BROKER'S AGREEMENT
This Agreement (the "Broker's Agreement") is dated as of
_____________, 1996, and is entered into between UAG West, Inc., a Delaware
corporation ("UAG West") and KBB, Inc., an Arizona corporation ("Broker").
In consideration of the mutual covenants contained herein, and other
good and valuable consideration, Broker and UAG West agree as follows:
1. ENGAGEMENT. UAG West hereby engages Broker, and Broker accepts
such engagement, as a broker for UAG West (i) to locate prospective automobile
and light truck dealerships and dealership groups for UAG West to acquire within
the Territory (as defined below) and (ii) to assist UAG West in obtaining new
dealerships in the Territory. For purposes of this Agreement, the "Territory"
shall mean the States of Arizona, New Mexico, Colorado and Utah, and the
counties in the State of California listed on Exhibit "A" hereto.
2. TERM. The Term of this Agreement shall begin on the date hereof
(the "Effective Date") and, unless otherwise terminated pursuant to Section 4
hereof, shall end on the date which is five years following the Effective Date;
PROVIDED, HOWEVER, that such term shall be extended automatically for an
additional year on each anniversary of the Effective Date unless either party
hereto gives written notice to the other party not to so extend within ninety
(90) days prior to an anniversary, in which case no further extension shall
occur (such term, including any extension thereof, shall hereinafter be referred
to as the "Term").
3. BROKER'S FEE. In return for Broker's efforts in identifying
dealerships and dealership groups in the Territory for UAG West to acquire or
open and in assisting in the acquisition or opening of such dealerships and
dealership groups, UAG West shall pay to Broker a fee (the "Broker's Fee") for
each dealership or dealership group (each an "Acquired Dealership" and
collectively, the "Acquired Dealerships") that UAG West acquires or opens in the
Territory during the Term other than the dealerships owned by the persons listed
on Exhibit "B" hereto. Each Broker Fee shall consist of a cash payment (not
less than $0) calculated as follows:
(i) If the Acquired Dealership is an existing dealership or
dealership group in the Territory, then the Broker's Fee shall be a cash
payment on the date of the acquisition of the Acquired Dealership (the
"Acquisition Closing Date") in an amount equal to the Acquired Dealership's
Pre-Tax Earnings (as defined below) for the 12-month period immediately
preceding the Acquisition Closing Date; PROVIDED, HOWEVER, that in the
event an Acquired Dealership's sales exceed Five Hundred Million Dollars
($500,000,000) during the twelve (12) month period immediately preceding
the Acquisition
Closing Date, then the Broker's Fee shall be an amount to be mutually
agreed to by Broker and UAG West;
(ii) If the Acquired Dealership is a dealership that UAG West is
opening ("New Dealership") within Maricopa County, Arizona, then the
Broker's Fee shall be a cash payment on the thirteenth month anniversary of
the date on which the New Dealership commenced business ("Opening Date") in
an amount equal to three times the New Dealership's Pre-Tax Earnings (as
defined below) for the twelve (12) month period commencing on the Opening
Date; and
(iii) If the Acquired Dealership is a New Dealership that UAG West
is opening within the Territory but not within Maricopa County, Arizona,
then the Broker's Fee shall be a cash payment on the thirteenth month
anniversary of the Opening Date in an amount equal to the New Dealership's
Pre-Tax Earnings for the twelve (12) month period commencing on the Opening
Date.
For purposes of this Agreement, each Acquired Dealership's Pre-Tax
Earnings shall mean the consolidated net earnings (or losses), before taxes, of
such Acquired Dealership, computed in accordance with generally accepted
accounting principles; PROVIDED, HOWEVER, that the calculation of the Acquired
Dealership's Pre-Tax Earnings shall add back any LIFO inventory adjustment and
shall not include any depreciation or amortization expense or expenses incurred
in connection with the acquisition, and shall be recast (consistent with UAG
West's past practices in connection with acquisitions) to reflect extraordinary
owners compensation, personal expenses and other expenses not related to the
continuing operations of the dealership, and without any allocation of overhead
expenses of UAG or UAG West or any acquisition-related expenses, such as
acquisition-related indebtedness. For purposes of this Agreement, each New
Dealership's Pre-Tax Earnings shall mean the consolidated net earnings (or
losses), before taxes, of such New Dealership, computed in accordance with
generally accepted accounting principles less the New Dealership's start-up
expenses; PROVIDED, HOWEVER, that the calculation of the New Dealership's Pre-
Tax Earnings shall add back any LIFO inventory adjustment and shall not include
any depreciation or amortization expense or any allocation of overhead expenses
of UAG or UAG West.
The Broker and UAG West may from time to time agree in writing as to
other fee arrangements in particular circumstances, such as an acquisition where
the target is not profitable.
4. TERMINATION. This Agreement shall terminate (a) at the
expiration of the Term; (b) at any time with the mutual consent of UAG West and
Broker; or (c) if Steven Knappenberger's employment with UAG West terminates
unless he is succeeded as President (provided that any decision with respect to
succession shall be at the sole discretion of the Board of Directors of UAG
West) by Jay Beskind or George Brochick. In addition, notwithstanding any
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termination, Broker shall be entitled to fees on any transaction that is the
subject of an agreement on the date of the termination or with respect to any
transaction that closes within one year from the date of termination and as to
which Broker rendered substantial assistance.
