STOCK PURCHASE AGREEMENT
DATED AS OF NOVEMBER 17, 1995
AMONG
UNITED AUTO GROUP, INC.,
UAG ATLANTA, INC.,
ATLANTA TOYOTA, INC.,
AND
CARL H. WESTCOTT
This STOCK PURCHASE AGREEMENT, dated as of November 17, 1995, is by
and among United Auto Group, Inc., a Delaware corporation ("UAG"), UAG Atlanta,
Inc., a Delaware corporation ("Sub"), Atlanta Toyota, Inc., a Texas corporation
(the "Company") and Carl H. Westcott ("Selling Stockholder").
W I T N E S S E T H:
WHEREAS, the Company operates franchise automobile dealerships and
related businesses;
WHEREAS, the Selling Stockholder owns all of the issued and
outstanding shares of common stock, par value $.10, of the Company (the "Common
Stock"); and
WHEREAS, Sub is a wholly-owned subsidiary of UAG; and
WHEREAS, Sub desires to purchase 1,000 shares of Common Stock from the
Selling Stockholder (such shares being collectively referred to herein as the
"Shares"), and the Selling Stockholder desires to sell the Shares to Sub (upon
the terms and subject to the conditions set forth in this Agreement), such that
immediately after giving effect to such purchase and sale, Sub will own one
hundred (100%) percent of all of the issued and outstanding shares of Common
Stock, on a fully diluted basis;
NOW, THEREFORE, in consideration of the mutual terms, conditions and
other agreements set forth herein, the parties hereto hereby agree as follows:
ARTICLE 1
PURCHASE AND SALE OF SHARES
1.1 PURCHASE AND SALE OF THE SHARES.
(a) PURCHASE AND SALE. Upon the terms and subject to the conditions
set forth in this Agreement, the Selling Stockholder shall sell to Sub, and Sub
shall purchase from the Selling Stockholder, the Shares for an aggregate
purchase price equal to (i) $9,555,455 (the "Base Price"), which Base Price is
subject to adjustment at Closing as provided in SECTION 1.3 hereof and after
Closing as provided in SECTION 1.2 hereof and (ii) a promissory note (the "Sub
Note") issued by Sub and guaranteed by UAG in the principal amount of $2,100,100
with interest only payable semi-annually at the prime rate set by Citibank, N.A.
on the Closing Date and maturing on the last day of the thirtieth month
following the Closing Date, such promissory note being in a form mutually
acceptable to the parties. At the Closing referred to in SECTION 1.1(b) hereof:
(i) The Selling Stockholder shall sell, assign, transfer and
deliver to Sub the Shares representing 100% of the outstanding Common Stock
and shall 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 Selling
Stockholder and in payment therefor shall deliver to the Selling
Stockholder (A) immediately available funds in an aggregate amount equal to
the Base Price as adjusted as provided in SECTION 1.3 hereof by wire
transfer to an account designated in writing by the Selling Stockholder and
(B) the Sub Note duly executed by Sub.
(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 at the offices of Rogers & Hardin, 2700 Cain Tower, Peachtree
Center, 229 Peachtree Street, N.E., Atlanta, Georgia 30303, or such other
location as the parties shall agree upon, at 10:00 a.m. as soon as practicable
following the date on which all conditions to the obligations of the parties
hereunder (other than those requiring an
exchange of certificates, opinions or other documents, or the taking of other
action, at the Closing) have been satisfied or waived but no later than December
31, 1995. The date on which the Closing is to occur 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 Selling Stockholder shall deliver to Sub (A)
certificates representing the Shares bearing the restrictive legend
customarily placed on securities that have not been registered under
applicable federal and state securities laws and accompanied by stock
powers as required by SECTION 1.1(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 Selling Stockholder at or prior to the Closing or
otherwise required in connection herewith;
(ii) Sub shall pay and deliver to the Selling Stockholder (A)
funds as required by SECTION 1.1(a)(ii) hereof, (B) the Sub Note duly
executed by Sub; (C) a guaranty of the Sub Note and the Lease (as
hereinafter defined) by UAG in a form mutually acceptable to the parties,
executed by UAG and (D) all opinions, certificates and other instruments
and documents required to be delivered by Sub at or prior to the Closing or
otherwise required in connection herewith;
(iii) the Selling Stockholder, Sub and the Company shall enter
into a lease for the real property used in the business of the Company in a
form mutually acceptable to the parties (the "Lease"). The Lease shall be
for a twenty (20) year term commencing on the Closing Date. The initial
lease rate shall be $980,000 per year, payable monthly, and (a) on the
third anniversary of the Closing Date shall increase to $1,080,000 per year
(the "Adjusted Base Rate"), (b) on the tenth anniversary of the Closing
Date (the "Tenth Anniversary") shall increase to an amount equal to the
Adjusted Base Rate plus an amount equal to a percentage of the Adjusted
Base Rate, which percentage shall be three-fourths (3/4) of the percentage
increase in the Consumer Price Index published
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from time to time by the United States Department of Labor ("CPI") between
the Closing Date and the Tenth Anniversary (such increased lease rate
hereinafter the "Increased Rate"), and (c) on the fifteenth anniversary of
the Closing Date (the "Fifteenth Anniversary") shall increase to an amount
equal to the Increased Rate plus an amount equal to a percentage of the
Increased Rate, which percentage shall be three-fourths (3/4) of the
percentage increase in the CPI between the Tenth Anniversary and the
Fifteenth Anniversary. In no event shall any adjustment in the lease rate
pursuant to SECTIONS 1.1(c) (vi)(b) OR (c) result in a rental rate
exceeding one and one-quarter (1 1/4%) percent of gross sales of the
Company for the calendar year immediately preceding such adjustment.
1.2 NET WORTH ADJUSTMENT.
(a) If the Closing Date is on or before the fifteenth (15th) of any
month, as soon as practicable after the Closing Date, the Selling Stockholder
shall deliver to Sub a balance sheet of the Company dated as of the last day of
the month immediately preceding the Closing Date, and if the Closing Date is
after the fifteenth (15th) of any month, as soon as practicable after the
Closing Date, the Selling Stockholder shall deliver to Sub a balance sheet of
the Company dated as of the last day of the month in which the Closing Date
occurred (such balance sheet so delivered is referred to herein as the "Closing
Date Balance Sheet") . The Closing Date Balance Sheet shall be prepared in good
faith on the same basis and in accordance with the accounting principles,
methods and practices used in preparing the Company Financial Statements (as
defined in SECTION 2.5 hereof), subject to the modifications, adjustments and
exceptions to such accounting principles, methods and practices as may be agreed
upon by Sub and the Selling Stockholder within thirty (30) days (or such other
number of days as the parties shall agree upon) of the date hereof and set forth
on SCHEDULE 1.2(a) hereto, and shall also include mutually agreed upon
procedures to adjust for any earnings and/or distributions of the Company
between the date of the Closing Date Balance Sheet and the Closing Date (such
accounting principles, methods and practices as so modified and adjusted, and
such procedures, are referred to herein as the "Accounting Principles") . In
connection with the preparation of the Closing Date Balance Sheet, the Selling
Stockholder and the Company shall permit the Reviewer (as
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defined below) and other representatives of Sub to conduct a physical inventory
at each location where inventory is held by the Company. From the results of
such inventory and prior to the Closing Date, Sub and the Selling Stockholder
(or the respective representatives thereof) will prepare a schedule, which shall
be signed by each of Sub and the Selling Stockholder, setting forth the nature
and quality of such inventory and such other items as shall be agreed upon by
Sub and the Selling Stockholder.
(b) Within thirty (30) days after delivery of the Closing Date
Balance Sheet, (i) Coopers & Lybrand or such other national accounting firm (the
"Reviewer") selected by Sub, shall audit or otherwise review the Closing Date
Balance Sheet in such manner as Sub and the Reviewer deem appropriate, and (ii)
Sub shall deliver such reviewed balance sheet (the "Reviewed Balance Sheet"),
together with the Reviewer's report thereon, to the Selling Stockholder. The
Reviewed Balance Sheet (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 1.2(g)(i) hereof),
computed in accordance with the definition of Net Worth set forth in SECTION
1.2(g)(ii) hereof. Sub and the Reviewer shall have the opportunity to consult
with the Selling Stockholder, the Company and each of the accountants and other
representatives of the Selling Stockholder and the Company and examine the work
papers, schedules and other documents prepared by the Selling Stockholder, the
Company and each of such accountants and other representatives during the
preparation of the Closing Date Balance Sheet. The Selling Stockholder and the
Selling Stockholder's independent public accountants shall have the opportunity
to consult with the Reviewer and examine the work papers, schedules and other
documents prepared by Sub and the Reviewer during the preparation of the
Reviewed Balance Sheet.
(c) The Selling Stockholder shall have a period of forty-five (45)
days after delivery to the Selling Stockholder of the Reviewed Balance Sheet to
present in writing to Sub all objections the Selling Stockholder 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 Sheet shall be deemed accepted and approved by the
Selling Stockholder and a supplemental closing (the "Supplemental Closing")
shall take
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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 Sub
and the Selling Stockholder.
(d) If the Selling Stockholder shall raise any objection within the
45-day period, Sub and the Selling Stockholder 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 Sub and the Selling
Stockholder within sixty (60) days after the delivery of the Reviewed Balance
Sheet, then the specific matters in dispute shall be submitted to Ernst & Young
or such other firm of independent public accountants mutually acceptable to Sub
and the Selling Stockholder, which firm shall make a final and binding
determination as to such matter or matters. Such accounting firm shall send its
written determination to Sub and the Selling Stockholder and the Supplemental
Closing, if any, shall take place five (5) Business Days following the receipt
of such determination by Sub and the Selling Stockholder. The fees and expenses
of the accounting firm referred to in this SECTION 1.2(e) shall be paid one half
by Sub and one half by the Selling Stockholder.
