UNITED AUTO GROUP, INC.
____________ Shares of Common Stock
Underwriting Agreement
, 1996
J.P. Morgan Securities Inc.
Montgomery Securities
Smith Barney Inc.
As Representatives of several underwriters
listed in Schedule I hereto
c/o J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Ladies and Gentlemen:
United Auto Group, Inc., a Delaware corporation (the "COMPANY"), proposes
to issue and sell to the several Underwriters listed in Schedule I hereto (the
"UNDERWRITERS"), for whom you are acting as representatives (the
"REPRESENTATIVES"), an aggregate of ___________ shares of Voting Common Stock,
par value $0.0001 per share (the "VOTING COMMON STOCK"), of the Company (the
"UNDERWRITTEN SHARES") and, for the sole purpose of covering over-allotments in
connection with the sale of the Underwritten Shares, at the option of the
Underwriters, up to an additional ________ shares of Voting Common Stock of the
Company (the "OPTION SHARES"). The Underwritten Shares and the Option Shares
are herein referred to as the "SHARES." The shares of Voting Common Stock of
the Company to be outstanding after giving effect to the sale of the Shares are
herein referred to as the "STOCK."
The Company has prepared and filed with the Securities and Exchange
Commission (the "COMMISSION") in accordance with the provisions of the
Securities Act of 1933, as amended, and the rules and regulations of the
Commission thereunder (collectively, the "SECURITIES ACT"), a registration
statement on Form S-1 (No. 333-09429), including a prospectus, relating to the
Shares. The registration statement as amended at the time of its effectiveness,
including information (if any) deemed to be part of the registration statement
at the time of effectiveness
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pursuant to Rule 430A under the Securities Act, is referred to in this Agreement
as the "REGISTRATION STATEMENT," and the prospectus in the form first used to
confirm sales of Shares is referred to in this Agreement as the "PROSPECTUS."
If the Company has filed an abbreviated registration statement pursuant to Rule
462(b) under the Securities Act (the "RULE 462 REGISTRATION STATEMENT"), then
any reference herein to the term "Registration Statement" shall be deemed to
include such Rule 462 Registration Statement.
The Company hereby agrees with the Underwriters as follows:
1. The Company agrees to issue and sell the Underwritten Shares to the
several Underwriters as hereinafter provided, and each Underwriter, upon the
basis of the representations and warranties herein contained, but subject to the
conditions hereinafter stated, agrees to purchase, severally and not jointly,
from the Company the respective number of Underwritten Shares set forth opposite
such Underwriter's name in Schedule I hereto at a purchase price per share (the
"PURCHASE PRICE") of $____________. The public offering price of the Shares is
not in excess of the price recommended by Smith Barney Inc. ("SMITH BARNEY"),
acting as a "qualified independent underwriter" within the meaning of the
Conduct Rules of the National Association of Securities Dealers, Inc. (the
"NASD").
In addition, the Company agrees to issue and sell the Option Shares to the
several Underwriters as hereinafter provided, and the Underwriters on the basis
of the representations and warranties herein contained, but subject to the
conditions hereinafter stated, shall have the option to purchase, severally and
not jointly, from the Company up to an aggregate of ________ Option Shares at
the Purchase Price, for the sole purpose of covering over-allotments (if any) in
the sale of Underwritten Shares by the several Underwriters.
If any Option Shares are to be purchased, the number of Option Shares to be
purchased by each Underwriter shall be the number of Option Shares which bears
the same ratio to the aggregate number of Option Shares being purchased as the
number of Underwritten Shares set forth opposite the name of such Underwriter in
Schedule I hereto (or such number increased as set forth in Section 9 hereof)
bears to the aggregate number of Underwritten Shares being purchased from the
Company by the several Underwriters, subject, however, to such adjustments to
eliminate any fractional shares as the Representatives in their sole discretion
shall make.
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The Underwriters may exercise the option to purchase the Option Shares at
any time (but not more than once) on or before the thirtieth day following the
date of this Agreement, by written notice from the Representatives to the
Company. Such notice shall set forth the aggregate number of Option Shares as
to which the option is being exercised and the date and time when the Option
Shares are to be delivered and paid for, which may be the same date and time as
the Closing Date (as hereinafter defined) but shall not be earlier than the
Closing Date or later than the tenth full Business Day after the date of such
notice (unless such time and date are postponed in accordance with the
provisions of Section 9 hereof). Any such notice shall be given at least two
Business Days prior to the date and time of delivery specified therein. As used
herein, the term "BUSINESS DAY" means any day other than a day on which banks
are permitted or required to be closed in New York City.
2. The Company understands that the Underwriters intend (i) to make a
public offering of the Shares as soon after (A) the Registration Statement has
become effective and (B) the parties hereto have executed and delivered this
Agreement, as in the judgment of the Representatives is advisable and (ii)
initially to offer the Shares upon the terms set forth in the Prospectus.
3. Payment for the Shares shall be made by wire transfer in immediately
available funds to the account specified by the Company to the Representatives
(which account shall be specified no later than noon the Business Day prior to
the Closing Date), in the case of the Underwritten Shares, on , 199_, or
at such other time on the same or such other date, not later than the fifth
Business Day thereafter, as the Representatives and the Company may agree upon
in writing or, in the case of the Option Shares, on the date and time specified
by the Representatives in the written notice of the Underwriters' election to
purchase such Option Shares. The time and date of such payment for the
Underwritten Shares is referred to herein as the "CLOSING DATE," and the time
and date for such payment for the Option Shares, if other than the Closing Date,
is herein referred to as the "ADDITIONAL CLOSING DATE."
Payment for the Shares to be purchased on the Closing Date or the
Additional Closing Date, as the case may be, shall be made against delivery to
the Representatives for the respective accounts of the several Underwriters of
the Shares to be purchased on such date registered in such names and in such
denominations as the Representatives shall request in writing not later than two
full Business Days prior to the Closing Date or the Additional Closing Date, as
the case may be, with any transfer taxes payable in connection with the transfer
to the
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Underwriters of the Shares duly paid by the Company. The certificates for the
Shares will be made available for inspection and packaging by the
Representatives at the office of J.P. Morgan Securities Inc. ("J.P. MORGAN
SECURITIES") set forth above not later than 1:00 P.M., New York City time, on
the Business Day prior to the Closing Date or the Additional Closing Date, as
the case may be.
