STOCK PURCHASE AGREEMENT
DATED AS OF JUNE 7, 1996
AMONG
UNITED AUTO GROUP, INC.,
UAG ATLANTA III, INC.,
HICKMAN NISSAN, INC.,
LYNDA JANE HICKMAN
AND
LYNDA JANE HICKMAN
AS EXECUTRIX UNDER THE WILL OF
JAMES FRANKLIN HICKMAN, JR., DECEASED
This STOCK PURCHASE AGREEMENT, dated as of June 7, 1996 is by and
among United Auto Group, Inc., a Delaware corporation ("UAG"), UAG Atlanta III,
Inc., a Delaware corporation ("Sub"), Hickman Nissan, Inc., a Georgia
corporation (the "Company"), Lynda Jane Hickman, an individual resident of the
State of Georgia ("Ms. Hickman") and Lynda Jane Hickman, as Executrix under the
Will of James Franklin Hickman, Jr. Deceased ("Stockholder").
W I T N E S S E T H:
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WHEREAS, the Company operates a Nissan automobile dealership and
related businesses in Chamblee, Georgia;
WHEREAS, the Stockholder owns all of the issued and outstanding shares
of common stock, par value $100, of the Company (the "Common Stock");
WHEREAS, Sub is a wholly-owned subsidiary of UAG; and
WHEREAS, Sub desires to purchase 500 shares of Common Stock from the
Stockholder (the "Shares"), and the 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 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 Stockholder shall sell to Sub, and Sub shall
purchase from the Stockholder, the Shares for an aggregate purchase price equal
to (i) Eleven
Million Dollars ($11,000,000) (the "Base Price"), which Base Price is subject to
adjustment after Closing as provided in SECTION 1.2 hereof and (ii) a promissory
note (the "Note") issued by Sub and guaranteed by UAG and the Company in the
principal amount of Two Million Dollars ($2,000,000) with interest only payable
monthly at the rate of nine percent (9%) per annum and maturing on the second
anniversary of the Closing Date (the "Maturity Date"), such promissory note
being in the form attached hereto as EXHIBIT A. At the Closing referred to in
SECTION 1.1(b) hereof:
(i) the Stockholder shall sell, assign, transfer and deliver to
Sub the Shares representing 100% of the outstanding Common Stock, free and
clear of all Liens (as defined in SECTION 10.11), 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
Stockholder and in payment therefor shall deliver to Stockholder (A)
immediately available funds in an aggregate amount equal to the Base Price
by wire transfer to an account designated in writing by the Stockholder or
by certified funds; (B) the Note duly executed by Sub; (C) a guaranty of
the Estate Lease (as defined in SECTION 1.1(c)(iii) hereof executed by UAG,
in the form attached hereto as EXHIBIT B (the "UAG Guaranty of Estate
Lease); (D) a guaranty of the Argonne Lease (as defined in SECTION
1.1(c)(iv) hereof) executed by UAG, in the form attached hereto as EXHIBIT
C (the "UAG Guaranty of Argonne Lease); (E) a guaranty of the Note executed
by the Company, in the form attached hereto as EXHIBIT D (the "Company
Guaranty of Note"); and (F) a guaranty of the Note executed by UAG in the
form attached hereto as EXHIBIT E (the "UAG Guaranty of Note").
(b) CLOSING. Subject to the conditions set forth in this Agreement,
the purchase and sale of the Shares pursuant to this Agreement (the "Closing")
shall take place 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
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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 the
later of: (i) June 28, 1996, (ii) the date that is two (2) business days after
the date on which the H-S-R Act (as defined in SECTION 5.11) waiting period
expires or is terminated, (iii) the date that is two (2) business days after the
date on which the condition set forth in SECTION 6.10 hereof is satisfied; or
(iv) the date that is two (2) business days after the date on which the
condition set forth in SECTION 6.17 hereof is satisfied; PROVIDED, HOWEVER, that
the Closing Date shall be no later than July 10, 1996. The date on which the
Closing occurs is herein referred to as the "Closing Date".
(c) DELIVERIES AT THE CLOSING. Subject to the conditions set forth
in this Agreement, at the Closing:
(i) the 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 Stockholder at or prior to the Closing or otherwise required in
connection herewith;
(ii) Sub shall pay and deliver to the Stockholder (A) funds as
required by SECTION 1.1(a)(ii) hereof, (B) the Note duly executed by Sub;
(C) the UAG Guaranty of Estate Lease duly executed by UAG; (D) the UAG
Guaranty of Argonne Lease duly executed by UAG; (E) the Company Guaranty of
Note duly executed by the Company; (F) the UAG Guaranty of Note executed by
UAG; and (G) 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 Stockholder and the Company shall enter into a lease
for the real property used in the business of the Company and located at
5211 and 5214 Peachtree Industrial
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Boulevard, Chamblee, Georgia, in the form attached hereto as EXHIBIT F (the
"Estate Lease").
(iv) The Stockholder shall deliver to Sub a lease for the real
property used in the business of the Company and located at 3393 Malone
Drive, Chamblee, Georgia, in the form attached hereto as EXHIBIT G (the
"Argonne Lease") duly executed by Argonne Enterprises, Inc. ("Argonne") and
the Company (the "Argonne Lease and the Estate Lease being referred to
herein collectively as the "Lease").
(v) Sub shall deliver to the Stockholder the Release of Guaranty
(as defined in SECTION 7.11 hereof).
(d) UAG hereby guarantees to the Stockholder the full and prompt
payment of the Base Price and all other amounts owned by Sub to the Stockholder
under this Agreement and the full and timely performance of all the terms,
conditions, covenants and agreements to be performed by Sub pursuant to this
Agreement.
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1.2 NET WORTH ADJUSTMENT.
(a) As soon as practicable after the Closing Date, the Stockholder
shall deliver to Sub a balance sheet of the Company dated as of the Closing Date
(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 1995 Company Balance Sheet (as defined in
SECTION 2.5 hereof), subject to the modifications, adjustments and exceptions to
such accounting principles, methods and practices set forth on SCHEDULE 1.2(a)
hereto (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 Stockholder and the Company shall permit the Reviewer (as 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 Stockholder (or the
respective representatives thereof) will prepare a schedule, which shall be
signed by Sub and the Stockholder, setting forth the nature and quality of such
inventory and such other items as shall be agreed upon by Sub and the
Stockholder.
(b) Within forty-five (45) 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 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)(iii)
hereof. Sub and the Reviewer shall have the opportunity to consult with the
Stockholder, the Company and each of the accountants and other representatives
of the Stockholder and the Company and examine the work papers, schedules and
other documents prepared by the Stockholder, the Company and each of
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such accountants and other representatives during the preparation of the Closing
Date Balance Sheet. The Stockholder and the 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 Stockholder shall have a period of forty-five (45) days
after delivery to the Stockholder of the Reviewed Balance Sheet to present in
writing to Sub all objections the 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 Stockholder and a
supplemental closing (the "Supplemental Closing") shall take place within five
(5) Business Days following the expiration of such 45-day period, or on such
other date as may be mutually agreed upon in writing by Sub and the Stockholder.
(d) If the Stockholder shall raise any objection within the 45-day
period, Sub and the 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 Stockholder
within sixty (60) days after the delivery of the Reviewed Balance Sheet, then
the specific matters in dispute shall be submitted to a national firm of
independent public accountants mutually acceptable to Sub and the 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 Stockholder and the Supplemental Closing, if any, shall take place five (5)
Business Days following the receipt of such determination by Sub and the
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 Stockholder.
(f) Sub and the Stockholder agree to cooperate with each other and
each other's authorized representatives and with any accounting firm selected by
Sub and the Stockholder pursuant to
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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 Two Million Four Hundred Sixty-three Thousand Dollars ($2,463,000) (the
amount of any such deficiency being referred to herein as the "Net Worth
Deficiency"), the 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 Closing, an
amount equal to the Net Worth Deficiency, together with interest on such amount
from the Closing Date to the date of the Supplemental Closing at the prime rate
or its equivalent (as announced from time to time by Citibank, N.A.); PROVIDED,
HOWEVER, that the Stockholder shall not be required to make any payment pursuant
to this SECTION 1.2(g)(i) unless the Net Worth Deficiency exceeds Fifty Thousand
Dollars ($50,000), in which event the Stockholder shall be fully liable for all
such Net Worth Deficiency without regard to such threshold.
(i) If the Final Net Worth shall be more than Two Million Four
Hundred Sixty-three Thousand Dollars ($2,463,000) (the amount of any such excess
being referred to herein as the "Net Worth Excess"), Sub shall pay to the
Stockholder at the Supplemental Closing, by wire transfer of immediately
available funds to an account designated in writing by the Stockholder, an
amount equal to the Net Worth Excess, together with interest on such amount from
the Closing Date to the date of the Supplemental Closing at the prime rate or
its equivalent (as announced from time to time by Citibank, N.A.); PROVIDED,
HOWEVER, that Sub shall not be required to make any payment pursuant to this
SECTION 1.2(g)(ii) unless the Net Worth Excess exceeds Fifty Thousand Dollars
($50,000), in which event Sub shall be fully liable for all such Net Worth
Excess without regard to such threshold.
(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 (calculated using the
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FIFO method of inventory which means that the LIFO reserves will be added back
to inventory) exceed the total liabilities.
ARTICLE 2
REPRESENTATIONS OF
THE COMPANY AND THE STOCKHOLDER
Subject to the parties' agreement and acknowledgement that certain of
the Schedules referred to in this ARTICLE 2 are to be delivered by the Company
and the Stockholder no later than June 12, 1996, the Company and the Stockholder
hereby jointly and severally represent to UAG and Sub 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 Georgia 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(a) 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 years. Attached as SCHEDULE 2.1(b) are complete
and correct copies of the Company's Articles of Incorporation and Bylaws as
amended and presently in effect.
2.2 SUBSIDIARIES.
Except as set forth in SCHEDULE 2.2 hereto or the Disclosure Documents
(as defined in SECTION 10.11 hereof), the Company does not have any interest or
investment in any Person (as defined in SECTION 10.11 hereof).
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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 (except under this Agreement) 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. 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 Lease and to perform its obligations hereunder and thereunder.
The execution, delivery and performance of this Agreement and the Lease 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 or the Lease and the transactions contemplated hereby and
thereby. This Agreement has been, and on the Closing Date the Lease will be,
duly executed and delivered by, and constitute a valid and binding obligation
of, the Company, enforceable against the Company in accordance with its terms.
