individually and in the aggregate, do not
have, and cannot reasonably be expected to have, a Material Adverse Effect, and
(iii) liabilities disclosed on Schedule 2.6 hereto. The Companies are not
parties to any Company Agreement, or subject to any charter or by-law
provision, any other corporate limitation or any Legal Requirement, which has,
or can reasonably be expected to have, a Material Adverse Effect.
2.7. ABSENCE OF MATERIAL ADVERSE EFFECT; CONDUCT OF BUSINESS.
(a) Since November 30, 1996, the Companies have operated in the
ordinary course of business consistent with past practice, except as set forth
on Schedule 2.7(a) hereto, and there has not been:
(i) any material adverse change in the assets, properties,
business, operations, prospects, net income or financial condition of
the Companies, and no factor, event, condition, circumstance or
prospective development exists which threatens or may threaten to have
a Material Adverse Effect;
(ii) any material loss, damage, destruction or other casualty to
the property or other assets of the Companies, whether or not covered
by insurance;
-16-
(iii) any change in any method of accounting or accounting
practice of the Companies; or
(iv) any loss of the employment, services or benefits of any
general manager, new car sales manager, used car sales manager, or any
equivalent employee of any of the Companies.
(b) Since November 30, 1996, except as set forth in Schedule 2.7(b)
hereto, the Companies have not:
(i) incurred any material obligation or liability (whether
absolute, accrued, contingent or otherwise), except in the ordinary
course of business consistent with past practice;
(ii) failed to discharge or satisfy any lien or pay or satisfy
any obligation or liability (whether absolute, accrued, contingent or
otherwise), other than liabilities being contested in good faith and
for which adequate reserves have been provided;
(iii) mortgaged, pledged or subjected to any lien any of its
property or other assets, except for mechanics liens and liens for
taxes not yet due and payable;
(iv) sold or transferred any assets or canceled any debts or
claims or waived any rights, except in the ordinary course of business
consistent with past practice;
(v) defaulted on any material obligation;
(vi) entered into any material transaction, except in the
ordinary course of business consistent with past practice;
(vii) written down the value of any inventory or written off as
uncollectible any accounts receivable or any portion thereof not
reflected in the Company Financial Statements except in the ordinary
course of business consistent with past practices;
(viii) granted any increase in the compensation or benefits of
employees other than increases in accordance with past practice not
exceeding 10% or entered into any employment or severance agreement or
arrangement with any of them except in the ordinary course of business
consistent with past practices;
(ix) made any individual capital expenditure in excess of
$100,000, or aggregate capital expenditures in excess of $300,000, or
additions to
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property, plant and equipment other than ordinary repairs and
maintenance;
(x) discontinued any franchise or the sale of any products or
product line or program;
(xi) incurred any obligation or liability for the payment of
severance benefits; or
(xii) entered into any agreement or made any commitment to do any
of the foregoing.
2.8. TAXES.
The Companies have each made a valid election pursuant to Section
1362(a) of the Internal Revenue Code, as amended (the "Code"), to be an "S
Corporation" within the meaning of Section 1361(a)(1) of the Code and (with the
exception of West Palm Nissan) have continued to qualify as such for all
taxable years since their formation and will continue to so qualify through the
Closing Date. The Companies and, for any period during all or part of which the
tax liability of any other corporation was determined on a combined or
consolidated basis with the Companies any such other corporation, have filed
timely all federal, state, local and foreign tax returns, reports and
declarations required to be filed (or have obtained or timely applied for an
extension with respect to such filing) correctly reflecting the Taxes (as
defined below) and all other information required to be reported thereon and
have paid, or made adequate provision for the payment of, all Taxes which are
due pursuant to such returns or pursuant to any assessment received by the
Companies or any such other corporation. As used herein, "Taxes" shall mean all
taxes, fees, levies or other assessments, including but not limited to income,
excise, property, sales, franchise, withholding, social security and
unemployment taxes imposed by the United States, any state, county, local or
foreign government, or any subdivision or agency thereof or taxing authority
therein, and any interest, penalties or additions to tax relating to such
taxes, charges, fees, levies or other assessments. Copies of all tax returns
for the fiscal years ended since December 31, 1992 have been furnished or made
available to UAG or its representatives to the extent available and in the
possession of the Companies and such copies are accurate and complete as of the
date hereof. The Companies have also furnished to UAG correct and complete
copies of all notices and correspondence sent or received since December 31,
1992 by the Companies to or from any federal, state or local tax authorities.
The Companies have adequately reserved for the payment of all Taxes with
respect to periods ended on or prior to the Closing Date for which tax returns
have not yet been filed. In the ordinary course, the Companies make adequate
provision on their books for the payment of all Taxes (including for the
current fiscal period) owed by the Companies. Except to the extent reserves
therefor are reflected on the Company Balance Sheets, the Companies are not
liable, or will not become liable, for any Taxes for any period ending on or
prior to the Closing
-18-
Date. Except as set forth on Schedule 2.8 hereto, the Companies have not been
subject to a federal or state tax audit of any kind since December 31 1992, and
no adjustment has been proposed by the Internal Revenue Service ("IRS") with
respect to any return for any subsequent year. With respect to the audits
referred to on Schedule 2.8 hereto and except as indicated thereon, no such
audit has resulted in an adjustment in excess of $50,000. Neither the Companies
nor any Stockholder knows of any basis for an assertion of a deficiency for
Taxes against the Companies. The Stockholders will cooperate, and will cause
their Affiliates to cooperate, with the Companies in the filing of any returns
and in any audit or refund claim proceedings involving Taxes for which the
Companies may be liable or with respect to which the Companies may be entitled
to a refund.
2.9. LEGAL MATTERS.
(a) Except as set forth on Schedule 2.9(a) hereto, (i) there is no
claim, action, suit, litigation, investigation, inquiry, review or proceeding
(collectively, "Claims") pending against, and, to the knowledge of the
Companies or the Stockholders, there is no material claim threatened against or
affecting, the Companies, any ERISA Plan (as defined in Section 2.18(a) hereof)
or any of their respective properties or rights before or by any court,
arbitrator, panel, agency or other governmental, administrative or judicial
entity, domestic or foreign, nor is any basis known to the Stockholders or the
Companies for any such Claims, and (ii) the Companies are not subject to any
judgment, decree, writ, injunction, ruling or order (collectively, "Judgments")
of any governmental, administrative or judicial authority, domestic or foreign.
Schedule 2.9(a) hereto identifies each Claim and Judgment disclosed thereon
which is fully covered by an insurance policy.
(b) The businesses of the Companies are being conducted in compliance
with all laws, ordinances, codes, rules, regulations, standards, judgments and
other requirements of all governmental, administrative or judicial entities
(collectively, "Legal Requirements") applicable to the Companies or any of
their respective businesses or properties except where the failure to be in
such compliance could not reasonably be expected to have a Material Adverse
Effect. The Companies hold, and are in compliance with, all franchises,
licenses, permits, registrations, certificates, consents, approvals or
authorizations (collectively, "Permits") required by all applicable Legal
Requirements. A list of all such permits is set forth on Schedule 2.9(b)
hereof.
(c) The Companies own or hold all Permits material to the conduct of
their businesses. No event has occurred and is continuing which permits, or
after notice or lapse of time or both would permit, any modification or
termination of any Permit.
-19-
2.10. PROPERTY.
Set forth on Schedule 2.10(a) hereto is a list of all interests in
real property owned by or leased to the Companies (including all real property
owned or leased by the Stockholders (directly or indirectly) and used in the
businesses of the Companies and of all options or other contracts to acquire
any such interest (collectively, and together with the New Facility, the "Real
Property"). With respect to any leased Real Property owned by ▇▇. ▇▇▇▇▇▇▇▇ or
any of his Affiliates, there are no defaults by either party under and no state
of facts exist which with the giving of notice or the passage of time, or both,
would constitute a default under such leases. With respect to any leased Real
Property not owned by ▇▇. ▇▇▇▇▇▇▇▇ or any of his Affiliates, neither the
Companies nor the Stockholders have (i) received notice of any defaults by any
parties under such leases (the "Third Party Leases") or (ii) any knowledge of
any state of facts which with the giving of notice or the passage of time, or
both, would constitute a default under such leases. True and correct copies of
all leases relating to the leased Real Property, together with any amendments
and modifications thereto, are attached as Schedule 2.10(b). All improvements
to the Real Property ("Improvements") and all machinery, equipment and other
tangible property owned or used by or leased to the Companies are fit for the
particular purposes for which they are used by the Companies. Such tangible
properties and all Improvements owned or leased by the Companies conform in all
material respects with all applicable laws, ordinances, rules and regulations
and other Legal Requirements and, to the knowledge of the Stockholders and the
Companies, such Improvements do not encroach in any respect on property of
others. To the knowledge of the Stockholders and the Companies, there are no
latent defects with respect to the Improvements. The Real Property is currently
zoned to permit the conduct of the respective businesses of the Companies as
presently conducted. Certificates of Occupancy have been issued with respect to
the Improvements without special conditions or restrictions. All utilities
servicing the Real Property and the Improvements are provided by
publicly-dedicated utility lines and are located within public rights-of-way
and do not cross or encumber any private land. No written notice (and, to the
knowledge of the Stockholders and the Companies, no oral notice) of any
pending, threatened or contemplated action by any governmental authority or
agency having the power of eminent domain has been given to the Companies or
the Stockholders with respect to the Real Property.
2.11. ENVIRONMENTAL MATTERS.
(a) Except as set forth on Schedule 2.11(a) hereto, (i) the Companies,
the Real Property, the Improvements and any property formerly owned, occupied
or leased by the Companies are in compliance with all Environmental Laws
(provided, however, that as to the Real Property or Improvements, such
representation is limited to the knowledge of the Stockholders and the
Companies as it may relate to compliance for any period prior to the
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Initial Date), (ii) the Companies have obtained all Environmental Permits (as
defined below), (iii) such Environmental Permits are in full force and effect,
and (iv) the Companies are in full compliance with all terms and conditions of
such Environmental Permits. As used in this Agreement, Initial Date shall mean
with respect to any portion of the Real Property or the Improvements, the
earlier of (i) date the Stockholders or the Companies first acquired any
ownership or leasehold interest in such property and (ii) the date on which the
Companies first began conducting operations on such property.
(b) The Companies and the Stockholders have not violated, done or
suffered any act which could give rise to liability under, and, to the
knowledge of the Stockholders and the Companies, are not otherwise exposed to
liability under, any Environmental Law. After the Initial Date (and, to the
knowledge of the Stockholders and the Companies, with respect to events prior
to the Initial Date), no event has occurred with respect to the Real Property,
the Improvements or any property formerly owned, occupied or leased by the
Companies, which, with the passage of time or the giving of notice, or both,
would constitute a violation of or non-compliance with any applicable
Environmental Law. To the knowledge of the Stockholders and the Companies, the
Companies have no contingent liability under any Environmental Law. There are
no liens under any Environmental Law on the Real Property.
(c) Except as set forth on Schedule 2.11(c) hereto, (i) after the
Initial Date (and, to the knowledge of the Stockholders and the Companies, with
respect to any use prior to the Initial Date) neither the Companies, the Real
Property or any portion thereof, the Improvements or any property formerly
owned, occupied or leased by the Companies, nor, to the knowledge of the
Companies or the Stockholders, any property adjacent to the Real Property is
being used or has been used for the treatment, generation, transportation,
processing, handling, production or disposal of any Hazardous Materials or as a
landfill or other waste disposal site and there has been no spill or release of
any Hazardous Materials (provided, however, that certain petroleum products are
stored and handled on the Real Property in the ordinary course of the
Companies' businesses in full compliance with all Environmental Laws including
the existing regulations of the United States Environmental Protection Agency
requiring spill protection, overfill protection and corrosion protection by
December 22, 1998 and all secondary containment requirements with respect to
above ground storage tanks), (ii) after the Initial Date (and, to the knowledge
of the Stockholders and the Companies, with respect to investigations prior to
the Initial Date), none of the Real Property or any portion thereof, the
Improvements or any property formerly owned, occupied or leased by the
Companies has been subject to investigation by any governmental authority
evaluating the need to investigate or undertake Remedial Action at such
property, and (iii) to the knowledge of the Companies and the Stockholders,
none of the Real
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Property, the Improvements or any property formerly owned, occupied or leased
by the Companies, or any site or location where the Companies sent waste of any
kind, is identified on the current or proposed (A) National Priorities List
under ▇▇ ▇.▇.▇. ▇▇▇ ▇▇▇▇▇▇▇▇ ▇, (▇) Comprehensive Environmental Response
Compensation and Liability Inventory System list, or (C) any list arising from
any statute analogous to CERCLA.
(d) Except as set forth on Schedule 2.11(d) hereto, after the Initial
Date (and, to the knowledge of the Stockholders and the Companies, prior to the
Initial Date), there have been and are no (i) aboveground or underground
storage tanks, subsurface disposal systems, or wastes, drums or containers
disposed of or buried on, in or under the ground or any surface waters, (ii)
asbestos or asbestos containing materials or radon gas, (iii) polychlorinated
biphenyls ("PCB") or PCB-containing equipment, including transformers, or (iv)
wetlands (as defined under any Environmental Law) located within any portion of
the Real Property, nor have any liens been placed upon any portion of the Real
Property, the Improvements or any property formerly owned, occupied or leased
by the Companies in connection with any actual or alleged liability under any
Environmental Law.