4. The Company represents and warrants to each Underwriter that:
(a) no order preventing or suspending the use of any preliminary
prospectus has been issued by the Commission, and each preliminary prospectus
filed as part of the Registration Statement as originally filed or as part of
any amendment thereto, or filed pursuant to Rule 424 under the Securities Act,
complied when so filed in all material respects with the Securities Act, and did
not contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading;
PROVIDED, HOWEVER, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with information
relating to any Underwriter furnished to the Company in writing by such
Underwriter through the Representatives expressly for use therein;
(b) no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceeding for that purpose has been instituted
or, to the best of the Company's knowledge, threatened by the Commission; and
the Registration Statement and Prospectus and any amendment or supplement
thereto comply, or will comply, as the case may be, in all material respects
with the Securities Act and do not and will not, as of the applicable effective
date as to the Registration Statement and any amendment thereto and as of the
date of the Prospectus and any amendment or supplement thereto, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not misleading,
and the Prospectus, at the Closing Date or Additional Closing Date, as the case
may be, will not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading; PROVIDED, HOWEVER,
that the foregoing representations and warranties shall not apply to statements
or omissions in the Registration Statement or the Prospectus made in reliance
upon and in conformity with information relating to any Underwriter
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furnished to the Company in writing by such Underwriter through the
Representatives expressly for use therein;
(c) the financial statements, and the related notes thereto, included
in the Registration Statement and the Prospectus present fairly (i) the
consolidated financial position of the Company and its consolidated subsidiaries
as of the dates indicated and the results of their operations and changes in
their consolidated cash flows and stockholders' equity for the periods specified
and (ii) the financial position or the consolidated financial position, as the
case may be, of the other entities listed in the "Index to Financial Statements"
in the Prospectus as of the dates indicated and the results of their operations
and changes in their cash flows or consolidated cash flows, as the case may be,
and, if applicable, stockholders' equity; said financial statements have been
prepared in conformity with generally accepted accounting principles applied on
a consistent basis, and the supporting schedule included in the Registration
Statement presents fairly the information required to be stated therein; and the
pro forma financial statements, and the related notes thereto, and other pro
forma financial information included in the Registration Statement and the
Prospectus have been prepared in accordance with the applicable requirements of
the Securities Act and are based upon good faith estimates and assumptions
believed by the Company to be reasonable;
(d) the statistical and market-related data included in the
Prospectus are based on or derived from sources that the Company believes are
reliable and accurate;
(e) since the respective dates as of which information is given in
the Prospectus, there has not been any change in the capital stock or long-term
debt of the Company or any of the Subsidiaries (as defined below), or any
material adverse change, or any development involving a prospective material
adverse change, in or affecting the general affairs, business, prospects,
management, financial position, stockholders' equity or results of operations of
the Company and the Subsidiaries, taken as a whole (a "MATERIAL ADVERSE CHANGE"
or a "PROSPECTIVE MATERIAL ADVERSE CHANGE"), otherwise than as set forth or
contemplated in the Prospectus; and except as set forth or contemplated in the
Prospectus neither the Company nor any of the Subsidiaries has entered into any
transaction or agreement (whether or not in the ordinary course of business)
material to the Company and the Subsidiaries taken as a whole;
(f) the Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws
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of its jurisdiction of incorporation, with power and authority (corporate and
other) to own and lease its properties and conduct its business as described in
the Prospectus, and has been duly qualified as a foreign corporation for the
transaction of business and is in good standing under the laws of each other
jurisdiction in which it owns or leases properties, or conducts any business, so
as to require such qualification, other than where the failure to be so
qualified or in good standing, singly or in the aggregate with all other such
failures, would not have a material adverse effect on the general affairs,
business, prospects, management, financial position, stockholders' equity or
results of operations of the Company and the Subsidiaries, taken as a whole (a
"MATERIAL ADVERSE EFFECT");
(g) each of the subsidiaries of the Company after giving effect to
the Contemporaneous Acquisitions (the "SUBSIDIARIES") has been duly incorporated
and is validly existing as a corporation under the laws of its jurisdiction of
incorporation, with power and authority (corporate and other) to own and lease
its properties and conduct its business as described in the Prospectus, and has
been duly qualified as a foreign corporation for the transaction of business and
is in good standing under the laws of each other jurisdiction in which it owns
or leases properties, or conducts any business, so as to require such
qualification, other than where the failure to be so qualified or in good
standing, singly or in the aggregate with all other such failures, would not
have a Material Adverse Effect; and all of the outstanding shares of capital
stock of each Subsidiary have been duly authorized and validly issued, are fully
paid and non-assessable, and (except as otherwise set forth in the Prospectus)
will be owned, as of the Closing Date, by the Company, directly or indirectly,
free and clear of all material liens, encumbrances, security interests or
claims, except that 19% of the Common Stock of SK Motors, Ltd. (d/b/a Scottsdale
Porsche) will be owned by [ ].
(h) this Agreement has been duly authorized, executed and delivered
by the Company;
(i) each of the agreements (collectively, the "TRANSACTION
DOCUMENTS") governing the acquisitions that are contemplated to occur on the
Closing Date (the "CONTEMPORANEOUS ACQUISITIONS") or the exchange of the
minority interests in certain of the Subsidiaries (the "MINORITY EXCHANGE") has
been duly authorized, executed and delivered by each of the parties thereto, and
constitutes a legally valid and binding obligation of each such party and is
enforceable against each such party in accordance with its terms; except as
described in the Prospectus, each of the representations and warranties of the
Company and its
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subsidiaries and, to the best of the Company's knowledge, of each of the other
parties set forth in the Transaction Documents was true and correct at the time
such representations and warranties were made and will be true and correct at
and as of the Closing Date or the Additional Closing Date, as the case may be,
as if made at and as of such date (other than to the extent any such
representation or warranty is expressly made as to only a certain other date),
except to the extent that the failure of any such representation or warranty to
be true, singly or in the aggregate, would not have a Material Adverse Effect;
(j) as of the Closing Date, the Company will have an authorized
capitalization as set forth in the Prospectus and such authorized capital stock
will conform as to legal matters to the description thereof set forth in the
Prospectus; all of the outstanding shares of capital stock of the Company have
been duly authorized and validly issued, are fully paid and non-assessable and
are not subject to any preemptive or similar rights; and, except as described in
or expressly contemplated by the Prospectus, there are no outstanding rights
(including, without limitation, preemptive rights), warrants or options to
acquire, or instruments convertible into or exchangeable for, any shares of
capital stock or other equity interest in the Company or any of the
Subsidiaries, or any contract, commitment, agreement, understanding or
arrangement of any kind to which the Company or any of the Subsidiaries is a
party relating to the issuance of any capital stock of the Company or any such
Subsidiary, any such convertible or exchangeable securities or any such rights,
warrants or options;
(k) the Shares have been duly authorized and, when issued and
delivered to and paid for by the Underwriters in accordance with the terms of
this Agreement, will be validly issued and will be fully paid and non-assessable
and will conform to the descriptions thereof in the Prospectus; and the issuance
of the Shares is not subject to any preemptive or similar rights;
(l) except as described in the Prospectus, neither the Company nor
any of the Subsidiaries is, or with the giving of notice or lapse of time or
both would be, in violation of or in default under, its Certificate or Articles
of Incorporation or By-Laws or any indenture, mortgage, deed of trust, loan
agreement, franchise agreement or other agreement or instrument to which the