(f) Sub and the Selling Stockholder agree to cooperate with each
other and each other's authorized representatives and with any accounting firm
selected by Sub and the Selling Stockholder pursuant to SECTION 1.2 (e) hereof
in order that any and all matters in dispute shall be resolved as soon as
practicable.
(g) (i) If the Net Worth as shown on the Reviewed Balance Sheet as
finally determined through the operation of SECTIONS 1. 2 (a) THROUGH (e) hereof
(such amount being referred to herein as the "Final Net Worth") shall be less
than the required net worth in Section 6.15 (the amount of any such deficiency
being referred to herein as the "Net Worth Deficiency"), the Selling Stockholder
shall pay to Sub at the Supplemental Closing, by wire transfer of immediately
available funds to an account designated in writing by Sub within two (2)
Business Days of the date of the Supplemental
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Closing, an amount equal to the difference between the Net Worth Deficiency and
$200,000, together with interest on such amount from the Closing Date to the
date of the Supplemental Closing at the prime rate or its equivalent (as
announced from time to time by Citibank, N.A.).
(ii) "Net Worth" computed in connection with the Closing Date
Balance Sheet and the Reviewed Balance Sheet shall mean the amount by which the
total assets exceed the total liabilities reflected, in each case, on the
balance sheet of Company comprising the Closing Date Balance Sheet or the
Reviewed Balance Sheet, as the case may be; provided that, notwithstanding the
foregoing, the effect of any disposition of the Company's Buick dealership and
related assets shall be disregarded for the purposes of computing Net Worth.
1.3 PARKING GARAGE.
The Company is a party to a General Construction Contract Agreement
dated July 12, 1995 (the "Construction Contract") with Excel Building Systems,
Inc. which provides for the construction of a two-story parking deck for the
Company (the "Parking Garage"). The Construction Contract and change orders
attached to a Requisition for Payment dated October 6, 1995 have been supplied
to Sub. Sub and Selling Stockholder acknowledge that the parking structure may
not be completed prior to the Closing. To fund progress payments under the
Construction Contract, the Company has executed a promissory note to NationsBank
dated October 25, 1995 in the principal amount of $450,000 and the Company may
borrow additional amounts to fund amounts due under the Construction Contract.
At the Closing, UAG, Sub and Selling Stockholder agree that the Base Price shall
be reduced by $1,106,700 (plus the cost, if any, of any change orders reflecting
changes required in order for the Company to obtain a certificate of occupancy
for the
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Parking Garage) and that Sub shall pay or cause the payment of all indebtedness
of the Company to NationsBank incurred to fund the Construction Contract (the
"Construction Debt") and that Sub shall assume and agree to perform the
remaining obligations of the Company under the Construction Contract, including
amounts due for change orders. Change orders subsequent to October 6, 1995 will
be submitted to Sub for approval prior to such orders becoming binding upon the
Company. Sub will not unreasonably withhold approval of change orders approved
by the Company's consulting engineers. After the Closing Date, change orders
reflecting changes required in order for the Company to obtain a certificate of
occupancy for the Parking Garage will be submitted to the Selling Stockholder at
least five days prior to such change orders becoming binding on the Company, and
the Selling Stockholder will be provided with an opportunity to consult with the
Company and its consulting engineers with respect thereto prior to such change
orders becoming binding on the Company. To the extent that such change orders
reflect changes required in order for the Company to obtain a certificate of
occupancy for the Parking Garage (and not attributable to changes in the Parking
Garage that were made (with Sub's approval or after the Closing) or are to be
made for reasons other than being required to obtain a certificate of occupancy
for the Parking Garage), the Selling Stockholder will, upon receipt of written
request therefor, reimburse the Company for reasonable amounts paid by the
Company as a result of such required changes.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY AND THE SELLING STOCKHOLDER
Upon delivery of all of the Schedules referred to in this Article 2,
which delivery shall be no later than 30 days after the date hereof, except as
specifically set forth on SCHEDULE 2, the Company and the Selling Stockholder
will be deemed to jointly and severally represent and warrant to Sub and UAG as
follows:
2.1 ORGANIZATION AND GOOD STANDING.
The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Texas 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. The Company 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 the Company would not, or
could not reasonably be expected to, in the aggregate have a Material Adverse
Effect (as defined in SECTION 10.11 hereof). SCHEDULE 2.1 hereto lists (i) the
states and other jurisdictions where the Company is so qualified and (ii) the
assumed names under which the Company conducts business and has conducted
business during the past five
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years. The Company has previously delivered or made available to Sub complete
and correct copies of its articles of incorporation and bylaws as amended and
presently in effect.
2.2 SUBSIDIARIES.
The Company does not have any subsidiaries.
2.3 CAPITALIZATION.
The authorized stock of the Company and the number of shares of
capital stock that 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 Company 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 Company or any securities convertible into, or
other rights to acquire, any shares of capital stock of the Company, or (ii)
obligates the Company to grant, offer or enter into any of the foregoing, or
(iii) relates to the voting or control of such capital stock, securities or
rights, except as provided in this Agreement or the Documents or as set forth on
SCHEDULE 2.3 hereto. The Company has not agreed to register any securities
under the Securities Act.
2.4 AUTHORITY; APPROVALS AND CONSENTS.
The Company has the corporate power and authority to enter into this
Agreement and the Documents (as defined in SECTION 10.11 hereof) to which it is
a party and to perform its obligations hereunder and thereunder. 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
have been duly authorized and approved by the Board of Directors of the Company
and no other corporate proceedings on the part of the Company are necessary to
authorize and approve this Agreement and the Documents and the transactions
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contemplated hereby and thereby. This Agreement has been, and on the Closing
Date the Documents to which the Company is a party will be, duly executed and
delivered by, and constitute a valid and binding obligation of, the Company,
enforceable against the Company in accordance with their respective terms,
except as enforceability may be limited by general equitable principles,
bankruptcy, insolvency, reorganization, moratorium or other laws affecting
creditors' rights generally. Except as set forth on SCHEDULE 2.4, the
execution, delivery and performance by the Company and the Selling Stockholder
of this Agreement and the Documents to which it or he is a party and the
consummation of the transactions contemplated hereby and thereby do not and will
not:
(i) contravene any provisions of the Articles of Incorporation
or By-Laws of the Company;
(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, require any consent or waiver of any
party to any Company Agreement other than agreements the breach or
violation of which could not reasonably be expected to have a Material
Adverse Effect;
(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 Company (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 Company or any of its businesses
or properties; or
(v) require any authorization, consent, order, permit or
approval of, or notice to, or filing, registration or qualification with,
any governmental, administrative or judicial authority.
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Except as set forth on SCHEDULE 2.4 or referred to above, to the
knowledge of the Company, no permit or approval of, or notice to any
governmental, administrative or judicial authority is necessary to be obtained
or made by the Company to enable the Company 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
except for the renewal of any permits in the ordinary course of business
(provided that the Company reasonably believes that any such permit will be
renewed).
2.5 FINANCIAL STATEMENTS.
Except as otherwise indicated below, attached as SCHEDULE 2.5 are true
and complete copies of:
(i) (A) the audited balance sheet of the Company as of December
31, 1994, and the related 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, and (B) the audited balance sheet
of the Company as of December 31, 1993, and the related 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; and
(ii) the September 1995 financial statements provided to Toyota
Motor Sales USA, Inc. ("Toyota") and Southeast Toyota, Inc. ("Southeast
Toyota") by the Company (the "Company Factory Statements" and the balance
sheet information included therein being referred to as the "Company
Balance Sheet");
(all the foregoing financial statements, including the notes thereto, being
referred to herein collectively as the "Company Financial Statements") . The
Company Financial Statements are in accordance with the books and records of the
Company, fairly present the consolidated financial position and results of
operations of the Company 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
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(except as otherwise indicated in such statements) during such periods, and can
be legitimately reconciled with the financial statements and the financial
records maintained and the accounting methods applied by the Company for federal
income tax purposes, and the unaudited financial statements included in the
Company Financial Statements include all adjustments, which consist of only
normal recurring accruals, necessary for such fair presentations. The
statements of income included in the Company Financial Statements do not contain
any items of special or nonrecurring income except as expressly specified
therein, and the balance sheets included in the Company Financial Statements do
not reflect any write-up or revaluation increasing the book value of any assets
except as expressly stated therein. The books and accounts of the Company 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 Company consistent with prior practices of the Company.
2.6 ABSENCE OF UNDISCLOSED LIABILITIES.
The Company does not have any liability of any nature whatsoever
(whether known or unknown, due or to become due, accrued, absolute, contingent
or otherwise), including, without limitation, any unfunded obligation under
employee benefit plans or arrangements as described in SECTION 2.17 AND 2.18
hereof or liabilities for Taxes (as defined in SECTION 2.8 hereof), except for
(i) liabilities reflected or reserved in against the most recent Company
Financial Statement, (ii) current liabilities incurred in the ordinary course of
business and consistent with past practice after the date of the Company Balance
Sheet 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 Company is not a party to any Company
Agreement,or subject to any articles of incorporation or bylaw provision, any
other corporate limitation or any Legal Requirement which has, or, to the
Company or the Selling Stockholder's knowledge, can reasonably be expected to
have, a Material Adverse Effect.
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2.7 ABSENCE OF MATERIAL ADVERSE EFFECT; CONDUCT OF BUSINESS.
(a) Since December 31, 1994, except as set forth on SCHEDULE 2.7(a)
hereto, the Company has operated in the ordinary course of business consistent
with past practice and there has not been:
(i) any material adverse change in the assets, properties,
business, operations, prospects, net income or financial condition of the
Company and, to the knowledge of the Selling Stockholder and the Company,
no factor, event, condition, circumstance or prospective development exists
which could reasonably be expected to have a Material Adverse Effect;
(ii) any material loss, damage, destruction or other casualty to
the property or other assets of the Company, whether or not covered by
insurance;
(iii) any change in any method of accounting or accounting
practice of the Company; or
(iv) any loss of the employment, services or benefits of any key
employee of the Company.