Except as set forth in SCHEDULE 2.4 hereto or the Disclosure Documents, the
execution, delivery and performance by the Company and the Stockholder of this
Agreement and the Lease and the consummation of the transactions contemplated
hereby and thereby do not and will not:
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(i) contravene any provisions of the Articles of Incorporation
or Bylaws 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, except Company 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 Lien 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, except for such violations or conflicts which could not
reasonably be expected to have a Material Adverse Effect; or
(v) require any authorization, consent, order, permit or
approval of, or notice to, or filing, registration or qualification with,
any governmental, administrative or judicial authority, except in
connection with or in compliance with the provisions of the H-S-R Act (as
defined in SECTION 5.11 hereof).
Except as referred to above, 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 such failures which could not reasonably be
expected to have a Material Adverse Effect.
2.5 FINANCIAL STATEMENTS.
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Attached as SCHEDULE 2.5 are true and complete copies of:
(i) the audited balance sheet of the Company as of December 31,
1995 (the "1995 Company Balance Sheet"), and the related statements of
income, stockholders' equity and cash flow for the fiscal year ended
December 31, 1995, together with the notes thereto, in each case examined
by and accompanied by the report of independent certified public
accountants, and (B) 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;
(ii) the unaudited balance sheet of the Company as of April 30,
1996 (the "April Company Balance Sheet") and the unaudited statement of
income, stockholders' equity and cash flow for the month period ended on
such date, together with the notes thereto (the April Unaudited Company
Balance Sheet and related statements of income, stockholder's equity and
cash flow being referred to collectively herein as "April Unaudited Company
Financial Statements"); and
(iii) the April 30, 1996 financial statement provided to Nissan
(the "Company Factory Statements");
(all of the foregoing financial statements [except for the financial statements
referred to in clause (iii) above] 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, results of
operations, stockholders' equity and changes in the financial position of the
Company as of the dates and for the periods indicated, in the case of the
financial statements referred to in clauses (i) and (ii) above in conformity
with GAAP consistently applied (except as otherwise indicated in such statements
or Disclosure Documents) 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
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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 or in the Disclosure Documents, 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 or in the Disclosure Documents. 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.
To the Stockholder's knowledge (as defined in SECTION 10.11 hereof),
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 SECTIONS 2.17 AND 2.18 hereof or
liabilities for Taxes (as defined in SECTION 2.8 hereof), except for (i)
liabilities reflected or reserved against in the April Unaudited Company
Financial Statement, (ii) current liabilities incurred in the ordinary course of
business and consistent with past practice after the date of the April Unaudited
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 or the Disclosure Documents. 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 can reasonably be expected to have, a Material Adverse
Effect, provided that the Company is in compliance with all of the terms and
provisions thereof.
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2.7 ABSENCE OF MATERIAL ADVERSE EFFECT; CONDUCT OF BUSINESS.
(a) Since December 31, 1995, except as set forth on SCHEDULE 2.7(a)
hereto or the Disclosure Documents, 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 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, 1995, except as set forth in SCHEDULE 2.7(b)
hereto or the Disclosure Documents, 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) failed to disclose or satisfy any material lien or pay or
satisfy any material obligation or liability (whether absolute, accrued,
contingent or otherwise), other than liabilities being contested in good
faith and for which adequate reserves have been provided;
(iii) mortgaged, pledged or subjected to any lien any of its
property or other assets except for mechanics' Liens and Liens for taxes
not yet due and payable;
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(iv) sold or transferred any assets or cancelled any debts or
claims or waived any rights, except in the ordinary course of business
consistent with past practice;
(v) defaulted on any material obligation;
(vi) entered into any material transaction, except in the
ordinary course of business consistent with past practice;
(vii) written down the value of a material portion of the
inventory or written off as uncollectible a material portion of the
accounts receivable or any portion thereof not reflected in the April
Unaudited Company Financial Statements;
(viii) granted any increase in the compensation or benefits of
employees other than increases in accordance with past practice not
exceeding 10% or entered into any employment or severance agreement or
arrangement with any of them;
(ix) made any individual capital expenditure in excess of
$75,000, or aggregate capital expenditures in excess of $200,000, or
additions to property, plant and equipment other than ordinary repairs and
maintenance, except for improvements to the used-car facility;
(x) discontinued any franchise or the sale of any products or
product line;
(xi) incurred any obligation or liability to any employee for the
payment of severance benefits; or
(x) entered into any agreement or made any commitment to do any
of the foregoing.
2.8 TAXES.
(a) 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
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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 for which the Company is liable, 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 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 federal income tax returns for
tax years ended December 31, 1990, 1991, 1992, 1993, 1994 and 1995 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 or its representatives correct and complete copies of all
material notices and correspondence sent or received since January 1, 1990 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 April Unaudited 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 April Unaudited 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 April Unaudited
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
in SCHEDULE 2.8 hereto or the Disclosure Documents, the Company has not been
subject to a federal or state tax audit of any kind since January 1, 1990, and
no adjustment has been proposed by the Internal Revenue Service ("IRS") since
January 1, 1990 with respect to any return for any subsequent year. With
respect to the audits referred to on
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SCHEDULE 2.8 hereto, no such audit has resulted in an adjustment in excess of
$50,000. To the Stockholder's knowledge, there is no basis for an assertion of
a deficiency for Taxes against the Company which has a substantial possibility
of being sustained on its merits on the basis of a reasonable and well-informed
analysis by a person knowledgeable in the law of such Taxes.
(b) The 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.
2.9 LEGAL MATTERS.
(a) Except as set forth in SCHEDULE 2.9(a) hereto or the Disclosure
Documents, (i) there is no claim, action, suit, litigation, investigation,
inquiry, review or proceeding (collectively, "Claims") pending against, or, to
the Stockholder's knowledge, threatened against or affecting, the Company, the
Real Property, the Improvements or any ERISA Plan (as defined in SECTION 2.18(a)
hereof) or any of the Company's or any ERISA Plan's respective assets,
properties or rights before or by any court, arbitrator, panel, agency or other
governmental, administrative or judicial entity, domestic or foreign, 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
-16-
reasonably be expected to have a Material Adverse Effect. A list of all such
permits is set forth on SCHEDULE 2.9(b) hereof.
(c) The Company owns or holds all Permits material to the conduct of
its business. To the Stockholder's knowledge, 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 material to the conduct of its
business.
2.10 PROPERTY.
(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
interests in real property owned by or leased to the Company (including all real
property owned or leased by the Stockholder (directly or indirectly) and 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 ("the "Tangible Property")
are in good operating condition and in good repair and are fit for the
particular purposes for which they are used by the Company, subject only to
ordinary wear and tear. The Real Property, the Tangible Property 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 except for nonconformity which could not reasonably be expected to have a
Material Adverse Effect. There are no latent defects with respect to the
Improvements. The Real Property is currently zoned to permit the conduct of the
respective businesses of the Company as presently conducted and there is no
pending, or to the Stockholder's knowledge, threatened applications for changes
in the zoning applicable to the Real Property. To the extent required, a
Certificate of Occupancy has been issued with respect to the Improvements
without special conditions or restrictions. To the Stockholder's knowledge, all
utilities servicing the Real Property and the Improvements are provided by
publicly-dedicated utility lines and are located within public rights-of-way and
do
-17-
not cross or encumber any private land, except those utilities that are subject
to easements and other rights-of-way. 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 Stockholder with respect to
the Real Property. There is no default by any party to any lease of Real
Property and true and complete copies of such leases will be provided to UAG on
or before June 10, 1996.
2.11 ENVIRONMENTAL MATTERS.
(a) Except as set forth in SCHEDULE 2.11(a) hereto or the Disclosure
Documents, (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, except for noncompliance
which could not reasonably be expected to have a Material Adverse Effect. 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's business or the Real Property or
Improvements.
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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"), the Occupational Safety and Health Act of 1970
(29 U.S.C. Section 651 ET SEQ.) ("OSHA"), and the Hazardous Materials
Transportation Act, 49 U.S.C. Section 1801 ET SEQ. ("HMTA"), and in the
regulations promulgated pursuant to such laws, all as amended, (ii) those
substances listed in the United States Department of Transportation Table (49
CFR 172.101 and amendments thereto) or by the Environmental Protection Agency
(or any successor agency) as hazardous substances (40 CFR part 302 and
amendments thereto), (iii) any material, waste or substance which is or contains
(A) petroleum, including crude oil or any fraction thereof, natural gas, or
synthetic gas usable for fuel or any mixture thereof, (B) asbestos, (C)
polychlorinated biphenyls, (D) designated as a "hazardous substance" pursuant to
Section 311 of the Clean Water Act, 33 U.S.C. 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 in the Disclosure Documents, to the
Stockholder's knowledge, the Company and the 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 for
violations, acts or omissions which could not reasonably be expected to have a
Material Adverse Effect. Except as set forth in the Disclosure Documents, to
the Stockholder's knowledge, no event has occurred with respect to the Real
Property, the Improvements or 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 for violations, acts or omissions which
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could not reasonably be expected to have a Material Adverse Effect. Except as
set forth in the Disclosure Documents, to the Stockholder's knowledge, the
Company has no contingent liability under any Environmental Law, and there are
no liens under any Environmental Law on the Real Property except for contingent
liabilities and liens which could not reasonably be expected to have a Material
Adverse Effect.
(c) Except as set forth in SCHEDULE 2.11(c) hereto or the Disclosure
Documents, (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 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 and are, to the extent currently
required, in material compliance with all applicable Environmental Laws
including the existing regulations of the United States Environmental Protection
Agency and the State of Georgia regarding spill protection, overfill protection
and corrosion protection, (ii) neither the Company nor the Stockholder has been
notified that any of the Real Property or any portion thereof, the Improvements
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
Stockholder, 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
-20-
corrective action under sections 3004(u), 3004(v) or 3008(h) of RCRA or
analogous state law.
(d) Except as set forth in SCHEDULE 2.11(d) hereto or the Disclosure
Documents, 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 (provided, however,
that certain petroleum products are stored and handled on the Real Property in
the ordinary course of the Company's business and are, to the extent currently
required, in material compliance with all applicable Environmental Laws
including the existing regulations of the United States Environmental Protection
Agency and the State of Georgia regarding spill protection, overfill protection
and corrosion protection), (ii) asbestos or asbestos containing materials or
radon gas, (iii) polychlorinated biphenyls ("PCB") or PCB-containing equipment,
including transformers, or (iv) wetlands (as defined under any Environmental
Law) located within any portion of the Real Property, nor have any Liens been
placed upon any portion of the Real Property, the Improvements or any property
formerly owned, occupied or leased by the Company in connection with any actual
or alleged liability under any Environmental Law, except for conditions which
could not reasonably be expected to have a Material Adverse Effect.