(e) Except as set forth on Schedule 2.11(e) hereto, (i) there is no
pending or threatened claim, litigation, or administrative proceeding, or known
prior claim, litigation or administrative proceeding, arising under any
Environmental Law involving any of the Companies, the Real Property, the
Improvements, any property formerly owned, leased or occupied by the Companies,
any offsite contamination affecting the business of the Companies or any
operations conducted at the Real Property, (ii) there are no ongoing
negotiations with or agreements with any governmental authority relating to any
Remedial Action or other environmentally related claim, (iii) the Companies
have not submitted notice pursuant to Section 103 of CERCLA or analogous
statute or notice under any other applicable Environmental Law reporting a
release of a Hazardous Material into the environment, and (iv) the Companies
have not received any notice, claim, demand, suit or request for information
from any governmental or private entity with respect to any liability or
alleged liability under any Environmental Law, nor to the knowledge of the
Stockholders and the Companies, has any other entity whose liability therefor,
in whole or in part, may be attributed to the Companies, received such notice,
claim, demand, suit or request for information.
(f) The Stockholders and the Companies have provided to UAG all
environmental studies and reports obtained by them or known to them pertaining
to the Real Property, the Improvements, the Companies and any property formerly
owned, occupied or leased by the Companies, and have permitted (or will have
permitted as of the Closing Date), the testing of the soil, groundwater,
building components, tanks, containers and equipment on the Real Property, the
Improvements, and any property formerly owned,
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occupied or leased by the Companies, by UAG or UAG's agents or experts as they
have or shall have deemed necessary or appropriate to confirm the condition of
such properties. Any testing shall not be construed as a waiver of any rights
which UAG or Sub have arising out of the representations and warranties
contained herein.
2.12. INVENTORIES.
The values at which inventories are carried on the Company Balance
Sheets and Company Factory Statements reflect the normal inventory valuation
policies of the Companies, and, in the case of the Company Balance Sheets, such
values are in conformity with GAAP consistently applied. All inventories
reflected on the Company Balance Sheets and Company Factory Statements or
arising since the date thereof are currently marketable and can reasonably be
anticipated to be sold at normal ▇▇▇▇-ups within 120 days after the date hereof
in the ordinary course of business, except for spare parts inventory which
inventory is good and usable.
2.13. ACCOUNTS RECEIVABLE.
All accounts receivable reflected on the Company Balance Sheets are,
and all accounts receivable that will be or will have been reflected on the
Closing Date Balance Sheets will be, good, and have been or will have been
collected or are collectible, without resort to litigation, within 120 days of
the Closing Date, and are subject to no defenses, setoffs or counterclaims
other than normal cash discounts accrued in the ordinary course of business.
2.14. INSURANCE.
All material properties and assets of the Companies which are of an
insurable character are insured against loss or damage by fire and other risks
to the extent and in the manner customary for companies engaged in similar
businesses or owning similar assets. Set forth on Schedule 2.14 hereto is a
list and brief description (including the name of the insurer, the type of
coverage provided, the amount of the annual premium for the current policy
period, the amount of remaining coverage and deductibles and the coverage
period) of all policies for such insurance and the Companies have made or will
make available to UAG true and complete copies of all such policies. All such
policies are in full force and effect, are sufficient for all applicable
requirements of law and will not in any way be affected by or terminated or
lapsed by reason of the consummation of the transactions contemplated by this
Agreement. No notice of cancellation or non-renewal with respect to, or
disallowance of any claim under, any such policy has been received by the
Companies.
2.15. CONTRACTS; ETC.
As used in this Agreement, the term "Company Agreements" shall mean
all mortgages, indenture notes, agreements, contracts,
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leases, licenses, franchises, obligations, instruments or other commitments,
arrangements or understandings of any kind, whether written or oral, binding or
non-binding, (including all leases and other agreements referred to on Schedule
2.10 hereto) to which any of the Companies is a party or by which any of the
Companies or any of their respective assets or properties (including the Real
Property and the Improvements) may be bound or affected, including all
amendments, modifications, extensions or renewals of any of the foregoing. Set
forth on Schedule 2.15 hereto is a complete and accurate list of each Company
Agreement which is material to the business, operations, assets, condition
(financial or otherwise) or prospects of any of the Companies. True and
complete copies of all written Company Agreements referred to on Schedule 2.15
and Schedule 2.10 hereto, exclusive of individual vehicle titles and/or
manufacturer's certificates of origin and floor plan liens applicable to
individual vehicles, have been delivered or made available to UAG, and the
Companies have provided UAG with accurate and complete written summaries of all
such Company Agreements which are unwritten. Except as set forth on Schedule
2.15, the Companies are not, nor, to the knowledge of the Companies and the
Stockholders is, any other party thereto, in material breach of or default
under any Company Agreement, and no event has occurred which (after notice or
lapse of time or both) would become a material breach or default under, or
would permit modification, cancellation, acceleration or termination of, any
Company Agreement or result in the creation of any material Lien upon, or any
Person obtaining any right to acquire, any properties, assets or rights of the
Companies in any such case where such breach, default or other event would
have, or could reasonably be expected to have, a Material Adverse Effect. There
are no material unresolved disputes involving any of the Companies under any
Company Agreement.
2.16. LABOR RELATIONS.
(a) The Companies have paid or made provision for the payment of all
salaries and accrued wages and have complied in all material respects with all
applicable laws, rules and regulations relating to the employment of labor,
including those relating to wages, hours, collective bargaining and the payment
and withholding of taxes, and have withheld and paid to the appropriate
governmental authority, or are holding for payment not yet due to such
authority, all amounts required by law or agreement to be withheld from the
wages or salaries of their employees.
(b) Except as described in Section 6.13 and as set forth on Schedule
2.16(b) hereto, none of the Companies is a party to any (i) outstanding
employment agreements or contracts with officers or employees that are not
terminable at will, or that provide for payment of any bonus or commission,
(ii) agreement, policy or practice that requires it to pay termination or
severance pay to salaried, non-exempt or hourly employees (other than as
required by law), (iii) collective bargaining agreement or other labor union
contract applicable to persons
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employed by the Companies, nor do the Stockholders or the Companies know of any
activities or proceedings of any labor union to organize any such employees.
The Companies have furnished to UAG complete and correct copies of all such
agreements ("Employment and Labor Agreements"). The Companies have not breached
or otherwise failed to comply with any provisions of any Employment or Labor
Agreement.
(c) Except as set forth in Schedule 2.16(c) hereto, (i) there is no
unfair labor practice charge or complaint pending before the National Labor
Relations Board ("NLRB"), (ii) there is no labor strike, material slowdown or
material work stoppage or lockout actually pending or, to the Stockholders' or
the Companies' knowledge, threatened, against or affecting the Companies, and
the Companies have not experienced any strike, material slow down or material
work stoppage, lockout or other collective labor action by or with respect to
employees of the Companies, (iii) there is no representation claim or petition
pending before the NLRB or any similar foreign agency and no question
concerning representation exists relating to the employees of the Companies,
(iv) there are no charges with respect to or relating to the Companies pending
before the Equal Employment Opportunity Commission or any state, local or
foreign agency responsible for the prevention of unlawful employment practices,
(v) the Companies have not received formal notice from any federal, state,
local or foreign agency responsible for the enforcement of labor or employment
laws of an intention to conduct an investigation of the Companies and, to the
knowledge of the Companies, no such investigation is in progress and (vi) the
consents of the unions that are parties to any Employment and Labor Agreements
are not required to complete the transactions contemplated by this Agreement
and the Documents.
(d) The Companies have never caused any "plant closing" or "mass
layoff" as such actions are defined in the Worker Adjustment and Retraining
Notification Act, as codified at 29 U.S.C. ▇▇.▇▇. 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").
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True and complete copies of all Pension Benefit Plans and Welfare Benefit Plans
(collectively, "ERISA Plans") have been delivered to or made available to UAG
together with, as applicable with respect to each such ERISA Plan, trust
agreements, summary plan descriptions, all IRS determination letters or
applications therefor with respect to any Pension Benefit Plan intended to be
qualified pursuant to Section 401(a) of the Internal Revenue Code of 1986, as
amended (the "Code"), and valuation or actuarial reports, accountant's
opinions, financial statements, IRS Form 5500s (or 5500-C or 5500-R) and
summary annual reports for the last three years.
(b) With respect to the ERISA Plans, except as set forth on Schedule
2.17(b):
(i) there is no ERISA Plan which is a " multiemployer" plan as
that term is defined in Section 3(37) of ERISA ("Multiemployer Plan");
(ii) no event has occurred or (to the knowledge of the Companies
or the Stockholders) is threatened or about to occur which would
constitute a prohibited transaction under Section 406 of ERISA or
under Section 4975 of the Code;
(iii) each ERISA Plan has operated since its inception in
accordance with the reporting and disclosure requirements imposed
under ERISA and the Code and has timely filed Form 5500e (or 5500-C or
5500-R) and predecessors thereof; and
(iv) no ERISA Plan is liable for any federal, state, local or
foreign Taxes.
(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
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established under a Pension Benefit Plan is not exempt under Section
501(a) of the Code.
(d) With respect to each Pension Benefit Plan which is a defined
benefit plan under Section 414(j) and, for the purpose solely of Section
2.17(d)(iv) hereof, each defined contribution plan under Section 414(i) of the
Code:
(i) no liability to the Pension Benefit Guaranty Corporation
("PBGC") under Sections 4062-4064 of ERISA has been incurred by the
Companies since the effective date of ERISA and all premiums due and
owing to the PBGC have been timely paid;
(ii) the PBGC has not notified the Companies or any Pension
Benefit Plan of the commencement of proceedings under Section 4042 of
ERISA to terminate any such plan;
(iii) no event has occurred since the inception of any Pension
Benefit Plan or (to the knowledge of the Companies or the
Stockholders) is threatened or about to occur which would constitute a
reportable event within the meaning of Section 4043(b) of ERISA;
(iv) no Pension Benefit Plan ever has incurred any "accumulated
funding deficiency" (as defined in Section 302 of ERISA and Section
412 of the Code); and
(v) if any of such Pension Benefit Plans were to be terminated on
the Closing Date (A) no liability under Title IV of ERISA would be
incurred by the Companies and (B) all benefits accrued to the day
prior to the Closing Date (whether or not vested) would be fully
funded in accordance with the actuarial assumptions and method
utilized by such plan for valuation purposes.
(e) With respect to each Pension Benefit Plan, Schedule 2.17(e)
contains a list of all Pension Benefit Plans to which ERISA has applied which
have been or are being terminated, or for which a termination is contemplated,
and a description of the actions taken by the PBGC and the IRS with respect
thereto.
(f) The approximate aggregate of the amounts of contributions by the
Companies to be paid or accrued under ERISA Plans for the current fiscal year
is set forth on Schedule 2.17(f) (the "Aggregate ERISA Contributions"), and the
Aggregate ERISA Contributions are not expected to exceed the total amount set
forth on Schedule 2.17(f). To the extent required in accordance with GAAP, the
Company Balance Sheets reflect in the aggregate an accrual of all amounts of
employer contributions accrued but unpaid by the Companies under the ERISA
Plans as of the date of the Company Balance Sheet.
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(g) With respect to any Multiemployer Plan (1) the Companies have not,
since their formation, made or suffered a "complete withdrawal" or "partial
withdrawal" as such terms are respectively defined in Sections 4203 and 4205 of
ERISA; (2) there is no withdrawal liability of the Companies under any
Multiemployer Plan, computed as if a "complete withdrawal" by the Companies had
occurred under each such Plan as of December 31, 1995; and (3) the Companies
have not received notice to the effect that any Multiemployer Plan is either in
reorganization (as defined in Section 4241 of ERISA) or insolvent (as defined
in Section 4245 of ERISA).
(h) With respect to the Welfare Benefit Plans:
(i) There are no liabilities of the Companies under Welfare
Benefit Plans with respect to any condition which relates to a claim
filed on or before the Closing Date.
(ii) No claims for benefits are in dispute or litigation.
2.18. OTHER BENEFIT AND COMPENSATION PLANS OR ARRANGEMENTS.
(a) Set forth on Schedule 2.18(a) hereto is a true and complete list
of:
(i) each employee stock purchase, employee stock option, employee
stock ownership, deferred compensation, performance, bonus, incentive,
vacation pay, holiday pay, insurance, severance, retirement, excess
benefit or other plan, trust or arrangement which is not an ERISA Plan
whether written or oral, which the Companies maintain or are required
to make contributions to;
(ii) each other agreement, arrangement, commitment and
understanding of any kind, whether written or oral, with any current
or former officer, director or consultant of the Companies pursuant to
which payments may be required to be made at any time following the
date hereof (including, without limitation, any employment, deferred
compensation, severance, supplemental pension, termination or
consulting agreement or arrangement); and
(iii) each employee of the Companies whose aggregate compensation
for the fiscal year ended December 31, 1996 exceeded $75,000. True and
complete copies of all of the written plans, arrangements and
agreements referred to on Schedule 2.18(a) ("Compensation
Commitments") have been provided to UAG together with, where prepared
by or for the Companies, any valuation, actuarial or accountant's
opinion or
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other financial reports with respect to each Compensation Commitment
for the last three years. An accurate and complete written summary has
been provided to UAG with respect to any Compensation Commitment which
is unwritten.