(b) Since December 31, 1994, except as set forth in SCHEDULE 2.7(b)
hereto, the Company has not:
(i) incurred any material obligation or liability (whether
absolute, accrued, contingent or otherwise), except in the ordinary course
of business consistent with past practice;
(ii) mortgaged, pledged or subjected to any lien any of its
property or other assets except in the ordinary course of business, and
except for mechanics and materialmens liens and liens for taxes not yet due
and payable;
(iii) sold or transferred any assets or cancelled any debts or
claims or waived any rights, except in the ordinary course of business
consistent with past practice;
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(iv) defaulted on any material obligation;
(v) entered into any material transaction, except in the
ordinary course of business consistent with past practice;
(vi) 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;
(vii) 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;
(viii) discontinued any franchise;
(ix) incurred any obligation or liability to any employee for the
payment of severance benefits of more than $5,000; or
(x) entered into any agreement or made any commitment to do any
of the foregoing.
2.8 TAXES.
The Company 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 Company 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 Company 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
(including property taxes paid by the Company pursuant to any lease), sales,
franchise, withholding, social security and unemployment taxes imposed by the
United States, any
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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 each fiscal year since the formation of the Company have
been furnished or made available to UAG or its representatives and such copies
are accurate and complete as of the date hereof. The Company has also furnished
or made available to UAG correct and complete copies of all notices and
correspondence sent or received since the formation of the Company by the
Company to or from any federal, state or local tax authorities. The Company has
adequately reserved for the payment of all Taxes with respect to periods ended
on, prior to or through the date of the Company Balance Sheet for which tax
returns have not yet been filed. In the ordinary course, the Company makes
adequate provision on its books for the payment of all Taxes (including for the
current fiscal period) owed by the Company. Except to the extent reserves
therefor are reflected on the Company Balance Sheet, the Company is not liable,
or will not become liable, for any Taxes for any period ending on, prior to or
through the date of the Company Balance Sheet. On the Closing Date Balance
Sheet, the Company will have adequately reserved for the payment of any Taxes
for any period ending on, prior to or through the date of the Closing Date
Balance Sheet. Except as set forth on SCHEDULE 2.8 hereto, the Company has not
been subject to a federal or state tax audit of any kind, 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, no such audit has resulted in an adjustment in excess of $50,000.
Neither the Company nor the Selling Stockholder knows of any basis for an
assertion of a deficiency for Taxes against the Company. The Selling
Stockholder will cooperate with the Company in the filing of any returns and in
any audit or refund claim proceedings involving Taxes for which the Company may
be liable or with respect to which the Company may be entitled to a refund.
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2.9 LEGAL MATTERS.
(a) Except as set forth on SCHEDULE 2.9(a) hereto, (i) there is no
claim, action, suit, litigation, investigation, inquiry, review or proceeding
(collectively, "Claims") pending against, or, to the knowledge of the Company or
the Selling Stockholder, threatened against or affecting, the Company, 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 Selling Stockholder or the Company for any such Claims, and
(ii) the Company is 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 Company 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 Company or any of its
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 Company holds, and is in compliance with, all franchises, licenses, permits,
registrations, certificates, consents, approvals or authorizations
(collectively, "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.
(c) The Company 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, except where the failure to own or hold such Permit(s) could not
reasonably be expected to have a Material Adverse Effect.
2.10 PROPERTY
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(a) The properties and assets owned by or leased to the Company are
adequate for the conduct of the respective businesses of the Company as
presently conducted. Set forth on SCHEDULE 2.10 hereto is a list of all real
property owned by or leased to the Company (including all real property owned or
leased by the Selling Stockholder used in the businesses of the Company) and of
all options or other contracts to acquire any such interest (collectively, the
"Real Property "). All improvements to the Real Property ("Improvements") and
all machinery, equipment and other tangible property owned or used by or leased
to the Company are fit for the particular purposes for which they are used by
the Company, subject only to normal maintenance and ordinary wear and tear.
Such tangible properties and all Improvements owned or leased by the Company
conform in all material respects with all applicable laws, ordinances, rules and
regulations and other Legal Requirements and such Improvements do not encroach
in any respect on property of others.
(b) (i) The Real Property is currently zoned to permit the conduct of
the respective businesses of the Company as presently conducted. A Certificate
of Occupancy has been issued with respect to the Improvements (other than the
Parking Garage) without special conditions or restrictions.
(ii) To the knowledge of the Company and the Selling Stockholder,
the detention pond on the Real Property has not flooded in the past five years.
(iii) All necessary building permits and other governmental
approvals that the Company was required to obtain on or before the date hereof
have been obtained with respect to construction of the Parking Garage.
(iv) The Improvements and all machinery, equipment and other
tangible property owned or used by or leased to the Company are in good working
order and condition for the particular purposes for which they are used subject
only to normal maintenance and ordinary wear and tear. No notice of any
pending, threatened or contemplated action by any governmental authority or
agency having the power of eminent domain has been given to the Company or the
Selling Stockholder with respect to the Real Property.
2.11 ENVIRONMENTAL MATTERS.
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(a) Except as set forth on SCHEDULE 2.11(a) hereto, (i) the Company,
the Real Property, the Improvements and any property formerly owned, occupied or
leased by the Company are in full compliance with all Environmental Laws (as
defined below), (ii) the Company has obtained all Environmental Permits (as
defined below), (iii) such Environmental Permits are in full force and effect,
and (iv) the Company is in full compliance with all terms and conditions of such
Environmental Permits. As used herein, "Environmental Laws" shall mean all
applicable requirements of environmental, public or employee health and safety,
public or community right-to-know, ecological or natural resource laws or
regulations or controls, including all applicable requirements imposed by any
law (including without limitation common law), rule, order, or regulations of
any federal, state, or local executive, legislative, judicial, regulatory, or-
administrative agency, board, or authority, or any applicable private agreement
(such as covenants, conditions and restrictions), which relate to, (i) noise,
(ii) pollution or protection of the air, surface water, groundwater, or soil,
(iii) solid, gaseous, or liquid waste generation, treatment, storage, disposal
or transportation, (iv) exposure to Hazardous Materials (as defined below), or
(v) regulation of the manufacture, processing, distribution and commerce, use,
or storage of Hazardous Materials. As used herein, "Environmental Permits"
shall mean all permits, licenses, approvals, authorizations, consents or
registrations required under applicable Environmental Law in connection with the
ownership, use and/or operation of the Company or the Real Property and
Improvements of the Company.
As used in this SECTION 2.11, "Hazardous Materials" shall mean,
collectively, (i) those substances included within the definitions of or
identified as "hazardous chemicals," "hazardous waste," "hazardous substances,"
"hazardous materials," "toxic substances" or similar terms in or pursuant to,
without limitation, the Comprehensive Environmental Response Compensation and
Liability Act of 1980 (42 U.S.C. 9601 ET SEQ.) ("CERCLA"), as amended by
Superfund Amendments and Reauthorization Act of 1986 (Pub. L. 99-499, 100
State, 1613), the Resource Conservation and Recovery Act of 1976 (42 U.S.C.
Section 6901 ET SEQ.) ("RCRA") and the Occupational Safety and Health Act of
1970 (29 U.S.C. Section 651 ET SEQ.) ("OSHA"), the Hazardous Materials
Transportation Act, 49 U.S.C. Section 1801 ET SEQ. ("HMTA"), and in the
regulations promul-
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gated 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. Section 1251 ET SEQ. (33 U.S.C. Section 1321) or listed pursuant to
Section 307 of the Clean Water Act (33 U.S.C. Section 1317), (E) flammable
explosives, (F) radioactive materials, and (iv) such other substances, materials
and wastes which are or become regulated or classified as hazardous, toxic or as
"special wastes" under any Environmental Laws.
(b) Except as set forth on SCHEDULE 2.11(b), the Company and the
Selling Stockholder have not violated, done or suffered any act which could give
rise to liability under, and are not otherwise exposed to liability under, any
Environmental Law. Except as set forth on SCHEDULE 2.11(b), no event has
occurred with respect to the Real Property, the Improvements, any property
formerly owned, occupied or leased by the Company, 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. Except as set forth on
SCHEDULE 2.11(b), the Company has no contingent liability under any
Environmental Law. There are no liens under any Environmental Law on the Real
Property.
(c) Except as set forth on SCHEDULE 2.11(c) hereto, (i) neither the
Company, the Real Property or any portion thereof, the Improvements or any
property formerly owned, occupied or leased by the Company, nor, to the
knowledge of the Selling Stockholder, 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 (provided, however, that certain petroleum
products are stored and handled on the Real Property in the ordinary course of
the Company's business in compliance with all Environmental Laws), (ii) none of
the Real Property or portion thereof, the Improve-
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ments or any property formerly owned, occupied or leased by the Company has been
subject to investigation by any governmental authority evaluating the need to
investigate or undertake Remedial Action (as defined below) at such property,
and (iii) none of the Real Property, the Improvements or any property formerly
owned, occupied or leased by the Company, or, to the knowledge of the Company,
any site or location where the Company sent waste of any kind, is identified on
the current or proposed (A) National Priorities List under 40 C.F.R. 300
Appendix B, (B) Comprehensive Environmental Response Compensation and Liability
Inventory System list, or (C) any list arising from any statute analogous to
CERCLA. As used herein, "Remedial Action" shall mean any action required to (i)
clean up, remove or treat Hazardous Materials, (ii) prevent a release or threat
of release of any Hazardous Material, (iii) perform pre-remedial studies,
investigations or post-remedial monitoring and care, (iv) cure a violation of
Environmental Law or (v) take corrective action under sections 3004(u), 3004(v)
or 3008(h) of RCRA or analogous state law.