Company or any of the Subsidiaries is a party or by which it or any of them or
any of their respective properties is bound, except for violations and defaults
which singly and in the aggregate are not material to the Company and the
Subsidiaries taken as a whole; the issuance and sale of the Shares and the
performance by the Company of its obligations under this
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Agreement and the Transaction Documents and the consummation of the transactions
contemplated herein and therein will not conflict with or result in a breach of
any of the terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement, franchise agreement or other agreement
or instrument to which the Company or any of the Subsidiaries is a party or by
which the Company or any of the Subsidiaries is bound or to which any of the
property or assets of the Company or any of the Subsidiaries is subject, and
will not result in any violation of any applicable law or statute or any order,
rule or regulation of any court or governmental agency or body having
jurisdiction over the Company, the Subsidiaries or any of their respective
properties, except any such conflicts, breaches and defaults resulting from the
performance by the Company of its obligations under the Transaction Documents
and the consummation of the transactions contemplated therein that, singly or in
the aggregate, would not have a Material Adverse Effect, and will not result in
any violation of the provisions of the Certificate of Incorporation or By-Laws
of the Company; and no consent, approval, authorization, order, license,
registration or qualification of or with any such court or governmental agency
or body is required for the issuance and sale of the Shares or the consummation
by the Company of the transactions contemplated by this Agreement, except such
consents, approvals, authorizations, orders, licenses, registrations or
qualifications as have been obtained under the Securities Act and as may be
required under state securities or Blue Sky Laws in connection with the purchase
and distribution of the Shares by the Underwriters;
(m) other than as set forth or contemplated in the Prospectus, there
are no legal or governmental investigations, actions, suits or proceedings
(collectively, "PROCEEDINGS") pending or, to the best of the Company's
knowledge, threatened against or affecting the Company or any of the
Subsidiaries or any of their respective properties or to which the Company or
any of the Subsidiaries is or may be a party or to which any property of the
Company or any of the Subsidiaries is or may be the subject which, singly or in
the aggregate, could have, or reasonably could be expected to have, a Material
Adverse Effect and, to the best of the Company's knowledge, no such Proceedings
are threatened or contemplated by governmental authorities or threatened by
others; and there are no statutes, regulations, contracts or other documents
that are required to be described in the Registration Statement or Prospectus or
to be filed as exhibits to the Registration Statement that are not described or
filed as required;
(n) the Company and the Subsidiaries have good and marketable title
in fee simple to all items of real property and
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good and marketable title to all personal property owned by them, in each case
free and clear of all liens, encumbrances and defects except such as are
described or referred to in the Prospectus and except to the extent as would
not, singly or in the aggregate, have a Material Adverse Effect; and any real
property and buildings held under lease by the Company and the Subsidiaries are
held by them under valid, existing and enforceable leases with such exceptions
as would not, singly or in the aggregate, have a Material Adverse Effect;
(o) no relationship, direct or indirect, exists between or among the
Company or any of the Subsidiaries on the one hand, and the directors, officers,
stockholders, customers or suppliers of the Company or any of the Subsidiaries
on the other hand, which is required by the Securities Act to be described in
the Prospectus which is not so described;
(p) no person has the right to require the Company to register any
securities of the Company or any of the Subsidiaries for offering and sale under
the Securities Act by reason of the filing of the Registration Statement with
the Commission or the issuance and sale of the Shares or the transactions in
connection therewith, except for such rights as have been duly waived;
(q) the Company is not and, after giving effect to the offering and
sale of the Shares, will not be an "investment company" or entity "controlled"
by an "investment company", as such terms are defined in the Investment Company
Act of 1940, as amended (the "INVESTMENT COMPANY ACT");
(r) the Company has complied with all provisions of Section 517.075,
Florida Statutes (Chapter 92 198, Laws of Florida, relating to doing business
with the Government of Cuba or with any person or affiliate located in Cuba;
(s) Coopers & Lybrand, L.L.P., who have certified certain financial
statements of the Company and the Subsidiaries, are independent public
accountants as required by the Securities Act;
(t) the Company and the Subsidiaries have filed all federal, state,
local and foreign tax returns which have been required to be filed and have paid
all taxes shown thereon and all assessments received by them or any of them to
the extent that such taxes have become due and are not being contested in good
faith, except such amounts that are not, singly or in the aggregate, material to
the Company and the Subsidiaries taken as a whole; and there is no tax
deficiency which has been or might reasonably be expected to be asserted or
threatened against the
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Company or any Subsidiary, other than such tax deficiencies in such amounts that
are not, singly or in the aggregate, material to the Company and the
Subsidiaries taken as a whole;
(u) the Company has not taken nor will it take, directly or
indirectly, any action designed to, or that might be reasonably expected to,
cause or result in stabilization or manipulation of the price of the Stock;
(v) each of the Company and the Subsidiaries owns, possesses or has
obtained all licenses, franchises, permits, certificates, consents, orders,
approvals and other authorizations (collectively, "PERMITS") from, and has made
all declarations and filings with, all federal, state, local and other
governmental authorities (including foreign regulatory agencies), all self-
regulatory organizations, all domestic or foreign courts and other tribunals and
all automobile manufacturers and distributors necessary to own or lease, as the
case may be, and to operate its properties and to carry on its business as
conducted as of the date hereof and as proposed to be conducted, and neither the
Company nor any such Subsidiary has received any actual notice of any proceeding
relating to revocation or modification of any such Permit, except as described
in the Prospectus; and each of the Company and the Subsidiaries is in compliance
with all laws and regulations relating to the conduct of its business as
conducted as of the date hereof, except to the extent that failure to so comply
would not, singly or in the aggregate, have a Material Adverse Effect;
(w) there are no existing or, to the best of the Company's knowledge,
threatened labor disputes with the employees of the Company or any of the
Subsidiaries which, singly or in the aggregate, would have a Material Adverse
Effect;
(x) the Company and the Subsidiaries (i) are in compliance with any
and all applicable foreign, federal, state and local laws and regulations
relating to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants
("ENVIRONMENTAL LAWS"), (ii) have received all permits, licenses or other
approvals required of them under applicable Environmental Laws to conduct their
respective businesses and (iii) are in compliance with all terms and conditions
of any such permit, license or approval, except, in each case, where such
noncompliance with Environmental Laws, failure to receive required permits,
licenses or other approvals or failure to comply with the terms and conditions
of such permits, licenses or approvals would not, singly or in the aggregate,
have a Material Adverse Effect; and
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(y) each employee benefit plan, within the meaning of Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), that
is maintained, administered or contributed to by the Company or any of its
affiliates for employees or former employees of the Company and its affiliates
has been maintained in compliance with its terms and the requirements of any
applicable statutes, orders, rules and regulations, including but not limited to
ERISA and the Internal Revenue Code of 1986, as amended (the "CODE"), except to
the extent non-compliance, singly or in the aggregate, would not have a Material
Adverse Effect. No prohibited transaction, within the meaning of Section 406 of
ERISA or Section 4975 of the Code, has occurred with respect to any such plan
excluding transactions effected pursuant to a statutory or administrative
exemption. For each such plan which is subject to the funding rules of Section
412 of the Code or Section 302 of ERISA, no "accumulated funding deficiency" as
defined in Section 412 of the Code has been incurred, whether or not waived, and
the fair market value of the assets of each such plan (excluding for these
purposes accrued but unpaid contributions) exceeded the present value of all
benefits accrued under such plan determined using reasonable actuarial
assumptions.