(b) Each Compensation Commitment:
(i) since its inception, has been operated in all material
respects in accordance with its terms;
(ii) is not currently under investigation, audit or review by the
IRS or any other federal or state agency and (to the knowledge of the
Companies or the Stockholders) no such action is contemplated or under
consideration;
(iii) has no liability for any federal, state, local or foreign
Taxes;
(iv) has no claims subject to dispute or litigation;
(v) has met all applicable requirements, if any, of the Code; and
(vi) has operated since its inception in material compliance with
the reporting and disclosure requirements imposed under ERISA and the
Code.
2.19. TRANSACTIONS WITH INSIDERS.
Set forth on Schedule 2.19 hereto is a complete and accurate
description of all material transactions between the Companies or any ERISA
Plan, on the one hand, and any Insider, on the other hand, that have occurred
since December 31, 1995. For purposes of this Agreement:
(i) the term "Insider" shall mean the Stockholders, any director
or officer of the Companies, and any Affiliate, Associate or Relative
of any of the foregoing persons;
(ii) the term "Associate" used to indicate a relationship with
any person means (A) any corporation, partnership, joint venture or
other entity of which such person is an officer or partner or is,
directly or indirectly, through one or more intermediaries, the
beneficial owner of 30% or more of (1) any class or type of equity
securities or other profits interest or (2) the combined voting power
of interests ordinarily entitled to vote for management or otherwise,
and (B) any trust or other estate in which such
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person has a substantial beneficial interest or as to which such
person serves as trustee or in a similar fiduciary capacity; and
(iii) a "Relative" of a person shall mean such person's spouse,
such person's parents, sisters, brothers, children and the spouses of
the foregoing, and any member of the immediate household of such
person.
2.20. PROPRIETY OF PAST PAYMENTS.
No funds or assets of the Companies have been used for illegal
purposes; no unrecorded funds or assets of the Companies have been established
for any purpose; no accumulation or use of the Companies' corporate funds or
assets has been made without being properly accounted for in the respective
books and records of the Companies; all payments by or on behalf of the
Companies have been duly and properly recorded and accounted for in their
respective books and records; no false or artificial entry has been made in the
books and records of the Companies for any reason; no payment has been made by
or on behalf of the Companies with the understanding that any part of such
payment is to be used for any purpose other than that described in the
documents supporting such payment; and the Companies have not made, directly or
indirectly, any illegal contributions to any political party or candidate,
either domestic or foreign. Neither the IRS nor any other federal, state, local
or foreign government agency or entity has initiated or threatened any
investigation of any payment made by the Companies of, or alleged to be of, the
type described in this Section 2.20.
2.21. INTEREST IN COMPETITORS.
Except as set forth on Schedule 2.21, neither the Companies nor the
Stockholders, nor any of their Affiliates, have any interest, either by way of
contract or by way of investment (other than as holder of not more than 2% of
the outstanding capital stock of a publicly traded Person, so long as such
holder has no other connection or relationship with such Person) or otherwise,
directly or indirectly, in any Person other than the Companies that is engaged
in the retail sale of automobiles or light duty trucks.
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.
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2.23. ACCOUNTS.
Schedule 2.23 hereof correctly identifies each bank account maintained
by or on behalf or for the benefit of the Companies and the name of each person
with any power or authority to act with respect thereto.
2.24. DISCLOSURE.
Neither the Companies nor the Stockholders have made any material
misrepresentation to UAG or the Sub relating to the Companies or the Shares or
the Real Property or Improvements and neither the Companies nor the
Stockholders to their knowledge have omitted to state to UAG any material fact
relating to the Companies or the Shares or the Real Property or Improvements
which is necessary in order to make the information given by or on behalf of
the Companies or the Stockholders to UAG not misleading. To the knowledge of
the Companies and the Stockholders, no fact, event, condition or contingency
exists or has occurred which has, or in the future can reasonably be expected
to have, a Material Adverse Effect, which has not been disclosed in the Company
Financial Statements or the Schedules to this Agreement.
2.25. NET WORTH.
On the Closing Date, the Net Worth of the Companies will be equal to
or greater than the November 30, 1996 Net Worth less the amount of any
Distributions.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES
OF THE STOCKHOLDERS
Subject to the parties' agreement and acknowledgement that the
Schedules referred to in this Article 3 are to be delivered by the Stockholders
no later than ten (10) Business Days after the Effective Date hereof, the
Stockholders hereby represent and warrant to UAG as follows:
3.1. OWNERSHIP OF SHARES; TITLE.
Each Stockholder is the owner of record and beneficially of the Shares
as set forth on Schedule 3.1 hereof and has, and shall transfer to Sub at the
Closing, good and marketable title to the Shares owned by him, free and clear
of any and all security 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
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party and to consummate the transactions contemplated hereby and thereby
(including the disposition of the Shares to Sub as contemplated by this
Agreement). This Agreement has been duly executed and delivered by the
Stockholders and constitutes, and the Documents to which each Stockholder is a
party when executed and delivered by such Stockholder will constitute, a valid
and binding obligation of such Stockholder, enforceable against him in
accordance with its terms. Except as set forth on Schedule 3.2, the execution,
delivery and performance of this Agreement and the Documents by the
Stockholders and the consummation of the transactions contemplated hereby and
thereby do not and will not:
(i) (after notice or lapse of time or both) conflict with, result
in a breach of any provision of, constitute a default under, result in
the modification or cancellation of, or give rise to any right of
termination or acceleration in respect of, any material contract,
agreement, commitment, understanding, arrangement or restriction to
which any of the Stockholders is a party or to which any of the
Stockholders or any of their property is subject;
(ii) violate or conflict with any Legal Requirements applicable
to the Stockholders or any of Stockholders' businesses or properties;
or
(iii) require any authorization, consent, order, permit or
approval of, or notice to, or filing, registration or qualification
with, any governmental, administrative or judicial authority, except
in connection with or in compliance with the provisions of the H-S-R
Act.
3.3. REAL PROPERTY AND IMPROVEMENTS.
The Real Property and Improvements owned by ▇▇. ▇▇▇▇▇▇▇▇ or his
Affiliates are owned in fee simple, free and clear of all Liens, claims and
encumbrances, except those disclosed in Schedule 3.3(a), none of which
currently or, to the knowledge of ▇▇. ▇▇▇▇▇▇▇▇ or his Affiliates, in the future
will materially affect the use of such Real Property or such Improvements for
the conduct of the respective businesses of the Companies as presently
conducted or, as to the New Facility, as proposed to be conducted. No
assessments have been made against any portion of the Real Property which are
unpaid (except ad valorem taxes for the current year that are not yet due and
payable), whether or not they have become Liens. There are no disputes
concerning the location of the lines and corners of the Real Property. No one
has been granted any right to purchase or lease such Real Property or
Improvements other than the existing leases in favor of the Companies, which
are to be terminated at the Closing by agreement between the parties and
pursuant to which the owners shall acknowledge that there are no defaults under
any such leases and that the Companies have no liability arising out of or
relating to such leases. Attached as
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Schedule 3.3 are all surveys, title binders, title policies and copies of any
exceptions to title relating to such Real Property or Improvements.
3.4. INVESTMENT INTENT.
▇▇. ▇▇▇▇▇▇▇▇ has no present plan, intention or arrangement to dispose
of any of the UAG Common Stock received by him pursuant to the terms of this
Agreement.
3.5. QUALIFICATION OF STOCKHOLDERS.
▇▇. ▇▇▇▇▇▇▇▇ (i) is an "accredited investor" within the meaning of
Regulation D of the Securities Act of 1933, as amended (the "Securities Act"),
and is acquiring the UAG Common Stock to be issued pursuant to the terms of
this Agreement for his own account and not with a view to, or for resale in
connection with, any distribution thereof; (ii) understands and acknowledges
that such UAG Common Stock has not been registered under the Securities Act or
any state securities laws by reason of certain exemptions from the registration
provisions thereof which depend upon, among other things, the bona fide nature
of ▇▇. ▇▇▇▇▇▇▇▇'▇ investment intent as expressed herein; (iii) is able to bear
the economic risk of investment in such UAG Common Stock and has such knowledge
and experience in financial and business matters that he is capable of
evaluating the risks and merits of such UAG Common Stock; (iv) acknowledges
that the UAG shares were not offered to him by means of publicly disseminated
advertisements or sales literature, or as part of a general solicitation; (v)
acknowledges that in deciding to proceed with the transaction set forth herein
he has relied solely on his own independent investigation of UAG and upon the
representations of UAG set forth herein; and (vi) understands and acknowledges
that such UAG Common Stock will be "restricted securities" as that term is
defined in Rule 144 under the Securities Act and that the certificates
representing such UAG Common Stock will bear a legend restricting transfer
unless (A) the transfer is exempt from the registration requirements under the
Securities Act and any applicable state securities law and an opinion of
counsel reasonably satisfactory to UAG that such transfer is exempt therefrom
is delivered to UAG or (B) the transfer is made pursuant to an effective
registration statement under the Securities Act and any applicable state
securities law.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF UAG
Subject to the parties' agreement and acknowledgement that the
Schedules referred to in this Article 4 are to be delivered by the Stockholders
no later than ten (10) Business Days after the Effective Date hereof, UAG and
UAG East hereby represent and warrant to the Companies and the Stockholders as
follows:
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4.1. ORGANIZATION AND GOOD STANDING.
UAG is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has the corporate power
and authority to own, lease and operate the properties used in its business and
to carry on its business as now being conducted. UAG is duly qualified to do
business and is in good standing as a foreign corporation in each state and
jurisdiction where qualification as a foreign corporation is required, except
for such failures to be qualified and in good standing, if any, which when
taken together with all other such failures of UAG and the UAG Subsidiaries (as
defined below) would not, or could not reasonably be expected to, in the
aggregate have a Material Adverse Effect on UAG and the UAG Subsidiaries, taken
as a whole. UAG has made available to the Stockholders complete and correct
copies of its charter and by-laws, as amended and presently in effect.
4.2. SUBSIDIARIES.
Each of the UAG Subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own, lease and operate
the properties and assets used in its business and to carry on its business as
now being conducted, and is duly qualified to do business and in good standing
as a foreign corporation in each jurisdiction where qualification as a foreign
corporation is required, except for such failures to be qualified and in good
standing, if any, which when taken together with all other such failures of UAG
and the UAG Subsidiaries would not, or could not reasonably be expected to, in
the aggregate have a Material Adverse Effect on UAG and the UAG Subsidiaries,
taken as a whole. All of the outstanding shares of capital stock of the UAG
Subsidiaries have been validly authorized and issued, are fully paid and
non-assessable, have not been issued in violation of any preemptive rights or
of any federal or state securities law. "UAG Subsidiary" shall mean any
corporation or other entity in which UAG, directly or indirectly, owns
beneficially securities representing 50% or more of (i) the aggregate equity or
profit interests or (ii) the combined voting power of voting interests
ordinarily entitled to vote for management or otherwise.
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.
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4.4. SEC FILINGS.
UAG has heretofore made available to ▇▇. ▇▇▇▇▇▇▇▇ UAG's Registration
Statement on Form S-1 as declared effective by the SEC on October 23, 1996 and
UAG's Quarterly Report on Form 10-Q for the period ending September 30, 1996
(the "SEC Filings"). As of their respective dates, the SEC filings did not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
4.5. AUTHORITY; APPROVALS AND CONSENTS.
UAG has the corporate power and authority to enter into this Agreement
and the Documents to which it is a party and to perform its obligations
hereunder and thereunder. At the time of the Closing, the execution, delivery
and performance of this Agreement and the Documents to which it is a party and
the consummation of the transactions contemplated hereby and thereby will have
been duly authorized and approved by the Board of Directors of UAG and no other
corporate proceedings on the part of UAG will be necessary to authorize and
approve this Agreement and the Documents and the transactions contemplated
hereby and thereby. This Agreement has been, and on the Closing Date the
Documents will be, duly executed and delivered by, and constitute a valid and
binding obligation of, UAG, enforceable against UAG in accordance with their
respective terms. Except as set forth on Schedule 4.5 hereto, the execution,
delivery and performance by UAG of this Agreement and the Documents to which it
is a party and the consummation of the transactions contemplated hereby and
thereby do not and will not:
(i) contravene any provisions of the Certificate of Incorporation
or By-Laws of UAG;
(ii) (after notice or lapse of time or both) conflict with,
result in a breach of any provision of, constitute a default under,
result in the modification or cancellation of, or give rise to any
right of termination or acceleration in respect of, any UAG Agreement
(as defined below) or require any consent or waiver of any party to
any UAG Agreement;
(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
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(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;
(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
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therein, and the balance sheets included in the UAG Financial Statements do not
reflect any write-up or revaluation increasing the book value of any assets.