(d) Except as set forth on SCHEDULE 2.11(d) hereto, there have been
and are no (i) aboveground or underground storage tanks, subsurface disposal
systems, or wastes, drums or containers disposed of or buried on, in or under
the ground or any surface waters, (ii) asbestos or asbestos containing materials
or radon gas (except that, as to radon gas, the Company makes no representation
or warranty with respect to the Parking Garage), (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
Company 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 Company, the Real Property, the
Improvements, any property formerly owned, leased or occupied by the Company,
any offsite contamination affecting the business of the Company or any
operations conducted at the Real Property, (ii) there are no
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ongoing negotiations with or agreements with any governmental authority relating
to any Remedial Action or other environmentally related claim, (iii) the Company
has 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 Company has 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 knowledge of the Selling Stockholder and the Company,
has any other entity whose liability therefor, in whole or in part, may be
attributed to the Company, received such notice, claim, demand, suit or request
for information.
(f) The Selling Stockholder or the Company have provided to UAG all
environmental studies and reports obtained by them or known to them pertaining
to the Real Property, the Improvements, the Company and any property formerly
owned, occupied or leased by the Company, 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, any property formerly owned, occupied or leased by the Company 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.
2.12 INVENTORIES.
The values at which inventories are carried on the Company Balance
Sheet reflect the normal inventory valuation policies of the Company, and such
values are in conformity with GAAP consistently applied. All inventories
reflected on the Company Balance Sheet and Company Factory Statement or arising
since the date thereof are currently marketable and can reasonably be
anticipated to be sold at normal mark-ups within 180 days after the date hereof
in the ordinary course of business (subject to the reserve for obsolete, off-
grade or slow-moving items that is reflected in the Company Balance Sheet or
will be reflected in the Closing Date Balance Sheet), except for spare parts
inventory which inventory is good and usable.
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2.13 ACCOUNTS RECEIVABLE.
All accounts receivable, other than accounts receivable from Jayhawk
Acceptance Corporation, reflected on the Company Balance Sheet are, and all
accounts receivable, other than accounts receivable from Jayhawk Acceptance
Corporation, that will be or will have been reflected on the Closing Date
Balance Sheet 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 (in each case, subject to
any reserves reflected on such balance sheets.)
2.14 INSURANCE.
All material properties and assets of the Company which are of an
insurable character are insured against loss or damage by fire and other risks
to the extent and in the manner reasonable in light of the risks attendant to
the businesses and activities in which the Company is engaged and customary for
companies engaged in similar businesses or owning similar assets. Set forth on
SCHEDULE 2.14 hereto is a list and brief description (including the name of the
insurer, the type of coverage provided, the amount of the annual premium for the
current policy period, the amount of remaining coverage and deductibles and the
coverage period) of all policies for such insurance and the Company previously
has made available to UAG true and complete copies of all such policies. All
such policies are in full force and effect sufficient for all applicable
requirements of law and will not in any way be effected by or terminated or
lapsed by reason of the consummation of the transactions contemplated by this
Agreement and the Documents. No notice of cancellation or non-renewal with
respect to, or disallowance of any claim under, any such policy has been
received by the Company.
2.15 CONTRACTS; ETC.
As used in this Agreement, the term "Company Agreements" shall mean
all mortgages, indenture notes, agreements, contracts, leases, licenses,
franchises, obligations, instruments or other commitments, arrangements or
understandings of any kind, whether
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written or oral, binding or non-binding, (including all leases and other
agreements referred to on SCHEDULE 2.10 hereto) to which the Company is a party
or by which the Company or any of its properties 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 businesses, operations, assets,
condition (financial or otherwise) or prospects of the Company and involves more
than $50,000 over the life of such Company Agreement. True and complete copies
of all written Company Agreements referred to on SCHEDULE 2.15 and SCHEDULE 2.10
hereto have heretofore been delivered or made available to UAG, and the Company
has 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 Company is not, nor, to the knowledge of the Company and the Selling
Stockholder is, any other party thereto, in 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 breach or default under, or would permit
modification, cancellation, acceleration or termination of, any Company
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 the Company
in any such case where such breach, default or other event would have, or could
reasonably be expected to have, a Material Adverse Effect.
2.16 LABOR RELATIONS.
(a) The Company 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 on SCHEDULE 2.16(b) hereto, the Company is
not 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
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commission in excess of $10,000, (ii) agreement, policy or practice that
requires it to pay termination or severance pay to salaried, non-exempt or
hourly employees (other than as required by law), (iii) collective bargaining
agreement or other labor union contract applicable to persons employed by the
Company, nor does the Selling Stockholder or the Company know of any activities
or proceedings of any labor union to organize any such employees. The Company
has furnished to UAG complete and correct copies of all such agreements
("Employment and Labor Agreements"). The Company has not breached or otherwise
failed to comply with any provisions of any Employment or Labor Agreement,
except where such breach or failure could not reasonably be expected to have a
Material Adverse Effect.
(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 Selling
Stockholder's or the Company's knowledge, threatened, against or affecting the
Company, and the Company has 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 Company, (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 Company, (iv)
there are no charges with respect to or relating to the Company pending before
the Equal Employment Opportunity Commission or any state, local or foreign
agency responsible for the prevention of unlawful employment-practices, (v) the
Company has 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 Company and, to the knowledge of
the Company, 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 Company has 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. Sections 2101-2109, and the
regulations promulgated therein.
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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 Company or to which the Company is 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 Company or to which the Company is
required to make contributions ("Welfare Benefit Plan").
True and complete copies of all Pension Benefit Plans and Welfare
Benefit Plans (collectively, "ERISA Plans") have been delivered to or made
available to UAG together with, as applicable with respect to each such ERISA
Plan, trust agreements, summary plan descriptions, all IRS determination letters
or applications therefor with respect to any Pension Benefit Plan intended to be
qualified pursuant to Section 401 (a) of the Internal Revenue Code of 1986, as
amended (the "Code"), and valuation or actuarial reports, accountant's opinions,
financial statements, IRS Form 5500s (or 5500-C or 5500-R) and summary annual
reports for the last three years.
(b) With respect to the ERISA Plans, except as set forth on SCHEDULE
2.17(b):
(i) there is no ERISA Plan which is a " multiemployer" plan as
that term is defined in Section 3(37) of ERISA ("Multiemployer Plan");
(ii) no event has occurred or (to the knowledge of the Company
or the Selling Stockholder) is threatened or about to occur which would
constitute a prohibited transaction under Section 406 of ERISA or under
Section 4975 of the Code;
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(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, except as set forth on SCHEDULE 2.17(c):
(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 Company or the Selling Stockholder) no
such action is contemplated or under consideration and the IRS has not
asserted that any Pension Benefit Plan is not qualified under Section
401(a) of the Code or that any trust established under a Pension Benefit
Plan is not exempt under Section 501(a) of the Code.
(d) With respect to each Pension Benefit Plan which is a defined
benefit plan under Section 414(j) and, for the purpose solely of SECTION
2.17(d)(iv) hereof, each defined contribution plan under Section 414(i) of the
Code, except as set forth on SCHEDULE 2.17(d):
(i) no liability to the Pension Benefit Guaranty Corporation
("PBGC") under Sections 4062-4064 of ERISA has been incurred by the Company
since the effective date of ERISA and all premiums due and owing to the
PBGC have been timely paid;
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(ii) the PBGC has not notified the Company 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 Company or the Selling
Stockholder) 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 Company 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 aggregate of the amounts of contributions by the Company to
be paid or accrued under ERISA Plans is not expected to exceed approximately
$250,000 for the current fiscal year. To the extent required in accordance with
GAAP, the Company Balance Sheet reflects in the aggregate an accrual of all
amounts of employer contributions accrued but unpaid by the Company under the
ERISA Plans as of the date of the Company Balance Sheet.
(g) Except as set forth on SCHEDULE 2.17(g), with respect to any
Multiemployer Plan (1) the Company has not, since its formation, made or
suffered a "complete withdrawal" or "partial withdrawal" as such terms are
respectively defined in Sections 4203 and S205 of ERISA; (2) there is no
withdrawal liability of the Company under any Multiemployer Plan, computed as if
a "complete withdrawal" by the Company had occurred under
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each such Plan as of December 31, 1994; and (3) the Company has 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, except as set forth
on SCHEDULE 2.17(h):
(i) There are no liabilities of the Company under Welfare
Benefit Plans with respect to any condition which relates to a claim filed
on or before the date of this Agreement.
(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 Company maintains or is 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 Company 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 Company whose aggregate compensation
for the fiscal year ended December 31, 1994 exceeded, and whose aggregate
compensation for the fiscal year ended December 31, 1995 is likely to
exceed, $50,000. True and complete copies of all of the written plans,
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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 Company, any valuation, actuarial or accountant's opinion or other
financial reports with respect to each Compensation Commitment for the last
three years. An accurate and complete written summary has been provided to
UAG with respect to any Compensation Commitment which is unwritten.
(b) Each Compensation Commitment:
(i) since its inception, has been operated in all material
respects in accordance with its terms;
(ii) is not currently under investigation, audit or review by
the IRS or any other federal or state agency and (to the knowledge of any
Company or the Selling Stockholder) 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;
(vi) has met all applicable requirements, if any, of the Code;
and
(v) 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 Company or any ERISA Plan,
on the one hand, and any Insider, on the other hand, that have occurred since
January 1, 1995. For purposes of this Agreement:
(i) the term "Insider" shall mean the Selling Stockholder, any
director or officer of the Company, and any Affiliate, Associate or
Relative of any of the foregoing persons;
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(ii) the term "Associate" used to indicate a relationship with
any person means (A) any corporation, partnership, joint venture or other
entity of which such person is an officer or partner or is, directly or
indirectly, through one or more intermediaries, the beneficial owner of 30%
or more of (1) any class or type of equity securities or other profits
interest or (2) the combined voting power of interests ordinarily entitled
to vote for management or otherwise, and (B) any trust or other estate in
which such person has a substantial beneficial interest or as to which such
person serves as trustee or in a similar fiduciary capacity; and
(iii) a "Relative" of a person shall mean such person's spouse,
such person's parents, sisters, brothers, children and the spouses of the
foregoing, and any member of the immediate household of such person.
