July 31, 1995
CERTIFIED MAIL
RETURN RECEIPT REQUESTED
PERSONAL AND CONFIDENTIAL
United Auto Group, Inc.
375 Park Avenue, 22nd Floor
New York, NY 10162
Attention: Mr. Carl Spielvogel, Chief Executive Officer
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Gentlemen:
On April 6, 1995 Oldsmobile Division on behalf of itself and GMC Truck Division
rejected a proposal submitted by United Auto Group, Inc. ("UAG") and Landers
Auto Sales, Inc. concerning a Stock Purchase Agreement executed between UAG and
Landers Auto Sales, Inc., Steve Landers, John Landers and Bob Landers of Benton,
Arkansas. That proposal contemplated the acquisition by UAG of eighty percent
of the ownership equity or Landers Auto Sales, Inc.
Oldsmobile's rejection of that proposal was based on the continuing failure of
UAG to meet General Motoros policies for Multiple Dealer Investors-Multiple
Dealer Operators (MDI-MDO) as set forth in NAO Dealer Bulletin 94-11. A copy of
that Bulletin was provided to all General Motors Dealers on September 14, 1994.
The fact that UAG has not fulfilled its responsibilities in the various General
Motors Dealerships in which it has a financial investment was covered in some
detail in a letter to UAG dated November 14, 1994 from Chevrolet Zone Manager,
A. A. Prince.
You have requested that Oldsmobile and GMC Truck reconsider our rejection of the
above-mentioned Stock Purchase Agreement. You have also proposed that as
condition of Oldsmobile and GMC Truck approval of the transactions contemplated
by such Stock Purchase Agreement, UAG will take the necessary steps to fulfill
its sales and service obilgations as outlined in each of the General Motors
Dealer Sales and Service Agreements to which it and/or any dealer company in
which UAG now has or hereafter acquires an ownership, financial, or management
interest (individually, a "Dealer Company" and collectively, the "Dealer
Companies") is a party, and that such level of performance shall be attained
within two years from the date of Oldsmobile and GMC Truck apprvoal of this
proposal. UAG has also agreed that, if UAG and/or any Dealer Company, fails to
achieve such level of performance within such period, UAG will voluntarily
terminate, and UAG will cause the applicable Dealer Company or Dealer Companies
to terminate the respective Dealer Agreements for all franchises at a location
at
which the Dealer Company is not then meeting its sales and/or service
performance obligations.
In consideration of the above, Oldsmobile and GMC Truck are prepared to approve
the proposed changes in ownership at Lands Auto Sales, Inc. subject to your
acceptance and agreement to the following:
1. UAG agrees that within two years from the date of this letter each Dealer
Company will meet its sales and service obligations for each General Motors
Dealer Sales and Service Agreement in effect with such Dealer Company.
For purposes of this agreement "sales and service obligations" are defined
in the General Motors Multiple Dealer Investor Policy as follows:
SALES PERFORMANCE
A retail sales index of 100 or higher.
CUSTOMER SATISFACTION
A customer satisfaction index (CSi) that is equal to or above the Dealer
Company's respective Zone/Branch average.
2. In the event a Dealer Company is not meeting both its sales obligations and
its service obligations (as defined above), at the end of two years from
the date of this letter, which performance will be reviewed by the
respective General Motors Divisions, UAG agrees that at General Motors
request, UAG will terminate and will cause each such Dealer Company to
terminate, ALL the General Motors Dealer Sales and Service Agreements in
effect with such Dealer Company.
3. Termination of any Dealer Sales and Service Agreements as described in item
two (2) above shall occur within six (6) months of General Motors notice to
UAG and the applicable Dealer Company of the failure of performance of such
Dealer Company which notice shall be given, if at all, by General Motors
within a reasonable period following General Motors receipt and review.
4. Until such time as UAG is in compliance with the General Motors Multiple
Dealer Investor Policy, it will not attempt to make or acquire additional
investments in any General Motors Dealerships.
5. Nothing contained in this letter is intended to preclude or prohibit UAG
from disposing of its interest in any Dealer Company, in accordance with
the existing General Motors policies.
6. UAG will cause DeFeo Oldsmobile of Bound Brook to voluntarily terminate
their Oldsmobile Dealer Sales and Service Agreement
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on or before December 31, 1995 on terms mutually acceptable to both
parties.
7. UAG hereby warrants and represents to General Motors that it currently has,
and shall maintain throughout the term of this Letter Agreement, the
absolute and unconditional right, power and authority to cause each Dealer
Company to comply with the terms and conditions of this Letter Agreement.
8. This Letter Agreement shall remain in full force and effect through August
27, 1998.
Please acknowledge your acceptance and agreement with the above by signing the
attached copy of this letter in the space provided below and return it to the
writer.
Very truly yours,
J. J. Zubor
Retail Organization &
Development Director
Accepted and agreed this 31st
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of July, 1995
By: /s/ Carl Spielvogel
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Carl Spielvogel
Chief Executive Officer
DAH/lm
cc: GMC Truck
Chevrolet
Pontiac
Buick
Cadillac
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