(e) Except as set forth in SCHEDULE 2.11(e) hereto or the Disclosure
Documents, (i) there is no pending or, to the Stockholder's knowledge,
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 or, to the
Stockholder's knowledge, 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 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
-21-
alleged liability under any Environmental Law, nor to Stockholder's knowledge,
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) To the Stockholder's knowledge, the Stockholder and 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, and any property formerly owned, occupied or
leased by the Company (to the extent permitted by the owner thereof), 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 April Unaudited
Company Balance Sheet reflect the normal inventory valuation policies of the
Company, and such values are in conformity with GAAP consistently applied,
except as otherwise provided in the April Unaudited Balance Sheet. All
inventories reflected on the April Unaudited Company Balance Sheet and Company
Factory Statement or arising since the date thereof are currently marketable and
can reasonably be anticipated to be sold in the ordinary course of business
(subject to the reserve for obsolete, off-grade or slow-moving items that is
reflected in the April Unaudited Company Balance Sheet or will be reflected in
the Closing Date Balance Sheet), except for spare parts inventory which
inventory is good and usable.
2.13 ACCOUNTS RECEIVABLE.
Except to the extent reserved, all accounts receivable reflected on
the April Unaudited Company Balance Sheet are, and all accounts receivable on
the Closing Date Balance Sheet, except to the extent reserved, will be good and
or will have been collected or are collectible, without resort to litigation.
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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 has made or
will make 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 Lease. True and complete copies of all insurance policies
referred to in SCHEDULE 2.14 hereof have been delivered to or made available to
UAG or its representatives. 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 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 assets or
properties (including the Real Property and the Improvements) may be bound or
affected, including all amendments, modifications, extensions or renewals of any
of the foregoing and which involve receipts or payments by the Company which
exceed or can reasonably be expected to exceed in $10,000 per year. 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. True and complete copies
of all written
-23-
Company Agreements referred to on SCHEDULE 2.15 and SCHEDULE 2.10 hereto have
been delivered or made available to UAG or its representatives, and the Company
has provided UAG with accurate and complete written summaries of all unwritten
Company Agreements which are material. Except as set forth in SCHEDULE 2.15 or
the Disclosure Documents, to the Stockholder's knowledge, the Company is not,
nor, to the knowledge of the 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 Lien upon, or any Person
obtaining any right to acquire, any properties, assets or rights of the Company
in any such case except for breaches, defaults or other events which could not
reasonably be expected to have a Material Adverse Effect. To the Stockholder's
knowledge, there are no material unresolved disputes involving any Company
Agreement.
2.16 LABOR RELATIONS.
(a) Except as set forth in the Disclosure Documents, 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 in SCHEDULE 2.16(b) hereto or the Disclosure
Documents, to the Stockholder's knowledge, 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
commission, (ii) agreement, policy or practice that requires it to pay
termination or severance pay to salaried, non-exempt or hourly employees (other
than as required by law), (iii) collective bargaining agreement or other labor
union contract applicable to persons employed by the Company, nor does the
Stockholder know of any activities or proceedings of any labor union to
-24-
organize any such employees. The Company has furnished to UAG or its
representatives complete and correct copies of all such agreements ("Employment
and Labor Agreements"). To the Stockholder's knowledge, the Company has not
breached or otherwise failed to comply with any provisions of any Employment or
Labor Agreement, except for breaches or failures which could not reasonably be
expected to have a Material Adverse Effect.
(c) Except as set forth in SCHEDULE 2.16(c) hereto or the Disclosure
Documents, (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 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 Stockholder's knowledge, 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.
2.17 EMPLOYEE BENEFIT PLANS.
(a) Set forth in SCHEDULE 2.17(a) hereto or the Disclosure Documents
is a true and complete list of:
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(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 current Pension Benefit Plans and
Welfare Benefit Plans (collectively, "ERISA Plans") have been delivered to or
made available to UAG or its representatives 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) or the Disclosure Documents:
(i) there is no ERISA Plan which is a "multi-employer" plan as
that term is defined in Section 3(37) of ERISA ("Multiemployer Plan");
(ii) no event has occurred or (to the Stockholder's knowledge),
is threatened or about to occur which would constitute a prohibited
transaction under Section 406 of ERISA or under Section 4975 of the Code;
(iii) each ERISA Plan has operated since its inception in
accordance with the reporting and disclosure requirements imposed under
ERISA and the Code and has timely filed Form 5500e (or 5500-C or 5500-R)
and predecessors thereof; and
(iv) no ERISA Plan is liable for any federal, state, local or
foreign Taxes.
-26-
(c) Except as set forth in SCHEDULE 2.17(c) hereto or in the
Disclosure Documents, each Pension Benefit Plan intended to be qualified under
Section 401(a) of the Code:
(i) has been qualified, from its inception, under Section 401(a)
of the Code, and the trust established thereunder has been exempt from
taxation under Section 501(a) of the Code and is currently in compliance
with applicable federal laws;
(ii) has been operated, since its inception, in accordance with
its terms and there exists no fact which could reasonably be expected would
adversely affect its qualified status; and
(iii) is not currently under investigation, audit or review by the
IRS or (to the Stockholder's knowledge), 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, to the Stockholder's knowledge, each defined contribution
plan under Section 414(i) of the Code:
(i) no liability to the Pension Benefit Guaranty Corporation
("PBGC") under Sections 4062-4064 of ERISA has been incurred by the Company
since the effective date of ERISA and all premiums due and owing to the
PBGC have been timely paid;
(ii) the PBGC has not notified the 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 Stockholder) is
threatened or about to occur which would
-27-
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 since January 1, 1990, 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 the total amount
set forth on SCHEDULE 2.17(f) for the current fiscal year. To the extent
required in accordance with GAAP, and except as set forth on the Disclosure
Documents, to the Stockholder's knowledge, the April Unaudited 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 April Unaudited Company Balance Sheet.
(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 4205 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 each such Plan as of December 31, 1995; and (3) the Company has
not received notice to the effect that any Multiemployer Plan is either in
reorganization (as defined in
-28-
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
in the Disclosure Documents:
(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 the April Unaudited Company Balance Sheet.
(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 or the Disclosure Documents
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, 1995 exceeded, and whose aggregate
compensation for the fiscal year ended December 31, 1996 is likely to
exceed, $50,000. True and complete copies of all of the written plans,
arrangements and agreements referred to on SCHEDULE 2.18(a) ("Compensation
Commitments") have been provided to UAG
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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) Except as set forth in the Disclosure Documents, to the
Stockholder's knowledge, each material Compensation Commitment:
(i) since its inception, has been operated in all material
respects in accordance with its terms;
(ii) is not currently under investigation, audit or review by the
IRS or any other federal or state agency and (to the knowledge of the
Stockholder) no such action is contemplated or under consideration;
(iii) has no liability for any federal, state, local or foreign
Taxes, except to the extent not due and payable;
(iv) has no claims subject to dispute or litigation;
(v) has met all applicable requirements, if any, of the Code;
and
(vi) has operated since its inception in material compliance with
the reporting and disclosure requirements imposed under ERISA and the Code,
except to the extent ERISA and the Code are not applicable.
2.19 TRANSACTIONS WITH INSIDERS.
Set forth on SCHEDULE 2.19 hereto or the Disclosure Documents 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, 1991. For purposes of this Agreement:
(i) the term "Insider" shall mean the 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.
To the Stockholder's knowledge, 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, to the Stockholder's knowledge, threatened any
investigation of any payment made by the Company of, or alleged to be of, the
type described in this SECTION 2.20.
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2.21 INTEREST IN COMPETITORS.
Except as set forth in SCHEDULE 2.21 or the Disclosure Documents,
neither the Company nor the Stockholder, nor any of their Affiliates, have any
interest, either by way of contract or by way of investment (other than as
holder of not more than 2% of the outstanding capital stock of a publicly traded
Person, so long as such holder has no other connection or relationship with such
Person) or otherwise, directly or indirectly, in any Person other than the
Company that is engaged in the retail sale or servicing of automobiles or light
duty trucks.
2.22 BROKERS.
Neither the Company, nor any director, officer or employee thereof,
nor the Stockholder or any representative of the 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 Lease.
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 Stockholder has made any material
misrepresentation to UAG relating to the Company or the Shares and neither the
Company nor the 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 Stockholder to UAG not
misleading.
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ARTICLE 3
REPRESENTATIONS OF THE STOCKHOLDER
Subject to the parties' agreement and acknowledgement that certain of
the Schedules referred to in this ARTICLE 3 are to be delivered by the
Stockholder to UAG and Sub no later than June 12, 1996, the Stockholder hereby
represents to UAG and Sub as follows:
3.1 OWNERSHIP OF SHARES; TITLE.
The Stockholder is the record and legal owner of the Shares set forth
on SCHEDULE 3.1 hereof and has, and shall transfer to Sub at the Closing, good
and marketable title to the Shares owned by her, free and clear of any and all
Liens, claims and encumbrances and free and clear of any restrictions on
transfer (other than restrictions on transfer imposed by applicable federal and
state securities laws), proxies and voting or other agreements.
3.2 AUTHORITY.
(a) The Stockholder has all requisite power and authority and has
full legal capacity and is competent to execute, deliver and perform this
Agreement and to consummate the transactions contemplated hereby (including the
disposition of the Shares to Sub as contemplated by this Agreement). This
Agreement has been duly executed and delivered by the Stockholder and
constitutes a valid and binding obligation of the Stockholder, enforceable
against the Stockholder in accordance with its terms.
(b) Except as set forth in SCHEDULE 3.2 or the Disclosure Documents,
the execution, delivery and performance of this Agreement by the Stockholder and
the consummation of the transactions contemplated hereby 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 Stock-
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holder is a party or to which the Stockholder or any of her property is
subject;
(ii) violate or conflict with any Legal Requirements applicable
to the Stockholder or any of its businesses or properties; or
(iii) require any authorization, consent, order, permit or
approval of, or notice to, or filing, registration or qualification with,
any governmental, administrative or judicial authority, except in
connection with or in compliance with the provisions of the H-S-R Act.
3.3 REAL PROPERTY AND IMPROVEMENTS.
Except as set forth in SCHEDULE 3.3 hereto or the Disclosure
Documents, the Stockholder or Argonne owns the Real Property and Improvements in
fee simple, free and clear of all Liens, claims and encumbrances (all such Real
Property and Improvements owned by Stockholder or Argonne being referred to
herein collectively as the "Stockholder Realty"). No assessments have been made
against any portion of the Stockholder Realty which are unpaid (except ad
valorem taxes for the current year that are not yet due and payable), whether or
not they have become Liens. There are no disputes concerning the location of
the lines and corners of the Real Property. No one has been granted any right
to purchase or lease the Stockholder Realty other than the existing leases in
favor of the Company, which is to be terminated at Closing. All contractors,
subcontractors and other persons or entities furnishing work, labor, materials
or supplies with respect to any of the Real Property, Improvements or Tangible
Property have been paid and there are no Liens against such property in
connection therewith (except for improvements to the used car facility which are
being paid in the ordinary course of business). Attached as SCHEDULE 3.3 are
all surveys, title binders, title policies and copies of any exceptions to title
relating to the Stockholder Realty.