The books and accounts of UAG and the UAG Subsidiaries are complete and correct
in all material respects and fairly reflect all of the transactions, items of
income and expense and all assets and liabilities of the businesses of UAG and
the UAG Subsidiaries consistent with prior practices of UAG and the UAG
Subsidiaries.
4.7. TAXES.
UAG, each UAG Subsidiary and, for any period during all or part of
which the tax liability of any other corporation was determined on a combined
or consolidated basis with UAG or any UAG Subsidiary, any such other
corporation, have filed timely all federal, state, local and foreign tax
returns, reports and declarations required to be filed (or have obtained or
timely applied for an extension with respect to such filing) correctly
reflecting the Taxes and all other information required to be reported thereon
and have paid, or made adequate provision for the payment of, all Taxes which
are due pursuant to such returns or pursuant to any assessment received by UAG
or any UAG Subsidiary or any such other corporation. In the ordinary course,
UAG makes adequate provision on its books for the payment of all Taxes
(including for the current fiscal period) owed by UAG and the UAG Subsidiaries.
Neither UAG nor any UAG Subsidiary has been subject to a federal or state tax
audit of any kind, and no adjustment has been proposed by the IRS with respect
to any return for any subsequent year. UAG knows of no basis for an assertion
of a deficiency for Taxes against UAG or any UAG Subsidiary.
4.8. ABSENCE OF UNDISCLOSED LIABILITIES.
Neither UAG nor any UAG Subsidiary has any material liability of any
nature whatsoever (whether known or unknown, due or to become due, accrued,
absolute, contingent or otherwise), including, without limitation, liabilities
for Taxes (as defined in Section 4.8), except for (i) liabilities reflected or
reserved against the most recent UAG Financial Statement, (ii) liabilities
disclosed in the SEC filings, (iii) current liabilities incurred in the
ordinary course of business and consistent with past practice after the date of
the UAG Balance Sheet which, individually and in the aggregate, do not have,
and cannot reasonably be expected to have, a material adverse effect on UAG and
the UAG Subsidiaries, taken as a whole, and (iv) liabilities disclosed on
Schedule 4.8 hereto.
4.9. LEGAL MATTERS.
(a) Except as set forth on Schedule 4.9(a) hereto, (i) there are no
material Claims pending against, or, to the knowledge of UAG or any UAG
Subsidiary, threatened against or affecting, UAG, any UAG Subsidiary, any of
their respective officers, directors, employees, agents or Affiliates
involving,
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affecting or relating to any assets, properties or operations of UAG or any UAG
Subsidiary, or any of their respective properties or rights before or by any
court, arbitrator, panel, agency or other governmental, administrative or
judicial entity, domestic or foreign, nor is any basis known to UAG, any UAG
Subsidiary or any of their directors, officers, employees or agents for any
such Claims, and (ii) neither UAG nor any UAG Subsidiary is subject to any
material Judgments of any governmental, administrative or judicial authority,
domestic or foreign.
(b) The businesses of UAG and the UAG Subsidiaries are being conducted
in compliance with all Legal Requirements applicable to UAG or any UAG
Subsidiary or any of their respective businesses or properties, except where
the failure to be in such compliance could not reasonably be expected to have a
material adverse effect on UAG and the UAG Subsidiaries, taken as a whole.
Except as set forth on Schedule 4.9(b) hereto, UAG and the UAG Subsidiaries
hold, and are in compliance with, all Permits required by all applicable Legal
Requirements except where the failure to hold or be in compliance with such
Permits could not reasonably be expected to have a material adverse effect on
UAG and the UAG Subsidiaries, taken as a whole.
(c) UAG and each UAG Subsidiary owns or holds all Permits material to
the conduct of its business. No event has occurred and is continuing which
permits, or after notice or lapse of time or both would permit, any
modification or termination of any Permit.
4.10. DISCLOSURE.
Neither UAG nor any UAG Subsidiary has made any material
misrepresentation to the Companies or the Stockholders relating to this
Agreement and neither UAG nor any UAG Subsidiary has omitted to state to the
Companies or the Stockholders any material fact relating to this Agreement
which is necessary in order to make the information given by or on behalf of
UAG or any UAG Subsidiary to the Companies or the Stockholders or their
representatives at or prior to Closing not misleading. No fact, event,
condition or contingency exists or has occurred which has, or in the future can
reasonably be expected to have, a material adverse effect on UAG and the UAG
Subsidiaries, taken as a whole, which has not been disclosed in the SEC Filings
or the Schedules to this Agreement.
4.11. ABSENCE OF MATERIAL ADVERSE EFFECT;
CONDUCT OF BUSINESS.
(a) Since October 28, 1996, UAG and the UAG Subsidiaries have operated
in the ordinary course of business consistent with past practice, except as set
forth on Schedule 4.11(a) hereto, and there has not been:
(i) any material adverse change in the assets, properties,
business, operations, prospects,
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net income or financial condition of UAG and the UAG Subsidiaries,
taken as a whole, and no factor, event, condition, circumstance or
prospective development exists which threatens or may threaten to have
a material adverse effect on UAG and the UAG Subsidiaries, taken as a
whole.
(ii) any material loss, damage, destruction or other casualty to
the property or other assets of UAG or any UAG Subsidiary, whether or
not covered by insurance;
(iii) any change in any method of accounting or accounting
practice of UAG or any UAG Subsidiary; or
(b) Since October 28, 1996, except as set forth in Schedule 4.11(b)
hereto, neither UAG nor the UAG Subsidiaries have:
(i) incurred any material obligation or liability (whether
absolute, accrued, contingent or otherwise), except in the ordinary
course of business consistent with past practice and except in
connection with the acquisition of additional dealerships;
(ii) failed to discharge or satisfy any lien or pay or satisfy
any obligation or liability (whether absolute, accrued, contingent or
otherwise), other than liabilities being contested in good faith and
for which adequate reserves have been provided;
(iii) sold or transferred any assets or canceled any debts or
claims or waived any rights, except in the ordinary course of business
consistent with past practice;
(iv) defaulted on any material obligation;
(v) written down the value of any inventory or written off as
uncollectible any accounts receivable or any portion thereof not
reflected in the UAG Financial Statements; or
(vi) entered into any agreement or made any commitment to do any
of the foregoing that has not been terminated.
4.12. INSURANCE.
All properties and assets of UAG and the UAG Subsidiaries which are of
an insurable character are insured against loss or damage by fire and other
risks to the extent and in the manner reasonable in light of the risks
attendant to the businesses and activities in which UAG and the UAG
Subsidiaries are
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or have been engaged and customary for companies engaged in similar businesses
or owning similar assets.
4.13. LABOR RELATIONS.
(a) UAG and each of the UAG Subsidiaries has paid or made provision
for the payment of all salaries and accrued wages and has complied in all
material respects with all applicable laws, rules and regulations relating to
the employment of labor, including those relating to wages, hours, collective
bargaining and the payment and withholding of taxes, and has withheld and paid
to the appropriate governmental authority, or is holding for payment not yet
due to such authority, all amounts required by law or agreement to be withheld
from the wages or salaries of its employees.
(b) Except as set forth in Schedule 4.13(b) hereto, (i) there is no
unfair labor practice charge or complaint pending before the NLRB, (ii) there
is no labor strike, material slowdown or material work stoppage or lockout
actually pending or, to UAG's or any of the UAG Subsidiaries' knowledge,
threatened, against or affecting UAG or any UAG Subsidiary, and neither UAG nor
any UAG Subsidiary has experienced any strike, material slow down or material
work stoppage, lockout or other collective labor action by or with respect to
employees of UAG or any UAG Subsidiary, (iii) there is no representation claim
or petition pending before the NLRB or any similar foreign agency and no
question concerning representation exists relating to the employees of UAG or
any UAG Subsidiary, (iv) there are no charges with respect to or relating to
UAG or any UAG Subsidiary pending before the Equal Employment Opportunity
Commission or any state, local or foreign agency responsible for the prevention
of unlawful employment practices, (v) neither UAG nor any UAG Subsidiary has
received formal notice from any federal, state, local or foreign agency
responsible for the enforcement of labor or employment laws of an intention to
conduct an investigation of UAG or any UAG Subsidiary and no such investigation
is in progress and (vi) the consents of the unions that are parties to any UAG
Employment and Labor Agreements (as defined below) are not required to complete
the transactions contemplated by this Agreement and the Documents. As used in
this agreement, the term "UAG Employment and Labor Agreements" shall mean all
(i) outstanding employment agreements or contracts with officers or employees
that are not terminable at will, or that provide for the payment of any bonus
or commission, (ii) agreements, policies or practices that require UAG or any
UAG Subsidiary to pay termination or severance pay to salaried, non-exempt or
hourly employees (other than as required by law), (iii) collective bargaining
agreements or other labor union contracts applicable to persons employed by UAG
or any UAG Subsidiary.
(c) Neither UAG nor any UAG Subsidiary has ever caused any "plant
closing" or "mass layoff" as such actions are defined in the Worker Adjustment
and Retraining Notification Act,
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as codified at 29 U.S.C. ▇▇.▇▇. 2101-2109, and the regulations promulgated
therein.
4.14. CONTRACTS; ETC.
As used in this Agreement, the term "UAG Agreements" shall mean all
mortgages, indenture notes, agreements, contracts, leases, licenses,
franchises, obligations, instruments or other commitments, arrangements or
understandings of any kind, whether written or oral, binding or non-binding, to
which UAG or any UAG Subsidiary is a party or by which UAG or any UAG
Subsidiary or any of their respective properties may be bound or affected,
including all amendments, modifications, extensions or renewals of any of the
foregoing which are material to the businesses, operations, assets, condition
(financial or otherwise) or prospects of UAG and the UAG Subsidiaries. Neither
UAG nor any UAG Subsidiary nor, to the knowledge of UAG and each UAG
Subsidiary, any other party thereto, is in breach of or default under any UAG
Agreement, and no event has occurred which (after notice or lapse of time or
both) would become a breach or default under, or would permit modification,
cancellation, acceleration or termination of, any UAG Agreement or result in
the creation of any security interest upon, or any person obtaining any right
to acquire, any properties, assets or rights of UAG or any UAG Subsidiary in
any such case where such breach, default or other event would have, or could
reasonably be expected to have, a material adverse effect on UAG and the UAG
Subsidiaries, taken as a whole.
4.15. BROKERS.
Neither UAG nor any UAG Subsidiary, nor any director, officer or
employee thereof, has employed any broker or finder or has incurred or will
incur any broker's, finder's or similar fees, commissions or expenses, in each
case in connection with the transactions contemplated by this Agreement or the
Documents.
4.16. PROPRIETY OF PAST PAYMENTS.
No funds or assets of UAG or any UAG Subsidiary have been used for
illegal purposes; no unrecorded funds or assets of UAG or any UAG Subsidiary
have been established for any purpose; no accumulation or use of UAG's or any
UAG Subsidiary's corporate funds or assets has been made without being properly
accounted for in the respective books and records of UAG or any UAG Subsidiary;
all payments by or on behalf of UAG and the UAG Subsidiaries have been duly and
properly recorded and accounted for in their respective books and records; no
false or artificial entry has been made in the books and records of UAG or any
UAG Subsidiary for any reason; no payment has been made by or on behalf of UAG
or any UAG Subsidiary with the understanding that any part of such payment is
to be used for any purpose other than that described in the documents
supporting such payment; and neither UAG nor any UAG Subsidiary has made,
directly or indirectly, any illegal contributions to any political party or
candidate, either domestic
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or foreign. Neither the IRS nor any other federal, state, local or foreign
government agency or entity has initiated or threatened any investigation of
any payment made by UAG or any UAG Subsidiary of, or alleged to be of, the type
described in this Section 4.16.
4.17. ENVIRONMENTAL MATTERS.
UAG and the UAG Subsidiaries have not violated, done or suffered any
act which could give rise to liability under and, to the knowledge of UAG, are
not otherwise exposed to liability under, any Environmental Law which could
reasonably be expected to have a material adverse effect on the financing
condition of UAG and the UAG Subsidiaries taken as a whole.
4.18. EMPLOYEE BENEFIT PLANS.
UAG and the UAG Subsidiaries are not subject to any liability under
any employee pension benefit plans or employee welfare benefit plans (as
defined in ERISA) maintained by UAG or any UAG Subsidiary which could
reasonably be expected to have a material adverse effect on the financial
condition of UAG and the UAG Subsidiaries, taken as a whole.
ARTICLE 5.