5. The Company covenants and agrees with each of the several Underwriters
as follows:
(a) to use its best efforts to cause the Registration Statement to
become effective at the earliest possible time and, if required, to file the
Prospectus with the Commission within the time periods specified by Rule 424(b)
and Rule 430A under the Securities Act; and to furnish copies of the Prospectus
to the Underwriters in New York City prior to 10:00 a.m., New York City time, on
the Business Day next succeeding the date of this Agreement in such quantities
as the Representatives may reasonably request;
(b) to deliver, at the expense of the Company, to the Representatives
four copies of the Registration Statement (as originally filed) and each
amendment thereto, in each case including exhibits, and to each other
Underwriter a copy of the Registration Statement (as originally filed) and each
amendment thereto, in each case without exhibits, and, during the period
mentioned in paragraph (e) below, to each of the Underwriters as many copies of
the Prospectus (including all amendments and supplements thereto) as the
Representatives may reasonably request;
(c) before filing any amendment or supplement to the Registration
Statement or the Prospectus, whether before or after
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the time the Registration Statement becomes effective, to furnish to the
Representatives a copy of the proposed amendment or supplement for review and
not to file any such proposed amendment or supplement to which the
Representatives reasonably object;
(d) to advise the Representatives promptly, and to confirm such
advice in writing (i) when the Registration Statement has become effective, (ii)
when any amendment to the Registration Statement has been filed or becomes
effective, (iii) when any supplement to the Prospectus or any amended Prospectus
has been filed and to furnish the Representatives with copies thereof, (iv) of
any request by the Commission for any amendment to the Registration Statement or
any amendment or supplement to the Prospectus or for any additional information,
(v) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of any order preventing or
suspending the use of any preliminary prospectus or the Prospectus or the
initiation or threatening of any proceeding for that purpose, (vi) of the
occurrence of any event, within the period referenced in paragraph (e) below, as
a result of which the Prospectus as then amended or supplemented would include
an untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances when the Prospectus is delivered to a purchaser, not misleading,
and (vii) of the receipt by the Company of any notification with respect to any
suspension of the qualification of the Shares for offer and sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose; and to use its best efforts to prevent the issuance of any such stop
order, or of any order preventing or suspending the use of any preliminary
prospectus or the Prospectus, or of any order suspending any such qualification
of the shares, or notification of any such order thereof and, if issued, to
obtain as soon as possible the withdrawal thereof;
(e) if, during such period of time after the first date of the public
offering of the Shares as in the opinion of counsel for the Underwriters a
prospectus relating to the Shares is required by law to be delivered in
connection with sales by the Underwriters or any dealer, any event shall occur
as a result of which it is necessary to amend or supplement the Prospectus in
order to make the statements therein, in the light of the circumstances when the
Prospectus is delivered to a purchaser, not misleading, or if it is necessary to
amend or supplement the Prospectus to comply with law, forthwith to prepare and
furnish, at the expense of the Company, to the Underwriters and to the dealers
(whose names and addresses the Representatives will furnish to the Company) to
which Shares may have been sold by the Representatives on behalf of the
Underwriters and to any other
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dealers upon request, such amendments or supplements to the Prospectus as may be
necessary so that the statements in the Prospectus as so amended or supplemented
will not, in the light of the circumstances when the Prospectus is delivered to
a purchaser, be misleading or so that the Prospectus will comply with law;
(f) to endeavor to qualify the Shares for offer and sale under the
securities or Blue Sky laws of such jurisdictions as the Representatives shall
reasonably request and to continue such qualification in effect so long as
reasonably required for distribution of the Shares; PROVIDED, HOWEVER, that the
Company shall not be required to file a general consent to service of process in
any jurisdiction;
(g) to make generally available to its security holders and to the
Representatives as soon as practicable an earnings statement covering a period
of at least twelve months beginning with the first fiscal quarter of the Company
occurring after the effective date of the Registration Statement, which shall
satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 of
the Commission promulgated thereunder;
(h) until December 31, 2000, to furnish to the Representatives copies
of all reports or other communications (financial or other) furnished to holders
of the Shares, and copies of any reports and financial statements furnished to
or filed with the Commission or any national securities exchange;
(i) for a period of 180 days after the date of the initial public
offering of the Shares not to (x) offer, pledge, sell, contract to sell, sell
any option or contract to purchase, purchase any option or contract to sell,
grant any option, right or warrant to purchase or otherwise transfer or dispose
of, directly or indirectly, any shares of Stock or any securities convertible
into or exercisable or exchangeable for Stock or (y) enter into any swap or
other agreement that transfers, in whole or in part, any of the economic
consequences of ownership of the Stock, whether any such transaction described
in clause (x) or (y) above is to be settled by delivery of Stock or such other
securities, in cash or otherwise, or (z) permit the registration under the
Securities Act of any shares of capital stock of the Company, in each case,
without the prior written consent of J.P. Morgan Securities; PROVIDED, HOWEVER,
that the foregoing shall not prohibit (i) the issuance and sale of the Shares
hereunder and the shares of Stock issued in the Minority Exchange, (ii) the
issuance of stock options granted under existing director or employee stock
option plans, (iii) the issuance of any shares of Stock issued upon the exercise
of
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options, warrants or convertible securities outstanding on the date hereof or
granted under existing director or employee stock option plans, (iv)
registration of the Shares and registration of shares of Voting Common Stock
pursuant to the Form S-8 Registration Statement of the Company to be filed with
the Commission on or about the Closing Date (the "S-8 REGISTRATION STATEMENT")
and (v) the issuance of any shares of Stock or options, warrants or rights to
purchase shares of Stock or securities convertible into shares of Stock, in each
case, in respect of an acquisition of an operating business so long as the
persons receiving the same agree to execute lock-up agreements substantially
similar to those being executed in connection with the offering of the Shares;
(j) to use the net proceeds received by the Company from the sale of
the Shares pursuant to this Agreement in the manner specified in the Prospectus
under the caption "Use of Proceeds" and to file with the Commission such reports
on Form SR as may be required by Rule 463 under the Securities Act;
(k) to use its best efforts to list, subject to notice of issuance,
the Shares on the New York Stock Exchange (the "EXCHANGE");
(l) whether or not the transactions contemplated in this Agreement
are consummated or this Agreement is terminated, to pay or cause to be paid all
costs and expenses incident to the performance of its obligations hereunder,
including without limiting the generality of the foregoing, all costs and
expenses (i) incident to the preparation, issuance, execution and delivery of
the Shares, (ii) incident to the preparation, printing and filing under the
Securities Act of the Registration Statement, the Prospectus and any preliminary
prospectus (including in each case all exhibits, amendments and supplements
thereto), (iii) incurred in connection with the registration or qualification of
the Shares under the laws of such jurisdictions as the Representatives may
designate (including fees of counsel for the Underwriters and its
disbursements), (iv) in connection with the listing of the Shares on the
Exchange, (v) related to the filing with, and clearance of the offering by, the
NASD (including the fees and expenses of Smith Barney acting as a "qualified
independent underwriter" within the meaning of the aforementioned Conduct
Rules), (vi) in connection with the printing (including word processing and
duplication costs) and delivery of the Blue Sky Survey and the furnishing to the
Underwriters and dealers of copies of the Registration Statement and the
Prospectus, including mailing and shipping, as herein provided, (vii) any
expenses incurred by the Company in connection with a "road show" presentation
to potential investors, (viii) the cost of preparing
-15-
stock certificates and (ix) the cost and charges of any transfer agent and any
registrar.
6. The several obligations of the Underwriters hereunder to purchase the
Shares on the Closing Date or the Additional Closing Date, as the case may be,
are subject to the performance by the Company of its obligations hereunder and
to the following additional conditions:
(a) The Registration Statement shall have become effective (or if a
post-effective amendment is required to be filed under the Securities Act, such
post-effective amendment shall have become effective) not later than 5:00 P.M.,
New York City time, on the date hereof; and no stop order suspending the
effectiveness of the Registration Statement or any post-effective amendment
shall be in effect, and no proceedings for such purpose shall be pending before
or threatened by the Commission; the Prospectus shall have been filed with the
Commission pursuant to Rule 424(b) within the applicable time period prescribed
for such filing by the rules and regulations under the Securities Act and in
accordance with Section 5(a) hereof; and all requests from the Commission for
additional information shall have been complied with to the satisfaction of the
Representatives.