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ARTICLE 4
REPRESENTATIONS OF UAG AND SUB
Subject to the parties' agreement and acknowledgement that certain of
the Schedules referred to in this ARTICLE 4 are to be delivered by UAG and Sub
no later than June 12, 1996, UAG and Sub hereby jointly and severally represent
to the Company and the Stockholder as follows:
4.1 ORGANIZATION AND GOOD STANDING.
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.
4.2 AUTHORITY; APPROVALS AND CONSENTS.
UAG and Sub, respectively, have the corporate power and authority to
enter into this Agreement, the Note, the UAG Guaranty of Note, the UAG Guaranty
of Estate Lease, the UAG Guaranty of Argonne Lease and the Company Guaranty of
Note (the "Stipulated Documents"), and to perform their respective obligations
hereunder. This Agreement has been, and on the Closing Date the Stipulated
Documents will be, duly executed and delivered by, and constitutes valid and
binding obligation of, UAG and Sub, enforceable against UAG and Sub in
accordance with its terms. The execution, delivery and performance by UAG and
Sub of this Agreement and the consummation of the transactions contemplated
hereby do not and will not:
(i) contravene any provisions of the certificate of
incorporation or bylaws of UAG or Sub;
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(ii) (after notice or lapse of time or both) conflict with, result
in a breach of any provision of, constitute a default under, result in the
modification or cancellation of, or give rise to any right of termination
or acceleration in respect of, any UAG Agreement (as defined in SECTION 4.5
hereof) 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 on UAG and its subsidiaries,
taken as a whole;
(iii) violate or conflict with any Legal Requirements applicable
to UAG or any of its subsidiaries or any of their respective businesses or
properties, except for such violations or conflicts which could not
reasonably be expected to have a Material Adverse Effect; or
(iv) require any authorization, consent, order, permit or
approval of, or notice to, or filing, registration or qualification with,
any governmental, administrative or judicial authority, except in
connection with or in compliance with the provisions of the H-S-R Act.
4.3 FINANCIAL STATEMENTS.
Attached as SCHEDULE 4.3 are true and correct copies of:
(i) (A) the unaudited balance sheet of UAG as of December 31,
1995 (the "1995 UAG Balance Sheet") and the related statements of income,
stockholders' equity and cash flow for the fiscal year ended December 31,
1995, together with the notes thereto, and (B) the audited balance sheet of
UAG 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
(ii) the unaudited balance sheet of UAG as of April 30, 1996 (the
"April Unaudited UAG Balance Sheet") and the unaudited statement of income,
stockholders' equity and cash flow for the month period ended on such date,
together with the notes thereto (the April Unaudited UAG Balance Sheet and
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related statements of income, Stockholder's equity cash flow, being
referred to collectively herein as "April Unaudited UAG Financial
Statements");
(all of the foregoing financial statements, including the notes thereto, being
referred to herein collectively as the "UAG Financial Statements"). The UAG
Financial Statements are in accordance with the books and records of UAG, fairly
present the consolidated financial position, results of operations,
stockholders' equity and changes in the financial position of UAG as of the
dates and for the periods indicated, in the case of the financial statements
referred to in clause (i) above in conformity with GAAP consistently applied
(except as otherwise indicated in such statements) during such periods, and can
be legitimately reconciled with the financial statements and the financial
records maintained and the accounting methods applied by UAG for federal income
tax purposes, and the unaudited financial statements included in the UAG
Financial Statements include 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 of nonrecurring income except as expressly specified therein, and the
balance sheets included in the UAG Financial Statements to not reflect any
write-up or evaluation increasing the book value of any assets except as
expressly stated therein. The books and accounts of UAG are complete and
correct in all material respects and fairly reflect all of the transactions,
items of income and expense and all assets and liabilities of the businesses of
UAG consistent with prior practices of UAG.
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4.4 LEGAL MATTERS.
(a) Except as set forth in SCHEDULE 4.4(a) hereto, (i) there is no
claim, action, suit, litigation, investigations, inquiry, review or proceeding
(collectively, "UAG Claims") pending against, or, to UAG's knowledge, threatened
against or affecting, UAG or its subsidiaries or any of their ERISA plans,
assets, properties or rights before or by any court, arbitrator, panel, agency
or other governmental, administrative or judicial entity, domestic or foreign,
and (ii) neither UAG nor any of its subsidiaries, is subject to any judgment,
decree, writ, injunction, ruling or order (collectively, "UAG Judgments") of any
governmental, administrative or judicial authority, domestic or foreign.
(b) To UAG's knowledge, the businesses of UAG and its subsidiaries
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, "UAG Legal Requirements")
applicable to UAG, its subsidiaries, or any of its respective businesses or
properties. To the knowledge of UAG, UAG or its subsidiaries hold, and are in
compliance with, all franchises, licenses, permits, registrations, certificates,
consents, approvals or authorizations (collectively, "UAG Permits") required by
all applicable UAG Legal Requirements.
4.5 CONTRACTS, ETC.
As used in this Agreement, the term "UAG Agreements" shall mean all
mortgages, indenture notes, agreements, contracts, leases, licenses, franchises,
obligations, instruments or other commitments, arrangements or understandings of
any kind, whether written or oral, binding or non-binding, to which UAG or its
subsidiaries is a party or by which UAG or its subsidiaries or any of its assets
or properties may be bound or affected, including all amendments, modifications,
extensions or renewals of any of the foregoing, and which involve receipts or
payments by UAG or its subsidiaries which exceed $100,000 per year. To UAG's
knowledge, UAG and its subsidiaries are not, nor, to the knowledge of UAG, is
any other party thereto, in breach of or default under any UAG Agreement, and no
event has occurred which (after notice or lapse of time or both) would become a
breach or
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default under, or would permit modification, cancellation, acceleration or
termination of, any UAG Agreement or result in the creation of any Lien upon, or
any Person obtaining any right to acquire, any properties, assets or rights of
UAG or its subsidiaries in any such case where such breach, default or other
event would have, or could not reasonably be expected to have, a material
adverse effect. To UAG's knowledge, there are no material unresolved disputes
involving any UAG Agreement, except for disputes which could not reasonably be
expected to have a material adverse effect.
4.6 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 Lease.
4.7 DISCLOSURE.
Neither UAG nor Sub has made any material misrepresentation to the
Stockholder and neither UAG nor Sub has omitted to state to the 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.
4.8 INVESTMENT.
Sub is acquiring the Shares for investment purposes only, for Sub's
own account, and not with a view to, or resale in connection with, the
distribution or transfer thereof. The Shares have not been offered to Sub or
UAG by means of any publicly disseminated advertisements or sales literature.
ARTICLE 5
COVENANTS AND ADDITIONAL AGREEMENTS
5.1 ACCESS; CONFIDENTIALITY.
(a) Between the date hereof and the Closing Date, the Stockholder and
the Company will (i) provide to the officers and
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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 their officers to
furnish to UAG and Sub and their authorized representatives any and all
financial, technical and operating data and other information pertaining to the
businesses and properties of the Company, and (ii) make available for inspection
and copying by UAG and Sub true and complete copies of any documents relating to
the foregoing. UAG and Sub will hold in confidence (unless and to the extent
compelled to disclose by judicial or administrative process or, in the opinion
of its counsel, by other requirements of law), and will cause their employees,
agents and representatives to hold in confidence, all Confidential Information
(as defined below), and will not disclose the same to any third party except in
connection with obtaining financing and otherwise as may reasonably be necessary
to carry out this Agreement and the transactions contemplated hereby, including
any due diligence review by or on behalf of UAG and Sub. If this Agreement is
terminated, UAG and Sub will promptly return to the Company, upon the request of
either the Stockholder or the Company, all Confidential Information furnished by
the Stockholder and/or the Company to UAG, Sub or any of their employees, agents
and/or the Company to UAG, Sub or any of their employees, agents or
representatives and held by UAG, Sub or any of their employees, agents and
representatives, including all originals, copies, excerpts, disks, tapes and
summaries thereof. UAG and Sub and their employees, agents and representatives
shall use the Confidential Information only for the purpose of consummating the
transactions contemplated by this Agreement and shall not use any Confidential
Information for any other purpose. If this Agreement is terminated for any
reason, UAG, Sub and their employees, agents and representatives shall not use
or have any communication with respect to any Confidential Information, or make
any Confidential Information available to any other Person (other than the
Company or the Stockholder) nor shall they or any of them for a period of two
(2) years following the termination of this Agreement, either on their own
behalf or on behalf of others, solicit, divert or hire, or attempt to solicit,
divert or hire any person employed by the Company at the time of execution of
this Agreement, whether or not the employment of any such person is pursuant to
a written contract, for a determined period or at will. As used herein,
"Confidential Information" shall mean all information,
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documents and data concerning the Company obtained by UAG, Sub or any of their
employees, agents or representatives from the Stockholder and/or 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,
Sub or any of their employees, agents or representatives of this SECTION 5.1 or
this Agreement.
(b) The Stockholder will hold in confidence (unless and to the
extent compelled to disclose by judicial or administrative process, or, in the
opinion of her counsel, by other requirements of law) all UAG Confidential
Information (as defined below) and will not disclose the same to any third party
except as may reasonably be necessary to carry out this Agreement and the
transactions contemplated hereby, including any due diligence review by or on
behalf of the Stockholder. If this Agreement is terminated, the Stockholder
will promptly return to UAG, upon the reasonable request of UAG, all UAG
Confidential Information furnished by UAG and held by the Stockholder, including
all copies and summaries thereof. As used herein, "UAG Confidential
Information" shall mean all information concerning UAG or any of its
subsidiaries obtained by the Stockholder 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 or
otherwise affiliated with UAG or any of its subsidiaries or (z) which is or
becomes known to the public, other than a breach by the Stockholder of this
Agreement.
(c) The terms and provisions of this SECTION 5.1 shall survive the
termination of this Agreement.
5.2 FURNISHING INFORMATION; ANNOUNCEMENTS.
The 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 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 Stockholder
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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 Stockholder or the
Company, on the one hand, nor UAG or Sub, on the other hand, nor 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.