COVENANTS AND ADDITIONAL AGREEMENTS
5.1. ACCESS; CONFIDENTIALITY.
Between the date hereof and the Closing Date, the Stockholders and the
Companies will (i) provide to the officers and other authorized representatives
of UAG and Sub full access, during normal business hours, to any and all
premises, properties, files, books, records, documents, and other information
of the Companies and will cause their officers to furnish to UAG and Sub and
their authorized representatives any and all financial, technical and operating
data and other information pertaining to the businesses and properties of the
Companies, and (ii) make available for inspection and copying by UAG and Sub
true and complete copies of any documents relating to the foregoing. UAG and
Sub will hold in confidence (unless and to the extent compelled to disclose by
judicial or administrative process or, in the opinion of its counsel, by other
requirements of law) all Confidential Information (as defined below) and will
not disclose the same to any third party except in connection with obtaining
financing and otherwise as may reasonably be necessary to carry out this
Agreement and the transactions contemplated hereby, including any due diligence
review by or on behalf of UAG and Sub. If this Agreement is terminated, UAG and
Sub will promptly return to the Companies, upon the reasonable request of the
Companies, all Confidential Information furnished by the Companies and held by
UAG and Sub, including all copies and summaries thereof. As used herein,
"Confidential Information" shall mean all information concerning the Companies
obtained by UAG or Sub from the Companies in connection with the transactions
contemplated by this Agreement,
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except information (x) ascertainable or obtained from public information, (y)
received from a third party not employed by or otherwise affiliated with the
Companies unless such information is received from a third party in violation
of a duty such third party owes to the Companies not to disclose such
information, or (z) which is or becomes known to the public, other than through
a breach by UAG of this Agreement. The Stockholders will hold in confidence
(unless and to the extent compelled to disclose by judicial or administrative
process, or, in the opinion of their counsel, by other requirements of law) all
UAG Confidential Information (as defined below) and will not disclose the same
to any third party except as may reasonably be necessary to carry out this
Agreement and the transactions contemplated hereby, including any due diligence
review by or on behalf of the Stockholders. If this Agreement is terminated,
the Stockholders will promptly return to UAG, upon the reasonable request of
UAG, all UAG Confidential Information furnished by UAG and held by the
Stockholders, including all copies and summaries thereof. As used herein, "UAG
Confidential Information" shall mean all information concerning UAG obtained by
the Stockholders in connection with the transactions contemplated by this
Agreement, except information (x) ascertained or obtained from public
information, (y) received from a third party not employed or otherwise
affiliated with UAG unless such information is received from a third party in
violation of a duty such third party owes to UAG not to disclose such
information, or (z) which is or becomes known to the public, other than a
breach by the Stockholders of this Agreement.
5.2. FURNISHING INFORMATION; ANNOUNCEMENTS.
The Stockholders and the Companies, on the one hand, and UAG and Sub,
on the other hand, will, as soon as practicable after reasonable request
therefor, furnish to the other all the information concerning the Stockholders
and the Companies or UAG and Sub, respectively, required for inclusion in any
statement or application made by UAG or the Companies to any governmental or
regulatory body or in connection with obtaining any third party consent in
connection with the transactions contemplated by this Agreement. Neither the
Stockholders nor the Companies, on the one hand, nor UAG nor Sub, on the other
hand, or any representative thereof, shall issue any press releases or
otherwise make any public statement with respect to the transactions
contemplated hereby without the prior consent of the other, except as may be
required by law (including federal or state securities laws) as determined by
such parties' counsel.
5.3. ANTITRUST IMPROVEMENTS ACT COMPLIANCE.
UAG and Sub and the Stockholders and the Companies, as applicable,
shall each file or cause to be filed with the Federal Trade Commission and the
United States Department of Justice any notifications required to be filed by
the respective "ultimate parent" entities under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended (the "H-S-R Act"), and the rules and
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regulations promulgated thereunder, with respect to the transactions
contemplated herein. The parties shall use their best efforts to make such
filings promptly, to respond to any requests for additional information made by
either of such agencies, to cause the waiting periods under the H-S-R Act to
terminate or expire at the earliest possible date and to resist vigorously, at
their respective cost and expense (including, without limitation, the
institution or defense of legal proceedings), any assertion that the
transactions contemplated herein constitute a violation of the antitrust laws,
all to the end of expediting consummation of the transactions contemplated
herein; provided, however, that if UAG or the Stockholders shall determine
after issuance of any preliminary injunction that continuing such resistance is
not in its or their best interests, UAG or the Stockholders, as the case may
be, may, by written notice to the other party, terminate this Agreement with
the effect set forth in Section 8.2 hereof.
5.4. CERTAIN CHANGES AND CONDUCT
OF BUSINESS OF THE COMPANIES.
(a) From and after the date of this Agreement and until the Closing
Date, the Companies shall, and the Stockholders shall cause the Companies to,
conduct their respective businesses solely in the ordinary course consistent
with past practices and, without the prior written consent of UAG, neither the
Stockholders nor the Companies will, except as required or permitted pursuant
to the terms hereof, permit the Companies to:
(i) make any material change in the conduct of their respective
businesses and operations or enter into any transaction other than in
the ordinary course of business consistent with past practices;
(ii) make any change in their Articles of Incorporation or
By-laws, issue any additional shares of capital stock or equity
securities or grant any option, warrant or right to acquire any
capital stock or equity securities or issue any security convertible
into or exchangeable for their capital stock or alter any term of any
of their outstanding securities or make any change in their
outstanding shares of capital stock or other ownership interests or
its capitalization, whether by reason of a reclassification,
recapitalization, stock split or combination, exchange or readjustment
of shares, stock dividend or otherwise;
(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
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(C) issue any options or other rights to acquire from the Companies,
directly or indirectly, debt securities of the Companies or any
security convertible into or exchangeable for such debt securities;
(iv) make any sale, assignment, transfer, abandonment or other
conveyance of any of their assets or any part thereof, except
transactions pursuant to existing contracts set forth in Schedule 2.15
hereto and dispositions of inventory or of worn-out or obsolete
equipment for fair or reasonable value in the ordinary course of
business consistent with past practices;
(v) subject any of their assets, or any part thereof, to any Lien
or suffer such to be imposed other than such Liens as may arise in the
ordinary course of business consistent with past practices by
operation of law which will not have, or cannot reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect;
(vi) declare, set aside or pay any dividends or other
distributions (whether in cash, stock, property or any combination
thereof) in respect of any shares of their capital stock (other than
distributions of net income attributable to periods after November 30,
1996 or distributions of existing cash as of November 30, 1996 as long
as such distributions could not reasonably be expected to adversely
effect the business or operation of the Companies) or redeem, retire,
purchase or otherwise acquire, directly or indirectly, any shares of
its capital stock;
(vii) acquire any assets, raw materials or properties, or enter
into any other transaction, other than in the ordinary course of
business consistent with past practices;
(viii) enter into any new (or amend any existing) employee
benefit plan, program or arrangement or any new (or amend any
existing) employment, severance or consulting agreement, grant any
general increase in the compensation of officers or employees
(including any such increase pursuant to any bonus, pension,
profit-sharing or other plan or commitment) or grant any increase in
the compensation payable or to become payable to any employee, except
in accordance with pre-existing contractual provisions or consistent
with past practices;
(ix) make or commit to make any individual material capital
expenditure in excess of $100,000, or aggregate capital expenditures
in excess of $300,000;
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(x) pay, loan or advance any amount to, or sell, transfer or
lease any properties or assets to, or enter into any agreement or
arrangement with, any of their Affiliates;
(xi) guarantee any indebtedness for borrowed money or any other
obligation of any other person, other than in the ordinary course of
business consistent with past practice;
(xii) fail to keep in full force and effect insurance comparable
in amount and scope to coverage maintained by the Companies (or on
behalf of the Companies) on the date hereof;
(xiii) make any loan, advance or capital contribution to or
investment in any Person;
(xiv) make any change in any method of accounting or accounting
principle, method, estimate or practice except for any such change
required by reason of a concurrent change in GAAP or write-down the
value of any inventory or write-off as uncollectible any accounts
receivable except in the ordinary course of business consistent with
past practices;
(xv) settle, release or forgive any material claim or litigation
or waive any material right;
(xvi) make, enter into, modify, amend in any material respect or
terminate any material commitment, bid or expenditure, other than in
the ordinary course of business consistent with past practice;
(xvii) take any other action that would cause any of the
representations and warranties made by the Companies in this Agreement
not to remain true and correct; or
(xviii) commit itself to do any of the foregoing.
(b) From and after the date hereof and until the Closing Date, the
Stockholders and the Companies will cause the Companies to use their reasonable
best efforts to:
(i) continue to maintain, in all material respects, their
properties in accordance with present practices in a condition
suitable for their current use;
(ii) comply with all applicable Environmental Laws, and, in the
event the Companies shall receive notice that there exists a violation
of any
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Environmental Law with respect to their operations or any Real
Property, promptly (and in any event within the time period permitted
by the applicable governmental authority) remove or remedy such
violation in accordance with all applicable Environmental Laws except
where the noticed violation is contested in good faith and by
appropriate proceedings diligently conducted; provided, however, that
any remediation or removal shall be subject to the prior approval of
UAG;
(iii) file, when due or required, federal, state, foreign and
other tax returns and other reports required to be filed and pay when
due all taxes, assessments, fees and other charges lawfully levied or
assessed against the Companies unless the validity thereof is
contested in good faith and by appropriate proceedings diligently
conducted;
(iv) keep its books of account, records and files in the ordinary
course and in accordance with existing practices;
(v) preserve its business organization intact and continue to
maintain existing business relationships with suppliers, customers and
others with whom business relationships exist other than relationships
that are, at the same time, not economically beneficial to it; and
(vi) continue to conduct their business in the ordinary course
consistent with past practices.
(c) From and after the date of this Agreement and until the
Closing Date, the Stockholders shall not, except with the prior written consent
of UAG and except as required or permitted pursuant to the terms hereof:
(i) make any material change to the Real Property or the
Improvements;
(ii) subject the Real Property or the Improvements, or any part
thereof, to any new Lien or suffer such to be imposed other than
non-material Liens in the ordinary course of business consistent with
past practice;
(iii) take any other action that would cause any of the
representations or warranties made by the Stockholders in this
Agreement not to remain true and correct in all material respects; or
(iv) commit themselves to do any of the foregoing.
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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.
Until the earlier of 180 days from the date hereof and the termination
of this Agreement pursuant to clause (ii) of Section 8.1 hereof, no
Stockholder, nor the Companies, nor their officers, directors, employees,
advisors, agents, representatives, Affiliates or anyone acting on behalf of the
Stockholders, the Companies or such persons, shall, directly or indirectly,
encourage, solicit, initiate or engage in discussions or negotiations with, or
provide any information to, any person (other than UAG or its representatives)
concerning any merger, sale of assets (other than in the ordinary course of
business), purchase or sale of shares of capital stock or similar transaction
involving the Companies or purchase or sale of any of the Real Property or
Improvements. The Stockholders shall promptly communicate to UAG any inquiries
or communications concerning any such transaction (including the identity of
any person making such inquiry or communication) which any Stockholder may
receive or of which any of the Stockholders may become aware.
5.7. CONSENTS; COOPERATION.
Subject to the terms and conditions hereof, the Stockholders and the
Companies and UAG will use their respective best efforts at their own expense:
(i) to obtain prior to the earlier of the date required (if so
required) or the Closing Date, all waivers, permits, licenses,
approvals, authorizations, qualifications, orders and consents of all
third parties and governmental authorities, and make all filings and
registrations with governmental authorities which are required on
their respective parts for (A) the consummation of the transactions
contemplated by this Agreement, (B) the ownership or leasing and
operating after the Closing by the Companies of all their material
properties and (C) the conduct after the Closing by the Companies of
their respective businesses as conducted by them on the date hereof;
(ii) to defend, consistent with applicable principles and
requirements of law, any lawsuit or other legal proceedings, whether
judicial or administrative, whether brought derivatively or on
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behalf of third persons (including governmental authorities)
challenging this Agreement or the transactions contemplated hereby and
thereby; and
(iii) to furnish each other such information and assistance as
may reasonably be requested in connection with the foregoing.
5.8. ADDITIONAL AGREEMENTS.
Subject to the terms and conditions of this Agreement, each of the
parties hereto agrees to use its best efforts at its own expense to take, or
cause to be taken, all action and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement.
Each of the parties agrees to execute and deliver any and all documents that
the respective manufacturers typically require a selling dealer or an acquiring
dealer to execute in connection with the transfer of a dealership. In case at
any time after the Closing any further action is necessary or desirable to
carry out the purposes of this Agreement, each of the parties and the proper
officers of the Companies shall take all such necessary action.
5.9. INTERIM FINANCIAL STATEMENTS.
Within thirty (30) days after the end of each calendar month after the
date of this Agreement, the Companies will deliver to UAG the most recent
monthly and year-to-date financial statements provided to each franchisor of
the Companies. All such statements shall fairly present the financial position,
results of operations and cash flow of the Companies and UAG, as applicable, as
at the date or for the periods indicated and shall be prepared on a basis
consistent with the Company Factory Statements attached hereto as Schedule 2.5.
5.10. NOTIFICATION OF CERTAIN MATTERS.
Between the date hereof and the Closing, each party to this Agreement
will give prompt notice in writing to the other party hereto of: (i) any
information that indicates that any representation and warranty of such party
contained herein was not true and correct as of the date hereof or will not be
true and correct as of the Closing, (ii) the occurrence of any event which
could result in the failure to satisfy a condition specified in Article 6 or
Article 7 hereof, as applicable, (iii) any notice or other communication from
any third person alleging that the consent of such third person is or may be
required in connection with the transactions contemplated by this Agreement,
and (iv) in the case of the Stockholders and the Companies, any notice of, or
other communication relating to, any default or event which, with notice or
lapse of time or both, would become a default under any Company Agreement. The
Stockholders shall (x) promptly advise UAG of any event that has, or could in
the future have, a Material Adverse
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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. PERSONAL GUARANTEES.