(b) The representations and warranties of the Company contained
herein are true and correct in all material respects on and as of the Closing
Date or the Additional Closing Date, as the case may be, as if made on and as of
the Closing Date or the Additional Closing Date, as the case may be, and the
Company shall have complied in all material respects with all agreements and all
conditions on its part to be performed or satisfied hereunder at or prior to the
Closing Date or the Additional Closing Date, as the case may be.
(c) subsequent to the execution and delivery of this Agreement and
prior to the Closing Date or the Additional Closing Date, as the case may be,
there shall not have occurred any downgrading, nor shall any notice have been
given of (i) any downgrading, (ii) any intended or potential downgrading or
(iii) any review or possible change that does not indicate an improvement, in
the rating accorded any securities of or guaranteed by the Company or any of the
Subsidiaries by any "nationally recognized statistical rating organization," as
such term is defined for purposes of Rule 436(g)(2) under the Securities Act;
(d) Since the respective dates as of which information is given in
the Prospectus, there shall not have been any change in the capital stock or
long-term debt of the Company or any of
-16-
the Subsidiaries or any Material Adverse Change, or any development involving a
Prospective Material Adverse Change, otherwise than as set forth or contemplated
in the Prospectus, the effect of which in the judgment of the Representatives
makes it impracticable or inadvisable to proceed with the public offering or the
delivery of the Shares on the Closing Date or the Additional Closing Date, as
the case may be, on the terms and in the manner contemplated in the Prospectus;
and neither the Company nor any of the Subsidiaries has sustained since the date
of the latest audited financial statements included material loss or
interference with its business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth or
contemplated in the Prospectus.
(e) The Representatives shall have received on and as of the Closing
Date or the Additional Closing Date, as the case may be, a certificate of two
executive officers of the Company (such certificate not to impose personal
liability on such officer), with specific knowledge about the Company's
financial matters, satisfactory to the Representatives, to the effect set forth
in subsections (a) through (d) of this Section and to the further effect that
there has not occurred any Material Adverse Change, or any development involving
a Prospective Material Adverse Change.
(f) Willkie Farr & Gallagher, counsel for the Company, shall have
furnished to the Representatives their written opinion, dated the Closing Date
or the Additional Closing Date, as the case may be, in form and substance
satisfactory to the Representatives, to the effect that:
(i) the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of its jurisdiction of
incorporation, with power and authority (corporate and other) to own and lease
its properties and conduct its business as described in the Prospectus;
(ii) each of the Subsidiaries has been duly incorporated and is
validly existing as a corporation under the laws of its jurisdiction of
incorporation, with power and authority (corporate and other) to own and lease
its properties and conduct its business as described in the Prospectus; and all
of the outstanding shares of capital stock of each Subsidiary have been duly
authorized and validly issued, are fully paid and non-assessable, and (except as
otherwise set forth in the Prospectus) are owned by the Company, directly or
indirectly, free and clear (to the best of such counsel's knowledge) of all
liens, encumbrances, security interests or claims;
-17-
(iii) other than as set forth or contemplated in the Prospectus,
to the best of such counsel's knowledge, there are no Proceedings pending or
threatened against or affecting the Company or any of the Subsidiaries or any of
their respective properties or to which the Company or any of the Subsidiaries
is or may be a party or to which any property of the Company or any of the
Subsidiaries is or may be the subject which, singly or in the aggregate, could
have a Material Adverse Effect and, to the best of such counsel's knowledge, no
such Proceedings are threatened or contemplated by governmental authorities or
threatened by others; and to the best of such counsel's knowledge, there are no
statutes, regulations, contracts or other documents that are required to be
described in the Registration Statement or Prospectus or to be filed as exhibits
to the Registration Statement that are not described or filed as required;
(iv) this Agreement has been duly authorized, executed and
delivered by the Company;
(v) each of the Transaction Documents has been duly authorized,
executed and delivered by the Company and each Subsidiary which is a party
thereto, and constitutes a legally valid and binding obligation of each such
party and is enforceable against each such party in accordance with its terms;
(vi) all of the shares of capital stock of the Company (other
than the Shares) issued or to be issued (including by conversion or exchange)
and outstanding on the Closing Date have been duly authorized and if issued, are
validly issued, fully paid and non-assessable or when issued, will be validly
issued, fully paid and non-assessable; all of such shares of capital stock of
the Company (other than shares of Stock covered by the S-8 Registration
Statement) have been, or will have been, issued without registration under the
Securities Act pursuant to an exemption therefrom;
(vii) the Shares to be issued and sold by the Company hereunder
have been duly authorized, and when delivered to and paid for the Underwriters
in accordance with the terms of this Agreement, will be validly issued, fully
paid and non-assessable, and the issuance of the Shares is not subject to any
preemptive or similar rights under any contract, agreement or instrument known
to such counsel or under applicable law;
(viii) to the best of such counsel's knowledge, neither the
filing of the Registration Statement nor the offer and sale of the Shares to the
Underwriters in the manner contemplated in this Agreement and the transactions
in connection
-18-
therewith give rise to any rights for or relating to the registration under the
Securities Act of any other securities of the Company or any of the
Subsidiaries, except for such rights as have been duly waived;
(ix) the statements in the Prospectus under "Business --
Franchise Agreements," "Description of Capital Stock," "Shares Eligible for
Future Sale" and "Underwriting" and in Items 14 and 15 of Part II of the
Registration Statement, insofar as such statements constitute a summary of the
terms of the capital stock of the Company, legal matters, documents or
proceedings referred to therein, fairly present the information called for with
respect to such terms, legal matters, documents or proceedings;
(x) based on a telephone call with the Staff of the Commission,
the Registration Statement has been declared effective under the Securities Act
and to the best of such counsel's knowledge, no stop order proceedings with
respect thereto are pending or threatened under the Securities Act; the
registration statement on Form 8-A registering the Stock under the Securities
Exchange Act of 1934, as amended (the "EXCHANGE ACT"), has been declared
effective by the Commission;
(xi) the issuance and sale of the Shares and the performance by
the Company of its obligations under this Agreement and the Transaction
Documents and the consummation of the transactions contemplated herein and
therein will not conflict with or result in a breach of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage, deed of
trust, loan agreement, franchise agreement or other agreement or instrument, in
each case, known to such counsel, to which the Company or any of the
Subsidiaries is a party or by which the Company or any of the Subsidiaries is
bound or to which any of the property or assets of the Company or any of the
Subsidiaries is subject, or the terms of any applicable law or statute or any
order, rule or regulation of any court or governmental agency or body having
jurisdiction over the Company, the Subsidiaries or any of their respective
properties, except for such conflicts, breaches, or defaults that, singly or in
the aggregate, would not have a Material Adverse Effect, nor will any such
action result in any violation of the provisions of the Certificate of
Incorporation or By-Laws of the Company;
(xii) no consent, approval, authorization, order, license,
registration or qualification of or with any court or governmental agency or
body is required for the issuance and sale of the Shares or the consummation of
the other transactions contemplated by this Agreement, except such consents,
approvals,
-19-
authorizations, orders, licenses, registrations or qualifications as have been
obtained under the Securities Act and as may be required under state securities
or Blue Sky laws in connection with the purchase and distribution of the Shares
by the Underwriters;
(xiii) the Company is not and, after giving effect to the
offering and sale of the Shares, will not be an "investment company" or entity
"controlled" by an "investment company," as such terms are defined in the
Investment Company Act;
(xiv) each of the Company and the Subsidiaries owns, possesses
or has obtained all required consents and approvals from all automobile
manufacturers and distributors with respect to the Contemporaneous