2.20 PROPRIETY OF PAST PAYMENTS.
Except as set forth in SCHEDULE 2.20 hereto, no funds or assets of the
Company have been used for illegal purposes; no unrecorded funds or assets of
the Company have been established for any purpose; no accumulation or use of the
Company's corporate funds or assets has been made without being properly
accounted for in the respective books and records of the Company; all payments
by or on behalf of the Company 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 Company for any reason; no
payment has been made by or on behalf of the Company 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 Company has not made, directly
or indirectly, any illegal contributions to any political party or candidate,
either domestic or foreign. Neither the IRS nor any other federal, state, local
or foreign government agency or entity has initiated or threatened any
investigation of any payment made by the Company of, or alleged to be of, the
type described in this SECTION 2.20.
2.21 INTEREST IN COMPETITORS.
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Neither the Company nor the Selling Stockholder, nor any of their
Affiliates, has 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 Company that is engaged in the retail sale of automobiles
in Georgia.
2.22 BROKERS.
Neither the Company, nor any director, officer or employee thereof,
nor the Selling Stockholder or any representative of the Selling Stockholder,
has employed any broker or finder or has incurred or will incur any broker's,
finder's or similar fees, commissions or expenses, in each case in connection
with the transactions contemplated by this Agreement or the Documents.
2.23 ACCOUNTS.
SCHEDULE 2.23 hereof correctly identifies each bank account maintained
by or on behalf or for the benefit of the Company and the name of each person
with any power or authority to act with respect thereto.
2.24 DISCLOSURE.
Neither the Company nor the Selling Stockholder has made any material
misrepresentation to UAG relating to the Company or the Shares and neither the
Company nor the Selling Stockholder has omitted to state to UAG any material
fact relating to the Company or the Shares which is necessary in order to make
the information given by or on behalf of the Company or the Selling Stockholder
to UAG not misleading or which if disclosed would reasonably affect the decision
of a person considering an acquisition of the Shares.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
OF THE SELLING STOCKHOLDER
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Upon his delivery of SCHEDULE 3.2 to UAG, the Selling Stockholder
shall be deemed to represent and warrant to UAG and Sub as follows:
3.1 OWNERSHIP OF SHARES; TITLE.
The Selling Stockholder is the owner of record and beneficially of the
Shares and has, and shall transfer to Sub at the Closing, good and marketable
title to the Shares, free and clear of any and all Security Interests, proxies
and voting or other agreements except restrictions on transfer imposed by
applicable federal and state securities laws and except as provided in the
Shareholders' Agreement.
3.2 AUTHORITY.
The Selling Stockholder has all requisite power and authority and has
full legal capacity and is competent to execute, deliver and perform this
Agreement and the Documents to which he is a party and to consummate the
transactions contemplated hereby and thereby (including the disposition of the
Shares to Sub as contemplated by this Agreement). This Agreement has been duly
executed and delivered by the Selling Stockholder and constitutes, and the
Documents to which the Selling Stockholder is a party when executed and
delivered by the Selling Stockholder will constitute, a valid and binding
obligation of the Selling Stockholder, enforceable against the Selling
Stockholder in accordance with its terms, except as enforceability may be
limited by general equitable principles, bankruptcy, insolvency, reorganization,
moratorium or other laws affecting creditors' rights generally. Except as set
forth on SCHEDULE 3.2, the execution, delivery and performance of this Agreement
and the Documents by the Selling Stockholder and the consummation of the
transactions contemplated hereby and thereby do not and will not:
(i) (after notice or lapse of time or both) conflict with,
result in a breach of any provision of, constitute a default under, result
in the modification or cancellation of, or give rise to any right of
termination or acceleration in respect of, any material contract,
agreement, commitment, understanding, arrangement or restriction to which
the Selling Stockholder is a party or to which the Selling
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Stockholder or any of the Selling Stockholder's property is subject;
(ii) violate or conflict with any Legal Requirements applicable
to the Selling Stockholder or any of the Selling Stockholder's 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.
3.3 REAL PROPERTY AND IMPROVEMENTS.
Except as set forth on SCHEDULE 3.3:
(a) The Selling Stockholder owns the Real Property and Improvements
in fee simple, free and clear of all liens, claims and encumbrances, except
those disclosed in SCHEDULE 3.3, none of which currently or, to his knowledge,
in the future will affect the use of the Real Property and Improvements for the
conduct of the respective businesses of the Company as presently conducted. No
assessments have been made against any portion of the Real Property which are
unpaid (except ad valorem taxes for the current year that are not yet due and
payable), whether or not they have become liens. To the Selling Stockholder's
knowledge, there are no disputes concerning the location of the lines and
corners of the Real Property.
(b) No one has been granted any right to purchase or lease the Real
Property or Improvements other than the existing lease in favor of the Company,
which is to be terminated at Closing.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF UAG AND SUB
Upon delivery of all of the Schedules referred to in this Article 4,
UAG and Sub will be deemed to represent and warrant to the Company and the
Selling Stockholder as follows:
4.1 ORGANIZATION AND GOOD STANDING.
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Each of UAG and each of its subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of the state of
its incorporation 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. Each of UAG and each of its subsidiaries 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 its subsidiaries would not, or
could not reasonably be expected to, in the aggregate have a material adverse
effect on UAG and its subsidiaries, taken as a whole. SCHEDULE 4.1 hereto lists
(i) the states and other jurisdictions where UAG and its subsidiaries are so-
qualified and (ii) the assumed names under which UAG conducts business. UAG has
previously delivered or made available to the Selling Stockholder complete and
correct copies of its certificate of incorporation and by-laws (including
comparable governing instruments with different names), as amended and presently
in effect.
4.2 CAPITALIZATION.
The authorized stock of UAG and the number of shares of capital stock
which are issued and outstanding are set forth on SCHEDULE 4.2 hereto. The
shares listed on SCHEDULE 4.2 hereto constitute all the issued and outstanding
shares of capital stock of UAG and have been validly authorized and issued, are
fully paid and nonassessable, have not been issued in violation of any
preemptive rights or of any federal or state securities law and no personal
liability attaches to the ownership thereof. 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 UAG or any securities convertible into, or other rights to
acquire, any shares of capital stock of UAG, or (ii) obligates UAG to grant,
offer or enter into any of the foregoing, or (iii) relates to the voting or
control of such capital stock, securities or rights, except as set forth on
SCHEDULE 4.2 hereto.
4.3 AUTHORITY; APPROVALS AND CONSENTS.
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UAG and Sub have the corporate power and authority to enter into this
Agreement and the Documents to which they are a party and to perform their
respective 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 UAG and Sub and no
other corporate proceedings on the part of UAG or Sub 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, UAG and Sub, enforceable against UAG and Sub in
accordance with their respective terms, except as enforceability may be limited
by general equitable principles, bankruptcy, insolvency, reorganization,
moratorium or other laws affecting creditors' rights generally. Except as set
forth on SCHEDULE 4.3 hereto, the execution, delivery and performance by UAG and
Sub of this Agreement and the Documents to which 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 Certificate of
Incorporation or Bylaws (including any comparable governing instrument with
a different name) of UAG or Sub;
(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
other than agreements the breach or violation of which could not reasonably
be expected to have a Material Adverse effect;
(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 or any UAG Subsidiary;
(iv) violate or conflict with any Legal Requirements applicable
to UAG or any UAG Subsidiary 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.
4.4 FINANCIAL STATEMENTS.
Attached as SCHEDULE 4.4 are true and complete copies of:
(i) the consolidated balance sheet of UAG and its subsidiaries
as of December 31 in each of the years 1993 and 1994, 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 & Lybrand,
independent certified public accountants; and
(ii) the unaudited consolidated balance sheet of UAG and its
subsidiaries as of __________________ (the "UAG Balance Sheet"), and the
unaudited consolidated statements of income, stockholders' equity and cash
flows for the month periods ended on such date, 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 its
subsidiaries, fairly present the consolidated financial position, results of
operations, stockholders' equity and changes in financial position of UAG and
its 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 its subsidiaries for federal income tax purposes, and
the unaudited financial statements included in the UAG Financial Statements
indicate all adjustments, which consist of only normal recurring accruals,
necessary for such fair presentations. The statements of income included in the
UAG Financial Statements do not contain any items of special or nonrecurring
income except as expressly specified therein, and the balance sheets included in
the UAG
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Financial Statements do not reflect any write-up or revaluation increasing the
book value of any assets, except as expressly stated therein. The books and
accounts of UAG and its 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 its subsidiaries
consistent with prior practices of UAG and its subsidiaries.
4.5 BROKERS.
Neither UAG, Sub nor any of their directors, officers or employees has
employed any broker or finder or has incurred or will incur any broker's,
finder's or similar fees, commissions or expenses, in each case in connection
with the transactions contemplated by this Agreement or the Documents.
4.6 DISCLOSURE.
Neither UAG nor Sub has made any material misrepresentation to the
Selling Stockholder and neither UAG nor Sub has omitted to state to the Selling
Stockholder any material fact relating to UAG or Sub which is necessary in order
to make the information given by UAG or Sub not misleading or which if disclosed
would reasonably affect the decision of a person considering the sale of the
Shares.
ARTICLE 5
COVENANTS AND ADDITIONAL AGREEMENTS
5.1 ACCESS; CONFIDENTIALITY.
Between the date hereof and the completion of due diligence as set
forth in Section 6.7 hereof, the Selling Stockholder and the Company 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 Company and will
cause the Company's officers to furnish to UAG and its authorized
representatives any and all financial, technical and operating data and other
information pertaining to the businesses and properties of the Company, and (ii)
make available
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for inspection and copying by UAG and Sub true and complete copies of any
documents relating to the foregoing. UAG and Sub will hold, and will cause
their representatives to 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, and will cause their representatives to, promptly
return to the Company, upon the reasonable request of the Company, all
Confidential Information furnished by the Company, including all copies and
summaries thereof. As used herein, "Confidential Information" shall mean all
information concerning the Company obtained by UAG, Sub and their
representatives from the Company in connection with the transactions
contemplated by this Agreement, except information (x) ascertainable or obtained
from public information, (y) received from a third party not employed by or
otherwise affiliated with the Company or (z) which is or becomes known to the
public, other than through a breach by UAG or Sub or any of their
representatives of this Agreement.