UAG will use reasonable efforts to cause the Stockholders to be
released from any and all personal guarantees of any loans, leases or other
indebtedness of the Companies set forth on the Company Financial Statements
(the "Personal Guarantees"). In the event that any of the Personal Guarantees
are not released by the Closing, UAG will indemnify and hold the Stockholders
harmless from any loss with respect to the Personal Guarantees which arises
after the Closing. Notwithstanding anything in this Section to the contrary,
UAG shall not be required to cause the Stockholders to be released from or
indemnify the Stockholders for any loss with respect to any Personal Guarantees
for any loans or other indebtedness relating to the Real Property owned by the
Stockholders or their Affiliates.
5.13. NON-INTERFERENCE.
After the Closing Date and for a period of five (5) years thereafter,
the Stockholders and their Affiliates shall not knowingly interfere with or
disrupt, or attempt to interfere with or disrupt, the relationship, contractual
or otherwise, between the Companies or any supplier, manufacturer, distributor,
consultant, independent contractor or employee of the Companies and agree not
to solicit or hire any employee of the Companies unless such employee has
already terminated his employment with the Companies.
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5.14. ENVIRONMENTAL AUDITS.
Prior to the Closing, UAG will pay THE costs for a Phase I
environmental audit. If, after obtaining the results of the Phase I
environmental audit, UAG determines that a Phase II environmental audit is
required, then the expenses of performing the Phase II environmental audit
shall be paid one-half by UAG and one-half by the Stockholders; provided,
however, that the Stockholders may elect not to pay any costs of the Phase II
audit but, if the Stockholders elect not to pay one-half of the costs of the
Phase II audit and the results of the Phase II audit conclude that remediation
is required, the Stockholders shall pay the entire costs of the Phase II audit.
If the Phase II audit indicates that any remedial action is required under any
Environmental Laws and UAG reasonably determines that such remedial action is
required in order for (i) the applicable company to continue to operate its
business as conducted at the time of discovery of the need for remedial action;
or (ii) the applicable company not to incur any liability to any Person as a
result of the presence of the material which prompts the recommendation for
such remedial action, then the Stockholders shall pay the costs of such
remedial action; provided, however, that the Stockholders shall only be
required to pay the costs of the minimum remedial action required to comply
with applicable Environmental Laws to the extent provided above and provided,
further, that the Stockholder shall not be required to pay any remedial costs
that exceed $500,000 in the aggregate. If the Phase II report concludes that
remedial action is required in an amount that exceeds $500,000 in the aggregate
and the Stockholders decide not to pay the costs of such remediation then UAG
may, at its option, terminate this Agreement pursuant to Section 8.1 (iv). The
Stockholders shall have the right to obtain a second opinion with respect to
the necessity of such remedial action within thirty (30) days after the Phase
II audit and if the two (2) environmental firms cannot agree, they shall chose
a third environmental company to make such determination within sixty (60) days
after the first Phase II audit. Such third environmental company shall be
independent of the parties and generally accepted by major institutional
lenders.
5.15. ACCESS TO RECORDS.
After Closing, UAG shall provide the Stockholders with reasonable
access to the books and records of the Companies to the extent necessary for
the Stockholders to comply with applicable tax laws. UAG will cooperate, and
will cause its Affiliates to cooperate, with the Stockholders in the filing of
any returns and in any audit or refund claims proceeding involving Taxes for
which the Stockholders may be liable or with respect to which the Stockholders
may be entitled to a refund.
5.16. NISSAN, PRIMUS AND WORLD OMNI MORTGAGES.
(a) If UAG does not accept floor plan financing from Nissan, Primus or
World Omni for each of the Companies that
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currently have floor plan financing through Nissan, Primus and World Omni (on
terms comparable to such existing terms) and the failure to accept such
financing causes an event of default under the Stockholders' existing mortgages
with Nissan, Primus and World Omni which default Nissan, Primus or World Omni
(as the case may be) refuses to waive, then UAG shall secure alternative
financing for the amount of such mortgages on commercially reasonable terms.
(b) If Primus, Nissan or World Omni do not offer floor plan financing
to UAG for each of the Companies that currently have floor plan financing
through Nissan, Primus and World Omni (on terms comparable to such existing
terms) and, as a result, there is an event of default under the Stockholders'
existing mortgages with Nissan, Primus or World Omni (as the case may be) which
default is not waived, then UAG and the Stockholders will cooperate to secure
alternative financing for the amount of such mortgages on commercially
reasonable terms. If alternative financing is not available, either party may
terminate this Agreement pursuant to Section 8.1 hereof.
5.17. CERTAIN CHANGES AND CONDUCT OF BUSINESS OF UAG.
From and after the date hereof and until the Closing Date, UAG and the
UAG Subsidiaries will use their reasonable best efforts to:
(i) continue to maintain, in all material respects, their
properties in accordance with present practices in a condition
suitable for their current use except where to do so would not be
economically beneficial to UAG or the UAG Subsidiaries;
(ii) comply with all applicable Environmental Laws, and, in the
event UAG or the UAG Subsidiaries receive notice that there exists a
violation of any Environmental Law with respect to their operations or
any Real Property, promptly (and in any event within the time period
permitted by the applicable governmental authority) remove or remedy
such violation in accordance with all applicable Environmental Laws,
except where the notice of violation is contested in good faith and by
appropriate proceedings diligently conducted;
(iii) file, when due or required, federal, state, foreign and
other tax returns and other reports required to be filed and pay when
due all taxes, assessments, fees and other charges lawfully levied or
assessed against UAG or any UAG Subsidiaries unless the validity
thereof is contested in good faith and by appropriate proceedings
diligently conducted;
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(iv) keep their books of account, records and files in the
ordinary course and in accordance with existing practices;
(v) preserve their business organization intact and continue to
maintain existing business relationships with suppliers, customers and
others with whom business relationships exist other than relationships
that are, at the same time, not economically beneficial to it; and
(vi) not take any other action that would cause any of the
representations or warranties made by UAG in this Agreement not to
remain true and correct in all material respects.
5.18. 1996 FINANCIAL STATEMENTS.
Prior to the Closing, the Stockholders shall deliver to UAG audited
balance sheets of the Companies as of December 31, 1996 (the "Company Balance
Sheets") and the related consolidated statements of income, stockholders'
equity and cash flows for the fiscal year ended December 31, 1996, together
with the notes thereto which statements shall be examined and accompanied by
the report of the Companies' independent certified public accountants and, upon
delivery, such statements shall be included within the definition of Company
Financial Statements. Notwithstanding the preceding sentence, the income
statement and cash flow statement for Westbury Nissan will not be audited
statements. UAG and the Stockholders shall each pay one-half of the cost of
such audit.
ARTICLE 6.
CONDITIONS TO THE OBLIGATIONS
OF UAG AND SUB TO EFFECT THE CLOSING
The obligations of UAG and Sub required to be performed by them at the
Closing shall be subject to the satisfaction, at or prior to the Closing, of
each of the following conditions, each of which may be waived by UAG or Sub as
provided herein except as otherwise required by applicable law:
6.1. REPRESENTATIONS AND WARRANTIES; AGREEMENTS; COVENANTS.
Each of the representations and warranties of the Companies and the
Stockholders contained in this Agreement shall be true and correct as of the
date hereof and (having been deemed to have been made again at and as of the
Closing) shall be true and correct in all material respects as of the Closing.
Each of the obligations of the Companies and the Stockholder required by this
Agreement to be performed by them at or prior to the Closing shall have been
duly performed and complied with in all material respects as of the Closing. At
the Closing, UAG shall have received a certificate, dated the Closing Date and
duly executed by the
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Stockholders, to the effect that the conditions set forth in the two preceding
sentences have been satisfied.
6.2. AUTHORIZATION; CONSENTS.
(a) All corporate action necessary to authorize the execution,
delivery and performance of this Agreement and the Documents, and the
consummation of the transactions contemplated hereby and thereby shall have
been duly and validly taken by the Companies. All filings required to be made
under the H-S-R Act in connection with the transactions contemplated hereby
shall have been made and all applicable waiting periods with respect to each
such filing, including any extensions thereof, shall have expired or been
terminated.
(b) All notices to, and declarations, filings and registrations with,
and consents, authorizations, approvals and waivers from, governmental and
regulatory bodies and third persons (including, but not limited to, all
automobile manufacturers with whom the Companies have entered into a franchise
agreement (or comparable instrument, mortgages, floor plan lenders and other
lenders)) required to consummate the transactions contemplated hereby and all
consents or waivers shall have been made or obtained.
6.3. OPINIONS OF THE COMPANIES' AND THE STOCKHOLDERS' COUNSEL.
UAG and Sub shall have been furnished with the opinion of counsel for
the Companies and the Stockholders, dated the Closing Date, in form and
substance reasonably satisfactory to UAG and its counsel, which opinion shall
have been rendered with respect to those matters contained in Sections 2.1,
2.3, 2.4, 2.9, 3.1 and 3.2 hereof. In rendering the foregoing opinion, such
counsel may rely as to factual matters upon certificates or other documents
furnished by officers and directors of the Companies and by government
officials and upon such other documents and data as such counsel deem
appropriate as a basis for their opinions. Such counsel may specify the state
or states in which they are admitted to practice, that they are not admitted to
the Bar in any other state or experts in the law of any other state and that
such opinions are limited to New York, Florida and federal laws.
6.4. ABSENCE OF LITIGATION.
No order, stay, injunction or decree of any court of competent
jurisdiction in the Untied States shall be in effect (i) that prevents or
delays the consummation of any of the transactions contemplated hereby or (ii)
would impose any limitation on the ability of UAG or Sub effectively to
exercise full rights of ownership of the Shares. No action, suit or proceeding
before any court or any governmental or regulatory entity shall be pending (or
threatened by any governmental or regulatory entity), and no investigation by
any governmental or regulatory entity shall have
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been commenced (and be pending), seeking to restrain or prohibit (or
questioning the validity or legality of) the consummation of the transactions
contemplated by this Agreement or seeking damages in connection therewith which
UAG or Sub, in good faith and with the advice of counsel, believes makes it
undesirable to proceed with the consummation of the transactions contemplated
hereby.
6.5. NO MATERIAL ADVERSE EFFECT.
During the period from December 31, 1995 to the Closing Date, there
shall not have been any material adverse change in the assets, properties,
business, operations, prospects, net income or financial condition of the
Companies.
6.6. NET WORTH.
On the Closing Date, the Stockholder shall deliver to UAG a balance
sheet of the Companies in accordance with Section 1.3.
6.7. COMPLETION OF DUE DILIGENCE.
UAG and Sub shall have completed their due diligence examination of
the Companies, the Real Property and the Improvements and the results of such
examination, including any Phase I or Phase II environmental audits of the
Companies, shall be satisfactory to UAG and Sub.
6.8. NET INCOME.
Coopers & ▇▇▇▇▇▇▇ or such other accounting firm as UAG may select
shall have confirmed to UAG that the 1996 Earnings of the Companies for the
year ending December 31, 1996 are no less than Eleven Million Dollars
($11,000,000). For purposes of this Section 6.8, 1996 Earnings shall be
determined using the same methodology as the earnings set forth on Schedule 6.8
hereto.
6.9. LEASES.
The Companies and the Landlords shall have entered into the Leases and
shall have agreed to the form of the New Facility Lease.
6.10. BOARD APPROVAL.
The Board of Directors of UAG and Sub shall have approved the
consummation of all of the transactions contemplated by this Agreement.
6.11. CERTIFICATES.
The Stockholders and the Companies shall have furnished UAG and Sub
with a certificate, dated as of the Closing Date, executed by the Stockholders
certifying to the fulfillment of the
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conditions set forth in Sections 6.5 and 6.6 hereof and shall have furnished
UAG and Sub with such any other certificates of its officers and others as UAG
and Sub may reasonably request to evidence compliance with the conditions set
forth in this Article 6.
6.12. LEGAL MATTERS.
All certificates, instruments, opinions and other documents required
to be executed or delivered by or on behalf of the Stockholders and the
Companies under the provisions of this Agreement, and all other actions and
proceedings required to be taken by or on behalf of the Stockholders and the
Companies in furtherance of the transactions contemplated hereby, shall be
reasonably satisfactory in form and substance to counsel for UAG and Sub.
6.13. APPROVAL OF MANUFACTURERS AND DISTRIBUTORS.
The Stockholders and the Companies shall have obtained the consent,
authorization and approval of each of the Companies' respective manufacturers
for the transfer of the Companies to UAG or UAG East on terms no less favorable
to those granted to the Stockholders and the Companies immediately prior to the
execution of this Agreement.