Acquisitions and the issuance and sale of the Shares hereunder; and
(xv) such counsel is of the opinion that the Registration
Statement and the Prospectus and any amendments and supplements thereto (other
than the financial statements and related schedules therein, as to which such
counsel need express no opinion) appear on their face to be appropriately
responsive in all material respects with the requirements of the Securities Act
and believes that (other than the financial statements and related schedule
therein, as to which such counsel need express no belief) the Registration
Statement and the prospectus included therein at the time the Registration
Statement became effective did not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading, and that neither the Prospectus
nor any amendment or supplement thereto contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
In rendering such opinions, such counsel may rely (A) as to matters
involving the application of laws other than the laws of the United States and
the State of New York and the General Corporation Law of the State of Delaware,
to the extent such counsel deems proper and to the extent specified in such
opinion, if at all, upon an opinion or opinions (in form and substance
reasonably satisfactory to Underwriters' counsel) of other counsel reasonably
acceptable to Underwriters' counsel, familiar with the applicable laws; (B) as
to matters of fact, to the extent such counsel deems proper, on certificates of
responsible officers of the Company and certificates or other written statements
of officials of jurisdictions having custody of documents respecting
-20-
the corporate existence or good standing of the Company; and (C) the opinion of
Rogers & Hardin being delivered on or prior to the Closing Date. The
Representatives understand that such counsel's opinion may be limited in scope
in respect of certain customary matters, including, without limitation, the
availability of equitable remedies, the limitation on enforceability arising
from bankruptcy and insolvency laws, that such counsel is only qualified to
opine on the laws of the United States and the State of New York and the General
Corporation Law of the State of Delaware, that such counsel is not rendering any
opinion as to breaches of agreements arising from breaches of financial
covenants or from breaches of cross-default provisions triggered by breaches in
any agreements not known to such counsel, that the opinion in clause (xiii) and
(insofar as it relates to the application of any law, statute, order, rule or
regulation) clause (xi) is limited to laws, statutes, orders, rules or
regulations usually applicable to transactions such as the offering of the
Shares, the Minority Exchange, the Contemporaneous Acquisitions and the
Preferred Stock Conversion and that opinions made to the knowledge of such
counsel are limited to the actual knowledge of those lawyers regularly engaged
on matters for the Company. The opinion of such counsel for the Company shall
state that the opinion of any such other counsel upon which they relied is in
form satisfactory to such counsel and, in such counsel's opinion, the
Underwriters and they are justified in relying thereon. With respect to the
matters to be covered in subparagraph (xv) above counsel may state their opinion
and belief is based upon their participation in the preparation of the
Registration Statement and the Prospectus and any amendment or supplement
thereto and review and discussion of the contents thereof but is without
independent check or verification except as specified.
The opinion of Willkie Farr & Gallagher described above shall be rendered
to the Underwriters at the request of the Company and shall so state therein.
(g) Philip N. Smith, Jr., general counsel of the Company, shall have
furnished to the Representatives his written opinion, dated the Closing Date or
the Additional Closing Date, as the case may be, in form and substance
satisfactory to the Representatives, to the effect that:
(i) the Company and each of the Subsidiaries has been duly
qualified as a foreign corporation for the transaction of business and is in
good standing under the laws of each other jurisdiction in which it owns or
leases properties, or conducts any business, so as to require such
qualification, other than where the failure to be so qualified or in good
standing, singly or in the
-21-
aggregate with all other such failures, would not have a Material Adverse
Effect;
(ii) neither the Company nor any of the Subsidiaries is, or with
the giving of notice or lapse of time or both would be, in violation of or in
default under, its Certificate or Articles of Incorporation or By-Laws or any
indenture, mortgage, deed of trust, loan agreement, franchise agreement or other
agreement or instrument, in each case, known to such counsel, to which the
Company or any of the Subsidiaries is a party or by which it or any of them or
any of their respective properties is bound, except for violations and defaults
which singly and in the aggregate are not material to the Company and the
Subsidiaries taken as a whole;
(iii) except as described in the Prospectus, each of the Company
and the Subsidiaries owns, possesses or has obtained all Permits from all
automobile manufacturers and distributors necessary to own or lease, as the case
may be, and to operate its properties and to carry on its business as conducted
as of the Closing Date and as proposed to be conducted, and neither the Company
nor any such Subsidiary has received any actual notice of any proceeding
relating to revocation or modification of any such Permit, in each case, other
than any Permit that is material to the Company and the Subsidiaries taken as a
whole; to the best of such counsel's knowledge, except as described in the
Prospectus, each of the Company and the Subsidiaries owns, possesses or has
obtained all Permits from, and has made all declarations and filings with, all
federal, state, local and other governmental authorities (including foreign
regulatory agencies), all self-regulatory organizations and all domestic or
foreign courts and other tribunals necessary to own or lease, as the case may
be, and to operate its properties and to carry on its business as conducted as
of the Closing Date and as proposed to be conducted, and neither the Company nor
any such Subsidiary has received any actual notice of any proceeding relating to
revocation or modification of any such Permit, in each case, other than any
Permit that is material to the Company and the Subsidiaries taken as a whole;
and to the best of such counsel's knowledge, each of the Company and the
Subsidiaries is in compliance with all laws and regulations relating to the
conduct of its business as conducted as of the date of the Prospectus, except as
described in the Prospectus and except to the extent failure to so comply would
not, singly or in the aggregate, have a Material Adverse Effect;
(iv) to the best of such counsel's knowledge, each of the
Company and the Subsidiaries owns, possesses or has the right to use the
intellectual property employed by it in connection with the business conducted
by it as of the date hereof other than
-22-
any such intellectual property that is not material to the Company and the
Subsidiaries taken as a whole;
(v) to the best of such counsel's knowledge, the Company and the
Subsidiaries have good and marketable title in fee simple to all real property
and good and marketable title to all personal property owned by them, in each
case free and clear of all liens, encumbrances and defects except such as are
described or referred to in the Prospectus and except to the extent as would not
simply or in the aggregate, have any Material Adverse Effect; and to the best of
such counsel's knowledge, any real property and buildings held under lease by
the Company and the Subsidiaries are held by them under valid, existing and
enforceable leases with such exceptions as would not have a Material Adverse
Effect;
(vi) to the best of such counsel's knowledge, each of the
Company and the Subsidiaries is in compliance with all Environmental Laws,
except, in each case, where noncompliance, singly or in the aggregate, would not
have a Material Adverse Effect; there are no Proceedings pending or, to the best
of such counsel's knowledge, threatened against or affecting the Company or any
of the Subsidiaries under any Environmental Law which, singly or in the
aggregate, would have a Material Adverse Effect; and
(vii) such counsel believes that (other than the financial
statements and related schedule therein, as to which such counsel need express
no belief) the Registration Statement and the prospectus included therein at the
time the Registration Statement became effective did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
that neither the Prospectus nor any amendment or supplement thereto contains any
untrue statement of a material fact or omits to state a material fact necessary
in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(h) On the effective date of the Registration Statement and the
effective date of the most recently filed post-effective amendment to the
Registration Statement and also on the Closing Date or Additional Closing Date,
as the case may be, Coopers & Lybrand, L.L.P. shall have furnished to you
letters, dated the respective dates of delivery thereof, in form and substance
satisfactory to you, containing statements and information of the type
customarily included in accountants' "comfort letters" to underwriters with
respect to the financial statements and certain financial information contained
in the Registration Statement and the Prospectus.