5.2 FURNISHING INFORMATION; ANNOUNCEMENTS.
The Selling Stockholder and the Company, 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 Selling
Stockholder and the Company or UAG and Sub, respectively, required for inclusion
in any statement or application made by UAG or Sub or the Company or the Selling
Stockholder to any governmental or regulatory body or to any manufacturer or
distributor or in connection with obtaining any third party consent in
connection with the transactions contemplated by this Agreement. Neither the
Selling Stockholder nor the Company, on the one hand, or UAG or 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.
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5.3 CERTAIN CHANGES AND CONDUCT OF BUSINESS.
(a) Except for the sale of the Company's Buick franchise and any
assets related thereto and except for transactions in connection with the
construction of the Company's parking garage and the financing thereof and
except as contemplated below, from and after the date of this Agreement and
until the Closing Date, the Company shall, and the Selling Stockholder shall
cause the Company to, conduct its businesses solely in the ordinary course
consistent with past practices and, without the prior written consent of UAG,
neither the Selling Stockholder nor the Company will, except as required or
permitted pursuant to the terms hereof, permit the Company to:
(i) make any material change in the conduct of its 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 its 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 its
capital stock or alter any material term of any of its outstanding
securities or make any change in its 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 Company, or (C) issue any options
or other rights to acquire from the Company, directly or indirectly, debt
securities of the Company or any security convertible into or exchangeable
for such debt securities;
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(iv) make any sale, assignment, transfer, abandonment or other
conveyance of any of its assets or any part thereof, except transactions
pursuant to existing contracts (which will be set forth in SCHEDULE 2.15
hereto) and dispositions in the ordinary course of business consistent with
past practices;
(v) subject any of its 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;
(vi) declare, set aside or pay any dividends or other
distribution (whether in cash, stock, property or any combination thereof)
in respect of any shares of its capital stock which would result in the Net
Worth of the Company to decrease below $2,216,168 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) except as may be disclosed to UAG prior to the Closing,
enter into any new (or amend any existing) employee benefit plan, program
or arrangement or any new (or amend any existing) employment, severance or
consulting agreement, grant any general increase in the compensation of
officers or employees (including any such increase pursuant to any bonus,
pension, profit-sharing or other plan or commitment) or grant any increase
in the compensation payable or to become payable to any employee, except in
accordance with pre-existing contractual provisions or consistent with past
practices;
(ix) make or commit to make any individual material capital
expenditure in excess of $50,000, or aggregate capital expenditures in
excess of $150,000, except in the ordinary course of business and except as
contemplated by the preceding provisions of this SECTION 5.3;
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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 its Affiliates, except in the ordinary course of
business and except as contemplated by the preceding provisions of this
SECTION 5.3;
(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 it (or on behalf of it) on
the date hereof;
(xiii) make any loan, advance or capital contribution to or
investment in any person, except in the ordinary course of business;
(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) commit itself to do any of the foregoing.
(b) Except for the sale of the Company's Buick franchise and any
assets related thereto and except for transactions in connection with the
construction of the Company's parking garage and the financing thereof, from and
after the date hereof and until the Closing Date, the Selling Stockholder and
the Company will use their reasonable best efforts to cause the Company to:
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(i) continue to maintain, in all material respects, its
properties in accordance with present practices in a condition suitable for
their current use;
(ii) 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 it unless the validity thereof is contested in good faith and by
appropriate proceedings diligently conducted;
(iii) keep its books of account, records and files in the
ordinary course and in accordance with existing practices;
(iv) 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
(v) continue to conduct its business in the ordinary course
consistent with past practices.
5.4 NO INTERCOMPANY PAYABLES OR RECEIVABLES.
Except as disclosed on SCHEDULE 5.4 (which shall be delivered within
30 days of the date of this Agreement), at the Closing there will be no
intercompany payables or intercompany receivables due and/or owing between the
Selling Stockholder and its Affiliates (other than the Company), on the one
hand, and the Company, on the other hand, other than those incurred in the
ordinary course of business and generally disclosed in the notes to the
Company's audited financial statements.
5.5 NEGOTIATIONS.
Until the earlier of 120 days from the date hereof and the termination
of this Agreement pursuant to SECTION 8.1 hereof, neither the Selling
Stockholder, nor the Company, nor the Company's officers, directors, employees,
advisors, agents, representatives, Affiliates or anyone acting on behalf of the
Selling Stockholder, the Company or such persons, shall, directly or
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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 as
contemplated hereby or in connection with the Company's sale of the Buick
franchise or in the ordinary course of business), purchase or sale of shares of
capital stock or similar transaction involving the Company. The Selling
Stockholder shall promptly communicate to UAG any inquiries or communications
concerning any such transaction (including the identity of any person making
such inquiry or communication) which the Selling Stockholder may receive or of
which the Selling Stockholder may become aware.
5.6 CONSENTS; COOPERATION.
Subject to the terms and conditions hereof, the Selling Stockholder
and the Company and UAG and Sub 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 Company
of all its material properties and (C) the conduct after the Closing by the
Company of its businesses as conducted by it on the date hereof; PROVIDED,
HOWEVER, that no such consent shall be required from the Buick Motor
Division of General Motors Corporation.
(ii) to defend, consistent with applicable principles and
requirements of law, any lawsuit or other legal proceedings, whether
judicial or administrative, whether brought derivatively or on behalf of
third persons (including governmental authorities) challenging this
Agreement or the transactions contemplated hereby; and
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(iii) to furnish each other such information and assistance as
may reasonably be requested in connection with the foregoing.
5.7 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.
In case at any time after the Closing any further action is necessary or
desirable to carry out the purposes of this Agreement, the proper officers of
the Company shall take all such necessary action.
5.8 INTERIM FINANCIAL STATEMENTS.
The Company will deliver to UAG copies of the financial statements
provided to Toyota after the date hereof within five days of their delivery, and
within thirty (30) days after the end of each calendar month after the date of
this Agreement, UAG will deliver to the Company unaudited consolidated balance
sheets of UAG, in each case as at the end of such calendar month, together with
the related unaudited consolidated statements of income and cash flow for the
fiscal month then ended. All such financial statements shall fairly present the
financial position and results of operations of the Company and UAG, as
applicable, as at the date or for the periods indicated. All unaudited
financial statements delivered pursuant to this SECTION 5.8 shall be prepared on
a basis consistent with the Company Financial Statements and the UAG Financial
Statements, as applicable.
5.9 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 made 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
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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 Selling Stockholder and the Company,
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 set forth on SCHEDULE 2.15. Each party hereto will (x) promptly
advise the other party hereto of any event that has, or could reasonably be
expected in the future to have, a Material Adverse Effect or material adverse
effect on UAG and its subsidiaries, taken as a whole, as applicable, (y) confer
on a regular and frequent basis with one or more designated representatives of
the other party to report operational matters and to report the general status
of ongoing operations, and (z) notify the other party of any emergency or other
change in the normal course of business or in the operation of the properties of
the Company and of any governmental complaints, investigations or hearings (or
communications indicating that the same may be contemplated) or adjudicatory
proceedings involving any property of the Company or UAG, as applicable, and
will keep the other party fully informed of such events and permit UAG's
representatives access to all materials prepared in connection therewith. The
Selling Stockholder 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 Selling Stockholder (including, without
limitation, any threat to commence, or notice of the commencement of any action
or other proceeding with respect to the Shares) or the occurrence of any other
event of which the Selling Stockholder has knowledge which could result in any
failure to consummate the sale of the Shares as contemplated hereby.
5.10 ASSURANCE BY THE SELLING STOCKHOLDER.
The Selling Stockholder shall use his best efforts to cause the
Company to comply with its respective covenants set forth in this Agreement.
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ARTICLE 6
CONDITIONS TO THE OBLIGATIONS
OF UAG AND SUB TO EFFECT THE CLOSING
The obligations of Sub required to be performed by it at the Closing
shall be subject to the satisfaction, at or prior to the Closing, of each of the
following conditions, each of which may be waived by 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 Company and the
Selling Stockholder 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 the Company and the Selling 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, Sub shall have received a certificate, dated the
Closing Date and duly executed by the Selling Stockholder and the chief
financial officer of the Company, to the effect that the conditions set forth in
the two preceding sentences have been satisfied except as specified in such
certificate.
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 Company.
(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 Company has a franchise agreement (or
comparable instrument) as of the Closing Date other than Buick) required to
consummate the transactions contemplated hereby and all consents or waivers
shall have been made or obtained.
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6.3 OPINIONS OF THE COMPANY'S AND THE SELLING STOCKHOLDER'S COUNSEL.
UAG shall have been furnished with the opinion of counsel for the
Company and the Selling Stockholder, dated the Closing Date, in form and
substance satisfactory to UAG and its counsel. 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 Company and by government
officials and upon such other documents and data as such counsel deem
appropriate as a basis for their opinions. Such counsel may specify the state
or states in which they are admitted to practice, that they are not admitted to
the Bar in any other state or experts in the law of any other state and that
such opinions are limited to Georgia, Texas 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 Sub effectively to exercise full rights
of ownership of the Shares. No action, suit or proceeding before any court or
any governmental or regulatory entity shall be pending (or threatened by any
governmental or regulatory entity), and no investigation by any governmental or
regulatory entity shall have been commenced (and be pending), seeking to
restrain or prohibit (or questioning the validity or legality of) the
consummation of the transactions contemplated by this Agreement or seeking
damages in connection therewith which 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, 1994 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
Company.
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6.6 WORKING CAPITAL REQUIREMENTS.
On the Closing Date, the Selling Stockholder shall deliver to Sub a
balance sheet of the Company dated as of the most recent practicable date
preceding the Closing Date, prepared in accordance with the Accounting
Principles (the "Estimated Closing Date Balance Sheet"). The Estimated Closing
Date Balance Sheet shall show as of the date thereof, after taking into account
the payment of any of the fees, costs and expenses by the Company incurred in
connection with this Agreement, consolidated net working capital of not less
than $5,454,832.