6.14. NONDISTURBANCE AGREEMENTS/ESTOPPEL CERTIFICATES.
UAG shall have been provided with nondisturbance agreements and
estoppel certificates in form and substance satisfactory to UAG with respect to
the properties that are the subject of the Leases and the Third Party Leases.
6.15. TITLE INSURANCE.
UAG shall have obtained title insurance on behalf of the Companies
with respect to the leasehold estates arising out of the Leases and the Third
Party Leases in form and substance satisfactory to UAG.
6.16. SCHEDULES.
The Companies and the Stockholders shall have delivered to UAG and Sub
all Schedules referred to herein and such Schedules shall be acceptable in form
and substance to UAG and Sub.
6.17. LEASE TERMINATION AGREEMENTS/MEMORANDA OF LEASE.
The appropriate parties shall have executed lease termination
agreements and memoranda of lease in form and substance satisfactory to UAG.
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6.18. RESIGNATION OF THE COMPANIES' DIRECTORS.
Each of the persons who is a director of the Companies on the Closing
Date shall have tendered to Sub in writing his or her resignation as such in
form and substance satisfactory to UAG.
6.19. EMPLOYMENT AGREEMENT.
UAG and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇. shall have entered into an employment
agreement on terms mutually agreeable to such parties.
ARTICLE 7.
CONDITIONS TO THE OBLIGATIONS OF
THE STOCKHOLDERS TO EFFECT THE CLOSING
The obligations of the Stockholders and the Companies required to be
performed by them at the Closing shall be subject to the satisfaction, at or
prior to the Closing, of each of the following conditions, each of which may be
waived by the Companies and the Stockholders as provided herein except as
otherwise required by applicable law:
7.1. REPRESENTATIONS AND WARRANTIES; AGREEMENTS.
Each of the representations and warranties of UAG and Sub contained in
this Agreement shall be true and correct on the date made and shall be true and
correct in all material respects as of the Closing. Each of the obligations of
UAG and Sub required by this Agreement to be performed by them at or prior to
the Closing shall have been duly performed and complied with in all material
respects as of the Closing. At the Closing, the Stockholders shall have
received a certificate, dated the Closing Date and duly executed by UAG and Sub
to the effect that the conditions set forth in the preceding two sentences have
been satisfied.
7.2. AUTHORIZATION OF THE AGREEMENT, CONSENTS.
(a) All corporate action necessary to authorize the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby shall have been duly and validly taken by UAG
and Sub. All filings required to be made under the H-S-R Act in connection with
the transactions contemplated hereby shall have been made and all applicable
waiting periods with respect to each such filing, including extensions thereof,
shall have expired or been terminated.
(b) All notices to, and declarations, filings and registrations with,
and consents, authorizations, approvals and waivers from, governmental and
regulatory bodies and third persons (including, but not limited to, all
automobile manufacturers with whom the Companies have entered into a franchise
agreement (or comparable instrument, mortgages, floor plan lenders and other
lenders)) required to consummate the
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transactions contemplated hereby and all consents or waivers shall have been
made or obtained.
7.3. OPINIONS OF UAG'S AND SUB'S COUNSEL.
The Stockholders shall have been furnished with the opinion of ▇▇▇▇▇▇
& ▇▇▇▇▇▇, counsel to UAG and Sub, dated the Closing Date, in form and substance
reasonably satisfactory to the Stockholders and their counsel, which opinions,
when taken together, shall have been rendered with respect to those matters
contained in Sections 4.1 and 4.2 hereof. In rendering the foregoing opinions,
such counsel may rely as to factual matters upon certificates or other
documents furnished by officers and directors of UAG and the Subs and by
government officials, and upon such other documents and data as such counsel
deems appropriate as a basis for its opinion. Such opinions may be limited to
federal laws and the General Corporation Law of the State of Delaware.
7.4. ABSENCE OF LITIGATION.
No order, stay, injunction or decree of any court of competent
jurisdiction in the Untied States shall be in effect (i) that prevents or
delays the consummation of any of the transactions contemplated hereby or (ii)
would impose any limitation on the ability of the Stockholders to transfer the
Shares. No action, suit or proceeding before any court or any governmental or
regulatory entity shall be pending (or threatened by any governmental or
regulatory entity), and no investigation by any governmental or regulatory
entity shall have been commenced (and be pending), seeking to restrain or
prohibit (or questioning the validity or legality of) the consummation of the
transactions contemplated by this Agreement or seeking damages in connection
therewith which the Stockholders, in good faith and with the advice of counsel,
believes makes it undesirable to proceed with the consummation of the
transactions contemplated hereby.
7.5. CERTIFICATES.
UAG and Sub shall have furnished the Stockholders with such
certificates of its officers and others to evidence compliance with the
conditions set forth in this Article 7 as may be reasonably requested by the
Stockholders.
7.6. LEGAL MATTERS.
All certificates, instruments, opinions and other documents required
to be executed or delivered by or on behalf of UAG or Sub under the provisions
of this Agreement, and all other actions and proceedings required to be taken
by or on behalf of UAG or Sub in furtherance of the transactions contemplated
hereby, shall be reasonably satisfactory in form and substance to counsel for
the Stockholders.
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7.7. REGISTRATION RIGHTS AGREEMENT.
UAG shall have entered into the Piggyback Registration Rights
Agreement.
7.8. SCHEDULES.
UAG shall have delivered to the Stockholders all Schedules referred to
in Article 4 and such Schedules shall be acceptable in form and substance to
the Stockholders.
7.9. LEASES.
The Companies and the Landlords shall have entered into the Leases and
shall have agreed to the form of the New Facility Lease.
7.10. NO MATERIAL ADVERSE EFFECT.
During the period from October 28, 1996 to the Closing Date, there
shall not have been any material adverse change in the assets, properties,
business, prospects, net income or financial condition of UAG.
7.11. EMPLOYMENT AGREEMENT.
UAG and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇. shall have entered into an employment
agreement on terms mutually agreeable to such parties.
ARTICLE 8.
TERMINATION
8.1. TERMINATION.
This Agreement may be terminated at any time prior to Closing:
(i) by mutual consent of UAG and the Stockholders;
(ii) by either UAG or the Stockholders if the Closing shall not
have taken place on or prior to April 30, 1997, or such later date as
shall have been approved by UAG and the Stockholders (provided that
the terminating party is not otherwise in material breach of its
representations, warranties, covenants or agreements under this
Agreement);
(iii) by UAG or the Stockholders if any court of competent
jurisdiction in the United States or other United States governmental
body shall have issued an order, decree or ruling or taken any other
action restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement, and such
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order, decree, ruling or other action shall have become final and
non-appealable;
(iv) by UAG or Sub if any of the conditions specified in Article
6 hereof have not been met or waived by UAG and Sub at such time as
such condition is no longer capable of satisfaction (provided UAG and
Sub are not otherwise in material breach of its representations,
warranties, covenants or agreements under this Agreement);
(v) by the Stockholders if any of the conditions specified in
Article 7 hereof have not been met or waived by the Stockholders at
such time as such condition is no longer capable of satisfaction
(provided that neither the Stockholders nor the Companies is otherwise
in material breach of their or its representations, warranties
covenants or agreements under this Agreement); or
(vi) by either UAG or the Stockholders if there has been a
material breach on the part of the other of any representation,
warranty, covenant or agreement set forth in this Agreement, which
breach (if capable of being cured) has not been cured within ten (10)
Business Days following receipt by the breaching party of written
notice of such breach.
If UAG or the Stockholders shall terminate this Agreement pursuant to the
provisions hereof, such termination shall be effected by notice to the other
party specifying the provision hereof pursuant to which such termination is
made.
8.2. EFFECT OF TERMINATION.
Except (i) for any willful breach of this Agreement prior to its
termination, (ii) for the obligations contained in Sections 5.1 and 10.2 hereof
and (iii) as set forth in Sections 9.1 and 9.2 hereof, upon the termination of
this Agreement pursuant to Section 8.1 hereof, this Agreement shall forthwith
become null and void and none of the parties hereto or any of their respective
officers, directors, employees, agents, Affiliates, consultants, stockholders
or principals shall have any liability or obligation hereunder or with respect
hereto.
ARTICLE 9.
INDEMNIFICATION
9.1. INDEMNIFICATION BY THE STOCKHOLDERS.
Notwithstanding the Closing or the delivery of the Shares, the
Stockholders, jointly and severally, indemnify and agree to fully defend, save
and hold harmless on an after-tax basis UAG, Sub, the Companies (after
Closing), and any of their
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respective officers, directors, employees, stockholders, advisors,
representatives, agents and Affiliates (each a "UAG Indemnified Party"), if a
UAG Indemnified Party (including the Companies after the Closing Date) shall at
any time or from time to time suffer any Costs (as defined in Section 9.6
below) arising, directly or indirectly, out of or resulting from, or shall pay
or become obligated to pay any sum on account of, (i) any and all Events of
Breach (as defined below) or (ii) any Claim before or by any court, arbitrator,
panel, agency or other governmental, administrative or judicial entity, which
Claim involves, affects or relates to any assets, properties or operations of
the Companies or the conduct of the business of the Companies prior to the
Closing Date (a "Stockholder Third Party Claim"). As used herein, "Event of
Breach" shall be and mean any one or more of the following: (i) any untruth or
inaccuracy in any representation of the Stockholders or the Companies or the
breach of any warranty of the Stockholders or the Companies contained in this
Agreement, including, without limitation, any misrepresentation in, or omission
from, any statement, certificate, schedule, exhibit, annex or other document
furnished pursuant to this Agreement by the Stockholders or the Companies (or
any representative of the Stockholders or the Companies) to UAG (or any
representative of UAG) and any misrepresentation in or omission from any
document furnished to UAG in connection with the Closing, and (ii) any failure
of the Stockholders or the Companies duly to perform or observe any term,
provision, covenant, agreement or condition on the part of the Stockholders or
the Companies to be performed or observed.
9.2. INDEMNIFICATION BY UAG.
Notwithstanding the Closing, UAG indemnifies and agrees to fully
defend, save and hold harmless on an after-tax basis the Stockholders, the
Companies (prior to Closing), and any of their respective officers, directors,
employees, stockholders, advisors, representatives, agents and Affiliates (each
a "Stockholder Indemnified Party"), if a Stockholder Indemnified Party shall at
any time or from time to time suffer any Costs arising, directly or indirectly,
out of or resulting from, or shall pay or become obligated to pay any sum on
account of, (i) any and all UAG Events of Breach (as defined below) or (ii) any
Claim before or by any court, arbitrator, panel, agency or other governmental,
administrative or judicial entity, which Claim involves, affects or relates to
any assets, properties or operations of UAG or the conduct of the business of
UAG prior to the Closing Date (a "UAG Third Party Claim"). As used herein, "UAG
Event of Breach" shall be and mean any one or more of the following: (i) any
untruth or inaccuracy in any representation of UAG or Sub or the breach of any
warranty of UAG or Sub contained in this Agreement, including, without
limitation, any misrepresentation in, or omission from, any statement,
certificate, schedule, exhibit, annex or other document furnished pursuant to
this Agreement by UAG (or any representative of UAG) to the Stockholders (or
any representative of the Stockholder) and any misrepresentation in or omission
from any document furnished to the Stockholders in connection with the
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Closing, and (ii) any failure of UAG duly to perform or observe any term,
provision, covenant, agreement or condition on the part of UAG to be performed
or observed.
9.3. PROCEDURES.
If (i) any Event of Breach occurs or is alleged and a UAG Indemnified
Party asserts that the Stockholders have become obligated to a UAG Indemnified
Party pursuant to Section 9.1, or if any Stockholder Third Party Claim is
begun, made or instituted as a result of which the Stockholders may become
obligated to a UAG Indemnified Party hereunder, or (ii) a UAG Event of Breach
occurs or is alleged and a Stockholder Indemnified Party asserts that UAG has
become obligated to a Stockholder Indemnified Party pursuant to Section 9.2, or
if any UAG Third Party Claim is begun, made or instituted as a result of which
UAG may become obligated to a Stockholder Indemnified Party hereunder (for
purposes of this Article 2, any UAG Indemnified Party and any Stockholder
Indemnified Party is sometimes referred to as an "Indemnified Party" and UAG
and the Stockholders are sometimes referred to as an "Indemnifying Party," and
any UAG Third Party Claim and any Stockholder Third Party Claim is sometimes
referred to as a "Third Party Claim," in each case as the context so requires),
such Indemnified Party shall give written notice to the Indemnifying Party of
its or his obligation to provide indemnification hereunder, provided that any
failure to so notify the Indemnifying Party shall not relieve them from any
liability that it or he may have to the Indemnified Party under this Article 9.
If such notice relates to a Third Party Claim, each Indemnifying Party, jointly
and severally, agrees to defend, contest or otherwise protect such Indemnified
Party against any such Third Party Claim at his or its sole cost and expense.