-23-
(i) The Representatives shall have received on and as of the Closing
Date or Additional Closing Date, as the case may be, an opinion of Cahill Gordon
& Reindel, counsel to the Underwriters, with respect to the due authorization
and valid issuance of the Shares, the Registration Statement, the Prospectus and
other related matters as the Representatives may reasonably request, and such
counsel shall have received such papers and information as they may reasonably
request to enable them to pass upon such matters.
(j) The Shares to be delivered on the Closing Date or Additional
Closing Date, as the case may be, shall have been approved for listing on the
Exchange, subject to official notice of issuance.
(k) The "lock-up" agreements, each substantially in the form of
Exhibit A hereto, of each of the Company's officers, directors and stockholders
and certain other equity holders relating to sales and certain other
dispositions of shares of Stock or certain other securities, delivered to you on
or before the date hereof, shall be in full force and effect on the Closing Date
or Additional Closing Date, as the case may be.
(l) Each of the conditions to closing of the Contemporaneous
Acquisitions and the Minority Exchange shall have been satisfied or waived at
the date hereof, and the Contemporaneous Acquisitions and the Minority Exchange
shall be consummated prior to or simultaneously with the consummation of the
offering of Shares hereunder.
(m) On or prior to the Closing Date or Additional Closing Date, as
the case may be, the Company shall have furnished to the Representatives such
further certificates and documents as the Representatives shall reasonably
request.
7. The Company agrees to indemnify and hold harmless each Underwriter and
each person, if any, who controls any Underwriter within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act, from and
against any and all losses, claims, damages and liabilities (including, without
limitation, the legal fees and other expenses incurred in connection with any
suit, action or proceeding or any claim asserted) caused by any untrue statement
or alleged untrue statement of a material fact contained in the Registration
Statement or any preliminary prospectus or the Prospectus or any amendment or
supplement thereto, or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such losses, claims,
damages or
-24-
liabilities are caused by any untrue statement or omission or alleged untrue
statement or omission made in reliance upon and in conformity with information
relating to any Underwriter furnished to the Company in writing by such
Underwriter through the Representatives expressly for use therein.
The Company also agrees to indemnify and hold harmless Smith Barney and
each person, if any, who controls Smith Barney within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act, from and
against any and all losses, claims, damages and liabilities incurred as a result
of Smith Barney's participation as a "qualified independent underwriter" within
the meaning of the Conduct Rules of the NASD in connection with the offering of
the Shares.
Each Underwriter agrees, severally and not jointly, to indemnify and hold
harmless the Company, its directors, its officers who sign the Registration
Statement and each person, if any, who controls the Company within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act to the
same extent as the foregoing indemnity from the Company to each Underwriter, but
only with reference to information relating to such Underwriter furnished to the
Company in writing by such Underwriter through the Representatives expressly for
use in the Registration Statement, the Prospectus, any amendment or supplement
thereto, or any preliminary prospectus.
If any suit, action, proceeding (including any governmental or regulatory
investigation), claim or demand shall be brought or asserted against any person
in respect of which indemnity may be sought pursuant to any of the three
preceding paragraphs, such person (the "INDEMNIFIED PERSON") shall promptly
notify the person against whom such indemnity may be sought (the "INDEMNIFYING
PERSON") in writing, and the Indemnifying Person, upon request of the
Indemnified Person, shall retain counsel reasonably satisfactory to the
Indemnified Person to represent the Indemnified Person and any others the
Indemnifying Person may designate in such proceeding and shall pay the fees and
expenses of such counsel related to such proceeding. In any such proceeding,
any Indemnified Person shall have the right to retain its own counsel, but the
fees and expenses of such counsel shall be at the expense of such Indemnified
Person unless (i) the Indemnifying Person and the Indemnified Person shall have
mutually agreed to the contrary, (ii) the Indemnifying Person has failed within
a reasonable time to retain counsel reasonably satisfactory to the Indemnified
Person or (iii) the named parties in any such proceeding (including any
impleaded parties) include both the Indemnifying Person and the Indemnified
Person and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing
-25-
interests between them. It is understood that the Indemnifying Person shall not,
in connection with any proceeding or related proceeding in the same
jurisdiction, be liable for the fees and expenses of more than one separate firm
(in addition to any local counsel) for all Indemnified Persons, and that all
such fees and expenses shall be reimbursed as they are incurred; PROVIDED,
HOWEVER, that if indemnity may be sought pursuant to the second paragraph of
this Section 7 in respect of such proceeding, then in addition to such separate
firm of the Underwriters and such control persons of the Underwriters the
indemnifying party shall be liable for the fees and expenses of not more than
one separate firm (in addition to any local counsel) for Smith Barney in its
capacity as a "qualified independent underwriter" and all persons, if any, who
control Smith Barney within the meaning of either Section 15 of the Securities
Act or Section 20 of the Exchange Act. Any such separate firm for the
Underwriters and such control persons of Underwriters shall be designated in
writing by J.P. Morgan Securities and any such separate firm for the Company,
its directors, its officers who sign the Registration Statement and such control
persons of the Company shall be designated in writing by the Company. The
Indemnifying Person shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the Indemnifying Person agrees to
indemnify any Indemnified Person from and against any loss or liability by
reason of such settlement or judgment. Notwithstanding the foregoing sentence,
if at any time an Indemnified Person shall have requested an Indemnifying Person
to reimburse the Indemnified Person for fees and expenses of counsel as
contemplated by the second and third sentences of this paragraph, the
Indemnifying Person agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 30 days after receipt by such Indemnifying Person of the
aforesaid request and (ii) such Indemnifying Person shall not have reimbursed
the Indemnified Person in accordance with such request prior to the date of such
settlement. No Indemnifying Person shall, without the prior written consent of
the Indemnified Person, effect any settlement of any pending or threatened
proceeding in respect of which any Indemnified Person is or could have been a
party and indemnity could have been sought hereunder by such Indemnified Person,
unless such settlement includes an unconditional release of such Indemnified
Person from all liability on claims that are the subject matter of such
proceeding.
If the indemnification provided for in the first, second or third
paragraphs of this Section 7 is unavailable to an Indemnified Person in respect
of any losses, claims, damages or liabilities referred to therein, then each
Indemnifying Person under such paragraph, in lieu of indemnifying such
Indemnified Person
-26-
thereunder, shall contribute to the amount paid or payable by such Indemnified
Person as a result of such losses, claims, damages or liabilities (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and the Underwriters and Smith Barney in its capacity as
a "qualified independent underwriter" on the other hand from the offering of the
Shares or (ii) if the allocation provided by clause (i) above is not permitted
by applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Company on the one hand and the Underwriters and Smith Barney in its
capacity as a "qualified independent underwriter" on the other hand in
connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Underwriters and Smith Barney in its capacity as a "qualified
independent underwriter" on the other hand shall be deemed to be in the same
respective proportions as the net proceeds from the offering (before deducting
expenses) received by the Company and the total underwriting discounts and the
commissions received by the Underwriters, in each case as set forth in the table
on the cover of the Prospectus, bear to the aggregate public offering price of
the Shares. The relative fault of the Company on the one hand and the
Underwriters and Smith Barney in its capacity as a "qualified independent
underwriter" on the other hand shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company, by the Underwriters or by Smith Barney in its capacity
as a "qualified independent underwriter" and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by PRO RATA
allocation (even if the Underwriters were treated as one entity for such
purposes) or by any other method of allocation that does not take account of the
equitable considerations referred to in the immediately preceding paragraph. The
amount paid or payable by an Indemnified Person as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses incurred by such Indemnified Person in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7, in no event shall an
Underwriter be required to contribute any amount in excess of the amount by
which the total price at which the Shares
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underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages that such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute pursuant to this
Section 7 are several in proportion to the respective number of Shares set forth
opposite their names in Schedule I hereto, and not joint.