6.7 COMPLETION OF DUE DILIGENCE.
Sub shall have completed its due diligence examination of the Company,
the Real Property and the Improvements and the results of such examination,
including any Phase I or Phase II environmental audits of the Company, shall be
satisfactory to UAG; PROVIDED, HOWEVER, that, with the exception of due
diligence relating to any environmental issues, such due diligence shall be
completed, and shall be deemed completed, no later than thirty (30) days after
the execution of this Agreement. Sub will pay the costs for a Phase I
environmental audit. If, after obtaining the results of the Phase I
environmental audit, Sub determines that a Phase II environmental audit is
required, the expenses of the Phase II environmental audit shall be paid one-
half by Sub and one-half by the Selling Stockholder.
6.8 LEASE.
The Selling Stockholder and the Company shall have entered into the
Lease.
6.9 BOARD APPROVAL.
The Board of Directors of UAG and Sub shall have approved the
consummation of all of the transactions contemplated by this Agreement and the
Documents.
6.10 CERTIFICATES.
The Selling Stockholder and the Company shall have furnished Sub with
such certificates of its officers and others
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as Sub may reasonably request to evidence compliance with the conditions set
forth in this ARTICLE 6.
6.11 LEGAL MATTERS.
All certificates, instruments, opinions and other documents required
to be executed or delivered by or on behalf of the Selling Stockholder and the
Company under the provisions of this Agreement, and all other actions and
proceedings required to be taken by or on behalf of the Selling Stockholder and
the Company in furtherance of the transactions contemplated hereby, shall be
reasonably satisfactory in form and substance to counsel for UAG and Sub.
6.12 APPROVAL OF MANUFACTURER AND DISTRIBUTOR.
The Selling Stockholder and the Company shall have obtained the
consent, authorization and approval of Toyota and Southeast Toyota on terms no
less favorable to those granted to the Company immediately prior to the
execution of this Agreement.
6.13 EMPLOYMENT AGREEMENT.
The Company and John Smith shall have entered into the John Smith
Employment Agreement.
6.14 SCHEDULES.
The Company and the Selling Stockholder shall have delivered to UAG
all Schedules referred to in ARTICLES 2 AND 3 and such Schedules shall be
acceptable in form and substance to UAG and Sub.
6.15 NET WORTH OF THE COMPANY.
The Net Worth of the Company, as determined in accordance with Section
1.2 hereof, shall not be less than $2,216,168 on the Closing Date.
6.16 ENVIRONMENTAL LAWS.
The Company shall be in compliance with all applicable Environmental
Laws.
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6.17 NONDISTURBANCE AGREEMENT. The Selling Stockholder shall have obtained a
nondisturbance agreement acceptable to the Company and UAG.
ARTICLE 7
CONDITIONS TO THE OBLIGATIONS OF
THE SELLING STOCKHOLDER TO EFFECT THE CLOSING
The obligations of the Selling Stockholder and the Company 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 Selling Stockholder 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 it at or prior to the
Closing shall have been duly performed and complied with in all material
respects as of the Closing. At the Closing, the Selling Stockholder shall have
received a certificate, dated the Closing Date and duly executed by the chief
executive officer and chief financial officer of UAG and of Sub to the effect
that the conditions set forth in the preceding two sentences have been satisfied
except as specified in such certificate.
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.
(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
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with whom the Company has entered into a franchise agreement (or comparable
instrument)) required to consummate the transactions contemplated hereby and all
consents or waivers shall have been made or obtained.
7.3 OPINIONS OF UAG'S AND SUB'S COUNSEL.
The Selling Stockholder shall have been furnished with the opinion of
Rogers & Hardin, counsel to UAG and Sub, dated the Closing Date, in form and
substance satisfactory to the Selling Stockholder. 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 Sub and by government
officials, and upon such other documents and data as such counsel deems
appropriate as a basis for its opinion. Such counsel may specify the state or
states in which they are admitted to practice, that they are not admitted to the
Bar in any other state or experts in the law of any other state and that such
opinions are limited to Georgia and federal laws and the General Corporation Law
of the State of Delaware.
7.4 ABSENCE OF LITIGATION.
No order, stay, judgment or decree shall have been issued by any court
and be in effect restraining or prohibiting the consummation of the transactions
contemplated hereby.
7.5 LEASE.
The Company and Sub shall have entered into the Lease.
7.6 CERTIFICATES.
UAG and Sub shall have furnished the Selling Stockholder 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
Selling Stockholder.
7.7 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
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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 Selling Stockholder.
7.8 NO MATERIAL ADVERSE EFFECT.
During the period from December 31, 1994 to the Closing Date, there
shall not have been any material adverse change in the assets, properties,
business, operations, prospects, net income or financial condition of UAG.
7.9 BOARD APPROVAL.
The Board of Directors of the Company shall have approved the
consummation of all of the transactions contemplated by this Agreement and the
Documents.
7.10 SCHEDULES.
UAG and Sub shall have delivered to the Selling Stockholder all
Schedules referred to in ARTICLE 4 and such Schedules shall be acceptable in
form and substance to the Selling Stockholder.
7.11 REPAYMENT OF CONSTRUCTION DEBT.
UAG and Sub shall have repaid all of the Construction Debt.
ARTICLE 8
TERMINATION
8.1 TERMINATION.
This Agreement may be terminated at any time prior to Closing:
(i) by mutual consent of UAG, Sub and the Selling Stockholder;
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(ii) by either UAG, Sub, or the Selling Stockholder if the
Closing shall not have taken place on or prior to December 31, 1995, or
such later date as shall have been approved by UAG, Sub and the Selling
Stockholder (provided that the terminating party is not otherwise in
material breach of its representations, warranties, covenants or agreements
under this Agreement);
(iii) by UAG, Sub, or the Selling Stockholder if any court of
competent jurisdiction in the United States or other United States
governmental body shall have issued an order, decree or ruling or taken any
other action restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement, and such order, decree, ruling
or other action shall have become final and non-appealable;
(iv) by UAG or Sub if any of the conditions specified in
ARTICLE 6 hereof have not been met or waived by UAG and Sub at such time as
such condition is no longer capable of satisfaction (provided that neither
UAG nor Sub is otherwise in material breach of its representations,
warranties, covenants or agreements under this Agreement);
(v) by the Selling Stockholder if any of the conditions
specified in ARTICLE 7 hereof have not been met or waived by the Selling
Stockholder at such time as such condition is no longer capable of
satisfaction (provided that neither the Selling Stockholder nor the Company
is otherwise in material breach of his or its representations, warranties
covenants or agreements under this Agreement); or
(vi) by either UAG, Sub or the Selling Stockholder if there has
been a material breach on the part of the other of any representation,
warranty, covenant or agreement set forth in this Agreement, which breach
has not been cured within ten (10) Business Days following receipt by the
breaching party of written notice of such breach.
If UAG, Sub or the Selling Stockholder shall terminate this Agreement
pursuant to the provisions hereof, such termination shall be effected by notice
to the other parties specifying the provision hereof pursuant to which such
termination is made.
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8.2 EFFECT OF TERMINATION.
Except (i) for any breach of this Agreement prior to its termination,
and (ii) for the obligations contained in SECTIONS 5.1 AND 10.2 hereof, and
(iii) as set forth in SECTION 9.1 and SECTION 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 SELLING STOCKHOLDER.
Notwithstanding the Closing or the delivery of the Shares, the Selling
Stockholder indemnifies and agrees to fully defend, save and hold harmless on an
after-tax basis UAG, Sub, the Company, and any of their respective officers,
directors, employees, stockholders, advisors, representatives, agents and
Affiliates (other than the Selling Stockholder) (each a "UAG Indemnified
Party"), if a UAG Indemnified Party (including the Company after the Closing
Date) shall at any time or from time to time suffer any Costs (as defined in
SECTION 9.7 below) arising, directly or indirectly, out of or resulting from, or
shall pay or become obligated to pay any sum on account of any and all Events of
Breach (as defined below). As used herein, "Event of Breach" shall be and mean
any untruth or inaccuracy in any representation of the Selling Stockholder or
the Company or the breach of any warranty of the Selling Stockholder or the
Company contained in ARTICLE 2 OR 3 of this Agreement.
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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 Selling Stockholder,
and any of his respective advisors, representatives, agents and Affiliates
(other than the Company) (each a "Westcott Indemnified Party"), if a Westcott
Indemnified Party (including the Company prior to Closing) shall at any time or
from time to time suffer any Costs arising, directly or indirectly, out of or
resulting from, or shall pay or become obligated to pay any sum on account of
any and all UAG Events of Breach (as defined below). As used herein, "UAG Event
of Breach" shall be and mean any untruth or inaccuracy in any representation of
UAG or Sub or the breach of any warranty of UAG or Sub contained in ARTICLE 4
of this Agreement.
9.3 PROCEDURES.
If (i) any Event of Breach occurs or is alleged and a UAG Indemnified
Party asserts that the Selling Stockholder has become obligated to a UAG
Indemnified Party pursuant to SECTION 9.1, or if any third party claim is begun,
made or instituted as a result of which the Selling Stockholder may become
obligated to a UAG Indemnified Party under this ARTICLE 9 (a "Westcott Third-
Party Claim") or (ii) a UAG Event of Breach occurs or is alleged and a Westcott
Indemnified Party asserts that UAG has become obligated to a Westcott
Indemnified Party pursuant to SECTION 9.2, or if any third-party claim is begun,
made or instituted as a result of which UAG may become obligated to a Westcott
Indemnified Party under this ARTICLE 9 (a "UAG Third-Party Claim") (for purposes
of this ARTICLE 9, any UAG Indemnified Party and any Westcott Indemnified Party
is sometimes referred to as an "Indemnified Party" and UAG and the Selling
Stockholder are sometimes referred to as an "Indemnifying Party," and any UAG
Third-Party Claim and any Westcott 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
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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 which consent shall
not be unreasonably withheld. In addition, the Indemnifying Party shall not
enter into any settlement of any Third Party Claim except with the written
consent of such Indemnified Party) which does not include as an unconditional
term thereof the giving by the claimant or the plaintiff to such Indemnified
Party a full release from all liability in respect of such Third Party Claim.