Such Indemnified Party shall have the right, but not the obligation, to
participate at its own expense in the defense thereof by counsel of such
Indemnified Party's choice and shall in any event cooperate with and assist the
Indemnifying Party to the extent reasonably possible. If the Indemnifying Party
fails timely to defend, contest or otherwise protect against such Third Party
Claim, such Indemnified Party shall have the right to do so, including, without
limitation, the right to make any compromise or settlement thereof, and such
Indemnified Party shall be entitled to recover the entire Cost thereof from the
Indemnifying Party, including, without limitation, attorneys' fees,
disbursements and amounts paid (or of which such Indemnified Party has become
obligated to pay) as the result of such Third Party Claim. Failure by the
Indemnifying Party to notify such Indemnified Party of its or their election to
defend any such Third Party Claim within fifteen (15) days after notice thereof
shall have been given to the Indemnifying Party shall be deemed a waiver by the
Indemnifying Party of its or their right to defend such Third Party Claim. If
the Indemnifying Party assumes the defense of the particular Third Party Claim,
the Indemnifying Party shall not, in the defense of such Third Party Claim,
consent to entry of any judgment or enter into any settlement, except with the
written consent of such Indemnified Party. In addition, the Indemnifying
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Party shall not enter into any settlement of any Third Party Claim except with
the written consent of such Indemnified Party) which does not include as an
unconditional term thereof the giving by the claimant or the plaintiff to such
Indemnified Party a full release from all liability in respect of such Third
Party Claim. Notwithstanding the foregoing, the Indemnifying Party shall not be
entitled to control (but shall be entitled to participate at their own expense
in the defense of), and the Indemnified Party shall be entitled to have sole
control over, the defense or settlement of any Third Party Claim to the extent
the Third Party Claim seeks an order, injunction or other equitable relief
against the Indemnified Party which, if successful, could materially interfere
with the business, operations, assets, condition (financial or otherwise) or
prospects of the Indemnified Party.
9.4. REMEDIES.
The rights of an Indemnified Party under this Article 9 are in
addition to such other rights and remedies which such Indemnified Party may
have under this Agreement, applicable law or otherwise.
9.5. DEFINITIONS.
For purposes of this Article 9 "Costs" shall mean all liabilities,
losses, reasonable costs, damages (not including consequential damages),
expenses, claims, reasonable attorneys' fees, experts' fees, consultants' fees,
and disbursements of any kind or of any nature whatsoever. For purposes of
application of the indemnity provisions of this Article 9, the amount of any
Cost arising from the breach of any representation, warranty, covenant or
agreement shall be the entire amount of any Cost suffered, paid or required to
be paid by the respective Indemnified Party as a result of such breach.
9.6. LIMITATION ON INDEMNIFICATION.
(a) Indemnification by the Stockholders.
(i) A UAG Indemnified Party shall be entitled to indemnification
in connection with an Event of Breach or a Stockholder Third Party
Claim only to the extent the aggregate Costs incurred or sustained by
all UAG Indemnified Parties exceed Two Hundred Fifty Thousand Dollars
($250,000) with respect to a breach of any provision herein other than
Section 2.11 or exceed a separate $250,000 amount with respect to a
breach under Section 2.11; provided, however, that notwithstanding the
preceding limitation, a UAG Indemnified Party shall be entitled to
indemnification for all Costs incurred or sustained by such UAG
Indemnified Party as a result of any untruth or inaccuracy in, or
breach of, a representation, warranty or covenant (or failure to
perform or observe any term,
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agreement or condition) contained in Article 1 or Sections 2.3, 2.8,
3.1, 5.6 and 5.14 (to the extent specified therein) hereof.
(ii) A UAG Indemnified Party shall be entitled to indemnification
in connection with an Event of Breach arising out of a breach of any
of the representations or warranties set forth in Articles 2 or 3
hereof or in connection with a Stockholder Third Party Claim for a
period terminating on the later of (i) the date two years after the
Closing Date, or (ii) with respect to any claim asserted with respect
to any breach of such representation or warranty pursuant to Section
9.3 hereof before the expiration of such two year period, on the date
such claim is finally liquidated or otherwise resolved; provided,
however, that a UAG Indemnified Party shall be entitled to
indemnification in connection with an Event of Breach arising out of
the representations and warranties in Sections 2.3, 2.8, 2.11, 2.20,
and 3.1 hereof until such claim is otherwise barred by the applicable
statute of limitations.
(iii) The aggregate Costs for which the Stockholders shall be
obligated to indemnify the UAG Indemnified Parties shall not exceed
Twenty-Five Million Dollars ($25,000,000) in the case of Costs
incurred or sustained by all UAG Indemnified Parties in connection
with an Event of Breach; provided, however, that a UAG Indemnified
Party shall be entitled to indemnification for all Costs incurred or
sustained by such UAG Indemnified Party as a result of any untruth or
inaccuracy in, or breach of, a representation, warranty or covenant
(or failure to perform or observe any term, agreement or condition)
contained in Article 1 or Sections 2.3, 2.8, 2.11, 2.20 and 3.1
hereof.
(b) Indemnification by UAG.
(i) A Stockholder Indemnified Party shall be entitled to
indemnification in connection with a UAG Event of Breach or a UAG
Third Party Claim only to the extent the aggregate Costs incurred or
sustained by all Stockholder Indemnified Parties exceed Two Hundred
Fifty Thousand Dollars ($250,000); provided, however, that,
notwithstanding the preceding limitation, a Stockholder Indemnified
Party shall be entitled to indemnification for all Costs incurred or
sustained by such Stockholder Indemnified Party as a result of any
untruth or inaccuracy in, or breach of, a representation, warranty or
covenant (or failure to perform or observe any term, agreement or
condition) contained in Article 1 hereof.
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(ii) A Stockholder Indemnified Party shall be entitled to
indemnification in connection with an UAG Event of Breach arising out
of a breach of any of the representations or warranties set forth in
Article 4 hereof or in connection with a UAG Third Party Claim for a
period terminating on the later of (i) the date two years after the
Closing Date, and (ii) with respect to any claim asserted with respect
to any breach of such representation or warranty pursuant to Section
9.3 hereof before the expiration of such representation or warranty,
on the date such claim is finally liquidated or otherwise resolved;
provided, however, that a Stockholder Indemnified Party shall be
entitled to indemnification in connection with an UAG Event of Breach
arising out of the representations and warranties in Sections 4.7,
4.9(b) and 4.16 hereof until such claim is otherwise barred by the
applicable statute of limitations.
(iii) The aggregate Costs for which UAG shall be obligated to
indemnify the Stockholder Indemnified Parties shall not exceed
Twenty-Five Million Dollars ($25,000,000) in the case of Costs
incurred or sustained by all Stockholder Indemnified Parties in
connection with a UAG Event of Breach; provided, however, that a
Stockholder Indemnified Party shall be entitled to indemnification for
all Costs incurred or sustained by such Stockholder Indemnified Party
as a result of untruth or inaccuracy in, or breach of, a
representation, warranty or covenant (or failure to perform or observe
any term, agreement or condition) contained in Article 1 or Sections
4.7, 4.9(b) and 4.16 hereof.
ARTICLE 10.
MISCELLANEOUS
10.1. SURVIVAL OF PROVISIONS.
(a) The respective representations, warranties, covenants and
agreements of each of the parties to this Agreement (except covenants and
agreements which are expressly required to be performed and are performed in
full on or before the Closing Date) shall survive the Closing Date and the
consummation of the transactions contemplated by this Agreement, subject to
Section 10.1(b) below. In the event of a breach of any such representations,
warranties or covenants, the party to whom such representations, warranties or
covenants have been made shall have all rights and remedies for such breach
available to it under the provisions of this Agreement or otherwise, whether at
law or in equity, regardless of any disclosure to, or investigation made by or
on behalf of, such party on or before the Closing Date.
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(b) Each of the representations and warranties set forth in Article 2,
Article 3 and Article 4 hereof and in any certificate delivered pursuant to
Article 6 or Article 7 hereof shall survive, and not be affected in any respect
by, the Closing for a period terminating on the later of (i) the date two years
after the Closing Date, and (ii) with respect to any claim asserted with
respect to any breach of such representation or warranty pursuant to Section
9.3 hereof before the expiration of such representation or warranty, on the
date such claim is finally liquidated or otherwise resolved, except with
respect to the representations and warranties in Sections 2.3, 2.8, 2.11, 2.20,
3.1, 4.7, 4.9(b) and 4.16 hereof.
10.2. FEES AND EXPENSES.
If the Closing does not occur and Section 5.6 hereof is materially
breached, then the Stockholders or the Companies shall pay to UAG, within five
(5) Business Days after receipt of a request therefor, an amount equal to all
of the reasonable legal and other fees, costs and expenses incurred by UAG in
connection with this Agreement and the transactions contemplated hereby.
10.3. HEADINGS.
The section headings herein are for convenience of reference only, do
not constitute part of this Agreement and shall not be deemed to limit or
otherwise affect any of the provisions hereof.
10.4. NOTICES.
All notices or other communications required or permitted hereunder
shall be given in writing and shall be deemed sufficient if delivered by hand,
recognized overnight delivery service for next business day delivery or
facsimile transmission (with original to follow by mail) or mailed by
registered or certified mail, postage prepaid (return receipt requested), as
follows:
If to the Companies before the Closing Date:
c/o ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Syracuse & Hirschtritt, LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
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If to the Companies after the Closing Date (in addition to the
foregoing addresses):
United Auto Group, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Executive Vice President
with a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇
2700 International Tower
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Esq.
If to the Stockholders:
c/o ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Syracuse & Hirschtritt, LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
If to UAG or Sub:
United Auto Group, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Executive Vice President
with a copy to:
▇▇▇▇▇▇ & Hardin
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.
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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. Prior drafts of this Agreement shall not be used as a basis
for interpreting this Agreement.
10.7. WAIVER AND AMENDMENTS.
Each of the Stockholders and the Companies as one party, and UAG and
Sub as the other party may by written notice to the other parties (i) extend
the time for the performance of any of the obligations or other actions of the
other parties, (ii) waive any inaccuracies in the representations or warranties
of the other parties contained in this Agreement, (iii) waive compliance with
any of the covenants of the other parties contained in this Agreement, (iv)
waive performance of any of the obligations of the other parties created under
this Agreement, or (v) waive fulfillment of any of the conditions to its own
obligations under this Agreement. The waiver by any party hereto of a breach of
any provision of this Agreement shall not operate or be construed as a waiver
of any subsequent breach, whether or not similar. This Agreement may be
amended, modified or supplemented only by a written instrument executed by the
parties hereto.
10.8. COUNTERPARTS.
This Agreement may be executed by facsimile signature(s) and in any
number of counterparts, all of which shall be considered
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one and the same agreement and each of which shall be deemed an original.
10.9. ACCOUNTING TERMS.
All accounting terms used herein which are not expressly defined or
modified in this Agreement shall have the respective meanings given to them in
accordance with GAAP.
10.10. SCHEDULES.
Disclosure of any matter in any Schedule hereto or in the Financial
Statements shall not be considered as disclosure pursuant to any other
provision, subprovision, section or subsection of this Agreement or Schedule to
this Agreement and shall not be deemed to limit any representations or
warranties made herein.
10.11. SEVERABILITY.
If any one or more of the provisions of this Agreement shall be held
to be invalid, illegal or unenforceable, the validity, legality or
enforceability of the remaining provisions of this Agreement shall not be
affected thereby. To the extent permitted by applicable law, each party waives
any provision of law which renders any provision of this Agreement invalid,
illegal or unenforceable in any respect.
10.12. REMEDIES.
None of the remedies provided for in this Agreement, including
termination of this Agreement as set forth in Article 8, indemnification as set
forth in Article 9, or the payment of certain fees, costs and expenses as set
forth in Section 10.2, shall be the exclusive remedy of either party for a
breach of this Agreement. The parties hereto shall have the right to seek any
other remedy in law or equity in lieu of or in addition to any remedies
provided in this Agreement, including an action for damages for breach of
contract.
10.13. GOVERNING LAW.
This Agreement shall be governed by and construed in accordance the
laws of the State of New York without giving effect to any choice or conflict
of law provision or rule that would cause the laws of any other jurisdiction to
apply.
10.14. TIME IS OF THE ESSENCE.
Time is of the essence for purposes of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
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UNITED AUTO GROUP, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------------
Its: Executive Vice President
[Signatures continued on following pages]
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UAG EAST, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------------
Its:
AMITY AUTO PLAZA LTD., D/B/A AMITY TOYOTA
SUPERSTORE
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------
Its: President
MASSAPEQUA IMPORTS LTD., D/B/A LEXUS OF
MASSAPEQUA
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------
Its: President
WESTBURY NISSAN LTD., D/B/A WESTBURY
NISSAN SUPERSTORE
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------
Its: President
WESTBURY SUPERSTORE LTD., D/B/A WESTBURY
TOYOTA
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------
Its: President
J&S AUTO REFINISHING LTD., D/B/A PREMIER
AUTO BODY
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------
Its: President
[Signatures continued on following page]
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FLORIDA CHRYSLER PLYMOUTH JEEP EAGLE INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------
Its: President
PALM AUTO PLAZA INC., D/B/A PALM BEACH
TOYOTA
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------
Its: President
WEST PALM INFINITI INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------
Its: President
WEST PALM NISSAN INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------
Its: President
NORTHLAKE AUTO FINISH INC., D/B/A TRAIL
AUTO BODY
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------
Its: President
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
-----------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
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