5.3 CERTAIN CHANGES AND CONDUCT OF BUSINESS.
(a) From and after the date of this Agreement and until the Closing
Date, the Company shall, and the 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 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 Bylaws,
issue any additional shares of capital stock or equity securities or grant
any option, warrant or right to acquire any capital stock or equity
securities or issue any security convertible into or exchangeable for 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
exchange-
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able 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;
(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 could reasonably be
expected to decrease the Net Worth of the Company below the April 30, 1996
Net Worth or redeem, retire, purchase or otherwise acquire, directly or
indirectly, any shares of its capital stock;
(vii) acquire any assets, raw materials or properties, or enter
into any other transaction, other than in the ordinary course of business
consistent with past practices;
(viii) enter into any new (or amend any existing) employee
benefit plan, program or arrangement or any new (or amend any existing)
employment, severance or consulting agreement, grant any general increase
in the compensation of officers or employees (including any such increase
pursuant to any bonus, pension, profit-sharing or other plan or commitment)
or grant any increase in the compensation payable or to become payable to
any employee, except in accordance with pre-existing contractual provisions
or consistent with past practices;
(ix) make or commit to make any individual material capital
expenditure in excess of $50,000, or aggregate capital expenditures in
excess of $150,000, except in the
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ordinary course of business and except improvements to complete the used-
car facility which is currently under construction;
(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;
(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; or
(xvii) commit itself to do any of the foregoing.
(b) From and after the date hereof and until the Closing Date, the
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, the Company's
properties, the Real Property and the Improvements in accordance with
present practices in a condition suitable for their current use;
(ii) comply with all applicable Environmental Laws, and, in the
event it shall receive notice that there exists a violation of any
Environmental Law with respect to its operations, the Improvements or any
Real Property, take such action as the Company may deem appropriate
consistent with the terms of this Agreement;
(iii) file, when due or required, federal, state, foreign and
other tax returns and other reports required to be filed and pay when due
all taxes, assessments, fees and other charges lawfully levied or assessed
against it unless the validity thereof is contested in good faith and by
appropriate proceedings diligently conducted;
(iv) keep its books of account, records and files in the ordinary
course and in accordance with existing practices;
(v) preserve its business organization intact and continue to
maintain existing business relationships with suppliers, customers and
others with whom business relationships exist other than relationships that
are, at the same time, not economically beneficial to it; and
(vi) continue to conduct its business in the ordinary course
consistent with past practices.
5.4 NO INTERCOMPANY PAYABLES OR RECEIVABLES.
At the Closing there will be no intercompany payables or intercompany
receivables due and/or owing between the Stockholder and any of her Affiliates,
on the one hand, and the Company, on the other hand, except under the Estate
Lease and the Argonne Lease.
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5.5 NEGOTIATIONS.
Until the earlier of (i) 180 days from the date hereof and (ii) the
termination of this Agreement pursuant to SECTION 8.1 hereof, neither the
Stockholder, the Company, nor the Company's officers, directors, employees,
advisors, agents, representatives, Affiliates or anyone acting on behalf of the
Stockholder, the Company or such persons, shall, directly or indirectly,
encourage, solicit, initiate or engage in discussions or negotiations with, or
provide any information to, any person (other than UAG, Sub and their respective
employees and representatives) concerning any merger, sale of assets (other than
in the ordinary course of business), purchase or sale of shares of capital stock
or similar transaction involving the Company. The 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 Stockholder may receive or of which the Stockholder may
become aware.
5.6 CONSENTS; COOPERATION.
Subject to the terms and conditions hereof, the 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.
(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
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governmental authorities) challenging this Agreement or the transactions
contemplated hereby; and
(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,
provided that in no event shall total expense of any party under this sentence
exceed Twenty-Five Thousand Dollars ($25,000). 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.
Within thirty (30) days after the end of each calendar month after
April 30, 1996, the Company will deliver to UAG unaudited consolidated balance
sheets of the Company at the end of such calendar month and at the end of the
corresponding calendar month of the preceding fiscal year, together with the
related unaudited consolidated statements of income and cash flow for the fiscal
months then ended. The Company will also deliver to UAG copies of the Company
Factory Statements provided to Nissan after the date hereof within five days of
their delivery to Nissan. All such financial statements shall fairly present
the financial position and results of operations of the Company as of the date
or for the periods indicated. All unaudited financial statements delivered
pursuant to this SECTION 5.9 shall be prepared on a basis consistent with the
April Unaudited Company Financial Statements.
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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 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 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 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.
The Company and the Stockholder will (x) promptly advise UAG of any event that
has, or could reasonably be expected in the future to have, a Material Adverse
Effect on the Company, (y) confer on a regular and frequent basis with one or
more designated representatives of UAG to report operational matters and to
report the general status of ongoing operations, and (z) notify UAG of any
emergency or other change in the normal course of business or relating to the
Real Property or Improvements of the Company and of any governmental complaints,
investigations or hearings (or communications indicating that the same may be
contemplated) or adjudicatory proceedings involving the Company, the Real
Property or the Improvements and will keep UAG fully informed of such events and
permit UAG's representatives access to all materials prepared in connection
therewith. Each 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 such 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 such Stockholder has knowledge which could result in any failure to
consummate the sale of the Shares as contemplated hereby.
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5.10 ASSURANCE BY THE STOCKHOLDER.
The Stockholder, the Company, UAG and Sub shall use their respective
best efforts to comply with their respective covenants set forth in this
Agreement.
5.11 ANTITRUST IMPROVEMENTS ACT COMPLIANCE.
UAG, Sub, the Stockholder and the Company, as applicable, shall each
file or cause to be filed with the Federal Trade Commission and the United
States Department of Justice any notifications required to be filed by the
respective "ultimate parent" entities under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "H-S-R Act"), and the rules and
regulations promulgated thereunder, with respect to the transactions
contemplated herein. The parties shall use their best efforts to make such
filings promptly, to respond to any requests for additional information made by
either of such agencies, to cause the waiting periods under the H-S-R Act to
terminate or expire at the earliest possible date and to resist vigorously, at
UAG's sole cost and expense (including, without limitation, the institution or
defense of legal proceedings), any assertion that the transactions contemplated
herein constitute a violation of the antitrust laws, all to the end of
expediting consummation of the transactions contemplated herein; PROVIDED,
HOWEVER, that if UAG or the Stockholder shall determine after issuance of any
preliminary injunction that continuing such resistance is not in its or their
best interests, UAG or the Stockholder, as the case may be, may, by written
notice to the other party, terminate this Agreement with the effect set forth in
SECTION 8.2 hereof. Notwithstanding the foregoing, UAG shall pay, at its sole
cost and expense, all filing fees and other expenses relating to complying with
the H-S-R Act.
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ARTICLE 6
CONDITIONS TO THE OBLIGATIONS
OF UAG AND SUB TO EFFECT THE CLOSING
The obligations of UAG and Sub required to be performed by them at the
Closing shall be subject to the satisfaction, at or prior to the Closing, of
each of the following conditions, each of which may be waived by UAG and Sub as
provided herein except as otherwise required by applicable law:
6.1 REPRESENTATIONS; AGREEMENTS; COVENANTS.
Each of the representations of the Company and the 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 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 Stockholder, to the effect that the conditions set forth in the two
preceding sentences have been satisfied.
6.2 AUTHORIZATION; CONSENTS.
(a) All corporate action necessary to authorize the execution,
delivery and performance of this Agreement and the Lease, and the consummation
of the transactions contemplated hereby shall have been duly and validly taken
by the Company. All filings required to be made under the H-S-R Act in
connection with the transactions contemplated hereby shall have been made and
all applicable waiting periods with respect to each such filing, including
extensions thereof, shall have expired or been terminated.
(b) All notices to, and declarations, filings and registrations
with, and consents, authorizations, approvals and waivers from, governmental and
regulatory bodies and third persons (including, but not limited to, all
automobile manufacturers with whom the Company has a franchise agreement (or
comparable instrument)) required to consummate the transactions
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contemplated hereby and all consents or waivers shall have been made or
obtained.
6.3 OPINIONS OF THE COMPANY'S AND THE STOCKHOLDER'S COUNSEL.
UAG and Sub shall have been furnished with the opinion of the
Company's and the Stockholder's counsel, dated the Closing Date, in form and
substance that is substantialy similar to the terms agreed to between UAG and
Stockholder's counsel on June 5, 1996.
6.4 ABSENCE OF LITIGATION.
No order, stay, injunction or decree of any court of competent
jurisdiction in the Untied States shall be in effect (i) that prevents or delays
the consummation of any of the transactions contemplated hereby or (ii) would
impose any limitation on the ability of UAG or Sub effectively to exercise full
rights of ownership of the Shares. No action, suit or proceeding before any
court or any governmental or regulatory entity shall be pending (or threatened
by any governmental or regulatory entity), and no investigation by any
governmental or regulatory entity shall have been commenced (and be pending),
seeking to restrain or prohibit (or questioning the validity or legality of) the
consummation of the transactions contemplated by this Agreement or seeking
damages in connection therewith which UAG or Sub, in good faith and with the
advice of counsel, believes makes it undesirable to proceed with the
consummation of the transactions contemplated hereby.
6.5 NO MATERIAL ADVERSE EFFECT.
During the period from December 31, 1995 to the Closing Date, there
shall not have been any material adverse change in the assets, properties,
business, operations, prospects, net income or financial condition of the
Company.
6.6 COMPLETION OF DUE DILIGENCE.
UAG and Sub shall have completed their 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
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satisfactory to UAG and Sub; 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 twenty-one (21) days
after the execution of this Agreement. UAG will pay the costs for a Phase I
environmental audit. If, after obtaining the results of the Phase I
environmental audit, UAG determines that a Phase II environmental audit is
required, the expenses of the Phase II environmental audit shall be paid by UAG;
PROVIDED, HOWEVER, that if the results of the Phase II environmental audit
conclude that remedial action is required, the Stockholder shall reimburse UAG
for one-half of the Phase II expenses and shall be responsible for the costs of
the remedial action, except that if it can reasonably be expected that the cost
of such remedial action will exceed Five Hundred Thousand Dollars ($500,000),
the Stockholder shall have the right to terminate this Agreement if UAG does not
agree to pay all such costs in excess of Five Hundred Thousand Dollars
($500,000). Notwithstanding the foregoing, UAG, Sub and their respective
representatives, in the performance of any due diligence, shall not communicate,
without the Stockholder's prior approval, with any employee, lender, creditor,
customer, franchisor, licensor, vendor, distributor or supplier of the Company
or any other person who deals or is otherwise associated with the Company.
