SHAREHOLDERS' AGREEMENT
This Shareholders' Agreement, dated as of October ___, 1996, is by and
among UAG West, Inc., a Delaware corporation ("UAG West"), SK Motors, Ltd., an
Arizona corporation, d/b/a Scottsdale Porsche (the "Company"), and the
Knappenberger Revocable Trust Dated April 15, 1983, as Amended ("Knappenberger
Trust"). UAG West and Knappenberger Trust and each other person or entity that
may become a party hereto as contemplated hereby, are hereinafter individually
referred to as a "Shareholder" and collectively referred to as the
"Shareholders".
W I T N E S S E T H :
WHEREAS, the parties hereto have entered into that certain Stock
Purchase Agreement dated as of June 6, 1996, as amended (the "Stock Purchase
Agreement");
WHEREAS, immediately prior to the Closing of the Stock Purchase
Agreement, Scottsdale Jaguar, Ltd., an Arizona corporation ("Scottsdale Jaguar")
shall own 100 shares (the "Shares") of no par value common stock of the Company
("Common Stock"), representing all of the issued and outstanding shares of
Common Stock;
WHEREAS, pursuant to the Stock Purchase Agreement, at the Closing,
Scottsdale Jaguar shall sell, assign, transfer and deliver the Shares to UAG
West;
WHEREAS, pursuant to the Stock Purchase Agreement, at the Closing, UAG
West shall sell, assign, transfer and deliver 19 shares of the Common Stock,
representing nineteen (19%) percent of the issued and outstanding shares of
Common Stock of the Company to Knappenberger Trust (the "Knappenberger Shares");
and
WHEREAS, the Company, UAG West, United Auto Group, Inc. and Porsche
Cars North America, Inc. ("Porsche") have entered into a Sales and Service
Agreement and an addendum thereto (the "Sales and Service Agreement");
WHEREAS, UAG West, the Company and Knappenberger Trust desire, INTER
ALIA, to provide certain rights and set certain restrictions in connection with
the transfer of the Shareholders' shares of Common Stock;
NOW, THEREFORE, in consideration of the mutual terms, conditions,
covenants and agreements made herein, the parties hereto hereby agree as
follows:
ARTICLE 1
TRANSFER OF SECURITIES
SECTION 1.1. CONSENT OF UAG WEST.
(a) Subject to the rights of Knappenberger Trust contained in
Article 3 hereof and except as otherwise provided herein and for as long as UAG
West (or an affiliate thereof) shall own at least 20% of the issued and
outstanding shares of Common Stock, no Shareholder other than UAG West shall
directly or indirectly Transfer (as defined below) any shares of capital stock
of the Company now or hereafter at any time owned by such Shareholder or any
interest therein, or the stock certificate or certificates representing any such
shares, or any voting trust certificate or certificates issued with respect to
such shares, without the prior written consent of UAG West and Porsche Cars of
North America, Inc. ("Porsche"). Any Transfer effected, or purported or
attempted to be effected, not in accordance with the terms and conditions of
this Section 1.1, or to a Person prohibited by law from holding shares of
capital stock of the Company, shall be void and shall not bind the Company. As
used in this Agreement, the term "Transfer" shall mean and include (i) when used
as a verb, the act of selling, pledging, mortgaging, hypothecating, giving,
transferring, creating a security interest, lien or trust (voting or otherwise),
assigning or otherwise encumbering or disposing of, and (ii) when used as a
noun, any sale, pledge, mortgage, hypothecation, gift, transfer, creation of
security interest, lien or trust, any assignment or other encumbrance or
disposition.
SECTION 1.2. GENERAL RESTRICTIONS.