The remedies provided for in this Section 7 are not exclusive and shall not
limit any rights or remedies which may otherwise be available to any indemnified
party at law or in equity.
The indemnity and contribution agreements contained in this Section 7 and
the representations and warranties of the Company set forth in this Agreement
shall remain operative and in full force and effect regardless of (i) any
termination of this Agreement, (ii) any investigation made by or on behalf of
any Underwriter or any person controlling any Underwriter or by or on behalf of
the Company, its officers or directors or any other person controlling the
Company and (iii) acceptance of and payment for any of the Shares.
8. Notwithstanding anything herein contained, this Agreement (or the
obligations of the several Underwriters with respect to the Option Shares) may
be terminated in the absolute discretion of the Representatives, by notice given
to the Company, if after the execution and delivery of this Agreement and prior
to the Closing Date (or, in the case of the Option Shares, prior to the
Additional Closing Date) (i) trading generally shall have been suspended or
materially limited on or by, as the case may be, any of the Exchange or the
American Stock Exchange, the Nasdaq National Market, the Chicago Board Options
Exchange, the Chicago Mercantile Exchange or the Chicago Board of Trade, (ii)
trading of any securities of or guaranteed by the Company shall have been
suspended on any exchange or in any over-the-counter market, (iii) a general
moratorium on commercial banking activities in New York shall have been declared
by either federal or New York State authorities, or (iv) there shall have
occurred any outbreak or escalation of hostilities or any change in financial
markets or any calamity or crisis that, in the judgment of the Representatives,
is material and adverse and which, in the judgment of the Representatives, makes
it impracticable to market the Underwritten Shares or the Option Shares, as the
case may be, on the terms and in the manner contemplated in the Prospectus.
-28-
9. This Agreement shall become effective upon the later of (x) execution
and delivery hereof by the parties hereto and (y) release of notification of the
effectiveness of the Registration Statement (or, if applicable, any post-
effective amendment) by the Commission.
If on the Closing Date or the Additional Closing Date, as the case may be,
any one or more of the Underwriters shall fail or refuse to purchase Shares
which it or they have agreed to purchase hereunder on such date, and the
aggregate number of Shares which such defaulting Underwriter or Underwriters
agreed but failed or refused to purchase is not more than one-tenth of the
aggregate number of Shares to be purchased on such date, the other Underwriters
shall be obligated severally in the proportions that the number of Shares set
forth opposite their respective names in Schedule I bears to the aggregate
number of Underwritten Shares set forth opposite the names of all such non-
defaulting Underwriters, or in such other proportions as the Representatives may
specify, to purchase the Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase on such date; PROVIDED,
HOWEVER, that in no event shall the number of Shares that any Underwriter has
agreed to purchase pursuant to Section 1 be increased pursuant to this Section 9
by an amount in excess of one-ninth of such number of Shares without the written
consent of such Underwriter. If on the Closing Date or the Additional Closing
Date, as the case may be, any Underwriter or Underwriters shall fail or refuse
to purchase Shares which it or they have agreed to purchase hereunder on such
date, and the aggregate number of Shares with respect to which such default
occurs is more than one-tenth of the aggregate number of Shares to be purchased
on such date, and arrangements satisfactory to the Representatives and the
Company for the purchase of such Shares are not made within 36 hours after such
default, this Agreement (or the obligations of the several Underwriters to
purchase the Option Shares, as the case may be) shall terminate without
liability on the part of any non-defaulting Underwriter or the Company. In any
such case either you or the Company shall have the right to postpone the Closing
Date (or, in the case of the Option Shares, the Additional Closing Date, but in
no event for longer than seven days, in order that the required changes, if any,
in the Registration Statement and in the Prospectus or in any other documents or
arrangements may be effected. Any action taken under this paragraph shall not
relieve any defaulting Underwriter from liability in respect of any default of
such Underwriter under this Agreement.
10. If this Agreement shall be terminated by the Underwriters, or any of
them, because of any failure or refusal on the part of the Company to comply
with its covenants or to fulfill any of the conditions of this Agreement, or if
for any reason the
-29-
Company shall be unable to perform its obligations under this Agreement or any
condition of the Underwriters' obligations cannot be fulfilled, the Company
agrees to reimburse the Underwriters or such Underwriters as have so terminated
this Agreement with respect to themselves, severally, for all out-of-pocket
expenses (including the fees and expenses of their counsel) reasonably incurred
by such Underwriters in connection with this Agreement or the offering
contemplated hereunder.
11. This Agreement shall inure to the benefit of and be binding upon the
Company, the Underwriters, any controlling persons referred to herein and their
respective successors and assigns. Nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any other person, firm or
corporation any legal or equitable right, remedy or claim under or in respect of
this Agreement or any provision herein contained. No purchaser of Shares from
any Underwriter shall be deemed to be a successor by reason merely of such
purchase.
12. Any action by the Underwriters hereunder may be taken by the
Representatives jointly or by J.P. Morgan Securities alone on behalf of the
Underwriters, and any such action taken by the Representatives jointly or by
J.P. Morgan Securities alone shall be binding upon the Underwriters. All
notices and other communications hereunder shall be in writing and shall be
deemed to have been duly given if mailed or transmitted by any standard form of
telecommunication. Notices to the Underwriters shall be given to the
Representatives, c/o J.P. Morgan Securities Inc., 60 Wall Street, New York, New
York 10260 (telecopy: 212/648-5121 or 212/648-5951); Attention: Syndicate
Department. Notices to the Company shall be given to it at 375 Park Avenue, New
York, New York 10152, (telecopy: 212/223-5148); Attention: Chief Executive
Officer.
13. This Agreement may be signed in counterparts, each of which shall be
an original and all of which together shall constitute one and the same
instrument.
14. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York, without giving effect to the conflicts of
laws provisions thereof.
If the foregoing is in accordance with your understanding, please sign and
return four counterparts hereof.
Very truly yours,
UNITED AUTO GROUP, INC.
By:______________________
Name:
Title:
Accepted as of the date first
written above:
J.P. MORGAN SECURITIES INC.
MONTGOMERY SECURITIES
SMITH BARNEY INC.
Acting severally on behalf of
themselves and the several
Underwriters listed in Schedule I
hereto.
By: J.P. MORGAN SECURITIES INC.
By: ________________________
Name:
Title:
SCHEDULE I
Underwritten
Underwriter Shares
- ----------- ------------
J.P. Morgan Securities Inc.
Montgomery Securities
Smith Barney Inc.
Total