6.7 LEASES.
The Stockholder and the Company shall have entered into the Estate
Lease, and the Company and Argonne shall have entered into the Argonne Lease.
6.8 CERTIFICATES.
The Stockholder and the Company shall have furnished UAG and Sub with
a certificate, dated as of the Closing Date, executed by the Stockholder
certifying to the fulfillment of the conditions set forth in SECTIONS 6.4 AND
6.11 hereof and shall have furnished UAG and Sub with such any other
certificates of its officers and others as UAG and Sub may reasonably request to
evidence compliance with the conditions set forth in this ARTICLE 6.
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6.9 LEGAL MATTERS.
All certificates, instruments and other documents required to be
executed or delivered by or on behalf of the 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 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.
6.10 APPROVAL OF MANUFACTURER AND DISTRIBUTOR.
The Stockholder and the Company shall have obtained the consent,
authorization and approval of Nissan Motor Corporation USA on terms no less
favorable to those granted to the Company immediately prior to the execution of
this Agreement.
6.11 ENVIRONMENTAL LAWS.
The Company shall be in compliance with all applicable Environmental
Laws.
6.12 NONDISTURBANCE AGREEMENT.
The Stockholder shall have obtained nondisturbance agreements with
respect to any indebtedness secured by the Real Property in form and substance
satisfactory to the Company and UAG.
6.13 TITLE INSURANCE.
UAG and Sub shall have obtained title insurance, at their expense, on
behalf of the Company with respect to the leasehold estate for the Estate Lease
and the Argonne Lease, in form and substance satisfactory to UAG and Sub and
shall have obtained certificates of title from Obenschain and Chandler, L.L.C.
with respect to title of the landlord under the Guynn Leases.
6.14 LEASE TERMINATION AGREEMENT/MEMORANDUM OF LEASE.
With respect to the existing leases between the Company and the
Stockholder and the Company and Argonne, the Company, the Stockholder and
Argonne, as the case may be, shall have executed
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lease termination agreements in form and substance satisfactory to UAG and the
Company. With respect to the Estate Lease and the Argonne Lease, the Company,
the Stockholder and Argonne shall have executed memoranda of lease in form and
substance satisfactory to UAG and the Company.
6.15 RESIGNATION OF THE COMPANY'S DIRECTORS.
Each of the persons who is a director of the Company on the Closing
Date shall have tendered to Sub in writing his resignation as such in form and
substance satisfactory to UAG.
6.16 SCHEDULES.
The Company and the Stockholder shall have delivered to UAG and Sub
all Schedules referred to in ARTICLES 2 AND 3 and such Schedules and the
Disclosure Documents shall be acceptable in form and substance to UAG and Sub.
6.17 COURT ORDER.
The Stockholder shall have obtained an order from the Probate Court of
Gwinnett County, Georgia relating to the power and authority of the Stockholder
to consummate the transactions contemplated by this Agreement.
ARTICLE 7
CONDITIONS TO THE OBLIGATIONS OF THE
STOCKHOLDER AND THE COMPANY TO EFFECT THE CLOSING
The obligations of the 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 Company and the Stockholder as provided herein except as otherwise
required by applicable law:
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7.1 REPRESENTATIONS AND AGREEMENTS.
Each of the representations of UAG and Sub contained in this Agreement
shall be true and correct on the date made and shall be true and correct in all
material respects as of the Closing. Each of the obligations of UAG and Sub
required by this Agreement to be performed by them at or prior to the Closing
shall have been duly performed and complied with in all material respects as of
the Closing. At the Closing, the Stockholder shall have received a certificate,
dated the Closing Date and duly executed by the chief financial officer of UAG
and of Sub to the effect that the conditions set forth in the preceding two
sentences have been satisfied.
7.2 AUTHORIZATION OF THE AGREEMENT, CONSENTS.
(a) All corporate action necessary to authorize the execution,
delivery and performance of this Agreement, the Stipulated Documents and the
consummation of the transactions contemplated hereby shall have been duly and
validly taken by UAG and Sub. All filings required to be made under the H-S-R
Act in connection with the transactions contemplated hereby shall have been made
and all applicable waiting periods with respect to each such filing, including
extensions thereof, shall have expired or been terminated.
(b) All notices to, and declarations, filings and registrations
with, and consents, authorizations, approvals and waivers from, governmental and
regulatory bodies and third persons (including, but not limited to, all
automobile manufacturers with whom the 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 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 Stockholder and its counsel. 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
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Sub and by government officials, and upon such other documents and data as such
counsel deems appropriate as a basis for its opinion. Such opinions may be
limited to Georgia and federal laws and the General Corporation Law of the State
of Delaware.
7.4 ABSENCE OF LITIGATION.
No order, stay, injunction or decree of any court of competent
jurisdiction in the United States shall be in effect (i) that prevents or delays
the consummation of any of the transactions contemplated hereby or (ii) would
impose any limitation on the ability of the Stockholder effectively to exercise
full right to sell and transfer 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 the Stockholder, in
good faith and with the advice of counsel, believes makes it undesirable to
proceed with the consummation of the transactions contemplated hereby.
7.5 BASE PRICE AND NOTE.
Sub shall have paid the Base Price and shall have executed the Note.
7.6 UAG GUARANTY.
UAG shall have executed the UAG Guaranty of Note, the UAG Guaranty of
Estate Lease, the UAG Guaranty of Argonne Lease and the UAG Guaranty of Note.
7.7 COMPANY GUARANTY OF NOTE.
The Company shall have executed the Company Guaranty of Note.
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7.8 CERTIFICATES.
UAG and Sub shall have furnished the 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
Stockholder.
7.9 LEGAL MATTERS.
All certificates, instruments, opinions and other documents required
to be executed or delivered by or on behalf of UAG or Sub under the provisions
of this Agreement, and all other actions and proceedings required to be taken by
or on behalf of UAG or Sub in furtherance of the transactions contemplated
hereby, shall be reasonably satisfactory in form and substance to counsel for
the Stockholder.
7.10 APPROVAL OF MANUFACTURER AND DISTRIBUTOR.
The Stockholder, UAG and the Company hall have obtained the consent,
authorization and approval of Nissan Motor Corporation USA.
7.11 RELEASE OF GUARANTY.
UAG and Sub shall have obtained the full and complete release of Lynda
Hickman, individually ("LH"), and the Stockholder from any and all obligations
and liabilities of the Company, including without limitation the guaranty of LH
and the Stockholder of all Liabilities under the Promissory Note dated May 4,
1994, in the original principal amount of $7,500,000 between Bank South, N.A.
and Hickman Nissan, Inc. (the "Release of Guaranty").
7.12 SCHEDULES.
UAG shall have delivered to the Stockholder all Schedules referred to
in ARTICLE 4 and such Schedules shall be acceptable in form and substance to the
Stockholder.
7.13 BOARD APPROVAL.
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The Board of Directors of UAG and Sub shall have approved this
Agreement and the transactions contemplated hereby.
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 Stockholder;
(ii) by either UAG, Sub, or the Stockholder if the Closing shall
not have taken place on or prior to the later of: (A) June 28, 1996, (B)
the date that is two (2) business days after the date on which the H-S-R
Act (as defined in SECTION 5.11) waiting period expires or is terminated,
(C) the date that is two (2) business days after the date on which the
condition set forth in Section 6.10 HEREOF IS SATISFIED, or (D) the date
that is two (2) business days after the date on which any condition set
forth in SECTION 6.17 hereof is satisfied; PROVIDED, HOWEVER, that the
Closing Date shall be no later than July 10, 1996 unless a later date shall
have been approved by UAG, Sub and the Stockholder.
(iii) by UAG, Sub, or the 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, covenants
or agreements under this Agreement);
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(v) by the Stockholder if any of the conditions specified in
ARTICLE 7 hereof have not been met or waived by the Stockholder at such
time as such condition is no longer capable of satisfaction (provided that
neither the Stockholder nor the Company is otherwise in material breach of
his or its representations, covenants or agreements under this Agreement);
or
(vi) by either UAG, Sub or the Stockholder if there has been a
material breach on the part of the other of any representation, 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 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.
8.2 EFFECT OF TERMINATION.
(a) 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 8.2(b) 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.
(b) Notwithstanding anything contained in this Agreement to the
contrary except SECTION 5.1 hereof, if the transactions contemplated by this
Agreement fail to close for any reason whatsoever (including without limitation
any party's breach of one or more representations, covenants and agreements set
forth in this Agreement or any party's arbitrary or capricious refusal to
close), then the total liability of the Stockholder and the Company (even if
such parties breach this Agreement or refuse to close) under ARTICLE 9 and this
Agreement shall not (except for matters described in SECTION 5.1(b) hereof)
exceed Twenty-Five Thousand Dollars ($25,000), and the total liability of UAG
and
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Sub (even if such parties breach this Agreement or refuse to close) under
ARTICLE 9 and this Agreement shall not (except for matters described in SECTION
5.1(a) hereof) exceed Twenty-Five Thousand Dollars ($25,000), and the parties
hereto acknowledge, covenant and agree that none of the parties hereto or any
other Person shall be entitled to specific performance or have any right to any
other equitable remedy or injunctive relief.
ARTICLE 9
INDEMNIFICATION
9.1 INDEMNIFICATION BY THE STOCKHOLDER.
Notwithstanding the Closing or the delivery of the Shares, the
Stockholder indemnifies and agrees, except to the extent covered by insurance,
to fully defend, save and hold harmless UAG, Sub and the Company (after the
Closing) (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 pay
any Costs (as defined in SECTION 9.7 below) arising out of or resulting from, or
shall pay or become legally obligated to pay any sum on account of, (i) any and
all Stockholder Events of Breach (as defined below) or (ii) any claim before or
by any court, arbitrator, panel, agency or other governmental, administrative or
judicial entity, which claim involves, affects or relates to any assets,
properties or operations of the Company or the conduct of the business of the
Company prior to the Closing Date (a "Stockholder Third Party Claim"). As used
herein, "Stockholder Event of Breach" shall be and mean any one or more of the
following: (i) any untruth or inaccuracy in any representation of the
Stockholder or the Company contained in this Agreement, including, without
limitation, any misrepresentation in, or omission from, any statement,
certificate, schedule, exhibit, annex or other document furnished pursuant to
this Agreement by the Stockholder or the Company (or any representative of the
Stockholder or the Company) to UAG or Sub (or any representative of UAG or Sub)
and any misrepresentation in or omission from any document furnished to UAG or
Sub in connection with the Closing, and (ii) any failure of the Stockholder or
the Company duly to perform or observe any term, provision, covenant, agreement
or condition on the part of the Stockholder or the Company to be performed or
observed.
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9.2 INDEMNIFICATION BY UAG.