No Shareholder (including UAG West and any other Shareholder permitted
to Transfer shares of capital stock of the Company or any interest therein in
accordance with Section 1.1 hereof) shall, directly or indirectly, Transfer any
shares of capital stock of the Company or any interest therein, whether
voluntarily or involuntarily, unless:
(a) (i) such Transfer complies with the provisions of this Agreement
and the Sales and Service Agreement; and (ii) the transferee (if other than
another Shareholder) agrees to be bound by this Agreement and the Sales and
Service Agreement and executes a counterpart hereof and such further documents
as may be necessary, in the opinion of the Company, to make it a party hereto
(any such transferee shall be deemed to be a Shareholder for purposes of this
Agreement); and
(b) such Transfer is made pursuant to either (i) an effective
registration statement under the Securities Act and any applicable state
securities laws, or (ii) an available exemption from the registration
requirements of the Securities Act and such laws and, prior to any such Transfer
(other than a Transfer to another Shareholder), the Person proposing the
Transfer provides to the Company a written opinion of legal counsel reasonably
satisfactory in form and substance to the Company and its counsel to the effect
that the proposed Transfer may be effected without registration under the
Securities Act and any applicable state securities laws.
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SECTION 1.3. LEGENDS ON STOCK CERTIFICATES.
For so long as shares of capital stock of the Company held by a
Shareholder are subject to this Agreement, all certificates representing such
shares shall bear the following legend:
The securities represented by this certificate are subject
to restrictions on transfer and certain other provisions of
the Shareholders' Agreement, dated as of October ___, 1996,
as the same may be amended from time to time, by and among
UAG West, Inc., ("UAG West"), SK Motors, Inc. (the
"Company"), Steven Knappenberger, Knappenberger Revocable
Trust Dated April 15, 1983 as Amended and certain other
shareholders of the Company who may from time to time become
parties to such Shareholders' Agreement and to the
provisions of the Sales and Service Agreement between the
Company, UAG West, United Auto Group, Inc. and Porsche Cars
North America, copies of which may be obtained at the
offices of the Company.
SECTION 1.4. IMPROPER TRANSFERS INEFFECTIVE.
Any purported transfer of Common Stock by a Shareholder which is not
permitted by the foregoing provisions of this Article 1, or which is in
violation of such provisions, shall be void and of no force and effect
whatsoever.
ARTICLE 2
PURCHASE AND SALE OF SHARES
Upon the occurrence of a Dealer Termination Event (as defined in the
Sales and Service Agreement) as to Knappenberger and subject to the consent and
approval of Porsche, UAG West shall have the right (the "Call") to acquire the
Knappenberger Shares for the Share Value (as defined below) for the purpose of
transferring, selling or assigning the Knappenberger Shares to a Dealer
Principal (as defined in the Sales and Service Agreement). UAG West may
exercise the Call by notifying Knappenberger Trust in writing of such exercise.
Within five (5) days of receipt of such notice or such later date as is set
forth in the notice, Knappenberger Trust shall sell, assign, transfer and
deliver to UAG West the Knappenberger Shares and the certificates representing
such shares accompanied by stock powers duly executed in blank. For purposes of
this Agreement, the Share Value shall be an amount equal to the Subsequent Value
(as defined in the Dealer Agreement) minus the sum of the Initial Value (as
defined in the Dealer Agreement) plus an amount equal to 15% of the Initial
Value per annum from the date hereof through the date the Knappenberger Shares
are transferred.
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If, at any time, the Company ceases to operate a Porsche dealership,
Knappenberger Trust shall transfer, assign and deliver the Knappenberger Shares
to UAG West.
As to any successor Dealer Principal consented to and approved by
Porsche, upon a Dealer Termination Event as to any such successor, such Dealer
Principal shall be required to sell and UAG West shall be required to purchase
the Company shares then held by such Dealer Principal on the terms and subject
to the conditions set forth in the Sales and Service Agreement.
ARTICLE 3
MISCELLANEOUS
SECTION 3.1. TERM.
All provisions of this Agreement shall terminate upon, in respect of
any Shareholder, when such Shareholder no longer owns any capital stock of the
Company.
SECTION 3.2. AMENDMENT; WAIVER.