5. INDEMNIFICATION BY BROKER. Broker shall indemnify and defend UAG
West, its affiliates and their respective directors, officers, shareholders,
employees and agents and hold them harmless to the fullest extent permitted by
law, from and against any and all claims, liabilities, losses, damages and
expenses (including attorneys' fees and costs) as they are incurred that are
directly or indirectly related to or otherwise incurred in connection with
Broker's bad faith, negligence or willful misconduct, or of any breach of this
Agreement by Broker.
6. INDEMNIFICATION BY UAG WEST. UAG West shall indemnify and defend
the Broker and each of its directors, officers, shareholders, employees and
agents and hold each of them harmless to the fullest extent permitted by law,
from and against any and all claims, liabilities, losses, damages and expenses
(including attorneys' fees and costs) as they are incurred that are directly or
indirectly related to or otherwise incurred in connection with the activities
set forth in Paragraph 1 hereof other than arising out of Broker's bad faith,
negligence or willful misconduct, or any breach of this Agreement by UAG West.
7. CONFIDENTIAL INFORMATION. Broker shall hold in the strictest
confidence any and all confidential and proprietary information and materials
provided to Broker by UAG West or any of its affiliates. Broker shall not use
any of the same except for purposes contemplated by this Agreement. Except to
enforce its rights hereunder, Broker shall, on UAG West's demand, return to UAG
West all documents and other materials previously provided to Broker by UAG West
or any of its affiliates and all copies thereof and excerpts therefrom in
Broker's possession. As used herein, confidential information shall mean all
information concerning UAG West or any of its affiliates except information (i)
ascertainable or obtained from public information, (ii) received from a third
party not employed by or otherwise affiliated with UAG West or any of its
affiliates, or (iii) which is or becomes known to the public, other than through
a breach by Broker of the terms of this Agreement.
8. NO VIOLATION. Broker represents and warrant to UAG West that
neither the execution and delivery of this Agreement nor the performance of its
duties hereunder violates or will violate the provisions of any other agreement
to which Broker or any of its directors, officers, shareholders, employees and
agents are bound. UAG West represents and warrants to Broker that neither the
execution and delivery of this Agreement nor the performance of its duties
hereunder violates or will violate the provisions of any
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other agreement to which it or any of its affiliates are parties or by which it
or any of its affiliates are bound.
9. BENEFIT OF AGREEMENT. This Agreement shall enure to the benefit
of and be binding upon UAG West and its successors, including, without
limitation, any corporation or person which may acquire all or substantially all
of UAG West's assets or business, or into which UAG West may be consolidated or
merged. This Agreement shall also enure to the benefit of, and be enforceable
by, Broker and its successors.
10. NOTICES. Any notice required or permitted hereunder shall be in
writing and shall be sufficiently given if personally delivered or if sent by
telegram or telex or by registered or certified mail, postage pre-paid, with
return receipt requested, addressed (a) in the case of UAG West, to c/o United
Auto Group, Inc., 375 Park Avenue, New York, New York 10022, Attn: General
Counsel, or to such other address and/or to the attention of such other person
as UAG West shall designate by written notice to Broker; and (b) in the case of
Broker, (i) to Steven Knappenberger at 6725 E. McDowell Road, Scottsdale,
Arizona 85257, (ii) George Brochick at 6242 E. Laurel Lane, Scottsdale, Arizona
85254, and (iii) Jay Beskind at 6513 E. Paradise Lane, Scottsdale, Arizona 85254
or to such other address as Messrs. Knappenberger, Brochick or Beskind,
respectively, shall designate by written notice to UAG West. Any notice given
hereunder shall be effective and deemed to have been given as of the date of
receipt.
11. AMENDMENT. This Agreement may not be changed or modified except
by an instrument in writing signed by both of the parties hereto.
12. WAIVER. The waiver by either party of the breach of any
provision of this Agreement shall not operate or be construed as a continuing
waiver or as a consent to or waiver of any subsequent breach hereof. Any waiver
must be in writing and signed by Broker or UAG West, as the case may be.
13. HEADINGS. The Section headings herein are for convenience of
reference only, do not constitute a part of this Agreement, and should not be
deemed to limit or affect any of the provisions hereof.
14. VALIDITY. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision or provisions of this Agreement, which shall remain in full
force and effect.
15. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, though all of
which together shall constitute one and the same instrument.
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16. ASSIGNMENT. Neither this Agreement nor any rights under this
Agreement are assignable and no duties or obligations under this Agreement are
delegable. Any attempted purported assignment or delegation shall be void.
17. ENTIRE AGREEMENT. This Agreement, together with its exhibits,
contains the entire agreement of the parties with respect to the subject matter
hereof and supersedes all prior or contemporaneous negotiations, correspondence,
or understandings and agreements between the parties.
18. GOVERNING LAW. This Agreement shall be governed by the laws of
the State of Arizona without regard to conflict of law principles.
UAG WEST, INC.
By: _______________________________
Its: _______________________________
KBB, INC.
By: _______________________________
Its: _______________________________
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EXHIBIT "A"
Counties
State of California
Los Angeles
Orange
Riverside
Ventura
San Bernadino
San Diego