Notwithstanding the Closing, UAG indemnifies and agrees, except to the
extent covered by insurance, to fully defend, save and hold harmless the
Stockholder and the Company (prior to the Closing) (each a "Stockholder
Indemnified Party"), if a Stockholder Indemnified Party (including the Company
prior to Closing) shall at any time or from time to time pay any Costs arising
out of or resulting from, or shall pay or become legally obligated to pay any
sum on account of, (i) any and all UAG Events of Breach (as defined below), (ii)
any claim before or by any court, arbitrator, panel, agency or other
governmental, administrative or judicial entity, which claim involves, affects
or relates to any assets, properties or operations of UAG or Sub or the conduct
of the business of UAG or Sub prior to or after the Closing Date or (iii) any
claim before or by any court, arbitrator, panel, agency or other governmental,
administrative or judicial entity, which claim involves, affects or relates to
the conduct of the business of the Company after the Closing Date (any and all
claims described in clauses (ii) and (iii) being referred to herein collectively
as a "UAG Third Party Claim"). As used herein, "UAG Event of Breach" shall be
and mean any one or more of the following: (i) any untruth or inaccuracy in any
representation of UAG or Sub contained in this Agreement, including, without
limitation, any misrepresentation in, or omission from, any statement,
certificate, schedule, exhibit, annex or other document furnished pursuant to
this Agreement by UAG or Sub (or any representative of UAG or Sub) to the
Stockholder (or any representative of the Stockholder) and any misrepresentation
in or omission from any document furnished to the Stockholder in connection with
the Closing, and (ii) any failure of UAG or Sub duly to perform or observe any
term, provision, covenant, agreement or condition on the part of UAG or Sub to
be performed or observed.
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9.3 PROCEDURES.
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If (i) any Stockholder Event of Breach occurs or is alleged and a UAG
Indemnified Party asserts that the Stockholder has become obligated to a UAG
Indemnified Party pursuant to SECTION 9.1, or if any Stockholder's Third Party
Claim is begun, made or instituted as a result of which the Stockholder may
become obligated to a UAG Indemnified Party hereunder, or (ii) a UAG Event of
Breach occurs or is alleged and a Stockholder Indemnified Party asserts that UAG
has become obligated to a Stockholder Indemnified Party pursuant to SECTION
9.2, or if any UAG Third Party Claim is begun, made or instituted as a result of
which UAG may become obligated to a Stockholder Indemnified Party hereunder (for
purposes of this ARTICLE 9, any UAG Indemnified Party and any Stockholder
Indemnified Party is sometimes referred to as an "Indemnified Party" and UAG and
the Stockholder are sometimes referred to as an "Indemnifying Party," and any
UAG Third Party Claim and any Stockholder Third Party Claim is sometimes
referred to as a "Third Party Claim," in each case as the context so requires),
such Indemnified Party shall give written notice to the Indemnifying Party of
its or her obligation to provide indemnification hereunder, provided that any
failure to so notify the Indemnifying Party shall not relieve them from any
liability that it or he may have to the Indemnified Party under this ARTICLE 9.
If such notice relates to a Third Party Claim, each Indemnifying Party, jointly
and severally, agrees to defend, contest or otherwise protect such Indemnified
Party against any such Third Party Claim at its or her 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
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the Indemnifying Party of its or their right to defend such Third Party Claim.
If the Indemnifying Party assumes the defense of the particular Third Party
Claim, the Indemnifying Party shall not, in the defense of such Third Party
Claim, consent to entry of any judgment or enter into any settlement, except
with the written consent of such Indemnified Party. In addition, the
Indemnifying Party shall not enter into any settlement of any Third Party Claim
(except with the written consent of such Indemnified Party) which does not
include as an unconditional term thereof the giving by the claimant or the
plaintiff to such Indemnified Party a full release from all liability in respect
of such Third Party Claim. Notwithstanding the foregoing, the Indemnifying
Party shall not be entitled to control (but shall be entitled to participate at
their own expense in the defense of), and the Indemnified Party shall be
entitled to have sole control over, the defense or settlement of any Third Party
Claim to the extent the Third Party Claim seeks an order, injunction or other
equitable relief against the Indemnified Party which, if successful, could
materially interfere with the business, operations, assets, condition (financial
or otherwise) or prospects of the Indemnified Party.
9.4 LIMITATION ON INDEMNIFICATION.
(a) INDEMNIFICATION BY THE STOCKHOLDERS. A UAG Indemnified Party
shall be entitled to indemnification in connection with a Stockholder Event of
Breach or a Stockholder Third Party Claim only if the aggregate Costs incurred
or sustained by all UAG Indemnified Parties exceed Two Hundred Fifty Thousand
Dollars ($250,000). In the event that the aggregate Costs incurred or sustained
by all UAG Indemnified Parties exceeds Two Hundred Fifty Thousand Dollars
($250,000), then the Stockholder shall be fully liable for all such Costs
without regard to such threshold. The provisions of this SECTION 9.4(a) shall
not apply to SECTIONS 1.2, 5.1 OR 10.2.
(b) INDEMNIFICATION BY UAG. A Stockholder Indemnified Party shall be
entitled to indemnification in connection with a UAG Event of Breach or a UAG
Third Party claim only if the aggregate Costs incurred or sustained by all
Stockholder Indemnified Parties exceed Two Hundred Fifty Thousand Dollars
($250,000). In the event the aggregate Costs incurred or sustained by all
Stockholder Indemnified Parties exceeds Two
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Hundred Fifty Thousand Dollars ($250,000), then UAG shall be fully liable for
all such Costs without regard to such threshold. The provisions of this SECTION
9.4(b) shall not apply to SECTIONS 1.2, 5.1 OR 10.2.
(c) BENEFITS. If any liability for taxes, with respect to which an
Indemnified Party is entitled to indemnification from the Indemnifying Party,
results from the disallowance of any claimed deduction or credit, or from the
shifting of any item of income from one taxable period to another taxable
period, then the amount of indemnification to which the Indemnified Party is
entitled shall be computed after taking into consideration any resulting tax
benefit accruing to the Indemnified Party. The adjustments for tax benefits and
insurance coverage under this ARTICLE 9 shall take into account the time value
of money using the then applicable federal rate for federal income tax purposes
in determining the amount of reimbursement to which the Indemnified Party is
entitled under this Article.
(d) CAP. (i) Notwithstanding anything contained in this Agreement to
the contrary and except as set forth in SECTION 9.10 hereof, in no event shall
the aggregate liability of the Stockholder under this ARTICLE 9 and this
Agreement exceed Two Million Dollars ($2,000,000), except that if the
transactions contemplated by this Agreement fail to close for any reason, in no
event shall the aggregate liability of the Stockholder under this ARTICLE 9 and
this Agreement exceed Twenty-Five Thousand Dollars ($25,000).
(ii) Notwithstanding anything contained in this Agreement to the
contrary, and except for UAG's liability under ARTICLE 1 hereof, including
without limitation UAG's liability under the UAG Guaranty of Estate Lease, UAG
Guaranty of Argonne Lease and UAG Guaranty of Note, in no event shall the
aggregate liability of UAG under this ARTICLE 9 and this Agreement exceed Two
Million Dollars ($2,000,00), except that if the transactions contemplated by
this Agreement fail to close for any reason, in no event shall the aggregate
liability of UAG under this ARTICLE 9 and this Agreement exceed Twenty-Five
Thousand Dollars ($25,000).
9.5 OFFSET.
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(a) Notwithstanding anything in this Agreement to the contrary, the
right of UAG, Sub and/or the Company to recover from the Stockholder for any
amounts due to UAG, Sub or the Company under this ARTICLE 9 shall be limited to
(i) the right to offset such amount against UAG's, Sub's or the Company's
obligations under the Note or (ii) to recover any principal amount paid on the
Note.
(b) If UAG, Sub or the Company (the "Exercising Party") determines in
good faith that it has a right to be indemnified and held harmless by the
Stockholder under this ARTICLE 9 (the "Offset Claim"), it may, after giving
twenty (20) days prior written notice to the Stockholder of its intention to
exercise its right of offset or right of recovery under this SECTION 9.5 with
respect to any Offset Claim (the "Right of Offset"), exercise such Right of
Offset with respect to such Offset Claim. Notwithstanding the foregoing, the
exercise of any Right of Offset by any Exercising Party shall not constitute or
be construed as a waiver or release of the Stockholder's right to object to any
Offset Claim or the exercise of any Right of Offset by any Exercising Party, and
the Stockholder shall have all of the rights and remedies available to the
Stockholder (whether at law or in equity) with respect thereto.
9.6 REMEDIES.
Except as otherwise provided in SECTIONS 5.1 AND 10.2 of this
Agreement, the rights of an Indemnified Party under this ARTICLE 9 shall be the
exclusive rights and remedies to which such Indemnified Party shall be entitled
under this Agreement, applicable law or otherwise.
9.7 DEFINITIONS.
For purposes of this ARTICLE 9, "Costs" shall mean, except to the
extent covered by insurance, all liabilities, losses, costs, damages (not
including consequential damages), expenses, claims, attorney's fees, experts'
fees, consultants' fees, and disbursements of any kind or of any nature
whatsoever; PROVIDED, HOWEVER, that attorney's fees shall be reasonable and
based on time actually spent which shall be charged at not more than the
attorney's standard hourly rate and provided further that only one law firm
shall be paid on any claim regardless of
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the number of indemnified parties involved in such claim. For purposes of
application of the indemnity provisions of this ARTICLE 9, the amount of any
Cost arising from the breach of any representation, covenant or agreement shall
be the out-of-pocket amount of any Cost actually paid or legally required to be
paid by the Indemnified Party as a result of such breach.
9.8 ADJUSTMENTS.
Notwithstanding anything contained in this Agreement to the contrary,
the Stockholder shall not have any liability under this Article for any breach
of covenant or misrepresentation or otherwise have any liability under this
Agreement to the extent that the existence of such liability or the breach of
covenant or the falsity of the representation upon which such liability would be
based is disclosed in any Schedule or Disclosure Document or in any other
contracts, documents, records or instruments delivered to or made available to
UAG, Sub or its representatives hereunder or which is disclosed in a written
notice furnished to any of them prior to the Closing Date; PROVIDED, HOWEVER,
that any such disclosure made between the date of execution of this Agreement
and the Closing Date shall not affect the right of Sub to elect not to close the
transactions contemplated by this Agreement as provided in SECTION 8.1 hereof;
it being understood and agreed that if Sub elects to close after such disclosure
(thereby waiving such breach or misrepresentation), UAG and Sub shall thereafter
have no claim against the Company or the Stockholder by reason of, in connection
with or arising from any such disclosed liability, breach or misrepresentation.