This Agreement may be altered or amended only with the written consent
of all of the parties hereto and Porsche. Any term of this Agreement and the
observance of any term herein may be waived (either generally or in a particular
instance and either retroactively or prospectively) by any party hereto only
with the written consent of such party, provided that any such waiver by any
party hereto shall not operate or be construed as a waiver of any other term or
observance of any term herein, whether or not similar.
SECTION 3.3. SPECIFIC PERFORMANCE.
The parties recognize that the obligations imposed on them in this
Agreement are special, unique and of extraordinary character, and that in the
event of breach by any party, damages will be an insufficient remedy;
consequently, it is agreed that the parties hereto may have specific performance
(in addition to damages) as a remedy for the enforcement hereof, without proving
damages.
SECTION 3.4. ASSIGNMENT.
Except as otherwise expressly provided herein, the terms and
conditions of this Agreement shall inure to the benefit of and be binding upon
the respective successors and permitted assigns of the parties hereto. This
Agreement may be assigned by a Shareholder only in connection with a Transfer of
any shares of Common Stock in accordance with the terms of this Agreement and
the Sales and Service Agreement; PROVIDED, HOWEVER, that the rights of
Knappenberger Trust contained in Article 3 hereof cannot be assigned or
otherwise transferred in connection with any
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Transfer of shares of Common Stock by Knappenberger Trust without the prior
written consent of UAG. No assignment of this Agreement shall relieve the
assignor from any liability hereunder.
SECTION 3.5. SHARES SUBJECT TO THIS AGREEMENT.
All shares of capital stock of the Company now owned or hereafter
acquired by any of the Shareholders shall be subject to the terms of this
Agreement and the Sales and Service Agreement.
SECTION 3.6. NOTICES.
All notices or other communications required or permitted hereunder
shall be given in writing and shall be deemed sufficient if delivered by hand,
recognized overnight delivery service or facsimile transmission or mailed by
registered or certified mail, postage prepaid (return receipt requested), as
follows:
If to Knappenberger Trust:
Mr. Steven Knappenberger
6725 E. McDowell Road
Scottsdale, Arizona 85257
If to UAG West or the Company:
United Auto Group, Inc.
375 Park Avenue
New York, New York 10152
Facsimile No.: (212) 223-5148
Attn: George G. Lowrance, Esq.,
Executive Vice President
with a copy to:
Rogers & Hardin
229 Peachtree Street, N. E.
Suite 2700
Atlanta, Georgia 30303
Attn: Michael Rosenzweig, Esq.
or such other address as shall be furnished in writing by such party, and any
such notice or communication shall be effective and be deemed to have been given
as of the date so delivered or
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three (3) days after the date so mailed; PROVIDED, HOWEVER, that any notice or
communication changing any of the addresses set forth above shall be effective
and deemed given only upon its receipt.
SECTION 3.7. COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original, and which counterparts together shall
constitute one and the same agreement of the parties hereto.
SECTION 3.8. SECTION HEADINGS.
Headings contained in this Agreement are inserted only as a matter of
convenience and in no way define, limit or extend the scope or intent of this
Agreement or any provisions hereof.
SECTION 3.9. GOVERNING LAW.
This Agreement shall be governed by, and construed in accordance with,
the laws of the State of Arizona, without giving effect to the choice-of-law
provisions thereof.
SECTION 3.10. SALES AND SERVICE AGREEMENT.
This Agreement has been entered into pursuant to the terms of the
Sales and Service Agreement and should be construed in a manner that is
consistent with said agreement and to give reasonable effect to the provisions
thereof.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
UAG WEST, INC.
By:
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Name:
Title:
SK MOTORS, LTD.
By:
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Name:
Title:
STEVEN KNAPPENBERGER REVOCABLE
TRUST DATED APRIL 15, 1983,
AS AMENDED
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STEVEN KNAPPENBERGER, TRUSTEE
125107.10
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