Notwithstanding the foregoing, the Indemnifying Party shall not be entitled to
control (but shall be entitled to participate at their own expense in the
defense of), and the Indemnified Party shall be entitled to have sole control
over, the defense or settlement of any third party claim to the extent the Third
Party Claim seeks an order, injunction or other equitable relief against the
Indemnified Party which, if successful, could materially interfere with the
business, operations, assets, condition (financial or otherwise) or prospects of
the Indemnified Party.
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9.4 LIMITATION ON INDEMNIFICATION.
(a) INDEMNIFICATION BY THE SELLING STOCKHOLDER.
(i) The aggregate Costs for which the Selling Stockholder shall
be obligated to indemnify the UAG Indemnified Parties shall not exceed
$11,100,000 in the case of Costs incurred or sustained by all UAG
Indemnified Parties in connection with an Event of Breach.
(b) INDEMNIFICATION BY UAG.
(i) The aggregate Costs for which UAG shall be obligated to
indemnify the Westcott Indemnified Parties shall not exceed $2,000,000 in
the case of Costs incurred or sustained by all Westcott Indemnified Parties
in connection with a UAG Event of Breach.
9.5 EXCLUSIVE REMEDIES FOR BREACH OF REPRESENTATIONS AND WARRANTIES.
Notwithstanding any other provision of this Agreement to the contrary,
(i) neither UAG nor Sub shall be liable for the breach of any representation or
warranty set forth in this Agreement unless the aggregate amount of such
liability exceeds $200,000, in which event UAG shall be fully liable without
regard to such threshold, and (ii) the Selling Stockholder shall not be liable
for any breach of a representation or warranty set forth in this Agreement
unless the aggregate amount of such liability, together with the Net Worth
Deficiency, if any, exceeds $200,000, in which event the Selling Stockholder
shall be fully liable without regard to such threshold.
9.6 DEFINITIONS.
For purposes of this ARTICLE 9, "Costs" shall mean all liabilities,
losses, costs, damages (not including consequential damages), expenses, claims,
attorneys' fees, experts' fees, consultants' fees, and disbursements of any kind
or of any nature whatsoever. For purposes of application of the indemnity
provisions of this ARTICLE 9, the amount of any Cost arising from the breach of
any representation or warranty shall be the entire
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amount of any Cost suffered, paid or required to be paid by the respective
Indemnified Party as a result of such breach.
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, subject to ARTICLE 9 hereof, all rights and
remedies for such breach available to it under the provisions of this Agreement
or otherwise, whether at law or in equity, regardless of any disclosure to, or
investigation made by or on behalf of, such party on or before the Closing Date.
(b) Each of the representations and warranties set forth in ARTICLE
2, ARTICLE 3 and ARTICLE 4 hereof and in any certificate delivered pursuant to
ARTICLE 6 or ARTICLE 7 hereof, shall survive (and not be affected in any respect
by) the Closing for a period terminating on the later of (i) the date two years
after the Closing Date, and (ii) with respect to any claim asserted with respect
to any breach of such representation or warranty or 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 2.11, 2.10(b)(ii) AND 3.3(b),
which shall survive the Closing Date for a period terminating on the later of
(y) the date five years after the Closing Date, and (z) with respect to any
claim asserted with respect to any breach of such representation or warranty or
pursuant to SECTION 9.3 hereof before the expiration of such representation or
warranty, on the date the claim is finally liquidated or otherwise resolved.
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10.2 FEES AND EXPENSES.
Except as otherwise expressly provided in this Agreement, all legal
and other fees, costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby through the Closing Date shall be paid
by the party incurring such fees, costs or expenses; PROVIDED, HOWEVER, that if
the Closing does not occur and SECTION 5.5 hereof is breached, then the Selling
Stockholder or the Company shall pay to UAG, within five (5) Business Days after
receipt of a request therefor, an amount equal to all of the legal and other
fees, costs and expenses incurred by UAG in connection with this Agreement and
the transactions contemplated hereby.
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 or facsimile transmission or mailed by
registered or certified mail, postage prepaid (return receipt requested), as
follows:
If to the Company before the Closing date:
Carl H. Westcott
1303 Marsh Lane
Carrollton, Texas 75006
with a copy to:
John D. Curtis
Two Galleria Tower
Suite 900
13455 Noel Road
Dallas, Texas 75240
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If to the Company after the Closing Date (in addition to the foregoing
addresses):
United Auto Group, Inc.
375 Park Avenue
New York, New York 10022
Facsimile No.: (212) 223-5148
Attn: George G. Lowrance, Esq.,
Executive Vice President and
General Counsel
with a copy to:
Rogers & Hardin
2700 Cain Tower, Peachtree Center
229 Peachtree Street, N.E.
Atlanta, Georgia 30303
Facsimile No.: (404) 525-2224
Attn: Michael Rosenzweig
If to the Selling Stockholder:
Carl H. Westcott
1303 Marsh Lane
Carrollton, Texas 75006
with a copy to:
John D. Curtis
Two Galleria Tower
Suite 900
13455 Noel Road
Dallas, Texas 75240
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If to UAG or Sub:
United Auto Group, Inc.
375 Park Avenue
New York, New York 10022
Facsimile No.: (212) 223-5148
Attn: George G. Lowrance, Esq.,
Executive Vice President and
General Counsel
with a copy to:
Rogers & Hardin
2700 Cain Tower, Peachtree Center
229 Peachtree Street, N.E.
Atlanta, Georgia 30303
Facsimile No.: (404) 525-2224
Attn: Michael Rosenzweig
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 Selling
Stockholder, the personal representatives and heirs of the Selling Stockholder)
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 and Sub shall have the unrestricted right to
assign this Agreement and to delegate all or any part of their 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 Selling Stockholder, the Company, UAG and Sub 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
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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 in any number of counterparts, all of
which shall be considered one and the same agreement and each of which shall be
deemed an original.
10.9 GOVERNING LAW.
This Agreement shall be governed by the laws of the State of Georgia.
10.10 ACCOUNTING TERMS.
All accounting terms used herein which are not expressly defined in
this Agreement shall have the respective meanings given to them in accordance
with GAAP.
10.11 CERTAIN DEFINITIONS.
For purposes of this Agreement:
(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) "best efforts" shall be deemed to not include any obligation on
the part of any person to undertake any liabilities, expend any funds or perform
acts (except liabilities, expenditures or performance, other than any best
efforts obligations, expressly required to be undertaken by the terms of this
Agreement) which are materially burdensome to such person; PROVIDED, HOWEVER,
that notwithstanding the foregoing, the term
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"best efforts" shall include an obligation to take such actions which are
normally incident to or reasonably foreseeable in connection with such
obligation or the transactions contemplated hereby.
(c) "Business Day" shall mean any day excluding Saturday, Sunday and
any day which is a legal holiday under Federal law.
(d) "Documents" shall mean the Sub Note, the UAG Guaranty and the
Lease.
(e) "GAAP" shall mean generally accepted accounting principles which
are in effect in the United States on the Closing Date.
(f) "Material Adverse Effect" shall mean any change in, or effect on,
the Company (including the business thereof) which is, or could reasonably be
expected to be, materially adverse to the business, operations, assets,
condition (financial or otherwise) or prospects of such Company.
(g) "person" shall mean and include an individual, corporation,
partnership, joint venture, association, trust, any other unincorporated
organization or entity and a governmental entity or any department or agency
thereto.
10.12 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.
10.13 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.
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10.14 REMEDIES.
Except as contemplated by SECTION 9.5 hereof, 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, the payment of
certain fees, costs and expenses as set forth in SECTION 10.2 or specific
performance as set forth in this SECTION 10.14, shall be the exclusive remedy of
either party for a breach of this Agreement, the parties hereto having 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.
10.15 TAXES AND COOPERATION.
The parties hereby agree that the accounting records and books of the
Company will be closed on the Closing Date and agree that the pro rata
allocation method provided in Section 1362(e)(2) of the Code will not apply.
The Company will make an election under Section 1362(e)(3) of the Code for
purposes of determining the Company's taxable income or loss to be reported on
the Selling Stockholder's Form K-1, and each party hereto will take all
necessary or proper steps and make any filings or notifications required to
effect such Section 1362(e)(3) election. The parties hereto agree that the
accounting firm that prepared the Company's 1994 tax return will prepare the
Company's final S corporation tax return. The Company agrees that it will make
its books and records available to the Selling Stockholder and his
representatives, upon reasonable notice and at reasonable times, at the Selling
Stockholder's cost and expense, it being understood that the Selling Stockholder
shall be entitled to make copies of any such books and records as shall be
reasonably necessary. In the event the Internal Revenue Service or any other
taxing authority initiates an examination of the Company with respect to a
taxable period that could impact the Selling Stockholder's tax liability for any
year, UAG shall promptly notify the Selling Stockholder of such examination, and
the Selling Stockholder shall have the right to control the defense of the
Company in responding to any proposed adjustments that would impact the Selling
Stockholder.
10.16 TIME IS OF THE ESSENCE.
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Time is of the essence for purposes of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
UNITED AUTO GROUP, INC.
By: /s/ Ezra P. Mager
------------------------------
Name: Ezra P. Mager
Title: Executive Vice Chairman
UAG ATLANTA, INC.
By: /s/ Ezra P. Mager
--------------------------------
Name: Ezra P. Mager
Title:
-------------------------------
ATLANTA TOYOTA, INC.
By: /s/ Carl H. Westcott
------------------------------
Name: Carl H. Westcott
Title: Chairman
/s/ Carl H. Westcott
----------------------------------
Carl H. Westcott
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