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9.9 SUBROGATION.
If the Indemnifying Party makes any payment under this Article with
respect to any loss, the Indemnifying Party shall be subrogated, to the extent
of such payment, to the rights of the Indemnified Party against any insurer or
other party with respect to such losses. If the Indemnified Party makes any
payments under this Article with respect to any losses, the Indemnified Party
shall assign to the Indemnifying Party any and all rights with respect to which
and to the extent to which indemnification shall have been sought or made under
this Agreement, and the Indemnified Party shall not take any action which
directly or indirectly would affect such claims that the Indemnifying Party may
have with respect thereto and shall cooperate fully with the Indemnified Party
in pursuing such claims.
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9.10 CERTAIN ADDITIONAL INDEMNIFICATION.
Notwithstanding anything herein to the contrary, the Stockholder and
Lynda Jane Hickman, in her individual capacity, jointly and severally, indemnify
and agree to fully defend, save and hold harmless each UAG Indemnified Party if
a UAG Indemnified Party shall at any time or from time to time be required to
pay any Costs or is subject to any other damages or liability arising out of or
resulting from, or shall pay or become legally obligated to pay any sum on
account of, any untruth or inaccuracy in any representation of the Stockholder
or the Company contained in SECTIONS 2.3, 3.1 AND 3.2(a) hereof; PROVIDED,
HOWEVER, that in no event shall the aggregate amount of the liability of the
Stockholder and Ms. Hickman under this SECTION 9.10 exceed Eleven Million
Dollars ($11,000,000) (the "Limitation Amount"), except that after the
expiration of the period that commences on the Closing Date and ends on the date
that is two (2) years after the Closing Date (the "2-Year Period") such
Limitation Amount shall be increased by the amount by which $2,000,000 exceeds
the aggregate amount of all claims asserted against the Stockholder during the
2-Year Period under SECTIONS 9.1 AND 9.5 hereof; and, PROVIDED, FURTHER, that
(a) the obligations of the Stockholder hereunder shall expire on the later of
the date that is (i) five (5) years after the Closing Date or (ii) with respect
to any claim asserted with respect to any breach of such representation pursuant
to SECTION 9.3 hereof within five (5) years of the Closing Date on the date such
claim is finally liquidated or otherwise resolved; and (b) the obligations of
Ms. Hickman hereunder shall expire on the later of the date that is (x) seven
(7) years after the Closing Date or (y) with respect to any claim asserted with
respect to any breach of such representation pursuant to SECTION 9.3 hereof
within seven (7) years of the Closing Date on the date such claim is finally
liquidated or otherwise resolved.
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ARTICLE 10
MISCELLANEOUS
10.1 SURVIVAL OF PROVISIONS.
(a) The respective representations, 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, or covenants, the party to
whom such representations, or covenants have been made shall have all rights and
remedies for such breach available to it under the provisions of this Agreement,
regardless of any disclosures to, or investigation made by or on behalf of, such
party on or before the Closing Date.
(b) Each of the representations 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 that is two (2)
years after the Closing Date, and (ii) with respect to any claim asserted with
respect to any breach of such representations pursuant to SECTION 9.3 hereof
before the expiration of such representation, on the date such claim is finally
liquidated or otherwise resolved; PROVIDED, HOWEVER, that with respect to the
Stockholder, the representations set forth in SECTIONS 2.3, 3.1 AND 3.2(a)
hereof shall survive and not be affected in any respect by the Closing, for a
period terminating on the later of (x) the date that is five (5) years after the
Closing Date and (y) with respect to any claim asserted with respect to any
breach of such representations pursuant to SECTION 9.3 hereof before the
expiration of such representations on the date such claim is finally liquidated
or otherwise resolved; and PROVIDED, FURTHER, that with respect to Ms. Hickman,
the representations set forth in SECTIONS 2.3, 3.1 AND 3.2(a) hereof shall
survive and not be affected in any respect by the Closing, for a period
terminating on the later of (x) the date that is seven (7) years after the
Closing Date and (y) with respect to any claim asserted with respect to any
breach of such representations pursuant to SECTION 9.3 hereof before the
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expiration of such representations on the date such claim is finally liquidated
or otherwise resolved.
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
Stockholder or the Company shall pay to UAG, within five (5) Business Days after
receipt of a request therefor, an amount equal to the lesser of (a) Twenty
Thousand Dollars ($20,000), or (b) 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 mailed by registered or certified mail,
postage prepaid (return receipt requested), as follows:
If to the Company before the Closing date:
339 Argonne Drive
Atlanta, Georgia 30304
and
Neill B. Faucett
Faucett, Taylor & Associates, P.C.
2550 Heritage Court, N.W.
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Atlanta, Georgia 30339
with a copy to:
Davis, Matthews & Quigley, P.C.
14th Floor, Lenox Towers II
3400 Peachtree Road
Atlanta, Georgia 30326
Attn: William M. Matthews, Esq.
If to the Company after the Closing Date:
United Auto Group, Inc.
375 Park Avenue
New York, New York 10022
Facsimile No.: (212) 223-5148
Attn: George G. Lowrance, Esq.,
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 Stockholder:
339 Argonne Drive
Atlanta, Georgia 30305
and
Neill B. Faucett
Faucett, Taylor & Associates, P.C.
2550 Heritage Court, N.W.
Atlanta, Georgia 30339
with a copy to:
Davis, Matthews & Quigley, P.C.
14th Floor, Lenox Towers II
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3400 Peachtree Road
Atlanta, Georgia 30326
Attn: William M. Matthews, Esq.
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.,
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 their respective heirs, legal
representatives, successors and 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 except with respect to the
distribution of the Estate of James Franklin Hickman pursuant to the terms of
his Will. 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 Lease 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, covenants or undertakings with respect to the transactions
contemplated hereby other than those expressly set forth herein or in the Lease.
Prior drafts of this Agreement shall not be used as a basis for interpreting
this Agreement.
10.7 WAIVER AND AMENDMENTS.
The 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 of the other parties contained in this Agreement, (iii) waive
compliance with any of the covenants of the other parties contained in this
Agreement, (iv) waive performance of any of the obligations of the other parties
created under this Agreement, or (v) waive fulfillment of any of the conditions
to its own obligations
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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 "best efforts" shall include an
obligation to take such actions
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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) "GAAP" shall mean generally accepted accounting principles which
are in effect in the United States on the Closing Date.
(e) "Liens" shall mean any mortgages, pledges, title defects or
objections, liens, claims, security interests, conditional and installment sale
agreements, encumbrances or charges of any kind.
(f) "Material Adverse Effect" shall mean any change in, or effect
on, the Company (including the business thereof) which would, or could
reasonably be expected to have a substantial material adverse effect on the
financial condition of the Company taken as a whole.
(g) "Person" shall mean and include an individual, corporation,
limited liability company, partnership, joint venture, association, trust, any
other incorporated or unincorporated organization or entity and a governmental
entity or any department or agency thereto.
(h) "Knowledge" means, with respect to the Stockholder, that Lynda
Hickman, President of the Company, knows, or in the exercise of reasonable
diligence, would or should have known of the particular matter referred to, and,
with respect to UAG, that the President of UAG knows or, in the exercise of
reasonable diligence, would or should have known of the particular matter
referred to.
(i) "Disclosure Documents" means this Agreement, the Schedules and
Exhibits attached hereto and all other contracts, documents, records and other
instruments delivered to UAG or Sub on or before the Closing Date.
10.12 SCHEDULES.
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Disclosure of any matter in any Schedule hereto or in the Financial
Statements shall 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.
10.14 TIME IS OF THE ESSENCE.
Time is of the essence for purposes of this Agreement.
10.14A MS. HICKMAN.
The parties hereby acknowledge and agree that the liability of Ms.
Hickman in her individual capacity under this Agreement is limited to her
obligations under SECTION 9.10 hereof.
10.15 S SHORT YEAR.
(a) The parties hereto acknowledge that upon the closing of the
transactions contemplated by this Agreement, the Company's status as an S
corporation for federal income tax purposes shall cease, that the taxable year
of the Company in which such closing occurs shall be divided into two (2) short
taxable years (a S short year and a C short year). Each of the parties hereto
covenants and agrees to make all elections, consents, statements and filings
that may be required by the Internal Revenue Code of 1986 to close the Company's
books on the last applicable day of the S short year (the "S Short Year").
(b) The federal and state income tax return for the S Short Year (the
"S Tax Returns") shall be prepared, at the Company's expense, by the accounting
firm of Faucett, Taylor &
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Associates, P.C. ("FTA"). The Company, UAG and Sub covenant and agree to
cooperate fully with the Stockholder and FTA in the preparation of the S Tax
Returns and to make available to FTA
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during normal business hours all books, records and information that FTA may
reasonably request to complete the preparation of the S Tax Returns in a prompt,
timely and complete manner. The S Tax Returns shall be prepared on the same
basis, and in a manner consistent with, the principles, methods and practices
used in preparing the Company's previous federal income tax returns. Upon FTA's
delivery of the completed S Tax Returns to the Company, which delivery shall be
no less than 30 days prior to the date thereof, in form and substance reasonably
satisfactory to the Company, the Company covenants and agrees to execute and
file, and UAG and Sub covenant and agree to cause the Company to execute and
file, such S Tax Returns with the appropriate taxing authorities on a timely
basis.
(c) UAG, Sub and the Company covenant and agree that they shall not,
without the Stockholder's prior written approval, make any elections or take any
action with respect to the S Short Year or any other tax period that precedes
the Closing Date which could affect the determination of the Company's or the
Stockholder's federal or state income liability for any of such tax periods.
10.16 ESTATE.
The parties hereby acknowledge and agree that the Stockholder has
executed this Agreement in her capacity as Executrix under the Will of James
Franklin Hickman, Jr., Deceased, and that the Stockholder has not made, and does
not make, any warranties under this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
UNITED AUTO GROUP, INC.
By: /s/ Carl Spielvogel
_________________________________
Name: Carl Spielvogel
Title: Chief Executive Officer
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UAG ATLANTA III, INC.
By: /s/ Carl Spielvogel
_________________________________
Name: Carl Spielvogel
Title: Chief Executive Officer
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HICKMAN NISSAN, INC.
By: /s/ Lynda Jane Hickman
________________________________
Name: Lynda Jane Hickman
Title: President
/s/Lynda Jane Hickman
____________________________________
Lynda Jane Hickman, Individually
/s/Lynda Jane Hickman
_____________________________________
Lynda Jane Hickman, as Executrix under the
Will of James Franklin Hickman, Jr., Deceased